-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, UAP9DdW/a084BRnBdJALXMdytsI0RDyqdCuX7mpHs8kDNyeTU/ZKcEvvu0FN6ra4 0TRcbFnNk22lEkj8myLVMg== 0000059198-95-000002.txt : 19950615 0000059198-95-000002.hdr.sgml : 19950615 ACCESSION NUMBER: 0000059198-95-000002 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 13 CONFORMED PERIOD OF REPORT: 19941231 FILED AS OF DATE: 19950320 SROS: MSE SROS: NYSE SROS: PSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: TRINOVA CORP CENTRAL INDEX KEY: 0000059198 STANDARD INDUSTRIAL CLASSIFICATION: MISCELLANEOUS FABRICATED METAL PRODUCTS [3490] IRS NUMBER: 344288310 STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-00924 FILM NUMBER: 95521837 BUSINESS ADDRESS: STREET 1: 3000 STRAYER CITY: MAUMEE STATE: OH ZIP: 43537 BUSINESS PHONE: 4198672200 FORMER COMPANY: FORMER CONFORMED NAME: LIBBEY OWENS FORD CO DATE OF NAME CHANGE: 19860814 FORMER COMPANY: FORMER CONFORMED NAME: LIBBEY OWENS FORD GLASS CO DATE OF NAME CHANGE: 19681004 10-K 1 FORM 10-K SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 1994 Commission File No. 1-924 TRINOVA CORPORATION (Exact name of registrant as specified in its charter) Ohio 34-4288310 (State of Incorporation) (I.R.S. Employer Identification No.) 3000 Strayer, Maumee, Ohio 43537-0050 (Address of principal executive office) (Zip Code) Registrant's telephone number, including area code: (419) 867-2200 Securities registered pursuant to Section 12(b) of the Act: Name of each exchange on Title of each class which registered Common Shares, $5.00 Par Value Frankfurt Stock Exchange Chicago Stock Exchange New York Stock Exchange Pacific Stock Exchange The Stock Exchange (London) Securities registered pursuant to Section 12(g) of the Act: None 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, and (2) has been subject to such filing requirements for the past 90 days. Yes X No _____ Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (Section 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ] [Cover page continued] -2- The aggregate market value of the Common Shares held by non-affiliates of the registrant as of February 21, 1995, was $766,367,545. The number of Common Shares, $5 Par Value, outstanding as of February 21, 1995, was 28,813,258. DOCUMENTS INCORPORATED BY REFERENCE Portions of the 1994 Annual Report to Security Holders are filed as Exhibit (13) filed hereto and are incorporated by reference into Parts I, II and IV. Portions of the proxy statement for the annual meeting of security holders to be held on April 20, 1995, are incorporated by reference into Part III. This document, including exhibits, contains 96 pages. The cover page consists of 2 pages. The Exhibit Index is located on pages 20-22. [End of cover page] -3- PART I ITEM 1. Business. (a) TRINOVA Corporation ("TRINOVA") is a world leader in the manufacture and distribution of engineered components and systems for industry, sold through its operating companies, Aeroquip Corporation ("Aeroquip") and Vickers, Incorporated ("Vickers"), to the industrial, automotive, and aerospace and defense markets. On September 22, 1994, Joseph C. Farrell, Chairman of the Board, President and Chief Executive Officer of The Pittston Company, was elected to the Board of Directors of TRINOVA. No business acquisitions were completed in 1994. On February 26, 1994, TRINOVA sold the assets, net of certain liabilities, of its electric motor business located in Wichita, Kansas; Blue Ash, Ohio; and Maysville, Kentucky. The business was sold as part of TRINOVA's ongoing program to eliminate businesses and product lines which do not fit its strategies. (b) "Note 13 - Business Segments" on pages 80-81 of Exhibit (13) filed hereunder is incorporated herein by reference. (c) A description of the business done and intended to be done by TRINOVA and its subsidiaries in each industry segment follows. (1) INDUSTRIAL: Aeroquip manufactures and sells all pressure ranges of hose and fittings; adapters; self-sealing couplings; and molded, extruded and co-extruded plastic products. Vickers manufactures and sells hydraulic, electrohydraulic, pneumatic and electronic control devices; piston and vane pumps and motors; servovalves and controls; hydraulic and pneumatic cylinders; hydraulic power packages; electric motors and drives; hydraulic and lubrication filtration; and fluid- evaluation services. Principal markets for these products include construction, mining, logging and farm equipment; machine tool; process industries; electrical machinery, air conditioning/refrigeration; appliances and communications equipment; electronics; lift truck; material handling; plant maintenance; and housing and commercial construction. Sales are dispersed geographically across a broad customer base. Products are sold directly to original equipment manufacturers ("OEMs") and through a worldwide network of distributors serving aftermarket and small- and medium-sized OEM customers. The industrial business is highly competitive in terms of price, quality and service. TRINOVA believes that Aeroquip has significant market position worldwide for industrial hose, fittings, couplings and adapters. TRINOVA also believes that Vickers has significant market position worldwide for mobile and industrial vane pumps, solenoid-operated directional valves, mobile hydraulic control valves for forklift trucks, cartridge valve systems, piston pumps for high-horsepower agricultural tractors, hydraulic tilt-train -4- technology, and utility vehicle hydraulic equipment. TRINOVA serves many customers in the highly diverse and fragmented industrial markets. Due to the diversity of TRINOVA's products, there are a large number of competitors scattered across a wide variety of market segments, with no single competitor competing in each of TRINOVA's product lines. The order backlog for the industrial business was $185 million as of December 31, 1994, compared to $148.4 million as of December 31, 1993. Substantially all of the December 31, 1994, backlog is expected to be filled in 1995. (2) AUTOMOTIVE: Aeroquip manufactures and sells air conditioning, power steering, oil and transmission cooler, and fuel line components and assemblies; body side moldings; decorative bumper strips; roof moldings; spoilers; rocker panel claddings; engine components; louvers and trim plates; interior trim; garnish moldings; structural products such as bumper beams; interior engine covers; instrument clusters; radio bezels; and display products. The automotive operations of Aeroquip serve worldwide automobile, light truck and van manufacturers. Products are primarily sold directly to manufacturers. Approximately 52 percent of worldwide sales of TRINOVA's automotive business are made to three major U.S. automobile manufacturers. The automotive industry is highly competitive in terms of price, quality and service. Aeroquip is a preferred supplier to the major U.S. and European automobile manufacturers. Competition for products in the automotive industry is very fragmented. (3) AEROSPACE & DEFENSE: Aeroquip manufactures and sells hose, fittings, couplings, swivels, V-band couplings, fuel-handling products and high-pressure tube fittings. Vickers manufactures and sells fixed- and variable-displacement pumps; fuel pumps; hydraulic motors and motor packages; motor pumps and generator packages; valves and valve packages; electrohydraulic and electromechanical actuators; electric motor packages; and sensors and monitoring devices. The aerospace & defense operations of Aeroquip and Vickers serve worldwide commercial aerospace and military markets including commercial aircraft, air defense, cargo handling, combat and support vehicles, commuter aircraft, engines, marine, military aircraft, military weaponry, missiles and naval machinery. Products are sold directly to OEM businesses and the Government and through a distributor network. Approximately 19 percent of TRINOVA's aerospace & defense business sales are made to two major U.S. airframe manufacturers. The aerospace & defense business is highly competitive in terms of price, quality and service. TRINOVA believes that Aeroquip has significant market position worldwide for aerospace hose, fittings and quick-disconnect couplings. TRINOVA also believes Vickers has significant market position worldwide for aerospace piston pumps and motors, and lube system diagnostics. -5- TRINOVA serves a large number of customers in the diverse and fragmented aerospace and defense markets. Due to the diversity of TRINOVA's products, there are a large number of competitors scattered across a wide variety of market segments, with no single competitor competing in each of TRINOVA's product lines. The order backlog for the aerospace & defense business was $267 million as of December 31, 1994, compared to $278.4 million as of December 31, 1993. Approximately 22 percent of the December 31, 1994, backlog is not expected to be filled in 1995 because certain contracts require deliveries after 1995. Approximately 34 percent of the December 31, 1994, backlog represents direct Government contracts or subcontracts on Government programs, which are subject to termination for convenience by the Government. (4) OTHER INFORMATION: TRINOVA and its subsidiaries are generally not dependent upon any one source for raw materials or purchased components essential to their businesses, and it is believed that such raw materials and components will be available in adequate quantities to meet anticipated production schedules. Patents owned by TRINOVA are considered important to the conduct of its present businesses. TRINOVA is licensed under a number of patents, none of which are considered material to its businesses. TRINOVA is the owner of a number of U.S. and non-U.S. trademark registrations. TRINOVA devotes engineering, research and development efforts to new products and improvement of existing products and production processes. During 1994, 1993 and 1992, TRINOVA spent a total of $55.5 million, $55.3 million and $65.3 million, respectively, on these efforts. TRINOVA employed 15,024 persons at December 31, 1994. (d) "Note 14 - Non-U.S. Operations" on page 82 of Exhibit (13) filed hereunder is incorporated herein by reference. TRINOVA believes the risk attendant to non-U.S. operations, which are primarily in developed countries, is not significantly greater than that attendant to its U.S. operations. ITEM 2. Properties. A description of TRINOVA's principal properties follows. Except as otherwise indicated, all properties are owned by TRINOVA or its subsidiaries. TRINOVA's executive offices (leased) are located in Maumee, Ohio. INDUSTRIAL: Aeroquip Corporation has executive and administrative offices in Maumee, Ohio (leased); technical centers in Ann Arbor, Michigan (leased) and Maumee, Ohio (leased); and manufacturing facilities throughout the United States and abroad, including plants in Mountain Home, Arkansas; Fitzgerald, Georgia; New Haven, Indiana; Williamsport, Maryland; Forest City and Norwood, North Carolina; Van Wert, Ohio; Gainesboro, Tennessee; Bassett, Virginia; Wausau, Wisconsin; Rio de Janeiro, Brazil; Chambray-Les-Tours, France; Baden- Baden and Hann-Muenden, Germany; Livorno, Italy; and Cardiff, United Kingdom. Aeroquip also owns or leases warehouse, assembly and distribution facilities and sales offices in the United States and abroad. -6- Vickers, Incorporated has executive and administrative offices in Maumee, Ohio (leased); a technical center in Rochester Hills (leased), Michigan; and manufacturing facilities throughout the United States and abroad, including plants in Decatur, Alabama; Searcy, Arkansas; Carol Stream and Petersburg (leased), Illinois; Grand Blanc and Jackson, Michigan; Omaha, Nebraska; White City, Oregon; Sao Paulo, Brazil; Bad Homburg, Germany; Casella and Vignate (leased), Italy; and Havant and Telford (leased), United Kingdom. Vickers also owns or leases warehouse, assembly and distribution facilities and sales offices in the United States and abroad. AUTOMOTIVE: Aeroquip has executive and administrative offices in Maumee, Ohio (leased); technical and administrative offices in Mt. Clemens, Michigan (leased); and manufacturing facilities throughout the United States and abroad, including plants in Atlanta, Georgia; Kendallville, Indiana; Henderson, Kentucky; Clinton Township (leased), Mt. Clemens, Port Huron, Spring Arbor and Sterling Heights, Michigan; Mooresville, North Carolina; Fremont, Ohio; Livingston, Tennessee; Baden-Baden, Beienheim (leased) and Frankfurt (leased), Germany; Chihuahua, Mexico; Alcala de Henares, Spain; and Brierley Hill, United Kingdom. Aeroquip also owns or leases warehouse, assembly and distribution facilities and sales offices in the United States and abroad. AEROSPACE & DEFENSE: Aeroquip Corporation has executive and administrative offices in Maumee, Ohio (leased); administrative offices in Jackson, Michigan; and manufacturing facilities throughout the United States and abroad, including plants in Toccoa, Georgia; Jackson, Michigan; Middlesex, North Carolina; Pau, France (leased); and Lakeside, United Kingdom (leased). Aeroquip also owns or leases warehouse, assembly and distribution facilities and sales offices in the United States and abroad. Vickers, Incorporated has executive and administrative offices in Maumee, Ohio (leased); and manufacturing facilities throughout the United States and abroad, including plants in Los Angeles, California; Grand Rapids, Michigan; Jackson, Mississippi; Hi-Nella, New Jersey; Glenolden, Pennsylvania; Bad Homburg, Germany; and Bedhampton, United Kingdom. Vickers also owns or leases warehouse, assembly and distribution facilities and sales offices in the United States and abroad. ITEM 3. Legal Proceedings. As previously reported, on March 26, 1992, the United States Environmental Protection Agency ("USEPA") issued an Administrative Order ("106 Order") under Section 106 of the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA") to TRINOVA's subsidiary, Aeroquip Corporation ("Aeroquip"), and five other Potentially Responsible Parties ("PRPs") relative to the San Fernando Valley Burbank Operable Unit ("BOU"), involving groundwater contamination. (Reference is made to Part II, Item 1, of TRINOVA's Quarterly Report on Form 10-Q for the quarter ended June 30, 1994.) The 106 Order requires the six PRPs to design and construct a water blending facility at a cost now estimated to be approximately $4.8 million. TRINOVA's portion of any such cost is estimated to be 18.33 percent based on a cost-sharing agreement among the six PRPs which was executed by TRINOVA on July 6, 1992. Construction of the blending facility is expected to be complete in March 1995. -7- Also related to the BOU, on May 15, 1994, USEPA issued to Lockheed Corporation ("Lockheed"), Aeroquip and other PRPs a Special Notice of Liability under CERCLA for the remaining 18 years of operation and maintenance (O&M) costs associated with the blending facility, as well as a water treatment facility constructed by Lockheed under its BOU Consent Decree with USEPA. The Special Notice of Liability also covers USEPA's past response costs. The cost of the O&M phase is not known at this time; USEPA past costs claimed against the PRPs are estimated at $12 million for the entire San Fernando Site, which includes other operable units in addition to the BOU. On April 26, 1994, Lockheed filed a complaint against Aeroquip and 105 other PRPs seeking contribution toward costs Lockheed incurred to construct the water treatment facility. Negotiations are under way among the PRPs and Lockheed to arrive at an equitable and reasonable allocation with respect to the BOU costs. Recovery by Lockheed, if any, against Aeroquip is not expected to be significant. As previously reported, on November 13, 1992, the USEPA, Region IX, issued a General Notice of Liability letter to TRINOVA's subsidiary, Sterer Engineering and Manufacturing Company, now known as the Fluid Control and Actuation Division of Vickers, Incorporated ("Vickers"). (Reference is made to Part I, Item 3, of TRINOVA's Annual Report on Form 10-K for the year ended December 31, 1993.) The letter notified Vickers of potential liability, as defined by Section 107(a) of CERCLA, that it may incur with respect to the San Fernando Valley Glendale South Operable Unit, involving groundwater contamination. The USEPA issued its Record of Decision ("ROD") on June 18, 1993. The interim remedy proposed in the ROD for both the North and South Operable Units is projected by the USEPA to cost approximately $45 million. Twenty-seven PRPs, including Vickers, entered into an Administrative Order on Consent with the USEPA on March 21, 1994, to conduct the Remedial Design ("RD") phase of the interim remedy. The estimated cost of the RD phase is $4.7 million. Vickers' portion of the RD costs is estimated to be 2.79 percent based on an interim allocation agreement among the PRPs. As previously reported, on July 31, 1992, the Maine Department of Environmental Protection issued an Administrative Enforcement Order to TRINOVA and its wholly owned subsidiaries, Aeroquip Corporation and Sterling Engineered Products Inc. ("Sterling"), as well as one other party, Pioneer Plastics Corporation ("Pioneer Plastics"), (collectively the "respondents"), pursuant to Title 38, section 1304(12) of the Maine Revised Statutes. (Reference is made to Part I, Item 3, of TRINOVA's Annual Report on Form 10-K for the year ended December 31, 1993.) The Order, which was issued without a prior hearing, required the respondents to conduct a complete Phase II environmental assessment of alleged soil and groundwater contamination at a manufacturing site in Auburn, Maine, which was formerly owned by Sterling and is now owned by Pioneer Plastics. The Order further required the respondents to remediate any environmental contamination identified in the Phase II assessment. On May 5, 1993, a Compliance Order on Consent ("COC") was entered into by the State of Maine, Sterling and Pioneer Plastics. The COC replaces and revokes the Order issued July 31, 1992. The COC requires Sterling to conduct a site investigation and to develop and implement a remedial work plan. The cost to Sterling to conduct the COC site investigation and develop the remedial work plan is estimated to be approximately $850,000. Sterling's remediation costs are undetermined at this time because the remedial work plan has not been completed. -8- TRINOVA and certain subsidiaries are defendants in various lawsuits. While the ultimate outcome of these lawsuits and the above environmental matters cannot now be predicted, management is of the opinion, based on the facts now known to it, that the liability, if any, in these lawsuits (to the extent not provided for by insurance or otherwise) and the above environmental matters will not have a material adverse effect upon TRINOVA's consolidated financial position. ITEM 4. Submission of Matters to a Vote of Security Holders. None. EXECUTIVE OFFICERS OF THE REGISTRANT The names, ages, positions and recent business experience of the executive officers of TRINOVA as of February 21, 1995, are listed below. Officers of TRINOVA are elected annually in April by the Board of Directors at the organization meeting immediately following the annual meeting of shareholders. NAME AND POSITION AGE BUSINESS EXPERIENCE Darryl F. Allen, 51 Chairman of the Board, President Chairman of the Board, and Chief Executive Officer of President and Chief TRINOVA since 1991. President and Executive Officer Chief Executive Officer of TRINOVA from 1986 to 1991. William R. Ammann, 53 Vice President-Administration Vice President-Administration and Treasurer of TRINOVA since and Treasurer April 1992. Vice President - Administration of TRINOVA from 1983 to April 1992. Warren N. Bimblick 40 Vice President-Corporate Vice President-Corporate Communications of TRINOVA since Communications 1990. Director-Investor Relations and Corporate Communications of TRINOVA from 1985 to 1990. James E. Kline, 53 Vice President & General Counsel Vice President and of TRINOVA since 1989. General Counsel James McKee, 63 Executive Vice President of Executive Vice President of TRINOVA since 1989 and President TRINOVA and President of of Vickers, Incorporated since Vickers, Incorporated 1987. James M. Oathout, 50 Secretary and Associate General Secretary and Counsel of TRINOVA since 1988. Associate General Counsel -9- NAME AND POSITION AGE BUSINESS EXPERIENCE Gregory R. Papp, 48 Corporate Controller of TRINOVA Corporate Controller since February 1993. Vice President and Controller of Aeroquip Corporation from July 1991 to February 1993. Vice President Planning and Control - Automotive Products Group of Aeroquip Corporation from January 1991 to July 1991. Group Controller - Garrett Automotive Group of Allied- Signal Corporation from 1987 to 1991. David M. Risley, 50 Vice President - Finance and Chief Vice President - Finance Financial Officer of TRINOVA since and Chief Financial Officer October 1992. Group Vice President - Administration and Control of Aeroquip Corporation from 1991 to October 1992. Vice President and Controller of Aeroquip Corporation from 1990 to 1991. Howard M. Selland, 51 Executive Vice President of Executive Vice President of TRINOVA and President of Aeroquip TRINOVA and President of Corporation since 1989. Aeroquip Corporation Philip G. Simonds, 54 Vice President-Taxation of TRINOVA Vice President-Taxation since 1983. There are no family relationships among the persons named above. PART II ITEM 5. Market for Registrant's Common Equity and Related Stockholder Matters. "Stock Exchanges," "Stock Ownership," "Dividend Information," "Quarterly Common Stock Information" and "Dividend Payments per Share of Common Stock" on page 84 of Exhibit (13) filed hereunder are incorporated herein by reference. ITEM 6. Selected Financial Data. "11-Year Summary of Selected Financial Data" on pages 49-51 of Exhibit (13) filed hereunder is incorporated herein by reference. -10- ITEM 7. Management's Discussion and Analysis of Financial Condition and Results of Operation. "Analysis of Operations" and "Liquidity, Working Capital and Capital Investment" on pages 52-58 of Exhibit (13) filed hereunder are incorporated herein by reference. ITEM 8. Financial Statements and Supplementary Data. "Quarterly Results of Operations (Unaudited)" and the consolidated financial statements of the registrant and its subsidiaries on pages 59-83 of Exhibit (13) filed hereunder are incorporated herein by reference. ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. None. PART III ITEM 10. Directors and Officers of the Registrant. "Election of Directors" and "Section 16(a) Reporting Delinquencies" on pages 1-2 and 9, respectively, of the proxy statement for the annual meeting to be held on April 20, 1995, are incorporated herein by reference. Information regarding executive officers is set forth in Part I of this report under the caption "Executive Officers of the Registrant." ITEM 11. Executive Compensation. "Compensation of Directors" and "Executive Compensation" (excluding material under the captions "TRINOVA Stock Performance Graph" and "Board Compensation Committee Report on Executive Compensation") on pages 3 and 5-9, respectively, of the proxy statement for the annual meeting to be held on April 20, 1995, are incorporated herein by reference. ITEM 12. Security Ownership of Certain Beneficial Owners and Management. "Security Ownership" on page 4 of the proxy statement for the annual meeting to be held on April 20, 1995, is incorporated herein by reference. ITEM 13. Certain Relationships and Related Transactions. None. PART IV ITEM 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K. -11- (a) The following documents are filed as a part of this report. (1) The following consolidated financial statements of TRINOVA and its subsidiaries, included on pages 61-83 of Exhibit (13) filed hereunder are incorporated by reference in Item 8. Report of Ernst & Young LLP, Independent Auditors Statement of Income - Years ended December 31, 1994, 1993 and 1992 Statement of Financial Position - December 31, 1994 and 1993 Statement of Cash Flows - Years ended December 31, 1994, 1993 and 1992 Statement of Shareholders' Equity - Years ended December 31, 1994, 1993 and 1992 Notes to Financial Statements - December 31, 1994 (2) The following consolidated financial statement schedule of TRINOVA and its subsidiaries is filed under Item 14(d): SCHEDULE PAGE(S) Schedule II - Valuation and qualifying accounts 17-19 All other schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission are either not required under the related instructions or are inapplicable, and therefore have been omitted. (3) The following exhibits are incorporated by reference hereunder, and those exhibits marked with an asterisk (*) (together with those exhibits so marked on page 13) are management contracts or compensatory plans or arrangements required to be filed as exhibits pursuant to Item 14(c) of this report: EXHIBIT NUMBER (3)-1 Amended Code of Regulations (amended April 21, 1988), filed as Exhibit (3) to Form SE filed on March 18, 1993 (3)-2 Amended Articles of Incorporation (amended January 26, 1989), filed as Exhibit (3) to Form 10-K filed on March 18, 1994 (4)-1 First Supplemental Indenture, dated as of May 4, 1992, between TRINOVA Corporation and NBD Bank, with respect to the issuance of $75,000,000 aggregate principal amount of TRINOVA Corporation 7.95% Notes Due 1997, filed as Exhibit (4)-1 to Form SE filed on May 6, 1992 (4)-2 7.95% Notes Due 1997, issued pursuant to the Indenture, dated as of January 28, 1988, between TRINOVA Corporation and NBD Bank -12- (formerly National Bank of Detroit), as supplemented by the First Supplemental Indenture, dated as of May 4, 1992, between TRINOVA Corporation and NBD Bank, filed as Exhibit (4)-2 to Form SE filed on May 6, 1992 (4)-3 Officers' Certificate of TRINOVA Corporation, dated May 4, 1992, pursuant to Section 2.01 of the Indenture, dated as of January 28, 1988, between TRINOVA Corporation and NBD Bank (formerly National Bank of Detroit), as supplemented by the First Supplemental Indenture, dated as of May 4, 1992, between TRINOVA Corporation and NBD Bank, filed as Exhibit (4)-3 to Form SE filed on May 6, 1992 (4)-4 Rights Agreement, dated January 26, 1989, between TRINOVA Corporation and First Chicago Trust Company of New York filed as Exhibit (2) to Form 8-A filed on January 27, 1989, as amended by the First Amendment to Rights Agreement filed as Exhibit (5) to Form 8 filed on July 1, 1992 (4)-5 Form of Share Certificate for Common Shares, $5 par value, of TRINOVA Corporation, filed as Exhibit (4)-2 to Form SE filed on July 1, 1992 (4)-6 Fiscal Agency Agreement, dated as of October 26, 1987, between TRINOVA Corporation, as Issuer, and Bankers Trust Company, as Fiscal Agent, with respect to $100,000,000 aggregate principal amount of TRINOVA Corporation 6% Convertible Subordinated Debentures Due 2002, filed as Exhibit (4)-1 to Form SE filed on March 18, 1993 (4)-7 Indenture, dated as of January 28, 1988, between TRINOVA Corporation and NBD Bank (formerly National Bank of Detroit), with respect to the issuance of $50,000,000 aggregate principal amount of TRINOVA Corporation 9.55% Senior Sinking Fund Debentures Due 2018, and the issuance of $75,000,000 aggregate principal amount of TRINOVA Corporation 7.95% Notes Due 1997, filed as Exhibit (4)-2 to Form SE filed on March 18, 1993 *(10)-1 TRINOVA Corporation 1982 Stock Option Plan, filed as Exhibit (10)-1 to Form SE filed on March 18, 1993 *(10)-2 TRINOVA Corporation 1984 Incentive Compensation Plan, filed as Exhibit (10)-2 to Form SE filed on March 18, 1993 *(10)-3 TRINOVA Corporation 1987 Stock Option Plan, filed as Exhibit (10)-3 to Form SE filed on March 18, 1993 *(10)-4 Change in Control Agreement for Officers, filed as Exhibit (10)- 4 to Form SE filed on March 18, 1993 (the Agreements executed by the Company and various executive officers of the Company are identical in all respects to the form of Agreement filed as an Exhibit to Form SE except as to differences in the identity of the officers and the dates of execution, and as to other variations directly necessitated by said differences) -13- *(10)-5 Change in Control Agreement for Non-officers, filed as Exhibit (10)-5 to Form SE filed on March 18, 1993 (the Agreements executed by the Company and various non-officer employees of the Company are identical in all respects to the form of Agreement filed as an Exhibit to Form SE except as to differences in the identity of the employees and the dates of execution, and as to other variations directly necessitated by said differences) *(10)-6 TRINOVA Corporation 1994 Stock Incentive Plan, filed as Appendix A to the proxy statement for the annual meeting held on April 21, 1994 *(10)-7 TRINOVA Corporation 1989 Non-Employee Directors' Equity Plan, filed as Exhibit (10) to Form 10-K filed on March 18, 1994 (99(i))-1 TRINOVA Corporation Directors' Charitable Award Program, filed as Exhibit (99(i)) to Form 10-K filed on March 18, 1994 (99(i))-2 Credit Agreement, dated as of August 31, 1994, among TRINOVA Corporation (borrower) and The Bank of Tokyo Trust Company; Chemical Bank; Citibank, N.A.; Dresdner Bank AG, New York and Grand Cayman branches; The First National Bank of Chicago; Morgan Guaranty Trust Company of New York; NBD Bank; and Union Bank of Switzerland, Chicago branches (banks) and Citibank N.A. (administrative agent) The following exhibits are filed hereunder, and those exhibits marked with an asterisk (*) (together with those so marked on pages 12-13) are management contracts or compensatory plans or arrangements required to be filed as exhibits pursuant to Item 14(c) of this report: *(10)-8 TRINOVA Corporation Plan for Optional Deferment of Directors' Fees (amended and restated effective April 1, 1995) *(10)-9 TRINOVA Corporation Directors' Retirement Plan (amended and restated effective January 1, 1990) *(10)-10 TRINOVA Corporation Supplemental Benefit Plan (amended and restated effective January 1, 1995) *(10)-11 TRINOVA Corporation Voluntary Deferred Compensation Plan (effective April 1, 1995) (11) Statement re: Computation of Per Share Earnings (13) Portions of the 1994 Annual Report to Security Holders (to the extent incorporated by reference hereunder) (21) Subsidiaries of the Registrant (23)-1 Consent of Independent Auditors (23)-2 Consent of Independent Auditors (24) Powers of Attorney (27) Financial Data Schedule -14- (b) TRINOVA did not file any reports on Form 8-K during the fourth quarter of 1994. (c) The exhibits which are listed under Item 14(a)(3) are filed or incorporated by reference hereunder. (d) The financial statement schedule which is listed under Item 14(a)(2) is filed hereunder. -15- SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. TRINOVA CORPORATION (Registrant) By: /S/ DARRYL F. ALLEN Darryl F. Allen Director, Chairman of the Board, President and Chief Executive Officer Date: March 20, 1995 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. /S/ DARRYL F. ALLEN Darryl F. Allen 3/20/95 Director, Chairman of the (Date) Board, President and Chief Executive Officer (Principal Executive Officer) /S/ DAVID M. RISLEY David M. Risley 3/20/95 Vice President - Finance (Date) and Chief Financial Officer (Principal Financial Officer) /S/ GREGORY R. PAPP Gregory R. Papp 3/20/95 Corporate Controller (Principal Accounting Officer) PURDY CRAWFORD* Purdy Crawford* 3/20/95 Director (Date) -16- DELMONT A. DAVIS* Delmont A. Davis* 3/20/95 Director (Date) JOSEPH C. FARRELL* Joseph C. Farrell* 3/20/95 Director (Date) DAVID R. GOODE* David R. Goode* 3/20/95 Director (Date) PAUL A. ORMOND* Paul A. Ormond* 3/20/95 Director (Date) JOHN P. REILLY* John P. Reilly* 3/20/95 Director (Date) ROBERT H. SPILMAN* Robert H. Spilman* 3/20/95 Director (Date) WILLIAM R. TIMKEN, JR.* William R. Timken, Jr.* 3/20/95 Director (Date) *By James E. Kline, Attorney-in-fact /S/ JAMES E. KLINE James E. Kline 3/20/95 Vice President and General Counsel (Date) -17- SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS TRINOVA CORPORATION
- ----------------------------------------------------------------------------------------------------------------------- COL. A COL. B COL. C COL. D COL. E - ----------------------------------------------------------------------------------------------------------------------- ADDITIONS Balance at (1) (2) Balance DESCRIPTION Beginning Charged to Costs Charged to Other Deductions at End of of Period and Expenses Accounts-Describe Describe Period - ----------------------------------------------------------------------------------------------------------------------- (In Thousands) YEAR ENDED DECEMBER 31, 1994 Deducted from asset accounts: Allowance for doubtful accounts $ 13,537 $ 2,384 $ - $ 742 -A $ 15,179 Deferred tax valuation allowance 29,962 (2,082) - (1,653)-B 29,533 Note A - Doubtful accounts charged off and currency translation adjustments Note B - Currency translation adjustments
-18- SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS TRINOVA CORPORATION
- ----------------------------------------------------------------------------------------------------------------------- COL. A COL. B COL. C COL. D COL. E - ----------------------------------------------------------------------------------------------------------------------- ADDITIONS Balance at (1) (2) Balance DESCRIPTION Beginning Charged to Costs Charged to Other Deductions at End of of Period and Expenses Accounts-Describe Describe Period - ----------------------------------------------------------------------------------------------------------------------- (In Thousands) YEAR ENDED DECEMBER 31, 1993 Deducted from asset accounts: Allowance for doubtful accounts $ 13,705 $ 3,318 $ - $ 3,486 -A $ 13,537 Deferred tax valuation allowance 30,441 2,283 - 2,762 -B 29,962 Note A - Doubtful accounts charged off and currency translation adjustments Note B - Currency translation adjustments
-19- SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS TRINOVA CORPORATION
- ----------------------------------------------------------------------------------------------------------------------- COL. A COL. B COL. C COL. D COL. E - ----------------------------------------------------------------------------------------------------------------------- ADDITIONS Balance at (1) (2) Balance DESCRIPTION Beginning Charged to Costs Charged to Other Deductions at End of of Period and Expenses Accounts-Describe Describe Period - ----------------------------------------------------------------------------------------------------------------------- (In Thousands) YEAR ENDED DECEMBER 31, 1992 Deducted from asset accounts: Allowance for doubtful accounts $ 13,821 $ 3,628 $ - $ 3,744 -A $ 13,705 Deferred tax valuation allowance 29,012 -B 1,429 - - 30,441 Note A - Doubtful accounts charged off and currency translation adjustments Note B - Valuation allowance recorded effective January 1, 1992 in accordance with adoption of Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes"
EX-99 2 EXHIBIT INDEX -20- EXHIBIT INDEX EXHIBIT PAGE(S) (3)-1 Amended Code of Regulations (amended April 21, Incorporated 1988), filed as Exhibit (3) to Form SE filed by Reference on March 18, 1993 (3)-2 Amended Articles of Incorporation (amended Incorporated January 26, 1989), filed as Exhibit (3) to by Reference Form 10-K filed on March 18, 1994 (4)-1 First Supplemental Indenture, dated as of May 4, Incorporated 1992, between TRINOVA Corporation and NBD Bank, by Reference with respect to the issuance of $75,000,000 aggregate principal amount of TRINOVA Corporation 7.95% Notes Due 1997, filed as Exhibit (4)-1 to Form SE filed on May 6, 1992 (4)-2 7.95% Notes Due 1997, issued pursuant to the Incorporated Indenture, dated as of January 28, 1988, between by Reference TRINOVA Corporation and NBD Bank (formerly National Bank of Detroit), as supplemented by the First Supplemental Indenture, dated as of May 4, 1992, between TRINOVA Corporation and NBD Bank, filed as Exhibit (4)-2 to Form SE filed on May 6, 1992 (4)-3 Officers' Certificate of TRINOVA Corporation, Incorporated dated May 4, 1992, pursuant to Section 2.01 of by Reference the Indenture, dated as of January 28, 1988, between TRINOVA Corporation and NBD Bank (formerly National Bank of Detroit), as supplemented by the First Supplemental Indenture, dated as of May 4, 1992, between TRINOVA Corporation and NBD Bank, filed as Exhibit (4)-3 to Form SE filed on May 6, 1992 (4)-4 Rights Agreement, dated January 26, 1989, between Incorporated TRINOVA Corporation and First Chicago Trust by Reference Company of New York filed as Exhibit (2) to Form 8-A filed on January 27, 1989, as amended by the First Amendment to Rights Agreement filed as Exhibit (5) to Form 8 filed on July 1, 1992 (4)-5 Form of Share Certificate for Common Shares, $5 Incorporated par value, of TRINOVA Corporation, filed as by Reference Exhibit (4)-2 to Form SE filed on July 1, 1992 (4)-6 Fiscal Agency Agreement, dated as of October 26, Incorporated 1987, between TRINOVA Corporation, as Issuer, by Reference and Bankers Trust Company, as Fiscal Agent, with respect to $100,000,000 aggregate principal amount of TRINOVA Corporation 6% Convertible Subordinated Debentures Due 2002, filed as Exhibit (4)-1 to Form SE filed on March 18, 1993 -21- (4)-7 Indenture, dated as of January 28, 1988, between Incorporated TRINOVA Corporation and NBD Bank (formerly by Reference National Bank of Detroit), with respect to the issuance of $50,000,000 aggregate principal amount of TRINOVA Corporation 9.55% Senior Sinking Fund Debentures Due 2018, and the issuance of $75,000,000 aggregate principal amount of TRINOVA Corporation 7.95% Notes Due 1997, filed as Exhibit (4)-2 to Form SE filed on March 18, 1993 (10)-1 TRINOVA Corporation 1982 Stock Option Plan, Incorporated filed as Exhibit (10)-1 to Form SE filed on by Reference March 18, 1993 (10)-2 TRINOVA Corporation 1984 Incentive Compensation Incorporated Plan, filed as Exhibit (10)-2 to Form SE filed by Reference on March 18, 1993 (10)-3 TRINOVA Corporation 1987 Stock Option Plan, Incorporated filed as Exhibit (10)-3 to Form SE filed on by Reference March 18, 1993 (10)-4 Change in Control Agreement for Officers, Incorporated filed as Exhibit (10)-4 to Form SE filed on by Reference March 18, 1993 (the Agreements executed by the Company and various executive officers of the Company are identical in all respects to the form of Agreement filed as an Exhibit to Form SE except as to differences in the identity of the officers and the dates of execution, and as to other variations directly necessitated by said differences) (10)-5 Change in Control Agreement for Non-officers, Incorporated filed as Exhibit (10)-5 to Form SE filed on by Reference March 18, 1993 (the Agreements executed by the Company and various non-officer employees of the Company are identical in all respects to the form of Agreement filed as an Exhibit to Form SE except as to differences in the identity of the employees and the dates of execution, and as to other variations directly necessitated by said differences) (10)-6 TRINOVA Corporation 1994 Stock Incentive Plan, Incorporated filed as Appendix A to the proxy statement for by Reference the annual meeting held on April 21, 1994 (10)-7 TRINOVA Corporation 1989 Non-Employee Directors' Incorporated Equity Plan, filed as Exhibit (10) to Form 10-K by Reference filed on March 18, 1994 (10)-8 TRINOVA Corporation Plan for Optional Deferment of 23-31 Directors' Fees (amended and restated effective April 1, 1995) -22- (10)-9 TRINOVA Corporation Directors' Retirement Plan 32-35 (amended and restated effective January 1, 1990) (10)-10 TRINOVA Corporation Supplemental Benefit Plan 36-41 (amended and restated effective January 1, 1995) (10)-11 TRINOVA Corporation Voluntary Deferred Compensation 42-47 Plan (effective April 1, 1995) (11) Statement re Computation of Per Share Earnings 48 (13) Portions of the 1994 Annual Report to Security 49-84 Holders (to the extent incorporated by reference hereunder) (21) Subsidiaries of the Registrant 85 (23)-1 Consent of Independent Auditors 86 (23)-2 Consent of Independent Auditors 87 (24) Powers of Attorney 88-95 (27) Financial Data Schedule 96 (99(i))-1 TRINOVA Corporation Directors' Charitable Award Incorporated Program, filed as Exhibit (99(i)) to Form 10-K by Reference filed on March 18, 1994 (99(i))-2 Credit Agreement, dated as of August 31, 1994, Incorporated among TRINOVA Corporation (borrower) and The Bank by Reference of Tokyo Trust Company; Chemical Bank; Citibank, N.A.; Dresdner Bank AG, New York and Grand Cayman branches; The First National Bank of Chicago; Morgan Guaranty Trust Company of New York; NBD Bank; and Union Bank of Switzerland, Chicago branches (banks) and Citibank N.A. (administrative agent) EX-10 3 EXHIBIT 10-8 -23- EXHIBIT (10)-8 TRINOVA CORPORATION PLAN FOR OPTIONAL DEFERMENT OF DIRECTORS' FEES (As Amended and Restated Effective April 1, 1995) TRINOVA Corporation ("Company") hereby restates the TRINOVA Corporation Plan for Optional Deferment of Directors' Fees ("Plan"). The purpose of the Plan is to allow directors of the Company to defer payment of certain fees and retirement benefits. The effective date of this amendment and restatement of the Plan is April 1, 1995. ARTICLE I. DEFINITIONS For the purposes of the Plan, the following words and phrases shall have the meanings indicated: 1.1 "Beneficial Owner" of Voting Stock shall mean any Person who would be deemed to beneficially own such Voting Stock within the meaning of Rule 13d-3 promulgated under the Exchange Act, or any successor rules or regulations thereto. 1.2 "Beneficiary" means the person or persons designated or deemed to be designated by the Participant pursuant to Article VII to receive benefits payable under the Plan in the event of the Participant's death. 1.3 "Board of Directors" means the Board of Directors of the Company. 1.4 A "Change of Control" shall have occurred for purposes of the Plan if any of the following events shall occur: (a) The Company is merged, consolidated or reorganized into or with another corporation or other legal person, and as a result of such merger, consolidation or reorganization less than a majority of the combined voting power of the then-outstanding securities of such corporation or person immediately after such transaction are held in the aggregate by the holders of Voting Stock immediately prior to such transaction; (b) If the Company sells all or substantially all of its assets to any other corporation or other legal person, less than a majority of the combined voting power of the then-outstanding securities of such corporation or person immediately after such transaction are held in the aggregate by the holders of Voting Stock immediately prior to such sale; (c) There is a report filed on Schedule 13D or Schedule 14D-1 (or any successor schedule, form or report), each as promulgated pursuant to the Exchange Act, disclosing that any Person has become the Beneficial Owner of 20 percent or more of the Voting Stock; (d) The Company files a report or proxy statement with the Securities and Exchange Commission pursuant to the Exchange Act disclosing in response to Form 8-K or Schedule 14A (or any successor -24- schedule, form or report or item therein) that a change in control of the Company has or may have occurred or will or may occur in the future pursuant to any then-existing contract or transaction; or (e) If during any period of two consecutive years, individuals who at the beginning of any such period constitute the directors of the Company cease for any reason to constitute at least a majority thereof, unless the election, or the nomination for election by the Company's shareholders, of each director of the Company first elected during such period was approved by a vote of at least two-thirds of the directors of the Company then still in office who were directors of the Company at the beginning of any such period. Notwithstanding the foregoing provisions of subparagraph (iii) or subparagraph (iv) hereof, a "Change in Control" shall not be deemed to have occurred for purposes hereof solely because (i) the Company, (ii) an entity in which the Company directly or indirectly beneficially owns 50 percent or more of the voting securities, or (iii) any Company-sponsored employee stock ownership plan or any other employee benefit plan of the Company, either files or becomes obligated to file a report or a proxy statement under or in response to Schedule 13D, Schedule 14D-1, Form 8-K or Schedule 14A (or any successor schedule, form or report or item therein) under the Exchange Act, disclosing beneficial ownership by it of shares of Voting Stock, whether in excess of 20 percent or otherwise, or because the Company reports that a change in control of the Company has or may have occurred or will or may occur in the future by reason of such beneficial ownership. 1.5 "Committee" means the Organization and Compensation Committee of the Board of Directors. 1.6 "Deferred Benefit" means the benefit payable to a Participant or his or her Beneficiary pursuant to the Plan. 1.7 "Deferred Benefit Account" means the account maintained on the books of the Company for each Participant pursuant to the Plan. 1.8 "Deferred Fees" means any Fee deferred pursuant to Section 3.1. 1.9 "Deferred Retirement Benefit" means any Retirement Benefit deferred pursuant to the Plan. 1.10 "Determination Date" means each March 31, June 30, September 30 and December 31, and shall also include the date of any Change in Control. 1.11 "Exchange Act" means the Securities Exchange Act of 1934, as amended from time to time. 1.12 "Fee" or "Fees" means any compensation other than Retirement Benefits payable in cash to a director for his or her services as a member of the Board of Directors or any committee thereof. 1.13 "Participant" means any eligible director who elects to participate by filing a deferral election as provided in Section 2.2 hereof and includes each director who is participating in the Plan on April 1, 1995. -25- 1.14 "Person" shall mean any "person" as the term "person" is used and defined in Section 14(d)(2) of the Exchange Act, and any "affiliate" or "associate" of any such person, as the terms "affiliate" and "associate" are defined in Rule 12b-2 of the General Rules and Regulations under the Exchange Act as in effect on April 1, 1995. 1.15 "Plan Year" means a 12-month period commencing January l and ending the following December 31. 1.16 "Retirement Benefits" means any payments to directors of the Company made pursuant to the TRINOVA Corporation Directors' Retirement Plan. 1.17 "Stock Unit" means an accounting unit equal in value to one of the Company's common shares. The number of Stock Units and fractions thereof included in any Deferred Benefit Account shall be adjusted as appropriate to reflect any stock dividend, stock split, recapitalization, merger or other similar event affecting the Company's common shares. 1.18 "Trust" shall mean the grantor trust maintained pursuant to the Trust Agreement for the TRINOVA Corporation Directors' Retirement Plan and Plan for Optional Deferment of Directors' Fees. 1.19 "Voting Stock" shall mean all outstanding securities of the Company entitled to vote generally in the election of directors of the Company at the time in question. ARTICLE II ELIGIBILITY AND PARTICIPATION 2.1 Eligibility. Each person who is a member of the Board of Directors of the Company shall be eligible to participate in the Plan. No director who has terminated his or her participation pursuant to Section 2.3 hereof shall be eligible to elect to participate in the Plan again. 2.2 Participation. Participation in the Plan shall be limited to eligible directors who elect to participate in the Plan by filing a deferral election (in form suitable to the Committee) with the Secretary of the Company. A properly completed and executed deferral election must be filed prior to the first day of the month in which the Participant's participation in the Plan will commence, and the election to participate shall be effective on the first day of the month following the month in which the election was received by the Secretary of the Company; provided, however, that any eligible director may elect to commence participation in the Plan on April 1, 1995 by filing a deferral election with the Secretary prior to such date. In the event that a director first becomes eligible to participate in the Plan during the course of a Plan Year and on or after April 1, 1995, his or her election must be filed no later than 30 days after election or appointment to the Board of Directors, and such election shall be effective only with regard to Fees earned or payable after the filing of the election. Notwithstanding the foregoing provisions of this Section 2.2, any election to defer Retirement Benefits shall be made at least one year prior to the date such Retirement Benefits will become payable to the Participant. 2.3 Termination of Participation. A Participant may elect to terminate his or her participation in the Plan by filing a written notice thereof with the Secretary of the Company, which termination shall be -26- effective at any time specified by the Participant in the notice, but not earlier than the first day of the Plan Year immediately succeeding the Plan Year in which such notice is filed with the Secretary of the Company. Amounts credited to such Participant's Deferred Benefit Account with respect to periods prior to the effective date of such termination shall continue to be payable pursuant to, and otherwise governed by, the terms of the Plan. ARTICLE III. DEFERRAL OF FEES AND RETIREMENT BENEFITS 3.1 Deferral of Fees. A Participant may elect to defer all, or a specified percentage, of his or her Fees, and a Participant may elect to have his or her deferred Fees credited to his Deferred Benefit Account either in dollar amounts or Stock Units. A Participant shall not be permitted to change the percentage of his or her Fees to be deferred, or the form in which such Deferred Fees are to be credited. Any Participant who was a Participant prior to April 1, 1995 may notify the Secretary in writing prior to such date that he or she wishes to have a specified percentage of his or her Deferred Fees invested in Stock Units, and in the absence of such notification all his or her Deferred Fees shall continue to be invested in dollar amounts. 