<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999
COMMISSION FILE NUMBER: 1-10863
YORK INTERNATIONAL CORPORATION
(EXACT NAME OF THE 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)
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
------------------- ---------------------
COMMON STOCK, $.005 PAR VALUE PER SHARE NEW YORK STOCK EXCHANGE
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: NONE
Indicate by check mark whether 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, and (2) has been subject to such filing requirements
for the past 90 days.
YES X NO
----- -----
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
As of March 27, 2000, there were 38,063,802 shares of the registrant's Common
Stock outstanding, and the aggregate market value of the Common Stock held by
non-affiliates was $792,245,220 based on the closing price of the Common Stock
on the New York Stock Exchange Composite Transactions of such date. (Only
officers and directors of the registrant are assumed to be affiliates for
purposes of this calculation.)
DOCUMENTS INCORPORATED BY REFERENCE
The Registrant's Annual Financial Statements and Review of Operations to
Stockholders for the year ended December 31, 1999 is incorporated herein by
reference into Parts II and IV.
Exhibit Index is located on pages 35 to 37.
<PAGE>
YORK INTERNATIONAL CORPORATION
FORM 10-K
YEAR ENDED DECEMBER 31, 1999
INDEX
PART 1
<TABLE>
<CAPTION>
Item
Number PAGE
------ ----
<S> <C> <C>
1. Business. 1
2. Properties. 14
3. Legal Proceedings. 14
4. Submission of Matters to a Vote of Security Holders. 15
PART II
5. Market for Registrant's Common Equity
and Related Stockholder Matters. 15
6. Selected Financial Data. 15
7. Management's Discussion and Analysis of Financial Condition
and Results of Operations. 15
7a. Quantitative and Qualitative Disclosure about Market Risk. 15
8. Financial Statements and Supplementary Data. 15
9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure. 16
PART III
10. Directors and Executive Officers of the Registrant. 16
11. Executive Compensation. 17
12. Security Ownership of Certain Beneficial Owners
and Management. 26
13. Certain Relationships and Related Transactions. 27
PART IV
14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K. 28
</TABLE>
<PAGE>
PART I
ITEM 1. BUSINESS.
General
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York International Corporation (the Company) is a full-line, global designer and
manufacturer of heating, ventilating, air conditioning and refrigeration
(HVAC&R) products. The Company believes it is the third largest manufacturer
and marketer of such products in the United States and one of the leading
companies in the HVAC&R industry internationally. The Company's air
conditioning systems range from a one ton unit for a small residence to the
59,000 ton system installed in the New York World Trade Center. In 1999, the
Company's products were sold in over 100 countries through over 850 sales and
distribution facilities and are in use in such diverse locations as the Kuala
Lumpur City Centre in Malaysia, the British Houses of Parliament, the Tokyo
World Trade Center, the Pentagon, NASA's Vehicle Assembly Building at Cape
Canaveral, NASA's Johnson Space Center, the Los Angeles International Airport,
the Jeddah Airport, the Overseas Union Bank Centre in Singapore, the Sydney
Opera House, the National Library Complex in Beijing, the Atlantic City
Convention Center, the English Channel Eurotunnel, the Hong Kong Exposition
Centre and the Lantau Airport Railway System in Hong Kong.
The Company was founded in 1874 in York, Pennsylvania. From 1956 until 1986 the
Company was a part of Borg-Warner Corporation ("Borg-Warner"). In 1986, it was
spun off to Borg-Warner shareholders and became an independent, publicly held
company. In 1988, the Company was purchased in a leveraged buyout by a
corporation organized by affiliates of Citicorp Investments Inc. ("CII") and two
investors. In October 1991, the Company completed an initial public offering of
its Common Stock, and in 1992, CII and the other non-management investors sold
their remaining shares in a public offering. In 1999, the Company expanded its
Refrigeration business by acquiring all of the outstanding capital stock of
Sabroe A/S, a Danish company. This acquisition establishes the York
Refrigeration Group as the world leader in supplying refrigeration systems and
products.
Headquartered in York, Pennsylvania, the Company has manufacturing facilities in
12 states and 14 foreign countries. As of December 31, 1999, the Company
employed approximately 25,000 people worldwide.
Unless the context otherwise requires, the terms "Company" and "York" refer to
the Company and its consolidated subsidiaries. The Company's principal executive
offices are located at 631 South Richland Avenue, York, Pennsylvania 17403, and
its telephone number is (717) 771-7890.
STRATEGY
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The Company's strategy is to focus on the global air conditioning and
refrigeration equipment markets, refrigeration contracting, and the worldwide
service, repair and replacement markets. The Company has grown, and expects to
continue to grow, through expansion of its current product lines, acquisition of
businesses, establishment of joint ventures and licensing of technology in the
HVAC&R industry.
The Company intends to continue its strategy of increasing its market share by
broadening its product range to offer a complete line of environmentally
acceptable and energy efficient products. The Company seeks to take advantage
of regulatory changes by developing products that comply with tightening
environmental and energy efficiency requirements and regulations before they
become effective. The Company has implemented its environmental strategy by
developing product lines that utilize its screw, centrifugal, reciprocating,
hermetic, scroll and inertia compressor technology employing HCFC-123, HCFC-22,
R-407C, R-410A, R-404A, R-507, R-717 (ammonia) and HFC-134a as a refrigerant.
The screw and centrifugal compressor utilize designs which separate the
refrigerant from the motor housing. See "Environmental Matters" below. The
Company has increased the overall efficiency of its product offerings by
employing internally developed advanced heat transfer and compressor
- ----------------------
. The cooling capacity of air conditioning units is measured in tons. One tone
of cooling capacity is equivalent to 12,000 BTUs and is generally adequate to
air condition approximately 500 square feet of residential space.
1
<PAGE>
technology and introducing large air conditioning systems that utilize advanced
thermal storage and absorption technologies.
The Company is also seeking to expand into new markets. The Company intends to
expand sales of its equipment throughout the international markets by broadening
its product line, expanding its distribution capabilities and pursuing
acquisitions.
The Company also focuses on controlling manufacturing and operating expenses and
thus improving its operating margins by redesigning products, acquiring more
efficient manufacturing equipment and processes and reducing costs not directly
associated with the manufacturing process. In addition, the Company has a
continuous planning process to enable it to carefully monitor the amount of
capital used in its business and to reposition its business units in light of
changing conditions throughout the year. The Company believes that its
management stock ownership plans and management incentive compensation plans,
which reward the management team of each operating unit for achieving the
planned objectives of that unit, will be key elements in implementing its
strategies and contributing to meeting financial objectives.
PRODUCTS AND MARKETS
- --------------------
All of the Company's products are in the heating, ventilating, air conditioning
and refrigeration (HVAC&R) industry, and the Company operates solely in this
industry. Within HVAC&R, the Company's products fall into three general
categories. The first is Unitary products, consisting of air conditioning and
furnace units and hermetic and scroll compressors designed for use in
residential and light commercial applications. The second is Engineered Systems
products, consisting of heating, air conditioning and thermal storage equipment
designed for commercial applications in retail stores, office buildings,
shopping malls, manufacturing facilities, hospitals, universities, airports and
marine vessels. The third is Refrigeration products, including commercial and
industrial refrigeration applications designed for the food, beverage, chemical
and petrochemical processing industries as well as marine applications. The
Company's engineered systems products and refrigeration and gas compression
equipment are designed specifically for the customer's needs and applications.
The following table sets forth net sales by product and geographic market:
<TABLE>
<CAPTION>
(in thousands)
1999 1998 1997
----------- ----------- -----------
<S> <C> <C> <C>
Unitary Products Group:
Bristol Compressors $ 579,686 $ 529,809 $ 504,024
Residential and light commercial products 1,098,514 1,055,627 964,648
Intragroup compressor sales (108,721) (103,676) (76,294)
---------- ---------- ----------
1,569,479 1,481,760 1,392,378
Engineered Systems Group 1,460,736 1,408,091 1,396,436
Refrigeration Products Group 883,609 447,499 447,093
Eliminations (47,209) (48,149) (42,250)
---------- ---------- ----------
Total net sales $3,866,615 $3,289,201 $3,193,657
========== ========== ==========
U.S. 52% 58% 58%
International 48% 42% 42%
---------- ---------- ----------
100% 100% 100%
========== ========== ==========
</TABLE>
Additional financial information about the Company's operating segments and
foreign and domestic operations and export sales is incorporated herein by
reference to Note 17 on pages a27 to a30 of the Annual Financial Statements and
Review of Operations. In June 1997, The Financial Accounting Standards Board
(FASB) issued Statement of Financial Accounting Standards No. 131, "Disclosure
about Segments of an Enterprise and Related Information." This statement
requires the Company to report certain financial and other information about its
business segments, products and services, the geographic areas in which it
operates and its major customers. The objective of this statement is to help
users of financial statements better understand the enterprise's performance,
better assess it prospects for future net cash flows and make more informed
judgements about the enterprise as a whole.
Unitary Products Group. The Company's Unitary Products Group consists of heating
- ----------------------
and air conditioning solutions for buildings ranging from private homes and
apartments to small commercial buildings. Unitary products include ducted
central air conditioning and heating systems (air conditioners, heat pumps and
furnaces), ductless
2
<PAGE>
mini-splits, and light commercial heating and cooling equipment. Bristol
Compressors manufactures reciprocating and scroll compressors for original
equipment manufacturers and for sale by wholesale distributors.
Unitary products consist of split systems and packaged products. A split system
consists of an outdoor unit containing a compressor and condenser, a connected
indoor unit containing a heat exchanger, an electric, gas or oil heating
section, an indoor blower system and associated controls. A packaged product is
a single, self-contained unit with compressor, condenser, heat exchanger,
electric, gas or oil heating section, blower and associated controls. These
units are typically installed on rooftops or beside a structure. Ducted
products distribute conditioned air throughout building structures with ductwork
connected to the system's blower, whereas ductless installations provide
conditioned air directly from indoor blowers without the use of ductwork.
A compressor is an integral part of an air conditioning system. The Company's
unitary products use compressors manufactured by the Unitary Products Group's
Bristol Compressors operation (Bristol) as well as those purchased from other
vendors. Approximately 80% of Bristol revenues are attributable to sales of
products to other air conditioning equipment manufacturers or wholesale
distributors.
The Company markets its Unitary products under the "YORK", "LUXAIRE", "FRASER-
JOHNSTON", "COLEMAN", "GUARDIAN", "AIRPRO", "BRISTOL" and "SEVESO" brands. A
licensing agreement with the Sunbeam Corporation, signed in 1999, gives York the
exclusive right to distribute residential HVAC products in North America under
the well-known "Coleman" brand. "YORK" is the Company's full line brand, which
is sold through Company-owned distribution centers and exclusive independent
distributors throughout the world. The "YORK" brand is sold with a high level
of customer service and sales support. The Company's 1995 acquisition of Evcon
Holdings expanded UPG's capabilities and distribution network in the domestic
unitary market. The Company's other brands are sold through more than 200 non-
exclusive distributors primarily for resale to contractors. The Company also
sells unitary products directly to the manufactured housing industry in North
America on an OEM basis. Internationally, the Unitary Product Group products
are sold in conjunction with other York business groups. See discussion of Non-
U.S. Distribution on page 6.
In 1998, the Company purchased the remaining 15% of its joint venture,
Aeromaster, and formed the 100% owned company York Industrial (Thailand) Co.,
Ltd. York Industrial (Thailand) Co., Ltd. is a mini-split manufacturer in
Bangkok, Thailand. The mini-split market represents a significant portion of
the unitary business in the Asia Pacific Region, and York Industrial Thailand
enables York to compete in this market with a product manufactured within the
Region. York Industrial Thailand supplies mini-split product to York offices
located around the world.
Sales of Unitary products include both new installations and replacement
systems. The Company estimates that more than half of its Unitary products
revenues in North America are attributable to the replacement market. The
replacement market is not affected by levels of new home construction and
therefore tends to be less cyclical. The replacement market is significantly
affected by ambient temperature. Hot weather in the spring season causes
existing older units to fail earlier in the season, leading customers to
accelerate replacement of a unit which might otherwise be deferred in the case
of a late season failure.
New residential products cover a wide range of efficiencies and may be able to
qualify for rebates offered by local utility companies for high efficiency
equipment. Bristol markets an INERTIA reciprocating compressor that directly
competes against other technologies in meeting high efficiency requirements.
Bristol has also developed a new compressor design known as TSTM Technology.
These new compressors provide higher system efficiencies, greater reliability,
and increased comfort. Scroll Technologies, a joint venture to design and
manufacture scroll compressors, continues to upgrade the scroll compressor
technology and performance.
Unitary and light commercial products are manufactured principally in plants
located in Elyria, Ohio; Norman, Oklahoma; Wichita, Kansas; Barlassina, Italy;
Montivideo, Uruguay; Asquith, Australia; Monterrey, Mexico; Bangkok, Thailand;
Johannesburg, South Africa; and Guangzhou, China. The Company's manufacturing
process relies on the purchase of certain components (including hermetic
compressors, copper tube, fan motors, fan blades, and control elements) from
outside suppliers, and in-house fabrication of sheet metal cabinets and
refrigerant coils. The various unitary products are then assembled and tested
before shipment. Bristol compressors are manufactured at the Company's
factories in Bristol, Virginia and Sparta, North Carolina, and by Scroll
Technologies in Arkadelphia, Arkansas. As with other Company products, Bristol
compressors are assembled using purchased parts (including motors, castings,
forgings and electronic components) as well as parts manufactured by the
Company.
3
<PAGE>
All of the markets in which the Company's Unitary Products Group does business
are very competitive. Unitary product manufacturers compete on the basis of
price, reliability, delivery, efficiency and maximum market coverage. Price
competition and maximum market coverage are of particular importance in the
residential product lines as there is often relatively little perceived
differentiation. In the domestic market, the Company competes with three large
worldwide manufacturers, Carrier - a United Technologies Corporation company
(Carrier), Trane Company division of American Standard Companies Inc. (Trane)
and Lennox and numerous national manufacturers such as Goodman, Rheem and
Nordyne. In the international market, the Company competes primarily with
Carrier, Trane, Lennox and several Asian manufacturers, including Hitachi, LG,
Matsushita, Mitsubishi Electric, Samsung and Toshiba. In the compressors market,
the Company competes directly with two United States manufacturers, Copeland
Corporation, a subsidiary of Emerson Electric Inc., and Tecumseh, a division of
Tecumseh Corporation.
ENGINEERED SYSTEMS GROUP. The Company's Engineered Systems Group consists of
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heating and air conditioning solutions for buildings ranging from small office
buildings and fast food restaurants to large commercial and industrial
complexes. Engineered Systems air conditioning products include air-cooled and
water-cooled chillers, central air handling units, variable air volume units,
underfloor air distribution systems, control equipment to monitor and control
entire systems, maintenance and service. Engineered Systems Group manufactures
and provides design solutions for systems used in hospitals, office towers,
hotels, airports, shopping centers, schools, institutions and industrial
complexes. The Engineered Systems Group also supplies specially designed
chilled water systems for use on U.S., British, French and other naval and
commercial marine vessels and is currently the major supplier of water chillers
to the U.S. Navy for both surface vessels and submarines. The Group is also the
world leader in the design, manufacturing and selling of snow making equipment.
The Company markets its Engineered Systems products and services under the
"YORK", "MILLER-PICKING", "TEMPMASTER" and "PACE" brands. In the United States
and Canada, distribution of Engineered Systems products and services are
coordinated by six regional offices and approximately 60 district offices.
These district offices market products directly to end users and contractors.
The Company has approximately 130 direct sales representatives and 120
independent sales agents in the North American market. Internationally, the
Engineered Systems products and services are sold and distributed in conjunction
with other York business groups. See discussion of Non-U.S. Distribution on
page 6.
The Engineered Systems Group has a full line of chiller products utilizing the
latest technologies and refrigerants and providing high efficiency, low energy
consumption, low noise and environmentally friendly product solutions. The
Group has a line of standard indoor air handling equipment incorporating the
technologies for indoor air quality and a line of customized indoor and outdoor
air handling products. The custom units are sold under the names PACE and
Miller-Picking. York manufactures the broadest line of chiller and air handling
equipment of any manufacturer in the industry.
The Group derives substantial revenue through service and repair work, by
selling replacement equipment and parts, and by providing routine maintenance
for products manufactured by the Group and its competitors through annual
service contracts. The Company has a global and national account sales program
to service customers with multiple locations throughout the world.
The Engineered Systems Group believes its reputation for service and repair is
excellent. The Company employs more than 3,500 service technicians in offices
throughout the world. The Engineered Systems Group believes that its emphasis
on growth and improved productivity on service and repair, combined with the
growth and aging of the installed base of air conditioning and refrigeration
equipment, will be key factors in increasing the Company's revenues derived from
the service, repair and replacement market.
The Company's Engineered Systems products are principally manufactured in York,
Pennsylvania; Albany, Missouri; Hattiesburg, Mississippi; Portland, Oregon; San
Antonio, Texas; Roanoke, Virginia; Basildon, England; Barlassina, Italy;
Asquith, Australia; Montevideo, Uruguay; Wuxi, China; Guanghzou, China; Durango,
Mexico; and Monterrey, Mexico.
All of the markets in which the Company's Engineered Systems Group does business
are very competitive. Engineered Systems product manufacturers compete on the
basis of product design, reliability, quality, price, efficiency, acoustics and
post-installment service. Architects and engineers play an important part in
determining which manufacturer's products will be used in an application. In the
domestic market, the Company competes primarily with two large worldwide
manufacturers, Carrier and Trane. In the international market, the Company
4
<PAGE>
competes primarily with Carrier, Trane and several Japanese manufacturers,
including Matsushita, Hitachi, Mitsubishi Electric and Toshiba.
Many of the components of the Company's engineered products, such as motors,
control elements and castings, are purchased from outside suppliers. The other
components are custom manufactured by the Company. Using these components and
custom-designed specifications, the engineered products are machined, assembled,
tested, shipped and installed. Following installation, the Company assists in
the start-up of the system, and supplies ongoing maintenance, service and
replacement parts.
YORK REFRIGERATION GROUP. The Company's York Refrigeration Group develops,
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manufactures and distributes products and systems for the marine, industrial and
commercial refrigeration market. YORK Refrigeration produces screw and
reciprocating compressors, condensers, evaporators, heat exchangers, industrial
and marine chillers, plate freezers, ice makers, process refrigeration systems,
air handling and ventilating equipment, gas compression systems, automated plant
control systems and advanced control systems for refrigerated containers.
Screw and reciprocating compressors enable the Company to produce highly
reliable, refrigeration systems required for commercial and industrial
applications in the food, beverage, chemical and petroleum industries as well as
marine applications. The Company's refrigeration and gas compression equipment
is engineered and manufactured to customer specifications. YORK Refrigeration
selects screw and reciprocating compressors together with other components to
offer customers the optimal solution and value for their specific application
considering cost, energy efficiency, reliability, space and environmental
requirements.
Refrigeration systems are essential in the textile, electronics, pharmaceutical
and petrochemical industries. Food, beverage, marine and process cooling
operations use refrigeration systems both in chilling and product freezing and
maintaining these products in warehouses, distribution centers and retail
outlets. York Refrigeration systems are also in use in sporting venues.
The Company markets its refrigeration and gas compression equipment under the
"YORK", "SABROE", "FRICK", "NOVENCO", "RETECH", "FRIGID COIL", "IMECO",
"ACUAire", "GRAM REFRIGERATION", "SAMIFI" and "YORK BONUS" brands. The products
are sold by the Company's sales engineers located in 14 offices and a national
network of more than 50 independent agents in the United States as well as
company owned sales offices, independent distributors, and agents and one
licensee elsewhere in the world. In addition, the Company believes that
developing countries offer opportunities for increasing sales of refrigeration
equipment. See non-U.S. distribution below for additional discussion on non-
U.S. markets.
Refrigeration equipment is manufactured at Company-owned facilities in Dixon,
Illinois; Polo, Illinois; Waynesboro, Pennsylvania; San Antonio, Texas; Sao
Paulo, Brazil; Carquefou, France; Aarhus, Naestved, and Hornslet, Denmark; Pune,
India; Milan, Italy; and at a leased facility in Santa Fe Springs, California.
All of the markets in which YORK Refrigeration does business are very
competitive. Refrigeration manufacturers compete on the basis of product design,
reliability, quality and price. In the market for refrigeration equipment, the
Company competes primarily with FES, GEA-Grasso, Evapco, Krack Corp., and Mycom.
5
<PAGE>
RAW MATERIALS AND PURCHASED COMPONENTS
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The Company purchases compressors, steel, copper, aluminum, electric motors,
castings, forgings, stampings, fabricated copper tubes, electronic starters and
controls, aluminum fin, fan blades, capacitors, transformers, refrigerant gases,
valves, fittings and other components from many outside suppliers. Alternate
sources of supply are available for all raw materials and components for which
the Company uses a single supplier. The Company believes that it has adequate
sources of supplies of raw materials and component parts for its manufacturing
requirements. In order to hedge against certain raw material price increases,
the Company may enter into forward contracts for the purchase of certain raw
materials, principally copper and aluminum.
PATENTS AND TRADEMARKS
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The Company holds numerous patents that relate to the design and use of its
products that it considers important, but not essential, to the overall conduct
of its business. It is the Company's policy to obtain patent protection for as
many of its new and developmental products as possible, and to enforce such
patent rights as appropriate. No patents which the Company considers material
will expire within the next five years.
The Company owns several trademarks that it considers important in the marketing
of its products as discussed in each of the business segment sections. The
Company believes that its rights in these trademarks are adequately protected
and of unlimited duration.
NON-U.S. DISTRIBUTION
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Outside of the United States, the Company markets the majority of its products
and services, for all business groups, through many of the same sales and
service offices. The Company's worldwide business groups are segregated
internally into North America and the four geographic regions discussed below.
The Company's European region, headquartered in Basildon England, markets its
products and services through offices located in Austria, Belgium, Bulgaria, the
Czech Republic, Denmark, England, Finland, France, Germany, Greece, Hungary,
Italy, Ireland, Latvia, the Netherlands, Norway, Poland, Romania, Russia, other
former Commonwealth of Independent States countries, Scotland, Slovakia, Spain,
Sweden, Switzerland and the Ukraine. The Company also considers markets in
parts of Africa and South Africa as part of the European region. Products are
also marketed through joint ventures as listed on pages 7 and 8.
The Company's Asian region, headquartered in Hong Kong (China), markets its
products and services through offices located in Australia, China, Hong Kong,
Indonesia, Japan, Korea, New Zealand, Philippines, Singapore, and Thailand.
Products are also marketed through joint ventures, as listed on pages 7 and 8,
and various independent distributors located throughout the region.
The Company's Latin American region, headquartered in Miami, Florida, markets
its products and services through offices located in Argentina, Brazil, Chile,
Colombia, Ecuador, Mexico, Miami (USA), Peru, Puerto Rico, Uruguay and
Venezuela. Products are also marketed through sales representatives and
independent distributors located throughout Latin America and joint ventures as
listed on pages 7 and 8.
The Company's Middle East region, headquartered in Dubai (U.A.E.), markets its
products and services throughout the Middle East, India and parts of Eastern
Africa through offices located in Abu Dhabi, Cairo, Dubai, Egypt, Indonesia,
Istanbul, Karachi, Kuwait, Mumbai and New Delhi. Products are also marketed
through numerous distributors in the region and joint ventures as listed on
pages 7 and 8.
6
<PAGE>
JOINT VENTURES IN U.S. AND NON-U.S. MARKETS
- -------------------------------------------
In addition to its wholly-owned production and distribution facilities, the
Company produces, distributes and services products through its participation in
several joint ventures, which are described in the following table:
<TABLE>
<CAPTION>
Joint Venture
(Percent Owned by Principal
Principal Location Joint Venture Partner the Company) Products/Services Markets Served
- -------------------- ------------------------ ---------------------------- ------------------------- --------------
<S> <C> <C> <C> <C>
Malaysia OYL Industries OYL-Condair Industries Manufacture Unitary Asia Pacific
BHD. SDN.BHD. (49%) and Engineered System Middle East
products
Malaysia OYL Industries York (Malaysia) Service Sales and service of air Malaysia
BHD. SDN.BHD. (30%) conditioning equipment
Peoples Republic Guangzhou Sinro Air York Guangzhou Air Manufacture Unitary and China
of China Conditioning Mechanical Conditioning and Engineered Systems
and Electrical Equipment Refrigeration Co. Ltd. products
Company Ltd. (97%)
Peoples Republic Wuxi Boiler Group York-Wuxi Air Conditioning Manufacture Engineered China
of China and Refrigeration Co. Ltd. Systems products
(80%)
Republic of China Taipei Engineering York-Taiwan, Inc. (60%) Sales and service of air Taiwan
(Taiwan) Development conditioning equipment
Cyprus Sabinco Ltd. KROY Ltd. (50%) Sales of air conditioning Middle East
equipment and parts
Saudi Arabia Al Salem United Al Salem-York Services Service and repair of Saudi Arabia
Contracting Co. Ltd. (49%) air conditioning
equipment
Spain Compania Roca Clima Roca-York S.L. (50%) Manufacture Unitary Spain
Radiadores S.A. products
Brazil Mayside Participacues York International Sales of air conditioning Brazil
Administracao e Comercial Ltda. (80%) equipment
Comercio Ltda
U.S. Carrier Corporation Scroll Technologies (50%) Manufacture scroll U.S.
compressors
Finland OY Huurre Group AB Sabroe Finland Oy (50%) Sales and service of Finland
refrigeration products
Hungary Individual Hungary Rotor Kalteanlagen GmbH Sales and service of Hungary
shareholder (50%) refrigeration products
Russia Tehol CJSC Sabroe Russ Closed Joint Sales and service of Russia
Arsenal Stock Company (43%) refrigeration products
IO Fund
Denmark Three Danish Jernstaberiet Dania A/S Castings Europe
pension funds (40%)
Japan (Flakt) Nissin Refrigeration & Stal Nissin Corp. (50%) Sales and service of Japan
Engineering Ltd. refrigeration products
Japan (Novenco) Individual Japan Novenco Nippon Ltd (50%) Sales and service of Japan
shareholder air handling equipment
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
Joint Venture
(Percent Owned by Principal
Principal Location Joint Venture Partner the Company) Products/Services Markets Served
- -------------------- ------------------------ -------------------------- ------------------------- --------------
<S> <C> <C> <C> <C>
Korea Individual Korea Hi-Pres Korea Co. Ltd (20%) Sales and service of Korea
shareholder air handling equipment
Malaysia Kumpulan Nametech Airvenco Sdn. Bhd. (20%) Sales and service of Malaysia
Sdn. Bhd. air handling equipment
Morocco IFU A/S, Denmark Tabrid Sabroe Maghreb S.A. Sales and service of North Africa
Individual Morocco (20%) refrigeration products
shareholder
USA (Sabroe Inc) Individual US Sabroe Refrigeration Inc Sales and service of North America
shareholder (50%) refrigeration products
Colombia Paramo Industria de Sabroe de Colombia Ltda Sales and service of Latin America
Refrigeracion Ltda. (60%) refrigeration products
Industria de Engenieria
e Refrigeracion S.A.
Uruguay Madef S.A. Idako S.A. (75%) Sales and service of Latin America
refrigeration products
</TABLE>
Dividends received by the Company from affiliates were $1.0 million in 1999,
$0.5 million in 1998 and $1.2 million in 1997. Total Company investments in
affiliates were $25.4 million, $20.1 million and $17.7 million at December 31,
1999, 1998 and 1997, respectively. Total sales by the Company to affiliates are
less than 1% of the Company's total revenues.
MAJOR CUSTOMERS
- ---------------
During 1999, no customer, distributor, dealer or licensee accounted for more
than 10% of the Company's revenues. The loss of a few customers, distributors,
dealers or licensees would not have a materially adverse effect on the Company's
business.
BACKLOG
- -------
The following table sets forth backlog by business segment:
<TABLE>
<CAPTION>
(in thousands)
1999 1998
---------- ---------
<S> <C> <C>
Unitary Products Group:
Bristol Compressors $ 93,524 $122,552
Residential and light commercial products 95,525 112,194
---------- --------
189,049 234,746
Engineered Systems Group 465,424 504,616
Refrigeration Products Group 410,623 140,111
---------- --------
Total backlog $1,065,096 $879,473
========== ========
</TABLE>
Substantially all orders are expected to be fulfilled within the next 12 months.
8
<PAGE>
GOVERNMENT CONTRACTS
- --------------------
In 1999, approximately 1% of the Company's sales were related to ongoing United
States Government projects. The Company expects that substantially all work
will be completed during fiscal year 2000 in connection with all of these
contracts. The Company's existing contracts with the United States Government
may be terminated at any time at the option of the Government and are subject to
continued availability of government appropriations. If these contracts were
terminated, the Company would only be entitled to reimbursement of costs
incurred and to payment of a reasonable allowance for profit on work actually
performed.
RESEARCH AND DEVELOPMENT
- ------------------------
The Company's product development activities include ongoing research and
development programs to redesign existing products to reduce manufacturing costs
and to increase product efficiencies, developing electronic controls for current
product offerings and creating a wide range of new products. During the years
1997, 1998 and 1999, the Company spent $30.6 million, $31.2 million, and $41.0
million, respectively, for all product development activities.
The Unitary Products Group continues to redesign its product line for lower
sound ratings, greater efficiency, reliability and manufacturing cost
effectiveness. The new Predator commercial rooftop line leads the industry in
efficiency and feature set valve. The Stealth series residential air
conditioner, utilizing Twin Single (TS) compressor technology is an industry
first. An entirely new gas furnace, designed specifically for the Manufactured
Housing market will make the Coleman brand of MH furnaces an industry leader.
Bristol has developed a new breakthrough compressor design, TS Technology,
providing higher system efficiencies, greater reliability, and increased
comfort. Scroll compressor technology and capability are continuing to expand
through the joint venture Scroll Technology.
The Engineered System Group's most notable product developments in 1999 were the
launch of new air-cooled packaged chiller offerings from 10 to 400 tons
replacing older regional product lines with cost-effective, low noise, energy
efficient, modular, global product platforms using HFC refrigerants and
innovative heat exchanger technology. The centrifugal and screw chiller product
expansion continues with new environmentally acceptable replacements for CFC's.
The product line now extends from 150 to 6,000 tons for these refrigerants. The
Group launched a new factory mounted "OptiView" graphic display control package
that provides state-of-the-art touch pad and visual control of the entire
chiller operation. The Group has also expanded its new line of variable speed
drives for centrifugal chillers to 1,400 tons. This product is compact enough
to mount directly on the chiller and is applicable to the retrofitting of any
centrifugal chiller on the market. The Group introduced a new line of
underfloor air distribution units to provide a solution for low-rise office
buildings which offers major benefits on ceiling height and construction costs.
The new products include the latest technologies to insure indoor air quality.
The combination of air handling product development and current product lines
give the Company the broadest line of air handling products of any single
manufacturer in the industry.
The York Refrigeration Group launched a comprehensive range of new products in
1999 including a large capacity screw compressor package, a second generation of
mid-range screw compressor packages, a standard range of variable speed drive
screw compressor packages, a small semihermetic screw compressor package, new
ice rink chillers and new PC and PLC based plant control systems. York
Refrigeration is currently developing a series of new screw compressors for the
food and beverage markets, a series of low pressure screw compressors for the
gas compression industry and a new range of chillers for industrial
applications. York Refrigeration research and development is focused on the
core competencies within compression and controls technology, thermodynamics and
manufacturing technology as well as application development. These technologies
are the basis for optimization, cost reductions and price performance as well as
developing new and enhanced product introductions.
9
<PAGE>
EMPLOYEES
- ---------
As of December 31, 1999, the Company employed approximately 25,000 persons
worldwide. Approximately 12,500 persons are employed in the United States and
12,500 persons are employed in foreign countries. Approximately 4,275 domestic
employees are covered by collective bargaining agreements which expire between
June 2000 and January 2004. The Company considers its relations with its
employees to be satisfactory.
ENVIRONMENTAL MATTERS
- ---------------------
Environmental laws that affect or could affect the Company's domestic operations
include, among others, the Clean Air Act, the Clean Water Act, the Resource
Conservation and Recovery Act, the Occupational Safety and Health Act, the
National Environmental Policy Act, the Toxic Substances Control Act, any
regulations promulgated under these acts, and various other Federal, state and
local laws and regulations governing environmental matters. The Company
believes it is in substantial compliance with such existing environmental laws
and regulations.
The Company's non-U.S. operations are also subject to various environmental
statutes and regulations. Generally, these requirements tend to be no more
restrictive than those in effect in the United States. The Company believes it
is in substantial compliance with such existing environmental statutes and
regulations. In 1993, the Council of European Communities agreed on EC
regulation number 1836/93 which recommended that each company voluntarily
complete an ECO-Audit. The Company has completed these audits at several of its
European facilities.
In September 1987, the United States became a signatory to an international
agreement titled the Montreal Protocol on Substances that Deplete the Ozone
Layer (the "Montreal Protocol"). The Montreal Protocol requires its signatories
to reduce production and consumption of CFCs and Halons, some of which are
utilized in air conditioning and refrigeration equipment. In 1988, the EPA
issued regulations under the Clean Air Act implementing the Montreal Protocol in
the United States. Many other countries have also become signatories to the
Montreal Protocol. The manner in which these countries implement the Montreal
Protocol and regulate CFCs could differ from the approach taken in the United
States.
The 1990 Clean Air Act amendments implement the Montreal Protocol by
establishing a program for limiting the production, importation and use of
certain ozone depleting chemicals (including those governed by the Montreal
Protocol) some of which are refrigerants currently used by the Company. Under
the Act, the production and consumption of the refrigerants designated as "Class
I substances" including all CFCs must be phased out beginning in 1991 and are to
be banned completely by 2000. Certain other refrigerants, including all HCFCs,
are designated as "Class II substances", and must be phased out between 2015 and
2030.
The Clean Air Act allows the EPA to accelerate the statutory phase-out schedule
for any Class I or Class II substance. In November 1992, the parties to the
Montreal Protocol agreed to amend the Protocol to require the complete phase-out
of CFC production by the beginning of 1996. Further, the parties agreed to a
1996 production cap on HCFCs and a complete phase-out of HCFC production by
2030. The EPA published a final rule requiring accelerated phase-out of the
production of all CFCs by 1996 and of all HCFCs by 2030.
None of the Company's manufactured products contains Class I substances. Class
I substances previously used by the Company have been substituted for by Class
II substances or substances that are currently unregulated. The Company does,
however, believe that revenues from servicing and repairing existing equipment
that uses Class I substances are and will be significant. These activities are
regulated by the EPA which imposes guidelines affecting service and maintenance
of equipment that use Class I and Class II substances. The Company trains and
licenses its service technicians in service and maintenance procedures that
comply with the new regulations. Therefore, the Company believes that the new
regulations will not have a material adverse effect on its operations. The
phase-out of Class I substances will require modifications to existing air
conditioning equipment as availability of recycled Class I substances decreases.
Since the Company's technology enables it to modify existing equipment for use
with Class II substances, it believes that this will continue to generate
additional service revenues. While the Company expects to derive substantial
revenue from the sale of products utilizing Class II substances, it is not
expected that any phase-out will have a significant impact on the sales of such
products until after the turn of the century. Nonetheless, as the supply of
virgin and recycled Class II substances falls, it will be necessary to address
the need to substitute permitted substances for Class II substances.
The Company, in conjunction with major chemical manufacturers, is continually in
the process of reviewing and addressing the impact of refrigerant regulations on
its products. The Company believes that the combination of
10
<PAGE>
those products which presently utilize Class II substances and those products in
the field which can be retrofitted to such refrigerants provides a complete line
of commercial and industrial products. Therefore, the Company does not foresee
any material adverse impact on its business or competitive position as a result
of the Montreal Protocol, the 1990 Clean Air Act amendments or their
implementing regulations. However, the Company believes that the implementation
of severe restrictions on the production, importation or use of refrigerants
employed in larger quantities by the Company could have such an impact. The
Company believes that the Engineered Systems products that it has produced will
be well positioned to utilize the next generation of refrigerants without
substantial modification. If the next generation of refrigerants is incompatible
with the hermetic compressors used by the Company and all of its competitors for
Unitary products, design modifications would be required.
GOVERNMENTAL REGULATIONS
- ------------------------
The Company is subject to regulations promulgated under the National Appliance
Energy Conservation Act of 1987, as amended, and various state regulations
concerning the energy efficiency of its products. The Company has developed and
is developing products which will comply with these regulations, and does not
believe that such regulations will have a material adverse effect on its
business.
11
<PAGE>
EXECUTIVE OFFICERS
- ------------------
The executive officers of the Company are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Michael R. Young 55 President and Chief Executive Officer
Ole Andersen 59 Vice President and President of Refrigeration Products Group
James F. Damiani 55 Vice President and President of Unitary Products Group
Wayne J. Kennedy 57 Vice President and President of Bristol Compressors
Peter C. Spellar 55 Vice President and President of Engineered Systems Group
Dale L. Bennett 61 Vice President, Human Resources
Charles F. Cargile 35 Vice President, Finance and Corporate Development
Jane G. Davis 50 Vice President, Secretary and General Counsel
Helen S. Marsteller 39 Vice President, Investor Relations
C. David Myers 36 Vice President and Chief Financial Officer
James P. Corcoran 54 Treasurer
David R. Heck 45 Controller
</TABLE>
Mr. Young has been President and Chief Executive Officer since February 2000.
Prior thereto, he was Vice President of the Company and President, Central
Environmental Systems from 1999 to 2000, Vice President of the Company, and
Chief Executive Officer and President of Bristol Compressors from 1996 to 1999,
President, Chairman and Chief Executive Officer of Evcon Industries, Inc. from
1991 to 1995, President and Chief Operating Officer of York International Inc.
from 1988 to 1989, and Chairman, President and Chief Executive Officer of
Bristol Compressors from 1983 to 1987.
Mr. Andersen has been Vice President of the Company and President of
Refrigeration Products Group since July 1999 when the Company acquired Sabroe
Refrigeration A/S, Denmark. He was Chief Executive Officer of Sabroe
Refrigeration A/S from 1997 to 1999. Prior to joining Sabroe, he was a Member of
the Executive Board and President of the Process Technology Division of GEA AG,
Germany from 1993 to 1997. Prior thereto, he was President of Niro Group,
Denmark from 1977 to 1993 and President of Niro Inc., USA from 1973 to 1977.
Mr. Damiani has been Vice President of the Company and President of Unitary
Products Group since January 2000. Prior to joining the Company, he was
President of ClimateMaster, Inc. from January 1995 to 2000 and prior to that,
Mr. Damiani had a thirty year career with Lennox Industries resulting in his
final assignment as Senior Vice President of North American Operations.
Mr. Kennedy has been Vice President of the Company and President, Bristol
Compressors since March 2000. Prior thereto, he was Vice President, Human
Resources from 1993 to 2000. Prior to joining the Company, he was Vice
President of Human Resources for the Millipore Corporation from 1985 to 1993.
Mr. Spellar has been Vice President of the Company and President, Engineered
Systems Group since February 2000. Prior thereto, he was Vice President,
Marketing and Strategic Accounts from 1999 to 2000, Vice President of the
Company and President, Applied Systems Worldwide from 1995 to 1999, Vice
President of the Company and Vice President, European Operations from 1992 to
1995, President, Frick Division from 1987 to 1992 and President of the Frick
Company from 1979 to 1987.
12
<PAGE>
Mr. Bennett has been Vice President, Human Resources since March 2000. Prior
thereto, he was Vice President, Organization Development from 1999 to 2000 and
Director of Organization Development from 1997 to 1999. Prior to joining the
Company, he held several Human Resource leadership positions with Millipore
Corporation, Pfizer Inc., and E. J. Gallo Winery.
Mr. Cargile has been Vice President, Finance and Corporate Development since
February 2000. Prior thereto he was Vice President, Business Development and
Strategic Planning from 1999 to February 2000, and Controller from 1998 to 1999.
Prior to joining the company, Mr. Cargile was Controller of Flowserve
Corporation from 1997 to 1998. Prior thereto, he held various positions with
BW/IP, Inc. from 1992 to 1996, including Corporate Controller and Chief
Accounting Officer. From 1987 to 1992, Mr. Cargile was with Coopers and Lybrand
LLP.
Ms. Davis has been Vice President, Secretary and General Counsel of the Company
since March 1995. Prior to joining the Company, she was Vice President, General
Counsel and Secretary of Joy Technologies Inc. from 1988 to 1995.
Ms. Marsteller has been Vice President, Investor Relations since September 1997.
Prior thereto, she was Director of Investor Relations from 1992 to 1997. Prior
thereto, she held various financial positions in the Unitary Products Group from
1986 to 1992. Prior to joining the Company, she held leadership positions at
Honeywell, Inc. and Armco, Inc.
Mr. Myers has been Vice President and Chief Financial Officer of the Company
since February 2000. Prior thereto he was Vice President Finance, Engineered
Systems Group from 1998 to February 2000, Corporate Controller from 1995 to
1998, Director of Finance for the Airside Products Group from 1994 to 1995, and
Director of Financial Planning and Controls in 1994. Prior to joining the
Company, he was with KPMG LLP from 1986 to 1994.
Mr. Corcoran has been Treasurer of the Company since July 1992. Prior to
joining the Company, he was Treasurer of Griffith Laboratories from 1990 to
1992, Treasurer of AM International from 1987 to 1990 and Director, Treasury
Operations of Borg-Warner Corporation from 1977 to 1987.
Mr. Heck has been Controller since January 2000. Prior to joining the Company,
he was Director of Strategic Analysis and Corporate Controller of Superior
Group, Inc. from 1995 to 1999, Corporate Controller and Accounting Manager for
LFC Financial Corp. from 1983 to 1995, and Audit Manager with Deloitte, Haskins,
& Sells from 1976 to 1983.
13
<PAGE>
ITEM 2. PROPERTIES.
The Company's principal offices are located in York, Pennsylvania on an
approximately 71 acre site owned by the Company. The following table lists the
principal manufacturing facilities owned by the Company:
<TABLE>
<CAPTION>
APPROXIMATE
Location PRIMARY PRODUCTS ENCLOSED AREA (SQ. FT.)
- ---------------------------- --------------------------------------- -----------------------
<S> <C> <C>
York, PA Engineered products 1,500,000
Wichita, KS Unitary products 835,000
Bristol, VA Unitary products (hermetic compressors) 700,000
Elyria, OH Unitary products 636,000
Norman, OK Unitary products 539,000
Waynesboro, PA Refrigeration products and compressors 459,000
Naestved, Denmark Refrigeration air handling products 332,000
Aarhus, Denmark Refrigeration products and compressors 290,000
Basildon, England Engineered products 254,000
San Antonio, TX Refrigeration and Engineered products 242,000
Norrkoping, Sweden Refrigeration products and compressors 198,000
Sparta, NC Unitary products (hermetic compressors) 180,000
Sao Paulo, Brazil Refrigeration products and compressors 123,000
Bangkok, Thailand Unitary products 123,000
Guangzhou, China Engineered products 115,000
Wuxi, China Engineered products 102,000
Dixon, IL Refrigeration condensing products 97,000
Asquith, Australia Engineered products 96,000
Durango, Mexico Engineered products 95,000
Hornslet, Denmark Refrigeration products 93,000
Monterrey, Mexico Engineered products, Unitary products 92,000
Carquefou, France Refrigeration and Engineered products 92,000
Polo, IL Refrigeration air handling products 78,000
Hornslet, Denmark Castings for compressor production 73,000
Roanoke, VA Engineered products (screw compressors) 72,000
Montevideo, Uruguay Engineered products 53,000
Milan, Italy Plate freezers 34,000
Johannesburg, South Africa Unitary products 34,000
</TABLE>
At the York, Pennsylvania location, approximately 200,000 square feet of
facilities are leased to tenants and approximately 340,000 square feet are
currently used by the Company as storage and is available for expansion. The
Company also leases for its own use a 163,000 square foot facility in Albany,
Missouri, a 360,000 square foot manufacturing facility in Barlassina, Italy, a
30,000 square foot manufacturing facility in Mannheim, Germany, an 82,000 square
foot facility in Santa Fe Springs, California, an 84,000 square foot
manufacturing facility in Hattiesburg, Mississippi, a 200,000 square foot
facility in Salisbury, North Carolina, and a 200,000 square foot facility in
Portland, Oregon.
In addition to the properties described above, the Company leases facilities
worldwide for use as sales and service offices and regional warehouses. The
Company believes that its properties are in good condition and adequate for its
requirements. The Company believes that its principal plants are generally
adequate to meet its production plans pursuant to its long-term sales goals.
In the ordinary course of its business, the Company monitors the condition of
its facilities to ensure that they remain adequate to meet its long-term sales
goals and production plans. The Company makes capital expenditures intended to
upgrade existing facilities and equipment to increase production efficiency and,
when appropriate, to adapt them to the requirements of manufacturing new product
lines.
ITEM 3. LEGAL PROCEEDINGS.
The Registrant is engaged in certain litigation with John R. Tucker, a Director
and former President and Chief Executive Officer regarding amounts he is
claiming in connection with the termination of his employment. The Company
believes it has no obligation to Mr. Tucker.
14
<PAGE>
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There were no matters submitted to the Company's security holders during the
fourth quarter of 1999.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
The Company's common stock trades on the New York Stock Exchange under the
symbol "YRK". On March 27, 2000, the Company had 5,626 holders of record of its
common stock.
<TABLE>
<CAPTION>
TRADING AND DIVIDEND INFORMATION
- ----------------------------------
Dividends
High LOW DECLARED
--------- --------- ---------
<S> <C> <C> <C> <C> <C>
1999
- ----------------------------------
Fourth quarter $28 1/4 $ 21 $.15
Third quarter 47 1/2 35 1/4 .15
Second quarter 43 3/8 34 3/8 .15
First quarter 41 5/8 33 5/8 .15
1998
- ----------------------------------
Fourth quarter $43 9/16 $27 1/2 $.12
Third quarter 46 11/16 31 5/8 .12
Second quarter 52 3/4 40 3/4 .12
First quarter 46 1/2 34 3/8 .12
</TABLE>
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 and
limitations imposed by the Amended and Restated Credit Agreement, amended in
1999, and the Revolving Credit Agreement established in 1999.
ITEM 6. SELECTED FINANCIAL DATA.
