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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from _________________ to _________________
Commission file number 0-3134
PARK-OHIO INDUSTRIES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
OHIO 34-6520107
- - ------------------------------------------------------ ------------------------------------------------------
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
23000 EUCLID AVENUE
CLEVELAND, OHIO
- - ------------------------------------------------------ 44117
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) ------------------------------------------------------
(ZIP CODE)
</TABLE>
Registrant's telephone number, including area code: (216) 692-7200
Securities registered pursuant to Section 12(b) of the Act:
None
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
COMMON STOCK, PAR VALUE $1.00 PER SHARE
(TITLE OF CLASS)
$.75 CUMULATIVE CONVERTIBLE PREFERRED STOCK, PAR VALUE $1.00 PER SHARE
(TITLE OF CLASS)
Indicate by check mark whether the registrant (1) has filed reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
Aggregate market value of the voting stock held by non-affiliates of the
registrant as of March 19, 1997: Approximately $113,293,000.
Number of shares outstanding of the registrant's Common Stock, par value
$1.00 per share, as of March 15, 1997: 10,869,237.
DOCUMENTS INCORPORATED BY REFERENCE
PORTIONS OF THE REGISTRANT'S PROXY STATEMENT DATED APRIL 16, 1997 ARE
INCORPORATED BY REFERENCE INTO PART III OF THIS FORM 10-K.
The Exhibit Index is located on page 33.
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PART I
ITEM 1. BUSINESS
Park-Ohio Industries, Inc. ("Park-Ohio", "the Company"), an Ohio
corporation since January, 1985, is a diversified manufacturer whose operations
serve a wide variety of industrial and consumer markets. Headquartered in
Cleveland, Ohio, Park-Ohio is publicly held, and its shares are traded on the
NASDAQ National Market System. Park-Ohio operates in two industry segments:
manufactured products and logistics. In 1996, Park-Ohio had net sales of $347.7
million and as of December 31, 1996, employed approximately 2,500 persons.
On July 31, 1996, Park-Ohio completed the sale of substantially all the
assets of Bennett Industries, Inc. ("Bennett"), a wholly-owned subsidiary which
manufactures plastic containers, to North America Packaging Corporation, an
indirect wholly-owned subsidiary of Southcorp Holdings Limited, an Australian
company, for $50.8 million in cash, resulting in a pre-tax gain of $13.8
million. The results of operations and changes in cash flows for Bennett have
been classified as discontinued operations for all periods presented in the
related consolidated statements of income and consolidated statements of cash
flows, respectively. The assets and liabilities of Bennett have been classified
in the consolidated balance sheets as net assets of discontinued operations at
December 31, 1995.
Effective March 31, 1995, Park-Ohio acquired all of the shares of RB&W
Corporation ("RB&W") in exchange for $31.0 million in cash and 2.0 million
shares of its common stock in a transaction valued at $54.2 million. The
combination has been accounted for as a purchase and accordingly, the operations
of RB&W are included in the consolidated financial statements as of that date.
The metal forming business of RB&W is included within the manufactured products
segment and the supply chain management business comprises the logistics
segment.
MANUFACTURED PRODUCTS
Park-Ohio's manufactured products segment includes forged and machined
products, metal forming, capital equipment, aluminum permanent mold castings,
industrial rubber products, consumer products and pharmaceutical caps and vials
and is carried out in 19 plants by approximately 2,000 employees. The three
largest customers, comprised of many divisions, accounted for approximately 34%
of manufactured products sales in 1996. The loss of business from any one of
these customers would have an adverse effect on this segment.
During 1995, in addition to the acquisition of the metal forming business
of RB&W, Park-Ohio also purchased certain assets of four companies for a total
cost of $6.4 million. The operations of these businesses prior to the dates of
acquisition were not material to Park-Ohio.
On October 15, 1993, Park-Ohio acquired General Aluminum Mfg. Company
("GAMCO") by issuing 250,000 shares of its common stock in exchange for the
outstanding shares of GAMCO. See Note B to the consolidated financial statements
included herein.
FORGED AND MACHINED PRODUCTS
Forged and machined products include the production, machining and
finishing of closed die forgings produced by Park-Ohio and others. The
transportation industry is Park-Ohio's major market for its forged and machined
products. Park-Ohio forges crankshafts and machines camshafts and crankshafts
for diesel engines used in trucks, locomotives, buses, farm machinery, marine
and other applications. It also forges components and other high-strength, high-
performance, structural parts for civilian and military aircraft, truck,
military ordnance and other machinery and equipment producers. Park-Ohio's
forging and machining business is carried out by approximately 450 employees in
four plants, two of which are located in Cleveland, Ohio, one in Wellington,
Ohio and one in Berwick, Pennsylvania. Forging and
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machining sales are generated by an internal sales force and through independent
sales representatives. Competition for forging and machining work is
substantial. Several of Park-Ohio's larger customers also do their own forging
or machining and there are many independent companies in this field, some of
which are substantially larger than Park-Ohio. Park-Ohio's forgings are made
primarily from various kinds of steel alloys. These raw materials are generally
available from a number of sources.
METAL FORMING
RB&W metal forming includes the engineering and manufacturing of cold
formed products and related hardware, principally, internally threaded parts and
miscellaneous formed metal components and assemblies which are manufactured in
high volume by cold forming, cold extrusion and specialized secondary
operations. The predominant material used is steel of various carbons and alloys
which is purchased directly from steel mills as hot rolled coils or rods or bars
of various diameters. Non-ferrous materials such as silicon bronze are purchased
in coils ready for use. These raw materials are generally available from a
number of sources. RB&W manufactures certain trademark items which are used in
volume in the automobile and truck industry and segments of the farm and
machinery businesses. These include lock nuts which find principal use in
applications where vibration is a problem and controlled tightening is desired.
RB&W's metal forming business is carried out by approximately 300 employees in
three plants located in Kent, Ohio; Coraopolis, Pennsylvania and Toronto,
Ontario. Metal forming products are sold through an internal sales force and
through independent representatives. The domestic industrial fastener industry,
which accounts for all of the products of RB&W's metal forming business, is
highly competitive. RB&W is one of the largest of several domestic producers of
industrial fasteners.
CAPITAL EQUIPMENT
Park-Ohio custom engineers, manufactures and sells capital equipment
consisting of forging presses, specialty lift trucks and induction heating
systems. Induction heating systems, the principal product, are sold under the
TOCCO brand name through Tocco, Inc. ("Tocco"), a wholly-owned subsidiary. TOCCO
induction heating systems are used primarily for heat treating, surface
hardening, heating for forging, brazing, soldering, annealing, shrink-fitting,
melting, welding, and heating metal components, principally for the purpose of
up-grading the wear and fatigue resistance features of such components.
Automotive and automotive supplier companies are Tocco's major customers with
farm equipment manufacturers second and miscellaneous metalworking companies
third. TOCCO systems are sold worldwide. Several companies manufacture equipment
competitive with some or all of the TOCCO equipment. While standard "off the
shelf" systems are produced, it is more often necessary to engineer unique
installations to meet the particular needs of the customer. TOCCO custom
engineering may involve systems with a series of loading, heating, quenching,
conveying and unloading processes incorporated into a single unit. The
individually designed systems may involve micro-processor controls, adaptable
modular construction and solid state technology. Production of capital equipment
and the related replacement parts along with the customer service technology is
carried out by approximately 500 employees in two plants, one located in
Cleveland, Ohio and one in Boaz, Alabama. In addition, a laboratory and customer
service facility is located in Madison Heights, Michigan. Sales are made both
through an internal sales organization and through independent representatives.
The various electrical components, electrical wiring, metal stampings, castings,
and other materials incorporated in the capital equipment are generally
available from a variety of sources.
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ALUMINUM PERMANENT MOLD CASTINGS
Park-Ohio produces and machines aluminum permanent mold castings
principally for the automotive industry through GAMCO, a wholly-owned
subsidiary. GAMCO operates with approximately 350 employees with plants located
in Conneaut, Ohio and Hartsville, Tennessee. The castings produced by GAMCO are
used in automobiles, vans and light trucks. GAMCO has received quality awards
from its major automotive customers and is one of the few permanent mold
aluminum foundries in the United States to have received these awards. Raw
materials for production, primarily aluminum ingots of various alloys, are
generally available. Products are sold directly and through sales
representatives.
INDUSTRIAL RUBBER PRODUCTS
Park-Ohio's industrial rubber and silicone products consist of injection
and transfer molded products, lathe cut goods, roll coverings, linings and items
requiring rubber-to-metal bonding. Rubber products produced by Park-Ohio are
used in automobiles, air brake equipment, gas and oil lines, motors,
compressors, caskets, communication equipment, printing rolls and steel mills.
Market conditions are competitive. Products are sold directly and through sales
representatives to a variety of industries. Raw materials for production include
natural and synthetic rubber and metal inserts, all of which are generally
available. Park-Ohio's industrial rubber products business is carried out by
approximately 300 employees in three plants in East Butler, Pennsylvania;
Geneva, Ohio; and Cicero, Illinois.
CONSUMER PRODUCTS
Park-Ohio manufactures barbecue grills, lawn spreaders, lap trays, patio
tables, tray table sets, plant stands and screen enclosures through Kay Home
Products, Inc. ("KHP"), a wholly-owned subsidiary. Sales are made through its
own sales organization and through independent representatives. KHP distributes
the products nationwide through a network comprised of mass merchandisers,
grocery chains, drug stores, and hardware stores. Market conditions are price
competitive. KHP has operations in Cleveland, Ohio; Antioch, Illinois and
Columbus, Ohio. Because KHP's business is very seasonal, the number of its
employees varies from approximately 100 during the off season to a peak of
approximately 300. KHP is not dependent upon any particular suppliers. During
the fourth quarter of 1996, Park-Ohio commenced the reorganization of its
consumer products manufacturing operations which will result in the realignment
of two manufacturing facilities and the discontinuance of certain product lines.
As a result of these actions, Park-Ohio recorded a charge of $2.7 million
primarily for the writedown of certain property and equipment and inventory to
net realizable value.
PHARMACEUTICAL CAPS AND VIALS
Friendly and Safe Packaging Systems, Inc., an eighty percent owned
subsidiary of Park-Ohio, acquired the worldwide exclusive license to manufacture
and market a combination container and one piece safety cap in September of
1995. Park-Ohio has spent a year and a half on the reengineering and design of
the Friendly and Safe(TM) cap systems. Initial shipments of the product will
begin in April of 1997, but revenues from this source are not expected to be
material to Park-Ohio in fiscal 1997. Park-Ohio believes its Clear Picture(TM)
safety cap and vial is superior to the current products on the market, but the
market is extremely competitive.
LOGISTICS
The principal activity of Park-Ohio's logistics business is the supply
chain management of various commodity products primarily fasteners, principally
to original equipment manufacturers. Logistics locations inventory several
thousand items which are readily available including common standard fasteners
such as bolts, nuts and cap screws; machine tapping and wood
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screws; stainless steel and non-ferrous bolts, nuts and screws; patented and
proprietary locking fasteners; plus non-standard engineered special items
inventoried for specific customer's orders. The logistics business is carried
out by approximately 500 employees, has 31 branches located throughout the
United States, Canada, Puerto Rico, Mexico and England, and has a central
distribution center located in Dayton, Ohio. The central distribution center
receives, processes and packages certain materials for the 31 branches. The
logistics business sales are generated through national agreements, Total
Fastening Service ("TFS") contracts, along with field and telemarketing efforts
on the part of each branch. These TFS contracts with large original equipment
manufacturers have increased significantly over the last few years. The products
sold by logistics are manufactured by a broad base of domestic fastener
manufacturers, as well as qualified sources around the world. The single largest
customer accounted for approximately 11% of sales of logistics. The loss of such
customer would have an adverse effect on this business. The logistics business
is competitive in both price and service and competes with a large number of
companies, including those with domestic manufacturing operations, and other
importers, many of whom have access to the same or similar sources of supply.
ENVIRONMENTAL REGULATIONS
Park-Ohio is subject to numerous laws and regulations designed to protect
the environment, particularly in regard to waste and emissions. In general,
Park-Ohio has not experienced difficulty in complying with environmental
protection provisions in the past, and compliance with such laws and regulations
has not had a materially adverse effect on Park-Ohio's operations.
INFORMATION AS TO INDUSTRY SEGMENT REPORTING
The information contained under the heading of "Note L -- Industry
Segments" of notes to consolidated financial statements included herein,
relating to net sales, operating income, identifiable assets and other
information by industry segment for the years ended December 31, 1996, 1995 and
1994 is incorporated herein by reference.
ITEM 2. PROPERTIES
Park-Ohio's operations include numerous manufacturing and warehousing
facilities located in 21 states in the United States and in 3 other countries.
Approximately 52% of the available square footage is owned. In 1996,
approximately 83% of the available domestic square footage was used by the
manufactured products segment and 17% by the logistics segment. Approximately
77% of the foreign facilities were used by the manufactured products segment and
23% were used by the logistics segment.
In the opinion of management, Park-Ohio's facilities are generally well
maintained and are suitable and adequate for their intended use.
ITEM 3. LEGAL PROCEEDINGS
Park-Ohio becomes involved in litigation arising out of its normal business
activities. In the opinion of management, Park-Ohio's liability, if any, under
any pending litigation would not materially affect its financial position or
results of operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders during the
fourth quarter of 1996.
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EXECUTIVE OFFICERS OF THE REGISTRANT
Information relating to executive officers of Park-Ohio is as follows:
<TABLE>
<CAPTION>
EXECUTIVE
OFFICER OF
REGISTRANT
NAME AGE PRESENT EXECUTIVE OFFICE SINCE
- - ------------------------ --- -------------------------------------------- ----------
<S> <C> <C> <C>
Edward F. Crawford 57 Chairman and Chief Executive Officer 1992
John J. Murray 41 President and Chief Operating Officer 1995
James S. Walker 54 Vice President and Chief Financial Officer 1983
Ronald J. Cozean 33 Secretary and General Counsel 1994
Matthew V. Crawford 27 Assistant Secretary and Corporate Counsel 1996
Patrick W. Fogarty 36 Chief Financial Officer of RB&W Corporation 1996
Felix J. Tarorick 54 President of RB&W Manufacturing 1996
</TABLE>
Mr. Walker has been an employee of Park-Ohio for more than five years.
Since 1964, Mr. Crawford owned and operated various private companies and is
currently Chairman and Chief Executive Officer, Crawford Group, Inc. From April,
1989, to his resignation in March, 1991, Mr. Crawford was a director of
Park-Ohio. On June 17, 1992, the shareholders approved the acquisition of Kay
Home Products, Inc., a company wholly-owned by Mr. Crawford. At that time, Mr.
Crawford was appointed to the Board of Directors and was elected Chairman, Chief
Executive Officer and President of Park-Ohio. Mr. Murray became the President
and Chief Operating Officer on January 1, 1995. He had been President of KMR
Industries, Inc. (business consulting firm) since 1991 and was formerly the
President and Chief Operating Officer, Rennoc Corporation (manufacturing
company) from 1989 to 1990. Mr. Murray was elected to the Board of Directors in
1992. Mr. Cozean was an attorney with the law firm of Squire, Sanders & Dempsey
prior to joining the Company in 1994. Matthew Crawford worked in the corporate
finance department of McDonald & Company prior to joining the Company in 1995.
Matthew Crawford is the son of Mr. Crawford. Mr. Fogarty worked for Ernst &
Young LLP prior to joining the Company in 1995. Mr. Tarorick was the President
of Kay Home Products prior to his position as President of RB&W Manufacturing.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SECURITY HOLDER
MATTERS
Park-Ohio's common stock, $1 par value, is traded on the NASDAQ National
Market System. The table presents its high and low sales prices. No dividends
were paid during the periods.
QUARTERLY COMMON STOCK PRICE RANGES
<TABLE>
<CAPTION>
1996 1995
------------ ------------
QUARTER HIGH LOW HIGH LOW
- - ------- ---- --- ---- ---
<S> <C> <C> <C> <C>
1st 17 1/8 13 1/8 14 10 5/8
2nd 23 16 3/8 12 1/4 11
3rd 19 3/8 14 1/8 15 3/8 12
4th 16 5/8 12 7/8 16 1/4 12 1/2
</TABLE>
The number of common shareholders of record for Park-Ohio's common stock as
of March 20, 1997 was 2,063.
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ITEM 6. SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
-------------------------------------------------------------
1996 1995 1994 1993 1992
--------- --------- --------- --------- ---------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
Operations
Net sales........................... $ 347,679 $ 289,501 $ 129,216 $ 94,472 $ 67,190
Gross profit........................ 58,279 48,630 24,991 18,580 9,456
Income (loss) from continuing
operations before income taxes... 14,753 12,913 6,652 3,929 (8,681)
Income taxes (benefit).............. 5,060 (6,900) (1,826) 242 137
Income (loss) from continuing
operations....................... 9,693 19,813 8,478 3,687 (8,818)
Income from discontinued
operations....................... 11,642 4,221 4,006 2,344 1,163
Cumulative effect of change in
accounting principle............. -0- -0- -0- -0- (26,891)
Net income (loss)................... 21,335 24,034 12,484 6,031 (34,546)
Net income (loss) per common share:
Continuing operations............ .88 1.93 1.00 .55 (1.47)
Discontinued operations.......... 1.06 .41 .49 .35 .19
Net income (loss)................ 1.94 2.34 1.49 .90 (5.76)
Supplemental per common share data
Pro forma income (loss) per common
share from continuing operations
on a fully taxable basis......... .88 .75 .47 .34 (.91)
Financial Position
Working capital..................... 99,723 96,719 29,596 18,409 11,503
Total assets........................ 282,910 301,747 128,396 93,451 67,681
Long-term debt...................... 60,754 96,503 9,766 25,054 12,008
Subordinated debentures............. 22,235 22,235 22,235 -0- -0-
Shareholders' equity................ 115,698 95,954 46,715 17,933 8,795
</TABLE>
- - ---------------
(A) On July 31, 1996, the Company completed the sale of substantially all of the
assets of Bennett Industries, Inc., a wholly-owned subsidiary which
manufactures plastic containers for $50.8 million in cash, resulting in a
pretax gain of $13.8 million recognized in the third quarter of 1996. The
results of operations for Bennett have been classified as discontinued
operations for all periods presented. The assets and liabilities of Bennett
have been classified in the consolidated balance sheets as net assets of
discontinued operations.
(B) On March 31, 1995, the Company acquired all of the shares of RB&W
Corporation in exchange for 2,023,000 shares of the Company's common stock
and cash. The transaction was accounted for as a purchase and, accordingly,
the operations of RB&W have been included since that date.
(C) On October 15, 1993, the Company acquired General Aluminum Mfg. Company in
an exchange of shares and on June 30, 1992, the Company completed the
acquisition of substantially all of the assets of Kay Home Products, Inc.
These acquisitions have been accounted for as purchases.
(D) Effective January 1, 1992, the Company adopted the provisions of Financial
Accounting Standards Board No. 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions," changing to the accrual method
of accounting for these benefits, which resulted in a noncash charge to
operations of $26,891 as of that date. During 1993, the Company reduced
costs and revised its actuarial assumptions to reflect experience.
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(E) During 1995 and 1994, the Company's utilization of net operating loss
carryforwards and reduction in valuation allowance for deferred tax assets
(See Note F to the consolidated financial statements included herein) had
the effect of increasing income per common share from continuing operations
$1.18 in 1995 and $.53 in 1994.
(F) This summary should be read in conjunction with the related Management's
Discussion and Analysis of Financial Condition and Results of Operations
included under Item 7 elsewhere herein.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
1996 versus 1995
On July 31, 1996, the Company completed the sale of substantially all of
the assets of Bennett Industries, Inc., a wholly-owned subsidiary which
manufactures plastic containers, to North America Packaging Corporation, an
indirect wholly-owned subsidiary of Southcorp Holdings Limited, an Australian
company, for $50.8 million in cash, resulting in a pre-tax gain of $13.8
million. The results of operations and changes in cash flows of Bennett have
been classified as discontinued operations for all periods presented in the
consolidated statements of income and cash flows. The assets and liabilities of
Bennett have been classified in the consolidated balance sheets as net assets of
discontinued operations at December 31, 1995.
Net sales from continuing operations increased by $58.2 million or 20%
during the period. Of the sales increase, approximately $47.8 million pertains
to incorporating RB&W in the consolidated results for the entire year with the
remainder primarily pertaining to acquisitions made subsequent to the second
quarter of 1995.
Gross profit from continuing operations rose to $58.3 million in the
current period from $48.6 million for 1995. Of the $9.7 million increase, $8.6
million pertains to acquisitions made in 1995 (approximately $6.7 million
relates to including RB&W for a full year) and $1.1 million pertains to margin
improvements primarily related to the logistics business. Consolidated gross
margins were approximately 17% of sales for both 1996 and 1995.
Selling, general and administrative costs from continuing operations
increased by 27% in 1996 primarily as a result of incorporating RB&W into the
consolidated results for the entire year. Of the total increase of $8.1 million,
55% pertains to RB&W. Other factors contributing to the increase were
administrative costs of other companies acquired at various times in 1995 which
are included in consolidated selling, general and administrative expense for the
entire year and costs associated with prospective business opportunities. As a
percentage of sales, consolidated selling, general and administrative costs
accounted for 11% of the sales dollar for 1996 and 10% for 1995.
During the fourth quarter of 1996, the Company commenced the reorganization
of its consumer products manufacturing operations which will result in the
realignment of two manufacturing facilities and the discontinuance of certain
product lines. As a result of these actions, the Company recorded a charge of
$2.7 million primarily for the writedown of certain property and equipment and
inventory to estimated net realizable value.
