-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DzuvcMxuHcE9uPlwrgotdq6jbA2VnW4XvnwyK6GytcHYUxcYF2NeIc5pv6RYbb1y SYEXhlQrpNq4eoPV0JkOYg== /in/edgar/work/20000627/0000050485-00-000003/0000050485-00-000003.txt : 20000920 0000050485-00-000003.hdr.sgml : 20000920 ACCESSION NUMBER: 0000050485-00-000003 CONFORMED SUBMISSION TYPE: 11-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19991231 FILED AS OF DATE: 20000627 FILER: COMPANY DATA: COMPANY CONFORMED NAME: INGERSOLL RAND CO CENTRAL INDEX KEY: 0000050485 STANDARD INDUSTRIAL CLASSIFICATION: [3560 ] IRS NUMBER: 135156640 STATE OF INCORPORATION: NJ FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 11-K SEC ACT: SEC FILE NUMBER: 001-00985 FILM NUMBER: 661825 BUSINESS ADDRESS: STREET 1: 200 CHESTNUT RIDGE RD STREET 2: PO BOX 8738 CITY: WOODCLIFF LAKE STATE: NJ ZIP: 07675 BUSINESS PHONE: 2015730123 MAIL ADDRESS: STREET 1: 200 CHESTNUT RIDGE ROAD CITY: WOODCLIFF LAKE STATE: NJ ZIP: 07675 11-K 1 0001.txt SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 11 - K X ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 1999 or _ TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____ to ____ Commission file number 1-985 A. Full title of the plan and address of the plan, if different from that of the issuer named below: INGERSOLL-RAND COMPANY SAVINGS AND STOCK INVESTMENT PLAN B. Name of the issuer of the securities held pursuant to the plan and the address of its principal executive office: INGERSOLL-RAND COMPANY P.O. BOX 8738 200 Chestnut Ridge Road Woodcliff Lake, New Jersey 07675 REQUIRED INFORMATION A. Financial Statements and Schedules Table of Contents Independent Auditor's Report Statements of Financial Condition for the Years ended December 31, 1999 and 1998 Statements of Income and Changes in Plan Equity for the Years ended December 31, 1999 and 1998 Notes to Financial Statements Schedule I - Item 27a - Schedule of Assets Held for Investment Purposes at December 31, 1999 Schedule V - Item 27d - Schedule of Reportable Transactions for the Year Ended December 31, 1999 B. Exhibit Consent of Independent Accountants SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Benefits Committee has duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized. Ingersoll-Rand Company Savings And Stock Investment Plan (Registrant) Date 6/22/00 By: /S/ Donald H. Rice Donald H. Rice Benefits Committee Chairman INGERSOLL-RAND COMPANY SAVINGS AND STOCK INVESTMENT PLAN TABLE OF CONTENTS INDEPENDENT AUDITORS' REPORT FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998: Statements of Financial Condition Statements of Income and Changes in Plan Equity Notes to Financial Statements SUPPLEMENTAL SCHEDULES (Combined Investment Trust): Schedule I - Item 27a - Schedule of Assets Held for Investment Purposes at December 31, 1999 Schedule V - Item 27d - Schedule of Reportable Transactions for the year ended December 31, 1999 Other schedules required by Section 2520.103-10 of the DOL Rules and Regulations for Reporting and Disclosure under ERISA have been omitted because they are not applicable. INDEPENDENT AUDITORS' REPORT To the Ingersoll-Rand Company Benefits Committee and Participants in the Ingersoll-Rand Company Savings and Stock Investment Plan Woodcliff Lake, New Jersey We have audited the accompanying statements of financial condition of the Ingersoll-Rand Company Savings and Stock Investment Plan (the "Plan") as of December 31, 1999 and 1998, and the related statements of income and changes in plan equity for the years then ended. These financial statements are the responsibility of the Ingersoll-Rand Company Benefits Committee (the "Benefits Committee"). Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the Benefits Committee, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, such financial statements present fairly, in all material respects, the financial condition of the Plan as of December 31, 1999 and 1998, and the income and changes in plan equity for the years then ended in conformity with accounting principles generally accepted in the United States of America. Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedules listed in the Table of Contents are presented for the purpose of additional analysis and are not a required part of the basic financial statements, but are supplementary information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. These schedules are the responsibility of the Benefits Committee. Such schedules have been subjected to the auditing procedures applied in our audit of the basic 1999 financial statements and, in our opinion, are fairly stated in all material respects when considered in relation to the basic 1999 financial statements taken as a whole. /S/ Deloitte & Touche DELOITTE & TOUCHE LLP Parsippany, New Jersey June 1, 2000 INGERSOLL-RAND COMPANY SAVINGS AND STOCK INVESTMENT PLAN STATEMENTS OF FINANCIAL CONDITION AS OF DECEMBER 31, 1999 AND 1998 1999 1998 Assets: Investments at current value - Combined Trust Fixed Income Fund $ 234,765,497 $226,002,416 Combined Trust Mutual Fund 453,869,229 355,707,045 Combined Trust Ingersoll-Rand Company Stock Fund 326,943,636 294,035,795 Total investments 1,015,578,362 875,745,256 Participant loans receivable 26,546,131 27,689,595 Contributions receivable 4,138,802 3,991,733 Due from merged plans 10,783,785 31,987,570 Total Assets and Plan equity $1,057,047,080 $939,414,154 See notes to the financial statements. INGERSOLL-RAND COMPANY SAVINGS AND STOCK INVESTMENT PLAN STATEMENTS OF INCOME AND