3.2 Deferral of Retirement Benefits. A Participant may elect to defer all, or a specified percentage, of his or her Retirement Benefits, and a Participant may elect to have his or her Deferred Retirement Benefits credited to his Deferred Benefit Account either in dollar amounts or Stock Units. A Participant shall not be permitted to change the percentage of his or her Retirement Benefits to be deferred, or the form in which such Deferred Retirement Benefits are to be credited. Any Participant who was a Participant prior to April 1, 1995 may notify the Secretary in writing prior to such date that he or she wishes to have a specified percentage of his or her Deferred Retirement Benefits invested in Stock Units, and in the absence of such notification all his or her Deferred Retirement Benefits shall continue to be invested in dollar amounts. 3.3 Crediting of Deferred Fees and/or Deferred Retirement Benefits. In his or her deferral election, each Participant shall specify the percentage of his or her Deferred Fees and/or Deferred Retirement Benefits that shall be deemed to be invested in dollar amounts and the percentage that shall be deemed to be invested in Stock Units. Such election may not be changed. Such Deferred Fees and/or Deferred Retirement Benefits shall be credited to the Participant's Deferred Benefit Account as of the date such amounts would otherwise have been paid to the Participant in the absence of the deferral election. The number of Stock Units to be so credited to the Participant's Deferred Benefit Account shall be determined on the basis of the closing price of the Company's common shares on the date so credited or, if such date is not a trading day, on the next preceding trading day. ARTICLE IV. DEFERRED BENEFIT ACCOUNT 4.1 Determination of Account. On any particular date, a Participant's Deferred Benefit Account shall consist of the aggregate amount of dollars and Stock Units credited thereto pursuant to Sections 3.1 and 3.2 hereof, plus any interest credited pursuant to Section 4.2 hereof, plus any dividend equivalents credited pursuant to Section 4.3 hereof. -27- 4.2 Crediting of Interest. As of each Determination Date, each Deferred Benefit Account to which Fees and/or Retirement Benefits have been credited in dollar amounts shall be increased by the amount of interest earned since the immediately preceding Determination Date. The interest rate used to credit the Participants' Deferred Benefit Accounts shall be equal to two percentage points in excess of the Moody's Corporate Bond Yield Average determined as of the Determination Date, or such other interest rate, subject to Article IX hereof, as may be established by the Committee for such purpose. Interest shall be credited at such rate as of each Determination Date based on the balance of each Participant's Deferred Benefit Account. Interest for the period prior to the first Determination Date applicable to a Deferred Benefit Account shall be prorated. Until a Participant or his or her Beneficiary receives his or her entire Deferred Benefit Account, the unpaid balance thereof credited in dollar amounts shall bear interest as provided in this Section 4.2. 4.3 Crediting of Dividend Equivalents. Each Deferred Benefit Account to which Fees and/or Retirement Benefits have been credited in Stock Units shall be credited with additional Stock Units equal in value to the amount of cash dividends paid by the Company on amounts of the Company's common shares equivalent to the number of Stock Units in such Deferred Benefit Account as of the date when each such dividend is paid. Such dividend equivalents shall be valued on the basis of the closing market price of the Company's common shares on the date so credited, or if such date is not a trading day, on the next preceding trading day. Until a Participant or his or her Beneficiary receives his or her entire Deferred Benefit Account, the unpaid balance thereof credited in Stock Units shall earn dividend equivalents as provided in this Section 4.3. 4.4 Statements of Account. The Committee shall provide to each Participant a quarterly statement setting forth the balance of such Participant's Deferred Benefit Account as of each Determination Date. 4.5 Vesting of Deferred Benefit Account. A Participant shall be 100% vested in his or her Deferred Benefit Account at all times. ARTICLE V. TRUST FOR DEFERRED BENEFITS 5.1 Establishment of Trust. The Company has established the Trust, to which the Company may, at the sole discretion of its Board of Directors, make contributions for the purpose of satisfying all or a portion of the Company's obligations under the Plan. Any benefits paid from the Trust to a Participant or beneficiary shall reduce the amount of the benefits payable hereunder by the Company from its general corporate assets. 5.2 Contributions to the Trust. Notwithstanding any provision herein to the contrary, the Company shall contribute to the Trust that amount calculated pursuant to Section 5.3 hereof within ten days after a Change in Control. 5.3 Amount of Contributions. The amount to be contributed to the Trust in the event of the occurrence of a Change in Control shall be the value of all Participants' Deferred Benefit Accounts in the Plan as of the date the Change in Control occurs. -28- ARTICLE VI. PAYMENT OF BENEFITS 6.1 Time of Payments. Except as provided in Section 8.5 hereof, as soon as practicable, but not more than 30 days after the earlier of (i) termination of service of the Participant as a director of the Company for reasons other than his or her death (or any different payment date that the Participant may have elected at the time of deferral), and (ii) the death of a Participant, the Company shall pay to the Participant or his Beneficiary, as the case may be, a Deferral Benefit equal to the balance of his or her Deferred Benefit Account. 6.2 Form of Payment. The Deferred Benefit payable pursuant to Section 6.1 hereof shall be paid in cash in one of the following forms, as elected by the Participant in his or her deferral election: (a) Equal annual installments over a period of five years (together, in the case of deferred compensation credited in dollar amounts, with interest thereon credited after the payment commencement date pursuant to Section 4.2 hereof and, in the case of deferred compensation credited in Stock Units, with any cash dividends credited after the payment commencement date pursuant to Section 4.3 hereof); or (b) Equal annual installments over a period of ten years (together, in the case of deferred compensation credited in dollar amounts, with interest thereon credited after the payment commencement date pursuant to Section 4.2 hereof and, in the case of deferred compensation credited in units, with any cash dividends credited after the payment commencement date pursuant to Section 4.3 hereof); or (c) A lump sum. For the purposes of this Section 6.2, each distribution from Deferred Benefit Accounts including Stock Units shall be valued on the basis of the closing market price of the Company's common shares on the last trading date prior to the date payment of such distribution is made. 6.3 Payments from Trust. Except as otherwise provided herein or in the instrument pursuant to which the Trust is maintained, payments pursuant to the Plan shall be made directly from the Trust to Participants and Beneficiaries to the extent that assets are available in the Trust for such purpose. ARTICLE VII. BENEFICIARY DESIGNATION 7.1 Beneficiary Designation. Each Participant shall have the right, at any time, to designate any person or persons as his or her Beneficiary to whom payment under the Plan shall be made in the event of his or her death prior to complete distribution to the Participant of his or her Deferral Benefit. Any Beneficiary designation shall be made in a written instrument filed with the Secretary of the Company and shall be effective only when received in writing by the Secretary. -29- 7.2 Amendments. Any Beneficiary designation may be changed by a Participant by the filing of a new Beneficiary designation, which will cancel all Beneficiary designations previously filed. 7.3 No Designation. If a Participant fails to designate a Beneficiary as provided above, or if all designated Beneficiaries predecease the Participant, then the Participant's designated Beneficiary shall be deemed to be the Participant's estate. 7.4 Effect of Payment. Payment to a Participant's Beneficiary (or, upon the death of a Beneficiary, to his or her estate) shall completely discharge the Company's obligations under the Plan and Trust. ARTICLE VIII. ADMINISTRATION 8.1 Committee; Duties. The Committee shall supervise the administration of the Plan, may from time to time adopt procedures governing the Plan and shall have authority to give interpretive rulings with respect to the Plan. 8.2 Agents. The Committee may appoint an individual, who may be an employee of the Company, to be the Committee's agent with respect to the day- to-day administration of the Plan. In addition, the Committee may, from time to time, employ other agents and delegate to them such administrative duties as it sees fit, and may from time to time consult with counsel who may be counsel to the Company. 8.3 Binding Effect of Decisions. Any decision or action of the Committee with respect to any question arising out of or in connection with the administration, interpretation and application of the Plan shall be final and binding upon all persons having any interest in the Plan. 8.4 Indemnity of Committee. The Company shall indemnify the members of the Committee against claims, loss, damage, expense and liability arising from any action or failure to act with respect to the Plan to the extent provided in the Regulations of the Company and any applicable indemnification agreement between the Company and such member. 8.5 Payment of Benefits in the Event of Disability. If a former Participant who is receiving (or is eligible to begin receiving) benefits has a mental or physical condition which the Committee, in its sole discretion based on medical evidence it deems acceptable, determines will prevent such person from satisfactorily managing his or her personal financial affairs, such Committee may direct any and all of the benefits to which the former Participant may be entitled to be paid in any one or more of the following ways: (a) to the former Participant, (b) to the former Participant's legal guardian or conservator, (c) to the former Participant's spouse, or (d) to any other individual or entity to be expended for the benefit of the former Participant. -30- ARTICLE IX. AMENDMENT AND TERMINATION OF PLAN The Board of Directors may at any time amend, suspend, terminate or reinstate any or all of the provisions of the Plan, except that no such amendment, suspension or termination may adversely affect any Participant's Deferred Benefit Account as it existed as of the effective date of such amendment, suspension or termination without such Participant's consent. The Committee may, pursuant to Section 4.2 hereof, change the basis for determining the rate of interest on amounts credited in dollar amounts to Participants' Deferred Benefit Accounts, but in no event shall any such change adversely affect any Participant's Deferred Benefit Account as it existed as of the effective date of such change without such Participant's consent. ARTICLE X. MISCELLANEOUS 10.1 Unfunded Arrangement. Neither Participants, nor their Beneficiaries, nor their heirs, successors or assigns, shall have any secured interest or claim in any property or assets of the Company. The Company's obligation under the Plan shall be merely that of an unfunded and unsecured promise of the Company to pay money in the future. Although the Company has created the Trust to hold funds to be used in payment of the Company's obligations under the Plan, and may fund such trust, any funds contained therein shall remain liable for the claims of the Company's general creditors. 10.2 Non-assignability. No right or interest under the Plan of a Participant or his or her Beneficiary (or any person claiming through or under any of them), other than the surviving spouse of any deceased Participant, shall be assignable or transferable in any manner or be subject to alienation, anticipation, sale, pledge, encumbrance or other legal process or in any manner be liable for or subject to the debts or liabilities of any such Participant or Beneficiary. If any Participant or Beneficiary (other than the surviving spouse of any deceased Participant) shall attempt to or shall transfer, assign, alienate, anticipate, sell, pledge or otherwise encumber his or her benefits hereunder or any part thereof, or if by reason of his or her bankruptcy or other event happening at any time such benefits would devolve upon anyone else or would not be enjoyed by him or her, then the Committee, in its discretion, may terminate his or her interest in any such benefit to the extent the Committee considers necessary or advisable to prevent or limit the effects of such occurrence. Termination shall be effected by filing a written "termination declarations" with the Secretary of the Company and making reasonable efforts to deliver a copy to the Participant or Beneficiary whose interest is adversely affected (the "Terminated Participant"). As long as the Terminated Participant is alive, any benefits affected by the termination shall be retained by the Company and, in the Committee's sole and absolute judgment, may be paid to or expended for the benefit of the Terminated Participant, his or her spouse, his or her children or any other person or persons in fact dependent upon him or her in such a manner as the Committee shall deem proper. Upon the death of the Terminated Participant, all benefits withheld from him or her and not paid to others in accordance with the preceding sentence shall be disposed of according to the provisions of the Plan that would apply if he or she died prior to the time that all benefits to which he or she was entitled were paid to him or her. -31- 10.3 Tax Effect. This Plan is intended to be treated as an unfunded deferred compensation plan under the Internal Revenue Code. It is the intention of the Company that the amounts by which directors have elected to defer pursuant to this Plan shall not be included in the gross income of the directors or their beneficiaries until such time as the amounts credited to directors' Deferred Benefit Accounts hereunder are distributed from the Plan. If, at any time, it is determined by the Company that amounts attributable to directors' deferral elections or Deferred Benefit Accounts are includible in the gross income of the directors or their beneficiaries before distribution pursuant to Article VI hereof, all amounts credited to directors' Deferred Benefit Accounts shall be immediately distributed to the respective directors or, in the case of deceased directors, their Beneficiaries. Distributions described in the preceding sentence shall be made by the Company or, if the Trust has been funded pursuant to Article V hereof, from the Trust if the Company is not insolvent at the time for such distribution and to the extent such funds are sufficient to satisfy the amount payable to the Participant under this Plan. 10.4 Section 16 of the Exchange Act and Rule 16b-3. For purposes of Section 16 of the Exchange Act, this Plan is intended to satisfy the exclusion from the definition of "derivative security" provided for certain cash-only securities in Rule 16a-1(c)(3) as in effect on and after May 1, 1991. If at any time Rule 16b-3 as in effect on and after May 1, 1991 or at any later date shall become applicable to the Plan, the Committee may make such changes in the terms or operation of the Plan as may then appear necessary or appropriate for purposes of such Rule, including, without limitation, by eliminating any restriction originally included in the Plan for purposes of Rule 16b-3, as in effect prior to such date, that may no longer be required. 10.5 Captions. The captions contained herein are for convenience only and shall not control or affect the meaning or construction hereof. 10.6 Governing Law. The provisions of the Plan shall be construed and interpreted according to the internal substantive laws of the State of Ohio. 10.7 Successors. The provisions of the Plan shall bind and inure to the benefit of the Company and its successors and assigns. The term successors as used herein shall include any corporate or other business entity which shall, whether by merger, consolidation, purchase or otherwise, acquire all or substantially all of the business and assets of the Company and successors of any such corporation or other business entity. 10.8 No Right to Continued Service. Nothing contained herein shall be construed to confer upon any director the right to continue to serve as a director of the Company or in any other capacity. The foregoing has been approved by and is being executed on behalf of TRINOVA Corporation effective as of April 1, 1995. TRINOVA CORPORATION EX-10 4 EXHIBIT 10-9 -32- EXHIBIT (10)-9 TRINOVA CORPORATION DIRECTORS' RETIREMENT PLAN Effective: January 1, 1985 Restatement Date: January 1, 1990 1. TRINOVA Corporation ("Company," formerly known, however, as Libbey-Owens-Ford Company) hereby restates the Libbey-Owens-Ford Company Amended Directors' Retirement Plan as the TRINOVA Corporation Directors' Retirement Plan ("Plan"). The purpose of the Plan is to recognize the valuable services provided and to be provided by its current and future nonofficer directors, as well as to assist the Company in attracting and retaining qualified persons to serve on its Board of Directors. The effective date of the restatement of the Plan is January 1, 1990. 2. Each person ("Participant") who has served on the Board of Directors of the Company on or after January 1, 1990, and who is not an officer of the Company, shall participate in the restated Plan. 3. Benefits shall be payable under the Plan to each Participant who has retired from the Board of Directors in accordance with article 9 of the Company's by-laws or who has, with the concurrence of the Board of Directors, resigned for health or other reasons beyond such person's control. Such benefits shall be payable monthly, commencing on the first day of the month following such Participant's retirement (or resignation, as provided herein) from the Board of Directors and ending with the payment for the month in which such Participant's death occurs, provided, however, that in no event shall the aggregate number of payments exceed the lesser of 120 or the number of months such Participant served as a nonofficer director of the Company. The amount of each monthly payment shall be equal to 1/12 of the annual retainer then in effect payable to the director by the Company for such Participant's services as a member of the Board of Directors (including the current committee chairman's fee for a director who has at any time served as a committee chairman, but excluding any meeting fees and any fees solely attributable to professional or other consulting services furnished to the Company independently of service as a director). Such benefit payments shall be made from those assets which are subject to the claims of general creditors, subject, however, to the provisions of paragraph 4 hereof. 4. The Company shall establish an irrevocable grantor trust ("Rabbi Trust") to which the Company may, at the sole discretion of its Board of Directors, make contributions for the purpose of satisfying all or a portion of the Company's obligations under the Plan. Any benefits paid from such Rabbi Trust to a Participant shall reduce the amount of the benefits payable hereunder by the Company from its general corporate assets. Furthermore, and notwithstanding any provision herein to the contrary, the Company shall contribute to the Rabbi Trust that aggregate amount calculated pursuant to paragraph 5 hereof within ten days of a Change in Control. -33- A "Change in Control" shall have occurred for purposes of the Plan if any of the following events shall occur: (i) The Company is merged, consolidated or reorganized into or with another corporation or other legal person, and as a result of such merger, consolidation or reorganization less than a majority of the combined voting power of the then-outstanding securities of such corporation or person immediately after such transaction are held in the aggregate by the holders of Voting Stock immediately prior to such transaction; (ii) If the Company sells all or substantially all of its assets to any other corporation or other legal person, less than a majority of the combined voting power of the then-outstanding securities of such corporation or person immediately after such transaction are held in the aggregate by the holders of Voting Stock immediately prior to such sale; (iii) There is a report filed on Schedule 13D or Schedule 14D-1 (or any successor schedule, form or report), each as promulgated pursuant to the Exchange Act, disclosing that any Person has become the Beneficial Owner of 20 percent or more of the Voting Stock; (iv) The Company files a report or proxy statement with the Securities and Exchange Commission pursuant to the Exchange Act disclosing in response to Form 8-K or Schedule 14A (or any successor schedule, form or report or item therein) that a change in control of the Company has or may have occurred or will or may occur in the future pursuant to any then-existing contract or transaction; or (v) If during any period of two consecutive years, individuals who at the beginning of any such period constitute the directors of the Company cease for any reason to constitute at least a majority thereof, unless the election, or the nomination for election by the Company's shareholders, of each director of the Company first elected during such period was approved by a vote of at least two-thirds of the directors of the Company then still in office who were directors of the Company at the beginning of any such period. Notwithstanding the foregoing provisions of subparagraph (iii) or subparagraph (iv) hereof, a "Change in Control" shall not be deemed to have occurred for purposes hereof solely because (i) the Company, (ii) an entity in which the Company directly or indirectly beneficially owns 50 percent or more of the voting securities, or (iii) any Company-sponsored employee stock ownership plan or any other employee benefit plan of the Company, either files or becomes obligated to file a report or a proxy statement under or in response to Schedule 13D, Schedule 14D-1, Form 8-K or Schedule 14A (or any successor schedule, form or report or item therein) under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), disclosing beneficial ownership by it of shares of Voting Stock, whether in excess of 20 percent or otherwise, or because the Company reports that a change in control of the Company has or may have occurred or will or may occur in the future by reason of such beneficial ownership. For purposes of the foregoing (a) "Beneficial Owner" of Voting Stock shall mean any Person who would be deemed to beneficially own such Voting Stock within the meaning -34- of Rule 13d-3 promulgated under the Exchange Act, or any successor rules or regulations thereto. (b) "Person" shall mean any "person," as the term "person" is used and defined in Section 14(d)(2) of the Exchange Act, and any "affiliate" or "associate" of any such person, as the terms "affiliate" and "associate" are defined in Rule 12b-2 of the General Rules and Regulations under the Exchange Act as in effect on the date hereof. (c) "Voting Stock" shall mean all outstanding securities of the Company entitled to vote generally in the election of directors of the Company at the time in question. 5. The amount to be contributed to the Rabbi Trust in the event of the occurrence of a Change in Control (as defined in paragraph 4 hereof) shall be the amount necessary to purchase annuities to provide Participants with the benefits they have accrued in the Plan as of the date the Change in Control occurs. 6. As a condition of participation in the Plan, upon and after a Participant's retirement from the Board of Directors, such Participant shall remain available at any reasonable time and from time to time to advise and to consult with the Chief Executive Officer of the Company and also with the Chairman of the Board of Directors of the Company (if such person is not also the Chief Executive Officer). 7. The obligation of the Company to make or continue payments under this Plan shall be subject to the condition that the Participant or former Participant shall not engage, either directly or indirectly, in any activity which is competitive with any activity of the Company, it being understood that in the event of a breach by the Participant or former Participant of the foregoing condition, the Company shall not be obligated to make any payment or payments hereunder coming due subsequent to the occurrence of such breach. The Organization and Compensation Committee of the Board of Directors ("Committee"), upon prior written request of a Participant or former Participant, may waive the condition specified above with respect to noncompetition if, based upon all of the relevant circumstances, in the sole judgment of the Committee, the granting of such a waiver is justified. 