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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, 1997
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 23, 1998, there were 40,641,902 shares of the registrant's Common
Stock outstanding, and the aggregate market value of the Common Stock held by
non-affiliates was $1,851,746,659 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 Report to Stockholders for the year ended December 31,
1997 and the Notice of Annual Meeting of Stockholders and Proxy Statement
pertaining to the Annual Meeting are incorporated herein by reference into Parts
II, III and IV.
Exhibit Index is located on pages 21 to 23
YORK INTERNATIONAL CORPORATION
FORM 10-K
YEAR ENDED DECEMBER 31, 1997
INDEX
PART 1
Item
Number Page
- ------ ----
1. Business 1
2. Properties 13
3. Legal Proceedings 14
4. Submission of Matters to a Vote of Security Holders 14
PART II
5. Market for Registrant's Common Equity 14
and Related Stockholder Matters
6. Selected Financial Data 14
7. Management's Discussion and Analysis of Financial Condition
and Results of Operations 14
8. Financial Statements and Supplementary Data 15
9. Changes in and Disagreements with Accountants on Accounting 15
and Financial Disclosure
PART III
10. Directors and Executive Officers of the Registrant 15
11. Executive Compensation 15
12. Security Ownership of Certain Beneficial Owners and Management 15
13. Certain Relationships and Related Transactions 15
PART IV
14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K 15
PART I
Item 1. Business
General
- -------
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 1997 the Company's products were sold in over 100
countries through over 750 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 (the "Acquisition"). In October 1991, the Company completed an initial
public offering of its Common Stock and in 1992 CII and the other non-management
investors in the Acquisition sold their remaining shares in a public offering.
Headquartered in York, Pennsylvania, the Company has manufacturing facilities in
13 states and 13 foreign countries. As of December 31, 1997, the Company
employed approximately 20,270 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 equipment and
worldwide service, repair and replacement markets and increase its presence in
the worldwide refrigeration and gas compression market. The Company has grown,
and expects to continue to grow, through expansion of its current product lines,
acquisitions 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
- ------------------------
* The cooling capacity of air conditioning units is measured in tons. One ton of
cooling capacity is equivalent to 12,000 BTUs and is generally adequate to air
condition approximately 500 square feet of residential space.
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overall efficiency of its product offerings by employing internally developed
advanced heat transfer and compressor 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
implemented 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, have been key elements in implementing its
strategies and achieving its 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 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 second 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 third is Refrigeration products, including commercial and
industrial refrigeration and gas compression equipment, designed for the food,
beverage, chemical and petrochemical processing industries. Like engineered
systems products, the Company's refrigeration and gas compression equipment is
designed specifically for the customer's needs and applications.
The following table sets forth revenue by product and geographic market:
(in thousands)
1997 1996 1995
----------- ------------ ---------------
Engineered Systems products $1,370,983 $1,313,587 $ 1,182,624 /(a)/
Unitary products 1,394,142 1,417,007 1,212,620 /(a)/
Refrigeration products 428,532 487,940 534,704 /(a)/
---------- ---------- -----------
Total revenue $3,193,657 $3,218,534 $ 2,929,948
========== ========== ===========
U.S. 58% 54% 55%
International 42% 46% 45%
-- -- --
100% 100% 100%
=== === ===
/(a)/ The 1995 revenue by product is estimated to represent the management
reorganization by product in 1997 and 1996.
Engineered Systems Products. The Company's Engineered Systems products consist
- ---------------------------
of heating and air conditioning equipment 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 and
control equipment to monitor and control the entire system. Larger units for
facilities such as hospitals, office towers, hotels, airports district cooling
and manufacturing operations are custom designed and manufactured by the
Company's Applied Systems Business Unit. The Applied Systems Business Unit also
supplies specially designed chilled water systems for use on U.S.,
2
British, French and other naval vessels. The Company is currently the major
supplier of water chillers to the U.S. Navy for both surface vessels and
submarines.
The Company has a line of standard indoor air handling equipment incorporating
the latest technologies for indoor air quality and a line of customized indoor
and outdoor air handling products. In 1997, the Company acquired PACE Gamewell
which designs, manufactures and sells air handling equipment. York manufactures
the broadest line of air handling equipment of any manufacturer in the industry.
