-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, KPu7IjWR920LI5TnEt9gGSmI+14Kw1MijNq2jI2KblXazOkISlqZD+B9e83QuYFf suMPvlHWhiR9cu9g9s61Mw== /in/edgar/work/0000893220-00-001256/0000893220-00-001256.txt : 20001114 0000893220-00-001256.hdr.sgml : 20001114 ACCESSION NUMBER: 0000893220-00-001256 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 8 CONFORMED PERIOD OF REPORT: 20000930 FILED AS OF DATE: 20001113 FILER: COMPANY DATA: COMPANY CONFORMED NAME: YORK INTERNATIONAL CORP /DE/ CENTRAL INDEX KEY: 0000842662 STANDARD INDUSTRIAL CLASSIFICATION: [3585 ] IRS NUMBER: 133473472 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-10863 FILM NUMBER: 759881 BUSINESS ADDRESS: STREET 1: 631 S RICHLAND AVE CITY: YORK STATE: PA ZIP: 17403 BUSINESS PHONE: 7177717890 MAIL ADDRESS: STREET 1: 631 SOUTH RICHLAND AVENUE CITY: YORK STATE: PA ZIP: 17403 FORMER COMPANY: FORMER CONFORMED NAME: YORK HOLDINGS CORP DATE OF NAME CHANGE: 19910930 10-Q 1 w42120e10-q.txt FORM 10-Q YORK INTERNATIONAL 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q [x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2000 COMMISSION FILE NUMBER 1-10863 YORK INTERNATIONAL CORPORATION (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) DELAWARE 13-3473472 (STATE OF INCORPORATION) (I.R.S. EMPLOYER IDENTIFICATION NO.) 631 SOUTH RICHLAND AVENUE, YORK, PA 17403 (717) 771-7890 (ADDRESS AND TELEPHONE NUMBER OF PRINCIPAL EXECUTIVE OFFICES) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.
Class Outstanding at November 8, 2000 ----- ------------------------------- Common Stock, par value $.005 38,027,277 shares
2 YORK INTERNATIONAL CORPORATION AND SUBSIDIARIES FORM 10-Q FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2000 INDEX
Page No. PART I. FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Condensed Statements of Operations - (Unaudited) Three Months and Nine Months Ended September 30, 2000 and 1999 3 Consolidated Condensed Balance Sheets - September 30, 2000 (Unaudited) and December 31, 1999 4 Consolidated Condensed Statements of Cash Flows - (Unaudited) Nine Months Ended September 30, 2000 and 1999 5 Supplemental Notes to Consolidated Condensed Financial Statements (Unaudited) 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 13 PART II. OTHER INFORMATION Item 1. Legal Proceedings 19 Item 2. Changes in Securities 19 Item 3. Defaults Upon Senior Securities 19 Item 4. Submission of Matters to a Vote of Security Holders 19 Item 5. Other Information 19 Item 6. Exhibits and Reports on Form 8-K 19
2 3 PART I - FINANCIAL INFORMATION YORK INTERNATIONAL CORPORATION AND SUBSIDIARIES ITEM 1 FINANCIAL STATEMENTS Consolidated Condensed Statements of Operations (Unaudited) (thousands except per share data)
Three Months Ended Sept. 30, Nine Months Ended Sept. 30, ---------------------------- ------------------------------- 2000 1999 2000 1999 --------- --------- ----------- ----------- Net sales $ 946,703 $ 970,360 $ 2,905,577 $ 2,765,181 Cost of goods sold 744,516 781,288 2,265,490 2,179,113 --------- --------- ----------- ----------- Gross profit 202,187 189,072 640,087 586,068 Selling, general and administrative expenses 150,054 148,661 474,005 425,419 Acquisition, integration, restructuring and other charges 28,462 22,159 29,681 35,117 --------- --------- ----------- ----------- Income from operations 23,671 18,252 136,401 125,532 Gain on sale of businesses -- (9,627) (26,902) (9,627) Interest expense, net 20,548 19,063 60,779 41,735 Equity in earnings of affiliates (1,624) (1,132) (5,695) (4,174) --------- --------- ----------- ----------- Income before income taxes and cumulative effect of accounting change 4,747 9,948 108,219 97,598 Provision (benefit) for income taxes (10,509) 6,172 24,181 35,096 --------- --------- ----------- ----------- Income before cumulative effect of accounting change 15,256 3,776 84,038 62,502 Cumulative effect of accounting change: Write-off of start-up costs (net of tax of $442) -- -- -- 897 --------- --------- ----------- ----------- Net income $ 15,256 $ 3,776 $ 84,038 $ 61,605 ========= ========= =========== =========== Basic earnings per share: Income before cumulative effect of accounting change $ 0.40 $ 0.09 $ 2.21 $ 1.57 Accounting change -- -- -- (0.02) --------- --------- ----------- ----------- Net income $ 0.40 $ 0.09 $ 2.21 $ 1.55 ========= ========= =========== =========== Diluted earnings per share: Income before cumulative effect of accounting change $ 0.40 $ 0.09 $ 2.20 $ 1.56 Accounting change -- -- -- (0.02) --------- --------- ----------- ----------- Net income $ 0.40 $ 0.09 $ 2.20 $ 1.54 ========= ========= =========== =========== Cash dividends per share $ 0.15 $ 0.15 $ 0.45 $ 0.45 ========= ========= =========== =========== Weighted average common shares and common equivalents outstanding: Basic 38,034 39,893 38,076 39,853 Diluted 38,232 40,275 38,170 40,103
See accompanying supplemental notes to consolidated condensed financial statements. 3 4 PART I - FINANCIAL INFORMATION YORK INTERNATIONAL CORPORATION AND SUBSIDIARIES Consolidated Condensed Balance Sheets (thousands of dollars)
Sept. 30, 2000 December 31, (Unaudited) 1999 -------------- ----------- ASSETS Current Assets: Cash and cash equivalents $ 56,430 $ 39,514 Receivables 694,436 720,022 Inventories: Raw materials 191,273 199,171 Work in process 151,313 112,669 Finished goods 313,350 287,206 ---------- ---------- Total inventories 655,936 599,046 Prepayments and other current assets 100,992 131,787 ---------- ---------- Total current assets 1,507,794 1,490,369 Deferred income taxes 39,584 13,207 Investments in affiliates 22,537 25,425 Property, plant and equipment, net 469,892 499,710 Unallocated excess of cost over net assets acquired 742,140 768,809 Deferred charges and other assets 60,318 77,019 ---------- ---------- Total assets $2,842,265 $2,874,539 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Notes payable and current portion of long-term debt $ 77,687 $ 102,864 Accounts payable and accrued expenses 795,614 860,264 Income taxes 37,479 42,007 ---------- ---------- Total current liabilities 910,780 1,005,135 Long-term warranties 42,637 39,607 Long-term debt 883,376 854,494 Postretirement benefit liabilities 152,777 154,066 Other long-term liabilities 79,737 89,307 ---------- ---------- Total liabilities 2,069,307 2,142,609 Stockholders' equity 772,958 731,930 ---------- ---------- Total liabilities and stockholders' equity $2,842,265 $2,874,539 ========== ==========
See accompanying supplemental notes to consolidated condensed financial statements. 4 5 PART I - FINANCIAL INFORMATION YORK INTERNATIONAL CORPORATION AND SUBSIDIARIES Consolidated Condensed Statements of Cash Flows (Unaudited) (thousands of dollars)
Nine Months Ended Sept. 30, --------------------------- 2000 1999 -------- --------- Cash flows from operating activities: Net income $ 84,038 $ 61,605 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization of property, plant and equipment 46,652 46,883 Amortization of deferred charges and unallocated excess of cost over net assets acquired 24,278 15,652 Provision for doubtful accounts receivable 4,774 7,862 Deferred income taxes (16,408) (6,808) Gain on sale of businesses (26,902) (9,627) Cumulative effect of accounting change -- 897 Effect of non-cash charges 32,649 38,503 Loss on sale of fixed assets and other 469 789 Change in assets and liabilities net of effects from purchase of other companies and sale of businesses: Receivables 8,846 2,517 Inventories (64,084) (33,336) Prepayments and other current assets 18,163 21,969 Other assets 9,084 (15,254) Accounts payable and accrued expenses (49,407) (88,975) Income taxes (4,465) (40,099) Long-term warranties 3,201 2,501 Postretirement benefit liabilities (1,289) 5,162 Other long-term liabilities (7,577) 3,309 -------- --------- Net cash provided by operating activities 62,022 13,550 -------- --------- Cash flows from investing activities: Proceeds from sale of businesses, net 41,826 35,512 Purchases of and investments in other companies, net of cash acquired (3,805) (405,226) Capital expenditures (67,595) (70,924) Proceeds from sale of fixed assets and other 5,525 393 -------- --------- Net cash used by investing activities (24,049) (440,245) -------- --------- Cash flows from financing activities: Net payments on short-term debt (25,445) (24,106) Proceeds from sale of accounts receivable -- 50,000 Net proceeds from issuance of bank loans 14,887 -- Net proceeds from commercial paper borrowings 46,454 435,113 Long-term debt payments (32,693) (5,091) Common stock issued 15 7,873 Treasury stock purchases (7,535) (7,610) Dividends paid (17,106) (17,956) -------- --------- Net cash (used) provided by financing activities (21,423) 438,223 -------- --------- Effect of exchange rate changes on cash 366 109 -------- --------- Net increase in cash and cash equivalents 16,916 11,637 -------- --------- Cash and cash equivalents at beginning of period 39,514 22,746 -------- --------- Cash and cash equivalents at end of period $ 56,430 $ 34,383 ======== =========
See accompanying supplemental notes to consolidated condensed financial statements. 5 6 PART I - FINANCIAL INFORMATION YORK INTERNATIONAL CORPORATION AND SUBSIDIARIES Supplemental Notes To Consolidated Condensed Financial Statements (Unaudited) (1) The consolidated condensed financial statements included herein have been prepared by the registrant pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to applicable rules and regulations, although the registrant believes that the disclosures herein are adequate to make the information presented not misleading. In the opinion of the Company, the accompanying consolidated condensed financial statements contain all adjustments necessary to present fairly the financial position as of September 30, 2000 and December 31, 1999, the results of operations for the three and nine month periods ended September 30, 2000 and 1999, and cash flows for the nine months ended September 30, 2000 and 1999. The results of operations for interim periods are not necessarily indicative of the results expected for the full year. (2) The following tables summarize the indebtedness and capitalization of the Company at September 30, 2000 and at December 31, 1999 (in thousands):
September 30, 2000 December 31, 1999 ------------------------ ------------------------ Current Long-term Current Long-term Indebtedness: Bank loans $57,468 $ -- $ 81,145 $ -- Bank lines at an average rate of 6.71% in 2000 and 5.28% in 1999 1,629 56,699 -- 41,812 Commercial paper, 6.68% interest in 2000 and 6.08% in 1999 -- 443,301 -- 396,847 Senior notes, 6.75% interest, due March 2003 -- 100,000 -- 100,000 Senior notes, 6.70% interest, due June 2008 -- 200,000 -- 200,000 Term loans (foreign currency) at an average rate of 4.11%, due July 2004 12,386 37,569 14,299 57,196 Other, primarily foreign bank loans, at an average rate of 5.79% in 2000 and 5.91% in 1999 6,204 45,807 7,420 58,639 ------- -------- -------- -------- Total notes payable and long-term debt $77,687 $883,376 $102,864 $854,494 ======= ======== ======== ========
September 30, December 31, Stockholders' equity: 2000 1999 --------- --------- Common Stock $.005 par value; 200,000 shares authorized; issued 45,063 shares at September 30, 2000 and 45,062 at December 31, 1999 $ 225 $ 225 Additional paid in capital 713,808 715,322 Retained earnings 409,461 342,529 Accumulated other comprehensive losses (89,571) (71,146) Treasury stock, 7,036 shares at September 30, 2000 and 6,700 shares at December 31, 1999, at cost (260,809) (253,274) Unearned compensation (156) (1,726) --------- --------- Total stockholders' equity $ 772,958 $ 731,930 ========= =========