Information contained under the caption "Five Year Summary of Selected Financial
Data" on page a5 of the Annual Financial Statements and Review of Operations is
incorporated herein by reference in response to this item.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
Information contained under the caption "Management's Discussion and Analysis of
Financial Condition and Results of Operations" on pages a6 to a12 of the Annual
Financial Statements and Review of Operations is incorporated herein by
reference in response to this item.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK.
Information contained under the caption "Management's Discussion and Analysis of
Financial Condition and Results of Operations, Market Risk," on pages a10 to a12
of the Annual Financial Statements and Review of Operations is incorporated
herein by reference in response to this item.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Financial statements for York International Corporation and Subsidiaries are
contained on a13 to a31 of the Annual Financial Statements and Review of
Operations and Summary of Quarterly Results (unaudited) are contained on page
a32 of the Annual Financial Statements and Review of Operations and are
incorporated herein by reference in response to this item.
15
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The directors of the Company are as follows:
<TABLE>
<CAPTION>
Name and Age Other Positions with the Company Director
or Principal Occupation Since
<S> <C> <C> <C>
Gerald C. McDonough (71).............. Chairman of the Board of Directors; 1988
Chairman of G.M. Management Group
Michael R. Young (55) .............. President and Chief Executive Officer 1999
Malcolm W. Gambill (69) .............. Retired Chairman of the Board and Chief 1993
Executive Officer of Harsco Corporation
Robert F. B. Logan (67) .............. Retired Chairman of the Board and Chief 1988
Executive Officer of Banc One Arizona
Corporation and Senior Executive of
Banc One Corporation's Western
Region
Donald M. Roberts (64) .............. Retired Vice Chairman and Treasurer of 1988
United States Trust Company of New York
and U.S. Trust Corporation
John R. Tucker (52) .............. Former President and Chief Executive Officer 1998
James A. Urry (46) .............. Vice President of Citicorp Venture 1992
Capital Ltd.
John E. Welsh, III (49) .............. Vice Chairman of Skytel 1990
Communications, Inc.
Walter B. Wriston (80) .............. Private Business Consultant 1992
</TABLE>
Mr. McDonough has been Chairman of G.M. Management Group (strategic advisory
services) since 1988. He was Chairman and Chief Executive Officer of Leaseway
Holdings, Inc. from 1987 to July 1988 and Chairman and Chief Executive Officer
of Leaseway Transportation Corp. from 1982 to 1987. Mr. McDonough is a Director
of Commercial Intertech Corporation, Associated Estates Realty Corporation, and
CUNO, Inc. and is a Trustee of The Fidelity Funds.
Mr. Young has been President and Chief Executive Officer of the Company since
February, 2000. From November, 1999 to February, 2000 he was President of the
Company's Central Environmental Systems Group. From 1996 to 1999 he was Chief
Executive Officer and President of the Company's Bristol Compressors subsidary.
He was President, Chairman and Chief Executive Officer of Evcon Industries, Inc.
from 1991 to 1995, President and Chief Operating Officer of the Company from
1988 to 1989 and Chairman, President and Chief Executive Officer of Bristol
Compressors, Inc. from 1983 to 1987.
Mr. Gambill was Chairman of the Board of Harsco Corporation from 1991 until he
retired in 1994. Mr. Gambill was Harsco's Chief Executive Officer from 1987 to
1993 and its President from 1987 to 1991.
16
<PAGE>
Mr. Logan was Chairman of the Board and Chief Executive Officer of Banc One
Arizona Corporation and Bank One Arizona, N.A. and Senior Executive of Banc One
Corporation's Western Region from April 1995 until his retirement on March 31,
1996. From April 1993 until April 1995, Mr. Logan was a private business
consultant. He was with Valley National Bank, as President and Chief Operating
Officer from January 1990 until April 1993 and as Senior Executive Vice
President from May 1989 to January 1990. Mr. Logan was President and Chief
Operating Officer of Alexander Hamilton Life Insurance Company of North America
from October 1988 to April 1989, an independent financial advisor from October
1986 to October 1988, and Group Chief Executive and Deputy Chairman of Samuel
Montagu & Co. (Holdings) Limited from March 1985 to July 1986. Mr. Logan is a
Director of Plantronics.
Mr. Roberts was Vice Chairman and Treasurer of the United States Trust Company
of New York and its parent, U.S. Trust Corporation, from February 1990 until his
retirement in September 1995. He was Executive Vice President and Treasurer of
both companies from January 1989 to February 1990 and Executive Vice President
of both companies from November 1979 to January 1989. Mr. Roberts is a Director
of Burlington Resources, Inc.
Mr. Tucker was President and Chief Executive Officer of the Company from October
1999 to February 2000 and President and Chief Operating Officer of the Company
from October 1997 to October 1999 and a Director since December 1997. Prior to
joining the Company, he was President of the Aerospace Equipment Systems Sector
of Allied Signal, Inc. from January 1996 to October 1997, President and Chief
Executive Officer of Motoren und Turbinen Union (Jet Engine Division) of
Daimler-Benz, A.G. from 1994 to 1996 and President of AEG Transportation Systems
from 1988 to 1994. Mr. Tucker held various positions with Westinghouse Electric
Corporation from 1968 to 1988.
Mr. Urry has been a Vice President of Citicorp Venture Capital Ltd. since 1989
and has been a Vice President of Citibank, N.A. since 1986. He is a Director of
Hancor Holdings, International Knife and Saw Corporation, Palomar Technologies,
Inc., Airxcel, Inc., and Intersil.
Mr. Welsh was Vice Chairman of Skytel Communications, Inc. from 1992 until his
retirement in December 1999 as part of the acquisition of Skytel by MCI
Worldcom. From 1990 to 1992, Mr. Welsh was a Managing Director of Prudential-
Bache Interfunding Inc. Prior thereto he was a Managing Director of Prudential
Bache Securities, Inc. from 1985 to 1990 and Co-Head of its Mergers and
Acquisitions Department from 1988 to 1990. Mr. Welsh is a Director of BICC
General Corp.
Mr. Wriston has been a private business consultant since he retired as the
Chairman and Chief Executive Officer of Citicorp in 1984. Mr. Wriston is a
Director of ICOS Corporation, Cygnus, Inc., and Vion Pharmaceuticals, Inc.
ITEM 11. EXECUTIVE COMPENSATION
RELATIONSHIP OF COMPENSATION TO PERFORMANCE
The Compensation Committee believes that the compensation of the Company's
officers should provide a strong incentive to achieve the Company's performance
objectives. The objectives, which are established by the Board of Directors
together with management, are intended to maximize corporate and divisional
performance and, ultimately, deliver strong value to the stockholders.
Consequently, in addition to salary, a significant portion of cash compensation
is in the form of an annual bonus, which is paid only if certain financial
objectives are met and which can be larger if such financial objectives are
exceeded. The more senior an officer, the more his or her total compensation
depends on the bonus payment. The Company's Incentive Compensation Plan also
contains a Mid-Term Program that provides for the grant of Performance Units to
be earned over a longer measurement period. In addition, the Compensation
Committee grants stock options and may grant restricted stock, designed to
provide long-term incentives to key employees and tie their interests directly
to those of the Company's stockholders.
SALARIES
The Compensation Committee sets the base salary of the Chief Executive Officer
and of each of the other officers based on a number of factors, including level
of responsibility, tenure with the Company, financial performance of the
Company, prior individual performance, and comparable salaries for officers at
other large industrial corporations. The Committee believes that base salary
levels should be competitive with the base salaries (excluding bonuses) of
companies in comparable industries and that the opportunity to increase
compensation above base salaries should be directly related to the achievement
of objective financial performance targets. The
17
<PAGE>
companies considered by the Committee include a larger number and broader range
of companies than are included in the S & P Electrical Equipment Index, shown in
the Stock Performance Graph below, reflecting the Committee's view that the
employment market for the Company's officers includes a broader range of
companies than those with which the Company should be compared for financial
performance purposes. A prominent executive compensation consulting firm assists
in determining market practice for all forms of executive compensation.
PERFORMANCE-BASED BONUSES
Annual Cash Program - The Company pays annual cash bonuses under the Annual Cash
Program of its Incentive Compensation Plan. Each year, the Company establishes
financial objectives for its various business units for the succeeding year,
which are, in turn, used to establish overall targets for the financial
performance of the Company. For 1999, the financial objectives selected were
earnings before interest and taxes ("EBIT"), with a capital charge for net
capital employed and goodwill, for the operating divisions and earnings per
share ("EPS") for the Company. The financial objectives are presented to the
Compensation Committee, which approves threshold, expected and overachievement
targets based on these objectives. Each of the Company's management employees,
including its executive officers, is eligible each year to earn a performance
bonus equal to a percentage of base salary. The applicable percentage depends
on the employee's level of responsibility and on the extent to which targets are
achieved (i. e., the more senior the employee and the greater the level of
performance of the area for which he or she is responsible, the higher the
applicable percentage used to calculate his or her bonus).
Bonuses for each individual are primarily based on the performance of that
individual's business unit. In the case of those individuals with
responsibility at the corporate level, such as the Chief Executive Officer and
other corporate officers, bonuses are based on overall Company performance. A
portion of the bonus of high level individuals in the business units is also
based on overall Company performance. Bonus awards to the executive officers
listed in the Summary Compensation Table are disclosed in that table.
Mid-Term Program - The Mid-Term Program of the Incentive Compensation Plan is
intended to cover successive measurement periods. The objectives for the
measurement period are approved by the Compensation Committee, which also
approves the number of Performance Units granted, based on market competitive
data and job responsibilities. At the end of the measurement period, the number
of Performance Units earned, if any, is based on the extent to which the
established objectives have been met. The value of each Performance Unit earned
will be equal to the average of the closing sale price of the Company's common
stock during the 120 consecutive trading days ending on the last day of the
measurement period.
In 1997, 1998, and 1999 the Compensation Committee approved Mid-Term Performance
Objectives for the three-year periods from 1997 through 1999, 1998 through 2000,
and 1999 through 2001, respectively. The 1997 and 1998 grants were based one-
half on cumulative earnings per share and one-half on total return to
stockholders as compared to the Industrial Component of the Standard & Poor's
Midcap 400 Index. In order to better align the program with stockholders'
interests, the 1999 grant was based solely on total return to stockholders as
compared to the Industrial Component of the Standard & Poor's Midcap 400 Index.
The 1997 grant expired at the end of 1999 with no Performance Units having been
earned since the Company did not meet either the target based on the Company's
cumulative earnings per share or the target for total return to stockholders.
STOCK AWARDS
In order to align the interests of management more closely with the long term
interests of the Company's stockholders, the Compensation Committee also issues
stock options and may issue restricted stock, pursuant to the Company's Amended
and Restated 1992 Omnibus Stock Plan. The Committee grants options to
individual employees based on its evaluation of a number of factors, including
level of base salary, level of responsibility, expected level of contribution to
the Company, prior individual performance and prior stock option and restricted
stock grants. The largest grants are awarded to the most senior employees, who,
in the view of the Compensation Committee, have the greatest potential impact on
the Company's profitability and growth. However, the Committee also awards
options to individuals at all levels of the organization in order to focus
employee attention on the performance of the Company's stock. Options under the
plan may be either incentive stock options or non-qualified stock options at the
discretion of the Compensation Committee. In 1999, the Committee granted stock
options exercisable at fair market value to certain key employees, including the
Company's officers. For these individuals, the options will not be exercisable
for seven years unless the Company's stock price reaches certain specified
levels. Certain options vest when the stock reaches $35.9375 and certain other
options vest one-half when the stock reaches $43.63 and one-half when the
18
<PAGE>
stock reaches $49.30. In each instance, the stock must remain at that average
price for fifteen consecutive trading days. Stock option awards to the executive
officers named in the Summary Compensation Table are disclosed in that table.
The Company has never repriced any stock options.
In 1999, the Compensation Committee granted restricted stock awards to one
executive officer in connection with the start of his employment with the
Company. In August 1994, in order to assure the retention of certain key
employees, the Compensation Committee awarded shares of restricted stock to
them, including to certain of the executive officers listed in the Summary
Compensation Table. Forty percent of these shares vested in 1996 and 20% vested
in each of 1997, 1998 and 1999. Under certain circumstances, the vesting of
shares issued to certain highly-compensated officers will be delayed until the
Company's deduction of compensation expense associated with such vesting would
not be limited by Section 162(m) of the Internal Revenue Code of 1986, as
amended (the "Code") (see below). If an award recipient is terminated for
cause, voluntarily terminates his or her employment with the Company, or
breaches certain obligations of confidentiality, he or she will forfeit any
unvested shares.
COMPENSATION OF CHIEF EXECUTIVE OFFICER
Mr. Pokelwaldt's 1999 compensation, including base salary, bonus and stock
option award, was determined by the Compensation Committee in accordance with
the criteria described above in the "Relationship of Compensation to
Performance," "Salaries," "Performance-Based Bonuses" and "Stock Awards"
sections of this report.
Mr. Pokelwaldt received an increase in his base compensation in 1999 from
$700,000 to $800,000 in order to keep his salary at a competitive level.
Because the Company did not meet its earnings per share target in 1999, Mr.
Pokelwaldt did not receive a bonus for 1999.
In 1999, Mr. Pokelwaldt received a grant of 15,000 Performance Units under the
Mid-Term Program of the Company's Incentive Compensation Plan. Achievement of
the target for these units, the Company's total return to stockholders compared
to a published index, will be measured at the end of 2001. For the 1997 grant,
which was measured at the end of 1999, Mr. Pokelwaldt did not receive any
payment, since the Company did not meet the threshold performance objectives.
In 1999, Mr. Pokelwaldt was also awarded performance accelerated stock options
to purchase 112,500 shares of the Company's common stock (on terms described
above under "Stock Awards") at the market price on the date of grant. Additional
details of Mr. Pokelwaldt's compensation over the past three fiscal years are
disclosed in the Summary Compensation Table and in other sections of this
"Executive Compensation" section.
Upon the retirement of Mr. Pokelwaldt in October, 1999, Mr. John R. Tucker
became Chief Executive Officer. At that time, his salary was increased from
$520,000 to $650,000 to reflect his increased responsibilities. Because the
Company did not meet its earnings per share target in 1999, Mr. Tucker did not
receive a bonus for 1999. In 1999, Mr. Tucker received a grant of 10,000
Performance Units under the Mid-Term Program of the Company's Incentive
Compensation Plan and was also awarded performance accelerated stock options to
purchase 181,250 shares of the Company's common stock (on terms described above
under "Stock Awards") at the market price on the date of grant.
RETIREMENT AND EMPLOYMENT AGREEMENTS
At the time of his retirement in October 1999, the Company entered into a
Retirement Agreement with Mr. Pokelwaldt. Under the terms of this agreement,
Mr. Pokelwaldt received his salary through the remainder of 1999 and a payment
of $2,400,000. The amounts paid to Mr. Pokelwaldt are included under the
heading "Other Compensation" in the Summary Compensation Table.
In 1999, the Company entered into Employment Agreements with certain key
executives, including the executive officers, other than Mr. Pokelwaldt, listed
in the Summary Compensation Table. The agreements have a three-year term and are
automatically extended in the absence of notice to the contrary by either party.
In the event the executive's employment is terminated by the Company other than
for cause, the executive will receive payment of his salary and target bonus for
the remainder of the employment period, health and welfare benefits during that
period, and an additional benefit under the Company's Executive Supplemental
Retirement Plan. The agreement also provides for an additional payment equal to
two years salary and target bonus in return for an agreement on the part of the
executive not to compete with the Company for a period of two years.
19
<PAGE>
In making its compensation decisions, the Committee considers the effect of
Section 162(m) of the Code, which limits to $1,000,000 the allowable federal
income tax deduction for compensation paid to the Company's Chief Executive
Officer and next four most highly compensated officers. The limit on
deductibility does not apply to performance-based compensation paid pursuant to
a plan approved by the stockholders. The Company expects that expense
associated with stock option awards made under the Company's Amended and
Restated 1992 Omnibus Stock Option Plan will not be limited by Section 162(m)
since the Company obtained stockholder approval of this Plan. The expense
associated with restricted share awards that are not performance-based may be
limited under Section 162(m) and, if that should be the case, the Committee may
defer the vesting of such awards until such time as the associated expense is
fully deductible. The Company has obtained stockholder approval of its
Incentive Compensation Plan and does not anticipate that the expense associated
with this Plan will be limited by Section 162(m).
In the opinion of the Committee, the Company's performance-based cash
compensation system, together with the grant of fair market value options and,
in limited circumstances, restricted stock awards, provides all management
employees, including executive officers, with an incentive to achieve objective
financial targets designed to increase stockholder value.
The foregoing report is hereby submitted by the members of the Compensation
Committee.
Walter B. Wriston, Chairman
Malcolm W. Gambill
Robert F. B. Logan
James A. Urry
SUMMARY COMPENSATION TABLE
The following table sets forth information concerning cash compensation paid by
the Company to the Chief Executive Officer and each of the next four most highly
compensated officers of the Company for services rendered in all capacities to
the Company and its subsidiaries during the three fiscal years ended December
31, 1999.
<TABLE>
<CAPTION>
Long Term
Compensation Awards
-----------------------------------
Annual Securities
Compensation (1)(2) Restricted Underlying All
------------------- Stock Options Other
Name Year Salary Bonus Award (3) Granted (4) Compensation (5)
----- -------- --------- ---------- ----------- ------------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
Robert N. Pokelwaldt(6) ........ 1999 $650,000 $ 0 0 112,500 $2,575,874
Past Chairman of the Board and.. 1998 700,000 947,556 0 25,000 11,776
Chief Executive Officer......... 1997 688,667 0 0 40,000 11,507
John R. Tucker(6) 1999 540,833 0 0 181,250 6,617
President and Chief............. 1998 445,833 750,000 0 24,000 2,798
Executive Officer 1997 79,003 200,000 $1,129,688 40,000 391
Michael R. Young................ 1999 426,459 411,469 0 80,000 18,958
Vice President, and President... 1998 400,000 547,733 0 8,000 8,487
Central Environmental Systems... 1997 400,000 0 535,000 30,000 21,794
Peter C. Spellar................ 1999 327,500 217,503 0 53,000 3,244
Vice President Corporate........ 1998 312,500 215,899 0 8,000 2,931
Marketing & Strategic Accounts.. 1997 291,667 0 0 10,000 2,684
Stuart R. Amos(6)............... 1999 340,416 0 0 83,000 2,990
Vice President and President,... 1998 250,000 361,390 216,875 10,000 1,954
Unitary Products Group
Robert C. Galvin(6)............. 1999 176,458 173,250 897,500 100,000 183
Vice President and Chief
Financial Officer
</TABLE>
20
<PAGE>
(1) No compensation that would be categorized as "Other Annual Compensation" was
paid to officers in any of the years presented.
(2) Includes amounts deferred at the election of the officer pursuant to the
York International Investment Plan, a plan established under Section 401(k)
of the Code and the York International Corporation Executive Deferred
Compensation Plan, a non-qualified deferred compensation plan. Does not
include any amounts that may ultimately be earned for the Performance Units
awarded during 1999 and shown in the Long-Term Incentive Plans - Awards in
Last Fiscal Year Table.
(3) The restricted stock holdings of the officers and the value of such holdings
as of December 31, 1999, based upon the 1999 year-end closing price (net of
the purchase price paid by the officer) are as follows: Mr. Tucker - 12,500
shares ($330,468), Mr. Young - 10,000 shares ($264,375), Mr. Amos - 5,000
shares ($132,188), and Mr. Galvin - 20,000 shares ($528,750). Any dividends
payable with respect to common stock will be paid with respect to the
restricted stock. Messrs. Tucker and Young received 25,000 shares and
10,000 shares, respectively, of restricted stock in 1997, Mr. Amos received
5,000 shares in 1998, and Mr. Galvin received 20,000 shares in 1999. In
each instance, the stock vests 50% on the second anniversary of the grant
and 25% on each of the two subsequent anniversaries.
(4) Excludes options to purchase common stock at 85% of fair market value
through automatic payroll deductions acquired in December 1999 under the
1992 Employee Stock Purchase Plan ("Purchase Plan"), in which Messrs.
Pokelwaldt, Tucker, Young, Spellar, and Amos each elected to participate.
Messrs. Pokelwaldt and Tucker each acquired 612 shares, Mr. Young acquired
611 shares, Mr. Spellar acquired 570 shares, and Mr. Amos acquired 345
shares of common stock.
(5) Comprises payments and accruals of $2,566,635 for Mr. Pokelwaldt under his
Retirement Agreement dated October 14, 1999 and under the Company's
Supplemental Executive Retirement Plan, matching contributions by the
Company under the York International Investment Plan, contributions for Mr.
Young under the Bristol Thrift and Retirement Plan, and for Mr. Pokelwaldt
under the York International Deferred Compensation Plan, and term life
insurance premiums for the named individuals for policies with a face amount
equal to the individual's base salary, as follows:
<TABLE>
<CAPTION>
Investment Plan Insurance
Contributions Premium
---------------- ---------
<S> <C> <C>
Robert N. Pokelwaldt $ 2,242 $6,997
John R. Tucker 4,595 2,022
Michael R. Young 14,638* 4,320
P. C. Spellar 1,288 1,956
Stuart R. Amos 1,780 1,210
Robert C. Galvin 0 183
* Bristol Thrift & Retirement
</TABLE>
(6) Mr. Pokelwaldt retired from the Company in October, 1999 and Messrs. Tucker,
Amos and Galvin left the Company in February, 2000.
OPTION GRANTS
The following table shows, as to each person named, the options to purchase
common stock granted by the Company in 1999 under the Amended and Restated 1992
Omnibus Stock Plan. The grants do not include options to purchase Company stock
through automatic payroll deductions under the Purchase Plan (see note (4) to
the Summary Compensation Table above).
<TABLE>
<CAPTION>
Option Grants in 1999
Individual Grants
-------------------------------------------------
% of
Number of Total
Securities Options Potential Realizable Value at Assumed
Underlying Granted Annual Rates of Stock Price Appreciation
Options to All Exercise for Option Term (End of Year Value) (1)
Granted Employees Price Per Expiration ------------------------------------------
Name (Shares) (2) in 1999 Share Date 0% 5% (3) 10% (3)
- -------------------------------- ----------- --------- --------- ---------- -- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
R. N. Pokelwaldt................ 112,500 6.6% $34.6250 03/16/09 $0 $2,449,688 $6,208,313
J. R. Tucker.................... 56,250 3.3% 34.6250 03/16/09 0 1,224,844 3,104,156
125,000 7.9% 22.9375 11/08/09 0 1,802,813 4,569,063
M. R. Young..................... 30,000 1.8% 34.6250 03/16/09 0 653,250 1,655,550
50,000 3.2% 22.9375 11/08/09 0 721,125 1,827,625
P. C. Spellar................... 33,000 1.9% 34.6250 03/16/09 0 718,575 1,821,105
20,000 1.3% 22.9375 11/08/09 0 288,450 731,050
S. R. Amos...................... 33,000 1.9% 34.6250 03/16/09 0 718,575 1,821,105
50,000 3.2% 22.9375 11/08/09 0 721,125 1,827,625
R.C. Galvin..................... 40,000 2.3% 40.0625 06/22/09 0 1,007,900 2,553,900
60,000 3.8% 22.9375 11/08/09 0 865,350 2,193,150
</TABLE>
21
<PAGE>
(1) Represent arbitrarily assumed rates of appreciation of the common stock
price, mandated by the Securities and Exchange Commission's rules,
compounded annually over the term of the option and are not intended to
forecast possible future appreciation, if any, of the common stock. The
market value of the common stock on the March 16, 1999 grant date was
$34.6250; the value of the common stock at the end of those options' term
based on a compounded 5% growth rate would be $56.40 per share and based on
a compounded 10% growth rate would be $89.81 per share. The market value
of the common stock on the June 22, 1999 grant date was $40.0625; the value
of the common stock at the end of those options' term based on a compounded
5% growth rate would be $65.26 per share and based on a compounded 10%
growth rate would be $103.91 per share. The market value of the common
stock on the November 8, 1999 grant date was $22.9375; the value of the
common stock at the end of those options' term based on a compounded 5%
growth rate would be $37.36 per share and based on a compounded 10% growth
rate would be $59.49 per share.
(2) The options are non-qualified, non-transferable other than by will or the
laws of descent and distribution, and become exercisable when the price of
the Company's common stock reaches certain pre-determined levels during the
five years following grant and remains at that average price for a period
of 15 consecutive trading days at $43.63. For the March 16, 1999 grant,
50% of the grant vests and becomes exercisable and the remaining 50% vests
at $49.30. For the June 22, 1999 grant, 50% vests at $50.48 and the
remaining 50% at $57.04. For the November 8, 1999 grant, 100% vests at
$35.9375. In the event any tranche has not vested within five years from
the date of grant, it vests and becomes exercisable on the seventh
anniversary of the grant and remains exercisable until the tenth
anniversary of the grant unless terminated sooner in the event of death,
disability, retirement or termination of employment.
(3) No gain to the optionees is possible without an increase in stock price
which will benefit all stockholders. A zero percent gain in stock price
will result in zero dollars for the optionee.
Option Exercises and 1999 Year-End Option Values
The following table shows, as to the individuals named in the Summary
Compensation Table above, information concerning stock option exercises and 1999
year-end stock option values.
Aggregated Option Exercises in Last
Fiscal Year and Year-End Option Values
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Number of Shares Value Underlying Unexercised In-the-Money Options
Acquired Realized Options at 1999 Year-End at 1999 Year-End (1)
---------------- -------- ------------------------- --------------------------
Name Exercisable/Unexercisable Exercisable/Unexercisable
- ---- ------------------------- --------------------------
<S> <C> <C> <C> <C>
R. N. Pokelwaldt.................. 23,450 $111,388 182,160 / 112,500 $ 0 / 0
J. R. Tucker...................... 0 0 67,125 / 178,125 0 / 562,500
M. R. Young....................... 0 0 53,000 / 65,000 0 / 225,000
P. C. Spellar..................... 0 0 69,200 / 36,500 0 / 90,000
S. R. Amos........................ 0 0 26,500 / 66,500 0 / 225,000
R. C. Galvin...................... 0 0 20,000 / 80,000 0 / 270,000
</TABLE>
___________
(1) Based upon an assumed fair market value of $27.4375 per share, which was the
closing price on the New York Stock Exchange of the common stock on December
31, 1999.
LONG-TERM INCENTIVE PLANS - AWARDS IN LAST FISCAL YEAR
The following table shows, as to each person named, the Performance Units
granted by the Company in 1999 under the Mid-Term Program of the Incentive
Compensation Plan. At the end of the three-year measurement period, the number
of Performance Units earned, if any, will be based on the extent to which the
established objective of total return to stockholders as compared to the
Industrial Component of the Standard & Poor's Midcap 400 Index has been met. If
the threshold objective is not met, no Performance Units are earned. If the
target objective is exceeded, additional Performance Units can be earned, up to
the number of the original grant. The value of each Performance Unit earned
will be equal to the average of the closing sale price of the Company's common
stock during the 120 consecutive trading days ending on the last day of the
measurement period.
22
<PAGE>
<TABLE>
<CAPTION>
Number of
Shares, Units Performance or
Or Other Other Period Until
Name Rights Maturation or Payout
- ---- ------------- ------------------------
<S> <C> <C>
R. N. Pokelwaldt.......................................................... 15,000 12/31/01
J. R. Tucker.............................................................. 10,000 12/31/01
M. R. Young............................................................... 6,275 12/31/01
P. C. Spellar............................................................. 4,942 12/31/01
S. R. Amos................................................................ 4,706 12/31/01
R. C. Galvin.............................................................. 5,033 12/31/01
</TABLE>
RETIREMENT PLANS
The Company has a defined benefit retirement plan (the "Retirement Plan")
covering the salaried employees of certain of the Company's business units who
are not subject to collective bargaining agreements. The Retirement Plan covers
each of the officers named in the Summary Compensation Table other than Mr.
Young and Mr. Galvin.
The following table indicates the amount of annual retirement income which would
be payable under the Retirement Plan (but for certain limitations imposed by the
Code) at normal retirement age to participants in specified salary and bonus
levels and years of credited service categories. For 1999 the Code limits to
$160,000 the amount of earnings which may be taken into account to calculate
benefits, and to $130,000 the benefits payable. The limits are adjusted
annually for inflation.
<TABLE>
<CAPTION>
Assumed Average Annual
Earnings for Highest
Five Consecutive
Years in 10 Years 15 Years 20 Years 25 Years 30 Years 35 Years
Preceding Retirement Service Service Service Service Service
--------------------- ----------- ---------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C>
$150,000............................................ $ 36,000 $ 48,000 $ 60,000 $ 72,000 $ 75,750
200,000............................................ 48,000 64,000 80,000 96,000 101,000
250,000............................................ 60,000 80,000 100,000 120,000 126,250
300,000............................................ 72,000 96,000 120,000 144,000 151,500
400,000............................................ 96,000 128,000 160,000 192,000 202,000
500,000............................................ 120,000 160,000 200,000 240,000 252,500
600,000............................................ 144,000 192,000 240,000 288,000 303,000
700,000............................................ 168,000 224,000 280,000 336,000 353,500
800,000............................................ 192,000 256,000 320,000 384,000 404,000
900,000............................................ 216,000 288,000 360,000 432,000 454,500
1,000,000............................................ 240,000 320,000 400,000 480,000 505,000
</TABLE>
The compensation covered by the Retirement Plan consists of base salary and
bonus paid in that year. The covered compensation (excluding the effect of Code
limitations) and credited years of service, as of December 31, 1999, for each of
the officers named in the Summary Compensation Table above were as follows: Mr.
Pokelwaldt - $739,884, 11 years; Mr. Tucker - $796,042, 2 years; Mr. Spellar
- - $447,983, 7 years; Mr. Amos - $744,936, 2 years. Mr. Galvin was not
eligible to participate in 1999 since he had less than one year of service.
The benefits shown in the above table are subject to reduction by an amount
equal to a percentage of Social Security benefits. The benefits are calculated
on a straight-life annuity basis assuming retirement at age 65.
The Company has a defined benefit supplemental retirement plan (the
"Supplemental Retirement Plan") covering certain key executive officers,
including those named in the Summary Compensation Table other than Mr. Young and
Mr. Amos.
The following table indicates the amount of annual retirement income which would
be payable under the Supplemental Retirement Plan at normal retirement age to
participants in specified salary and bonus levels and years of credited service
categories.
23
<PAGE>
<TABLE>
<CAPTION>
Assumed Average Annual
Earnings for Highest
Five Consecutive
Years in 10 Years 15 Years 20 Years 25 Years 30 Years 35 Years
Preceding Retirement Service Service Service Service Service
--------------------- ----------- ---------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C>
$150,000............................................ $ 56,250 $ 75,000 $ 75,000 $ 75,000 $ 75,000
200,000............................................ 75,000 100,000 100,000 100,000 100,000
250,000............................................ 93,750 125,000 125,000 125,000 125,000
300,000............................................ 112,500 150,000 150,000 150,000 150,000
400,000............................................ 150,000 200,000 200,000 200,000 200,000
500,000............................................ 187,500 250,000 250,000 250,000 250,000
600,000............................................ 225,000 300,000 300,000 300,000 300,000
700,000............................................ 262,500 350,000 350,000 350,000 350,000
800,000............................................ 300,000 400,000 400,000 400,000 400,000
900,000............................................ 337,500 450,000 450,000 450,000 450,000
1,000,000............................................ 375,000 500,000 500,000 500,000 500,000
</TABLE>
The Supplemental Retirement Plan provides a retirement benefit equal to up to
50% (based on a maximum of 20 years of credited service (no credit is given for
service beyond 20 years) and final compensation) of the officer's highest
average salary and bonus for three out of the last five years preceding
retirement. The covered compensation and credited years of service under the
Supplemental Retirement Plan based on 1999 salaries and bonuses as of December
31, 1999, would be approximately: Mr. Pokelwaldt - $914,333, 20 years; Mr.
Tucker - $719,583, 2 years; Mr. Spellar - $407,306, 20 years; Mr. Amos -
$531,667, 2 years.
The benefits shown in the above table are subject to reduction by an amount
equal to a percentage of Social Security benefits, benefits under the Retirement
Plan and any other retirement benefits received. The benefits are calculated on
a straight-life annuity basis assuming retirement at age 62.
The following table indicates the amount of annual retirement income which would
be payable under the Bristol Compressors, Inc. Officers Retirement and Salary
Continuation Plan (the "Bristol Plan") at normal retirement age to participants
in specified salary levels and years of credited service categories. Mr. Young
is a participant in this plan.
<TABLE>
<CAPTION>
Assumed Average Annual
Earnings for Highest
Five Consecutive
Years in 10 Years 15 Years 20 Years 25 Years 30 Years 35 Years
Preceding Retirement Service Service Service Service Service
--------------------- ----------- ---------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C>
150,000............................................ 60,000 60,000 60,000 60,000 60,000
200,000............................................ 80,000 80,000 80,000 80,000 80,000
250,000............................................ 100,000 100,000 100,000 100,000 100,000
300,000............................................ 120,000 120,000 120,000 120,000 120,000
400,000............................................ 160,000 160,000 160,000 160,000 160,000
500,000............................................ 200,000 200,000 200,000 200,000 200,000
600,000............................................ 240,000 240,000 240,000 240,000 240,000
700,000............................................ 280,000 280,000 280,000 280,000 280,000
800,000............................................ 320,000 320,000 320,000 320,000 320,000
900,000............................................ 360,000 360,000 360,000 360,000 360,000
1,000,000............................................ 400,000 400,000 400,000 400,000 400,000
</TABLE>
The Bristol Plan provides a retirement benefit equal to 40% of the employee's
base salary for the full calendar year preceding the participant's actual
retirement, without regard to service. The compensation for Mr. Young as of
December 31, 1999 would be approximately $426,458.
The benefits shown in the above table are subject to reduction by 2% per year
for early retirement before age 62. The benefits are calculated payable as a 15
year certain benefit payable at age 62.
24
<PAGE>
The Evcon Industries, Inc. Retirement Plan for Salaried Employees in which Mr.
Young participated from 1991 until 1995, is intended to provide Mr. Young with
retirement benefits. As of December 31, 1999, upon attaining age 65, he is
eligible to receive an annual retirement benefit of $17,227.
The Frick/Frigid Coil Pension Plan for Salaried Employees (the "Frick Plan"), in
which Mr. Pokelwaldt participated from 1979 until his transfer to the Retirement
Plan in 1988, is intended to provide Mr. Pokelwaldt with retirement benefits.
Upon attaining age 65, Mr. Pokelwaldt is eligible to receive an annual
retirement benefit of $8,900 under the Frick Plan. Mr. Spellar also
participated in the Frick Plan. His participation was from 1979 until his
transfer to the Retirement Plan in 1992. Upon attaining age 65, Mr. Spellar is
eligible to receive an annual retirement benefit of $16,289 from the Frick Plan.
CHANGE-IN-CONTROL ARRANGEMENTS
The Company maintains severance agreements with certain of its key employees,
including the individuals named in the Summary Compensation Table, which provide
severance benefits in the event the employee's employment terminates in
connection with or for a period following a change in control of the Company.
In such event, the employee would receive a payment equal to three times his or
her annual base salary and target bonus, together with continued health
insurance benefits until the earlier of 36 months or the obtaining of similar
coverage from another employer. Amounts payable under the agreements will be
cut back to the extent they would not be tax deductible under Section 280G of
the Internal Revenue Code.
STOCK PERFORMANCE GRAPH
The following chart compares the cumulative total return on the Company's common
stock for the 5-year period from December 31, 1994 through December 31, 1999 to
the cumulative total return for the same period of the Standard & Poor's Midcap
400 Index, the Industrial Component of the Standard & Poor's Midcap 400 Index,
and the Standard & Poor's Electrical Equipment Index. The graph assumes that
the value of the investment in the common stock and each index was $100 on
December 31, 1994 and that all dividends were reinvested.
COMPARISON OF 60 MONTH CUMULATIVE TOTAL RETURN
AMONG YORK INTERNATIONAL, THE S&P MIDCAP 400 INDEX,
THE INDUSTRIAL COMPONENT OF THE S&P MIDCAP 400 INDEX
AND THE S&P ELECTRICAL EQUIPMENT INDEX
[STOCK PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
Dec. 94 Dec. 95 Dec. 96 Dec. 97 Dec. 98 Dec. 99
<S> <C> <C> <C> <C> <C> <C>
York International 100 128.17 153.44 109.87 114.70 78.46
S&P Electrical Equipment - 500 100 140.33 192.73 271.60 364.51 546.57
S&P Midcap 400 Index 100 130.94 156.08 206.43 245.87 282.06
Industrial Component of
The S&P Midcap 400 100 129.51 155.11 185.39 202.67 245.20
</TABLE>
25
<PAGE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
OWNERSHIP OF COMMON STOCK
OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth information as of February 29, 1999 with respect
to beneficial ownership of shares of the Company's common stock, assuming
exercise of options exercisable within 60 days of such date, by each Director,
by each executive officer named in the Summary Compensation Table and by all
Directors and executive officers as a group. Except as otherwise noted, the
beneficial owners have sole voting and investment power as to all such shares.
<TABLE>
<CAPTION>
Number of
Shares
Beneficially Percentage of
Name of Beneficial Owner Owned (a) Outstanding
- ------------------------ ------------------ ---------------
<S> <C> <C>
Robert N. Pokelwaldt (b)........................................................... 392,251 1%
Malcolm W. Gambill (c)............................................................. 25,330 *
Robert F. B. Logan (d)............................................................. 94,011 *
Gerald C. McDonough (e)............................................................ 71,650 *
Donald M. Roberts (f).............................................................. 80,434 *
John R. Tucker (g)................................................................. 97,368 *
James A. Urry (h).................................................................. 44,617 *
John E. Welsh, III (i)............................................................. 31,400 *
Walter B. Wriston (j).............................................................. 13,450 *
Michael R. Young (k)............................................................... 94,077 *
Peter C. Spellar (l)............................................................... 130,786 *
Stuart R. Amos (m)................................................................. 34,950 *
Robert C. Galvin................................................................... 42,000 *
All directors and executive officers of the Company as a group (21 persons) (n). 1,454,509 3.8%
</TABLE>
___________
* Represents less than 1.0% of the aggregate shares of common stock
outstanding.
(a) Includes shares issuable upon exercise of options that are exercisable
within 60 days.
(b) Includes 182,160 shares issuable upon exercise of options.
(c) Includes 9,000 shares issuable upon exercise of options and 5,330 shares
representing Director fees deferred into the York common stock Fund of the
Company's Deferred Compensation Plan.
(d) Includes 200 shares owned by Mr. Logan's wife as to which he disclaims
beneficial ownership, 9,000 shares issuable upon exercise of options, and
4,418 shares representing Director fees deferred into the York common stock
Fund of the Company's Deferred Compensation Plan.
(e) Includes 9,000 shares issuable upon exercise of options.
(f) Includes 13,679 shares owned by Mr. Roberts' adult child and 13,678 shares
owned by Mr. Roberts' wife on behalf of their two children as to which Mr.
Roberts has no voting or investment power and as to which he disclaims
beneficial ownership, 9,000 shares issuable upon exercise of options, and
1,041 shares representing Director fees deferred into the York common stock
Fund of the Company's Deferred Compensation Plan.
(g) Includes 67,125 shares issuable upon exercise of options.
(h) Includes 9,000 shares issuable upon exercise of options and 5,617 shares
representing Director fees deferred into the York common stock Fund of the
Company's Deferred Compensation Plan.
(i) Includes 9,000 shares issuable upon exercise of options.
(j) Includes 9,000 shares issuable upon exercise of options.
(k) Includes 53,000 shares issuable upon exercise of options.
(l) Includes 30,000 shares held in trust for Mr. Spellar's children, as to which
he disclaims any beneficial ownership, and 69,200 shares issuable upon
exercise of options.
(m) Includes 26,500 shares issuable upon exercise of options.
(n) Includes 672,835 shares issuable upon exercise of options.
26
<PAGE>
OWNERSHIP OF OTHER BENEFICIAL OWNERS
<TABLE>
<CAPTION>
Voting Dispositive Total Amount Percent
Authority Authority of Beneficial Of
Name and Address Sole Shared Sole Shared Ownership Class
- -------------------------------- --------- --------- --------- --------- ------------- --------
<S> <C> <C> <C> <C> <C> <C>
Capital Research and 0 0 4,842,300 0 4,842,300 12.4%
Management Company (1)
333 S. Hope St.
Los Angeles, CA 90071
Amvescap PLC (2) 0 4,295,285 0 4,295,285 4,295,285 11.02%
11 Devonshire Square
London EC2 M4YR
England
Brinson Partners, Inc. (3) 3,856,233 0 0 3,856,233 3,856,233 9.7%
209 South Lasalle
Chicago, IL 60604-1295/ UBS AG
KR Capital Advisors, Inc. (4) 2,137,475 0 2,137,475 0 2,137,475 5.5%
450 Park Avenue
New York, NY 17403/
Edward D. Klein
</TABLE>
(1) Based on a Schedule 13G filed with the Securities and Exchange Commission on
February 10, 2000.
(2) Based on a Schedule 13G filed by Amvescap PLC with the Securities and
Exchange Commission on February 3, on behalf of itself and on behalf of AVZ,
Inc., AIM Management Group Inc., AMVESCAP Group Services, Inc., Invesco,
Inc., Invesco North American Holdings, Inc., Invesco Capital Management,
Inc., INVESCO Funds Group, Inc., INVESCO Management & Research, Inc.,
INVESCO Realty Advisers, Inc., and INVESCO (NY) Asset Management, Inc.
(3) Based on a Schedule 13G filed by Brinson Partners, Inc. ("BPI") and UBS AG,
the ultimate Swiss parent of BPI, with the Securities and Exchange
Commission on February 4, 2000.
(4) Based on a Schedule 13G filed by KR Capital Advisers, Inc. and Edward D.
Klein with the Securities and Exchange Commission on February 4, 2000.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based on a review of the forms filed with the Securities and Exchange
Commission, we believe that all reports required of officers and directors
concerning their ownership of the Company's stock during 1999 were filed in a
timely manner.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Capial Research and Management, Invesco, an affiliate of Amvescap, and KR
Capital Advisers Inc., each of which is a holder of more than 5% of the
Company's stock, manage portions of the Company's pension plan assets.
Agreements with these entities are on an arm's-length basis.
27
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a)(1) The following financial statements of York International Corporation
and subsidiaries are incorporated herein by reference to pages a13 to a31
of the Annual Financial Statements and Review of Operations:
Consolidated Balance Sheets - as of December 31, 1999 and 1998
Consolidated Statements of Operations - years ended December 31, 1999,
1998, and 1997
Consolidated Statements of Comprehensive Income - years ended
December 31, 1999, 1998 and 1997
Consolidated Statements of Cash Flows - years ended December 31, 1999,
1998, and 1997
Consolidated Statements of Stockholders' Equity - years ended
December 31, 1999, 1998 and 1997
Notes to Consolidated Financial Statements
(2) The following financial statement schedule for York International
Corporation and subsidiaries is included herein:
VIII Valuation and Qualifying Accounts - years ended December 31,
1999, 1998 and 1997;
(Page 34 of Form 10-K)
All other schedules are omitted as they are not applicable.
Independent Auditors' Report Covering Financial Statement Schedule; (Page
33 of Form 10-K)
(3) The exhibits filed in response to Item 601 of Regulation S-K are as
follows:
EXHIBIT
NUMBER
- -------
<TABLE>
<C> <S>
3.1 Amended and Restated Certificate of Incorporation of Registrant (Incorporated by reference
to Exhibit 4.1 to the Registrant's Registration Statement on Form S-3, File No. 33-91292,
filed on June 7, 1995)
3.2 Certificate of Amendment to the Amended and Restated Certificate of Incorporation dated May
3, 1996 (Incorporated by reference to Exhibit 3.2 to the Registrant's Annual Report on Form
10-K for the year ended December 31, 1996, File No. 1-10863)
3.3 By-Laws of Registrant, restated as of December 17, 1996 (Incorporated by reference to
Exhibit 3.3 to the Registrant's Annual Report on Form 10-K for the year ended December 31,
1996, File No. 1-10863)
4.1 Receivables Sale Agreement dated as of March 26, 1997, by and among the Registrant, as
seller and collection agent, Asset Securitization Cooperative Corporation, as purchaser, and
Canadian Imperial Bank of Commerce, as servicing agent along with the supporting exhibits
(Incorporated by reference to Exhibit 4.1 to Registrant's Quarterly Report on Form 10-Q for
the quarter ended March 31, 1997, File No. 1-10863)
4.2 SECOND AMENDMENT TO AMENDED AND RESTATED RECEIVABLES SALE AGREEMENT, among the Registrant,
as seller and collection agent, Asset Securitization Cooperative Corporation, as purchaser,
and Canadian Imperial Bank of Commerce, as servicing agent. (Incorporated by reference to
Exhibit 4.1 to Registrant's Form 10-Q for the quarter ended September 30, 1999, File No.
1-10863)
4.3 THIRD AMENDMENT TO AMENDED AND RESTATED RECEIVABLES SALE AGREEMENT, among the Registrant, as
seller and collection agent, Asset Securitization Cooperative Corporation, as purchaser,
Canadian imperial Bank of Commerce, as servicing agent. (Incorporated by reference to
Exhibit 4.2 to Registrant's Form 10-Q for the quarter ended September 30, 1999, File No.
