<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended December 31, 1997
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from _______ to _______
Commission file number 0-3134
A. Full title of the plan and the address of the plan, if different from
that of the issuer named below:
INDIVIDUAL ACCOUNT RETIREMENT PLAN OF PARK-OHIO
INDUSTRIES, INC. AND OTHER SPONSORING CORPORATIONS
B. Name of issuer of the securities held pursuant to the plan and
the address of its principal executive office:
PARK-OHIO INDUSTRIES, INC.
23000 EUCLID AVENUE
CLEVELAND, OHIO 44117
Page 1
<PAGE> 2
INDEX
PAGE(S)
Report of Independent Auditors F-1
Financial Statements
Statements of Net Assets Available
for Plan Benefits, with Fund Information
as of December 31, 1997 and 1996 F-2--F-3
Statements of Changes in Net Assets
Available for Plan Benefits, with Fund
Information for the Years Ended
December 31, 1997 and 1996 F-4--F-5
Notes to Financial Statements F-6--F-17
Schedule I: Schedule of Assets
Held for Investment Purposes at
December 31, 1997 F-18
Schedule II: Schedule of Reportable
Transactions for the Year Ended
December 31, 1997 F-19
EXHIBITS
Exhibit
Number Description
23 Consent of Independent Auditors
* Other supplemental schedules required by Section 2520.103-10 of the
Department of Labor Rules and Regulations for Reporting and Disclosure
under ERISA have been omitted because they are not applicable.
Page 2
<PAGE> 3
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Administrator of the Plan has duly caused this annual report to be signed on its
behalf by the undersigned hereunto duly authorized.
Individual Account Retirement Plan
Of Park-Ohio Industries, Inc. and
other Sponsoring Corporations
Date: June 26, 1998
By /s/ James S. Walker
--------------------------------
James S. Walker
Vice President and Chief
Financial Officer
<PAGE> 4
Report of Independent Auditors
Plan Administrative Committee
Individual Account Retirement Plan of
Park-Ohio Industries, Inc. and Other
Sponsoring Corporations
We have audited the accompanying statements of net assets available for plan
benefits of the Individual Account Retirement Plan of Park-Ohio Industries, Inc.
and Other Sponsoring Corporations as of December 31, 1997 and 1996, and the
related statements of changes in net assets available for plan benefits for the
years then ended. These financial statements are the responsibility of the
Plan's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for plan benefits of the Plan at
December 31, 1997 and 1996, and the changes in nets assets available for plan
benefits for the years then ended, in conformity with generally accepted
accounting principles.
Our audits were performed for the purpose of forming an opinion on the financial
statements taken as a whole. The accompanying supplemental schedules of assets
held for investment purposes as of December 31, 1997, and reportable
transactions for the year then ended, are presented for the purposes of
complying with the Department of Labor's Rules and Regulations for Reporting and
Disclosure under the Employee Retirement Income Security Act of 1974, and are
not a required part of the financial statements. The Fund information in the
statements of net assets available for plan benefits and the statements of
changes in net assets available for plan benefits is presented for purposes of
additional analysis rather than to present the net assets available for plan
benefits and changes in net assets available for plan benefits of each fund. The
supplemental schedules and Fund information have been subjected to the auditing
procedures applied in our audits of the 1997 and 1996 financial statements and,
in our opinion, are fairly stated in all material respects in relation to the
1997 and 1996 financial statements taken as a whole.
/s/ Ernst & Young LLP
Cleveland, Ohio
June 23, 1998
F-1
<PAGE> 5
Individual Account Retirement Plan of Park-Ohio
Industries, Inc. and Other Sponsoring Corporations
Statement of Net Assets Available for Plan Benefits
with Fund Information
December 31, 1997
<TABLE>
<CAPTION>
Funds
---------------------------------------------------------------------------------------
Park-Ohio
Money Equity Common
Equity Bond Market International Balanced Income Stock
---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Cash
Investments, at fair value:
KeyCorp Victory Value Fund $17,904,195
KeyCorp Victory
Intermediate Income Bond Fund $2,772,350
KeyCorp Prism Money Market Fund $4,763,595
Putnam New Opportunities Fund
Templeton Growth Fund
George Putnam Fund of Boston
KeyCorp EB Money Market Fund $ 91,182
Park-Ohio Industries, Inc.
Common Stock 2,217,521
Participant loans
---------------------------------------------------------------------------------------
17,904,195 2,772,350 4,763,595 2,308,703
Employer contribution receivable 23,718 2,903 20,723 5,025
Employee contribution receivable 86,190 8,232 25,542 14,507
Accrued fees and expenses (2,598)
---------------------------------------------------------------------------------------
NET ASSETS AVAILABLE FOR PLAN
BENEFITS $18,014,103 $2,783,485 $4,809,860 $ 0 $ 0 $ 0 $2,325,637
=======================================================================================
<CAPTION>
---------------------------------------------------------------------
Putnam
New Templeton George Loan
Opportunities Growth Putnam Fund Total
---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ASSETS
Cash $11,749 $ 11,749
Investments, at fair value:
KeyCorp Victory Value Fund 17,904,195
KeyCorp Victory
Intermediate Income Bond Fund 2,772,350
KeyCorp Prism Money Market Fund 4,763,595
Putnam New Opportunities Fund $1,140,377 1,140,377
Templeton Growth Fund $1,489,035 1,489,035
George Putnam Fund of Boston $2,132,036 2,132,036
KeyCorp EB Money Market Fund 91,182
Park-Ohio Industries, Inc.
