Unassociated Document

0001144204-05-033999.txt : 20051104 0001144204-05-033999.hdr.sgml : 20051104 20051104153536 ACCESSION NUMBER: 0001144204-05-033999 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20050930 FILED AS OF DATE: 20051104 DATE AS OF CHANGE: 20051104 FILER: COMPANY DATA: COMPANY CONFORMED NAME: INGERSOLL RAND CO LTD CENTRAL INDEX KEY: 0001160497 STANDARD INDUSTRIAL CLASSIFICATION: GENERAL INDUSTRIAL MACHINERY & EQUIPMENT [3560] IRS NUMBER: 752993910 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-16831 FILM NUMBER: 051180204 BUSINESS ADDRESS: STREET 1: 155 CHESTNUT RIDGE ROAD CITY: MONTVALE STATE: NJ ZIP: 07645 BUSINESS PHONE: 2015730123 MAIL ADDRESS: STREET 1: 155 CHESTNUT RIDGE ROAD CITY: MONTVALE STATE: NJ ZIP: 07645 10-Q 1 v028350_10q.htm Unassociated Document

FORM 10-Q

UNITED STATES 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 September 30, 2005


o	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 LIMITED

(Exact name of registrant as specified in its charter)


Bermuda (State or other jurisdiction of incorporation or organization)		75-2993910 (I.R.S. Employer Identification No.)

Clarendon House

2 Church Street

Hamilton HM 11, Bermuda

(Address of principal executive offices)

(441) 295-2838

(Registrant’s telephone number, including area code)

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 o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule12b-2 of the Exchange Act). Yes x No o

The number of Class A common shares outstanding as of October 31, 2005 was 330,834,485.

INGERSOLL-RAND COMPANY LIMITED

FORM 10-Q

INDEX


PART I	FINANCIAL INFORMATION

	Item 1 - Financial Statements

	Condensed Consolidated Income Statement for the three and nine months
	ended September 30, 2005 and 2004

	Condensed Consolidated Balance Sheet at September 30, 2005 and
	December 31, 2004

	Condensed Consolidated Statement of Cash Flows for the nine months
	ended September 30, 2005 and 2004

	Notes to Condensed Consolidated Financial Statements


	Item 2 - Management's Discussion and Analysis of Financial Condition
	and Results of Operations

	Item 3 - Quantitative and Qualitative Disclosures about Market Risk

	Item 4 - Controls and Procedures

PART II	OTHER INFORMATION

	Item 1 - Legal Proceedings

	Item 2 - Unregistered Sales of Securities and Use of Proceeds

	Item 6 - Exhibits

SIGNATURES

Part I - FINANCIAL INFORMATION

Item 1 - Financial Statements

INGERSOLL-RAND COMPANY LIMITED

CONDENSED CONSOLIDATED INCOME STATEMENT

(Unaudited)


		Three months ended						Nine months ended
		September 30,						September 30,
In millions, except per share amounts		2005			2004			2005			2004
Net revenues	$	2,615.3		$	2,368.0		$	7,833.6		$	6,934.6
Cost of goods sold		1,920.7			1,738.8			5,750.4			5,076.3
Selling and administrative expenses		354.6			351.0			1,067.1			1,035.9
Operating income		340.0			278.2			1,016.1			822.4
Interest expense		(35.5	)		(35.7	)		(109.8	)		(116.1	)
Other income, net		9.6			5.1			27.0			0.2
Earnings before income taxes		314.1			247.6			933.3			706.5
Provision for income taxes		58.0			42.0			153.1			99.0
Earnings from continuing operations		256.1			205.6			780.2			607.5
Discontinued operations, net of tax		(1.9	)		32.2			(17.5	)		96.0
Net earnings	$	254.2		$	237.8		$	762.7		$	703.5

Basic earnings per common share:
Earnings from continuing operations	$	0.76		$	0.60		$	2.30		$	1.75
Discontinued operations, net of tax		—			0.09			(0.05	)		0.28
Net earnings	$	0.76		$	0.69		$	2.25		$	2.03

Diluted earnings per common share:
Earnings from continuing operations	$	0.75		$	0.59		$	2.27		$	1.73
Discontinued operations, net of tax		—			0.09			(0.05	)		0.27
Net earnings	$	0.75		$	0.68		$	2.22		$	2.00

Dividends per common share	$	0.16		$	0.13		$	0.41		$	0.32

See accompanying notes to condensed consolidated financial statements.

INGERSOLL-RAND COMPANY LIMITED

CONDENSED CONSOLIDATED BALANCE SHEET

(Unaudited)


In millions	September 30, 2005			December 31, 2004
ASSETS
Current assets:
Cash and cash equivalents	$	732.1		$	1,703.1
Marketable securities		152.7			0.6
Accounts and notes receivable, net		1,764.6			1,498.4
Inventories		1,230.3			1,058.8
Prepaid expenses and deferred income taxes		360.5			348.8
Total current assets		4,240.2			4,609.7

Property, plant and equipment, net		1,091.8			1,013.2
Goodwill		4,487.6			4,211.0
Intangible assets, net		797.5			618.2
Other assets		922.9			962.5
Total assets	$	11,540.0		$	11,414.6

LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	722.9		$	684.0
Accrued compensation and benefits		379.2			433.5
Accrued expenses and other current liabilities		1,051.3			1,146.6
Current maturities of long-term debt and loans payable		993.4			612.8
Total current liabilities		3,146.8			2,876.9

Long-term debt		1,190.7			1,267.6
Postemployment and other benefit liabilities		1,036.1			1,018.1
Other noncurrent liabilities		558.6			518.2
Total liabilities		5,932.2			5,680.8

Shareholders' equity:
Class A common shares		333.9			173.1
Other shareholders' equity		5,440.7			5,497.9
Accumulated other comprehensive (loss) income		(166.8	)		62.8
Total shareholders' equity		5,607.8			5,733.8
Total liabilities and shareholders' equity	$	11,540.0		$	11,414.6

See accompanying notes to condensed consolidated financial statements.

INGERSOLL-RAND COMPANY LIMITED

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(Unaudited)


	Nine months ended September 30,
In millions	2005			2004
Cash flows from operating activities:
Earnings from continuing operations	$	780.2		$	607.5
Adjustments to arrive at net cash used in operating activities:
Depreciation and amortization		144.1			127.1
Changes in other assets and liabilities, net		(467.2	)		(288.1	)
Other, net		(34.4	)		39.5
Net cash provided by operating activities		422.7			486.0

Cash flows from investing activities:
Capital expenditures		(81.5	)		(65.2	)
Acquisitions, net of cash		(518.0	)		(28.6	)
Purchases of marketable securities		(149.5	)		—
Proceeds from business disposition		9.4			226.2
Proceeds from sale of property, plant and equipment		10.6			41.5
Other, net		6.8			1.6
Net cash (used in) provided by investing activities		(722.2	)		175.5

Cash flows from financing activities:
Decrease in short-term borrowings		(21.8	)		(23.7	)
Proceeds from long-term debt		300.4			2.4
Payments of long-term debt		(152.2	)		(318.5	)
Net change in debt		126.4			(339.8	)
Dividends paid		(139.2	)		(109.4	)
Proceeds from exercise of stock options		78.3			98.5
Redemption of preferred stock of subsidiaries		(73.6	)		—
Purchase of treasury shares		(623.8	)		(282.6	)
Net cash used in financing activities		(631.9	)		(633.3	)

Net cash (used in) provided by discontinued operations		(29.2	)		15.3

Effect of exchange rate changes on cash and cash equivalents		(10.4	)		3.8

Effect of change in fiscal year end of business		—			(23.8	)

Net (decrease) increase in cash and cash equivalents		(971.0	)		23.5
Cash and cash equivalents - beginning of period		1,703.1			416.3
Cash and cash equivalents - end of period	$	732.1		$	439.8

See accompanying notes to condensed consolidated financial statements.

INGERSOLL-RAND COMPANY LIMITED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1 - Basis of Presentation

In the opinion of management, the accompanying condensed consolidated financial statements contain all adjustments, which include normal recurring adjustments, necessary to present fairly the consolidated unaudited financial position, results of operations and cash flows for all periods presented.

The accompanying condensed consolidated financial statements should be read in conjunction with the consolidated financial statements included in the Ingersoll-Rand Company Limited (the Company or IR-Limited) Annual Report on Form 10-K for the year ended December 31, 2004. Certain prior period amounts have been reclassified to conform to the current period presentation.

The results for Hussmann International, Inc. and its majority-owned affiliates had been on a 15-day lag for U.S. operations and a one-month lag for non-U.S. operations, since its acquisition in 2000. During the first quarter of 2004, these lags were eliminated, and the financial results were recorded on a current basis. The resulting net loss of $16.5 million was recorded directly to retained earnings on the Consolidated Balance Sheet, and the resulting cash outflow of $23.8 million was shown as a separate line item on the Consolidated Statement of Cash Flows.

On August 3, 2005, the Company’s Board of Directors declared a two-for-one stock split, effected in the form of a stock distribution, payable on September 1, 2005 to shareholders of record on August 16, 2005. The Company retained the current par value of $1.00 per share for all common shares. All references in the financial statements and notes to the number of shares outstanding, per share amounts, and stock option data of the Company’s common shares have been restated to reflect the effect of the stock split for all periods presented. Shareholders’ equity reflects the stock split by reclassifying from “retained earnings” to “common stock” an amount equal to the par value of the additional shares arising from the split as of the distribution date.

Note 2 - Incentive Stock Plans

Under the Company’s incentive stock plans, approved in 1995 and 1998, key employees have been granted options to purchase Class A common shares. The Company continues to account for these plans under the recognition and measurement principles of APB No. 25, “Accounting for Stock Issued to Employees.” Accordingly, no compensation expense is recognized for employee stock options since options granted are at prices not less than fair market value at the date of grant. The plans also authorize stock appreciation rights and stock awards, which result in compensation expense. Additionally, the Company maintains a shareholder-approved Management Incentive Unit Award Plan, which results in compensation expense. Compensation expense is recognized as a result of vesting and the Company’s Class A common share price. Fluctuations in the Company’s Class A common share price increase or decrease compensation expense.

