FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1994
Commission File No. 1-924
TRINOVA CORPORATION
(Exact name of registrant as specified in its charter)
Ohio 34-4288310
(State of Incorporation) (I.R.S. Employer
Identification No.)
3000 Strayer, Maumee, Ohio 43537-0050
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: (419) 867-2200
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
Common Shares, $5.00 Par Value Frankfurt Stock Exchange
Chicago Stock Exchange
New York Stock Exchange
Pacific Stock Exchange
The Stock Exchange (London)
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, 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 (Section 229.405 of this chapter) 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. [ ]
[Cover page continued]
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The aggregate market value of the Common Shares held by non-affiliates of the
registrant as of February 21, 1995, was $766,367,545.
The number of Common Shares, $5 Par Value, outstanding as of February 21,
1995, was 28,813,258.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the 1994 Annual Report to Security Holders are filed as Exhibit
(13) filed hereto and are incorporated by reference into Parts I, II and IV.
Portions of the proxy statement for the annual meeting of security holders to
be held on April 20, 1995, are incorporated by reference into Part III.
This document, including exhibits, contains 96 pages.
The cover page consists of 2 pages.
The Exhibit Index is located on pages 20-22.
[End of cover page]
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PART I
ITEM 1. Business.
(a) TRINOVA Corporation ("TRINOVA") is a world leader in the manufacture and
distribution of engineered components and systems for industry, sold through
its operating companies, Aeroquip Corporation ("Aeroquip") and Vickers,
Incorporated ("Vickers"), to the industrial, automotive, and aerospace and
defense markets.
On September 22, 1994, Joseph C. Farrell, Chairman of the Board,
President and Chief Executive Officer of The Pittston Company, was elected to
the Board of Directors of TRINOVA.
No business acquisitions were completed in 1994.
On February 26, 1994, TRINOVA sold the assets, net of certain
liabilities, of its electric motor business located in Wichita, Kansas; Blue
Ash, Ohio; and Maysville, Kentucky. The business was sold as part of
TRINOVA's ongoing program to eliminate businesses and product lines which do
not fit its strategies.
(b) "Note 13 - Business Segments" on pages 80-81 of Exhibit (13) filed
hereunder is incorporated herein by reference.
(c) A description of the business done and intended to be done by TRINOVA and
its subsidiaries in each industry segment follows.
(1) INDUSTRIAL: Aeroquip manufactures and sells all pressure ranges of
hose and fittings; adapters; self-sealing couplings; and molded, extruded and
co-extruded plastic products.
Vickers manufactures and sells hydraulic, electrohydraulic, pneumatic
and electronic control devices; piston and vane pumps and motors; servovalves
and controls; hydraulic and pneumatic cylinders; hydraulic power packages;
electric motors and drives; hydraulic and lubrication filtration; and fluid-
evaluation services.
Principal markets for these products include construction, mining,
logging and farm equipment; machine tool; process industries; electrical
machinery, air conditioning/refrigeration; appliances and communications
equipment; electronics; lift truck; material handling; plant maintenance; and
housing and commercial construction. Sales are dispersed geographically
across a broad customer base. Products are sold directly to original
equipment manufacturers ("OEMs") and through a worldwide network of
distributors serving aftermarket and small- and medium-sized OEM customers.
The industrial business is highly competitive in terms of price,
quality and service. TRINOVA believes that Aeroquip has significant market
position worldwide for industrial hose, fittings, couplings and adapters.
TRINOVA also believes that Vickers has significant market position worldwide
for mobile and industrial vane pumps, solenoid-operated directional valves,
mobile hydraulic control valves for forklift trucks, cartridge valve systems,
piston pumps for high-horsepower agricultural tractors, hydraulic tilt-train
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technology, and utility vehicle hydraulic equipment. TRINOVA serves many
customers in the highly diverse and fragmented industrial markets. Due to the
diversity of TRINOVA's products, there are a large number of competitors
scattered across a wide variety of market segments, with no single competitor
competing in each of TRINOVA's product lines.
The order backlog for the industrial business was $185 million as of
December 31, 1994, compared to $148.4 million as of December 31, 1993.
Substantially all of the December 31, 1994, backlog is expected to be filled
in 1995.
(2) AUTOMOTIVE: Aeroquip manufactures and sells air conditioning,
power steering, oil and transmission cooler, and fuel line components and
assemblies; body side moldings; decorative bumper strips; roof moldings;
spoilers; rocker panel claddings; engine components; louvers and trim plates;
interior trim; garnish moldings; structural products such as bumper beams;
interior engine covers; instrument clusters; radio bezels; and display
products.
The automotive operations of Aeroquip serve worldwide automobile,
light truck and van manufacturers. Products are primarily sold directly to
manufacturers. Approximately 52 percent of worldwide sales of TRINOVA's
automotive business are made to three major U.S. automobile manufacturers.
The automotive industry is highly competitive in terms of price,
quality and service. Aeroquip is a preferred supplier to the major U.S. and
European automobile manufacturers. Competition for products in the automotive
industry is very fragmented.
(3) AEROSPACE & DEFENSE: Aeroquip manufactures and sells hose,
fittings, couplings, swivels, V-band couplings, fuel-handling products and
high-pressure tube fittings.
Vickers manufactures and sells fixed- and variable-displacement pumps;
fuel pumps; hydraulic motors and motor packages; motor pumps and generator
packages; valves and valve packages; electrohydraulic and electromechanical
actuators; electric motor packages; and sensors and monitoring devices.
The aerospace & defense operations of Aeroquip and Vickers serve
worldwide commercial aerospace and military markets including commercial
aircraft, air defense, cargo handling, combat and support vehicles, commuter
aircraft, engines, marine, military aircraft, military weaponry, missiles and
naval machinery. Products are sold directly to OEM businesses and the
Government and through a distributor network. Approximately 19 percent of
TRINOVA's aerospace & defense business sales are made to two major U.S.
airframe manufacturers.
The aerospace & defense business is highly competitive in terms of
price, quality and service. TRINOVA believes that Aeroquip has significant
market position worldwide for aerospace hose, fittings and quick-disconnect
couplings. TRINOVA also believes Vickers has significant market position
worldwide for aerospace piston pumps and motors, and lube system diagnostics.
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TRINOVA serves a large number of customers in the diverse and
fragmented aerospace and defense markets. Due to the diversity of TRINOVA's
products, there are a large number of competitors scattered across a wide
variety of market segments, with no single competitor competing in each of
TRINOVA's product lines.
The order backlog for the aerospace & defense business was $267
million as of December 31, 1994, compared to $278.4 million as of December 31,
1993. Approximately 22 percent of the December 31, 1994, backlog is not
expected to be filled in 1995 because certain contracts require deliveries
after 1995. Approximately 34 percent of the December 31, 1994, backlog
represents direct Government contracts or subcontracts on Government programs,
which are subject to termination for convenience by the Government.
(4) OTHER INFORMATION: TRINOVA and its subsidiaries are generally
not dependent upon any one source for raw materials or purchased components
essential to their businesses, and it is believed that such raw materials and
components will be available in adequate quantities to meet anticipated
production schedules.
Patents owned by TRINOVA are considered important to the conduct of
its present businesses. TRINOVA is licensed under a number of patents, none
of which are considered material to its businesses. TRINOVA is the owner of a
number of U.S. and non-U.S. trademark registrations.
TRINOVA devotes engineering, research and development efforts to new
products and improvement of existing products and production processes.
During 1994, 1993 and 1992, TRINOVA spent a total of $55.5 million, $55.3
million and $65.3 million, respectively, on these efforts.
TRINOVA employed 15,024 persons at December 31, 1994.
(d) "Note 14 - Non-U.S. Operations" on page 82 of Exhibit (13) filed
hereunder is incorporated herein by reference. TRINOVA believes the risk
attendant to non-U.S. operations, which are primarily in developed countries,
is not significantly greater than that attendant to its U.S. operations.
ITEM 2. Properties.
A description of TRINOVA's principal properties follows. Except as
otherwise indicated, all properties are owned by TRINOVA or its subsidiaries.
TRINOVA's executive offices (leased) are located in Maumee, Ohio.
INDUSTRIAL: Aeroquip Corporation has executive and administrative offices in
Maumee, Ohio (leased); technical centers in Ann Arbor, Michigan (leased) and
Maumee, Ohio (leased); and manufacturing facilities throughout the United
States and abroad, including plants in Mountain Home, Arkansas; Fitzgerald,
Georgia; New Haven, Indiana; Williamsport, Maryland; Forest City and Norwood,
North Carolina; Van Wert, Ohio; Gainesboro, Tennessee; Bassett, Virginia;
Wausau, Wisconsin; Rio de Janeiro, Brazil; Chambray-Les-Tours, France; Baden-
Baden and Hann-Muenden, Germany; Livorno, Italy; and Cardiff, United Kingdom.
Aeroquip also owns or leases warehouse, assembly and distribution facilities
and sales offices in the United States and abroad.
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Vickers, Incorporated has executive and administrative offices in
Maumee, Ohio (leased); a technical center in Rochester Hills (leased),
Michigan; and manufacturing facilities throughout the United States and
abroad, including plants in Decatur, Alabama; Searcy, Arkansas; Carol Stream
and Petersburg (leased), Illinois; Grand Blanc and Jackson, Michigan; Omaha,
Nebraska; White City, Oregon; Sao Paulo, Brazil; Bad Homburg, Germany; Casella
and Vignate (leased), Italy; and Havant and Telford (leased), United Kingdom.
Vickers also owns or leases warehouse, assembly and distribution facilities
and sales offices in the United States and abroad.
AUTOMOTIVE: Aeroquip has executive and administrative offices in Maumee, Ohio
(leased); technical and administrative offices in Mt. Clemens, Michigan
(leased); and manufacturing facilities throughout the United States and
abroad, including plants in Atlanta, Georgia; Kendallville, Indiana;
Henderson, Kentucky; Clinton Township (leased), Mt. Clemens, Port Huron,
Spring Arbor and Sterling Heights, Michigan; Mooresville, North Carolina;
Fremont, Ohio; Livingston, Tennessee; Baden-Baden, Beienheim (leased) and
Frankfurt (leased), Germany; Chihuahua, Mexico; Alcala de Henares, Spain; and
Brierley Hill, United Kingdom. Aeroquip also owns or leases warehouse,
assembly and distribution facilities and sales offices in the United States
and abroad.
AEROSPACE & DEFENSE: Aeroquip Corporation has executive and administrative
offices in Maumee, Ohio (leased); administrative offices in Jackson, Michigan;
and manufacturing facilities throughout the United States and abroad,
including plants in Toccoa, Georgia; Jackson, Michigan; Middlesex, North
Carolina; Pau, France (leased); and Lakeside, United Kingdom (leased).
Aeroquip also owns or leases warehouse, assembly and distribution facilities
and sales offices in the United States and abroad.
Vickers, Incorporated has executive and administrative offices in
Maumee, Ohio (leased); and manufacturing facilities throughout the United
States and abroad, including plants in Los Angeles, California; Grand Rapids,
Michigan; Jackson, Mississippi; Hi-Nella, New Jersey; Glenolden, Pennsylvania;
Bad Homburg, Germany; and Bedhampton, United Kingdom. Vickers also owns or
leases warehouse, assembly and distribution facilities and sales offices in
the United States and abroad.
ITEM 3. Legal Proceedings.
As previously reported, on March 26, 1992, the United States
Environmental Protection Agency ("USEPA") issued an Administrative Order ("106
Order") under Section 106 of the Comprehensive Environmental Response,
Compensation, and Liability Act ("CERCLA") to TRINOVA's subsidiary, Aeroquip
Corporation ("Aeroquip"), and five other Potentially Responsible Parties
("PRPs") relative to the San Fernando Valley Burbank Operable Unit ("BOU"),
involving groundwater contamination. (Reference is made to Part II, Item 1,
of TRINOVA's Quarterly Report on Form 10-Q for the quarter ended June 30,
1994.) The 106 Order requires the six PRPs to design and construct a water
blending facility at a cost now estimated to be approximately $4.8 million.
TRINOVA's portion of any such cost is estimated to be 18.33 percent based on a
cost-sharing agreement among the six PRPs which was executed by TRINOVA on
July 6, 1992. Construction of the blending facility is expected to be
complete in March 1995.
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Also related to the BOU, on May 15, 1994, USEPA issued to Lockheed
Corporation ("Lockheed"), Aeroquip and other PRPs a Special Notice of
Liability under CERCLA for the remaining 18 years of operation and maintenance
(O&M) costs associated with the blending facility, as well as a water
treatment facility constructed by Lockheed under its BOU Consent Decree with
USEPA. The Special Notice of Liability also covers USEPA's past response
costs. The cost of the O&M phase is not known at this time; USEPA past costs
claimed against the PRPs are estimated at $12 million for the entire San
Fernando Site, which includes other operable units in addition to the BOU.
On April 26, 1994, Lockheed filed a complaint against Aeroquip and 105 other
PRPs seeking contribution toward costs Lockheed incurred to construct the
water treatment facility. Negotiations are under way among the PRPs and
Lockheed to arrive at an equitable and reasonable allocation with respect to
the BOU costs. Recovery by Lockheed, if any, against Aeroquip is not expected
to be significant.
As previously reported, on November 13, 1992, the USEPA, Region IX,
issued a General Notice of Liability letter to TRINOVA's subsidiary, Sterer
Engineering and Manufacturing Company, now known as the Fluid Control and
Actuation Division of Vickers, Incorporated ("Vickers"). (Reference is made
to Part I, Item 3, of TRINOVA's Annual Report on Form 10-K for the year ended
December 31, 1993.) The letter notified Vickers of potential liability, as
defined by Section 107(a) of CERCLA, that it may incur with respect to the San
Fernando Valley Glendale South Operable Unit, involving groundwater
contamination. The USEPA issued its Record of Decision ("ROD") on June 18,
1993. The interim remedy proposed in the ROD for both the North and South
Operable Units is projected by the USEPA to cost approximately $45 million.
Twenty-seven PRPs, including Vickers, entered into an Administrative Order on
Consent with the USEPA on March 21, 1994, to conduct the Remedial Design
("RD") phase of the interim remedy. The estimated cost of the RD phase is
$4.7 million. Vickers' portion of the RD costs is estimated to be 2.79
percent based on an interim allocation agreement among the PRPs.
As previously reported, on July 31, 1992, the Maine Department of
Environmental Protection issued an Administrative Enforcement Order to TRINOVA
and its wholly owned subsidiaries, Aeroquip Corporation and Sterling
Engineered Products Inc. ("Sterling"), as well as one other party, Pioneer
Plastics Corporation ("Pioneer Plastics"), (collectively the "respondents"),
pursuant to Title 38, section 1304(12) of the Maine Revised Statutes.
(Reference is made to Part I, Item 3, of TRINOVA's Annual Report on Form 10-K
for the year ended December 31, 1993.) The Order, which was issued without a
prior hearing, required the respondents to conduct a complete Phase II
environmental assessment of alleged soil and groundwater contamination at a
manufacturing site in Auburn, Maine, which was formerly owned by Sterling and
is now owned by Pioneer Plastics. The Order further required the respondents
to remediate any environmental contamination identified in the Phase II
assessment. On May 5, 1993, a Compliance Order on Consent ("COC") was
entered into by the State of Maine, Sterling and Pioneer Plastics. The COC
replaces and revokes the Order issued July 31, 1992. The COC requires
Sterling to conduct a site investigation and to develop and implement a
remedial work plan. The cost to Sterling to conduct the COC site
investigation and develop the remedial work plan is estimated to be
approximately $850,000. Sterling's remediation costs are undetermined at this
time because the remedial work plan has not been completed.
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TRINOVA and certain subsidiaries are defendants in various lawsuits.
While the ultimate outcome of these lawsuits and the above environmental
matters cannot now be predicted, management is of the opinion, based on the
facts now known to it, that the liability, if any, in these lawsuits (to the
extent not provided for by insurance or otherwise) and the above environmental
matters will not have a material adverse effect upon TRINOVA's consolidated
financial position.
ITEM 4. Submission of Matters to a Vote of Security Holders.
None.
EXECUTIVE OFFICERS OF THE REGISTRANT
The names, ages, positions and recent business experience of the
executive officers of TRINOVA as of February 21, 1995, are listed below.
Officers of TRINOVA are elected annually in April by the Board of Directors at
the organization meeting immediately following the annual meeting of
shareholders.
NAME AND POSITION AGE BUSINESS EXPERIENCE
Darryl F. Allen, 51 Chairman of the Board, President
Chairman of the Board, and Chief Executive Officer of
President and Chief TRINOVA since 1991. President and
Executive Officer Chief Executive Officer of
TRINOVA from 1986 to 1991.
William R. Ammann, 53 Vice President-Administration
Vice President-Administration and Treasurer of TRINOVA since
and Treasurer April 1992. Vice President -
Administration of TRINOVA from
1983 to April 1992.
Warren N. Bimblick 40 Vice President-Corporate
Vice President-Corporate Communications of TRINOVA since
Communications 1990. Director-Investor
Relations and Corporate
Communications of TRINOVA from
1985 to 1990.
James E. Kline, 53 Vice President & General Counsel
Vice President and of TRINOVA since 1989.
General Counsel
James McKee, 63 Executive Vice President of
Executive Vice President of TRINOVA since 1989 and President
TRINOVA and President of of Vickers, Incorporated since
Vickers, Incorporated 1987.
James M. Oathout, 50 Secretary and Associate General
Secretary and Counsel of TRINOVA since 1988.
Associate General Counsel
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NAME AND POSITION AGE BUSINESS EXPERIENCE
Gregory R. Papp, 48 Corporate Controller of TRINOVA
Corporate Controller since February 1993. Vice
President and Controller of
Aeroquip Corporation from July 1991
to February 1993. Vice President
Planning and Control - Automotive
Products Group of Aeroquip
Corporation from January 1991 to
July 1991. Group Controller -
Garrett Automotive Group of Allied-
Signal Corporation from 1987 to
1991.
David M. Risley, 50 Vice President - Finance and Chief
Vice President - Finance Financial Officer of TRINOVA since
and Chief Financial Officer October 1992. Group Vice President
- Administration and Control of
Aeroquip Corporation from 1991
to October 1992. Vice President
and Controller of Aeroquip
Corporation from 1990 to 1991.
Howard M. Selland, 51 Executive Vice President of
Executive Vice President of TRINOVA and President of Aeroquip
TRINOVA and President of Corporation since 1989.
Aeroquip Corporation
Philip G. Simonds, 54 Vice President-Taxation of TRINOVA
Vice President-Taxation since 1983.
There are no family relationships among the persons named above.
PART II
ITEM 5. Market for Registrant's Common Equity and Related Stockholder
Matters.
"Stock Exchanges," "Stock Ownership," "Dividend Information,"
"Quarterly Common Stock Information" and "Dividend Payments per Share of
Common Stock" on page 84 of Exhibit (13) filed hereunder are incorporated
herein by reference.
ITEM 6. Selected Financial Data.
"11-Year Summary of Selected Financial Data" on pages 49-51 of Exhibit
(13) filed hereunder is incorporated herein by reference.
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ITEM 7. Management's Discussion and Analysis of Financial Condition
and Results of Operation.
"Analysis of Operations" and "Liquidity, Working Capital and Capital
Investment" on pages 52-58 of Exhibit (13) filed hereunder are incorporated
herein by reference.
ITEM 8. Financial Statements and Supplementary Data.
"Quarterly Results of Operations (Unaudited)" and the consolidated
financial statements of the registrant and its subsidiaries on pages 59-83 of
Exhibit (13) filed hereunder are incorporated herein by reference.
ITEM 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
None.
PART III
ITEM 10. Directors and Officers of the Registrant.
"Election of Directors" and "Section 16(a) Reporting Delinquencies" on
pages 1-2 and 9, respectively, of the proxy statement for the annual meeting
to be held on April 20, 1995, are incorporated herein by reference.
Information regarding executive officers is set forth in Part I of this report
under the caption "Executive Officers of the Registrant."
ITEM 11. Executive Compensation.
"Compensation of Directors" and "Executive Compensation" (excluding
material under the captions "TRINOVA Stock Performance Graph" and "Board
Compensation Committee Report on Executive Compensation") on pages 3 and 5-9,
respectively, of the proxy statement for the annual meeting to be held on
April 20, 1995, are incorporated herein by reference.
ITEM 12. Security Ownership of Certain Beneficial Owners and Management.
"Security Ownership" on page 4 of the proxy statement for the annual
meeting to be held on April 20, 1995, is incorporated herein by reference.
ITEM 13. Certain Relationships and Related Transactions.
None.
PART IV
ITEM 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
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(a) The following documents are filed as a part of this report.
(1) The following consolidated financial statements of TRINOVA and
its subsidiaries, included on pages 61-83 of Exhibit (13) filed hereunder are
incorporated by reference in Item 8.
Report of Ernst & Young LLP, Independent Auditors
Statement of Income - Years ended December 31, 1994, 1993 and 1992
Statement of Financial Position - December 31, 1994 and 1993
Statement of Cash Flows - Years ended December 31, 1994, 1993 and 1992
Statement of Shareholders' Equity - Years ended December 31, 1994, 1993
and 1992
Notes to Financial Statements - December 31, 1994
(2) The following consolidated financial statement schedule of
TRINOVA and its subsidiaries is filed under Item 14(d):
SCHEDULE PAGE(S)
Schedule II - Valuation and qualifying accounts 17-19
All other schedules for which provision is made in the applicable accounting
regulations of the Securities and Exchange Commission are either not required
under the related instructions or are inapplicable, and therefore have been
omitted.
