<PAGE> 1
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 SEPTEMBER 30, 2000
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.
<TABLE>
<CAPTION>
Class Outstanding at November 8, 2000
----- -------------------------------
<S> <C>
Common Stock, par value $.005 38,027,277 shares
</TABLE>
<PAGE> 2
YORK INTERNATIONAL CORPORATION AND SUBSIDIARIES
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2000
INDEX
<TABLE>
<CAPTION>
Page No.
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Condensed Statements of Operations - (Unaudited)
Three Months and Nine Months Ended September 30, 2000 and 1999 3
Consolidated Condensed Balance Sheets -
September 30, 2000 (Unaudited) and December 31, 1999 4
Consolidated Condensed Statements of Cash Flows - (Unaudited)
Nine Months Ended September 30, 2000 and 1999 5
Supplemental Notes to Consolidated Condensed
Financial Statements (Unaudited) 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 13
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 19
Item 2. Changes in Securities 19
Item 3. Defaults Upon Senior Securities 19
Item 4. Submission of Matters to a Vote of Security Holders 19
Item 5. Other Information 19
Item 6. Exhibits and Reports on Form 8-K 19
</TABLE>
2
<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 Sept. 30, Nine Months Ended Sept. 30,
---------------------------- -------------------------------
2000 1999 2000 1999
--------- --------- ----------- -----------
<S> <C> <C> <C> <C>
Net sales $ 946,703 $ 970,360 $ 2,905,577 $ 2,765,181
Cost of goods sold 744,516 781,288 2,265,490 2,179,113
--------- --------- ----------- -----------
Gross profit 202,187 189,072 640,087 586,068
Selling, general and administrative expenses 150,054 148,661 474,005 425,419
Acquisition, integration, restructuring and
other charges 28,462 22,159 29,681 35,117
--------- --------- ----------- -----------
Income from operations 23,671 18,252 136,401 125,532
Gain on sale of businesses -- (9,627) (26,902) (9,627)
Interest expense, net 20,548 19,063 60,779 41,735
Equity in earnings of affiliates (1,624) (1,132) (5,695) (4,174)
--------- --------- ----------- -----------
Income before income taxes and cumulative
effect of accounting change 4,747 9,948 108,219 97,598
Provision (benefit) for income taxes (10,509) 6,172 24,181 35,096
--------- --------- ----------- -----------
Income before cumulative effect
of accounting change 15,256 3,776 84,038 62,502
Cumulative effect of accounting change:
Write-off of start-up costs (net of tax of $442) -- -- -- 897
--------- --------- ----------- -----------
Net income $ 15,256 $ 3,776 $ 84,038 $ 61,605
========= ========= =========== ===========
Basic earnings per share:
Income before cumulative effect
of accounting change $ 0.40 $ 0.09 $ 2.21 $ 1.57
Accounting change -- -- -- (0.02)
--------- --------- ----------- -----------
Net income $ 0.40 $ 0.09 $ 2.21 $ 1.55
========= ========= =========== ===========
Diluted earnings per share:
Income before cumulative effect
of accounting change $ 0.40 $ 0.09 $ 2.20 $ 1.56
Accounting change -- -- -- (0.02)
--------- --------- ----------- -----------
Net income $ 0.40 $ 0.09 $ 2.20 $ 1.54
========= ========= =========== ===========
Cash dividends per share $ 0.15 $ 0.15 $ 0.45 $ 0.45
========= ========= =========== ===========
Weighted average common shares and
common equivalents outstanding:
Basic 38,034 39,893 38,076 39,853
Diluted 38,232 40,275 38,170 40,103
</TABLE>
See accompanying supplemental notes to consolidated condensed financial
statements.
3
<PAGE> 4
PART I - FINANCIAL INFORMATION
YORK INTERNATIONAL CORPORATION AND SUBSIDIARIES
Consolidated Condensed Balance Sheets
(thousands of dollars)
<TABLE>
<CAPTION>
Sept. 30, 2000 December 31,
(Unaudited) 1999
-------------- -----------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 56,430 $ 39,514
Receivables 694,436 720,022
Inventories:
Raw materials 191,273 199,171
Work in process 151,313 112,669
Finished goods 313,350 287,206
---------- ----------
Total inventories 655,936 599,046
Prepayments and other current assets 100,992 131,787
---------- ----------
Total current assets 1,507,794 1,490,369
Deferred income taxes 39,584 13,207
Investments in affiliates 22,537 25,425
Property, plant and equipment, net 469,892 499,710
Unallocated excess of cost
over net assets acquired 742,140 768,809
Deferred charges and other assets 60,318 77,019
---------- ----------
Total assets $2,842,265 $2,874,539
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Notes payable and current portion
of long-term debt $ 77,687 $ 102,864
Accounts payable and accrued expenses 795,614 860,264
Income taxes 37,479 42,007
---------- ----------
Total current liabilities 910,780 1,005,135
Long-term warranties 42,637 39,607
Long-term debt 883,376 854,494
Postretirement benefit liabilities 152,777 154,066
Other long-term liabilities 79,737 89,307
---------- ----------
Total liabilities 2,069,307 2,142,609
Stockholders' equity 772,958 731,930
---------- ----------
Total liabilities and stockholders' equity $2,842,265 $2,874,539
========== ==========
</TABLE>
See accompanying supplemental notes to consolidated condensed financial
statements.
