YORK International Announces Fourth Quarter and Full Year Results and

    Business Editors

    YORK, Pa.--(BUSINESS WIRE)--Feb. 24, 2005--

Results for 2004 in Line with Previous Guidance Company Reiterates Full Year 2005 Guidance of $2.60 to $2.90 Per Share

    YORK International Corporation (NYSE:YRK) today reported net income of $15.4 million, or $0.37 per diluted share for the fourth quarter of 2004.
    Commenting on the results, President and CEO, C. David Myers said, "In 2004, our business was challenged by dramatic material cost increases and the impact of our implementation of YORKConnect; nevertheless, we executed well and are pleased with the progress we have made on our strategic priorities."
    Net sales increased 6.8% from the fourth quarter of 2003 to $1.2 billion. Asia and UPG delivered strong double-digit increases over the fourth quarter of 2003. Income from operations was $25.2 million in the fourth quarter of 2004, and reflects the impact of increased material costs, inefficiencies in service in the Americas and increased investments in IT infrastructure. Included in the fourth quarter results are additional costs related to an IT infrastructure outsourcing contract and $1.0 million in net restructuring costs primarily associated with changes in the EMEA organization.
    Income tax expense was $0.9 million and includes the impact of foreign tax planning strategies and tax benefits recorded in connection with certain foreign tax credit provisions in the American Jobs Creation Act of 2004. The positive tax benefits were partially offset by the restructuring costs and the costs related to the IT outsourcing contract. The Company is currently in discussions to significantly modify its IT infrastructure outsourcing contract and expects those negotiations to be concluded during the first quarter. Any impact associated with this modification will be included in the 2005 results.

    BUSINESS UNIT REVIEW

    GLOBAL APPLIED

    Sales for the Global Applied business grew 6.7% from the fourth quarter of 2003 to $960.1 million. Sales in the Americas were up 6.3% due to improved equipment volume in North America and Latin America, partially offset by lower service revenue in North America. Sales increased 5.0% in EMEA driven by strong growth in the Middle East and the favorable translation impact of European currencies. Asia sales increased 22.1% with growth across the entire region.
    Income from operations in the fourth quarter was $51.5 million compared to $62.2 million in the prior year. Higher material costs globally, inefficiencies resulting from the YORKConnect deployment in North America, and pricing pressures in Europe and Asia more than offset volume leverage, the benefits of 2003 restructuring actions, productivity gains and pricing realization in certain markets.
    The Global Applied backlog at the end of the quarter increased 14.0% from the prior year to $1.0 billion. Excluding the impact of foreign currency translation, the backlog improved 9.4%.

    UNITARY PRODUCTS

    UPG sales improved 13.0% to $187.7 million and UPG outpaced the industry with sales gains in every product category.
    Income from operations in the fourth quarter was $8.4 million. A more positive product mix, price increases and operating leverage on higher volume were offset by material cost increases, and investments in VISTA, marketing and product development.

    BRISTOL

    Bristol's sales for the fourth quarter were $73.7 million compared to $75.4 million in the fourth quarter of 2003.
    Bristol's loss from operations was $3.3 million in the fourth quarter of 2004 due to material cost increases, partially offset by improved productivity and lower selling, general and administrative spending.

    CORPORATE, ELIMINATIONS AND OTHER

    Corporate, eliminations and other expenses were $30.4 million as compared to $25.8 million in the fourth quarter of 2003, reflecting incremental investments in global IT infrastructure and increased spending associated with Sarbanes-Oxley compliance.

    FULL YEAR RESULTS

    Net sales for the full year increased 10.6% to a record $4.5 billion, led by double-digit increases in Global Applied and UPG. Income from operations for the full year was $128.2 million and includes a charge of $20 million to record the estimated liability associated with the UPG furnace remediation program. The targeted benefits from the 2003 restructuring actions were overachieved. These benefits, the success of new products, volume leverage, and productivity gains were offset by significant material cost increases, inefficiencies from the deployment of YORKConnect, and increased investments in VISTA and IT infrastructure. For the full year, the Company reported net income of $81.6 million, or $1.96 per diluted share. Solid balance sheet management led to a reduction in debt and the receivables securitization program of $62.8 million.