(continued) 6 7 As of October 4, 2000, the Company amended the $400 million 364-day Revolving Credit Agreement (the Revolver) expiring on May 31, 2001 and the $500 million Amended Credit Agreement (the Credit Agreement) expiring on July 31, 2002. The Revolver and the Credit Agreement provide for borrowings under the facilities at LIBOR plus 0.45%. If borrowings greater than 33% of either facility are utilized, the rate increases to LIBOR plus 0.55%. The Company pays an annual fee of 0.10% for each facility, and the Credit Agreement allows for borrowings at specified bid rates. At September 30, 2000 and December 31, 1999, the three-month LIBOR rate was 6.77% and 6.03%, respectively. The Revolver and the Credit Agreement, as amended, contain financial and operating covenants requiring the Company to maintain certain financial ratios and standard provisions limiting leverage, investments and liens. The Company was in compliance with these financial and operating covenants at September 30, 2000 and December 31, 1999. At September 30, 2000 and December 31, 1999, no amounts were outstanding under either of these agreements. The Company has additional short-term bank lines that provide for total borrowings of $175 million which are expected to be reborrowed in the ordinary course of business. At September 30, 2000 and December 31, 1999, the Company had $58.3 million and $41.8 million, respectively, outstanding under these bank lines. Commercial paper borrowings are expected to be reborrowed in the ordinary course of business on a long-term basis. Commercial paper borrowings were also the primary source of funds used to finance the acquisition of Sabroe A/S. Concerning bank loans and other, the Company's non-U.S. subsidiaries maintain bank credit facilities in various currencies that provided for available borrowings of $244.1 million and $385.1 million at September 30, 2000 and December 31, 1999, respectively, of which $189.9 million and $295.1 million, respectively, were unused. In some instances, borrowings against these credit facilities have been guaranteed by the Company to assure availability of funds at favorable rates. The Company also maintains other debt of $55.2 million and $57.2 million at September 30, 2000 and December 31, 1999, respectively. (3) The Company established a receivables sales agreement in 1992. Under an Amended and Restated Receivables Sales Agreement entered into on December 22, 1999 and amended October 20, 2000, the maximum amount of the purchasers' investment increased from $150 million to $175 million and is subject to decrease based on the level of eligible accounts receivable and restrictions on concentrations of receivables. The balance of the sold accounts receivable was $175 million at September 30, 2000 and at December 31, 1999. The sold accounts receivable are reflected as a reduction of receivables in the accompanying consolidated balance sheets. The discount rate on the receivables sold was approximately 6.62% and 6.22% at September 30, 2000 and December 31, 1999, respectively. (4) In the first half of 2000, the employment of several senior executives, including the Company's former chief executive officer and chief financial officer, was terminated. The Company has negotiated agreements with these executives, resulting in severance costs of $6.7 million, of which $3.5 million and $3.2 million were charged to earnings in the first quarter and second quarter of 2000, respectively. (5) In February, 1998, the Company incurred damage to its Grantley manufacturing facility in York, PA, when tanks used for testing ruptured. The accident caused substantial damage to its facilities, which have been subsequently rebuilt. The Company obtained reimbursement under its insurance programs for both property damage and business interruption relating to the Grantley facility, and reached a final settlement in the third quarter of 2000. During the year ended December 31, 1999, the Company received payments of $27.5 million and in the quarter ended September 30, 2000, the Company received a final cash payment of $17.0 million. Pursuant to generally accepted accounting principles, the costs of reconstructing and replacing property damaged or destroyed in the accident were recorded in the applicable property accounts, and the difference between the net book value of the assets damaged or destroyed and the related insurance recovery was included in operations. During the first half of 1999 and during the third quarter of 2000, the Company recorded credits to cost of goods sold of $6.0 million and $9.1 million, respectively. (continued) 7 8 (6) Comprehensive income is determined as follows: Comprehensive Income (in thousands)
Three Months Ended Sept. 30, Nine Months Ended Sept. 30, --------------------------- --------------------------- 2000 1999 2000 1999 ------- ------- ------- ------- Net income $15,256 $ 3,776 $84,038 $61,605 Other comprehensive loss (income): Foreign currency translation adjustment 8,294 (482) 18,425 9,130 ------- ------- ------- ------- Comprehensive income $ 6,962 $ 4,258 $65,613 $52,475 ======= ======= ======= =======
(7) The Company's basic earnings per share are based upon the weighted average common shares outstanding during the period. The Company's diluted earnings per share are based upon the weighted average outstanding common shares and common share equivalents. (8) Net income as set forth in the statements of operations is used in the computation of basic and diluted earnings per share information. Reconciliations of shares used in the computations of earnings per share are as follows (in thousands):
Three Months Ended Sept. 30, Nine Months Ended Sept. 30, ---------------------------- --------------------------- 2000 1999 2000 1999 ------ ------ ------ ------ Weighted average common shares outstanding used in the computation of basic earnings per share 38,034 39,893 38,076 39,853 Effect of dilutive securities: Non-vested restricted shares 7 77 7 77 Stock options 191 305 87 173 ------ ------ ------ ------ Weighted average common shares and equivalents used in the computation of diluted earnings per share 38,232 40,275 38,170 40,103 ====== ====== ====== ======
(continued) 8 9 (9) The table below represents the Company's operating results by segment:
(in thousands) Three Months Ended Sept. 30, Nine Months Ended Sept. 30, ----------------------------- ------------------------------ 2000 1999 2000 1999 --------- ----------- ----------- ----------- Net sales: Engineered Systems Group $ 376,971 $ 355,572 $ 1,112,592 $ 1,056,092 York Refrigeration Group 242,484 274,632 735,198 564,807 Unitary Products Group 264,932 274,010 786,187 826,186 Bristol Compressors 106,083 111,928 430,211 463,232 Eliminations (43,767) (45,782) (158,611) (145,136) --------- ----------- ----------- ----------- $ 946,703 $ 970,360 $ 2,905,577 $ 2,765,181 ========= =========== =========== =========== Eliminations include the following intersegment sales: Engineered Systems Group $ 9,021 $ 7,004 $ 32,645 $ 19,603 York Refrigeration Group 6,687 8,717 26,368 26,380 Unitary Products Group 250 583 1,354 1,716 Bristol Compressors 27,809 29,478 98,244 97,437 --------- ----------- ----------- ----------- Eliminations $ 43,767 $ 45,782 $ 158,611 $ 145,136 ========= =========== =========== =========== Income from operations: Engineered Systems Group $ 28,086 $ 26,445 $ 84,343 $ 76,189 York Refrigeration Group 16,582 16,108 45,167 28,313 Unitary Products Group 20,032 23,876 59,475 81,783 Bristol Compressors 3,751 11,436 44,916 52,248 Eliminations, general corporate expenses and other non-allocated items including acquisition, integration, restructuring, and other charges (44,780) (59,613) (97,500) (113,001) --------- ----------- ----------- ----------- $ 23,671 $ 18,252 $ 136,401 $ 125,532 Equity in earnings of affiliates: Engineered Systems Group $ (776) $ (232) $ (2,482) $ (1,127) York Refrigeration Group (103) (214) (604) (460) Unitary Products Group (327) (164) (1,251) (587) Bristol Compressors (418) (522) (1,358) (2,000) --------- ----------- ----------- ----------- $ (1,624) $ (1,132) $ (5,695) $ (4,174) Earnings before interest and taxes: Engineered Systems Group $ 28,862 $ 26,677 $ 86,825 $ 77,316 York Refrigeration Group 16,685 16,322 45,771 28,773 Unitary Products Group 20,359 24,040 60,726 82,370 Bristol Compressors 4,169 11,958 46,274 54,248 Eliminations, general corporate expenses and other non-allocated items including acquisition, integration, restructuring, and other charges (44,780) (59,613) (97,500) (113,001) --------- ----------- ----------- ----------- $ 25,295 $ 19,384 $ 142,096 $ 129,706 Gain on sale of businesses -- (9,627) (26,902) (9,627) Interest expense, net 20,548 19,063 60,779 41,735 --------- ----------- ----------- ----------- Income before income taxes and cumulative effect of accounting change $ 4,747 $ 9,948 $ 108,219 $ 97,598 Provision (benefit) for income taxes (10,509) 6,172 24,181 35,096 --------- ----------- ----------- ----------- Income before cumulative effect of accounting change $ 15,256 $ 3,776 $ 84,038 $ 62,502 ========= =========== =========== ===========
(continued) 9 10
September 30, 2000 December 31, 1999 ------------------ ----------------- Total assets: Engineered Systems Group $ 771,709 $ 712,119 York Refrigeration Group 631,848 680,453 Unitary Products Group 631,399 560,776 Bristol Compressors 224,410 217,792 Eliminations and other non-allocated assets 582,899 703,399 ---------- ------------ $ 2,842,265 $ 2,874,539 ============ ============
(10) In January 1999, the Company recorded a charge of $0.9 million, net of $0.4 million in related income taxes, to write-off start-up activities in accordance with AICPA Statement of Position 98-5, "Reporting on the Costs of Start-Up Activities." (11) On June 10, 1999, the Company acquired all of the outstanding capital stock of Sabroe A/S (Sabroe), a Danish company, for $407.1 million in cash and assumed debt of $216.0 million. Sabroe is a world leader in supplying refrigeration systems and products. In connection with the acquisition and subsequent restructuring, the following were considered in the allocation of the purchase price: acquisition expenses of $7.3 million; deferred taxes of $30.4 million; non-cash write-downs of $4.4 million and other accruals of $11.8 million. During the execution of the integration plan, additional costs were incurred and accrued, resulting in an increase to the unallocated excess of cost over net assets acquired. These costs were $5.2 million for fixed asset write-downs, primarily at the Norrkoping and Retech plants, and additional accruals of $3.2 million primarily for severance costs for workforce reductions. During the third quarter of 2000, additional deferred tax assets were recognized relating to pre-acquisition loss carryforwards resulting in a decrease to the unallocated excess of cost over net assets acquired of $9.0 million. The Company has nearly completed executing the plan for integrating Sabroe into the York Refrigeration Group. The Sabroe portion of the plan included closing two plants, closing certain duplicate sales and service offices in Europe and Asia, rationalizing products, workforce reductions and other costs. The Retech and Norrkoping manufacturing plants in Denmark and Sweden, respectively, are closed and have no remaining production. The table below details the activities in the first three quarters of 2000.
