75-2993910
|
|
(I.R.S.
Employer
Identification No.) |
PART
I
|
FINANCIAL
INFORMATION
|
|
|
Item
1 -
|
Financial Statements | ||
|
Condensed
Consolidated Income Statement for the three and six months ended
June 30,
2007 and 2006
|
1
|
|
|
Condensed
Consolidated Balance Sheet at June 30, 2007 and December 31,
2006
|
2
|
|
Condensed
Consolidated Statement of Cash Flows for the three and six months
ended
June 30, 2007 and 2006
|
3
|
||
Notes
to Condensed Consolidated Financial Statements
|
4
|
||
Item 2 - |
Management's
Discussion and Analysis of Financial Condition and Results of
Operations
|
24
|
|
Item 3 - |
Quantitative
and Qualitative Disclosures about Market Risk
|
39
|
|
Item
4 -
|
Controls and Procedures |
39
|
|
PART
II
|
OTHER
INFORMATION
|
40
|
|
Item
1 -
|
Legal Proceedings |
40
|
|
Item
1A -
|
Risk Factors |
40
|
|
Item
2 -
|
Unregistered Sales of Equity Securities and Use of Proceeds |
41
|
|
Item
6 -
|
Exhibits |
42
|
|
SIGNATURES
|
43
|
||
CERTIFICATIONS
|
Three
months ended
June 30, |
Six
months ended
June 30, |
||||||||||||
In
millions, except per share amounts
|
2007
|
2006
|
2007
|
2006
|
|||||||||
Net
revenues
|
$
|
2,224.6
|
$
|
2,048.0
|
$
|
4,200.8
|
$
|
3,852.7
|
|||||
Cost
of goods sold
|
1,589.7
|
1,463.1
|
3,005.6
|
2,763.8
|
|||||||||
Selling
and administrative expenses
|
360.8
|
332.4
|
712.5
|
638.5
|
|||||||||
Operating
income
|
274.1
|
252.5
|
482.7
|
450.4
|
|||||||||
Interest
expense
|
(30.8
|
)
|
(30.8
|
)
|
(66.5
|
)
|
(66.0
|
)
|
|||||
Other
income (expense), net
|
8.6
|
(6.2
|
)
|
8.5
|
0.1
|
||||||||
Earnings
before income taxes
|
251.9
|
215.5
|
424.7
|
384.5
|
|||||||||
Provision
for income taxes
|
43.9
|
18.4
|
60.1
|
29.9
|
|||||||||
Earnings
from continuing operations
|
208.0
|
197.1
|
364.6
|
354.6
|
|||||||||
Discontinued
operations, net of tax
|
756.1
|
116.4
|
817.0
|
212.1
|
|||||||||
Net
earnings
|
$
|
964.1
|
$
|
313.5
|
$
|
1,181.6
|
$
|
566.7
|
|||||
Basic
earnings per common share:
|
|||||||||||||
Earnings
from continuing operations
|
$
|
0.69
|
$
|
0.60
|
$
|
1.20
|
$
|
1.08
|
|||||
Discontinued
operations, net of tax
|
2.52
|
0.36
|
2.70
|
0.65
|
|||||||||
Net
earnings
|
$
|
3.21
|
$
|
0.96
|
$
|
3.90
|
$
|
1.73
|
|||||
Diluted
earnings per common share:
|
|||||||||||||
Earnings
from continuing operations
|
$
|
0.68
|
$
|
0.60
|
$
|
1.19
|
$
|
1.07
|
|||||
Discontinued
operations, net of tax
|
2.49
|
0.35
|
2.66
|
0.64
|
|||||||||
Net
earnings
|
$
|
3.17
|
$
|
0.95
|
$
|
3.85
|
$
|
1.71
|
|||||
Dividends
per common share
|
$
|
0.18
|
$
|
0.16
|
$
|
0.36
|
$
|
0.32
|
June
30,
|
December
31,
|
||||||
In
millions
|
2007
|
2006
|
|||||
ASSETS
|
|||||||
Current
assets:
|
|||||||
Cash
and cash equivalents
|
$
|
460.2
|
$
|
273.1
|
|||
Marketable
securities
|
0.7
|
0.7
|
|||||
Accounts
and notes receivable, less allowance of $10.6 in 2007 and $8.3
in
2006
|
1,644.0
|
1,481.7
|
|||||
Inventories
|
919.3
|
833.1
|
|||||
Prepaid
expenses and deferred income taxes
|
509.6
|
355.5
|
|||||
Assets
held for sale
|
2,130.6
|
2,589.9
|
|||||
Total
current assets
|
5,664.4
|
5,534.0
|
|||||
Property,
plant and equipment, net
|
873.3
|
866.7
|
|||||
Goodwill
|
3,877.5
|
3,837.2
|
|||||
Intangible
assets, net
|
707.0
|
712.8
|
|||||
Other
assets
|
1,284.1
|
1,195.2
|
|||||
Total
assets
|
$
|
12,406.3
|
$
|
12,145.9
|
|||
LIABILITIES
AND EQUITY
|
|||||||
Current
liabilities:
|
|||||||
Accounts
payable
|
$
|
685.1
|
$
|
757.6
|
|||
Accrued
compensation and benefits
|
295.3
|
305.0
|
|||||
Accrued
expenses and other current liabilities
|
672.0
|
697.8
|
|||||
Loans
payable and current maturities of long-term debt
|
686.7
|
1,075.8
|
|||||
Liabilities
held for sale
|
1,239.2
|
1,288.5
|
|||||
Total
current liabilities
|
3,578.3
|
4,124.7
|
|||||
|
|||||||
Long-term
debt
|
894.5
|
895.7
|
|||||
Postemployment
and other benefit liabilities
|
985.0
|
1,044.7
|
|||||
Other
noncurrent liabilities
|
1,116.1
|
676.0
|
|||||
Total
liabilities
|
6,573.9
|
6,741.1
|
|||||
Shareholders'
equity:
|
|||||||
Class
A common shares
|
293.4
|
306.8
|
|||||
Retained
earnings
|
5,692.7
|
5,456.1
|
|||||
Accumulated
other comprehensive income (loss)
|
(153.7
|
)
|
(358.1
|
)
|
|||
Total
shareholders' equity
|
5,832.4
|
5,404.8
|
|||||
Total
liabilities and shareholders' equity
|
$
|
12,406.3
|
$
|
12,145.9
|
Six
months ended June 30,
|
|||||||
In
millions
|
2007
|
2006
|
|||||
Cash
flows from operating activities:
|
|||||||
Net
earnings
|
$
|
1,181.6
|
$
|
566.7
|
|||
Income
from discontinued operations, net of tax
|
(817.0
|
)
|
(212.1
|
)
|
|||
Adjustments
to arrive at net cash provided by (used in) operating
activities:
|
|||||||
Depreciation
and amortization
|
70.6
|
75.5
|
|||||
Stock
settled share-based compensation
|
17.8
|
11.5
|
|||||
Changes
in other assets and liabilities, net
|
(375.0
|
)
|
(124.7
|
)
|
|||
Other,
net
|
21.1
|
(89.9
|
)
|
||||
Net
cash provided by (used in) continuing operating activities
|
99.1
|
227.0
|
|||||
Net
cash provided by (used in) discontinued operating
activities
|
99.1
|
3.6
|
|||||
Cash
flows from investing activities:
|
|||||||
Capital
expenditures
|
(57.8
|
)
|
(75.8
|
)
|
|||
Proceeds
from sale of property, plant and equipment
|
9.0
|
1.1
|
|||||
Acquisitions,
net of cash acquired
|
(3.7
|
)
|
(28.5
|
)
|
|||
Proceeds
from sales and maturities of marketable securities
|
0.1
|
155.9
|
|||||
Proceeds
from business disposition, net of cash of $23.4
|
1,291.7
|
-
|
|||||
Other,
net
|
3.4
|
(1.9
|
)
|
||||
Net
cash provided by (used in) continuing investing activities
|
