<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1998
COMMISSION FILE NUMBER 1-10863
YORK INTERNATIONAL CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 13-3473472
(STATE OF INCORPORATION) (I.R.S. EMPLOYER IDENTIFICATION NO.)
631 SOUTH RICHLAND AVENUE, YORK, PA 17403
(717) 771-7890
(ADDRESS AND TELEPHONE NUMBER OF PRINCIPAL EXECUTIVE OFFICES)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (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 the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at May 8, 1998
----- --------------------------
Common Stock, par value $.005 40,722,091 shares
<PAGE>
-2-
YORK INTERNATIONAL CORPORATION AND SUBSIDIARIES
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1998
INDEX
-----
Page No.
Part I. Financial Information
Item 1. Financial Statements
Consolidated Condensed Statements of Operations - (Unaudited)
Three Months Ended March 31, 1998 and 1997 3
Consolidated Condensed Balance Sheets -
March 31, 1998 (Unaudited) and December 31, 1997 4
Consolidated Condensed Statements of Cash Flows - (Unaudited)
Three Months Ended March 31, 1998 and 1997 5
Supplemental Notes to Consolidated Condensed
Financial Statements (Unaudited) 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 9
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 12
Item 2. Changes in Securities 12
Item 3. Defaults Upon Senior Securities 12
Item 4. Submission of Matters to a Vote of Security Holders 12
Item 5. Other Information 12
Item 6. Exhibits and Reports on Form 8-K 13
<PAGE>
-3-
PART I - FINANCIAL INFORMATION
------------------------------
YORK INTERNATIONAL CORPORATION AND SUBSIDIARIES
Item 1
FINANCIAL STATEMENTS
Consolidated Condensed Statements of Operations (Unaudited)
- ----------------------------------------------------------
(thousands except per share data)
<TABLE>
<CAPTION>
Three Months Ended March 31,
----------------------------
1998 1997
-------------- ------------
<S> <C> <C>
Net sales $741,988 $800,767
Cost of goods sold 584,956 637,032
-------- --------
Gross profit 157,032 163,735
Selling, general and
administrative expenses 122,436 131,915
-------- --------
Income from operations 34,596 31,820
Interest expense, net 11,071 9,434
Equity in losses of affiliates 1,307 240
-------- --------
Income before income taxes 22,218 22,146
Provision for income taxes 7,554 7,286
-------- --------
Net income $ 14,664 $ 14,860
======== ========
Basic earnings per share $ 0.36 $ 0.34
Diluted earnings per share $ 0.36 $ 0.34
======== ========
Cash dividends per share $ 0.12 $ 0.12
======== ========
Weighted average common shares and common
equivalents outstanding:
Basic 40,469 43,435
Diluted 40,726 44,012
</TABLE>
See accompanying supplemental notes to consolidated condensed financial
statements.
<PAGE>
-4-
PART I - FINANCIAL INFORMATION
------------------------------
YORK INTERNATIONAL CORPORATION AND SUBSIDIARIES
<TABLE>
<CAPTION>
Consolidated Condensed Balance Sheets
- -------------------------------------
(thousands of dollars)
March 31, 1998 December 31,
(Unaudited) 1997
---------- ------------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 9,472 $ 12,228
Receivables 566,353 555,830
Inventories:
Raw materials 174,137 163,336
Work in process 96,962 110,882
Finished goods 296,571 266,896
---------- ----------
Total inventories 567,670 541,114
Prepayments and other current assets 109,796 112,448
---------- ----------
Total current assets 1,253,291 1,221,620
Deferred income taxes 21,691 21,869
Unallocated excess of cost
over net assets acquired 341,581 343,854
Investments in affiliates 22,144 17,660
Property, plant and equipment, net 368,947 368,642
Deferred charges and other assets 23,233 22,653
---------- ----------
Total assets $2,030,887 $1,996,298
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Notes payable and current portion
of long-term debt $ 85,090 $ 69,438
Accounts payable and accrued expenses 613,309 601,573
Income taxes 18,037 15,486
---------- ----------
Total current liabilities 716,436 686,497
Warranties 39,571 36,280
Long-term debt 444,725 452,344
Postretirement benefit liabilities 135,078 133,294
Other long-term liabilities 41,803 41,598
---------- ----------
Total liabilities 1,377,613 1,350,013
Stockholders' equity 653,274 646,285
---------- ----------
Total liabilities and stockholders' equity $2,030,887 $1,996,298
========== ==========
</TABLE>
See accompanying supplemental notes to consolidated condensed financial
statements.