The following table is presented in accordance with Statement of Financial Accounting Standard (SFAS) No. 148, “Accounting for Stock-Based Compensation - Transition and Disclosure” and illustrates the effect on net income and earnings per share if the Company had applied the fair value recognition provisions of SFAS No. 123, “Accounting for Stock-Based Compensation,” to stock-based employee compensation:

		Three months				Nine months
		ended September 30,				ended September 30,
In millions, except per share amounts		2005		2004		2005			2004
Net earnings, as reported	$	254.2	$	237.8	$	762.7		$	703.5
Add (Deduct): Stock-based employee compensation
expense (income) included in reported net
income, net of tax		5.4		2.5		(1.8	)		13.5
Deduct: Total stock-based employee compensation
expense determined under fair value based
method for all awards, net of tax		13.6		9.7		22.3			34.5
Pro forma net earnings	$	246.0	$	230.6	$	738.6		$	682.5

Basic earnings per share:
As reported	$	0.76	$	0.69	$	2.25		$	2.03
Pro forma		0.73		0.67		2.17			1.97

Diluted earnings per share:
As reported	$	0.75	$	0.68	$	2.22		$	2.00
Pro forma		0.73		0.66		2.15			1.95

Note 3 - Inventories

Inventories are stated at cost, which is not in excess of market. Most U.S. manufactured inventories, excluding the Climate Control Technologies segment, are valued on the last-in, first-out (LIFO) method. All other inventories are valued using the first-in, first-out (FIFO) method. The composition of inventories is as follows:


In millions		September 30, 2005		December 31, 2004
Raw materials and supplies	$	422.1	$	359.4
Work-in-process		248.2		190.1
Finished goods		664.6		612.3
		1,334.9		1,161.8
Less - LIFO reserve		104.6		103.0
Total	$	1,230.3	$	1,058.8

Note 4 - Discontinued Operations

Discontinued operations, net of tax, for the third quarter of 2005 amounted to expense of $1.9 million compared to $32.2 million of income for the third quarter of 2004. The third quarter of 2005 includes $9.8 million of retained and on-going costs mainly associated with environmental and product liability and legal costs (mostly asbestos claims) from divested businesses. These expenses were partially offset by $7.9 million of additional net gains from previously sold businesses, mostly from Dresser-Rand ($6.9 million). The third quarter of 2004 includes income from Dresser-Rand ($16.6 million) and gains from Engineered Solutions ($19.2 million) and Drilling Solutions ($3.1 million), partially offset by retained and on-going costs associated with other divested businesses.

Discontinued operations, net of tax, for the first nine months of 2005 amounted to expense of $17.5 million compared to $96.0 million of income for the nine months ended September 30, 2004. The first nine months of 2005 include expenses of $27.8 million, partially offset by net gains of previously sold businesses of $10.3 million. The expenses include on-going and retained expenses related to environmental, employee benefits and product liability and legal costs (mostly asbestos claims). The gains for the 2005 period were mainly the result of Dresser-Rand ($8.2 million). The nine month period in 2004 includes $19.4 million (after tax) recorded for claims filed under the Continued Dumping and Subsidy Offset Act of 2000, income from Dresser-Rand ($31.3 million) and gains from Drilling Solutions ($40.0 million) and Engineered Solutions ($18.8 million), partially offset by retained and on-going costs of other divested businesses.

Note 5 - Goodwill and Other Intangible Assets

The changes in the carrying amount of goodwill for the nine months ended September 30, 2005, are as follows:


	Climate			Compact
	Control			Vehicle			Construction			Industrial			Security
In millions	Technologies			Technologies			Technologies			Technologies			Technologies			Total
Balance at December 31, 2004	$	2,618.7		$	801.4		$	101.3		$	119.4		$	570.2		$	4,211.0
Acquisitions		3.4			0.1			10.6			23.2			365.6			402.9
Translation adjustments		(61.7	)		(3.1	)		(0.3	)		(4.3	)		(56.9	)		(126.3	)
Balance at September 30, 2005	$	2,560.4		$	798.4		$	111.6		$	138.3		$	878.9		$	4,487.6

The Company initially records to goodwill the excess of the purchase price over the preliminary valuation of the net assets acquired. Once the final valuation has been performed for each acquisition, the Company may record an adjustment to goodwill. The Company made several acquisitions during the nine months ended September 30, 2005, including CISA S.p.A (CISA). The Company’s integration plan for CISA included facility closures and employee terminations, which were announced during the third quarter of 2005.

The following table sets forth the gross amount and accumulated amortization of the Company’s intangible assets:


		September 30, 2005				December 31, 2004
		Gross		Accumulated		Gross		Accumulated
In millions		amount		amortization		amount		amortization
Customer relationships	$	482.9	$	55.0	$	384.9	$	44.5
Software		151.7		80.8		141.6		61.3
Trademarks		95.1		4.3		12.1		6.5
Other		92.4		39.9		71.6		35.1
Total amortizable intangible assets		822.1		180.0		610.2		147.4
Total indefinite lived intangible assets - trademarks		155.4		—		155.4		—
Total	$	977.5	$	180.0	$	765.6	$	147.4

Intangible asset amortization expense for the three months ended September 30, 2005 and 2004 was $13.7 million and $11.2 million, respectively. Intangible asset amortization expense for the nine months ended September 30, 2005 and 2004 was $40.3 million and $27.9 million, respectively. Estimated intangible asset amortization expense for each of the next five fiscal years is expected to be $51.4 million in 2006, $37.2 million in 2007, $31.8 million in 2008, $28.3 million in 2009, and $25.0 million in 2010.

Note 6 - Weighted-Average Common Shares

Information on basic and diluted shares is as follows:


	Three months ended				Nine months ended
	September 30,				September 30,
In millions	2005		2004		2005		2004
Weighted-average number of basic shares		335.8		346.2		339.7		347.1
Shares issuable under incentive stock plans		3.5		3.9		3.8		4.4
Weighted-average number of diluted shares		339.3		350.1		343.5		351.5

Diluted earnings per share computations for the three months ended September 30, 2005 and 2004 excluded the weighted-average effect of the assumed exercise of approximately 0.1 million and 0.2 million shares issuable under stock benefit plans, respectively. Excluded for the nine months ended September 30, 2005 and 2004 were approximately 0.1 million and 0.2 million shares, respectively. These shares were excluded because the effect on the computation of earnings per share would be anti-dilutive.

Note 7 - Comprehensive Income

The components of comprehensive income are as follows:


	Three months ended						Nine months ended
	September 30,						September 30,
In millions	2005			2004			2005			2004
Net earnings	$	254.2		$	237.8		$	762.7		$	703.5
Other comprehensive (loss) income:
Foreign currency translation adjustment		(16.0	)		26.3			(235.0	)		0.2
Change in fair value of derivatives qualifying
as cash flow hedges, net of tax		(0.7	)		(4.4	)		5.4			7.8
Comprehensive income	$	237.5		$	259.7		$	533.1		$	711.5

Included in accumulated other comprehensive income at September 30, 2005, is a $1.4 million gain related to the fair value of foreign currency derivatives qualifying as cash flow hedges, all of which is expected to be reclassified to earnings over the next twelve months. Additionally, an $8.3 million loss, related to an interest rate derivative qualified as a cash flow hedge of the forecasted issuance of debt, is included in accumulated other comprehensive income at September 30, 2005. During the next twelve months, $0.9 million is expected to be reclassified to earnings, with the total being reclassified over the next 10 years. The actual amounts that will be reclassified to earnings over the next twelve months may vary from these amounts as a result of changes in market conditions. No amounts were reclassified to earnings during the quarter in connection with forecasted transactions that were no longer considered probable of occurring.

During the period ended September 30, 2005, the Company purchased approximately $150 million of auction rate securities, which are highly liquid, variable-rate debt securities. These securities are recorded as short-term marketable securities and are classified as available-for-sale under Statement of Financial Accounting Standard No. 115 (SFAS 115), “Accounting for Certain Investments in Debt and Equity Securities.” Also during the third quarter of 2005, the Company acquired a company that owns marketable equity securities representing a minority interest in Taiwan Fu Hsing Industrial Ltd. These securities are recorded as long-term assets and are classified as available-for-sale. In accordance with SFAS 115, available-for-sale securities are recorded at market value with the unrealized gain or loss, less applicable deferred income taxes, shown as other comprehensive income in shareholders’ equity. As of September 30, 2005, there were no unrealized gains or losses on either of these securities.

Note 8 - Commitments and Contingencies

The Company is involved in various litigations, claims and administrative proceedings, including environmental and product liability matters. Amounts recorded for identified contingent liabilities are estimates, which are reviewed periodically and adjusted to reflect additional information when it becomes available. Subject to the uncertainties inherent in estimating future costs for contingent liabilities, management believes that the liability, which may result from these legal matters, would not have a material adverse effect on the financial condition, results of operations, liquidity or cash flows of the Company.

In assessing its potential environmental liability, the Company bases its estimates on current laws and regulations and current remediation technologies. The Company does not discount its liability or assume any insurance recoveries.

Ingersoll-Rand Company (IR-New Jersey), a Company subsidiary, is a defendant in numerous asbestos-related lawsuits in state and federal courts. In virtually all of the suits a large number of other companies have also been named as defendants. The claims against IR-New Jersey generally allege injury caused by exposure to asbestos contained in certain of IR-New Jersey’s products. Although IR-New Jersey was neither a producer nor a manufacturer of asbestos, some of its formerly manufactured products utilized asbestos-containing components, such as gaskets, purchased from third-party suppliers.