1,242.7
|
50.8
|
|||||
Net
cash provided by (used in) discontinued investing
activities
|
(34.2
|
)
|
(24.5
|
)
|
|||
Cash
flows from financing activities:
|
|||||||
Increase
(decrease) in short-term borrowings
|
(383.2
|
)
|
20.0
|
||||
Proceeds
from long-term debt
|
1.6
|
1.9
|
|||||
Payments
of long-term debt
|
(12.4
|
)
|
(508.2
|
)
|
|||
Net
change in debt
|
(394.0
|
)
|
(486.3
|
)
|
|||
Dividends
paid
|
(109.6
|
)
|
(105.0
|
)
|
|||
Proceeds
from exercise of stock options
|
121.4
|
81.4
|
|||||
Repurchase
of common shares by subsidiary
|
(846.5
|
)
|
(383.7
|
)
|
|||
Net
cash provided by (used in) continuing financing activities
|
(1,228.7
|
)
|
(893.6
|
)
|
|||
Net
cash provided by (used in) discontinued financing
activities
|
-
|
-
|
|||||
Effect
of exchange rate changes on cash and cash equivalents
|
9.1
|
17.9
|
|||||
Net
increase (decrease) in cash and cash equivalents
|
187.1
|
(618.8
|
)
|
||||
Cash
and cash equivalents - beginning of period
|
273.1
|
828.9
|
|||||
Cash
and cash equivalents - end of period
|
$
|
460.2
|
$
|
210.1
|
Three months ended
June 30,
|
Six months ended
June 30,
|
||||||||||||
In
millions
|
2007
|
2006
|
2007
|
2006
|
|||||||||
Road
Development, net of tax
|
$
|
678.2
|
$
|
27.7
|
$
|
694.1
|
$
|
45.1
|
|||||
Compact
Equipment, net of tax
|
81.7
|
97.3
|
142.3
|
184.8
|
|||||||||
Other
discontinued operations, net of tax
|
(3.8
|
)
|
(8.6
|
)
|
(19.4
|
)
|
(17.8
|
)
|
|||||
Total
discontinued operations, net of tax
|
$
|
756.1
|
$
|
116.4
|
$
|
817.0
|
$
|
212.1
|
Three months ended
June 30,
|
Six months ended
June 30,
|
||||||||||||
In
millions
|
2007
|
2006
|
2007
|
2006
|
|||||||||
Net
revenues
|
$
|
759.8
|
$
|
765.8
|
$
|
1,452.4
|
$
|
1,484.9
|
|||||
After-tax
earnings
|
81.7
|
97.3
|
142.3
|
184.8
|
In
millions
|
June 30,
2007
|
December 31,
2006
|
|||||
Assets
|
|
|
|||||
Current
assets
|
$
|
924.0
|
$
|
834.2
|
|||
Property,
plant and equipment, net
|
293.6
|
264.6
|
|||||
Goodwill
and other intangible assets, net
|
694.8
|
691.3
|
|||||
Other
assets and deferred income taxes
|
218.2
|
197.9
|
|||||
Assets
held for sale
|
$
|
2,130.6
|
$
|
1,988.0
|
|||
Liabilities
|
|||||||
Current
liabilities
|
$
|
762.6
|
$
|
658.5
|
|||
Noncurrent
liabilities
|
476.6
|
442.7
|
|||||
Liabilities
held for sale
|
$
|
1,239.2
|
$
|
1,101.2
|
Three months ended
June 30,
|
Six months ended
June 30,
|
||||||||||||
In
millions
|
2007
|
2006
|
2007
|
2006
|
|||||||||
Net
revenues
|
$
|
77.2
|
$
|
228.1
|
$
|
244.4
|
$
|
415.3
|
|||||
After-tax
earnings from operations
|
$
|
2.5
|
$
|
27.7
|
$
|
18.4
|
$
|
45.1
|
|||||
Gain
on sale, net of tax of $128.6
|
675.7
|
-
|
675.7
|
-
|
|||||||||
Total
discontinued operations
|
$
|
678.2
|
$
|
27.7
|
$
|
694.1
|
$
|
45.1
|
December
31,
|
||||
In
millions
|
2006
|
|||
Assets
|
|
|||
Current
assets
|
$
|
317.6
|
||
Property,
plant and equipment, net
|
145.0
|
|||
Goodwill
and other intangible assets, net
|
99.8
|
|||
Other
assets and deferred income taxes
|
39.5
|
|||
Assets
held for sale
|
$
|
601.9
|
||
Liabilities
|
||||
Current
liabilities
|
$
|
118.9
|
||
Noncurrent
liabilities
|
68.4
|
|||
Liabilities
held for sale
|
$
|
187.3
|
Three months ended
June 30,
|
Six months ended
June 30,
|
||||||||||||
In
millions
|
2007
|
2006
|
2007
|
2006
|
|||||||||
Retained
costs, net of tax
|
$
|
(3.9
|
)
|
$
|
(8.8
|
)
|
$
|
(19.6
|
)
|
$
|
(18.2
|
)
|
|
Net
gain on disposals, net of tax
|
0.1
|
0.2
|
0.2
|
0.4
|
|||||||||
Total
other discontinued operations, net of tax
|
$
|
(3.8
|
)
|
$
|
(8.6
|
)
|
$
|
(19.4
|
)
|
$
|
(17.8
|
)
|
June
30,
|
December
31,
|
||||||
In
millions
|
2007
|
2006
|
|||||
Raw
materials and supplies
|
$
|
379.8
|
$
|
353.8
|
|||
Work-in-process
|
191.7
|
186.3
|
|||||
Finished
goods
|
445.5
|
401.3
|
|||||
1,017.0
|
941.4
|
||||||
Less
- LIFO reserve
|
97.7
|
108.3
|
|||||
Total
|
$
|
919.3
|
$
|
833.1
|
In
millions
|
Climate
Control
Technologies
|
Industrial
Technologies
|
Security
Technologies
|
Total
|
|||||||||
Balance
at December 31, 2006
|
$
|
2,545.1
|
$
|
341.2
|
$
|
950.9
|
$
|
3,837.2
|
|||||
Acquisitions
and adjustments*
|
-
|
4.8
|
3.3
|
8.1
|
|||||||||
Translation
|
14.0
|
2.3
|
15.9
|
32.2
|
|||||||||
Balance
at June 30, 2007
|
$
|
2,559.1
|
$
|
348.3
|
$
|
970.1
|
$
|
3,877.5
|
June
30, 2007
|
December
31, 2006
|
||||||||||||
In
millions
|
Gross
amount
|
Accumulated
amortization
|
Gross
amount
|
Accumulated
amortization
|
|||||||||
Customer
relationships
|
$
|
492.3
|
$
|
79.0
|
$
|
489.6
|
$
|
71.8
|
|||||
Trademarks
|
105.3
|
12.2
|
102.6
|
9.8
|
|||||||||
Patents
|
31.9
|
19.4
|
30.5
|
18.2
|
|||||||||
Other
|
47.9
|
25.4
|
48.9
|
23.7
|
|||||||||
Total
amortizable intangible assets
|
677.4
|
136.0
|
671.6
|
123.5
|
|||||||||
Indefinite-lived
intangible assets
|
165.6
|
-
|
164.7
|
-
|
|||||||||
Total
|
$
|
843.0
|
$
|
136.0
|
$
|
836.3
|
$
|
123.5
|
Three months ended
June 30,
|
Six months ended
June 30
|
||||||||||||
In
millions
|
2007
|
2006
|
2007
|
2006
|
|||||||||
Service
cost
|
$
|
3.0
|
$
|
2.7
|
$
|
6.2
|
$
|
5.4
|
|||||
Interest
cost
|
14.0
|
13.6
|
28.1
|
27.2
|
|||||||||
Net
amortization of prior service gains
|
(1.0
|
)
|
(1.0
|
)
|
(2.1
|
)
|
(2.0
|
)
|
|||||
Net
amortization of net actuarial losses
|
4.6
|
4.6
|
9.5
|
9.2
|
|||||||||
Net
periodic postretirement benefits cost
|
20.6
|
19.9
|
41.7
|
39.8
|
|||||||||
Curtailment
and settlement gains
|
(23.4
|
)
|
-
|
(23.4
|
)
|
-
|
|||||||
Net
periodic postretirement benefit (gains) costs after curtailment and
settlement gains
|
$
|
(2.8
|
)
|
$
|
19.9
|
$
|