CHANGES IN PLAN EQUITY YEARS ENDED DECEMBER 31, 1999 AND 1998 1999 1998 Contributions: Participants $ 53,075,655 $ 51,206,693 Investment income: Dividends 32,466,088 18,022,005 Interest 16,601,081 15,578,911 Net appreciation of investments 120,300,479 103,899,604 Net investment income 169,367,648 137,500,520 Total additions 222,443,303 188,707,213 Participant withdrawals and distributions 115,463,976 97,928,329 Net increase prior to transfers 106,979,327 90,778,884 Transfers from other plans, net 10,653,599 31,381,688 Net increase in plan equity 117,632,926 122,160,572 Plan equity, beginning of year 939,414,154 817,253,582 Plan equity, end of year $1,057,047,080 $939,414,154 See notes to the financial statements. INGERSOLL-RAND COMPANY SAVINGS AND STOCK INVESTMENT PLAN NOTES TO FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 1999 AND 1998 1. PLAN DESCRIPTION The following brief description of the Ingersoll-Rand Company Savings and Stock Investment Plan (the "Plan") provides only general information. Participants should refer to the Plan Document for a more complete description of the Plan's provisions. General - Ingersoll-Rand Company (the "Company") adopted the Plan for eligible employees at participating locations. Prior to July 1, 1999, eligible participants could participate in the Plan on the first day of the month following 30 calendar days of employment. Effective July 1, 1999, automatic enrollment was instituted for the Plan, whereby a new employee is automatically enrolled in the Plan upon date of hire with a 2% pre-tax contribution set-up. The employee then has a period of approximately 30 days to elect to not contribute to the Plan. Payroll deductions, consequently, do not begin until such period has expired. The Chase Manhattan Bank ("Chase") and PricewaterhouseCoopers are the trustee and recordkeeper of the Plan, respectively. The Benefits Committee, which is appointed by the Company's Board of Directors (or its delegate), administers the Plan. The Finance Committee of the Company's Board of Directors establishes the Plan's investment policies. The Company intends to continue the Plan indefinitely. However, the Company retains the right to discontinue the Plan. If the Company discontinues the Plan, all participant account balances become fully vested at the termination date. Contributions - Participants may contribute as basic contributions one to six percent (in whole percentages) of their compensation through payroll deductions. Participants contributing six percent of compensation may contribute an additional one to ten percent of compensation as supplemental contributions. Participants may use before- or after-tax dollars for part or all of their contributions. Contributions are subject to varying limitations to ensure compliance with Internal Revenue Code requirements. Participants may change their contribution amounts at any time effective the first pay period of the following month by contacting the recordkeeper through its automated Benefits Information Line (BIL). The Company contributes to the Plan via a matching contribution and a Company retirement contribution. The Company matches basic contributions at a rate determined by the Company's Board of Directors. The Plan requires that Company matching contributions be at least 25%, but no more than 100% of participants' basic contributions. For 1999 and 1998, the Company matching contribution was set at 50% of basic contributions. As a Company retirement contribution for certain eligible employees, the Company also contributes to the Plan one percent of the participant's monthly compensation. An additional one percent is contributed to the Plan for employees who meet certain criteria, as outlined in the Plan. Effective October 1, 1995, for Company matching contributions, and effective March 1, 1996, for Company retirement contributions, the Plan was amended to provide for an offset to the Company contributions under the Plan with an equivalent benefit to the Plan participants under the Ingersoll-Rand/Clark Leveraged Employee Stock Ownership Plan (LESOP), a participating plan in the Ingersoll-Rand Company Combined Investment Trust (the "Combined Trust"). Amounts accrued under the Plan prior to the effective dates of these amendments remain in the Plan unaffected. Participant contributions are always 100% vested. Company matching and retirement contributions, including those provided to the LESOP, vest on a five-year, graded-vesting schedule. Employees are immediately 20% vested. After completing two years of service, the vested percentage increases in increments of 20% per year until fully vested after five years of service. All Company matching and retirement contributions become 100% vested if a participant is disabled or his or her employment terminates due to retirement or death. Investment Options - The Plan assets are held in the Combined Trust, together with assets from other participating plans. Participants may invest their contributions, in multiples of one percent, in one or more of the following funds: Fixed Income Fund - A fund that invests in securities that produce a fixed rate of return. Investments may include United States government securities, corporate bonds, notes, debentures, convertible securities, preferred stocks, investment funds or investment contracts. Mutual Fund - Prior to March 1, 1997, participants could select from the following mutual funds: Fidelity Fund, Fidelity Growth and Income Portfolio, Fidelity U.S. Equity Index