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 September 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 October 31, 1994 was
105,493,140.<PAGE>
INGERSOLL-RAND COMPANY
FORM 10-Q
INDEX
PART I. FINANCIAL INFORMATION Page
Condensed Consolidated Balance Sheet at
September 30, 1994 and December 31, 1993 3
Condensed Consolidated Income Statement for the
three and nine months ended September 30, 1994 and 1993 4
Condensed Consolidated Statement of Cash Flows
for the nine months ended September 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
SEPTEMBER 30, DECEMBER 31,
1994 1993
Current assets:
Cash and cash equivalents $ 237,521 $ 227,993
Marketable securities 4,634 6,172
Accounts and notes receivable, net of
allowance for doubtful accounts 891,431 797,525
Inventories 692,222 713,690
Prepaid expenses and deferred taxes 173,006 156,780
Total current assets 1,998,814 1,902,160
Investments and advances:
Dresser-Rand Company 86,972 112,630
Partially-owned equity companies 164,169 158,645
251,141 271,275
Property, plant and equipment, at cost 1,824,637 1,665,428
Less - accumulated depreciation 878,702 790,284
Net property, plant and equipment 945,935 875,144
Intangible assets, net 127,683 105,855
Deferred income taxes 79,537 90,913
Other assets 136,867 129,985
Total assets $3,539,977 $3,375,332
LIABILITIES AND EQUITY
Current liabilities:
Loans payable $ 181,738 $ 206,939
Accounts payable and accruals 887,075 817,385
Total current liabilities 1,068,813 1,024,324
Long-term debt 319,513 314,136
Postemployment liabilities 511,702 515,787
Ingersoll-Dresser Pump Company minority interest 153,711 146,331
Other liabilities 25,085 24,929
Shareowners' equity:
Common stock 218,321 217,879
Other shareowners' equity 1,242,832 1,131,946
Total shareowners' equity 1,461,153 1,349,825
Total liabilities and equity $3,539,977 $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 Nine Months Ended
September 30, September 30,
1994 1993 1994 1993
<S> <C> <C> <C> <C>
NET SALES $1,113,670 $973,524 $3,267,786 $2,932,402
Cost of goods sold 840,171 736,244 2,482,071 2,217,102
Administrative, selling and service
engineering expenses 184,534 172,775 544,857 531,301
Restructure of operations charge -- -- -- 5,000
Operating income 88,965 64,505 240,858 178,999
Interest expense 11,279 12,744 34,884 40,289
Other income (expense), net (5,876) (5,691) (9,313) (8,620)
Dresser-Rand income 5,400 9,400 15,400 21,400
Ingersoll-Dresser Pump Company
minority interest (1,023) (491) (2,675) (1,878)
Earnings before income taxes 76,187 54,979 209,386 149,612
Provision for income taxes 27,808 19,793 76,426 53,861
Earnings for the period before
the effect of accounting change 48,379 35,186 132,960 95,751
Effect of accounting change
(Net of income tax benefit):
- Postemployment benefits -- -- -- (21,000)
Net earnings $ 48,379 $ 35,186 $ 132,960 $ 74,751
Average number of common
shares outstanding 105,483 105,106 105,447 104,911
Net earnings per common share before
the effect of accounting change $ 0.46 $ 0.33 $ 1.26 $ 0.91
Effect of accounting change:
- Postemployment benefits -- -- -- (0.20)
Net earnings per common share $ 0.46 $ 0.33 $ 1.26 $ 0.71
Dividends per common share $0.185 $0.175 $0.535 $0.525
See accompanying notes to condensed consolidated financial statements.