1-10863)
</TABLE>
28
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
4.4 Indenture dated as of March 1, 1993 between the Registrant and Morgan Guaranty Trust Company
of New York, as Trustee (Incorporated by reference to Exhibit 4.1 to the Registrant's
Registration Statement filed on Form S-3, File No. 33-57178, filed on January 19, 1993)
4.5 Indenture effective as of June 1, 1998 between the Registrant and State Street Bank and
Trust Company, a Massachusetts chartered trust company, as Trustee (Incorporated by
reference to Exhibit 4 to the Registrant's Form 8-K, File No. 1-10863, filed on May 28, 1998)
4.6 Amended and Restated Credit Agreement, dated as of July 21, 1995 among the Registrant, the
several banks and the other financial institutions from time to time parties to the
Agreement and Canadian Imperial Bank of Commerce, acting through its New York Agency, as
Agent (Incorporated by reference to Exhibit 10.17 to Registrant's Quarterly Report on Form
10-Q for the quarter ended September 30, 1995, File No. 1-10863)
4.7 First Amendment dated as of May 28, 1997 to the Amended and Restated Credit Agreement among
the Registrant, the several banks and the 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 along with supporting exhibits (Incorporated by reference to Exhibit
4.5 to Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 1997, File
No. 1-10863)
4.8 SECOND AMENDMENT, dated as of June 3, 1999, 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. (Incorporated by reference to Exhibit
4.1 to Registrant's Form 10-Q for the quarter ended June 30, 1999, File No. 1-10863)
4.9 364-DAY REVOLVING CREDIT AGREEMENT, dated as of June 3, 1999, among York International
Corporation, the several banks and other financial institutions from time to time parties to
this Agreement and Canadian imperial Bank of Commerce, acting through its New York Agency as
administrative agent for the Banks hereunder. (Incorporated by reference tp Exhibit 4.2 to
Registrant's Form 10-Q for the quarter ended June 30, 1999, File No. 1-10863)
4.10 FOURTH AMENDMENT TO AMENDED AND RESTATED RECEIVABLES SALE AGREEMENT, among the Registrant,
as seller and collection agent, Asset Securitization Cooperative Corporation, as purchaser,
Canadian imperial Bank of Commerce, as servicing agent, effective December 22, 1999. (filed
herewith)
*10.1 Registrant's 1989 Employee Stock Option Plan (Incorporated by reference to Exhibit 10.4 to
Registrant's Annual Report on Form 10-K for the year ended December 31, 1989, File No.
33-25440)
*10.2 Registrant's Amended and Restated 1992 Omnibus Stock Plan (Incorporated by reference to
Exhibit 10.1 to Registrant's Annual Report on Form 10-Q for the quarter ended March 31,
1997, File No. 1-10863)
*10.3 Amendment No. 1 to the York International Corporation Amended and Restated 1992 Omnibus
Stock Plan, dated February 16, 1999 (Incorporated by reference to Exhibit 10.15 to the
Registrant's Annual Report on Form 10-K for the year ended December 31, 1998, File No.
1-10863)
*10.4 York International Corporation 1996 Incentive Compensation Plan (Amended and Restated
Effective January 1, 1999) (Incorporated by reference to Exhibit 10.2 to the
</TABLE>
29
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 1999, File No. 1-10863)
*10.5 Bristol Compressors, Inc. Officers Retirement/Salary Continuation Plan (Incorporated by
reference to Exhibit 10.4 to York International Corporation's Registration Statement on Form
S-1, File No. 33-30713, filed on August 25, 1989)
*10.6 York International Corporation Supplemental Executive Retirement Plan (Incorporated by
reference to Exhibit 10.12 to Registrant's Annual Report on Form 10-K for the year ended
December 31, 1993, File No. 1-10863)
*10.7 Form of Restricted Stock Agreement by and between Registrant and certain of its employees
(Incorporated by reference to Exhibit 10.7 to Registrant's Annual Report on Form 10-K for
the year ended December 31, 1995, File No. 1-10863)
*10.8 York International Corporation Executive Deferred Compensation Plan (Incorporated by
reference to Exhibit 10.3 to Registrant's Annual Report on Form 10-K for the year ended
December 31, 1993, File No. 1-10863)
*10.9 First Amendment to the York International Corporation Executive Deferred Compensation Plan,
dated as of December 2, 1994 (Incorporated by reference to Exhibit 10.8 to Registrant's
Annual Report on Form 10-K for the year ended December 31, 1995, File No. 1-10863)
*10.10 Second Amendment to the York International Corporation Executive Deferred Compensation Plan,
dated as of December 17, 1996 (Incorporated by reference to Exhibit 3.2 to the Registrant's
Annual Report on Form 10-K for the year ended December 31, 1996, File No. 1-10863)
*10.11 Form of Severance Agreement entered into between the Registrant and certain of its Officers
and Employees (Incorporated by references to Exhibit 10.1 to Registrant's Quarterly Report
on Form 10-Q for the quarter ended September 30, 1997, File No. 1-10863.)
*10.12 Executive Officer Compensation Agreement between York International Corporation and John R.
Tucker, dated October 22, 1997 (Incorporated by reference to Exhibit 10.12 to the
Registrant's Annual Report on Form 10-K for the year ended December 31, 1998, File No.
1-10863)
*10.13 Executive Officer Compensation Agreement between York International Corporation and Stuart
R. Amos, dated February 6, 1998 (Incorporated by reference to Exhibit 10.13 to the
Registrant's Annual Report on Form 10-K for the year ended December 31, 1998, File No.
1-10863)
*10.14 Executive Officer Compensation Agreement between York International Corporation and Robert
C. Galvin, dated June 21, 1999 (filed herewith)
*10.15 Third Amendment to the York International Corporation Executive Deferred Compensation Plan,
effective as of October 1, 1999 (filed herewith)
*10.16 Employment Agreement between York International Corporation and John R. Tucker, dated
December 29, 1999 (filed herewith)
*10.17 Employment Agreement between York International Corporation and Stuart R. Amos, dated
December 29, 1999 (filed herewith)
*10.18 Employment Agreement between York International Corporation and Robert C. Galvin, dated
December 29, 1999 (filed herewith)
</TABLE>
30
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
*10.19 Employment Agreement between York International Corporation and Michael R. Young, dated
December 29, 1999 (filed herewith)
*10.20 Retirement Agreement between York International Corporation and Robert N. Pokelwaldt, dated
October 14, 1999 (filed herewith)
*10.21 Employment Agreement between York International Corporation and Key Executive Employees,
dated December 29, 1999 (filed herewith)
*10.22 Amendment No. 2 to the York International Corporation Amended and Restated 1992 Omnibus
Stock Plan, dated February 9, 2000 (filed herewith)
12 Statement re: Computation of Ratio of Earnings to Fixed Charges (filed herewith)
13 Annual Financial Statements and Review of Operations with Accountants' Certificate (filed
herewith)
21 Subsidiaries of the Registrant (filed herewith)
23 Accountants' Consent (filed herewith)
27 Financial Data Schedule (filed herewith EDGAR Only)
* Required to be Filed as management contracts, compensatory plans or arrangements required to
be identified pursuant to Item 14(c) of the registrant's report on Form 10-K.
</TABLE>
(b) No reports on Form 8-K have been filed during the last quarter of fiscal
1999.
31
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
YORK INTERNATIONAL CORPORATION
/S/ Michael R. Young
---------------------
MICHAEL R. YOUNG
President and Chief Executive Officer
Date: March 27, 2000
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities indicated on this 27th day of March 2000.
Signature TITLE
--------- -----
/S/ Michael R. Young President and Chief Executive Officer
- --------------------- (Principal Executive Officer)
MICHAEL R. YOUNG
/S/ C. David Myers Vice President and Chief Financial Officer
- ------------------- (Principal Financial Officer)
C. DAVID MYERS
/S/ Charles F. Cargile Vice President, Finance and Corporate Development
- -------------------------
CHARLES F. CARGILE
/S/ David R. Heck Controller
- ------------------ (Principal Accounting Officer)
DAVID R. HECK
DIRECTORS
---------
/S/ Gerald C. McDonough*
- -------------------------
GERALD C. MCDONOUGH
/S/ Malcolm W. Gambill*
- ------------------------
MALCOLM W. GAMBILL
/S/ Robert F. B. Logan*
- ------------------------
ROBERT F. B. LOGAN
/S/ Donald M. Roberts*
- -----------------------
DONALD M. ROBERTS
/S/ Michael R. Young
- ---------------------
MICHAEL R. YOUNG
/S/ James A. Urry*
- -------------------
JAMES A. URRY
/S/ John E. Welsh, III*
- -----------------------
JOHN E. WELSH, III
/S/ Walter B. Wriston*
- -----------------------
WALTER B. WRISTON
* Pursuant to powers of attorney.
32
<PAGE>
INDEPENDENT AUDITORS' REPORT
----------------------------
The Board of Directors and Stockholders
York International Corporation:
Under date of February 17, 2000, we reported on the consolidated balance sheets
of York International Corporation and subsidiaries as of December 31, 1999 and
1998, and the related consolidated statements of operations, comprehensive
income, cash flows and stockholders' equity for each of the years in the three-
year period ended December 31, 1999, as contained in the 1999 Annual Financial
Statements and Review of Operations to stockholders. These consolidated
financial statements and our report thereon are incorporated by reference in the
annual report on Form 10-K for the year 1999. In connection with our audits of
the aforementioned consolidated financial statements, we also have audited the
financial statement schedule as listed in the accompanying index. This
financial statement schedule is the responsibility of the Company's management.
Our responsibility is to express an opinion on this financial statement schedule
based on our audits.
In our opinion, such financial statement schedule, when considered in relation
to the basic consolidated financial statements taken as a whole, presents
fairly, in all material respects, the information set forth therein.
KPMG LLP
/S/ KPMG LLP
Harrisburg, Pennsylvania
February 17, 2000
33
<PAGE>
SCHEDULE VIII
YORK INTERNATIONAL CORPORATION AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
Years Ended December 31, 1999, 1998 and 1997
(thousands of dollars)
<TABLE>
<CAPTION>
Column A Column B Column C Column C Column D Column E
- ----------------------------------- ---------- --------- ------------ ---------- ----------
Balance at Additions Additions Balance at
Beginning Costs and Other Close of
Description of Period Expenses Accounts (a) Deductions Period
- ----------------------------------- ---------- --------- ------------ ---------- ----------
<S> <C> <C> <C> <C> <C>
1999
Allowances for Doubtful Accounts $19,911 $10,899 $8,913 $ 8,381 $31,342
Warranties $36,488 $13,967 $1,475 $12,323 $39,607
1998
Allowances for Doubtful Accounts $17,839 $ 8,206 $ -- $ 6,134 $19,911
Warranties $36,280 $13,492 $ -- $13,284 $36,488
1997
Allowances for Doubtful Accounts $20,737 $ 6,139 $ -- $ 9,037 $17,839
Warranties $33,135 $12,805 $ -- $ 9,660 $36,280
</TABLE>
(a) Additions charged to Other Accounts includes liabilities of businesses
acquired in 1999.
34
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER EXHIBIT INDEX NUMBER
------- ------------- ------
<S> <C> <C>
3.1 Amended and Restated Certificate of Incorporation of Registrant (Incorporated by reference
to Exhibit 4.1 to the Registrant's Registration Statement on Form S-3, File No. 33-91292,
filed on June 7, 1995)
3.2 Certificate of Amendment to the Amended and Restated Certificate of Incorporation dated May
3, 1996 (Incorporated by reference to Exhibit 3.2 to the Registrant's Annual Report on Form
10-K for the year ended December 31, 1996, File No. 1-10863)
3.3 By-Laws of Registrant, restated as of December 17, 1996 (Incorporated by reference to
Exhibit 3.3 to the Registrant's Annual Report on Form 10-K for the year ended December 31,
1996, File No. 1-10863)
4.1 Receivables Sale Agreement dated as of March 26, 1997, by and among the Registrant, as
seller and collection agent, Asset Securitization Cooperative Corporation, as purchaser, and
Canadian Imperial Bank of Commerce, as servicing agent along with the supporting exhibits
(Incorporated by reference to Exhibit 4.1 to Registrant's Quarterly Report on Form 10-Q for
the quarter ended March 31, 1997, File No. 1-10863)
4.2 SECOND AMENDMENT TO AMENDED AND RESTATED RECEIVABLES SALE AGREEMENT, among the Registrant,
as seller and collection agent, Asset Securitization Cooperative Corporation, as purchaser,
and Canadian Imperial Bank of Commerce, as servicing agent. (Incorporated by reference to
Exhibit 4.1 to Registrant's Form 10-Q for the quarter ended September 30, 1999, File No.
1-10863)
4.3 THIRD AMENDMENT TO AMENDED AND RESTATED RECEIVABLES SALE AGREEMENT, among the Registrant, as
seller and collection agent, Asset Securitization Cooperative Corporation, as purchaser,
Canadian imperial Bank of Commerce, as servicing agent. (Incorporated by reference to
Exhibit 4.2 to Registrant's Form 10-Q for the quarter ended September 30, 1999, File No.
1-10863)
4.4 Indenture dated as of March 1, 1993 between the Registrant and Morgan Guaranty Trust Company
of New York, as Trustee (Incorporated by reference to Exhibit 4.1 to the Registrant's
Registration Statement filed on Form S-3, File No. 33-57178, filed on January 19, 1993)
4.5 Indenture effective as of June 1, 1998 between the Registrant and State Street Bank and
Trust Company, a Massachusetts chartered trust company, as Trustee (Incorporated by
reference to Exhibit 4 to the Registrant's Form 8-K, File No. 1-10863, filed on May 28, 1998)
4.6 Amended and Restated Credit Agreement, dated as of July 21, 1995 among the Registrant, the
several banks and the other financial institutions from time to time parties to the
Agreement and Canadian Imperial Bank of Commerce, acting through its New York Agency, as
Agent (Incorporated by reference to Exhibit 10.17 to Registrant's Quarterly Report on Form
10-Q for the quarter ended September 30, 1995, File No. 1-10863)
4.7 First Amendment dated as of May 28, 1997 to the Amended and Restated Credit Agreement among
the Registrant, the several banks and the 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 along with supporting exhibits (Incorporated by reference to Exhibit
4.5 to Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 1997, File
No. 1-10863)
4.8 SECOND AMENDMENT, dated as of June 3, 1999, to the Amended and Restated
</TABLE>
35
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
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. (Incorporated by
reference to Exhibit 4.1 to Registrant's Form 10-Q for the quarter ended June 30, 1999, File
No. 1-10863)
4.9 364-DAY REVOLVING CREDIT AGREEMENT, dated as of June 3, 1999, among York International
Corporation, the several banks and other financial institutions from time to time parties to
this Agreement and Canadian imperial Bank of Commerce, acting through its New York Agency as
administrative agent for the Banks hereunder. (Incorporated by reference tp Exhibit 4.2 to
Registrant's Form 10-Q for the quarter ended June 30, 1999, File No. 1-10863)
4.10 FOURTH AMENDMENT TO AMENDED AND RESTATED RECEIVABLES SALE AGREEMENT, among the Registrant,
as seller and collection agent, Asset Securitization Cooperative Corporation, as purchaser,
Canadian imperial Bank of Commerce, as servicing agent, effective December 22, 1999. (filed
herewith)
*10.1 Registrant's 1989 Employee Stock Option Plan (Incorporated by reference to Exhibit 10.4 to
Registrant's Annual Report on Form 10-K for the year ended December 31, 1989, File No.
33-25440)
*10.2 Registrant's Amended and Restated 1992 Omnibus Stock Plan (Incorporated by reference to
Exhibit 10.1 to Registrant's Annual Report on Form 10-Q for the quarter ended March 31,
1997, File No. 1-10863)
*10.3 Amendment No. 1 to the York International Corporation Amended and Restated 1992 Omnibus
Stock Plan, dated February 16, 1999 (Incorporated by reference to Exhibit 10.15 to the
Registrant's Annual Report on Form 10-K for the year ended December 31, 1998, File No.
1-10863)
*10.4 York International Corporation 1996 Incentive Compensation Plan (Amended and Restated
Effective January 1, 1999) (Incorporated by reference to Exhibit 10.2 to the Registrant's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1999, File No. 1-10863)
*10.5 Bristol Compressors, Inc. Officers Retirement/Salary Continuation Plan (Incorporated by
reference to Exhibit 10.4 to York International Corporation's Registration Statement on Form
S-1, File No. 33-30713, filed on August 25, 1989)
*10.6 York International Corporation Supplemental Executive Retirement Plan (Incorporated by
reference to Exhibit 10.12 to Registrant's Annual Report on Form 10-K for the year ended
December 31, 1993, File No. 1-10863)
*10.7 Form of Restricted Stock Agreement by and between Registrant and certain of its employees
(Incorporated by reference to Exhibit 10.7 to Registrant's Annual Report on Form 10-K for
the year ended December 31, 1995, File No. 1-10863)
*10.8 York International Corporation Executive Deferred Compensation Plan (Incorporated by
reference to Exhibit 10.3 to Registrant's Annual Report on Form 10-K for the year ended
December 31, 1993, File No. 1-10863)
*10.9 First Amendment to the York International Corporation Executive Deferred Compensation Plan,
dated as of December 2, 1994 (Incorporated by reference to Exhibit 10.8 to Registrant's
Annual Report on Form 10-K for the year ended December 31, 1995, File No. 1-10863)
*10.10 Second Amendment to the York International Corporation Executive Deferred Compensation Plan,
dated as of December 17, 1996 (Incorporated by reference to
</TABLE>
36
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Exhibit 3.2 to the Registrant's Annual Report on Form 10-K for the year ended
December 31, 1996, File No. 1-10863)
*10.11 Form of Severance Agreement entered into between the Registrant and certain of its Officers
and Employees (Incorporated by references to Exhibit 10.1 to Registrant's Quarterly Report
on Form 10-Q for the quarter ended September 30, 1997, File No. 1-10863.)
*10.12 Executive Officer Compensation Agreement between York International Corporation and John R.
Tucker, dated October 22, 1997 (Incorporated by reference to Exhibit 10.12 to the
Registrant's Annual Report on Form 10-K for the year ended December 31, 1998, File No.
1-10863)
*10.13 Executive Officer Compensation Agreement between York International Corporation and Stuart
R. Amos, dated February 6, 1998 (Incorporated by reference to Exhibit 10.13 to the
Registrant's Annual Report on Form 10-K for the year ended December 31, 1998, File No.
1-10863)
*10.14 Executive Officer Compensation Agreement between York International Corporation and Robert
C. Galvin, dated June 21, 1999 (filed herewith)
*10.15 Third Amendment to the York International Corporation Executive Deferred Compensation Plan,
effective as of October 1, 1999 (filed herewith)
*10.16 Employment Agreement between York International Corporation and John R. Tucker, dated
December 29, 1999 (filed herewith)
*10.17 Employment Agreement between York International Corporation and Stuart R. Amos, dated
December 29, 1999 (filed herewith)
*10.18 Employment Agreement between York International Corporation and Robert C. Galvin, dated
December 29, 1999 (filed herewith)
*10.19 Employment Agreement between York International Corporation and Michael R. Young, dated
December 29, 1999 (filed herewith)
*10.20 Retirement Agreement between York International Corporation and Robert N. Pokelwaldt, dated
October 14, 1999 (filed herewith)
*10.21 Employment Agreement between York International Corporation and Key Executive Employees,
dated December 29, 1999 (filed herewith)
*10.22 Amendment No. 2 to the York International Corporation Amended and Restated 1992 Omnibus
Stock Plan, dated February 9, 2000 (filed herewith)
12 Statement re: Computation of Ratio of Earnings to Fixed Charges (filed herewith)
13 Annual Financial Statements and Review of Operations with Accountants' Certificate (filed
herewith)
21 Subsidiaries of the Registrant (filed herewith)
23 Accountants' Consent (filed herewith)
27 Financial Data Schedule (filed herewith EDGAR Only)
* Required to be Filed as management contracts, compensatory plans or arrangements required to
be identified pursuant to Item 14(c) of the registrant's report on Form 10-K.
</TABLE>
37
<PAGE>
Exhibit 4.10
FOURTH AMENDMENT TO AMENDED AND RESTATED
RECEIVABLES SALE AGREEMENT
FOURTH AMENDMENT TO AMENDED AND RESTATED RECEIVABLES SALE AGREEMENT,
dated as of December 22, 1999 (this "Amendment"), among York International
---------
Corporation ("York"), Asset Securitization Cooperative Corporation ("ASCC") and
---- ----
Canadian Imperial Bank of Commerce ("CIBC"). Unless otherwise defined herein,
----
the capitalized terms used herein shall have the meanings assigned to them in
the Receivables Sale Agreement referred to below.
WHEREAS, York, ASCC and CIBC are party to that certain Amended and
Restated Receivables Sale Agreement, dated as of March 26, 1997, as amended (as
so amended, the "Receivables Sale Agreement"), pursuant to which York, as
--------------------------
seller, has sold to ASCC Ownership Interests in certain Receivables generated by
York and in the Seller's Interest;
WHEREAS, the parties hereto wish to amend the Receivables Sale
Agreement in the manner and on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants herein contained, the parties hereto agree as follows:
SECTION 1. DEFINED TERMS.
"Effective Date" means the first date on which (i) each of the parties
hereto shall have executed and delivered one or more counterparts of this
Amendment, (ii) ASCC shall have received a fee equal to $15,000, and (iii) the
conditions precedent set forth in Section 3 have been satisfied.
SECTION 2. AMENDMENTS OF THE RECEIVABLES SALE AGREEMENT.
(a) Amendment of Article I.
-----------------------
(i) The definition "Aggregate Investment" is hereby deleted in its
entirety.
(ii) Clause (ii) of the definition "Default Ratio" is hereby
amended to read in its entirety as follows:
(ii) the aggregate outstanding balance of all Receivables of
such Division that were unpaid for more than 60 days and less
than 91 days, in the case of the York Divisions, or for more
than 90 days, in the case of Bristol, past the dates on which
they were due as of the end of the month most recently
completed, and
(iii) Clause (1) of the definition "Defaulted Receivable" is
hereby amended by inserting the words "or the York Division, as the case
may be," after the word "Division".
<PAGE>
(iv) Clause (2) of the definition "Dilutions" is hereby amended by
inserting the words "or the York Division, as the case may be," after
the word "Division".
(v) Clause (6) of the definition "Eligible Receivable" is hereby
amended by inserting the words "or the York Division, as the case may
be" after the word "Division".
(vi) Clause (18) of the definition "Eligible Receivable" is hereby
amended by inserting the words "or the York Division, as the case may
be," after the word "Division".
(vii) Clause (19) of the definition "Eligible Receivable" is
hereby amended by inserting the words "or the York Division, as the case
may be" after the word "Division".
(viii) The definition "Division" is hereby amended to read in its
entirety as follows:
"Division" means the York Divisions (in the aggregate) and,
--------
for the purposes of this Agreement, Bristol. Each reference in
this Agreement to a Division, insofar as such reference is to
Bristol, shall, where appropriate, be deemed to be a reference to
the Seller as the owner of the Seller's Interest.
(ix) Clause (1) of the definition "Eligible Receivable" is hereby
amended by deleting the number "91" contained therein and substituting
in replacement thereof the number "60".
(x) Clause (2)(a) of the definition "Eligible Receivable" is hereby
amended by deleting the number "30" contained therein and substituting
in replacement thereof the number "90".
(xi) Clause (2)(b) of the definition "Eligible Receivable" is
hereby amended to read in its entirety as follows:
(b) if such Receivable was generated by UPG, within 360 days
after the billing date thereof, provided, that, if such
--------
Receivable is required to be paid in full on a date greater than
180 days after the billing date thereof, the payment of the
outstanding balance thereof is insured under an insurance policy
acceptable to the Purchaser issued by an insurance provider whose
claims-paying ability is rated at least AA by Standard & Poor's
or the equivalent thereof by a nationally recognized rating
agency acceptable to the Purchaser and with respect to which the
Purchaser is named as loss payee thereof
(xii) The definition "Foreign Concentration Limit" is hereby
amended to read in its entirety as follows:
<PAGE>
"Foreign Concentration Limit" means, with respect to all
---------------------------
Receivables owing to the York Divisions from all Obligors which
are not U.S. residents or Canadian residents, an amount equal to
the lesser of (x) 10% of the Investment at the time of
determination of the Foreign Concentration Limit and (y)
$17,500,000, reduced by the lesser of (i) the "Foreign
Concentration Limit" (as defined in the Transfer Agreement) and
(ii) the outstanding balance of all Foreign Receivables in the
"Receivables Pool" (as defined in the Transfer Agreement);
provided, that the Purchaser may, at any time and from time to
--------
time in its sole discretion, reduce or increase the Foreign
Concentration Limit effective immediately upon the delivery of a
notice to the Seller.
(xiii) Clause (y) of the definition "Historical Default Ratio" is
hereby amended to read in its entirety as follows:
(y) the aggregate outstanding balance of all Receivables of such
Division that were unpaid for more than 60 days and less than 91
days, in the case of the York Divisions, or for more than 90
days, in the case of Bristol, past the dates on which they were
due as at the end of each such full fiscal month of the Seller by
(xiv) The definition "Overextended Division" is hereby deleted in
its entirety.
(xv) The definition "Purchase Limit" is hereby amended to read in
its entirety as follows:
"Purchase Limit" means, at any time of determination, for
--------------
all Divisions in the aggregate, an amount equal to $175,000,000.
(xvi) Clause (i) of the definition "Receivables Pool" is hereby
amended to read in its entirety as follows:
(i) with respect to the York Divisions, the aggregation of each
then outstanding Receivable of the York Divisions with respect to
which the Purchaser has purchased an Ownership Interest and
(xvii) Clause (A) of paragraph (2) of the definition "Reserve" is
hereby amended to read in its entirety as follows:
(A) Receivables of such Division which, as at the end of each
such month, were unpaid for more than 60 days and less than 91
days, in the case of the York Divisions, or for more than 90
days, in the case of Bristol, past the date on which they were
due and
<PAGE>
(xviii) Paragraph (4) of the definition "Reserve" is hereby
amended by deleting the percentage "4.28%" contained therein and
substituting in replacement thereof the percentage "4.31%" and by
amending clause (b) to read in its entirety as follows:
(b) (i) .5833 with respect to the York Divisions and (ii) .2833
with respect to Bristol.
(xix) The definition "Selling Division" is hereby deleted in its
entirety.
(xx) The definition "Standard Concentration Limit" is hereby
amended to read in its entirety as follows:
"Standard Concentration Limit" means, (i) with respect to
----------------------------
all of the Receivables of any Division owing from a single
Obligor (except for an Obligor listed on Exhibit A) together with
Receivables owing from its Affiliates or subsidiaries, an amount
equal to the lesser of (i) 3% of the Investment at the time of
determination of the Standard Concentration Limit and (ii)
$5,250,000; provided, that the Purchaser may, at any time in its
discretion, reduce or increase the Standard Concentration Limit
for any Obligor through the delivery of a notice to the Seller.
(xxi) The definition "Unutilized Purchase Limit" is hereby amended
by deleting the dollar amount "$150,000,000" and substituting in
replacement thereof the dollar amount "$175,000,000".
(xxii) Article I of the Receivables Sale Agreement is hereby
amended by adding the following definition in proper alphabetical
sequence:
"York Divisions" means each of Applied, UPG and Frick.
--------------
(b) Amendment of Article III.
-------------------------
(i) Section 3.1(a) is hereby amended to read in its entirety as
follows:
(a) When the Purchaser accepts an offer from the Seller to
purchase an interest in (i) Receivables of the York Divisions or
(ii) the Seller's Interest, the Purchaser shall have acquired, in
exchange for the purchase price paid, an undivided percentage
ownership interest in (i) the Receivables Pool of the York
Divisions and any Collections relating thereto or (ii) the
Seller's Interest, as the case may be. Each such undivided
percentage interest of the Purchaser shall be referred to in this
Agreement as an "Ownership Interest". The Ownership Interest
with respect to the Receivables Pool of the York Divisions shall
at any time, except as provided in paragraphs (b) and (c) of this
Section, be equal to the following fraction (expressed as a
percentage):
<PAGE>
(ii) The term "R" in Section 3.1(a) is hereby amended by deleting
the words "such Division" and substituting in replacement thereof the
words "the York Divisions".
(iii) Clause (I) of the term "ER" in Section 3.1(a) is hereby
amended by deleting the words "each Division (other than Bristol)" and
substituting in replacement thereof the words "the York Divisions".
(iv) Clauses (iv) and (v) of the term "ER" in Section 3.1(a) is
hereby amended to read in its entirety as follows:
(iv) with respect to Eligible Receivables generated by Applied,
the positive result of (A) the aggregate amount by which the
outstanding balance of all such Eligible Receivables not required
to be paid in full until a date between thirty-one days and
ninety days, inclusive, after the billing date thereof exceeds
the product of (1) 5% and (2) the Investment at such time, less
----
(B) the amount, if any, determined in clause (i) hereof with
respect to each Obligor described therein which is an Obligor of
a Receivable described in this clause; (v) with respect to
Eligible Receivables generated by UPG, the positive result of (A)
the aggregate amount by which the outstanding balance of all such
Eligible Receivables not required to be paid in full until a date
between sixty-one days and one hundred eighty days, inclusive,
after the billing date thereof exceeds the product of (1) 10% and
(2) the Investment at such time, less (B) the amount, if any,
----
determined in clause (i) hereof with respect to each Obligor
described therein which is an Obligor of a Receivable described
in this clause; and (vi) with respect to Eligible Receivables
generated by UPG, the positive result of (A) the aggregate amount
by which the outstanding balance of all such Eligible Receivables
not required to be paid in full until a date between one hundred
eighty-one days and three hundred and sixty days, inclusive,
after the billing date thereof exceeds the product of (1) 15% and
(2) the Investment at such time, less (B) the amount, if any,
----
determined in clause (i) hereof with respect to each Obligor
described therein which is an Obligor of a Receivable described
in this clause;
(v) Clause (i) of the last paragraph of Section 3.1(a) is hereby
amended to read in its entirety as follows:
(i) with respect to the York Divisions, the value of Investment
with respect to the Receivables Pool of the York Divisions,
Reserve with respect to the York Divisions, Eligible Receivables
(as so reduced) in such Receivables Pool, Standard Concentration
Limit or Special Concentration Limit with respect to any Obligor,
Foreign Concentration Limit, Government Concentration Limit or
Dilution Percentage with respect to the York Divisions and
<PAGE>
(vi) Section 3.1(b) is hereby amended to read in its entirety as
follows:
(b) During any period when the Investment is being reduced,
the Ownership Interest in both the Receivables of the York
Divisions and the Seller's Interest will remain fixed at the
percentage in effect as of the date immediately preceding the
commencement of that period and the Purchaser shall cease
acquiring an interest in any such Receivables, Seller's Interest
or Collections thereon arising during such period.
(vii) Section 3.1(c) is hereby amended by deleting the words "each
Division" in the first and second sentences thereof and substituting in
replacement thereof the words "the York Divisions".
(viii) Section 3.1(e) is hereby amended by deleting the words "all
Receivables Pools of the Divisions" and substituting in replacement
thereof the words "the Receivables Pool of the York Divisions".
(ix) Section 3.2 is hereby amended to read in its entirety as
follows:
Section 3.2 Frequency of Determining Ownership Interest.
-------------------------------------------
The Collection Agent shall determine or be deemed to determine
the Ownership Interest in the Receivables Pool of the York
Divisions and the Seller's Interest daily, and shall report it to
the Servicing Agent at the following times only:
(a) on the date of an Initial Purchase from the Seller;
(b) on each Settlement Date;
(c) on the date of an Incremental Purchase from the Seller;
(d) on the Business Day immediately preceding any period during
which the Investment is being reduced;
(e) on the Business Day on which the ceases being reduced;
(f) when the Collection Agent has reason to believe that the
Maximum Ownership Interest has been exceeded; and
(g) at the request of the Purchaser.
(x) Section 3.3 is hereby amended to read in its entirety as
follows:
Section 3.3 Maximum Ownership Interest.
--------------------------
(a) If, on any day (after giving effect to Collections and
the generation of new Receivables with respect to the Receivables
Pool of the
<PAGE>
York Divisions on such day), the Ownership Interest
in such Receivables Pool would exceed the Maximum Ownership
Interest, the Purchaser shall cease making Reinvestment Purchases
and the Collection Agent shall remit to the Purchaser on a daily
basis all Collections attributable to such Ownership Interest
(net of amounts distributed or to be distributed pursuant to
Sections 7.2.2(a) and 7.2(b)(i)) as a reduction to its Investment
until the Purchaser has received an amount sufficient to reduce
such Ownership Interest to the Maximum Ownership Interest. The
Seller shall remit to the Purchaser in reduction of its
Investment any payment made by the Purchaser to the Seller on
account of Reinvestment Purchases to the extent the Ownership
Interest exceeded the Maximum Ownership Interest at the time the
Seller received any such Reinvestment Purchase payment.
(b) If, on any day (after giving effect to Collections and
the increase in the Seller's "Investment" (as defined in the
Transfer Agreement) in Bristol's Receivables pursuant to the
Transfer Agreement), the Ownership Interest with respect to the
Seller's Interest would exceed the Maximum Ownership Interest,
the Purchaser shall cease making Reinvestment Purchases and the
Collection Agent shall remit to the Purchaser on a daily basis
all Collections attributable to such Ownership Interest (net of
amounts distributed or to be distributed pursuant to Sections
7.2.2(a) and 7.2(b)(i)) as a reduction to its Investment until
the Purchaser has received an amount sufficient to reduce such
Ownership Interest to the Maximum Ownership Interest. The Seller
shall remit to the Purchaser in reduction of its Investment any
payment made by the Purchaser to the Seller on account of
Reinvestment Purchases to the extent the Ownership Interest
exceeded the Maximum Ownership Interest at the time the Seller
received any such Reinvestment Purchase payment.
(c) Amendment of Article IV.
------------------------
(i) Section 4.1(a) is hereby amended by deleting the words "(other
than Incremental Purchases deemed made pursuant to Section 3.3(a))" in
clause (i) thereof.
(ii) Section 4.1(b) is hereby amended by to read in its entirety as
follows:
(b) for a Reinvestment Purchase in Eligible Receivables or
in the Seller's Interest, the positive result of (i) the product
of (A) the dollar amount of the Collections received on account
of Pool Receivables of the related Division on the date of such
Purchase and (B) the Ownership Interest with respect to such
Division on that date, less (ii) any fees payable under Section
7.2.2(b)(i);
provided, that the payment of any amount described in (a) or (b)
--------
above would not cause (and such amount shall be reduced so as not
to cause) either:
<PAGE>
(1) the Investment to exceed the Purchase Limit for all
Divisions in the aggregate; or
(2) the Ownership Interest in the Receivables Pool of the
York Divisions to exceed the Maximum Ownership
Interest.
(d) Amendment of Article V.
-----------------------
(i) Section 5.2.1 is hereby amended by deleting the words "with
respect to any Division" contained in the first line of the last
paragraph thereof.
(e) Amendment of Article VI.
------------------------
(i) Section 6.2(a) is hereby amended by deleting the words ", the
Division which generated the Receivables which are the subject of the
Purchase" contained in the second sentence thereof.
(ii) Section 6.2(b) is hereby amended by deleting clause (ii) in
its entirety and renumbering clause (iii) as clause (ii).
(iii) Section 6.4 is hereby amended to read in its entirety as
follows:
Section 6.4 Condition Precedent to all Incremental
--------------------------------------
Purchases. Before the Purchaser will consider making an
---------
Incremental Purchase, the Servicing Agent shall have received, on
or prior to the date of such Incremental Purchase, all
Receivables Activity Reports required to be delivered at or prior
to such date.
(f) Amendment of Article VII.
-------------------------
(i) Section 7.1 is hereby amended by deleting the words "with
respect to any Division" in paragraphs (c) and (d) thereof.
(ii) Section 7.2.2(b)(ii) is hereby amended to read in its entirety
as follows:
(ii) second,
(A) if Reinvestment Purchases have been suspended, all
remaining Collections will be paid to the
Purchaser as a return of its Investment; or
(B) if Reinvestment Purchases have not been suspended,
all remaining Collections will be paid to the
Seller for a Reinvestment Purchase.
(g) Amendment of Article VIII.
--------------------------
<PAGE>
(i) Clause (vi) of Section 8.2.1(a) is hereby amended to read in
its entirety as follows:
(vi) on any Settlement Date, the Average Maturity with respect to
the Receivables Pool of the York Divisions exceeds 131 days
or the Receivables Pool of Bristol exceeds 80 days;
(h) Amendment of Article X.
-----------------------
(i) Section 10.1(i) is hereby amended by deleting the words "each
of the Divisions" and substituting in replacement thereof the words "the
York Divisions".
(ii) Section 10.1(k) is hereby amended by deleting the words "each
Division" and substituting in replacement thereof the words "the York
Divisions".
(iii) Section 10.3(f) is hereby amended by deleting the words "a
Division" at the end thereof and substituting in replacement thereof the
words "the York Divisions".
(iv) Section 10.3(g) is hereby amended by deleting the dollar
amount "$20,000,000" and substituting in replacement thereof the dollar
amount "$17,500,000".
SECTION 3. CONDITIONS PRECEDENT
The occurrence of the Effective Date shall be subject to the
conditions precedent that ASCC and CIBC shall have received the following, each
dated such date, and in form and substance, satisfactory to ASCC and CIBC:
(i) A certificate of the Secretary or an Assistant Secretary of
York certifying as to (1) the incumbency and signatures of its officers
authorized to sign this Amendment and the other agreements and documents
to be delivered by it hereunder, (2) its charter (attached and
appropriately certified by the Secretary of State of its jurisdiction of
incorporation) and by-laws, and (3) the resolutions of its Board of
Directors, authorizing this Amendment and the other agreements and
documents to be delivered by it hereunder and the transactions
contemplated hereby.
(ii) A certificate of the chief administrative officer or treasurer
of York to the effect that, after giving effect to the transactions
contemplated by this Amendment, (i) the representations and warranties
contained in Section 9.1 of the Receivables Sale Agreement will be
correct on and as of the Effective Date as though made by York on and as
of the Effective Date, provided that all references in such
representations and warranties to Receivables Sale Agreement shall be
deemed to refer to the Receivables Sale Agreement as amended hereby, and
(ii) no event has occurred and is continuing, or would result from the
transactions contemplated hereby, that constitutes an event described in
Section 8.2.1(a) of the Receivables Sale Agreement or that would
constitute such an event but for the requirement that notice be given or
time elapse or both.
<PAGE>
(iii) Such other certificates, documents and opinions as ASCC or
CIBC may reasonably request.
SECTION 4. CONDITION SUBSEQUENT
(a) York shall, not later than December 28, 1999, deliver to ASCC and
CIBC, a favorable opinion of counsel for York, in form and substance
satisfactory to ASCC and CIBC.
(b) The failure of the Seller to comply with the provisions of this
Section 4 shall constitute the occurrence of an event under Section 8.2.1(a) of
the Receivables Sale Agreement with the same force and effect as if such
provisions were set forth therein, and shall entitle ASCC and CIBC to exercise
any and all remedies described in the Receivables Sale Agreement.
SECTION 5. REPRESENTATIONS AND WARRANTIES.
York hereby represents and warrants as follows:
(i) It is a corporation duly incorporated, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and is
duly qualified in good standing as a foreign corporation in each
jurisdiction where the failure to be so qualified could materially
adversely affect its ability to perform its obligations hereunder or under
the Receivables Sale Agreement (as amended hereby).
(ii) The execution and delivery by it of this Amendment and the
performance by it of this Amendment and the Receivables Sale Agreement (as
amended hereby) are within its corporate powers, have been duly authorized
by all necessary corporate action, do not contravene (1) its charter or by-
laws or (2) any law or contractual restriction binding on or affecting it,
and do not and will not result in or require the creation of any lien upon
or with respect to any of its properties. This Amendment has been duly
executed and delivered by it.
(iii) No authorization or approval or other action by, and no notice to
or filing with, any governmental authority or regulatory body is required
for the due execution and delivery by it of this Amendment or the
performance by it of this Amendment or the Receivables Sale Agreement (as
amended hereby).
(iv) This Amendment and the Receivables Sale Agreement (as amended
hereby) constitute legal, valid and binding obligations, enforceable
against it in accordance with their respective terms.
(v) There is no pending or, to its knowledge, threatened action or
proceeding affecting it or any of its subsidiaries before any court,
governmental agency or arbitrator, which could reasonably be expected to
materially adversely affect (1) its financial condition or operations, or
(2) its ability to perform its obligations under this Amendment or the
Receivables Sale Agreement (as amended hereby), or which could affect the
<PAGE>
legality, validity or enforceability of the Receivables Sale Agreement (as
amended hereby).
SECTION 6. EXPENSES.
York agrees to pay on demand all costs and expenses incurred in
connection with the preparation, execution, delivery, enforcement and
administration of this Amendment and the other documents and agreements to be
delivered hereunder, including, without limitation, the reasonable fees and
disbursements of counsel to ASCC and CIBC.
SECTION 7. EXECUTION IN COUNTERPARTS.
This Amendment may be executed in any number of counterparts and by
different parties hereto on separate counterparts, each of which counterparts,
when so executed and delivered, shall be deemed to be an original, and all of
which counterparts, when taken together, shall constitute but one and the same
agreement.
SECTION 8. GOVERNING LAW.
THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK.
SECTION 9. SEVERABILITY OF PROVISIONS.
Any provision of this Amendment which is prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions hereof or affecting the validity or enforceability of such provision
in any other jurisdiction.
SECTION 10. CAPTIONS.
The captions in this Amendment are for convenience of reference only
and shall not define or limit any of the terms or provisions hereof.
SECTION 11. AGREEMENTS TO REMAIN IN FULL FORCE AND EFFECT.
(a) This Amendment shall be deemed to be an amendment to the
Receivables Sale Agreement. All references in the Receivables Sale Agreement to
the term "Aggregate Investment" shall be deemed to be "Investment". All
references to the Receivables Sale Agreement in any other agreements or document
shall on and after the Effective Date be deemed to refer to the Receivables Sale
Agreement as amended hereby.
(b) Except as herein amended, all terms, provisions and conditions of
the Receivables Sale Agreement and all documents executed in connection
therewith shall continue in full force and effect and shall remain enforceable
and binding in accordance with their terms.
<PAGE>
SECTION 12. NO PROCEEDINGS.
Each of the parties hereto hereby agrees that it will not institute
against, or join any other person, firm, corporation or other entity in
instituting against, ASCC any bankruptcy, reorganization, insolvency or similar
proceeding.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed as of the date first above written.
YORK INTERNATIONAL CORPORATION
By: ____________________________
Name:
Title:
ASSET SECURITIZATION COOPERATIVE CORPORATION
By: ____________________________
Name:
Title:
CANADIAN IMPERIAL BANK OF COMMERCE
By: ____________________________
Authorized Signatory
<PAGE>
Exhibit 10.14
[Letterhead of York/(R)/ International]
June 21, 1999
Mr. Robert C. Galvin
44 Holmes Road
Ridgefield, CT 06877
Dear Bob:
On behalf of York International Corporation, I am very pleased to offer to you
the position of Vice President and Chief Financial Officer reporting to me,
effective on or before July 12, 1999. Your starting base salary will be
$32,083.34/month ($385,000/annually).
The Incentive Compensation Plan for executives at York International has two
elements; an annual cash bonus which is based on single year results, and a mid-
term Performance Unit Plan (P.U.P.) which is based on three-year results. Your
participation in the annual portion of the Plan will be a 45% Base Expected
Value level and a 90% Base Over Achievement level. Based on the 1999 Plan, your
Adjusted Expected Value is 78% and adjusted Over Achievement is 156%. If the
company should achieve its 1999 financial plan, your incentive opportunity will
be calculated at the annual Expected Value percentage (Adjusted Base EV) for the
full year January 1, 1999 through December 31, 1999. For 1999, you will be
guaranteed a minimum incentive award of $173,250. It will be recommended, and
subject to approval of the Board of Directors, that you receive 5,033 P.U.P.
units. These units will be earned from the grant date to the end of 2001, the
valuation date.
It will also be recommended to the Board of Directors that you receive 40,000
performance accelerated stock options under the provisions of the Stock Option
Plan priced at Fair Market Value on the date of grant. With this annual grant
there are two accelerated vesting triggers which must be achieved within five
years. The first trigger will be set at a stock price of a 26% increase over
grant price and when achieved, 50% of the option shares will vest. The second
trigger will be set at a stock price of a 13% increase over the first trigger
price and when achieved, the remaining 50% of the option shares will vest. The
trigger prices will be averaged for 15 consecutive trading days. If one or both
of the trigger prices are not reached within 5 years, the options will
automatically vest after 7 years. According to the Omnibus Stock Plan, options
will automatically be cancelled upon termination of employment for "Cause".
Termination for Cause is the termination of employment of an employee for (i)
providing the Company with materially false representations relied upon by the
Company in furnishing information to stockholders, a stock exchange or the
Securities and Exchange Commission, (ii) maintaining an undisclosed,
unauthorized and material conflict of interest in the discharge of duties owed
to the Company, (iii) misconduct causing a serious violation by the Company of
state or federal laws, (iv) theft of Company funds or assets, or (v) conviction
of a crime involving moral turpitude.
In addition, it will be recommended to the Board of Directors that you be
granted 20,000 Restricted Shares, priced at $1.00 per share. These shares will
vest 50% upon the second anniversary of grant, and 25% respectively, at the
third and fourth anniversaries.
Should you accept this offer, the above will be voted on by the Board of
Directors on June 22, 1999 and the grant price will be fixed at close of
business that day.
You will be a participant in York's financial planning program with an annual
allowance of $5,000.
<PAGE>
You will be provided relocation benefits typically offered to a transferred York
employee. However, the incidental expense allowance will be increased to $15,000
grossed up to cover appropriate taxes. Included in this relocation package, you
will be eligible for an interest free bridge loan at 90% of your equity. Also,
you will be provided 6 months of temporary housing with all expenses paid.
You will be provided dual housing expenses. The Company reimbursement, covered
by receipts, will apply to the old or new residence, whichever is less expense.
These expenses include:
. Mortgage principal and interest payments;
. Prorated taxes and insurance premiums;
. Unoccupied dwelling insurance;
. Cost of necessary utilities; and
. Regular or required maintenance such as lawn care.
You will be paid a car buyout of $25,000 grossed up to cover appropriate taxes.
This will be paid to you within two weeks of your start date.
You will be provided the following severance guarantees:
1. The Company Change of Control agreement.
2. One and one-half year's base and incentive pay and the immediate vesting
of your employment restricted stock grant should you be involuntarily
terminated within the first two years of your employment (without just
cause), not related to a change of control.
You will participate in York's FlexChoice Group Health and Welfare Benefits
Program effective on your date of hire. You will be eligible for all other
benefits, (including Investment Plan, Retirement Plan, etc.) based on the plan
provisions.
It will be recommended to the Board of Directors that you become a participant
in the Supplemental Executive Retirement Plan (S.E.R.P.) effective with your
date of hire. The purpose of this benefit is to provide pension benefits above
the current ERISA salary cap of $160,000 annually and to increase overall
pension entitlement to 2.5% of Final average earnings when combined with the
standard plan.