Portfolio, and Fidelity Magellan Fund. After March 1, 1997, participants were able to select from the following mutual funds: Fidelity Growth and Income Portfolio, Fidelity Magellan Fund, Templeton Foreign Fund, Fidelity Contra Fund, Fidelity Low-Priced Stock Fund, Fidelity U.S. Equity Index Commingled Pool Fund (formerly known as the Fidelity Institutional S&P 500 Index), Putnam Vista Fund and Putnam New Opportunities Fund. Each fund consists of a portfolio of common stocks or other securities based on the fund's investment objective. Prospectuses are available from the respective fund's management company. Ingersoll-Rand Company Stock Fund - A fund consisting primarily of the Company's Common Stock. Prior to December 1, 1998, this fund limited a participant's investment to 50% of current contributions or account balance on transfers. Effective December 1, 1998, participants are permitted to invest up to 100% of current contributions or account balance on transfers into this fund. Each fund reinvests its income in that fund. On any business day, participants may change their allocation of future contributions and transfer prior contributions between funds. Transfers of prior contributions must be made in whole percentages. Participants have several options that permit access to their contributions, earnings, and certain vested Company contributions. These options are subject to certain rules and restrictions. Distributions and Withdrawals - Plan distributions may be in the form of a lump sum or in such other manner that the Benefits Committee may permit. In addition, effective December 1, 1998, Plan participants who separate from service may elect distributions of at least $500 on a daily basis. At December 31, 1999 and 1998, the number of participants with balances in the Plan approximated 18,200 and 18,500, respectively. The number of participants contributing to each of the Plan's funds at December 31, 1999, were approximately: Fixed Income Fund 8,400 Mutual Fund: Templeton Foreign Fund 1,100 Fidelity Contra Fund 2,400 Putnam Vista Fund 2,200 Fidelity U.S. Equity Index Commingled Pool Fund 4,300 Fidelity Low-Priced Stock Fund 1,600 Fidelity Growth and Income Portfolio 5,300 Putnam New Opportunities Fund 3,400 Fidelity Magellan Fund 4,400 Ingersoll-Rand Company Stock Fund 5,100 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation - The Plan follows the accrual method of accounting. Use of Estimates - The preparation of financial statements in conformity with generally accepted accounting principles requires the Benefits Committee to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. Valuation of Investments - Plan assets are part of the Combined Trust, which provides unified investment management. Chase invests the Plan assets in the various Combined Trust investment funds. Separate participant accounts are maintained by investment fund. These accounts record contributions, withdrawals, transfers, earnings and changes in market value. The Putnam Guaranteed Horizon Account and the Putnam Managed Accounts are recorded at their respective contract values. Contract value equals principal plus cumulative interest earned, reduced by distributions. The Chase Domestic Liquidity Fund contains short-term debt, bank certificates of deposit and collateralized repurchase agreements. The carrying value of these investments is a reasonable estimate of their current value due to the short-term nature of the instruments. Rates of return on the money-market funds vary with the instruments purchased and changes in short- term interest rates. The financial statements report investments in the Mutual Funds and the Ingersoll-Rand Company Common Stock Fund at current value based on published market quotations. Security Transactions and Investment Income - Realized gains or losses on security transactions are recorded on the trade date. Realized gains or losses are the difference between the proceeds received and the participant's average unit cost. Dividend income is recorded on the ex-dividend date and interest income is recorded when earned. The statement of income and changes in plan equity includes unrealized appreciation or depreciation in accordance with the policy of stating investments at current value. Appreciation or depreciation of investments reflects both realized gains and losses and the change in unrealized appreciation and depreciation of investments. Contributions - Participant and Company matching contributions are contributed to the Combined Trust or the LESOP trust, as applicable, on a monthly basis. Participant contributions for each fund are based on the participants' investment decisions. Company retirement contributions are contributed to the Combined Trust or the LESOP after the end of each month or annually, as outlined in the Plan. The Company matching and retirement contributions may be made to the Combined Trust or LESOP in cash or Company stock. Forfeitures - Forfeitures of nonvested Company contributions occur when participants are terminated. Forfeitures of $244,158 in 1999 and $195,011 in 1998 were or will be used to reduce future Company contributions. Expenses of the Plan - Most expenses associated with the administration of the Plan and the Combined Trust are paid for by the Company. Expenses of the funds related to the investment and reinvestment of assets are included in the cost of the related investments. Benefit Obligations - Distributions to terminated employees are recorded in the Plan's financial statements when paid. The approved and unpaid amounts were $2,197,703 and $3,295,148 at December 31, 1999 and 1998, respectively. These amounts will be reflected as liabilities on the Plan's Form 5500 in accordance with Department of Labor Regulations. Reclassifications - Certain prior year amounts have been reclassified to conform to the current year presentation. The Plan has adopted Statement of Position 99-3, "Accounting for and Reporting of Certain Defined Contribution Benefit Plan Investments and Other Disclosure Matters", and, thus, previously reported by-fund amounts have been eliminated. 