-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, d78Tf4e4A6KMPGgitfvRUAsTThcRpZMGSOleYWlfRua/lQqmaN02nRoG2cDauu2N AqIvUdYuuCheRqaeWEv9/g== 0000050485-94-000007.txt : 19940526 0000050485-94-000007.hdr.sgml : 19940526 ACCESSION NUMBER: 0000050485-94-000007 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19940331 FILED AS OF DATE: 19940513 FILER: COMPANY DATA: COMPANY CONFORMED NAME: INGERSOLL RAND CO CENTRAL INDEX KEY: 0000050485 STANDARD INDUSTRIAL CLASSIFICATION: 3560 IRS NUMBER: 135156640 STATE OF INCORPORATION: NJ FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-00985 FILM NUMBER: 94527972 BUSINESS ADDRESS: STREET 1: 200 CHESTNUT RIDGE RD CITY: WOODCLIFF LAKE STATE: NJ ZIP: 07675 BUSINESS PHONE: 2015730123 MAIL ADDRESS: STREET 1: 200 CHESTNUT RIDGE ROAD CITY: WOODCLIFF LAKE STATE: NJ ZIP: 07675 10-Q 1 FORM 10Q FOR PERIOD ENDED MARCH 31, 1994 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1994 or TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 1-985 INGERSOLL-RAND COMPANY Exact name of registrant as specified in its charter New Jersey 13-5156640 State of incorporation I.R.S. Employer Identification No. Woodcliff Lake, New Jersey 07675 Address of principal executive offices Zip Code (201) 573-0123 Telephone number of principal executive offices Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes . X . No . . . The number of shares of common stock outstanding as of April 29, 1994 was 105,463,740. INGERSOLL-RAND COMPANY FORM 10-Q INDEX PART I. FINANCIAL INFORMATION Page Condensed Consolidated Balance Sheet at March 31, 1994 and December 31, 1993 3 Condensed Consolidated Income Statement for the three months ended March 31, 1994 and 1993 4 Condensed Consolidated Statement of Cash Flows for the three months ended March 31, 1994 and 1993 5 Notes to Condensed Consolidated Financial Statements 6-7 Management's Discussion and Analysis of Financial Condition and Results of Operations 8-12 Exhibit 11 - Computations of Primary and Fully Diluted Earnings Per Share 13-14 PART II. OTHER INFORMATION 15 SIGNATURES 17 2 PART I. FINANCIAL INFORMATION INGERSOLL-RAND COMPANY CONDENSED CONSOLIDATED BALANCE SHEET (in thousands) ASSETS MARCH 31, DECEMBER 31, 1994 1993 Current assets: Cash and cash equivalents $ 227,406 $ 227,993 Marketable securities 5,392 6,172 Accounts and notes receivable, net of allowance for doubtful accounts 829,326 797,525 Inventories 735,065 713,690 Prepaid expenses and deferred taxes 170,839 156,780 Total current assets 1,968,028 1,902,160 Investments and advances: Dresser-Rand Company 108,891 112,630 Partially-owned equity companies 160,376 158,645 269,267 271,275 Property, plant and equipment, at cost 1,696,003 1,665,428 Less - accumulated depreciation 816,854 790,284 Net property, plant and equipment 879,149 875,144 Intangible assets, net 104,252 105,855 Deferred income taxes 83,970 90,913 Other assets 130,588 129,985 Total assets $3,435,254 $3,375,332 LIABILITIES AND EQUITY Current liabilities: Loans payable $ 236,465 $ 206,939 Accounts payable and accruals 821,244 817,385 Total current liabilities 1,057,709 1,024,324 Long-term debt 313,219 314,136 Postemployment liabilities 516,258 515,787 Ingersoll-Dresser Pump Company minority interest 146,935 146,331 Other liabilities 25,285 24,929 Shareowners' equity: Common stock 218,271 217,879 Other shareowners' equity 1,157,577 1,131,946 Total shareowners' equity 1,375,848 1,349,825 Total liabilities and equity $3,435,254 $3,375,332 See accompanying notes to condensed consolidated financial statements. 3 INGERSOLL-RAND COMPANY CONDENSED CONSOLIDATED INCOME STATEMENT (in thousands except per share figures) Three Months Ended March 31, 1994 1993 NET SALES $1,010,308 $952,105 Cost of goods sold 775,924 728,042 Administrative, selling and service engineering expenses 174,257 178,913 Operating income 60,127 45,150 Interest expense 11,871 13,878 Other income (expense), net (2,153) 1,424 Dresser-Rand income 5,700 6,100 Ingersoll-Dresser Pump Company minority interest 184 (315) Earnings before income taxes 51,987 38,481 Provision for income taxes 18,975 13,853 Earnings for the period before the effect of accounting change 33,012 24,628 Effect of accounting change (Net of income tax benefit): - Postemployment benefits -- (21,000) Net earnings $ 33,012 $ 3,628 Average number of common shares outstanding 105,402 104,754 Net earnings per common share before the effect of accounting change $ 0.31 $ 0.24 Effect of accounting change: - Postemployment benefits -- (0.20) Net earnings per common share $ 0.31 $ 0.04 Dividends per common share $0.175 $0.175 See accompanying notes to condensed consolidated financial statements. 