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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999
COMMISSION FILE NUMBER: 1-10863
YORK INTERNATIONAL CORPORATION
(EXACT NAME OF THE REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 13-3473472
(STATE OF INCORPORATION) (I.R.S. EMPLOYER IDENTIFICATION NO.)
631 SOUTH RICHLAND AVENUE, YORK, PA 17403
(717) 771-7890
(ADDRESS AND TELEPHONE NUMBER OF PRINCIPAL EXECUTIVE OFFICES)
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
------------------- ---------------------
COMMON STOCK, $.005 PAR VALUE PER SHARE NEW YORK STOCK EXCHANGE
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: NONE
Indicate by check mark whether 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, 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. [ ]
As of March 27, 2000, there were 38,063,802 shares of the registrant's Common
Stock outstanding, and the aggregate market value of the Common Stock held by
non-affiliates was $792,245,220 based on the closing price of the Common Stock
on the New York Stock Exchange Composite Transactions of such date. (Only
officers and directors of the registrant are assumed to be affiliates for
purposes of this calculation.)
DOCUMENTS INCORPORATED BY REFERENCE
The Registrant's Annual Financial Statements and Review of Operations to
Stockholders for the year ended December 31, 1999 is incorporated herein by
reference into Parts II and IV.
Exhibit Index is located on pages 35 to 37.
YORK INTERNATIONAL CORPORATION
FORM 10-K
YEAR ENDED DECEMBER 31, 1999
INDEX
PART 1
Item
Number PAGE
------ ----
1. Business. 1
2. Properties. 14
3. Legal Proceedings. 14
4. Submission of Matters to a Vote of Security Holders. 15
PART II
5. Market for Registrant's Common Equity
and Related Stockholder Matters. 15
6. Selected Financial Data. 15
7. Management's Discussion and Analysis of Financial Condition
and Results of Operations. 15
7a. Quantitative and Qualitative Disclosure about Market Risk. 15
8. Financial Statements and Supplementary Data. 15
9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure. 16
PART III
10. Directors and Executive Officers of the Registrant. 16
11. Executive Compensation. 17
12. Security Ownership of Certain Beneficial Owners
and Management. 26
13. Certain Relationships and Related Transactions. 27
PART IV
14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K. 28
PART I
ITEM 1. BUSINESS.
General
- -------
York International Corporation (the Company) is a full-line, global designer and
manufacturer of heating, ventilating, air conditioning and refrigeration
(HVAC&R) products. The Company believes it is the third largest manufacturer
and marketer of such products in the United States and one of the leading
companies in the HVAC&R industry internationally. The Company's air
conditioning systems range from a one ton unit for a small residence to the
59,000 ton system installed in the New York World Trade Center. In 1999, the
Company's products were sold in over 100 countries through over 850 sales and
distribution facilities and are in use in such diverse locations as the Kuala
Lumpur City Centre in Malaysia, the British Houses of Parliament, the Tokyo
World Trade Center, the Pentagon, NASA's Vehicle Assembly Building at Cape
Canaveral, NASA's Johnson Space Center, the Los Angeles International Airport,
the Jeddah Airport, the Overseas Union Bank Centre in Singapore, the Sydney
Opera House, the National Library Complex in Beijing, the Atlantic City
Convention Center, the English Channel Eurotunnel, the Hong Kong Exposition
Centre and the Lantau Airport Railway System in Hong Kong.
The Company was founded in 1874 in York, Pennsylvania. From 1956 until 1986 the
Company was a part of Borg-Warner Corporation ("Borg-Warner"). In 1986, it was
spun off to Borg-Warner shareholders and became an independent, publicly held
company. In 1988, the Company was purchased in a leveraged buyout by a
corporation organized by affiliates of Citicorp Investments Inc. ("CII") and two
investors. In October 1991, the Company completed an initial public offering of
its Common Stock, and in 1992, CII and the other non-management investors sold
their remaining shares in a public offering. In 1999, the Company expanded its
Refrigeration business by acquiring all of the outstanding capital stock of
Sabroe A/S, a Danish company. This acquisition establishes the York
Refrigeration Group as the world leader in supplying refrigeration systems and
products.
Headquartered in York, Pennsylvania, the Company has manufacturing facilities in
12 states and 14 foreign countries. As of December 31, 1999, the Company
employed approximately 25,000 people worldwide.
Unless the context otherwise requires, the terms "Company" and "York" refer to
the Company and its consolidated subsidiaries. The Company's principal executive
offices are located at 631 South Richland Avenue, York, Pennsylvania 17403, and
its telephone number is (717) 771-7890.
STRATEGY
- --------
The Company's strategy is to focus on the global air conditioning and
refrigeration equipment markets, refrigeration contracting, and the worldwide
service, repair and replacement markets. The Company has grown, and expects to
continue to grow, through expansion of its current product lines, acquisition of
businesses, establishment of joint ventures and licensing of technology in the
HVAC&R industry.
The Company intends to continue its strategy of increasing its market share by
broadening its product range to offer a complete line of environmentally
acceptable and energy efficient products. The Company seeks to take advantage
of regulatory changes by developing products that comply with tightening
environmental and energy efficiency requirements and regulations before they
become effective. The Company has implemented its environmental strategy by
developing product lines that utilize its screw, centrifugal, reciprocating,
hermetic, scroll and inertia compressor technology employing HCFC-123, HCFC-22,
R-407C, R-410A, R-404A, R-507, R-717 (ammonia) and HFC-134a as a refrigerant.
The screw and centrifugal compressor utilize designs which separate the
refrigerant from the motor housing. See "Environmental Matters" below. The
Company has increased the overall efficiency of its product offerings by
employing internally developed advanced heat transfer and compressor
- ----------------------
. The cooling capacity of air conditioning units is measured in tons. One tone
of cooling capacity is equivalent to 12,000 BTUs and is generally adequate to
air condition approximately 500 square feet of residential space.
1
technology and introducing large air conditioning systems that utilize advanced
thermal storage and absorption technologies.
The Company is also seeking to expand into new markets. The Company intends to
expand sales of its equipment throughout the international markets by broadening
its product line, expanding its distribution capabilities and pursuing
acquisitions.
The Company also focuses on controlling manufacturing and operating expenses and
thus improving its operating margins by redesigning products, acquiring more
efficient manufacturing equipment and processes and reducing costs not directly
associated with the manufacturing process. In addition, the Company has a
continuous planning process to enable it to carefully monitor the amount of
capital used in its business and to reposition its business units in light of
changing conditions throughout the year. The Company believes that its
management stock ownership plans and management incentive compensation plans,
which reward the management team of each operating unit for achieving the
planned objectives of that unit, will be key elements in implementing its
strategies and contributing to meeting financial objectives.
PRODUCTS AND MARKETS
- --------------------
All of the Company's products are in the heating, ventilating, air conditioning
and refrigeration (HVAC&R) industry, and the Company operates solely in this
industry. Within HVAC&R, the Company's products fall into three general
categories. The first is Unitary products, consisting of air conditioning and
furnace units and hermetic and scroll compressors designed for use in
residential and light commercial applications. The second is Engineered Systems
products, consisting of heating, air conditioning and thermal storage equipment
designed for commercial applications in retail stores, office buildings,
shopping malls, manufacturing facilities, hospitals, universities, airports and
marine vessels. The third is Refrigeration products, including commercial and
industrial refrigeration applications designed for the food, beverage, chemical
and petrochemical processing industries as well as marine applications. The
Company's engineered systems products and refrigeration and gas compression
equipment are designed specifically for the customer's needs and applications.
The following table sets forth net sales by product and geographic market:
(in thousands)
1999 1998 1997
----------- ----------- -----------
Unitary Products Group:
Bristol Compressors $ 579,686 $ 529,809 $ 504,024
Residential and light commercial products 1,098,514 1,055,627 964,648
Intragroup compressor sales (108,721) (103,676) (76,294)
---------- ---------- ----------
1,569,479 1,481,760 1,392,378
Engineered Systems Group 1,460,736 1,408,091 1,396,436
Refrigeration Products Group 883,609 447,499 447,093
Eliminations (47,209) (48,149) (42,250)
---------- ---------- ----------
Total net sales $3,866,615 $3,289,201 $3,193,657
========== ========== ==========
U.S. 52% 58% 58%
International 48% 42% 42%
---------- ---------- ----------
100% 100% 100%
========== ========== ==========
Additional financial information about the Company's operating segments and
foreign and domestic operations and export sales is incorporated herein by
reference to Note 17 on pages a27 to a30 of the Annual Financial Statements and
Review of Operations. In June 1997, The Financial Accounting Standards Board
(FASB) issued Statement of Financial Accounting Standards No. 131, "Disclosure
about Segments of an Enterprise and Related Information." This statement
requires the Company to report certain financial and other information about its
business segments, products and services, the geographic areas in which it
operates and its major customers. The objective of this statement is to help
users of financial statements better understand the enterprise's performance,
better assess it prospects for future net cash flows and make more informed
judgements about the enterprise as a whole.
Unitary Products Group. The Company's Unitary Products Group consists of heating
- ----------------------
and air conditioning solutions for buildings ranging from private homes and
apartments to small commercial buildings. Unitary products include ducted
central air conditioning and heating systems (air conditioners, heat pumps and
furnaces), ductless
2
mini-splits, and light commercial heating and cooling equipment. Bristol
Compressors manufactures reciprocating and scroll compressors for original
equipment manufacturers and for sale by wholesale distributors.
Unitary products consist of split systems and packaged products. A split system
consists of an outdoor unit containing a compressor and condenser, a connected
indoor unit containing a heat exchanger, an electric, gas or oil heating
section, an indoor blower system and associated controls. A packaged product is
a single, self-contained unit with compressor, condenser, heat exchanger,
electric, gas or oil heating section, blower and associated controls. These
units are typically installed on rooftops or beside a structure. Ducted
products distribute conditioned air throughout building structures with ductwork
connected to the system's blower, whereas ductless installations provide
conditioned air directly from indoor blowers without the use of ductwork.
A compressor is an integral part of an air conditioning system. The Company's
unitary products use compressors manufactured by the Unitary Products Group's
Bristol Compressors operation (Bristol) as well as those purchased from other
vendors. Approximately 80% of Bristol revenues are attributable to sales of
products to other air conditioning equipment manufacturers or wholesale
distributors.
The Company markets its Unitary products under the "YORK", "LUXAIRE", "FRASER-
JOHNSTON", "COLEMAN", "GUARDIAN", "AIRPRO", "BRISTOL" and "SEVESO" brands. A
licensing agreement with the Sunbeam Corporation, signed in 1999, gives York the
exclusive right to distribute residential HVAC products in North America under
the well-known "Coleman" brand. "YORK" is the Company's full line brand, which
is sold through Company-owned distribution centers and exclusive independent
distributors throughout the world. The "YORK" brand is sold with a high level
of customer service and sales support. The Company's 1995 acquisition of Evcon
Holdings expanded UPG's capabilities and distribution network in the domestic
unitary market. The Company's other brands are sold through more than 200 non-
exclusive distributors primarily for resale to contractors. The Company also
sells unitary products directly to the manufactured housing industry in North
America on an OEM basis. Internationally, the Unitary Product Group products
are sold in conjunction with other York business groups. See discussion of Non-
U.S. Distribution on page 6.
In 1998, the Company purchased the remaining 15% of its joint venture,
Aeromaster, and formed the 100% owned company York Industrial (Thailand) Co.,
Ltd. York Industrial (Thailand) Co., Ltd. is a mini-split manufacturer in
Bangkok, Thailand. The mini-split market represents a significant portion of
the unitary business in the Asia Pacific Region, and York Industrial Thailand
enables York to compete in this market with a product manufactured within the
Region. York Industrial Thailand supplies mini-split product to York offices
located around the world.
Sales of Unitary products include both new installations and replacement
systems. The Company estimates that more than half of its Unitary products
revenues in North America are attributable to the replacement market. The
replacement market is not affected by levels of new home construction and
therefore tends to be less cyclical. The replacement market is significantly
affected by ambient temperature. Hot weather in the spring season causes
existing older units to fail earlier in the season, leading customers to
accelerate replacement of a unit which might otherwise be deferred in the case
of a late season failure.
New residential products cover a wide range of efficiencies and may be able to
qualify for rebates offered by local utility companies for high efficiency
equipment. Bristol markets an INERTIA reciprocating compressor that directly
competes against other technologies in meeting high efficiency requirements.
Bristol has also developed a new compressor design known as TSTM Technology.
These new compressors provide higher system efficiencies, greater reliability,
and increased comfort. Scroll Technologies, a joint venture to design and
manufacture scroll compressors, continues to upgrade the scroll compressor
technology and performance.
Unitary and light commercial products are manufactured principally in plants
located in Elyria, Ohio; Norman, Oklahoma; Wichita, Kansas; Barlassina, Italy;
Montivideo, Uruguay; Asquith, Australia; Monterrey, Mexico; Bangkok, Thailand;
Johannesburg, South Africa; and Guangzhou, China. The Company's manufacturing
process relies on the purchase of certain components (including hermetic
compressors, copper tube, fan motors, fan blades, and control elements) from
outside suppliers, and in-house fabrication of sheet metal cabinets and
refrigerant coils. The various unitary products are then assembled and tested
before shipment. Bristol compressors are manufactured at the Company's
factories in Bristol, Virginia and Sparta, North Carolina, and by Scroll
Technologies in Arkadelphia, Arkansas. As with other Company products, Bristol
compressors are assembled using purchased parts (including motors, castings,
forgings and electronic components) as well as parts manufactured by the
Company.
3
All of the markets in which the Company's Unitary Products Group does business
are very competitive. Unitary product manufacturers compete on the basis of
price, reliability, delivery, efficiency and maximum market coverage. Price
competition and maximum market coverage are of particular importance in the
residential product lines as there is often relatively little perceived
differentiation. In the domestic market, the Company competes with three large
worldwide manufacturers, Carrier - a United Technologies Corporation company
(Carrier), Trane Company division of American Standard Companies Inc. (Trane)
and Lennox and numerous national manufacturers such as Goodman, Rheem and
Nordyne. In the international market, the Company competes primarily with
Carrier, Trane, Lennox and several Asian manufacturers, including Hitachi, LG,
Matsushita, Mitsubishi Electric, Samsung and Toshiba. In the compressors market,
the Company competes directly with two United States manufacturers, Copeland
Corporation, a subsidiary of Emerson Electric Inc., and Tecumseh, a division of
Tecumseh Corporation.
