<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, 1998
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 HOLDINGS CORP.
23000 EUCLID AVENUE
CLEVELAND, OHIO 44117
Page 1
<PAGE> 2
INDEX
<TABLE>
<CAPTION>
PAGE (S)
<S> <C>
Report of Independent Auditors................................................................... F-1
FINANCIAL STATEMENTS
Statements of Net Assets Available for Benefits,
with Fund Information ........................................................................ F-2--F-3
Statements of Changes in Net Assets Available for Benefits, with
Fund Information ............................................................................. F-4--F-5
Notes to Financial Statements.................................................................... F-6--F-17
SUPPLEMENTAL SCHEDULES
Schedule I--Schedule of Assets Held for
Investment Purposes at December 31, 1998...................................................... F-18
Schedule II--Schedule of Reportable
Transactions for the Year Ended December 31, 1998............................................. F-19
</TABLE>
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 29, 1999
By /s/ James S. Walker
-------------------
James S. Walker
Vice President and Chief
Financial Officer
Page 3
<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 financial statements and supplementary
schedules of the Individual Account Retirement Plan of Park-Ohio Industries,
Inc. and Other Sponsoring Corporations as of December 31, 1998 and 1997, and for
the years then ended, as listed in the table of contents. These financial
statements are the responsibility of the Plan's management. Our responsibility
is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan at
December 31, 1998 and 1997, and the changes in its net assets available for
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, 1998, and reportable
transactions for the year then ended, are presented for the purposes of
additional analysis and are not a required part of the financial statements but
are supplementary information required by the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974. These supplemental schedules are the responsibility of the
Plan's management. The Fund Information in the statements of net assets
available for benefits and the statements of changes in net assets available for
benefits is presented for purposes of additional analysis rather than to present
the net assets available for benefits and changes in net assets available for
benefits of each fund. The supplemental schedules and Fund Information have been
subjected to the auditing procedures applied in our audits of the 1998 and 1997
financial statements and, in our opinion, are fairly stated in all material
respects in relation to the financial statements taken as a whole.
/s/ Ernst & Young LLP
Cleveland, Ohio
June 11, 1999
F-1
<PAGE> 5
Individual Account Retirement Plan of Park-Ohio
Industries, Inc. and Other Sponsoring Corporations
Statement of Net Assets Available for Benefits,
with Fund Information
December 31, 1998
<TABLE>
<CAPTION>
KeyCorp.
Victory KeyCorp.
Intermediate Prism Putnam
KeyCorp. Income Money New Templeton
Victory Value Bond Market Opportunities Growth
---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ASSETS
Investments, at fair value:
KeyCorp Victory Value Fund $ 22,635,366
KeyCorp Victory Intermediate Income Bond
Fund $ 3,411,089
KeyCorp Prism Money Market Fund $ 6,081,282
Putnam New Opportunities Fund $ 3,128,695
Templeton Growth Fund $ 1,483,803
George Putnam Fund of Boston
KeyCorp EB Money Market Fund
Park-Ohio Holdings Corp. Common Stock
Participant loans
---------------------------------------------------------------------------
Total investments 22,635,366 3,411,089 6,081,282 3,128,695 1,483,803
Receivables:
Employer contribution receivable 27,014 4,679 23,011 9,567 6,148
Employee contribution receivable 90,655 13,566 33,133 35,664 21,930
---------------------------------------------------------------------------
NET ASSETS AVAILABLE FOR BENEFITS $ 22,753,035 $ 3,429,334 $ 6,137,426 $ 3,173,926 $ 1,511,881
===========================================================================
</TABLE>
<TABLE>
<CAPTION>
Park-Ohio
George Common Loan
Putnam Stock Fund Total
-------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ASSETS
Investments, at fair value:
KeyCorp Victory Value Fund $ 22,635,366
KeyCorp Victory Intermediate Income Bond
Fund 3,411,089
KeyCorp Prism Money Market Fund 6,081,282
Putnam New Opportunities Fund 3,128,695
Templeton Growth Fund 1,483,803
George Putnam Fund of Boston $ 3,383,843 3,383,843
KeyCorp EB Money Market Fund $ 57,613 57,613
Park-Ohio Holdings Corp. Common Stock 2,301,254 2,301,254
Participant loans $ 755,056 755,056
-------------------------------------------------------------
Total investments 3,383,843 2,358,867 755,056 43,238,001
Receivables:
Employer contribution receivable 10,976 7,060 88,455
Employee contribution receivable 35,807 22,264 253,019
-------------------------------------------------------------
NET ASSETS AVAILABLE FOR BENEFITS $ 3,430,626 $ 2,388,191 $ 755,056 $ 43,579,475
=============================================================
</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 Benefits,
with Fund Information
December 31, 1997
<TABLE>
<CAPTION>
KeyCorp.