8. No rights under this Plan shall be assignable, transferrable or subject to encumbrance or charge of any nature. No claim for the nonpayment or erroneous payment of benefits hereunder may be made other than by the Participant or former Participant or by his or her estate acting on his or her behalf. 9. If a former Participant who is receiving benefits or is eligible to begin receiving benefits under the Plan is under a legal disability, as determined in the sole discretion of the Committee, the Committee may direct any or all of the benefits to which the former Participant may be entitled to be paid in any one or more of the following ways: (a) to the former Participant, or (b) to the former Participant's legal guardian or conservator, or -35- (c) to the former Participant's spouse or to any other individual or entity to be expended for the benefit of the former Participant. 10. The Board of Directors of the Company may at any time amend, suspend or terminate the Plan in whole or in part, but such action shall not affect the right of any Participant or former Participant to receive benefits accrued hereunder prior to the date of such action. 11. The Plan shall be administered by the Committee. Each member of the Committee shall serve at the pleasure of the Committee and may be removed at any time, with or without cause, by such Committee. 12. The Plan is established under and shall be construed according to the laws of the State of Ohio. The foregoing has been approved by and is being executed on behalf of TRINOVA Corporation effective as of January 1, 1990. TRINOVA CORPORATION EX-10 5 EXHIBIT 10-10 -36- EXHIBIT (10)-10 TRINOVA CORPORATION SUPPLEMENTAL BENEFIT PLAN Effective: January 1, 1976 Restatement Date: January 1, 1995 1. TRINOVA Corporation ("Company") previously established the TRINOVA Corporation Supplemental Benefit Plan ("Plan") for the sole purpose of providing benefits for certain employees in excess of the limitation on contributions and benefits imposed by the Internal Revenue Code upon the Company's qualified employee pension benefit plans. The Company hereby amends and restates the Plan effective as of January 1, 1995. 2. Each of the following persons ("Participant") shall participate in the Plan: (a) Any person who is a full-time employee of the Company (or of any of its affiliates which adopts the Plan in writing with the consent of the Company, such affiliate being hereinafter referred to as a "Sponsoring Affiliate"), and whose benefits under the qualified defined benefit plans sponsored by the Company or by any of such Sponsoring Affiliates are, as a result of the application of section 401(a)(17) and section 415 of the Internal Revenue Code of 1986, as amended ("Code"), less than the amount otherwise payable from such defined benefit plans in the absence of the limitations in such sections. (b) Any person who is a full-time employee of the Company (or of any of such Sponsoring Affiliates), and whose allocations under the qualified defined contribution plans sponsored by the Company or by any of such Sponsoring Affiliates are, as a result of the application of section 401(a)(17) and section 415 of the Code, less than the amount which could otherwise be allocated to his or her account in such defined contribution plans in the absence of the limitations in such sections. 3. With respect to each Participant described in paragraph 2(a), benefits payable under the Plan shall be an amount equal to the difference between (a) the amount which would be payable to the Participant under the appropriate qualified defined benefit plan in which he or she participates in the absence of the limitations in section 401(a)(17) and section 415 of the Code and (b) the amount payable to the Participant under the qualified defined benefit plan sponsored by the Company or by the Sponsoring Affiliate in which he or she participates. 4. With respect to each Participant described in paragraph 2(b), an allocation shall be credited each year to an account in such Participant's name on the records of the Company as of the date such allocation would have been made to the qualified defined contribution plan in which he or she participates in the absence of the limitations in section -37- 401(a)(17) and section 415 of the Code, in an amount equal to the difference between (a) the amount which could have been allocated to such Participant's account in the qualified defined contribution plan in which he or she participates in the absence of the limitations in section 401(a)(17) and section 415 of the Code and (b) the amount actually allocated to his or her account in such qualified defined contribution plan. Subject to paragraph 5 hereof, each Participant's account under the Plan will also be credited with interest as of the last day of each calendar quarter equal to two percentage points in excess of the Moody's Corporate Bond Yield Average, determined as of the last day of the quarter, or such other interest rate as may be established by the Organization and Compensation Committee of the Board of Directors of the Company for such purpose. A separate account shall be maintained on the records of the Company and Sponsoring Affiliate in the name of each Participant for each qualified defined contribution plan sponsored by such entity in which the Participant participates. 5. The Company and each Sponsoring Affiliate shall establish an irrevocable grantor trust ("Rabbi Trust") to which the Company and its Sponsoring Affiliates (as the case may be) may, at the sole discretion of their respective boards of directors, make contributions for the purpose of satisfying all or a portion of their obligations under the Plan. Any benefits paid from such Rabbi Trust shall reduce the amount of the benefits payable hereunder by the Company or its Sponsoring Affiliate (as the case may be) from its general corporate assets. In addition, to the extent any benefits become payable to a Participant pursuant to the terms of a split dollar supplemental offset plan established by the Company or any Sponsoring Affiliate (including the vesting of a Participant's interest in a life insurance policy purchased under such a plan), the value of such benefits shall reduce the amount of any benefits otherwise payable hereunder by the Company or any Sponsoring Affiliate. Notwithstanding the final paragraph of paragraph 4 hereof, if the Company or Sponsoring Affiliate makes a contribution to such Rabbi Trust, earnings credited to each Participant's accounts described in paragraph 4 hereof from and after the date of the contribution shall not be determined under paragraph 4 hereof, but rather shall be based on the investment performance of the Rabbi Trust. Furthermore (and notwithstanding any provision herein to the contrary), the Company and each Sponsoring Affiliate shall contribute to the Rabbi Trust that aggregate amount calculated pursuant to paragraph 6 hereof within ten days of a Change in Control. A "Change in Control" shall have occurred for purposes of the Plan if any of the following events shall occur: (i) The Company is merged, consolidated or reorganized into or with another corporation or other legal person, and as a result of such merger, consolidation or reorganization less than a majority of the combined voting power of the then- outstanding securities of such corporation or person immediately after such transaction are held in the aggregate by the holders of Voting Stock immediately prior to such transaction; -38- (ii) If the Company sells all or substantially all of its assets to any other corporation or other legal person, less than a majority of the combined voting power of the then- outstanding securities of such corporation or person immediately after such transaction are held in the aggregate by the holders of Voting Stock immediately prior to such sale; (iii) There is a report filed on Schedule 13D or Schedule 14D-1 (or any successor schedule, form or report), each as promulgated pursuant to the Exchange Act, disclosing that any Person has become the Beneficial Owner of 20 percent or more of the Voting Stock; (iv) The Company files a report or proxy statement with the Securities and Exchange Commission pursuant to the Exchange Act disclosing in response to Form 8-K or Schedule 14A (or any successor schedule, form or report or item therein) that a change in control of the Company has or may have occurred or will or may occur in the future pursuant to any then- existing contract or transaction; or (v) If during any period of two consecutive years, individuals who at the beginning of any such period constitute the directors of the Company cease for any reason to constitute at least a majority thereof, unless the election, or the nomination for election by the Company's shareholders, of each director of the Company first elected during such period was approved by a vote of at least two-thirds of the directors of the Company then still in office who were directors of the Company at the beginning of any such period. Notwithstanding the foregoing provisions of subparagraph (iii) or subparagraph (iv) hereof, a "Change in Control" shall not be deemed to have occurred for purposes hereof solely because (i) the Company, (ii) an entity in which the Company directly or indirectly beneficially owns 50 percent or more of the voting securities, or (iii) any employee stock ownership plan sponsored by the Company, operating company or affiliate (as the case may be) or any other employee benefit plan of the Company, operating company or affiliate, either files or becomes obligated to file a report or a proxy statement under or in response to Schedule 13D, Schedule 14D-1, Form 8-K or Schedule 14A (or any successor schedule, form or report or item therein) under the Securities Exchange Act of 1934, as amended ("Exchange Act"), disclosing beneficial ownership by it of shares of Voting Stock, whether in excess of 20 percent or otherwise, or because the Company reports that a change in control of the Company has or may have occurred or will or may occur in the future by reason of such beneficial ownership. For purposes of the foregoing (a) "Beneficial Owner" of Voting Stock shall mean any Person who would be deemed to beneficially own such Voting Stock within the meaning of Rule 13d-3 promulgated under the Exchange Act, or any successor rules or regulations thereto. -39- (b) "Person" shall mean any "person," as the term "person" is used and defined in Section 14(d)(2) of the Exchange Act, and any "affiliate" or "associate" of any such person, as the terms "affiliate" and "associate" are defined in Rule 12b-2 of the General Rules and Regulations under the Exchange Act as in effect on the date hereof. (c) "Voting Stock" shall mean all outstanding securities of the Company entitled to vote generally in the election of directors of the Company at the time in question. 6. The amount to be contributed to the Rabbi Trust in the event of the occurrence of a Change in Control (as defined in paragraph 5 hereof) shall be (a) the sum of (1) the value (determined as of the date the Change in Control occurs) of all vested benefits accrued to Participants in the defined contribution portion of the Plan as well as the value of all vested benefits in pay status to beneficiaries in the defined contribution portion of the Plan and (2) the amount necessary to purchase annuities which will provide Participants (as well as beneficiaries whose benefits are in pay status) with the vested benefits they have accrued in the defined benefit portion of the Plan as of the date the Change in Control occurs, less (b) any amounts previously contributed with respect to such Participants and such beneficiaries to the Rabbi Trust. To the extent that the Company or any Sponsoring Affiliate has entered into a split dollar supplemental offset plan agreement on behalf of any Participant, the amount to be contributed to the Rabbi Trust shall also be reduced by the value of such Participant's vested interest in the policy purchased under such supplemental offset plan agreement. 7. Benefits under the Plan shall be payable from those assets which are subject to the claims of general creditors of the Company and its Sponsoring Affiliates or from the Rabbi Trust at such time or times, and shall be subject to the same terms and conditions as if being paid pursuant to the appropriate underlying qualified plan. However, notwithstanding the foregoing, if the employment of a Participant terminates (either voluntarily or involuntarily) following the occurrence of a Change in Control (as defined in paragraph 5 hereof) but prior to the Participant's attainment of the age at which benefits would be payable to him or her under the qualified defined benefit plan sponsored by the Company or a Sponsoring Affiliate in which the Participant participates, upon written request by the Participant to the Company or Sponsoring Affiliate, as the case may be, which previously employed the Participant, such entity shall direct the trustee of the Rabbi Trust to purchase an annuity contract providing such Participant with benefits payable at such time or times, in such manner and in such amounts as would have otherwise been payable hereunder, and to deliver such annuity contract to the Participant within ten days of the date of such request or within ten days of the occurrence of the funding described in paragraph 6 hereof, whichever occurs later. Any payments to a Participant under such annuity contract shall fully discharge the payment obligations under the Plan with respect to such payments. Upon the death of the Participant, any balance in the Participant's account under paragraph 4 shall be paid to the Participant's beneficiary in the same manner and at the same time as any death benefits payable to the Participant's beneficiary under the Company's Retirement Savings and Profit-Sharing Plan, and any survivor benefit payable with respect -40- to the benefits under paragraph 3 shall be paid to the Participant's beneficiary in the same manner as the equivalent survivor benefit under the applicable defined benefit plan maintained by the Company (or a Sponsoring Affiliate). For purposes hereof, the beneficiary shall be determined by reference to the beneficiary designation form completed by the Participant for the Company's Retirement Savings and Profit-Sharing Plan or, if none, by reference to the provisions of said Plan. 8. Except to the extent that a Participant or former Participant may designate a beneficiary to receive any payment to be made following his or her death and except by will or the laws of descent and distribution, no rights under this Plan shall be assignable, transferrable or subject to encumbrance or charge of any nature. No claim for the nonpayment or erroneous payment of benefits hereunder may be made other than by the Participant or former Participant or by his or her estate acting on his or her behalf. 9. If a former Participant who is receiving (or is eligible to begin receiving) benefits under the Plan has a mental or physical condition which the Administrative Committee, in its sole discretion based on medical evidence it deems acceptable, determines will prevent such person from satisfactorily managing his or her personal financial affairs, the Administrative Committee may direct any and all of the benefits to which the former Participant may be entitled to be paid in any one or more of the following ways: (a) to the former Participant, or (b) to the former Participant's legal guardian or conservator, or (c) to the former Participant's spouse, (d) or to any other individual or entity to be expended for the benefit of the former Participant. Such payment shall be in complete satisfaction of the Company's obligations under the Plan. 10. The Company or its Sponsoring Affiliate may at any time amend, suspend or terminate the Plan in whole or in part with respect to its own employees, but such action shall not reduce the amount of benefits or income previously credited to the account of any Participant or former Participant. 11. Nothing contained herein shall be construed as a guarantee of employment nor as a limitation on the right to terminate the employment of any Participant in the Plan, either with or without cause. 12. The Plan shall be administered by the TRINOVA Corporation Administrative Committee. 13. The Plan is established under and shall be construed according to the laws of the State of Ohio. -41- The foregoing has been approved by and is being executed on behalf of TRINOVA Corporation effective as of January 1, 1995. TRINOVA CORPORATION EX-10 6 EXHIBIT 10-11 -42- EXHIBIT (10)-11 TRINOVA CORPORATION VOLUNTARY DEFERRED COMPENSATION PLAN 1. Purpose. TRINOVA Corporation hereby establishes the TRINOVA Corporation Voluntary Deferred Compensation Plan ("Plan"). The purpose of the Plan is to provide selected senior executive employees of TRINOVA Corporation and its subsidiaries (hereinafter, collectively referred to as the "Company") an opportunity to defer receipt of certain portions of the compensation otherwise payable to them by the Company, in accordance with the terms and conditions set forth herein. 2. Eligibility. The employees eligible to participate in the Plan shall be those senior executive employees of the Company whose base salary (on an annualized basis) is at least $150,000 per year. Such persons shall be referred to as "Participants." 3. Election to Defer. Each Participant may elect, by delivering a written election to the Administrative Committee described in paragraph 15, to defer receipt of between 10 percent and 50 percent (in increments of 5 percent) of his or her base salary (on an annualized basis). A Participant may also elect to defer receipt of between 10 percent and 100 percent (in increments of 5 percent) of his or her Annual Executive Incentive Plan award payable under the Company's Incentive Compensation Plan for any year. Such elections shall be made on such form as may be prescribed by the Administrative Committee. Once received by the Administrative Committee, a Participant's election to defer cannot be revoked and shall continue until the date specified in the election. However, a Participant may modify his or her election with respect to compensation payable for future periods by delivering a new written election to the Administrative Committee. The Participant's election to defer a portion of his or her base salary must be made prior to the beginning of the calendar year in which it will be earned. A Participant must make a separate election with respect to each year of participation in the Plan and may make separate elections with respect to his or her base salary and his or her annual executive incentive plan award for any year. A new Participant in the Plan shall have 30 days following his or her notification of eligibility by the Administrative Committee to make an election with respect to compensation to be earned for the balance of the year. 4. Deferred Compensation Account. At the time of the Participant's initial election to defer pursuant to paragraph 3, the Administrative Committee shall establish a recordkeeping account ("Deferred Compensation Account") for such Participant on the Company's records. All amounts deferred by a Participant in accordance with paragraph 3 shall be credited to the Participant's Deferred Compensation Account as of the date on which such compensation would have been paid to the Participant in the absence of the deferral election. -43- 5. Additions to Deferred Compensation Accounts. As of the last day of each calendar quarter, the Participant's Deferred Compensation Account shall be credited with interest equal to two percentage points in excess of the Moody's Corporate Bond Yield Average, determined as of the last day of the quarter, or such other interest rate as may be established by the Organization and Compensation Committee of the Board of Directors of the Company for such purpose. The crediting of an interest factor shall occur so long as there is a balance in the Participant's Deferred Compensation Account regardless of whether the Participant has terminated employment with the Company, or has died. Notwithstanding the foregoing provisions of this paragraph, however, no interest shall be credited to amounts withdrawn from the Participant's Deferred Compensation Account, which amounts had been credited to such Account for less than three years, unless such amounts are withdrawn on account of the Participant's death or disability. 6. Payment of Deferred Amounts. (a) When a Participant commences participation in the Plan, he or she shall indicate on an election form provided by the Administrative Committee a date certain on which the amount in his or her Deferred Compensation Account shall be paid, or shall commence being paid. The Participant may also designate on such election form an interim distribution date on which a specified part of his or her Deferred Compensation Account, not to exceed the aggregate amount the Participant has deferred, without interest, shall be paid to the Participant in a lump sum. The amount in the Participant's Deferred Compensation Account shall be paid, or shall commence being paid, as soon as administratively feasible following the date indicated in such election form. However, if a Participant terminates employment with the Company for reasons other than retirement prior to the date specified in such election form, the amount in his or her Deferred Compensation Account shall be paid, or shall commence being paid, as soon as administratively feasible following the date of such termination of employment. (b) The Participant may elect to receive payment of the balance credited to his or her Deferred Compensation Account either (i) in a lump sum or (ii) as a series of equal annual installments, over a five year or ten year period, as the Participant shall elect at the time of the deferral election. No modification or revocation of the election of the form of benefit distribution will be recognized if made during the one year period before the Deferred Compensation Account becomes payable. If no election is made, the balance will be paid as a series of annual installments over a period of ten years. (c) In the event of the Participant's death, the balance in the Participant's Deferred Compensation Account shall be paid to the Participant's beneficiary in a lump sum as soon as administratively feasible following the end of the calendar quarter in the which the death of the Participant occurs. For purposes hereof, the beneficiary shall be determined by reference to the beneficiary designation form completed by the Participant for the Company's Retirement Savings and -44- Profit-Sharing Plan or, if none, by reference to the provisions of said Plan. 7. Hardship Withdrawals. Any provision in paragraph 6 to the contrary notwithstanding, in the event a Participant incurs a severe unforeseeable financial emergency, the Administrative Committee, in its sole discretion and upon written application of such Participant, may direct immediate payment of all or a portion of the then current value of such Participant's Deferred Compensation Account, provided, however, that such payment shall in no event exceed the amount necessary to alleviate such financial hardship. For purposes of this paragraph, an unforeseeable financial emergency shall consist of a severe financial hardship to the Participant resulting from a sudden and unexpected illness or accident of the Participant or of a dependent of the Participant, loss of the Participant's property due to casualty, or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant. The circumstances that will constitute an unforeseeable emergency will be determined by the Administrative Committee upon the facts of each case, but, in any case, payment may not be made to the extent that such hardship is or may be relieved: (i) through reimbursement or compensation by insurance or otherwise, (ii) by liquidation of the Participant's assets, to the extent the liquidation of such assets would not itself cause severe financial hardship, or (iii) by cessation of deferrals under the Plan. 8. Grantor Trust. The Company shall establish an irrevocable grantor trust ("Rabbi Trust") to which the Company may, at the sole discretion of its Board of Directors (except to the extent contributions may be required under paragraph 9), make contributions for the purpose of satisfying all or a portion of the Company's obligations under the Plan. Any benefits paid from such Rabbi Trust to a Participant or beneficiary shall reduce the amount of the benefits payable hereunder by the Company from its general corporate assets. Notwithstanding the provisions of paragraph 5, if the Company makes a contribution to such Rabbi Trust, earnings credited to each Participant's account from and after the date of the contribution shall not be determined under paragraph 5, but rather shall be determined based on the investment performance of the Rabbi Trust. 