ENGINEERED SYSTEMS GROUP. The Company's Engineered Systems Group consists of
- ------------------------
heating and air conditioning solutions for buildings ranging from small office
buildings and fast food restaurants to large commercial and industrial
complexes. Engineered Systems air conditioning products include air-cooled and
water-cooled chillers, central air handling units, variable air volume units,
underfloor air distribution systems, control equipment to monitor and control
entire systems, maintenance and service. Engineered Systems Group manufactures
and provides design solutions for systems used in hospitals, office towers,
hotels, airports, shopping centers, schools, institutions and industrial
complexes. The Engineered Systems Group also supplies specially designed
chilled water systems for use on U.S., British, French and other naval and
commercial marine vessels and is currently the major supplier of water chillers
to the U.S. Navy for both surface vessels and submarines. The Group is also the
world leader in the design, manufacturing and selling of snow making equipment.
The Company markets its Engineered Systems products and services under the
"YORK", "MILLER-PICKING", "TEMPMASTER" and "PACE" brands. In the United States
and Canada, distribution of Engineered Systems products and services are
coordinated by six regional offices and approximately 60 district offices.
These district offices market products directly to end users and contractors.
The Company has approximately 130 direct sales representatives and 120
independent sales agents in the North American market. Internationally, the
Engineered Systems products and services are sold and distributed in conjunction
with other York business groups. See discussion of Non-U.S. Distribution on
page 6.
The Engineered Systems Group has a full line of chiller products utilizing the
latest technologies and refrigerants and providing high efficiency, low energy
consumption, low noise and environmentally friendly product solutions. The
Group has a line of standard indoor air handling equipment incorporating the
technologies for indoor air quality and a line of customized indoor and outdoor
air handling products. The custom units are sold under the names PACE and
Miller-Picking. York manufactures the broadest line of chiller and air handling
equipment of any manufacturer in the industry.
The Group derives substantial revenue through service and repair work, by
selling replacement equipment and parts, and by providing routine maintenance
for products manufactured by the Group and its competitors through annual
service contracts. The Company has a global and national account sales program
to service customers with multiple locations throughout the world.
The Engineered Systems Group believes its reputation for service and repair is
excellent. The Company employs more than 3,500 service technicians in offices
throughout the world. The Engineered Systems Group believes that its emphasis
on growth and improved productivity on service and repair, combined with the
growth and aging of the installed base of air conditioning and refrigeration
equipment, will be key factors in increasing the Company's revenues derived from
the service, repair and replacement market.
The Company's Engineered Systems products are principally manufactured in York,
Pennsylvania; Albany, Missouri; Hattiesburg, Mississippi; Portland, Oregon; San
Antonio, Texas; Roanoke, Virginia; Basildon, England; Barlassina, Italy;
Asquith, Australia; Montevideo, Uruguay; Wuxi, China; Guanghzou, China; Durango,
Mexico; and Monterrey, Mexico.
All of the markets in which the Company's Engineered Systems Group does business
are very competitive. Engineered Systems product manufacturers compete on the
basis of product design, reliability, quality, price, efficiency, acoustics and
post-installment service. Architects and engineers play an important part in
determining which manufacturer's products will be used in an application. In the
domestic market, the Company competes primarily with two large worldwide
manufacturers, Carrier and Trane. In the international market, the Company
4
competes primarily with Carrier, Trane and several Japanese manufacturers,
including Matsushita, Hitachi, Mitsubishi Electric and Toshiba.
Many of the components of the Company's engineered products, such as motors,
control elements and castings, are purchased from outside suppliers. The other
components are custom manufactured by the Company. Using these components and
custom-designed specifications, the engineered products are machined, assembled,
tested, shipped and installed. Following installation, the Company assists in
the start-up of the system, and supplies ongoing maintenance, service and
replacement parts.
YORK REFRIGERATION GROUP. The Company's York Refrigeration Group develops,
- ------------------------
manufactures and distributes products and systems for the marine, industrial and
commercial refrigeration market. YORK Refrigeration produces screw and
reciprocating compressors, condensers, evaporators, heat exchangers, industrial
and marine chillers, plate freezers, ice makers, process refrigeration systems,
air handling and ventilating equipment, gas compression systems, automated plant
control systems and advanced control systems for refrigerated containers.
Screw and reciprocating compressors enable the Company to produce highly
reliable, refrigeration systems required for commercial and industrial
applications in the food, beverage, chemical and petroleum industries as well as
marine applications. The Company's refrigeration and gas compression equipment
is engineered and manufactured to customer specifications. YORK Refrigeration
selects screw and reciprocating compressors together with other components to
offer customers the optimal solution and value for their specific application
considering cost, energy efficiency, reliability, space and environmental
requirements.
Refrigeration systems are essential in the textile, electronics, pharmaceutical
and petrochemical industries. Food, beverage, marine and process cooling
operations use refrigeration systems both in chilling and product freezing and
maintaining these products in warehouses, distribution centers and retail
outlets. York Refrigeration systems are also in use in sporting venues.
The Company markets its refrigeration and gas compression equipment under the
"YORK", "SABROE", "FRICK", "NOVENCO", "RETECH", "FRIGID COIL", "IMECO",
"ACUAire", "GRAM REFRIGERATION", "SAMIFI" and "YORK BONUS" brands. The products
are sold by the Company's sales engineers located in 14 offices and a national
network of more than 50 independent agents in the United States as well as
company owned sales offices, independent distributors, and agents and one
licensee elsewhere in the world. In addition, the Company believes that
developing countries offer opportunities for increasing sales of refrigeration
equipment. See non-U.S. distribution below for additional discussion on non-
U.S. markets.
Refrigeration equipment is manufactured at Company-owned facilities in Dixon,
Illinois; Polo, Illinois; Waynesboro, Pennsylvania; San Antonio, Texas; Sao
Paulo, Brazil; Carquefou, France; Aarhus, Naestved, and Hornslet, Denmark; Pune,
India; Milan, Italy; and at a leased facility in Santa Fe Springs, California.
All of the markets in which YORK Refrigeration does business are very
competitive. Refrigeration manufacturers compete on the basis of product design,
reliability, quality and price. In the market for refrigeration equipment, the
Company competes primarily with FES, GEA-Grasso, Evapco, Krack Corp., and Mycom.
5
RAW MATERIALS AND PURCHASED COMPONENTS
- --------------------------------------
The Company purchases compressors, steel, copper, aluminum, electric motors,
castings, forgings, stampings, fabricated copper tubes, electronic starters and
controls, aluminum fin, fan blades, capacitors, transformers, refrigerant gases,
valves, fittings and other components from many outside suppliers. Alternate
sources of supply are available for all raw materials and components for which
the Company uses a single supplier. The Company believes that it has adequate
sources of supplies of raw materials and component parts for its manufacturing
requirements. In order to hedge against certain raw material price increases,
the Company may enter into forward contracts for the purchase of certain raw
materials, principally copper and aluminum.
PATENTS AND TRADEMARKS
- ----------------------
The Company holds numerous patents that relate to the design and use of its
products that it considers important, but not essential, to the overall conduct
of its business. It is the Company's policy to obtain patent protection for as
many of its new and developmental products as possible, and to enforce such
patent rights as appropriate. No patents which the Company considers material
will expire within the next five years.
The Company owns several trademarks that it considers important in the marketing
of its products as discussed in each of the business segment sections. The
Company believes that its rights in these trademarks are adequately protected
and of unlimited duration.
NON-U.S. DISTRIBUTION
- ---------------------
Outside of the United States, the Company markets the majority of its products
and services, for all business groups, through many of the same sales and
service offices. The Company's worldwide business groups are segregated
internally into North America and the four geographic regions discussed below.
The Company's European region, headquartered in Basildon England, markets its
products and services through offices located in Austria, Belgium, Bulgaria, the
Czech Republic, Denmark, England, Finland, France, Germany, Greece, Hungary,
Italy, Ireland, Latvia, the Netherlands, Norway, Poland, Romania, Russia, other
former Commonwealth of Independent States countries, Scotland, Slovakia, Spain,
Sweden, Switzerland and the Ukraine. The Company also considers markets in
parts of Africa and South Africa as part of the European region. Products are
also marketed through joint ventures as listed on pages 7 and 8.
The Company's Asian region, headquartered in Hong Kong (China), markets its
products and services through offices located in Australia, China, Hong Kong,
Indonesia, Japan, Korea, New Zealand, Philippines, Singapore, and Thailand.
Products are also marketed through joint ventures, as listed on pages 7 and 8,
and various independent distributors located throughout the region.
The Company's Latin American region, headquartered in Miami, Florida, markets
its products and services through offices located in Argentina, Brazil, Chile,
Colombia, Ecuador, Mexico, Miami (USA), Peru, Puerto Rico, Uruguay and
Venezuela. Products are also marketed through sales representatives and
independent distributors located throughout Latin America and joint ventures as
listed on pages 7 and 8.
The Company's Middle East region, headquartered in Dubai (U.A.E.), markets its
products and services throughout the Middle East, India and parts of Eastern
Africa through offices located in Abu Dhabi, Cairo, Dubai, Egypt, Indonesia,
Istanbul, Karachi, Kuwait, Mumbai and New Delhi. Products are also marketed
through numerous distributors in the region and joint ventures as listed on
pages 7 and 8.
6
JOINT VENTURES IN U.S. AND NON-U.S. MARKETS
- -------------------------------------------
In addition to its wholly-owned production and distribution facilities, the
Company produces, distributes and services products through its participation in
several joint ventures, which are described in the following table:
Joint Venture
(Percent Owned by Principal
Principal Location Joint Venture Partner the Company) Products/Services Markets Served
- -------------------- ------------------------ ---------------------------- ------------------------- --------------
Malaysia OYL Industries OYL-Condair Industries Manufacture Unitary Asia Pacific
BHD. SDN.BHD. (49%) and Engineered System Middle East
products
Malaysia OYL Industries York (Malaysia) Service Sales and service of air Malaysia
BHD. SDN.BHD. (30%) conditioning equipment
Peoples Republic Guangzhou Sinro Air York Guangzhou Air Manufacture Unitary and China
of China Conditioning Mechanical Conditioning and Engineered Systems
and Electrical Equipment Refrigeration Co. Ltd. products
Company Ltd. (97%)
Peoples Republic Wuxi Boiler Group York-Wuxi Air Conditioning Manufacture Engineered China
of China and Refrigeration Co. Ltd. Systems products
(80%)
Republic of China Taipei Engineering York-Taiwan, Inc. (60%) Sales and service of air Taiwan
(Taiwan) Development conditioning equipment
Cyprus Sabinco Ltd. KROY Ltd. (50%) Sales of air conditioning Middle East
equipment and parts
Saudi Arabia Al Salem United Al Salem-York Services Service and repair of Saudi Arabia
Contracting Co. Ltd. (49%) air conditioning
equipment
Spain Compania Roca Clima Roca-York S.L. (50%) Manufacture Unitary Spain
Radiadores S.A. products
Brazil Mayside Participacues York International Sales of air conditioning Brazil
Administracao e Comercial Ltda. (80%) equipment
Comercio Ltda
U.S. Carrier Corporation Scroll Technologies (50%) Manufacture scroll U.S.
compressors
Finland OY Huurre Group AB Sabroe Finland Oy (50%) Sales and service of Finland
refrigeration products
Hungary Individual Hungary Rotor Kalteanlagen GmbH Sales and service of Hungary
shareholder (50%) refrigeration products
Russia Tehol CJSC Sabroe Russ Closed Joint Sales and service of Russia
Arsenal Stock Company (43%) refrigeration products
IO Fund
Denmark Three Danish Jernstaberiet Dania A/S Castings Europe
pension funds (40%)
Japan (Flakt) Nissin Refrigeration & Stal Nissin Corp. (50%) Sales and service of Japan
Engineering Ltd. refrigeration products
Japan (Novenco) Individual Japan Novenco Nippon Ltd (50%) Sales and service of Japan
shareholder air handling equipment
7
Joint Venture
(Percent Owned by Principal
Principal Location Joint Venture Partner the Company) Products/Services Markets Served
- -------------------- ------------------------ -------------------------- ------------------------- --------------
Korea Individual Korea Hi-Pres Korea Co. Ltd (20%) Sales and service of Korea
shareholder air handling equipment
Malaysia Kumpulan Nametech Airvenco Sdn. Bhd. (20%) Sales and service of Malaysia
Sdn. Bhd. air handling equipment
Morocco IFU A/S, Denmark Tabrid Sabroe Maghreb S.A. Sales and service of North Africa
Individual Morocco (20%) refrigeration products
shareholder
USA (Sabroe Inc) Individual US Sabroe Refrigeration Inc Sales and service of North America
shareholder (50%) refrigeration products
Colombia Paramo Industria de Sabroe de Colombia Ltda Sales and service of Latin America
Refrigeracion Ltda. (60%) refrigeration products
Industria de Engenieria
e Refrigeracion S.A.
Uruguay Madef S.A. Idako S.A. (75%) Sales and service of Latin America
refrigeration products
Dividends received by the Company from affiliates were $1.0 million in 1999,
$0.5 million in 1998 and $1.2 million in 1997. Total Company investments in
affiliates were $25.4 million, $20.1 million and $17.7 million at December 31,
1999, 1998 and 1997, respectively. Total sales by the Company to affiliates are
less than 1% of the Company's total revenues.
MAJOR CUSTOMERS
- ---------------
During 1999, no customer, distributor, dealer or licensee accounted for more
than 10% of the Company's revenues. The loss of a few customers, distributors,
dealers or licensees would not have a materially adverse effect on the Company's
business.