Common Stock 2,217,521
Participant loans 522,411 522,411
-------------------------------------------------------------
1,140,377 1,489,035 2,132,036 522,411 33,032,702
Employer contribution receivable 6,011 5,422 7,586 71,388
Employee contribution receivable 24,560 21,555 26,315 206,901
Accrued fees and expenses (2,598)
-------------------------------------------------------------
NET ASSETS AVAILABLE FOR PLAN
BENEFITS $1,170,948 $1,516,012 $2,165,937 $534,160 $33,320,142
=============================================================
</TABLE>
See notes to financial statements.
F-2
<PAGE> 6
Individual Account Retirement Plan of Park-Ohio
Industries, Inc. and Other Sponsoring Corporations
Statement of Net Assets Available for Plan Benefits
with Fund Information
December 31, 1996
<TABLE>
<CAPTION>
Funds
----------------------------------------------------------------------------------
Money Equity
Equity Bond Market International Balanced Income
----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Investments, at fair value:
KeyCorp Prism Money Market Fund $ 398 $ 681 $ 5,820,308 $ 126 $ 113
KeyCorp Victory Intermediate
Income Bond Fund 3,346,926
KeyCorp Victory Value Fund 12,019,795
Fidelity Advisor Income & Growth
Fund 910,277
Fidelity Advisor Equity Income 3,646,634
Fund A
KeyCorp Victory International
Growth Fund $696,643
Park-Ohio Industries, Inc.
Common Stock
Participant loans
----------------------------------------------------------------------------------
12,020,193 3,347,607 5,820,308 696,643 910,403 3,646,747
Employer contribution receivable 9,990 1,925 13,598 2,445 5,228 10,321
Employee contribution receivable 15,405 3,402 19,200 5,270 14,780 23,829
Accrued fees and expenses (103) (411) (719) (82) (123) (452)
----------------------------------------------------------------------------------
NET ASSETS AVAILABLE FOR PLAN
BENEFITS $ 12,045,485 $3,352,523 $ 5,852,387 $ 704,276 $930,288 $ 3,680,445
==================================================================================
<CAPTION>
--------------------------------------------
Park-Ohio
Common Loan
Stock Fund Total
--------------------------------------------
<S> <C> <C> <C>
ASSETS
Investments, at fair value:
KeyCorp Prism Money Market Fund $ 30,480 $ 5,852,106
KeyCorp Victory Intermediate
Income Bond Fund 3,346,926
KeyCorp Victory Value Fund 12,019,795
Fidelity Advisor Income & Growth Fund 910,277
Fidelity Advisor Equity Income Fund A 3,646,634
KeyCorp Victory International
Growth Fund 696,643
Park-Ohio Industries, Inc.
Common Stock 1,510,727 1,510,727
Participant loans $ 22,190 22,190
--------------------------------------------
1,541,207 22,190 28,005,298
Employer contribution receivable 2,330 45,837
Employee contribution receivable 323 82,209
Accrued fees and expenses (2,229) (4,119)
--------------------------------------------
NET ASSETS AVAILABLE FOR PLAN
BENEFITS $ 1,541,631 $ 22,190 $ 28,129,225
===========================================
</TABLE>
See notes to financial statements.
