-----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, OdVd5n2B0+u9XTbS90N4fcyVyuEdZMszbWrks2gh44IirR2ZGvucCXd2wJNTdWX+ Nl/INWFKRZqYYNKrI/OdLw== 0000050485-01-500006.txt : 20010321 0000050485-01-500006.hdr.sgml : 20010321 ACCESSION NUMBER: 0000050485-01-500006 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 12 CONFORMED PERIOD OF REPORT: 20010320 FILED AS OF DATE: 20010320 FILER: COMPANY DATA: COMPANY CONFORMED NAME: INGERSOLL RAND CO CENTRAL INDEX KEY: 0000050485 STANDARD INDUSTRIAL CLASSIFICATION: GENERAL INDUSTRIAL MACHINERY & EQUIPMENT [3560] IRS NUMBER: 135156640 STATE OF INCORPORATION: NJ FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: SEC FILE NUMBER: 001-00985 FILM NUMBER: 1572858 BUSINESS ADDRESS: STREET 1: 200 CHESTNUT RIDGE RD STREET 2: PO BOX 8738 CITY: WOODCLIFF LAKE STATE: NJ ZIP: 07677 BUSINESS PHONE: 2015730123 MAIL ADDRESS: STREET 1: 200 CHESTNUT RIDGE ROAD CITY: WOODCLIFF LAKE STATE: NJ ZIP: 07677 10-K 1 tenk-00.txt FORM 10-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2000 or TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File No. 1-985 INGERSOLL-RAND COMPANY (Exact name of registrant as specified in its charter) New Jersey 13-5156640 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) Woodcliff Lake, New Jersey 07677 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code:(201)573-0123 Securities registered pursuant to Section 12(b) of the Act: Name of each exchange Title of each class on which registered Series A Preference Stock Purchase Rights New York, London and Amsterdam Common Stock, $2 par value New York, London and Amsterdam Income PRIDES New York Growth PRIDES New York Securities registered pursuant to Section 12(g) of the Act: None 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 Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K [ ] The aggregate market value of common stock held by nonaffiliates on March 5, 2001 was $7,433,814,574 based on the closing price of such stock on the New York Stock Exchange. This includes the shares owned by the Registrant's Leveraged Employee Stock Ownership Plan. The number of shares of common stock outstanding as of March 5, 2001 was 160,259,428. DOCUMENTS INCORPORATED BY REFERENCE Consolidated Financial Statements for fiscal year ended December 31, 2000, incorporated by reference in the company's Current Report on Form 8-K, dated February 9, 2001. Proxy Statement for Annual Meeting of Shareholders to be held on May 2, 2001. See Part III of this Form 10-K Annual Report for portions incorporated by reference. (A definitive proxy statement has been filed with the Commission since the close of the fiscal year). PART I Item 1. BUSINESS Ingersoll-Rand Company (the company) was organized in 1905 under the laws of the State of New Jersey as a consolidation of Ingersoll-Sergeant Drill Company and the Rand Drill Company, whose businesses were established in the early 1870's. Over the years, additional products which have been developed internally or obtained through acquisition have supplemented the original business. The company is a leading provider of security and safety, climate control, industrial productivity and infrastructure products. In each of these markets, the company offers a diverse product portfolio that includes well-recognized industrial and commercial brands. Climate Control - Offers a range of temperature-control products for protecting food and other perishables. Products include: Thermo King transport temperature control units for truck trailers, small trucks, seagoing containers and air conditioning for buses, and Hussmann refrigerated display cases for supermarkets, delicatessens and other commercial and institutional refrigeration applications. Industrial Productivity - Has a diverse group of businesses offering products and services to enhance industrial efficiency. These products and services include: Ingersoll-Rand air compressors and components for compressed-air systems, tools and material handling equipment, and fluid handling products, Club Car golf cars and utility vehicles, and Torrington bearings, components and motion-control technologies. Infrastructure - Supplies products and services for all types of construction projects and industrial and commercial development, including Bobcat compact equipment and Ingersoll-Rand road pavers, compactors, portable-power products and drilling equipment. Security and Safety - Markets architectural hardware and access- control products and services for residential, commercial and institutional buildings. Led by the familiar Schlage brand, products include locks and locksets, door closers, exit devices, steel doors and frames, power-operated doors, architectural columns and biometric and electronic access control technologies. During 2000, the company announced the formation of the Independent Power Segment. The new segment, which includes the company's PowerWorks microturbine technologies, will focus on identifying, developing and marketing alternative-power and energy-management solutions. The Independent Power Segment will be reported as part of the company's Industrial Productivity Sector beginning in 2001. The company has undertaken a restructuring program which includes such actions as plant rationalizations, organizational realignments consistent with the company's new market-based structure and the consolidation of back-office processes. Restructuring charges incurred consist of costs associated with severance and other employee termination benefits, and facility exit costs including lease terminations. Current year charges of $76.2 million related to employee severance and other employee termination costs cover approximately 2,100 employees, of which 55% have been terminated as of December 31, 2000. The restructuring plan is expected to be substantially complete by the end of 2001. In June 2000, the company acquired Hussmann International, Inc. (Hussmann), for approximately $1.7 billion in cash after consideration of amounts paid for outstanding stock options, debt retirement, employee contracts and transaction costs. Hussmann's business is the design, production, installation and service of merchandising and refrigeration systems for the global food industry. Hussmann is included in the Climate Control Sector. During 2000, the company acquired Sambron S.A. (Sambron) for approximately $19.0 million. Sambron manufactures and distributes a range of telescopic material handlers and is included in the Infrastructure Sector. For approximately $23.0 million in cash, the company purchased a majority interest in Zexel Cold Systems, a manufacturer of bus air-conditioning equipment and refrigeration units for small trucks and is included in the Climate Control Sector. The company purchased Interflex Datensysteme GmbH (Interflex) for approximately $60.0 million. Interflex provides integrated products and services for electronic access control, time and attendance recording, personnel scheduling and industrial data management and is included in the Security and Safety Sector. On August 12, 1999, the company announced its intention to dispose of its interest in Dresser-Rand Company (D-R), a joint venture involved in the reciprocating compressor and turbo machinery business, and Ingersoll-Dresser Pump Company (IDP), a joint venture involved in the pump equipment business. On October 5, 1999, the joint venture partner, as permitted under the joint venture agreements, elected to sell its share of the joint ventures to the company. Effective December 31, 1999, the company completed the purchase of the joint venture partner's 49% share of IDP for a net purchase price of approximately $377 million payable by the issuance of a promissory note, which was redeemed On January 14, 2000. The acquisition of the joint venture partner's 51% share of D-R was completed on February 2, 2000 at a net purchase price of approximately $543.0 million. On August 8, 2000, the company sold IDP for $775 million in cash and realized an after-tax gain of $124.8 million. The assets of IDP had been classified as assets held for sale. On September 5, 2000, the company completed the sale of the reciprocating gas compressor packaging and rental business of D-R for $190 million. The remaining net assets of D-R have been reported as assets held for sale in the company's financial statements. Products Principal products of the company include the following: Air balancers Fluid-handling equipment Air compressors & Golf cars accessories Hoists Air dryers Hydraulic breakers Air logic controls Lubrication equipment Air motors Microturbines Air and electric tools Material handling equipment Asphalt compactors Needle roller bearings Asphalt pavers Paving equipment Automated dispensing systems Piston pumps Automatic doors Pneumatic breakers Automotive components Pneumatic cylinders Ball bearings Pneumatic valves Bath fittings and Portable compressors accessories Portable generators Biometric access control Portable light towers systems Refrigerated display cases Blasthole drills Refrigeration systems Compact hydraulic excavators Road-building machinery Construction equipment Rock drills Diaphragm pumps Rock stabilizers Door closers and controls Roller bearings Door locks, latches & Rotary drills locksets Rough-terrain material Doors and door frames handlers (steel) Skid-steer loaders Drilling equipment and Soil compactors accessories Spray-coating systems Electrical security products Telescopic material handlers Electronic access control Transport temperature systems control systems Engine-starting systems Utility vehicles Exit devices Waterjet-cutting systems Extrusion pump systems Water-well drills Fastener-tightening systems Winches These products are sold primarily under the company's name and also under other names including ABG, Blaw-Knox, Bobcat, Club Car, Dor-O-Matic, Fafnir, Falcon, Glynn-Johnson, Hussmann, Johnstone, LCN, Legge, Monarch, Montabert, Normbau, Schlage, Steelcraft, Thermo King, Torrington, Von Duprin and Zimmerman. During the past three years, the division of the company's sales between capital goods and expendables has been in the approximate ratio of 64 percent and 36 percent, respectively. The company generally defines as expendables those products which are not capitalized by the ultimate user. Examples of such products are parts sold for replacement purposes, power tools and needle bearings. Additional information on the company's business and financial information about industry segments is presented in the Consolidated Financial Statements. Distribution The company's products are distributed by a number of methods which the company believes are appropriate to the type of product. Sales are made domestically through branch sales offices and through distributorships and dealers across the United States. International sales are made through numerous subsidiary sales and service companies with a supporting chain of distributors in over 100 countries. Working Capital The products manufactured by the company must usually be readily available to meet rapid delivery requirements. Such working capital requirements are not, however, in the opinion of management, materially different from those experienced by the company's major competitors. Customers No material part of the company's business is dependent upon a single customer or very few customers, the loss of any one of which would have a material adverse effect on the company's operations. Competitive Conditions The company's products are sold in highly competitive markets throughout the world against products produced by both foreign and domestic corporations. The principal methods of competition in these markets relate to price, quality and service. The company believes that it is one of the leading manufacturers in the world of a broad line of air compression systems, anti- friction bearings, construction equipment, transport temperature control products, refrigerated display merchandisers, refrigeration systems and controls, air tools, golf cars and utility vehicles. In addition, the company believes it is a leading supplier in domestic markets for locks, other door hardware products, skid-steer loaders and asphalt paving equipment. International Operations Sales to customers outside the United States accounted for approximately 34 percent of the consolidated net sales in 2000. Sales outside of the United States are made in more than 100 countries; therefore, the attendant risks of manufacturing or selling in a particular country, such as nationalization and establishment of common markets, would not have a significant effect on the company's international operations. Raw Materials The company manufactures many of the components included in its products. The principal raw materials required for the manufacture of the company's products are purchased from numerous suppliers, and the company believes that available sources of supply will generally be sufficient for its needs for the foreseeable future. Backlog The company's approximate backlog of orders at December 31, 2000, believed by it to be firm, was $306.5 million for the Climate Control Sector, $547.6 million for the Industrial Productivity Sector, $124.6 million for the Infrastructure Sector and $77.5 million for the Security and Safety Sector as compared to $173.5 million, $536.3 million $151.8 million and $85.5 million respectively, at December 31, 1999. These backlog figures are based on orders received. While the major portion of the company's products are built in advance of order and either shipped or assembled from stock, orders for specialized machinery or specific customer application are submitted with extensive lead time and are often subject to revision, deferral, cancellation or termination. The company estimates that approximately 90 percent of the backlog will be shipped during the next twelve months. Research and Development The company maintains extensive research and development facilities for experimenting, testing and developing high quality products. The company employs approximately 2,000 professional employees for its research and development activities. The company spent $188.4 million in 2000, $186.2 million in 1999 and $169.6 million in 1998 on research and development. Patents and Licenses The company owns numerous patents and patent applications and is licensed under others. While it considers that in the aggregate its patents and licenses are valuable, it does not believe that its business is materially dependent on its patents or licenses or any group of them. In the company's opinion, engineering and production skills, and experience are more responsible for its market position than patents or licenses. Environmental Matters The company continues to be dedicated to an environmental program to reduce the utilization and generation of hazardous materials during the manufacturing process and to remediate identified environmental concerns. As to the latter, the company currently is engaged in site investigations and remedial activities to address environmental cleanup from past operations at current and former manufacturing facilities. During 2000, the company spent approximately $5.0 million on capital projects for pollution abatement and control, and an additional $6.0 million for environmental remediation expenditures at sites presently or formerly owned or leased by the company. It should be noted that these amounts are difficult to estimate because environmental improvement costs are generally a part of the overall improvement costs at a particular plant. Therefore, the accurate estimate of which portion of an improvement or a capital expenditure relates to an environmental improvement is difficult to ascertain. The company believes that these expenditure levels will continue and may increase over time. Given the evolving nature of environmental laws, regulations and technology, the ultimate cost of future compliance is uncertain. 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 approximately 26 federal Superfund and state remediation sites, excluding sites as to which the company's records disclose no involvement or as to which the company's liability has been fully determined. 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 not assumed it will 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, state and federal 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. Employees There are approximately 51,000 employees of the company throughout the world, of whom approximately 32,000 work in the United States and 19,000 in foreign countries. The company believes relations with its employees are good. Item 2. PROPERTIES The company's executive offices are located in Woodcliff Lake, New Jersey. Manufacturing and assembly operations are conducted in 64 plants in the United States; 5 plants in Canada; 33 plants in Europe; 16 plants in Asia and 9 plants in Latin America. The company also maintains various warehouses, offices and repair centers throughout the world. Substantially all plant facilities are owned by the company and the remainder are under long-term lease. The company believes that its plants and equipment have been well maintained and are generally in good condition. The reportable segments for which the facilities are primarily used are described below. Facilities under long-term lease are included below and are not significant to each operating segment's total number of plants or square footage. Climate Control The Climate Control Sector focuses on markets requiring refrigerant-gas compression technology and services to provide gas pressure for distribution to end users or to maintain a refrigeration cycle. This sector includes Thermo King transport temperature control equipment, and Hussmann, a leader in display case refrigeration, which was acquired in June 2000. Hussmann experiences the greatest demand for its products in the third and fourth quarters of the year. This demand results from the customers' seasonal construction cycles and the desire to complete stores prior to the year-end holiday season. The sector's manufacturing locations are as follows: Approximate Number of Plants Square Footage Domestic 16 4,169,000 International 23 4,892,000 Total 39 9,061,000 Industrial Productivity The Industrial Productivity Sector is composed of a group of businesses focused on providing solutions for customers to enhance industrial efficiency. The Industrial Productivity Sector consists of three segments: O Air Solutions Segment provides equipment and services for compressed air systems. O Bearings and Components Segment provides motion control technologies to the automotive and industrial markets. These products include Torrington and Fafnir bearings and components. O Industrial Products Segment includes Club Car golf cars and utility vehicles, tools and related industrial production equipment. The sector's manufacturing facilities are as follows: Approximate Number of Plants Square Footage Domestic 25 5,711,000 International 20 3,354,000 Total 45 9,065,000 Infrastructure The Infrastructure Sector designs, manufactures and markets powered vehicles that are utilized in infrastructure development, commercial construction and material movement fields. The Infrastructure Sector includes Bobcat skid-steer loaders and compact hydraulic excavators, Blaw-Knox and ABG pavers, and Ingersoll-Rand compactors, drilling equipment, and portable power products. The sector's manufacturing facilities are as follows: Approximate Number of Plants Square Footage Domestic 10 2,875,000 International 7 1,037,000 Total 17 3,912,000 Security and Safety The Security and Safety Sector concentrates on manufacturing, marketing, and managing the distribution channels required to reach end user customers seeking products that enhance productivity and security in the industrial, construction, and do- it-yourself markets. Security and Safety includes architectural hardware products, such as Schlage locks, Von Duprin exit devices, door-control hardware, steel doors, and electronic access control technologies including, power-operated doors and architectural columns. The sector's manufacturing facilities are as follows: Approximate Number of Plants Square Footage Domestic 13 2,156,000 International 13 1,052,000 Total 26 3,208,000 Item 3. LEGAL PROCEEDINGS In the normal course of business, the company is involved in a variety of lawsuits, claims and legal proceedings, including proceedings for off-site waste disposal cleanup of approximately 26 sites under federal Superfund and similar state laws. 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. See also the discussion under Item 1 - Environmental Matters. Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS No matters were submitted to a vote of the company's security holders during the last quarter of its fiscal year ended December 31, 2000. The following information is included in accordance with the provision of Part III, Item 10. Date of Service as Principal Occupation and an Executive Other Information Name and Age Officer for Past Five Years Herbert L. Henkel(52) 4/5/99 Chairman of Board (since May 2000) and Chief Executive Officer (since October 1999), President and Director (since April 1999); (Chief Operating Officer April 1999 - October 1999; Textron, President, February 1999 - March 1999 and Chief Operating Officer, 1998 - March 1999; President of Textron's Industrial Products Segment 1994- 1998) David W. Devonshire (55) 1/12/98 Executive Vice President (since January 2000) and Chief Financial Officer (since 1998); (Senior Vice President, 1998 - January 2000; Owens Corning, Senior Vice President and Chief Financial Officer, 1993 - 1997) Brian D. Jellison (55) 2/7/96 Executive Vice President (since 1998) and Sector President, Infrastructure (since July 2000); (Vice President and President of the Architectural Hardware Group, 1995 - 1998) Rone H. Lewis (56) 3/20/00 Senior Vice President (since June 2000)and Sector President, Independent Power (since October 2000);(President e-Business Sector, March 2000- January 2001; Surety.com, Vice President, Business Development, 1996-2000) Gordon A. Mapp (54) 6/14/00 Senior Vice President, Sector President, Climate Control (since June 2000) (President, Air Solutions Group and Industrial Productivity-Vice President, 1999-2000; President, Air Compressor Group 1998-1999, Vice President and General Manager, North American Division, Thermo King 1993-1998) Patricia Nachtigal (54) 11/2/88 Senior Vice President (since June 2000) and General Counsel (Vice President 1988-2000) Michael D. Radcliff (50) 1/15/01 Senior Vice President, President, e-Business Sector, and Chief Technology Officer (since January 2001); (Owens Corning, Vice President and CIO, and President and CEO of Integrex (an Owens Corning subsidiary) 1994 - 2000) Don H. Rice (56) 2/1/96 Senior Vice President, Global Business Services and Human Resources, (since 2000) (Vice President, Human Resources, 1995-2000) Randy P. Smith (51) 2/3/00 Senior Vice President (since June 2000)and Sector President, Security and Safety (since February 2000); (Vice President, February 2000 - June 2000 Textron Fastening Systems, President 1998- 2000, Emerson Electric, President 1993-1998) John E. Turpin (54) 1/8/01 Senior Vice President and Sector President, Industrial Productivity (since January 2001); (The Stanley Works, Vice President, Operational Excellence, 1997-2000, Vice President, Operations, 1995-1997) Steven R. Shawley (48) 6/1/98 Vice President and Controller (Controller 1998-1999, Thermo King Business Unit Controller 1994-1998) No family relationship exists between any of the above-listed executive officers of the company. All officers are elected to hold office for one year or until their successors are elected and qualify. PART II Item 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS Information regarding the principal market for the company's common stock and related stockholder matters are as follows: Quarterly share prices and dividends for the common stock are shown in the following tabulation. The common shares are listed on the New York Stock Exchange and also on the London and Amsterdam exchanges. Common Stock High Low Dividend 2000 First quarter $57 3/4 $34 1/8 $.17 Second quarter 51 3/8 39 3/8 .17 Third quarter 48 3/4 31 7/8 .17 Fourth quarter 44 13/16 29 1/2 .17 1999 First quarter $52 7/16 $44 5/8 $.15 Second quarter 73 13/16 49 7/8 .15 Third quarter 67 11/16 53 .17 Fourth quarter 58 1/2 44 7/8 .17 The Bank of New York (Church Street Station, P.O. Box 11258, New York, NY 10286-1258, (800)524-4458) is the transfer agent, registrar and dividend reinvestment agent. On March 5, 2001, as part of the consideration for the acquisition of Taylor Industries, the company issued 352,812 shares of the company's common stock. These shares were previously held as treasury stock and had not been registered. There are no significant restrictions on the payment of dividends. The approximate number of record holders of common stock as of February 28, 2001 was 10,973. Item 6. SELECTED FINANCIAL DATA Selected financial data for the five years ended December 31, is as follows (in millions except per share amounts): 2000 1999 1998 1997 1996 Net sales $ 8,798.2 $7,842.6 $7,540.2 $6,374.2 $5,973.5 Earnings from continuing operations 546.2 563.1 481.6 367.6 342.3 Total assets 10,528.5 8,400.2 7,926.4 8,033.8 5,232.2 Long-term debt 1,540.1 2,113.3 2,166.0 2,528.0 1,163.8 Shareholders' equity 3,495.2 3,083.0 2,730.1 2,364.8 2,109.9 Basic earnings per share: Continuing operations $3.39 $3.44 $2.94 $2.25 $2.12 Discontinued operations 0.76 0.17 0.17 0.08 0.10 Diluted earnings per share: Continuing operations $3.36 $3.40 $2.91 $2.23 $2.11 Discontinued operations 0.76 0.17 0.17 0.08 0.10 Dividends per common share 0.68 0.64 0.60 0.57 0.52 Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Net earnings for 2000 were $669.4 million, or diluted earnings per share of $4.12. For the year net earnings from continuing operations were $546.2 million or diluted earnings per share of $3.36. Net earnings from discontinued operations contributed $123.2 million or $0.76 diluted earnings per share. During 2000, the following significant events occurred that affect year-to-year comparisons: O On June 14, 2000, the company acquired Hussmann International, Inc. (Hussmann), for approximately $1.7 billion in cash including amounts paid for outstanding stock options, debt retirement, employee contracts and transaction costs. Hussmann's business is the design, production, installation and service of merchandising and refrigeration systems for the global food industry. O In early 2000, the company completed the purchase of Dresser- Rand Company (D-R) by acquiring the joint venture partner's 51% share. The company had been reporting the results of D-R as discontinued operations. Since the sale of D-R was not completed within a year, D-R is now presented for all periods as results from assets held for sale, net of tax. O In order to reposition itself for the future, the company began a program to restructure and initiate productivity investments across its worldwide operations. The total pretax cost of this program will be approximately $325 million and will include plant rationalizations, organizational realignments consistent with the company's new market-based structure and the consolidation of back office processes. Every business sector has been impacted by the program, which will result in closing over 50 facilities, 40% of which are factories, and an 8% reduction in the workforce. O The company implemented Emerging Issues Task Force Issue No. 00-10, "Accounting for Shipping and Handling Fees and Costs" in the fourth quarter of 2000. This required the company to include the revenues billed for shipping and handling in net sales. The effect was to increase net sales and cost of goods sold by $180.6 million in 2000, $175.9 million in 1999, and $155.5 million in 1998. Sales for 2000 were $8,798.2 million, an increase of approximately 12% over the $7,842.6 million in 1999. This increase includes the favorable effect of the Hussmann acquisition. Excluding Hussmann, sales increased approximately 3%. Cost of goods sold, and selling and administrative expenses in 2000 include charges for productivity investments. Productivity investments consist of costs for equipment moving, facility redesign, employee relocation and retraining, and systems enhancements. Charges for productivity investments are expensed as incurred. Productivity investments were incurred by all business segments. The following table shows the 2000 results adjusted for productivity investments: Reported Productivity Adjusted In millions results investments results Cost of goods sold $6,461.0 $22.0 $6,439.0 Selling and administrative expenses 1,146.7 28.0 1,118.7 Cost of goods sold in 2000 was 73.4% of sales as compared to 72.6% in 1999. Excluding productivity investments, the ratio was 73.2% of sales. The increase in the ratio of cost of goods sold to sales was due to the inclusion of Hussmann, which historically has had a higher ratio than the company has maintained. Selling and administrative expenses were 13.0% of sales in 2000 as compared to 13.4% for 1999. Adjusted selling and administrative expenses were 12.7% of sales in 2000. The decrease in the ratio reflects that Hussmann's ratio was historically lower than the company's. Restructuring charges for 2000 were $76.2 million. The restructuring program began in the third quarter of 2000 and is expected to be substantially complete by the end of 2001. Restructuring charges of $65.8 million consist of severance and other employee termination costs, while facility exit costs including lease terminations totaled $10.4 million. Charges related to employee severance and other employee termination costs cover approximately 2,100 employees, of which 55% were terminated as of December 31, 2000. Operating income for the year totaled $1,114.3 million, a slight increase over 1999 operating income of $1,099.3 million. Restructuring and productivity investments charges included in operating income were $76.2 million and $50.0 million, respectively. Excluding restructuring and productivity investments, as well as the increase due to the inclusion of the Hussmann acquisition, operating income increased by approximately 6%. Interest expense for the year totaled $253.7 million versus $203.1 million for 1999. The increase is due to the impact of the debt incurred to purchase Hussmann. Interest expense from the debt required to purchase D-R is included in results from assets held for sale, net of tax. Other income (expense), net, includes foreign exchange activities, equity in earnings of partially owned affiliates, and other miscellaneous income and expense items. In 2000, these activities resulted in a net expense of $15.3 million, a favorable change of $7.0 million from the $22.3 million net expense reported in 1999. This positive change is attributable to the gains from the sale of three joint ventures, partially offset by higher foreign exchange losses. The company's charges for minority interests are composed of two items: (1) charges associated with the company's equity-linked securities, and (2) interests of minority owners (less than 50%) in consolidated subsidiaries of the company. Minority interest charges increased due to higher earnings in jointly owned entities in which the company has the majority ownership, while charges for equity-linked securities were comparable. Results from assets held for sale, net of tax, contains the unsold portion of D-R. During the third quarter, the results from D-R were reclassified from discontinued operations to results from assets held for sale since its sale was not completed within a year. The company's portion of the net earnings of D-R for 2000 was $23.3 million. These earnings include a $30.2 million after-tax gain on the sale of D-R's compression services business, after-tax restructuring charges and productivity investments of $9.9 million, interest expense net of tax on acquisition debt, and a foreign sales corporation tax benefit. The company's effective tax rate for continuing operations was 34.1% in 2000 and 34.8% in 1999. The company's effective tax rate for continuing operations excluding D-R and restructuring and productivity investments charges was 34.8% in 2000 and 35.5% in 1999. The effective tax rate in 2000 includes tax credits generated by the company's foreign sales corporation and other ongoing tax planning initiatives. The variance between the company's rate and the statutory rate of 35.0% is primarily due to lower tax rates associated with foreign earnings, the foreign sales corporation, tax benefits associated with income in Puerto Rico, offset by the effect of state and local taxes and the nondeductibility of goodwill. Earnings from discontinued operations, net of tax, were $123.2 million for 2000. This represents the Ingersoll-Dresser Pump Company (IDP) operating loss of $1.6 million in 2000, and an after-tax gain of $124.8 million recorded on the sale of IDP (See Note 4 to the Consolidated Financial Statements). Outlook The world economy in 2001 is difficult to predict. This is especially true in the United States, where economic activity has declined in the last several months of 2000. Declines have occurred in key markets, particularly automotive, truck and trailer, and road development. Construction markets have stayed steady, but it is expected that they will also decline in the first half of 2001. Stronger results are expected from the air solutions, and security and safety businesses. The company expects its revenue to be up slightly, driven by new product introductions. The company's new product introductions scheduled for 2001 include electronic access products, new compact equipment offerings, a safe tire mounting system, new climate control offerings as well as a 70 kilowatt microturbine. The company expects Hussmann to add to earnings since it will be included for a full year. The company also expects to receive the initial benefit from productivity investments. The company anticipates pricing pressure in certain end-markets and product mix changes to negatively impact both revenue growth and earnings. It is expected that the company will spend about 6 cents per share to commercialize the PowerWorks microturbine product line. Another significant factor in 2001 will be the conversion of the equity-linked securities in May. This will add approximately 8 million shares to the total number of outstanding shares of common stock, which will cause dilution of earnings per share. The company believes that 2001 will be a challenging year, but will produce another strong earnings performance. Review of Business Segments Climate Control The Climate Control Sector includes Thermo King transport temperature control equipment, and Hussmann display case refrigeration. The sector's revenues for 2000 totaled $2,021.1 million compared with $1,221.8 million in 1999. The sector's revenues increased approximately 65% due to the inclusion of Hussmann, which was acquired on June 14, 2000. Operating income for the year was $206.4 million, which included restructuring charges of $3.6 million and productivity investments of $6.9 million. Operating income for 1999 totaled $166.5 million. During 2000, the Thermo King business was adversely affected by a severe decline in the North American truck and trailer market, continued weak truck and trailer results in Europe, and the unfavorable effect of currency. However, the bus air conditioning and sea-going container businesses improved substantially. Hussmann's operating results were consistent with expectations, but reduced capital spending by several major supermarket chains affected revenues. Operating margins for the sector declined from 13.6% to 10.2% due to the inclusion of Hussmann's results, the decline in truck and trailer market and the unfavorable effect of foreign currency. Industrial Productivity The Industrial Productivity Sector is composed of a group of businesses focused on providing solutions for customers to enhance industrial efficiency. Reported revenues of $3,025.0 million increased slightly from those reported for 1999 of $2,991.1 million. Operating income was $365.9 million, which included $28.0 million of restructuring charges and $8.1 million of productivity investments charges. Excluding these charges, operating income was $402.0 million, an increase of 15.4% from $348.5 million in 1999. This increase was primarily due to the improved results in the Air Solutions, and Bearings and Components businesses. The Industrial Productivity Sector consists of three segments: O Air Solutions, which provides equipment and services for compressed air systems, reported sales of $859.5 million for the year an improvement of 12.5% compared to 1999. Operating income increased by approximately 21.5%, excluding the effect of restructure charges of $10.5 million and productivity investments of $4.3 million. The business' performance benefited primarily from the increased emphasis on the aftermarket business and ongoing cost and expense reduction activity. O Bearings and Components provides motion control technologies to the automotive and industrial markets. Revenues for the year declined slightly to $1,185.3 million, from $1,239.5 million for 1999, due to lower volumes in the automotive market. Operating income improved by 9.7% including restructuring and other charges. Significant ongoing cost and expense reduction activities and higher aftermarket revenues contributed to this improvement. Restructuring charges were $11.5 million for this segment, while charges for productivity investments were $1.3 million. The downturn in the production of light trucks and sport-utility vehicles affected the fourth-quarter 2000 revenues of this business. O Industrial Products includes Club Carr golf cars and utility vehicles, tools and related industrial production equipment. Reported revenues of $980.2 million for the year decreased slightly, compared to $987.3 million in 1999. Excluding last year's revenues from the Automation Division (sold in the fourth quarter of 1999), revenues increased by 6.7%. Operating income of $112.4 million for the year includes charges for restructuring of $6.0 million and productivity investments of $2.5 million. Lower margins resulted from cost pressures in the European industrial business and the unfavorable effects of currency. Infrastructure The Infrastructure Sector includes Bobcat compact equipment, road pavers and compactors; portable power products, and drilling equipment. This sector's revenues for the year totaled $2,341.7 million, versus $2,341.5 million for 1999. Bobcat's revenue improvement due to volume gains was offset by lower sales in the balance of the sector. Operating income of $375.5 million includes charges for restructuring of $11.4 million and productivity investments of $8.5 million. Excluding restructure and productivity investments, operating income increased slightly from the 1999 operating income level of $393.1 million. Operating margins for the sector were impacted significantly by foreign exchange. Bobcat acquired a new product line and continues to introduce new products. This enables them to maintain market share in the compact equipment market. Portable power revenues declined as slowness in national rental accounts occurred. Road development revenues also declined as domestic market softness outweighed growth in Europe. Security and Safety The Security and Safety Sector includes architectural hardware products and electronic access-control technologies. For this sector, revenues increased by 9.5% to $1,410.4 million, when compared to the prior year. Operating income for 2000 increased to $271.6 million from $248.4 million in 1999. This sector's operating income included $15.1 million and $8.9 million of charges for restructure and productivity investments, respectively. Revenue growth is attributable to continued strength in both the commercial and residential markets. In addition to higher volumes, profitability is due to productivity improvements and the successful assimilation of recent acquisitions. Liquidity and Capital Resources During 2000, the company acquired Hussmann for $1.7 billion in cash, sold IDP for $775 million in cash, and acquired full ownership of D-R for $543 million. The acquisitions of Hussmann and D-R were financed principally by issuing short-term commercial paper and from internally generated cash. The acquisitions of Hussmann and D-R are discussed in Notes 5 and 3, respectively, and the sale of IDP in Note 4, to the Consolidated Financial Statements. The following table contains several key measures used by management to gauge the company's financial performance: 2000 1999 1998 Working capital (in millions) $(644) $1,129 $737 Current ratio 0.8 1.6 1.5 Debt-to-total capital ratio 48% 42% 44% Average working capital to net sales 1.5% 11.5% 10.5% Average days outstanding in receivables 53.3 48.8 51.5 Average months' supply of inventory 2.3 2.4 2.4 Note: Working capital includes assets held for sale. The company maintains significant operations in foreign countries; therefore, the movement of the U.S. dollar against foreign currencies has an impact on the company's financial position. Generally, the functional currency of the company's foreign subsidiaries is their local currency. The company manages exposure to changes in foreign currency exchange rates through its normal operating and financing activities, as well as through the use of forward exchange contracts and options. The company attempts, through its hedging activities, to mitigate the impact on income of changes in foreign exchange rates. (Additional information on the company's use of financial instruments can be found in Note 10 to the Consolidated Financial Statements.) The following points highlight the financial results and financial condition of the company's operations with the impact of foreign currency translation where appropriate: o Cash and cash equivalents totaled $74.4 million at December 31, 2000, a $148.5 million decrease from the prior year-end balance of $222.9 million. Cash flows from operating activities provided $774.1 million, investing activities used $1,537.2 million and financing activities provided $647.0 million. Net cash used by discontinued operations was $22.1 million. Exchange rate changes during 2000 decreased cash and cash equivalents by $10.3 million. o Receivables totaled $1,323.5 million at December 31, 2000, compared to $988.5 million at the prior year end, a net increase of $335.0 million. Acquisitions accounted for an increase of $348.8 million. Receivables increased approximately $58.0 million due to higher sales activity during the latter part of the fourth quarter, which were offset by reductions caused by exchange rate changes during 2000. The company also sold an additional $40 million of accounts receivable to a financial institution in 2000. The average days outstanding in receivables was 53.3 days compared to the 1999 level of 48.8 days. o Inventories amounted to $1,022.9 million at December 31, 2000, an increase of $280.8 million from last year's level of $742.1 million. The net increase in inventories during 2000 is the result of an increase from acquisitions of $132.7 million, a reduction caused by exchange rate changes during the year of $27.8 million, and an overall increase in inventories. o Prepaid expenses totaled $82.0 million at the end of the year, $21.3 million higher than the balance at December 31, 1999. The increase is associated with pensions and acquisitions. o Assets held for sale totaled $612.4 million. This reflects a decrease of $187.3 million over the December 31, 1999, balance of $799.7 million. The account balance at the end of 1999 primarily represented the company's