In December 1996, the Company negotiated full settlement of subordinated
notes receivable, resulting from the sale of two manufacturing facilities for a
gain of $2.7 million. In addition, in the third quarter, the Company realized a
$1.5 million gain on the sale of securities.
Interest expense from continuing operations increased by $1.0 million in
1996 due to higher levels of bank debt outstanding during the period. Average
debt outstanding for the period
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increased from $92.4 million in 1995 to $103.2 million in 1996. The increase in
borrowings was caused by the acquisition of RB&W as of March 31, 1995, and
higher levels of revolving credit debt to support increased sales and production
as well as capital expenditures in excess of depreciation. Interest rates for
the period are approximately the same for both 1996 and 1995.
During the fourth quarter of 1995, the Company recorded deferred tax assets
of $8.1 million relating to anticipated future income tax benefits from
utilization of net operating loss carryforwards. As a result, as of January 1,
1996, the Company began to fully provide for Federal income taxes. Additionally,
Federal income tax expense from continuing operations for the 1995 period was
reduced by $3.7 million due to the utilization of net operating loss
carryforwards. During 1996, as a result of the gain on the sale of Bennett
Industries, all net operating loss carryforwards for tax purposes relating to
the Company have been fully utilized. At December 31, 1996, subsidiaries of the
Company have net operating loss carryforwards for tax purposes of approximately
$15.0 million, subject to certain limitations which expire in 2001 to 2007.
1995 versus 1994
Effective March 31, 1995, the Company acquired all of the shares of RB&W
Corporation ("RB&W") in exchange for $31.0 million in cash and 2.0 million of
its common shares in a transaction valued at $54.2 million. The combination has
been accounted for as a purchase and, accordingly, the operations of RB&W are
included in the consolidated financial statements as of that date. The metal
forming business of RB&W is included within the manufactured products segment,
and the supply chain management business comprises the Company's logistics
segment.
Net sales from continuing operations increased by $160.3 million during the
period, of which $139.2 million pertained to RB&W whose results are included for
the period April through December 1995. Of the sales increase applicable to
RB&W, $108.5 million pertains to the logistics segment and $30.7 million relates
to the metal forming business included within the manufactured products segment.
The remainder of the sales increase pertains to the manufactured products
segment and is caused primarily by acquisitions made during the year.
Gross profit from continuing operations rose to $48.6 million in the
current period from $25.0 million for 1994. Of the $23.6 million increase in
gross profits, RB&W accounted for practically the entire increase. Consolidated
gross margins were 17% of sales in 1995 compared with approximately 19% of sales
in 1994. The decline in gross margins was due, in part, to RB&W which has lower
gross margins than the Company as a whole. In addition, margins in the consumer
products business included in the manufactured products segment declined as a
result of increased raw material costs that could not be adequately reflected in
pricing and to product mix changes.
Selling, general and administrative costs increased by 78% in the period
largely as a result of including RB&W in the consolidated results. As a
percentage of sales, consolidated selling, general and administrative costs
accounted for 10% of the sales dollar in the current period compared to 13% in
1994.
Interest expense increased by $4.4 million in 1995 due to higher levels of
debt outstanding during the period. Average debt outstanding for the period
increased from $27.8 million in 1994 to $92.0 million in 1995. The increase in
borrowings was caused by the acquisition of RB&W, other acquisitions, higher
levels of revolving credit debt to support increased sales and to the
convertible subordinated debentures issued in May 1994, being outstanding for
the entire current period. Interest rates remained approximately the same for
both 1995 and 1994.
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The income tax benefit of $6.9 million in 1995 primarily results from
recording an $8.1 million reduction in the valuation allowance on deferred tax
assets.
LIQUIDITY AND SOURCES OF CAPITAL
The ratio of current assets to current liabilities was 2.78 at December 31,
1996, compared to 2.80 at December 31, 1995 and 2.43 at December 31, 1994.
Working capital increased by $3.0 million in 1996 primarily as a result of
increased receivables and inventories offset by an increase in current
liabilities.
Current financial resources (working capital and available bank borrowing
arrangements) and anticipated funds from continuing operations are expected to
be adequate to meet current cash requirements. Capital expenditures for 1997 are
anticipated to be approximately $15.0 million which will be used to invest in
the Company's current facilities for projected new business, for scheduled
improvements and for other necessary expenditures. The Company's growth during
the three-year period ended December 31, 1996, has largely been fueled by
acquisitions. In the event additional capital resources are needed for other
opportunities in the near future, the Company believes adequate financing is
either in place or would be available. In addition, on July 31, 1996, the
Company applied the proceeds, net of income taxes, of $46.3 million from the
sale of Bennett to reduce outstanding bank borrowings. The Company currently has
in place a $125 million credit agreement of which $58.5 million is borrowed as
of December 31, 1996.
During 1996, the Company generated $20.6 million from continuing operations
before changes in operating assets and liabilities. After giving effect to the
use of $15.0 million in the operating accounts and $2.0 million provided from
discontinued operations, the Company provided $7.7 million from operating
activities. During 1996, the Company invested $15.6 million in capital
expenditures and purchased for $1.8 million, 126,225 of its own shares, all of
which were funded by internally generated cash flows and additional bank
borrowings.
During 1995, the Company generated $18.0 million from continuing operations
before changes in operating assets and liabilities. After giving effect to
changes in the operating accounts of $27.7 million and $5.7 million provided by
discontinued operations, the Company used $4.0 million in operating activities.
This amount and capital expenditures of $13.6 million were funded by an increase
in bank borrowings. In addition, the Company borrowed $68.6 million under its
revolving credit agreement to fund acquisitions of $35.8 million, primarily
RB&W, and to pay off $32.8 million of acquired debt related to the acquisitions.
During 1994, the Company generated $9.7 million from operations before
changes in operating assets and liabilities. After giving effect to changes in
the operating accounts of $6.4 million and the $5.7 million provided by
discontinued operations, the Company generated $9.0 million from operating
activities. During 1994, the Company borrowed $11.4 million under revolving
credit arrangements with a bank group and sold $20.9 million, net of financing
costs, of 7 1/4% Convertible Senior Subordinated Debentures and $4.2 million of
common stock. The combined proceeds were used to fund capital expenditures of
$11.8 million, acquisitions of $2.1 million, acquire other capital assets of
$2.9 million and retire $26.7 million of bank indebtedness under revolving
credit and term loan arrangements.
Long-term debt and the convertible senior subordinated debentures
represented 42% of the Company's capital at December 31, 1996, 55% at December
31, 1995 and 41% at December 31, 1994.
IMPACT OF INFLATION
Although inflation was not a significant factor in 1996, the Company
continues to seek ways to cope with its impact. To the extent permitted by
competition, the Company's operations generally attempt to pass on increased
costs by increasing sales prices over time. The Company primarily uses the FIFO
method of accounting for its inventories. Under this method, current costs are
generally reflected in cost of products. The charges to operations for
depreciation
9
<PAGE> 11
represent the allocation of historical costs incurred over past years and are
significantly less than if they were based on the current cost of productive
capacity being consumed.
OTHER
Governmental agencies have identified eight disposal sites for clean-up
under Superfund and similar laws to which the Company has been named a Potential
Responsible Party. The Company is participating in the cost of certain clean-up
efforts. However, the Company's share of such costs has not been material and is
not expected to have a material adverse impact on the Company's financial
condition or results of operations.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY FINANCIAL DATA
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Report of Independent Auditors.................................................... 11
Financial Statements:
Consolidated balance sheets -- December 31, 1996 and 1995....................... 12
Consolidated statements of income -- Years ended December 31, 1996, 1995 and
1994......................................................................... 13
Consolidated statements of shareholders' equity -- Years ended December 31,
1996, 1995 and 1994.......................................................... 14
Consolidated statements of cash flows -- Years ended December 31, 1996, 1995 and
1994......................................................................... 15
Notes to consolidated financial statements...................................... 16
Supplementary Financial Data:
Selected quarterly financial data (unaudited) -- Years ended December 31, 1996
and 1995..................................................................... 28
</TABLE>
10
<PAGE> 12
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
Board of Directors and Shareholders
Park-Ohio Industries, Inc.
We have audited the consolidated financial statements of Park-Ohio
Industries, Inc. and subsidiaries listed in the index at Item 14(a)(1). 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 Park-Ohio
Industries, Inc. and subsidiaries at December 31, 1996 and 1995 and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1996 in conformity with generally
accepted accounting principles.
/s/ Ernst & Young LLP
Cleveland, Ohio
February 17, 1997
11
<PAGE> 13
CONSOLIDATED BALANCE SHEETS
PARK-OHIO INDUSTRIES, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
1996 1995
-------- --------
(DOLLARS IN
THOUSANDS)
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents.......................................... $ 4,659 $ 2,662
Accounts receivable, less allowances for doubtful accounts of
$1,048 in 1996 and $787 in 1995................................. 58,764 55,121
Inventories........................................................ 83,758 80,702
Deferred tax assets................................................ 3,000 8,000
Other current assets............................................... 5,718 3,935
-------- --------
Total Current Assets....................................... 155,899 150,420
Property, Plant and Equipment
Land and land improvements......................................... 2,599 2,401
Buildings.......................................................... 21,520 20,800
Machinery and equipment............................................ 82,743 70,916
-------- --------
106,862 94,117
Less accumulated depreciation...................................... 53,054 49,691
-------- --------
53,808 44,426
Other Assets
Excess purchase price over net assets acquired, net................ 40,305 41,991
Net assets of discontinued operations.............................. -0- 33,694
Deferred taxes..................................................... 14,100 15,400
Other.............................................................. 18,798 15,816
-------- --------
$282,910 $301,747
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Trade accounts payable............................................. $ 28,545 $ 30,859
Accrued expenses................................................... 20,695 17,013
Current portion of long-term liabilities........................... 6,936 5,829
-------- --------
Total Current Liabilities.................................. 56,176 53,701
Long-Term Liabilities, less current portion
Long-term debt..................................................... 55,571 92,450
Other postretirement benefits...................................... 28,442 30,562
Other.............................................................. 4,788 6,845
-------- --------
88,801 129,857
Convertible Senior Subordinated Debentures........................... 22,235 22,235
Shareholders' Equity
Capital stock, par value $1 a share
Serial preferred stock:
Authorized -- 632,470 shares; Issued -- none.................. -0- -0-
Common stock:
Authorized -- 20,000,000 shares
Issued and outstanding -- 10,432,998 shares in 1996 and
10,401,881 in 1995........................................... 10,433 10,402
Additional paid-in capital......................................... 49,337 49,184
Retained earnings.................................................. 57,703 36,368
Treasury stock, at cost, 126,225 shares in 1996.................... (1,775) -0-
-------- --------
115,698 95,954
-------- --------
$282,910 $301,747
======== ========
</TABLE>
See notes to consolidated financial statements.
12
<PAGE> 14
CONSOLIDATED STATEMENTS OF INCOME
PARK-OHIO INDUSTRIES, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
1996 1995 1994
-------- -------- --------
(DOLLARS IN THOUSANDS, EXCEPT
PER SHARE DATA)
<S> <C> <C> <C>
Net sales................................................ $347,679 $289,501 $129,216
Costs and expenses:
Cost of products sold.................................. 289,400 240,871 104,225
Selling, general and administrative expenses........... 38,131 30,020 16,838
Restructuring charge................................... 2,652 -0- -0-
Other income........................................... (4,204) (214) -0-
Interest expense....................................... 6,947 5,911 1,501
-------- -------- --------
Income from continuing operations before income
taxes............................................. 14,753 12,913 6,652
Income taxes (benefit)................................... 5,060 (6,900) (1,826)
-------- -------- --------
Income from continuing operations................... 9,693 19,813 8,478
Discontinued operations:
Income from operation of Bennett Industries............ 3,126 4,221 4,006
Gain on disposal of Bennett Industries, net of income
taxes............................................... 8,516 -0- -0-
-------- -------- --------
Income from discontinued operations................. 11,642 4,221 4,006
-------- -------- --------
Net income................. $ 21,335 $ 24,034 $ 12,484
======== ======== ========
Net income per common share:
Continuing operations.................................. $ .88 $ 1.93 $ 1.00
Discontinued operations................................ 1.06 .41 .49
-------- -------- --------
Net income............................................. $ 1.94 $ 2.34 $ 1.49
======== ======== ========
Common shares used in the computation.................... 10,960 10,257 8,092
</TABLE>
See notes to consolidated financial statements.
13
<PAGE> 15
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
PARK-OHIO INDUSTRIES, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
ADDITIONAL
COMMON PAID-IN RETAINED TREASURY
STOCK CAPITAL EARNINGS STOCK TOTAL
------- ---------- -------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Balance at January 1, 1994........... $ 6,771 $ 11,312 $ (150) $ -0- $ 17,933
Net income........................... 12,484 12,484
Issuance of Kay Home Products
earn-out shares.................... 1,150 10,925 12,075
Sale of common stock................. 271 3,952 4,223
------- ------- ------- ------- --------
Balance at December 31,1994.......... 8,192 26,189 12,334 -0- 46,715
Net income........................... 24,034 24,034
Acquisition of RB&W Corporation...... 2,023 21,251 23,274
Issuance of General Aluminum Mfg.
Company earn-out shares............ 187 1,744 1,931
------- ------- ------- ------- --------
Balance at December 31, 1995......... 10,402 49,184 36,368 -0- 95,954
Exercise of stock options............ 31 153 184
Purchase of treasury stock........... (1,775) (1,775)
Net Income........................... 21,335 21,335
------- ------- ------- ------- --------
Balance at December 31, 1996......... $10,433 $ 49,337 $ 57,703 $ (1,775) $115,698
======= ======= ======= ======= ========
</TABLE>
See notes to consolidated financial statements.
14
<PAGE> 16
CONSOLIDATED STATEMENTS OF CASH FLOWS
PARK-OHIO INDUSTRIES, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
--------------------------------
1996 1995 1994
-------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net Income............................................. $ 21,335 $ 24,034 $ 12,484
Adjustments to reconcile net income to net cash
provided (used) by continuing operations:
Discontinued operations........................... (11,642) (4,221) (4,006)
Gain on sale of investments....................... (1,552) -0- -0-
Depreciation and amortization..................... 7,998 6,278 3,213
Tax benefit resulting from reduction of valuation
allowance on deferred tax assets............... -0- (8,100) (2,000)
Deferred income taxes............................. 4,500 -0- -0-
--------- --------- ---------
20,639 17,991 9,691
Changes in operating assets and liabilities excluding
acquisitions of businesses:
Accounts receivable................................. (3,643) (2,479) (192)
Inventories......................................... (3,056) (14,914) (5,766)
Accounts payable and accrued expenses............... (1,214) (5,473) 424
Other............................................... (7,040) (4,855) (819)
--------- --------- ---------
Net Cash Provided (Used) by Continuing
Operations..................................... 5,686 (9,730) 3,338
Net Cash Provided by Discontinued Operations...... 2,040 5,738 5,689
--------- --------- ---------
Net Cash Provided (Used) by Operating Activities.. 7,726 (3,992) 9,027
INVESTING ACTIVITIES
Purchases of property, plant and equipment, net........ (15,590) (13,632) (11,749)
Costs of acquisitions.................................. -0- (35,793) (2,114)
Investments............................................ (5,427) -0- -0-
Proceeds from sales of investments..................... 6,315 -0- -0-
Proceeds from sale of discontinued operations, net of
$4,500 of income taxes.............................. 46,313 -0- -0-
Other.................................................. -0- -0- (2,909)
--------- --------- ---------
Net Cash Provided (Used) by Investing Activities.. 31,611 (49,425) (16,772)
FINANCING ACTIVITIES
Proceeds from bank arrangements........................ 9,500 86,969 11,350
Payments on long-term debt............................. (45,249) (33,062) (26,661)
Proceeds from convertible senior subordinated
debentures, net..................................... -0- -0- 20,872
Issuance of common stock............................... 184 -0- 4,223
Purchase of treasury stock............................. (1,775) -0- -0-
--------- --------- ---------
Net Cash (Used)Provided by Financing Activities... (37,340) 53,907 9,784
--------- --------- ---------
Increase in Cash and Cash Equivalents............. 1,997 490 2,039
Cash and Cash Equivalents at Beginning of Year.... 2,662 2,172 133
--------- --------- ---------
Cash and Cash Equivalents at End of Year.......... $ 4,659 $ 2,662 $ 2,172
========= ========= =========
</TABLE>
See notes to consolidated financial statements.
15
<PAGE> 17
PARK-OHIO INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996, 1995 AND 1994
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
NOTE A -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Consolidation: The consolidated financial statements include the accounts
of the Company and all of its subsidiaries. All significant intercompany
accounts and transactions have been eliminated upon consolidation.
Accounting Estimates: The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
Cash Equivalents: The Company considers all highly liquid investments with
a maturity of three months or less when purchased to be cash equivalents.
Inventories: Inventories are stated at the lower of cost (principally the
first-in, first-out method) or market value. If the first-in, first-out method
of inventory accounting had been used exclusively by the Company, inventories
would have been approximately $4,921 and $4,928 higher than reported at December
31, 1996 and 1995, respectively.
Major Classes of Inventories
<TABLE>
<CAPTION>
DECEMBER 31
------------------
1996 1995
------- -------
<S> <C> <C>
In-process and finished goods....................... $60,587 $58,215
Raw materials and supplies.......................... 23,171 22,487
------- -------
$83,758 $80,702
======= =======
</TABLE>
Property, Plant and Equipment: Property, plant and equipment are carried at
cost. Major additions are capitalized and betterments are charged to accumulated
depreciation; expenditures for repairs and maintenance are charged to
operations. Depreciation of fixed assets is computed principally by the
straight-line method based on the estimated useful lives of the assets.
Excess Purchase Price Over Net Assets Acquired: The Company records
amortization of excess purchase price over the fair value of net assets acquired
(see Note B) over twenty-five years using the straight-line method. Management
periodically evaluates for possible impairment the current value of these
intangibles through cash flow and income analyses of the acquired businesses.
The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed of." Statement No. 121
establishes accounting standards for determining the impairment of long-lived
assets to be held and used, certain identifiable intangibles, and goodwill
related to those assets and for long-lived assets and certain identifiable
intangibles to be disposed of. The company adopted Statement No. 121 during the
first quarter of 1996. The financial statement effect of adoption was not
material.
Pensions: The Company and its subsidiaries have pension plans, principally
noncontributory defined benefit or noncontributory defined contribution plans,
covering substantially all employees. For the defined benefit plans, benefits
are based on the employee's years of service
16
<PAGE> 18
PARK-OHIO INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
and the Company's policy is to fund that amount recommended by its independent
actuaries. For the defined contribution plans, the costs charged to operations
and the amount funded are based upon a percentage of the covered employees'
compensation.
Stock-Based Compensation: The Company has elected to account for
stock-based compensation using the intrinsic value method prescribed in
Accounting Principles Board Opinion No. 25 "Accounting for Stock Issued to
Employees" ("APB 25"), and related interpretations. Under APB 25, because the
exercise price of the Company's employee stock options equals the market price
of the underlying stock on the date of grant, no compensation expense is
recognized.
Income Taxes: The Company accounts for income taxes under the liability
method whereby deferred tax assets and liabilities are determined based on
temporary differences between the financial reporting and the tax bases of
assets and liabilities and are measured using the current enacted tax rates.
Net Income Per Common Share: Net income per common share is based on the
weighted average number of common shares outstanding and assumes the exercise of
outstanding dilutive stock options and the issuance of certain additional shares
subject to earn-out provisions. On a fully-diluted basis, both net income and
common shares outstanding are adjusted to assume the conversion of the
convertible senior subordinated debentures issued in 1994. Fully diluted
earnings per share were as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
-----------------------------
1996 1995 1994
------- ------- -------
<S> <C> <C> <C>
Continuing operations.......................... $ .88 $ 1.86 $ 1.04
Discontinued operations........................ .96 .37 .45
------ ------ ------
Net income..................................... $ 1.84 $ 2.23 $ 1.49
====== ====== ======
Common shares used in the computation.......... 12,111 11,467 8,815
====== ====== ======
</TABLE>
During 1995 and 1994, the Company's utilization of net operating loss
carryforwards and reduction in valuation allowances for deferred tax assets (See
Note F) had the effect of increasing income per common share from continuing
operations by $1.18 in 1995 and $.53 in 1994. Accordingly, income per common
share from continuing operations on a fully taxable basis is as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
-----------------------------
1996 1995 1994
------- ------- -------
<S> <C> <C> <C>
Pro forma income per common share from
continuing operations on a fully taxable
basis........................................ $ .88 $ .75 $ .47
====== ====== ======
</TABLE>
Interest Rate Swap Agreements: The Company enters into interest rate swap
agreements to modify the interest characteristics of its outstanding debt. Each
interest rate swap agreement is designated with a portion of the principal
balance and term of a specific debt obligation. These agreements involve the
exchange of amounts based on a fixed interest rate for amounts based on variable
interest rates of the life of the agreement without an exchange of the notional
amount upon which the payments are based. The differential to be paid or
received as interest rates change is accrued and recognized as an adjustment of
interest expense related to the debt.
Revenue Recognition: For the majority of its operations, the Company
recognizes revenues upon shipment of its product. Revenues on long-term
contracts are recognized using the
17
<PAGE> 19
PARK-OHIO INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
percentage of completion method of accounting, under which the sales value of
performance is recognized on the basis of the percentage each contract's cost to
date bears to the total estimated cost. The recognition of profit, based upon
anticipated final costs, is made only after evaluation of the contract status at
critical milestones. The Company's contracts generally provide for billing of
customers. Revenues earned on contracts in process in excess of billings are
classified in other current assets in the accompanying balance sheet.