The Company markets its Engineered Systems products under the "YORK", "MILLER-
PICKING", "TEMPMASTER", "SEVESO" and "PACE" brands. In the United States and
Canada, distribution of Engineered Systems products are coordinated by 8
regional offices and approximately 61 district offices. These district offices
market products directly to end users and contractors. The Company has
approximately 120 direct sales representatives and 115 independent sales agents
in the North American market.
The Company derives substantial revenues by selling replacement equipment and
parts, and by providing routine maintenance and emergency service for products
manufactured by the Company and its competitors through annual service
contracts. The Company has a corporate and national account sales program to
service customers with multiple locations throughout the world.
The Company believes its reputation for service and repair is excellent. The
Company's more than 3,500 service technicians in offices throughout the world
generate substantial revenues through the sale of replacement parts and by
providing routine and emergency service for air conditioning and refrigeration
systems manufactured by the Company and its competitors. In 1997 on a worldwide
basis, the higher margin service, repair and replacement business accounted for
an estimated 41% of the Company's total sales. The Company believes that its
emphasis 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;
Salisbury, North Carolina; San Antonio, Texas; Basildon, England; Barlassina,
Italy; Carquefou, France; Mannheim, Germany; Asquith, Australia; Montevideo,
Uruguay; Wuxi, China; Guanghzou, China; Durango Mexico; and Monterrey, Mexico.
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.
Unitary Products. The Company's primary unitary products are ducted central air
- ----------------
conditioning and heating systems, light commercial equipment and ductless mini-
splits manufactured and sold by the Company's Unitary Products Group ("UPG") and
hermetic compressors manufactured and sold by Bristol Compressors. Revenues
from Bristol Compressors were approximately $381 million, $448 million and $504
million during 1995, 1996, and 1997, respectively.
Unitary products consist of split systems and packaged products. A split system
consists of an outdoor unit containing a compressor and condenser, and 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 on a slab 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 hermetic compressor is an integral part of an air conditioning system. The
Company's products use compressors manufactured by Bristol as well as those
purchased from other vendors. In 1995, 1996, and 1997, approximately
3
83% of Bristol's revenues were attributable to sales of products to other air
conditioning equipment manufacturers. During 1995, Bristol entered into a joint
venture, Scroll Technologies, to design and manufacture scroll compressors.
This allowed Bristol to expand its product offering to include scroll compressor
capabilities.
The Company markets its Unitary products under the "YORK", "LUXAIRE", "FRASER-
JOHNSTON", "COLEMAN EVCON", "GUARDIAN", "AIRPRO" and "SEVESO" brands. "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.
In 1995 the Company formed a joint venture, Aeromaster, a mini-split
manufacturer located in Bangkok, Thailand. The mini-split market represents a
significant portion of the unitary business in the Asia Pacific Region and
Aeromaster enables York to compete in this market with a product manufactured
within the Region. Aeromaster supplies mini-split product to York offices
located around the world.
Sales of Unitary products and Bristol compressors 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 trends to be less cyclical. The replacement market
is significantly affected by ambient temperature. Hot spring weather 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. The Company's commercial products have been redesigned to meet the
five year compliance requirement of the U.S. Energy Policy Act of 1992 (EPACT).
This includes the energy efficiency rating (EER) of the system as well as the
efficiency of certain motors. 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
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;
Bogota, Colombia; Monterrey, Mexico; Perth, Australia; Coffs Harbour, Australia;
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.
Refrigeration Products. The Company has developed a successful line of
- ----------------------
industrial and commercial refrigeration products. The Company manufactures
screw and reciprocating compressors. Screw compressors enable the Company to
produce a highly reliable, ammonia refrigeration system required for commercial
and industrial applications in the food, beverage, chemical and petrochemical
industries. The Company believes that screw compressors are the most reliable
and energy efficient compressors available for ammonia refrigeration systems.
Food processing equipment produced by the Company includes spiral and tunnel
freezers for the poultry, frozen vegetable and prepared food businesses. In
addition, the Company manufactures packaged refrigeration systems to cool
chemical and petrochemical products during their production processes. Gram
Refrigeration and Gram Contractors provide similar manufacturing capabilities in
Europe and increase distribution and availability of
4
advanced technology. Gram also makes reciprocating compressors for refrigeration
applications. The Company's refrigeration and gas compression equipment is
engineered and manufactured to customer specifications.