4
<PAGE> 5
PART I - FINANCIAL INFORMATION
YORK INTERNATIONAL CORPORATION AND SUBSIDIARIES
Consolidated Condensed Statements of Cash Flows (Unaudited)
(thousands of dollars)
<TABLE>
<CAPTION>
Nine Months Ended Sept. 30,
---------------------------
2000 1999
-------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 84,038 $ 61,605
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization of property,
plant and equipment 46,652 46,883
Amortization of deferred charges and unallocated
excess of cost over net assets acquired 24,278 15,652
Provision for doubtful accounts receivable 4,774 7,862
Deferred income taxes (16,408) (6,808)
Gain on sale of businesses (26,902) (9,627)
Cumulative effect of accounting change -- 897
Effect of non-cash charges 32,649 38,503
Loss on sale of fixed assets and other 469 789
Change in assets and liabilities net of effects from
purchase of other companies and sale of businesses:
Receivables 8,846 2,517
Inventories (64,084) (33,336)
Prepayments and other current assets 18,163 21,969
Other assets 9,084 (15,254)
Accounts payable and accrued expenses (49,407) (88,975)
Income taxes (4,465) (40,099)
Long-term warranties 3,201 2,501
Postretirement benefit liabilities (1,289) 5,162
Other long-term liabilities (7,577) 3,309
-------- ---------
Net cash provided by operating activities 62,022 13,550
-------- ---------
Cash flows from investing activities:
Proceeds from sale of businesses, net 41,826 35,512
Purchases of and investments in other
companies, net of cash acquired (3,805) (405,226)
Capital expenditures (67,595) (70,924)
Proceeds from sale of fixed assets and other 5,525 393
-------- ---------
Net cash used by investing activities (24,049) (440,245)
-------- ---------
Cash flows from financing activities:
Net payments on short-term debt (25,445) (24,106)
Proceeds from sale of accounts receivable -- 50,000
Net proceeds from issuance of bank loans 14,887 --
Net proceeds from commercial paper borrowings 46,454 435,113
Long-term debt payments (32,693) (5,091)
Common stock issued 15 7,873
Treasury stock purchases (7,535) (7,610)
Dividends paid (17,106) (17,956)
-------- ---------
Net cash (used) provided by financing activities (21,423) 438,223
-------- ---------
Effect of exchange rate changes on cash 366 109
-------- ---------
Net increase in cash and cash equivalents 16,916 11,637
-------- ---------
Cash and cash equivalents at beginning of period 39,514 22,746
-------- ---------
Cash and cash equivalents at end of period $ 56,430 $ 34,383
======== =========
</TABLE>
See accompanying supplemental notes to consolidated condensed financial
statements.
5
<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 necessary to present
fairly the financial position as of September 30, 2000 and December 31,
1999, the results of operations for the three and nine month periods
ended September 30, 2000 and 1999, and cash flows for the nine months
ended September 30, 2000 and 1999. The results of operations for
interim periods are not necessarily indicative of the results expected
for the full year.
(2) The following tables summarize the indebtedness and capitalization of
the Company at September 30, 2000 and at December 31, 1999 (in
thousands):
<TABLE>
<CAPTION>
September 30, 2000 December 31, 1999
------------------------ ------------------------
Current Long-term Current Long-term
<S> <C> <C> <C> <C>
Indebtedness:
Bank loans $57,468 $ -- $ 81,145 $ --
Bank lines at an average rate of 6.71%
in 2000 and 5.28% in 1999 1,629 56,699 -- 41,812
Commercial paper, 6.68% interest
in 2000 and 6.08% in 1999 -- 443,301 -- 396,847
Senior notes, 6.75% interest, due March 2003 -- 100,000 -- 100,000
Senior notes, 6.70% interest, due June 2008 -- 200,000 -- 200,000
Term loans (foreign currency) at an average
rate of 4.11%, due July 2004 12,386 37,569 14,299 57,196
Other, primarily foreign bank loans, at an
average rate of 5.79% in 2000 and 5.91%
in 1999 6,204 45,807 7,420 58,639
------- -------- -------- --------
Total notes payable and long-term debt $77,687 $883,376 $102,864 $854,494
======= ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
September 30, December 31,
Stockholders' equity: 2000 1999
--------- ---------
<S> <C> <C>
Common Stock $.005 par value;
200,000 shares authorized;
issued 45,063 shares at September 30, 2000
and 45,062 at December 31, 1999 $ 225 $ 225
Additional paid in capital 713,808 715,322
Retained earnings 409,461 342,529
Accumulated other comprehensive losses (89,571) (71,146)
Treasury stock, 7,036 shares at September 30, 2000
and 6,700 shares at December 31, 1999, at cost (260,809) (253,274)
Unearned compensation (156) (1,726)
--------- ---------
Total stockholders' equity $ 772,958 $ 731,930
========= =========
</TABLE>
(continued)
6
<PAGE> 7
As of October 4, 2000, the Company amended the $400 million 364-day
Revolving Credit Agreement (the Revolver) expiring on May 31, 2001 and
the $500 million Amended Credit Agreement (the Credit Agreement)
expiring on July 31, 2002. The Revolver and the Credit Agreement
provide for borrowings under the facilities at LIBOR plus 0.45%. If
borrowings greater than 33% of either facility are utilized, the rate
increases to LIBOR plus 0.55%. The Company pays an annual fee of 0.10%
for each facility, and the Credit Agreement allows for borrowings at
specified bid rates. At September 30, 2000 and December 31, 1999, the
three-month LIBOR rate was 6.77% and 6.03%, respectively. The Revolver
and the Credit Agreement, as amended, contain financial and operating
covenants requiring the Company to maintain certain financial ratios
and standard provisions limiting leverage, investments and liens. The
Company was in compliance with these financial and operating covenants
at September 30, 2000 and December 31, 1999. At September 30, 2000 and
December 31, 1999, no amounts were outstanding under either of these
agreements.
The Company has additional short-term bank lines that provide for total
borrowings of $175 million which are expected to be reborrowed in the
ordinary course of business. At September 30, 2000 and December 31,
1999, the Company had $58.3 million and $41.8 million, respectively,
outstanding under these bank lines.
Commercial paper borrowings are expected to be reborrowed in the
ordinary course of business on a long-term basis. Commercial paper
borrowings were also the primary source of funds used to finance the
acquisition of Sabroe A/S.
Concerning bank loans and other, the Company's non-U.S. subsidiaries
maintain bank credit facilities in various currencies that provided for
available borrowings of $244.1 million and $385.1 million at September
30, 2000 and December 31, 1999, respectively, of which $189.9 million
and $295.1 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
also maintains other debt of $55.2 million and $57.2 million at
September 30, 2000 and December 31, 1999, respectively.