BACKLOG
- -------
The following table sets forth backlog by business segment:
(in thousands)
1999 1998
---------- ---------
Unitary Products Group:
Bristol Compressors $ 93,524 $122,552
Residential and light commercial products 95,525 112,194
---------- --------
189,049 234,746
Engineered Systems Group 465,424 504,616
Refrigeration Products Group 410,623 140,111
---------- --------
Total backlog $1,065,096 $879,473
========== ========
Substantially all orders are expected to be fulfilled within the next 12 months.
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GOVERNMENT CONTRACTS
- --------------------
In 1999, approximately 1% of the Company's sales were related to ongoing United
States Government projects. The Company expects that substantially all work
will be completed during fiscal year 2000 in connection with all of these
contracts. The Company's existing contracts with the United States Government
may be terminated at any time at the option of the Government and are subject to
continued availability of government appropriations. If these contracts were
terminated, the Company would only be entitled to reimbursement of costs
incurred and to payment of a reasonable allowance for profit on work actually
performed.
RESEARCH AND DEVELOPMENT
- ------------------------
The Company's product development activities include ongoing research and
development programs to redesign existing products to reduce manufacturing costs
and to increase product efficiencies, developing electronic controls for current
product offerings and creating a wide range of new products. During the years
1997, 1998 and 1999, the Company spent $30.6 million, $31.2 million, and $41.0
million, respectively, for all product development activities.
The Unitary Products Group continues to redesign its product line for lower
sound ratings, greater efficiency, reliability and manufacturing cost
effectiveness. The new Predator commercial rooftop line leads the industry in
efficiency and feature set valve. The Stealth series residential air
conditioner, utilizing Twin Single (TS) compressor technology is an industry
first. An entirely new gas furnace, designed specifically for the Manufactured
Housing market will make the Coleman brand of MH furnaces an industry leader.
Bristol has developed a new breakthrough compressor design, TS Technology,
providing higher system efficiencies, greater reliability, and increased
comfort. Scroll compressor technology and capability are continuing to expand
through the joint venture Scroll Technology.
The Engineered System Group's most notable product developments in 1999 were the
launch of new air-cooled packaged chiller offerings from 10 to 400 tons
replacing older regional product lines with cost-effective, low noise, energy
efficient, modular, global product platforms using HFC refrigerants and
innovative heat exchanger technology. The centrifugal and screw chiller product
expansion continues with new environmentally acceptable replacements for CFC's.
The product line now extends from 150 to 6,000 tons for these refrigerants. The
Group launched a new factory mounted "OptiView" graphic display control package
that provides state-of-the-art touch pad and visual control of the entire
chiller operation. The Group has also expanded its new line of variable speed
drives for centrifugal chillers to 1,400 tons. This product is compact enough
to mount directly on the chiller and is applicable to the retrofitting of any
centrifugal chiller on the market. The Group introduced a new line of
underfloor air distribution units to provide a solution for low-rise office
buildings which offers major benefits on ceiling height and construction costs.
The new products include the latest technologies to insure indoor air quality.
The combination of air handling product development and current product lines
give the Company the broadest line of air handling products of any single
manufacturer in the industry.
The York Refrigeration Group launched a comprehensive range of new products in
1999 including a large capacity screw compressor package, a second generation of
mid-range screw compressor packages, a standard range of variable speed drive
screw compressor packages, a small semihermetic screw compressor package, new
ice rink chillers and new PC and PLC based plant control systems. York
Refrigeration is currently developing a series of new screw compressors for the
food and beverage markets, a series of low pressure screw compressors for the
gas compression industry and a new range of chillers for industrial
applications. York Refrigeration research and development is focused on the
core competencies within compression and controls technology, thermodynamics and
manufacturing technology as well as application development. These technologies
are the basis for optimization, cost reductions and price performance as well as
developing new and enhanced product introductions.
9
EMPLOYEES
- ---------
As of December 31, 1999, the Company employed approximately 25,000 persons
worldwide. Approximately 12,500 persons are employed in the United States and
12,500 persons are employed in foreign countries. Approximately 4,275 domestic
employees are covered by collective bargaining agreements which expire between
June 2000 and January 2004. The Company considers its relations with its
employees to be satisfactory.
ENVIRONMENTAL MATTERS
- ---------------------
Environmental laws that affect or could affect the Company's domestic operations
include, among others, the Clean Air Act, the Clean Water Act, the Resource
Conservation and Recovery Act, the Occupational Safety and Health Act, the
National Environmental Policy Act, the Toxic Substances Control Act, any
regulations promulgated under these acts, and various other Federal, state and
local laws and regulations governing environmental matters. The Company
believes it is in substantial compliance with such existing environmental laws
and regulations.
The Company's non-U.S. operations are also subject to various environmental
statutes and regulations. Generally, these requirements tend to be no more
restrictive than those in effect in the United States. The Company believes it
is in substantial compliance with such existing environmental statutes and
regulations. In 1993, the Council of European Communities agreed on EC
regulation number 1836/93 which recommended that each company voluntarily
complete an ECO-Audit. The Company has completed these audits at several of its
European facilities.
In September 1987, the United States became a signatory to an international
agreement titled the Montreal Protocol on Substances that Deplete the Ozone
Layer (the "Montreal Protocol"). The Montreal Protocol requires its signatories
to reduce production and consumption of CFCs and Halons, some of which are
utilized in air conditioning and refrigeration equipment. In 1988, the EPA
issued regulations under the Clean Air Act implementing the Montreal Protocol in
the United States. Many other countries have also become signatories to the
Montreal Protocol. The manner in which these countries implement the Montreal
Protocol and regulate CFCs could differ from the approach taken in the United
States.
The 1990 Clean Air Act amendments implement the Montreal Protocol by
establishing a program for limiting the production, importation and use of
certain ozone depleting chemicals (including those governed by the Montreal
Protocol) some of which are refrigerants currently used by the Company. Under
the Act, the production and consumption of the refrigerants designated as "Class
I substances" including all CFCs must be phased out beginning in 1991 and are to
be banned completely by 2000. Certain other refrigerants, including all HCFCs,
are designated as "Class II substances", and must be phased out between 2015 and
2030.
The Clean Air Act allows the EPA to accelerate the statutory phase-out schedule
for any Class I or Class II substance. In November 1992, the parties to the
Montreal Protocol agreed to amend the Protocol to require the complete phase-out
of CFC production by the beginning of 1996. Further, the parties agreed to a
1996 production cap on HCFCs and a complete phase-out of HCFC production by
2030. The EPA published a final rule requiring accelerated phase-out of the
production of all CFCs by 1996 and of all HCFCs by 2030.
None of the Company's manufactured products contains Class I substances. Class
I substances previously used by the Company have been substituted for by Class
II substances or substances that are currently unregulated. The Company does,
however, believe that revenues from servicing and repairing existing equipment
that uses Class I substances are and will be significant. These activities are
regulated by the EPA which imposes guidelines affecting service and maintenance
of equipment that use Class I and Class II substances. The Company trains and
licenses its service technicians in service and maintenance procedures that
comply with the new regulations. Therefore, the Company believes that the new
regulations will not have a material adverse effect on its operations. The
phase-out of Class I substances will require modifications to existing air
conditioning equipment as availability of recycled Class I substances decreases.
Since the Company's technology enables it to modify existing equipment for use
with Class II substances, it believes that this will continue to generate
additional service revenues. While the Company expects to derive substantial
revenue from the sale of products utilizing Class II substances, it is not
expected that any phase-out will have a significant impact on the sales of such
products until after the turn of the century. Nonetheless, as the supply of
virgin and recycled Class II substances falls, it will be necessary to address
the need to substitute permitted substances for Class II substances.
The Company, in conjunction with major chemical manufacturers, is continually in
the process of reviewing and addressing the impact of refrigerant regulations on
its products. The Company believes that the combination of
10
those products which presently utilize Class II substances and those products in
the field which can be retrofitted to such refrigerants provides a complete line
of commercial and industrial products. Therefore, the Company does not foresee
any material adverse impact on its business or competitive position as a result
of the Montreal Protocol, the 1990 Clean Air Act amendments or their
implementing regulations. However, the Company believes that the implementation
of severe restrictions on the production, importation or use of refrigerants
employed in larger quantities by the Company could have such an impact. The
Company believes that the Engineered Systems products that it has produced will
be well positioned to utilize the next generation of refrigerants without
substantial modification. If the next generation of refrigerants is incompatible
with the hermetic compressors used by the Company and all of its competitors for
Unitary products, design modifications would be required.
GOVERNMENTAL REGULATIONS
- ------------------------
The Company is subject to regulations promulgated under the National Appliance
Energy Conservation Act of 1987, as amended, and various state regulations
concerning the energy efficiency of its products. The Company has developed and
is developing products which will comply with these regulations, and does not
believe that such regulations will have a material adverse effect on its
business.
11
EXECUTIVE OFFICERS
- ------------------
The executive officers of the Company are as follows:
NAME AGE POSITION
---- --- --------
Michael R. Young 55 President and Chief Executive Officer
Ole Andersen 59 Vice President and President of Refrigeration Products Group
James F. Damiani 55 Vice President and President of Unitary Products Group
Wayne J. Kennedy 57 Vice President and President of Bristol Compressors
Peter C. Spellar 55 Vice President and President of Engineered Systems Group
Dale L. Bennett 61 Vice President, Human Resources
Charles F. Cargile 35 Vice President, Finance and Corporate Development
Jane G. Davis 50 Vice President, Secretary and General Counsel
Helen S. Marsteller 39 Vice President, Investor Relations
C. David Myers 36 Vice President and Chief Financial Officer
James P. Corcoran 54 Treasurer
David R. Heck 45 Controller
Mr. Young has been President and Chief Executive Officer since February 2000.
Prior thereto, he was Vice President of the Company and President, Central
Environmental Systems from 1999 to 2000, Vice President of the Company, and
Chief Executive Officer and President of Bristol Compressors from 1996 to 1999,
President, Chairman and Chief Executive Officer of Evcon Industries, Inc. from
1991 to 1995, President and Chief Operating Officer of York International Inc.
from 1988 to 1989, and Chairman, President and Chief Executive Officer of
Bristol Compressors from 1983 to 1987.
Mr. Andersen has been Vice President of the Company and President of
Refrigeration Products Group since July 1999 when the Company acquired Sabroe
Refrigeration A/S, Denmark. He was Chief Executive Officer of Sabroe
Refrigeration A/S from 1997 to 1999. Prior to joining Sabroe, he was a Member of
the Executive Board and President of the Process Technology Division of GEA AG,
Germany from 1993 to 1997. Prior thereto, he was President of Niro Group,
Denmark from 1977 to 1993 and President of Niro Inc., USA from 1973 to 1977.
Mr. Damiani has been Vice President of the Company and President of Unitary
Products Group since January 2000. Prior to joining the Company, he was
President of ClimateMaster, Inc. from January 1995 to 2000 and prior to that,
Mr. Damiani had a thirty year career with Lennox Industries resulting in his
final assignment as Senior Vice President of North American Operations.
Mr. Kennedy has been Vice President of the Company and President, Bristol
Compressors since March 2000. Prior thereto, he was Vice President, Human
Resources from 1993 to 2000. Prior to joining the Company, he was Vice
President of Human Resources for the Millipore Corporation from 1985 to 1993.
Mr. Spellar has been Vice President of the Company and President, Engineered
Systems Group since February 2000. Prior thereto, he was Vice President,
Marketing and Strategic Accounts from 1999 to 2000, Vice President of the
Company and President, Applied Systems Worldwide from 1995 to 1999, Vice
President of the Company and Vice President, European Operations from 1992 to
1995, President, Frick Division from 1987 to 1992 and President of the Frick
Company from 1979 to 1987.
12
Mr. Bennett has been Vice President, Human Resources since March 2000. Prior
thereto, he was Vice President, Organization Development from 1999 to 2000 and
Director of Organization Development from 1997 to 1999. Prior to joining the
Company, he held several Human Resource leadership positions with Millipore
Corporation, Pfizer Inc., and E. J. Gallo Winery.
Mr. Cargile has been Vice President, Finance and Corporate Development since
February 2000. Prior thereto he was Vice President, Business Development and
Strategic Planning from 1999 to February 2000, and Controller from 1998 to 1999.
Prior to joining the company, Mr. Cargile was Controller of Flowserve
Corporation from 1997 to 1998. Prior thereto, he held various positions with
BW/IP, Inc. from 1992 to 1996, including Corporate Controller and Chief
Accounting Officer. From 1987 to 1992, Mr. Cargile was with Coopers and Lybrand
LLP.
Ms. Davis has been Vice President, Secretary and General Counsel of the Company
since March 1995. Prior to joining the Company, she was Vice President, General
Counsel and Secretary of Joy Technologies Inc. from 1988 to 1995.
Ms. Marsteller has been Vice President, Investor Relations since September 1997.
Prior thereto, she was Director of Investor Relations from 1992 to 1997. Prior
thereto, she held various financial positions in the Unitary Products Group from
1986 to 1992. Prior to joining the Company, she held leadership positions at
Honeywell, Inc. and Armco, Inc.
Mr. Myers has been Vice President and Chief Financial Officer of the Company
since February 2000. Prior thereto he was Vice President Finance, Engineered
Systems Group from 1998 to February 2000, Corporate Controller from 1995 to
1998, Director of Finance for the Airside Products Group from 1994 to 1995, and
Director of Financial Planning and Controls in 1994. Prior to joining the
Company, he was with KPMG LLP from 1986 to 1994.
Mr. Corcoran has been Treasurer of the Company since July 1992. Prior to
joining the Company, he was Treasurer of Griffith Laboratories from 1990 to
1992, Treasurer of AM International from 1987 to 1990 and Director, Treasury
Operations of Borg-Warner Corporation from 1977 to 1987.
Mr. Heck has been Controller since January 2000. Prior to joining the Company,
he was Director of Strategic Analysis and Corporate Controller of Superior
Group, Inc. from 1995 to 1999, Corporate Controller and Accounting Manager for
LFC Financial Corp. from 1983 to 1995, and Audit Manager with Deloitte, Haskins,
& Sells from 1976 to 1983.
13
ITEM 2. PROPERTIES.