The Company markets its refrigeration and gas compression equipment under the
"YORK", "YORK FOOD SYSTEMS", "FRICK", "FRIGID COIL", "IMECO", "RECO", "RITE
COIL", "RECOLD", "NORTHFIELD", "ACUAIRE" and "GRAM REFRIGERATION" brands. The
products are sold by the Company's sales engineers located in 14 offices and a
national network of more than 40 independent agents in the United States as well
as nine offices, 20 independent distributors and two licensees elsewhere in the
world. In addition, the Company believes that developing countries offer
opportunities for increasing sales of refrigeration equipment.
The Company's Food Systems Group develops commercial food freezing and
processing machinery in the domestic and international markets. Customers of
this group include Tyson Foods, H. J. Heinz, Cargill, Unilever and Nestle. The
Food Systems Group pulls through sales of refrigeration products from the
refrigeration products group.
The Company's new products in this area include smaller capacity packaged
commercial freezing machines down-sized to meet the needs of the developing new
markets, and a growing capability to design and deliver turn-key food processing
lines which include a broad spectrum of York products.
Refrigeration equipment is manufactured at Company-owned facilities in Dixon,
Illinois; Polo, Illinois; Waynesboro, Pennsylvania; Northfield, Minnesota;
Smithville, Ohio; San Antonio, Texas; Carquefou, France; and Vojens, Denmark,
and at a leased facility in Santa Fe Springs, California.
International Distribution
- --------------------------
The Company markets its equipment and service in Europe through companies
located in Austria, Switzerland, Bulgaria, Russia, other former Commonwealth of
Independent States countries, the Czech Republic, Hungary, Poland, Slovakia,
Romania, England, France, Germany, Denmark, Belgium, Netherlands, and Italy.
The Company's European operations have supplied equipment for such locations as
the Kremlin in Moscow, the Pompidou Center in Paris, the La Scala Opera House in
Milan, the English Channel Eurotunnel and the Frankfurt Airport.
The Company markets its equipment and service in the Middle East and India
through offices in Dubai, Abu Dhabi, Kuwait, Istanbul, New Delhi, Mumbai, Cairo,
Karachi, and through numerous distributors throughout the region. The Company
has sales and service joint ventures throughout the Kingdom of Saudi Arabia.
The Company's ability to manufacture large tonnage air-cooled air conditioning
equipment capable of operating under extreme conditions has resulted in winning
a substantial number of large contracts in the water short Middle East. The
Company has installed systems throughout the region, including equipment in the
Jeddah Airport, the Prophet's Mosque in Medina, the U.S. Embassy in New Delhi,
the Cairo Airport, the Abu Dhabi National Oil Company and the stock exchanges in
Kuwait and Istanbul.
The Company markets and services its products in the Pacific Rim region through
offices in Hong Kong, China, Singapore, Korea, Australia, Indonesia, and
Thailand, joint ventures in Taiwan and Malaysia, and various distributors
throughout the region. The Company manufactures products through joint ventures
in China, Thailand, and Malaysia, and wholly owned facilities in Australia. The
Company has installed systems throughout the region, including equipment in the
Shanghai Opera House, Shenzhen Railway Station, Hong Kong Exposition Centre,
Overseas Union Bank Centre in Singapore, Grand Hotel in Taipei, Sydney Opera
House, and the Kuala Lumpur City Centre in Malaysia, the world's tallest
building.
Sales through Latin America are handled through offices in Mexico, Argentina,
Brazil, Chile, Colombia, Miami, (USA), Puerto Rico, Argentina, Ecuador, Peru and
Venezuela, and sales representatives and independent distributors located
throughout Latin America. Installations include the World Trade Centers in
Mexico, Colombia, and Chile, the Sao Market Place in Brazil, the Mexican Stock
Exchange and the Hotel Intercontinental in Argentina.
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,
from time to time the Company enters into forward contracts for the purchase of
certain raw materials, principally copper and aluminum.