All asbestos-related claims resolved to date have been dismissed or settled. For the nine-month periods ended September 30, 2005 and 2004, total costs for settlement and defense of asbestos claims after insurance recoveries and net of tax were approximately $12.5 million and $12.3 million, respectively. The Company performs a thorough analysis, updated periodically, of its actual and potential asbestos liabilities projected seven years in the future. Based upon such analysis, the Company believes that its reserves and insurance are adequate to cover its asbestos liabilities, and that these liabilities are not likely to have a material effect on its financial position, results of operations, liquidity or cash flows.

Legislation currently under consideration in Congress concerns pending and future asbestos-related personal injury claims. It is uncertain what effect, if any, passage of such legislation would have upon the Company’s financial position, results of operations or cash flows.

The Company sells product on a continuous basis under various arrangements through institutions that provide leasing and product financing alternatives to retail and wholesale customers. Under these arrangements, the Company is contingently liable for loan guarantees and residual values of equipment of approximately $7.5 million, including consideration of ultimate net loss provisions. The risk of loss to the Company is minimal, and historically, only immaterial losses have been incurred relating to these arrangements since the fair value of the underlying equipment that serves as collateral is generally in excess of the contingent liability. Management believes these guarantees will not adversely affect the condensed consolidated financial statements.

The Company remains contingently liable for approximately $25.7 million relating to performance bonds associated with prior sale of products of IDP, which the Company divested in 2000. The acquirer of IDP is the primary obligor under these performance bonds. However, should the acquirer default under these arrangements the Company would be required to satisfy these financial obligations. The Company estimates that $11.9 million of the obligation will expire during the fourth quarter. The remainder extends through 2008.

The Company is contingently liable for customs duties in certain non-U.S. countries which totaled $6.9 million at September 30, 2005. These amounts are not accrued as the Company intends on exporting the product to another country for final sale.

In connection with the disposition of certain businesses and facilities, the Company has indemnified the purchasers for the expected cost of remediation of environmental contamination, if any, existing on the date of disposition. Such expected costs are accrued when environmental assessments are made or remedial efforts are probable and the costs can be reasonably estimated.

The following table represents the changes in the product warranty liability for the nine months ended September 30, 2005:


In millions
Beginning balance	$	190.5
Reductions for payments		(64.1	)
Accruals for warranties issued during the period		57.7
Changes to accruals related to preexisting warranties		9.2
Acquisitions		1.1
Translation		(4.1	)
Ending balance	$	190.3

Note 9 - Postretirement Benefits Other Than Pensions

The Company sponsors several postretirement plans that cover certain eligible employees. These plans provide for health care benefits, and in some instances, life insurance benefits. Postretirement health plans generally are contributory and contributions are adjusted annually. Life insurance plans for retirees are primarily noncontributory. The Company funds the postretirement benefit costs principally on a pay-as-you-go basis. The components of net periodic postretirement benefits cost for the three and nine months ended September 30, were as follows:

	Three months ended				Nine months ended
	September 30,				September 30,
In millions	2005		2004		2005		2004
Service cost	$	2.5	$	2.6	$	7.4	$	7.9
Interest cost		13.5		13.9		40.5		42.9
Net amortization and deferral losses		2.5		2.2		7.6		8.1
Net postretirement benefit expense	$	18.5	$	18.7	$	55.5	$	58.9

Note 10 - Pension Plans

The Company has noncontributory pension plans covering substantially all U.S. employees. In addition, certain non-U.S. employees in other countries are covered by pension plans. The Company’s pension plans for U.S. non-collectively bargained employees provide benefits on a modest final average pay formula. The Company’s U.S. collectively bargained pension plans principally provide benefits based on a flat benefit formula. Non-U.S. plans provide benefits based on earnings and years of service. In addition, the Company maintains supplemental benefit plans for officers and other key employees. The components of the Company’s pension related costs for the three and nine months ended September 30, include the following:

	Three months ended						Nine months ended
	September 30,						September 30,
In millions	2005			2004			2005			2004
Service cost	$	13.4		$	10.3		$	39.4		$	36.6
Interest cost		40.0			44.0			120.4			133.9
Expected return on plan assets		(53.2	)		(56.2	)		(160.8	)		(168.1	)
Net amortization of unrecognized:
Prior service costs		2.2			2.3			6.4			6.6
Transition amount		0.2			0.3			0.7			0.7
Plan net losses		5.8			5.3			16.9			16.2
Net pension cost		8.4			6.0			23.0			25.9
Curtailment/settlement losses		0.7			—			2.8			0.6
Net pension cost after curtailments/settlements	$	9.1		$	6.0		$	25.8		$	26.5

Settlement losses were recorded in 2005 as a result of lump sum distributions under supplemental benefit plans for officers and other key employees. The curtailment loss for the nine month period ended September 30, 2004 relates to a non-U.S. location included in the sale of Drilling Solutions.

The Company made required contributions of $18.8 million and discretionary contributions of $11.4 million to its pension plans during the nine months ended September 30, 2005. The Company contributed $20.0 million in required contributions and $40.0 million in discretionary contributions to its pension plans during the nine months ended September 30, 2004.

Note 11 - Business Segment Information

During the first quarter of 2005, the Company realigned its internal organization and operating segments to reflect its diversified structure and to promote greater transparency of results. The former Infrastructure segment has been disaggregated into two segments - the Compact Vehicle Technologies segment (formerly named the Bobcat and Club Car segment in the first quarter) and the Construction Technologies segment. The prior year segment results have been restated to conform to these changes.

A summary of operations by reportable segment is as follow:

	Three months ended						Nine months ended
	September 30,						September 30,
In millions	2005			2004			2005			2004
Net revenues
Climate Control Technologies	$	723.0		$	694.4		$	2,090.4		$	2,059.2
Compact Vehicle Technologies		636.6			547.8			2,023.9			1,658.5
Construction Technologies		291.7			263.7			904.3			766.2
Industrial Technologies		437.3			398.7			1,273.0			1,130.0
Security Technologies		526.7			463.4			1,542.0			1,320.7
Total	$	2,615.3		$	2,368.0		$	7,833.6		$	6,934.6

Operating income
Climate Control Technologies	$	81.9		$	78.6		$	225.8		$	228.0
Compact Vehicle Technologies		92.7			69.8			318.4			241.5
Construction Technologies		26.8			29.6			94.3			85.3
Industrial Technologies		61.0			46.4			167.4			123.6
Security Technologies		101.7			76.4			265.6			211.2
Unallocated corporate expense		(24.1	)		(22.6	)		(55.4	)		(67.2	)
Total	$	340.0		$	278.2		$	1,016.1		$	822.4

No significant changes in long-lived assets by geographic area have occurred since December 31, 2004.

Note 12 - IR New Jersey

IR-Limited has guaranteed all of the issued public debt securities of a wholly owned subsidiary, IR-New Jersey, while certain debt of IR-Limited is guaranteed by IR-New Jersey. The guarantees are full and unconditional, and no other subsidiary of the Company guarantees the securities. The following condensed consolidated financial information for IR-Limited, IR-New Jersey, and all their other subsidiaries is included so that separate financial statements of IR-New Jersey are not required to be filed with the U.S. Securities and Exchange Commission.

The condensed consolidating financial statements present IR-Limited and IR-New Jersey investments in their subsidiaries using the equity method of accounting. Intercompany investments in the non-voting Class B common shares are accounted for on the cost method and are reduced by intercompany dividends.

Condensed Consolidating Income Statement

For the three months ended September 30, 2005


		IR-			IR-			Other			Consolidating			IR-Limited
In millions		Limited			New Jersey			Subsidiaries			Adjustments			Consolidated
Net revenues	$	—		$	418.9		$	2,196.4		$	—		$	2,615.3
Cost of goods sold		—			325.6			1,595.1			—			1,920.7
Selling and administrative expenses		—			82.4			272.2			—			354.6
Operating income		—			10.9			329.1			—			340.0
Equity earnings in affiliates (net of tax)		266.7			172.8			100.5			(540.0	)		—
Interest expense		(3.4	)		(25.7	)		(6.4	)		—			(35.5	)
Intercompany interest and fees		(8.2	)		(108.9	)		117.1			—			—
Other income (expense), net		(0.9	)		11.7			(1.2	)		—			9.6
Earnings before income taxes		254.2			60.8			539.1			(540.0	)		314.1
(Benefit) provision for income taxes		—			(44.3	)		102.3			—			58.0
Earnings (loss) from continuing operations		254.2			105.1			436.8			(540.0	)		256.1
Discontinued operations, net of tax		—			(4.6	)		2.7			—			(1.9	)
Net earnings	$	254.2		$	100.5		$	439.5		$	(540.0	)	$	254.2

Condensed Consolidating Income Statement

For the nine months ended September 30, 2005


		IR-			IR-			Other			Consolidating			IR-Limited
In millions		Limited			New Jersey			Subsidiaries			Adjustments			Consolidated
Net revenues	$	—		$	1,229.9		$	6,603.7		$	—		$	7,833.6
Cost of goods sold		—			953.6			4,796.8			—			5,750.4
Selling and administrative expenses		—			233.6			833.5			—			1,067.1
Operating income		—			42.7			973.4			—			1,016.1
Equity earnings in affiliates (net of tax)		796.9			448.0			238.6			(1,483.5	)		—
Interest expense		(5.3	)		(80.1	)		(24.4	)		—			(109.8	)
Intercompany interest and fees		(28.7	)		(300.9	)		329.6			—			—
Other income (expense), net		(0.2	)		39.4			(12.2	)		—			27.0
Earnings before income taxes		762.7			149.1			1,505.0			(1,483.5	)		933.3
(Benefit) provision for income taxes		—			(102.4	)		255.5			—			153.1
Earnings (loss) from continuing operations		762.7			251.5			1,249.5			(1,483.5	)		780.2
Discontinued operations, net of tax		—			(13.0	)		(4.5	)		—			(17.5	)
Net earnings	$	762.7		$	238.5		$	1,245.0		$	(1,483.5	)	$	762.7

