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Management considers assets to be impaired if the carry- ing value exceeds the undiscounted projected cash flows from operations. If impairment exists, the assets are writ- ten down to fair value or the projected discounted cash flows from related operations. As of December 31, 2004, the Company expects the remaining carrying value of assets to be recoverable. 

Income taxes – Income taxes are accounted for using an asset and liability approach whereby deferred tax assets and liabilities are recorded for differences in the financial reporting bases and tax bases of the Company’s assets and liabilities (see Note 8). 

Concentration of credit risk – Financial instruments, which potentially subject the Company to concentrations of credit risk, include trade accounts receivable. Credit risk is limited by the dispersion of the Company’s customers over various geographic areas, operating primarily in the electronics manufacturing and distribution industries. The Company performs on-going credit evaluations of its cus- tomers and generally requires no collateral from its cus- tomers. Historically, credit losses have not been significant. 

The Company currently maintains substantially all of its day-to-day operating cash balances with major finan- cial institutions. Cash balances are usually in excess of Federal and/or foreign deposit insurance limits. 

Use of estimates – The preparation of financial state- ments in conformity with accounting principles gener- ally accepted in the United States of America requires that management make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ materially from those estimates. 

Stock split – On November 25, 2003, the Company affected a three-for-two stock split for shareholders of record as of November 14, 2003 in the form of a 50% stock dividend. All share and per share amounts in the accompanying financial statements and footnotes reflect the effect of this stock split. 

Earnings per share – Earnings per share are based upon the weighted average number of shares of common stock and common stock equivalents outstanding, net of common stock held in treasury. Earnings per share is computed using the “treasury stock method” under the Financial Accounting Standards Board (FASB) Statement No. 128. 

For the years ended December 31, 2002, 2003 and 2004, options outstanding for 824,000 shares, 1,195,000 shares, and 0 shares of common stock have been excluded from the computation of diluted earnings per share because their effect was anti-dilutive. 

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