The Company's principal offices are located in York, Pennsylvania on an
approximately 71 acre site owned by the Company. The following table lists the
principal manufacturing facilities owned by the Company:
APPROXIMATE
Location PRIMARY PRODUCTS ENCLOSED AREA (SQ. FT.)
- ---------------------------- --------------------------------------- -----------------------
York, PA Engineered products 1,500,000
Wichita, KS Unitary products 835,000
Bristol, VA Unitary products (hermetic compressors) 700,000
Elyria, OH Unitary products 636,000
Norman, OK Unitary products 539,000
Waynesboro, PA Refrigeration products and compressors 459,000
Naestved, Denmark Refrigeration air handling products 332,000
Aarhus, Denmark Refrigeration products and compressors 290,000
Basildon, England Engineered products 254,000
San Antonio, TX Refrigeration and Engineered products 242,000
Norrkoping, Sweden Refrigeration products and compressors 198,000
Sparta, NC Unitary products (hermetic compressors) 180,000
Sao Paulo, Brazil Refrigeration products and compressors 123,000
Bangkok, Thailand Unitary products 123,000
Guangzhou, China Engineered products 115,000
Wuxi, China Engineered products 102,000
Dixon, IL Refrigeration condensing products 97,000
Asquith, Australia Engineered products 96,000
Durango, Mexico Engineered products 95,000
Hornslet, Denmark Refrigeration products 93,000
Monterrey, Mexico Engineered products, Unitary products 92,000
Carquefou, France Refrigeration and Engineered products 92,000
Polo, IL Refrigeration air handling products 78,000
Hornslet, Denmark Castings for compressor production 73,000
Roanoke, VA Engineered products (screw compressors) 72,000
Montevideo, Uruguay Engineered products 53,000
Milan, Italy Plate freezers 34,000
Johannesburg, South Africa Unitary products 34,000
At the York, Pennsylvania location, approximately 200,000 square feet of
facilities are leased to tenants and approximately 340,000 square feet are
currently used by the Company as storage and is available for expansion. The
Company also leases for its own use a 163,000 square foot facility in Albany,
Missouri, a 360,000 square foot manufacturing facility in Barlassina, Italy, a
30,000 square foot manufacturing facility in Mannheim, Germany, an 82,000 square
foot facility in Santa Fe Springs, California, an 84,000 square foot
manufacturing facility in Hattiesburg, Mississippi, a 200,000 square foot
facility in Salisbury, North Carolina, and a 200,000 square foot facility in
Portland, Oregon.
In addition to the properties described above, the Company leases facilities
worldwide for use as sales and service offices and regional warehouses. The
Company believes that its properties are in good condition and adequate for its
requirements. The Company believes that its principal plants are generally
adequate to meet its production plans pursuant to its long-term sales goals.
In the ordinary course of its business, the Company monitors the condition of
its facilities to ensure that they remain adequate to meet its long-term sales
goals and production plans. The Company makes capital expenditures intended to
upgrade existing facilities and equipment to increase production efficiency and,
when appropriate, to adapt them to the requirements of manufacturing new product
lines.
ITEM 3. LEGAL PROCEEDINGS.
The Registrant is engaged in certain litigation with John R. Tucker, a Director
and former President and Chief Executive Officer regarding amounts he is
claiming in connection with the termination of his employment. The Company
believes it has no obligation to Mr. Tucker.
14
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There were no matters submitted to the Company's security holders during the
fourth quarter of 1999.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
The Company's common stock trades on the New York Stock Exchange under the
symbol "YRK". On March 27, 2000, the Company had 5,626 holders of record of its
common stock.
TRADING AND DIVIDEND INFORMATION
- ----------------------------------
Dividends
High LOW DECLARED
--------- --------- ---------
1999
- ----------------------------------
Fourth quarter $28 1/4 $ 21 $.15
Third quarter 47 1/2 35 1/4 .15
Second quarter 43 3/8 34 3/8 .15
First quarter 41 5/8 33 5/8 .15
1998
- ----------------------------------
Fourth quarter $43 9/16 $27 1/2 $.12
Third quarter 46 11/16 31 5/8 .12
Second quarter 52 3/4 40 3/4 .12
First quarter 46 1/2 34 3/8 .12
The declaration and payment of future dividends will be at the sole discretion
of the Board of Directors and will depend upon such factors as the Company's
profitability, financial condition, cash requirements and future prospects and
limitations imposed by the Amended and Restated Credit Agreement, amended in
1999, and the Revolving Credit Agreement established in 1999.
ITEM 6. SELECTED FINANCIAL DATA.
Information contained under the caption "Five Year Summary of Selected Financial
Data" on page a5 of the Annual Financial Statements and Review of Operations is
incorporated herein by reference in response to this item.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
Information contained under the caption "Management's Discussion and Analysis of
Financial Condition and Results of Operations" on pages a6 to a12 of the Annual
Financial Statements and Review of Operations is incorporated herein by
reference in response to this item.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK.
Information contained under the caption "Management's Discussion and Analysis of
Financial Condition and Results of Operations, Market Risk," on pages a10 to a12
of the Annual Financial Statements and Review of Operations is incorporated
herein by reference in response to this item.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Financial statements for York International Corporation and Subsidiaries are
contained on a13 to a31 of the Annual Financial Statements and Review of
Operations and Summary of Quarterly Results (unaudited) are contained on page
a32 of the Annual Financial Statements and Review of Operations and are
incorporated herein by reference in response to this item.
15
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The directors of the Company are as follows:
Name and Age Other Positions with the Company Director
or Principal Occupation Since
Gerald C. McDonough (71).............. Chairman of the Board of Directors; 1988
Chairman of G.M. Management Group
Michael R. Young (55) .............. President and Chief Executive Officer 1999
Malcolm W. Gambill (69) .............. Retired Chairman of the Board and Chief 1993
Executive Officer of Harsco Corporation
Robert F. B. Logan (67) .............. Retired Chairman of the Board and Chief 1988
Executive Officer of Banc One Arizona
Corporation and Senior Executive of
Banc One Corporation's Western
Region
Donald M. Roberts (64) .............. Retired Vice Chairman and Treasurer of 1988
United States Trust Company of New York
and U.S. Trust Corporation
John R. Tucker (52) .............. Former President and Chief Executive Officer 1998
James A. Urry (46) .............. Vice President of Citicorp Venture 1992
Capital Ltd.
John E. Welsh, III (49) .............. Vice Chairman of Skytel 1990
Communications, Inc.
Walter B. Wriston (80) .............. Private Business Consultant 1992
Mr. McDonough has been Chairman of G.M. Management Group (strategic advisory
services) since 1988. He was Chairman and Chief Executive Officer of Leaseway
Holdings, Inc. from 1987 to July 1988 and Chairman and Chief Executive Officer
of Leaseway Transportation Corp. from 1982 to 1987. Mr. McDonough is a Director
of Commercial Intertech Corporation, Associated Estates Realty Corporation, and
CUNO, Inc. and is a Trustee of The Fidelity Funds.
Mr. Young has been President and Chief Executive Officer of the Company since
February, 2000. From November, 1999 to February, 2000 he was President of the
Company's Central Environmental Systems Group. From 1996 to 1999 he was Chief
Executive Officer and President of the Company's Bristol Compressors subsidary.
He was President, Chairman and Chief Executive Officer of Evcon Industries, Inc.
from 1991 to 1995, President and Chief Operating Officer of the Company from
1988 to 1989 and Chairman, President and Chief Executive Officer of Bristol
Compressors, Inc. from 1983 to 1987.
Mr. Gambill was Chairman of the Board of Harsco Corporation from 1991 until he
retired in 1994. Mr. Gambill was Harsco's Chief Executive Officer from 1987 to
1993 and its President from 1987 to 1991.
16
Mr. Logan was Chairman of the Board and Chief Executive Officer of Banc One
Arizona Corporation and Bank One Arizona, N.A. and Senior Executive of Banc One
Corporation's Western Region from April 1995 until his retirement on March 31,
1996. From April 1993 until April 1995, Mr. Logan was a private business
consultant. He was with Valley National Bank, as President and Chief Operating
Officer from January 1990 until April 1993 and as Senior Executive Vice
President from May 1989 to January 1990. Mr. Logan was President and Chief
Operating Officer of Alexander Hamilton Life Insurance Company of North America
from October 1988 to April 1989, an independent financial advisor from October
1986 to October 1988, and Group Chief Executive and Deputy Chairman of Samuel
Montagu & Co. (Holdings) Limited from March 1985 to July 1986. Mr. Logan is a
Director of Plantronics.
Mr. Roberts was Vice Chairman and Treasurer of the United States Trust Company
of New York and its parent, U.S. Trust Corporation, from February 1990 until his
retirement in September 1995. He was Executive Vice President and Treasurer of
both companies from January 1989 to February 1990 and Executive Vice President
of both companies from November 1979 to January 1989. Mr. Roberts is a Director
of Burlington Resources, Inc.
Mr. Tucker was President and Chief Executive Officer of the Company from October
1999 to February 2000 and President and Chief Operating Officer of the Company
from October 1997 to October 1999 and a Director since December 1997. Prior to
joining the Company, he was President of the Aerospace Equipment Systems Sector
of Allied Signal, Inc. from January 1996 to October 1997, President and Chief
Executive Officer of Motoren und Turbinen Union (Jet Engine Division) of
Daimler-Benz, A.G. from 1994 to 1996 and President of AEG Transportation Systems
from 1988 to 1994. Mr. Tucker held various positions with Westinghouse Electric
Corporation from 1968 to 1988.
Mr. Urry has been a Vice President of Citicorp Venture Capital Ltd. since 1989
and has been a Vice President of Citibank, N.A. since 1986. He is a Director of
Hancor Holdings, International Knife and Saw Corporation, Palomar Technologies,
Inc., Airxcel, Inc., and Intersil.
Mr. Welsh was Vice Chairman of Skytel Communications, Inc. from 1992 until his
retirement in December 1999 as part of the acquisition of Skytel by MCI
Worldcom. From 1990 to 1992, Mr. Welsh was a Managing Director of Prudential-
Bache Interfunding Inc. Prior thereto he was a Managing Director of Prudential
Bache Securities, Inc. from 1985 to 1990 and Co-Head of its Mergers and
Acquisitions Department from 1988 to 1990. Mr. Welsh is a Director of BICC
General Corp.
Mr. Wriston has been a private business consultant since he retired as the
Chairman and Chief Executive Officer of Citicorp in 1984. Mr. Wriston is a
Director of ICOS Corporation, Cygnus, Inc., and Vion Pharmaceuticals, Inc.
ITEM 11. EXECUTIVE COMPENSATION
RELATIONSHIP OF COMPENSATION TO PERFORMANCE
The Compensation Committee believes that the compensation of the Company's
officers should provide a strong incentive to achieve the Company's performance
objectives. The objectives, which are established by the Board of Directors
together with management, are intended to maximize corporate and divisional
performance and, ultimately, deliver strong value to the stockholders.
Consequently, in addition to salary, a significant portion of cash compensation
is in the form of an annual bonus, which is paid only if certain financial
objectives are met and which can be larger if such financial objectives are
exceeded. The more senior an officer, the more his or her total compensation
depends on the bonus payment. The Company's Incentive Compensation Plan also
contains a Mid-Term Program that provides for the grant of Performance Units to
be earned over a longer measurement period. In addition, the Compensation
Committee grants stock options and may grant restricted stock, designed to
provide long-term incentives to key employees and tie their interests directly
to those of the Company's stockholders.
SALARIES
The Compensation Committee sets the base salary of the Chief Executive Officer
and of each of the other officers based on a number of factors, including level
of responsibility, tenure with the Company, financial performance of the
Company, prior individual performance, and comparable salaries for officers at
other large industrial corporations. The Committee believes that base salary
levels should be competitive with the base salaries (excluding bonuses) of
companies in comparable industries and that the opportunity to increase
compensation above base salaries should be directly related to the achievement
of objective financial performance targets. The
17
companies considered by the Committee include a larger number and broader range
of companies than are included in the S & P Electrical Equipment Index, shown in
the Stock Performance Graph below, reflecting the Committee's view that the
employment market for the Company's officers includes a broader range of
companies than those with which the Company should be compared for financial
performance purposes. A prominent executive compensation consulting firm assists
in determining market practice for all forms of executive compensation.
PERFORMANCE-BASED BONUSES
Annual Cash Program - The Company pays annual cash bonuses under the Annual Cash
Program of its Incentive Compensation Plan. Each year, the Company establishes
financial objectives for its various business units for the succeeding year,
which are, in turn, used to establish overall targets for the financial
performance of the Company. For 1999, the financial objectives selected were
earnings before interest and taxes ("EBIT"), with a capital charge for net
capital employed and goodwill, for the operating divisions and earnings per
share ("EPS") for the Company. The financial objectives are presented to the
Compensation Committee, which approves threshold, expected and overachievement
targets based on these objectives. Each of the Company's management employees,
including its executive officers, is eligible each year to earn a performance
bonus equal to a percentage of base salary. The applicable percentage depends
on the employee's level of responsibility and on the extent to which targets are
achieved (i. e., the more senior the employee and the greater the level of
performance of the area for which he or she is responsible, the higher the
applicable percentage used to calculate his or her bonus).
Bonuses for each individual are primarily based on the performance of that
individual's business unit. In the case of those individuals with
responsibility at the corporate level, such as the Chief Executive Officer and
other corporate officers, bonuses are based on overall Company performance. A
portion of the bonus of high level individuals in the business units is also
based on overall Company performance. Bonus awards to the executive officers
listed in the Summary Compensation Table are disclosed in that table.
Mid-Term Program - The Mid-Term Program of the Incentive Compensation Plan is
intended to cover successive measurement periods. The objectives for the
measurement period are approved by the Compensation Committee, which also
approves the number of Performance Units granted, based on market competitive
data and job responsibilities. At the end of the measurement period, the number
of Performance Units earned, if any, is based on the extent to which the
established objectives have been met. The value of each Performance Unit earned
will be equal to the average of the closing sale price of the Company's common
stock during the 120 consecutive trading days ending on the last day of the
measurement period.