18.3
|
$
|
39.8
|
||||
Amounts
recorded in continuing operations
|
$
|
6.8
|
$
|
6.8
|
$
|
13.6
|
$
|
13.5
|
|||||
Amounts
recorded in discontinued operations
|
(9.6
|
)
|
13.1
|
4.7
|
26.3
|
||||||||
Total
|
$
|
(2.8
|
)
|
$
|
19.9
|
$
|
18.3
|
$
|
39.8
|
Three months ended
June 30,
|
Six months ended
June 30,
|
||||||||||||
In
millions
|
2007
|
|
2006
|
2007
|
2006
|
||||||||
Service
cost
|
$
|
14.3
|
$
|
14.4
|
$
|
29.2
|
$
|
28.8
|
|||||
Interest
cost
|
41.1
|
40.3
|
82.6
|
80.2
|
|||||||||
Expected
return on plan assets
|
(57.7
|
)
|
(54.5
|
)
|
(115.9
|
)
|
(108.6
|
)
|
|||||
Net
amortization of:
|
|||||||||||||
Prior
service costs
|
2.3
|
2.1
|
4.7
|
4.2
|
|||||||||
Transition
amount
|
0.2
|
0.2
|
0.4
|
0.4
|
|||||||||
Plan
net acturial losses
|
3.3
|
6.7
|
7.9
|
13.3
|
|||||||||
Net
periodic pension cost
|
3.5
|
9.2
|
8.9
|
18.3
|
|||||||||
Curtailment
and settlement losses
|
24.3
|
-
|
24.3
|
-
|
|||||||||
Net
periodic pension costs after curtailment and settlement
losses
|
$
|
27.8
|
$
|
9.2
|
$
|
33.2
|
$
|
18.3
|
|||||
Amounts
recorded in continuing operations
|
$
|
6.7
|
$
|
10.2
|
$
|
15.0
|
$
|
20.1
|
|||||
Amounts
recorded in discontinued operations
|
21.1
|
(1.0
|
)
|
18.2
|
(1.8
|
)
|
|||||||
Total
|
$
|
27.8
|
$
|
9.2
|
$
|
33.2
|
$
|
18.3
|
2007
|
2006
|
||||||
Dividend
yield
|
1.75
|
%
|
1.49
|
%
|
|||
Volatility
|
26.10
|
%
|
27.70
|
%
|
|||
Risk-free
rate of return
|
4.71
|
%
|
4.47
|
%
|
|||
Expected
life
|
4.70
years
|
4.42
years
|
Shares
subject
to option
|
Weighted-
average
exercise price
|
Aggregate
intrinsic
value (millions)
|
Weighted-
average
remaining life
|
||||||||||
December
31, 2006
|
19,164,942
|
$
|
31.53
|
||||||||||
Granted
|
3,367,725
|
43.28
|
|||||||||||
Exercised
|
(4,126,249
|
)
|
29.42
|
||||||||||
Cancelled
|
(312,017
|
)
|
40.78
|
||||||||||
Outstanding
June 30, 2007
|
18,094,401
|
$
|
34.04
|
$
|
376.4
|
6.6
|
|||||||
Exercisable
June 30, 2007
|
11,532,138
|
$
|
29.99
|
$
|
286.4
|
5.4
|
Shares
subject
to option
|
Weighted-
average
exercise price
|
Aggregate
intrinsic
value (millions)
|
Weighted-
average
remaining life
|
||||||||||
December
31, 2006
|
1,693,754
|
$
|
33.11
|
||||||||||
Granted*
|
-
|
-
|
|||||||||||
Exercised
|
(354,621
|
)
|
30.69
|
||||||||||
Cancelled
|
(35,347
|
)
|
34.30
|
||||||||||
Outstanding
June 30, 2007
|
1,303,786
|
$
|
33.71
|
$
|
27.5
|
6.5
|
|||||||
Exercisable
June 30, 2007
|
904,924
|
$
|
31.34
|
$
|
21.3
|
5.8
|
Three months ended
June 30,
|
Six months ended
June 30,
|
||||||||||||
In
millions
|
2007
|
2006
|
2007
|
2006
|
|||||||||
Stock
options
|
$
|
4.3
|
$
|
3.4
|
$
|
15.7
|
$
|
11.6
|
|||||
SARs
|
0.1
|
2.7
|
0.5
|
6.0
|
|||||||||
Performance
shares
|
1.6
|
4.6
|
5.8
|
9.1
|
|||||||||
Deferred
compensation
|
1.5
|
2.7
|
2.5
|
5.7
|
|||||||||
Other
|
-
|
0.4
|
0.2
|
0.8
|
|||||||||
Pre-tax
expense
|
7.5
|
13.8
|
24.7
|
33.2
|
|||||||||
Tax
benefit
|
2.9
|
5.3
|
9.4
|
12.7
|
|||||||||
After
tax expense
|
$
|
4.6
|
$
|
8.5
|
$
|
15.3
|
$
|
20.5
|
Three months ended
June 30,
|
Six
months ended
June 30,
|
||||||||||||
In
millions
|
2007
|
2006
|
2007
|
2006
|
|||||||||
Net
earnings
|
$
|
964.1
|
$
|
313.5
|
$
|
1,181.6
|
$
|
566.7
|
|||||
Other
comprehensive income (loss):
|
|||||||||||||
Foreign
currency translation adjustment
|
32.2
|
82.5
|
67.8
|
135.7
|
|||||||||
Change
in fair value of derivatives qualifying as cash flow hedges,
net of tax
|
(5.8
|
)
|
(3.1
|
)
|
(5.9
|
)
|
(7.2
|
)
|
|||||
Unrealized
gain (loss) on marketable securities, net of
tax
|
0.8
|
0.4
|
0.3
|
0.3
|
|||||||||
Pension
and other postretirement benefits liability adjustment, net of
tax
|
135.3
|
-
|
142.2
|
-
|
|||||||||
Comprehensive
income
|
$
|
1,126.6
|
$
|
393.3
|
$
|
1,386.0
|
$
|
695.5
|
Three months ended
June 30,
|
Six months ended
June 30,
|
||||||||||||
In
millions
|
2007
|
2006
|
2007
|
2006
|
|||||||||
Weighted-average
number of basic shares
|
299.9
|
327.1
|
303.1
|
327.9
|
|||||||||
Shares
issuable under incentive stock plans
|
4.4
|
3.7
|
3.9
|
3.6
|
|||||||||
Weighted-average
number of diluted shares
|
304.3
|
330.8
|
307.0
|
331.5
|
|||||||||
Anti-dilutive
shares
|
2.6
|
2.3
|
2.0
|
-
|
In
millions
|
2007
|
2006
|
|||||
Balance
at beginning of period
|
$
|
137.1
|
$
|
135.2
|
|||
Reductions
for payments
|
(35.6
|
)
|
(33.3
|
)
|
|||
Accruals
for warranties issued during the period
|
42.8
|
35.7
|
|||||
Changes
to accruals related to preexisting warranties
|
(1.0
|
)
|
(0.2
|
)
|
|||
Acquisitions
|
0.1
|
0.1
|
|||||
Translation
|
1.5
|
2.4
|
|||||
Balance
at end of period
|
$
|
144.9
|
$
|
139.9
|
Three months ended
June 30,
|
Six months ended
June 30,
|
||||||||||||
In
millions
|
2007
|
2006
|
2007
|
2006
|
|||||||||
Net
revenues
|
|
|
|||||||||||
Climate
Control Technologies
|
$
|
846.0
|
$
|
798.0
|
$
|
1,574.9
|
$
|
1,481.6
|
|||||
Industrial
Technologies
|
749.9
|
667.1
|
1,417.6
|
1,263.4
|
|||||||||
Security
Technologies
|
628.7
|
582.9
|
1,208.3
|
1,107.7
|
|||||||||
Total
|
$
|
2,224.6
|
$
|
2,048.0
|
$
|
4,200.8
|
$
|
3,852.7
|
|||||
Operating
income
|
|||||||||||||
Climate
Control Technologies
|
$
|
99.8
|
$
|
88.4
|
$
|
169.2
|
$
|
157.6
|
|||||
Industrial
Technologies
|
109.3
|
95.5
|
200.9
|
177.2
|
|||||||||
Security
Technologies
|
108.3
|
98.0
|
199.0
|
177.6
|
|||||||||
Unallocated
corporate expense
|
(43.3
|
)
|
(29.4
|
)
|
(86.4
|
)
|
(62.0
|
)
|
|||||
Total
|
$
|
274.1
|
$
|
252.5
|
$
|
482.7
|
$
|
450.4
|
June
30,
|
December
31,
|
||||||
In
millions
|
2007
|
2006
|
|||||
United
States
|
$
|
535.9
|
$
|
502.8
|
|||
Non-U.S.