Environmental: The Company accrues environmental costs related to existing
conditions resulting from past or current operations and from which no current
or future benefit is discernible. Costs which extend the life of the related
property or mitigate or prevent future environmental contamination are
capitalized. The Company records a liability when environmental assessments
and/or remedial efforts are probable and can be reasonably estimated. The
estimated liability of the Company is not discounted or reduced for possible
recoveries from insurance carriers.
Concentration of Credit Risk: The Company sells its products to customers
in diversified industries. The Company performs ongoing credit evaluations of
its customers' financial condition but does not require collateral to support
customer receivables. The Company establishes an allowance for doubtful accounts
based upon factors surrounding the credit risk of specific customers, historical
trends and other information. As of December 31, 1996 the Company had
uncollateralized receivables with six customers in the automotive and truck
industry each with several locations approximating $19,988 which represents 34%
of the Company's trade accounts receivable. During 1996, sales to these
customers amounted to approximately $103,028 which represents 30% of the
Company's revenue.
Reclassifications: Certain prior year amounts have been reclassified to
conform to the 1996 presentation.
NOTE B -- ACQUISITIONS
On March 31, 1995, the Company acquired all of the shares of RB&W
Corporation (RB&W) in exchange for 2,023,000 shares of the Company's common
stock ($11.50 market value as of March 31, 1995) and cash of $30,968. The
transaction has been accounted for as a purchase.
The table below reflects the current value of the net assets acquired of
RB&W:
<TABLE>
<S> <C>
Cash................................................ $ 510
Accounts receivable................................. 29,551
Inventories......................................... 36,131
Property, plant and equipment....................... 5,591
Excess purchase price over net assets acquired...... 25,596
Deferred tax assets................................. 13,300
Other assets........................................ 12,620
Notes payable....................................... (28,739)
Trade accounts payable.............................. (21,524)
Accrued expenses.................................... (9,172)
Long-term liabilities............................... (9,622)
--------
$ 54,242
========
</TABLE>
The following unaudited pro forma results of operations assume the
acquisition occurred on January 1, 1995. These pro forma results have been
prepared for comparative purposes only
18
<PAGE> 20
PARK-OHIO INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
and do not purport to be indicative of the results of continuing operations
which actually would have resulted had the acquisition occurred on the date
indicated.
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1995
-----------------
<S> <C>
Net sales.................................................... $ 336,533
Gross profit................................................. 47,255
Income from continuing operations............................ 18,797
Income from continuing operations per common share........... $ 1.74
</TABLE>
During 1995, the Company also purchased certain assets of four companies
for a total cost of $6,400 which includes $1,500 for Ajax Manufacturing Company,
purchased from a related party. The operations of these businesses prior to the
dates of acquisition were not material to the Company.
On October 15, 1993, the Company acquired General Aluminum Mfg. Company
(GAMCO), by issuing 250,000 shares of its common stock valued at $3,127 in
exchange for the outstanding shares of GAMCO. An additional 187,500 shares of
common stock valued at $1,931 which represents purchase price in excess of net
assets acquired, were issued in March, 1995 and an additional 375,000 shares of
common stock will be issued at a value to be determined at the date of issuance
during 1997 as a result of GAMCO achieving certain income levels during 1996 as
specified in the purchase agreement. Up to an additional 187,500 shares of
common stock may be issued in 1998 if GAMCO achieves certain income levels
during the year ending December 31, 1997. Throughout 1996, the 375,000 shares to
be issued in 1997 were included in the earnings per share calculation on a
weighted average basis when it appeared likely such shares would be issued
pursuant to this agreement.
NOTE C -- SALE OF BENNETT INDUSTRIES
On July 31, 1996, the Company completed the sale of substantially all of
the assets of Bennett Industries, Inc. ("Bennett"), a wholly-owned subsidiary
which manufactures plastic containers, to North America Packaging Corporation,
an indirect wholly-owned subsidiary of Southcorp Holdings Limited, an Australian
company, for $50.8 million in cash, resulting in a pre-tax gain of $13.8
million. The results of operations and changes in cash flows for Bennett have
been classified as discontinued operations for all periods presented in the
related consolidated statements of income and consolidated statements of cash
flows, respectively. Interest expense has been allocated to discontinued
operations based on the ratio of net assets discontinued to the total net assets
of the consolidated entity plus consolidated debt. The assets and liabilities of
Bennett have been classified in the consolidated balance sheets as net assets of
discontinued operations at December 31, 1995.
Summary operating results of the discontinued operations, excluding the
above gain, for the years ended December 31, 1996, 1995 and 1994 were as
follows:
<TABLE>
<CAPTION>
DECEMBER 31
---------------------------------
1996 1995 1994
------- ------- -------
<S> <C> <C> <C>
Sales.................................................... $49,448 $81,929 $62,311
Costs and Expenses....................................... 44,502 77,708 58,305
------- ------- -------
Income from discontinued operations before income taxes.. 4,946 4,221 4,006
Income taxes............................................. 1,820 -0- -0-
------- ------- -------
Net income from discontinued operations.................. $ 3,126 $ 4,221 $ 4,006
======= ======= =======
</TABLE>
19
<PAGE> 21
PARK-OHIO INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
NOTE D -- ACCRUED EXPENSES
Accrued expenses include the following:
<TABLE>
<CAPTION>
DECEMBER 31
--------------------
1996 1995
------- -------
<S> <C> <C>
Self-insured liabilities.............................................. $ 2,521 $ 1,959
Warranty and installation accruals.................................... 2,752 2,060
Accrued payroll and payroll-related items............................. 3,112 2,977
State and local taxes................................................. 2,422 1,136
Advance billings...................................................... 1,646 1,301
Restructuring reserve (see Note M).................................... 2,653 -0-
Acquisition liabilities............................................... -0- 2,196
Interest payable...................................................... 248 780
Sundry................................................................ 5,341 4,604
------- -------
Totals...................................................... $20,695 $17,013
======= =======
</TABLE>
NOTE E -- FINANCING ARRANGEMENTS
Long-term debt consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31
--------------------
1996 1995
------- -------
<S> <C> <C>
Term loan, payable in quarterly installments of $1,250 through
December 31, 2001, final payment due March 31, 2002................. $32,500 $35,000
Revolving credit maturing on March 31, 1999........................... 26,000 59,000
Other................................................................. 2,254 2,503
------- -------
60,754 96,503
Less current maturities............................................... 5,183 4,053
------- -------
Totals...................................................... $55,571 $92,450
======= =======
</TABLE>
Maturities of long-term debt during each of the five years following
December 31, 1996 are approximately $5,183 in 1997, $5,325 in 1998, $31,523 in
1999, $5,526 in 2000 and $5,132 in 2001.
The Company has a credit agreement with a group of banks under which it may
borrow up to $125 million ($35 million term loan and $90 million revolving
credit commitments, respectively)on an unsecured basis. Interest is payable
quarterly at the prime lending rate (8.25% at December 31, 1996)or at the
Company's election, at LIBOR plus a percentage which fluctuates based on
specific financial ratios (which aggregated 6.6% at December 31, 1996). The
weighted average rate on borrowings was 6.6% at December 31, 1996. The credit
agreement expires on March 31, 1999.
The Company has agreements on which up to $3 million in standby letters of
credit and commercial letters of credit may be issued. In addition to the bank's
customary letter of credit fees, a 1% fee is assessed on standby letters of
credit on an annual basis. As of December 31, 1996, in addition to amounts
borrowed under the revolving credit agreement, there is $2.2 million outstanding
primarily for standby letters of credit. A fee of 1/4% is imposed by the bank
on the unused portion of available borrowings.
20
<PAGE> 22
PARK-OHIO INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
The credit agreement contains limitations on borrowings, investments, lease
rentals, capital expenditures and acquisitions or mergers, and requires
maintenance of specific financial ratios and a minimum net worth.
As of December 31, 1996 the Company has interest rate swap agreements for
notional borrowings of $50 million in which the Company pays a fixed rate and
receives a floating rate equal to the three month LIBOR rate. The weighted
average pay rate and receive rate under these agreements is 5.83% and 5.55%,
respectively. These agreements mature during 2000.
During 1994, the Company sold $22,235 of its 7 1/4% convertible senior
subordinated debentures and $4,200 of its common stock at $15.75 a share. The
debentures are convertible into shares of the Company's common stock at a price
of $19.32 per share or a rate of 51.76 shares per $1 thousand principal amount
of debentures and are subordinated to all senior indebtedness of the Company.
Subsequent to December 15, 1996, the debentures may be redeemed at the option of
the Company, in whole or in part, initially at 107% and thereafter at prices
declining to 100% on and after December 15, 2003 together with accrued interest.
Sinking fund payments begin in 2000 in an amount sufficient to retire annually
20% of the aggregate principal amount of debentures issued, calculated to retire
80% of the debentures prior to maturity. Interest is payable semi-annually.
NOTE F -- INCOME TAXES
Significant components of the Company's net deferred tax assets and
liabilities are as follows:
<TABLE>
<CAPTION>
DECEMBER 31
--------------------
1996 1995
------- -------
<S> <C> <C>
Deferred tax assets:
Postretirement benefit obligation................................... $10,600 $11,200
Tax net operating loss carryforwards................................ 5,100 9,000
Inventory........................................................... 4,500 4,300
Tax credits......................................................... 600 1,200
Other -- net........................................................ 3,400 5,600
------- -------
Total deferred tax assets................................... 24,200 31,300
Deferred tax liabilities:
Tax over book depreciation.......................................... 4,400 5,700
Pension............................................................. 2,700 2,200
------- -------
Total deferred tax liabilities.............................. 7,100 7,900
------- -------
Net deferred tax assets............................................... $17,100 $23,400
======= =======
</TABLE>
As of December 31, 1995, the Company reduced by $8,100 the remaining
valuation allowance on deferred tax assets relating to anticipated future income
tax benefits from utilization of net operating loss carryforwards as full
realization of these assets is expected.
21
<PAGE> 23
PARK-OHIO INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
The reasons for the difference between income taxes (benefit) and the
amount computed by applying the statutory Federal income tax rate to income from
continuing operations before income taxes are as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
---------------------------------
1996 1995 1994
------- ------- -------
<S> <C> <C> <C>
Computed statutory amount................................ $ 5,000 $ 4,400 $ 2,262
Effect of state income taxes payable..................... 600 500 -0-
Other.................................................... (540) -0- -0-
Utilization of net operating loss carryforwards.......... -0- (3,700) (2,088)
Reduction in valuation allowance for deferred tax
assets................................................. -0- (8,100) (2,000)
------- ------- -------
Income taxes (benefit)......................... $ 5,060 $(6,900) $(1,826)
======= ======= =======
</TABLE>
At December 31, 1996, subsidiaries of the Company have net operating loss
carryforwards for income tax purposes of approximately $15 million subject to
certain limitations, which expire in 2001 to 2007.
NOTE G -- STOCK OPTIONS
Under the provisions of the Company's Amended and Restated 1992 Stock
Option Plan, incentive stock options or non-statutory options to purchase
850,000 shares of the Company's stock may be granted to officers and other key
employees at the market price on the respective date of grant. The option rights
are exercisable only if and after the employee shall have remained in the employ
of the Company for one year from the date the option is granted. At December 31,
1996, there were a total of 676,000 options outstanding under the Plan; 175,000
of such options became 100% exercisable after two years from the date of grant
at option prices ranging from $3.813 -- $5.125 a share and terminate five years
from the option date; 501,000 of such options become 100% exercisable after
three years from the date of grant at option prices ranging from
$9.125 -- $14.25 a share and terminate ten years from the option date. During
1996, 31,167 options under this Plan were exercised at prices ranging from
$5.125 -- $10.625 a share. At December 31, 1996, there were 348,992 options
exercisable at option prices ranging from $3.813 -- $14.25 a share.
The 1996 Non-Employee Director Stock Option Plan authorized the granting of
options on 250,000 shares of common stock to directors who are not employees of
the Company. Annually, each non-employee director will automatically receive
options to acquire 6,000 shares at the market price on the date of grant.
Options under this plan are exercisable six months from the date of grant. At
December 31, 1996 there were 30,000 options outstanding and exercisable under
this plan at an exercise price of $13.625. Also during 1996 the Chairman and
Chief Executive Officer of the Company was granted a non-statutory stock option
to purchase 500,000 shares of common stock at $13.625 per share which was the
market price at the date of grant. The options become 100% exercisable after
five years and shall terminate fifteen years from the option date.
Had the compensation cost for the stock options granted in 1996 and 1995
been determined based on the fair value method of FASB Statement No. 123, the
Company's net income and earnings per share would have been reduced by $1,290
($.12 per share) in 1996 and $223 ($.02 per share) in 1995. The effects on 1996
and 1995 net earnings may not be representative of the effect on future years
net earnings amounts as the compensation cost on each year's grant is recognized
over the vesting period.
22
<PAGE> 24
PARK-OHIO INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
Fair value was estimated at the date of grant using a Black-Scholes option
pricing model with the following weighted-average assumptions for 1996 and 1995,
respectively: risk-free interest rates of 5.25% and 6.34%; zero dividend yield;
expected volatility of 43% and expected option lives of 6 to 10 years for 1996
and 6 years for 1995.
NOTE H -- LEGAL PROCEEDINGS
The Company becomes involved in litigation arising out of its normal
business activities. In the opinion of management, the Company's liability, if
any, under any pending litigation would not have a material effect on its
financial position or results of operations.
NOTE I -- PENSIONS
A summary of the components of net periodic pension credit for the defined
benefit plans and the total contributions charged to pension expense for the
defined contribution plans is as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
----------------------------------
1996 1995 1994
------- -------- -------
<S> <C> <C> <C>
Defined benefit plans:
Service cost.......................................... $ 296 $ 287 $ 128
Interest cost......................................... 3,249 3,362 1,469
Actual return on assets............................... (7,499) (10,719) 66
Net amortization and deferral......................... 2,795 6,315 (1,961)
------- -------- -------
Net periodic pension credit of defined benefit
plans.............................................. (1,159) (755) (298)
Defined contribution plans.............................. 796 680 508
------- -------- -------
Total pension (credit) expense................ $ (363) $ (75) $ 210
======= ======== =======
</TABLE>
Assumptions used in the accounting for the defined benefit pension plans
were as follows:
<TABLE>
<CAPTION>
DECEMBER 31
------------------------
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Weighted average discount rate...................................... 7.5 % 7.5% 8.5%
Expected long-term rate of return on assets......................... 8.5 % 8.5% 9.5%
</TABLE>
23
<PAGE> 25
PARK-OHIO INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
The following table sets forth the funded status and amounts recognized in
the consolidated balance sheets at December 31, 1996 and 1995 for the Company's
defined benefit pension plans.
<TABLE>
<CAPTION>
DECEMBER 31
--------------------
1996 1995
------- -------
<S> <C> <C>
Actuarial present value of benefit obligations:
Vested benefit obligation........................................... $42,863 $44,223
======= =======
Accumulated benefit obligation...................................... $44,671 $45,872
======= =======
Plan assets at fair value............................................. $63,139 $58,563
Projected benefit obligation.......................................... 45,049 46,308
------- -------
Plan assets in excess of projected benefit obligation................. 18,090 12,255
Unrecognized net gain................................................. (6,959) (2,956)
Unrecognized prior service cost....................................... 1,442 1,436
Unrecognized net asset at January 1, 1987 net of amortization......... (203) (231)
------- -------
Net pension asset included in other assets............................ $12,370 $10,504
======= =======
</TABLE>
The plans' assets at December 31, 1996 and 1995 are invested in listed
stocks, bonds and unallocated insurance contracts.
NOTE J -- OTHER POSTRETIREMENT BENEFITS
The Company and certain of its subsidiaries provide health care and life
insurance benefits for retired employees. Employees may become eligible for
benefits if they qualify for retirement while working for the Company.
The following table presents the plan's funded status and amounts
recognized in the consolidated balance sheets at December 31, 1996 and 1995:
<TABLE>
<CAPTION>
DECEMBER 31
--------------------
1996 1995
------- -------
<S> <C> <C>
Accumulated postretirement benefit obligation:
Retirees............................................................ $17,555 $18,460
Fully eligible active plan participants............................. 479 445
Other active plan participants...................................... 1,854 1,626
------- -------
Accumulated Postretirement Benefit Obligations.............. 19,888 20,531
Unrecognized net gain............................................... 10,307 10,851
------- -------
Accrued Postretirement Benefit Obligations.................. $30,195 $31,382
======= =======
</TABLE>
Net periodic benefit cost includes the following components for the years
ended December 31, 1996, 1995 and 1994:
<TABLE>
<CAPTION>
DECEMBER 31
------------------------------
1996 1995 1994
------ ------ ------
<S> <C> <C> <C>
Service cost................................................. $ 106 $ 92 $ 58
Interest cost................................................ 1,458 1,559 1,476
Net amortization and deferral................................ (544) (819) (620)
------ ------ ------
Net Periodic Postretirement Benefit Cost........... $1,020 $ 832 $ 914
====== ====== ======
</TABLE>
24
<PAGE> 26
PARK-OHIO INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
The accumulated postretirement benefit obligation ("APBO") was determined
using an assumed discount rate of 7.5%, 7.5% and 8.5% for 1996, 1995 and 1994,
respectively. The assumed annual health care trend rate for retirees younger
than 65 was 9.0% in 1996 (9.5% in 1995 and 10% in 1994) decreasing to 6.0% in
2004. The assumed annual health care trend rate for retirees aged 65 and over
will decrease to 5.5% in 2004. A 1% change in the trend rate would increase the
APBO by 4.2% and annual expense by 11%.
NOTE K -- LEASES
Rental expense for 1996, 1995 and 1994 was $4,751, $3,527 and $931,
respectively. Future minimum lease commitments during each of the five years
following December 31, 1996 are as follows: $3,295 in 1997, $2,630 in 1998,
$2,184 in 1999, $2,044 in 2000 and $1,735 in 2001.
NOTE L -- INDUSTRY SEGMENTS
The Company operates in two industry segments: Manufactured Products and
Logistics. The Manufactured Products Segment manufactures industrial products
for the airline, automotive, locomotive, trucking and housewares industries and
includes forged and machined products, metal forming, capital equipment,
permanent mold castings, industrial rubber products and consumer products.
Forged and machined products include the production, machining and finishing of
closed die forgings produced by the Company and others. Metal forming includes
the engineering and manufacturing of fasteners, cold formed parts and related
hardware. Capital equipment includes the engineering and manufacturing of
capital equipment consisting of forging presses, specialty lift trucks and
induction heating systems. Permanent mold castings include the production and
machining of permanent mold aluminum parts. Industrial rubber products include
custom made molded and lathe cut goods and items requiring rubber-to-metal
bonding. Consumer products include molded plastic and metal indoor and outdoor
products. The Logistics Segment provides supply chain management of various
commodity products including fasteners, primarily to original equipment
manufacturers.
The Company's sales are made through its own sales organization,
distributors and representatives. Intersegment metal forming sales to the
Logistics Segment are eliminated in consolidation and are not included in the
figures presented. Intersegment sales are accounted for at values based on
market prices. Income allocated to segments excludes interest expense and
amortization of excess purchase price over net assets acquired. Identifiable
assets by industry segment include assets directly identified with those
operations.
25
<PAGE> 27
PARK-OHIO INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
Corporate assets generally consist of cash and cash equivalents, deferred
tax assets, and other assets.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
------------------------------------
1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
Net Sales
Manufactured products............................ $196,327 $181,000 $129,216
Logistics........................................ 151,352 108,501 -0-
-------- -------- --------
$347,679 $289,501 $129,216
======== ======== ========
Income from continuing operations before income taxes
Manufactured products............................ $ 16,263 $ 14,525 $ 11,011
Logistics........................................ 9,276 8,217 -0-
-------- -------- --------
25,539 22,742 11,011
Amortization of excess purchase price over net
assets acquired................................ (1,902) (1,504) (223)
Corporate costs.................................. (1,937) (2,414) (2,635)
Interest expense................................. (6,947) (5,911) (1,501)
-------- -------- --------
$ 14,753 $ 12,913 $ 6,652
======== ======== ========
Identifiable Assets
Manufactured products............................ $177,946 $162,114 $ 90,851
Logistics........................................ 92,862 93,876 -0-
General corporate................................ 12,102 12,063 10,520
Discontinued operations.......................... -0- 33,694 27,025
-------- -------- --------
$282,910 $301,747 $128,396
======== ======== ========
Depreciation and Amortization Expense
Manufactured products............................ $ 6,644 $ 5,544 $ 3,213
Logistics........................................ 1,354 734 -0-
-------- -------- --------
$ 7,998 $ 6,278 $ 3,213
======== ======== ========
Capital Expenditures
Manufactured products............................ $ 10,272 $ 4,974 $ 3,557
Logistics........................................ 4,152 1,099 -0-
General corporate................................ 1,054 237 260
Discontinued operations.......................... 112 7,322 7,932
-------- -------- --------
$ 15,590 $ 13,632 $ 11,749
======== ======== ========
</TABLE>
The Company's manufactured products segment had sales of $33,728 in 1996,
$32,200 in 1995, and $28,000 in 1994 to Ford Motor Company (9.7%, 11.1% and
21.7% of consolidated net sales, respectively).
NOTE M -- RESTRUCTURING CHARGES AND OTHER INCOME
During the fourth quarter of 1996, the Company commenced the reorganization
of its consumer products manufacturing operations which will result in the
realignment of two manufacturing facilities and the discontinuance of certain
products lines. As a result of these
26
<PAGE> 28
PARK-OHIO INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
actions, the Company recorded a charge of $2,700 primarily for the writedown of
certain property and equipment and inventory to estimated net realizable value.