Additional Accruals Remaining Established in 2000 Utilized in Remaining Accruals at to Finalize Nine Months Ended Accruals at (in thousands) December 31, 1999 Integration September 30, 2000 September 30, 2000 ------------ ----------------- ----------- ------------------ ------------------ Severance costs $5,897 $2,928 $5,187 $3,638 Contractual obligations 1,575 - 327 1,248 Other 356 241 489 108 ------ ------ ------ ------ $7,828 $3,169 $6,003 $4,994 ===== ====== ====== ======
The acquisition has been accounted for under the purchase method of accounting and the Sabroe assets, liabilities and results of operations, since acquisition, have been included in the consolidated financial statements. The allocation of the purchase price and other costs as discussed above resulted in the following components of intangible assets, based on independent appraisals and other information, and related straight-line amortization periods:
(in thousands) Intangible Assets Amortization period ------------ ----------------- ------------------- Unallocated excess of cost over net assets acquired $442,537 30 years Trademark and tradenames 35,480 30 years Proprietary technology and patents 2,050 15 years -------- Total intangibles $480,067 ========
The following unaudited pro forma summary combines the consolidated results of operations of the Company and Sabroe as if the acquisition had occurred at the beginning of 1999. The pro forma summary includes adjustments for amortization expense as a result of unallocated excess of cost over net assets acquired and other intangible assets as presented above, interest expense on acquisition debt issued to finance the purchase, adjusted depreciation expense as a result of new fixed assets bases, and estimated (continued) 10 11 income tax effect of the pro forma adjustments. The pro forma summary is for informational purposes only and may not necessarily reflect the results of operations of the Company had Sabroe operated as part of the Company for the periods presented.
Nine Months Ended September 30, 2000 1999 1999 (thousands, except per share data) Historical Historical Pro forma -------------------------------- ---------- ---------- --------- Net sales $2,905,577 $2,765,181 $2,998,753 Income before cumulative effect of accounting change 84,038 62,502 53,488 Net income 84,038 61,605 52,591 Diluted earnings per share: Income before cumulative effect of accounting change $ 2.20 $ 1.56 $ 1.33 Net income $ 2.20 $ 1.54 $ 1.31
(12) In February 2000, the Company sold Northfield Freezing Systems, a supplier to the food processing industry, to FMC Corporation for $39.4 million. In April 2000, the Company sold another small business for $2.4 million. The sale of the two businesses resulted in a net pretax gain of $26.9 million in the first half of 2000. (13) In the third quarter of 2000, the Company recorded $28.7 million in charges related to cost reduction actions. The actions include closures and divestitures, product line and facility rationalizations, and selling, general and administrative expense reductions. The charges included $16.7 million for the impairment of fixed assets and the unallocated excess of cost over net assets acquired relating to facilities to be closed or divested, write-downs of other assets of $6.9 million, accruals for severance related costs of $2.8 million, and other accruals of $2.3 million. Also, the Company recorded charges in cost of goods sold of $4.5 million relating to inventory write-downs and warranty accruals related to these cost reduction activities. (14) During the last three quarters of 1999, the Company recorded charges to operations of $54.5 million in acquisition, integration, restructuring and other charges. York Refrigeration Group charges of $35.0 million related to acquisition, integration and restructuring cost for integrating Sabroe into the York Refrigeration business and, in accordance with applicable accounting rules, were not allocated as part of the purchase price. This portion of the integration plan included closing York's Gram manufacturing plant in Denmark, closing or downsizing certain duplicate sales and service offices in Europe, product rationalizations, and workforce reductions. Other Company charges of $19.5 million, not impacted by the Sabroe acquisition, related to restructuring, downsizing and other costs. The following provides details on activities in the first three quarters of 2000. YORK REFRIGERATION GROUP CHARGES
Remaining Utilized in Remaining Accruals at Nine Months Ended Accruals at (In thousands) December 31, 1999 September 30, 2000 September 30, 2000 ------------ ----------------- ------------------ ------------------ Severance costs $1,426 $ 811 $ 615 Contractual obligations 554 11 543 Other 50 17 33 ------ ------- -------- $2,030 $ 839 $ 1,191 ====== ======= ========
The Company recorded a net credit of $0.2 million and net expenses of $1.0 million in the third quarter and the first three quarters of 2000, respectively, for York Refrigeration Group integration activities. (continued) 11 12 OTHER COMPANY CHARGES
Remaining Utilized in Remaining Accruals at Nine Months Ended Accruals at (in thousands) December 31, 1999 September 30, 2000 September 30, 2000 ------------ ----------------- ------------------ ------------------ Severance costs $4,318 $3,974 $ 344 Contractual obligations 1,535 591 944 ------ ------ ------- $5,853 $4,565 $ 1,288 ====== ====== =======
In the third quarter of 1999, the Company recorded a charge in cost of goods sold of $17.5 million to write-down inventory to the lower of cost or market. Integration of the Refrigeration business, principally discontinuation of Gram product lines resulted in $6.1 million of the inventory write-down. Deteriorating economic conditions in Latin America and Eastern Europe resulted in inventory write-downs of $3.5 million and $4.1 million, respectively. Faulty gas engines in a UPG unit accounted for additional inventory write-downs of $2.8 million. The remaining $1.0 million of inventory write-downs related to ESG operations in the U.S. and Australia. The Company recorded a net credit of $0.9 million during the third quarter of 2000 relating to these prior charges. (15) The benefit for income taxes for the three months ended September 30, 2000 was $10.5 million. The benefit arose primarily from the recognition of certain deferred tax benefits resulting from the integration of the Sabroe acquisition and the utilization of certain foreign net operating loss carryforwards. The provision for income taxes for the nine months ended September 30, 2000 was $24.2 million. The effective rate was 22.3% for the first nine months of 2000 compared to 36.0% for the same period of 1999. The lower effective tax rate resulted from the third quarter events described above, offset in part by the tax effect of the gain on the Northfield sale. The tax rate from normal operations was 31% for the nine months ended September 30, 2000. (16) Reference is made to Registrant's 1999 Annual Report on Form 10-K for more detailed financial statements and footnotes. 12 13 PART I - FINANCIAL INFORMATION YORK INTERNATIONAL CORPORATION AND SUBSIDIARIES ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations
Net Sales (in thousands) Three Months Ended Sept. 30, Nine Months Ended Sept. 30, ---------------------------- ------------------------------- 2000 1999 2000 1999 --------- --------- ----------- ----------- Engineered Systems Group $ 376,971 $ 355,572 $ 1,112,592 $ 1,056,092 York Refrigeration Group 242,484 274,632 735,198 564,807 Unitary Products Group 264,932 274,010 786,187 826,186 Bristol Compressors 106,083 111,928 430,211 463,232 Eliminations (43,767) (45,782) (158,611) (145,136) --------- --------- ----------- ----------- Net Sales $ 946,703 $ 970,360 $ 2,905,577 $ 2,765,181 ========= ========= =========== =========== U.S. 52% 51% 50% 55% Non-U.S 48% 49% 50% 45% --------- --------- ----------- ----------- Total 100% 100% 100% 100% ========= ========= =========== ===========
Net sales for the three months ended September 30, 2000 decreased 2.4% to $946.7 million from $970.4 million for the same period in 1999. Net sales for the nine months ended September 30, 2000 increased 5.1% to $2,905.6 million as compared to $2,765.2 million for the nine months ended September 30, 1999. From a geographic perspective, for the three months ended September 30, 2000, U.S. sales decreased 1.6% to $489.2 million and non-U.S sales decreased 3.3% to $457.5 million. Order backlog at September 30, 2000 was $1,057.2 million compared to $1,149.0 million as of September 30, 1999 and $1,065.1 million as of December 31, 1999. Engineered Systems Group (ESG) sales for the three months ended September 30, 2000 increased 6.0% to $377.0 million from $355.6 million for the same period in 1999. Year-to-date sales increased 5.3% to $1,112.6 million. The increase in sales was primarily the result of strength in the global service business and increased equipment sales in North America, partially offset by the sale of Viron in the third quarter of 1999. York Refrigeration Group (YRG) sales for the three months ended September 30, 2000 decreased 11.7% to $242.5 million from $274.6 million for the same period in 1999. The decrease was the result of negative currency translation effects and the divestiture of Northfield Freezing Systems. Year-to-date sales increased 30.2% to $735.2 million. The increase was due to the acquisition of Sabroe, partially offset by the divestiture of Northfield and negative currency translation effects. Unitary Products Group (UPG) sales for the three months ended September 30, 2000 decreased 3.3% to $264.9 million from $274.0 million for the same period in 1999. Year-to-date sales decreased 4.8% to $786.2 million. The sales decrease was a result of a decline in the domestic unitary market, weakness in the manufactured housing business, and the impact of higher than normal levels of inventory in the distribution channels. Bristol Compressors sales for the three months ended September 30, 2000 decreased 5.2% to $106.1 million from $111.9 million for the same period in 1999. Year-to-date sales decreased 7.1% to $430.2 million. The decline was due to a reduction in room air conditioner compressor sales and a weaker domestic unitary market. In the third quarter of 2000, the Company settled an insurance claim relating to the Grantley accident, and recorded a $9.1 million benefit to cost of goods sold. This benefit is partially offset by an unrelated settlement of $2.8 million (continued) 13 14 due to a claim from a 1991 project. In 1999, the Company recorded credits to cost of goods sold of $6.0 million relating to the Grantley insurance claim. In the third quarter of 2000, the Company recorded charges in cost of goods sold of $4.5 million relating to inventory write-downs and warranty accruals for cost reduction activities. In the third quarter of 1999, the Company recorded a charge in cost of goods sold of $17.5 million to write-down inventory to the lower of cost or market. Integration of the Refrigeration business, principally discontinuation of Gram product lines resulted in $6.1 million of the inventory write-down. Deteriorating economic conditions in Latin America and Eastern Europe resulted in inventory write-downs of $3.5 million and $4.1 million, respectively. Faulty gas engines in a UPG unit accounted for additional inventory write-downs of $2.8 million. The remaining $1.0 million of inventory write-downs related to ESG operations in the U.S. and Australia. The Company recorded a net credit of $0.9 million during the third quarter of 2000 relating to these prior charges. Excluding all charges discussed above and $0.5 million of operating costs related to the current year cost reduction initiatives, gross profit during the third quarter ended September 30, 2000 decreased 3.2% to $199.9 million (21.1% of sales) from $206.6 million (21.3% of sales) during the third quarter ended September 30, 1999. The decrease is primarily due to Bristol's reduction in production volume due to order cancellations for the fourth quarter of 2000. Gross profit for the nine months ended September 30, 2000 increased 5.7% to $637.8 million (22.0% of sales) from $603.6 million (21.8% of sales) during the same nine months of 1999. The increase is primarily due to the impact of the acquisition of Sabroe, partially offset by negative currency translation effects. Selling, general and administrative expense (SG&A), exclusive of $0.6 million relating to the current year cost reduction actions, increased 0.5% to $149.4 million (15.8% of sales) in the third quarter ended September 30, 2000 from $148.7 million (15.3% of sales) in the third quarter ended September 30, 1999. For the nine months ended September 30, 2000, SG&A expense increased to $473.4 million (16.3% of sales) compared to $425.4 million (15.4% of sales) for the nine months ended September 30, 1999. The increase in dollars and percentage is primarily due to increased goodwill amortization, the full impact of the Sabroe acquisition, and increased spending in engineering and marketing at UPG. Included in SG&A for the first two quarters of 2000 are executive severance costs of $6.7 million. In September 2000, the Company announced initiation of a cost reduction process designed to result in savings of $25 million to $30 million in 2001, and continuing annual savings of $50 million to $60 million thereafter. Total pre-tax charges to implement the cost reduction program are estimated to approximate $120 million through the second quarter of 2001, of