3. FIXED INCOME FUND Investments in the Fixed Income Fund at December 31 were as follows: 1999 1998 Putnam Guaranteed Horizon Account $ - $ 33,833,943 Putnam Managed Accounts 146,624,228 140,431,941 Chase Domestic Liquidity Fund 40,092,278 29,793,375 MetLife Stable Income Fund 77,203,061 73,037,033 PIMCO Stable Value Fund 96,404,638 71,797,545 Total Combined Trust Fixed Income 360,324,205 348,893,837 Fund Less other plans 125,558,708 122,891,421 Plan investment in Fixed Income $234,765,497 $226,002,416 Fund At December 31, 1999 and 1998, certain assets of the Combined Trust were invested in synthetic investment contracts. The Putnam Guaranteed Horizon Account and the Putnam Managed Accounts consist principally of an investment agreement between the Company and Putnam and a wrapper contract with a financially responsible third party which provides liquidity, or benefit responsiveness. The Putnam Guaranteed Horizon Account matured on November 15, 1999. The Putnam Guaranteed Horizon Account under contract at December 31, 1998 was: Average Guaranteed Rate Amount Yield of Return $33,833,943 4.59% 6.224% The Putnam Managed Accounts under contract at December 31, 1999 were: Net Crediting Average Interest Maturity Amount Yield Rate Date $111,123,599 6.85% 6.264% None - end upon written notice 35,500,629 6.75 6.081 None - end upon written notice $146,624,228 The Putnam Managed Accounts under contract at December 31, 1998 were: Net Crediting Average Interest Maturity Amount Yield Rate Rate $105,713,723 5.54% 6.373% None - end upon written notice 34,718,218 5.36 6.090 None - end upon written notice $140,431,941 The net crediting rate for all synthetic investment contracts is reset twice a year, on January 1 and July 1. In no event is the net crediting rate reset below 0%. The Chase Domestic Liquidity Fund reported an annualized rate of return as of December 31 of 5.297% in 1999 and 5.42% in 1998. The Metropolitan Life Insurance (MetLife) Stable Income Fund invests in a group annuity contract which is carried at contract value, an approximation of current value. Interest rates credited to the fund were 6.33% from January 1, 1998 through May 31, 1998; 6.14% from June 1, 1998 through December 31, 1998; 6.06% from January 1, 1999 through May 31, 1999; and 6.16% from June 1, 1999 through December 31, 1999. This contract has no expiration date. The MetLife group annuity contract consists principally of an investment agreement between the Company and MetLife in which MetLife maintains a separate account for the investment of participants' assets in an actively managed institutional bond fund. The PIMCO Stable Value Fund was purchased by the Plan on August 3, 1998. The fund is comprised of a separate account fixed income portfolio actively managed by PIMCO and a book value wrap contract issued by AIG Financial Products. The book value wrap contract allows for the portfolio to be carried at contract value, which equals net deposits plus credited interest. The contract has no expiration date. Interest rates credited to the fund were 6.31% from August 3, 1998 through September 20, 1998; 6.18% from October 1, 1998 through December 31, 1998; 6.22% from January 1, 1999 through March 31, 1999; 6.14% from April 1, 1999 through May 20, 1999; 6.27% from May 21, 1999 through June 30, 1999; 6.21% from July 1, 1999 through September 30, 1999; and 6.18% from October 1, 1999 through December 31, 1999. 4. MUTUAL FUND Investments in the Mutual Fund at December 31 were as follows: 1999 1998 Templeton Foreign Fund $ 11,586,291 $ 6,921,974 Fidelity Contra Fund 37,510,026 21,322,115 Putnam Vista Fund 48,320,134 32,992,446 Fidelity U.S. Equity Index Commingled Pool Fund 135,905,290 117,107,351 Fidelity Low-Priced Stock Fund 14,615,615 17,601,769 Fidelity Growth and Income Portfolio 117,689,091 115,129,445 Putnam New Opportunities Fund 76,149,767 41,152,100 Fidelity Magellan Fund 95,900,248 69,122,106 Fidelity U.S. Equity Index Portfolio 1,475,468 1,078,526 Fidelity Fund 1,090,502 714,058 Total Combined Trust Mutual Fund 540,242,432 423,141,890 Less other plans 86,373,203 67,434,845 Plan investment in Mutual Fund $453,869,229 $355,707,045 Net realized and unrealized appreciation (depreciation) of investments for the years ended December 31 were as follows: 1999 1998 Templeton Foreign Fund $ 2,564,435 $(1,211,980) Fidelity Contra Fund 1,704,124 3,207,213 Putnam Vista Fund 11,179,611 3,168,970 Fidelity U.S. Equity Index Commingled 24,092,796 27,532,736 Pool Fund Fidelity Low-Priced Stock Fund (215,761) (1,631,387) Fidelity Growth and Income Portfolio 3,429,563 19,284,047 Putnam New Opportunities Fund 25,073,179 6,397,092 Fidelity Magellan Fund 10,097,567 14,089,078 Fidelity U.S. Equity Index Portfolio 221,356 212,894 Fidelity Fund 145,206 115,703 Total Combined Trust Mutual Fund 78,292,076 71,164,366 Less other plans 11,608,166 10,883,335 Net Plan appreciation $66,683,910 $60,281,031 