Item 1. Business
(a) The Company (as used herein the term "Raymond" refers to The Raymond Corporation alone, and the term "Company" refers to The Raymond Corporation and its subsidiaries, both consolidated and unconsolidated, and direct and indirect) operates predominately in one business segment, that being the design, manufacture, sale, leasing and short-term rental of materials handling equipment. Revenues are realized predominately through its North American Dealer Network although the Company has expanded in both the domestic and international markets with minimal capital investment through distribution and O.E.M. (Original Equipment Manufacturer) supply agreements.
Raymond was organized in 1840 as Lyon Iron Works, in Greene, New York, and in 1922 George G. Raymond, Sr. purchased it. Raymond produced its first materials handling product in 1930 under the Lyon Iron Works name. In 1941, Raymond was renamed Lyon-Raymond Corporation, and in 1951, was renamed The Raymond Corporation. Shares were first offered to the public in 1956.
The major components of the Company's international operations are Raymond Industrial Equipment, Limited, a wholly-owned Canadian manufacturing subsidiary, and G.N. Johnston Equipment Co. Ltd., the exclusive Canadian distributor that is 45% owned by R.H.E. Ltd., a wholly-owned Canadian subsidiary of Raymond. Foreign exchange exposure on international operations is limited primarily to the Canadian dollar and is minimized through the purchase of foreign currency exchange contracts.
In 1991, Raymond and Mitsubishi Caterpillar Forklift America Inc. ("MCFA") signed an agreement to create a joint venture company. The joint venture company, known as Material Handling Associates, Inc. ("MHA"), is a separate enterprise which designs, develops, and sells products to be manufactured exclusively by the Company and distributed exclusively through MHA dealers using Caterpillar trademarks. This venture is intended to expand distribution of products manufactured by the Company and to provide additional opportunities for the sale of replacement parts and accessories.
During 1992, Raymond entered into an agreement with B.T. Industries AB ("BT") of Mjolby, Sweden, a European manufacturer and distributor of lift trucks. Under the agreement, the Company manufactures a European version of the SWING-REACH/R/ truck for distribution by BT. In addition, the agreement grants BT the non-exclusive right to distribute this product in other markets in which the Company currently does not participate.
In 1994, Raymond and MCFA signed an agreement to purchase for resale battery powered, electric low lift pallet trucks known as walkies, similar to those currently manufactured by the Company for MHA. MCFA markets the walkies under the Mitsubishi trademark throughout the United States, Canada, Mexico, Central and South America. Also in 1994, Raymond and MCFA signed an agreement whereby the Company manufactures a sit-down counterbalanced electric forklift truck exclusively for sale to MCFA.
In 1994, Raymond entered into an agreement with Jungheinrich A.G. ("Jungheinrich") of Hamburg, Germany, the second largest manufacturer of lift trucks in Europe. Under the agreement, the Company manufactures a European version of the EASi orderpicker truck for distribution by Jungheinrich. In addition, the agreement grants Jungheinrich the non-exclusive right to distribute this product in other markets in which the Company currently does not participate.
During 1994, Raymond and Remstar International Inc. ("Remstar"), of Westbrook, Maine, signed an agreement whereby the Company manufactures horizontal carousels and parts for distribution by Remstar. Pursuant to the agreement, the Company agrees to use Remstar as its exclusive distributor in the United States, Canada and Mexico but retains the right to sell parts, accessories and equipment in the United States, Canada and Mexico for use with the Company's horizontal carousels sold prior to this agreement.
In 1994, the Company expanded its Dealer Network into Columbia and Costa Rica. Existing markets in Mexico were expanded to include additional sales territories.
The Company has equity investments in certain members of the Company's Dealer Network and, in 1994, increased equity investments in dealerships with principal offices in Missouri and Utah.
During 1994, Raymond formed Dockstocker Corporation, a New York corporation, owned by Raymond Sales Corporation, a 100% owned subsidiary of Raymond. Dockstocker Corporation will market and sell a stand-up end control counterbalanced forklift truck featuring flexible dockstance operator configuration designed to maximize loading productivity in the dock environment.
(b) Financial Information about Industry Segments
"Note M-Business Segment Information" on Page 36 of the Annual Report to Shareholders for the year ended December 31, 1994 is incorporated herein by reference.
(c) Narrative Description of Business
(i) Principal Products and Services
The Company's products are marketed principally under the RAYMOND/R/ trademark, and fall into the category of unit load and case pick load handling.
The Company's unit load and case pick load products are operator-controlled machines used to move a load from point A to point B. The unit load and case pick load product line includes orderpickers, walkies, sideloaders, straddle, SWING-REACH/R/ trucks, and REACH-FORK/R/ trucks for narrow aisle and very narrow aisle operation, and counterbalanced PACER/TM/ trucks.
In 1990, a new line of orderpickers with advanced microprocessor control was introduced by the Company. The orderpickers significantly reduce the high costs and time involved to pick orders. Total programmability, through the intellidrive/R/ control system, allows truck performance to be tailored to each user's needs to optimize productivity. The intellidrive system utilizes microchip technology developed by the Company and is designed to replace control systems based on hydraulic and mechanical technologies commonly utilized in the industry. The intellidrive system enhances the trucks' performance characteristics and productivity and has allowed the Company to reduce manufacturing costs through reduced material and labor expense.
In 1991, the Company introduced a series of products known as EASi products - Ergonomically Advanced Systems with intellidrive. This new line of trucks is designed for greater operator comfort and enhanced productivity. The trucks included in this series are the operator-up SWING-REACH truck, the orderpicker and the narrow aisle REACH-FORK truck. The new EASi REACH-FORK truck has unequaled capacity at elevated heights and provides greater space utilization and increased productivity.
Also in 1991, five new walkies were introduced featuring a top-mounted operator's steering handle and other innovations.
In 1992, the Company introduced a new base model version of the orderpicker and REACH-FORK truck.
In 1993, a new generation of the EASi REACH-FORK truck and EASi Orderpicker were introduced, designed for greater operator comfort and productivity. The Company also introduced regenerative braking to allow recycling of energy back into the battery, improving overall efficiency while extending component life. The REACH-FORK truck also has an innovative motor impeller design, ensuring a superior air flow system which improves component life and further enhances operator comfort.
Also in 1993, the Company introduced an option on the EASi REACH-FORK truck and EASi Orderpicker with the SMARTi/TM/ information system. The SMARTi information system enables the customer to easily obtain reports on the truck's activities by shift, day or week to help evaluate productivity.
In addition, two new walkies were introduced in 1993. The 8,000 pound capacity walkie and the transistor-controlled 4,000 pound capacity walkie are designed to increase productivity.
In 1994, the Company introduced a new walkie handle design to provide greater operator comfort, convenience and productivity. The design difference can make repeated movements more comfortable.
Also in 1994, two new products were added to the EASi REACH-FORK/R/ line featuring upgradeability from 24 volt operation, and an optional dockstance operator compartment. In addition, the EASi REACH-FORK family was expanded to include a four directional truck for use in handling both standard pallets and long loads, and additional mast selections for very tall single and double deep reach applications.
All of these vehicles, controls and systems are sold through a network of dealerships, which have multiple full service facilities across their trading area and are supported by a repair and replacement parts service. The Company's replacement parts and accessories business supports the base of the Company's lift trucks in service and provides new parts and service to customers who have service needs for non-Company equipment. In addition, the Company rebuilds and sells electric motors and other components for replacement use, offering its customers a cost-effective alternative to purchasing a new component for both Company and non-Company equipment.
Raymond Leasing Corporation, a wholly-owned subsidiary of the Company, offers lease financing, short-term rentals and sales of used equipment and serves as a marketing vehicle for the Company's products by providing the Company's Dealer Network with flexible leasing programs.
The Company presently manufactures lift truck masts for two original equipment manufacturer (O.E.M.) customers.
The product and service categories of the Company's business segment are shown with percentage of revenues contributed in "Note M-Business Segment Information" on page 36 of the Annual Report to Shareholders for the year ended December 31, l994, which is incorporated herein by reference.
(ii) Status of Announced Products Not Yet Introduced
The Company has not made a public announcement about any new products or industry segments that will require a material investment of assets or that are otherwise material. However, as in prior years, the Company expects to introduce new and enhanced models through its normal research and development activities.
(iii) Sources and Availability of Raw Materials
The Company procures components from the best available sources of supply, which include a broad range of internal manufacturing capabilities. Certain components of its products are fabricated from bar, strip, rod and plate steel. Individual decisions to make or buy are based upon numerous factors, the more significant being quality, cost, lead time, and technological sensitivity.
The Company has no significant long-term commitments with any supplier and believes its supply arrangements are adequate for current and presently foreseeable needs. Certain electric motors, forks, castings, hydraulic and electronic components are made to Company specifications and are purchased from single sources. Many single sources are backed up by agreements to allow manufacture by alternate sources or by the availability of similar standard components from alternate sources.
Continued effort is made by the Company's Engineering and Purchasing Departments to establish and improve the strong working relationships between the Company and its suppliers.
The Company's products vary in capacity, function, and load capability; thus, specifications for a particular order require that many of the components are only made to orders booked. Commonly used parts are manufactured or purchased and stocked to minimize production time. Finished products are normally assembled only to orders booked. Every effort is made to keep inventories low, while meeting competitive delivery commitments.
(iv) Patents, Trademarks, Licenses, Franchises and Concessions Held
The Company has numerous registered patents in the United States, Canada and several European countries with respect to various inventions, including the intellidrive/R/ control system. Although the Company considers that, taken as a whole, the rights under these patents, which expire from time to time, are a valuable asset, it does not regard its business as being materially dependent upon any single patent or any group of patents.
The Company also has a number of registered and common law trademarks and service marks for its products. The trade and service marks, taken as a whole, are considered by the Company to be important to its business.
(v) Seasonality of Business
The Company does not recognize its business segment or any of its products or services as seasonal.
(vi) Working Capital Practices
The Company pursues and the industry demands no special business practices with respect to working capital items.
(vii) Customers
The Company distributes its products principally through its Dealer Network. These Dealers sell the Company's products to the end users, which represent a broad cross-section of industry. They include public and private businesses engaged in the manufacture, storage and/or distribution, both wholesale and retail, of a wide variety of products which include: materials, food, textiles, paper, steel, rubber, electrical components, equipment and machinery.
In 1992, the Company established its National Accounts Program, which offers selected large customers a single purchasing and financing source for their materials handling equipment and service needs. Delivery, installation and after-sale service are provided by the Company's Dealer Network. The program focuses on fleet users of lift trucks with facilities in several areas of the country.
No single customer (end user) of the Company accounts for 10% or more of the Company's total consolidated revenues.
(viii) Backlog
As of December 31, 1994, the backlog of orders aggregated approximately $78,119,000 compared with a backlog of approximately $52,297,000 on December 31, 1993. No assurance can be given that the backlog will continue at any particular level. The Company reasonably expects to fill the backlog of orders within the current fiscal year, unless a longer production lead time has been requested by the customer. The Company believes that its current backlog can generally be considered firm; no significant cancellations are expected.
(ix) Contracts Subject to Termination or Renegotiation
There is no material portion of the business that is subject to renegotiation of profits or termination of contracts or subcontracts at the election of the Government.
(x) Competition
While competitive conditions vary from product to product, all of the Company's products are marketed in the highly competitive manufacturing and warehousing materials handling systems markets. Historically, Raymond's strength has been in providing superior application, specific product performance, service and reliability.
The Company is a major competitor in all market segments in which it participates, generally competing with other major national and international manufacturers. Many small manufacturers compete with a few major manufacturers in a highly fragmented market. In addition to these direct competitors, a number of other products compete indirectly for the industrial consumer's materials handling dollars. The Company believes it is the only North American manufacturer which designs and manufactures its own vehicle controls. This allows the Company to be a leader in developing and applying new control technologies, responding more quickly to user demands and trends, and differentiating its products with respect to key competitive factors such as productivity and ergonomics.
The Company believes it is the only company offering its comprehensive array of materials handling systems, products and services to the markets it serves.
Because of the Company's broad product mix, it has no one single competitor but rather various competitors across the unit load and case pick load handling category.
In recent years, the Company has introduced a new enhanced line of orderpickers, reach trucks, turret trucks and walkies which have solidified the Company's position in the unit load and case pick load handling category. Over time, several manufacturers have emerged as key competitors in this category, including U.S.-based Crown Equipment Corporation, Clark Material Handling Company, a wholly-owned subsidiary of Terex Corporation, and the Yale Industrial and Hyster subsidiaries of North American Coal Company.
The Company no longer considers itself a competitor in the automated storage and retrieval market since its business activity is now limited to the manufacture of horizontal carousels for a single original equipment manufacturer (O.E.M.) customer
(xi) Research and Development
The cost of the Company's research and development program amounted to $3,958,000 in 1994 compared to $4,251,000 in 1993, and $2,557,000 in 1992. The Company works closely with customers in the development of product application to fulfill a particular materials handling requirement.
(xii) Compliance with Environmental Laws and Regulations
The Company's production facilities and operations are subject to a variety of federal, state and local environmental and job safety laws and regulations, including various federal, state and local laws, ordinances and regulations pursuant to which an owner of real property may become liable for the costs of removal or remediation of certain hazardous or toxic substances located on or in such property. Environmental laws often impose liability without regard to whether the owner knew of, or was responsible for, the presence of such hazardous or toxic substances. The presence of such substances, or the failure to remediate the presence of such substances properly, may adversely affect the owner's ability to sell such real estate or to borrow using such real estate as collateral. In particular, the federal Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA") imposes joint and several liability for clean-up and enforcement costs, without regard to fault or to the legality of the original conduct, on current or predecessor owners or operators of a site. Under CERCLA, an owner or operator of the site may be liable for all or part of the costs to clean up sites at which waste has been released by the owners, the owner's lessees, or by predecessor or successor owners. In addition, liability extends to persons/companies which generated the hazardous substances located on the property, or arranged for disposal of such substances. The Company believes that it is in compliance in all material respects with all relevant federal, state and local rules and regulations and regulations regarding hazardous or toxic substances. No assurances, however, can be given that the Company is aware of all potential environmental liabilities, or that there are not material environmental liabilities of which the Company is not aware.
(xiii) Employees
The Company had 1,498 employees on December 31, 1994.
(d) Financial Information about Foreign and Domestic Operations and Export Sales
(1) "Note M-Business Segment Information" on Page 36 of the Annual Report to Shareholders for the Year ended December 31, 1994 is incorporated herein by reference.
(2) The Company has no extraordinary risks attendant to its foreign operations.
Item 2.

