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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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### FORM 10-K

[X]
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED SEPTEMBER 27, 2003 OR[  ]
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934


Commission File Number: 0-5971

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WOODHEAD INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdictionof incorporation or organization)
36-1982580
(IRS EmployerIdentification No.)


Three Parkway North, Suite 550
Deerfield, IL 60015
(Address of principal executive offices)
(847) 236-9300
(Registrants telephone number,including area code)




SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT

Title of Class

Exchange onwhich registeredCommon Stock, Par Value $1.00Preferred Stock Purchase Rights

NASDAQ NASDAQ


Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes
[X]   No
[  ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrants knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.   [  ]

Indicate by a check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the act).   Yes
[X]   No
[  ]

The aggregate market value of the voting stock held by non-affiliates of the Registrant as of March 29, 2003 was $141,212,651. The number of common shares outstanding as of December 5, 2003 was 12,083,866.



DOCUMENTS INCORPORATED BY REFERENCE

Certain information contained in the Proxy Statement for the Annual Meeting of Shareowners ofregistrant to be held January 30, 2004 is incorporated by reference into Part III hereof.

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TABLE OF CONTENTS

PART I

     Item 1. Business

     Item 2. Properties

     Item 3. Legal Proceedings

     Item 4. Submission of Matters to a Vote of Security Holders
PART II

     Item 5. Market for the Companys Common Equity and Related Stockholder Matters

     Item 6. Selected Financial Data

     Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations

     Item 7A. Quantitative and Qualitative Disclosures about Market Risk

     Item 8. Consolidated Financial Statements and Supplementary Data

     Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

     Item 9A. Controls and Procedures
PART III

     Item 10. Directors and Executive Officers of the Registrant

     Item 11. Executive Compensation

     Item 12. Security Ownership of Certain Beneficial Owners and Management

     Item 13. Certain Relationships and Related Transactions

     Item 14. Principal Accounting Fees and Services
PART IV

     Item 15. Exhibits, Financial Statement Schedules and Reports on Form 8-K



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PART I

Item 1. Business

General

Woodhead Industries, Inc. (the Company, which may be referred to as we, us, or our) is engaged in two business segments serving a diverse group of customers and industries worldwide. We develop, manufacture, and market electronic and industrial communications products, primarily serving the global automation and control market with connectivity solutions and specialty electrical products.

Where reference is made in any Item of this Annual Report on Form 10-K to information in the Proxy Statement for the Annual Meeting of Shareowners of the Company to be held on January 30, 2004, such information shall be deemed to be incorporated therein by such reference.

Business Segments

Our operating segments are based on the organization of business groups comprised of similar products and services. Revenues in our Industrial Communications and Connectivity Products Segment (Connectivity Segment) are primarily derived from sales of system components for devices in open networks for automated manufacturing and distribution applications. Revenues in our Electrical Safety & Specialty Products Segment (Electrical Segment) are primarily derived from sales of specialized products to support enhanced safety and productivity on the factory floor.

Selected financial information by business segment for each of the last three fiscal years is contained in Note 13 of the Notes to Consolidated Financial Statements.

Products

We develop, manufacture and market electronic and industrial communications products, primarily serving the global automation and control markets with connectivity solutions and specialty electrical products. Through our Connectivity segment we provide the industrial automation industry with a single, worldwide source for industrial communications and connectivity solutions. Our product lines, comprising five recognized industry-leading brands, Brad Harrison®, mPm®, SST, applicom® and RJ-Lnxx® make us the premier supplier of application-specific connectivity solutions.

Our Electrical segment manufactures highly customized products to support enhanced safety and productivity on the factory floor. Our Electrical product brands include Daniel Woodhead® and Aero-Motive®.

Distribution

We sell our products to stocking distributors, original equipment manufacturers (OEM) and system integrators. Our direct sales force, as well as manufacturers agencies, service our customers and promote our products to end-customers.

Raw Materials

Parts and materials for our products are readily available from a variety of suppliers. It has been our practice to develop more than one source of supply for critical items.

Patents and Intellectual Property Rights

We hold patents, trademarks and licensing agreements on certain of our products. We believe these trademarks and patents are valuable but not essential to the future growth of our businesses.

Customers

We sell our products to a broad customer base. No single customer accounts for ten percent or more of our sales revenue.

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Backlog

The backlog of unfilled orders stood at $16.0 million, $14.3 million and $13.8 million at the end of fiscal years 2003, 2002 and 2001, respectively. The 2003 Connectivity segment backlog as compared to the prior year was up 13.1%. The Electrical segment recorded a 9.3% increase in total backlog when compared to fiscal 2002. This increase was due mainly to a large government order received in the fourth quarter at our Aero-Motive subsidiary.

Competition

Similar products of the type sold by us are also available from competitors. We believe delivery time, as well as quality and customer service are important to our success. Our ability to manufacture high-quality products, that serve specialized needs, as well as our multiple channels of distribution differentiate us from the competition.

International Operations

A significant portion of our business is from outside the United States. The international operations are conducted through our subsidiaries who manufacture and sell products in both of our business segments. Fluctuations in foreign currency exchange rates can impact our results of operations and financial condition. Since much of our international manufacturing costs and operating expenses are also incurred in local currencies, the impact of changes in exchange rates on reported net income is partially mitigated. Selected financial information by major geographical region for each of the last three fiscal years is contained in Note 13 of the Notes to Consolidated Financial Statements.

Research & Development

Selected financial information related to research and development is contained in Note 12 of the Notes to Consolidated Financial Statements.

Environmental Matters

Our operations are subject to international, federal, state and local environmental laws and regulations. We are party to an environmental matter, which obligates us to investigate, remediate, or mitigate the effects on the environment of the release of certain substances at one of our manufacturing facilities. It is possible that this matter could affect cash flows and results of operations. Additional details on the environmental exposure can be found in Note 16 of the Notes to Consolidated Financial Statements.

Employees

At the end of fiscal year 2003, we had 1,506 full-time employees.

Availability of Reports

Our Internet Web site address is www.woodhead.com. Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities and Exchange Act of 1934 are available free of charge through our Web site as soon as reasonably practicable after they are electronically filed with, or furnished to, the Securities and Exchange Commission.

Forward-Looking Statements

The Securities and Exchange Commission encourages companies to disclose forward-looking information, so that investors can better understand a companys future prospects, and make informed investment decisions. This annual report, and other written and oral statements that we make from time to time, contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements set out anticipated results based on managements plans and assumptions. We have tried, wherever possible, to identify such statements by using words such as anticipate, estimate, expect, plan, believe, and words and terms of similar substance, in connection with any discussion of future operating or financial performance.

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We cannot guarantee that any forward-looking statement will be realized, although we believe we have been prudent in our plans and assumptions. Achievement of future results is subject to risks, uncertainties, and inaccurate assumptions.

In particular, such risks include statements relating to future actions, prospective products, future performance or results of current or anticipated products, sales efforts, expenses, changes in foreign exchange rates, the outcome of contingencies such as legal proceedings, general economic and business conditions, and competition.

International-based revenues and substantial international assets result in our exposure to currency exchange rate fluctuations. We continuously evaluate the economic and operational impact of all foreign currencies, including its impact on competition, pricing, and foreign currency exchange risks. There is no guarantee, however, that all problems have been foreseen, or that no material disruption will occur in our business.

Growth in costs and expenses, changes in product mix, and the impact of acquisitions, restructuring, divestitures and other unusual items, that could result from evolving business strategies, could affect future results. Changes in the U.S. tax code and the tax laws in other countries can affect our net earnings. Claims have been brought against us and our subsidiaries for various legal, environmental, and tax matters, and additional claims arise from time to time. It is possible that our cash flows and results of operations could be affected by the resolution of these matters.

Should known or unknown risks or uncertainties materialize, or should underlying assumptions prove inaccurate, actual results could vary materially from those anticipated, estimated or projected. Investors should bear this in mind as they consider forward-looking statements.

This discussion of potential risks and uncertainties is by no means complete but is designed to highlight important factors that may impact our outlook. We undertake no obligation to publicly update forward-looking statements, whether as a result of new information, future events, or otherwise.

Item 2. Properties

We own facilities in the following locations:

Location

Land owned

Floor Area

Business SegmentJuarez, Mexico




16.5 acres



229,000 sq. ft.



Connectivity and ElectricalNorthbrook, Illinois




4.7 acres



125,000 sq. ft.



Connectivity and ElectricalKalamazoo, Michigan




39.1 acres



116,000 sq. ft.



ElectricalFranklin, Massachusetts




6.6 acres



60,000 sq. ft.



ConnectivityEl Paso, Texas




5.0 acres



50,000 sq. ft.



Connectivity and ElectricalEbbw Vale, UK




4.5 acres



42,000 sq. ft.



ConnectivityBelvidere, Illinois




3.5 acres



36,000 sq. ft.



ElectricalBretten, Germany




1.4 acres



27,000 sq. ft.



ConnectivityCusano Milano, Italy




0.1 acres



18,000 sq. ft.



ConnectivityCaudebec-lès-Elbeuf, France




0.2 acres



6,000 sq. ft.



Connectivity


We own all of the above properties in fee, except the land in Ebbw Vale, UK, which is held under a lease expiring in 2105, and the land in Bretten, Germany, which is held under a lease expiring in 2046.

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We lease the following properties for use in our operations. In addition to rent, the leases require us to pay directly for taxes, insurance, maintenance and other operating expenses or to pay higher rent when operating expenses increase.

Location

Floor Area

Business SegmentWaterloo, Canada




60,000 sq. ft.



ConnectivityMississauga, Canada




20,000 sq. ft.



ConnectivityPaderno, Italy




18,300 sq. ft.



ConnectivityDeerfield, Illinois




11,600 sq. ft.



Corporate HeadquartersLagny-Sur-Marne, France




6,500 sq. ft.



ConnectivityGenoa, Italy




3,300 sq. ft.



ConnectivityToh Tuck, Singapore




3,000 sq. ft.



ConnectivityCaudebec-lès-Elbeuf, France




2,000 sq. ft.



ConnectivityLeinfelden, Germany




1,000 sq. ft.



ConnectivityYokohama, Japan




900 sq. ft.



ConnectivityShanghai, China




500 sq. ft.



ConnectivityNagoya, Japan




300 sq. ft.



Connectivity


A 120,000 square foot plant in Juarez, Mexico was completed in 2002. Our two Juarez plants are manufacturing resources for all our North American subsidiaries. With the addition of this facility, we believe there is sufficient capacity available to cover our needs through at least fiscal year 2004.

Item 3. Legal Proceedings

Selected financial information related to current legal proceedings is contained in Note 16 of the Notes to Consolidated Financial Statements.

Item 4. Submission of Matters to a Vote of Security Holders

During the fourth quarter of fiscal year 2003, which ended on September 27, 2003, there were no matters submitted to a vote of security holders either through solicitation of proxies or otherwise.

PART II

Item 5. Market for the Companys Common Equity and Related Stockholder Matters

Selected information regarding the companys common equity and related stockholder matters is contained in Note 21 of the Notes to Consolidated Financial Statements.

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Item 6. Selected Financial Data

The following Financial Profile sets forth selected consolidated financial data for our operations. The data should be read in conjunction with the Management Discussion and Analysis of Financial Condition and Results of Operations and the Financial Statements. The consolidated statement of operations data for each of the last five fiscal years, the related consolidated balance sheet data and other data have been derived from our audited consolidated financial statements.

Fiscal Years Ended2003(1)

2002(1)

2001

2000

1999OperationsNet sales



$
179,038


$
170,179


$
190,186


$
196,932


$
171,783Cost of sales




112,991



107,770



114,493



115,195



98,702Gross profit




66,047



62,409



75,693



81,737



73,081% of net sales




36.9
%


36.7
%


39.8
%


41.5
%


42.5
%Operating expenses




56,855



54,466



56,978



57,322



52,693% of net sales




31.8
%


32.0
%


30.0
%


29.1
%


30.7
%Interest and other expenses




(39
)


2,820



5,159



3,567



3,236Income before income taxes




9,231



5,123



13,556



20,848



17,152% of net sales




5.2
%


3.0
%


7.1
%


10.6
%


10.0
%Provision for income taxes




3,392



2,578



5,722



7,716



6,258Income from continuing operations




5,839



2,545



7,834



13,132



10,894% of net sales




3.3
%


1.5
%


4.1
%


6.7
%


6.3
%Income from discontinued operations




730















% of net sales




0.4
%


0.0
%


0.0
%


0.0
%


0.0
%Net income



$
6,569


$
2,545


$
7,834


$
13,132


$
10,894% of net sales




3.7
%


1.5
%


4.1
%


6.7
%


6.3
%Return on average assets




3.9
%


1.5
%


4.8
%


8.2
%


6.9
%Return on stockholders average investment




6.4
%


2.7
%


8.7
%


15.4
%


13.9
%Earnings per share, basicFrom continuing operations



$
0.50


$
0.22


$
0.68


$
116


$
0.98From discontinued operations




0.06















Net Income



$
0.56


$
0.22


$
0.68


$
1.16


$
0.98Earnings per share, dilutedFrom continuing operations



$
0.49


$
0.22


$
0.66


$
1.12


$
0.96From discontinued operations




0.06















Net Income



$
0.55


$
0.22


$
0.66


$
1.12


$
0.96Dividends per share



$
0.36


$
0.36


$
0.36


$
0.36


$
0.36Weighted average common shares outstanding,   diluted




11,930



11,829



11,810



11,680



11,372Other DataNet cash flows provided by operating activities




17,479



24,524



23,435



21917



13,128Net cash used for investing activities




21



(7,011
)


(24,601
)


(9313
)


(7,778
)Net cash (used for) provided by financing   activities




(6,827
)


(6,370
)


(3,519
)


(6,035
)


(8,260
)Interest expense (income), net




2,862



2,895



3,125



2,932



3,429Depreciation and amortization




11,115



10,366



11,221



10,285



10,277Engineering and product development




8,918



8,261



7,822



7,000



6,169Year-End PositionsTotal assets



$
172,449


$
166,651


$
166,868


$
162,459


$
157,641Total liabilities




63,999



69,306



74,149



74,499



75,187Working capital (Current assets less current   liabilities)




47,260



38,963



41,438



46,310



38,287Current ratio




2.7 to 1



2.4 to 1



2.7 to 1



2.8 to 1



2.5 to 1Stockholders investment




108,450



97,345



92,719



87,960



82,454Long-term debt




30,900



36,600



45,400



45,000



47,120Book value per share



$
9.03


$
8.24


$
8.02


$
7.70


$
7.34Number of employees




1,506



1,490



1,534



1,679



1,616Number of stockholders




395



402



407



434



511


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|(1) | The company adopted SFAS No. 142 in 2002 and related information is contained in Note 6 of the Notes to Consolidated Financial Statements.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------

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Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations

Results of Operations 2003, 2002 and 2001

We develop, manufacture and market electronic and industrial communications products, primarily serving the global automation and control markets with connectivity solutions and specialty electrical products. Through our Industrial Communications and Connectivity Segment (Connectivity Segment, or Connectivity) we provide the industrial automation industry with a single, worldwide source for industrial communications and connectivity solutions. Our product lines, comprising five recognized industry-leading brands, Brad Harrison®, mPm®, SST, applicom® and RJ-Lnxx® make us the premier supplier of application-specific connectivity solutions. Our Electrical Safety & Specialty Segment (Electrical Segment, or Electrical) manufactures highly customized products to support enhanced safety and productivity on the factory floor. Our Electrical product brands include Daniel Wood





head® and Aero-Motive®. We sell our products to stocking distributors, original equipment manufacturers (OEM) and system integrators. Our direct sales force, as well as manufacturers agencies, service our customers and promote our products to end-customers.