In December 1996, the Company negotiated full settlement of subordinated
notes receivable, resulting from the sale of two manufacturing facilities, which
were fully reserved at the date of sale. The net proceeds received of $2,700
were recorded in income in the fourth quarter. In the third quarter of 1996, the
Company sold certain securities purchased during 1996 for $6,315 which resulted
in a gain of $1,500.
27
<PAGE> 29
SUPPLEMENTARY FINANCIAL DATA
SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
<TABLE>
<CAPTION>
QUARTER ENDED
-------------------------------------------------------
1996 MARCH 31 JUNE 30 SEPT.30 DEC. 31
- - --------------------------------------------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net sales.................................... $ 90,854 $ 90,693 $ 79,750 $ 86,382
Gross profit................................. 15,530 15,431 13,044 14,274
Income from continuing operations............ 2,582 2,550 2,113 2,448
Income from discontinued operations.......... 1,499 1,326 8,817 -0-
Net Income................................... $ 4,081 $ 3,876 $ 10,930 $ 2,448
======= ======= ======= =======
Primary Earnings Per Share:
Continuing Operations...................... $ .24 $ .23 $ .19 $ .22
Discontinued Operations.................... .14 .12 .81 -0-
------- ------- ------- -------
Net Income................................. $ .38 $ .35 $ 1.00 $ .22
======= ======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
QUARTER ENDED
-------------------------------------------------------
1995 MARCH 31 JUNE 30 SEPT. 30 DEC. 31
- - --------------------------------------------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net sales.................................... $ 42,331 $ 88,311 $ 77,164 $ 81,695
Gross profit................................. 8,208 14,947 11,548 13,927
Income from continuing operations............ 2,696 4,221 2,059 10,837
Income from discontinued operations.......... 1,044 600 956 1,621
Net Income................................... $ 3,740 $ 4,821 $ 3,015 $ 12,458
======= ======= ======= =======
Primary Earnings Per Share:
Continuing Operations...................... $ .31 $ .39 $ .19 $ 1.00
Discontinued Operations.................... .12 .06 .09 .15
------- ------- ------- -------
Net Income................................. $ .43 $ .45 $ .28 $ 1.15
======= ======= ======= =======
</TABLE>
NOTE 1 -- On July 31, 1996, the Company completed the sale of substantially all
of the assets of Bennett Industries, Inc., a wholly-owned subsidiary
which manufactures plastic containers, for $50.8 million in cash,
resulting in a pretax gain of $13.8 million recognized in the third
quarter of 1996. The results of operations for Bennett have been
classified as discontinued operations for all periods presented. The
assets and liabilities of Bennett have been classified in the
consolidated balance sheets as net assets of discontinued operations
at December 31, 1995.
NOTE 2 -- On March 31, 1995, the Company acquired all of the shares of RB&W
Corporation in exchange for 2,023,000 shares of the Company's common
stock and cash. The transaction has been accounted for as a purchase
and, accordingly, the operations of RB&W have been included since that
date.
NOTE 3 -- Effective December 31, 1995, the Company recorded the deferred tax
assets relating to anticipated future income tax benefits from
utilization of net operating loss carryforwards, resulting in a credit
of $8.1 million for the year ended December 31, 1995. Therefore, as of
January 1, 1996, the Company began to fully provide Federal income
taxes.
NOTE 4 -- Included in income from continuing operations for the quarter ended
September 30, 1996, is a gain on the sale of securities of $1.0
million, net of income taxes.
28
<PAGE> 30
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
There were no changes in nor disagreements with Park-Ohio's independent
auditors on accounting and financial disclosure matters within the two-year
period ended December 31, 1996.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information contained in "Election of Directors" on pages 2 and 3 of
Park-Ohio's Proxy Statement, dated April 16, 1997, is incorporated herein by
reference. Information relating to executive officers of Park-Ohio is contained
under Part I of this Annual Report on Form 10-K.
ITEM 11. EXECUTIVE COMPENSATION
The information relating to executive compensation contained under the
headings "Certain Matters Pertaining to the Board of Directors" on page 6,
"Executive Compensation" on pages 7 and 8, and "Information Concerning Executive
Officers -- Executive Agreements" on page 12, of Park-Ohio's Proxy Statement,
dated April 16, 1997, is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information contained under the heading "Beneficial Ownership of
Shares" on pages 4 and 5 of Park-Ohio's Proxy Statement, dated April 16, 1997,
relating to the beneficial ownership of Park-Ohio's Common Stock is incorporated
herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information concerning related transactions contained under the heading
"Information Concerning Executive Officers -- Related Transactions" on page 12
of Park-Ohio's Proxy Statement, dated April 16, 1997, is incorporated herein by
reference.
29
<PAGE> 31
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a)(1) The following financial statements are included in Part II, Item 8:
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Report of Independent Auditors.................................................... 11
Financial Statements
Consolidated balance sheets -- December 31, 1996 and 1995...................... 12
Consolidated statements of income -- years ended December 31, 1996, 1995 and
1994.......................................................................... 13
Consolidated statements of shareholders' equity -- years ended December 31,
1996, 1995 and 1994........................................................... 14
Consolidated statements of cash flows -- years ended December 31, 1996, 1995
and 1994...................................................................... 15
Notes to consolidated financial statements..................................... 16-27
Selected quarterly financial data (unaudited) -- years ended December 31, 1996 and
1995........................................................................... 28
</TABLE>
(3) Exhibits included herein:
<TABLE>
<S> <C> <C> <C>
(3)(A) Amended Articles of Incorporation of Park-Ohio.............. ****
(3)(B) Code of Regulations of Park-Ohio............................ ****
Instruments defining the rights of security holders:
(4)(A) See Exhibits (3)(A) and (B)
(4)(B) Credit Agreement among Park-Ohio Industries, Inc., and
various financial institutions, dated April 11, 1995........ *****
(4)(C) Indenture dated May 3, 1994 between Park-Ohio Industries,
Inc. and Society Bank, Michigan, as Trustee................. ***
(10)(A) Form of Indemnification Agreement entered into between
Park-Ohio Industries, Inc. and each of its directors and
certain officers............................................ *
(10)(B) Amended and Restated Plan and Agreement of Merger dated
February 6, 1995 among Park-Ohio Industries, Inc., P.O.
Acquisition Company, Inc. and RB&W Corporation.............. *****
(10)(C) Plan and Agreement of Merger dated October 1, 1993 among
Park-Ohio Industries, Inc., PO Acquisition Company, Inc.,
General Aluminum Mfg. Company and Edward F. Crawford........ **
(10)(D) Park-Ohio Industries, Inc. Amended and Restated 1992 Stock
Option Plan................................................. ******
(10)(E) Escrow Agreement dated October 15, 1993 among Park-Ohio
Industries, Inc., Edward F. Crawford and The Huntington
Trust Company, N.A.......................................... **
(10)(F) Employment Agreement between Park-Ohio Industries, Inc. And
John J. Murray dated effective January 1, 1995.............. *******
(10)(G) Asset Purchase Agreement dated as of May 28, 1996 among
North America Packaging Corporation, as Buyer, Bennett
Industries, Inc., as Seller, and Park-Ohio Industries,
Inc......................................................... ********
(10)(H) Non-Statutory Stock Option Agreement dated February 22, 1996
by and between Park-Ohio Industries, Inc., and Edward F.
Crawford.................................................... *********
(10)(I) 1996 Non-employee Director Stock Option Plan................ *********
(11) Computation of Net Income Per Common Share
</TABLE>
30
<PAGE> 32
<TABLE>
<S> <C> <C>
(21) List of Subsidiaries of Park-Ohio Industries, Inc.
(23) Consent of Independent Auditors
(27) Financial Data Schedule (Electronic Filing Only)
</TABLE>
- - ---------------
* These documents were filed as part of the registrant's Annual
Report on Form 10-K for the year ended December 31, 1992.
** These documents were filed as part of the registrant's Report on
Form 8-K filed with the Commission on November 1, 1993.
*** These documents were filed as part of the registrant's Report on
Form 8-K filed with the Commission on May 6, 1994.
**** These documents were filed as part of the registrant's Report on
Form S-3 (No. 33-86054)filed with the Commission on November 7,
1994.
***** These documents were part of the registrant's Form S-4 (No. 33-87230)
filed with the Commission on December 9, 1994, as amended.
****** These documents were filed as part of the Registrant's Report on Form
10-Q filed with the Commission on May 12, 1995.
******* These documents were filed as part of the Registrant's Report on Form
10-Q filed with the Commission on August 14, 1995.
******** These documents were filed as part of the Registrant's Report on Form
10-Q filed with the Commission on August 14, 1996.
********* These documents were filed as part of the Registrant's Definitive
Proxy Statement filed with the Commission on April 16, 1996.
Exhibits (10)(D), (10)(F) and (10)(H) are either a management
contract, compensatory plan or arrangement required to be filed as
an exhibit pursuant to Item 14(c) of this report.
(b) Reports on Form 8-K filed in the fourth quarter of 1996:
None
31
<PAGE> 33
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTION 13 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.
PARK-OHIO INDUSTRIES, INC.
(Registrant)
By: /s/ RONALD J.
COZEAN
----------------------
Ronald J. Cozean,
Secretary
Date: March 27, 1997
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.
<TABLE>
<S> <C>
/s/ EDWARD F. CRAWFORD Chairman and Chief Executive
- - ----------------------------------------
Officer (Principal Executive
Edward F. Crawford Officer) and Director
/s/ JOHN J. MURRAY President and Chief Operating
- - ----------------------------------------
Officer and Director
John J. Murray
/s/ JAMES S. WALKER Vice President -- and Chief
- - ----------------------------------------
Financial Officer (Principal
James S. Walker Financial and Accounting Officer)
/s/ LEWIS E. HATCH, JR. Director
- - ----------------------------------------
Lewis E. Hatch, Jr.
/s/ THOMAS E. MCGINTY Director
- - ----------------------------------------
Thomas E. McGinty
/s/ LAWRENCE O. SELHORST Director
- - ----------------------------------------
Lawrence O. Selhorst
/s/ RICHARD S. SHEETZ Director
- - ----------------------------------------
Richard S. Sheetz
/s/ JAMES W. WERT Director
- - ----------------------------------------
James W. Wert
</TABLE>
March 27, 1997
32
<PAGE> 34
ANNUAL REPORT ON FORM 10-K
PARK-OHIO INDUSTRIES, INC.
FOR THE YEAR ENDED DECEMBER 31, 1996
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
- - ----------------------------------------
<S> <C>
(4)(D) First Amendment dated as of June 19, 1995 to the Credit Agreement among
Park-Ohio Industries, Inc. and various financial institutions dated April
11, 1995
(4)(E) Second Amendment dated as of December 5, 1995 to the Credit Agreement
among Park-Ohio Industries, Inc. and various financial institutions dated
April 11, 1995
(4)(F) Third Amendment dated as of April 11, 1996 to the Credit Agreement among
Park-Ohio Industries, Inc. and various financial institutions dated April
11, 1995
(4)(G) Fourth Amendment dated as of December 31, 1996 to the Credit Agreement
among Park-Ohio Industries, Inc. and various financial institutions dated
April 11, 1995
(11) Computation of Net Income per Common share
(21) List of Subsidiaries of Park-Ohio Industries,Inc.
(23) Consent of Independent Auditors
(27) Financial Data Schedule
(Electronic Filing Only)
</TABLE>
33
<PAGE> 1
Exhibit (4)(D)
FIRST AMENDMENT AGREEMENT
First Amendment Agreement made as of the 19th day of June, 1995, by and
among PARKOHIO INDUSTRIES, INC., an Ohio corporation (the "Borrower"), SOCIETY
NATIONAL BANK, as Agent (the "Agent") and the banks listed on Schedule I
attached hereto and made a part hereof (the "Banks):
WHEREAS, the Borrower, the Agent and the Banks are parties to a certain
credit agreement dated April 11, 1995, as it may from time to time be amended,
supplemented or otherwise modified, which provides, among other things, for
revolving credits and term loans aggregating One Hundred Million Dollars until
March 31, 1999, all upon certain terms and conditions (the "Credit Agreement");
WHEREAS, the Borrower, the Agent and the Banks desire to amend the
Credit Agreement by modifying certain financial covenants and incorporating a
form of assignment agreement;
WHEREAS, each term used herein shall be defined in accordance with the
Credit Agreement;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein and for other valuable considerations, the Borrower, the Agent
and the Banks agree as follows:
1. The Credit Agreement is hereby amended as of April 11, 1995 by
deleting Section 5.7 thereof in its entirety and by inserting in place thereof
the following:
SECTION 5.7. WORKING CAPITAL. Borrower will not suffer or
permit the Consolidated Net Current Assets at any time to fall below
the current minimum amount required, which current minimum amount
required shall be (a) Fifty Million Dollars ($50,000,000) on March 31,
1995 through December 30, 1996, (b) Seventy Million Dollars
($70,000,000) on December 31, 1996 through December 30, 1997 and (c)
Eighty Million Dollars ($80,000,000) on December 31, 1997 and
thereafter, based upon Borrower's financial statements for the most
recent calendar quarter. Borrower and its Consolidated Subsidiaries
will maintain at all times the ratio of Current Assets to Current
Liabilities of no less than the current minimum ratio required, which
current minimum ratio required shall be (a) 1.75 to 1.00 on March 31,
1995 through December 30, 1996, and (b) 2.00 to 1.00 on December 31,
1996 and thereafter, based upon Borrower's financial statements for the
most recent calendar quarter.
2. The Credit Agreement is hereby amended as of April 11, 1995 by
deleting Section 5.9 thereof in its entirety and by inserting in place thereof
the following:
SECTION 5.9. NET WORTH. Borrower will not suffer or permit the
Consolidated Net Worth of Borrower and its Consolidated Subsidiaries at
any time to fall below the current minimum amount required, which
current minimum amount required shall be Forty One Million Dollars
($41,000,000) on March 31, 1995 through December 30, 1995, (b) Fifty
Four Million Dollars ($54,000,000) on December 31, 1995 through
December 30,
1
<PAGE> 2
1996, (c) Seventy Two Million Dollars ($72,000,000) on
December 31, 1996 through December 30, 1997, and (c) Ninety Five
Million Dollars ($95,000,000) on December 31, 1997 and thereafter,
based upon Borrower's financial statements for the most recent calendar
quarter.
3. The Credit Agreement is hereby amended as of April 11, 1995 by
deleting Section 5.10 thereof in its entirety and by inserting in place thereof
the following:
SECTION 5.10. LEVERAGE. Borrower and its Consolidated
Subsidiaries will not suffer or permit at any time the ratio of (a)
Total Liabilities minus Subordinated indebtedness to (b) Consolidated
Net Worth (hereinafter referred to as "Leverage Ratio"), to exceed (i)
4.00 to 1.00 on June 30, 1995 through December 30, 1995, (ii) 3.30 to
1.00 on December 31, 1995 through December 30, 1996, (iii) 2.70 to 1.00
on December 31, 1996 through December 30, 1997, and (iv) 2.00 to 1.00
on December 31, 1997 and thereafter, based upon Borrower's financial
statements for the most recent calendar quarter.
4. The Credit Agreement is hereby amended by deleting Section 10.13
thereof in its entirety and by inserting in place thereof the following:
SECTION 10.13. BANK ASSIGNMENTS/PARTICIPATIONS.
(a) Any Bank may, in the ordinary course of its commercial
banking business and in accordance with applicable law, at any time
sell to one or more financial institutions ("Participants")
participating interests in any Note held by such Bank, any Commitment
of such Bank or any other interest of such Bank hereunder and under the
Related Writings; provided that, anything herein to the contrary
notwithstanding, each of the Banks hereunder shall retain the lesser of
(i) such Bank's Commitment hereunder and the aggregate amount of such
Bank's Notes issued hereunder or (ii) an undivided ten percent (10%) of
the original Commitment of the Banks (unless the original Commitment of
the Banks hereunder shall be permanently reduced and then each Bank
shall retain ten percent (10%) of the amount as so reduced) and of the
aggregate amount of the Notes issued hereunder. In the event of any
such sale by a Bank of participating interests to a Participant, such
Bank's obligations under this credit agreement to the other parties to
this credit agreement shall remain unchanged; such Bank shall remain
solely responsible for the performance thereof; such Bank shall remain
the holder of any such Note for all purposes under this credit
agreement and the Related Writings; and the Borrower and the Agent
shall continue to deal solely and directly with such Bank in connection
with such Bank's rights and obligations under this credit agreement and
the Related Writings. The Borrower agrees that if amounts outstanding
under this credit agreement and the Notes are due or unpaid, or shall
have been declared or shall have become due and payable upon the
occurrence of an Event of Default, each Participant shall be deemed to
have the right of set-off in respect of its participating interest in
amounts owing under this credit agreement and any Note to the same
extent as if the amount of its participating interest were owing
directly to it as a Bank under this credit agreement or any Note,
provided that such Participant shall only be entitled to such right of
set-off if it shall have agreed in the agreement pursuant to which it
shall have acquired its participating
2
<PAGE> 3
interest to share with the Banks the proceeds thereof as provided in
Section 8.5. The Borrower also agrees that each Participant shall be
entitled to the benefits of Article III and Sections 10.7, 10.8 and
10.9 with respect to its participation in the Commitments and the loans
outstanding from time to time.
(b) With the written consent of the Agent, any Bank may
(subject to the proviso set forth below), in the ordinary course of its
commercial banking business and in accordance with applicable law, at
any time sell to one or more financial institutions ("Purchasing
Banks") a part of its rights and obligations under this credit
agreement and the Notes, pursuant to an Assignment and Acceptance
executed by such Purchasing Bank, such transferor Bank and the Agent)
and delivered to the Agent for its acceptance and recording in the
Register; provided that, anything herein to the contrary
notwithstanding, each of the Banks hereunder shall retain the lesser of
(i) such Bank's Commitment hereunder and the aggregate amount of such
Bank's Notes issued hereunder or (ii) an undivided ten percent (10%) of
the original Commitment of the Banks (unless the original Commitment of
the Banks hereunder shall be permanently reduced and then each Bank
shall retain ten percent (10%) of the amount as so reduced) and of the
aggregate amount of the Notes issued hereunder, and FURTHER PROVIDED
that, prior to the occurrence of an Event of Default, no Bank shall
sell its interest hereunder pursuant to an assignment without the
written consent of the Borrower, which consent shall not be
unreasonably withheld. Upon such execution, delivery, acceptance and
recording, from and after the Transfer Effective Date determined
pursuant to such Assignment and Acceptance, (x) the Purchasing Bank
thereunder shall be a party hereto and, to the extent provided in such
Assignment and Acceptance, have the rights and obligations of a Bank
hereunder with a Commitment as set forth therein, and (y) the
transferor Bank thereunder shall, to the extent provided in such
Assignment and Acceptance, be released from its obligations under this
credit agreement. Such Assignment and Acceptance shall be deemed to
amend this credit agreement to the extent, and only to the extent,
necessary to reflect the addition of such Purchasing Bank and the
resulting adjustment of the appropriate Commitments arising from the
purchase by such Purchasing Bank of all or a portion of the rights and
obligations of such transferor Bank under this credit agreement and the
Notes. On or prior to the Transfer Effective Date determined pursuant
to such Assignment and Acceptance, the Borrower shall execute and
deliver to the Agent, in exchange for the surrendered Note, a new
Revolving Credit Note and/or Term Note, as the case may be, to the
order of such Purchasing Bank in an amount equal to the Revolving
Credit Commitment and/or the Term Loan Commitment assumed by it
pursuant to such Assignment and Acceptance and new Notes to the order
of the transferor Bank in an amount equal to the Commitment retained by
it hereunder. Such new Notes shall be dated the Closing Date and shall
otherwise be in the form of the Notes replaced thereby. The Notes
surrendered by the transferor Bank shall be returned by the Agent to
the Borrower marked "cancelled".
(c) The Agent shall maintain at its address referred to in
Section 10.6 a copy of each Assignment and Acceptance delivered to it
and a register (the "Register") for the recordation of the names and
addresses of the Banks and the Commitment of, and principal amount of
the loans owing to, each Bank from time to time. The entries in the
Register shall
3
<PAGE> 4
be conclusive, in the absence of manifest error, and the Borrower, the
Agent and the Banks may treat each financial institution whose name is
recorded in the Register as the owner of the loan recorded therein for
all purposes of this credit agreement. The Register shall be available
for inspection by the Borrower or any Bank at any reasonable time and
from time to time upon reasonable prior notice.
(d) Upon its receipt of an Assignment and Acceptance executed
by a transferor Bank, a Purchasing Bank and the Agent, together with
payment by the transferor Bank and/or the Purchasing Bank of a
registration and processing fee of Two Thousand Five Hundred Dollars
($2,500), to be retained by the Agent for its own account, the Agent
shall (i) promptly accept such Assignment and Acceptance, and (ii) on
the Transfer Effective Date determined pursuant thereto, record the
information contained therein in the Register and give notice of such
acceptance and recordation to the Banks and the Borrower.
(e) The Borrower authorizes each Bank to disclose to any
Participant or Purchasing Bank (each, a "Transferee") and any
prospective Transferee any and all financial information in such Bank's
possession concerning the Borrower and its Subsidiaries which has been
delivered to such Bank by or on behalf of the Borrower or its
Subsidiaries pursuant to this credit agreement or which has been
delivered to such Bank by or on behalf of the Borrower in connection
with such Bank's credit evaluation of the Borrower and its Subsidiaries
prior to becoming a party to this credit agreement.
(f) If, pursuant to this section, any interest in this credit
agreement or any Note is transferred to any Transferee which is
organized under the laws of any jurisdiction other than the United
States or any state thereof, the transferor Bank shall cause such
Transferee, concurrently with the effectiveness of such transfer, (i)
to represent to the transferor Bank (for the benefit of the transferor
Bank, the Agent and the Borrower) that under applicable law and
treaties no taxes will be required to be withheld by the Agent, the
Borrower or the transferor Bank with respect to any payments to be made
to such Transferee in respect of the loans hereunder, (ii) to furnish
to the transferor Bank (and, in the case of any Purchasing Bank
registered in the Register, the Agent and the Borrower) either (A) U.S.