<PAGE>
-5-
PART I - FINANCIAL INFORMATION
------------------------------
YORK INTERNATIONAL CORPORATION AND SUBSIDIARIES
<TABLE>
<CAPTION>
Consolidated Condensed Statements of Cash Flows (Unaudited)
- -------------------------------------------------------------
(thousands of dollars)
Three Months Ended March 31,
------------------------------
1998 1997
-------------- --------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 14,664 $ 14,860
Adjustments to reconcile net income to net
cash used by operating activities:
Depreciation and amortization 14,960 12,416
Amortization of deferred charges 3,834 3,598
Provision for doubtful accounts receivable 3,254 2,210
Other 2,175 1,258
Change in assets and liabilities net of
effects from purchase of other companies:
Receivables (17,462) (43,489)
Inventories (33,658) (24,782)
Prepayments and other current assets 3,361 (3,029)
Deferred income taxes 226 3,462
Other assets (1,629) 2,071
Accounts payable and accrued expenses 14,875 (5,901)
Income taxes 3,233 (331)
Long-term warranties 4,171 193
Postretirement benefit liabilities 1,784 383
Other long-term liabilities (972) (1,691)
-------- --------
Net cash provided/(used) by operating activities 12,816 (38,772)
-------- --------
Cash flows from investing activities:
Net purchases of and investments in other
companies (net of cash acquired) (5,000) -
Capital expenditures (13,737) (13,639)
Other (342) 295
-------- --------
Net cash used by investing activities (19,079) (13,344)
-------- --------
Cash flows from financing activities:
Common stock issued 425 1,047
Treasury stock purchases (101) (8,019)
Long term debt payments (61,192) (3,133)
Net borrowings/(payments) on short term debt 15,652 (58,431)
Net proceeds from issuance of commercial paper 53,573 122,114
Dividends paid (4,869) (5,217)
-------- --------
Net cash provided by financing activities 3,488 48,361
-------- --------
Effect of exchange rate changes on cash 19 (12)
-------- --------
Net decrease in cash and cash equivalents (2,756) (3,767)
-------- --------
Cash and cash equivalents at beginning of period 12,228 11,470
-------- --------
Cash and cash equivalents at end of period $ 9,472 $ 7,703
======== ========
</TABLE>
See accompanying supplemental notes to consolidated condensed financial
statements.
<PAGE>
-6-
PART I - FINANCIAL INFORMATION
------------------------------
YORK INTERNATIONAL CORPORATION AND SUBSIDIARIES
Supplemental Notes To Consolidated Condensed Financial Statements (Unaudited)
- -----------------------------------------------------------------------------
(1) The consolidated condensed financial statements included herein have been
prepared by the registrant pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been
condensed or omitted pursuant to applicable rules and regulations, although
the registrant believes that the disclosures herein are adequate to make
the information presented not misleading. In the opinion of the Company,
the accompanying consolidated condensed financial statements contain all
adjustments (consisting of only normally recurring accruals) necessary to
present fairly the financial position as of March 31, 1998 and December 31,
1997, the results of operations for the three months ended March 31, 1998
and 1997, and cash flows for the three months ended March 31, 1998 and
1997.
(2) The results of operations for interim periods are not necessarily
indicative of the results expected for the full year.
(3) The following tables summarize the capitalization of the Company at March
31, 1998 and at December 31, 1997 (in thousands):
<TABLE>
<CAPTION>
March 31, 1998 December 31, 1997
--------------------- -----------------------
Current Long Term Current Long Term
-------- ----------- -------- -------------
<S> <C> <C> <C> <C>
Indebtedness:
Bank loans $75,575 $ - $60,235 $ -
Commercial paper - 221,755 - 168,182
Bank lines - 109,860 - 169,780
Senior notes - 100,000 - 100,000
Other 9,515 13,110 9,203 14,382
------- --------- -------- ------------
Total notes payable and long-term debt $85,090 $ 444,725 $69,438 $ 452,344
======= ========= ======== ============
<CAPTION>
March 31, December 31,
Stockholders' equity: 1998 1997
--------- ------------
<S> <C> <C>
Common Stock $.005 par value;
200,000 shares authorized;
issued 44,073 shares at March 31, 1998
and 44,057 shares at December 31, 1997 $ 220 $ 220
Additional paid in capital 679,622 679,180
Retained earnings 183,170 173,375
Currency translation adjustment (51,097) (47,100)
Treasury stock, 3,431 shares at March 31, 1998
and 3,429 shares at December 31, 1997, at cost (153,526) (153,425)
Unearned compensation (5,115) (5,965)
--------- ------------
Total stockholders' equity $ 653,274 $ 646,285
========= ============
</TABLE>
The Company maintains a $500 million revolving credit facility pursuant to
an Amended and Restated Credit Agreement (the Agreement) expiring on July
31, 2002. The Agreement was amended and restated on May 1, 1997. At March
31, 1998, the Company could borrow $500 million. The Agreement provides for
borrowings under the facility at LIBOR plus .16% or at specified bid rates.
