UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) May 25, 1995
INGERSOLL-RAND COMPANY
(Exact name of registrant as specified in its charter)
New Jersey 1-985 13-5156640
(State of incorporation) (Commission (I.R.S. Employer
File Number) Identification No.)
Woodcliff Lake, New Jersey 07675
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (201) 573-0123
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
The following financial statements are hereby filed as part of
this report:
7.) Unaudited consolidated balance sheet of Clark at March 31, 1995
and the unaudited consolidated statements of income and
retained earnings, and cash flows for the three months
ended March 31, 1995 and 1994 are attached.
<PAGE>
[CAPTION]
CLARK EQUIPMENT COMPANY AND CONSOLIDATED SUBSIDIARIES
STATEMENT OF INCOME AND RETAINED EARNINGS (UNAUDITED)
Three months ended March 31,
<TABLE>
(Amounts in Thousands, except per share data) 1995 1994
<S> <C> <C>
Net sales ................................................ $ 313,124 $ 205,163
Operating costs and expenses:
Cost of goods sold .................................... 246,692 162,087
Selling, general and administrative expenses .......... 35,110 25,547
281,802 187,634
Operating income ........................................ 31,322 17,529
Other income, net ........................................ 4,466 7,016
Interest expense ........................................ (5,390) (5,570)
Pre-tax income from continuing operations ................ 30,398 18,975
Provision for income taxes ............................... 10,346 6,659
Income from continuing operations ........................ 20,052 12,316
Income from discontinued operations ...................... 20,337 14,588
Net income................................................ 40,389 26,904
Add: Income retained at beginning of period .............. 254,643 92,708
Income retained at end of period ......................... $ 295,032 $ 119,612
Income per share:
From continuing operations........................... $ 1.16 $ .70
From discontinued operations......................... 1.18 .84
Net income .......................................... $ 2.34 $ 1.54
Average number of shares................................ 17,294 17,449
Number of shares outstanding at end of period ......... 17,101 17,411
<FN>
* Restated to reflect the equity in net income of VME Group N.V. as a discontinued
operation.
See Notes to Financial Statements
</TABLE>
<PAGE>
<TABLE>
CLARK EQUIPMENT COMPANY AND CONSOLIDATED SUBSIDIARIES
BALANCE SHEET (UNAUDITED)
<CAPTION> Amounts in Thousands
Mar. 31 Dec. 31,
1995 1994
<S> <C> <C>
Cash, cash equivalents and short-term investments .... $ 47,046 $ 228,604
Accounts and notes receivable ......................... 186,808 108,460
Accounts receivable from associated companies ......... 1,703 1,085
Inventories:
Raw Materials ................................... 52,505 37,070
Work-in-process and finished goods .............. 117,383 86,658
Total inventory ............................. 169,888 123,728
Investment and advances, discontinued operations (VME). 216,280 -
Deferred tax assets ................................... 27,400 24,384
Other current assets .................................. 12,492 8,862
Total current assets ........................ 661,617 495,123
Investment and advances-associated companies .......... 8,957 12,555
Investment and advances,discontinued operations (VME).. - 195,943
Deferred tax assets-net ............................... 96,891 100,402
Property, plant and equipment - at cost ............... 432,513 382,523
Less accumulated depreciation ......................... 220,196 201,384
Net property, plant and equipment ........... 212,317 181,139
Goodwill............................................... 379,095 167,272
Other assets .......................................... 50,517 41,465
$ 1,409,394 $ 1,193,899
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Notes payable .........................................$ 97,191 $ 11,944
Accounts payable and accruals ......................... 180,075 127,161
Accrued payrolls, social security and general taxes ... 36,156 29,967
Accrued postretirement benefits - current ............. 19,481 21,132
Taxes on income ....................................... 7,933 1,547
Deferred income taxes ................................. 672 715
Current installments on long-term debt ................ 18,574 12,140
Total current liabilities ....................... 360,082 204,606