    OUTLOOK

    Mr. Myers said, "For 2005, we expect stable to improving markets, with the exception of Europe. We are seeing lower levels of quoting activity in Europe as a result of deteriorating macroeconomic indicators in this region. We anticipate strong growth in China and the Middle East and modest growth in the Americas and in the North American Unitary industry."
    Mr. Myers continued, "As highlighted in our December press release, we anticipate material cost increases of approximately $100 million in 2005. A majority of the incremental material cost increases in 2005 and the impact from the YORKConnect deployment will be in the first half of the year. These factors, as well as the impact of Europe, result in an expected first quarter loss in the range of $0.25 to $0.35 per share. For the full year, we are confident we will continue to deliver improvements in our businesses. We are reiterating our full-year guidance to achieve earnings in the range of $2.60 to $2.90 per share."

    CONFERENCE CALL AND WEBCAST INFORMATION

    YORK International will conduct a conference call to discuss fourth quarter performance and business outlook on Thursday, February 24, 2005, at 09:00 a.m. EST. The conference call will be available through a web broadcast on YORK International's web site at www.york.com.
    If you are unable to connect to the company's web site you may listen via telephone, please call 973-935-8509 (code not required) five minutes prior to the scheduled start time.
    There will be a replay of the conference call beginning Thursday, February 24, 2005, at 11:00 a.m., continuing through until Monday, February 28, 2005, at 11:00 p.m. You may call 877-519-4471, code #563 0183.

    CAUTIONARY STATEMENTS

    This press release and the earnings release conference call may contain non-GAAP financial measures that are reconciled to the most directly comparable GAAP measures on pages 8 and 9 of this press release. The company believes that providing this additional information provides a transparent view of core operational performance with and without the impact of special items in 2003. Management utilizes non-GAAP measures internally to assess historical and expected future performance of the company and as a basis for certain compensation arrangements. Special items in 2003 included restructuring costs, operating expenses related to restructuring initiatives, significant pension curtailments, and gain and loss on divestitures. Special items are the direct result of significant strategic actions initiated by management in 2003 to further reduce the company's overall cost structure and support implementation of the new geographic organization. These charges would not have been incurred if management did not initiate actions to reposition the company. Special items are deducted from GAAP measures (income from operations, income (loss) and earnings (loss) per share before cumulative effect of change in accounting principle, net income (loss), and earnings (loss) per share) to allow users of the company's financial information to identify the cost impact of management's significant strategic decisions on historical results.
    This release includes "forward-looking statements" that involve risks and uncertainties. Actual results could differ materially from those projected in the forward-looking statements. Factors that could affect results include estimates used in determining the expected cost of the furnace remediation program, rising material costs, economic and political environments, climatic conditions, work stoppages, litigation, product liability, currency, and regulatory and competitive pressures. Additional information regarding these risk factors and uncertainties is detailed in YORK's SEC filings.

    ABOUT YORK

    YORK International Corporation is a full-line, global provider of heating, ventilating, air conditioning and refrigeration (HVAC&R) products and services. YORK is the largest independent supplier of HVAC&R equipment in the United States and a leading competitor in the industry internationally. The company's products are sold in more than 125 countries and YORK has approximately 23,200 employees worldwide.

YORK INTERNATIONAL CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Operations (unaudited)

Three Months Ended Twelve Months Ended Dec. 31, Dec. 31, (in thousands, except per share data) 2004 2003 2004 2003 ----------- ----------- ----------- -----------

Net sales $1,189,794 $1,114,322 $4,510,143 $4,076,054

Cost of goods sold (976,522) (908,598) (3,679,326) (3,292,804) ----------- ----------- ----------- -----------

Gross profit 213,272 205,724 830,817 783,250

Selling, general, and administrative expenses (187,082) (167,319) (701,629) (636,179)

Restructuring and other charges, net (1,007) (30,101) (1,007) (91,395) Gain on divestiture -- 345 -- 345 ----------- ----------- ----------- -----------

Income from operations 25,183 8,649 128,181 56,021

Interest expense, net (9,893) (11,073) (41,773) (47,535)

Equity in earnings (loss) of affiliates 1,024 (143) 8,569 5,582 ----------- ----------- ----------- -----------