In 1997, 1998, and 1999 the Compensation Committee approved Mid-Term Performance
Objectives for the three-year periods from 1997 through 1999, 1998 through 2000,
and 1999 through 2001, respectively. The 1997 and 1998 grants were based one-
half on cumulative earnings per share and one-half on total return to
stockholders as compared to the Industrial Component of the Standard & Poor's
Midcap 400 Index. In order to better align the program with stockholders'
interests, the 1999 grant was based solely on total return to stockholders as
compared to the Industrial Component of the Standard & Poor's Midcap 400 Index.
The 1997 grant expired at the end of 1999 with no Performance Units having been
earned since the Company did not meet either the target based on the Company's
cumulative earnings per share or the target for total return to stockholders.
STOCK AWARDS
In order to align the interests of management more closely with the long term
interests of the Company's stockholders, the Compensation Committee also issues
stock options and may issue restricted stock, pursuant to the Company's Amended
and Restated 1992 Omnibus Stock Plan. The Committee grants options to
individual employees based on its evaluation of a number of factors, including
level of base salary, level of responsibility, expected level of contribution to
the Company, prior individual performance and prior stock option and restricted
stock grants. The largest grants are awarded to the most senior employees, who,
in the view of the Compensation Committee, have the greatest potential impact on
the Company's profitability and growth. However, the Committee also awards
options to individuals at all levels of the organization in order to focus
employee attention on the performance of the Company's stock. Options under the
plan may be either incentive stock options or non-qualified stock options at the
discretion of the Compensation Committee. In 1999, the Committee granted stock
options exercisable at fair market value to certain key employees, including the
Company's officers. For these individuals, the options will not be exercisable
for seven years unless the Company's stock price reaches certain specified
levels. Certain options vest when the stock reaches $35.9375 and certain other
options vest one-half when the stock reaches $43.63 and one-half when the
18
stock reaches $49.30. In each instance, the stock must remain at that average
price for fifteen consecutive trading days. Stock option awards to the executive
officers named in the Summary Compensation Table are disclosed in that table.
The Company has never repriced any stock options.
In 1999, the Compensation Committee granted restricted stock awards to one
executive officer in connection with the start of his employment with the
Company. In August 1994, in order to assure the retention of certain key
employees, the Compensation Committee awarded shares of restricted stock to
them, including to certain of the executive officers listed in the Summary
Compensation Table. Forty percent of these shares vested in 1996 and 20% vested
in each of 1997, 1998 and 1999. Under certain circumstances, the vesting of
shares issued to certain highly-compensated officers will be delayed until the
Company's deduction of compensation expense associated with such vesting would
not be limited by Section 162(m) of the Internal Revenue Code of 1986, as
amended (the "Code") (see below). If an award recipient is terminated for
cause, voluntarily terminates his or her employment with the Company, or
breaches certain obligations of confidentiality, he or she will forfeit any
unvested shares.
COMPENSATION OF CHIEF EXECUTIVE OFFICER
Mr. Pokelwaldt's 1999 compensation, including base salary, bonus and stock
option award, was determined by the Compensation Committee in accordance with
the criteria described above in the "Relationship of Compensation to
Performance," "Salaries," "Performance-Based Bonuses" and "Stock Awards"
sections of this report.
Mr. Pokelwaldt received an increase in his base compensation in 1999 from
$700,000 to $800,000 in order to keep his salary at a competitive level.
Because the Company did not meet its earnings per share target in 1999, Mr.
Pokelwaldt did not receive a bonus for 1999.
In 1999, Mr. Pokelwaldt received a grant of 15,000 Performance Units under the
Mid-Term Program of the Company's Incentive Compensation Plan. Achievement of
the target for these units, the Company's total return to stockholders compared
to a published index, will be measured at the end of 2001. For the 1997 grant,
which was measured at the end of 1999, Mr. Pokelwaldt did not receive any
payment, since the Company did not meet the threshold performance objectives.
In 1999, Mr. Pokelwaldt was also awarded performance accelerated stock options
to purchase 112,500 shares of the Company's common stock (on terms described
above under "Stock Awards") at the market price on the date of grant. Additional
details of Mr. Pokelwaldt's compensation over the past three fiscal years are
disclosed in the Summary Compensation Table and in other sections of this
"Executive Compensation" section.
Upon the retirement of Mr. Pokelwaldt in October, 1999, Mr. John R. Tucker
became Chief Executive Officer. At that time, his salary was increased from
$520,000 to $650,000 to reflect his increased responsibilities. Because the
Company did not meet its earnings per share target in 1999, Mr. Tucker did not
receive a bonus for 1999. In 1999, Mr. Tucker received a grant of 10,000
Performance Units under the Mid-Term Program of the Company's Incentive
Compensation Plan and was also awarded performance accelerated stock options to
purchase 181,250 shares of the Company's common stock (on terms described above
under "Stock Awards") at the market price on the date of grant.
RETIREMENT AND EMPLOYMENT AGREEMENTS
At the time of his retirement in October 1999, the Company entered into a
Retirement Agreement with Mr. Pokelwaldt. Under the terms of this agreement,
Mr. Pokelwaldt received his salary through the remainder of 1999 and a payment
of $2,400,000. The amounts paid to Mr. Pokelwaldt are included under the
heading "Other Compensation" in the Summary Compensation Table.
In 1999, the Company entered into Employment Agreements with certain key
executives, including the executive officers, other than Mr. Pokelwaldt, listed
in the Summary Compensation Table. The agreements have a three-year term and are
automatically extended in the absence of notice to the contrary by either party.
In the event the executive's employment is terminated by the Company other than
for cause, the executive will receive payment of his salary and target bonus for
the remainder of the employment period, health and welfare benefits during that
period, and an additional benefit under the Company's Executive Supplemental
Retirement Plan. The agreement also provides for an additional payment equal to
two years salary and target bonus in return for an agreement on the part of the
executive not to compete with the Company for a period of two years.
19
In making its compensation decisions, the Committee considers the effect of
Section 162(m) of the Code, which limits to $1,000,000 the allowable federal
income tax deduction for compensation paid to the Company's Chief Executive
Officer and next four most highly compensated officers. The limit on
deductibility does not apply to performance-based compensation paid pursuant to
a plan approved by the stockholders. The Company expects that expense
associated with stock option awards made under the Company's Amended and
Restated 1992 Omnibus Stock Option Plan will not be limited by Section 162(m)
since the Company obtained stockholder approval of this Plan. The expense
associated with restricted share awards that are not performance-based may be
limited under Section 162(m) and, if that should be the case, the Committee may
defer the vesting of such awards until such time as the associated expense is
fully deductible. The Company has obtained stockholder approval of its
Incentive Compensation Plan and does not anticipate that the expense associated
with this Plan will be limited by Section 162(m).
In the opinion of the Committee, the Company's performance-based cash
compensation system, together with the grant of fair market value options and,
in limited circumstances, restricted stock awards, provides all management
employees, including executive officers, with an incentive to achieve objective
financial targets designed to increase stockholder value.
The foregoing report is hereby submitted by the members of the Compensation
Committee.
Walter B. Wriston, Chairman
Malcolm W. Gambill
Robert F. B. Logan
James A. Urry
SUMMARY COMPENSATION TABLE
The following table sets forth information concerning cash compensation paid by
the Company to the Chief Executive Officer and each of the next four most highly
compensated officers of the Company for services rendered in all capacities to
the Company and its subsidiaries during the three fiscal years ended December
31, 1999.
Long Term
Compensation Awards
-----------------------------------
Annual Securities
Compensation (1)(2) Restricted Underlying All
------------------- Stock Options Other
Name Year Salary Bonus Award (3) Granted (4) Compensation (5)
----- -------- --------- ---------- ----------- ------------- ----------------
Robert N. Pokelwaldt(6) ........ 1999 $650,000 $ 0 0 112,500 $2,575,874
Past Chairman of the Board and.. 1998 700,000 947,556 0 25,000 11,776
Chief Executive Officer......... 1997 688,667 0 0 40,000 11,507
John R. Tucker(6) 1999 540,833 0 0 181,250 6,617
President and Chief............. 1998 445,833 750,000 0 24,000 2,798
Executive Officer 1997 79,003 200,000 $1,129,688 40,000 391
Michael R. Young................ 1999 426,459 411,469 0 80,000 18,958
Vice President, and President... 1998 400,000 547,733 0 8,000 8,487
Central Environmental Systems... 1997 400,000 0 535,000 30,000 21,794
Peter C. Spellar................ 1999 327,500 217,503 0 53,000 3,244
Vice President Corporate........ 1998 312,500 215,899 0 8,000 2,931
Marketing & Strategic Accounts.. 1997 291,667 0 0 10,000 2,684
Stuart R. Amos(6)............... 1999 340,416 0 0 83,000 2,990
Vice President and President,... 1998 250,000 361,390 216,875 10,000 1,954
Unitary Products Group
Robert C. Galvin(6)............. 1999 176,458 173,250 897,500 100,000 183
Vice President and Chief
Financial Officer
20
(1) No compensation that would be categorized as "Other Annual Compensation" was
paid to officers in any of the years presented.
(2) Includes amounts deferred at the election of the officer pursuant to the
York International Investment Plan, a plan established under Section 401(k)
of the Code and the York International Corporation Executive Deferred
Compensation Plan, a non-qualified deferred compensation plan. Does not
include any amounts that may ultimately be earned for the Performance Units
awarded during 1999 and shown in the Long-Term Incentive Plans - Awards in
Last Fiscal Year Table.
(3) The restricted stock holdings of the officers and the value of such holdings
as of December 31, 1999, based upon the 1999 year-end closing price (net of
the purchase price paid by the officer) are as follows: Mr. Tucker - 12,500
shares ($330,468), Mr. Young - 10,000 shares ($264,375), Mr. Amos - 5,000
shares ($132,188), and Mr. Galvin - 20,000 shares ($528,750). Any dividends
payable with respect to common stock will be paid with respect to the
restricted stock. Messrs. Tucker and Young received 25,000 shares and
10,000 shares, respectively, of restricted stock in 1997, Mr. Amos received
5,000 shares in 1998, and Mr. Galvin received 20,000 shares in 1999. In
each instance, the stock vests 50% on the second anniversary of the grant
and 25% on each of the two subsequent anniversaries.
(4) Excludes options to purchase common stock at 85% of fair market value
through automatic payroll deductions acquired in December 1999 under the
1992 Employee Stock Purchase Plan ("Purchase Plan"), in which Messrs.
Pokelwaldt, Tucker, Young, Spellar, and Amos each elected to participate.
Messrs. Pokelwaldt and Tucker each acquired 612 shares, Mr. Young acquired
611 shares, Mr. Spellar acquired 570 shares, and Mr. Amos acquired 345
shares of common stock.
(5) Comprises payments and accruals of $2,566,635 for Mr. Pokelwaldt under his
Retirement Agreement dated October 14, 1999 and under the Company's
Supplemental Executive Retirement Plan, matching contributions by the
Company under the York International Investment Plan, contributions for Mr.
Young under the Bristol Thrift and Retirement Plan, and for Mr. Pokelwaldt
under the York International Deferred Compensation Plan, and term life
insurance premiums for the named individuals for policies with a face amount
equal to the individual's base salary, as follows:
Investment Plan Insurance
Contributions Premium
---------------- ---------
Robert N. Pokelwaldt $ 2,242 $6,997
John R. Tucker 4,595 2,022
Michael R. Young 14,638* 4,320
P. C. Spellar 1,288 1,956
Stuart R. Amos 1,780 1,210
Robert C. Galvin 0 183
* Bristol Thrift & Retirement
(6) Mr. Pokelwaldt retired from the Company in October, 1999 and Messrs. Tucker,
Amos and Galvin left the Company in February, 2000.
OPTION GRANTS
The following table shows, as to each person named, the options to purchase
common stock granted by the Company in 1999 under the Amended and Restated 1992
Omnibus Stock Plan. The grants do not include options to purchase Company stock
through automatic payroll deductions under the Purchase Plan (see note (4) to
the Summary Compensation Table above).
Option Grants in 1999
Individual Grants
-------------------------------------------------
% of
Number of Total
Securities Options Potential Realizable Value at Assumed
Underlying Granted Annual Rates of Stock Price Appreciation
Options to All Exercise for Option Term (End of Year Value) (1)
Granted Employees Price Per Expiration ------------------------------------------
Name (Shares) (2) in 1999 Share Date 0% 5% (3) 10% (3)
- -------------------------------- ----------- --------- --------- ---------- -- ---------- ----------
R. N. Pokelwaldt................ 112,500 6.6% $34.6250 03/16/09 $0 $2,449,688 $6,208,313
J. R. Tucker.................... 56,250 3.3% 34.6250 03/16/09 0 1,224,844 3,104,156
125,000 7.9% 22.9375 11/08/09 0 1,802,813 4,569,063
M. R. Young..................... 30,000 1.8% 34.6250 03/16/09 0 653,250 1,655,550
50,000 3.2% 22.9375 11/08/09 0 721,125 1,827,625
P. C. Spellar................... 33,000 1.9% 34.6250 03/16/09 0 718,575 1,821,105
20,000 1.3% 22.9375 11/08/09 0 288,450 731,050
S. R. Amos...................... 33,000 1.9% 34.6250 03/16/09 0 718,575 1,821,105
50,000 3.2% 22.9375 11/08/09 0 721,125 1,827,625
R.C. Galvin..................... 40,000 2.3% 40.0625 06/22/09 0 1,007,900 2,553,900
60,000 3.8% 22.9375 11/08/09 0 865,350 2,193,150
21
(1) Represent arbitrarily assumed rates of appreciation of the common stock
price, mandated by the Securities and Exchange Commission's rules,
compounded annually over the term of the option and are not intended to
forecast possible future appreciation, if any, of the common stock. The
market value of the common stock on the March 16, 1999 grant date was
$34.6250; the value of the common stock at the end of those options' term
based on a compounded 5% growth rate would be $56.40 per share and based on
a compounded 10% growth rate would be $89.81 per share. The market value
of the common stock on the June 22, 1999 grant date was $40.0625; the value
of the common stock at the end of those options' term based on a compounded
5% growth rate would be $65.26 per share and based on a compounded 10%
growth rate would be $103.91 per share. The market value of the common
stock on the November 8, 1999 grant date was $22.9375; the value of the
common stock at the end of those options' term based on a compounded 5%
growth rate would be $37.36 per share and based on a compounded 10% growth
rate would be $59.49 per share.