Long-term debt ........................................ 225,489 193,294
Other non-current liabilities ......................... 102,067 93,994
Accrued postretirement benefits ....................... 244,876 241,837
Deferred income taxes ................................. 7,533 8,008
Total liabilities ........................... 940,047 741,739
Stockholders' Equity:
Preferred stock - authorized 3,000,000 shares at
$1.00 par value - none issued ................... - -
Capital stock common - authorized 40,000,000 shares at
$7.50 par value - issued 19,194,684 shares at
March 31, 1995 and December 31, 1994 ............ 143,960 143,960
Capital in excess of par value of stock ............... 180,228 180,107
Retained earnings ..................................... 295,032 254,643
Cumulative translation and other adjustments .......... (54,166) (47,211)
565,054 531,499
Less, common stock held in treasury, at cost -
2,093,288 shares and 1,793,709 shares at the
respective dates................................. (69,838) (53,470)
Less, unallocated LESOP shares purchased with debt -
834,494 shares at March 31, 1995 and December 31, 1994 . (25,869) (25,869)
Total stockholders' equity ................... 469,347 452,160
$1,409,394 $1,193,899
<FN>
See Notes to Financial Statements
</TABLE>
<TABLE>
CLARK EQUIPMENT COMPANY AND CONSOLIDATED SUBSIDIARIES
STATEMENT OF CASH FLOWS (UNAUDITED)
Three months ended March 31
<CAPTION>
Amounts in Thousands
1995 1994*
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net income ..................................... $ 40,389 $ 26,904
Less, income from discontinued operations ...... (20,337) (14,588)
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation ............................. 9,056 7,499
Amortization of intangibles .............. 1,338 464
Exchange loss ............................ 6,577 171
Employee benefit expense funded
with treasury stock ................ 565 253
Loss of unconsolidated companies ......... 150 -
Increase in receivables and other current
assets.............................. (38,087) (21,806)
Decrease in refundable income taxes ...... - 2,423
Decrease(increase) in inventory .......... (18,162) 1,788
Decrease (increase) in net deferred tax
assets.............................. (147) 484
Increase in payables and accruals ........ 27,287 10,214
Increase in other non-current assets ..... (1,236) (715)
Increase in other long-term liabilities .. 7,454 4,910
Other..................................... 25 (1)
Net cash provided by operating activities ...... 14,872 18,000
CASH FLOWS FROM INVESTING ACTIVITIES:
Cost of acquisition - net of cash acquired ..... (245,173) -
Additions to properties ........................ (16,722) (6,982)
Sales of properties ............................ 139 269
Decrease (increase) in short-term investments .. 180,200 (21,300)
Decrease (increase) in investments and
advances--associated companies ................. 4 (1)
Net cash used in investing activities ...... (81,552) (28,014)
CASH FLOWS FROM FINANCING ACTIVITIES:
Additions to long-term borrowings .............. 83 -
Payments on long-term debt ..................... (494) (417)
Increase in notes payable-current .............. 84,127 1,873
Repurchase of shares and placed in treasury .... (16,933) -
Other........................................... 121 115
Net cash provided in financing activities 66,904 1,571
Effect of exchange rate changes on cash ........ (1,582) (469)
Cash flows from discontinued automotive operations - (2,769)
Decrease in cash and cash equivalents .......... (1,358) (11,681)
Cash and cash equivalents at beginning of year . 48,404 35,228
Cash and cash equivalents at end of period ..... 47,046 23,547
Short-term investments (cost approximates market) - 221,900
Cash, cash equivalents and short-term investments $ 47,046 $245,447
<FN>
* Restated to separately reflect cash flows from discontinued operations.
See Notes to Financial Statements
</TABLE>
<PAGE>
CLARK EQUIPMENT COMPANY AND CONSOLIDATED SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
General Information
These financial statements have been prepared from the unaudited financial
records of the Clark Equipment Company (Clark). The statements should be read
in conjunction with Clark's 1994 Annual Report filed on Form 10-K. In the
opinion of Clark management, all adjustments necessary for a fair statement of
the results of operations for the interim periods have been reflected. All
adjustments are of a normal and recurring nature except as otherwise discussed.