(3) The Company established a receivables sales agreement in 1992. Under an
Amended and Restated Receivables Sales Agreement entered into on
December 22, 1999 and amended October 20, 2000, the maximum amount of
the purchasers' investment increased from $150 million to $175 million
and is subject to decrease based on the level of eligible accounts
receivable and restrictions on concentrations of receivables. The
balance of the sold accounts receivable was $175 million at September
30, 2000 and at December 31, 1999. The sold accounts receivable are
reflected as a reduction of receivables in the accompanying
consolidated balance sheets. The discount rate on the receivables sold
was approximately 6.62% and 6.22% at September 30, 2000 and December
31, 1999, respectively.
(4) In the first half of 2000, the employment of several senior executives,
including the Company's former chief executive officer and chief
financial officer, was terminated. The Company has negotiated
agreements with these executives, resulting in severance costs of $6.7
million, of which $3.5 million and $3.2 million were charged to
earnings in the first quarter and second quarter of 2000, respectively.
(5) In February, 1998, the Company incurred damage to its Grantley
manufacturing facility in York, PA, when tanks used for testing
ruptured. The accident caused substantial damage to its facilities,
which have been subsequently rebuilt.
The Company obtained reimbursement under its insurance programs for
both property damage and business interruption relating to the Grantley
facility, and reached a final settlement in the third quarter of 2000.
During the year ended December 31, 1999, the Company received payments
of $27.5 million and in the quarter ended September 30, 2000, the
Company received a final cash payment of $17.0 million.
Pursuant to generally accepted accounting principles, the costs of
reconstructing and replacing property damaged or destroyed in the
accident were recorded in the applicable property accounts, and the
difference between the net book value of the assets damaged or
destroyed and the related insurance recovery was included in
operations. During the first half of 1999 and during the third quarter
of 2000, the Company recorded credits to cost of goods sold of $6.0
million and $9.1 million, respectively.
(continued)
7
<PAGE> 8
(6) Comprehensive income is determined as follows:
Comprehensive Income (in thousands)
<TABLE>
<CAPTION>
Three Months Ended Sept. 30, Nine Months Ended Sept. 30,
--------------------------- ---------------------------
2000 1999 2000 1999
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net income $15,256 $ 3,776 $84,038 $61,605
Other comprehensive loss (income):
Foreign currency translation
adjustment 8,294 (482) 18,425 9,130
------- ------- ------- -------
Comprehensive income $ 6,962 $ 4,258 $65,613 $52,475
======= ======= ======= =======
</TABLE>
(7) 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.
(8) Net income as set forth in the statements of operations is used in the
computation of basic and diluted earnings per share information.
Reconciliations of shares used in the computations of earnings per
share are as follows (in thousands):
<TABLE>
<CAPTION>
Three Months Ended Sept. 30, Nine Months Ended Sept. 30,
---------------------------- ---------------------------
2000 1999 2000 1999
------ ------ ------ ------
<S> <C> <C> <C> <C>
Weighted average common shares
outstanding used in the computation
of basic earnings per share 38,034 39,893 38,076 39,853
Effect of dilutive securities:
Non-vested restricted shares 7 77 7 77
Stock options 191 305 87 173
------ ------ ------ ------
Weighted average common shares and
equivalents used in the computation
of diluted earnings per share 38,232 40,275 38,170 40,103
====== ====== ====== ======
</TABLE>
(continued)
8
<PAGE> 9
(9) The table below represents the Company's operating results by segment:
<TABLE>
<CAPTION>
(in thousands) Three Months Ended Sept. 30, Nine Months Ended Sept. 30,
----------------------------- ------------------------------
2000 1999 2000 1999
--------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net sales:
Engineered Systems Group $ 376,971 $ 355,572 $ 1,112,592 $ 1,056,092
York Refrigeration Group 242,484 274,632 735,198 564,807
Unitary Products Group 264,932 274,010 786,187 826,186
Bristol Compressors 106,083 111,928 430,211 463,232
Eliminations (43,767) (45,782) (158,611) (145,136)
--------- ----------- ----------- -----------
$ 946,703 $ 970,360 $ 2,905,577 $ 2,765,181
========= =========== =========== ===========
Eliminations include the following
intersegment sales:
Engineered Systems Group $ 9,021 $ 7,004 $ 32,645 $ 19,603
York Refrigeration Group 6,687 8,717 26,368 26,380
Unitary Products Group 250 583 1,354 1,716
Bristol Compressors 27,809 29,478 98,244 97,437
--------- ----------- ----------- -----------
Eliminations $ 43,767 $ 45,782 $ 158,611 $ 145,136
========= =========== =========== ===========
Income from operations:
Engineered Systems Group $ 28,086 $ 26,445 $ 84,343 $ 76,189
York Refrigeration Group 16,582 16,108 45,167 28,313
Unitary Products Group 20,032 23,876 59,475 81,783
Bristol Compressors 3,751 11,436 44,916 52,248
Eliminations, general corporate expenses
and other non-allocated items including
acquisition, integration, restructuring,
and other charges (44,780) (59,613) (97,500) (113,001)
--------- ----------- ----------- -----------
$ 23,671 $ 18,252 $ 136,401 $ 125,532
Equity in earnings of affiliates:
Engineered Systems Group $ (776) $ (232) $ (2,482) $ (1,127)
York Refrigeration Group (103) (214) (604) (460)
Unitary Products Group (327) (164) (1,251) (587)
Bristol Compressors (418) (522) (1,358) (2,000)
--------- ----------- ----------- -----------
$ (1,624) $ (1,132) $ (5,695) $ (4,174)
Earnings before interest and taxes:
Engineered Systems Group $ 28,862 $ 26,677 $ 86,825 $ 77,316
York Refrigeration Group 16,685 16,322 45,771 28,773
Unitary Products Group 20,359 24,040 60,726 82,370
Bristol Compressors 4,169 11,958 46,274 54,248
Eliminations, general corporate expenses
and other non-allocated items including
acquisition, integration, restructuring,
and other charges (44,780) (59,613) (97,500) (113,001)
--------- ----------- ----------- -----------
$ 25,295 $ 19,384 $ 142,096 $ 129,706
Gain on sale of businesses -- (9,627) (26,902) (9,627)
Interest expense, net 20,548 19,063 60,779 41,735
--------- ----------- ----------- -----------
Income before income taxes and cumulative
effect of accounting change $ 4,747 $ 9,948 $ 108,219 $ 97,598
Provision (benefit) for income taxes (10,509) 6,172 24,181 35,096
--------- ----------- ----------- -----------
Income before cumulative effect of
accounting change $ 15,256 $ 3,776 $ 84,038 $ 62,502
========= =========== =========== ===========
</TABLE>
(continued)
9
<PAGE> 10
<TABLE>
<CAPTION>
September 30, 2000 December 31, 1999
------------------ -----------------
<S> <C> <C>
Total assets:
Engineered Systems Group $ 771,709 $ 712,119
York Refrigeration Group 631,848 680,453
Unitary Products Group 631,399 560,776
Bristol Compressors 224,410 217,792
Eliminations and other non-allocated assets 582,899 703,399
---------- ------------
$ 2,842,265 $ 2,874,539
============ ============
</TABLE>
(10) In January 1999, the Company recorded a charge of $0.9 million, net of
$0.4 million in related income taxes, to write-off start-up activities
in accordance with AICPA Statement of Position 98-5, "Reporting on the
Costs of Start-Up Activities."