Victory KeyCorp.
Intermediate Prism Putnam
KeyCorp. Income Money New Templeton
Victory Value Bond Market Opportunities Growth
--------------------------------------------------------------------------
<S> <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 $ 1,140,377
Templeton Growth Fund $ 1,489,035
George Putnam Fund of Boston
KeyCorp EB Money Market Fund
Park-Ohio Holdings Corp. Common Stock
Participant loans
--------------------------------------------------------------------------
Total investments 17,904,195 2,772,350 4,763,595 1,140,377 1,489,035
Receivables:
Employer contribution receivable 23,718 2,903 20,723 6,011 5,422
Employee contribution receivable 86,190 8,232 25,542 24,560 21,555
Accrued fees and expenses
--------------------------------------------------------------------------
NET ASSETS AVAILABLE FOR BENEFITS $ 18,014,103 $ 2,783,485 $ 4,809,860 $ 1,170,948 $ 1,516,012
==========================================================================
</TABLE>
<TABLE>
<CAPTION>
Park-Ohio
George Common Loan
Putnam Stock Fund Total
------------------------------------------------------------
<S> <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
Templeton Growth Fund 1,489,035
George Putnam Fund of Boston $ 2,132,036 2,132,036
KeyCorp EB Money Market Fund $ 91,182 91,182
Park-Ohio Holdings Corp. Common Stock 2,217,521 2,217,521
Participant loans 522,411 522,411
------------------------------------------------------------
Total investments 2,132,036 2,308,703 522,411 33,032,702
Receivables:
Employer contribution receivable 7,586 5,025 71,388
Employee contribution receivable 26,315 14,507 206,901
Accrued fees and expenses (2,598) (2,598)
------------------------------------------------------------
NET ASSETS AVAILABLE FOR BENEFITS $ 2,165,937 $ 2,325,637 $ 534,160 $ 33,320,142
============================================================
</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 Benefits,
with Fund Information
Year Ended December 31, 1998
<TABLE>
<CAPTION>
KeyCorp.
Victory KeyCorp.