investments in their ventures in IDP and D-R. (See Notes 4 and 3 to the Consolidated Financial Statements.) During the current year, activity in this account included the operating results of the joint ventures, the February 2000 purchase of the remaining 51% interest in D-R for $543 million, the divestiture of IDP and D-R compression services business as well as the net change in the assets and liabilities of D-R. The company expects to complete the sale of D-R in 2001. o Deferred income taxes (current) of $82.0 million at December 31, 2000, represented the deferred tax benefit of the difference between the book and tax values of various current assets and liabilities. The components of the balance are included in Note 17 to the Consolidated Financial Statements. o Investments in and advances from partially owned equity affiliates at December 31, 2000, totaled $167.6 million, a decrease of $30.6 million over the 1999 balance of $198.2 million. During 2000, the company sold its interests in three partially owned affiliates relating to the manufacture of steering-column assemblies for approximately $37 million in cash. Income and dividends from the investments in partially owned equity affiliates were $8.9 million and $2.8 million, respectively, in 2000. Amounts due from these units were $10.6 million at December 31, 2000. Currency movements were the primary cause of the remaining change in the account balance. o Net property, plant and equipment increased by $287.8 million in 2000 to a year-end balance of $1,528.0 million. Capital expenditures in 2000 totaled $186.6 million, and acquisitions, net of dispositions added $296.9 million. Foreign exchange fluctuations decreased net fixed assets by approximately $19.4 million. The remaining net decrease was the result of depreciation and sales and retirements. o Intangible assets, net, totaled $5,105.3 million at December 31, 2000, as compared to $3,726.3 million at December 31, 1999, for a net increase of $1,379.0 million. The amortization expense for the current year was $135.4 million. Acquisition activity accounted for $1.5 billion of the increase with the remainder due to foreign currency translation. o Deferred income taxes (noncurrent) totaled $114.1 million at December 31, 2000, an amount that was $43.9 million lower than the 1999 balance. The components of this amount at December 31, 2000, can be found in Note 17 to the Consolidated Financial Statements. o Other assets totaled $290.7 million at year end, an increase of $81.5 million from the 1999 balance, primarily due to an increase in prepaid pensions. o Accounts payable and accruals totaled $1,698.7 million at December 31, 2000, an increase of $474.3 million from the previous year's balance of $1,224.4 million. Acquisitions, net of dispositions, accounted for approximately $388.6 million of the increase. Restructuring charges, and the timing of payrolls and benefits accounted for the additional increase in 2000. o Loans payable, including current maturities of long-term debt, were $2,121.8 million at the end of 2000, which reflects a significant increase of $1,626.3 million from the $495.5 million level at December 31, 1999. Loans payable at December 31, 2000, included approximately $742.9 million of current maturities of long-term debt, while only $73.1 million were included in the prior year end balance. The additional increase in loans payable was due to acquisitions, principally Hussmann. In February 2001, the company replaced a portion of loans payable with long-term debt carrying an interest rate of 5.75%. o Long-term debt, excluding current maturities, totaled $1,540.1 million, a reduction of approximately $573.2 million from the prior year's balance of $2,113.3 million. Reductions in long- term debt of $737.2 million and $6.4 million represent the reclassification of the current maturities of long-term debt to loans payable and the payments of long-term debt, respectively. o Postemployment and other benefit liabilities at December 31, 2000, totaled $824.8 million, an increase of $19.8 million from the December 31, 1999, balance. Postemployment liabilities include medical and life insurance postretirement benefits, long-term pension and other noncurrent benefit accruals. (See Notes 18 and 19 to the Consolidated Financial Statements for additional information.) o Minority interest liabilities at December 31, 2000, totaled $110.5 million, which represent a net increase of $14.8 million over the balance at the end of the prior year. This liability represents the ownership interests of other entities in certain consolidated subsidiaries of the company. o Other liabilities (noncurrent) at December 31, 2000, totaled $188.8 million, an increase of $27.0 million compared to the balance at December 31, 1999. The increase is associated with acquisitions during 2000. Generally, these accruals cover environmental, insurance, legal and other long-term contractual obligations. o In May 1997, the board of directors authorized the repurchase of up to 15.0 million shares of the company's stock at management's discretion. A total of 9.9 million shares have been purchased since the inception of the program. During 2000, 3.0 million shares were repurchased. Treasury shares were used during the past year for a small acquisition and in connection with shares issued under stock incentive plans. Other information concerning the company's financial resources, commitments and plans is as follows: The average short-term borrowings outstanding, excluding current maturities of long-term debt, were $1,352.1 million in 2000, compared to $104.8 million in 1999. The weighted average interest rate during 2000 and 1999 was 6.6%. The maximum amounts outstanding during 2000 and 1999 were $2,533.8 million and $422.4 million, respectively. The company had $1.3 billion in domestic short-term credit lines and $750.0 million in long-term credit lines at December 31, 2000, all of which were unused. Additionally, $602.8 million of foreign credit lines were available for working capital purposes, $433.3 million of which was unused at the end of the year. These facilities exceed projected requirements for 2000 and provide direct support for commercial paper and indirect support for other financial instruments, such as letters of credit and comfort letters. In 2000, foreign currency translation adjustments decreased shareholders' equity by $86.0 million. This was due to the strengthening of the U.S. dollar against other currencies in countries where the company has significant operations. Currency fluctuations in the euro, euro-linked currencies and the British pound accounted for nearly all of the change. The company utilizes two wholly owned special purpose subsidiaries to purchase accounts and notes receivable at a discount from the company on a continuous basis. These special purpose subsidiaries simultaneously sell an undivided interest in these accounts and notes receivable to a financial institution up to a maximum of $210.0 million in 2000 and $170.0 million in 1999. The agreements between the special purpose corporations and the financial institution do not have predefined expiration dates. The company is retained as the servicer of the pooled receivables. At December 31, 2000 and 1999, $210.0 million and $170.0 million of such receivables, respectively, remained uncollected. Capital expenditures were $186.6 million and $190.5 million in 2000 and 1999, respectively. The company continues investing to improve manufacturing productivity, reduce costs, and provide environmental enhancements and advanced technologies for existing facilities. The capital expenditure program for 2001 is estimated at approximately $220 million, including amounts approved in prior periods. Many of these projects are subject to review and cancellation at the option of the company without incurring substantial charges. There are no planned projects, either individually or in the aggregate, that represent a material commitment for the company. At December 31, 2000, employment totaled 50,855. This represents an increase over the prior year's level of 46,062. This increase is due to the acquisitions during the year offset by the terminations under the company's restructuring program. Financial Market Risk The company generates foreign currency exposures in the normal course of business. To mitigate the risk from foreign currency exchange rate fluctuations, the company will generally enter into forward currency exchange contracts for the purchase or sale of a currency in accordance with the company's policies and procedures. The company applies sensitivity analysis and value at risk (VAR) techniques when measuring the company's exposure to currency fluctuations. VAR is a measurement of the estimated loss in fair value until currency positions can be neutralized, recessed or liquidated and assumes a 95% confidence level with normal market conditions. The potential one-day loss, as of December 31, 2000, was $3.3 million and is considered insignificant in relation to the company's results of operations and shareholders' equity. With regard to interest rate risk, the effect of a hypothetical 1% increase in interest rates, across all maturities, would decrease the estimated fair value of the company's long-term debt at December 31, 2000, from $1,537.1 million to an estimated fair value of $1,465.0 million. Environmental Matters The company continues to be dedicated to an environmental program to reduce the utilization and generation of hazardous materials during the manufacturing process and to remediate identified environmental concerns. As to the latter, the company currently is engaged in site investigations and remedial activities to address environmental cleanup from past operations at current and former manufacturing facilities. During 2000, the company spent approximately $5.0 million on capital projects for pollution abatement and control, and an additional $6.0 million for environmental remediation expenditures at sites presently or formerly owned or leased by the company. It should be noted that these amounts are difficult to estimate because environmental improvement costs are generally a part of the overall improvement costs at a particular plant. Therefore, the accurate estimate of which portion of an improvement or a capital expenditure relates to an environmental improvement is difficult to ascertain. The company believes that these expenditure levels will continue and may increase over time. Given the evolving nature of environmental laws, regulations and technology, the ultimate cost of future compliance is uncertain. 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 approximately 26 federal Superfund and state remediation sites, excluding sites as to which the company's records disclose no involvement or as to which the company's liability has been fully determined. 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 not assumed it will 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, state and federal 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. New Accounting Standard The company adopted SFAS No. 133 "Accounting for Derivative Instruments and Hedging Activities" and its amendments as of January 1, 2001. The statement requires all derivatives to be recognized as assets or liabilities on the balance sheet and measured at fair value. Changes in the fair value of derivatives will be recognized in earnings or other comprehensive income, depending on the designated purpose of the derivative. The company recorded approximately $1.2 million after tax as the cumulative effect adjustment as a decrease to accumulated other comprehensive income at January 1, 2001. 1999 Compared to 1998 Sales for 1999 totaled $7.8 billion, which generated $1,099.3 million of operating income and $563.1 million of net earnings from continuing operations ($3.40 diluted earnings per share). Net earnings from discontinued operations totaled $28.0 million ($0.17 diluted earnings per share). For 1998, sales were $7.5 billion, which generated $969.1 million of operating income and produced net earnings from continuing operations for the year of $481.6 million ($2.91 diluted earnings per share). In 1998, net earnings from discontinued operations totaled $27.5 million ($0.17 diluted earnings per share). A comparison of key financial data between 1999 and 1998 follows: o Net sales in 1999 amounted to $7.8 billion, reflecting a 4.0% improvement over the 1998 total of $7.5 billion. Net sales for 1999 and 1998 include increases of $175.9 million and $155.5 million, respectively, for the implementation of EITF No. 00- 10, "Accounting for Shipping and Handling Fees and Costs." o Cost of goods sold in 1999 was 72.6% of sales, compared to 73.5% in 1998. The ratio of cost of goods sold to sales reflected a marked improvement in 1999 compared to 1998 based on the continued success of the company's asset-management, strategic-sourcing and productivity improvement programs. Cost of goods sold includes the reclassification of shipping and handling fees. o Selling and administrative expenses were 13.4% of sales in 1999, compared to 13.6% for 1998. This decrease is attributable to the company's cost-containment programs. o Operating income for the year totaled $1,099.3 million, a 13.4% increase compared to 1998 operating income of $969.1 million. The ratio of operating income to sales in 1999 was 14.0%, compared to 12.9% for the prior year. This improvement was the combined effect of the company's aggressive productivity- improvement and procurement programs, and the continued stability of domestic markets. o Interest expense for the year totaled $203.1 million versus $224.1 million for 1998. The reduction in interest expense totaled $21.0 million principally due to lower average outstanding debt balances during 1999 when compared to the prior year. o Other income (expense), net, is the sum of foreign exchange activities, equity in earnings of partially owned affiliates, and other miscellaneous income and expense items. In 1999, these activities resulted in a net expense of $22.3 million, an unfavorable change of $7.0 million compared to the 1998 net other expense of $15.3 million. This change was caused by lower earnings from partially owned equity affiliates, lower miscellaneous income and higher miscellaneous expenses, which were offset by a favorable change in foreign currency activity in 1999 when compared to the prior year. o The company's charges for minority interests are composed of two items: (1) charges associated with the company's equity- linked securities (issued during the first quarter of 1998), which totaled $25.6 million in 1999 and $19.7 million in 1998, and (2) interests of minority owners (less than 50%) in a consolidated unit of the company, which totaled $3.5 million in 1999 and $3.8 million in 1998. o Results from assets held for sale (net of tax) represents the company's equity in the earnings of D-R. Equity earnings of D-R were $18.2 million in 1999 and $26.1 million in 1998. o The company's effective tax rates for 1999 and 1998 were 34.8% and 34.2%, respectively. The variance from the 35.0% statutory rate primarily was due to lower tax rates associated with foreign earnings, the foreign sales corporation, favorable tax benefits associated with income earned in Puerto Rico, offset by the effect of state and local taxes and the nondeductibility of a portion of goodwill. o Discontinued operations (net of tax) for 1999 amounted to $28.0 million, which was $0.5 million higher than the $27.5 million for the year ended December 31, 1998. This category represents the company's 51% interest in IDP, net of appropriate taxes. Additional information on discontinued operations is contained throughout this report and in Note 4 to the Consolidated Financial Statements. At December 31, 1999, employment totaled 46,062. This represents a slight decrease from 1998's level of 46,525. During 1999, the company made progress in improving its liquidity and capital resources through its aggressive asset management programs and the ability to generate $854.7 million of cash flow from its operations. These actions contributed to the company's reduction in its debt-to-total capital ratio from 44% at the end of 1998 to 42% at December 31, 1999. In addition, adjusting the December 31, 1999, short-term liability for the purchase of the remaining interest in IDP lowers the debt-to-total capital ratio to 38%. The following points highlight the financial results and financial condition of the company's operations with the impact of foreign currency translation where appropriate: o Cash and cash equivalents totaled $222.9 million at December 31, 1999, a $179.4 million increase from the prior year-end balance of $43.5 million. Cash flows from operating activities provided $854.7 million, investing activities used $237.0 million and financing activities used $445.1 million. Exchange rate changes during 1999 decreased cash and cash equivalents by $7.8 million. o Receivables totaled $988.5 million at December 31, 1999, compared to $963.7 million at the prior year end, a net increase of $24.8 million. The increase is attributable to higher sales activity during the latter part of the fourth quarter and acquisitions, which were offset by reductions caused by exchange rate changes during 1999. The company focuses on decreasing its receivables base through its asset- management program, which produced a reduction in the average days outstanding in receivables to 48.8 days from the 1998 level of 51.5 days. o Inventories amounted to $742.1 million at December 31, 1999, a decrease of $82.7 million from 1998's level of $824.8 million. The net reduction to inventories during 1999 is the net result of the reduction caused by exchange rate changes during the year of $31.5 million, the company's effort to reduce inventories, and the net effect of reductions caused by dispositions exceeding increases from acquisitions. o Prepaid expenses totaled $60.7 million at the end of 1999, $5.0 million higher than the balance at December 31, 1998. The increase is associated with a general increase in prepaid expense accounts from acquired companies during the year. o Assets held for sale totaled $799.7 million. This reflects an increase of $399.6 million compared to the December 31, 1998, balance of $400.1 million. The account balance at the end of 1998 primarily represents the company's investments in IDP and D-R, which are now identified as discontinued operations and results from assets held for sale (net of tax), respectively. (See Notes 4 and 3 to the Consolidated Financial Statements.) During 1999, this account was increased by the operating results of the joint ventures, and the December 31, 1999, purchase of the remaining 49% interest in IDP for $377.0 million, as well as the net change in the assets and liabilities of IDP. o Deferred income taxes (current) of $53.9 million at December 31, 1999, represented the deferred tax benefit of the difference between the book and tax values of various current assets and liabilities. The components of the balance are included in Note 17 to the Consolidated Financial Statements. o Investments in and advances with partially owned equity affiliates at December 31, 1999, totaled $198.2 million, an increase of $14.6 million compared to the 1998 balance of $183.6 million. This category includes the company's investments in partially owned equity affiliates (i.e. 50% or less ownership). Income and dividends from the investments in partially owned equity affiliates were $9.5 million and $6.4 million, respectively, in 1999. Amounts due to these units increased $1.5 million from December 31, 1998. Currency movements were the primary cause of the remaining change in the account balance. o Net property, plant and equipment increased by $3.5 million in 1999 to a year-end balance of $1,240.2 million. Capital expenditures in 1999 totaled $190.5 million, and acquisitions (net of dispositions) added $2.7 million. Foreign exchange fluctuations decreased net fixed assets by approximately $21.2 million. The remaining net decrease was the result of depreciation and sales and retirements. o Intangible assets, net, totaled $3,726.3 million at December 31, 1999, as compared to $3,765.8 million at December 31, 1998, for a net decrease of $39.5 million. The amortization expense for 1999 was $112.8 million. Acquisition activity and the effects of foreign currency translation accounted for the balance of the change. o Deferred income taxes (noncurrent) totaled $158.0 million at December 31, 1999, an amount that was $48.0 million lower than the 1998 balance. The components comprising the balance at December 31, 1999, can be found in Note 17 to the Consolidated Financial Statements. o Other assets totaled $209.2 million at December 31, 1999, an increase of $33.5 million from the 1998 balance, primarily due to an increase in prepaid pensions of $32.0 million. o Accounts payable and accruals totaled $1,224.4 million at December 31, 1999, a decrease of $60.0 million from 1998's balance of $1,284.4 million. Reduced inventory levels at year end and acquisitions, net of dispositions, along with the timing of payrolls and benefits accounted for the reduction in 1999. o Loans payable including current maturities of long-term debt, were $495.5 million at the end of 1999, which reflects a $177.5 million increase from the $318.0 million level at December 31, 1998. Approximately $252.2 million of current maturities of long-term debt were repaid in 1999. The balance at the end of 1999 included a $377.0 million note payable issued in connection with the company's purchase of the remaining interest in the IDP joint venture. Excluding this item, loans payable would have reflected a reduction from the 1998 year-end balance of approximately $200.0 million. o Long-term debt, excluding current maturities, totaled $2,113.3 million, a reduction of approximately $52.7 million from the prior year's balance of $2,166.0 million. Reductions in long- term debt of $73.1 million represent the reclassification of the current maturities of long-term debt to loans payable. Long- term financings for plant and office expansions accounted for the modest increase in debt activity for the year. o Postemployment and other benefit liabilities at December 31, 1999, totaled $805.0 million, a decrease of $15.5 million from the December 31, 1998, balance. Postemployment liabilities include medical and life insurance postretirement benefits, long-term pension and other noncurrent benefit accruals. (See Notes 18 and 19 to the Consolidated Financial Statements for additional information.) o Minority interest liabilities at December 31, 1999, totaled $95.7 million, which represented a net increase of $62.1 million from the balance at the end of the prior year. This liability represents the ownership interests of other entities in certain consolidated subsidiaries of the company. The increase for 1999 primarily represents an equity interest purchase by a vendor in an entity controlled by the company. o Other liabilities (noncurrent) at December 31, 1999, totaled $161.8 million, an increase of $9.3 million from the balance at December 31, 1998. The increase is associated with acquisitions during 1999. These obligations are not expected to be paid in the next year. Generally, these accruals cover environmental, insurance, legal and other long-term contractual obligations. Other information concerning the company's financial resources, commitments and plans is as follows: The average short-term borrowings outstanding, excluding current maturities of long-term debt, was $104.8 million in 1999, compared to $314.8 million in 1998. The weighted average interest rate during 1999 was 6.6%, compared to 6.3% during 1998. The maximum amounts outstanding during 1999 and 1998 were $422.4 million and $794.1 million, respectively. The company had $1.3 billion in domestic short-term credit lines and $750.0 million in long-term credit lines at December 31, 1999, all of which were unused. Additionally, $599.8 million of foreign credit lines were available for working capital purposes, $527.3 million of which was unused at the end of the year. In 1999, foreign currency translation adjustments decreased shareholders' equity by $46.5 million. This change was due to the strengthening of the U.S. dollar against other currencies in countries where the company has significant operations. Currency changes in the euro, euro-linked currencies and the British pound accounted for nearly all of the change. Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK The information under the caption "Financial Market Risk" in Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations is incorporated herein by reference. Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (a) The consolidated financial statements and the report thereon of PricewaterhouseCoopers LLP dated February 6, 2001, are incorporated by reference to the company's Current Report on Form 8-K dated February 9, 2001. (b) The unaudited quarterly financial data for the two-year period ended December 31, is as follows (in millions except per share amounts): Net Cost of Operating Net 2000 sales goods sold income earnings First quarter $2,020.4 $1,481.6 $ 269.3 $136.0 Second quarter 2,232.9 1,614.8 348.5 175.4 Third quarter 2,300.8 1,713.8 246.0 251.9 Fourth quarter 2,244.1 1,650.8 250.5 106.1 Year 2000 $8,798.2 $6,461.0 $1,114.3 $669.4 1999 First quarter $1,933.6 $1,432.7 $ 238.6 $121.1 Second quarter 2,089.6 1,516.0 304.8 166.6 Third quarter 1,888.9 1,367.5 272.9 137.5 Fourth quarter 1,930.5 1,374.7 283.0 165.9 Year 1999 $7,842.6 $5,690.9 $1,099.3 $591.1 All amounts shown have been restated to reflect adoption of Emerging Issues Task Force Issue No. 00-10 "Accounting for Shipping and Handling Fees and Costs" in the fourth quarter of 2000. The impact increased net sales and cost of goods sold by $180.6 million for the year 2000 and $175.9 million for the year 1999. 2000 1999 Basic Diluted Basic Diluted earnings earnings earnings earnings per per per per common common common common share share share share First quarter $0.84 $0.83 $0.74 $0.73 Second quarter 1.09 1.08 1.01 0.99 Third quarter 1.56 1.55 0.84 0.83 Fourth quarter 0.66 0.66 1.02 1.01 Year $4.15 $4.12 $3.61 $3.57 Item 9. CHANGES IN AND DISAGREEMENTS WITH INDEPENDENT ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. PART III Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT The information required by Item 10 is (i) incorporated by reference in this Form 10-K Annual Report from pages 4 through 6, and 22 of the company's definitive proxy statement for the Annual Meeting of Shareholders to be held on May 2, 2001, and (ii) included after Item 4 in Part I of this Form 10-K Annual Report. Item 11. EXECUTIVE COMPENSATION Information on executive compensation is incorporated by reference in this Form 10-K Annual Report from pages 7 through 17 of the company's definitive proxy statement for the Annual Meeting of Shareholders to be held on May 2, 2001. Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT Information on security ownership of directors and nominees, directors and officers as a group and certain beneficial owners is incorporated by reference in this Form 10-K Annual Report on pages 3 and 4 of the company's definitive proxy statement for the Annual Meeting of Shareholders to be held on May 2, 2001. Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS Information required by Item 13 is incorporated by reference in this Form 10-K Annual Report from page 22 of the company's definitive proxy statement for the Annual Meeting of Shareholders to be held on May 2, 2001. PART IV Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K (a) 1. and 2. Financial statements and financial statement schedules The financial statements, together with the report thereon of PricewaterhouseCoopers LLP dated February 6, 2001, included as Exhibit 13 and the unaudited quarterly financial data included in Part II Item 8(b) are incorporated by reference in this Form 10-K Annual Report. The financial statement schedule listed in the accompanying index should be read in conjunction with the financial statements in such Annual Report to Shareholders for 2000. Separate financial statements for all 50 percent or less owned companies, accounted for by the equity method have been omitted because no individual entity constitutes a significant subsidiary. (b) Reports on Form 8-K A Current Report on Form 8-K (Item 7) dated November 3, 2000 reporting of pro forma financial information reflecting Dresser-Rand Company as continuing operations. A Current Report on Form 8-K (Item 5) dated February 6, 2001 reporting the Debt Securities Underwriting Agreement Standard Provisions relating to Registration Statement No. 333- 50902. A Current Report on Form 8-K (Item 5) dated February 9, 2001 reporting the filing of Exhibit 12 - Computation of the Ratio of Earnings to Fixed Charges and Exhibit 13 - Audited Financial Statements at and for the year ended December 31, 2000. A Current Report on Form 8-K/A (Item 5) dated February 9, 2001 amending the filing of Exhibit 23 - Consent of PricewaterhouseCoopers LLP. 3. Exhibits The exhibits listed on the accompanying index to exhibits are filed as part of this Form 10-K Annual Report. INGERSOLL-RAND COMPANY INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES (Item 14 (a) 1 and 2) Form 10-K Consolidated Financial Statements: Report of independent accountants * Consolidated balance sheet at December 31, 2000 and 1999 * For the years ended December 31, 2000, 1999 and 1998: Consolidated statement of income * Consolidated statement of shareholders' equity * Consolidated statement of cash flows * Notes to consolidated financial statements * Selected unaudited quarterly financial data ** Financial Statement Schedule: Report of independent accountants on financial statement schedule See below Consolidated schedule for the years ended December 31, 2000, 1999 and 1998: Schedule II -- Valuation and Qualifying Accounts See below * Incorporated by reference to the company's Current Report on Form 8-K dated February 9, 2001. ** See Item 8 Financial Statements and Supplementary Data. Financial statement schedules not included in this Form 10-K Annual Report have been omitted because they are not applicable or the required information is shown in the financial statements or notes thereto. REPORT OF INDEPENDENT ACCOUNTANTS ON FINANCIAL STATEMENT SCHEDULE To the Board of Directors and Shareholders of Ingersoll-Rand Company: Our audits of the consolidated financial statements of Ingersoll- Rand Company (the "company") referred to in our report dated February 6, 2001, appearing in the company's Current Report on Form 8-K, dated February 9, 2001 (which report and consolidated financial statements are incorporated by reference in this Annual Report on Form 10-K) also included an audit of the financial statement schedule listed in Item 14(a)(2) of this Form 10-K. In our opinion, this financial statement schedule presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. /S/ PricewaterhouseCoopers LLP PRICEWATERHOUSECOOPERS LLP Florham Park, New Jersey February 6, 2001 CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in the Registration Statement on Form S-3 (No. 333-50902) and to the incorporation by reference in the Registration Statements on Form S-8 (No. 333-42133, No. 333-19445, No. 333-67257 and No. 333- 00829) of Ingersoll-Rand Company (the "company") of our report dated February 6, 2001 relating to the financial statements which appears in the company's Current Report on Form 8-K, dated February 9, 2001, which is incorporated in this Annual Report on Form 10-K. We also consent to the incorporation by reference of our report dated February 6, 2001 relating to the financial statement schedule, which appears in this Form 10-K. /S/ PricewaterhouseCoopers LLP PRICEWATERHOUSECOOPERS LLP Florham Park, New Jersey March 20, 2001 SCHEDULE II INGERSOLL-RAND COMPANY VALUATION AND QUALIFYING ACCOUNTS FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 and 1998 (Amounts in millions) Additions charged to Balance at costs and Balance beginning expenses Deductions at end Description of year (*) (**) of year 2000 Doubtful accounts $ 33.4 $ 16.6 $ 7.2 $ 42.8 1999 Doubtful accounts $ 35.4 $ 8.7 $ 10.7 $ 33.4 1998 Doubtful accounts $ 29.4 $ 10.5 $ 4.5 $ 35.4 (*) "Additions" include foreign currency translation and business acquisitions. (**) "Deductions" include accounts and advances written off, less recoveries. INGERSOLL-RAND COMPANY INDEX TO EXHIBITS (Item 14(a)) Description 3 (i) Restated Certificate of Incorporation of Ingersoll-Rand Company, as amended through May 28, 1992. Incorporated by reference to Form 10-K of Ingersoll-Rand Company for the year ended December 31, 1993, filed March 30, 1994. 3 (ii) Amendment to Restated Certificate of Incorporation of Ingersoll-Rand Company filed May 28, 1992. Incorporated by reference to Form 10-K of Ingersoll-Rand Company for the year ended December 31, 1993, filed March 30, 1994. 3 (iii) Amendment to Restated Certificate of Incorporation of Ingersoll-Rand Company filed August 20, 1997. Incorporated by reference to Form S-3 filed October 2, 1997. 3 (iv) Amendment to Restated Certificate of Incorporation of Ingersoll-Rand Company filed December 22, 1998. Filed herewith. 3 (v) By-Laws of Ingersoll-Rand Company, as amended through May 4, 2000. Filed herewith. 4 (i) Rights Agreement, dated as of November 9, 1998. Incorporated by reference from Form 8-A/A of Ingersoll- Rand Company filed on November 13, 1998. 4 (ii) Indenture, dated as of August 1, 1986 between Ingersoll- Rand Company and The Bank of New York, as Trustee, as supplemented. Incorporated by reference to Exhibits 4.1, 4.2 and 4.3 of the company's Form S-3 Registration Statement No. 33-39474 and Exhibit 4.2 to Form S-3 Registration Statement No. 333-50902. 4(iii) Purchase Contract Agreement dated as of March 23, 1998 between Ingersoll-Rand Company and The Bank of New York, as Purchase Contract Agent. Incorporated by reference to Form 10-K of Ingersoll-Rand Company for the year ended December 31, 1998, filed March 30, 1999. 4(iv) Pledge Agreement dated as of March 23, 1998 between Ingersoll-Rand Company and The Chase Manhattan Bank, as Collateral Agent, Custodial Agent and Securities Intermediary. Incorporated by reference to Form 10-K of Ingersoll-Rand Company for the year ended December 31, 1998, filed March 30, 1999. 4(v) Indenture dated as of March 23, 1998 between Ingersoll-Rand Company and The Bank of New York, as trustee. Incorporated by reference to Form 10-K of Ingersoll-Rand Company for the year ended December 31, 1998, filed March 30, 1999. 4(vi) First Supplemental Indenture dated as of March 23, 1998 between Ingersoll-Rand Company and The Bank of New York, as trustee. Incorporated by reference to Form 10-K of Ingersoll-Rand Company for the year ended December 31, 1998, filed March 30, 1999. 4(vii) Amended and Restated Declaration of Trust for Ingersoll- Rand Financing I, a Delaware statutory business trust, dated March 23, 1998. Incorporated by reference to Form 10-K of Ingersoll-Rand Company for the year ended December 31, 1998, filed March 30, 1999. 4(viii) Guarantee Agreement dated as of March 23, 1998, between Ingersoll-Rand Company and The First National Bank of Chicago, as trustee. Incorporated by reference to Form 10-K of Ingersoll-Rand Company for the year ended December 31, 1998, filed March 30, 1999. 4 (ix) (a) Ingersoll-Rand Company is a party to several long-term debt instruments under which in each case the total amount of securities authorized does not exceed 10% of the total assets of Ingersoll-Rand Company and its subsidiaries on a consolidated basis. Pursuant to paragraph 4(iii)(A) of Item 601(b) of Regulation S-K, Ingersoll-Rand Company agrees to furnish a copy of such instruments to the Securities and Exchange Commission upon request. 10 (iii) The following exhibits constitute management contracts or compensatory plans or arrangements required by Item 601 of Regulation S-K. 10 (iii) (a) Management Incentive Unit Plan of Ingersoll-Rand Company. Amendment to the Management Incentive Unit Plan, effective January 1, 1982. Amendment to the Management Incentive Unit Plan, effective January 1, 1987. Amendment to the Management Incentive Unit Plan, effective June 3, 1987. Incorporated by reference to Form 10-K of Ingersoll-Rand Company for the year ended December 31, 1993, filed March 30, 1994. 10 (iii) (b) Amended and Restated Ingersoll-Rand Company Director Deferred Compensation and Stock Award Plan. Filed herewith. 10 (iii) (c) Description of Bonus Arrangement for Sector Presidents of Ingersoll-Rand Company. Filed herewith. 10 (iii) (d) Description of Bonus Arrangement for Chairman, President and Staff Officers. Incorporated by reference to Form 10-K of Ingersoll-Rand Company for the year ended December 31, 1993, filed March 30, 1994. 10 (iii) (e) Amended and Restated Form of Change of Control Agreement as of March 1, 1999 with Chairman of Ingersoll-Rand Company. Incorporated by reference to Form 10-K of Ingersoll- Rand Company for the year ended December 31, 1998, filed March 30, 1999. 10 (iii) (f) Amended and Restated Form of Change of Control Agreement as of March 1, 1999, with selected executive officers other than Chairman of Ingersoll-Rand Company. Incorporated by reference to Form 10-K of Ingersoll-Rand Company for the year ended December 31, 1998, filed March 30, 1999. 10 (iii) (g) Executive Supplementary Retirement Agreement for selected executive officers. Incorporated by reference to Form 10-K of Ingersoll-Rand Company for the year ended December 31, 1993, filed March 30, 1994. 10 (iii) (h) Executive Supplementary Retirement Agreement for selected executive officers. Incorporated by reference to Form 10-K for the year ended December 31, 1996, filed March 26, 1997. 10 (iii) (i) Forms of insurance and related letter agreements with certain executive officers. Incorporated by reference to Form 10-K of Ingersoll-Rand Company for the year ended December 31, 1993, filed March 30, 1994. 10 (iii) (j) Restated Supplemental Pension Plan. Incorporated by reference to Form 10-K of Ingersoll-Rand Company for the year ended December 31, 1995, filed March 29, 1996. 10 (iii) (k) Supplemental Stock and Savings Investment Plan effective as of January 1, 1989. Incorporated by reference to Form 10-K of Ingersoll-Rand Company for the year ended December 31, 1993, filed March 30, 1994. 10 (iii) (l) Supplemental Retirement Account Plan effective as of January 1, 1989. Incorporated by reference to Form 10-K of Ingersoll-Rand Company for the year ended December 31, 1993, filed March 30, 1994. 10 (iii) (m) Incentive Stock Plan of 1995 of Ingersoll-Rand Company. Incorporated by reference to the Notice of 1995 Annual Meeting of Shareholders and Proxy Statement dated March 15, 1995. See Appendix A of the Proxy Statement dated March 15, 1995. 10 (iii) (n) Senior Executive Performance Plan. Incorporated by reference to the Notice of 2000 Annual Meeting of Shareholders and Proxy Statement dated March 7, 2000. See Appendix A of the Proxy Statement dated March 7, 2000. 10 (iii) (o) Amended and Restated Elected Officers Supplemental Plan. Incorporated by reference to Form 10-K of Ingersoll-Rand Company for the year ended December 31, 1998, filed March 30, 1999. 10 (iii) (p) Amended and Restated Executive Deferred Compensation Plan. Filed herewith. 10 (iii) (q) Chief Financial Officer Employment Agreement. Incorporated by reference to Form 10-K for the year ended December 31, 1997, filed March 6, 1998. 10 (iii) (r) Incentive Stock Plan of 1998 of Ingersoll-Rand Company. Incorporated by reference to Appendix A to the Notice of 1998 Annual Meeting of Shareholders and Proxy Statement dated March 17, 1998. 10 (iii) (s) Composite Employment Agreement with Chief Executive Officer. Incorporated by reference to Form 10-K for the year ended December 31, 1999, filed March 30, 2000. 10 (iii) (t) Employment Agreement with Senior Vice President Rone Lewis. Filed herewith. 10 (iii) (u) Employment Agreement with Senior Vice President Michael Radcliff. Filed herewith. 10 (iii) (v) Employment Agreement with Senior Vice President Randy Smith. Filed herewith. 10 (iii) (w) Employment Agreement with Senior Vice President John Turpin. Filed herewith. 11 Computation of Earnings Per Share. Filed herewith. 12 Computations of Ratios of Earnings to Fixed Charges. Incorporated reference to the Current Report on Form 8-K filed February 9, 2001. 13 Ingersoll-Rand Company Annual Report to Shareholders for 2000. Incorporated by reference to the Current Report on Form 8-K filed February 9, 2001. Not deemed to be filed as part of this report except to the extent incorporated by reference. 21 List of Subsidiaries of Ingersoll-Rand Company. Filed herewith. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) 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 (Registrant) By /S/ David W. Devonshire Date March 20, 2001 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Signature Title Date Chairman President, Chief Executive Officer and Director (Principal /S/ Herbert L. Henkel Executive Officer) March 20, 2001 (Herbert L. Henkel) Executive Vice President, Chief Financial Officer (Principal /S/ David W. Devonshire Financial Officer) March 20, 2001 (David W. Devonshire) Vice President and Controller (Principal /S/ Steven R. Shawley Accounting Officer) March 20, 2001 (Steven R. Shawley) /S/ Joseph P. Flannery Director March 20, 2001 (Joseph P. Flannery) /S/ Peter C. Godsoe Director March 20, 2001 (Peter C. Godsoe) /S/ Constance J. Horner Director March 20, 2001 (Constance J. Horner) /S/ H. William Lichtenberger Director March 20, 2001 (H. William Lichtenberger) /S/ Theodore E. Martin Director March 20, 2001 (Theodore E. Martin) /S/ Orin R. Smith Director March 20, 2001 (Orin R. Smith) /S/ Richard J. Swift Director March 20, 2001 (Richard J. Swift) /S/ Tony L. White Director March 20, 2001 (Tony L. White) EX-3 2 ex-3iv.txt CERTIFICATE OF AMENDMENT EXHIBIT 3 (iv) CERTIFICATE OF AMENDMENT OF THE RESTATED CERTIFICATE OF INCORPORATION OF INGERSOLL-RAND COMPANY Pursuant to the provisions of Section 14A:7-2(2) of the New Jersey Business Corporation Act ("NJBCA"), the undersigned Corporation executes the following Certificate of Amendment to its Restated Certificate of Incorporation. 1. The name of the Corporation (hereinafter called the "Corporation") is "Ingersoll-Rand Company". 