Prior to commencing employment, you will be required to execute a
Confidentiality Agreement and Code of Business Conduct Certification. You will
also be required to satisfactorily complete a pre-employment physical
examination which includes a drug screen. In the event you have a disability,
York will make reasonable accommodations for you provided the accommodations
allow you to perform the essential functions of this position and does not
create an undue hardship for the Company.
York adheres to an "employment at will" policy which allows either you or York
to terminate an employment relationship without notice. The employment of each
individual is subject to the normal policies and practices of the Company and
its benefits plans as they will be revised from time to time.
We look forward to you joining York International Corporation, Bob, and to the
contributions you
<PAGE>
will make toward our growing organization. Please contact me at (717) 771-7383
if you have any questions about York or our offer.
Enclosed is a second original of this offer, upon acceptance, please return one
copy to my attention with your signature for our records by June 21, 1999.
Sincerely,
/s/ Robert N. Pokelwaldt
Robert N. Pokelwaldt
Chairman and Chief Executive Officer
/s/ Robert C. Galvin
__________________________________________
Robert C. Galvin
__________________________________________
Date
cc W. Kennedy
<PAGE>
Exhibit 10.15
THIRD AMENDMENT TO THE
YORK INTERNATIONAL CORPORATION
EXECUTIVE DEFERRED COMPENSATION PLAN
Pursuant to the powers of amendment reserved to the Compensation Committee
under Article X of the York International Corporation Executive Deferred
Compensation Plan (the "Plan"), the Plan is hereby amended, effective as of
October 1, 1999, as follows:
1. Section 12.1(b) is hereby amended and restated in its entirety to read
as follows:
"Only Salary Deferrals, Bonus Deferrals and Directors' Fee
Deferrals shall be allocable to the York Stock Fund."
2. Section 12.1(c) is hereby amended and restated in its entirety to read
as follows:
"A Participant may provide the Administrative Committee with
investment allocation directions, pursuant to such procedures set
forth by the Administrative Committee from time to time, that
direct that all or a portion of the Participant's Salary
Deferrals, Bonus Deferrals, and Directors' Fee Deferrals be
allocated to the York Stock Fund. Any such investment allocation
direction shall be prospective in nature and shall apply only to
Salary Deferrals, Bonus Deferrals and Directors' Fee Deferrals
allocated to the Participant's Account after delivery of such
investment allocation direction to the Administrative Committee.
Notwithstanding the immediately preceding sentence, (i) any
Participant in the Plan on January 1, 1995, may make a one-time
election to have reallocated to the York Stock Fund all or a
portion of the Directors' Fee Deferrals allocated to another
investment fund as of the time of such election, provided that
the Participant delivers a written investment allocation
direction to the Administrative Committee on or before January
31, 1995; and (ii) any Participant in the Plan on October 1,
1999, may make a one-time election to have reallocated to the
York Stock Fund all or a portion of the Salary Deferrals and
Bonus Deferrals allocated to another investment fund as of the
time of such election, provided that the Participant delivers a
written investment allocation direction to the Administrative
Committee on or before October 31, 1999.
3. Section 12.1(d) is hereby amended and restated in its entirety to read
as follows:
<PAGE>
"A Participant's Deferred Compensation allocated to the York
Stock Fund may not be reallocated to another investment fund."
4. Section 12.1(g)(i) is hereby amended and restated in its entirety to
read as follows:
"The bookkeeping account for a Participant shall be credited, as
of the day the applicable deferred salary, deferred bonus or
deferred directors' fee would otherwise have been payable to the
Participant, with units equal to the number of shares of York
Common Stock (including fractions of a share) that could have
been purchased with the amount of such Salary Deferrals, Bonus
Deferrals or Directors' Fee Deferrals at the average of the
closing sales prices of York Common Stock as reported on the New
York Stock Exchange for the ten trading days immediately
preceding the date as of which the bookkeeping account is so
credited."
The York International Corporation Executive Deferred Compensation Plan, as
amended by this Second Amendment effective as of October 1, 1999, is hereby
ratified and confirmed in all respects.
IN WITNESS WHEREOF, the Compensation Committee has caused this Second
Amendment to be executed as of the __ day of September, 1999.
The Compensation Committee of the Board of
Directors of York International Corporation
By: ______________________________
Attest:
________________________
<PAGE>
Exhibit 10.16
EMPLOYMENT AGREEMENT
AGREEMENT by and between York International Corporation, a Delaware
corporation (the "Company") and John R. Tucker (the "Executive") dated as of the
29th day of December, 1999.
The Board of Directors of the Company has determined that it is in its
best interests and that of its shareholders to employ the Executive in the
capacity described below and the Executive wishes to serve in such capacity.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. Effective Date. The "Effective Date" shall mean December 29, 1999.
2. Employment Period. The Company hereby agrees to employ the
Executive, and the Executive hereby agrees to enter into the employ of the
Company subject to the terms and conditions of this Agreement, for the period
commencing on the Effective Date and ending on the third anniversary thereof
(the "Employment Period") provided, however, that the Employment Period shall be
automatically extended without action by either party for an additional one
month period on the 16th day of each month unless, not later than the 15th day
of any month, either party shall give notice to the other in writing that such
party does not intend to extend the Employment Period.
3. Terms of Employment. (a) Position and Duties. (A) During the
Employment Period, the Executive shall serve as Chief Executive Officer and
President with such authority, duties and responsibilities as are commensurate
with such position and (B) the Executive's services shall be performed in York,
Pennsylvania.
(b) Compensation.
(i) Base Salary. During the Employment Period, the Executive shall
receive an annual base salary of $650,000 ("Annual Base Salary"), which shall be
paid in accordance with the Company's payroll practices. During the Employment
Period, the Annual Base Salary shall be reviewed at least annually. Any increase
in Annual Base Salary shall not serve to limit or reduce any other obligation to
the Executive under this Agreement. Annual Base Salary shall not be reduced
after any such increase and the term Annual Base Salary as utilized in this
Agreement shall refer to Annual Base Salary as so increased. As used in this
Agreement, the term "affiliated companies" shall include any company controlled
by, controlling or under common control with the Company.
(ii) Incentive Compensation. During the Employment Period, the
Executive shall have an annual cash bonus and a mid-term performance bonus
opportunity based on a percentage of his Annual Base Salary (determined annually
by the Company's Board in accordance with the provisions of the 1996 Incentive
Compensation Plan) and shall otherwise be eligible for incentive compensation
awards on the same basis as similarly situated executives.
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<PAGE>
(iii) Employee Benefit Plans. During the Employment Period, the
Executive shall be entitled to participate in all incentive, employee benefit,
retirement, welfare and other plans, practices, policies and programs applicable
to senior executives of the Company.
(iv) Expenses. During the Employment Period, the Executive shall be
entitled to receive prompt reimbursement for all reasonable expenses incurred by
the Executive in accordance with the Company's policies.
(v) Perquisite Benefits. During the Employment Period, the Executive
shall be provided with perquisite benefits as are provided to other senior
executives of the Company.
(vi) Vacation. During the Employment Period, the Executive shall be
entitled to paid vacation in accordance with the plans, policies, programs and
practices of the Company and its affiliated companies as in effect with respect
to the senior executives of the Company.
4. Termination of Employment. (a) Death or Disability. The Executive's
employment shall terminate automatically upon the Executive's death during the
Employment Period. If the Company determines in good faith that the Disability
of the Executive has occurred during the Employment Period (pursuant to the
definition of Disability set forth below), it may give to the Executive written
notice in accordance with Section 11(b) of this Agreement of its intention to
terminate the Executive's employment. In such event, the Executive's employment
with the Company shall terminate effective on the 30th day after receipt of such
notice by the Executive (the "Disability Effective Date"), provided that, within
the 30 days after such receipt, the Executive shall not have returned to
full-time performance of the Executive's duties. For purposes of this Agreement,
"Disability" shall mean the absence of the Executive from the Executive's duties
with the Company on a full-time basis for 180 consecutive business days as a
result of incapacity due to mental or physical illness which is determined to be
total and permanent by a physician selected by the Company or its insurers and
acceptable to the Executive or the Executive's legal representative.
(b) Cause. The Company may terminate the Executive's employment during
the Employment Period for Cause. For purposes of this Agreement, "Cause" shall
mean:
(i) knowingly providing the Company with materially false
representations relied upon by the Company in furnishing information to
stockholders, a stock exchange or the Securities and Exchange Commission, or
(ii) maintaining an undisclosed, unauthorized and material conflict of
interest in the discharge of duties owed to the Company, or
(iii) willful misconduct causing serious violation by the Company of
state or federal laws, or
(iv) theft of Company funds or assets, or
(v) conviction of a crime involving moral turpitude.
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<PAGE>
For purposes of this provision, no act or failure to act, on the part of the
Executive, shall be considered "willful" unless it is done, or omitted to be
done, by the Executive in bad faith or without reasonable belief that the
Executive's action or omission was in the best interests of the Company. Any
act, or failure to act, based upon authority given pursuant to a resolution duly
adopted by the Board or based upon advice of counsel for the Company shall be
conclusively presumed to be done, or omitted to be done, by the Executive in
good faith and in the best interest of the Company.
(c) Good Reason. In the event that the Executive's employment with the
Company is voluntarily terminated by the Executive with "Good Reason", the
Executive shall be entitled to a lump sum payment representing the remaining
balance of his or her employment agreement as calculated in accordance with
Section 5 (a). For purposes of this Agreement, "Good Reason" shall mean, in the
absence of a written consent of the Executive, any of the following which occurs
before the expiration of the Executive's Employment Period:
(i) a substantial and adverse change in the Executive's
responsibilities, job description, status or position as a key employee of the
Company, when compared to the Executive's prior responsibilities, job
description, status or position as a key employee of the Company as contemplated
by Section 3(a) of this Agreement, excluding for this purpose an isolated,
insubstantial and inadvertent action not taken in bad faith, and which is
remedied by the Company promptly after receipt or notice thereof given by the
Executive;
(ii) any material failure by the Company to comply with any of the
provisions of Section 3(b) of this Agreement, unless initiated by the Executive,
other than a failure not occurring in bad faith and which is remedied by the
Company promptly after receipt of notice thereof given by the Executive;
(iii) the requiring that the Executive travel on the Company's
business to an extent materially greater than the Executive's normal business
travel, or the Company requiring the Executive to be based at any office or
location more than 35 miles from that provided in Section 3(a)(i)(B) hereof;
(iv) a material breach by the Company of any terms of this Agreement,
or any failure by the Company to comply with and satisfy Section 9 of this
Agreement, or any purported termination by the Company of the Executive's
employment otherwise than as expressly permitted by this Agreement
(v) any failure by the Company to obtain the assumption of this
Agreement by any successor or assign of the Company.
(d) Notice of Termination. Any termination by the Company for Cause, or
by the Executive for Good Reason, shall be communicated by Notice of Termination
to the other party hereto given in accordance with Section 11(b) of this
Agreement. For purposes of this Agreement, a "Notice of Termination" means a
written notice which (i) indicates the specific termination provision in this
Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination of
the Executive's employment under the provision so indicated and (iii) if the
Date of Termination (as defined below) is other than the date of receipt of such
notice, specifies the termination date (which date shall be not more than thirty
days after the giving of such notice). The failure by the
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<PAGE>
Executive or the Company to set forth in the Notice of Termination any fact or
circumstance which contributes to a showing of Good Reason or Cause shall not
waive any right of the Executive or the Company, respectively, hereunder or
preclude the Executive or the Company, respectively, from asserting such fact or
circumstance in enforcing the Executive's or the Company's rights hereunder.
(e) Date of Termination. "Date of Termination" means (i) if the
Executive's employment is terminated by the Company for Cause, or by the
Executive for Good Reason, the date of receipt of the Notice of Termination or
any later date specified therein within 30 days of such notice, as the case may
be, (ii) if the Executive's employment is terminated by the Company other than
for Cause or Disability, the Date of Termination shall be the date on which the
Company notifies the Executive of such termination and (iii) if the Executive's
employment is terminated by reason of death or Disability, the Date of
Termination shall be the date of death of the Executive or the Disability
Effective Date, as the case may be.
5. Obligations of the Company upon Termination. (a) Good Reason; Other
Than for Cause, Death or Disability. If, during the Employment Period, the
Company shall terminate the Executive's employment other than for Cause, Death
or Disability or the Executive shall terminate employment for Good Reason:
(i) the Company shall pay to the Executive in a lump sum in cash
within 30 days after the Date of Termination the aggregate of the following
amounts:
A. the sum of the Executive's Annual Base Salary through the Date of
Termination to the extent not theretofore paid, (this amount shall be
hereinafter referred to as the "Accrued Obligations"); and
B. An amount equal to the Executive's Annual Base Salary plus Annual
Cash Bonus (based on the adjusted EV bonus amount for the Fiscal Year in
which the Date of Termination occurs, the "Adjusted EV Bonus") for the
remaining Employment Period; and
C. an amount equal to the actuarial equivalent of the benefit under
the Company's qualified defined benefit retirement plan (the "Retirement
Plan") (utilizing actuarial assumptions no less favorable to the Executive
than those in effect under the Company's Retirement Plan immediately prior
to the Effective Date), and the supplemental early retirement plan in which
the Executive participates (the "SERP") which the Executive would receive
if the Executive's employment continued until the Executive reached age 62,
assuming for this purpose that at age 62 the Executive would have 20 years
of credited service and all accrued benefits are fully vested, and assuming
that the Executive's compensation in each of the periods is that required
by Section 3(b) and that the Executive's Annual Cash Bonus for such years
is the Adjusted EV Bonus;
(ii) the Company shall continue to provide welfare benefits to the
Executive and his dependants until the end of the Employment Period on the same
basis that such benefits were provided to him immediately prior to the Date of
Termination; and
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<PAGE>
(iii) to the extent not theretofore paid or provided, the Company
shall timely pay or provide to the Executive any other amounts or benefits
required to be paid or provided or which the Executive is eligible to receive
under any plan, program, policy or practice or contract or agreement of the
Company and its affiliated companies (such other amounts and benefits shall be
hereinafter referred to as the "Other Benefits").
(b) Death. If the Executive's employment is terminated by reason of the
Executive's death during the Employment Period, this Agreement shall terminate
without further obligations to the Executive's legal representatives under this
Agreement, other than for payment of Accrued Obligations and the timely payment
or provision of Other Benefits. Accrued Obligations shall be paid to the
Executive's estate or beneficiary, as applicable, in a lump sum in cash within
30 days of the Date of Termination. With respect to the provision of Other
Benefits, the term Other Benefits as utilized in this Section 5(b) shall include
death benefits as in effect on the date of the Executive's death with respect to
senior executives of the Company and his beneficiaries.
(c) Disability. If the Executive's employment is terminated by reason
of the Executive's Disability during the Employment Period, this Agreement shall
terminate without further obligations to the Executive, other than for payment
of Accrued Obligations and the timely payment or provision of Other Benefits.
Accrued Obligations shall be paid to the Executive in a lump sum in cash within
30 days of the Date of Termination. With respect to the provision of Other
Benefits, the term Other Benefits as utilized in this Section 5(c) shall
include, and the Executive shall be entitled after the Disability Effective Date
to receive, disability and other benefits as in effect at any time thereafter
generally with respect to the senior executives of the Company.
(d) Cause; Other than for Good Reason. If the Executive's employment
shall be terminated for Cause or the Executive terminates his employment without
Good Reason during the Employment Period, this Agreement shall terminate without
further obligations to the Executive other than the obligation to pay to the
Executive his Annual Base Salary through the Date of Termination, and Other
Benefits, in each case to the extent theretofore unpaid.
6. Non-exclusivity of Rights. Except as specifically provided, nothing
in this Agreement shall prevent or limit the Executive's continuing or future
participation in any plan, program, policy or practice provided by the Company
or any of its affiliated companies and for which the Executive may qualify, nor,
subject to Section 11(e), shall anything herein limit or otherwise affect such
rights as the Executive may have under any contract or agreement with the
Company or any of its affiliated companies. Amounts which are vested benefits or
which the Executive is otherwise entitled to receive under any plan, policy,
practice or program of or any contract or agreement with the Company or any of
its affiliated companies at or subsequent to the Date of Termination shall be
payable in accordance with such plan, policy, practice or program or contract or
agreement except as explicitly modified by this Agreement.
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<PAGE>
7. Full Settlement. The Company's obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim, recoupment,
defense or other claim, right or action which the Company may have against the
Executive or others. In no event shall the Executive be obligated to seek other
employment or take any other action by way of mitigation of the amounts payable
to the Executive under any of the provisions of this Agreement and, such amounts
shall not be reduced whether or not the Executive obtains other employment. The
Company agrees to pay as incurred, to the full extent permitted by law, all
legal fees and expenses which the Executive may reasonably incur as a result of
any contest (regardless of the outcome thereof) by the Company, the Executive or
others of the validity or enforceability of, or liability under, any provision
of this Agreement or any guarantee of performance thereof (including as a result
of any contest by the Executive about the amount of any payment pursuant to this
Agreement), plus in each case interest on any delayed payment at the applicable
Federal rate provided for in Section 7872(f)(2)(A) of the Internal Revenue Code
of 1986, as amended (the "Code").
8. Confidential Information. (a) The Executive shall hold in a
fiduciary capacity for the benefit of the Company all secret or confidential
information, knowledge or data relating to the Company or any of its affiliated
companies, and their respective businesses, which shall have been obtained by
the Executive during the Executive's employment by the Company or any of its
affiliated companies and which shall not be or become public knowledge (other
than by acts by the Executive or representatives of the Executive in violation
of this Agreement). After termination of the Executive's employment with the
Company, the Executive shall not, without the prior written consent of the
Company or as may otherwise be required by law or legal process, communicate or
divulge any such information, knowledge or data to anyone other than the Company
and those designated by it. In no event shall an asserted violation of the
provisions of this Section 8 constitute a basis for deferring or withholding any
amounts otherwise payable to the Executive under this Agreement.
(b) Any termination of the Executive's employment or of this Agreement
shall have no effect on the continuing operation of this Section 8 or Section 9
below.
9. Noncompetition/Nonsolicitation. (a) For two years after the Date of
Termination, Executive will not directly or indirectly, own, manage, operate,
control or participate in the ownership, management, operation or control of or
be connected as an officer, employee, partner, director, consultant or otherwise
with, or have any financial interest in, any business which is in material
competition with the business conducted by the Company or its affiliates.
Ownership for personal investment purposes only of less than 2% of the voting
stock of any publicly held corporation shall not constitute a violation hereof.
(b) For two years after the Date of Termination, the Executive
will not, directly or indirectly, on behalf of the Executive
or any other person, solicit for employment any person
employed by the Company or its affiliates as of the date
hereof or known by the Executive at the time to be employed by
the Company or its affiliates.
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<PAGE>
(c) (i) Executive acknowledges and agrees that the restrictions
contained in this Section 9 and in Section 8 are reasonable
and necessary to protect and preserve the legitimate
interests, properties, goodwill and business of the Company,
and that irreparable injury will be suffered by the Company
should Executive breach any of the provisions of this Section.
Executive represents and acknowledges that (1) Executive has
been advised by the Company to consult Executive's own legal
counsel in respect of this Agreement, (2) Executive has had
full opportunity, prior to execution of this Agreement, to
review thoroughly this Agreement with Executive's counsel, and
(3) the provisions of this Section 9 are reasonable and these
restrictions do not prevent Executive from earning a
reasonable livelihood.
(ii) Executive further acknowledges and agrees that a breach
of any of the restrictions in this Section 9 and Section 8 cannot be adequately
compensated by monetary damages. Executive agrees that the Company shall be
entitled to preliminary and permanent injunctive relief, without the necessity
of proving actual damages, as well as provable damages and an equitable
accounting of all earnings, profits and other benefits arising from any
violation of this Section 9, which rights shall be cumulative and in addition to
any other fights or remedies to which the Company may be entitled. In the event
that any of the provisions of this Section 9 should ever be adjudicated to
exceed the time, geographic, service, or other limitations permitted by
applicable law in any jurisdiction, it is the intention of the parties that the
provision shall be amended to the extent of the maximum time, geographic,
service, or other limitations permitted by applicable law, that such amendment
shall apply only within the jurisdiction of the court that made such
adjudication and that the provision otherwise be enforced to the maximum extent
permitted by law.
(iii) Executive irrevocably and unconditionally (1) agrees
that any suit, action or other legal proceeding arising out of this Section 9
and Section 8, including without limitation, any action commenced by the Company
for preliminary and permanent injunctive relief and other equitable relief, may
be brought in the Court of Common Pleas of York County, Pennsylvania or if such
court does not have jurisdiction or will not accept jurisdiction, in any court
of general jurisdiction in Pennsylvania, (2) consents to the non-exclusive
jurisdiction of any such court in any such suit, action or proceeding, and (3)
waive any objection which Executive may have to the laying of venue of any such
suit, action or proceeding in any process, pleadings, notices or other papers in
a manner permitted by the notice provisions of this Section 9.
(d) In exchange for the covenants set forth in this Section 9, the
Company agrees to make to the Executive a lump sum payment equal to two years of
the Executive's then-current Annual Base Salary plus then-current Adjusted EV
Bonus, payable within 30 days after the Date of Termination.
10. Successors. (a) This Agreement is personal to the Executive and
without the prior written consent of the Company shall not be assignable by the
Executive otherwise than by will or the laws of descent and distribution. This
Agreement shall inure to the benefit of and be enforceable by the Executive's
legal representatives.
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<PAGE>
(b) This Agreement shall inure to the benefit of and be binding upon
the Company and its successors and assigns.
(c) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to assume
expressly and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place. As used in this Agreement, "Company" shall mean the Company as
herein before defined and any successor to its business and/or assets as
aforesaid which assumes and agrees to perform this Agreement by operation of
law, or otherwise.
11. Miscellaneous. (a) This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, without
reference to principles of conflict of laws. The captions of this Agreement are
not part of the provisions hereof and shall have no force or effect. This
Agreement may not be amended or modified otherwise than by a written agreement
executed by the parties hereto or their respective successors and legal
representatives.
(b) All notices and other communications hereunder shall be in writing
and shall be given by hand delivery to the other party or by registered or
certified mail, return receipt requested, postage prepaid, addressed as follows:
If to the Executive:
Mr. John R. Tucker
830 Oakwood Court, South
Red Lion, PA 17356
If to the Company:
York International Corporation
631 S. Richland Avenue
York, PA 17403
Attention: General Counsel
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement.
(d) The Company may withhold from any amounts payable under this
Agreement such Federal, state, local or foreign taxes as shall be required to be
withheld pursuant to any applicable law or regulation.
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<PAGE>
(e) The Executive's or the Company's failure to insist upon strict
compliance with any provision of this Agreement or the failure to assert any
right the Executive or the Company may have hereunder, including, without
limitation, the right of the Executive to terminate employment for Good Reason
pursuant to Section 4(c)(i)-(v) of this Agreement, shall not be deemed to be a
waiver of such provision or right or any other provision or right of this
Agreement.
IN WITNESS WHEREOF, the Executive has hereunto set the Executive's hand
and, pursuant to the authorization from its Boards of Directors, the Company has
caused these presents to be executed in its name on its behalf, all as of the
day and year first above written.
----------------------------
John R. Tucker
YORK INTERNATIONAL CORPORATION
By:
----------------------------
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Exhibit 10.17
EMPLOYMENT AGREEMENT
AGREEMENT by and between York International Corporation, a Delaware
corporation (the "Company") and Stuart R. Amos (the "Executive") dated as of the
29th day of December, 1999.
The Board of Directors of the Company has determined that it is in its
best interests and that of its shareholders to employ the Executive in the
capacity described below and the Executive wishes to serve in such capacity.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. Effective Date. The "Effective Date" shall mean December 29,1999.
2. Employment Period. The Company hereby agrees to employ the
Executive, and the Executive hereby agrees to enter into the employ of the
Company subject to the terms and conditions of this Agreement, for the period
commencing on the Effective Date and ending on the third anniversary thereof
(the "Employment Period") provided, however, that the Employment Period shall be
automatically extended without action by either party for an additional one
month period on the 16th day of each month unless, not later than the 15th day
of any month, either party shall give notice to the other in writing that such
party does not intend to extend the Employment Period.
3. Terms of Employment. (a) Position and Duties. (A) During the
Employment Period, the Executive shall serve as President, ESG with such
authority, duties and responsibilities as are commensurate with such position
and (B) the Executive's services shall be performed in York, PA
(b) Compensation.
(i) Base Salary. During the Employment Period, the Executive shall
receive an annual base salary of $425,000 ("Annual Base Salary"), which shall be
paid in accordance with the Company's payroll practices. During the Employment
Period, the Annual Base Salary shall be reviewed at least annually. Any increase
in Annual Base Salary shall not serve to limit or reduce any other obligation to
the Executive under this Agreement. Annual Base Salary shall not be reduced
after any such increase and the term Annual Base Salary as utilized in this
Agreement shall refer to Annual Base Salary as so increased. As used in this
Agreement, the term "affiliated companies" shall include any company controlled
by, controlling or under common control with the Company.
(ii) Incentive Compensation. During the Employment Period, the
Executive shall have an annual cash bonus and a mid-term performance bonus
opportunity based on a percentage of his Annual Base Salary (determined annually
by the Company's Board in accordance with the provisions of the 1996 Incentive
Compensation Plan) and shall otherwise be eligible for incentive compensation
awards on the same basis as similarly situated executives.
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(iii) Employee Benefit Plans. During the Employment Period, the
Executive shall be entitled to participate in all incentive, employee benefit,
retirement, welfare and other plans, practices, policies and programs applicable
to senior executives of the Company.
(iv) Expenses. During the Employment Period, the Executive shall be
entitled to receive prompt reimbursement for all reasonable expenses incurred by
the Executive in accordance with the Company's policies.
(v) Perquisite Benefits. During the Employment Period, the Executive
shall be provided with perquisite benefits as are provided to other senior
executives of the Company.
(vi) Vacation. During the Employment Period, the Executive shall be
entitled to paid vacation in accordance with the plans, policies, programs and
practices of the Company and its affiliated companies as in effect with respect
to the senior executives of the Company.
4. Termination of Employment. (a) Death or Disability. The Executive's
employment shall terminate automatically upon the Executive's death during the
Employment Period. If the Company determines in good faith that the Disability
of the Executive has occurred during the Employment Period (pursuant to the
definition of Disability set forth below), it may give to the Executive written
notice in accordance with Section 11(b) of this Agreement of its intention to
terminate the Executive's employment. In such event, the Executive's employment
with the Company shall terminate effective on the 30th day after receipt of such
notice by the Executive (the "Disability Effective Date"), provided that, within
the 30 days after such receipt, the Executive shall not have returned to
full-time performance of the Executive's duties. For purposes of this Agreement,
"Disability" shall mean the absence of the Executive from the Executive's duties
with the Company on a full-time basis for 180 consecutive business days as a
result of incapacity due to mental or physical illness which is determined to be
total and permanent by a physician selected by the Company or its insurers and
acceptable to the Executive or the Executive's legal representative.
(b) Cause. The Company may terminate the Executive's employment during
the Employment Period for Cause. For purposes of this Agreement, "Cause" shall
mean:
(i) knowingly providing the Company with materially false
representations relied upon by the Company in furnishing information to
stockholders, a stock exchange or the Securities and Exchange Commission, or
(ii) maintaining an undisclosed, unauthorized and material conflict of
interest in the discharge of duties owed to the Company, or
(iii) willful misconduct causing serious violation by the Company of
state or federal laws, or
(iv) theft of Company funds or assets, or
(v) conviction of a crime involving moral turpitude.
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For purposes of this provision, no act or failure to act, on the part of the
Executive, shall be considered "willful" unless it is done, or omitted to be
done, by the Executive in bad faith or without reasonable belief that the
Executive's action or omission was in the best interests of the Company. Any
act, or failure to act, based upon authority given pursuant to a resolution duly
adopted by the Board or based upon advice of counsel for the Company shall be
conclusively presumed to be done, or omitted to be done, by the Executive in
good faith and in the best interest of the Company.
(c) Good Reason. In the event that the Executive's employment with the
Company is voluntarily terminated by the Executive with "Good Reason", the
Executive shall be entitled to a lump sum payment representing the remaining
balance of his or her employment agreement as calculated in accordance with
Section 5 (a). For purposes of this Agreement, "Good Reason" shall mean, in the
absence of a written consent of the Executive, any of the following which occurs
before the expiration of the Executive's Employment Period:
(i) a substantial and adverse change in the Executive's
responsibilities, job description, status or position as a key employee of the
Company, when compared to the Executive's prior responsibilities, job
description, status or position as a key employee of the Company as contemplated
by Section 3(a) of this Agreement, excluding for this purpose an isolated,
insubstantial and inadvertent action not taken in bad faith, and which is
remedied by the Company promptly after receipt or notice thereof given by the
Executive;
(ii) any material failure by the Company to comply with any of the
provisions of Section 3(b) of this Agreement, unless initiated by the Executive,
other than a failure not occurring in bad faith and which is remedied by the
Company promptly after receipt of notice thereof given by the Executive;
(iii) the requiring that the Executive travel on the Company's
business to an extent materially greater than the Executive's normal business
travel, or the Company requiring the Executive to be based at any office or
location more than 35 miles from that provided in Section 3(a)(i)(B) hereof;
(iv) a material breach by the Company of any terms of this Agreement,
or any failure by the Company to comply with and satisfy Section 9 of this
Agreement, or any purported termination by the Company of the Executive's
employment otherwise than as expressly permitted by this Agreement
(v) any failure by the Company to obtain the assumption of this
Agreement by any successor or assign of the Company.
(d) Notice of Termination. Any termination by the Company for Cause, or
by the Executive for Good Reason, shall be communicated by Notice of Termination
to the other party hereto given in accordance with Section 11(b) of this
Agreement. For purposes of this Agreement, a "Notice of Termination" means a
written notice which (i) indicates the specific termination provision in this
Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination of
the Executive's employment under the provision so indicated and (iii) if the
Date of Termination (as defined below) is other than the date of receipt of such
notice, specifies the termination date (which date shall be not more than thirty
days after the giving of such notice). The failure by the
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Executive or the Company to set forth in the Notice of Termination any fact or
circumstance which contributes to a showing of Good Reason or Cause shall not
waive any right of the Executive or the Company, respectively, hereunder or
preclude the Executive or the Company, respectively, from asserting such fact or
circumstance in enforcing the Executive's or the Company's rights hereunder.
(e) Date of Termination. "Date of Termination" means (i) if the
Executive's employment is terminated by the Company for Cause, or by the
Executive for Good Reason, the date of receipt of the Notice of Termination or
any later date specified therein within 30 days of such notice, as the case may
be, (ii) if the Executive's employment is terminated by the Company other than
for Cause or Disability, the Date of Termination shall be the date on which the
Company notifies the Executive of such termination and (iii) if the Executive's
employment is terminated by reason of death or Disability, the Date of
Termination shall be the date of death of the Executive or the Disability
Effective Date, as the case may be.
5. Obligations of the Company upon Termination. (a) Good Reason; Other
Than for Cause, Death or Disability. If, during the Employment Period, the
Company shall terminate the Executive's employment other than for Cause, Death
or Disability or the Executive shall terminate employment for Good Reason:
(i) the Company shall pay to the Executive in a lump sum in cash
within 30 days after the Date of Termination the aggregate of the following
amounts:
A. the sum of the Executive's Annual Base Salary through the Date
of Termination to the extent not theretofore paid, (this amount shall
be hereinafter referred to as the "Accrued Obligations"); and
B. An amount equal to the Executive's Annual Base Salary plus
Annual Cash Bonus (based on the adjusted EV bonus amount for the
Fiscal Year in which the Date of Termination occurs, the "Adjusted EV
Bonus") for the remaining Employment Period; and
C. an amount equal to the excess of (a) the actuarial equivalent
of the benefit under the Company's qualified defined benefit
retirement plan (the "Retirement Plan") (utilizing actuarial
assumptions no less favorable to the Executive than those in effect
under the Company's Retirement Plan immediately prior to the Effective
Date), and any excess or supplemental retirement plan in which the
Executive participates (together, the "SERP") which the Executive
would receive if the Executive's employment continued until the end of
the Employment Period assuming for this purpose that all accrued
benefits are fully vested, and, assuming that the Executive's
compensation in each of the periods is that required by Section 3(b)
and that the Executive's Annual Cash Bonus for such years is the
Adjusted EV Bonus, over (b) the actuarial equivalent of the
Executive's actual benefit (paid or payable), if any, under the
Retirement Plan and the SERP as of the Date of Termination;
(ii) the Company shall continue to provide welfare benefits to the
Executive and his dependants until the end of the Employment Period on the same
basis that such benefits were provided to him immediately prior to the Date of
Termination; and
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(iii) to the extent not theretofore paid or provided, the Company
shall timely pay or provide to the Executive any other amounts or benefits
required to be paid or provided or which the Executive is eligible to receive
under any plan, program, policy or practice or contract or agreement of the
Company and its affiliated companies (such other amounts and benefits shall be
hereinafter referred to as the "Other Benefits").
(b) Death. If the Executive's employment is terminated by reason of the
Executive's death during the Employment Period, this Agreement shall terminate
without further obligations to the Executive's legal representatives under this
Agreement, other than for payment of Accrued Obligations and the timely payment
or provision of Other Benefits. Accrued Obligations shall be paid to the
Executive's estate or beneficiary, as applicable, in a lump sum in cash within
30 days of the Date of Termination. With respect to the provision of Other
Benefits, the term Other Benefits as utilized in this Section 5(b) shall include
death benefits as in effect on the date of the Executive's death with respect to
senior executives of the Company and his beneficiaries.
(c) Disability. If the Executive's employment is terminated by reason
of the Executive's Disability during the Employment Period, this Agreement shall
terminate without further obligations to the Executive, other than for payment
of Accrued Obligations and the timely payment or provision of Other Benefits.
Accrued Obligations shall be paid to the Executive in a lump sum in cash within
30 days of the Date of Termination. With respect to the provision of Other
Benefits, the term Other Benefits as utilized in this Section 5(c) shall
include, and the Executive shall be entitled after the Disability Effective Date
to receive, disability and other benefits as in effect at any time thereafter
generally with respect to the senior executives of the Company.
(d) Cause; Other than for Good Reason. If the Executive's employment
shall be terminated for Cause or the Executive terminates his employment without
Good Reason during the Employment Period, this Agreement shall terminate without
further obligations to the Executive other than the obligation to pay to the
Executive his Annual Base Salary through the Date of Termination, and Other
Benefits, in each case to the extent theretofore unpaid.
6. Non-exclusivity of Rights. Except as specifically provided, nothing
in this Agreement shall prevent or limit the Executive's continuing or future
participation in any plan, program, policy or practice provided by the Company
or any of its affiliated companies and for which the Executive may qualify, nor,
subject to Section 11(e), shall anything herein limit or otherwise affect such
rights as the Executive may have under any contract or agreement with the
Company or any of its affiliated companies. Amounts which are vested benefits or
which the Executive is otherwise entitled to receive under any plan, policy,
practice or program of or any contract or agreement with the Company or any of
its affiliated companies at or subsequent to the Date of Termination shall be
payable in accordance with such plan, policy, practice or program or contract or
agreement except as explicitly modified by this Agreement.
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7. Full Settlement. The Company's obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim, recoupment,
defense or other claim, right or action which the Company may have against the
Executive or others. In no event shall the Executive be obligated to seek other
employment or take any other action by way of mitigation of the amounts payable
to the Executive under any of the provisions of this Agreement and, such amounts
shall not be reduced whether or not the Executive obtains other employment. The
Company agrees to pay as incurred, to the full extent permitted by law, all
legal fees and expenses which the Executive may reasonably incur as a result of
any contest (regardless of the outcome thereof) by the Company, the Executive or
others of the validity or enforceability of, or liability under, any provision
of this Agreement or any guarantee of performance thereof (including as a result
of any contest by the Executive about the amount of any payment pursuant to this
Agreement), plus in each case interest on any delayed payment at the applicable
Federal rate provided for in Section 7872(f)(2)(A) of the Internal Revenue Code
of 1986, as amended (the "Code").
8. Confidential Information. (a) The Executive shall hold in a
fiduciary capacity for the benefit of the Company all secret or confidential
information, knowledge or data relating to the Company or any of its affiliated
companies, and their respective businesses, which shall have been obtained by
the Executive during the Executive's employment by the Company or any of its
affiliated companies and which shall not be or become public knowledge (other
than by acts by the Executive or representatives of the Executive in violation
of this Agreement). After termination of the Executive's employment with the
Company, the Executive shall not, without the prior written consent of the
Company or as may otherwise be required by law or legal process, communicate or
divulge any such information, knowledge or data to anyone other than the Company
and those designated by it. In no event shall an asserted violation of the
provisions of this Section 8 constitute a basis for deferring or withholding any
amounts otherwise payable to the Executive under this Agreement.
(b) Any termination of the Executive's employment or of this Agreement
shall have no effect on the continuing operation of this Section 8 or Section 9
below.
9. Noncompetition/Nonsolicitation. (a) For two years after the Date of
Termination, Executive will not directly or indirectly, own, manage, operate,
control or participate in the ownership, management, operation or control of or
be connected as an officer, employee, partner, director, consultant or otherwise
with, or have any financial interest in, any business which is in material
competition with the business conducted by the Company or its affiliates.
Ownership for personal investment purposes only of less than 2% of the voting
stock of any publicly held corporation shall not constitute a violation hereof.
(b) For two years after the Date of Termination, the Executive
will not, directly or indirectly, on behalf of the Executive
or any other person, solicit for employment any person
employed by the Company or its affiliates as of the date
hereof or known by the Executive at the time to be employed by
the Company or its affiliates.
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(c) (i) Executive acknowledges and agrees that the restrictions
contained in this Section 9 and in Section 8 are reasonable
and necessary to protect and preserve the legitimate
interests, properties, goodwill and business of the Company,
and that irreparable injury will be suffered by the Company
should Executive breach any of the provisions of this Section.
Executive represents and acknowledges that (1) Executive has
been advised by the Company to consult Executive's own legal
counsel in respect of this Agreement, (2) Executive has had
full opportunity, prior to execution of this Agreement, to
review thoroughly this Agreement with Executive's counsel, and
(3) the provisions of this Section 9 are reasonable and these
restrictions do not prevent Executive from earning a
reasonable livelihood.
(ii) Executive further acknowledges and agrees that a breach
of any of the restrictions in this Section 9 and Section 8 cannot be adequately
compensated by monetary damages. Executive agrees that the Company shall be
entitled to preliminary and permanent injunctive relief, without the necessity
of proving actual damages, as well as provable damages and an equitable
accounting of all earnings, profits and other benefits arising from any
violation of this Section 9, which rights shall be cumulative and in addition to
any other fights or remedies to which the Company may be entitled. In the event
that any of the provisions of this Section 9 should ever be adjudicated to
exceed the time, geographic, service, or other limitations permitted by
applicable law in any jurisdiction, it is the intention of the parties that the
provision shall be amended to the extent of the maximum time, geographic,
service, or other limitations permitted by applicable law, that such amendment
shall apply only within the jurisdiction of the court that made such
adjudication and that the provision otherwise be enforced to the maximum extent
permitted by law.
(iii) Executive irrevocably and unconditionally (1) agrees
that any suit, action or other legal proceeding arising out of this Section 9
and Section 8, including without limitation, any action commenced by the Company
for preliminary and permanent injunctive relief and other equitable relief, may
be brought in the Court of Common Pleas of York County, Pennsylvania or if such
court does not have jurisdiction or will not accept jurisdiction, in any court
of general jurisdiction in Pennsylvania, (2) consents to the non-exclusive
jurisdiction of any such court in any such suit, action or proceeding, and (3)
waive any objection which Executive may have to the laying of venue of any such
suit, action or proceeding in any process, pleadings, notices or other papers in
a manner permitted by the notice provisions of this Section 9.
(d) In exchange for the covenants set forth in this Section 9, the
Company agrees to make to the Executive a lump sum payment equal to two years of
the Executive's then-current Annual Base Salary plus then-current Adjusted EV
Bonus, payable within 30 days after the Date of Termination.
10. Successors. (a) This Agreement is personal to the Executive and
without the prior written consent of the Company shall not be assignable by the
Executive otherwise than by will or the laws of descent and distribution. This
Agreement shall inure to the benefit of and be enforceable by the Executive's
legal representatives.
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(b) This Agreement shall inure to the benefit of and be binding upon
the Company and its successors and assigns.
(c) The Company will require any successor (whether direct or indirect,
by purchase, merger, consolidation or otherwise) to all or substantially all of
the business and/or assets of the Company to assume expressly and agree to
perform this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had taken place.
As used in this Agreement, "Company" shall mean the Company as herein before
defined and any successor to its business and/or assets as aforesaid which
assumes and agrees to perform this Agreement by operation of law, or otherwise.
11. Miscellaneous. (a) This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, without
reference to principles of conflict of laws. The captions of this Agreement are
not part of the provisions hereof and shall have no force or effect. This
Agreement may not be amended or modified otherwise than by a written agreement
executed by the parties hereto or their respective successors and legal
representatives.
(b) All notices and other communications hereunder shall be in writing
and shall be given by hand delivery to the other party or by registered or
certified mail, return receipt requested, postage prepaid, addressed as follows:
If to the Executive:
Mr. Stuart R. Amos
1506 Phoenix Road
Phoenix, MD 21131-1022
If to the Company:
York International Corporation
631 S. Richland Avenue
York, PA 17403
Attention: General Counsel
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement.
(d) The Company may withhold from any amounts payable under this
Agreement such Federal, state, local or foreign taxes as shall be required to be
withheld pursuant to any applicable law or regulation.
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(e) The Executive's or the Company's failure to insist upon strict
compliance with any provision of this Agreement or the failure to assert any
right the Executive or the Company may have hereunder, including, without
limitation, the right of the Executive to terminate employment for Good Reason
pursuant to Section 4(c)(i)-(v) of this Agreement, shall not be deemed to be a
waiver of such provision or right or any other provision or right of this
Agreement.
IN WITNESS WHEREOF, the Executive has hereunto set the Executive's hand
and, pursuant to the authorization from its Boards of Directors, the Company has
caused these presents to be executed in its name on its behalf, all as of the
day and year first above written.
------------------------------
Stuart R. Amos
YORK INTERNATIONAL CORPORATION
By:
---------------------------
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Exhibit 10.18
EMPLOYMENT AGREEMENT
AGREEMENT by and between York International Corporation, a Delaware
corporation (the "Company") and Robert C. Galvin (the "Executive") dated as of
the 29th day of December, 1999.
The Board of Directors of the Company has determined that it is in its
best interests and that of its shareholders to employ the Executive in the
capacity described below and the Executive wishes to serve in such capacity.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. Effective Date. The "Effective Date" shall mean December 29,1999.
2. Employment Period. The Company hereby agrees to employ the
Executive, and the Executive hereby agrees to enter into the employ of the
Company subject to the terms and conditions of this Agreement, for the period
commencing on the Effective Date and ending on the third anniversary thereof
(the "Employment Period") provided, however, that the Employment Period shall be
automatically extended without action by either party for an additional one
month period on the 16th day of each month unless, not later than the 15th day
of any month, either party shall give notice to the other in writing that such
party does not intend to extend the Employment Period.
3. Terms of Employment. (a) Position and Duties. (A) During the
Employment Period, the Executive shall serve as Vice President and Chief
Financial Officer with such authority, duties and responsibilities as are
commensurate with such position and (B) the Executive's services shall be
performed in York, PA.
(b) Compensation.
(i) Base Salary. During the Employment Period, the Executive shall
receive an annual base salary of $385,000 ("Annual Base Salary"), which shall be
paid in accordance with the Company's payroll practices. During the Employment
Period, the Annual Base Salary shall be reviewed at least annually. Any increase
in Annual Base Salary shall not serve to limit or reduce any other obligation to
the Executive under this Agreement. Annual Base Salary shall not be reduced
after any such increase and the term Annual Base Salary as utilized in this
Agreement shall refer to Annual Base Salary as so increased. As used in this
Agreement, the term "affiliated companies" shall include any company controlled
by, controlling or under common control with the Company.
(ii) Incentive Compensation. During the Employment Period, the
Executive shall have an annual cash bonus and a mid-term performance bonus
opportunity based on a percentage of his Annual Base Salary (determined annually
by the Company's Board in accordance with the provisions of the 1996 Incentive
Compensation Plan) and shall otherwise be eligible for incentive compensation
awards on the same basis as similarly situated executives.
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(iii) Employee Benefit Plans. During the Employment Period, the
Executive shall be entitled to participate in all incentive, employee benefit,
retirement, welfare and other plans, practices, policies and programs applicable
to senior executives of the Company.
(iv) Expenses. During the Employment Period, the Executive shall be
entitled to receive prompt reimbursement for all reasonable expenses incurred by
the Executive in accordance with the Company's policies.
(v) Perquisite Benefits. During the Employment Period, the Executive
shall be provided with perquisite benefits as are provided to other senior
executives of the Company.
(vi) Vacation. During the Employment Period, the Executive shall be
entitled to paid vacation in accordance with the plans, policies, programs and
practices of the Company and its affiliated companies as in effect with respect
to the senior executives of the Company.
4. Termination of Employment. (a) Death or Disability. The Executive's
employment shall terminate automatically upon the Executive's death during the
Employment Period. If the Company determines in good faith that the Disability
of the Executive has occurred during the Employment Period (pursuant to the
definition of Disability set forth below), it may give to the Executive written
notice in accordance with Section 11(b) of this Agreement of its intention to
terminate the Executive's employment. In such event, the Executive's employment
with the Company shall terminate effective on the 30th day after receipt of such
notice by the Executive (the "Disability Effective Date"), provided that, within
the 30 days after such receipt, the Executive shall not have returned to
full-time performance of the Executive's duties. For purposes of this Agreement,
"Disability" shall mean the absence of the Executive from the Executive's duties
with the Company on a full-time basis for 180 consecutive business days as a
result of incapacity due to mental or physical illness which is determined to be
total and permanent by a physician selected by the Company or its insurers and
acceptable to the Executive or the Executive's legal representative.
(b) Cause. The Company may terminate the Executive's employment during
the Employment Period for Cause. For purposes of this Agreement, "Cause" shall
mean:
(i) knowingly providing the Company with materially false
representations relied upon by the Company in furnishing information to
stockholders, a stock exchange or the Securities and Exchange Commission, or
(ii) maintaining an undisclosed, unauthorized and material conflict of
interest in the discharge of duties owed to the Company, or
(iii) willful misconduct causing serious violation by the Company of
state or federal laws, or
(iv) theft of Company funds or assets, or
(v) conviction of a crime involving moral turpitude.
