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 June 30, 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 July 25, 1994 was
105,477,740. <PAGE>
INGERSOLL-RAND COMPANY
FORM 10-Q
INDEX
PART I. FINANCIAL INFORMATION Page
Condensed Consolidated Balance Sheet at
June 30, 1994 and December 31, 1993 3
Condensed Consolidated Income Statement for the
three and six months ended June 30, 1994 and 1993 4
Condensed Consolidated Statement of Cash Flows
for the six months ended June 30, 1994 and 1993 5
Notes to Condensed Consolidated Financial Statements 6-7
Management's Discussion and Analysis of Financial
Condition and Results of Operations 8-15
Exhibit 11 - Computations of Primary and
Fully Diluted Earnings Per Share 16-17
SIGNATURES 18
2 <PAGE>
PART I. FINANCIAL INFORMATION
INGERSOLL-RAND COMPANY
CONDENSED CONSOLIDATED BALANCE SHEET
(in thousands)
ASSETS
JUNE 30, DECEMBER 31,
1994 1993
Current assets:
Cash and cash equivalents $ 256,582 $ 227,993
Marketable securities 5,290 6,172
Accounts and notes receivable, net of
allowance for doubtful accounts 896,958 797,525
Inventories 703,743 713,690
Prepaid expenses and deferred taxes 176,903 156,780
Total current assets 2,039,476 1,902,160
Investments and advances:
Dresser-Rand Company 104,557 112,630
Partially-owned equity companies 155,414 158,645
259,971 271,275
Property, plant and equipment, at cost 1,780,864 1,665,428
Less - accumulated depreciation 858,418 790,284
Net property, plant and equipment 922,446 875,144
Intangible assets, net 103,406 105,855
Deferred income taxes 83,765 90,913
Other assets 151,200 129,985
Total assets $3,560,264 $3,375,332
LIABILITIES AND EQUITY
Current liabilities:
Loans payable $ 264,582 $ 206,939
Accounts payable and accruals 849,661 817,385
Total current liabilities 1,114,243 1,024,324
Long-term debt 313,767 314,136
Postemployment liabilities 516,616 515,787
Ingersoll-Dresser Pump Company minority interest 152,411 146,331
Other liabilities 25,314 24,929
Shareowners' equity:
Common stock 218,301 217,879
Other shareowners' equity 1,219,612 1,131,946
Total shareowners' equity 1,437,913 1,349,825
Total liabilities and equity $3,560,264 $3,375,332
See accompanying notes to condensed consolidated financial statements.
3 <PAGE>
<TABLE>
INGERSOLL-RAND COMPANY
CONDENSED CONSOLIDATED INCOME STATEMENT
(in thousands except per share figures)
Three Months Ended Six Months Ended
June 30, June 30,
1994 1993 1994 1993
<S> <C> <C> <C> <C>
NET SALES $1,143,808 $1,006,773 $2,154,116 $1,958,878
Cost of goods sold 865,976 752,816 1,641,900 1,480,858
Administrative, selling and service
engineering expenses 186,066 179,613 360,323 358,526
Restructure of operations charge -- 5,000 -- 5,000
Operating income 91,766 69,344 151,893 114,494
Interest expense 11,734 13,667 23,605 27,545
Other income (expense), net (1,284) (4,353) (3,437) (2,929)
Dresser-Rand income 4,300 5,900 10,000 12,000
Ingersoll-Dresser Pump Company
minority interest (1,836) (1,072) (1,652) (1,387)
Earnings before income taxes 81,212 56,152 133,199 94,633
Provision for income taxes 29,643 20,215 48,618 34,068
Earnings for the period before
the effect of accounting change 51,569 35,937 84,581 60,565
Effect of accounting change
(Net of income tax benefit):
- Postemployment benefits -- -- -- (21,000)
Net earnings $ 51,569 $ 35,937 $ 84,581 $ 39,565
Average number of common
shares outstanding 105,469 104,871 105,432 104,810
Net earnings per common share before
the effect of accounting change $ 0.49 $ 0.34 $0.80 $ 0.58
Effect of accounting change:
- Postemployment benefits -- -- -- (0.20)
Net earnings per common share $ 0.49 $ 0.34 $0.80 $ 0.38
Dividends per common share $0.175 $0.175 $0.35 $ 0.35
See accompanying notes to condensed consolidated financial statements.