Intermediate Prism Putnam
KeyCorp. Income Money New Templeton George
Victory Value Bond Market Opportunities Growth Putnam
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ADDITIONS
Interest income
Dividend income $ 3,599,179 $ 177,815 $ 97,863 $ 193,285 $ 312,342
Other income 1,002 274 $ 381 39 68 144
Contributions from employer 295,559 36,753 167,042 79,973 63,820 98,882
Contributions from participants 1,177,610 119,843 335,853 344,742 260,896 372,707
Transfer from other plans 1,388,485 328,565 467,528 903,225 55,622 960,402
Unrealized appreciation (depreciation)
in fair value of investments 200,706 33,308 21,870 328,919 (180,943) (30,711)
Realized gain (loss) 1,100,429 17,811 250,741 69,803 (42,390) 40,320
Loan transfers
----------------------------------------------------------------------------------------
7,762,970 714,369 1,243,415 1,824,564 350,358 1,754,086
DEDUCTIONS
Distributions to participants (1,592,588) (161,519) (866,415) (217,688) (124,205) (291,415)
Transfers (to) from other funds (1,405,237) 100,597 961,182 397,209 (228,419) (193,945)
Trustee fees and expenses (26,213) (7,598) (10,616) (1,107) (1,865) (4,037)
----------------------------------------------------------------------------------------
Net increase (decrease) 4,738,932 645,849 1,327,566 2,002,978 (4,131) 1,264,689
Net assets available for benefits at
beginning of year 18,014,103 2,783,485 4,809,860 1,170,948 1,516,012 2,165,937
----------------------------------------------------------------------------------------
NET ASSETS AVAILABLE FOR BENEFITS AT
END OF YEAR $ 22,753,035 $ 3,429,334 $ 6,137,426 $ 3,173,926 $ 1,511,881 $ 3,430,626
========================================================================================
</TABLE>
<TABLE>
<CAPTION>
Park-Ohio
Common Loan
Stock Fund Total
--------------------------------------------------
<S> <C> <C> <C>
ADDITIONS
Interest income $ 4,194 $ 53,928 $ 58,122
Dividend income 4,380,484
Other income 147 2,055
Contributions from employer 60,819 802,848
Contributions from participants 231,893 2,843,544
Transfer from other plans 26,761 4,130,588
Unrealized appreciation (depreciation)
in fair value of investments (372,336) 813
Realized gain (loss) 1,436,714
Loan transfers 98,648 98,648
---------------------------------------------
(48,522) 152,576 13,753,816
DEDUCTIONS
Distributions to participants (123,134) (57,376) (3,434,340)
Transfers (to) from other funds 242,917 125,696
Trustee fees and expenses (8,707) (60,143)
---------------------------------------------
Net increase (decrease) 62,554 220,896 10,259,333
Net assets available for benefits at
beginning of year 2,325,637 534,160 33,320,142
---------------------------------------------
NET ASSETS AVAILABLE FOR BENEFITS AT
END OF YEAR $ 2,388,191 $ 755,056 $ 43,579,475
=============================================
</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 Benefits,
with Fund Information
Year Ended December 31, 1997
<TABLE>
<CAPTION>
KeyCorp.
Victory KeyCorp. Fidelity Fidelity
KeyCorp. Intermediate Prism KeyCorp. Advisor Advisor Putnam
Victory Income Money Victory Income Equity New
Value Bond Market International Growth Income Opportunities
-----------------------------------------------------------------------------------------------
<S> <C> <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 $ 24,956
Other income (expense) 15,823 16 118 18 216 279 (33)
Contributions from employer 239,669 29,503 209,025 4,965 10,159 20,653 30,853
Contributions from participants 1,008,744 103,802 291,134 21,547 40,714 97,359 139,943
Transfer from other plans 81,786 22,574 5,558 4,737 15,053 6,236 34,834
Unrealized appreciation (depreciation)
in fair value of investments 1,355,565 16,601 82,757 (11,871) (54,021) (427,757) 81,126
Realized gain (loss) 1,058,014 9,588 180,025 5,086 51,505 415,987 62,107
-----------------------------------------------------------------------------------------------
5,300,274 361,915 768,624 24,483 73,210 123,329 373,786
DEDUCTIONS
Distributions to participants (1,993,340) (552,981) (975,537) (5,827) (7,031) (33,209) (16,696)
Transfers (to) from other funds 2,672,180 (374,106) (829,846) (722,744) (996,210) (3,769,556) 813,987
Trustee fees and expenses (10,496) (3,866) (5,768) (188) (257) (1,009) (129)
-----------------------------------------------------------------------------------------------
Net increase (decrease) 5,968,618 (569,038) (1,042,527) (704,276) (930,288) (3,680,445) 1,170,948
Net assets available for 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 BENEFITS AT
END OF YEAR $ 18,014,103 $ 2,783,485 $ 4,809,860 $ 0 $ 0 $ 0 $ 1,170,948
===============================================================================================
</TABLE>
<TABLE>
<CAPTION>
Park-Ohio
Templeton George Common Loan
Growth Putnam Stock Fund Total
------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ADDITIONS
Interest income $ 3,579 $ 15,273 $ 18,994
Dividend income $ 231,542 $ 164,795 2,161,819