2. The following resolution has been adopted by the Board of Directors of the Corporation (hereinafter called the "Board of Directors"), as required by Subsection 14A:7- 2(3) of the NJBCA. RESOLVED, that pursuant to the authority granted to and vested in the Board of Directors of the Corporation in accordance with the provisions of the Restated Certificate of Incorporation, the Board of Directors hereby amends and restates in their entirety the designation and number, relative rights, preferences and limitation of the Series A Preference Stock of the Corporation as follows: (1) Designation and Amount. The shares of such series shall be designated as "Series A Preference Stock" (hereinafter referred to as "Series A Preference Stock") and the number of shares constituting the Series A Preference Stock shall be 600,000. Such number of shares may be increased or decreased by resolution of the Board of Directors; provided, that no decrease shall reduce the number of shares of Series A Preference Stock to a number less than the number of shares then outstanding plus the number of shares reserved for issuance upon the exercise of outstanding options, rights or warrants or upon the conversion of any outstanding securities issued by the Corporation convertible into Series A Preference Stock. (2) Dividends and Distributions. (a) Subject to the rights of the holders of any shares of any series of Preferred Stock of the Corporation (the "Preferred Stock") (or any similar stock) ranking prior and superior to the Series A Preference Stock with respect to dividends, the holders of shares of Series A Preference Stock, in preference to the holders of Common Stock, par value $2.00 per share of the Corporation (the "Common Stock"), and of any other stock of the Corporation ranking junior to the Series A Preference Stock, shall be entitled to receive, when, as and if declared by the Board of Directors out of funds legally available for the purpose, quarterly dividends payable in cash on the fifteenth day of January, April, July, and October in each year (each such date being referred to herein as a "Dividend Payment Date"), commencing on the first Dividend Payment Date after the first issuance of a share or fraction of a share of Series A Preference Stock, in an amount per share (rounded to the nearest cent) equal to the greater of (a) $1 or (b) subject to the provision for adjustment hereinafter set forth, 1000 times the aggregate per share amount of all cash dividends, and 1000 times the aggregate per share amount (payable in kind) of all non- cash dividends or other distributions other than a dividend payable in shares of Common Stock, declared on the Common Stock since the immediately preceding Dividend Payment Date or, with respect to the first Dividend Payment Date, since the first issuance of any share or fraction of a share of Series A Preference Stock. In the event the Corporation shall at any time after December 22, 1998, declare or pay any dividend on the Common Stock payable in shares of Common Stock, or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the amount to which holders of shares of Series A Preference Stock were entitled immediately prior to such event under clause (b) of the preceding sentence shall be adjusted by multiplying such amount by a fraction, the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. (b) The Corporation shall declare a dividend or distribution on the Series A Preference Stock as provided in paragraph (A) of this Section immediately after it declares a dividend or distribution on the Common Stock (other than a dividend payable in shares of Common Stock); provided that, in the event no dividend or distribution shall have been declared on the Common Stock during the period between any Dividend Payment Date and the next subsequent Dividend Payment Date, a dividend of $1 per share on the Series A Preference Stock shall nevertheless be payable, when, as and if declared, on such subsequent Dividend Payment Date. (c) Dividends shall begin to accrue and be cumulative, whether or not earned or declared, on outstanding shares of Series A Preference Stock from the Dividend Payment Date next preceding the date of issue of such shares, unless the date of issue of such shares is prior to the record date for the first Dividend Payment Date, in which case dividends on such shares shall begin to accrue from the date of issue of such shares, or unless the date of issue is a Dividend Payment Date or is a date after the record date for the determination of holders of shares of Series A Preference Stock entitled to receive a quarterly dividend and before such Dividend Payment Date, in either of which events such dividends shall begin to accrue and be cumulative from such Dividend Payment Date. Accrued but unpaid dividends shall not bear interest. Dividends paid on the shares of Series A Preference Stock in an amount less than the total amount of such dividends at the time accrued and payable on such shares shall be allocated pro rata on a share-by-share basis among all such shares at the time outstanding. The Board of Directors may fix a record date for the determination of holders of shares of Series A Preference Stock entitled to receive payment of a dividend or distribution declared thereon, which record date shall be not more than 60 days prior to the date fixed for the payment thereof. (3) Voting Rights. The holders of shares of Series A Preference Stock shall have the following voting rights; (a) Subject to the provision for adjustment hereinafter set forth and except as otherwise provided in the Restated Certificate of Incorporation or required by law, each share of Series A Preference Stock shall entitle the holder thereof to 1000 votes on all matters upon which the holders of the Common Stock of the Corporation are entitled to vote. In the event the Corporation shall at any time after December 22, 1998, declare or pay any dividend on the Common Stock payable in shares of Common Stock, or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the number of votes per share to which holders of shares of Series A Preference Stock were entitled immediately prior to such event shall be adjusted by multiplying such number by a fraction, the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. (b) Except as otherwise provided herein, in the Restated Certificate of Incorporation or in any other Amendment creating a series of Preferred Stock or any similar stock, and except as otherwise required by law, the holders of shares of Series A Preference Stock and the holders of shares of Common Stock and any other capital stock of the Corporation having general voting rights shall vote together as one class on all matters submitted to a vote of shareholders of the Corporation. (c) Except as set forth herein, or as otherwise provided by law, holders of Series A Preference Stock shall have no special voting rights and their consent shall not be required (except to the extent they are entitled to vote with holders of Common Stock as set forth herein) for taking any corporate action. (4) Certain Restrictions. (a) Whenever quarterly dividends or other divi- dends or distributions payable on the Series A Preference Stock as provided in Section 2 are in arrears, thereafter and until all accrued and unpaid dividends and distributions, whether or not earned or declared, on shares of Series A Preference Stock outstanding shall have been paid in full, the Corporation shall not: (i) declare or pay dividends, or make any other distributions, on any shares of stock ranking junior (as to dividends) to the Series A Preference Stock; (ii)declare or pay dividends, or make any other distributions, on any shares of stock ranking on a parity (as to dividends) with the Series A Preference Stock, except dividends paid ratably on the Series A Preference Stock and all such parity stock on which dividends are payable or in arrears in proportion to the total amounts to which the holders of all such shares are then entitled; (iii) redeem or purchase or otherwise acquire for consideration shares of any stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series A Preference Stock, provided that the Corporation may at any time redeem, purchase or otherwise acquire shares of any such junior stock in exchange for shares of any stock of the Corporation ranking junior (as to dividends and upon dissolution, liquidation or winding up) to the Series A Preference Stock or rights, warrants or options to acquire such junior stock; (iv) redeem or purchase or otherwise acquire for consideration any shares of Series A Preference Stock, or any shares of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series A Preference Stock, except in accordance with a purchase offer made in writing or by publication (as determined by the Board of Directors) to all holders of such shares upon such terms as the Board of Directors, after consideration of the respective annual dividend rates and other relative rights and preferences of the respective series and classes, shall determine in good faith will result in fair and equitable treatment among the respective series or classes. (b) The Corporation shall not permit any subsidiary of the Corporation to purchase or otherwise acquire for consideration any shares of stock of the Corporation unless the Corporation could, under paragraph (A) of this Section 4, purchase or otherwise acquire such shares at such time and in such manner. (5) Reacquired Shares. Any shares of Series A Preference Stock purchased or otherwise acquired by the Corporation in any manner whatsoever shall be retired and canceled promptly after the acquisition thereof. (6) Liquidation, Dissolution or Winding Up. Upon any liquidation, dissolution or winding up of the Corporation, no distribution shall be made (A) to the holders of the Common Stock or of shares of any other stock of the Corporation ranking junior, upon liquidation, dissolution or winding up, to the Series A Preference Stock unless, prior thereto, the holders of shares of Series A Preference Stock shall have received $100 per share, plus an amount equal to accrued and unpaid dividends and distributions thereon, whether or not earned or declared, to the date of such payment, provided that the holders of shares of Series A Preference Stock shall be entitled to receive an aggregate amount per share, subject to the provision for adjustment hereinafter set forth, equal to 1000 times the aggregate amount to be distributed per share to holders of shares of Common Stock, or (B) to the holders of shares of stock ranking on a parity upon liquidation, dissolution or winding up with the Series A Preference Stock, except distributions made ratably on the Series A Preference Stock and all such parity stock in proportion to the total amounts to which the holders of all such shares are entitled upon such liquidation, dissolution or winding up. In the event the Corporation shall at any time after December 22, 1998 declare or pay any dividend on the Common Stock payable in shares of Common Stock, or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the aggregate amount to which holders of shares of Series A Preference Stock were entitled immediately prior to such event under the proviso in clause (A) of the preceding sentence shall be adjusted by multiplying such amount by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. (7) Consolidation. Merger. etc. In case the Corporation shall enter into any consolidation, merger, combination or other transaction in which the shares of Common Stock are converted into, exchanged for or changed into other stock or securities, cash and/or any other property, then in any such case each share of Series A Preference Stock shall at the same time be similarly converted into, exchanged for or changed into an amount per share (subject to the provision for adjustment hereinafter set forth) equal to 1000 times the aggregate amount of stock, securities, cash and/or any other property (payable in kind), as the case may be, into which or for which each share of Common Stock is converted, exchanged or converted. In the event the Corporation shall at any time after December 22, 1998 declare or pay any dividend on the Common Stock payable in shares of Common Stock, or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the amount set forth in the preceding sentence with respect to the conversion, exchange or change of shares of Series A Preference Stock shall be adjusted by multiplying such amount by a fraction, the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. (8) No Redemption. The shares of Series A Preference Stock shall not be redeemable from any holder. (9) Rank. The Series A Preference Stock shall rank, with respect to the payment of dividends and the distribution of assets upon liquidation, dissolution or winding up of the Corporation, junior to all other series of Preferred Stock and senior to the Common Stock. (10) Amendment. If any proposed amendment to the Restated Certificate of Incorporation would alter, change or repeal any of the preferences, powers or special rights given to the Series A Preference Stock so as to affect the Series A Preference Stock adversely, then the holders of the Series A Preference Stock shall be entitled to vote separately as a class upon such amendment, and the affirmative vote of two- thirds of the outstanding shares of the Series A Preference Stock, voting separately as a class, shall be necessary for the adoption thereof, in addition to such other vote as may be required by the New Jersey Business Corporation Act. 3. The resolution was adopted by the Board of Directors at a meeting duly called and held on November 4, 1998, at which a quorum was present. 4. The Restated Certificate of Incorporation of the Corporation is amended so that the designation and number of shares of the class and series acted upon in the resolution, and the relative rights, preferences and limitations of each such class and series are as stated in the resolution. IN WITNESS WHEREOF, the undersigned have executed and subscribed this Certificate of Amendment of the Restated Certificate of Incorporation of the Corporation this 9th day of December, 1998. INGERSOLL-RAND COMPANY By: /s/ Patricia Nachtigal Name: Patricia Nachtigal Title: Vice President & General Counsel EX-3 3 ex-3v.txt BY-LAWS EXHIBIT 3 (v) BY-LAWS of INGERSOLL-RAND COMPANY As amended through May 4, 2000 BY-LAWS of INGERSOLL-RAND COMPANY ARTICLE I. STOCKHOLDERS' MEETINGS Section 1. Annual Meeting: The annual meeting of the Stockholders of the Company shall be held on the fourth Thursday of April, in each year, or such other date as the Board of Directors may determine, at such hour and at such place within or without the State of New Jersey as may be fixed by the Board of Directors and stated in the notice of the meeting, for the election of Directors of the Company and for the transaction of such other business as may come before it in accordance with the provisions of these By-Laws. At any such annual meeting of Stockholders, only such business shall be conducted as shall have been brought before the meeting (a) by or at the direction of the Board of Directors, or (b) by any Stockholder entitled to vote at such meeting who complies with the procedures set forth in this Section 1. Any Stockholder entitled to vote at such meeting may propose business to be included in the agenda of such meeting only if written notice of such Stockholder's intent is given to the Secretary of the Company, either by personal delivery or by United States mail, postage prepaid, not later than 90 days in advance of the anniversary of the immediately preceding annual meeting or if the date of the annual meeting of Stockholders occurs more than 30 days before or 60 days after the anniversary of such immediately preceding annual meeting, not later than the close of business on the seventh day following the date on which notice of such meeting is given to Stockholders. A Stockholder's notice to the Secretary shall set forth in writing as to each matter such Stockholder proposes to bring before the annual meeting (a) a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting, (b) the name and address, as they appear on the Company's books, of the Stockholder proposing such business, (c) the class and number of shares of the Company which are beneficially owned by the Stockholder and (d) any material interest of the Stockholder in such business. Notwithstanding anything in these By-Laws to the contrary, no business shall be conducted at an annual meeting except in accordance with the procedures set forth in this Section 1. The officer of the Company or other person presiding at the annual meeting shall, if the facts so warrant, determine and declare to the meeting that business was not properly brought before the meeting in accordance with the provisions of this Section 1, and, if such officer or other person should so determine, he or she shall so declare to the meeting and any such business not properly brought before the meeting shall not be transacted. Section 2. Special Meetings: Special meetings of the Stockholders may be held at the principal office of the Company in the State of New Jersey or at such other place within or without said State as may from time to time be designated by the Board of Directors and stated in the notice of the meeting, whenever called in writing by the Chairman of the Board, the Vice-Chairman or the President or by vote of a majority of the Board of Directors. At any special meeting of the Stockholders, only such business shall be conducted as shall have been brought before the meeting by or at the direction of the Board of Directors and such business shall be confined to the object or objects stated in the notice thereof. Section 3. Quorum: Unless otherwise provided in the Certificate of Incorporation of this Company or by statute, the presence in person or by proxy of the holders of record of the shares entitled to cast a majority of the votes at any meeting of the Stockholders shall constitute a quorum at such meeting. Whenever the holders of any class or series of shares are entitled to vote separately on a specified item of business, the presence in person or by proxy of the holders of record of the shares of such class or series entitled to cast a majority of the votes thereon shall constitute a quorum for the transaction of such specified item of business. If the holders of the amount of stock necessary to constitute a quorum shall fail to attend in person or by proxy at the time and place fixed by these By-Laws for an annual meeting, or as fixed by notice, as above provided for a special meeting, a majority in interest of the Stockholders present, in person or by proxy, may adjourn from time to time without notice other than announcement at the meeting until the holders of the amount of stock requisite to constitute a quorum shall attend. At any such adjourned meeting at which a quorum shall be present, any business may be transacted which might have been transacted at the meeting as originally notified. Section 4. Organization: The Chairman of the Board shall call meetings of the Stockholders to order and shall act as chairman of such meetings. In the absence of the Chairman of the Board, or if he so designates, the Chief Executive Officer, or in his absence, the Vice Chairman, the President, an Executive Vice President shall preside, and in the absence of any of the foregoing officers, the Stockholders present, or the Board of Directors, may appoint any stockholder to act as chairman of any meeting. The Secretary of the Company shall act as Secretary of all meetings of the Stockholders. In the absence of the Secretary at any meeting of the Stockholders, the presiding officer, may appoint any person to act as Secretary of the meeting. Section 5. Voting: At each meeting of the Stockholders, every Stockholder shall be entitled to vote in person or by proxy appointed by instrument in writing subscribed by such Stockholder or by his duly authorized attorney and delivered to the inspectors at the meeting. The votes for Directors and, upon demand of any Stockholder, the votes upon any question before the meeting shall be by ballot. Section 6. Inspectors: At each annual stated meeting of the Stockholders for the election of Directors, the presiding officer of such meeting shall appoint two persons to act as inspectors, who shall be sworn to perform their duties in accordance with the laws of the State of New Jersey, and who shall return a formal certificate. Section 7. Organization: The Board of Directors shall annually elect one of its members to be Chairman of the Board and shall fill any vacancy in the position of Chairman of the Board at such time and in such manner as the Board of Directors shall determine. The Chairman of the Board shall preside at meetings of the Board of Directors and lead the Board in fulfilling its responsibilities as defined in Section 1 of this Article II and, in particular, its responsibilities to oversee the performance of the Company. The Board of Directors may also elect one or more of its members to serve as a Vice Chairman of the Board who shall have such duties and responsibilities as are provided by these By-Laws or may be determined by the Board of Directors. In the absence of the Chairman of the Board, the Chief Executive Officer, or in his absence, the Vice Chairman of the Board, or in his absence, a member of the Board selected by the members present, shall preside at meetings of the Board. Section 8. Nominations of Directors: Nominations for the election of Directors may be made by the Board of Directors or any Stockholder entitled to vote for the election of Directors. Any Stockholder entitled to vote for the election of Directors at a meeting or to express a consent in writing without a meeting may nominate a person or persons for election as a Director only if written notice of such Stockholder's intent to make such nomination is given to the Secretary of the Company, either by personal delivery or United States mail, postage prepaid, not later than (a) with respect to an election to be held at an annual meeting of Stockholders, 90 days in advance of the anniversary of the immediately preceding annual meeting or if the date of the annual meeting of Stockholders occurs more than 30 days before or 60 days after the anniversary of such immediately preceding annual meeting, not later than the close of business on the seventh day following the date on which notice of such meeting is given to Stockholders and (b) in the case of any Stockholder who wishes to nominate a person or persons for election as a Director pursuant to consents in writing by Stockholders without a meeting (to the extent election by such consents is permitted under applicable law and the Company's Certificate of Incorporation), 60 days in advance of the date on which materials soliciting such consents are first mailed to Stockholders or, if no such materials are required to be mailed under applicable law, 60 days in advance of the date on which the first such consent in writing is executed. Each such notice shall set forth the name and address of the Stockholder who intends to make the nomination