Condensed Consolidating Income Statement

For the three months ended September 30, 2004


In millions		IR- Limited			IR- New Jersey			Other Subsidiaries			Consolidating Adjustments			IR-Limited Consolidated
Net revenues	$	—		$	364.8		$	2,003.2		$	—		$	2,368.0
Cost of goods sold		—			282.4			1,456.4			—			1,738.8
Selling and administrative expenses		—			82.9			268.1			—			351.0
Operating income		—			(0.5	)		278.7			—			278.2
Equity earnings in affiliates (net of tax)		240.5			170.8			84.9			(496.2	)		—
Interest expense		—			(28.5	)		(7.2	)		—			(35.7	)
Intercompany interest and fees		(2.2	)		(99.4	)		101.6			—			—
Other income (expense), net		(0.5	)		26.9			(21.3	)		—			5.1
Earnings before income taxes		237.8			69.3			436.7			(496.2	)		247.6
(Benefit) provision for income taxes		—			(22.7	)		64.7			—			42.0
Earnings (loss) from continuing operations		237.8			92.0			372.0			(496.2	)		205.6
Discontinued operations, net of tax		—			(7.3	)		39.5			—			32.2
Net earnings	$	237.8		$	84.7		$	411.5		$	(496.2	)	$	237.8

Condensed Consolidating Income Statement

For the nine months ended September 30, 2004


		IR-			IR-			Other			Consolidating			IR-Limited
In millions		Limited			New Jersey			Subsidiaries			Adjustments			Consolidated
Net revenues	$	—		$	1,027.4		$	5,907.2		$	—		$	6,934.6
Cost of goods sold		—			803.3			4,273.0			—			5,076.3
Selling and administrative expenses		0.1			245.5			790.3			—			1,035.9
Operating income		(0.1	)		(21.4	)		843.9			—			822.4
Equity earnings in affiliates (net of tax)		711.5			459.7			251.8			(1,423.0	)		—
Interest expense		(0.2	)		(93.4	)		(22.5	)		—			(116.1	)
Intercompany interest and fees		(4.8	)		(281.6	)		286.4			—			—
Other income (expense), net		(2.9	)		62.9			(59.8	)		—			0.2
Earnings before income taxes		703.5			126.2			1,299.8			(1,423.0	)		706.5
(Benefit) provision for income taxes		—			(112.6	)		211.6			—			99.0
Earnings (loss) from continuing operations		703.5			238.8			1,088.2			(1,423.0	)		607.5
Discontinued operations, net of tax		—			12.9			83.1			—			96.0
Net earnings	$	703.5		$	251.7		$	1,171.3		$	(1,423.0	)	$	703.5

Condensed Consolidating Balance Sheet

September 30, 2005


In millions	IR-Limited			IR-New Jersey			Other Subsidiaries			Consolidating Adjustments			IR-Limited Consolidated
Current assets:
Cash and cash equivalents	$	15.9		$	231.5		$	484.7		$	—		$	732.1
Marketable securities		—			150.1			2.6			—			152.7
Accounts and notes receivable, net		0.1			347.6			1,416.9			—			1,764.6
Inventories, net		—			195.2			1,035.1			—			1,230.3
Prepaid expenses and deferred income taxes		—			82.1			278.4			—			360.5
Accounts and notes receivable affiliates		15.1			3,928.9			22,037.3			(25,981.3	)		—
Total current assets		31.1			4,935.4			25,255.0			(25,981.3	)		4,240.2

Investment in affiliates		6,886.9			11,331.3			30,609.2			(48,827.4	)		—
Property, plant and equipment, net		—			247.1			844.7			—			1,091.8
Intangible assets, net		—			160.5			5,124.6			—			5,285.1
Other assets		1.9			663.5			257.5			—			922.9
Total assets	$	6,919.9		$	17,337.8		$	62,091.0		$	(74,808.7	)	$	11,540.0

Current liabilities:
Accounts payable and accruals	$	9.0		$	611.2		$	1,533.2		$	—		$	2,153.4
Current maturities of long-term debt and loans payable		—			893.9			99.5			—			993.4
Accounts and note payable affiliates		1,000.0			6,101.6			18,879.7			(25,981.3	)		—
Total current liabilities		1,009.0			7,606.7			20,512.4			(25,981.3	)		3,146.8

Long-term debt		298.9			660.5			231.3			—			1,190.7
Notes payable affiliates		—			3,647.4			—			(3,647.4	)		—
Other noncurrent liabilities		4.2			1,114.3			476.2			—			1,594.7
Total liabilities		1,312.1			13,028.9			21,219.9			(29,628.7	)		5,932.2

Shareholders' equity:
Class A common shares		360.2			—			(26.3	)		—			333.9
Class B common shares		270.6			—			—			(270.6	)		—
Common shares		—			—			2,362.8			(2,362.8	)		—
Other shareholders' equity		9,682.0			4,992.3			42,941.8			(52,175.4	)		5,440.7
Accumulated other comprehensive income		154.7			(232.5	)		1.4			(90.4	)		(166.8	)
		10,467.5			4,759.8			45,279.7			(54,899.2	)		5,607.8
Less: Contra account		(4,859.7	)		(450.9	)		(4,408.6	)		9,719.2			—
Total shareholders' equity		5,607.8			4,308.9			40,871.1			(45,180.0	)		5,607.8
Total liabilities and equity	$	6,919.9		$	17,337.8		$	62,091.0		$	(74,808.7	)	$	11,540.0

Condensed Consolidating Balance Sheet

December 31, 2004


In millions	IR-Limited			IR-New Jersey			Other Subsidiaries			Consolidating Adjustments			IR-Limited Consolidated
Current assets:
Cash and cash equivalents	$	236.8		$	844.1		$	622.2		$	—		$	1,703.1
Marketable securities		—			—			0.6			—			0.6
Accounts and notes receivable, net		1.1			265.3			1,232.0			—			1,498.4
Inventories, net		—			152.7			906.1			—			1,058.8
Prepaid expenses and deferred income taxes		0.2			88.9			259.7			—			348.8
Accounts and notes receivable affiliates		51.7			1,757.7			17,064.3			(18,873.7	)		—
Total current assets		289.8			3,108.7			20,084.9			(18,873.7	)		4,609.7

Investment in affiliates		6,759.6			10,938.1			15,773.8			(33,471.5	)		—
Property, plant and equipment, net		—			239.4			773.8			—			1,013.2
Intangible assets, net		—			151.4			4,677.8			—			4,829.2
Other assets		—			649.5			313.0			—			962.5
Total assets	$	7,049.4		$	15,087.1		$	41,623.3		$	(52,345.2	)	$	11,414.6

Current liabilities:
Accounts payable and accruals	$	5.0		$	481.1		$	1,778.0		$	—		$	2,264.1
Current maturities of long-term debt and loans payable		—			546.3			66.5			—			612.8
Accounts and note payable affiliates		1,310.6			3,525.0			14,038.1			(18,873.7	)		—
Total current liabilities		1,315.6			4,552.4			15,882.6			(18,873.7	)		2,876.9

Long-term debt		—			1,048.3			219.3			—			1,267.6
Notes payable affiliates		—			3,647.4			—			(3,647.4	)		—
Other noncurrent liabilities		—			434.5			1,101.8			—			1,536.3
Total liabilities		1,315.6			9,682.6			17,203.7			(22,521.1	)		5,680.8

Shareholders' equity:
Class A common shares		178.4			—			(5.3	)		—			173.1
Class B common shares		135.3			—			—			(135.3	)		—
Common shares		—			—			2,362.8			(2,362.8	)		—
Other shareholders' equity		10,006.3			6,051.6			26,386.6			(36,946.6	)		5,497.9
Accumulated other comprehensive income		384.2			(186.5	)		185.5			(320.4	)		62.8
		10,704.2			5,865.1			28,929.6			(39,765.1	)		5,733.8
Less: Contra account		(4,970.4	)		(460.6	)		(4,510.0	)		9,941.0			—
Total shareholders' equity		5,733.8			5,404.5			24,419.6			(29,824.1	)		5,733.8
Total liabilities and equity	$	7,049.4		$	15,087.1		$	41,623.3		$	(52,345.2	)	$	11,414.6

Condensed Consolidating Statement of Cash Flows

For the nine months ended September 30, 2005


		IR-			IR-			Other			Consolidating		IR-Limited
In millions		Limited			New Jersey			Subsidiaries			Adjustments		Consolidated
Net cash (used in) provided by operating activities	$	1.1		$	(808.3	)	$	1,229.9		$	—	$	422.7

Cash flows from investing activities:
Capital expenditures		—			(19.5	)		(62.0	)		—		(81.5	)
Acquisitions, net of cash		—			—			(518.0	)		—		(518.0	)
Purchases of marketable securities		—			(150.1	)		0.6			—		(149.5	)
Proceeds from business disposition		—			—			9.4			—		9.4
Proceeds from sale of property, plant and
equipment		—			1.5			9.1			—		10.6
Other, net		—			3.7			3.1			—		6.8
Net cash used in investing activities		—			(164.4	)		(557.8	)		—		(722.2	)

Cash flows from financing activities:
Net change in debt		297.4			(40.2	)		(130.8	)		—		126.4
Net intercompany (payments) proceeds		(274.0	)		405.4			(131.4	)				—
Redemption of preferred stock of subsidiaries		(73.6	)		—			—			—		(73.6	)
Dividends (paid) received		(250.1	)		9.5			101.4			—		(139.2	)
Proceeds from the exercise of stock options		78.3			—			—			—		78.3
Purchase of treasury shares		—			—			(623.8	)		—		(623.8	)
Net cash (used in) provided by financing activities		(222.0	)		374.7			(784.6	)		—		(631.9	)

