SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
F O R M 10 - K
Annual Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 For the Fiscal Year
Ended December 31, 1994.
OR
Transition Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934 For the Transition
Period from
to
Commission File Number 1-8973
KYSOR INDUSTRIAL CORPORATION
(Exact name of registrant as specified in its charter)
Michigan
(State or other jurisdiction of incorporation or organization)
38-1909000
(IRS employer identification number)
One Madison Avenue,
Cadillac, Michigan
(Address of principal executive offices)
49601-9785
(Zip Code)
Registrant's telephone number, including area code:
(616) 779-2200
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Common Stock $1 par value
Name of each exchange on which registered
New York Stock Exchange
Indicatee by check mark whether the registrant (1) has
filed all reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90
days. YES X NO
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained
herein, and will not be contained, to the best of
registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [X]
The aggregate market value of the voting stock held by
nonaffiliates* of the registrant as of March 1, 1995:
Common Stock $104,349,328
*For purposes of this response, the Kysor Industrial
Corporation Employee Stock Ownership Plan, which owns
328,856 shares of Common Stock and 803,553 shares of
Series A Preferred Stock, is considered to be an affiliate
of Kysor Industrial Corporation.
Indicate the number of shares outstanding of each of the
registrant's class of Common Stock, as of the latest
practicable date: 5,706,318 shares of Common Stock, $1 par
value, as of March 1, 1995.
Documents Incorporated by Reference
Part III, Items 10 through 13 Parts of the registrant's
definitive Proxy Statement
for its April 28, 1995
Annual Meeting of
Shareholders
PART I
Item 1. BUSINESS
(a) General Development of Business.
Kysor Industrial Corporation ("Kysor", the "Company"
or the "Registrant") is a Michigan corporation. It is the
successor to a Delaware corporation of the same name organized
in 1970 and also previously a Michigan corporation of the same
name originally organized in 1925.
In April 1988, Kysor purchased an 80 percent
interest in Kysor/Warren Refrigeration GmbH of Limburg,
Germany. In January 1989 the remaining 20 percent interest
was acquired. Kysor/Warren Refrigeration GmbH designs,
manufactures and markets refrigerated display cases for the
European market.
In February 1994, Kysor acquired Kalt Manufacturing
Co., Inc., located in Portland, Oregon and Goodyear, Arizona.
Kalt manufactures walk-in coolers and panels for the
supermarket, convenience store, and food service industries.
(b) Segment Information.
Kysor's operations include two segments: commercial
products and transportation products. Operations in the
commercial products segment design, manufacture and market
refrigerated display cases, energy control systems,
refrigerated building systems, and heating and air-conditioning systems.
Operations in the transportation
products segment design, manufacture and market engine
performance systems, engine protection systems, and components
and accessories for heavy-duty trucks, other commercial
vehicles and marine equipment. Financial information related
to the industry segments is included in Item 8, Financial
Statements and Supplementary Data, under Note 11 - Segment
Information - in the Notes to Consolidated Financial
Statements.
(c) Narrative Description of Business.
At December 31, 1994, Kysor had approximately 2,236
employees. Information as of December 31, 1994 concerning
Kysor's two industry segments is presented below. Certain
financial information related to the individual industry
segments is incorporated in response to Item 1(b) above.
There were no material expenditures for compliance
with federal, state or local provisions regulating the
discharge of materials into the environment except with
respect to ongoing proceedings relating to soil and
groundwater contamination at the Cadillac Industrial Park in
Cadillac, Michigan which is explained further under Note 10,
Contingent Liabilities, to the Consolidated Financial
Statements included in Part II, Item 8.
Commercial Products
The principal products of the commercial products
group include supermarket refrigerated display cases,
condensing units, insulated panels for refrigerated building
systems and walk-in coolers. The principal markets for
Kysor's commercial products group include supermarkets,
convenience stores, food processors and restaurants.
Refrigerated display equipment, refrigerated building systems,
and sundry food store, food processing and restaurant
equipment are sold directly to supermarkets and convenience
stores, as well as through independent commercial
refrigeration distributors.
The basic raw materials used by Kysor in this group
are galvanized sheet and other types of steel, aluminum,
glass, copper tubing, foam insulation, refrigerants, brass,
copper, plastics and a variety of purchased electronic
components. All raw materials used in this segment are
readily available in adequate quantities from a number of
sources.
Kysor holds or is licensed under a number of patents
and trademarks relating to its commercial products. While
none of these patents or trademarks are considered
individually to be material, collectively these patents and
trademarks are important to the business of the commercial
products group.
There are no significant seasonal factors for the
business of this group. Backlogs at year-end 1994 were
approximately $64.0 million compared to $42.0 million in 1993
(restated to reflect the transfer of the Kysor/Westran
operation to the Transportation Products Group) and no
material portion of this business is subject to renegotiation
or termination by the government. There are no working
capital requirements peculiar to this industry segment.
The commercial products industry is highly
competitive. Kysor competes with numerous companies in this
group, some of which are larger and have greater financial
resources than Kysor. Kysor believes that it competes
primarily on the basis of quality, service, product
performance, and price for most of its products, and warrants
the majority of its products in accordance with general
industry practices.
The commercial products group generated $29.0
million and $48.4 million of sales and revenues from Food Lion
Stores in the years ended December 31, 1993 and 1992
respectively. No single customer generated in excess of 10
percent of consolidated sales and revenues in 1994.
Transportation Products
The principal products of this group include engine-performance
systems consisting of radiator shutters, fan
clutches and plastic fans, engine-protection systems
consisting of various engine-monitoring devices, truck fuel
tanks, marine instruments and heating, ventilating, and
air-conditioning for commercial vehicles. The principal markets
for Kysor's transportation products group are original
equipment manufacturers of such vehicles as medium- and heavy-duty
trucks, buses, off-highway equipment and the marine
industry. The majority of the group's sales are made directly
to manufacturers. Additionally, Kysor utilizes a network of
independent distributors to provide aftermarket and
replacement parts service to end users.
The basic raw materials used by Kysor in this group
are steel, brass, copper, aluminum, plastics and a variety of
purchased electronic components which are widely available in
adequate quantities from a number of sources.
Kysor holds or is licensed under a number of patents
and trademarks relating to its transportation products. While
none of these patents or trademarks are considered
individually to be of material value, collectively these
patents and trademarks are important to the business of the
transportation products group.
There are no significant seasonal factors for the
business of this group. Backlogs at year-end 1994 were
approximately $31.0 million compared to $22.0 million in 1993
and no material portion of this business is subject to
renegotiation or termination by the government. There are no
working capital requirements peculiar to this industry
segment. The Transportation Products Group generated $32.1
million and $26.5 million of sales and revenues from Ford
Motor Company in the years ended December 31, 1994 and 1993
respectively.
The transportation products industry is highly
competitive. Kysor competes with numerous companies in this
group, some of which are larger and have greater financial
resources than Kysor. Kysor believes that it competes
primarily on the basis of quality, service, product
performance, and price for most of its products, and warrants
the majority of its products in accordance with general
industry practices.
(d) Financial Information About Foreign and Domestic
Operations and Export Sales
This information is included in Item 8 - Financial
Statements and Supplementary Data - in Note 11 to the
Consolidated Financial Statements. The "Financial
Information by Segment" does not include separately reported
export sales because they are not significant.
Item 2. PROPERTIES
Kysor and its subsidiaries owned or leased the
following offices and manufacturing facilities as of December
31, 1994:
COMMERCIAL PRODUCTS GROUP
Location Description Interest
Georgia:
Conyers Plant & office; 480,000 Owned in fee simple
sq. ft. on 50-acre site
Columbus Plant & office; 295,826 Owned in fee simple
sq. ft. on 22.7-acre site
Texas:
Fort Worth Plant & office; 100,162 Owned in fee simple
sq. ft. on 11-acre site
Oregon:
Portland Plant & office; 84,000 Leased
sq. ft. on 5.65-acre site
Arizona:
Goodyear Plant & office; 50,000 Leased
sq. ft. on 5.0-acre site
Germany:
Limburg Plant & office; 52,096 sq. Owned in fee simple
ft. on 6.9-acre site
TRANSPORTATION PRODUCTS GROUP
Illinois:
Byron Plant, warehouse & office; Owned in fee simple
176,716 sq. ft. on 31-acre
site
Indiana:
Scottsburg Plant & office; 42,048 Owned in fee simple
sq. ft. on 10.7-acre site
Michigan:
Cadillac Plant, warehouse & office; Owned in fee simple
131,426 sq. ft. on 12.4-
acre site
Spring Plant & office; 80,000 sq. Owned in fee simple
Lake ft. on 8.1-acre site
Rothbury Plant, warehouse & office; Owned in fee simple
18,543 sq. ft. on 3.4-acre
site
Walker Plant & office; 49,188 Owned in fee simple
sq. ft. on 3-acre site
White Plant & office;42,000 sq. Owned in fee simple
Pigeon ft. on 5-acre site
North Carolina:
Charlotte Plant & office; 91,150 Owned in fee simple
sq. ft. on 3.5-acre site
South Wales:
Hengoed Plant & office; 50,000 Leased
sq. ft.
CORPORATE
Michigan:
Cadillac Executive office; 23,000 Owned in fee simple
sq. ft. on 102-acre site
Oklahoma:
Duncan Vacant plant, warehouse & Owned in fee simple
office; 93,000 sq. ft. on
22.1-acre site
It is believed that Kysor's facilities are generally
adequate for its operations and such properties are maintained
in a good state of repair.
Item 3. LEGAL PROCEEDINGS.
As previously reported, the Company is involved in
the following legal proceedings:
The Company is involved in a US EPA environmental
proceeding with respect to a site in Cadillac, Michigan. The
description of such proceeding is set forth in Part II, Item
8 of this report, Note 10 to the Consolidated Financial
Statements.
On July 3, 1991, the Michigan Attorney General and
the Michigan Department of Natural Resources ("MDNR") filed a
lawsuit against the Company and various other parties in the
United States Federal District Court for the Western District
of Michigan relating to the Cadillac, Michigan site described
in the preceding paragraph. The preceeding is also described
in Note 10 to the Consolidated Financial Statements included
in Part II, Item 8 of this report. On December 28, 1994 a
series of consent judgments were entered by the court in
which the Company and other defendants settled claims
for past costs incurred by the State in its investigation of
the site, known damages for injury to natural resources, and
fines and penalties. The Company's share of that settlement
was $2.5 million, including interest.
On December 31, 1991, General Electric filed a
third-party claim against the Company in the United States
District Court for the Western District of Michigan. The
description of such proceeding is set forth in Part I, Item 3
of the Company's 1993 Annual Report on Form 10-K filed with
the Commission on March 30, 1994. All third-party claims by
General Electric against the Company in this matter were
settled by an agreement dated February 18, 1995, and the
parties are in the process of obtaining an order of dismissal
from the court. Under the settlement agreement, Kysor has
agreed to pay $1.6 million as its share of past response costs
and expenses incurred by GE in connection with the remediation
of environmental contamination and defense of the underlying
claims against GE. Kysor has also agreed to pay 55 percent of
future environmental response costs related to the site. The
anticipated cost associated with Kysor's liability has
previously been accrued.
On March 30, 1993, the Company received a
notification from the MDNR that it has been named as a PRP
with respect to a site commonly referred to as the SCA
Independent Landfill Superfund Site, located in Muskegon
County, Michigan. The notice alleges that the Company,
together with numerous other parties, was an owner, generator
or transporter of waste materials deposited at the site. The
PRP notice requests the Company and the other named PRPs to
conduct a Remedial Investigation and Feasibility Study
("RI/FS") to determine the extent of contamination at the
site, and seeks recovery of investigative costs expended by
the MDNR to date. No significant discovery has taken place
with respect to this matter. On September 30, 1993, SC
Holdings, Inc. signed an Administrative Order By Consent For
Response Activity with MDNR. The remaining named PRPs
(including the company) have been negotiating with SC Holdings, Inc.
to arrive at terms for an acceptable Participation Agreement
among the presently named PRPs.
The U.S. EPA has identified three past or present
divisions of Kysor as de minimis PRPs at the Thermo Chem
Superfund Site in Muskegon, Michigan. This proceeding is
described in Part II, Item 1 of the Company's Form 10-Q
Quarterly Report filed with the Commission on November 14,
1994. The Company recently agreed to participate with other
PRPs to fund remedial activities at the site. Under that
agreement, the Company will be responsible for approximately
.83 percent of the costs incurred in connection with the
remediation. The referenced percentage is subject to change
as parties join or leave the group facilitating the cleanup.
The anticipated cost associated with Kysor's liability has
previously been accrued.
Other contingent liabilities include various legal
actions, proceedings and claims which are pending or which may
be instituted or asserted in the future against the Company.
Litigation is subject to many uncertainties, the outcome of
individual matters is not predictable with assurance and it is
reasonably possible that some of these other legal actions,
proceedings and claims could be decided unfavorable to the
Company. Although the liability with regard to these matters
at December 31, 1994 cannot be ascertained, it is the opinion
of management, after conferring with counsel, that any
liability resulting from these other matters should not
materially affect the consolidated financial position of the
Company and its subsidiaries at December 31, 1994.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable.
PART II
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS.
As of December 31, 1994, Kysor Industrial
Corporation had a total of 5,640,881 shares of Common Stock
issued and outstanding and 1,294 shareholders of record. A
large number of shares are held by brokerage firms and banks
for the benefit of other shareholders in all 50 states of the
United States and several foreign countries. In addition, the
Corporation had 803,553 shares of Series A Convertible Voting
Preferred Stock outstanding, all of which are owned by the
Kysor Industrial Corporation Employee Stock Ownership Plan.