F-3
<PAGE> 7
Individual Account Retirement Plan of Park-Ohio
Industries, Inc. and Other Sponsoring Corporations
Statement of Changes in Net Assets Available for Plan Benefits
with Fund Information
Year Ended December 31, 1997
<TABLE>
<CAPTION>
Funds
-------------------------------------------------------------------------------------
Money Equity
Equity Bond Market International Balanced Income
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ADDITIONS
Interest income $ 116 $ 4 $ 7 $ 1 $ 10 $ 4
Dividend income 1,540,557 179,827 9,574 10,568
Other income (expense) 15,823 16 118 18 216 279
Contributions from employer 239,669 29,503 209,025 4,965 10,159 20,653
Contributions from participants 1,008,744 103,802 291,134 21,547 40,714 97,359
Transfers from RB&W ESOP 19,945 16,366 641
Transfer from other plans 61,841 6,208 5,558 4,737 15,053 5,595
Unrealized appreciation (depreciation)
in fair value of investments 1,355,565 16,601 82,757 (11,871) (54,021) (427,757)
Realized gain 1,058,014 9,588 180,025 5,086 51,505 415,987
Loans to participants
Loan repayments
-------------------------------------------------------------------------------------
5,300,274 361,915 768,624 24,483 73,210 123,329
DEDUCTIONS
Distributions to participants (1,993,340) (552,981) (975,537) (5,827) (7,031) (33,209)
Loan repayments
Transfers (to) from other funds 2,672,180 (374,106) (829,846) (722,744) (996,210) (3,769,556)
Trustee fees and expenses (10,496) (3,866) (5,768) (188) (257) (1,009)
-------------------------------------------------------------------------------------
Net increase (decrease) 5,968,618 (569,038) (1,042,527) (704,276) (930,288) (3,680,445)
Net assets available for plan
benefits at beginning of year 12,045,485 3,352,523 5,852,387 704,276 930,288 3,680,445
-------------------------------------------------------------------------------------
NET ASSETS AVAILABLE FOR PLAN
BENEFITS AT END OF YEAR $ 18,014,103 $ 2,783,485 $ 4,809,860 $ 0 $ 0 $ 0
=====================================================================================
<CAPTION>
----------------------------------------------------------------------
Park-Ohio Putnam
Common New Templeton George Loan
Stock Opportunities Growth Putnam Fund Total
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ADDITIONS
Interest income $ 3,579 $ 15,273 $ 18,994
Dividend income $ 24,956 $ 231,542 $ 164,795 2,161,819
Other income (expense) 145 (33) (192) (103) 16,287
Contributions from employer 43,462 30,853 43,548 63,785 695,622
Contributions from participants 166,556 139,943 178,026 235,601 2,283,426
Transfers from RB&W ESOP 564 639 625 646 39,426
Transfer from other plans 61,784 34,195 50,942 22,711 268,624
Unrealized appreciation (depreciation)
in fair value of investments 678,349 81,126 (103,262) 73,242 1,690,729
Realized gain (9,717) 62,107 181 22,064 1,794,840
Loans to participants 565,334 565,334
Loan repayments 63,338 63,338
-------------------------------------------------------------------------------------
944,722 373,786 401,410 582,741 643,945 9,598,439
DEDUCTIONS
Distributions to participants (49,177) (16,696) (59,205) (50,888) (570,633) (4,314,524)
Loan repayments (63,338) (63,338)
Transfers (to) from other funds (104,922) 813,987 1,174,335 1,634,886 501,996
Trustee fees and expenses (6,617) (129) (528) (802) (29,660)
-------------------------------------------------------------------------------------
Net increase (decrease) 784,006 1,170,948 1,516,012 2,165,937 511,970 5,190,917
Net assets available for plan
benefits at beginning of year 1,541,631 22,190 28,129,225
-------------------------------------------------------------------------------------
NET ASSETS AVAILABLE FOR PLAN
BENEFITS AT END OF YEAR $ 2,325,637 $ 1,170,948 $ 1,516,012 $ 2,165,937 $534,160 $ 33,320,142
=====================================================================================
</TABLE>
See notes to financial statements.
F-4
<PAGE> 8
Individual Account Retirement Plan of
Park-Ohio Industries, Inc. and
Other Sponsoring Corporations
Statement of Changes in Net Assets Available for Plan Benefits
with Fund Information
Year Ended December 31, 1996
<TABLE>
<CAPTION>
Money Equity
Equity Bond Market International Balanced Income
------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ADDITIONS
Interest income $ 325 $ 386 $ 309 $ 28 $ 34 $ 88
Dividend income 152,313 214,944 1,596 16,816 42,074
Other income 34,452 5,957 2,878 1,897 8 1,434
Contributions from employer 126,536 29,029 190,948 30,410 65,571 145,488
Contributions from participants 567,238 138,214 349,234 113,740 253,476 602,331
Transfers from RB&W ESOP 799,713 88,692 380,448 195,094 319,972 641,549
Transfer from RB&W Retirement &
Savings Plan 1,475,777 448,606 621,071 368,372 1,523,369
Transfer from other plans 19,243 3,713 30,338 4,133 21,312 15,353
Unrealized appreciation (depreciation)
in fair value of investments 1,107,367 (125,653) 212,012 5,552 54,021 221,441
Realized gain 1,071,087 13,299 29,488 29,757 8,755 156,390
------------------------------------------------------------------------------------
5,354,051 817,187 1,816,726 750,579 739,965 3,349,517
DEDUCTIONS
Distributions to participants (948,349) (300,030) (546,798) (25,347) (17,536) (210,133)
Loan repayments
Transfers (to) from other funds (1,107,530) (926,724) 898,336 (17,232) 208,695 553,124
Trustee fees and expenses (41,042) (12,675) (9,615) (3,724) (836) (12,063)
------------------------------------------------------------------------------------
Net increase (decrease) 3,257,130 (422,242) 2,158,649 704,276 930,288 3,680,445
Net assets available for plan
benefits at beginning of year 8,788,355 3,774,765 3,693,738
------------------------------------------------------------------------------------
NET ASSETS AVAILABLE FOR PLAN
BENEFITS AT END OF YEAR $ 12,045,485 $ 3,352,523 $ 5,852,387 $ 704,276 $ 930,288 $3,680,445
====================================================================================
<CAPTION>
Park-Ohio
Common Loan
Stock Fund Total
-------------------------------------------
<S> <C> <C> <C>
ADDITIONS
Interest income $ 1,459 $ (3,558) $ (929)
Dividend income 427,743
Other income 48 46,674
Contributions from employer 32,806 620,788
Contributions from participants 134,594 2,158,827
Transfers from RB&W ESOP 1,537,163 3,962,631
Transfer from RB&W Retirement &
Savings Plan 50,641 4,487,836
Transfer from other plans 28,172 122,264
Unrealized appreciation (depreciation)
in fair value of investments (578,078) 896,662
Realized gain 1,308,776
-------------------------------------------
1,156,164 47,083 14,031,272
DEDUCTIONS
Distributions to participants (2,635) (2,050,828)
Loan repayments (24,893) (24,893)
Transfers (to) from other funds 391,331
Trustee fees and expenses (3,229) (83,184)
-------------------------------------------
Net increase (decrease) 1,541,631 22,190 11,872,367
Net assets available for plan
benefits at beginning of year 16,256,858
-------------------------------------------
NET ASSETS AVAILABLE FOR PLAN
BENEFITS AT END OF YEAR $ 1,541,631 $ 22,190 $ 28,129,225
===========================================
</TABLE>
See notes to financial statements.