</TABLE>
4<PAGE>
INGERSOLL-RAND COMPANY
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(in thousands)
Six Months Ended
June 30,
1994 1993
Cash flows from operating activities:
Net earnings $ 84,581 $ 39,565
Adjustments to arrive at net cash
provided by operating activities:
Effect of accounting changes -- 21,000
Depreciation and amortization 65,495 63,572
Equity earnings/loss, net of dividends (13,172) (17,094)
Restructure of operations -- 5,000
Minority interest in earnings 2,124 (1,263)
Deferred income taxes 7,148 1,842
Other noncash items (3,632) (584)
Changes in other assets and liabilities, net (73,411) (85,789)
Net cash provided by operating activities 69,133 26,249
Cash flows from investing activities:
Capital expenditures (73,301) (51,141)
Proceeds from sales of property, plant
and equipment 4,341 2,023
Proceeds from business dispositions -- 10,123
Acquisitions, net of cash (22,260) --
Decrease in marketable securities 1,183 5,077
Cash invested in or advances from
equity companies 24,090 54,799
Net cash (used in) provided by
investing activities (65,947) 20,881
Cash flows from financing activities:
Increase (decrease) in short-term borrowings 52,312 (57,143)
Proceeds from long-term debt 2,577 101,065
Payments of long-term debt (1,565) (72,767)
Net change in debt 53,324 (28,845)
Dividends paid (36,909) (36,686)
Other 2,710 6,145
Net cash provided by (used in)
financing activities 19,125 (59,386)
Effect of exchange rate changes
on cash and cash equivalents 6,278 (2,381)
Net increase (decrease) in cash and
cash equivalents 28,589 (14,637)
Cash and cash equivalents - beginning of period 227,993 216,832
Cash and cash equivalents - end of period $256,582 $202,195
See accompanying notes to condensed consolidated financial statements.
5 <PAGE>
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 and six months ended
June 30, 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):
June 30, December 31,
1994 1993
Raw materials and supplies $ 128,956 $ 121,083
Work-in-process 301,241 295,829
Finished goods 443,008 462,677
873,205 879,589
Less - LIFO reserve 169,462 165,899
Total $ 703,743 $ 713,690
Work-in-process inventories are stated after deducting
customer progress payments of $16,077,000 at June 30, 1994
and $14,395,000 at December 31, 1993.
Note 3 - The company's investment in the Dresser-Rand partnership at
June 30, 1994 and December 31, 1993 was $145,431,000 and
$133,867,000, respectively. The company owed Dresser-Rand
$40,874,000 at June 30, 1994 and $21,237,000 at December 31,
1993.
The summarized financial position of Dresser-Rand was as
follows (in thousands):
June 30, December 31,
1994 1993
Current assets $ 465,824 $ 489,122
Property, plant and
equipment, net 203,348 220,604
Other assets and investments 17,410 18,531
686,582 728,257
Deduct:
Current liabilities 300,753 321,629
Noncurrent liabilities 191,150 188,211
491,903 509,840
Net partners' equity
and advances $ 194,679 $ 218,417
6 <PAGE>
INGERSOLL-RAND COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(continued)
Note 3 - Continued:
Net sales of Dresser-Rand were $540.7 million for the six
months ended June 30, 1994 and $541.5 million for the six
months ended June 30, 1993; and gross profit was $94.6
million and $104.9 million, respectively. Dresser-Rand's
net income for the six months ended June 30, 1994 was $20.4
million and $25.7 million for the six months ended June 30,
1993.
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.
Note 7 - On April 11, 1994, the company acquired full ownership of
the ball bearing joint venture with GMN Georg Mueller of
America, Inc. The company previously owned 50% of the joint
venture.