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For purposes of this provision, no act or failure to act, on the part of the
Executive, shall be considered "willful" unless it is done, or omitted to be
done, by the Executive in bad faith or without reasonable belief that the
Executive's action or omission was in the best interests of the Company. Any
act, or failure to act, based upon authority given pursuant to a resolution duly
adopted by the Board or based upon advice of counsel for the Company shall be
conclusively presumed to be done, or omitted to be done, by the Executive in
good faith and in the best interest of the Company.
(c) Good Reason. In the event that the Executive's employment with the
Company is voluntarily terminated by the Executive with "Good Reason", the
Executive shall be entitled to a lump sum payment representing the remaining
balance of his or her employment agreement as calculated in accordance with
Section 5 (a). For purposes of this Agreement, "Good Reason" shall mean, in the
absence of a written consent of the Executive, any of the following which occurs
before the expiration of the Executive's Employment Period:
(i) a substantial and adverse change in the Executive's
responsibilities, job description, status or position as a key employee of the
Company, when compared to the Executive's prior responsibilities, job
description, status or position as a key employee of the Company as contemplated
by Section 3(a) of this Agreement, excluding for this purpose an isolated,
insubstantial and inadvertent action not taken in bad faith, and which is
remedied by the Company promptly after receipt or notice thereof given by the
Executive;
(ii) any material failure by the Company to comply with any of the
provisions of Section 3(b) of this Agreement, unless initiated by the Executive,
other than a failure not occurring in bad faith and which is remedied by the
Company promptly after receipt of notice thereof given by the Executive;
(iii) the requiring that the Executive travel on the Company's
business to an extent materially greater than the Executive's normal business
travel, or the Company requiring the Executive to be based at any office or
location more than 35 miles from that provided in Section 3(a)(i)(B) hereof;
(iv) a material breach by the Company of any terms of this Agreement,
or any failure by the Company to comply with and satisfy Section 9 of this
Agreement, or any purported termination by the Company of the Executive's
employment otherwise than as expressly permitted by this Agreement
(v) any failure by the Company to obtain the assumption of this
Agreement by any successor or assign of the Company.
(d) Notice of Termination. Any termination by the Company for Cause, or
by the Executive for Good Reason, shall be communicated by Notice of Termination
to the other party hereto given in accordance with Section 11(b) of this
Agreement. For purposes of this Agreement, a "Notice of Termination" means a
written notice which (i) indicates the specific termination provision in this
Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination of
the Executive's employment under the provision so indicated and (iii) if the
Date of Termination (as defined below) is other than the date of receipt of such
notice, specifies the termination date (which date shall be not more than thirty
days after the giving of such notice). The failure by the
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Executive or the Company to set forth in the Notice of Termination any fact or
circumstance which contributes to a showing of Good Reason or Cause shall not
waive any right of the Executive or the Company, respectively, hereunder or
preclude the Executive or the Company, respectively, from asserting such fact or
circumstance in enforcing the Executive's or the Company's rights hereunder.
(e) Date of Termination. "Date of Termination" means (i) if the
Executive's employment is terminated by the Company for Cause, or by the
Executive for Good Reason, the date of receipt of the Notice of Termination or
any later date specified therein within 30 days of such notice, as the case may
be, (ii) if the Executive's employment is terminated by the Company other than
for Cause or Disability, the Date of Termination shall be the date on which the
Company notifies the Executive of such termination and (iii) if the Executive's
employment is terminated by reason of death or Disability, the Date of
Termination shall be the date of death of the Executive or the Disability
Effective Date, as the case may be.
5. Obligations of the Company upon Termination. (a) Good Reason; Other
Than for Cause, Death or Disability. If, during the Employment Period, the
Company shall terminate the Executive's employment other than for Cause, Death
or Disability or the Executive shall terminate employment for Good Reason:
(i) the Company shall pay to the Executive in a lump sum in cash
within 30 days after the Date of Termination the aggregate of the following
amounts:
A. the sum of the Executive's Annual Base Salary through the Date
of Termination to the extent not theretofore paid, (this amount shall
be hereinafter referred to as the "Accrued Obligations"); and
B. An amount equal to the Executive's Annual Base Salary plus
Annual Cash Bonus (based on the adjusted EV bonus amount for the
Fiscal Year in which the Date of Termination occurs, the "Adjusted EV
Bonus") for the remaining Employment Period; and
C. an amount equal to the excess of (a) the actuarial equivalent
of the benefit under the Company's qualified defined benefit
retirement plan (the "Retirement Plan") (utilizing actuarial
assumptions no less favorable to the Executive than those in effect
under the Company's Retirement Plan immediately prior to the Effective
Date), and any excess or supplemental retirement plan in which the
Executive participates (together, the "SERP") which the Executive
would receive if the Executive's employment continued until the end of
the Employment Period assuming for this purpose that all accrued
benefits are fully vested, and, assuming that the Executive's
compensation in each of the periods is that required by Section 3(b)
and that the Executive's Annual Cash Bonus for such years is the
Adjusted EV Bonus, over (b) the actuarial equivalent of the
Executive's actual benefit (paid or payable), if any, under the
Retirement Plan and the SERP as of the Date of Termination;
(ii) the Company shall continue to provide welfare benefits to the
Executive and his dependants until the end of the Employment Period on the same
basis that such benefits were provided to him immediately prior to the Date of
Termination; and
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(iii) to the extent not theretofore paid or provided, the Company
shall timely pay or provide to the Executive any other amounts or benefits
required to be paid or provided or which the Executive is eligible to receive
under any plan, program, policy or practice or contract or agreement of the
Company and its affiliated companies (such other amounts and benefits shall be
hereinafter referred to as the "Other Benefits").
(b) Death. If the Executive's employment is terminated by reason of the
Executive's death during the Employment Period, this Agreement shall terminate
without further obligations to the Executive's legal representatives under this
Agreement, other than for payment of Accrued Obligations and the timely payment
or provision of Other Benefits. Accrued Obligations shall be paid to the
Executive's estate or beneficiary, as applicable, in a lump sum in cash within
30 days of the Date of Termination. With respect to the provision of Other
Benefits, the term Other Benefits as utilized in this Section 5(b) shall include
death benefits as in effect on the date of the Executive's death with respect to
senior executives of the Company and his beneficiaries.
(c) Disability. If the Executive's employment is terminated by reason
of the Executive's Disability during the Employment Period, this Agreement shall
terminate without further obligations to the Executive, other than for payment
of Accrued Obligations and the timely payment or provision of Other Benefits.
Accrued Obligations shall be paid to the Executive in a lump sum in cash within
30 days of the Date of Termination. With respect to the provision of Other
Benefits, the term Other Benefits as utilized in this Section 5(c) shall
include, and the Executive shall be entitled after the Disability Effective Date
to receive, disability and other benefits as in effect at any time thereafter
generally with respect to the senior executives of the Company.
(d) Cause; Other than for Good Reason. If the Executive's employment
shall be terminated for Cause or the Executive terminates his employment without
Good Reason during the Employment Period, this Agreement shall terminate without
further obligations to the Executive other than the obligation to pay to the
Executive his Annual Base Salary through the Date of Termination, and Other
Benefits, in each case to the extent theretofore unpaid.
6. Non-exclusivity of Rights. Except as specifically provided, nothing
in this Agreement shall prevent or limit the Executive's continuing or future
participation in any plan, program, policy or practice provided by the Company
or any of its affiliated companies and for which the Executive may qualify, nor,
subject to Section 11(e), shall anything herein limit or otherwise affect such
rights as the Executive may have under any contract or agreement with the
Company or any of its affiliated companies. Amounts which are vested benefits or
which the Executive is otherwise entitled to receive under any plan, policy,
practice or program of or any contract or agreement with the Company or any of
its affiliated companies at or subsequent to the Date of Termination shall be
payable in accordance with such plan, policy, practice or program or contract or
agreement except as explicitly modified by this Agreement.
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7. Full Settlement. The Company's obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim, recoupment,
defense or other claim, right or action which the Company may have against the
Executive or others. In no event shall the Executive be obligated to seek other
employment or take any other action by way of mitigation of the amounts payable
to the Executive under any of the provisions of this Agreement and, such amounts
shall not be reduced whether or not the Executive obtains other employment. The
Company agrees to pay as incurred, to the full extent permitted by law, all
legal fees and expenses which the Executive may reasonably incur as a result of
any contest (regardless of the outcome thereof) by the Company, the Executive or
others of the validity or enforceability of, or liability under, any provision
of this Agreement or any guarantee of performance thereof (including as a result
of any contest by the Executive about the amount of any payment pursuant to this
Agreement), plus in each case interest on any delayed payment at the applicable
Federal rate provided for in Section 7872(f)(2)(A) of the Internal Revenue Code
of 1986, as amended (the "Code").
8. Confidential Information. (a) The Executive shall hold in a
fiduciary capacity for the benefit of the Company all secret or confidential
information, knowledge or data relating to the Company or any of its affiliated
companies, and their respective businesses, which shall have been obtained by
the Executive during the Executive's employment by the Company or any of its
affiliated companies and which shall not be or become public knowledge (other
than by acts by the Executive or representatives of the Executive in violation
of this Agreement). After termination of the Executive's employment with the
Company, the Executive shall not, without the prior written consent of the
Company or as may otherwise be required by law or legal process, communicate or
divulge any such information, knowledge or data to anyone other than the Company
and those designated by it. In no event shall an asserted violation of the
provisions of this Section 8 constitute a basis for deferring or withholding any
amounts otherwise payable to the Executive under this Agreement.
(b) Any termination of the Executive's employment or of this Agreement
shall have no effect on the continuing operation of this Section 8 or Section 9
below.
9. Noncompetition/Nonsolicitation. (a) For two years after the Date of
Termination, Executive will not directly or indirectly, own, manage, operate,
control or participate in the ownership, management, operation or control of or
be connected as an officer, employee, partner, director, consultant or otherwise
with, or have any financial interest in, any business which is in material
competition with the business conducted by the Company or its affiliates.
Ownership for personal investment purposes only of less than 2% of the voting
stock of any publicly held corporation shall not constitute a violation hereof.
(b) For two years after the Date of Termination, the Executive
will not, directly or indirectly, on behalf of the Executive
or any other person, solicit for employment any person
employed by the Company or its affiliates as of the date
hereof or known by the Executive at the time to be employed by
the Company or its affiliates.
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(c) (i) Executive acknowledges and agrees that the restrictions
contained in this Section 9 and in Section 8 are reasonable
and necessary to protect and preserve the legitimate
interests, properties, goodwill and business of the Company,
and that irreparable injury will be suffered by the Company
should Executive breach any of the provisions of this Section.
Executive represents and acknowledges that (1) Executive has
been advised by the Company to consult Executive's own legal
counsel in respect of this Agreement, (2) Executive has had
full opportunity, prior to execution of this Agreement, to
review thoroughly this Agreement with Executive's counsel, and
(3) the provisions of this Section 9 are reasonable and these
restrictions do not prevent Executive from earning a
reasonable livelihood.
(ii) Executive further acknowledges and agrees that a breach
of any of the restrictions in this Section 9 and Section 8 cannot be adequately
compensated by monetary damages. Executive agrees that the Company shall be
entitled to preliminary and permanent injunctive relief, without the necessity
of proving actual damages, as well as provable damages and an equitable
accounting of all earnings, profits and other benefits arising from any
violation of this Section 9, which rights shall be cumulative and in addition to
any other fights or remedies to which the Company may be entitled. In the event
that any of the provisions of this Section 9 should ever be adjudicated to
exceed the time, geographic, service, or other limitations permitted by
applicable law in any jurisdiction, it is the intention of the parties that the
provision shall be amended to the extent of the maximum time, geographic,
service, or other limitations permitted by applicable law, that such amendment
shall apply only within the jurisdiction of the court that made such
adjudication and that the provision otherwise be enforced to the maximum extent
permitted by law.
(iii) Executive irrevocably and unconditionally (1) agrees
that any suit, action or other legal proceeding arising out of this Section 9
and Section 8, including without limitation, any action commenced by the Company
for preliminary and permanent injunctive relief and other equitable relief, may
be brought in the Court of Common Pleas of York County, Pennsylvania or if such
court does not have jurisdiction or will not accept jurisdiction, in any court
of general jurisdiction in Pennsylvania, (2) consents to the non-exclusive
jurisdiction of any such court in any such suit, action or proceeding, and (3)
waive any objection which Executive may have to the laying of venue of any such
suit, action or proceeding in any process, pleadings, notices or other papers in
a manner permitted by the notice provisions of this Section 9.
(d) In exchange for the covenants set forth in this Section 9, the
Company agrees to make to the Executive a lump sum payment equal to two years of
the Executive's then-current Annual Base Salary plus then-current Adjusted EV
Bonus, payable within 30 days after the Date of Termination.
10. Successors. (a) This Agreement is personal to the Executive and
without the prior written consent of the Company shall not be assignable by the
Executive otherwise than by will or the laws of descent and distribution. This
Agreement shall inure to the benefit of and be enforceable by the Executive's
legal representatives.
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(b) This Agreement shall inure to the benefit of and be binding upon
the Company and its successors and assigns.
(c) The Company will require any successor (whether direct or indirect,
by purchase, merger, consolidation or otherwise) to all or substantially all of
the business and/or assets of the Company to assume expressly and agree to
perform this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had taken place.
As used in this Agreement, "Company" shall mean the Company as herein before
defined and any successor to its business and/or assets as aforesaid which
assumes and agrees to perform this Agreement by operation of law, or otherwise.
11. Miscellaneous. (a) This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, without
reference to principles of conflict of laws. The captions of this Agreement are
not part of the provisions hereof and shall have no force or effect. This
Agreement may not be amended or modified otherwise than by a written agreement
executed by the parties hereto or their respective successors and legal
representatives.
(b) All notices and other communications hereunder shall be in writing
and shall be given by hand delivery to the other party or by registered or
certified mail, return receipt requested, postage prepaid, addressed as follows:
If to the Executive:
Mr. Robert C. Galvin
44 Holmes Road
Ridgefield, CT 06877
If to the Company:
York International Corporation
631 S. Richland Avenue
York, PA 17403
Attention: General Counsel
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement.
(d) The Company may withhold from any amounts payable under this
Agreement such Federal, state, local or foreign taxes as shall be required to be
withheld pursuant to any applicable law or regulation.
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(e) The Executive's or the Company's failure to insist upon strict
compliance with any provision of this Agreement or the failure to assert any
right the Executive or the Company may have hereunder, including, without
limitation, the right of the Executive to terminate employment for Good Reason
pursuant to Section 4(c)(i)-(v) of this Agreement, shall not be deemed to be a
waiver of such provision or right or any other provision or right of this
Agreement.
IN WITNESS WHEREOF, the Executive has hereunto set the Executive's hand
and, pursuant to the authorization from its Boards of Directors, the Company has
caused these presents to be executed in its name on its behalf, all as of the
day and year first above written.
--------------------------------
Robert C. Galvin
YORK INTERNATIONAL CORPORATION
By:
--------------------------------
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Exhibit 10.19
EMPLOYMENT AGREEMENT
AGREEMENT by and between York International Corporation, a Delaware
corporation (the "Company") and Michael R. Young (the "Executive") dated as of
the 29th day of December, 1999.
The Board of Directors of the Company has determined that it is in its
best interests and that of its shareholders to employ the Executive in the
capacity described below and the Executive wishes to serve in such capacity.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. Effective Date. The "Effective Date" shall mean December 29,1999.
2. Employment Period. The Company hereby agrees to employ the
Executive, and the Executive hereby agrees to enter into the employ of the
Company subject to the terms and conditions of this Agreement, for the period
commencing on the Effective Date and ending on the third anniversary thereof
(the "Employment Period") provided, however, that the Employment Period shall be
automatically extended without action by either party for an additional one
month period on the 16th day of each month unless, not later than the 15th day
of any month, either party shall give notice to the other in writing that such
party does not intend to extend the Employment Period.
3. Terms of Employment. (a) Position and Duties. (A) During the
Employment Period, the Executive shall serve as President, CES with such
authority, duties and responsibilities as are commensurate with such position
and (B) the Executive's services shall be performed in Wichita, KS.
(b) Compensation.
(i) Base Salary. During the Employment Period, the Executive shall
receive an annual base salary of $470,000 ("Annual Base Salary"), which shall be
paid in accordance with the Company's payroll practices. During the Employment
Period, the Annual Base Salary shall be reviewed at least annually. Any increase
in Annual Base Salary shall not serve to limit or reduce any other obligation to
the Executive under this Agreement. Annual Base Salary shall not be reduced
after any such increase and the term Annual Base Salary as utilized in this
Agreement shall refer to Annual Base Salary as so increased. As used in this
Agreement, the term "affiliated companies" shall include any company controlled
by, controlling or under common control with the Company.
(ii) Incentive Compensation. During the Employment Period, the
Executive shall have an annual cash bonus and a mid-term performance bonus
opportunity based on a percentage of his Annual Base Salary (determined annually
by the Company's Board in accordance with the provisions of the 1996 Incentive
Compensation Plan) and shall otherwise be eligible for incentive compensation
awards on the same basis as similarly situated executives.
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(iii) Employee Benefit Plans. During the Employment Period, the
Executive shall be entitled to participate in all incentive, employee benefit,
retirement, welfare and other plans, practices, policies and programs applicable
to senior executives of the Company.
(iv) Expenses. During the Employment Period, the Executive shall be
entitled to receive prompt reimbursement for all reasonable expenses incurred by
the Executive in accordance with the Company's policies.
(v) Perquisite Benefits. During the Employment Period, the Executive
shall be provided with perquisite benefits as are provided to other senior
executives of the Company.
(vi) Vacation. During the Employment Period, the Executive shall be
entitled to paid vacation in accordance with the plans, policies, programs and
practices of the Company and its affiliated companies as in effect with respect
to the senior executives of the Company.
4. Termination of Employment. (a) Death or Disability. The
Executive's employment shall terminate automatically upon the Executive's death
during the Employment Period. If the Company determines in good faith that the
Disability of the Executive has occurred during the Employment Period (pursuant
to the definition of Disability set forth below), it may give to the Executive
written notice in accordance with Section 11(b) of this Agreement of its
intention to terminate the Executive's employment. In such event, the
Executive's employment with the Company shall terminate effective on the 30th
day after receipt of such notice by the Executive (the "Disability Effective
Date"), provided that, within the 30 days after such receipt, the Executive
shall not have returned to full-time performance of the Executive's duties. For
purposes of this Agreement, "Disability" shall mean the absence of the Executive
from the Executive's duties with the Company on a full-time basis for 180
consecutive business days as a result of incapacity due to mental or physical
illness which is determined to be total and permanent by a physician selected by
the Company or its insurers and acceptable to the Executive or the Executive's
legal representative.
(b) Cause. The Company may terminate the Executive's employment
during the Employment Period for Cause. For purposes of this Agreement, "Cause"
shall mean:
(i) knowingly providing the Company with materially false
representations relied upon by the Company in furnishing information to
stockholders, a stock exchange or the Securities and Exchange Commission, or
(ii) maintaining an undisclosed, unauthorized and material conflict
of interest in the discharge of duties owed to the Company, or
(iii) willful misconduct causing serious violation by the Company of
state or federal laws, or
(iv) theft of Company funds or assets, or
(v) conviction of a crime involving moral turpitude.
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For purposes of this provision, no act or failure to act, on the part of the
Executive, shall be considered "willful" unless it is done, or omitted to be
done, by the Executive in bad faith or without reasonable belief that the
Executive's action or omission was in the best interests of the Company. Any
act, or failure to act, based upon authority given pursuant to a resolution duly
adopted by the Board or based upon advice of counsel for the Company shall be
conclusively presumed to be done, or omitted to be done, by the Executive in
good faith and in the best interest of the Company.
(c) Good Reason. In the event that the Executive's employment with
the Company is voluntarily terminated by the Executive with "Good Reason", the
Executive shall be entitled to a lump sum payment representing the remaining
balance of his or her employment agreement as calculated in accordance with
Section 5 (a). For purposes of this Agreement, "Good Reason" shall mean, in the
absence of a written consent of the Executive, any of the following which occurs
before the expiration of the Executive's Employment Period:
(i) a substantial and adverse change in the Executive's
responsibilities, job description, status or position as a key employee of the
Company, when compared to the Executive's prior responsibilities, job
description, status or position as a key employee of the Company as contemplated
by Section 3(a) of this Agreement, excluding for this purpose an isolated,
insubstantial and inadvertent action not taken in bad faith, and which is
remedied by the Company promptly after receipt or notice thereof given by the
Executive;
(ii) any material failure by the Company to comply with any of the
provisions of Section 3(b) of this Agreement, unless initiated by the Executive,
other than a failure not occurring in bad faith and which is remedied by the
Company promptly after receipt of notice thereof given by the Executive;
(iii) the requiring that the Executive travel on the Company's
business to an extent materially greater than the Executive's normal business
travel, or the Company requiring the Executive to be based at any office or
location more than 35 miles from that provided in Section 3(a)(i)(B) hereof;
(iv) a material breach by the Company of any terms of this Agreement,
or any failure by the Company to comply with and satisfy Section 9 of this
Agreement, or any purported termination by the Company of the Executive's
employment otherwise than as expressly permitted by this Agreement
(v) any failure by the Company to obtain the assumption of
this Agreement by any successor or assign of the Company.
(d) Notice of Termination. Any termination by the Company for Cause,
or by the Executive for Good Reason, shall be communicated by Notice of
Termination to the other party hereto given in accordance with Section 11(b) of
this Agreement. For purposes of this Agreement, a "Notice of Termination" means
a written notice which (i) indicates the specific termination provision in this
Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination of
the Executive's employment under the provision so indicated and (iii) if the
Date of Termination (as defined below) is other than the date of receipt of such
notice, specifies the termination date (which date shall be not more than thirty
days after the giving of such notice). The failure by
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the Executive or the Company to set forth in the Notice of Termination any fact
or circumstance which contributes to a showing of Good Reason or Cause shall not
waive any right of the Executive or the Company, respectively, hereunder or
preclude the Executive or the Company, respectively, from asserting such fact or
circumstance in enforcing the Executive's or the Company's rights hereunder.
(e) Date of Termination. "Date of Termination" means (i) if the
Executive's employment is terminated by the Company for Cause, or by the
Executive for Good Reason, the date of receipt of the Notice of Termination or
any later date specified therein within 30 days of such notice, as the case may
be, (ii) if the Executive's employment is terminated by the Company other than
for Cause or Disability, the Date of Termination shall be the date on which the
Company notifies the Executive of such termination and (iii) if the Executive's
employment is terminated by reason of death or Disability, the Date of
Termination shall be the date of death of the Executive or the Disability
Effective Date, as the case may be.
5. Obligations of the Company upon Termination. (a) Good Reason;
Other Than for Cause, Death or Disability. If, during the Employment Period, the
Company shall terminate the Executive's employment other than for Cause, Death
or Disability or the Executive shall terminate employment for Good Reason:
(i) the Company shall pay to the Executive in a lump sum in cash
within 30 days after the Date of Termination the aggregate of the following
amounts:
A. the sum of the Executive's Annual Base Salary through the Date
of Termination to the extent not theretofore paid, (this amount shall
be hereinafter referred to as the "Accrued Obligations"); and
B. An amount equal to the Executive's Annual Base Salary plus Annual
Cash Bonus (based on the adjusted EV bonus amount for the Fiscal Year in
which the Date of Termination occurs, the "Adjusted EV Bonus") for the
remaining Employment Period; and
C. an amount equal to the excess of (a) the actuarial equivalent of
the benefit under the Company's qualified defined benefit retirement plan
(the "Retirement Plan") (utilizing actuarial assumptions no less favorable
to the Executive than those in effect under the Company's Retirement Plan
immediately prior to the Effective Date), and any excess or supplemental
retirement plan in which the Executive participates (together, the "SERP")
which the Executive would receive if the Executive's employment continued
until the end of the Employment Period assuming for this purpose that all
accrued benefits are fully vested, and, assuming that the Executive's
compensation in each of the periods is that required by Section 3(b) and
that the Executive's Annual Cash Bonus for such years is the Adjusted EV
Bonus, over (b) the actuarial equivalent of the Executive's actual benefit
(paid or payable), if any, under the Retirement Plan and the SERP as of the
Date of Termination;
(ii) the Company shall continue to provide welfare benefits to the
Executive and his dependants until the end of the Employment Period on the same
basis that such benefits were provided to him immediately prior to the Date of
Termination; and
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(iii) to the extent not theretofore paid or provided, the Company
shall timely pay or provide to the Executive any other amounts or benefits
required to be paid or provided or which the Executive is eligible to receive
under any plan, program, policy or practice or contract or agreement of the
Company and its affiliated companies (such other amounts and benefits shall be
hereinafter referred to as the "Other Benefits").
(b) Death. If the Executive's employment is terminated by reason of
the Executive's death during the Employment Period, this Agreement shall
terminate without further obligations to the Executive's legal representatives
under this Agreement, other than for payment of Accrued Obligations and the
timely payment or provision of Other Benefits. Accrued Obligations shall be paid
to the Executive's estate or beneficiary, as applicable, in a lump sum in cash
within 30 days of the Date of Termination. With respect to the provision of
Other Benefits, the term Other Benefits as utilized in this Section 5(b) shall
include death benefits as in effect on the date of the Executive's death with
respect to senior executives of the Company and his beneficiaries.
(c) Disability. If the Executive's employment is terminated by reason
of the Executive's Disability during the Employment Period, this Agreement shall
terminate without further obligations to the Executive, other than for payment
of Accrued Obligations and the timely payment or provision of Other Benefits.
Accrued Obligations shall be paid to the Executive in a lump sum in cash within
30 days of the Date of Termination. With respect to the provision of Other
Benefits, the term Other Benefits as utilized in this Section 5(c) shall
include, and the Executive shall be entitled after the Disability Effective Date
to receive, disability and other benefits as in effect at any time thereafter
generally with respect to the senior executives of the Company.
(d) Cause; Other than for Good Reason. If the Executive's employment
shall be terminated for Cause or the Executive terminates his employment without
Good Reason during the Employment Period, this Agreement shall terminate without
further obligations to the Executive other than the obligation to pay to the
Executive his Annual Base Salary through the Date of Termination, and Other
Benefits, in each case to the extent theretofore unpaid.
6. Non-exclusivity of Rights. Except as specifically provided,
nothing in this Agreement shall prevent or limit the Executive's continuing or
future participation in any plan, program, policy or practice provided by the
Company or any of its affiliated companies and for which the Executive may
qualify, nor, subject to Section 11(e), shall anything herein limit or otherwise
affect such rights as the Executive may have under any contract or agreement
with the Company or any of its affiliated companies. Amounts which are vested
benefits or which the Executive is otherwise entitled to receive under any plan,
policy, practice or program of or any contract or agreement with the Company or
any of its affiliated companies at or subsequent to the Date of Termination
shall be payable in accordance with such plan, policy, practice or program or
contract or agreement except as explicitly modified by this Agreement.
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7. Full Settlement. The Company's obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim, recoupment,
defense or other claim, right or action which the Company may have against the
Executive or others. In no event shall the Executive be obligated to seek other
employment or take any other action by way of mitigation of the amounts payable
to the Executive under any of the provisions of this Agreement and, such amounts
shall not be reduced whether or not the Executive obtains other employment. The
Company agrees to pay as incurred, to the full extent permitted by law, all
legal fees and expenses which the Executive may reasonably incur as a result of
any contest (regardless of the outcome thereof) by the Company, the Executive or
others of the validity or enforceability of, or liability under, any provision
of this Agreement or any guarantee of performance thereof (including as a result
of any contest by the Executive about the amount of any payment pursuant to this
Agreement), plus in each case interest on any delayed payment at the applicable
Federal rate provided for in Section 7872(f)(2)(A) of the Internal Revenue Code
of 1986, as amended (the "Code").
8. Confidential Information. (a) The Executive shall hold in a
fiduciary capacity for the benefit of the Company all secret or confidential
information, knowledge or data relating to the Company or any of its affiliated
companies, and their respective businesses, which shall have been obtained by
the Executive during the Executive's employment by the Company or any of its
affiliated companies and which shall not be or become public knowledge (other
than by acts by the Executive or representatives of the Executive in violation
of this Agreement). After termination of the Executive's employment with the
Company, the Executive shall not, without the prior written consent of the
Company or as may otherwise be required by law or legal process, communicate or
divulge any such information, knowledge or data to anyone other than the Company
and those designated by it. In no event shall an asserted violation of the
provisions of this Section 8 constitute a basis for deferring or withholding any
amounts otherwise payable to the Executive under this Agreement.
(b) Any termination of the Executive's employment or of this Agreement
shall have no effect on the continuing operation of this Section 8 or Section 9
below.
9. Noncompetition/Nonsolicitation. (a) For two years after the Date of
Termination, Executive will not directly or indirectly, own, manage, operate,
control or participate in the ownership, management, operation or control of or
be connected as an officer, employee, partner, director, consultant or otherwise
with, or have any financial interest in, any business which is in material
competition with the business conducted by the Company or its affiliates.
Ownership for personal investment purposes only of less than 2% of the voting
stock of any publicly held corporation shall not constitute a violation hereof.
(b) For two years after the Date of Termination, the Executive will
not, directly or indirectly, on behalf of the Executive or any
other person, solicit for employment any person employed by the
Company or its affiliates as of the date hereof or known by the
Executive at the time to be employed by the Company or its
affiliates.
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(c) (i) Executive acknowledges and agrees that the restrictions
contained in this Section 9 and in Section 8 are reasonable and
necessary to protect and preserve the legitimate interests,
properties, goodwill and business of the Company, and that
irreparable injury will be suffered by the Company should
Executive breach any of the provisions of this Section. Executive
represents and acknowledges that (1) Executive has been advised by
the Company to consult Executive's own legal counsel in respect of
this Agreement, (2) Executive has had full opportunity, prior to
execution of this Agreement, to review thoroughly this Agreement
with Executive's counsel, and (3) the provisions of this Section 9
are reasonable and these restrictions do not prevent Executive
from earning a reasonable livelihood.
(ii) Executive further acknowledges and agrees that a breach of
any of the restrictions in this Section 9 and Section 8 cannot be adequately
compensated by monetary damages. Executive agrees that the Company shall be
entitled to preliminary and permanent injunctive relief, without the necessity
of proving actual damages, as well as provable damages and an equitable
accounting of all earnings, profits and other benefits arising from any
violation of this Section 9, which rights shall be cumulative and in addition to
any other fights or remedies to which the Company may be entitled. In the event
that any of the provisions of this Section 9 should ever be adjudicated to
exceed the time, geographic, service, or other limitations permitted by
applicable law in any jurisdiction, it is the intention of the parties that the
provision shall be amended to the extent of the maximum time, geographic,
service, or other limitations permitted by applicable law, that such amendment
shall apply only within the jurisdiction of the court that made such
adjudication and that the provision otherwise be enforced to the maximum extent
permitted by law.
(iii) Executive irrevocably and unconditionally (1) agrees that
any suit, action or other legal proceeding arising out of this Section 9 and
Section 8, including without limitation, any action commenced by the Company for
preliminary and permanent injunctive relief and other equitable relief, may be
brought in the Court of Common Pleas of York County, Pennsylvania or if such
court does not have jurisdiction or will not accept jurisdiction, in any court
of general jurisdiction in Pennsylvania, (2) consents to the non-exclusive
jurisdiction of any such court in any such suit, action or proceeding, and (3)
waive any objection which Executive may have to the laying of venue of any such
suit, action or proceeding in any process, pleadings, notices or other papers in
a manner permitted by the notice provisions of this Section 9.
(d) In exchange for the covenants set forth in this Section 9, the
Company agrees to make to the Executive a lump sum payment equal to two years of
the Executive's then-current Annual Base Salary plus then-current Adjusted EV
Bonus, payable within 30 days after the Date of Termination.
10. Successors. (a) This Agreement is personal to the Executive and
without the prior written consent of the Company shall not be assignable by the
Executive otherwise than by will or the laws of descent and distribution. This
Agreement shall inure to the benefit of and be enforceable by the Executive's
legal representatives.
-7-
<PAGE>
(b) This Agreement shall inure to the benefit of and be binding upon
the Company and its successors and assigns.
(c) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to assume
expressly and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place. As used in this Agreement, "Company" shall mean the Company as
herein before defined and any successor to its business and/or assets as
aforesaid which assumes and agrees to perform this Agreement by operation of
law, or otherwise.
11. Miscellaneous. (a) This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, without
reference to principles of conflict of laws. The captions of this Agreement are
not part of the provisions hereof and shall have no force or effect. This
Agreement may not be amended or modified otherwise than by a written agreement
executed by the parties hereto or their respective successors and legal
representatives.
(b) All notices and other communications hereunder shall be in writing
and shall be given by hand delivery to the other party or by registered or
certified mail, return receipt requested, postage prepaid, addressed as follows:
If to the Executive:
Mr. Michael R. Young
204 Roscommon Drive
Bristol, TN 37620
If to the Company:
York International Corporation
631 S. Richland Avenue
York, PA 17403
Attention: General Counsel
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement.
(d) The Company may withhold from any amounts payable under this
Agreement such Federal, state, local or foreign taxes as shall be required to be
withheld pursuant to any applicable law or regulation.
-8-
<PAGE>
(e) The Executive's or the Company's failure to insist upon strict
compliance with any provision of this Agreement or the failure to assert any
right the Executive or the Company may have hereunder, including, without
limitation, the right of the Executive to terminate employment for Good Reason
pursuant to Section 4(c)(i)-(v) of this Agreement, shall not be deemed to be a
waiver of such provision or right or any other provision or right of this
Agreement.
IN WITNESS WHEREOF, the Executive has hereunto set the Executive's hand
and, pursuant to the authorization from its Boards of Directors, the Company has
caused these presents to be executed in its name on its behalf, all as of the
day and year first above written.
----------------------------------------
Michael R. Young
YORK INTERNATIONAL CORPORATION
By:
------------------------------------
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<PAGE>
Exhibit 10.20
RETIREMENT AGREEMENT
THIS RETIREMENT AGREEMENT (the "Agreement") entered into on October __,
1999, by and between YORK INTERNATIONAL CORPORATION, a Delaware corporation (the
"Company"), with its principal office in York, Pennsylvania, and Robert N.
Pokelwaldt, a resident of York, Pennsylvania ("Executive").
WHEREAS, Executive is the Chairman and Chief Executive Officer of the
Company; and
WHEREAS, Executive has announced his intention to retire and the Board of
Directors of the Company (the "Board") has determined that Executive's
retirement at this time is acceptable; and
WHEREAS, the Board and Executive have agreed that Executive shall retire on
the date of this Agreement (the "Retirement Date") and shall resign as a
director of the Company; and
WHEREAS, in consideration of the years of valuable service provided by
Executive to the Company and his agreement to cooperate with the Company in
transitioning his duties to his successor, both parties desire to enter into an
agreement that will reflect the compensation and other benefits to which
Executive will be entitled by reason of his retirement and other agreements
between the parties;
NOW, THEREFORE, the parties hereto, intending to be legally bound, hereby
agree as follows:
1. Retirement. Executive and the Company agree that Executive shall retire
on the Retirement Date and that Executive shall be considered to have retired
for all Company purposes, including all plans, benefits and programs which the
Company maintains or has maintained and in which Executive participated during
the term of his employment by the Company. Effective immediately, Executive
hereby resigns all positions (including without limitation all officer and
director positions) with the Company and its subsidiaries and shall cease to be
an employee of the Company or any of its subsidiaries. Until December 31, 2000,
the Company shall furnish Executive with reasonable office space off premises,
which shall be sufficient for him to conduct business at an executive level and
secretarial support. Within thirty days after the Retirement Date, Executive
shall be entitled to purchase his personal computer (but without any Company
proprietary software or data) from the Company for book value.
2. Payments and Benefits.
(a) Executive shall continue to receive his regular base salary and
continue to participate in all benefit plans and programs of the Company through
the Retirement Date. On the Retirement Date, the Company shall pay Executive, in
one lump sum in cash, the amount of base salary he otherwise would have received
from the Retirement Date through December 31, 1999 as well as an amount equal to
all accrued but unpaid vacation pay at the Retirement Date, reduced by all
applicable Federal (at the 28% rate), state and local income and employment
taxes
<PAGE>
that must be withheld by the Company ("Withholding Taxes").
(b) On the eighth day following the execution of the Release, as
defined below, without revocation, but in no event earlier than January 2, 2000,
the Company shall pay to Executive in cash the sum of $2,400,000, reduced by the
Withholding Taxes.
(c) The Company shall also pay to Executive, no sooner than
January 2, 2000 and no later than March 31, 2000, in one lump sum in cash, all
amounts due Executive under the Company's Deferred Compensation Plan and the
single sum present value of the benefit due Executive under the Company's
Supplemental Executive Retirement Plan (the "SERP"), determined under the normal
terms of each such plan; provided, however, that the Company shall cause the
determination of the benefit due to Executive under the SERP to be made by
taking into account, and treating as a full year of compensation, all
compensation paid to Executive (including the payment made under subsection (a)
above) for (in the case of any 1999 bonus) or during 1999. The payment under
Section 2(b) of this Agreement shall not be taken into account in determining
the benefit due to Executive under the SERP.
(d) No further payments or benefits shall be made or provided to
Executive except for (i) Executive's rights to options, restricted stock,
performance units and benefits under the terms of the written benefit plans or
programs, sponsored by the Company, in which Executive participated prior to the
Retirement Date, (ii) continued provision of cellular telephone service, at the
same level as the Company provides senior executives generally, for the 36
months following the Retirement Date and (iii) as soon as practicable following
the execution of this Agreement, the Company shall pay Executive's counsel all
documented legal fees and expenses, to a maximum of $20,000, arising in
representing Executive in the preparation of this Agreement and, particularly,
in advising Executive as to the consequences to him of Section 3 of this
Agreement and the Release attached hereto as Annex 1.
3. Confidential Information. Executive recognizes and acknowledges that by
reason of his employment by and service to the Company before and during
employment, he has had and may continue to have access to confidential or
proprietary information relating to the business of the Company, which may
include, but is not limited to, trade secrets, trade "know-how", customer
information, supplier information, cost and pricing information, marketing and
sales techniques, strategies and programs, computer programs and software, and
all financial information including any and all balance sheets, income
statements or statements of cash flows with respect to the Company or any of its
subsidiaries or affiliates (collectively referred to as "Confidential
Information"). Executive acknowledges that such Confidential Information is a
valuable and unique asset of the Company and Executive covenants that he will
not, unless expressly authorized in writing by the Chairman or Chief Executive
Officer, at any time, use any Confidential Information or divulge or disclose
any Confidential Information to any person, firm or corporation. Executive also
covenants that at no time after the Retirement Date, directly or indirectly,
will he use any Confidential Information or divulge or disclose any Confidential
Information to any person, firm or corporation, unless such information is in
the public domain through no fault of Executive or except when required to do so
by a court of law, by any governmental agency having supervisory authority over
the business of the Company or by any administrative or legislative body
(including a committee thereof) with apparent jurisdiction to order him to
divulge, disclose or make accessible such information. In such a case, Executive
2
<PAGE>
will inform the Company in writing promptly of such required disclosure, but in
any event at least five business days prior to disclosure, and will reasonably
cooperate with the Company in attempting to resist the disclosure. All written
Confidential Information in Executive's possession during the course of his
employment shall remain the property of the Company. For the purposes of this
Section, the term "Company" shall be deemed to include the Company and all of
its subsidiaries and affiliates. The confidentiality obligations of this Section
are in addition to any other confidentiality obligation(s) of Executive under
any other agreement with the Company.
4. Equitable Relief.
(a) Executive acknowledges and agrees that the restrictions contained
in Section 3 are reasonable and necessary to protect and preserve the legitimate
interests, properties, goodwill and business of the Company, that the Company
would not have entered into this Agreement in the absence of such restrictions
and that irreparable injury will be suffered by the Company should Executive
breach any of those provisions. Executive represents and acknowledges that (i)
he has been advised by the Company to consult his own legal counsel in respect
of this Agreement, and (ii) that he has had full opportunity, prior to execution
of this Agreement, to review thoroughly this Agreement with his counsel.
(b) Executive further acknowledges and agrees that a breach of any of
the restrictions in Section 3 cannot be adequately compensated by monetary
damages. Therefore, in the event that the Company believes that Executive has or
is about to violate any of the provisions of Section 3, it shall provide
Executive with written notice as soon as reasonably practicable under the
circumstances and ask Executive to cease, or not to so violate those provisions.
Executive agrees that the Company shall be entitled to preliminary and permanent
injunctive relief, without the necessity of proving actual damages, and an
equitable accounting of all earnings, profits and other benefits arising from
any violation of Section 3. All such rights shall be cumulative and in addition
to any other rights or remedies to which the Company may be entitled.
5. Release. Notwithstanding anything else to the contrary in this
Agreement, the payments and benefits provided for under Section 2 of this
Agreement, shall be conditioned up Executive executing, and not revoking as
provided therein, a written release prior to the 22nd day following the
Retirement Date (the "Release"). The Release shall be in the form attached
hereto as Annex 1. In consideration of Executive's release, the Company shall
execute a release in favor of Executive, on the date of this Agreement but which
shall not become irrevocable until the Release becomes irrevocable, in the form
attached hereto as Annex 2. Notwithstanding the foregoing, Executive shall be
entitled to be indemnified by the Company, and the Release shall not apply to
any liability, cost or expense (including attorney's fees) for which Executive
would have been indemnified during employment and service on the Board, in
accordance with the bylaws of the Company, for actions taken on behalf of the
Company during the term of Executive's employment by, and service on the Board
of, the Company.
6. Notices. All notices and other communications required or permitted
under this Agreement or necessary or convenient in connection herewith shall be
in writing and shall be deemed to have been given when hand delivered or mailed
by registered or certified mail, or by
3
<PAGE>
overnight mail or fax, as follows (provided that notice of change of address
shall be deemed given only when received):
If to the Company, to:
YORK INTERNATIONAL CORPORATION
P. O. Box 1592-364C
York, PA 17405-1592
Attention: Corporate Secretary
If to Executive, to:
Robert N. Pokelwaldt
45 Burning Tree Court
York, PA 17404
With a required copy to:
Morgan, Lewis & Bockius LLP
1701 Market Street
Philadelphia, PA 19103
Attention: Robert J. Lichtenstein, Esquire
or to such other names or addresses as the Company or Executive, as the case may
be, shall designate by notice to each other person entitled to receive notices
in the manner specified in this Section.
7. Subsequent Statements; Non-Disparagement. Executive and the Company
agree to mutually develop any oral or written statements to be given as to the
terms and reasons for Executive's retirement and separation from the Company and
to Executive's performance while an executive of the Company. Nothing contained
herein shall limit communication in connection with enforcing the terms of this
Agreement. Executive and the Company, acting through it directors, officers and
employees, each agree not to disparage or impugn the character or reputation or
business practices of the other.
8. Contents of Agreement; Amendment and Assignment.
(a) This Agreement supersedes all prior agreements and otherwise sets
forth the entire understanding between the parties hereto with respect to the
subject matter hereof and cannot be changed, modified, extended or terminated
except upon written amendment approved by the Board and executed on its behalf
by a duly authorized representative and by Executive.
(b) All of the terms and provisions of this Agreement shall be binding
upon and inure to the benefit of and be enforceable by the respective heirs,
executors, administrators, legal representatives, successors and assigns of the
parties hereto, except that the duties and responsibilities of Executive under
this Agreement are of a personal nature and shall not be assignable or
delegatable in whole or in part by Executive.
9. Severability. If any provision of this Agreement or application
thereof to anyone or under any circumstances is adjudicated to be invalid or
unenforceable in any jurisdiction, such
4
<PAGE>
invalidity or unenforceability shall not affect any other provision or
application of this Agreement which can be given effect without the invalid or
unenforceable provision or application and shall not invalidate or render
unenforceable such provision or application in any other jurisdiction. If any
provision is held void, invalid or unenforceable with respect to particular
circumstances, it shall nevertheless remain in full force and effect in all
other circumstances.
10. Remedies Cumulative; No Waiver. No remedy conferred upon a party
by this Agreement is intended to be exclusive of any other remedy, and each and
every such remedy shall be cumulative and shall be in addition to any other
remedy given under this Agreement or now or hereafter existing at law or in
equity. No delay or omission by a party in exercising any right, remedy or power
under this Agreement or existing at law or in equity shall be construed as a
waiver thereof, and any such right, remedy or power may be exercised by such
party from time to time and as often as may be deemed expedient or necessary by
such party in its sole discretion.
11. Death Benefits; Beneficiaries/References. The payments due under
Section 2(b) of this Agreement shall be paid to Executive's beneficiary(ies) in
the event of his death prior to the date specified in that Section. Executive
shall be entitled to select and change a beneficiary or beneficiaries to receive
that payment following Executive's death by giving the Company written notice
thereof. In the event of Executive's death or a judicial determination of his
incompetence, reference in this Agreement to Executive shall be deemed, where
appropriate, to refer to his beneficiary(ies), estate or other legal
representative.
12. Withholding. The Company may withhold from any payments under this
Agreement the Withholding Taxes. Executive shall bear all expense of, and be
solely responsible for, all federal, state and local taxes due with respect to
any payment received under this Agreement.
13. Miscellaneous. All section headings used in this Agreement are for
convenience only. This Agreement may be executed in counterparts, each of which
is an original. It shall not be necessary in making proof of this Agreement or
any counterpart hereof to produce or account for any of the other counterparts.
14. Governing Law. This Agreement shall be governed by and interpreted
under the laws of the Commonwealth of Pennsylvania without giving effect to any
conflict of laws provisions.
IN WITNESS WHEREOF, the parties, intending to be legally bound, have
executed this Agreement as of the date first above written.