Joint Ventures in Foreign Markets
- ---------------------------------
In addition to its wholly-owned production and distribution facilities, the
Company produces, distributes and services Unitary and Engineered Systems
products in foreign markets through its participation in several foreign 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
Thailand Individual Thai Aeromaster Industry Manufacture Unitary Asia Pacific
Shareholders Co. Ltd. (85%) products Europe
Peoples Republic Guangzhou Sinro Air York Ghuangzhou Air Manufacture Unitary and China
of China Conditioning Mechanical Conditioning and Engineered Systems
and Electrical Equipment Refrigeration Co. Ltd. products
Company Ltd. (97%)
Republic of China Taipei Engineering York Taiwan Inc. Sales and service of air Taiwan
(Taiwan) Development (60%) conditioning equipment
Spain Compania Roca Clima Roca-York S.L. Manufacture Unitary Spain
Radiadores S.A. (50%) products
Cyprus Sabinco Ltd. KROY Ltd. (50%) Sales of air conditioning Middle East
equipment and parts
Colombia Inversiones Lopez York International S.A. Manufacture Unitary and Colombia
Imbett y cias en. cia (Colombia) (89%) Engineered Systems
products
Peoples Republic Wuxi Boiler Group York Wuxi Air Conditioning Manufacture Engineered China
of China and Refrigeration Co. Ltd. Systems products
(80%)
Brazil Mayside Participacues York International Sales of air conditioning Brazil
Administracao e Comercial Ltda. equipment
Comercio Ltda (80%)
Saudi Arabia Al Salem United Al Salem-York Services Service and repair of Saudi Arabia
Contracting Co. Ltd. (49%) air conditioning
equipment
6
Dividends received by the Company from foreign joint ventures were $0.6 million
in 1995, $1.5 million in 1996 and $1.2 million in 1997. Total Company
investments in foreign joint ventures were $16.7 million, $22.2 million and
$17.7 million at December 31, 1995, 1996 and 1997, respectively. Total sales by
the Company to foreign joint ventures are less than 1% of the Company's total
revenues.
Research and Development
- ------------------------
The Company's ongoing research and development program involves redesigning
existing products to reduce manufacturing costs and to increase product
efficiencies, developing electronic controls for existing products and creating
new products. During the years 1995, 1996 and 1997, the Company spent $26.9
million, $28.0 million and $30.6 million, respectively, for all product
development activities.
Product development activities in 1996 and 1997 encompassed a wide range of
products. The Company's centrifugal chiller line was expanded for use with
HCFC-22, HCFC-123 and HFC-134a, all considered environmentally acceptable
replacements for CFC's. The Company also offers screw compressors which use R-
717 (ammonia). The product line now extends from 300 to 2,000 tons for these
refrigerants. The Company also completed development of a new custom air
handling product line in the range of 2,000 to 50,000 cubic feet per minute
(CFM). The new products include the latest technologies to insure indoor air
quality. The combination of air handling product development and existing
product lines gives York the broadest line of air handling products of any
single manufacturer in the industry. The Company announced a new line of
centrifugal chillers ranging from 400 to 2,000 tons, incorporating natural gas
engine drives supplied by Caterpillar Inc. The product line boasts the highest
efficiency of any gas-powered air conditioning system on the market. The
development of prototype HFC-134a centrifugal chillers for Surface and Submarine
Vessels continued under various U.S. Navy contracts. These chillers are
targeted for introduction in the Navy's new construction programs in 1998.
Development of HFC-236fa retrofit kits for R-114 systems were also developed in
1997 for fleet demonstration in 1998. In 1995, the Company introduced more
efficient centrifugal chillers utilizing HCFC-123, HCFC-22 and HFC-134a. The
efficiency levels of .50 to .52 kw/ton are expected to be among the best in the
industry. The Company has also introduced a new line of variable speed drives
for centrifugal chillers to 1,000 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.
Bristol developed its 1.5 - 5 ton "Inertia" reciprocating compressor and put it
into production in 1991. Bristol continues to improve on the efficiency level
of the "Inertia" and a higher efficiency version was developed and put into
production during 1994. The "Inertia" compressor is being sold in the
residential equipment market for high energy efficiency air conditioning and
heat pump applications. Bristol has developed a new breakthrough design, TSTM
Technology, for compressors which provide higher system efficiencies, greater
reliability, and increased comfort. Scroll compressor technology and capability
are expanding through the joint venture established in 1995.
Competition
- -----------
All of the markets in which the Company does business are very competitive.
Participants compete on the basis of service and the price, quality, reliability
and efficiency of products. Several of the Company's competitors have greater
financial resources than the Company.
In the domestic market for Engineered Systems air conditioning equipment, the
Company competes primarily with two large United States manufacturers, Carrier
Corporation, a subsidiary of United Technologies Corporation, and Trane Company,
a division of American Standard Inc. Engineered Systems product manufacturers
compete on the basis of product design, reliability 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 Unitary products market, the Company competes with numerous national and
regional manufacturers. In this market, price competition and maximum market
coverage are particularly important, as there is relatively little perceived
differentiation among competing product lines.
