Our outstanding long-term debt increased from $547.4 million at December 31, 2004 to $563.6 million at March 31, 2005, due primarily to the $24.2 million increase in our accounts receivable.  Of our total long-term debt, $444.5 million was outstanding under our $475 million unsecured revolving credit facility that expires on May 5, 2009 (the “Facility”).  The Facility permits the Company to borrow at interest rates based upon a margin above the London Inter-Bank Offered Rate (“LIBOR”), which margin varies with the ratio of total funded debt to earnings before interest, taxes, depreciation and amortization (“EBITDA”).  These interest rates also vary as LIBOR varies.  We also pay a commitment fee on the unused amount of the $475 million Facility credit limit, which also varies with the ratio of our total debt to our EBITDA.  At March 31, 2005, the Company’s margin above LIBOR was 1.5% and our commitment fee rate was .3%.  The Facility requires us to maintain specified financial ratios and to satisfy certain financial condition tests.  We were in compliance with all of these tests as of March 31, 2005.

In addition to the Facility, at March 31, 2005 we also had $115 million of convertible senior subordinated debt outstanding at a fixed interest rate of 2.75%.        We also had outstanding an additional $4.3 million of other senior debt.  At March 31, 2005, our borrowing availability was $19.7 million based on the Facility’s financial covenants.

CRITICAL ACCOUNTING POLICIES

Revenue Recognition
The Company recognizes revenue upon transfer of title, which generally occurs upon shipment of the product to the customer.  The pricing of products sold is generally supported by customer purchase orders, and accounts receivable collection is reasonably assured at the time of shipment.  Estimated discounts and rebates are recorded as a reduction of sales in the same period revenue is recognized. Product returns and credits are estimated and recorded at the time of shipment based upon historical experience.  Shipping and handling costs are recorded as revenue when billed to the customers.

Goodwill and Other Intangibles
In accordance with SFAS No. 142, “Goodwill and Other Intangible Assets,” goodwill is not amortized; however it is tested for impairment at least annually, with any resulting adjustment charged to the results of operations.  Amortization continues to be recorded for other intangible assets with definite lives. 

Retirement Plans
Approximately half of our domestic employees are covered by defined benefit pension plans with the remaining domestic employees covered by defined contribution plans.  The large majority of our foreign employees are covered by mandated government programs.  Our obligations under our domestic defined benefit plans are determined with the assistance of actuarial firms.  The actuaries make certain assumptions regarding such factors as withdrawal rates and mortality rates.  The actuaries also provide us with information and recommendations from which management makes further assumptions on such factors as the long-term expected rate of return on plan assets, the discount rate on benefit obligations and where applicable, the rate of annual compensation increases.  Based upon the assumptions made, the investments made by the plans, overall conditions and movement in financial markets, particularly the stock market and how actual withdrawal rates, life-spans of benefit recipients and other factors differ from assumptions, annual expenses and recorded assets or liabilities of these defined benefit plans may change significantly from year to year.  Based on our annual review of actuarial assumptions as well as historical rates of return on plan assets and existing long-term bond rates, we set the long-term rate of return on plan assets at 8.75% and the discount rate at 5.75% for our defined benefit plans as of December 31, 2004.  We expect our domestic defined benefit pension expenses in 2005 to increase approximately $1.8 million from 2004, due primarily to the two acquisitions we made from GE in 2004.

Use of Estimates and Assumptions
The preparation of our consolidated financial statements in conformity with accounting principles generally accepted in the United States requires the use of estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and the related disclosure of contingent assets and liabilities.  Management bases its estimates on historical experience and on other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources.  Actual results may differ from these estimates under different assumptions or conditions.

New Accounting Pronouncements
In December 2004, the FASB issued SFAS No. 123(R), “Share-Based Payment”, which requires companies to expense the value of employee stock options and similar awards.  This Statement is a revision of FASB Statement No. 123, “Accounting for Stock-Based Compensation”.  This Statement supersedes APB Opinion No. 25, “Accounting for Stock Issued to Employees”.  SFAS No. 123R(R) has been revised to become effective beginning January 1, 2006.  Management is currently assessing the impact of adopting SFAS No. 123(R).

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