YORK INTERNATIONAL CORPORATION
By
-------------------------- -----------------------
Robert N. Pokelwaldt
5
<PAGE>
ANNEX 1
GENERAL RELEASE
1. I, Robert N. Pokelwaldt, for and in consideration of certain payments to be
made and benefits to be provided to me under Section 2 of the Agreement to which
this Annex 1 is attached, dated as of October 14, 1999 (the "Agreement") with
YORK INTERNATIONAL CORPORATION (the "Company"), and for other good and valuable
consideration, do hereby REMISE, RELEASE, AND FOREVER DISCHARGE the Company and
each of its subsidiaries and affiliates, and all of their respective past,
present, and future officers, directors, shareholders, partners, employees,
agents, and insurers, acting in any capacity whatsoever, and all of their
respective successors and assigns, heirs, executors, and administrators, and all
other persons or entities who/that might be claimed to be jointly or severally
liable with them (hereinafter collectively referred to as "the Released
Parties") of and from all claims causes of action, suits, charges, debts, dues,
sums of money, attorneys' fees and costs, accounts, bills, covenants, contracts,
agreements, expenses, wages, compensation, benefits, promises, damages,
judgments, rights, demands, or otherwise (hereinafter collectively referred to
as "Claims"), known or unknown, accrued or unaccrued, contingent or
non-contingent, in equity or in law, which I ever had, now have, or hereafter
may have, or which my heirs, executors, or administrators may have, by reason of
any matter, cause or thing whatsoever from the beginning of time through the
date of my signature on this General Release. This General Release includes, but
is not limited to, all Claims in any way arising from, relating to, or
concerning my employment with and the retirement of my employment from and
service on the Board of Directors of the Company and/or other Released Parties,
and the terms, conditions, and benefits payments resulting therefrom or my
status as a shareholder of the Company or any Released Party (other than a class
derivative rights action in which neither Executive nor any related persons are
named plaintiffs). This General Release further includes, but is not limited to,
all Claims for discrimination based upon age, sex, race, disability, national
origin, religion, or any other protected characteristic including without
limitation all Claims arising under Title VII of the Civil Rights Act of 1964,
the Age Discrimination in Employment Act, the Americans With Disabilities Act,
the Employee Retirement Income Security Act of 1974, as amended, the
Pennsylvania Human Relations Act, the Civil Rights Act of 1866, and all other
federal, state, and local employment discrimination statutes, and all Claims for
breach of contract or for the commission of any torts; provided, however, that
this General Release shall not apply to (i) any entitlements under the terms of
the Agreement or under any other plans or programs of the Company in which I
participated and under which I have accrued a benefit nor (ii) to my right to be
indemnified by the Company, pursuant to the bylaws of the Company or otherwise,
for any liability, cost or expense for which I would have been indemnified for
actions taken on behalf of the Company during the term and within the scope of
my employment by and service on the Board of Directors of, the Company.
2. I further agree and covenant that neither I, nor any person, organization
or other entity on my behalf, will assert, file, charge, claim, sue or cause or
permit to be filed, charged, or claimed, any action with respect to any Claim(s)
which have been released under paragraph 1 of this Annex 1. If I do so, and the
action is found to be barred in whole or in part by paragraph 1 of
<PAGE>
this Annex 1, I shall pay the attorneys' fees and costs incurred by any of the
Released Parties in defending against those Claim(s) that are found to be so
barred.
3. I hereby agree and recognize that my employment by the Company was
permanently and irrevocably severed on the Retirement Date and the Company (and
Released Parties) have no obligation, contractual or otherwise to me to hire,
rehire, re-employ or engage me in any capacity in the future, and I hereby
release the Released Parties from any and all liabilities based upon the denial
of re-employment or future engagement. I acknowledge that the terms of the
Agreement provide me with payments and benefits which are in addition to any
amounts to which I otherwise would have been entitled.
4. I hereby agree and acknowledge that the payments and benefits provided by
the Company are to bring about an amicable resolution of my employment
arrangements and are not to be construed as an admission of any violation of any
federal, state or local statute or regulation, or of any duty owed by the
Company and that the Agreement and this General Release are made voluntarily to
provide an amicable resolution of my employment relationship with the Company.
5. I hereby certify that I have read the terms of this General Release, that
I have been advised by the Company to discuss it with my attorney, and that I
understand its terms and effects. I acknowledge, further, that I am executing
this General Release of my own volition with a full understanding of its terms
and effects and with the intention of releasing all claims recited herein in
exchange for the consideration described in the Agreement, which I acknowledge
is adequate and satisfactory to me. None of the above-named parties, nor their
agents, representatives, or attorneys have made any representations to me
concerning the terms or effects of this General Release other than those
contained herein.
6. I hereby acknowledge that I have been informed that I have the right to
consider this General Release for a period of 21 days prior to execution. I also
understand that I have the right to revoke this General Release for a period of
seven days following execution by giving written notice to the Company at P.O.
Box 1592-364C, York, PA 17405, Attention: Corporate Secretary, and that the
Agreement shall not become effective or enforceable until the revocation period
has expired.
Intending to be legally bound hereby, I execute the foregoing General Release
this 14th day of October, 1999.
- ------------------------------ -----------------------
Witness Robert N. Pokelwaldt
<PAGE>
ANNEX 2
GENERAL RELEASE
1. YORK INTERNATIONAL CORPORATION and each of its subsidiaries and
affiliates, and all of their respective past, present, and future officers and
directors and their respective successors and assigns, heirs, executors and
administrators (hereinafter collectively included within the term the "YORK"),
for and in consideration of the release of Robert N. Pokelwaldt ("Executive"),
of October 14, 1999, and other good and valuable consideration, does hereby
REMISE, RELEASE, AND FOREVER DISCHARGE Executive, his assigns, heirs, executors
and administrators (hereinafter collectively included within the term
"Executive"), acting in any capacity whatsoever, of and from all claims, causes
of action, suits, charges, debts, dues, sums of money, attorneys' fees and
costs, accounts, bills, covenants, contracts, agreements, expenses, wages,
compensation, benefits, promises, damages, judgments, rights, demands, or
otherwise (hereinafter collectively referred to as "Claims") whatsoever in law
or in equity, which it ever had, now has, or hereafter may have, by reason of
any matter, cause or thing whatsoever from the beginning of Executive's
employment with YORK to the date of York's signature on this Release arising
from or relating in any way to Executive's employment and service as an officer,
director or fiduciary, his retirement and the termination of his employment and
service as an officer, director or fiduciary with YORK, including but not
limited to, any Claims which have been asserted, could have been asserted, or
could be asserted now or in the future under any federal, state or local laws,
any contracts between YORK and Executive and any Claims now or hereafter
recognized and all claims for counsel fees and costs; provided, however, that
this Release shall not apply to (i) any Claim(s) attributable to a crime or to
an action outside the scope of Executive's employment, (ii) any breach of
obligation under the terms of the Agreement nor (iii) any Claim(s) of which the
Company does not have knowledge nor could reasonably be expected to have
knowledge as of the date of this Agreement because of the Executive's fraud.
2. YORK further agrees and covenants that neither YORK, nor any person,
organization or other entity on its behalf, will assert, file, charge, claim,
sue or cause or permit to be filed, charged, or claimed, any action with respect
to any Claim(s) which have been released under paragraph 1 of this Annex 2. If
York does so, and the action is found to be barred in whole or in part by this
Annex 2, York shall pay the attorneys' fees and costs incurred by the Executive
in defending against those Claim(s) that are found to be so barred.
3. YORK hereby certifies that it has been advised by counsel in the
preparation and review of this General Release.
Intending to be legally bound hereby, YORK executed the foregoing General
Release this 14th day of October, 1999.
York International Corporation
- ------------------------------ ---------------------------
Witness By:
<PAGE>
Exhibit 10.21
EMPLOYMENT AGREEMENT
AGREEMENT by and between York International Corporation, a Delaware
corporation (the "Company") and KEY EXECUTIVES (the "Executive") dated as of the
29th day of December, 1999.
The Board of Directors of the Company has determined that it is in its
best interests and that of its shareholders to employ the Executive in the
capacity described below and the Executive wishes to serve in such capacity.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. Effective Date. The "Effective Date" shall mean December 29,1999.
2. Employment Period. The Company hereby agrees to employ the
Executive, and the Executive hereby agrees to enter into the employ of the
Company subject to the terms and conditions of this Agreement, for the period
commencing on the Effective Date and ending on the third anniversary thereof
(the "Employment Period") provided, however, that the Employment Period shall be
automatically extended without action by either party for an additional one
month period on the 16th day of each month unless, not later than the 15th day
of any month, either party shall give notice to the other in writing that such
party does not intend to extend the Employment Period.
3. Terms of Employment. (a) Position and Duties. (A) During the
Employment Period, the Executive shall serve as [insert title] with such
authority, duties and responsibilities as are commensurate with such position
and (B) the Executive's services shall be performed in
(location)_______________.
(b) Compensation.
(i) Base Salary. During the Employment Period, the Executive shall
receive an annual base salary of ________ ("Annual Base Salary"), which shall be
paid in accordance with the Company's payroll practices. During the Employment
Period, the Annual Base Salary shall be reviewed at least annually. Any increase
in Annual Base Salary shall not serve to limit or reduce any other obligation to
the Executive under this Agreement. Annual Base Salary shall not be reduced
after any such increase and the term Annual Base Salary as utilized in this
Agreement shall refer to Annual Base Salary as so increased. As used in this
Agreement, the term "affiliated companies" shall include any company controlled
by, controlling or under common control with the Company.
(ii) Incentive Compensation. During the Employment Period, the
Executive shall have an annual cash bonus and a mid-term performance bonus
opportunity based on a percentage of his Annual Base Salary (determined annually
by the Company's Board in accordance with the provisions of the 1996 Incentive
Compensation Plan) and shall otherwise be eligible for incentive compensation
awards on the same basis as similarly situated executives.
-1-
<PAGE>
(iii) Employee Benefit Plans. During the Employment Period, the
Executive shall be entitled to participate in all incentive, employee benefit,
retirement, welfare and other plans, practices, policies and programs applicable
to senior executives of the Company.
(iv) Expenses. During the Employment Period, the Executive shall be
entitled to receive prompt reimbursement for all reasonable expenses incurred by
the Executive in accordance with the Company's policies.
(v) Perquisite Benefits. During the Employment Period, the Executive
shall be provided with perquisite benefits as are provided to other senior
executives of the Company.
(vi) Vacation. During the Employment Period, the Executive shall be
entitled to paid vacation in accordance with the plans, policies, programs and
practices of the Company and its affiliated companies as in effect with respect
to the senior executives of the Company.
4. Termination of Employment. (a) Death or Disability. The Executive's
employment shall terminate automatically upon the Executive's death during the
Employment Period. If the Company determines in good faith that the Disability
of the Executive has occurred during the Employment Period (pursuant to the
definition of Disability set forth below), it may give to the Executive written
notice in accordance with Section 11(b) of this Agreement of its intention to
terminate the Executive's employment. In such event, the Executive's employment
with the Company shall terminate effective on the 30th day after receipt of such
notice by the Executive (the "Disability Effective Date"), provided that, within
the 30 days after such receipt, the Executive shall not have returned to
full-time performance of the Executive's duties. For purposes of this Agreement,
"Disability" shall mean the absence of the Executive from the Executive's duties
with the Company on a full-time basis for 180 consecutive business days as a
result of incapacity due to mental or physical illness which is determined to be
total and permanent by a physician selected by the Company or its insurers and
acceptable to the Executive or the Executive's legal representative.
(b) Cause. The Company may terminate the Executive's employment during
the Employment Period for Cause. For purposes of this Agreement, "Cause" shall
mean:
(i) knowingly providing the Company with materially false
representations relied upon by the Company in furnishing information to
stockholders, a stock exchange or the Securities and Exchange Commission, or
(ii) maintaining an undisclosed, unauthorized and material conflict of
interest in the discharge of duties owed to the Company, or
(iii) willful misconduct causing serious violation by the Company of
state or federal laws, or
(iv) theft of Company funds or assets, or
(v) conviction of a crime involving moral turpitude.
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<PAGE>
For purposes of this provision, no act or failure to act, on the part of the
Executive, shall be considered "willful" unless it is done, or omitted to be
done, by the Executive in bad faith or without reasonable belief that the
Executive's action or omission was in the best interests of the Company. Any
act, or failure to act, based upon authority given pursuant to a resolution duly
adopted by the Board or based upon advice of counsel for the Company shall be
conclusively presumed to be done, or omitted to be done, by the Executive in
good faith and in the best interest of the Company.
(c) Good Reason. In the event that the Executive's employment with the
Company is voluntarily terminated by the Executive with "Good Reason", the
Executive shall be entitled to a lump sum payment representing the remaining
balance of his or her employment agreement as calculated in accordance with
Section 5 (a). For purposes of this Agreement, "Good Reason" shall mean, in the
absence of a written consent of the Executive, any of the following which occurs
before the expiration of the Executive's Employment Period:
(i) a substantial and adverse change in the Executive's
responsibilities, job description, status or position as a key employee of the
Company, when compared to the Executive's prior responsibilities, job
description, status or position as a key employee of the Company as contemplated
by Section 3(a) of this Agreement, excluding for this purpose an isolated,
insubstantial and inadvertent action not taken in bad faith, and which is
remedied by the Company promptly after receipt or notice thereof given by the
Executive;
(ii) any material failure by the Company to comply with any of the
provisions of Section 3(b) of this Agreement, unless initiated by the Executive,
other than a failure not occurring in bad faith and which is remedied by the
Company promptly after receipt of notice thereof given by the Executive;
(iii) the requiring that the Executive travel on the Company's
business to an extent materially greater than the Executive's normal business
travel, or the Company requiring the Executive to be based at any office or
location more than 35 miles from that provided in Section 3(a)(i)(B) hereof;
(iv) a material breach by the Company of any terms of this Agreement,
or any failure by the Company to comply with and satisfy Section 9 of this
Agreement, or any purported termination by the Company of the Executive's
employment otherwise than as expressly permitted by this Agreement
(v) any failure by the Company to obtain the assumption of this
Agreement by any successor or assign of the Company.
(d) Notice of Termination. Any termination by the Company for Cause, or
by the Executive for Good Reason, shall be communicated by Notice of Termination
to the other party hereto given in accordance with Section 11(b) of this
Agreement. For purposes of this Agreement, a "Notice of Termination" means a
written notice which (i) indicates the specific termination provision in this
Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination of
the Executive's employment under the provision so indicated and (iii) if the
Date of Termination (as defined below) is other than the date of receipt of such
notice, specifies the termination date (which date shall be not more than thirty
days after the giving of such notice). The failure by the
-3-
<PAGE>
Executive or the Company to set forth in the Notice of Termination any fact or
circumstance which contributes to a showing of Good Reason or Cause shall not
waive any right of the Executive or the Company, respectively, hereunder or
preclude the Executive or the Company, respectively, from asserting such fact or
circumstance in enforcing the Executive's or the Company's rights hereunder.
(e) Date of Termination. "Date of Termination" means (i) if the
Executive's employment is terminated by the Company for Cause, or by the
Executive for Good Reason, the date of receipt of the Notice of Termination or
any later date specified therein within 30 days of such notice, as the case may
be, (ii) if the Executive's employment is terminated by the Company other than
for Cause or Disability, the Date of Termination shall be the date on which the
Company notifies the Executive of such termination and (iii) if the Executive's
employment is terminated by reason of death or Disability, the Date of
Termination shall be the date of death of the Executive or the Disability
Effective Date, as the case may be.
5. Obligations of the Company upon Termination. (a) Good Reason; Other
Than for Cause, Death or Disability. If, during the Employment Period, the
Company shall terminate the Executive's employment other than for Cause, Death
or Disability or the Executive shall terminate employment for Good Reason:
(i) the Company shall pay to the Executive in a lump sum in cash
within 30 days after the Date of Termination the aggregate of the following
amounts:
A. the sum of the Executive's Annual Base Salary through the Date
of Termination to the extent not theretofore paid, (this amount shall
be hereinafter referred to as the "Accrued Obligations"); and
B. An amount equal to the Executive's Annual Base Salary plus
Annual Cash Bonus (based on the adjusted EV bonus amount for the
Fiscal Year in which the Date of Termination occurs, the "Adjusted EV
Bonus") for the remaining Employment Period; and
C. an amount equal to the excess of (a) the actuarial equivalent
of the benefit under the Company's qualified defined benefit
retirement plan (the "Retirement Plan") (utilizing actuarial
assumptions no less favorable to the Executive than those in effect
under the Company's Retirement Plan immediately prior to the Effective
Date), and any excess or supplemental retirement plan in which the
Executive participates (together, the "SERP") which the Executive
would receive if the Executive's employment continued until the end of
the Employment Period assuming for this purpose that all accrued
benefits are fully vested, and, assuming that the Executive's
compensation in each of the periods is that required by Section 3(b)
and that the Executive's Annual Cash Bonus for such years is the
Adjusted EV Bonus, over (b) the actuarial equivalent of the
Executive's actual benefit (paid or payable), if any, under the
Retirement Plan and the SERP as of the Date of Termination;
(ii) the Company shall continue to provide welfare benefits to the
Executive and his dependants until the end of the Employment Period on the same
basis that such benefits were provided to him immediately prior to the Date of
Termination; and
-4-
<PAGE>
(iii) to the extent not theretofore paid or provided, the Company
shall timely pay or provide to the Executive any other amounts or benefits
required to be paid or provided or which the Executive is eligible to receive
under any plan, program, policy or practice or contract or agreement of the
Company and its affiliated companies (such other amounts and benefits shall be
hereinafter referred to as the "Other Benefits").
(b) Death. If the Executive's employment is terminated by reason of the
Executive's death during the Employment Period, this Agreement shall terminate
without further obligations to the Executive's legal representatives under this
Agreement, other than for payment of Accrued Obligations and the timely payment
or provision of Other Benefits. Accrued Obligations shall be paid to the
Executive's estate or beneficiary, as applicable, in a lump sum in cash within
30 days of the Date of Termination. With respect to the provision of Other
Benefits, the term Other Benefits as utilized in this Section 5(b) shall include
death benefits as in effect on the date of the Executive's death with respect to
senior executives of the Company and his beneficiaries.
(c) Disability. If the Executive's employment is terminated by reason
of the Executive's Disability during the Employment Period, this Agreement shall
terminate without further obligations to the Executive, other than for payment
of Accrued Obligations and the timely payment or provision of Other Benefits.
Accrued Obligations shall be paid to the Executive in a lump sum in cash within
30 days of the Date of Termination. With respect to the provision of Other
Benefits, the term Other Benefits as utilized in this Section 5(c) shall
include, and the Executive shall be entitled after the Disability Effective Date
to receive, disability and other benefits as in effect at any time thereafter
generally with respect to the senior executives of the Company.
(d) Cause; Other than for Good Reason. If the Executive's employment
shall be terminated for Cause or the Executive terminates his employment without
Good Reason during the Employment Period, this Agreement shall terminate without
further obligations to the Executive other than the obligation to pay to the
Executive his Annual Base Salary through the Date of Termination, and Other
Benefits, in each case to the extent theretofore unpaid.
6. Non-exclusivity of Rights. Except as specifically provided, nothing
in this Agreement shall prevent or limit the Executive's continuing or future
participation in any plan, program, policy or practice provided by the Company
or any of its affiliated companies and for which the Executive may qualify, nor,
subject to Section 11(e), shall anything herein limit or otherwise affect such
rights as the Executive may have under any contract or agreement with the
Company or any of its affiliated companies. Amounts which are vested benefits or
which the Executive is otherwise entitled to receive under any plan, policy,
practice or program of or any contract or agreement with the Company or any of
its affiliated companies at or subsequent to the Date of Termination shall be
payable in accordance with such plan, policy, practice or program or contract or
agreement except as explicitly modified by this Agreement.
-5-
<PAGE>
7. Full Settlement. The Company's obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim, recoupment,
defense or other claim, right or action which the Company may have against the
Executive or others. In no event shall the Executive be obligated to seek other
employment or take any other action by way of mitigation of the amounts payable
to the Executive under any of the provisions of this Agreement and, such amounts
shall not be reduced whether or not the Executive obtains other employment. The
Company agrees to pay as incurred, to the full extent permitted by law, all
legal fees and expenses which the Executive may reasonably incur as a result of
any contest (regardless of the outcome thereof) by the Company, the Executive or
others of the validity or enforceability of, or liability under, any provision
of this Agreement or any guarantee of performance thereof (including as a result
of any contest by the Executive about the amount of any payment pursuant to this
Agreement), plus in each case interest on any delayed payment at the applicable
Federal rate provided for in Section 7872(f)(2)(A) of the Internal Revenue Code
of 1986, as amended (the "Code").
8. Confidential Information. (a) The Executive shall hold in a
fiduciary capacity for the benefit of the Company all secret or confidential
information, knowledge or data relating to the Company or any of its affiliated
companies, and their respective businesses, which shall have been obtained by
the Executive during the Executive's employment by the Company or any of its
affiliated companies and which shall not be or become public knowledge (other
than by acts by the Executive or representatives of the Executive in violation
of this Agreement). After termination of the Executive's employment with the
Company, the Executive shall not, without the prior written consent of the
Company or as may otherwise be required by law or legal process, communicate or
divulge any such information, knowledge or data to anyone other than the Company
and those designated by it. In no event shall an asserted violation of the
provisions of this Section 8 constitute a basis for deferring or withholding any
amounts otherwise payable to the Executive under this Agreement. (b) Any
termination of the Executive's employment or of this Agreement shall have no
effect on the continuing operation of this Section 8 or Section 9 below.
9. Noncompetition/Nonsolicitation. (a) For two years after the Date of
Termination, Executive will not directly or indirectly, own, manage, operate,
control or participate in the ownership, management, operation or control of or
be connected as an officer, employee, partner, director, consultant or otherwise
with, or have any financial interest in, any business which is in material
competition with the business conducted by the Company or its affiliates.
Ownership for personal investment purposes only of less than 2% of the voting
stock of any publicly held corporation shall not constitute a violation hereof.
(b) For two years after the Date of Termination, the Executive will
not, directly or indirectly, on behalf of the Executive or any other person,
solicit for employment any person employed by the Company or its affiliates as
of the date hereof or known by the Executive at the time to be employed by the
Company or its affiliates.
-6-
<PAGE>
(c) (i) Executive acknowledges and agrees that the restrictions
contained in this Section 9 and in Section 8 are reasonable and necessary to
protect and preserve the legitimate interests, properties, goodwill and business
of the Company, and that irreparable injury will be suffered by the Company
should Executive breach any of the provisions of this Section. Executive
represents and acknowledges that (1) Executive has been advised by the Company
to consult Executive's own legal counsel in respect of this Agreement, (2)
Executive has had full opportunity, prior to execution of this Agreement, to
review thoroughly this Agreement with Executive's counsel, and (3) the
provisions of this Section 9 are reasonable and these restrictions do not
prevent Executive from earning a reasonable livelihood.
(ii) Executive further acknowledges and agrees that a breach of any
of the restrictions in this Section 9 and Section 8 cannot be adequately
compensated by monetary damages. Executive agrees that the Company shall be
entitled to preliminary and permanent injunctive relief, without the necessity
of proving actual damages, as well as provable damages and an equitable
accounting of all earnings, profits and other benefits arising from any
violation of this Section 9, which rights shall be cumulative and in addition to
any other fights or remedies to which the Company may be entitled. In the event
that any of the provisions of this Section 9 should ever be adjudicated to
exceed the time, geographic, service, or other limitations permitted by
applicable law in any jurisdiction, it is the intention of the parties that the
provision shall be amended to the extent of the maximum time, geographic,
service, or other limitations permitted by applicable law, that such amendment
shall apply only within the jurisdiction of the court that made such
adjudication and that the provision otherwise be enforced to the maximum extent
permitted by law.
(iii) Executive irrevocably and unconditionally (1) agrees that any
suit, action or other legal proceeding arising out of this Section 9 and Section
8, including without limitation, any action commenced by the Company for
preliminary and permanent injunctive relief and other equitable relief, may be
brought in the Court of Common Pleas of York County, Pennsylvania or if such
court does not have jurisdiction or will not accept jurisdiction, in any court
of general jurisdiction in Pennsylvania, (2) consents to the non-exclusive
jurisdiction of any such court in any such suit, action or proceeding, and (3)
waive any objection which Executive may have to the laying of venue of any such
suit, action or proceeding in any process, pleadings, notices or other papers in
a manner permitted by the notice provisions of this Section 9.
(d) In exchange for the covenants set forth in this Section 9, the
Company agrees to make to the Executive a lump sum payment equal to two years of
the Executive's then-current Annual Base Salary plus then-current Adjusted EV
Bonus, payable within 30 days after the Date of Termination.
10. Successors. (a) This Agreement is personal to the Executive and
without the prior written consent of the Company shall not be assignable by the
Executive otherwise than by will or the laws of descent and distribution. This
Agreement shall inure to the benefit of and be enforceable by the Executive's
legal representatives.
-7-
<PAGE>
(b) This Agreement shall inure to the benefit of and be binding upon
the Company and its successors and assigns.
(c) The Company will require any successor (whether direct or indirect,
by purchase, merger, consolidation or otherwise) to all or substantially all of
the business and/or assets of the Company to assume expressly and agree to
perform this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had taken place.
As used in this Agreement, "Company" shall mean the Company as herein before
defined and any successor to its business and/or assets as aforesaid which
assumes and agrees to perform this Agreement by operation of law, or otherwise.
11. Miscellaneous. (a) This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, without
reference to principles of conflict of laws. The captions of this Agreement are
not part of the provisions hereof and shall have no force or effect. This
Agreement may not be amended or modified otherwise than by a written agreement
executed by the parties hereto or their respective successors and legal
representatives.
(b) All notices and other communications hereunder shall be in writing
and shall be given by hand delivery to the other party or by registered or
certified mail, return receipt requested, postage prepaid, addressed as follows:
If to the Executive:
If to the Company:
York International Corporation
631 S. Richland Avenue
York, PA 17403
Attention: General Counsel
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement.
(d) The Company may withhold from any amounts payable under this
Agreement such Federal, state, local or foreign taxes as shall be required to be
withheld pursuant to any applicable law or regulation.
-8-
<PAGE>
(e) The Executive's or the Company's failure to insist upon strict
compliance with any provision of this Agreement or the failure to assert any
right the Executive or the Company may have hereunder, including, without
limitation, the right of the Executive to terminate employment for Good Reason
pursuant to Section 4(c)(i)-(v) of this Agreement, shall not be deemed to be a
waiver of such provision or right or any other provision or right of this
Agreement.
IN WITNESS WHEREOF, the Executive has hereunto set the Executive's hand
and, pursuant to the authorization from its Boards of Directors, the Company has
caused these presents to be executed in its name on its behalf, all as of the
day and year first above written.
------------------------------
YORK INTERNATIONAL CORPORATION
By:
------------------------------
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<PAGE>
EXHIBIT 10.22
AMENDMENT NO. 2 TO THE
YORK INTERNATIONAL CORPORATION
AMENDED AND RESTATED 1992 OMNIBUS STOCK PLAN
On behalf of York International Corporation (the "Company"), the Board of
Directors of the Company (the "Board") at its meeting on February 9, 2000,
pursuant to the authority granted it under Section 15 of the Plan, wishes to
amend the York International Corporation 1992 Omnibus Stock Plan (the "Plan") to
adopt the following amendment, effective January 1, 2000:
1. Section 3 is hereby amended by deleting the sentence: "The Committee
shall have no authority to administer, modify or interpret Section 7 of the
Plan, except as to any adjustments pursuant to Section 14."
2. Section 7 is hereby amended by adding the following paragraph at the
end:
"In addition to the options to be granted to non-employee Directors in
the manner set forth above, the Committee may at any time and from
time to time grant stock options to non-employee Directors on such
terms and conditions as the Committee may determine, subject to the
provisions of Section 6 and the other applicable provisions of the
Plan."
3. Section 15 is hereby amended by deleting the sentence: "No amendment to
Section 7 of the Plan shall be made more than once every six months other than
to conform with changes in the Code or the rules thereunder."
4. In all other respects, the Plan is hereby ratified and confirmed.
* * * * * * *
IN WITNESS WHEREOF, the Board has caused this Amendment No. 2 to be
executed under seal by its duly authorized representative.
<TABLE>
<CAPTION>
WITNESS/ATTEST: YORK INTERNATIONAL CORPORATION
<S> <C> <C> <C>
/s/ Jane G. Davis By: /s/ Gerald C. McDonough
- -------------------------------------------- ----------------------------------------
Print Name: Jane G. Davis Print Name: Gerald C. McDonough
------------------------------ ----------------------------------------
Title: Chairman
Date: February 9, 2000
----------------------------------------
</TABLE>
<PAGE>
EXHIBIT 12
YORK INTERNATIONAL CORPORATION
STATEMENT RE: COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(Dollar amounts in thousands)
<TABLE>
<CAPTION>
1995 1996 1997 1998 1999
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Earnings (loss) before taxes and
cumulative effect of accounting change $(70,782) 204,463 78,468 187,303 118,082
Interest expense 41,412 34,544 40,876 41,527 61,150
Interest component of
rental expense 5,055 5,590 5,036 5,797 6,487
-------- ------- ------- ------- -------
$(24,315) 244,597 124,380 234,627 185,719
======== ======= ======= ======= =======
Interest expense 41,412 34,544 40,876 41,527 61,150
Interest component of
rental expense 5,055 5,590 5,036 5,797 6,487
-------- ------- ------- ------- -------
$ 46,467 40,134 45,912 47,324 67,637
======== ======= ======= ======= =======
Fixed charge coverage ratio 0.0 6.1 2.7 5.0 2.7
======== ======= ======= ======= =======
</TABLE>
Note - Earnings (loss) before taxes and cumulative effect of accounting change
for 1995 are after a charge for impairment loss on long-lived assets of
$244,473. As a result, fixed charges exceed earnings (loss) before taxes and
cumulative effect of accounting change for 1995, net of such fixed charges by
$70,782.
<PAGE>
EXHIBIT 13
YORK INTERNATIONAL CORPORATION
ANNUAL FINANCIAL STATEMENTS
AND REVIEW OF OPERATIONS
1999
a1
<PAGE>
Contents
DESCRIPTION OF BUSINESS......................................................a3
MANAGEMENT'S REPORT ON FINANCIAL STATEMENTS..................................a4
INDEPENDENT AUDITORS' REPORT.................................................a4
FIVE YEAR SUMMARY OF SELECTED FINANCIAL DATA.................................a5
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS........................................a6
FINANCIAL STATEMENTS........................................................a13
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS..................................a17
SUMMARY OF QUARTERLY RESULTS................................................a32
TRADING AND DIVIDEND INFORMATION............................................a32
INVESTOR AND STOCKHOLDER INFORMATION........................................a33
CORPORATE DATA..............................................................a33
DIRECTORS AND OFFICERS......................................................a34
a2
<PAGE>
Description of Business
York International Corporation (the Company) is a full-line, global designer and
manufacturer of heating, ventilating, air conditioning and refrigeration
(HVAC&R) products. The Company believes it is the third largest manufacturer and
marketer of such products in the United States and one of the leading companies
in the HVAC&R industry internationally. The Company's air conditioning systems
range from a one ton* unit for a small residence to the 59,000 ton system
installed in the New York World Trade Center. In 1999, the Company's products
were sold in over 100 countries through over 850 sales and distribution
facilities and are in use in such diverse locations as the Kuala Lumpur City
Centre in Malaysia, the British Houses of Parliament, the Tokyo World Trade
Center, the Pentagon, NASA's Vehicle Assembly Building at Cape Canaveral, NASA's
Johnson Space Center, the Los Angeles International Airport, the Jeddah Airport,
the Overseas Union Bank Centre in Singapore, the Sydney Opera House, the
National Library Complex in Beijing, the Atlantic City Convention Center, the
English Channel Eurotunnel, the Hong Kong Exposition Centre and the Lantau
Airport Railway System in Hong Kong.
The Company was founded in 1874 in York, Pennsylvania. From 1956 until 1986, the
Company was a part of Borg-Warner Corporation ("Borg-Warner"). In 1986, it was
spun off to Borg-Warner shareholders and became an independent, publicly held
company. In 1988, the Company was purchased in a leveraged buyout by a
corporation organized by affiliates of Citicorp Investments Inc. ("CII") and two
investors. In October 1991, the Company completed an initial public offering of
its Common Stock and in 1992 CII and the other non-management investors sold
their remaining shares in a public offering. In 1999, the Company expanded its
Refrigeration business by acquiring all of the outstanding capital stock of
Sabroe A/S, a Danish company. The acquisition establishes the York Refrigeration
Group as the world leader in supplying industrial refrigeration systems and
products.
Headquartered in York, Pennsylvania, the Company has manufacturing facilities in
12 states and 14 foreign countries. As of December 31, 1999, the Company
employed approximately 25,000 people worldwide.
Unless the context otherwise requires, the terms "Company" and "York" refer to
the Company and its consolidated subsidiaries. The Company's principal executive
offices are located at 631 South Richland Avenue, York, Pennsylvania 17403, and
its telephone number is (717) 771-7890.
Products and Markets
All of the Company's products are in the heating, ventilating, air conditioning
and refrigeration (HVAC&R) industry, and the Company operates solely in this
industry. Within HVAC&R, the Company's products fall into three general
categories. The first is Unitary products, consisting of air conditioning and
furnace units and hermetic and scroll compressors designed for use in
residential and light commercial applications. The second is Engineered Systems
products, consisting of heating, air conditioning and thermal storage equipment
designed for commercial applications in retail stores, office buildings,
shopping malls, manufacturing facilities, hospitals, universities, airports and
marine vessels. The third is Refrigeration products, including commercial and
industrial refrigeration and gas compression equipment, designed for the food,
beverage, chemical and petrochemical processing industries. The Company's
engineered systems products and refrigeration products are designed specifically
for the customer's needs and applications.
* The cooling capacity of air conditioning units is measured in tons. One ton of
cooling capacity is equivalent to 12,000 BTUs and is generally adequate to air
condition approximately 500 square feet of residential space.
a3
<PAGE>
Management's Report on Financial Statements and Independent Auditors' Report
Management's Report on Financial Statements
To the Stockholders of York International Corporation:
The management of York International Corporation is responsible for the
preparation of the accompanying financial statements. In management's opinion,
the financial statements have been prepared in conformity with generally
accepted accounting principles. The Company believes that the accounting systems
and related controls that it maintains are sufficient to provide reasonable
assurance that financial records are reliable for preparing financial statements
and maintaining accountability for assets. These systems and controls are tested
and evaluated regularly by the Company's internal auditors as well as by the
independent auditors in connection with their annual audit.
The directors of York International Corporation have established an Audit
Committee currently comprised of four outside directors. The Audit Committee
meets with management, the internal auditors and the independent auditors and
monitors generally the accounting affairs of the Company. The Audit Committee
also recommends to the stockholders the selection of the independent auditors.
/s/ Michael R. Young /s/ C. David Myers /s/ Charles F. Cargile
Michael R. Young C. David Myers Charles F. Cargile
President and Vice President and Vice President, Finance and
Chief Executive Officer Chief Financial Officer Corporate Development
February 17, 2000
Independent Auditors' Report
The Board of Directors and Stockholders, York International Corporation:
We have audited the accompanying consolidated balance sheets of York
International Corporation and subsidiaries as of December 31, 1999 and 1998, and
the related consolidated statements of operations, comprehensive income, cash
flows and stockholders' equity for each of the years in the three-year period
ended December 31, 1999. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of York International
Corporation and subsidiaries as of December 31, 1999 and 1998, and the results
of their operations and their cash flows for each of the years in the three-year
period ended December 31, 1999, in conformity with generally accepted accounting
principles.
/s/ KPMG LLP
Harrisburg, Pennsylvania
February 17, 2000
a4
<PAGE>
Five Year Summary of Selected Financial Data
<TABLE>
<CAPTION>
(in thousands, except per share data and Other Information) 1999 1998 1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Statement of Operations Data:
Net sales $ 3,866,615 $ 3,289,201 $ 3,193,657 $ 3,218,534 $ 2,929,948
Gross profit 812,964 722,936 636,226 685,857 629,379
Acquisition, integration, restructuring and
other charges (a) 54,532 -- -- -- --
Impairment loss on long-lived assets (b) -- -- -- -- 244,473
Income (loss) from operations 163,945 228,704 114,002 238,384 (21,670)
Gain on sale of business 9,627 -- -- -- --
Interest expense, net 61,150 41,527 40,876 34,544 41,412
Income (loss) before income taxes and cumulative
effect of accounting change 118,082 187,303 78,468 204,463 (70,782)
Provision for income taxes 41,303 50,810 31,075 56,554 25,290
Income (loss) before cumulative effect of
accounting change 76,779 136,493 47,393 147,909 (96,072)
Net income (loss) 75,882 136,493 47,393 147,909 (96,072)
Basic earnings (loss) per share:
Income (loss) before cumulative effect
of accounting change 1.93 3.38 1.11 3.43 (2.38)
Accounting change (0.02) -- -- -- --
Net income (loss) 1.91 3.38 1.11 3.43 (2.38)
Diluted earnings (loss) per share:
Income (loss) before cumulative effect
of accounting change 1.93 3.36 1.10 3.37 (2.38)
Accounting change (0.02) -- -- -- --
Net income (loss) 1.91 3.36 1.10 3.37 (2.38)
Cash dividends per share 0.60 0.48 0.48 0.36 0.24
Weighted average common shares and
common equivalents outstanding:
Basic 39,637 40,402 42,550 43,136 40,321
Diluted 39,832 40,622 43,040 43,950 40,321
Capital expenditures $ 104,065 $ 64,638 $ 66,854 $ 73,576 $ 66,242
Depreciation and amortization 64,171 57,785 52,776 48,581 42,841
Amortization of deferred charges and unallocated
excess of cost over net assets acquired 24,119 17,059 15,978 18,410 18,643
Balance Sheet Data:
Working capital $ 485,234 $ 521,054 $ 535,123 $ 524,143 $ 393,063
Total assets 2,874,539 2,106,538 1,996,298 2,074,771 1,927,002
Long-term debt 854,494 362,724 452,344 313,641 314,246
Stockholders' equity 731,930 730,799 646,285 780,377 624,814
Other Information:
Employees 25,000 20,600 20,300 20,100 19,000
Backlog (in thousands) $ 1,065,096 $ 879,473 $ 834,466 $ 845,076 $ 868,640
Total debt as a percent of total capital 56.7% 36.2% 44.7% 36.2% 39.1%
Current ratio 1.48 1.66 1.78 1.68 1.50
Book value per share $ 19.08 $ 18.27 $ 15.91 $ 17.89 $ 14.51
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) In 1999, the Company recorded charges to operations for costs relating to
the acquisition, integration and restructuring of Sabroe and other Company
cost reduction initiatives. See notes 14 and 15 to the financial
statements.
(b) In 1995, the Company adopted Statement of Financial Accounting Standards
(SFAS) 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of," resulting in a charge of $244.5
million to operations
a5
<PAGE>
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Results of Operations
The following table sets forth sales by product group and geographic market:
<TABLE>
<CAPTION>
Net Sales (in thousands) 1999 1998 1997
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Unitary Products Group:
Bristol Compressors $ 579,686 $ 529,809 $ 504,024
Residential and light commercial products 1,098,514 1,055,627 964,648
Intragroup compressor sales (108,721) (103,676) (76,294)
----------- ----------- -----------
1,569,479 1,481,760 1,392,378
Engineered Systems Group 1,460,736 1,408,091 1,396,436
York Refrigeration Group 883,609 447,499 447,093
Eliminations (47,209) (48,149) (42,250)
- ------------------------------------------------------------------------------------------
Net Sales $ 3,866,615 $ 3,289,201 $ 3,193,657
- ------------------------------------------------------------------------------------------
U.S. 52% 58% 58%
International 48% 42% 42%
- ------------------------------------------------------------------------------------------
Total 100% 100% 100%
- ------------------------------------------------------------------------------------------
</TABLE>
In June 1997, The Financial Accounting Standards Board (FASB) issued SFAS No.
131, "Disclosure about Segments of an Enterprise and Related Information." This
statement requires the Company to report certain financial and other information
about its business segments, products and services, the geographic areas in
which it operates and its major customers. The objective of this statement is to
help users of financial statements better understand the enterprise's
performance, better assess its prospects for future net cash flows and make more
informed judgments about the enterprise as a whole. See note 17 to the
consolidated financial statements for this disclosure.
Results of Operations 1999 as Compared with 1998
Sales for the year ended December 31, 1999 increased 17.6% to $3,866.6 million
from $3,289.2 million for 1998. (See table above which shows sales by business
segment and geographic market, and note 17 to the consolidated financial
statements for additional information.) Sales levels increased for all business
groups. Order backlog at December 31, 1999 was $1,065.1 million compared to
$879.5 million as of December 31, 1998.
Unitary Products Group (UPG) sales increased 5.9% to $1,569.5 million due to
improved volume in both the compressor and the equipment businesses. Sales
increases in North America, including a preseason sales incentive program,
Europe and the Middle East offset lower equipment volume in Latin America.
Engineered Systems Group (ESG) sales increased 3.7% to $1,460.7 million,
primarily due to increased volume in domestic aftermarket service and chiller
equipment sales. The increases were offset somewhat by lower airside equipment
volume and the impact of the sale of Viron, the Company's performance
contracting business.
York Refrigeration Group (YRG) sales increased 97.5% to $883.6 million. The
increase was due to the acquisition of Sabroe, which added approximately $445
million of sales to the York Refrigeration total. Excluding the impact of
Sabroe, Refrigeration sales were down in Europe and Asia primarily due to lower
capital investments by petrochemical companies.
From a geographic perspective, domestic sales increased 5.5% to $2,002.4 million
and international sales increased 34.1% to $1,864.2 million.
In 1999, the Company recorded charges in cost of goods sold of $22.4 million,
primarily to write-down inventory to the lower of cost or market. Integration of
the Refrigeration business, principally discontinuation of certain Gram product
lines, resulted in $6.9 million of the inventory write-down. Deteriorating
economic conditions in Latin America and Eastern Europe resulted in inventory
write-downs of $3.2 million and $4.2 million, respectively. ESG operations,
primarily in the U.S. and Australia, resulted in inventory writedowns of $1.5
million. The discontinuance of a UPG product line resulted in additional
inventory write-downs of $4.6 million and warranty charges of $2.0 million.
In 1999, gross profit increased 12.5% to $813.0 million (21.0% of sales) from
$722.9 million (22.0% of sales) in 1998. The gross profit dollar improvement was
due to the inclusion of Sabroe for seven months, the higher margin ESG service
business and improved factory performance and cost reductions in UPG. Excluding
the charges identified in the preceding paragraph, gross profit as a percentage
of sales decreased from 22.0% in 1998 to 21.6% in 1999. The decrease resulted
primarily from ESG airside factory inefficiencies and overall weakness in the
airside business and in Latin America. During 1999, the Company recorded $6
million of
a6
<PAGE>
credits to cost of goods sold for expected recovery from business interruption
insurance relating to the Grantley accident. Similar credits totaled $25.5
million in 1998.
Selling, General and Administrative expense (SG&A) increased 20.3% to $594.5
million (15.4% of sales) in 1999 from $494.2 million (15.0% of sales) in 1998.
The increase in amount is due to the acquisition of Sabroe and selective
investments, primarily in the first half of the year, in engineering, product
development and information technology.
In 1999, the Company recorded charges to operations of $54.5 million, of which
$35.0 million related to the integration of Sabroe into the York Refrigeration
business and $19.5 million related to restructuring and downsizing other Company
operations not impacted by the Sabroe acquisition.
The York Refrigeration Group charges consist of non-cash write-downs of $8.2
million and other accruals of $8.7 million principally for the closure of the
Gram manufacturing facility in Denmark, the closure of duplicate sales and
service offices in Europe and Asia and workforce reductions. Additionally, the
Company recorded cash expenses of $12.7 million relating to the cost and loss on
a currency option to fix the price of the acquisition and $5.4 million for
integration expenses consisting of employee relocation, office integration
activities, product training and sign and logo changes.
The other Company charges of $19.5 million consist of non-cash write-downs of
$3.6 million and other accruals of $15.9 million. The charges relate to
workforce reductions, asset write-downs, principally in Latin America and
Eastern Europe due to the current economic conditions in those regions, closing
costs for the ESG Airside factory in Salisbury, North Carolina, contractual
obligations and other receivables.
Income from operations in 1999 decreased to $163.9 million (4.2% of sales) from
$228.7 million (7.0% of sales) in 1998. The discussion below of each business
units' income from operations excludes all charges as discussed above.
Unitary Products Group income from operations increased 11.2% to $156.2 million
(10.0% of sales) due to better performance in the equipment and compressor
businesses. Improved plant performance on higher volume, cost reduction efforts
and strong mini-split product exports from Thailand offset weakness in Latin
America performance.
Engineered Systems Group income from operations decreased 8.4% to $114.7 million
(7.9% of sales) due to poor performance in the airside business and weakness in
Latin America. These weaknesses were partially offset by strong year-over-year
performance in aftermarket service operations, success in certain new product
introductions and continued strength in Asia.
York Refrigeration Group income from operations increased 62.4% to $44.5 million
(5.0% of sales) due to including seven months of Sabroe earnings. Excluding
Sabroe, refrigeration earnings were significantly lower on a year-over-year
basis due to factory inefficiencies and overall reduced capital spending by
petrochemical companies.
In 1999, the Company recorded a gain on the sale of Viron, the Company's
performance contracting business, of $9.6 million.
In 1999, net interest expense increased 47.3% to $61.2 million due to the impact
of higher average borrowings. Excluding the Sabroe acquisition financing, lower
average debt levels and favorable average interest rates for foreign and
variable debt would have contributed to lower interest expense.
Equity in earnings of affiliates was $5.7 million in 1999 as compared to $0.1
million in 1998. The improvement was primarily the result of improved
performance in the UPG Scroll Technologies Compressor operation.
Provision for income taxes of $41.3 million for 1999 relates to both U.S. and
non-U.S. operations. The effective rate was 35% for 1999 compared to 27.1% (33%
excluding export incentives, foreign tax credit planning and other non-U.S.
activities including closures and consolidations) for 1998. The increase in the
effective tax rate is primarily attributable to integration and restructuring
charges in certain jurisdictions for which no tax benefit was recorded.
Net income, as a result of the above factors, was $75.9 million in 1999 as
compared to $136.5 million in 1998.
Results of Operations 1998 as Compared with 1997
Sales for the year ended December 31, 1998 increased 3.0% to $3,289.2 million
from $3,193.7 million for 1997. (See table above which shows sales by business
segment and geographic market, and note 17 to the consolidated financial
statements for additional information.) Sales levels increased for all business
groups. Order backlog at December 31, 1998 was $879.5 million compared to $834.5
million as of December 31, 1997.