F-5
<PAGE> 9
Individual Account Retirement Plan of
Park-Ohio Industries, Inc. and
Other Sponsoring Corporations
Notes to Financial Statements
December 31, 1997
A. SIGNIFICANT ACCOUNTING POLICIES
The accounting records of the Individual Account Retirement Plan (the "Plan")
are maintained on the accrual basis.
Purchases of investments are recorded at cost and revalued to market values at
the close of each day by the Plan Trustee. All investments are under the control
and management of Key Trust Company of Ohio N.A., the Trustee of the Plan.
Purchases and sales are accounted for on the trade date.
Investment income and realized and unrealized gains and losses are reported as
net income derived from investment activities and are allocated among the
individual accounts in proportion to their respective balances immediately
preceding the valuation date.
The investments in Park-Ohio Industries, Inc. (the "Company") common stock,
KeyCorp Victory Value Fund, KeyCorp Victory Intermediate Income Bond Fund,
KeyCorp Victory International Growth Fund, Fidelity Advisor Income & Growth
Fund, Fidelity Advisor Equity Income Fund T, Putnam New Opportunities Fund,
Templeton Growth Fund, and George Putnam Fund of Boston are valued as of the
last reported trade price on the last business day of the period.
Investments in the KeyCorp Prism Money Market Fund are valued at market, which
consider adjustments to the fund value for investment income and trustee
expenses.
The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from these estimates.
F-6
<PAGE> 10
Individual Account Retirement Plan of
Park-Ohio Industries, Inc. and
Other Sponsoring Corporations
Notes to Financial Statements--Continued
B. DESCRIPTION OF THE PLAN
The Plan, adopted by the Company effective January 1, 1985, is a defined
contribution plan which covers substantially all eligible full time employees in
the following classifications:
1. Salaried employees of the Ohio Crankshaft Division of the Company
except such employment is not considered covered employment after
March 4, 1989 for any employee who was an active participant in
the Revised Non-Contributory Pension Plan for Hourly-Rated
Employees of Ohio Crankshaft Division of Park-Ohio Industries,
Inc. on or after July 10, 1983.
2. Former salaried employees of Bennett Industries, Inc. and hourly
non-bargaining unit employees of all Bennett Divisions except
Lithonia (prior to August 1, 1996).
3. Non-bargaining unit employees of the Corporate Office of the
Company, Tocco, Inc. the Park Drop Forge Division of the Company,
Castle Rubber Company, and Cleveland City Forge Salary Employees,
Kay Home Products, Inc. (Marsh Allan and Quaker Industries
Divisions) (effective November 1, 1994), Cleveland City
Forge-Division Hourly Employees (effective November 1, 1995), RB&W
Corporation (effective April 1, 1995), Green Bearing (effective
February 1, 1997), Summerspace Inc. (effective March 1, 1997),
FECO Division of TOCCO (effective April 1, 1997), Delo Screw
Company (effective May 27, 1997), Arden Industrial Products, Inc.
(effective July 25, 1997), and Arcon Fastners, Inc. (effective
October 3, 1997).
4. Employees of General Aluminum Manufacturing Company (effective
January 1, 1995), Cicero Flexible Products (effective December 1,
1995), Bargaining and Non-Bargaining Employees of Blue Falcon
Forge (effective March 2, 1995), Bargaining and Non-Bargaining
Employees of Geneva Rubber Company Division (effective March 1,
1995), Ajax Manufacturing Company and Advanced Vehicles Inc.
Salaried Employees (effective January 1, 1996), and Forging
Developments International, Inc. (effective May 1, 1997).
F-7
<PAGE> 11
Individual Account Retirement Plan of
Park-Ohio Industries, Inc. and
Other Sponsoring Corporations
Notes to Financial Statements--Continued
B. DESCRIPTION OF THE PLAN--CONTINUED
5. Bargaining unit employees of the Ohio Crankshaft Division,
pursuant to a collective bargaining agreement between the Company
and the United Automobile, Aerospace and Agricultural Implement
Workers of America and its Local 91 (effective August 1, 1995),
and bargaining unit employees of RB&W Corporation-Coraopolis Plant
(effective April 1, 1996).