|
878.8
|
911.9
|
|||||
Total
|
$
|
1,414.7
|
$
|
1,414.7
|
In
millions
|
IR
Limited
|
IR
New
Jersey
|
Other
Subsidiaries
|
Consolidating
Adjustments
|
IR
Limited Consolidated
|
|||||||||||
Net
revenues
|
$
|
-
|
$
|
236.1
|
$
|
1,988.5
|
$
|
-
|
$
|
2,224.6
|
||||||
Cost
of goods sold
|
-
|
162.2
|
1,427.5
|
-
|
1,589.7
|
|||||||||||
Selling
and administrative expenses
|
4.5
|
77.9
|
278.4
|
-
|
360.8
|
|||||||||||
Operating
income
|
(4.5
|
)
|
(4.0
|
)
|
282.6
|
-
|
274.1
|
|||||||||
Equity
earnings in affiliates (net of tax)
|
993.2
|
107.3
|
347.3
|
(1,447.8
|
)
|
-
|
||||||||||
Interest
expense
|
(6.6
|
)
|
(17.8
|
)
|
(6.4
|
)
|
-
|
(30.8
|
)
|
|||||||
Intercompany
interest and fees
|
(15.2
|
)
|
(117.5
|
)
|
132.7
|
-
|
-
|
|||||||||
Other
income (expense), net
|
(2.8
|
)
|
23.4
|
(12.0
|
)
|
-
|
8.6
|
|||||||||
Earnings
(loss) before income taxes
|
964.1
|
(8.6
|
)
|
744.2
|
(1,447.8
|
)
|
251.9
|
|||||||||
(Benefit)
provision for income taxes
|
-
|
(24.4
|
)
|
68.3
|
-
|
43.9
|
||||||||||
Earnings
(loss) from continuing operations
|
964.1
|
15.8
|
675.9
|
(1,447.8
|
)
|
208.0
|
||||||||||
Discontinued
operations, net of tax
|
-
|
331.5
|
424.6
|
-
|
756.1
|
|||||||||||
Net
earnings (loss)
|
$
|
964.1
|
$
|
347.3
|
$
|
1,100.5
|
$
|
(1,447.8
|
)
|
$
|
964.1
|
In
millions
|
IR
Limited
|
IR
New
Jersey
|
Other
Subsidiaries
|
Consolidating
Adjustments
|
IR
Limited Consolidated
|
|||||||||||
Net
revenues
|
$
|
-
|
$
|
459.0
|
$
|
3,741.8
|
$
|
-
|
$
|
4,200.8
|
||||||
Cost
of goods sold
|
-
|
320.0
|
2,685.6
|
-
|
3,005.6
|
|||||||||||
Selling
and administrative expenses
|
16.0
|
161.9
|
534.6
|
-
|
712.5
|
|||||||||||
Operating
income
|
(16.0
|
)
|
(22.9
|
)
|
521.6
|
-
|
482.7
|
|||||||||
Equity
earnings in affiliates (net of tax)
|
1,243.1
|
222.8
|
348.8
|
(1,814.7
|
)
|
-
|
||||||||||
Interest
expense
|
(17.6
|
)
|
(35.0
|
)
|
(13.9
|
)
|
-
|
(66.5
|
)
|
|||||||
Intercompany
interest and fees
|
(25.4
|
)
|
(236.1
|
)
|
261.5
|
-
|
-
|
|||||||||
Other
income (expense), net
|
(2.5
|
)
|
23.0
|
(12.0
|
)
|
-
|
8.5
|
|||||||||
Earnings
(loss) before income taxes
|
1,181.6
|
(48.2
|
)
|
1,106.0
|
(1,814.7
|
)
|
424.7
|
|||||||||
(Benefit)
provision for income taxes
|
-
|
(69.1
|
)
|
129.2
|
-
|
60.1
|
||||||||||
Earnings
(loss) from continuing operations
|
1,181.6
|
20.9
|
976.8
|
(1,814.7
|
)
|
364.6
|
||||||||||
Discontinued
operations, net of tax
|
-
|
327.9
|
489.1
|
-
|
817.0
|
|||||||||||
Net
earnings (loss)
|
$
|
1,181.6
|
$
|
348.8
|
$
|
1,465.9
|
$
|
(1,814.7
|
)
|
$
|
1,181.6
|
In
millions
|
IR
Limited
|
IR
New
Jersey
|
Other
Subsidiaries
|
Consolidating
Adjustments
|
IR
Limited Consolidated
|
|||||||||||
Net
revenues
|
$
|
-
|
$
|
233.8
|
$
|
1,814.2
|
$
|
-
|
$
|
2,048.0
|
||||||
Cost
of goods sold
|
-
|
165.6
|
1,297.5
|
-
|
1,463.1
|
|||||||||||
Selling
and administrative expenses
|
3.4
|
66.4
|
262.6
|
-
|
332.4
|
|||||||||||
Operating
income
|
(3.4
|
)
|
1.8
|
254.1
|
-
|
252.5
|
||||||||||
Equity
earnings in affiliates (net of tax)
|
329.5
|
169.5
|
10.9
|
(509.9
|
)
|
-
|
||||||||||
Interest
expense
|
(4.6
|
)
|
(20.1
|
)
|
(6.1
|
)
|
-
|
(30.8
|
)
|
|||||||
Intercompany
interest and fees
|
(7.2
|
)
|
(235.5
|
)
|
242.7
|
-
|
-
|
|||||||||
Other
income (expense), net
|
(0.8
|
)
|
23.5
|
(28.9
|
)
|
-
|
(6.2
|
)
|
||||||||
Earnings
(loss) before income taxes
|
313.5
|
(60.8
|
)
|
472.7
|
(509.9
|
)
|
215.5
|
|||||||||
(Benefit)
provision for income taxes
|
-
|
(62.6
|
)
|
81.0
|
-
|
18.4
|
||||||||||
Earnings
(loss) from continuing operations
|
313.5
|
1.8
|
391.7
|
(509.9
|
)
|
197.1
|
||||||||||
Discontinued
operations, net of tax
|
-
|
9.1
|
107.3
|
-
|
116.4
|
|||||||||||
Net
earnings (loss)
|
$
|
313.5
|
$
|
10.9
|
$
|
499.0
|
$
|
(509.9
|
)
|
$
|
313.5
|
In
millions
|
IR
Limited
|
IR
New
Jersey
|
Other
Subsidiaries
|
Consolidating
Adjustments
|
IR
Limited Consolidated
|
|||||||||||
Net
revenues
|
$
|
-
|
$
|
453.8
|
$
|
3,398.9
|
$
|
-
|
$
|
3,852.7
|
||||||
Cost
of goods sold
|
-
|
330.8
|
2,433.0
|
-
|
2,763.8
|
|||||||||||
Selling
and administrative expenses
|
11.6
|
133.8
|
493.1
|
-
|
638.5
|
|||||||||||
Operating
income
|
(11.6
|
)
|
(10.8
|
)
|
472.8
|
-
|
450.4
|
|||||||||
Equity
earnings in affiliates (net of tax)
|
605.9
|
318.0
|
58.2
|
(982.1
|
)
|
-
|
||||||||||
Interest
expense
|
(8.4
|
)
|
(45.6
|
)
|
(12.0
|
)
|
-
|
(66.0
|
)
|
|||||||
Intercompany
interest and fees
|
(18.6
|
)
|
(355.7
|
)
|
374.3
|
-
|
-
|
|||||||||
Other
income (expense), net
|
(0.6
|
)
|
23.0
|
(22.3
|
)
|
-
|
0.1
|
|||||||||
Earnings
(loss) before income taxes
|
566.7
|
(71.1
|
)
|
871.0
|
(982.1
|
)
|
384.5
|
|||||||||
(Benefit)
provision for income taxes
|
-
|
(116.2
|
)
|
146.1
|
-
|
29.9
|
||||||||||
Earnings
(loss) from continuing operations
|
566.7
|
45.1
|
724.9
|
(982.1
|
)
|
354.6
|
||||||||||
Discontinued
operations, net of tax
|
-
|
13.1
|
199.0
|
-
|
212.1
|
|||||||||||
Net
earnings (loss)
|
$
|
566.7
|
$
|
58.2
|
$
|
923.9
|
$
|
(982.1
|
)
|
$
|
566.7
|
In
millions
|
IR
Limited
|
IR
New
Jersey
|
Other
Subsidiaries
|
Consolidating
Adjustments
|
IR
Limited Consolidated
|
|||||||||||
Current
assets:
|
||||||||||||||||
Cash
