-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, GDhctpxqEYlhCILE5/vwBvi6VYN3ymZPg9MNRVjdATnQnYCGOqNLdg9LlmAbkuYA Tl3d5PeqAlNNh3dWowSjIg== 0000950129-94-000838.txt : 19941221 0000950129-94-000838.hdr.sgml : 19941221 ACCESSION NUMBER: 0000950129-94-000838 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 19940930 FILED AS OF DATE: 19941220 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: DANIEL INDUSTRIES INC CENTRAL INDEX KEY: 0000026821 STANDARD INDUSTRIAL CLASSIFICATION: INDUSTRIAL INSTRUMENTS FOR MEASUREMENT, DISPLAY, AND CONTROL [3823] IRS NUMBER: 741547355 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-06098 FILM NUMBER: 94565332 BUSINESS ADDRESS: STREET 1: 9753 PINE LAKE DR CITY: HOUSTON STATE: TX ZIP: 77055 BUSINESS PHONE: 7134676000 MAIL ADDRESS: STREET 1: 9753 PINE LAKE DRIVE STREET 2: WINDSOR HOUSE - 50 VICTORIA ST CITY: HOUSTON STATE: TX ZIP: 77055 10-K 1 DANIEL IND. 10-K FOR PERIOD ENDED 09/30/94 1 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (MARK ONE) /X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED) FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1994 OR / / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED) FOR THE TRANSITION PERIOD FROM __________ TO __________
COMMISSION FILE NO. 1-6098 DANIEL INDUSTRIES, INC. (Exact name of registrant as specified in its charter) DELAWARE 74-1547355 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 9753 PINE LAKE DRIVE 77055 HOUSTON, TEXAS (Zip code) (Address of principal executive offices) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (713) 467-6000 SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
NAME OF EACH EXCHANGE ON TITLE OF EACH CLASS WHICH REGISTERED - ------------------------------------ ------------------------------------ COMMON STOCK, $1.25 PAR VALUE NEW YORK STOCK EXCHANGE RIGHTS TO PURCHASE PREFERRED SHARES NEW YORK STOCK EXCHANGE
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: None Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ] At November 30, 1994, the aggregate market value of Common Stock, $1.25 par value, of the registrant held by non-affiliates of the registrant was $122,800,379. As of that date, there were outstanding 12,032,470 shares of Common Stock, $1.25 par value, of the registrant. DOCUMENTS INCORPORATED BY REFERENCE There is incorporated by reference in Part III of this Annual Report on Form 10-K the information contained under the headings "Election of Director", "Company Executive and Subsidiary Officer", "Executive Compensation", "Certain Relationships and Related Transactions" and "Principal Stockholders" in the Registrant's Proxy Statement for its Annual Meeting of Stockholders proposed to be held February 2, 1995, which Proxy Statement shall be filed within 120 days of the end of the registrant's fiscal year. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 2 P A R T I ITEM 1. BUSINESS. Daniel Industries, Inc. is engaged in providing products and systems used to measure rates of flow and accumulated volumes of fluids, primarily oil and natural gas. The Company manufactures a variety of measurement devices including orifice, turbine, positive displacement, ultrasonic and oval gear meters and a wide range of electronic instruments used in conjunction with flow measurement products. The Company also designs, fabricates and assembles large, automated flow measurement systems to meet specific needs and applications, as well as other systems utilized for enhanced oil recovery. The Company's flow measurement products and systems are used mainly by producers, refiners and transporters of oil and natural gas. The Company is also engaged in the manufacture and sale of pipeline valves, fasteners and fabricated production equipment. Daniel Industries, Inc. was incorporated under the laws of Delaware in 1988 as the successor to a business started in 1930. Unless the context indicates otherwise, references herein to the "Company" refer to Daniel Industries, Inc., its subsidiaries and their predecessors. FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS The Company has two industry segments: Flow Measurement and Energy Products. Financial information for the Company's industry segments is presented in NOTE 13 of NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. Such information is hereby incorporated by reference herein. FLOW MEASUREMENT Since its inception in 1930, the Company has manufactured products that employ a method known as differential orifice measurement to measure fluids, primarily natural gas. These orifice measurement products cause a decline in pressure as fluid flows through the device. This decline in pressure is measured and used to determine rates of flow and accumulated volumes of fluid. In addition to its orifice measurement products, the Company manufactures flow measurement products using turbines whose frequency of rotation indicates rates of flow and accumulated volumes of fluid. The Company also manufactures positive displacement and oval gear meters for the measurement of various liquid flows. Sales of all metering equipment worldwide contributed 43%, 53% and 49% of this industry segment's revenues in fiscal 1994, 1993 and 1992, respectively. The Company also manufactures a wide range of electronic instruments used in conjunction with flow measurement products. Sales of electronic products worldwide contributed approximately 20%, 24% and 25% of this industry segment's revenues in fiscal 1994, 1993 and 1992, respectively. The Company's electronic flow computers instantaneously compute and display the rate of flow and accumulated volumes of fluid. The Company has developed several software programs and has an in-house programming capability to meet specific customer applications. Other electronic products manufactured by the Company include chromatographs for analysis of natural gas to determine its BTU content and 1 3 ultrasonic flowmeters for nonintrusive gas flow measurement. In addition, the Company designs and manufactures electronic products for the automation of liquid petroleum loading facilities. The Company designs, fabricates and assembles large flow measurement systems, including specialized electronic and control systems for the automation of liquid petroleum product loading systems. Sales of all systems worldwide contributed approximately 37%, 23% and 26% of this industry segment's revenues in fiscal 1994, 1993 and 1992, respectively. A typical system is mounted on one or more skids for ease of installation and contains various mechanical equipment, electronic instruments, piping, supports and walkways. A system can be operated manually or it can be completely automated through the use of computers and other instrumentation supplied and programmed by the Company. In the process of supplying a flow measurement system, the Company first defines the total measurement requirements, and subsequently designs the system. The Company then fabricates or supplies the various mechanical and electronic components of the system. The system is assembled and tested at the Company's Houston, Texas or Falkirk, Scotland plant. The Company also has the capability to supervise on-site installation and start-up operations of the system and to provide servicing for the system after installation. The Company has sales offices in eight United States cities, Calgary, Canada; Cramerview, South Africa; Dammam, Saudi Arabia; Datchet, England; Edmonton, Canada; Falkirk, Scotland; Leiden, Holland; Moscow, Russia; Potsdam- Babelsberg, Germany and Singapore through which it sells its flow measurement products and systems. In addition, sales are made domestically and in certain foreign countries through a system of sales representatives and distributors working on a commission basis. Although the Company's flow measurement products and systems have been used in water handling and the chemical and power generation industries, sales are principally to integrated oil companies, gas pipeline companies and other concerns engaged in the production, transmission and marketing of oil and natural gas. The geographic market for the Company's flow measurement products and systems is worldwide. In competing for the sale of large systems, the Company may enter into contracts which provide for the completion of the systems at specified prices and in accordance with time schedules. These contracts may involve greater risks as a result of unforeseen increases in the prices of raw materials and other costs. In its financial statements, the Company accounts for large systems using the percentage-of-completion method, which requires recognition of revenues and costs over the life of the contract, rather than solely at the time the contract is completed. The Company has not compiled detailed market information regarding its competitive position in the flow measurement industry. However, the Company believes that, in terms of revenues, it is the largest United States producer of orifice measurement products used to measure natural gas flows in custody transfer. In addition, management considers the Company to be a major international supplier of large flow measurement systems, which are used to measure crude oil flows. Among the other devices used for flow measurement are turbine measurement products, but the Company is less influential in the market for those products. In general, the Flow Measurement segment of the Company has 2 4 numerous competitors, none of which is considered to be dominant. The principal competitive factors in this industry include, singularly or in various combinations, price, design, efficiency and the ability of the products or systems to measure and display rates of flow and accumulated volumes of fluid accurately. At September 30, 1994 and 1993, the Company's backlog of orders believed to be firm for the Flow Measurement segment's products and systems was approximately $27,400,000 and $64,800,000, respectively. The Company expects that substantially all of the backlog at September 30, 1994, will be filled during the fiscal year ending September 30, 1995. (See "ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS." - "Results of Operations".) ENERGY PRODUCTS The Energy Products segment offers to the energy markets an array of services and products which include: pipeline valves, fasteners including stud bolts, nuts, ring joint gaskets and industrial flanges, and energy recovery products such as steam generators and fabricated production equipment. The Company is engaged in the manufacture of fabricated gate valves that range from 2" to 84" in diameter. The bodies of these valves are fabricated from plate steel which is cut and welded, rather than from castings. The Company's gate valve operation includes a line of cast gate valves ranging from 2" to 6" in diameter and a round body design, which incorporates a combination of fabricated and cast valve components, for large diameter and high pressure applications. The Company manufactures a line of forged-body trunnion ball valves in 2" through 48" bore sizes. Their primary application is pipeline block valves and on/off service in liquid and gas systems. The Company also manufactures two-way and four-way cast steel plug-type valves ranging from 2" to 30" and 3" to 24" in diameter, respectively. These valves are used in metering systems and other applications which require more precise cutoff or control of pipeline flows. The Company's pipeline valves are marketed by two domestic sales offices and offices in Calgary, Canada; Cramerview, South Africa; Dammam, Saudi Arabia; Datchet, England; Leiden, Holland; Moscow, Russia and Singapore. In addition, sales are made worldwide through representatives working on a commission basis. The Company's valves are sold primarily to contractors, refineries and transmission companies for use in controlling liquid or gas pipeline flows. The Company competes worldwide with numerous manufacturers of fabricated, forged and cast valves. Ability to meet strict delivery requirements, as well as price and quality of the valves sold, are considered to be the principal competitive factors in the sale of pipeline valves. The Company manufactures a complete line of alloy stud bolts. Stud bolts are unheaded bolts which are either entirely threaded or threaded only on the ends. Generally, the stud bolts manufactured by the Company are sold with attached nuts which are purchased from outside sources. The Company's bolt manufacturing process uses on-site heat-treating furnaces which enable the 3 5 Company to purchase untreated coils of alloy steel, rather than the more expensive heat-treated and sized bars of steel traditionally used by stud bolt manufacturers. The manufacturing process is conducted under strict quality control, and various tests are run to ensure the strength and quality of the bolts produced. The Company also manufactures ring joint gaskets for production well-head equipment, valves and piping systems. These gaskets frequently are used in conjunction with stud bolts and nuts. The Company also manufactures industrial flanges. The fasteners are sold through the Company's own sales force, located in Aberdeen, Scotland; Edmonton, Canada; Gardena, California; and Houston, Texas, to valve manufacturers, engineering contractors, supply houses and bolt and nut distributors. The Company's fasteners are used mainly by manufacturing industries which supply equipment to companies engaged in the production, processing and transporting of oil and natural gas. The Company is one of many foreign and domestic manufacturers of fasteners. The Company believes that neither the Company nor any of its competitors clearly dominates the market. However, competition from foreign manufacturers is intense. Strength and uniformity of the product, price and the ability to meet delivery requirements are the principal competitive factors in the fastener industry. The Company is a leading manufacturer of large steam generators and water treatment equipment for enhanced oil recovery operations and also produces equipment for pipeline and production facilities. While these markets are not completely new, the international requirements for these products have increased. To remove certain toxic materials from major gas pipelines, the Company has designed and manufactured pipeline gas blow-down packages which safely remove the unwanted materials. These trailer-mounted units separate gas, liquids and solids; reduce pressure; measure flow rate and reduce noise of blow-down gas to a permissible level. In addition, the Company makes LACT units, separators, strainers, heater-treater units and meter provers. At September 30, 1994 and 1993, the Company's backlog of orders believed to be firm for the Energy Products segment was approximately $6,000,000 and $7,400,000, respectively. The Company expects that substantially all of the backlog at September 30, 1994, will be filled during the fiscal year ending September 30, 1995. FOREIGN OPERATIONS Approximately 26% of the Company's consolidated revenues for its fiscal year ended September 30, 1994, was attributable to sales of flow measurement products and systems manufactured or assembled at the Company's plants in Falkirk, Scotland and Potsdam-Babelsberg, Germany. Sales of Company products and systems for foreign installation or use outside the United States, inclusive of the Scotland and German operations, contributed approximately 60%, 52% and 54% of the Company's consolidated revenues in fiscal 1994, 1993 and 1992, respectively. The Company's operations outside the United States are subject to the usual risks of such operations, including changes in governmental policies, currency transfer restrictions and devaluation. The Company endeavors to 4 6 minimize these risks through the use of letters of credit, United States dollar-denominated contracts and hedging of specific foreign currency commitments. Financial information about the Company's foreign and domestic operations and export sales by geographic area is presented in NOTE 13 of NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. Such information is hereby incorporated by reference herein. RAW MATERIALS Raw materials and other supplies used by the Company in the manufacture and fabrication of its products are purchased from suppliers and other manufacturers. No purchases are made under long-term contracts, and the Company does not consider that it is materially dependent upon any single source of supply. From time to time, however, the Company encounters difficulty in obtaining steel and steel castings. CUSTOMERS Occasionally, the Company's Flow Measurement segment is engaged to supply one or more large flow measurement systems for a single installation. A few contracts to design and assemble such systems would be of material importance to that industry segment's results of operations for a particular fiscal period. However, the Company is not dependent on a few customers on a continuing basis. PATENTS AND RESEARCH The Company has sought patent protection for products which appear to have commercial importance. The Company does not consider that the patents currently held by it are material to its operations as a whole. The Company engages in research activities with a view to the development of new products as well as the improvement of existing products. The amounts spent during the fiscal years ended September 30, 1994, 1993 and 1992, on research and product development activities were approximately $4,100,000, $5,300,000 and $5,500,000, respectively. EMPLOYEES At September 30, 1994, the Company employed approximately 1,450 persons, of whom approximately 1,100 were located in the United States, approximately 250 were located in the United Kingdom and 100 were located in other nations. ENVIRONMENTAL COMPLIANCE Compliance with existing governmental regulations which have been enacted or adopted regulating the discharge of materials into the environment, or otherwise relating to the protection of the environment, does not have, nor is expected to have, a material effect on the Company. 5 7 OTHER BUSINESS CONDITIONS AND REGULATIONS The Company's business is largely dependent upon the level and nature of the activities in the worldwide oil and natural gas industries. The level of such activities may be influenced by numerous factors, including general economic conditions, the demand for oil and/or natural gas, development of alternative energy sources, taxation, price controls and other political and economic conditions. The business of the Company is moderately seasonal to the extent that many of the Company's products and systems are installed and its services provided out-of-doors. Consequently, sales attributable to these products and services tend to increase somewhat during the summer months when the weather is more favorable, and there are more daylight hours. For a discussion of the Company's practices relating to working capital, see "ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS." - "Liquidity and Capital Resources." ITEM 2. PROPERTIES. The principal offices and manufacturing facilities of the Company are as follows:
APPROX. AREA LOCATION (SQ. FT.) TENURE UTILIZATION -------- ------------ ------ ----------- Flow Measurement Segment - ------------------------ Houston, Texas(a) 428,000 Owned Manufacture of flow Falkirk, Scotland 258,000 Owned measurement products and design, fabrication and testing of flow measure- ment systems. Potsdam-Babelsberg, 180,000 Owned Manufacture of flow measure- Germany ment products. Houston, Texas 54,000 Owned Fabrication of flow computers, automation systems, gas chromatographs and instrument panels. Calgary, Canada 15,000 Leased Manufacture and sales of flow measurement products.