We have operations in nine countries outside the United States, and fluctuations in foreign currency exchange rates can impact our results of operations and financial condition.

Sales

Our sales increased 5.2% in fiscal 2003 compared to 2002. Sales declined year-over-year 10.5% and 3.4% in fiscal years 2002 and 2001, respectively.

Sales activity in 2003 started to show improvement from the adverse economic conditions that have affected the U.S. and international manufacturing environments since 2001. Total revenues for fiscal 2003 year were $179.0 million compared to $170.2 million in fiscal 2002. This increase was due to the sales results in our Connectivity segment. Connectivity segment sales were $126.3 million in 2003, a 12.6% increase from fiscal 2002. The increase was due mainly to favorable exchange rates ($9.0 million gain when compared to 2002) and the improved performance in our European operations, primarily in the Physical Media and DIN product lines. Connectivity sales accounted for 70.6% of total revenue in 2003 and 65.9% in 2002.

Electrical segment sales were $52.7 million in 2003, a 9.1% decrease from fiscal 2002. This decrease was due mainly to the sale of our AKAPP operation, which accounted for $5.7 million of revenue in 2002. Electrical sales accounted for 29.4% of total sales in 2003 and 34.1% in 2002.

Sales volume in 2003 compared to 2002 was also negatively impacted by slightly lower selling prices (less than 1%), which resulted from competitive market pressures.

Sales activity in 2002 continued to reflect the adverse economic conditions in the U.S. and international manufacturing environments that began in 2001. In particular, the lack of capital investment by the industrial marketplace coupled with a severe decline in the telecom and datacom sectors resulted in the lower sales. While we saw a small pick up in orders during the February to May period, as the year progressed, it became clear that the economy was not going to recover as most economists and industry experts had initially predicted. The decline in volume was in part offset by increases in sales dollars due to changes in foreign exchange rates, primarily as the Euro strengthened and the full year impact of sales from our applicom subsidiary acquired in February of 2001. These two factors benefited sales by 2.5% compared to 2001.

Connectivity segment sales in 2002 were $112.2 million and declined 11.1% from 2001 with telecom/datacom sales down 33%. Connectivity sales accounted for 65.9% of total sales in 2002 and 66.4% in 2001.

Although the Electrical segment benefited from MRO (Maintenance, Repair, Operation) sales and a government hose reel order in the fourth quarter, its sales declined 9.4% from 2001 to $58.0 million.

Selling prices declined in 2002 by less than 1% principally due to competitive pressure in all areas, but more in the telecom and datacom sectors than others.

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Sales by Region

Sales to customers in the United States were $108.3 million in 2003, $107.3 million in 2002 and $122.4 million in fiscal 2001. Sales to customers outside the U.S. were $70.7 million in 2003, $62.9 million in 2002 and $67.8 million in 2001. European sales increased 11% in fiscal 2003 due mainly to changes in the Euro exchange rate. This increase was partially offset by the revenue lost from the sale of our AKAPP subsidiary. Sales in 2003 to customers in Canada and the Far East increased by 8% and 60%, respectively. The increase in Canada was due mainly to the favorable exchange effects from the strengthening of the Canadian Dollar. In 2002 European sales declined 1% after benefiting from the strengthening Euro and the full year of Applicom sales. In 2002 sales in Canada and the Far East declined by 5% and 6%, respectively when compared to 2001.

We collected 40%, 38% and 34% of our revenue in foreign currencies during 2003, 2002 and 2001, respectively.

Backlog

The backlog of unfilled orders stood at $16.0 million, $14.3 million and $13.8 million at the end of 2003, 2002 and 2001, respectively. The 2003 Connectivity segment backlog as compared to the prior year was up 13.1%. The Electrical segment recorded a 9.3% increase in total backlog when compared to fiscal 2002. This increase was due mainly to a large government order received in the fourth quarter at our Aero-Motive subsidiary.

Gross Profit

In 2003, gross profit as a percent of sales increased to 36.9% from 36.7% in 2002. This increase was due mainly to improved efficiencies and productivity improvements, particularly from the migration of production to our Juarez, Mexico facility, which occurred in 2002 and early 2003. Also contributing to this increase in the gross profit level was a $0.7 million decrease in obsolescence expense. Partially offsetting these improvements were lower pricing, the shift in sales mix by location and lower margins in the telecommunications market.

In 2002 gross profit declined to 36.7% from 39.8% in 2001. This decline was attributable primarily to lower plant utilization throughout the business. During the year lower sales volume in both business segments, coupled with the significant reduction in our inventory levels from 2001 were the principal drivers of the lower plant utilization. Also, during 2002 our new plant in Mexico came on line and we incurred initial startup costs and expenses to migrate production from our plant in Northbrook, Illinois. In addition, we incurred startup costs to initiate production of fiber optic products in our UK facility. As a result of declining volumes due to adverse economic conditions in the U.S. and international markets, we needed to increase our reserve for excess/obsolete inventory. This increased expense by $0.4 million from $1.1 million in 2001 to $1.5 million in 2002. The lower inventory levels in 2002 resulted in a reduction of the LI





FO reserve requirement, which favorably impacted our gross profit by $1.2 million compared to 2001.

Operating Expenses

Operating expenses as a percent of sales were 31.8% in 2003, 32.0% in 2002 and 30.0% in 2001. While operating expense as a percent of sales decreased in 2003, the actual expenses increased to $56.9 million in 2003 from $54.5 million in 2002. The dollar increase was due mainly to the $2.1 million restructuring charge for the migration of our operations from our Aero-Motive subsidiary to Juarez, Mexico. The Aero-Motive restructuring will continue into 2004 with anticipated costs estimated to be $1.8 million for the year. In addition, related to the Aero-Motive restructuring, we anticipate a pension settlement charge estimated to be approximately $0.8 million in 2004 triggered by reduced employment levels that require us to recognize past gains and losses in our pension plan accounts. Also contributing to the increase in operating expenses in 2003 was the $2.6 million effect of foreign exchange rate changes and the upgrading in the sales,





 marketing and engineering areas. Partially offsetting these increases were the $1.5 million credit to operating expense due to the modification of our retiree medical program, the non-recurrence of a restructuring charge for $1.0 million to account for severance and related costs to

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eliminate approximately 10% of our salaried positions worldwide in 2002 and the elimination of AKAPP operating expenses, which were $1.8 million.

While operating expenses as a percent of sales increased in 2002 compared to 2001, the actual expenses declined to $54.5 million in 2002 from $57.0 million in 2001. In 2002 we adopted FASB 142, which required us to stop amortizing goodwill. This reduced expenses by $1.5 million in 2002. In the second quarter of 2002 we incurred a $1.0 million restructuring charge for severance and related costs associated with personnel reductions. During 2002 we continued to reduce spending in our operations to offset the decline in sales revenue. This was a process that was started in early 2001 when we first saw economic conditions deteriorate in our primary markets. The savings achieved in 2002 and 2001 were partially offset by the full year impact of operating expenses at applicom acquired in April 2001.

Segment Operating Income

Income from operations in our Connectivity segment increased to $5.1 million or 4.0% of sales in 2003 from $2.9 million or 2.6% of sales in 2002. This increase was due mainly to higher sales, lower obsolescence expense and favorable exchange rates. A shift in sales mix and the weak telecommunications market partially offset these improvements. Income from operations in our Electrical segment declined to $4.8 million or 9.1% of sales from $5.8 million or 9.9% of sales in 2002. The decrease in our Electrical segment was due mainly to the $2.1 million restructuring charge for the Aero-Motive actions in 2003 and the $0.4 million of income from operations eliminated as a result of the AKAPP sale.

Income from operations in our Connectivity segment declined to $2.9 million or 2.6% of sales in 2002 from $13.2 million or 10.4% of sales in 2001. Lower operating expenses were unable to offset the impact of lower plant utilization, increases in excess/obsolescence expense, the restructuring charge and the decline in sales volume. Income from operations in our Electrical segment was 9.9% and 10.8% of sales in 2002 and 2001, respectively. The decline in 2002 was a result of reduced sales volumes and lower plant utilization.

Interest (Income) / Expense

Interest expense was $3.1 million in 2003, $3.0 million in 2002 and $3.4 million in 2001 primarily for interest paid on our long-term debt incurred in connection with the mPm and SST acquisitions in 1998. The increase in interest expense in 2003 compared to 2002 was due to $0.3 million of interest paid on a value added tax ruling in Mexico. During 2001 we incurred interest expense on loans under our bank revolving credit agreements to temporarily finance the applicom acquisition. Interest income was earned on short-term deposits of operating cash.

Other (Income) / Expense

Other (income)/expense in 2003 was ($2.9) million compared to ($0.1) million in 2002. The 2003 income consisted mainly of a $2.4 million gain realized from exchange rate changes on a U.S. Dollar loan that our Canadian subsidiary used to acquire the assets of SST in early 1998. Also included in 2003 was the $0.8 million gain from the sale of the Aero-Motive workstation product line and $0.3 million of expense related to an adverse value added tax ruling in Mexico.

Other (income)/expense in 2002 was ($0.1) million compared to $2.0 million in 2001. The year-to-year change was due primarily to the $1.9 million write-off of the investment in Symphony Systems in 2001.

Income from Continuing Operations

Income from continuing operations was $5.8 million or 3.3% of net sales in 2003, $2.5 million or 1.5% of net sales in 2002 and $7.8 million or 4.1% of net sales in 2001. The 2003 increase in income from continuing operations when compared to 2002 was due mainly to the gain from exchange rate changes on the U.S. Dollar loan that our Canadian subsidiary has outstanding, improved operating efficiencies, and the sale of the Aero-Motive workstation product line. The increases were partially offset by the Aero-Motive restructuring charge that occurred in fiscal 2003.

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Income from continuing operations decreased in 2002 compared to 2001 due mainly to lower productivity associated with the decreased sales levels in 2002. Also contributing to the decrease was the restructuring charge of $1.0 million to account for severance and related costs to eliminate 10% of our salaried positions worldwide in 2002.

Discontinued Operations

In the first fiscal quarter of 2003 we sold our AKAPP operations for $4.9 million in cash. This sale resulted in a gain of $0.7 million and was recorded as Income from Discontinued Operations. The results of operations related to AKAPP for fiscal 2003 were also recorded as Income from Discontinued Operations.

Net Income

Net income was $6.6 million or 3.7% of net sales in 2003, $2.5 million or 1.5% of sales in 2002 and $7.8 million or 4.1% of net sales in 2001. The 2003 increase in net income when compared to 2002 was due to the increase in income from continuing operations, specifically the positive exchange rate changes, improved efficiencies and the Aero-Motive product line sale, and income generated from the AKAPP sale.

Our effective tax rate was 34.1% in 2003, 50.3% in 2002 and 42.2% in 2001. In 2003 the income tax rate was close to the U.S. federal statutory rate. In 2002 the lower level of profitability combined with certain items not deductible in Europe resulted in the higher effective tax rate. For 2001 we could not tax-effect the $1.9 million write-off of our investment in Symphony Systems and this increased our effective tax rate.

Financial Condition, Liquidity and Capital Resources

Assets

At fiscal year-end 2003 we had $22.5 million in cash and short-term investments, up from $13.2 million at the end of 2002. The increase in our cash balance was due principally to our strong operating cash flow of $17.5 million, the $4.2 million of cash received from the sale of our AKAPP operations and the $1.1 million in cash generated from the Aero-Motive product line sale. 2003 operating cash flows of $17.5 million decreased from $24.5 million in 2002. This decrease was due to the $8.9 million reduction in inventory in 2002 compared to a $1.8 million reduction in 2003.

Working capital in 2003 increased to $47.3 million from $39.0 million in 2002. This increase in working capital was due mainly to the increased profit levels that were generated in 2003. Also contributing to the increase in working capital were the favorable exchange rate effects on our foreign assets and the decreased spending on capital expenditures that occurred in 2003.

We continued to invest in property, plant and equipment, including new machinery, computer systems and facility improvements. Purchases of property, plant and equipment were $4.5 million in 2003 compared to $7.2 million in 2002. In 2002 we spent $2.1 million to complete a second manufacturing facility in Juarez, Mexico.

Our cash and short-term investments are available for strategic investments, acquisitions, and other potential cash needs that may arise. We believe that existing cash and short-term investments, together with funds generated from operations, will be sufficient to meet our operating requirements in 2004.

Liabilities

At fiscal year-end 2003 we had $36.6 million of long-term debt outstanding ($5.7 million shown as current debt), and we had unused credit facilities that provide for additional borrowings of up to $25.0 million. Effective March 30, 2002, we amended our credit agreement with a bank to increase the maximum ratio of debt to EBITDA, as defined, from 2.5 to 2.9, and reduce the minimum interest coverage ratio, as defined, from 3.0 to 2.0. This amendment expired on March 29, 2003, when the maximum debt to EBITDA ratio reverted back to 2.5 and the minimum interest coverage ratio reverted

11

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back to 3.0. We are in compliance with all of our funding arrangements. Additional information on debt covenants can be found in Note 2 A of the Notes to Consolidated Financial Statements.

