-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, VjPQ2KUcbF605FF5MGRq2qtGNQbv+gtsvudUriEYjNv1X7pG/P2DNm2Dj47agVn9 Pg4mQuS8FgM2AJQMN74YOw== 0000050485-98-000003.txt : 19980310 0000050485-98-000003.hdr.sgml : 19980310 ACCESSION NUMBER: 0000050485-98-000003 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19980309 ITEM INFORMATION: FILED AS OF DATE: 19980309 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: INGERSOLL RAND CO CENTRAL INDEX KEY: 0000050485 STANDARD INDUSTRIAL CLASSIFICATION: GENERAL INDUSTRIAL MACHINERY & EQUIPMENT [3560] IRS NUMBER: 135156640 STATE OF INCORPORATION: NJ FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-00985 FILM NUMBER: 98560096 BUSINESS ADDRESS: STREET 1: 200 CHESTNUT RIDGE RD STREET 2: PO BOX 8738 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 8-K 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported) March 9, 1998 INGERSOLL-RAND COMPANY (Exact name of registrant as specified in its charter) New Jersey 1-985 13-5156640 (State of incorporation) (Commission (I.R.S. Employer File Number) Identification No.) Woodcliff Lake, New Jersey 07675 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (201) 573-0123 INGERSOLL-RAND COMPANY Item 7. FINANCIAL STATEMENTS AND EXHIBITS The following financial statements and pro forma information are hereby filed as supplemental information to the financial information included in the Form 8-K filed on November 5, 1997: 1.) An introduction to the pro forma financial statements is attached. 2.) A pro forma income statement which combines the results of the company for the year ended December 31, 1997 with the unaudited results of Thermo King for the ten months ended October 31, 1997, along with a description of the pro forma adjustments. 3.) Unaudited interim financial statements of Thermo King for the nine month periods ended September 30, 1997 and 1996. INGERSOLL-RAND COMPANY Unaudited Pro Forma Statement of Income For the year ended December 31, 1997 (In millions except per share amounts) Pro forma Ingersoll- Ingersoll- Thermo Adjustments Rand Rand King Debit Credit Pro forma Net sales $7,103.3 $862.1 $ -- $ -- $7,965.4 Cost of goods sold 5,263.7 610.9 53.4 (1,2,4) 5,928.0 Administrative, selling and service engineering expenses 1,079.3 89.4 0.4 (4) -- 1,169.1 Operating income 760.3 161.8 (53.8) -- 868.3 Interest expense (136.6) (0.9) (118.7)(3,6) -- (256.2) Other income (expense), net (2.1) (2.9) (11.8)(5) -- (16.8) Dresser-Rand income 9.4 -- -- -- 9.4 Minority interests (17.3) (1.4) -- -- (18.7) Earnings before income taxes 613.7 156.6 (184.3) -- 586.0 Provision for income taxes 233.2 28.0 -- 65.3(7) 195.9 Net earnings $ 380.5 $128.6 $(184.3) $65.3 $ 390.1 Basic earnings per common share $2.33 $2.39 Diluted earnings per common share $2.31 $2.37 Average number of common shares outstanding for basic EPS 163.2 163.2 Average number of common shares outstanding for diluted EPS 164.8 164.8
INGERSOLL-RAND COMPANY THERMO KING CORPORATION NOTES TO PRO FORMA INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 1997 NOTES: GENERAL COMMENT: The pro forma income statement for the year 1997, reflects the pro forma income statement adjustments required to present the estimated combined results of the company and Thermo King, as if the acquisition of Thermo King took place on January 1, 1997. The company acquired Thermo King on October 31, 1997, and the results of Thermo King for the last two months of 1997, together with the effect of estimated purchase accounting adjustments for that two month period, have been included in the company's historical results for 1997. (1) Reflects the additional depreciation on the fixed asset write-up to fair value and the additional amortization of other identifiable intangible assets. (2) Reflects the amortization of the goodwill from the Thermo King acquisition over its estimated life of 40 years for book purposes. (3) Reflects the amortization of the debt issuance costs for the Thermo King acquisition. (4) Reflects the additional postemployment costs for conforming Thermo King's plans to the actuarial assumptions used by the company. (5) Reflects the lost interest income on approximately $300 million of funds used by the company for the Thermo King acquisition. (6) Reflects the additional estimated interest expense incurred by the company for the Thermo King acquisition. The interest expense was calculated for the first full year on a pro forma basis by using a combination of both short- term and long-term debt which was outstanding for various periods of time for 1997 at actual or estimated interest rates which was then reduced by interest expense for the last two months of the year, in connection with the Thermo King acquisition. (7) The tax benefits related to the pro forma adjustments included: o $45.9 million associated with interest expense, o $13.1 million with the deductible portion of goodwill,and o $6.3 million associated with the remainder of the pro forma adjustments, for the period. THERMO KING Financial Statements As at and for the nine month periods ended September 30, 1997 and 1996 (Unaudited) Thermo King Combined Statement of Income (In thousands) (Unaudited) For the nine months ended September 30 1997 1996 Revenues $768,406 $746,332 Cost of goods sold (note 1) (539,709) (530,911) Marketing, administration and general expenses (note 1) (79,737) (76,801) Operating profit 148,960 138,620 Other income(expense),net (2,887) (683) Interest expense (785) (779) Income before income taxes