Other income (expense) (192) (103) 145 16,287
Contributions from employer 43,548 63,785 43,462 695,622
Contributions from participants 178,026 235,601 166,556 2,283,426
Transfer from other plans 51,567 23,357 62,348 308,050
Unrealized appreciation (depreciation)
in fair value of investments (103,262) 73,242 678,349 1,690,729
Realized gain (loss) 181 22,064 (9,717) 1,794,840
------------------------------------------------------------------
401,410 582,741 944,722 15,273 8,969,767
DEDUCTIONS
Distributions to participants (59,205) (50,888) (49,177) (5,299) (3,749,190)
Transfers (to) from other funds 1,174,335 1,634,886 (104,922) 501,996
Trustee fees and expenses (528) (802) (6,617) (29,660)
------------------------------------------------------------------
Net increase (decrease) 1,516,012 2,165,937 784,006 511,970 5,190,917
Net assets available for benefits at
beginning of year 1,541,631 22,190 28,129,225
------------------------------------------------------------------
NET ASSETS AVAILABLE FOR BENEFITS AT
END OF YEAR $ 1,516,012 $ 2,165,937 $ 2,325,637 $ 534,160 $ 33,320,142
==================================================================
</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, 1998
A. SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The accounting records of the Individual Account Retirement Plan (the "Plan")
are maintained on the accrual basis.
INVESTMENT VALUE AND INCOME RECOGNITION
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 the common stock of Park-Ohio Holdings Corp., the parent
company of Park-Ohio Industries, Inc., (collectively referred to as the
"Company"), KeyCorp Victory Value Fund, KeyCorp Victory Intermediate Income Bond
Fund, KeyCorp 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.
RECLASSIFICATIONS
Certain prior year amounts have been reclassified to conform to current year
presentation.
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), Arcon Fastners, Inc. (effective October
3, 1997), and Charken Company (effective November 1, 1998).
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:
KeyCorp. Victory Value 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.
KeyCorp. Victory Intermediate Income 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.
KeyCorp. Prism 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
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.
George Putnam Fund of Boston--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 Holdings Corp. 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.
Effective January 1, 1998 the Arden Fasteners 401(k) Retirement Plan was merged
with the Individual Account Retirement Plan of Park-Ohio Industries, Inc. The
balance of assets transferred to Key Trust Company of Ohio, N.A. on January 5,
1998 was $3,899,139. Participants became eligible for the Individual Account
Retirement Plan as of the date of acquisition, at which time contributions to
the Arden Fasteners 401(k) Retirement Plan were frozen.
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
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 $10,000 and $9,500, the IRS maximum contribution for 1998 and 1997,
respectively. 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.
Contributions refundable to participants represent current year contributions
and earnings on such deposits that must be returned to employees to ensure Plan
compliance with additional limitations in the Internal Revenue Code on
contributions by highly compensated individuals. Employee contributions and the
contribution receivable are shown net of the amounts refundable. The total
contributions refundable to participants were $10,911 and $0 in 1998 and 1997,
respectively.
Participants of the Plan can make changes to their account via the telephone,
through the Trust Talk System of Key Trust Company. 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.
F-10
<PAGE> 14
Individual Account Retirement Plan of
Park-Ohio Industries, Inc. and
Other Sponsoring Corporations
Notes to Financial Statements-Continued
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.
E. INVESTMENTS
Investments held by the Plan at December 31, 1998 and 1997 are summarized as
follows:
<TABLE>
<CAPTION>
1998 1997
------------------------------- ----------------------------
MARKET VALUE COST MARKET VALUE COST
------------------------------------------------------------
<S> <C> <C> <C> <C>
Cash $ 11,749 $ 11,749
KeyCorp Victory Value Fund $ 22,635,366* $ 18,351,266 17,904,195* 13,820,801
KeyCorp Victory Intermediate
Income Bond Fund 3,411,089* 3,327,386 2,772,350* 2,721,955
KeyCorp Prism Money Market
Fund 6,081,282* 5,744,332 4,763,595* 4,448,515
Putnam New Opportunities
Fund 3,128,695* 2,718,650 1,140,377 1,059,251
Templeton Growth Fund 1,483,803 1,768,008 1,489,035 1,592,297
George Putnam Fund of Boston 3,383,843* 3,341,312 2,132,036* 2,058,794
KeyCorp EB Money Market Fund 57,613 57,613 91,182 91,182
Park-Ohio Holdings Corp.
