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Annual Financial Rept,1982
	ML20088A334
Person / Time
Site:	Barnwell File:Allied-General Nuclear Services icon.png
Issue date:	12/31/1982
From:	; ALLIED CHEMICAL CORP.
To:	;
References
	NUDOCS 8404110398
	Download: ML20088A334 (60)
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Highlights cf 1982 Allied Corporation in 1982 Allied... o made the third highest profit in its history a agreed to acquire The Bendix Corporation and acquired a large minority interest in the Martin Marietta Corporation a increased domestic oil and gas reserves by 38 percent through an acquisition a established two new operating companies to expand its electrical' electronic businesses a continued to increase R&D spending and funding of oil and gas exploration o improved productivity, reduced costs and cut working capital needs to position itself for faster growth when the economy recovers (oocars :n rnmons except per snare amounts) 1982 1981 1980 Net sa!es $6,167 $6,407 $5,519 Net income 272 348 289 Per share of common stock: Net earnings 6.22 9.17 8.15 Cash dividends 2.40 2.35 2.15 1

s Lctt:r to Sharch:Idsrs 6,500 employees dunng the year. Against this gloomy backdrop .aere suddenly appeared, late in the third quarter, an extraordinary op-portunity Two large corporations, Bendix and Martin Marietta, were involved in a takeover battle that appeared to be at a stalemate When Bendix approached us, we saw the possibility of realizing sev-eral of our most important strategic objectives, so we entered into mer-ger negotiations. Bendix has a leading position in the worldwide automotive busi- ) Merger Approved ness, and its automotive group has i We were able to reach agreements remained profitable throughout the I which provided that Allied, without long recession. It has an exce!!ent laying out any cash, would acquire distribution network serving the Bendix and a 39 percent interest in automotive af termarket, and we Martin Marietta The first stage of expect this to benefit our other Twas widely forecas he year 1982 was one of deep the transaction was camed out late businesses producing automotive recession, with its inevitable in December, and the merger was products. impact on profitabihty, but a year given final and overwhelming ap-Bendix also is an important nevertheless in which Albed made proval by the shareholders of supplier of computer-controlled its boldest and most promising Bendix and Allied at special meet-machine tools and automated pro-commitment to future grcuth. ings held on January 31.1983. duction equipment. The economic recovery that The negotiations and agree-ments that brought about the Earnings Balance for the second half never came. merger are far too comp lex to be Bendix raises the percentage of Instead, economic dechne turned repeated here. They were detailed our profits coming from domestic into economic disaster, the worst in a 277-page proxy statement dis-sources, enabling us to make better recession since World War 11. tributed to all Allied and Bendix use of Allied's tax credits. It im-At the same time, and in part shareholders in advance of the Ope-proves the balance between income because of the recession, a world-cial meetings. from manufacturing operations and wide oversupply of oil forced prices The happy result of this long from oil and gas production. And it down and reduced the earnings effort, to which many of the officers also increases the average tech-of our proutable oil and gas opera-and employees of both companies nological level of Allied s busi-tions. And the strength of the U S. devoted long hours over a period of nesses, thus helping in our drive to about f ve months, is that Bendix, a become less dependent on com-dollar abroad sharply reduced ex-i port sales of many products. company with more than $4 billion modity products. In this climate Alhed's net in-in annMI sales, is now a subsidiary The Bendix and Martin Marietta come declined to $6.22 a share, of Allied. It brings us many new acquisitions cost Allied $1.8 billion, 32 percent below 1981's record strengths. a price we think is fair and which $9.17 but stdl the third highest in Bendix makes high-technology leaves us with a debt level that is Allied's history. Sa!cs totaled electronics equipment for various manageable. We have several $6.2 bdhon, compared to $6 4 billion aerospace markets. Its products are options to bring our debt-to-capital-the year before. used in virtually all U.S. fighter ization ratio, which stands at 35.7 planes and in the newest commer-percent following the merger, back 1 Productivity improved cial aircraft. Bendix will play a toward the very low levels we To achieve these results required significant role in expanding the achieved in 1981 and 1982. exceotional efforts in cost cutting, electrical / electronic segment of Because of the recession, we pativity improvement and Allied's business, which was started concentrated a great deal of effort tighter control over use of capital. with the acquisition of the Eltra during 1982 on managing for cash Unfortunate ly, because demand for Corporation in 1979 and expanded flow and increasing the efficiency of many of our products declined so with the acquisition of Bunker Ramo all our operations. Eltra and Bunker sharply, we had to lay off about Corporation in 1981. Ramo were reorganized into two 2

fY N F 5 C .5% n l , b -. The Company's financial condi-tion was significantly improved during the year. Long-term debt was reduced by $157 million, from 23.3 percent of total capital at De-cember 31,1981, to 19 5 percent at December 31,1982. A Company-l wide cost reduction program streamlined operations, and inven-tories were cut back by $194 million. r These and other actions helped I position Allied to handle the Bendix acquisition. I want to thank Alhed's 44,000 employees for working so hard and successfully in last year's difficu!! economic environment. We look forward to the same kind of enthusiastic effort by the 61,000 talented Bendix employees who have now become part of Allied. We enter 1983 seriously con-cerned about the state of the U.S. Edward L Hennessy, Jr. economy. Bendix is expected to make a contribution to Allied's earn-ings this year after allowing for the [ new operating companies, Allied in keeping with our long-stand-expenses of the merger. But the I information Systems and Allied ing commitment to the chemical terrible slowdown in industrial ac-Electron c Components, and a new industry, we started construction on tivity continues to affect most of Industrial Products Group was a plant to produce new water treat-Allied's businesses, including formed to provide more effective ment polymers and on a pilot plant Bendix. management for several businesses to make fluorinated carbon mate-Current forecasts suggest that which are outside the scope of our rials, used in new miniature the recovery will be slow. We are l five cores. Our diverse Canadian batteries. convinced that Allied's businesses operations were regrouped in a new are positioned to make the most of Allied Canada Inc. R&D Rises recovery when it comes and that the The domestic operations of our Because of the severe pressure on addition of Bendix will help make Union Texas Petroleum subsidiary earnings, we postponed some capi-possible, over the next few years, a were strengthened early in the year tal projects, but we continued to great new era of profitable growth when Allied, in equal partnership make substantial investment in for Allied. with the Continental Group, ac-projects and programs we feel are ) quired Supron Energy Corporation. essential to Allied's future growth. Supron has large U.S. gas reserves, Research and development spend-k particularly in the Southwest. ing rose from $152 million in 1981 to ), We continued to prune our $186 million. Oil and gas exploration portfolio of businesses that don't fit expense increased from $189 mil-Edward L. Hennessy, Jr. M into our plans, selling the Converse lion in 1981 to $245 million. Capital Chairman of the Board 1 Rubber Company, Stanley G. Flagg. spending totaled $524 million in and Chief Executive Officer Borg Textiles and the European seat 1982, compared to S609 million in belt operations during 1982. 1981. February 2,1983 I f l 3 i

l Thisis Allisd i l l l l I ( l l .j g. l NP - l Chemicals Fibers and Plastics Ftincipal products Soda ash = electronic, water Nylon fdament and staple I treatment, fluorine, chrome fibers a nylon and polyester l and fine chemicals industrial fibers a nylon a nitrogen and phosphate apparel fibers engineered fertilizers e refractory and packaging plastics products a fluorocarbons + fluoropolymers a hydrofluoric and sulfuric e high-density polyethylene acids

specialty oximes
- low-molecular-weight a tar products
uranium polyethylene a phenol hexafluoride
sulfur

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Markets Industries Glass ' electrical Residential and commercial e electronic d water carpet e automotive treatment

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r automotive c agriculture a electronic a packaging

steel and aluminum a containers
additives

= chemicals a refrigeration a fertilizer a coatings a nuclear a refining w fibers = plastics 4

( $L Oil and Gas Electrical and Electronic Health and Scientific Crude oil and condensate Electnca! and e!ectron;c Analytical and measuring natural gas + hquefied connectors and instruments and apparatus natural gas liquefied components = e!ectronic < reagent chemica!s and petroleum gases ' natura! information sys* ems diagnostics " glassware gasohne residue gas - m htary intelligence and plasticware ' laboratory - ethylene systems ' phototypesetting furniture equ pment and penphera!s - wire, cable and motors i > batteries and chargers I Oil ref,n=ng gas pipe'ines Telecommunications Industrial laboratories chemical feedstocks computers ' military! medical laboratories 5 home, farm, utthty and aerospace u brokerage and < educationalinstitutions inoustnal fuels banking a publishing government laboratories 4 - transportation industrial and sma!I engines l t materials handling l l 5

Ch:mictb Sales in the chemicals segment were $1,296 million, a 19 percent decrease compared to 1981's $1,594 million. Income from operations was $16 e gehe @e pswes million, an 89 percent decrease compared to 1981's $148 million. caused by an industry-wide over-J supply. The resu't was a substantial drop in profits from the previous year. There was also a large loss in the traditionally profitable chrome chem ca!s business-$27 million. Al-though somewhat affected by slowdowns in the housing and auto-motive markets, the business other of its advances in fluorine suffered primarily because of prob-chemistry fluorinated carbon lems associated with the (CF,)-from the laboratory to the introduction of a new manufacturing pi!ot plant stage. A new facility at process. By year-end, however, the the Metropolis, lilinois, plant, sched-situation was corrected. uled to be operational by mid-1983, will permit larger scale development Despite all-out efforts costs and improve efficiency Savings Realized of CF, technology, as well as the in its operations. Amed During the year the company imple-introduction of a new group of spe-Chemical Company's 1982 mented a number of cost-cutting cialty products for the emerging performance was disap-and productivity programs which and tast-growing lithium battery pointing, with sa:es oown helped offset the shortfa!!s. A reor-market, where fluorinated carbon is and earnings sharply be-ganization, designed to reduce staff used as a cathode material in the low the previous year's functions and make each business manufacture of batteries for cam-record high levels. unit more self-sufficient, resulted in eras, watches and electronic The company operated in an annualized savings of about products. CF, also has potential as a severe economic climate and was $25 mi! Son. Additiona! savings also a lubricant and specialty coating. affected by the strength of the U S. were realized through innovative dollar which weakened export projects improving the productivity Other Programs sales. Neverthetess, most of its of energy, labor and materials in the To meet the increasing demand for businesses, vWth the exception of company's plants and sales and new, sophisticated refractory prod-fertehzers, soda ash, chrome chemi-dlstnbution systems. ucts for growth markets and for ca!s and refractory products. Although 1982 was not a year of diversification within the basic man-affected by the depressed steel growth for Allied Chemical, its com-ufacturing industries it now serves, industry, held up wet!. Three mitment to developing new spe-the comoany also opened a new businesses-fine chemica!s, cia!!y products and technologies for multimillion-dollar research center at fluorocarbons and su! fur prod-the future remained strong. The State College, Pennsylvania. ucts-showed gains over the company continued to accelerate In other developments, a li-previous year funding of its research and develop-censing agreement was signed with in the fertilizer area, sa!es ment programs, increasing its a Japanese firm which permits the plunged and the business lost $36 investment from $34 million in 1981 company to manufacture and mar-milhon. The situation was caused by to $38 million in 1982. ket refractories and equipment for the very severe depress:on in the The principal targets of its for-slide-gate systems used in steel-agricu'tural industry, the company's ward research activ;ty are water making, and plans to build a new single largest market, as well as by treatment, electronic and fluorine liquid aluminum sulfate plant in the high cost of domestic natural chemicats. Two new products result-Tampa, Florida, in early 1983,were gas, the raw material from which ing frrm this Emphasis-Clarifloc announced. The new plant, the fertilizers are made, we'er treatment polymers and company's third in Florida, will serve Soda ash, the company's vol- /.cculith photoresists for the elec-industrial and municipal customers ume leader, not only suffered from t onics industry-are already having who use the product in the man-sof t demand in its pnme market, iritial successes in the marketplace. ufacture of paper and for treating glass manufacturing, but also from in 1982 the company took an-water. (- 6

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I Fibers cnd Picctics Sales in the fibers and plastics segment were $1,111 million, a 7 I percent decrease compared to 1981's $1,195 million. Income from operations was $93 million, an increase of 27 percent over 1981's $73 million. l phcation of either soil protector or antimicrobial agent. In the industrial market, sa!es were near the level of last year, although earnings increased as a result of improvement in the polyes-ter sector. The company produces heavy-denier, high-tenacity nylon and po! yester fibers used in such products as automotive and truck tires, seat belts, hoses and con-veyor be!ts. or Allied Fibers & Plastics Com-Poor market conditions affected pany,1982 was a relatively good apparel fiber performance. A year. Although sales dechned, earn- $30 million modernization program ings were up, reflecting good at the Columbia, South Carolina, performance in the carpet and in-plant was completed dunng the dustrial frbers businesses and in year The expenditure reflects a pro-them is a new line of polyester high-density polyethylene, which prietary process which improves terephthalate mol6ng resins tar-made a b;g recovery from the pre-quality, reduces costs and provides geted at the growing electronics vious year's slump. f;exibihty for new products. and industrial markets, a new fluoro-The company's fibers business polymer film for release applica-faced severe competition through-HDPE improves tions, and a new fluoropo!ymer out the year. Nevertheless, it In the plastics area, high-dens,ty coating system which affords the outperformed the industry in gen-polyethylene (HDPE) sates in-industna! user a substantial reduc-eral during that period, the eighth creased modestly. and earnings tion in corrosion damage, year out of the last nine that it has improved to a greater extent, aided Allied is the world leader in the done so. Much of the credit for this in part by favorable raw material production and marketing of low-achievement in recent years goes to costs earlier in the year. Raw mate-molecular-weight polyethylene, Anso IV nylon carpet yarn, which rial costs have been rising over the nearly 50 percent of which is sold was introduced to the carpet indus-last few months however, and se-overseas. Sales declined somewhat try about two and a half years ago vere competition in the marketplace as a result of worldwide economic with great success. has begun eroding margins. HDPE conditions. Nevertheless, earnings is used in the fabrication of house-improved, helped by cost savings A New Feature hold chemical, dairy and food brought about by the closing of a The techno!ogy that produced this containers, among others manufacturing plant at Tonawanda, advanced fiber, which features built-Engineered plastics' income New York. Marketed primarily under in soil, stain and static protection, performance was hit particularly the A-C trademark, inw-molecular-has been extended with the addi-hard by general economic condi-weight polyethylene is used as an tion of built-in antimicrobial pro-tions in 1982, a period dunng which additive in a wide variety of prod-tection, which retards the growth of substantial investments were made ucts, from ink to floor waxes. j odor-causing bacteria and fungi. to support the business area's future To develop "Anso IV with Called "Anso /V with growth. HaloFresh" fibers and other innova-HaloFresh," the new fiber recently tive products for its customers, was introduced in carpet made by Products introduced Allied Fibers & olastics Company i most of the industry's major mills. Several new engineered plastics spent $42 million for research and The built-in antimicrobial feature products, introduced in 1982, are development in 1982, an increase of eliminates the need for topical ap-gaining market acceptance. Among 20 percent over the previous year. l l, 8

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. _ = _ _ _ _ _. Oil end Gco Sales in the oil and gas segment were $1,992 million, a of natural gas. Net natural gas hq-4 percent decrease compared uids production from UTP's to 1981's $2,068 million. Income rocessing plants averaged 16,000 day in 1982,55,000 barrels a day from operations was $486 barrels per day. net to UTP. million, a decrease of 15 At year-end, estimated re-Net daily production during pared to 1981's (50 serves, including the Supron 1982 from UTP's properties in East acquisition, were 493 million barrels Kalimantan, Indonesia, averaged of oil equiva!ent, down 10 mil lion 2,836 barrels of crude oil and con-barrels f,om 1981 after producton of densate and 132 million cubic feet 51 milhon barrels of oil equivalent. of natural gac, ccmpared to 2.500 barrels and 132 miliion cubic feet in Exploration Expense Up 1981. Natural gas production will in-Expenditures essent!al to future crease substantially in late 1983 growth increased significantly dur-with the doubling of capacity at the ing the year. Oil and gas exploration Bontang LNG plant and with gas j expense rose from $189 million in sales to a new Indonesian fertihzer ~ 1961 to $245 million in 1982. UTP facility. participated in the completion of Oil production from five de-Ulevels 401 exploratory and development velopment wolls in Pakistan's nion Texas Petroleum, Allied's weh, including 68 wells dnlled on Khaskeli field, which UTP dis-oil and gas subsidiary, con-the acquired Supron properties. covered in 1981, averaged nearly tinued its strong performance This resulted in 335 gross (79.47 2,228 barrels daily in 1982,586 bar-in 1982, although lower world-net) productive wells representing a rels net daily to UTP. Additional wide pnces for oil and lower 37 percent success ratio on explor-drilling will be conducted there in demand for domestic natural atory.'. ells and 96 percent on 1983 UTP has a 30 percent gas reduced sa'es and income development wel!s. ownership. from operations below 1981 UTP's total capital and explora-In 1983 the company plans to tion expenditures, including internal participate in 59 exploratory wells to Early in 1982 Allied acquired geological and geophysical costs, test its foreign properties. These Supron Energy Corporation and increased from $475 million in 1981 wells will include confirmation drill-i subsequentiy transferred the pro-to $482 million in 1982. In 1983 UTP ing in Argentina's Ma! argue Sur ducing properties to a partnership plans to spend $535 million on cap-area. I equally owned with the Continental ital and explorat on programs. Group, Inc. This acquisition im-Significant discoveries were Gas Processing proves UTPs ba'ance of domestic made during 1982 in Southeast For the third consecutive year, lig-to foreign reserves. Cn an oil equiv-Texas, the Gulf of Mexico off Loui-uids production from the 11 gas atent basis, UTP's share of the siana and in the Williston Basin of processing plants UTP operates in-former Supron reserves increased North Dakota. An active exploration creased at a rate substantially domestic reserves from 23 percer,t and development program will con-greater than the industry. In 1983 of UTP's total to 29 percent. tinue in 1983. In the San Juan Basin UTP expects to bring an additional Worldwide net daily production, of New Mexico a!one, UTP pians to plant on stream in Texas and an-including production from the com-participate in the dnl!ing of 120 wells other in Louisiana and plans further pany's share of the former Supron to develop reserves located on the expansion. properties, averaged 86.000 barrels former Supron properties. At year-Both productivity and profit-of crude oil and condensate and end UTP's net undeveloped lease-ability were improved in 1982 in 320 million cubic feet of natural gas holds in the U.S. tota!ed some Texgas Corporation, a subsidiary in 1982, compared to 85,000 barrels 2.2 million acres. that markets liquefied petroleum and 329 million cubic feet in 1981. gas mostly in the eastem ha'f of the Of the 1982 total, foreign net daily Foreign Production U.S. Operations were streamlined production was 68,000 barrels of in the British North Sea, daily crude through consolidations of selected l crude oil and condensate and 135 oil and condensate product:on in retail branches and the sale or dade million cubic feet of natural gas Do-the Piper and Claymore fields, in of a number of others. Expanded mestic net daily production was which UTP has a 20 percent inter-marketing efforts will increase pro-18,000 barrels of crude oil and con-est, increased slightly from 307.000 pane sales to the motor fuel market densate and 185 million cubic feet barrels a day in 1981 to 315,000 a in 1983. j 10

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Electric 1 cnd Electr:nic Sales in the electrical and electronic segment were $882 million, a 7 percent increase over 1981's $825 million. Income from operations was $3 million, compared to 1981's $33 million, a 21 percent increase over the previous year. Electronic Components in the electronic components area, the Amphenol division felt strong competitive pressures as we!i as declining conditions in the commer-cial aerospace and telephony industries. The division, which pro-l duces electrical, electronic and Group, which produces and mar. l fiber optic connectors and associ-kets phototypesetting products, I ated interconnecting aevices, systems and typefaces, were se-Tof certain busin he Corporation's e!ectncal nevenheless increased spending on verely depressed in 1982 and the and electronic core business research and development. The di-unit operated at a loss. There were is managed by A!!;ed Electronic vision's telecommunication and several reasons, among them in-Components Company and Allied special military projects performed tense competition and the world-Information Systems Company, both well, permitting Amphenol to gain wide recession tnat resulted in a formed early in 1982 by the merger slightly in overall market share. falloff in business across the groups The Presto!ite division, which geographical markets. i Eltra and Bunker Ramo Corpora-manufactures a wide range of elec-The Bunker Ramo information tions. Eltra. acquired in 1979, tronics, wire and motors for the Systems division, which provides marked Amedt entry in the electri-automotive, material handling, farm electronic transaction processing caUelectronics field and Bunker equipment, manne and construction systems to the banking, savings Ramo, acquired in mid-1981, broad-industries, performed at levels com-and loan, and brokerage industries, ened and enhanced its base. parable to the markets it serves and increased sales in 1982 over the Dependent to a large extent on had a better than average earnirigs level of the previous year. However, the vitality of industrial and business performance. income, in a year-to-year compari-activity, thea businesses were af-Overall sales by C&D Batteries, son, dropped because of increased fected by a sluggish economy which manufactures lead-acid bat-R&D expend tures. While cost reductions helped teries for a wide variety of indus' rial In the past few months the cushion the impact, there was ero-markets, continued at near the level division has introduced expanded sion in eamings in 1982. of the year before, a!! hough its information systems that combine Together, Allied's Electronic earnings were down Sales of bat-the capabdities of the best personal Components and Information Sys-teries used for standby power in computers and word processors c' tems Companies achieved ccst telecommunications and uninter-the market today Deliveries will i reductions in 1982 that amount to ruptible power supplies continued begin in 1983. Employing a new l about $40 million on an annualized strong, a!most making up for slump-microcomputer, the units can be 1 basis. Administrative and general ing sales in the industrial lift truck configured as a multiterminal, multi-expenses were greatly reduced and other motive power markets. function office automation system ) and productivity was improved C&D's capital expenditures for man-for use by banks, brokerage offices i throughout the companies' opera-u'acturing modernization resulted in and other financial institutions. J tions, placing the units in a more a strengthening of its competitive Sa!es by the Bunker Ramo l competitive position for a strong position and enabled the unit to Electronic Systems division, which recovery when business improves. gain a larger market share. is primarily a defense contractor, The two companies a!so con-were up moderately over the year tinued their aggressive research Information Systems before, and the division was able to and development programs, in the information systems area, turn a loss in 1981 into a small profit spending a total of $40 million, sales by the Mergenthaler Linotype in 1982. h 2 12

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H=lth cnd Sci:ntific Products Sales in the health and scientific products segment were $505 million in 1982; income from operations was

$19 million. Fisher Scientific [ Company, which constitutes this segment, was acquired effective October 1,1981. also boosted outlays on research and deve!opment by 14 percent, to carry out its comm;tment to add more high-technology products to its businesses. Fisher is the leading supplier to industrial labs and the second largest suppher to medical labs. Its hospita!s, clinics and medical cen-products include analytical and ters, benefited from increased measuring instruments, apparatus demand by health care facihties. he Corporation's newest and apphances; reagent chemicals Growth of this market is expected to Tscient;fic products m core bus ness in hea:tn and and diagnostics; glassware and continue for the foreseeab!c future. p!asticware, and laboratory year of operatton in 1982. Managed furniture. New Products by Aliied Health & Scienbfic Prod-Sales to industrial laboratories were ucts Company, it is, at th's time. New Catalo; relatively strong in 1982, consider-made up entirely of Fisher Scientif,c in 1982 Fisher tnought out the latest ing the state of the economy Sa!es Company, which Amed acquired in ed tion of what is probably its best equaled the level of the year before, the fall of 1981 as an entry into the known " product." a 1,700-plus-page helped to some extent by the intro-high-growth opportunities of the illustrated catalog of virtually all duction of two new items that were health caru ano other scientific 56.000 Fisher-stocked items. The named by industnal Research Mag-markets. catalog, issued every other year, is azine as among the 100 "most Fisher Scientific, which man-sent to more than 300,000 custom-significant technical products of ufactures, drstnbutes and sells a ers and potential customers around 1982." The isotemp ashing furnace, broad range of products used in the world. Model 495, combines an integral laboratones, exceeded the sa!es Among hundreds of new items microprocessor with a unique level of its 1981 record year, despite introduced and included in the cat-forced-draf t design to provide cus-the slowest growth rate in the labo-a!og is a new version of Fisher's tomers greater flexibihty in deter-rstory supphes markets ni a dec-automatic tissue processor Ca!!ed mining ash and/or volatiles content. The other product is a new Jarrell-ade. However, in a year-to-year the Histomatic 266MP and de-s campanson, earnings slumped, re-wgaec 'ar large medical centers, it Ash sohd sampling spectrometer I fiecting compet:tive price pressures can prccess as many as 340 tissue that provides expanded analytical and costs of expanding its sa!es cassettes in a single run. It has an capability. force integral microprocessor which en-Fisher Scientific's other major Although the company trimmed ab!es the user to create and store markets, educational and govem-i costs in many areas of its opera-individualized programs. The com-ment laboratories, were less robust tions, it continued to make a pany also introduced the new than the medical and industrial substantial investment towards its Contempra chromatic line of modu-areas, reflecting a reduced level of l future growth. It expanded its saies lar steel laboratory furn:ture Offered spending in these segments of the l and marketing staffs by 16 percent in five attractive co! ors, with grada-economy. [ in order to penetrate geographical tions of shades of each color from Allied Health & Scientific Prod-and market areas which were not drawer to drawer, the furniture cre-ucts Company's future plans are to previously fully covered. This invest-ates a feeling of airiness new to make carefully selected acquisitions ment accounted for more than 40 Oboratory installations. in the hea!th care field, including percent of the company's total profit Fisher's sales to medical labo-some outside of the laboratory sup-dechne from 1981. The company ratones, such as those found in ply business. l 14 l

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Technnlogy 4 l R&D spending increased from $152 million in 1981 to $186 l million in 1982. l ture computer chips, which find wide use in Allied's electronic prod-ucts. Company scientists are work-ing on new photoresists which will permit production of even more powerful chips, thus adding new products to the electronic chemi-cals line. The commercia! possibilities of Othree years. Fundi ne of Allied's most important strong new engineering plastics and have many other potential uses. corporate strategies is to new fibers are under evalJation. Early in 1982 Allied and Emerson grow through internal de-Solid materials with forms and Electric Company began a joint pro-velopment of new tech-oroperties not oreviously available gram to develop industrial motors nology and new products are being produced in the labora-using Metglas alloys. To this end the Corpora-tory by using lasers to initiate tion has been steadily chemical reactions in gas mixtures. Company Acquired expanding its research staff Commercial interest is being shown The Nitragin Company, acquired by and programs over the last in Allied's bipolar membranes, Allied Chemical Company in 1982 which can break salts aown into and subsequently transferred to has nsen from a level of $70 m llicn their component acids and bases, Allied Technologies. will comple-in i979 to $186 maion in 1982, and using very little energy. ment R&D work in genetic engineer-spending for this purpcse, exclud-ing to develop new strains of thi-ing Eendix, is expected to total $1.2 Commercialization zobia, the bacteria that convert ni-billion in the 1983-87 penod. Dunng 1982 Allied Technologies trogen into nourishment for certain A!! hough a significant part of Company was formed to strengthen forms of plant life. Nitragin, a lead-this effort points in new directions, technological development and ing marketer of soilinocu! ants, will most of the R&D programs seek to help commerciahze the most signifi-provide the marketing and distribu-develop new or improved products cant laboratory discoveries. Among tion system for new products evolv-and processes for the Company's the fledgling products it is promot-ing from laboratory discoveries. existing businesses. In the chemi-ing are Metglas amorphous alloys, Albed Technolog;es is also an entirel new class of engineering building a new business in lasers cals area. for instance, new prod-f octs are being formulated for use as materials with many advantages, based in pad on the development flocculants and sludge dewatering particularly in the ease with which by Allied scientists of synthetic alex-ager:'s in water treatment plants. they can be magnetized. andrite crystals. The a!exandrite Such advances will help extend in 1982 the company began to laser is the first tunable solid state l Abed's leadership in water treat-commercialize its Metglas products laser with potential in commercia! l ment chen.icals. in Japanese markets through a joint and military applications. venture company establ shed the During 1982 a scientific alex-Serving Old and New previous year. andrite laser product line was Technologies under oevelopment in Allied is also participating in a introduced by Apollo Lasers for Company laboratories sometimes utility industry program to demon-commercial applications. Other serve botn the newes' and oldest of strate that distribution transformers specially designed a!exandnte Allied's businesses. The Corpora-with Metglas cores can reduce lasers have been delivered to vari-tion is a leading supplier of elec-power losses and save large ous government agencies for tronic chemicals used to manufac-amounts of energy. Metglas alloys military applications. 16