(11) On June 10, 1999, the Company acquired all of the outstanding capital
stock of Sabroe A/S (Sabroe), a Danish company, for $407.1 million in
cash and assumed debt of $216.0 million. Sabroe is a world leader in
supplying refrigeration systems and products. In connection with the
acquisition and subsequent restructuring, the following were considered
in the allocation of the purchase price: acquisition expenses of $7.3
million; deferred taxes of $30.4 million; non-cash write-downs of $4.4
million and other accruals of $11.8 million. During the execution of
the integration plan, additional costs were incurred and accrued,
resulting in an increase to the unallocated excess of cost over net
assets acquired. These costs were $5.2 million for fixed asset
write-downs, primarily at the Norrkoping and Retech plants, and
additional accruals of $3.2 million primarily for severance costs for
workforce reductions. During the third quarter of 2000, additional
deferred tax assets were recognized relating to pre-acquisition loss
carryforwards resulting in a decrease to the unallocated excess of cost
over net assets acquired of $9.0 million.
The Company has nearly completed executing the plan for integrating
Sabroe into the York Refrigeration Group. The Sabroe portion of the
plan included closing two plants, closing certain duplicate sales and
service offices in Europe and Asia, rationalizing products, workforce
reductions and other costs. The Retech and Norrkoping manufacturing
plants in Denmark and Sweden, respectively, are closed and have no
remaining production. The table below details the activities in the
first three quarters of 2000.
<TABLE>
<CAPTION>
Additional Accruals
Remaining Established in 2000 Utilized in Remaining
Accruals at to Finalize Nine Months Ended Accruals at
(in thousands) December 31, 1999 Integration September 30, 2000 September 30, 2000
------------ ----------------- ----------- ------------------ ------------------
<S> <C> <C> <C> <C>
Severance costs $5,897 $2,928 $5,187 $3,638
Contractual obligations 1,575 - 327 1,248
Other 356 241 489 108
------ ------ ------ ------
$7,828 $3,169 $6,003 $4,994
===== ====== ====== ======
</TABLE>
The acquisition has been accounted for under the purchase method of
accounting and the Sabroe assets, liabilities and results of
operations, since acquisition, have been included in the consolidated
financial statements. The allocation of the purchase price and other
costs as discussed above resulted in the following components of
intangible assets, based on independent appraisals and other
information, and related straight-line amortization periods:
<TABLE>
<CAPTION>
(in thousands) Intangible Assets Amortization period
------------ ----------------- -------------------
<S> <C> <C>
Unallocated excess of cost over
net assets acquired $442,537 30 years
Trademark and tradenames 35,480 30 years
Proprietary technology and patents 2,050 15 years
--------
Total intangibles $480,067
========
</TABLE>
The following unaudited pro forma summary combines the consolidated
results of operations of the Company and Sabroe as if the acquisition
had occurred at the beginning of 1999. The pro forma summary includes
adjustments for amortization expense as a result of unallocated excess
of cost over net assets acquired and other intangible assets as
presented above, interest expense on acquisition debt issued to finance
the purchase, adjusted depreciation expense as a result of new fixed
assets bases, and estimated
(continued)
10
<PAGE> 11
income tax effect of the pro forma adjustments. The pro forma summary
is for informational purposes only and may not necessarily reflect the
results of operations of the Company had Sabroe operated as part of the
Company for the periods presented.
<TABLE>
<CAPTION>
Nine Months Ended September 30, 2000 1999 1999
(thousands, except per share data) Historical Historical Pro forma
-------------------------------- ---------- ---------- ---------
<S> <C> <C> <C>
Net sales $2,905,577 $2,765,181 $2,998,753
Income before cumulative
effect of accounting change 84,038 62,502 53,488
Net income 84,038 61,605 52,591
Diluted earnings per share:
Income before cumulative effect
of accounting change $ 2.20 $ 1.56 $ 1.33
Net income $ 2.20 $ 1.54 $ 1.31
</TABLE>
(12) In February 2000, the Company sold Northfield Freezing Systems, a
supplier to the food processing industry, to FMC Corporation for $39.4
million. In April 2000, the Company sold another small business for
$2.4 million. The sale of the two businesses resulted in a net pretax
gain of $26.9 million in the first half of 2000.
(13) In the third quarter of 2000, the Company recorded $28.7 million in
charges related to cost reduction actions. The actions include closures
and divestitures, product line and facility rationalizations, and
selling, general and administrative expense reductions. The charges
included $16.7 million for the impairment of fixed assets and the
unallocated excess of cost over net assets acquired relating to
facilities to be closed or divested, write-downs of other assets of
$6.9 million, accruals for severance related costs of $2.8 million, and
other accruals of $2.3 million. Also, the Company recorded charges in
cost of goods sold of $4.5 million relating to inventory write-downs
and warranty accruals related to these cost reduction activities.