Cash Flows

Net cash flow provided by operating activities was $17.5 million in 2003, down from $24.5 million in 2002 and $23.4 million in 2001. The decrease in 2003 operating cash flow was due to a smaller reduction in inventory and increases in prepaid expenses. The increase in prepaid expense was due to a $2.0 million contribution to the pension plan. The improvement in 2002 operating cash flow compared to 2001 was due to reductions in inventory and accounts receivable balances partially offset by declines in accrued expenses and net income.

In 2003 cash flows from investing activities included $4.5 million of capital additions and cash received of $4.2 million from the sale of AKAPP operations. In 2002 we invested $7.2 million on capital additions, of which $2.1 million was used to finish the second Juarez plant.

In fiscal 2000, we made an investment of $1.9 million in Symphony Systems, which represented less than 20% of Symphonys equity, which we accounted for under the cost method. During 2001, Symphony Systems was attempting to raise additional funds for future operations. When Symphony Systems failed to raise additional funds, and was unable to sell the company, we felt that the fair value of this equity investment had declined to zero and this decline was other than temporary. Consequently, we wrote off the entire investment in fiscal 2001. Subsequently, Symphony Systems made an assignment for the benefit of creditors in March 2002. As a result of this assignment, we received nothing for our equity interest.

Net cash used for financing activities in 2003, 2002 and 2001 represent the repayment of debt in the amounts of $4.2 million, $4.9 million and $0.5 million, respectively, and dividend payments to our shareholders of $4.3 million, $4.2 million and $4.1 million, respectively.

Financial Instruments

In our global operating activities, and in the normal course of our business, we are exposed to changes in foreign currency exchange rates that may adversely affect our results of operations and financial condition. We seek to minimize those risks through our regular operating activities and, when deemed appropriate, through the use of financial instruments. We use financial instruments to selectively hedge our foreign currency risk and do not use financial instruments for speculative purposes. Additional details on our foreign exchange exposures can be found in Note 2 C of the Notes to Consolidated Financial Statements.

Contingent Liabilities and Environmental Matters

Our operations are subject to international, federal, state and local environmental laws and regulations. We are party to an environmental matter, which obligates us to investigate, remediate or mitigate the effects on the environment of the release of certain substances at one of our manufacturing facilities. It is possible that this matter could affect cash flows and results of operations. Additional details on the environmental exposure can be found in Note 16 of the Notes to Consolidated Financial Statements.

Critical Accounting Policies

Our financial statements and accompanying notes are prepared in accordance with accounting principles generally accepted in the United States. Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses. These estimates and assumptions are affected by managements application of accounting policies. Critical accounting policies for the business include revenue recognition, valuation of long-lived assets, accounting for contingent liabilities and environmental matters and accounting for income taxes. There were no material changes made to critical accounting estimates compared to prior years.

Revenue Recognition  We recognize revenue upon transfer of title at the time of shipment or services provided, when all significant contractual obligations have been satisfied, the price is fixed or determinable and collection is reasonably assured. At the end of 2003 we had $1.3 million accrued for

12

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warranty costs, sales returns, sales incentives, price adjustments and other allowances based on prior claims experience and other quantitative and qualitative factors. No single customer accounted for more than 10% of revenue.

Valuation of Long-Lived Assets  Our longlived assets include land, buildings, equipment, molds and dies, purchased software, goodwill and other intangible assets. Long-lived assets, other than goodwill, are depreciated over their estimated useful lives. We review long-lived assets other than goodwill for impairment to assess recoverability from future operations using undiscounted cash flows. Goodwill and indefinite-lived intangible assets are reviewed annually for impairment under the provisions of SFAS No. 142 Goodwill and Other Intangible Assets. Fair values are estimated based upon forecasted cash flows discounted to present value. The fair value of our long-lived assets is dependent on the future performance of individual operations as well as volatility inherent in their external markets. If estimated forecasts are not met and actual cash flows or discount rate estimates change, we may have to rec
ord an impairment charge not previously recognized. We currently have $32.3 million of goodwill on our consolidated balance sheet. No impairment charges were recorded in either 2003 or 2002.

Accounting for Contingent Liabilities and Environmental Matters  We have incurred and expect to incur, assessment, remediation and related costs at one of our facilities for the costs of cleaning up contamination resulting from past spills, disposal or other releases of hazardous substances. We have been conducting an investigation of soil and groundwater at the site with oversight by the Michigan Department of Environmental Quality (DEQ). We estimate that a minimum of approximately $1.3 million of investigation and remediation expense remain to be incurred over the next 14 years. We have a reserve for such purpose. Our cost estimates are subject to uncertainty because of the extent of the contamination area, changes in remediation technology and ongoing DEQ feedback. We may incur significant additional assessment, remediation and related costs at the site and such costs could materially and adversely affect
our consolidated net income for the period in which such costs are incurred.

Accounting for Income Taxes  SFAS 109, Accounting for Income Taxes, establishes financial accounting and reporting standards for the effect of income taxes. The objectives of accounting for income taxes are to recognize the amount of taxes payable or refundable for the current year and deferred tax liabilities and assets for future tax consequences of events that have been recognized in our financial statements or tax returns. We have on our balance sheet net deferred tax assets of $2.9 million. Judgment is required in assessing the future tax consequences of events that have been recognized in our financial statements or tax returns. Fluctuations in the actual outcome of these tax consequences could impact our financial position or the results of operations.

Forward-Looking Statements

The Securities and Exchange Commission encourages companies to disclose forward-looking information, so that investors can better understand a companys future prospects, and make informed investment decisions. This report, and other written and oral statements that we make from time to time, contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements set out anticipated results based on managements plans and assumptions. We have tried, wherever possible, to identify such statements by using words such as anticipate, estimate, expect, plan, believe, and words and terms of similar substance, in connection with any discussion of future operating or financial performance.

We cannot guarantee that any forward-looking statement will be realized, although we believe we have been prudent in our plans and assumptions. Achievement of future results is subject to risks, uncertainties, and inaccurate assumptions.

In particular, such risks include statements relating to future actions, prospective products, future performance or results of current or anticipated products, sales efforts, expenses, the outcome of contingencies such as legal proceedings, general economic and business conditions, currency fluctuations, and competition.

International-based revenues and substantial international assets result in our exposure to currency exchange rate fluctuations. We continue to evaluate the economic and operational impact of all foreign

13

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currencies, including its impact on competition, pricing, and foreign currency exchange risks. There is no guarantee, however, that all problems have been foreseen and corrected, or that no material disruption will occur in our businesses.

Growth in costs and expenses, changes in product mix, and the impact of acquisitions, restructuring, divestitures and other unusual items, that could result from evolving business strategies, could affect future results. Changes in the U.S. tax code and the tax laws in other countries can affect our net earnings. Claims have been brought against us and our subsidiaries for various legal, environmental, and tax matters, and additional claims arise from time to time. It is possible that our cash flows and results of operations could be affected by the resolution of these matters.

Should known or unknown risks or uncertainties materialize, or should underlying assumptions prove inaccurate, actual results could vary materially from those anticipated, estimated or projected. Investors should bear this in mind as they consider forward-looking statements.

This discussion of potential risks and uncertainties is by no means complete but is designed to highlight important factors that may impact our outlook. We undertake no obligation to publicly update forward-looking statements, whether as a result of new information, future events, or otherwise.

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

Selected financial information related to quantitative and qualitative market risk is contained in Note 2 of the Notes to Consolidated Financial Statements.

Item 8. Consolidated Financial Statements and Supplementary Data

Report of Management

Woodhead Industries, Inc. management is responsible for the integrity of the information presented in this Annual Report on Form 10-K, including the Companys financial statements. These statements have been prepared in conformity with accounting principles generally accepted in the United States and include, where necessary, estimates and judgments by management.

We maintain systems of accounting and internal controls designed to provide assurance that assets are properly accounted for as well as to insure that the financial records are reliable for preparing financial statements. The systems are augmented by qualified personnel and are reviewed on a periodic basis.

Our independent public accountants, Ernst & Young LLP, conduct annual audits of our financial statements in accordance with auditing standards generally accepted in the United States, which include the review of internal controls for the purpose of establishing audit scope, and issue an opinion on the fairness of such financial statements.

The Audit Committee, which is composed solely of independent directors, meets periodically with management and the independent public accountants to review the manner in which they are performing their responsibilities and to discuss auditing, internal accounting controls, and financial reporting matters. The independent public accountants periodically meet alone with the Audit Committee and have free access to the Audit Committee at any time.



|/s/ Philippe Lemaitre                                           | /s/ Robert H. Fisher                                              
|--------------------------------------------------------------- | ------------------------------------------------------------------
|                                                                |                                                                   
|Philippe LemaitreChairman, President and Chief ExecutiveOfficer | Robert H. FisherVice President, Financeand Chief Financial Officer

14

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REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To The Board of Directors and Shareholders of Woodhead Industries, Inc.:

We have audited the accompanying consolidated balance sheets of Woodhead Industries, Inc. (a Delaware corporation) and subsidiaries as of September 27, 2003 and September 28, 2002, and the related consolidated statements of income, stockholders' investment, comprehensive income and cash flows for each of the two years in the period ended September 27, 2003. These consolidated financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. The financial statements of Woodhead Industries, Inc. and subsidiaries for the period ended September 29, 2001 were audited by other auditors who have ceased operations and whose report dated December 18, 2001 expressed an unqualified opinion on those statements before the inclusion of additional disclosures referred to in the last paragraph of this report.

We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Woodhead Industries, Inc. and subsidiaries at September 27, 2003 and September 28, 2002, and the results of their operations and their cash flows for each of the two years in the period ended September 27, 2003, in conformity with accounting principles generally accepted in the United States.

As discussed in Notes 1 and 6 to the financial statements, in the year ended September 28, 2002 the Company changed its method of accounting for goodwill.

As discussed above, the financial statements of Woodhead Industries, Inc. and subsidiaries for the period ended September 29, 2001 (2001) were audited by other auditors who have ceased operations. As described in Note 6, these financial statements have been revised to include the transitional disclosures required by Statement of Financial Accounting Standards No. 142, GOODWILL AND OTHER INTANGIBLE ASSETS, which was adopted by the Company as of September 30, 2001. Our audit procedures with respect to the disclosures in Note 6 with respect to 2001 included (a) agreeing the previously reported net income to the previously issued financial statements and the adjustments to reported net income representing amortization expense (including any related tax effects) recognized in those periods related to goodwill to the Companys underlying records obtained from management, and (b) testing the mathematical accuracy of the reconciliation of





 adjusted net income to reported net income, and the related earnings per share amounts. In our opinion the disclosures related to adjusted net income for 2001 in Note 6 are appropriate. However, we were not engaged to audit, review or apply any procedures to the 2001 financial statements of the Company other than with respect to such disclosures and, accordingly, we do not express an opinion or any other form of assurance on the 2001 financial statements taken as a whole.

| | /s/ Ernst & Young LLP
| | ---------------------
| |                      

| | Chicago, Illinois
November 7, 2003
except for Note 20 as to which the date is November 21, 2003
| | -----------------------------------------------------------------------------------------------

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REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To The Board of Directors and Shareholders of Woodhead Industries, Inc.:

We have audited the accompanying consolidated balance sheets of WOODHEAD INDUSTRIES, INC. (a Delaware corporation) AND SUBSIDIARIES as of September 29, 2001, and September 30, 2000, and the related consolidated statements of income, stockholders investment, comprehensive income and cash flows for each of the three years in the period ended September 29, 2001. These consolidated financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of WOODHEAD INDUSTRIES, INC. AND SUBSIDIARIES as of September 29, 2001, and September 30, 2000, and the results of its operations and its cash flows for each of the three years in the period ended September 29, 2001, in conformity with accounting principles generally accepted in the United States.

/s/ Arthur Andersen LLP*

---

Chicago, IllinoisDecember 18, 2001

*This report is a copy of the previously issued report covering fiscal years 2001 and 2000. The predecessor auditor has not reissued its report.

16

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Woodhead Industries, Inc.Consolidated Balance SheetsAs of September 27, 2003 andSeptember 28, 2002

2003

2002(Amounts in thousands)AssetsCurrent assets:Cash and short-term investments



$
22,547


$
13,152Accounts receivable




31,017



30,770Inventories




13,020



14,825Prepaid expenses




4,816



2,870Refundable income taxes




1,625



1,971Deferred income taxes




2,403



3,119Total current assets




75,428



66,707Property, plant and equipment, net




60,391



64,053Other intangible assets, net




706



798Goodwill, net




32,290



28,757Deferred income taxes




3,018



3,339Other assets




616



2,997Total assets



$
172,449


$
166,651Liabilities and Stockholders InvestmentCurrent liabilities:Accounts payable



$
8,343


$
9,119Accrued expenses




13,586



12,785Income taxes payable




539



1,640Current portion of long-term debt




5,700



4,200Total current liabilities




28,168



27,744Long-term debt




30,900



36,600Deferred income taxes




2,496



1,771Other liabilities




2,435



3,191Total liabilities




63,999



69,306Stockholders investmentCommon stock at par (shares issued: 12,011 in 2003 and  11,817 in 2002)




12,011



11,817Additional paid-in capital




18,578



16,526Deferred stock compensation




(773
)


(218
)Accumulated other comprehensive income/(loss)




2,832



(4,292
)Retained earnings




75,802



73,512Total stockholders investment




108,450



97,345Total liabilities and stockholders investment



$
172,449


$
166,651


The accompanying notes are an integral part of these statements.

17

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Woodhead Industries, Inc.Consolidated Statements of IncomeFor the years ended September 27, 2003,September 28, 2002, and September 29, 2001

2003

2002

2001(Amounts in thousands, except per share data)Net sales



$
179,038


$
170,179


$
190,186Cost of sales




112,991



107,770



114,493Gross profit




66,047



62,409



75,693Operating expensesEngineering and product development




8,918



8,261



7,822Marketing and sales




25,528



25,695



26,791General and administrative




20,344



19,495



22,365Restructuring and other charges




2,065



1,015



Income from operations




9,192



7,943



18,715Interest expense




3,084



3,036



3,407Interest income




(222
)


(141
)


(282
)Other (income) expense, net




(2,901
)


(75
)


2,034Income before income taxes




9,231



5,123



13,556Provision for income taxes




3,392



2,578



5,722Income from continuing operations



$
5,839


$
2,545


$
7,834Discontinued operationsIncome from discontinued AKAPP operations   (Including gain on disposal $725)




733







Income tax expense




3







Income from discontinued operations




730







Net Income



$
6,569


$
2,545


$
7,834Earnings per share, basicFrom continuing operations



$
0.50


$
0.22


$
0.68From discontinued operations



$
0.06


$



$
Net income



$
0.56


$
0.22


$
0.68Earnings per share, dilutedFrom continuing operations



$
0.49


$
0.22


$
0.66From discontinued operations



$
0.06


$



$
Net income



$
0.55


$
0.22


$
0.66Weighted average number of shares outstandingBasic




11,812



11,668



11,488Diluted




11,930



11,829



11,810


The accompanying notes are an integral part of these statements.