Generally, an employee in one of the above classifications becomes eligible to
join the Plan after completing 30 days of continuous employment.
Individual accounts are maintained for all participants. All amounts are
credited or charged to an account in terms of full and fractional investment
units at the investment unit values determined as of the transaction date. Each
participant designates how his share of the contributions is to be allocated
among the investment funds of the Plan described below:
Equity Fund--contributions and earnings are to be invested in marketable
equity securities or in any common or collective fund comprised
substantially of such investments. The fund invests primarily in stocks
with above average income and appreciation potential.
Bond Fund--contributions and earnings are to be invested in U.S.
Government Securities, corporate bonds or in any common or collective
fund comprised substantially of such investments. The fund invests in
primarily investment grade debt securities with average maturities of 3-8
years.
Money Market Fund--contributions and earnings are to be invested in
short-term investments such as certificates of deposit, U.S. Treasury
Bills and commercial paper or in any common or collective fund comprised
substantially of such investments.
F-8
<PAGE> 12
Individual Account Retirement Plan of
Park-Ohio Industries, Inc. and
Other Sponsoring Corporations
Notes to Financial Statements--Continued
B. DESCRIPTION OF THE PLAN--CONTINUED
International Fund--contributions and earnings are to be invested in
foreign equity securities or in any common or collective fund comprised
substantially of such investments. The fund generally invests in equity
securities in at least three different countries, excluding the U.S. This
investment option was eliminated as of April 1, 1997, and the assets were
transferred to the Templeton Growth Fund described below.
Balanced Fund--contributions and earnings are to be invested in
marketable equity securities and debt securities or in any common or
collective fund comprised substantially of such investments. The fund
invests in stocks which have potential for growth or income and capital
appreciation. The fund may invest up to 35% in below investment grade
debt securities. This investment option was eliminated as of April 1,
1997, and the assets were transferred to the George Putnam Fund described
below.
Equity Income Fund--contributions and earnings are to be invested in
marketable equity securities or in any common or collective fund
comprised substantially of such investments. The fund invests in stocks
with above average dividends and which are generally undervalued. This
investment option was eliminated as of April 1, 1997, and the assets were
transferred to the Equity Fund described above.
Putnam New Opportunities Fund--contributions and earnings are to be
invested in marketable equity securities or in any common or collective
fund comprised substantially of such investments within 7 or 8 industry
sectors believed to offer exceptional growth potential. The fund, which
was an available investment option as of April 1, 1997, invests
primarily in stocks of fast-growing innovative companies with above
average yields.
Templeton Growth Fund--contributions and earnings are to be invested in
marketable equity and debt securities or in any common or collective fund
comprised substantially of such investments. The fund, which was an
available investment option as of April 1, 1997, invests in stocks which
have potential for long-term growth and debt obligations of companies and
governments of any nation.
F-9
<PAGE> 13
Individual Account Retirement Plan of
Park-Ohio Industries, Inc. and
Other Sponsoring Corporations
Notes to Financial Statements--Continued
B. DESCRIPTION OF THE PLAN--CONTINUED
George Putnam Fund--contributions and earnings are to be invested in
marketable equity and debt securities or in any common or collective fund
comprised substantially of such investments. The fund, which was an
available investment option as of April 1, 1997, invests in stocks which
have potential for capital growth and current income.
Park-Ohio Industries, Inc. Common Stock Fund--contributions and earnings
are to be invested in common shares of the Company purchased on the open
market.
The Plan provides for contributions to be made to the Plan pursuant to a
qualified cash or deferred arrangement under Section 401(k) of the Internal
Revenue Code. If a participant elects to have contributions made for him
pursuant to such an arrangement, his compensation is reduced by the amount of
such contributions elected and the employer makes Plan contributions equal to
the amount of the reduction.
The Company may terminate the Plan at any time by resolution of its Board of
Directors. In the event of the termination of the Plan, the beneficial interests
of all participants under the Plan shall become fully vested.
C. CONTRIBUTIONS
Contributions by employees to the Plan are made via payroll deductions.
Employees may contribute up to 16% of their compensation on a pre-tax basis, not
to exceed $9,500, the IRS maximum for 1997 and 1996. Employee contributions are
fully vested and non-forfeitable at all times.
The Plan provides for uniform rates of employer contributions for all eligible
employees, regardless of employment classification, so that each participant is
entitled to basic contributions equal to two percent of credited compensation
paid by the employer. The basic contribution is allocated among the investment
options based on individual participant's investment allocation designation.
F-10
<PAGE> 14
Individual Account Retirement Plan of
Park-Ohio Industries, Inc. and
Other Sponsoring Corporations
Notes to Financial Statements--Continued
C. CONTRIBUTIONS--CONTINUED
Contributions refundable to participants represent current year contributions
that must be returned to employees to ensure Plan compliance with additional
limitations in the Internal Revenue Code on contributions by highly compensated
individuals. The employee contribution receivable is shown net of the
contributions refundable. The total contributions refundable to participants
were $0 and $58,654 in 1997 and 1996, respectively.