Net cash used in discontinued operations		—			(14.6	)		(14.6	)		—		(29.2	)

Effect of exchange rate changes on cash and
cash equivalents		—			—			(10.4	)		—		(10.4	)

Net (decrease) increase in cash and cash equivalents		(220.9	)		(611.0	)		(139.1	)		—		(971.0	)
Cash and cash equivalents - beginning of period		236.8			844.1			622.2			—		1,703.1
Cash and cash equivalents - end of period	$	15.9		$	233.1		$	483.1		$	—	$	732.1

Condensed Consolidating Statement of Cash Flows

For the nine months ended September 30, 2004


		IR-			IR-			Other			Consolidating		IR-Limited
In millions		Limited			New Jersey			Subsidiaries			Adjustments		Consolidated
Net cash (used in) provided by operating activities	$	(6.5	)	$	(342.2	)	$	834.7		$	—	$	486.0

Cash flows from investing activities:
Capital expenditures		—			(20.5	)		(44.7	)		—		(65.2	)
Acquisitions, net of cash		—			—			(28.6	)		—		(28.6	)
Proceeds from business disposition		—			189.0			37.2			—		226.2
Proceeds from sale of property, plant and
equipment		—			18.2			23.3			—		41.5
Other, net		—			—			1.6			—		1.6
Net cash provided by (used in) investing activities		—			186.7			(11.2	)		—		175.5

Cash flows from financing activities:
Net change in debt		—			(316.1	)		(23.7	)		—		(339.8	)
Net intercompany (payments) proceeds		(51.8	)		549.6			(497.8	)				—
Dividends (paid) received		(194.3	)		7.3			77.6			—		(109.4	)
Proceeds from the exercise of stock options		98.5			—			—			—		98.5
Purchase of treasury shares		—			—			(282.6	)		—		(282.6	)
Net cash used in financing activities		(147.6	)		240.8			(726.5	)		—		(633.3	)

Net cash (used in) provided by discontinued operations		—			(10.1	)		25.4			—		15.3

Effect of exchange rate changes on cash and
cash equivalents		—			—			3.8			—		3.8

Effect of change in fiscal year end of business		—			—			(23.8	)		—		(23.8	)

Net (decrease) increase in cash and cash equivalents		(154.1	)		75.2			102.4			—		23.5
Cash and cash equivalents - beginning of period		160.5			104.1			151.7			—		416.3
Cash and cash equivalents - end of period	$	6.4		$	179.3		$	254.1		$	—	$	439.8

Item 2 - Management’s Discussion and Analysis of Financial Condition and Results of Operations

INGERSOLL-RAND COMPANY LIMITED

MANAGEMENT’S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Executive Summary and Outlook

Ingersoll-Rand Company Limited (IR or the Company) is a leading innovation and solutions provider with strong brands and leading positions within its markets. The Company’s business segments are Climate Control Technologies, Compact Vehicle Technologies, Construction Technologies, Industrial Technologies and Security Technologies. The Company’s diverse product portfolio encompasses such leading industrial and commercial brands as Thermo King® transport temperature control equipment, Hussmann® commercial and retail refrigeration equipment, Ingersoll-Rand® industrial and construction equipment, Bobcat® compact construction equipment, Club Car® golf cars and utility vehicles and Schlage® locks and security solutions. In addition, IR offers products and services under many other premium brands for customers in industrial and commercial markets.

The Company seeks to drive shareholder value through three areas of emphasis: Dramatic Growth, by developing innovative solutions that improve our customers’ operations; Operational Excellence, by fostering a 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 outcomes. IR has transformed its portfolio to become a more diversified company with strong growth prospects by divesting cyclical, low-growth, asset-intensive businesses, and improving efficiencies, capabilities, and products and services for its high-potential businesses. The Company expects to use the cash flow generated from operations and divestitures for bolt-on acquisitions, stock buybacks and dividend enhancements.

The following significant events occurred during the first nine months of 2005:

In January, the Company completed the acquisition of the remaining 70% interest in Italy-based CISA S.p.A. (CISA) for approximately $267 million in cash and the assumption of approximately $244 million of debt. CISA manufactures an array of security products, including electronic locking systems, cylinders, door closers, and panic hardware, and also markets safes and padlocks. In April, the Company acquired the remaining 20% interest in Shanghai Ingersoll-Rand Compressor Company Limited (SIRC) for approximately $26 million, which was a joint venture established in 1987. SIRC manufactures a wide range of products and components for IR and provides the Company with a network of company-owned distribution centers located in most major cities in China to sell, install and service IR products. In May, the Company acquired Security One Systems for approximately $31 million, a security systems integrator located in Florida. Security One provides security design solutions including access control, closed circuit TV, video surveillance and alarm monitoring. In May, the Company purchased Baumaschinen Bensheim GmbH, a German construction equipment dealer, for approximately $14 million. In August, the Company established a joint venture with Taiwan Fu Hsing Industrial Company Ltd. (Taiwan Fu Hsing), a leading manufacturer of mechanical locks based in Taiwan, for approximately $72 million. The Company has a majority interest in Taiwan Fu Hsing’s mechanical door lock manufacturing subsidiaries in China and Malaysia, as well as a minority equity interest in Taiwan Fu Hsing. In August, the Company acquired Astrum Gesellschaft fur Angewandte Informatik GmbH (Astrum), based in Erlangen, Germany, for approximately $14 million. Astrum develops and provides personnel scheduling and work-time management software and services to a wide range of clients including those engaged in healthcare, manufacturing, hospitality, and transportation and logistics. The Company also made several smaller bolt-on acquisitions during the period.

On August 3, 2005, the Company’s Board of Directors (the “Board”) declared a two-for-one stock split, effected in the form of a stock distribution, payable on September 1, 2005 to shareholders of record on August 16, 2005. The Company retained the current par value of $1.00 per share for all common shares. All references in the financial statements and notes to the number of shares outstanding, per share amounts, and stock option data of the Company’s common shares have been restated to reflect the effect of the stock split for all periods presented. Shareholders’ equity reflects the stock split by reclassifying from “retained earnings” to “common stock” an amount equal to the par value of the additional shares arising from the split as of the distribution date. The Board also declared a 28% increase in the quarterly dividend of the Company Class A common shares to 16 cents per share and expanded the Company’s share repurchase program, which was established in August 2004, to $2 billion. During the first nine months of 2005, the Company repurchased 15.7 million Class A common shares at a cost of $623.8 million. Total purchases under the program through September 30, 2005 have been 19.7 million Class A common shares at a cost of $763.9 million.

·	The Company made discretionary contributions of $11.4 million to its pension plans during the nine months ended September 30, 2005, as well as $18.8 million in required employer contributions.

Revenues for the third quarter of 2005 were $2,615.3 million, a 10% increase compared with net revenues of $2,368.0 million in 2004. Revenues for all of the Company's business segments experienced growth compared to the 2004 third quarter: Climate Control Technologies (4%), Compact Vehicle Technologies (16%), Construction Technologies (11%), Industrial Technologies (10%) and Security Technologies (14%).

Revenues for the first nine months of 2005 were $7,833.6 million, a 13% increase compared with net revenues of $6,934.6 million for the comparable period in 2004. With the exception of Climate Control Technologies, all of the Company's business segments experienced double-digit revenue growth during the nine months ended September 30, 2005 compared to the same period in 2004: Compact Vehicle Technologies (22%), Construction Technologies (18%), Industrial Technologies (13%) and Security Technologies (17%). Climate Control Technologies’ revenues were slightly higher from period to period.

For the third quarter of 2005, all of the Company’s business segments, except Construction Technologies, reported improved operating income compared to 2004. For the nine-month period ended September 30, 2005, all of the Company’s business segments, except Climate Control Technologies, reported improved operating income compared to 2004. The improved results for both periods were mostly attributable to increased volumes and product mix, improved pricing, productivity improvements and acquisitions. Material cost inflation, manufacturing inefficiencies due to material availability and productivity investment costs continue to adversely impact operating income.

The Company reported third quarter 2005 net earnings of $254.2 million, or diluted earnings per share of $0.75. Earnings from continuing operations for the third quarter of 2005 increased by 25% compared to 2004. The Company reported net earnings of $762.7 million, or diluted earnings per share of $2.22, for the nine months ended September 30, 2005. Earnings from continuing operations for the first nine months of 2005 increased by 28% compared to the first nine months of 2004. The Company’s debt-to-capital ratio of 27.9% at September 30, 2005 was higher than the 24.3% ratio at December 31, 2004 mainly due to the issuance of $300 million of long-term debt during the second quarter.

Results of Operations - Three Months Ended September 30, 2005 and 2004

Earnings from continuing operations for the third quarter of 2005 were $256.1 million, or diluted earnings per share of $0.75, compared with $205.6 million and $0.59 diluted earnings per share in the comparable quarter of 2004.

	Three months ended September 30,
Dollar amounts in millions	2005			2004
Net revenues	$	2,615.3		$	2,368.0
Cost of goods sold		1,920.7			1,738.8
Selling and administrative expenses		354.6			351.0
Operating income	$	340.0		$	278.2
Operating margin		13.0	%		11.7	%

Net Revenues

Revenues for the third quarter of 2005 increased by approximately 10% over the comparable quarter of 2004. Higher volumes and product mix accounted for approximately 4% of the increase, while acquisitions and improved pricing accounted for 4% and 2%, respectively. Revenues increased by over 10% in all geographic regions except Asia Pacific. The Company continues to increase recurring revenues, which include revenues associated with parts, attachments, service and used equipment.

Cost of Goods Sold

Cost of goods sold in the third quarter of 2005 was 73.4% of revenue, which was the same as the third quarter of 2004. Savings from productivity improvements and the reduction of lower margin products were offset by higher material costs and manufacturing inefficiencies due to the lack of component availability from suppliers.