Kysor Industrial Corporation's Common Stock is
traded on the New York Stock Exchange under the trading symbol
KZ. A Quarterly summary of the high and low sales price of
its Common Stock and dividends declared is as follows:
<TABLE>
<CAPTION>
1994 1993
Dividends Dividends
Declared High Low Declared High Low
<S> <C> <C> <C> <C> <C> <C>
First Quarter $.12 $ 18.00 $ 15.50 $.10 $21.75 $16.125
Second Quarter .13 18.00 15.00 .11 20.875 15.875
Third Quarter .13 20.75 17.25 .11 18.00 14.50
Fourth Quarter .13 22.375 20.00 .12 17.875 15.625
</TABLE>
Item 6. SELECTED FINANCIAL DATA
KYSOR INDUSTRIAL CORPORATION AND SUBSIDIARIES
(Dollars in Thousands except per share data)
1994 1993
OPERATING RESULTS
Commercial Products Sales 164,606 151,158
Transportation Products Sales 147,907 121,449
Net Sales 312,513 272,607
Other Revenues 1,866 1,251
Total sales and revenues 314,379 273,858
Commercial Products Operating Profit 15,440 17,077
Transportation Products Operating Profit 20,138 14,283
Total Operating Profit 35,578 31,360
Interest Expense 1,961 2,162
Income Before Tax & Actg Change from Cont' Oper 21,725 18,008
Income (Loss) from Cont' Oper before Actg Change 13,275 10,098
Accounting Change / Discontinued Operations -7,628
Net Income (Loss) 13,275 2,470
Earnings (Loss) Applicable to Common Stock 12,295 1,487
_________ _________
ERNINGS (LOSS) PER COMMON SHARE AND DIVIDENDS
Before Acccounting Change from Continuing Operations $2.12 $1.62
Net Earnings (Loss) 2.12 0.27
Dividends Declared 0.51 0.44
_________ _________
FINANCIAL INFORMATION
Current Assets 107,986 93,210
Working Capital 51,312 45,062
Property, Plant and Equipment 42,913 42,823
Capital Expenditures 8,485 8,653
Depreciation & Amortization 8,979 7,654
Intangible Assets 4,616 2,806
Total Assets 177,540 156,455
Long-Term Debt 30,394 33,673
Retained Earnings 53,443 43,997
Shareholders' Equity 67,918 54,693
_________ _________
FINANCIAL RATIOS
Current Ratio 1.9 1.9
Debt to Invested Capital 30.9% 38.1%
Net Income Return on Beginning Equity 24.3% 4.7%
Pretax Income Coverage of Interest and Preferred Divid 7.1 5.8
_________ _________
OTHER
Price Range of Common Stock - High $22.375 $21.75
- Low $15.00 $14.50
Number of Shareholders 1,294 1,396
Net Outstanding Common Shares 5,640,881 5,467,840
KYSOR INDUSTRIAL CORPORATION AND SUBSIDIARIES
(Dollars in Thousands except per share data)
1992 1991
OPERATING RESULTS
Commercial Products Sales 156,243 127,452
Transportation Products Sales 105,931 96,191
Net Sales 262,174 223,643
Other Revenues 1,623 1,255
Total sales and revenues 263,797 224,898
Commercial Products Operating Profit 19,753 9,663
Transportation Products Operating Profit 9,163 4,751
Total Operating Profit 28,916 14,414
Interest Expense 2,595 3,748
Income Before Tax & Actg Change from Cont' Oper 16,027 -66
Income (Loss) from Cont' Oper before Actg Change 9,127 -726
Accounting Change / Discontinued Operations
Net Income (Loss) 9,127 -726
Earnings (Loss) Applicable to Common Stock 8,077 -1,779
_________ _________
ERNINGS (LOSS) PER COMMON SHARE AND DIVIDENDS
Before Acccounting Change from Continuing Operations $1.52 ($0.35)
Net Earnings (Loss) 1.52 (0.35)
Dividends Declared 0.40 0.55
_________ _________
FINANCIAL INFORMATION
Current Assets 80,515 74,668
Working Capital 41,609 40,115
Property, Plant and Equipment 41,898 45,760
Capital Expenditures 3,919 4,956
Depreciation & Amortization 7,650 7,713
Intangible Assets 3,046 3,365
Total Assets 135,850 133,010
Long-Term Debt 36,521 45,540
Retained Earnings 44,908 38,914
Shareholders' Equity 52,905 44,572
_________ _________
FINANCIAL RATIOS
Current Ratio 2.1 2.2
Debt to Invested Capital 40.8% 50.5%
Net Income Return on Beginning Equity 20.5% -1.5%
Pretax Income Coverage of Interest and Preferred Divid 4.8 1.0
_________ _________
OTHER
Price Range of Common Stock - High $19.125 $12.75
- Low $6.875 $5.75
Number of Shareholders 1,429 1,432
Net Outstanding Common Shares 5,332,201 5,151,186
KYSOR INDUSTRIAL CORPORATION AND SUBSIDIARIES
(Dollars in Thousands except per share data)
1990
OPERATING RESULTS
Commercial Products Sales 123,241
Transportation Products Sales 108,410
Net Sales 231,651
Other Revenues 2,478
Total sales and revenues 234,129
Commercial Products Operating Profit 9,246
Transportation Products Operating Profit 10,091
Total Operating Profit 19,337
Interest Expense 3,586
Income Before Tax & Actg Change from Cont' Oper 8,664
Income (Loss) from Cont' Oper before Actg Change 5,064
Accounting Change / Discontinued Operations
Net Income (Loss) 5,064
Earnings (Loss) Applicable to Common Stock 4,009
_________
ERNINGS (LOSS) PER COMMON SHARE AND DIVIDENDS
Before Acccounting Change from Continuing Operations $0.72
Net Earnings (Loss) 0.72
Dividends Declared 0.60
_________
FINANCIAL INFORMATION
Current Assets 87,564
Working Capital 50,504
Property, Plant and Equipment 49,322
Capital Expenditures 4,773
Depreciation & Amortization 7,080
Intangible Assets 3,668
Total Assets 148,070
Long-Term Debt 53,393
Retained Earnings 44,948
Shareholders' Equity 49,260
_________
FINANCIAL RATIOS
Current Ratio 2.4
Debt to Invested Capital 52.0%
Net Income Return on Beginning Equity 9.7%
Pretax Income Coverage of Interest and Preferred Divid 2.7
_________
OTHER
Price Range of Common Stock - High $12.875
- Low $6.750
Number of Shareholders 1,441
Net Outstanding Common Shares 5,264,094
Segment results for 1990 through 1993 have been restated to include the
Kysor/Westran division in the Transportaion Products Group and to remove
it from the Commercial Products Segment where it was previously reported.
This summary should be read in conjunction with the Consolidated Financial
Statements and Notes thereto included in Part II Item 8 of this report.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
Comparison of 1994 and 1993 Kysor Industrial
Corporation's sales and revenues in 1994 were $314.4 million,
up 14.8% from 1993. The Transportation Products Group sales
increased 21.8% to $147.9 million. The increase relates
primarily to additional unit sales volume associated with the
record build year for North American Class-8 trucks and
Kysor's increased market penetration. The Commercial
Products Group sales increased 8.9% to $164.6 million. This
group was positively impacted by the acquisition of Kalt
Manufacturing Company, Inc. (renamed Kysor/Kalt) in February
1994. Without Kysor/Kalt, the Commercial Products Group's
sales would have been down 7.7% as a result of a reduction in
unit sales volume at the Kysor/Warren operations. The lower
unit sales volume is attributable to a reduction in expansion
plans of a major customer. The impact of this reduction is
expected to decrease in future periods as additional volume
from new customers is realized.
Total Company operating profits increased to $35.2
million, or 11.3% of sales in 1994, from $31.4 million, or
11.5% of sales, in 1993. The slight decline in income as a
percentage of sales during 1994 resulted from a combination of
factors. The most significant reason for the percentage
reduction was the continued trimming of expansion plans by a
major customer of the Commercial Products Group. The effects
of this were offset by the acquisition of Kysor/Kalt and the
record year experienced by the Transportation Products Group.
Another factor which positively impacted income was the
decline in selling and administrative expenses as a percentage
of sales due to certain cost-containment programs and the
relatively fixed nature of these costs.
Interest and other revenues increased to $1.9 million
in 1994, up from $1.3 million in 1993 as a result of the
increase in interest rates during 1994 and the sale of
certain fixed assets. Interest expense was down $201,000 as
a result of lower average debt outstanding during 1994.
The Company is presently involved in certain
environmental proceedings with respect to soil and groundwater
contamination in Cadillac, Michigan, as described in Note 10,
Contingent Liabilities. In addition, as disclosed in Note 10,
the Company is involved in various other legal proceedings
including certain proceedings involving allegedly contaminated
sites to which the Company has been named a potentially
responsible party ("PRP") under the Federal Superfund law or
comparable state laws. Although discovery in certain of these
proceedings has not been completed, subject to the
contingencies discussed in Note 10, management does not
believe, based on the information presently available to it,
that the ultimate aggregate cost to the Company of such
proceedings would have a material adverse effect on its
financial condition, results of operations, or liquidity.
Net income before the cumulative effect of the
accounting change for Statement of Financial Accounting
Standards #106 ("SFAS #106") was $13.3 million in 1994, up
31.5% from $10.1 million in 1993. Primary earnings per share
increased to $2.12 in 1994 compared to $1.62 per share in
1993, before the effect of the accounting change for SFAS
#106.
Comparison of 1993 and 1992 Kysor Industrial
Corporation's 1993 total sales and revenues were $273.9
million, up 3.8 percent from 1992. Net income, before the
accounting change for postretirement benefits, was $10.1
million compared to $9.1 million reported in 1992. Primary
earnings per share before the accounting change was $1.62 in
1993 compared to $1.52 per share in 1992. Primary earnings per
share after the accounting change was $.27 per share in 1993.
Included in the 1993 results is a provision for environmental
matters amounting to $.14 per share, which was described in
greater detail in Note 11 of the 1993 Annual Report, while
1992 results include a provision for litigation equaling $.18
per share. The increase in 1993 profitability resulted
primarily from increases in the Transportation Products Group
where they benefited from the best Class-8 heavy-duty truck
market since 1979 and the increased market penetration of
Kysor's injection molded polymer engine fans.
In the first quarter of 1993, the Company adopted SFAS
#106 which required employers to accrue the cost of
postretirement benefits other than pensions during the working
careers of active employees, instead of expensing the benefits
when paid as allowed under prior rules. The cumulative effect
of this change was to reduce net income by $7.6 million.
International Operations Kysor Industrial Corporation
has two foreign manufacturing subsidiaries which were
operational during 1994 Kysor/Warren Refrigeration GmbH,
which is part of the Commercial Products Group, and
Kysor/Europe, part of the Transportation Products Group.
Kysor/Warren Refrigeration GmbH, with manufacturing
operations in Limburg, Germany, experienced an 8.2% decrease
in sales and the losses continued. The decline in sales is
primarily due to the selective elimination of unprofitable
business through more aggressive pricing.
Kysor/Europe, serving the European commercial vehicle
market with manufacturing operations located in Hengoed, South
Wales, experienced a 45.6% increase in sales in 1994 compared
to 1993. The increase in sales is due to improvement in the
European truck and off-highway markets and to sales of polymer
engine fans which Kysor/Europe began to manufacture in 1994.
The improvement in sales, along with enhanced internal
controls and cost-containment programs, allowed Kysor/Europe
to report operating profit of $110,000 in 1994 compared to
operating losses of $412,000 in 1993.
In the first quarter of 1995, Kysor/Asia Ltd.
commenced operations. The subsidiary, located in Changwon,
South Korea, will manufacture injection molded polymer engine
fans for the Far East commercial vehicle market.
Liquidity and Capital Resources Net cash generated
from operations was $13.9 million in 1994 compared to $27.6
million in 1993. Net working capital increased to $51.2
million at December 31, 1994 from $45.1 million at December
31, 1993. The reduction in cash provided by operations is due
mainly to the changes in accounts receivable and inventory
which increased 29.1% and 27.7%, respectively, from 1993 to
1994 as a result of the increase in sales volume. Inventory
turns decreased from 1993 to 1994 due in large part to the
increase in inventory necessary to meet backlog levels at the
end of 1994, which were up 33.8% from record levels at
year-end 1993.
Included in the reported assets of the Company are
deferred income tax charges of $12.6 million. This asset
represents the future tax effect of temporary differences
between financial reporting and tax laws and regulations. The
temporary differences are expected to reverse in future years
resulting in the asset being realized. This is supported by
the historical profitability of the Company which is expected
to continue in the future.
The Company's debt to invested capital ratio decreased
to 30.9% at December 31, 1994 from 38.1% at December 31, 1993.
At December 31, 1994, the Company had current maturities of
long-term debt amounting to $6.6 million. All temporary
borrowings are executed under a $20 million, long-term,
revolving credit facility of which none was utilized at
December 31, 1994.
Corporate philosophy is that long-term debt, properly
utilized, can contribute to the sustained long-term growth of
the Company. In furtherance of this philosophy, the Company
will use long-term debt to the point financial flexibility is
preserved and undue financial risk is not incurred. The
Company's long-term objective is to maintain debt at less than
40 percent of total capitalization.
Capital expenditures during 1994 were financed through
internally generated funds. The Company's capital expenditures
for the year were $8.5 million relating primarily to the
replacement and improvement of manufacturing equipment.
Depreciation and amortization were $9.0 million for 1994.
Capital expenditures are expected to increase during 1995,
while depreciation and amortization should remain at
approximately the same levels.
The Company has paid uninterrupted dividends since
1936. Dividends paid in 1994 were $4.4 million compared to
$3.9 million in 1993.
The Company believes, that subject to the
contingencies described in Note 10, existing cash balances,
anticipated cash flow from operations, available borrowings on
the revolving line of credit, and other potential sources of
borrowing are sufficient to meet its short- and long-term
liquidity and capital resource needs.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders
Kysor Industrial Corporation
Cadillac, Michigan
We have audited the accompanying consolidated balance sheet of
Kysor Industrial Corporation and Subsidiaries as of December 31,
1994 and 1993, and the related consolidated statements of
income, shareholders' equity and cash flows for each of the
three years in the period ended December 31, 1994. These
financial statements are the responsibility of the Corporation's
management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the consolidated
financial position of Kysor Industrial Corporation and
Subsidiaries as of December 31, 1994 and 1993, and the
consolidated results of their operations and their cash flows
for each of the three years in the period ended December 31,
1994, in conformity with generally accepted accounting
principles.
As discussed in Note 7 to the consolidated financial statements,
effective January 1, 1993, the Corporation changed its method of
accounting for postretirement benefits other than pensions.
By s\COOPERS & LYBRAND L.L.P.
Coopers & Lybrand L.L.P.