(a) Includes Corporate headquarters. 6 8 Houston, Texas 13,000 Owned The building is being held for future use or possible sale. Waller County, Texas 321 acres Owned Land purchased for future development. Energy Products Segment - ----------------------- Houston, Texas 189,000 Owned Manufacture of stud bolts, ring joint gaskets and industrial flanges. Houston, Texas 213,000 Owned Manufacture of pipeline valves. Houston, Texas 44,000 Owned Fabrication and assembly of energy recovery products. Matamoros, Mexico 35,000 Owned The building was leased to a suitable tenant through August 1994. A tentative agreement has been reached for the sale of this property. Gardena, California 20,000 Leased Wholesale gaskets, bolts and nuts. Edmonton, Canada 16,000 Leased Wholesale gaskets, bolts and nuts.
ITEM 3. LEGAL PROCEEDINGS. The Company is subject to legal proceedings and claims which arise in the ordinary course of business. In the opinion of management, the amounts of ultimate liability, if any, with respect to these actions will not materially affect the financial position of the Company. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. There was no matter during the fourth quarter of the fiscal year covered by this Annual Report on Form 10-K submitted to a vote of security holders, through the solicitation of proxies or otherwise. 7 9 P A R T II ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS. The shares of common stock, $1.25 par value, of the Company are traded on the New York Stock Exchange under the symbol DAN. At November 30, 1994, the approximate number of holders of record of shares of common stock of the Company was 1,372. The following table sets forth for each quarterly period during the fiscal years ended September 30, 1994 and 1993 (i) the high and low sales prices of shares of common stock of the Company and (ii) the amount of cash dividends per share paid on the common stock of the Company. Such dividends were declared and paid on a quarterly basis.
PRICE OF COMMON DIVIDENDS STOCK PAID ----------------- --------- HIGH LOW ------ ------ Fiscal 1994 Quarter Ended: December 31, 1993. . . . . . . . . . . . . $15 7/8 $12 3/8 $.045 March 31, 1994 . . . . . . . . . . . . . . 13 5/8 10 1/2 .045 June 30, 1994. . . . . . . . . . . . . . . 12 3/8 10 3/8 .045 September 30, 1994 . . . . . . . . . . . . 12 1/2 9 7/8 .045 Fiscal 1993 Quarter Ended: December 31, 1992. . . . . . . . . . . . . 12 1/4 10 1/2 .045 March 31, 1993 . . . . . . . . . . . . . . 14 1/4 10 3/4 .045 June 30, 1993. . . . . . . . . . . . . . . 14 1/8 12 1/4 .045 September 30, 1993 . . . . . . . . . . . . 15 3/4 13 1/4 .045
The Company is authorized by its Certificate of Incorporation to issue up to 1,000,000 shares of serial preferred stock, $1 par value, but no shares of serial preferred stock of the Company have been issued. Subject to the rights of holders of serial preferred stock, the holders of shares of common stock of the Company are entitled to receive dividends when and as declared by the Board of Directors of the Company out of funds legally available therefor. The Company has paid cash dividends on its common stock during each year since 1948. The Company's future dividend policy with respect to its common stock, including the frequency, type and amount of dividends, if any, will be determined by its Board of Directors in light of its results of operations, its cash flow, its anticipated capital requirements, possible future issuances of serial preferred stock and the restrictions as to payment of dividends contained in instruments pursuant to which the Company has issued long-term debt. (See NOTE 9 of NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.) 8 10 ITEM 6. SELECTED FINANCIAL DATA.
YEAR ENDED SEPTEMBER 30, ---------------------------------------------------- 1994 1993 1992 1991 1990 -------- -------- -------- -------- -------- (in thousands except per share data) Revenues . . . . . . . . .$203,766 $180,249 $210,362 $201,744 $170,558 Net Income (Loss). . . . . 1,324 5,025 8,373 (1,969) 8,112 Total Assets . . . . . . . 187,337 178,068 177,079 192,091 155,827 Long-Term Debt . . . . . . 11,429 14,286 17,143 20,000 23,600 Earnings (Loss) per Share. .11 .42 .70 (.18) .78 Cash Dividends per Share . .18 .18 .18 .18 .18 Average Shares Outstanding 12,030 11,991 11,960 10,925 10,372
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. RESULTS OF OPERATIONS OVERVIEW Revenues for the fiscal year ended September 30, 1994 were $203,766,000 compared to $180,249,000 in fiscal 1993. Net income was $1,324,000, or $.11 per share, compared to $5,025,000, or $.42 per share, last year. The Company's Flow Measurement segment, which consists of meters, electronic instruments and engineered systems, reported higher revenues and earnings for fiscal 1994 compared to a year ago. The Flow Measurement segment serves primarily worldwide natural gas markets. The Energy Products segment, which consists of valves, industrial fasteners and energy recovery equipment, reported lower revenues and earnings for fiscal 1994 compared to last year. The Energy Products segment serves primarily the domestic crude oil markets. FISCAL 1994 VS. FISCAL 1993 Consolidated revenues increased 13% to $203,766,000 for fiscal 1994, from $180,249,000 for fiscal 1993. The Flow Measurement segment posted a 32% increase in revenues to $145,657,000 for the current year, from $110,009,000 for last year. Sales of flow measurement systems, which comprised 37% and 23% of this segment's revenues in the respective periods, increased significantly in the more recent period due primarily to construction of two gas metering stations destined for the North Sea. Sales of flow measurement products increased eight percent, reflecting increased demand for the Company's metering and electronic products, primarily in foreign markets. The Energy Products segment experienced a 17% decline in revenues to $57,739,000 for the current year, compared to $69,424,000 for last year. Sales of pipeline valves, which comprised approximately one-half of this segment's revenues in the respective periods, decreased due to a more competitive worldwide market. 9 11 Consolidated backlog at September 30, 1994, was approximately $33,400,000, compared to $72,200,000 a year ago. The decline in backlog is due to inclusion in the prior year of an unusually large order for a flow measurement system in the amount of approximately $23,000,000. The consolidated gross profit margin declined to 32% of revenues for fiscal 1994, compared to 38% of revenues for fiscal 1993. The gross profit margin in the Flow Measurement segment declined seven percentage points to 35% of revenues primarily due to a shift in product mix towards sales of flow measurement systems, which earn lower margins than sales of flow measurement products. The gross profit margin in the Energy Products segment declined seven percentage points to 23% of revenues primarily as a result of current year pricing pressures for pipeline valve and fastener products and declines in operational efficiencies at both the valve and fastener operations. Consolidated selling, general and administrative expenses increased to $57,026,000 for fiscal 1994, from $52,592,000 for fiscal 1993. However, these expenses, as a percentage of revenues, declined slightly between the two periods. Within the Flow Measurement segment, selling expenses declined as a percentage of revenues due to the change in product mix towards sales of flow measurement systems, which have lower sales commissions than sales of flow measurement products. General and administrative expenses also declined as a percentage of revenues, resulting from the significant increase in sales. The Energy Products segment's expenses increased as a percentage of revenues since certain of these expenses are fixed and do not decrease proportionately with sales. Corporate expenses increased 66% to $8,273,000 primarily due to reductions of accruals in fiscal 1993 relating to settled litigation. Research and development expenses decreased 23% to $4,094,000 for fiscal 1994, compared to $5,343,000 for fiscal 1993, primarily due to completion of certain electronics projects. Consolidated depreciation and amortization expense increased 14% to $7,483,000 for fiscal 1994 due to capital expenditures in fiscal 1993 in both the Flow Measurement and Energy Products segments. Consolidated interest expense decreased eight percent to $1,927,000 for fiscal 1994 due to lower long-term debt levels, partially offset by increased short-term borrowing levels. The effective tax rate for fiscal 1994 of 38% is consistent with the effective tax rate in fiscal 1993. Effective October 1, 1993, the Company adopted the Financial Accounting Standards Board's Statement No. 109, "Accounting for Income Taxes" ("FAS 109"), changing the method of determining reported income tax expense. Financial statements for prior years have not been restated and the cumulative effect of the accounting change was not material. (See NOTE 8 of NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.) 10 12 FISCAL 1993 VS. FISCAL 1992 Consolidated revenues decreased 14% to $180,249,000 for fiscal 1993, from $210,362,000 for fiscal 1992. The Flow Measurement segment experienced a 10% decline in revenues to $110,009,000 for fiscal 1993. Sales of flow measurement products, which comprised approximately three-fourths of this segment's sales in both fiscal 1993 and 1992, decreased $5,206,000 due to the severe slowdown in the domestic oil and gas markets. Sales of flow measurement systems, which accounted for approximately 25% of this segment's sales in both fiscal 1993 and 1992, decreased $6,492,000. This decrease can be attributed to a temporary decline in volume at the Company's U.K. subsidiary and the strengthening of the U.S. dollar against the British pound. The Energy Products segment experienced a 21% decline in revenues to $69,424,000 for fiscal 1993. Sales of pipeline valve products, which comprised approximately half of this segment's sales in fiscal 1993 and 1992, decreased $9,832,000 as a result of comparison to fiscal 1992 which included an unusually large international order. Sales of fasteners and related products, which accounted for approximately one-third of this segment's sales in both fiscal 1993 and 1992, decreased $3,450,000 due primarily to the severe slowdown in the domestic oil and gas markets. The consolidated gross profit margin remained flat at 38% of revenues for fiscal 1993 and 1992. The gross profit margin in both the Flow Measurement and Energy Products segments remained unchanged at 42% and 30% of revenues, respectively. Consolidated selling, general and administrative expenses decreased 10% to $52,592,000 for fiscal 1993, compared to $58,408,000 for fiscal 1992. The Flow Measurement segment's expenses decreased 8% to $31,488,000 and the Energy Products segment's expenses decreased 4% to $16,119,000. Corporate expenses decreased 33% to $4,985,000 due primarily to the realization of $1,500,000 pretax income from an insurance settlement. This settlement was a reimbursement of litigation expenses and defense costs incurred in prior years. Consolidated selling, general and administrative expenses, however, increased as a percentage of sales since certain of these expenses are fixed and do not decrease proportionately with revenues. Consolidated interest expense declined 13% to $2,088,000 for fiscal 1993 as a result of the retirement of debt. The effective tax rate of approximately 38% for fiscal 1993 is greater than the U.S. statutory rate primarily due to losses at the Company's German operation for which no tax benefits are currently recognized. IMPACT OF INFLATION An effect of inflation is to increase the prices of labor and raw materials used to manufacture the Company's products, which may require periodic increases in the prices for those products to maintain gross profit margins. Although this principle impacts most manufacturers, management does not consider the Company to have any unique difficulty in managing the effects of inflation on the Company's business. With respect to the effect of inflation on reported income, 11 13 the Company applies the LIFO method to a majority of its inventories to account for production costs. LIQUIDITY AND CAPITAL RESOURCES At September 30, 1994, the Company's working capital balance was $65,990,000, compared to $67,209,000 at September 30, 1993. Although the Company's working capital position decreased slightly between the two periods, its cash balance declined significantly to $2,520,000 at September 30, 1994, from $23,220,000 at September 30, 1993. The decrease in cash was due to capital expenditures, the funding of operational activities, payments on long-term debt and payments of dividends. Receivables, inventories and costs in excess of billings on contracts in progress increased an aggregate of $19,743,000, consistent with the increase in revenues in the Flow Measurement segment. The Company recorded a current deferred tax asset, in the amount of $5,126,000 at September 30, 1994, in connection with the implementation of FAS 109. (See NOTE 8 of NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.) Working capital at September 30, 1994, included $45,314,000 of inventory, which is not as liquid as other current assets. Since April 1994, the Company has relied upon short-term borrowings under its bank lines of credit to supplement its working capital and other cash requirements. At September 30, 1994, the Company had uncommitted short- term lines of credit aggregating approximately $40,000,000. As of September 30, 1994 and December 19, 1994, borrowings under these lines were $5,900,000 and $13,550,000, respectively, at weighted average interest rates of 5.54% and 6.3%, respectively. While the Company expects its borrowing requirements to generally increase in fiscal 1995 over present levels, the timing of one or a few major expenditures or receipts may affect the level of borrowings at a particular point in time. The Company considers its financial position to be strong, with a working capital ratio of 2.4 to 1.0 and debt to total capitalization of 14%. The Company believes that its current financial position and available lines of credit will provide ample sources of funds to meet foreseeable requirements. The Company anticipates capital expenditures in fiscal 1995 of approximately $6,000,000, compared to $13,631,000 in fiscal 1994 and $11,793,000 in fiscal 1993. Most of the anticipated capital expenditures for fiscal 1995 are not the subject of firm commitments, and the Company may modify its plans depending upon future results of operations and other factors. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. The financial statements required to be filed under this item are presented on pages 19 through 36 of this report, and the supplementary financial information required to be filed under this item is presented in NOTE 14 of NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. Such financial statements are hereby incorporated by reference under this Item 8. 12 14 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. During the twenty-four months prior to September 30, 1994, the Company did not file a Form 8-K which reports a change of accountants or disagreement with its accountants on any matter of accounting principles, practices or financial statement disclosure. P A R T III ITEMS 10 TO 13 INCLUSIVE. The information contained under the headings "Election of Directors", "Company Executive and Subsidiary Officers", "Executive Compensation", "Certain Relationships and Related Transactions" and "Principal Stockholders" in the Company's Proxy Statement for its Annual Meeting of Stockholders proposed to be held February 2, 1995, which Proxy Statement shall be filed within 120 days of the end of the Company's fiscal year, is hereby incorporated by reference herein. 13 15 P A R T IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K. (a) DOCUMENTS FILED AS A PART OF THIS REPORT 1. Financial Statements
Page ---- Report of independent accountants . . . . . . . . . . . . . 18 Consolidated balance sheet at September 30, 1994 and 1993. . 19 Consolidated statement of operations for the years ended September 30, 1994, 1993 and 1992 . . . . . . . . . . . 20 Consolidated statement of stockholders' equity for the years ended September 30, 1994, 1993 and 1992. . . . . . 21 Consolidated statement of cash flows for the years ended September 30, 1994, 1993 and 1992. . . . . . . . . 22 Notes to consolidated financial statements . . . . . . . . 23 - 36
2. Financial Statement Schedules V - Property, plant and equipment . . . . . . . . . . . . 37 VI - Accumulated depreciation of property, plant and equipment . . . . . . . . . . . . . . . 38 IX - Short-term borrowings . . . . . . . . . . . . . . . . 39
All other schedules and financial statements are omitted because they are not applicable or the required information is shown in the financial statements or notes thereto listed above in Item 14(a) 1. 3. Exhibits
Exhibit Number Description - ------ ----------- 2.1 - Plan and Agreement of Merger dated as of January 22, 1988, by and between Daniel Industries, Inc., a Texas corporation ("Daniel Texas"), and Daniel Industries, Inc., a Delaware corporation (the "Company"), filed as Exhibit 2.1 to the Company's Registration of Securities of Certain Successor Issuers on Form 8-B, and hereby incorporated by reference herein. 3.1 - Certificate of Incorporation of the Company, filed as Exhibit 3.1 to the Company's Registration of Securities of Certain Successor Issuers on Form 8-B dated May 5, 1988, and hereby incorporated by reference herein. 3.2 - Bylaws of the Company, as amended through February 25, 1994. 3.3 - Certificate of Designation, Powers, Preferences and Rights of Series A Junior Participating Preferred Stock filed as Exhibit 3.3 in the
14 16 Company's Amendment to Application or Report on Form 8, and hereby incorporated by reference herein. 4.1 - Note Purchase Agreement dated as of December 5, 1988, between the Company and The Variable Annuity Life Insurance Company, The Mutual Benefit Life Insurance Company, MONY Life Insurance Company of America and MONY Legacy Life Insurance Company (including the form of the Company's Senior Notes in the aggregate in the principal amount of $20,000,000) filed as Exhibit 4.3 to the Company's Annual Report on Form 10-K for the year ended September 30, 1988, and hereby incorporated by reference herein. 4.2 - Rights Agreement dated as of May 31, 1990, between the Company and Wachovia Bank and Trust Company, N.A., as Rights Agent, filed as Exhibit 1 to the Company's Registration of Certain Classes of Securities on Form 8-A filed June 5, 1990, and hereby incorporated by reference herein. 4.3 - Certificate of Designation, Powers, Preferences and Rights of Series A Junior Participating Preferred Stock (included as Exhibit 3.3 hereto). 10.1 - Description of the Company's key employees' bonus arrangement filed as Exhibit 10.1 in the Company's Amendment to Application or Report on Form 8, and hereby incorporated by reference herein. 10.2 - 1977 Stock Option Plan, as amended and restated on December 16, 1993. 10.3 - 1981 Stock Option Plan, as amended and restated on December 31, 1986, filed as Exhibit 19.2 to Daniel Texas's Quarterly Report on Form 10-Q for the quarter ended December 31, 1986, and hereby incorporated by reference herein. 10.4 - Form of Director's Stock Option Agreements dated October 9, 1986, between Daniel Texas and the several non-employee directors, filed as Exhibit 19.1 to Daniel Texas's Quarterly Report on Form 10-Q for the quarter ended March 31, 1987, and hereby incorporated by reference herein. 10.5 - Form of Agreement dated as of February 9, 1984, Amending and Restating Employment Agreement between Daniel Texas and Each of W. A. Griffin and H. D. Morrison, Jr. filed as Exhibit 10.5 in the Company's Amendment to Application or Report on Form 8, and hereby incorporated by reference herein. 10.6 - Deferred Compensation Agreement for Employees effective as of October 31, 1986, filed as Exhibit 19.3 to Daniel Texas's Quarterly Report on Form 10-Q for the quarter ended December 31, 1986, and hereby incorporated by reference herein.