which $70 million will require cash payments. In the third quarter of 2000, the Company recorded $33.2 million in charges related to these cost reduction actions, including the $4.5 million charged to cost of goods sold as discussed above. The actions include closures and divestitures, product line and facility rationalizations, and selling, general and administrative expense reductions. The charges included $16.7 million for the impairment of fixed assets and the unallocated excess of cost over net assets acquired relating to facilities to be closed or divested, write-downs of other assets of $6.9 million, accruals for severance related costs of $2.8 million, and other accruals of $2.3 million. The Company also recorded a net credit of $0.2 million and net expenses of $1.0 million in the third quarter and the first three quarters of 2000, respectively, for York Refrigeration Group integration activities. In the third quarter of 1999, the Company recorded charges of $10.0 million related to the integration of Sabroe into the York Refrigeration business and $12.2 million for restructuring and downsizing other Company operations. In the second quarter of 1999, the Company recorded acquisition and integration charges of approximately $13.0 million. Equity in earnings of affiliates was $1.6 million during the third quarter of 2000 as compared to $1.1 million during the third quarter of 1999. Year-to-date equity in earnings of affiliates was $5.7 million in 2000 compared to $4.2 million in 1999. This improvement is primarily attributable to better performance of the Company's joint ventures in Malaysia. During the third quarter of 2000, earnings before interest and taxes (EBIT), excluding restructuring charges, integration expenses, certain one-time settlements, and the inventory write-downs, decreased to $52.1 million (5.5% of sales) from $59.1 million (6.1% of sales) in 1999. EBIT, excluding special charges, for the nine months ended (continued) 14 15 September 30, 2000 was $176.9 million (6.1% of sales) compared to $182.4 million (6.6% of sales) for the same nine months of 1999. The discussion below of each business unit's EBIT excludes the restructuring charges, integration expenses, charges for executive severance, certain one-time settlements, and the inventory write-downs as discussed above. ESG EBIT for the three months ended September 30, 2000 increased 8.2% to $28.9 million (7.7% of sales) from $26.7 million (7.5% of sales) for the same period in 1999. EBIT for the nine months ended September 30, 2000 was $86.8 million compared to $77.3 million in 1999. The improvement was the result of the performance of the global service business, strong North American equipment sales, the successful introduction of new products, and improved factory performance. YRG EBIT for the three months ended September 30, 2000 increased to $16.7 million (6.9% of sales) from $16.3 million (5.9% of sales) for the same period in 1999. EBIT for the nine months ended September 30, 2000 was $45.8 million compared to $28.8 million in 1999. The improvement was primarily due to the acquisition of Sabroe and resulting cost synergies, partially offset by negative currency translations effects. UPG EBIT for the three months ended September 30, 2000 decreased to $20.4 million (7.7% of sales) from $24.0 million (8.8% of sales) for the same period in 1999. EBIT for the nine months ended September 30, 2000 was $60.7 million compared to $82.4 million in 1999. EBIT decreased as a result of lower volume, increased investments in engineering, product development and marketing, and lower margins in European unitary operations. Bristol Compressors EBIT for the three months ended September 30, 2000 decreased to $4.2 million (3.9% of sales) from $12.0 million (10.7% of sales) for the same period in 1999. EBIT for the nine months ended September 30, 2000 was $46.3 million compared to $54.2 million in 1999. The decrease reflected volume effects of a significant decline in production versus 1999 due to the cancellation of orders for the fourth quarter of 2000 and reduced margins. In February 2000, the Company sold Northfield Freezing Systems, a supplier to the food processing industry, to FMC Corporation for $39.4 million. In April 2000, the Company sold another small business for $2.4 million. The sale of the two businesses resulted in a net pretax gain of $26.9 million in the first half of 2000. Net interest expense increased to $20.5 million for the third quarter of 2000. Interest expense was $60.8 million for the nine months ended September 30, 2000 compared to $41.7 million for the nine months ended September 30, 1999. The increase is due to higher interest rates and higher debt levels related to the acquisition of Sabroe. In January of 1999, the Company recorded a $0.9 million charge, net of a $0.4 million tax benefit, to write-off start-up activities in accordance with AICPA Statement of Position 98-5, "Reporting on The Costs of Start-Up Activities. The benefit for income taxes for the three months ended September 30, 2000 was $10.5 million. The benefit arose primarily from the recognition of certain deferred tax benefits resulting from the integration of the Sabroe acquisition and the utilization of certain foreign net operating loss carryforwards. The provision for income taxes for the nine months ended September 30, 2000 was $24.2 million. The effective rate was 22.3% for the first nine months of 2000 compared to 36.0% for the same period of 1999. The lower effective tax rate resulted from the third quarter events described above, offset in part by the tax effect of the gain on the Northfield sale. The tax rate from normal operations was 31% for the nine months ended September 30, 2000. Net income, as a result of the above factors, was $15.3 million during the third quarter of 2000 as compared to $3.8 million during the third quarter of 1999. For the nine months ended September 30, 2000, net income increased to $84.0 million compared to $61.6 million in the first nine months of 1999. Liquidity and Capital Resources Working capital requirements are generally met through a combination of internally generated funds, bank lines of credit, commercial paper issuances, financing of trade receivables and credit terms from suppliers which approximate receivable terms to the Company's customers. The Company believes that these sources, including its $400 million 364-day Amended Revolver and its $500 million Amended Credit Agreement described below, will be (continued) 15 16 sufficient to meet foreseeable working capital needs. Additional sources of working capital include customer deposits and progress payments. Working capital was $597.0 million and $485.2 million as of September 30, 2000 and December 31, 1999, respectively. Inventory levels were higher at September 30, 2000, than at December 31, 1999, due to seasonal inventory builds and increased levels in anticipation of factory consolidations. Accounts payable and accrued expenses were lower at September 30, 2000, than at December 31, 1999, due to a decrease in accruals related to the Sabroe acquisition and other Company charges. The current ratio was 1.66 at September 30, 2000, as compared to 1.48 at December 31, 1999. Long-term indebtedness was $883.4 million at September 30, 2000, primarily consisting of borrowings of $443.3 million in commercial paper, $300.0 million of senior notes, $56.7 million in bank lines and $37.6 million in Danish term loans. At September 30, 2000, the Company had available a $400 million 364-day Amended Revolving Credit Agreement (the Revolver) expiring on May 31, 2001 and a $500 million Amended Credit Agreement (the Credit Agreement) expiring on July 31, 2002. The Revolver and the Credit Agreement were amended as of October 4, 2000 to provide for charges relating to the cost reduction process. The facilities provide for borrowings at LIBOR plus 0.45%. If borrowings greater than 33% of either facility are utilized, the rate increases to LIBOR plus 0.55%. The Company pays an annual fee of 0.10% for each facility and the Credit Agreement allows for borrowings at specified bid rates. At September 30, 2000, the three-month LIBOR rate was 6.77%. The Revolver and the Credit Agreement, as amended, contain financial and operating covenants requiring the Company to maintain certain financial ratios and standard provisions limiting leverage, investments and liens. The Company was in compliance with these financial and operating covenants at September 30, 2000. No amounts were outstanding under either of these agreements. The Company has additional short-term bank lines that provide for total borrowings of $175 million which are expected to be reborrowed in the ordinary course of business on a long-term basis. At September 30, 2000 and December 31, 1999, the Company had $58.3 million and $41.8 million, respectively, outstanding under these bank lines. Commercial paper borrowings are expected to be reborrowed in the ordinary course of business. Commercial paper borrowings were also the primary source of funds used to finance the acquisition of Sabroe A/S. The interest rate on the commercial paper was 6.68% as of September 30, 2000. At September 30, 2000 and December 31, 1999, the Company had $300 million of Senior Notes outstanding. On June 1, 1998, the Company issued $200 million of 6.70% fixed rate Senior Notes having a maturity of ten years from the date of issue. The remaining $100 million ten-year Senior Notes bear interest at a 6.75% fixed rate and are due March 2003. The Company maintains foreign currency term loans at September 30, 2000 of $50.0 million payable in semi-annual payments. These term loans are due July 2004 and bear interest at an average rate of 4.11%. Concerning bank loans and other, the Company's non-U.S. subsidiaries maintain bank credit facilities in various currencies that provided for available borrowings of $244.1 million and $385.1 million at September 30, 2000 and December 31, 1999, respectively, of which $189.9 million and $295.1 million, respectively, were unused. In some instances, borrowings against these credit facilities have been guaranteed by the Company to assure availability of funds at favorable rates. The Company also maintains other debt of $55.2 million and $57.2 million at September 30, 2000 and December 31, 1999, respectively. The Company established a receivables sales agreement in 1992. Under an Amended and Restated Receivables Sales Agreement entered into on December 22, 1999 and amended October 20, 2000, the maximum amount of the purchasers' investment increased from $150 million to $175 million and is subject to decrease based on the level of eligible accounts receivable and restrictions on concentrations of receivables. The balance of the sold accounts receivable was $175 million at September 30, 2000 and at December 31, 1999. The sold accounts receivable are reflected as a reduction of receivables in the accompanying consolidated balance sheets. The discount rate on the receivables sold was approximately 6.62% and 6.22% at September 30, 2000 and December 31, 1999, respectively. (continued) 16 17 Because the Company's obligations under the Amended and Restated Credit Agreement and Receivables Sales Agreement bear interest at floating rates, the Company's interest costs are sensitive to changes in prevailing interest rates. Based on historical cash flows, the Company believes that it will be able to satisfy its principal and interest payment obligations and its working capital and capital expenditure requirements from operating cash flows together with the availability under the revolving credit facility. In the ordinary course of business, the Company enters into various types of transactions that involve contracts and financial instruments with off-balance-sheet risk. The Company enters into these financial instruments to manage financial market risk, including foreign exchange, commodity price and interest rate risk. The Company enters into these financial instruments utilizing over-the-counter as opposed to exchange traded instruments. The Company mitigates the risk that counterparties to these over-the-counter agreements will fail to perform by only entering into agreements with major international financial institutions. Capital expenditures were $67.6 million for the nine months ended September 30, 2000 as compared to $70.9 million for the same period of 1999. Capital expenditures currently anticipated for expanded capacity, cost reductions and the introduction of new products during the next twelve months are expected to be in excess of depreciation and amortization. These expenditures will be funded from a combination of operating cash flows, availability under the revolving credit facility, and commercial paper borrowings. Cash dividends of $0.15 per share were paid on common stock in the third quarter of 2000. The declaration and payment of future dividends will be at the sole discretion of the Board of Directors and will depend upon such factors as the Company's profitability, financial condition, cash requirements, future prospects and other factors deemed relevant by the Board of Directors. Acquisition of Sabroe and the Integration Plan In June 1999, the Company acquired all of the outstanding capital stock of Sabroe A/S (Sabroe), a Danish company, for $407.1 million in cash and assumed debt of $216.0 million. Sabroe is a world leader in supplying refrigeration systems and products. The Company financed the acquisition through issuance of commercial paper, supported by its credit facilities. The Company