7
In the hermetic 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. In this
market, the Company competes primarily on the basis of reliability and price as
well as delivery, service and product efficiency.
In the market for refrigeration equipment, the Company competes primarily with
FES, BAC, Evapco and Krack Corp., Stahl, Sabroe and Frigoscandia.
In international markets for air conditioning equipment, the Company competes
primarily with Carrier Corporation, Trane Company and several Japanese
manufacturers, including Matsushita, Hitachi, Mitsubishi Electric and Toshiba.
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, including "YORK". "LUXAIRE", "FRASER-JOHNSTON", "RECOLD",
"FRICK", "FRIGID COIL", "BRISTOL", "IMECO", "MILLER PICKING", "RECO",
"COLEMAN(R) EVCON", "AIRPRO", "GUARDIAN", "YORK FOOD SYSTEMS", "RITE COIL",
"NORTHFIELD FREEZING SYSTEMS", "SEVESO", "GRAM", "AEROMASTER", "ACUAIRE" and
"TEMPMASTER". The Company believes that its rights in these trademarks are
adequately protected and of unlimited duration.
Major Customers
- ---------------
During 1997, 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
- -------
As of December 31, 1997, the Company's backlog was $834.5 million as compared to
$845.1 million as of December 31, 1996. Substantially all of the orders are
expected to be fulfilled within the next 12 months.
Government Contracts
- --------------------
In 1997, approximately 2% 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 1998 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.
Employees
- ---------
As of December 31, 1997, the Company employed approximately 20,270 persons
worldwide. Approximately 12,555 persons are employed in the United States and
7,715 persons are employed in foreign countries. Approximately 3,482 domestic
employees are covered by collective bargaining agreements which expire between
8
December 31, 1998 and March 31, 2003. 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 foreign 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 prior to the end of the decade. 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
9
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.
10
Executive Officers
- ------------------
The executive officers of the Company are as follows:
Name Age Position
---- --- --------
Robert N. Pokelwaldt 61 Chairman of the Board of Directors and
Chief Executive Officer
John R. Tucker 50 President and Chief Operating Officer
William G. Cowles, Jr. 52 Vice President and President
of Refrigeration
Joseph D. Smith 44 Vice President, Manufacturing
Peter J. Spellar 53 Vice President and President
of Applied Systems
Michael R. Young 53 Vice President and President
of Bristol Compressors
Jane G. Davis 48 Vice President, Secretary
and General Counsel
Dean T. DuCray 57 Vice President and Chief
Financial Officer
Wayne J. Kennedy 55 Vice President, Human
Resources
Helen S. Marsteller 37 Vice President, Investor Relations
and Corporate Communications
Mark V. Stanga 44 Vice President, Government Affairs
James P. Corcoran 52 Treasurer
C. David Myers 34 Controller
Mr. Pokelwaldt has been Chairman of the Company since January 1993. Prior
thereto he was President, Chief Executive Officer and Director of the Company
since June 1991, President and Chief Operating Officer from January 1990 to June
1991, Vice President of the Company and President of Applied Systems from
September 1988 to January 1990 and Chairman and Chief Executive Officer of Frick
Company from June 1983 to September 1988.
Mr. Tucker has been President and Chief Operating Officer of the Company since
October 1997. Prior to joining the Company, he was President of 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, Inc. from 1988 to 1994, and held various positions with
Westinghouse Electric Corporation from 1968 to 1988.
Mr. Cowles has been Vice President and President of Refrigeration Products Group
since January 1997. Prior thereto, he was President, Northfield Freezing
Systems from September 1985 to January 1997.
11
Mr. Smith has been Vice President, Manufacturing since December 1997. Prior
thereto he was President of the Airside Products Group since October 1994.
Prior thereto he was Vice President of Special Projects of the Company from May
1994 to October 1994. Prior to joining the Company, Mr. Smith was Vice
President and General Manager of Spherical Roller Bearing Division of SKF USA,
Inc. since May 1992. Previous to this, Mr. Smith held various positions with
Harley Davidson and General Motors.
Mr. Spellar has been Vice President of the Company and President, Applied
Systems Worldwide since November 1995. Prior thereto, he was Vice President of
the Company and Vice President, European Operations from August 1992 to November
1995, President, Frick Division from May 1987 to August 1992 and President of
the Frick Company from May 1979 to May 1987.