(2) The options are non-qualified, non-transferable other than by will or the
laws of descent and distribution, and become exercisable when the price of
the Company's common stock reaches certain pre-determined levels during the
five years following grant and remains at that average price for a period
of 15 consecutive trading days at $43.63. For the March 16, 1999 grant,
50% of the grant vests and becomes exercisable and the remaining 50% vests
at $49.30. For the June 22, 1999 grant, 50% vests at $50.48 and the
remaining 50% at $57.04. For the November 8, 1999 grant, 100% vests at
$35.9375. In the event any tranche has not vested within five years from
the date of grant, it vests and becomes exercisable on the seventh
anniversary of the grant and remains exercisable until the tenth
anniversary of the grant unless terminated sooner in the event of death,
disability, retirement or termination of employment.
(3) No gain to the optionees is possible without an increase in stock price
which will benefit all stockholders. A zero percent gain in stock price
will result in zero dollars for the optionee.
Option Exercises and 1999 Year-End Option Values
The following table shows, as to the individuals named in the Summary
Compensation Table above, information concerning stock option exercises and 1999
year-end stock option values.
Aggregated Option Exercises in Last
Fiscal Year and Year-End Option Values
Number of Securities Value of Unexercised
Number of Shares Value Underlying Unexercised In-the-Money Options
Acquired Realized Options at 1999 Year-End at 1999 Year-End (1)
---------------- -------- ------------------------- --------------------------
Name Exercisable/Unexercisable Exercisable/Unexercisable
- ---- ------------------------- --------------------------
R. N. Pokelwaldt.................. 23,450 $111,388 182,160 / 112,500 $ 0 / 0
J. R. Tucker...................... 0 0 67,125 / 178,125 0 / 562,500
M. R. Young....................... 0 0 53,000 / 65,000 0 / 225,000
P. C. Spellar..................... 0 0 69,200 / 36,500 0 / 90,000
S. R. Amos........................ 0 0 26,500 / 66,500 0 / 225,000
R. C. Galvin...................... 0 0 20,000 / 80,000 0 / 270,000
___________
(1) Based upon an assumed fair market value of $27.4375 per share, which was the
closing price on the New York Stock Exchange of the common stock on December
31, 1999.
LONG-TERM INCENTIVE PLANS - AWARDS IN LAST FISCAL YEAR
The following table shows, as to each person named, the Performance Units
granted by the Company in 1999 under the Mid-Term Program of the Incentive
Compensation Plan. At the end of the three-year measurement period, the number
of Performance Units earned, if any, will be based on the extent to which the
established objective of total return to stockholders as compared to the
Industrial Component of the Standard & Poor's Midcap 400 Index has been met. If
the threshold objective is not met, no Performance Units are earned. If the
target objective is exceeded, additional Performance Units can be earned, up to
the number of the original grant. The value of each Performance Unit earned
will be equal to the average of the closing sale price of the Company's common
stock during the 120 consecutive trading days ending on the last day of the
measurement period.
22
Number of
Shares, Units Performance or
Or Other Other Period Until
Name Rights Maturation or Payout
- ---- ------------- ------------------------
R. N. Pokelwaldt.......................................................... 15,000 12/31/01
J. R. Tucker.............................................................. 10,000 12/31/01
M. R. Young............................................................... 6,275 12/31/01
P. C. Spellar............................................................. 4,942 12/31/01
S. R. Amos................................................................ 4,706 12/31/01
R. C. Galvin.............................................................. 5,033 12/31/01
RETIREMENT PLANS
The Company has a defined benefit retirement plan (the "Retirement Plan")
covering the salaried employees of certain of the Company's business units who
are not subject to collective bargaining agreements. The Retirement Plan covers
each of the officers named in the Summary Compensation Table other than Mr.
Young and Mr. Galvin.
The following table indicates the amount of annual retirement income which would
be payable under the Retirement Plan (but for certain limitations imposed by the
Code) at normal retirement age to participants in specified salary and bonus
levels and years of credited service categories. For 1999 the Code limits to
$160,000 the amount of earnings which may be taken into account to calculate
benefits, and to $130,000 the benefits payable. The limits are adjusted
annually for inflation.
Assumed Average Annual
Earnings for Highest
Five Consecutive
Years in 10 Years 15 Years 20 Years 25 Years 30 Years 35 Years
Preceding Retirement Service Service Service Service Service
--------------------- ----------- ---------- ---------- ---------- ------------
$150,000............................................ $ 36,000 $ 48,000 $ 60,000 $ 72,000 $ 75,750
200,000............................................ 48,000 64,000 80,000 96,000 101,000
250,000............................................ 60,000 80,000 100,000 120,000 126,250
300,000............................................ 72,000 96,000 120,000 144,000 151,500
400,000............................................ 96,000 128,000 160,000 192,000 202,000
500,000............................................ 120,000 160,000 200,000 240,000 252,500
600,000............................................ 144,000 192,000 240,000 288,000 303,000
700,000............................................ 168,000 224,000 280,000 336,000 353,500
800,000............................................ 192,000 256,000 320,000 384,000 404,000
900,000............................................ 216,000 288,000 360,000 432,000 454,500
1,000,000............................................ 240,000 320,000 400,000 480,000 505,000
The compensation covered by the Retirement Plan consists of base salary and
bonus paid in that year. The covered compensation (excluding the effect of Code
limitations) and credited years of service, as of December 31, 1999, for each of
the officers named in the Summary Compensation Table above were as follows: Mr.
Pokelwaldt - $739,884, 11 years; Mr. Tucker - $796,042, 2 years; Mr. Spellar
- - $447,983, 7 years; Mr. Amos - $744,936, 2 years. Mr. Galvin was not
eligible to participate in 1999 since he had less than one year of service.
The benefits shown in the above table are subject to reduction by an amount
equal to a percentage of Social Security benefits. The benefits are calculated
on a straight-life annuity basis assuming retirement at age 65.
The Company has a defined benefit supplemental retirement plan (the
"Supplemental Retirement Plan") covering certain key executive officers,
including those named in the Summary Compensation Table other than Mr. Young and
Mr. Amos.
The following table indicates the amount of annual retirement income which would
be payable under the Supplemental Retirement Plan at normal retirement age to
participants in specified salary and bonus levels and years of credited service
categories.
23
Assumed Average Annual
Earnings for Highest
Five Consecutive
Years in 10 Years 15 Years 20 Years 25 Years 30 Years 35 Years
Preceding Retirement Service Service Service Service Service
--------------------- ----------- ---------- ---------- ---------- ------------
$150,000............................................ $ 56,250 $ 75,000 $ 75,000 $ 75,000 $ 75,000
200,000............................................ 75,000 100,000 100,000 100,000 100,000
250,000............................................ 93,750 125,000 125,000 125,000 125,000
300,000............................................ 112,500 150,000 150,000 150,000 150,000
400,000............................................ 150,000 200,000 200,000 200,000 200,000
500,000............................................ 187,500 250,000 250,000 250,000 250,000
600,000............................................ 225,000 300,000 300,000 300,000 300,000
700,000............................................ 262,500 350,000 350,000 350,000 350,000
800,000............................................ 300,000 400,000 400,000 400,000 400,000
900,000............................................ 337,500 450,000 450,000 450,000 450,000
1,000,000............................................ 375,000 500,000 500,000 500,000 500,000
The Supplemental Retirement Plan provides a retirement benefit equal to up to
50% (based on a maximum of 20 years of credited service (no credit is given for
service beyond 20 years) and final compensation) of the officer's highest
average salary and bonus for three out of the last five years preceding
retirement. The covered compensation and credited years of service under the
Supplemental Retirement Plan based on 1999 salaries and bonuses as of December
31, 1999, would be approximately: Mr. Pokelwaldt - $914,333, 20 years; Mr.
Tucker - $719,583, 2 years; Mr. Spellar - $407,306, 20 years; Mr. Amos -
$531,667, 2 years.
The benefits shown in the above table are subject to reduction by an amount
equal to a percentage of Social Security benefits, benefits under the Retirement
Plan and any other retirement benefits received. The benefits are calculated on
a straight-life annuity basis assuming retirement at age 62.
The following table indicates the amount of annual retirement income which would
be payable under the Bristol Compressors, Inc. Officers Retirement and Salary
Continuation Plan (the "Bristol Plan") at normal retirement age to participants
in specified salary levels and years of credited service categories. Mr. Young
is a participant in this plan.
Assumed Average Annual
Earnings for Highest
Five Consecutive
Years in 10 Years 15 Years 20 Years 25 Years 30 Years 35 Years
Preceding Retirement Service Service Service Service Service
--------------------- ----------- ---------- ---------- ---------- ------------
150,000............................................ 60,000 60,000 60,000 60,000 60,000
200,000............................................ 80,000 80,000 80,000 80,000 80,000
250,000............................................ 100,000 100,000 100,000 100,000 100,000
300,000............................................ 120,000 120,000 120,000 120,000 120,000
400,000............................................ 160,000 160,000 160,000 160,000 160,000
500,000............................................ 200,000 200,000 200,000 200,000 200,000
600,000............................................ 240,000 240,000 240,000 240,000 240,000
700,000............................................ 280,000 280,000 280,000 280,000 280,000
800,000............................................ 320,000 320,000 320,000 320,000 320,000
900,000............................................ 360,000 360,000 360,000 360,000 360,000
1,000,000............................................ 400,000 400,000 400,000 400,000 400,000
The Bristol Plan provides a retirement benefit equal to 40% of the employee's
base salary for the full calendar year preceding the participant's actual
retirement, without regard to service. The compensation for Mr. Young as of
December 31, 1999 would be approximately $426,458.
The benefits shown in the above table are subject to reduction by 2% per year
for early retirement before age 62. The benefits are calculated payable as a 15
year certain benefit payable at age 62.
24
The Evcon Industries, Inc. Retirement Plan for Salaried Employees in which Mr.
Young participated from 1991 until 1995, is intended to provide Mr. Young with
retirement benefits. As of December 31, 1999, upon attaining age 65, he is
eligible to receive an annual retirement benefit of $17,227.
The Frick/Frigid Coil Pension Plan for Salaried Employees (the "Frick Plan"), in
which Mr. Pokelwaldt participated from 1979 until his transfer to the Retirement
Plan in 1988, is intended to provide Mr. Pokelwaldt with retirement benefits.
Upon attaining age 65, Mr. Pokelwaldt is eligible to receive an annual
retirement benefit of $8,900 under the Frick Plan. Mr. Spellar also
participated in the Frick Plan. His participation was from 1979 until his
transfer to the Retirement Plan in 1992. Upon attaining age 65, Mr. Spellar is
eligible to receive an annual retirement benefit of $16,289 from the Frick Plan.
CHANGE-IN-CONTROL ARRANGEMENTS
The Company maintains severance agreements with certain of its key employees,
including the individuals named in the Summary Compensation Table, which provide
severance benefits in the event the employee's employment terminates in
connection with or for a period following a change in control of the Company.
In such event, the employee would receive a payment equal to three times his or
her annual base salary and target bonus, together with continued health
insurance benefits until the earlier of 36 months or the obtaining of similar
coverage from another employer. Amounts payable under the agreements will be
cut back to the extent they would not be tax deductible under Section 280G of
the Internal Revenue Code.
STOCK PERFORMANCE GRAPH
The following chart compares the cumulative total return on the Company's common
stock for the 5-year period from December 31, 1994 through December 31, 1999 to
the cumulative total return for the same period of the Standard & Poor's Midcap
400 Index, the Industrial Component of the Standard & Poor's Midcap 400 Index,
and the Standard & Poor's Electrical Equipment Index. The graph assumes that
the value of the investment in the common stock and each index was $100 on
December 31, 1994 and that all dividends were reinvested.
COMPARISON OF 60 MONTH CUMULATIVE TOTAL RETURN
AMONG YORK INTERNATIONAL, THE S&P MIDCAP 400 INDEX,
THE INDUSTRIAL COMPONENT OF THE S&P MIDCAP 400 INDEX
AND THE S&P ELECTRICAL EQUIPMENT INDEX
[STOCK PERFORMANCE GRAPH]
Dec. 94 Dec. 95 Dec. 96 Dec. 97 Dec. 98 Dec. 99
York International 100 128.17 153.44 109.87 114.70 78.46
S&P Electrical Equipment - 500 100 140.33 192.73 271.60 364.51 546.57
S&P Midcap 400 Index 100 130.94 156.08 206.43 245.87 282.06
Industrial Component of
The S&P Midcap 400 100 129.51 155.11 185.39 202.67 245.20
25
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
OWNERSHIP OF COMMON STOCK
OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth information as of February 29, 1999 with respect
to beneficial ownership of shares of the Company's common stock, assuming
exercise of options exercisable within 60 days of such date, by each Director,
by each executive officer named in the Summary Compensation Table and by all
Directors and executive officers as a group. Except as otherwise noted, the
beneficial owners have sole voting and investment power as to all such shares.
Number of
Shares
Beneficially Percentage of
Name of Beneficial Owner Owned (a) Outstanding
- ------------------------ ------------------ ---------------
Robert N. Pokelwaldt (b)........................................................... 392,251 1%
Malcolm W. Gambill (c)............................................................. 25,330 *
Robert F. B. Logan (d)............................................................. 94,011 *
Gerald C. McDonough (e)............................................................ 71,650 *
Donald M. Roberts (f).............................................................. 80,434 *
John R. Tucker (g)................................................................. 97,368 *
James A. Urry (h).................................................................. 44,617 *
John E. Welsh, III (i)............................................................. 31,400 *
Walter B. Wriston (j).............................................................. 13,450 *
Michael R. Young (k)............................................................... 94,077 *
Peter C. Spellar (l)............................................................... 130,786 *
Stuart R. Amos (m)................................................................. 34,950 *
Robert C. Galvin................................................................... 42,000 *
All directors and executive officers of the Company as a group (21 persons) (n). 1,454,509 3.8%
___________
* Represents less than 1.0% of the aggregate shares of common stock
outstanding.