At March 31, 1998 and December 31, 1997, the LIBOR rate was 5.65% and
5.75%, respectively. A fee of .09% is paid on the facility. The
(cont'd)
<PAGE>
-7-
PART I - FINANCIAL INFORMATION
------------------------------
YORK INTERNATIONAL CORPORATION AND SUBSIDIARIES
Supplemental Notes To Consolidated Condensed Financial Statements (Unaudited)
- -----------------------------------------------------------------------------
(Cont'd)
- --------
Agreement, as amended, contains financial and operating covenants requiring
the Company to maintain certain financial ratios and standard provisions
limiting leverage, investments and liens.
The Company's non-U.S. subsidiaries maintain bank credit facilities in
various currencies that provided for available borrowings of $247.6 million
and $245.2 million at March 31, 1998 and December 31, 1997, respectively,
of which $166.1 million and $175.5 million, respectively, were unused. In
some instances, borrowings against these credit facilities have been
guaranteed by the Company to assure availability of funds at favorable
rates.
The Company established a commercial paper facility with two dealers in
November 1995. Commercial paper borrowings are expected to be reborrowed in
the ordinary course of business. The interest rate on the commercial paper
was 5.64% at March 31, 1998 and 5.84% at December 31, 1997.
During the second quarter of 1997, the Company arranged four separate
unsecured bank lines similar to commercial paper. These bank lines provide
for total borrowings of $295 million which are expected to be reborrowed in
the ordinary course of business. At March 31, 1998 and December 31, 1997,
the Company had $109.9 million and $169.8 million, respectively,
outstanding under the bank lines. The average rate under the bank lines was
5.67% and 5.92% at March 31, 1998 and December 31, 1997, respectively.
The $100 million of Senior Notes bear interest at a 6.75% fixed rate and
are due March 2003.
During 1995, the Company arranged two term loans denominated in foreign
currencies. The Company borrowed $26.2 million with a final maturity on
November 15, 1998 with an interest rate of 3.98%. The loan is repayable in
four annual installments. On December 21, 1995, the Company borrowed $100
million with an interest rate of 4.87%. This loan was repaid in June 1997.
The remaining term loan agreement contains financial and operating
covenants that are equivalent to the covenants of the Company's Amended and
Restated Credit Agreement.
In July 1995, the Company registered $200 million in debt securities with
the Securities and Exchange Commission. Under terms of the registration
statement, the Company may offer and sell up to that amount of such
securities from time to time at prices and terms to be determined at or
prior to sale. No amounts of such debt securities were outstanding at March
31, 1998.
Under a receivables sales agreement entered into in 1992, the Company sold
a fractional ownership interest in a defined pool of trade accounts
receivable for $100 million in 1998 and 1997. The sold accounts receivable
are reflected as a reduction of receivables in the accompanying
consolidated balance sheets. Under an Amended and Restated Receivables
Sales Agreement entered into on March 26, 1997, the maximum amount of the
purchasers' investment is currently $120 million and is subject to decrease
based on the level of eligible accounts receivable and restrictions on
concentrations of receivables. The discount rate on the receivables sold at
March 31, 1998 and December 31, 1997 was approximately 5.53% and 5.78%,
respectively.
During May 1997, the Stockholders approved an amendment to the 1992 Omnibus
Stock Plan. The Amended and Restated 1992 Omnibus Stock Plan authorizes the
issuance of up to 4,380,000 shares of the Company's common stock as stock
options or restricted share awards, of which up to 3% of the total
outstanding shares are available for restricted share awards. The exercise
price of stock options granted under the Plan is not less than the fair
market value of the shares on the date the option is granted. The
(cont'd)
<PAGE>
-8-
PART I - FINANCIAL INFORMATION
------------------------------
YORK INTERNATIONAL CORPORATION AND SUBSIDIARIES
Supplemental Notes To Consolidated Condensed Financial Statements (Unaudited)
- -----------------------------------------------------------------------------
(Cont'd)
- --------
restricted shares are granted at a price determined by the Board of
Directors. In March, 1998, key employees were awarded options to purchase
714,815 shares at an exercise price of $43.6875 per share.
In 1997, the Board of Directors authorized the Company to purchase up to
6.0 million shares of its Common Stock over the next four years to fund the
Company's Employee Stock Purchase Plan and the Amended and Restated 1992
Omnibus Stock Plan. The stock purchases are made from time to time on the
open market. Under the program, 3.4 million shares were repurchased on the
open market in 1997. During the first quarter of 1998, no shares were
repurchased under the program.
(4) On February 2, 1998, the Company incurred damage to its Grantley
manufacturing facility in York, PA when tanks used for testing ruptured.