5. INGERSOLL-RAND COMPANY STOCK FUND Investments in the Ingersoll-Rand Company Stock Fund at December 31 were as follows: 1999 1998 Ingersoll-Rand Company Common Stock $357,300,067 $319,997,731 Chase Domestic Liquidity Fund 1,160,681 1,594,830 Total Combined Trust Ingersoll-Rand Company Stock Fund 358,460,748 321,592,561 Less other plans 31,517,112 27,556,766 Plan investment in Ingersoll-Rand $326,943,636 $294,035,795 Company Stock Fund Net realized and unrealized appreciation of investments for the years ended December 31 were as follows: 1999 1998 Total Combined Trust Ingersoll-Rand $ 58,332,187 $ 47,184,264 Company Stock Fund Less other plans 4,715,618 3,565,691 Net Plan appreciation $ 53,616,569 $ 43,618,573 6. LOAN FUND The Plan allows participants to borrow from their vested account balance subject to certain limits. Loans are withdrawn from the participants' accounts in a sequence outlined in the Plan. The number of loans outstanding at December 31, 1999 and 1998 was 7,441 and 7,932, respectively. The Benefits Committee establishes the loan interest rate and reviews the rate quarterly. The loan rate may be adjusted each quarter in order to reflect the current prime rate. The interest rate on new loans during 1999 and 1998 was 9%. Interest charges begin 60 days after the initial loan date. Loans are repaid in equal installments through payroll deductions over a maximum of five years. Loan repayments consist of interest and principal, and are reinvested according to the participant's current investment elections. If a participant terminates employment with the Company, any outstanding loan balance is considered a distribution. 7. DIVIDEND AND INTEREST INCOME Dividend and interest income for all investments at December 31 were as follows: 1999 1998 Total Combined Trust $61,207,205 $42,039,999 Less other plans 12,140,036 8,439,083 Net Plan dividend and interest income from investments $49,067,169 $33,600,916 8. TAX STATUS The Plan is intended to be qualified under Code Section 401(a) of the Internal Revenue Code of 1986 (the "Code") and is intended to be exempt from taxation under Section 501(a) of the Code. The Plan received a favorable IRS determination letter dated October 27, 1999. The Plan has been amended since receiving the determination letter. However, the plan administrator believes that the Plan is currently designed and being operated in compliance with the applicable requirements of the Code. Therefore, no provision for income taxes has been included in the Plan's financial statements. 9. TRANSFERS TO/FROM OTHER PLANS Effective December 31, 1999, the assets of the Johnstone Pump Co. Savings Plan; Monarch Hardware, Inc. Profit Sharing Plan; Zimmerman Handling Systems, Ingersoll-Rand's Employees 401(k) Plan; and Torrington Rockford Salary Savings Plan (collectively, the "Merged Plans") were merged into the Plan. During March 2000, the existing participant balances in the Merged Plans were transferred to the investment options available in the Plan that were elected by each participant. Effective November 8, 1999, certain assets of the Harrow Products, Inc. 401(k) Savings Plan & Trust (the "Harrow Plan") were merged into the Plan. During March 2000, the existing participant balances in the Harrow Plan were transferred to the investment options available in the Plan that were elected by each participant. During July 1999, the assets of the Palm Sales/Towmaster 401(k) Profit Sharing Plan And Trust (the "Palm Sales Plan") were merged into the Plan. Existing participant balances in the Palm Sales Plan were transferred to the investment options available in the Plan that were elected by each participant. During July 1999, certain assets of the CDS Midwest, Inc. Bargaining Unit Employee Retirement And Savings Plan (the "CDS Plan") were transferred into the Plan. Existing participant balances in the CDS Plan were transferred to the investment options available in the Plan that were elected by each participant. Effective December 31, 1998, the LCN Closers Employees' Profit Sharing Plan (the "LCN Plan") was merged into the Plan. During January 1999, the existing participant balances in the LCN Plan were transferred to the investment options available in the Plan that were elected by each participant during December 1998. 10.COMBINED INVESTMENT TRUST FINANCIAL INFORMATION At December 31, 1999 and 1998, the Plan had an 81% and 80% participation, respectively, in the Combined Trust. The financial statements for the Combined Trust are prepared on the modified cash basis of accounting, which is substantially the same as the accrual basis of accounting. The financial statements of the Combined Trust with explanatory footnotes for the years ended December 31, 1999 and 1998 follow. INGERSOLL-RAND COMPANY COMBINED INVESTMENT TRUST STATEMENTS OF NET ASSETS AS OF DECEMBER 31, 1999 AND 1998 1999 1998 Investments: Fixed Income Fund - Putnam Guaranteed Horizon Account $ - $ 33,833,943 Chase Domestic Liquidity Fund 40,092,278 31,388,205 Putnam Managed Account 146,624,228 140,431,941 MetLife Stable Income Fund 77,203,061 73,037,033 PIMCO Stable Value Fund 96,404,638 71,797,545 Total Fixed Income Fund 360,324,205 350,488,667 Mutual Fund - Templeton Foreign Fund 11,586,291 6,921,974 Fidelity Contra Fund 37,510,026 21,322,115 Putnam Vista Fund 48,320,134 32,992,446 Fidelity U.S. Equity Index Commingled Pool Fund 135,905,290 117,107,351 Fidelity Low-Priced Stock Fund 14,615,615 17,601,769 Fidelity Growth and Income Portfolio 117,689,091 