9. Effect of Change in Control. Upon the occurrence of a Change in Control of the Company the Company shall make a contribution to the Rabbi Trust in an amount equal to the sum of the balance credited to all Participants' Deferred Compensation Accounts at such time. A "Change in Control" shall have occurred for purposes of the Plan if any of the following events shall occur: -45- (i) The Company is merged, consolidated or reorganized into or with another corporation or other legal person, and as a result of such merger, consolidation or reorganization less than a majority of the combined voting power of the then-outstanding securities of such corporation or person immediately after such transaction are held in the aggregate by the holders of the Company's Voting Stock immediately prior to such transaction; (ii) If the Company sells all or substantially all of its assets to any other corporation or other legal person, less than a majority of the combined voting power of the then-outstanding securities of such corporation or person immediately after such transaction are held in the aggregate by the holders of the Company's Voting Stock immediately prior to such sale; (iii) There is a report filed on Schedule 13D or Schedule 14D-1 (or any successor schedule, form or report), each as promulgated pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange Act"), disclosing that any Person has become the Beneficial Owner of 20 percent or more of the Company's Voting Stock; (iv) The Company files a report or proxy statement with the Securities and Exchange Commission pursuant to the Exchange Act disclosing in response to Form 8-K or Schedule 14A (or any successor schedule, form or report or item therein) that a change in control of the Company has or may have occurred or will or may occur in the future pursuant to any then-existing contract or transaction; or (v) If during any period of two consecutive years, individuals who at the beginning of any such period constitute the directors of the Company cease for any reason to constitute at least a majority thereof, unless the election, or the nomination for election by the Company's shareholders, of each director of the Company first elected during such period was approved by a vote of at least two-thirds of the directors of the Company then still in office who were directors of the Company at the beginning of any such period. Notwithstanding the foregoing provisions of subparagraph (iii) or subparagraph (iv) hereof, a "Change in Control" shall not be deemed to have occurred for purposes hereof solely because (i) the Company, (ii) an entity in which the Company directly or indirectly beneficially owns 50 percent or more of the voting securities, or (iii) any employee stock ownership plan sponsored by the Company, operating company or affiliate (as the case may be) or any other employee benefit plan of the Company, operating company or affiliate, either files or becomes obligated to file a report or a proxy statement under or in response to Schedule 13D, Schedule 14D-1, Form 8-K or Schedule 14A (or any successor schedule, form or report or item therein) under the Exchange Act, disclosing beneficial ownership by it of shares of the Company's Voting Stock, whether in excess of 20 percent or otherwise, or because the Company reports that a change in control of the Company has or may have occurred or will or may occur in the future by reason of such beneficial ownership. -46- For purposes of the foregoing (a) "Beneficial Ownership" of Voting Stock shall mean any Person who would be deemed to beneficially own such Voting Stock within the meaning of Rule 13d-3 promulgated under the Exchange Act, or any successor rules or regulations thereto. (b) "Person" shall mean any "person," as the term "person" is used and defined in Section 14(d)(2) of the Exchange Act, and any "affiliate" or "associate" of any such person, as the terms "affiliate" and "associate" are defined in Rule 12b-2 of the General Rules and Regulations under the Exchange Act as in effect on the date hereof. (c) "Voting Stock" shall mean all outstanding securities of the Company entitled to vote generally in the election of directors of the Company at the time in question. 10. Participant Reports. The Administrative Committee shall provide a statement to the Participant concerning the status of his or her Deferred Compensation Account at least annually. 11. Payment to Incapacitated Participants. If a former Participant who is receiving (or is eligible to begin receiving) benefits under the Plan has a mental or physical condition which the Administrative Committee, in its sole discretion based on medical evidence it deems acceptable, determines will prevent such person from satisfactorily managing his personal financial affairs, the Administrative Committee may direct any and all of the benefits to which the former Participant may be entitled under the Plan to be paid: (a) to the former Participant, or (b) to the former Participant's legal guardian or conservator, or (c) to the former Participant's spouse, or (d) to any other individual or entity for the benefit of the Participant. Such payment shall be in complete satisfaction of the Company's obligations under the Plan. 12. Non-Transferability of Interest. Amounts credited to Participant's Deferred Compensation Account shall be considered as general assets of the Company for use as it deems necessary and shall be subject to the claims of the Company's creditors. The rights and interests of a Participant during the Deferral Period shall be those of a general creditor, except to the extent that a Participant may designate a beneficiary to receive any payment to be made following his or her death, and except by will or the laws of descent and distribution, the Participant's rights under this Plan may not be assigned, pledged, transferred or otherwise subject to encumbrance or change of any nature. No claim for the nonpayment or erroneous payment of benefits hereunder may be made other than by the Participant or by his or her designated beneficiary. -47- 13. Unfunded Obligation. The Plan shall not be funded, and no trust, escrow or other provisions shall be established to secure payments due under the Plan. A Participant shall be treated as a general, unsecured creditor at all times under the Plan. 14. Amendment, Suspension and Termination. The Board of Directors of the Company may amend, suspend, or terminate the Plan or any portion thereof in such manner and to such extent as it may deem advisable and in the best interest of the Company. No amendment, suspension and termination shall alter or impair any Participant's rights with respect to his or her Deferred Compensation Account without the consent of the Participant affected thereby. 15. Administrative Committee. The Plan shall be administered by the TRINOVA Corporation Administrative Committee. The Administrative Committee shall have sole and complete authority to interpret the terms and provisions of the Plan and to adopt, alter and repeal such administrative rules, regulations and practices governing the operation of the Plan as it shall from time to time deem advisable. Any reference in the Plan to the Administrative Committee shall, to the extent appropriate, be deemed to refer to any person or persons to whom duties or responsibilities are delegated by such Committee. 16. No Right to Employment or Other Benefits. Nothing contained herein shall be construed as conferring upon any Participant the right to continue in the employ of the Company. Any compensation deferred and any benefits paid under the Plan shall not be included in creditable compensation in computing benefits under any qualified employee benefit plan of the Company except to the extent expressly provided for therein. 17. Governing Law. The Plan is established under and shall be construed according to the laws of the State of Ohio. 18. Effective Date. The Plan shall be effective April 1, 1995, subject to approval by the Board of Directors of the Corporation. Thereupon, eligible Participants shall be permitted to make an election under paragraph 4 within 30 days with respect to compensation to be earned during the balance of the fiscal year. The foregoing Voluntary Deferred Compensation Plan has been approved by and is being executed on behalf of TRINOVA Corporation. TRINOVA CORPORATION EX-11 7 EXHIBIT 11 -48- EXHIBIT (11)
STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS TRINOVA CORPORATION (In thousands, except per share data) Year Ended December 31 -------------------------------------- 1994 1993 1992 -------- -------- -------- Average shares outstanding 28,719 28,321 28,232 Assumed conversion of the 6 percent convertible debentures 1,905 - - Net effect of dilutive stock options based upon treasury stock method using average market price 191 84 27 --------- --------- --------- Average shares of common stock and common stock equivalents outstanding 30,815 28,405 28,259 ========= ========= ========= Income before cumulative effect of accounting change $ 65,855 $ 10,511 $ 14,442 After-tax equivalent of interest expense on the 6 percent convertible debentures 3,720 - - Cumulative effect to January 1, 1993, of accounting change, net of income tax benefit - (70,229) - --------- --------- --------- Net income (loss) $ 69,575 $ (59,718) $ 14,442 ========= ========= ========= Income before cumulative effect of accounting change $ 2.26 $ .37 $ .51 Cumulative effect of accounting change, net of income tax benefit - (2.47) - --------- --------- --------- NET INCOME (LOSS) PER SHARE $ 2.26 $ (2.10) $ .51 ========= ========= ========= Note - Net income (loss) per share is computed using the average number of common shares outstanding, including common stock equivalents. For purposes of computing net income per share for 1994, the assumed conversion of the Company's 6 percent convertible debentures was included in average shares outstanding, increasing the average number of shares outstanding by 1,904,762 shares, and net income was increased for the after-tax equivalent of interest expense on the debentures. The assumed conversion of the 6 percent convertible debentures was not included in average shares outstanding for 1993 and 1992 because the effect of the inclusion would have been anti-dilutive.
EX-13 8 EXHIBIT 13 -49- EXHIBIT (13) PORTIONS OF THE 1994 ANNUAL REPORT TO SHAREHOLDERS
11-Year Summary of Selected Financial Data Years Ended December 31 (1994-1989) (Dollars in millions, except per share data) 1994 1993 1992 1991 1990 1989 Continuing Operations Net sales $1,794.7 $1,643.8 $1,695.5 $1,681.2 $1,955.4 $1,942.3 Cost of products sold 1,351.4 1,247.4 1,307.4 1,309.1 1,477.7 1,441.4 Interest expense 21.1 25.5 26.3 26.5 31.7 28.6 Income taxes (credit) 35.4 6.6 9.6 (11.2) 29.6 29.6 Income (loss) from continuing operations before cumulative effect adjustment 65.9 10.5a 14.4 (184.1)c 45.5d 33.4e Discontinued operations - - - - - (1.1)f Cumulative effect adjustment - (70.2) - - - - Net Income (Loss) 65.9 (59.7) 14.4 (184.1) 45.5 32.3 Income (Loss) Attributable to Common Stock 69.6 (59.7) 14.4 (184.1) 45.5 32.3 Per Common Share Data Primary - - Continuing operations before cumulative effect adjustment 2.26 .37 .51 (6.52)c 1.51d .98e - - Discontinued operations - - - - - (.03)f - - Cumulative effect adjustment - (2.47) - - - - - - Net income (loss) 2.26 (2.10) .51 (6.52) 1.51 .95 - - Average shares outstanding (in millions) 30.8 28.4b 28.3b 28.2b 30.2b 34.1b Financial Position Cash 27.9 20.5 26.3 26.6 25.5 23.0 Plants and properties-net 379.8 386.8 405.5 434.5 467.2 455.8 Total assets 1,001.0 972.2 1,017.4 1,070.4 1,314.2 1,361.5 Working capital 251.0 162.4 178.6 123.2 242.5 322.5 Long-term debt 234.9 246.2 239.1 177.3 195.6 203.9 Shareholders' equity 320.0 253.2 352.9 374.6 598.7 651.3 Other Data Cash dividends per share - - Common .68 .68 .68 .68 .68 .66 - - Preferred Shares outstanding at Dec. 31 (in millions) - - Common 28.8 28.4 28.2 28.2 28.2 33.0 - - Preferred Return on average shareholders' equity 22.6% -a 4.0% -c 7.4% 4.8%e Debt-to-capitalization ratio 42.6% 55.1% 50.3% 47.0% 35.5% 30.4% Number of employees at Dec. 31 - - Non-U.S. 4,965 5,094 5,948 6,516 7,935 8,835 - - U.S. 10,059 9,918 9,975 11,180 11,486 12,762 - - Total 15,024 15,012 15,923 17,696 19,421 21,597
-50-
11-Year Summary of Selected Financial Data Years Ended December 31 (1988-1984) (Dollars in millions, except per share data) 1988 1987 1986 1985 1984 Continuing Operations Net sales $1,781.3 $1,533.2 $1,279.2 $1,114.7 $ 988.3 Cost of products sold 1,294.8 1,105.6 909.7 788.2 668.1 Interest expense 31.8 30.3 23.2 24.1 25.1 Income taxes (credit) 51.5 51.7 24.7 35.3 35.1 Income (loss) from continuing operations before cumulative effect adjustment 87.5g 68.3 31.4i 47.6 50.2 Discontinued operations .3 4.2 91.1j 27.1 20.5 Cumulative effect adjustment - (12.5) - - - Net Income (Loss) 87.8 59.9 122.6 74.6 70.6 Income (Loss) Attributable to Common Stock 91.6 58.9 118.1 69.9 65.8 Per Common Share Data Primary - - Continuing operations before cumulative effect adjustment 2.53g 2.00 .80i 1.17 1.34 - - Discontinued operations .01 .12 2.68j .73 .60 - - Cumulative effect adjustment - (.37) - - - - - Net income (loss) 2.54 1.75 3.48 1.90 1.94 - - Average shares outstanding (in millions) 36.1 33.7 33.9 36.7 33.9 Financial Position Cash 37.1 24.0 17.6 25.8 20.7 Plants and properties-net 464.1 437.0 354.8 291.5 209.5 Total assets 1,426.7 1,319.7 1,155.1 1,204.9 969.8 Working capital 407.9 283.0 240.7 410.3 359.8 Long-term debt 279.0 244.1 148.7 216.6 205.1 Shareholders' equity 679.2 614.4 549.7 716.3 529.4 Other Data Cash dividends per share - - Common .60 .53 .476 .447 .41 - - Preferred 1.1875 4.75 4.75 4.75 Shares outstanding at Dec. 31 (in millions) - - Common 34.2 34.1 30.2 41.5 33.9 - - Preferred .9 1.0 1.0 Return on average shareholders' equity 13.7% 10.4% 19.9%ij 12.2% 13.7% Debt-to-capitalization ratio 34.9% 35.7% 33.0% 27.8% 33.5% Number of employees at Dec. 31 - - Non-U.S. 9,251 7,683 7,258 7,005 6,030 - - U.S. 12,979 11,964 10,828 10,592 8,973 - - Total 22,230 19,647 18,086 17,597 15,003 -51- (a) Includes a special charge for severance and other personnel-related costs amounting to $26 million pretax, $18.2 million net ($.64 per share) and a provision for unsuccessfully contested prior years' value-added taxes in Brazil amounting to $7 million pretax, $4.7 million net ($.17 per share). (b) The Company's 6 percent convertible debentures, which are common stock equivalents, have not been included in average shares outstanding because the effect of their inclusion would be anti-dilutive. (See Note 1, Net Income (Loss) per Share, of Notes to Financial Statements.) (c) Includes a special charge for the write-off of intangibles and other charges amounting to $166.4 million pretax, $156.4 million net ($5.54 per share) and a gain from settlement of outstanding litigation associated with the purchase and installation of automated factory equipment amounting to $2.3 million pretax, $1.4 million net ($.05 per share). (d) Includes settlement gains associated with terminated pension plans amounting to $5.2 million pretax, $2.8 million net ($.09 per share). (e) Includes a provision for restructuring amounting to $53 million pretax, $38.5 million net ($1.13 per share); a provision of $8 million pretax, $5 million net ($.15 per share) for costs associated with the write-down in value of a flexible manufacturing system; and a gain of $4 million pretax, $2.5 million net ($.07 per share) from the sale of certain investments. (f) Includes a loss on the sale of the Laminated Products Group business amounting to $1.7 million pretax, $1.1 million net ($.03 per share). (g) Includes settlement gains associated with terminated pension plans amounting to $6.1 million pretax, $3.3 million net ($.09 per share). (h) 1987 financial statements were restated to reflect the adoption of FASB Statement No. 96 retroactive to January 1, 1987. This change in accounting method decreased net income for the year ended December 31, 1987, by $2.7 million ($.08 per share). Net income for the year ended December 31, 1987, was also decreased $12.5 million ($.37 per share) for the cumulative effect of the change in accounting related to years prior to 1987 which were not restated. (i) Includes a provision for restructuring amounting to $49.1 million pretax, $28.4 million net ($.84 per share). (j) Includes a gain from disposal of the Glass business and other associated gains amounting to $99.4 million pretax, $85 million net ($2.50 per share). All applicable common share amounts and per share data have been adjusted to reflect the two-for-one common stock split in 1987 and the three-for-two common stock split in 1986.
-52- FINANCIAL REVIEW AND ANALYSIS OF OPERATIONS
Analysis of Operations 1994 Compared with 1993 The following data provide highlights for the year 1994 compared with the year 1993. Percent (dollars in thousands, Year Ended December 31 Increase except per share data) 1994 1993 (Decrease) CONSOLIDATED Net sales $1,794,695 $1,643,841 9.2% Manufacturing income 443,292 396,427 11.8 Manufacturing margin 24.7% 24.1% Special charge -- 26,000 -- Operating income 141,069 68,892* 104.8 Operating margin 7.9% 4.2%* Income before cumulative effect of accounting change 65,855 10,511* -- Cumulative effect to January 1, 1993, of accounting change, net of income tax benefit -- (70,229) -- Net income (loss) 65,855 (59,718)* -- Net Income (Loss) per Share Income before cumulative effect of accounting change 2.26 .37* -- Cumulative effect of accounting change, net of income tax benefit -- (2.47) -- Net income (loss) per share 2.26 (2.10)* -- Number of employees 15,024 15,012 .1) INDUSTRIAL Net sales 963,446 864,590 11.4 Special charge -- 19,200 -- Operating income 89,281 17,118* -- Operating margin 9.3% 2.0%* Order backlog at December 31 185,022 148,399 24.7 AUTOMOTIVE Net sales 514,273 452,637 13.6 Special charge -- 2,600 -- Operating income 46,841 45,724* 2.4 Operating margin 9.1% 10.1%* AEROSPACE & DEFENSE Net sales 316,976 326,614 (3.0) Special charge -- 3,600 -- Operating income 28,114 26,016* 8.1 Operating margin 8.9% 8.0%* Order backlog at December 31 267,019 278,351 (4.1) *After deducting the special charge.
-53- Consolidated sales for 1994 increased 9.2 percent. Sales for the industrial and automotive segments increased 11.4 and 13.6 percent, respectively, over 1993, but aerospace & defense sales declined 3 percent. U.S. sales increased $110.3 million, or 10.5 percent, and non-U.S. sales increased $40.6 million, or 6.9 percent. Changes in currency exchange rates accounted for nearly $8 million of the increase. The Company's industrial segment sales increased $98.9 million, or 11.4 percent. U.S. industrial markets continued to strengthen throughout the year, led by growing mobile equipment and machine tool markets, which contributed to an increase in the Company's U.S. industrial sales of 13.7 percent. Strengthening economies contributed to improved industrial sales for the Company in Europe in each of the last three quarters of 1994 compared with the prior year. Non-U.S. industrial sales increased nearly 7.5 percent, the result of increased sales in Asia/Pacific and Brazil in addition to the growth in Europe. Industrial sales in Europe are expected to continue to increase in 1995 as the economies in most countries improve and the Company recognizes the benefits of increased momentum from a new distribution strategy that will focus more directly on the capabilities of a realigned distributor network. Order intake continued to show strong improvement compared with the prior year, increasing 13.4 percent. This resulted in order backlog at December 31, 1994, of $185 million which was $36.6 million, or 24.7 percent, greater than at December 31, 1993. The Company's automotive segment sales increased $61.6 million, or 13.6 percent, over 1993. U.S. production of cars, vans and light trucks improved significantly, which contributed to an increase in TRINOVA's U.S. automotive sales of nearly 20 percent. Recovery of the automotive markets in Europe proceeded more slowly. As a result of this slower growth and the winding down of certain long-term supply contracts in the second half of the year, the Company's growth in automotive sales in Europe in 1994 was held to 7 percent over 1993. Certain other automotive programs will also be ending during 1995, which may reduce automotive sales for the second half of the year below their 1994 level. The Company's aerospace & defense segment sales declined $9.6 million, or 3 percent, from 1993. In addition to the effects of continued low levels of defense spending, the sale of a small electric motor business in the 1994 first quarter contributed to the sales decline. Nonetheless, the aerospace & defense segment had a strong fourth quarter, with increased sales over the 1993 fourth quarter and each of the previous 1994 quarters. This increase was due to improvements in both original equipment and spare parts sales. Order backlog at December 31, 1994, of $267 million was $11.3 million, or 4.1 percent, lower than at December 31, 1993. Consolidated manufacturing margin improved to 24.7 percent from 24.1 percent in 1993. Manufacturing margin for the industrial and aerospace & defense segments improved in 1994, while manufacturing margin for the automotive segment declined. In addition to the benefit of increased sales due to both increased volume and selective price increases in the industrial segment, each -54- of the segments continued to realize the benefit of restructuring efforts. Restructuring initiatives to streamline operations and improve manufacturing and distribution processes have resulted in improved factory throughput and customer service which contributed to improved margins. Automotive segment margins, however, were adversely affected by the conclusion in 1994 of certain highly profitable programs, a shift in sales mix in Europe to lower margin business and program start-up inefficiencies. Increases in provisions for profit-sharing contributions to employees retirement savings plans due to higher earnings in 1994 also served to lower manufacturing margin for each of the segments, particularly industrial. The effect of liquidation of LIFO inventory quantities on cost of products sold and manufacturing income in 1994 was not significant, while in 1993, liquidation of LIFO inventory quantities reduced cost of products sold by $7.6 million. Selling and general administrative and engineering, research and development expenses (operating expenses) were slightly higher in 1994, than in 1993, but, as a percent of sales, were 16.8 percent in 1994 compared with 18.3 percent in 1993. The Company continues to aggressively pursue reduction of its operating expenses. However, significantly higher net income in 1994 led to increases in provisions for profit-sharing contributions to employees' retirement savings plans and incentive compensation that were charged to operating expenses. Operating income for 1994 was $141.1 million, compared with $68.9 million in 1993. Before deducting the special charge of $26 million in 1993, operating income was $94.9 million. Interest expense for 1994 of $21.1 million was $4.5 million lower than in 1993, reflecting the effect of lower average debt levels in 1994. Other expenses - net were $7.5 million lower than in 1993 when the Company recognized a charge of $7 million ($4.7 million after tax, or $.17 per share) to provide for unsuccessfully contested prior years' value-added taxes in Brazil. Net income for 1994 amounted to $65.9 million, or $2.26 per share, compared with income before cumulative effect of accounting change in 1993 of $10.5 million, or $.37 per share. After cumulative effect of change in accounting, net loss for 1993 was $59.7 million, or $2.10 per share. The effective tax rate for 1994 was 35 percent, compared with an effective rate in 1993 of 38.6 percent. The Company evaluated the likelihood of realizing the future benefits of deferred tax assets recorded at December 31, 1994. Valuation allowances were provided for those deferred tax assets where the Company concluded that the future benefits were not likely to be realized. Valuation allowances relate to deferred tax assets in non-U.S. taxing jurisdictions. -55-
1993 Compared with 1992 The following data provide highlights for the year 1993 compared with the year 1992. Percent (dollars in thousands, Year Ended December 31 Increase except per share data) 1993 1992 (Decrease) CONSOLIDATED Net sales $1,643,841 $1,695,512 (3.0)% Manufacturing income 396,427 388,155 2.1 Manufacturing margin 24.1% 22.9% Special charge 26,000 -- -- Operating income 68,892* 58,980 16.8 Operating margin 4.2%* 3.5% Income before cumulative effect of accounting change 10,511* 14,442 (27.2) Cumulative effect to January 1, 1993, of accounting change, net of income tax benefit (70,229) -- -- Net income (loss) (59,718)* 14,442 -- Income (Loss) per Share Income before cumulative effect of accounting change .37* .51 (27.5) Cumulative effect of accounting change, net of income tax benefit (2.47) -- -- Net income (loss) per share (2.10)* .51 -- Number of employees 15,012 15,923 (5.7) INDUSTRIAL Net sales 864,590 902,794 (4.2) Special charge 19,200 -- -- Operating income 17,118* 16,733 2.3 Operating margin 2.0%* 1.9% Order backlog at December 31 148,399 152,225 (2.5) AUTOMOTIVE Net sales 452,637 415,387 9.0 Special charge 2,600 -- -- Operating income 45,724* 32,291 41.6 Operating margin 10.1%* 7.8% AEROSPACE & DEFENSE Net sales 326,614 377,331 (13.4) Special charge 3,600 -- -- Operating income 26,016* 29,756 (12.6) Operating margin 8.0%* 7.9% Order backlog at December 31 278,351 321,610 (13.5) *After deducting the special charge.
