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, 1997
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 30, 1997 was
108,402,278.
INGERSOLL-RAND COMPANY
FORM 10-Q
INDEX
PART I. FINANCIAL INFORMATION
Condensed Consolidated Balance Sheet at
March 31, 1997 and December 31, 1996
Condensed Consolidated Income Statement for
the three months ended March 31, 1997 and 1996
Condensed Consolidated Statement of Cash Flows
for the three months ended March 31, 1997 and 1996
Notes to Condensed Consolidated Financial Statements
Management's Discussion and Analysis of Financial
Condition and Results of Operations
Exhibit 11 - Computations of Primary and
Fully Diluted Earnings Per Share
SIGNATURES
PART I. FINANCIAL INFORMATION
INGERSOLL-RAND COMPANY
CONDENSED CONSOLIDATED BALANCE SHEET
(in millions)
ASSETS
MARCH 31, DECEMBER 31,
1997 1996
Current assets:
Cash and cash equivalents $ 466.1 $ 184.1
Marketable securities 7.1 8.0
Accounts and notes receivable, net of
allowance for doubtful accounts 1,135.2 1,066.2
Inventories 785.4 775.1
Prepaid expenses and deferred taxes 258.3 236.5
Assets held for sale - 265.7
Total current assets 2,652.1 2,535.6
Investments and advances:
Dresser-Rand Company 140.9 152.6
Partially-owned equity companies 213.8 223.6
354.7 376.2
Property, plant and equipment, at cost 2,083.4 2,103.7
Less - accumulated depreciation 970.4 958.3
Net property, plant and equipment 1,113.0 1,145.4
Intangible assets, net 1,172.6 1,178.0
Deferred income taxes 131.2 162.6
Other assets 236.9 223.8
Total assets $5,660.5 $5,621.6
LIABILITIES AND EQUITY
Current liabilities:
Loans payable $ 172.5 $ 162.3
Accounts payable and accruals 1,161.5 1,127.9
Total current liabilities 1,334.0 1,290.2
Long-term debt 1,164.8 1,163.8
Postemployment liabilities 822.0 814.7
Ingersoll-Dresser Pump Company minority interest 106.8 113.4
Other liabilities 118.5 148.7
Shareowners' equity:
Common stock 221.2 220.6
Other shareowners' equity 1,893.2 1,870.2
Total shareowners' equity 2,114.4 2,090.8
Total liabilities and equity $5,660.5 $5,621.6
See accompanying notes to condensed consolidated financial statements.
INGERSOLL-RAND COMPANY
CONDENSED CONSOLIDATED INCOME STATEMENT
(in millions except per share figures)
Three Months Ended
March 31,
1997 1996
Net sales $1,639.4 $1,604.9
Cost of goods sold 1,228.4 1,208.8
Administrative, selling and service
engineering expenses 244.4 245.5
Operating income 166.6 150.6
Interest expense (27.9) (31.3)
Other income (expense), net (6.0) (1.4)
Dresser-Rand income 1.5 .5
Ingersoll-Dresser Pump minority interest (2.6) ( .1)
Earnings before income taxes 131.6 118.3
Provision for income taxes 53.8 43.8
Net earnings $ 77.8 $ 74.5
Average number of common
shares outstanding 108.2 107.1
Net earnings per common share $ 0.72 $ 0.70
Dividends per common share $ 0.205 $0.185
See accompanying notes to condensed consolidated financial
statements.
INGERSOLL-RAND COMPANY
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(in millions)
Three Months Ended
March 31,
1997 1996
Cash flows from operating activities:
Net earnings $ 77.8 $ 74.5
Adjustments to arrive at net cash
provided by operating activities:
Depreciation and amortization 56.1 52.0
Realignment of operations - 30.4
Gain on sale of business (5.8) (45.0)
Net equity earnings/losses, net of dividends (3.3) 4.8
Minority interests in earnings 2.9 0.5
Other noncash items 11.7 (1.0)
Changes in other assets and
liabilities, net (91.5) (110.8)
Net cash provided by operating activities 47.9 5.4
Cash flows from investing activities:
Capital expenditures (40.1) (47.2)
Proceeds from sales of property, plant
and equipment 10.8 11.0
Acquisitions, net of cash - (95.4)
Proceeds from business dispositions 241.5 122.3
Increase in marketable securities (0.5) (3.1)
Cash advances (to) from equity companies 10.6 (22.2)
Net cash provided by (used in)
investing activities 222.3 (34.6)
Cash flows from financing activities:
Increase (decrease) in short-term borrowings 14.3 (10.3)
Proceeds from long-term debt 1.6 0.1
Payments of long-term debt ( 0.8) (1.0)
Net change in debt 15.1 (11.2)
Dividends paid (22.2) (19.8)
Other 8.9 3.6
Net cash provided by (used in)
financing activities 1.8 (27.4)
Effect of exchange rate changes
on cash and cash equivalents 10.0 4.5
Net increase (decrease) in cash and
cash equivalents 282.0 (52.1)
Cash and cash equivalents -
beginning of period 184.1 137.3
Cash and cash equivalents - end of period $466.1 $ 85.2
See accompanying notes to condensed consolidated financial
statements.