Common Shares 2,301,254* 2,573,319 2,217,521* 2,117,250
Participant loans 755,056 522,411
------------------------------------------------------------
TOTAL INVESTMENTS $ 43,238,001 $ 37,881,886 $ 33,044,451 $ 27,921,794
============================================================
</TABLE>
Realized gains and losses are calculated based upon historical cost of the
securities using the average cost method.
* Represents investments that are 5% or more of the net assets available for
benefits at December 31, 1998 and 1997, respectively.
F-11
<PAGE> 15
Individual Account Retirement Plan of
Park-Ohio Industries, Inc. and
Other Sponsoring Corporations
Notes to Financial Statements--Continued
E. INVESTMENTS--CONTINUED
<TABLE>
<CAPTION>
KeyCorp. Fidelity
Victory KeyCorp. KeyCorp. Advisor Fidelity
Intermediate Prism Victory Income & Advisor
KeyCorp. Income Money International Growth Equity Putnam New Templeton
Victory Value Bond Market Growth Balanced Income Opportunities Growth
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Year Ended December 31,
1998:
Selling price $ 4,755,667 $ 735,257 $ 3,959,645 $ 1,699,676 $ 741,126
Cost 3,655,238 717,446 3,708,904 1,629,873 783,516
-------------------------------------------------------------------------------------------------------
Realized gain $ 1,100,429 $ 17,811 $ 250,741 $ 69,803 $ (42,390)
=======================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Park-Ohio
George Common
Putnam Stock Total
--------------------------------------
<S> <C> <C> <C>
Year Ended December 31,
1998:
Selling price $ 1,007,092 $ 1,382,637 $ 14,281,100
Cost 966,772 1,382,637 12,844,386
--------------------------------------
Realized gain $ 40,320 $ 0 $ 1,436,714
======================================
</TABLE>
<TABLE>
<CAPTION>
KeyCorp. Fidelity
Victory KeyCorp. KeyCorp. Advisor Fidelity
Intermediate Prism Victory Income & Advisor
KeyCorp. Income Money International Growth Equity Putnam New Templeton
Victory Value Bond Market Growth Balanced Income Opportunities Growth
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <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 $ 585,935 $ 560,993
Cost 3,204,576 1,060,346 3,062,258 784,821 1,155,393 3,590,296 523,828 560,812
-------------------------------------------------------------------------------------------------------
Realized gain $ 1,058,014 $ 9,588 $ 180,025 $ 5,086 $ 51,505 $ 415,987 $ 62,107 $ 181
=======================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Park-Ohio
George Common
Putnam Stock Total
--------------------------------------
<S> <C> <C> <C>
Year Ended December 31,
1997:
Selling price $ 325,795 $ 954,589 $ 17,005,207
Cost 303,731 964,306 15,210,367
--------------------------------------
Realized gain $ 22,064 $ (9,717) $ 1,794,840
======================================
</TABLE>
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
The net unrealized appreciation (depreciation) of investments included in the
Plan equity is as follows:
<TABLE>
<CAPTION>
KeyCorp. Fidelity
Victory KeyCorp. KeyCorp. Advisor Fidelity
Intermediate Prism Victory Income & Advisor
KeyCorp. Income Money International Growth Equity Putnam New
Victory Value Bond Market Growth Balanced Income Opportunities
---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1997 $ 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 81,126
Change for the fiscal period 200,706 33,308 21,870 328,919
---------------------------------------------------------------------------------------
BALANCE AT DECEMBER 31, 1998 $ 4,284,100 $ 83,703 $ 336,950 $ 0 $ 0 $ 0 $ 410,045
=======================================================================================
</TABLE>
<TABLE>
<CAPTION>
Park-Ohio
Common
Templeton George Stock
Growth Putnam Fund Total
-----------------------------------------------
<S> <C> <C> <C> <C>
Balance at January 1, 1997 $ (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
Change for the fiscal period (180,943) (30,711) (372,336) 813
-----------------------------------------------
BALANCE AT DECEMBER 31, 1998 $ (284,205) $ 42,531 $ (272,065) $ 4,601,059
===============================================
</TABLE>
F-13
<PAGE> 17
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 by participants was $73,411 and $49,529, and contributions
required by the employer were reduced by $70,578 and $49,997 in 1998 and 1997,
respectively. The balance of forfeited amounts available to the Company to
reduce future contributions was $75,205 and $1,043 at December 31, 1998 and
1997, respectively. The majority of current year balance is attributable to
forfeited contributions from the Arden Fastener 401(k) Retirement Plan, which
were transferred upon the merger with the Individual Account Retirement Plan.