Unitary Products Group sales increased 6.4% to $1,481.8 million, primarily due
to improved volume in the unitary equipment markets in North America and Latin
America and continued growth and expansion in Latin American markets.
Engineered Systems Group sales increased 0.8% to $1,408.1 million, primarily due
to increased volume in the domestic service and equipment business and continued
growth and expansion in Latin America. These increases were offset by a decline
in the Asian market and lost sales as a result of the accident at the Grantley
factory in York, PA. (See additional disclosure in note 16 to the consolidated
financial statements.)
York Refrigeration Group sales were basically flat at $447.5 million, primarily
due to the sale of the German Commercial Refrigeration business in the second
quarter of 1997. Excluding the sale of this business, refrigeration product
sales improved approximately 6% primarily due to stronger sales levels in the
second half of 1998 in Europe and North America.
a7
<PAGE>
From a geographic perspective, domestic sales increased 3.2% to $1,898.6 million
and international sales increased 2.6% to $1,390.6 million.
Gross profit in 1998 increased 13.6% to $722.9 million (22.0% of sales) from
$636.2 million (19.9% of sales) in 1997. Excluding the non-recurring items in
1997, gross profit as a percent of sales increased 120 basis points. This
improvement is due to the performance of the Unitary Products Group, improved
performance in manufacturing operations, product mix, and other cost reduction
measures. During 1998, the Company recorded credits to cost of goods sold of
$25.5 million reflecting expected insurance recovery for certain incremental
expenses and losses included in cost of goods sold as a result of the Grantley
accident.
Selling, General and Administrative expense (SG&A) decreased 5.4% to $494.2
million (15.0% of sales) in 1998 from $522.2 million (16.4% of sales) in 1997.
Excluding the non-recurring items in 1997, SG&A as a percent of sales was flat.
Income from operations in 1998 increased to $228.7 million (7.0% of sales) from
$114.0 million (3.6% of sales) in 1997. Excluding the non-recurring items in
1997, operating income as a percent of sales increased 120 basis points.
Unitary Products Group income from operations increased 36.8% to $140.5 million
(9.5% of sales), primarily due to increased volume in the unitary equipment
markets in North America and Latin America, improved plant performance,
effective implementation of cost reduction programs and continued growth and
expansion in Latin American markets.
Engineered Systems Group income from operations increased 5.8% to $125.2 million
(8.9% of sales), primarily due to increased volume and performance in the
domestic service and equipment business and continued growth and expansion in
Latin America. These increases were offset by the decline in the Asian market
and profits on lost sales as a result of the accident at the Grantley factory.
York Refrigeration Group income from operations increased 20.6% to $27.4 million
(6.1% of sales), primarily due to stronger performance domestically and in
Europe in both sales and factory performance. SG&A expenditures were reduced by
effective control of spending in all regions and the sale of the German
Commercial Refrigeration business.
In 1998, net interest expense increased 1.6% to $41.5 million due to the impact
of higher average borrowing rates offset by the benefit of reduced working
capital levels.
Equity in earnings of affiliates was $0.1 million in 1998 as compared to $5.3
million in 1997. The 1997 earnings include a net gain of $4.5 million relating
to the gain on the sale of an Egyptian air conditioning company reduced by a
portion of the non-recurring charge in 1997.
Provision for income taxes of $50.8 million for 1998 relates to both U.S. and
non-U.S. operations. The effective rate is 27.1% and reflects a non-recurring
benefit recorded in the third quarter relating to export incentives, foreign tax
credit planning and other activities outside the U.S., including closures and
consolidations. Excluding the non-recurring benefit, the Company's effective tax
rate would have been 33%.
Net income, as a result of the above factors, was $136.5 million in 1998 as
compared to $47.4 million in 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 $400 million 364-day Revolver and its $500 million
Amended Credit Agreement described below, will be sufficient to meet working
capital needs during 2000. Additional sources of working capital include
customer deposits and progress payments.
Working capital was $485.2 million and $521.1 million as of December 31, 1999
and 1998, respectively. Accounts receivable increased in 1999 due to the
addition of Sabroe and the UPG sales incentive program including extended terms.
These increases were slightly offset by decreases in ESG and the additional $75
million of receivable sales. Inventory levels were higher at December 31, 1999,
than at December 31, 1998, due to the acquisition of Sabroe somewhat offset by
lower inventory levels in Unitary Products. The current ratio was 1.48 at
December 31, 1999, as compared to 1.66 for December 31, 1998.
Long-term indebtedness was $854.5 million at December 31, 1999, primarily
consisting of borrowings of $396.8 million in commercial paper, $300.0 million
of senior notes, $41.8 in bank lines and $57.2 million in Danish term loans.
At December 31, 1999, the Company had available a $400 million 364-day Revolving
Credit Agreement (the Revolver) and a $500 million Amended Credit Agreement (the
Credit Agreement) expiring on July 31, 2002. The Revolver and the Credit
Agreement amendment were effective on June 3, 1999 and provide for borrowings
under the facility 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
a fee of 0.10% for each facility and the Credit Agreement allows for borrowings
at specified bid rates. At December 31, 1999, the LIBOR rate was 6.03%. 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 December 31, 1999. No
amounts were outstanding under either of these agreements.
a8
<PAGE>
The Company's bank lines provide for total borrowings of $175 million which are
expected to be reborrowed in the ordinary course of business. At December 31,
1999 and 1998, the Company had $41.8 million and $41.0 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 6.08% as of December 31, 1999.
At December 31, 1999 and 1998, 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 December 31, 1999 of $71.5
million payable in semi-annual payments of $7.15 million. These term loans are
due July 2004 and bear interest at an average rate of 4.12%.
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 $385.1 million and $269.6 million at December 31, 1999 and 1998,
respectively, of which $295.1 million and $202.9 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 $57.2 million and $7.6 million at
December 31, 1999 and 1998, respectively.
The Company established a receivables sales agreement in 1992. Under an Amended
and Restated Receivables Sales Agreement entered into on December 22, 1999, 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 and $100 million at December 31, 1999
and 1998, respectively. 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 6.22% and 5.30% at
December 31, 1999 and 1998, respectively.
In December 1999, the Company sold certain machinery and equipment resulting in
net proceeds of $82.4 million and entered into a five year lease for the use of
the equipment. At the end of the lease term, the Company may purchase the
equipment, return the equipment to the lessor, or extend the lease for up to
five additional years. If the Company chooses to return the equipment at the end
of the initial lease term, the Company is obligated to pay the lessor a maximum
of $33.8 million.
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. Financial instruments are more fully
discussed in note 2 to the consolidated financial statements and under the
caption Market Risk on page a10.
Capital expenditures were $104.1 million in 1999 as compared to $64.6 million in
1998. The increase was the result of seven months of Sabroe capital spending,
the Grantley rebuild, planned projects to improve factory performance and
information technology capital projects. Capital expenditures currently
anticipated for expanded capacity, cost reductions and the introduction of new
products during 2000 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, commercial paper
borrowings and advance payments received from the insurance company for accident
claims submitted.
Cash dividends of $0.60 and $0.48 per share were paid on common stock in 1999
and 1998, respectively. 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.
Employee stock plans include the amended 1992 Employee Stock Purchase Plan which
authorizes the allocation of 2,000,000 shares of stock for the Plan and the
Amended and Restated 1992 Omnibus Stock Plan which authorizes the issuance of up
to 7,880,000 shares of the Company's common stock as stock options or restricted
share awards. At December 31, 1999, approximately 756,000 options remained
available for grant under the Plan.
In February 1999, the Board of Directors authorized the Company to purchase an
additional 2.5 million shares of its Common Stock, increasing the authorization
to 8.5 million shares, over the four subsequent years which can be used to fund
the Company's
a9
<PAGE>
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, 2.0 million shares were repurchased on the open market during 1999
and 1.1 million shares were repurchased in 1998. In addition, during the first
quarter of 2000, the Company repurchased approximately 300,000 shares.
Company management believes that these employee stock plans provide valuable
incentives to a broad range of York employees by giving them a direct equity
interest in the Company. Company management further believes that funding the
required shares through share repurchases will mitigate the dilutive impact such
employee plans would otherwise have.
ACQUISITION OF SABROE AND THE INTEGRATION PLAN
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. The Company financed the acquisition through issuance of
commercial paper, supported by its credit facilities.
The Company is in the process of executing the plan for integrating Sabroe into
the York Refrigeration Group. The plan includes the closing of Sabroe's Retech
and York's Gram manufacturing plants in Denmark and Sabroe's Norrkoping
manufacturing plant in Sweden. The plan also includes the closure of select
duplicate sales and service offices in Europe and Asia, salary and wage employee
rationalizations, product rationalizations, and other actions related to
reorganizing the York Refrigeration Group. The plan is expected to be
substantially completed within one year from the acquisition date.
INFLATION
Management believes inflation has not had a significant impact on the Company's
results of operations for the periods presented. The Company was able to
substantially offset the effect of inflation through cost reduction programs in
1999. Management does not anticipate inflation having a significant impact on
the future results of operations.
CYCLICALITY
Exposure to cyclicality in the new construction market is partially mitigated by
the Company's emphasis on the service, repair and replacement market. As the
installed base of heating, air conditioning and refrigeration equipment has
grown and aged, the Company derives a significant portion of its revenue from
the service, repair and replacement market. In 1999, 1998 and 1997,
respectively, on a worldwide basis, service, repair and replacement revenue
accounted for an estimated 42%, 44% and 41% of the Company's total sales, while
new construction sales accounted for the remaining 58%, 56% and 59%.
SEASONALITY
Sales of the Company's Unitary products equipment historically have been
seasonal. Demand for residential air conditioning equipment in the new
construction and replacement market varies according to the season, with
increased demand generally in the summer months. Demand in the residential
replacement market generally peaks in early summer for air conditioners and in
the fall for furnaces. Demand for hermetic compressors in the original equipment
market generally increases from January through July as manufacturers increase
production to meet anticipated seasonal demand. The Company provides incentives
for distributors to purchase products in advance of seasonal sales. These
incentives, together with advance production schedules, somewhat reduce the
impact of seasonal fluctuations on the Company's sales of residential equipment.
Requirements for service and repair parts for Engineered Systems products and
the Refrigeration Contracting business also increase during summer months. The
overall effect of seasonality is slightly dampened by the Company's Engineered
Systems and Refrigeration equipment, for which demand is less seasonal.
MARKET RISK
The Company is subject to market risk associated with changes in interest rates,
foreign currency exchange rates and certain commodity prices. To manage the risk
of fluctuations in interest rates, the Company's borrowings are a mix of fixed
and floating rate obligations. This includes $100 million of Senior Notes that
bear interest at a 6.75% fixed rate and are due March 2003 as well as $200
million of Senior Notes with a fixed interest rate of 6.70% which are due June
2008. Short-term borrowings are typically bank loans and commercial paper that
is reborrowed in the ordinary course of business. The Company's short-term
borrowings maturity dates support seasonal working capital needs. The Company's
non-U.S. subsidiaries maintain bank credit facilities for borrowings in their
functional currency on a floating rate basis.
The Company has manufacturing facilities in 14 foreign countries and its
products are sold in over 100 countries throughout the world. As a result, the
Company is exposed to foreign currency risk that future cash flows from
transactions in foreign currencies will be negatively impacted by exchange rate
changes. To reduce this risk, the Company hedges its foreign currency
transaction exposure with forward contracts and purchased options, in accordance
with the Company's Treasury Policy and Procedures Manual on hedging (the
Policy). These foreign currency forward and option contracts are matched to
foreign currency transactions that effectively fix the sales price for finished
product or purchase price for raw material components. The Company's local
entities are required to hedge these firm commitments with the Corporate
Treasury Department. The Corporate Treasury Department evaluates the Company's
net position on an overall basis, in accordance with the parameters established
in the Policy, and where necessary, hedges the foreign currency exchange
exposure risk with an external counter-party using the instruments mentioned
previously. The
a10
<PAGE>
Company mitigates the risk that the counter-party to these agreements will fail
to perform by only entering into agreements with major international financial
institutions. Foreign currency risk associated with intercompany transactions is
mitigated using a multilateral netting process. Any net exposures are hedged as
discussed above and in accordance with the Policy.
The Company purchases raw material commodities and is at risk for fluctuations
in the market price of those commodities. In connection with the purchase of
major commodities, principally copper and aluminum for manufacturing
requirements, the Company may enter into commodity forward contracts to
effectively fix the cost of the commodity to the Company. These contracts
require each settlement between the Company and its counter-party to coincide
with cash market purchases of the actual commodity. Settlement proceeds or
payments are recognized as an adjustment to the cost of the commodity purchased.
The Company does not hedge firm commitments beyond three years.
The Company does not anticipate any material changes in its primary market risk
exposures in 2000 and does not hold or issue derivative instruments for trading
purposes.
The following tables provide information about the fair value of the Company's
market-sensitive financial instruments and are forward-looking statements. All
instruments described in the tables are non-trading. The Company's borrowings
are not included in the tables since their carrying amount approximates the fair
value of similar debt instruments of comparable maturity and the interest rate
market risk is not significant as a result of the management strategies
described previously. Refer to note 2 to the consolidated financial statements
for additional information. The tables present the Company's market risk
exposure to potential changes in the fair value of its foreign currency hedge
instruments at December 31, 1999 and 1998. As discussed previously, the hedged
instrument maturity matches the transactional cash flow exposures. The 1999
hedged instruments mature in 2000, 2001 and 2002, respectively. The 1999 table
also illustrates the effect of a 10% appreciation and depreciation of the United
States Dollar for the Australian Dollar, Danish Krona, New Zealand Dollar, Saudi
Arabia Riyal and Thailand Baht net exposure positions and the effect of a 10%
appreciation and depreciation of the Danish Krona for the Canadian Dollar, Euro,
British Pound Sterling, Japanese Yen, Norwegian Krone and Singapore Dollar net
exposure positions. The 1998 table illustrates the effect of a 10% appreciation
and depreciation of the United States Dollar on the unhedged position, with the
exception of the German Deutsche Mark exposure which is based on a 10%
appreciation and depreciation of the British Pound Sterling. Futhermore, the
tables present the December 31, 1999 and 1998 fair value of the Company's total
pounds of copper hedged.
<TABLE>
<CAPTION>
Foreign Currency Exposure 1999
- -----------------------------------------------------------------------------------------------------------------------
(USD equivalents, in thousands)
- -----------------------------------------------------------------------------------------------------------------------
(Short Exposure) (Short Exposure) Foreign Currency USD or DKK USD or DKK
Foreign Currency Hedged as of Exchange Exposure 10% 10%
Currency Exchange Exposure Dec. 31, 1999 Net of Hedging Appreciation Depreciation
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
AUD - Australian Dollar 1,613 0 1,613 (161) 161
CAD - Canadian Dollar 728 2,383 (1,655) 166 (166)
DKK - Danish Krona (15,636) (13,750) (1,886) 189 (189)
EUR - EURO 21,679 17,321 4,358 (436) 436
GBP - British Pound Sterling 1,454 10,732 (9,278) 928 (928)
JPY - Japanese Yen 426 8,013 (7,587) 759 (759)
NZD - New Zealand Dollar (138) 0 (138) 14 (14)
NOK - Norwegian Krone 131 4,605 (4,474) 447 (447)
SAR - Saudi Arabia Riyal 2,148 0 2,148 (215) 215
SGD - Singapore Dollar 0 1,502 (1,502) 150 (150)
THB - Thailand Baht (400) (400) 0 0 0
- -----------------------------------------------------------------------------------------------------------------------
<CAPTION>
Foreign Currency Exposure 1998
- -----------------------------------------------------------------------------------------------------------------------
(USD equivalents, in thousands)
- -----------------------------------------------------------------------------------------------------------------------
(Short Exposure) (Short Exposure) Foreign Currency USD or GBP USD or GBP
Foreign Currency Hedged as of Exchange Exposure 10% 10%
Currency Exchange Exposure Dec.31, 1998 Net of Hedging Appreciation Depreciation
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
AUD - Australian Dollar 9,200 9,200 0 0 0
CLP - Chilean Peso 5,100 2,500 2,600 (260) 260
DEM - German Deutsche Mark 11,863 11,542 321 (32) 32
DKK - Danish Krona (789) 0 (789) 79 (79)
GBP - British Pound Sterling 1,606 1,383 223 (22) 22
JPY - Japanese Yen 5,227 5,253 (26) 3 (3)
NZD - New Zealand Dollar 608 608 0 0 0
SGD - Singapore Dollar 5,900 5,900 0 0 0
THB - Thailand Baht 1,557 1,557 0 0 0
ZAR - South African Rands 2,167 2,167 0 0 0
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
a11
<PAGE>
<TABLE>
<CAPTION>
Copper Exposure 1999
- --------------------------------------------------------------------------------
Pounds Notional Dec. 31, 1999
Year Hedged Amount Fair Value
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
2000 41,300,000 $33,667,000 $35,953,000
- --------------------------------------------------------------------------------
<CAPTION>
Copper Exposure 1998
- --------------------------------------------------------------------------------
Pounds Notional Dec. 31, 1998
Year Hedged Amount Fair value
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
1999 50,000,000 $42,692,000 $34,346,000
2000 20,000,000 17,150,000 14,660,000
- --------------------------------------------------------------------------------
</TABLE>
EURO CONVERSION
The Euro is not expected to have a material effect on the Company's operating
results or competitive position. The Company's financial systems are Euro
compliant and opportunities will continue to be investigated for European-wide
system infrastructures.
GRANTLEY ACCIDENT
On February 2, 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 facilities used in steel cutting and rolling operations
and heat exchanger production. The Company took a number of measures to limit
the disruptions and costs resulting from the accident, including moving
production to other Company facilities, outsourcing or subcontracting production
of certain components, and establishing temporary production elsewhere at the
Grantley location. The Company's rebuilding operations were substantially
completed during the second quarter of 1999, fully restoring its production
capacity. For additional information relating to the Grantley facility incident,
see note 16 to the consolidated financial statements.
NEW ACCOUNTING STANDARDS
In June 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). 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 June
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. Although the Company has not
completed its analysis, adoption of this statement is not expected to have a
material effect 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 and the successful
integration of Sabroe into the YRG. Unseasonably cool spring or summer weather
could 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. The
resolution of the Grantley insurance claim for an amount greater than or less
than amounts recorded could affect the Company's results. Overall performance of
the Company in 1999 was affected by less robust economic conditions in Latin
America and Eastern Europe. Future anticipated performance could be affected by
any serious economic downturns in other worldwide markets or a slower than
expected recovery in Latin America and Eastern Europe.
a12
<PAGE>
Consolidated Balance Sheets
<TABLE>
<CAPTION>
December 31
- ----------------------------------------------------------------------------------------
(in thousands) 1999 1998
- ----------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 39,514 $ 22,746
Receivables 720,022 632,768
Inventories 599,046 536,854
Prepayments and other current assets 131,787 118,165
- ----------------------------------------------------------------------------------------
Total current assets 1,490,369 1,310,533
- ----------------------------------------------------------------------------------------
Deferred income taxes 13,207 30,805
Investments in affiliates 25,425 20,092
Property, plant and equipment, net 499,710 374,731
Unallocated excess of cost over net assets acquired 768,809 337,353
Deferred charges and other assets 77,019 33,024
- ----------------------------------------------------------------------------------------
Total assets $ 2,874,539 $ 2,106,538
- ----------------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable and current portion of long-term debt $ 102,864 $ 52,583
Accounts payable and accrued expenses 860,264 670,797
Income taxes 42,007 66,099
- ----------------------------------------------------------------------------------------
Total current liabilities 1,005,135 789,479
- ----------------------------------------------------------------------------------------
Long-term warranties 39,607 36,488
Long-term debt 854,494 362,724
Postretirement benefit liabilities 154,066 140,152
Other long-term liabilities 89,307 46,896
- ----------------------------------------------------------------------------------------
Total liabilities 2,142,609 1,375,739
- ----------------------------------------------------------------------------------------
Stockholders' equity:
Common stock $.005 par value; 200,000 shares authorized;
Issued 45,062 shares in 1999 and 44,616 shares in 1998 225 223
Additional paid in capital 715,322 700,959
Retained earnings 342,529 290,465
Accumulated other comprehensive losses (71,146) (58,209)
Treasury stock, at cost; 6,700 shares in 1999 and
4,621 shares in 1998 (253,274) (199,037)
Unearned compensation (1,726) (3,602)
- ----------------------------------------------------------------------------------------
Total stockholders' equity 731,930 730,799
- ----------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $ 2,874,539 $ 2,106,538
- ----------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these statements.
a13
<PAGE>
Consolidated Statements of Operations
<TABLE>
<CAPTION>
Years Ended December 31
- --------------------------------------------------------------------------------------------------------------------
(in thousands, except per share data) 1999 1998 1997
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net sales $ 3,866,615 $ 3,289,201 $ 3,193,657
Cost of goods sold 3,053,651 2,566,265 2,557,431
- --------------------------------------------------------------------------------------------------------------------
Gross profit 812,964 722,936 636,226
Selling, general and administrative expenses 594,487 494,232 522,224
Acquisition, integration, restructuring and other charges 54,532 -- --
- --------------------------------------------------------------------------------------------------------------------
Income from operations 163,945 228,704 114,002
Gain on sale of business (9,627) -- --
Interest expense, net 61,150 41,527 40,876
Equity in earnings of affiliates (5,660) (126) (5,342)
- --------------------------------------------------------------------------------------------------------------------
Income before income taxes and cumulative effect of accounting change 118,082 187,303 78,468
Provision for income taxes 41,303 50,810 31,075
- --------------------------------------------------------------------------------------------------------------------
Income before cumulative effect of accounting change 76,779 136,493 47,393
Cumulative effect of accounting change
write-off of start-up costs (net of tax of $442) 897 -- --
- --------------------------------------------------------------------------------------------------------------------
Net income $ 75,882 $ 136,493 $ 47,393
- --------------------------------------------------------------------------------------------------------------------
Basic earnings per share:
Income before cumulative effect of accounting change $ 1.93 $ 3.38 $ 1.11
Accounting change (0.02) -- --
- --------------------------------------------------------------------------------------------------------------------
Net income 1.91 3.38 1.11
Diluted earnings per share:
Income before cumulative effect of accounting change 1.93 3.36 1.10
Accounting change (0.02) -- --
- --------------------------------------------------------------------------------------------------------------------
Net income 1.91 3.36 1.10
- --------------------------------------------------------------------------------------------------------------------
Weighted average common shares and common equivalents outstanding:
Basic 39,637 40,402 42,550
Diluted 39,832 40,622 43,040
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these statements.
Consolidated Statements of Comprehensive Income
<TABLE>
<CAPTION>
Years Ended December 31
- ----------------------------------------------------------------------------------------------------
(in thousands) 1999 1998 1997
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net income $ 75,882 $ 136,493 $ 47,393
Other comprehensive losses:
Foreign currency translation adjustments (13,722) (10,324) (23,622)
Minimum pension liabilities (net of tax of ($386) and $386) 785 (785) --
- ----------------------------------------------------------------------------------------------------
Total other comprehensive losses (12,937) (11,109) (23,622)
- ----------------------------------------------------------------------------------------------------
Comprehensive income $ 62,945 $ 125,384 $ 23,771
- ----------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these statements.
a14
<PAGE>
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
Years Ended December 31
- ---------------------------------------------------------------------------------------------------------
(in thousands) 1999 1998 1997
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 75,882 $ 136,493 $ 47,393
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization of property, plant and equipment 64,171 57,785 52,776
Amortization of deferred charges and unallocated
excess of cost over net assets acquired 24,119 17,059 15,978
Provision for doubtful accounts receivable 10,899 8,206 6,139
Effect of non-cash charges 58,807 -- --
Gain on sale of business (9,627) -- --
Cumulative effect of accounting change 897 -- --
Other 2,340 5,634 (1,638)
Change in assets and liabilities net of effects from
purchase of other companies and sale of business:
Receivables (43,215) (88,430) 2,074
Inventories 10,896 4,536 48,562
Prepayments and other current assets (4,042) (6,025) (3,145)
Deferred income taxes (12,755) (9,417) (1,686)
Other assets (10,513) (16,995) 2,245
Accounts payable and accrued expenses (80,787) 64,050 (2,422)
Income taxes (26,831) 47,889 (13,429)
Long-term warranties 3,362 197 2,030
Postretirement benefit liabilities 7,797 6,073 4,883
Other long-term liabilities 1,344 6,113 (6,046)
- ---------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 72,744 233,168 153,714
- ---------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Purchases of and investments
in other companies (net of cash acquired) (407,766) (7,794) (8,978)
Proceeds from sale of business, net 35,512 -- --
Capital expenditures (104,065) (64,638) (66,854)
Other 1,155 1,781 5,718
- ---------------------------------------------------------------------------------------------------------
Net cash used by investing activities (475,164) (70,651) (70,114)
- ---------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Net payments on short-term debt (37,488) (16,855) (59,023)
Long-term debt payments (33,327) (119,748) (114,223)
Net (payments) proceeds of commercial paper borrowings 396,847 (168,182) 83,146
Proceeds from sale lease-back 82,397 -- --
Proceeds from sale of accounts receivable 75,000 -- --
Proceeds from issuance of senior bank notes -- 198,310 --
Net proceeds from issuance of bank loans -- -- 169,780
Common stock issued 13,636 19,546 14,909
Treasury stock purchases (54,237) (45,824) (157,224)
Dividends paid (23,818) (19,403) (20,349)
- ---------------------------------------------------------------------------------------------------------
Net cash provided (used) by financing activities 419,010 (152,156) (82,984)
- ---------------------------------------------------------------------------------------------------------
Effect of exchange rate changes on cash 178 157 142
- ---------------------------------------------------------------------------------------------------------
Net increase in cash and cash equivalents 16,768 10,518 758
Cash and cash equivalents at beginning of year 22,746 12,228 11,470
- ---------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of year $ 39,514 $ 22,746 $ 12,228
- ---------------------------------------------------------------------------------------------------------
Supplemental disclosure of cash paid for:
Interest $ 59,484 $ 40,207 $ 41,519
Income taxes 62,306 28,153 55,587
Non-cash investing activities, acquisition of business:
Fair value of tangible and intangible assets acquired 877,276 7,377 20,447
Cash paid (407,766) (7,794) (17,481)
- ---------------------------------------------------------------------------------------------------------
Liabilities assumed $ 469,510 $ (417) $ 2,966
- ---------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these statements.
a15
<PAGE>
Consolidated Statements of Stockholders' Equity
<TABLE>
<CAPTION>
Addi- Accumulated
Common Stock Issued tional Other Treasury Stock Unearned
------------------- Paid In Retained Comprehensive --------------------- Compen-
(in thousands, except share data) Shares Amount Capital Earnings Losses Shares Amount sation
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1996 43,719,853 $ 219 $667,775 $146,331 $(23,478) 97,628 $ (3,875) $(6,595)
Net income -- -- -- 47,393 -- -- -- --
Issuance of common stock under
executive stock agreements 15,000 -- 898 -- -- (25,000) 1,126 (1,984)
Issuance of common stock under
employee stock purchase plan 165,369 1 5,557 -- -- (744) 34 --
Other, primarily exercise of stock options 157,067 -- 2,758 -- -- (149,926) 6,495 --
Tax effect of options exercised -- -- 2,187 -- -- -- -- --
Amortization of unearned compensation -- -- -- -- -- -- -- 2,614
Issuance of treasury stock, at cost -- -- 5 -- -- (469) 19 --
Purchase of treasury stock, at cost -- -- -- -- -- 3,507,321 (157,224) --
Cash dividends on common stock
($.48 per share) -- -- -- (20,349) -- -- -- --
Currency translation adjustment -- -- -- -- (23,622) -- -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1997 44,057,289 $ 220 $679,180 $173,375 $(47,100) 3,428,810 $(153,425) $(5,965)
Net income -- -- -- 136,493 -- -- -- --
Issuance of common stock under
executive stock agreements, net 32,000 -- 1,169 -- -- 1,600 212 (1,137)
Issuance of common stock under
employee stock purchase plan 225,861 1 7,585 -- -- -- -- --
Other, primarily exercise of stock options 300,625 2 11,715 -- -- -- -- --
Tax effect of options exercised -- -- 1,310 -- -- -- -- --
Amortization of unearned compensation -- -- -- -- -- -- -- 3,500
Purchase of treasury stock, at cost -- -- -- -- -- 1,190,640 (45,824) --
Cash dividends on common stock
($.48 per share) -- -- -- (19,403) -- -- -- --
Minimum pension liability -- -- -- -- (785) -- -- --
Currency translation adjustment -- -- -- -- (10,324) -- -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1998 44,615,775 $ 223 $700,959 $290,465 $(58,209) 4,621,050 $(199,037) $(3,602)
Net income -- -- -- 75,882 -- -- -- --
Issuance of common stock under
executive stock agreements, net 23,500 -- 953 -- -- 1,000 -- (919)
Issuance of common stock under
employee stock purchase plan 205,980 1 4,803 -- -- -- -- --
Other, primarily exercise of stock options 216,662 1 7,878 -- -- -- -- --
Tax effect of options exercised -- -- 729 -- -- -- -- --
Amortization of unearned compensation -- -- -- -- -- -- -- 2,795
Purchase of treasury stock, at cost -- -- -- -- -- 2,077,838 (54,237) --
Cash dividends on common stock
($.60 per share) -- -- -- (23,818) -- -- -- --
Minimum pension liability -- -- -- -- 785 -- -- --
Currency translation adjustment -- -- -- -- (13,722) -- -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1999 45,061,917 $ 225 $715,322 $342,529 $(71,146) 6,699,888 $(253,274) $(1,726)
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these statements.
a16
<PAGE>
Notes to Consolidated Financial Statements
NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations
York International Corporation (The Company) is a full-line, global designer and
manufacturer of heating, ventilating, air conditioning and refrigeration
(HVAC&R) equipment with three major product groups: Unitary, Engineered Systems,
and Refrigeration. The Company markets its products and services throughout the
world, and its customers range from residential contractors to design builders,
contractors and building owners.
Use of Estimates in the Financial Statements
Preparation of the financial statements, in conformity with generally accepted
accounting principles, requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosures of
contingent assets and liabilities at the date of the financial statements, and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and
its wholly-owned and majority-owned subsidiaries. All significant intercompany
transactions have been eliminated.
Cash and Cash Equivalents
The Company considers all highly liquid investments purchased with a maturity of
three months or less to be cash equivalents.
Inventories
Inventories are valued at the lower of cost or market using the last-in,
first-out (LIFO) or first-in, first-out (FIFO) method.
Property, Plant and Equipment and Depreciation
Property, plant and equipment are stated at cost less accumulated depreciation.
Expenditures for maintenance, repairs and renewals of relatively minor items are
generally charged to earnings as incurred. Improvements and renewals of
significant items are capitalized.
Depreciation is computed generally on a straight-line basis over the estimated
useful lives of related assets. For income tax purposes, accelerated methods of
depreciation are generally used.
Unallocated Excess of Cost Over Net Assets Acquired
Unallocated excess of cost over net assets acquired is amortized on a
straight-line basis over periods of up to 40 years. Accumulated amortization
related to such excess at December 31, 1999 and 1998, is $110.4 million and
$90.3 million, respectively. The Company assesses the recoverability or
impairment, if any, of the elements of this intangible asset by determining
whether the amortization of the balance over its remaining life can be recovered
through undiscounted future operating cash flows of the acquired operations or
the long-lived assets to which the unallocated excess is attributed.
Postretirement Benefit Plans and Postemployment Benefits
A majority of domestic employees participate in noncontributory pension plans,
and substantially all non-U.S. employees participate in contributory or
noncontributory pension plans.
The Company has certain postemployment benefits provided to former or inactive
employees who are not retirees. These benefits include salary continuance,
severance and disability health care. The benefits are accrued over the
employee's service period or as an expense at the date of the event triggering
the benefit.
The Company adopted SFAS No.132, "Employers' Disclosures about Pensions and
Other Postretirement Benefits" in 1998, which revised employers' disclosures
about pension and other postretirement benefit plans. All prior disclosures were
restated to conform to the provisions of SFAS 132.
Revenue Recognition
Sales and related cost of goods sold are recognized as title transfers,
generally based upon shipment of products or performance of services.
Income Taxes
Income taxes are accounted for under the asset and liability method. Deferred
tax assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases and operating
loss and tax credit carryforwards. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to be recovered or
settled. The effect on deferred tax assets and liabilities of a change in tax
rates is recognized in income in the period that includes the enactment date.
Earnings of foreign operations are reinvested in the business and no provision
for domestic income tax or foreign withholding tax is made on such earnings
until distributed.
a17
<PAGE>
Earnings per Share
Earnings per share (EPS) are computed in accordance with Statement of Financial
Accounting Standards (SFAS) No.128, "Earnings per Share". Basic EPS are based
upon the weighted average common shares outstanding during the period. Diluted
EPS are based upon the weighted average outstanding common shares and common
share equivalents.
Foreign Currency Translation
The functional currency for the majority of the Company's foreign operations is
the applicable local currency. Adjustments resulting from translating foreign
functional currency financial statements into U.S. dollars are included in
currency translation adjustments in stockholders' equity. Gains or losses
resulting from foreign currency transactions are included in the results of
operations.
Accounting for Stock-Based Compensation
The Company applies Accounting Principles Board (APB) Opinion No. 25,
"Accounting for Stock Issued to Employees," and related interpretations in
accounting for its stock-based compensation plans. Accordingly, no compensation
expense has been recognized with respect to such plans other than for restricted
stock and performance-based awards. Information related to stock-based
compensation awards is presented in note 18 to the consolidated financial
statements along with the disclosures required under SFAS 123, "Accounting for
Stock-Based Compensation."
Start-Up Activities
In 1999, the Company adopted AICPA Statement of Position (SOP) 98-5, "Reporting
on the Cost of Start-Up Activities," which requires that costs of start-up
activities, including organization costs, be expensed as incurred. 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 the
SOP.
NOTE 2--FINANCIAL INSTRUMENTS
Financial Instruments with Off-Balance-Sheet Risk
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 counter-parties to these over-the-counter
agreements will fail to perform by only entering into agreements with major
international financial institutions.
Foreign Currency Instruments
Since the Company purchases raw materials and sells finished products in various
currencies, the Company is exposed to foreign currency risk. The Company manages
its foreign currency transaction risk by hedging the net currency exposures.
However, the Company does not hedge certain foreign exchange transaction
exposures that are immaterial or are considered to be in currencies highly
correlated to the manufacturing entity's currency.
The Company primarily uses foreign currency forward contracts and purchased
options. These foreign currency forward and option contracts are matched to firm
commitments of foreign currency transactions and effectively fix the sales or
purchase price. These contracts are settled in cash upon expiration, with
settlement proceeds or payments included in the measurement of the item hedged.
The option contracts are purchased in cash and amortized over the contract term.
The Company does not hedge anticipated or firm commitments beyond three years.
Commodity Contracts
Since the Company purchases raw material commodities, it is at risk for
fluctuations in the market price of those commodities. In connection with the
purchase of major commodities, principally copper and aluminum for anticipated
manufacturing requirements, the Company may enter into commodity forward
contracts to effectively fix the cost of the commodity. These contracts require
cash settlement between the Company and its counter-party to coincide with cash
market purchases of the actual commodity. Settlement proceeds or payments are
recognized as an adjustment to the cost of the commodity purchased. The Company
does not hedge anticipated or firm commitments beyond three years.
The notional amount and estimated fair value of the Company's hedging contracts
are as follows:
<TABLE>
<CAPTION>
1999 1998
(in thousands) Notional Fair Notional Fair
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Foreign currency forward contracts $73,890 $72,301 $55,245 $54,629
Commodity forward contracts 33,667 35,953 59,842 49,006
- -------------------------------------------------------------------------------------------------
</TABLE>
a18
<PAGE>
Other Financial Instruments
The carrying amounts and estimated fair values of the Company's other financial
instruments are as follows:
<TABLE>
<CAPTION>
1999 1998
(in thousands) Carrying Fair Carrying Fair
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cash and cash equivalents $ 39,514 $ 39,514 $ 22,746 $ 22,746
Short-term borrowings 102,864 102,864 52,583 52,583
Long-term debt:
Commercial paper 396,847 396,847 -- --
Bank lines 41,812 41,812 41,003 41,003
Senior notes at 6.75% 100,000 95,950 100,000 102,622
Senior notes at 6.70% 200,000 176,825 200,000 205,632
Term loans 57,196 57,196 -- --
Other 58,639 58,639 21,721 21,721
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
The fair values of each of the Company's long-term debt instruments are based on
the amount of future cash flows associated with each instrument discounted using
the Company's current borrowing rate for similar debt instruments of comparable
maturity.
NOTE 3--RECEIVABLES
Receivables consist of:
<TABLE>
<CAPTION>
(in thousands) 1999 1998
- --------------------------------------------------------------------------------------------
<S> <C> <C>
Customers, trade $657,076 $554,601
Affiliate receivables, trade 19,113 12,538
Other receivables 75,175 85,540
- --------------------------------------------------------------------------------------------
751,364 652,679
Less allowance for doubtful accounts receivable 31,342 19,911
- --------------------------------------------------------------------------------------------
Net receivables $720,022 $632,768
- --------------------------------------------------------------------------------------------
</TABLE>
The Company established a receivables sales agreement in 1992. Under an Amended
and Restated Receivables Sales Agreement entered into on December 22, 1999, 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 and $100 million at December 31, 1999
and 1998, respectively. 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 6.22% and 5.30% at
December 31, 1999 and 1998, respectively.
NOTE 4--INVENTORIES
Inventories consist of:
<TABLE>
<CAPTION>
(in thousands) 1999 1998
- --------------------------------------------------------------------------------
<S> <C> <C>
Raw material $199,171 $177,960
Work in progress 112,669 92,712
Finished goods 287,206 266,182
- --------------------------------------------------------------------------------
Total inventories $599,046 $536,854
- --------------------------------------------------------------------------------
</TABLE>
Inventories valued under the LIFO method comprised approximately 30%, 36% and
41% of the December 31, 1999, 1998 and 1997 totals, respectively. If valued
under the FIFO method, inventories would have been greater by $11.7 million at
December 31, 1999, $13.1 million at December 31, 1998 and $13.8 million at
December 31, 1997.
NOTE 5--PREPAYMENTS AND OTHER CURRENT ASSETS
Prepayments and other current assets consist of:
<TABLE>
<CAPTION>
(in thousands) 1999 1998
- --------------------------------------------------------------------------------
<S> <C> <C>
Deferred income tax assets $ 69,395 $ 74,394
Prepaid insurance 20,870 19,499
Prepaid materials and supplies 11,777 6,939
Deferred employee benefits 11,542 --
Other 18,203 17,333
- --------------------------------------------------------------------------------
Total prepayments and other current assets $131,787 $118,165
- --------------------------------------------------------------------------------
</TABLE>
a19
<PAGE>
NOTE 6--INVESTMENTS IN AFFILIATES
The Company owns 50% or less of affiliate operations located in Malaysia,
Cyprus, Saudi Arabia, Spain, Russia, Denmark, Japan, Korea, Morocco and the
United States. These investments are accounted for using the equity method of
accounting and total $25.4 million in 1999 and $20.1 million in 1998. Dividends
received from affiliates were $1.0 million in 1999, $0.5 million in 1998 and
$1.2 million in 1997. Equity in earnings of affiliates for 1997 includes a
one-time gain of approximately $6.0 million resulting from the sale of the
Company's minority interest in an Egyptian air conditioning company.
NOTE 7--PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consist of:
<TABLE>
<CAPTION>
(in thousands) 1999 1998
- -----------------------------------------------------------------------------------------
<S> <C> <C>
Land $ 79,380 $ 10,751
Buildings 139,770 123,865
Machinery and equipment 549,672 550,396
Construction in progress 48,997 31,682
Capital leases 12,734 14,337
- -----------------------------------------------------------------------------------------
830,553 731,031
Less accumulated depreciation 330,843 356,300
- -----------------------------------------------------------------------------------------
Net property, plant and equipment $499,710 $374,731
- -----------------------------------------------------------------------------------------
</TABLE>
Amortization of capital lease assets has been included in depreciation expense.
Accumulated capital lease amortization was $4.4 million and $4.3 million at
December 31, 1999 and 1998, respectively.
NOTE 8--ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses consist of:
<TABLE>
<CAPTION>
(in thousands) 1999 1998
- -----------------------------------------------------------------------------------------
<S> <C> <C>
Accounts payable, trade and other $534,860 $429,646
Employee compensation, benefits and related accruals 168,644 105,300
Warranties and claims 58,413 46,948
Accrued insurance 31,854 28,140
Other accrued expenses 66,493 60,763
- -----------------------------------------------------------------------------------------
Total accounts payable and accrued expenses $860,264 $670,797
- -----------------------------------------------------------------------------------------
</TABLE>
NOTE 9--NOTES PAYABLE AND LONG-TERM DEBT
Notes payable and long-term debt consist of:
<TABLE>
<CAPTION>
(in thousands) 1999 1998
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Notes payable and current portion of long-term debt:
Term loans (foreign currency) current portion $ 14,299 $ --
Bank loans 81,145 51,011
Other 7,420 1,572
- -----------------------------------------------------------------------------------------------------------------------
Total notes payable and current portion of long-term debt $102,864 $ 52,583
- -----------------------------------------------------------------------------------------------------------------------
Long-term debt:
Bank lines at an average rate of 5.28% in 1999 and 5.61% in 1998 $ 41,812 $ 41,003
Commercial paper, 6.08% interest 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 4.12%, due July 2004 57,196 --
Other, primarily foreign bank loans, at an average rate of 5.91% in 1999
and 5.86% in 1998 58,639 21,721
- -----------------------------------------------------------------------------------------------------------------------
Total long-term debt $854,494 $362,724
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
a20
<PAGE>
In June 1999, the Company established a $400 million 364-day Revolving Credit
Agreement (the Revolver) and amended the $500 million Amended Credit Agreement
(the Credit Agreement) expiring on July 31, 2002. The Revolver and the Credit
Agreement amendment 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 a fee of 0.10% for each
facility, and the Credit Agreement allows for borrowings at specified bid rates.
At December 31, 1999 and 1998, the LIBOR rate was 6.03% and 5.06%, 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 December 31,
1999 and 1998. No amounts were outstanding under either of these agreements.
The Company's bank lines provide for total borrowings of $175 million which are
expected to be reborrowed in the ordinary course of business. At December 31,
1999 and 1998, the Company had $41.8 million and $41.0 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. The
interest rate on the commercial paper was 6.08% as of December 31, 1999.
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 $385.1 million and $269.6 million at December 31, 1999 and 1998,
respectively, of which $295.1 million and $202.9 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 $57.2 million and $7.6 million at
December 31, 1999 and 1998, respectively.
Annual principal payments on long-term debt are as follows for the fiscal years
indicated:
<TABLE>
<CAPTION>
(in thousands)
- --------------------------------------------------------------------------------
<S> <C>
2000 $ 21,719
2001 19,658
2002 458,635
2003 119,184
2004 17,732
Thereafter 239,285
- --------------------------------------------------------------------------------
</TABLE>
Interest expense is net of interest income of $5.1 million in 1999, $3.4 million
in 1998 and $1.8 million in 1997.
NOTE 10--POSTRETIREMENT BENEFIT PLANS AND POSTEMPLOYMENT BENEFITS
The Company has postretirement benefit plans for certain employees including
pension plans and postretirement benefit plans other than pensions, including
health and life insurance plans and other postemployment benefits.
A majority of domestic employees participate in noncontributory pension plans,
and substantially all non-U.S. employees participate in contributory or
noncontributory pension plans. Plans covering salaried and management employees
provide pension benefits that are based on the employee's compensation during
the several years before retirement. Plans covering hourly employees and union
members generally provide benefits of stated amounts for each year of service.
Contributions to the plans are based upon the projected unit credit actuarial
funding method and are limited to amounts that are currently deductible for tax
reporting purposes. The Company has an unfunded supplemental benefit plan which
was adopted in 1993 to provide certain senior management with supplemental
retirement benefits.
The Company has several postretirement health and life insurance plans covering
certain employees who were hired before February 1, 1993, who retire under the
normal, early or disability retirement provisions of any one of the Company's
domestic defined benefit pension plans. Former employees who retired prior to
February 1, 1993, contribute to the cost of the plans, although the Company pays
the majority of the cost. Employees retiring after February 1, 1993, contribute
to the cost of the plans based on an indexed service-related premium. Employees
hired after February 1, 1993, are not eligible for the plans. The plans are not
funded.
a21
<PAGE>
The following table sets forth the funded status and amounts recognized in the
Company's consolidated balance sheets:
<TABLE>
<CAPTION>
Pension Benefits Other Benefits
------------------------------------------------
(in thousands) 1999 1998 1999 1998
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Change in benefit obligation
Benefit obligation at beginning of year $(403,974) $(350,416) $(115,859) $ (96,569)
Purchase of company (7,148) -- -- --
Service cost (17,995) (16,286) (2,642) (1,971)
Interest cost (25,415) (24,278) (8,131) (6,704)
Actuarial gain (10,032) (23,522) (16,251) (12,366)
Plan assumptions 55,033 (12,377) 14,012 (4,319)
Benefits paid 24,225 24,892 6,078 6,070
Plan amendments (21,057) (560) 5,100 --
Curtailments (250) 634 -- --
Foreign exchange 5,848 (2,061) -- --
- ----------------------------------------------------------------------------------------------------
Benefit obligation at end of year $(400,765) $(403,974) $(117,693) $(115,859)
- ----------------------------------------------------------------------------------------------------
Change in plan assets
Fair value of plan assets at beginning of year $ 432,884 $ 386,248 $ -- $ --
Actual return on plan assets 64,253 62,902 -- --
Contributions by employer 3,997 6,967 5,373 5,781
Contributions by plan participants 923 -- 705 289
Benefits paid (24,225) (24,892) (6,078) (6,070)
Foreign exchange (4,403) 1,659 -- --
- ----------------------------------------------------------------------------------------------------
Fair value of plan assets at end of year $ 473,429 $ 432,884 $ -- $ --
- ----------------------------------------------------------------------------------------------------
Funded status $ 72,664 $ 28,910 $(117,693) $(115,859)
Unrecognized prior service cost 30,835 12,203 (1,208) 4,421
Unrecognized (gain) loss (147,195) (71,473) 3,042 677
- ----------------------------------------------------------------------------------------------------
Net amount recognized $ (43,696) $ (30,360) $(115,859) $(110,761)
- ----------------------------------------------------------------------------------------------------
Amounts recognized in consolidated balance sheets
Net accrued benefit liability $ (45,401) $ (33,390) $(115,859) $(110,761)
Intangible asset 1,705 1,859 -- --
Accumulated other comprehensive income -- 1,171 -- --
- ----------------------------------------------------------------------------------------------------
Net amount recognized $ (43,696) $ (30,360) $(115,859) $(110,761)
- ----------------------------------------------------------------------------------------------------
<CAPTION>
Pension Benefits Other Benefits
------------------------------------------------
1999 1998 1999 1998
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Weighted average assumptions as of December 31
Discount rate 8.00% 7.00% 8.00% 7.00%
Expected return on plan assets 9.75% 9.75% --% --%
Rate of compensation increase 4.75% 4.75% --% --%
- ----------------------------------------------------------------------------------------------------
</TABLE>
For measurement purposes an 8% annual rate of increase in the cost of covered
health care benefits was assumed for 2000. The rate was assumed to decrease
gradually to 5.0% for 2006 and thereafter.
a22
<PAGE>
Net periodic benefit costs include the following components:
<TABLE>
<CAPTION>
Pension Benefits Other Benefits
(in thousands) 1999 1998 1997 1999 1998 1997
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Components of net periodic benefit cost:
Service cost--benefits earned
during the period $ 17,995 $ 16,286 $ 14,772 $ 2,642 $ 1,971 $ 1,984
Interest cost on projected benefit obligations 25,415 24,278 22,964 8,131 6,704 6,714
Expected return on plan assets (32,238) (37,601) (32,256) -- -- --
Amortization of prior service cost 352 6,851 4,434 529 528 528
Amortization of net gain (347) (304) (367) (127) (646) (614)
Decrease (increase) due to curtailment/window 250 (53) 212 -- -- --
- -------------------------------------------------------------------------------------------------------------------------------
Net periodic benefit cost $ 11,427 $ 9,457 $ 9,759 $ 11,175 $ 8,557 $ 8,612
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Unrecognized net gains and losses in excess of the corridor are amortized over
an average of approximately 13 years, the estimated remaining service period of
employees. Net assets of the pension trust consist primarily of stocks and debt
securities.