</TABLE>
<PAGE>
INGERSOLL-RAND COMPANY
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(in thousands)
Nine Months Ended
September 30,
1994 1993
Cash flows from operating activities:
Net earnings $ 132,960 $ 74,751
Adjustments to arrive at net cash
provided by operating activities:
Effect of accounting change -- 21,000
Depreciation and amortization 98,551 95,143
Equity earnings/losses, net of dividends (22,295) (29,722)
Restructure of operations -- 5,000
Gain on sale of investment -- (1,402)
Deferred income taxes 13,235 1,009
Minority interest in earnings 2,662 2,847
Other noncash items (7,245) 1,212
Changes in other assets and liabilities, net (18,385) (106,861)
Net cash provided by operating activities 199,483 62,977
Cash flows from investing activities:
Capital expenditures (109,353) (83,551)
Proceeds from sales of property, plant
and equipment 4,858 4,154
Proceeds from business dispositions 2,250 45,995
Acquisitions, net of cash (36,507) (42,479)
Decrease in marketable securities 2,404 3,270
Cash invested in and advances from
equity companies 35,939 51,441
Other -- (7,181)
Net cash used in investing activities (100,409) (28,351)
Cash flows from financing activities:
Increase (decrease) in short-term borrowings 38,536 (11,053)
Proceeds from long-term debt 2,330 101,586
Payments of long-term debt (82,951) (72,576)
Net change in debt (42,085) 17,957
Dividends paid (56,424) (55,070)
Other 2,952 12,741
Net cash used in financing activities (95,557) (24,372)
Effect of exchange rate changes
on cash and cash equivalents 6,011 (5,562)
Net increase in cash and cash equivalents 9,528 4,692
Cash and cash equivalents - beginning of period 227,993 216,832
Cash and cash equivalents - end of period $ 237,521 $ 221,524
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 nine months
ended September 30, 1994 and 1993.
Note 2 - Inventories of appropriate domestically 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 was as follows
(in thousands):
September 30, December 31,
1994 1993
Raw materials and supplies $ 129,724 $ 121,083
Work-in-process 292,113 295,829
Finished goods 442,721 462,677
864,558 879,589
Less - LIFO reserve 172,336 165,899
Total $ 692,222 $ 713,690
Work-in-process inventories are stated after deducting
customer progress payments of $27,782,000 at September 30,
1994 and $14,395,000 at December 31, 1993.
Note 3 - The company's investment in the Dresser-Rand partnership at
September 30, 1994 and December 31, 1993 was $151,017,000
and $133,867,000, respectively. The company owed
Dresser-Rand $64,045,000 at September 30, 1994 and
$21,237,000 at December 31, 1993.
The summarized financial position of Dresser-Rand was as
follows (in thousands):
September 30, December 31,
1994 1993
Current assets $ 437,982 $ 489,122
Property, plant and
equipment, net 198,036 220,604
Other assets and investments 16,837 18,531
652,855 728,257
Deduct:
Current liabilities 302,441 321,629
Noncurrent liabilities 190,776 188,211
493,217 509,840
Net partners' equity
and advances $ 159,638 $ 218,417
6<PAGE>
INGERSOLL-RAND COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(continued)
Note 3 - Continued:
Net sales of Dresser-Rand were $832.0 million for the nine
months ended September 30, 1994 and $830.7 million for the
nine months ended September 30, 1993; and gross profit was
$143.2 million and $170.3 million, respectively.
Dresser-Rand's net income for the nine months ended
September 30, 1994 was $31.5 million and $43.9 million for
the nine months ended September 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. The company paid approximately $18 million in
connection with this acquisition.
Note 9 - Effective August 4, 1994, the company acquired the Ecoair
air compressor product line from MAN Gutenoffnungshutte AG
(MAN GHH) of Oberhausen, Germany for approximately $10.6
million. The company also entered a 50/50 joint venture,
GHH-RAND Schraubenkompressoren GmbH & Co. KG (GHH-RAND),
with MAN GHH to manufacture airends. The company invested
approximately $17.6 million in GHH-RAND.
7<PAGE>
INGERSOLL-RAND COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Net sales for the third quarter of 1994 totalled $1.1 billion,
14.4 percent higher than the amount reported for last year's third
quarter. Operating income for the third quarter totalled $89.0
million, which represents a 37.9 percent increase over the $64.5
million reported for the three months ended September 30, 1993. The
operations of Ingersoll-Dresser Pump Company (IDP) generated
approximately $3.2 million of operating income during the third
quarter of the year, versus operating at close to break-even levels
during the third quarter of 1993, on essentially the same level of
sales for both periods.
The company reported net earnings of $48.4 million, or 46 cents
per common share, for the third quarter of 1994 versus $35.2 million,
or 33 cents per common share, for the three months ended September
30, 1993. Overall, international markets continued to strengthen and
improved on a quarter to quarter basis. Domestic markets,
principally our construction, air compressor, door hardware and
automotive related products, grew at a stronger rate during the third
quarter of 1994 when compared to the comparable quarter in the prior
year. These improved business conditions, coupled with the benefits
derived from cost-containment programs, are responsible for the third
quarter improvement over the comparable 1993 period.
Partial liquidations of LIFO (last-in, first-out) inventories
benefitted the third quarter cost of goods sold by $1.6 million
(approximately $1.0 million after tax or one cent per share).