15 17 10.7 - Agreement Amending Amended and Restated Director's Stock Option Agreement between the Company and Gibson Gayle, Jr. filed as Exhibit 19.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1991, and hereby incorporated by reference herein. 10.8 - Agreement Amending Amended and Restated Director's Stock Option Agreement between the Company and each of Ronald C. Lassiter, William C. Morris, Joseph L. Parrish, Richard L. O'Shields and James R. Whatley, filed as exhibit 10.9 to the Company's Annual Report on Form 10-K for the year ended September 30, 1991, and hereby incorporated by reference herein. 10.9 - Agreement amending Director's Stock Option Agreement between the Company and Leo E. Linbeck, Jr. filed as Exhibit 10.10 to the Company's Annual Report on Form 10-K for the year ended September 30, 1991, and hereby incorporated by reference herein. 21 - Subsidiaries of the Company. 23 - Consent of Independent Accountants. 27 - Financial data schedule.
(b) REPORTS ON FORM 8-K The Company did not file any reports on Form 8-K during the fourth quarter of its fiscal year ended September 30, 1994. 16 18 SIGNATURES PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED. DANIEL INDUSTRIES, INC. (Registrant) DATE: DECEMBER 16, 1994 BY W. A. GRIFFIN W. A. Griffin CHAIRMAN OF THE BOARD PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE REGISTRANT AND IN THE CAPACITIES AND ON THE DATES INDICATED.
SIGNATURE TITLE DATE --------- ----- ---- W. A. GRIFFIN Chairman of the Board December 16, 1994 - ------------------------------ and a Director (W. A. Griffin) (Chief Executive Officer) W. A. GRIFFIN, III President and a Director December 16, 1994 - ------------------------------ (Chief Operating Officer) (W. A. Griffin, III) HENRY G. SCHOPFER, III Vice President, Finance December 16, 1994 - ------------------------------ (Henry G. Schopfer, III) MICHAEL R. YELLIN Vice President, Secretary December 16, 1994 - ------------------------------ and Treasurer (Michael R. Yellin) RALPH H. CLEMONS, JR. Director December 16, 1994 - ------------------------------ (Ralph H. Clemons, Jr.) RICHARD L. O'SHIELDS Director December 16, 1994 - ------------------------------ (Richard L. O'Shields) WILLIAM C. MORRIS Director December 16, 1994 - ------------------------------ (William C. Morris) BRIAN E. O'NEILL Director December 16, 1994 - ------------------------------ (Brian E. O'Neill) GIBSON GAYLE, JR. Director December 16, 1994 - ------------------------------ (Gibson Gayle, Jr.) RONALD C. LASSITER Director December 16, 1994 - ------------------------------ (Ronald C. Lassiter) LEO E. LINBECK, JR. Director December 16, 1994 - ------------------------------ (Leo E. Linbeck, Jr.)
17 19 REPORT OF INDEPENDENT ACCOUNTANTS TO THE BOARD OF DIRECTORS AND STOCKHOLDERS OF DANIEL INDUSTRIES, INC. In our opinion, the consolidated financial statements listed in the index appearing under Item 14(a) 1 and 2 on page 14 present fairly, in all material respects, the financial position of Daniel Industries, Inc. and its subsidiaries at September 30, 1994 and 1993, and the results of their operations and their cash flows for each of the three years in the period ended September 30, 1994, in conformity with generally accepted accounting principles. These financial statements are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above. PRICE WATERHOUSE LLP Houston, Texas November 15, 1994 18 20 DANIEL INDUSTRIES, INC. CONSOLIDATED BALANCE SHEET ASSETS
September 30, ----------------------- 1994 1993 -------- -------- (in thousands) Current assets: Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . $ 2,520 $ 23,220 Receivables, net of reserve of $243 and $96 . . . . . . . . . . . . . . 38,146 33,105 Costs in excess . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,888 6,054 Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45,314 39,446 Deferred taxes on income . . . . . . . . . . . . . . . . . . . . . . . 5,126 Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,657 3,350 -------- -------- Total current assets . . . . . . . . . . . . . . . . . . . . . . . 111,651 105,175 Property, plant and equipment at cost, net . . . . . . . . . . . . . . . 69,796 64,477 Intangibles and other assets . . . . . . . . . . . . . . . . . . . . . . 5,890 8,416 -------- -------- $187,337 $178,068 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Notes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5,900 Current maturities of long-term debt . . . . . . . . . . . . . . . . . 2,857 $ 2,857 Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,946 17,395 Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,958 17,714 -------- -------- Total current liabilities . . . . . . . . . . . . . . . . . . . . 45,661 37,966 Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,429 14,286 Deferred taxes on income . . . . . . . . . . . . . . . . . . . . . . . . 8,367 4,766 -------- -------- Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . 65,457 57,018 -------- -------- Commitments and contingencies Stockholders' equity: Preferred stock, $1.00 par value, 1,000,000 shares authorized, 150,000 shares designated as Series A junior participating preferred stock, no shares issued or outstanding . . . . . . . . . . . . . . . . . . . . . . . . Common stock, $1.25 par value, 20,000,000 shares authorized, 12,032,470 and 12,026,450 shares issued . . . . . . . . . . . . . . . 15,041 15,033 Capital in excess of par value . . . . . . . . . . . . . . . . . . . . 89,675 89,564 Translation component . . . . . . . . . . . . . . . . . . . . . . . . . (2,061) (3,614) Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,225 20,067 -------- -------- Total stockholders' equity . . . . . . . . . . . . . . . . . . . . 121,880 121,050 -------- -------- $187,337 $178,068 ======== ========
The accompanying notes are an integral part of the financial statements. 19 21 DANIEL INDUSTRIES, INC. CONSOLIDATED STATEMENT OF OPERATIONS
Year Ended September 30, --------------------------------------- 1994 1993 1992 ---------- --------- --------- (in thousands except per share amounts) Revenues . . . . . . . . . . . . . . . . . . . . . . . . . $203,766 $180,249 $210,362 -------- -------- -------- Costs and expenses: Cost of goods sold . . . . . . . . . . . . . . . . . . . 138,599 112,144 131,112 Selling, general and administrative expenses . . . . . . . . . . . . . . . . . . . . . . . 57,026 52,592 58,408 Research and development expenses . . . . . . . . . . . . 4,094 5,343 5,474 Interest expense . . . . . . . . . . . . . . . . . . . . 1,927 2,088 2,412 -------- -------- -------- 201,646 172,167 197,406 -------- -------- -------- Income before income tax expense . . . . . . . . . . . . . 2,120 8,082 12,956 Income tax expense . . . . . . . . . . . . . . . . . . . . 796 3,057 4,583 -------- -------- -------- Net income . . . . . . . . . . . . . . . . . . . . . . . . $ 1,324 $ 5,025 $ 8,373 ======== ======== ======== Earnings per common share . . . . . . . . . . . . . . . . . $ .11 $ .42 $ .70 ======== ======== ========
The accompanying notes are an integral part of the financial statements. 20 22 DANIEL INDUSTRIES, INC. CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (IN THOUSANDS EXCEPT FOR SHARES)
Capital Common Stock in Excess -------------------- of Par Translation Retained Shares Amount Value Component Earnings Total ---------- -------- ------- --------- -------- -------- Balance at September 30, 1991 . 11,899,334 $14,874 $88,613 $(1,126) $10,982 $113,343 Net income . . . . . . . . . 8,373 8,373 Cash dividends . . . . . . . (2,154) (2,154) Exercise of stock options 69,653 87 391 478 Aggregate translation adjustment for the year . . 387 387 ---------- ------- ------- ------- ------- -------- Balance at September 30, 1992 . 11,968,987 14,961 89,004 (739) 17,201 120,427 Net income . . . . . . . . . 5,025 5,025 Cash dividends . . . . . . . (2,159) (2,159) Exercise of stock options, including tax benefits . . 57,463 72 560 632 Aggregate translation adjustment for the year . . (2,875) (2,875) ---------- ------- ------- ------- ------- -------- Balance at September 30, 1993 . 12,026,450 15,033 89,564 (3,614) 20,067 121,050 Net income . . . . . . . . . 1,324 1,324 Cash dividends . . . . . . . (2,166) (2,166) Exercise of stock options, including tax benefits . . 6,020 8 111 119 Aggregate translation adjustment for the year . . 1,553 1,553 ---------- ------- ------- ------- ------- -------- Balance at September 30, 1994 . 12,032,470 $15,041 $89,675 $(2,061) $19,225 $121,880 ========== ======= ======= ======= ======= ========
The accompanying notes are an integral part of the financial statements. 21 23 DANIEL INDUSTRIES, INC. CONSOLIDATED STATEMENT OF CASH FLOWS
Year Ended September 30, ---------------------------------- 1994 1993 1992 -------- -------- -------- (in thousands) Cash flows from operating activities: Net income . . . . . . . . . . . . . . . . . . . . . . . . $ 1,324 $ 5,025 $ 8,373 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization . . . . . . . . . . . . . 7,483 6,584 6,598 Deferred income taxes . . . . . . . . . . . . . . . . . (1,810) 468 5,205 Changes in operating assets and liabilities: Receivables . . . . . . . . . . . . . . . . . . . . . (5,041) 1,521 2,821 Inventories . . . . . . . . . . . . . . . . . . . . . (5,868) 1,122 6,395 Costs in excess . . . . . . . . . . . . . . . . . . . (8,834) (3,150) 2,444 Accounts payable and accrued liabilities. . . . . . . 2,079 4,698 (17,876)(a) Other assets/liabilities, net . . . . . . . . . . . . 1,223 (100)(a) 1,654 ------- ------- ------- Net cash provided by (used in) operating activities . . . . . (9,444) 16,168 15,614 ------- ------- ------- Cash flows from investing activities: Capital expenditures . . . . . . . . . . . . . . . . . . . (13,631) (11,793) (8,758) Acquisition and related costs . . . . . . . . . . . . . . . (4,931) Purchase of investment securities . . . . . . . . . . . . . (3,067) Investment in license agreement . . . . . . . . . . . . . . (2,667) Proceeds from sale of investment securities . . . . . . . . 1,000 Proceeds from sale of assets. . . . . . . . . . . . . . . . 304 375 1,203 ------- ------- ------- Net cash used in investing activities . . . . . . . . . . . . (12,327) (17,152) (12,486) ------- ------- ------- Cash flows from financing activities: Net borrowings on lines of credit . . . . . . . . . . . . . 5,900 Payments on long-term debt. . . . . . . . . . . . . . . . . (2,857) (2,857) (3,600) Cash dividends paid, $.18 per share . . . . . . . . . . . . (2,166) (2,159) (2,154) Activity under stock option plan . . . . . . . . . . . . . 119 632 478 ------- ------- ------- Net cash provided by (used in) financing activities . . . . . 996 (4,384) (5,276) ------- ------- ------- Effect of exchange rate changes on cash and cash equivalents. 75 (661) 166 ------- ------- ------- Decrease in cash and cash equivalents . . . . . . . . . . . . (20,700) (6,029) (1,982) Cash and cash equivalents, beginning of year. . . . . . . . . 23,220 29,249 31,231 ------- ------- ------- Cash and cash equivalents, end of year. . . . . . . . . . . . $ 2,520 $23,220 $29,249 ======= ======= ======= (a) Includes the effects of the litigation settlement. Cash payments for (refunds of) income taxes . . . . . . . . . $ 1,835 $ (199) $ 256 Cash payments for interest. . . . . . . . . . . . . . . . . . 2,022 2,136 2,477
The accompanying notes are an integral part of the financial statements. 22 24 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES PRINCIPLES OF CONSOLIDATION The consolidated financial statements include the accounts of the Company and its majority-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. TRANSLATION OF FOREIGN CURRENCIES Gains and losses resulting from balance sheet translation of foreign operations where a foreign currency is the functional currency are included as a separate component of stockholders' equity. Gains and losses resulting from balance sheet translation of foreign operations where the U. S. dollar is the functional currency are included in the consolidated results of operations. FAIR VALUE OF FINANCIAL INSTRUMENTS Management has determined that the fair value of the Company's financial instruments is equivalent to the carrying amount of such instruments as presented or disclosed in the financial statements. CASH AND CASH EQUIVALENTS The Company considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents. ACCOUNTS RECEIVABLE A substantial portion of the Company's trade receivables are with customers primarily in the petroleum industry. REVENUE RECOGNITION Sales and cost of goods sold of large systems contracts are recorded using the percentage-of-completion method, based on the ratio of costs incurred to date to total estimated costs on each contract. Losses, if any, to be incurred on contracts in progress are charged to income in full as soon as they become apparent, and estimated warranty costs are accrued as revenues are earned. Sales and cost of goods sold of products are recorded when the customer takes title to the products. INVENTORIES Inventories are valued at the lower of cost or market. Cost, which includes material, labor and overhead, is determined principally by the last-in, first-out (LIFO) method and by the average cost method. INVESTMENTS Marketable securities are carried at the lower of aggregate cost or market. Realized gains and losses on the sale of investments are recognized in income. The Company has not elected early adoption of the Financial Accounting Standards Board Statement No. 115, "Accounting for Certain Investments in Debt and Equity Securities" effective for fiscal years beginning after December 15, 1993, which is the Company's year ended September 30, 1995. The Company believes 23 25 adoption of this Statement will not materially affect the Company's financial statements. PROPERTY, PLANT AND EQUIPMENT Depreciation of plant and equipment is provided over the estimated useful lives of the various classes of assets using the straight-line method. Maintenance and repairs are charged to expense. Renewals and betterments are capitalized. On retirement or sale of assets, the cost of such assets and accumulated depreciation are removed from the accounts and the gain or loss, if any, is credited or charged to income. INTANGIBLE ASSETS Goodwill, representing the excess cost of purchased subsidiaries over the fair value of net assets acquired, is amortized using the straight-line method over a 40-year period. Other intangible assets are amortized using the straight-line method over their estimated useful lives, none of which exceeds 12 years. At September 30, 1994 and 1993, accumulated amortization on intangibles was approximately $2,600,000 and $2,400,000, respectively. INCOME TAXES Prior to October 1, 1993, the Company provided deferred income taxes for timing differences arising when revenues or expenses were recognized in different periods for financial reporting and tax purposes. Effective October 1, 1993, the Company adopted the Financial Accounting Standards Board Statement No. 109, "Accounting for Income Taxes" ("FAS 109"). The statement requires the use of an asset and liability approach for financial accounting and reporting for income taxes. Information on the adoption of FAS 109 is set forth in NOTE 8 of NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. The Company does not provide for U.S. income taxes on foreign subsidiaries' undistributed earnings intended to be permanently reinvested in foreign operations. EARNINGS (LOSS) AND DIVIDENDS PER SHARE Earnings (loss) per share are computed based on the average number of shares outstanding during each year. Dividends per share are stated at the current equivalent of the number of shares outstanding at the time the dividends were declared. Stock options outstanding have not been included in the computation of earnings per share since the effect is not significant. NOTE 2 - ACQUISITION As previously reported in the Company's Annual Report on Form 10-K for the year ended September 30, 1993, the Company acquired, effective January 1, 1992, from an agency of the German government, a facility in Potsdam-Babelsberg in the former German Democratic Republic ("GDR"). The facility manufactures oval gear meters and will produce other Company products. Acquisition and related costs, aggregating approximately $4,900,000, are recorded primarily in property, plant and equipment. Registration of legal title in the Company's name was completed in June 1994. 24 26 In connection with the Company's scheduled expenditures and committed employment level at the German facility, the Company received formal notification that a government subsidy of approximately $1,650,000 was granted. Approximately $411,000 and $535,000 of this subsidy has been recognized in the Company's fiscal 1994 and 1993 results of operations, respectively. NOTE 3 - CONTRACTS IN PROGRESS Information with respect to contracts in progress accounted for under the percentage-of-completion method is as follows:
SEPTEMBER 30, ----------------- 1994 1993 ------ ------- (IN THOUSANDS) Cost and estimated earnings on contracts in progress $47,017 $17,360 Less billings applicable thereto . . . . . . . . . . 32,368 11,876 ------- ------- $14,649 $ 5,484 ======= ======= Presented in accompanying financial statements as: Costs in excess . . . . . . . . . . . . . . . . . $14,888 $ 6,054 Billings in excess (included in accrued expenses) . . . . . . . . . . . . . . . 239 570 ------- ------- $14,649 $ 5,484 ======= =======
NOTE 4 - INVENTORIES
SEPTEMBER 30, ------------------ 1994 1993 ------- ------- (IN THOUSANDS) Inventories by valuation method are as follows: Last-in, first-out (LIFO) . . . . . . . . . . . . $25,286 $21,731 Average cost . . . . . . . . . . . . . . . . . . 20,028 17,715 ------- ------- $45,314 $39,446 ======= ======= Major components of inventories include: Raw materials . . . . . . . . . . . . . . . . . . $16,412 $14,193 Work in process . . . . . . . . . . . . . . . . . 8,854 9,663 Finished goods. . . . . . . . . . . . . . . . . . 27,490 22,377 ------- ------- 52,756 46,233 Less LIFO reserve . . . . . . . . . . . . . . . . 7,442 6,787 ------- ------- $45,314 $39,446 ======= =======
Inventory reduction in fiscal 1993 resulted in liquidation of LIFO inventory layers carried at lower costs prevailing in prior periods as compared with current costs, the effect of which increased earnings by approximately $.02 per share. 25 27 NOTE 5 - PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment and related accumulated depreciation are summarized as follows:
SEPTEMBER 30, ESTIMATED -------------------- USEFUL LIFE 1994 1993 IN YEARS -------- -------- ----------- (IN THOUSANDS) Land . . . . . . . . . . . . . . . . $ 7,411 $ 7,745 Buildings. . . . . . . . . . . . . . 34,881 30,835 10-45 Machinery and equipment. . . . . . . 48,975 45,800 3-12 Computer and peripheral equipment. . 8,603 7,740 3-5 Office furniture and equipment . . . 6,022 5,519 3-10 Automotive equipment . . . . . . . . 1,719 1,765 3-4 Other transportation equipment . . . 4,183 4,183 8-15 Other. . . . . . . . . . . . . . . . 13,308 11,085 5-20 ------- -------- 125,102 114,672 Less accumulated depreciation. . . . 55,306 50,195 ------- -------- $69,796 $ 64,477 ======= ========
NOTE 6 - NOTES PAYABLE At September 30, 1994, the Company had uncommitted short-term lines of credit aggregating approximately $40,000,000. Loans under these lines may be made in such amounts and at such maturities and interest rates as are offered by the banks and accepted by the Company at the time of each borrowing. At September 30, 1994, borrowings under these lines were $5,900,000. These borrowings were at a weighted average interest rate of 5.54% and were due at varying dates through October 1994. NOTE 7 - ACCRUED EXPENSES Accrued expenses are summarized as follows:
SEPTEMBER 30, ------------------- 1994 1993 -------- -------- (IN THOUSANDS) Other accrued expenses . . . . . . . . . . . . . . . $14,873 $12,711 Accrued taxes other than on income . . . . . . . . . 2,809 2,588 Salaries and wages . . . . . . . . . . . . . . . . . 2,276 2,415 ------- ------- $19,958 $17,714 ======= =======
26 28 NOTE 8 - INCOME TAXES The Company adopted the Financial Accounting Standards Board's Statement No. 109, "Accounting for Income Taxes" ("FAS 109") effective October 1, 1993. Financial statements for prior years have not been restated. The cumulative effect of the accounting change was not material. Adoption of FAS 109 resulted in the reclassification of certain current deferred tax assets which had previously been offset against non-current deferred tax liabilities. Deferred tax liabilities (assets) are as follows:
SEPTEMBER 30, 1994 ------------------ (IN THOUSANDS) Gross deferred tax liabilities: Excess book over tax basis of property & equipment $ 9,144 Partnership income 312 Property tax accrual 291 Other 1,502 ------- 11,249 ------- Gross deferred tax assets: Operating loss carryforward from subsidiary (3,648) Excess tax over book basis of inventories (2,551) Inventory reserves (699) Intercompany transfer pricing (687) Insurance reserves (673) Other reserves (479) Loss on sales of subsidiaries (408) Vacation accruals (270) Alternative minimum tax credit carryforward (263) Other (750) ------- (10,428) ------- Deferred tax asset valuation allowance 2,420 ------- $ 3,241 =======
Through September 30, 1994, the Company's German subsidiary has generated a tax loss carryforward of $6,993,000 which may be carried forward indefinitely. The valuation allowance relates to the amount of the German loss carryforward which may not be realized. 27 29 Income tax expense (benefit) is as follows:
YEAR ENDED SEPTEMBER 30, ----------------------------- 1994 1993 1992 ------- ------- ------- (IN THOUSANDS) Federal: Current . . . . . . . . . . . . . . . . $ 1,327 $1,758 $(2,023) Deferred. . . . . . . . . . . . . . . . (1,486) 281 4,938 Foreign: Current . . . . . . . . . . . . . . . . 1,259 782 1,047 Deferred. . . . . . . . . . . . . . . . (359) 187 267 State and local: . . . . . . . . . . . . . . 55 49 354 ------- ------ ------- Income tax expense. . . . . . . . . . . $ 796 $3,057 $ 4,583 ======= ====== =======
The 1992 deferred tax expense of $5,205,000 results principally from realization of the deferred tax benefit of certain expenses associated with a litigation settlement recognized in 1991 for financial reporting purposes. The components of income before income tax expense (benefit) are:
YEAR ENDED SEPTEMBER 30, ----------------------------- 1994 1993 1992 ------- ------- ------- (IN THOUSANDS) Domestic. . . . . . . . . . . . . . . . . . . . $ 421 $8,339 $10,829 Foreign . . . . . . . . . . . . . . . . . . . . 1,699 (257) 2,127 ------ ------ ------- $2,120 $8,082 $12,956 ====== ====== =======
The cumulative undistributed earnings of foreign subsidiaries, on which U.S. taxes have not been provided, were approximately $12,700,000, $10,100,000 and $8,800,000 at September 30, 1994, 1993 and 1992, respectively. The U.S. income tax effect associated with the repatriation of these earnings may be offset by foreign tax credits. 28 30 Components of the difference between the income tax expense (benefit) computed at the U.S. statutory income tax rate and the income tax expense (benefit) are as follows:
YEAR ENDED SEPTEMBER 30, --------------------------- 1994 1993 1992 ------ ------ ------- (IN THOUSANDS) Tax expense of income at 34% . . . . . . . . . . $ 721 $2,748 $4,405 Foreign Sales Corporation (FSC) provisions . . . (373) (384) (494) Loss of foreign subsidiary with no tax benefit . . . . . . . . . . . . . . . . . 172 737 466 Goodwill amortization. . . . . . . . . . . . . . 40 41 41 Tax exempt interest. . . . . . . . . . . . . . . (61) (179) (215) Non-deductible expenses. . . . . . . . . . . . . 197 156 187 State income taxes . . . . . . . . . . . . . . . (5) 32 218 Other tax effects related to foreign operations. 150 (112) 109 Other, net . . . . . . . . . . . . . . . . . . . (45) 18 (134) ----- ------ ------ Income tax expense . . . . . . . . . . . . $ 796 $3,057 $4,583 ===== ====== ====== Effective tax expense rate . . . . . . . . . 38% 38% 35% ===== ====== ======
NOTE 9 - LONG-TERM DEBT Long-term debt includes the following:
SEPTEMBER 30, ------------------ 1994 1993 ------- ------- (IN THOUSANDS) Payable to four insurance companies (unsecured); 11.5%; principal payable in annual installments of $2,857,140; interest payable semi-annually . . . . . $14,286 $17,143 Less portion due within one year. . . . . . . . . . . . 2,857 2,857 ------- ------- $11,429 $14,286 ======= =======
In December 1988, four insurance companies purchased an aggregate of $20,000,000 of the Company's unsecured 11.5% Senior Notes due 1998. Prepayment of amounts in excess of scheduled maturities are subject to certain restrictions and would be at a premium. The note purchase agreement related to the sale of these notes requires the maintenance of a specified current ratio and a specified amount of net worth and also includes restrictive covenants relating to additional indebtedness and leases, creation of liens, payment of dividends, mergers and disposition of assets. Retained earnings was unrestricted as to the payment of dividends at September 30, 1994. 29 31 Long-term debt at September 30, 1994, matures as follows:
AMOUNT YEAR ENDING -------------- SEPTEMBER 30, (IN THOUSANDS) ------------- 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,857 1996 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,857 1997 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,857 1998 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,857 1999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,858
NOTE 10 - STOCKHOLDERS' EQUITY, STOCK OPTIONS AND PROFIT SHARING AND SAVINGS PLAN On May 31, 1990, the Board of Directors declared a dividend of one Preferred Share Purchase Right (the "Right") for each outstanding share of common stock. Under certain conditions, each Right may be exercised to purchase one one-hundredth share of a new series of junior participating preferred stock at an exercise price of $60, subject to adjustment. The Rights may only be exercised 10 days following a public announcement that a third party has acquired 20% or more of the outstanding common shares or 10 days following the commencement of, or announcement of an intention to make a tender offer or exchange offer, the consummation of which would result in the beneficial ownership by a third party of 20% or more of such outstanding common shares. The Rights, which do not have voting rights, expire May 31, 2000, and at the Company's option, may be redeemed by the Company prior to expiration for $.01 per Right. In the event that the Company is acquired in a merger or other business combination or 50% or more of its consolidated assets or earning power are sold, provision shall be made so that each holder of a Right shall have the right to receive, upon exercise thereof at the then current exercise price, that number of shares of common stock of the surviving company which at the time of such transaction would have a market value of two times the exercise price of the Right. During fiscal 1994, the Company had options outstanding under two stock option plans and under separate stock option agreements. A description of the plans and agreements follows: STOCK OPTION PLANS In 1977, the Board of Directors of the Company adopted a non-qualified stock option plan and reserved 100,000 shares of common stock for issuance upon the exercise of options granted to executives and other key personnel. In December 1986, each option holder was granted a new stock option subject to relinquishment of previously granted options. In 1993 and 1989, the Board of Directors amended the non-qualified stock option plan and reserved 400,000 and 250,000 shares of common stock, respectively, for issuance upon the exercise of options granted to executives and other key personnel. Approval of the stockholders was obtained. 30 32 In 1981, the Board of Directors of the Company adopted an incentive stock option plan and reserved 300,000 shares of common stock for issuance upon the exercise of options granted to executives and other key personnel. In 1984, the Board of Directors amended the incentive stock option plan and reserved an additional 100,000 shares of common stock for issuance upon the exercise of options granted to executives and other key personnel. Effective December 31, 1986, as a result of changes in the federal income tax treatment of incentive stock options, the Board of Directors amended and restated the 1981 Plan to provide for the granting of options not intended to qualify as incentive stock options. In addition, in December 1986, each option holder was granted a new stock option subject to the relinquishment of previously granted options. For each of these plans, a committee of the Board of Directors determines which eligible employees will receive options, the times at which such options are to be granted, the number of shares subject to such options and the exercise price and duration of such options. In the case of the 1981 Plan, optionees may, with the committee's permission, exercise options using previously-owned shares of common stock, in lieu of cash, to satisfy all or part of the exercise price. Options that have been granted under the 1977 Plan are for a ten-year term and are exercisable either from the date of grant or at the end of the first year of the term. The fair market value of the shares on the dates the options outstanding at September 30, 1994, were granted was approximately $5,000,000. At September 30, 1994 and 1993, there were 461,376 and 38,876 shares (adjusted for stock dividends and a stock split) reserved for future options that may be granted under the 1977 Plan. Under the provisions of the 1981 Plan, the exercise price may not be less than the fair market value of the shares on the date of grant. Options that have been granted are for a ten-year term and are exercisable either from the date of grant or at the end of the first year of the term. The fair market value of the shares on the dates the options outstanding at September 30, 1994, were granted was approximately $2,000,000. At September 30, 1994 and 1993, there were no shares reserved for future options that may be granted under the 1981 Plan. NON-EMPLOYEE DIRECTORS' STOCK OPTION AGREEMENTS In February 1986, the Board of Directors of the Company granted to non-employee members of the Board of Directors options to purchase 60,000 shares of common stock and reserved an additional 30,000 shares for future grants to non-employee Board members. The 1986 options were granted subject to both the relinquishment by the non-employee members of the Board of Directors of the December 1981 options granted to them and approval by shareholders of the Company, which was obtained in February 1987. In addition, the Board of Directors released from reservation 15,000 shares of common stock that were reserved in 1982 for grants of options to future non-employee directors of the Company. The Board of Directors determines which future non-employee directors will receive options and the terms of such options. Options are exercisable for six years from the date of grant. The fair market value of the shares on the date the options outstanding at September 30, 1994, were granted was approximately $100,000. At September 30, 1994 and 1993, there were 10,000 and 31 33 20,000 shares reserved for future options that may be granted to non-employee directors of the Company. When stock options are exercised, the par value of the shares issued is credited to the common stock account and the excess of the exercise price over such par value is credited to capital in excess of par value. Any tax benefits resulting from the exercise of options in excess of those included in income are credited to capital in excess of par value. Additional information regarding shares of the Company's common stock related to the Company's stock options is as follows:
Non-Employee 1977 1981 Directors' Plan Plan Agreements ------- ------- ---------- Outstanding, September 30, 1993 . . . 375,079 133,570 10,000 Cancelled. . . . . . . . . . . . . (22,500) Exercised. . . . . . . . . . . . . (6,020)(b) Granted. . . . . . . . . . . . . . 10,000 ------- ------- ------- Outstanding, September 30, 1994 . . . 352,579 (a) 127,550 (c) 20,000 (d) ======= ======= ======= Exercisable, September 30, 1994 . . . 352,579 127,550 20,000 ======= ======= =======
- ---------- (a) Options were granted in 1989 at $10.00 per share, in 1991 at $16.75 per share, in 1992 at $11.875 per share and in 1993 at $14.125 per share. (b) Options were exercised at $7.00 per share. (c) Options were granted in 1986 at $7.00 and $7.70 per share and in 1991 at $16.75 and $18.425 per share. (d) Options were granted in 1989 at $12.75 per share and in 1994 at $11.00 per share. PROFIT SHARING AND SAVINGS PLAN The Company and certain of its domestic subsidiaries have adopted a profit sharing and savings plan in which substantially all employees are eligible to participate. Annual contributions to the profit sharing portion of the plan are discretionary, and are determined by the Company's Board of Directors. Contributions to the savings portion of the plan are made on a monthly basis in an amount as required by the plan. Contributions accrued and expenses related to this plan were approximately $1,800,000, $1,300,000 and $1,200,000 for the years 1994, 1993 and 1992, respectively. NOTE 11 - COMMITMENTS AND CONTINGENCIES The Company is subject to legal proceedings and claims which arise in the ordinary course of business. In the opinion of management, the amount of ultimate liability with respect to these actions will not materially affect the financial position of the Company. Additionally, in the ordinary course of 32 34 business, the Company has issued standby letters of credit and bank guarantees as security for advances, progress payments and performance on long-term contracts and, as a result, is contingently liable in the amount of approximately $26,300,000 at September 30, 1994. NOTE 12 - QUARTERLY FINANCIAL INFORMATION (UNAUDITED) The following is a summary of unaudited quarterly financial data for fiscal 1994 and 1993:
NET EARNINGS GROSS INCOME (LOSS) REVENUES PROFIT (LOSS) PER SHARE -------- ------ ------ --------- (IN THOUSANDS EXCEPT PER SHARE AMOUNTS) Quarter Ended: December 31, 1993 . . . . $40,575 $14,647 $ (841) $(.07) March 31, 1994 . . . . . 48,632 15,830 120 .01 June 30, 1994 . . . . . . 56,239 16,947 477 .04 September 30, 1994 . . . 58,320 17,743 1,568 .13 Quarter Ended: December 31, 1992 . . . . $35,866 $14,458 $ (338) $(.03) March 31, 1993 . . . . . 43,112 17,534 1,194 .10 June 30, 1993 . . . . . . 50,009 18,182 1,805 .15 September 30, 1993 . . . 51,262 17,931 2,364 .20
During the fourth quarter of fiscal 1993, the Company realized $1,500,000 of pretax income from an insurance settlement. This settlement was a reimbursement of litigation expenses and defense costs incurred in prior years. There were no other unusual or infrequently occurring items or adjustments, other than normal recurring adjustments, in any of the quarters presented. NOTE 13 - INDUSTRY SEGMENTS The Company has two principal industry segments: Flow Measurement and Energy Products. The Flow Measurement segment manufactures and services products and systems used to measure rates of flow and accumulated volumes of fluids, primarily oil and natural gas. The Energy Products segment offers an array of products and services to the energy markets. Operations of this segment include the manufacture of pipeline valves used on both gas and liquid pipelines, the production of fasteners for use in oil, gas and process industries and energy recovery products. Intersegment transfers (primarily Energy Products to Flow Measurement) and transfers to other geographic areas (primarily U.S. to U.K.) are not significant to the operations of either segment or geographic area and are accounted for as transfers at cost on the following schedules. Segment operating income represents revenues less operating expenses and is not reduced for interest 33 35 expense, general corporate expenses and income taxes. Identifiable assets are those tangible and intangible assets that are identified with the operations of a particular industry segment or geographic area. INFORMATION ON INDUSTRY SEGMENTS (IN THOUSANDS)
OPERATING IDENTI- CAPITAL DEPRECIATION INCOME FIABLE EXPENDI- AND REVENUES (LOSS) ASSETS TURES AMORTIZATION -------- --------- ------ -------- ------------ FISCAL 1994 - ----------- Flow Measurement. . $145,657 $13,454 $117,388 $ 8,416 $3,986 Energy Products . . 57,739 (1,501) 54,193 5,002 2,588 -------- ------- -------- ------- ------ Subtotal. . . . . 203,396 11,953 171,581 13,418 6,574 Corporate . . . . . 370 (7,906) 15,756 213 909 Interest Expense. . (1,927) -------- ------- -------- ------- ------ Total . . . . . . $203,766 $ 2,120 $187,337 $13,631 $7,483 ======== ======= ======== ======= ====== FISCAL 1993 - ----------- Flow Measurement. . $110,009 $ 9,601 $ 97,909 $ 7,250 $3,561 Energy Products . . 69,424 4,747 50,454 3,879 2,236 -------- ------- -------- ------- ------ Subtotal. . . . . 179,433 14,348 148,363 11,129 5,797 Corporate . . . . . 816 (4,178)(a) 29,705 664 787 Interest Expense. . (2,088) -------- ------- -------- ------- ------ Total . . . . . . $180,249 $ 8,082 $178,068 $11,793 $6,584 ======== ======= ======== ======= ====== FISCAL 1992 - ----------- Flow Measurement. . $121,707 $12,201 $ 86,219 $ 3,852 $3,382 Energy Products . . 87,720 9,692 56,343 3,647 2,372 -------- ------- -------- ------- ------ Subtotal. . . . . 209,427 21,893 142,562 7,499 5,754 Corporate . . . . . 935 (6,525) 34,517 1,259 844 Interest Expense. . (2,412) -------- ------- -------- ------- ------ Total . . . . . . $210,362 $12,956 $177,079 $ 8,758 $6,598 ======== ======= ======== ======= ======
(a) Includes pretax income of $1,500 from an insurance settlement. 34 36 INFORMATION ON GEOGRAPHIC OPERATIONS (IN THOUSANDS)
UNITED STATES EUROPE CANADA CONSOLIDATED ------ ------ ------ ------------ FISCAL 1994 - ----------- Revenues . . . . . . . . . . . . . $134,904 $52,962 $15,530 $203,396 ======== ======= ======= ======== Operating income . . . . . . . . . $ 4,553 $ 2,476 $ 4,924 $ 11,953 ======== ======= ======= ======== Identifiable assets at September 30, 1994 . . . . . . . $116,514 $48,851 $ 6,216 $171,581 ======== ======= ======= ======== FISCAL 1993 - ----------- Revenues . . . . . . . . . . . . . $140,639 $29,133 $ 9,661 $179,433 ======== ======= ======= ======== Operating income . . . . . . . . . $ 10,724 $ 675 $ 2,949 $ 14,348 ======== ======= ======= ======== Identifiable assets at September 30, 1993 . . . . . . . $106,526 $36,807 $ 5,030 $148,363 ======== ======= ======= ======== FISCAL 1992 - ----------- Revenues . . . . . . . . . . . . . $165,501 $35,721 $ 8,205 $209,427 ======== ======= ======= ======== Operating income . . . . . . . . . $ 17,146 $ 2,502 $ 2,245 $ 21,893 ======== ======= ======= ======== Identifiable assets at September 30, 1992 . . . . . . . $106,856 $30,682 $ 5,024 $142,562 ======== ======= ======= ========
Included in United States revenues were export sales of $52,800,000, $55,500,000 and $69,900,000 in fiscal 1994, 1993 and 1992, respectively. These sales were primarily to Africa, the Far East, the Middle East, and South America. At September 30, 1994, 1993 and 1992, the Company's investment in consolidated foreign subsidiaries, primarily its U.K. subsidiary, approximated $40,200,000, $30,100,000 and $28,100,000, respectively. Foreign currency transaction gains and losses included in income were immaterial in fiscal 1994, 1993 and 1992. 35 37 NOTE 14 - SUPPLEMENTARY STATEMENT OF INCOME INFORMATION The following amounts were charged to costs and expenses:
YEAR ENDED SEPTEMBER 30, ---------------------------- 1994 1993 1992 ------- ------- ------- (IN THOUSANDS) Depreciation and amortization. . . . . . . $7,483 $6,584 $6,598 Maintenance and repairs. . . . . . . . . . 3,660 3,809 4,142 Ad valorem taxes . . . . . . . . . . . . . 2,468 2,656 2,807 Lease expense (a). . . . . . . . . . . . . 1,368 1,460 1,591
(a) Minimum operating lease commitments relate principally to office space and manufacturing facilities and are not material to the Company. 36 38 Schedule V DANIEL INDUSTRIES, INC. PROPERTY, PLANT AND EQUIPMENT (in thousands)
================================================================================================== Balance at Balance beginning Additions at end of Classification of period at cost Retirements Other period ================================================================================================== For the year ended September 30, 1994: Land . . . . . . . . . . . . . . . . . $ 7,745 $ 156 $ (490) $ 7,411 Buildings. . . . . . . . . . . . . . . 30,835 3,377 $ 332 1,001 34,881 Machinery and equipment. . . . . . . . 45,800 3,736 790 229 48,975 Computer and peripheral equipment. . . 7,740 1,562 818 119 8,603 Office furniture and equipment . . . . 5,519 144 170 529 6,022 Automotive equipment . . . . . . . . . 1,765 55 132 31 1,719 Other transportation equipment . . . . 4,183 4,183 Other. . . . . . . . . . . . . . . . . 8,015 1,411 237 90 9,279 Construction in progress . . . . . . . 3,070 3,190 (2,231) 4,029 -------- ------- ------ ------- -------- $114,672 $13,631 $2,479 $ (722) $125,102 ======== ======= ====== ======= ======== For the year ended September 30, 1993: Land . . . . . . . . . . . . . . . . . $ 8,162 $ 107 $ 197 $ (327) $ 7,745 Buildings. . . . . . . . . . . . . . . 29,250 2,156 21 (550) 30,835 Machinery and equipment. . . . . . . . 45,383 3,891 3,065 (409) 45,800 Computer and peripheral equipment. . . 7,815 1,398 1,267 (206) 7,740 Office furniture and equipment . . . . 5,355 687 301 (222) 5,519 Automotive equipment . . . . . . . . . 2,095 152 392 (90) 1,765 Other transportation equipment . . . . 4,183 4,183 Other. . . . . . . . . . . . . . . . . 7,671 1,049 527 (178) 8,015 Construction in progress . . . . . . . 679 2,353 8 46 3,070 -------- ------- ------ ------- -------- $110,593 $11,793 $5,778 $(1,936) $114,672 ======== ======= ====== ======= ======== For the year ended September 30, 1992: Land . . . . . . . . . . . . . . . . . $ 4,387 $ 1,285 $ 2,490 $ 8,162 Buildings. . . . . . . . . . . . . . . 26,301 2,328 $ 39 660 29,250 Machinery and equipment. . . . . . . . 41,763 3,162 1,019 1,477 45,383 Computer and peripheral equipment. . . 6,830 1,401 408 (8) 7,815 Office furniture and equipment . . . . 4,759 770 111 (63) 5,355 Automotive equipment . . . . . . . . . 1,862 284 137 86 2,095 Other transportation equipment . . . . 8,663 4,480 4,183 Other. . . . . . . . . . . . . . . . . 7,454 398 187 6 7,671 Construction in progress . . . . . . . 1,798 (870) (249) 679 -------- ------- ------ ------- -------- $103,817 $ 8,758 $6,381 $ 4,399 (a) $110,593 ======== ======= ====== ======= ========
(a) Includes acquisition of a facility in Germany. 37 39 Schedule VI DANIEL INDUSTRIES, INC. ACCUMULATED DEPRECIATION OF PROPERTY, PLANT AND EQUIPMENT (in thousands)
=================================================================================================== Additions Balance at charged to Balance beginning costs and at end of Classification of period expenses Retirements Other period =================================================================================================== For the year ended September 30, 1994: Buildings. . . . . . . . . . . . . . . $ 7,747 $1,062 $ 51 $ (244) $ 8,514 Machinery and equipment. . . . . . . . 28,124 2,713 656 68 30,249 Computer and peripheral equipment. . . 4,183 1,302 787 53 4,751 Office furniture and equipment . . . . 3,110 394 158 39 3,385 Automotive equipment . . . . . . . . . 1,209 244 132 31 1,352 Other transportation equipment . . . . 922 422 1,344 Other. . . . . . . . . . . . . . . . . 4,900 996 198 13 5,711 ------- ------ ------ ------- ------- $50,195 $7,133 $1,982 $ (40) $55,306 ======= ====== ====== ======= ======= For the year ended September 30, 1993: Buildings. . . . . . . . . . . . . . . $ 7,034 $ 826 $ 11 $ (102) $ 7,747 Machinery and equipment. . . . . . . . 28,201 2,683 2,493 (267) 28,124 Computer and peripheral equipment. . . 4,470 1,000 1,196 (91) 4,183 Office furniture and equipment . . . . 3,081 391 285 (77) 3,110 Automotive equipment . . . . . . . . . 1,328 273 330 (62) 1,209 Other transportation equipment . . . . 500 422 922 Other. . . . . . . . . . . . . . . . . 4,914 525 501 (38) 4,900 ------- ------ ------ ------- ------- $49,528 $6,120 $4,816 $ (637) $50,195 ======= ====== ====== ======= ======= For the year ended September 30, 1992: Buildings. . . . . . . . . . . . . . . $ 6,309 $ 761 $ 4 $ (32) $ 7,034 Machinery and equipment. . . . . . . . 26,150 2,759 776 68 28,201 Computer and peripheral equipment. . . 3,851 907 253 (35) 4,470 Office furniture and equipment . . . . 2,794 471 87 (97) 3,081 Automotive equipment . . . . . . . . . 1,207 273 123 (29) 1,328 Other transportation equipment . . . . 2,968 545 3,013 500 Other. . . . . . . . . . . . . . . . . 4,604 535 167 (58) 4,914 ------- ------ ------ ------- ------- $47,883 $6,251 $4,423 $ (183) $49,528 ======= ====== ====== ======= =======
38 40 Schedule IX DANIEL INDUSTRIES, INC. SHORT-TERM BORROWINGS (in thousands except percentages)
================================================================================================== Weighted Maximum Average average Weighted amount amount interest Category of Balance at average outstanding outstanding rate aggregate end interest during the during the during the short-term borrowings (a) of period rate period period (b) period (c) ================================================================================================== For the year ended September 30, 1994: Bank borrowings . . . . . . . $5,900 5.54% $16,000 $4,153 5.10% - ----------
(a) Borrowings during fiscal 1994 were made under bank lines of credit. Maturities ranged from one to 61 days. (b) Average amount outstanding during the period was computed by dividing the total of daily outstanding principal balances by the number of days in the fiscal year. (c) Weighted average interest rate during the period was computed by dividing the actual short-term interest expense by the average amount outstanding during the period as described in (b) above. 39 41 INDEX TO EXHIBITS
Exhibit Number - ------ 2.1 - Plan and Agreement of Merger dated as of January 22, 1988, by and between Daniel Industries, Inc., a Texas corporation ("Daniel Texas"), and Daniel Industries, Inc., a Delaware corporation (the "Company"), filed as Exhibit 2.1 to the Company's Registration of Securities of Certain Successor Issuers on Form 8-B, and hereby incorporated by reference herein. 3.1 - Certificate of Incorporation of the Company, filed as Exhibit 3.1 to the Company's Registration of Securities of Certain Successor Issuers on Form 8-B dated May 5, 1988, and hereby incorporated by reference herein. 3.2 - Bylaws of the Company, as amended through February 25, 1994. 3.3 - Certificate of Designation, Powers, Preferences and Rights of Series A Junior Participating Preferred Stock filed as Exhibit 3.3 in the Company's Amendment to Application or Report on Form 8, and hereby incorporated by reference herein. 4.1 - Note Purchase Agreement dated as of December 5, 1988, between the Company and The Variable Annuity Life Insurance Company, The Mutual Benefit Life Insurance Company, MONY Life Insurance Company of America and MONY Legacy Life Insurance Company (including the form of the Company's Senior Notes in the aggregate in the principal amount of $20,000,000) filed as Exhibit 4.3 to the Company's Annual Report on Form 10-K for the year ended September 30, 1988, and hereby incorporated by reference herein. 4.2 - Rights Agreement dated as of May 31, 1990, between the Company and Wachovia Bank and Trust Company, N.A., as Rights Agent, filed as Exhibit 1 to the Company's Registration of Certain Classes of Securities on Form 8-A filed June 5, 1990, and hereby incorporated by reference herein.