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
(including normal recurring accruals) necessary to present
fairly the consolidated unaudited financial position and
results of operations for the three months ended March 31,
1997 and 1996.
Note 2 - On February 14, 1997, the company sold the Clark-Hurth Group
to Dana Corporation. At December 31, 1996, the net assets
held for sale totalled $265.7 million and were classified as
current assets on the Consolidated Balance Sheet. Clark-
Hurth results have been reported as part of the Engineered
Equipment Segment. This group's 1997 results inclusive of
the sale transaction, produced operating income for the
first quarter of approximately $2.7 million; however on an
after-tax basis, reduced net earnings by approximately
$3.6 million.
Note 3 - On January 31, 1996, the company acquired for $95.4 million
in cash and the assumption of certain liabilities, the
Steelcraft Division of MascoTech, Inc. (Steelcraft).
Steelcraft manufactures a wide range of cold-rolled and
galvanized steel doors for use primarily in nonresidential
construction. On August 27, 1996, the company acquired for
$34.3 million in cash and the assumption of certain
liabilities, substantially all of the assets of Zimmerman
International Corp. (Zimmerman). Zimmerman manufactures
equipment and systems that assist in handling or lifting
tools, components and materials for a variety of industrial
operations. These transactions have been accounted for as
purchases, with the results included since their respective
acquisition dates. Pro forma results assuming the
acquisitions had occurred at the beginning of the year would
not have been materially different than those reported.
Note 4 - In the first quarter of 1996, the company accrued for the
realignment of its foreign operations, principally in
Europe. These accruals were primarily for severance
payments and pension benefits associated with work force
reductions. Also in the first quarter, accruals were
established for the exit or abandonment of selected European
product lines and the closing of a steel foundry. These
accruals totalled approximately $30.4 million and were
charged to operating income.
Note 5 - On March 26, 1996, the company sold most of the assets of
the Pulp Machinery Division for approximately $122.3 million
to Beloit Corporation, a subsidiary of Harnischfeger
Industries, Inc., realizing a pretax gain of $45 million.
In addition in March 1996, the company sold an investment
for a gain of $4.8 million.
Note 6 - In August 1996, the company agreed to sell the remaining
assets of the Process Systems Group to Gencor Industries,
Inc., subject to certain closing conditions. The sale was
completed during the fourth quarter of 1996 at a price of
approximately $58 million in cash for a pretax gain of
approximately $10 million. The Process Systems Group had
been reported as part of the Engineered Equipment Segment.
Note 7 - 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 millions):
March 31, December 31,
1997 1996
Raw materials and supplies $ 145.6 $ 156.2
Work-in-process 262.1 238.7
Finished goods 536.4 538.1
944.1 933.0
Less - LIFO reserve 158.7 157.9
Total $ 785.4 $ 775.1
Work-in-process inventories are stated after deducting
customer progress payments of $25.1 million at March 31,
1997 and $24.9 million at December 31, 1996.
Note 8 - The company's investment in the Dresser-Rand partnership at
March 31, 1997 and December 31, 1996 was $147.3 million and
$149.4 million, respectively. The company owed Dresser-Rand
$6.4 million at March 31, 1997 and Dresser-Rand owed the
company $3.2 million at December 31, 1996. During the first
quarter of 1996, Dresser-Rand distributed $100 million
proportionally to its partners (the company's share was $49
million) which was offset against its advances to the
partners. Net sales of Dresser-Rand were $260.2 million for
the three months ended March 31, 1997 and $245.4 million for
the three months ended March 31, 1996; and gross profit was
$49.8 million and $44.2 million, respectively.