Note 8 - On June 30, 1994, the company acquired Montabert S.A., a
French manufacturer of hydraulic rock-breaking and drilling
equipment, for a cash payment and the assumption of certain
liabilities. At June 30, 1994, the company paid
approximately $18 million in connection with this
acquisition and has included this figure as a component of
"Other assets" on the consolidated balance sheet. This
acquisition will be consolidated into the company's
financial statements during the third quarter of the year.
7 <PAGE>
INGERSOLL-RAND COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Net sales for the second quarter of 1994 totalled $1.1 billion,
13.6 percent higher than the amount reported for last year's second
quarter. Operating income for the second quarter totalled $91.8
million, which represents a 23.4 percent increase over the $74.3
million reported for the three months ended June 30, 1993, before
last year's $5.0 million restructure of operations charge. The 1993
restructure of operations charge related to the company's decision to
sell its underground coal-mining machinery operations. The
operations of Ingersoll-Dresser Pump Company (IDP) generated
approximately $5.0 million of operating income during the second
quarter of the year, as compared to approximately $3.3 million in
1993's comparable quarter.
The company reported net earnings of $51.6 million, or 49 cents
per common share, for the second quarter of 1994 versus $35.9
million, or 34 cents per common share for the three months ended June
30, 1993. Overall, international markets have started to reflect
consistent signs of strengthening and improved on a quarter to
quarter basis. However, domestic markets, principally our
construction, air compressor, door hardware and automotive related
products, grew at a much stronger rate in the second quarter of 1994
when compared to the comparable quarter in the prior year. These
improved business conditions, coupled with the benefits derived by
cost containment programs, are responsible for the second quarter
improvement over the comparable 1993 period.
There were no partial liquidations of LIFO (last-in, first-out)
inventories during the second quarter of 1994. However, liquidations
in 1993's second quarter benefitted costs by $4.0 million ($2.5
million after tax, or two cents per share). Net losses from foreign
exchange activities for the second quarter of 1994 totalled $1.8
million, or two cents per common share versus net losses of $2.0
million or two cents per common share for the comparable 1993
quarter.
For the first six months of 1994, net sales amounted to $2.2
billion, which was 10.0 percent higher than last year's six month
total. Operating income for the first half of 1994 totalled $151.9
million, which represents a 27.1 percent increase over the $119.5
million reported for the comparable 1993 period, before considering
last year's $5 million restructure of operations charge. During the
first six months of the year, IDP contributed approximately $6.4
million of operating income to the company's consolidated results
versus approximately $5.3 million for the first half of 1993.
8 <PAGE>
INGERSOLL-RAND COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(continued)
The company reported net earnings of $84.6 million, or 80 cents
per common share, for the first six months of 1994. Net earnings for
the first half of 1993, before the effect of the retroactive adoption
of an accounting change, totalled $60.6 million, or 58 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 $39.6 million, or 38 cents per share for the six months
ended June 30, 1993.
There were no partial liquidations of LIFO inventories during the
first six months of 1994. However, partial liquidations of LIFO
inventories during the first half of 1993 benefitted cost of goods
sold by $4.0 million ($2.5 million after tax or two cents per share).
Foreign exchange losses for the first six months of 1994 decreased
net earnings by $2.8 million or three cents per share which compares
to net losses of $2.3 million or two cents per share for the
comparable 1993 period.
The ratios of cost of goods sold to sales for both the second
quarter and first half of 1994 reflects a slight deterioration from
the comparable periods in 1993, principally due to the effects of
general inflation on the costs of material and on salary and employee
benefits during the last year coupled with the fact that the first
six months of 1993 also included a $4 million benefit from the
partial liquidations of LIFO inventories which was not duplicated
during the first six months of 1994. However, the ratio of
administrative, selling and service engineering expenses to sales for
both the second quarter and first six months of the year reflected a
marked improvement over the comparable periods in 1993 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.