and minority interest in income of consolidated subsidiaries 145,288 137,158 Income tax expense (28,767) (28,529) Minority interest in income of consolidated subsidiaries (1,319) (1,174) Net income $115,202 $107,455 Thermo King Combined Balance Sheet (In thousands) (Unaudited) September 30 1997 1996 ASSETS Cash and cash equivalents $ 9,905 $ 4,392 Customer receivables, net of allowances of $1,459 in 1997 and $1,391 in 1996 163,429 132,951 Inventories (note 2) 115,374 106,083 Deferred income taxes 7,477 7,601 Prepaid and other current assets 9,402 13,376 Total current assets 305,587 264,403 Plant and equipment,net (note 3) 95,602 88,558 Intangible and other noncurrent assets (note 4) 29,841 23,294 Total assets $431,030 $376,255 LIABILITIES AND INVESTED EQUITY Accounts payable $ 73,227 $ 65,906 Short-term debt 5,207 4,635 Current maturities of long-term debt 29 195 Progress payments from customers 1,051 3,105 Product warranty 27,130 25,461 Other current liabilities (note 5) 70,262 63,399 Total current liabilities 176,906 162,701 Long-term debt 1,657 - Employee benefit obligations (note 1) 46,475 72,077 Other noncurrent liabilities 2,392 2,174 Total liabilities 227,430 236,952 Commitments and contingencies (note 7) Minority interest in equity of consolidated subsidiaries 1,970 2,203 Invested equity (note 6): Minimum pension liability adjustment (note 1) (7,211) (24,860) Cumulative foreign currency translation adjustments 8,864 4,268 Invested equity 199,977 157,692 Total invested equity 201,630 137,100 Total liabilities and investment equity $431,030 $376,255 Thermo King Combined Statement of Cash Flows (In thousands) (Unaudited) For the nine months ended September 30 1997 1996 Cash flows from operating activities: Net income $115,202 $107,455 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 11,402 9,938 Changes in assets and liabilities Customer receivables (29,155) (353) Inventories 2,803 20,738 Accounts payable 2,669 (2,632) Product warranty 881 (4,106) Pension liability (7,226) (4,641) Deferred income taxes 3,593 2,123 Other assets and liabilities 15,368 8,780 Cash provided by operating activities 115,537 137,302 Cash flows from investing activities: Capital expenditures (14,874) (14,876) Cash used by investing activities (14,874) (14,876) Cash flows from financing activities: Net decrease in short-term debt (1,251) (7,421) Repayments of long-term debt (476) (391) Disbursements to parent company, net of direct charges and allocations (92,328) (116,223) Cash used by financing activities (94,055) (124,035) Increase (decrease) in cash and cash equivalents 6,608 (1,609) Cash and cash equivalents- beginning of period 3,297 6,001 Cash and cash equivalents- end of period $ 9,905 $ 4,392 Supplemental disclosure of cash flow information: Interest paid $ 785 $ 779 THERMO KING NOTES TO FINANCIAL STATEMENTS (In thousands) (Unaudited) NOTE 1: BASIS OF PRESENTATION Thermo King (the Company), a unit of CBS Corporation (CBS), formerly Westinghouse Electric Corporation, designs, manufactures and distributes a broad line of transport temperature control equipment, including units and associated service parts for trucks, trailers, seagoing containers, buses and rail cars. The combined financial statements of the Company include the accounts of Thermo King Corporation (an indirect wholly owned subsidiary of CBS) and certain other CBS affiliates. Unless otherwise indicated all dollar amounts in these financial statements are presented in thousands. All material intercompany accounts and transactions have been eliminated in combination. When reading the financial information contained in these interim financial statements, reference should be made to the financial statements and notes contained in the Company's financial statements for the year ended December 31, 1996. Historically, the results of the Company's domestic operations have been included in the consolidated United States income tax return of CBS. The results of the Company's foreign operations have been reported in their respective taxing jurisdiction along with the operations of other CBS affiliates. The income tax- related information in these financial statements is presented as if the Company had not been eligible to be included in the consolidated tax returns of CBS or other affiliates (i.e. the Company on a stand-alone basis). The recognition and measurement of income tax expense and deferred income taxes requires certain assumptions, allocations and significant estimates, which management believes are reasonable to measure the tax consequences as if the Company were a stand-alone taxpayer. The Company's undistributed foreign earnings are deemed to be permanently reinvested and, therefore, no deferred taxes have been recognized. The Company's income tax expense is determined in accordance with the asset and liability method of accounting for income taxes. For purposes of these financial statements, any current income tax liabilities are considered to have been paid by CBS and are recorded through the invested equity account with CBS. The Company is charged directly for the cost of certain services that CBS provides to its business units and subsidiaries. These services can include information systems support and certain accounting functions, such as transaction processing, legal services, environmental affairs and human resources. CBS centrally develops, negotiates, and administers the Company's insurance programs. The insurance includes broad all-risk coverage for