(3) The following exhibits are incorporated by reference hereunder,
and those exhibits marked with an asterisk (*) (together with those exhibits
so marked on page 13) are management contracts or compensatory plans or
arrangements required to be filed as exhibits pursuant to Item 14(c) of this
report:
EXHIBIT
NUMBER
(3)-1 Amended Code of Regulations (amended April 21, 1988), filed as
Exhibit (3) to Form SE filed on March 18, 1993
(3)-2 Amended Articles of Incorporation (amended January 26, 1989),
filed as Exhibit (3) to Form 10-K filed on March 18, 1994
(4)-1 First Supplemental Indenture, dated as of May 4, 1992, between
TRINOVA Corporation and NBD Bank, with respect to the issuance
of $75,000,000 aggregate principal amount of TRINOVA Corporation
7.95% Notes Due 1997, filed as Exhibit (4)-1 to Form SE filed on
May 6, 1992
(4)-2 7.95% Notes Due 1997, issued pursuant to the Indenture, dated as
of January 28, 1988, between TRINOVA Corporation and NBD Bank
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(formerly National Bank of Detroit), as supplemented by the
First Supplemental Indenture, dated as of May 4, 1992, between
TRINOVA Corporation and NBD Bank, filed as Exhibit (4)-2 to Form
SE filed on May 6, 1992
(4)-3 Officers' Certificate of TRINOVA Corporation, dated May 4, 1992,
pursuant to Section 2.01 of the Indenture, dated as of January
28, 1988, between TRINOVA Corporation and NBD Bank (formerly
National Bank of Detroit), as supplemented by the First
Supplemental Indenture, dated as of May 4, 1992, between TRINOVA
Corporation and NBD Bank, filed as Exhibit (4)-3 to Form SE
filed on May 6, 1992
(4)-4 Rights Agreement, dated January 26, 1989, between TRINOVA
Corporation and First Chicago Trust Company of New York filed as
Exhibit (2) to Form 8-A filed on January 27, 1989, as amended by
the First Amendment to Rights Agreement filed as Exhibit (5) to
Form 8 filed on July 1, 1992
(4)-5 Form of Share Certificate for Common Shares, $5 par value, of
TRINOVA Corporation, filed as Exhibit (4)-2 to Form SE filed on
July 1, 1992
(4)-6 Fiscal Agency Agreement, dated as of October 26, 1987, between
TRINOVA Corporation, as Issuer, and Bankers Trust Company, as
Fiscal Agent, with respect to $100,000,000 aggregate principal
amount of TRINOVA Corporation 6% Convertible Subordinated
Debentures Due 2002, filed as Exhibit (4)-1 to Form SE filed on
March 18, 1993
(4)-7 Indenture, dated as of January 28, 1988, between TRINOVA
Corporation and NBD Bank (formerly National Bank of Detroit),
with respect to the issuance of $50,000,000 aggregate principal
amount of TRINOVA Corporation 9.55% Senior Sinking Fund
Debentures Due 2018, and the issuance of $75,000,000 aggregate
principal amount of TRINOVA Corporation 7.95% Notes Due 1997,
filed as Exhibit (4)-2 to Form SE filed on March 18, 1993
*(10)-1 TRINOVA Corporation 1982 Stock Option Plan, filed as Exhibit
(10)-1 to Form SE filed on March 18, 1993
*(10)-2 TRINOVA Corporation 1984 Incentive Compensation Plan, filed as
Exhibit (10)-2 to Form SE filed on March 18, 1993
*(10)-3 TRINOVA Corporation 1987 Stock Option Plan, filed as Exhibit
(10)-3 to Form SE filed on March 18, 1993
*(10)-4 Change in Control Agreement for Officers, filed as Exhibit (10)-
4 to Form SE filed on March 18, 1993 (the Agreements executed by
the Company and various executive officers of the Company are
identical in all respects to the form of Agreement filed as an
Exhibit to Form SE except as to differences in the identity of
the officers and the dates of execution, and as to other
variations directly necessitated by said differences)
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*(10)-5 Change in Control Agreement for Non-officers, filed as Exhibit
(10)-5 to Form SE filed on March 18, 1993 (the Agreements
executed by the Company and various non-officer employees of the
Company are identical in all respects to the form of Agreement
filed as an Exhibit to Form SE except as to differences in the
identity of the employees and the dates of execution, and as to
other variations directly necessitated by said differences)
*(10)-6 TRINOVA Corporation 1994 Stock Incentive Plan, filed as Appendix
A to the proxy statement for the annual meeting held on April
21, 1994
*(10)-7 TRINOVA Corporation 1989 Non-Employee Directors' Equity Plan,
filed as Exhibit (10) to Form 10-K filed on March 18, 1994
(99(i))-1 TRINOVA Corporation Directors' Charitable Award Program, filed
as Exhibit (99(i)) to Form 10-K filed on March 18, 1994
(99(i))-2 Credit Agreement, dated as of August 31, 1994, among TRINOVA
Corporation (borrower) and The Bank of Tokyo Trust Company;
Chemical Bank; Citibank, N.A.; Dresdner Bank AG, New York and
Grand Cayman branches; The First National Bank of Chicago;
Morgan Guaranty Trust Company of New York; NBD Bank; and Union
Bank of Switzerland, Chicago branches (banks) and Citibank N.A.
(administrative agent)
The following exhibits are filed hereunder, and those exhibits
marked with an asterisk (*) (together with those so marked on pages 12-13) are
management contracts or compensatory plans or arrangements required to be
filed as exhibits pursuant to Item 14(c) of this report:
*(10)-8 TRINOVA Corporation Plan for Optional Deferment of Directors'
Fees (amended and restated effective April 1, 1995)
*(10)-9 TRINOVA Corporation Directors' Retirement Plan (amended and
restated effective January 1, 1990)
*(10)-10 TRINOVA Corporation Supplemental Benefit Plan (amended and
restated effective January 1, 1995)
*(10)-11 TRINOVA Corporation Voluntary Deferred Compensation Plan
(effective April 1, 1995)
(11) Statement re: Computation of Per Share Earnings
(13) Portions of the 1994 Annual Report to Security Holders (to the
extent incorporated by reference hereunder)
(21) Subsidiaries of the Registrant
(23)-1 Consent of Independent Auditors
(23)-2 Consent of Independent Auditors
(24) Powers of Attorney
(27) Financial Data Schedule
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(b) TRINOVA did not file any reports on Form 8-K during the fourth
quarter of 1994.
(c) The exhibits which are listed under Item 14(a)(3) are filed or
incorporated by reference hereunder.
(d) The financial statement schedule which is listed under Item 14(a)(2)
is filed hereunder.
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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.
TRINOVA CORPORATION (Registrant)
By: /S/ DARRYL F. ALLEN
Darryl F. Allen
Director, Chairman of the Board,
President and Chief Executive Officer
Date: March 20, 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/ DARRYL F. ALLEN
Darryl F. Allen 3/20/95
Director, Chairman of the (Date)
Board, President and Chief
Executive Officer
(Principal Executive Officer)
/S/ DAVID M. RISLEY
David M. Risley 3/20/95
Vice President - Finance (Date)
and Chief Financial Officer
(Principal Financial Officer)
/S/ GREGORY R. PAPP
Gregory R. Papp 3/20/95
Corporate Controller
(Principal Accounting Officer)
PURDY CRAWFORD*
Purdy Crawford* 3/20/95
Director (Date)
<PAGE>
-16-
DELMONT A. DAVIS*
Delmont A. Davis* 3/20/95
Director (Date)
JOSEPH C. FARRELL*
Joseph C. Farrell* 3/20/95
Director (Date)
DAVID R. GOODE*
David R. Goode* 3/20/95
Director (Date)
PAUL A. ORMOND*
Paul A. Ormond* 3/20/95
Director (Date)
JOHN P. REILLY*
John P. Reilly* 3/20/95
Director (Date)
ROBERT H. SPILMAN*
Robert H. Spilman* 3/20/95
Director (Date)
WILLIAM R. TIMKEN, JR.*
William R. Timken, Jr.* 3/20/95
Director (Date)
*By James E. Kline, Attorney-in-fact
/S/ JAMES E. KLINE
James E. Kline 3/20/95
Vice President and General Counsel (Date)
<PAGE>
-17-
<TABLE>
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
TRINOVA CORPORATION
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
COL. A COL. B COL. C COL. D COL. E
- -----------------------------------------------------------------------------------------------------------------------
ADDITIONS
Balance at (1) (2) Balance
DESCRIPTION Beginning Charged to Costs Charged to Other Deductions at End of
of Period and Expenses Accounts-Describe Describe Period
- -----------------------------------------------------------------------------------------------------------------------
(In Thousands)
<S> <C> <C> <C> <C <C>
YEAR ENDED DECEMBER 31, 1994
Deducted from asset accounts:
Allowance for doubtful accounts $ 13,537 $ 2,384 $ - $ 742 -A $ 15,179
Deferred tax valuation allowance 29,962 (2,082) - (1,653)-B 29,533
<FN>
Note A - Doubtful accounts charged off and currency translation adjustments
Note B - Currency translation adjustments
</FN>
</TABLE>
<PAGE>
-18-
<TABLE>
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
TRINOVA CORPORATION
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
COL. A COL. B COL. C COL. D COL. E
- -----------------------------------------------------------------------------------------------------------------------
ADDITIONS
Balance at (1) (2) Balance
DESCRIPTION Beginning Charged to Costs Charged to Other Deductions at End of
of Period and Expenses Accounts-Describe Describe Period
- -----------------------------------------------------------------------------------------------------------------------
(In Thousands)
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1993
Deducted from asset accounts:
Allowance for doubtful accounts $ 13,705 $ 3,318 $ - $ 3,486 -A $ 13,537
Deferred tax valuation allowance 30,441 2,283 - 2,762 -B 29,962
<FN>
Note A - Doubtful accounts charged off and currency translation adjustments
Note B - Currency translation adjustments
</FN>
</TABLE>
<PAGE>
-19-
<TABLE>
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
TRINOVA CORPORATION
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
COL. A COL. B COL. C COL. D COL. E
- -----------------------------------------------------------------------------------------------------------------------
ADDITIONS
Balance at (1) (2) Balance
DESCRIPTION Beginning Charged to Costs Charged to Other Deductions at End of
of Period and Expenses Accounts-Describe Describe Period
- -----------------------------------------------------------------------------------------------------------------------
(In Thousands)
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1992
Deducted from asset accounts:
Allowance for doubtful accounts $ 13,821 $ 3,628 $ - $ 3,744 -A $ 13,705
Deferred tax valuation allowance 29,012 -B 1,429 - - 30,441
<FN>
Note A - Doubtful accounts charged off and currency translation adjustments
Note B - Valuation allowance recorded effective January 1, 1992 in accordance
with adoption of Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes"
</FN>
</TABLE>
-20-
EXHIBIT INDEX
EXHIBIT PAGE(S)
(3)-1 Amended Code of Regulations (amended April 21, Incorporated
1988), filed as Exhibit (3) to Form SE filed by Reference
on March 18, 1993
(3)-2 Amended Articles of Incorporation (amended Incorporated
January 26, 1989), filed as Exhibit (3) to by Reference
Form 10-K filed on March 18, 1994
(4)-1 First Supplemental Indenture, dated as of May 4, Incorporated
1992, between TRINOVA Corporation and NBD Bank, by Reference
with respect to the issuance of $75,000,000
aggregate principal amount of TRINOVA Corporation
7.95% Notes Due 1997, filed as Exhibit (4)-1 to
Form SE filed on May 6, 1992
(4)-2 7.95% Notes Due 1997, issued pursuant to the Incorporated
Indenture, dated as of January 28, 1988, between by Reference
TRINOVA Corporation and NBD Bank (formerly
National Bank of Detroit), as supplemented by the
First Supplemental Indenture, dated as of May 4,
1992, between TRINOVA Corporation and NBD Bank,
filed as Exhibit (4)-2 to Form SE filed on
May 6, 1992
(4)-3 Officers' Certificate of TRINOVA Corporation, Incorporated
dated May 4, 1992, pursuant to Section 2.01 of by Reference
the Indenture, dated as of January 28, 1988,
between TRINOVA Corporation and NBD Bank
(formerly National Bank of Detroit), as
supplemented by the First Supplemental Indenture,
dated as of May 4, 1992, between TRINOVA
Corporation and NBD Bank, filed as Exhibit
(4)-3 to Form SE filed on May 6, 1992
(4)-4 Rights Agreement, dated January 26, 1989, between Incorporated
TRINOVA Corporation and First Chicago Trust by Reference
Company of New York filed as Exhibit (2) to Form
8-A filed on January 27, 1989, as amended by the
First Amendment to Rights Agreement filed as
Exhibit (5) to Form 8 filed on July 1, 1992
(4)-5 Form of Share Certificate for Common Shares, $5 Incorporated
par value, of TRINOVA Corporation, filed as by Reference
Exhibit (4)-2 to Form SE filed on July 1, 1992
(4)-6 Fiscal Agency Agreement, dated as of October 26, Incorporated
1987, between TRINOVA Corporation, as Issuer, by Reference
and Bankers Trust Company, as Fiscal Agent,
with respect to $100,000,000 aggregate principal
amount of TRINOVA Corporation 6% Convertible
Subordinated Debentures Due 2002, filed as
Exhibit (4)-1 to Form SE filed on March 18, 1993
<PAGE>
-21-
(4)-7 Indenture, dated as of January 28, 1988, between Incorporated
TRINOVA Corporation and NBD Bank (formerly by Reference
National Bank of Detroit), with respect to the
issuance of $50,000,000 aggregate principal
amount of TRINOVA Corporation 9.55% Senior Sinking
Fund Debentures Due 2018, and the issuance of
$75,000,000 aggregate principal amount of TRINOVA
Corporation 7.95% Notes Due 1997, filed as Exhibit
(4)-2 to Form SE filed on March 18, 1993
(10)-1 TRINOVA Corporation 1982 Stock Option Plan, Incorporated
filed as Exhibit (10)-1 to Form SE filed on by Reference
March 18, 1993
(10)-2 TRINOVA Corporation 1984 Incentive Compensation Incorporated
Plan, filed as Exhibit (10)-2 to Form SE filed by Reference
on March 18, 1993
(10)-3 TRINOVA Corporation 1987 Stock Option Plan, Incorporated
filed as Exhibit (10)-3 to Form SE filed on by Reference
March 18, 1993
(10)-4 Change in Control Agreement for Officers, Incorporated
filed as Exhibit (10)-4 to Form SE filed on by Reference
March 18, 1993 (the Agreements executed by the
Company and various executive officers of the
Company are identical in all respects to the
form of Agreement filed as an Exhibit to Form SE
except as to differences in the identity of the
officers and the dates of execution, and as to
other variations directly necessitated by said
differences)
(10)-5 Change in Control Agreement for Non-officers, Incorporated
filed as Exhibit (10)-5 to Form SE filed on by Reference
March 18, 1993 (the Agreements executed by the
Company and various non-officer employees of
the Company are identical in all respects to
the form of Agreement filed as an Exhibit to
Form SE except as to differences in the identity
of the employees and the dates of execution, and
as to other variations directly necessitated by
said differences)
(10)-6 TRINOVA Corporation 1994 Stock Incentive Plan, Incorporated
filed as Appendix A to the proxy statement for by Reference
the annual meeting held on April 21, 1994
(10)-7 TRINOVA Corporation 1989 Non-Employee Directors' Incorporated
Equity Plan, filed as Exhibit (10) to Form 10-K by Reference
filed on March 18, 1994
(10)-8 TRINOVA Corporation Plan for Optional Deferment of 23-31
Directors' Fees (amended and restated effective
April 1, 1995)
<PAGE>
-22-
(10)-9 TRINOVA Corporation Directors' Retirement Plan 32-35
(amended and restated effective January 1, 1990)
(10)-10 TRINOVA Corporation Supplemental Benefit Plan 36-41
(amended and restated effective January 1, 1995)
(10)-11 TRINOVA Corporation Voluntary Deferred Compensation 42-47
Plan (effective April 1, 1995)
(11) Statement re Computation of Per Share Earnings 48
(13) Portions of the 1994 Annual Report to Security 49-84
Holders (to the extent incorporated by reference
hereunder)
(21) Subsidiaries of the Registrant 85
(23)-1 Consent of Independent Auditors 86
(23)-2 Consent of Independent Auditors 87
(24) Powers of Attorney 88-95
(27) Financial Data Schedule 96
(99(i))-1 TRINOVA Corporation Directors' Charitable Award Incorporated
Program, filed as Exhibit (99(i)) to Form 10-K by Reference
filed on March 18, 1994
(99(i))-2 Credit Agreement, dated as of August 31, 1994, Incorporated
among TRINOVA Corporation (borrower) and The Bank by Reference
of Tokyo Trust Company; Chemical Bank; Citibank,
N.A.; Dresdner Bank AG, New York and Grand Cayman
branches; The First National Bank of Chicago;
Morgan Guaranty Trust Company of New York; NBD
Bank; and Union Bank of Switzerland, Chicago
branches (banks) and Citibank N.A. (administrative
agent)
-23-
EXHIBIT (10)-8
TRINOVA CORPORATION PLAN FOR
OPTIONAL DEFERMENT OF DIRECTORS' FEES
(As Amended and Restated Effective April 1, 1995)
TRINOVA Corporation ("Company") hereby restates the TRINOVA
Corporation Plan for Optional Deferment of Directors' Fees ("Plan"). The
purpose of the Plan is to allow directors of the Company to defer payment of
certain fees and retirement benefits. The effective date of this amendment
and restatement of the Plan is April 1, 1995.
ARTICLE I.
DEFINITIONS
For the purposes of the Plan, the following words and phrases
shall have the meanings indicated:
1.1 "Beneficial Owner" of Voting Stock shall mean any Person who
would be deemed to beneficially own such Voting Stock within the meaning of
Rule 13d-3 promulgated under the Exchange Act, or any successor rules or
regulations thereto.
1.2 "Beneficiary" means the person or persons designated or deemed
to be designated by the Participant pursuant to Article VII to receive
benefits payable under the Plan in the event of the Participant's death.
1.3 "Board of Directors" means the Board of Directors of the
Company.
1.4 A "Change of Control" shall have occurred for purposes of the
Plan if any of the following events shall occur:
(a) The Company is merged, consolidated or reorganized
into or with another corporation or other legal person, and as a result
of such merger, consolidation or reorganization less than a majority of
the combined voting power of the then-outstanding securities of such
corporation or person immediately after such transaction are held in the
aggregate by the holders of Voting Stock immediately prior to such
transaction;
(b) If the Company sells all or substantially all of its
assets to any other corporation or other legal person, less than a
majority of the combined voting power of the then-outstanding securities
of such corporation or person immediately after such transaction are
held in the aggregate by the holders of Voting Stock immediately prior
to such sale;
(c) There is a report filed on Schedule 13D or Schedule
14D-1 (or any successor schedule, form or report), each as promulgated
pursuant to the Exchange Act, disclosing that any Person has become the
Beneficial Owner of 20 percent or more of the Voting Stock;
(d) The Company files a report or proxy statement with the
Securities and Exchange Commission pursuant to the Exchange Act
disclosing in response to Form 8-K or Schedule 14A (or any successor
<PAGE>
-24-
schedule, form or report or item therein) that a change in control of
the Company has or may have occurred or will or may occur in the future
pursuant to any then-existing contract or transaction; or
(e) If during any period of two consecutive years,
individuals who at the beginning of any such period constitute the
directors of the Company cease for any reason to constitute at least a
majority thereof, unless the election, or the nomination for election by
the Company's shareholders, of each director of the Company first
elected during such period was approved by a vote of at least two-thirds
of the directors of the Company then still in office who were directors
of the Company at the beginning of any such period.
Notwithstanding the foregoing provisions of subparagraph (iii) or subparagraph
(iv) hereof, a "Change in Control" shall not be deemed to have occurred for
purposes hereof solely because (i) the Company, (ii) an entity in which the
Company directly or indirectly beneficially owns 50 percent or more of the
voting securities, or (iii) any Company-sponsored employee stock ownership
plan or any other employee benefit plan of the Company, either files or
becomes obligated to file a report or a proxy statement under or in response
to Schedule 13D, Schedule 14D-1, Form 8-K or Schedule 14A (or any successor
schedule, form or report or item therein) under the Exchange Act, disclosing
beneficial ownership by it of shares of Voting Stock, whether in excess of 20
percent or otherwise, or because the Company reports that a change in control
of the Company has or may have occurred or will or may occur in the future by
reason of such beneficial ownership.
1.5 "Committee" means the Organization and Compensation Committee
of the Board of Directors.
1.6 "Deferred Benefit" means the benefit payable to a Participant
or his or her Beneficiary pursuant to the Plan.
1.7 "Deferred Benefit Account" means the account maintained on the
books of the Company for each Participant pursuant to the Plan.
1.8 "Deferred Fees" means any Fee deferred pursuant to Section 3.1.
1.9 "Deferred Retirement Benefit" means any Retirement Benefit
deferred pursuant to the Plan.
1.10 "Determination Date" means each March 31, June 30, September 30
and December 31, and shall also include the date of any Change in Control.
1.11 "Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time.
1.12 "Fee" or "Fees" means any compensation other than Retirement
Benefits payable in cash to a director for his or her services as a member of
the Board of Directors or any committee thereof.
1.13 "Participant" means any eligible director who elects to
participate by filing a deferral election as provided in Section 2.2 hereof
and includes each director who is participating in the Plan on April 1, 1995.
<PAGE>
-25-
1.14 "Person" shall mean any "person" as the term "person" is used
and defined in Section 14(d)(2) of the Exchange Act, and any "affiliate" or
"associate" of any such person, as the terms "affiliate" and "associate" are
defined in Rule 12b-2 of the General Rules and Regulations under the Exchange
Act as in effect on April 1, 1995.
1.15 "Plan Year" means a 12-month period commencing January l and
ending the following December 31.
1.16 "Retirement Benefits" means any payments to directors of the
Company made pursuant to the TRINOVA Corporation Directors' Retirement Plan.
1.17 "Stock Unit" means an accounting unit equal in value to one of
the Company's common shares. The number of Stock Units and fractions thereof
included in any Deferred Benefit Account shall be adjusted as appropriate to
reflect any stock dividend, stock split, recapitalization, merger or other
similar event affecting the Company's common shares.
1.18 "Trust" shall mean the grantor trust maintained pursuant to the
Trust Agreement for the TRINOVA Corporation Directors' Retirement Plan and
Plan for Optional Deferment of Directors' Fees.
1.19 "Voting Stock" shall mean all outstanding securities of the
Company entitled to vote generally in the election of directors of the Company
at the time in question.
ARTICLE II
ELIGIBILITY AND PARTICIPATION
2.1 Eligibility. Each person who is a member of the Board of
Directors of the Company shall be eligible to participate in the Plan. No
director who has terminated his or her participation pursuant to Section 2.3
hereof shall be eligible to elect to participate in the Plan again.