has nearly completed executing the plan for integrating Sabroe into the York Refrigeration Group. The Sabroe portion of the plan included closing two plants, closing certain duplicate sales and service offices in Europe and Asia, rationalizing products, workforce reductions and other costs. The Retech and Norrkoping manufacturing plants in Denmark and Sweden, respectively, are closed and have no remaining production. New Accounting Standards In 1998, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 133, "Accounting for Derivative Instruments and Hedging Activities." The Standard establishes comprehensive accounting and reporting standards for derivative instruments and hedging activities that require a company to record the derivative instrument at fair value in the balance sheet. Furthermore, the derivative instrument must meet specific criteria or the change in its fair value is to be recognized in earnings in the period of change. To achieve hedge accounting treatment the derivative instrument needs to be part of a well- documented hedging strategy that describes the exposure to be hedged, the objective of the hedge and a measurable definition of its effectiveness in hedging the exposure. In 1999, the FASB issued SFAS No. 137, "Accounting for Derivative Instruments and Hedging Activities - Deferral of the Effective Date of SFAS No. 133." SFAS No. 137 delays the Standard effective date to the beginning of the first quarter of the fiscal year beginning after June 15, 2000. In June 2000, the FASB issued SFAS No. 138, "Accounting for Certain Derivative Instruments and Certain Hedging Activities" which amends SFAS No.133 in certain respects. Although the Company has not completed its analysis, adoption of these statements is not expected to have a material effect on the Company's financial statements. (continued) 17 18 In September 2000, the FASB issued SFAS No. 140, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities." The Standard replaces SFAS No. 125 and revises the standards for accounting for securitizations and other transfers of financial assets and collateral and requires certain disclosures. The Standard is effective for transfers and servicing of financial assets and extinguishments of liabilities occurring after March 31, 2001, and for recognition and reclassification of collateral and for disclosures relating to securitization transactions and collateral for fiscal years ending after December 15, 2000. The Company has not determined the effect, if any, adoption of this standard will have on the Company's financial statements. Forward-Looking Information - Risk Factors To the extent the Company has made "forward-looking statements," certain risk factors could cause actual results to differ materially from those anticipated in such forward-looking statements including, but not limited to, competition, government regulation, environmental considerations, weather, and the successful implementation of the Company's cost reduction actions. Unseasonably cool spring or summer weather could continue to adversely affect the Company's UPG residential air conditioning business. The ESG air conditioning business could be affected by a slowdown in the large chiller market and by the acceptance of new product introductions. YRG could continue to be adversely affected by the effects of declining European currencies. In addition, overall performance of the Company could be affected by any serious economic downturns in various world markets. 18 19 YORK INTERNATIONAL CORPORATION AND SUBSIDIARIES PART II - OTHER INFORMATION Item 1 Legal Proceedings Not Applicable Item 2 Changes in Securities Not Applicable Item 3 Defaults Upon Senior Securities Not Applicable Item 4 Submission of Matters to a Vote of Security Holders Not Applicable Item 5 Other Information Not Applicable Item 6 Exhibits and Reports on Form 8-K (a) Exhibit 4.1 - SECOND AMENDMENT, dated as of October 4, 2000, to the 364-Day Revolving Credit Agreement, among YORK INTERNATIONAL CORPORATION, the several banks and other financial institutions from time to time parties thereto and CANADIAN IMPERIAL BANK OF COMMERCE, acting through its New York Agency, as administrative agent for the Banks thereunder Exhibit 4.2 - FOURTH AMENDMENT, dated as of October 4, 2000, to the Amended and Restated Credit Agreement, among YORK INTERNATIONAL CORPORATION, the several banks and other financial institutions from time to time parties thereto and CANADIAN IMPERIAL BANK OF COMMERCE, acting through its New York Agency, as agent for the Banks thereunder Exhibit 4.3 - FIFTH AMENDMENT TO AMENDED AND RESTATED RECEIVABLES SALE AGREEMENT, among York International Corporation, Asset Securitization Cooperative Corporation and Canadian Imperial Bank of Commerce Exhibit 10.1 - Amendment No. 3 to the York International Corporation Amended and Restated 1992 Omnibus Stock Plan, effective July 27, 2000 Exhibit 10.2 - Settlement Agreement and General Release by and between John R. Tucker and York International Corporation, dated August 7, 2000 Exhibit 10.3 - Fourth Amendment to the York International Corporation Executive Deferred Compensation Plan, effective as of October 1, 2000 Exhibit 27 Financial Data Schedule (EDGAR only) (b) None 19 20 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned unto duly authorized. YORK INTERNATIONAL CORPORATION Registrant Date November 8, 2000 /S/ C. David Myers ---------------- --------------------------------- C. David Myers Corporate Vice President and Chief Financial Officer 20 EX-4.1 2 w42120ex4-1.txt SECOND AMENDMENT CREDIT AGREEMENT 1 Exhibit 4.1 SECOND AMENDMENT, dated as of October 4, 2000 (this "Amendment"), to the 364-Day Revolving Credit Agreement dated as of June 3, 1999, as amended by the First Amendment thereto, dated as of June 1, 2000 (as the same may be further amended, supplemented or otherwise modified from time to time, the "Credit Agreement"), among YORK INTERNATIONAL CORPORATION, a Delaware corporation (the "Company"), the several banks and other financial institutions from time to time parties thereto (collectively, the "Banks"; individually a "Bank") and CANADIAN IMPERIAL BANK OF COMMERCE, acting through its New York Agency, as administrative agent for the Banks thereunder (in such capacity, the "Administrative Agent"). W I T N E S S E T H : WHEREAS, the Company, the Banks and the Administrative Agent are parties to the Credit Agreement; WHEREAS, the Company, the Administrative Agent and the Banks desire to amend the Credit Agreement in the manner provided for herein; NOW THEREFORE, in consideration of the foregoing, the parties hereto agree as follows: 1. Defined Terms. Unless otherwise defined herein, terms which are defined in the Credit Agreement and used herein as defined terms are so used as so defined. Unless otherwise indicated, all Section, subsection and Schedule references are to the Credit Agreement. 2. Amendments to Subsection 1.1. (a) Subsection 1.1 of the Credit Agreement is hereby amended by deleting the definition of "Consolidated EBIT" contained therein in its entirety and inserting in lieu thereof the following definition: "Consolidated EBIT": for any period, Consolidated Net Income for such period (excluding, however, (a) any gains from the sale or other disposition of assets (other than sales of inventory in the ordinary course of business), (b) the effect of non-recurring restructuring charges in an amount not to exceed $50,000,000 incurred prior to December 31, 1999 in connection with the Acquisition and the integration of the operations of Sabroe with those of the Company and its Subsidiaries, (c) any non-recurring charges incurred prior to July 1, 2001, in an aggregate amount not to exceed $110,000,000 in connection with the profit enhancement initiatives announced in the Company's earnings release for the third fiscal quarter of 2000, and (d) any other extraordinary or non-recurring gains), before deduction for income taxes and Consolidated Interest Expense, determined in accordance with GAAP. 2 2 (b) Subsection 1.1 of the Credit Agreement is hereby amended by deleting the definition of "Consolidated Net Worth" contained therein in its entirety and inserting in lieu thereof the following definition: "Consolidated Net Worth": at any particular date, all amounts which, in accordance with GAAP, would be included under stockholders' equity on a consolidated balance sheet of the Company and its Subsidiaries at such date, adjusted to exclude therefrom any effects on stockholders' equity resulting from any non-recurring charges incurred prior to July 1, 2001, in an aggregate amount not to exceed $110,000,000 in connection with the profit enhancement initiatives announced in the Company's earnings release for the third fiscal quarter of 2000. 3. Representations and Warranties. On and as of the date hereof and after giving effect to this Amendment and the transactions contemplated hereby, the Company hereby confirms, reaffirms and restates the representations and warranties set forth in Section 4 of the Credit Agreement, except to the extent that such representations and warranties expressly relate to a specific earlier date in which case the Company hereby confirms, reaffirms and restates such representations and warranties as of such earlier date, provided that the references to the Credit Agreement in such representations and warranties shall be deemed to refer to the Credit Agreement as in effect prior to the date hereof and as amended pursuant to this Amendment. 4. Effectiveness. This Amendment shall become effective upon satisfaction of each of the following conditions: (a) receipt by the Administrative Agent of counterparts of this Amendment duly executed and delivered by the Company and the Required Banks; and (b) the Fourth Amendment, dated as of the date hereof, to that certain Amended and Restated Credit Agreement dated as of July 21, 1995 and amended by the First Amendment thereto, dated as of May 28, 1997, the Second Amendment thereto, dated as of June 3, 1999, and the Third Amendment thereto, dated as of June 1, 2000, among the Company, the Administrative Agent, as Agent thereunder, and the several lenders party thereto shall have become effective, or the Administrative Agent shall be reasonably satisfied that such effectiveness shall occur concurrently with the effectiveness of this Amendment. 5. Continuing Effect; No Other Amendments. Except as expressly amended hereby, all of the terms and provisions of the Credit Agreement are and shall remain in full force and effect. The amendments provided for herein are limited to the specific sections of the Credit Agreement specified herein and shall not constitute amendments of, or an indication of the Administrative Agent's or the Banks' willingness to amend, any other provisions of the Credit Agreement or the same sections for any other date or time period (whether or not such other provisions or compliance with such sections for another date or time period are affected by the circumstances addressed in this Amendment). 6. Expenses. The Company agrees to pay and reimburse the Administrative Agent for all its reasonable costs and out-of-pocket expenses incurred in connection with the 3 3 preparation and delivery of this Amendment, including, without limitation, the reasonable fees and disbursements of counsel to the Administrative Agent. 7. Counterparts. This Amendment may be executed by one or more of the parties to this Amendment on any number of separate counterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument. A set of the copies of this Amendment signed by all the parties shall be lodged with the Company and the Administrative Agent. 8. GOVERNING LAW. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK. 4 IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed and delivered by their respective duly authorized officers as of the date first above written. YORK INTERNATIONAL CORPORATION By: ------------------------------------- Title: CANADIAN IMPERIAL BANK OF COMMERCE, NEW YORK AGENCY, as Agent By: ------------------------------------- Title: BANK OF AMERICA, N.A. as Syndication Agent and as a Bank By: ------------------------------------- Title: CITIBANK, N.A., as Documentation Agent and as a Bank By: ------------------------------------- Title: CIBC, INC., as a Bank By: ------------------------------------- Title: 5 BANCA COMMERCIALE ITALIANA - NEW YORK BRANCH By: ------------------------------------- Title: FLEET NATIONAL BANK By: ------------------------------------- Title: BANK OF TOKYO - MITSUBISHI TRUST COMPANY By: ------------------------------------- Title: BG BANK A/S By: ------------------------------------- Title: COMMERZBANK AKTIENGESELLSCHAFT, NEW YORK AND GRAND CAYMAN BRANCHES By: ------------------------------------- Title: By: ------------------------------------- Title: 6 DEN DANSKE BANK AKTIESELSKAB, CAYMAN ISLANDS BRANCH By: ------------------------------------- Title: FIRST UNION NATIONAL BANK By: ------------------------------------- Title: HSBC BANK USA By: ------------------------------------- Title: NATIONAL WESTMINSTER BANK PLC By: ------------------------------------- Title: PNC BANK, NATIONAL ASSOCIATION By: ------------------------------------- Title: 7 BANK OF NOVA SCOTIA By: ------------------------------------- Title: THE CHASE MANHATTAN BANK By: ------------------------------------- Title: ALLFIRST BANK By: ------------------------------------- Title: MERITA BANK PLC By: ------------------------------------- Title: ING BANK NV By: ------------------------------------- Title: EX-4.2 3 w42120ex4-2.txt FORTH AMENDMENT CREDIT AGREEMENT 1 Exhibit 4.2 FOURTH AMENDMENT, dated as of October 4, 2000 (this "Amendment"), to the Amended and Restated Credit Agreement, dated as of July 21, 1995, as amended by the First Amendment thereto, dated as of May 28, 1997, the Second Amendment thereto, dated as of June 3, 1999 and the Third Amendment thereto, dated as of June 1, 2000 (as the same may be further amended, supplemented or otherwise modified from time to time, the "Credit Agreement"), among YORK INTERNATIONAL CORPORATION, a Delaware corporation (the "Company"), the several banks and other financial institutions from time to time parties thereto (collectively, the "Banks"; individually a "Bank") and CANADIAN IMPERIAL BANK OF COMMERCE, acting through its New York Agency, as agent for the Banks thereunder (in such capacity, the "Agent"). W I T N E S S E T H : WHEREAS, the Company, the Banks and the Agent are parties to the Credit Agreement; WHEREAS, the Company, the Agent and the Banks desire to amend the Credit Agreement in the manner provided for herein; NOW THEREFORE, in consideration of the foregoing, the parties hereto agree as follows: 1. Defined Terms. Unless otherwise defined herein, terms which are defined in the Credit Agreement and used herein as defined terms are so used as so defined. Unless otherwise indicated, all Section, subsection and Schedule references are to the Credit Agreement. 