Internal Revenue Service Form 4224 or U.S. Internal Revenue Service
Form 1001 or (B) United States Internal Revenue Service Form W-8 or
W-9, as applicable (wherein such Transferee claims entitlement to
complete exemption from U.S. federal withholding tax on all interest
payments hereunder), and (iii) to agree (for the benefit of the
transferor Bank, the Agent and the Borrower) to provide the transferor
Bank (and, in the case of any Purchasing Bank registered in the
Register, the Agent and the Borrower) a new Form 4224 or Form 1001 or
Form W-8 or W-9, as applicable, upon the expiration or obsolescence of
any previously delivered form and comparable statements in accordance
with applicable U.S. laws and regulations and amendments duly executed
and completed by such Transferee, and to comply from time to time with
all applicable U.S. laws and regulations with regard to such
withholding tax exemption.
(g) Nothing herein shall prohibit any Bank from pledging or
assigning any Note to any Federal Reserve Bank in accordance with
applicable law.
4
<PAGE> 5
5. The Credit Agreement is hereby amended to add a new Exhibit C in the
form of Schedule II, attached hereto.
5
<PAGE> 6
6. Borrower hereby represents and warrants to the Agent and the Banks
that (a) Borrower has the legal power and authority to execute and deliver this
First Amendment Agreement; (b) officials executing this First Amendment
Agreement have been duly authorized to execute and deliver the same and bind
Borrower with respect to the provisions hereof; (c) the execution and delivery
hereof by Borrower and the performance and observance by Borrower of the
provisions hereof do not violate or conflict with the organizational agreements
of Borrower or any law applicable to Borrower or result in a breach of any
provision of or constitute a default under any other agreement, instrument or
document binding upon or enforceable against Borrower; (d) no Possible Default
exists under the Credit Agreement, nor will any occur immediately after the
execution and delivery of the First Amendment Agreement or by the performance or
observance of any provision hereof; (e) neither Borrower nor any Subsidiary has
any claim or offset against, or defense or counterclaim to, any of Borrower's or
any Subsidiary's obligations or liabilities under the Credit Agreement or any
Related Writing, and Borrower and each Subsidiary hereby waives and releases the
Agent and each of the Banks from any and all such claims, offsets, defenses and
counterclaims of which Borrower and any Subsidiary is aware, such waiver and
release being with full knowledge and understanding of the circumstances and
effect thereof and after having consulted legal counsel with respect thereto,
and (f) this First Amendment Agreement constitutes a valid and binding
obligation of Borrower in every respect, enforceable in accordance with its
terms.
7. Each reference that is made in the Credit Agreement or any other
writing shall hereafter be construed as a reference to the Credit Agreement as
amended hereby. Except as herein otherwise specifically provided, all provisions
of the Credit Agreement shall remain in full force and effect and be unaffected
hereby.
8. This First Amendment Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed to be an original and all
of which taken together shall constitute but one and the same agreement.
9. The rights and obligations of all parties hereto shall be governed
by the laws of the State of Ohio.
<TABLE>
<S> <C> <C>
Address: 600 Tower East PARK-OHIO INDUSTRIES, INC.
20600 Chagrin Blvd.
Shaker Heights, OH 44122 By:
----------------------------------
James S. Walker, Vice President
and
----------------------------------
Ronald J. Cozean, Secretary
Address: Society Center SOCIETY NATIONAL BANK,
127 Public Square Individually and as Agent
Cleveland, OH
44114-1306 By:
Attn: Commercial Loans- ----------------------------------
Kenneth M. Merhar, Vice President
</TABLE>
6
<PAGE> 7
Cleveland District
7
<PAGE> 8
<TABLE>
<S> <C> <C>
Address: Huntington Building THE HUNTINGTON NATIONAL BANK
917 Euclid Avenue
Cleveland, OH 44115 By:
Attn: Corporate Banking Div. --------------------------------
John P. Barsotti, Vice President
Address: 611 Woodward Avenue NBD BANK, N.A.
Detroit, MI 48226
Attn: Midwest Banking By:
--------------------------------
Frederick Crawford, Vice Pres.
The undersigned consent to the terms hereof.
Address: 600 Tower East BENNETT INDUSTRIES, INC.
20600 Chagrin Blvd.
Shaker Heights, OH 44122 By:
--------------------------------
James S. Walker, Treasurer
and
--------------------------------
Ronald J. Cozean, Secretary
Address: 600 Tower East CASTLE RUBBER COMPANY
20600 Chagrin Blvd.
Shaker Heights, OH 44122 By:
--------------------------------
James S. Walker, Treasurer
and
--------------------------------
Ronald J. Cozean, Secretary
Address: 600 Tower East KAY HOME PRODUCTS, INC.
20600 Chagrin Blvd.
Shaker Heights, OH 44122 By:
--------------------------------
James S. Walker, Treasurer
and
--------------------------------
Ronald J. Cozean, Secretary
Address: 600 Tower East GENERAL ALUMINUM MFG. COMPANY
20600 Chagrin Blvd.
Shaker Heights, OH 44122 By:
--------------------------------
James S. Walker, Treasurer
and
--------------------------------
Ronald J. Cozean, Secretary
</TABLE>
8
<PAGE> 9
<TABLE>
<S> <C> <C>
Address: 600 Tower East BLUE FALCON INVESTMENTS, INC.
20600 Chagrin Blvd.
Shaker Heights, OH 44122 By:
--------------------------------
James S. Walker, Treasurer
and
--------------------------------
Ronald J. Cozean, Secretary
Address: 600 Tower East RB&W CORPORATION
20600 Chagrin Blvd.
Shaker Heights, OH 44122 By:
--------------------------------
James S. Walker, Treasurer
and
--------------------------------
Ronald J. Cozean, Secretary
Address: 600 Tower East BLUE FALCON FORGE, INC.
20600 Chagrin Blvd.
Shaker Heights, OH 44122 By:
--------------------------------
James S. Walker, Treasurer
and
--------------------------------
Ronald J. Cozean, Secretary
Address: 600 Tower East TOCCO, INC.
20600 Chagrin Blvd.
Shaker Heights, OH 44122 By:
--------------------------------
James S. Walker, Treasurer
</TABLE>
10
<PAGE> 10
<TABLE>
<S> <C>
and
--------------------------------
Ronald J. Cozean, Secretary
</TABLE>
9
<PAGE> 11
SCHEDULE I
SOCIETY NATIONAL BANK
NBD BANK, N.A.
THE HUNTINGTON NATIONAL BANK
<PAGE> 12
SCHEDULE II
EXHIBIT C
ASSIGNMENT AND ACCEPTANCE
Reference is made to the Credit Agreement dated as of April 11, 1995,
(as amended by the First Amendment Agreement dated as of June ___, 1995, and as
may be further amended, supplemented or otherwise modified from time to time,
the "Credit Agreement"), among PARKOHIO INDUSTRIES, INC., an Ohio corporation
(the "Borrower"), the Banks named therein and SOCIETY NATIONAL BANK, as agent
for the Banks (in such capacity, the "Agent"). Unless otherwise defined herein,
terms defined in the Credit Agreement and used herein shall have the meaning
given to them in the Credit Agreement.
___________(the "Assignor") and _____________________ (the "Assignee")
agree as follows:
1. The Assignor hereby irrevocably sells and assigns to the Assignee
without recourse to the Assignor, and the Assignee hereby irrevocably purchases
and assumes from the Assignor without recourse to the Assignor, as of the
Effective Date (as defined below), a _____% interest (the "Assigned Interest")
in and to the Assignor's rights and obligations under the Credit Agreement with
respect to the Assignor's Commitment thereunder in a principal amount as set
forth on Annex 1 hereto.
2. The Assignor (a) makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with the Credit Agreement or any Related Writing, or
the execution, legality, validity, enforceability, genuineness, sufficiency or
value of the Credit Agreement, any other Related Writing or any other instrument
or document furnished pursuant thereto, or any collateral security granted in
connection therewith, if any, other than that it has not created any adverse
claim upon the interest being assigned by it hereunder and that such interest is
free and clear of any such adverse claim; (b) makes no representation or
warranty and assumes no responsibility with respect to the financial condition
of the Borrower, any of its Subsidiaries or any other obligor or the performance
or the observance by the Borrower, any of its Subsidiaries or any other obligor
or any of their respective obligations under the Credit Agreement or any Related
Writing or any other instrument or document furnished pursuant hereto or
thereto; and (c) attaches the Note(s) held by it evidencing the Assignor's
Commitment and requests that the Agent exchange such Note(s) for a new Note or
Notes payable to the Assignee and a new Note or Notes payable to the Assignor in
the respective amounts which reflect the assignment being made hereby (and after
giving effect to any other assignments which have become effective on the
Effective Date).
3. The Assignee (a) represents and warrants that it is legally
authorized to enter into this Assignment and Acceptance; (b) confirms that it
has received a copy of the Credit Agreement, and the First Amendment Agreement,
together with copies of the financial statements delivered pursuant to Section
5.3 thereof and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into this
Assignment and Acceptance; (c) agrees
1
<PAGE> 13
that it will, independently and without reliance upon the Assignor, the Agent or
any other Bank, based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under the Credit Agreement, the Related Writings or any other
instrument or document furnished pursuant hereto or thereto; (d) appoints and
authorizes the Agent to take such action as agent on its behalf and to exercise
such powers and discretion under the Credit Agreement, the Related Writings or
other instruments or documents furnished pursuant hereto or thereto as are
delegated to the Agent by the terms thereof, together with such powers as are
incidental thereto; and (e) agrees that it will be bound by the provisions of
the Credit Agreement and will perform in accordance with its terms all the
obligations which by the terms of the Credit Agreement are required to be
performed by it as a Bank including, if it is organized under the laws of a
jurisdiction outside the United States, its obligations pursuant to subsection
10.13(f) of the Credit Agreement.
4. The effective date of this Assignment and Acceptance shall be
__________, 19__ (the "Effective Date"). Following the execution of this
Assignment and Acceptance, it will be delivered to the Agent for acceptance by
it and recording by the Agent pursuant to Section 10.13 of the Credit Agreement,
effective as of the Effective Date (which shall not be, unless otherwise agreed
to by the Agent, earlier than three Cleveland Banking Days after the date of
such acceptance and recording by the Agent).
5. Upon such acceptance and recording, from and after the Effective
Date, the Agent shall make all payments in respect of the Assigned Interest
(including payments of principal, interest, fees and other amounts) to the
Assignee whether such amounts have accrued prior to the Effective Date or accrue
subsequent to the Effective Date. The Assignor and the Assignee shall make all
appropriate adjustments in payments by the Agent for periods prior to the
Effective Date or with respect to the making of this assignment directly between
themselves.
6. From and after the Effective Date, (a) the Assignee shall be a party
to the Credit Agreement and, to the extent provided in this Assignment and
Acceptance, have the rights and obligations of a Bank thereunder and under the
Related Writings and shall be bound by the provisions thereof and (b) the
Assignor shall, to the extent provided in this Assignment and Acceptance,
relinquish its rights and be released from its obligations under the Credit
Agreement.
7. The Assignee advises the Agent that the address listed on Annex 1 is
its address for notices under the Credit Agreement.
8. This Assignment and Acceptance shall be governed by and construed in
accordance with the laws of the State of Ohio.
IN WITNESS WHEREOF, the parties hereto have caused this Assignment and
Acceptance to be executed as of the ____ day of_______________, 19___, by their
respective duly authorized officers on Annex 1 hereto.
2
<PAGE> 14
ANNEX 1 to the
Assignment and Acceptance
-------------------------
Re: Credit Agreement, dated as of
April 11, 1995, as amended, among
Park-Ohio Industries, Inc., the Banks
from time to time parties thereto, and
Society National Bank, as Agent
-------------------------------
Name of Assignor:
Name of Assignee:
Transfer Effective Date of Assignment:
<TABLE>
<CAPTION>
Principal Percentage Percentage
Amount of Revolving of Assignor's of Total Revolving
Credit Commitment Assigned Interest Assigned Credit Commitment Amount
- - -------------------------- ----------------- ------------------------
<S> <C> <C>
$ % %
Principal Percentage Percentage
Amount of Term of Assignor's of Total Term
Loan Commitment Assigned Interest Assigned Loan Commitment Amount
$ % %
[NAME OF ASSIGNEE] [NAME OF ASSIGNOR]
By: By:
----------------------- ----------------------------
Title: Title:
Consented to: Consented to:
SOCIETY NATIONAL BANK PARK-OHIO INDUSTRIES, INC.
as Agent
By: By:
----------------------- ----------------------------
Kenneth M. Merhar, Vice President Title:
</TABLE>
<PAGE> 15
ASSIGNMENT AND ACCEPTANCE
Reference is made to the Credit Agreement dated as of April 11, 1995,
(as amended by the First Amendment Agreement dated as of June ___, 1995, and as
may be further amended, supplemented or otherwise modified from time to time,
the "Credit Agreement"), among PARKOHIO INDUSTRIES, INC., an Ohio corporation
(the "Borrower"), the Banks named therein and SOCIETY NATIONAL BANK, as agent
for the Banks (in such capacity, the "Agent"). Unless otherwise defined herein,
terms defined in the Credit Agreement and used herein shall have the meaning
given to them in the Credit Agreement.
SOCIETY NATIONAL BANK (the "Assignor") and NATIONAL CITY BANK (the
"Assignee") agree as follows:
1. The Assignor hereby irrevocably sells and assigns to the Assignee
without recourse to the Assignor, and the Assignee hereby irrevocably purchases
and assumes from the Assignor without recourse to the Assignor, as of the
Effective Date (as defined below), a twenty percent (20%) interest (the
"Assigned Interest") in and to the Assignor's rights and obligations under the
Credit Agreement with respect to the Assignor's Commitment thereunder in a
principal amount as set forth on Annex 1 hereto.
2. The Assignor (a) makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with the Credit Agreement or any Related Writing, or
the execution, legality, validity, enforceability, genuineness, sufficiency or
value of the Credit Agreement, any other Related Writing or any other instrument
or document furnished pursuant thereto, or any collateral security granted in
connection therewith, if any, other than that it has not created any adverse
claim upon the interest being assigned by it hereunder and that such interest is
free and clear of any such adverse claim; (b) makes no representation or
warranty and assumes no responsibility with respect to the financial condition
of the Borrower, any of its Subsidiaries or any other obligor or the performance
or the observance by the Borrower, any of its Subsidiaries or any other obligor
or any of their respective obligations under the Credit Agreement or any Related
Writing or any other instrument or document furnished pursuant hereto or
thereto; and (c) attaches the Note(s) held by it evidencing the Assignor's
Commitment and requests that the Agent exchange such Note(s) for a new Note or
Notes payable to the Assignee and a new Note or Notes payable to the Assignor in
the respective amounts which reflect the assignment being made hereby (and after
giving effect to any other assignments which have become effective on the
Effective Date).
3. The Assignee (a) represents and warrants that it is legally
authorized to enter into this Assignment and Acceptance; (b) confirms that it
has received a copy of the Credit Agreement, and the First Amendment Agreement,
together with copies of the financial statements delivered pursuant to Section
5.3 thereof and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into this
Assignment and Acceptance; (c) agrees that it will, independently and without
reliance upon the Assignor, the Agent or any other Bank, based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking action under the Credit Agreement,
the Related Writings or any other instrument or document furnished pursuant
hereto or thereto; (d) appoints
<PAGE> 16
and authorizes the Agent to take such action as agent on its behalf and to
exercise such powers and discretion under the Credit Agreement, the Related
Writings or other instruments or documents furnished pursuant hereto or thereto
as are delegated to the Agent by the terms thereof, together with such powers as
are incidental thereto; and (e) agrees that it will be bound by the provisions
of the Credit Agreement and will perform in accordance with its terms all the
obligations which by the terms of the Credit Agreement are required to be
performed by it as a Bank including, if it is organized under the laws of a
jurisdiction outside the United States, its obligations pursuant to subsection
10.13(f) of the Credit Agreement.
4. The effective date of this Assignment and Acceptance shall be
__________, 1995 (the "Effective Date"). Following the execution of this
Assignment and Acceptance, it will be delivered to the Agent for acceptance by
it and recording by the Agent pursuant to Section 10.13 of the Credit Agreement,
effective as of the Effective Date (which shall not be, unless otherwise agreed
to by the Agent, earlier than three Cleveland Banking Days after the date of
such acceptance and recording by the Agent).
5. Upon such acceptance and recording, from and after the Effective
Date, the Agent shall make all payments in respect of the Assigned Interest
(including payments of principal, interest, fees and other amounts) to the
Assignee whether such amounts have accrued prior to the Effective Date or accrue
subsequent to the Effective Date. The Assignor and the Assignee shall make all
appropriate adjustments in payments by the Agent for periods prior to the
Effective Date or with respect to the making of this assignment directly between
themselves.
6. From and after the Effective Date, (a) the Assignee shall be a party
to the Credit Agreement and, to the extent provided in this Assignment and
Acceptance, have the rights and obligations of a Bank thereunder and under the
Related Writings and shall be bound by the provisions thereof and (b) the
Assignor shall, to the extent provided in this Assignment and Acceptance,
relinquish its rights and be released from its obligations under the Credit
Agreement.
7. The Assignee advises the Agent that the address listed on Annex 1 is
its address for notices under the Credit Agreement.
8. This Assignment and Acceptance shall be governed by and construed in
accordance with the laws of the State of Ohio.
IN WITNESS WHEREOF, the parties hereto have caused this Assignment and
Acceptance to be executed as of the ____ day of _______________, 1995, by their
respective duly authorized officers on Annex 1 hereto.
2
<PAGE> 17
ANNEX 1 to the
Assignment and Acceptance
-------------------------
Re: Credit Agreement, dated as of
April 11, 1995, as amended, among
Park-Ohio Industries, Inc., the Banks
from time to time parties thereto,
and Society National Bank, as Agent
-----------------------------------
<TABLE>
<CAPTION>
Name of Assignor: SOCIETY NATIONAL BANK
Name of Assignee: NATIONAL CITY BANK
Transfer Effective Date of Assignment:
Principal Percentage Percentage
Amount of Revolving of Assignor's of Total Revolving
Credit Commitment Assigned Interest Assigned Credit Commitment Amount
<S> <C> <C>
$ 6,500,000 20% 10%
Principal Percentage Percentage
Amount of Term of Assignor's of Total Term
Loan Commitment Assigned Interest Assigned Loan Commitment Amount
$ 3,500,000 20% 10%
NATIONAL CITY BANK SOCIETY NATIONAL BANK
By: By:
--------------------------------- ----------------------------
Title: Kenneth M. Merhar, Vice President
Consented to: Consented to:
SOCIETY NATIONAL BANK PARK-OHIO INDUSTRIES, INC.
as Agent
By: By:
--------------------------------- ----------------------------
Kenneth M. Merhar, Vice President Title:
</TABLE>
<PAGE> 18
ASSIGNMENT AND ACCEPTANCE
Reference is made to the Credit Agreement dated as of April 11, 1995,
(as amended by the First Amendment Agreement dated as of June ___, 1995, and as
may be further amended, supplemented or otherwise modified from time to time,
the "Credit Agreement"), among PARKOHIO INDUSTRIES, INC., an Ohio corporation
(the "Borrower"), the Banks named therein and SOCIETY NATIONAL BANK, as agent
for the Banks (in such capacity, the "Agent"). Unless otherwise defined herein,
terms defined in the Credit Agreement and used herein shall have the meaning
given to them in the Credit Agreement.
SOCIETY NATIONAL BANK (the "Assignor") and MELLON BANK (the "Assignee")
agree as follows:
1. The Assignor hereby irrevocably sells and assigns to the Assignee
without recourse to the Assignor, and the Assignee hereby irrevocably purchases
and assumes from the Assignor without recourse to the Assignor, as of the
Effective Date (as defined below), a ten percent (10%) interest (the "Assigned
Interest") in and to the Assignor's rights and obligations under the Credit
Agreement with respect to the Assignor's Commitment thereunder in a principal
amount as set forth on Annex 1 hereto.
2. The Assignor (a) makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with the Credit Agreement or any Related Writing, or
the execution, legality, validity, enforceability, genuineness, sufficiency or
value of the Credit Agreement, any other Related Writing or any other instrument
or document furnished pursuant thereto, or any collateral security granted in
connection therewith, if any, other than that it has not created any adverse
claim upon the interest being assigned by it hereunder and that such interest is
free and clear of any such adverse claim; (b) makes no representation or
warranty and assumes no responsibility with respect to the financial condition
of the Borrower, any of its Subsidiaries or any other obligor or the performance
or the observance by the Borrower, any of its Subsidiaries or any other obligor
or any of their respective obligations under the Credit Agreement or any Related
Writing or any other instrument or document furnished pursuant hereto or
thereto; and (c) attaches the Note(s) held by it evidencing the Assignor's
Commitment and requests that the Agent exchange such Note(s) for a new Note or
Notes payable to the Assignee and a new Note or Notes payable to the Assignor in
the respective amounts which reflect the assignment being made hereby (and after
giving effect to any other assignments which have become effective on the
Effective Date).