4 INGERSOLL-RAND COMPANY CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (in thousands) Three Months Ended March 31, 1994 1993 Cash flows from operating activities: Net earnings $ 33,012 $ 3,628 Adjustments to arrive at net cash provided by operating activities: Effect of accounting change -- 21,000 Depreciation and amortization 31,811 30,917 Equity earnings/loss, net of dividends (5,846) (9,165) Minority interests in earnings 17 (3,322) Deferred income taxes 6,943 1,402 Other noncash items 99 1,523 Changes in other assets and liabilities, net (57,396) (58,455) Net cash provided by (used in) operating activities 8,640 (12,472) Cash flows from investing activities: Capital expenditures (36,204) (22,412) Proceeds from sales of property, plant and equipment 2,268 2,930 Decrease in marketable securities 796 7,108 Cash invested in or advances to equity companies 9,717 32,139 Net cash (used in) provided by investing activities (23,423) 19,765 Cash flows from financing activities: Increase (decrease) in short-term borrowings 27,990 (10,818) Proceeds from long-term debt 1,769 100,506 Payments of long-term debt (1,035) (68,585) Net change in debt 28,724 21,103 Dividends paid (18,453) (18,340) Other 2,284 2,443 Net cash provided by financing activities 12,555 5,206 Effect of exchange rate changes on cash and cash equivalents 1,641 (1,394) Net (decrease) increase in cash and cash equivalents (587) 11,105 Cash and cash equivalents - beginning of period 227,993 216,832 Cash and cash equivalents - end of period $227,406 $227,937 See accompanying notes to condensed consolidated financial statements. 5 INGERSOLL-RAND COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Note 1 - In the opinion of management, the accompanying condensed consolidated financial statements contain all adjustments (consisting only of normal recurring accruals) necessary to present fairly the consolidated unaudited financial position and results of operations for the three months ended March 31, 1994 and 1993. Note 2 - Inventories of appropriate domestic manufactured inventories of standard products are valued on the last-in, first-out (LIFO) method and all other inventories are valued using the first-in, first-out (FIFO) method. The composition of inventories for the balance sheets presented was as follows (in thousands): March 31, December 31, 1994 1993 Raw materials and supplies $ 125,037 $ 121,083 Work-in-process 303,580 295,829 Finished goods 474,053 462,677 902,670 879,589 Less - LIFO reserve 167,605 165,899 Total $ 735,065 $ 713,690 Work-in-process inventories are stated after deducting customer progress payments of $17,391,000 at March 31, 1994 and $14,395,000 at December 31, 1993. Note 3 - The company's investment in the Dresser-Rand partnership at March 31, 1994 and December 31, 1993 was $138,989,000 and $133,867,000, respectively. The company owed Dresser-Rand $30,098,000 at March 31, 1994 and $21,237,000 at December 31, 1993. Net sales of Dresser-Rand were $310.3 million for the three months ended March 31, 1994 and $268.7 million for the three months ended March 31, 1993; and gross profit was $49.1 million and $51.8 million, respectively. Dresser-Rand's net income for the three months ended March 31, 1994 was $11.6 million and $13.8 million for the three months ended March 31, 1993. 