and of the person or persons to be nominated for election as a Director, a representation that the Stockholder is a holder of record of stock of the Company entitled to vote at such meeting or to express such consent in writing and intends to appear in person or by proxy at the meeting to nominate the person or persons specified in the notice or to execute such a consent in writing to elect such person or persons as a Director, a description of all arrangements or understandings between the Stockholder and each nominee and any other person or persons (naming such person or persons) pursuant to which the nomination or nominations for election as a Director are to be made by the Stockholder, such other information regarding each nominee proposed by such Stockholder as would have been required to be included in a proxy statement filed pursuant to the proxy rules of the Securities and Exchange Commission if such nominee had been nominated, or was intended to be nominated, for election as a Director by the Board of Directors, and the consent of each nominee to serve as a Director of the Company if so elected. The Board of Directors may refuse to acknowledge the nomination of any person not made in compliance with the foregoing procedures. ARTICLE II. BOARD OF DIRECTORS Section 1. Number and Election: The business and property of the Company shall be managed by a Board of nine Directors. The number of Directors may be altered from time to time by the alteration of these By-Laws, provided that, as required by the Restated Certificate of Incorporation, the Board shall never consist of less than eight members. As provided in the Restated Certificate of Incorporation, the Board of Directors shall be divided into three classes, each consisting of three Directors. At each annual election, the successors to the Directors of the class whose terms shall expire in that year shall be elected to hold office for a term of three years, so that the term of office of one class of Directors shall expire in each year. Each Director shall serve for the term for which such Director shall have been elected and until such Director's successor shall have been duly elected. Notwithstanding the foregoing provisions of this Section 1, if and as long as the Restated Certificate of Incorporation provides for the election of additional Directors by class or classes of stock, such additional Directors shall be elected in the manner and for the term provided in the Restated Certificate of Incorporation. Section 2. Vacancies: Subject to any requirements of the Certificate of Incorporation with respect to the filling of vacancies among additional Directors elected by a class or classes of stock, if the office of any Director becomes vacant, the remaining Directors may, by a majority vote, elect a successor who shall hold office until the next succeeding annual meeting of the Stockholders and until his successor shall have been elected and qualified. Section 3. Place of Meetings: The Directors may hold their meetings and may have an office and keep the books of the Company (except as otherwise may be provided for by law) in such place or places in the State of New Jersey or outside of the State of New Jersey as the Board from time to time may determine. Section 4. Regular Meetings: Regular meetings of the Board of Directors shall be held at such times and intervals as the Board may from time to time determine. It shall be the duty of the Secretary to send a notice to each of the Directors at his address as it appears on the books of the Company at least two (2) days before the holding of each regular meeting, but a failure of the Secretary to send such notice shall not invalidate any proceedings of the said Board. Section 5. Special Meetings: Special meetings of the Board of Directors shall be held whenever called by the Chairman of the Board or the Vice-Chairman or the President, or by one-third (1/3) of the Directors for the time being in office. The Secretary shall give notice of each special meeting by mailing the same at least two (2) days before the meeting, or by telegraphing the same at least one (1) day before the meeting to each Director, but such notice may be waived by any Director. At any meeting at which every Director shall be present, even without notice, any business may be transacted. Section 6. Quorum: Six (6) members of the Board of Directors, but not less than one-third (1/3) of the entire Board, shall constitute a quorum for the transaction of business; but if at any meeting of the Board there be less than a quorum present, those present may adjourn the meeting from time to time. At meetings of the Board of Directors, business shall be transacted in such order as from time to time the Board may determine. Section 7. Director Emeritus: The Board of Directors may appoint a person who has served with distinction and who has retired from the Board upon reaching mandatory retirement as provided herein to the position of Director Emeritus. A Director Emeritus shall be invited to attend all meetings of the Board and shall receive the same compensation as that paid to outside Directors. While serving as a Director Emeritus, he shall not be considered a retired director for pension benefit purposes; however, any pension benefits to which he may be entitled will commence upon his cessation of service as a Director Emeritus. He shall be appointed by the Board for a one-year term and may be reappointed from time to time by action of the Board. While the presence of a Director Emeritus at a Board meeting will not be considered for quorum or voting purposes, nevertheless, his advice and counsel on all matters to come before the Board is invited. ARTICLE III. COMMITTEES The Board of Directors may appoint from their number such standing committees as they deem best and to the extent permitted by statute may invest them with such of their own powers as they may deem advisable, subject to such conditions as they may prescribe. ARTICLE IV. OFFICERS Section 1. Officers: The officers of the Company to be elected by the Board of Directors shall include a Chief Executive Officer (who shall be a member of the Board), President, Treasurer and Secretary and may also include one or more Vice Chairmen, Executive Vice Presidents, Senior Vice Presidents, Vice Presidents, and such other officers as the Board of Directors shall deem necessary or otherwise appropriate to elect. A person may hold any number of offices simultaneously. Any elected officer may be removed at any time with or without cause by the Board or by the committee or superior officer upon whom such power of removal may be conferred. Section 2. Powers and Duties: The Chief Executive Officer of the Company shall have executive responsibility for the general conduct of the business and affairs of the Company. He may appoint and remove assistant officers. He shall exercise such other powers, authority and responsibilities as the Board of Directors may determine. Other officers shall have all the usual and customary powers and shall perform all the usual and customary duties incident to their respective offices and, in addition thereto and to any duties specifically prescribed by any subsequent provisions of these By-Laws, they shall respectively perform such other general or special duties as may from time to time be assigned to them by the Board of Directors or the Chief Executive Officer. The Board of Directors may appoint an officer to act as Chief Financial Officer of the Company, who shall have responsibility for the financial affairs of the Company. He will be responsible for the preparation of the financial statements of the Company, and such other duties as from time to time may be assigned to him by the Board of Directors or the Chief Executive Officer. The Board of Directors may appoint an officer to act as General Counsel of the Company, who shall have responsibility for the legal affairs of the Company. The Board of Directors may appoint the Controller to be the principal accounting and financial control officer of the Company. Securities of other corporations or interests in other entities held by the Company may be voted by the Chairman of the Board or by any other person designated by the Board of Directors or Chief Executive Officer. Section 3. Term: The executive officers elected by the Board of Directors shall hold office for one year or until their successors are elected and qualify. The Chairman, and any Vice-Chairman, shall be elected by the Directors from among their own number. One person may hold more than one office. ARTICLE V. BILLS, NOTES, AND CHECKS All bills, notes, checks or other negotiable instruments of the Company shall be made in the name of the Company and shall be signed by two executive officers or by any two persons duly authorized by the Board of Directors. No officers or agents of the Company, either singly or together shall have power to make any bill, note or check or other negotiable instrument in the name of the Company to bind the Company thereby, except as in this Article prescribed and provided. No officer or agent of this Company shall have power to endorse in the name, for or in behalf of the Company, any note, bill of exchange, draft, check or other written instrument for the payment of money, save only for purposes of the discount or the collection of the said instrument, unless thereunto duly and specially authorized by the vote of the Directors of this Company entered on the minutes of said Board. ARTICLE VI. CAPITAL STOCK Section 1. Certificates for Shares: The certificates for shares of the capital stock of the Company shall be in such form not inconsistent with the Certificate of Incorporation as shall be prepared or be approved by the Board of Directors. The certificates shall be signed by or bear thereon the facsimile signature of the Chairman, the Vice-Chairman, President, or an Executive Vice President, or a Vice President, and also be signed by or bear thereon the facsimile signature of the Treasurer or an Assistant Treasurer. The certificates shall be consecutively numbered. The name of the person owning the shares represented thereby, with the number of such shares and the date of issue, shall be entered in the Company's books. Section 2. Transfers: Shares of the capital stock of the Company shall be transferred only on the books of the Company by the holder thereof in person or by his attorney, upon surrender of the certificate or certificates properly endorsed. The Board of Directors shall have power and authority to make all such rules and regulations as it may deem expedient concerning the issue, transfer and registration of certificates for shares of the capital stock of the Company. The Board of Directors may appoint Transfer Agents and Stock Registrars and may require all stock certificates to bear the signatures of such a Transfer Agent and of such a Registrar of Transfers, or any of them. The stock transfer books may be closed for such period next preceding any Stockholders' meeting, or the payment of dividends as the Board of Directors may from time to time determine, and during such period no stock shall be transferable. The Board of Directors may also fix in advance a date not more than 60 nor less than 10 days preceding the date of any meeting of Stockholders, nor more than 60 days preceding the date for the payment of any dividend on the Common Stock or any series of Preference Stock, or the date for allotment of rights, or the date when any change or conversion or exchange of capital stock shall go into effect, as a record date for the determination of the Stockholders entitled to notice of and to vote at any such meeting, or entitled to receive payment of any such dividend, or any such allotment of rights, or to exercise the rights in respect to any such change, conversion or exchange of capital stock. In such cases only Stockholders of record on the date so fixed shall be entitled to such notice of and vote at such meeting, or to receive payment of such dividend, or allotment of rights, or to exercise such rights, as the case may be, and notwithstanding any transfer of any stock on the books of the Company after any such record date fixed as aforesaid. Section 3. Lost Stock Certificates: In case any stock certificate shall be lost, the Board of Directors may order a new certificate to be issued in its place upon receiving such proof of loss and such security therefor as may be satisfactory to it. ARTICLE VII. THE CORPORATE SEAL The Corporate Seal of the Company shall consist of a circle formed by the words "Ingersoll-Rand Company" and the letters "N. J." with the words "Corporate Seal" and the figures "1905" in the center. The Seal shall be attested by the signature of the Secretary or the Assistant Secretary or of the Treasurer or the Assistant Treasurer. When authorized by the Board of Directors, the Secretary shall affix the Seal, or cause it to be affixed, to all documents executed on behalf of the Company. The Board of Directors may also specifically or generally authorize other persons to affix the Seal. ARTICLE VIII. REACQUIRED SHARES When shares of the Company are reacquired by the Company by purchase, by redemption or by their conversion into other shares of the Company, such shares shall be treated by the Company as treasury shares, unless and to the extent the Board of Directors determines at any time that any such shares shall be cancelled. ARTICLE IX. INDEMNIFICATION OF DIRECTORS, OFFICERS AND OTHERS Section 1. Right to Indemnification: Each person who was or is made a party or is threatened to be made a party to or is involved in any pending, threatened or completed civil, criminal, administrative or arbitrative action, suit or proceeding, or any appeal therein or any inquiry or investigation which could lead to such action, suit or proceeding ("proceeding"), by reason of his or her being or having been a Director or officer of the Company or of any constituent corporation absorbed by the Company in a consolidation or merger, or by reason of his or her being or having been a Director, officer, trustee, employee or agent of any other corporation (domestic or foreign) or of any partnership, joint venture, sole proprietorship, trust, employee benefit plan or other enterprise (whether or not for profit), serving as such at the request of the Company or of any such constituent corporation, or the legal representative of any such Director, officer, trustee, employee or agent, shall be indemnified and held harmless by the Company to the fullest extent permitted by the New Jersey Business Corporation Act, as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Company to provide broader indemnification rights than said Act permitted prior to such amendment), from and against any and all reasonable costs, disbursements and attorneys' fees, and any and all amounts paid or incurred in satisfaction of settlements, judgments, fines and penalties, incurred or suffered in connection with any such proceeding, and such indemnification shall continue as to a person who has ceased to be a Director, officer, trustee, employee or agent and shall inure to the benefit of his or her heirs, executors, administrators and assigns; provided, however, that there shall be no indemnification hereunder with respect to any settlement or other nonadjudicated disposition of any proceeding unless the Company has given its prior consent to such settlement or disposition. The right to indemnification conferred in this Section 1 shall be a contract right and shall include the right to be paid by the Company the expenses incurred in connection with any proceeding in advance of the final disposition of such proceeding as authorized by the Board of Directors; provided, however, that, if the New Jersey Business Corporation Act so requires, the payment of such expenses incurred by a Director or officer in his or her capacity as a Director or officer in advance of the final disposition of a proceeding shall be made only upon receipt by the Company of an undertaking, by or on behalf of such Director or officer, to repay all amounts so advanced if it shall ultimately be determined that such Director or officer is not entitled to be indemnified under this Section 1 or otherwise. The Company may, by action of its Board of Directors, provide for indemnification and advancement of expenses to employees and agents of the Company with the same scope and effect as the foregoing indemnification of Directors and officers. Section 2. Right of Claimant to Bring Suit: If a claim under Section 1 of this Article IX is not paid in full by the Company within thirty days after a written request has been received by the Company, the claimant may at any time thereafter apply to a court for an award of indemnification by the Company for the unpaid amount of the claim and, if successful on the merits or otherwise in connection with any proceeding, or in the defense of any claim, issue or matter therein, the claimant shall be entitled also to be paid by the Company any and all expenses incurred or suffered in connection with such proceeding. It shall be a defense to any such action (other than an action brought to enforce a claim for the advancement of expenses incurred in connection with any proceeding where the required undertaking, if any, has been tendered to the Company) that the claimant has not met the standard of conduct which makes it permissible under the New Jersey Business Corporation Act for the Company to indemnify the claimant for the amount claimed, but the burden of proving such defense shall be on the Company. Neither the failure of the Company (including its Board of Directors, independent legal counsel or its stockholders) to have made a determination prior to the commencement of such proceeding that indemnification of the claimant is proper in the circumstances because he or she has met the applicable standard of conduct set forth in the New Jersey Business Corporation Act, nor an actual determination by the Company (including its Board of Directors, independent legal counsel or its stockholders) that the claimant has not met such applicable standard of conduct, nor the termination of any proceeding by judgment, order, settlement, conviction or upon a plea of nolo contendere or its equivalent, shall be a defense to the action or create a presumption that the claimant has not met the applicable standard of conduct. Section 3. Non-Exclusivity of Rights: The right to indemnification and advancement of expenses provided by or granted pursuant to this Article IX shall not exclude or be exclusive of any other rights, including the right to be indemnified against any and all reasonable costs, disbursements and attorneys' fees, and any and all amounts paid or incurred in satisfaction of settlements, judgments, fines and penalties incurred or suffered in proceedings by or in the right of the Company, to which any person may be entitled under a certificate of incorporation, by-law, agreement, vote of stockholders, or otherwise, provided that no indemnification shall be made to or on behalf of any person if a judgment or other final adjudication adverse to such person establishes that such person has not met the applicable standard of conduct required to be met under the New Jersey Business Corporation Act. ARTICLE X. AMENDMENTS The Board of Directors may, by a majority vote of the entire Board, make By-Laws and from time to time alter, amend or repeal any By-Law, but any By-Law made by the Board of Directors may be altered or repealed by the Stockholders at any annual or special meeting. Notice of such proposed alteration, amendment or repeal of any By-Law shall be included in the notice of the meeting of the Directors or Stockholders. ARTICLE XI. AUDITORS The Board of Directors may appoint a firm of certified public accountants to audit the books and accounts of the Company for the calendar year in which such appointment is made. EX-10 4 ex-10b.txt EXHIBIT 10III (B) - IR DEF. COMP. AND STOCK AWARD EXHIBIT 10 iii(b) IR DIRECTOR DEFERRED COMPENSATION AND STOCK AWARD PLAN [As Amended and Restated Effective January 1, 2001] TABLE OF CONTENTS SECTION 1 - STATEMENT OF PURPOSE 1 SECTION 2 - DEFINITIONS 2.1 Account Balance 2 2.2 Beneficiary 2 2.3 Beneficiary Designation Form 2 2.4 Board 2 2.5 Conversion Account 2 2.6 Deferral Account 2 2.7 Deferral Amount 2 2.8 Deferred IR Stock Award Account 3 2.9 Election Form 3 2.10 Fees 3 2.11 Investment Option Subaccounts 3 2.12 IR Stock 3 2.13 IR Stock Account 3 2.14 Participant 3 2.15 Plan Year 3 2.16 Retirement 4 2.17 Return 4 2.18 Supplemental Contribution 4 2.19 Supplemental Contribution Account 4 2.20 Trust 4 SECTION 3 - PARTICIPATION, DEFERRAL ELECTION AND INVESTMENT ELECTION 3.1 Participation and Deferral Election 5 3.2 Investment Election 6 SECTION 4 - VESTING 4.1 Deferral Amounts 7 4.2 Supplemental Contributions 7 4.3 Conversion Account 7 4.4 Deferred IR Stock Award Account 7 SECTION 5 - ACCOUNTS AND VALUATIONS 5.1 Deferral Accounts 8 5.2 Supplemental Contribution Accounts 9 5.3 IR Stock Accounts 9 5.4 Deferred IR Stock Award Amount 11 5.5 Deferred Amounts upon Termination of the Retirement Plan 12 5.6 Conversion of Deferred Compensation Account Balances 12 5.7 Valuation of Account Balance in Event of Change in Control 13 5.8 Changes in Capitalization 13 5.9 Accounts are Boookkeeping Entries 13 SECTION 6 - DISTRIBUTON OF ACCOUNTS 6.1 Termination, Retirement and Death 15 6.2 Scheduled Distributions 16 6.3 Form of Payments of IR Stock 18 6.4 Change in Control 18 6.5 Taxes; Withholding 20 SECTION 7 - BENEFICIARY DESIGNATION 21 SECTION 8 - AMENDMENT AND TERMINATION OF PLAN 8.1 Amendment 22 8.2 Termination of Plan 22 SECTION 9 - MISCELLANEOUS 9.1 Unsecured General Creditor 23 9.2 Entire Agreement; Successors 23 9.3 Non-Assignability 23 9.4 Authorization and Source of Shares 24 9.5 Singular and Plural 24 9.6 Captions 24 9.7 Applicable Law 24 9.8 Severability 24 IR Director Deferred Compensation and Stock Award Plan As Amended and Restated Effective January 1, 2001 SECTION 1 STATEMENT OF PURPOSE The purpose of the IR Director Deferred Compensation and Stock Award Plan (the "Plan") is to further increase the mutuality of interest between Ingersoll-Rand Company (the "Company"), its non-employee members of the Board ("Non- employee Directors") and stockholders by providing its Non- employee Directors the opportunity to elect to defer receipt of cash compensation. The Plan, originally known as the Ingersoll-Rand Company Directors Deferred Compensation and Stock Award Plan, became effective on January 1, 1997 and was amended and restated effective January 1, 2001. SECTION 2 DEFINITIONS 2.1 "Account Balance" means, for each Plan Year, a credit on the records of the Company equal to the sum of the value of a Participant's Deferral Account, Supplemental Contribution Account and IR Stock Account for such Plan Year. The Account Balance shall be a bookkeeping entry only and shall be utilized solely as a device for the measurement and determination of the amounts to be paid in cash or IR Stock, as applicable, to a Participant, or to the Participant's designated Beneficiary, pursuant to the Plan. 2.2 "Beneficiary" means the person or persons designated as such in accordance with Section 7. 