2. Amendments to Subsection 1.1. (a) Subsection 1.1 of the Credit Agreement is hereby amended by deleting the definition of "Consolidated EBIT" contained therein in its entirety and inserting in lieu thereof the following definition: "Consolidated EBIT": for any period, Consolidated Net Income for such period (excluding, however, (a) any gains from the sale or other disposition of assets (other than sales of inventory in the ordinary course of business), (b) the effect of non-recurring restructuring charges in an amount not to exceed $50,000,000 incurred prior to December 31, 1999 in connection with the acquisition by the Company of Sabroe Refrigeration A/S and the integration of the operations of Sabroe Refrigeration A/S with those of the Company and its Subsidiaries, (c) any non-recurring charges incurred prior to July 1, 2001, in an aggregate amount not to exceed $110,000,000 in connection with the profit enhancement initiatives announced in the Company's earnings release for the third fiscal quarter of 2000, and (d) any other extraordinary or non-recurring gains), before deduction for income taxes and Consolidated Interest Expense, determined in accordance with GAAP. 2 2 (b) Subsection 1.1 of the Credit Agreement is hereby amended by deleting the definition of "Consolidated Net Worth" contained therein in its entirety and inserting in lieu thereof the following definition: "Consolidated Net Worth": at any particular date, all amounts which, in accordance with GAAP, would be included under stockholders' equity on a consolidated balance sheet of the Company and its Subsidiaries at such date, adjusted to exclude therefrom any effects on stockholders' equity resulting from any non-recurring charges incurred prior to July 1, 2001, in an aggregate amount not to exceed $110,000,000 in connection with the profit enhancement initiatives announced in the Company's earnings release for the third fiscal quarter of 2000. 3. Representations and Warranties. On and as of the date hereof and after giving effect to this Amendment and the transactions contemplated hereby, the Company hereby confirms, reaffirms and restates the representations and warranties set forth in Section 4 of the Credit Agreement, except to the extent that such representations and warranties expressly relate to a specific earlier date in which case the Company hereby confirms, reaffirms and restates such representations and warranties as of such earlier date, provided that the references to the Credit Agreement in such representations and warranties shall be deemed to refer to the Credit Agreement as in effect prior to the date hereof and as amended pursuant to this Amendment. 4. Effectiveness. This Amendment shall become effective upon satisfaction of each of the following conditions: (a) receipt by the Agent of counterparts of this Amendment duly executed and delivered by the Company and the Required Banks; and (b) the Second Amendment, dated as of the date hereof, to that certain 364-Day Revolving Credit Agreement dated as of June 3, 1999 and amended by the First Amendment thereto, dated as of June 1, 2000, among the Company, the Agent, as Administrative Agent thereunder, and the several lenders party thereto shall have become effective, or the Agent shall be reasonably satisfied that such effectiveness shall occur concurrently with the effectiveness of this Amendment. 5. Continuing Effect; No Other Amendments. Except as expressly amended hereby, all of the terms and provisions of the Credit Agreement are and shall remain in full force and effect. The amendments provided for herein are limited to the specific sections of the Credit Agreement specified herein and shall not constitute amendments of, or an indication of the Agent's or the Banks' willingness to amend, any other provisions of the Credit Agreement or the same sections for any other date or time period (whether or not such other provisions or compliance with such sections for another date or time period are affected by the circumstances addressed in this Amendment). 6. Expenses. The Company agrees to pay and reimburse the Agent for all its reasonable costs and out-of-pocket expenses incurred in connection with the preparation and delivery of this Amendment, including, without limitation, the reasonable fees and disbursements of counsel to the Agent. 3 3 7. Counterparts. This Amendment may be executed by one or more of the parties to this Amendment on any number of separate counterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument. A set of the copies of this Amendment signed by all the parties shall be lodged with the Company and the Agent. 8. GOVERNING LAW. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK. 4 IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed and delivered by their respective duly authorized officers as of the date first above written. YORK INTERNATIONAL CORPORATION By: -------------------------------- Title: CANADIAN IMPERIAL BANK OF COMMERCE, NEW YORK AGENCY, as Agent By: -------------------------------- Title: CIBC, INC. By: -------------------------------- Title: BANCA COMMERCIALE ITALIANA, NEW YORK BRANCH By: -------------------------------- Title: By: -------------------------------- Title: BANK OF AMERICA, N.A. By: -------------------------------- Title: 5 THE CHASE MANHATTAN BANK By: -------------------------------- Title: CITIBANK, N.A. By: -------------------------------- Title: COMMERZBANK AKTIENGESELLSCHAFT, NEW YORK AND GRAND CAYMAN BRANCHES By: -------------------------------- Title: By: -------------------------------- Title: FIRST UNION NATIONAL BANK By: -------------------------------- Title: BANK AUSTRIA CREDITANSTALT By: -------------------------------- Title: CREDIT SUISSE FIRST BOSTON (formerly known as Credit Suisse) By: -------------------------------- Title: By: -------------------------------- Title: 6 FLEET NATIONAL BANK By: -------------------------------- Title: ALLFIRST BANK By: -------------------------------- Title: HSBC BANK USA By: -------------------------------- Title: MORGAN GUARANTY TRUST COMPANY OF NEW YORK By: -------------------------------- Title: NATIONAL WESTMINSTER BANK PLC By: -------------------------------- Title: NATIONAL WESTMINSTER BANK PLC NASSAU BRANCH By: -------------------------------- Title: PNC BANK, NATIONAL ASSOCIATION By: -------------------------------- Title: 7 WESTPAC BANKING CORPORATION By: -------------------------------- Title: ING BANK NV By: -------------------------------- Title: EX-4.3 4 w42120ex4-3.txt FIFTH AMENDMENT TO AMENDED RECEIVABLES SALE AGR. 1 Exhibit 4.3 FIFTH AMENDMENT TO AMENDED AND RESTATED RECEIVABLES SALE AGREEMENT FIFTH AMENDMENT TO AMENDED AND RESTATED RECEIVABLES SALE AGREEMENT, dated as of October 20, 2000 (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 each of the parties hereto shall have executed and delivered one or more counterparts of this Amendment. Section 2. Amendment of the Receivables Sale Agreement. Clause (i) of Section 8.2.1(a) is hereby amended to read in its entirety as follows: (i) the Seller's long-term unsecured debt rating falls below BBB- by Standard & Poor's or Baa3 by Moody's Investors Service, Inc.; Section 3. Representations and Warranties. York hereby represents and warrants as follows: (i) 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. 2 (ii) 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). (iii) 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. (iv) 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 legality, validity or enforceability of the Receivables Sale Agreement (as amended hereby). Section 4. 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 5. 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 6. Governing Law. THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. Section 7. 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 8. 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. 2 3 Section 9. 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 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. Section 10. 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. 3 4 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 4 EX-10.1 5 w42120ex10-1.txt AMENDMENT 3 TO OMNIBUS STOCK PLAN 1 EXHIBIT 10.1 AMENDMENT NO. 3 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 July 27, 2000, authorized the following amendment to the York International Corporation Amended and Restated 1992 Omnibus Stock Plan (the "Plan"), effective July 27, 2000, pursuant to the authority granted it under Section 15 of the Plan: 1. Section 4 is hereby amended and restated in its entirety to read as follows: "4. SHARES AVAILABLE FOR THE PLAN; ANNUAL LIMIT ON GRANTS Subject to adjustments as provided in Section 14, as of any date the total number of shares of Common Stock with respect to which awards may be granted under the Plan shall be equal to 8,380,000 shares, provided that (i) any award of incentive stock options shall only be granted from the 4,380,000 shares as previously approved by the Company's stockholders and (ii) the number of restricted shares awarded under the Plan may not exceed 3% of the total number of shares of Common Stock outstanding at the time of any such award. Subject to adjustments as contemplated by Section 14, no person may be granted more than 200,000 restricted shares, or options to purchase more than 200,000 shares, during any one calendar year. If any grant under the Plan expires or terminates unexercised, becomes unexercisable or is forfeited or otherwise terminated or canceled as to any shares, the shares subject to such grants shall thereafter be available for further grants under the Plan unless such shares would not be deemed available for future grants pursuant to Rule 16b-3 of the Securities Exchange Act of 1934, as from time to time amended." 2. In all other respects, the Plan is hereby ratified and confirmed. * * * * * IN WITNESS WHEREOF, the Board has caused this Amendment No. 3 to be executed under seal by its duly authorized representative. 2 WITNESS/ATTEST: YORK INTERNATIONAL CORPORATION /s/ Jane G. Davis By: /s/ Gerald C. McDonough - -------------------------- ------------------------------------- Print Name: Jane G. Davis Print Name: Gerald C. McDonough --------------- ----------------------------- Title: Chairman ---------------------------------- Date: July 27, 2000 ----------------------------------- EX-10.2 6 w42120ex10-2.txt SETTLEMENT AGREEMENT 1 Exhibit 10.2 NOTICE THIS IS A VERY IMPORTANT LEGAL DOCUMENT. BY SIGNING THIS DOCUMENT, YOU ARE AGREEING TO RELEASE YOUR EMPLOYER FROM CERTAIN LEGAL LIABILITY TO YOU. YOU SHOULD THEREFORE CONSULT WITH AN ATTORNEY BEFORE SIGNING THIS DOCUMENT. YOU HAVE TWENTY-ONE (21) DAYS FOLLOWING THE DISTRIBUTION OF THIS DOCUMENT TO CONSIDER IT, ALTHOUGH YOU MAY RETURN IT PRIOR TO THE EXPIRATION OF THIS TWENTY-ONE (21) DAY PERIOD IF YOU SO CHOOSE. IF YOU SIGN THIS DOCUMENT, YOU WILL THEN HAVE SEVEN (7) DAYS TO REVOKE YOUR AGREEMENT TO BE BOUND BY THIS DOCUMENT. FOLLOWING THE EXPIRATION OF THIS SEVEN (7) DAY PERIOD, THIS DOCUMENT SHALL BECOME FINAL AND BINDING ON YOU. CONFIDENTIAL AND COMPLETE SETTLEMENT AGREEMENT AND GENERAL RELEASE This is a Confidential and Complete Settlement Agreement and General Release ("Agreement") by and between John R. Tucker ("Tucker") and York International Corporation ("YIC"). As used herein, "Parties" shall mean Tucker and YIC. WHEREAS, YIC commenced a lawsuit against Tucker and Robert C. Galvin by filing a Praecipe for a Writ of Summons in the Court of Common Pleas of York County, Pennsylvania captioned York International Corporation v. John R. Tucker and Robert C. Galvin, NO. 2000-SU-01031-01 ("YIC Action"); WHEREAS, Tucker also commenced lawsuits against YIC in the Delaware Chancery Court of New Castle County captioned John R. Tucker v. York International Corporation, C.A. No. 17979 NC, and John R. Tucker v. McDounough, Gambill, Logan, Roberts, Welsh, Wriston,Young, and York International Corporation, C.A. No. 17872 NC, and in the Superior Court for New Castle County, Delaware captioned John R. Tucker v. York International Corporation, C.A. No. 00C-03-054-RRC (collectively the "Tucker Actions"). WHEREAS, the Parties desire to avoid the expense and inconvenience of litigation, to resolve any and all disputes of whatever kind between them amicably, to dismiss Tucker from the YIC Action, to dismiss YIC from the Tucker Actions, and to avoid any future litigation between them; NOW, THEREFORE, in consideration of the mutual covenants contained herein, and INTENDING TO BE LEGALLY BOUND HEREBY, the Parties hereby agree as follows: 1 of 10 2 1. No Admission of Liability The Parties, and each of them, agree that this Agreement is made in compromise of disputed claims and solely to avoid the expense and inconvenience of litigation and is not, and is not to be construed as, a finding or admission of fault, wrongdoing, or obligation on the part of any of the Parties. This Agreement shall be effective on the eighth day after the date on which Tucker signs the Agreement (the "effective date"). 