Detroit, Michigan
February 13, 1995
<TABLE>
KYSOR INDUSTRIAL CORPORATION
Consolidated Balance Sheet
(Dollars in thousands, except per share data)
<CAPTION>
December 31,
1994 1993
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and equivalents 15,850 21,339
Accounts receivable, less $2,027 and
$1,546 allowance for doubtful accounts 46,437 35,968
Finished goods inventory 6,762 5,339
Work in process inventory 10,039 8,973
Raw material inventory 19,864 14,097
Prepaid expenses 2,067 1,228
Deferred income tax charges 6,966 6,266
TOTAL CURRENT ASSETS 107,985 93,210
PROPERTY, PLANT AND EQUIPMENT
Land 2,612 2,616
Buildings 31,103 30,155
Machinery and equipment 67,518 61,970
101,233 94,741
Less accumulated depreciation 58,320 51,918
TOTAL PROPERTY, PLANT AND EQUIPMENT 42,913 42,823
OTHER ASSETS
Goodwill, patents and other intangibles,
net of amortization of $2,592 and $2,062 4,616 2,806
Cash value of officers' life insurance 10,623 9,547
Deferred income tax charges 5,248 4,031
Miscellaneous receivables and other assets 6,155 4,038
TOTAL OTHER ASSETS 26,642 20,422
TOTAL ASSETS 177,540 156,455
LIABILITIES
CURRENT LIABILITIES
Current maturities of long-term debt 6,597 5,670
Accounts payable 21,122 14,353
Accrued income taxes payable 1,124 2,426
Accrued expenses and contingent
liabilities 27,831 25,699
TOTAL CURRENT LIABILITIES 56,674 48,148
Long-term debt, less current maturities,
plus guarantee of ESOP indebtedness 30,394 33,673
Accumulated postretirement benefit
obligation 13,037 12,628
Other long-term liabilities 9,517 7,313
TOTAL LIABILITIES AND DEFERRED CREDITS 109,622 101,762
PREFERRED SHAREHOLDERS' EQUITY
Preferred Stock, shares authorized
5,000,000; Employee Stock Ownership Plan,
outstanding 803,553 and 810,163; stated
value of $24.375 19,587 19,748
Unearned deferred compensation under
employee stock ownership plan -15,311 -16,175
TOTAL PREFERRED SHAREHOLDERS' EQUITY 4,276 3,573
COMMON SHAREHOLDERS' EQUITY
Common stock, $1 par value, shares
authorized 30,000,000;
outstanding 5,640,881 and 5,467,840 5,641 5,468
Additional paid-in capital 5,386 3,386
Retained earnings 53,443 43,997
Translation adjustment 807 286
Notes receivable-common stock 96,705 and
99,116 shares -1,286 -1,319
Unearned deferred compensation under
employee stock ownership plan -349 -698
TOTAL COMMON SHAREHOLDERS' EQUITY 63,642 51,120
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 177,540 156,455
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
KYSOR INDUSTRIAL CORPORATION
Consolidated Statement of Income
(Amounts in thousands, except per share data)
<CAPTION>
Years Ended December 31,
1994 1993 1992
<S> <C> <C> <C>
SALES AND REVENUES
Net sales 312,513 272,607 262,174
Interest and other revenues 1,866 1,251 1,623
TOTAL SALES AND REVENUES 314,379 273,858 263,797
COSTS AND EXPENSES
Cost of sales 240,106 207,203 199,851
Selling and administrative expenses 48,685 44,460 43,104
Interest expense 1,961 2,162 2,595
Other expenses 1,902 2,025 2,220
TOTAL COSTS AND EXPENSES 292,654 255,850 247,770
INCOME BEFORE INCOME TAXES AND
ACCOUNTING CHANGE 21,725 18,008 16,027
INCOME TAXES 8,450 7,910 6,900
INCOME BEFORE OF ACCOUNTING CHANGE 13,275 10,098 9,127
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING
FOR POSTRETIREMENT BENEFITS (Net of income
tax benefit of $4,435) - -7,628 -
NET INCOME 13,275 2,470 9,127
DIVIDENDS ON PREFERRED STOCK (Net of income
tax benefit of $598, $601 and $541) 980 983 1,050
EARNINGS APPLICABLE TO COMMON STOCK 12,295 1,487 8,077
EARNINGS (LOSS) PER COMMON SHARE
PRIMARY - BEFORE ACCOUNTING CHANGE 2.12 1.62 1.52
- ACCOUNTING CHANGE - -1.35 -
- NET EARNINGS 2.12 .27 1.52
FULLY DILUTED - BEFORE ACCOUNTING CHANGE 1.81 1.38 1.30
- ACCOUNTING CHANGE - -1.35 -
- NET EARNINGS 1.81 .03 1.30
Weighted average common shares and equivalents 5,798 5,636 5,307
Dividends declared per common share .51 .44 .40
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
KYSOR INDUSTRIAL CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(Amounts in thousands)
<CAPTION>
Years Ended December 31,
1994 1993 1992
<S> <C> <C> <C>
CASH FLOWS PROVIDED (USED) BY OPERATING
ACTIVITIES:
Net income 13,275 2,470 9,127
Adjustments to reconcile net income to
net cash provided (used) by operating
activities:
Cumulative effect of change in accounting for
Postretirement Benefits (net of tax benefits) - 7,628 -
Depreciation and amortization 8,979 7,654 7,650
Provision for losses on accounts receivable 807 544 1,031
(Gain) Loss on sales of fixed assets -224 7 -13
Deferred compensation (ESOP) 1,213 1,212 1,212
Deferred income taxes -1,917 -1,275 -1,328
Changes in assets and liabilities providing
(consuming) cash:
Accounts receivable -8,778 -4,442 -5,811
Inventories -7,227 6,026 3,191
Prepaid expenses -792 174 -763
Accounts payable 5,391 -153 2,177
Accrued expenses and contingent liabilities 1,916 4,495 1,267
Accrued income taxes payable 66 1,781 1,604
Other long-term liabilities 1,178 1,467 -420
NET CASH PROVIDED BY OPERATING ACTIVITIES 13,887 27,588 18,924
CASH FLOWS PROVIDED (USED) BY INVESTING
ACTIVITIES:
Additions to property and equipment -8,485 -8,653 -3,919
Proceeds from sales of property and equipment 1,181 307 458
Acquisitions, net of cash acquired -4,128 - -
Increase in other long-term assets -3,034 -3,194 -1,168
Unrealized translation gain (loss) 521 -341 -658
NET CASH USED BY INVESTING ACTIVITIES -13,945 -11,881 -5,287
CASH FLOWS PROVIDED (USED) BY FINANCING
ACTIVITIES:
Current borrowings 997 1,593 -
Principal payments against long-term debt -3,349 -366 -9,189
Proceeds from issuance of common stock 1,768 1,355 1,784
Purchase of Common Stock -493 - -
Common stock and preferred stock dividends paid -4,354 -3,863 -3,658
NET CASH USED BY FINANCING ACTIVITIES -5,431 -1,281 -11,063
NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS -5,489 14,426 2,574
CASH AND EQUIVALENTS AT BEGINNING OF YEAR 21,339 6,913 4,339
CASH AND EQUIVALENTS AT END OF YEAR 15,850 21,339 6,913
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
KYSOR INDUSTRIAL CORPORATION AND SUBSIDIARIES
Consolidated Statement of Shareholders' Equity
(Dollars in thousands, except per share data)
<CAPTION>
Unearned
Deferred Additional
Preferred Compensation Common Paid-In
Stock ESOP Stock Capital
<S> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1991 19,935 (17,903) 5,151
Employee Stock Ownership
Plan, deferred
compensation earned 864
Preferred stock
distributions (3,223
shares for 8,040 shares of
common) (79) 8 70
Exercise of employee stock
options, 172,975 shares
issued 173 1,561
Collections of notes
receivable
Translation adjustment on
investments in foreign
subsidiaries
Net income
Preferred stock dividends
(net of income tax benefit
of $541)
Common dividends declared,
$ .40 per share
BALANCE, DECEMBER 31, 1992 19,856 (17,039) 5,332 1,631
Employee Stock Ownership
Plan, deferred
compensation earned 864
Preferred stock
distributions (4,449
shares for 6,528 shares of
common) (108) 7 101
Exercise of employee stock
options, 129,111 shares
issued 129 1,654
Collections of notes
receivable
Translation adjustment on
investments in foreign
subsidiaries
Net income
Preferred stock dividends
(net of income tax benefit
of $601)
Common dividends declared,
$ .44 per share
BALANCE, DECEMBER 31, 1993 19,748 (16,175) 5,468 3,386
Employee Stock Ownership
Plan, deferred
compensation earned 864
Purchase of common stock,
returned to an unissued
status (24,292 shares) (24) (469)
Preferred stock
distributions (6,610
shares for 9,463 shares of
common) (161) 9 157
Exercise of employee stock
options, 187,870 shares
issued 188 2,312
Collections of notes
receivable
Translation adjustment on
investments in foreign
subsidiaries
Net income
Preferred stock dividends
(net of income tax benefit
of $598)
Common dividends declared,
$ .51 per share
BALANCE, DECEMBER 31, 1994 19,587 (15,311) 5,641 5,386
</TABLE>
<TABLE>
<CAPTION>
Notes
Common Stock Receivable-
Retained Held In Translation Common
Earnings Treasury Adjustment Stock
<S> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1991 38,914 1,285 (1,415)
Employee Stock Ownership
Plan, deferred
compensation earned
Preferred stock
distributions (3,223
shares for 8,040 shares of
common)
Exercise of employee stock
options, 172,975 shares
issued
Collections of notes
receivable 51
Translation adjustment on
investments in foreign
subsidiaries (658)
Net income 9,127
Preferred stock dividends
(net of income tax benefit
of $541) (1,050)
Common dividends declared,
$ .40 per share (2,083)
BALANCE, DECEMBER 31, 1992 44,908 627 (1,364)
Employee Stock Ownership
Plan, deferred
compensation earned
Preferred stock
distributions (4,449
shares for 6,528 shares of
common)
Exercise of employee stock
options, 129,111 shares
issued
Collections of notes
receivable 45
Translation adjustment on
investments in foreign
subsidiaries (341)
Net income 2,470
Preferred stock dividends
(net of income tax benefit
of $601) (983)
Common dividends declared,
$ .44 per share (2,398)
BALANCE, DECEMBER 31, 1993 43,997 286 (1,319)
Employee Stock Ownership
Plan, deferred
compensation earned
Purchase of common stock,
returned to an unissued
status (24,292 shares)
Preferred stock
distributions (6,610
shares for 9,463 shares of
common)
Exercise of employee stock
options, 187,870 shares
issued
Collections of notes
receivable 33
Translation adjustment on
investments in foreign
subsidiaries 521
Net income 13,275
Preferred stock dividends
(net of income tax benefit
of $598) (980)
Common dividends declared,
$ .51 per share (2,849)
BALANCE, DECEMBER 31, 1994 53,443 807 (1,286)
</TABLE>
<TABLE>
<CAPTION>
Unearned
Deferred Total
Compensation Shareholders'
ESOP Equity
<S> <C> <C>
BALANCE, DECEMBER 31, 1991 (1,395) 44,572
Employee Stock Ownership
Plan, deferred
compensation earned 349 1,213
Preferred stock
distributions (3,223
shares for 8,040 shares of
common) (1)
Exercise of employee stock
options, 172,975 shares
issued 1,734
Collections of notes
receivable 51
Translation adjustment on
investments in foreign
subsidiaries (658)
Net income 9,127
Preferred stock dividends
(net of income tax benefit
of $541) (1,050)
Common dividends declared,
$ .40 per share (2,083)
BALANCE, DECEMBER 31, 1992 (1,046) 52,905
Employee Stock Ownership
Plan, deferred
compensation earned 348 1,212
Preferred stock
distributions (4,449
shares for 6,528 shares of
common)
Exercise of employee stock
options, 129,111 shares
issued 1,783
Collections of notes
receivable 45
Translation adjustment on
investments in foreign
subsidiaries (341)
Net income 2,470
Preferred stock dividends
(net of income tax benefit
of $601) (983)
Common dividends declared,
$ .44 per share (2,398)
BALANCE, DECEMBER 31, 1993 (698) 54,693
Employee Stock Ownership
Plan, deferred
compensation earned 349 1,213
Purchase of common stock,
returned to an unissued
status (24,292 shares) (493)
Preferred stock
distributions (6,610
shares for 9,463 shares of
common) 5
Exercise of employee stock
options, 187,870 shares
issued 2,500
Collections of notes
receivable 33
Translation adjustment on
investments in foreign
subsidiaries 521
Net income 13,275
Preferred stock dividends
(net of income tax benefit
of $598) (980)
Common dividends declared,
$ .51 per share (2,849)
BALANCE, DECEMBER 31, 1994 (349) 67,918
</TABLE>
The accompanying notes are an integral part of the financial statements.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The consolidated financial statements include the accounts of
Kysor Industrial Corporation and all of its subsidiaries
("Kysor" or "Company").
Foreign Currency Translation
Translation adjustments have been accumulated as a separate
component of Shareholders' Equity.
Cash and Equivalents
Kysor considers all highly-liquid debt instruments purchased
with a maturity of three months or less to be cash equivalents.
Inventories
Inventories are generally stated at the lower of FIFO (first in,
first out) cost or market. Kysor has one subsidiary on LIFO
(last in, first out), the inventory value of which was $896,000
and $828,000 lower than it would have been under FIFO at
December 31, 1994 and 1993, respectively.
Property, Plant and Equipment and Depreciation
Property, plant and equipment are stated at cost. Depreciation
is computed by the straight-line method based on the estimated
useful lives of the assets.
Buildings are depreciated over lives ranging from 10 to 40
years. Machinery, equipment, and office furniture are
depreciated over lives ranging from 3 to 25 years.
When properties are retired, the cost of such properties, net of
accumulated depreciation and any salvage proceeds, is reflected
in income.
Goodwill
Goodwill, resulting from the excess of cost over the net assets
of purchased companies, is amortized on a straight-line basis
over periods not exceeding 20 years.
Income Taxes
In 1993, the Company adopted Statement of Financial Accounting
Standards #109, "Accounting for Income Taxes," which requires
recognition of deferred tax liabilities and assets for the
expected future tax consequences of events that have been
included in the financial statements or tax returns. Under this
method, deferred tax liabilities and assets are determined based
on the difference between the financial statement and tax bases
of assets and liabilities using enacted tax rates in effect for
the year in which the differences are expected to reverse (see
Note 9).
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Prior to 1993, the provision for income taxes was based on
income and expenses included in the accompanying consolidated
statements of operations. Differences between taxes so computed
and taxes payable under applicable statutes and regulations were
classified as deferred taxes arising from timing differences.
Financial Instruments
The Company has cash, cash equivalents, and long-term debt which
are considered financial instruments. The market values of
these financial instruments, as determined through information
obtained from banking sources and management estimates,
approximate their carrying values.
Pension and Retirement Plans
Annual provisions for pension and retirement plan costs
recognize amortization of prior service costs over the expected
service period of active employees. Accrued pension costs are
funded annually to the extent deductible for federal income tax
purposes.
In 1993, the Company adopted Financial Accounting Standards
#106, "Employers' Accounting for Postretirement Benefits Other
than Pensions" which requires the accrual of postretirement
benefits such as health care and life insurance during the
working careers of active employees instead of expensing the
benefits when paid as allowed under prior rules (see Note 7).
Product Warranty Costs
Anticipated costs related to product warranty are expensed in
the period of sale.
Environmental Costs
Environmental expenditures that relate to current or future
revenues are expensed or capitalized as appropriate.
Expenditures that relate to an existing condition caused by past
operations, and do not contribute to current or future revenues,
are expensed. Liabilities are recorded when environmental
assessments and/or cleanups are probable and the costs can be
reasonably estimated. Generally, the timing of these accruals
coincides with Kysor's commitment to a formal plan of action.
Earnings Per Common Share
Primary earnings per common share have been computed using the
weighted average shares of Common Stock and dilutive Common
Stock equivalents outstanding during the year. The Convertible
Stock has been determined not to be a Common Stock equivalent.
Fully diluted earnings per common share are calculated assuming
the conversion of the Convertible Stock to Common Stock, as well
as other dilutive assumptions.
NOTE 2. ACCRUED EXPENSES AND CONTINGENT LIABILITIES
Components of Accrued Expenses and Contingent Liabilities are as
follows at December 31:
1994 1993
Workers' compensation/liability insurance $ 8,012 $ 6,430
Compensation 7,364 5,744
Litigation 3,527 2,900
Warranty 2,509 4,120
Other 6,419 6,505
Total Accrued Expenses and Contingent Liabilities $ 27,831 $ 25,699
NOTE 3. FINANCING
(amounts in thousands)
Years ended December 31, 1994 1993
Long-Term Debt consists of the following:
Long-Term Debt
Term note, $750 quarterly principal payments, $ 12,000 $ 15,000
beginning 1994, plus interest at 9.9%
Loan agreement for Kysor Industrial Corporation
Employee Stock Ownership Plan, $1,250
semiannual principal payments beginning 1996,
plus interest at 8.36% 20,000 20,000
Other, $3,248 principal payments due in 1995,
plus interest at rates ranging from 5.0% to 8.0% 4,642 3,646
Loan Guarantee
Loan guarantee for Kysor Industrial Corporation
Employee Stock Ownership Plan, $174
semiannual principal payments, plus
interest at 7.0% 349 697
36,991 39,343
Less current maturities 6,597 5,670
Total Long-Term Debt $ 30,394 $ 33,673
At December 31, 1994, the Company maintained revolving credit
agreements with two banks which provide for borrowings up to $20
million. At December 31, 1994, there were
no outstanding borrowings under this facility. Interest rates
are fixed at the date of borrowing based on current LIBOR rates
plus a spread of .50 percent. An annual commitment fee of .25
percent is paid on the unused balance. The Company has an
interest rate swap under which the variable rate of interest on
the $15 million term note is converted to a fixed rate of 9.4
percent plus a spread of .50 percent. The weighted average
variable rate of interest received and paid is equal to the
three-month LIBOR in effect at the fixing date and is reset
quarterly. The term of the swap matches the maturity of the
corresponding term note.