Item 2. Properties
The Company's corporate headquarters and main manufacturing facility are located in an approximately 70,000 square foot office building and approximately 325,000 square foot adjacent plant in Greene, New York, both of which are owned by the Company.
Expansion has recently been completed on a modern 138,000 square foot steel and masonry manufacturing and office building the Company owns in Brantford, Ontario, Canada.
The Company owns a modern one-story facility located in East Syracuse, New York which houses the Company's Parts Distribution Center and a Raymond dealership. The facility, made of steel and masonry construction, contains approximately 61,000 square feet of warehouse and office space. Approximately 9,300 square feet of the warehouse is presently occupied by Raymond Leasing Corporation's rental department and truck repair facility.
The Company currently leases approximately 10,301 square feet of space from The Greene Central School District in Greene, New York for use as a training center. The lease, for a five year period, expires December, 1995.
All of the Company's properties and machinery are believed to be well maintained and in good condition. The Company estimates that its production capacity is adequate for the business anticipated during the next three or four years.
Item 3.

Item 3. Legal Proceedings
The Company is currently defending approximately 70 products liability and similar lawsuits involving industrial accidents. Management believes that none of these will individually have a material adverse effect on the Company. Taken as a whole, the damages claimed would have a material adverse effect on the Company but actual costs of judgments, settlements and costs of defense have not had such an effect to date. The Company views these actions, and related expenses of administration, litigation and insurance, as part of the ordinary course of its business. The Company uses a combination of self-insured retention and insurance, paid for in part by its dealers, to manage these risks and believes that the insurance coverage and reserves established for self-insured risks are adequate. The Company's dealers contribute to the funding of the Company's products liability program and, in turn, the Company indemnifies the dealers against products liability expense and manages products liability claims. The Company has a policy of aggressively defending these lawsuits which generally take several years to ultimately resolve.
The Company is also one of sixteen remaining defendants in a private environmental lawsuit. The five plaintiffs in the case are Cooper Industries, Inc., Keystone Consolidated Industries, Inc., The Monarch Machine Tool Co., Niagara Mohawk Power Corporation and Overhead Door Corporation. Plaintiffs have been ordered by the United States Environmental Protection Agency to perform a Remedial Investigation/Feasibility Study with respect to a 20 acre site located in Cortland, New York and are seeking contribution from each of the defendants. Plaintiffs have alleged that each defendant is a "Potentially Responsible Party" as that term is defined in environmental statutes. Pretrial discovery is expected to continue through the Fall of 1995. The site involved in the litigation was a manufacturing site for many decades prior to 1971. From 1971 to 1985, a scrap metal processing operation was conducted at the site. From 1975 to 1982, the owners of the scrap metal processing operation purchased scrap metal from the Company. The plaintiffs have alleged that the scrap metal purchased from the Company was coated with certain solvents and/or cutting oils. Plaintiffs have the burden of proving the nature and extent of the Company's contribution to the site, as well as the burden of proving what portion of the material delivered to the site was "hazardous" as that term is defined in the environmental statutes. The Company is aggressively defending the claim and does not believe it is likely to have a material adverse effect on the Company.
Item 4.

Item 4. Submission of Matters to a Vote of Security Holders
During the fourth quarter of 1994, no matter was submitted to a vote of security holders.
ADDITIONAL INFORMATION REQUIRED IN PART I:
Executive Officers of the Registrant
The names, ages and positions of all the Executive Officers of the Company, as of March 10, 1995, are listed below together with their business experience during the past five years. Officers are elected annually by the Board of Directors. There are no family relationships among these officers or any Director or Executive Officer of the Company, nor any arrangement or understanding between any officer and any other person pursuant to which the officer was elected.
PART II
Item 5.

Item 5. Market for the Company's Common Stock and Related Security Holder Matters
Common Stock Market Prices and Dividends and related securities matters, as discussed on Pages 7, 9, 10, 14, 29, 38 and 42 of the Annual Report to Shareholders for the year ended December 31, 1994, included in this Form 10-K Annual Report as Exhibit 13 are incorporated herein by reference.
Item 6.

Item 6. Selected Financial Data
Selected Financial Data of The Raymond Corporation and consolidated subsidiaries, reported on Pages 9 and 10 of the Annual Report to Shareholders for the year ended December 31, 1994, included in this Form 10-K Annual Report as Exhibit 13 are incorporated herein by reference.
Item 7.

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
Management's Discussion and Analysis of Financial Condition and Results of Operations on Pages 11 through 15 of the Annual Report to Shareholders for the year ended December 31, 1994, included in this Form 10-K Annual Report as Exhibit 13 are incorporated herein by reference.
Item 8.

Item 8. Financial Statements and Supplementary Data
The consolidated Financial Statements of The Raymond Corporation included on Pages 16 through 38 of the Annual Report to Shareholders for the year ended December 31, 1994, included in this Form 10-K Annual Report as Exhibit 13 are incorporated herein by reference.
Quarterly Results of Operations on Page 38, Note M and Supplemental Information on Changing Price Levels on Page 14 of the Annual Report to Shareholders for the year ended December 31, 1994, included in this Form 10-K Annual Report as Exhibit 13 are incorporated herein by reference.
Item 9.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Not applicable.
PART III
Item 10.

Item 10. Directors and Executive Officers of the Registrant
Information regarding Directors required by Items 401 and 405 of Regulation S-K is disclosed under the captions "Nominees for Election as Directors" and "Directors Continuing in Office" in the Proxy Statement for the Annual Meeting of Shareholders to be held April 29, 1995 included as Exhibit 99 hereto, and is incorporated herein by reference. Information regarding Executive Officers is included in Part I of this Form 10-K and incorporated herein by reference thereto.
Item 11.