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C:rporato R=ponnibility ~ In 1982 the Corporation, together with the Allied Foundation, contributed $3.8 million to educational institutions and community and anr1 management expertise. cultural organizations. In Alheds support of pnvate sec-tor initiative has taken other forms addition, the Company spent about $250 million on programs Cha:rman Hennessy and other related to environmental Allied executives participated in the work ng w:th the Environmental Pro-protection, employee health Presidents Private Sector Survey on tection Agency (EPA) to improve and energy conservation. Cost Control, aimed at ehminating ine cost-effectiveness of controls waste and improving efficiency in through innovative approaches. For the federal government. They also example, a proposal now before the participated in a similar effort initi-EPA will reduce capital costs at the ated in New Jersey by Governor Company's agricultural operabons Thomas Kean. in Geismar Louisiana, by some $15 In communities where Allied mdlion with no adverse impact on has facihties, the Company and the environment. employees are active in civic and Albed also has extensive pro-I human service programs. At both grams to protect employee health commun:ty and nat;onal levels, and safety. In 1982 the Company Amed also provides financial sup-spent about $115 mdhon on efforts Alhed is responding i ways to President Reagan's call for port to many organizations directly related to the health of its greater private sector initiative in In 1982, contributions by the workforce. Milhons more were spent the so!ution of pubhc prob l ems A!!ied Foundation and the Corpora-on indirect health-related programs Some of the comm:tments are tion totated $3 8 milhon. Of this, $1.6 such as toxicological research, new. some are ongo ng mdhon was in a:d to education and which helps to protect the hea!!h of in 1982, for example. the $2.2 mdhon was in grants to com-customers and the general public, Allied Foundation in;tiated a munity and cultural organizations as well as employees. program to provide sa!ary Protecting the environment is support grants to chemical another way in which Alhed demon-Safety improves engineenng departments at nine strates its social concern. During in the area of safety, Allied improved Amencan colleges and universities 1982. the Company invested $34 its performance for the seventh whose graduates are among those million in environmental improvo-consecutive year, reducing by 23 most frequently recruited by the ment projects and spent about $88 percent its number of industnal Company The program a'ms to mdlion to operate all the environ-accidents compared to 1981. The help retain quahfred engineering menta! improvement faciht:es now in Company's " Strive for Excehence" faculties on the nation's campuses place. program, designed to promote on-i where the lure of higher sa! anes by the-job safety is being expanded to the pnvate sector has diminished Value Out of Waste promote accident prevention for em-both the quantity and quety of A high prionty has been A!ned's ployees and their famihes at home. educators search for matenal and fuel value in As in previous years, Allied's Among the ongoing programs plant waste streams in order to efforts to save energy by improving in v.hich Allied participates is the minimize waste treatment while the energy efficiency of its plant Technical Training Project. Inc, a improv:ng productivity At a plant in operations continued aggressively. nonprofit organization in Newark, Baton Rouge, Louisiana, a waste The Company spent over $14 mdlion New Jersey. supported by Aihed hydrochtonc acid stream is in 1982 to carry out a wide range of and other private businesses. The processed to produce calcium chlo-energy projects in a number of its program. a 16-week course of class-ride for use in oil drilhng And at plants, thereby matntaining spend-room study and on-the-job training, several plants, methods have been ing levels of previous years. With prepares young adults for technical developed to use by-products 1972 as the benchmark year, the careers in science. Opportunities safely as fuel. This perm:ts recovery Company had, by 1982, reduced its It dustriatization Centers (OIC) of of heat value from the waste and use of energy per unit of production Amenca, Inc. is another employ-ehminates the cost of off-site by 17.7 percent. This was about two - mont training program which Allied disposal. percent less than the year before has supported for many years While complying with existing because most plants were operat- ' through contnbutions of money er.vironmentallegislation, Alked is ing at reduced capacity. b 18

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and has been elected president of Allied Corporation and a member of its Board of Directors. Alonzo L. Mcdonald is president of Bendix. With headquarters in Southfield, Michigan, Bendix has some 85 divi-sions, subsidiaries and affiliates controls and electric-generating l and employs over 61,000 people and navigation equipment for mili-he Bendix Corporation, now around the world, tary ground vehicles; acoustic .Tof$138million. a subsidiary of Allied, is one Bendix' Aerospace-Electronics submarine detection equipment; of the nation's leading manufac-Group, with headquarters in test and checkout equipment; turers. In 1982 the company, whose Arlington, Virginia, provides prod-precision components for tactical fiscal year ended September 30, ucts and services for commercial, missiles, and field engineering, had revenues of $4.1 billion-the military and general aviation mar-management and support services. second highest in its history-and kets worldwide and for America's in 1982 the Aerospace-Elec-income from continuing operations defense and space programs. tronics Group mairMained at record In fiscal 1982 the group's reve-levels its investment in research, The year 1982 was the first year nues amounted to $1,585 million new product development and capi-out of the last 12 that Bendix reve-and operating profits totaled $161 tal programs which are expected to nues and income from continuing million. The major portion of this benefit the group in the mid '80s operations failed to set new records. business is with the U.S. and beyond. The projects included in the period from 1971 through government. the continuing development of 1981, revenues climbed from $1.4 to cockpit avionics, brake systems $4.4 billion, while income from con-Bendix A Pioneer and hydraulic actuators for the tinuing operations rose from $39 to Automatic flight control systems. Boeing 757 and 767 jet transports, $205 million. The merger will en-pioneered by Bendix more than 50 which are expected to reach sub-hance Allied's profits in 1983 and in years ago, are part of an extensive stantial production levels by the the years to come. list of products which the company middle of this decade, and avionics Founded in 1924 by Vincent provides for the aviation industry. sensors, electronic cockpit displays Bendix, who ten years earlier had Others are aircraft wheels and and advanced electrical generating invented a starter device that elimi-brakes; airborne radar systems; systems for the growing commuter nated the need for hand cranking communications, navigation and and business aircraft markets. automobile engines, Bendix today is identification equipment; electric Bendix' Automotive Group, a respected force in the aerospace-power generating systems; ignition with headquarters in Southfield, electronics, automotive and indus-and fuel control systems; electro-Michigan, supplies systems and trial markets. Many of Bendix' mechanical and hydraulic components to domestic and for-products fit well with those pro-components; engine and flight in-eign manufacturers of cars, light duced by Allied. More importantly, struments; motion sensing and air trucks and heavy vehicles, and also Bendix opens the door for expan-data systems, and test and check-supplies a variety of replacement sion of some Allied businesses, oui equipment. parts. particularly in the safe of electronic For space and nonaviation de-In fiscal 1982, automotive products to government markets. fense programs, Bendix provides operations' revenues totaled $1,968 William M. Agee is chairman systems for guidance and control of mi!! ion and operating profits and chief executive officer of Bendix missiles and space vehicles; fuel amounted to $169 million. 20

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N f D h 9. : Y G_. 3 K q ..fe e ;gg _ gj#%)fd. p;.g ;; >n- -FQ . ~.. n u,3_ g.q: :..._? 2 , j-[..,' i.p,Pf j 7.;g y7 f.T F.[i -., ,,.q j g A, _ g (,F _. ;;%: . - L; ' ' 4 7:.: ' \\ L Leader in Brakes Y f _r.f.;;(/T: fl:.. " ]... \\ {f.g s. W L.J. J F.: ;. Bendix,s tne world s 'ead og 4nde-G. ? , s.' 9,.. - ~... ' f l2. I. l2: %.Q. :6.;. : N pendent producer of automot:ve 0. :..., g / [.. y . (.: ? [,f. .g..N systems and components the com- ~- brake systems In add l tion to brake d ".f... )[ {.i [.,

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7.:;l^-: -:' % /..; - pany's onginal-equipment products fg'. S i: E.. '.,. 7.2 f - ~. ' '. include fnction matenals ana a van-s [M['h.' '.d, :.m.... ~~ f~ ['ry : f.... ;,,.. ety of eng ne management systems p2 4;. 3:qe. and components y 2h;.4l:p. r i v.3.. n %.,m,.9 77g< ..C :( :,. ; M .. e. %. %:GV i ; T-Bendix aftermarket business 4- , 7 cvs. c.,q.e. g.. s - ...g. which accounts for about hatt of the ':v h,S ' _g. ' (.; g.. @$ V;.#-l -[ ' :" -h fl d.! l ' - .[: Automot+ve Group's sales. consists of replacement parts for car and f e -( d'^ ?"~ ,_ y.f fj.. f.; ' No c: ft.J,.J truck brake systems. plus Fram a!r.

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c. . ;,.. L ; .,l,,,, oil and fuel filters and Autohte spark 4 y . j $"f.fl',{.;. 3 i S. : 1 plugs Fram and Autohte have im- '.[ $ (n.. j i f...[ . ~ z. p /:H ;4.h-T.~.1 p'.. _ /;' portant market positions in the K )3 p ' i : .....t'g c,'lt ,J ' e..- aftermarket .J

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.., fy.g m..' .;. ; d. ? between U S and internationa: mar- ' f e 4=' J.2 j business is about evenly div'ded 3 s. .y , ?... N. I [ 3..D.'.; v.,":'(,N:.h [/.Y kets, pnmanly in Europe '.. :g;[sp,.h.1 4

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technological reputation They in-clude an electronically controlled g diesel fuel injection system which has been hcensed for production. a miniatunzed power steenng valve and a newly designed power brake booster in 1982 the group began q production of new Autohte copper-core spark plugs that provide higner efficiency and longer hfe than con-l c ventional plugs, and of a'. electronic fuel injection system for one of the ) newly introduced U S automobries Bendix' Industnal Group. with ^ headquarters in Cleveland. Ohio. manufactures machine tools and a l E variety of other production equip-l ~ ment and systems pnmarily for the l metalworking industry The group l had revenues of $560 milhon in l ~, fiscal 1982 but cperated at a loss .i because of a sharp drop in demand s in most of the more than 40 product markets it serves ? With the acquisition of Warner & Swasey in early 1980. Bendix be-l Came the nation's second largest machine tool company The Indus-l l l 22 1

Allied Allied and Bendix Combined Ailled Allied and Bendix Combinad $6.2 billion $10 3 bdhon $598 million $921 milhon .M other -% h Automottv.17% Automotiv. 22% .R.M -H Rh.M Procluct. 2% i Prostuct. 3% lect Ic.nd HMh.M r L"'d*1",T ^*'******'7'

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o..M o..,es oT.u n.(3>s trial Group supplies automated Interest in Marietta transfer, material handling and as-In the same series of transactions sembly equipment; computer-that resulted in the Bendix merger, f.,_

~ controlled turning, grinding, boring, Allied acquired 39 percent of the cutting, bending and shearing common stock of Martin Marietta Y;M$. equipment; automatic gauging, Corporation. Formed in 1960 and p is-i p [M measuring and inspection equip-based in Bethesda, Maryland, Mar-f( ment; flexible machining systems; tin Marietta is a diversified company h]yE >e. oO I .,I computer-control systems, and pre-with six business segments. cision cutting tools and machine The company increased both b j I" accessories. its sales and earnings in nine of ten Other operations produce tele-years ending in 1981. In 1982, sales scoping-boom hydraulic excavators of $3.5 bi;l ion continued at a record .c and material handlers for a variety level, earnings fell to $91.6 million. of construction and industrial mar-Its aerospace unit, the com- $ p-i kets and piping systems for the pany's largest, is a high-technology power-generating, refining, pet-operation involved in the design, %p 4 rochemical and other processing development and manufacture of f-industries. major defanse and space systems I USA 1 To improve its position in factory such as the giant external expend-4 .i automation and flexible manufactur-able liquid fuel tank and other "n e ing systems, the group recently systems for the space shuttle, the kk '~ concluded several technology Titan ill space launch system and agreements with European and Jap-systems for the MX missile program. anese companies and is investing its other business areas include alu-heavily in internal development of minum, cement, chemicals, construc - new automation products. tion aggregates and data systems. f. 23

-n av ew Consolidnted Statum:nt cf Incem3 Allied Corporation (Dol!ars in mdbons except ner sha e amounts) Years ended December 31 1982 1981 1980 Net sales $6,167 $6.407 $5.519 Cost of goods sold (exclusive of DD&A) 4,361 4,455 3.824 Depreciation. depletion and amortization (DD&A) 382 347 271 Selling, general and administrative expenses 639 534 434 Total costs and expenses 5,382 5,336 4.529 Income from operations 785 1,071 990 Other income-net 89 21 45 Nonrecurring items (11) 29 (28) Interest and other financial charges (84) (88) (81) Income before taxes on income 779 1,033 926 Taxes on income 507 685 637 Net income 272 348 289 Preferred stock dividend requirement (68) (38) (23) Earnings applicable to common stock $ 204 $ 310 $ 266 Earnings per share of common stock * $ 6.22 $ 9.17 $ 8.15

Earnings per share of common stock a*e based upon the we+ghted average number of sha'es outstand.ng dunng each year as fonows 1982.

32.810.044 sha'es.1981,33.840 648 sha es and 1980. 32 610 944 sha'es No dJution resu'ts from outstand;ng convert bte preferred stock and stock options the on!y comrron stock equiva'ents Consolidated Statement of Retained Earnings (Donars in m Aons exceot ner sha e amour"s) Years ended December 31 1982 1981 1980 Balance at beginning of year $1,290 $1,057 $ 858 Net income 272 348 289 Other (12) 1 3 Dividends: Preferred redeemable stock (69) (37) (23) Common stock (1982-$2.40 per share; 1981-52.35 per share and 1980-$2.15 per share) (79) (79) (70) Balance at end of year $1,402 $1.290 $1,057 The Other Financial Statement Data and Notes to Financial Staterrents on pages 32-51 are an integral part of these statements 24

Canzlidated Balanca Sheet Allied Corporation I (Doitars in mAons) December 31 1982 1981 Azzatz Current assets: Cash and short-term securities and time deposits, at cost approximating market $ 176 $ 181 Accounts and notes receivable 728 933 Inventories 647 841 Prepaid expenses and other current assets 73 56 Total current assets 1,624 2.011 Investment in The Bendix Corporation 893 Investment in Martin Marietta Corporation 301 Other investments and long-term receivables 376 226 Property, plant and equipment less accumulated depreciation, depletion and amortization (1982-$2,374; 1981-52,063)* 2,858 2,866 Other assets 220 241 Total assets $6,272 $5,344 LIIbilities Current liabilities: Accounts payable $ 769 $ 974 Short-term borrowings 38 53 Accrued liabilities 302 286 Other current liabilities 99 60 Total current liabilities 1,208 1,373 Long-term debt and capitalized lease obligations 700 857 Deferred income taxes 287 335 l Accrued pension obligations 79 89 l Other liabilities 205 199 Prafarred redeemable stock (aggregate liquidation preference: 1982-$619; 1981-5625) 586 591 Adjuztable Rate Series E Cumulative Preferred Stock (held by Bendix) 1,194 C mmon stock and other shareholders' equity Capital-common stock-Authorized 100,000,000 shares (par value $1 per share); issued: 1982-35,448,911 shares; 1981-34.127,879 shares 669 629 Common stock held in treasury, at cost: 1982-198,954 shares; 1981-384,188 shares (10) (19) Cumulative foreign exchange translation adjustment (48) Retained eamings 1,402 1,290 Total common stock and other shareholders' equity 2,013 1,900 Total liabilities and shareholders' equity $6,272 $5.344 "The Company follows the successful efforts method of accounting for oil and gas activitres. The Other Financial Statement Data and Notes to Financial Statements on pages 32-51 are an integral part of this statement. 25

C:nsolidated St:tsm:nt cf Ching;a in Fin:n:lil Po iti:n Allied Corporation (Doua's in m" ions) Years ended December 31 1982 1981 1980 Funds from operations Net income $ 272 $348 $289 Add (deduct) items not affecting funds: Depreciation, depletion and amortization 382 347 271 Gain on sale of Canadian oil and gas properties (194) Provision for write-off of investment and other assets 189 14 Other-net (119) (6) 34 Total funds from operations 535 684 608 Changes in working capital-net

217 (179)

(125) Dividends on common and preferred stock (148) (116) (93) Other-net 86 70 75 Funds retained in the business 690 459 465 Financing transactions issuance of preferred stock to finance acquisitions 1,194 331 Issuance of common stock 137 19 237 Issuance of notes and revenue bonds 131 93 24 Reduction in long-term debt and capitalized lease obligations (288) (230) (91) 1,174 213 170 Funds required for capital additions and other changes investments in Bendix and Martin Marietta (1,194) Acquisitions (excl. working capital and cash acquired-$302) Property, plant and equipment, investments and other assets (468) Long-term liabilities and debt assumed 112 Additions to property, plant and equipment (524) (609) (533) Changes in assets held for disposal 112 (6) Changes in other investments and long-term receivables (140) 70 (64) Proceeds from property, plant and equipment retired or sold 130 71 45 Repurchases of common and preferred stock (93) (16) Net proceeds from safe of Canadian oil and gas properties 237 Write-off of investment and other assets (189) (14) Cumulative translation adjustment (48) (1,869) (680) (572) Increase (decrease)in cash and short-term securities (5) $ (8) $ 63

Analysis of changes in working capital Accounts and notes receivable

$ 205 $(148) $ (29) Inventories 194 (240) 1 Prepaid expenses and other current assets (17) (20) (3) Current assets held for d;sposal 38 61 Accounts payable (205) 301 (95) Short-term borrowings (15) 20 (147) Other liabilities 55 (130) 87 $ 217 $(179) $(125) The Other Financial Statement Data and Notes to Financial Statements on pages 32-51 are an integral part of this statement. 26

.w j Menig:m:nt's Dircus:isn end An:lyri3 Al'ied Corporation Net Sales 1982 Compared with 1981 82 62 Fmincial Condition 8' 6# The Company significantly improved its inventory and long-term debt balances during 1982. Improved management of al 55 working capital and the effect of dispositions reduced inventories by $194 million. The percent of long-term debt '9 43 to total capital declined from 23.3 at December 31,1981, to 7, 3g 19.5 at December 31,1982. The Company had $176 million available in cash and marketable securities for its operations compared with $181 million at December 31, At December 31,1982, the ratio of current assets to current liabilities was 1.3X compared to 1.SX at December 0" '"'" *"5 ) 31,1981. The Company's short-term liquidity was much 82 s!'onger than this ratio indicates because the inventory 272 value on the balance sheet is significantly below its current 81 348 replacement cost. A significant portion of inventories is 80 289 valued on a LIFO accounting basis which calculates inventories at costs and prices at the time the Company 79 17e adopted LIFO. On an adjusted basis, the current ratio at December 31,1982, would be 1.6X compared to 1.7X at 7a m isa December 31,1981. This ratio and its implications must also be viewed in context of the Company's ready access to cash through a credit agreement, under which a maxir:.um of $2 billion may be borrowed. Although the Return on Assets from Continuing Operations Company has not borrowed under the credit agreement in (percent) m After-tax ePre tax

1982, it has served as support for the issuance of 82 M~~"^1 to o commercial paper. Commercial paper outstanding was as high as $476 million during the year, with none outstanding et M? s~~'~"~~""915 9 at year-end 80 tus in March 1982 the Company sold its Converse and Stanley G. Flagg Divisions for a total consideration valued 79 m ts -,- r - - - - - !ii2 at approximately $127 million, consisting of cash, long-term notes and stock. As part of the proceeds from the sale of 7e m s e v~'"*1 121 Converse, the Company received a minority common stock

.Ao,usted for tne o,tteence between taxes p,ov,oed. princ,pativ tor fore.g., interest in the purchaser. operatons, and u s tax rates and nonrecurr ng sterns in April 1982 the Company completed the acquisition of the Sup<on Energy Corporation, and the Supron Data re!ating to the abow chads as pmsented in the selected Financ;at Data table producing properties were transferred to a partnership on p ges 52 and 53 owned equally by the Company and The Continental Group, Inc. Continental had provided one half of the funds for the acquisition. The acquisition was financed, in part, with the proceeds of a nonrecourse production payment financing (repayable out of revenues from production of the 27

former Supron properties) entered into by the partnership Research and Development Expenditureo* and with the issuance of Money Multiplier Notes (zero <,n m 3ons; coupon) for which the Company received net proceeds of 82 18e $98 million. The Money Mu!tiplier Notes financing was completed in May 1982 with future payments comprising 81 152 principal and interest in the aggregate of $450 million; however, because the Notes have serial maturities, at no ec 1os time during the hfe of these Notes should the aggregate 79 7g liability exceed $229 million. During 1982 the Company spent $524 million for n Se capital expenditures vercus $609 million in 1981, representing a 14 percent decrease. Funds for the capital expenditure program came mainly from operations. Spending was allocated to the various business segments Property, Plant and Equipment Additions

i as follows:

(;n mmons) 1982 1981 9 524 8E-ww& 2r ' ~

m o

% of % of ' ~ ~ ' " ] 609 (Donars in mdbons) Amount Total _ Amount Total 81 FNE, w* t Chemica!s $103 20 % $136 23 % 533 80 Fibers and plast:cs 74 14 81 13 On and gas

249 47 317 52

,pw. -m 1409 79, 7 ~ ,w Electrical and elect onte 60 11 38 6 Hea th and scientific products 9 2 2 - 7g g.;g r -e \\ 7 w m " " 7 502 Other operat; ors and unalocated corporate 29 6 35 6 $524 100 % $609 100%

This amount coes not include capita! eXDend tures of $26 mHhon for Distribution of 1982 Revenue Dollar Unicor Prodccirg Company. an equ4 partnersh:p
- "U The Company's total capital spending in 1983 is currently projected to approximate $650 milhon, including 23 s wage..a a-es n aneo

$150 million by Bendix. y In 1982 the Company sold investment tax credits and Accelerated Cost Recovery System tax depreciation " ' ' " * " " " ^ * " " ' " " ' deductions, relating to 1982 capital expenditures, under 12 g4 the provisions of the Economic Recovery Tax Act of 1981, s 3 rne for $29 milhon. s2 in 1982 the Company repurchased more than 2.4 million shares of common and preferred stock for $93 million under previously announced repurchase

Data relatng to the abow cha ts a e presented on page 43 programs. The Company has authority to repurchase up to an additional 0.3 million shares of common stock and up to approximately a 39 percent equity interest in Martin the total outstanding number of shares of Series D Marietta Corporation. Bendix, which upon consummation Convertible Preferred Stock (at December 31,1982, of the merger of Bendix and a subsidiary of Allied (Bendix' 1.5 million shares were outstanding).

shareholders approved the merger and the Company's The Company's long-term debt and capitalized lease shareholders approved the issuance of more than 15 obligations decreased by $157 million, from $857 million to million shares of common stock in connection with the $700 million, because of the effect of two exchanges of the acquisition, both on January 31,1983) will become a Company's common stock (more than 3 million shares were consolidated subsidiary of Allied. Bendix had cash and issued) for outstanding indebtedness, the recurchase of marketable securities of $148 million at September 30, debentures in the open market and the classification of 1982 (Bendix' fiscal year-end) and a ratio of current assets notes due April 1983 to current liabilities. to current liabilities of 1.0X. The low ratio of current assets In December 1982 the Company acquired, in a two-to current liabilities and the high level of long-term debt step transaction 55 percent of the outstanding common at September 30,1982, reflects Bendix' acquisition of stock of The Bendix Corporation and obtained approximately 25 million shares of common stock of Martin Marietta for $1.2 billion. Bendix currently has commitments under revolving credit agreements with various banks totaling $490 million 28

pursuant to which borrowings of $424 million were segments were impacted by the continuing effects of the outstanding on September 30,1982, and short-term racession. borrowing agreements with various banks terminating in Net income for 1982 was $272 million, or $6.22 a August and September 1983 totaling $709 million pursuant share, compared to 1981's $348 million, or $9.17 a share. to which borrowings of $440 million were outstanding on Earnings per share were affected by the issuance in the September 30,1982. second half of 1981 of preferred redeemable stock for At September 30,1982, Bendix had $832 million of acquisitions which reduced the amount of income long-term debt (excludes current portion for 1983 of applicable to common stock. SCO million) outstanding with aggregate annual maturities Depreciation, depletion and amortization increased of $109 million for fiscal 1984 and for substantially reduced $35 million, or 10 percent, and selling, general and amounts in each of the three fiscal years thereafter. It is administrative expenses increased $105 million, or anticipated that funds generated by Bendix' continuing 20 percent, reflecting the inclusion in 1982 of full period operations will be sufficient to meet its current liabilities, results of Bunker Ramo and Fisher Scientific, acquired in exclusive of the approximately $440 million of short-term the second half of 1981. Excluding these acquisitions, l borrowings referred to above. Bendix anticipates that, -depreciation, depletion and amortization was $15 million following the merger, appropriate arrangements will be higher, while selling, general and administrative expenses made with respect to these borrowings and $80 million of were $13 million lower than last year. Other indebtedness which matures prior to March 1984. Other income-net increased $68 million, mainly After the merger the Company and its consolidated reflecting profits from the exchanges of common stock for subsidiaries, including Bendix, will have a ratio of long-debentures and the favorable effect of foreign currency term debt to total capitalization of approximately 36 items. percent on a pro forma basis,16 percentage points higher The nonrecurring charge in 1982 of $11 million and the than the Company's ratio at December 31,1982. net nonrecurring gain in 1981 of $29 million are discussed l The Company has set a goal of reducing its in Note 4 of Notes to Financial Statements. l outstanding long-term debt by approximately $300 million. The effective tax rate was 65.1 percent,1.2 percentage l As a result, assuming the Company's total capitalization points lower than the rate for 1981. The lower 1982 rate otherwise remains at a constant level, the ratio would be reflects the impact of the debt / equity swaps and the j reduced to the 33-34 percent range, a level which the realization of tax benefits of $16 million relating to the sale Company beJeves would be consistent with maintaining of tax benefits. In 1982 the Company realized the final i the credit ratings accorded its publicly held debt securities portion ($23 million) of the prior years' tax benefits to be l prior to the merger. The Company currently expects that it recognized under the 1980 U.S.-U.K. Tax Treaty. See the l will be able to achieve this goal over a period of three to six tax data in the Other Financial Statement Data for further months following the merger through a combination of information. liquidation of portfolio investments and reductions in The following discusses sales and income from i working capital requirements, any of which could come operations (adjusted) by segment: (Dollars in millions) ] from either Allied or Bendix. Increase / in the longer term the Company intends to reduce its chemicase itet 1981 (Decrease) j long-term debt further by seeking joint venture partners for Sales $1,298 $1,594 $(298) its soda ash and fertilizer businesses, sales of real estate Income from operations (adjusted) is 148 (132) l and other non-manufacturing assets and the divestiture of Sales volumes and income were lower for agricultural certain operating businesses. i products, chrome chemicals, soda ash, refractory See Note 2 of Notes to F,nancial Statements for materials and tar products. The effects of the recession 4 additionalinformation relating to Bendix and Martin have been most severe in those markets chemicals serve, Marietta* 3 mainly agriculture, automotive, steel and housing. Fine chemicals, fluorocarbons and sulfur products showed g ins over the previous year. Inventory reductions during Net sales in 1982 totaled $6.2 billion, a decrease of l the year resulted in liquidation of LIFO inventory quantities $0.2 billion, or 4 percent, compared to 1981. Excluding carried at lower costs prevailing in prior years. The effect recent acquisitions and divestitures, comparable sales are of the inventory reductions was to increase income from down 10 percent, reflecting lower sales volumes as all operations by $10 million compared to an increase of $22 million in 1981, increase / Fibers and pleetics 1982 1981 (Decrease) Sales $1,111 $1,195 $(84) Income from operations 98 73 20 i Sales decreased because of the disruption of ) operations at the Frankford, Pennsylvania phenol plant as a j result of a fire and explosion, lower export sales and lower

sales of engineered plastics and apparel fibers. Sales of value on the balance sheet is significantly below its current high-density polyethylene and home furnishings increased. replacernent cost. A significant portion of inventories is income was higher because of substantially lower raw valued on a LIFO accounting basis, which calculates material costs and higher sales volumes for high-density inventories at costs and prices at the time the Company polyethylene, partly offset by the !cwer sales and margins adopted LIFO. On an adjusted basis, the current ratio at for engineered plastics and apparel fibers. In addition December 31,1981, would be 1.7X, compared to 1.6X at inventory reductions during the year resulted in liquidations December 31,1980. This ratio and its implications must of LIFO inventory quantities, which increased income from also be viewed in context of the Company's ready access operations by $16 million in 1982. to cash through a credit agreement. Under the 1980 arrangemert. the maximum amount available was