During the years ended December 31, 1994 and 1993, there was no
short-term debt.
Aggregate maturities of obligations under long-term debt, during
the next five years ended December 31, are as follows:
(amounts in thousands) 1995 1996 1997 1998 1999
Maturities of Long-Term Debt $6,597 $4,446 $5,696 $5,696 $2,597
Under the financing arrangements, Kysor is subject to certain
restrictions relating, among other things, to the creation of
indebtedness, the maintenance of minimum consolidated working
capital, the payment of dividends and the purchase of Common
Stock.
Interest paid was $2,105,000, $2,073,000, and $3,039,000 for the
years ended December 31, 1994, 1993 and 1992, respectively.
NOTE 4. STOCK OPTION PLANS
As of December 31, 1994, Kysor administered its 1980
Nonqualified Stock Option Plan; 1983 Incentive Stock Option
Plan; 1984 Stock Option Plan; 1987 Stock Option and Restricted
Stock Plan; and 1993 Long-Term Incentive Plan. Options may be
granted to officers, directors and key employees to purchase
common shares of the Company's stock at a price equal to the
mean market value of such stock at the date of the grant. All
options granted prior to January 1, 1990 are currently
exercisable. All options granted after January 1, 1990 vest at
the rate of 20 percent at date of grant and 20 percent each year
thereafter, except for the final 20 percent which vests only
upon exercise and retention for one year of the entire vested 80
percent. at the date of grant, except for a nonqualified stock
option for 100,000 shares granted to the Chairman of the Board
on January 30, 1987, which vested at the rate of 20 percent per
year through January 30, 1991. All options granted after
January 1, 1990 vest at the rate of 20 percent at date of grant
and 20 percent each year
thereafter, except for the final 20 percent which vests only
upon exercise and retention for one year of the entire vested 80
percent.
Changes in options outstanding for the years ended December 31,
1993 and 1994 are as follows:
<TABLE>
<CAPTION>
Number of Number of
Shares Optioned
Reserved Shares Option Price Range Total
<S> <C> <C> <C> <C>
Balance December 31, 1992 312,341 1,642,150 $ 7.25 - $19.125 $19,986,837
Granted (288,500) 288,500 16.3215- 18.9375 5,384,719
Terminated 59,700 (59,700) 7.25 - 19.125 (668,300)
Exercised - (138,650) 7.25 - 18.6875 (1,488,494)
1993 Long-Term
Incentive Plan 1,000,000
Balance December 31, 1993 1,083,541 1,732,300 7.25 - 19.125 23,214,762
Granted (221,000) 221,000 16.125 - 21.4375 3,674,172
Terminated 8,030 (8,030) 7.25 - 18.9375 (69,072)
Exercised - (214,270) 7.25 - 18.9375 (2,258,335)
Balance December 31, 1994 870,571 1,731,000 $ 7.25 - $21.4375 $24,561,527
</TABLE>
At December 31, 1994, 1,159,930 of the shares granted were
exercisable. The price of options exercised in 1994 ranged from
$15.50 to $21.875 per share for a total of $4,053,151. The
price of options exercised in 1993 ranged from $15.50 to
$20.4375 for a total market value of $2,591,225.
In 1989, optionees executed 4.5 percent nonrecourse installment
purchase agreements of $2,090,793 with respect to 157,128 shares
previously granted under the nonqualified plans. During 1991,
three optionee participants relinquished their stock option
loans in the amount of $589,383 and forfeited the attendant
41,150 common shares. Under the terms of the installment
purchase agreements, the shares are pledged as collateral and
the extension of credit is subject to Federal Reserve Bank
Regulation G. Required annual payments are calculated using a
15-year amortization with a balloon payment due within the
original life of the option being exercised. The participants
have limited rights of principal deferral in cases of hardship.
The Board of Directors, in January 1992, passed a resolution to
permit participants to defer the 1992 principal payments to the
end of the loan. Dividends paid, in respect to the shares, are
received by the Company and first applied to accrued interest
and then to principal.
NOTE 5. ACQUISITION
On February 4, 1994, Kysor acquired certain assets and assumed
certain liabilities of Kalt Manufacturing Co., Inc. (Kalt).
Kalt manufactures insulated panels and doors for the supermarket
and convenience store industries and has manufacturing
facilities in Portland, Oregon and Goodyear, Arizona.
The transaction was accounted for as a purchase and,
accordingly, Kalt's results of operations have been included in
the consolidated statement of income since the effective date of
the acquisition. The excess of the purchase price over the
estimated fair value of the net assets acquired is being
amortized on a straight-line basis over 10 years. The
acquisition did not have a material impact on the operations of
the Company.
NOTE 6. PREFERRED STOCK
On February 24, 1989, Kysor sold 820,513 shares of newly issued
8 percent cumulative Series A Convertible Voting Preferred
Stock, $24.375 stated value per share (the "Convertible Stock"),
to the Kysor Industrial Corporation Employee Stock Ownership
Plan (the "ESOP"). The Convertible Stock may be voluntarily
converted at the option of the holder, unless previously
redeemed, into shares of Kysor Industrial Corporation Common
Stock (the "Common Stock") on a one-for-one basis, subject to
certain antidilution adjustments, and will convert automatically
into Common Stock (in certain instances subject to a conversion
floor equal to liquidation value of $24.375 per share plus
accrued and unpaid dividends) if transferred to a holder other
than the ESOP or another Kysor Industrial Corporation employee
benefit plan. The Convertible Stock is subject to redemption by
the Company. Each share of Convertible Stock entitles its
holder to one vote on all matters submitted for a vote of
shareholders, again subject to possible antidilution
adjustments. The Convertible Stock ranks senior to the Common
Stock and is at least on a parity with any other series of
Preferred Stock that may be subsequently issued.
Preferred Stock issued and outstanding was 803,553 and 810,163
shares at December 31, 1994 and 1993, respectively. Preferred
shares allocated to ESOP participants were 35,463 for each of
the years ended December 31, 1994 and 1993.
NOTE 7. PENSION AND RETIREMENT PLANS
Kysor has several noncontributory defined benefit pension plans
and defined contribution plans covering substantially all of its
domestic employees. The defined benefit plans provide benefits
based on the participants' years of service and compensation or
stated amounts for each year's service. The Company's funding
policy is to make annual contributions as required by contract
or applicable regulations.
The pension cost components were:
(amounts in thousands)
Years Ended December 31, 1994 1993 1992
Defined Benefit Plans:
Service cost benefits earned during period $2,176 $1,905 $1,497
Interest cost on projected benefit obligation3,758 3,388 3,024
Actual investment return on plan assets 1,461 (6,001) (3,434)
Net amortization and deferral (4,871) 2,967 670
$2,524 $2,259 $1,757
Assumptions used in the accounting were:
Years Ended December 31, 1994 1993 1992
Discount rates 8.0% 8.0% 8.0%
Rates of increase in compensation levels 4.9% 5.4% 5.3%
Expected long-term rate of return on assets 8.0% 8.0% 8.0%
The following table sets forth the funded status and amounts
recognized in the Company's statement of financial position for
defined benefit plans:
NOTE 7. PENSION AND RETIREMENT PLANS (continued)
(amounts in thousands)
Years Ended December 31, 1994 1993
Plans in Which Plans in Which
Assets Accum. Assets Accum.
Exceed Benefits Exceed Benefits
Accum. Exceed Accum. Exceed
Benefits Assets Benefits Assets
Actuarial present value of benefit
obligations:
Vested benefit obligation $(32,865) $ (5,162) $(30,503) $ (3,239)
Accumulated benefit obligation $(35,134) $ (7,530) $(32,955) $ (5,804)
Projected benefit obligation $(40,598) $(10,211) $(38,434) $ (7,432)
Plan assets at fair market value 48,072 - 49,267 -
Projected benefit obligation (in
excess of) or less than plan
assets 7,474 (10,211) 10,833 (7,432)
Unrecognized net (gain) or loss (2,539) 2,298 (6,782) 1,678
Prior service cost not yet recognized
in net periodic pension cost 1,376 795 778 82
Unrecognized net (asset) obligation
at January 1, (1,731) 645 (1,980) 779
Pension asset (liability) recognized in
the statement of
financial position $ 4,580 $(6,473) $ 2,849 $(4,893)
At both December 31, 1994 and 1993, 100 percent of plan assets
was invested in publicly traded stocks, bonds, and money market
investments.
In 1985, Kysor adopted a nonqualified, unfunded supplemental
executive retirement plan for senior management. Kysor has
purchased life insurance policies on the lives of participants
and is the sole owner and beneficiary of such policies. The
amount of coverage is designed to provide sufficient revenues to
cover all costs of the plan if the assumptions made as to
mortality experience, policy earnings, and other factors are
realized. The Company is charging earnings with the present
value of the future cost of the plan over the remaining working
life of the participants.
In September 1985, Kysor established an Employee Stock Ownership
Plan ("ESOP") and trust for its domestic salaried employees.
The ESOP authorized the trust to borrow $3,487,000 from a bank
in September 1985. The proceeds were used to purchase 357,668
shares of Common Stock at $9.75 per share, that being the mean
market price on the New
York Stock Exchange on August 22, 1985, the day preceding the
date the transaction was agreed upon. The Company has
guaranteed the loan and is obligated to contribute sufficient
cash to the ESOP to enable it to repay the loan principal
($349,000 annually) plus interest.
In February 1989, Kysor expanded the ESOP with the sale to the
ESOP of $20 million of newly issued Series A Convertible Voting
Preferred Stock from the Company (see Note 6). The ESOP
purchase of Preferred Stock was financed by a loan from the
Company which issued a $20 million, 15-year ESOP note to raise
the necessary funds. In 1994, 1993, and 1992, dividends on
Preferred Stock of $1,578,000, $1,584,000, and $1,591,000 plus
interest expense of $101,000, $88,000, and $81,000,
respectively, were used to service the debt obligation related
to the ESOP. The Company amortized $864,000 in 1994, 1993, and
1992, of unearned deferred compensation relating to the shares
allocated for the year as a percentage of the total shares to be
allocated.
Postretirement Health and Life Insurance Benefits
Kysor provides certain defined health care and life insurance
benefits for retired employees. All salaried and certain hourly
employees may become eligible for these benefits if they reach
retirement age while working for the Company. Effective January
1, 1993, the Company adopted Statement of Accounting Standards
#106, "Employers accounting for Postretirement Benefits other
than Pensions" ("SFAS #106"). SFAS #106 requires the accrual
method of accounting for postretirement health care and life
insurance benefits. At January 1, 1993, the Company recognized
the full amount of its estimated accumulated postretirement
benefit obligation which resulted in a pretax charge to 1993
earnings for this transition obligation of $12,063,000
($7,628,000 net of income tax benefit) or $1.35 per share. This
amount has been reflected in the Consolidated Statement of
Income as the cumulative effect of an accounting change.
The incremental cost in 1993 of accounting for postretirement
health care and life insurance benefits under the new accounting
method amounted to $564,000, less a deferred tax benefit of
$212,000. Prior to 1993, the Company expensed claims for
postretirement benefits on a pay-as-you-go method. Retiree
benefit payments were $684,000, $788,000 and $862,000 in 1994,
1993, and 1992 respectively. The components of net
postretirement periodic expense included the following:
(amounts in thousands) 1994 1993
Service cost - benefits earned during the year $ 317 $ 413
Interest cost on accumulated postretirement benefit
obligation 942 939
Net periodic benefit costs $ 1,259 $ 1,352
At December 31, 1994 and 1993, the actuarial and recorded
liabilities for those postretirement benefits, none of which
have been funded, were as follows:
(amounts in thousands) 1994 1993
Accumulated postretirement benefit obligation (APBO):
Retirees $ 9,639 $ 10,191
Fully eligible active plan participants 1,316 1,146
Other active participants 1,707 1,429
Total APBO 12,662 12,766
Fair market value of plan assets - -
Accumulated postretirement benefit obligation in
excess of plan assets 12,662 12,766
Unrecognized net (loss) 375 (138)
Accrued postretirement benefit liability at December 31 $ 13,037 $ 12,628
Assumptions used in accounting were:
Discount rate at December 31 8.0 8.0
Present health care trend rate (decreasing uniformly
to the year 2005)
. Under age 65 9.3 10.0
. Age 65 and older 7.6 8.0
Ultimate trend rate in 2005 5.5 5.5
A one percent increase each year in the health care cost trend
rate used would have resulted in a 10.5 percent increase in the
aggregate service and interest components of expense for the
year ended December 31, 1994, and a 10.1 percent increase in the
accumulated postretirement benefit obligation at December 31,
1994.
The Company has a continuing deferred compensation arrangement
with Raymond A. Weigel, former chairman, which provides for
annual payments of $350,000.
NOTE 8. LEASE COMMITMENTS
Kysor leases some real estate and equipment. In most cases,
management expects that in the normal course of business these
leases will be renewed and replaced by other leases. Kysor has
future minimum rental payments required through 1999 under
operating leases that have initial or remaining noncancelable
lease terms in excess of one year in the following amounts:
(amounts in thousands) Years Ended December 31,
1995 1996 1997 1998 1999
Future minimum rental payments $999 $842 $784 $594 $550
In addition to fixed rentals, certain of these leases requires
Kysor to pay maintenance, property taxes, and insurance.
Rental expense charged to operations is as follows:
(amounts in thousands) Years Ended December 31,
1994 1993 1992
Minimum rentals $2,254 $1,829 $1,909
Contingent rentals 87 53 30
Total $2,341 $1,882 $1,939
NOTE 9. INCOME TAXES
The Company adopted Statement of Financial Accounting Standards
#109, "Accounting for Income Taxes" ("SFAS #109"), as of January
1, 1993. The cumulative effect of this change in accounting
principle was immaterial. Prior years' financial statements
have not been restated to apply the provisions of SFAS #109.
The adoption of SFAS #109 changes the Company's method of
accounting for income taxes from the deferred method using
Accounting Principles Board Opinion #11 ("APB #11") to an asset
and liability approach.
The provision (credit) for income tax consists of the following:
(amounts in thousands) Years Ended December 31,
1994 1993 1992
Currently payable
Federal $ 8,973 $ 7,733 $ 7,318
State and local 1,263 1,022 800
Foreign 102 55 28
Total currently payable 10,338 8,810 8,146
Deferred
Federal (2,013) (790) (1,076)
State and local (275) (110) (170)
Foreign - - -
Total deferred (2,288) (900) (1,246)
Total provision $ 8,050 $ 7,910 $ 6,900
Deferred income taxes, on a SFAS #109 basis, reflect the
estimated future tax effect of temporary differences between the
amount of assets and liabilities for financial reporting
purposes and such amounts as measured by tax laws and
regulations.