Mr. Young has been Vice President of the Company, and Chief Executive Officer
and President of Bristol Compressors since October 1996. Prior thereto, he was
President, Chairman and Chief Executive Officer of Evcon Industries, Inc. from
1991-1995, 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.
Ms. Davis has been Vice President, Secretary and General Counsel of the Company
since March 1995. Prior thereto, she was Vice President, General Counsel and
Secretary of Joy Technologies Inc. from September 1988 to February 1995.
Mr. DuCray has been Vice President and Chief Financial Officer of the Company
since January 1987. Prior to joining the Company he was President and Chief
Executive Officer of Technical Oil Tool Corporation, a wholly-owned subsidiary
of Baker International Corporation, from July 1976 to January 1987.
Mr. Kennedy has been Vice President, Human Resources, of the Company since May
1993. Prior thereto he was the Vice President of Human Resources for the
Millipore Corporation from 1985 to 1993.
Ms. Marsteller has been Vice President, Investor Relations and Corporate
Communications since September 1997. Prior thereto, she was Director of
Investor Relations from 1992 to September 1997. Prior thereto, she held various
financial positions in the Unitary Products Group from 1986 to 1992.
Mr. Stanga has been Vice President of Government Affairs since February 1997.
Prior thereto, he was Director of Government Affairs from October 1995 to
February 1997. Prior to joining the Company, Mr. Stanga was Environmental
Affairs counsel for Litton Industries from April 1988 to October 1995, Associate
Director of the Office of Ocean and Coastal Resources Management in the U.S.
Commerce Department from April 1986 to April 1988, and Attorney Advisor at the
U.S. Environmental Protection Agency from February 1983 to April 1986.
Mr. Corcoran has been Treasurer of the Company since July 1992. Prior thereto
he was Treasurer of Griffith Laboratories from August 1990 to May 1992,
Treasurer of AM International from March 1987 to August 1990 and Director,
Treasury Operations of Borg-Warner Corporation from February 1977 to March 1987.
Mr. Myers has been Controller since July 1995. Prior thereto, he was Director
of Finance, Airside Products Group to July 1995 and Director of Financial
Planning and Controls from March 1994 to December 1994. Prior to joining the
Company, he was with KPMG Peat Marwick LLP from August 1986 to March 1994.
12
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
Elyria, OH Unitary products 636,000
Norman, OK Unitary products 549,000
Bristol, VA Hermetic compressors 520,000
Waynesboro, PA Refrigeration products 400,000
and compressors
Basildon, England Engineered products 370,000
Sparta, NC Hermetic compressors 180,000
San Antonio, TX Refrigeration and 136,000
Engineered products
Durango, Mexico Engineered products 116,000
Vojens, Denmark Refrigeration products 111,000
and compressors
Asquith, Australia Engineered products 102,000
Monterrey, Mexico Engineered products, 102,000
Unitary products
Guangzhou, China Air handling products 100,000
Dixon, IL Refrigeration products 97,000
Bangkok, Thailand Unitary products 94,000
Carquefou, France Engineered products 92,000
Polo, IL Refrigeration products 78,000
Roanoke, VA Screw compressors 72,000
Wuxi, China Engineered products 70,000
Johannesburg, South Africa Unitary products 56,000
Smithville, OH Freezer systems 44,000
Northfield, MN Freezer systems 44,000
Bogota, Colombia Unitary products and 40,000
Engineered products
Montevideo, Uruguay Engineered products 22,000
At the York, Pennsylvania location, approximately 220,000 square feet of
facilities are leased to tenants and approximately 100,000 square feet are
neither currently used by the Company nor leased to third parties. The Company
also leases for its own use a 163,000 square foot facility in Albany, Missouri,
a 230,000 square foot manufacturing facility in Barlassina, Italy, a 60,000
square foot manufacturing facility in Mannheim, Germany, a 126,000 square foot
manufacturing facility in Perth, Australia, 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 209,000 square foot facility in Portland, Oregon.
In addition to the properties described above, the Company leases approximately
100 facilities in the United States and over 50 additional 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.
13
Item 3. Legal Proceedings
The Company is a party to lawsuits arising from time to time in the ordinary
course of business. The Company believes that no pending lawsuit will result in
any material adverse effect to the Company.
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 1997.
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 23, 1998, the Company had 5,346 holders of record of its
common stock.