Partial liquidations during the 1993 third quarter benefitted costs
by $600,000 (approximately $400,000 after tax). Net losses from
foreign exchange activities for the third quarter of 1994 totalled
$1.5 million, or two cents per common share, versus net losses of
$3.8 million, or four cents per common share, for the comparable 1993
quarter.
For the first nine months of 1994, net sales amounted to $3.3
billion, which was 11.4 percent higher than last year's nine month
total. Operating income for the first three quarters of 1994
totalled $240.9 million, which represents a 30.9 percent increase
over the $184.0 million reported for the comparable 1993 period,
before considering last year's $5 million restructure of operations
charge. During the first nine months of the year, IDP contributed
over $8.0 million of operating income to the company's consolidated
results versus approximately $5.0 million for the first three
quarters of 1993, on a three percent lower level of sales in 1994
versus the 1993 period.
8<PAGE>
INGERSOLL-RAND COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(continued)
The company reported net earnings of $133.0 million, or $1.26 per
common share, for the first nine months of 1994. Net earnings for
the first three quarters of 1993, before the effect of the
retroactive adoption of an accounting change, totalled $95.8 million,
or 91 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 $74.8 million, or 71 cents per share, for the nine months
ended September 30, 1993.
Partial liquidations of LIFO (last-in, first-out) inventories
during the first nine months of 1994 and 1993 benefitted cost of
goods sold by $1.6 million and $4.6 million, respectively. Foreign
exchange losses for the first nine months of 1994 decreased net
earnings by $4.4 million, or five cents per share, which compares to
net losses of $6.1 million, or six cents per share,for the comparable
1993 period.
The ratio of cost of goods sold to sales for the third quarter of
1994 reflects a minor improvement over the comparable ratio for
1993's third quarter principally due to improvements in IDP's
international cost ratio during the current quarter when compared to
last year. However, the ratio of cost of goods sold to sales for the
first nine months of 1994 reflects a slight deterioration from the
comparable period in 1993, principally due to the effects of general
inflation on the costs of material and on salary and employee
benefits during the year. The ratios of administrative, selling and
service engineering expenses to sales for both the third quarter and
first nine 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 $5.9 million of net
expense for the three months ended September 30, 1994, which
approximated last year's third quarter total. For the first nine
months of 1994, other income (expense), net, totalled $9.3 million
which represents an increase of $700,000 of net expense over the
amount reported for the three quarters ended September 30, 1993.
Reductions in losses from foreign exchange activities in both the
quarter and nine month periods were offset by lower earnings from
partially-owned equity companies and an increase in expenses of a
miscellaneous nature.
The company's pretax profits for its 49 percent interest in
Dresser-Rand Company (another partnership between Dresser Industries
and the company) totalled $5.4 million for the third quarter of the
year and $15.4 million for the first nine months of 1994. This
compares to income of $9.4 million for the third quarter of 1993 and
$21.4 million for the first three quarters of 1993.
The Ingersoll-Dresser Pump Company's minority interest represents
Dresser's interest in the operating results of IDP. During the third
quarter of 1994, the minority interest charge totalled $1.0 million,
which indicated that IDP generated net income at the partnership
level of approximately $2.1 million. For the first nine months of
1994, the minority interest charge totalled $2.7 million, which
indicated that IDP generated approximately $5.5 million of net income
at the partnership level for the first three quarters of the year.
For the third quarter and first nine months of 1993, the minority
interest charge for IDP was $0.5 million and $1.9 million,
respectively.
Interest expense for the third quarter and first nine months of
1994 was below the amounts reported in the comparable periods of 1993
by $1.5 million and $5.4 million, respectively. The reduction is
principally attributed to lower outstanding debt and lower interest
rates.
The company's effective tax rates for both the third quarter and
first nine 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.
10<PAGE>
INGERSOLL-RAND COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(continued)
The consolidated results for both the third quarter and first
nine 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 reflected increases during the first nine
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 third quarter of the year totalled
$1,133.1 million and represents an increase of 16.2 percent over the
1993 third quarter total of $975.2 million. IDP was the only
operation within the company which failed to report meaningful
increases in third quarter bookings levels when compared to the
comparable quarter of 1993. The company's backlog of orders at
September 30, 1994, believed by it to be firm, was approximately
$1,056 million, which reflects an increase of $134 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 September 30, 1994 did not
change materially from December 31, 1993. In the first nine months
of 1994, working capital increased by approximately $52.2 million to
$930.0 million at September 30, 1994 from December 31, 1993's balance
of $877.8 million. The current ratio at September 30, 1994 was 1.9
to 1, which equalled the December 31, 1993 ratio.