Dresser-Rand's net income for the three months ended March
31, 1997 was $3.1 million, as compared to $1.0 million for
the three months ended March 31, 1996.
The summarized financial position of Dresser-Rand was as
follows (in millions):
March 31, December 31,
1997 1996
Current assets $437.4 $496.5
Property, plant and
equipment, net 255.1 262.5
Other assets and investments 57.1 49.8
749.6 808.8
Deduct:
Current liabilities 271.1 306.4
Noncurrent liabilities 183.2 204.4
454.3 510.8
Net partners' equity
and advances $295.3 $298.0
Note 9 - On April 3, 1997, the company completed the acquisition
of Newman Tonks Group PLC (Newman Tonks), for
approximately $376 million (230 million British pounds).
Newman Tonks, headquartered in Birmingham, England, is a
leading manufacturer, specifier and supplier of branded
architectural hardware products.
Note 10 -Earnings per share is computed based on the average
number of common shares outstanding (108.2 million and
107.1 million for the first three months of 1997 and
1996, respectively). The Financial Accounting Standards
Board issued Statement of Financial Accounting Standards
(SFAS) No. 128 "Earnings per Share" in February 1997,
required to be adopted on December 31, 1997. The impact
of SFAS No. 128 on the calculation of earnings per share
for the three months ended March 31, 1997 and 1996 is not
material.
INGERSOLL-RAND COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The company's results for the first quarter of 1997 reflected an
improvement over last year's first quarter. Overall, first quarter
net earnings totalled $77.8 million, or 72 cents per share, as
compared to last year's first quarter net earnings of $74.5 million,
or 70 cents per share.
The first quarter improvement is even greater after the
elimination of the following noncomparable items from both periods:
(a) the first quarter of 1997 contains operating income of $2.7
million from the Clark-Hurth Group (sold on February 14, 1997)
from the operating results of the group and the sale transaction.
However, due to the differences between the book and tax basis
of the net assets sold, this resulted in a net after-tax
loss of approximately $3.6 million, or three cents per share.
(b) the first quarter of 1996 included:
(i) operating income of approximately $4.0 million and
$1.8 million of net earnings (or two cents per share),
exclusive of acquisition interest expense, generated by
Clark-Hurth;
(ii) operating income of approximately $1.5 million and
$0.9 million of net earnings (or one cent per share) from
the Process Systems Group (which was sold in two separate
transactions during 1996);
(iii)an operating income benefit of approximately $45
million from the sale of the Pulp Machinery Division, which
increased net earnings by approximately $28 million(or 26
cents per share);
(iv) a charge to operating income of approximately $25
million for the realignment of the company's foreign
operations and for the abandonment of selected European
product lines. These actions reduced net earnings by
approximately $15.5 million (or 15 cents per share);
(v) a charge to operating income of $5.4 million by
Ingersoll-Dresser Pump Company (IDP) for the closing of a
steel foundry, which reduced net earnings by approximately
$2 million (or two cents per share); and
(vi) a gain on the sale of an investment which benefitted
other income by $4.8 million and generated an increase in
net earnings of $3.0 million (or three cents per share).
Excluding the noncomparable items from both quarters would
produce an adjusted net earnings for the first three months of 1997
of approximately $81.4 million (or 75 cents per share) versus an
adjusted net earnings amount of approximately $58.3 million (or 55
cents per share) for the first three months of 1996.
A comparison of key income statement amounts between the
quarters, is as follows:
o Net sales for the first three months of 1997 and 1996 totalled
$1.6 billion. However, after excluding noncomparable units from
both periods, adjusted first quarter 1997 sales increased nine
percent over last year's adjusted first quarter total.
o The ratio of cost of goods sold to sales for the first quarter
of 1997 reflected a modest improvement over the reported 1996
first quarter ratio. After excluding the effect of the 1997
first quarter gain from the sale of Clark-Hurth, the adjusted
ratio of cost of goods sold to sales approximates 75.3 percent.
Excluding noncomparable items from 1996's first quarter, the
adjusted ratio of cost of goods sold to sales becomes 76.2
percent. On an adjusted basis the overall ratio reflected a
marked improvement.
o The company did not have any partial liquidations of LIFO (last-
in, first-out) inventories during the first quarters of 1997 or
1996.
o The ratio of administrative, selling and service engineering
expenses to sales was 14.9 percent for the first three months of
1997, as compared to 15.3 percent for the first quarter of 1996.
