## Financial Condition 

## Liquidity and Capital Resources 

In 2001, the Company generated cash from operating activities of $76.8 million. Investments in property, plant and equipment were $25.2 million. In 2001, total debt was reduced by $35.3 million and debt as a percentage of total capitalization was reduced from 58 percent to 55 percent. At December 31, 2001, the Company had working capital of $91.7 million and a current ratio of 1.9 to 1. 

At December 31, 2001, available borrowing under the Company’s revolving credit facility was approximately $47 million. In addition, there is an uncommitted $25 million springing facility. During the next five years management anticipates on-going capital expenditures in the range of $25 to $30 million annually. Cash flows from operations and funds available under existing credit facilities will provide the Company’s primary source of future financing. Management believes that it has sufficient financial resources to meet anticipated business requirements in the foreseeable future, including capital expenditures, dividends, working capital and debt service. 

## Market Risk and Derivative Financial Instruments 

The Company has financing arrangements that require interest payments based on floating interest rates. As such, the Company’s financial results are subject to changes in the market rate of interest. Our objective in managing the exposure to interest rate changes is to limit the volatility and impact of rate changes on earnings while maintaining the lowest overall borrowing cost. At present, the Company has not entered into any interest rate swaps or other derivative instruments to fix the interest rate on any portion of its financing arrangements with floating rates. Accordingly, based on current debt levels at December 31, 2001, if market interest rates increase one percent, the Company's interest expense would increase approximately $2.5 million. 

Some of the Company’s subsidiaries operate in foreign countries and, as such, their financial results are subject to the variability that arises from exchange rate movements. The Company believes that foreign currency exchange rate fluctuations do not represent a significant market risk due to the nature of the foreign countries in which we operate, primarily Canada and Western Europe, as well as the size of those operations relative to the total Company. 

The Company uses certain commodities, primarily plastic resins, in its manufacturing processes. As such, the cost of operations is subject to fluctuation as the market for these commodities changes. The Company monitors this risk but currently has no derivative contracts to hedge this risk, 

however, the Company also has no significant purchase obligations to purchase fixed quantities of such commodities in future periods. 

## Accounting Standards for Business Combinations and Goodwill 

The Financial Accounting Standards Board recently issued Statement of Financial Accounting Standard No. 141 (SFAS 141), “Business Combinations,” and SFAS 142, “Goodwill and Other Intangible Assets.” The statements are effective for the Company on January 1, 2002. These statements will result in modifications relative to the Company’s accounting for goodwill and other intangible assets. Specifically, the Company will cease goodwill and certain intangible asset amortization beginning January 1, 2002. Upon adopting the new standards and cessation of amortization for goodwill, the Company anticipates increases in annual income before taxes of $9.2 million and earnings per share of approximately $.30 per share. Additionally, intangible assets, including goodwill, will be subject to new impairment testing criteria. Other than the impact to future earnings of eliminating goodwill amortization, the Company has not yet made a complete evaluation regarding the impact of adoption on the Company’s financial statements, including the possible impairment of goodwill as recorded on the December 31, 2001, balance sheet. 