115,129,445 Putnam New Opportunities Fund 76,149,767 41,152,101 Fidelity Magellan Fund 95,900,248 69,122,106 Fidelity U.S. Equity Index Portfolio 1,475,468 1,078,526 Fidelity Fund 1,090,502 714,057 Total Mutual Fund 540,242,432 423,141,890 Ingersoll-Rand Company Common Stock Fund 358,460,748 319,997,731 Total investments at current value (cost $898,976,910 in 1999 and $791,758,503 in 1998) 1,259,027,385 1,093,628,288 Participant loans receivable 36,561,745 35,806,555 NET ASSETS $1,295,589,130 $1,129,434,843 INGERSOLL-RAND COMPANY COMBINED INVESTMENT TRUST STATEMENTS OF CHANGES IN NET ASSETS AS OF DECEMBER 31, 1999 AND 1998 1999 1998 Additions to net assets: Contributions received $ 64,899,274 $ 62,650,395 Dividends and interest income from investments 61,207,205 42,039,999 Net appreciation of investments 136,624,263 118,348,630 Total additions 262,730,742 223,039,024 Participant withdrawals and distributions 127,617,488 99,491,491 Net increase prior to transfers 135,113,254 123,547,533 Transfers from other plans, net 31,041,033 58,379,753 Increase in net assets for the year 166,154,287 181,927,286 Net assets, beginning of year 1,129,434,843 947,507,557 Net assets, end of year $1,295,589,130 $1,129,434,843 a. Trust Description The Combined Investment Trust (the "Combined Trust") provides unified investment management of the assets of several plans sponsored by Ingersoll-Rand Company and certain of its subsidiaries (collectively the "Companies"). The participating plans include the Ingersoll-Rand Company Savings Plan for Bargaining Unit Employees, the Ingersoll- Dresser Pump Company Savings and Investment Plan, the Ingersoll-Rand Company Savings and Stock Investment Plan, the I-R/Clark Leveraged Employee Stock Ownership Plan, the Ingersoll-Rand/Thermo King Savings and Stock Investment Plan and the Ingersoll-Rand/Thermo King Retirement Savings Plan of Puerto Rico (collectively, the "Plans"). The participants of the Plans are eligible employees of the Companies. The Chase Manhattan Bank ("Chase") and PricewaterhouseCoopers are the trustee and recordkeeper of the Combined Trust, respectively. The Combined Trust maintains separate participant accounts by investment fund. These accounts record contributions, withdrawals and transfers, and reflect investment earnings and changes in market value. Certain of the Plans, namely the I-R/Clark Leveraged Employee Stock Ownership Plan, the Ingersoll-Rand/Thermo King Savings and Stock Investment Plan and the Ingersoll- Rand/Thermo King Retirement Savings Plan of Puerto Rico participate in the Combined Trust only through investment in the Fixed Income Fund and/or the Ingersoll-Rand Company Stock Fund of the Combined Trust. b. Summary of Significant Accounting Policies Basis of Presentation - The Combined Trust uses the modified cash basis of accounting which is substantially the same as the accrual basis of accounting. Use of Estimates - The preparation of financial statements in conformity with generally accepted accounting principles requires the Benefits Committee to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. Valuation of Investments - The Putnam Guaranteed Horizon Account and the Putnam Managed Accounts are recorded at their respective contract values. Contract value equals principal plus cumulative interest earned, reduced by distributions. The Chase Domestic Liquidity Fund contains short-term debt, bank certificates of deposit and collateralized repurchase agreements. The carrying value of these investments is a reasonable estimate of their current value due to the short- term nature of the instruments. Rates of return on the money-market funds vary with the instruments purchased and changes in short-term interest rates. The financial statements report investments in the Mutual Funds (defined in Note c) and the Ingersoll-Rand Company Common Stock Fund at current value based on published market quotations. Security Transactions and Investment Income - Realized gains or losses on security transactions are recorded on the trade date. Realized gains or losses are the difference between the proceeds received and the participant's average unit cost. Dividend income is recorded on the ex-dividend date and interest income is recorded when earned. The statement of changes in net assets includes unrealized appreciation or depreciation in accordance with the policy of stating investments at current value. Appreciation or depreciation of investments reflects both realized gains and losses and the change in unrealized appreciation and depreciation of investments. Contributions and Expenses - The Combined Trust records contributions when received from the participating Plans. It reports disbursements from the participating Plans for participant withdrawals, loans and Plan to Plan transfers when paid. Most expenses for the administration of the participating Plans and the Combined Trust are paid for by the Companies. Expenses of the funds related to the investment and reinvestment of assets are included in the cost of the related investments. c. Investments At December 31, 1999 and 1998, certain assets of the Combined Trust were invested in synthetic investment contracts. The Putnam Guaranteed Horizon Account and the Putnam Managed Accounts consist principally of an investment agreement between the Company and Putnam and a wrapper contract with a financially responsible third party, which provides liquidity or benefit-responsiveness. The Putnam Guaranteed Horizon Account matures on November 15, 