2. Early Retirement Tucker's early retirement from YIC was effective on February 9, 2000. It is Tucker's intention not to seek or engage in employment with any designer and/or manufacturer of heating, ventilating, air conditioning and/or refrigeration products in the future, and Tucker agrees that he will not seek or engage in employment with any designer and/or manufacturer of heating, ventilating, air conditioning and/or refrigeration products for at least five years from the effective date of this Agreement. 3. Payments by YIC Within 14 calendar days of the effective date of this Agreement, YIC shall pay Tucker a lump sum payment in the gross amount of Two Million Two Hundred and Forty Two Thousand Dollars ($2,242,000.00), less all legally required withholdings and deductions. This payment shall be made by wire transfer to Belcher, Henzie & Biegenzahn, Legal Services Trust Fund, Attorney-Client Trust Account, Bank of America, Account No. 16643-30781, ABA Routing Number 121000358. 4. Benefits (a) Tucker shall receive all benefits that accrue to him as a York employee who obtains early retirement at Tucker's age as of the effective date of this Agreement. These shall include any benefits that are due to an age-52 retired employee under the York International Corporation 1992 Omnibus Stock Plan, York's 401K and the York International Corporation Pension Plan Number 1, and COBRA rights under York's health care plan. (b) For a period of two (2) years beginning on the effective date of this Agreement, YIC shall provide Tucker with the health and welfare benefits (specifically, medical, prescription drug, dental, vision, and basic life insurance) that were being provided to him immediately prior to his early retirement on the same basis as such benefits are provided to other senior executive employees of YIC. Should Tucker begin to receive similar benefits from a future employer during the two (2) year period, he shall immediately notify YIC and his benefits from YIC shall then cease. 2 of 10 3 5. Stock Options (a) Any stock options granted to Tucker up to the effective date of this Agreement shall be left outstanding under the original terms of their issuance. An Options Summary describing Tucker's stock options, including strike price and expiration date, is attached hereto as Exhibit A. Tuckers rights under each of the stock options shall be governed by the applicable Stock Option Agreement under which the specific stock option was granted. A true and correct copy of each Stock Option Agreement is attached as Exhibit B. (b) Any unvested Restricted Shares of YIC stock purchased by Tucker shall be considered forfeited. 6. Change in Corporate Control In the event that a change in corporate control of York occurs after the effective date of this Agreement, York will take reasonable steps to cooperate with Tucker in defending against any potential claim by the Internal Revenue Service that any part of the payments and/or benefits described in this Agreement resulted from a change in control of York for the purposes of Sections 280G and 4999 of the Internal Revenue Code. 7. Pennsylvania State University License Tucker shall take all steps necessary to transfer the Pennsylvania State University spectator's box license, currently under his own name, into York's name. If for any reason such a transfer cannot be accomplished, Tucker shall, upon request by YIC, immediately terminate such license and promptly deliver any refund to York to the extent allowable by the terms and conditions of the license. 8. Noncompetition/Nonsolicitation Tucker shall continue to be bound by Paragraph 9 of the December 29, 1999 Employment Agreement between Tucker and YIC. This provision is attached hereto as Exhibit C. 9. Complete General Release of Claims (a) "YIC Released Parties," as used in this Agreement, shall mean (1) YIC; (2) all direct and indirect subsidiaries, affiliates, units, divisions predecessors, and successors of YIC ("affiliated entities"); (3) YIC's and any affiliated entities' past, current, and future employees, officers, directors, parents, partners, agents, owners, shareholders, attorneys, heirs, successors, assigns, predecessors, and legal representatives, in their individual and official capacities, as well as all of their agents, employees, directors, officers, owners, shareholders, heirs, successors, assigns, and legal representatives; (4) YIC's and any affiliated entities' insurers; (5) YIC's and any affiliated entities' past, present and future employee benefit plans, as well as the administrators, fiduciaries, affiliates, insurers, and otherwise of all such employee benefit plans; and (6) all other persons, corporations, or other entities who/that might be claimed 3 of 10 4 to be jointly or severally liable with any of the persons or entities named above and with respect to any of the "Claims" or "Released Claims" (as defined below). (b) "Tucker Released Parties," as used in this Agreement shall mean Tucker and all of his heirs, executors, administrators, agents, attorneys, legal representatives, and successors and assigns. (c) Tucker unconditionally and irrevocably discharges, releases, and remises the YIC Released Parties, jointly and severally, of and from all claims, causes of actions, suits, charges, debts, dues, sums of money, attorneys' fees and costs, accounts, bills, covenants, contracts, torts, agreements, expenses, wages, compensation, promises, damages, judgments, rights, demands, or otherwise ("Claims"), known or unknown, in law or equity, accrued or unaccrued, contingent or non-contingent, whenever arising from the beginning of time up until the effective date of this Agreement, whether or not capable of proof as of the effective date of this Agreement, whether common law or statutory, whether or not now recognized, that Tucker, or anyone claiming by, through, or under him (including without limitation his heirs, executors, personal representatives, administrators, assigns, and spouse(s)) in any way might have, or could have, against any of the YIC Released Parties. (d) YIC (and its affiliated entities) unconditionally and irrevocably discharge, release, and remise the Tucker Released Parties of and from all claims, causes of actions, suits, charges, debts, dues, sums of money, attorneys' fees and costs, accounts, bills, covenants, contracts, torts, agreements, expenses, wages, compensation, promises, damages, judgments, rights, demands, or otherwise ("Claims"), known or unknown, in law or equity, accrued or unaccrued, contingent or non-contingent, whenever arising from the beginning of time up until the effective date of this Agreement, whether or not capable of proof as of the effective date of this Agreement, whether common law or statutory, whether or not now recognized, that YIC (any affiliated entities), or anyone claiming by, through, or under them in any way might have, or could have, against the Tucker Released Parties. (e) The Claims enumerated in Sections 9(b) and (c) above ("Released Claims") shall include without limitation and only by way of example: (1) all Claims in any way arising from, relating to, or concerning Tucker's employment with YIC, including (without limitation) Tucker's separation from YIC or the manner of Tucker's separation from YIC; (2) all Claims for discrimination based on age, sex, race, disability status, national origin, or any other protected characteristic, including (without limitation) Claims under Title VII, the Americans with Disabilities Act, the Civil Rights Act of 1866, the Rehabilitation Act, the Age Discrimination in Employment Act, the FMLA, the Equal Pay Act, and all state and local analogues of such statutes, including (without limitation) the Pennsylvania Human Relations Act; (3) all Claims arising under the Employee Retirement Income Security Act (and the COBRA amendments thereto), including (without limitation) Claims for 4 of 10 5 the recovery of benefits, Claims for wrongful discharge, Claims for breach of fiduciary duty, Claims relating to the disclosure and reporting of information, and Claims otherwise relating to ERISA's procedural requirements, except that this waiver shall not apply to any benefits that Tucker is entitled to receive in connection with his retirement, as described in Section 4 hereof; (4) all Claims for breach of contract, defamation, promissory estoppel, negligence, loss of consortium, breach of the covenant of good faith and fair dealing, misrepresentation, wrongful discharge, emotional distress, interference with contractual relations, equitable and promissory estoppel, breach of fiduciary duty, fraud, and any other common law claims under the laws of any jurisdiction; (5) all Claims for the recovery of wages, accrued time-off, benefits, or any other compensation, including (without limitation) Claims under the Fair Labor Standards Act; (6) all Claims arising under any law codified at Titles 29 and 42 of the United States Code (and any state or local analogue of such laws), or regulations promulgated pursuant thereto, to the extent such laws are not expressly enumerated above; (7) all Claims for statutory penalties, attorneys' fees, costs, and expenses relating to this Agreement, the YIC Action, the Tucker Actions, or otherwise; and (8) all Claims made or which could have been made against Tucker by YIC in the YIC Action. (9) all Claims made or which could have been made against YIC by Tucker in the Tucker Actions. (f) Notwithstanding the foregoing, Released Claims shall not include claims to enforce the express terms of this Agreement. (g) Tucker further agrees and warrants that he will not hereafter make application for, seek, or accept employment or engagement as an employee, independent contractor, agent or consultant, with or for YIC or any affiliated entity of YIC. Tucker shall not sue, charge, or in any way allege that YIC (or any of the other entities named in this Section) improperly or unlawfully refused to consider any such future applications for employment or engagement by Tucker. Tucker releases the YIC Released Parties from any and all liabilities on account of such denial of re-employment, and shall be responsible for any attorneys' fees and costs incurred by the YIC Released Parties in responding to a claim for such liabilities. (h) It is the Parties' intention that the language relating to the description of the Claims and Released Claims in this Section shall be accorded the broadest possible interpretation. 5 of 10 6 10. Covenant Not to Sue YIC covenants not to institute any actions against the Tucker Released Parties and Tucker covenants not to institute any actions against any of the YIC Released Parties in any forum (whether judicial, administrative, or otherwise; whether legal or equitable; whether federal, state, or local) with respect to any Claim(s) it/he has released in this Agreement. If it/he does so and the action is found to be barred in whole or in part by this Agreement, it/he shall pay the attorneys' fees and costs incurred by the defendant(s) in defending the Claim(s) that are found to be barred. 11. Dismissal of Tucker and YIC from Suits (a) YIC shall take whatever steps are necessary to have Tucker dismissed from the YIC Action with prejudice, and without costs or attorneys' fees to either party. (b) Tucker shall take whatever steps are necessary to have YIC dismissed from the Tucker Actions with prejudice, and without costs or attorney's fees to either party. (c) YIC and Tucker shall take all reasonable steps to request that the court documents in both the YIC Action and the Tucker Actions be placed under seal. 12. Non-Disparagement; Public Statement (a) Neither Tucker nor any person acting on his behalf shall disparage, or cause to be disparaged (whether directly or indirectly), any of the YIC Released Parties in any statements to shareholders, investors, analysts, the media, or to the general public. Neither YIC nor any person acting on its behalf shall disparage, or cause to be disparaged (whether directly or indirectly), the Tucker Released Parties in any statements to shareholders, investors, analysts, the media, or to the general public. (b) Nothing herein is intended to limit any responses to compulsory process, or to limit disclosures required by applicable law or regulation. (c) Either Party may, at its sole discretion, issue a press release describing the settlement of this case, but any such press release shall conform to the script attached to this agreement as Exhibit D. (d) Because breach of the non-disparagement requirements of Section 12 would be extremely detrimental to and would result in irreparable injury to the interests of YIC and Tucker, YIC or Tucker shall be entitled to injunctive relief to restrain any violations of Section 12 in addition to any other damages or other remedies to which they may be entitled. In any action to enforce this Section 12, either Party shall be entitled to be reimbursed for its/his attorneys' fees by the other Party if it establishes in any action to enforce this Section that a material breach of this Section has occurred. 