6 INGERSOLL-RAND COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) Note 3 - Continued: The summarized financial position of Dresser-Rand was as follows (in thousands): March 31, December 31, 1994 1993 Current assets $ 454,962 $ 489,122 Property, plant and equipment, net 211,751 220,604 Other assets and investments 20,647 18,531 687,360 728,257 Deduct: Current liabilities 294,132 321,629 Noncurrent liabilities 190,006 188,211 484,138 509,840 Net partners' equity and advances $ 203,222 $ 218,417 Note 4 - In February 1993, the company issued $100 million of notes at 6 7/8% per annum, which are not redeemable prior to maturity in 2003. The proceeds from these notes were used to redeem $68 million of the company's outstanding 8.05% Debentures Due 2004 and for general corporate purposes. Note 5 - On July 20, 1993, the company sold substantially all of its underground coal-mining machinery assets to Long-Airdox Company. In connection with this sale, the company recorded a $5 million restructure of operations charge, during the 1993 second quarter. Note 6 - Effective August 1, 1993, the company acquired the Kunsebeck, Germany, needle and cylindrical bearing business of FAG Kugelfischer Georg Schafer AG of Schweinfurt, Germany. 7 INGERSOLL-RAND COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS First quarter 1994 net sales totalled $1.0 billion, 6.1 percent higher than the amount reported for the first three months of 1993. Operating income for the first quarter totalled $60.1 million, or approximately one-third higher than the amount reported for the comparable 1993 quarter. The company reported net earnings of $33.0 million, or 31 cents per common share, for the first quarter of 1994. Net earnings for the first three months of 1993, before the effect of the retroactive adoption of an accounting change, totalled $24.6 million, or 24 cents per common share. The 1993 accounting change related to the company's adoption, effective January 1, 1993, of Statement of Financial Accounting Standards No. 112, "Employers' Accounting for Postemployment Benefits". The 1993 adoption of this statement resulted in a one-time after-tax charge of $21.0 million, or 20 cents per share. After considering this charge, the company reported net earnings of $3.6 million, or four cents per share for the three months ended March 31, 1993. The ratio of cost of goods sold to sales for the first quarter of 1994 reflects a slight deterioration from 1993's first quarter primarily due to unabsorbed costs associated with the severe winter weather experienced by a number of the company's plants located in the Northeast, which were closed for periods up to one week during the early part of the quarter. The ratio of administrative, selling and service engineering expenses to sales during the first three months of 1994 decreased significantly over 1993's first quarter due to the combined effect of last year's restructuring activity at Ingersoll-Dresser Pump Company and the continued effect of the company's efforts from cost-containment programs. There were no LIFO (last-in, first-out) inventory liquidations during the first quarter of 1994 or 1993. Other income (expense), net, aggregated $2.2 million of net expense for the three months ended March 31, 1994. This represents a $3.6 million unfavorable change from the $1.4 million of income reported for the first quarter of 1993. The principal reasons for this change are: o losses from foreign exchange activity totalled $1.1 million in the current quarter versus $391,000 in the comparable 1993 quarter; and, o a reduction in equity earnings from partially-owned affiliated companies of approximately $3 million. 8 INGERSOLL-RAND COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) The company's pretax profits from its 49 percent interest in Dresser-Rand Company (another partnership between Dresser and the company) totalled $5.7 million for the first quarter of 1994, compared to $6.1 million for the three months ended March 31, 1993. The Ingersoll-Dresser Pump Company's minority interest represents Dresser's interest in the operating results of IDP. The first quarter of 1994 reflects a benefit to the company of $184,000, which indicates that this joint venture produced a net loss at the partnership level of approximately $375,000 during the first three months of 1994. During the first quarter of 1993, the company recorded a charge to pretax earnings of approximately $315,000, which indicated that IDP generated net income at the partnership level of approximately $640,000 in the comparable 1993 period. It should be noted that despite a ten percent decrease in sales for the IDP venture for the first quarter of 1994 versus last year, benefits derived from cost-containment and restructuring programs helped to generate operating income during the first quarter of 1994 which was close to last year's level. Interest expense for the first three months of the year decreased by $2.0 million from the $13.9 million incurred during the first quarter of 1993. This decrease is the composite result of lower outstanding debt and an overall lower effective interest rate in the first quarter of 1994 when compared to 1993. The company's effective tax rates were 36.5 percent and 36.0 percent for the three months ended March 31, 1994 and 1993, respectively. These rates represent the company's forecast of its effective tax position for each year. The company's effective tax rate differs from the statutory rate of 35 percent mainly due to state income taxes and some foreign earnings being taxed at higher rates. The effective tax rate for the full year 1993 was 35.5 percent. The results for the first quarter of the year benefitted from the combination of business improvements in most of the company's domestic markets including auto, housing and construction and a continued emphasis on cost-containment programs throughout the company. International business has generally reflected a modest increase during the first quarter of 1994 when compared to the first three months of last year. Incoming orders totalled $1,137.4 million and represents an increase of 5.7 percent over the 1993 first quarter total of $1,075.8 million. The Production Equipment Group and IDP were the only operations within the company which failed to report meaningful increases in first quarter bookings levels when compared to the first quarter of 1993. The company's backlog of orders at 9 INGERSOLL-RAND COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) March 31, 1994, believed by it to be firm, was approximately $1,032 million, which reflects an increase of $110 million over the December 31, 1993 balance. The company estimates that approximately 90 percent of the backlog will be shipped during the next twelve months. Liquidity and Capital Resources The company's financial position at March 31, 1994 did not change materially from December 31, 1993. In the first three months of 1994, working capital increased by approximately $32.5 million to $910.3 million at March 31, 1994 from December 31, 1993's balance of $877.8 million. The current ratio at March 31, 1994 was 1.9 to 1, which equalled the ratio at December 31, 1993. The company's cash, cash equivalents and marketable securities decreased by $1.4 million during the first three months of 1994 to $232.8 million from $234.2 million at December 31, 1993. This decrease is the net effect of a general decrease in cash and cash equivalents of approximately $2.2 million, a $0.8 million decrease in marketable securities and a $1.6 million increase attributed to the effect of currency movements during the first quarter of the year. Receivables totalled $829.3 million at March 31, 1994, which represents a $31.8 million increase from the $797.5 million reported at December 31, 1993. This increase is the net effect of a strong selling period towards the end of the first quarter offset by aggressive collection efforts and the effect of foreign currency translation during the first three months of 1994. Inventories totalled $735 million at March 31, 1994, approximately $21 million higher than the December 31, 1993 level. The activity during the first quarter of 1994 represents the net effect of the normal first quarter build of domestic inventories increased slightly by the change in exchange rates on the international inventories. Long-term debt, including current maturities, at the end of the first quarter, totalled $397 million, which approximated the year-end balance. The company's March 31, 1994 debt-to-capital ratio was 29/71, which reflects a slight increase from the 28/72 ratio at December 31, 1993. 