18

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Woodhead Industries, Inc.Consolidated Statements of Cash FlowsFor the years ended September 27, 2003,September 28, 2002, and September 29, 2001

2003

2002

2001(Amounts in thousands)Cash Flows from Operating ActivitiesNet income for the year



$
6,569


$
2,545


$
7,834Adjustments to reconcile net income to net cash flows   from operating activities:Depreciation and amortization




11,115



10,366



11,221Income from discontinued operations




(730
)






Write-off investment in Symphony Systems












1,925Tax benefit from employee stock options




200



218



593Deferred tax expense




1,432



1,631



(76
)(Increase) Decrease in:Accounts receivable




583



1,230



3,952Inventories




2,347



9,394



14Prepaid expenses




(1,970
)


(87
)


790Other assets




1,207



586



(287
)(Decrease) Increase in:Accounts payable




(1,043
)


(738
)


94Accrued expenses




488



(1,105
)


(3,562
)Income taxes payable




(1,365
)


(255
)


1,221Other liabilities




(1,354
)


739



(284
)Net cash flows provided by operating activities




17,479



24,524



23,435Cash Flows from Investing ActivitiesPurchases of property, plant and equipment




(4,506
)


(7,167
)


(10,019
)Acquisition of Applicom (less cash acquired)












(14,722
)Dispositions of property, plant and equipment




340



156



140Cash from sale of AKAPP operations   (less cash sold)




4,187







Net cash provided (used) for investing activities




21



(7,011
)


(24,601
)Cash Flows from Financing ActivitiesDecrease in long-term debt




(4,200
)


(4,879
)


(449
)Sales of stock




1,652



2,711



1,065Dividend payments




(4,279
)


(4,202
)


(4,135
)Net cash used for financing activities




(6,827
)


(6,370
)


(3,519
)Effect of exchange rates




(1,278
)


(2,147
)


139Net increase (decrease) in cash and short-term investments




9,395



8,996



(4,546
)Cash and short-term investments at beginning of year




13,152



4,156



8,702Cash and short-term investments at end of year



$
22,547


$
13,152


$
4,156Supplemental cash flow dataCash paid during the year for:Interest



$
2,735


$
3,117


$
3,384Income taxes



$
2,415


$
1,434


$
4,789


The accompanying notes are an integral part of these statements.

19

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Woodhead Industries, Inc.Consolidated Statements of Comprehensive IncomeFor the years ended September 27, 2003,September 28, 2002, and September 29, 2001

2003

2002

2001(Amounts in thousands)Net Income



$
6,569


$
2,545


$
7,834Other comprehensive income:Accumulated foreign currency translation   adjustment, before tax




7,069



3,937



(1,052
)Unrealized gain (loss) on cash flow   hedging instrument




(687
)


68



544Minimum pension liability adjustment




1,178



(1,088
)


(90
)Income tax benefit related to other   comprehensive income




(436
)


436



Comprehensive income, net of tax



$
13,693


$
5,898


$
7,236


The accompanying notes are an integral part of these statements.

20

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Woodhead Industries, Inc.Consolidated Statements of Stockholders' InvestmentFor the years ended September 27, 2003,September 28, 2002, and September 29, 2001

Common Stock

Additional Paid-in Capital

Deferred Stock Compensation

Accumulated Other Comprehensive Income (Loss)

Retained Earnings

Total Stockholders Investment(Amounts in thousands, except share data)Balance September 30, 2000



$
11,418


$
12,360


$
(241
)

$
(7,047
)

$
71,470


$
87,960Net income for the year




















7,834



7,834Translation adjustment
















(1,052
)






(1,052
)Unrealized gain on cash flow   hedging instrument
















544







544Minimum pension liability   adjustment, net of tax
















(90
)






(90
)Cash dividends, $0.36 per   share




















(4,135
)


(4,135
)Stock option plans




150



1,619



(111
)










1,658Balance September 29, 2001



$
11,568


$
13,979


$
(352
)

$
(7,645
)

$
75,169


$
92,719Net income for the year




















2,545



2,545Translation adjustment
















3,937







3,937Unrealized gain on cash flow   hedging instrument
















68







68Minimum pension liability   adjustment, net of tax
















(652
)






(652
)Cash dividends, $0.36 per   share




















(4,202
)


(4,202
)Stock option plans




249



2,547



134











2,930Balance September 28, 2002



$
11,817


$
16,526


$
(218
)

$
(4,292
)

$
73,512


$
97,345Net income for the year




















6,569



6,569Translation adjustment
















7,069







7,069Unrealized loss on cash flow   hedging instrument
















(687
)






(687
)Minimum pension liability   adjustment, net of tax
















742







742Cash dividends, $0.36 per   share




















(4,279
)


(4,279
)Stock option plans




194



2,052



(555
)










1,691Balance September 27, 2003



$
12,011


$
18,578


$
(773
)

$
2,832


$
75,802


$
108,450


The accompanying notes are an integral part of these statements.

21

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Notes to Consolidated Financial Statements(Currency amounts in tables are in thousands, except per share data)

NOTE 1.  Summary of Accounting Policies

A. Consolidation and Basis Presentation

Our consolidated financial statements include the accounts of all our subsidiaries, including those operating outside the United States, each of which is wholly owned. All material intercompany transactions have been eliminated in consolidation. We prepare our financial statements in conformity with United States Generally Accepted Accounting Principles. In preparing the financial statements, we must use some estimates and assumptions that may affect reported amounts and disclosures. Among others, we use estimates when accounting for depreciation, amortization, employee benefits, asset valuation allowances and loss contingencies. We are also subject to risks and uncertainties that may cause actual results to differ from those estimates.

We follow the practice of ending our fiscal year on the Saturday closest to September 30, which resulted in 52-week periods in years 2003, 2002 and 2001.

Certain amounts in the prior period financial statements have been reclassified to conform to the current period presentation.

B. Cash and Short-Term Investments

Cash and short-term investments include cash and items almost as liquid as cash, such as certificates of deposit and time deposits, with maturity periods of three months or less when purchased.

C. Accounts Receivable

We make judgments as to collectibility of accounts receivable based on historical trends and future expectations. Management estimates an allowance for sales returns and doubtful accounts, which represents the collectibility of trade accounts receivable. These allowances adjust gross trade accounts receivable down to net realizable value. To determine the allowance for sales returns, management uses historical trends to estimate future period product returns. To determine the allowance for doubtful accounts, management reviews specific customers and our accounts receivable aging report.

D. Inventories

We value our inventories at the lower of cost or market value, and adjust their values for reserves. Cost is determined using the first-in first-out (FIFO) method, or the last-in first-out (LIFO) method. The LIFO method of inventory valuation is used by three of our four U.S. subsidiaries and this method was chosen to better match current cost and revenue.

E. Long-Lived Assets

Long-lived assets include:

Property, plant and equipment  These assets are recorded at original cost and increased by the cost of significant improvements after purchase. We depreciate the cost evenly over the assets estimated useful lives, using the straight-line method. Maintenance and repairs are charged to expense as incurred. We remove the cost of property retired or otherwise disposed of from the property accounts, accumulated depreciation from the related reserves, and reflect the net gain or loss in income.

Other intangible assets  When accounting for acquisitions under the purchase method of accounting, we allocate the purchase price to the fair values of tangible and intangible assets. Intangible assets include trade names and non-compete agreements. Intangible assets are amortized over periods ranging from 3 to 15 years.

Goodwill  Goodwill represents the difference between the purchase price of an acquired business and the fair value of the assets, when accounted for under the purchase method of accounting. In fiscal 2002 we adopted SFAS 142 and review the impairment of goodwill annually.

22

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Other assets  Subsequent to September 29, 2001 we became aware of information that made us believe that the decline in fair value of our investment in Symphony Systems was other than temporary. We believe that the fair value of this investment, which was accounted for under the cost method, is zero. Consequently, we wrote off the entire carrying amount of $1.9 million in 2001.

We review long-lived assets, other than goodwill, to assess the recoverability from future operations using undiscounted cash flows. If necessary, we record the charges for impairment of long-lived assets for the amount by which the carrying value of these assets exceeds the present value of future cash flows. We continually evaluate the periods of amortization and depreciation assigned to our assets to determine whether events or circumstances warrant revised estimates of useful lives.

F. Foreign Currency Translation

Most of our international operations maintain their records in their local currencies, which are also their functional currencies. We translate assets and liabilities to their U.S. Dollar equivalents at rates in effect at the balance sheet date, and record translation adjustments in Other Comprehensive Income included in Stockholders' Investment. We translate Statement of Income accounts at average rates for the period. We translate the financial statements of our Mexican operation, whose functional currency is the U.S. Dollar, using both the current and historic exchange rates and record translation adjustments in Other Expenses.

G. Stock-Based Compensation

We grant options to our directors, officers and key employees. The exercise price of the stock options granted equals the market price on the date of grant. In accordance with Statement of Financial Accounting Standards No. 123: Accounting for Stock-Based Compensation, we elected to account for our stock-based compensation under Accounting Principles Board Opinion No. 25: Accounting for Stock Issued to Employees. We do not record expenses related to stock option grants.

We adopted the disclosure-only provisions of SFAS No. 123: Accounting for Stock-Based Compensation. The following table summarizes results as if we had recorded compensation expense for the 2003, 2002, and 2001 option grants:

2003

2002

2001Net Income:As reported



$
6,569


$
2,545


$
7,834Pro forma




5,430



1,943



7,247Basic earnings per shareAs reported



$
0.56


$
0.22


$
0.68Pro forma




0.46



0.17



0.63Diluted earnings per shareAs reported



$
0.55


$
0.22


$
0.66Pro forma




0.45



0.17



0.61


The pro forma effect of stock option grants on results of operations may not be representative of the pro forma effect on results of operations for future years.

H. Revenue Recognition

We recognize revenue upon transfer of title at the time of shipment (F.O.B. shipping point), when all significant contractual obligations have been satisfied, the price is fixed or determinable, and collectibility is reasonably assured. We sell our products to stocking distributors, system integrators, as well as directly to OEM customers. We provide for warranty costs, sales returns, sales incentives, price adjustments, and other allowances at the time of shipment, based on prior claims experience and other quantitative and qualitative factors.

We have no post shipment obligations such as installation, training or customer acceptance. Products are shipped F.O.B. shipping point; the risks and rewards of ownership pass to the buyer at that time.

23

---

Our return policies allow only for catalog items to be returned based on factory approval and our financial statements include a return reserve (estimates are based on historic performance), which reduces period net sales.

We require receipt of a firm purchase order including quantities, shipping date and price. Any pricing discounts are reflected on the invoice. For certain customers, we offer volume rebates and these rebates are accrued monthly based on our estimates of the customer earning the amount of the rebate.

I. Shipping and Handling Costs

All shipping and handling costs charged to customers are recorded as Net Sales and all related expenses are included in Cost of Sales.

J. Advertising

We expense advertising and promotional costs in the period incurred. Advertising expenses were $1.8 million in 2003, $1.9 million in 2002 and $2.4 million in 2001.

K. Research and Development

We expense research and development costs in the period incurred.

L. Recently Issued Accounting Standards

In July 2001 the Financial Accounting Standards Board (FASB) issued SFAS No. 141, Business Combinations, and SFAS No. 142, Goodwill and Other Intangible Assets. SFAS No. 141 requires business combinations initiated after June 30, 2001 to be accounted for using the purchase method of accounting, and broadens the criteria for recording intangible assets separate from goodwill. SFAS No. 142 requires the use of a non-amortization approach to account for purchased goodwill and certain intangibles. Under the non-amortization approach, goodwill and certain intangibles will not be amortized into operating expenses, but instead will be reviewed for impairment and written down and charged to operating expenses only in the periods in which the recorded value of goodwill and certain intangibles exceeds its fair value.

We adopted the provisions of these statements at the beginning of our fiscal year 2002. As a result, we no longer amortize goodwill, which reduced our operating expenses by $1.5 million for the year ended September 28, 2002 when compared to the same period in the prior year. In 2003 and 2002 we completed comprehensive studies of the fair value of goodwill. We found that the fair values of our reporting units' net assets exceed their carrying values. Consequently, we concluded that there was no impairment of goodwill. We will continue to assess the fair values of our reporting units. If in the future the carrying values of our reporting unit net assets exceed their fair values, we will charge the difference to operating expense in the period in which the goodwill impairment becomes evident.

On September 29, 2002 we adopted SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets. SFAS No. 144 states that the results of operations of a component of an entity that has either been disposed of or is classified as held for sale shall be reported in discontinued operations if both the following conditions are met: (a) the operations and cash flows of the component have been (or will be) eliminated from the ongoing operations of the entity as a result of the disposal transaction and (b) the entity will not have any significant continuing involvement in the operations of the component after the disposal transaction.

In November 2002 the FASB issued FASB Interpretation No. 45, Guarantors Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others (FIN 45). FIN 45 provides guidance on the disclosures to be made by a guarantor in its interim and annual financial statements about its obligations under certain guarantees that it has issued and also clarifies that the guarantor is required to recognize, at the inception of a guarantee, a liability for the fair value of the obligation undertaken in issuing the guarantee. We have adopted the requirements of FIN 45 and made the appropriate disclosures in the Financial Statements and Notes included in this Form 10-K. We

24

---

believe that the amount of our warranty settlements and reserve are not material and are not therefore included as a disclosure to these financial statements.

In December 2002 the FASB issued SFAS No. 148, Accounting for Stock-Based Compensation  Transition and Disclosure, which amends SFAS No. 123, Accounting for Stock-Based Compensation. SFAS No. 148 provides alternative methods of transition for companies that voluntarily change to the fair value-based method of accounting for stock-based employee compensation, and also requires expanded disclosures in both interim and annual financial statements. We have adopted the expanded disclosure requirements of SFAS No. 148 for the year ended September 27, 2003.