The accident occurred on the third-shift and facilities used in the steel
cutting and rolling operations and heat exchanger production sustained
substantial damage. The Company has taken a number of measures to limit
the disruptions and costs resulting from the accident, including moving
production to other York facilities, outsourcing or subcontracting
production of certain components, and establishing temporary production
elsewhere at the Grantley location. The Company intends to rebuild the
facility and fully restore its production capacity.
The Company maintains insurance for both property damage and business
interruption applicable to its production facilities including Grantley.
The applicable coverage provides for deductibles of $25,000 for property
damage and $25,000 for business interruption. During the first quarter
1998, the Company recorded a credit of $12.5 million to cost of goods sold
reflecting insurance coverage for estimated incremental expenses and losses
included in cost of goods sold during the quarter as a result of the
accident. This amount does not represent the total business interruption
claim or insurance recovery for the first quarter nor has the Company
recorded any amount for the property damage impact (including any insurance
recoveries). The Company is continuing to accumulate information required
to determine the total amount for property damage and business interruption
related to the accident for which it will pursue recovery.
(5) The Company adopted Statement of Financial Accounting Standards No.130
"Reporting Comprehensive Income" in the first quarter of 1998.
Comprehensive income is determined as follows:
<TABLE>
<CAPTION>
Comprehensive Income
- --------------------
<S> <C> <C>
Net income $14,664 $14,860
Other comprehensive loss, net of tax:
Foreign currency translation adjustment
(net of tax of $1,359 and $1,202) 2,638 2,452
------- -------
Comprehensive income $12,026 $12,408
======= =======
</TABLE>
(6) The Company adopted Statement of Financial Accounting Standards No. 128
(SFAS128) "Earnings per Share" in 1997, which establishes standards for
computing and presenting earnings per share. All prior earnings per share
amounts have been restated to conform to the provisions of SFAS128.
The Company's basic earnings per share are based upon the weighted average
common shares outstanding during the period. The Company's diluted
earnings per share are based upon the weighted average outstanding common
shares and common share equivalents.
(7) Reference is made to Registrant's 1997 Annual Report on Form 10-K for more
detailed financial statements and footnotes.
-9-
<PAGE>
YORK INTERNATIONAL CORPORATION AND SUBSIDIARIES
Item 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Results of Operations
- ---------------------
Net Sales for the three months ended March 31, 1998 decreased 7.3% to $742.0
million as compared to $800.8 million for the three months ended March 31, 1997.
Income from operations for the first quarter of 1998 was $34.6 million compared
to $31.8 million for the first quarter of 1997. First quarter revenues
decreased in all three Business Units. Engineered Products revenue decreased
9.1% from the first quarter of 1997 primarily as a result of disruptions related
to the explosion at the Company's Grantley facility. The Engineered Products
group sales were also affected by the economic downturn in Asia as compared to
the first quarter of 1997. The Unitary Products Group revenue decreased by
$14.9 million or 4.0% from 1997. The decrease was due to distributors and
dealers taking less product in advance of the cooling season in North America in
response to the delayed cooling season in 1997. This also created a decrease in
sales of OEM compressors as manufacturers have reduced preseason purchases and
production. The Refrigeration Group had a sales decrease of 14.1%, or $14.5
million from 1997. The decrease was the result of the sale of the German
Commercial Refrigeration business. Excluding the Commercial Refrigeration
impact, revenues were generally flat as compared to 1997.
For the first quarter of 1998, aggregate non-U.S. sales decreased 9.7% from the
first quarter of 1997 to $314.1 primarily as a result of weakness in the Asian
economy partially offset by strong performance in Latin America. Domestic
revenue decreased 5.5% to $427.9 million primarily as a result of the damage to
the Grantley facility and dealers and distributors ordering less product in
advance of the cooling season in North America.
Order backlog at March 31, 1998 was $984.6 million which is 7.4% greater than at
March 31, 1997. Domestic backlog increased 16.7% to $575.3 million. This
increase was anchored by strong Engineered Products equipment backlog in North
America. International backlog decreased 3.4% to $409.3 million directly
relating to the decline in the Asian economy and the sale of the German
Commercial Refrigeration business. The decreases were mitigated by significant
increases in Latin America and the Middle East.
The following table sets forth first quarter revenue by product and geographic
market (in thousands):
<TABLE>
<CAPTION>
Three months ended March 31,
------------------------------
1998 1997
-------------- --------------
<S> <C> <C>
Engineered products $293,862 $323,155
Unitary products 359,869 374,815
Refrigeration products 88,257 102,797
-------- --------
Total Revenue $741,988 $800,767
======== ========
U.S. 58% 57%
International 42% 43%
-------- --------
Total 100% 100%
======== ========
</TABLE>
Gross profit for the quarter was $157.0 million or 21.2% of sales as compared to
$163.7 million or 20.4% of sales for the first quarter of 1997. Improved
performance in manufacturing facilities resulted in a favorable impact at the
gross profit line. Incremental costs and losses related to the accident at the
Grantley plant were offset by a portion of the anticipated insurance recovery.