Item 11. Executive Compensation
Information regarding compensation of Directors and Executive Officers is disclosed under the captions "Directors Remuneration; Attendance" and "Executive Compensation" of the Proxy Statement for the Annual Meeting of Shareholders to be held April 29, 1995, included as Exhibit 99 hereto, and is incorporated herein by reference thereto.
Item 12.

Item 12. Security Ownership of Certain Beneficial Owners and Management
This information is disclosed under the captions "Security Ownership of Certain Beneficial Owners" and "Security Ownership of Management" in the Proxy Statement for the Annual Meeting of Shareholders to be held on April 29, 1995 included as Exhibit 99 hereto, and is incorporated herein by reference thereto.
Item 13.

Item 13. Certain Relationships and Related Transactions
This information is disclosed in the 1995 Proxy Statement for the Annual Meeting of Shareholders in the section captioned "Certain Relationships and Related Transactions" included as Exhibit 99 hereto, and is incorporated herein by reference thereto.
PART IV
Item 14.

Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) Documents filed as part of this report:
1. The following financial statements of the Registrant and its subsidiaries, presented on pages 16 to 38 of the Registrant's 1994 Annual Report to Shareholders, which is filed with this Form 10-K Annual Report as Exhibit 13, are incorporated herein by reference.
2. The following Consolidated Financial Statement Schedules of The Raymond Corporation and Subsidiaries are required by Item 14(d):
All other schedules for which provision is made in Regulation S-X of the Securities and Exchange Commission have been omitted because they are not applicable or not required under the related instructions or because the information has been furnished elsewhere in the financial statements.
3. See Exhibit Index at pages 17-19 of this Form 10-K.
(b) No report on Form 8-K was filed by the registrant during the fourth quarter of its fiscal year ending December 31, 1994.
EXHIBIT INDEX -------------
Exhibit # Description ------- ----------- 3.1 Restated and Amended Certificate of Incorporation of The Raymond Corporation. Filed as Exhibit 3.1 to the 1991 Form 10-K Annual Report of the Company and incorporated herein by reference.
3.2 Bylaws of the Company, as amended, dated January 1, 1993. Filed as Exhibit 3.2 to the 1992 Form 10-K Annual Report of the Company and incorporated herein by reference.
4.2 Form of Indenture between the Company and The Chase Manhatten Bank, N.A., as Trustee, and the 6.50% Convertible Subordinated Debenture due 2003, incorporated herein by reference to Registration Statement on Form S-3, Registration No. 33-71480, effective November 12, 1993.
10.1 Joint Venture Agreement dated August 1, 1991 between Caterpillar Industrial Inc., and The Raymond Corporation. Filed as Exhibit 10.18 to the 1991 Form 10-K Annual Report of the Company and incorporated herein by reference.
10.2 First Amendment to Joint Venture Agreement dated August 1, 1991 between Caterpillar Industrial Inc. and The Raymond Corporation dated October 22, 1992. Filed as Exhibit 10.18 to the 1992 Form 10-K Annual Report of the Company and incorporated herein by reference.
10.3 Second Amendment to Joint Venture Agreement dated August 1, 1991 between Caterpillar Industrial Inc. and The Raymond Corporation.
10.4 Third Amendment to Joint Venture Agreement dated August 1, 1991 between Caterpillar Industrial Inc. and The Raymond Corporation.
10.5 Revolving Credit and Term Loan Agreement dated December 21, 1994 among The Raymond Corporation, Raymond Leasing Corporation and Chemical Bank.
10.6 Revolving Credit and Term Loan Agreement dated February 14, 1995 among The Raymond Corporation, Raymond Leasing Corporation and The Chase Manhattan Bank, N.A.
10.7 Raymond Leasing Corporation Senior Note Agreement dated as of March 1, 1987. Filed as Exhibit 10.6 to the 1993 Form 10-K Annual Report of the Company and incorporated herein by reference.
10.8 Raymond Leasing Corporation Revolving Line of Credit dated April 30, 1992. Filed as Exhibit 10.7 to the 1993 Form 10-K Annual Report of the Company and incorporated herein by reference.
10.9 Raymond Leasing Corporation Senior Note Agreement dated as of November 1, 1991. Filed as Exhibit 10.22 to the 1992 Form 10-K Annual Report of the Company and incorporated herein by reference.
EXECUTIVE COMPENSATION PLANS AND ARRANGEMENTS ---------------------------------------------
Exhibit # Description ------- ----------- 10.10 Consulting Agreement effective as of January 1, 1995 between Lee J. Wolf and The Raymond Corporation.
10.11 Consulting Agreement effective as of January 1, 1995 between George G. Raymond, Jr. and The Raymond Corporation.
10.12 Employment Agreement dated as of November 3, 1987 between Ross K. Colquhoun and The Raymond Corporation. Filed as Exhibit 10.10 to the 1990 Form 10-K Annual Report of the Company and incorporated herein by reference.
10.13 Amendment #1 to Employment Agreement effective January 1, 1994 between Ross K. Colquhoun and The Raymond Corporation.
10.14 Sample form of Employment Agreement between The Raymond Corporation and Company Vice Presidents. Filed as Exhibit 10.8 to the 1991 Form 10-K Annual Report of the Company and incorporated herein by reference.
10.15 The Raymond Corporation Retirement Benefits Equalization Plan.
10.16 The Raymond Corporation Stock Option Plan (1991).
10.17 The Raymond Corporation Savings Plan effective January 1, 1986, amended and restated as of January 1, 1993. Filed as Exhibit 10.20 to the 1993 Form 10-K Annual Report of the Company and incorporated herein by reference.
10.18 The Raymond Corporation Deferred Compensation Plan for Exempt Employees restated as of September 1, 1994.
10.19 The Raymond Corporation Officer Performance Bonus Plan Formula. Filed as Exhibit 10.15 to the 1992 Form 10-K Annual Report of the Company and incorporated herein by reference.
10.20 Profit Sharing Retirement Plan of The Raymond Corporation, Plan A, dated January 1, 1976, revised July 23, 1993. Filed as Exhibit 10.23 to the 1993 Form 10-K Annual Report of the Company and incorporated herein by reference.
10.21 Profit Sharing Retirement Plan for Salaried Employees of The Raymond Corporation, Plan B, dated January 1, 1976, revised July 23, 1993. Filed as Exhibit 10.24 to the 1993 Form 10-K Report of the Company and incorporated herein by reference
10.22 The Raymond Corporation Pension Plan.
Exhibit # Description ------- ----------- 11. Statement re: computation of per share earnings.
13. Annual Report to Shareholders for the year ended December 31, 1994.
18. Letter dated February 7, 1992 from Ernst & Young re: change in accounting principles. Filed as Exhibit 18 to the 1991 Form 10-K Annual Report of the Company and incorporated herein by reference.
19. Filed Form 8 Report dated September 11, 1992. Filed as Exhibit 19 to the 1992 Form 10-K Annual Report of the Company and incorporated herein by reference.
21. Subsidiaries (Direct and Indirect) of The Raymond Corporation for the year ending December 31, 1994.
23. Consent of Independent Auditors dated March 27, 1995.
24. Power of Attorney of Directors dated March 4, 1995.
27. Financial Data Schedule.
99. The Company's 1995 Proxy Statement for the Annual Meeting of Shareholders to be held on April 29, 1995.
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.
Date: March 29, 1995 THE RAYMOND CORPORATION ------------------------ (Registrant)
By: /s/ Ross K. Colquhoun --------------------------- Ross K. Colquhoun President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the Registrant and in the capacities and on the date indicated.
By: /s/ Ross K. Colquhoun By: /s/ William B. Lynn ------------------------ --------------------------- Ross K. Colquhoun William B. Lynn President, Chief Executive Executive Vice President Officer and Director Principal Financial Officer
Date: 03/29/95 Date: 03/29/95
By: /s/ John F. Everts ------------------------- John F. Everts Corporate Controller Date: 03/29/95
By: /s/ George G. Raymond, Jr. By: /s/ Arthur M. Richardson --------------------------- -------------------------- George G. Raymond, Jr., Chairman Arthur M. Richardson, Director Date: 03/29/95 Date: 03/29/95
By: /s/ James F. Matthews By: /s/ M. Richard Rose --------------------------- -------------------------- James F. Matthews, Director M. Richard Rose, Director Date: 03/29/95 Date: 03/29/95
By: /s/ John E. Mott By: /s/ Daniel F. Senecal -------------------------- ---------------------------- John E. Mott, Director Daniel F. Senecal, Director Date: 03/29/95 Date: 03/29/95
By: /s/ Michael R. Porter -------------------------- Michael R. Porter, Director Date: 03/29/95
By: /s/ Lee J. Wolf --------------------- Lee J. Wolf, Director
Date: 03/29/95
THE RAYMOND CORPORATION AND SUBSIDIARIES
SCHEDULE I -- Condensed Financial Information of Registrant -- The Raymond Corporation
Years ended December 31, 1994, 1993 and 1992
Condensed Balance Sheets
The accompanying notes are a part of the financial statements.
THE RAYMOND CORPORATION AND SUBSIDIARIES
SCHEDULE I -- Condensed Financial Information of Registrant -- The Raymond Corporation
Years ended December 31, 1994, 1993 and 1992
Condensed Balance Sheets
The accompanying notes are a part of the financial statements.
THE RAYMOND CORPORATION AND SUBSIDIARIES
SCHEDULE I -- Condensed Financial Information of Registrant -- The Raymond Corporation
Years ended December 31, 1994, 1993 and 1992
Condensed Statements of Income
The accompanying notes are a part of the financial statements.
THE RAYMOND CORPORATION AND SUBSIDIARIES
SCHEDULE I -- Condensed Financial Information of Registrant -- The Raymond Corporation
Years ended December 31, 1994, 1993 and 1992
Condensed Statements of Cash Flow
The accompanying notes are part of the financial statements.
THE RAYMOND CORPORATION AND SUBSIDIARIES
SCHEDULE I -- Condensed Financial Information of Registrant -- The Raymond Corporation
Years ended December 31, 1994, 1993 and 1992
Notes to Condensed Financial Statements
NOTE A - Basis of Presentation
In the parent company-only financial statements, the Company's investment in subsidiaries and unconsolidated investees is stated at cost plus equity in undistributed earnings of the subsidiaries and unconsolidated investees since the date of acquisition. Parent company-only financial statements should be read in conjunction with the Company's consolidated financial statements.
NOTE B - Long-Term Debt
The 6.5% convertible subordinated debentures are convertible into shares of common stock at a rate adjusted for the 1994 5% stock dividend of approximately 56.47 shares for each $1,000 principal amount of debentures. These debentures are redeemable at prices ranging from 103.5% of principal to par depending upon the redemption date. The debentures are convertible at any time prior to maturity and are redeemable any time on or after December 15, 1996, in whole or in part, at the option of the Company.
THE RAYMOND CORPORATION AND SUBSIDIARIES
SCHEDULE I -- Condensed Financial Information of Registrant -- The Raymond Corporation
Years ended December 31, 1994, 1993 and 1992
Notes to Condensed Financial Statements (cont'd)
NOTE C -- Guarantee
Raymond Leasing Corporation, a wholly-owned subsidiary of the Company, has a $12,000,000 long-term debt obligation outstanding at December 31, 1994. Under terms of the debt agreement, the Company has guaranteed the payment of all principal and interest.
NOTE D -- Dividends from Subsidiaries and Investees
Cash dividends paid to The Raymond Corporation from unconsolidated investees accounted for under the equity method were $107,969 in 1994, $682,208 in 1993, and $1,478,658 in 1992. Cash dividends paid to The Raymond Corporation by subsidiaries were $0 in 1994, $334,000 in 1993, and $0 for 1992.
THE RAYMOND CORPORATION AND SUBSIDIARIES
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
Year Ending December 31, 1994
A - Warranty & maintenance costs charged against reserve.
B - Bad debt write-offs charged against reserve.
C - Insurance costs charged against reserve.
THE RAYMOND CORPORATION AND SUBSIDIARIES
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
Year Ending December 31, 1993
A -- Warranty & maintenance costs charged against reserve.
B -- Bad debt write-offs charged against reserve.
C -- Insurance costs charged against reserve, including for the first time the activity of self-insured retention for workers' compensation.
THE RAYMOND CORPORATION AND SUBSIDIARIES
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
Year Ending December 31, 1992
A -- Warranty & maintenance costs charged against reserve.
B -- Bad debt write-offs charged against reserve.
C -- Insurance costs charged against reserve.


