-----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, n8xdWNVCPU6r16qTRhEVk4ZtlVPAtKqhwhbpOsXhf/d5vTQW1SBNh70aAEdvEaw/ STD6yDT+5//kDhk3D8xGeg== 0000050485-95-000006.txt : 19950511 0000050485-95-000006.hdr.sgml : 19950511 ACCESSION NUMBER: 0000050485-95-000006 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950331 FILED AS OF DATE: 19950510 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: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-00985 FILM NUMBER: 95536094 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 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, 1995 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 28, 1995 was 105,628,901. INGERSOLL-RAND COMPANY FORM 10-Q INDEX PART I. FINANCIAL INFORMATION Page Condensed Consolidated Balance Sheet at March 31, 1995 and December 31, 1994 3 Condensed Consolidated Income Statement for the three months ended March 31, 1995 and 1994 4 Condensed Consolidated Statement of Cash Flows for the three months ended March 31, 1995 and 1994 5 Notes to Condensed Consolidated Financial Statements 6-7 Management's Discussion and Analysis of Financial Condition and Results of Operations 8-13 Exhibit 11 - Computations of Primary and Fully Diluted Earnings Per Share 14-15 SIGNATURES 16 2 PART I. FINANCIAL INFORMATION INGERSOLL-RAND COMPANY CONDENSED CONSOLIDATED BALANCE SHEET (in thousands) ASSETS MARCH 31, DECEMBER 31, 1995 1994 Current assets: Cash and cash equivalents $ 245,178 $ 207,023 Marketable securities 4,540 4,231 Accounts and notes receivable, net of allowance for doubtful accounts 986,027 949,392 Inventories 755,820 679,308 Prepaid expenses and deferred taxes 169,063 162,933 Total current assets 2,160,628 2,002,887 Investments and advances: Dresser-Rand Company 75,102 90,705 Partially-owned equity companies 193,751 173,871 268,853 264,576 Property, plant and equipment, at cost 1,873,575 1,818,564 Less - accumulated depreciation 892,937 859,273 Net property, plant and equipment 980,638 959,291 Intangible assets, net 130,356 124,487 Deferred income taxes 72,616 74,480 Other assets 185,522 171,200 Total assets $3,798,613 $3,596,921 LIABILITIES AND EQUITY Current liabilities: Loans payable $ 214,357 $ 117,249 Accounts payable and accruals 930,834 922,828 Total current liabilities 1,145,191 1,040,077 Long-term debt 318,226 315,850 Postemployment liabilities 519,294 518,297 Ingersoll-Dresser Pump Company minority interest 159,589 154,069 Other liabilities 51,604 37,286 Shareowners' equity: Common stock 218,529 218,338 Other shareowners' equity 1,386,180 1,313,004 Total shareowners' equity 1,604,709 1,531,342 Total liabilities and equity $3,798,613 $3,596,921 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, 1995 1994 NET SALES $1,185,585 $1,010,308 Cost of goods sold 893,111 775,924 Administrative, selling and service engineering expenses 203,277 174,257 Operating income 89,197 60,127 Interest expense (8,964) (11,871) Other income (expense), net (5,996) (2,153) Dresser-Rand income 300 5,700 Ingersoll-Dresser Pump Company minority interest (2,245) 184 Earnings before income taxes 72,292 51,987 Provision for income taxes 26,025 18,975 Net earnings $ 46,267 $ 33,012 Average number of common shares outstanding 105,566 105,402 Net earnings per common share $ 0.44 $ 0.31 Dividends per common share $0.185 $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, 1995 1994 Cash flows from operating activities: Net earnings $ 46,267 $ 33,012 Adjustments to arrive at net cash provided by operating activities: Depreciation and amortization 36,700 31,811 Net equity earnings, net of dividends (5,623) (5,846) Minority interests in earnings 2,534 17 Deferred income taxes 1,889 6,943 Other noncash items (11,098) 99 Changes in other assets and liabilities, net (76,110) (57,396) Net cash (used in) provided by operating activities (5,441) 8,640 Cash flows from investing activities: Capital expenditures (43,915) (36,204) Proceeds from sales of property, plant and equipment 1,986 2,268 Acquisitions, net of cash (17,262) -- (Increase) decrease in marketable securities (148) 796 Net cash advances from equity companies 21,610 9,717 Net cash used in investing activities (37,729) (23,423) Cash flows from financing activities: Increase in short-term borrowings 85,856 27,990 Proceeds from long-term debt 2,015 1,769 Payments of long-term debt (1,169) (1,035) Net change in debt 86,702 28,724 Dividends paid (19,534) (18,453) Other 950 2,284 Net cash provided by financing activities 68,118 12,555 Effect of exchange rate changes on cash and cash equivalents 13,207 1,641 Net increase (decrease) in cash and cash equivalents 38,155 (587) Cash and cash equivalents - beginning of period 207,023 227,993 Cash and cash equivalents - end of period $245,178 $227,406 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, 1995 and 1994. Note 