Total income tax expense for continuing operations differs from the amount that would be provided by applying the statutory federal income tax rate to
pretax earnings as illustrated below (in thousands):
YEAR ENDED DECEMBER 31,
2003 2002 2001
Income tax expense at the statutory federal income tax rate $ 2,298 $ 1,858 $ 2,062
Increase (decrease) resulting from:
State income taxes 34 80 220
Decrease in valuation allowance — — (68)
R&D credit (100) (164) (52)
Foreign sales benefit (250) (244) (352)
Other, net (103) (127) (7)
Total income tax expense $ 1,879 $ 1,403 $ 1,803
STOCKHOLDERS’ EQUITY
The Board of Directors of the Company has at various times authorized repurchases of Company stock in open-market or negotiated transactions at such
times and at such prices as management may from time to time decide. The Company has effected a number of open-market or negotiated transactions to
purchase its stock during the past three years. These repurchases totaled 20,200, 26,000 and 10,300 shares during the years 2003, 2002 and 2001,
respectively, at per share prices ranging from $14.02 to $42.42. As of December 31, 2003, authorization for the repurchase of 94,000 additional shares
remained. The Company purchased 173,614 shares of its common stock at $23.00 per share in April 2003 pursuant to a tender offer. The Company
purchased 502,229 shares of its common stock at $34.50 per share in December 2001 pursuant to a tender offer. All shares purchased in the tender offers
and in the open-market or negotiated transactions became treasury shares upon repurchase by the Company. 
In September 2003, the Company announced that it had adopted a policy for the payment of regular quarterly cash dividends on the Company’s common
stock. The Company subsequently paid a quarterly cash dividend of $ .12 per common share in both September and December of 2003.
The Company has a Common Share Purchase Rights Plan, which is intended to protect the interests of stockholders in the event of a hostile attempt to take
over the Company. The rights, which are not presently exercisable and do not have any voting powers, represent the right of the Company’s stockholders
to purchase at a substantial discount, upon the occurrence of certain events, shares of common stock of the Company or of an acquiring company involved
in a business combination with the Company. In January 2000, this plan, which was adopted in February 1990, was extended until February 2005.
INCOME PER SHARE
The following is the computation for basic and diluted income per share from continuing operations:
YEAR ENDED DECEMBER 31,
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) 2003 2002 2001
Income from continuing operations $ 4,892 $ 4,065 $ 4,262
Weighted average basic shares outstanding 1,711 1,711 2,033
Add: Effect of dilutive securities (options) 128 152 239
Weighted average diluted shares outstanding 1,839 1,863 2,272
Income per share from continuing operations:
Basic $ 2.86 $ 2.37 $ 2.10
Diluted $ 2.66 $ 2.18 $ 1.88
For the years ended December 31, 2003, 2002 and 2001, options to purchase approximately 25,250, 40,625 and 7,800 shares of common stock,
respectively, were not included in the computation of diluted income per share because their effect would have been antidilutive.
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