The restructure of operations charge during the second quarter of
1993 relates to the company's decision to sell its underground coal-
mining operations, which was completed in July 1993. The operating
income generated by this unit, during the past few years, was
essentially at the break-even level.
9 <PAGE>
INGERSOLL-RAND COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(continued)
Other income (expense), net aggregated $1.3 million of net
expense for the three months ended June 30, 1994, a decrease of
approximately $3.1 million below the net expense for 1993's second
quarter. The second quarter reduction in net expense is attributed
to lower foreign exchange losses ($500,000); an increase in earnings
from partially-owned equity companies ($900,000) and a reduction in
expenses of a miscellaneous nature when compared to the amounts
reported for the three month period ended June 30, 1993. For the
first six months of 1994, other income (expense), net totalled $3.4
million of net expense which represents a $500,000 increase over the
amount reported for the first six months of 1993. This increase is
the net result of lower earnings from partially-owned equity
companies of approximately $2.5 million, which was substantially
offset by a reduction in expenses of a miscellaneous nature during
the first half of the year.
The company's pretax profits for its 49 percent interest in
Dresser-Rand Company (another partnership between Dresser Industries
and the company) totalled $4.3 million for the second quarter of the
year and $10.0 million for the first half of 1994. This compares to
income of $5.9 million for the second quarter of 1993 and $12.0
million for the six months ended June 30, 1993.
The Ingersoll-Dresser Pump Company's minority interest represents
Dresser's interest in the operating results of IDP. During the
second quarter of 1994, the minority interest charge totalled $1.8
million, which indicated that IDP generated net income at the
partnership level of approximately $3.7 million. For the first half
of 1994, the minority interest charge totalled $1.7 million, which
indicated that IDP generated approximately $3.4 million of net income
at the partnership level for the first six months of the year. For
the second quarter and first six months of 1993, the minority
interest charge for IDP was $1.1 million and $1.4 million,
respectively.
Interest expense for the second quarter and first six months of
1994 was below the amounts reported in the comparable periods of 1993
by $1.9 million and $3.9 million, respectively. The reduction is
principally attributed to lower outstanding debt due to more
efficient use of the company's cash and financial resources.
10 <PAGE>
INGERSOLL-RAND COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(continued)
The company's effective tax rate for both the second quarter and
first six months of 1994 and 1993 were 36.5 percent and 36.0 percent,
respectively. 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 of 1993 was 35.5 percent.
The consolidated results for both the second quarter and first
six months of the year benefitted from the combination of business
improvements in most of the company's domestic markets (including
auto, housing, construction and general industrial) and a continued
emphasis on cost-containment programs throughout the company.
International business has generally reflected increases during the
first six months of 1994 when compared to the comparable periods in
1993 but not at the rates at which the company's domestic business
has improved. Incoming orders for the second quarter of the year
totalled $1,151.5 million and represents an increase of 13.6 percent
over the 1993 second quarter total of $1,013.8 million. The
Production Equipment and Construction and Mining groups were the only
operations within the company which failed to report meaningful
increases in second quarter bookings levels when compared to the
second quarter of 1993. The company's backlog of orders at June 30,
1994, believed by it to be firm, was approximately $1,030 million,
which reflects an increase of $108 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 June 30, 1994 did not change
materially from December 31, 1993. In the first six months of 1994,
working capital increased by approximately $47.4 million to $925.2
million at June 30, 1994 from December 31, 1993's balance of $877.8
million. The current ratio at June 30, 1994 was 1.8 to 1, down
slightly from the 1.9 to 1 ratio at December 31, 1993.
The company's cash, cash equivalents and marketable securities
increased by $27.7 million during the first six months of 1994 to
$261.9 million from $234.2 million at December 31, 1993. This
increase is the net effect of a general increase in cash and cash
equivalents of approximately $44.6 million, a $1.2 million decrease
in marketable securities, cash paid for acquisitions of $22.3 million
and a $6.6 million increase attributed to the effect of currency
movements during the first six months of the year.