2 - Inventories of appropriate domestic manufactured 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 were as follows (in thousands): March 31, December 31, 1995 1994 Raw materials and supplies $ 139,167 $ 117,613 Work-in-process 317,690 293,023 Finished goods 462,602 429,655 919,459 840,291 Less - LIFO reserve 163,639 160,983 Total $ 755,820 $ 679,308 Work-in-process inventories are stated after deducting customer progress payments of $25,422,000 at March 31, 1995 and $27,242,000 at December 31, 1994. Note 3 - The company's investment in the Dresser-Rand partnership at March 31, 1995 and December 31, 1994 was $165,724,000 and $160,832,000, respectively. The company owed Dresser-Rand $90,622,000 at March 31, 1995 and $70,127,000 at December 31, 1994. Net sales of Dresser-Rand were $204.4 million for the three months ended March 31, 1995 and $310.3 million for the three months ended March 31, 1994; and gross profit was $41.2 million and $49.1 million, respectively. Dresser-Rand's net income for the three months ended March 31, 1995 was $0.6 million, as compared to $11.6 million for the three months ended March 31, 1994. 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, 1995 1994 Current assets $ 433,774 $ 440,539 Property, plant and equipment, net 199,878 197,797 Other assets and investments 18,998 18,445 652,650 656,781 Deduct: Current liabilities 321,706 295,048 Noncurrent liabilities 196,086 188,937 517,792 483,985 Net partners' equity and advances $ 134,858 $ 172,796 Note 4 - On April 10, 1995, the company and Clark Equipment Company (Clark) announced an agreement for the company to acquire Clark in a cash merger transaction for $86 per outstanding share of Clark common stock. During the first quarter, the company had purchased 274,200 shares of Clark's outstanding stock for approximately $15 million. 7 INGERSOLL-RAND COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS First quarter 1995 net sales totalled $1.2 billion, 17.3 percent higher than the amount reported for the first three months of 1994. Operating income for the first quarter totalled $89.2 million and represents a significant increase over the $60.1 million reported for the comparable 1994 quarter. The company reported net earnings of $46.3 million, or 44 cents per common share, for the first quarter of 1995. Net earnings for the first three months of 1994, totalled $33.0 million, or 31 cents per common share. The ratio of cost of goods sold to sales for the first quarter of 1995 reflects a marked improvement over 1994's first quarter ratio primarily due to the benefits of higher production rates during the two periods. The ratio of administrative, selling and service engineering expenses to sales during the first three months of the year reflects a slight improvement over last year's ratio, the result of the company's continued efforts from cost-containment programs and increased sales. There were no LIFO (last-in, first-out) inventory liquidations during the first quarters of 1995 and 1994. Other income (expense), net, aggregated $6.0 million of net expense for the three months ended March 31, 1995. This represents a $3.8 million unfavorable change from the $2.2 million of net expense reported for the first quarter of 1994. The principal reasons for this change are losses from foreign exchange activity (i.e. $7.3 million in the current quarter versus $1.1 million in the comparable 1994 quarter), somewhat offset by an increase in equity earnings from partially-owned affiliated companies. The company's pretax profits from its 49 percent interest in Dresser-Rand Company (a partnership between Dresser Industries, Inc. and the company) totalled $300,000 for the first quarter of 1995, compared to $5.7 million for the three months ended March 31, 1994. The reduction in earnings is attributed to substantially lower sales by Dresser-Rand for the first quarter of 1995 when compared to the prior year. 8 INGERSOLL-RAND COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) Ingersoll-Dresser Pump Company (IDP) is a partnership between the company and Dresser in which the company owns the majority interest. The IDP minority interest represents Dresser's interest in the operating results of IDP. The first quarter of 1995 reflects a charge to the company of $2.2 million, which indicates that this joint venture generated net income at the partnership level of approximately $4.6 million during the first three months of 1995. During the first quarter of 1994, the company recorded a benefit to pretax earnings of approximately $184,000, which indicated that IDP produced a net loss at the partnership level of approximately $375,000 in the comparable 1994 period. Interest expense for the first three months of the year decreased by $2.9 million from the $11.9 million incurred during the first quarter of 