6 of 10 7 13. Confidentiality (a) Neither Tucker, his attorneys, nor any person acting on their behalf, shall at any time disclose to any person or entity: (i) the terms of this Agreement, including without limitation the consideration Tucker is being paid hereunder; (ii) the subject matter of the YIC Action or the Tucker Actions, (iii) any aspect of Tucker's employment with YIC, (iv) any aspect of Tucker's separation from YIC, and/or (v) any confidential information, knowledge or data relating to YIC or any of its affiliated companies that Tucker learned or obtained during his employment with YIC including, without limitation, trade secrets, trade "know how," customer and supplier information, cost and pricing information, marketing and sales techniques, strategies and programs, computer programs and software, and all financial information. YIC likewise agrees to keep confidential the information identified in subsections 13 (a) (i)(ii)(iii) and (iv). (b) Notwithstanding the confidentiality requirements of Section 13 (a) above, Tucker or Tucker's attorneys may disclose information covered by that section if required to do so pursuant to legal process or by order of court; provided, however, that Tucker and Tucker's attorneys: (i) shall not seek such legal process or order, or encourage or aid any other person or entity in seeking such process or order; (ii) shall notify YIC's counsel of service of such legal process or order within three (3) days of receipt (or within such shorter time period as may be necessary to allow adequate time to protect the confidentiality agreed to above); and (iii) shall cooperate with YIC, if so requested, to oppose any effort to require disclosure of the information protected by Section 13 (a). In the event that YIC requests Tucker's cooperation under this Section, it will reimburse Tucker for any reasonable expenses he may incur in connection with YIC's request. (c) Notwithstanding the confidentiality requirements of Section 13 (a) above, Tucker may disclose the terms of this Agreement as necessary to his lawyers, accountants, insurers, or other tax or financial advisors, provided that those persons or entities maintain the information as confidential. (d) Notwithstanding the confidentiality requirements of Section 13 (a), both Parties may communicate the terms of Tucker's separation from York as an early retirement requested by Tucker for personal reasons. (e) With respect to YIC, nothing in this Section shall apply to or limit any responses to compulsory process, or any disclosures made by YIC for purposes of internal reporting requirements or disclosures to YIC's accountants, auditors, or attorneys, or to disclosures or reporting obligations imposed by applicable law or regulation including without limitation any requirements that this Agreement be disclosed in securities filings or be filed with the SEC or other applicable agency. To the extent that YIC publicly discloses any information under this section, then Tucker shall no longer be required to treat the information thus disclosed as confidential. 7 of 10 8 (f) Because breach of the confidentiality requirements of Section 13 (a) would be extremely detrimental to and would result in irreparable injury to the interests of Tucker or YIC, either Party shall be entitled to injunctive relief to restrain any violations of Section 13 (a) in addition to any other damages or other remedies to which they may be entitled. In any action to enforce this Section 13, YIC or Tucker shall be entitled to be reimbursed for its/his attorneys' fees if it is established that a material breach of this Section has occurred. 14. Destruction of Documents The Parties shall destroy, and shall direct their counsel to destroy, any and all documents prepared by either Party in connection with, or in preparation for, the YIC Action and/or the Tucker Actions. This provision shall not apply to those documents that, in the discretion of counsel for either party, must be retained to comply with the applicable standards of professional responsibility. As to such documents, counsel shall take all reasonable steps to safeguard all materials during the period of retention and to destroy them when appropriate in the future. 15. Acknowledgments (a) The Parties acknowledge that they have carefully reviewed this Agreement with the assistance of counsel, that they have entered into this Agreement freely and voluntarily and without reliance on any promises not expressly contained herein, that they have been afforded an adequate time to review carefully the terms hereof, and that this Agreement shall not be deemed void or voidable by claims of duress, deception, mistake of fact, or otherwise. Nor shall the principle of construction whereby all ambiguities are to be construed against the drafter be employed in the interpretation of this Agreement. This Agreement should not be construed for or against any party. (b) Tucker acknowledges that the Tucker Actions are the only such legal actions in any forum (whether judicial, administrative, or otherwise; whether legal or equitable; whether federal, state, or local) that he has initiated against any of the YIC Released Parties. YIC also acknowledges that the YIC Action is the only such legal action in any forum (whether judicial, administrative, or otherwise; whether legal or equitable; whether federal, state, or local) that it has initiated against the Tucker Released Parties. 16. Governing Law and Consent to Jurisdiction This Agreement shall be governed by the laws of the Commonwealth of Pennsylvania, irrespective of the principles of conflicts of law applicable therein. The Parties consent to personal jurisdiction in the Court of Common Pleas of York County, Pennsylvania and agree that all disputes in any way arising under or related to this Agreement shall be resolved exclusively in the Court of Common Pleas of York County. 8 of 10 9 17. Enurement and Assignment This Agreement shall inure to the benefit of, and be binding upon, the Parties' heirs, executors, assigns, successors, and legal representatives. YIC shall have the right to assign its rights under this Agreement. Tucker shall not have the right to assign his rights under this Agreement, except that he may assign his rights to receive any payments due him under this Agreement to his family members or to his estate. 18. Modification This Agreement shall not be amended or modified except by a written instrument signed by all Parties. 19. Entire Agreement (a) This Agreement represents the entire agreement between the Parties relating to the subject matter hereof. It shall supersede all prior agreements between them covering the subject matter hereof. Such prior agreements being superseded include, without limitation: (a) the letter from James Bristol to Steven Feirson dated June 8, 2000 concerning settlement terms; (b) the letter from Robert Pokelwaldt to John R. Tucker dated October 22, 1997; (c) the Employment Agreement between the parties the effective date of which is December 29, 1999, and (d) any Severance Agreement to which Tucker may have been a party. (b) Notwithstanding this Section, the parties intend that Tucker will continue to be bound by the terms of his covenant not to compete as detailed in Section 9 of the December 29, 1999 Employment Agreement between the Parties. Section 9 of the December 29, 1999 Employment Agreement between the Parties is not being superseded by this Agreement and is valid and binding. (c) The only payments, benefits, or other remuneration that Tucker is to receive from YIC or the YIC Released Parties in connection with his separation are those that are expressly set forth in paragraphs 3, 4, and 5 of this Agreement. Any Claims for payments, benefits, or other remuneration not expressly set forth in paragraphs 3, 4, and 5 of this Agreement shall be considered extinguished; including without limitation any Claims under YIC's Incentive Compensation Plan, any Claims under YIC's financial planning program, any claims under YIC's Change of Control agreement, and any claims under YIC's Supplemental Executive Retirement Plan. 20. Severability If any provision of this Agreement is adjudged to be invalid for whatever reason, such invalidity shall not affect any other clause of this Agreement, and such clauses shall remain in full force and effect. 9 of 10 10 THE UNDERSIGNED, INTENDING TO BE LEGALLY BOUND BY THE FOREGOING TERMS, HEREBY APPLY THEIR SIGNATURES VOLUNTARILY AND WITH FULL UNDERSTANDING OF THE TERMS OF THIS AGREEMENT AND EXECUTE THIS AGREEMENT AS OF THE DATES SET FORTH BELOW. YORK INTERNATIONAL CORPORATION /s/ John R. Tucker By: /s/ Jane G. Davis - ------------------------------ -------------------------- John R. Tucker Authorized Representative 7 August 2000 August 7, 2000 - ------------------------------ ----------------------------- Dated Date Sworn to and subscribed Sworn to and subscribed before me this 7th day of before me this 16th day of August, 2000. August, 2000. /s/ John P. Abriola /s/ Joy D. Shepp - ------------------------------ ----------------------------- NOTARY PUBLIC NOTARY PUBLIC 10 of 10 EX-10.3 7 w42120ex10-3.txt FORTH AMENDMENT EXECUTIVE DEFERRED COMPENSATION PL 1 Exhibit 10.3 FOURTH 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, 2000, as follows: 1. Section 6.1 is hereby amended and restated in its entirety to read as follows: "6.1 Time and Manner of Distributions. Upon the earliest of a Participant's termination of employment, ceasing to be an eligible Outside Director, death, or attainment of age 70, the Administrative Committee shall commence payment of the Participant's Account to the Participant or the Participant's Beneficiary, as applicable, as soon as practicable thereafter; provided, however, that the Compensation Committee may determine in its sole and absolute discretion to delay payment commencement to any Participant if necessary to avoid application of the deduction limitation of section 162(m) of the Code to the Employer. All distributions will be based on the value of the Participant's Account measured as of the Valuation Date immediately preceding the date of the distribution. Except as provided below, the form of distribution shall be determined in the sole and absolute discretion of the Compensation Committee and shall either be in the form of a single-sum payment or in substantially equal quarterly, semi-annual or annual installments (adjusted periodically to reflect Value Adjustments allocated to the Participant's Account pursuant to Section 5.2) over a period of time, not to exceed ten years. However, in the case of a Participant who is to receive a distribution due to the attainment of age 70, such Participant may elect, in the calendar year preceding the year in which such Participant attains age 70, the form of distribution (subject to the approval of the Compensation Committee) from those described above. In the case of a Participant who attains age 70 in the year 2000, such election may be made at any time prior to the Participant's attainment of age 70. In the event that any Participant's Account is distributed in installments, the Compensation Committee may in its sole and absolute discretion at any point in time during the payout period pay the remaining balance of the Participant's Account in a single-sum payment. Upon attainment of age 70, a Participant shall no longer be permitted to make future deferrals and shall cease to be eligible to participate in the Plan." 2 2. A new Section 6.5 is added to read as follows: "6.5. Withdrawal at Age 65. Notwithstanding the provisions of Section 6.1, a Participant who commences participating in the Plan on or after October 1, 2000, may make a one time irrevocable election upon first becoming a Participant to receive a distribution at age 65 of all or any portion of his or her Account. Any distributions made under this Section 6.5 shall be made in the form of a single-sum payment as soon as practicable after the Participant's attainment of age 65 and shall be valued in accordance with Section 6.1." The York International Corporation Executive Deferred Compensation Plan, as amended by this Fourth Amendment effective as of October 1, 2000, is hereby ratified and confirmed in all respects. IN WITNESS WHEREOF, the Compensation Committee has caused this Fourth Amendment to be executed as of this 21st day of September, 2000. The Compensation Committee of the Board of Directors of York International Corporation By: /s/ Malcolm W. Gambill ----------------------------- Attest: /s/ Jeffrey D. Gard - ----------------------- EX-27 8 w42120ex27.txt FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 (UNAUDITED), THE CONSOLIDATED CONDENSED BALANCE SHEETS AT SEPTEMBER 30, 2000 (UNAUDITED) AND THE CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 (UNAUDITED) AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 9-MOS DEC-31-2000 JAN-01-2000 SEP-30-2000 56,430 0 655,337 25,386 655,936 1,507,794 831,833 361,941 2,842,265 910,780 883,376 0 0 225 0 2,842,265 2,905,577 2,905,577 2,265,490 2,265,490 0 4,774 60,779 108,219 24,181 84,038 0 0 0 84,038 2.21 2.20
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