2.3 "Beneficiary Designation Form" means the form established from time to time by the Company that a Participant completes and returns to the Secretary of the Company to designate one or more Beneficiaries. 2.4 "Board" means the Board of Directors of the Company. 2.5 "Conversion Account" means the sum of all of the shares of IR Stock credited to a Participant pursuant to Section 5.6. 2.6 "Deferral Account" means, for each Plan Year, (i) the sum of all of a Participant's Deferral Amounts, plus (ii) amounts credited in accordance with all the applicable crediting provisions of the Plan that relate to the Participant's Deferral Account, less (iii) all distributions made to the Participant or to the Participant's Beneficiary pursuant to the Plan that relate to the Participant's Deferral Account. 2.7 "Deferral Amount" means the amount of Fees actually deferred under the Plan by the Participant pursuant to Section 3 for any one Plan Year. 2.8 "Deferred IR Stock Award Account" means, for each Plan Year, the sum of all of a Participant's deferred stock award amounts pursuant to Section 5.4 and deferred amounts upon termination of the retirement plan pursuant to Section 5.5. 2.9 "Election Form" means the form or forms established from time to time by the Company that a Participant completes, signs and returns to the Secretary of the Company to make an election under the Plan. An Election Form also includes any other method approved by the Company that a Participant may use to make an election under the Plan. The terms and conditions specified in the Election Form(s) are incorporated by reference herein and form a part of the Plan. If there is a conflict between the Election Form and the Plan, the terms of the Plan shall control and govern. 2.10 "Fees" means retainer and meeting fees payable to Non- employee Directors. 2.11 "Investment Option Subaccounts" means the separate subaccounts, each of which corresponds to an investment option elected by the Participant with respect to a Participant's Deferral Accounts. 2.12 "IR Stock" means the common stock of the Company. 2.13 "IR Stock Account" means, for each Plan Year, (i) the sum of all of a Participant's Deferral Amounts that are deemed to be invested in IR Stock, plus (ii) amounts credited in accordance with all the applicable crediting provisions of the Plan that relate to the Participant's IR Stock Account, less (iii) all distributions made to the Participant or to the Participant's Beneficiary pursuant to the Plan that relate to the Participant's IR Stock Account. 2.14 "Participant" means a Non-employee Director participating in the Plan in accordance with the provisions of Section 3. 2.15 "Plan Year" means a calendar year. 2.16 "Retirement" means retirement in accordance with the Board's retirement policy for Non-employee Directors. 2.17 "Return" means, for each investment option, an amount equal to the net investment return (including changes in value and distributions) for each such investment option during each business day. 2.18 "Supplemental Contribution" means an additional amount to be credited to a Participant's Supplemental Contribution Account equal to twenty percent (20%) of the Participant's Fees that are deferred under the Plan for a Plan Year. 2.19 "Supplemental Contribution Account" means, for each Plan Year, (i) the sum of all of a Participant's Supplemental Contributions, plus (ii) amounts credited in accordance with all the applicable crediting provisions of the Plan that relate to the Participant's Supplemental Contribution Account, less (iii) all distributions made to the Participant or to the Participant's Beneficiary pursuant to the Plan that relate to the Participant's Supplemental Contribution Account. 2.20 "Trust" means the IR Grantor Trust Agreement, dated as of January 1, 2001 between the Company and the trustee named therein, as amended from time to time. SECTION 3 PARTICIPATION, DEFERRAL ELECTION AND INVESTMENT ELECTION 3.1 Participation and Deferral Election. Non-employee Directors may elect to participate in the Plan for a given Plan Year by filing a completed Election Form for the Plan Year in the manner prescribed by the Secretary of the Company. The Election Form must specify the percentage or dollar amount of any Deferral Amount otherwise payable during such Plan Year that will be deferred under the Plan. Notwithstanding anything to the contrary, at the Non-employee Director's direction, an election to participate in the Plan for a given Plan Year may continue from Plan Year to Plan Year unless a written request to modify or terminate that election for a subsequent period is submitted to the Secretary of the Company on or before the date 15 days prior to the beginning of the subsequent Plan Year. Any election to defer a Deferral Amount is irrevocable upon the filing of the Election Form, and must be properly completed and filed no later than the November 30 immediately preceding such Plan Year, or, with respect to a new Non-employee Director, before the effective date of his or her election to the Board, or such other date as the Secretary of the Company may specify. A Non-employee Director who fails to file a properly completed Election Form by such date will be ineligible to defer a Deferral Amount under the Plan for the following Plan Year. In addition, the Company may establish from time to time such other enrollment requirements as it determines are necessary or proper. If the Company determines in good faith that a Participant no longer qualifies as a Non-employee Director, the Company shall have the right to (i) terminate any deferral election the Participant has made for the remainder of the Plan Year in which the Participant's membership status changes, (ii) prevent the Participant from making future deferral elections and/or (iii) immediately distribute the Participant's then vested Account Balances, Conversion Account and Deferred IR Stock Award Account and terminate the Participant's participation in the Plan. 3.2 Investment Election. In accordance with procedures established by the Company, prior to the time a Participant's Deferral Amounts are credited to a Participant's Deferral Account pursuant to Section 5.1, the Participant shall designate, on an Election Form, the types of investment options in which the Participant's Deferral Amounts will be deemed to be invested for purposes of determining the amount of earnings to be credited to the Participant's Deferral Account and, with respect to Deferral Amounts that are designated by the Participant to be deemed to be invested in IR Stock, the IR Stock Account. Subject to Section 5.3, in making the designations pursuant to this Section, the Participant may specify that all or any portion of the Participant's Deferral Amount be deemed to be invested, in whole percentage increments, in one or more of the types of investment options provided under the Plan. A Participant may change the designation made under this Section with respect to prior and/or future Deferral Amounts by filing an Election Form no later than the time specified by the Secretary of the Company, to be effective as of the first business day of the following month. If a Participant fails to elect a type of investment option under this Section, he or she shall be deemed to have elected the investment option designated by the Company as the default investment option. SECTION 4 VESTING 4.1 Deferral Amounts. A Participant shall be fully vested in his or her Deferral Account. 4.2 Supplemental Contributions. A Participant shall vest in his or her Supplemental Contribution Account on the earliest of: (i) the fifth anniversary of the date the Supplemental Contribution is credited to the Participant's Supplemental Contribution Account; (ii) the date of the Participant's cessation of service on the Board by reason of Retirement or death; (iii) a Change in Control pursuant to Section 6.4; or (iv) a termination of the Plan pursuant to Section 8.2. 4.3 Conversion Account. A Participant shall be fully vested in his or her Conversion Account. 4.4 Deferred IR Stock Award Account. A Participant shall be fully vested in his or her Deferred IR Stock Award Account. SECTION 5 ACCOUNTS AND VALUATIONS 5.1 Deferral Accounts. The Company shall establish and maintain a separate Deferral Account for each Participant for each Plan Year. All Deferral Amounts, other than Deferral Amounts that are deemed, at the Participant's election, to be invested in IR Stock shall be credited to the Participant's Deferral Account on the date when the Deferral Amount would otherwise be paid to the Participant. All Deferral Amounts that are deemed, at the Participant's election, to be invested in IR Stock shall be credited to the Participant's IR Stock Account as described in Section 5.3. Each Participant's Deferral Accounts shall be divided into Investment Option Subaccounts. A Participant's Deferral Accounts shall be credited as follows: (a) On the day a Deferral Amount is credited to a Participant's Deferral Account, the Administrative Committee shall credit the Investment Option Subaccounts of the Participant's Deferral Account with an amount equal to the Participant's Deferral Amount in accordance with the Participant's Election Form; that is, the portion of the Participant's Deferral Amount that the Participant has elected to be deemed to be invested in a certain type of investment option shall be credited to the Investment Option Subaccount corresponding to that investment option, and (b) Each business day, each Investment Option Subaccount of a Participant's Deferral Account shall be adjusted for earnings or losses in an amount equal to that determined by multiplying the balance credited to such Investment Option Subaccount as of the prior day plus contributions credited that day to the Investment Option Subaccount by the Return for the corresponding investment option selected by the Company. 5.2 Supplemental Contribution Accounts. The Company shall establish and maintain a separate Supplemental Contribution Account for each Plan Year for each Participant who receives a Supplemental Contribution for such Plan Year. All Supplemental Contributions shall be credited to the Participant's Supplemental Contribution Account on the same date that the Participant's Deferral Amount for which the Supplemental Contribution is being made is credited to the Participant's Deferral Account pursuant to Section 5.1. Notwithstanding anything to the contrary, a Participant may not designate the investment of Supplemental Contributions and all of a Participant's Supplemental Contributions shall be deemed to be invested in, and shall remain deemed to be invested in, IR Stock in the Participant's Supplemental Contribution Account until distributed from the Plan. All Supplemental Contributions shall be credited to a Participant's Supplemental Contribution Account in units or fractional units. The value of each unit shall be determined each business day and shall equal the closing price of one share of IR Stock on the New York Stock Exchange-Composite Tape. On each date that Supplemental Contributions are credited to a Participant's Supplemental Contribution Account, the number of units to be credited shall be determined by dividing the amount of such Supplemental Contributions by the value of a unit on such date. Dividends paid on IR Stock shall be reflected in a Participant's Supplemental Contribution Account by the crediting of additional units or fractional units. Such additional units or fractional units shall equal the value of the dividends based upon the closing price of one share of IR Stock on the New York Stock Exchange- Composite Tape on the date such dividends are paid. 5.3 IR Stock Accounts. The Company shall establish and maintain a separate IR Stock Account for each Plan Year for each Participant who elects to have all or a portion of his of her Deferral Amounts for such Plan Year invested in IR Stock. All Deferral Amounts that are deemed, at the Participant's election, to be invested in IR Stock shall be credited to the Participant's IR Stock Account on the date when the Deferral Amount would otherwise be paid to the Participant. Notwithstanding anything to the contrary, IR Stock credited to a Participant's IR Stock Account may not be designated by the Participant to be deemed to be invested in any other investment option and shall remain invested in IR Stock in such IR Stock Account until distributed from the Plan. A Participant's IR Stock Accounts shall be credited as follows: (a) On the day a Deferral Amount is credited to a Participant's IR Stock Account, the Company shall credit the IR Stock Account with an amount equal to the Participant's Deferral Amount. (b) All Deferral Amounts deemed to be invested in IR Stock in accordance with the Participant's Election Form shall be credited to a Participant's IR Stock Account in units or fractional units. The value of each unit shall be determined each business day and shall equal the closing price of one share of IR Stock on the New York Stock Exchange-Composite Tape. On each date that Deferral Amounts are credited to the Participant's IR Stock Account, the number of units to be credited shall be determined by dividing the amount of such Deferral Amounts by the value of a unit on such date. Dividends paid on IR Stock shall be reflected in a Participant's IR Stock Account by the crediting of additional units or fractional units. Such additional units or fractional units shall equal the value of the dividends based upon the closing price of one share of IR Stock on the New York Stock Exchange-Composite Tape on the date such dividends are paid. 5.4 Deferred IR Stock Award Amount. Each Non-employee Director shall receive an annual award on the date of the first Board meeting after each annual meeting of shareholders in the form of a promise by the Company to deliver 600 shares of IR Stock, or such other amount as may from time to time be established by resolution of the Board. Annual awards of shares of IR Stock shall be credited to the Deferred IR Stock Award Account of each Non-employee. A Participant's Deferred IR Stock Award Accounts shall be credited as follows: (a) On the day an annual award of IR Stock is credited to a Participant's Deferred IR Stock Award Account, the Company shall credit the Deferred IR Stock Award Account with an amount equal to the Participant's annual award of IR Stock. (b) All awards of IR Stock pursuant to this Section and amounts credited pursuant to Section 5.5 shall be credited to a Participant's Deferred IR Stock Award Account in units or fractional units. The value of each unit shall be determined each business day and shall equal the closing price of one share of IR Stock on the New York Stock Exchange-Composite Tape. On each date that awards of IR Stock are credited to the Participant's Deferred IR Stock Award Account, the number of units to be credited shall be determined by dividing the amount of such IR Stock awarded by the value of a unit on such date. Dividends paid on IR Stock shall be reflected in a Participant's Deferred IR Stock Award Account by the crediting of additional units or fractional units. Such additional units or fractional units shall equal the value of the dividends based upon the closing price of one share of IR Stock on the New York Stock Exchange- Composite Tape on the date such dividends are paid. 5.5 Deferred Amounts upon Termination of the Retirement Plan. The shares of IR Stock credited to the deferred compensation accounts (such crediting having occurred prior to the Plan's amendment and restatement effective January 1, 2001) of the Non-employee Directors pursuant to the resolutions adopted by the Board on November 6, 1996, with respect to the elimination of retirement payments to Non-employee Directors shall be credited to the Deferred IR Stock Award Account of each Non- Employee Director as of January 1, 2001. 5.6 Conversion of Deferred Compensation Account Balances. A Non-employee Director's cash balance in the deferred compensation program as of December 31, 1996 was transferred to an equivalent balance in the Plan as of January 1, 1997. Such balance was equal to the number of shares of IR Stock, including fractions, which could have been purchased with such cash account balance on January 2, 1997 at the mean of the high and low prices of a share of IR Stock on the New York Stock Exchange - Composite Tape on such date, provided that if no sales of shares of IR Stock were made on the New York Stock Exchange on that date, the mean of the high and low prices reported for the preceding day on which sales of shares of IR Stock were made on the New York Stock Exchange. A Non-employee Director's balance, as such balance is described in the previous paragraph, shall be credited to the Non-employee Director's Conversion Account as of January 1, 2001 in units or fractional units. The value of each unit shall be determined each business day and shall equal the closing price of one share of IR Stock on the New York Stock Exchange-Composite Tape. Dividends paid on IR Stock shall be reflected in a Non- employee Director's Conversion Account by the crediting of additional units or fractional units. Such additional units or fractional units shall equal the value of the dividends based upon the closing price of one share of IR Stock on the New York Stock Exchange- Composite Tape on the date such dividends are paid. 5.7 Valuation of Account Balance in Event of Change in Control. In the event of a Change in Control pursuant to Section 6.4, the value of each IR Stock unit deemed to be invested in each IR Stock Account, Supplemental Contribution Account, Conversion Account and Deferred IR Stock Award Account shall be equal to the highest Fair Market Value (as such term is defined in the Company's Incentive Stock Plan of 1998) of one share of IR Stock during the 60 days preceding the date on which the Change in Control occurs. In the event of a Change in Control pursuant to Section 6.4, the value of a Participant's Account Balances for all investment options other than IR Stock shall be determined as of the end of the month during which the Change in Control occurs. 5.8 Changes in Capitalization. If there is any change in the number or class of shares of IR Stock through the declaration of a stock dividend or other extraordinary dividends, or recapitalization resulting in stock splits, or combinations or exchanges of such shares or in the event of similar corporate transactions, the units in each Participant's IR Stock Account, Supplemental Contribution Account, Conversion Account and Deferred IR Stock Award Account shall be equitably adjusted to reflect any such change in the number or class of issued shares of IR Stock or to reflect such similar corporate transaction. 