The components of deferred income tax assets and liabilities are
as follows:
(amounts in thousands)
Years Ended December 31,
1994 1993
Gross Deferred Tax Assets:
Postretirement health care $ 4,944 $ 4,644
Employee benefit plans 4,273 3,147
Workers' compensation/liability insurance 3,039 2,377
Environmental costs 981 481
Warranty 926 1,100
Service contract 876 896
Bad debts 680 482
Slow-moving inventory 633 704
Vacation pay 574 453
Litigation 357 1,072
Other 851 297
Deferred Tax Assets 18,134 15,653
Gross Deferred Tax Liabilities:
Depreciation 3,243 3,693
Pension 1,737 1,053
LIFO reserve at acquisition 548 535
Other 21 75
Deferred Tax Liabilities 5,549 5,356
Net Deferred Income Tax Asset $ 12,585 $ 10,297
Deferred income taxes for 1992 were derived using guidelines in
APB #11. Under APB #11 deferred income taxes result from timing
differences in the recognition of revenues and expenses between
financial statements and tax returns. The sources of these
differences and the related effect of each on the Company's
provision for income taxes as of December 31, 1992 were as
follows:
(amounts in thousands)
Slow-moving inventory $ (496)
Workers' compensation/liability insurance (433)
Depreciation (395)
Warranty (360)
Litigation 407
Other 31
Total $ (1,246)
Major differences between the income taxes computed using the
United States statutory tax rate and the actual income tax
expense were as follows:
(amounts in thousands)
Years Ended December 31,
1994 1993 1992
Federal income taxes at statutory rate $ 7,464 $ 6,303 $ 5,449
Net nondeductible losses related to foreign
subsidiaries and other foreign expenses 344 1,071 981
State and local income taxes (net of
federal benefit) 642 593 472
Life insurance (172) (165) (169)
Other (228) 108 167
Provision for Income Taxes $ 8,050 $ 7,910 $ 6,900
Income taxes paid were $10,261,000, $7,427,000, and $6,245,000
for the years ended December 31, 1994, 1993 and 1992,
respectively. Income tax refunds were $66,000 in 1994, $71,000
in 1993, and $283,000 in 1992. Domestic operations contributed
a profit of $23,321,000, $20,713,000, and $18,261,000 to income
before income taxes and before cumulative effect of accounting
change for 1994, 1993 and 1992, respectively. Foreign
operations sustained a loss of $1,996,000, $2,704,000, and
$2,234,000 for the same periods. Income tax benefits of
$771,000, $473,000, and $560,000 have been credited to
shareholders' equity for the years ended December 31, 1994,
1993, and 1992, respectively, for deemed compensation deductions
attributable to stock options. Income tax benefits of $598,000,
$601,000, and $541,000 for preferred stock dividends related to
the Company's ESOP have been credited to shareholders' equity in
1994, 1993, and 1992, respectively.
NOTE 10. CONTINGENT LIABILITIES
As previously reported, the Company has been involved in ongoing
proceedings relating to soil and groundwater contamination at
the Cadillac Industrial Park in Cadillac, Michigan (the "Site").
The Company has completed soil and groundwater remedial design
work for the Site (undertaken pursuant to a unilateral
administrative order issued by the U.S. EPA in 1990) through the
95% completion state, and U.S. EPA has approved that work. The
design work is expected to be completed in March 1995. In
January 1995, U.S. EPA issued to the Company and other
potentially responsible parties ("PRPs") an additional
unilateral administrative order (also under CERCLA 106)
requiring the parties to perform the soil and groundwater
cleanup contemplated by the Company's design work. The Company
presently intends to facilitate a cleanup through a joint effort
involving a Local Development Finance Authority established by
the City of Cadillac ("LDFA") and other PRPs. In that regard,
the referenced LDFA recently sold nonrecourse bonds totaling $7
million to pay the anticipated capital costs of constructing an
areawide environmental cleanup facility as required by the
pending administrative order. A portion of these bond proceeds
were used to reimburse the Company for previously incurred
design costs relating to the Site. These bonds are to be paid
by future property taxes on a cogeneration plant presently
operating in the area, in which both the Company and the City of
Cadillac are limited partners.
While it is clear that the Company is responsible for the soil
contamination at its location and shares a portion of the
responsibility for the groundwater contamination, it is
presently impossible to provide a precise estimate of the
Company's actual liability. The Company believes that the bond
proceeds received by the LDFA will be adequate to cover the
capital costs of the soil and groundwater areawide cleanup
facility. In the event the LDFA funds are inadequate to pay the
required capital costs, Kysor and the other PRPs would be
responsible for the additional costs pursuant to the pending
administrative order. It is anticipated that operating and
maintenance costs of the cleanup facility will be shared
primarily by the PRPs, including Kysor, as well as other parties
within the Cadillac Industrial Park pursuant to a special
assessment district proposed by the City of Cadillac. The
extent of any assessment to Kysor cannot be determined at the
present time. The Company continues to believe that the initial
cleanup cost estimate of the U.S. EPA (approximately $15
million) is overstated. The Company also intends to reserve its
right to seek mixed funding for certain costs related to the
cleanup, and will continue to pursue insurance coverage for any
costs it may incur at the Site. There still has been no
determination as to the availability or extent of such funding
or insurance coverage.
In December 1994, the Company also resolved its legal
proceedings with the State of Michigan concerning the State's
efforts to recover past response costs, penalties, and natural
resource damages concerning the Site. The settlement was within
reserves previously established by the Company. The settlement
did not affect the State's request for a declaratory judgment
that the Company be held jointly and severally liable for
cleanup of the Site, and allows the State, upon the occurrence of certain
future contingencies, to pursue additional claims for natural
resource damages.
Other contingent liabilities include various legal actions,
proceedings and claims which are pending or which may be
instituted or asserted in the future against the Company.
Litigation is subject to many uncertainties, the outcome of
individual matters is not predictable with assurance and it is
reasonably possible that some of these other legal actions,
proceedings and claims could be decided unfavorable to the
Company. Although the liability with regard to these matters at
December 31, 1994 cannot be ascertained, it is the opinion of
management, after conferring with counsel, that any liability
resulting from these other matters should not materially affect
the consolidated financial position, results of operation, or
liquidity of the Company and its subsidiaries at December 31,
1994.
NOTE 11. SEGMENT INFORMATION
Kysor Industrial Corporation's operations include two segments:
commercial products and transportation products. Operations in
the commercial products segment design, manufacture and market
refrigerated display cases, energy control systems, refrigerated
building systems, and heating and air-conditioning systems.
Operations in the transportation products segment design,
manufacture and market engine-performance systems, engine-protection
systems, and components and accessories for heavy-duty trucks, other
commercial vehicles and marine equipment.
Segment results for 1993 and 1992 have been restated to include
the Kysor/Westran division in the Transportation Products Group
and to remove it from the Commercial Products Group were it was
previously reported. Additionally, year ended 1994 segment
information for the Commercial Products Group includes the
results of Kysor/Kalt since the date of acquisition. The
commercial products segment generated $29.0 million and $48.4
million of sales and revenues from one customer in the years
ended December 31, 1993 and 1992, respectively. The
transportation products segment generated $32.1 million and
$27.3 million of sales and revenues from one customer in the
year ended December 31, 1994 and 1993, respectively. Segment
information for the years ended December 31, 1994, 1993, and
1992 is furnished on the following page and is incorporated
herein by reference.
<TABLE>
KYSOR INDUSTRIAL CORPORATION AND SUBSIDIARIES
Financial Information by Segment
<CAPTION>
Years Ended December 31,
(amounts in thousands)
1994 1993 1992
<S> <C> <C> <C>
NET SALES
Commercial products
United States 146,790 131,760 140,009
Europe 17,816 19,398 16,234
Total commercial products 164,606 151,158 156,243
Transportation products
United States 139,027 115,105 96,503
Europe 8,880 6,344 9,428
Total transportation products 147,907 121,449 105,931
NET SALES 312,513 272,607 262,174
OPERATING PROFIT (LOSS)*
Commercial products
United States 16,704 18,948 21,352
Europe -1,264 -1,871 -1,599
Total commercial products 15,440 17,077 19,753
Transportation products
United States 20,028 14,695 9,509
Europe 110 -412 -346
Total transportation products 20,138 14,283 9,163
TOTAL OPERATING PROFIT 35,578 31,360 28,916
Corporate administrative expense (net) -11,892 -11,190 -8,794
Provision for litigation - - -1,500
Interest expense -1,961 -2,162 -2,595
INCOME BEFORE INCOME TAXES AND BEFORE
CUMULATIVE EFFECT OF ACCOUNTING CHANGE 21,725 18,008 16,027
<FN>
* Operating profit includes net sales less operating
expenses. Excluded from the computation of operating
profit are interest and other non- operating revenues,
general corporate expenses and interest expense.
</TABLE>
<TABLE>
KYSOR INDUSTRIAL CORPORATION AND SUBSIDIARIES
Financial Information by Segment
<CAPTION>
Years Ended December 31
(amounts in thousands)
1994 1993 1992
<S> <C> <C> <C>
ASSETS
Commercial products
United States 61,770 49,196 50,606
Europe 11,700 9,847 9,937
Total commercial products 73,470 59,043 60,543
Transportation products
United States 52,739 44,013 42,033
Europe 4,711 2,938 4,356
Total transportation products 57,450 46,951 46,389
Subtotal 130,920 105,994 106,932
Cash and other corporate assets 46,620 50,461 28,918
TOTAL ASSETS 177,540 156,455 135,850
DEPRECIATION AND AMORTIZATION
Commercial products 3,601 3,075 3,127
Transportation products 4,590 4,336 4,274
Corporate 788 243 249
TOTAL DEPRECIATION AND AMORTIZATION 8,979 7,654 7,650
CAPITAL EXPENDITURES
Commercial products 2,947 3,288 1,949
Transportation products 5,378 5,299 1,828
Corporate 160 66 142
TOTAL CAPITAL EXPENDITURES 8,485 8,653 3,919
</TABLE>
<TABLE>
Quarterly Financial Data
(Unaudited)
(Amounts in thousands, except per share data)
<CAPTION>
First Second Third Fourth Total
Qtr Qtr Qtr Qtr Year
<S> <C> <C> <C> <C> <C>
1994
Total sales and revenues 70,310 78,525 84,541 83,003 314,379
Gross profit 15,626 17,339 19,612 19,430 72,007
Net income 2,102 2,996 4,333 3,844 13,275
Earnings applicable to common stock 1,856 2,752 4,089 3,598 12,295
Primary earnings per share .33 .48 .70 .61 2.12
Fully diluted earnings per share .28 .41 .60 .52 1.81
Dividends declared per common share .12 .13 .13 .13 .51
1993
Total sales and revenues 63,909 69,933 74,435 65 581 273,858
Gross profit 15,411 16,770 17,272 15,951 65,404
Income before cumulative effect of
accounting change 2,105 2,777 3,270 1,946 10,098
Cumulative effect of change in
accounting for postretirement
benefits (net of tax) -7,628 - - - -7,628
Net income (loss) -5,523 2,777 3,270 1,946 2,470
Earnings applicable to common stock -5,773 2,528 3,032 1,700 1,487
Primary earnings (loss) per share
Before accounting change .33 .45 .54 .30 1.62
Accounting change -1.35 - - - -1.35
Net income (loss) -1.02 .45 .54 .30 .27
Fully diluted earnings per share -1.07 .38 .46 .26 .03
Dividends declared per common share .10 .11 .11 .12 .44
</TABLE>
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.
Not applicable
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE
REGISTRANT.
The information under the captions "Directors and
Executive Officers" and "Section 16(a) Reporting
Delinquencies" in the Company's definitive Proxy Statement
for its April 28, 1995 Annual Meeting of Shareholders is here
incorporated by reference.
Item 11. EXECUTIVE COMPENSATION.
The information under the captions "Summary
Compensation Table", "Retirement Plans", "Stock Option Plans",
"Long-Term Incentive Compensation", "Management Transactions,
Termination of Employment and Change in Control
Arrangements", "Director Compensation", and "Compensation
Committee Interlocks and Insider Participation" in the
Company's definitive Proxy Statement for its April 28, 1995
Annual Meeting of Shareholders is here incorporated by
reference.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT.
The information under the caption "Voting Securities"
in the Company's definitive Proxy Statement for its April 28,
1995 Annual Meeting of Shareholders is here incorporated by
reference.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The information under the captions
"Indebtedness of Management", and "Compensation
Committee Interlocks and Insider Participation", in the
Company's definitive Proxy Statement for its April 28, 1995
Annual Meeting of Shareholders is here incorporated by
reference.
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND
REPORTS ON FORM 8-K.
The following financial statements are filed as part
of this report: Consolidated Balance Sheet for 1994 and 1993,
Consolidated Income Statement for 1994, 1993 and 1992,
Consolidated Statement of Cash Flows for 1994, 1993 and 1992, Consolidated
Statement of Shareholders' Equity for 1994, 1993 and 1992. Audit
Report and Notes to the Consolidated Financial Statements. In addition
the financial statements of the Kysor Industrial Corporation Employee
Stock Ownership Plan for the years ended 1994, 1993 and 1992 are
filed as part of this report.
Individual financial statements of the individual
operating subsidiaries are omitted because the Company is
primarily an operating Company and the subsidiaries included
in the consolidated financial statements are wholly owned
subsidiaries and are not indebted to any person other than the
Parent or the consolidated subsidiaries in amounts exceeding
five percent (5%) of the total assets as shown by the
Consolidated Balance Sheet at December 31, 1994.
1. The following financial statement schedule is filed as a part
of this report:
VIII. Valuation and Qualifying Accounts and Reserves
Schedules other than that listed above are omitted because
they are not required, not applicable, or the information is
disclosed elsewhere in the financial statements.
2. The following exhibits are filed as part of this report:
NUMBER EXHIBIT LOCATION
3(a) Restated Articles of Incorporation (8)
(b) Restated Bylaws (15)
(c) Certificate of Designations, Rights and (11)
Preferences - Series A Convertible Voting
Preferred Stock
4(a) Rights Agreement dated as of April 28, (5)
1986 between Kysor Industrial Corporation
and NBD Bank, N.A.
(b) Appointment of State Street Bank as successor (1)
Rights agent as of June 1, 1994.
(c) Revolving Credit Agreements between Kysor (12)
Industrial Corporation and NBD Bank,
N.A., and Old Kent Bank and Trust Company
(d) Amendment dated January 1994 to the (15)
Revolving Credit Agreements between NBD
Bank, N.A., and Old Kent Bank and Trust
Company
(e) Term Note Agreement with NBD Bank, N.A. (8)
dated as of October 4, 1988
(f) Note Agreement between Kysor Industrial (8)
Corporation and Massachusetts Mutual Life
Insurance Company dated February 24, 1989
(g) Loan Agreement between Kysor Industrial (3)
Corporation Employee Stock Ownership Plan
and NBD Bank, N.A. and Related Guaranty
and Note Purchase Agreement
(h) The Company has outstanding several
classes of long-term debt instruments.
None of these classes of debt is
registered under the Securities Act of
1933. None of these classes of debt
outstanding at the date of this report
exceeds 10% of the Company's total
consolidated assets except for the
previously disclosed item included as
exhibit 4(d) and 4(f). The Company
agrees to furnish copies of the
agreements defining the rights of holders
of such long-term indebtedness to the
Securities and Exchange Commission upon
request
The following management contracts of compensatory plans or arrangements
are included in the exhibits filed as part of this report:
10(a) Stock Option and Stock Appreciation (2)
Rights Plan of 1980
(b) Kysor Industrial Corporation amended 1983 (6)
Incentive Stock Option Plan
(c) Kysor Industrial Corporation amended 1984 (6)
Stock Option Plan
(d) Kysor Industrial Corporation 1987 Stock (4)
Option Plan
(e) Kysor Industrial Corporation 1993 (14)
Long-Term Incentive Plan
(f) Form of Termination Agreements with (3)
corporate officers David W. Crooks,
Thomas P. Forrestal, Jr., Timothy J.