and cash equivalents
|
$
|
5.9
|
$
|
173.8
|
$
|
280.5
|
$
|
-
|
$
|
460.2
|
||||||
Marketable
securities
|
-
|
-
|
0.7
|
-
|
0.7
|
|||||||||||
Accounts
and notes receivable, net
|
1.8
|
219.2
|
1,423.0
|
-
|
1,644.0
|
|||||||||||
Inventories,
net
|
-
|
114.6
|
804.7
|
-
|
919.3
|
|||||||||||
Prepaid
expenses and deferred income taxes
|
-
|
479.9
|
29.7
|
-
|
509.6
|
|||||||||||
Assets
held for sale
|
-
|
238.0
|
1,892.6
|
-
|
2,130.6
|
|||||||||||
Accounts
and notes receivable affiliates
|
550.9
|
3,107.9
|
27,384.3
|
(31,043.1
|
)
|
-
|
||||||||||
Total
current assets
|
558.6
|
4,333.4
|
31,815.5
|
(31,043.1
|
)
|
5,664.4
|
||||||||||
Investment
in affiliates
|
7,706.3
|
11,946.2
|
30,905.6
|
(50,558.1
|
)
|
-
|
||||||||||
Property,
plant and equipment, net
|
-
|
164.4
|
708.9
|
-
|
873.3
|
|||||||||||
Intangible
assets, net
|
-
|
79.1
|
4,505.4
|
-
|
4,584.5
|
|||||||||||
Other
assets
|
1.6
|
1,223.8
|
58.7
|
-
|
1,284.1
|
|||||||||||
Total
assets
|
$
|
8,266.5
|
$
|
17,746.9
|
$
|
67,994.1
|
$
|
(81,601.2
|
)
|
$
|
12,406.3
|
|||||
Current
liabilities:
|
||||||||||||||||
Accounts
payable and accruals
|
$
|
6.5
|
$
|
207.6
|
$
|
1,438.3
|
$
|
-
|
$
|
1,652.4
|
||||||
Current
maturities of long-term debt
|
||||||||||||||||
and
loans payable
|
-
|
589.1
|
97.6
|
-
|
686.7
|
|||||||||||
Liabilities
held for sale
|
-
|
454.3
|
784.9
|
-
|
1,239.2
|
|||||||||||
Accounts
and note payable affiliates
|
960.3
|
7,291.3
|
22,791.5
|
(31,043.1
|
)
|
-
|
||||||||||
Total
current liabilities
|
966.8
|
8,542.3
|
25,112.3
|
(31,043.1
|
)
|
3,578.3
|
||||||||||
Long-term
debt
|
299.1
|
410.7
|
184.7
|
-
|
894.5
|
|||||||||||
Note
payable affiliate
|
950.0
|
2,697.4
|
-
|
(3,647.4
|
)
|
-
|
||||||||||
Other
noncurrent liabilities
|
218.2
|
1,821.5
|
61.4
|
-
|
2,101.1
|
|||||||||||
Total
liabilities
|
2,434.1
|
13,471.9
|
25,358.4
|
(34,690.5
|
)
|
6,573.9
|
||||||||||
Shareholders'
equity:
|
||||||||||||||||
Class
A common shares
|
368.7
|
-
|
(75.3
|
)
|
-
|
293.4
|
||||||||||
Class
B common shares
|
270.6
|
-
|
-
|
(270.6
|
)
|
-
|
||||||||||
Common
shares
|
-
|
-
|
2,362.8
|
(2,362.8
|
)
|
-
|
||||||||||
Other
shareholders' equity
|
9,503.0
|
5,163.2
|
44,155.2
|
(53,128.7
|
)
|
5,692.7
|
||||||||||
Accumulated
other comprehensive income (loss)
|
167.8
|
(464.8
|
)
|
247.1
|
(103.8
|
)
|
(153.7
|
)
|
||||||||
10,310.1
|
4,698.4
|
46,689.8
|
(55,865.9
|
)
|
5,832.4
|
|||||||||||
Less:
Contra account
|
(4,477.7
|
)
|
(423.4
|
)
|
(4,054.1
|
)
|
8,955.2
|
-
|
||||||||
Total
shareholders' equity
|
5,832.4
|
4,275.0
|
42,635.7
|
(46,910.7
|
)
|
5,832.4
|
||||||||||
Total
liabilities and equity
|
$
|
8,266.5
|
$
|
17,746.9
|
$
|
67,994.1
|
$
|
(81,601.2
|
)
|
$
|
12,406.3
|
In
millions
|
IR
Limited
|
IR
New
Jersey
|
Other
Subsidiaries
|
Consolidating
Adjustments
|
IR
Limited Consolidated
|
|||||||||||
Current
assets:
|
||||||||||||||||
Cash
and cash equivalents
|
$
|
1.7
|
$
|
81.6
|
$
|
189.8
|
$
|
-
|
$
|
273.1
|
||||||
Marketable
securities
|
-
|
-
|
0.7
|
-
|
0.7
|
|||||||||||
Accounts
and notes receivable, net
|
0.3
|
177.6
|
1,303.8
|
-
|
1,481.7
|
|||||||||||
Inventories,
net
|
-
|
92.5
|
740.6
|
-
|
833.1
|
|||||||||||
Prepaid
expenses and deferred income taxes
|
0.4
|
375.4
|
(20.3
|
)
|
-
|
355.5
|
||||||||||
Assets
held for sale
|
-
|
494.4
|
2,095.5
|
-
|
2,589.9
|
|||||||||||
Accounts
and notes receivable affiliates
|
921.4
|
2,662.1
|
26,537.6
|
(30,121.1
|
)
|
-
|
||||||||||
Total
current assets
|
923.8
|
3,883.6
|
30,847.7
|
(30,121.1
|
)
|
5,534.0
|
||||||||||
Investment
in affiliates
|
7,130.9
|
11,565.2
|
31,003.2
|
(49,699.3
|
)
|
-
|
||||||||||
Property,
plant and equipment, net
|
-
|
170.0
|
696.7
|
-
|
866.7
|
|||||||||||
Intangible
assets, net
|
-
|
78.4
|
4,471.6
|
-
|
4,550.0
|
|||||||||||
Other
assets
|
1.7
|
1,135.0
|
58.5
|
-
|
1,195.2
|
|||||||||||
Total
assets
|
$
|
8,056.4
|
$
|
16,832.2
|
$
|
67,077.7
|
$
|
(79,820.4
|
)
|
$
|
12,145.9
|
|||||
Current
liabilities:
|
||||||||||||||||
Accounts
payable and accruals
|
$
|
6.3
|
$
|
360.5
|
$
|
1,393.6
|
$
|
-
|
$
|
1,760.4
|
||||||
Current
maturities of long-term debt
|
||||||||||||||||
and
loans payable
|
378.0
|
596.8
|
101.0
|
-
|
1,075.8
|
|||||||||||
Liabilities
held for sale
|
-
|
539.9
|
748.6
|
-
|
1,288.5
|
|||||||||||
Accounts
and note payable affiliates
|
779.0
|
7,035.7
|
22,306.4
|
(30,121.1
|
)
|
-
|
||||||||||
Total
current liabilities
|
1,163.3
|
8,532.9
|
24,549.6
|
(30,121.1
|
)
|
4,124.7
|
||||||||||
Long-term
debt
|
299.0
|
411.3
|
185.4
|
-
|
895.7
|
|||||||||||
Note
payable affiliate
|
950.0
|
2,697.4
|
-
|
(3,647.4
|
)
|
-
|
||||||||||
Other
noncurrent liabilities
|
239.3
|
1,434.8
|
46.6
|
-
|
1,720.7
|
|||||||||||
Total
liabilities
|
2,651.6
|
13,076.4
|
24,781.6
|
(33,768.5
|
)
|
6,741.1
|
||||||||||
Shareholders'
equity:
|
||||||||||||||||
Class
A common shares
|
364.5
|
-
|
(57.7
|
)
|
-
|
306.8
|
||||||||||
Class
B common shares
|
270.6
|
-
|
-
|
(270.6
|
)
|
-
|
||||||||||
Common
shares
|
-
|
-
|
2,362.8
|
(2,362.8
|
)
|
-
|
||||||||||
Other
shareholders' equity
|
9,403.3
|
4,815.3
|
43,950.7
|
(52,713.2
|
)
|
5,456.1
|
||||||||||
Accumulated