Selling and Administrative Expenses

Selling and administrative expenses in the third quarter of 2005 were 13.6% of revenues as compared to 14.8% in 2004. The decrease in the ratio was primarily due to higher revenue. Total expenses for the third quarter of 2005 were favorably impacted by lower employee benefit costs ($7.1 million) and an adjustment to the allowance for doubtful accounts estimate ($7.2 million). These savings were offset by higher expenses due to acquisitions ($16.3 million) and productivity investments ($6.1 million). The third quarter of 2004 included legal costs associated with a product warranty issue ($5.0 million).

Operating Income

Operating income for the third quarter of 2005 increased by approximately 22%. The increase was mainly due to higher volumes, product mix, improved pricing and productivity improvements. Acquisitions during 2005 also increased the third quarter operating income. These positive effects were partially offset by increased material costs and investments.

Interest Expense

Interest expense for the third quarter of 2005 was $35.5 million, which was comparable to the third quarter of 2004. The benefits of lower average interest rates were offset by higher year-over-year average debt levels.

Other Income, net

Other income, net includes foreign exchange activities, equity in earnings of partially owned affiliates, minority interests, and other miscellaneous income and expense items. Other income, net aggregated to $9.6 million in the third quarter of 2005 as compared with $5.1 million in 2004. The change is primarily due to higher interest income ($6.9 million) and lower minority interest charges ($2.6 million). These increases were partially offset by lower earnings from equity investments and lower foreign currency exchange gains.

Provision for Income Taxes

The Company’s third quarter 2005 provision for income taxes was $58.0 million, as compared to $42.0 million in 2004. The Company’s effective tax rate of 18.5% for the third quarter of 2005 is higher than the 17.0% in the third quarter of 2004. The 2005 rate increase is due to an increase in the 2005 earnings outlook, especially in higher tax jurisdictions.

We have completed our review of the foreign earnings repatriation provision of the American Jobs Creation Act of 2004. We concluded that, given the effective foreign tax rates applicable to our unrepatriated earnings, as well as certain restrictions in the Act and in the laws of other jurisdictions, and the composition of other tax attributes, the foreign earnings repatriation provision of the Act does not provide a material financial benefit to the Company. Based on that analysis, we do not plan to change our existing repatriation practices as a result of the Act.

Discontinued Operations

Results of Operations - Nine Months Ended September 30, 2005 and 2004

Earnings from continuing operations for the nine months ended September 30, 2005 were $780.2 million, or diluted earnings per share of $2.27, compared with $607.5 million and $1.73 diluted earnings per share in the comparable period of 2004.

	Nine months ended September 30,
Dollar amounts in millions	2005			2004
Net revenues	$	7,833.6		$	6,934.6
Cost of goods sold		5,750.4			5,076.3
Selling and administrative expenses		1,067.1			1,035.9
Operating income	$	1,016.1		$	822.4
Operating margin		13.0	%		11.9	%

Net Revenues

Revenues for the nine months ended September 30, 2005 increased by approximately 13% over the comparable period of 2004. Higher volumes and product mix accounted for approximately 7% of the increase, while the majority of the remaining increase was attributable to acquisitions and improved pricing accounted for 3% and 2%, respectively. The Company continues to make progress in increasing recurring revenues, which includes revenues associated with parts, attachments, service and used equipment sales.

Cost of Goods Sold

Cost of goods sold for the nine months ended September 30, 2005 was 73.4% of revenues as compared to 73.2% in 2004. The slight decrease in gross margin was mostly attributable to higher material costs and manufacturing inefficiencies due to the lack of availability of material from suppliers, mostly offset by productivity improvements and a reduction of lower margin products.

Selling and Administrative Expenses

Selling and administrative expenses for the nine months ended September 30, 2005 were 13.6% of revenues as compared to 14.9% in 2004. The decrease in the ratio was primarily due to higher revenue and lower stock-based liability program costs. The favorable settlement of certain product-related litigation, an adjustment to the allowance for doubtful accounts estimate and lower employee benefit costs also decreased the 2005 expenses. These benefits were partially offset by higher expenses due to acquisitions. The 2004 expenses included increases due to legal costs associated with a product warranty issue and were reduced by the gain on the sale of corporate real estate.

Operating Income

Operating income for the nine months ended September 30, 2005 increased by approximately 24%. The increase was mainly due to higher volumes, product mix, pricing and improved productivity. Acquisitions over the first nine months of 2005 also increased operating income. These positive effects were partially offset by increased material costs and productivity investment costs.

Interest Expense

Interest expense for the nine months ended September 30, 2005 was $109.8 million, a decrease of $6.3 million from 2004. The benefits of lower average interest rates were partially offset by higher year-over-year average debt levels.

Other Income, net

Other income, net, aggregated $27.0 million for the nine months ended September 30, 2005, as compared with $0.2 million in 2004. The change is primarily due to additional foreign currency exchange gains ($11.0 million), higher interest income ($17.3 million) and lower minority interest charges ($5.9 million), partially offset by lower income from equity investments ($3.3 million) in the current period.

Provision for Income Taxes

The Company’s provision for income taxes for the nine months ended September 30, 2005 was $153.1 million, as compared to $99.0 million in 2004. The Company’s effective tax rate of 16.4% is higher for the nine month period ended September 30, 2005, compared to 14.0% for the comparable period in 2004. The higher tax rate is due to an increase in the 2005 earnings outlook, especially in higher tax jurisdictions. Tax benefits of $8.8 million lowered the effective tax rate for first nine months of 2004.

Discontinued Operations

Review of Business Segments

Climate Control Technologies

Climate Control Technologies provides solutions to transport, preserve, store and display temperature-sensitive products by engaging in the design, manufacture, sale and service of transport temperature control units, refrigerated display merchandisers, beverage coolers, HVAC systems, and walk-in storage coolers and freezers.

During the quarter, Climate Control Americas had a 9% increase in revenue. This increase was attributable to strength in the transport business, modest growth in the retail business and an increase in recurring revenues. Total international revenues declined by 3% compared to the third quarter of 2004. This decrease was the result of a decline in Asia Pacific sales. European sales were flat, as growth in the truck and container business was offset by a decline in the retail business,.


	Three months ended						Nine months ended
	September 30,						September 30,
Dollar amounts in millions	2005			2004			2005			2004
Net revenues	$	723.0		$	694.4		$	2,090.4		$	2,059.2
Operating income		81.9			78.6			225.8			228.0
Operating margin		11.3	%		11.3	%		10.8	%		11.1	%

Climate Control Technologies’ revenues for the third quarter of 2005 were approximately 4% higher than the third quarter of 2004. Increases from acquisitions and improved pricing were partially offset by lower volumes and product mix. Operating income was slightly higher for the third quarter of 2005 and operating margins were equal to 2004. Improved pricing and productivity increased operating income by $14 million and $6 million, respectively. These improvements were partially offset by higher material costs of $7 million, a decrease of $3 million due to lower volume and product mix, and additional costs in the service and installation business.

Climate Control Technologies’ revenues for the first nine months of 2005 were slightly higher than 2004. Increases from improved pricing and the effects of currency were mostly offset by lower volumes and product mix. Operating income and margins for the first half of 2005 were lower than 2004. Higher material costs of $36 million decreased operating income, as well as a decrease of $20 million due to lower volume and product mix. These negative effects were mostly offset by improved pricing and productivity which increased operating income by $30 million and $21 million, respectively.

Compact Vehicle Technologies

The Compact Vehicle Technologies segment is engaged in the design, manufacture, sale and service of skid-steer loaders, mini-excavators and golf and utility vehicles. This segment includes the Bobcat and Club Car brands.

During the quarter, Bobcat revenues increased by 21% compared to last year’s third quarter due to growth in North American markets and new product sales, as well as continued strength in the aftermarket parts and attachments markets. Club Car revenues were relatively flat compared to the third quarter of 2004 as double digit growth in our golf and utility vehicles offset higher prior year revenues from the launch of an all-wheel drive vehicle and the completion of a large customer vehicle program during 2005.

	Three months ended						Nine months ended
	September 30,						September 30,
Dollar amounts in millions	2005			2004			2005			2004
Net revenues	$	636.6		$	547.8		$	2,023.9		$	1,658.5
Operating income		92.7			69.8			318.4			241.5
Operating margin		14.6	%		12.7	%		15.7	%		14.6	%

Compact Vehicle Technologies’ revenues for the third quarter of 2005 increased by approximately 16% compared to 2004. The increase was mainly attributable to higher volumes and product mix, which accounted for approximately 13% of the increase. The remaining 3% increase was mostly due to improved pricing. Operating income and margins for the third quarter of 2005 also increased significantly. Higher volumes and product mix contributed $14 million and improved pricing also increased operating income by $14 million from the prior year comparable quarter. These positive effects were partially offset by higher material costs of $5 million and manufacturing inefficiencies due to the lack of availability of components.

Compact Vehicle Technologies’ revenues for the first nine months of 2005 increased by approximately 22% compared to 2004. The increase was mainly attributable to higher volumes and product mix, which accounted for approximately 19% of the increase. The remaining 3% increase was mostly due to improved pricing. Operating income and margins for the first nine months of 2005 also increased. Higher volumes and product mix improved operating income by $94 million, while improved pricing also added $41 million during the period. These positive effects were partially offset by higher material costs of $50 million, investments in productivity improvements and manufacturing inefficiencies due to the lack of availability of components.

Construction Technologies

Construction Technologies is engaged in the design, manufacture, sale and service of road construction and repair equipment, portable power products, general-purpose construction equipment and light towers. It is comprised of the Utility Equipment and Road Development businesses.

Road Development revenues decreased by 2%, compared to the third quarter of 2004, as a decline in China due to the governmental curtailment of construction investment and lower European revenues, offset growth in the North American market. Utility Equipment had a revenue increase of 31% compared to the third quarter of 2004. This increase was the result of new product growth, expanded distribution and the effects of the hurricane season. These factors resulted in increased sales in all geographic regions.