In January 2003 we adopted FASB Statement No. 146, Accounting for Costs Associated with Exit or Disposal Activities, which generally requires that a liability for costs associated with an exit or disposal activity be expensed as incurred. Exit costs primarily consist of future minimum lease payments on vacated facilities, facility closure costs and facility consolidation costs. Employee separation costs consist primarily of severance costs. At each reporting date, we will evaluate our accruals for exit costs and employee separation to ensure that the accruals are still appropriate.

NOTE 2.  Financial Instruments

A. Long-Term Debt

In September 1998 we issued $45.0 million of Senior Guaranteed Notes to refinance bank borrowings related to the acquisitions of SST and mPm. Long-term debt at the balance sheet dates consisted of the following:

2003

20026.64% Notes, Due September 30th, annually,   2002  2013



$
17,400


$
21,6006.81% Notes, Due September 30th, annually,   2004  2013




13,500



15,000Total long-term debt



$
30,900


$
36,600Current portion not included above



$
5,700


$
4,200


Long-term debt outstanding at September 27, 2003 matures as follows:

Fiscal Year

Amounts Maturing2004



$
5,7002005




5,7002006




5,7002007




5,7002008




5,700after 2008



$
8,100


Under the various funding arrangements we are required, among other restrictions, to maintain a consolidated net worth, as defined, of not less than $77.5 million. Effective March 30, 2002 we amended our revolving credit agreement with a bank to increase the maximum ratio of debt to EBITDA, as defined, from 2.5 to 2.9, and reduce the minimum interest coverage ratio, as defined, from 3.0 to 2.0. This amendment expired on March 29, 2003, when the maximum debt to EBITDA ratio reverted back to 2.5 and the minimum interest coverage ratio reverted back to 3.0. In addition, there are certain restrictions on the creation or assumption of any lien or security interest upon any of our assets. We are in compliance with all provisions of our funding arrangements.

Included in our financial statements is a 6.64% senior guaranteed note, which is held by a subsidiary and has a parental guarantee. In addition, there is a 6.81% senior guaranteed note held by the parent company, which is guaranteed by our U.S. subsidiaries.

25

---

B. Short-Term Borrowings

At September 27, 2003 we had an unused revolving credit agreement with a bank that provides for borrowings up to $25.0 million at the banks prime or offered rate. This agreement expires on February 28, 2004. We are in the process of negotiating credit facilities for the time after the current agreement expires. At September 27, 2003 and September 28, 2002 we had no short-term borrowings.

C. Derivative Financial Instruments

In our global operating activities and in the normal course of our business, we are exposed to changes in foreign currency exchange rates, which may adversely affect our results of operations and financial condition. We seek to minimize those risks through our regular operating activities and, when deemed appropriate, through the use of derivatives.

In 1998 we entered into a foreign currency swap agreement with an AA- rated counterparty to hedge a portion of our cash flows from our Italian subsidiary. Under the terms of the agreement, we agreed to swap 35.52 billion Lire for 20.0 million U.S. Dollars over a period of 8 years. In addition, the contract provides for us to make annual interest payments of 6.50% on the outstanding Lire balance, and to receive 7.43% annual interest on the outstanding U.S. Dollar balance. While the hedge was denominated in Italian Lire we re-denominated the transaction in Euros in 2002. The re-denomination was done at an exchange rate of 1,936.27 Italian Lire to the Euro.

The following table describes the values to be exchanged over the next four years relating to the Euro swap:

U.S. DollarsMaturity

Amortizing Amount

Outstanding Notional Amount09/30/03



$
3,000


$
8,00009/30/04




3,000



5,00009/30/05




3,000



2,00009/30/06



$
2,000


$
0




EurosMaturity

Amortizing Amount

Outstanding Notional Amount09/30/03




2,752



7,33809/30/04




2,752



4,58609/30/05




2,752



1,83409/30/06




1,834



0


We base the fair value for our cross-currency swap on the cost estimate to terminate the agreement. The fair value of the swap at September 27, 2003 was recorded as a $0.3 million liability.

D. Fair Value

Our long-term debt is denominated in U.S. Dollars and carries fixed interest. We base the fair value of our long-term debt on market or dealer quotes. The difference between fair and carrying values of our financial instruments, other than the swap, were not material at the balance sheet dates.

26

---

NOTE 3.  Accounts Receivable

We reduce our accounts receivable balance to account for reserves for doubtful accounts, sales returns, warranties and allowances. The table below shows the activity in our accounts receivable reserves during the fiscal years:

2003

2002

2001Beginning balance



$
1,250


$
1,844


$
1,611Charged to costs and expenses




189



20



228Write-offs




(240
)


(180
)


(65
)Price adjustments charged to net sales




88



(434
)


70Ending balance



$
1,287


$
1,250


$
1,844


NOTE 4.  Inventories

Inventories at the balance sheet dates were comprised of the following:

2003

2002Inventories valued using FIFO



$
8,463


$
9,576Inventories valued using LIFO:At FIFO cost




7,636



8,965Less: Reserve to reduce to LIFO




(3,079
)


(3,716
)LIFO Inventories




4,557



5,249Total Inventories



$
13,020


$
14,825Inventory composition using FIFORaw Materials



$
8,978


$
10,340Work-in-process and finished goods




7,121



8,201Total Inventories at FIFO



$
16,099


$
18,541


The use of LIFO for inventory valuation was chosen in 1979 to better match current cost and revenue. The LIFO method of inventory valuation is used by three of our four U.S. subsidiaries. The one U.S. subsidiary not utilizing LIFO was acquired in 1990 and is a higher technology business in which the inventory (approximately 8% of total inventory) declines in value over time. LIFO is not utilized in our foreign operations as this method is not accepted by foreign countries for tax purposes and the cost of maintaining two inventory systems is cost prohibitive to us.

In 2003, inventory levels continued to reduce. This reduction resulted in a liquidation of LIFO inventory quantities carried at lower costs prevailing in prior years as compared with the cost of 2003 purchases. The effect of this liquidation was to increase net income by $0.4 million.

Had we used the FIFO method for all inventories, net income would have been $0.4 and $0.6 million lower in 2003 and 2002, respectively. Net income would have been $0.1 million higher if the FIFO method were used in 2001.

27

---

NOTE 5.  Property, Plant and Equipment

Net property (PP&E) at the balance sheet dates was as follows:

Asset Description

2003

2002Land



$
4,228


$
4,255Buildings and improvements




27,102



27,087Machinery and equipment




38,289



35,939Dies and molds




23,901



23,056Software technology




35,756



30,654Furniture and office equipment




18,175



17,382Total PP&E, at cost




147,451



138,373Less: Accumulated depreciation and amortization




(87,060
)


(74,320
)PP&E, net



$
60,391


$
64,053


Depreciation expense was $11.1 million, $10.2 million and $9.3 million for fiscal years 2003, 2002 and 2001, respectively.

The carrying values of fixed assets are impacted by fluctuations in foreign exchange rates. We depreciate fixed assets using the straight-line method over the following periods:

Asset Description

Asset LifeBuildings and improvements




20 to 40 yearsMachinery and equipment




3 to 12 yearsDies and molds




4 to 5 yearsSoftware technology




9 yearsFurniture and office equipment




3 to 10 years


In the fourth quarter of fiscal year 1998 we acquired the business and certain assets of SST, including software technology, and in the second quarter of fiscal year 2001 we acquired the business and certain assets of applicom International, including software technology. We amortize the capitalized software over a period of nine years, which we believe is appropriate for these types of industrial software. Net software at the balance sheet dates was as follows:

2003

2002Software technology



$
35,756


$
30,654Accumulated amortization




(18,719
)


(12,630
)Net software technology



$
17,037


$
18,024


NOTE 6.  Goodwill and Other Intangible Assets

We adopted SFAS 142 in fiscal year 2002 and as a result we reclassified $0.4 million of Other intangible assets into Goodwill and have stopped amortizing goodwill. Essentially all goodwill relates to our Connectivity Segment. Goodwill at the balance sheet dates was:

2003

2002Goodwill



$
38,490


$
34,389Accumulated amortization




(6,200
)


(5,632
)Goodwill, net



$
32,290


$
28,757


28

---

The carrying values of goodwill are impacted by fluctuations in foreign exchange rates.

The following table summarizes the results as if we had adopted SFAS No. 142 and did not amortize goodwill for the years 2003, 2002 and 2001.

2003

2002

2001Net Income:As reported



$
6,569


$
2,545


$
7,834Add back: amortization, net of tax












1,210Adjusted Net Income




6,569



2,545



9,044Basic earnings per share:As reported



$
0.56


$
0.22


$
0.68Adjusted Net Income




0.56



0.22



0.79Diluted earnings per share:As reported



$
0.55


$
0.22


$
0.66Adjusted Net Income




0.55



0.22



0.77


Other intangible assets at the balance sheet dates were:

2003

2002Other intangible assets



$
1,313


$
1,122Accumulated amortization




(607
)


(324
)Other intangible assets, net



$
706


$
798


The following table shows the future amortization expense for intangible assets as of September 27, 2003:

Fiscal Year

Estimated Amortization2004



$
1112005




532006




532007




532008




53after 2008



$
383


NOTE 7.  Accrued Expenses

Accrued expenses at the balance sheet dates were as follows:

2003

2002Payroll



$
4,341


$
2,767Pension and profit sharing




2,633



4,033Commissions




875



778Taxes




837



1,231Environmental




452



452Insurance




402



258All other




4,046



3,266Total accrued expenses



$
13,586


$
12,785


29

---

NOTE 8.  Lease Commitments

We lease properties for use in our operations. In addition to rent, the leases require us to pay directly for taxes, insurance, maintenance and other operating expenses, or to pay higher rent when operating expenses increase. Total lease expenses were $1.0 million for the years 2003, 2002 and 2001. The following table shows future minimum lease commitments under non-cancelable lease-terms in excess of one year as of September 27, 2003:

Fiscal Year

Lease Commitments2004



$
9662005




8832006




5932007




5792008




261after 2008



$
335


NOTE 9.  Capital Stock

A. Common And Preferred Stock

Our total authorized stock is 40.0 million shares, consisting of 10.0 million shares of preferred stock, par value $0.01 per share, and 30.0 million shares of common stock, par value $1.00 per share. No shares of preferred stock have been issued to date. Common stock issued was 12.0 million and 11.8 million on September 27, 2003 and September 28, 2002, respectively.

In May 1996, we adopted a new shareholder rights plan, effective upon termination of the previous rights plan, and declared a dividend distribution of one preferred stock purchase right (Right) for each share of common stock outstanding. Each Right represents the right to purchase, if and when the Rights are exercisable, a unit consisting of one one-thousandth of a share (Unit) of Series A Junior Participating Preferred Stock at a purchase price of $65 per unit, subject to adjustment. The exercise price and the number of shares issuable upon the exercise of the Rights are subject to adjustment in certain cases to prevent dilution. The Rights are evidenced by the common stock certificates and are not exercisable or transferable apart from the common stock, until ten days after a person (i) acquires 15% or more of the common stock, or (ii) commences a tender offer, which would result in the ownership of 15% or mor





e of the common stock, or the Board of Directors determines that any person has become an Adverse Person, as that term is defined in the plan. In the event any person becomes the beneficial owner of 15% or more of common stock or the Board of Directors declares a person an Adverse Person, each of the Rights (other than Rights held by the party triggering the Rights and certain transferees which are voided) becomes a discount right, entitling the holder to acquire common stock having a value equal to twice the Rights exercise price. In the event the Company is acquired in a merger or other business combination transaction (including one in which the Company is the surviving corporation), each Right will entitle its holder to purchase, at the then current exercise price of the Right, that number of shares of common stock of the surviving company which at the time of such transaction would have a market value of two times the exercise price of the Right. The Rights do not have any voting rights and are re





deemable, at the option of the Company, at a price of $0.01 per Right at any time until ten days after a person acquires beneficial ownership of at least 15% of the common stock. The Rights expire on May 29, 2006. So long as the Rights are not separately transferable, the Company will issue one Right with each new share of common stock issued.

B. Stock Option Plans

We may grant stock options to directors, officers and key employees, under our stock option plans, at a price not less than the market value at the date of grant. Options issued to directors are exercisable 6 months after the grant date, and expire 10 years (5 years for pre-2002 grants) after the grant date. Portions of options issued to employees in fiscal years 2003, 2002 and 2001 are exercisable one, two and three years after the grant date, and expire 10 years after the grant date. Options issued to employees before fiscal year 2001 were exercisable one year after the grant date and expire 10 years after the grant date. All granted options are subject to continuous employment and certain other conditions.