2.2 Participation. Participation in the Plan shall be limited to
eligible directors who elect to participate in the Plan by filing a deferral
election (in form suitable to the Committee) with the Secretary of the
Company. A properly completed and executed deferral election must be filed
prior to the first day of the month in which the Participant's participation
in the Plan will commence, and the election to participate shall be effective
on the first day of the month following the month in which the election was
received by the Secretary of the Company; provided, however, that any eligible
director may elect to commence participation in the Plan on April 1, 1995 by
filing a deferral election with the Secretary prior to such date. In the
event that a director first becomes eligible to participate in the Plan during
the course of a Plan Year and on or after April 1, 1995, his or her election
must be filed no later than 30 days after election or appointment to the Board
of Directors, and such election shall be effective only with regard to Fees
earned or payable after the filing of the election. Notwithstanding the
foregoing provisions of this Section 2.2, any election to defer Retirement
Benefits shall be made at least one year prior to the date such Retirement
Benefits will become payable to the Participant.
2.3 Termination of Participation. A Participant may elect to
terminate his or her participation in the Plan by filing a written notice
thereof with the Secretary of the Company, which termination shall be
<PAGE>
-26-
effective at any time specified by the Participant in the notice, but not
earlier than the first day of the Plan Year immediately succeeding the Plan
Year in which such notice is filed with the Secretary of the Company. Amounts
credited to such Participant's Deferred Benefit Account with respect to
periods prior to the effective date of such termination shall continue to be
payable pursuant to, and otherwise governed by, the terms of the Plan.
ARTICLE III.
DEFERRAL OF FEES AND RETIREMENT BENEFITS
3.1 Deferral of Fees. A Participant may elect to defer all, or a
specified percentage, of his or her Fees, and a Participant may elect to have
his or her deferred Fees credited to his Deferred Benefit Account either in
dollar amounts or Stock Units. A Participant shall not be permitted to change
the percentage of his or her Fees to be deferred, or the form in which such
Deferred Fees are to be credited. Any Participant who was a Participant prior
to April 1, 1995 may notify the Secretary in writing prior to such date that
he or she wishes to have a specified percentage of his or her Deferred Fees
invested in Stock Units, and in the absence of such notification all his or
her Deferred Fees shall continue to be invested in dollar amounts.
3.2 Deferral of Retirement Benefits. A Participant may elect to
defer all, or a specified percentage, of his or her Retirement Benefits, and a
Participant may elect to have his or her Deferred Retirement Benefits credited
to his Deferred Benefit Account either in dollar amounts or Stock Units. A
Participant shall not be permitted to change the percentage of his or her
Retirement Benefits to be deferred, or the form in which such Deferred
Retirement Benefits are to be credited. Any Participant who was a Participant
prior to April 1, 1995 may notify the Secretary in writing prior to such date
that he or she wishes to have a specified percentage of his or her Deferred
Retirement Benefits invested in Stock Units, and in the absence of such
notification all his or her Deferred Retirement Benefits shall continue to be
invested in dollar amounts.
3.3 Crediting of Deferred Fees and/or Deferred Retirement Benefits.
In his or her deferral election, each Participant shall specify the percentage
of his or her Deferred Fees and/or Deferred Retirement Benefits that shall be
deemed to be invested in dollar amounts and the percentage that shall be
deemed to be invested in Stock Units. Such election may not be changed. Such
Deferred Fees and/or Deferred Retirement Benefits shall be credited to the
Participant's Deferred Benefit Account as of the date such amounts would
otherwise have been paid to the Participant in the absence of the deferral
election. The number of Stock Units to be so credited to the Participant's
Deferred Benefit Account shall be determined on the basis of the closing price
of the Company's common shares on the date so credited or, if such date is not
a trading day, on the next preceding trading day.
ARTICLE IV.
DEFERRED BENEFIT ACCOUNT
4.1 Determination of Account. On any particular date, a
Participant's Deferred Benefit Account shall consist of the aggregate amount
of dollars and Stock Units credited thereto pursuant to Sections 3.1 and 3.2
hereof, plus any interest credited pursuant to Section 4.2 hereof, plus any
dividend equivalents credited pursuant to Section 4.3 hereof.
<PAGE>
-27-
4.2 Crediting of Interest. As of each Determination Date, each
Deferred Benefit Account to which Fees and/or Retirement Benefits have been
credited in dollar amounts shall be increased by the amount of interest earned
since the immediately preceding Determination Date. The interest rate used to
credit the Participants' Deferred Benefit Accounts shall be equal to two
percentage points in excess of the Moody's Corporate Bond Yield Average
determined as of the Determination Date, or such other interest rate, subject
to Article IX hereof, as may be established by the Committee for such purpose.
Interest shall be credited at such rate as of each Determination Date based on
the balance of each Participant's Deferred Benefit Account. Interest for the
period prior to the first Determination Date applicable to a Deferred Benefit
Account shall be prorated. Until a Participant or his or her Beneficiary
receives his or her entire Deferred Benefit Account, the unpaid balance
thereof credited in dollar amounts shall bear interest as provided in this
Section 4.2.
4.3 Crediting of Dividend Equivalents. Each Deferred Benefit
Account to which Fees and/or Retirement Benefits have been credited in Stock
Units shall be credited with additional Stock Units equal in value to the
amount of cash dividends paid by the Company on amounts of the Company's
common shares equivalent to the number of Stock Units in such Deferred Benefit
Account as of the date when each such dividend is paid. Such dividend
equivalents shall be valued on the basis of the closing market price of the
Company's common shares on the date so credited, or if such date is not a
trading day, on the next preceding trading day. Until a Participant or his or
her Beneficiary receives his or her entire Deferred Benefit Account, the
unpaid balance thereof credited in Stock Units shall earn dividend equivalents
as provided in this Section 4.3.
4.4 Statements of Account. The Committee shall provide to each
Participant a quarterly statement setting forth the balance of such
Participant's Deferred Benefit Account as of each Determination Date.
4.5 Vesting of Deferred Benefit Account. A Participant shall be
100% vested in his or her Deferred Benefit Account at all times.
ARTICLE V.
TRUST FOR DEFERRED BENEFITS
5.1 Establishment of Trust. The Company has established the Trust,
to which the Company may, at the sole discretion of its Board of Directors,
make contributions for the purpose of satisfying all or a portion of the
Company's obligations under the Plan. Any benefits paid from the Trust to a
Participant or beneficiary shall reduce the amount of the benefits payable
hereunder by the Company from its general corporate assets.
5.2 Contributions to the Trust. Notwithstanding any provision
herein to the contrary, the Company shall contribute to the Trust that amount
calculated pursuant to Section 5.3 hereof within ten days after a Change in
Control.
5.3 Amount of Contributions. The amount to be contributed to the
Trust in the event of the occurrence of a Change in Control shall be the value
of all Participants' Deferred Benefit Accounts in the Plan as of the date the
Change in Control occurs.
<PAGE>
-28-
ARTICLE VI.
PAYMENT OF BENEFITS
6.1 Time of Payments. Except as provided in Section 8.5 hereof, as
soon as practicable, but not more than 30 days after the earlier of (i)
termination of service of the Participant as a director of the Company for
reasons other than his or her death (or any different payment date that the
Participant may have elected at the time of deferral), and (ii) the death of a
Participant, the Company shall pay to the Participant or his Beneficiary, as
the case may be, a Deferral Benefit equal to the balance of his or her
Deferred Benefit Account.
6.2 Form of Payment. The Deferred Benefit payable pursuant to
Section 6.1 hereof shall be paid in cash in one of the following forms, as
elected by the Participant in his or her deferral election:
(a) Equal annual installments over a period of five years
(together, in the case of deferred compensation credited in dollar
amounts, with interest thereon credited after the payment commencement
date pursuant to Section 4.2 hereof and, in the case of deferred
compensation credited in Stock Units, with any cash dividends credited
after the payment commencement date pursuant to Section 4.3 hereof); or
(b) Equal annual installments over a period of ten years
(together, in the case of deferred compensation credited in dollar
amounts, with interest thereon credited after the payment commencement
date pursuant to Section 4.2 hereof and, in the case of deferred
compensation credited in units, with any cash dividends credited after
the payment commencement date pursuant to Section 4.3 hereof); or
(c) A lump sum.
For the purposes of this Section 6.2, each distribution from Deferred Benefit
Accounts including Stock Units shall be valued on the basis of the closing
market price of the Company's common shares on the last trading date prior to
the date payment of such distribution is made.
6.3 Payments from Trust. Except as otherwise provided herein or in
the instrument pursuant to which the Trust is maintained, payments pursuant to
the Plan shall be made directly from the Trust to Participants and
Beneficiaries to the extent that assets are available in the Trust for such
purpose.
ARTICLE VII.
BENEFICIARY DESIGNATION
7.1 Beneficiary Designation. Each Participant shall have the
right, at any time, to designate any person or persons as his or her
Beneficiary to whom payment under the Plan shall be made in the event of his
or her death prior to complete distribution to the Participant of his or her
Deferral Benefit. Any Beneficiary designation shall be made in a written
instrument filed with the Secretary of the Company and shall be effective only
when received in writing by the Secretary.
<PAGE>
-29-
7.2 Amendments. Any Beneficiary designation may be changed by a
Participant by the filing of a new Beneficiary designation, which will cancel
all Beneficiary designations previously filed.
7.3 No Designation. If a Participant fails to designate a
Beneficiary as provided above, or if all designated Beneficiaries predecease
the Participant, then the Participant's designated Beneficiary shall be deemed
to be the Participant's estate.
7.4 Effect of Payment. Payment to a Participant's Beneficiary (or,
upon the death of a Beneficiary, to his or her estate) shall completely
discharge the Company's obligations under the Plan and Trust.
ARTICLE VIII.
ADMINISTRATION
8.1 Committee; Duties. The Committee shall supervise the
administration of the Plan, may from time to time adopt procedures governing
the Plan and shall have authority to give interpretive rulings with respect to
the Plan.
8.2 Agents. The Committee may appoint an individual, who may be an
employee of the Company, to be the Committee's agent with respect to the day-
to-day administration of the Plan. In addition, the Committee may, from time
to time, employ other agents and delegate to them such administrative duties
as it sees fit, and may from time to time consult with counsel who may be
counsel to the Company.
8.3 Binding Effect of Decisions. Any decision or action of the
Committee with respect to any question arising out of or in connection with
the administration, interpretation and application of the Plan shall be final
and binding upon all persons having any interest in the Plan.
8.4 Indemnity of Committee. The Company shall indemnify the
members of the Committee against claims, loss, damage, expense and liability
arising from any action or failure to act with respect to the Plan to the
extent provided in the Regulations of the Company and any applicable
indemnification agreement between the Company and such member.
8.5 Payment of Benefits in the Event of Disability. If a former
Participant who is receiving (or is eligible to begin receiving) benefits has
a mental or physical condition which the Committee, in its sole discretion
based on medical evidence it deems acceptable, determines will prevent such
person from satisfactorily managing his or her personal financial affairs,
such Committee may direct any and all of the benefits to which the former
Participant may be entitled to be paid in any one or more of the following
ways:
(a) to the former Participant,
(b) to the former Participant's legal guardian or
conservator,
(c) to the former Participant's spouse, or
(d) to any other individual or entity to be expended for
the benefit of the former Participant.
<PAGE>
-30-
ARTICLE IX.
AMENDMENT AND TERMINATION OF PLAN
The Board of Directors may at any time amend, suspend,
terminate or reinstate any or all of the provisions of the Plan, except that
no such amendment, suspension or termination may adversely affect any
Participant's Deferred Benefit Account as it existed as of the effective date
of such amendment, suspension or termination without such Participant's
consent. The Committee may, pursuant to Section 4.2 hereof, change the basis
for determining the rate of interest on amounts credited in dollar amounts to
Participants' Deferred Benefit Accounts, but in no event shall any such change
adversely affect any Participant's Deferred Benefit Account as it existed as
of the effective date of such change without such Participant's consent.
ARTICLE X.
MISCELLANEOUS
10.1 Unfunded Arrangement. Neither Participants, nor their
Beneficiaries, nor their heirs, successors or assigns, shall have any secured
interest or claim in any property or assets of the Company. The Company's
obligation under the Plan shall be merely that of an unfunded and unsecured
promise of the Company to pay money in the future. Although the Company has
created the Trust to hold funds to be used in payment of the Company's
obligations under the Plan, and may fund such trust, any funds contained
therein shall remain liable for the claims of the Company's general creditors.
10.2 Non-assignability. No right or interest under the Plan of a
Participant or his or her Beneficiary (or any person claiming through or under
any of them), other than the surviving spouse of any deceased Participant,
shall be assignable or transferable in any manner or be subject to alienation,
anticipation, sale, pledge, encumbrance or other legal process or in any
manner be liable for or subject to the debts or liabilities of any such
Participant or Beneficiary. If any Participant or Beneficiary (other than the
surviving spouse of any deceased Participant) shall attempt to or shall
transfer, assign, alienate, anticipate, sell, pledge or otherwise encumber his
or her benefits hereunder or any part thereof, or if by reason of his or her
bankruptcy or other event happening at any time such benefits would devolve
upon anyone else or would not be enjoyed by him or her, then the Committee, in
its discretion, may terminate his or her interest in any such benefit to the
extent the Committee considers necessary or advisable to prevent or limit the
effects of such occurrence. Termination shall be effected by filing a written
"termination declarations" with the Secretary of the Company and making
reasonable efforts to deliver a copy to the Participant or Beneficiary whose
interest is adversely affected (the "Terminated Participant").
As long as the Terminated Participant is alive, any benefits
affected by the termination shall be retained by the Company and, in the
Committee's sole and absolute judgment, may be paid to or expended for the
benefit of the Terminated Participant, his or her spouse, his or her children
or any other person or persons in fact dependent upon him or her in such a
manner as the Committee shall deem proper. Upon the death of the Terminated
Participant, all benefits withheld from him or her and not paid to others in
accordance with the preceding sentence shall be disposed of according to the
provisions of the Plan that would apply if he or she died prior to the time
that all benefits to which he or she was entitled were paid to him or her.
<PAGE>
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10.3 Tax Effect. This Plan is intended to be treated as an unfunded
deferred compensation plan under the Internal Revenue Code. It is the
intention of the Company that the amounts by which directors have elected to
defer pursuant to this Plan shall not be included in the gross income of the
directors or their beneficiaries until such time as the amounts credited to
directors' Deferred Benefit Accounts hereunder are distributed from the Plan.
If, at any time, it is determined by the Company that amounts attributable to
directors' deferral elections or Deferred Benefit Accounts are includible in
the gross income of the directors or their beneficiaries before distribution
pursuant to Article VI hereof, all amounts credited to directors' Deferred
Benefit Accounts shall be immediately distributed to the respective directors
or, in the case of deceased directors, their Beneficiaries. Distributions
described in the preceding sentence shall be made by the Company or, if the
Trust has been funded pursuant to Article V hereof, from the Trust if the
Company is not insolvent at the time for such distribution and to the extent
such funds are sufficient to satisfy the amount payable to the Participant
under this Plan.
10.4 Section 16 of the Exchange Act and Rule 16b-3. For purposes of
Section 16 of the Exchange Act, this Plan is intended to satisfy the exclusion
from the definition of "derivative security" provided for certain cash-only
securities in Rule 16a-1(c)(3) as in effect on and after May 1, 1991. If at
any time Rule 16b-3 as in effect on and after May 1, 1991 or at any later date
shall become applicable to the Plan, the Committee may make such changes in
the terms or operation of the Plan as may then appear necessary or appropriate
for purposes of such Rule, including, without limitation, by eliminating any
restriction originally included in the Plan for purposes of Rule 16b-3, as in
effect prior to such date, that may no longer be required.
10.5 Captions. The captions contained herein are for convenience
only and shall not control or affect the meaning or construction hereof.
10.6 Governing Law. The provisions of the Plan shall be construed
and interpreted according to the internal substantive laws of the State of
Ohio.
10.7 Successors. The provisions of the Plan shall bind and inure to
the benefit of the Company and its successors and assigns. The term
successors as used herein shall include any corporate or other business entity
which shall, whether by merger, consolidation, purchase or otherwise, acquire
all or substantially all of the business and assets of the Company and
successors of any such corporation or other business entity.
10.8 No Right to Continued Service. Nothing contained herein shall
be construed to confer upon any director the right to continue to serve as a
director of the Company or in any other capacity.
The foregoing has been approved by and is being executed on
behalf of TRINOVA Corporation effective as of April 1, 1995.
TRINOVA CORPORATION
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EXHIBIT (10)-9
TRINOVA CORPORATION
DIRECTORS' RETIREMENT PLAN
Effective: January 1, 1985
Restatement Date: January 1, 1990
1. TRINOVA Corporation ("Company," formerly known, however, as
Libbey-Owens-Ford Company) hereby restates the Libbey-Owens-Ford Company
Amended Directors' Retirement Plan as the TRINOVA Corporation Directors'
Retirement Plan ("Plan"). The purpose of the Plan is to recognize the
valuable services provided and to be provided by its current and future
nonofficer directors, as well as to assist the Company in attracting and
retaining qualified persons to serve on its Board of Directors. The effective
date of the restatement of the Plan is January 1, 1990.
2. Each person ("Participant") who has served on the Board of
Directors of the Company on or after January 1, 1990, and who is not an
officer of the Company, shall participate in the restated Plan.
3. Benefits shall be payable under the Plan to each Participant
who has retired from the Board of Directors in accordance with article 9 of
the Company's by-laws or who has, with the concurrence of the Board of
Directors, resigned for health or other reasons beyond such person's control.
Such benefits shall be payable monthly, commencing on the first day of the
month following such Participant's retirement (or resignation, as provided
herein) from the Board of Directors and ending with the payment for the month
in which such Participant's death occurs, provided, however, that in no event
shall the aggregate number of payments exceed the lesser of 120 or the number
of months such Participant served as a nonofficer director of the Company.
The amount of each monthly payment shall be equal to 1/12 of the annual
retainer then in effect payable to the director by the Company for such
Participant's services as a member of the Board of Directors (including the
current committee chairman's fee for a director who has at any time served as
a committee chairman, but excluding any meeting fees and any fees solely
attributable to professional or other consulting services furnished to the
Company independently of service as a director). Such benefit payments shall
be made from those assets which are subject to the claims of general
creditors, subject, however, to the provisions of paragraph 4 hereof.
4. The Company shall establish an irrevocable grantor trust
("Rabbi Trust") to which the Company may, at the sole discretion of its Board
of Directors, make contributions for the purpose of satisfying all or a
portion of the Company's obligations under the Plan. Any benefits paid from
such Rabbi Trust to a Participant shall reduce the amount of the benefits
payable hereunder by the Company from its general corporate assets.
Furthermore, and notwithstanding any provision herein to the
contrary, the Company shall contribute to the Rabbi Trust that aggregate
amount calculated pursuant to paragraph 5 hereof within ten days of a Change
in Control.
<PAGE>
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A "Change in Control" shall have occurred for purposes of the Plan
if any of the following events shall occur:
(i) The Company is merged, consolidated or reorganized into or
with another corporation or other legal person, and as a result of such
merger, consolidation or reorganization less than a majority of the
combined voting power of the then-outstanding securities of such
corporation or person immediately after such transaction are held in the
aggregate by the holders of Voting Stock immediately prior to such
transaction;
(ii) If the Company sells all or substantially all of its assets
to any other corporation or other legal person, less than a majority of
the combined voting power of the then-outstanding securities of such
corporation or person immediately after such transaction are held in the
aggregate by the holders of Voting Stock immediately prior to such sale;
(iii) There is a report filed on Schedule 13D or Schedule 14D-1
(or any successor schedule, form or report), each as promulgated
pursuant to the Exchange Act, disclosing that any Person has become the
Beneficial Owner of 20 percent or more of the Voting Stock;
(iv) The Company files a report or proxy statement with the
Securities and Exchange Commission pursuant to the Exchange Act
disclosing in response to Form 8-K or Schedule 14A (or any successor
schedule, form or report or item therein) that a change in control of
the Company has or may have occurred or will or may occur in the future
pursuant to any then-existing contract or transaction; or
(v) If during any period of two consecutive years, individuals
who at the beginning of any such period constitute the directors of the
Company cease for any reason to constitute at least a majority thereof,
unless the election, or the nomination for election by the Company's
shareholders, of each director of the Company first elected during such
period was approved by a vote of at least two-thirds of the directors of
the Company then still in office who were directors of the Company at
the beginning of any such period.
Notwithstanding the foregoing provisions of subparagraph (iii) or subparagraph
(iv) hereof, a "Change in Control" shall not be deemed to have occurred for
purposes hereof solely because (i) the Company, (ii) an entity in which the
Company directly or indirectly beneficially owns 50 percent or more of the
voting securities, or (iii) any Company-sponsored employee stock ownership
plan or any other employee benefit plan of the Company, either files or
becomes obligated to file a report or a proxy statement under or in response
to Schedule 13D, Schedule 14D-1, Form 8-K or Schedule 14A (or any successor
schedule, form or report or item therein) under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), disclosing beneficial ownership by it
of shares of Voting Stock, whether in excess of 20 percent or otherwise, or
because the Company reports that a change in control of the Company has or may
have occurred or will or may occur in the future by reason of such beneficial
ownership.
For purposes of the foregoing
(a) "Beneficial Owner" of Voting Stock shall mean any Person who
would be deemed to beneficially own such Voting Stock within the meaning
<PAGE>
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of Rule 13d-3 promulgated under the Exchange Act, or any successor rules
or regulations thereto.
(b) "Person" shall mean any "person," as the term "person" is
used and defined in Section 14(d)(2) of the Exchange Act, and any
"affiliate" or "associate" of any such person, as the terms "affiliate"
and "associate" are defined in Rule 12b-2 of the General Rules and
Regulations under the Exchange Act as in effect on the date hereof.
(c) "Voting Stock" shall mean all outstanding securities of the
Company entitled to vote generally in the election of directors of the
Company at the time in question.
5. The amount to be contributed to the Rabbi Trust in the event
of the occurrence of a Change in Control (as defined in paragraph 4 hereof)
shall be the amount necessary to purchase annuities to provide Participants
with the benefits they have accrued in the Plan as of the date the Change in
Control occurs.
