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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, 1998
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 26, 1999, there were 39,864,887 shares of the registrant's Common
Stock outstanding, and the aggregate market value of the Common Stock held by
non-affiliates was $1,330,099,897 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, 1998 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 22 to 24.
YORK INTERNATIONAL CORPORATION
FORM 10-K
YEAR ENDED DECEMBER 31, 1998
INDEX
PART 1
Item
Number Page
------ ----
1. Business.
2. Properties.
3. Legal Proceedings.
4. Submission of Matters to a Vote of Security Holders.
PART II
5. Market for Registrant's Common Equity
and Related Stockholder Matters.
6. Selected Financial Data.
7. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
7a. Quantitative and Qualitative Disclosure about Market Risk.
8. Financial Statements and Supplementary Data.
9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure.
PART III
10. Directors and Executive Officers of the Registrant.
11. Executive Compensation.
12. Security Ownership of Certain Beneficial Owners and Management.
13. Certain Relationships and Related Transactions.
PART IV
14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
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 1998, 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 12 foreign countries. As of December 31, 1998, the Company
employed approximately 20,600 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 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 ton 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, 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. 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 sales by product and geographic market:
(in thousands)
1998 1997 1996
----------- ----------- -----------
Engineered Systems Group $1,408,091 $1,396,436 $1,319,306
Unitary Products Group 1,481,760 1,392,378 1,417,782
Refrigeration Products Group 447,499 447,093 510,399
Eliminations (48,149) (42,250) (28,953)
---------- ---------- ----------
Total sales $3,289,201 $3,193,657 $3,218,534
========== ========== ==========
U.S. 58% 58% 54%
International 42% 42% 46%
--- --- ---
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 15 on pages a25 to a27 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.
2
Engineered Systems Products. 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,
control equipment to monitor and control the entire system, maintenance and
service. Engineered Systems Group manufactures and provides certain design
solutions for larger systems used in hospitals, office towers, hotels and
airports. 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. The Company is currently the major supplier of water chillers to
the U.S. Navy for both surface vessels and submarines.
The Company markets its Engineered Systems under the "YORK", "MILLER-PICKING",
"TEMPMASTER", "SEVESO" and "PACE" brands. In the United States and Canada,
distribution of Engineered Systems products and services are coordinated by
seven regional offices and approximately 61 district offices. These district
offices market products directly to end users and contractors. The Company has
approximately 123 direct sales representatives and 115 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. The Group also 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. In
1997, the Company acquired PACE Gamewell which designs, manufactures and sells
air handling equipment. York manufactures the broadest line of chiller and air
handling equipment of any manufacturer in the industry.
The Engineered Systems Group 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 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. These technicians generate 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. The Engineered Systems Group 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; Salisbury, North
Carolina; Portland, Oregon; San Antonio, Texas; Roanoke, Virginia; Basildon,
England; Barlassina, Italy; Carquefou, France; 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 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 Corporation, a subsidiary of United Technologies
Corporation, and Trane Company, a division of American Standard Inc. In the
international market, the Company competes primarily with Carrier Corporation,
Trane Company 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.
3
Unitary Products. 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 mini-splits, light commercial heating and cooling equipment,
and reciprocating and scroll OEM 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, 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 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. Revenues from Bristol were approximately $517 million, $504 million
and $530 million during 1996, 1997 and 1998, respectively. Approximately 80% of
Bristol revenues are attributable to sales of products to other air conditioning
equipment manufacturers.
The Company markets its Unitary products under the "YORK", "LUXAIRE", "FRASER-
JOHNSTON", "COLEMAN EVCON", "GUARDIAN", "AIRPRO", "BRISTOL" 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.
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 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. 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 TS(TM) 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;
Bogota, Colombia; 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
4
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.
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 Corporation, Trane Company and Lennox and
numerous national manufacturers such as Goodman, International Comfort Products,
Rheem and Nordyne. In the international market, the Company competes primarily
with Carrier Corporation, Trane Company, 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.
Refrigeration Products. The Company's Refrigeration Products Group consists of
- ----------------------
screw and reciprocating compressors, condensers, evaporators, heat exchangers,
freezers for commercial food freezing, process refrigeration systems, hygienic
air distribution systems, gas compression systems and automated plant control
systems.