1999. The Putnam Guaranteed Horizon Account under contract at December 31, 1998 was: Average Guaranteed Rate Amount Yield of Return $ 33,833,943 4.59% 6.224% The Putnam Managed Accounts under contract at December 31, 1999 were: Net Crediting Average Interest Maturity Amount Yield Rate Date $ 111,123,599 6.85% 6.264% None - end upon written notice 35,500,629 6.75 6.081 None - end upon written notice $ 146,624,228 The Putnam Managed Accounts under contract at December 31, 1998 were: Net Crediting Average Interest Maturity Amount Yield Rate Date $ 105,713,723 5.54% 6.373% None - end upon written notice 34,718,218 5.36 6.090 None - end upon written notice $ 140,431,941 The net crediting rate for all synthetic investment contracts is reset twice a year, on January 1 and July 1. In no event is the net crediting rate reset below 0%. The Chase Domestic Liquidity Fund reported an annualized rate of return as of December 31 of 5.297% in 1998 and 5.42% in 1998. The Metropolitan Life Insurance (MetLife) Stable Income Fund invests in a group annuity contract which is carried at contract value, an approximation of current value. Interest rates credited to the fund were 6.33% from January 1, 1998 through May 31, 1998; 6.14% from June 1, 1998 through December 31, 1998; 6.06% from January 1, 1999 through May 31, 1999; and 6.16% from June 1, 1999 through December 31, 1999. This contract has no expiration date. The MetLife group annuity contract consists principally of an investment agreement between the Company and MetLife in which MetLife maintains a separate account for the investment of participants' assets in an actively managed institutional bond fund. The PIMCO Stable Value Fund was purchased by the Combined Trust on August 3, 1998. The fund is comprised of a separate account fixed income portfolio actively managed by PIMCO and a book value wrap contract issued by AIG Financial Products. The book value wrap contract allows for the portfolio to be carried at contract value, which equals net deposits plus credited interest. The contract has no expiration date. Interest rates credited to the fund were 6.31% from August 3, 1998 through September 30, 1998 and 6.18% from October 1, 1998 through December 31, 1998; 6.22% from January 1, 1999 through March 31, 1999; 6.14% from April 1, 1999 through May 20, 1999; 6.27% from May 21, 1999 through June 30, 1999; 6.21% from July 1, 1999 through September 30, 1999; and 6.18% from October 1, 1999 through December 31, 1999. The total cost of the Combined Trust Mutual Fund was $374,792,330 and $308,807,364 at December 31, 1999 and 1998, respectively. The Company Stock Fund investment in Ingersoll-Rand Company common stock at December 31, 1999 and 1998, included 6,488,991 shares and 6,817,526 shares, respectively. At December 31, 1999 and 1998, the average cost of these shares was $162,888,525 and $132,462,472, respectively. Net realized gain (loss) on securities sold of the Combined Trust's investments for the years ended December 31 was as follows: 1999 1998 Mutual Fund: Templeton Foreign Fund $ (91,276) $ (365,827) Fidelity Contra Fund 1,203,074 442,112 Putnam Vista Fund 1,820,135 1,070,041 Fidelity U.S. Equity Index Commingled Pool Fund 8,701,850 6,369,851 Fidelity Low-Priced Stock Fund (284,031) 119,790 Fidelity Growth and Income Portfolio 8,826,501 6,509,327 Putnam New Opportunities Fund 2,836,978 1,117,066 Fidelity Magellan Fund 4,081,607 3,114,960 Fidelity U.S. Equity Index Portfolio 70,592 48,428 Fidelity Fund 11,070 6,051 Total Mutual Fund 27,176,500 18,431,799 Ingersoll-Rand Company Common Stock Fund 51,455,799 31,279,147 Net realized gain $78,632,299 $49,710,946 Net unrealized gain (loss) of the Combined Trust's investments for the years ended December 31 was as follows: 1999 1998 Mutual Fund: Templeton Foreign Fund $ 2,655,711 $ (846,153) Fidelity Contra Fund 501,050 2,765,101 Putnam Vista Fund 9,359,477 2,098,929 Fidelity U.S. Equity Index Commingled Pool Fund 15,390,946 21,162,885 Fidelity Low-Priced Stock Fund 68,270 (1,751,178) Fidelity Growth and Income Portfolio (5,396,938) 12,774,721 Putnam New Opportunities Fund 22,236,201 5,280,025 Fidelity Magellan Fund 6,015,960 10,974,118 Fidelity U.S. Equity Index Portfolio 150,764 164,466 Fidelity Fund 134,136 109,653 Total Mutual Fund 51,115,577 52,732,567 Ingersoll-Rand Company Common Stock Fund 6,876,387 15,905,117 Net unrealized gain $57,991,964 $68,637,684 d. Tax Status The Ingersoll-Rand Company Savings Plan for Bargaining Unit Employees, the Ingersoll-Dresser Pump Company Savings and Investment Plan, the Ingersoll-Rand Company Savings and Stock Investment Plan, the I-R/Clark Leveraged Employee Stock Ownership Plan, and the Ingersoll-Rand/Thermo King Savings and Stock Investment Plan are intended to be qualified under Code Section 401(a) of the Internal Revenue Code of 1986 (the "Code") and are intended to be exempt from taxation under Section 501(a) of the Code. Each Plan has received a favorable determination letter from the Internal Revenue Service. A favorable determination letter for the Ingersoll-Rand/Thermo King Retirement Savings Plan of Puerto Rico was received from the tax authorities in Puerto Rico that the plan is qualified under section 1165 of the Puerto Rico Internal Revenue code of 1994. The Plan administrator believes that the Plans are currently designed and being operated in compliance with the applicable requirements of the U.S. and Puerto Rico Internal Revenue Codes. Therefore, no provision for income taxes has been included