other comprehensive income (loss)
|
(36.4
|
)
|
(627.9
|
)
|
205.7
|
100.5
|
(358.1
|
)
|
||||||||
10,002.0
|
4,187.4
|
46,461.5
|
(55,246.1
|
)
|
5,404.8
|
|||||||||||
Less:
Contra account
|
(4,597.2
|
)
|
(431.6
|
)
|
(4,165.4
|
)
|
9,194.2
|
-
|
||||||||
Total
shareholders' equity
|
5,404.8
|
3,755.8
|
42,296.1
|
(46,051.9
|
)
|
5,404.8
|
||||||||||
Total
liabilities and equity
|
$
|
8,056.4
|
$
|
16,832.2
|
$
|
67,077.7
|
$
|
(79,820.4
|
)
|
$
|
12,145.9
|
In
millions
|
IR
Limited
|
IR
New
Jersey
|
Other
Subsidiaries
|
IR
Limited Consolidated
|
|||||||||
Net
cash provided by (used in) continuing operating activities
|
$
|
(41.2
|
)
|
$
|
(346.5
|
)
|
$
|
486.8
|
$
|
99.1
|
|||
Net
cash provided by (used in) discontinued operating
activities
|
-
|
(15.2
|
)
|
114.3
|
99.1
|
||||||||
Cash
flows from investing activities:
|
|||||||||||||
Capital
expenditures
|
-
|
(12.4
|
)
|
(45.4
|
)
|
(57.8
|
)
|
||||||
Proceeds
from sale of property, plant and equipment
|
-
|
3.1
|
5.9
|
9.0
|
|||||||||
Acquisitions,
net of cash
|
-
|
(0.6
|
)
|
(3.1
|
)
|
(3.7
|
)
|
||||||
Proceeds
from business disposition, net of cash of $23.4
|
-
|
630.1
|
661.6
|
1,291.7
|
|||||||||
Proceeds
from sales and maturities of marketable securities
|
-
|
-
|
0.1
|
0.1
|
|||||||||
Other,
net
|
-
|
3.5
|
(0.1
|
)
|
3.4
|
||||||||
Net
cash provided by (used in) continuing investing activities
|
-
|
623.7
|
619.0
|
1,242.7
|
|||||||||
Net
cash provided by (used in) discontinued investing
activities
|
-
|
(0.2
|
)
|
(34.0
|
)
|
(34.2
|
)
|
||||||
Cash
flows from financing activities:
|
|||||||||||||
Net
change in debt
|
(378.0
|
)
|
(8.3
|
)
|
(7.7
|
)
|
(394.0
|
)
|
|||||
Net
inter-company proceeds (payments)
|
531.1
|
(169.5
|
)
|
(361.6
|
)
|
-
|
|||||||
Dividends
(paid) received
|
(229.1
|
)
|
8.2
|
111.3
|
(109.6
|
)
|
|||||||
Proceeds
from the exercise of stock options
|
121.4
|
-
|
-
|
121.4
|
|||||||||
Repurchase
of common shares by subsidiary
|
-
|
-
|
(846.5
|
)
|
(846.5
|
)
|
|||||||
Net
cash provided by (used in) continuing financing activities
|
45.4
|
(169.6
|
)
|
(1,104.5
|
)
|
(1,228.7
|
)
|
||||||
Net
cash provided by (used in) discontinued financing
activities
|
-
|
-
|
-
|
-
|
|||||||||
Effect
of exchange rate changes on cash and cash equivalents
|
-
|
-
|
9.1
|
9.1
|
|||||||||
Net
increase (decrease) in cash and cash equivalents
|
4.2
|
92.2
|
90.7
|
187.1
|
|||||||||
Cash
and cash equivalents - beginning of period
|
1.7
|
81.6
|
189.8
|
273.1
|
|||||||||
Cash
and cash equivalents - end of period
|
$
|
5.9
|
$
|
173.8
|
$
|
280.5
|
$
|
460.2
|
In
millions
|
IR
Limited
|
IR
New
Jersey
|
Other
Subsidiaries
|
IR
Limited Consolidated
|
|||||||||
Net
cash provided by (used in) continuing operating activities
|
$
|
(40.2
|
)
|
$
|
(175.7
|
)
|
$
|
442.9
|
$
|
227.0
|
|||
Net
cash provided by (used in) discontinued operating
activities
|
-
|
39.6
|
(36.0
|
)
|
3.6
|
||||||||
Cash
flows from investing activities:
|
|||||||||||||
Capital
expenditures
|
-
|
(25.3
|
)
|
(50.5
|
)
|
(75.8
|
)
|
||||||
Proceeds
from sale of property, plant and equipment
|
-
|
0.5
|
0.6
|
1.1
|
|||||||||
Acquisitions,
net of cash
|
-
|
-
|
(28.5
|
)
|
(28.5
|
)
|
|||||||
Proceeds
from business disposition
|
-
|
-
|
-
|
-
|
|||||||||
Proceeds
from sales and maturities of marketable securities
|
-
|
-
|
155.9
|
155.9
|
|||||||||
Other,
net
|
-
|
-
|
(1.9
|
)
|
(1.9
|
)
|
|||||||
Net
cash provided by (used in) continuing investing activities
|
-
|
(24.8
|
)
|
75.6
|
50.8
|
||||||||
Net
cash provided by (used in) discontinued investing
activities
|
-
|
(3.0
|
)
|
(21.5
|
)
|
(24.5
|
)
|
||||||
Cash
flows from financing activities:
|
|||||||||||||
Net
change in debt
|
38.5
|
(497.8
|
)
|
(27.0
|
)
|
(486.3
|
)
|
||||||
Net
inter-company proceeds (payments)
|
94.6
|
453.0
|
(547.6
|
)
|
-
|
||||||||
Dividends
(paid) received
|
(199.2
|
)
|
7.4
|
86.8
|
(105.0
|
)
|
|||||||
Proceeds
from the exercise of stock options
|
81.4
|
-
|
-
|
81.4
|
|||||||||
Repurchase
of common shares by subsidiary
|
-
|
-
|
(383.7
|
)
|
(383.7
|
)
|
|||||||
Net
cash provided by (used in) continuing financing activities
|
15.3
|
(37.4
|
)
|
(871.5
|
)
|
(893.6
|
)
|
||||||
Net
cash provided by (used in) discontinued financing
activities
|
-
|
-
|
-
|
-
|
|||||||||
Effect
of exchange rate changes on cash and cash equivalents
|
-
|
-
|
17.9
|
17.9
|
|||||||||
Net
increase (decrease) in cash and cash equivalents
|
(24.9
|
)
|
(201.3
|
)
|
(392.6
|
)
|
(618.8
|
)
|
|||||
Cash
and cash equivalents - beginning of period
|
25.5
|
207.1
|
596.3
|
828.9
|
|||||||||
Cash
and cash equivalents - end of period
|
$
|
0.6
|
$
|
5.8
|
$
|
203.7
|
$
|
210.1
|
·
|
Dramatic
Growth, by developing innovative products and solutions that improve
our
customers’ operations, expanding highly profitable recurring revenues and
executing low-risk, high-return bolt-on
acquisitions;
|
·
|
Operational
Excellence, by fostering a lean culture of continuous improvement
and cost
control; and
|
·
|
Dual
Citizenship, by encouraging our employees’ active collaboration with
colleagues across business units and geographic regions to achieve
superior business results.
