Document ryN112jRLOxakG3xXk1dmo1q

Notes to Consolidated Financial Statements iAbtUde'^e accouni^iif the Company and Its wholly- owned Canadian and International subsidiaries. The net assets of such subsidiaries including loans and advances from the Company amounted to $34,503,389 at December 31,1966 and $32,158,796 at December 31, 1965. For the year ended December 31,1966 the net losses of such subsidiaries were $2,148,046 after amortization of intangibles and a write-off of goodwill amounting to $1,407,384 and the payment of technical service fees, administrative charges, and interest to the Company totalling SI,648,025. In the year ended December 31,1965 the net earnings of these sub sidiaries were $886,328 after amortization of intangibles amounting to $230,46S and the payment of technical service fees, administrative charges, and interest to the Company totalling $955,654. 2. Included in the caption Other income-net on the Statement of Consolidated Earnings in the year ended December 31, 1966 ate gains which arose upon the disposition of securities previ ously held for investment amounting to $1,515,1S5. and a write-off amounting to $800,000 which represents the Company's estimate of the decline in value of purchased goodwill. 3. Depreciation has been provided by the Company and its subsidiaries generally at rates calcu lated to absorb the cost of buildings and equipment during the period of their useful lives. Where permitted by income tax laws, the Company and certain ol its subsidiaries deduct larger amounts of depreciation for income tax purposes than are charged against net earnings. The reductions in tax liabilities resulting from this practice are not credited to net earnings but are accumulated in deferred income taxes, displayed separately on Ihe consolidated balance sheet. 4. The financial data In this report have been adjusted to reffect the increase in authorized shares.^ to 6,000,000 and the two-for-one stock split approved by the shareholders on April 26 1966. 5. At December 31, 1966, 25% of total inventories, measured by approximate current cosfare^ stated on the last-in, first-out basis. Such cost exceeds the last-in, first-out value by $4,742,000.' "* 6. Long term debt at December 31,1966 includes the following:. . Due Within '.One Year Due AftethtrL One Year , y^ Abex Corporation 4'/j% sinking fund debentures due 1982 ..:----- ------ '. 4'/% sinking fund debentures due 1987 ...'.......... .........-- .. $' -- $ 9,533,C 11,127,0 Canadian Subsidiaries . - ^ . Amount due January 16,1967 on purchase.of r~ ' Jarry Hydraulics Limited ;.... .'.-------- . ;'.,,. :^` 3,p20,378 . Amount due Canadian governmentoh purchase of equipment;:^;-;;/'-' ,; ;>1,993 157,! European Subsidiaries y-'s-' v;-:-' ". ' ' ' Notes payable (3.8%-7%LdueJ967-i986.-. . ^/.v,-: ;-. .v;Lt:;4;v^r? ^2^- 6,573,5 Total longterm debt yv,.. Sag-, s&jn&j) Under the terms'of the indentures'cove'rihg sinking.fund debenttih^^jilimum annuaf-slhM| fund payments are required/; as'^foilows: 1968;'. $710,000;. 1969r|97tg;Jr900,000; 1972rt $1,300,000; 1982, $1,15O,00Q;.t9^1?86;j$65q,000; and 1987;$500^^i?^V The indentures covering thedebentures Contain restrictionsilambhgiaih^'against the pa] ; of dividends (other than stock"dYt8ehd5>; the.fedemption of.'ca^.ft^A^l^ahd: IriYestmed .. subsidiaries in areas other thanJfteUnited States and CanadajVThffiarriqunWree oCsuch resl i'; .V tlxita nt nM>AmKai> IQft/t'imnbv-nwhnirict TAlffrCtK/A: CfWflhiinKvUfKiixTth/Uv.lXjU;! . ". c. Beginning of year. Net earnings and (in -1! .... -. ?. .'Reference should be mad'e-ttfni ydxe/clsable. No shan 35;141 $59,219,1718 10,460,474?^ . 69,679,6 `9^23 > $Q18'.- 5,271,85 $64,408,t akCommission pro twenty-five " ` SCI 01699