Screw compressors enable the Company to produce highly reliable, ammonia
refrigeration systems required for commercial and industrial applications in the
food, beverage, chemical and petroleum industries. The Company believes that
screw compressors are the most reliable and energy efficient compressors
available for ammonia refrigeration systems. The Company's Gram Refrigeration
business provides similar manufacturing capabilities in Europe and increased
availability of technologically advanced product. Gram also produces
reciprocating compressors for refrigeration applications. The Company's
refrigeration and gas compression equipment is engineered and manufactured to
customer specifications. Food freezing equipment produced by the Company
includes spiral and tunnel freezers for the poultry, frozen vegetable and
prepared food businesses. Smaller capacity packaged commercial freezing machines
have been downsized to meet the needs of developing new markets.
Refrigeration systems are essential in the textile, electronics, pharmaceutical
and petrochemical industries. Food, beverage and process cooling operations use
refrigeration systems both in product freezing and maintaining these products in
warehouses, distribution centers and retail outlets. Refrigeration Product Group
systems are also in use in sporting venues.
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 50 independent agents in the United States as well
as nine offices, 20 independent distributors 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; Northfield, Minnesota;
Smithville, Ohio; San Antonio, Texas; Carquefou, France; and Vojens, Denmark,
and at a leased facility in Santa Fe Springs, California.
All of the markets in which the Company's Refrigeration Products Group does
business are very competitive. Refrigeration product manufacturers compete on
the basis of product design, reliability, quality and price. In the market for
refrigeration equipment, the Company competes primarily with FES, BAC, Evapco
and Krack Corp., Mycom, Sabroe and Frigoscandia (subsidiary of FMC Corporation).
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 enters 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 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, France, Germany, Hungary, Italy, Latvia, the
Netherlands, Poland, Romania, Russia, other former Commonwealth of Independent
States countries, Slovakia, 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 a joint venture in Greece.
The Company's Asian region, headquartered in Hong Kong (China), markets its
products and services through offices located in Australia, China, Hong Kong,
Indonesia, Korea, New Zealand, Philippines, Singapore, and Thailand. Products
are also marketed through joint ventures in Taiwan (China) and Malaysia 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.
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 sales and service joint ventures
in Cyprus and the Kingdom of Saudi Arabia.
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 Unitary and Engineered Systems
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 Coniditioning 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. Sales and service of air Taiwan
(Taiwan) Development (60%) 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
Greece Individual Greek York Hellas S.A. Service and repair of Greece
shareholders (80%) air conditioning
equipment
Spain Compania Roca Clima Roca-York S.L. Manufacture Unitary Spain
Radiadores S.A. (50%) products
Brazil Mayside Participacues York International Sales of air conditioning Brazil
Administracao e Comercial Ltda. equipment
Comercio Ltda (80%)
U.S. Carrier Corporation Scroll Technologies Manufacture scroll U.S.
(50%) compressors
Dividends received by the Company from joint ventures were $1.5 million in 1996,
$1.2 million in 1997, and $0.5 million in 1998. Total Company investments in
joint ventures were $22.2 million, $17.7 million and $20.1 million at December
31, 1996, 1997 and 1998, respectively. Total sales by the Company to joint
ventures are less than 1% of the Company's total revenues.
Major Customers
- ---------------
During 1998, 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.
7
Backlog
- -------
The following table sets forth backlog by business segment:
(in thousands)
1998 1997
---- ----
Engineered Systems Group $504,616 $477,203
Unitary Products Group 234,746 220,601
Refrigeration Products Group 140,111 136,662
-------- --------
Total backlog $879,473 $834,466
======== ========
Substantially all orders are expected to be fulfilled within the next 12 months.
Government Contracts
- --------------------
In 1998, 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 1999 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 new products encompass a wide range of products.
During the years 1996, 1997 and 1998, the Company spent $28.0 million, $30.6
million, and $31.2 million, respectively, for all product development
activities.