42 INDEX TO EXHIBITS
Exhibit Number - ------ 4.3 - Certificate of Designation, Powers, Preferences and Rights of Series A Junior Participating Preferred Stock (included as Exhibit 3.3 hereto). 10.1 - Description of the Company's key employees' bonus arrangement filed as Exhibit 10.1 in the Company's Amendment to Application or Report on Form 8, and hereby incorporated by reference herein. 10.2 - 1977 Stock Option Plan, as amended and restated on December 16, 1993. 10.3 - 1981 Stock Option Plan, as amended and restated on December 31, 1986, filed as Exhibit 19.2 to Daniel Texas's Quarterly Report on Form 10-Q for the quarter ended December 31, 1986, and hereby incorporated by reference herein. 10.4 - Form of Director's Stock Option Agreements dated October 9, 1986, between Daniel Texas and the several non-employee directors, filed as Exhibit 19.1 to Daniel Texas's Quarterly Report on Form 10-Q for the quarter ended March 31, 1987, and hereby incorporated by reference herein. 10.5 - Form of Agreement dated as of February 9, 1984, Amending and Restating Employment Agreement between Daniel Texas and Each of W. A. Griffin and H. D. Morrison, Jr. filed as Exhibit 10.5 in the Company's Amendment to Application or Report on Form 8, and hereby incorporated by reference herein. 10.6 - Deferred Compensation Agreement for Employees effective as of October 31, 1986, filed as Exhibit 19.3 to Daniel Texas's Quarterly Report on Form 10-Q for the quarter ended December 31, 1986, and hereby incorporated by reference herein. 10.7 - Agreement Amending Amended and Restated Director's Stock Option Agreement between the Company and Gibson Gayle, Jr. filed as Exhibit 19.1 to the Company's Quarterly Report on Form
43 INDEX TO EXHIBITS
Exhibit Number - ------ 10-Q for the quarter ended March 31, 1991, and hereby incorporated by reference herein. 10.8 - Agreement Amending Amended and Restated Director's Stock Option Agreement between the Company and each of Ronald C. Lassiter, William C. Morris, Joseph L. Parrish, Richard L. O'Shields and James R. Whatley, filed as Exhibit 10.9 to the Company's Annual Report on Form 10-K for the year ended September 30, 1991, and hereby incorporated by reference herein. 10.9 - Agreement amending Director's Stock Option Agreement between the Company and Leo E. Linbeck, Jr., filed as Exhibit 10.10 to the Company's Annual Report on Form 10-K for the year ended September 30, 1991, and hereby incorporated by reference herein. 21 - Subsidiaries of the Company. 23 - Consent of Independent Accountants. 27 - Financial data schedule.
EX-3.2 2 BYLAWS OF THE COMPANY AS AMENDED 02/25,94 1 BY-LAWS OF DANIEL INDUSTRIES, INC. (as amended through February 25, 1994) Article I Meetings of Stockholders Section 1.1. Place of Meetings. All meetings of stockholders shall be held at such place, either within or without the State of Delaware, as shall be determined from time to time by the Board of Directors. Section 1.2. Annual Meetings. The annual meeting of stockholders shall be held at such date and time as shall be determined from time to time by the Board of Directors. The annual meeting shall be held for the purpose of electing directors in accordance with Article X of the Certificate of Incorporation and transacting such other business as may be properly brought before the meeting. Section 1.3. Special Meetings. Special meetings of stockholders may be called only by the Board of Directors. The Board of Directors shall determine the date and time of each special meeting of stockholders. The business transacted at any special meeting of stockholders shall be limited to the purposes stated in the notice of that meeting. -1- 2 Section 1.4. Notice of Meetings. Written notice of each meeting of stockholders, stating the time and place and purpose or purposes thereof, shall be given to each stockholder entitled to vote at the meeting, within the time prescribed by statute. Section 1.5. Quorum. The holders of a majority of the shares entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at any meeting of stockholders except as otherwise provided by statute. The holders of a majority of the shares entitled to vote thereat, present in person or represented by proxy, whether or not a quorum is present, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented. If the adjournment is for more than 30 days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted that might have been transacted at the meeting as originally notified. Section 1.6. Voting. When a quorum is present or represented at any meeting of stockholders, the affirmative vote of the holders of a majority of the shares present in person or represented by proxy at the meeting and entitled to vote on the subject matter shall be the act of the stockholders in all matters, including the election of directors, unless the matter is one upon which, by express provision of the statutes, of the Certificate of Incorporation or of these by-laws, a different vote is required, in which case such express provision shall govern and -2- 3 control the decision of that matter. Every stockholder having the right to vote shall be entitled to vote in person, or by proxy appointed by an instrument in writing subscribed by such stockholder, bearing a date not more than three years prior to voting, unless such instrument provides for a longer period, and filed with the Secretary of the corporation before, or at the time of, the meeting. If such instrument shall designate two or more persons to act as proxies, unless such instrument shall provide to the contrary, a majority of such persons present at any meeting at which their powers thereunder are to be exercised shall have and may exercise all the powers of voting thereby conferred. Section 1.7. Consents of Stockholders. As provided in Article VI of the Certificate of Incorporation, the right of stockholders of the corporation to take action by a consent in writing is denied. Article II Board of Directors Section 2.1. Powers. The business and affairs of the corporation shall be managed under the direction of its Board of Directors, which may exercise all powers of the corporation and do all lawful acts and things as are not by statute or by the Certificate of Incorporation or by these by-laws required to be exercised or done by the stockholders. Section 2.2. Number and Classification. The number of directors shall be fixed in the manner provided by, and the directors shall be divided into classes in accordance with, Article X of the Certificate of Incorporation. The number of directors so fixed shall constitute -3- 4 the total number of directors of the corporation. By the affirmative vote of not less than 80% of the number of directors of the corporation in office at the time, the directors may appoint advisory directors. Advisory directors will be entitled to attend and participate at meetings of the Board of Directors but shall not be entitled to vote on any matter submitted to directors or to exercise any other power vested in a director. Advisory directors shall not constitute directors of the corporation and shall have none of the duties of directors to the corporation. Any advisory director may be removed without cause by the affirmative vote of not less than 80% of the number of directors of the corporation in office at the time. Advisory directors shall be compensated in accordance with Section 2.9 of these by- laws. Section 2.3. Removal. A director may not be removed except in accordance with Article X of the Certificate of Incorporation. Section 2.4. Annual Meetings. The annual meeting of the Board of Directors shall be held each year, without other notice than this by-law, at the place of, and immediately following, the annual meeting of stockholders. However, if a majority of the whole Board of Directors shall so consent in writing, such regular meeting may be held at such time and place as shall be fixed by such consent, and the Secretary shall give notice of such regular meeting, stating such time and place, in the manner required by these by-laws. Section 2.5. Other Meetings. Other meetings of the Board of Directors may be called by the Chairman of the Board of Directors, the President or any two directors. Except as provided in Section 2.4 of these by-laws, notice of each meeting of the Board of Directors -4- 5 stating the time and place of the meeting shall be given not less than seventy-two hours before the time of the meeting, by or at the direction of the person or persons calling the meeting, to each director. If the person or persons calling the meeting shall instruct the Secretary or any Assistant Secretary to give such notice, then the Secretary or such Assistant Secretary shall promptly do so in the manner required by these by-laws. Section 2.6. Waiver of Notice. The attendance of a director at any meeting shall constitute a waiver of notice of such meeting, except where a director attends a meeting for the purpose of objecting to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any meeting of the Board of Directors need be specified in the notice or waiver of notice of such meeting. Section 2.7. Quorum. A majority of the total number of directors, determined in accordance with Section 2.2 of these by-laws, shall constitute a quorum for the transaction of business at any meeting of the Board of Directors, and the vote of a majority of the directors present at a meeting at which there is a quorum shall be the act of the Board of Directors unless the Certificate of Incorporation or these by-laws shall require a vote of a greater number of directors. If a quorum shall not be present at any meeting of the Board of Directors, a majority of the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present. -5- 6 Section 2.8. Action by Consent of Directors. Any action required or permitted to be taken at any meeting of the Board of Directors may be taken without a meeting if a consent in writing, setting forth the action so taken, is signed by all of the directors. Section 2.9. Compensation of Directors. The Board of Directors, irrespective of any personal interest of any of its members, shall have authority to fix the compensation of all directors for services to the corporation as directors, as members of one or more committees of the Board of Directors, as officers, or otherwise. Article III Committees of Directors Section 3.1. Designation, Powers and Name. The Board of Directors may, by resolution passed by a majority of the whole Board of Directors, designate one or more committees, including, if they shall so determine, an Executive Committee, each such committee to consist of one or more of the directors of the corporation. The Board of Directors may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of such committee. In the absence or disqualification of any member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member. -6- 7 Section 3.2. Meetings of and Action by Committees. Except as otherwise provided in the resolution pursuant to which a particular committee of the Board of Directors was designated, (i) meetings of such committee may be held within or without the State of Delaware and may be called by any member thereof, (ii) notice of each meeting of such committee stating the time and place of the meeting shall be given not less than forty-eight hours before the time of the meeting, by or at the direction of the person or persons calling the meeting, to each member of such committee, and if the person or persons calling the meeting shall instruct the Secretary or any Assistant Secretary to give such notice, then the Secretary or such Assistant Secretary shall promptly do so in the manner required by these by-laws, (iii) attendance of a director at any meeting of such committee shall constitute a waiver of notice of such meeting, except where a director attends a meeting for the express purpose of objecting to the transaction of any business on the ground that the meeting is not lawfully called or convened, (iv) neither the business to be transacted at, nor the purpose of, any meeting of such committee need be specified in the notice or waiver of notice of such meeting, (v) at all meetings of such committee, a majority of the number of directors comprising such committee, as fixed by such resolution, shall constitute a quorum for the transaction of business, (vi) the vote of a majority of the members present at a meeting of such committee at which there is a quorum shall be the act of such committee, and (vii) if a quorum shall not be present at any meeting of such committee, a majority of the members present at such meeting may adjourn such meeting from time to time, without notice other than announcement at such meeting, until -7- 8 a quorum shall be present. The Board of Directors, by resolution adopted by a majority of the whole Board of Directors, may amend or repeal the resolution pursuant to which any committee of the Board of Directors was designated, may remove any member of any committee, and may fill any vacancy occurring on any committee. Each committee of directors shall keep regular minutes of its proceedings and report the same to the Board of Directors when requested to do so. Section 3.3. Action by Consent. Any action required or permitted to be taken at any meeting of any committee of the Board of Directors may be taken without a meeting if a consent in writing, setting forth the action so taken, is signed by all of the members of such committee. Article IV Notice Section 4.1. Methods of Giving Notice. Whenever under the provisions of the statutes, the Certificate of Incorporation or these by-laws, notice is required to be given to any director, member of any committee or stockholder, such notice shall be in writing and delivered personally or mailed to such director, member or stockholder; provided that in the case of a director or a member of any committee such notice may be given orally or by telephone or telegram. If mailed, notice to a director, member of a committee or stockholder shall be deemed to be given when deposited in the United States mail first class in a sealed envelope, with postage thereon prepaid, addressed, in the case of a stockholder, to the stockholder at the -8- 9 stockholder's address as it appears on the records of the corporation or, in the case of a director or a member of a committee, to such person at his business or home address. If sent by telegraph, notice to a director or member of a committee shall be deemed to be given when the telegram, so addressed, is delivered to the telegraph company. Section 4.2. Written Waiver. Whenever any notice is required to be given under the provisions of the statutes, the Certificate of Incorporation or these by-laws, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto. Article V Officers Section 5.1. Officers. The officers of the corporation shall be a Chairman of the Board of Directors, a President, one or more Vice Presidents, a Secretary and a Treasurer, each of whom shall be elected by the Board of Directors. The Board of Directors may elect or appoint other officers and agents, including Assistant Secretaries and Assistant Treasurers, who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined by the Board of Directors. Any two or more offices, other than the offices of President and Secretary, may be held by the same person. Section 5.2. Term of Office. Each officer shall hold office until his successor is elected by the Board of Directors or until his earlier death, resignation or removal from office. -9- 10 Section 5.3. Removal and Resignation. Any officer or agent elected or appointed by the Board of Directors may be removed without cause by the Board of Directors whenever, in its sole judgment, the best interests of the corporation shall be served thereby, but such removal shall be without prejudice to the contractual rights, if any, of the person so removed. Election or appointment of an officer or agent shall not of itself create contract rights. Any officer may resign at any time by giving written notice to the corporation. Any such resignation shall take effect at the date of the receipt of such notice or at any later time specified therein, and unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. Section 5.4. Vacancies. Any vacancy occurring in any office of the corporation by death, resignation or removal from office may be filled only by the Board of Directors. Section 5.5. Salaries. The salaries of all officers of the corporation shall be fixed by the Board of Directors or pursuant to its direction. No officer shall be prevented from receiving a salary by reason of his also being a director. Section 5.5. Chief Executive Officer. The Board of Directors shall designate either the Chairman of the Board of Directors or the President as the Chief Executive Officer of the corporation, and the person last so designated shall be the Chief Executive Officer of the corporation until a successor Chief Executive Officer is designated by the Board of Directors or until such person ceases to hold the office held by him at the time of such designation. The Chief Executive Officer shall be the principal executive officer of the corporation for purposes -10- 11 of all filings by the corporation with the United States Securities and Exchange Commission, shall preside at all meetings of stockholders, shall have general and active management of the business of the corporation, and shall see that all resolutions of the Board of Directors are carried into effect. The Board of Directors may change the designation of Chief Executive Officer at any time, but no such change shall constitute removal of any person from the office of Chairman of the Board of Directors or President, as the case may be. If the Chairman of the Board of Directors shall have been last designated as Chief Executive Officer, then in the absence or disability of the Chairman of the Board of Directors, the President shall perform the duties and have the authority of the Chief Executive Officer. If the President shall have been last designated as Chief Executive Officer, then in the absence or disability of the President, the Chairman of the Board of Directors shall perform the duties and have the authority of the Chief Executive Officer. Section 5.6. Chairman of the Board of Directors. The Chairman of the Board of Directors shall preside at all meetings of the Board of Directors, and he shall have such other authority and perform such other duties as may be determined from time to time by resolution of the Board of Directors not inconsistent with these by-laws. If the Chairman of the Board of Directors shall have been last designated as Chief Executive Officer, then he also shall have