Item 1. Business
The Registrant, a diversified specialty food company, is principally engaged in the manufacture of spices, seasonings, flavorings and other specialty food products and sells such products to the retail food market, the foodservice market and to industrial food processors throughout the world. The Registrant also, through subsidiary corporations, manufactures and markets plastic packaging products for the food, cosmetic and health care industries.
The Registrant's Annual Report to Stockholders for 1994, which is enclosed as Exhibit 13, contains a description of the general development, during the last fiscal year, of the business of the Registrant, which was formed in 1915 under Maryland law as the successor to a business established in 1889. Pages 9 through 21 of that Report are incorporated by reference. The Registrant's net sales increased 8.9% in 1994 to $1,694,772,000 due to both sales price and volume changes.
The Registrant operates in one business segment and has disclosed in Note 10 of the Notes to Consolidated Financial Statements on page 35 of its Annual Report to Stockholders for 1994, which Note is incorporated by reference, the financial information about the business segment required by this Item.
SPECIALTY FOOD BUSINESS
The Registrant's Annual Report to Stockholders for 1994 sets forth a description of the business conducted by the Registrant on pages 9 through 11. Those pages of the Registrant's Annual Report are incorporated by reference.
Principal Products/Marketing
Spices, seasonings, flavorings, and other specialty food products are the Registrant's principal products. Spices, seasonings, flavorings, and other specialty food products accounted for approximately 90% of net sales on a consolidated basis during the three fiscal years ended November 30, 1994. No other product or class of similar products or services contributed as much as 10% to consolidated net sales during the last three fiscal years. The Registrant's efforts will continue to be directed primarily in the area of spices, seasonings, flavorings, and other specialty food products.
The Registrant markets its consumer and foodservice products through its own sales organization, food brokers and distributors. In the industrial market, sales are made mostly through the Registrant's own sales force.
Products/Industry Segments
The Registrant has not announced or made public information about a new product or industry segment that would require the investment of a material amount of the assets of the Registrant or that otherwise is material.
Raw Materials Many of the spices and herbs purchased by the Registrant are imported into the United States from the country of origin, although substantial quantities of particular materials, such as paprika, dehydrated vegetables, onion and garlic, and substantially all of the specialty food ingredients other than spices and herbs, originate in the United States. Some of the imported materials are purchased from dealers in the United States. The Registrant is a direct importer of certain raw materials, mainly black pepper, vanilla beans, cinnamon, herbs and seeds from the countries of origin. The principal purpose of such purchases is to satisfy the Registrant's own needs. The Registrant also sells imported raw materials to other food processors.
The raw materials most important to the Registrant are onion, garlic and capsicums (paprika and chili peppers), which are produced in the United States, black pepper, most of which originates in India, Indonesia, Malaysia and Brazil, and vanilla beans, a large proportion of which the Registrant obtains from the Malagasy Republic and Indonesia.
Trademarks, Licenses and Patents
The Registrant owns a number of registered trademarks, which in the aggregate may be material to the Registrant's business. However, the loss of any one of those trademarks, with the exception of the Registrant's "McCormick" and "Schilling" trademarks, would not have a material adverse impact on the Registrant's business. The "McCormick" and "Schilling" trademarks are extensively used by the Registrant in connection with the sale of a substantial number of the Registrant's products in the United States. The "McCormick" and "Schilling" trademarks are registered and used in various foreign countries as well. The terms of the trademark registrations are as prescribed by law and the registrations will be renewed for as long as the Registrant deems them to be useful.
The Registrant has entered into a number of license agreements authorizing the use of its trademarks by persons in foreign countries. In the aggregate, the loss of those license agreements would not have a material adverse impact on the Registrant's business. The terms of the license agreements are generally 3 to 5 years or until such time as either party terminates the agreement. Those agreements with specific terms are renewable upon agreement of the parties.
The Registrant owns various patents, but they are not viewed as material to the Registrant's business.
Seasonal Nature of Business
Historically, the Registrant's sales and profits are lower in the first two quarters of the fiscal year and increase in the third and fourth quarters.
Working Capital
In order to meet increased demand for its products during its fourth quarter, the Registrant usually builds its inventories during the second and third quarters. In common with other companies, the Registrant generally finances working capital items (inventory and receivables) through short-term borrowings, which include the use of lines of credit and the issuance of commercial paper.
Customers
The Registrant has a large number of customers for its products. No single customer accounted for as much as 10% of consolidated net sales in 1994. In the same year, sales to the five largest customers represented approximately 20% of consolidated net sales.
Backlog Orders
The dollar amount of backlog orders of the Registrant's specialty food business is not material to an understanding of the Registrant's business, taken as a whole.
Government Contracts
No material portion of the Registrant's business is subject to renegotiation of profits or termination of contracts or subcontracts at the election of the government.
Competition
Although the Registrant is a leader in sales of certain spices and seasoning and flavoring products, and is the largest producer and distributor of dehydrated onions and garlic in the United States, its business is highly competitive. For further discussion, see pages 13 and 17 of the Registrant's Annual Report to Stockholders for 1994, which pages are incorporated by reference.
Research and Quality Control
The Registrant has emphasized quality and innovation in the development, production and packaging of its products. Many of the Registrant's products are prepared from confidential formulae developed by its research laboratories and product development departments. The long experience of the Registrant in its field contributes substantially to the quality of the products offered for sale. Quality specifications exist for the Registrant's products,and continuing quality control inspections and testing are performed. Total expenditures for these and other related activities during fiscal years 1994, 1993 and 1992 were approximately $39,562,000, $38,226,000, and $35,968,000 respectively. Of these amounts, expenditures for research and development amounted to $12,999,000 in 1994, $12,259,000 in 1993, and $11,844,000 in 1992. The amount spent on customer-sponsored research activities is not material.
Environmental Regulations
Compliance with Federal, State and local provisions related to protection of the environment has had no material effect on the Registrant's business. No material capital expenditures for environmental control facilities are expected to be made during this fiscal year or the next.
Employees
The Registrant had on average approximately 8,900 employees during fiscal year 1994.
Foreign Operations
International businesses have made significant contributions to the Registrant's growth and profits. In common with other companies with foreign operations, the Registrant is subject in varying degrees to certain risks typically associated with doing business abroad, such as local economic and market conditions, exchange and price controls, restrictions on investment, royalties and dividends and exchange rate fluctuations.
Note 10 of the Notes to Consolidated Financial Statements on page 35 of the Registrant's Annual Report to Stockholders for 1994, and page 13 of the Registrant's Annual Report to Stockholders for 1994 contain the information required by subsection (d) of Item 101 of Regulation S-K, which pages are incorporated by reference.
Packaging Operations
The Registrant's Annual Report to Stockholders for 1994 sets forth a description of the Registrant's packaging group on page 11, which page is incorporated by reference. Setco, Inc. and Tubed Products, Inc., which comprise Registrant's packaging group, are wholly owned subsidiaries of the Registrant and are, respectively, manufacturers of plastic bottles and plastic squeeze tubes.
Substantially all of the raw materials used in the packaging business originate in the United States. The market for plastic packaging is highly competitive. The Registrant is the largest single customer of the packaging group. All intracompany sales have been eliminated from the Registrant's consolidated financial statements.
Item 2.