Income (loss) before income taxes and cumulative effect of change in accounting principle 16,314 (2,567) 94,977 14,068

Provision for income taxes (929) (1,571) (13,398) (2,653) ----------- ----------- ----------- -----------

Income (loss) before cumulative effect of change in accounting principle 15,385 (4,138) 81,579 11,415

Cumulative effect of change in accounting principle -- -- -- (15,413) ----------- ----------- ----------- -----------

Net income (loss) $ 15,385 $ (4,138) $ 81,579 $ (3,998) =========== =========== =========== ===========

Diluted earnings (loss) per share: Income (loss) before cumulative effect of change in accounting principle $ 0.37 $ (0.10) $ 1.96 $ 0.28 Cumulative effect of change in accounting principle -- -- -- (0.38) ----------- ----------- ----------- -----------

Net income (loss) $ 0.37 $ (0.10) $ 1.96 $ (0.10) =========== =========== =========== ===========

Cash dividends per share $ 0.20 $ 0.15 $ 0.80 $ 0.60 =========== =========== =========== ===========

Diluted weighted average common shares and common equivalents outstanding 41,721 40,069 41,623 40,206

YORK INTERNATIONAL CORPORATION AND SUBSIDIARIES

Condensed Consolidated Balance Sheets (unaudited)

December 31, December 31, (in thousands) 2004 2003 ------------ ------------

ASSETS

Current assets: Cash and cash equivalents $ 42,881 $ 49,650 Receivables, net 804,141 662,525 Inventories 615,131 512,714 Prepayments and other current assets 154,738 144,255 ------------ ------------

Total current assets 1,616,891 1,369,144

Deferred income taxes 152,259 133,298 Investments in affiliates 35,725 28,200 Property, plant, and equipment, net 556,629 541,118 Goodwill 542,851 529,182 Intangibles, net 39,357 36,744 Deferred charges and other assets 77,978 99,530 ------------ ------------

Total assets $ 3,021,690 $ 2,737,216 ============ ============

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities: Notes payable and current portion of long- term debt $ 19,539 $ 30,755 Accounts payable and accrued expenses 1,154,713 939,179 Income taxes 40,829 45,035 ------------ ------------

Total current liabilities 1,215,081 1,014,969

Long-term warranties 49,379 46,888 Long-term debt 545,468 582,027 Postretirement and postemployment benefits 226,213 233,841 Other long-term liabilities 106,686 83,091 ------------ ------------

Total liabilities 2,142,827 1,960,816

Stockholders' equity 878,863 776,400 ------------ ------------

Total liabilities and stockholders' equity $ 3,021,690 $ 2,737,216 ============ ============

Certain reclassifications have been made to the 2003 condensed consolidated balance sheet to conform to the 2004 presentation.

YORK INTERNATIONAL CORPORATION AND SUBSIDIARIES

Supplemental Statement of Operations and Segment Information (unaudited)

Three Months Ended December 31, -------------------------------------- 2003 (in thousands, except per share Excluding data) 2004 2003 Special Items ----------- ------------ -------------

Revenue: -------- Global Applied: Americas $ 414,087 $ 389,637 $ 389,637 EMEA 444,684 423,496 423,496 Asia 168,541 138,030 138,030 Intragroup sales (67,224) (51,424) (51,424) ----------- ------------ ------------- 960,088 899,739 899,739 Unitary Products Group 187,716 166,097 166,097 Bristol Compressors 73,731 75,387 75,387 Eliminations (31,741) (26,901) (26,901) ----------- ------------ ------------- Total $1,189,794 $ 1,114,322 $ 1,114,322 =========== ============ =============

Income from Operations: ----------------------- Global Applied: Americas $ 13,931 $ 25,133 $ 25,133 EMEA 20,606 19,941 19,941 Asia 16,971 17,137 17,137 ----------- ------------ ------------- 51,508 62,211 62,211 Unitary Products Group 8,378 9,622 9,622 Bristol Compressors (3,287) (58) (58) Corporate, eliminations, and other (30,409) (25,805) (25,805) Charges and other expenses (1,007)A (37,666)B -- Gain on divestiture -- 345 -- ----------- ------------ ------------- Total $ 25,183 $ 8,649 $ 45,970