	Three months ended						Nine months ended
	September 30,						September 30,
Dollar amounts in millions	2005			2004			2005			2004
Net revenues	$	291.7		$	263.7		$	904.3		$	766.2
Operating income		26.8			29.6			94.3			85.3
Operating margin		9.2	%		11.2	%		10.4	%		11.1	%

Construction Technologies’ revenues for the third quarter of 2005 increased by approximately 11% compared to 2004. The increase was mainly attributable to higher volumes and product mix, which accounted for approximately 7% of the increase. The remaining increase was mainly due to improved pricing, which accounted for approximately 3% of the change. Operating income and margins declined during the period. Higher material costs negatively impacted operating income by $10 million. Operating income was also affected by unfavorable product and geographic mix and manufacturing inefficiencies due to the lack of availability of components. These increased costs were partially offset by increased income of $9 million related to improved pricing and $3 million from higher volumes and product mix.

Construction Technologies’ revenues for the first nine months of 2005 increased by approximately 18% compared to 2004. The increase was mainly attributable to higher volumes and product mix, which accounted for approximately 14% of the increase. The remaining increase was mostly due to improved pricing, which increased revenues by approximately 4%. Operating income increased, while the operating margins declined compared to the nine month period in 2004. Higher volumes and product mix increased operating income by $16 million, while improved pricing and productivity added $27 million and $15 million, respectively, during the period. These positive effects were partially offset by higher material costs of $41 million, productivity investment costs of $4 million and manufacturing inefficiencies due to the lack of availability of components.

Industrial Technologies

Industrial Technologies is focused on providing solutions to enhance customers’ industrial and energy efficiency, mainly by engaging in the design, manufacture, sale and service of compressed air systems, tools, fluid power production and energy generation systems. This segment includes the Air Solutions and Productivity Solutions businesses.

Air Solutions’ revenues increased 9% for the third quarter compared to 2004. Higher revenue was the result of strong growth in the Americas, new product growth and a 15% increase in recurring revenues. Productivity Solutions increased revenue by 8% over the comparable period in 2004. Product sales improved in all categories, driven by growth from new products.


	Three months ended						Nine months ended
	September 30,						September 30,
Dollar amounts in millions	2005			2004			2005			2004
Net revenues	$	437.3		$	398.7		$	1,273.0		$	1,130.0
Operating income		61.0			46.4			167.4			123.6
Operating margin		14.0	%		11.6	%		13.2	%		10.9	%

Industrial Technologies’ revenues for the third quarter of 2005 increased by approximately 10% compared to 2004. The increase was mainly attributable to higher volumes and product mix, which accounted for approximately 7% of the increase. The remaining increase was due to improved pricing. Operating income and margins for the third quarter of 2005 also increased significantly. Higher volumes and product mix increased operating income by $10 million, while improved pricing also contributed $8 million to the increase.

Industrial Technologies’ revenues for the first nine months of 2005 increased by approximately 13% compared to 2004. The increase was mainly attributable to higher volumes and product mix, which accounted for approximately 9% of the increase. The remaining increase was mostly due to improved pricing. Operating income and margins for the nine month period in 2005 also increased significantly. Higher volumes and product mix increased operating income by $28 million, while improved pricing also contributed $23 million to the increase.

Security Technologies

Security Technologies is engaged in the design, manufacture, sale and service of mechanical and electronic security products, biometric access control systems and security and scheduling software.

Security Technologies’ revenues and operating income benefited from strong growth in its electronic controls and integrated solutions businesses for the third quarter of 2005. Total revenues were up 3% before acquisitions and prior year divestitures and bookings were strong. North American sales improved over the third quarter of 2004, due to the continued strength in the residential and commercial businesses. Without the effect of acquisitions, international sales were flat.


	Three months ended						Nine months ended
	September 30,						September 30,
Dollar amounts in millions	2005			2004			2005			2004
Net revenues	$	526.7		$	463.4		$	1,542.0		$	1,320.7
Operating income		101.7			76.4			265.6			211.2
Operating margin		19.3	%		16.5	%		17.2	%		16.0	%

Security Technologies’ revenues for the third quarter of 2005 increased by approximately 14% compared to 2004. The increase was mainly attributable to acquisitions, which increased revenues by 14%. Improved pricing also increased revenues during the period, which helped to offset lower revenues due to business divestitures during the fourth quarter of 2004. Operating income and margins also increased significantly during the period. Improved pricing, productivity and acquisitions increased operating income by $15 million, $7 million and $5 million, respectively. These increases were partially offset by unfavorable product mix and volume of $9 million. The operating income for the third quarter of 2004 was negatively impacted by costs of approximately $10 million related to a product warranty issue.

Security Technologies’ revenues for the first nine months of 2005 increased by approximately 17% compared to 2004. The increase was mainly attributable to acquisitions, which increased revenues by 15%. The majority of the remaining increase was due to improved pricing. Operating income and margins also improved compared to 2004. Improved pricing, productivity and acquisitions increased operating income by $42 million, $18 million and $11 million, respectively. The favorable settlement of certain product-related litigation also increased operating income for the first nine months of 2005. These increases were partially offset by higher material costs of $15 million, unfavorable product mix and volumes of $22 million and productivity investment costs of $13 million. Operating income for the first nine months of 2004 was lowered by costs of approximately $10 million related to a product warranty issue, costs related to a plant closing and the discontinuance of a plumbing fixture product line of $7 million and legal expenses of $11 million.

Liquidity and Capital Resources

The Company’s primary source for liquidity has been operating cash flow. Net cash provided by operating activities for the nine months ended 2005 and 2004 was $422.7 million and $486.0 million, respectively. The decrease in net cash from operating activities is primarily attributable to negative impacts from period to period in accounts payable and accrued liabilities, as well as increases in accounts receivable as a result of increased sales and a build-up of inventory due to component availability issues. These decreases were partially offset by higher earnings in 2005.

Net cash used in investing activities for the first nine months of 2005 was $722.2 million, compared to net cash provided by investing activities for the same period in 2004 of $175.5 million. Cash paid for acquisitions included $267.3 million for the CISA acquisition during the first quarter of 2005 and totaled $518.0 million for the nine month period. Cash flows for 2005 also include purchases of $149.5 million of auction rate securities, which are classified as available-for-sale marketable securities. The nine month period ended September 30, 2004 included cash from dispositions of $226.2 million, mainly from the sale of the Drilling Solutions business.

Net cash used in financing activities for the first nine months of 2005 was $631.9 million compared to $633.3 million in 2004. During the second quarter of 2005, the Company issued $300 million of long-term debt. The Company repurchased $623.8 million of Class A common shares in the first nine months of 2005, compared to $282.6 million in the same period in 2004. During the second and third quarters of 2005, the Company repurchased the preferred shares of two subsidiaries. Payments of $73.6 million were made to unrelated third party holders of the shares. The Company has fully consolidated these subsidiaries since their inception. The Company also made $166.3 million of additional long-term debt repayments during the first nine months of 2004, compared to same period in 2005.

The Company’s debt-to-total capital ratio at September 30, 2005 was 27.9%, compared to 24.3% at December 31, 2004. The increase in the ratio is due to the issuance of $300 million of long-term debt during the second quarter of 2005. The Company's public debt has no financial covenants and its $2.0 billion revolving credit lines, which were both unused, have a debt-to-total capital covenant of 65%, which is calculated excluding non-cash items.

The Company’s working capital was $1,093.4 million at September 30, 2005 compared to $1,732.8 million at December 31, 2004. The change was due primarily to a lower cash balance at September 30, 2005 resulting from acquisitions, share repurchases and dividend payments, and an increase in current maturities of long-term debt. This decrease was partially offset by an increase in accounts receivable from increased sales and a planned increase in inventory due to expected sales volumes and continued material availability concerns.

Environmental and Asbestos Matters

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 federal Superfund and state remediation sites. 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 assumed it will not 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 contributions 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, U.S. federal and state 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.

Ingersoll-Rand Company (IR-New Jersey), a Company subsidiary, is a defendant in numerous asbestos-related lawsuits in state and federal courts. In virtually all of the suits a large number of other companies have also been named as defendants. The claims against IR-New Jersey generally allege injury caused by exposure to asbestos contained in certain of IR-New Jersey's products. Although IR-New Jersey was neither a producer nor a manufacturer of asbestos, some of its formerly manufactured products utilized asbestos-containing components, such as gaskets, purchased from third-party suppliers.

All asbestos-related claims resolved to date have been dismissed or settled. For the nine-month periods ended September 30, 2005 and 2004, total costs for settlement and defense of asbestos claims after insurance recoveries and net of tax were approximately $12.5 million and $12.3 million, respectively. The Company performs a thorough analysis, updated periodically, of its actual and potential asbestos liabilities projected seven years into the future. Based upon such analysis, the Company believes that its reserves and insurance are adequate to cover its asbestos liabilities, and that these liabilities are not likely to have a material adverse effect on its financial position, results of operations, liquidity or cash flows.

New Accounting Standards

In November 2004, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standard No. 151, “Inventory Costs, an amendment of ARB No. 43, Chapter 4” (SFAS 151). SFAS 151 clarifies that abnormal amounts of idle facility expense, freight, handling costs and spoilage should be recognized as current-period charges and requires the allocation of fixed production overheads to inventory based on the normal capacity of the production facilities. SFAS 151 is effective for fiscal years beginning after June 15, 2005. The Company does not expect the adoption of SFAS 151 to have a material impact on its consolidated financial position and results of operations.