6. As a condition of participation in the Plan, upon and after
a Participant's retirement from the Board of Directors, such Participant shall
remain available at any reasonable time and from time to time to advise and to
consult with the Chief Executive Officer of the Company and also with the
Chairman of the Board of Directors of the Company (if such person is not also
the Chief Executive Officer).
7. The obligation of the Company to make or continue payments
under this Plan shall be subject to the condition that the Participant or
former Participant shall not engage, either directly or indirectly, in any
activity which is competitive with any activity of the Company, it being
understood that in the event of a breach by the Participant or former
Participant of the foregoing condition, the Company shall not be obligated to
make any payment or payments hereunder coming due subsequent to the occurrence
of such breach. The Organization and Compensation Committee of the Board of
Directors ("Committee"), upon prior written request of a Participant or former
Participant, may waive the condition specified above with respect to
noncompetition if, based upon all of the relevant circumstances, in the sole
judgment of the Committee, the granting of such a waiver is justified.
8. No rights under this Plan shall be assignable, transferrable
or subject to encumbrance or charge of any nature. No claim for the
nonpayment or erroneous payment of benefits hereunder may be made other than
by the Participant or former Participant or by his or her estate acting on his
or her behalf.
9. If a former Participant who is receiving benefits or is
eligible to begin receiving benefits under the Plan is under a legal
disability, as determined in the sole discretion of the Committee, the
Committee may direct any or all of the benefits to which the former
Participant may be entitled to be paid in any one or more of the following
ways:
(a) to the former Participant, or
(b) to the former Participant's legal guardian or conservator,
or
<PAGE>
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(c) to the former Participant's spouse or to any other
individual or entity to be expended for the benefit of the former
Participant.
10. The Board of Directors of the Company may at any time amend,
suspend or terminate the Plan in whole or in part, but such action shall not
affect the right of any Participant or former Participant to receive benefits
accrued hereunder prior to the date of such action.
11. The Plan shall be administered by the Committee. Each
member of the Committee shall serve at the pleasure of the Committee and may
be removed at any time, with or without cause, by such Committee.
12. The Plan is established under and shall be construed
according to the laws of the State of Ohio.
The foregoing has been approved by and is being executed on behalf
of TRINOVA Corporation effective as of January 1, 1990.
TRINOVA CORPORATION
-36-
EXHIBIT (10)-10
TRINOVA CORPORATION
SUPPLEMENTAL BENEFIT PLAN
Effective: January 1, 1976
Restatement Date: January 1, 1995
1. TRINOVA Corporation ("Company") previously established the
TRINOVA Corporation Supplemental Benefit Plan ("Plan") for the sole purpose of
providing benefits for certain employees in excess of the limitation on
contributions and benefits imposed by the Internal Revenue Code upon the
Company's qualified employee pension benefit plans. The Company hereby amends
and restates the Plan effective as of January 1, 1995.
2. Each of the following persons ("Participant") shall
participate in the Plan:
(a) Any person who is a full-time employee of the Company (or of any
of its affiliates which adopts the Plan in writing with the
consent of the Company, such affiliate being hereinafter referred
to as a "Sponsoring Affiliate"), and whose benefits under the
qualified defined benefit plans sponsored by the Company or by any
of such Sponsoring Affiliates are, as a result of the application
of section 401(a)(17) and section 415 of the Internal Revenue Code
of 1986, as amended ("Code"), less than the amount otherwise
payable from such defined benefit plans in the absence of the
limitations in such sections.
(b) Any person who is a full-time employee of the Company (or of any
of such Sponsoring Affiliates), and whose allocations under the
qualified defined contribution plans sponsored by the Company or
by any of such Sponsoring Affiliates are, as a result of the
application of section 401(a)(17) and section 415 of the Code,
less than the amount which could otherwise be allocated to his or
her account in such defined contribution plans in the absence of
the limitations in such sections.
3. With respect to each Participant described in paragraph
2(a), benefits payable under the Plan shall be an amount equal to the
difference between (a) the amount which would be payable to the Participant
under the appropriate qualified defined benefit plan in which he or she
participates in the absence of the limitations in section 401(a)(17) and
section 415 of the Code and (b) the amount payable to the Participant under
the qualified defined benefit plan sponsored by the Company or by the
Sponsoring Affiliate in which he or she participates.
4. With respect to each Participant described in paragraph
2(b), an allocation shall be credited each year to an account in such
Participant's name on the records of the Company as of the date such
allocation would have been made to the qualified defined contribution plan in
which he or she participates in the absence of the limitations in section
<PAGE>
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401(a)(17) and section 415 of the Code, in an amount equal to the difference
between (a) the amount which could have been allocated to such Participant's
account in the qualified defined contribution plan in which he or she
participates in the absence of the limitations in section 401(a)(17) and
section 415 of the Code and (b) the amount actually allocated to his or her
account in such qualified defined contribution plan. Subject to paragraph 5
hereof, each Participant's account under the Plan will also be credited with
interest as of the last day of each calendar quarter equal to two percentage
points in excess of the Moody's Corporate Bond Yield Average, determined as of
the last day of the quarter, or such other interest rate as may be established
by the Organization and Compensation Committee of the Board of Directors of
the Company for such purpose. A separate account shall be maintained on the
records of the Company and Sponsoring Affiliate in the name of each
Participant for each qualified defined contribution plan sponsored by such
entity in which the Participant participates.
5. The Company and each Sponsoring Affiliate shall establish an
irrevocable grantor trust ("Rabbi Trust") to which the Company and its
Sponsoring Affiliates (as the case may be) may, at the sole discretion of
their respective boards of directors, make contributions for the purpose of
satisfying all or a portion of their obligations under the Plan. Any benefits
paid from such Rabbi Trust shall reduce the amount of the benefits payable
hereunder by the Company or its Sponsoring Affiliate (as the case may be) from
its general corporate assets. In addition, to the extent any benefits become
payable to a Participant pursuant to the terms of a split dollar supplemental
offset plan established by the Company or any Sponsoring Affiliate (including
the vesting of a Participant's interest in a life insurance policy purchased
under such a plan), the value of such benefits shall reduce the amount of any
benefits otherwise payable hereunder by the Company or any Sponsoring
Affiliate.
Notwithstanding the final paragraph of paragraph 4 hereof, if the
Company or Sponsoring Affiliate makes a contribution to such Rabbi Trust,
earnings credited to each Participant's accounts described in paragraph 4
hereof from and after the date of the contribution shall not be determined
under paragraph 4 hereof, but rather shall be based on the investment
performance of the Rabbi Trust.
Furthermore (and notwithstanding any provision herein to the
contrary), the Company and each Sponsoring Affiliate shall contribute to the
Rabbi Trust that aggregate amount calculated pursuant to paragraph 6 hereof
within ten days of a Change in Control.
A "Change in Control" shall have occurred for purposes of the Plan
if any of the following events shall occur:
(i) The Company is merged, consolidated or reorganized into or
with another corporation or other legal person, and as a
result of such merger, consolidation or reorganization less
than a majority of the combined voting power of the then-
outstanding securities of such corporation or person
immediately after such transaction are held in the aggregate
by the holders of Voting Stock immediately prior to such
transaction;
<PAGE>
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(ii) If the Company sells all or substantially all of its assets
to any other corporation or other legal person, less than a
majority of the combined voting power of the then-
outstanding securities of such corporation or person
immediately after such transaction are held in the aggregate
by the holders of Voting Stock immediately prior to such
sale;
(iii) There is a report filed on Schedule 13D or Schedule 14D-1
(or any successor schedule, form or report), each as
promulgated pursuant to the Exchange Act, disclosing that
any Person has become the Beneficial Owner of 20 percent or
more of the Voting Stock;
(iv) The Company files a report or proxy statement with the
Securities and Exchange Commission pursuant to the Exchange
Act disclosing in response to Form 8-K or Schedule 14A (or
any successor schedule, form or report or item therein) that
a change in control of the Company has or may have occurred
or will or may occur in the future pursuant to any then-
existing contract or transaction; or
(v) If during any period of two consecutive years, individuals
who at the beginning of any such period constitute the
directors of the Company cease for any reason to constitute
at least a majority thereof, unless the election, or the
nomination for election by the Company's shareholders, of
each director of the Company first elected during such
period was approved by a vote of at least two-thirds of the
directors of the Company then still in office who were
directors of the Company at the beginning of any such
period.
Notwithstanding the foregoing provisions of subparagraph (iii) or subparagraph
(iv) hereof, a "Change in Control" shall not be deemed to have occurred for
purposes hereof solely because (i) the Company, (ii) an entity in which the
Company directly or indirectly beneficially owns 50 percent or more of the
voting securities, or (iii) any employee stock ownership plan sponsored by the
Company, operating company or affiliate (as the case may be) or any other
employee benefit plan of the Company, operating company or affiliate, either
files or becomes obligated to file a report or a proxy statement under or in
response to Schedule 13D, Schedule 14D-1, Form 8-K or Schedule 14A (or any
successor schedule, form or report or item therein) under the Securities
Exchange Act of 1934, as amended ("Exchange Act"), disclosing beneficial
ownership by it of shares of Voting Stock, whether in excess of 20 percent or
otherwise, or because the Company reports that a change in control of the
Company has or may have occurred or will or may occur in the future by reason
of such beneficial ownership.
For purposes of the foregoing
(a) "Beneficial Owner" of Voting Stock shall mean any Person who would
be deemed to beneficially own such Voting Stock within the meaning
of Rule 13d-3 promulgated under the Exchange Act, or any successor
rules or regulations thereto.
<PAGE>
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(b) "Person" shall mean any "person," as the term "person" is used and
defined in Section 14(d)(2) of the Exchange Act, and any
"affiliate" or "associate" of any such person, as the terms
"affiliate" and "associate" are defined in Rule 12b-2 of the
General Rules and Regulations under the Exchange Act as in effect
on the date hereof.
(c) "Voting Stock" shall mean all outstanding securities of the
Company entitled to vote generally in the election of directors of
the Company at the time in question.
6. The amount to be contributed to the Rabbi Trust in the event
of the occurrence of a Change in Control (as defined in paragraph 5 hereof)
shall be (a) the sum of (1) the value (determined as of the date the Change in
Control occurs) of all vested benefits accrued to Participants in the defined
contribution portion of the Plan as well as the value of all vested benefits
in pay status to beneficiaries in the defined contribution portion of the Plan
and (2) the amount necessary to purchase annuities which will provide
Participants (as well as beneficiaries whose benefits are in pay status) with
the vested benefits they have accrued in the defined benefit portion of the
Plan as of the date the Change in Control occurs, less (b) any amounts
previously contributed with respect to such Participants and such
beneficiaries to the Rabbi Trust. To the extent that the Company or any
Sponsoring Affiliate has entered into a split dollar supplemental offset plan
agreement on behalf of any Participant, the amount to be contributed to the
Rabbi Trust shall also be reduced by the value of such Participant's vested
interest in the policy purchased under such supplemental offset plan
agreement.
7. Benefits under the Plan shall be payable from those assets
which are subject to the claims of general creditors of the Company and its
Sponsoring Affiliates or from the Rabbi Trust at such time or times, and shall
be subject to the same terms and conditions as if being paid pursuant to the
appropriate underlying qualified plan. However, notwithstanding the
foregoing, if the employment of a Participant terminates (either voluntarily
or involuntarily) following the occurrence of a Change in Control (as defined
in paragraph 5 hereof) but prior to the Participant's attainment of the age at
which benefits would be payable to him or her under the qualified defined
benefit plan sponsored by the Company or a Sponsoring Affiliate in which the
Participant participates, upon written request by the Participant to the
Company or Sponsoring Affiliate, as the case may be, which previously employed
the Participant, such entity shall direct the trustee of the Rabbi Trust to
purchase an annuity contract providing such Participant with benefits payable
at such time or times, in such manner and in such amounts as would have
otherwise been payable hereunder, and to deliver such annuity contract to the
Participant within ten days of the date of such request or within ten days of
the occurrence of the funding described in paragraph 6 hereof, whichever
occurs later. Any payments to a Participant under such annuity contract shall
fully discharge the payment obligations under the Plan with respect to such
payments.
Upon the death of the Participant, any balance in the
Participant's account under paragraph 4 shall be paid to the Participant's
beneficiary in the same manner and at the same time as any death benefits
payable to the Participant's beneficiary under the Company's Retirement
Savings and Profit-Sharing Plan, and any survivor benefit payable with respect
<PAGE>
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to the benefits under paragraph 3 shall be paid to the Participant's
beneficiary in the same manner as the equivalent survivor benefit under the
applicable defined benefit plan maintained by the Company (or a Sponsoring
Affiliate). For purposes hereof, the beneficiary shall be determined by
reference to the beneficiary designation form completed by the Participant for
the Company's Retirement Savings and Profit-Sharing Plan or, if none, by
reference to the provisions of said Plan.
8. Except to the extent that a Participant or former
Participant may designate a beneficiary to receive any payment to be made
following his or her death and except by will or the laws of descent and
distribution, no rights under this Plan shall be assignable, transferrable or
subject to encumbrance or charge of any nature. No claim for the nonpayment
or erroneous payment of benefits hereunder may be made other than by the
Participant or former Participant or by his or her estate acting on his or her
behalf.
9. If a former Participant who is receiving (or is eligible to
begin receiving) benefits under the Plan has a mental or physical condition
which the Administrative Committee, in its sole discretion based on medical
evidence it deems acceptable, determines will prevent such person from
satisfactorily managing his or her personal financial affairs, the
Administrative Committee may direct any and all of the benefits to which the
former Participant may be entitled to be paid in any one or more of the
following ways:
(a) to the former Participant, or
(b) to the former Participant's legal guardian or conservator, or
(c) to the former Participant's spouse,
(d) or to any other individual or entity to be expended for the
benefit of the former Participant.
Such payment shall be in complete satisfaction of the Company's obligations
under the Plan.
10. The Company or its Sponsoring Affiliate may at any time
amend, suspend or terminate the Plan in whole or in part with respect to its
own employees, but such action shall not reduce the amount of benefits or
income previously credited to the account of any Participant or former
Participant.
11. Nothing contained herein shall be construed as a guarantee
of employment nor as a limitation on the right to terminate the employment of
any Participant in the Plan, either with or without cause.
12. The Plan shall be administered by the TRINOVA Corporation
Administrative Committee.
13. The Plan is established under and shall be construed
according to the laws of the State of Ohio.
<PAGE>
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The foregoing has been approved by and is being executed on behalf
of TRINOVA Corporation effective as of January 1, 1995.
TRINOVA CORPORATION
-42-
EXHIBIT (10)-11
TRINOVA CORPORATION
VOLUNTARY DEFERRED COMPENSATION PLAN
1. Purpose. TRINOVA Corporation hereby establishes the TRINOVA Corporation
Voluntary Deferred Compensation Plan ("Plan"). The purpose of the Plan is to
provide selected senior executive employees of TRINOVA Corporation and its
subsidiaries (hereinafter, collectively referred to as the "Company") an
opportunity to defer receipt of certain portions of the compensation otherwise
payable to them by the Company, in accordance with the terms and conditions
set forth herein.
2. Eligibility. The employees eligible to participate in the Plan shall be
those senior executive employees of the Company whose base salary (on an
annualized basis) is at least $150,000 per year. Such persons shall be
referred to as "Participants."
3. Election to Defer. Each Participant may elect, by delivering a written
election to the Administrative Committee described in paragraph 15, to defer
receipt of between 10 percent and 50 percent (in increments of 5 percent) of
his or her base salary (on an annualized basis). A Participant may also elect
to defer receipt of between 10 percent and 100 percent (in increments of 5
percent) of his or her Annual Executive Incentive Plan award payable under the
Company's Incentive Compensation Plan for any year. Such elections shall be
made on such form as may be prescribed by the Administrative Committee.
Once received by the Administrative Committee, a Participant's
election to defer cannot be revoked and shall continue until the date
specified in the election. However, a Participant may modify his or her
election with respect to compensation payable for future periods by delivering
a new written election to the Administrative Committee.
The Participant's election to defer a portion of his or her base
salary must be made prior to the beginning of the calendar year in which it
will be earned. A Participant must make a separate election with respect to
each year of participation in the Plan and may make separate elections with
respect to his or her base salary and his or her annual executive incentive
plan award for any year. A new Participant in the Plan shall have 30 days
following his or her notification of eligibility by the Administrative
Committee to make an election with respect to compensation to be earned for
the balance of the year.
4. Deferred Compensation Account. At the time of the Participant's initial
election to defer pursuant to paragraph 3, the Administrative Committee shall
establish a recordkeeping account ("Deferred Compensation Account") for such
Participant on the Company's records. All amounts deferred by a Participant
in accordance with paragraph 3 shall be credited to the Participant's Deferred
Compensation Account as of the date on which such compensation would have been
paid to the Participant in the absence of the deferral election.
<PAGE>
-43-
5. Additions to Deferred Compensation Accounts. As of the last day of each
calendar quarter, the Participant's Deferred Compensation Account shall be
credited with interest equal to two percentage points in excess of the Moody's
Corporate Bond Yield Average, determined as of the last day of the quarter, or
such other interest rate as may be established by the Organization and
Compensation Committee of the Board of Directors of the Company for such
purpose.
The crediting of an interest factor shall occur so long as there is a
balance in the Participant's Deferred Compensation Account regardless of
whether the Participant has terminated employment with the Company, or has
died.
Notwithstanding the foregoing provisions of this paragraph, however,
no interest shall be credited to amounts withdrawn from the Participant's
Deferred Compensation Account, which amounts had been credited to such Account
for less than three years, unless such amounts are withdrawn on account of the
Participant's death or disability.
6. Payment of Deferred Amounts.
(a) When a Participant commences participation in the Plan, he
or she shall indicate on an election form provided by the
Administrative Committee a date certain on which the amount in his or
her Deferred Compensation Account shall be paid, or shall commence
being paid. The Participant may also designate on such election form
an interim distribution date on which a specified part of his or her
Deferred Compensation Account, not to exceed the aggregate amount the
Participant has deferred, without interest, shall be paid to the
Participant in a lump sum. The amount in the Participant's Deferred
Compensation Account shall be paid, or shall commence being paid, as
soon as administratively feasible following the date indicated in such
election form. However, if a Participant terminates employment with
the Company for reasons other than retirement prior to the date
specified in such election form, the amount in his or her Deferred
Compensation Account shall be paid, or shall commence being paid, as
soon as administratively feasible following the date of such
termination of employment.
(b) The Participant may elect to receive payment of the balance
credited to his or her Deferred Compensation Account either (i) in a
lump sum or (ii) as a series of equal annual installments, over a five
year or ten year period, as the Participant shall elect at the time of
the deferral election. No modification or revocation of the election
of the form of benefit distribution will be recognized if made during
the one year period before the Deferred Compensation Account becomes
payable. If no election is made, the balance will be paid as a series
of annual installments over a period of ten years.
(c) In the event of the Participant's death, the balance in the
Participant's Deferred Compensation Account shall be paid to the
Participant's beneficiary in a lump sum as soon as administratively
feasible following the end of the calendar quarter in the which the
death of the Participant occurs. For purposes hereof, the beneficiary
shall be determined by reference to the beneficiary designation form
completed by the Participant for the Company's Retirement Savings and
<PAGE>
-44-
Profit-Sharing Plan or, if none, by reference to the provisions of said
Plan.
7. Hardship Withdrawals. Any provision in paragraph 6 to the contrary
notwithstanding, in the event a Participant incurs a severe unforeseeable
financial emergency, the Administrative Committee, in its sole discretion and
upon written application of such Participant, may direct immediate payment of
all or a portion of the then current value of such Participant's Deferred
Compensation Account, provided, however, that such payment shall in no event
exceed the amount necessary to alleviate such financial hardship.
For purposes of this paragraph, an unforeseeable financial emergency shall
consist of a severe financial hardship to the Participant resulting from a
sudden and unexpected illness or accident of the Participant or of a dependent
of the Participant, loss of the Participant's property due to casualty, or
other similar extraordinary and unforeseeable circumstances arising as a
result of events beyond the control of the Participant. The circumstances
that will constitute an unforeseeable emergency will be determined by the
Administrative Committee upon the facts of each case, but, in any case,
payment may not be made to the extent that such hardship is or may be
relieved:
(i) through reimbursement or compensation by insurance or
otherwise,
(ii) by liquidation of the Participant's assets, to the extent the
liquidation of such assets would not itself cause severe
financial hardship, or
(iii) by cessation of deferrals under the Plan.
8. Grantor Trust. The Company shall establish an irrevocable grantor trust
("Rabbi Trust") to which the Company may, at the sole discretion of its Board
of Directors (except to the extent contributions may be required under
paragraph 9), make contributions for the purpose of satisfying all or a
portion of the Company's obligations under the Plan. Any benefits paid from
such Rabbi Trust to a Participant or beneficiary shall reduce the amount of
the benefits payable hereunder by the Company from its general corporate
assets.
Notwithstanding the provisions of paragraph 5, if the Company makes a
contribution to such Rabbi Trust, earnings credited to each Participant's
account from and after the date of the contribution shall not be determined
under paragraph 5, but rather shall be determined based on the investment
performance of the Rabbi Trust.
9. Effect of Change in Control. Upon the occurrence of a Change in Control
of the Company the Company shall make a contribution to the Rabbi Trust in an
amount equal to the sum of the balance credited to all Participants' Deferred
Compensation Accounts at such time.