Increase, Oli and gas 1982 1981 (Decrease) $600 million. In 1981 this borrowing arrangement was renegotiated to $2 billion. Although the Company had no Sales

$1,992 $2.068 $(76) income from operations (aciusteo) 486 570 (84) balance outstanding under the credit agreement at December 31,1981 it has served as support for the Sales and income were lower because of the world-issuance of commercial paper. Commercial paper wide decline in crude oil prices, higher exploration outstanding was as high as $174 million during the year, expenses and reduced demand for domestic natural gas with none outstanding at year-end. and crude oil. Higher sales of liquefied natural gas in During 1981 the Company acquired Bunker Ramo and Indonesia and crude oil in Spain and Pakistan were partial Fisher Scientific for approximately $654 million. The offsets. Inventory reductions during the year resulted in transactions were financed through the issuance of $331 liquidations of LIFO inventory quantities, which increased million of Preferred Stock, a $70 million-3h year note, income from operations by $23 million in 1982. internally generated cash, plus part of the proceeds inc ease / recc!ved from the sale of the Company's Canadian oil and Electrical and electronic isd2 1981 (Decrease) gas operations. The Company received $351 million, after Sa!es $882 $825 $57 expenses and applicable Canadian taxes, from the sale of income from operations 3 33 (30) the Canadian oil and gas operations in August 1981. In Sales increased because of the inclusion in 1982 of addition the Company disposed of a number of other full-period results of Bunker Ramo acquired effective July 1, operations, including the Ashland coke plant, for $88 1981. Sales of Prestolite products and phototypesetting million in cash and the assumption by the purchaser of one equipment were below last year. Income was lower of the facilities of $51 million of the Company's debt. primarily because of the depressed phototypesetting and During 1981 the Company spent $609 million for automotive markets and lower margins for electrical and capital expenditures, versus $533 million in 1980, electronic connectors, partly offset by income from representing a 14 percent increase. Funds for the capital electronic systems for transactior: processing. expenditure program came mainly from operations. Spending was allocated to the various business segments Increase r Health and scientific products 1982 1981 (Decrease) as follows: Sa:es $505 $120 $385 1981 1980 locome from operatons 19 10 9 This segment consists of the operations of Fisher (Douars in muons) Amount Total Amount Total Scientific, which were acquired in the fourth quarter of Chemica's $136 23 % $103 19 % 1981. Fibers and plastics 81 13 111 21 Oil and gas 317 52 271 51 ec aland co 38 6 20 Supplementary data, presenting some historical financial j information on an inflation-adjusted basis, is included in other operations and Note 14 of Notes to Financial Statements. unatlocated corporate 35 6 28 5 $609 100 % $533 100 % In 1981 the Company sold investment tax credits and 1981 Compared with 1980 Accelerated Cost Recovery System tax depreciation deductions, relating to 1981 capital expenditures, under the Financial Condition provisions of the Economic Recovery Tax Act of 1981 for At December 31,1981, the Company had $181 million $57 million. available in cash and marketable securities for its The Company's long-term debt and capitalized lease operations, versus $189 million at December 31,1980. obligations outstanding decreased from $885 million to At December 31,1981, the ratio of current assets to current liabilities was 1.5X, compared to 1.4X et December 31,1980. The Company's short-term liquidity was much stronger than this ratio indicates because the inventory 30

$857 million at December 31,1980 and 1981, respectively, capital gain rata on the proceeds from the sa!e of the reflecting debenture repurchases and the assumption of Canadian oil and gas operations, partly offsit by the $51 million of the Company's debt by the purchaser cl one U.K. Supplementary Petroleum Duty. of the Company's plants, mainly offset by debt associated The following discusses sales and income from with acquisitions. operations (adjusted) by segment: (Dollars in millions) In 1981 the Board of Directors authorized the Chemicals 1M1 1980 Increase purchase from time to time by the Company of up to sales s1,594 $1.436 5158 3,000,000 shares of common stock on the open market income from operations (adjusted) tes 141 7 or in privately negotiated transactions. The Company repurchased 350,586 shares of common stock Sales increased mainly for fluorocarbons, tar products, i e@m&@ for $16 million in 1981. materials and uranium hexafluoride. Income was up Results of Operations slightly as gains from higher sales offset lower volumes Net sales in 1981 totaled $6.4 billion, an increase of and higher costs for soda ash and agricultural products. $.9 billion, or 16 percent, over 1980. Higher selling prices, inventory reductions during the year resulted in liquidations principally reflecting higher worldwide energy prices and of LIFO inventory quantities carned at lower costs higher prices for some chemical and fiber products, prevailing in prior years. The effect of the inventory result d in 63 percent of the increase; physical volume and reductions was to increase income from operations by $22 product mix remained at 1980 levels. $331 million, or million compared to an increase of $13 million in 1980. 37 percent of the increase, represented sales of Bunker Fibers and plastics 1M1 1980 increase Ramo and Fisher Scientific, both of which the Company sales $1,19s $1,114 $81 acquired in the second half of 1981. All of the Company's income from operations 73 69 4 business segments contributed to the higher sales. Sales and income increased because of substantially However, the results of some business areas, which mainly higher margins and volumes for home fumishings and d: pend on the depressed housing and automotive improvements for industrial fibers and engineered plastics. industries and agriculture, were weak throughout the year. A partial offset was lower earnings for high-density in addition, overall performance was adversely affected in polyethylene and apparel fibers. th3 fourth quarter by the current recession. oil and oss 1981 1980 Increase Net income for 1981 was $348 million, or $9.17 a share, compared to 1980's $289 million, or $8.15 a share, fn ne from operations (adjusted) Earnings per share were affected by the issuance in 1981 of preferred redeemable stock for acquisitions which Sales improved mainly because of higher volumes and reduced the amount of income applicable to common prices for gas liquids and higher prices for U.S. oil and stock. gas, as well as increased natural gas volumes. Earnings Cost of goods sold increased $631 million, or also improved reflecting higher domestic oil prices 17 p:rcent, because of higher costs for energy, labor, raw resulting from decontrol of crude oil prices in January 1981, mattrials, windfall profit tax, research and development, oil higher domestic gas sales, higher prices for North Sea and gas exploration expenditures and the effects of the oil and Indonesian natural gas, as well as tax benefits Bunk:r Ramo and Fisher Scientific acquisitions. realized from the U.S.-U.K. tax treaty. Substantially higher D:preciation, depletion and amortization increased exploration expenses and the windfall profit tax partially $76 million because of the generally high level of capital offset the earnings gain. cxpanditures in recent years and the start-up of certain Electrical and electronic 1981 1980 increase U S. natural gas operations. sales seas $647 si78 Selling, general and administrative expenses income from operations as 17 16 increased $100 million, principally relating to higher Sales and income increased as a result of the salari:s and employee related expenses, increased acquisition of Bunker Ramo in the third quarter of 1981 cdvertising and the effects of the Bunker Ramo and Fisher and, in addition, income was up because of improved Scuntific acquisitions. operations for the phototypesetting business. Other income-net decreased $24 million reflecting unfavorable foreign currency items, partly offset by a profit HealHi and scienunc products M 1980 Increase on repurchase of debentures and higher equity income. sales stao s120 inc me h m perat ns to 10 The net nonrecurring gain in 1981 of $29 million and the nonrecurring charge in 1980 of $28 million are Sales and income reflect the acquisition of Fisher discussed in Note 4 of Notes to Financial Statements. Scientific in the fourth quarter of 1981. The effective tax rate was 66.3 percent,2 5 percentage points lower than for the 1980 period. The lower rate principally reflects the tax benefits realized from tha U.S.-U.K. tax treaty, the impact of foreign currency items, as well as benefits resulting from using the lower 31

i Other Financial Statement Data Allied Corporation (Dolla's in mtitons except per sha'e amounts) company were settled for immaterial amounts. The remaining proposed tax assessments aggregate $52 million. Most of the proposed additional taxes relate to the Other income-net timing of deductions and result in offsetting adjustments in Years ended December 31 1982 1981 1980 future years. Management is contesting the assessments, inte est. d.v dends and other $33 $22 $23 which are not expected to have a material effect on the Prof;t on debt ecuity swaps financial position or results of operations of the Company. (1982) and purchase of decentu'es (1) 50 21 4 Years ended December 31 1982 1981 1980 Eau ty income 11 16 4 The pnnc1 pal items account,ng Foreign exchange ga'n (loss)(1) (5) (38) 14 for the d:fference in taxes on $89 $21 $45 income computed at the United as dam ram W as (1) On an after-tax bas,s, p'of,ts from debt eau.ty swaps (1982) and the purchase of debentu'es resulted in a ga n of $134 5 31 and $ 06 a sha'e in the respective years and fore:gn cur ency items resulted in a loss of $ 13 a shar n 1982. a loss of $ 52 a share in 1981 and a ga n of $ 03 a Ta e in c s of the U S tax rate on fore <gn earnings 254 315 234 U S -U K tax treaty benefits (36) (42) Interest and other financial charges Non-taxable debt equity swaps (17) Cap;tal gaen on sa!e of Canadian Yea's ended December 31 1982 1981 '980 ~ ~ Total interest and other f.nancia! Amortization of deferred charges $122 $114 $102 investment tax credtt (29) (27) (19) Less-Capitahred inte'est (38) (26) (21) All other items-net (23) (6) (4) $ 84 $ 88 $ 81 $507 $685 $637 The caption "All other items-net" includes $16 million income before taxes on income from the sale of tax benefits relating to tax leases in 1982, Years ended December 31 1982 1981 1980 the availability of which, under revised income tax Un:ted States S 66 $ 136 $110 regulations, will be sharply reduced in 1983 and thereafter. Fore +gn 713 897 816 Deferred income taxes were not provided for $779 $1.033 $926 accumulated deferred Domestic International Sales CorporaSon (DISC) income of about $76 million at December 31,1982. Taxes on income At December 31,1982, $46 million of deferred Years ended December 31 1982 1981 1980 investment tax credits remained to be taken into book Taxes on income consists of income in future years. The Company has $101 million of U"(dS nvestment tax credit carry-forwards available for offset l ,nt $ 1 $ 10 $ 9 Deferred-current (21) (10) 32 against future income tax payments (tax return bas,:s) Deferred-noncurrent (36) 20 (20) through 1997. United States income tax law provides for Foreign. the utilization of investment tax credit carry-forwards on a Current 573 647 543 first-in, first-out basis, which management beiieves will [efer ed n assure their use during the carry-forward periods. u rent (1 () 65 State taxes 8 23 6 $507 $685 $637 The Internal Revenue Service, in 1980, completed an audit of the Company's tax returns for the years 1971 through 1976 and an associated company's tax returns for the years 1972 through 1975. During 1981 and 1982, the tax assessments relating to the Company's 1971 tax return and the 1972 through 1975 tax returns of the associated 32

Ye:rs ended Decimber 31 1982 1981 1980 Y trs *nded Decembar 31 1982 1981 1980 The principal items in the United Statts oderred tax provision are as follows: Thz pnncipal items in th3 foreign eM Mm W We M Exczss of tax over book as follows: depreciaton S3 $21 $23 Tax over (under) book investment tax credit (lTC) depreciahon $(28) $ (9) $99 Allowable ITC deferred 4 45 25 PRT accrued for books over Allowable ITC camed forward (under) amount deductible for to future years (15) (24) U K. corporate tax 18 10 (30) Amortization of deferred ITC (29) (27) (19) All other items-net (S) (6) (2) Excess of foreign tax credits for tax over book amounts 55 S(18) $ (5) $67 1979 and 1981 charges for $C"[""*d Accounts and notes receivable rations and 7c g s recognizabie for tax in future December 31 1982 1981 years 27 (73) 69 Trade $425 $888 Tax gain on liquidation of Supron Other 135 77 Energy Corporaton and Ettra 700 965 Corporation (14) (47) Tax benef.t of pension expense Less-Allowance for doubtful accounts over (under) amount and refunds (32) (32) recognized for book (25) 25 4 $728 $933 Excess of tax over book amortzation of intang'ble dnlling and development costs 12 19 18 IRW8MlOFI#8 Unreahzed gain (loss) on foreign December 31 1982 1981 exchange hedge contracts 9 (18) 7 All other items-net (44) (22) (44) Raw mate $1 S(b7) $10 $12 Finished products 269 393 The decrease in the 1982 current foreign income tax supphes and containers 14e 153 provision from 1981 reflects lower revenues as a result of Se47 $841 lower worldwide prices for crude oil. The increase in the Inventories valued at LIFO amounted to $183 million at 1982 and 1981 current foreign income tax provision from December 31,1982, and $237 million at December 31, 1980 includes the impact of the Supplementary Petroleum 1981, which were below estimated replacement cost by Duty (SPD), effective January 1,1981; the utilization in 1980 $248 and $29C million, respectively. of the remaining tax benefits for deductible expenditures In 1982,1981 and 1980, inventory reductions resulted and uplift credits relating to the construction of the North in liquidations of LIFO inventory quantities carried at the Sea facilities; and the taxation of interest income as a result lower costs prevailing in prior years. The effect of the of restructuring the U.K. operations, offset in part by the inventory reductions was to increase net income b/ $25 realization of benefits under the U.S.-U.K. Tax Treaty million, or $.76 a share, in 1982, $11 million, or $.32 a ratified in 1980 of which $23 and $25 million in 1982 and share, in 1981, and $9 million, or $.29 a share, in 1980. 1981, respectively, were associated with pre-1981 earnings. The SPD is levied at a rate of 20 percent of gross income less a deduction for oil allowance. The SPD is deductible for both U.K. Petroleum Revenue Tax (PRT) and U.K. Corporation Tax. The balance of the increase, compared to 1980, represents an increase in oil and gas revenues. The provisions for foreign income tax currently payable, related to North Sea oil production, have been reduced by uplift credits of approximately $1, $12 and $79 million in 1982, 1981 and 1980, respectively. Uplift credits are an additional deduction for the PRT, equal to 35 percent of certain exp:nditures. Management expects the Company to realiza future tax benefits applicable to dividends from its U.K. oil and gas subsidiary. Such tax benefits substantially offset the increases relating to the SPD on a consolidated basis. 33

Other investments and long-term receivables Long-term debt and capitallaed 88 8 Dec 2 3r31 1982 1981 EcI Noducing Company (oil and gas) 8147 December 31 1982 1981 Equiie ce Corporation (leasing) e6 67 Sinking fund debentures. Other a osidianes and affiliates de 80 5 20% due November 1,1991 8 10 $ 86 Receive >les 94 79 6 60% due August 1,1993 23 51 $376 $226 7%% due September 1,1996 43 54 9% due April 1,2000 44 54 8W% due January 15,2001 38 50 Property, plant and equipment 8%% Notes due Apnt 1,1983 75 December 31 1982 1981 157 370 Land and land improvements 8 100 $ 174 Capitahzed lease obhgations: Oil and gas propertiet mines and quames 840 689 Capital leases,4 3%-24 276%, matunng at Machinery and equipment 3,252 3.068 various dates through 1996 37 48 Buildings Set 549 Environmentalimprovement revenue bonds. Office furniture and equipment 43 58 4 9%-8 0%, maturing at various dates Transportation equipment 37 91 thcough 2002 82 83 Construction in progress 261 300 Industrial revenue bonds,2 0%-9 0%, maturing at various dates through 2004 75 89 5.232 4 929 LQss-Accumulated depeciation, deplet,on 1M 220 J amom a on (2,374) (2.063) Environmental improvement and industrial r 82.850 $2.866 development revenue bonds and note obligations,4 0%-11.5%, maturing at various dates through 2012 et 92 Other assets Other. Dxember 31 1982 1981 Money mult, plier notes (zero coupon) b3s in excess of net assets of 13 001%-13 899%, due 1987-2000 112 C Quired companies $132 $139 Note payable, 12.75%-20 5% (12.75% or prime, if higher) due January 2,1985 70 70 Othor deferred charges SS 102 Eurodollar loans, 10 875% -20.1875% 31 53 8220 $241 Other long-term debt, 2.0% -17 25% 57 63 270 186 Accrued liabilities sub-total 710 868 Less-Unamortized discount (10) (11) December 31 1982 1981 $700 $857 Yaxes payable Current $236 $195 hed-current (54) (37) Principal paymonts on long-term debt wages 7e 84 Other 42 44 and capitalized lease obilgations s302 $286 The schedule of principal payments on long-term debt and capitalized lease obligations at December 31,1982, is as follows: Debentures Capitalized Environmental and Lease Improvement Notes (1) Obligations Obligations Other 1983 $ 39 $ 16 $2 $ 30 1994 25 2 42 1985 12 3 81 1986 12 1 5 1987 11 7 52 Thereafter 157 134 76 90 196 210 91 300 Less-Current portion (39) (16) (2) (30) $157 $194 $89 $270 (1) Amounts are not of debentures repurchased 34

Preferred redeemable stock (1) Common stock held in treasury December 31 1982 1981 1980 Dec:mber 31 1982 1981 1980 $91.25 Senes A cumu!ative Balance at beginning of year Sie $9 $14 preferred-Authorized amount Purchased-1982. 2.394.817 $200 milhon (200.000 shares). shares-1981. 350.586 shares Balancs at beginning of year $200 $200 $147 (under a 3.000.000 share Shires issued-53.000 sha'es 53 repurchase program) 88 16 Used for Dividend Reinsestment 200 200 200 Plan-1982. 527,458 $86.23 Series B cumulative shares-1981, 76.031 preferred-Authonzed amount shares-1980. 64.343 shares (19) (3) (2) $60 million (60.000 sha'es): Used upon exercise of stuck Batancs at beginning of year to 60 52 options-1982,10.162 Sh;res issued-8.000 shares 8 shares-1981,13.497 80 60 60 shares-1980. 59.976 shares (1) (1) (3) Used for Stock Purchase and $6.74 Series C cumulative Savings Plan-1982,319,796 ~ A r ed 3 7 8 42 shares 194 194 - Used for debt / equity 194 194 swap 3-1.719.315 shares (to) $12 Seri;s D cumulatve $10 $19 $9 convert,ble preferred-Authorized 1.630.319 shares. B;lacs at beginning of year 137 - Cumuletive foreign GMchenge issued for acquisition 137 - translation adjustment Shares repurchased-62.200 shires (5) - December 31 1982 132 137 - January 1,1982, opening adjustment Se Translation adjustments and net losses from hedges g,,, and intercompany balances 36 (1) See Note 6 of Notes to Financial Statements for further details. Income taxes related to hedges and intercompany ba:ances 4 Capitel-common stock-Issued See Dec:mber 31 1982 1981 1980 Balanca at beginning of year $429 $616 $385 Leases issued in pubhc stock offenng-Capitalized leases relate to plants, machinery and 4.000.000 shares 216 equipment, pipelines and transportation equipment, Issued under Dividend included in Capitalized leases are plants and facilities 2 EO ha financed by industrial development and environmental 98 228 10 10 improvement revenue bonds, the principal and interest on shires issued for acquis.tions-1981, which will be covered by payments made by the Company. 243.367 shares-1980, 344.953 Under certain conditions the Company has the option to shcres 2 5 purchase certain of the leased assets at prices which sIa 1,3830 ams 40 - approximate the related capitalized lease obligations. Issued upon exercise of stock 10 most Cases, management expects, as its normal 1 - business practice, to renew or replace current leases by optinns-17.867 shares 8000 $629 $616 (1) The Dividend Reinvestment and Stock Purchase Plan (Plan) permits shiteholders to invest Cash dividends and optional cash payments in add. tron'.i shares of the Companyi common stock Shares purchased under the Plan shall e,ther be previously unissued or treasury shares The purchase price of shares related to reinvested dividends is 95 percent of m rket price and shares purchased with optional cash payments are at 100 percent of market price The Company pays all commissions and other service charges relat.ng to the Plan 36

oth:r leas s or purchase the assets, depending on outstanding options at Decemb:r 31,1982, 796,410 were economic conditions at the time. accompanied by SARs. Unissued and treasury shares of Ft ture minimum lease payments under capitalized common stock have been used upon ex rcise of stock and operating leases having initial or remaining options. T tal proceeds from unissued shares have been noncancellable lease terms in excess of one year as of credited to capital-common stock. Differences between December 31,1982, are as follows: the cost of treasury stock used and the total option price of shares exercised have been charged to retained eamings. Capttahzed Operating Years Ending December 31 Leases Leases Number of shares 1983 $ 29 5 31 Outsta.1 ding at December 31,1979 555.101 1984 37 23 Granted at $47-557 3125 per share 1,111.600 1985 25 19 Less-1986 22 15 Exercised at $29-548 per share 67.376 1987 20 13 Lapsed or canceHed 43,355 i Thereafter 200 62 Surrendered upon exercise of sARs 112.850 Total (1) 333 $163 Outstand 4ng at December 31,1980 1.443.120 Granted at $42.5625-556 25 per share 358.475 Less-imputed interest (2) (123) Less-Present va'ue of net minimum Exercised at $29-$47 por share 35.636 tease payments $210 Lapsed or canceHed 76.735 Surrendered upon exercise of SARs 27.030 (1) Minimum payments have not been reduced by minimum sublease rentals of $31 mdhon for capstahzed leases and of $7 mahon for operating Outstanding at December 31,1981 1.662.194 leases due in the future under noncancePable subl eases. Granted at $31.19-544 50 per share 563.750 (2) Amount necessary to reduce net minimum lease payments to p'esent Less-value calculated principany at lessor's imphcit rates as of the incept.on of Exercised at $3o-$31 per share 12.437 the leases Lapsed or canceued 137.507 Total lease rentals (exclud:ng capitalized lease rentals) Sur encered upon exercise of SARs 800 of $84, $70 and $52 million are included in costs and Outstanding at December 31,1982, expenses for 1982,1981 and 1980, respectively. $30-$57 3125 por share 2 075.200 Exercisab!e at December 31.1982 1.050.855 Stock options Avaaabte for grant at December 31.1981 161.600 Under the terms of the 1982 Stock Option Plan (Plan) approved by the shareholders on April 26,1982, the Avadable for grant at December 31,1982 1.719 890 Company may grant stock options covering 2,000,000 The amount of compensation (income) expense for shares of common stock, which may be accompanied by 1982,1981 and 1980 relating to SARs was $(1) $(2) and i stock appreciation rights (SARs), to certain officers and key $3 million, respectively. employees. Stock options have been granted and are The Company, as part of the acquisition of Fisher currently outstanding under this Plan and prior plans. The Scientific, assumed the outstanding stock options and options are granted for terms of ten years and become related SARs previously granted by Fisher to its exercisable in installments over the first three years. A SAR employees. Such options were granted at 100 percent of entitles the optionee to surrender unexercised stock quoted market price at datea of grant for terms of 10 years. options for cash or stock equal to the excess of the fair No further options will be granted. At December 31,1982, market value of the surrendered shares over the option and 1981, there were options outstanding and exercisable value of wch shares. All options were granted at for 9,246 shares and 35,798 shares, respectively, of the 100 percent of quoted market price at dates of grant. Company's Series D Preferred Shares at $25 through Options outstanding at December 31,1982, were granted $61.82 and $19.32 through $61.82 per share, respectively. as follows: 1974,12,150 shares; 1976,16,400 shares; 1977, During 1982, options covering 26,552 shares were 96,480 shares; 1978,62,390 shares: 1979,86,940 shares; exercised. 1980,928,965 shares: 1981,328.875 shares and 1982, The shareholders also approved, on April 26,1982, the 543,000 shares. Of the 2,075,200 shares covered by 1982 Stock Option Plan for Salaried Employees. In 1982 under this plart the Company granted stock options covering 984,941 shares of common stock, the fair market value of which equated 10 percent of the annual base compensation for qualifying salaried employees. The options, exercisable at $34.07, were granted at 100 percent of quoted market price at the date of grant for a term of three years and become exercisable after the first + year. As of December 31,1982. 936,486 shares were outstanding, none of which were exercisable, and options covering 48,455 shares were cancelled during the year. 38

Notes to Financial Statements Allied Corporation foOiWS in rWhOr'S PMCPpt Der sha"P a?Ou ts) n Property, plant and equipment, other than oil and gas pr perties, are carned at cost and are generally Note 1. Summa'Y of Significant depreciated on a composite basis for asset groups using Accounting Policies estimated service lives, which range from 3 to 35 years, or amortized using unit of production rates for mines and Consolidated financial statements include the quarries. For the financial statements, depreciation is accounts of Albed Corporation and all majonty owned computed principally on the straight-line method. For tax significant subsidiaries, except for The Bendix purposes, depreciation is generally computed by Corporation, which is temporanly carried at cost, and a accelerated methods based on allowable usefullives. On wholly owned leasing subsidiary The accounts of oil and normal retirement or replacement, cost of property (less gas companies include their proportionate interests in the salvage) is charged to accumulated depreciation. Gains or assets,liabihties and operations of unincorporated losses arising from other retirements or sales are included joint ventures. n income currently Maintenance and repairs are charged inveCtments and long term receivables are carried at the lower of cost or market, adjusted for permanent Other assets include costs in excess of the net assets of impairments, and in the case of unconsolidated acquired companies (goodwill) and patents and licenses, subsidiaries, partnerships and affibates over which net of amortization. Goodwill of $40 million relates to significant influence is exercised, adjusted for the equity in businesses acquired before November 1,1970. and is undistnbuted earnings since acquisition. considered to have an indeterminate hfe and accordingly is not amortized. Goodwill subsequent to that date is being Inventories are va'ued at the lower of cost or market amortized on a straight-line basis over a 25-year period. using the last-in, first-out (LIFO) method for a significant Patents and licenses, which include the costs of acquiring portion of all quahfying domestic inventories and rights to certain manufacturing processes, are amortized principally the average cost method for other inventories. Over the hves of such rights. Oil and gas activities are accounted for employing the income taxes are based on pre-tax financial statement successful efforts method cf accounting as defined by the income with an appropriate deferred tax provision to Financial Accounting Standards Board (FASB) and as provide for the tax effect of temporary (timing) differences outhned in the Secunties and Exchange Commission's between pre-tax financial statement income and taxable accounting rules and releases. Property acquisition costs, ncome per the tax retum Deferred income taxes are not costs of successful exploratory wells and all development provided on undistributed eamings of affiliated companies, costs are capitanzed and amortized using unit of which are considered to be permanently reinvested. Any production rates based on proved developed reserves. U S. taxes payable on foreign earnings which may be Costs of unsuccessful exploratory wells are expensed remitted, however, will be substantially offset by foreign tax when determined to be nonproductive. Production costs, credits. overhead and all exploration costs other than costs for The investment tax credit is included in financial exploratory anthng are charged against income as statement income as a reduction of the provision for ircome incurred. taxes over the lives of the related assets. Pension expense reflects current costs and the amortization of prior service costs principally over 30 to 40 years. The Company generally funds amounts equal to ( pension expense plus a pertion of the accrued pension I liability based upon union contracts or actuarial studies. Accordingly, the existing accrued pension liability provided in prior years is reduced concurrently with the amounts deposited with trustees. 37