Interest expense, net (9,893) (11,073) (11,073)

Equity in earnings (loss) of affiliates 1,024 (143) (143) ----------- ------------ -------------

Income (loss) before income taxes 16,314 (2,567) 34,754

Provision for income taxes (929) (1,571) (7,331)

----------- ------------ -------------

Net income (loss) $ 15,385 $ (4,138) $ 27,423 =========== ============ =============

Diluted earnings (loss) per share: Net income (loss) $ 0.37 $ (0.10) $ 0.67 =========== ============ =============

Weighted average diluted shares 41,721 40,069 41,218

A -- Includes $1,007 of restructuring and other charges, net. Accrual reversals of $2,758 relate to prior restructuring actions and charges of $3,765 relate to additional severance actions associated primarily with the realignment of our EMEA organization.

B -- Includes $31,843 of restructuring and other charges (of which $1,742 is recorded as part of cost of goods sold), $4,195 of operating expenses (recorded as part of cost of goods sold) related to the cost reduction actions, and $1,628 of curtailment costs (recorded as part of selling, general, and administrative expenses).

Supplemental Statement of Operations and Segment Information (unaudited)

Twelve Months Ended December 31, ------------------------------------- 2003 (in thousands, except per share Excluding data) 2004 2003 Special Items ----------- ----------- -------------

Revenue: -------- Global Applied: Americas $1,520,645 $1,388,930 $ 1,388,930 EMEA 1,512,006 1,343,138 1,343,138 Asia 611,655 490,063 490,063 Intragroup sales (234,865) (194,537) (194,537) ----------- ----------- ------------- 3,409,441 3,027,594 3,027,594 Unitary Products Group 854,100 760,059 760,059 Bristol Compressors 426,657 451,241 451,241 Eliminations (180,055) (162,840) (162,840) ----------- ----------- ------------- Total $4,510,143 $4,076,054 $ 4,076,054 =========== =========== =============

Income from Operations: ----------------------- Global Applied: Americas $ 50,387 $ 54,855 $ 54,855 EMEA 47,085 44,691 44,691 Asia 69,656 69,634 69,634 ----------- ----------- ------------- 167,128 169,180 169,180 Unitary Products Group 75,454 60,698 60,698 Bristol Compressors 5,220 25,405 25,405 Corporate, eliminations, and A other (118,614) (79,858) (79,858) Charges and other expenses (1,007)B (119,749)C -- Gain on divestiture -- 345 -- ----------- ----------- ------------- Total $ 128,181 $ 56,021 $ 175,425

Interest expense, net (41,773) (47,535)C (46,635)

Equity in earnings of affiliates 8,569 5,582 5,582 ----------- ----------- -------------

Income before income taxes and cumulative effect of change in accounting principle 94,977 14,068 134,372

Provision for income taxes (13,398) (2,653) (28,241)

----------- ----------- -------------

Income before cumulative effect of change in accounting principle $ 81,579 $ 11,415 $ 106,131 =========== =========== =============

Diluted earnings per share: Income before cumulative effect of change in accounting principle $ 1.96 $ 0.28 $ 2.64 =========== =========== =============

Weighted average diluted shares 41,623 40,206 40,206

A -- Includes a charge of $20,000 to record the estimated liability associated with the UPG furnace remediation program.

B -- Includes $1,007 of restructuring and other charges, net. Accrual reversals of $2,758 relate to prior restructuring actions and charges of $3,765 relate to additional severance actions associated primarily with the realignment of our EMEA organization.

C -- Includes $96,879 of restructuring and other charges (of which $5,484 is recorded as part of cost of goods sold), $8,828 of operating expenses (recorded as part of cost of goods sold) related to the cost reduction actions, $14,042 of curtailment costs (recorded as part of selling, general, and administrative expenses), and $900 of fees related to repayment of sale leaseback obligation (recorded as part of interest expense).

--30--JM/ny*

CONTACT: YORK International Corporation Helen Marsteller, 717-771-7451

KEYWORD: PENNSYLVANIA INDUSTRY KEYWORD: BANKING MANUFACTURING REAL ESTATE BUILDING/CONSTRUCTION EARNINGS CONFERENCE CALLS SOURCE: YORK International Corporation

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