Item 2. Properties
The location and general character of the Registrant's principal plants and other materially important physical properties are as follows:
(a) Consumer Products
A plant is located in Hunt Valley, Maryland on approximately 52 acres in the Hunt Valley Business Community. This plant, which contains approximately 540,000 square feet, is owned in fee and is used for processing and distributing spices and other food products. A plant of approximately 475,000 square feet located in Salinas, California is owned in fee and is used for milling, processing, packaging, and distributing spices and other food products.
(b) Industrial Products
(i)A plant complex is located in Gilroy, California consisting of connected and adjacent buildings owned in fee and providing approximately 894,000 square feet of space for milling, dehydrating, packaging, warehousing and distributing onion, garlic and capsicums. Adjacent to this plant is a 4.3 acre cogeneration facility which supplies steam to the dehydration business as well as electricity to Pacific Gas & Electric Company. The cogeneration facility was financed with an installment note secured by the property and equipment. This note is non-recourse to the Registrant.
(ii)The Registrant has two principal plants devoted to industrial flavoring products in the United States. A plant of 102,000 square feet is located in Hunt Valley, Maryland and is owned in fee. A plant of 102,400 square feet is located in Dallas, Texas and is owned in fee.
(c) Spice Milling
Located adjacent to the consumer products plant in Hunt Valley is a spice milling and cleaning plant which is owned in fee by the Registrant and contains approximately 185,000 square feet. This plant services all food product groups of the Registrant. Much of the milling and grinding of raw materials for Registrant's seasoning products is done in this facility.
(d) Packaging Products
The Registrant has four principal plants which are devoted to the production of plastic containers. The facilities are located in California, Massachusetts, New York and New Jersey, and range in size from 178,000 to 280,000 square feet. The plants in New York and New Jersey are leased.
(e) International
The Registrant has a plant in London, Ontario which is devoted to the processing, packaging and distribution of food products. This facility is approximately 145,000 square feet and is owned in fee.
(f) Research and Development
The Registrant has a facility in Hunt Valley , Maryland which houses the research and development laboratories and the technical capabilities of the industrial division. The facility is approximately 109,000 square feet and is owned in fee.
Item 3.

Item 3. Legal Proceedings
There are no material pending legal proceedings to which the Registrant or any of its subsidiaries is a party or to which any of their property is subject.
Item 4.

Item 4. Submission of Matters to a Vote of Security Holders
No matter was submitted during the fourth quarter of Registrant's fiscal year 1994 to a vote of security holders.
PART II
Item 5.

Item 5. Market for Registrant's Common Equity and Related Stockholder Matters
The Registrant has disclosed at page 19 of its Annual Report to Stockholders for 1994, which page is incorporated by reference, the information relating to the market, market quotations, and dividends paid on Registrant's common stocks required by this Item.
The approximate number of holders of common stock of the Registrant based on record ownership as of January 31, 1995 was as follows:
Approximate Number Title of Class of Record Holders
Common Stock, no par value 2,086 Common Stock Non-Voting, 10,880 no par value
Item 6.

Item 6. Selected Financial Data
The Registrant has disclosed the information required by this Item in the Historical Financial Summary of its Annual Report to Stockholders for 1994 at pages 20 and 21, which pages are incorporated by reference.
Item 7.

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
The Registrant's Annual Report to Stockholders for 1994 at pages 12 through 19 contains a discussion and analysis of the Company's financial condition and results of operations for the three fiscal years ended November 30, 1994. Said pages are incorporated by reference.
Item 8.

Item 8. Financial Statements and Supplementary Data
The financial statements and supplementary data for McCormick & Company, Incorporated are included on pages 23 through 36 of the Annual Report to Stockholders for 1994, which pages are incorporated by reference. The report of independent auditors from Ernst & Young on such financial statements is included on page 37 of the Annual Report to Stockholders for 1994; the supplemental schedule for 1992, 1993 and 1994 is included on page 14 of this Report on Form 10-K.
The unaudited quarterly data required by Item 302 of Regulation S-K is included in Note 11 of the Notes to Consolidated Financial Statements at page 36 of the Registrant's Annual Report to Stockholders for 1994, which Note is incorporated by reference.
Item 9.

Item 9. Changes in and None. Disagreements with Accountants on Accounting and Financial Disclosure.
PART III Item 10.

Item 11.Executive Registrant's Proxy Compensation. Statement dated February 15, 1995/Pages 9-18.
Item 12.

Item 12.Security Ownership Registrant's Proxy of Certain Statement dated February Owners and Management.15, 1995/Pages 4-7.
Item 13.

Item 13.Certain Relationships Registrant's Proxy and Related Statement dated February Transactions. 15, 1995/Page 7.
PART IV Item 14.