Effective January 1, 1996, the Plan implemented the Trust Talk System of Key
Trust Company, which allows participants to make changes to their account via
the telephone. The current provision of the system permits a participant to
change investment allocation percentages once every 30 days and change payroll
deferral percentages on the first day of every quarter.
D. PARTICIPANT LOANS
A participant may borrow from employee 401(k) contributions and earnings a
minimum of $1,000 and a maximum of the lesser of 50% of the participant's
eligible account or $50,000. Loan repayments are made via payroll deductions on
after-tax dollars, which commence thirty to sixty days after receipt and
acceptance of the loan check. Terms of the participant loan are five years for a
personal loan and 15 years for a mortgage loan, with interest payable at prime
plus one percent.
F-11
<PAGE> 15
Individual Account Retirement Plan of
Park-Ohio Industries, Inc. and
Other Sponsoring Corporations
Notes to Financial Statements--Continued
E. INVESTMENTS
Investments held by the Plan at December 31, 1997 and 1996 are summarized as
follows:
<TABLE>
<CAPTION>
1997 1996
------------------------------- --------------------------------
MARKET VALUE COST MARKET VALUE COST
----------------------------------------------------------------
<S> <C> <C> <C> <C>
KeyCorp Victory Value $ 17,904,195 $ 13,820,801 $ 12,019,795 $ 9,292,747
KeyCorp Victory Intermediate
Income Bond Fund 2,772,350 2,721,955 3,346,926 3,313,133
KeyCorp Prism Money Market
Fund 4,763,595 4,448,515 5,852,106 5,619,106
Putnam New Opportunities Fund 1,140,377 1,059,251
Templeton Growth Fund 1,489,035 1,592,297
George Putnam Fund of Boston 2,132,036 2,058,794
KeyCorp EB Money Market
Fund 91,182 91,182
KeyCorp Victory International
Growth Fund 696,643 684,765
Fidelity Advisor Income
& Growth Fund 910,277 856,257
Fidelity Advisor Equity Income
Fund T 3,646,634 3,218,878
Park-Ohio Industries, Inc.
Common Shares 2,217,521 2,117,250 1,510,727 2,088,705
Participant loans 522,411 522,411 22,190 22,190
----------------------------------------------------------------
TOTAL INVESTMENTS $33,032,702 $ 28,432,456 $ 28,005,298 $ 25,095,781
================================================================
</TABLE>
Realized gains and losses are calculated based upon historical cost of the
securities using the average cost method.
F-12
<PAGE> 16
Individual Account Retirement Plan of
Park-Ohio Industries, Inc. and
Other Sponsoring Corporations
Notes to Financial Statements--Continued
E. INVESTMENTS--CONTINUED
<TABLE>
<CAPTION>
Money
Equity Bond Market International Balanced Equity
Fund Fund Fund Fund Fund Income Fund
--------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Year Ended December 31,
1997:
Selling price $4,262,590 $1,069,934 $3,242,283 $789,907 $1,206,898 $4,006,283
Cost 3,204,576 1,060,346 3,062,258 784,821 1,155,393 3,590,296
--------------------------------------------------------------------------
Realized gain $1,058,014 $ 9,588 $ 180,025 $ 5,086 $ 51,505 $ 415,987
==========================================================================
<CAPTION>
Park-Ohio
Common Putnam New Templeton George
Stock Opportunities Growth Putnam
Fund Fund Fund Fund Total
----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Year Ended December 31,
1997:
Selling price $ 954,589 $585,935 $560,993 $ 325,795 $17,005,207
Cost 964,306 523,828 560,812 303,731 15,210,367
----------------------------------------------------------------
Realized gain $ (9,717) $ 62,107 $ 181 $ 22,064 $1,794,840
================================================================
<CAPTION>
Park-Ohio
Money Common
Equity Bond Market International Balanced Equity Stock
Fund Fund Fund Fund Fund Income Fund Fund Total
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Year Ended December 31,
1996:
Selling price $3,369,835 $1,621,222 $1,947,946 $ 265,512 $129,131 $707,587 $ 671,818 $8,713,051
Cost 2,298,748 1,607,923 1,918,458 235,755 120,376 551,197 671,818 7,404,275
---------------------------------------------------------------------------------------------------
REALIZED GAIN $1,071,087 $ 13,299 $ 29,488 $ 29,757 $ 8,755 $156,390 $ 0 $1,308,776
===================================================================================================
</TABLE>
F-13
<PAGE> 17
Individual Account Retirement Plan of
Park-Ohio Industries, Inc. and
Other Sponsoring Corporations
Notes to Financial Statements--Continued
E. INVESTMENTS--CONTINUED
The net unrealized appreciation (depreciation) of investments included in the
Plan equity is as follows:
<TABLE>
<CAPTION>
Putnam
Money New
Equity Bond Market International Balanced Equity Opportunities
Fund Fund Fund Fund Fund Income Fund Fund
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1996 $1,620,462 $159,447 $20,311 $ 6,319 $206,316
Change for the fiscal period 1,107,367 (125,653) 212,012 5,552 $ 54,021 221,441
-------------------------------------------------------------------------------------
Balance at December 31, 1996 2,727,829 33,794 232,323 11,871 54,021 427,757
Change for the fiscal period 1,355,565 16,601 82,757 (11,871) (54,021) (427,757) $81,126
-------------------------------------------------------------------------------------
BALANCE AT DECEMBER 31, 1997 $4,083,394 $ 50,395 $315,080 $ 0 $ 0 $ 0 $81,126
=====================================================================================
<CAPTION>
Park-Ohio
Temporary George Common
Growth Putnam Stock
Fund Fund Fund Total
------------------------------------------------
<S> <C> <C> <C> <C>
Balance at January 1, 1996 $2,012,855
Change for the fiscal period $(578,078) 896,662
------------------------------------------------
Balance at December 31, 1996 (578,078) 2,909,517
Change for the fiscal period $(103,262) $73,242 678,349 1,690,729
------------------------------------------------
BALANCE AT DECEMBER 31, 1997 $(103,262) $73,242 $100,271 $4,600,246
================================================
</TABLE>
F-14
<PAGE> 18
Individual Account Retirement Plan of
Park-Ohio Industries, Inc. and
Other Sponsoring Corporations
Notes to Financial Statements--Continued
F. BENEFITS
A participant is entitled to receive the full value of his account upon (1)
normal retirement at age 65; (2) attainment of at least age 55 and 10 years of
service; (3) death, or total and permanent disability as determined by the Plan
Administrator upon the basis of competent medical opinion, or (4) termination of
employment after seven years of credited service. Such benefits may be paid in a
lump sum cash payment or through the purchase of a single premium annuity
contract.