This improvement reflects the company's effort to aggressively
reduce its costs.
o Operating income for the first quarter of 1997 totalled $166.6
million, as compared to $150.6 million for last year's first
quarter. The ratio of operating income to sales in 1997 was 10.2
percent, as compared to 9.4 percent for the first three months
of the prior year. After excluding the noncomparable items
(previously discussed) from both quarters, the adjusted 1997
first quarter operating income would have been $163.9 million.
This represents a 26-percent increase over last year's first
quarter total after adjustments for Clark-Hurth, the Process
Systems Group and the other noncomparable items previously
identified. This marked improvement is the effect of an
improved economy and the company's aggressive cost-containment
programs.
o Other income (expense), net, aggregated $6.0 million of expense
for the three months ended March 31, 1997, as compared to $1.4
million of expense in the first quarter of 1996. This
unfavorable change is almost entirely attributed to the $4.8
million gain on the sale of an investment during the first
quarter of 1996. Reductions in losses from foreign exchange
activities during the first three months of 1997 versus the
comparable period of 1996 were offset by lower earnings from
partially-owned equity companies and a minor increase in
miscellaneous expenses.
o The company's pretax profits for its 49 percent interest in
Dresser-Rand Company totalled $1.5 million for the first quarter
of 1997, reflecting an improvement over the $0.5 million
reported for the first three months of 1996.
o IDP minority interest charge totalled $2.6 million for the first
three months of the year versus $0.1 million for last year's
first quarter, which was after the effect of last year's first
quarter foundry closing costs of approximately $2.0 million.
o Interest expense for the first three months of the year totalled
$27.9 million, which represents a $3.4 million reduction from
the $31.3 million for the first quarter of last year, reflecting
the lower debt levels in 1997.
o The company's effective tax rate for the first quarter of 1997
was 37 percent on normal operating results. Taxes of $7.2
million relating to the sale of Clark-Hurth resulted in an
effective first-quarter rate of 40.9 percent. The effective tax
rate for both the first quarter and full year of 1996 was 37
percent. The projected effective tax rate for the remaining
three quarters of 1997 is estimated at 38 percent, including the
effect which is expected to result from the company's second
quarter acquisition of Newman Tonks.
o The consolidated results for the first quarter of the year
benefited from the combination of business improvements in a
number of the company's domestic markets (including automotive,
construction and general industrial) and a continued emphasis on
the company's productivity-improvement programs. Incoming orders
for the first quarter of the year totalled $1.8 billion which
was comparable to last year's first quarter total. Bookings
excluding divested businesses, represented an overall increase
of slightly over five percent. Bookings in the United States
were up over six percent, and international orders were up over
three percent from last year, despite an unfavorable currency
impact of approximately four percent. The company's backlog of
orders at March 31, 1997, believed by it to be firm, was $1.5
billion, which equalled the backlog at December 31, 1996.
However, the year-end backlog figure included orders for Clark-
Hurth products, which are excluded from the March 31, 1997
balance. The company estimates that approximately 90 percent of
the backlog will be shipped during the next twelve months.
Liquidity and Capital Resources
In the first three months of the year, the company completed the
previously announced sale of Clark-Hurth Group to Dana Corporation.
In addition, the company's projected financial position will also
change during the second quarter of the year due to the April 1997
acquisition of Newman Tonks. During the first quarter of 1997, the
company's working capital increased by $72.7 million to $1.3 billion
at March 31, 1997, from the December 31, 1996 balance of $1.2
billion. The current ratio at March 31, 1997 was 2.0 to one, which
equaled the year-end ratio.
The company's cash and cash equivalents increased by $282.0
million during the first three months of 1997 to $466.1 million from
$184.1 million at December 31, 1996. The increase in cash and cash
equivalents is primarily related to the proceeds from the sale of the
Clark-Hurth Group on February 14, 1997. A significant portion of
these funds were used to finance the company's second quarter
acquisition of Newman Tonks.
In evaluating the net change in cash and cash equivalents, cash
flows from operating, investing and financing activities, and the
effect of exchange rate movements must be considered. Cash flows
from operating activities provided $47.9 million, investing
activities provided $222.3 million and financing activities provided
$1.8 million. Exchange rate changes during the first three months of
1997 increased cash and cash equivalents by $10.0 million.