in the Trust's financial statements. e. Participant Loans Receivable Participants in certain Plans may borrow from their vested account balances subject to terms defined by the individual Plans. f. Transfers to/from Other Plans Effective December 31, 1999, the assets of the Johnstone Pump Co. Savings Plan; Monarch Hardware, Inc. Profit Sharing Plan; Zimmerman Handling Systems, Ingersoll-Rand's Employees 401(k) Plan; and Torrington Rockford Salary Savings Plan (collectively, the "Merged Plans") were merged into the Combined Trust. During March 2000, the existing participant balances in the Merged Plans were transferred to the investment options available in the Ingersoll-Rand Company Savings And Stock Investment Plan that were elected by each participant. Effective November 8, 1999, certain assets of the Harrow Products, Inc. 401(k) Savings Plan & Trust (the "Harrow Plan") were merged into the Combined Trust. During March 2000, the existing participant balances in the Harrow Plan were transferred to the investment options available in the Ingersoll-Rand Company Savings And Stock Investment Plan that were elected by each participant. During July 1999, the assets of the Palm Sales/Towmaster 401(k) Profit Sharing Plan And Trust were merged into the Combined Trust. Existing participant balances in this plan were transferred to the investment options available in the Ingersoll-Rand Company Savings And Stock Investment Plan that were elected by each participant. During July 1999, certain assets of the CDS Midwest, Inc. Bargaining Unit Employee Retirement And Savings Plan were transferred into the Combined Trust. Existing participant balances in this plan were transferred to the investment options available in the Ingersoll-Rand Company Savings And Stock Investment Plan that were elected by each participant. Effective December 31, 1999, the assets of the LCN Closers Employees' Profit Sharing Plan (the "LCN Plan") were merged into the Combined Trust. During January 1999, the existing participant balances in the LCN Plan were transferred to the investment options available in the Ingersoll-Rand Company Savings And Stock Investment Plan that were elected by each participant during December 1998. g. Subsequent Events Effective December 31, 1999, Ingersoll-Rand Company completed the purchase of Ingersoll-Dresser Pump Company, previously a joint venture with a third party, by acquiring the joint venture partner's 49% share. On February 9, 2000, Ingersoll-Rand Company entered into an agreement to sell the Ingersoll-Dresser Pump Company unit. The transaction is subject to regulatory approval and is expected to close during the second quarter of 2000. Effective upon the closing of the transaction, the Company will no longer sponsor the Ingersoll-Dresser Pump Company Savings and Investment Plan. Putnam Investments ("Putnam") will become trustee and recordkeeper of the Ingersoll-Rand Company Savings Plan for Bargaining Unit Employees on July 1, 2000, at which time the Plan's assets will be removed from the Combined Trust and transferred to Putnam. INGERSOLL-RAND COMPANY COMBINED INVESTMENT TRUST SCHEDULE I ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES YEAR ENDED DECEMBER 31, 1999 Shares, Description Units, Identity of Issue of Principal Current Investment Amount Value Guaranteed Investment Contracts: Putnam Managed Account I 6.081%; no maturity - $ 35,500,629 Putnam Managed Account II 6.264%; no maturity - 111,123,599 Metropolitan Life Group Annuity Insurance Company Contract - 77,203,061 PIMCO Stable Value Group Annuity Contract Contract - 96,404,638 Templeton Foreign Fund Open-end Mutual Fund 1,032,646 11,586,291 Fidelity Contra Fund Open-end Mutual Fund 624,959 37,510,026 Putnam Vista Fund Open-end Mutual Fund 2,767,476 48,320,134 Fidelity U.S. Equity Open-end Mutual Index Commingled Fund Pool Fund 3,231,224 135,905,290 Fidelity Low-Priced Stock Open-end Mutual Fund Fund 645,566 14,615,615 Fidelity Growth & Income Open-end Mutual Portfolio Fund 2,495,528 117,689,091 Putnam New Opportunities Open-end Mutual Fund Fund 837,179 76,149,767 Fidelity Magellan Fund Open-end Mutual Fund 701,897 95,900,248 Fidelity U.S. Equity Open-end Mutual Index Portfolio Fund 28,325 1,475,468 Fidelity Fund Open-end Mutual Fund 25,593 1,090,502 Ingersoll-Rand Company Common Stock Class A 6,488,991 358,460,748 Chase Domestic Liquidity Money Market 41,064,128 40,092,278 Fund Fund Participant Loans Due 1/1/98 - Receivable 12/31/03; 6% - 9% 36,561,745 TOTAL INVESTMENTS $1,295,589,130 Note: The cost of the investment in the Ingersoll-Rand Company Common Stock fund at December 31, 1999 was $162,888,525. INGERSOLL-RAND COMPANY COMBINED INVESTMENT TRUST SCHEDULE V ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS YEAR ENDED DECEMBER 31, 1999 Current Expense Value of Identity of Incurred Cost Asset On Party Description Purchase Selling With of Transaction Net Gain Involved of Asset Price Price Transaction Asset Date (Loss) Series of Transactions: Ingersoll-Rand Company Common Stock Class A $49,095,819 $ - $27,158 $ - $49,068,661 $ - Ingersoll-Rand Company Common Stock Class A - 62,062,345 34,440 16,298,926 62,062,345 45,728,979
INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference in the Registration Statement on Form S-8 No. 333-42133 of Ingersoll-Rand Company of our report dated June 1, 2000 which appears elsewhere in this Form 11-K. /S/ Deloitte & Touche DELOITTE & TOUCHE LLP Parsippany, New Jersey June 15, 2000 -----END PRIVACY-ENHANCED MESSAGE-----