In the event of termination of employment, a participant has a vested right in
his share of the Company's contributions determined as follows:
<TABLE>
<CAPTION>
Vested
Credited Vesting Service Percentage
- -----------------------------------------------------------------------
<S> <C>
Less than 3 years 0%
At least 3 years but less than 4 years 20
At least 4 years but less than 5 years 40
At least 5 years but less than 6 years 60
At least 6 years but less than 7 years 80
7 years or more 100
</TABLE>
The portion of the Company's contributions that are not vested in such
terminated participants will generally be forfeited and may be used to reduce
the Company's future contributions to the Plan. The total of forfeited
contributions was $49,529 and $15,858 in 1997 and 1996, respectively.
A participant may withdraw in cash a portion of his contributions subject to
certain limitations and restrictions. The hardship withdrawal may be used to
purchase a principal residence, avoid foreclosure on a mortgage, or pay bona
fide medical or education expenditures.
F-15
<PAGE> 19
Individual Account Retirement Plan of
Park-Ohio Industries, Inc. and
Other Sponsoring Corporations
Notes to Financial Statements--Continued
G. TRANSFER OF ASSETS
Effective January 1, 1996, former participants in the RB&W Employee Stock
Ownership Plan who are active participants in the Plan, have the option of
transferring their balances from the RB&W Employee Stock Ownership Plan to the
Plan. The value of assets transferred to the Plan during the year were $39,426
in 1997 and $3,962,630 in 1996, respectively.
H. TRANSACTIONS WITH PARTIES-IN-INTEREST
There were no reportable transactions with parties-in-interest during the year.
I. INCOME TAX STATUS
The Internal Revenue Service has ruled that the Plan qualifies under Section
401(a) and 401(k) of the Internal Revenue Code (IRC) and is, therefore, not
subject to tax under present income tax laws. Once qualified, the Plan is
required to operate in conformity with the IRC to maintain its qualification.
The Plan Administrative Committee is not aware of any course of action or series
of events that have occurred that might adversely affect the Plan's qualified
status. The tax-exempt status of the Plan does not apply to the taxability of
distributions to participants under the Plan.
F-16
<PAGE> 20
Individual Account Retirement Plan of
Park-Ohio Industries, Inc. and
Other Sponsoring Corporations
Notes to Financial Statements--Continued
J. NUMBER OF PARTICIPANTS BY FUND (UNAUDITED)
The number of active participants in each investment option at December 31, 1997
and 1996 are as follows:
<TABLE>
<CAPTION>
1997 1996
--------------------------------
<S> <C> <C>
Park-Ohio Industries, Inc. Common
Stock Fund 575 405
Money Market Fund 1,309 1,060
Bond Fund 866 885
Equity Fund 1,429 1,141
Putnam New Opportunities Fund 389
Templeton Growth Fund 603
George Putnam Fund 682
Loan Fund 125
Balanced Fund 452
International Fund 342
Equity Income Fund 685
<FN>
* The total number of participants in the Plan is less than the sum of the
number of participants shown above because many individuals were
participating in more than one fund.
</TABLE>
K. YEAR 2000 ISSUE (UNAUDITED)
The Company has developed a plan to modify its internal information technology
to be ready for the year 2000 and has begun converting critical data processing
systems. The project also includes determining whether third party service
providers have reasonable plans in place to become year 2000 compliant. The
Company currently expects the project to be substantially complete by early
1999. The Company does not expect this project to have a significant effect on
plan operations.