Net income per share amounts are in dollars, based on the average number of
shares outstanding for the period, taking into account the dilutive effect
of common stock equivalents under Clark's stock option plans. The
number of shares used to compute net income per share for the three month
periods ended March 31, 1995 and March 31, 1994, were 17,293,583 and
17,449,303, respectively. There were no dividends paid during the three
months ending March 31, 1995 or March 31, 1994.
7,738 shares of common stock were reserved for issuance pursuant to the
exercise of options under the Clark 1985 Stock Option Plan on March 31, 1995.
Options for 7,738 shares were outstanding under the Clark 1985 Stock Option
Plan on the same date.
On May 10, 1994, the stockholders of Clark approved the 1994 Clark Long
Term Incentive Plan ("LTIP") and the Clark Stock Acquisition Plan for
Non-Employee Directors ("Director Stock Plan"). 850,000 shares and 150,000
shares were authorized for issuance under the LTIP and the Director Stock
Plan respectively. Options for 88,400 shares were outstanding at March 31,
1995 under the LTIP.
In addition to the above options, there were performance units outstanding
at March 31 of 393,966 in 1995 and 464,139 in 1994. These performance
units are equivalent to free-standing stock appreciation rights. When the
performance units are surrendered, the grantee receives a cash payment for
each unit surrendered, equal to the amount by which the price of Clark
stock on the date of surrender exceeds the exercise price.
Organizational Developments
Acquisitions:
In May 1994, Clark acquired the stock of Blaw-Knox Construction
Equipment Corporation ("Blaw-Knox"), a leading manufacturer of asphalt
pavers, for approximately $145 million. If Clark had acquired Blaw-Knox
at January 1, 1994, sales in the first quarter of 1994 would have
increased by approximately $26.3 million and net income would have
increased by approximately $2.2 million.
Clark acquired the stock of Club Car, Inc. ("Club Car"), a leading
manufacturer of golf cars and utility vehicles on March 13, 1995 for
approximately $245 million (net of cash acquired). Included in the first
quarter of 1995 sales are sales of approximately $12 million related to
Club Car. Club Car's operations had an immaterial effect on the 1995 first
quarter income.
Sale of VME:
On April 13, 1995, Clark sold its interest in VME Group N.V. ("VME"),
its 50 percent owned construction equipment joint venture, to A.B. Volvo
for $573 million. Clark is expected to net approximately $430 million
after expenses and taxes and realize a gain on the transaction of
approximately $270 million. Clark filed a Form 8-K on April 21, 1995
showing the pro forma effects of this transaction on the December 31, 1994
balance sheet (after adjustments for the Club Car acquisition).
The first quarter results of VME are included in Clark's first quarter
results as a discontinued operation. VME's results have been included to
reflect Clark's continued ownership of VME through March 31, 1995. The
remaining gain to be recorded on the sale of VME, after the recognition of
VME's first quarter results, is approximately $250 million.
Tender Offer by Ingersoll-Rand:
On April 9, 1995, Clark and Ingersoll-Rand Company ("IR") entered into a
Merger Agreement. Pursuant to the terms of this Merger Agreement, IR
agreed to increase to $86 per share the purchase price offered under its
tender offer to purchase 100% of the stock of Clark. The tender offer was
originally scheduled to expire on May 5, 1995 but has been extended to May
12, 1995 to allow additional time for completion of review of the
transaction by the Antitrust Division of the Justice Department. If a
change of control occurs under the tender offer, certain additional
liabilities will result under officer and employee benefit plans. The
liabilities resulting from these change of control provisions will be
reflected in Clark's financial statements if and when a change of
control occurs and will be material to future results of operations. Clark
also expects to incur expenses of approximately $18 million in
connection with the IR tender offer and merger if they are consummated.
Statement of Cash Flows
The Statement of Cash Flows for the three months ended March 31, 1995 and
1994 has been prepared based on the continuing operations of Clark.
As such, the discontinued cash flows of Clark Automotive Products
Corporation ("CAPCO") and VME have been reflected separately within the
Statement of Cash Flows.