ITEM 1. BUSINESS
Navistar International Corporation is a holding company and its principal operating subsidiary is Navistar International Transportation Corp. referred to as "Transportation". As used hereafter, "Navistar" or "Company" refers to Navistar International Corporation and its subsidiaries and "Parent Company" refers to Navistar International Corporation alone.
Navistar, through its wholly-owned subsidiary Transportation, operates in one principal business segment, the manufacture and marketing of Class 5 through 8 diesel trucks, including school bus chassis, mid- range diesel engines and service parts in the United States and Canada and in selected export markets. Transportation is the industry market share leader in the combined Class 5 through 8 truck market in the United States and Canada, offering a full line of diesel-powered products in the common carrier, private carrier, government/service, leasing, construction, energy/petroleum and student transportation markets. Transportation also produces mid-range diesel engines for use in its Class 5, 6 and 7 medium trucks and for sale to original equipment manufacturers. Transportation markets its products through an extensive distribution network which includes 951 dealer and distribution outlets in the United States and Canada. Service and customer support are also supplied at these outlets. As a further extension of its business, Transportation provides financing and insurance for its dealers, distributors and retail customers through its wholly-owned subsidiary, Navistar Financial Corporation, referred to as "Navistar Financial". See "Important Supporting Operations".
THE MEDIUM AND HEAVY TRUCK INDUSTRY
The market in which Navistar competes is subject to considerable volatility as it moves in response to cycles in the overall business environment and is particularly sensitive to the industrial sector which generates a significant portion of the freight tonnage hauled. Government regulation has impacted and will continue to impact trucking operations and efficiency and the specifications of equipment.
The following table shows retail deliveries in the combined United States and Canadian markets for the five years ended October 31, 1994, in thousands of units. YEARS ENDED OCTOBER 31, -----------------------
1994 1993 1992 1991 1990 ---- ---- ---- ---- ---- Class 5, 6 and 7 medium trucks and school bus chassis ..... 134.2 122.5 118.3 120.1 149.8 Class 8 heavy trucks ......... 205.4 166.4 125.2 109.0 139.0 ----- ----- ----- ----- ----- Total ...................... 339.6 288.9 243.5 229.1 288.8 ===== ===== ===== ===== =====
Source: Based upon monthly data by the American Automobile Manufacturers Associations (AAMA) in the United States and Canada and other sources.
The truck market in the United States and Canada is highly competitive. Major domestic competitors include PACCAR, Ford and General Motors, as well as foreign-controlled manufacturers, such as Freightliner, Mack and Volvo GM. In addition, manufacturers from Japan (Hino, Isuzu, Nissan and Mitsubishi) are competing in the United States and Canadian markets. The intensity of this competitiveness, which is expected to continue, results in price discounting and margin pressures throughout the industry. In addition to the influence of price, market position is driven by product quality, engineering, styling and utility and a comprehensive distribution system.
TRANSPORTATION MARKET SHARE
Transportation delivered 91,600 Class 5 through 8 trucks in the United States and Canada in fiscal 1994, a 15% increase from the 79,800 in 1993. Navistar's combined share of the Class 5 through 8 truck market in 1994 was 27%. Transportation has been the leader in combined market share for Class 5 through 8 trucks, including school bus chassis, in the United States and Canada in each of its last 14 fiscal years.
PRODUCTS AND SERVICES
The following table illustrates the percentage of Transportation's sales by class of product based on dollar amount:
YEARS ENDED OCTOBER 31, --------------------------
PRODUCT CLASS 1994 1993 1992 - ------------- ---- ---- ----
Class 5, 6 and 7 medium trucks and school bus chassis ..... 32% 31% 36% Class 8 heavy trucks ......... 42 44 39 Service parts ................ 14 14 15 Engines ...................... 12 11 10 ---- ---- ---- Total ...................... 100% 100% 100% ==== ==== ====
Transportation offers a full line of Class 5 through 8 trucks, with the objective of serving the customer better and more effectively by addressing requirements for increased performance and value. Transportation has made continuing improvements in its Class 8 heavy truck image. In 1994, new products were introduced including integrated sleeper cabs (Pro Sleeper) in four sizes, anti-lock brakes as standard equipment on 9000 series conventionals and cabovers, and changes in the 5000 series of trucks (Paystar) which improve weight distribution. In addition, the new T444E diesel engine was introduced in 1994 as the first fully electronic mid-range diesel engine produced. This engine will further enhance Class 5, 6 and 7 medium truck operating performance and life.
Transportation was recognized at the industry's largest trade show of the year by winning the award for the "Most Significant Powered Vehicle" for the 9200 Premium Conventional tractor with the all-new 51" Hi-Rise Pro Sleeper. According to a recent survey conducted by J. D. Power and Associates on 1994 Medium-Duty Truck Customer Satisfaction, Navistar ranked number one in customer satisfaction in product and service for Class 5, 6 and 7 medium conventional trucks for the second consecutive year.
For over two decades, Transportation has been the leading supplier of school bus chassis in the United States. Chassis are sold through dealers and national account managers for delivery to the ultimate customers: school districts and contractors. Transportation manufactures chassis for conventional school buses, as well as chassis for use in small capacity buses designed to meet the needs of disabled students. In addition to its traditional chassis business, Transportation has invested in American Transportation Corporation (AmTran), a manufacturer of school bus bodies. Through its relationship with AmTran, Transportation participates in the trend toward the integrated design and manufacture of school buses, which offers the potential for improved production and marketing efficiencies and a reduction in the school bus order cycle.
Transportation offers only diesel-powered trucks and buses because of their improved fuel economy, ease of serviceability and greater durability over gasoline-powered vehicles. Transportation's Class 8 heavy trucks generally use diesel engines purchased from outside suppliers however, in 1994, it began offering the new T444E engine for use in its heavy trucks. Class 5, 6 and 7 medium trucks are powered by diesel engines manufactured by Transportation. In 1993, Transportation launched its all new world class series of in-line six cylinder diesel engines for bus and Class 5 through 8 truck models. Transportation is the leading supplier of mid- range diesel engines in the 150-300 horsepower range according to data supplied by a private research firm, Power Systems Research of Minneapolis, Minnesota. Based upon information published by R.L. Polk & Company, diesel-powered Class 5, 6 and 7 medium truck shipments represented 81% of all medium truck shipments for fiscal year 1994 in the United States and Canada.
Transportation's truck manufacturing operations in the United States and Canada consist principally of the assembly of components manufactured by its suppliers, although Transportation produces its own mid-range diesel truck engines, sheet metal components (including cabs) and miscellaneous other parts.
The following is a summary of Transportation's truck manufacturing capacity utilization for the five years ended October 31, 1994.
YEARS ENDED OCTOBER 31, -----------------------
1994 1993 1992 1991 1990 ------ ------ ------ ------ ------ Production units ............ 94,993 88,274 73,901 70,502 80,737 Total production capacity ... 112,966 106,032 106,088 106,762 114,402 Capacity utilization ........ 84.1% 83.3% 69.7% 66.0% 70.6%
Total production capacity varies as a result of changes in the number of days of production during a year as well as changes in production constraints.
ENGINE & FOUNDRY
Transportation builds diesel engines for use in its Class 5, 6 and 7 medium trucks, school buses, selected Class 8 heavy truck models and for sale to original equipment manufacturers. Production in 1994 totalled 192,400 units, an increase of 9.7% from the 175,500 units produced in 1993.
Transportation has completed a major capital investment in its engine products and facilities to manufacture a new generation of mid-range diesel engines in both the in-line six cylinder and V-8 configurations. This new generation of engines is designed to respond to customer demands for engines that have more power, improved fuel economy, longer life, and meet current emission requirements through 1997. The engines are offered in a wider horsepower range than previously offered, which will give Transportation an opportunity to expand the number of applications for its engines and broaden its customer base. Transportation believes that its family of diesel engines, each designed to provide superior performance in customer applications, offers both the lowest cost of ownership and excellent value to its customers.
In September 1993, Transportation introduced three new in-line six cylinder engines that replaced its long-standing DT family of engines in International Class 5, 6 and 7 medium trucks. These new engines, the DT 466 [175-230 HP], DT 466 High Torque [195-250 HP] and the International 530 [250-300 HP] offer displacements of 466 and 530 cubic inches. These in-line six cylinder products feature 20 percent longer life as a result of larger main and rod bearings, stronger crankshafts, and gear driven accessories. In 1995, full electronic control of the fuel system will be incorporated into three new six-cylinder engine models, the DT 466E, DT 466E High Torque and International 530E. These electronically controlled engines will offer the customer a flexible array of features such as cruise control, self diagnostics and an engine protection system.
Transportation is the first to offer a totally electronic mid-range diesel engine family which meets emissions standards without the use of catalytic converters. With the introduction of the 8.7 Liter 530 and 530E engines, Transportation offers to customers who, in the past have only been able to purchase larger 10 Liter class engines, a lighter-weight, more cost-effective product.
In February 1994, Transportation replaced the 7.3 Liter V-8 diesel engine with an entirely new product. The T444E is a 444 cubic inch V-8 engine with an electronically controlled fuel injection system. This new diesel engine offers significant customer advantages, with a 10 to 15 percent improvement in fuel economy, 30 to 40 percent enhancement in durability, and improved power and torque when compared to Transportation's 7.3 Liter V-8 product. The new V-8 also meets current emissions requirements cost-effectively and includes such optional features as electronic cruise control, electronically controlled power take-off and diagnostic capabilities.
Based on U.S. registrations published by R.L. Polk & Company, the T444E electronically controlled diesel engine is the leading engine of its class. In addition to its strong contribution to the market position of Transportation's medium trucks, a light truck version, marketed as the 7.3 Liter Direct Injection Diesel, has had significant external sales. Transportation has entered into an agreement to supply this new V-8 product to a major automotive company through the year 2000 for use in all of its diesel-powered light trucks and vans. Sales of this engine to the automotive company currently accounts for approximately 88% of Navistar's 444E sales. Shipments to all original equipment manufacturers totalled a record 130,600 units in 1994, an increase of 11% from the 118,200 units shipped in 1993.
The following is a summary of Transportation's engine capacity utilization for the five years ended October 31, 1994.
YEARS ENDED OCTOBER 31, -----------------------
1994 1993 1992 1991 1990 ------- ------- ------- ------- ------- Engine production units ..... 192,446 175,464 148,991 126,103 160,434 Total production capacity ... 188,000 166,260 166,260 166,720 166,720 Capacity utilization ........ 102.4% 105.5% 89.6% 75.6% 96.2%
Total production capacity varies as a result of changes in product mix.
Transportation is exploring the development of alternative fuel engines, including engines powered by compressed natural gas. Transportation has entered into an agreement with Detroit Diesel Corporation to develop a natural gas engine based on Transportation's new V-8 engine and Detroit Diesel's electronic alternative fuel technology.
SERVICE PARTS
The service parts business is a significant contributor to Transportation's sales and gross margin and to the maintenance of its Class 5 through 8 truck and engine customer base. In the United States and Canada, Transportation operates seven regional parts distribution centers, which allows it to offer 24-hour availability and same day shipment of the parts most frequently requested by customers. Transportation is undertaking initiatives to increase parts sales outside of the United States and Canada. As customers have explored ways to reduce their costs and improve efficiency, Transportation and its dealers have established programs to help them manage the parts and maintenance aspects of their businesses more efficiently. Transportation also offers a "Fleet Charge" program, which allows participating customers to purchase parts on credit at all of its dealer locations at consistent and competitive prices. In 1994, service parts sales increased as a result of higher net selling prices, export business expansion and growth in dealer and national accounts.
MARKETING AND DISTRIBUTION
United States and Canadian Operations. Transportation's truck products are distributed in virtually all key markets in the United States and Canada through the largest retail organization specializing in medium and heavy trucks. As part of its continuing program to adapt to changing market conditions, Transportation has been assisting dealers to expand their operations to better serve their customer base. Transportation's truck distribution and service network in the United States and Canada was composed of 951, 950 and 952 dealers and retail outlets at October 31, 1994, 1993 and 1992, respectively. Included in these totals were 473, 467 and 460 secondary and associate locations at October 31, 1994, 1993 and 1992, respectively.
Retail dealer activity is supported by 5 regional operations in the United States and a general office in Canada. A national account sales group is responsible for 155 major national account customers.
Transportation's 10 retail and 4 wholesale used truck centers in the United States and Canada provide sales and trade-in benefits to its dealers and retail customers.
International Operations. Transportation exports trucks, components and service parts, both wholesale and retail, to more than 70 countries around the world. In 1994, 5,100 trucks were exported while 5,300 trucks were exported in 1993. Cumulatively, from 1986 through 1994, Transportation was the leading North American exporter of Class 6-8 trucks, according to data provided by the AAMA.
In Mexico, Transportation has an agreement with DINA Camiones, S.A. (DINA) to supply product technology, components and technical services for assembly of DINA trucks and buses. In 1994, Transportation exported almost 10,000 engines to DINA, bringing the total engines shipped to approximately 30,000 over the past three years. Transportation also has initiated sales of the in-line six cylinder family of mid-range diesel engines to Perkins Group, Ltd., of Peterborough, England, for worldwide distribution and to Detroit Diesel Corporation, the North American distributor of Perkins.
NAVISTAR FINANCIAL CORPORATION
Navistar Financial is engaged in the wholesale, retail and to a lesser extent lease financing of new and used trucks sold by Transportation and its dealers in the United States. Navistar Financial also finances wholesale accounts and selected retail accounts receivable of Transportation. Sales of new products (including trailers) of other manufacturers are also financed regardless of whether designed or customarily sold for use with Transportation's truck products. During fiscal 1994 and 1993, Navistar Financial provided wholesale financing for 93% and 90%, respectively, of the new truck units sold by Transportation to its dealers and distributors in the United States. Navistar Financial also provided retail financing in fiscal 1994 for approximately 15% of the new truck units sold by Transportation and its dealers and distributors in the United States, unchanged from fiscal 1993.
Navistar Financial's wholly-owned insurance subsidiary, Harco National Insurance Company, provides commercial physical damage and liability insurance coverage to Transportation's dealers and retail customers and to the general public through an independent insurance agency system.
IMPORTANT SUPPORTING OPERATIONS
Third Party Sales Financing Agreements. In the United States, Transportation has an agreement with Associates Commercial Corporation (Associates) to provide wholesale financing to certain of its truck dealers and retail financing to their customers. During fiscal 1994 and 1993, Associates provided 7% and 10%, respectively, of the wholesale financing utilized by Transportation's dealers and distributors.
Navistar International Corporation Canada has an agreement with a subsidiary of General Electric Canadian Holdings Limited to provide financing for Canadian dealers and customers.
Foreign Insurance Subsidiaries. Harbour Assurance Company of Bermuda Limited offers a variety of programs to the Company, including general liability insurance, ocean cargo coverage for shipments to and from foreign distributors and reinsurance coverage for various Transportation policies. The company writes minimal third party coverage and provides a variety of insurance programs to Transportation, its dealers, distributors and customers.
CAPITAL EXPENDITURES AND RESEARCH AND DEVELOPMENT
Transportation designs and manufactures its trucks and diesel engines to meet or exceed specific industry requirements. New products are introduced and improvements are made, in accordance with operating plans and market requirements and not on a predetermined cycle.
During 1994, capital expenditures totalled $87 million. Major program expenditures included continued investment in machinery and equipment at the Melrose Park, Illinois and Indianapolis, Indiana engine facilities to manufacture mid-range diesel engines used in trucks and school bus chassis manufactured by the Company and also sold to original equipment manufacturers. Other expenditures were made for truck product improvements, modernization of facilities and compliance with environmental regulations.
During 1993, capital expenditures totalled $110 million. Major product program expenditures included investment at the Melrose Park, Illinois and Indianapolis, Indiana engine facilities to manufacture a new series of mid-range diesel engines for use within the Company's truck products and for sale to original equipment manufactures. Other expenditures were made for truck product improvements, modernization of facilities and compliance with environmental regulations. In 1992, capital expenditures were $55 million.
Product development is an ongoing process at Transportation. Research and development activities are directed toward the introduction of new products and improvements of existing products and processes used in their manufacture. Spending for company-sponsored activities totalled $95 million in 1994 and 1993 and $90 million in 1992.
BACKLOG
The backlog of unfilled truck orders (subject to cancellation or return in certain events) was as follows:
AT OCTOBER 31 MILLIONS OF DOLLARS UNITS ------------- ------------------- ------
1994 ...... $ 4,197 64,841 1993 ...... $ 1,353 23,939 1992 ...... $ 1,124 20,456
Although the backlog of unfilled orders is one of many indicators of market demand, many factors may affect point-in-time comparisons such as changes in production rates, available capacity, new product introductions and competitive pricing actions.
EMPLOYEES
The following table summarizes employment levels as of the end of fiscal years 1992 through 1994:
TOTAL AT OCTOBER 31 EMPLOYMENT ------------- ----------
1994 ....................... 14,910 1993 ....................... 13,612 1992 ....................... 13,945
To meet the increased customer demand, additional production workers were employed at the Chatham, Ontario and Springfield, Ohio Truck Facilities and at the Melrose Park, Illinois and Indianapolis, Indiana Engine Facilities.
LABOR RELATIONS
At October 31, 1994, the United Automobile, Aerospace and Agricultural Implement Workers of America (UAW) represented 8,278 of the Company's active employees in the United States, and the Canadian Auto Workers (CAW) represented 1,873 of the Company's active employees in Canada. Other unions represented 1,015 of the Company's active employees in the United States and Canada. The Company entered into collective bargaining agreements with the UAW and CAW in 1993 which expire on October 1, 1995 and October 24, 1996, respectively.
PATENTS AND TRADEMARKS
Transportation continuously obtains patents on its inventions and thus owns a significant patent portfolio. Additionally, many of the components which Transportation purchases for its products are protected by patents that are owned or controlled by the component manufacturer. Transportation has licenses under third party patents relating to its products and their manufacture, and Transportation grants licenses under its patents. The royalties paid or received under these licenses are not significant. No particular patent or group of patents is considered by Transportation to be essential to its business as a whole.
Like all businesses which offer well-known products or services, Transportation's primary trademarks symbolize the Company's goodwill and provide instant identification of its products and services in the marketplace and thus, are an important part of its worldwide sales and marketing efforts. To support these efforts, Transportation maintains, or has pending, registrations of its primary trademarks in those countries in which it does business or expects to do business.
RAW MATERIALS AND ENERGY SUPPLIES
Transportation purchases raw materials, parts and components from numerous outside suppliers but relies upon some suppliers for a substantial number of components for its truck products. Transportation's purchasing strategies have been designed to improve access to the lowest cost, highest quality sources of raw materials, parts and components, and to reduce inventory carrying requirements. A portion of Transportation's requirements for raw materials and supplies is filled by single source suppliers.
The impact of an interruption in supply will vary by commodity. Some parts are generic to the industry while others are of a proprietary design requiring unique tooling which would require time to recreate. However, the Company's exposure to a disruption in production as a result of an interruption of raw materials and supplies is no greater than the industry as a whole. In order to remedy any losses resulting from an interruption in supply, the Company maintains contingent business interruption insurance for storms, fire and water damage. In 1994, as a result of industry-wide growth and demand, several suppliers experienced capacity constraints which created interruptions in the flow of supplies to the Company.
IMPACT OF GOVERNMENT REGULATION
Truck and engine manufacturers continue to face increasing governmental regulation of their products, especially in the areas of environment and safety. The Company believes its products comply with all applicable environmental and safety regulations.
As a diesel engine manufacturer, the Company has incurred significant research and tooling costs to totally redesign its engine product lines to meet United States Environmental Protection Agency (U.S. EPA) and California Air Resources Board (CARB) emission standards effective in the 1994 model year. The Company faces significant additional outlays through 1998 to meet further tightening of these standards. The Company expects that its diesel engines will be able to meet all of these standards in the required time-frame. However, compliance with California's 1998 Ultra- Low-Emission Vehicle (ULEV) standards for medium-size vehicles (which includes vehicles up to 14,000 lbs. Gross Vehicle Weight Rating - GVWR) will require the use of alternative fuels. The Company expects to have products available to meet these standards prior to 1998.
Emissions regulations in Canada and Mexico are similar, but not identical, to the U.S. federal regulations. Although Canada's regulations impose standards equivalent only to the U.S. standards for the 1990 model year, diesel engine manufacturers, including the Company, have voluntarily signed several memorandums of understanding with the Canadian federal government, agreeing to sell only engines meeting the 1994 U.S. emission standards in model years 1995 to 1997. Mexico has adopted the U.S. heavy diesel engine emission standards as of the 1994 model year but has conditioned compliance on the availability of low-sulfur diesel fuel. The Mexican government is expected to complete the conversion of diesel fuel supplies nationwide to low-sulfur fuel in mid-1995.
Truck manufacturers are also subject to various noise standards imposed by federal, state and local regulations. The engine is one of a truck's primary noise sources, and the Company therefore works closely with original equipment manufacturers to develop strategies to reduce engine noise. The Company is also subject to the National Traffic and Motor Vehicle Safety Act (Safety Act) and Federal Motor Vehicle Safety Standards (Safety Standards) promulgated by the National Highway Traffic Safety Administration. The Company believes it is in compliance with the Safety Act and the Safety Standards.
Expenditures to comply with various environmental regulations relating to the control of air, water and land pollution at production facilities and to control noise levels and emissions from Transportation's products have not been material except for the Wisconsin Steel and Solar Turbine sites.
ITEM 2.