3. The Assignee (a) represents and warrants that it is legally
authorized to enter into this Assignment and Acceptance; (b) confirms that it
has received a copy of the Credit Agreement, and the First Amendment Agreement,
together with copies of the financial statements delivered pursuant to Section
5.3 thereof and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into this
Assignment and Acceptance; (c) agrees that it will, independently and without
reliance upon the Assignor, the Agent or any other Bank, based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking action under the Credit Agreement,
the Related Writings or any other instrument or document furnished pursuant
hereto or thereto; (d) appoints
<PAGE> 19
and authorizes the Agent to take such action as agent on its behalf and to
exercise such powers and discretion under the Credit Agreement, the Related
Writings or other instruments or documents furnished pursuant hereto or thereto
as are delegated to the Agent by the terms thereof, together with such powers as
are incidental thereto; and (e) agrees that it will be bound by the provisions
of the Credit Agreement and will perform in accordance with its terms all the
obligations which by the terms of the Credit Agreement are required to be
performed by it as a Bank including, if it is organized under the laws of a
jurisdiction outside the United States, its obligations pursuant to subsection
10.13(f) of the Credit Agreement.
4. The effective date of this Assignment and Acceptance shall be
__________, 1995 (the "Effective Date"). Following the execution of this
Assignment and Acceptance, it will be delivered to the Agent for acceptance by
it and recording by the Agent pursuant to Section 10.13 of the Credit Agreement,
effective as of the Effective Date (which shall not be, unless otherwise agreed
to by the Agent, earlier than three Cleveland Banking Days after the date of
such acceptance and recording by the Agent).
5. Upon such acceptance and recording, from and after the Effective
Date, the Agent shall make all payments in respect of the Assigned Interest
(including payments of principal, interest, fees and other amounts) to the
Assignee whether such amounts have accrued prior to the Effective Date or accrue
subsequent to the Effective Date. The Assignor and the Assignee shall make all
appropriate adjustments in payments by the Agent for periods prior to the
Effective Date or with respect to the making of this assignment directly between
themselves.
6. From and after the Effective Date, (a) the Assignee shall be a party
to the Credit Agreement and, to the extent provided in this Assignment and
Acceptance, have the rights and obligations of a Bank thereunder and under the
Related Writings and shall be bound by the provisions thereof and (b) the
Assignor shall, to the extent provided in this Assignment and Acceptance,
relinquish its rights and be released from its obligations under the Credit
Agreement.
7. The Assignee advises the Agent that the address listed on Annex 1 is
its address for notices under the Credit Agreement.
8. This Assignment and Acceptance shall be governed by and construed in
accordance with the laws of the State of Ohio.
IN WITNESS WHEREOF, the parties hereto have caused this Assignment and
Acceptance to be executed as of the ____ day of _______________, 1995, by their
respective duly authorized officers on Annex 1 hereto.
2
<PAGE> 20
ANNEX 1 to the
Assignment and Acceptance
-------------------------
Re: Credit Agreement, dated as of
April 11, 1995, as amended, among
Park-Ohio Industries, Inc., the Banks
from time to time parties thereto,
and Society National Bank, as Agent
-----------------------------------
<TABLE>
<CAPTION>
Name of Assignor: SOCIETY NATIONAL BANK
Name of Assignee: MELLON BANK
Transfer Effective Date of Assignment:
Principal Percentage Percentage
Amount of Revolving of Assignor's of Total Revolving
Credit Commitment Assigned Interest Assigned Credit Commitment Amount
<S> <C> <C>
$ 3,250,000 10% 5%
Principal Percentage Percentage
Amount of Term of Assignor's of Total Term
Loan Commitment Assigned Interest Assigned Loan Commitment Amount
$ 1,750,000 10% 5%
MELLON BANK SOCIETY NATIONAL BANK
By: By:
--------------------------------- ------------------------------
Title: Kenneth M. Merhar, Vice President
Consented to: Consented to:
SOCIETY NATIONAL BANK PARK-OHIO INDUSTRIES, INC.
as Agent
By: By:
--------------------------------- ------------------------------
Kenneth M. Merhar, Vice President Title:
</TABLE>
<PAGE> 21
FIRST AMENDMENT AGREEMENT - MAY, 1995
<PAGE> 1
Exhibit (4)(E)
SECOND AMENDMENT AGREEMENT
Second Amendment Agreement made as of the 5th day of December, 1995,
by and among PARK-OHIO INDUSTRIES, INC., an Ohio corporation ("Borrower"),
SOCIETY NATIONAL BANK, as Agent ("Agent") and the banks listed on Schedule I
attached hereto and made a part hereof (the "Banks"):
WHEREAS, Borrower, Agent and the Banks are parties to a certain credit
agreement dated April 11, 1995, as amended, and as it may from time to time be
further amended, supplemented or otherwise modified, which provides, among other
things, for a revolving credit and a term loan aggregating One Hundred Million
Dollars, all upon certain terms and conditions (the "Credit Agreement");
WHEREAS, Borrower, Agent and the Banks desire to amend the Credit
Agreement by increasing the amount of the revolving credit and by modifying
certain other provisions thereof;
WHEREAS, each term used herein shall be defined in accordance with the
Credit Agreement;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein and for other valuable considerations, Borrower, Agent and the
Banks agree as follows:
1. The first paragraph of Section 2.1 of the Credit Agreement is hereby
amended by deleting the amount "One Hundred Million Dollars ($100,000,000)" and
by inserting in place thereof the amount "One Hundred Twenty Five Million
Dollars ($125,000,000)".
2. The Credit Agreement is hereby amended by deleting Section 5.21
thereof in its entirety and by inserting in place thereof the following:
SECTION 5.21. CAPITAL EXPENDITURES. Borrower and its
Consolidated Subsidiaries will not invest in Capital Expenditures (a)
more than an aggregate amount equal to Fourteen Million Dollars
($14,000,000) during the 1995 fiscal year of Borrower, and (b) more
than an amount equal to Ten Million Dollars ($10,000,000) during the
1996 fiscal year of Borrower and during each fiscal year thereafter.
3. The Credit Agreement is hereby amended to add a new Annex 1 in the
form of Schedule I, attached hereto.
4. Concurrently with the execution of this Second Amendment Agreement,
Borrower shall execute and deliver to each Bank a new Revolving Credit Note
dated as of the Closing Date, and being in the form and substance of Exhibit A
of the Credit Agreement, with the blanks appropriately filled to reflect the
Revolving Credit Commitment of each Bank. After receipt of such Revolving Credit
Note, each Bank will mark the Revolving Credit Note being replaced hereby,
"Replaced" and return the same to Borrower.
<PAGE> 2
5. Borrower hereby represents and warrants to the Agent and the Banks
that (a) Borrower has the legal power and authority to execute and deliver this
Second Amendment Agreement; (b) officials executing this Second Amendment
Agreement have been duly authorized to execute and deliver the same and bind
Borrower with respect to the provisions hereof; (c) the execution and delivery
hereof by Borrower and the performance and observance by Borrower of the
provisions hereof do not violate or conflict with the organizational agreements
of Borrower or any law applicable to Borrower or result in a breach of any
provision of or constitute a default under any other agreement, instrument or
document binding upon or enforceable against Borrower; (d) no Possible Default
exists under the Credit Agreement, nor will any occur immediately after the
execution and delivery of the Second Amendment Agreement or by the performance
or observance of any provision hereof; (e) neither Borrower nor any Subsidiary
has any claim or offset against, or defense or counterclaim to, any of
Borrower's or any Subsidiary's obligations or liabilities under the Credit
Agreement or any Related Writing, and Borrower and each Subsidiary hereby waives
and releases the Agent and each of the Banks from any and all such claims,
offsets, defenses and counterclaims of which Borrower and any Subsidiary is
aware, such waiver and release being with full knowledge and understanding of
the circumstances and effect thereof and after having consulted legal counsel
with respect thereto, and (f) this Second Amendment Agreement constitutes a
valid and binding obligation of Borrower in every respect, enforceable in
accordance with its terms.
6. Each reference that is made in the Credit Agreement or any other
writing shall hereafter be construed as a reference to the Credit Agreement as
amended hereby. Except as herein otherwise specifically provided, all provisions
of the Credit Agreement shall remain in full force and effect and be unaffected
hereby.
7. This Second Amendment Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed to be an original and all
of which taken together shall constitute but one and the same agreement.
8. The rights and obligations of all parties hereto shall be governed
by the laws of the State of Ohio.
<TABLE>
<S> <C> <C>
Address: 600 Tower East PARK-OHIO INDUSTRIES, INC.
20600 Chagrin Blvd.
Shaker Heights, OH 44122 By:
------------------------------------
James S. Walker, Vice President
and
------------------------------------
Ronald J. Cozean, Secretary
</TABLE>
2
<PAGE> 3
<TABLE>
<S> <C> <C>
Address: Society Center SOCIETY NATIONAL BANK,
127 Public Square Individually and as Agent
Cleveland, OH
44114-1306 By:
Attn: Commercial Loans- ------------------------------------
Cleveland District Kenneth M. Merhar, Vice President
Address: Huntington Building THE HUNTINGTON NATIONAL BANK
917 Euclid Avenue
Cleveland, OH 44115 By:
-----------------------------
Attn: Corporate Banking Div. Jerald A. Bakota, Vice President
Address: 611 Woodward Avenue NBD BANK
Detroit, MI 48226
Attn: Midwest Banking By:
------------------------------------
Maher R. Touma, Vice President
Address: 200 Public Square MELLON BANK, N.A.
29th Floor
Cleveland, OH 44114-2301 By:
Attn: Corporate Banking Div. ------------------------------------
Henry W. Centa, Vice President
Address: 1900 East Ninth Street NATIONAL CITY BANK
Cleveland, OH 44114-0756
Attn: Metro/Ohio Division By:
Loc. # 2104 ------------------------------------
Anthony J. DiMare, Vice President
The undersigned consent to the terms hereof.
Address: 600 Tower East BENNETT INDUSTRIES, INC.
20600 Chagrin Blvd.
Shaker Heights, OH 44122 By:
------------------------------------
James S. Walker, Treasurer
and
------------------------------------
Ronald J. Cozean, Secretary
</TABLE>
3
<PAGE> 4
<TABLE>
<S> <C> <C>
Address: 600 Tower East CASTLE RUBBER COMPANY
20600 Chagrin Blvd.
Shaker Heights, OH 44122 By:
------------------------------------
James S. Walker, Treasurer
and
------------------------------------
Ronald J. Cozean, Secretary
Address: 600 Tower East KAY HOME PRODUCTS, INC.
20600 Chagrin Blvd.
Shaker Heights, OH 44122 By:
------------------------------------
James S. Walker, Treasurer
and
------------------------------------
Ronald J. Cozean, Secretary
Address: 600 Tower East GENERAL ALUMINUM MFG. COMPANY
20600 Chagrin Blvd.
Shaker Heights, OH 44122 By:
------------------------------------
James S. Walker, Treasurer
and
------------------------------------
Ronald J. Cozean, Secretary
Address: 600 Tower East BLUE FALCON INVESTMENTS, INC.
20600 Chagrin Blvd.
Shaker Heights, OH 44122 BY:
------------------------------------
James S. Walker, Treasurer
and
------------------------------------
Ronald J. Cozean, Secretary
Address: 600 Tower East RB&W CORPORATION
20600 Chagrin Blvd.
Shaker Heights, OH 44122 By:
------------------------------------
James S. Walker, Treasurer
and
------------------------------------
Ronald J. Cozean, Secretary
4
</TABLE>
<PAGE> 5
<TABLE>
<S> <C> <C>
Address: 600 Tower East BLUE FALCON FORGE, INC.
20600 Chagrin Blvd.
Shaker Heights, OH 44122 By:
------------------------------------
James S. Walker, Treasurer
and
------------------------------------
Ronald J. Cozean, Secretary
Address: 600 Tower East TOCCO, INC.
20600 Chagrin Blvd.
Shaker Heights, OH 44122 By:
------------------------------------
James S. Walker, Treasurer
and
------------------------------------
Ronald J. Cozean, Secretary
Address: 600 Tower East THE AJAX MANUFACTURING
20600 Chagrin Blvd. COMPANY
Shaker Heights, OH 44122
By:
------------------------------------
James S. Walker, Treasurer
and
------------------------------------
Ronald J. Cozean, Secretary
</TABLE>
<PAGE> 6
REVOLVING CREDIT NOTE
$31,500,000 Cleveland, Ohio
As of April 11, 1995
FOR VALUE RECEIVED, the undersigned PARK-OHIO INDUSTRIES, INC. (the
"Borrower") promises to pay on March 31, 1999, to the order of SOCIETY NATIONAL
BANK (the "Bank") at the Main Office of Society National Bank, Agent, 127 Public
Square, Cleveland, Ohio 44114-1306 the principal sum of
THIRTY ONE MILLION FIVE HUNDRED THOUSAND AND 00/100 DOLLARS
- - ---------------------------------------------------
or the aggregate unpaid principal amount of all loans made by Bank to Borrower
pursuant to Paragraph A of Section 2.1 of the credit agreement, as hereinafter
defined, whichever is less, in lawful money of the United States of America. As
used herein, "Credit Agreement" means the credit agreement dated as of April 11,
1995, as amended, among Borrower, the banks named therein and Society National
Bank, as Agent. Capitalized terms used herein shall have the meanings ascribed
to them in the Credit Agreement.
Borrower also promises to pay interest on the unpaid principal amount
of each loan from time to time outstanding, from the date of such loan until the
payment in full thereof, at the rates per annum which shall be determined in
accordance with the provisions of Paragraph A of Section 2.1 of the Credit
Agreement. Such interest shall be payable on each date provided for in Paragraph
A of such Section 2.1; provided, however, that interest on any principal portion
which is not paid when due shall be payable on demand.
The portions of the principal sum hereof from time to time representing
Prime Rate Loans and LIBOR Loans, and payments of principal of any thereof, will
be shown on the records of Bank by such method as Bank may generally employ;
provided, however, that failure to make any such entry shall in no way detract
from Borrower's obligations under this note.
If this note shall not be paid at maturity, whether such maturity
occurs by reason of lapse of time or by operation of any provision for
acceleration of maturity contained in the Credit Agreement, the principal hereof
and the unpaid interest thereon shall bear interest, until paid, at a rate per
annum which shall be two per cent (2%) in excess of the Adjusted Prime Rate from
time to time in effect. All payments of principal of and interest on this note
shall be made in immediately available funds. In an Event of Default in the
payment of interest or balance of principal, when the same becomes due, Bank may
collect and Borrower agrees to pay a late charge of an amount equal to the
greater of (a) ten per cent (10%) of the amount of such late payment, or (b)
Twenty Five Dollars ($25).
This note is one of the Revolving Credit Notes referred to in the
Credit Agreement. Reference is made to the Credit Agreement for a description of
the right of the undersigned to anticipate payments hereof, the right of the
holder hereof to declare this note due prior to its stated maturity, and other
terms and conditions upon which this note is issued.
<PAGE> 7
The undersigned authorizes any attorney at law at any time or times
after the maturity hereof (whether maturity occurs by lapse of time or by
acceleration) to appear in any state or federal court of record in the United
States of America, to waive the issuance and service of process, to admit the
maturity of this note and the nonpayment thereof when due, to confess judgment
against the undersigned in favor of the holder of this note for the amount then
appearing due, together with interest and costs of suit, and thereupon to
release all errors and to waive all rights of appeal and stay of execution. The
foregoing warrant of attorney shall survive any judgment, and if any judgment be
vacated for any reason, the holder hereof nevertheless may thereafter use the
foregoing warrant of attorney to obtain an additional judgment or judgments
against the undersigned. The undersigned agrees that the Agent or the Banks'
attorney may confess judgment pursuant to the foregoing warrant of attorney. The
undersigned further agrees that the attorney confessing judgment pursuant to the
foregoing warrant of attorney may receive a legal fee or other compensation from
the Agent or the Banks.
PARK-OHIO INDUSTRIES, INC.
By:
---------------------------------------
James S. Walker, Vice President
and
---------------------------------------
Ronald J. Cozean, Secretary
"WARNING -- BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT
TRIAL. IF YOU DO NOT PAY ON TIME A COURT JUDGMENT MAY BE TAKEN AGAINST YOU
WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO COLLECT
FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR WHETHER FOR
RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE AGREEMENT
OR ANY OTHER CAUSE."
<PAGE> 8
REVOLVING CREDIT NOTE
$22,500,000 Cleveland, Ohio
As of April 11, 1995
FOR VALUE RECEIVED, the undersigned PARK-OHIO INDUSTRIES, INC. (the
"Borrower") promises to pay on March 31, 1999, to the order of NBD BANK (the
"Bank") at the Main Office of Society National Bank, Agent, 127 Public Square,
Cleveland, Ohio 44114-1306 the principal sum of
TWENTY TWO MILLION FIVE HUNDRED THOUSAND AND 00/100 DOLLARS
- - ---------------------------------------------------
or the aggregate unpaid principal amount of all loans made by Bank to Borrower
pursuant to Paragraph A of Section 2.1 of the credit agreement, as hereinafter
defined, whichever is less, in lawful money of the United States of America. As
used herein, "Credit Agreement" means the credit agreement dated as of April 11,
1995, as amended, among Borrower, the banks named therein and Society National
Bank, as Agent. Capitalized terms used herein shall have the meanings ascribed
to them in the Credit Agreement.
Borrower also promises to pay interest on the unpaid principal amount
of each loan from time to time outstanding, from the date of such loan until the
payment in full thereof, at the rates per annum which shall be determined in
accordance with the provisions of Paragraph A of Section 2.1 of the Credit
Agreement. Such interest shall be payable on each date provided for in Paragraph
A of such Section 2.1; provided, however, that interest on any principal portion
which is not paid when due shall be payable on demand.
The portions of the principal sum hereof from time to time representing
Prime Rate Loans and LIBOR Loans, and payments of principal of any thereof, will
be shown on the records of Bank by such method as Bank may generally employ;
provided, however, that failure to make any such entry shall in no way detract
from Borrower's obligations under this note.
If this note shall not be paid at maturity, whether such maturity
occurs by reason of lapse of time or by operation of any provision for
acceleration of maturity contained in the Credit Agreement, the principal hereof
and the unpaid interest thereon shall bear interest, until paid, at a rate per
annum which shall be two per cent (2%) in excess of the Adjusted Prime Rate from
time to time in effect. All payments of principal of and interest on this note
shall be made in immediately available funds. In an Event of Default in the
payment of interest or balance of principal, when the same becomes due, Bank may
collect and Borrower agrees to pay a late charge of an amount equal to the
greater of (a) ten per cent (10%) of the amount of such late payment, or (b)
Twenty Five Dollars ($25).
This note is one of the Revolving Credit Notes referred to in the
Credit Agreement. Reference is made to the Credit Agreement for a description of
the right of the undersigned to anticipate payments hereof, the right of the
holder hereof to declare this note due prior to its stated maturity, and other
terms and conditions upon which this note is issued.
<PAGE> 9
The undersigned authorizes any attorney at law at any time or times
after the maturity hereof (whether maturity occurs by lapse of time or by
acceleration) to appear in any state or federal court of record in the United
States of America, to waive the issuance and service of process, to admit the
maturity of this note and the nonpayment thereof when due, to confess judgment
against the undersigned in favor of the holder of this note for the amount then
appearing due, together with interest and costs of suit, and thereupon to
release all errors and to waive all rights of appeal and stay of execution. The
foregoing warrant of attorney shall survive any judgment, and if any judgment be
vacated for any reason, the holder hereof nevertheless may thereafter use the
foregoing warrant of attorney to obtain an additional judgment or judgments
against the undersigned. The undersigned agrees that the Agent or the Banks'
attorney may confess judgment pursuant to the foregoing warrant of attorney. The
undersigned further agrees that the attorney confessing judgment pursuant to the
foregoing warrant of attorney may receive a legal fee or other compensation from
the Agent or the Banks.
PARK-OHIO INDUSTRIES, INC.
By:
--------------------------------------
James S. Walker, Vice President
and
--------------------------------------
Ronald J. Cozean, Secretary
"WARNING -- BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT
TRIAL. IF YOU DO NOT PAY ON TIME A COURT JUDGMENT MAY BE TAKEN AGAINST YOU
WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO COLLECT
FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR WHETHER FOR
RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE AGREEMENT
OR ANY OTHER CAUSE."
<PAGE> 10
REVOLVING CREDIT NOTE
$22,500,000 Cleveland, Ohio
As of April 11, 1995
FOR VALUE RECEIVED, the undersigned PARK-OHIO INDUSTRIES, INC. (the
"Borrower") promises to pay on March 31, 1999, to the order of THE HUNTINGTON
NATIONAL BANK (the "Bank") at the Main Office of Society National Bank, Agent,
127 Public Square, Cleveland, Ohio 44114-1306 the principal sum of
TWENTY TWO MILLION FIVE HUNDRED THOUSAND AND 00/100 DOLLARS
- - ---------------------------------------------------
or the aggregate unpaid principal amount of all loans made by Bank to Borrower
pursuant to Paragraph A of Section 2.1 of the credit agreement, as hereinafter
defined, whichever is less, in lawful money of the United States of America. As
used herein, "Credit Agreement" means the credit agreement dated as of April 11,
1995, as amended, among Borrower, the banks named therein and Society National
Bank, as Agent. Capitalized terms used herein shall have the meanings ascribed
to them in the Credit Agreement.
Borrower also promises to pay interest on the unpaid principal amount
of each loan from time to time outstanding, from the date of such loan until the
payment in full thereof, at the rates per annum which shall be determined in
accordance with the provisions of Paragraph A of Section 2.1 of the Credit
Agreement. Such interest shall be payable on each date provided for in Paragraph
A of such Section 2.1; provided, however, that interest on any principal portion
which is not paid when due shall be payable on demand.
The portions of the principal sum hereof from time to time representing
Prime Rate Loans and LIBOR Loans, and payments of principal of any thereof, will
be shown on the records of Bank by such method as Bank may generally employ;
provided, however, that failure to make any such entry shall in no way detract
from Borrower's obligations under this note.
