Ingersoll-Rand Endures Kryptonite's $10 Million Hit
OCTOBER 25, 2004 -- MONTVALE, NJ --Kryptonite delivered a $10 million hit in unanticipated costs in the third quarter to the Security and Safety division of parent company Ingersoll-Rand. Despite the setback, Ingersoll-Rand enjoyed an overall 15 percent increase in third quarter revenue to $2.4 billion.
Kryptonite's financial drubbing began in early September after Internet video clips demonstrated the apparent ease in cracking its tubular locks with the shells of ballpoint pens. Kryptonite launched replacement programs for consumers and retailers, and accelerated retail delivery of new product.
Those moves, however, hit the security division's operating margin.
"Operating margins of 16.5 percent (in the third quarter) declined compared to 2003, reflecting approximately $10 million of estimated costs related to Kryptonite cylindrical bicycle locks," the company reported Oct. 21 in a filing with the Security and Exchange Commission. Its operating margin in 2003 for the same period was 21.2 percent.
Lock company Schlage is another IR Security and Safety property.
The division also experienced a 14 percent drop in operating income in the third quarter from $88.5 million a year ago to $76.4 million this quarter. Still, the company's security and safety division posted an 11 percent increase in overall revenue to $463.4 million compared to $417.4 million last year.
The company, founded in 1871, is organized in Bermuda with corporate offices in Montvale, New Jersey. It has about 42,000 employees worldwide and a current market capitalization of approximately $11 billion with annual sales of more than $9 billion. The company trades on the New York Stock Exchange under the symbol IR.