Campbell, Timothy D. Peterson, Peter W.
Gravelle, Richard G. De Boer, Ellen E.
Hovey, Mary C. Janik, Robert L. Joseph,
Terry M. Murphy
(g) Employment Contract with corporate (4)
officer George R. Kempton
(h) Service Contract with Raymond A. Weigel (3)
(i) Form of Supplemental Executive Retirement (3)
Plan with George R. Kempton, Peter W.
Gravelle, Timothy J. Campbell, Thomas P.
Forrestal, Jr., David W. Crooks, Timothy
D. Peterson, Logan F. Wernz, Wilbert J.
Venema, John B. Stevenson, William G.
Cobb
(j) Amendment dated as of August 15, 1989 to (9)
Supplemental Executive Retirement Plan
dated July 10, 1985
(k) Amendment dated as of January 31, 1990 to (9)
Supplemental Executive Retirement Plan
dated July 10, 1985
(l) Kysor Industrial Corporation S.E.R.P. (9)
Irrevocable Trust
(m) Form of Indemnity Agreement with (6)
directors and corporate officers; Stephen
I. D'Agostino, William E. Callahan,
Timothy J. Campbell, Paul K. Gaston,
Grant C. Gentry, Peter W. Gravelle,
George R. Kempton, Philip LeBoutillier,
Jr., Robert W. Navarre, Robert J.
Ratliff, Frederick W. Schwier, John D.
Selby, Raymond A. Weigel, David W.
Crooks, Terry M. Murphy, Timothy D.
Peterson, Richard G. De Boer, Ellen E.
Hovey, Mary C. Janik, Robert L. Joseph
(n) Kysor Industrial Corporation Pension Plan (9)
for Directors dated January 1, 1985,
amended January, 1989
(o) Amendment dated as of July 28, 1989 to (8)
Kysor Industrial Corporation Pension Plan
for Directors dated January 1, 1985
(p) Directors Pension Plan Trust (9)
(q) Kysor Industrial Corporation Corporate (12)
Management Variable Compensation Program
(r) Form of Nonrecourse Promissory Note and (12)
Pledge Agreement - Stock Option Loan
Program; George R. Kempton, Philip
LeBoutillier, Jr., Paul K. Gaston
The Following are Other Material Contracts Included in the
Exhibits Filed as Part of this Report:
(s) AFP Divestiture Agreements (10)
(t) Beaver Michigan Associates Limited (12)
Partnership Agreement
(u) Development Agreement between Beaver (12)
Michigan Associates Limited Partnership,
The City of Cadillac and the Local
Development Finance Authority of the City
of Cadillac
(v) Kysor Industrial Corporation Employee (15)
Stock Ownership Plan Amended and Restated
effective January 1, 1989
(w) Employee Stock Ownership Trust between (15)
Kysor Industrial Corporation and Old Kent
Bank and Trust Co. dated January 1, 1989
(x) Note Agreement between Employee Stock (7)
Ownership Plan and Kysor Industrial
Corporation
11 Computation of Consolidated Earnings Per Share (1)
21 Subsidiaries of the Registrant (1)
23 Consent of Independent Accountants (1)
24 Power of Attorney (1)
27 Financial Data Schedule (1)
99 Report of Coopers & Lybrand, Certified (1)
Public Accountants, on Examination of
Financial Statements and Supplemental
Schedule of Reportable Transactions and
financial statements of the Kysor Industrial
Corporation Employee Stock Ownership Plan
Notes
(1) Filed as a new exhibit to this report.
(2) This exhibit was previously filed as an exhibit to
the Registrant's Form 10-K Annual Report for its
fiscal year ended December 31, 1981, and is here
incorporated by reference.
(3) This exhibit was previously filed as an exhibit to
the Registrant's Form 10-K Annual Report for its
fiscal year ended December 31, 1985, and is here
incorporated by reference.
(4) This exhibit was previously filed as an exhibit to
the Registrant's Form 10-K Annual Report for its
fiscal year ended December 31, 1986, and is here
incorporated by reference.
(5) This exhibit was previously filed as an exhibit to
the Registrant's Form 8-K Current Report dated May 1,
1986, and is here incorporated by reference.
(6) This exhibit was previously filed as an exhibit to
the Registrant's Form 10-K Annual Report for its
fiscal year ended December 31, 1987, and is here
incorporated by reference.
(7) This exhibit was filed as an exhibit to the
Registrant's Form 8-K Current Report dated March 1,
1989, and is here incorporated by reference.
(8) This exhibit was previously filed as an exhibit to
the Registrant's Form 10-K Annual Report for its
fiscal year ended December 31, 1988, and is here
incorporated by reference.
(9) This exhibit was previously filed as an exhibit to
the Registrant's Form 10-K Annual Report for its
fiscal year ended December 31, 1989, and is here
incorporated by reference.
(10) This exhibit was previously filed as an exhibit to
the Registrant's Form 10-K Annual Report for its
fiscal year ended December 31, 1990, and is here
incorporated by reference.
(11) This exhibit was filed as an exhibit to the
Registrant's Form 8-K Current Report dated February
28, 1989, and is here incorporated by reference.
(12) This exhibit was previously filed as an exhibit to
the Registrant's Form 10-K Annual Report for its
fiscal year ended December 31, 1991, and is here
incorporated by reference.
(13) This exhibit was previously filed as an exhibit to
the Registrant's Form 10-K Annual Report for its
fiscal year ended December 31, 1992, and is here
incorporated by reference.
(14) This exhibit was previously filed as an exhibit to
the Registrant's Proxy Statement for its fiscal year
ended December 31, 1992 and is here incorporated by
reference.
(15) This exhibit was previously filed as an exhibit to
the Registrant's Form 10-K Annual Report for its
fiscal year ended December 31, 1993, and is here
incorporated by reference.
The Company will furnish a copy of any exhibit listed
above to any shareholder of the Company without charge upon
written request to Investor Relations, Kysor Industrial
Corporation, One Madison Avenue, Cadillac, Michigan 49601-9785.
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.
KYSOR INDUSTRIAL CORPORATION
By /s/ Terry M. Murphy
Terry M. Murphy
Vice President, Chief
Financial Officer
Date: March 2, 1995
Pursuant to the requirements of the Securities
Exchange Act of 1934, this report has been signed below by
the following persons on behalf of the Registrant and in the
capacities and on the dates indicated.
/s/ Raymond A. Weigel * /s/ George R. Kempton *
Raymond A. Weigel, Chairman George R. Kempton, Chairman of
Emeritus, Director the Board, Chief Executive Officer,
Director
(Principal Executive Officer)
Date: March 2, 1995 Date: March 2, 1995
/s/ Peter W. Gravelle * /s/ Robert L. Joseph *
Peter W. Gravelle, President Robert L. Joseph, Comptroller
and Chief Operating Officer (Principal
Accounting Officer)
Date: March 2, 1995 Date: March 2, 1995
/s/ William E. Callahan * /s/ Robert J. Ratliff *
William E. Callahan, Director Robert J. Ratliff, Director
Date: March 2, 1995 Date: March 2, 1995
/s/ Paul K. Gaston * /s/ Grant C. Gentry *
Paul K. Gaston, Director Grant C. Gentry, Director
Date: March 2, 1995 Date: March 2, 1995
/s/ Philip LeBoutillier, Jr. * /s/ Timothy J. Campbell *
Philip LeBoutillier, Jr., Timothy J. Campbell, Group
Director Vice President, Director
Date: March 2, 1995 Date: March 2, 1995
/s/ Frederick W. Schwier * /s/ John D. Selby *
Frederick W. Schwier, Director John D. Selby, Director
Date: March 2, 1995 Date: March 2, 1995
/s/ Robert W. Navarre* /s/ Stephen I. D'Agostino*
Robert W. Navarre, Director Stephen I. D'Agostino
Date: March 2, 1995 Date: March 2, 1995
*By /s/ Terry M. Murphy
Terry M. Murphy
Attorney-in-fact
REPORT OF INDEPENDENT ACCOUNTANTS
ON FINANCIAL STATEMENT SCHEDULES
Kysor Industrial Corporation
Cadillac, Michigan
Our report on the consolidated financial statements of Kysor
Industrial Corporation and Subsidiaries is included in Item 8 of
this Form 10-K. In connection with our audits of such financial
statements, we have also audited the related financial statement
schedule listed in Item 14(a)1 of this Form 10-K.
In our opinion, the financial statement schedule referred to
above, when considered in relation to the basic financial
statements taken as a whole, presents fairly, in all material
respects, the information required to be included therein.
By s\COOPERS & LYBRAND L.L.P.
Coopers & Lybrand L.L.P.
Detroit, Michigan
February 13, 1995
<TABLE>
KYSOR INDUSTRIAL CORPORATION AND SUBSIDIARIES
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
<CAPTION>
Column A Column B Column C Column D Column E
________ __________ ______________________ __________ __________
Additions
______________________
(1) (2)
Balance at Charged to Charged Balance
Beginning Costs and to Other at End
DESCRIPTION of Period Expenses Accounts Deductions of Period
___________ __________ __________ __________ __________ __________
<S> <C> <C> <C> <C> <C>
Year Ended December 31, 1994:
Allowance for possible losses on ($15,000)(b)
accounts and notes receivable $1,546,000 $807,000 235,000 (d) $546,000 (a) $2,027,000
__________ __________ _________ _________ __________
__________ __________ _________ _________ __________
Year Ended December 31, 1993:
Allowance for possible losses on $13,000 (c)
accounts and notes receivable $1,496,000 $544,000 ($33,000)(b) $474,000 (a) $1,546,000
__________ __________ _________ _________ __________
__________ __________ _________ _________ __________
Year Ended December 31, 1992:
Allowance for possible losses on ($22,000)(c)
accounts and notes receivable $985,000 $1,031,000 ($9,000)(b) $489,000 (a) $1,496,000
__________ __________ _________ _________ __________
__________ __________ _________ _________ __________
<FN>
(a) Accounts written off as uncollectible net of recoveries
(b) Effect of translation adjustment on foreign operations
(c) Reclassification
(d) Amounts added in acquisitions
</TABLE>
May 19, 1994
NBD Bank, N.A. State Street Bank & Trust Co.
611 Woodward Avenue 2 Heritage Drive
Detroit, MI 48226 North Quincy, MA 02171
Attn: Ernie Peck Attn: David Saporito
Re: Rights Agreement Dated as of April 28, 1986 As Amended
Ladies and Gentlemen:
Kysor Industrial Corporation hereby appoints State
Street Bank and Trust Company as successor Rights Agent
effective June 1, 1994, it having been demonstrated to Kysor
Industrial Corporation that State Street Bank and Trust
Company meets the requirements set forth in Section 21 of
the Rights Agreement for eligibility to serve as such
successor Rights Agent. Pursuant to Section 21 of the
Rights Agreement, NBD Bank, N.A. is requested to deliver and
transfer to State Street any property held by it under the
Rights Agreement.
Please acknowledge receipt of this letter and, in the
case of State Street, its acceptance of the appointment as
Rights Agent under the Rights Agreement, in the space
provided below.
Very truly yours,
KYSOR INDUSTRIAL CORPORATION
David W. Crooks, Vice President,
General Counsel and Secretary
<TABLE>
EXHIBIT 11 - S-K Item 601 (b) (11)
KYSOR INDUSTRIAL CORPORATION AND SUBSIDIARIES
COMPUTATION OF CONSOLIDATED EARNINGS PER SHARE
(in thousands except per share)
<CAPTION>
1994 1993 1992 1991 1990
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
PRIMARY EARNINGS PER SHARE CALCULATION
Income before cumulative effect of accounting change $13,274 $10,098 $9,127 ($725) $5,065
Less dividends on preferred stock 1,578 1,584 1,591 1,595 1,599
Plus tax benefit from preferred dividends 598 601 541 542 544
----- ----- ----- ----- -----
Earnings applicable to common stock before accounting change 12,294 9,115 8,077 (1,778) 4,010
Cumulative effect of change in accounting - (7,628) - - -
------ ------ ------ ------ ------
Earnings (Loss) applicable to common stock $12,294 $1,487 $8,077 ($1,778) $4,010
====== ====== ====== ====== ======
Weighted average common shares outstanding 5,461 5,322 5,079 5,101 5,471
Dilutive effect assuming excercise of certain stock
options applying the treasury stock method based
on year to date average price 336 314 229 0 102
----- ----- ----- ----- -----
Weighted average common shares and common
equivalent shares outstanding 5,798 5,636 5,307 5,101 5,572
====== ====== ====== ====== ======
Primary earnings per share
Income before accounting change $2.12 $1.62 $1.52 ($0.35) $0.72
Accounting change - ($1.35) - - -
Net earnings $2.12 $0.27 $1.52 ($0.35) $0.72
====== ====== ====== ====== ======
FULLY DILUTED EARNINGS PER SHARE CALCULATION
A.
Weighted average common shares outstanding 5,461 5,322 5,079 5,101 5,471
Dilutive effect assuming excercise of certain stock
options applying the treasury stock method based on
the greater of year to date average or end of period price 422 316 401 0 102
----- ----- ----- ----- -----
Weighted average common shares and common
equivalent shares outstanding 5,883 5,638 5,480 5,101 5,573
====== ====== ====== ====== ======
Fully diluted earnings per share (A)
Income before accounting change $2.09 $1.62 $1.47 ($0.35) $0.72
Accounting change - ($1.35) - - -
Net earnings $2.09 $0.27 $1.47 ($0.35) $0.72
====== ====== ====== ====== ======
B.
Assuming preferred stock converted to common
Vested Preferred shares issued 175 147 116 83 50
Non-vested Preferred shares issued 627 663 699 735 770
----- ----- ----- ----- -----
Total Preferred shares issued 804 810 815 818 820
Vested Preferred shares issued 175 147 116 83 50
Guaranteed floor price for involuntary conversions $24.375 $24.375 $24.375 $24.375 $24.375
------- ------- ------- ------- -------
Subtotal $4,276 $3,573 $2,817 $2,031 $1,214
The lower of year to date average or end of period common
stock price $18.438 $17.330 $11.430 $7.000 $7.250
------- ------- ------- ------- -------
Required common shares to be issued assuming involuntary
conversion of vested shares at guaranteed floor price 231 205 245 289 167
Required common shares to be issued assuming voluntary
conversion of non-vested shares on one-for-one basis 628 664 699 735 770
Weighted average common shares and common
equivalent shares outstanding for fully diluted Part A. 5,883 5,638 5,480 5,101 5,572
------- ------- ------- ------- -------
Weighted average common shares and common
equivalent shares outstanding for fully diluted Part B. 6,742 6,507 6,424 6,125 6,510
====== ====== ====== ====== ======
Income before cumulative effect of accounting change $13,274 $10,098 $9,127 ($725) $5,065
Additional ESOP expense presently funded by preferred divide (1,578) (1,584) (1,591) (1,595) (1,599)
Plus tax benefit on additional ESOP expense 84 74 412 351 353
Common stock dividends to reduce ESOP expense 439 383 378 564 562
------- ------- ------- ------- -------
Adjusted Income before cumulative effect of accounting chang $12,219 $8,971 $8,326 ($1,406) $4,380
====== ====== ====== ====== ======
Fully diluted earnings per share (B)
Income (loss) before accounting change $1.81 $1.38 $1.30 ($0.23) $0.67
Accounting change - ($1.35) - - -
Net earnings (loss) $1.81 $0.03 $1.30 ($0.23) $0.67
======== ======== ====== ====== ======
Fully diluted earnings per share (Lower of (A) or (B)) $1.81 $0.03 $1.30 ($0.35) $0.67
======== ======== ======== ======== ========
</TABLE>
EXHIBIT 21
SUBSIDIARIES OF THE REGISTRANT
STATE/COUNTRY OF
NAME INCORPORATION ORGANIZATION BUSINESS NAME
Charles Needham Industries, Inc. Texas Kysor/Needham
Westran Corporation Michigan Kysor/Westran
Kysor Europe Marketing England Kysor/Europe
Kysor Industries, S.A. Belgium Kysor/Europe
Kysor/Warren Refrigeration GmbH Germany Kysor/Warren
Refrigeration GmbH
Kysor/Warren - U.K. United Kingdom Kysor/Warren
Kysor/Asia Ltd. Korea Kysor/Asia Ltd.