the authority and perform the duties appertaining to that designation, as specified in Section 5.5 of these by-laws. -11- 12 Section 5.7. President. The President shall be the Chief Operating Officer of the corporation, and he shall have general supervision of the day-to-day operations of the corporation's several industry segments. Unless the Board of Directors shall have designated a particular officer of the corporation as Chief Financial Officer, then the President shall be the Principal Financial Officer of the corporation for purposes of all filings by the corporation with the United States Securities and Exchange Commission. The President shall have such other authority and perform such other duties as may be determined from time to time by resolution of the Board of Directors not inconsistent with these by-laws. If the President shall have been last designated as Chief Executive Officer, then he also shall have the authority and perform the duties appertaining to that designation, as specified in Section 5.5 of these by-laws. Section 5.8. Vice Presidents. The Vice Presidents shall have such authority and perform such duties as may be determined from time to time by resolution of the Board of Directors not inconsistent with these by-laws or as the Chairman of the Board of Directors or the President may from time to time delegate. The Board of Directors may, at the time of the election of any Vice President of the corporation, designate such Vice President a "Senior Vice President" or "Executive Vice President" of the corporation or designate such Vice President by reference to a principal business function, such as "Finance" or "Administration". Section 5.9. Secretary. The Secretary shall attend all meetings of the Board of Directors and all meetings of the stockholders and shall record all of the proceedings of such meetings in minute books to be kept for that purpose. If any member of any committee of the -12- 13 Board of Directors shall so request, the Secretary shall perform like duties in respect of the proceedings of meetings of such committee. If requested by any person or persons having authority to call such a meeting, the Secretary shall give, or cause to be given, notice of each meeting of the Board of Directors and notice of each meeting of stockholders, such notice to be given promptly in the manner required by these by-laws. The Secretary shall keep in safe custody the seal of the corporation and, when authorized by the Board of Directors, shall affix the same to any instrument requiring it. The Secretary shall have such other authority and perform such other duties as may be determined from time to time by resolution of the Board of Directors not inconsistent with these by-laws or as the Chief Executive Officer may from time to time delegate. Section 5.10. Assistant Secretary. The Assistant Secretary shall, in the absence or disability of the Secretary, have the authority and perform the duties of the Secretary. He shall have such other authority and perform such other duties as may be determined from time to time by resolution of the Board of Directors not inconsistent with these by-laws or as the Secretary may from time to time delegate. Section 5.11. Treasurer. The Treasurer shall have custody of the corporate funds and securities and shall keep full and accurate accounts and records of receipts, disbursements and other transactions in books belonging to the corporation. He shall deposit all moneys and other valuable effects in the name and to the credit of the corporation in such depositories as may be designated by the Board of Directors. He shall disburse the funds of the corporation -13- 14 as and when ordered by the Board of Directors, taking proper vouchers for such disbursements, and shall render to the Chief Executive Officer and to the Board of Directors, when the Chief Executive Officer or the Board of Directors so requires, an account of all his transactions as Treasurer and of the financial condition of the corporation. The Treasurer shall have such other authority and perform such other duties as may be determined from time to time by resolution of the Board of Directors not inconsistent with these by-laws or as the Chief Executive Officer may from time to time delegate. Section 5.12. Assistant Treasurer. The Assistant Treasurer shall, in the absence or disability of the Treasurer, have the authority and perform the duties of the Treasurer. He shall have such other authority and perform such other duties as may be determined from time to time by resolution of the Board of Directors not inconsistent with these by-laws or as the Treasurer may from time to time delegate. Article VI Checks and Deposits Section 6.1. Checks, etc. All checks, demands, drafts or other orders for the payment of money, notes or other evidences of indebtedness issued in the name of the corporation shall be signed by such officer or officers or such agent or agents of the corporation, and in such manner, as shall be determined by the Board of Directors. -14- 15 Section 6.2. Deposits. All funds of the corporation not otherwise employed shall be deposited from time to time to the credit of the corporation in such banks, trust companies or other depositories as the Board of Directors may select. Article VII Certificates of Stock Section 7.1. Issuance. Each stockholder of the corporation shall be entitled to a certificate or certificates showing the number of shares of stock registered in his name on the books of the corporation. The certificates shall be in such form as may be determined by the Board of Directors, shall be issued in numerical order and shall be entered in the books of the corporation as they are issued. They shall exhibit the holder's name and number of shares and shall be signed by the President or a Vice President and by the Secretary or an Assistant Secretary, provided that such signatures may be facsimile. All certificates surrendered to the corporation's transfer agent for transfer shall be cancelled, and no new certificate shall be issued until the former certificate for a like number of shares shall have been surrendered and cancelled, except that in the case of a lost, stolen, destroyed or mutilated certificate a new one may be issued therefor upon such terms and with such indemnity, if any, to the corporation as the Board of Directors may prescribe. Unless otherwise provided in the resolution or resolutions of the Board of Directors providing for the issuance of shares of Preferred Stock of the corporation of a particular series, certificates shall not be issued representing fractional shares of stock. -15- 16 Section 7.2. Lost Certificates. The Board of Directors may direct a new certificate or certificates to be issued in place of any certificate or certificates theretofore issued by the corporation alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen or destroyed. When authorizing such issue of a new certificate or certificates, the Board of Directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate or certificates, or his legal representative, to advertise the same in such manner as it shall require or to give the corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the corporation with respect to the certificate or certificates alleged to have been lost, stolen or destroyed, or both. Section 7.3. Registered Stockholders. The corporation shall be entitled to treat the holder of record of any share or shares of stock as the holder in fact thereof and, accordingly, shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of the State of Delaware. Article VIII Dividends -16- 17 Section 8.1. Declaration. Dividends upon the stock of the corporation may be declared by the Board of Directors at any regular or special meeting. Dividends may be paid in cash, in property or in shares of stock. Section 8.2. Reserve. Before payment of any dividend, there may be set aside out of any funds of the corporation available for dividends such sum or sums as the Board of Directors from time to time, in their absolute discretion, think proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the corporation, or for such other purpose as the Board of Directors shall think conducive to the interest of the corporation. Article IX Indemnification Section 9.1. Third Party Actions. The corporation shall indemnify any natural person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation), by reason of the fact that he is or was a director or officer of the corporation, or is or was serving at the request of the corporation as a director or officer or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to -17- 18 be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement or conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful. Section 9.2. Actions by or in the Right of the Corporation. The corporation shall indemnify any natural person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that he is or was a director or officer of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees) actually and reasonably incurred by him in connection with the defense or settlement of such action or suit if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation and except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation unless and only to the extent that the Court of Chancery or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view -18- 19 of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper. Section 9.3. Determination of Conduct. The determination whether an officer, director or agent has met the applicable standard of conduct set forth in Sections 9.1 and 9.2 (unless indemnification is ordered by a court) shall be made (1) by the Board of Directors by a majority vote of a quorum consisting of directors who were not parties to such action, suit or proceeding, or (2) if such quorum is not obtainable, or even if obtainable a quorum of disinterested directors so directs, by independent legal counsel in a written opinion, or (3) by the stockholders. Section 9.4. Payment of Expenses in Advance. Expenses incurred by an officer, director or agent in defending a civil or criminal action, suit or proceeding for which such person may be entitled to indemnity under this Article IX shall be paid by the corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of the director, officer or agent to repay such amount if it shall ultimately be determined that he is not entitled to be indemnified under this Article IX. Section 9.5. Definitions. For purposes of this Article IX, references to "the corporation" shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors and officers, so that any person who is or who was a director or officer of such constituent -19- 20 corporation, or is or was serving at the request of such constituent corporation as a director, officer or agent of another corporation, partnership, joint venture, trust or other enterprise, shall stand in the same position under the provisions of this Article IX with respect to the resulting or surviving corporation as he would have with respect to such constituent corporation if its separate existence had continued. For purposes of this Article IX, references to "other enterprises" shall include employee benefit plans; references to "fines" shall include any excise taxes assessed on a person with respect to any employee benefit plan; and references to "serving at the request of the corporation" shall include any service as a director or officer of the corporation that imposes duties on, or involves services by, such director or officer with respect to an employee benefit plan, its participants or beneficiaries; and a person who acted in good faith and in a manner he reasonably believed to be in the best interest of the participants and beneficiaries in the employee benefit plan shall be deemed to have acted in a manner "not opposed to the best interests of the corporation" as referred to in this Article IX. Section 9.6. Indemnity Not Exclusive. The indemnification and advancement of expenses provided by this Article IX shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under any agreement, vote of stockholders, vote of disinterested directors, insurance arrangement or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office. -20- 21 Section 9.7. Continuation. The indemnification and advancement of expenses provided by this Article IX shall continue as to a person who has ceased to be a director or officer and shall inure to the benefit of the heirs, executors and administrators of such a person. Section 9.8. No Further Authorization Required. This Article IX is intended to make mandatory the indemnification permitted by Section 145 of the Delaware General Corporation Law. This Article IX shall be deemed to constitute the authorization required by subsection (d) of said Section 145, and no further authorization by the Board of Directors or the stockholders of the corporation shall be necessary in any specific case if the indemnification or advancement of expenses referred to in this Article IX is, by the terms of this Article IX, required to be afforded in that case. Article X By-Law Amendments; Application of Section 203 of the Delaware General Corporation Law Section 10.1. Certificate of Incorporation to Govern. These by-laws may not be adopted, amended or repealed otherwise than in accordance with Article VI of the Certificate of Incorporation, provided that Section 10.2 of these by-laws may not be further amended by the Board of Directors. Section 10.2. No Application of Section 203. The corporation hereby expressly elects not to be governed by Section 203 of the Delaware General Corporation Law entitled "Business Combinations with Interested Stockholders". -21- EX-10.2 3 1977 STOCK OPTION PLAN AS AMENDED 12/16/93 1 DANIEL INDUSTRIES, INC. 1977 Stock Option Plan (As Amended and Restated on December 16, 1993) 1. Purpose. This 1977 Stock Option Plan (this "Plan") of Daniel Industries, Inc. (the "Company"), for executive officers and other key employees of the Company, is intended to advance the best interests of the Company by providing those individuals who have substantial responsibility for its management and growth with additional incentive and by increasing their proprietary interest in the success of the Company, thereby encouraging them to remain in its employ. 2. Administration. This Plan shall be administered by a committee (the "Committee") designated by the Board of Directors of the Company in accordance with the provisions of Article III of the by-laws of the Company. The Committee shall consist of three directors of the Company, each of whom shall be a disinterested person. For purposes of this Paragraph 2, "disinterested person" means a person who is not, at any time during such person's service as a member of the Committee or at any time during one year prior to such service, granted Options (as hereinafter defined) or granted or awarded other equity securities pursuant to any other plan of the Company or any of its affiliates. All action by the Committee shall be taken in accordance with the provisions of Article III of the by- laws of the Company. The Committee shall designate a chairman from among its members, who shall preside at all of its meetings, and shall designate a secretary, without regard to whether that person is a member of the Committee, who shall keep the minutes of the proceedings of the Committee and all records, documents and data pertaining to the administration of this Plan. All questions of interpretation and application of this Plan, or of options granted or to be granted hereunder ("Options"), shall be subject to the determination, which shall be final, binding and conclusive, of the Committee. 3. Option Shares. Subject to the provisions of Paragraph 17 hereof, the shares of stock issuable upon the exercise of Options shall be shares of Common Stock, $1.25 par value ("Stock"), of the Company. The aggregate number of shares of Stock that may be issued upon the exercise of Options shall not exceed 987,363, consisting of (i) 100,000 shares provided for under this Plan on the date this Plan became effective, (ii) 250,000 additional shares provided for under this Plan on August 22, 1989, (iii) 400,000 additional shares provided for under this Plan on December 16, 1993, and (iv) 237,363 shares that, after the date the Plan became effective but prior to December 17, 1993, became available for issuance upon the exercise of Options by reason of Paragraph 17 hereof. 173,408 shares have been issued in accordance with the terms of the Plan after the date the Plan became effective but prior to December 17, 1993, such that 2 813,955 of such aggregate number of shares, and the class thereof, shall be subject to adjustment in accordance with the provisions of Paragraph 17 hereof in respect of any event referred to in Paragraph 17 hereof that occurs on or after December 17, 1993. Such shares of Stock may be treasury shares or authorized but unissued shares. In the event that any outstanding Option for any reason shall expire or terminate or be forfeited or canceled, whether by reason of the death or severance of employment of the individual to whom such Option was granted, the relinquishment of such Option, or any other cause, the shares of Stock allocable to the unexercised portion of such Option may be made the subject of one or more other Options granted on or after the date of the expiration, termination, forfeiture or cancellation of such first-mentioned Option. 4. Authority to Grant Options. The Committee may grant from time to time to such eligible individuals as it shall from time to time determine one or more Options to purchase a stated number of shares of Stock subject to the terms and conditions of this Plan and the terms and conditions of the agreement evidencing such Option. The number of shares of Stock issuable upon the exercise of any Option shall be determined by the Committee at the time such Option is granted, provided that such number of shares of Stock shall be subject to adjustment in accordance with the provisions of Paragraph 17 hereof. 