30

---

Options OutstandingRange ofExercise Prices

Number Outstanding at 9/27/2003

Weighted Average Remaining Contractual Life, in years

Weighted Average Exercise Price$5  $10




28



1.1


$
9.3310  15




1,086



7.1



12.0515  20




262



5.9



16.01over $20




282



5.4



20.501,658



6.5


$
14.07




Options ExercisableRange ofExercise Prices

Number Outstanding at 9/27/2003

Weighted Average Remaining Contractual Life, in years

Weighted Average Exercise Price$5  $10




28



1.1


$
9.3310  15




438



7.1



12.7615  20




190



5.9



15.91Over $20




228



5.4



20.48884



6.5


$
15.32


The following table summarizes the activity for the plans:

Under OptionShares Available for Grant

Number of Shares

Weighted Average Exercise PriceBalance September 30, 2000




512



1,182


$
12.11Grant




(255
)


255



20.37Exercised








(152
)


7.79Forfeited




17



(17
)


19.73Restricted Stock Grants




(14
)






18.64Balance September 29, 2001




260



1,268



14.23Authorized




1,500







Grant




(394
)


394



15.18Exercised








(276
)


9.37Expired












11.52Forfeited




119



(119
)


17.52Balance September 28, 2002




1,485



1,267



15.29Grant




(572
)


572



10.74Exercised




130



(130
)


10.53Expired




14



(14
)


20.38Forfeited




37



(37
)


13.17Balance September 27, 2003




1,094



1,658


$
14.07


31

---

We estimated the fair values using the Black-Scholes option-pricing model, modified for dividends, and used the following assumptions:

2003

2002

2001Expected dividend yield




3.5
%


2.4
%


1.8
%Risk-free interest rate




4.0
%


3.7
%


5.7
%Expected stock price volatility




47.7
%


40.7
%


38.5
%Expected term until exercise, in years




8.0



7.9



7.3Weighted fair value per share



$
4.13


$
5.73


$
8.62Total value of options granted



$
2,360


$
1,916


$
2,089


NOTE 10.  Comprehensive Income

Accumulated other comprehensive (income) loss consists of the following components:

Foreign Currency Translation Adjustment

Unrealized Gains on Cash Flow Hedging Instrument

Minimum Pension Liability, Net of Taxes

Compre- hensive (Income) LossBalance September 30, 2000



$
7,047










$
7,047Other Comprehensive Income




1,052



(544
)


90



598Balance September 29, 2001




8,099



(544
)


90



7,645Other Comprehensive Income




(3,937
)


(68
)


652



(3,353
)Balance September 28, 2002




4,162



(612
)


742



4,292Other Comprehensive Income




(7,069
)


687



(742
)


(7,124
)Balance September 27, 2003



$
(2,907
)


75






$
(2,832
)


NOTE 11.  Earnings Per Share

The reconciliation between basic and diluted earnings per share is as follows:

2003

2002

2001Income from continuing operations



$
5,839


$
2,545


$
7,834Income from discontinued operations




730







Net Income



$
6,569


$
2,545


$
7,834Earnings per share, basicFrom continuing operations



$
0.50


$
0.22


$
0.68From discontinued operations



$
0.06







As Reported



$
0.56


$
0.22


$
0.68Earnings per share, dilutedFrom continuing operations



$
0.49


$
0.22


$
0.66From discontinued operations



$
0.06







As Reported



$
0.55


$
0.22


$
0.66Weighted-average number of shares outstanding




11,812



11,668



11,488Dilutive common stock options




118



161



322Weighted-average number of shares outstanding  plus dilutive common stock options




11,930



11,829



11,810Outstanding common stock options   having no dilutive effect




937



336



377


32

---

NOTE 12.  Research and Development

Innovation by our research and development operations is very important to the growth of our businesses. Our goal is to discover, develop and bring to market innovative products that address new needs. In addition to Research and Development, our Statement of Income caption Engineering and Product Development includes expenses for engineers, designers and drafters to enhance existing products.

Research and development expenses were $5.5 million in 2003, $4.2 million in 2002 and $3.5 million in 2001.

NOTE 13.  Segment Information and Geographic Data

Our operating segments are based on the organization of business groups comprised of similar products and services. Revenues in our Industrial Communications and Connectivity Products Segment (Connectivity Segment) are primarily derived from sales of system components to devices in open networks for automated manufacturing and distribution applications. Revenues in our Electrical Safety & Specialty Products Segment (Electrical Segment) are primarily derived from sales of specialized products to support enhanced safety and productivity on the factory floor.

Segment reporting includes our Asian operations in the Connectivity segment for fiscal years 2003 and 2002 and in our Electrical segment for fiscal year 2001. In fiscal 2002 we changed our segment reporting to include our Asian operations in the Connectivity Segment to recognize the change in the operations business mix. Asian operations had been part of our Electrical Segment.

Sales between segments were not significant. Sales in geographic areas were determined by customer location. No single customer accounted for 10 percent or more of our total revenue. Sales in foreign countries did not meet minimum disclosure requirements. We did not allocate certain corporate expenses, primarily those related to the overall management of the corporation, to the segments or geographic areas. Both segments share certain production facilities and equipment (PP&E). These assets, and related additions and depreciation, were allocated based on unit production. Geographic data on assets is based on the physical location of those assets. Corporate assets were primarily investments in subsidiaries and cash.

33

---

A. Segment Information

Net Sales2003

2002

2001Connectivity



$
126,315


$
112,171


$
126,189Electrical




52,723



58,008



63,997Consolidated



$
179,038


$
170,179


$
190,186




Income from Operations2003

2002

2001Connectivity



$
5,098


$
2,901


$
13,155Electrical




4,772



5,769



6,913Corporate & other




(678
)


(727
)


(1,353
)Consolidated



$
9,192


$
7,943


$
18,715




Reconciliation of Income fromOperations to Net Income2003

2002

2001Income from operations



$
9,192


$
7,943


$
18,715Interest expense, net




(2,862
)


(2,895
)


(3,125
)Other income (expense), net




2,901



75



(2,034
)Income taxes




(3,392
)


(2,578
)


(5,722
)Income from continuing operations




5,839



2,545



7,834Discontinued operationsIncome from discontinued operations (including gain   on disposal of $725)




733







Income tax expense




(3
)






Income from discontinued operations




730







Consolidated net income



$
6,569


$
2,545


$
7,834




Total Assets2003

2002Connectivity



$
125,167


$
119,915Electrical




24,590



31,652Corporate & other




22,692



15,084Consolidated



$
172,449


$
166,651




Depreciation and Amortization2003

2002

2001Connectivity



$
8,163


$
7,671


$
8,370Electrical




2,782



2,465



2,564Corporate & other




170



230



287Consolidated



$
11,115


$
10,366


$
11,221




Additions to Long-lived Assets2003

2002Connectivity



$
3,029


$
3,822Electrical




1,425



3,225Corporate & other




52



120Consolidated



$
4,506


$
7,167


34

---

B. Geographic Data

Net Sales2003

2002

2001United States



$
108,308


$
107,255


$
122,369All other countries




70,730



62,924



67,817Consolidated



$
179,038


$
170,179


$
190,186




Total Assets2003

2002United States



$
55,286


$
51,553Italy




32,739



29,303Canada




24,182



24,848Mexico




19,275



20,035France




20,633



19,752All other countries




20,334



21,160Consolidated



$
172,449


$
166,651


NOTE 14.  Taxes

Income before income taxes consisted of the following:

2003

2002

2001United States



$
6,434


$
4,712


$
8,778International




3,530



411



4,778Total income before taxes



$
9,964


$
5,123


$
13,556


The provision for income taxes consisted of the following:

2003

2002

2001U.S. federal income tax



$
1,471


$
732


$
3,347State income taxes




75



198



506International income taxes




1,849



1,648



1,869Total provision for taxes on income




3,395



2,578


$
5,722Current provision




1,963



947



5,798Deferred provision




1,432



1,631



(76
)Total provision for taxes on income



$
3,395


$
2,578


$
5,722


35

---

Deferred taxes arise because of different treatment within financial statement accounting and tax accounting, known as temporary differences. We record the tax effect of these temporary differences as deferred tax assets (generally items that can be used as a tax deduction or credit in future periods), and deferred tax liabilities (generally items for which we received a tax deduction, but have not yet recorded in the Statement of Income). The tax effects of the major items recorded as deferred tax assets and liabilities are:

2003

2002Deferred tax assets:Accounts receivable reserves



$
306


$
313Inventory reserves




879



431Employee benefit reserves




1,360



2,196Environmental reserves




459



501Other reserves




1,319



841Write-off of purchased research and development




1,395



1,091Software amortization




1,008



788Depreciation & amortization








386Write-off of impaired long-lived assets




635



825Investment impairment loss




439



713Loss carryforwards




3,658



1,791Other, net




316



405Less: Valuation allowance




(1,389
)


(1,214
)Total deferred tax assets




10,385



9,067Less: Deferred tax liabilitiesAccelerated depreciation and amortization




6,590



4,275Prepaid pension




659



Other, net




211



105Total deferred tax liabilities




7,460



4,380Net deferred tax assets



$
2,925


$
4,687


At September 27, 2003, we have federal, state and foreign net operating loss carryforwards of $18.5 million for income tax purposes that expire in fiscal years 2004 through 2009. For financial reporting purposes, we recorded a valuation allowance of $1.2 million to offset some of the deferred tax assets related to those carryforwards that may expire unused.

A reconciliation of the federal statutory rate to the effective tax rate is as follows:

2003

2002

2001Federal statutory rate




35.0
%


35.0
%


35.0
%State income taxes, net of federal benefit




0.5
%


2.6
%


2.4
%Effect of international operations




1.6
%


12.0
%


1.5
%Tax effect of capital (gain) loss not recorded




(2.4
)%






5.0
%Other, net




(0.6
)%


0.7
%


(1.7
)%Effective tax rate




34.1
%


50.3
%


42.2
%


Undistributed earnings of our foreign subsidiaries amounted to approximately $10.8 million at September 27, 2003. Those earnings are considered to be indefinitely reinvested and, accordingly, no provision for U.S. federal and state income tax has been provided thereon. Upon distribution of those earnings in the form of dividends or otherwise, we would be subject to both U.S. income tax (subject to an adjustment for foreign tax credits) and withholding taxes payable to various foreign countries. Determination of the amount of unrecognized deferred U.S. income tax liability is not practicable because of complexities associated with its hypothetical calculation. Withholding taxes of approximately $0.6 million would be payable upon remittance of all previously unremitted earnings at September 27, 2003.

36

---

NOTE 15.  Benefit Plans

We have defined contribution, defined benefit and government mandated plans covering eligible non-bargaining unit employees.

The annual profit-sharing contributions, which are the lesser of (i) a percentage of income defined in the plans, or (ii) 15% of the aggregate compensation paid to participants during the year, were $0.6 million, $0.7 million and $1.1 million in 2003, 2002 and 2001, respectively.

We make matching contributions of 50% of employees contributions, up to 4% of compensation, to a 401(k) plan. Matching contributions were $0.3 million in 2003, 2002 and 2001.

Pension benefits are fully vested after five years and are based upon years of service and highest five-year average compensation. It has been our policy to fund our pension costs by making annual contributions based upon minimum funding provisions of the Employee Retirement Income Security Act of 1974. During 2003 we contribued an additional $2.0 million to increase the funded status of our plan. Our total pension expense for company-sponsored qualified plans was $0.4 million, $0.4 million, and $0.3 million in 2003, 2002 and 2001, respectively.

In 1990 we adopted a supplemental retirement benefit plan for certain key executive officers which will provide supplemental payments upon retirement, disability or death. The obligations are not funded apart from our general assets. We charged $0.2 million, $0.2 million and $0.5 million in 2003, 2002 and 2001, respectively, to expense under the plan.

The projected benefit obligation, accumulated benefit obligation and fair value of plan assets for the plans with accumulated benefit obligations in excess of plan assets were $1.1 million, $1.0 million and $0, respectively in 2003; $8.0 million, $6.5 million and $4.8 million, respectively in 2002; and $0.9 million, $0.8 million and $0, respectively, in 2001.

The components of net periodic pension cost for the non-union plans were:

2003

2002

2001Service cost-benefits earned during the year



$
496


$
486


$
432Interest cost on projected benefit obligation




508



572



582Expected return on plan assets




(486
)


(551
)


(508
)Amortization of prior service cost




27



31



29Amortization of transitional asset (obligation)




1



1



3Recognized actuarial loss




50



3



Additional loss recognized due to settlement












277Periodic pension cost, net



$
596


$
542


$
815


We used the following assumptions in accounting for the pension plans:

2003

2002

2001Discount rate




6.3
%


6.8
%


7.3
%Rate of increase in compensation levels




4.5
%


4.5
%


5.6
%Expected long-term rate of return on plan assets




8.0
%


8.0
%


7.5
%


37

---

The following table reconciles the plans funded status and the amount recorded on our consolidated balance sheets for our non-union plans:

2003

2002Change in benefit obligation:Benefit obligation at beginning of year



$
7,962


$
8,325Service cost




496



486Interest cost




508



572Benefits paid




(684
)


(1,298
)Actuarial (gain) or loss




766



(123
)Benefit obligation at end of year




9,048



7,962Change in plan assets:Fair value of plan assets at beginning of year




4,841



6,501Actual return on plan assets




703



(675
)Employer contributions




2,199



313Benefits paid




(684
)


(1,235
)Settlement payments








(63
)Fair value of plan assets at end of year




7,059



4,841Reconciliation of funded status:Underfunded status




1,989



3,121Unrecognized actuarial gain or (loss)




(2,689
)


(2,189
)Unrecognized transition obligation




(4
)


(5
)Unrecognized prior service cost




(191
)


(217
)Accrued (prepaid) pension cost included in the consolidated balance sheets



$
(895
)

$
710


Amounts recorded on the consolidated balance sheets were:

2003

2002Prepaid benefit cost



$
(895
)

$
(93
)Accrued benefit liability








2,067Intangible asset








(86
)Accumulated other comprehensive income








(1,178
)Accrued (prepaid) pension cost included in the consolidated balance sheets



$
(895
)

$
710


Plan assets of company-sponsored plans are invested primarily in common stocks, corporate bonds and government securities. Although we have the right to improve, change or terminate the plans, they are intended to be permanent.

Most of our union employees are covered by union-sponsored, collectively-bargained, multi-employer pension plans. For such plans, we contributed and charged to expense $0.2 million in 2003, 2002 and 2001. These contributions are determined in accordance with the provisions of negotiated labor contracts and generally are based on the number of man-hours worked. Information from the union plans' administrators is not available to permit us to determine our share of unfunded vested benefits.

We provide an optional retiree medical program to a majority of our U.S. salaried and non-union retirees. Beginning in April 2003, the plan was modified to require participants to fund the total cost of the medical program. At September 28, 2002 we had an accrued postretirement benefit cost, which is included in our consolidated balance sheet of $2.2 million. Starting in January 2004 we will have no liability for any of these postretirement benefit costs and the reduction of this $2.2 million liability is being amortized over the period from April 1, 2003 to January 1, 2004. During the year ended September 27, 2003 we lowered our benefits liability account by $1.4 million and we will continue to reduce this liability account in the first quarter of fiscal 2004.