F-17
<PAGE> 21
Individual Account Retirement Plan of Park-Ohio
Industries, Inc. and Other Sponsoring Corporations
EIN 346520107 Plan 011
Form 5500, Line 27(a)--Assets Held for Investment Purposes
December 31, 1997
<TABLE>
<CAPTION>
Description Fair Market
Identity of Issuer of Asset Cost Value
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
KEY TRUST COMPANY OF OHIO N.A.
KeyCorp Prism Money Market Fund 418,557 units $ 4,448,515 $ 4,763,595
KeyCorp Victory Value Fund 1,081,171 units 13,820,801 17,904,195
KeyCorp Victory Intermediate Income
Bond Fund 288,486 units 2,721,955 2,772,350
Putnam New Opportunities Fund 23,440 units 1,059,251 1,140,377
Templeton Growth Fund 76,754 units 1,592,297 1,489,035
George Putnam Fund of Boston 118,578 units 2,058,794 2,132,036
EB Money Market Fund 91,182 units 91,182 91,182
Park Ohio Industries, Inc. 121,508 shares of
common stock 2,117,250 2,217,521
Participant loans Interest rates
ranging from
9.25% to 9.50% 522,411 522,411
---------------------------------------
$ 28,432,456 $ 33,032,702
=======================================
</TABLE>
F-18
<PAGE> 22
Individual Account Retirement Plan of Park-Ohio
Industries, Inc. and Other Sponsoring Corporations
EIN 346520107 Plan 011
Form 5500, Line 27(d)--Schedule of Reportable Transactions
Year Ended December 31, 1997
<TABLE>
<CAPTION>
Current Value
of Asset on
Purchase Selling Cost of Transaction Net Realized
Description of Asset Price Price Asset Date Gain (Loss)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CATEGORY (i)--INDIVIDUAL TRANSACTIONS IN EXCESS OF 5% OF PLAN ASSETS
KeyCorp Victory Value Fund
Purchase of 257,417.8 units $ 3,696,519 $ 3,696,519 $ 3,696,519
Fidelity Advisor Equity Income Fund
Sale of 169,100 units $3,696,519 3,320,412 3,696,519 $ 376,107
CATEGORY (iii)--SERIES OF TRANSACTIONS IN EXCESS OF 5% OF PLAN ASSETS
KeyCorp Prism Money Market Fund
Sale of 292,533.9 units 3,242,212 3,062,187 3,242,212 180,025
Purchase of 172,681.2 units 1,922,710 1,922,710 1,922,710
KeyCorp Victory Value Fund
Sale of 257,499.5 units 4,136,143 3,078,129 4,136,143 1,058,014
Purchase of 494,584 units 7,606,964 7,606,964 7,606,964
KeyCorp Victory Intermediate Income
Bond Fund
Sale of 112,397.7 units 1,069,251 1,059,663 1,069,251 9,588
Purchase of 49,315.7 units 468,485 468,485 468,485
KeyCorp EB Money Market Fund
Sale of 876,894 units 876,894 876,894 876,894
Purchase of 936,278 units 936,278 936,278 936,278
Fidelity Advisor Income & Growth Fund
Sale of 73,157.1 units 1,205,299 1,153,794 1,205,299 51,505
Purchase of 17,584.6 units 297,538 297,538 297,538
Fidelity Advisor Equity Income Fund
Sale of 182,074 units 3,990,469 3,574,482 3,990,469 415,987
Purchase of 15,712.7 units 355,605 355,605 355,605
Putnam New Opportunities Fund
Sale of 12,057 units 585,935 523,828 585,935 62,107
Purchase of 35,497.4 units 1,583,079 1,583,079 1,583,079
</TABLE>
F-19
<PAGE> 23
Individual Account Retirement Plan of Park-Ohio
Industries, Inc. and Other Sponsoring Corporations
EIN 346520107 Plan 011
Form 5500, Line 27(d)--Schedule of Reportable Transactions--Continued
<TABLE>
<CAPTION>
Current Value
of Asset on
Purchase Selling Cost of Transaction Net Realized
Description of Asset Price Price Asset Date Gain (Loss)
- ------------------------------------------------------------------------------------------------------------------------
CATEGORY (iii)--SERIES OF TRANSACTIONS IN EXCESS OF 5% OF PLAN ASSETS--CONTINUED
<S> <C> <C> <C> <C> <C>
Templeton Growth Fund
Sale of 27,058 units $560,993 $ 560,812 $ 560,993 $ 181
Purchase of 103,812.3 units $2,153,108 2,153,108 2,153,108
George Putnam Fund
Sale of 17,985.5 units 325,795 303,731 325,795 22,064
Purchase of 136,563.6 units 2,362,525 2,362,525 2,362,525
</TABLE>
There were no category (ii) or (iv) reportable transactions during 1997.
F-20
<PAGE> 1
Exhibit 23
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement on
Form S-8 pertaining to the Individual Account Retirement Plan of Park-Ohio
Industries, Inc. and Other Sponsoring Corporations of our report dated
June 23, 1998 with respect to the financial statements and schedules of the
Park-Ohio Industries, Inc. Individual Account Retirement Plan included in
this Annual Report (Form 11-K) for the year ended December 31, 1997.
/s/ Ernst & Young LLP
Cleveland, Ohio
June 23, 1998