Selling, General and Administration expenses decreased 7.2% to $122.4 million or
16.5% of sales from $131.9 million or 16.5% of sales for 1997 same quarter.
SG&A expenses were relatively flat considering the $9.4 million
(cont'd)
<PAGE>
-10-
YORK INTERNATIONAL CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (CONT'D)
charge in the first quarter 1997 for the costs to close the Houston
manufacturing facility and to downsize the German operations.
Interest expense during the first quarter increased to $11.1 million in 1998
from $9.4 million in 1997. This was mainly due to higher average borrowings and
slightly higher average rates.
Provision for income taxes of $7.6 million in the first quarter of 1998 relates
both to U.S. and non-U.S. operations. An increase in the effective tax rate
outside the U.S. is the primary reason for the slightly higher overall effective
tax rate in the first quarter of 1998 compared to 1997.
Net income, as a result of the above factors, was $14.7 million in the first
quarter of 1998 as compared to net income of $14.9 million in the first quarter
of 1997.
Liquidity and Capital Resources
- -------------------------------
Working capital requirements are generally met through a combination of
internally generated funds, bank lines of credit, commercial paper issuances,
financing of trade receivables and credit terms from suppliers which approximate
receivable terms to the Company's customers. The Company believes that these
sources, including its bank lines of credit under the Amended and Restated
Credit Agreement, will be sufficient to meet working capital needs during 1998.
Additional sources of working capital include customer deposits and progress
payments.
The Company had working capital of $536.9 million and $535.1 million as of March
31, 1998 and December 31, 1997, respectively. The current ratio was 1.75 at
March 31, 1998, as compared to 1.78 for December 31, 1997.
Long-term indebtedness was $444.7 million at March 31, 1998, primarily
consisting of borrowings under commercial paper, bank lines and the $100 million
senior notes. As of March 31, 1998, there were no borrowings under the revolving
credit facility.
At March 31, 1998, the Company maintained a $500 million Amended and Restated
Credit Agreement (the Agreement) expiring on July 31, 2002. The Agreement was
amended and restated May 1, 1997. At March 31, 1998 the Company could borrow
$500 million. The Agreement provides for borrowings under the facility at LIBOR
plus .16% or at specified bid rates. At March 31, 1998, the LIBOR rate was
5.65%. A fee of .09% is paid on the facility. The Agreement, as amended,
contains financial and operating covenants requiring the Company to maintain
certain financial ratios and standard provisions limiting leverage, investments
and liens.
The Company's non-U.S. subsidiaries maintain bank credit facilities in various
currencies that provide for borrowings of $247.6 million and $245.2 million at
March 31, 1998 and December 31, 1997, respectively, of which $166.1 million and
$175.5 million, respectively, were unused. In some instances, borrowings against
these credit facilities have been guaranteed by the Company to assure
availability of funds at favorable rates.
Commercial paper borrowings are expected to be reborrowed in the ordinary course
of business. The interest rate on the commercial paper was 5.64% and 5.84% as of
March 31, 1998 and December 31, 1997, respectively.
During the second quarter of 1997, the Company arranged four separate unsecured
bank lines similar to commercial paper. These bank lines provide for total
borrowings of $295 million which are expected to be reborrowed in the ordinary
course of business. At March 31, 1998 and December 31, 1997, the Company had
$109.9 million and $169.8 million, respectively outstanding under these bank
lines. The average rate on the bank lines was 5.67% and 5.92%, at March 31,
1998 and December 31, 1997, respectively.
The $100 million of Senior Notes bear interest at a 6.75% fixed rate and are due
March 2003.
(cont'd)
<PAGE>
-11-
YORK INTERNATIONAL CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (CONT'D)
During 1995, the Company arranged a term loan denominated in a foreign currency.
The Company borrowed $26.2 million with a final maturity on November 15, 1998
and an interest rate of 3.98%. The loan is repayable in four annual
installments. The term loan agreement contains financial and operating
covenants that are equivalent to the covenants of the Company's Amended and
Restated Credit Agreement.
In 1992, the Company sold a fractional ownership interest in a defined pool of
trade accounts receivable for $100 million. At March 31, 1998 and December 31,
1997, the discount rate on the accounts receivable was approximately 5.53% and
5.78%, respectively.