Kysor/Kalt, Inc. Michigan Kysor/Kalt
CONSENT OF INDEPENDENT ACCOUNTANTS
Kysor Industrial Corporation
Cadillac, Michigan
We consent to the incorporation by reference in the registration
statements of Kysor Industrial Corporation on Form S-8 (as
listed below) of our report dated February 13, 1995, on our
audits of the consolidated financial statements and financial
statement schedule of Kysor Industrial Corporation and
Subsidiaries as of December 31, 1994 and 1993, and for each of
the three years in the period ended December 31, 1994, which
report is included in this Annual Report on Form 10-K.
PLAN SEC FILE
1980 Stock Option and Appreciation Rights Plan 2-67607
1983 Incentive Stock Option Plan 2-86346
1984 Stock Option Plan 2-99855
1987 Stock Option and Restricted Stock Plan 33-18438 and
33-30463
Employee Stock Ownership Plan 33-27360
401(K) Savings Plan for Bargaining Employees 33-59420
401(K) Savings Plan for Non-Bargaining Employees 33-59412
1993 Long-Term Incentive Plan 33-71758
By s\COOPERS & LYBRAND L.L.P.
Coopers & Lybrand L.L.P.
Detroit, Michigan
March 20, 1995
Exhibit 24
POWER OF ATTORNEY
The undersigned, in his capacity as a director or officer, or
both, as the case may be, of Kysor Industrial Corporation, does
hereby appoint GEORGE R. KEMPTON and TERRY M. MURPHY,
or either of them, his true and lawful attorneys or attorney to
execute in his name, place and stead, in his capacity as a director
or officer or both, as the case may be, of Kysor Industrial
Corporation, a Form 10-K Annual Report of Kysor Industrial
Corporation for its fiscal year ended December 31, 1994, any and
all amendments to said report, and to file the same with the
Securities and Exchange Commission. Each of said attorneys shall
have full power and authority to do and perform in the name and on
behalf of the undersigned, in any and all capacities, every act
whatsoever requisite or necessary to be done in the premises as
fully and to all intents and purposes as the undersigned might or
could do in person, the undersigned hereby ratifying and approving
the acts of said attorneys and each of them.
SIGNATURE TITLE DATE
/s/ William E. Callahan
William E. Callahan Director March 2, 1995
POWER OF ATTORNEY
The undersigned, in his capacity as a director or officer, or
both, as the case may be, of Kysor Industrial Corporation, does
hereby appoint GEORGE R. KEMPTON and TERRY M. MURPHY,
or either of them, his true and lawful attorneys or attorney to
execute in his name, place and stead, in his capacity as a director
or officer or both, as the case may be, of Kysor Industrial
Corporation, a Form 10-K Annual Report of Kysor Industrial
Corporation for its fiscal year ended December 31, 1994, any and
all amendments to said report, and to file the same with the
Securities and Exchange Commission. Each of said attorneys shall
have full power and authority to do and perform in the name and on
behalf of the undersigned, in any and all capacities, every act
whatsoever requisite or necessary to be done in the premises as
fully and to all intents and purposes as the undersigned might or
could do in person, the undersigned hereby ratifying and approving
the acts of said attorneys and each of them.
SIGNATURE TITLE DATE
/s/ Timothy J. Campbell
Timothy J. Campbell Director March 2, 1995
POWER OF ATTORNEY
The undersigned, in his capacity as a director or officer, or
both, as the case may be, of Kysor Industrial Corporation, does
hereby appoint GEORGE R. KEMPTON and TERRY M. MURPHY,
or either of them, his true and lawful attorneys or attorney to
execute in his name, place and stead, in his capacity as a director
or officer or both, as the case may be, of Kysor Industrial
Corporation, a Form 10-K Annual Report of Kysor Industrial
Corporation for its fiscal year ended December 31, 1994, any and
all amendments to said report, and to file the same with the
Securities and Exchange Commission. Each of said attorneys shall
have full power and authority to do and perform in the name and on
behalf of the undersigned, in any and all capacities, every act
whatsoever requisite or necessary to be done in the premises as
fully and to all intents and purposes as the undersigned might or
could do in person, the undersigned hereby ratifying and approving
the acts of said attorneys and each of them.
SIGNATURE TITLE DATE
/s/ Stephen I. D'Agostino
Stephen I. D'Agostino Director March 2, 1995
POWER OF ATTORNEY
The undersigned, in his capacity as a director or officer, or
both, as the case may be, of Kysor Industrial Corporation, does
hereby appoint GEORGE R. KEMPTON and TERRY M. MURPHY,
or either of them, his true and lawful attorneys or attorney to
execute in his name, place and stead, in his capacity as a director
or officer or both, as the case may be, of Kysor Industrial
Corporation, a Form 10-K Annual Report of Kysor Industrial
Corporation for its fiscal year ended December 31, 1994, any and
all amendments to said report, and to file the same with the
Securities and Exchange Commission. Each of said attorneys shall
have full power and authority to do and perform in the name and on
behalf of the undersigned, in any and all capacities, every act
whatsoever requisite or necessary to be done in the premises as
fully and to all intents and purposes as the undersigned might or
could do in person, the undersigned hereby ratifying and approving
the acts of said attorneys and each of them.
SIGNATURE TITLE DATE
/s/ Paul K. Gaston
Paul K. Gaston Director March 2, 1995
The undersigned, in his capacity as a director or officer, or
both, as the case may be, of Kysor Industrial Corporation, does
hereby appoint GEORGE R. KEMPTON and TERRY M. MURPHY,
or either of them, his true and lawful attorneys or attorney to
execute in his name, place and stead, in his capacity as a director
or officer or both, as the case may be, of Kysor Industrial
Corporation, a Form 10-K Annual Report of Kysor Industrial
Corporation for its fiscal year ended December 31, 1994, any and
all amendments to said report, and to file the same with the
Securities and Exchange Commission. Each of said attorneys shall
have full power and authority to do and perform in the name and on
behalf of the undersigned, in any and all capacities, every act
whatsoever requisite or necessary to be done in the premises as
fully and to all intents and purposes as the undersigned might or
could do in person, the undersigned hereby ratifying and approving
the acts of said attorneys and each of them.
SIGNATURE TITLE DATE
/s/ Grant C. Gentry
Grant C. Gentry Director March 2, 1995
POWER OF ATTORNEY
The undersigned, in his capacity as a director or officer, or
both, as the case may be, of Kysor Industrial Corporation, does
hereby appoint GEORGE R. KEMPTON and TERRY M. MURPHY,
or either of them, his true and lawful attorneys or attorney to
execute in his name, place and stead, in his capacity as a director
or officer or both, as the case may be, of Kysor Industrial
Corporation, a Form 10-K Annual Report of Kysor Industrial
Corporation for its fiscal year ended December 31, 1994, any and
all amendments to said report, and to file the same with the
Securities and Exchange Commission. Each of said attorneys shall
have full power and authority to do and perform in the name and on
behalf of the undersigned, in any and all capacities, every act
whatsoever requisite or necessary to be done in the premises as
fully and to all intents and purposes as the undersigned might or
could do in person, the undersigned hereby ratifying and approving
the acts of said attorneys and each of them.
SIGNATURE TITLE DATE
/s/ Peter W. Gravelle
Peter W. Gravelle Director March 2, 1995
POWER OF ATTORNEY
The undersigned, in his capacity as a director or officer, or
both, as the case may be, of Kysor Industrial Corporation, does
hereby appoint GEORGE R. KEMPTON and TERRY M. MURPHY,
or either of them, his true and lawful attorneys or attorney to
execute in his name, place and stead, in his capacity as a director
or officer or both, as the case may be, of Kysor Industrial
Corporation, a Form 10-K Annual Report of Kysor Industrial
Corporation for its fiscal year ended December 31, 1994, any and
all amendments to said report, and to file the same with the
Securities and Exchange Commission. Each of said attorneys shall
have full power and authority to do and perform in the name and on
behalf of the undersigned, in any and all capacities, every act
whatsoever requisite or necessary to be done in the premises as
fully and to all intents and purposes as the undersigned might or
could do in person, the undersigned hereby ratifying and approving
the acts of said attorneys and each of them.
SIGNATURE TITLE DATE
/s/ George R. Kempton
George R. Kempton Director March 2, 1995
POWER OF ATTORNEY
The undersigned, in his capacity as a director or officer, or
both, as the case may be, of Kysor Industrial Corporation, does
hereby appoint GEORGE R. KEMPTON and TERRY M. MURPHY,
or either of them, his true and lawful attorneys or attorney to
execute in his name, place and stead, in his capacity as a director
or officer or both, as the case may be, of Kysor Industrial
Corporation, a Form 10-K Annual Report of Kysor Industrial
Corporation for its fiscal year ended December 31, 1994, any and
all amendments to said report, and to file the same with the
Securities and Exchange Commission. Each of said attorneys shall
have full power and authority to do and perform in the name and on
behalf of the undersigned, in any and all capacities, every act
whatsoever requisite or necessary to be done in the premises as
fully and to all intents and purposes as the undersigned might or
could do in person, the undersigned hereby ratifying and approving
the acts of said attorneys and each of them.
SIGNATURE TITLE DATE
/s/ Philip LeBoutillier, Jr.
Philip LeBoutillier, Jr. Director March 2, 1995
POWER OF ATTORNEY
The undersigned, in his capacity as a director or officer, or
both, as the case may be, of Kysor Industrial Corporation, does
hereby appoint GEORGE R. KEMPTON and TERRY M. MURPHY,
or either of them, his true and lawful attorneys or attorney to
execute in his name, place and stead, in his capacity as a director
or officer or both, as the case may be, of Kysor Industrial
Corporation, a Form 10-K Annual Report of Kysor Industrial
Corporation for its fiscal year ended December 31, 1994, any and
all amendments to said report, and to file the same with the
Securities and Exchange Commission. Each of said attorneys shall
have full power and authority to do and perform in the name and on
behalf of the undersigned, in any and all capacities, every act
whatsoever requisite or necessary to be done in the premises as
fully and to all intents and purposes as the undersigned might or
could do in person, the undersigned hereby ratifying and approving
the acts of said attorneys and each of them.
SIGNATURE TITLE DATE
/s/ Robert W. Navarre
Robert W. Navarre Director March 2, 1995
POWER OF ATTORNEY
The undersigned, in his capacity as a director or officer, or
both, as the case may be, of Kysor Industrial Corporation, does
hereby appoint GEORGE R. KEMPTON and TERRY M. MURPHY,
or either of them, his true and lawful attorneys or attorney to
execute in his name, place and stead, in his capacity as a director
or officer or both, as the case may be, of Kysor Industrial
Corporation, a Form 10-K Annual Report of Kysor Industrial
Corporation for its fiscal year ended December 31, 1994, any and
all amendments to said report, and to file the same with the
Securities and Exchange Commission. Each of said attorneys shall
have full power and authority to do and perform in the name and on
behalf of the undersigned, in any and all capacities, every act
whatsoever requisite or necessary to be done in the premises as
fully and to all intents and purposes as the undersigned might or
could do in person, the undersigned hereby ratifying and approving
the acts of said attorneys and each of them.
SIGNATURE TITLE DATE
/s/ Robert J. Ratliff
Robert J. Ratliff Director March 2, 1995
POWER OF ATTORNEY
The undersigned, in his capacity as a director or officer, or
both, as the case may be, of Kysor Industrial Corporation, does
hereby appoint GEORGE R. KEMPTON and TERRY M. MURPHY,
or either of them, his true and lawful attorneys or attorney to
execute in his name, place and stead, in his capacity as a director
or officer or both, as the case may be, of Kysor Industrial
Corporation, a Form 10-K Annual Report of Kysor Industrial
Corporation for its fiscal year ended December 31, 1994, any and
all amendments to said report, and to file the same with the
Securities and Exchange Commission. Each of said attorneys shall
have full power and authority to do and perform in the name and on
behalf of the undersigned, in any and all capacities, every act
whatsoever requisite or necessary to be done in the premises as
fully and to all intents and purposes as the undersigned might or
could do in person, the undersigned hereby ratifying and approving
the acts of said attorneys and each of them.
SIGNATURE TITLE DATE
/s/ John D. Selby
John D. Selby Director March 2, 1995
POWER OF ATTORNEY
The undersigned, in his capacity as a director or officer, or
both, as the case may be, of Kysor Industrial Corporation, does
hereby appoint GEORGE R. KEMPTON and TERRY M. MURPHY,
or either of them, his true and lawful attorneys or attorney to
execute in his name, place and stead, in his capacity as a director
or officer or both, as the case may be, of Kysor Industrial
Corporation, a Form 10-K Annual Report of Kysor Industrial
Corporation for its fiscal year ended December 31, 1994, any and
all amendments to said report, and to file the same with the
Securities and Exchange Commission. Each of said attorneys shall
have full power and authority to do and perform in the name and on
behalf of the undersigned, in any and all capacities, every act
whatsoever requisite or necessary to be done in the premises as
fully and to all intents and purposes as the undersigned might or
could do in person, the undersigned hereby ratifying and approving
the acts of said attorneys and each of them.
SIGNATURE TITLE DATE
/s/ Frederick W. Schwier
Frederick W. Schwier Director March 2, 1995
The undersigned, in his capacity as a director or officer, or
both, as the case may be, of Kysor Industrial Corporation, does
hereby appoint GEORGE R. KEMPTON and TERRY M. MURPHY,
or either of them, his true and lawful attorneys or attorney to
execute in his name, place and stead, in his capacity as a director
or officer or both, as the case may be, of Kysor Industrial
Corporation, a Form 10-K Annual Report of Kysor Industrial
Corporation for its fiscal year ended December 31, 1994, any and
all amendments to said report, and to file the same with the
Securities and Exchange Commission. Each of said attorneys shall
have full power and authority to do and perform in the name and on
behalf of the undersigned, in any and all capacities, every act
whatsoever requisite or necessary to be done in the premises as
fully and to all intents and purposes as the undersigned might or
could do in person, the undersigned hereby ratifying and approving
the acts of said attorneys and each of them.