(14) During the last three quarters of 1999, the Company recorded charges to
operations of $54.5 million in acquisition, integration, restructuring
and other charges. York Refrigeration Group charges of $35.0 million
related to acquisition, integration and restructuring cost for
integrating Sabroe into the York Refrigeration business and, in
accordance with applicable accounting rules, were not allocated as part
of the purchase price. This portion of the integration plan included
closing York's Gram manufacturing plant in Denmark, closing or
downsizing certain duplicate sales and service offices in Europe,
product rationalizations, and workforce reductions. Other Company
charges of $19.5 million, not impacted by the Sabroe acquisition,
related to restructuring, downsizing and other costs.
The following provides details on activities in the first three
quarters of 2000.
YORK REFRIGERATION GROUP CHARGES
<TABLE>
<CAPTION>
Remaining Utilized in Remaining
Accruals at Nine Months Ended Accruals at
(In thousands) December 31, 1999 September 30, 2000 September 30, 2000
------------ ----------------- ------------------ ------------------
<S> <C> <C> <C>
Severance costs $1,426 $ 811 $ 615
Contractual obligations 554 11 543
Other 50 17 33
------ ------- --------
$2,030 $ 839 $ 1,191
====== ======= ========
</TABLE>
The Company recorded a net credit of $0.2 million and net expenses of
$1.0 million in the third quarter and the first three quarters of 2000,
respectively, for York Refrigeration Group integration activities.
(continued)
11
<PAGE> 12
OTHER COMPANY CHARGES
<TABLE>
<CAPTION>
Remaining Utilized in Remaining
Accruals at Nine Months Ended Accruals at
(in thousands) December 31, 1999 September 30, 2000 September 30, 2000
------------ ----------------- ------------------ ------------------
<S> <C> <C> <C>
Severance costs $4,318 $3,974 $ 344
Contractual obligations 1,535 591 944
------ ------ -------
$5,853 $4,565 $ 1,288
====== ====== =======
</TABLE>
In the third quarter of 1999, the Company recorded a charge in cost of
goods sold of $17.5 million to write-down inventory to the lower of
cost or market. Integration of the Refrigeration business, principally
discontinuation of Gram product lines resulted in $6.1 million of the
inventory write-down. Deteriorating economic conditions in Latin
America and Eastern Europe resulted in inventory write-downs of $3.5
million and $4.1 million, respectively. Faulty gas engines in a UPG
unit accounted for additional inventory write-downs of $2.8 million.
The remaining $1.0 million of inventory write-downs related to ESG
operations in the U.S. and Australia. The Company recorded a net credit
of $0.9 million during the third quarter of 2000 relating to these
prior charges.
(15) The benefit for income taxes for the three months ended September 30,
2000 was $10.5 million. The benefit arose primarily from the
recognition of certain deferred tax benefits resulting from the
integration of the Sabroe acquisition and the utilization of certain
foreign net operating loss carryforwards. The provision for income
taxes for the nine months ended September 30, 2000 was $24.2 million.
The effective rate was 22.3% for the first nine months of 2000 compared
to 36.0% for the same period of 1999. The lower effective tax rate
resulted from the third quarter events described above, offset in part
by the tax effect of the gain on the Northfield sale. The tax rate from
normal operations was 31% for the nine months ended September 30, 2000.
(16) Reference is made to Registrant's 1999 Annual Report on Form 10-K for
more detailed financial statements and footnotes.
12
<PAGE> 13
PART I - FINANCIAL INFORMATION
YORK INTERNATIONAL CORPORATION AND SUBSIDIARIES
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Results of Operations
<TABLE>
<CAPTION>
Net Sales (in thousands) Three Months Ended Sept. 30, Nine Months Ended Sept. 30,
---------------------------- -------------------------------
2000 1999 2000 1999
--------- --------- ----------- -----------
<S> <C> <C> <C> <C>
Engineered Systems Group $ 376,971 $ 355,572 $ 1,112,592 $ 1,056,092
York Refrigeration Group 242,484 274,632 735,198 564,807
Unitary Products Group 264,932 274,010 786,187 826,186
Bristol Compressors 106,083 111,928 430,211 463,232
Eliminations (43,767) (45,782) (158,611) (145,136)
--------- --------- ----------- -----------
Net Sales $ 946,703 $ 970,360 $ 2,905,577 $ 2,765,181
========= ========= =========== ===========
U.S. 52% 51% 50% 55%
Non-U.S 48% 49% 50% 45%
--------- --------- ----------- -----------
Total 100% 100% 100% 100%
========= ========= =========== ===========
</TABLE>
Net sales for the three months ended September 30, 2000 decreased 2.4% to $946.7
million from $970.4 million for the same period in 1999. Net sales for the nine
months ended September 30, 2000 increased 5.1% to $2,905.6 million as compared
to $2,765.2 million for the nine months ended September 30, 1999. From a
geographic perspective, for the three months ended September 30, 2000, U.S.
sales decreased 1.6% to $489.2 million and non-U.S sales decreased 3.3% to
$457.5 million.
Order backlog at September 30, 2000 was $1,057.2 million compared to $1,149.0
million as of September 30, 1999 and $1,065.1 million as of December 31, 1999.
Engineered Systems Group (ESG) sales for the three months ended September 30,
2000 increased 6.0% to $377.0 million from $355.6 million for the same period in
1999. Year-to-date sales increased 5.3% to $1,112.6 million. The increase in
sales was primarily the result of strength in the global service business and
increased equipment sales in North America, partially offset by the sale of
Viron in the third quarter of 1999.
York Refrigeration Group (YRG) sales for the three months ended September 30,
2000 decreased 11.7% to $242.5 million from $274.6 million for the same period
in 1999. The decrease was the result of negative currency translation effects
and the divestiture of Northfield Freezing Systems. Year-to-date sales increased
30.2% to $735.2 million. The increase was due to the acquisition of Sabroe,
partially offset by the divestiture of Northfield and negative currency
translation effects.
Unitary Products Group (UPG) sales for the three months ended September 30, 2000
decreased 3.3% to $264.9 million from $274.0 million for the same period in
1999. Year-to-date sales decreased 4.8% to $786.2 million. The sales decrease
was a result of a decline in the domestic unitary market, weakness in the
manufactured housing business, and the impact of higher than normal levels of
inventory in the distribution channels.