In July 1995, the Company registered $200 million in debt securities with the
Securities and Exchange Commission. Under terms of the registration statement,
the Company may offer and sell up to that amount of such securities from time to
time at prices and terms to be determined at or prior to sale. No amounts of
such debt securities are outstanding at March 31, 1998.
Because the Company's obligations under the Amended and Restated Credit
Agreement and Receivables Sales Agreement bear interest at floating rates, the
Company's interest costs are sensitive to changes in prevailing interest rates.
Based on historical cash flows, the Company believes that it will be able to
satisfy its principal and interest payment obligations and its working capital
and capital expenditure requirements from operating cash flows together with the
availability under the revolving credit facility and commercial paper
borrowings. In the ordinary course of business, the Company enters into various
types of transactions that involve contracts and financial instruments with off-
balance-sheet risk. The Company enters into these financial instruments to
manage financial market risk, including foreign exchange, commodity price and
interest rate risk. The Company enters into these financial instruments
utilizing over-the-counter as opposed to exchange traded instruments. The
Company mitigates the risk that counterparties to these over-the-counter
agreements will fail to perform by only entering into agreements with major
international financial institutions.
Capital expenditures currently anticipated for expanded capacity, cost
reductions and the introduction of new products during the next twelve months
will be in excess of depreciation and amortization. These expenditures will be
funded from a combination of operating cash flows and availability under the
revolving credit facility and commercial paper borrowings.
Cash dividends of $0.12 per share were paid on common stock in the first quarter
of 1998. The declaration and payment of future dividends will be at the sole
discretion of the Board of Directors and will depend upon such factors as the
Company's profitability, financial condition, cash requirements and future
prospects.
Year 2000
- ---------
Management has initiated an enterprise-wide program to prepare the Company's
computer systems and applications for the year 2000. The Company expects to
incur internal staff costs as well as consulting and other expenses related to
infrastructure and facilities enhancements necessary to prepare systems and
applications for the year 2000. The cost of testing and conversion of systems
and applications will not have a material affect on the Company's results of
operations or financial position. A significant proportion of these costs are
not likely to be incremental costs to the Company, but rather will represent the
redeployment of existing information technology resources or be a component of
planned system improvements.
New Accounting Standards
- ------------------------
In January 1997, the Securities and Exchange Commission amended regulations and
forms, including Regulation S-X and S-K, to clarify and expand existing
disclosure requirements about accounting policies for certain derivative
instruments, and to add new disclosure requirements about the risk of loss from
changes in market rates or prices
(cont'd)
<PAGE>
-12-
YORK INTERNATIONAL CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (CONT'D)
which are inherent in derivatives. The Company's disclosures in its annual
report on Form 10-K conform to the disclosure requirements set forth in the
amended regulations. Adoption by the Company of the disclosure requirement
relating to risk of loss, which requirements are effective for fiscal years
ending after June 15, 1998, are not expected to have a material affect on the
Company's financial statements.
In June 1997, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards No.131, "Disclosures about Segments of an
Enterprise and Related Information." In January 1998, the FASB issued Statement
of Financial Accounting Standards No.132, "Employers' Disclosures about Pensions
and Other Postretirement Benefits". These statements establish standards for
reporting information about business segments and products in financial
statements and establish new disclosure requirements relating to pension and
other postretirement benefits. These pronouncements are effective for fiscal
years beginning after December 15, 1997.
Adoption of these statements is not expected to have a material affect on the
Company's financial statements.
Forward-Looking Information -- Risk Factors
- -------------------------------------------
To the extent the Registrant has made "forward-looking statements," certain risk
factors could cause actual results to differ materially from those anticipated
in such forward-looking statements. Unseasonably cool spring or summer weather
in the northeastern United States or in Europe could adversely affect the
Registrant's residential air conditioning business, as could a failure to reduce
manufacturing costs in its Scroll Technologies joint venture. Anticipated
improvement in the Registrant's refrigeration business will require the
achievement of improved plant performance. The commercial air conditioning
business could be affected by a slowdown in the large chiller market and by the
level of CFC retrofits. Overall anticipated performance of the Registrant could
be affected by any serious economic downturns in the United States, Europe,
Latin America or Asia.