(a) Includes shares issuable upon exercise of options that are exercisable
within 60 days.
(b) Includes 182,160 shares issuable upon exercise of options.
(c) Includes 9,000 shares issuable upon exercise of options and 5,330 shares
representing Director fees deferred into the York common stock Fund of the
Company's Deferred Compensation Plan.
(d) Includes 200 shares owned by Mr. Logan's wife as to which he disclaims
beneficial ownership, 9,000 shares issuable upon exercise of options, and
4,418 shares representing Director fees deferred into the York common stock
Fund of the Company's Deferred Compensation Plan.
(e) Includes 9,000 shares issuable upon exercise of options.
(f) Includes 13,679 shares owned by Mr. Roberts' adult child and 13,678 shares
owned by Mr. Roberts' wife on behalf of their two children as to which Mr.
Roberts has no voting or investment power and as to which he disclaims
beneficial ownership, 9,000 shares issuable upon exercise of options, and
1,041 shares representing Director fees deferred into the York common stock
Fund of the Company's Deferred Compensation Plan.
(g) Includes 67,125 shares issuable upon exercise of options.
(h) Includes 9,000 shares issuable upon exercise of options and 5,617 shares
representing Director fees deferred into the York common stock Fund of the
Company's Deferred Compensation Plan.
(i) Includes 9,000 shares issuable upon exercise of options.
(j) Includes 9,000 shares issuable upon exercise of options.
(k) Includes 53,000 shares issuable upon exercise of options.
(l) Includes 30,000 shares held in trust for Mr. Spellar's children, as to which
he disclaims any beneficial ownership, and 69,200 shares issuable upon
exercise of options.
(m) Includes 26,500 shares issuable upon exercise of options.
(n) Includes 672,835 shares issuable upon exercise of options.
26
OWNERSHIP OF OTHER BENEFICIAL OWNERS
Voting Dispositive Total Amount Percent
Authority Authority of Beneficial Of
Name and Address Sole Shared Sole Shared Ownership Class
- -------------------------------- --------- --------- --------- --------- ------------- --------
Capital Research and 0 0 4,842,300 0 4,842,300 12.4%
Management Company (1)
333 S. Hope St.
Los Angeles, CA 90071
Amvescap PLC (2) 0 4,295,285 0 4,295,285 4,295,285 11.02%
11 Devonshire Square
London EC2 M4YR
England
Brinson Partners, Inc. (3) 3,856,233 0 0 3,856,233 3,856,233 9.7%
209 South Lasalle
Chicago, IL 60604-1295/ UBS AG
KR Capital Advisors, Inc. (4) 2,137,475 0 2,137,475 0 2,137,475 5.5%
450 Park Avenue
New York, NY 17403/
Edward D. Klein
(1) Based on a Schedule 13G filed with the Securities and Exchange Commission on
February 10, 2000.
(2) Based on a Schedule 13G filed by Amvescap PLC with the Securities and
Exchange Commission on February 3, on behalf of itself and on behalf of AVZ,
Inc., AIM Management Group Inc., AMVESCAP Group Services, Inc., Invesco,
Inc., Invesco North American Holdings, Inc., Invesco Capital Management,
Inc., INVESCO Funds Group, Inc., INVESCO Management & Research, Inc.,
INVESCO Realty Advisers, Inc., and INVESCO (NY) Asset Management, Inc.
(3) Based on a Schedule 13G filed by Brinson Partners, Inc. ("BPI") and UBS AG,
the ultimate Swiss parent of BPI, with the Securities and Exchange
Commission on February 4, 2000.
(4) Based on a Schedule 13G filed by KR Capital Advisers, Inc. and Edward D.
Klein with the Securities and Exchange Commission on February 4, 2000.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based on a review of the forms filed with the Securities and Exchange
Commission, we believe that all reports required of officers and directors
concerning their ownership of the Company's stock during 1999 were filed in a
timely manner.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Capial Research and Management, Invesco, an affiliate of Amvescap, and KR
Capital Advisers Inc., each of which is a holder of more than 5% of the
Company's stock, manage portions of the Company's pension plan assets.
Agreements with these entities are on an arm's-length basis.
27
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a)(1) The following financial statements of York International Corporation
and subsidiaries are incorporated herein by reference to pages a13 to a31
of the Annual Financial Statements and Review of Operations:
Consolidated Balance Sheets - as of December 31, 1999 and 1998
Consolidated Statements of Operations - years ended December 31, 1999,
1998, and 1997
Consolidated Statements of Comprehensive Income - years ended
December 31, 1999, 1998 and 1997
Consolidated Statements of Cash Flows - years ended December 31, 1999,
1998, and 1997
Consolidated Statements of Stockholders' Equity - years ended
December 31, 1999, 1998 and 1997
Notes to Consolidated Financial Statements
(2) The following financial statement schedule for York International
Corporation and subsidiaries is included herein:
VIII Valuation and Qualifying Accounts - years ended December 31,
1999, 1998 and 1997;
(Page 34 of Form 10-K)
All other schedules are omitted as they are not applicable.
Independent Auditors' Report Covering Financial Statement Schedule; (Page
33 of Form 10-K)
(3) The exhibits filed in response to Item 601 of Regulation S-K are as
follows:
EXHIBIT
NUMBER
- -------
3.1 Amended and Restated Certificate of Incorporation of Registrant (Incorporated by reference
to Exhibit 4.1 to the Registrant's Registration Statement on Form S-3, File No. 33-91292,
filed on June 7, 1995)
3.2 Certificate of Amendment to the Amended and Restated Certificate of Incorporation dated May
3, 1996 (Incorporated by reference to Exhibit 3.2 to the Registrant's Annual Report on Form
10-K for the year ended December 31, 1996, File No. 1-10863)
3.3 By-Laws of Registrant, restated as of December 17, 1996 (Incorporated by reference to
Exhibit 3.3 to the Registrant's Annual Report on Form 10-K for the year ended December 31,
1996, File No. 1-10863)
4.1 Receivables Sale Agreement dated as of March 26, 1997, by and among the Registrant, as
seller and collection agent, Asset Securitization Cooperative Corporation, as purchaser, and
Canadian Imperial Bank of Commerce, as servicing agent along with the supporting exhibits
(Incorporated by reference to Exhibit 4.1 to Registrant's Quarterly Report on Form 10-Q for
the quarter ended March 31, 1997, File No. 1-10863)
4.2 SECOND AMENDMENT TO AMENDED AND RESTATED RECEIVABLES SALE AGREEMENT, among the Registrant,
as seller and collection agent, Asset Securitization Cooperative Corporation, as purchaser,
and Canadian Imperial Bank of Commerce, as servicing agent. (Incorporated by reference to
Exhibit 4.1 to Registrant's Form 10-Q for the quarter ended September 30, 1999, File No.
1-10863)
4.3 THIRD AMENDMENT TO AMENDED AND RESTATED RECEIVABLES SALE AGREEMENT, among the Registrant, as
seller and collection agent, Asset Securitization Cooperative Corporation, as purchaser,
Canadian imperial Bank of Commerce, as servicing agent. (Incorporated by reference to
Exhibit 4.2 to Registrant's Form 10-Q for the quarter ended September 30, 1999, File No.
1-10863)
28
4.4 Indenture dated as of March 1, 1993 between the Registrant and Morgan Guaranty Trust Company
of New York, as Trustee (Incorporated by reference to Exhibit 4.1 to the Registrant's
Registration Statement filed on Form S-3, File No. 33-57178, filed on January 19, 1993)
4.5 Indenture effective as of June 1, 1998 between the Registrant and State Street Bank and
Trust Company, a Massachusetts chartered trust company, as Trustee (Incorporated by
reference to Exhibit 4 to the Registrant's Form 8-K, File No. 1-10863, filed on May 28, 1998)
4.6 Amended and Restated Credit Agreement, dated as of July 21, 1995 among the Registrant, the
several banks and the other financial institutions from time to time parties to the
Agreement and Canadian Imperial Bank of Commerce, acting through its New York Agency, as
Agent (Incorporated by reference to Exhibit 10.17 to Registrant's Quarterly Report on Form
10-Q for the quarter ended September 30, 1995, File No. 1-10863)
4.7 First Amendment dated as of May 28, 1997 to the Amended and Restated Credit Agreement among
the Registrant, the several banks and the other financial institutions from time to time
parties thereto and Canadian Imperial Bank of Commerce, acting through its New York Agency,
as agent for the Banks along with supporting exhibits (Incorporated by reference to Exhibit
4.5 to Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 1997, File
No. 1-10863)
4.8 SECOND AMENDMENT, dated as of June 3, 1999, to the Amended and Restated Credit Agreement
among YORK INTERNATIONAL CORPORATION, the several banks and other financial institutions
from time to time parties thereto and CANADIAN IMPERIAL BANK OF COMMERCE, acting through its
New York Agency, as agent for the Banks thereunder. (Incorporated by reference to Exhibit
4.1 to Registrant's Form 10-Q for the quarter ended June 30, 1999, File No. 1-10863)
4.9 364-DAY REVOLVING CREDIT AGREEMENT, dated as of June 3, 1999, among York International
Corporation, the several banks and other financial institutions from time to time parties to
this Agreement and Canadian imperial Bank of Commerce, acting through its New York Agency as
administrative agent for the Banks hereunder. (Incorporated by reference tp Exhibit 4.2 to
Registrant's Form 10-Q for the quarter ended June 30, 1999, File No. 1-10863)
4.10 FOURTH AMENDMENT TO AMENDED AND RESTATED RECEIVABLES SALE AGREEMENT, among the Registrant,
as seller and collection agent, Asset Securitization Cooperative Corporation, as purchaser,
Canadian imperial Bank of Commerce, as servicing agent, effective December 22, 1999. (filed
herewith)
*10.1 Registrant's 1989 Employee Stock Option Plan (Incorporated by reference to Exhibit 10.4 to
Registrant's Annual Report on Form 10-K for the year ended December 31, 1989, File No.
33-25440)
*10.2 Registrant's Amended and Restated 1992 Omnibus Stock Plan (Incorporated by reference to
Exhibit 10.1 to Registrant's Annual Report on Form 10-Q for the quarter ended March 31,
1997, File No. 1-10863)
*10.3 Amendment No. 1 to the York International Corporation Amended and Restated 1992 Omnibus
Stock Plan, dated February 16, 1999 (Incorporated by reference to Exhibit 10.15 to the
Registrant's Annual Report on Form 10-K for the year ended December 31, 1998, File No.
1-10863)
*10.4 York International Corporation 1996 Incentive Compensation Plan (Amended and Restated
Effective January 1, 1999) (Incorporated by reference to Exhibit 10.2 to the
29
Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 1999, File No. 1-10863)
*10.5 Bristol Compressors, Inc. Officers Retirement/Salary Continuation Plan (Incorporated by
reference to Exhibit 10.4 to York International Corporation's Registration Statement on Form
S-1, File No. 33-30713, filed on August 25, 1989)
*10.6 York International Corporation Supplemental Executive Retirement Plan (Incorporated by
reference to Exhibit 10.12 to Registrant's Annual Report on Form 10-K for the year ended
December 31, 1993, File No. 1-10863)
*10.7 Form of Restricted Stock Agreement by and between Registrant and certain of its employees
(Incorporated by reference to Exhibit 10.7 to Registrant's Annual Report on Form 10-K for
the year ended December 31, 1995, File No. 1-10863)
*10.8 York International Corporation Executive Deferred Compensation Plan (Incorporated by
reference to Exhibit 10.3 to Registrant's Annual Report on Form 10-K for the year ended
December 31, 1993, File No. 1-10863)
*10.9 First Amendment to the York International Corporation Executive Deferred Compensation Plan,
dated as of December 2, 1994 (Incorporated by reference to Exhibit 10.8 to Registrant's
Annual Report on Form 10-K for the year ended December 31, 1995, File No. 1-10863)
*10.10 Second Amendment to the York International Corporation Executive Deferred Compensation Plan,
dated as of December 17, 1996 (Incorporated by reference to Exhibit 3.2 to the Registrant's
Annual Report on Form 10-K for the year ended December 31, 1996, File No. 1-10863)
*10.11 Form of Severance Agreement entered into between the Registrant and certain of its Officers
and Employees (Incorporated by references to Exhibit 10.1 to Registrant's Quarterly Report
on Form 10-Q for the quarter ended September 30, 1997, File No. 1-10863.)
*10.12 Executive Officer Compensation Agreement between York International Corporation and John R.
Tucker, dated October 22, 1997 (Incorporated by reference to Exhibit 10.12 to the
Registrant's Annual Report on Form 10-K for the year ended December 31, 1998, File No.
1-10863)
*10.13 Executive Officer Compensation Agreement between York International Corporation and Stuart
R. Amos, dated February 6, 1998 (Incorporated by reference to Exhibit 10.13 to the
Registrant's Annual Report on Form 10-K for the year ended December 31, 1998, File No.
1-10863)
*10.14 Executive Officer Compensation Agreement between York International Corporation and Robert
C. Galvin, dated June 21, 1999 (filed herewith)
*10.15 Third Amendment to the York International Corporation Executive Deferred Compensation Plan,
effective as of October 1, 1999 (filed herewith)
*10.16 Employment Agreement between York International Corporation and John R. Tucker, dated
December 29, 1999 (filed herewith)
*10.17 Employment Agreement between York International Corporation and Stuart R. Amos, dated
December 29, 1999 (filed herewith)
*10.18 Employment Agreement between York International Corporation and Robert C. Galvin, dated
December 29, 1999 (filed herewith)
30
*10.19 Employment Agreement between York International Corporation and Michael R. Young, dated
December 29, 1999 (filed herewith)
*10.20 Retirement Agreement between York International Corporation and Robert N. Pokelwaldt, dated
October 14, 1999 (filed herewith)
*10.21 Employment Agreement between York International Corporation and Key Executive Employees,
dated December 29, 1999 (filed herewith)
*10.22 Amendment No. 2 to the York International Corporation Amended and Restated 1992 Omnibus
Stock Plan, dated February 9, 2000 (filed herewith)
12 Statement re: Computation of Ratio of Earnings to Fixed Charges (filed herewith)
13 Annual Financial Statements and Review of Operations with Accountants' Certificate (filed
herewith)
21 Subsidiaries of the Registrant (filed herewith)
23 Accountants' Consent (filed herewith)
27 Financial Data Schedule (filed herewith EDGAR Only)
* Required to be Filed as management contracts, compensatory plans or arrangements required to
be identified pursuant to Item 14(c) of the registrant's report on Form 10-K.