The Engineered System Groups most notable chiller product developments in 1998
were the new air-cooled offerings from 10 to 400 tons and many older regional
product lines are being replaced with low-cost, energy efficient, modular,
global product platforms. The centrifugal chiller line expansion continues with
new environmentally acceptable replacements for CFC's. 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 current product lines give the Company the
broadest line of air handling products of any single manufacturer in the
industry. The HFC-134a centrifugal chillers for Surface and Submarine Vessels
were introduced in the Navy's new construction programs in 1998. Development of
HFC-236fa retrofit kits were also installed into the fleet in 1998. 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.
The Unitary Products Group continues to redesign its product line for lower
sound ratings, greater efficiency, reliability and manufacturing cost
effectiveness. 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 Refrigeration Products Group continues to redesign certain products for
greater reliability and manufacturing cost effectiveness. The group is
currently developing a new high-pressure screw compressor at the Frick
manufacturing facility in Waynesboro, PA to be used in applications for the gas
compression industry.
8
Employees
- ---------
As of December 31, 1998, the Company employed approximately 20,600 persons
worldwide. Approximately 12,900 persons are employed in the United States and
7,700 persons are employed in foreign countries. Approximately 4,700 domestic
employees are covered by collective bargaining agreements which expire between
May 1999 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.
9
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 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 62 Chairman of the Board of Directors and
Chief Executive Officer
John R. Tucker 51 President and Chief Operating Officer
Stuart Amos 52 Vice President and President of Unitary Products
Group
William G. Cowles, Jr. 53 Vice President and President of Refrigeration
Joseph D. Smith 45 Vice President, Manufacturing
Peter J. Spellar 54 Vice President and President of Applied Systems
Michael R. Young 54 Vice President, President and Chief Executive
Officer of Bristol Compressors
Jane G. Davis 49 Vice President, Secretary and General Counsel
Wayne J. Kennedy 56 Vice President, Human Resources
Helen S. Marsteller 38 Vice President, Investor Relations and Corporate
Communications
Mark V. Stanga 45 Vice President, Government Affairs
Benson K. Woo 44 Vice President and Chief Financial Officer
Charles F. Cargile 34 Controller
James P. Corcoran 53 Treasurer
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. Amos has been Vice President and President of Unitary Products Group since
March 1998. Prior to joining the Company, he was President and Chief Operating
Officer of Siebe Industrial Equipment Division from January 1996 to August 1997
and President of Compair Division from November 1993 to January 1996, both
divisions of Siebe PLC; President of Astec Standard Power from May 1990 to
November 1993 and President of ENI from November 1987 to May 1990, both
divisions of Emerson Electric.
11
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.
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 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.
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. 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. Woo has been Vice President and Chief Financial Officer of the Company since
June 1998. Prior to joining the Company he was the Vice President and Treasurer
of Case Corporation, from September 1994 to June 1998. Prior to this, Mr. Woo
held increasingly responsible positions with General Motors (GM) Corporation
from 1981 to 1994.
Mr. Cargile has been Controller since November 1998. Prior to joining the
company, Mr. Cargile was Controller of Flowserve Corporation from July 1997 to
October 1998. Prior thereto, he was the Controller of BW/IP from December 1996
to June 1997; Director Corporate Accounting of BW/IP from March 1996 to December
1996; Manager Operations and Financial Analysis of BW/IP from 1992 to March
1996.
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.
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
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
Basildon, England Engineered products 254,000
San Antonio, TX Refrigeration and Engineered products 194,000
Sparta, NC Unitary products (hermetic compressors) 180,000
Bangkok, Thailand Unitary products 123,000
Vojens, Denmark Refrigeration products and compressors 111,000
Guangzhou, China Engineered products 100,000
Dixon, IL Refrigeration products 97,000
Asquith, Australia Engineered products 96,000
Durango, Mexico Engineered products 95,000
Monterrey, Mexico Engineered products, Unitary products 92,000
Wuxi, China Engineered products 87,000
Polo, IL Refrigeration products 78,000
Roanoke, VA Engineered products (screw compressors) 72,000
Smithville, OH Refrigeration products (freezer systems) 51,000
Northfield, MN Refrigeration products (freezer systems) 49,000
Bogota, Colombia Unitary products and Engineered products 40,000
Montevideo, Uruguay Engineered products 38,000
Johannesburg, South Africa Unitary products 34,000
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 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 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 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 1998.