1994. This decrease is the composite result of lower outstanding debt and benefits from the company's continuing asset management programs. The company's effective tax rates were 36.0 percent and 36.5 percent for the three months ended March 31, 1995 and 1994, 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 1994 was 36.0 percent. The results for the first quarter of the year benefitted from the combination of business improvements in virtually all of the company's domestic markets including auto, construction and general industrial and a continued emphasis on cost-containment programs throughout the company. International business has generally reflected a reasonably strong increase during the first quarter of 1995 when compared to the first three months of last year. Incoming orders totalled $1,387.6 million and represents an increase of 22.0 percent over the 1994 first quarter total of $1,137.4 million. The Door Hardware Group was the only operation within the company which failed to report meaningful increases in first quarter bookings levels when compared to the first quarter of 1994. The company's backlog of orders at March 31, 1995, believed by it to be firm, was approximately $1.3 billion, which reflects an increase of $300 million over the December 31, 1994 balance. The company estimates that approximately 90 percent of the backlog will be shipped during the next twelve months. 9 INGERSOLL-RAND COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) Liquidity and Capital Resources The company's financial position at March 31, 1995 did not change materially from December 31, 1994. In the first three months of 1995, working capital increased by approximately $52.6 million to $1,015.4 million at March 31, 1995 from December 31, 1994's balance of $962.8 million. The current ratio at March 31, 1995 was 1.9 to 1, which equalled the ratio at December 31, 1994. The company's cash and cash equivalents increased by $38.2 million during the first three months of 1995 to $245.2 million from $207.0 million at December 31, 1994. Cash flows used in operating activities for the first quarter of 1995 totalled $5.4 million, investing activities used $37.7 million and financing activities provided $68.1 million. Exchange rates during the first quarter of 1995 increased cash and cash equivalents by $13.2 million. Marketable securities totalled $4.5 million at March 31, 1995, $0.3 million more than the balance at December 31, 1994. The increase is due to a slight increase in marketable securities and an increase due to currency fluctuations. Receivables totalled $986.0 million at March 31, 1995, which represents a $36.6 million increase from the $949.4 million reported at December 31, 1994. This increase is the net effect of a strong selling period towards the end of the first quarter and the effect of foreign currency translation offset by aggressive collection efforts during the first three months of 1995. Inventories totalled $755.8 million at March 31, 1995, approximately $77 million higher than the December 31, 1994 level. The activity during the first quarter of 1995 represents the net effect of the normal first quarter build of domestic inventories, and higher international inventories due to the weakening of the U.S. dollar. Long-term debt, including current maturities, at the end of the first quarter, totalled $322.0 million, which was approximately $2.0 million higher than the year-end balance. The company's March 31, 1995 debt-to-capital ratio was 25/75, which reflects an increase from the 22/78 ratio at December 31, 1994. 10 INGERSOLL-RAND COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) During the first three months of 1995, foreign currency translation adjustments resulted in a net increase of approximately $44 million in shareowners' equity, caused by the weakening of the U.S. dollar against other currencies. Currency changes in Japan, Germany, France, United Kingdom, Netherlands, Singapore and Spain 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, 1995 remain substantially unchanged from December 31, 1994. 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 28 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 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, results of operations, liquidity or cash flows of the company. It should be noted that when the company estimates its liability for environmental matters, such estimates are based on current technologies and the company does not discount its liability or assume any insurance recoveries. Clark Equipment Company Acquisition On March 28, 1995, the company announced that it had made a proposal to acquire Clark Equipment Company (Clark) in a cash merger transaction, valued at approximately $1.3 billion (or between $75 and $77 per Clark share). On April 10, 1995, the company's board of