A "Change in Control" shall have occurred for purposes of the Plan if
any of the following events shall occur:
<PAGE>
-45-
(i) The Company is merged, consolidated or reorganized into or with
another corporation or other legal person, and as a result of
such merger, consolidation or reorganization less than a
majority of the combined voting power of the then-outstanding
securities of such corporation or person immediately after such
transaction are held in the aggregate by the holders of the
Company's Voting Stock immediately prior to such transaction;
(ii) If the Company sells all or substantially all of its assets to
any other corporation or other legal person, less than a
majority of the combined voting power of the then-outstanding
securities of such corporation or person immediately after such
transaction are held in the aggregate by the holders of the
Company's Voting Stock immediately prior to such sale;
(iii) There is a report filed on Schedule 13D or Schedule 14D-1 (or
any successor schedule, form or report), each as promulgated
pursuant to the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), disclosing that any Person has become the
Beneficial Owner of 20 percent or more of the Company's Voting
Stock;
(iv) The Company files a report or proxy statement with the
Securities and Exchange Commission pursuant to the Exchange Act
disclosing in response to Form 8-K or Schedule 14A (or any
successor schedule, form or report or item therein) that a
change in control of the Company has or may have occurred or
will or may occur in the future pursuant to any then-existing
contract or transaction; or
(v) If during any period of two consecutive years, individuals who
at the beginning of any such period constitute the directors of
the Company cease for any reason to constitute at least a
majority thereof, unless the election, or the nomination for
election by the Company's shareholders, of each director of the
Company first elected during such period was approved by a vote
of at least two-thirds of the directors of the Company then
still in office who were directors of the Company at the
beginning of any such period.
Notwithstanding the foregoing provisions of subparagraph (iii) or subparagraph
(iv) hereof, a "Change in Control" shall not be deemed to have occurred for
purposes hereof solely because (i) the Company, (ii) an entity in which the
Company directly or indirectly beneficially owns 50 percent or more of the
voting securities, or (iii) any employee stock ownership plan sponsored by the
Company, operating company or affiliate (as the case may be) or any other
employee benefit plan of the Company, operating company or affiliate, either
files or becomes obligated to file a report or a proxy statement under or in
response to Schedule 13D, Schedule 14D-1, Form 8-K or Schedule 14A (or any
successor schedule, form or report or item therein) under the Exchange Act,
disclosing beneficial ownership by it of shares of the Company's Voting Stock,
whether in excess of 20 percent or otherwise, or because the Company reports
that a change in control of the Company has or may have occurred or will or
may occur in the future by reason of such beneficial ownership.
<PAGE>
-46-
For purposes of the foregoing
(a) "Beneficial Ownership" of Voting Stock shall mean any Person
who would be deemed to beneficially own such Voting Stock within the
meaning of Rule 13d-3 promulgated under the Exchange Act, or any
successor rules or regulations thereto.
(b) "Person" shall mean any "person," as the term "person" is
used and defined in Section 14(d)(2) of the Exchange Act, and any
"affiliate" or "associate" of any such person, as the terms
"affiliate" and "associate" are defined in Rule 12b-2 of the General
Rules and Regulations under the Exchange Act as in effect on the date
hereof.
(c) "Voting Stock" shall mean all outstanding securities of the
Company entitled to vote generally in the election of directors of the
Company at the time in question.
10. Participant Reports. The Administrative Committee shall provide a
statement to the Participant concerning the status of his or her Deferred
Compensation Account at least annually.
11. Payment to Incapacitated Participants. If a former Participant who is
receiving (or is eligible to begin receiving) benefits under the Plan has a
mental or physical condition which the Administrative Committee, in its sole
discretion based on medical evidence it deems acceptable, determines will
prevent such person from satisfactorily managing his personal financial
affairs, the Administrative Committee may direct any and all of the benefits
to which the former Participant may be entitled under the Plan to be paid:
(a) to the former Participant, or
(b) to the former Participant's legal guardian or conservator,
or
(c) to the former Participant's spouse, or
(d) to any other individual or entity for the benefit of the
Participant.
Such payment shall be in complete satisfaction of the Company's obligations
under the Plan.
12. Non-Transferability of Interest. Amounts credited to Participant's
Deferred Compensation Account shall be considered as general assets of the
Company for use as it deems necessary and shall be subject to the claims of
the Company's creditors.
The rights and interests of a Participant during the Deferral Period
shall be those of a general creditor, except to the extent that a Participant
may designate a beneficiary to receive any payment to be made following his or
her death, and except by will or the laws of descent and distribution, the
Participant's rights under this Plan may not be assigned, pledged, transferred
or otherwise subject to encumbrance or change of any nature. No claim for the
nonpayment or erroneous payment of benefits hereunder may be made other than
by the Participant or by his or her designated beneficiary.
<PAGE>
-47-
13. Unfunded Obligation. The Plan shall not be funded, and no trust,
escrow or other provisions shall be established to secure payments due under
the Plan. A Participant shall be treated as a general, unsecured creditor at
all times under the Plan.
14. Amendment, Suspension and Termination. The Board of Directors of the
Company may amend, suspend, or terminate the Plan or any portion thereof in
such manner and to such extent as it may deem advisable and in the best
interest of the Company. No amendment, suspension and termination shall alter
or impair any Participant's rights with respect to his or her Deferred
Compensation Account without the consent of the Participant affected thereby.
15. Administrative Committee. The Plan shall be administered by the
TRINOVA Corporation Administrative Committee. The Administrative Committee
shall have sole and complete authority to interpret the terms and provisions
of the Plan and to adopt, alter and repeal such administrative rules,
regulations and practices governing the operation of the Plan as it shall from
time to time deem advisable. Any reference in the Plan to the Administrative
Committee shall, to the extent appropriate, be deemed to refer to any person
or persons to whom duties or responsibilities are delegated by such Committee.
16. No Right to Employment or Other Benefits. Nothing contained herein
shall be construed as conferring upon any Participant the right to continue in
the employ of the Company. Any compensation deferred and any benefits paid
under the Plan shall not be included in creditable compensation in computing
benefits under any qualified employee benefit plan of the Company except to
the extent expressly provided for therein.
17. Governing Law. The Plan is established under and shall be construed
according to the laws of the State of Ohio.
18. Effective Date. The Plan shall be effective April 1, 1995, subject to
approval by the Board of Directors of the Corporation. Thereupon, eligible
Participants shall be permitted to make an election under paragraph 4 within
30 days with respect to compensation to be earned during the balance of the
fiscal year.
The foregoing Voluntary Deferred Compensation Plan has been approved
by and is being executed on behalf of TRINOVA Corporation.
TRINOVA CORPORATION
-48-
EXHIBIT (11)
<TABLE>
<CAPTION>
STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS
TRINOVA CORPORATION
(In thousands, except per share data)
Year Ended December 31
--------------------------------------
1994 1993 1992
-------- -------- --------
<S> <C> <C> <C>
Average shares outstanding 28,719 28,321 28,232
Assumed conversion of the 6 percent
convertible debentures 1,905 - -
Net effect of dilutive stock options
based upon treasury stock method
using average market price 191 84 27
--------- --------- ---------
Average shares of common stock and
common stock equivalents outstanding 30,815 28,405 28,259
========= ========= =========
Income before cumulative
effect of accounting change $ 65,855 $ 10,511 $ 14,442
After-tax equivalent of interest
expense on the 6 percent convertible
debentures 3,720 - -
Cumulative effect to January 1, 1993,
of accounting change, net of income
tax benefit - (70,229) -
--------- --------- ---------
Net income (loss) $ 69,575 $ (59,718) $ 14,442
========= ========= =========
Income before cumulative
effect of accounting change $ 2.26 $ .37 $ .51
Cumulative effect of accounting
change, net of income tax benefit - (2.47) -
--------- --------- ---------
NET INCOME (LOSS) PER SHARE $ 2.26 $ (2.10) $ .51
========= ========= =========
<FN>
Note - Net income (loss) per share is computed using the average number of
common shares outstanding, including common stock equivalents. For purposes
of computing net income per share for 1994, the assumed conversion of the
Company's 6 percent convertible debentures was included in average shares
outstanding, increasing the average number of shares outstanding by 1,904,762
shares, and net income was increased for the after-tax equivalent of interest
expense on the debentures. The assumed conversion of the 6 percent convertible
debentures was not included in average shares outstanding for 1993 and 1992
because the effect of the inclusion would have been anti-dilutive.
</FN>
</TABLE>
-49-
EXHIBIT (13)
PORTIONS OF THE 1994
ANNUAL REPORT TO SHAREHOLDERS
<TABLE>
<CAPTION>
11-Year Summary of Selected Financial Data
Years Ended December 31 (1994-1989)
(Dollars in millions, except per share data)
1994 1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C> <C>
Continuing Operations
Net sales $1,794.7 $1,643.8 $1,695.5 $1,681.2 $1,955.4 $1,942.3
Cost of products sold 1,351.4 1,247.4 1,307.4 1,309.1 1,477.7 1,441.4
Interest expense 21.1 25.5 26.3 26.5 31.7 28.6
Income taxes (credit) 35.4 6.6 9.6 (11.2) 29.6 29.6
Income (loss) from continuing
operations before cumulative
effect adjustment 65.9 10.5a 14.4 (184.1)c 45.5d 33.4e
Discontinued operations - - - - - (1.1)f
Cumulative effect adjustment - (70.2) - - - -
Net Income (Loss) 65.9 (59.7) 14.4 (184.1) 45.5 32.3
Income (Loss) Attributable
to Common Stock 69.6 (59.7) 14.4 (184.1) 45.5 32.3
Per Common Share Data
Primary
- - Continuing operations before
cumulative effect adjustment 2.26 .37 .51 (6.52)c 1.51d .98e
- - Discontinued operations - - - - - (.03)f
- - Cumulative effect adjustment - (2.47) - - - -
- - Net income (loss) 2.26 (2.10) .51 (6.52) 1.51 .95
- - Average shares outstanding
(in millions) 30.8 28.4b 28.3b 28.2b 30.2b 34.1b
Financial Position
Cash 27.9 20.5 26.3 26.6 25.5 23.0
Plants and properties-net 379.8 386.8 405.5 434.5 467.2 455.8
Total assets 1,001.0 972.2 1,017.4 1,070.4 1,314.2 1,361.5
Working capital 251.0 162.4 178.6 123.2 242.5 322.5
Long-term debt 234.9 246.2 239.1 177.3 195.6 203.9
Shareholders' equity 320.0 253.2 352.9 374.6 598.7 651.3
Other Data
Cash dividends per share
- - Common .68 .68 .68 .68 .68 .66
- - Preferred
Shares outstanding at Dec. 31 (in millions)
- - Common 28.8 28.4 28.2 28.2 28.2 33.0
- - Preferred
Return on average
shareholders' equity 22.6% -a 4.0% -c 7.4% 4.8%e
Debt-to-capitalization ratio 42.6% 55.1% 50.3% 47.0% 35.5% 30.4%
Number of employees at Dec. 31
- - Non-U.S. 4,965 5,094 5,948 6,516 7,935 8,835
- - U.S. 10,059 9,918 9,975 11,180 11,486 12,762
- - Total 15,024 15,012 15,923 17,696 19,421 21,597
</TABLE>
<PAGE>
-50-
<TABLE>
<CAPTION>
11-Year Summary of Selected Financial Data
Years Ended December 31 (1988-1984)
(Dollars in millions, except per share data)
1988 1987 1986 1985 1984
<S> <C> <C> <C> <C> <C>
Continuing Operations
Net sales $1,781.3 $1,533.2 $1,279.2 $1,114.7 $ 988.3
Cost of products sold 1,294.8 1,105.6 909.7 788.2 668.1
Interest expense 31.8 30.3 23.2 24.1 25.1
Income taxes (credit) 51.5 51.7 24.7 35.3 35.1
Income (loss) from continuing
operations before cumulative
effect adjustment 87.5g 68.3 31.4i 47.6 50.2
Discontinued operations .3 4.2 91.1j 27.1 20.5
Cumulative effect adjustment - (12.5) - - -
Net Income (Loss) 87.8 59.9 122.6 74.6 70.6
Income (Loss) Attributable
to Common Stock 91.6 58.9 118.1 69.9 65.8
Per Common Share Data
Primary
- - Continuing operations before
cumulative effect adjustment 2.53g 2.00 .80i 1.17 1.34
- - Discontinued operations .01 .12 2.68j .73 .60
- - Cumulative effect adjustment - (.37) - - -
- - Net income (loss) 2.54 1.75 3.48 1.90 1.94
- - Average shares outstanding
(in millions) 36.1 33.7 33.9 36.7 33.9
Financial Position
Cash 37.1 24.0 17.6 25.8 20.7
Plants and properties-net 464.1 437.0 354.8 291.5 209.5
Total assets 1,426.7 1,319.7 1,155.1 1,204.9 969.8
Working capital 407.9 283.0 240.7 410.3 359.8
Long-term debt 279.0 244.1 148.7 216.6 205.1
Shareholders' equity 679.2 614.4 549.7 716.3 529.4
Other Data
Cash dividends per share
- - Common .60 .53 .476 .447 .41
- - Preferred 1.1875 4.75 4.75 4.75
Shares outstanding at Dec. 31
(in millions)
- - Common 34.2 34.1 30.2 41.5 33.9
- - Preferred .9 1.0 1.0
Return on average
shareholders' equity 13.7% 10.4% 19.9%ij 12.2% 13.7%
Debt-to-capitalization ratio 34.9% 35.7% 33.0% 27.8% 33.5%
Number of employees at Dec. 31
- - Non-U.S. 9,251 7,683 7,258 7,005 6,030
- - U.S. 12,979 11,964 10,828 10,592 8,973
- - Total 22,230 19,647 18,086 17,597 15,003
<PAGE>
-51-
<FN>
(a) Includes a special charge for severance and other personnel-related
costs amounting to $26 million pretax, $18.2 million net ($.64 per
share) and a provision for unsuccessfully contested prior years'
value-added taxes in Brazil amounting to $7 million pretax, $4.7
million net ($.17 per share).
(b) The Company's 6 percent convertible debentures, which are common stock
equivalents, have not been included in average shares outstanding
because the effect of their inclusion would be anti-dilutive. (See
Note 1, Net Income (Loss) per Share, of Notes to Financial
Statements.)
(c) Includes a special charge for the write-off of intangibles and other
charges amounting to $166.4 million pretax, $156.4 million net ($5.54
per share) and a gain from settlement of outstanding litigation
associated with the purchase and installation of automated factory
equipment amounting to $2.3 million pretax, $1.4 million net ($.05 per
share).
(d) Includes settlement gains associated with terminated pension plans
amounting to $5.2 million pretax, $2.8 million net ($.09 per share).
(e) Includes a provision for restructuring amounting to $53 million
pretax, $38.5 million net ($1.13 per share); a provision of $8 million
pretax, $5 million net ($.15 per share) for costs associated with the
write-down in value of a flexible manufacturing system; and a gain of
$4 million pretax, $2.5 million net ($.07 per share) from the sale of
certain investments.
(f) Includes a loss on the sale of the Laminated Products Group business
amounting to $1.7 million pretax, $1.1 million net ($.03 per share).
(g) Includes settlement gains associated with terminated pension plans
amounting to $6.1 million pretax, $3.3 million net ($.09 per share).
(h) 1987 financial statements were restated to reflect the adoption of
FASB Statement No. 96 retroactive to January 1, 1987. This change in
accounting method decreased net income for the year ended December 31,
1987, by $2.7 million ($.08 per share). Net income for the year ended
December 31, 1987, was also decreased $12.5 million ($.37 per share)
for the cumulative effect of the change in accounting related to years
prior to 1987 which were not restated.
(i) Includes a provision for restructuring amounting to $49.1 million
pretax, $28.4 million net ($.84 per share).
(j) Includes a gain from disposal of the Glass business and other
associated gains amounting to $99.4 million pretax, $85 million net
($2.50 per share).
All applicable common share amounts and per share data have been adjusted to
reflect the two-for-one common stock split in 1987 and the three-for-two
common stock split in 1986.
</FN>
</TABLE>
<PAGE>
-52-
FINANCIAL REVIEW AND ANALYSIS OF OPERATIONS
<TABLE>
<CAPTION>
Analysis of Operations
1994 Compared with 1993
The following data provide highlights for the year 1994 compared with the year
1993.
Percent
(dollars in thousands, Year Ended December 31 Increase
except per share data) 1994 1993 (Decrease)
<S> <C> <C> <C>
CONSOLIDATED
Net sales $1,794,695 $1,643,841 9.2%
Manufacturing income 443,292 396,427 11.8
Manufacturing margin 24.7% 24.1%
Special charge -- 26,000 --
Operating income 141,069 68,892* 104.8
Operating margin 7.9% 4.2%*
Income before cumulative effect
of accounting change 65,855 10,511* --
Cumulative effect to January 1, 1993,
of accounting change, net of income
tax benefit -- (70,229) --
Net income (loss) 65,855 (59,718)* --
Net Income (Loss) per Share
Income before cumulative effect
of accounting change 2.26 .37* --
Cumulative effect of accounting
change, net of income tax benefit -- (2.47) --
Net income (loss) per share 2.26 (2.10)* --
Number of employees 15,024 15,012 .1)
INDUSTRIAL
Net sales 963,446 864,590 11.4
Special charge -- 19,200 --
Operating income 89,281 17,118* --
Operating margin 9.3% 2.0%*
Order backlog at December 31 185,022 148,399 24.7
AUTOMOTIVE
Net sales 514,273 452,637 13.6
Special charge -- 2,600 --
Operating income 46,841 45,724* 2.4
Operating margin 9.1% 10.1%*
AEROSPACE & DEFENSE
Net sales 316,976 326,614 (3.0)
Special charge -- 3,600 --
Operating income 28,114 26,016* 8.1
Operating margin 8.9% 8.0%*
Order backlog at December 31 267,019 278,351 (4.1)
<FN>
*After deducting the special charge.
</FN>
</TABLE>
<PAGE>
-53-
Consolidated sales for 1994 increased 9.2 percent. Sales for the industrial
and automotive segments increased 11.4 and 13.6 percent, respectively, over
1993, but aerospace & defense sales declined 3 percent. U.S. sales increased
$110.3 million, or 10.5 percent, and non-U.S. sales increased $40.6 million,
or 6.9 percent. Changes in currency exchange rates accounted for nearly $8
million of the increase.
The Company's industrial segment sales increased $98.9 million, or 11.4
percent. U.S. industrial markets continued to strengthen throughout the year,
led by growing mobile equipment and machine tool markets, which contributed to
an increase in the Company's U.S. industrial sales of 13.7 percent.
Strengthening economies contributed to improved industrial sales for the
Company in Europe in each of the last three quarters of 1994 compared with the
prior year. Non-U.S. industrial sales increased nearly 7.5 percent, the
result of increased sales in Asia/Pacific and Brazil in addition to the growth
in Europe. Industrial sales in Europe are expected to continue to increase in
1995 as the economies in most countries improve and the Company recognizes the
benefits of increased momentum from a new distribution strategy that will
focus more directly on the capabilities of a realigned distributor network.
Order intake continued to show strong improvement compared with the prior
year, increasing 13.4 percent. This resulted in order backlog at December 31,
1994, of $185 million which was $36.6 million, or 24.7 percent, greater than
at December 31, 1993.
The Company's automotive segment sales increased $61.6 million, or 13.6
percent, over 1993. U.S. production of cars, vans and light trucks improved
significantly, which contributed to an increase in TRINOVA's U.S. automotive
sales of nearly 20 percent. Recovery of the automotive markets in Europe
proceeded more slowly. As a result of this slower growth and the winding down
of certain long-term supply contracts in the second half of the year, the
Company's growth in automotive sales in Europe in 1994 was held to 7 percent
over 1993. Certain other automotive programs will also be ending during 1995,
which may reduce automotive sales for the second half of the year below their
1994 level.
The Company's aerospace & defense segment sales declined $9.6 million, or 3
percent, from 1993. In addition to the effects of continued low levels of
defense spending, the sale of a small electric motor business in the 1994
first quarter contributed to the sales decline. Nonetheless, the aerospace &
defense segment had a strong fourth quarter, with increased sales over the
1993 fourth quarter and each of the previous 1994 quarters. This increase was
due to improvements in both original equipment and spare parts sales. Order
backlog at December 31, 1994, of $267 million was $11.3 million, or 4.1
percent, lower than at December 31, 1993.
Consolidated manufacturing margin improved to 24.7 percent from 24.1 percent
in 1993. Manufacturing margin for the industrial and aerospace & defense
segments improved in 1994, while manufacturing margin for the automotive
segment declined. In addition to the benefit of increased sales due to both
increased volume and selective price increases in the industrial segment, each
<PAGE>
-54-
of the segments continued to realize the benefit of restructuring efforts.
Restructuring initiatives to streamline operations and improve manufacturing
and distribution processes have resulted in improved factory throughput and
customer service which contributed to improved margins. Automotive segment
margins, however, were adversely affected by the conclusion in 1994 of certain
highly profitable programs, a shift in sales mix in Europe to lower margin
business and program start-up inefficiencies. Increases in provisions for
profit-sharing contributions to employees retirement savings plans due to
higher earnings in 1994 also served to lower manufacturing margin for each of
the segments, particularly industrial. The effect of liquidation of LIFO
inventory quantities on cost of products sold and manufacturing income in 1994
was not significant, while in 1993, liquidation of LIFO inventory quantities
reduced cost of products sold by $7.6 million.
Selling and general administrative and engineering, research and development
expenses (operating expenses) were slightly higher in 1994, than in 1993, but,
as a percent of sales, were 16.8 percent in 1994 compared with 18.3 percent in
1993. The Company continues to aggressively pursue reduction of its operating
expenses. However, significantly higher net income in 1994 led to increases
in provisions for profit-sharing contributions to employees' retirement
savings plans and incentive compensation that were charged to operating
expenses. Operating income for 1994 was $141.1 million, compared with $68.9
million in 1993. Before deducting the special charge of $26 million in 1993,
operating income was $94.9 million.
Interest expense for 1994 of $21.1 million was $4.5 million lower than in
1993, reflecting the effect of lower average debt levels in 1994. Other
expenses - net were $7.5 million lower than in 1993 when the Company
recognized a charge of $7 million ($4.7 million after tax, or $.17 per share)
to provide for unsuccessfully contested prior years' value-added taxes in
Brazil.
Net income for 1994 amounted to $65.9 million, or $2.26 per share, compared
with income before cumulative effect of accounting change in 1993 of $10.5
million, or $.37 per share. After cumulative effect of change in accounting,
net loss for 1993 was $59.7 million, or $2.10 per share. The effective tax
rate for 1994 was 35 percent, compared with an effective rate in 1993 of 38.6
percent.
The Company evaluated the likelihood of realizing the future benefits of
deferred tax assets recorded at December 31, 1994. Valuation allowances were
provided for those deferred tax assets where the Company concluded that the
future benefits were not likely to be realized. Valuation allowances relate
to deferred tax assets in non-U.S. taxing jurisdictions.