-56- Consolidated sales for 1993 were 3 percent lower than in 1992. Sales for the Company's industrial and aerospace & defense segments declined during the year, but automotive segment sales increased. Consolidated U.S. sales increased $21.2 million, or 2.1 percent, but non-U.S. sales declined $72.9 million, or 11.0 percent. Changes in currency exchange rates accounted for nearly $51 million of the decline. Industrial sales declined $38.2 million, or 4.2 percent, from 1992. U.S. sales increased $18.2 million, or 3.4 percent, over the prior year as key markets in the U.S. industrial sector continued to improve. Sales within industrial markets in Asia/Pacific and Brazil also improved over 1992. Industrial sales in Europe, however, declined from 1992 levels, principally the result of the ongoing recession in most European countries. Including the effects of changes in currency exchange rates, industrial sales in Europe declined nearly 26 percent from the prior year. Automotive sales increased $37.3 million, or 9.0 percent, over 1992. U.S. automotive sales increased $37 million, or nearly 20 percent, over the prior year and included the effect of consolidation in 1993 of a joint venture that had previously been accounted for by the equity method. The Company's European automotive sales volume remained strong during 1993, but because of the negative effects of changes in currency exchange rates, the reported European sales were flat compared with 1992. Aerospace & defense sales declined $50.7 million, or 13.4 percent, from 1992. This reduction reflected the continued weak conditions in worldwide aerospace and defense markets, as both U.S. and non-U.S. sales were lower than in 1992. U.S. government defense spending continued to decline, and commercial aircraft manufacturers continued to cut back production schedules. Partially offsetting this trend, sales to the commercial aftermarket and repair markets continued to grow in 1993. Consolidated manufacturing margin improved to 24.1 percent from 22.9 percent for 1992. Manufacturing margin for the industrial and automotive segments improved in 1993. Manufacturing margin for the aerospace & defense segment remained flat compared with 1992, although volume was 13.4 percent lower. Aggressive cost-reduction efforts and continued consolidation of operations and manufacturing processes contributed to improved margins. Liquidation of LIFO inventory quantities reduced cost of products sold, principally benefiting the industrial segment, by $7.6 million in 1993, compared with $6.6 million in 1992. Underabsorption of manufacturing burden due to continued inventory reduction partially offset this benefit in both years. Initiatives which were undertaken in 1992 to reduce selling and general administrative and engineering, research and development expenses were aggressively pursued during 1993. Operating expenses in 1993 were $27.6 million, or 8.4 percent, lower than in 1992 and were 18.3 percent of sales in 1993, compared with 19.4 percent in 1992. The reduction in engineering, research and development expenses was the result of a streamlining of efforts to achieve greater efficiency. -57- In the 1993 second quarter, the Company recorded a $26 million ($18.2 million after tax, or $.64 per share) provision for severance and other personnel- related costs associated with worldwide work force reductions, primarily focusing on the Company's industrial operations in Europe. The number of employees worldwide was reduced by approximately 900 persons, or 6 percent, during the year 1993, which contributed to the improvement in manufacturing and operating margins. Restructuring payments in 1993 (net of proceeds from sale of properties) amounted to $17.4 million. This compares with restructuring payments in 1992 totaling $31.7 million. Operating income for the year ended December 31, 1993, amounted to $68.9 million after deducting the special charge of $26 million and compares with operating income for the year 1992 of $59.0 million. Other expenses - net were $17.6 million greater in 1993 than in 1992. In the 1993 fourth quarter, the Company recognized a charge of $7 million ($4.7 million after tax, or $.17 per share) to provide for unsuccessfully contested prior years' value-added taxes in Brazil. Also, Other expenses - net for the year 1993 included exchange losses of $10.6 million, principally relating to Brazil, compared with $4.9 million for the year 1992. Income before cumulative effect of accounting change amounted to $10.5 million, or $.37 per share, compared with net income of $14.4 million, or $.51 per share, in 1992. The effective tax rate for the year 1993 was 38.6 percent. Adjustment of net deferred tax assets due to the change in the statutory U.S. federal income tax rate reduced the provision for income taxes for the year ended December 31, 1993, by approximately $1 million. The effective income tax rate for the year 1992 was 39.9 percent. Liquidity, Working Capital and Capital Investment Cash provided by operating activities during 1994 totaled $143 million, compared with $128.9 million in 1993. Higher earnings in 1994 compared with 1993, after adjustment for the cumulative effect of change in accounting and special charge, contributed to the increase in cash provided by operations. Cash provided by changes in payables, other assets and accruals was more than offset by the effect of increased receivables. Of the increase in receivables, $25 million was due to a reduction in the amount of accounts receivable sold. Restructuring payments in 1994 totaling $6 million, net of proceeds from sale of properties and business, were $11.5 million lower than in the prior year. Inventory reductions in 1993 provided cash of $42.7 million, compared with a nominal increase in inventories in 1994. Income tax payments in 1994 were $13 million less than in 1993. Capital expenditures totaled $55.2 million in 1994, nearly the same as capital spending in 1993. Capital spending for 1995, however, is projected to grow significantly to support manufacturing process improvements. Quarterly dividend payments for 1994 were $.17 per share, or $.68 per share for the year. In January 1995, the Company's Board of Directors approved a dividend for the first quarter of 1995 of $.18 per share, equal to an annualized rate of $.72 per share. Debt payments, net of borrowings, totaled $72.6 million in 1994, compared with $57.8 million in 1993. The debt-to-capitalization ratio (debt divided by debt plus equity) was 42.6 percent at December 31, 1994, down from 55.1 percent at December 31, 1993. In 1994, the Company executed a five-year, $175 million -58- revolving credit agreement with a consortium of U.S. and non-U.S. banks. The agreement is intended to support the Company's commercial paper borrowings, and, to the extent not so utilized, provide domestic borrowing capacity. There were no borrowings under this agreement or commercial paper outstanding at December 31, 1994. In addition, the Company has uncommitted arrangements with various banks to provide short-term financing as necessary. The Company expects that cash flow from operating activities will be sufficient to meet normal operating requirements over the near term. The Company or certain of its subsidiaries have been named potentially responsible parties (PRP) for site investigation and cleanup costs under the Comprehensive Environmental Response, Compensation, and Liability Act (Superfund) or similar state laws with respect to certain sites. In addition, the Company has undertaken corrective and preventive environmental projects of its own to achieve compliance with applicable environmental laws at certain of its facilities. The Company believes that the costs arising out of such PRP designations and the Company's compliance projects will not have a material adverse effect on the Company's consolidated financial position. -59- QUARTERLY RESULTS OF OPERATIONS (UNAUDITED) The following is a summary of the quarterly results of operations for the years ended December 31, 1994 and 1993.
1994 -------------------------------------------------------- Three Months Ended -------------------------------------------- Year Ended Mar 31 Jun 30 Sep 30 Dec 31 Dec 31 ------- ------- ------- ------- ---------- (In thousands, except per share data) Net sales $ 439,831 $ 460,863 $ 437,587 $ 456,414 $1,794,695 Manufacturing income 108,465 115,426 106,481 112,920 443,292 Net income 13,274 19,324 15,131 18,126 65,855 Net income per share .46 .66 .52 .62 2.26 Average shares outstanding 30,745 30,866 30,903 30,890 30,815(a)
1993 -------------------------------------------------------- Three Months Ended -------------------------------------------- Year Ended Mar 31 Jun 30 Sep 30 Dec 31 Dec 31 ------- ------- ------- ------- ----------- (In thousands, except per share data) Net sales $ 429,169 $ 419,748 $ 393,263 $ 401,661 $1,643,841 Manufacturing income 98,231 101,919 96,260 100,017 396,427 Income (loss) before cumulative effect of accounting change 5,634 (9,121) 9,461 4,537 10,511 (b) Cumulative effect of accounting change (70,229) - - - (70,229) Net income (loss) (64,595) (9,121) 9,461 4,537 (59,718)(b) Income (loss) per share Income (loss) before cumulative effect of accounting change .20 (.32) .33 .16 .37 (b) Cumulative effect of accounting change (2.48) - - - (2.47)(c) Net income (loss) per share (2.28) (.32) .33 .16 (2.10)(b,c) Average shares outstanding 28,296 28,345 28,434 28,512 28,405 (a) -60- a) For purposes of computing net income per share for 1994, the assumed conversion of the Company's 6 percent convertible debentures was included in average shares outstanding, increasing the average number of shares outstanding by 1,904,762 shares, and net income was increased for the after-tax equivalent of interest expense on the debentures. The assumed conversion of the convertible debentures was not included in average shares outstanding for 1993 because the effect of the inclusion would have been anti-dilutive. (b) The 1993 fourth quarter and year include a provision for unsuccessfully contested prior years' value-added taxes in Brazil amounting to $7 million pretax, $4.7 million net ($.17 per share). The income tax provision for the 1993 third quarter and year was reduced by approximately $1 million due to adjustment of net deferred tax assets to recognize the change in the U.S. statutory tax rate. The income tax provision for the 1993 third quarter also includes the benefit from utilization of a current-year operating loss of a non-U.S. subsidiary. The 1993 second quarter and year include a special charge for severance and other personnel-related costs amounting to $26 million pretax, $18.2 million net ($.64 per share). (c) The total of the quarterly income per share amounts does not equal the annual per share amounts.
-61- REPORT OF ERNST & YOUNG LLP, Independent Auditors Shareholders and Board of Directors TRINOVA Corporation We have audited the accompanying statement of financial position of TRINOVA Corporation and subsidiaries as of December 31, 1994 and 1993, and the related statements of income, shareholders' equity, and cash flows for each of the three years in the period ended December 31, 1994. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of TRINOVA Corporation and subsidiaries at December 31, 1994 and 1993, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 1994, in conformity with generally accepted accounting principles. As discussed in Note 8 of Notes to Financial Statements, in 1993 the Company changed its method of accounting for postretirement benefits other than pensions. /S/ ERNST & YOUNG LLP Toledo, Ohio January 25, 1995 -62-
STATEMENT OF INCOME Years ended December 31, 1994, 1993 and 1992 (In thousands, except per share data) 1994 1993 1992 -------- -------- -------- Net sales $1,794,695 $1,643,841 $1,695,512 Cost of products sold 1,351,403 1,247,414 1,307,357 ---------- ---------- ---------- MANUFACTURING INCOME 443,292 396,427 388,155 Selling and general administrative expenses 246,758 246,221 263,863 Engineering, research and development expenses 55,465 55,314 65,312 Special charge - 26,000 - ---------- ---------- ---------- OPERATING INCOME 141,069 68,892 58,980 Interest expense (21,060) (25,516) (26,313) Other expenses - net (18,754) (26,265) (8,625) ---------- ---------- ---------- INCOME BEFORE INCOME TAXES AND CUMULATIVE EFFECT OF ACCOUNTING CHANGE 101,255 17,111 24,042 Income taxes 35,400 6,600 9,600 ---------- ---------- ---------- INCOME BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE 65,855 10,511 14,442 Cumulative effect to January 1, 1993, of accounting change, net of income tax benefit - (70,229) - ---------- ---------- ---------- NET INCOME (LOSS) $ 65,855 $ (59,718) $ 14,442 ========== ========== ========== INCOME (LOSS) PER SHARE Income before cumulative effect of accounting change $ 2.26 $ .37 $ .51 Cumulative effect of accounting change, net of income tax benefit - (2.47) - ---------- ---------- ---------- NET INCOME (LOSS) PER SHARE $ 2.26 $ (2.10) $ .51 ========== ========== ========== Average number of common shares outstanding 30,815 28,405 28,259 ========== ========== ========== The Notes to Financial Statements are an integral part of this statement.
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STATEMENT OF FINANCIAL POSITION December 31, 1994 and 1993 (Dollars in thousands, except per share data) 1994 1993 ------------ ------------ ASSETS CURRENT ASSETS Cash and cash equivalents $ 27,928 $ 20,534 Receivables 247,531 200,340 Inventories 217,316 212,346 Other current assets 47,618 54,011 ----------- ----------- TOTAL CURRENT ASSETS 540,393 487,231 Plants and properties 869,831 826,100 Less accumulated depreciation 490,025 439,281 ----------- ----------- 379,806 386,819 Other assets 80,835 98,151 ----------- ----------- TOTAL ASSETS $ 1,001,034 $ 972,201 =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Notes payable $ 1,755 $ 60,539 Accounts payable 96,587 81,133 Income taxes 31,621 27,364 Other accrued liabilities 158,501 151,469 Current maturities of long-term debt 930 4,257 ----------- ----------- TOTAL CURRENT LIABILITIES 289,394 324,762 Long-term debt 234,914 246,214 Postretirement benefits other than pensions 120,848 120,058 Other liabilities 28,150 22,558 Deferred income taxes 7,682 5,377 SHAREHOLDERS' EQUITY Common stock - par value $5 a share Authorized - 100,000,000 shares Outstanding - 28,795,909 and 28,405,880 shares, respectively (after deducting 5,413,987 and 5,804,016 shares, respectively, in treasury) 143,979 142,029 Additional paid-in capital 12,511 2,157 Retained earnings 184,930 138,628 Currency translation adjustments (21,374) (29,582) ----------- ----------- TOTAL SHAREHOLDERS' EQUITY 320,046 253,232 ------------ ----------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 1,001,034 $ 972,201 =========== =========== The Notes to Financial Statements are an integral part of this statement.
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STATEMENT OF CASH FLOWS Years ended December 31, 1994, 1993 and 1992 (In thousands) 1994 1993 1992 -------- -------- -------- CASH FLOWS FROM OPERATING ACTIVITIES Net income (loss) $ 65,855 $ (59,718) $ 14,442 Adjustments to reconcile net income (loss) to net cash provided by operating activities: Cumulative effect of accounting change, net of income tax benefit - 70,229 - Special charge - 26,000 - Depreciation 60,784 61,802 62,242 Deferred income taxes 17,436 (5,465) 11,178 Changes in certain assets and liabilities, excluding effects from special charge - -Receivables (41,384) (15,041) (26,405) - -Inventories (3,570) 42,656 24,679 - -Accounts payable 13,116 5,016 1,153 - -Income taxes 10,631 (8,298) (3,010) - -Other assets, payables and accruals 19,164 18,810 (6,538) Restructuring payments - net (5,978) (17,439) (31,749) Other 6,947 10,367 135 ---------- ---------- ---------- NET CASH PROVIDED BY OPERATING ACTIVITIES 143,001 128,919 46,127 CASH FLOWS FROM INVESTING ACTIVITIES Capital expenditures (55,154) (55,128) (52,278) Other 1,840 1,904 993 ---------- ---------- ---------- NET CASH USED BY INVESTING ACTIVITIES (53,314) (53,224) (51,285) CASH FLOWS FROM FINANCING ACTIVITIES Cash dividends (19,553) (19,258) (19,198) Decrease in notes payable (57,862) (51,092) (30,193) Repayments of long-term borrowings (15,068) (15,261) (15,920) Long-term borrowings 317 8,523 75,744 Stock issuance under stock plans 12,304 2,528 192 ---------- ---------- ---------- NET CASH PROVIDED(USED) BY FINANCING ACTIVITIES (79,862) (74,560) 10,625 Effect of exchange rate changes on cash (2,431) (6,870) (5,795) ---------- ---------- ---------- INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 7,394 (5,735) (328) Cash and cash equivalents at beginning of year 20,534 26,269 26,597 ---------- ---------- ---------- CASH AND CASH EQUIVALENTS AT END OF YEAR $ 27,928 $ 20,534 $ 26,269 ========== ========== ========== The Notes to Financial Statements are an integral part of this statement.
-65-
STATEMENT OF SHAREHOLDERS' EQUITY Years ended December 31, 1994, 1993 and 1992 (Dollars in thousands, except per share data) Additional Currency Common Paid-In Retained Translation Stock Capital Earnings Adjustments BALANCE AT JANUARY 1, 1992 $ 141,130 $ 336 $ 222,360 $ 10,821 Net income 14,442 Cash dividends paid ($.68 a share) (19,198) Issuance of 11,656 shares, net of shares exchanged, under stock plans 58 134 Translation and hedge adjustments (17,223) --------- --------- --------- --------- BALANCE AT DECEMBER 31, 1992 141,188 470 217,604 (6,402) Net loss (59,718) Cash dividends paid ($.68 a share) (19,258) Issuance of 168,254 shares, net of shares exchanged, under stock plans 841 1,687 Translation and hedge adjustments (23,180) --------- --------- --------- --------- BALANCE AT DECEMBER 31, 1993 142,029 2,157 138,628 (29,582) Net income 65,855 Cash dividends paid ($.68 a share) (19,553) Issuance of 390,029 shares, net of shares exchanged, under stock plans 1,950 10,354 Translation and hedge adjustments 8,208 --------- --------- --------- --------- BALANCE AT DECEMBER 31, 1994 $ 143,979 $ 12,511 $ 184,930 $ (21,374) ========= ========= ========= ========= The Notes to Financial Statements are an integral part of this statement.