ITEM 2. PROPERTIES
Transportation has 7 manufacturing and assembly plants in the United States and 1 in Canada. All plants are owned by Transportation. The aggregate floor space of these 8 plants is approximately 8 million square feet.
Transportation also owns or leases other significant properties in the United States and Canada, including a paint facility, a small component fabrication plant, vehicle and parts distribution centers, sales offices, engineering centers and its headquarters in Chicago.
ITEM 3.

ITEM 3. LEGAL PROCEEDINGS
ENVIRONMENTAL MATTERS - ---------------------
Beginning in March 1984, Transportation received several enforcement notices from the U.S. EPA, all of which relate to Transportation's painting activities at its Springfield, Ohio assembly and body plants. The notices alleged that these painting activities violated the Federal Clean Air Act because the paint contained volatile organic compounds (VOC) in greater quantities than permitted under applicable Ohio regulations (the VOC Regulations). In an administrative action instituted under Section 120 of the Clean Air Act, begun in September 1984, U.S. EPA sought to recover a noncompliance penalty, measured as the costs allegedly saved by Transportation by not complying with the VOC Regulations at the assembly plant.
In a court action instituted under Section 113(b) of the Clean Air Act, the United States filed civil complaints pertaining to the assembly plant (filed on April 30, 1985) and the body plant (filed on November 3, 1986) in the U.S. District Court in the Southern District of Ohio. These complaints asked the judge to impose fines of up to $25,000 per violation of the VOC Regulations per day since December 31, 1982. In November 1994, Transportation and U.S. EPA concluded a settlement of both the administrative action and the court action. The settlement included a payment of $2.7 million by Transportation.
OTHER MATTERS - -------------
In May 1993, a jury issued a verdict in favor of Vernon Klein Truck & Equipment, Inc. and against Transportation in the amount of $10.8 million in compensatory damages and $15 million in punitive damages. The Company appealed the verdict and in order to do so was required to post a bond collateralized with $30 million in cash. In November 1994, the Court of Appeals of the State of Oklahoma reversed the verdict and entered judgement in favor of Transportation on virtually all aspects of the case. The bond and related collateral will be released when the order of the Court of Appeals is filed.
Transportation and the Economic Development Administration (EDA), a division of the U.S. Department of Commerce reached an agreement in the fourth quarter of 1994 in settlement of commercial and environmental disputes related to the Wisconsin Steel property. EDA and Transportation became 90% and 10% beneficiaries, respectively, of a trust which was created after the party that purchased Wisconsin Steel filed for bankruptcy. At the time of bankruptcy, EDA had guaranteed repayment of 90% and Transportation of 10% of loans made to Wisconsin Steel. The settlement provides that EDA transfer its interest in the trust to Transportation, which in turn will assume responsibility for completing the investigation of the environmental condition at the site and for any cleanup work that may be necessary. Transportation has agreed to pay EDA $11 million to settle various commercial issues as well as reimburse them for a portion of environmental response costs spent by EDA. The Department of Justice must approve the final settlement before the interest in the trust, or the property, is transferred to Transportation.
The Company and its subsidiaries are subject to various other claims arising in the ordinary course of business, and are parties to various legal proceedings which constitute ordinary routine litigation incidental to the business of the Company and its subsidiaries. In the opinion of the Company's management, none of these proceedings or claims are material to the business or the financial condition of the Company.
EXECUTIVE OFFICERS
The following selected information for each of the Company's current executive officers was prepared as of November 4, 1994.
OFFICERS AND POSITIONS WITH NAME AGE NAVISTAR AND OTHER INFORMATION ---- --- ----------------------------------
James C. Cotting ....... 61 Chairman and Chief Executive Officer since 1987 and a Director since 1983. Mr. Cotting also is Chairman and Chief Executive Officer of Transportation since 1990 and a Director since 1987. Prior to this, Mr. Cotting served as Vice Chairman and Chief Financial Officer, 1983-1987.
John R. Horne .......... 56 President and Chief Operating Officer and a Director since 1990. Mr. Horne also is President and Chief Operating Officer of Transportation since 1990 and a Director since 1987. Prior to this, Mr. Horne served as Group Vice President and General Manager, Engine and Foundry, 1990 and Vice President and General Manager, Engine and Foundry, 1983-1990.
Robert C. Lannert ...... 54 Executive Vice President and Chief Financial Officer and a Director since 1990. Mr. Lannert also is Executive Vice President and Chief Financial Officer of Transportation since 1990 and a Director since 1987. Prior to this, Mr. Lannert served as Vice President and Treasurer, 1987-1990 and Vice President and Treasurer of Transportation, 1979-1990.
Robert A. Boardman ...... 47 Senior Vice President and General Counsel since 1990. Mr. Boardman also is Senior Vice President and General Counsel of Transportation since 1990. Prior to this, Mr. Boardman served as Vice President of Manville Corporation, 1988-1990 and Corporate Secretary, 1983-1990.
Thomas M. Hough ......... 49 Vice President and Treasurer since 1992. Mr. Hough also is Vice President and Treasurer of Transportation since 1992. Prior to this, Mr. Hough served as Assistant Treasurer 1987-1992, and Assistant Treasurer of Transportation, 1987-1992. Mr. Hough also served as Assistant Controller, Accounting and Financial Systems, 1987 and Controller of Navistar Financial Corporation, 1982-1987.
Robert I. Morrison ...... 56 Vice President and Controller since 1987. Mr. Morrison also is a Vice President and Controller of Transportation since 1985. Prior to this, Mr. Morrison served as Assistant Treasurer and Vice President, Finance and Planning, International Group, 1983-1985.
Steven K. Covey ......... 43 Corporate Secretary since 1990. Mr. Covey is Associate General Counsel of Transportation since November 1992. Prior to this, Mr. Covey served as General Attorney, Finance and Securities of Transportation, 1989-1992, Senior Counsel, Finance and Securities, 1986-1989 and Senior Attorney, Corporate Operations 1984-1986.
ITEM 4.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not Applicable
PART II
The information required by Items 5-8 is incorporated herein by reference from the 1994 Annual Report to Shareowners, filed as Exhibit 13 to this Form 10-K as follows: Annual Report Page ------ ITEM 5.