Foreign currency financial stat:m:nts are trrnslated in basis of its evaluation of the fair valu:s of both companies accordancs with ths requir:m:nts of FASB Stat:m:nt in consultation with the Company's financial advisor. No. 52, " Foreign Currency Translation," eff:ctive January 1, The Company's iny:stm:nts in B:ndix and Martin 1982. Accordingly, all asset and liability accounts of foreign Marietta at December 31,1982, are reflected in the 1982 subsidiaries, except for subsidiaries operating in hyper-consolidated balance sheet at cost. The Company's inflationary countries which are translated in a manner proportionate share of the 1982 earnings of Bendix and similar to that used under the prior method, are translated at Martin Marietta subsequent to its initial investment in late th3 rates of exchange in effect at the balance sheet date. December was not significant. Each acquisition will be Effects of rate changes are included in t' ' cumulative accounted for as a purchase with effect from January 1, foreign exchange translation adjustment caption on the 1983. The purchase price for Bendix and Martin Marietta Consohdated Balance Sheet. The adjustment results will be allocated to the individual company's tangible and primanly from translating inventory, property, plant and identifiable intangible assets acquired and to the liabilities i equipment and deferred taxes at current rates rather than at assumed. Such allocations will be based upon appraisals, j the histoncal rates used under the prior method. The impact valuations, estimated values and other studies to be 1 on results of operations for 1982 of adopting FASB undertaken during the first quarter of 1983. Statement No. 52 is immaterial, and also would have been Assuming that the acquisitions of Bendix and Martin immaterialif adopted in 1981. Marietta had been consummated at the beginning of 1981, the unaudited pro forma net sales, income from continuing operations (af ter-tax) and earnings per share of common stock from continuing operations for 1982 and 1981 would Note 2. Investments in The Bendix Corporation have been $10,150 and $305 million and $4.29 a share and and in Martin Marietta Corporation $11,378 and $532 million and $8 32 a share, respectively. These amounts give effect to an estimated allocation and The Company acquired in a multi step transaction on related amortization of the purchase prices to the not D:cember 21 and 22,1982, under a stock purchase assets acquired, as well as giving recognition to the agreement, approximately 55 percent (50.3 percent on a acquisitions of Bunker Ramo and Fin 1er as if such fully-diluted basis) of the outstanding common stock of acquisitions had been consummated at January 1,1981. The Bendix Corporation (Bendix) and approximatefy No provision has been made in the pro forma amounts for 39 percent of the outstanding common stock of Martin estimated nonrecurring charges of $35 million which are Marietta Corporation (Martin Marietta) with a value of d rectiy related to the merger and equity acquisition. The $893 million and $301 million, respectively. Under the terms pr forma amounts have been prepared on the basis that of a merger agreement, and subject to approval by the the acquisitions were financed as of the beginning of 1981 shareholders of the Company and Bendix (which approvals through the safe of marketabfe securities by Bendix of were obtained on January 31,1983), each remaining share $353 million, debt financings by Bendix of $841 million and of common stock of Bendix outstanding (other than that the issuance by the Company of: $158 million (present held by the Company) will be converted into secunties of value) of original issue discount notes; $293 million of the Company as follows: 0 25 of a share of a new series of preferred stock; and 15.258,529 shares of common stock preferred stock; two separate series of 6 percent onginal with a value of $475 million. issue discount notes; and 1.3 shares of common stock. The unaudited pro forma balance sheet data as of Bendix will become a consolidated subsidiary of the Company after the merger of a subsidiary of the Company December 31,1982, is presented to show an approximation with and into Bendix. The Company's interest in Martin f the consolidated balance sheet of the Company and Marietta will be accounted for as an investment under the Bendix, including the Company's equity investment in Martin Marietta, as if the merger had been consummated equity method. as of December 31,1982 The selected historical balance Bendix is a diverdied company, which reports its sheet data for Bendix and Martin Marietta have been operations primarily in the following segments: automotivo, summarized from the most recent financial information consisting of systems and components for the original published by Bendix and Martin Marietta. equipment and replacement markets; aerospace-clectronics, consisting of products and services for the aviation markets and defense and space programs; industrial, consisting of machine tools and accessories for the metalworking industry and other products. Martin Marietta is a diversified company engaged in the business of prod #ng cement, construction aggregates, chemical products and aluminum and other metal products, and developing and producing space and defense systems and products, and aircraft components. The tutal consideration to be paid by the Company in th3 acquisitions was determined by the Company on the as

Pref;rred Shires represint th3 diff;rencts b tween th3 Hstonc4 D Bendix Mutin Manetta at S:pt:mber at Septembe, dat:s of issunncs and are bring amortiz:d ov;r th3 liv s of Pro Forma 30,1982 30.1982 the securities. Cur ent assets s3.098 $1528 $1.087 Total assets 8.276 3.871 3.168 Current habaties 2.219 1,488 781 an0. term debt 2,038 832 1.341 Note 4. Nonrecurring items Non-current babstres 652 70 481 Shareholders' equity 3.367 1.481 565 The 1982 nonrecurring loss of $11 million (after-tax $8 million.or $.24 a share) reflects the wnte off of a note and a provision to cover plant snutdown and disposal costs. The 1981 nonrecurring gain of $29 million consists of a Note 3. Acquisitions gain of $312 million (after-tax $194 million, or $5.73 a share) from the sale of the Company's Canadian oil and gas In April 1982 the Company completed the acquisition of p operties, offset in part by a provision of $283 million tha Supron Energy Corporation, and the Supron producing (after-tax $189 million, or $5.59 a share), which includes a prop:rties were transferred to a partnership (Unicon reserve for the write-off of an investment and other assets, Producing Company) owned equally by the Company and the restructuring of certain businesses and the shutdown of The Continental Group, Inc. Supron was primarily engaged an unprofitable fertilizer plant. in domestic oil and gas exploration and production. The The 1980 nonrecurring loss of $28 millien (after-tax $14 Company's one-half interest in the acquisition of Supron's million, or $.44 a share) reflects a provision for estimated common stock was valued at approximately $357 million plant shutdown and disposal costs. and financed with the proceeds of a nonrecourse production payment financing (repayable out of revenues from production of the Unicon properties) and with the issuance of Money Multiplier Notes (zero coupon) from which the Company received net proceeds of $98 million. The Company's investment in Unicon at December 31, The Company has a long-term credit agreement with 28 1982, was $147 million. Supron's earnings prior to the banks for commitments totaling $2 billion. The agreement acquisition were not material to the Company. See Note 10 provides for the availability of f Jnds in two commitments of of Notes to Financial Statements for additionalinformation $1 billion each ("A" and "B") Commitments A and B may r:lating to Unicon. be used for any corporate purpose, but if commitment B is In July 1981 Bunker Ramo Corporation became a used in connection with an acquisition, any bank may wholly owned subsidiary of the Company. Bunker Ramo is request to be temporarily relieved of its obligation under mainly engaged in the development, manufacture and sale commitment B based upon the identity of the company to of cl:ctrical components and clectricalinformation be acquired; the remaining banks may elect to increase the,r participation according!y. The principal amounts of i syst:ms and services. The transac4on was valued at approximately $347 million and financed through the such loans are required to be repaid no later than May 8, issuance of $194 million ($205 million face value) of a new 1986, or may be converted to term loans to be repaid in S: ries C Preferred stock (Series C), a $70 million note, semiannual installments through May 8,1990. The intemally generated cash plus cash from the sale of the Company has agreed to pay a commitment fee of % of Company's Canadian oil and gas operations. Bunker 1 percent per annum on the unutilized portion of Ramo's results were consolidated with the Company's commitment A and % of 1 percent on the unutilized portion effective July 1,1981. of commitment B. If the Company borrows under In October 1981 Fisher Scientific Company became a commitment B, an additional % of 1 percent will be paid on j wholly owned subsidiary of the Company Fisher Scientific the unutilized portion of commitment B retroactive to the i is engaged in the manufacture, distribution, sa!e and date of the commitment or for one year, whichever is less, s:rvice of a wide range of products used in laboratories. until such borrowing is repaid in full. Tha transaction was valued at approximately $311 million The Company or its subsidiaries may elect to borrow and financed through the issuance of $137 million ($160 under the credit agreement in the form of Eurodollar j million face value) of a new Series D Preferred stock (Series borrowings or domestic dollar borrowings. As of May 1982, D) and cash from the sale of the Company's Canadian oil and gas operations. Fisher Scientifics results were consolidated with the Company's effective October 1,1981. Th se acquisitions were accounted for by the purchase method of accounting. The excess paid over the fair value of net assets acquired was approximately $76 million. Issue discounts on the Series C and Series D 39

depending upon the form of borrowing elected, interest will vote per share on every question submitted to the common be payable at the average floating pnme rate of two shareholders voting with the common shareholders as a reference banks or will be payable at a rate which is, for single class. the first three years of the credit agreement, % of 1 percent Series A Shares are subject to mandatory sinking over either the average London Interbank Offered Rate fund redemption at face value beginning on July 15.1989. (LIBOR) or the average certificate of deposit rate adjusted and ending on July 15,1999. Senes B Shares are subject for reserve requirements and FDIC costs (CD Rate) of three to mandatory sinking fund redemption at face value reference banks. Af ter the first three years, the fraction of begrnning on July 15,1985, and ending on July 15,1989. 1 percent over LIBOR or the CD Rate increases % of The sinking fund payment required in 1985 and each year 1 percent for the succeeding three-year penod and another thereafter to 1989 for Senes B Shares is $12 milhon. % of 1 percent for the final succeeding two-year period. Optional redemptions can commence after July 14,1984, Although the Company had no balance outstanding under at the following redemption prices per share if redeemed the creoit agreement at December 31,1982, it has served during the twelve-month penods ending July 15:1985-as support for issuance of commercial paper. $1,067,1966-$1,062,1987-$1,058 (Series A Shares) and The Company has the option to maintain average 1985-$1,038,1986-$1,029,1987-$1,019 (Series B Shares) compensating balances with each of the banks to partially and at prorated declining amounts thereafter. offset commitment fees, and is currently utmzing this option Senes C Shares are convertible at any time into 0.786 with two banks, the others are being compensated by the of a share of common stock. Series C Shares are payment of fees. redeemable at the Company's option beginning on August The Company has a limited recourse Eurocollar 15,1986. at a redemption price of $57 per share, declining financing under which the Company's obligation to repay is $0 50 per year therea ter until August 15,1990, after which limited by the amount of certain revenues to be received by date each share will be redeemable at $55 per share. a wholly owned subsidiary, Union Texas Far East Senes C Shares are subject to mandatory s;nking fund Corporation, from its interest in the sale of liquefied natural redemption at face value beginning on August 15,1991, gas and crude oil from the Badak field, East Kalimantan, which will each year redeem 4 percent of the number of Inoonesia The interest rates on the loans are 1% percent Senes C Shares originally outstanding. over the floating three-month LIBOR. The revenues from the Senes D Shares are convertible at any time into 1.351 Badak field a'e expected to permit full repayment of the shares of common stock. Series D Shares are redeemable loans by mid-1985 at the Company's option at any time after October 27, 1986, at $100 per share. Series D Shares are subject to mandatory sinking fund reder"ption at face value beginning on September 1,1991, which will redeem 2,5 Note 6. Preferred Stock percent of the number of Series D Shares onginally outstanding for each of the years 1991 through 2010, and There are authonzed 10,000,000 shares of preferred stock, 5 percent of such number for each year thereafter through without par value, of which 200.000 receemable $9125 2020. Senes A Cumuiative Preferred Shares (dividend of $91.25 a Series E Shares were issued to The Bendix share) and 60,000 redeemable $86 25 Series B Cumulative Corporation in exchange for all the stock of its wholly Preferred Shares (dividend of $86 25 a share) were issued owned subsidiary Bendix Acquisition Corporation. The in pnvate placement transactions and 3,768,142 exchange was the first step of a multi-step transaction redeeniable $6 74 Senes C Cumulative Convertible which resu!ted in the Company acquiring 11,900,103 Preferred Shares (dividend of $6.74 a share), 1,630,319 sha9s of Bendix Common Stock and rop'oxbately a redeemable $12 Series D Cumulative Convertible Preferred 39 percent equity interest in Martin Ma at 1 Corporation. Shares (dNidend of $12 a share) and 1,000 Adjustable Series E Shares are nonreceemabl > '.or to Rate Senes E Cumulatme Preferred Shares were issued or December 21,1985, but a'e redeemat, c a or afie' tr at authonzed for issuance in connection with acquisitions ~ date in whole or in part at the Conpanys optic The holders of Senes C and D Shares are entitled to one redemption pnce of about $1.2 million per 3harr w accrued and unpaid dividends. Series E Shares shall not accrue dividends prior to June 30,1983, and such dividends will be payable on the earlier of such dates and quarterly thereafter. Upon completion of the merger Bendix will become a consolidated subsidiary of the Company, and the shares will be eliminated in the Company's consolidated balance sheet. See Note 2 of Notes to Financial Statements for additional information relating to the Bendix acquisition. Holders of Series A, B, C, D and E Shares have priority over holders of common stock as to payment of dividends and distributions on liquidation. The distnbution per share 40

on involuntary liquidations for Series A B, C, D and E Shares is $1,000, $1,000, $55, $100 and $1,193,674, 3 8. Mndna respectively, plus accrued dividends to the payment date. If the Company has not met the requirements for dividend payments or any sinking fund requirements in connection The Company's pension plans, almost all of which are non-with the Series A. B, C or D Shares or requirements for contributory, cover substantially all employees. Pension e ense in 1982,1981 and 1980 was $80, $75 and $70 dividend payments for the Series E Shares, the Company may not pay any dividend on the common stock (other million, respectively. than a dividend payable in ccmmon stock) or purchase or The Company uses the services of enrolled actuaries otherwise retire common stock. If dividends on the to calculate the amount of annual contnbutions to plan l preferred stock have not been paid in an aggregate trustees. The actuaries estimate that the net assets held by amount of at least six quarterly dividends, the holders of all trustees will provide for the actuarial present value of Ws neh gmah Mg h War amo@a@n series of preferred stock, voting together as a single class. and on the basis of one vote per $1,000 of liquidation period for prior service costs. preference, are entitled to elect two directors to the Board A comparison of accumulated plan benefits, of Directors of the Company until the first annual meeting calculated primarily using an eight percent rate of return, after all dividends in default have been paid. and plan net assets (including accrued pension 1 The Board of Directors, by resolution, may establish obligations) for the Company's defined benefit pension additional series of preferred stock having such number of plans is presented below: i shares, designation, relative voting dividend, liquidation January 1 1982 1981 I and other nghts, preferences and limitations as they may Actuanai present va!ue of accumulated determine. plan benef>ts Vested p'an benefits $879 5822 Nonvested plan benef.ts 57 47 $936 $869 Nata 7. Common Stock Net assets avaaab'e for tan benef.ts Net assets held by trustees $723 $688 Subject to the rights of the preferred stock, common Accrued pension obligat:ons 87 91 shareholders are entitled to receive such dividends as may $810 sn9 I be declared by the Companys Board of Directors, are entitled to one vote per share on every question submitted to the common shareholders and are entitled, in the event ~ of liquidation, to share ratably in all the assets of the Note 9. Commitments and Contingencies Company which are available for distribution to the I common shareholders Common shareholders do not have a subsidiary of the Company is a 50 percent partner in preemptive or conversion nghts. Shares of common stock Allied General Nuclear Services (AGNS), which has built issued and outstanding or held in the treasury are not a facility at Barnwell, South Carolina, to recover usable liable to further calls or assessments. There is no restriction nuclear fuel materials from the spent fuel of nuclear power on dividends or the repurchase or redemption of common reactors. Actions by the federal government have had the j stock by the Company except as described in the effect of preventing AGNS from operating the facility, and Preferred Stock note. At December 31,1982, approximately management does not believe that private operation of the 1 5 million shares of common stock were reserved for Barnwell facility is feasible or commercially practicable j issuance upon conversion of the Series C and Series D because of the many uncertainties surrounding the nuclear Preferred Shares. fuel cycle. In 1981 the Company established an after-tax j provision of $87 million for the write-off and shutdown of the AGNS facility when government funding ceases. During i the federal government's fiscal year 1982, AGNS continued j research programs at Barnwell under contract with the U.S. Department of Energy At the request of the Administration, Congress has appropriated funds only through July 31, 1983, for the Department of Energy to permit AGNS personnel at Barnwell to complete work on safeguards I systems technology developed over the last five years. Management continues to believe that Barnwell is a l 41

nationd cnd intern: tion:1 asset th:t should be used for At December 31,1982, Equilease had tot lleased assets reproc:ssing cnd has proposeo th t th facility be end:r management cpproaching $1 billion. Fin:nci:1 dita tr:nsferred to the fed:ral govemment. AGNS is engaged in for Equilease (accounted for by the equity method) is litig tion with one of its customers, which claims that AGNS summarized as follows: is obligated to supply it with quantities of fissile material Years ended December 31 1982 1981 equivalent to that which would have been obtained by Revenues S 80 $ 69 reprocessing and contends that its damages total in Net income 6 3 cxcess of $126 million. AGNS has denied liability and has December 31 1982 1981 asserted counterclaims seeking damages in excess of $90 Net investment in contracts and other million. Management believes that AGNS has substantial receivables $344 $337 dinses to the customer's claim and that the outcome of ss s , notes payable and commercial this litigation will not have a material effect on the financial paper 112 155 position or results of operations of the Company. AGNS (o,ng dl,bt je g had entered into reprocessing arrangements with a shamholders equity se 77 number of other companies, several of which have In 1982, the Company completed the acquisition of the cxecuted mutual termination agreements. The Company has various other lawsuits (some of Supron Energy Corporation, and Supron's producing which are for substantial amounts), claims, commitments properties, located principally in the San Juan Basin rnd contingent liabilities, including those resulting from (New Mexico and Colorado) and the Williston Basin environmental regulations, safety and health regulations (North Dakota), were transferred to a partnership and Internal Revenue Service tax assessments. However, (Unicon Producing Company),n which the Company i th se matters are not expected to have a material effect on has a 50 percent interest. See Notes 3 and 13 of Notes to Financial Statements for additional information. the financial position or results of operations of the Financial data for Unicon (accounted for by the equity Company. method)is summarized as follows: Penod ended December 31 (a) 1982 ' ales s Note 10. Selected Financial Data $3s ot1t of Investee Companies Loss before taxes on income (9)(b) December 31 1982 Equilease Corporation, a wholly owned subsidiary, is one current assets s 34 of the nation's oldest and largest non bank-affiliated Total assets 830 cquipment leasing companies. Equitease operates 16 ["fre"c'Mlxsuction payment S s1s offices in major cities throughout North America, Partners' accounts 294 Europe and Latin America with affiliated offices in Asia. (a) Results of Unicon after April 1982. Equilease is engaged essentially in three leasing related (b) The partnership's income is shown on a pre-tax basis since indtvidual partners are responsible for their share of taxes and has been adjusted to cndeavors, including; ehminate interest payable to the partners o Purchasing a wide variety of income-producing cquipment, as a principal, and leasing it, on either a conventional, leveraged or " operating" lease basis to commercial users; o Acting, for a fee, as an intermediary in the placement of property for lease; and a Managing, for a fee, limited partnerships, shares in which cre distributed both publicly and privately, whose asset; are income-producing equipment, or reatty, leased to a worldwide array of lessees under a variety of leasing crrangements. 42

Nota 11. Segm:nt Finrncirl D;ta E!ectncal Hearth and Other Operations Fibers and Oil and and Scientif.c and Unanocated Chemica!s Plastics Gas E!ectronic Products Corporate (1) Total Net sa!es 1982 $1,296 $1,111 $1,992 $ 882 $505 8 381 $6,187 1981 1.594 1,195 2.068 825 120 605 6.407 1980 1.436 1,114 1.751 647 571 5.519 1979 1.255 940 1.235 324 578 4.332 1978 1.110 771 833 302 3.016 Research and 1982 38 42 40 5 61 186 development 1981 34 35 33 1 49 152 expense 1980 20 25 25 35 105 1979 8 22 10 30 70 1978 8 18 30 56 Deprecton. 1982 74 55 176 52 7 18 382 depietion and 1981 75 50 165 38 2 17 347 i amort:zation 1980 70 43 114 26 18 271 l expense 1979 51 37 112 12 13 225 l 1978 46 36 97 11 190 Incorre from 1982 12 93 803 3 19 (145) 785 [ operat, ors (2) 1981 138 73 910 33 10 (93) 1.071 i i 1980 132 69 904 17 (132) 990 1979 91 115 599 14 (124) 695 1978 34 123 354 (107) 404 Income from 1982 16 93 486 3 19 (145) 472 I operatons 1981 148 73 570 33 10 (88) 746 (adjusted)(2)(3) 1980 141 69 532 17 (127) 632 j 1979 92 115 390 14 (122) 489 1978 34 123 319 (107) 369 Property. 1982 103 74 249 60 9 29 524 p' ant and 1981 136 81 317 38 2 35 609 eau pment 1980 103 111 2 71 20 28 533 add t-ons 1979 85 72 182 16 54 409 1978 105 61 193 137 502 laent f.able 1982 1,068 658 1,626 766 438 1,716 6,272 assets 1981 1.235 679 1.367 1.068 352 643 5.344 1980 1.t72 685 1.283 621 777 4.538 1979 1,101 563 1.002 668 876 4.210 1978 995 526 905 825 3,251 j l Intersegment sates approximate market and are not signif. cant. (1) The "Other Opera $ons and Unanocated Corporate" column includes amounts for other operat.ons, corporate, discont.nued operations and the natu al gas p pohne system sold in 1980 Incfuded in the capt.on "Ident.f,ab:e assets" are the investments in Bendix and Mart:n Marietta of $1.194 r mahon for 1982, assets for other operations of $173. $365. $322, $349 and $133 milhon, discont.nued operations of $, $., $150, $205 and $381 i mAon and Corporate assets of $356. $288, $212, $175 and $183 mJhon for each of the respective years. (2) Operat ng prof t as defined by FASB Statement No.14 would a!so include an aflocaton to segments of "Other income-net" and "NonTcumng j items " The amounts in these captions have not been anocated to the segments in order to avoid distortions in trends and comparabihty among 1 segenents (3) income from operat4ons for selected bus.nesses has been adjusted for the d.fference between taxes provided and ordinary U S tax rates, pnmarily to remove distort ons created by extremely high tax rates in certa.n foreign countnes which would have obscured comparabihty between segmcats l I 1 l i i 43 . -. ~, -

N:ta 12. Geogrcphic Areco-Fin:ncl:1 Dcts United Adiust States (1) Canada Europe Other and Elim. Total Net sa'es (2) 1942 $4,688 $234 $901 $344 3- $4.147 1981 4.843 309 949 306 6.407 1980 3.988 254 995 282 5.519 1979 3.228 215 688 201 4 332 1978 2.354 165 335 162 3.016 f.mome from operations (3) 1982 108 19 552 106 788 1981 312 47 592 120 1.0 71 1980 177 48 609 156 990 1979 160 40 424 71 695 1978 96 32 213 63 404 income from operations 1982 100 19 250 94 472 (adjusted) (3)(4) 1981 326 42 270 108 746 1980 191 49 251 141 b32 1979 163 38 222 66 489 1978 36 163 74 369 Assets 1942 5,432 204 454 350 (170) 6,272 1981 4.135 222 769 288 (70) 5.344 1980 3.383 261 601 285 8(5) 4.538 1979 3.051 231 675 180 73(5) 4 210 1978 2,186 177 452 164 272(5) 3 251 Liabilities 1942 1,871 58 521 202 (170) 2,479 1981 2,140 82 622 79 (70) 2.853 1980 1.869 126 706 55 (142) 2.614 1979 2,167 86 550 49 (131) 2.721 1978 1.640 59 344 45 (109) 1.979 (1) Corporate income, expenses, assets and liabilities am included in the United States column (2) included in United States net sa!es are export sales of $371, $426. $369. $294 and $234 million for each of the respective years (3) Operating prof.t as defined by the FASa Statement No 14 would also include an allocation to geographic areas of "Other income-net" and "Nonrecumng items" The amounts in these captions have not been alle:ated to the geographic areas in order to avoid distortions in trends. (4) Income from operations for selected businesses has been adjusted for the difference between taxes provided and ordinary U S tax rates, primar,fy to remove d stortions created by extremely high tax rates in certa:n foreign countries which would have obscured comparability between geographic areas (5) includes the assets of the discontinued operat ons of $150, $205 and $381 million for each of the respective years Canadian oil and gas properties. The Canadian reserves represented eight percent of the Company's total proved N:te 13. Supplementary Oil reserves of oil and seven percent of the total proved riatural cnd Gas Information (unaudited) gas reserves at December 31,1980. Reserves are considered proved if economic Reserve, revenue and cost information concerning the roducibility is supported by either actual production or Company's worldwide oil- (crude oil, condensate and conclusive formation tests. Proved developed reserves are natural gas liquids) and natural gas-related activities is reserves that can be expected to be recovered through presented below existing wells with existing equipment and operating During 1982 the Company completed the acquisit. ion methods. Proved undeveloped reserves are reserves that of the Supron Energy Corporation, and Supron's producing are expected to be recovered from new wells on undrilled properties were transferred to a partnership (Unicon acreage or from existing wells where a relatively major Producing Company) in which the Company has a 50 expenditure is required to permit production. These percent interest. The Company's investment in Unicon is estimates do not include reserves which may be found by being accounted for on the equity method. extension of proved areas, reserves which have been During 1981 the Company sold substantially all of its estimated considering known geological and seismic data and previous experience with similar reservoirs, or reserves recoverable by secondary or tertiary recovery methods unless these methods are in operation and showing successful results. 44

The Comp:ny's n t quantiti;s of proved developed and undeveloped reserves of oil and natural gas, by geographic areas and ch;ng:s th: rein were as follows: Oil-Million Barrels Natural Gas-Bilhon Cubic Feet United South United States Canada America (a) Europe Asia Total States Canada Europe Asia Total Proved i. : ; M and undeveloped reserves Beg nning of year 1982 44 4 101 15 166 421 6 1,527(b)(d)1,984 1981 47 15 6 111 15 194 417 149 31 1.545(b)(d) 2.142 1980 51 12 8 131 15 217 428 148 33 1.476(b)(d) 2,085 Revisions of previous 1982 3 1 4 (37) (122) (150) estimates 1981 (1) 10 (2) 7 (2/) (1) (24) (119) (171) 1980 2 (9) (2) (9) 1 (9) (91) (99) Ext:nsions. 1M2 3 1 2 6 43 5e 101 discoveries and 1981 4 1 2 3 10 98 3 149 250 other additions 1980 2 2 10 3 17 39 16 208 263 Production 1M2 (4) (2) (21) (2) (31) (62) (1) (48)(c) (111) 1981 (6) (1) (2) (20) (1) (30) (67) (4) (1) (48)(c) (120) 1980 (6) (1) (2) (21) (1) (31) (51) (6) (2) (48)(c) (107) S lis of minera! san-IM2 place 1981 (15) (15) (147) (147) 1980 End of year iss2 41 5 83 16 145 365 5 1,415(b)(d)1,708 1981 44 6 101 15 166 421 6 1527(b)(d) 1.954 1980 47 15 6 111 15 194 417 149 31 1.545(b)(d) 2.142 Proportional interest in equity partnership-cnd of year 1982 4 4 211 211 Totml includ:ng equity pirtrurship-end of year 1982 45 5 83 16 149 574 5 1,415 1,906 Proved developed reserves Beginning of year 1942 43 6 95 11 155 394 6 1.118(b) 1,514 1981 47 15 6 101 15 184 395 149 6 1.178(b)(d) 1.728 1980 51 12 8 131 15 217 352 148 8 1.476(b)(d) 1.984 End of year IM2 40 5 to 13 13e 342 5 1,081(b) 1.400 1981 43 6 95 11 155 394 6 1,118(b) 1,518 1980 47 15 6 101 15 184 395 149 6 1.178(b)(d) 1.728 (a) Res:rve and production information relates to a serv ce contract operation in Argent r s under which the Company is paid a fee based on production. (b) includes reserves that will require utilization of an expanded Indonesian liquefied natural gas (LNG) plant scheduled for completion in 1983 (c) included in Astas gas production is approximately 7,10, and 9 BCF for each of the respective years, of gas consumed, primarily in operation of the Indonestan LNG pfant. (d) includes reserves that require the negotiata. of add,tional sa:es ag eements de