-66- NOTES TO FINANCIAL STATEMENTS December 31, 1994 (Dollars in thousands, except per share data) NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation: The consolidated financial statements include the accounts of the Company and its subsidiaries. Affiliated companies in which the Company's ownership is 20 to 50 percent are accounted for by the equity method. All other minority investments are carried at cost. All significant intercompany transactions, balances and profits are eliminated upon consolidation. Cash Equivalents: Marketable securities that are highly liquid and have maturities of three months or less are classified as cash equivalents. The carrying amount approximates fair value. Inventories: Inventories are stated at the lower of cost or market. Inventory costs for U.S. operations are determined principally by the last-in, first-out (LIFO) method. The remaining inventory costs are determined primarily by the first-in, first-out (FIFO) method. Plants and Properties: Plants and properties are carried at cost. Depreciation is generally computed by the straight-line method over the estimated useful lives of the respective assets. In general, depreciation is provided at annual rates of 2.5 to 3 percent on buildings and 8 to 10 percent on equipment. Life Insurance: The Company's investment in corporate-owned life insurance is recorded net of policy loans. Net life insurance expense, including interest expense of $1,522 on policy loans in 1994, is included in Other expenses - net in the Statement of Income. Accounting Changes: The Company adopted Statement of Financial Accounting Standards No. 106, "Employers' Accounting for Postretirement Benefits Other than Pensions," effective January 1, 1993. The effect of adopting this standard is discussed in Note 8. The Company also adopted, effective January 1, 1993, Statement of Financial Accounting Standards No. 112, "Employers' Accounting for Postemployment Benefits," which was not significant to the Company's results of operations or consolidated financial position. Net Income (Loss) per Share: Net income (loss) per share is computed using the average number of common shares outstanding, including common stock equivalents. For purposes of computing net income per share for 1994, the assumed conversion of the Company's 6 percent convertible debentures was included in average shares outstanding, increasing the average number of shares outstanding by 1,904,762 shares, and net income was increased for the after-tax equivalent of interest expense on the debentures. The assumed conversion of the 6 percent convertible debentures was not included in average shares outstanding for 1993 and 1992 because the effect of the inclusion would have been anti-dilutive. -67- NOTES TO FINANCIAL STATEMENTS NOTE 2 - ACCOUNTS RECEIVABLE The Company has an agreement expiring on December 22, 1995, with a financial institution to sell, on an ongoing basis, undivided percentage ownership interests in a designated pool of U.S. trade accounts receivable, up to a maximum of $75,000. Accounts receivable amounting to $50,000 and $75,000 were sold under this agreement at December 31, 1994 and 1993, respectively. The Company has retained substantially the same risk of loss as if these accounts receivable had not been sold. NOTE 3 - INVENTORIES Inventory costs determined by the LIFO method accounted for approximately 55 percent and 51 percent of the total inventories at December 31, 1994 and 1993, respectively. If all inventories valued by the LIFO method had been valued at current costs, these inventories would have been approximately $33,047 and $32,829 higher than reported at December 31, 1994 and 1993, respectively. During 1994, 1993 and 1992 certain inventories were reduced, resulting in the liquidation of LIFO inventory quantities carried at lower costs prevailing in prior years compared with current cost. The effect of these inventory liquidations in 1994 was not significant. In 1993 and 1992, the effect of inventory liquidations was to reduce cost of products sold by $7,615 and $6,590, respectively. This increased income before cumulative effect of accounting change in 1993 by $4,653 ($.16 per share) and increased net income in 1992 by $4,086 ($.14 per share). NOTE 4 - DEBT 1994 1993 ------ ------ 6% convertible subordinated debentures $100,000 $100,000 7.95% notes 75,000 75,000 9.55% senior sinking fund debentures 50,000 50,000 Industrial revenue bonds - interest rates from 5.8% to 9.5% - due at various dates to 2013 7,661 11,176 Other 3,183 14,295 -------- -------- 235,844 250,471 Less current maturities 930 4,257 -------- -------- $234,914 $246,214 ======== ======== -68- NOTES TO FINANCIAL STATEMENTS NOTE 4 - DEBT (Continued) The 6 percent convertible subordinated debentures are convertible into common stock at a conversion price of $52.50 per share. The debentures mature on October 15, 2002, and are subject to earlier redemption, at the option of the Company, in whole or in part, at specified declining redemption prices plus accrued interest. The 7.95 percent notes mature on May 1, 1997, are not redeemable prior to maturity, and are not subject to a sinking fund. The 9.55 percent senior sinking fund debentures mature on February 1, 2018, and are subject to earlier redemption, at the option of the Company, in whole or in part, at specified declining redemption prices plus accrued interest. An annual mandatory sinking fund payment of $2,500 is required commencing February 1, 1999. The Company may increase its sinking fund payment in any year by an additional amount of up to $5,000. In 1994, the Company executed a five-year, $175,000 revolving credit agreement with a consortium of U.S. and non-U.S. banks. Borrowings under the credit line will bear interest at rates agreed to by the Company and lendors. At December 31, 1994, there were no borrowings under this agreement. Covenants of the revolving credit agreement and certain other debt instruments require the Company to maintain certain financial ratios, including a limitation that the Company's debt-to-capitalization ratio (exclusive of the effects of the change in accounting for postretirement benefit obligations) not exceed a specified amount. At December 31, 1994, under the most restrictive of these covenants, retained earnings of $154,000 were available for the payment of cash dividends. At December 31, 1994, long-term debt amounting to $235,844, including current maturities, had an estimated fair value of $224,400. Estimated fair value for long-term debt, including current maturities, at December 31, 1993, was $265,600. Fair value for notes payable at December 31, 1994 and 1993, was approximately equal to the carrying amount at that date. Maturities of long-term debt in 1995 and in the four succeeding years are $930, $507, $75,498, $549 and $3,102. Interest paid on debt during 1994, 1993 and 1992 amounted to $25,146, $24,994 and $26,825, respectively. The weighted average interest rate of outstanding short-term notes payable was 9.4 percent and 4.8 percent at December 31, 1994 and 1993, respectively. -69- NOTES TO FINANCIAL STATEMENTS
NOTE 5 - INCOME TAXES The components of income before income taxes and cumulative effect of accounting change consist of the following: 1994 1993 1992 ------ ------ ------ U.S. $ 45,562 $ 8,147 $ 649 Non-U.S. 55,693 8,964 23,393 -------- --------- --------- $101,255 $ 17,111 $ 24,042 ======== ========= =========
Income tax expense, excluding taxes related to cumulative effect of accounting change, consists of the following: 1994 1993 1992 ------ ------ ------ Current: U.S. federal $ 4,537 $ 4,841 $ (6,098) State and local 954 299 1,875 Non-U.S. 12,473 6,925 2,645 -------- --------- --------- 17,964 12,065 (1,578) Deferred: U.S. federal 10,900 (2,050) 9,055 Non-U.S. 6,536 (3,415) 2,123 -------- --------- --------- 17,436 (5,465) 11,178 -------- --------- --------- $ 35,400 $ 6,600 $ 9,600 ======== ========= =========
-70- NOTES TO FINANCIAL STATEMENTS NOTE 5 - INCOME TAXES (Continued) The effect of temporary differences and loss carryforwards giving rise to deferred tax assets and liabilities is as follows: 1994 1993 ------ ------ Gross Deferred Tax Assets Postretirement benefits other than pensions $ 42,332 $ 45,540 Tax loss carryforwards 30,572 44,712 Employee benefit accruals 9,436 9,315 Other 10,400 18,841 --------- --------- 92,740 118,408 Gross Deferred Tax Liabilities Depreciation (37,737) (36,875) Pensions (3,125) (5,746) Other (1,157) (2,243) --------- --------- (42,019) (44,864) Valuation allowances (29,533) (29,962) --------- --------- Net deferred tax assets $ 21,188 $ 43,582 ========= ========= The components of deferred tax assets (liabilities) net of valuation allowances are classified in the Statement of Financial Position as follows: 1994 1993 ---- ---- Current assets $ 9,750 $ 19,287 Non-current assets 19,120 29,672 Non-current liabilities (7,682) (5,377) -------- -------- Net deferred tax assets $ 21,188 $ 43,582 ======== ======== Valuation allowances decreased $429 and $479 in 1994 and 1993, respectively, and increased $1,429 in 1992. -71- NOTES TO FINANCIAL STATEMENTS NOTE 5 - INCOME TAXES (Continued) Reconciliation of the statutory U.S. federal income tax rate to the effective income tax rate before cumulative effect of accounting change follows: 1994 1993 1992 ------ ------ ------ Statutory U.S. federal income tax rate 35.0% 35.0% 34.0% Increase (decrease) resulting from: State and local taxes, net of federal benefit .8 1.1 5.1 Special charge - basis differences and charges without tax benefits - 15.6 - Taxes in excess of (less than) the U.S. tax rate on non-U.S. earnings 2.3 (6.0) - Rate differential on temporary differences - (6.5) - Other (3.1) (.6) .8 ---- ---- ----- Effective income tax rate 35.0% 38.6% 39.9% ==== ==== ===== Adjustment of net deferred tax assets due to the change in the statutory U.S. federal income tax rate reduced the provision for income taxes for 1993 by approximately $1,000. At December 31, 1994, the Company had non-U.S. net operating loss carryforwards of $72,594 for income tax purposes. Loss carryforwards of approximately $33,809 have no expiration dates and the remainder expire in years through 1999. The Company does not provide deferred income taxes on undistributed earnings of certain of its non-U.S. subsidiaries which have been reinvested indefinitely. Undistributed earnings of non-U.S. subsidiaries for which U.S. income taxes have not been provided approximated $56,000 at December 31, 1994. Should these earnings be remitted, certain countries will impose withholding taxes that will be available for use as credits against any U.S. federal income tax liability, subject to certain limitations. It is not practical to estimate the amount of tax that would be payable should the Company remit these earnings. Income taxes paid during 1994, 1993 and 1992 amounted to $7,333, $20,363 and $1,432, respectively. -72- NOTES TO FINANCIAL STATEMENTS NOTE 6 - ENVIRONMENTAL The Company or certain of its subsidiaries have been named potentially responsible parties (PRP) for site investigation and cleanup costs under the Comprehensive Environmental Response, Compensation, and Liability Act (Superfund) or similar state laws with respect to certain sites. While the ultimate outcome of the PRP designations and other environmental matters cannot now be predicted, the Company believes that costs, in excess of amounts provided, arising out of these matters will not have a material adverse effect on the Company's consolidated financial position. NOTE 7 - RETIREMENT PLANS The Company has adopted trusteed defined-contribution plans as its primary retirement vehicle. Such plans now cover most full-time U.S. employees and certain non-U.S. employees. Annual expense for the major defined-contribution plans is based primarily upon employee participation and earnings of the Company. The Company follows the policy of funding retirement plan contributions accrued. The Company has trusteed defined-benefit plans covering a limited number of full-time U.S. employees. The defined-benefit plans typically provide for full vesting after five years of service, and benefits are principally based on employee earnings and/or length of service. The Company's funding policy for these plans is to make annual contributions at least sufficient to meet minimum legal funding requirements. Various plans are also in effect for subsidiaries operating outside the U.S., including trusteed or insured, government-sponsored and unfunded plans. Components of net periodic pension cost for the defined-benefit plans and the total contributions charged to pension expense for the defined-contribution plans are summarized below. Net periodic pension cost for 1993 was reduced by settlement gains for certain non-U.S. plans aggregating $1,400.
1994 1993 1992 ------ ------ ------ Defined-benefit plans: Service cost - benefits earned $ 2,700 $ 2,900 $ 3,200 Interest cost 10,700 10,900 11,200 Actual return on plans' assets 2,500 (23,500) (12,300) Net amortization and deferral (12,800) 12,300 1,800 -------- -------- -------- Net pension cost - defined-benefit plans 3,100 2,600 3,900 Defined-contribution plans 31,200 19,400 14,600 Other non-U.S. retirement plans 700 700 300 -------- -------- -------- Total pension expense $ 35,000 $ 22,700 $ 18,800 ======== ======== ========
-73- NOTES TO FINANCIAL STATEMENTS NOTE 7 - RETIREMENT PLANS (Continued) The defined-benefit plans' assets consist of equity securities, corporate and government bonds, and real estate. Following are assumptions used in determining the plans' benefit obligations. The measurement dates for these plans were principally September 30. 1994 1993 ------ ------ Discount rates: U.S. 8.25% 7.25% Non-U.S. 7.9 7.6 Rates of increase in future compensation: U.S. 4.0 4.0 Non-U.S. 3.0-5.5 3.0-5.5 Long-term rate of return on assets 10.0 10.0
The following table sets forth the funded status and amounts recorded in the Company's Statement of Financial Position for defined-benefit plans. 1994 1993 -------------------- --------------------- Assets Accumulated Assets Accumulated Exceed Benefits Exceed Benefits Accumulated Exceed Accumulated Exceed Benefits Assets Benefits Assets ----------- ----------- ----------- ----------- Actuarial present value of benefit obligation: Vested benefit obligation $ 93,300 $ 31,200 $107,800 $ 17,800 ======== ======== ======== ======== Accumulated benefit obligation $ 94,600 $ 32,900 $110,800 $ 18,500 ======== ======== ======== ======== Projected benefit obligation $109,800 $ 35,800 $128,200 $ 19,400 Plans' assets at fair value 118,100 13,600 136,300 900 -------- -------- -------- -------- Projected benefit obligation (in excess of) less than plans' assets 8,300 (22,200) 8,100 (18,500) Unrecognized net gain (1,000) (8,100) (9,300) (1,200) Unrecognized net obligation less amortization 1,800 2,400 4,400 1,200 Unrecognized prior service cost 8,800 2,200 9,000 700 Adjustment required to recognize minimum liability - (1,100) - (500) -------- -------- -------- -------- Net pension asset (liability) recorded in the Statement of Financial Position $ 17,900 $(26,800) $ 12,200 $(18,300) ======== ======== ======== ========
-74- NOTES TO FINANCIAL STATEMENTS NOTE 8 - POSTRETIREMENT BENEFITS OTHER THAN PENSIONS The Company and its subsidiaries provide access to benefits under life insurance and health care plans for most retired U.S. and certain retired non- U.S. employees and eligible spouses (participants). Most retirees outside the U.S. are covered by government-sponsored or retiree-funded programs. Benefits for U.S. retirees are generally subject to participant contributions, deductibles, co-payment provisions and certain other limitations. The Company has reserved the right to change these benefit plans as necessary or appropriate, where permitted by law. Effective January 1, 1993, changes were made to plans covering certain retired participants, resulting in a realignment of benefits and consolidation of certain plans. Certain provisions of these changes will become effective for participants who retire after January 1, 1995. The revised plans recognize that the Company, as the secondary provider to Medicare, will contribute toward the cost of health care benefits for participants who retire at age 65 or older and have at least 10 years of service at retirement. The amount of the Company's contribution for participants retiring after January 1, 1995, will be limited to fixed amounts (base-period costs) that now approximate the average current cost of claims. Accordingly, as medical costs escalate, those participants retiring in 1995 and thereafter will pay the difference between the Company's average annual per-capita claims costs and the base-period costs. During a transition period, the Company will also contribute toward the cost of health care for participants who retire prior to age 65, providing they had met certain age and service-period requirements as of January 1, 1995. The amount of the Company's contribution will not exceed the base-period costs. Those participants retiring before reaching age 65 who do not meet the age and service period requirements will have the option to purchase health care benefits at full cost until becoming eligible for a Company contribution at age 65. The Company adopted Statement of Financial Accounting Standards No. 106, "Employers' Accounting for Postretirement Benefits Other than Pensions" (FAS 106), effective January 1, 1993. This standard specifies that the expected cost of providing postretirement benefits other than pensions be accrued during the eligible employees' active service periods. The Company elected to recognize the transition obligation as a cumulative effect to January 1, 1993, of a change in accounting principle resulting in a non-cash charge to income of $113,229 ($70,229 after tax, or $2.47 per share for the year). In addition to the cumulative effect of change in accounting, the Company's 1993 postretirement benefit cost increased $6,800 from what it would have been had the change in accounting not been made, decreasing income before cumulative effect of accounting change for 1993 by $4,200, or $.15 per share. -75- NOTES TO FINANCIAL STATEMENTS NOTE 8 - POSTRETIREMENT BENEFITS OTHER THAN PENSIONS (Continued) Components of postretirement benefit cost are as follows: 1994 1993 Service cost - benefits earned $ 1,971 $ 3,121 Interest cost 7,352 9,093 Net amortization and deferral (969) - --------- --------- Postretirement benefit cost $ 8,354 $ 12,214 ========= ========= The decline in the 1994 expense was principally due to plan amendments, reflecting reductions in service and interest costs, as well as amortization of unrecognized prior service cost. For 1992 the cost of retiree health care and life insurance benefits recognized as expense when claims were incurred was $5,000. The Company's postretirement benefit plans are not funded. The status of the plans at December 31, 1994 and 1993 (based on measurement of the accumulated postretirement benefit obligation at September 30), is as follows: 1994 1993 Accumulated postretirement benefit obligation: Retirees $ 64,622 $ 67,673 Plans' participants fully eligible to receive benefits 13,108 14,368 Other active plan participants 20,942 28,566 --------- --------- 98,672 110,607 Unrecognized prior service cost 11,611 3,859 Unrecognized net gains 10,565 5,592 --------- --------- Accrued postretirement benefits other than pensions $ 120,848 $ 120,058 ========= ========= Following are assumptions used in determining the postretirement benefit cost and the accumulated postretirement benefit obligation: 1994 1993 Discount rate 8.25% 7.25% Projected health care cost trend rates: Under age 65 10.1 10.6 Over age 65 7.4 7.7 Ultimate 5.25 5.25 Year ultimate health care cost trend rate is achieved 2008 2008 -76- NOTES TO FINANCIAL STATEMENTS NOTE 8 - POSTRETIREMENT BENEFITS OTHER THAN PENSIONS (Continued) The projected health care cost trend rates listed above for under and over age 65 participants represent assumed increases in per capita cost of covered health care benefits for 1995 and 1994, respectively. For future years, the rates are assumed to decrease gradually and remain at the ultimate trend rate thereafter. A one-percentage point increase in the projected health care cost trend rates would increase the 1994 postretirement benefit cost by $860 and the accumulated postretirement benefit obligation as of September 30, 1994, by $6,800. -77- NOTES TO FINANCIAL STATEMENTS NOTE 9 - LEASES The Company and its subsidiaries lease a variety of real property and equipment. Rent expense under operating leases amounted to approximately $21,908, $22,470 and $23,960 for 1994, 1993 and 1992, respectively. Future minimum rental payments required under operating leases that have initial or remaining non-cancelable lease terms in excess of one year as of December 31, 1994, are as follows: 1995 $ 15,106 1996 12,490 1997 10,223 1998 8,309 1999 6,114 Thereafter 28,869 -------- $ 81,111 ======== NOTE 10 - FORWARD EXCHANGE CONTRACTS The Company enters into forward exchange contracts to hedge exposure to exchange rate fluctuations on anticipated future purchase and sales transactions and on certain intercompany loans denominated in currencies other than the functional currency of the originating subsidiaries. Forward exchange contracts are written on a short-term basis (generally 30 days), are not held for trading purposes, and are not held for purposes of speculation. The hedges of anticipated future transactions and intercompany loans are intended to limit the risk associated with the effects of changes in foreign exchange rates as the future transactions materialize and the intercompany loans are settled. Gains and losses on all forward exchange contracts described above are recognized in Other expenses - net in the Statement of Income in the periods the exchange rates change. The Company's credit risk in these transactions is limited to the cost of replacing the contracts at current market rates in the event of non-performance by the counterparties. Since these contracts are written with major international financial institutions, the Company believes its risk of credit loss is remote, and any losses incurred would not be significant. At December 31, 1994, the Company had no forward exchange contracts outstanding to hedge exposure to exchange rate fluctuations on anticipated future transactions or intercompany loans. The Company previously entered into forward exchange contracts to hedge the exposed net asset positions of certain non-U.S. subsidiaries. Gains and losses on those contracts were deferred in the currency translation adjustments component of shareholders' equity. At December 31, 1993, the Company had approximately $49,000 of forward exchange contracts outstanding, of which $42,000 related to hedges of exposed net assets. -78- NOTES TO FINANCIAL STATEMENTS NOTE 11 - SPECIAL CHARGE AND OTHER TRANSACTION In 1993, the Company recorded a special charge of $26,000 for severance and other personnel-related costs associated with worldwide work force reductions, primarily focusing on the Company's industrial operations in Europe. This special charge increased the net loss for the year ended December 31, 1993, by $18,200, or $.64 per share. Also in 1993, the Company recorded a charge in Other expenses - net of $7,000 ($4,700 after tax, or $.17 per share) to provide for unsuccessfully contested prior years' value-added taxes in Brazil. NOTE 12 - CAPITAL STOCK AND EMPLOYEE STOCK OPTIONS The Company has rights outstanding as set forth in a Rights Agreement, whereby holders of common stock have one right for each share of common stock outstanding. When exercisable, each right entitles its holder to buy one one- hundredth of a new preferred share for $125. The Company has 4,000,000 shares of serial preferred stock authorized, of which no shares were outstanding at December 31, 1994 or 1993. If a person or group acquires 20 percent or more of the Company's outstanding common stock without complying with the Ohio Control Share Acquisition Act, or engages in certain self-dealing transactions, holders of rights will be entitled to purchase (a) common stock of the Company at one-half the market price, or (b) shares of an acquiring company at one-half the market price, depending upon the circumstances of the transaction. The Company may redeem the rights at a price of $.01 per right at any time prior to the rights becoming exercisable. The rights will expire in 1999. In 1994, the Company's shareholders approved the 1994 Stock Incentive Plan (the "1994 Plan") which permits the issuance of stock options, stock appreciation rights ("SARs") and performance awards to selected salaried employees as approved by the Organization and Compensation Committee of the Board of Directors. The 1994 Plan replaced the Company's 1982 and 1987 Stock Option Plans ("Option Plans"). The number of shares of common stock that may be issued or transferred under the 1994 Plan may not exceed 1,419,900 shares, which includes 419,900 shares that were available for grant under the Option Plans as of the date the 1994 Plan was approved by the Board of Directors. The aggregate number of shares that may be granted to any single individual through stock options or SARs under the 1994 Plan may not exceed 200,000. Shares subject to award under the 1994 Plan that expire, terminate or are canceled without exercise are available for the grant of new awards. In instances where SARs or performance awards are settled in cash, the shares covered by such settlements will remain available for issuance under the 1994 Plan. Common stock issued under the 1994 Plan may be shares of original issuance, treasury shares or a combination thereof. -79- NOTES TO FINANCIAL STATEMENTS NOTE 12 - CAPITAL STOCK AND EMPLOYEE STOCK OPTIONS (Continued) Options may be granted to selected employees to purchase common stock at a price not less than 100 percent of fair market value on the date of grant. The term of each award will be determined by the Organization and Compensation Committee. All options granted as of December 31, 1994, are exercisable one year after date of grant and expire 10 years after date of grant. Options granted may be incentive stock options or non-qualified options. SARs granted under the 1994 Plan may either be freestanding appreciation rights or may be granted in tandem with stock options. No SARs were issued or outstanding at December 31, 1994. Performance awards may be granted to selected employees to receive future payments contingent on continuous service with the Company and achievement of pre-established goals. Such awards may be settled in cash, common shares available under the 1994 Plan or a combination of both as determined by the Organization and Compensation Committee. In January 1995, 17,049 shares of common stock were distributed to participants as performance awards under provisions of the long-term incentive plan for the three-year period ended December 31, 1994. At December 31, 1994, options were outstanding with expiration dates ranging to May 24, 2014, to purchase 1,097,230 shares of common stock at a weighted- average exercise price of $29.29 per share. At December 31, 1994, the Company had 4,105,892 shares of common stock reserved for issuance in connection with stock options and performance awards and for conversion of 6 percent convertible subordinated debentures.