real and personal property and third-party liability coverage, employer's liability coverage, automobile liability, general product liability, and other standard liability coverage. CBS also maintains a program of self-insurance for workers' compensation in the U.S. CBS charges its business units for all of the centrally administered insurance programs based in part on claims history. Specific liabilities for general and product liability, automobile and workers' compensation claims are included in the Company's financial statements. All of the charges for the corporate services described above are based on costs which directly relate to the Company or on a pro rata portion of CBS's total costs of the services provided, on a basis that management believes is reasonable. However, management believes it is possible that the costs of these transactions may differ from those that would result from transactions among unrelated parties. For the nine months ended September 30, 1997, charges for such services were approximately $14,219. CBS does not charge its divisions for the carrying costs related to its investment in such units (invested equity). Therefore, the Company's results of operations for each of the periods presented do not include any allocated interest charges from CBS, and no portion of CBS's debt is specifically related to the operations of the Company. Employees of the Company also participate in various CBS- sponsored employee benefit plans. As of September 30, 1997, the Company's minimum pension liability for certain non-Thermo King employees located in Puerto Rico was transferred to CBS. This transfer reduced the Company's employee benefit obligation and noncurrent deferred tax asset by $2,838 and $1,076, respectively, and increased invested equity by $1,762. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. On an on going basis, management reviews its estimates based on currently available information. Changes in facts and circumstances may result in revised estimates. In the opinion of management, the combined financial statements include all material adjustments necessary to present fairly the Company's financial position, results of operations, and cash flows. Such adjustments are of a normal recurring nature. The results for this interim period are not necessarily indicative of results for the entire year or any other interim period. NOTE 2: INVENTORIES At September 30, 1997 1996 Raw materials $ 10,663 $ 9,321 Work in process 43,528 42,631 Finished goods 61,131 52,235 115,322 104,187 Recoverable engineering and other 52 1,896 Inventories $115,374 $106,083 NOTE 3: PLANT AND EQUIPMENT At September 30, 1997 1996 Land and buildings $ 39,323 $ 37,533 Machinery and equipment 158,571 139,491 Construction in progress 14,626 20,584 Plant and equipment, at cost 212,520 197,608 Accumulated depreciation (116,918) (109,050) Plant and equipment, net $ 95,602 $ 88,558 For the nine months ended September 30, 1997 and 1996, depreciation expense totaled $8,733 and $9,053, respectively. NOTE 4: INTANGIBLE AND OTHER NONCURRENT ASSETS At September 30, 1997 1996 Goodwill $18,734 $ 2,764 Deferred tax assets 8,825 18,025 Other intangible assets 1,859 2,101 Other 423 404 Intangible and other noncurrent assets $29,841 $23,294 Goodwill and other intangible assets are shown net of accumulated amortization of $7,044 at September 30, 1997 and $4,273 at September 30, 1996. NOTE 5: OTHER CURRENT LIABILITIES At September 30, 1997 1996 Accrued employee compensation $14,139 $10,740 Accrued employee benefit obligations 13,000 13,000 Accrued expenses 43,123 39,659 Other current liabilities $70,262 $63,399 NOTE 6: INVESTED EQUITY Changes in Invested Equity At September 30, 1997 1996 Balance at beginning of period $177,520 $141,314 Net income 115,202 107,455 Minimum pension liability adjustment 6,525 5,426 Cumulative translation adjustment (5,289) (872) Disbursements to CBS, net (92,328) (116,223) Balance at end of period $201,630 $137,100 NOTE 7: COMMITMENTS AND CONTINGENCIES The Company is involved in various litigation matters in the ordinary course of business. In the opinion of management, the ultimate resolution of such matters will not result in judgments which, in the aggregate, would materially affect the Company's financial position. In the ordinary course of business standby letters of credit and surety bonds are issued on behalf of the Company. At September 30, 1997, the Company had $6,643 outstanding under such obligations. The Company sources all of the diesel engines that constitute a significant component of its trailer and certain of its truck products from two primary vendors in Japan. The products in which these engines are used account for the majority of the Company's sales. While the Company believes that it could locate alternative sources for these components in the event that its relationship with these suppliers were disrupted, the delays and costs associated with such a change would have a short-term adverse impact on the Company's operations. Historically, the Company has entered into long-term agreements with these vendors to attempt to ensure a reliable source of supply. At September 30, 1997, the Company had under such agreements commitments to purchase $16,900 of engines through December of 1997. 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 March 9, 1998 /S/ David W. Devonshire David W. Devonshire Senior Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) -----END PRIVACY-ENHANCED MESSAGE-----