11 <PAGE>
INGERSOLL-RAND COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(continued)
Receivables totalled $897.0 million at June 30, 1994, which
represents a $99.4 million increase from the amount reported at
December 31, 1993. This increase is the net effect of a strong
selling period towards the end of the second quarter offset by
aggressive collection efforts and a $17.7 million effect of foreign
currency translation during the first six months of 1994.
Inventories totalled $703.7 million at June 30, 1994,
approximately $9.9 million lower than the December 31, 1993 level.
The activity during the first half of 1994 represents the net effect
of increased sales offsetting an increase due to exchange rates on
the international inventories of $17.3 million.
Long-term debt, including current maturities, at the end of the
first six months of the year, totalled $397.5 million, which
approximated the year-end balance.
The company's June 30, 1994 debt-to-capital ratio was 29/71,
which reflects a slight decrease from the 28/72 ratio at December 31,
1993.
During the first six months of 1994, foreign currency adjustments
resulted in a net increase of approximately $33.5 million in
shareowners' equity, caused by the weakening of the U.S. dollar
against other currencies. Currency changes in Japan, Germany,
France, the United Kingdom and Italy accounted for over 80 percent 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 June 30, 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
12 <PAGE>
INGERSOLL-RAND COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(continued)
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.
Acquisition
On June 30, 1994, the company completed its acquisition of
Montabert, S.A. (Montabert), a French manufacturer of hydraulic rock-
breaking and drilling equipment. Montabert's consolidated net sales
for 1993 were approximately $75 million. Montabert's consolidated
assets at December 31, 1993 totalled approximately $60 million. The
purchase included a cash payment from the company and the assumption
of certain liabilities of Montabert. At June 30, 1994, the company
disbursed approximately $18 million in connection with this
acquisition and has included this figure as a component of the "Other
assets" account on the consolidated balance sheet. This acquisition
will be consolidated into the company's financial statements during
the third quarter of the year.
Review of Business Segments
The Standard Machinery Segment reported sales of $354.5 million
during the second quarter of 1994, which represents a 10.6 percent
increase from the $320.5 million for the same quarter of last year.
Operating income, totalled $30.5 million, which represents a 17.3
percent improvement over the $26.0 million of operating income for
1993's second quarter, before the $5.0 million restructure of
operations charge. For the first half of 1994, the segment's net
sales totalled $673.6 million, which was 9.1 percent above the $617.3
million reported for the comparable 1993 period. The segment's
13 <PAGE>
INGERSOLL-RAND COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(continued)
operating income for the first six months of 1994, totalled $53.3
million and represents a 33.9 percent increase over the $39.8 million
of operating income reported for the first half of 1993, before
considering last year's $5.0 million restructure of operations
charge. The increase in sales and operating income for both the
second quarter and first six months of the year is attributed to
stronger domestic and international markets for both construction and
air compressor products. The 1993 restructure of operations charge
of $5.0 million relates to the company's decision to sell its
underground coal-mining operations, which had basically operated at
the break-even level during the past few years. This operation no
longer fit into the company's long range strategic goals and it was
disposed of on July 20, 1993.
Engineered Equipment Segment's sales for the second quarter of
the year were $236.6 million which were essentially equal to 1993's
second quarter total of $235.6 million. Operating income for the
three months ended June 30, 1994 totalled $3.8 million, down from the
$4.6 million reported for 1993's second quarter. For the first six
months of 1994, the segment reported sales of $440.2 million which is
4.2 percent below 1993's total of $459.6 million. Operating income
for the first half of 1994 was $2.0 million, as compared to $5.4
million for the comparable 1993 period. Second quarter sales for IDP
are up slightly over the amount reported for the three months ended
June 30, 1993. Operating income for the period also reflected a
slight improvement primarily due to the benefit of lower costs which
is the result of IDP's restructuring efforts. IDP's sales for the
first six months of 1994 were slightly below the amount reported for
the first half of 1993, but the operating income for the two periods
was at approximately the same level. Process Systems Group's sales
for the second quarter of the year were below the amount reported for
the three months ended June 30, 1993, and the group operated at the
break-even level for the quarter. The group's sales for the first
six months of the year were approximately 10 percent below 1993's
level, and the group reported an operating loss for the period as its
business continues to be affected by the poor market conditions in
the pulp and paper industry.