Trading and Dividend Information
- --------------------------------
Dividends
High Low Declared
---- --- ---------
1997
----
Fourth quarter $47 3/8 $39 5/16 $ .12
Third quarter 49 7/16 41 3/4 .12
Second quarter 50 5/8 38 5/8 .12
First quarter 54 3/8 42 .12
1996
----
Fourth quarter $56 1/4 $47 3/8 $ .09
Third quarter 51 7/8 44 3/4 .09
Second quarter 53 5/8 46 3/4 .09
First quarter 49 44 .09
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 1997 Amended and Restated Credit Agreement.
Item 6. Selected Financial Data
Information contained under the caption "Five Year Summary of Selected Financial
Data" on page a4 of the Annual Report 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 a11 of the Annual
Report is incorporated herein by reference in response to this item.
14
Item 8. Financial Statements and Supplementary Data
Financial statements for York International Corporation and Subsidiaries are
contained on pages a12 to a29 of the Annual Report and Summary of Quarterly
Results (unaudited) are contained on page a29 of the Annual Report and are
incorporated herein by reference in response to this item.
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
Information contained under the caption "Election of Directors" in the
Registrant's definitive 1998 Proxy Statement is incorporated herein by reference
in response to this item. See Item 1 above for information concerning executive
officers.
Item 11. Executive Compensation
Information contained under the caption "Executive Compensation" in the
Registrant's definitive 1998 Proxy Statement is incorporated herein by reference
in response to this item, other than the information under the subcaptions
"Report of the Compensation Committee" and "Stock Performance Graph" which are
not incorporated by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management
Information contained under the captions "Election of Directors" and "Ownership
of Common Stock" in the Registrant's definitive 1998 Proxy Statement is
incorporated herein by reference in response to this item.
Item 13. Certain Relationships and Related Transactions
None.
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 a12 to a29 of the Annual Report:
Consolidated Balance Sheets - as of December 31, 1997 and 1996
Consolidated Statements of Operations - years ended December 31,
1997, 1996, and 1995
Consolidated Statements of Cash Flows - years ended December 31,
1997, 1996, and 1995
Consolidated Statements of Stockholders' Equity - years ended
December 31, 1997, 1996 and 1995
Notes to Consolidated Financial Statements
(2) The following financial statement schedule for York International
Corporation and subsidiaries is included herein:
15
VIII Valuation and Qualifying Accounts - years ended December 31,
1997, 1996 and 1995; (Page 20 of Form 10-K)
All other schedules are omitted as they are not applicable.
Independent Auditors' Report Covering Financial Statement Schedule;
(Page 19 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 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)
4.3 Share Transfer Agreement dated as of June 19, 1995 between the
Registrant and National Westminster Bank PLC (Incorporated by reference
to Exhibit 4.3 to Registrant's Annual Report on Form 10-K for the year
ended December 31, 1995, File No. 1-10863)
4.4 Dividend Rights Agreement dated as of June 19, 1995 between the
Registrant and National Westminster Bank PLC (Incorporated by reference
to Exhibit 4.4 to Registrant's Annual Report on Form 10-K for the year
ended December 31, 1995, File No. 1-10863)
4.5 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)
4.6 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)
4.9 Amendment to Share Transfer Agreement between Registrant and National
Westminster Bank PLC, dated February 11, 1998 (filed herewith)
16
4.10 Amendment to Dividend Rights Agreement between Registrant and National
Westminster Bank PLC, dated February 11, 1998 (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 Registrant's 1996 Incentive Compensation Plan (Incorporated by
reference to Exhibit 10.3 to the Registrant's Annual Report on Form 10-
K for the year ended December 31, 1996, File No. 1-10863)
*10.4 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)
*10.5 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)
*10.6 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)
*10.7 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 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.)
11 Statement re: Computation of Per Share Earnings (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)
27.1 Financial Data Schedule for 1996 Restated for FAS128, Earnings Per
Share (filed herewith)
* 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
1997.
17
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/ Robert N. Pokelwaldt
----------------------------
Robert N. Pokelwaldt
Chief Executive Officer
Date: MARCH 23, 1998
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 23rd day of March 1998.