10 INGERSOLL-RAND COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) During the first three months of 1994, foreign currency adjustment resulted in a net increase of approximately $5 million in shareowners' equity, caused by the weakening of the U.S. dollar against other currencies. Currency changes in Italy, Australia, Singapore and Japan accounted for virtually all of this change. The translation of accounts receivable and inventories were the principal balance sheet items affected by the currency fluctuations since year- end. Environmental Matters Environmental matters at March 31, 1994 remain substantially unchanged from December 31, 1993. The company has been identified as a potentially responsible party in environmental proceedings brought under both the federal Superfund law and state remediation laws, involving 29 sites within the United States. For all sites, there are other potentially responsible parties and in most instances, the company's involvement is minimal. Although there is a possibility that a responsible party might have to bear more than its proportional share of site clean-up costs if other responsible parties fail to make contributions, the company has not yet had, and to date there is no indication that it will have, to bear more than its proportional share of clean-up costs at any site. The company also is engaged in site investigations and remedial activities to address environmental cleanup from past operations at current and former manufacturing facilities. Although uncertainties regarding environmental technology, state and federal regulations, insurance coverage and individual site information make estimating the liability difficult, management believes that the total liability for the cost of environmental remediation will not have a material effect on the financial condition or the results of operations of the company. Review of Business Segments The Standard Machinery Segment reported sales of $319.2 million for the first three months of 1994, an increase of 7.5 percent from last year's first quarter. The segment's operating income for the quarter totalled $22.9 million and represents a 67.2 percent increase over the $13.7 million reported for 1993's first quarter. The increase in sales is attributed to a double-digit improvement in domestic markets combined with a slight improvement in international business. The domestic increase in sales volume is more pronounced when you adjust 1993's first quarter sales for underground coal mining equipment, which was sold effective June 30, 1993. The Air Compressor and Construction and Mining groups reported marked improvements in their operating income margins, the result of improved domestic operations and continued benefits from cost- containment programs. 11 INGERSOLL-RAND COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) Engineered Equipment Segment's sales for the first quarter of 1994 totalled $203.5 million, down 9.2 percent from the $224.0 million reported for the first three months of 1993. The segment reported an operating loss of $1.8 million for the first quarter of 1994, as compared to $0.8 million of operating income in last year's first quarter. Sales from Ingersoll-Dresser Pump Company declined by approximately ten percent both domestically and internationally from the amounts reported for the first three months of 1993. Benefits derived from cost-containment and restructuring programs, however, helped to generate operating income during the first quarter of the year which was close to last year's level. Process Systems Group's sales were also approximately ten percent below 1993's first quarter due to the continued depressed conditions in the pulp and paper industry. The reduced volume caused the group to report an operating loss for the quarter. The Bearings, Locks and Tools Segment reported sales of $487.6 million for the first quarter of 1994, which is 13.1 percent above last year's first quarter total of $431.3 million. Operating income totalled $47.4 million, which was significantly higher than the $38.2 million of operating income reported by the segment for the first three months of 1993. An increase in demand for automotive-related products and for general industrial products