Bristol Compressors sales for the three months ended September 30, 2000
decreased 5.2% to $106.1 million from $111.9 million for the same period in
1999. Year-to-date sales decreased 7.1% to $430.2 million. The decline was due
to a reduction in room air conditioner compressor sales and a weaker domestic
unitary market.
In the third quarter of 2000, the Company settled an insurance claim relating to
the Grantley accident, and recorded a $9.1 million benefit to cost of goods
sold. This benefit is partially offset by an unrelated settlement of $2.8
million
(continued)
13
<PAGE> 14
due to a claim from a 1991 project. In 1999, the Company recorded credits to
cost of goods sold of $6.0 million relating to the Grantley insurance claim.
In the third quarter of 2000, the Company recorded charges in cost of goods sold
of $4.5 million relating to inventory write-downs and warranty accruals for cost
reduction activities.
In the third quarter of 1999, the Company recorded a charge in cost of goods
sold of $17.5 million to write-down inventory to the lower of cost or market.
Integration of the Refrigeration business, principally discontinuation of Gram
product lines resulted in $6.1 million of the inventory write-down.
Deteriorating economic conditions in Latin America and Eastern Europe resulted
in inventory write-downs of $3.5 million and $4.1 million, respectively. Faulty
gas engines in a UPG unit accounted for additional inventory write-downs of $2.8
million. The remaining $1.0 million of inventory write-downs related to ESG
operations in the U.S. and Australia. The Company recorded a net credit of $0.9
million during the third quarter of 2000 relating to these prior charges.
Excluding all charges discussed above and $0.5 million of operating costs
related to the current year cost reduction initiatives, gross profit during the
third quarter ended September 30, 2000 decreased 3.2% to $199.9 million (21.1%
of sales) from $206.6 million (21.3% of sales) during the third quarter ended
September 30, 1999. The decrease is primarily due to Bristol's reduction in
production volume due to order cancellations for the fourth quarter of 2000.
Gross profit for the nine months ended September 30, 2000 increased 5.7% to
$637.8 million (22.0% of sales) from $603.6 million (21.8% of sales) during the
same nine months of 1999. The increase is primarily due to the impact of the
acquisition of Sabroe, partially offset by negative currency translation
effects.
Selling, general and administrative expense (SG&A), exclusive of $0.6 million
relating to the current year cost reduction actions, increased 0.5% to $149.4
million (15.8% of sales) in the third quarter ended September 30, 2000 from
$148.7 million (15.3% of sales) in the third quarter ended September 30, 1999.
For the nine months ended September 30, 2000, SG&A expense increased to $473.4
million (16.3% of sales) compared to $425.4 million (15.4% of sales) for the
nine months ended September 30, 1999. The increase in dollars and percentage is
primarily due to increased goodwill amortization, the full impact of the Sabroe
acquisition, and increased spending in engineering and marketing at UPG.
Included in SG&A for the first two quarters of 2000 are executive severance
costs of $6.7 million.
In September 2000, the Company announced initiation of a cost reduction process
designed to result in savings of $25 million to $30 million in 2001, and
continuing annual savings of $50 million to $60 million thereafter. Total
pre-tax charges to implement the cost reduction program are estimated to
approximate $120 million through the second quarter of 2001, of which $70
million will require cash payments.
In the third quarter of 2000, the Company recorded $33.2 million in charges
related to these cost reduction actions, including the $4.5 million charged to
cost of goods sold as discussed above. The actions include closures and
divestitures, product line and facility rationalizations, and selling, general
and administrative expense reductions. The charges included $16.7 million for
the impairment of fixed assets and the unallocated excess of cost over net
assets acquired relating to facilities to be closed or divested, write-downs of
other assets of $6.9 million, accruals for severance related costs of $2.8
million, and other accruals of $2.3 million. The Company also recorded a net
credit of $0.2 million and net expenses of $1.0 million in the third quarter and
the first three quarters of 2000, respectively, for York Refrigeration Group
integration activities.
In the third quarter of 1999, the Company recorded charges of $10.0 million
related to the integration of Sabroe into the York Refrigeration business and
$12.2 million for restructuring and downsizing other Company operations. In the
second quarter of 1999, the Company recorded acquisition and integration charges
of approximately $13.0 million.
Equity in earnings of affiliates was $1.6 million during the third quarter of
2000 as compared to $1.1 million during the third quarter of 1999. Year-to-date
equity in earnings of affiliates was $5.7 million in 2000 compared to $4.2
million in 1999. This improvement is primarily attributable to better
performance of the Company's joint ventures in Malaysia.
During the third quarter of 2000, earnings before interest and taxes (EBIT),
excluding restructuring charges, integration expenses, certain one-time
settlements, and the inventory write-downs, decreased to $52.1 million (5.5% of
sales) from $59.1 million (6.1% of sales) in 1999. EBIT, excluding special
charges, for the nine months ended
(continued)
14
<PAGE> 15
September 30, 2000 was $176.9 million (6.1% of sales) compared to $182.4 million
(6.6% of sales) for the same nine months of 1999. The discussion below of each
business unit's EBIT excludes the restructuring charges, integration expenses,
charges for executive severance, certain one-time settlements, and the inventory
write-downs as discussed above.
ESG EBIT for the three months ended September 30, 2000 increased 8.2% to $28.9
million (7.7% of sales) from $26.7 million (7.5% of sales) for the same period
in 1999. EBIT for the nine months ended September 30, 2000 was $86.8 million
compared to $77.3 million in 1999. The improvement was the result of the
performance of the global service business, strong North American equipment
sales, the successful introduction of new products, and improved factory
performance.
YRG EBIT for the three months ended September 30, 2000 increased to $16.7
million (6.9% of sales) from $16.3 million (5.9% of sales) for the same period
in 1999. EBIT for the nine months ended September 30, 2000 was $45.8 million
compared to $28.8 million in 1999. The improvement was primarily due to the
acquisition of Sabroe and resulting cost synergies, partially offset by negative
currency translations effects.