The company's cash, cash equivalents and marketable securities
increased by only $8.0 million during the first nine months of 1994
to $242.2 million from $234.2 million at December 31, 1993. However,
it should be noted that while this was a modest increase, there were
many significant cash inflows and outflows. Cash flows from
operating activities totalled $189.5 million, investing activities
used $90.4 million and financing activities used $95.6 million.
Exchange rate changes for the first nine months of 1994 totalled $6.0
million.
Receivables totalled $891.4 million at September 30, 1994, which
represents a $93.9 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 third quarter combined with
$20.1 million from acquisitions which is offset by aggressive
collection efforts and a $18.1 million effect of foreign currency
translation during the first nine months of 1994.
11<PAGE>
INGERSOLL-RAND COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(continued)
Inventories totalled $692.2 million at September 30, 1994,
approximately $21.5 million lower than the December 31, 1993 level.
This decrease is the net effect of increased sales activity, and an
aggressive company program to reduce inventory, which were offset by
a $24.6 million increase from acquisitions and a $17.7 million
increase due to exchange rates on the international inventories.
Long-term debt, including current maturities, at the end of the
first nine months of the year, totalled $322.7 million. During the
quarter, the company repaid the last installment of $75.0 million on
its 8 3/8% Notes Due 1994. Acquisitions increased long-term debt by
approximately $7.0 million. The remaining change was due to
increases in foreign long-term debt and translation.
The company's September 30, 1994 debt-to-capital ratio was 26/74,
which reflects an increase over the 28/72 ratio at December 31, 1993.
During the first nine months of 1994, foreign currency
adjustments resulted in a net increase of approximately $27.5 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 approximately 85
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 September 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 34 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
12<PAGE>
INGERSOLL-RAND COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(continued)
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. 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.
Acquisitions
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. Montabert's results have been
included in the consolidated financial statements of the company
since its acquisition date.
Effective August 4, 1994, the company acquired the Ecoair air
compressor product line from MAN Gutenoffnungshutte AG (MAN GHH) of
Oberhausen, Germany for approximately $10.6 million. The company
also entered a 50/50 joint venture, GHH-RAND Schraubenkompressoren
GmbH & Co. KG, with MAN GHH to manufacture airends. The company
invested approximately $17.6 million in GHH-Rand.
Review of Business Segments
The Standard Machinery Segment reported sales of $370.3 million
during the third quarter of 1994, which represents a 21.9 percent
increase over the $303.7 million for the same quarter of last year.
Operating income, totalled $28.9 million, which represents a 52.9
percent improvement over the $18.9 million of operating income for
1993's third quarter. For the first nine months of 1994, the
segment's net sales totalled $1,043.9 million, which was 13.3 percent
above the $921.0 million reported for the comparable 1993 period.
The segment's operating income for the first nine months of 1994,
totalled $82.3 million and represents a 40.2 percent increase over
the $58.7 million of operating income reported for the first three
quarters of 1993, before considering last year's $5.0 million
restructure of operations charge. The increase in sales and
operating income for both the third quarter and first nine months of
the year is attributed to stronger domestic and international markets
for both construction and air compressor products. The 1993
13<PAGE>
INGERSOLL-RAND COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(continued)
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 third quarter of the
year were $208.8 million, which was five percent below 1993's third
quarter total of $219.7 million. Operating income for the three
months ended September 30, 1994 totalled $5.1 million, which is a
slight improvement over the $4.2 million reported for 1993's third
quarter. For the first nine months of 1994, the segment reported
sales of $649.0 million which is 4.5 percent below 1993's total of
$679.3 million. Operating income for the first three quarters of
1994 was $7.0 million, as compared to $9.6 million for the comparable
1993 period. Third quarter sales for IDP were essentially equal to
the amount reported for the three months ended September 30, 1993.
Operating income for the period reflects an improvement over last
year's third quarter primarily due to the benefit of lower costs
which are the result of IDP's restructuring efforts. IDP's sales for
the first nine months of 1994 were slightly below the amount reported
for the first three quarters of 1993, but the operating income for
the two periods reflected an improvement. Process Systems Group's
sales for the third quarter of the year were over 20 percent below
the amount reported for the three months ended September 30, 1993.
The group generated a modest amount of operating income for the
quarter; however, it was below the amount reported in 1993's
comparable period. The group's sales for the first nine months of
the year were over 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.