Contingencies
Clark is self-insured with respect to product liability risk, although
insurance coverage is obtained for catastrophic losses. Clark has pending
approximately 63 claims, with respect to which approximately 47 suits have
been filed alleging damages for injuries or deaths arising from accidents
involving products manufactured by Clark's continuing operations. In the
aggregate, these claims could be material to Clark. At March 31, 1995,
Clark had accruals of approximately $19.5 million related to product
liability exposures for known claims and for claims anticipated to have been
incurred that have not yet been reported. The accruals have been determined
based upon actuarial calculations using historical claims experience.
Clark has also recorded a receivable of $5.7 million for expected recoveries
from insurance companies.
Clark is involved in numerous other lawsuits arising out of the
ordinary conduct of its business. These lawsuits pertain to various
matters, including warranties, civil rights, and other issues. The ultimate
results of these claims and proceedings at March 31, 1995 are subject to a
high degree of estimation and cannot be determined with complete precision.
However, in the opinion of Clark management, either adequate provision for
anticipated costs has been made through insurance coverage or accruals, or
the ultimate costs will not materially effect the consolidated financial
position of Clark.
Clark has given certain guarantees to third parties and has entered
into certain repurchase arrangements relating to product distribution and
product financing activities involving Clark's continuing operations.
As of March 31, 1995, guarantees are approximately $29 million and
repurchase arrangements relating to product financing by an independent
finance company approximate $108 million. It is not practicable to
determine the additional amount subject to repurchase solely under dealer
distribution agreements.
Under the repurchase arrangements relating to product distribution and
product financing activities, when dealer terminations do occur, a newly
selected dealer generally purchases the assets of the prior dealer and
assumes any related financial obligation. Accordingly, the risk of loss to
Clark is minimal, and historically Clark has incurred only immaterial
losses relating to these arrangements.
Clark enters into forward exchange contracts to protect margins on
projected future sales denominated in foreign currencies. Settlement dates
on executed contracts are generally not more than 18 months in advance of
the original execution date. In the first quarter 1995 results, a pretax
reserve of $5.8 million was recorded on foreign exchange contracts.
Maximum risk of loss on these contracts is limited to the amount of the
difference between the spot rate at the date of contract delivery and the
contracted rate. Clark believes that future sales revenue will
generate sufficient foreign currency to meet these commitments.
Clark is or may be liable for other matters, including contingencies
related to the sale of its forklift truck business, Clark Material Handling
Company ("CMHC"), and environmental issues.
Environmental
Clark is involved in environmental clean-up activities or litigation
in connection with eight former waste disposal sites and four former plant
locations. Clark is also involved in an environmental clean-up
action at one current location. Additionally, Clark is a defendant
in a lawsuit filed by the United States Environmental Protection Agency
(EPA) that seeks civil penalties for alleged violations of the Clean Water
Act, arising out of the discharge of certain metal finishing wastewaters
generated at a current plant operating site.
At each of the eight waste disposal sites, Clark contracted with
independent waste disposal operators to properly handle the disposal of its
waste. The EPA also has identified other parties responsible for clean-up
costs at the waste disposal sites. Clark has and will continue to
accrue for these costs when the liability can be reasonably estimated. As
of March 31, 1995, Clark had reserves of approximately $15.4 million
for potential future environmental clean-up costs. The environmental
reserves represent Clark's current estimate of its liability for
environmental clean-up costs and are not reduced by any possible recoveries
from insurance companies. Clark's estimate of its liability is based
upon: 1) the estimated costs of investigating and remediating the
environmental contamination at each site and 2) Clark's estimated
share of the liability at the site. Estimated costs of remediation can
change as the site investigation and remediation progresses and additional
information becomes available. Further, these estimated costs can change
if the selected remedial action at a site is not effective and additional
work is required. In addition, the development of new remediation
technologies could impact these costs.
In estimating its share of the potential liability at a site, Clark
takes into account the contributions to the clean-up costs that will be
paid by other potentially responsible parties. Clark's share of the
potential liability could therefore change if other potentially responsible
parties become financially insolvent or dispute their liability. As a
result of the possibility of changes in remedial cost estimates and in
Clark's share of liability, Clark continually monitors the adequacy
of its reserves and makes adjustments as necessary. Based upon the
information presently available to it, Clark does not believe that it
will incur any material costs in excess of the amount of its reserves as a
result of any such changes.