<PAGE>
-55-
<TABLE>
<CAPTION>
1993 Compared with 1992
The following data provide highlights for the year 1993 compared with the year
1992.
Percent
(dollars in thousands, Year Ended December 31 Increase
except per share data) 1993 1992 (Decrease)
<S> <C> <C> <C>
CONSOLIDATED
Net sales $1,643,841 $1,695,512 (3.0)%
Manufacturing income 396,427 388,155 2.1
Manufacturing margin 24.1% 22.9%
Special charge 26,000 -- --
Operating income 68,892* 58,980 16.8
Operating margin 4.2%* 3.5%
Income before cumulative effect
of accounting change 10,511* 14,442 (27.2)
Cumulative effect to January 1, 1993,
of accounting change, net of income
tax benefit (70,229) -- --
Net income (loss) (59,718)* 14,442 --
Income (Loss) per Share
Income before cumulative effect
of accounting change .37* .51 (27.5)
Cumulative effect of accounting
change, net of income tax benefit (2.47) -- --
Net income (loss) per share (2.10)* .51 --
Number of employees 15,012 15,923 (5.7)
INDUSTRIAL
Net sales 864,590 902,794 (4.2)
Special charge 19,200 -- --
Operating income 17,118* 16,733 2.3
Operating margin 2.0%* 1.9%
Order backlog at December 31 148,399 152,225 (2.5)
AUTOMOTIVE
Net sales 452,637 415,387 9.0
Special charge 2,600 -- --
Operating income 45,724* 32,291 41.6
Operating margin 10.1%* 7.8%
AEROSPACE & DEFENSE
Net sales 326,614 377,331 (13.4)
Special charge 3,600 -- --
Operating income 26,016* 29,756 (12.6)
Operating margin 8.0%* 7.9%
Order backlog at December 31 278,351 321,610 (13.5)
<FN>
*After deducting the special charge.
</FN>
</TABLE>
<PAGE>
-56-
Consolidated sales for 1993 were 3 percent lower than in 1992. Sales for the
Company's industrial and aerospace & defense segments declined during the
year, but automotive segment sales increased. Consolidated U.S. sales
increased $21.2 million, or 2.1 percent, but non-U.S. sales declined $72.9
million, or 11.0 percent. Changes in currency exchange rates accounted for
nearly $51 million of the decline.
Industrial sales declined $38.2 million, or 4.2 percent, from 1992. U.S.
sales increased $18.2 million, or 3.4 percent, over the prior year as key
markets in the U.S. industrial sector continued to improve. Sales within
industrial markets in Asia/Pacific and Brazil also improved over 1992.
Industrial sales in Europe, however, declined from 1992 levels, principally
the result of the ongoing recession in most European countries. Including the
effects of changes in currency exchange rates, industrial sales in Europe
declined nearly 26 percent from the prior year.
Automotive sales increased $37.3 million, or 9.0 percent, over 1992. U.S.
automotive sales increased $37 million, or nearly 20 percent, over the prior
year and included the effect of consolidation in 1993 of a joint venture that
had previously been accounted for by the equity method. The Company's
European automotive sales volume remained strong during 1993, but because of
the negative effects of changes in currency exchange rates, the reported
European sales were flat compared with 1992.
Aerospace & defense sales declined $50.7 million, or 13.4 percent, from 1992.
This reduction reflected the continued weak conditions in worldwide aerospace
and defense markets, as both U.S. and non-U.S. sales were lower than in 1992.
U.S. government defense spending continued to decline, and commercial aircraft
manufacturers continued to cut back production schedules. Partially
offsetting this trend, sales to the commercial aftermarket and repair markets
continued to grow in 1993.
Consolidated manufacturing margin improved to 24.1 percent from 22.9 percent
for 1992. Manufacturing margin for the industrial and automotive segments
improved in 1993. Manufacturing margin for the aerospace & defense segment
remained flat compared with 1992, although volume was 13.4 percent lower.
Aggressive cost-reduction efforts and continued consolidation of operations
and manufacturing processes contributed to improved margins. Liquidation of
LIFO inventory quantities reduced cost of products sold, principally
benefiting the industrial segment, by $7.6 million in 1993, compared with $6.6
million in 1992. Underabsorption of manufacturing burden due to continued
inventory reduction partially offset this benefit in both years.
Initiatives which were undertaken in 1992 to reduce selling and general
administrative and engineering, research and development expenses were
aggressively pursued during 1993. Operating expenses in 1993 were $27.6
million, or 8.4 percent, lower than in 1992 and were 18.3 percent of sales in
1993, compared with 19.4 percent in 1992. The reduction in engineering,
research and development expenses was the result of a streamlining of efforts
to achieve greater efficiency.
<PAGE>
-57-
In the 1993 second quarter, the Company recorded a $26 million ($18.2 million
after tax, or $.64 per share) provision for severance and other personnel-
related costs associated with worldwide work force reductions, primarily
focusing on the Company's industrial operations in Europe. The number of
employees worldwide was reduced by approximately 900 persons, or 6 percent,
during the year 1993, which contributed to the improvement in manufacturing
and operating margins. Restructuring payments in 1993 (net of proceeds from
sale of properties) amounted to $17.4 million. This compares with
restructuring payments in 1992 totaling $31.7 million. Operating income for
the year ended December 31, 1993, amounted to $68.9 million after deducting
the special charge of $26 million and compares with operating income for the
year 1992 of $59.0 million.
Other expenses - net were $17.6 million greater in 1993 than in 1992. In the
1993 fourth quarter, the Company recognized a charge of $7 million ($4.7
million after tax, or $.17 per share) to provide for unsuccessfully contested
prior years' value-added taxes in Brazil. Also, Other expenses - net for the
year 1993 included exchange losses of $10.6 million, principally relating to
Brazil, compared with $4.9 million for the year 1992.
Income before cumulative effect of accounting change amounted to $10.5
million, or $.37 per share, compared with net income of $14.4 million, or $.51
per share, in 1992. The effective tax rate for the year 1993 was 38.6
percent. Adjustment of net deferred tax assets due to the change in the
statutory U.S. federal income tax rate reduced the provision for income taxes
for the year ended December 31, 1993, by approximately $1 million. The
effective income tax rate for the year 1992 was 39.9 percent.
Liquidity, Working Capital and Capital Investment
Cash provided by operating activities during 1994 totaled $143 million,
compared with $128.9 million in 1993. Higher earnings in 1994 compared with
1993, after adjustment for the cumulative effect of change in accounting and
special charge, contributed to the increase in cash provided by operations.
Cash provided by changes in payables, other assets and accruals was more than
offset by the effect of increased receivables. Of the increase in
receivables, $25 million was due to a reduction in the amount of accounts
receivable sold. Restructuring payments in 1994 totaling $6 million, net of
proceeds from sale of properties and business, were $11.5 million lower than
in the prior year. Inventory reductions in 1993 provided cash of $42.7
million, compared with a nominal increase in inventories in 1994. Income tax
payments in 1994 were $13 million less than in 1993.
Capital expenditures totaled $55.2 million in 1994, nearly the same as capital
spending in 1993. Capital spending for 1995, however, is projected to grow
significantly to support manufacturing process improvements. Quarterly
dividend payments for 1994 were $.17 per share, or $.68 per share for the
year. In January 1995, the Company's Board of Directors approved a dividend
for the first quarter of 1995 of $.18 per share, equal to an annualized rate
of $.72 per share.
Debt payments, net of borrowings, totaled $72.6 million in 1994, compared with
$57.8 million in 1993. The debt-to-capitalization ratio (debt divided by debt
plus equity) was 42.6 percent at December 31, 1994, down from 55.1 percent at
December 31, 1993. In 1994, the Company executed a five-year, $175 million
<PAGE>
-58-
revolving credit agreement with a consortium of U.S. and non-U.S. banks. The
agreement is intended to support the Company's commercial paper borrowings,
and, to the extent not so utilized, provide domestic borrowing capacity.
There were no borrowings under this agreement or commercial paper outstanding
at December 31, 1994. In addition, the Company has uncommitted arrangements
with various banks to provide short-term financing as necessary. The Company
expects that cash flow from operating activities will be sufficient to meet
normal operating requirements over the near term.
The Company or certain of its subsidiaries have been named potentially
responsible parties (PRP) for site investigation and cleanup costs under the
Comprehensive Environmental Response, Compensation, and Liability Act
(Superfund) or similar state laws with respect to certain sites. In addition,
the Company has undertaken corrective and preventive environmental projects of
its own to achieve compliance with applicable environmental laws at certain of
its facilities. The Company believes that the costs arising out of such PRP
designations and the Company's compliance projects will not have a material
adverse effect on the Company's consolidated financial position.
<PAGE>
-59-
<TABLE>
QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
The following is a summary of the quarterly results of operations for the
years ended December 31, 1994 and 1993.
<CAPTION>
1994
--------------------------------------------------------
Three Months Ended
-------------------------------------------- Year Ended
Mar 31 Jun 30 Sep 30 Dec 31 Dec 31
------- ------- ------- ------- ----------
(In thousands, except per share data)
<S> <C> <C> <C> <C> <C>
Net sales $ 439,831 $ 460,863 $ 437,587 $ 456,414 $1,794,695
Manufacturing income 108,465 115,426 106,481 112,920 443,292
Net income 13,274 19,324 15,131 18,126 65,855
Net income per share .46 .66 .52 .62 2.26
Average shares outstanding 30,745 30,866 30,903 30,890 30,815(a)
</TABLE>
<TABLE>
<CAPTION>
1993
--------------------------------------------------------
Three Months Ended
-------------------------------------------- Year Ended
Mar 31 Jun 30 Sep 30 Dec 31 Dec 31
------- ------- ------- ------- -----------
(In thousands, except per share data)
<S> <C> <C> <C> <C> <C>
Net sales $ 429,169 $ 419,748 $ 393,263 $ 401,661 $1,643,841
Manufacturing income 98,231 101,919 96,260 100,017 396,427
Income (loss) before cumulative
effect of accounting change 5,634 (9,121) 9,461 4,537 10,511 (b)
Cumulative effect of accounting
change (70,229) - - - (70,229)
Net income (loss) (64,595) (9,121) 9,461 4,537 (59,718)(b)
Income (loss) per share
Income (loss) before cumulative
effect of accounting change .20 (.32) .33 .16 .37 (b)
Cumulative effect of accounting
change (2.48) - - - (2.47)(c)
Net income (loss) per share (2.28) (.32) .33 .16 (2.10)(b,c)
Average shares outstanding 28,296 28,345 28,434 28,512 28,405 (a)
<PAGE>
-60-
<FN>
a) For purposes of computing net income per share for 1994, the assumed
conversion of the Company's 6 percent convertible debentures was included
in average shares outstanding, increasing the average number of shares
outstanding by 1,904,762 shares, and net income was increased for the
after-tax equivalent of interest expense on the debentures. The assumed
conversion of the convertible debentures was not included in average
shares outstanding for 1993 because the effect of the inclusion would
have been anti-dilutive.
(b) The 1993 fourth quarter and year include a provision for unsuccessfully
contested prior years' value-added taxes in Brazil amounting to $7
million pretax, $4.7 million net ($.17 per share). The income tax
provision for the 1993 third quarter and year was reduced by
approximately $1 million due to adjustment of net deferred tax assets to
recognize the change in the U.S. statutory tax rate. The income tax
provision for the 1993 third quarter also includes the benefit from
utilization of a current-year operating loss of a non-U.S. subsidiary.
The 1993 second quarter and year include a special charge for severance
and other personnel-related costs amounting to $26 million pretax, $18.2
million net ($.64 per share).
(c) The total of the quarterly income per share amounts does not equal the
annual per share amounts.
</FN>
</TABLE>
<PAGE>
-61-
REPORT OF ERNST & YOUNG LLP,
Independent Auditors
Shareholders and Board of Directors
TRINOVA Corporation
We have audited the accompanying statement of financial position of TRINOVA
Corporation and subsidiaries as of December 31, 1994 and 1993, and the related
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 Company'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 TRINOVA
Corporation and subsidiaries at 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 8 of Notes to Financial Statements, in 1993 the Company
changed its method of accounting for postretirement benefits other than
pensions.
/S/ ERNST & YOUNG LLP
Toledo, Ohio
January 25, 1995
<PAGE>
-62-
<TABLE>
<CAPTION>
STATEMENT OF INCOME
Years ended December 31, 1994, 1993 and 1992
(In thousands, except per share data)
1994 1993 1992
-------- -------- --------
<S> <C> <C> <C>
Net sales $1,794,695 $1,643,841 $1,695,512
Cost of products sold 1,351,403 1,247,414 1,307,357
---------- ---------- ----------
MANUFACTURING INCOME 443,292 396,427 388,155
Selling and general administrative
expenses 246,758 246,221 263,863
Engineering, research and development
expenses 55,465 55,314 65,312
Special charge - 26,000 -
---------- ---------- ----------
OPERATING INCOME 141,069 68,892 58,980
Interest expense (21,060) (25,516) (26,313)
Other expenses - net (18,754) (26,265) (8,625)
---------- ---------- ----------
INCOME BEFORE INCOME TAXES AND
CUMULATIVE EFFECT OF ACCOUNTING
CHANGE 101,255 17,111 24,042
Income taxes 35,400 6,600 9,600
---------- ---------- ----------
INCOME BEFORE CUMULATIVE
EFFECT OF ACCOUNTING CHANGE 65,855 10,511 14,442
Cumulative effect to January 1, 1993,
of accounting change, net of income
tax benefit - (70,229) -
---------- ---------- ----------
NET INCOME (LOSS) $ 65,855 $ (59,718) $ 14,442
========== ========== ==========
INCOME (LOSS) PER SHARE
Income before cumulative
effect of accounting change $ 2.26 $ .37 $ .51
Cumulative effect of accounting
change, net of income tax benefit - (2.47) -
---------- ---------- ----------
NET INCOME (LOSS) PER SHARE $ 2.26 $ (2.10) $ .51
========== ========== ==========
Average number of common
shares outstanding 30,815 28,405 28,259
========== ========== ==========
<FN>
The Notes to Financial Statements are an integral part of this statement.
</FN>
</TABLE>
<PAGE>
-63-
<TABLE>
<CAPTION>
STATEMENT OF FINANCIAL POSITION
December 31, 1994 and 1993
(Dollars in thousands, except per share data)
1994 1993
------------ ------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 27,928 $ 20,534
Receivables 247,531 200,340
Inventories 217,316 212,346
Other current assets 47,618 54,011
----------- -----------
TOTAL CURRENT ASSETS 540,393 487,231
Plants and properties 869,831 826,100
Less accumulated depreciation 490,025 439,281
----------- -----------
379,806 386,819
Other assets 80,835 98,151
----------- -----------
TOTAL ASSETS $ 1,001,034 $ 972,201
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable $ 1,755 $ 60,539
Accounts payable 96,587 81,133
Income taxes 31,621 27,364
Other accrued liabilities 158,501 151,469
Current maturities of long-term debt 930 4,257
----------- -----------
TOTAL CURRENT LIABILITIES 289,394 324,762
Long-term debt 234,914 246,214
Postretirement benefits other than pensions 120,848 120,058
Other liabilities 28,150 22,558
Deferred income taxes 7,682 5,377
SHAREHOLDERS' EQUITY
Common stock - par value $5 a share
Authorized - 100,000,000 shares
Outstanding - 28,795,909 and
28,405,880 shares, respectively
(after deducting 5,413,987 and
5,804,016 shares, respectively, in treasury) 143,979 142,029
Additional paid-in capital 12,511 2,157
Retained earnings 184,930 138,628
Currency translation adjustments (21,374) (29,582)
----------- -----------
TOTAL SHAREHOLDERS' EQUITY 320,046 253,232
------------ -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 1,001,034 $ 972,201
=========== ===========
<FN>
The Notes to Financial Statements are an integral part of this statement.
</FN>
</TABLE>
<PAGE>
-64-
<TABLE>
<CAPTION>
STATEMENT OF CASH FLOWS
Years ended December 31, 1994, 1993 and 1992
(In thousands)
1994 1993 1992
-------- -------- --------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ 65,855 $ (59,718) $ 14,442
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Cumulative effect of accounting change,
net of income tax benefit - 70,229 -
Special charge - 26,000 -
Depreciation 60,784 61,802 62,242
Deferred income taxes 17,436 (5,465) 11,178
Changes in certain assets and liabilities,
excluding effects from special charge
- -Receivables (41,384) (15,041) (26,405)
- -Inventories (3,570) 42,656 24,679
- -Accounts payable 13,116 5,016 1,153
- -Income taxes 10,631 (8,298) (3,010)
- -Other assets, payables and accruals 19,164 18,810 (6,538)
Restructuring payments - net (5,978) (17,439) (31,749)
Other 6,947 10,367 135
---------- ---------- ----------
NET CASH PROVIDED BY OPERATING ACTIVITIES 143,001 128,919 46,127
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (55,154) (55,128) (52,278)
Other 1,840 1,904 993
---------- ---------- ----------
NET CASH USED BY INVESTING ACTIVITIES (53,314) (53,224) (51,285)
CASH FLOWS FROM FINANCING ACTIVITIES
Cash dividends (19,553) (19,258) (19,198)
Decrease in notes payable (57,862) (51,092) (30,193)
Repayments of long-term borrowings (15,068) (15,261) (15,920)
Long-term borrowings 317 8,523 75,744
Stock issuance under stock plans 12,304 2,528 192
---------- ---------- ----------
NET CASH PROVIDED(USED) BY FINANCING ACTIVITIES (79,862) (74,560) 10,625
Effect of exchange rate changes on cash (2,431) (6,870) (5,795)
---------- ---------- ----------
INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 7,394 (5,735) (328)
Cash and cash equivalents at beginning of year 20,534 26,269 26,597
---------- ---------- ----------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 27,928 $ 20,534 $ 26,269
========== ========== ==========
<FN>
The Notes to Financial Statements are an integral part of this statement.
</FN>
</TABLE>
<PAGE>
-65-
<TABLE>
<CAPTION>
STATEMENT OF SHAREHOLDERS' EQUITY
Years ended December 31, 1994, 1993 and 1992
(Dollars in thousands, except per share data)
Additional Currency
Common Paid-In Retained Translation
Stock Capital Earnings Adjustments
<S> <C> <C> <C> <C>
BALANCE AT JANUARY 1, 1992 $ 141,130 $ 336 $ 222,360 $ 10,821
Net income 14,442
Cash dividends paid ($.68 a share) (19,198)
Issuance of 11,656 shares, net of
shares exchanged, under stock plans 58 134
Translation and hedge adjustments (17,223)
--------- --------- --------- ---------
BALANCE AT DECEMBER 31, 1992 141,188 470 217,604 (6,402)
Net loss (59,718)
Cash dividends paid ($.68 a share) (19,258)
Issuance of 168,254 shares, net of
shares exchanged, under stock plans 841 1,687
Translation and hedge adjustments (23,180)
--------- --------- --------- ---------
BALANCE AT DECEMBER 31, 1993 142,029 2,157 138,628 (29,582)
Net income 65,855
Cash dividends paid ($.68 a share) (19,553)
Issuance of 390,029 shares, net of
shares exchanged, under stock plans 1,950 10,354
Translation and hedge adjustments 8,208
--------- --------- --------- ---------
BALANCE AT DECEMBER 31, 1994 $ 143,979 $ 12,511 $ 184,930 $ (21,374)
========= ========= ========= =========
<FN>
The Notes to Financial Statements are an integral part of this statement.
</FN>
</TABLE>
<PAGE>
-66-
NOTES TO FINANCIAL STATEMENTS
December 31, 1994
(Dollars in thousands, except per share data)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation: The consolidated financial statements include
the accounts of the Company and its subsidiaries. Affiliated companies in
which the Company's ownership is 20 to 50 percent are accounted for by the
equity method. All other minority investments are carried at cost. All
significant intercompany transactions, balances and profits are eliminated
upon consolidation.
Cash Equivalents: Marketable securities that are highly liquid and have
maturities of three months or less are classified as cash equivalents. The
carrying amount approximates fair value.
Inventories: Inventories are stated at the lower of cost or market.
Inventory costs for U.S. operations are determined principally by the last-in,
first-out (LIFO) method. The remaining inventory costs are determined
primarily by the first-in, first-out (FIFO) method.
Plants and Properties: Plants and properties are carried at cost.
Depreciation is generally computed by the straight-line method over the
estimated useful lives of the respective assets. In general, depreciation is
provided at annual rates of 2.5 to 3 percent on buildings and 8 to 10 percent
on equipment.
Life Insurance: The Company's investment in corporate-owned life insurance is
recorded net of policy loans. Net life insurance expense, including interest
expense of $1,522 on policy loans in 1994, is included in Other expenses - net
in the Statement of Income.
Accounting Changes: The Company adopted Statement of Financial Accounting
Standards No. 106, "Employers' Accounting for Postretirement Benefits Other
than Pensions," effective January 1, 1993. The effect of adopting this
standard is discussed in Note 8. The Company also adopted, effective January
1, 1993, Statement of Financial Accounting Standards No. 112, "Employers'
Accounting for Postemployment Benefits," which was not significant to the
Company's results of operations or consolidated financial position.
Net Income (Loss) per Share: Net income (loss) per share is computed using
the average number of common shares outstanding, including common stock
equivalents. For purposes of computing net income per share for 1994, the
assumed conversion of the Company's 6 percent convertible debentures was
included in average shares outstanding, increasing the average number of
shares outstanding by 1,904,762 shares, and net income was increased for the
after-tax equivalent of interest expense on the debentures. The assumed
conversion of the 6 percent convertible debentures was not included in average
shares outstanding for 1993 and 1992 because the effect of the inclusion would
have been anti-dilutive.
<PAGE>
-67-
NOTES TO FINANCIAL STATEMENTS
NOTE 2 - ACCOUNTS RECEIVABLE
The Company has an agreement expiring on December 22, 1995, with a financial
institution to sell, on an ongoing basis, undivided percentage ownership
interests in a designated pool of U.S. trade accounts receivable, up to a
maximum of $75,000. Accounts receivable amounting to $50,000 and $75,000 were
sold under this agreement at December 31, 1994 and 1993, respectively. The
Company has retained substantially the same risk of loss as if these accounts
receivable had not been sold.