38

---

These postretirement benefits are unfunded. Cost components of these postretirement benefits, principally health care, were:

2003

2002

2001Service cost



$
67


$
121


$
125Interest cost




166



256



225Amortization of transition obligation




(2,895
)


38



55Recognized actuarial loss




1,493



77



45Total Cost



$
(1,169
)

$
492


$
450


The funded status of these benefits on the balance sheet dates was as follows:

2003

2002Actuarial present value of benefit obligation:Retirees



$
40


$
1,639Eligible active employees








1,354Other active employees








1,891Accumulated postretirement benefit obligation




40



4,884Fair value of plan assets at end of year








Underfunded status




40



4,884Unrecognized transition obligation








(420
)Unrecognized prior service cost




1,457



Unrecognized actuarial loss




(719
)


(2,212
)Accrued postretirement benefit cost included in the consolidated balance sheets



$
778


$
2,252


We used the following assumptions in accounting for these plans:

Participants aged under 65:

2003

2002

2001Discount rate




6.3
%


6.8
%


7.3
%Health care trend rate in first year




N/A



10.0
%


10.0
%Gradually declining to a trend rate of




N/A



6.0
%


5.5
%in the year




N/A



2006



2009


Participants aged 65 and over:

2003

2002

2001Discount rate




6.3
%


6.8
%


7.3
%Health care trend rate in first year




N/A



10.0
%


12.0
%Gradually declining to a trend rate of




N/A



6.0
%


6.0
%in the year




N/A



2006



2009


A one-percentage point increase in the assumed health care trend would have the following effects on:

2003

2002Aggregate of service and interest cost



$
38


$
90Accumulated postretirement obligation







$
1,016


We provide certain post-employment benefits to former or inactive employees before retirement. The costs associated with those benefits are immaterial.

39

---

NOTE 16.  Contingent Liabilities

We are
subject to federal and state hazardous substance cleanup laws that impose
liability for the costs of cleaning up contamination resulting from past spills,
disposal or other releases of hazardous substances. In this regard, we have
incurred, and expect to incur, assessment, remediation and related costs at one
of our facilities. In 1991, we reported to state regulators a release at that
site from an underground storage tank (UST). The UST and certain
contaminated soil subsequently were removed and disposed of at an off-site
disposal facility.

We
have been conducting an investigation of soil and groundwater at the site with
oversight by the Michigan Department of Environmental Quality (DEQ).
The investigation indicates that, unrelated to the UST release, additional soil
and groundwater at the site have been impaired by chlorinated solvents,
including tetrachloroethane and trichloroethylene, and other compounds. Also,
our investigation revealed that the previous owners of the site had used a
portion of the site as a disposal area. We have remediated the soils in this
area but believe that it is a source of contamination of groundwater, both
on-site and off-site. Our investigation indicates that there were releases by
the previous owners in areas over which additions were subsequently built. These
releases have impacted groundwater that has migrated off-site. We have
implemented a groundwater remediation system for the on-site contamination. We
continue to monitor and analyze conditions to determine the continued efficacy
of the system. We also have implemented a groundwater remediation system for the
off-site contamination. We continue to analyze other remedial alternatives for
the off-site groundwater contamination and are reviewing these alternatives with
the DEQ.

We
previously filed a complaint in federal district court seeking contribution from
the previous owners of the site for the cost of the investigation and
remediation of the site. We settled that litigation through a consent judgment
against the former owners. Also, we have asserted claims against insurers of the
former owners for the amounts specified in the consent judgment. The insurers
have denied coverage and three of them filed a declaratory judgment action to
that effect against us in federal district court.

We
estimate that a minimum of approximately $1.3 million of investigation and
remediation expenses, both on-site and off-site, remain to be incurred over the
next 14 years. We have a reserve for such purposes. Our cost estimate was
based on a review of currently available data and assumptions concerning the
extent of contamination, geological conditions, and the costs and effectiveness
of certain treatment technologies. The cost estimate continues to be subject to
uncertainty because of the extent of the contamination area, the variety and
nature of geological conditions throughout the contamination area, changes in
remediation technology, and ongoing DEQ feedback. We are continuing to monitor
the conditions at the site and will adjust our reserve if necessary. We may
incur significant additional assessment, remediation and related costs at the
site, and such costs could materially and adversely affect our consolidated net
income in the period such costs are incurred. At this time, however, we cannot
estimate the time or potential magnitude of such additional costs, if any.

40

---

NOTE 17.  Restructuring Charges

During
the second quarter of 2002 we recorded a restructuring charge in the amount of
$1.0 million to primarily account for severance and related costs of eliminating
about 10% of our salaried positions worldwide. Additionally we identified 31
positions in our manufacturing plant in Northbrook, Illinois, which were
eliminated with the continued migration of product to our new manufacturing
plant in Juarez, Mexico. This workforce reduction represented an acceleration of
initiatives that we started over the previous six months to improve our
efficiencies and reduce expenses. We anticipated that the salaried personnel
reduction would produce annual savings of about $3.0 million. The restructuring
resulted in the layoffs of 93 people, of which 70 people were severed as of
March 30, 2002. The restructuring was completed during fiscal 2002 and there is
currently no reserve left for any of these restructuring charges. The following
table details the activity in the restructuring accrual accounts at September
28, 2002:

Restructuring ReserveBalance at 9/29/2001



$
Charged to expense in Q2 2002




1,015Cash paid in 2002




984Remaining balance at 9/28/02




31Cash paid in 2003




31Balance 9/27/2003



$



In
January 2003 we adopted FASB Statement No. 146, Accounting for Costs
Associated with Exit or Disposal Activities, which generally requires that a
liability for costs associated with an exit or disposal activity be expensed as
incurred. Exit costs primarily consist of future minimum lease payments on
vacated facilities, facility closure costs and facility consolidation costs.
Employee separation costs consist primarily of severance costs. At each
reporting date, we will evaluate our accruals for exit costs and employee
separation to ensure that the accruals are still appropriate.

In the
quarter ending June 28, 2003 we announced the closing of our Aero-Motive
facility in Kalamazoo, Michigan. In addition to selling several small product
lines that do not align strategically with our current operations we will
consolidate and integrate the remaining manufacturing operations into our
facility in Juarez, Mexico, which will improve our overall operating
efficiencies. The office operations will be integrated with our Northbrook,
Illinois facility. The closing of this facility will terminate the employment of
111 total employees, which includes sixty-four plant employees and forty-seven
office employees. As of the year ended September 27, 2003 sixteen employees had
left the company. The sale and integration process will take several quarters to
complete and it is estimated that the Kalamazoo, Michigan facility will remain
open until the second quarter of calendar year 2004.

For
the year ended September 27, 2003 we recorded restructuring and other related
charges of $2,065, which related to the closing of our Aero-Motive facility.
This restructuring charge is composed of the following:

Costs expensedquarter ended9/27/03

Cumulativecosts through9/27/03

TotalanticipatedcostsOne-Time Termination Benefit



$
335


$
935


$
1,562Other Associated Costs




575



1,130



2,243Total Restructuring and Other Charges



$
910


$
2,065


$
3,805


The costs included as a one-time termination benefit are the estimates of severance benefits that will be incurred as the Kalamazoo facility is closed. In accordance with SFAS No. 144 we have accelerated the depreciation on those assets that are expected to be excess when the facility is closed. We have included $0.7 million of accelerated depreciation in other associated costs for the year ended September 27, 2003. Legal fees, system conversion costs, incidental salaries and travel expense represent the balance of other associated costs. There are no anticipated contract termination costs related to this project.

41

---

The following table details the activity in the Aero-Motive restructuring accrual accounts at September 27, 2003:

Restructuring ReserveBalance at 9/28/2002



$
Charged to expense in fiscal 2003




2,065Less: depreciation non-cash expense




678Cash paid in 2003




528Remaining balance at 9/27/03



$
859


NOTE 18.  Sale of AKAPP Operations

On September 29, 2002 we adopted SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets. SFAS No. 144 states that the results of operations of a component of an entity that has either been disposed of or is classified as held for sale shall be reported in discontinued operations if both the following conditions are met: (a) the operations and cash flows of the component have been (or will be) eliminated from the ongoing operations of the entity as a result of the disposal transaction and (b) the entity will not have any significant continuing involvement in the operations of the component after the disposal transaction.

In November 2002 we sold our Dutch subsidiary, AKAPP, to a third party. We sold the AKAPP operation for $4.9 million in cash, which included the payment of a $2.6 million inter-company loan and the receipt of $2.3 million in cash. As a result of this transaction we recorded a $0.7 million gain on disposal, which in accordance with SFAS No. 144 has been reported as Income from Discontinued Operations. The results of operations related to AKAPP for fiscal 2003 were also recorded as Income from Discontinued Operations. The results of operations for AKAPP in fiscal 2002 were not reclassified to discontinued operations because (as shown below) they are not material.

Twelve Months Ended 9/28/02Sales



$
5,732Income Before Taxes




26Net Income



$
17


42

---

NOTE 19.  applicom International Acquisition

We had no acquisitions in fiscal years 2003 and 2002. In fiscal 2001, we acquired applicom International. The details of that acquisition are as follows:

On February 2, 2001, we acquired applicom International S.A. for $14.7 million in cash and in accordance with APB No. 16: Business Combinations, applied the purchase method of accounting. Located in Normandy, France, applicom produces software, interface cards and related products that provide communication connections in industrial automation systems. Additional applicom operations are in Germany and Italy.

We financed the transaction with cash on hand and borrowings through our bank revolving credit agreement. As a result of applying the purchase method of accounting, we recorded $6.4 million of goodwill, which is amortizing over a period of 20 years (goodwill amortization was discontinued in fiscal 2002). Also, we capitalized software technology in the amount of $4.8 million, which we are amortizing over a period of nine years. We believe this nine-year life is appropriate because industrial software of this type experiences extended years of revenue growth, and future benefits of this software will last for nine years or more.

The following table shows the fair value of assets and liabilities and purchase accounting adjustments and, where applicable, their useful lives recorded in connection with the applicom acquisition:

Purchase Price Allocation

Fair Value

Asset LifeCurrent assets



$
3,745Software technology




4,794



9 yearsProperty, plant and equipment




1,035



340 yearsOther intangible assets:Trade name




635



15 yearsAssembled workforce




423



11 yearsNon-compete agreements




423



3 yearsGoodwill




6,434



20 yearsTotal assets acquired




17,489Current liabilities




1,381Long-term liabilities




1,128Other long-term liabilities




258Total liabilities assumed



$
2,767Total assets less liabilities



$
14,722Cash consideration paid (net of cash acquired)



$
14,722


43

---

We included the financial results of this business in the 2001 consolidated financial statements from the date of acquisition.

Our fiscal year 2001 includes eight months of applicom operations. The table below shows unaudited pro forma information of combined results of Woodhead and applicom as if the acquisition had occurred as of the first day of fiscal 2001, including the effects of purchase accounting adjustments. These results do not necessarily reflect actual results which would have occurred if the acquisition had taken place at the beginning of the earliest period presented or as of the date indicated, nor are they necessarily indicative of the results of future combined operations.

2001Net Sales:As reported



$
190,186Pro forma




192,512Net Income:As reported



$
7,834Pro forma




7,508Basic earnings per share:As reported



$
0.68Pro forma




0.65Diluted earnings per share:As reported



$
0.66Pro forma




0.64


NOTE 20.  Subsequent Events

On November 21, 2003 we completed the sale of our Aero-Motive subsidiarys government hose reel product line to Cleveland Gear Company, Inc., a subsidiary of Vesper Corporation for $1.2 million. We will record a gain of approximately $1.2 million in the first quarter of 2004 from this transaction.

44

---

NOTE 21.  Summary of Quarterly Data (Unaudited)

Our common stock trades on the NASDAQ Stock Market under the symbol WDHD. The daily quotations are published in the Wall Street Journal and other leading publications. At September 27, 2003, we had 395 shareholders of record.

The following table sets forth selected financial data along with the high and low sales price of our common stock on the NASDAQ Stock Market during the last three fiscal years.

QuarterFirst

Second

Third

Fourth

Full year2003Net sales



$
42,232


$
45,810


$
46,694


$
44,302


$
179,038Gross profit




15,728



16,910



16,629



16,780



66,047Income from operations




1,960



2,576



2,322



2,334



9,192Net income




2,156



1,531



2,044



838



6,569Earnings per share  basic




0.18



0.13



0.17



0.08



0.56Earnings per share  diluted




0.18



0.13



0.17



0.07



0.55Dividends per common share



$
0.09


$
0.09


$
0.09


$
0.09


$
0.36Stock Prices:High



$
12.74


$
13.90


$
12.85


$
17.37


$
17.37Low



$
8.81


$
10.93


$
11.10


$
11.83


$
8.812002Net sales



$
38,621


$
42,579


$
45,603


$
43,376


$
170,179Gross profit




14,485



15,593



17,429



14,902



62,409Income from operations




1,295



1,230



3,277



2,141



7,943Net income




136



164



1,526



719



2,545Earnings per share  basic




0.01



0.01



0.13



0.06



0.22Earnings per share  diluted




0.01



0.01



0.13



0.06



0.22Dividends per common share



$
0.09


$
0.09


$
0.09


$
0.09


$
0.36Stock Prices:High



$
18.15


$
17.80


$
19.23


$
17.30


$
19.23Low



$
13.80


$
14.73


$
15.90


$
11.38


$
11.382001Net sales



$
48,652


$
52,004


$
47,455


$
42,075


$
190,186Gross profit




19,626



20,947



18,478



16,642



75,693Income from operations




5,805



6,361



3,696



2,853



18,715Net income




3,076



3,416



1,537



(195
)


7,834Earnings per share  basic




0.27



0.30



0.13



(0.02
)


0.68Earnings per share  diluted




0.26



0.29



0.13



(0.02
)


0.66Dividends per common share



$
0.09


$
0.09


$
0.09


$
0.09


$
0.36Stock Prices:High



$
22.63


$
19.50


$
19.88


$
17.80


$
22.63Low



$
18.00


$
15.56


$
15.96


$
14.96


$
14.96


Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Information required by this item is incorporated by reference to our current report on Form 8-K, which we filed on May 8, 2002, confirming the dismissal of Arthur Andersen LLP as our independent auditor and confirming the engagement of Ernst & Young LLP as our independent auditor.

45

---

Item 9A. Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our filings under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the periods specified in the rules and forms of the Securities and Exchange Commission. This information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosures. Our management, including our principal executive officer and our principal financial officer, recognizes that any set of controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of our disclosure controls and procedures within 90 days of the filing date of this report. Based on this evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures are effective in alerting them on a timely basis to material information required to be disclosed in our periodic filings.

There were no significant changes in our internal controls or in other factors that could significantly affect these controls subsequent to the date of the evaluation referenced in the foregoing paragraph.

