tender offer. The other income in 2001 was primarily related to the Company’s one-time pre-tax gain of $428,000 on the sale of a patent.
Income tax expense in 2003 totaled $1.9 million, compared with $1.4 million in 2002 and $1.8 million in 2001. The effective tax rates for 2003, 2002 and
2001 were 27.8 percent, 25.7 percent and 29.7 percent, respectively. Benefits from tax incentives for exports and R&D expenditures totaled $350,000 in
2003, $408,000 in 2002 and $404,000 in 2001. The higher effective tax rate in 2003 is primarily a result of benefits from tax incentives for exports and
R&D expenditures being a lesser percentage of taxable income in 2003 than in 2002. The lower effective tax rate in 2002 is primarily a result of benefits
from tax incentives for exports and R&D expenditures being a larger percentage of taxable income in 2002 than in 2001 and the utilization of capital loss
carryforwards in 2002. 
The Company believes that 2004 revenues will be higher than 2003 revenues and that the cost of goods sold, gross profit, operating income and income
from continuing operations will each be higher in 2004 than in 2003. The Company further believes that it will have continuing volume growth in most of
its product lines in 2004, complemented by the introduction of new products, and that it will achieve a double-digit annual rate of growth in earnings per
share from continuing operations for the next several years.
DISCONTINUED OPERATIONS
During 1997, the Company sold all of its natural gas operations. The financial statements presented herein reflect the Company’s natural gas operations as
discontinued operations for all periods presented. The financial statements also reflect an after-tax gain on disposal of these discontinued operations of 
$ .2 million, or $ .10 per basic and $ .09 per diluted share, in both 2003 and 2002, and $5.5 million, or $2.70 per basic and $2.42 per diluted share, in 2001.
In addition to the initial consideration received in 1997 upon the sale of the natural gas operations, certain annual contingent deferred payments of up to
$250,000 per year were to be paid to the Company over an eight-year period which began in 1999, with the amount paid each year to be dependent upon
revenues received by the purchaser from certain gas transportation contracts. The Company received deferred payments of $250,000 each, before tax, from
the purchaser in April 2003, 2002 and 2001 which are reflected in each year as a gain from discontinued operations of $165,000, net of tax. The 2001
gain also includes a $5,327,000 non-cash gain from reversal of a reserve established when the Company disposed of its natural gas operations in 1997.
This reversal in the third quarter of 2001 followed the resolution of an outstanding contingency related to the sale of those assets. 
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