NOTE 3 - INVENTORIES
Inventory costs determined by the LIFO method accounted for approximately 55
percent and 51 percent of the total inventories at December 31, 1994 and 1993,
respectively. If all inventories valued by the LIFO method had been valued at
current costs, these inventories would have been approximately $33,047 and
$32,829 higher than reported at December 31, 1994 and 1993, respectively.
During 1994, 1993 and 1992 certain inventories were reduced, resulting in the
liquidation of LIFO inventory quantities carried at lower costs prevailing in
prior years compared with current cost. The effect of these inventory
liquidations in 1994 was not significant. In 1993 and 1992, the effect of
inventory liquidations was to reduce cost of products sold by $7,615 and
$6,590, respectively. This increased income before cumulative effect of
accounting change in 1993 by $4,653 ($.16 per share) and increased net income
in 1992 by $4,086 ($.14 per share).
NOTE 4 - DEBT
1994 1993
------ ------
6% convertible subordinated debentures $100,000 $100,000
7.95% notes 75,000 75,000
9.55% senior sinking fund debentures 50,000 50,000
Industrial revenue bonds - interest rates from
5.8% to 9.5% - due at various dates to 2013 7,661 11,176
Other 3,183 14,295
-------- --------
235,844 250,471
Less current maturities 930 4,257
-------- --------
$234,914 $246,214
======== ========
<PAGE>
-68-
NOTES TO FINANCIAL STATEMENTS
NOTE 4 - DEBT (Continued)
The 6 percent convertible subordinated debentures are convertible into common
stock at a conversion price of $52.50 per share. The debentures mature on
October 15, 2002, and are subject to earlier redemption, at the option of the
Company, in whole or in part, at specified declining redemption prices plus
accrued interest. The 7.95 percent notes mature on May 1, 1997, are not
redeemable prior to maturity, and are not subject to a sinking fund.
The 9.55 percent senior sinking fund debentures mature on February 1, 2018,
and are subject to earlier redemption, at the option of the Company, in whole
or in part, at specified declining redemption prices plus accrued interest.
An annual mandatory sinking fund payment of $2,500 is required commencing
February 1, 1999. The Company may increase its sinking fund payment in any
year by an additional amount of up to $5,000.
In 1994, the Company executed a five-year, $175,000 revolving credit agreement
with a consortium of U.S. and non-U.S. banks. Borrowings under the credit
line will bear interest at rates agreed to by the Company and lendors. At
December 31, 1994, there were no borrowings under this agreement. Covenants
of the revolving credit agreement and certain other debt instruments require
the Company to maintain certain financial ratios, including a limitation that
the Company's debt-to-capitalization ratio (exclusive of the effects of the
change in accounting for postretirement benefit obligations) not exceed a
specified amount. At December 31, 1994, under the most restrictive of these
covenants, retained earnings of $154,000 were available for the payment of
cash dividends.
At December 31, 1994, long-term debt amounting to $235,844, including current
maturities, had an estimated fair value of $224,400. Estimated fair value for
long-term debt, including current maturities, at December 31, 1993, was
$265,600. Fair value for notes payable at December 31, 1994 and 1993, was
approximately equal to the carrying amount at that date.
Maturities of long-term debt in 1995 and in the four succeeding years are
$930, $507, $75,498, $549 and $3,102. Interest paid on debt during 1994, 1993
and 1992 amounted to $25,146, $24,994 and $26,825, respectively. The weighted
average interest rate of outstanding short-term notes payable was 9.4 percent
and 4.8 percent at December 31, 1994 and 1993, respectively.
<PAGE>
-69-
<TABLE>
NOTES TO FINANCIAL STATEMENTS
<CAPTION>
NOTE 5 - INCOME TAXES
The components of income before income taxes and cumulative effect of
accounting change consist of the following:
1994 1993 1992
------ ------ ------
<S> <C> <C> <C>
U.S. $ 45,562 $ 8,147 $ 649
Non-U.S. 55,693 8,964 23,393
-------- --------- ---------
$101,255 $ 17,111 $ 24,042
======== ========= =========
</TABLE>
<TABLE>
<CAPTION>
Income tax expense, excluding taxes related to cumulative effect of accounting
change, consists of the following:
1994 1993 1992
------ ------ ------
<S> <C> <C> <C>
Current:
U.S. federal $ 4,537 $ 4,841 $ (6,098)
State and local 954 299 1,875
Non-U.S. 12,473 6,925 2,645
-------- --------- ---------
17,964 12,065 (1,578)
Deferred:
U.S. federal 10,900 (2,050) 9,055
Non-U.S. 6,536 (3,415) 2,123
-------- --------- ---------
17,436 (5,465) 11,178
-------- --------- ---------
$ 35,400 $ 6,600 $ 9,600
======== ========= =========
</TABLE>
<PAGE>
-70-
NOTES TO FINANCIAL STATEMENTS
NOTE 5 - INCOME TAXES (Continued)
The effect of temporary differences and loss carryforwards giving rise to
deferred tax assets and liabilities is as follows:
1994 1993
------ ------
Gross Deferred Tax Assets
Postretirement benefits other than pensions $ 42,332 $ 45,540
Tax loss carryforwards 30,572 44,712
Employee benefit accruals 9,436 9,315
Other 10,400 18,841
--------- ---------
92,740 118,408
Gross Deferred Tax Liabilities
Depreciation (37,737) (36,875)
Pensions (3,125) (5,746)
Other (1,157) (2,243)
--------- ---------
(42,019) (44,864)
Valuation allowances (29,533) (29,962)
--------- ---------
Net deferred tax assets $ 21,188 $ 43,582
========= =========
The components of deferred tax assets (liabilities) net of valuation
allowances are classified in the Statement of Financial Position as follows:
1994 1993
---- ----
Current assets $ 9,750 $ 19,287
Non-current assets 19,120 29,672
Non-current liabilities (7,682) (5,377)
-------- --------
Net deferred tax assets $ 21,188 $ 43,582
======== ========
Valuation allowances decreased $429 and $479 in 1994 and 1993, respectively,
and increased $1,429 in 1992.
<PAGE>
-71-
NOTES TO FINANCIAL STATEMENTS
NOTE 5 - INCOME TAXES (Continued)
Reconciliation of the statutory U.S. federal income tax rate to the effective
income tax rate before cumulative effect of accounting change follows:
1994 1993 1992
------ ------ ------
Statutory U.S. federal income tax rate 35.0% 35.0% 34.0%
Increase (decrease) resulting from:
State and local taxes, net of federal
benefit .8 1.1 5.1
Special charge - basis differences and
charges without tax benefits - 15.6 -
Taxes in excess of (less than) the
U.S. tax rate on non-U.S. earnings 2.3 (6.0) -
Rate differential on temporary
differences - (6.5) -
Other (3.1) (.6) .8
---- ---- -----
Effective income tax rate 35.0% 38.6% 39.9%
==== ==== =====
Adjustment of net deferred tax assets due to the change in the statutory U.S.
federal income tax rate reduced the provision for income taxes for 1993 by
approximately $1,000.
At December 31, 1994, the Company had non-U.S. net operating loss
carryforwards of $72,594 for income tax purposes. Loss carryforwards of
approximately $33,809 have no expiration dates and the remainder expire in
years through 1999.
The Company does not provide deferred income taxes on undistributed earnings
of certain of its non-U.S. subsidiaries which have been reinvested
indefinitely. Undistributed earnings of non-U.S. subsidiaries for which U.S.
income taxes have not been provided approximated $56,000 at December 31, 1994.
Should these earnings be remitted, certain countries will impose withholding
taxes that will be available for use as credits against any U.S. federal
income tax liability, subject to certain limitations. It is not practical to
estimate the amount of tax that would be payable should the Company remit
these earnings.
Income taxes paid during 1994, 1993 and 1992 amounted to $7,333, $20,363 and
$1,432, respectively.
<PAGE>
-72-
NOTES TO FINANCIAL STATEMENTS
NOTE 6 - ENVIRONMENTAL
The Company or certain of its subsidiaries have been named potentially
responsible parties (PRP) for site investigation and cleanup costs under the
Comprehensive Environmental Response, Compensation, and Liability Act
(Superfund) or similar state laws with respect to certain sites. While the
ultimate outcome of the PRP designations and other environmental matters
cannot now be predicted, the Company believes that costs, in excess of amounts
provided, arising out of these matters will not have a material adverse effect
on the Company's consolidated financial position.
NOTE 7 - RETIREMENT PLANS
The Company has adopted trusteed defined-contribution plans as its primary
retirement vehicle. Such plans now cover most full-time U.S. employees and
certain non-U.S. employees. Annual expense for the major defined-contribution
plans is based primarily upon employee participation and earnings of the
Company. The Company follows the policy of funding retirement plan
contributions accrued.
The Company has trusteed defined-benefit plans covering a limited number of
full-time U.S. employees. The defined-benefit plans typically provide for
full vesting after five years of service, and benefits are principally based
on employee earnings and/or length of service. The Company's funding policy
for these plans is to make annual contributions at least sufficient to meet
minimum legal funding requirements. Various plans are also in effect for
subsidiaries operating outside the U.S., including trusteed or insured,
government-sponsored and unfunded plans.
Components of net periodic pension cost for the defined-benefit plans and the
total contributions charged to pension expense for the defined-contribution
plans are summarized below. Net periodic pension cost for 1993 was reduced by
settlement gains for certain non-U.S. plans aggregating $1,400.
<TABLE>
<CAPTION>
1994 1993 1992
------ ------ ------
<S> <C> <C> <C>
Defined-benefit plans:
Service cost - benefits earned $ 2,700 $ 2,900 $ 3,200
Interest cost 10,700 10,900 11,200
Actual return on plans' assets 2,500 (23,500) (12,300)
Net amortization and deferral (12,800) 12,300 1,800
-------- -------- --------
Net pension cost - defined-benefit plans 3,100 2,600 3,900
Defined-contribution plans 31,200 19,400 14,600
Other non-U.S. retirement plans 700 700 300
-------- -------- --------
Total pension expense $ 35,000 $ 22,700 $ 18,800
======== ======== ========
</TABLE>
<PAGE>
-73-
NOTES TO FINANCIAL STATEMENTS
NOTE 7 - RETIREMENT PLANS (Continued)
The defined-benefit plans' assets consist of equity securities, corporate and
government bonds, and real estate. Following are assumptions used in
determining the plans' benefit obligations. The measurement dates for these
plans were principally September 30.
1994 1993
------ ------
Discount rates:
U.S. 8.25% 7.25%
Non-U.S. 7.9 7.6
Rates of increase in future compensation:
U.S. 4.0 4.0
Non-U.S. 3.0-5.5 3.0-5.5
Long-term rate of return on assets 10.0 10.0
<TABLE>
<CAPTION>
The following table sets forth the funded status and amounts recorded in the
Company's Statement of Financial Position for defined-benefit plans.
1994 1993
-------------------- ---------------------
Assets Accumulated Assets Accumulated
Exceed Benefits Exceed Benefits
Accumulated Exceed Accumulated Exceed
Benefits Assets Benefits Assets
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Actuarial present value
of benefit obligation:
Vested benefit obligation $ 93,300 $ 31,200 $107,800 $ 17,800
======== ======== ======== ========
Accumulated benefit obligation $ 94,600 $ 32,900 $110,800 $ 18,500
======== ======== ======== ========
Projected benefit obligation $109,800 $ 35,800 $128,200 $ 19,400
Plans' assets at fair value 118,100 13,600 136,300 900
-------- -------- -------- --------
Projected benefit obligation
(in excess of) less than
plans' assets 8,300 (22,200) 8,100 (18,500)
Unrecognized net gain (1,000) (8,100) (9,300) (1,200)
Unrecognized net
obligation less amortization 1,800 2,400 4,400 1,200
Unrecognized prior service cost 8,800 2,200 9,000 700
Adjustment required to
recognize minimum liability - (1,100) - (500)
-------- -------- -------- --------
Net pension asset (liability)
recorded in the Statement
of Financial Position $ 17,900 $(26,800) $ 12,200 $(18,300)
======== ======== ======== ========
</TABLE>
<PAGE>
-74-
NOTES TO FINANCIAL STATEMENTS
NOTE 8 - POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
The Company and its subsidiaries provide access to benefits under life
insurance and health care plans for most retired U.S. and certain retired non-
U.S. employees and eligible spouses (participants). Most retirees outside the
U.S. are covered by government-sponsored or retiree-funded programs. Benefits
for U.S. retirees are generally subject to participant contributions,
deductibles, co-payment provisions and certain other limitations. The Company
has reserved the right to change these benefit plans as necessary or
appropriate, where permitted by law. Effective January 1, 1993, changes were
made to plans covering certain retired participants, resulting in a
realignment of benefits and consolidation of certain plans. Certain
provisions of these changes will become effective for participants who retire
after January 1, 1995.
The revised plans recognize that the Company, as the secondary provider to
Medicare, will contribute toward the cost of health care benefits for
participants who retire at age 65 or older and have at least 10 years of
service at retirement. The amount of the Company's contribution for
participants retiring after January 1, 1995, will be limited to fixed amounts
(base-period costs) that now approximate the average current cost of claims.
Accordingly, as medical costs escalate, those participants retiring in 1995
and thereafter will pay the difference between the Company's average annual
per-capita claims costs and the base-period costs.
During a transition period, the Company will also contribute toward the cost
of health care for participants who retire prior to age 65, providing they had
met certain age and service-period requirements as of January 1, 1995. The
amount of the Company's contribution will not exceed the base-period costs.
Those participants retiring before reaching age 65 who do not meet the age and
service period requirements will have the option to purchase health care
benefits at full cost until becoming eligible for a Company contribution at
age 65.
The Company adopted Statement of Financial Accounting Standards No. 106,
"Employers' Accounting for Postretirement Benefits Other than Pensions" (FAS
106), effective January 1, 1993. This standard specifies that the expected
cost of providing postretirement benefits other than pensions be accrued
during the eligible employees' active service periods. The Company elected to
recognize the transition obligation as a cumulative effect to January 1, 1993,
of a change in accounting principle resulting in a non-cash charge to income
of $113,229 ($70,229 after tax, or $2.47 per share for the year). In addition
to the cumulative effect of change in accounting, the Company's 1993
postretirement benefit cost increased $6,800 from what it would have been had
the change in accounting not been made, decreasing income before cumulative
effect of accounting change for 1993 by $4,200, or $.15 per share.
<PAGE>
-75-
NOTES TO FINANCIAL STATEMENTS
NOTE 8 - POSTRETIREMENT BENEFITS OTHER THAN PENSIONS (Continued)
Components of postretirement benefit cost are as follows:
1994 1993
Service cost - benefits earned $ 1,971 $ 3,121
Interest cost 7,352 9,093
Net amortization and deferral (969) -
--------- ---------
Postretirement benefit cost $ 8,354 $ 12,214
========= =========
The decline in the 1994 expense was principally due to plan amendments,
reflecting reductions in service and interest costs, as well as amortization
of unrecognized prior service cost. For 1992 the cost of retiree health care
and life insurance benefits recognized as expense when claims were incurred
was $5,000.
The Company's postretirement benefit plans are not funded. The status of the
plans at December 31, 1994 and 1993 (based on measurement of the accumulated
postretirement benefit obligation at September 30), is as follows:
1994 1993
Accumulated postretirement benefit obligation:
Retirees $ 64,622 $ 67,673
Plans' participants fully eligible
to receive benefits 13,108 14,368
Other active plan participants 20,942 28,566
--------- ---------
98,672 110,607
Unrecognized prior service cost 11,611 3,859
Unrecognized net gains 10,565 5,592
--------- ---------
Accrued postretirement benefits
other than pensions $ 120,848 $ 120,058
========= =========
Following are assumptions used in determining the postretirement benefit cost
and the accumulated postretirement benefit obligation:
1994 1993
Discount rate 8.25% 7.25%
Projected health care cost trend rates:
Under age 65 10.1 10.6
Over age 65 7.4 7.7
Ultimate 5.25 5.25
Year ultimate health care cost trend
rate is achieved 2008 2008
<PAGE>
-76-
NOTES TO FINANCIAL STATEMENTS
NOTE 8 - POSTRETIREMENT BENEFITS OTHER THAN PENSIONS (Continued)
The projected health care cost trend rates listed above for under and over age
65 participants represent assumed increases in per capita cost of covered
health care benefits for 1995 and 1994, respectively. For future years, the
rates are assumed to decrease gradually and remain at the ultimate trend rate
thereafter. A one-percentage point increase in the projected health care cost
trend rates would increase the 1994 postretirement benefit cost by $860 and
the accumulated postretirement benefit obligation as of September 30, 1994, by
$6,800.
<PAGE>
-77-
NOTES TO FINANCIAL STATEMENTS
NOTE 9 - LEASES
The Company and its subsidiaries lease a variety of real property and
equipment. Rent expense under operating leases amounted to approximately
$21,908, $22,470 and $23,960 for 1994, 1993 and 1992, respectively.
Future minimum rental payments required under operating leases that have
initial or remaining non-cancelable lease terms in excess of one year as of
December 31, 1994, are as follows:
1995 $ 15,106
1996 12,490
1997 10,223
1998 8,309
1999 6,114
Thereafter 28,869
--------
$ 81,111
========
NOTE 10 - FORWARD EXCHANGE CONTRACTS
The Company enters into forward exchange contracts to hedge exposure to
exchange rate fluctuations on anticipated future purchase and sales
transactions and on certain intercompany loans denominated in currencies other
than the functional currency of the originating subsidiaries. Forward
exchange contracts are written on a short-term basis (generally 30 days), are
not held for trading purposes, and are not held for purposes of speculation.
The hedges of anticipated future transactions and intercompany loans are
intended to limit the risk associated with the effects of changes in foreign
exchange rates as the future transactions materialize and the intercompany
loans are settled. Gains and losses on all forward exchange contracts
described above are recognized in Other expenses - net in the Statement of
Income in the periods the exchange rates change. The Company's credit risk in
these transactions is limited to the cost of replacing the contracts at
current market rates in the event of non-performance by the counterparties.
Since these contracts are written with major international financial
institutions, the Company believes its risk of credit loss is remote, and any
losses incurred would not be significant. At December 31, 1994, the Company
had no forward exchange contracts outstanding to hedge exposure to exchange
rate fluctuations on anticipated future transactions or intercompany loans.
The Company previously entered into forward exchange contracts to hedge the
exposed net asset positions of certain non-U.S. subsidiaries. Gains and
losses on those contracts were deferred in the currency translation
adjustments component of shareholders' equity. At December 31, 1993, the
Company had approximately $49,000 of forward exchange contracts outstanding,
of which $42,000 related to hedges of exposed net assets.
<PAGE>
-78-
NOTES TO FINANCIAL STATEMENTS
NOTE 11 - SPECIAL CHARGE AND OTHER TRANSACTION
In 1993, the Company recorded a special charge of $26,000 for severance and
other personnel-related costs associated with worldwide work force reductions,
primarily focusing on the Company's industrial operations in Europe. This
special charge increased the net loss for the year ended December 31, 1993, by
$18,200, or $.64 per share. Also in 1993, the Company recorded a charge in
Other expenses - net of $7,000 ($4,700 after tax, or $.17 per share) to
provide for unsuccessfully contested prior years' value-added taxes in Brazil.
NOTE 12 - CAPITAL STOCK AND EMPLOYEE STOCK OPTIONS
The Company has rights outstanding as set forth in a Rights Agreement, whereby
holders of common stock have one right for each share of common stock
outstanding. When exercisable, each right entitles its holder to buy one one-
hundredth of a new preferred share for $125. The Company has 4,000,000 shares
of serial preferred stock authorized, of which no shares were outstanding at
December 31, 1994 or 1993. If a person or group acquires 20 percent or more
of the Company's outstanding common stock without complying with the Ohio
Control Share Acquisition Act, or engages in certain self-dealing
transactions, holders of rights will be entitled to purchase (a) common stock
of the Company at one-half the market price, or (b) shares of an acquiring
company at one-half the market price, depending upon the circumstances of the
transaction. The Company may redeem the rights at a price of $.01 per right
at any time prior to the rights becoming exercisable. The rights will expire
in 1999.
In 1994, the Company's shareholders approved the 1994 Stock Incentive Plan
(the "1994 Plan") which permits the issuance of stock options, stock
appreciation rights ("SARs") and performance awards to selected salaried
employees as approved by the Organization and Compensation Committee of the
Board of Directors. The 1994 Plan replaced the Company's 1982 and 1987 Stock
Option Plans ("Option Plans").
The number of shares of common stock that may be issued or transferred under
the 1994 Plan may not exceed 1,419,900 shares, which includes 419,900 shares
that were available for grant under the Option Plans as of the date the 1994
Plan was approved by the Board of Directors. The aggregate number of shares
that may be granted to any single individual through stock options or SARs
under the 1994 Plan may not exceed 200,000. Shares subject to award under the
1994 Plan that expire, terminate or are canceled without exercise are
available for the grant of new awards. In instances where SARs or performance
awards are settled in cash, the shares covered by such settlements will remain
available for issuance under the 1994 Plan. Common stock issued under the
1994 Plan may be shares of original issuance, treasury shares or a combination
thereof.
<PAGE>
-79-
NOTES TO FINANCIAL STATEMENTS
NOTE 12 - CAPITAL STOCK AND EMPLOYEE STOCK OPTIONS (Continued)
Options may be granted to selected employees to purchase common stock at a
price not less than 100 percent of fair market value on the date of grant.
The term of each award will be determined by the Organization and Compensation
Committee. All options granted as of December 31, 1994, are exercisable one
year after date of grant and expire 10 years after date of grant. Options
granted may be incentive stock options or non-qualified options. SARs granted
under the 1994 Plan may either be freestanding appreciation rights or may be
granted in tandem with stock options. No SARs were issued or outstanding at
December 31, 1994.
Performance awards may be granted to selected employees to receive future
payments contingent on continuous service with the Company and achievement of
pre-established goals. Such awards may be settled in cash, common shares
available under the 1994 Plan or a combination of both as determined by the
Organization and Compensation Committee. In January 1995, 17,049 shares of
common stock were distributed to participants as performance awards under
provisions of the long-term incentive plan for the three-year period ended
December 31, 1994.