directors announced a merger agreement between the two companies pursuant to which the company would make a tender offer for all of Clark's outstanding common stock at $86 per share for an aggregate purchase price of approximately $1.5 billion (including related expenses). On May 4, 1995, the tender offer for the Clark shares 11 INGERSOLL-RAND COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) was extended to the close of business on May 12, 1995 in order to allow additional time to complete the Justice Department's review of the transaction. The company has been engaged in discussions with the Justice Department and is committed to satisfactorily resolving the antitrust concerns. As of March 31, 1995 the company had purchased 274,200 shares of Clark's outstanding stock for approximately $15 million, which is included in the "other assets" category on the balance sheet and in acquisitions on the cash flow statement. Review of Business Segments The Standard Machinery Segment reported sales of $398.8 million for the first three months of 1995, an increase of 24.9 percent from last year's first quarter. The segment's operating income for the quarter totalled $35.3 million and represents a 54.1-percent increase over the $22.9 million reported for 1994's first quarter. The increase in sales is attributed to a double-digit improvement in both the domestic and international businesses. The Air Compressor and Construction and Mining groups reported marked improvements in their operating income margins, the result of improved operations in virtually all of their markets. Engineered Equipment Segment's sales for the first quarter of 1995 totalled $232.4 million, up 14.2 percent from the $203.5 million reported for the first three months of 1994. The segment reported operating income of $7.6 million for the first three months of 1995. This represents a significant improvement over the $1.8 million operating loss that the segment reported for last year's first quarter. Sales from Ingersoll-Dresser Pump Company for the first quarter of 1995 exceeded last year's comparable quarter by approximately 10 percent and operating income improved significantly over the prior year's level. Process Systems Group's sales and operating income during the first three months of 1995 also reflected significant improvement over the related amounts reported for the first quarter of 1994, as their pulp and paper markets continue to improve. The Bearings, Locks and Tools Segment reported sales of $554.4 million for the first quarter of 1995, which is 13.7 percent above last year's first quarter total of $487.6 million. Operating income totalled $55.2 million, which was 16.5 percent higher than the $47.4 million of operating income reported by the segment for the first three months of 1994. 12 INGERSOLL-RAND COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) 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. Door Hardware Group's sales and operating performance were somewhat below last year's strong first quarter results, primarily due to the negative effect of higher interest rates on the housing industry. The Production Equipment Group's sales and operating income increased by double digits over their prior year levels, based on the continued strength in both their domestic and international markets. 13 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, 1995 1994 PRIMARY EARNINGS PER SHARE (NOTE 1): Net earnings applicable to common stock $ 46,267 $ 33,012 Average number of common shares outstanding 105,566 105,402 PRIMARY EARNINGS PER SHARE $0.44 $ 0.31 FULLY DILUTED EARNINGS PER SHARE (NOTE 2):(*) Net earnings for the period $ 46,267 $ 33,012 Adjusted shares: Average number of common shares outstanding 105,566 105,402 Number of common shares issuable assuming exercise under incentive stock plans 385 453 Average number of outstanding shares, as adjusted for fully diluted earnings per share calculations 105,951 105,855 FULLY DILUTED EARNINGS PER SHARE $0.44 $ 0.31 (*) 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. 14 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. 15 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 10, 1995 /S/ T.F. McBride T.F. McBride, Senior Vice President & Chief Financial Officer Principal Financial Officer Date May 10, 1995 /S/ R.A. Spohn R.A. Spohn, Controller - Accounting and Reporting Principal Accounting Officer 16 EX-27 2
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE MARCH 31, 1995 FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS DEC-31-1995 MAR-30-1995 245,178 4,540 1,013,402 27,375 755,820 2,160,628 1,873,575 892,937 3,798,613 1,145,191 318,226 218,529 0 0 1,386,180 3,798,613 1,185,585 1,185,585 893,111 893,111 0 0 8,964 72,292 26,025 46,267 0 0 0 46,267 0.44 0.44
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