UPG EBIT for the three months ended September 30, 2000 decreased to $20.4
million (7.7% of sales) from $24.0 million (8.8% of sales) for the same period
in 1999. EBIT for the nine months ended September 30, 2000 was $60.7 million
compared to $82.4 million in 1999. EBIT decreased as a result of lower volume,
increased investments in engineering, product development and marketing, and
lower margins in European unitary operations.
Bristol Compressors EBIT for the three months ended September 30, 2000 decreased
to $4.2 million (3.9% of sales) from $12.0 million (10.7% of sales) for the same
period in 1999. EBIT for the nine months ended September 30, 2000 was $46.3
million compared to $54.2 million in 1999. The decrease reflected volume effects
of a significant decline in production versus 1999 due to the cancellation of
orders for the fourth quarter of 2000 and reduced margins.
In February 2000, the Company sold Northfield Freezing Systems, a supplier to
the food processing industry, to FMC Corporation for $39.4 million. In April
2000, the Company sold another small business for $2.4 million. The sale of the
two businesses resulted in a net pretax gain of $26.9 million in the first half
of 2000.
Net interest expense increased to $20.5 million for the third quarter of 2000.
Interest expense was $60.8 million for the nine months ended September 30, 2000
compared to $41.7 million for the nine months ended September 30, 1999. The
increase is due to higher interest rates and higher debt levels related to the
acquisition of Sabroe.
In January of 1999, the Company recorded a $0.9 million charge, net of a $0.4
million tax benefit, to write-off start-up activities in accordance with AICPA
Statement of Position 98-5, "Reporting on The Costs of Start-Up Activities.
The benefit for income taxes for the three months ended September 30, 2000 was
$10.5 million. The benefit arose primarily from the recognition of certain
deferred tax benefits resulting from the integration of the Sabroe acquisition
and the utilization of certain foreign net operating loss carryforwards. The
provision for income taxes for the nine months ended September 30, 2000 was
$24.2 million. The effective rate was 22.3% for the first nine months of 2000
compared to 36.0% for the same period of 1999. The lower effective tax rate
resulted from the third quarter events described above, offset in part by the
tax effect of the gain on the Northfield sale. The tax rate from normal
operations was 31% for the nine months ended September 30, 2000.
Net income, as a result of the above factors, was $15.3 million during the third
quarter of 2000 as compared to $3.8 million during the third quarter of 1999.
For the nine months ended September 30, 2000, net income increased to $84.0
million compared to $61.6 million in the first nine months of 1999.
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 $400 million 364-day Amended Revolver and its $500
million Amended Credit Agreement described below, will be
(continued)
15
<PAGE> 16
sufficient to meet foreseeable working capital needs. Additional sources of
working capital include customer deposits and progress payments.
Working capital was $597.0 million and $485.2 million as of September 30, 2000
and December 31, 1999, respectively. Inventory levels were higher at September
30, 2000, than at December 31, 1999, due to seasonal inventory builds and
increased levels in anticipation of factory consolidations. Accounts payable and
accrued expenses were lower at September 30, 2000, than at December 31, 1999,
due to a decrease in accruals related to the Sabroe acquisition and other
Company charges. The current ratio was 1.66 at September 30, 2000, as compared
to 1.48 at December 31, 1999.
Long-term indebtedness was $883.4 million at September 30, 2000, primarily
consisting of borrowings of $443.3 million in commercial paper, $300.0 million
of senior notes, $56.7 million in bank lines and $37.6 million in Danish term
loans.
At September 30, 2000, the Company had available a $400 million 364-day Amended
Revolving Credit Agreement (the Revolver) expiring on May 31, 2001 and a $500
million Amended Credit Agreement (the Credit Agreement) expiring on July 31,
2002. The Revolver and the Credit Agreement were amended as of October 4, 2000
to provide for charges relating to the cost reduction process. The facilities
provide for borrowings at LIBOR plus 0.45%. If borrowings greater than 33% of
either facility are utilized, the rate increases to LIBOR plus 0.55%. The
Company pays an annual fee of 0.10% for each facility and the Credit Agreement
allows for borrowings at specified bid rates. At September 30, 2000, the
three-month LIBOR rate was 6.77%. The Revolver and the Credit Agreement, as
amended, contain financial and operating covenants requiring the Company to
maintain certain financial ratios and standard provisions limiting leverage,
investments and liens. The Company was in compliance with these financial and
operating covenants at September 30, 2000. No amounts were outstanding under
either of these agreements.
The Company has additional short-term bank lines that provide for total
borrowings of $175 million which are expected to be reborrowed in the ordinary
course of business on a long-term basis. At September 30, 2000 and December 31,
1999, the Company had $58.3 million and $41.8 million, respectively, outstanding
under these bank lines.
Commercial paper borrowings are expected to be reborrowed in the ordinary course
of business. Commercial paper borrowings were also the primary source of funds
used to finance the acquisition of Sabroe A/S. The interest rate on the
commercial paper was 6.68% as of September 30, 2000.
At September 30, 2000 and December 31, 1999, the Company had $300 million of
Senior Notes outstanding. On June 1, 1998, the Company issued $200 million of
6.70% fixed rate Senior Notes having a maturity of ten years from the date of
issue. The remaining $100 million ten-year Senior Notes bear interest at a 6.75%
fixed rate and are due March 2003.
The Company maintains foreign currency term loans at September 30, 2000 of $50.0
million payable in semi-annual payments. These term loans are due July 2004 and
bear interest at an average rate of 4.11%.
Concerning bank loans and other, the Company's non-U.S. subsidiaries maintain
bank credit facilities in various currencies that provided for available
borrowings of $244.1 million and $385.1 million at September 30, 2000 and
December 31, 1999, respectively, of which $189.9 million and $295.1 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 also maintains other debt of $55.2 million and
$57.2 million at September 30, 2000 and December 31, 1999, respectively.