In December 2004, the FASB issued SFAS No. 123 (Revised 2004), “Share Based Payment” (SFAS 123(R)). SFAS 123(R) is a revision of SFAS No. 123, “Accounting for Stock-Based Compensation,” which supersedes APB No. 25, “Accounting for Stock Issued to Employees,” and amends SFAS No. 95, “Statement of Cash Flows.” SFAS 123(R) requires companies to recognize compensation expense in the income statement for an amount equal to the fair value of the share-based payment issued. This applies to all transactions involving the issuance of equity by a company in exchange for goods and services, including employees. In accordance with a U.S. Securities and Exchange Commission rule, the Company will delay implementation of SFAS 123(R) until January 1, 2006. The Company is evaluating the transition applications and the impact the adoption of SFAS 123(R) will have on its consolidated financial position, results of operations and cash flows.

In December 2004, the FASB released Financial Staff Position 109-2, “Accounting and Disclosure Guidance for the Foreign Earnings Repatriation Provision within the American Jobs Creation Act of 2004” (FSP 109-2). The American Jobs Creation Act (the Act) provides for a special one-time tax deduction of 85% of certain foreign earnings that are repatriated in either an enterprise’s last tax year that began before the enactment date, or the first tax year that begins during the one-year period beginning on the date of enactment. FSP 109-2 allows for time for enterprises beyond the financial reporting period of enactment to evaluate the effect of the Act on its plan for reinvestment or repatriation of foreign earnings for purposes of applying SFAS No. 109. We have completed our review of the foreign earnings repatriation provision of the Act. We concluded that, given the effective foreign tax rates applicable to our unrepatriated earnings, as well as certain restrictions in the Act and in the laws of other jurisdictions, and the composition of other tax attributes, the foreign earnings repatriation provision of the Act does not provide a material financial benefit to the Company. Based on that analysis, we do not plan to change our existing repatriation practices as a result of the Act.

In March 2005, the FASB issued Interpretation No. 47, “Accounting for Conditional Asset Retirement Obligations” (FIN 47). FIN 47 requires an entity to recognize a liability for a conditional asset retirement obligation when incurred if the liability can be reasonably estimated. The Interpretation also clarifies that the term Conditional Asset Retirement Obligation refers to a legal obligation to perform an asset retirement activity in which the timing and/or method of settlement are conditional on a future event that may or may not be within the control of the entity. FIN 47 also clarifies when an entity would have sufficient information to reasonably estimate the fair value of an asset retirement obligation. FIN 47 is effective for the Company on December 31, 2005. The Company is evaluating the impact the adoption of FIN 47 will have on its consolidated financial position, results of operations and cash flows.

In March 2005, the SEC issued Staff Accounting Bulletin No. 107 (SAB 107) regarding the Staff’s interpretation of SFAS 123(R). This interpretation provides the Staff’s views regarding interactions between SFAS 123(R) and certain SEC rules and regulations and provides interpretations of the valuation of share-based payments for public companies. The interpretive guidance is intended to assist companies in applying the provisions of SFAS 123(R) and investors and users of the financial statements in analyzing the information provided. The Company will follow the guidance prescribed in SAB 107 in connection with its adoption of SFAS 123(R) in the first quarter of 2006.

In May 2005, the FASB issued SFAS No. 154, “Accounting Changes and Error Corrections” (SFAS 154) which replaces Accounting Principles Board Opinion No. 20, “Accounting Changes” and SFAS No. 3, “Reporting Accounting Changes in Interim Financial Statements - An Amendment of APB Opinion No. 28.” SFAS 154 provides guidance on the accounting for and reporting of accounting changes and error corrections. It establishes a retrospective application, or the latest practicable date, as the required method for reporting a change in accounting principle and the reporting of a correction of an error. SFAS 154 is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005. The Company does not expect the adoption of SFAS 154 to have a material impact on its consolidated financial position and results of operations.

In July 2005, the FASB issued a proposed interpretation of SFAS 109, “Accounting for Income Taxes,” to clarify certain aspects of accounting for uncertain tax positions, including issues related to the recognition and measurement of those tax positions. If adopted as proposed, the interpretation would be effective in the fourth quarter of 2005, and any adjustments required to be recorded as a result of adopting the interpretation would be reflected as a cumulative effect from a change in accounting principle. We are currently in the process of determining the impact of adoption of the interpretation as proposed on our consolidated financial position and results of operations.

Safe Harbor Statement

Information provided by the Company in reports such as this report on Form 10-Q, in press releases and in statements made by employees in oral discussions, to the extent the information is not historical fact, constitutes “forward looking statements” within the meaning of regulations under the Securities Act of 1933 and the Securities Exchange Act of 1934. Forward-looking statements by their nature involve risk and uncertainty.

The Company cautions that a variety of factors, including but not limited to the following, could cause business conditions, results, performance or achievements to differ from those expected by the Company: changes in the rate of economic growth in the United States and in other major international economies; significant changes in trade, monetary and fiscal policies worldwide; tax legislation; currency fluctuations among the U.S. dollar and other currencies; political factors or changes; demand for Company products and services; distributor inventory levels; failure to achieve the Company’s productivity targets; and competitor actions including unanticipated pricing actions or new product introductions.

Item 3 - Quantitative and Qualitative Disclosures about Market Risk

For a discussion of the Company’s risk factors and uncertainties, refer to Part II, Item 7A, “Quantitative and Qualitative Disclosures About Market Risk,” contained in the Company’s Annual Report incorporated by reference in Form 10-K for the period ended December 31, 2004.

Item 4 - Controls and Procedures

The Company’s management, including its Chief Executive Officer and Chief Financial Officer, has conducted an evaluation of the effectiveness of disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that as of September 30, 2005, the Company’s disclosure controls and procedures are effective in ensuring that all material information required to be filed in this Quarterly Report on Form 10-Q has been recorded, processed, summarized and reported when required.

There has been no change in the Company’s internal control over financial reporting that occurred during the third quarter of 2005 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II OTHER INFORMATION

Item 1 - Legal Proceedings

In the normal course of business, the Company is involved in a variety of lawsuits, claims and legal proceedings, including commercial and contract disputes, employment matters, product liability claims, environmental liabilities and intellectual property disputes. In the opinion of the Company, pending legal matters are not expected to have a material adverse effect on the results of operations, financial condition, liquidity or cash flows.

By letter dated October 13, 2005, the Michigan Department of Environmental Quality ("DEQ") has reduced its prior assessment of stipulated penalties to $90,000 against the Company for an alleged violation of a DEQ Administrative Order of Consent ("AOC"). The AOC governs the Company's environmental investigation and cleanup obligations related to the McCoy Creek Industrial Park, Buchanan, Michigan. The Company believes it has valid defenses against the penalty and is seeking to resolve this matter through the informal dispute resolution process provided in the AOC.

As previously reported, on November 10, 2004, the SEC issued an Order directing that a number of public companies, including the Company, provide information relating to their participation in transactions under the United Nations’ Oil For Food Program. Upon receipt of the Order, the Company undertook a thorough review of its participation in the program, has provided the SEC with information responsive to the Order and will provide additional information requested by the SEC. The Company will continue to cooperate fully with the SEC in this matter.

See also the discussion under Part I, Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations, Environmental and Asbestos Matters and also Part I, Item 1, Note 8 to the Consolidated Condensed Financial Statements.

Item 2 - Unregistered Sales of Securities and Use of Proceeds

Issuer Purchases of Equity Securities

The following table provides information with respect to purchases by the Company of its Class A common shares during the quarter ended September 30, 2005:


							Approximate dollar
					Total number of		value of shares still
	Total number				shares purchased		available to be
	of shares		Average		as part of the		purchased under
	purchased		price paid		program		the program
Period	(000's)		per share		(000's)		($000's)
7/01/2005 - 7/31/2005		—	$	—		—	$	1,381,285
8/01/2005 - 8/31/2005		2,845		39.35		2,845		1,269,338
9/01/2005 - 9/30/2005		850		39.10		850		1,236,099
Total		3,695				3,695

On August 3, 2005, the Board of Directors of the Company expanded the Company’s existing share repurchase program to allow the repurchase of up to a total of $2 billion worth of Class A common shares. The plan was established on August 4, 2004 and authorized the Company to repurchase up to 20 million shares. Based on market conditions, share repurchases will be made from time to time in the open market and in privately negotiated transactions at the discretion of management. This long-term repurchase program will serve primarily to offset dilution from the Company’s incentive stock plan.

Item 6 - Exhibits

(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.

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.

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.

INGERSOLL-RAND COMPANY LIMITED

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 LIMITED

(Registrant)


Date: November 4, 2005		/s/ Timothy R. McLevish
		Timothy R. McLevish, Senior Vice President
		and Chief Financial Officer

		Principal Financial Officer


Date: November 4, 2005		/s/ Richard W. Randall
		Richard W. Randall, Vice President and
		Controller

		Principal Accounting Officer

EX-31.1 2 v028350_ex31-1.htm

Exhibit 31.1

CERTIFICATION

I, Herbert L. Henkel, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Ingersoll-Rand Company Limited;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.	Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.	The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a.	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b.	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.


Date: November 4, 2005	/s/ Herbert L. Henkel
	Herbert L. Henkel
	Principal Executive Officer

EX-31.2 3 v028350_ex31-2.htm

Exhibit 31.2

CERTIFICATION

I, Timothy R. McLevish, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Ingersoll-Rand Company Limited;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

c.	Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

5.	The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a.	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b.	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.


Date: November 4, 2005	/s/ Timothy R. McLevish
	Timothy R. McLevish
	Principal Financial Officer

EX-32 4 v028350_ex32.htm

Exhibit 32

Section 1350 Certifications

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code)

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code), each of the undersigned officers of Ingersoll-Rand Company Limited (the Company), does hereby certify that:

The Quarterly Report on Form 10-Q for the quarter and nine months ended September 30, 2005 (the Form 10-Q) of the Company fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.


/s/ Herbert L. Henkel
Herbert L. Henkel
Chief Executive Officer
November 4, 2005


/s/ Timothy R. McLevish
Timothy R. McLevish
Chief Financial Officer
November 4, 2005