Receivables totalled $1.1 billion at March 31, 1997, which
represents a $69.0 million increase over the amount reported at
December 31, 1996. The increase was attributed to strong first
quarter sales which were partially offset by the effect of foreign
currency translation.
Inventories totalled $785.4 million at March 31, 1997 which
represents a minor increase over the year end balance of $775.1
million. The net increase is the result of building inventory to
fulfill orders in the second and third quarters offset by exchange
rates applicable to international inventories.
Intangible assets decreased by approximately $5.4 million during
the first three months of 1997. Intangibles were impacted mainly by
amortization.
Long term debt, including current maturities, at March 31, 1997,
totalled $1.3 billion. The company's debt-to-total capital ratio was
39 percent at March 31, 1997, which is the same as at December 31,
1996.
During the first three months of 1997, foreign currency
translation adjustments resulted in a net decrease of approximately
$49.4 million in shareowners' equity, caused by the strengthening of
the U.S. dollar against other currencies. Currency changes in
Belgium, France, Germany, Italy, Japan, Netherlands, Spain,
Switzerland and United Kingdom, accounted for almost 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
The company has been and continues to be dedicated to an
environmental program to reduce the utilization and generation of
hazardous materials during the manufacturing process and to remediate
identified environmental concerns. As to the latter, the company
currently is engaged in site investigations and remedial activities
to address environmental cleanup from past operations at current and
former manufacturing facilities, including the facilities added
through acquisitions.
The company is a party to environmental lawsuits and claims, and
has received notices of potential violations of environmental laws
and regulations from the Environmental Protection Agency and similar
state authorities. It is identified as a potentially responsible
party (PRP) for cleanup costs associated with off-site waste disposal
at approximately 39 federal Superfund and state remediations sites,
excluding sites as to which the company's records disclose no
involvement or as to which the company's liability has been fully
determined. For all sites there are other PRPs and in most
instances, the company's site involvement is minimal. In estimating
its liability, the company has not assumed it will bear the entire
cost of remediation of any site to the exclusion of other PRPs who
may be jointly and severally liable. The ability of other PRPs to
participate has been taken into account, based generally on the
parties' financial condition and probable contribution on a per site
basis. Additional lawsuits and claims involving environmental
matters are likely to arise from time to time in the future.
Although uncertainties regarding environmental technology, state
and federal laws and regulations and individual site information make
estimating the liability difficult, management believes that the
total liability for the cost of remediation and environmental
lawsuits and claims will not have a material effect on the financial
condition, results of operations, liquidity or cash flows of the
company for any year. 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 August 27, 1996, the company acquired the business and
substantially all of the assets of Zimmerman International Corp.,
which manufactures equipment and systems that assist in handling or
lifting tools, components and materials for a variety of operations.
The acquisition was paid for in cash and the assumption of certain
liabilities. Zimmerman's business is part of Tool & Hoist, a
division of the Production Equipment Group.
On January 31, 1996, the company acquired the Steelcraft
Division of MascoTech, Inc., which manufactures a wide range of cold
rolled and galvanized steel doors for use primarily in nonresidential
construction. The acquisition was paid for in cash and the
assumption of certain liabilities. Steelcraft is a division of the
Architectural Hardware Group.
Dispositions
On February 14, 1997, the company sold the Clark-Hurth Group to
Dana Corporation. Clark-Hurth had been reported as part of the
Engineered Equipment Segment. This group's 1997 results inclusive
of the sale transaction produced operating income for the first
quarter of $2.7 million; however, on an after-tax basis, this
reduced net earnings by approximately $3.6 million.
Subsequent Event
On May 7, 1997, the company announced that its board of directors
has authorized the repurchase of up to 10 million shares of the company's
common stock. Based on market conditions, the share repurchases will
be made from time to time in the open market and in privately
negotiated transactions. The repurchased shares will be available for
general corporate purposes.
Review of Business Segments
The Standard Machinery Segment reported sales of $737.6 million
for the first quarter of 1997, an increase of 7.1 percent over 1996's
first quarter level of $688.5 million. Operating income for the
quarter was $83.1 million as compared to last year's first quarter
operating income of $52.5 million. However, the first three months
of 1996 included approximately $16 million of charges to operating
income which related to the company's actions in 1996 to realign its
foreign operations and to eliminate selected European product lines.