Although Clark management cannot determine whether or not a material effect
on future operations is reasonably likely to occur, it believes that the
recorded reserve levels are appropriate estimates of the potential
liability for environmental clean-up costs. Further, Clark management
believes that the additional maximum exposure level in excess of the recorded
reserve level would not be material to the financial condition of Clark.
Although settlement of the reserves will cause future cash outlays, it is
not expected that such outlays will materially impact Clark's liquidity
position. Clark's expenditures in the first quarter of 1995 relating to
environmental compliance and clean-up activities approximated $0.6 million.
Sale of Clark Material Handling Company ("CMHC")
Clark sold its forklift truck business, CMHC, to Terex Corporation
("Terex") in 1992. As part of the sale, Terex and CMHC assumed
substantially all of the obligations of Clark relating to CMHC
operations, including: 1) contingent liabilities of the Company with
respect to floor plan and rental repurchase agreements, 2) certain
guarantees of obligations of third parties, and 3) existing and future
product liability claims involving CMHC products. In the event that Terex
and CMHC fail to perform or are unable to discharge any of the assumed
obligations, Clark could be required to discharge such obligations.
1) Repurchase Agreements
At the time of the sale, Clark had agreed with an independent
finance company to repurchase approximately $220 million of CMHC
dealer floor plan and rental inventory in the event of a default by
individual dealers for whom the inventory was financed. Since the
sale, dealer floor plan and rental inventory obligations have been
liquidating in the normal course of business and stand at
approximately $34.4 million at March 31, 1995. These obligations will
continue to liquidate in an orderly fashion. Clark will not be
required to perform these repurchase obligations unless the dealer
defaults on the underlying obligations and Terex and CMHC default on
their repurchase obligations. Should that occur, the collateral value
securing the obligations should be sufficient to reduce any loss to an
immaterial amount.
2) Third Party Guarantees
Clark has guaranteed approximately $13.5 million of obligations
of third parties relating to the CMHC operation. Approximately $8.2
million of these guarantees relate to national account rental
arrangements with a number of large, creditworthy customers.
Approximately $5.3 million relate to capital loans given by a finance
company to independent CMHC dealers, which are secured by a lien on
substantially all of the dealer's assets. These guaranteed
obligations are expected to liquidate over time. Clark
believes, based on experience, that the national account customers and
dealers, who are the primary obligors, will meet their obligations,
resulting in immaterial losses to Clark regardless of whether
CMHC and Terex are able to perform their obligations.
3) Product Liability Claims
CMHC had approximately $45 million of accruals relating to existing
product liability claims at the time of the sale. Future accidents
are likely to occur, which could result in increased product liability
exposure over time. Clark could incur losses relating to these
product liability claims if CMHC and Terex fail to perform their
obligations. The impact of any such losses would be mitigated by
available tax benefits and by insurance coverage that is available for
catastrophic losses. Cash settlement of product liability claims are
generally made over extended periods of time, thereby significantly
reducing the impact of cash flow in any one year.
Uncertainty exists as to the ultimate effect on Clark if Terex and CMHC
fail to perform these obligations and commitments. While the aggregate
losses associated with these obligations could be material, Clark
does not believe such an event would materially effect Clark's
ability to meet its cash requirements.
In its 1994 annual report on Form 10-K, Terex reported that it earned
income of approximately $.5 million for the year ended December 31, 1994.
Included in this income are pretax gains of approximately $31 million from
the sale of non-strategic assets. Further, at December 31, 1994, Terex had
deficit shareholder investment of approximately $56 million. In their
report on the financial statements of Terex, Terex's independent
accountants, Price Waterhouse LLP, indicate that Terex is required to make
significant debt repayments in 1995, which it is seeking to refinance.
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 June 15, 1995 /S/ T.F. McBride
T.F. McBride, Senior Vice
President & Chief Financial Officer
Principal Financial Officer
Date June 15, 1995 /S/ R.A. Spohn
R.A. Spohn, Controller -
Accounting and Reporting
Principal Accounting Officer