Costs incurred in oil and gas properiy acquisition, cxplorition cnd developm:nt activiti:s were as follows: United South Other States Ccnada America Europe Asia Int'l To:tl Property acquis4 tion 1982 8 14 S-S- S-8 1 8-8 15 1981 18 1 4 21 44 1980 30 3 8 3 1 45 is 24 76 33 22S(e) Exp! oration 1982 76 1981 84 3 8 26 43 24 188(a) 1960 61 9 1 11 37 6 125(a) 158 Development 1982 65 1 2 12 78 1981 $9 5 5 44 42 195 1980 79 10 2 50 20 161 Proportional interest 26 in equity partnership 1982 26 Total including enuity nartnersh'n 1942 S181 81 818 836 8155 833 S424 (a) includes cash expenditures for capital add. tion,s of $18. $30 and $28 million for each of the respective years The aggregate amount of capitalized costs (including construction in progress) relating to oil and gas producing activities, the aggregate amount of the related accumulated depreciation, depletion and amortization (DD&A) and accumulated valuation allowances at December 31,1982,1981 and 1980 were as follows: United South Other States Canada America Europe Asia Int'l Total Proved and unproved properties Gross capital 1982 8779 8 5 827 84M S259 $28 S1,524 1981 681 5 23 497 175 24 1,405 1980 551 101 16 452 137 3 1.260 Accumulated DD&A (including 1982 363 4 16 236 43 14 676 va'uat.on a!lowances) 1981 291 5 13 219 38 5 571 1980 235 40 9 156 32 2 474 Proportional intemst of not capitatized costs of equ:ty 396 partnership 1982 396 Proved properties 1,312 Gross capital 1982 432 1 23 414 242 1981 552 21 481 159 1.213 1980 443 72 16 435 124 1.090 Accumulated DD&A 1982 296 15 224 36 578 1981 238 13 211 30 492 1980 195 24 9 150 25 403 44

The results of operitions for the Company's oil and gas producing activiti:s for 1982,1981 and 1980 were as follows: Year ended United South Othir December 31,1982 States America Europe Asia Int'l. Total Net sales $344 $14 $671 $303 $1.332 Production costs 113 3 41 59 216 Exp'oriton expenses 67 13 26 69 32 207 Depreciation, depletion, and emortization 65 3 60 6 134 Valuction allowances 26 2 1 9 38 Totd costs and expenses 271 19 129 135 41 595 incom3 (loss) before taxes on ^ 542 168 (41) 737 income 73 (5) - Taxes on income (1) 34 442-86 562 Results of operations 39 (N / *04 82 (41) 175 Proportional interest in results of operations of equity partnership 3 3 Tot;l resutts of operations (2) $ 42 $ (5) $100 $ 82 $(41) $ 178 Year ended United ~ c.outh Other December 31,1981 States Canade. /*nenca Europe . Asia int'l. Total Net sNes $372 $24 $16 - $721 $273 $1.406 Producton costs 122 6 40 ~ '16 219 Explorrtion expenses 60 3 6

22 43 24 158 Depreciation, depletion, and tmortization 51 2

3 71 5 132 ~ Vduit on allowances 21 3 3 1 3 31 Tcd costs and expenses 254 13 15 136 95 27 540 incoma (loss) before taxes on e income 118 11 1 585 178 (27) 866 Trfaes on income (1) 58 5 449 96, 608 Resofts of operations (21 $ 60 $6 $1 $136 'A 82 $(2h - $ 258 .s ' Y;;r cnded United South Otner - Dec mber 31,1980 States Canada Amenca D'~[pe Asia ~ Int'l - Total Net sales $211' $32 $14 $698 $253 '41.208 Producton costs 60 4 5 37 50

150, Explotton expenses 44 4

1 8 35 5.+ 97 Depreciaton, depleton. l and amortizaton 24 2 1 55 4 86, ~ I Valuaton allowances 18 3 1 1.._ , s2-23 Tot:J costs and expenses 146 13 7 101 90 362 Income (loss) before taxes on income 65 19 7 597 }C3 f5) 84ta T;:xes on income (1) 31 7 477 85

600

.n Results of operations (2) $ 34 $1? $7 $ 90. - S 78' .. $(S) $ 246 g_ (1) Computed using statutory tax rates adjusted for permanent df erences, tax cred;ts and a!!owances' j. (2) Excludes overhead and financing cos's b, /

m

' ws 4 R 4 4. s ) l d' s 9

^

t ,r A 4 / i 47 ) e L*__,_..'.-_-- J

The standardized measure of discounted future net cash flows and changes therein relating to proved oil and gas reserves at December 31,1982,1981 and 1980 were as follows: Un1ted South December 31,1982 States Europe Asia Amenca Other Total Future cash inflows $1.923 $2.707 $6 666 $31 $11 $11,338 Future product on and covelopment costs (931) (736) (1.282) (21) (3) (2,9 73) Future income tax expense (432) (1.560) (2.973) (4) (4 %9) Future net cash flows (a) 560 411 2.411 10 4 3.3% 10% d:scount for estimated timing of cash flows (154) (83) (1.280) (1) (2) (1.520) Standardized measure of d.scounted future net cash flows $ 406 $ 328 $1,131 $9 $2 $ 1.876 P,roporttonal interest in equity partnership s standard zed measure of discounted future net cash flows 5 197 $ 197 $ 1807 Bag!nning of year Sa'es and transfers of oil and gas produced. net of production costs (1,116) (313) Net changes in pnces development and product on costs 226 Extensions, discovenes. and improved recovery. less related costs 126 Deve!opment costs incurred dunng the penod 466 Revis+ons of previous quant.ty estimates 181 increase in present va'ue due to passage of one year 209 Net change in income taxes 290 Other $ 1,876 End of year Un1ted South December 31,1981 States Europe Asia Amenca Totaf Futu e cash inf!ows $2,176 $3.557 $6.986 $42 $12.761 r Futu e production and deveiopment costs (758) (1.062) (910) (30) (2,760) r Future ccome tax expense (647) (2.044) (3.402) (6 093) Futu'e net cash flows (a) 771 451 2.674 12 3.908 10% d scount for est, mated t. ming of cash f ows (272) (116) (1,711) (2) (2,101) Standa<dized measure of d.scounted future net cash f:ows $ 499 $ 335 $ %3 $10 $ 1.807 Beg'nning of year $ 1.782 Sa'es and transfers of oil and gas produced. net of production costs (1,187) Net changes in pnces, development and prodJClior costs 220 Extens.ons. d scover es and improved recovery less related costs 336 Development costs incurred dunng the penod 178 Revis'ons of previous quant,ty estimates 295 Increase in present va'ue due to passage of one year 178 Net change in income taxes 58 Sales of reserves in piace (383) Other 330 End of year $ 1.807 46

Un'ted South December 31,1980 States Europe Asia America Canada Total Future cash inflows $2,254 $3.896 $6.140 $48 $547 $12.885 t Future production and development costs (1,107) (728) (481) (28) (255) (2.599) ) Future income tax expense (516) (2.553) (3.169) (138) (6.376) l Future net cash flows (a) 631 615 2.490 20 154 3,910 10% discount for estimated tim.ng of cash flows (218) (200) (1.634) (4) (72) (2,128) i Standardized measure of discounted future net cash f;ows S 413 $ 415 $ 856 StC $ 82 $ 1,782 Beginning of year $ 1,367 Sates and transfers of oil and gas produced, net of production costs (1.052) j Net changes in prices, development and production costs tS83 { Extensions, discovenes, and improved recovery, less related costs 289 l Development costs incurred during the perod 76 j Revisions of previous quantity estimates (102) Increase in present value due to passage of one year 137 Net change in income taxes (842) Other 326 End of year $ 1,782 (a) Future net cash flows were computed using year-end pnces and costs and statutory tax rates adjusted for permanent d fferences, tax credits and allowances. Not314. Unaudited Financial Information Currterly Financial Information 1982 1981 Mar. 31 June 30 Sept. 30 Dec.31 Year Mar. 31 June 30 Sept. 30(a) Dec. 31(a) Year (a) Net sales $1.614 $1.595 $1.514 $1.444 $6.167 $1.582 $1,586 $1,544 $1,696 $6.407 Gross profit (b) 457 482 444 423 1.806 465 482 464 541 1.952 Net income 63 82 81(c) 46(c) 2/2 84 87 118(c) 59(c) 348 Per share of common stock: Net eamings 1 38 2 01 195(c) .88(c) 6.22 2.33 2.40 315(c) 1.29(c) 9.17 Dividends paid 60 .60 60 60 2 40 55 60 .60 .60 2.35 Market price (composite I tape)(d) l High 45 38 37.50 36.75 38.38 45.38 57.00 ~ 56.63 59 BB ' 48.38 59 88 Low 32.38 30.13 29 75 30 50 28.75 46.89. 49 13' 39 00 40.50 39.00 (a) includes the resutts of Bunker Ramo Corporation after June 30,1981, and of Fisher Scirtific Company a+ter September 30.1981. (b) Exclusive of depreciation. depletion and amortizatio.1 (c) See Note 4 of Notes to Financial Statemen'.s for a discussion of nonrecurring items In 1982, third quarter resets include a net gain of $31 million, er $ 94 a share, from debtR qui $ swaps. in 1982, fourth quarter nonrecurring charge consists of a wnte-off of a nots and a provision to cover plant shutdown and disposal costs. In 1981, third quarter nonrecurring items consist of a gain on the sa'e of the Comprny's Canadian oil and gas properties partly offset by a provision which includes a reserve for the write-off of an investment and other assets; fourth quarter nenrecurring charge consists primar.ly of a provision for the disposition of an unprofitable fertilizer plant. (d) Principally traded on The New York Stock Exchange. supplemental data is set forth in accordance with this Supplementary informat!on Regarding requirement and is beliewd by the Company to have been prepared on a reasonsble basis; however, much of the inflation and Changing Prices FASB mandated das in thisiection lacks the retevance and reliability attributes which characterize historical The Company's firiancial statements are presented on the accounting information. The application of indexes to the basis of historical (actual) costs. Such financial statements, Company's varied fixed assats requires numerous T however, do not reflect the decline in the purchasing power estimates and assumptions which raises a question as'td of the dollar during inflat,onary penods. The Financial i Accounting Standards Board requires the presentation of the usefulness of the information devebped. The Company v' n ,,s ~ information reflecting the changes in the prices of specific N ' goods and services (current cost method) on the 5 Company's historical financial data. The accompanying s s 4.g 49

cautions users of this information that the data is of limited both of which result in an amount which approximates the value for decision making purposes. Moreover, the FASB cost of goods at the time of sale. The increase in DD&A intends to assess the usefulness of the information at the results from the considerable upward adjustment of end of a five-year experimental period. property, plant and equipment under the current cost The current cost method adjusts historical acquisition method. Since present tax laws do not allow deductions for cost for changes in specific prices. Since the large volume inflation, adjusted costs and expenses, the revised net of such assets, principally property, plant and equipment, income amount does not include any adjustment to the precludes individual measurement, the amounts shown income tax provision. were generally determined by applying external indexes to The gain from decline in purchasing power of net the recorded historical costs. amounts owed is calculated by measuring the increase in The current cost of product inventories was principally purchasing power for the year attributable to general determined on the basis of average actual cost for the inflation taking into account net monetary liabilities at the three months ended October 31,1982, since such beginning and end of the year and transactions during the inventories were generally acquired in the latter part of the year. Since a net monetary liability position may be viewed year. However, because a significant portion of inventories as a hedge against a decline in the dollar's purchasing is valued on the last-in, first-out (LIFO) method in the power, the gain from such decline is taken into historical balance sheet, such inventories are valued at consideration when assessing the impact of inflation prices lower than current costs. The substantia' increase in on the Company. inventory amounts, adjusted for changes in specific prices, The increase in shareholders' equity results mainly results from valuing such inventories at year-end 1982 from the increased value assigned to inventories and dollars. property, plant and equipment-net, as well as the gain income statement amounts for cost of goods sold and from the decline in the purchasing power of net amounts depreciation, depletion and amortization expense (DD&A) owed. have been adjusted in arriving at the net income amount Adjustments to the current cost data needed to reflect on the current cost method. Net sales and all other the effects of generalinflation are based upon the United operating expenses have not been adjusted sinco they are States Consumer Price Index for all urban consumers considered to reflect average price levels for the year. The (U.S. CPI (u)). adjustment to cost of goods sold is relatively small as the The five-year comparison shows the effects of Company calculates cost of goods sold on the basis of adjusting specific historical amounts, expressed in terms valuing inventories on the LIFO or average cost methods, of average 1982 dollars, as measured by the U.S. CPI (u). Statement of Income and Other Financial Data Adjusted f;r Changing Prices for the Year Ended December 31,1982 As Reported in the Financial Ad. justed for Changes in Statement of Income Statements (Historical Cost) Specific Prices (Current Cost) Net sates $6.167 $6.167 Cost of goods sold 4.361 4.414 Depreciation. depletion and amortization 382 549 Selling. general and administrative expenses 639 639 Other income-net (89) (89) Nonrecumng items 11 11 Interest and other finanClal Charges 84 84 Pre-tax income 779 559 Taxes on income 507 507 Net income 272 52 Gain from decin.- in purchasing power of net amounts owed 88 Net income plus gain imm decline in purchasing power of net amounts owed $ 272 $ 140 Per share of common stock. U income (loss) $ 6 22 $ (.49) Net intome plus ga'n from decline in purcnasing power of net amounts owed 6.22 2.18 Other Financial Data inventories at year-end $ 647 $ 924 Property. plant and equipment-net at year-end 2.858 4.110 Sha ehoicers' equity in average 1982 dollars 2,013 3.485 Foreign currency translation adjustment (42) (60) l EfSct of increase in general price level $ 231 i increase in specific prices (current cost) of inventories and property. plant and equipment-net j 209 held during the year Excess of increase in the general price level over increase in specific prices $ 22 50

Five-year Comparison cf Selected Supplementary Fin:ncl:1 Data Adju;ted for Effects of Changing Prices Years ended December 31 1982 1981 1980 1979 1978 Not Sales As reported in financial statements $6,167 $6.407 $5.519 $4.332 $3.316 Restated in average 1982 dollars 6,167 6.807 6.469 5,765 4.465 Income From Continuing Operations As reported in financial statements 272 348 289 176 153 Restated in current cost 52 152 171 44 Shareholders' Equity As reported in financial statements 2,013 1.900 1.664 1.229 Restated in current cost 3,485 3.716 3.322 2.950 Purchasing power gain 88 170 213 249 Difference between increase in the general price level and incretse in specific prices 22 (206) 124 306 Per share of common stock: Income (Loss) from continuing operations: -as reported 6.22 9.17 8.15 5.95 5.40 -in current cost (.49) 3.27 4.42 1.30 Cash dividends as reported in financial statements 2.40 2.35 2.15 2.00 2 00 Cash dividends restated in average 1982 collars 2.39 2.49 2.51 2.68 2.98 Market price (actual at year-end) 32.38 43.88 53.50 49.13 28.25 Market price restated in average 1982 dollars 31.86 45.10 59.90 61.83 40 28 Average Consumer Price Index for all urban consumers 289.3 272 3 246 8 217.4 195.4 Note: Restatements in current costs are in average 1982 dollars. Report of Independent Accountants D. I flCe - 65 MA IS N AVENUE MORRISTOWN. NJ 07960 g7aterhouse u seaa To the Shareholders and Directors of Allied Corporation in our opinion, the accompanying consolidated balance sheet and the related consolidated statements of income, retained earnings and changes in financial position present fairly the financial position of Allied Corporation and its consolidated subsidiaries at December 31,1982 and 1981, and the results of their operations and the changes in their financial position for each of the three years in the period ended December 31,1982, in conformity with generally accepted accounting principles consistently applied. Our examinations of these statements were made in accordance with generally accepted auditing standards and accordingly included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances. l l l l January 21,1983 A - '- r 51

Select:d Fin ncial D:t3 Allied Corporation (Do!Iars in moons except per sha'e amounts) Years ended December 31 1982 (a) 1981(a) 1980 1979(a) 1978 For the Year Net sales $6,167 $6,407 $5,519 $4,332 $3,016 Cost of goods sold (exclusive of DD&A) 4,361 4,455 3.824 3,115 2,223 Depreciation, depletion and amortization (DD&A) 382 347 271 225 190 income from operations 785 1,071 990 695 404 Nonrecurring items (11) 29 (28) (50) (9) Interest and other f:nancial charges (84) (88) (81) (102) (69) Income from continuing operations before taxes on income 779 1,033 926 560 341 Taxes on income 507 685 637 384 188 Income from continuing operations 272 348 289 176 153 Discontinued operations: Operating losses, net of income tax (19) (33) Estimated loss on disposal, net of income tax (146) Net income 272 348 289 11 120 Preferred stock dividend requirement (68) (38) (23) (5) Earnings applicable to common stock $ 204 $ 310 $ 266 S 6 S 120 Earnings per share of common stock-. Income from continuing operations S 6.22 5 9.17 $ 8.15 5 5.95 S 5.40 Losses from discontinued operations (5.75) (1.15) Wet earnings S 6.22 $ 9.17 S 8.15 5.20 S 4.25 Weighted average number cf common shares outstanding (in millions) 32.8 33.8 32.6 28.7 28.3 Dividends per share of common stock $ 2.40 $ 2.35 5 2.15 S 2.00 $ 2.00 Salanes and wages 1,140 1,018 828 681 526 Oil and gas exploration costs expensed 245 189 120 91 81 Environmental improvement cosic expensed 88 80 88 30 30 Property, plant and equipment addFions: Environmental improvement facilities 34 56 54 64 101 Capitalized oil and gas exploration and development 239 251 226 162 170 Plant improvements and additions 251 302 253 183 231 Total additions 524 609 533 409 502 52

t (Doitars in mdl ons except per share amounts) I December 31 1982 (a) 1981(a) 1980 1979(a) 1978 At Year-End Net working capital $ 416 $ 638 $ 467 $ 279 $ 285 Property, plant and equipment-net 2,858 2,866 2,384 2,169 2,041 Total assets 6,272 5,344 4,538 4,210 3,251 Long-term debt and capitalized lease obligations 700 857 885 952 947 Preferred redeemable stock 586 591 260 199 Common stock and other shareholders' equity 2,013 1,900 1,664 1,229 1,272 Book value per share of common stock 57.11 56.30 49.69 42.65 44.62 Number of common shares outstanding (in millions) 35.2 33.7 33.5 28.8 28.5 Common shareholders 58,046 56,648 58,022 60,304 63,779 Employees 44,337 58,224 46,269 49,014 31,979 Finzncial Statistics Return on sales (pre-tax adjusted) (b) 8.2 11.6 11.0 8.8 10.5 Return on average assets: Pre-tax (adjusted)(b) 10.0 15.9 14.8 11.2 12.1 After-tax 5.4 7.5 7.0 4.5 5.8 Retum on common equity 10.1 16.3 16.0 14.1 12.0 Long-term debt as a percent of total capital 19.5 23.3 28.4 35.6 38.5 Interest coverage ratio 7.1 9.4 10.1 7.0 6.1 (a) locludes the ettect of acquisltions in the respective pencas See Note 3 of Notes to Financial Statements for a d;scussion of 1982 and 1981 acqurs.tions. The Company acquired Eltra Corporation effectve July 1,1979 The transaction was valued at approximate!y 5598 mdlion and was accounted for as a purchase (b) Pre tax income for se!ected businesses has been adjustea for the difference between taxes provideo and ordinary U S. tax rates, pnmanly to remove d:stort:ons created by extremely high tax rates in certa <n toreign countries, as well as nonrecurring items l 53

Policy and Management Committoo ...-ne...,..-c-~ ! l5 .t 's f p j j ~ g j .g ? aj r . 7 4 h N l Edward L. Hennessy. Jr. A!an Belzer Edgar S. Brower Cha rrmn cf :ne Board and President. Athea Fibers Pres:1ent. Amed Electronic Ct et Esecuhe O'f tcer & Plastics Company. and Components Company. and Group Vrce Pres; dent Group vrce Presiaent l' v .i J .i' I , "( i Robert L. Col0 Wuham D. Geitz Pres < dent. Amed Information Chanman of tne Poard ar.c Systems Company and Group Ch=ef Execut>ve Officer. Union V:ce Pres! dent Texas Petroieum. anci Group Vice Pres, dent l l ~ A J u Y-g The Po' icy and Managerrent Comm tiee. compnsing the Comparys cenior off cers usua!y meets twce a rnonth to res.ew bus:ress plans of tre cperat.ng compan:es to A. Clark Johnson James L. Vincent d.scuss al major projects and President. A!hed Chemical President. Aihed Hea'th & to dewcp poac;cs and Company, and Group Scientific Products Company. I busress strateg<es for A%ed Vice President and Group Vice President 54

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i Officers Dircctors l All members of the Policy Edward L. Hennessy. Jrf Heien S. Meyner ' Board Committees and Management Cha"r a"d Ch et Corrora e D rector Arte s ree to:"e o eecte s i Committee are officers of Exmge OM ce PhJ M W^ h rams 9e to :re Ccm - roes on eveJ Lo'Doraten

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1 Aud.t Committee Other officers are: Waltam M Agee Ccmara e D ecter 'q" gY p pgg, Cna rr an aM Cn,ef St Jaccues De G asse France Chaaman Daniel P Burnham E xec.: ve C" cer Vice P'es de and Cer ec' er Ine Be-a x Co pory on Char'es W N;cho:s. Jr " 2 Board Nominating and P.es: cent Prare inseuor Review Comm'ttee Edward W Canahan A : ed Cowav Neasork New v'k Char:es W N cho's Jr Vce Px, dent Wa th. Sye y anc C ha.r re an Enw creentat sc ences Jewel Piummer Cobb ' Stan!ey P. Porter "" 3 Corporate Respons'blty P ce V+ce Cha:r'ran 'et ed N:cho!as A Cameron C N"ec Comm.ttee na S: ate AqNr Young & Corrpany "O "" O l V ce P esidert-F,na"cc un ye,sm Fu.e'+0n Da as. Teus ChaUran r u,~= con Ca,erna i Theodore C Rogers ' ~ 4 F; nance Committee WAam F. Loftus i V.ce Pres * ' a"J Peasu'er Dona'd W Davis ' ' Presde"t and Ch ef Ed Aard L Hennessy Jr. Ch et Eircutc.e C4? ce. Execa.e 041 cer Charman Harry J Rob;nson. M D-and Cha rma, NL Industnes Inc 5 Organizat;on and (ce Pres der ! Med CT A?'a rs 7he StarJey i.c as New York New York Compensation New Br'a n. Ccn o cc: iSucomr et < emces and Committee P.eter J. Schmer en ,g, of too s a-d ecu pment :o :ne Petro'eum Pichard R Sh nn bce Pres!denbP rn:ng and %,g.g ngg7y) De. e opment Cha:rman John P. Fishwtck "' Jonathan L. Scott 6 Retirement Funds Dr Richard A Swahn Paver Cha irran cf the Board Committee va Pwuen* nesea en and W n e s varx Da,,es and i.es a,d Ch:ct Executive Off.cer John P. F;shw,ck D,, r+,,4~ f, u eng 7 DC J L Sco" Enterpnses. Inc Charm n (La4 fg r1 treng. Texas (De,ehrer and n;anager o' Bnan D Forrow commerc;x rea; esta:e Scientific Advisory i Ser or V{e Pres cen' and other in estmentsi s Comm ttee i a ce e r Counse, An.ed Corporm.0, R! chard R. Shinn " Dr. James A Krumnanst "7 ForTer Cha.rman ard Ch'ef Cha<rro r l WJnam R Hase ton Execurve Cmcer Dr. John I Brauman Cru rTan a-d Ch.et yeropear. # in:urance Dr. MUdred,_S Dresselhaus i l E=ecuNe C%cer Lo reany l S: Reais Papor Com pany Nev. Yore Nes York S:r Sam F. cdwarcs NeA Y'ork. New Yo'k Dr. Sidney Kaufman Thomas P. Stafford Dr. Jeremy R. Knowles Robert D. KFpatnck '," vee Cnaaran Dr. John R. Whinnery Presiden and Co-Ch et G bra. tar Expioraton Lim 4ed Executr.e O't.cer Oxtanoma C.ty Oeahoma CIGNA Corpora!.on (0 ! and gas exp'oraton NosYyk Ne A Ycrk and prodachon) (Di,e s ' ed inscrance and inanc;x inst ioton) Paul Thayer* Cha.rman James A. Krumhansl 2 The LTV Corporation Herace W.te Professor Da"aa. Texas of Physics and Professor of Appled Phys'es Co nel Univers.t/ Ithaca New York i Resigned in January 1983 after nomination to serve as Deputy Secretary of Defense. 56 -1

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SECURITIES,AND EXCHANGE COMMISSION h WA$HINGTON, D.C. 20549

~~

Form 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1'934 For the fiscal year ended DECEMBER 31, 1982 Commission file number 1-1269 Allied Corporation (Exact name of registrant as specified in its charter) NEW YORK 13-4918545 (State or other jurisdiction of (i.R.S. Employer incorporation or organization) Identification No.) P.O. Box 4000R Morristown, New Jersey 07960 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (201)455-2000 Securities registered pursuant to Section 12(b) of the Act: Name of Each Exchange Title of Each Class on Which Registered Common Stock, par value $1 per share New York Stock Exchange Midwest Stock Exchange Pacific Stock Exchange Toronto Stock Exchange $6.74 Series C Cumulative Convertible New York Stock Exchange Preferred Shares Pacific Stock Exchange $12 Series D Cumulative Convertible New York Stock Exchange Preferred Shares Adjustable Rate Series F Cumulative New York Stock Exchange Preferred Shares 8%% Notes due April 1,1983 New Yorl< Stock Exchange Money Multiplier Notes (Zero Coupon) New York Stock Exchange (5 issues) du9 July 1,1987, October 1, 1992, January 15, 1996. September 15, 1998 and August 15,2000 6% Original Issue Discount Notes New York Stxs Exchange (2 issues) due December 15,1988 and December 15,1990 5.20% Debentures due November 1,1991 New York Stock Exchange 6.60% Debentures due August 1,1993 New York Stock Exchange 7%% Debentures due September 1,1996 New York Stock Exchange 9% Debentures due April 1,2000 New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mai 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 1No __ The aggregate market value of the voting stock held by nonaffiliates of the registrant was approximately $1.5 billion at December 31,1982. There were 35,249,957 shares of Common Stock outstanding at December 31,1982. Documents incorporated by Reference Part I and II: Annual Report to Shareholders for the Year Ended December 31,1982. Part Ill: Proxy Statement for Annual Meeting of Shareholders to be held April 25,1983. Part I and IV: The Bendix Corporation Annual Report on Form 10-K for the Year Ended September 30,1982.

ALLIED CORPORATION Cross Reference Sheet Page(s) in Form 10-K Heading (s) in Annual Report to Shareholders for Annual item No. Year Ended December 31,1982 Report

1. Business Note 9. Commitments and Contingencies 41 Note 11. Segment Financial Data..............

43 Note 12. Geographic Areas-Financial Data 44

3. Legal Proceedings Note 9. Commitments and Contingencies 41

5. Market for the Regis-Note 14. Unaudited Financial Information-Quarterly trant's Common Stock Financial Information....

49 and Related Stock-Selected Financial Data........... 53 holder Matters

6. Selected Financial Data Selected Financial Data........

52,53

7. Management's Discus-Management's Discussion and Analysis 27 sion and Analysis of Financial Condition and Results of Opera-tions

8. Financial Statements and Consolidated Statement of income 24 Supplementary Data Consolidated Statement of Retained Earnings..

24 Consolidated Balance Sheet 25 Consolidated Statement of Changes in Financial Position. 26 Other Financial Statement Data 32 Notes to Financial Statements.... 37 Report of Independent Accountants. 51 Heading (s) in Proxy Statement for Page(s) in Ar:nual Meeting of Shareholders Proxy to be held April 25.1983 Statement

10. Directors and Executive Election of Directors Officers of r.ho Reg-istrant

11. Management Remunera-Remuneration of Officers and Directors tion

12. Security Ownership of Voting Securities.

Certain Beneficial Owners and Manage-ment Annual Report on Form 10-K of The Page(s) in Bendix Corporation for Year Ended Form September 30.1982 10-K

1. Business Business...................

1

13. Financial Statement 13(a) 1. Financial Statements..................

5 Schedules i

To be included in a definitive Proxy Statement to be filed with the Securities and Exchange Commission not later than 120 days after December 31,1982.