|
· |
On
July 29, 2007, the Company agreed to sell its Bobcat, Utility Equipment
and Attachments businesses (collectively, Compact Equipment) to Doosan
Infracore for cash proceeds of approximately $4.9 billion. The sale
is
subject to customary closing conditions and is targeted to close
early in
the 2007 fourth quarter.
|
·
|
On
April 30, 2007, the Company completed its sale of its Road Development
business unit to AB Volvo (publ) in all countries except for India,
which
closed on May 4, 2007, for cash proceeds of approximately $1.3 billion.
The Company recorded a gain on sale of $675.7 million (net of tax
of
$128.6 million).
|
·
|
During
the six months ended June 30, 2007, the Company repurchased 17.6
million
Class A common shares at a cost of $846.5 million. Subsequently,
the
Company repurchased an additional 7.0 million Class A common shares
as of
August 3, 2007, at a total cost of $377.3 million. Also on May 14,
2007,
the Company’s board of directors expanded the share-repurchase program
from $2 billion to $4 billion.
|
·
|
Effective
January 1, 2007, the Company adopted FASB Interpretation No. 48,
“Accounting for Uncertainty in Income Taxes - an interpretation of
FASB
Statement 109” (FIN 48), which prescribes a recognition threshold and
measurement process for recording in the financial statements uncertain
tax positions taken or expected to be taken in a tax return. As a
result
of adopting FIN 48 as of January 1, 2007, the Company recorded additional
liabilities to its previously established reserves, and a corresponding
decrease in retained earnings of $145.6 million. See Note 8 to the
Company’s condensed consolidated financial statements for further
description of FIN 48 and the related impacts of
adoption.
|
·
|
On
July 20, 2007, the Company and its consolidated subsidiaries received
a
notice from the Internal Revenue Service (IRS) containing proposed
adjustments to the Company’s tax filings in connection with an audit of
the 2001 and 2002 tax years. The IRS did not contest the validity
of the
Company’s reincorporation in Bermuda. The most significant adjustments
proposed by the IRS involve treating the intercompany debt incurred
in
connection with the Company’s reincorporation in Bermuda as equity. As a
result of this recharacterization, the IRS has disallowed the deduction
of
interest paid on the debt and imposed dividend withholding taxes
on the
payments denominated as interest. These adjustments proposed by the
IRS,
if upheld in their entirety, would result in additional taxes with
respect
to 2002 of approximately $190 million plus interest, and would require
the
Company to record additional charges associated with this matter.
At this
time, the IRS has not yet begun their examination of the Company’s tax
filings for years subsequent to 2002. However, if these adjustments
or a
portion of these adjustments proposed by the IRS are ultimately sustained,
it is likely to also affect subsequent tax
years.
|
Three
months ended June 30,
|
|||||||||||||
Dollar
amounts in millions, except per share amounts
|
2007
|
%
of
revenues
|
2006
|
%
of
revenues
|
|||||||||
Net
revenues
|
$
|
2,224.6
|
$
|
2,048.0
|
|||||||||
Cost
of goods sold
|
1,589.7
|
71.5%
|
|
1,463.1
|
71.5%
|
|
|||||||
Selling
and administrative expenses
|
360.8
|
16.2%
|
|
332.4
|
16.2%
|
|
|||||||
Operating
income
|
274.1
|
12.3%
|
|
252.5
|
12.3%
|
|
|||||||
Interest
expense
|
(30.8
|
)
|
(30.8
|
)
|
|||||||||
Other
income (expense), net
|
8.6
|
(6.2
|
)
|
||||||||||
Earnings
before income taxes
|
251.9
|
215.5
|
|||||||||||
Provision
for income taxes
|
43.9
|
18.4
|
|||||||||||
Earnings
from continuing operations
|
208.0
|
197.1
|
|||||||||||
Discontinued
operations, net of tax
|
756.1
|
116.4
|
|||||||||||
Net
earnings
|
$
|
964.1
|
$
|
313.5
|
|||||||||
Diluted
earnings per common share:
|
|||||||||||||
Earnings
from continuing operations
|
$
|
0.68
|
$
|
0.60
|
|||||||||
Discontinued
operations, net of tax
|
2.49
|
0.35
|
|||||||||||
Net
earnings
|
$
|
3.17
|
$
|
0.95
|
In
millions
|
2007
|
2006
|
|||||
Road
Development, net of tax
|
$
|
678.2
|
$
|
27.7
|
|||
Compact
Equipment, net of tax
|
81.7
|
97.3
|
|||||
Other
discontinued operations, net of tax
|
(3.8
|
)
|
(8.6
|
)
|
|||
Total
discontinued operations, net of tax
|
$
|
756.1
|
$
|
116.4
|
In
millions
|
2007
|
2006
|
|||||
Net
revenues
|
$
|
759.8
|
$
|
765.8
|
|||
After-tax
earnings
|
81.7
|
97.3
|
In
millions
|
2007
|
2006
|
|||||
Net
revenues
|
$
|
77.2
|
$
|
228.1
|
|||
After-tax
earnings from operations
|
$
|
2.5
|
$
|
27.7
|
|||
Gain
on sale, net of tax of $128.6
|
675.7
|
-
|
|||||
Total
discontinued operations
|
$
|
678.2
|
$
|
27.7
|
In
millions
|
2007
|
2006
|
|||||
Retained
costs, net of tax
|
$
|
(3.9
|
)
|
$
|
(8.8
|
)
|
|
Net
gain on disposals, net of tax
|
0.1
|
0.2
|
|||||
Total
other discontinued operations, net of tax
|
$
|
(3.8
|
)
|
$
|
(8.6
|
)
|
Six
months ended June 30,
|
|||||||||||||
Dollar
amounts in millions, except per share amounts
|
2007
|
%
of
revenues
|
2006
|
%
of
revenues
|
|||||||||
Net
revenues
|
$
|
4,200.8
|
$
|
3,852.7
|
|||||||||
Cost
of goods sold
|
3,005.6
|
71.5%
|
|
2,763.8
|
71.7%
|
|
|||||||
Selling
and administrative expenses
|
712.5
|
17.0%
|
|
638.5
|
16.6%