14
<PAGE>
<PAGE>
INGERSOLL-RAND COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(continued)
The Bearings, Locks and Tools Segment reported sales of $552.7
million for the three months ended June 30, 1994, a 22.6 percent
increase over last year's second quarter total of $450.7 million.
Operating income was $67.1 million, an increase of approximately 29
percent over the 1993 second quarter level of $52.1 million. For the
first six months of 1994, the segment reported net sales of $1.0
billion, 17.9 percent above the $882.0 million reported in the
comparable period of 1993. Operating income for the first half of
1994, totalled $114.6 million compared to $90.2 million reported for
the six months ended June 30, 1993.
The Bearings and Components Group's sales in the second quarter
of 1994 were more than 20 percent above the amount reported for the
comparable 1993 quarter with a corresponding increase in the group's
operating income based on the continued strength of domestic
automobile production.
An improving housing market, coupled with market penetration and
a strong demand for door hardware, products produced higher sales and
operating income for the Door Hardware Group during the second
quarter of the year versus 1993's comparable quarter.
The Production Equipment Group's sales and operating income for
the second quarter of 1994 were well above the amounts reported for
the three months ended June 30, 1993. The group's results for the
second quarter of 1994 were favorably affected by a large shipment
from its Automated Production Systems Division, and generally
stronger business conditions in both their domestic and international
markets, when compared to last year's second quarter.
15 <PAGE>
<TABLE>
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 Six Months Ended
June 30, June 30,
PRIMARY EARNINGS PER SHARE (NOTE 1): 1994 1993 1994 1993
<S> <C> <C> <C> <C>
Earnings before effect of accounting change $ 51,569 $ 35,937 $ 84,581 $ 60,565
Effect of accounting change:
- Postemployment benefits -- -- -- (21,000)
Net earnings applicable to common stock $ 51,569 $ 35,937 $ 84,581 $ 39,565
Average number of common shares outstanding 105,469 104,871 105,432 104,810
PRIMARY EARNINGS PER SHARE:
Earnings before effect of accounting change $0.49 $0.34 $0.80 $ 0.58
Effect of accounting change:
- Postemployment benefits -- -- -- (0.20)
Primary earnings per share $0.49 $0.34 $0.80 $ 0.38
FULLY DILUTED EARNINGS PER SHARE (NOTE 2):(*)
Earnings before effect of accounting change $ 51,569 $ 35,937 $ 84,581 $ 60,565
Effect of accounting change:
- Postemployment benefits -- -- -- (21,000)
Net earnings applicable to common stock $ 51,569 $ 35,937 $ 84,581 $ 39,565
Adjusted shares:
Average number of common shares outstanding 105,469 104,871 105,432 104,810
Number of common shares issuable
assuming exercise under incentive
stock plans 397 572 425 548
Average number of outstanding shares,
as adjusted for fully diluted earnings
per share calculations 105,866 105,443 105,857 105,358
FULLY DILUTED EARNINGS PER SHARE:
Earnings before effect of accounting change $0.49 $0.34 $0.80 $ 0.57
Effect of accounting change:
- Postemployment benefits -- -- -- (0.20)
Fully diluted earnings per share $0.49 $0.34 $0.80 $ 0.37
(*) 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.
</TABLE>
16<PAGE>
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.
17 <PAGE>
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 August 9, 1994 /S/ T.F. McBride
T.F. McBride, Senior Vice
President & Chief Financial Officer
Principal Financial Officer
Date August 9, 1994 /S/ R.A. Spohn
R.A. Spohn, Controller -
Accounting and Reporting
Principal Accounting Officer
18 <PAGE>