PART II -- OTHER INFORMATION
Item 1 Legal Proceedings
Not Applicable
Item 2 Changes in Securities
Not Applicable
Item 3 Defaults Upon Senior Securities
Not Applicable
Item 4 Submission of Matters to a Vote of Security Holders
Not Applicable
Item 5 Other Information
Not Applicable
(cont'd)
<PAGE>
-13-
YORK INTERNATIONAL CORPORATION AND SUBSIDIARIES
PART II -- OTHER INFORMATION (CONT'D)
Item 6 Exhibits and Reports on Form 8-K
(a) Exhibit 11 Statement re: Computation of Per Share Earnings (filed
herewith)
Exhibit 27 Financial Data Schedule (EDGAR only)
Exhibit 27.1 Financial Data Schedule for March 31, 1997 Restated for
FAS128, Earnings per Share (EDGAR ONLY)
Exhibit 27.2 Financial Data Schedule for June 30, 1997 Restated for
FAS128, Earnings per Share (EDGAR ONLY)
Exhibit 27.3 Financial Data Schedule for September 30, 1997 Restated
for FAS128, Earnings per Share (EDGAR ONLY)
Exhibit 27.4 Financial Data Schedule for June 30, 1996 Restated for
FAS128, Earnings per Share (EDGAR ONLY)
Exhibit 27.5 Financial Data Schedule for September 30, 1996 Restated
for FAS128, Earnings per Share (EDGAR ONLY)
(b) None
<PAGE>
-14-
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned unto duly authorized.
YORK INTERNATIONAL CORPORATION
------------------------------
Registrant
Date May 8, 1998 /s/ C. David Myers
--------------------- --------------------------------
Principal Accounting Officer and
Principal Financial Officer
<PAGE>
EXHIBIT 11
YORK INTERNATIONAL CORPORATION AND SUBSIDIARIES
STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
<TABLE>
<CAPTION>
Three Months Ended March 31,
----------------------------
1998 1997
------------- -------------
<S> <C> <C>
Shares used in Computation of per share earnings:
Basic shares outstanding 40,469,000 43,435,000
Effect of Dilutive Securities:
Non-Vested Restricted Shares 166,000 209,000
Stock Options 91,000 368,000
---------- ----------
Diluted shares outstanding 40,726,000 44,012,000
========== ==========
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Consolidated Condensed Statements of Operations for the Quarter Ended March 31,
1998 (Unaudited), the Consolidated Condensed Balance Sheets at March 31, 1998
(Unaudited), and the Consolidated Condensed Statements of Cash Flows for the
Quarter Ended March 31, 1998 (Unaudited) and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 9,472
<SECURITIES> 0
<RECEIVABLES> 508,070
<ALLOWANCES> 19,284
<INVENTORY> 567,670
<CURRENT-ASSETS> 1,253,291
<PP&E> 693,679
<DEPRECIATION> 324,732
<TOTAL-ASSETS> 2,030,887
<CURRENT-LIABILITIES> 716,436
<BONDS> 444,725
0
0
<COMMON> 220
<OTHER-SE> 653,054
<TOTAL-LIABILITY-AND-EQUITY> 2,030,887
<SALES> 741,988
<TOTAL-REVENUES> 741,988
<CGS> 584,956
<TOTAL-COSTS> 584,956
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 3,254
<INTEREST-EXPENSE> 11,071
<INCOME-PRETAX> 22,218
<INCOME-TAX> 7,554
<INCOME-CONTINUING> 14,664
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 14,664
<EPS-PRIMARY> 0.36
<EPS-DILUTED> 0.36
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Consolidated Condensed Statements of Operations for the Three Months Ended March
31, 1997 (Unaudited), the Consolidated Condensed Balance Sheets at March 31,
1997 (Unaudited), and the Consolidated Condensed Statements of Cash Flows for
the Three Months Ended March 31, 1997 (Unaudited) and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 7,703
<SECURITIES> 0
<RECEIVABLES> 570,176
<ALLOWANCES> 21,896
<INVENTORY> 633,952
<CURRENT-ASSETS> 1,356,083
<PP&E> 644,003
<DEPRECIATION> 285,425
<TOTAL-ASSETS> 2,127,980
<CURRENT-LIABILITIES> 702,492
<BONDS> 432,622
0
0
<COMMON> 219
<OTHER-SE> 780,211
<TOTAL-LIABILITY-AND-EQUITY> 2,127,980
<SALES> 800,767
<TOTAL-REVENUES> 800,767
<CGS> 637,032
<TOTAL-COSTS> 637,032
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 2,210
<INTEREST-EXPENSE> 9,434
<INCOME-PRETAX> 22,146
<INCOME-TAX> 7,286
<INCOME-CONTINUING> 14,860
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 14,860
<EPS-PRIMARY> 0.34
<EPS-DILUTED> 0.34
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Consolidated Condensed Statements of Operations for the Six Months Ended June