Signature Title
--------- -----
/s/ Robert N. Pokelwaldt Chief Executive Officer
- ------------------------- (Principal Executive Officer)
Robert N. Pokelwaldt
/s/ Dean T. DuCray Vice President and Chief Financial Officer
- --------------------- (Principal Financial Officer)
Dean T. DuCray
/s/ C. David Myers Controller
- --------------------- (Principal Accounting Officer)
C. David Myers
Directors
---------
/s/ Robert N. Pokelwaldt
- ---------------------------
Robert N. Pokelwaldt
/s/ Malcolm W. Gambill*
- --------------------------
Malcolm W. Gambill
/s/ Robert F. B. Logan*
- -------------------------
Robert F. B. Logan
/s/ Gerald C. McDonough*
- --------------------------
Gerald C. McDonough
/s/ Donald M. Roberts*
- ------------------------
Donald M. Roberts
/s/ John R. Tucker
- -------------------
John R. Tucker
/s/ John E. Welsh*
- --------------------
John E. Welsh III
/s/ Walter B. Wriston*
- ----------------------
Walter B. Wriston
* Pursuant to powers of attorney.
18
Independent Auditors' Report
----------------------------
The Board of Directors and Stockholders
York International Corporation:
Under date of February 10, 1998, we reported on the consolidated balance sheets
of York International Corporation and subsidiaries as of December 31, 1997 and
1996, and the related consolidated statements of operations, cash flows and
stockholders' equity for each of the years in the three-year period ended
December 31, 1997, as contained in the 1997 annual report 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 1997. 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.
As discussed in Note 17 to the consolidated financial statements, the Company
adopted the provisions of Statement of Financial Accounting Standards No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed Of" effective October 1, 1995.
KPMG PEAT MARWICK LLP
/s/ KPMG Peat Marwick LLP
Harrisburg, Pennsylvania
February 10, 1998
19
SCHEDULE VIII
YORK INTERNATIONAL CORPORATION AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
Years Ended December 31, 1997, 1996 and 1995
(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
----------- ---------- --------- ----------- ---------- ----------
1997
Allowances for Doubtful Accounts $20,737 $ 6,139 $ - $ 9,037 $17,839
Warranties $33,135 $12,805 $ - $ 9,660 $36,280
1996
Allowances for Doubtful Accounts $17,229 $ 5,718 $ 425 $ 2,635 $20,737
Warranties $27,943 $15,649 $ - $10,457 $33,135
1995
Allowance for Doubtful Accounts $13,461 $ 5,774 $1,201 $ 3,207 $17,229
Warranties $21,535 $10,610 $2,875 $ 7,077 $27,943
- ----------------
(a) Additions Charged to Other Accounts include liabilities of businesses
acquired in 1996 and 1995.
20
EXHIBIT INDEX
- ------------
The following exhibits are filed pursuant to Item 601 of Regulation S-K. The
items marked with an asterisk are filed by reference as noted.
Exhibit Page
Number 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 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)
4.3 Share Transfer Agreement dated as of June 19, 1995 between
the Registrant and National Westminster Bank PLC (Incorporated
by reference to Exhibit 4.3 to Registrant's Annual Report on
Form 10-K for the year ended December 31, 1995, File No.
1-10863)
4.4 Dividend Rights Agreement dated as of June 19, 1995 between
the Registrant and National Westminster Bank PLC (Incorporated
by reference to Exhibit 4.4 to Registrant's Annual Report on
Form 10-K for the year ended December 31, 1995, File No.
1-10863)
4.5 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)
4.6 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)
21
4.9 Amendment to Share Transfer Agreement between Registrant and National
Westminster Bank PLC, dated February 11, 1998 (filed herewith)
4.10 Amendment to Dividend Rights Agreement between Registrant and
National Westminster Bank PLC, dated Febuary 11, 1998 (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 Registrant's 1996 Incentive Compensation Plan (Incorporated by
reference to Exhibit 10.3 to the Registrant's Annual Report on
Form 10-K for the year ended December 31, 1996, File No. 1-10863)
10.4 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)
*10.5 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)
*10.6 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 Decemebr 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 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 Registrants Annual
Report on Form 10-K for the year ended Decemeber 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 reference to
Exhibit 10.1 to Registrant's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1997, File No. 1-10863.)
11 Statement re: Computation of Per Share Earnings (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)
22
21 Subsidiaries of the Registrant (filed herewith)
23 Accountants' Consent (filed herewith)
27 Financial Data Schedule (filed herewith)
27.1 Financial Data Schedule for 1996 Restated for FAS128, Earnings
Per Share (filed herewith)
(b) No reports on Form 8-K have been filed during the last quarter of fiscal
1997.
23