The following table summarizes stock options for the years 1994 and 1993. 1994 1993 -------------------------- -------------------------- Option Range of Option Range of Shares Option Prices Shares Option Prices ----------- ------------- ----------- ------------- Outstanding at January 1 1,271,892 $14.17 to $32.81 1,546,739 $14.17 to $32.81 Granted 316,000 33.13 278,000 29.38 Exercised (416,312) 14.17 to 29.38 (468,897) 14.17 to 29.25 Expired or canceled (74,350) 14.17 to 29.25 (83,950) 22.50 to 29.38 Outstanding at December 31 1,097,230 15.96 to 33.13 1,271,892 14.17 to 32.81 Exercisable at December 31 781,230 15.96 to 32.81 1,007,892 14.17 to 32.81 Available for future awards at December 31 1,086,851 419,900
-80- NOTES TO FINANCIAL STATEMENTS NOTE 13 - BUSINESS SEGMENTS TRINOVA is a world leader in the manufacture and distribution of engineered components and systems for industry, sold through its companies, Aeroquip and Vickers, to the industrial, automotive, and aerospace and defense markets. The industrial business serves original equipment and aftermarket customers in various worldwide markets including construction, mining, logging and farm equipment; machine tool; process industries; electrical machinery; air conditioning/refrigeration; appliances and communications equipment; electronics; lift truck; material handling; plant maintenance; and housing and commercial construction. The automotive business serves worldwide automobile, light truck and van manufacturers. The aerospace & defense business serves original equipment and aftermarket customers in worldwide commercial aerospace and military markets including commercial aircraft, air defense, cargo handling, combat and support vehicles, commuter aircraft, engines, marine, military aircraft, military weaponry, missiles and naval machinery. Products include fluid connectors, pumps, hydraulic and electric motors, electric drives, cylinders, hydraulic and electronic controls, filters and fluid-evaluation services, and a wide variety of custom-engineered molded automotive and industrial plastic products. Operating income is net sales less operating expenses. Operating expenses include cost of products sold; selling and general administrative expenses; and engineering, research and development expenses. For 1993, operating expenses included a special charge amounting to $26,000, allocated $19,200 to industrial, $2,600 to automotive, $3,600 to aerospace & defense and $600 to corporate. Identifiable assets by business segment include all assets directly identified with those operations. Corporate assets consist of cash, receivables, properties, deferred income taxes and deferred charges. -81- NOTES TO FINANCIAL STATEMENTS NOTE 13 - BUSINESS SEGMENTS (Continued)
The following data relate to business segments: Depreciation Identi- and Operating fiable Amortization Capital Net Sales Income Assets Expense Expenditures ----------- ----------- ----------- ----------- ----------- 1994 Industrial $ 963,446 $ 89,281 $ 517,383 $ 30,141 $ 25,682 Automotive 514,273 46,841 227,115 18,215 18,725 Aerospace & Defense 316,976 28,114 178,216 11,727 8,533 ---------- ---------- ---------- ---------- ---------- $1,794,695 164,236 922,714 60,083 52,940 ========== Corporate (23,167) 41,488 1,988 2,214 Investments in affiliates - 36,832 - - ---------- ---------- ---------- ---------- $ 141,069 $1,001,034 $ 62,071 $ 55,154 ========== ========== ========== ========== 1993 Industrial $ 864,590 $ 17,118 $ 477,182 $ 31,860 $ 29,115 Automotive 452,637 45,724 203,725 17,547 14,705 Aerospace & Defense 326,614 26,016 189,050 11,785 10,724 ---------- ---------- ---------- ---------- ---------- $1,643,841 88,858 869,957 61,192 54,544 ========== Corporate (19,966) 64,655 1,826 584 Investments in affiliates - 37,589 - - ---------- ---------- ---------- ---------- $ 68,892 $ 972,201 $ 63,018 $ 55,128 ========== ========== ========== ========== 1992 Industrial $ 902,794 $ 16,733 $ 551,367 $ 33,145 $ 30,374 Automotive 415,387 32,291 193,549 15,555 12,178 Aerospace & Defense 377,331 29,756 199,063 12,910 8,915 ---------- ---------- ---------- ---------- ---------- $1,695,512 78,780 943,979 61,610 51,467 ========== Corporate (19,800) 35,891 1,591 811 Investments in affiliates - 37,519 - - ---------- ---------- ---------- ---------- $ 58,980 $1,017,389 $ 63,201 $ 52,278 ========== ========== ========== ==========
-82- NOTES TO FINANCIAL STATEMENTS NOTE 14 - NON-U.S. OPERATIONS U.S. sales include export sales to unaffiliated non-U.S. customers of $133,769, $81,650 and $71,707 in 1994, 1993 and 1992, respectively. Currency exchange losses charged to Other expenses - net amounted to $7,834, $16,398 and $8,442 in 1994, 1993 and 1992, respectively. The exchange losses principally result from translation of financial statements for the Company's operations in Brazil and are due, in part, to funds which have been invested. The currency exchange losses were partially offset by investment income. The following summary of financial data pertains to the Company and its non- U.S. operations. The geographic groupings of non-U.S. operations have been based on similarities of business environments and geographic proximity.
United Elimina- Consoli- States Europe Other tions dated --------- --------- --------- --------- --------- 1994 Net sales $1,164,914 $ 518,785 $ 110,996 $ - $1,794,695 Operating income 102,066 24,738 14,265 - 141,069 Identifiable assets 725,297 288,820 83,447 133,362 964,202 Total assets 781,188 288,820 86,153 155,127 1,001,034 Total liabilities 593,372 142,351 8,397 63,132 680,988 1993 Net sales $1,054,595 $ 486,829 $ 102,417 $ - $1,643,841 Operating income (loss)(a) 54,895 (876) 14,873 - 68,892 Identifiable assets 689,548 325,757 63,269 143,962 934,612 Total assets 727,550 325,757 63,269 144,375 972,201 Total liabilities 683,449 103,406 (1,139) 66,747 718,969 (a) Includes special charge amounting to: (10,775) (15,125) (100) - (26,000) 1992 Net sales $1,033,384 $ 578,464 $ 83,664 $ - $1,695,512 Operating income 32,646 15,399 10,935 - 58,980 Identifiable assets 668,746 368,117 64,066 121,059 979,870 Total assets 707,124 368,117 64,066 121,918 1,017,389 Total liabilities 506,752 219,247 2,217 63,687 664,529
-83- NOTES TO FINANCIAL STATEMENTS NOTE 15 - OTHER INFORMATION 1994 1993 ---------- ---------- Receivables Receivables $ 262,710 $ 213,877 Less allowance for doubtful accounts 15,179 13,537 --------- --------- $ 247,531 $ 200,340 ========= ========= Inventories In-process and finished products $ 171,555 $ 172,964 Raw materials and manufacturing supplies 45,761 39,382 --------- --------- $ 217,316 $ 212,346 ========= ========= Other Current Assets Deferred income taxes $ 9,750 $ 19,287 Prepaid expenses and other current assets 37,868 34,724 --------- --------- $ 47,618 $ 54,011 ========= ========= Plants and Properties - at Cost Land and improvements $ 21,170 $ 20,729 Buildings 188,891 182,054 Machinery and equipment 630,654 591,219 Construction in progress 29,116 32,098 --------- --------- $ 869,831 $ 826,100 ========= ========= Other Assets Investments in and advances to affiliates $ 36,832 $ 37,589 Deferred income taxes 19,120 29,672 Receivables, deposits and other assets 24,883 30,890 --------- --------- $ 80,835 $ 98,151 ========= ========= Other Accrued Liabilities Employees' compensation and amounts withheld therefrom $ 83,289 $ 63,366 Taxes, other than income taxes 10,341 11,671 Other accrued liabilities 64,871 76,432 --------- --------- $ 158,501 $ 151,469 ========= ========= -84- INVESTOR INFORMATION Stock Exchanges TRINOVA's common stock is traded on the New York, Chicago and Pacific Stock Exchanges, and on the London and Frankfurt Stock Exchanges. Our NYSE ticker symbol is TNV. TRINOVA's 6 percent convertible subordinated debentures are listed on the Luxembourg Stock Exchange. Stock Ownership On December 31, 1994, there were 11,347 record holders of TRINOVA's common stock. Although exact information is unavailable, TRINOVA estimates there are approximately 7,000 additional beneficial owners, based upon the 1994 proxy solicitation. Dividend Information In January 1995, the Board of Directors increased the quarterly cash dividend on TRINOVA's common stock to 18 cents per share. Cash dividends have been paid without interruption on common stock since 1933. The payment of dividends is subject to restrictions described in Note 4 of Notes to Financial Statements. Quarterly Common Stock Information 1994 1993 Quarter Ended High Low Close High Low Close March 31 40 31.38 34.63 28.25 21 26.50 June 30 37.25 32.50 34.63 31.88 24.50 31.38 September 30 39 33.75 34.88 31.50 26.88 26.88 December 31 35.25 28.50 29.38 33.75 25.50 31.38 Dividend Payments per Share of Common Stock 1994 1993 March $ .17 $ .17 June .17 .17 September .17 .17 December .17 .17 $ .68 $ .68 EX-21 9 EXHIBIT 21 -85- EXHIBIT (21) TRINOVA CORPORATION SUBSIDIARIES OF THE REGISTRANT The assets and business of all subsidiaries listed below are included in the 1994 consolidated financial statements of the Registrant. In addition to those named, 1 U.S. and 13 non-U.S. consolidated subsidiaries and 6 affiliated companies that are accounted for by the cost and/or equity methods are not disclosed. The undisclosed subsidiaries and affiliated companies in the aggregate do not constitute a significant subsidiary. Incorporated or Percent of Organized - Voting Securities Company State or Country Owned - ---------------------------------- ------------------ ----------------- TRINOVA Corporation Ohio Registrant SUBSIDIARIES OF REGISTRANT Aeroquip Corporation Michigan 100 Aeroquip International Inc. Delaware 100 Vickers, Incorporated Delaware 100 Vickers International Inc. Delaware 100 Aeroquip A.G. Switzerland 100 Aeroquip Iberica S.A. Spain 100 Aeroquip Inoac Co. Michigan 51 Aeroquip LTD Barbados 100 Aeroquip-Sterling GmbH Germany 100 Sterling Engineered Products Inc. Delaware 100 TRINOVA do Brasil, S/A Brazil 99.5 TRINOVA Canada Inc. Canada 100 TRINOVA GmbH Germany 100 TRINOVA Export Trading Company Virgin Islands 100 TRINOVA Limited United Kingdom 100 TRINOVA Pte. Ltd. Singapore 100 TRINOVA S.A. France 100 TRINOVA S.p.A. Italy 100 Vickers Systems Limited Hong Kong 100 Vickers Systems Limited New Zealand 100 Vickers Systems Pty. Ltd. Australia 100 Vickers Systems S.A. Spain 100 Vickers Systems Sdn. Bhd. Malaysia 100 Vickers Systems OY Finland 100 EX-23 10 EXHIBIT 23-1 -86- EXHIBIT (23)-1 CONSENT OF INDEPENDENT AUDITORS We consent to the incorporation by reference in the Annual Report (Form 10-K) of TRINOVA Corporation for the year ended December 31, 1994, of our report dated January 25, 1995, included in Exhibit 13 to Form 10-K. Our audits also included the financial statement schedule of TRINOVA Corporation listed in Item 14(a)(2). This schedule is the responsibility of the Company's management. Our responsibility is to express an opinion based on our audits. In our opinion, the financial statement schedule referred to above, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein. /S/ ERNST & YOUNG LLP Toledo, Ohio March 20, 1995 EX-23 11 EXHIBIT 23-2 -87- EXHIBIT (23)-2 CONSENT OF INDEPENDENT AUDITORS We consent to the incorporation by reference in Post-Effective Amendment No. 1 to Registration Statement No. 33-9127 on Form S-3 dated August 28, 1987, Registration Statement No. 33-19555 on Form S-3 dated January 15, 1988, Post- Effective Amendment No. 2 to Registration Statement No. 33-14682 on Form S-8 dated April 28, 1989, Registration Statement No. 33-28638 on Form S-8 dated May 10, 1989, Registration Statement No. 33-54059 on Form S-8 dated June 10, 1994, and Registration Statement No. 33-55399 on Form S-8 dated September 8, 1994, of our report dated January 25, 1995, with respect to the financial statements and schedule of TRINOVA Corporation included or incorporated by reference in the Annual Report (Form 10-K) for the year ended December 31, 1994. /S/ ERNST & YOUNG LLP Toledo, Ohio March 20, 1995 EX-24 12 EXHIBIT 24 -88- EXHIBIT (24) DIRECTOR OF TRINOVA CORPORATION ANNUAL REPORT ON FORM 10-K POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS that the undersigned director of TRINOVA Corporation, an Ohio corporation ("TRINOVA"), does hereby constitute and appoint Darryl F. Allen, James E. Kline and William R. Ammann, and each of them, a true and lawful attorney in his name, place and stead, in any and all capacities, to sign his name to TRINOVA's Annual Report on Form 10-K for the year ended December 31, 1994, and any and all amendments to such Form 10-K, and to cause the same to be filed with the Securities and Exchange Commission, granting unto said attorneys and each of them full power and authority to do and perform any act and thing necessary and proper to be done in the premises, as fully to all intents and purposes as the undersigned could do if personally present, and the undersigned hereby ratifies and confirms all that said attorneys or any one of them shall lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney on this 24th day of February, 1995. /S/ PURDY CRAWFORD Purdy Crawford Director cjk/wp -89- DIRECTOR OF TRINOVA CORPORATION ANNUAL REPORT ON FORM 10-K POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS that the undersigned director of TRINOVA Corporation, an Ohio corporation ("TRINOVA"), does hereby constitute and appoint Darryl F. Allen, James E. Kline and William R. Ammann, and each of them, a true and lawful attorney in his name, place and stead, in any and all capacities, to sign his name to TRINOVA's Annual Report on Form 10-K for the year ended December 31, 1994, and any and all amendments to such Form 10-K, and to cause the same to be filed with the Securities and Exchange Commission, granting unto said attorneys and each of them full power and authority to do and perform any act and thing necessary and proper to be done in the premises, as fully to all intents and purposes as the undersigned could do if personally present, and the undersigned hereby ratifies and confirms all that said attorneys or any one of them shall lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney on this 15th day of February, 1995. /S/ DELMONT A. DAVIS Delmont A. Davis Director cjk/wp -90- DIRECTOR OF TRINOVA CORPORATION ANNUAL REPORT ON FORM 10-K POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS that the undersigned director of TRINOVA Corporation, an Ohio corporation ("TRINOVA"), does hereby constitute and appoint Darryl F. Allen, James E. Kline and William R. Ammann, and each of them, a true and lawful attorney in his name, place and stead, in any and all capacities, to sign his name to TRINOVA's Annual Report on Form 10-K for the year ended December 31, 1994, and any and all amendments to such Form 10-K, and to cause the same to be filed with the Securities and Exchange Commission, granting unto said attorneys and each of them full power and authority to do and perform any act and thing necessary and proper to be done in the premises, as fully to all intents and purposes as the undersigned could do if personally present, and the undersigned hereby ratifies and confirms all that said attorneys or any one of them shall lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney on this 22nd day of February, 1995. /S/ JOSEPH C. FARRELL Joseph C. Farrell Director cjk/wp -91- DIRECTOR OF TRINOVA CORPORATION ANNUAL REPORT ON FORM 10-K POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS that the undersigned director of TRINOVA Corporation, an Ohio corporation ("TRINOVA"), does hereby constitute and appoint Darryl F. Allen, James E. Kline and William R. Ammann, and each of them, a true and lawful attorney in his name, place and stead, in any and all capacities, to sign his name to TRINOVA's Annual Report on Form 10-K for the year ended December 31, 1994, and any and all amendments to such Form 10-K, and to cause the same to be filed with the Securities and Exchange Commission, granting unto said attorneys and each of them full power and authority to do and perform any act and thing necessary and proper to be done in the premises, as fully to all intents and purposes as the undersigned could do if personally present, and the undersigned hereby ratifies and confirms all that said attorneys or any one of them shall lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney on this 23rd day of February, 1995. /S/ DAVID R. GOODE David R. Goode Director cjk/wp -92- DIRECTOR OF TRINOVA CORPORATION ANNUAL REPORT ON FORM 10-K POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS that the undersigned director of TRINOVA Corporation, an Ohio corporation ("TRINOVA"), does hereby constitute and appoint Darryl F. Allen, James E. Kline and William R. Ammann, and each of them, a true and lawful attorney in his name, place and stead, in any and all capacities, to sign his name to TRINOVA's Annual Report on Form 10-K for the year ended December 31, 1994, and any and all amendments to such Form 10-K, and to cause the same to be filed with the Securities and Exchange Commission, granting unto said attorneys and each of them full power and authority to do and perform any act and thing necessary and proper to be done in the premises, as fully to all intents and purposes as the undersigned could do if personally present, and the undersigned hereby ratifies and confirms all that said attorneys or any one of them shall lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney on this 15th day of February, 1995. /S/ PAUL A. ORMOND Paul A. Ormond Director cjk/wp -93- DIRECTOR OF TRINOVA CORPORATION ANNUAL REPORT ON FORM 10-K POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS that the undersigned director of TRINOVA Corporation, an Ohio corporation ("TRINOVA"), does hereby constitute and appoint Darryl F. Allen, James E. Kline and William R. Ammann, and each of them, a true and lawful attorney in his name, place and stead, in any and all capacities, to sign his name to TRINOVA's Annual Report on Form 10-K for the year ended December 31, 1994, and any and all amendments to such Form 10-K, and to cause the same to be filed with the Securities and Exchange Commission, granting unto said attorneys and each of them full power and authority to do and perform any act and thing necessary and proper to be done in the premises, as fully to all intents and purposes as the undersigned could do if personally present, and the undersigned hereby ratifies and confirms all that said attorneys or any one of them shall lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney on this 27th day of February, 1995. /S/ JOHN P. REILLY John P. Reilly Director cjk/wp -94- DIRECTOR OF TRINOVA CORPORATION ANNUAL REPORT ON FORM 10-K POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS that the undersigned director of TRINOVA Corporation, an Ohio corporation ("TRINOVA"), does hereby constitute and appoint Darryl F. Allen, James E. Kline and William R. Ammann, and each of them, a true and lawful attorney in his name, place and stead, in any and all capacities, to sign his name to TRINOVA's Annual Report on Form 10-K for the year ended December 31, 1994, and any and all amendments to such Form 10-K, and to cause the same to be filed with the Securities and Exchange Commission, granting unto said attorneys and each of them full power and authority to do and perform any act and thing necessary and proper to be done in the premises, as fully to all intents and purposes as the undersigned could do if personally present, and the undersigned hereby ratifies and confirms all that said attorneys or any one of them shall lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney on this 20th day of February, 1995. /S/ ROBERT H. SPILMAN Robert H. Spilman Director cjk/wp -95- DIRECTOR OF TRINOVA CORPORATION ANNUAL REPORT ON FORM 10-K POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS that the undersigned director of TRINOVA Corporation, an Ohio corporation ("TRINOVA"), does hereby constitute and appoint Darryl F. Allen, James E. Kline and William R. Ammann, and each of them, a true and lawful attorney in his name, place and stead, in any and all capacities, to sign his name to TRINOVA's Annual Report on Form 10-K for the year ended December 31, 1994, and any and all amendments to such Form 10-K, and to cause the same to be filed with the Securities and Exchange Commission, granting unto said attorneys and each of them full power and authority to do and perform any act and thing necessary and proper to be done in the premises, as fully to all intents and purposes as the undersigned could do if personally present, and the undersigned hereby ratifies and confirms all that said attorneys or any one of them shall lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney on this 15th day of February, 1995. /S/ WILLIAM R. TIMKEN, JR. William R. Timken, Jr. Director cjk/wp EX-27 13 EXHIBIT 27 - FINANCIAL DATA SCHEDULE
5 THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE STATEMENT OF FINANCIAL POSITION AND THE CONDENSED STATEMENT OF OPERATIONS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 YEAR DEC-31-1994 DEC-31-1994 27,928 0 262,710 15,179 217,316 540,393 869,831 490,025 1,001,034 289,394 234,914 143,979 0 0 176,067 1,001,034 1,794,695 1,794,695 1,351,403 1,351,403 0 0 21,060 101,255 35,400 65,855 0 0 0 65,855 2.26 2.26
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