If this note shall not be paid at maturity, whether such maturity
occurs by reason of lapse of time or by operation of any provision for
acceleration of maturity contained in the Credit Agreement, the principal hereof
and the unpaid interest thereon shall bear interest, until paid, at a rate per
annum which shall be two per cent (2%) in excess of the Adjusted Prime Rate from
time to time in effect. All payments of principal of and interest on this note
shall be made in immediately available funds. In an Event of Default in the
payment of interest or balance of principal, when the same becomes due, Bank may
collect and Borrower agrees to pay a late charge of an amount equal to the
greater of (a) ten per cent (10%) of the amount of such late payment, or (b)
Twenty Five Dollars ($25).
This note is one of the Revolving Credit Notes referred to in the
Credit Agreement. Reference is made to the Credit Agreement for a description of
the right of the undersigned to anticipate payments hereof, the right of the
holder hereof to declare this note due prior to its stated maturity, and other
terms and conditions upon which this note is issued.
<PAGE> 11
The undersigned authorizes any attorney at law at any time or times
after the maturity hereof (whether maturity occurs by lapse of time or by
acceleration) to appear in any state or federal court of record in the United
States of America, to waive the issuance and service of process, to admit the
maturity of this note and the nonpayment thereof when due, to confess judgment
against the undersigned in favor of the holder of this note for the amount then
appearing due, together with interest and costs of suit, and thereupon to
release all errors and to waive all rights of appeal and stay of execution. The
foregoing warrant of attorney shall survive any judgment, and if any judgment be
vacated for any reason, the holder hereof nevertheless may thereafter use the
foregoing warrant of attorney to obtain an additional judgment or judgments
against the undersigned. The undersigned agrees that the Agent or the Banks'
attorney may confess judgment pursuant to the foregoing warrant of attorney. The
undersigned further agrees that the attorney confessing judgment pursuant to the
foregoing warrant of attorney may receive a legal fee or other compensation from
the Agent or the Banks.
PARK-OHIO INDUSTRIES, INC.
By:
--------------------------------------
James S. Walker, Vice President
and
--------------------------------------
Ronald J. Cozean, Secretary
"WARNING -- BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT
TRIAL. IF YOU DO NOT PAY ON TIME A COURT JUDGMENT MAY BE TAKEN AGAINST YOU
WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO COLLECT
FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR WHETHER FOR
RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE AGREEMENT
OR ANY OTHER CAUSE."
<PAGE> 12
REVOLVING CREDIT NOTE
$9,000,000 Cleveland, Ohio
As of April 11, 1995
FOR VALUE RECEIVED, the undersigned PARK-OHIO INDUSTRIES, INC. (the
"Borrower") promises to pay on March 31, 1999, to the order of NATIONAL CITY
BANK (the "Bank") at the Main Office of Society National Bank, Agent, 127 Public
Square, Cleveland, Ohio 44114-1306 the principal sum of
NINE MILLION AND 00/100 DOLLARS
- - ------------------------------------------------------------------------
or the aggregate unpaid principal amount of all loans made by Bank to Borrower
pursuant to Paragraph A of Section 2.1 of the credit agreement, as hereinafter
defined, whichever is less, in lawful money of the United States of America. As
used herein, "Credit Agreement" means the credit agreement dated as of April 11,
1995, as amended, among Borrower, the banks named therein and Society National
Bank, as Agent. Capitalized terms used herein shall have the meanings ascribed
to them in the Credit Agreement.
Borrower also promises to pay interest on the unpaid principal amount
of each loan from time to time outstanding, from the date of such loan until the
payment in full thereof, at the rates per annum which shall be determined in
accordance with the provisions of Paragraph A of Section 2.1 of the Credit
Agreement. Such interest shall be payable on each date provided for in Paragraph
A of such Section 2.1; provided, however, that interest on any principal portion
which is not paid when due shall be payable on demand.
The portions of the principal sum hereof from time to time representing
Prime Rate Loans and LIBOR Loans, and payments of principal of any thereof, will
be shown on the records of Bank by such method as Bank may generally employ;
provided, however, that failure to make any such entry shall in no way detract
from Borrower's obligations under this note.
If this note shall not be paid at maturity, whether such maturity
occurs by reason of lapse of time or by operation of any provision for
acceleration of maturity contained in the Credit Agreement, the principal hereof
and the unpaid interest thereon shall bear interest, until paid, at a rate per
annum which shall be two per cent (2%) in excess of the Adjusted Prime Rate from
time to time in effect. All payments of principal of and interest on this note
shall be made in immediately available funds. In an Event of Default in the
payment of interest or balance of principal, when the same becomes due, Bank may
collect and Borrower agrees to pay a late charge of an amount equal to the
greater of (a) ten per cent (10%) of the amount of such late payment, or (b)
Twenty Five Dollars ($25).
This note is one of the Revolving Credit Notes referred to in the
Credit Agreement. Reference is made to the Credit Agreement for a description of
the right of the undersigned to anticipate payments hereof, the right of the
holder hereof to declare this note due prior to its stated maturity, and other
terms and conditions upon which this note is issued.
<PAGE> 13
The undersigned authorizes any attorney at law at any time or times
after the maturity hereof (whether maturity occurs by lapse of time or by
acceleration) to appear in any state or federal court of record in the United
States of America, to waive the issuance and service of process, to admit the
maturity of this note and the nonpayment thereof when due, to confess judgment
against the undersigned in favor of the holder of this note for the amount then
appearing due, together with interest and costs of suit, and thereupon to
release all errors and to waive all rights of appeal and stay of execution. The
foregoing warrant of attorney shall survive any judgment, and if any judgment be
vacated for any reason, the holder hereof nevertheless may thereafter use the
foregoing warrant of attorney to obtain an additional judgment or judgments
against the undersigned. The undersigned agrees that the Agent or the Banks'
attorney may confess judgment pursuant to the foregoing warrant of attorney. The
undersigned further agrees that the attorney confessing judgment pursuant to the
foregoing warrant of attorney may receive a legal fee or other compensation from
the Agent or the Banks.
PARK-OHIO INDUSTRIES, INC.
By:
------------------------------------
James S. Walker, Vice President
and
------------------------------------
Ronald J. Cozean, Secretary
"WARNING -- BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT
TRIAL. IF YOU DO NOT PAY ON TIME A COURT JUDGMENT MAY BE TAKEN AGAINST YOU
WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO COLLECT
FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR WHETHER FOR
RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE AGREEMENT
OR ANY OTHER CAUSE."
<PAGE> 14
REVOLVING CREDIT NOTE
$4,500,000 Cleveland, Ohio
As of April 11, 1995
FOR VALUE RECEIVED, the undersigned PARK-OHIO INDUSTRIES, INC. (the
"Borrower") promises to pay on March 31, 1999, to the order of MELLON BANK,
N.A. (the "Bank") at the Main Office of Society National Bank, Agent, 127
Public Square, Cleveland, Ohio 44114-1306 the principal sum of
FOUR MILLION FIVE HUNDRED THOUSAND AND 00/100 DOLLARS
- - ------------------------------------------------------------------------
or the aggregate unpaid principal amount of all loans made by Bank to Borrower
pursuant to Paragraph A of Section 2.1 of the credit agreement, as hereinafter
defined, whichever is less, in lawful money of the United States of America. As
used herein, "Credit Agreement" means the credit agreement dated as of April 11,
1995, as amended, among Borrower, the banks named therein and Society National
Bank, as Agent. Capitalized terms used herein shall have the meanings ascribed
to them in the Credit Agreement.
Borrower also promises to pay interest on the unpaid principal amount
of each loan from time to time outstanding, from the date of such loan until the
payment in full thereof, at the rates per annum which shall be determined in
accordance with the provisions of Paragraph A of Section 2.1 of the Credit
Agreement. Such interest shall be payable on each date provided for in Paragraph
A of such Section 2.1; provided, however, that interest on any principal portion
which is not paid when due shall be payable on demand.
The portions of the principal sum hereof from time to time representing
Prime Rate Loans and LIBOR Loans, and payments of principal of any thereof, will
be shown on the records of Bank by such method as Bank may generally employ;
provided, however, that failure to make any such entry shall in no way detract
from Borrower's obligations under this note.
If this note shall not be paid at maturity, whether such maturity
occurs by reason of lapse of time or by operation of any provision for
acceleration of maturity contained in the Credit Agreement, the principal hereof
and the unpaid interest thereon shall bear interest, until paid, at a rate per
annum which shall be two per cent (2%) in excess of the Adjusted Prime Rate from
time to time in effect. All payments of principal of and interest on this note
shall be made in immediately available funds. In an Event of Default in the
payment of interest or balance of principal, when the same becomes due, Bank may
collect and Borrower agrees to pay a late charge of an amount equal to the
greater of (a) ten per cent (10%) of the amount of such late payment, or (b)
Twenty Five Dollars ($25).
This note is one of the Revolving Credit Notes referred to in the
Credit Agreement. Reference is made to the Credit Agreement for a description of
the right of the undersigned to anticipate payments hereof, the right of the
holder hereof to declare this note due prior to its stated maturity, and other
terms and conditions upon which this note is issued.
<PAGE> 15
The undersigned authorizes any attorney at law at any time or times
after the maturity hereof (whether maturity occurs by lapse of time or by
acceleration) to appear in any state or federal court of record in the United
States of America, to waive the issuance and service of process, to admit the
maturity of this note and the nonpayment thereof when due, to confess judgment
against the undersigned in favor of the holder of this note for the amount then
appearing due, together with interest and costs of suit, and thereupon to
release all errors and to waive all rights of appeal and stay of execution. The
foregoing warrant of attorney shall survive any judgment, and if any judgment be
vacated for any reason, the holder hereof nevertheless may thereafter use the
foregoing warrant of attorney to obtain an additional judgment or judgments
against the undersigned. The undersigned agrees that the Agent or the Banks'
attorney may confess judgment pursuant to the foregoing warrant of attorney. The
undersigned further agrees that the attorney confessing judgment pursuant to the
foregoing warrant of attorney may receive a legal fee or other compensation from
the Agent or the Banks.
PARK-OHIO INDUSTRIES, INC.
By:
----------------------------------------
James S. Walker, Vice President
and
----------------------------------------
Ronald J. Cozean, Secretary
"WARNING -- BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT
TRIAL. IF YOU DO NOT PAY ON TIME A COURT JUDGMENT MAY BE TAKEN AGAINST YOU
WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO COLLECT
FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR WHETHER FOR
RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE AGREEMENT
OR ANY OTHER CAUSE."
<PAGE> 16
SCHEDULE I
ANNEX 1
<TABLE>
<CAPTION>
REVOLVING
CREDIT TERM LOAN
COMMITMENT COMMITMENT MAXIUM
BANKING INSTITUTIONS PERCENTAGE AMOUNT AMOUNT AMOUNT
<S> <C> <C> <C> <C>
Society National Bank 35% $31,500,000 $12,250,000 $43,750,000
NBD Bank 25% $22,500,000 $8,750,000 $31,250,000
The Huntington National 25% $22,500,000 $8,750,000 $31,250,000
Bank
National City Bank 10% $9,000,000 $3,500,000 $12,500,000
Mellon Bank, N.A. 5% $4,500,000 $1,750,000 $6,250,000
100% $90,000,000 $35,000,000 $125,000,000
TOTAL
</TABLE>
<PAGE> 17
SECOND
AMENDMENT
AGREEMENT -
NOV., 1995
<PAGE> 18
<PAGE> 1
Exhibit (4)(F)
THIRD AMENDMENT AGREEMENT
Third Amendment Agreement made as of the 11th day of April, 1996, by
and among PARKOHIO INDUSTRIES, INC., an Ohio corporation ("Borrower"), SOCIETY
NATIONAL BANK, as Agent ("Agent") and the banks listed on Schedule I attached
hereto and made a part hereof (the "Banks"):
WHEREAS, Borrower, Agent and the Banks are parties to a certain credit
agreement dated April 11, 1995, as amended, and as it may from time to time be
further amended, supplemented or otherwise modified, which provides, among other
things, for a revolving credit and a term loan aggregating One Hundred Twenty
Five Million Dollars until March 31, 1999, all upon certain terms and conditions
(the "Credit Agreement");
WHEREAS, Borrower, Agent and the Banks desire to amend the Credit
Agreement by modifying certain provisions thereof;
WHEREAS, each term used herein shall be defined in accordance with the
Credit Agreement;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein and for other valuable considerations, Borrower, Agent and the
Banks agree as follows:
1. The "Applicable Spread" definition of Article I of the Credit
Agreement is hereby amended by deleting the following sentence in its entirety:
Anything herein to the contrary notwithstanding, from the Closing Date
until the earlier of (a) April 30, 1996 or (b) receipt by Agent of
audited financial statements for Borrower's fiscal year ending December
31, 1995, the Applicable Spread shall be one and forty-two
one-hundredths percent (1-42/100%).
and by inserting in place thereof the following sentence:
Anything herein to the contrary notwithstanding, from the Closing Date
until the earlier of (a) July 1, 1996 or (b) the sale of Bennett
Industries, Inc., the Applicable Spread shall be one and forty-two
one-hundredths percent (1-42/100%).
2. Section 5.15 of the Credit Agreement is hereby amended to add a new
subpart (c) as follows:
(c) Borrower may sell the stock or substantially all of the
assets of Bennett Industries, Inc.
<PAGE> 2
3. Borrower hereby represents and warrants to the Agent and the Banks
that (a) Borrower has the legal power and authority to execute and deliver this
Third Amendment Agreement; (b) officials executing this Third Amendment
Agreement have been duly authorized to execute and deliver the same and bind
Borrower with respect to the provisions hereof; (c) the execution and delivery
hereof by Borrower and the performance and observance by Borrower of the
provisions hereof do not violate or conflict with the organizational agreements
of Borrower or any law applicable to Borrower or result in a breach of any
provision of or constitute a default under any other agreement, instrument or
document binding upon or enforceable against Borrower; (d) no Possible Default
exists under the Credit Agreement, nor will any occur immediately after the
execution and delivery of the Third Amendment Agreement or by the performance or
observance of any provision hereof; (e) neither Borrower nor any Subsidiary has
any claim or offset against, or defense or counterclaim to, any of Borrower's or
any Subsidiary's obligations or liabilities under the Credit Agreement or any
Related Writing, and Borrower and each Subsidiary hereby waives and releases the
Agent and each of the Banks from any and all such claims, offsets, defenses and
counterclaims of which Borrower and any Subsidiary is aware, such waiver and
release being with full knowledge and understanding of the circumstances and
effect thereof and after having consulted legal counsel with respect thereto,
and (f) this Third Amendment Agreement constitutes a valid and binding
obligation of Borrower in every respect, enforceable in accordance with its
terms.
4. Each reference that is made in the Credit Agreement or any other
writing shall hereafter be construed as a reference to the Credit Agreement as
amended hereby. Except as herein otherwise specifically provided, all provisions
of the Credit Agreement shall remain in full force and effect and be unaffected
hereby.
5. This Third Amendment Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed to be an original and all
of which taken together shall constitute but one and the same agreement.
6. The rights and obligations of all parties hereto shall be governed
by the laws of the State of Ohio.
Address: 23000 Euclid Avenue PARK-OHIO INDUSTRIES, INC.
Euclid, Ohio 44117
By:
----------------------------------
James S. Walker, Vice President
and
----------------------------------
Ronald J. Cozean, Secretary
2
<PAGE> 3
<TABLE>
<S> <C> <C>
Address: Society Center SOCIETY NATIONAL BANK,
127 Public Square Individually and as Agent
Cleveland, OH 44114-1206
Attn: Commercial Loans- By:
Cleveland District ----------------------------------
Kenneth M. Merhar, Vice President
Address: Huntington Building THE HUNTINGTON NATIONAL BANK
917 Euclid Avenue
Cleveland, OH 44115 By:
Attn: Corporate Banking Div. ----------------------------------
Jerald A. Bakota, Vice President
Address: 611 Woodward Avenue NBD BANK
Detroit, MI 48226
Attn: Midwest Banking By:
----------------------------------
Lisa A. Ferris, Vice President
Address: 200 Public Square MELLON BANK, N.A.
29th Floor
Cleveland, OH 44114-2301 By:
Attn: Corporate Banking Div. ----------------------------------
Henry W. Centa, Vice President
Address: 1900 East Ninth Street NATIONAL CITY BANK
Cleveland, OH 44114-0756
Attn: Metro/Ohio Division By:
Loc.# 2104 ----------------------------------
Anthony J. DiMare, Vice President
The undersigned consent to the terms hereof.
Address: 23000 Euclid Avenue BENNETT INDUSTRIES, INC.
Euclid, Ohio 44117
By:
-----------------------------------
James S. Walker, Vice Pres. and Treas.
and
-----------------------------------
Ronald J. Cozean, Secretary
</TABLE>
3
<PAGE> 4
<TABLE>
<S> <C> <C>
Address: 23000 Euclid Avenue CASTLE RUBBER COMPANY
Euclid, Ohio 44117
By:
-----------------------------------
James S. Walker, Treasurer
and
-----------------------------------
Ronald J. Cozean, Secretary
Address: 23000 Euclid Avenue KAY HOME PRODUCTS, INC.
Euclid, Ohio 44117
By:
-----------------------------------
James S. Walker, Treasurer
and
-----------------------------------
Ronald J. Cozean, Secretary
Address: 23000 Euclid Avenue GENERAL ALUMINUM MFG. COMPANY
Euclid, Ohio 44117
By:
-----------------------------------
James S. Walker, Treasurer
and
-----------------------------------
Ronald J. Cozean, Secretary
Address: 23000 Euclid Avenue BLUE FALCON INVESTMENTS, INC.
Euclid, Ohio 44117
By:
-----------------------------------
James S. Walker, Treasurer
and
-----------------------------------
Ronald J. Cozean, Secretary
Address: 23000 Euclid Avenue RB&W CORPORATION
Euclid, Ohio 44117
By:
-----------------------------------
James S. Walker, Treasurer
and
-----------------------------------
Ronald J. Cozean, Vice Pres. and Sec.
</TABLE>
4
<PAGE> 5
<TABLE>
<S> <C> <C>
Address: 23000 Euclid Avenue BLUE FALCON FORGE, INC.
Euclid, Ohio 44117
By:
-----------------------------------
James S. Walker, Treasurer
and
-----------------------------------
Ronald J. Cozean, Secretary
Address: 23000 Euclid Avenue TOCCO, INC.
Euclid, Ohio 44117
By:
-----------------------------------
James S. Walker, Treasurer
and
-----------------------------------
Ronald J. Cozean, Secretary
Address: 23000 Euclid Avenue THE AJAX MANUFACTURING COMPANY
Euclid, Ohio 44117
By:
-----------------------------------
James S. Walker, Vice Pres. and Treas.
and
-----------------------------------
Ronald J. Cozean, Secretary
Address: 23000 Euclid Avenue CICERO FLEXIBLE PRODUCTS, INC.
Euclid, Ohio 44117 f.k.a. Blue Utica, Inc.
By:
-----------------------------------
James S. Walker, Vice Pres. and Treas.
and
-----------------------------------
Ronald J. Cozean, Vice Pres. and Sec.
</TABLE>
5
<PAGE> 6
PARK OHIO
THIRD AMENDMENT AGREEMENT
6
<PAGE> 1
Exhibit(4)(G)
FOURTH AMENDMENT AGREEMENT
This Fourth Amendment Agreement made as of the 31st day of December,
1996, by and among PARK-OHIO INDUSTRIES, INC., an Ohio corporation ("Borrower"),
KEYBANK NATIONAL ASSOCIATION, formerly known as Society National Bank, as Agent
("Agent") and the banks signing on the signature pages hereof (the "Banks"):
WHEREAS, Borrower, Agent and the Banks are parties to a certain credit
agreement dated April 11, 1995, as amended, and as it may from time to time be
further amended, restated or otherwise modified, which provides, among other
things, for a revolving credit and a term loan aggregating One Hundred Twenty
Five Million Dollars, all upon certain terms and conditions (the "Credit
Agreement");
WHEREAS, Borrower, Agent and the Banks desire to amend the Credit
Agreement by eliminating the Letter of Credit facility and modifying certain
provisions thereof;
WHEREAS, each term used herein shall be defined in accordance with the
Credit Agreement;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein and for other valuable considerations, Borrower, Agent and the
Banks agree as follows:
1. Article I of the Credit Agreement is hereby amended to delete the
definitions of "Guarantor of Payment" and "Revolving Credit Commitment"
therefrom and to insert the following in place thereof:
"Guarantor of Payment" means any one of Castle Rubber Company,
Kay Home Products, Inc., General Aluminum Mfg. Company, Blue Falcon
Investments, Inc., RB&W Corporation, Blue Falcon Forge, Inc., Tocco,
Inc., The Ajax Manufacturing Company, Cicero Flexible Products, Inc.
(fka Blue Utica, Inc.) and SummerSpace, Inc., or any other party which
shall deliver a Guaranty of Payment to the Agent subsequent to the
Closing Date.
"Revolving Credit Commitment" shall mean the obligation
hereunder of each Bank, during the Commitment Period, to make Revolving
Loans up to the aggregate amount set forth opposite such Bank's name
under the column headed "Revolving Credit Commitment Amount" as listed
in Annex 1 hereof (or such lesser amount as shall be determined
pursuant to Section 2.5 hereof).
2. Article I of the Credit Agreement is hereby amended to delete the
definition of "Letter of Credit" therefrom.
<PAGE> 2
3. Article I of the Credit Agreement is hereby amended to add the
following new definitions thereto:
"Loan" or "Loans" shall mean the credit granted to Borrower by
the Banks in accordance with Section 2.1A or B hereof.
"Revolving Loan" shall mean a Loan granted to Borrower by the
Banks in accordance with Section 2.1A hereof.