5. Eligibility. The individuals who shall be eligible to be granted Options shall be those executive officers and other key employees (including officers who may be directors of the Company, but excluding any officer or other key employee who shall have been designated by the Board of Directors of the Company as ineligible for the grant of Options) of the Company, or of any parent or subsidiary corporation of the Company, as the Committee shall determine from time to time. 6. Option Price. The price at which shares of Stock may be purchased upon the exercise of an Option (the "Option Price") shall be determined by the Committee at the time such Option is granted and shall be expressed in United States dollars. The Option Price with respect to any Option may be less than, equal to, or greater than the fair market value on the date such Option is granted of the shares of Stock that may be purchased upon the exercise of such Option. In no event, however, shall the Option Price with respect to any Option be less than the greater of (i) 50% of the fair market value on the date such Option is granted of the shares of Stock that may be purchased upon the exercise of such Option or (ii) the aggregate par value of the shares of Stock that may be purchased upon the exercise of such Option. 7. Duration of Options. The Committee, in its discretion, may provide that an Option shall be exercisable during any period of time from the date such Option is granted, provided that no Option may be exercised until the expiration of six months following the date such Option was granted. -2- 3 8. Amount Exercisable. Each outstanding Option may be exercised, either with respect to all or less than all of the number of shares of Stock subject to such Option, subject to such conditions as the Committee, in its discretion, may provide in the agreement evidencing such Option. 9. Exercise of Options. The individual to whom an Option is granted (an "Optionee") may exercise such Option by delivering to the Company a written notice stating (i) that such Optionee wishes to exercise such Option on the date such notice is so delivered, (ii) the number of shares of Stock with respect to which such Option is to be exercised and (iii) the address to which the certificate representing such shares of Stock should be mailed. In order to be effective, such written notice shall be accompanied by (i) payment of the Option Price of such shares of Stock and (ii) payment of an amount of money necessary to satisfy any withholding tax liability that may result from the exercise of such Option. Each such payment shall be made to the Company in United States dollars. In its discretion, the Committee may require, as an additional condition to the issuance of shares of Stock upon the exercise of an Option, that the Optionee to whom such Option was granted execute and deliver to the Company a stock purchase agreement, in such form as may be required by the Committee, within three business days after such form of agreement is presented to such Optionee. As promptly as practicable after the receipt by the Company of (i) such written notice from the Optionee, (ii) payment, in the form required by the foregoing provisions of this Paragraph 9, of the Option Price of the shares of Stock with respect to which such Option is to be exercised, (iii) payment, in the form required by the foregoing provisions of this Paragraph 9, of an amount of money necessary to satisfy any withholding tax liability that may result from the exercise of such Option, and (iv) an executed stock purchase agreement in the form required by the Committee, if any is so required, the Company shall cause to be delivered to such Optionee (or to a specified escrow agent, if so required under the terms of such stock purchase agreement) a certificate representing the number of shares of Stock with respect to which such Option has been so exercised, such certificate to be registered in the name of such Optionee, provided that such delivery shall be considered to have been made when such certificate shall have been mailed, postage prepaid, to such Optionee at the address specified for such purpose in such written notice from the Optionee to the Company. 10. Transferability of Options. An Option shall not be transferable by the Optionee to whom such Option was granted otherwise than by will or under the laws of descent and distribution or pursuant to a qualified domestic relations order, as defined by the Internal Revenue Code of 1986, as amended, or Title I of the Employee Retirement Income Security Act, or the rules thereunder. The designation by an Optionee of a beneficiary shall not constitute a transfer of an Option for purposes of this Plan. -3- 4 11. Termination of Employment or Death of Optionee. All Options granted to an Optionee shall terminate immediately upon severance of the employment relationship between the Company and such Optionee for any reason, for or without cause, other than death. Whether authorized leave of absence, or absence on military or government service, shall constitute severance of the employment relationship between the Company and any Optionee shall be determined by the Committee at the time thereof. In the event of the death of an Optionee while in the employ of the Company and before the date of expiration of any Option granted to such Optionee, such Option shall terminate on the earlier of such date of expiration or one year following the date of such Optionee's death. After the death of such Optionee, the Optionee's executors or administrators, or the person to whom such Optionee's Option shall have been transferred by will or under the laws of descent and distribution, shall have the right, at any time prior to such termination, to exercise such Option, as a whole (without regard to any limitations set forth in or imposed pursuant to the first sentence of Paragraph 8 hereof) or in part. For the purpose of determining the employment relationship between the Company and an Optionee, employment by any parent or subsidiary corporation of the Company shall be considered employment by the Company. 12. Requirements of Law. The Company shall not be required to issue any shares of Stock upon the exercise of any Option if the issuance of such shares of Stock would constitute or result in a violation by the Company, or by the Optionee to whom such Option was granted, of any provision of any applicable law, statute or regulation of any governmental authority. Upon the exercise of any Option, the Company shall not be required to issue any shares of Stock unless the Committee shall have received evidence satisfactory to it that the Optionee to whom such Option was granted will not transfer such shares of Stock until a registration statement with respect to such shares of Stock shall have become effective under the Securities Act of 1933 or until an opinion of counsel satisfactory to the Company shall have been received by the Company to the effect that such registration is not required. Any determination in this connection by the Committee shall be final, binding and conclusive. The Company may, but shall in no event be obligated to, register under the Securities Act of 1933, or register or otherwise qualify for sale under the securities laws of any state, the shares of Stock issuable upon the exercise of one or more Options. In the event that any shares of Stock issuable upon the exercise of an Option are not registered under the Securities Act of 1933, the Company may imprint on the certificates representing such shares of Stock the following legend or any other legend that counsel for the Company considers necessary or advisable to comply with the Securities Act of 1933: -4- 5 The shares of stock represented by this certificate have not been registered under the Securities Act of 1933 or under the securities laws of any state and may not be sold or transferred except upon such registration or upon receipt by the Corporation of an opinion of counsel satisfactory to the Corporation, in form and substance satisfactory to the Corporation, that registration is not required for such sale or transfer. The Company shall not be obligated to take any other affirmative action to cause the exercise of any Option, or the issuance of shares of Stock upon the exercise of any Option, to comply with any law, statute or regulation of any governmental authority. 13. No Rights as Shareholder. No Optionee shall have any right as a shareholder with respect to any shares of Stock issuable upon the exercise of any Option granted to such Optionee until the date of issuance to such Optionee of a certificate representing such shares of Stock. Except as otherwise provided in Paragraph 17 hereof, no adjustment for dividends, or otherwise, shall be made if the record date therefor is prior to the date of issuance of such certificate. 14. Employment Obligation. The granting of any Option shall not impose upon the Company, or upon any parent or subsidiary corporation of the Company, any obligation to employ or continue to employ any Optionee. The right of the Company, or of any parent or subsidiary corporation of the Company, to terminate the employment of any person shall not be diminished or otherwise affected by reason of the fact that an Option has been granted to him. 15. Forfeiture for Competition. If the Committee finds that the holder of any outstanding Option, at any time following the date upon which such Option was granted, directly or indirectly owned, operated, managed or controlled, or participated in the ownership, management, operation or control of, or was employed or was paid as a consultant or as an independent contractor by, a business that competed at any time after that date with the Company or with any parent or subsidiary corporation of the Company, then such holder shall thereupon forfeit all outstanding Options granted to him, provided that such holder shall not forfeit any outstanding Option solely on account of such holder's ownership of shares or other securities issued by any corporation so long as such ownership does not result in the direct or indirect control by such holder of such corporation. 16. Forfeiture for Dishonesty. If the Committee finds that an Optionee has engaged in fraud, embezzlement, theft, commission of a felony, or proven dishonesty in the course of such Optionee's employment by the Company or by any parent or subsidiary corporation of the Company and that such action has damaged the Company or such parent or subsidiary corporation, or if the Committee finds that an Optionee has disclosed trade secrets -5- 6 of the Company or of any parent or subsidiary corporation of the Company, then such Optionee shall thereupon forfeit all outstanding Options granted to such Optionee. 17. Changes in the Capital Structure of the Company. The existence of outstanding Options shall not affect in any manner the right of the Company (i) to make any change in the Company's capital structure or its business, (ii) to effect any merger or consolidation of the Company, (iii) to issue any bonds, debentures or other evidences of indebtedness, (iv) to issue any preferred stock or any other securities affecting the Stock or the rights of the holders thereof, (v) to cause the dissolution of the Company or any sale or transfer of all or any part of the assets or business of the Company, or (vi) to take any other corporate action or proceeding, whether of a similar character or otherwise. If the Company shall effect a reclassification of shares of Stock, the payment of a stock dividend to holders of shares of Stock, or some other increase or reduction in the number of shares of Stock outstanding without receiving compensation therefor in money, services or property, then (i) the number, class and per share price of shares of Stock issuable upon the exercise of any outstanding Option shall be appropriately adjusted so that the Optionee to whom such Option was granted shall be entitled upon the exercise of such Option to receive, for the same aggregate consideration, the same number and class of shares that such Optionee would have received had such Optionee exercised such Option immediately prior to the occurrence of the event requiring such adjustment and (ii) the aggregate number of shares of Stock, and the class thereof, that may be issued upon the exercise of Options that are not at the time outstanding shall be adjusted by substituting for such number and class that number and class of shares that would have been received by the holder of record of an equal number of outstanding shares of Stock as the result of the occurrence of the event requiring such adjustment. After a merger of one or more corporations into the Company, or after a consolidation of the Company and one or more corporations under circumstances in which the Company is the surviving corporation, each holder of an outstanding Option shall be entitled upon the exercise of such Option to receive (subject to any required action by shareholders), in lieu of the number of shares of Stock issuable upon the exercise of such Option, the number and class of shares or other securities to which such holder would have been entitled pursuant to the terms of the agreement of merger or consolidation if, immediately prior to such merger or consolidation, such holder had been the holder of record of a number of shares of Stock equal to the number of shares of Stock issuable upon the exercise of such Option. If the Company is merged into or consolidated with another corporation under circumstances in which the Company is not the surviving corporation, or if the Company dissolves, (i) subject to the provisions of clause (iii) of this grammatical paragraph, after the effective date of such merger or consolidation, as the case may be, each holder of an outstanding Option shall be entitled upon the exercise of such Option to receive, in lieu of shares of Stock, such shares or other securities as the holders of shares of Stock received -6- 7 pursuant to the terms of such merger or consolidation; (ii) the Board of Directors of the Company, in its discretion, may waive any limitations set forth in or imposed pursuant to the first sentence of Paragraph 8 hereof so that all outstanding Options shall be exercisable in full from and after a date prior to the effective date of such merger, consolidation or dissolution, as the case may be; and (iii) all outstanding Options may be canceled by the Board of Directors as of the effective date of such merger, consolidation or dissolution, provided that (x) notice of such cancellation shall be given to each holder of an outstanding Option and (y) such holder shall have the right to exercise such Option in full (without regard to any limitations set forth in or imposed pursuant to the first sentence of Paragraph 8 hereof) during the 30-day period immediately preceding the effective date of such merger, consolidation or dissolution. Except as in this Paragraph 17 expressly provided, the issue by the Company of shares of any class, or securities convertible into shares of any class, for money or services or property, either upon direct sale or upon the exercise of rights or warrants to subscribe therefor or upon conversion of shares or obligations of the Company convertible into such shares or other securities, shall not affect, and no adjustment by reason thereof shall be made with respect to, the number, class or Option Price of any shares issuable upon the exercise of any outstanding Option. 18. Substitute Options. Options may be granted from time to time in substitution for options held by employees of other corporations who concurrently become employees of the Company as the result of a merger or consolidation of such other corporation with or into the Company, the acquisition by the Company of assets of such other corporation, or the acquisition by the Company of stock of such other corporation. The terms and conditions of such substitute Options may vary from the terms and conditions set forth herein to such extent as the Board of Directors of the Company may deem appropriate to conform, in whole or in part, to the provisions of the options in substitution for which such substitute Options are granted. 19. Amendment or Termination of Plan. The Board of Directors of the Company may modify, revise or terminate this Plan at any time and from time to time, provided that without the further approval of the holders of a majority of the outstanding shares of Stock, the Board of Directors of the Company may not (i) materially increase the benefits accruing to participants under this Plan, (ii) change the aggregate number of shares of Stock that may be issued upon the exercise of Options (except to the extent that the actions of the Board of Directors may require adjustment of such number pursuant to the provisions of Paragraph 17), or (iii) change the class of employees to whom Options may be granted. 20. Option Agreements. Each Option shall be evidenced by a written agreement that shall be subject to the terms and conditions of this Plan and shall be executed by the Optionee to whom such Option is granted and by the Company. Each such agreement shall contain such other provisions as the Committee, in its discretion, shall deem advisable. -7- 8 21. Effective Date of Plan. This Plan shall become effective and shall be deemed to have been adopted on January 1, 1977, subject only to approval by the holders of a majority of the outstanding shares of Stock within 12 months after such date. This Plan shall terminate (i) when the total number of shares of Stock with respect to which Options may be granted shall have been issued upon the exercise of Options or (ii) by action of the Board of Directors of the Company pursuant to Paragraph 19 hereof. -8- EX-21 4 SUBSIDIARIES OF THE COMPANY 1 EXHIBIT 21 SUBSIDIARIES OF THE COMPANY JURISDICTION OF NAME OF SUBSIDIARY INCORPORATION ------------------ --------------- Daniel Bolt and Gasket, Ltd. Canada Daniel de Mexico, S.A. Mexico Daniel En-Fab Systems, Inc. Delaware Daniel Flow Products, Inc. Delaware Daniel Flow Products, Ltd. Canada Daniel Industrial, Inc. Delaware Daniel Industries Foreign Sales Corporation U.S. Virgin Islands Daniel Industries Limited United Kingdom Daniel Messtechnik GmbH Babelsberg Germany Daniel Valve Company Delaware Danmasa, S.A. de C.V. Mexico EX-23 5 CONSENT OF INDEPENDENT ACCOUNTANTS 1 EXHIBIT 23 CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in (i) the Registration Statement on Form S-8 (SEC File No. 2- 65288), (ii) the Registration Statement on Form S-8 (SEC File No. 2-79399), (iii) the Registration Statement on Form S-8 (SEC File No. 2-79660) and (iv) the Registration Statement on Form S-8 (SEC File No. 33-000162), including all Post- Effective Amendments thereto filed prior to the date of this consent, of Daniel Industries, Inc. of our report dated November 15, 1994, appearing on page 18 of this Annual Report on Form 10-K. PRICE WATERHOUSE LLP Houston, Texas December 16, 1994 EX-27 6 FINANCIAL DATA SCHEDULE
5 1,000 YEAR SEP-30-1994 OCT-01-1993 SEP-30-1994 2,520 0 38,146 243 45,314 111,651 125,102 55,306 187,337 45,661 0 15,041 0 0 89,675 187,337 203,766 203,766 138,599 138,599 61,120 0 1,927 2,120 796 1,324 0 0 0 1,324 .11 .11
-----END PRIVACY-ENHANCED MESSAGE-----