caused higher sales and operating income in the Bearings and Components Group when compared to last year's first quarter. However, the group's operating results for the quarter were adversely affected by the lack of profitability generated from its plant in Kunsebeck, Germany, which was acquired in the latter part of 1993 from FAG. Increases in housing related markets coupled with market share penetration produced higher sales and operating income from the Door Hardware Group in the first quarter of 1994 when compared to last year's performance. The Production Equipment Group's sales increased slightly over their prior year level. However, the group's first quarter operating income and operating income margin improved notably over the levels reported for the first three months of 1993 based on an improving domestic market and cost-containment benefits. 12 PART I - EXHIBIT 11 Page 1 of 2 INGERSOLL-RAND COMPANY COMPUTATIONS OF PRIMARY AND FULLY DILUTED EARNINGS PER SHARE (in thousands except per share figures) Three Months Ended March 31, 1994 1993 PRIMARY EARNINGS PER SHARE (NOTE 1): Earnings before effect of accounting change $ 33,012 $ 24,628 Effect of accounting change: - Postemployment benefits -- (21,000) Net earnings applicable to common stock $ 33,012 $ 3,628 Average number of common shares outstanding 105,402 104,754 PRIMARY EARNINGS PER SHARE: Earnings before effect of accounting change $0.31 $ 0.24 Effect of accounting change: - Postemployment benefits -- (0.20) Primary earnings per share $0.31 $ 0.04 FULLY DILUTED EARNINGS PER SHARE (NOTE 2):(*) Earnings before effect of accounting change $ 33,012 $ 24,628 Effect of accounting change: - Postemployment benefits -- (21,000) Net earnings applicable to common stock $ 33,012 $ 3,628 Adjusted shares: Average number of common shares outstanding 105,402 104,754 Number of common shares issuable assuming exercise under incentive stock plans 453 524 Average number of outstanding shares, as adjusted for fully diluted earnings per share calculations 105,855 105,278 FULLY DILUTED EARNINGS PER SHARE: Earnings before effect of accounting change $0.31 $0.23 Effect of accounting change: - Postemployment benefits -- (0.20) Fully diluted earnings per share $0.31 $ 0.03 (*) This calculation is presented in accordance with the Securities Exchange Act of 1934, although it is not required disclosure under APB Opinion No. 15. See accompanying notes to computations of primary and fully diluted earnings per share. 13 PART I - EXHIBIT 11 Page 2 of 2 INGERSOLL-RAND COMPANY NOTES TO COMPUTATIONS OF PRIMARY AND FULLY DILUTED EARNINGS PER SHARE Note 1 - Shares issuable under outstanding stock plans, applying the "Treasury Stock" method, have been excluded from the computation of primary earnings per share since such shares were less than 1% of common shares outstanding. 2 - Net earnings per share of common stock computed on a fully diluted basis are based on the average number of common shares outstanding during each year after adjustment for individual securities which may be dilutive. Securities entering into consideration in making this calculation are common shares issuable under employee stock plans. Employee stock options outstanding are included in the calculation of fully diluted earnings per share by applying the "Treasury Stock" method quarterly. Such calculations are made using the higher of the average month-end market prices or the market price at the end of the quarter, in order to reflect the maximum potential dilution. 14 INGERSOLL-RAND COMPANY PART II - OTHER INFORMATION Item 6 - Exhibits and Reports on Form 8-K a.) Exhibits The exhibits listed on the accompanying index to exhibits on page 16 are filed as part of this Form 10-Q Quarterly Report. b.) Reports on Form 8-K None. 15 INGERSOLL-RAND COMPANY INDEX TO EXHIBITS (Item 6(a)) Description Page 12 Computations of Ratios of Earnings to Fixed Charges 18-19 16 INGERSOLL-RAND COMPANY SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. INGERSOLL-RAND COMPANY (Registrant) Date May 13, 1994 /S/ T.F. McBride T.F. McBride, Senior Vice President & Chief Financial Officer Principal Financial Officer Date May 13, 1994 /S/ R.A. Spohn R.A. Spohn, Controller - Accounting and Reporting Principal Accounting Officer 17 EX-12 2 EXHIBIT 12 - RATIOS OF EARNINGS TO FIXED CHARGES INGERSOLL-RAND COMPANY EXHIBIT 12 COMPUTATIONS OF RATIOS OF EARNINGS TO FIXED CHARGES Page 1 of 2 (Dollar Amounts in Thousands) (2) Years Ended December 31 Fixed charges: 1993 1992 1991 1990 1989 Interest expense............................ $ 55,764 $ 64,698 $ 64,476 $ 71,663 $ 44,049 Amortization of debt discount and expense... 688 288 265 255 255 Rentals (one-third of rentals).............. 19,425 20,846 21,229 20,599 17,410 Capitalized interest........................ 3,103 3,460 4,640 4,197 4,336 Total fixed charges........................... $ 78,980 $ 89,292 $ 90,610 $ 96,714 $ 66,050 Net earnings (loss)........................... $142,524 $(234,406) $150,589 $185,343 $210,751 Add: Minority income (loss) of majority- owned subsidiaries................... 13,571 (33,155) 1,938 2,232 1,304 Taxes on income........................ 90,000 67,400 84,600 99,800 100,374 Fixed charges.......................... 78,980 89,292 90,610 96,714 66,050 Effect of accounting changes........... 21,000 350,000 -- -- -- Less: Capitalized interest................... 3,103 3,460 4,640 4,197 4,336 Undistributed earnings (losses) from less than 50% owned affiliates....... 39,933 16,603 13,523 3,327 6,036 Earnings available for fixed charges ......... $303,039 $ 219,068 $309,574 $376,565 $368,107 Ratio of earnings to fixed charges ........... 3.84(1) 2.45(3) 3.42(4) 3.89 5.57 Undistributed earnings (losses) from less than 50% owned affiliates: Equity in earnings (losses)................. $ 42,077 $ 17,865 $ 14,768 $ 4,187 $ 6,903 Less: Dividends paid .................... 2,144 1,262 1,245 860 867 Undistributed earnings (losses) from less-than 50% owned affiliates............ $ 39,933 $ 16,603 $ 13,523 $ 3,327 $ 6,036 (1) The 1993 calculation includes the effect of the $5 million pretax charge relating to the restructure of the company's underground mining machinery business. Excluding this amount, the ratio would have been 3.90. (2) The company's portion of the earnings and fixed charges of the Dresser-Rand Company (a joint venture formed effective January 1, 1987 with Dresser Industries, Inc.) are included through September 30, 1992. Effective October 1, 1992, the company's ownership interest in the Dresser-Rand Company was reduced from 50% to 49%. (3) The 1992 calculation includes (i) the effect of the $10 million pretax charge relating to the restructure of the company's aerospace bearings business and (ii) the full effect of the $70 million pretax restructure of operations charge relating to the Ingersoll-Dresser Pump Company. Excluding the 1992 restructure charges the ratio would have been 3.35. (4) The 1991 ratio includes the $7.1 million net pretax benefit from a restructure of operations. Excluding this amount the ratio would have been 3.34.
18 EXHIBIT 12 Page 2 of 2 INGERSOLL-RAND COMPANY COMPUTATIONS OF RATIOS OF EARNINGS TO FIXED CHARGES (Dollar Amounts in Thousands) For the Three Months Ended March 31, 1994 Fixed charges: Interest expense . . . . . . . . . . . . . . . $12,697 Amortization of debt discount and expense . . . 120 Rentals (one-third of rentals) . . . . . . . . 5,327 Capitalized interest . . . . . . . . . . . . . 600 Total fixed charges . . . . . . . . . . . . . . . $18,744 Net earnings . . . . . . . . . . . . . . . . . . $33,012 Add: Minority income (loss) of majority- owned subsidiaries . . . . . . . . . . . 17 Taxes on income . . . . . . . . . . . . . . 18,975 Fixed charges . . . . . . . . . . . . . . . 18,744 Less: Capitalized interest . . . . . . . . . . . 600 Undistributed earnings (losses) from less than 50% owned affiliates . . . . . 7,204 Earnings available for fixed charges . . . . . . $62,944 Ratio of earnings to fixed charges . . . . . . . 3.36 Undistributed earnings (losses) from less than 50% owned affiliates: Equity in earnings (losses) . . . . . . . . . . $ 7,486 Less: Dividends paid . . . . . . . . . . . . 282 Undistributed earnings (losses) from less-than 50% owned affiliates . . . . . . . $ 7,204 19 -----END PRIVACY-ENHANCED MESSAGE-----