"Term Loan" shall mean the Loan granted to Borrower by the
Banks in accordance with Section 2.1B hereof.
"Total Commitment Amount" shall mean the obligation hereunder
of the Banks, during the Commitment Period, to make Loans up to the
maximum aggregate principal amount set forth as the "Total Commitment
Amount" on Annex 1 hereof (or such lesser amount as shall be determined
pursuant to Section 2.5 hereof).
4. Section 2.1 of the Credit Agreement is hereby deleted in its
entirety with the following to be inserted in place thereof:
SECTION 2.1. AMOUNT AND NATURE OF CREDIT. Subject to the terms
and provisions of this credit agreement, each Bank will participate to
the extent hereinafter provided in making Loans to Borrower in such
aggregate amount as Borrower shall request pursuant to the Revolving
Credit Commitment and the Term Loan Commitment; provided, however, that
in no event shall the aggregate principal amount of all Loans
outstanding under this credit agreement during the Commitment Period
exceed the Total Commitment Amount.
Each Bank, for itself and not one for any other, agrees to
participate in borrowings made hereunder on such basis that (a)
immediately after the completion of any borrowing by Borrower
hereunder, the aggregate principal amount then outstanding on Notes
issued to such Bank shall not be in excess of the amount shown opposite
the name of such Bank under the column headed "Maximum Amount" as set
forth in Annex 1 hereto for the Commitment Period, and (b) such
aggregate principal amount outstanding on Notes issued to such Bank
shall represent that percentage of the aggregate principal amount then
outstanding on all Notes (including the Notes held by such Bank) which
is shown opposite the name of such Bank under the column headed
"Percentage" in Annex 1 hereto.
Each borrowing from, and reduction of Commitments of, the
Banks hereunder shall be made pro rata according to their respective
Commitments. The Loans may be made as Revolving Loans and as a Term
Loan as follows:
A. Revolving Loans. Subject to the terms and conditions of
this credit agreement, during the Commitment Period, the Banks shall
make a Loan or Loans to Borrower in such amount or amounts as Borrower
may from time to time request, but not exceeding in aggregate principal
amount at any one time outstanding hereunder the Revolving Credit
Commitment. Borrower shall have the option, subject to the terms and
conditions set forth herein, to borrow hereunder up to the amount of
the Revolving Credit Commitment
2
<PAGE> 3
by means of any combination of (a) Prime Rate Loans maturing on the
last day of the Commitment Period, bearing interest at a rate per annum
which shall be the Adjusted Prime Rate from time to time in effect and
drawn down in aggregate amounts of not less than Five Hundred Thousand
Dollars ($500,000) or any multiple thereof, or (b) LIBOR Loans maturing
on the last day of the Commitment Period, drawn down in aggregate
amounts of not less than One Million Dollars ($1,000,000) or any
multiple thereof, bearing interest at a rate per annum which shall be
the Derived LIBOR Rate, fixed in advance of each Interest Period as
herein provided for each such Interest Period. Interest hereunder shall
be based on a year having 360 days, and calculated for the actual
number of days elapsed.
Borrower shall pay interest on the unpaid principal amount of
Prime Rate Loans outstanding from time to time from the date thereof
until paid, on the last day of each succeeding June, September,
December and March of each year and at the maturity thereof, commencing
June 30, 1995. Borrower shall pay interest at a fixed rate for each
Interest Period on the unpaid principal amount of LIBOR Loans
outstanding from time to time from the date thereof until paid, payable
on each Interest Adjustment Date with respect to an Interest Period
(provided that if an Interest Period exceed three months, the interest
must be paid every three months, commencing three (3) months from the
beginning of such Interest Period).
At the request of Borrower, provided no Event of Default
exists hereunder, the Banks shall convert Prime Rate Loans to LIBOR
Loans at any time and shall convert LIBOR Loans to Prime Rate Loans on
any Interest Adjustment Date, but each request for loans under this
Paragraph A must either be for Prime Rate Loans or LIBOR Loans.
The obligation of Borrower to repay the Prime Rate Loans and
the LIBOR Loans made by each Bank and to pay interest thereon shall be
evidenced by a Revolving Credit Note of Borrower substantially in the
form of Exhibit A hereto, with appropriate insertions, dated the date
of this credit agreement and payable to the order of such Bank on the
last day of the Commitment Period in the principal amount of its
Revolving Credit Commitment, or, if less, the aggregate unpaid
principal amount of Revolving Loans made hereunder by such Bank. The
principal amount of the Prime Rate Loans and the LIBOR Loans made by
each Bank and all prepayments and payments thereof and the applicable
dates with respect thereto shall be recorded by each Bank from time to
time on the records of such Bank by such method as each Bank may
generally employ; provided, however, that failure to make any such
entry shall in no way detract from Borrower's obligations under such
Note. The aggregate unpaid amount of Prime Rate Loans and LIBOR Loans
set forth on the records of such Bank shall be rebuttably presumptive
evidence of the principal amount owing and unpaid on such Revolving
Credit Note. If an Event of Default shall occur hereunder, the
principal of the Revolving Credit Note and the unpaid interest thereon
shall bear interest,
3
<PAGE> 4
until paid (or until, if ever, such Event of Default may be waived in
writing by the Banks), at a rate per annum which shall be two per cent
(2%) in excess of the Adjusted Prime Rate from time to time in effect.
Subject to the provisions of this credit agreement, Borrower shall be
entitled under this Paragraph A to borrow funds, repay the same in
whole or in part and reborrow hereunder at any time and from time to
time during the Commitment Period.
B. Term Loan. Subject to the conditions of this credit
agreement, the Banks will make a seven (7) year Term Loan to Borrower
in such amount, if any, as Borrower may request on the Closing Date,
but not exceeding the Term Loan Commitment of such Bank then in effect.
To evidence the Term Loan, Borrower shall execute and deliver to each
Bank an appropriate Term Note dated the date the Term Loan is to be
made, and substantially in the form of Exhibit B hereto, with
appropriate insertions. The Term Notes shall be payable in twenty-four
(24) consecutive quarter annual installments aggregating One Million
Two Hundred Fifty Thousand Dollars ($1,250,000) for each quarter,
commencing June 30, 1996 and continuing on the last day of each
succeeding September, December, March and June of each year, through
December 31, 2001, with the balance thereof payable in full on March
31, 2002. Borrower shall notify the Agent at the time of the request
whether the Term Loan will be a Prime Rate Loan or a LIBOR Loan. The
Term Loan must be either a Prime Rate Loan or a LIBOR Loan, and may not
be a mixture of a Prime Rate Loan and a LIBOR Loan; but the Banks, at
the request of Borrower, shall convert a Prime Rate Loan to a LIBOR
Loan at any time and shall convert a LIBOR Loan to a Prime Rate Loan on
any Interest Adjustment Date. Interest hereunder shall be based on a
year having 360 days, and calculated for the actual number of days
elapsed.
If the Term Loan is a Prime Rate Loan, Borrower shall pay
interest on the unpaid principal amount thereof outstanding from time
to time from the date thereof until paid, on the last day of each
succeeding June, September, December, and March of each year and at the
maturity thereof, commencing June 30, 1995, at a rate per annum which
shall be the Adjusted Prime Rate from time to time in effect. Any
change in such rate resulting from a change in the Adjusted Prime Rate
shall be effective immediately from and after such change in the
Adjusted Prime Rate. If the Term Loan is a LIBOR Loan, Borrower shall
pay interest at a fixed rate for each Interest Period on the unpaid
principal amount of the LIBOR Loan outstanding from time to time from
the date thereof until paid, payable on each Interest Adjustment Date
with respect to an Interest Period (provided that if an Interest Period
exceeds three months, the interest must be paid every three months,
commencing three months from the beginning of such Interest Period), at
a rate per annum which shall be the Derived LIBOR Rate, fixed in
advance of each Interest Period as herein provided for each such
Interest Period.
The principal amount of the Prime Rate Loans and the LIBOR
Loans made by each Bank and all prepayments and payments thereof and
the applicable dates with respect thereto shall be recorded by such
Bank from time to time on the records of such Bank by such method as
each Bank may generally employ. The aggregate unpaid amount of Prime
Rate Loans and LIBOR Loans set forth on the records of each Bank shall
be rebuttably
4
<PAGE> 5
presumptive evidence of the principal amount owing and unpaid on each
Term Note; provided, however, that failure to make any such entry shall
in no way detract from Borrower's obligations under such Note. If an
Event of Default shall occur hereunder, the principal of each Term Note
and the unpaid interest thereon shall bear interest, until paid (or
until, if ever, such Event of Default may be waived in writing by the
Banks), at a rate per annum which shall be two per cent (2%) in excess
of the Adjusted Prime Rate from time to time in effect.
5. Section 5.21 of the Credit Agreement is hereby deleted in its
entirety with the following to be inserted in place thereof:
SECTION 5.21. CAPITAL EXPENDITURES. Borrower and its
Consolidated Subsidiaries shall not invest in Capital Expenditures more
than an aggregate amount equal to Sixteen Million Dollars ($16,000,000)
during the 1996 fiscal year of Borrower and during each fiscal year
thereafter.
6. Sections 2.5, 8.1 and 8.2 of the Credit Agreement are hereby amended
to delete the references to Letter of Credit, or the obligation of the Agent of
the Banks to issue any Letter of Credit.
7. Section 8.3 of the Credit Agreement is hereby deleted in its
entirety.
8. The Credit Agreement is hereby amended to add a new replacement
Annex 1 in the form of Schedule I, attached hereto.
9. Borrower hereby represents and warrants to the Agent and the Banks
that (a) Borrower has the legal power and authority to execute and deliver this
Fourth Amendment Agreement; (b) officials executing this Fourth Amendment
Agreement have been duly authorized to execute and deliver the same and bind
Borrower with respect to the provisions hereof; (c) the execution and delivery
hereof by Borrower and the performance and observance by Borrower of the
provisions hereof do not violate or conflict with the organizational agreements
of Borrower or any law applicable to Borrower or result in a breach of any
provision of or constitute a default under any other agreement, instrument or
document binding upon or enforceable against Borrower; (d) no Possible Default
or Event of Default exists under the Credit Agreement, nor will any occur
immediately after the execution and delivery of the Fourth Amendment Agreement
or by the performance or observance of any provision hereof; (e) neither
Borrower nor any Subsidiary has any claim or offset against, or defense or
counterclaim to, any of Borrower's or any Subsidiary's obligations or
liabilities under the Credit Agreement or any Related Writing, and Borrower and
each Subsidiary hereby waives and releases the Agent and each of the Banks from
any and all such
<PAGE> 6
claims, offsets, defenses and counterclaims of which Borrower and any Subsidiary
is aware, such waiver and release being with full knowledge and understanding of
the circumstances and effect thereof and after having consulted legal counsel
with respect thereto, and (f) this Fourth Amendment Agreement constitutes a
valid and binding obligation of Borrower in every respect, enforceable in
accordance with its terms.
10. Each reference that is made in the Credit Agreement or any other
writing shall hereafter be construed as a reference to the Credit Agreement as
amended hereby. Except as herein otherwise specifically provided, all provisions
of the Credit Agreement shall remain in full force and effect and be unaffected
hereby.
11. This Fourth Amendment Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed to be an original and all
of which taken together shall constitute but one and the same agreement.
12. The rights and obligations of all parties hereto shall be governed
by the laws of the State of Ohio.
Address: 23000 Euclid Avenue PARK-OHIO INDUSTRIES, INC.
Euclid, Ohio 44117
By:
-------------------------------
James S. Walker, Vice President
and
-------------------------------
Ronald J. Cozean, Secretary
6
<PAGE> 7
<TABLE>
<S> <C> <C>
Address: Key Center KEYBANK NATIONAL ASSOCIATION,
127 Public Square Individually and as Agent
Cleveland, OH 44114-1206
Attn: Commercial Loans- By:
Cleveland District ----------------------------------------
Kenneth M. Merhar, Vice President
Address: Huntington Building THE HUNTINGTON NATIONAL BANK
917 Euclid Avenue
Cleveland, OH 44115 By:
Attn: Corporate Banking Div. ----------------------------------------
Jerald A. Bakota, Vice President
Address: 611 Woodward Avenue NBD BANK
Detroit, MI 48226
Attn: Midwest Banking By:
----------------------------------------
Lisa A. Ferris, Vice President
Address: 200 Public Square MELLON BANK, N.A.
29th Floor
Cleveland, OH 44114-2301 By:
Attn: Corporate Banking Div. ----------------------------------------
Henry W. Centa, Vice President
Address: 1900 East Ninth Street NATIONAL CITY BANK
Cleveland, OH 44114-0756
Attn: Metro/Ohio Division By:
Loc.# 2104 ----------------------------------------
Anthony J. DiMare, Senior Vice President
The undersigned consent to the terms hereof.
Address: 23000 Euclid Avenue CASTLE RUBBER COMPANY
Euclid, Ohio 44117
By:
-----------------------------------------
James S. Walker, Treasurer
and
-----------------------------------------
Ronald J. Cozean, Secretary
</TABLE>
7
<PAGE> 8
<TABLE>
<S> <C> <C>
Address: 23000 Euclid Avenue KAY HOME PRODUCTS, INC.
Euclid, Ohio 44117
By:
---------------------------------
James S. Walker, Treasurer
and
---------------------------------
Ronald J. Cozean, Secretary
Address: 23000 Euclid Avenue GENERAL ALUMINUM MFG. COMPANY
Euclid, Ohio 44117
By:
---------------------------------
James S. Walker, Treasurer
and
---------------------------------
Ronald J. Cozean, Secretary
Address: 23000 Euclid Avenue BLUE FALCON INVESTMENTS, INC.
Euclid, Ohio 44117
By:
---------------------------------
James S. Walker, Treasurer
and
---------------------------------
Ronald J. Cozean, Secretary
Address: 23000 Euclid Avenue RB&W CORPORATION
Euclid, Ohio 44117
By:
---------------------------------
James S. Walker, Treasurer
and
---------------------------------
Ronald J. Cozean, Vice Pres. and Sec.
Address: 23000 Euclid Avenue BLUE FALCON FORGE, INC.
Euclid, Ohio 44117
By:
---------------------------------
James S. Walker, Treasurer
and
---------------------------------
Ronald J. Cozean, Secretary
</TABLE>
8
<PAGE> 9
<TABLE>
<S> <C> <C>
Address: 23000 Euclid Avenue TOCCO, INC.
Euclid, Ohio 44117
By:
---------------------------------
James S. Walker, Treasurer
and
---------------------------------
Ronald J. Cozean, Secretary
Address: 23000 Euclid Avenue THE AJAX MANUFACTURING COMPANY
Euclid, Ohio 44117
By:
---------------------------------
James S. Walker, Vice Pres. and Treas.
and
---------------------------------
Ronald J. Cozean, Secretary
Address: 23000 Euclid Avenue CICERO FLEXIBLE PRODUCTS, INC.
Euclid, Ohio 44117 fka Blue Utica, Inc.
By:
---------------------------------
James S. Walker, Vice Pres. and Treas.
and
---------------------------------
Ronald J. Cozean, Vice Pres. and Sec.
Address: 23000 Euclid Avenue SUMMERSPACE, INC.
Euclid, Ohio 44117
By:
---------------------------------
James S. Walker, Treasurer
and
---------------------------------
Ronald J. Cozean, Secretary
</TABLE>
9
<PAGE> 10
SCHEDULE 1 TO FOURTH AMENDMENT AGREEMENT
ANNEX 1
<TABLE>
<CAPTION>
REVOLVING CREDIT TERM LOAN
COMMITMENT COMMITMENT MAXIMUM
BANKING INSTITUTIONS PERCENTAGE AMOUNT AMOUNT AMOUNT
<S> <C> <C> <C> <C>
KeyBank National Association,
f.k.a. Society National Bank 35% $31,500,000 $12,250,000 $ 43,750,000
NBD Bank 25% $22,500,000 $ 8,750,000 $ 31,250,000
The Huntington National Bank 25% $22,500,000 $ 8,750,000 $ 31,250,000
National City Bank 10% $ 9,000,000 $ 3,500,000 $ 12,500,000
Mellon Bank, N.A. 5% $ 4,500,000 $ 1,750,000 $ 6,250,000
TOTAL 100% $90,000,000 $35,000,000
TOTAL COMMITMENT
AMOUNT $125,000,000
</TABLE>
10
<PAGE> 11
PARK OHIO
FOURTH AMENDMENT AGREEMENT
11
<PAGE> 1
EXHIBIT 11
PARK-OHIO INDUSTRIES, INC. AND SUBSIDIARIES
COMPUTATION OF NET INCOME PER COMMON SHARE
(In Thousands - Except Per Share Data)
<TABLE>
<CAPTION>
Year Ended December 31
-------------------------------------------
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Income from continuing operations $ 9,693 $ 19,813 $ 8,478
Amortization of imputed goodwill associated
with the earnout shares (84) (77) (398)
------------ ------------ -----------
Income from continuing operations related to
shareholders of Common Stock (Primary) 9,609 19,736 8,080
Interest (net of income taxes in 1996)
associated with convertible senior
subordinated debentures 999 1,612 1,009
------------ ------------ -----------
Income from continuing operations related to
shareholders of Common Stock (Fully
diluted) $ 10,608 $ 21,348 $ 9,089
============ ============ ===========
Discontinued operations $ 11,642 $ 4,221 $ 4,006
============ ============ ===========
Net income related to shareholders of Common
Stock (Primary) $ 21,251 $ 23,957 $ 12,086
============ ============ ===========
Net income related to shareholders of Common
Stock (Fully diluted) $ 22,250 $ 25,569 $ 13,095
============ ============ ===========
PRIMARY COMPUTATION
Average shares outstanding during the period 10,433,096 9,885,958 6,949,695
Effect of General Aluminum Mfg. Company
earnout shares deemed to be issued 187,500 187,500 187,500
Effect of Kay Home Products, Inc.
earnout shares deemed to be issued -0- -0- 796,973
Effect of dilutive stock options based on
the treasury stock method using the
average market price for the period 339,583 183,789 157,854
------------ ------------ -----------
Shares used 10,960,179 10,257,247 8,092,022
============ ============ ===========
Per share of Common Stock:
Continuing operations $ .88 $ 1.93 $ 1.00
Discontinued operations 1.06 .41 .49
------------ ------------ -----------
Net income $ 1.94 $ 2.34 $ 1.49
============ ============ ===========
FULLY DILUTED COMPUTATION
Average shares outstanding per primary
computation above 10,960,179 10,257,247 8,092,022
Additional effect of dilutive stock
options based on the treasury stock
method using the end of period market
price, if higher than the average
market price -0- 59,276 -0-
Effect of assuming conversion of the
Convertible Senior Subordinated
Debentures 1,150,880 1,150,880 723,258
------------ ------------ -----------
Shares used 12,111,059 11,467,403 8,815,280
Per share of common stock: ============ ============ ===========
Continuing operations $ .88 $ 1.86 $ 1.04
Discontinued operations .96 .37 .45
------------ ------------ -----------
Net income $ 1.84 $ 2.23 $ 1.49
============ ============ ===========
</TABLE>
<PAGE> 1
EXHIBIT 21
LIST OF SUBSIDIARIES OF PARK-OHIO INDUSTRIES, INC.
Park-Ohio has no parent. As of December 31, 1996, Park-Ohio had the following
significant subsidiaries, all of which are included in the consolidated
financial statements:
<TABLE>
<CAPTION>
PERCENTAGE OF
VOTING
SECURITIES
STATE OF OWNED BY
SUBSIDIARY ORGANIZATION PARK-OHIO
---------- ------------ ---------
<S> <C> <C>
Ajax Manufacturing Company Ohio 100%
Blue Falcon Forge, Inc. Pennsylvania 100%
Castle Rubber Company Pennsylvania 100%
Cicero Flexible Products Ohio 100%
Friendly & Safe Packaging Systems, Inc. Ohio 80%
General Aluminum Mfg. Company Ohio 100%
Kay Home Products, Inc. Ohio 100%
RB&W Corporation Delaware 100%
Tocco, Inc. Alabama 100%
</TABLE>
<PAGE> 1
Exhibit 23
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statements on
Form S-3 and Forms S-8 (relating to the 1992 Stock Option Plan and to the
Individual Account Retirement Plan) of Park-Ohio Industries, Inc. for the
registration of 363,094 shares, 350,000 shares and 1,500,000 shares,
respectively, of its common stock of our report dated February 17, 1997 with
respect to the consolidated financial statements of Park-Ohio Industries, Inc.
included in this Annual Report on Form 10-K for the year ended December 31,
1996.
/s/ Ernst & Young LLP
Cleveland, Ohio
March 27, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000076282
<NAME> PARK-OHIO INDUSTRIES, INC
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<EXCHANGE-RATE> 1
<CASH> 4,659
<SECURITIES> 0
<RECEIVABLES> 58,764
<ALLOWANCES> 1,048
<INVENTORY> 83,758
<CURRENT-ASSETS> 155,899
<PP&E> 106,862
<DEPRECIATION> 53,054
<TOTAL-ASSETS> 282,910
<CURRENT-LIABILITIES> 56,176
<BONDS> 77,806
<COMMON> 10,433
0
0
<OTHER-SE> 105,265
<TOTAL-LIABILITY-AND-EQUITY> 282,910
<SALES> 347,679
<TOTAL-REVENUES> 347,679
<CGS> 289,400
<TOTAL-COSTS> 289,400
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,947
<INCOME-PRETAX> 14,753
<INCOME-TAX> 5,060
<INCOME-CONTINUING> 9,693
<DISCONTINUED> 11,642
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 21,335
<EPS-PRIMARY> 1.94
<EPS-DILUTED> 1.84
</TABLE>