|
|
|||||||
Operating
income
|
482.7
|
11.5%
|
|
450.4
|
11.7%
|
|
|||||||
Interest
expense
|
(66.5
|
)
|
(66.0
|
)
|
|||||||||
Other
income (expense), net
|
8.5
|
0.1
|
|||||||||||
Earnings
before income taxes
|
424.7
|
384.5
|
|||||||||||
Provision
for income taxes
|
60.1
|
29.9
|
|||||||||||
Earnings
from continuing operations
|
364.6
|
354.6
|
|||||||||||
Discontinued
operations, net of tax
|
817.0
|
212.1
|
|||||||||||
Net
earnings
|
$
|
1,181.6
|
$
|
566.7
|
|||||||||
Diluted
earnings per common share:
|
|||||||||||||
Earnings
from continuing operations
|
$
|
1.19
|
$
|
1.07
|
|||||||||
Discontinued
operations, net of tax
|
2.66
|
0.64
|
|||||||||||
Net
earnings
|
$
|
3.85
|
$
|
1.71
|
In
millions
|
2007
|
2006
|
|||||
Road
Development, net of tax
|
$
|
694.1
|
$
|
45.1
|
|||
Compact
Equipment, net of tax
|
142.3
|
184.8
|
|||||
Other
discontinued operations, net of tax
|
(19.4
|
)
|
(17.8
|
)
|
|||
Total
discontinued operations, net of tax
|
$
|
817.0
|
$
|
212.1
|
In
millions
|
2007
|
2006
|
|||||
Net
revenues
|
$
|
1,452.4
|
$
|
1,484.9
|
|||
After-tax
earnings
|
142.3
|
184.8
|
In
millions
|
2007
|
2006
|
|||||
Net
revenues
|
$
|
244.4
|
$
|
415.3
|
|||
After-tax
earnings from operations
|
$
|
18.4
|
$
|
45.1
|
|||
Gain
on sale, net of tax of $128.6
|
675.7
|
-
|
|||||
Total
discontinued operations
|
$
|
694.1
|
$
|
45.1
|
In
millions
|
2007
|
2006
|
|||||
Retained
costs, net of tax
|
$
|
(19.6
|
)
|
$
|
(18.2
|
)
|
|
Net
gain on disposals, net of tax
|
0.2
|
0.4
|
|||||
Total
other discontinued operations, net of tax
|
$
|
(19.4
|
)
|
$
|
(17.8
|
)
|
Three
months ended
June 30, |
Six
months ended
June 30, |
||||||||||||||||||
Dollar
amounts in millions
|
2007
|
2006
|
%
change
|
2007
|
2006
|
%
change
|
|||||||||||||
Net
revenues
|
$
|
846.0
|
$
|
798.0
|
6.0%
|
|
$
|
1,574.9
|
$
|
1,481.6
|
6.3%
|
|
|||||||
Operating
income
|
99.8
|
88.4
|
12.9%
|
|
169.2
|
157.6
|
7.4%
|
|
|||||||||||
Operating
margin
|
11.8
|
%
|
11.1
|
%
|
10.7
|
%
|
10.6
|
%
|
Three
months ended
June 30, |
Six
months ended
June 30, |
||||||||||||||||||
Dollar
amounts in millions
|
2007
|
2006
|
%
change
|
2007
|
2006
|
%
change
|
|||||||||||||
Net
revenues
|
$
|
749.9
|
$
|
667.1
|
12.4%
|
|
$
|
1,417.6
|
$
|
1,263.4
|
12.2%
|
|
|||||||
Operating
income
|
109.3
|
95.5
|
14.5%
|
|
200.9
|
177.2
|
13.4%
|
|
|||||||||||
Operating
margin
|
14.6
|
%
|
14.3
|
%
|
14.2
|
%
|
14.0
|
%
|
Three
months ended
June 30, |
Six
months ended
June 30, |
||||||||||||||||||
Dollar
amounts in millions
|
2007
|
2006
|
%
change
|
2007
|
2006
|
%
change
|
|||||||||||||
Net
revenues
|
$
|
628.7
|
$
|
582.9
|
7.9%
|
|
$
|
1,208.3
|
$
|
1,107.7
|
9.1%
|
|
|||||||
Operating
income
|
108.3
|
98.0
|
10.5%
|
|
199.0
|
177.6
|
12.0%
|
|
|||||||||||
Operating
margin
|
17.2
|
%
|
16.8
|
%
|
16.5
|
%
|
16.0
|
%
|
Dollar
amounts in millions
|
June
30,
2007 |
June
30,
2006 |
|||||
Operating
cash flow provided by (used in) continuing operations
|
$
|
99.1
|
$
|
227.0
|
|||
Investing
cash flow provided by (used in) continuing operations
|
1,242.7
|
50.8
|
|||||
Financing
cash flow provided by (used in) continuing operations
|
(1,228.7
|
)
|
(893.6
|
)
|
Dollar
amounts in millions
|
June
30,
2007 |
December
31,
2006 |
|||||
Cash
and cash equivalents
|
$
|
460.2
|
$
|
273.1
|
|||
Working
capital
|
2,086.1
|
1,409.3
|
|||||
Total
debt
|
1,581.2
|
1,971.5
|
|||||
Total
shareholders' equity
|
5,832.4
|
5,404.8
|
|||||
Debt-to-total
capital ratio
|
21.1
|
%
|
26.5
|
%
|
Period
|
Total
number
of shares purchased (000's) |
Average
price paid per share |
Total
number
of shares purchased as part of program (000's) |
Approximate
dollar
value of shares still available to be purchased under the program ($000's) |
|||||||||
4/01/2007
- 4/30/2007
|
3,300.0
|
$
|
44.36
|
3,300.0
|
$
|
1,719,940
|
|||||||
5/01/2007
- 5/31/2007
|
5,195.3
|
48.26
|
5,195.3
|
3,469,135
|
|||||||||
6/01/2007
- 6/30/2007
|
6,016.0
|
52.44
|
6,016.0
|
3,153,546
|
|||||||||
Total
|
14,511.3
|
14,511.3
|
Votes
For
|
Votes
Withheld
|
||||||
G.D.
Forsee
|
248,247,905
|
21,629,261
|
|||||
P.C.
Godsoe
|
239,371,972
|
30,505,194
|
|||||
C.J.
Horner
|
248,038,291
|
21,838,875
|
|||||
T.E.
Martin
|
243,942,272
|
25,943,894
|
|||||
P.
Nachtigal
|
256,135,401
|
13,741,765
|
|||||
O.R.
Smith
|
247,688,002
|
22,189,164
|
|||||
R.J.
Swift
|
255,495,428
|
14,381,738
|
(a) Exhibits
|
||
Exhibit
No.
|
Description
|
|
31.1
|
Certification
of Chief Executive Officer Pursuant to Rule 13a-14(a) or Rule 15d-14(a),
as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Filed herewith.
|
|
31.2
|
Certification
of Chief Financial Officer Pursuant to Rule 13a-14(a) or Rule 15d-14(a),
as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Filed herewith.
|
|
32
|
Certifications
of Chief Executive Officer and Chief Financial Officer Pursuant to
Rule
13a-14(b) or Rule 15d-14(b) and 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Filed
herewith.
|
|
|
|
Date: August 8, 2007 | /s/ Timothy R. McLevish | |
Timothy R. McLevish, Senior Vice President |
||
and
Chief Financial Officer
|
Principal
Financial Officer
|
||
|
|
|
Date: August 8, 2007 | /s/ Richard W. Randall | |
Richard W. Randall, Vice President and |
||
Controller
|
||
Principal
Accounting Officer
|