30, 1997 (Unaudited), the Consolidated Condensed Balance Sheets at June 30, 1997
(Unaudited), and the Consolidated Condensed Statements of Cash Flows for the Six
Months Ended June 30, 1997 (Unaudited) and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 13,220
<SECURITIES> 0
<RECEIVABLES> 608,652
<ALLOWANCES> 21,761
<INVENTORY> 623,100
<CURRENT-ASSETS> 1,386,078
<PP&E> 660,223
<DEPRECIATION> 292,650
<TOTAL-ASSETS> 2,163,216
<CURRENT-LIABILITIES> 677,059
<BONDS> 498,655
0
0
<COMMON> 219
<OTHER-SE> 773,930
<TOTAL-LIABILITY-AND-EQUITY> 2,163,216
<SALES> 1,685,164
<TOTAL-REVENUES> 1,685,164
<CGS> 1,332,031
<TOTAL-COSTS> 1,332,031
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 3,350
<INTEREST-EXPENSE> 20,416
<INCOME-PRETAX> 84,536
<INCOME-TAX> 27,474
<INCOME-CONTINUING> 57,062
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 57,062
<EPS-PRIMARY> 1.33
<EPS-DILUTED> 1.31
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Consolidated Condensed Statements of Operations for the Nine Months Ended
September 30, 1997 (Unaudited), the Consolidated Condensed Balance Sheets at
September 30, 1997 (Unaudited), and the Consolidated Condensed Statements of
Cash Flows for the Nine Months Ended September 30, 1997 (Unaudited) and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 7,788
<SECURITIES> 0
<RECEIVABLES> 498,937
<ALLOWANCES> 18,621
<INVENTORY> 597,318
<CURRENT-ASSETS> 1,254,851
<PP&E> 667,600
<DEPRECIATION> 302,345
<TOTAL-ASSETS> 2,033,728
<CURRENT-LIABILITIES> 665,576
<BONDS> 406,113
0
0
<COMMON> 219
<OTHER-SE> 752,240
<TOTAL-LIABILITY-AND-EQUITY> 2,033,728
<SALES> 2,434,944
<TOTAL-REVENUES> 2,434,944
<CGS> 1,922,016
<TOTAL-COSTS> 1,922,016
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 6,038
<INTEREST-EXPENSE> 30,296
<INCOME-PRETAX> 119,744
<INCOME-TAX> 38,927
<INCOME-CONTINUING> 80,847
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 80,847
<EPS-PRIMARY> 1.88
<EPS-DILUTED> 1.86
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Consolidated Condensed Statements of Operations for the Six Months Ended
June 30, 1996 (Unaudited), the Consolidated Condensed Balance Sheets at
June 30, 1996 (Unaudited), and the Consolidated Condensed Statements of
Cash Flows for the Six Months Ended June 30, 1996 (Unaudited) and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 4,954
<SECURITIES> 0
<RECEIVABLES> 579,728
<ALLOWANCES> 17,596
<INVENTORY> 564,820
<CURRENT-ASSETS> 1,274,169
<PP&E> 595,861
<DEPRECIATION> 253,244
<TOTAL-ASSETS> 2,028,697
<CURRENT-LIABILITIES> 739,543
<BONDS> 378,802
0
0
<COMMON> 217
<OTHER-SE> 699,638
<TOTAL-LIABILITY-AND-EQUITY> 2,028,697
<SALES> 1,589,827
<TOTAL-REVENUES> 1,589,827
<CGS> 1,242,208
<TOTAL-COSTS> 1,242,208
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 3,504
<INTEREST-EXPENSE> 17,536
<INCOME-PRETAX> 105,784
<INCOME-TAX> 35,966
<INCOME-CONTINUING> 69,818
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 69,818
<EPS-PRIMARY> 1.63
<EPS-DILUTED> 1.60
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Consolidated Condensed Statements of Operations for the Nine Months Ended
September 30, 1996 (Unaudited), the Consolidated Condensed Balance Sheets at
September 30, 1996 (Unaudited), and the Consolidated Condensed Statements of
Cash Flows for the Nine Months Ended September 30, 1996 (Unaudited) and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 5,017
<SECURITIES> 0
<RECEIVABLES> 524,498
<ALLOWANCES> 19,158
<INVENTORY> 610,192
<CURRENT-ASSETS> 1,262,555
<PP&E> 615,345
<DEPRECIATION> 263,704
<TOTAL-ASSETS> 2,026,249
<CURRENT-LIABILITIES> 746,193
<BONDS> 329,252
0
0
<COMMON> 217
<OTHER-SE> 737,833
<TOTAL-LIABILITY-AND-EQUITY> 2,026,249
<SALES> 2,377,130
<TOTAL-REVENUES> 2,377,130
<CGS> 1,860,694
<TOTAL-COSTS> 1,860,694
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 5,252
<INTEREST-EXPENSE> 25,201
<INCOME-PRETAX> 159,221
<INCOME-TAX> 50,564
<INCOME-CONTINUING> 108,657
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 108,657
<EPS-PRIMARY> 2.51
<EPS-DILUTED> 2.48
</TABLE>