(b) No reports on Form 8-K have been filed during the last quarter of fiscal
1999.
31
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.
YORK INTERNATIONAL CORPORATION
/S/ Michael R. Young
---------------------
MICHAEL R. YOUNG
President and Chief Executive Officer
Date: March 27, 2000
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 indicated on this 27th day of March 2000.
Signature TITLE
--------- -----
/S/ Michael R. Young President and Chief Executive Officer
- --------------------- (Principal Executive Officer)
MICHAEL R. YOUNG
/S/ C. David Myers Vice President and Chief Financial Officer
- ------------------- (Principal Financial Officer)
C. DAVID MYERS
/S/ Charles F. Cargile Vice President, Finance and Corporate Development
- -------------------------
CHARLES F. CARGILE
/S/ David R. Heck Controller
- ------------------ (Principal Accounting Officer)
DAVID R. HECK
DIRECTORS
---------
/S/ Gerald C. McDonough*
- -------------------------
GERALD C. MCDONOUGH
/S/ Malcolm W. Gambill*
- ------------------------
MALCOLM W. GAMBILL
/S/ Robert F. B. Logan*
- ------------------------
ROBERT F. B. LOGAN
/S/ Donald M. Roberts*
- -----------------------
DONALD M. ROBERTS
/S/ Michael R. Young
- ---------------------
MICHAEL R. YOUNG
/S/ James A. Urry*
- -------------------
JAMES A. URRY
/S/ John E. Welsh, III*
- -----------------------
JOHN E. WELSH, III
/S/ Walter B. Wriston*
- -----------------------
WALTER B. WRISTON
* Pursuant to powers of attorney.
32
INDEPENDENT AUDITORS' REPORT
----------------------------
The Board of Directors and Stockholders
York International Corporation:
Under date of February 17, 2000, we reported on the consolidated balance sheets
of York International Corporation and subsidiaries as of December 31, 1999 and
1998, and the related consolidated statements of operations, comprehensive
income, cash flows and stockholders' equity for each of the years in the three-
year period ended December 31, 1999, as contained in the 1999 Annual Financial
Statements and Review of Operations to stockholders. These consolidated
financial statements and our report thereon are incorporated by reference in the
annual report on Form 10-K for the year 1999. In connection with our audits of
the aforementioned consolidated financial statements, we also have audited the
financial statement schedule as listed in the accompanying index. This
financial statement schedule is the responsibility of the Company's management.
Our responsibility is to express an opinion on this financial statement schedule
based on our audits.
In our opinion, such financial statement schedule, when considered in relation
to the basic consolidated financial statements taken as a whole, presents
fairly, in all material respects, the information set forth therein.
KPMG LLP
/S/ KPMG LLP
Harrisburg, Pennsylvania
February 17, 2000
33
SCHEDULE VIII
YORK INTERNATIONAL CORPORATION AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
Years Ended December 31, 1999, 1998 and 1997
(thousands of dollars)
Column A Column B Column C Column C Column D Column E
- ----------------------------------- ---------- --------- ------------ ---------- ----------
Balance at Additions Additions Balance at
Beginning Costs and Other Close of
Description of Period Expenses Accounts (a) Deductions Period
- ----------------------------------- ---------- --------- ------------ ---------- ----------
1999
Allowances for Doubtful Accounts $19,911 $10,899 $8,913 $ 8,381 $31,342
Warranties $36,488 $13,967 $1,475 $12,323 $39,607
1998
Allowances for Doubtful Accounts $17,839 $ 8,206 $ -- $ 6,134 $19,911
Warranties $36,280 $13,492 $ -- $13,284 $36,488
1997
Allowances for Doubtful Accounts $20,737 $ 6,139 $ -- $ 9,037 $17,839
Warranties $33,135 $12,805 $ -- $ 9,660 $36,280
(a) Additions charged to Other Accounts includes liabilities of businesses
acquired in 1999.
34
EXHIBIT PAGE
NUMBER EXHIBIT INDEX NUMBER
------- ------------- ------
3.1 Amended and Restated Certificate of Incorporation of Registrant (Incorporated by reference
to Exhibit 4.1 to the Registrant's Registration Statement on Form S-3, File No. 33-91292,
filed on June 7, 1995)
3.2 Certificate of Amendment to the Amended and Restated Certificate of Incorporation dated May
3, 1996 (Incorporated by reference to Exhibit 3.2 to the Registrant's Annual Report on Form
10-K for the year ended December 31, 1996, File No. 1-10863)
3.3 By-Laws of Registrant, restated as of December 17, 1996 (Incorporated by reference to
Exhibit 3.3 to the Registrant's Annual Report on Form 10-K for the year ended December 31,
1996, File No. 1-10863)
4.1 Receivables Sale Agreement dated as of March 26, 1997, by and among the Registrant, as
seller and collection agent, Asset Securitization Cooperative Corporation, as purchaser, and
Canadian Imperial Bank of Commerce, as servicing agent along with the supporting exhibits
(Incorporated by reference to Exhibit 4.1 to Registrant's Quarterly Report on Form 10-Q for
the quarter ended March 31, 1997, File No. 1-10863)
4.2 SECOND AMENDMENT TO AMENDED AND RESTATED RECEIVABLES SALE AGREEMENT, among the Registrant,
as seller and collection agent, Asset Securitization Cooperative Corporation, as purchaser,
and Canadian Imperial Bank of Commerce, as servicing agent. (Incorporated by reference to
Exhibit 4.1 to Registrant's Form 10-Q for the quarter ended September 30, 1999, File No.
1-10863)
4.3 THIRD AMENDMENT TO AMENDED AND RESTATED RECEIVABLES SALE AGREEMENT, among the Registrant, as
seller and collection agent, Asset Securitization Cooperative Corporation, as purchaser,
Canadian imperial Bank of Commerce, as servicing agent. (Incorporated by reference to
Exhibit 4.2 to Registrant's Form 10-Q for the quarter ended September 30, 1999, File No.
1-10863)
4.4 Indenture dated as of March 1, 1993 between the Registrant and Morgan Guaranty Trust Company
of New York, as Trustee (Incorporated by reference to Exhibit 4.1 to the Registrant's
Registration Statement filed on Form S-3, File No. 33-57178, filed on January 19, 1993)
4.5 Indenture effective as of June 1, 1998 between the Registrant and State Street Bank and
Trust Company, a Massachusetts chartered trust company, as Trustee (Incorporated by
reference to Exhibit 4 to the Registrant's Form 8-K, File No. 1-10863, filed on May 28, 1998)
4.6 Amended and Restated Credit Agreement, dated as of July 21, 1995 among the Registrant, the
several banks and the other financial institutions from time to time parties to the
Agreement and Canadian Imperial Bank of Commerce, acting through its New York Agency, as
Agent (Incorporated by reference to Exhibit 10.17 to Registrant's Quarterly Report on Form
10-Q for the quarter ended September 30, 1995, File No. 1-10863)
4.7 First Amendment dated as of May 28, 1997 to the Amended and Restated Credit Agreement among
the Registrant, the several banks and the other financial institutions from time to time
parties thereto and Canadian Imperial Bank of Commerce, acting through its New York Agency,
as agent for the Banks along with supporting exhibits (Incorporated by reference to Exhibit
4.5 to Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 1997, File
No. 1-10863)
4.8 SECOND AMENDMENT, dated as of June 3, 1999, to the Amended and Restated
35
Credit Agreement among YORK INTERNATIONAL CORPORATION, the several banks and other financial
institutions from time to time parties thereto and CANADIAN IMPERIAL BANK OF COMMERCE,
acting through its New York Agency, as agent for the Banks thereunder. (Incorporated by
reference to Exhibit 4.1 to Registrant's Form 10-Q for the quarter ended June 30, 1999, File
No. 1-10863)
4.9 364-DAY REVOLVING CREDIT AGREEMENT, dated as of June 3, 1999, among York International
Corporation, the several banks and other financial institutions from time to time parties to
this Agreement and Canadian imperial Bank of Commerce, acting through its New York Agency as
administrative agent for the Banks hereunder. (Incorporated by reference tp Exhibit 4.2 to
Registrant's Form 10-Q for the quarter ended June 30, 1999, File No. 1-10863)
4.10 FOURTH AMENDMENT TO AMENDED AND RESTATED RECEIVABLES SALE AGREEMENT, among the Registrant,
as seller and collection agent, Asset Securitization Cooperative Corporation, as purchaser,
Canadian imperial Bank of Commerce, as servicing agent, effective December 22, 1999. (filed
herewith)
*10.1 Registrant's 1989 Employee Stock Option Plan (Incorporated by reference to Exhibit 10.4 to
Registrant's Annual Report on Form 10-K for the year ended December 31, 1989, File No.
33-25440)
*10.2 Registrant's Amended and Restated 1992 Omnibus Stock Plan (Incorporated by reference to
Exhibit 10.1 to Registrant's Annual Report on Form 10-Q for the quarter ended March 31,
1997, File No. 1-10863)
*10.3 Amendment No. 1 to the York International Corporation Amended and Restated 1992 Omnibus
Stock Plan, dated February 16, 1999 (Incorporated by reference to Exhibit 10.15 to the
Registrant's Annual Report on Form 10-K for the year ended December 31, 1998, File No.
1-10863)
*10.4 York International Corporation 1996 Incentive Compensation Plan (Amended and Restated
Effective January 1, 1999) (Incorporated by reference to Exhibit 10.2 to the Registrant's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1999, File No. 1-10863)
*10.5 Bristol Compressors, Inc. Officers Retirement/Salary Continuation Plan (Incorporated by
reference to Exhibit 10.4 to York International Corporation's Registration Statement on Form
S-1, File No. 33-30713, filed on August 25, 1989)
*10.6 York International Corporation Supplemental Executive Retirement Plan (Incorporated by
reference to Exhibit 10.12 to Registrant's Annual Report on Form 10-K for the year ended
December 31, 1993, File No. 1-10863)
*10.7 Form of Restricted Stock Agreement by and between Registrant and certain of its employees
(Incorporated by reference to Exhibit 10.7 to Registrant's Annual Report on Form 10-K for
the year ended December 31, 1995, File No. 1-10863)
*10.8 York International Corporation Executive Deferred Compensation Plan (Incorporated by
reference to Exhibit 10.3 to Registrant's Annual Report on Form 10-K for the year ended
December 31, 1993, File No. 1-10863)
*10.9 First Amendment to the York International Corporation Executive Deferred Compensation Plan,
dated as of December 2, 1994 (Incorporated by reference to Exhibit 10.8 to Registrant's
Annual Report on Form 10-K for the year ended December 31, 1995, File No. 1-10863)
*10.10 Second Amendment to the York International Corporation Executive Deferred Compensation Plan,
dated as of December 17, 1996 (Incorporated by reference to
36
Exhibit 3.2 to the Registrant's Annual Report on Form 10-K for the year ended
December 31, 1996, File No. 1-10863)
*10.11 Form of Severance Agreement entered into between the Registrant and certain of its Officers
and Employees (Incorporated by references to Exhibit 10.1 to Registrant's Quarterly Report
on Form 10-Q for the quarter ended September 30, 1997, File No. 1-10863.)
*10.12 Executive Officer Compensation Agreement between York International Corporation and John R.
Tucker, dated October 22, 1997 (Incorporated by reference to Exhibit 10.12 to the
Registrant's Annual Report on Form 10-K for the year ended December 31, 1998, File No.
1-10863)
*10.13 Executive Officer Compensation Agreement between York International Corporation and Stuart
R. Amos, dated February 6, 1998 (Incorporated by reference to Exhibit 10.13 to the
Registrant's Annual Report on Form 10-K for the year ended December 31, 1998, File No.
1-10863)
*10.14 Executive Officer Compensation Agreement between York International Corporation and Robert
C. Galvin, dated June 21, 1999 (filed herewith)
*10.15 Third Amendment to the York International Corporation Executive Deferred Compensation Plan,
effective as of October 1, 1999 (filed herewith)
*10.16 Employment Agreement between York International Corporation and John R. Tucker, dated
December 29, 1999 (filed herewith)
*10.17 Employment Agreement between York International Corporation and Stuart R. Amos, dated
December 29, 1999 (filed herewith)
*10.18 Employment Agreement between York International Corporation and Robert C. Galvin, dated
December 29, 1999 (filed herewith)
*10.19 Employment Agreement between York International Corporation and Michael R. Young, dated
December 29, 1999 (filed herewith)
*10.20 Retirement Agreement between York International Corporation and Robert N. Pokelwaldt, dated
October 14, 1999 (filed herewith)
*10.21 Employment Agreement between York International Corporation and Key Executive Employees,
dated December 29, 1999 (filed herewith)
*10.22 Amendment No. 2 to the York International Corporation Amended and Restated 1992 Omnibus
Stock Plan, dated February 9, 2000 (filed herewith)
12 Statement re: Computation of Ratio of Earnings to Fixed Charges (filed herewith)
13 Annual Financial Statements and Review of Operations with Accountants' Certificate (filed
herewith)
21 Subsidiaries of the Registrant (filed herewith)
23 Accountants' Consent (filed herewith)
27 Financial Data Schedule (filed herewith EDGAR Only)
* Required to be Filed as management contracts, compensatory plans or arrangements required to
be identified pursuant to Item 14(c) of the registrant's report on Form 10-K.
37