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS ......... 65
ITEM 6.

ITEM 6. SELECTED FINANCIAL DATA ................. 63
ITEM 7.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION ................. 4
ITEM 8.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA .................. 19
With the exception of the aforementioned information (Part II; Items 5-8) and the information specified under Items 1 and 14 of this report, the 1994 Annual Report to Shareowners is not to be deemed filed as part of this report.
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ITEM 9.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None
PART III
ITEMS 10, 11, 12 AND 13
Information required by Part III (Items 10, 11, 12 and 13) of this Form is incorporated herein by reference from Navistar's definitive Proxy Statement for the March 15, 1995 Annual Meeting of Shareowners.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
Information required by Part IV (Item 14) of this form is incorporated herein by reference from Navistar International Corporation's 1994 Annual Report to Shareowners, filed as Exhibit 13 to this Form 10-K as follows:
Annual Report Page ------ Financial Statements - --------------------
Statement of Income (Loss) for the years ended October 31, 1994, 1993 and 1992 ................ 19 Statement of Financial Condition as of October 31, 1994 and 1993 ...................... 21 Statement of Cash Flow for the years ended October 31, 1994, 1993 and 1992 ................ 23 Statement of Non-Redeemable Preferred, Preference and Common Shareowners' Equity for the years ended October 31, 1994, 1993 and 1992 .......... 25 Notes to Financial Statements .................... 27
Form 10-K Schedules Page - --------- ----
VIII - Valuation and Qualifying Accounts and Reserves .........................
All other schedules are omitted because of the absence of the conditions under which they are required or because information called for is shown in the financial statements and notes thereto in the 1994 Annual Report to Shareowners.
Finance and Insurance Subsidiaries:
The financial statements of Navistar Financial Corporation for the years ended October 31, 1994, 1993 and 1992 appearing on pages 9 through 11 in Annual Report on Form 10-K for Navistar Financial Corporation for the fiscal year ended October 31, 1994, Commission No. 1-4146-1, are incorporated herein by reference and filed as Exhibit 28 to this Form 10-K.
Financial information regarding all Navistar subsidiaries engaged in finance and insurance operations, including Navistar Financial Corporation, appears as supplemental information to the Financial Statements in the Navistar 1994 Annual Report to Shareowners and is incorporated herein by reference.
Exhibits, Including those Incorporated by Reference Form 10-K Page - --------------------------------------------------- --------------
(3) Articles of Incorporation and By-Laws ..... E-1 (4) Instruments Defining the Rights of Security Holders, including Indentures E-2 (10) Material Contracts ....................... E-3 (11) Computation of Net Income (Loss) Per Common Share ....................... E-5 (13) Navistar International Corporation 1994 Annual Report to Shareowners ...... N/A (22) Subsidiaries of the Registrant ........... E-6 (23) Independent Auditors' Consent ............ 21 (24) Power of Attorney ........................ 19 (28) Navistar Financial Corporation Annual Report on Form 10-K for the fiscal year ended October 31, 1994 ............ N/A
All exhibits other than those indicated above are omitted because of the absence of the conditions under which they are required or because the information called for is shown in the financial statements and notes thereto in the 1994 Annual Report to Shareowners.
Reports on Form 8-K - -------------------
No reports on Form 8-K were filed for the three months ended October 31, 1994.
SIGNATURE
NAVISTAR INTERNATIONAL CORPORATION AND SUBSIDIARIES
----------------------------------
SIGNATURE
Pursuant to the requirements of Section 13 and 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.
NAVISTAR INTERNATIONAL CORPORATION - ---------------------------------- (Registrant)
/s/ Robert I. Morrison - ---------------------------------- Robert I. Morrison January 27, 1995 Vice President and Controller (Principal Accounting Officer)
SIGNATURE EXHIBIT 24 NAVISTAR INTERNATIONAL CORPORATION AND SUBSIDIARIES
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POWER OF ATTORNEY
Each person whose signature appears below does hereby make, constitute and appoint James C. Cotting and Robert I. Morrison and each of them acting individually, true and lawful attorneys-in-fact and agents with power to act without the other and with full power of substitution, to execute, deliver and file, for and on such person's behalf, and in such person's name and capacity or capacities as stated below, any amendment, exhibit or supplement to the Form 10-K Report making such changes in the report as such attorney-in-fact deems appropriate.
SIGNATURES
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:
Signature Title Date - ----------------------- ----------------------------- ----------------
/s/ James C. Cotting - ----------------------- James C. Cotting Chairman of the Board, January 27, 1995 and Chief Executive Officer and Director (Principal Executive Officer)
/s/ Robert I. Morrison - ----------------------- Robert I. Morrison Vice President and Controller January 27, 1995 (Principal Accounting Officer)
/s/ Jack R. Anderson - ----------------------- Jack R. Anderson Director January 27, 1995
/s/ William F. Andrews - ------------------------ William F. Andrews Director January 27, 1995
/s/ Wallace W. Booth - ------------------------ Wallace W. Booth Director January 27, 1995
/s/ Andrew F. Brimmer - ------------------------ Andrew F. Brimmer Director January 27, 1995
/s/ Bill Casstevens - ------------------------ Bill Casstevens Director January 27, 1995
SIGNATURE EXHIBIT 24 (CONTINUED)
NAVISTAR INTERNATIONAL CORPORATION AND SUBSIDIARIES
----------------------------------
SIGNATURES (Continued)
/s/Richard F. Celeste - ------------------------ Richard F. Celeste Director January 27, 1995
/s/John D. Correnti - ------------------------ John D. Correnti Director January 27, 1995
/s/William Craig - ------------------------ William Craig Director January 27, 1995
/s/Jerry E. Dempsey - ------------------------ Jerry E. Dempsey Director January 27, 1995
/s/Mary Garst - ------------------------ Mary Garst Director January 27, 1995
/s/ Arthur G. Hansen - ------------------------ Arthur G. Hansen Director January 27, 1995
/s/ John R. Horne - ------------------------ John R. Horne Director January 27, 1995
/s/Robert C. Lannert - ------------------------ Robert C. Lannert Director January 27, 1995
/s/ Donald D. Lennox - ------------------------ Donald D. Lennox Director January 27, 1995
/s/ Elmo R. Zumwalt, Jr. - ------------------------ Elmo R. Zumwalt, Jr. Director January 27, 1995
SIGNATURE
NAVISTAR INTERNATIONAL CORPORATION AND SUBSIDIARIES ----------------------------------
INDEPENDENT AUDITORS' REPORT
Navistar International Corporation:
We have audited the Statement of Financial Condition of Navistar International Corporation and Consolidated Subsidiaries as of October 31, 1994 and 1993, and the related Statement of Income (Loss), of Cash Flow, and of Non-Redeemable Preferred, Preference and Common Shareowners' Equity for each of the three years in the period ended October 31, 1994, and have issued our report thereon dated December 12, 1994 (which includes an explanatory paragraph relating to the change in methods of accounting for postretirement benefits other than pensions and for income taxes as required by Statements of Financial Accounting Standards No. 106 and No. 109); such consolidated financial statements and report are included in your 1994 Annual Report to Shareowners and are incorporated herein by reference. Our audits also included the financial statement schedule of Navistar International Corporation and Consolidated Subsidiaries, listed in Item 14. This financial statement schedule is the responsibility of the Company's management. Our responsibility is to express an opinion based on our audits. In our opinion, such financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly in all material respects the information set forth therein.
Deloitte & Touche LLP December 12, 1994 Chicago, Illinois
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EXHIBIT 23
INDEPENDENT AUDITORS' CONSENT
Navistar International Corporation:
We consent to the incorporation by reference in Post-Effective Amendment No. 1 to Registration No. 2-70979 on Form S-8 and in Post- Effective Amendment No. 6 to Registration No. 2-55544 on Form S-8 and in Post-Effective Amendment No. 1 to Registration No. 2-9604 on Form S-8 of our reports dated December 12, 1994, appearing and incorporated by reference in this Annual Report on Form 10-K of Navistar International Corporation for the year ended October 31, 1994.
Deloitte & Touche LLP January 27, 1995 Chicago, Illinois