SIGNATURE TITLE DATE
/s/ Raymond A. Weigel
Raymond A. Weigel Director March 2, 1995
POWER OF ATTORNEY
The undersigned, in his capacity as a director or officer, or
both, as the case may be, of Kysor Industrial Corporation, does
hereby appoint GEORGE R. KEMPTON and TERRY M. MURPHY,
or either of them, his true and lawful attorneys or attorney to
execute in his name, place and stead, in his capacity as a director
or officer or both, as the case may be, of Kysor Industrial
Corporation, a Form 10-K Annual Report of Kysor Industrial
Corporation for its fiscal year ended December 31, 1994, any and
all amendments to said report, and to file the same with the
Securities and Exchange Commission. Each of said attorneys shall
have full power and authority to do and perform in the name and on
behalf of the undersigned, in any and all capacities, every act
whatsoever requisite or necessary to be done in the premises as
fully and to all intents and purposes as the undersigned might or
could do in person, the undersigned hereby ratifying and approving
the acts of said attorneys and each of them.
SIGNATURE TITLE DATE
/s/ Terry M. Murphy
Terry M. Murphy Vice President, Chief Financial Officer March 2, 1995
(Principal Financial Officer)
POWER OF ATTORNEY
The undersigned, in his capacity as a director or officer, or
both, as the case may be, of Kysor Industrial Corporation, does
hereby appoint GEORGE R. KEMPTON and TERRY M. MURPHY,
or either of them, his true and lawful attorneys or attorney to
execute in his name, place and stead, in his capacity as a director
or officer or both, as the case may be, of Kysor Industrial
Corporation, a Form 10-K Annual Report of Kysor Industrial
Corporation for its fiscal year ended December 31, 1994, any and
all amendments to said report, and to file the same with the
Securities and Exchange Commission. Each of said attorneys shall
have full power and authority to do and perform in the name and on
behalf of the undersigned, in any and all capacities, every act
whatsoever requisite or necessary to be done in the premises as
fully and to all intents and purposes as the undersigned might or
could do in person, the undersigned hereby ratifying and approving
the acts of said attorneys and each of them.
SIGNATURE TITLE DATE
/s/ Robert L. Joseph
Robert L. Joseph Comptroller March 2, 1995
(Principal Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This Schedule contains summary financial information extracted from the
consolidated financial statements of Kysor Industrial Corporation and
Subsidiaries for the year ended December 31, 1994 and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000202356
<NAME> KYSOR INDUSTRIAL CORP
<MULTIPLIER> 1000
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<EXCHANGE-RATE> 1
<CASH> 15,850
<SECURITIES> 0
<RECEIVABLES> 48,464
<ALLOWANCES> 2,027
<INVENTORY> 36,265
<CURRENT-ASSETS> 107,821
<PP&E> 101,233
<DEPRECIATION> 58,320
<TOTAL-ASSETS> 177,511
<CURRENT-LIABILITIES> 56,645
<BONDS> 30,394
<COMMON> 5,641
0
19,587
<OTHER-SE> 42,690
<TOTAL-LIABILITY-AND-EQUITY> 177,511
<SALES> 312,513
<TOTAL-REVENUES> 314,379
<CGS> 240,506
<TOTAL-COSTS> 288,384
<OTHER-EXPENSES> 1,902
<LOSS-PROVISION> 807
<INTEREST-EXPENSE> 1,961
<INCOME-PRETAX> 21,325
<INCOME-TAX> 8,050
<INCOME-CONTINUING> 13,275
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 13,275
<EPS-PRIMARY> 2.12
<EPS-DILUTED> 1.81
</TABLE>
KYSOR INDUSTRIAL CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
REPORT ON AUDITS OF FINANCIAL STATEMENTS
AND SUPPLEMENTAL SCHEDULES
FOR THE YEARS ENDED DECEMBER 31, 1994 AND 1993
Kysor Industrial Corporation Employee Stock Ownership Plan
Index to Financial Statements and Supplemental Schedules
Pages
Report of Independent Accountants 2
Financial Statements:
Statement of Net Assets Available for Plan Benefits
as of December 31, 1994 and 1993 3
Statement of Changes in Net Assets Available for Plan
Benefits for the Years Ended December 31, 1994,
1993 and 1992 4
Notes to Financial Statements 5-8
Supplemental Schedules:
Item 27a - Schedule of Assets Held for Investment
Purposes as of December 31, 1994 9
Item 27d - Schedule of Reportable Transactions for
the Year Ended December 31, 1994 10
Report of Independent Accountants
To the Committee of
Kysor Industrial Corporation
Employee Stock Ownership Plan:
We have audited the accompanying statement of net assets
available for plan benefits of Kysor Industrial Corporation
Employee Stock Ownership Plan as of December 31, 1994 and 1993,
and the related statement of changes in net assets available for
plan benefits for each of the three years in the period ended
December 31, 1994. These financial statements are the
responsibility of the Plan's management. Our responsibility is
to express an opinion on these financial statements based on our
audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the net assets
available for benefits of the Plan as of December 31, 1994 and
1993, and the changes in net assets available for plan benefits
for each of the three years in the period ended December 31,
1994, in conformity with generally accepted accounting
principles.
Our audits were performed for the purpose of forming an opinion
on the basic financial statements taken as a whole. The
supplemental schedules as listed in the accompanying index on
page 1 are presented for purposes of additional analysis and are
not a required part of the basic financial statements but are
supplementary information required by the Department of Labor's
Rules and Regulations for Reporting and Disclosure under the
Employee Retirement Income Security Act of 1974. The
supplemental schedules have been subjected to the auditing
procedures applied in the audit of the basic financial
statements and, in our opinion, are fairly stated, in all
material respects in relation to the basic financial statements
taken as a whole.
/s Coopers & Lybrand L.L.P.
Detroit, Michigan
March 17, 1995
Kysor Industrial Corporation Employee Stock Ownership Plan
Statement of Net Assets Available for Plan Benefits
as of December 31, 1994 and 1993
ASSETS 1994 1993
Cash and cash equivalents $ 95,325 $ 61,306
Receivables:
Preferred stock dividend 654,329 658,362
Employer contributions 41,650 36,000
Investments, at fair value (Note 3) 27,504,871 25,813,079
Total assets 28,296,175 26,568,747
LIABILITIES
Notes payable 20,348,727 20,697,453
Accrued interest 695,979 694,362
Total liabilities 21,044,706 21,391,815
Net assets available for plan
benefits $ 7,251,469 $ 5,176,932
The accompanying notes are an integral part of the financial
statements.
Kysor Industrial Corporation Employee Stock Ownership Plan
Statement of Changes in Net Assets Available for Plan Benefits
for the years ended December 31, 1994, 1993 and 1992
1994 1993 1992
Additions:
Employer contributions $ 335,110 $ 367,683 381,159
Dividend and interest income 1,746,822 1,733,198 1,737,561
Net appreciation in fair value
of investments 2,070,529 - 4,008,104
4,152,461 2,100,881 6,126,824
Deductions:
Benefits paid to
withdrawing participants 369,304 246,778 211,980
Interest expense 1,708,620 1,733,014 1,763,415
Net depreciation in fair value
of investments - 193,238 -
2,077,924 2,173,030 1,975,395
Net additions (deductions) 2,074,537 (72,149) 4,151,429
Net assets available for plan benefits,
beginning of year 5,176,932 5,249,081 1,097,652
Net assets available for plan benefits,
end of year $ 7,251,469 $ 5,176,932 $ 5,249,081
The accompanying notes are an integral part of the financial
statements.
Kysor Industrial Corporation Employee Stock Ownership Plan
Notes to Financial Statements
1. Summary of Significant Accounting Policies:
a. Investment Valuation: Investments in common stock traded on
a national securities exchange are valued at the last reported
sales price on the last business day of the year. The preferred
stock was valued at $25.11 and $24.50 per share on December 31,
1994 and 1993, respectively, based on a market comparable
analysis performed by an independent investment firm. Units of
the collective investment fund are valued at $1. The Plan's
assets, which consist primarily of the items noted above, are
held by the trustee of the Plan.
b. Investment Transactions: Purchases and sales of securities
are reflected on a trade-date basis. The basis on which cost is
determined in computing realized gains or losses from sales or
distributions of investments is average cost.
c. Change in Unrealized Appreciation (Depreciation) of
Investments: In accordance with the policy of stating
investments at fair value, the Plan presents the net
appreciation (depreciation) in the fair value of its investments
in the statement of changes in net assets available for plan
benefits. Net appreciation (depreciation) consists of the
realized gains or losses and the unrealized appreciation
(depreciation) on those investments.
d. Interest and Dividend Recognition: Interest income and
expense are recorded as earned or incurred. Common stock
dividend income is recorded on the ex-dividend date. Dividends
on the shares of preferred stock are recorded as declared.
Preferred stock dividends are cumulative, in the amount of eight
percent per annum, from the date of their original issuance.
e. Financial Instruments: The Plan has investments and notes
payable which are considered financial instruments. The
investments are carried at fair value. The fair value of notes
payable, as determined through information obtained from banking
sources and management estimates, approximates their carrying
value.
2. Description of Plan and Benefits:
The Plan is a noncontributory stock ownership plan available to
all U. S. salaried and hourly employees of Kysor Industrial
Corporation (the "Company") not covered by a collective
bargaining agreement. The Plan is designed to invest primarily
in the preferred stock and common stock of the Company and is
intended to meet the requirements of Section 141 of the Revenue
Act of 1978, as amended, and Section 401(a) of the Internal
Revenue Code of 1954, as amended.
2. Description of Plan and Benefits, continued:
On February 24, 1989, the Plan purchased 820,513 shares of newly
issued eight percent cumulative Series A Convertible Voting
Preferred Stock, $24.375 stated value per share ("Convertible
Stock"), from the Company. The Plan's purchase of preferred
stock was financed by a loan from the company which issued a
$20,000,000, 15-year ESOP note to raise necessary funds. The
Plan pledges all such Convertible Stock as collateral for the
purpose of securing payment and performance of all obligations
and indebtedness of the Plan pursuant to the exempt loan
agreement. The Company will service the debt obligation plus
interest primarily through the distribution of preferred stock
dividends. In 1994, 1993 and 1992, dividends on preferred stock
of $1,577,000, $1,587,000 and $1,593,000, plus $96,000, $85,000
and $79,000 of additional contributions, respectively, were
received from the Company. The Convertible Stock may be
voluntarily converted at the option of the Plan into shares of
the Company's common stock on a one-for-one basis, subject to
certain antidilution adjustments. The Convertible Stock is
subject to redemption by the Company generally beginning March
1, 1993.
As the debt is serviced, a proportionate number of shares will
be allocated among plan participants based on participants'
compensation levels. At December 31, 1994, 1993 and 1992,
628,124, 663,588 and 699,051 shares, respectively, were
unallocated to plan participants.
During 1985, the Plan purchased 357,668 shares of the Company's
common stock. The Plan's purchase was financed through a bank
loan, guaranteed by the Company. Over a period of 10 years, the
Company will repay the cost of the shares plus interest. As the
loan is repaid, the proportionate number of shares will be
allocated among plan participants based upon participants'
compensation levels. At December 31, 1994, 1993 and 1992,
35,763, 71,530, and 107,297 shares, respectively, of common
stock of the Company remained unallocated to plan participants.
The Company's contributions will vest over 7 years, beginning
with 20 percent vesting after 3 years and 20 percent vesting
each year thereafter. Forfeitures will be allocated among the
accounts of all eligible participants for that year. The
Company is obligated to make contributions to the Plan which,
when aggregated with the Plan's dividends and interest earnings,
equal the amount necessary to enable the Plan to make its
regularly scheduled payments of principal and interest due on
its notes payable.
Upon termination or retirement, the balance in a participant's
account may be distributed in cash or in shares of the Company's
common stock at the participant's option. During 1994, 1993 and
1992, the Plan(s) distributed 4,243 shares, 4,578 shares and
5,955 shares, respectively, of the Company's common stock to
withdrawing participants. Additionally, 6,611 shares of
preferred stock were converted into common stock during 1994.
3. Investments:
The following is a summary of plan assets at December 31:
1994 1993
Market Value Cost Market Value Cost
Kysor Industrial Corporation
common stock, 329,302
shares in 1994 and 341,201
shares in 1993 $ 7,285,807 $ 3,316,497 $ 5,928,368 $ 3,259,424
Kysor Industrial Corporation
preferred stock, 803,553
shares in 1994 and 810,164
shares in 1993 20,177,212 19,586,604 19,849,006 19,747,748
Short-term investments 41,852 41,852 35,705 35,705
$27,504,871 $22,944,953 $25,813,079 $23,042,877
Kysor Industrial Corporation common stock at the close of
business on December 31, 1994 and March 17, 1995 was $22.125 and
$21.125 per share, respectively.
4. Tax Status:
The United States Treasury Department advised on August 8, 1989
that the Plan constitutes a qualified trust under Section 401(a)
of the Internal Revenue Code and, therefore, is exempt from
federal income taxes under the provisions of Section 501(a).
The Plan has been amended since receiving the determination
letter. However, the plan administrator and the Plan's tax
counsel believe that the Plan is currently designed and being
operated in compliance with the applicable requirements of the
Internal Revenue Code. Therefore, they believe that the Plan
was qualified and the related trust was tax-exempt as of the
financial statement date.
5. Notes Payable:
Notes payable consist of the following:
1994 1993
Loan from Kysor Industrial Corporation,
$1,250,000 semiannual principal payments,
starting July 25, 1996, plus interest
payable quarterly at 8.36 percent $ 20,000,000 $ 20,000,000
Note payable to National Bank of Detroit,
$174,363 semiannual principal payments
through September 30, 1995, plus
interest payable quarterly
at 7.0 percent 348,727 697,453
Total notes payable $ 20,348,727 $ 20,697,453
6. Administrative Expenses:
Administrative expenses of the Plan are paid by the Company.
7. Plan Termination Priorities:
The Company has no intention of terminating the Plan. However,
conditions which would cause plan termination are specified in
the plan agreement. Upon termination of the Plan, the assets of
the Plan would continue to be applied for the exclusive benefit
of participants and/or their beneficiaries, as directed by the
Committee.
Kysor Industrial Corporation Employee Stock Ownership Plan
Item 27a - Schedule of Assets Held for Investment Purposes
as of December 31, 1994
Description of Investment,
Including Maturity Date,
Rate of Interest, Collateral, Current
Identity of Issuer Par or Maturity Value Cost Value
Kysor Industrial
Corporation Common stock, 329,302 shares $ 3,316,497 $ 7,285,807
Kysor Industrial
Corporation Preferred stock, 803,553
shares 19,586,604 20,177,212
Old Kent Bank Collective Investment Fund 41,852 41,852
$22,944,953 $ 27,504,871
*Represents investments in excess of five percent of net assets
available for plan benefits.
<TABLE>
Kysor Industrial Corporation Employee Stock Ownership Plan
Item 27d - Schedule of Reportable Transactions
for the year ended December 31, 1994
<CAPTION>
Expense
Number Number Incurred Cost
Party Involved Description of of Purchase Selling with of Net Gain
of Asset Transactions Shares Price Price Transaction* Asset or (Loss)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Old Kent Bank Old Kent Bank
Money Market
Funds:
Total assets
purchased 108 161,914 $161,914 $161,914
Total assets
sold 12 155,856 155,856 155,856
Kysor
Industrial
Corp. Common stock:
Total assets
purchased 1 9 156 156
Total assets
sold 9 17,128 310,599 308,825 $ 1,774
Note: The above transactions include transactions with respect
to the same issue of securities, which, when aggregated,
exceeded five percent of the Plan's assets.
*Information regarding expenses incurred with each transaction
was not provided by the trustee.
</TABLE>
