8-KEarnings & ResultsFinancial EventsExhibits & Filings

Trane Technologies plc 8-K Report, Financial Results (Oct 18, 2013)

Filed October 18, 2013For Securities:TT

Summary

This Form 8-K filing by Ingersoll-Rand plc (now Trane Technologies plc) on October 18, 2013, primarily reports on the company's third quarter 2013 financial results and a significant goodwill impairment charge. Investors should note the announcement of Q3 2013 results, which are detailed in an accompanying press release. A key development is the recognition of a $111.4 million non-cash pre-tax goodwill impairment charge related to the Security Technologies Europe, Middle East, India, and Africa (EMEIA) reporting unit. This charge resulted from an interim impairment test indicating the reporting unit's fair value fell below its carrying value. The impairment charge is not expected to affect the company's compliance with debt covenants or its borrowing capacity. Furthermore, the filing clarifies that a related, larger impairment charge of $137.6 million pre-tax will be reflected in the carve-out financial statements for Allegion plc, the entity that will house the commercial and residential security businesses post-spin-off. Management believes the Security Technologies EMEIA unit will continue to be successful within Allegion.

Key Highlights

  • 1Ingersoll-Rand plc announced its third quarter 2013 financial results on October 18, 2013.
  • 2The company recorded a non-cash pre-tax goodwill impairment charge of $111.4 million ($106.2 million after-tax) for the Security Technologies EMEIA reporting unit.
  • 3This impairment charge was determined through an interim goodwill impairment test conducted in the third quarter of 2013.
  • 4The impairment was triggered because the estimated fair value of the Security Technologies EMEIA reporting unit was less than its carrying value.
  • 5The company stated that this impairment charge will not impact compliance with existing debt covenants or borrowing capacity.
  • 6A related, larger impairment charge of $137.6 million pre-tax is expected in the carve-out financial statements for Allegion plc, the entity to be spun off.
  • 7The filing was made on October 17, 2013, with the earliest event reported being October 14, 2013.

Frequently Asked Questions

The main financial event is the announcement of Ingersoll-Rand plc's third quarter 2013 results and the recognition of a $111.4 million non-cash pre-tax goodwill impairment charge related to its Security Technologies EMEIA reporting unit.

The goodwill impairment charge resulted from an interim impairment test performed in the third quarter of 2013. The test indicated that the estimated fair value of the Security Technologies EMEIA reporting unit was lower than its carrying value on the company's books.

No, the company explicitly stated that this $111.4 million non-cash impairment charge will not impact its compliance with existing debt covenants or its borrowing capacity under current credit arrangements.

The Security Technologies EMEIA reporting unit is part of the businesses being spun off into Allegion plc. A larger, related non-cash impairment charge of $137.6 million pre-tax will be reflected in Allegion's carve-out financial statements. The company believes this unit will remain a successful part of Allegion post-spin-off.