2

~ s NOTE: Allied Corporation is sometimes referred to in this Report as the Registrant and as the i Company, and Allied Corporation and its consolidated subsidiaries are sometimes referred to as the Company. TABLE OF CONTENTS ltem Page Part 1. 1 Business.. 4 2 Properties 12 3 Legal Proceedings 25 4 Submission of Matters to a Vote of Security Holders 26 Executive Officers of the Registrant... 26 Part II. 5 Market for the Registrant's Common Stock and Related Stockhcider Matters 28 6 Selected Financial Data.... 28 7 Management's Discussion and Analysis of Financial Condition and Results of Operations 28 8 Financial Statements and Supplementary Data 28 9 Disagreements on Accounting and Financial Disclosure. 29 Part ll1. 10 Directors and Executive Officers of the Registrant 29(a) 11 Management Remuneration. 29(a) 12 Security Ownership of Certain Beneficial Owners and Management 29(a) Part IV.13 Exhibits, Financial Statement Schedules and Repcrts on Form 8-K 29 Signatures... 31 (a) These items are omitted since the Registrant wit! file w;th the Securities and Exchange Commission a definitive Proxy Statement pursuant to Regulation 14A involving the election of directo.s not later than 120 days s'ter December 31,198?. Certain ott'er informatio 1 relating to the Exect :ve'Off:cers d of thc' R?g'strs.nt appears at pages 26 through 28 cf this Report. 3 a

e Part 1. Item 1. Business Allied Corporation (with its consolidated subsidiaries sometimes referred to in this Report as the Company) was organized in the State of New York in 1920. On December 21 and 22,1982, the Company acquired approximately 55% of the outstanding common stock of The Bendix Corporation (Bendix) and approximately 39% of the outstanding common stock of Martin Marietta Corporation (Martin Marietta). Bandix became a consolidated subsidiary of the Company on January 31,1983, when the Bendix shareholders approved the merger of Bendix with a subsidiary of the Company and the Company's shareholders approved the issuance of common stock in conjunction with the acquisition. Based on the Company's holdings of Martin Marietta's outstanding common stock, such interest in Martin Marietta will be accounted for as an investment under the equity method. Bendix, a Delaware corporation, is engaged primarily in the following business segments: automot;ve, consisting of systems and components for the original equipment and replacement markets; aerospaco-electronics, consisting of products and services for the aviation markets and defense and space programs; and industrial, consisting of machine tools and accessories for the metalworking industry and other products. The business discussion included in item 1 Business of the Annual Report on Form 10-K of Bendix for the year ended September 30,1982 is incorporated herein by reference. Martin Marietta, a Maryland corporation, is engaged in the business of producing cement, construction aggregates, chemical products and aluminum and other metal products, and developing and producing space and defense systems and products and aircraft components. On January 28, 1983, the Company agreed to acquire, subject to certain conditions, Instrumentation Laboratory Inc., a maker of biomedical and analytical instruments, for cash and the Company's common stock in a transaction valued at approximately $112 million. The Company is also considering other possible acquisitions to further diversify and complement its existing businesses, although there can be no assurance that any such acquisition will occur. For 1982 the Company reported its operations under six business segments: chemicals; fibers and plastics; oil and gas; electrical and e'ectronic; health and scientific products; and eter operations, which includes batteries, industnat products and automotive safety restraints. The Company's products are used in agriculture and by many major industr;es, including textiles, steel, construction-petroleum, plastics, automotive, chemicals, paper, soap, telecommunications, commercial typography, military and aerospace, g! ass, paint, feather anc aluminum, a id by brokerage and financial institutions, as well as by industrial and medical laboratories. The following is a description of the Cc,npany's ;ix business segments and the principal products and activities in each. Chemicals The major chemicals products are sulfuric, hydrochloric and hydrofluoric acids, soda ash, calcium chloride, sodium bicarbonate, ammonium chloride, aluminum fluoride, sodium bichromate, chromic acid and other chromium chemicals, coal tar pitch, creosote, tar acids, Genetron* and Genesolvt fluorocarbons, aluminum sulfate, semiconductor chemicals, anhydrous ammonia, other ammonia-based products such as Uran

nitrogen solutions, urea and Poly-N* ammonium polyphosphates, refractory brick and specialty products and the conversion of uranium ore concentrates into uranium hexafluoride (UFe).

Sulfuric acid, the most widely used industrial chemical, is used principally in the production of other chemicals, fertilizers, iron and steel, rayon and petroleum products. Uses for the other commodity ( products in this segment include chrome plating, metal finishing, road maintenance, corrosion control, l carbon and wood treatment and the production of fluorocarbons, paper, detergents, resins, glass, l pigments, nuclear fuel, textiles, leather, plastics, petroleum products, aluminum, solvents, fertilizers and other chemicals. l i 4 l

The Company is the largest producer of hydrofluoric acid (HF) in the United States. Other domestic producers include Du Pont, Pennwalt, Harshaw and Essex. The Company expanded the Geismar, Louisiana HF facility to increase the plant's capacity by 50,000 tons to 95,000 tons a year, which expansion is scheduled to start up by mid-1983. HF is the base on which the Company has built six different businesses, including such products as Genetron5 and Genesolva fluorocarbons, sulfur hexafluoride, aluminum fluoride and electronic chemicals, as well as UFs conversion. The Company is the largest producer of soda ash in the United States and the second largest in the world. There are five other major domestic producers: FMC, Kerr-McGee, Stauffer, Texasgulf and Tenneco. The Company is seeking a joint venture partner for its soda ash business. The chrome chemicals industry consists of the Company and two other domestic producers (Diamond Shamrock and American Chromium) and five other free world producers. These industries are capital and energy intensive. Fluorocarbons are used as refrigerants, blowing agents for urethane foams, cleansing of electronic, optical, watch and aerospace parts and for the degreasing of metals and dry-cleaning of clothes. The other domestic fluorocarbon producers include Du Pont, Pennwalt, Kaiser and Racon. Aluminum sulfate is used in the manufacture of paper products, for both potable and waste water treatment and for other industrial purposes. Agricultural products are used principally for the manufacture of mixed and direct application fertilizers. Fertilizer sales have significant seasonal variability. Such factors as geographic location, crop, planting practices, weather, economics and agronomics influence this seasonal use. Generally the peak in domestic demand occurs from March to early June, during the spring planting season. Demand for the remainder of the year is low with the exception of increases in the fall. The Corapany markets primarily non-pressure nitrogen solutions and ammonium polyphosphates throughout the continental United States. The Company is a major producer of nitrogen fertilizer solutions. Thes9 markets are serviced almost equally by commercial producers and farmers' cooperatives. The industry is highly competitive and consists of numerous chemical fertilizer producers, including a large number of relatively small enterprises. Prices fluctuate with the seasonal variations in demand and the resulting peak and minimum inventory levels. The Company is looking for a joint venture partner for its agricultural tusiness which has been significa.itly impacted by industry overcapacity as wel1 as a oepressed farm economy. The Compar'y shutdown and mothballed its Helena, Arkansas ammonia and ri9cgan solutions facility in 1982 and is seeking a buyer for that facility. The f jorth American Refractories Company (NARCO) division is engagad in the manufacture and saic cf a croad line of refractories. We ma;n products are firectay, basic carbon, magnesite, high alumina and delomite bricks, mortars, cements, plastics. castables ami g:nring mixes. NARCO's proouc+s 4re used to line industrial furnaces and for other applications in mar.ufacturing rrocesses where high temperatures are encountered. More than 50% of NARCO's sales are raade to the iron and stee; industry, principally to six major companies, with the remainder to othat industries such as glass, cement and copper. Each of the markets served by NARCO is highly competitive, and in each of these markets it is neither the largest nor the smallest supplier. The Company processes uranium ore concentrates into UFe, which is an essential intermediate in the production of fuel elements for nuclear power reactors, for domestic and foreign customers. The Company is the larger of two domestic processors, the other being Kerr McGee, of uranium ore concentrates into UFe and, along with three foreign processors, which are either government owned or controlled, competes for the free world market. Price, performance reliability and product purity are the principal competitive factors. The principal raw materials used in the chemicals segment are sulfur, salt, limestone, fluorspar, chrome ore, trona ore, hydrofluoric acid, carbon tetrachloride, chloroform, bauxite, alumina bearing clay, natural gas, phosphate rock and magnesite. The Company mines its extensive trona and limestone reserves. The Company is a minority holder in a company which owns and works fluorspar deposits in Mexico and which supplies a portion of the Company's fluorspar requirements with the balance purchased from outside suppliers. The Company is producing its salt, dolomite and kaolin requirements, a significant part of its hydrofluoric acid requirements and some of its clay requirements, 5

with the balance of th:so and th) oth:r raw mat: rials

referred to earli:r purchased from outside suppliers.

Fibers and Plastics This segment consists of two groups: Fibers. The Company is the third largest producer of nylon in the United States after Du Pont and Monsanto and is the largest producer of type 6 nylon. The Company is also the largest domestic producer of caprolactam, the primary intermediate for type 6 nylon, from which it produces fine and heavy denier nylon yarns. These yarns are offered in a wide variety of forms, textures and characteristics, some of which are sold under the trademarks Anso8, Anso X8, Anso8 IV, Caprolan* and A.C.E.* Fine deniers are sold to the textile industry chiefly for use in the manufacture of fabrics for apparel. Heavy deniers are used principally in carpet yarn, industrial fabrics, and automotive seat belts and tire cord. In addition, the Company produces heavy denier polyester yams which are used in industrial fabrics, cordage, seat belts and tire cord. Also included in this group are phenol, a primary ingredient for caprolactam; acetone, a by-product of the phenol process; and ammonium sulfate, a by-product of the caprolactam process, which is used as a fertilizer. In March 1982 the Company's phenol production facility, at Frankford, Pennsylvania, was substantially damaged by an explosion and fire. The facility is currently producing about 140 million pounds or 20% of its former capacity and is currently being rebuilt to about 80% of its former capacity. Construction is scheduled to be completed in late 1983. In the home fumishings market, both continuous filament and staple nylon yams are sold to yarn processors and mills for the manufacture of carpeting. Major competitors include Du Pont, Monsanto, 1 American Enka and Badische. There is considerable price competition. Brand identity is an importam competitive factor in the market. in the tire and industrial market, the Company's primary products are nylon and polyester tire cord and seat belt yarns. The tire cord is sold to tire manufacturers for weaving and fabrication and the seat belt yam is sold to weaving mills. Sales of industrial nylon continued to be adversely affected in 1982 by weak demand from domestic automotive and tire manufacturers; however, this situation is expected to improve during 1983. Other applications include rope and cordage and a broad range of induttrial reinforcement materials. The main competitors are Du Pont and Monsanto for tire and indus* rial nylon products and Celanese for tire and industnal polyester prcducts. Tha industiy is price and product performance oriented. In the apparel market, the Company soils Caprolan8 nylon flat yarns for warp knit and weav'ng applications. The industry is highly price cerrpetitive. The major nylon competitors are Du Pon'., Badische and American Enka. The p.incipal raw materials used h the fibers group are currene, na' usa; gas ar.d sulfur, all of which tha Company purchases 'or use in the manufacture of caprolactam, and terephtha!ic acid and ethylene glycol, both of which the Ccmpany purchases for use in the manufacture of polyester fibers. Plastics. Products in this group include high-density polyethylene resins for drums, pails, bottles, food containers, film and housewares; A-C8 polyethylene products for floor polishes, rubber and plastic additives and textile finishes; and engineering plastics consisting of: Capron* nylon engineering plastics for automotive, electrical and appliance components; Capran8 nylon-6 thermoplastic film and polyester films used primarily for food and medical packaging; Aclar* film, a fluorinated hydrocarbon used for pharmaceutical packaging; polyvinyl chloride films used for packaging; and fluoropolymers (polytetrafluoroethylene and other fluorine-containing polymers) for a variety of industrial applications. The high-density polyethylene resins business consists of 12 domestic producers, including the Company, and is highly competitive as to price. This product competes with wood, paper, metal, glass and other plastics in end-use applications.- Low-molecular weight ethylene polymer and copolymer products, which include those the Company sells under the A-C8 polyethylene label, serve a specialty market which is woridwide. These 6

~ products compets with a number of oth":r products such as calcium stearate, polypropylene, other polyethylenes and natural waxes. Competition also exists in alternate technologies which can displace l these products on a cost performance basis. Competitors include one other major (Eastman Chemical) and several minor domestic producers and three major foreign producers. The Capron8 nylon engineering plastics, Capran8 nylon-6 thermoplastic film and Aclar" film markets are price and product performance oriented. Major competitors include Du Pont, Monsanto, Celanese and Reynolds Metals. Fluoropolymers are premium priced specialty resins, and the major competitors are Du Pont and Pennwalt. The Company's fluoropolymer business includes polytet-rafluoroethylene (Halon8), chlorotrifluoroethylene (Aclon8) and ethylene-chlorotrifluoroethylene (Halar' E-CTFE) resins. The Company is currently the only producer of Halar# E-CTFE. In 1982 the Company started up a multi-million dollar facility at the Orange, Texas plant which expanded production capacity of Ha!ar8 E-CTFE, which was approved by Underwriters' Laboratories for use as insulation and jacketing fnr low voltage wire and cable for use without metal conduit in the open plenum areas above hung ceilings in commercial buildings. The principal raw materials used in the plastics group are ethylene, isopropanol, acrylic acid, fluorocarbons and nylon resins. The Company is engaged in a joint venture for the production of ethylene, which supplies about 42% of the Company's ethylene requirements, with the balancs purchased from others. Isopropanol and acrylic acid are purchased from others. The Company produces all of its fluorocarbon and nylon resins requirements. Oil and Gas The Company's wholly owned subsidiary, Union Texas Petroleum Corporation, along with its affiliates (Union Texas), conducts the Company's oil and gas businesses. The Company's preducts include crude oil, natural gasoline, condensate, natural and residue gas, liquefied natural gas (LNG), liquefied petroleum gases (LPGs) and ethylene. Produced crude oil and most natural gasoline and condensate are sold to others for further processing. Substantially all of the natural and residue gas produced by the Company in the United States is sold to gas transmission companies under long-term contracts. Natura! gas produced in !ndonesia is sold as LNG primarily under long-term contracts to Japanese utilities and industrial customers. Domestically, LPGs are sold as residential, commercial, agricultural and industrial heat.ng fue's, as a fuel for motor vehicles and as petrochemical feedstocks. A significant partion of such LPGs are sold through Texgas* LPG retail outlets. Ethylcne is a raw material from which the Company makes high-density polyethylene and polyethylene resins. Union Texas is among the largest independent oli and gas companies and is an important segment of the Company's total operations, although it is substantially smalter than the m3lcr oil compar.ies. The Company engages in worldwide oil and gas exploration piograms and has various interests in or rights to conduct exploratory activities on undeveloped ac:eage located in the United States and 19 countries throughout the world. The Company's petroleum lease acquisition, exploration, deveiopment and production activities are discussed in " Item 2. Properties" of this Form 10-K Annual Report. The Company's oil and gas business is subject to intense competition, both with respect to the acquisition of new reserves and new exploration leases, licenses and concessions. There is substantial uncertainty as to the degree of success that may be achieved from exploration programs, and in recer.t years the overall cost of finding and developing new reserves has increased substantially. In addition, oil and. gas operations, particularly those in harsher environments, are subject to interruption risks related to weather, accidents and other factors beyond the Company's control and, in the case of foreign operations, risks associated with investments in foreign countries, as discussed under " Foreign Activities." Domestic oil and propane prices were decontro!!ad in early 1981, and since ther, those products have been sold at free market prices. However, the full impact of oil price decontrol on oil industry earnings was reduced by the Windfall Profit Tax Act which became effective on March 1,1980. The tax rate, varying from 27%% to 70%, is applied to an increment of the full sales price per barrel over an adjusted base price determined by a statutory formula. The tax is scheduled to expire no later than 7

January 1991. The Company's weighted average domestic oil price changed from $31.64 per barrel as of December 31,1981 to $27.58 per barrel during 1982. Seasonal variation exists for both wholesale and retail sales of LPGs. Approximately 70% of the wholesale and retail sales volume occurs in the period from October through March. This variation is due primarily to the increase in heating requirements in the cold weather months. The Company's weighted average domestic natural gas price increased from $2.45 per thousand cubic feet (MCF) to $2.63 per MCF during 1982. The Company's natural gas production (including condensate therefrom) is governed largely by contractual requirements. The Company has experienced some domestic production curtailments in 1982 as contract customers have generally required less naturai gas and are using contract provisions to reduce prices being paid to the Company for decontrolled natural gas because of the current oversupply situation. For 1982 curtailments and normal production declines resulted in a modest decrease in domestic production compared with 1981. The Company's domestic gas production is marketed at prices permitted by the Natural Gas Policy Act except where limited by contract or market factors. Allowable prices under such Act for certain natural gas categories are expected to increase in early 1985 when additional natural gas deregulation is scheduled to take effect. Government regulations and taxes on foreign operations, as well as the Company's 50% interest in a new equity partnership (1982) which resulted in a substantial increase in domestic gas reserves, are discussed in " Item 2. Properties" of this Form 10-K Annual Report. Electrical and Electronic The Company's wholly owned subsidiary, Bunker Ramo-Eltra Corporation, along with its subsidiaries, conducts the Company's electrical and electronic businesses. Major electrical products are Prestolite

motors, ignition systems, alternators, generators, wire and cable; C&D" batteries, chargers and control equipment for the material handling, communications and standby battery power marirets; Mergenthaler phototypesetting systems; Ampheno!' connecting devices and related compo-nonts for interconnecting of electria! circuits; and o'ectronic systems for transaction processing by bankir'g. brokerage and other industries.

The predacts manufactured by the Prestolite divisions are sold to a wide variety of markets. Prestolite is an important supplier of electric motors to the electric vehicle industry, the major volume of its sales being to manufacturers of electric material handling equipment. Prestolite has provided electronic ignition systems to trie marire, material handling equipment, automotive and small engine markets, as well as to the aftermarket. Major competitors include G.E., Delco, Champion and Essex. The C&D Patteries civision manufactures and sells batteries and related products to the material handling equipment, mining, railroad, communications, utility and standby battery power markets. The division is one of the largest suppliers of batteries and related equipment to the material handling equipment industry and of standby communications batteries, including the cylindrical communications battery. The division's products are also sold for use in standby battery power systems and the more sophisticated uninterruptible power systems to the electric utilities industry and for certain military projects. Major competitors include Gould, Exide, General Battery, Globe-Union, Chloride and Barrett. C&D and Prestolite together make available a full line of electrical products for electric vehicles and have a joint program to offer complete electrical system packages to manufacturers who are working to develop electric delivery vehicles and electrobuses. The Mergenthaler group is one of the largest manufacturers and distributors of typesetting systems l in the world graphic systems market, with a major position in the important phototypesetting equipment market. In addition, Mergenthaler markets related peripheral equipment such as input keyboards and cathode ray tube correction and editing devices. Major customers for its products are newspapers, printers, publishers and commercial typographers. l Approximately 66% of Mergenthaler's sales are outside of the U.S. Mergenthaler's foreign business is carried on through manufacturing subsidiaries, sales subsidiaries, affiliated companies and 8

o,.. merchant dealers. Engineering is performed in the U.S., U.K. and West Germany and principal manufacturing facilities are located in the U.K. and West Germany. The Amphenol division produces a full line of electrical and electronic connectors and interconnection devices used as components in business equipment and in consumer, instrumentation, I military and telephone applications. The division's product range includes fiber optic, microwave, UHF and sub-miniature areas, as well as sockets, plugs, cable assemblies, adapters and coaxial switches. Competitors include AMP, ITT Cannon, TRW Cinch, Burndy, Molex, Deutsch, Du Pont/ Berg and many others. Technological innovation is a major element of success in the connector industry and the division is implementing programs to meet changing market conditions. Bunker Ramo information Systems division provides electronic transaction processing systems for use by the banking, savings and loan, insurance and brokerage industries. The division serves nearly 6,000 banking, insurance and savings and loan offices worldwide with on-line terminal systems and over 3,000 brokerage offices with market information systems. Competitors include IBM, Quotron and GTE. Bunker Ramo Electronic Systems division is engaged in research, development, design, production and support equipment and systems for collecting, processing and analyzing electromagne-tic and acoustic data primarily for the federal government. The division provides microwave components and subsystems to original equipment manufacturers, as well as systems engineering, computer programming and field engineering support for specialized computer systems for the storage, l retrieval and communication of digital information. The markets for the Company's electrical and electronic products are highly competitive, with numerous other companies producing essentially similar products in each area. For the most part, the operations of the electrical and electronic segment require materials which are generally readily available, such as steel, gold, copper, plastics, aluminum and lead. At this time the Company does not foresee any undue shortages or cost increases that would materially disrupt production or place it at any significant competitive disadvantage. Health and Scientific Products The Company's wholly owned subsidiary, Fisher Scientific Company, along with its subsidiaries, is engaged in the manufacturo, distnbutien, sale and service of a wida range of products used in laboratories. Such products include laboratory equipment ar.d furniture. analytical and measuring instruments and apparatus, reagent and other chernicais aac diagaostic kits and supplies. Approximately one-third of Fisher Scientific's sales is represcnted by products uf its own menufacture, with the remainder purchased from many suppliers. Thcse products are sold to a wide vanety of markets which include industrial laboratcries, medical laboratories, educationa' institutions and governmental agencies. Sales in the U.S. and Canada are made through t, ales-distdbution-service centers, each of which warehouses a complete line of Fisher Scientific's products. Sales in Europe, South America and the Far East are made primarily through distributors. Fisher Scientific actively competes with many laboratory supply distributors. While several large distributors also manufacture some of their products, most are dealers and jobbers only. Fisher Scientific generally offers a wider range of laboratory products than its competitors and is a leader in the distribution of laboratory products. Raw materials used in the health and scientific products group are generally readily available and include sheet steel and bar stock, castings, electronic, optical and mechanical parts and assemblies, motors, recorders, hardware and wire, metallic salts, refined ores and other metallic compounds, unpurified acids and bases, human and animal sera and organic chemical compounds. Other Operations The Other Operations segment consists of Prestolite Battery division, which manufactures a full line of starting batteries for cars. heavy-duty trucks, farm equipment and other applications; Woodstock 9 i a

Die Casting division, which produces zinc and aluminum'dia ca$ tings; tha Mirshalltown Instrum:nts division, which manufactures pressure and temperature gauges; and the Automotive Products division, a manufacturer of automotive seat belts. In 1982 the Company sold its Converse (production and marketing of athletic footwear), Stanley G. Flagg (manufacturer of malleable iron and brass fittings) and Borg Textile (manufacturer of knitted deep-pile fabrics) divisions. In addition, the Company sold or shutdown substantially all of its European seat belt business. Allied-General Nuclear Services The Compar'y's wholly owned subsidiary, Allied Chemical Nuclear Products, Inc., is a 50% partner in Allied-General Nuclear Services (AGNS), which has built a facility at Barnwell, South Carolina to recover useable nuclear fuel materials from the spent fuel of nuclear power reactors. For information relating to the write-off of the Company's equity investment in and certain litigation relating to AGNS, see Note 9 of Notes to Financial Statements in the Company's 1982 Annual Report to shareholders, incorporated herein by reference. Segment Financial Data The statement " Segment Financial Data" at page 43 of the Company's 1982 Annual Report to shareholders is incorporated herein by reference. Domestic and Foreign Financial Data The statement " Geographic Areas-Financial Data" at page 44 of the Company's 1982 Annual Report to shareholders is incorporated herein by reference. Foreign Activities The Company is engaged in substantial foreign oil and gas exploration and development activities as described in " Item 2. Properties" of this Form 10-K Annual Report. The Company's principa! foreign manufacturing operations (chemicals, electrical and electronic belts) are in Canada. Electrical and electronic connectors and ~ products and automet

3ctured in the U.K., West Germany and France. Phototypesetting interconnection devic" N

-v quipment are manufactured in the U.K. and West Germany. The systems and related + Company also has y.% n wholly owned interests in mineral ard chemical facilities in Mexico, Spain, Puerto Rico and Braat. The Company maintains sales offices in Canada; Melboume, Australia; Haasrode, Belgium: Knutsford, England; Zurich, Switzerland: Hong Kong; Auckland, New Zealand; Mexico City, McAico; San Salvador, El Salvador; Guatemala City, Guatemala; Sao Paulo, Brazil; Caracas, Venezuela; Singapore; Munich, West Germany; and various other countries, as well as warehousing and distribution facilities in various countries to support export sales. The Company's foreign business is subject to the usual risks attendant upon investments in foreign countries, including nationalization, expropriation, limitations on repatriation, restrictive action by local governments and changes in currency exchange rates. Raw Materials Among the principal raw materials used by the Company are natural gas, petroleum derivatives, sulfur, phosphate rock, salt, limestone, fluorspar, bauxite, alumina-bearing clay, chrome ore, trona ore, metallic and organic chemical compounds, electronic, optical and mechanical parts and assemblies, steel and bar stock, gold, copper, aluminum, lead and zinc. Uses, sources and availability of the raw materials are described above under the segment discussions. Patents and Trademarks The Company owns a large number of patents and is licensed under other patents covering certain of its products and processes. It believes that in the aggregate the rights under such patents 10

l and licenses are important to its operations, but does not consider that any patent or license or group of them related to a specific process or product is of material importance in relation to its total business. ( The Company also has registered trademarks for a number of its products. The principal significant trademarks are in the fibers and plastics segment and the Amphenol, Bunker Ramo l Information Systems, Mergenthaler and Prestolite divisions of the electrical and electronic segment. Research and Development f The Company's research activities are directed toward the discovery and development of new products and processes, improvements in existing products and processes and the development of new uses for existing products. The Company is supplementing in-house research by contracting research projects to major universities and private firms. The Company's wholly owned subsidiary, Allied Canada Inc., has less than a 10% interest in Bio Logicals, a Toronto-based firm involved in the development and application of high-speed gene recombinant techniques. Bio Logicals will conduct advanced research for the Company involving biotechnology for producing industrial, specialty and agricultural chemicals. The Company has a 20% interest in Calgene Inc. of Davis. Califomia, a biotechnology firm specializing in the application of bioengineering technology to agriculture. Research and development expenses totaled $186 million in 1982, $152 million in 1981 and $105 million in 1980. A Scientific Advisory Committee, consisting of prominent scientists from outside of the Company, reviews ongoing research programs and recommends new areas of resear:h and development for the Company. The Company has a research complex at Morris Township, New Jersey, consisting of research and development laboratories where special emphasis is placed upon basic research and upon development of new products and processes. In addition, there are laboratories near Petersburg, Virginia (fibers); Buffalo and Syracuse, New York; and Curwensville and State College, Pennsylvania (chemicals); Toledo, Ohio; Plainview, New York: Westlake Village, California; Trumbull, Connecticut; Boulder, Colorado; Eschborn, West Germany; and Cheltenham, England (electrical and electronic); and Waltham, Massachusetts; Fair Lawn, New Jersey; Orangeburg, New York; arid Pittsburgh, Pennsylvania (health and scientific products). Environment The Company believes that as a general matter its policies, practices and procedures in the areas } of pollution control, product safety, occupational health, toxicology, medical services and safety and l loss prevention are ajequate to prevent unreasonable risk of envircnmental ar'd other damage, and of resulting f.r'ancial liability, in connection with its business. Some risk of environmen'a; cnd other damcgs is, however, inberent in the operations of the Company, as it is with other companits engaged 11 s5lar businesses. In addition, there are particular areas of the Company's business (for example, the Corrpaafs chernica: product lines) which, by their nature, may create risk of environmental injury or other damage. The Company is and has been engaged in the handling, manufacture or use of many substances or compounds thereof, or of radioactive materials, which are either toxic, known or suspected mutagens, teratogens or carcinogens in their own right or which utilize and discharge materials which may have similar properties. The Company believes that in most cases the production, handling, use, processing, storage, transportation, sale and disposal of such substances have been environmentally acceptable. It is possible, however, that future knowledge or other developments, such as increasingly strict requirements of environmental laws and enforcement policies thereunder, could bring into question the Company's handling, manufacture, use or disposal of such substances. Increased government attention is being focused upon past and present industrial waste disposal practices. In connection with past disposal practices, the Company is a named party to six civil actions seeking cleanup costs. It is possible that additional enforcement actions or civil suits for damages will be commenced based upon alleged improper past waste disposal practices viewed in the light of more stringent government regulations and increased public concern. Capital expenditures for environmental facilities were $34 million in 1982. The Company estimates that during each of the years 1983 and 1984 such capital expenditures will total between $40 million 11 l l

and $48 million annually, excluding any spending by The Bendix Corporation. In addition to capital expenditures, the Company has incurred and will incur significant operating costs in connection with such facilities. Employees The Company had 44,337 salaried and hourly employees at December 31,1982. Among the approximately 15,560 unionized employees, those employed in the Company's plants and other operations are represented by local unions that are either independent or affiliated with the United Steel Workers of America, the Oil, Chemical and Atomic Workers International Union, the United Auto Workers, the International Brotherhood of Teamsters and the International Union of Electrical, Radio and Machine Workers of the AFL-CIO and many other national and international unions. Relations between the Company and its employees and their various representatives have been generally satisfactory, although the Company has experienced work stoppages from time to time. Approximately 23% of the Company's unionized employees are covered by labor contracts scheduled to expire in 1983. Major labor negotiations in 1983 will include locations in the electrical and electronic, chemicals, and other operations segments. item 2. Properties The Company has more than 400 plants, research laboratories, mines, quarries and other facilities. The plants are located to serve large marketing areas and to provide accessibility to raw materials. The properties are generally maintained in good operating condition. The Company's headquarters and administrative complex is located at Morris Township, New Jersey. The Company 3 owns or leases natural gas transmission and distribution systems, warehouses, railroad cars, barges, automobiles, trucks, airplanes and materials nandling and data processing equipment. It also leases space for administrative and sales staffs. The principal plants, mines and quarries, which are owned in fee unless otherwise indicated, are as follows: Chemicals Fairfield, AL Detroit, MI Womelsdcrf, PA lone, CA Bonne Terre, MO Front Royal, VA El Segundo, CA Farber, MO Hopewell, VA (3) Pittsburg, CA (2 plents) Owensville, MO Anacortes, WA Richmond, CA Omaha, NB Renton, WA Santa Barbara, CA Elizabeth, NJ (2) Nitro, WV N. Claymont, DE Buffalo, NY Green River,WY (partly-leased Danvi!Io, IL Jamesviile, NY (Itmestone plant; trona mineralleases) Arrharstu g, Ont.. Canada r East St. Louis, il quar,y) Metropolis, IL Syracuse, NY Valleyfie,ld, Que., Canada Baton Rouge, LA tron:on, OH 36 Aluminum sulfate plants Geismar, LA (1) Curwensville, PA (domestic and foreign) Baltimore, MD Mount Union, PA Fibers and Plastics Moncure, NC Baton Rouge, LA (partly-leased Cofumbia, SC Elizabeth, NJ (2) plant) Orange, TX Metuchen, NJ Philadelphia, PA Hopewell, VA (3) Pottsville, PA Chesterfield, VA Oil and Gas (4) Rayne, LA (partly-leased plant) Haughton, LA Sadler, TX (66% owned) St. Bernard, LA Ringwood, OK Silver, TX Geismar, LA (1) Rankin, TX (partly-leased plant) 137 retail LPG outlets (in 15 states) (1) Produces ethylene (facility 42% owned) and chemical products. (2) Produces chemical and plastic products. (3) Produces chemical and fiber products. (4) Gas processing plants (except for the Geismar, LA plant and LPG outlets). 12