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-14
<PAGE> 18
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 $7,615 in
1998 and $39,426 in 1997, respectively.
H. TRANSACTIONS WITH PARTIES-IN-INTEREST
There were no reportable transactions with parties-in-interest during the year.
I. INCOME TAX STATUS
The Plan has received a determination letter from the Internal Revenue Service
dated May 30, 1996, stating that the Plan is qualified under Section 401(a) of
the Internal Revenue Code (the "Code"), and, therefore, the related trust is
exempt from taxation. Once qualified, the Plan is required to operate in
conformity with the Code to maintain its qualification. The Plan Administrator
believes the Plan is being operated in compliance with the applicable
requirements of the Code and, therefore, believes that the Plan is qualified and
the related trust is tax exempt.
J. SUBSEQUENT EVENT
Effective May 1, 1999 an instrument of merger was executed to merge The Metalloy
Corporation 401(k) Profit Sharing Plan and Trust and The Metalloy Corporation
Hourly Employees' 401(k) Plan, (collectively referred to as the "Metalloy
Plans") into the Individual Account Retirement Plan of Park-Ohio Industries,
Inc. and Other Sponsoring Corporations. The assets of the Metalloy Plans were
transferred to Key Trust Company of Ohio, N.A., the trustee of the Plan on
May 5, 1999. The assets transferred had a market value of $10,658,976.
F-15
<PAGE> 19
Individual Account Retirement Plan of
Park-Ohio Industries, Inc. and
Other Sponsoring Corporations
Notes to Financial Statements-Continued
K. NUMBER OF PARTICIPANTS BY FUND (UNAUDITED)
The number of active participants in each investment option at December 31, 1998
and 1997 are as follows:
<TABLE>
<CAPTION>
1998 1997
------------------------
<S> <C> <C>
KeyCorp Victory Value Fund 1,596 1,429
KeyCorp Intermediate Income Bond Fund 963 866
KeyCorp Prism Money Market Fund 1,530 1,309
Putnam New Opportunities Fund 685 389
Templeton Growth Fund 653 603
George Putnam Fund of Boston 933 682
Park-Ohio Holdings Corp. Common
Stock Fund 712 575
Loan Fund 155 125
</TABLE>
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.
L. YEAR 2000 (UNAUDITED)
The Company has determined that it will be necessary to take certain steps in
order to ensure that the Plan's information systems are prepared to handle Year
2000 dates. The Company is taking a two phase approach. The first phase
addresses internal systems that must be modified or replaced to function
properly. Both internal and external resources are being utilized to replace or
modify existing software applications, and test the software and equipment for
the Year 2000 modifications. The Company anticipates substantially completing
this phase of the project during 1999. Costs associated with modifying software
and equipment are not estimated to be significant and will be paid by the
Company.