The Bearings, Locks and Tools Segment reported sales of $534.6
million for the three months ended September 30, 1994, an 18.8
percent increase over last year's third quarter total of $450.1
million. Operating income was $63.4 million, an increase of 29.4
percent over the 1993 third quarter level of $49.0 million. For the
first nine months of 1994, the segment reported net sales of $1,574.9
million, 18.2 percent above the $1,332.1 million reported in the
comparable period of 1993. Operating income for the first three
quarters of 1994, totalled $178.0 million, an increase of 27.9
percent over the $139.2 million reported for the nine months ended
September 30, 1993.
14<PAGE>
INGERSOLL-RAND COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(continued)
The Bearings and Components Group's sales in the third quarter of
1994 were more than 20 percent above the amount reported for the
comparable 1993 quarter. The group's operating income improved at a
large rate based on the continued strength of domestic automobile
production.
Market penetration, a strong demand for door hardware products
and a stable housing market produced higher sales and operating
income for the Door Hardware Group during the third quarter of the
year versus 1993's comparable quarter.
The Production Equipment Group's sales and operating income for
the third quarter of 1994 were well above the amounts reported for
the three months ended September 30, 1993. The group's results for
the third 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 third quarter.
15<PAGE>
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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 Nine Months Ended
September 30, September 30,
PRIMARY EARNINGS PER SHARE (NOTE 1): 1994 1993 1994 1993
<S> <C> <C> <C> <C>
Earnings before effect of accounting change $ 48,379 $ 35,186 $132,960 $ 95,751
Effect of accounting change:
- Postemployment benefits -- -- -- (21,000)
Net earnings applicable to common stock $ 48,379 $ 35,186 $132,960 $ 74,751
Average number of common shares outstanding 105,483 105,106 105,447 104,911
PRIMARY EARNINGS PER SHARE:
Earnings before effect of accounting change $0.46 $0.33 $1.26 $ 0.91
Effect of accounting change:
- Postemployment benefits -- -- -- (0.20)
Primary earnings per share $0.46 $0.33 $1.26 $ 0.71
FULLY DILUTED EARNINGS PER SHARE (NOTE 2):(*)
Earnings before effect of accounting change $ 48,379 $ 35,186 $132,960 $ 95,751
Effect of accounting change:
- Postemployment benefits -- -- -- (21,000)
Net earnings applicable to common stock $ 48,379 $ 35,186 $132,960 $ 74,751
Adjusted shares:
Average number of common shares outstanding 105,483 105,106 105,447 104,911
Number of common shares issuable
assuming exercise under incentive
stock plans 616 656 489 584
Average number of outstanding shares,
as adjusted for fully diluted earnings
per share calculations 106,099 105,762 105,936 105,495
FULLY DILUTED EARNINGS PER SHARE:
Earnings before effect of accounting change $0.46 $0.33 $1.26 $ 0.90
Effect of accounting change:
- Postemployment benefits -- -- -- (0.20)
Fully diluted earnings per share $0.46 $0.33 $1.26 $ 0.70
(*) 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>
<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 November 14, 1994 /S/ T.F. McBride
T.F. McBride, Senior Vice
President & Chief Financial Officer
Principal Financial Officer
Date November 14, 1994 /S/ R.A. Spohn
R.A. Spohn, Controller -
Accounting and Reporting
Principal Accounting Officer
18<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE SEPTEMBER 30, 1994 FINANCIAL STATEMENTS AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> SEP-30-1994
<CASH> 237,521
<SECURITIES> 4,634
<RECEIVABLES> 914,343
<ALLOWANCES> 22,912
<INVENTORY> 692,222
<CURRENT-ASSETS> 1,998,814
<PP&E> 1,824,637
<DEPRECIATION> 878,702
<TOTAL-ASSETS> 3,539,977
<CURRENT-LIABILITIES> 1,068,813
<BONDS> 319,513
<COMMON> 218,321
0
0
<OTHER-SE> 1,242,832
<TOTAL-LIABILITY-AND-EQUITY> 3,539,977
<SALES> 3,267,786
<TOTAL-REVENUES> 3,267,786
<CGS> 2,482,071
<TOTAL-COSTS> 2,482,071
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 34,884
<INCOME-PRETAX> 209,386
<INCOME-TAX> 76,426
<INCOME-CONTINUING> 132,960
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 132,960
<EPS-PRIMARY> 1.26
<EPS-DILUTED> 1.26
</TABLE>