Electrical cnd Electronic Decatur, AL Wichita, KS Drummondville, Que., Canada West Lake Village, CA Florence, KY Scarborough, Ont., Canada Boulder, CO Bay City, Mt Altrincham, England Danbury, CT (partly leased) Port Huron, MI Canterbury, England (leased Trumbull, CT Sidney, NB plant) Hollywood, FL (leased land) Durham, NC Cheltenham, England Conyers, GA Endicott, NY Whitstable, Kent, England Elberten, GA Huguenot, NY Dole, France Tifton, GA Syracuse, NY Eschborn, West Germany Broadview, IL Wagoner, OK Heilbronn/Neckor, West Cicero, IL Conshohocken,PA Germany Attica, IN Leola, PA Munich, West Germany York, PA (partly leased) Offenbach, West Germany Health and Scientific Products Mountain Home, AR (leased Bridgewater, NJ Rochester, NY plant) Fair Lawn, NJ Indiana, PA West Haven, CT Orangeburg, NY Nazareth, PA Waltham, MA (leased plant) Sales and Distribution Centers Phoenix, AZ (leased facility) Cleveland, OH London, Ont., Canada (leased Los Angeles, CA Philadelphia, PA facility) San Francisco, CA (leased Pittsburgh, PA Malton, Ont., Canada (leased facilit Denver,y) Memphis, TN (leased facility) facility) CO (leased facility) Dallas, TX (leased facility)ty) Ottawa, Ont., Canada Fort Lauderdale, FL Houston, TX (leased facili Toronto, Ont., Canada (leased Orlando, FL (leased facility) Salt Lake City, UT (leased facility) Atlanta, GA (leased facility) facility) Whitby, Ont., Canada (leased East Point, GA Richmond, VA (leased facility) facility) Chicago, IL (leased facility) )Parkersburg, WV Montreal, Que., Canada Louisville, KY (leased facility Calgary, Alta., Canada (leased Singapore (leased facility) Baton Rouge, LA Silver Spring, MD(leased facility)facility) Mexico City, Mexico (leased Edmonton, Alta., Canada facility) BostLn, MA Vancouver, B.C., Canada Cayey,ty) Puerto Rico (leased Detroit, MI (leased facility) (leased facility) facili Minneapolis, MN (leased facility) Winnipeg, Man., Canada (feased Munich, West Germany (leased St. Louis, MO fac4ity) facility) Springfield, NJ Dartmouth, N.S., Canada Zurich, Switzerland (leased Raleigh, NC (feased facility) facility) Cincinnati, OH Other Operations Greenville, AL Woodstock, IL Reading, PA Visalia, CA Vincennes, IN Knoxville, TN Manchester, lA Niagara Falls, NY Maple, Ont., Canada Marshalltown, lA Oil and Gas Properties The Company is involved in a worldwide exploration program subject to the inherent risks typical of oil and gas exploration. In Order to provide the maximum exposure to potential oil and gas reserves and to spread the risks over a number of individual exploration projects, the Company typically participates with other companies in unincorporated joint ventures to evaluate and, if appropriate, develop specific prospects. In these situations, the Company is responsible for its proportionate share of the costs involved and is similarly entitled to its share of any reserves discovered. To differentiate between the overall scope of the projects the Company is involved in and the actual interest the Company has in each of those projects, gross (total joint venture) and/or net (the Company's interest) figures may be shown for such items as acreage, number of wells and production. 13

e Additional information, including reserves, production, revenues and costs, for oil and gas activities is included in Note 13 of Notes to Financial Statements in the 1982 Annual Report to shareholders. Gas measurements reflect pressure bases in effect locally. In April 1982 the Company completed the acquisition of Supron Energy Corporation and Supron's domestic producing properties were transferred to a partnership in which the Company has a 50% interest. As a result of the acquisition, the Company's interests in proved developed and undeveloped reserves. on an oil equivalent basis, increased by about 9% worldwide (based on the Company's reserves at December 31, 1981). See the caption " Equity Partnership" included elsewhere in the " Properties section in this Form 10-K Annual Raport. During 1982 the Company filed reports with the U.S. Energy information Agency containing data on U.S. reserves at December 31, 1981 and U.S. production for the year then ended, which data agrees with the information included in the Company's Form 10-K Annual Report for the year ended December 31, 1981. Since December 31,1982 there has been no major discovery or other favorable or adverse event that is believed to have caused a significant change in the Company's estimated proved resentes. At December 31,1982 total gross and net producing (developed) acres, by geographic area, were as follows: Producing Acres (In Thousands) Area Gross Net United States. 500 272 Canada. 2 1 South America. 39 6 Europe. 33 7 Asia. 67 19 641 305 Proport;onal interest in producing acre;.ge of equity partnership 212 64 8 3J Total. ] At December 31, 1982 the undeveloped acreage, including leases, contractual rights and concessions of oil and gas properties, expressed in both gross and net acres. by geographic area, were as follows: Undeveloped Acres (In Thousands) Area Gross M United States. 3,740 2,237 Canada. 21 3 1,358 372 South America. 3,625 1,688 Europe. Africa.. 15,062 4,033 Asia.. 14,675 4,458 Australia.. 5,575 1,240 Middle East.................. 3,013 461 1,632 816 West Indies (Jamaica)..... 48,701 15,308 Proportional interest in undeveloped acreage of equity partnership. 19 5 Total. 48,720 15,313 14

Seventeen percent of the gross undeveloped acreage within the Uniteo States is located in l Montana.14% is located in the Appalachian area of Virginia and West Virginia,13% in Utah,11% in Nevada and 10% in Texas. The balance of the undeveloped acreage is located in 16 other states and federal and state offshore waters. South American undeveloped acreage is located principally in Brazil (56%) with the remainder in Argentina. European undeveloped acreage is held principally in Spain (41%), the British Sector of the North Sea (20%), Portugal (18%) and France (14%), with the balance in Italy and Germany. African acreage represents Guinea (60%) and Tunisia (33%), with the balance in Angola and The Ivory Coast. Asian acreage is located in Pakistan (22%) and four areas in Indonesia (78%). The Middle East acreage is located in Abu Dhabi (78%) and Bahra:n (22%). The average sales price and production cost of oil and gas for 1982,1981 and 1980 were as follows: United South states Canada (1) America Europe Asia Average Sales Pn.ce Per barrel of oil 1982.... $27.58 $7.06 $31.57 $35.23 1981. 31.64 11.14 8.01 35.44 39.51 1980........ 20.51 12.69 7.77 33.76 34.67 Per Mcf(2) of gas 1982. 2.63 2.15 5.87 1981.. 2.45 1.81 2.55 5.75 1980. 1.58 1.83 2.49 5.39 Average Production Cost (3) Per equivalent barrel of oil (4) 1982... 6.60(5) 1.78 1.92 6.69 1981. 6.86(5) 2.56 2.92 1.98 5.84 1980. 4.04(5) 1.74 2.77 1,76 6.20 (1) The Ccmpany's 1982 production was immaterial; since substantially all cf its Canadian oil and gas properties were sold in 1981. (2) Mcf mea 7s thousand cubic feet. (3) Production costs include expenditures for operating expense and severance and ad valorem taxes. (4) Gas has been converted to a common equivalent barrel of oil based on relative energy content. (5) Includes $2.79, $3.56 and $1.21 per equiva'ent barrel of oil fcr the Windfall Profit Tax in 1982,1981 and 1980, respectively. At December 31, 1982 total gross and net productive oil and gas wells, including mt.ltiple completions, by geographic area, were as follows: Oil Wells Gas wells Area Gross Net Gross Net United States.... 5,032 741.0 939 184.7 Canada.... 5 3.3 South America............ 340 56.7 Europe....... 51 10.4 Asia. 125 33.2 86 20.0 5,553 844.6 1,025 204.7 Proportional interest in wells of. equity partnership. 317 53.0 1.230 255.0 Total (1)............... 5,870, 897.6 2,255 459.7 (1) The gross number of oil and gas wells with multiple completions is 420. 15

I The number of net productive and dry exploratory wells drilled during 1982,1981 and 1980, by geographic area, was as follows: Productive Dry Area 1982 1981 1980 1982 1981 g United States........ 9.22 6.38 5.89 9.35 6.04 9.19 Canada 2.00 .25 4.14 .70 3.82 South America. 1.90 .63 .17 Europe............ .45 1.42 1.14 1.84 Asia... 1.69 1.01 1.42 3.85 4.61 3.57 Other Int'l 3.20 1.10 Total... 13.36 7.64 11.45 19.72 14.22 18.59 The number of net productive and dry development welfs drilled during 1982,1981 and 1980 by geog *aphic area, was as follows: Productive Dry Area 1982 1981 1980 1982 1981 1980 40.54 26.81 25.04 3.58 1.39 1.85 United States. Canada. 9.95 5.74 1.75 .50 South America.. 3.50 5.83 3.90 Europe. .73 .80 1.80 .40 .20 . 10.61 9.31 9.06 1.20 2.10 Asia. 55.38 52.70 45.54 3.58 4.74 4.65 Proportional interest in wells of equity part- .27 nership. 10.73 Total. 66.11 52.70 45.54 3.85 4.74 4.65 In 1982 the Company participated in the completion of 401 wells in which its interest was the equivaler.t of 103.04 wells, resulting in 48.38 oil wells, 31.09 gas wells and 23.57 dry wells. At December 31,1982 there were pressure maintenance programs in the U.S.; the British Sector of the North Sea; Argentina; and North Sumatra, Indonesia. At December 31,1982 there were 77 gross wells and 23.83 net wells in process of being drilled as follows: Exp8 oratory Cn ;.;.; Area Gross Not Geoss Not United States. 4 2.45 33 7.25 South America. 1 .33 Europe... 2 .40 2 .40 Asia.. 3 .72 5 1.30 Other Int'l. 2 .78 12 4.68 40-8.95 Proportional interest in wells of equity 25 10.20 partnership... g 4.68 6J 19.15 Total.. Domestic Oil and Gas Properties The Company, including its proportional interests in an equity partnership had interests in 712,000 gross (336.000 net) producing acres and 3,759.000 gross (2,242,000 net) undeveloped acres at December 31,1982. Net production from domestic wells in 1982 was 7 million barrels of crude oil and condensate and 68 billion cubic feet of gas. The Company's primary oil and gas production, development and exploration activities are located in the offshore Texas and Louisiana regions of the Gulf of Mexico, the onshore Gulf Coast areas of Texas and Louisiana, West Texas, Oklahoma, northwestern New Mexico and the Rocky Mountain region. 16

UNITED STATES k.. AREAS OF OIL AND GAS ACTIVITY s j 'N.. (/ WILLISTON WIND B A SIN / l-RIVER BASIN POWDER RIVE p# ROCKY MOUNTAIN OVERTHRUST BASIN ,~ 4 ~ d MICHIG AN I l i.-(*,, B ASIN I DENVER } 1 1 i REEN* - B ASIN w l 1 b-RIVER \\ )

p. g y

x Q-[ p B ASIN ( e N ,p.#~3 -\\ ( APP AL ACHI AN i B ASi l iC MA SAN UAN ,1 ^ u. \\ 1, -[@ TEXAS l OAS1 , jf. 1 EAST G U t.7 : k i\\ s i ' N. l BASIN h @g s .g. OtJT1.lNES INDICATE GEOLOGICAL AREAS h h ^ N'AHICH YHE COMPANY HAS VARYING 6 RM N EkPLGRATION OR PRODUCTION IN'TERESTS. .h THE COTMANYlS MAJOR DOMESTIC PRODUCING h ] FIELDS (CVER 500 DARRZLS/ DAY OIL EQUIVALENT - GULF CF MEXICO , NET) F181.0 NUM6ERS REFERENCE MAJOR ' DOMESTIC PRODUCfNG FIELDS CifART. i P

in 1982 the Company participated in the drilling of 253 gross domestic development w:lls in which its working interest was the equivalent of 55.12 net wells. Of the net wells,29.83 were oil wells,21.44 were gas wells and 3.85 were dry wells. The 1982 domestic exploration program included drilling 41 gross (18.57 net) exploratory wells in addition to geological and geophysical evaluation of various properties. Of the 18.57 net exploratory wells,6.98 were oil wells,2.24 were gas wells and 9.35 were dry wells. The following table presents selected information for 14 fields which each produce in excess of 500 barrels of oil equivalent per day net to the Company. Together, these fields represented 45% of the j liquids and 68% of the gas produced domestically by the Company during 1982. Major Domestic Producing Fields Not 1982 Production Reference on DOE (1) Liquids Gas Field United States Map (Per Day) (Bbis./ Day)(2) (MMCF/ Day)(2) Onshore: Lake Arthur, LA*. 1 9,315 1,241 46.8 Wellman, TX* 2 2,673 2,587 .5 Terryville, LA*. 3 1,415 68 7.8 Wasson, TX. 4 1,407 1,285 .7 Burkholder (China Lake), TX*.. 5 1,003 5.8 Orange Grove, LA* 6 956 109 4.9 East Sour Lake, TX*.. 7 912 209 4.1 Slaughter, TX* 8 750 720 .2 Blanco, NM* 9 688 9 3.9 Midland Farms, TX.... 10 660 627 .2 Levelland, TX..... 11 626 592 .2 Offshore: Eugene Island 384/386, LA* 12 6,970 290 38.8 South Marsh Island 66, LA. 13 1 597 314 7.4 High is!and 154/155, TX 14 943 186 4.4

Operated by the Company.

(1) Gas is converted to a common equivalent barrel of oil based on relative energy content. (2) Bbis. means barrels; MMCF mear,s million cubic feet. Significant Activity: In the Lake Arthur Field in southem Louisiana (working interests range from 83% to 100%), the Company continued an infill drilling program and completed the installation of a gas compression system. This system facilitates the recovery of gas that would otherwise not be recoverable and will accelerate the production of the remaining estimated 84 billion cubic feet (gross) of recoverable gas in the field. Also, drilling of a deep wildcat well was commenced in Novernber 1982 to evaluate deep sands under the Lake Arthur Field. In 1982 the Company completed a discovery well, in the Peck Area of Lavaca County, Texas, and four offset wells with working interests ranging from 38% to 50%. The field is currently producing at a gross rate of 6 million cubic feet of gas per day. The Company's largest domestic oil reserve, the Wellman Field in West Texas, which currently utilizes secondary recovery methods, is being evaluated to determine the feasibility of using carbon dioxide tertiary recovery methods. In the Gulf of Mexico, production facilities for Mustang Island Block 758 (25% working interest), offshore Texas, were completed, and gas production began in September 1982. The Block is currently producing 5 million cubic feet of gas per day. A commercial field was discovered in 1982, offshore 18

s Louisiana on Vermilion Block 75 (50% working interest) which is expected to begin gas production in early 1983. The Company is currently evaluating a discovery well drilled offshore Louisiana at South Pelto Block 2 (25% working interest). Additional drilling is planned to determine the' commercial feasibility of this discovery. Geological and geophysical evaluations continued in the Michigan Basin of Central Michigan and the Appalachian Overthrust Belt of Virginia and West Virginia as well as within the Company's established regions of operation. Equity Partnership: In April 1982 the Company completed the acquisition of Supron Energy Corporation, and Supron's domestic producing properties and some undeveloped acreage were transferred to a partnership (Unicon Producing Company) in which the Company has a 50% interest. At December 31,1982 the Company's share of proved developed and undeveloped reserves of Unicon were estimated by the Company's engineers to be 4 million barrels (3 million barrels developed) of liquids and 211 billion cubic feet (157 billion cubic feet developed) of gas. The Company's share of Unicon's production was 207,000 barrels of oil and 6 billion cubic feet of gas for the period ended December 31,1982. Unicon participated in the drilling of 55 gross (11 net to the Company) development wells, resulting in 5.16 oil wells,5.57 gas wells and.27 dry wells. An active developmental drilling program on the acquired acreage is planned to continue in 1983. Seventy-five percent of the estimated proved developed and undeveloped reserves acquired as part of the Supron acquisition are located in the San Juan Basin of northwestern New Mexico and southwestern Colorado,6% are located in the Williston Basin of North Dakota and Montana and the balance are located in a number of other states. Foreign Oil & Gas Properties Outside the U.S., the Company has entered into a number of international petroleum agreements in the form of concessions, participation, production sharing, and risk / service contracts and holds a number of petro'eum-related rights in the form of licenses, permits and leases (any such agreement or right is hereafter referred to as a permit). As a result of these agreements and rights, the Company has working interests in foreign oil and gas properties covering 45,102,000 gross (13,104,000 net) acres in 19 countries. The Company's working interests range from 3% to 100% The Company's international net production for 1982 was 25 million barrels of oil and 49 billion cubic feet of gas. At year-end 1982 the Company's net proved foreign reserves were 104 million barrels of oil and 1,420 billion cubic feet of gas. In 1982 the Company participated in the drilling of 61 gross ircernational development wells in which its working interest was the equivalent of 14.84 net wells. Of the net wells,8.28 were oil wells and 6.56 were gas wells. The 1982 intemational exploration program included drilling 46 gross (14.51 net) exploratory wells in addition to geological and geophysical evaluation of various properties. Of the 14.51 net exploratory wells,3.29 were oil wells,.85 were gas wells and 10.37 were dry wells. United Kingdom: The Company has interests in 19 blocks in the U.K. covering 119,000 net acres with working interests ranging from 3% to 41%. Of the 19 blocks,17 are undeveloped and two are productive. Net production to the Company in the U.K. during 1982 was 19 million barrels of crude oil, one billion cubic feet of gas and.8 million barrels of liquefied petroleum gases. During 1982 the Company participated in the drilling of 9 gross (1.75 net) exploratory wells. Results of 1982 exploratory drilling were 1 gross (.20 net) oil well,1 gross (.25 net) gas well, 5 gross (.90 net) dry wells and, at year-end,2 gross (.40 net) wells were in progress. In 1982 the Company participated in the drilling of 2 gross (.40 net) development wells, one in each of the Piper and Claymore Fields, which resulted in 2 gross (.40 net) oil wells. The Company has a 20% interest in a joint venture operated by Occidental Petroleum Corporation (OXY). The OXY venture is developing and producing the Piper and Claymore Fields within U.K. blocks 15/17 and 14/19, Remaining proved recoverable reserves of liquids as of December 31,1982, based upon estimates of the Company's engineers, are estimated to be 227 million barrels for Piper and 237 million barrels for Claymore. The Company's share of these reserves is estimated to be, after a 12%% 19

l l U.K. NORTH SEA /%- n SHETLAND p NORWAY is. g r 3 / OR EY ls. CLAYMORE 8 l I \\ k_ ./ FLOTTA TERMINAL PIPER

g #7

$ g* / ) n} V ,W w ~J 2, I/ ? SCOTLAND J S.E ENGLAND @ LEASENOLD BLOCKS U OVERRIDING ROYALTY BLOCKS e CONFIRMED FIELDS N - OlL PIPELINE

== G AS PIPELINE

( 00 W. E ENGLISH CHANNEL = a -muum -summm-minum -mmmmm mmmen s i 20

U.K. royalty,40 million barr:Is for Piper and 41 million barr:Is for Claymore. These reserve estimates are based on an effective water drive mechanism, including a program of water injection previously initiated to supplement the Piper and Claymore Fields' natural water drive. During 1982 Piper produced at an average daily gross rate of 205,000 barrels of crude oil,12,000 barrels of natural gas liquids and 14 million cubic feet of gas. Production from the northern extension of the Claymore Field which began in late 1981 increased Claymore production in 1982 by approximately 10,000 gross barrels of crude oil per day. Claymore produced at an average total gross rate of approximately 97,000 barrels of crude oil per day in 1982. The companies in the Piper and Claymore ventures have an agreement with the British National Oil Corporation (BNOC) under which BNOC is a party to the Piper and Claymore licenses and operating agreements relating to the fields, the crude oil pipeline and the Flotta terminal with a 10% vote thereunder. BNOC has no interest in the Piper and Claymore property or the facilities covered by the OXY group operating agreements, but has the option to purchase on a commercial basis, at market prices, a portion of the Company's share of oil production remaining after royalty. BNOC purchased about 51% of the Company's share of oil production in 1982, and future purchases are expected to remain at the same level. The Company has been selling its entire share of the crude oil production attributable to the Piper and Claymore Fields (net of royalty oil taken in kind and purchases by BNOC) to two purchasers at prices negotiated quarterly. Excess Piper gas is delivered through the OXY joint venture's pipeline approximately 35 miles to the Frigg gas pipeline. The gas is then transported to shore and sold to the British Gas Corporation at prices which may be adjusted annually, primarily based on the average of British wholesale prices. The OXY joint venture is receiving fees from Texaco North Sea Ltd. for the use of the venture's facilities in the transporting and processing of hydrocarbons from Texaco's Tartan Field. The Company is evaluating the development of the gas reserves in the Sean Field discovered in 1969, which have not previously been economical to develop. Negotiations are underway with the British Gas Corporation to determine if economical development can be achieved. In addition to royalty payments, production from Piper and Claymore is subject to the United Kingdom Corporate Income Tax, the Petroleum Revenue Tax (PRT) and the Supplementary Petroleum Duty (SPD). The 1982 U.K. Finance Act (Act) extended the term of the SPD to December 31,1982 from its prior expiration date in June 1982. In addition, the Act increased the rate of PRT from 70% to 75%, effective January 1,1983. The effect of eliminating the SPD effective December 31,1982 and increasing the PRT rate from 70% to 75% will decrease the effective U.K. tax rate slightly beginning in 1983. Under the Petroleum and Submarine Pipelines Act and other legislation, the government of the U.K. exercises control over oil and gas operations including production, pipeline throughput rates, safety standards and offshore accommodations in the British Sector of the North Sea. The impact of current as well as possible future U.K. governmental regulations on the Company's activities cannot be predicted. Indonesia: The Company has interests in five production sharing contracts in Indonesia covering 3,484,000 net acres with working interests ranging from 25% to 50%. Of the five areas covered by the contracts, the two areas that include productive acreage are onshore and the three undeveloped areas are offshore. Net production to the Company in Indonesia during 1982 was 1.5 million barrels of oil and 48.3 billion cuoic feet of gas. During 1982 the Company participated in the drilling of 19 gross (5.51 net) { exploratory wells in Indonesia. Results of the 1982 exploratory drilling were 4 gross (1.09 net) oil wells, l 2 gross (.60 net) gas wells,11 gross (3.26 net) dry wells, with 2 gross (.56 net) wells in progress at year-end. Production sharing contracts with the Indonesian Government provide for the recovery of exploration, development and production costs. For each accounting period, the production remaining after recovery of such costs is shared 65.91% for Pertamina (the Indonesian state oil company) and 34.09% for the joint venture participants on oil, and 20.45% for Pertamina and 79.55% for the joint venture participants on gas. From their share of oil, the joint venture participants furnish, at a nominal price, a share of Indonesia's domestic oil requirements which does not exceed 8.52% of total oit 21