F-16
<PAGE> 20
Individual Account Retirement Plan of
Park-Ohio Industries, Inc. and
Other Sponsoring Corporations
Notes to Financial Statements-Continued
L. YEAR 2000 (UNAUDITED)--CONTINUED
For the second phase of the project, Plan management established formal
communications with its third party service providers to determine that they
have developed plans to address their own Year 2000 problems as they relate to
the Plan's operations. All third party service providers have indicated that
they will be Year 2000 compliant by early 1999. If modification of data
processing systems of either the Plan, the Company, or its service providers are
not completed timely, the Year 2000 problem could have a material impact on the
operations of the Plan.
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)--Schedule of Assets Held for Investment Purposes
December 31, 1998
<TABLE>
<CAPTION>
Identity of Issuer, Borrower Description Current
or Similar Party of Investment Cost Value
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
KeyCorp Victory Value Fund* 1,299,390 units $ 18,351,266 $ 22,635,366
KeyCorp Victory Intermediate Income
Bond Fund* 348,782 units 3,327,386 3,411,089
KeyCorp Prism Money Market Fund* 507,747 units 5,744,332 6,081,282
Putnam New Opportunities Fund 53,546 units 2,718,650 3,128,695
Templeton Growth Fund 90,642 units 1,768,008 1,483,803
George Putnam Fund of Boston 187,574 units 3,341,312 3,383,843
Key Trust Company of Ohio, N.A.: Employee
Benefits Money Market Fund* 57,613 units 57,613 57,613
Park Ohio Holdings Corp.* 152,149 shares of
common stock 2,573,319 2,301,254
Participant loans Interest rates
ranging from
9.25% to 9.50% 755,056
---------------------------------
$ 37,881,886 $ 43,238,001
=================================
</TABLE>
*Indicates party-in-interest to the Plan.
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, 1998
<TABLE>
<CAPTION>
Purchase Selling Cost of
Identity of Party Involved Description of Asset Price Price Assets Current Value Net Gain
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CATEGORY (I)--INDIVIDUAL TRANSACTIONS IN EXCESS OF 5% OF PLAN ASSETS
KeyCorp Victory Value Fund* $ 3,474,052 $ 3,474,052 $ 3,474,052
CATEGORY (III)--SERIES OF TRANSACTIONS IN EXCESS OF 5% OF PLAN ASSETS
KeyCorp Prism Money Market Fund* Common/Collective
Trust 3,959,645 3,708,904 3,959,645 $ 250,741
5,004,721 5,004,721 5,004,721
KeyCorp Victory Intermediate
Income Fund* Mutual Fund 735,257 717,446 735,257 17,811
1,322,877 1,322,877 1,322,877
KeyCorp EB Money Market Fund* Employee Benefits
Money Market Fund 1,382,637 1,382,637 1,382,637
1,349,068 1,349,068 1,349,068
KeyCorp Victory Value Fund* Mutual Fund
4,755,667 3,655,238 4,755,667 1,100,429
8,183,993 8,183,993 8,183,993
Putnam New Opportunities Fund Mutual Fund
1,699,676 1,629,873 1,699,676 69,803
3,289,272 3,289,272 3,289,272
Templeton Growth Fund Mutual Fund 741,127 783,517 741,127 (42,390)
959,228 959,228 959,228
George Putnam Fund Mutual Fund 1,007,092 966,772 1,007,092 40,320
2,249,290 2,249,290 2,249,290
</TABLE>
*Indicates party-in-interest to the Plan.
There were no category (ii) or (iv) reportable transactions during 1998.
F-19
<PAGE> 1
Exhibit 23
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement on
Form S-8 (33-01047) pertaining to the Individual Account Retirement Plan of
Park-Ohio Industries, Inc. and Other Sponsoring Corporations of our report dated
June 11, 1999 with respect to the financial statements and schedules of the
Individual Account Retirement Plan of Park-Ohio Industries, Inc. and Other
Sponsoring Corporations included in this Annual Report (Form 11-K) for the year
ended December 31, 1998.
/s/ Ernst & Young LLP
Cleveland, Ohio
June 25, 1999