After consideration of these items, operating income in the current
quarter reflects a 21-percent improvement over an adjusted first
quarter 1996 performance. All groups within this segment except for
the Construction and Mining Group, reported sales, operating income
and operating income margin improvements over adjusted first quarter
1996 figures.
Engineered Equipment Segment's sales totalled $235.2 million for
the first quarter of the year which is 30.9 percent below the $340.2
million for last year's first quarter. Operating income for the first
quarter of the year totalled $10.0 million versus $51.5 million for
last year's first quarter. Clark-Hurth reported $41.9 million of
sales for the first six weeks of the year which generated an
operating income for the period of approximately $2.7 million. In
last year's first quarter, Clark-Hurth generated $4.0 million of
operating income on sales of $92.8 million for the full quarter.
In addition, the first quarter of 1996 included a net gain of
approximately $45 million from the sale of the company's Pulp
Machinery Division.
IDP generated approximately $7.3 million of operating income
during the first quarter of 1997 which reflected a slight improvement
over last year's first quarter after adding back the 1996
noncomparable charge of approximately $5.4 million for the closure of
a steel foundry.
The Bearings, Locks and Tools Segment reported first quarter
sales of $666.6 million, 15.7 percent higher than last year's first
quarter level of $576.2 million. Operating income for the first
quarter of the year totalled $85.2 million. This reflects a
significant improvement over last year's adjusted first quarter
operating income of $66.4 million, which excludes approximately $9
million for the segment's share of the 1996 realignment charge for
foreign operations.
The Bearings and Components Group's sales for the first quarter
of 1997 were more than 10 percent higher than 1996's first quarter.
The group's operating income and operating income margins improved
over last year's first quarter results.
Architectural Hardware Group's sales for the first three months
of the year increased by more than 10 percent over 1996's first
quarter with approximately one-half of the increase being attributed
to the 1997 full quarter effect of the January 31, 1996 acquisition
of Steelcraft. The group's operating income and operating income
margins also improved over 1996's first quarter figures.
The Production Equipment Group's sales for the first quarter of
1997 were over 25 percent above the 1996 level. Operating income and
operating income margins also improved over the 1996 level, before
considering the effect of last year's first quarter realignment
charges.
PART I - EXHIBIT 11
INGERSOLL-RAND COMPANY
COMPUTATIONS OF PRIMARY AND FULLY DILUTED EARNINGS PER SHARE
(in millions except per share figures)
Three Months Ended
March 31,
1997 1996
PRIMARY EARNINGS PER SHARE (NOTE 1):
Net earnings applicable to common stock $ 77.8 $ 74.5
Average number of common shares outstanding 108.2 107.1
PRIMARY EARNINGS PER SHARE $0.72 $0.70
FULLY DILUTED EARNINGS PER SHARE (NOTE 2):(*)
Net earnings for the period $ 77.8 $ 74.5
Adjusted shares:
Average number of common shares outstanding 108.2 107.1
Number of common shares issuable
assuming exercise under incentive
stock plans 1.1 .5
Average number of outstanding shares,
as adjusted for fully diluted earnings
per share calculations 109.3 107.6
FULLY DILUTED EARNINGS PER SHARE $0.71 $0.69
(*) 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.
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.
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 14, 1997 /S/ F. B. O'Brien
F. B. O'Brien, Senior Vice
President & Chief Financial Officer
Principal Financial Officer
Date May 14, 1997 /S/ G. V. Geraghty
G. V. Geraghty, Vice President
and Comptroller
Principal Accounting Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE MARCH
31, 1997 FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 466
<SECURITIES> 7
<RECEIVABLES> 1,168
<ALLOWANCES> 33
<INVENTORY> 785
<CURRENT-ASSETS> 2,652
<PP&E> 2,083
<DEPRECIATION> 970
<TOTAL-ASSETS> 5,661
<CURRENT-LIABILITIES> 1,334
<BONDS> 1,165
0
0
<COMMON> 221
<OTHER-SE> 1,893
<TOTAL-LIABILITY-AND-EQUITY> 5,661
<SALES> 1,639
<TOTAL-REVENUES> 1,639
<CGS> 1,228
<TOTAL-COSTS> 1,228
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 28
<INCOME-PRETAX> 132
<INCOME-TAX> 54
<INCOME-CONTINUING> 78
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 78
<EPS-PRIMARY> .72
<EPS-DILUTED> .71
</TABLE>