PART III

Item 10. Directors and Executive Officers of the Registrant

Information about our Directors is incorporated by reference to the discussion under Item 1, Nominees and Continuing Directors on pages 1 through 6 of our Proxy Statement for the 2004 Annual Meeting of Stockholders. Our Executive Officers are:

Name

Age

Position

Position held sincePhilippe Lemaitre

54

Chairman, President and Chief Executive Officer

August 2003Robert H. Fisher

55

Vice President of Finance, Chief Financial Officer

December 2000Robert A. Moulton

54

Vice President, Human Resources

May 1987Joseph P. Nogal

48

Vice President, Treasurer/Controller and Assistant Secretary

January 1999Robert J. Tortorello

54

Vice President, General Counsel and Secretary

January 1991Duane E. Wiedor

45

Vice President, Executive V.P. Woodhead Connectivity, N.A

January 2003Michael H. Gies

44

Vice President, Corporate Development and Strategy

August 2003Brian D. Payson

43

Vice President, Executive V.P. Global Operations, Woodhead Connectivity

August 2003


All officers are elected each year at the Annual Meeting of the Board of Directors, which is held immediately following the Annual Meeting of Stockholders. The next Annual Meeting of Stockholders will be held on January 30, 2004.

Information concerning Mr. Lemaitre is incorporated by reference to the discussion under Item 1, Nominees and Continuing Directors on page 3 of our Proxy Statement for the 2004 Annual Meeting of Stockholders.

Mr. Robert H. Fisher joined Woodhead in December 2000 as Vice President, Finance and Chief Financial Officer. He previously served as Executive Vice President of Finance for Rockwell Internationals Electronic Commerce group from 1998 to 2000. Before that he was Vice President of Finance for US Robotics/3 Coms Personal Communication business, and Vice President/Controller for Zenith Electronics Corporation.

46

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Mr. Robert A. Moulton joined Woodhead in October 1986 as Manager, Human Resources and was elected Vice President in May 1987. He previously served as Director, Personnel at G.D. Searle and Company from 1981 to 1986.

Mr. Joseph P. Nogal became Woodheads Treasurer/Controller in January 1991. He was elected Assistant Secretary in July 1993, and was elected Vice President, Treasurer/Controller in January 1999. He previously served as Controller at Woodhead Canada Limited.

Mr. Robert J. Tortorello became our General Counsel and Secretary in June 1987. He was elected Corporate Vice President in January 1991. He previously served as Assistant Vice President and Assistant to the Chairman at Beatrice Companies, Inc. from 1986 to 1987.

Mr. Duane E. Wiedor joined Woodhead in April 2001 as President, Aero-Motive Company. In February 2002 he was appointed President, Woodhead Connectivity, N. A. and North American Operations. In January 2003 he was elected a Corporate Vice President and Executive Vice President, Woodhead Connectivity, N. A. He previously served as Business Development Manager/Production Manager at Tessy Plastics Incorporated from 1998 to 2001.

Mr. Michael H. Gies joined Woodhead in January 2000 as Vice President, Marketing and Product Development, Daniel Woodhead Company. He was appointed President, Aero-Motive Company in February 2002. In January 2003 he was elected a Corporate Vice President and Executive Vice President, Global Marketing, Connectivity. In August 2003 he was appointed Vice President, Corporate Development and Strategy. He previously served as Manager, Transportation Industry Cinch, North American Group, Labinal Inc. from 1995 to 2000.

Mr. Brian Payson joined Woodhead in 1990 as Vice President, Operations of Advanced Interconnect (AI) when Woodhead acquired AI. He became President, AI in February 1998. In January 2003 he was elected a Corporate Vice President and Executive Vice President, AI and Global Engineering, Connectivity. In August 2003 he was appointed Executive Vice President, Global Operations, Connectivity.

We have adopted a Code of Ethics for Senior Officers that applies to all of our officers including the Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer. The Code of Ethics for Senior Officers is included as Exhibit 14 to this Annual Report on Form 10-K. In the event we make an amendment to, or grant any waivers of, a provision of the Code of Ethics for Senior Officers that applies to the Chief Executive Officer, Chief Financial Officer or Chief Accounting Officer that requires disclosure under applicable SEC rules, we intend to disclose such amendment or waiver and the reason therefor on our Web Site.

Item 11. Executive Compensation

Information about executive compensation is incorporated by reference to the discussion under the heading Executive Compensation beginning on page 8 of our Proxy Statement for the 2004 Annual Meeting of Stockholders.

Item 12. Security Ownership of Certain Beneficial Owners and Management

Information about security ownership of certain beneficial owners and management is incorporated by reference to the discussion under the heading Stock Ownership of Management and Certain Beneficial Owners on page 6 of our Proxy Statement for the 2004 Annual Meeting of Stockholders.

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We may grant stock options to directors, officers and key employees, under our stock option plans at a price not less than the market value at the date of grant. Detailed information regarding stock option plans can be found in Note 9 of the Notes to Consolidated Financial Statements. The following table summarizes the availability of options in total and available options to be exercised:

(a)

(b)

(c)Number of securities tobe issued upon exerciseof outstanding options,warrants and rights

Weighted-averageexercise price ofoutstanding options,warrants and rights

Number of securitiesremaining available forfuture issuance underequity compensation plans(excluding securitiesreflected in column (a))Equity compensation plans   approved by security holders




1,657,908


$
14.07



1,093,659Equity compensation plans   not approved by security holders












Total




1,657,908


$
14.07



1,093,659


Item 13. Certain Relationships and Related Transactions

The registrant does not have any information relating to certain relationships or related transactions that is required to be reported by Item 404 of Regulation S-K.

Item 14. Principal Accounting Fees and Services

The aggregate fees for professional services provided by our independent public accountants for the fiscal years ended September 27, 2003 and September 28, 2002 are as follows:

2003

2002Ernst &Young LLP

Total 2002

Ernst &Young LLP

ArthurAndersen LLP(1)Audit Fees



$
372


$
299


$
277


$
22Audit Related Fees(2)




24



20







20Tax Fees




311
(3)


233



230
(4)


3All Other Fees(5)








57



57



Total



$
707


$
609


$
564


$
45


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|(1) | Amounts are for services provided prior to their dismissal on May 7, 2002.
|--- | --------------------------------------------------------------------------

|(2) | Amounts are for benefit plan audits and accounting and internal control consultation.
|--- | -------------------------------------------------------------------------------------

|(3) | 2003 tax fees include $267 for tax compliance and $44 for tax planning and tax advice.
|--- | --------------------------------------------------------------------------------------

|(4) | Total includes $113 for services provided prior to their appointment as our independent public accountants on May 7, 2002.
|--- | --------------------------------------------------------------------------------------------------------------------------

|(5) | Total is for valuation services provided prior to their appointment as our independent public accountants on May 7, 2002.
|--- | -------------------------------------------------------------------------------------------------------------------------

The Audit Committee of our Board of Directors pre-approves on an annual basis the audit, audit related, tax and other non-audit services to be rendered by our accountants based on historical information and anticipated requirements for the following fiscal year. The Audit Committee pre-approves specific types or categories of engagements constituting audit, audit related, tax and other non-audit services as well as the range of fee amounts corresponding to each such engagement. To the extent that our management believes that a new service or the expansion of a current service provided by our accountants is necessary or desirable, such new or expanded services are presented to the Audit Committee for its review and approval prior to the engagement of our accountants to render such services. The Audit Committee may delegate pre-approval authority to a member of the Audit Committee, who must present such members decisions to the ful





l Audit Committee at its next scheduled

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meeting. No audit related, tax or other non-audit services were approved by the Audit Committee pursuant to Rule 2-01, paragraph (c)(7)(i)(C) of SEC Regulation S-X during the fiscal year ended September 27, 2003.

PART IV

Item 15. Exhibits, Financial Statement Schedules and Reports on Form 8-K

15(a)(1)  Financial Statements

All financial statements listed below are those of the company and its consolidated subsidiaries:

Page(s) in our2003 Form 10-KReports of Independent Public Accountants




1516Segment Information




3335Geographic Data




35Consolidated Balance Sheets




17Consolidated Statements of Income




18Consolidated Statements of Cash Flows




19Consolidated Statements of Comprehensive Income




20Consolidated Statements of Stockholders Investment




21Notes to Financial Statements




2245


15(a)(2)  Financial Statement Schedules

Schedules are omitted because they are not required or the information is given elsewhere in the financial statements or related notes.

15(a)(3)  Exhibits

These exhibits are available upon request. Requests should be directed to Mr. Robert J. Tortorello, Secretary, Woodhead Industries, Inc., Three Parkway North, Suite 550, Deerfield, Illinois, 60015.

| | (3) | (i) Articles of Incorporation. Our Certificate of Incorporation including amendments through January 22, 1993 is incorporated by reference to Exhibit (4)(a) of our Form S-8 report filed on April 22, 1994, as Registration #33-77968.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (3) | (ii) By-laws. Our By-laws, as amended, are incorporated by reference to Exhibit (3)(b) of our Form 10-K report for the year ended September 27, 1997.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------
| | (4) | Instruments defining the rights of security holders, including indentures.                                                                           

| |  | (a) | Our Preferred Stock Purchase Rights Plan adopted April 24, 1996, is incorporated by reference to Exhibit 4 of our Form 10-Q report for the period ended March 30, 1996.                                                                                                                                                                               
| |  | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | (b) | A Credit Agreement between the Registrant and Harris Trust and Savings Bank dated October 29, 1993, including the first through eighth amendments thereto filed with the Securities and Exchange Commission as Exhibit 4(b) to our Annual Report on Form 10-K for the fiscal year ended September 28, 2002.                                           
| |  | (c) | Form of the 6.64% Note Purchase Agreement between the Registrants consolidated subsidiary, Woodhead Finance Company, and private investors dated September 28, 1998 filed with the Securities and Exchange Commission as Exhibit (4)(c) to our Annual Report on Form 10-K for the fiscal year ended September 28, 2002.                              
| |  | (d) | The 6.81% Note Purchase Agreement between the Registrant and private investors dated September 28, 1998 in the amount of $15,000,000, maturing in 2013.The document described in paragraph 4(d) above is not filed herewith by Registrant, but Registrant undertakes to furnish copies thereof to the Securities and Exchange Commission upon request.



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| | (10) | Material Contracts
| | ---- | ------------------

| |  | (a) | The 1990 Stock Awards Plan, as amended, is incorporated by reference to Exhibit (10)(c) of our Form 10-K report for the year ended October 2, 1999.                                                                                                                                              
| |  | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | (b) | The 1993 Stock Awards Plan, as amended, is incorporated by reference to Exhibit (10)(d) of our Form 10-K report for the year ended October 2, 1999.                                                                                                                                              
| |  | (c) | The 1996 Stock Awards Plan, as amended, is incorporated by reference to Exhibit (10)(e) of our Form 10-K report for the year ended October 2, 1999.                                                                                                                                              
| |  | (d) | The 1999 Stock Awards Plan is incorporated by reference to Exhibit A of our Proxy Statement for the 2000 Annual Meeting of Stockholders.                                                                                                                                                         
| |  | (e) | The 2001 Stock Awards Plan is incorporated by reference to Exhibit A of our Proxy Statement for the 2002 Annual Meeting of Stockholders.                                                                                                                                                         
| |  | (f) | The Management Incentive Plan effective for fiscal 2003, is incorporated by reference to page 17 of our Proxy Statement for the 2004 Annual Meeting of Stockholders.                                                                                                                             
| |  | (g) | The Plan of Compensation for Outside Directors, is incorporated by reference to Exhibit (10) of our Form 10-K report for the year ended September 28, 1985.                                                                                                                                      
| |  | (h) | The 1990 Supplemental Executive Retirement Plan is incorporated by reference to page 16 of our Proxy Statement for the 2004 Annual Meeting of Stockholders.                                                                                                                                      
| |  | (i) | The Severance Agreement between Mr. Philippe Lemaitre and Woodhead is incorporated by reference to Exhibit 10(i) of our 10-K report for the year ended September 29, 2001. Messrs. Fisher, Moulton, Nogal, Tortorello, Wiedor and two other key employees have substantially identical contracts.

| | (14) | Code of Ethics for Senior Officers
| | ---- | ----------------------------------

| | (21) | Subsidiaries of the Company
| | ---- | ---------------------------

| | (23.1) | Consent of Ernst & Young LLP
| | ------ | ----------------------------

| | (23.2) | Information regarding consent of Arthur Andersen LLP
| | ------ | ----------------------------------------------------

| | (31.1) | Certification Pursuant to Section 302 of the SarbanesOxley Act of 2002 signed by Philippe Lemaitre  President and C.E.O.
| | ------ | --------------------------------------------------------------------------------------------------------------------------

| | (31.2) | Certification Pursuant to Section 302 of the SarbanesOxley Act of 2002 signed by Robert H. Fisher  Vice President, Finance and Chief Financial Officer.
| | ------ | ---------------------------------------------------------------------------------------------------------------------------------------------------------

| | (32.1) | Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the SarbanesOxley Act of 2002.
| | ------ | -----------------------------------------------------------------------------------------------------------------------

| | (32.2) | Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the SarbanesOxley Act of 2002.
| | ------ | -----------------------------------------------------------------------------------------------------------------------

15(b)  Reports on Form 8-K

During the quarter ended September 27, 2003 we filed an 8-K on July 23, 2003 releasing our third quarter 2003 earnings.

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SIGNATURES

Under the requirements of Section 13 or 15(d) of the Securities and Exchange Act of 1934, this report was signed on behalf of the Registrant by the authorized persons below.

WOODHEAD INDUSTRIES, INC.BY:

/s/   Robert H. FisherRobert H. FisherVice President, Finance and C.F.O.December 17, 2003


Under the requirements of the Securities and Exchange Act of 1934, this report was signed by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:

Signature

Title

Date/s/ Philippe Lemaitre
Philippe Lemaitre

Chairman, President and C.E.O.(Principal Executive Officer)

12-17-03/s/ Robert H. Fisher
Robert H. Fisher

Vice President, Finance and C.F.O.(Principal Financial Officer)

12-17-03/s/ Joseph P. Nogal
Joseph P. Nogal

Vice President, Treasurer/Controller(Principal Accounting Officer)

12-17-03/s/ Charles W. Denny
Charles W. Denny

Director

12-17-03/s/ Ann F. Hackett
Ann F. Hackett

Director

12-17-03/s/ Linda Y. C. Lim
Linda Y. C. Lim, Ph.D.

Director

12-17-03/s/ Eugene P. Nesbeda
Eugene P. Nesbeda

Director

12-17-03/s/ Sarilee K. Norton
Sarilee K. Norton

Director

12-17-03


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