At December 31, 1994, options were outstanding with expiration dates ranging
to May 24, 2014, to purchase 1,097,230 shares of common stock at a weighted-
average exercise price of $29.29 per share. At December 31, 1994, the Company
had 4,105,892 shares of common stock reserved for issuance in connection with
stock options and performance awards and for conversion of 6 percent
convertible subordinated debentures.
<TABLE>
<CAPTION>
The following table summarizes stock options for the years 1994 and 1993.
1994 1993
-------------------------- --------------------------
Option Range of Option Range of
Shares Option Prices Shares Option Prices
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Outstanding at
January 1 1,271,892 $14.17 to $32.81 1,546,739 $14.17 to $32.81
Granted 316,000 33.13 278,000 29.38
Exercised (416,312) 14.17 to 29.38 (468,897) 14.17 to 29.25
Expired or canceled (74,350) 14.17 to 29.25 (83,950) 22.50 to 29.38
Outstanding at
December 31 1,097,230 15.96 to 33.13 1,271,892 14.17 to 32.81
Exercisable at
December 31 781,230 15.96 to 32.81 1,007,892 14.17 to 32.81
Available for future
awards at December 31 1,086,851 419,900
</TABLE>
<PAGE>
-80-
NOTES TO FINANCIAL STATEMENTS
NOTE 13 - BUSINESS SEGMENTS
TRINOVA is a world leader in the manufacture and distribution of engineered
components and systems for industry, sold through its companies, Aeroquip and
Vickers, to the industrial, automotive, and aerospace and defense markets.
The industrial business serves original equipment and aftermarket customers in
various worldwide markets including construction, mining, logging and farm
equipment; machine tool; process industries; electrical machinery; air
conditioning/refrigeration; appliances and communications equipment;
electronics; lift truck; material handling; plant maintenance; and housing and
commercial construction.
The automotive business serves worldwide automobile, light truck and van
manufacturers.
The aerospace & defense business serves original equipment and aftermarket
customers in worldwide commercial aerospace and military markets including
commercial aircraft, air defense, cargo handling, combat and support vehicles,
commuter aircraft, engines, marine, military aircraft, military weaponry,
missiles and naval machinery.
Products include fluid connectors, pumps, hydraulic and electric motors,
electric drives, cylinders, hydraulic and electronic controls, filters and
fluid-evaluation services, and a wide variety of custom-engineered molded
automotive and industrial plastic products.
Operating income is net sales less operating expenses. Operating expenses
include cost of products sold; selling and general administrative expenses;
and engineering, research and development expenses. For 1993, operating
expenses included a special charge amounting to $26,000, allocated $19,200 to
industrial, $2,600 to automotive, $3,600 to aerospace & defense and $600 to
corporate. Identifiable assets by business segment include all assets
directly identified with those operations. Corporate assets consist of cash,
receivables, properties, deferred income taxes and deferred charges.
<PAGE>
-81-
NOTES TO FINANCIAL STATEMENTS
NOTE 13 - BUSINESS SEGMENTS (Continued)
<TABLE>
<CAPTION>
The following data relate to business segments:
Depreciation
Identi- and
Operating fiable Amortization Capital
Net Sales Income Assets Expense Expenditures
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
1994
Industrial $ 963,446 $ 89,281 $ 517,383 $ 30,141 $ 25,682
Automotive 514,273 46,841 227,115 18,215 18,725
Aerospace & Defense 316,976 28,114 178,216 11,727 8,533
---------- ---------- ---------- ---------- ----------
$1,794,695 164,236 922,714 60,083 52,940
==========
Corporate (23,167) 41,488 1,988 2,214
Investments in
affiliates - 36,832 - -
---------- ---------- ---------- ----------
$ 141,069 $1,001,034 $ 62,071 $ 55,154
========== ========== ========== ==========
1993
Industrial $ 864,590 $ 17,118 $ 477,182 $ 31,860 $ 29,115
Automotive 452,637 45,724 203,725 17,547 14,705
Aerospace & Defense 326,614 26,016 189,050 11,785 10,724
---------- ---------- ---------- ---------- ----------
$1,643,841 88,858 869,957 61,192 54,544
==========
Corporate (19,966) 64,655 1,826 584
Investments in
affiliates - 37,589 - -
---------- ---------- ---------- ----------
$ 68,892 $ 972,201 $ 63,018 $ 55,128
========== ========== ========== ==========
1992
Industrial $ 902,794 $ 16,733 $ 551,367 $ 33,145 $ 30,374
Automotive 415,387 32,291 193,549 15,555 12,178
Aerospace & Defense 377,331 29,756 199,063 12,910 8,915
---------- ---------- ---------- ---------- ----------
$1,695,512 78,780 943,979 61,610 51,467
==========
Corporate (19,800) 35,891 1,591 811
Investments in
affiliates - 37,519 - -
---------- ---------- ---------- ----------
$ 58,980 $1,017,389 $ 63,201 $ 52,278
========== ========== ========== ==========
</TABLE>
<PAGE>
-82-
NOTES TO FINANCIAL STATEMENTS
NOTE 14 - NON-U.S. OPERATIONS
U.S. sales include export sales to unaffiliated non-U.S. customers of
$133,769, $81,650 and $71,707 in 1994, 1993 and 1992, respectively. Currency
exchange losses charged to Other expenses - net amounted to $7,834, $16,398
and $8,442 in 1994, 1993 and 1992, respectively. The exchange losses
principally result from translation of financial statements for the Company's
operations in Brazil and are due, in part, to funds which have been invested.
The currency exchange losses were partially offset by investment income.
The following summary of financial data pertains to the Company and its non-
U.S. operations. The geographic groupings of non-U.S. operations have been
based on similarities of business environments and geographic proximity.
<TABLE>
<CAPTION>
United Elimina- Consoli-
States Europe Other tions dated
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
1994
Net sales $1,164,914 $ 518,785 $ 110,996 $ - $1,794,695
Operating income 102,066 24,738 14,265 - 141,069
Identifiable assets 725,297 288,820 83,447 133,362 964,202
Total assets 781,188 288,820 86,153 155,127 1,001,034
Total liabilities 593,372 142,351 8,397 63,132 680,988
1993
Net sales $1,054,595 $ 486,829 $ 102,417 $ - $1,643,841
Operating income (loss)(a) 54,895 (876) 14,873 - 68,892
Identifiable assets 689,548 325,757 63,269 143,962 934,612
Total assets 727,550 325,757 63,269 144,375 972,201
Total liabilities 683,449 103,406 (1,139) 66,747 718,969
(a) Includes special
charge amounting to: (10,775) (15,125) (100) - (26,000)
1992
Net sales $1,033,384 $ 578,464 $ 83,664 $ - $1,695,512
Operating income 32,646 15,399 10,935 - 58,980
Identifiable assets 668,746 368,117 64,066 121,059 979,870
Total assets 707,124 368,117 64,066 121,918 1,017,389
Total liabilities 506,752 219,247 2,217 63,687 664,529
</TABLE>
<PAGE>
-83-
NOTES TO FINANCIAL STATEMENTS
NOTE 15 - OTHER INFORMATION
1994 1993
---------- ----------
Receivables
Receivables $ 262,710 $ 213,877
Less allowance for doubtful accounts 15,179 13,537
--------- ---------
$ 247,531 $ 200,340
========= =========
Inventories
In-process and finished products $ 171,555 $ 172,964
Raw materials and manufacturing supplies 45,761 39,382
--------- ---------
$ 217,316 $ 212,346
========= =========
Other Current Assets
Deferred income taxes $ 9,750 $ 19,287
Prepaid expenses and other current assets 37,868 34,724
--------- ---------
$ 47,618 $ 54,011
========= =========
Plants and Properties - at Cost
Land and improvements $ 21,170 $ 20,729
Buildings 188,891 182,054
Machinery and equipment 630,654 591,219
Construction in progress 29,116 32,098
--------- ---------
$ 869,831 $ 826,100
========= =========
Other Assets
Investments in and advances to affiliates $ 36,832 $ 37,589
Deferred income taxes 19,120 29,672
Receivables, deposits and other assets 24,883 30,890
--------- ---------
$ 80,835 $ 98,151
========= =========
Other Accrued Liabilities
Employees' compensation and amounts
withheld therefrom $ 83,289 $ 63,366
Taxes, other than income taxes 10,341 11,671
Other accrued liabilities 64,871 76,432
--------- ---------
$ 158,501 $ 151,469
========= =========
<PAGE>
-84-
INVESTOR INFORMATION
Stock Exchanges
TRINOVA's common stock is traded on the New York, Chicago and Pacific Stock
Exchanges, and on the London and Frankfurt Stock Exchanges. Our NYSE ticker
symbol is TNV.
TRINOVA's 6 percent convertible subordinated debentures are listed on the
Luxembourg Stock Exchange.
Stock Ownership
On December 31, 1994, there were 11,347 record holders of TRINOVA's common
stock. Although exact information is unavailable, TRINOVA estimates there are
approximately 7,000 additional beneficial owners, based upon the 1994 proxy
solicitation.
Dividend Information
In January 1995, the Board of Directors increased the quarterly cash dividend
on TRINOVA's common stock to 18 cents per share.
Cash dividends have been paid without interruption on common stock since 1933.
The payment of dividends is subject to restrictions described in Note 4 of
Notes to Financial Statements.
Quarterly Common Stock Information
1994 1993
Quarter Ended High Low Close High Low Close
March 31 40 31.38 34.63 28.25 21 26.50
June 30 37.25 32.50 34.63 31.88 24.50 31.38
September 30 39 33.75 34.88 31.50 26.88 26.88
December 31 35.25 28.50 29.38 33.75 25.50 31.38
Dividend Payments per Share of Common Stock
1994 1993
March $ .17 $ .17
June .17 .17
September .17 .17
December .17 .17
$ .68 $ .68
-85-
EXHIBIT (21)
TRINOVA CORPORATION
SUBSIDIARIES OF THE REGISTRANT
The assets and business of all subsidiaries listed below are included in the
1994 consolidated financial statements of the Registrant. In addition to
those named, 1 U.S. and 13 non-U.S. consolidated subsidiaries and 6 affiliated
companies that are accounted for by the cost and/or equity methods are not
disclosed. The undisclosed subsidiaries and affiliated companies in the
aggregate do not constitute a significant subsidiary.
Incorporated or Percent of
Organized - Voting Securities
Company State or Country Owned
- ---------------------------------- ------------------ -----------------
TRINOVA Corporation Ohio Registrant
SUBSIDIARIES OF REGISTRANT
Aeroquip Corporation Michigan 100
Aeroquip International Inc. Delaware 100
Vickers, Incorporated Delaware 100
Vickers International Inc. Delaware 100
Aeroquip A.G. Switzerland 100
Aeroquip Iberica S.A. Spain 100
Aeroquip Inoac Co. Michigan 51
Aeroquip LTD Barbados 100
Aeroquip-Sterling GmbH Germany 100
Sterling Engineered Products Inc. Delaware 100
TRINOVA do Brasil, S/A Brazil 99.5
TRINOVA Canada Inc. Canada 100
TRINOVA GmbH Germany 100
TRINOVA Export Trading Company Virgin Islands 100
TRINOVA Limited United Kingdom 100
TRINOVA Pte. Ltd. Singapore 100
TRINOVA S.A. France 100
TRINOVA S.p.A. Italy 100
Vickers Systems Limited Hong Kong 100
Vickers Systems Limited New Zealand 100
Vickers Systems Pty. Ltd. Australia 100
Vickers Systems S.A. Spain 100
Vickers Systems Sdn. Bhd. Malaysia 100
Vickers Systems OY Finland 100
-86-
EXHIBIT (23)-1
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Annual Report (Form
10-K) of TRINOVA Corporation for the year ended December 31, 1994, of our
report dated January 25, 1995, included in Exhibit 13 to Form 10-K.
Our audits also included the financial statement schedule of TRINOVA
Corporation listed in Item 14(a)(2). This schedule is the responsibility of
the Company's management. Our responsibility is to express an opinion based
on our audits. 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 set forth
therein.
/S/ ERNST & YOUNG LLP
Toledo, Ohio
March 20, 1995
-87-
EXHIBIT (23)-2
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in Post-Effective Amendment No. 1
to Registration Statement No. 33-9127 on Form S-3 dated August 28, 1987,
Registration Statement No. 33-19555 on Form S-3 dated January 15, 1988, Post-
Effective Amendment No. 2 to Registration Statement No. 33-14682 on Form S-8
dated April 28, 1989, Registration Statement No. 33-28638 on Form S-8 dated
May 10, 1989, Registration Statement No. 33-54059 on Form S-8 dated June 10,
1994, and Registration Statement No. 33-55399 on Form S-8 dated September 8,
1994, of our report dated January 25, 1995, with respect to the financial
statements and schedule of TRINOVA Corporation included or incorporated by
reference in the Annual Report (Form 10-K) for the year ended December 31,
1994.
/S/ ERNST & YOUNG LLP
Toledo, Ohio
March 20, 1995
-88-
EXHIBIT (24)
DIRECTOR OF
TRINOVA CORPORATION
ANNUAL REPORT ON FORM 10-K
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that the undersigned director of
TRINOVA Corporation, an Ohio corporation ("TRINOVA"), does hereby constitute
and appoint Darryl F. Allen, James E. Kline and William R. Ammann, and each of
them, a true and lawful attorney in his name, place and stead, in any and all
capacities, to sign his name to TRINOVA's Annual Report on Form 10-K for the
year ended December 31, 1994, and any and all amendments to such Form 10-K,
and to cause the same to be filed with the Securities and Exchange Commission,
granting unto said attorneys and each of them full power and authority to do
and perform any act and thing necessary and proper to be done in the premises,
as fully to all intents and purposes as the undersigned could do if personally
present, and the undersigned hereby ratifies and confirms all that said
attorneys or any one of them shall lawfully do or cause to be done by virtue
hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of
Attorney on this 24th day of February, 1995.
/S/ PURDY CRAWFORD
Purdy Crawford
Director
cjk/wp
<PAGE>
-89-
DIRECTOR OF
TRINOVA CORPORATION
ANNUAL REPORT ON FORM 10-K
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that the undersigned director of
TRINOVA Corporation, an Ohio corporation ("TRINOVA"), does hereby constitute
and appoint Darryl F. Allen, James E. Kline and William R. Ammann, and each of
them, a true and lawful attorney in his name, place and stead, in any and all
capacities, to sign his name to TRINOVA's Annual Report on Form 10-K for the
year ended December 31, 1994, and any and all amendments to such Form 10-K,
and to cause the same to be filed with the Securities and Exchange Commission,
granting unto said attorneys and each of them full power and authority to do
and perform any act and thing necessary and proper to be done in the premises,
as fully to all intents and purposes as the undersigned could do if personally
present, and the undersigned hereby ratifies and confirms all that said
attorneys or any one of them shall lawfully do or cause to be done by virtue
hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of
Attorney on this 15th day of February, 1995.
/S/ DELMONT A. DAVIS
Delmont A. Davis
Director
cjk/wp
<PAGE>
-90-
DIRECTOR OF
TRINOVA CORPORATION
ANNUAL REPORT ON FORM 10-K
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that the undersigned director of
TRINOVA Corporation, an Ohio corporation ("TRINOVA"), does hereby constitute
and appoint Darryl F. Allen, James E. Kline and William R. Ammann, and each of
them, a true and lawful attorney in his name, place and stead, in any and all
capacities, to sign his name to TRINOVA's Annual Report on Form 10-K for the
year ended December 31, 1994, and any and all amendments to such Form 10-K,
and to cause the same to be filed with the Securities and Exchange Commission,
granting unto said attorneys and each of them full power and authority to do
and perform any act and thing necessary and proper to be done in the premises,
as fully to all intents and purposes as the undersigned could do if personally
present, and the undersigned hereby ratifies and confirms all that said
attorneys or any one of them shall lawfully do or cause to be done by virtue
hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of
Attorney on this 22nd day of February, 1995.
/S/ JOSEPH C. FARRELL
Joseph C. Farrell
Director
cjk/wp
<PAGE>
-91-
DIRECTOR OF
TRINOVA CORPORATION
ANNUAL REPORT ON FORM 10-K
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that the undersigned director of
TRINOVA Corporation, an Ohio corporation ("TRINOVA"), does hereby constitute
and appoint Darryl F. Allen, James E. Kline and William R. Ammann, and each of
them, a true and lawful attorney in his name, place and stead, in any and all
capacities, to sign his name to TRINOVA's Annual Report on Form 10-K for the
year ended December 31, 1994, and any and all amendments to such Form 10-K,
and to cause the same to be filed with the Securities and Exchange Commission,
granting unto said attorneys and each of them full power and authority to do
and perform any act and thing necessary and proper to be done in the premises,
as fully to all intents and purposes as the undersigned could do if personally
present, and the undersigned hereby ratifies and confirms all that said
attorneys or any one of them shall lawfully do or cause to be done by virtue
hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of
Attorney on this 23rd day of February, 1995.
/S/ DAVID R. GOODE
David R. Goode
Director
cjk/wp
<PAGE>
-92-
DIRECTOR OF
TRINOVA CORPORATION
ANNUAL REPORT ON FORM 10-K
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that the undersigned director of
TRINOVA Corporation, an Ohio corporation ("TRINOVA"), does hereby constitute
and appoint Darryl F. Allen, James E. Kline and William R. Ammann, and each of
them, a true and lawful attorney in his name, place and stead, in any and all
capacities, to sign his name to TRINOVA's Annual Report on Form 10-K for the
year ended December 31, 1994, and any and all amendments to such Form 10-K,
and to cause the same to be filed with the Securities and Exchange Commission,
granting unto said attorneys and each of them full power and authority to do
and perform any act and thing necessary and proper to be done in the premises,
as fully to all intents and purposes as the undersigned could do if personally
present, and the undersigned hereby ratifies and confirms all that said
attorneys or any one of them shall lawfully do or cause to be done by virtue
hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of
Attorney on this 15th day of February, 1995.
/S/ PAUL A. ORMOND
Paul A. Ormond
Director
cjk/wp
<PAGE>
-93-
DIRECTOR OF
TRINOVA CORPORATION
ANNUAL REPORT ON FORM 10-K
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that the undersigned director of
TRINOVA Corporation, an Ohio corporation ("TRINOVA"), does hereby constitute
and appoint Darryl F. Allen, James E. Kline and William R. Ammann, and each of
them, a true and lawful attorney in his name, place and stead, in any and all
capacities, to sign his name to TRINOVA's Annual Report on Form 10-K for the
year ended December 31, 1994, and any and all amendments to such Form 10-K,
and to cause the same to be filed with the Securities and Exchange Commission,
granting unto said attorneys and each of them full power and authority to do
and perform any act and thing necessary and proper to be done in the premises,
as fully to all intents and purposes as the undersigned could do if personally
present, and the undersigned hereby ratifies and confirms all that said
attorneys or any one of them shall lawfully do or cause to be done by virtue
hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of
Attorney on this 27th day of February, 1995.
/S/ JOHN P. REILLY
John P. Reilly
Director
cjk/wp
<PAGE>
-94-
DIRECTOR OF
TRINOVA CORPORATION
ANNUAL REPORT ON FORM 10-K
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that the undersigned director of
TRINOVA Corporation, an Ohio corporation ("TRINOVA"), does hereby constitute
and appoint Darryl F. Allen, James E. Kline and William R. Ammann, and each of
them, a true and lawful attorney in his name, place and stead, in any and all
capacities, to sign his name to TRINOVA's Annual Report on Form 10-K for the
year ended December 31, 1994, and any and all amendments to such Form 10-K,
and to cause the same to be filed with the Securities and Exchange Commission,
granting unto said attorneys and each of them full power and authority to do
and perform any act and thing necessary and proper to be done in the premises,
as fully to all intents and purposes as the undersigned could do if personally
present, and the undersigned hereby ratifies and confirms all that said
attorneys or any one of them shall lawfully do or cause to be done by virtue
hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of
Attorney on this 20th day of February, 1995.
/S/ ROBERT H. SPILMAN
Robert H. Spilman
Director
cjk/wp
<PAGE>
-95-
DIRECTOR OF
TRINOVA CORPORATION
ANNUAL REPORT ON FORM 10-K
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that the undersigned director of
TRINOVA Corporation, an Ohio corporation ("TRINOVA"), does hereby constitute
and appoint Darryl F. Allen, James E. Kline and William R. Ammann, and each of
them, a true and lawful attorney in his name, place and stead, in any and all
capacities, to sign his name to TRINOVA's Annual Report on Form 10-K for the
year ended December 31, 1994, and any and all amendments to such Form 10-K,
and to cause the same to be filed with the Securities and Exchange Commission,
granting unto said attorneys and each of them full power and authority to do
and perform any act and thing necessary and proper to be done in the premises,
as fully to all intents and purposes as the undersigned could do if personally
present, and the undersigned hereby ratifies and confirms all that said
attorneys or any one of them shall lawfully do or cause to be done by virtue
hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of
Attorney on this 15th day of February, 1995.
/S/ WILLIAM R. TIMKEN, JR.
William R. Timken, Jr.
Director
cjk/wp
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
STATEMENT OF FINANCIAL POSITION AND THE CONDENSED STATEMENT OF OPERATIONS AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<CASH> 27,928
<SECURITIES> 0
<RECEIVABLES> 262,710
<ALLOWANCES> 15,179
<INVENTORY> 217,316
<CURRENT-ASSETS> 540,393
<PP&E> 869,831
<DEPRECIATION> 490,025
<TOTAL-ASSETS> 1,001,034
<CURRENT-LIABILITIES> 289,394
<BONDS> 234,914
<COMMON> 143,979
0
0
<OTHER-SE> 176,067
<TOTAL-LIABILITY-AND-EQUITY> 1,001,034
<SALES> 1,794,695
<TOTAL-REVENUES> 1,794,695
<CGS> 1,351,403
<TOTAL-COSTS> 1,351,403
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 21,060
<INCOME-PRETAX> 101,255
<INCOME-TAX> 35,400
<INCOME-CONTINUING> 65,855
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 65,855
<EPS-PRIMARY> 2.26
<EPS-DILUTED> 2.26
</TABLE>