I NDON ESI A O 200 400 600 MILES 26,25% INTEREST IN 4 1,559,000 ACRES

- y o

p% p d N 0 O @9'-- D j g e y D 4 jlNGAPORE j_s,/ 8 y h h C g$ 7 4' SULA Si o fELD C)g c ^K b g 4 i 1 p Qb IRIAN I I 910,000 ACRES 30 % \\ d JAYA l i ^ ^ lNTEREST IN q f o U! ( JjV A c7 ,,f l o 50% 25 % INTEREST IN INTEREST IN 30% 1,409,000 ACRES 3.370.000 ACRES INTEREST IN 4,182,000 ACRES \\

produced from the contract area. Additionally, th3 Company pays Indonssia income taxas at a statutory tax rate of 56%. i The Company owns a 26.25% working interest in a joint venture operated by Roy M. Huffington, Inc. (Huffco). The Huffco venture explores for and produces oil, gas and condensate from a production sharing contract area covering 1,559,000 gross (409,000 net) acres in East Kalimantan. The remaining proved recoverable reserves of this venture as of December 31,1982, based upon estimates of the Company's engineers, are 7.2 trillion cubic feet of gas and 146 million barrels of liquids. The Company's share of these reserves is estimated to be 1.4 trillion cubic feet of gas and 13 million barrels of liquids. During 1982 the Company's share of daily field production averaged 132 million cubic feet of gas and averaged 2,836 barrels of oil and condensate. In 1982 the Huffco venture's exploratory drilling was 5 gross (1.31 net) wells, resulting in 3. gross (.79 net) oil wells,1 gross (.26 net) dry well, with 1 gross (.26 net) well in progress at year-end. Also in 1982 the Huffco venture participated in the drillirig of 34 gross (8.91 net) development wells which resulted in 4 gross (1.05 net) oil wells,25 gross (6.56 net) gas wells, with 5 gross (1.30 net) wells in progress at year-end. Facilities owned by Pertamina are utilized to liquefy and store gas produced from the Huffco venture's field for shipment to Japan, using LNG tankers under long-term charter to Pertamina. The gas, in liquefied form (LNG), is being sold to Japanese customers primarily under long-term sales contracts arranged by Pertamina at prices which change in conjunction with Indonesian crude oil prices. A new sales agreement, signed by Pertamina and Japanese buyers in 1981, will result in the 3 doubling of the existing liquefaction facilities utilized by the Huffco venture in East Kalimantan. i Sufficient gas reserves have been proved from the Huffco venture's contract area, as well as in certain j adjacent areas operated by other contractors, to supply the expanded facilities which are currently under construction and are scheduled for completion in late 1983. The Huffco venture is scheduled to supply about 68% of the gas for the expanded facilities. In addition to supplying gas to the expanded liquefaction plant, the Huffco venture will begin-supplying about 68% of the gas requirements for a fertilizer plant on Kalimantan in 1983 at prices set by the Indonesian authorities. Such prices are expected to be substantially less than the price received for gas delivered to the liquefaction facilities. I The Company's second producing venture in Indonesia is operated by' Asamera, Inc. (the Company has a 30% working interest). The Asamera venture explores for and produces oil from a production sharing contract area covering 910,000 gross (273,000 net) acres on the northern portion of the Island of Sumatra. The Company markets its share of production at prices established under a ) yearly contract to one purchaser. Remaining reserves as of December 31,1982, based upon estimates j of the Company's engineers, are 9.7 gross (1.8 net) million barrels of oil. In 1982 the Company i participated in the drilling of 12 gross (3.60 net) exploratory wells, resulting in 1 gross (.30 net) oil well, j 2 gross (.60 net) gas wells, 8 gross (2.40 net) dry wells, with 1 gross (.30 net) well in progress at year-end. The Company also has interests in three other production sharing contracts in Indonesia totaling j 8,961,000 gross (2,802,000 net) acres. The Company (working interest ranging from 25% to 50%) is operator of two of the three contracts. During 1982 seismic studies were conducted in all three areas. In 1982 the Company participated in the drilling of two (.6 net) dry wells. Argentina: The Company has a 16.6% interest in a joint venture which has rights to explore and I develop approximately 119,000 gross acres in the Mendoza province of Argentina. Argentina Cities Service Development Company is the operator. Production averaged 31,280 gross barrels of oil per. i day in 1982. Under the terms of the sennce contract covering the exploration and development of the acreage, the joint venture receives a fee based on oil production. ) The Company has a 32.5% interest in a joint venture (OXY is the operator) which is exploring - 520,000 gross acres in the Malargue Basin. Five exploratory wells v,cre drilled in 1982, one of which, the La Brea #1, encountered oil. Further drilling is underway to determine if corr,mercial quantities of oit 23 ' j c-i . - ~. -.. ~. -

exist. Under tha t;rms of the servico contract for this permit tha joint venturo will rec:iva e fee based on oil production. Spain: The Company has a 32.5% interest in a joint venture (the Spanish national oil company is the operator) which is producing oil from the Dorada Fie!d (14,085 gross, 4,578 net acres) in the Tarragona Block "E" in the Mediterranean Sea offshore Spain. In 1982 successful development efforts added approximately 1,640,000 gross (533,000 net) barrels of oil to the field's reserves. Daily 1982 production was 7,665 gross (2,491 net) barrels. The remaining Dorada Field reserves are expected to be fully produced in early 1983. Under the terms of the Dorada Exploitation Agreement, the Company's share of production is sold by decree to a government-controlled refinery at prices which approximate world market prices. The Company has various interests in and is the operator for joint ventures which are exploring three onshore and six offshore areas covering 1,455,000 gross (411,000 net) acres in Spain. Future seismic studies are planned for selected onshore and offshore areas. Pakistan: The Company has a 30% working interest and is the operator for a joint venture which has an onshore permit covering 3,312,000 gross acres. In February 1982 production was initiated, under a commercial mining license, from the Khaskeli Field, and has averaged approximately 2,228 gross (586 net) barrels of oil per day. Production is trucked to a refinery in Karachi, Pakistan and is sold at market prices less transportation costs. One exploratory and six development wells have been drilled in the Khaskeli Field. Development work is continuing and further exploratory work is planned to assess the remainder of the permit. Canada: In 1981 the Company sold all of its Canadian oil and gas interests with the exception of three insignificant properties. In 1982 the Company acquired additional insignificant Canadian properties as part of the Supron acquisition. Working interests in Canada range from 25% to 100%. Net production for the year was 13,000 barrels of oil. In 1982 the Company drilled two exploratory wells which discovered and are currently producing oil. The area is being evaluated to determine the commercial significance of the discovery. Other Foreign Oil and Gas Exploration Properties: In addition to the exploration activity being conducted on foreign producing properties, the Company is pursuing an international exploration program involving acreage acquisitions, geophysical studies and exploratory drilling as detailed below. The Company is also participating in geophysical studies in other areas in which it holds no ownership position, but where future acquisitions of acreage are possible. Undeveloped Acreage (in Thousands) Country Gross Not Comments Abu Dhabi 2,353 263 The Company acquired interests in two permits (one onshore and one offshore) during 1981. One dry well has been drilled on the onshore permit. Drilling is planned on the offshore permit in 1983. Angola. 1,000 250 Three dry wells have been drilled on this offshore permit. Australia (1)........ 5,575 1,240 The Company holds interests in two permits, one onshore and one offshore (acquired in 1982). In 1982 one dry well was drilled on the offshore permit and three were drilled on the onshore permit. Bahrain(2).... 660 198 The Company is evaluating data received from pre-vious seismic and drilling activity on this offshore permit. (continued on following page) 24 L-

(continued from previous page) Undeveloped Acreage (In Thousands) l Country Gross Net Comments i l Brazil. 758 190 One dry well was drilled on this offshore block in 1982. France (2) 497 373 Seismic studies have been conducted and exploratory drilling is planned on this offshore permit in 1983. Guinea..... 8,962 2,241 Seismic studies have been conducted on this offshore permit and exploratory drilling is planned in 1983. Italy 245 116 Seismic studies have been conducted on this offshore permit and a dry well was drilled. Seismic data is being evaluated. The Ivory Coast 185 69 Evaluation of seismic data is in process and further geophysical studies are planned. At year-end, an exploratory well was in progress. Jamaica (2). 1,632 616 Seismic studies have been conducted on the two offshore permits. A dry well was drilled in 1982. Portugal (2).. 635 635 Seismic studies were completed and are being evalu-ated for this onshore permit. Tunisia (3).. 4,915 1,473 Seven wells have been drilled on two of three onshore permits with no commercial quantities of hy-drocarbons discovered. An additional well was being drilled at year-end. Further seismic or drilling activity is planned on all three permits. West Germany.. 44 35 An exploratory well was being drilled at year-end on this offshore permit. (1) The Company operates one of the two permits. (2) The Company is the operator. (3) The Company operates two of the three permits. Item 3. Legal Proceedings Reference is made to Note 9, Commitments and Contingencies, of Notes to Financial Statements at page 41 of the Company's 1982 Annual Report to shareholders, incorporated herein by reference, for further information. The litigation referred to in said Note relating to Allied-General Nuclear Services (AGNS), in which the Company's subsidiary, Allied Chemical Nuclear Products, Inc., is a 50% partner, is e, action filed by Commonwealth Edison in July 1979. in the United States District Court for the Northern District of Illinois against AGNS, Allied Chemical Nuclear Products, Inc. and others claiming that AGNS was contractually obligated to supply Commonwealth Edison with quantities of fissile material equivalent to that which would have been obtained by reprocessing and contends that its damages total in excess of $126 million (Commonwealth Edison Co. v. Allied Chemical Nuclear Products, Inc., et al., Docket No. 79-62866). AGNS has denied liabildy under the reprocessing contract and has asserted three counterclaims against Commonwealth Edison seeking to have the reprocessing contract declared null and void and claiming damages in excess of $90 million. 4 25

Item 4. Submi si;n cf Mattera t3 o Vcta cf Security Hildera At the Special Meeting of shareholders of the Company held on January 31,1983, the Company's shareholders approved a proposal to issue up to 15,260,000 shares of the Company's common stock in connection with the Company's acquisition of The Bendix Corporation. Of the votes cast,27,651,978 shares were voted in favor and 1,467,511 shares voted against. In addition,896,425 shares abstained from voting. Executive Officers of the Registrant The executive officers of the Registrant, listed below, are elected annually in April. There are no family relationships among them. Name, Age, Date First Elected an Officer Business Experience Edward L. Hennessy, Jr.(a), 54 Chairman of the Board and Chief Executive Officer since 1979 December 1979. President and Chief Executive Officer of the Company May 1979 to November 1979. Executive Vice President, Group Vice President, Systems and Equipment Group, and Chief Financial Officer of United Technologies Corporation (a designer, engineer and manufacturer of high-technology products),1977 to 1979. William M. Agee(a),* 45 President of the Company effective January 31,1983. Chairman 1983 and Chief Executive Officer of The Bendix Corporation (a manufacturer of aerospace-electronics, automotive and indus-trial products) since 1977. Alan Belzer,50 Group Vice President and President of Allied Fibers and Plastics 1975 Company since October 1979. Group Vice President Decem-ber 1975 to September 1979. Edgar S. Brower, 52 Group Vice President and President of Allied Electronic Compo-1982 nents Company since February 1982. Executive Vice Presi-dent of Eltra Corporation (a unit of the Company) September 1980 to January 1982. President of Automotive Products Division January 1977 to September 1980. Robert L. Cole, 53 Group Vice President and President of Allied Information 1982 Systems Company since February 1982. Vice President (1976 to January 1982), Executive Vice President, Power Group (1981 to 1982) and President, North American Operations, Otis Elevator Company (1976 to 1981) of United Technologies. William D. Geitz, 59 Group Vice President and Chairman and Chief Executive Officer 1975 of Union Texas Petroleum Corporation since November 1981. Chairman and Chief Executive Officer of Union Texas Pet-roleum Holdings, Inc. and Union Texas Products Corporation l since December 1982. Group Vice President and President of Union Texas Petroleum Corporation (December 1979) and its predecessor Union Texas Petroleum Company October 1979 to October 1981. Group Vice President December 1975 to September 1979. l

Mr. Agee has announced his intention to resign his executive position as President of the Company and as Chairman and Chief Executive Officer of Bendix by June 1,1983.

26

Nemo, Age, Date First Elected an Omcor Business Experience A. Clark Johnson, 52 Group Vice President and President of Allied Chemical Company 1982 since October 1982. Executive Vice President of Allied Information Systems Company February 1982 to September 1982. Executive Vice President of Allied Chemical Company October 1979 to January 1982. President of former Specialty Chemicals Division 1977 to September 1979. James L. Vincent,43 Group Vice President and President of Allied Health and 1982 Scientific Products Company since January 1982. Executive Vice President and Chief Operating Officer (1979 to December 1981) and Group Vice President (1976 to 1979) of Abbott Laboratories (developer, manufacturer and seller of human health care products). Harold W. Buirkle,62 Senior Vice President-Planning and Finance since October 1969 1979. Group Vice President February 1978 to September 1979. Vice President-Administration December 1975 to January 1978. L. James Colby, Jr., 49 Senior Vice President-Technology since May 1980. Senior 1977 Vice President-Research and Development October 1979 to April 1980. Group Vice President September 1977 to Septem-ber 1979. Brian D. Forrow(a),55 Senior Vice President and General Counsel since October 1979. 1968 Vice President and General Counsel January 1968 to Septem-ber 1979. Edwin M. Halkyard, 48 Senior Vice President-Human Resources since October 1979. 1978 Vice President-Corporate Relations April 1978 to September 1979. Corporate Director of Employee Relations 1976 to March 1978. David G. Powell, 49 Senior Vice President-Public Affairs since October 1979. 1979 Manager-Public Affairs of Exxon Chemical Company (Exxon Corporation) 1976 to September 1979. H. Dorn Stewart, Jr., 50 Senior Vice President-Operations since January 1980. Senior 1980 Vice President of Petrochemical Group (1977 to December 1979) and Vice President-Refining and Marketing, Eastern Region (1972 to 1977) of Union Oil Company of California. Daniel P. Burnham,36 Vice President and Controller since April 1982. General Manager 1982 of Insulation Division (1981 to 1982), Director of Marketing, Abrasives (1980 to 1981), Director, Strategic Development (1979 to 1980), Corporate Controller (1976 to 1978) of The Carborundum Company. Director, Financial Planning of Ken-necott Corporation (1978 to 1979). Edward W. Callahan, 52 Vice President-Health, Safety and Environmental Sciences 1978 since November 1981. Vice President-Environmental Affairs April 1978 to October 1981. General Manager-Environmen-tal Services 1970 to March 1978. Nicholas A. Cameron,44 Vice President-Finance since February 1982. Vice President 1979 and Treasurer July 1981 tu January 1982. Treasurer October 1979 to June 1981. Assistant Treasurer 1973 to September 1979. 27

Name, Age, Date First Elected an Officer Business Experience Victor Futter,64 Vice President and Secretary since April 1978. Associate 1978 General Counsel 1976 to March 1978. William F. Loftus, 44 Vice Presiden; > d Treasurer since February 1982. Director-1982 Taxes April 13. 3 to January 1982. Senior Tax Counsel (1978 to April 1979), Manager-Financial Planning (1977 to 1978) and Manager-Tax Section (1975 to 1977) of E.l. du Pont de Nemours and Company. Harry J. Robinson, M.D., 69 Vice President-Medical Affairs since April 1976. 1976 Pieter J. Schiller, 45 Vice President-Planning and Development since October 1975 1979. Treasurer December 1975 to September 1979. Richard A. Swalin, 53 Vice President-Research and Development since May 1980. 1980 Vice President-Technology of Eltra Corporation 1977 to May 1980. (a)Also a director. Part 11. Item 5. Market for the Registrant's Common Stock and Related Stockholder Matters Market and dividend information for the Registrant's common stock is contained in the statement " Quarterly Financial Information" at page 49 of the Company's 1982 Annual Report to shareholders, and such information is incorporated herein by reference. The number of record holders of the Registrant's common stock is contained in the statement " Selected Financial Data" at page 53 of the Company's 1982 Annual Report to shareholders, and such information is incorporated herein by reference. Item 6. Selected Financial Data The information included under the captions "For the Year" and "At Year End" in the statement " Selected Financial Data" at pages 52 and 53 of the Company's 1982 Annual Report to shareholders is incorporated herein by reference. Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations " Management's Discussion and Analysis" at pages 27 through 31 of the Company's 1982 Annual Report to shareholders is incorporated herein by reference. Item 8. Financial Statements and Supplementary Data The Company's consolidated financial statements, together with the report thereon of Price Waterhouse dated January 21, 1983, appearing at pages 24 through 26 and 32 through 51 of the 28

Company's 1982 Annual Report to shareholders, are incorporated herein by reference. With the exception of the aforemen*hned information and the information incorporated by reference in Items 1, 3,5. 6 and 7, the 1982 Annual Report to shareholders is not to be deemed filed as part of this Form 10-K Annual Report. Item 9. Disagreements on Accounting and Financial Disclosure Not Applicable Part Ill. Item 10. Directors and Executive Officers of the Registrant Information relating to directors of the Registrant will be contained in a definitive Proxy Statement involving the election of directors which the Registrant will file with the Securities and Exchange Commission pursuant to Regulation 14A not later than 120 days after December 31,1982, and such information is incorporated herein by reference. Certain other information relating to Executive Officers of the Registrant appears at pages 26 through 28 of this Form 10-K Annual Report. Item 11. Management Remuneration Information relating to management remuneration will be contained in the Proxy Statement referred to above in " Item 10. Directors and Executive Officers of the Registrant." and such information is incorporated herein by reference. item 12. Security Ownership of Certain Beneficial Owners and Management Information relating to security ownership of certain beneficial owners and management will be contained in the Proxy Statement referred to above in " Item 10. Directors and Executive Officers of the Registrant," and such information is incorporated herein by reference. Part IV. Item 13. Exhibits, Financial Statement Schedules and Reports on Form 8-K P_qe (a) Certain documents filed as part of the Form 10-K:

1. The financial statements together with the report thereon of Price Waterhouse dated January 21,1983, set forth at pages 24 through 26 and 32 through 51 of the Company's 1982 Annual Report to shareholders are incorporated by reference in this Form 10-K Annual Report.

2. Financial Statement Schedules Report of Independent Accountants on Financial Statement Schedules....... 32 V-Property, Plant and Equiprnent...........

33 VI-Accumulated Depreciation, Depletion & Amortization of Property, Plant and Eq uipment.................................... 34 Vill-Valuation and Qualifying Accounts..... 36 IX-Short term Borrowings................................... 37 X-Supplementary income Statement Information............... 38 29

The financial statement schedules should be read in conjunction with the financial statements incorporated by reference in item 8 of this Form 10-K Annual Report. Schedules other than those listed above are omitted because they are not applicable. (b) Reports on Form 8-K A report on Form 8-K dated December 21,1982 was filed on January 5,1983 concerning: (i) The Company's purchase of 11,900,100 shares of common stock of Bendix from Martin Marietta Corporation (Martin Marietta) and one of Martin Marietta's subsidiaries; (ii) The Company's purchase of all of the outstanding capital stock of Bendix Acquisition Corporation (BAC), a wholly owned subsidiary of Bendix (the assets of which included 25,582,500 shares of common stock of Martin Marietta) in exchange for 1,000 shares of a new series of the Company's preferred stock; and (iii) The sale of 19,128,000 shares of Martin Marietta's common stock by BAC (then and now a wholly owned subsidiary of the Company) to a subsidiary of Martin Marietta. (c) Exhibits See the Exhibit Index at pages 39 and 40 of this Form 10-K Annual Report. The following exhibits listed on the Exhibit Index are filed with this Form 10-K Annual Report: 3.2-Certificate of Amendment of the Certificate of incorporation of the Company dated December 17, 1982. 3.3-Certificate of Amendment of the Certificate of Incorporation of the Company dated January 27,1983. 13-The Company's 1982 Annual Report to shareholders. 22-Subsidiaries of the Registrant. 24-Consent of independent Accountants. (d) Financial Statement Schedules -Financial Statement Schedules are listed in response to item 13.(a)2. -Financial Statements of The Bendix Corporation. The consolidated financial statements, the Auditors' Opinion and supplementary information on the effects of changing prices are incorporated herein by reference to Bendix' Annual Report on Form 10-K for the year ended September 30,1982. 30

SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this annual report to be signed on its behalf by the undersigned, thereunto duly authorized. Allied Corporation DANIEL P. BURNHAM January 28,1983 By Daniel P. Burnham Vice President and Controller Pursuant to the requirements of the Securities Exchange Act of 1934, this annual report has been signed below by the following persons in the capacities and on the dates indicated: Name Name EDWARD L. HENNEssY, JR. HELEN S. MEYNER Edward L. Hennessy, Jr. Helen S. Meyner Chairman of the Board and Chief Executive Director Officer and Director JEWEL PLUMMER COBB ROGER H. MORLEY Jewel Plummer Cobb Roger H. Morley Director Director DONALD W. davis CHARLES W. NicHOLS. JR. Donald W. Davis Charles W. Nichols, Jr. Director Director JOHN P. FisHWICK STANLEY P. PORTER John P. Fishwick Stanley P. Porter Director Director BRIAN D. FORROW THEODORE C. ROGERS Brian D. Forrow Theodore C. Rogers Director Director WILLIAM R. HAsELTON RICHARo R. SHINN William R. Haselton Richard R. Shinn Director Director ROBERT D. KILPATRICK HAROLD W. BUIRKLE Robert D. Kilpatrick Harold W. Buirkte Director Senior Vice President-Planning and Finance (Principal Financial Officer) JAMES A. KRUMHANsl DANIEL P. BURNHAM James A. Krumhans! Daniel P. Burnham Director Vice President and Controller (Principal Accounting Officer)

January 28,1983 31

REPORT OF INDEPENDENT ACCOUNTANTS ON FINANCIAL STATEMENT SCHEDULES To the Board of Directors of Allied Corporation Our examinations of the consolidated financial statements referred to in our report dated January 21,1983 appearing on page 51 of the 1982 Annual Report to shareholders of Allied Corporation (which report and financial statements are incorporated by reference in this Annual Report on Form 10-K), also included an examination of the Financial Statement Schedules listed in Item 13(a) (2) of this Form 10-K. In our opinion, these Financial Statement Schedules present fairly the information set forth therein when read in conjunction with the related consolidated financial statements. PaicE WATERHOUsE 65 Madison Avenue Morristown, New Jersey 07960 January 21, 1983 s 32

(Dollars in Millions) ALLIED CORPORATION AND CONSOLIDATED SUBSIDIARIES SCHEDULE V-PROPERTY, PLANT AND EQUIPMENT Balance at Additions Sales and initially Balance at Classification beginning of year at cost Retirements Adjustments Consolidated end of year Year Ended December 31.1982 Land and land improvements...... $ 174 S 9 $ 3 S-S- $ 180 Oil and gas properties, mines and quarries...... 689 146 23 (2) 30 840 Machinery and equipment.... 3,068 355 154 (17) 3,252 Buildings.................. Office fumiture and equipment........ 549 37 29 (8) 549 58 10 4 (1) 63 Transportation equipment....... 91 4 8 87 Construction in progress.... 300 (37) 2 261 Tota!...... $4,929 $524 $223 $(28) S 30 $5.232 8 Year Ended December 31,1981 Land and land improvements....... $ 119 $ 6 $ 4 S-S 53 $ 174 Oil and gas properties. mines and quarries........ 633 136 80 689 Machinery and equipment.. Buildings.................... 2,634 364 98 17 151 3,068 404 32 6 7 112 549 Office furniture and equipment.... 43 8 1 2 6 58 Transportation equipment...... 100 5 14 91 Construction in progress....... 246 58 17 13 300 Total.............. $4.179 $609 $220 S 26 S335 $4,929 Year Ended December 31,1980 Land and land improvements...... $ 114 5 9 5 4 S- $ 119 Oil and gas properties. mines and quarries.................. 495 152 14 633 Machinery and equipment........ 2,462 260 94 6 2,634 Buildings............ 387 32 16 1 404 Office fumiture and equipment.... 43 6 7 1 43 Transportation equipment...... 99 10 9 100 Construction in progress..... 182 64 246 Total......... $3,782 $533 $144 S 8 $4,179

(Dollars in Millions) ALLIED CORPORATION AND CONSOLIDATED SUBSIDIARIES SCHEDULE VI-ACCUMULATED DEPRECIATION, DEPLETION & AMORTIZATION OF PROPERTY, PLANT AND EQUIPMENT Additions Balance at charged to Balance beginning costs and Sales and at end Classification of year expenses (1)(2) Ret 6rements(2) Adjustments of year Year Ended December 31,1982 Depreciation and amortization: Land improvements....................... $ 42 $ 5 $2 $ 49 278 94 14 358 Oil and gas properties, mines and quarries.. 1,446 236 62 15 1,635 Machinery and equipment............. 204 30 9 (1) 224 Buildings.......................... Office fumiture and equipment.. 23 5 3 1 26 Transportation equipment.................. 46 7 5 5 53 N Total accumulated depreciation and amortization...................... 2,039 377 93 22 2,345 Depletion: Oil and gas properties, mines and quarries.... 24 5 29 Total accumulated depreciation, depletion and amortization......................... $2,063 $382 $93 $22 $2,374 Year Ended December 31,1981 Depreciation and amortizat. ion: Land improvements........ 35 $ 6 $ 1 $2 $ 42 232 78 32 278 Oil and gas properties, mines and quarries. 1,266 223 50 7 1,446 Machinery and equipment............ 162 28 1 15 204 Buildings................. Office fumiture and equipment.............. 17 4 1 3 23 Transportation equipment... 49 5 8 46 Total accumulated depreciation and amortization.............. 1,761 344 93 27 2,039 Depletion: Oil and gas properties, mines and quarries... 34 3 13 24 Total accumulated depreciation, depletion and $1,795 $347 $106 $27 $2,063 amortization............

(Dollars in Millions) ALLIED CORPORATION AND CONSOLIDATED SUBSIDIARIES SCHEDULE VI-ACCUMULATED DEPRECIATION, DEPLETION & AMORTIZATION OF PROPERTY, PLANT AND EQUIPMENT Additions Balance at charged to Balance beginning costs and Sales and initially at end e Retirements (2) Consolidated of year genses(1)(2) Classification of year Year Ended Decenhr 31, N Depreciation and amortization: $ 30 $ 6 $1 $ 35 Land improvements 189 49 6 232 Oil and gas properties, mines and quarries. 1,144 181 62 3 1,266 Machinery and equipment. 152 21 12 1 162 Buildings........ 17 4 5 1 17 g Office fumiture and equipment 49 8 8 49 Transportation equipment...... Total accumulated depreciation and amortization........ 1,581 269 94 5 1,761 Depletion: 32 2 34 Oil and gas properties, mines and quarries. Total accumulated depreciation, depletion and $1,613 $271 $94 $5 $1,795 amortization.... Notes: (1) Estimated service lives used for computing depreciation range from 3 to 35 years. (2) Excludes depreciation, depletion and amortization expense and sales and retirements for discontinued businesses for 1981 and 1980. .1

/ (Dollars in Millions) ALLIED CORPORATION AND CONSOLIDATED SUBSIDIARIES SCHEDULE Vill-VALUATION AND QUAllFYlNG ACCOUNTS Additions Charged to Balance at costs and Charged to Initially Balance Description beginning of year expenses other accounts Consolidated Deductions at end of year Year Ended December 31. 1982 Allowance for losses and refunds: Doubtful accounts (1).. $23 $10 $ 1(2) $10(4) $24 25 8 33(6) Retumable containers (1). 9 4(3) 5(5) 8 $57 $10 $13 $15 $65 Year Ended December 31,1981 Allowance for losses and M refunds: Doubtful accounts (1)..... $16 $10 S- $4 $ 7(4) $23 25 25(6) Returnable containers (1). 8 6(3) 5(5) 9 $49 $10 $6 $4 $12 $57 Year Ended December 31, 1980 Allowance for losses and refunds: Doubtful accounts (1)...... $17 $12 $13(4) $16 25 25(6) Returnable containers (1) 7 8(3) 7(5) 8 $24 $37 $8 $20 $49 Notes (1) These amounts are deducted in the balance sheet from accounts and notes receivable. (2) Reinstatement of customer accounts previously written off. (3) Charged to customers when containers were shipped. (4) Bad debts written off. (5) Containers retumed or permanently retained by customers. (6) This amount is deducted in the balance sheet from other investments and long-term receivables.

(Dollars in Millions) ALLIED CORPORATION AND CONSOLIDATED SUBSIDIARIES SCHEDULE IX-SHORT-TERM BORROWINGS weig%ted everage Bolence et Weighted everage Maximum outstanding Average outstanding interest rate Category end of year interest rate during year during year during year Year Ended December 31,1982 Payable to banks: $476(2) $182(3) 12.49%(3) Domestic (1) Foreign.............. 38 14.90 % 46 41(4) 14.33 %(4) Year Ended December 31, 1981 ra Payable to banks: Domestic (1)............ $5 13.64 % $127 $ 46(3) 14.65 %(3) 48 14.99 % 48 35(4) 15.69 %(4) Foreign..... Year Ended December 31, 1980 Payable to banks: Domestic (1) (5)......... $207 $ 47(3) 15.18%(3) Foreign................ 33 14.30% 41 35(4) 14.00 %(3) Notes: (1) Includes amounts for maximum outstanding, average outstanding and the weighted average interest rate for commercial paper of: $476, $181, and 12.49% for 1982; $127, $45, and 14.62% for 1981 and $70, $24 and 13.82% for 1980. (2) Amounts outstanding include the financing relating to Supron Energy Corporation, which required peak funding of $282 during 1982. (3) Based on the amounts outstanding at the end of each day. (4) Based on the amounts outstanding at month-end. (5) Amounts outstanding include the financing of the acquisition of Eltra Corporation ihrough February 29,1980. J

l (Dollars in Mi!! ions) ALLIED CORPORATION AND CONSOLIDATED SUBSIDIARIES 1 SCHEDULE X-SUPPLEMENTARY INCOME STATEMENT INFORMATION Charged to costs and expenses Years Ended December 31 1982 1981 1980 Maintenance and repairs. $292 $310 $269 Depreciation and amortization of intangible assets, preoperating costs and similar deferrals. Taxes, other than income taxes: PayroII. 85 84 64 Property. 32 28 23 a Windfall Profits Tax.. 48 63 18 Other... 39 42 34 204 217 139 Royalties. Advertising costs. (*) Less than 1 percent of total sales and revenues. _s, N rcq _. _, -}}

ML20088A334

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