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 26, 1999, the Company had 5,303 holders of record of its
common stock.
Trading and Dividend Information
- --------------------------------
Dividends
High Low Declared
---------- ---------- ---------
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
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
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 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 a11
of the Annual Financial Statements and Review of Operations 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 a13 to a29 of the Annual Financial Statements and Review of
Operations and Summary of Quarterly Results (unaudited) are contained on page
A31 of the Annual Financial Statements and Review of Operations 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 1999 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 1999 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 1999 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 a13 to
a29 of the Financial Statements and Review of Operations:
Consolidated Balance Sheets - as of December 31, 1998 and 1997
Consolidated Statements of Operations - years ended December 31,
1998, 1997, and 1996
Consolidated Statements of Cash Flows - years ended December 31,
1998, 1997, and 1996
Consolidated Statements of Comprehensive Income - years ended
December 31, 1998, 1997 and 1996
Consolidated Statements of Stockholders' Equity - years ended
December 31, 1998, 1997 and 1996
Notes to Consolidated Financial Statements
15
(2) The following financial statement schedule for York International
Corporation and subsidiaries is included herein:
VIII Valuation and Qualifying Accounts - years ended December 31,
1998, 1997 and 1996; (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)
4.11 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)
*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)
*10.12 Executive Officer Compensation Agreement between York International
Corporation and John R Tucker, dated October 22, 1997 (filed
herewith)
*10.13 Executive Officer Compensation Agreement between York International
Corporation and Stuart R. Amos, dated February 6, 1998 (filed
herewith)
*10.14 Executive Officer Compensation Agreement between York International
Corporation and Benson K. Woo, dated June 5, 1998 (filed herewith)
*10.15 Amendment No. 1 to the York International Corporation 1992 Omnibus
Stock Plan, dated February 16, 1999 (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)
17
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
1998.
18
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
YORK INTERNATIONAL CORPORATION
/s/ Robert N. Pokelwaldt
-------------------------
Robert N. Pokelwaldt
Chief Executive Officer
Date: March 26, 1999
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 26th day of March 1999.
Signature Title
--------- -----
/S/ Robert N. Pokelwaldt Chief Executive Officer
- ------------------------- (Principal Executive Officer)
Robert N. Pokelwaldt
/S/ Benson K. Woo Vice President and Chief Financial Officer
- -------------------- (Principal Financial Officer)
Benson K. Woo
/S/ Charles F. Cargile Controller
- ------------------------- (Principal Accounting Officer)
Charles F. Cargile
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.
19
Independent Auditors' Report
----------------------------
The Board of Directors and Stockholders
York International Corporation:
Under date of February 15, 1999, we reported on the consolidated balance sheets
of York International Corporation and subsidiaries as of December 31, 1998 and
1997, 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, 1998, as contained in the 1998 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
1998. 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 15, 1999
20
SCHEDULE VIII
YORK INTERNATIONAL CORPORATION AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
Years Ended December 31, 1998, 1997 and 1996
(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
----------- ---------- --------- ----------- ---------- ----------
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
1996
Allowances for Doubtful Accounts $17,229 $ 5,718 $425 $ 2,635 $20,737
Warranties $27,943 $15,649 $ - $10,457 $33,135
- ----------
(a) Additions Charged to Other Accounts include liabilities of businesses
acquired in 1996.
21
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)
22
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 February 11, 1998 (filed herewith)
4.11 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)
*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.)
23
*10.12 Executive Officer Compensation Agreement between York International Corporation
and John R. Tucker, dated October 22, 1997 (filed herewith)
*10.13 Executive Officer Compensation Agreement between York International Corporation
and Stuart R. Amos, dated February 6, 1998 (filed herewith)
*10.14 Executive Officer Compensation Agreement between York International Corporation
and Benson K. Woo, dated June 5, 1998 (filed herewith)
*10.15 Amendment No. 1 to the York International Corporation 1992 Omnibus Stock Plan,
dated February 16, 1999 (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
1998.
24