The Company established a receivables sales agreement in 1992. Under an Amended
and Restated Receivables Sales Agreement entered into on December 22, 1999 and
amended October 20, 2000, the maximum amount of the purchasers' investment
increased from $150 million to $175 million and is subject to decrease based on
the level of eligible accounts receivable and restrictions on concentrations of
receivables. The balance of the sold accounts receivable was $175 million at
September 30, 2000 and at December 31, 1999. The sold accounts receivable are
reflected as a reduction of receivables in the accompanying consolidated balance
sheets. The discount rate on the receivables sold was approximately 6.62% and
6.22% at September 30, 2000 and December 31, 1999, respectively.
(continued)
16
<PAGE> 17
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.
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 were $67.6 million for the nine months ended September 30,
2000 as compared to $70.9 million for the same period of 1999. Capital
expenditures currently anticipated for expanded capacity, cost reductions and
the introduction of new products during the next twelve months are expected to
be in excess of depreciation and amortization. These expenditures will be funded
from a combination of operating cash flows, availability under the revolving
credit facility, and commercial paper borrowings.
Cash dividends of $0.15 per share were paid on common stock in the third quarter
of 2000. 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, future
prospects and other factors deemed relevant by the Board of Directors.
Acquisition of Sabroe and the Integration Plan
In June 1999, the Company acquired all of the outstanding capital stock of
Sabroe A/S (Sabroe), a Danish company, for $407.1 million in cash and assumed
debt of $216.0 million. Sabroe is a world leader in supplying refrigeration
systems and products. The Company financed the acquisition through issuance of
commercial paper, supported by its credit facilities.
The Company has nearly completed executing the plan for integrating Sabroe into
the York Refrigeration Group. The Sabroe portion of the plan included closing
two plants, closing certain duplicate sales and service offices in Europe and
Asia, rationalizing products, workforce reductions and other costs. The Retech
and Norrkoping manufacturing plants in Denmark and Sweden, respectively, are
closed and have no remaining production.
New Accounting Standards
In 1998, the Financial Accounting Standards Board (FASB) issued Statement of
Financial Accounting Standards (SFAS) No. 133, "Accounting for Derivative
Instruments and Hedging Activities." The Standard establishes comprehensive
accounting and reporting standards for derivative instruments and hedging
activities that require a company to record the derivative instrument at fair
value in the balance sheet. Furthermore, the derivative instrument must meet
specific criteria or the change in its fair value is to be recognized in
earnings in the period of change. To achieve hedge accounting treatment the
derivative instrument needs to be part of a well- documented hedging strategy
that describes the exposure to be hedged, the objective of the hedge and a
measurable definition of its effectiveness in hedging the exposure. In 1999, the
FASB issued SFAS No. 137, "Accounting for Derivative Instruments and Hedging
Activities - Deferral of the Effective Date of SFAS No. 133." SFAS No. 137
delays the Standard effective date to the beginning of the first quarter of the
fiscal year beginning after June 15, 2000. In June 2000, the FASB issued SFAS
No. 138, "Accounting for Certain Derivative Instruments and Certain Hedging
Activities" which amends SFAS No.133 in certain respects. Although the Company
has not completed its analysis, adoption of these statements is not expected to
have a material effect on the Company's financial statements.
(continued)
17
<PAGE> 18
In September 2000, the FASB issued SFAS No. 140, "Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities." The Standard
replaces SFAS No. 125 and revises the standards for accounting for
securitizations and other transfers of financial assets and collateral and
requires certain disclosures. The Standard is effective for transfers and
servicing of financial assets and extinguishments of liabilities occurring after
March 31, 2001, and for recognition and reclassification of collateral and for
disclosures relating to securitization transactions and collateral for fiscal
years ending after December 15, 2000. The Company has not determined the effect,
if any, adoption of this standard will have on the Company's financial
statements.
Forward-Looking Information - Risk Factors
To the extent the Company has made "forward-looking statements," certain risk
factors could cause actual results to differ materially from those anticipated
in such forward-looking statements including, but not limited to, competition,
government regulation, environmental considerations, weather, and the successful
implementation of the Company's cost reduction actions. Unseasonably cool spring
or summer weather could continue to adversely affect the Company's UPG
residential air conditioning business. The ESG air conditioning business could
be affected by a slowdown in the large chiller market and by the acceptance of
new product introductions. YRG could continue to be adversely affected by the
effects of declining European currencies. In addition, overall performance of
the Company could be affected by any serious economic downturns in various world
markets.
18
<PAGE> 19
YORK INTERNATIONAL CORPORATION AND SUBSIDIARIES
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
Item 6 Exhibits and Reports on Form 8-K
(a) Exhibit 4.1 - SECOND AMENDMENT, dated as of October 4, 2000,
to the 364-Day Revolving Credit Agreement, among YORK
INTERNATIONAL CORPORATION, the several banks and other
financial institutions from time to time parties thereto and
CANADIAN IMPERIAL BANK OF COMMERCE, acting through its New
York Agency, as administrative agent for the Banks thereunder
Exhibit 4.2 - FOURTH AMENDMENT, dated as of October 4, 2000,
to the Amended and Restated Credit Agreement, among YORK
INTERNATIONAL CORPORATION, the several banks and other
financial institutions from time to time parties thereto and
CANADIAN IMPERIAL BANK OF COMMERCE, acting through its New
York Agency, as agent for the Banks thereunder
Exhibit 4.3 - FIFTH AMENDMENT TO AMENDED AND RESTATED
RECEIVABLES SALE AGREEMENT, among York International
Corporation, Asset Securitization Cooperative Corporation and
Canadian Imperial Bank of Commerce
Exhibit 10.1 - Amendment No. 3 to the York International
Corporation Amended and Restated 1992 Omnibus Stock Plan,
effective July 27, 2000
Exhibit 10.2 - Settlement Agreement and General Release by and
between John R. Tucker and York International Corporation,
dated August 7, 2000
Exhibit 10.3 - Fourth Amendment to the York International
Corporation Executive Deferred Compensation Plan, effective as
of October 1, 2000
Exhibit 27 Financial Data Schedule (EDGAR only)
(b) None
19
<PAGE> 20
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 November 8, 2000 /S/ C. David Myers
---------------- ---------------------------------
C. David Myers
Corporate Vice President and
Chief Financial Officer
20