The projected benefit obligation, accumulated benefit obligation, and fair value
of plan assets for the pension plans with accumulated benefit obligations in
excess of plan assets were $50.8 million, $48.5 million and $20.8 million,
respectively, as of December 31, 1999, and $113.6 million, $110.5 million, and
$88.4 million, respectively, as of December 31, 1998.
Assumed health care cost trend rates have an effect on the amounts reported for
the health care plan. A one-percentage-point change in assumed health care cost
trend rates would have the following effects:
<TABLE>
<CAPTION>
(in thousands) 1% Increase 1% Decrease
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Effect on total of service and interest cost components $ 2,309 $ (1,813)
Effect on postretirement benefit obligation 22,827 (18,221)
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
Salaried and eligible hourly employees of the Company may participate in the
York International Corporation Investment Plan by contributing up to 16% of
their earnings as pre-tax contributions. Beginning in 1990, the Company
contributed 25% of the employee contribution up to a maximum Company
contribution of 1% of earnings for all eligible employees. The Company's
contributions were approximately $1.8 million in 1999, $1.5 million in 1998 and
$1.1 million in 1997.
NOTE 11--COMMITMENTS AND CONTINGENCIES
Sale Leaseback
In December 1999, the Company sold certain machinery and equipment resulting in
proceeds of $82.4 million and entered into a five year operating lease for the
use of the equipment. At the end of the lease term, the Company may purchase the
equipment at fair market value, return the equipment to the lessor, or extend
the lease for up to five additional years. If the Company chooses to return the
equipment at the end of the initial lease term, the Company is obligated to pay
the lessor a maximum of $33.8 million. The book value of the equipment sold was
$40.4 million. The excess of the proceeds over the book value was deferred and
is included in other long-term liabilities in the accompanying consolidated
balance sheet. The excess of the deferred gain over the maximum return
obligation will be amortized over the lease term.
Leases
The Company has numerous non-cancelable leases with terms exceeding one year. At
December 31, 1999, lease commitments, including the return obligation on the
sale leaseback, for all of the Company's operating leases are as follows:
<TABLE>
<CAPTION>
(in thousands)
- --------------------------------------------------------------------------------
<S> <C>
2000 $ 36,947
2001 29,221
2002 24,523
2003 17,293
2004 47,681
Thereafter 9,695
- --------------------------------------------------------------------------------
Total $165,360
- --------------------------------------------------------------------------------
</TABLE>
Total rental expense was $40.5 million in 1999, $32.8 million in 1998 and $35.4
million in 1997.
a23
<PAGE>
Subsequent Event
Subsequent to December 31, 1999 the Company terminated three senior officers,
including its former chief executive officer and chief financial officer. The
Company is in litigation with the former chief executive officer and believes it
has no obligation for severance. The Company has negotiated with the other two
former senior officers resulting in anticipated severance costs of approximately
$3.5 million, which will be charged to earnings in the first quarter of 2000.
Contingent Liabilities
Company management believes that various current claims and litigation have been
adequately provided for or are covered by insurance. Therefore, the resolution
of such matters is not expected to materially affect the Company's financial
position or future earnings.
At December 31, 1999, $20.1 million in standby letters of credit and $197.5
million of performance guarantees issued by the Company were outstanding. These
items are expected to expire and be replaced with similar items in the normal
course of business.
NOTE 12--INCOME TAXES
Components of earnings and taxes consist of:
<TABLE>
<CAPTION>
(in thousands) 1999 1998 1997
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Income before income taxes:
U.S $ 89,971 $ 153,469 $ 75,893
Non-U.S 28,111 33,834 2,575
- -------------------------------------------------------------------------------
$ 118,082 $ 187,303 $ 78,468
- -------------------------------------------------------------------------------
Income tax expense:
Current:
U.S. Federal $ 30,556 $ 47,794 $ 31,383
State 892 5,395 1,011
Non-U.S 18,287 11,893 7,498
- -------------------------------------------------------------------------------
Total current 49,735 65,082 39,892
Deferred (8,432) (14,272) (8,817)
- -------------------------------------------------------------------------------
Total provision for income taxes $ 41,303 $ 50,810 $ 31,075
- -------------------------------------------------------------------------------
</TABLE>
Income tax expense differed from the amounts computed by applying the U.S.
Federal income tax rate of 35% to income before income taxes as a result of the
following:
<TABLE>
<CAPTION>
(in thousands) 1999 1998 1997
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Tax expense at statutory rate $ 41,329 $ 65,556 $ 27,464
Increase (decrease) resulting from:
Equity in earnings of affiliates/minority interest (693) (498) (540)
Taxes on foreign earnings 880 (16,389) 7,466
State income taxes--current 580 3,507 657
Purchase accounting adjustments 6,811 3,511 3,570
State income taxes--deferred (239) 621 (1,421)
Export incentives (5,496) (4,122) (4,776)
Other (1,869) (1,376) (1,345)
- ----------------------------------------------------------------------------------------
Total provision for income taxes $ 41,303 $ 50,810 $ 31,075
- ----------------------------------------------------------------------------------------
</TABLE>
The tax effects of temporary differences that give rise to significant portions
of the deferred tax assets and deferred tax liabilities at December 31, 1999 and
1998 are presented below:
a24
<PAGE>
<TABLE>
<CAPTION>
(in thousands) 1999 1998
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
Deferred tax assets:
Accounts receivable, principally due to allowance for doubtful accounts $ 5,013 $ 3,625
Inventories, including uniform capitalization 19,981 18,359
Compensated absences and benefits, principally
due to accrual for financial reporting purposes 13,222 12,294
Contingencies, due to accrual for financial reporting purposes 8,285 7,860
Warranty reserves, due to accrual for financial reporting purposes 24,480 23,928
Postretirement benefits 57,089 54,970
Other 35,128 28,556
- ------------------------------------------------------------------------------------------------
Total gross deferred tax assets 163,198 149,592
- ------------------------------------------------------------------------------------------------
Deferred tax liabilities:
Plant, equipment and intangible assets due to purchase accounting
adjustments and differences in depreciation and amortization 59,449 26,337
Inventory, due to purchase accounting adjustments 15,765 15,765
Other 5,382 2,291
- ------------------------------------------------------------------------------------------------
Total gross deferred tax liabilities 80,596 44,393
- ------------------------------------------------------------------------------------------------
Net deferred tax assets $ 82,602 $105,199
- ------------------------------------------------------------------------------------------------
</TABLE>
Based on the Company's historical and current pre-tax earnings, management
believes it is likely the Company will realize the net deferred tax assets.
During 1998, the Internal Revenue Service (IRS) completed its examination of the
Company's Federal income tax returns for 1993 and 1994. The Company reached a
settlement agreement with the IRS for those years; this settlement did not have
a material effect on the Company's financial statements.
Various state and foreign tax returns are under examination by the applicable
authorities. The Company does not anticipate any material effect to the
Company's financial statements resulting from these examinations.
Domestic income taxes or foreign withholding taxes have not been provided on
$156 million and $124 million of undistributed earnings of foreign subsidiaries
and affiliates at December 31, 1999 and 1998, respectively. These earnings are
considered to be permanently invested in the businesses and, under the tax laws,
are not subject to such taxes until distributed as dividends. If the earnings
were not considered permanently invested, approximately $9.3 million and $7.3
million of deferred income taxes, consisting of foreign withholding taxes, would
have been provided at December 31, 1999 and 1998, respectively. Such taxes, if
ultimately paid, may be recoverable as foreign tax credits in the U.S.
NOTE 13--RESEARCH AND DEVELOPMENT
Total research and development costs charged to expense amounted to $41.0
million in 1999, $31.2 million in 1998 and $30.6 million in 1997.
NOTE 14--ACQUISITIONS AND DIVESTITURES
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 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.
The Company is in process of executing the plan for integrating Sabroe into the
York Refrigeration Group. The Sabroe portion of the plan includes closing the
Retech and Norrkoping manufacturing plants in Denmark and Sweden, respectively,
closing certain duplicate sales and service offices in Europe and Asia, product
rationalizations and other costs related to the York Refrigeration Group
restructuring. The plan also includes Sabroe workforce reductions of
approximately 500 salary and wage employees, of which 230 remain at December 31,
1999. The plan is expected to be substantially complete within one year from the
acquisition date. The table below details the restructuring activities discussed
above.
<TABLE>
<CAPTION>
Non-cash Established Utilized Remaining
(in thousands) Write-downs Accruals in 1999 Accruals
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Fixed assets write-downs $ 2,542 $ -- $ -- $ --
Inventory write-downs 1,849 -- -- --
Severance costs -- 9,299 3,402 5,897
Contractual obligations -- 1,911 336 1,575
Other -- 632 276 356
- --------------------------------------------------------------------------------------
$ 4,391 $11,842 $ 4,014 $ 7,828
- --------------------------------------------------------------------------------------
</TABLE>
a25
<PAGE>
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 preliminary
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 $ 441,289 30 years
Trademark and tradenames 35,480 30 years
Proprietary technology and patents 2,050 15 years
- ----------------------------------------------------------------------------------------------------------
Total intangibles $ 478,819
- ----------------------------------------------------------------------------------------------------------
</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 for 1999 information and at the beginning of 1998 for 1998
information. 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 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>
Year Ended December 31, 1999 1998
(thousands, except per share data) Historical Proforma (unaudited) Historical Proforma (unaudited)
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales $ 3,866,615 $ 4,100,187 $ 3,289,201 $ 3,981,655
Income before cumulative
effect of accounting change 76,779 70,339 136,493 125,487
Net income 75,882 69,442 136,493 125,487
Diluted earnings per share:
Income before cumulative effect
of accounting change $ 1.93 $ 1.76 $ 3.36 $ 3.09
Net income $ 1.91 $ 1.74 $ 3.36 $ 3.09
- -------------------------------------------------------------------------------------------------------------
</TABLE>
The Company recorded a gain of $9.6 million on the sale of Viron, the Company's
performance contracting business, in the third quarter of 1999.
NOTE 15--CHARGES TO OPERATIONS
In 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, not allocated as part of the purchase price,
related to acquisition, integration and restructuring cost for integrating
Sabroe into the York Refrigeration business. Other Company charges of $19.5
million, not impacted by the Sabroe acquisition, related to restructuring,
downsizing and other one time costs.
York Refrigeration Group charges
The York Refrigeration Group charges consist of non-cash write-downs of $8.2
million and other accruals of $8.7 million principally for the closure of the
Gram manufacturing facility in Denmark, the closure of duplicate sales and
service offices in Europe and Asia and workforce reductions. Of the
approximately 450 salary and wage employee reductions planned, approximately 130
remain at December 31, 1999. The costs of these actions are detailed in the
table below.
<TABLE>
<CAPTION>
Non-cash Established Utilized Remaining
(in thousands) Write-downs Accruals in 1999 Accruals
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Fixed asset write-downs $8,176 $ -- $ -- $ --
Severance costs -- 5,260 3,834 1,426
Contractual obligations -- 1,095 541 554
Other -- 2,348 2,298 50
- ------------------------------------------------------------------------------------
$8,176 $8,703 $6,673 $2,030
- ------------------------------------------------------------------------------------
</TABLE>
Additionally, the Company recorded cash expenses of $12.7 million relating to
the cost and loss on a currency option to fix the price of the acquisition and
$5.4 million for integration expenses consisting of employee relocation, office
integration activities, product training and sign and logo changes.
a26
<PAGE>
Other Company charges
The other Company charges of $19.5 million consist of non-cash write-downs of
$3.6 million and other accruals of $15.9 million. The charges relate to
workforce reductions, asset write-downs, principally in Latin America and
Eastern Europe due to the current economic conditions in those regions, closing
costs for the ESG Airside factory in Salisbury, North Carolina, contractual
obligations and other receivables. Of the approximately 530 salary and wage
employees reductions planned, 7 remain at December 31, 1999. These costs are
detailed in the table below.
<TABLE>
<CAPTION>
Non-cash Established Utilized Remaining
(in thousands) Write-downs Accruals in 1999 Accruals
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Fixed asset write-downs $ 1,851 $ -- $ -- $ --
Receivable write-downs 1,773 -- -- --
Severance costs -- 8,953 4,635 4,318
Contractual obligations -- 6,962 5,427 1,535
- --------------------------------------------------------------------------------------
$ 3,624 $15,915 $10,062 $ 5,853
- --------------------------------------------------------------------------------------
</TABLE>
In 1999, the Company also recorded charges in cost of goods sold of $22.4
million, primarily to write-down inventory to the lower of cost or market.
Integration of the Refrigeration business, principally discontinuation of Gram
product lines, resulted in $6.9 million of the inventory write-down.
Deteriorating economic conditions in Latin America and Eastern Europe resulted
in inventory write-downs of $3.2 million and $4.2 million, respectively. ESG
operations primarily in the U.S. and Australia resulted in inventory writedowns
of $1.5 million. The discontinuance of a UPG product line resulted in additional
inventory write-downs of $4.6 million and warranty charges of $2.0 million. The
related liability for warranty charges represents the Company's estimate of
future costs based on a range of possible outcomes. Additional charges to
operations in future periods may be required if actual costs incurred exceed
amounts recorded at December 31, 1999.
During 1997, the Company recorded charges of $75.5 million. The charges related
to the closing of the Houston manufacturing facility, the downsizing of German
operations and profit improvement initiatives, including closing and
streamlining certain operations and rationalization of global distribution and
products throughout the world. At December 31, 1999, accrual balances of $3.6
million remain relating primarily to product warranty and lease obligations.
NOTE 16--GRANTLEY ACCIDENT
On February 2, 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 facilities used in steel cutting and rolling operations
and heat exchanger production. The Company's rebuilding operations were
substantially completed during the second quarter of 1999, fully restoring 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.
Pursuant to generally accepted accounting principles, the costs of
reconstructing and replacing property damaged or destroyed in the accident are
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
will be included in profit and loss upon settlement. During 1999 and 1998, the
Company recorded credits to cost of goods sold of $6.0 million and $25.5
million, respectively, reflecting insurance coverage for certain incremental
expenses and losses included in cost of goods sold as a result of the accident.
These amounts represent only a portion of the Company's estimate of the total
costs and expenses resulting from the accident which is included in the
Company's claim under business interruption coverage.
During 1999 and 1998, the Company received advanced payments of $6.2 million and
$19.4 million, respectively, from the insurance company representing partial
payments under the property damage coverage. During 1999 and 1998, the Company
received advanced payments of $21.3 million and $10.0 million, respectively,
from the insurance company representing partial payments under the business
interruption coverage. The Company and the insurance company have settled on a
portion of the claim under the property damage coverage, but have not agreed on
any settlement under the remaining property damage or business interruption
coverage.
NOTE 17--SEGMENT INFORMATION
In 1997, the Company reorganized its geographically focused operations into
three global business groups. These three global business groups operate in the
Heating, Ventilating, Air Conditioning and Refrigeration industry (HVAC&R) and
are segmented as the Unitary Products Group, Engineered Systems Group and York
Refrigeration Group.
The Company's Unitary Products Group (UPG) consists of heating and air
conditioning solutions for buildings ranging from private homes and apartments
to small commercial buildings. Unitary products include ducted central air
conditioning and heating systems (air conditioners, heat pumps and furnaces),
ductless mini-splits, and light commercial heating and cooling equipment.
Bristol
a27
<PAGE>
Compressors, included with UPG, manufactures reciprocating and scroll
compressors for original equipment manufacturers and for sale by wholesale
distributors.
The Company's Engineered Systems Group (ESG) consists of heating and air
conditioning solutions for buildings ranging from small office buildings and
fast food restaurants to large commercial and industrial complexes. Engineered
Systems air conditioning products include air-cooled and water-cooled chillers,
central air handling units, variable air volume units, control equipment to
monitor and control the entire system, maintenance and service. ESG manufactures
and provides custom design solutions for large systems used in hospitals, office
towers, hotels and airports. ESG also supplies specially designed chilled water
systems for use on naval and commercial marine vessels.
The Company's York Refrigeration Group (YRG) consists of screw and reciprocating
compressors, condensers, evaporators, heat exchangers, process refrigeration
systems, hygienic air distribution systems, gas compression systems, automated
plant control systems, refrigeration contracting, maintenance and service.
The following table represents the Company's operating results by segment:
<TABLE>
<CAPTION>
(in thousands) 1999 1998 1997
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net sales:
Unitary Products Group:
Bristol Compressors $ 579,686 $ 529,809 $ 504,024
Residential and light commercial products 1,098,514 1,055,627 964,648
Intragroup compressor sales (108,721) (103,676) (76,294)
----------- ----------- -----------
1,569,479 1,481,760 1,392,378
Engineered Systems Group 1,460,736 1,408,091 1,396,436
York Refrigeration Group 883,609 447,499 447,093
Eliminations (1) (47,209) (48,149) (42,250)
- -----------------------------------------------------------------------------------------------------------------
$ 3,866,615 $ 3,289,201 $ 3,193,657
- -----------------------------------------------------------------------------------------------------------------
(1) Eliminations include the following intersegment sales:
Unitary Products Group $ 13,330 $ 10,936 $ 12,609
Engineered Systems Group 12,802 12,710 7,236
York Refrigeration Group 21,077 24,503 22,405
- -----------------------------------------------------------------------------------------------------------------
Eliminations (1) $ 47,209 $ 48,149 $ 42,250
- -----------------------------------------------------------------------------------------------------------------
Income from operations:
Unitary Products Group:
Bristol Compressors $ 58,990 $ 53,152 $ 44,860
Residential and light commercial products 97,247 87,330 57,864
----------- ----------- -----------
156,237 140,482 102,724
Engineered Systems Group 114,689 125,170 118,278
York Refrigeration Group 44,527 27,420 22,734
Eliminations, general corporate expenses
and other non-allocated items (151,508) (64,368) (129,734)
- -----------------------------------------------------------------------------------------------------------------
$ 163,945 $ 228,704 $ 114,002
- -----------------------------------------------------------------------------------------------------------------
Equity in (earnings) losses of affiliates:
Unitary Products Group:
Bristol Compressors $ (2,640) $ 785 $ (5,732)
Residential and light commercial products (867) 318 1,792
----------- ----------- -----------
(3,507) 1,103 (3,940)
Engineered Systems Group (1,769) (1,260) (1,402)
York Refrigeration Group (384) 31 --
- -----------------------------------------------------------------------------------------------------------------
$ (5,660) $ (126) $ (5,342)
- -----------------------------------------------------------------------------------------------------------------
Gain on sale of business $ (9,627) $ -- $ --
Interest expense, net 61,150 41,527 40,876
- -----------------------------------------------------------------------------------------------------------------
Income before income taxes and cumulative effect of accounting change $ 118,082 $ 187,303 $ 78,468
Provision for income taxes 41,303 50,810 31,075
- -----------------------------------------------------------------------------------------------------------------
Income before cumulative effect of accounting change $ 76,779 $ 136,493 $ 47,393
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
a28
<PAGE>
<TABLE>
<CAPTION>
(in thousands) 1999 1998 1997
- -----------------------------------------------------------------------------------------------------------
(continued)
<S> <C> <C> <C>
Total assets:
Unitary Products Group:
Bristol Compressors $ 217,792 $ 207,624 $ 201,863
Residential and light commercial products 569,223 511,669 488,105
Eliminations and other non-allocated assets (14,267) (14,225) (7,370)
----------- ----------- -----------
772,748 705,068 682,598
Engineered Systems Group 714,212 713,943 703,498
York Refrigeration Group 669,317 272,039 237,179
Eliminations and other non-allocated assets 718,262 415,488 373,023
- -----------------------------------------------------------------------------------------------------------
$ 2,874,539 $ 2,106,538 $ 1,996,298
- -----------------------------------------------------------------------------------------------------------
Depreciation and amortization of property, plant and equipment:
Unitary Products Group:
Bristol Compressors $ 10,536 $ 10,003 $ 9,357
Residential and light commercial products 16,192 16,539 14,006
----------- ----------- -----------
26,728 26,542 23,363
Engineered Systems Group 18,299 16,871 15,679
York Refrigeration Group 15,162 9,502 9,351
Other non-allocated depreciation and amortization 3,982 4,870 4,383
- -----------------------------------------------------------------------------------------------------------
$ 64,171 $ 57,785 $ 52,776
- -----------------------------------------------------------------------------------------------------------
Capital expenditures:
Unitary Products Group:
Bristol Compressors $ 15,698 $ 11,436 $ 11,558
Residential and light commercial products 19,266 13,088 13,963
----------- ----------- -----------
34,964 24,524 25,521
Engineered Systems Group 37,074 28,257 23,413
Refrigeration Products Group 17,949 9,001 15,095
Other non-allocated capital expenditures 14,078 2,856 2,825
- -----------------------------------------------------------------------------------------------------------
$ 104,065 $ 64,638 $ 66,854
- -----------------------------------------------------------------------------------------------------------
</TABLE>
Other non-allocated costs for management reporting include goodwill
amortization, certain pension costs, Olympic sponsorship costs, integration
costs, restructuring costs, other corporate costs, interest and income taxes.
Non-allocated assets primarily consist of prepaid pension expenses, deferred tax
assets, goodwill, LIFO inventory reserves, and other corporate assets. For
management reporting, intersegment sales are recorded on a cost-plus basis and
are recorded at cost by the buying segment. Business unit management performance
is based on earnings before interest and taxes adjusted by a charge for capital
and, to a lesser extent, earnings per share.
The Company's sales are 52% to the United States and 48% to non-U.S. countries
in 1999 and 58% to the United States and 42% to non-U.S. countries for 1998 and
1997. No single non-U.S. country or single customer accounts for greater than
10% of the Company's sales. Information related to United States and non-U.S.
sales to outside customers, based on the location of the assets generating the
sales, is as follows:
<TABLE>
<CAPTION>
(in thousands) 1999 1998 1997
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net sales:
United States $2,309,364 $2,200,137 $2,155,174
Other 1,557,251 1,089,064 1,038,483
- --------------------------------------------------------------------------------------------
$3,866,615 $3,289,201 $3,193,657
- --------------------------------------------------------------------------------------------
</TABLE>
Included in United States sales are export sales of $307.0 million in 1999,
$301.5 million in 1998 and $316.3 million in 1997.
a29
<PAGE>
The location of the Company's net property, plant and equipment is as follows:
<TABLE>
<CAPTION>
1999 1998 1997
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net property, plant and equipment:
United States 53% 76% 78%
Denmark 23% 4% 4%
Other 24% 20% 18%
- ----------------------------------------------------------------------------------------------
100% 100% 100%
- ----------------------------------------------------------------------------------------------
</TABLE>
At December 31, 1999, Denmark was the only non-U.S. country with greater than
10% of the Company's consolidated net property, plant and equipment. No single
non-U.S. country had greater than 10% of the Company's consolidated net
property, plant and equipment at December 31, 1998 or 1997.
NOTE 18--STOCKHOLDERS' EQUITY
The 1992 Employee Stock Purchase Plan authorizes the allocation of 1,500,000
shares of common stock for the Plan. An additional 500,000 shares were
authorized in February 1999. The purchase price of the shares under the Purchase
Plan is 85% of the lower of the fair market value of shares at the beginning of
the period or end of the period. No compensation expense is recorded in
connection with the Plan. In 1999, 1998 and 1997, there were 205,980 shares,
225,861 shares and 165,169 shares, respectively, purchased by employees at a
price of $23.32 per share, $33.63 per share and $33.63 per share, respectively.
During May 1997 and February 1999, amendments to the 1992 Omnibus Stock Plan
were approved. The amended and restated 1992 Omnibus Stock Plan authorizes the
issuance of up to 7,880,000 shares of the Company's common stock under stock
option 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 equal to the fair market value of the shares
on the date the option is granted. The restricted shares are granted at a price
determined by the Board of Directors. In 1999, 1998 and 1997 under the 1992
Omnibus Stock Plan, key employees were awarded 23,500, 32,000 and 40,000 shares,
respectively, of restricted common stock generally vesting over four years.
Accordingly, unearned compensation of $0.9 million, $1.1 million and $2.0
million was recorded as a charge to equity in 1999, 1998 and 1997, respectively,
which is being amortized over the vesting period.
Changes in the number of shares under the stock option plan are as follows:
<TABLE>
<CAPTION>
1999 1998 1997
- -----------------------------------------------------------------------------------------------------------------------------------
Weighted Average Weighted Average Weighted Average
Shares Exercise Price Shares Exercise Price Shares Exercise Price
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Outstanding, January 1, 3,097,222 $42.97 2,776,367 $42.50 2,365,859 $39.97
Granted 3,303,924 29.41 797,415 43.11 829,143 45.43
Exercised (216,662) 41.36 (300,625) 39.05 (306,993) 30.24
Canceled (358,063) 41.32 (175,935) 42.87 (111,642) 44.36
Outstanding, December 31, 5,826,421 35.64 3,097,222 42.97 2,776,367 42.50
Exercisable, December 31, 3,049,766 $42.05 2,289,257 $42.91 1,952,454 $41.30
Available, December 31, 755,794 222,405 884,175
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The exercise price of options outstanding and those exercised is $31.75 to
$33.75 per share for 1992 grants, $34.25 to $40.00 per share for 1993 grants,
$35.75 to $39.00 per share for 1994 grants, $38.25 to $46.00 per share for 1995
grants, $46.00 to $54.88 per share for 1996 grants, $44.63 to $49.63 per share
for 1997 grants, $33.13 to $49.50 per share for 1998 grants and $22.94 to $42.50
for 1999 grants. The weighted average remaining contractual life for options
outstanding at December 31, 1999 is 8.11 years.
In 1997 and 1999, the Board of Directors authorized the Company to purchase up
to 6.0 million and 2.5 million shares, respectively, of its Common Stock over
four years to fund the Company's Employee Stock Purchase Plan and the Amended
and Restated 1992 Omnibus Stock Plan. The stock purchases will be made from time
to time on the open market. Under the program, 2.0 million, 1.1 million and 3.4
million shares were repurchased on the open market in 1999, 1998 and 1997,
respectively. In addition, in the first quarter of 2000, the Company repurchased
approximately 300,000 shares.
The Company applies APB Opinion No. 25, "Accounting for Stock Issued to
Employees," and related interpretations in accounting for its plans.
Accordingly, no compensation expense has been recognized for its stock-based
compensation plans other than for restricted stock and performance-based awards.
Had compensation cost for the Company's other stock option and employee stock
purchase plans been determined based upon the fair value at the grant date for
awards under these plans consistent with the methodology prescribed under SFAS
No. 123, "Accounting for Stock-Based Compensation," the Company's net income and
earnings per share would have been reduced to the pro forma amounts indicated
below.
a30
<PAGE>
<TABLE>
<CAPTION>
(in thousands, except per share data) 1999 1998 1997
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net earnings--as reported $75,882 $136,493 $47,393
Net earnings--pro forma 65,462 126,241 38,471
Diluted earnings per share--as reported 1.91 3.36 1.10
Diluted earnings per share--pro forma 1.64 3.11 0.89
- -------------------------------------------------------------------------------------------
</TABLE>
The per share weighted average fair value of the options granted during 1999,
1998, and 1997 is estimated as $10.47, $16.66 and $18.04, respectively, on the
date of grant using the Black-Scholes option-pricing model. The weighted average
assumptions based on the date of grant are as follows: dividend yield of 2.1%,
1.1% and 1.0% in 1999, 1998 and 1997, respectively; volatility of 31.4%, 27.5%
and 27.2% in 1999, 1998 and 1997, respectively; risk-free interest rate of 5.5%,
5.7% and 6.6% in 1999, 1998 and 1997, respectively, and an expected life of 7.6
years, 7.7 years and 7.0 years in 1999, 1998 and 1997, respectively.
Pro forma net income reflects only options granted after 1994. Therefore, the
full impact of calculating compensation costs for stock options granted prior to
January 1, 1995 is not reflected in the pro forma net income amounts presented
above because compensation cost for options granted prior to January 1, 1995 is
not considered. Because the determination of fair value of all options granted
includes variable factors, including volatility, and because additional option
grants are expected to be made each year, the above proforma disclosures are not
representative of proforma effects on reported net income for future years.
NOTE 19--EARNINGS PER SHARE RECONCILIATION OF SHARES OUTSTANDING
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:
<TABLE>
<CAPTION>
(in thousands) 1999 1998 1997
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Weighted average common shares outstanding used
in the computation of basic earnings per share 39,637 40,402 42,550
Effect of dilutive securities:
Non-vested restricted shares 61 132 167
Stock options 134 88 323
- ----------------------------------------------------------------------------------------------------
Weighted average common shares and equivalents used
in the computation of diluted earnings per share 39,832 40,622 43,040
- ----------------------------------------------------------------------------------------------------
</TABLE>
a31
<PAGE>
Summary of Quarterly Results (unaudited)
<TABLE>
<CAPTION>
(in thousands, except per share data) First Quarter Second Quarter Third Quarter Fourth Quarter
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1999
Net sales $ 782,757 $1,012,064 $ 970,360 $1,101,434
Gross profit 165,581 231,415 189,072 226,896
Net income 17,377 40,452 3,776 14,277
Earnings per share:
Basic .44 1.02 .09 .37
Diluted .44 1.01 .09 .36
1998
Net sales $ 741,988 $ 888,481 $ 810,355 $ 848,377
Gross profit 157,032 194,839 183,781 187,284
Net income 14,664 42,307 47,254 32,268
Earnings per share:
Basic .36 1.04 1.17 .81
Diluted .36 1.03 1.16 .81
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Trading and Dividend Information
<TABLE>
<CAPTION>
Dividends
High Low Declared
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
1999
Fourth quarter $28 1/4 $21 $.15
Third quarter 47 1/2 35 1/4 .15
Second quarter 43 3/8 34 3/8 .15
First quarter 41 5/8 33 5/8 .15
1998
Fourth quarter $43 9/16 $27 1/2 $.12
Third quarter 46 11/16 31 5/8 .12
Second quarter 52 3/4 40 3/4 .12
First quarter 46 1/2 34 3/8 .12
- --------------------------------------------------------------------------------
</TABLE>
a32
<PAGE>
Investor and Stockholder Information and Corporate Data
INVESTOR AND STOCKHOLDER INFORMATION
Stockholder Inquiries
Questions concerning your account, dividend payments, address changes,
consolidation of duplicate accounts, lost certificates and related matters
should be addressed to York International Corporation's transfer agent:
Chase Mellon Shareholder Services, L.L.C.
P.O. Box 3315
South Hackensack, NJ 07606-1915
1-800-851-9677
http://www.chasemellon.com
Dividend Policy
The declaration and payment of quarterly dividends is made at the discretion of
York's Board of Directors. The dividend is reviewed by the board quarterly. York
has paid quarterly dividends on its common shares without interruption since
going public in 1991.
Direct Deposit of Dividends
Stockholders who would like their dividends directly deposited in a U.S. bank
account should contact the transfer agent at the above address for an enrollment
form.
Dividend Reinvestment Program
An automatic dividend reinvestment plan is available to all stockholders of
record. Dividends can be automatically reinvested in York common stock.
Participants also may add cash for the purchase of additional shares. For more
information, contact Chase Mellon Shareholder Services, L.L.C., at (800)
437-6726.
Investor Relations Program
York International has an active investor relations program directed to both
individual and institutional investors. The Company's investor relations mission
is to maintain an ongoing awareness of the Company's performance among its
stockholders and the financial community. The Company welcomes inquiries from
its investors, large or small, as well as from members of the financial
community. For further information, contact:
Investor Relations Department
York International Corporation
P.O. Box 1592-364F
York, PA 17405-1592
Telephone: (717) 771-7409
Fax: (717) 771-7381
About York's Shareholders
At year-end, the Company had approximately 5,000 registered shareholders.
Approximately 10% of the Company shares were held by individual investors. The
Company shares were also held by about 150 institutions. At year-end, there were
approximately 3,500 employee shareholders participating in the York
International Employee Stock Purchase Plan, for an estimated 19% enrollment of
eligible employees.
CORPORATE DATA
Corporate Offices
Street Address:
York International Corporation
631 South Richland Avenue
York, PA 17403
Mailing Address:
York International Corporation
P.O. Box 1592
York, PA 17405-1592
Telephone: (717) 771-7890
Fax: (717) 771-7381
Additional Information
Stockholder, financial and other information about York is available from
several sources. The Company's 10K Report, 10Q and Quarterly Reports to
Stockholders are available through the Company's automated telephone system by
dialing (717) 771-7409.
You can also request these publications by writing:
Investor Relations
York International Corporation
P.O. Box 1592-364F
York, PA 17405-1592
Fax: (717) 771-7381
E-mail: [email protected]
York news releases, including earnings announcements, are available by fax 24
hours a day through Company News On-Call at (800) 758-5804. The York extension
is 992638.
You can access financial and other information, such as quarterly press releases
on earnings and product announcements, through the Internet. To connect to
York's website, set your browser software to: http://www.york.com
Stock Exchange Listing
The New York Stock Exchange
Stock Trading Symbol
YRK
a33
<PAGE>
Board of Directors
GERALD C. MCDONOUGH
Private Business Consultant
Retired Chairman and Chief Executive Officer of Leaseway Holdings, Inc.
Chairman of the Board and member of the Finance, and Nominating and Governance
Committees
MALCOLM W. GAMBILL
Retired Chairman and Chief Executive Officer of Harsco Corporation
Member of the Audit, Compensation, Executive, and Nominating and Governance
Committees
ROBERT F. B. LOGAN
Retired Chairman and Chief Executive Officer of Banc One Arizona Corporation
Member of the Audit, Compensation, and Finance Committees
DONALD M. ROBERTS
Retired Vice Chairman and Treasurer of United States Trust Company of New York
and its parent, U.S. Trust Corporation
Chairman of the Audit Committee and member of the Executive, and Nominating and
Governance Committees
MICHAEL R. YOUNG
President and Chief Executive Officer
JOHN R. TUCKER
Former Chief Executive Officer and President
JAMES A. URRY
Vice President of Citicorp Venture
Capital, Ltd.
Member of the Audit, Compensation, and Executive Committees
JOHN E. WELSH, III
Vice Chairman of Mobile Telecommunications Technologies Corporation
Chairman of the Finance Committee and member of the Executive Committee
WALTER B. WRISTON
Private Business Consultant
Retired Chairman and Chief Executive Officer of Citicorp
Chairman of the Compensation and Executive Committees
Officers
MICHAEL R. YOUNG
President and Chief Executive Officer
OLE ANDERSEN
Vice President and President of Refrigeration Products Group
JAMES F. DAMIANI
Vice President and President of Unitary Products Group
WAYNE J. KENNEDY
Vice President and President of Bristol Compressors
PETER C. SPELLAR
Vice President and President of Engineered Systems Group
DALE L. BENNETT
Vice President, Human Resources
CHARLES F. CARGILE
Vice President, Finance and Corporate Development
JANE G. DAVIS
Vice President, Secretary and General Counsel
HELEN S. MARSTELLER
Vice President, Investor Relations
C. DAVID MYERS
Vice President and Chief Financial Officer
JAMES P. CORCORAN
Treasurer
DAVID R. HECK
Controller
The trademarks AIR PRO; BRISTOL; FRASER-JOHNSTON; GUARDIAN; LUXAIRE; ACUAIR;
FRICK; FRIGIDCOIL; IMECO; NORTHFIELD; RECO and YORK are registered in the United
States Patent and Trademark Office by York International Corporation or its
affiliates. SABROE; NOVENCO; RETECH; GRAM REFRIGERATION; RECOLD; AND RITE COIL
are trademarks of York International Corporation or its affiliates.
a34
<PAGE>
EXHIBIT 21
YORK INTERNATIONAL CORPORATION
Subsidiaries of the Registrant
------------------------------
<TABLE>
<CAPTION>
Name and Jurisdiction
of Incorporation
- -----------------
Percent of Ownership
--------------------
<S> <C>
York Air Conditioning and Refrigeration, Inc. (Delaware) 100%
Bristol Compressors, Inc. (Delaware) 100%
Bristol Compressors Purchasing, Inc. (Delaware) 100%
Bristol Compressors Sparta, Inc. (Delaware) 100%
Codorus Acceptance Corp. (Delaware) 100%
Frigid Coil/Frick, Inc. (Delaware) 100%
IMECO, Inc. (Delaware) 100%
Evcon Holdings Inc. (Delaware) 100%
Evcon Industries, Inc. (Delaware) 100%
York International (SA), Inc. (Delaware) 100%
York Snow, Inc. (Delaware) 100%
York Food Systems International Limited (Delaware) 100%
Miller-Picking of Mississippi, Inc. (Mississippi) 100%
York International Treasury Services Inc. (Delaware) 100%
York Foreign Sales Corporation (Barbados) 100%
York International Ltd. (Canada) 100%
York International Limited (UK) 100%
York A.C.R. Ltd. (Ireland) 100%
York International B.V. (Netherlands) 100%
York International S.p.A. (Italy) 100%
York International S.A.S. (France) 100%
York France S.A.S. (France) 100%
York Systems S.A.S. (France) 100%
York Neige S.A.S. (France) 100%
Duplan Engineering S.A.S. (France) 100%
IMEF S.A.S. (France) 100%
York International Holdings GmbH (Germany) 100%
York International GmbH (Germany) 100%
Integral Energietechnik GmbH (Germany) 100%
York International A/S (Denmark) 100%
York International, S.A. de C.V. (Mexico) 100%
York Aire, S.A. de C.V. (Mexico) 100%
York International Comercial Limitada (Chile) 100%
York International Ltda (Colombia) 100%
York International S.R.L. (Peru) 100%
York International del Ecuador C.A. Interyork (Ecuador) 100%
York International S.A. (Venezuela) 100%
York International S.A. (Uruguay) 100%
York International Pte. Ltd. (Singapore) 100%
York Philippines, Inc. (Philippines) 100%
York International (Northern Asia) Limited (Hong Kong) 100%
York A/C and Refrigeration Co. Ltd (Thailand) 100%
York Industrial (Thailand) Co. Ltd (Thailand) 100%
York International CH (Korea) 100%
York International Australia Pty, Ltd. (Australia) 100%
York New Zealand Limited (New Zealand) 100%
PT York Aditama Teknik (Indonesia) 100%
York Airconditioning and Refrigeration FZE (U.A.E.) 100%
EXHIBIT 21 (CON'T)
</TABLE>
<PAGE>
YORK INTERNATIONAL CORPORATION
Subsidiaries of the Registrant (con't)
--------------------------------------
<TABLE>
<CAPTION>
Name and Jurisdiction
of Incorporation
- --------------------
Percent of Ownership
--------------------
<S> <C>
York Air conditioning & Refrigeration Ltd. Co. (Egypt) 100%
Y.I.C. Limited (Cyprus) 100%
YORK Refrigeration ApS (Denmark) 100%
YORK Koleteknik ApS (Denmark) 100%
YORK Refrigeration, Controls ApS (Denmark) 100%
YORK Refrigeration, Foundry ApS (Denmark) 100%
Retech Refrigeration Technologies ApS (Denmark) 100%
Novenco ApS (Denmark) 100%
Novenco Hi-Pres ApS (Denmark) 100%
Novenco A.S. (Norway) 100%
Oy Novenco AB (Finland) 100%
YORK Kulde AS (Norway) 100%
Sabroe Holdings AB (Sweden) 100%
Sabroe Svenska AB (Sweden) 100%
YORK Marine AB (Sweden) 100%
YORK International AB (Sweden) 100%
YORK Bonus Energi AB (Sweden) 100%
Novenco B.V. (The Netherlands) 100%
YORK Industriekalte GmbH (Germany) 100%
Sabroe Kalteanlagen GmbH (Austria) 100%
YORK Refrigeration Italia S.r.l. (Italy) 100%
YORK Samifi Freezers S.r.l. (Italy) 100%
YORK Refrigeration, S.L. (Spain) 100%
Sabroe S.A.S. (France) 100%
Sabroe BV (The Netherlands) 100%
YORK - Inham-Refrigeration BV (The Netherlands) 100%
Sabroe Holdings Ltd (UK) 100%
York Refrigeration Ltd (UK) 100%
York Refrigeration Products Ltd (UK) 100%
Coolrite Ltd (UK) 100%
Sabroe Refrigeration India Ltd (India) 100%
Sabroe Philippines Inc. (Philippines) 100%
YORK Refrigeration (Thailand) Co. Ltd (Thailand) 100%
YORK Japan Co. Ltd (Japan) 100%
Sabroe - M & M Refrigeration, Inc (Canada) 100%
Sabroe de Argentina S.A. (Argentina) 100%
Sabroe de Mexico S.A. de C. V. (Mexico) 100%
YORK Refrigeration Peru S/A (Peru) 100%
YORK Refrigeration Chile S/A (Chile) 100%
YORK Thermfresh Pty Ltd (Australia) 100%
York Hellas S.A. (Greece) 100%
York Ghuangzhou Air Conditioning and Refrigeration Co. Ltd. (China) 97%
Sabroe do Brasil Ltda (Brazil) 85%
York-Wuxi Air Conditioning and Refrigeration Co. Ltd. (China) 80%
York International Commercial Ltda. (Brazil) 80%
Idako S.A. (Uruguay) 75%
Sabroe de Colombia Ltda (Colombia) 60%
York-Taiwan, Inc. (Taiwan) 60%
Rotor Kalteanlagen GmbH (Hungary) 50%
EXHIBIT 21 (CON'T)
</TABLE>
<PAGE>
YORK INTERNATIONAL CORPORATION
Subsidiaries of the Registrant (con't)
--------------------------------------
<TABLE>
<CAPTION>
Name and Jurisdiction
of Incorporation
-------------------
Percent of Ownership
--------------------
<S> <C>
Sabroe OU (Estonia) 50%
Novenco Nippon Ltd (Japan) 50%
Sabroe Refrigeration Inc (Delaware) 50%
Sabroe M & M Refrigeration Inc (Maryland) 50%
Sabroe Finland Oy (Finland) 50%
</TABLE>
<PAGE>
EXHIBIT 23
Accountants' Consent
--------------------
The Board of Directors and Stockholders
York International Corporation:
We consent to incorporation by reference in the Registration Statements on Forms
S-3 (File No. 33-94330) and S-8 (File No. 33-25440 1989 Employee Stock Option
Plan, File No. 333-2384 Amended and Restated 1992 Omnibus Stock Plan and File
No. 33-64684 1992 Omnibus Stock Plan and 1992 Employee Stock Purchase Plan) of
York International Corporation of our reports dated February 17, 2000, relating
to the consolidated balance sheets of York International Corporation and
subsidiaries as of December 31, 1999 and 1998, and the related consolidated
statements of operations, comprehensive income, cash flows and stockholders'
equity for each of the years in the three-year period ended December 31, 1999
and the related financial statement schedule, which reports appear in or are
incorporated by reference in the December 31, 1999 annual report on Form 10-K of
York International Corporation.
KPMG LLP
/S/ KPMG LLP
Harrisburg, Pennsylvania
March 27, 2000
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Consolidated Condensed Statements of Operations for the Year Ended December 31,
1999 (Audited), the Consolidated Condensed Balance Sheets At December 31, 1999
(Audited), and the Consolidated Condensed Satements of Cash Flows for the Year
Ended December 31, 1999 (Audited) and is qualified in its entirety by reference
to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 39,514
<SECURITIES> 0
<RECEIVABLES> 676,189
<ALLOWANCES> 31,342
<INVENTORY> 599,046
<CURRENT-ASSETS> 1,490,369
<PP&E> 830,553
<DEPRECIATION> 330,843
<TOTAL-ASSETS> 2,874,539
<CURRENT-LIABILITIES> 1,005,135
<BONDS> 854,494
<COMMON> 225
0
0
<OTHER-SE> 731,705
<TOTAL-LIABILITY-AND-EQUITY> 2,874,539
<SALES> 3,866,615
<TOTAL-REVENUES> 3,866,615
<CGS> 3,053,651
<TOTAL-COSTS> 3,053,651
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 10,899
<INTEREST-EXPENSE> 61,150
<INCOME-PRETAX> 118,082
<INCOME-TAX> 41,303
<INCOME-CONTINUING> 76,779
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 897
<NET-INCOME> 75,882
<EPS-BASIC> 1.91
<EPS-DILUTED> 1.91
</TABLE>