5.9 Accounts are Bookkeeping Entries. Notwithstanding any other provision of the Plan that may be interpreted to the contrary, the investment options, including IR Stock, are to be used for measurement purposes only, and a Participant's election of any such investment option, the allocation to his or her Account Balances, Conversion Account and Deferred IR Stock Award Account thereto, the calculation of additional amounts and the crediting or debiting of such amounts to a Participant's Account Balances, Conversion Account and Deferred IR Stock Award Account shall not be considered or construed in any manner as an actual investment in any such investment option. In the event that the Company or the trustee of the Trust, in its own discretion, decides to invest funds in any or all of the investment options, no Participant shall have any rights in or to such investments themselves. Without limiting the foregoing, a Participant's Account Balances, Conversion Account and Deferred IR Stock Award Account shall at all times be a bookkeeping entry only and shall not represent any investment made on the Participant's behalf by the Company or the Trust. The Participant shall at all times remain an unsecured creditor of the Company. SECTION 6 DISTRIBUTION OF ACCOUNTS 6.1 Termination, Retirement and Death. A Participant who terminates as a member of the Board, reaches Retirement or dies shall be paid his or her vested Account Balances, Conversion Account and Deferred IR Stock Award Account (and after his or her death to his or her Beneficiary) in annual installments over ten (10) years beginning as soon as administratively practicable in the year following the Participant's termination, Retirement or death unless an optional form of benefit payment is elected in accordance with the next sentence. For each Plan Year's Account Balance and for his or her Conversion Account and Deferred IR Stock Award Account the Participant may elect an optional form of benefit payment from among the following: (1) A lump sum distribution to be paid as soon as administratively practicable in the year following the Participant's termination, Retirement or death; (2) Annual installments over five (5) years commencing as soon as administratively practicable in the year following the Participant's termination, Retirement or death; (3) Annual installments over fifteen (15) years commencing as soon as administratively practicable in the year following the Participant's termination, Retirement or death; and (4) A lump sum distribution which shall be paid as soon as administratively practicable in the year specified by the Participant on the Election Form. Such specified time shall be no less than one (1) year and no more than five (5) years following termination, Retirement or death. A Participant may elect, on an Election Form, to change the form and/or extend the timing of a distribution under this Section that he or she has previously elected to any other form of distribution or time permitted under this Section, provided that no such election shall be effective unless it is made at least one (1) year before the Participant's termination, Retirement or death, as applicable. In the event of the Participant's termination, Retirement or death prior to the elected date for one or more scheduled distributions pursuant to Section 6.2, the portion of the Participant's Account Balance associated with such distribution(s) shall be paid to the Participant (and after his or her death to his or her Beneficiary) in the same form as elected by the Participant under this Section. Notwithstanding any provision of the Plan to the contrary, if a Participant terminates, has reached Retirement or dies while receiving annual installments pursuant to Section 6.2, such annual installments shall continue to be paid to the Participant (and after his or her death to his or her Beneficiary) in the same manner as if the Participant had not terminated employment, reached Retirement or died. All distributions under this Section shall be made on a pro rata basis from the Participant's Account Balances, Conversion Account and Deferred IR Stock Award Accounts. 6.2 Scheduled Distributions. A Participant may elect, on an Election Form, to receive a distribution of all or a portion of his or her Deferral Account and IR Stock Account with respect to a Plan Year(s) while still a Non-employee Director. A Participant's election for a distribution under this Section shall be permitted only if the date specified on the Election Form by the Participant for such distribution (in the event of a lump sum) or the commencement of such distribution (in the event of annual installments) is no earlier than two (2) years from the last day of the Plan Year for which the portion of the Deferral Account and IR Stock Account to be distributed is actually deferred. A Participant may elect, on an Election Form, to extend the date for any distribution under this Section with respect to any Plan Year, provided such election occurs at least one year before the date of distribution most recently elected for that Plan Year by the Participant and the extension is for a period of not less than two (2) years after the date of distribution most recently elected for that Plan Year by the Participant. The Participant shall have the right to extend the date for any distribution under this Section for a Plan Year twice. At the time an election for a distribution under this Section is made, the Participant shall also elect, on the Election Form, the form of payment of the distribution. The Participant shall elect either (i) a lump sum payment to be paid as soon as soon as administratively practicable in the year specified by the Participant on the Election Form or (ii) annual installments over two (2), three (3), four (4) or five (5) years beginning as soon as administratively practicable in the year specified by the Participant on the Election Form. A Participant may elect, on an Election Form, to change the form of payment for any distribution under this Section for any Plan Year to any other form of payment permitted under this Section, provided such election occurs at least one (1) year before the date of distribution previously elected by the Participant. All distributions under this Section shall be made on a pro rata basis from the Participant's Deferral Account(s) and IR Stock Account(s), as applicable. 6.3 Form of Payments of IR Stock. Except as provided in Sections 6.4, all amounts in a Participant's IR Stock Account, Supplemental Contribution Account, Conversion Account and Deferred IR Stock Award Account payable to a Participant or Beneficiary under the Plan shall be paid in IR Stock, with one share distributed for each unit. All fractional shares shall be payable in cash. All distributions from the Plan that are to be paid in a specified number of annual installments shall be paid so that the amount of each annual installment is determined by dividing the total remaining number of units in the Participant's Account Balance, Conversion Account and Deferred IR Stock Award Account to be paid in annual installments, by the number of years of annual installments remaining. 6.4 Change in Control. In the event of a Change in Control, as defined in this Section, all Account Balances, the Conversion Account and the Deferred IR Stock Account shall be valued pursuant to Section 5.7, and shall be distributed in cash in a lump sum within forty five (45) days following the Change in Control. For purposes hereof, (1)"Affiliate" shall mean, when used to indicate a relationship with a specified person, a person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, such specified person. (2)"Associate" shall mean, when used to indicate a relationship with a specified person, (a) any corporation, partnership, or other organization of which such specified person is an officer or partner, (b) any trust or other estate in which such specified person has a substantial beneficial interest or as to which such specified person serves as trustee or in a similar fiduciary capacity, (c) any relative or spouse of such specified person, or any relative of such spouse who has the same home as such specified person, or who is a Director or officer of the Company or any of its parents or subsidiaries, and (d) any person who is a director, officer, or partner of such specified person or of any corporation (other than the Company or any wholly-owned subsidiary of the Company), partnership or other entity which is an Affiliate of such specified person. (3)"Beneficial Owner" shall have the same meaning as such term is defined by Rule 13d-3 under the Securities Exchange Act of 1934 (or any successor provision at the time in effect); provided, however, that any individual, corporation, partnership, group, association, or other person or entity which has the right to acquire any of the Company's outstanding securities entitled to vote generally in the election of directors at any time in the future, whether such right is contingent or absolute, pursuant to any agreement, arrangement, or understanding or upon exercise of conversion rights, warrants or options, or otherwise, shall be deemed the Beneficial Owner of such securities. (4)"Change in Control" shall mean the occurrence of either of the following: (a)any individual, corporation, partnership, group, association or other person or entity, together with its Affiliates and Associates (other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company), is or becomes the Beneficial Owner of securities of the Company representing 20 percent or more of the combined voting power of the Company's then outstanding securities entitled to vote generally in the election of directors, unless a majority of the Continuing Directors determines in their sole discretion that, for purposes of this Plan, a Change in Control has not occurred; (b)the Continuing Directors shall at any time fail to constitute a majority of the members of the Board; or (c)any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all, or substantially all, of the assets of the Company, other than any sale, lease, exchange or other transfer to any person or entity where the Company owns, directly or indirectly, at least 80 percent of the outstanding voting securities of such person or entity after any such transfer. (5)"Continuing Director" shall mean a Director who either was a member of the Board on April 24, 1998 or who became a member of the Board subsequent to such date and whose election, or nomination for election by the Company's shareholders, was Duly Approved by the Continuing Directors of the Board at the time of such nomination or election, either by a specific vote or by approval of the proxy statement issued by the Company on behalf of the Board in which such person is named as a nominee for Director, provided, however, that no individual shall be considered a Continuing Director if such individual initially assumed office as a result of either an actual or threatened "Election Contest" (as described in Rule 14a-11 promulgated under the Securities Exchange Act of 1934, as amended) or other actual or threatened solicitation of proxies or consents other than by or on behalf of the Board (a "Proxy Contest"), including by reason of any agreement intended to avoid or settle any Election Contest or Proxy Contest. (6)"Duly Approved by the Continuing Directors" shall mean an action approved by the vote of at least a majority of the Continuing Directors then on the Board, except, if the votes of such Continuing Directors in favor of such action would be insufficient to constitute an act of the Board if a vote by all of its members were to have been taken, then such term shall mean an action approved by the unanimous vote of the Continuing Directors then on the Board so long as there are at least three Continuing Directors on the Board at the time of such unanimous vote. 6.5 Taxes; Withholding. To the extent required by law, the Company, or the trustee of the Trust, shall withhold from payments made hereunder an amount equal to at least the minimum taxes required to be withheld by the federal or any state or local government. The amount to be withheld and the manner in which amounts shall be withheld shall be determined in the sole discretion of the Company or the trustee of the Trust. SECTION 7 BENEFICIARY DESIGNATION A Participant shall have the right to designate a Beneficiary(ies) to receive the Participant's Account Balances, Conversion Account and Deferred IR Stock Award Account in the event the Participant dies prior to receiving all of his or her Account Balances, Conversion Account and Deferred IR Stock Award Account. A Beneficiary designation shall be made, and may be amended at any time, by the Participant by filing a written designation with the Secretary of the Company, on such form and in accordance with such procedures as the Company shall establish from time to time. A Participant may change the designated Beneficiary under this Plan at any time by providing such designation in writing to the Secretary of the Company. If a Participant fails to designate a Beneficiary(ies), or if all designated Beneficiaries predecease the Participant, the Participant's Beneficiary(ies) shall be deemed to be the Participant's estate. If the Company is unable to determine a Participant's Beneficiary or if any dispute arises concerning a Participant's Beneficiary, the Company may pay benefits to the Participant's estate. Upon such payment, the Company shall have no further liability hereunder. If any distribution to a Beneficiary is to be made in annual installments, and the Beneficiary dies before receiving all such installments, the value of the remaining installments, if any, shall be paid to the estate of the Beneficiary in a lump sum. SECTION 8 AMENDMENT AND TERMINATION OF PLAN 8.1 Amendment. The Plan may, at any time and from time to time, be amended without the consent of any Participant or Beneficiary, by the Board (or an authorized Committee of the Board); provided, however, that no amendment shall reduce any benefits accrued under the terms of the Plan prior to the date of amendment. 8.2 Termination of Plan a. Company's Right to Terminate. The Board (or an authorized Committee of the Board) may terminate the Plan at any time and for any reason. b. Payments Upon Termination. Upon any termination of the Plan under this Section, Fees, Supplemental Contributions and stock awards pursuant to Section 5.4 shall prospectively cease to be deferred and, with respect to all such amounts previously deferred, the Company shall pay to the Participant, in a lump sum, unless otherwise provided by the Board at the time of termination, as soon as administratively practicable, the value of the Participant's Account Balances, Conversion Account and Deferred IR Stock Award Accounts. SECTION 9 MISCELLANEOUS 9.1 Unsecured General Creditor. Benefits under the Plan shall be payable by the Company out of its general funds. The Company shall have the right to establish a reserve or make any investment for the purposes of satisfying its obligations hereunder for payment of benefits at its discretion, provided, however, that no Participant or Beneficiary shall have any interest in such investment or reserve. To the extent that any person acquires a right to receive benefits under this Plan, such rights shall be no greater than the right of any unsecured general creditor of the Company. No Participant shall have any of the rights or privileges of a stockholder of the Company under the Plan, including as a result of the crediting of units to the Participant's IR Stock Account, Supplemental Contribution Account, Conversion Account or Deferred IR Stock Award Account, except at such time as distribution is actually made from the Participant's IR Stock Account, Supplemental Contribution Account, Conversion Account or Deferred IR Stock Award Account, as applicable. 9.2 Entire Agreement; Successors. The Plan, including the Election Form and any subsequently adopted amendments to the Plan or Election Form, shall constitute the entire agreement or contract between the Company and any Participant regarding this Plan. There are no covenants, promises, agreements, conditions or understandings, either oral or written, between the Company and any Participant relating to the subject, matter hereof, other than those set forth herein. This Plan and any amendment hereof shall be binding on the Company and the Participants and, their respective heirs, administrators, trustees, successors and assigns, including but not limited to, any successors of the Company by merger, consolidation or otherwise by operation of law, and on all designated Beneficiaries of the Participant. 9.3 Non-Assignability. To the extent permitted by law, the right of any Participant or any Beneficiary in any benefit hereunder shall not be subject to attachment or any other legal process for the debts of such Participant or Beneficiary; nor shall any such benefit be subject to anticipation, alienation, sale, transfer, assignment or encumbrance. 9.4 Authorization and Source of Shares. Shares of IR Stock necessary to meet the obligations of the Plan have been reserved and authorized pursuant to resolutions adopted by the Board on December 4, 1996, and additional shares of IR Stock shall be reserved and authorized for delivery under the Plan from time to time. These shares of IR Stock may be provided from newly-issued or treasury shares. 9.5 Singular and Plural. As the context may require, the singular may be read as the plural and the plural as the singular. 9.6 Captions. The captions to the articles, sections, and paragraphs of this Plan are for convenience only and shall not control or affect the meaning or construction of any of its provisions. 9.7 Applicable Law. This Plan shall be governed and construed in accordance with the laws of the State of New Jersey. 9.8 Severability. If any provisions of this Plan shall, to any extent, be invalid or unenforceable, the remainder of this Plan shall not be affected thereby, and each provision of this Plan shall be valid and enforceable to the fullest extent permitted by law. IN WITNESS WHEREOF, the Company has caused this amendment and restatement to be executed by its duly authorized representative as of January 1, 2001. INGERSOLL-RAND COMPANY By: s/s Donald H. Rice Donald H. Rice Senior Vice President Global Business Services and Human Resources EX-10 5 ex-10c.txt EXHIBIT 10III (C) - DESCR. OF BONUS ARRANGEMENTS Exhibit 10(iii) (c) DESCRIPTION OF BONUS ARRANGEMENT FOR SECTOR PRESIDENTS OF INGERSOLL-RAND COMPANY There is no formal document setting forth this arrangement. However, the Compensation and Nominating Committee of the Board of Directors will approve bonus arrangements for the Sector Presidents for 2001 which will be dependent upon the performance of the Sector Presidents' respective sectors, with a portion of their bonuses based on the total company's performance relative to predetermined earnings per share, cash flow, and return on invested capital goals. Discretionary bonuses may be paid in the event that goals are not met. EX-10 6 ex-10p.txt EXHIBIT 10III (P) - IR EXEC. DEFER. COMP. PLAN EXHIBIT 10 iii(p) IR EXECUTIVE DEFERRED COMPENSATION PLAN [As Amended and Restated Effective January 1, 2001] TABLE OF CONTENTS SECTION 1 - STATEMENT OF PURPOSE 1 SECTION 2 - DEFINITIONS 2.1 Account Balance 2 2.2 Administrative Committee 2 2.3 Base Salary 2 2.4 Beneficiary 2 2.5 Beneficiary Designation Form 2 2.6 Cash Incentive Compensation Award 2 2.7 Change in Control 2 2.8 Code 2 2.9 Compensation Committee 3 2.10 Deferral Account 3 2.11 Deferral Amount 3 2.12 Disability 3 2.13 Discretionary Company Contribution 3 2.14 Discretionary Company Contribution Account 3 2.15 Dividends on Stock Grants 3 2.16 Early Distribution 3 2.17 Elected Officer 3 2.18 Election Form 3 2.19 Eligible Employee 4 2.20 ERISA 4 2.21 Investment Option Subaccounts 4 2.22 IR Stock 4 2.23 IR Stock Account 4 2.24 Participant 4 2.25 Plan Year 4 2.26 Retirement 4 2.27 Return 4 2.28 Service 4 2.29 Supplemental Contribution 5 2.30 Supplemental Contribution Account 5 2.31 Trust 5 2.32 Unforseeable Financial Emergency 5 SECTION 3 - ADMINISTRATION OF THE PLAN 6 SECTION 4 - PARTICIPATION, DEFERRAL ELECTION AND INVESTMENT ELECTION 4.1 Participation and Deferral Election 7 4.2 Investment Election 7 SECTION 5 - VESTING 5.1 Deferral Amounts 9 5.2 Supplemental Contributions 9 5.3 Discretionary Contributions 9 SECTION 6 - ACCOUNTS AND VALUATIONS 6.1 Deferral Accounts 10 6.2 Supplemental Contribution Accounts 10 6.3 Discretionary Contribution Accounts 11 6.4 IR Stock Accounts 12 6.5 Changes in Capitalization 13 6.6 Accounts are Boookkeeping Entries 13 SECTION 7 - DISTRIBUTON OF ACCOUNTS 7.1 Termination with Five Years of Service, Retirement, Disability and Death 14 7.2 Scheduled Distributions Prior to Termination of Employment 15 7.3 Termination of Employment Prior to Completing Five (5) Years of Service 16 7.4 Hardship Distribution 16 7.5 Early Distributions (with forfeiture) 16 7.6 Form of Payments of IR Stock 17 7.7 Taxes; Withholding 17 SECTION 8 - BENEFICIARY DESIGNATION 18 SECTION 9 - AMENDMENT AND TERMINATION OF PLAN 9.1 Amendment 19 9.2 Termination of Plan 19 SECTION 10 - MISCELLANEOUS 10.1 Unsecured General Creditor 20 10.2 Entire Agreement; Successors 20 10.3 Non-Assignability 20 10.4 No Contract of Employment 20 10.5 Authorization and Source of Shares 20 10.6 Singular and Plural 21 SECTION 10 - MISCELLANEOUS - (Continued) 10.7 Captions 21 10.8 Applicable Law 21 10.9 Severability 21 10.10 Notice 21 IR Executive Deferred Compensation Plan As Amended and Restated Effective January 1, 2001 SECTION 1 STATEMENT OF PURPOSE The purpose of the IR Executive Deferred Compensation Plan (the "Plan") is to further increase the mutuality of interest between Ingersoll-Rand Company (the "Company"), its employees and stockholders by providing a select group of management and highly compensated employees the opportunity to elect to defer receipt of cash compensation. The Plan shall be unfunded for tax purposes and for purposes of Title I of ERISA. The Plan, originally known as the Ingersoll- Rand Company Executive Deferred Compensation and Stock Bonus Plan, became effective on January 1, 1997 and was amended and restated effective January 1, 2001. SECTION 2 DEFINITIONS 2.1 "Account Balance" means, for each Plan Year, a credit on the records of the Company equal to the sum of the value of a Participant's Deferral Account, Supplemental Contribution Account, Discretionary Contribution Account and IR Stock Account for such Plan Year. The Account Balance shall be a bookkeeping entry only and shall be utilized solely as a device for the measurement and determination of the amounts to be paid in cash or IR Stock, as applicable, to a Participant, or to the Participant's designated Beneficiary, pursuant to the Plan. 2.2 "Administrative Committee" means the committee appointed by the Chief Executive Officer of the Company which will administer the Plan in accordance with the duties delegated to it by the Compensation and Nominating Committee of the Board of Directors of the Company or as set forth herein. 2.3 "Base Salary" means a Participant's annual base salary, excluding bonuses, commissions, incentive compensation and all other remuneration for services rendered to the Company and prior to reduction for any salary contributions to a plan established pursuant to Code Section 125 or qualified pursuant to Code Section 401(k). 2.4 "Beneficiary" means the person or persons designated as such in accordance with Section 8. 2.5 "Beneficiary Designation Form" means the form established from time to time by the Administrative Committee that a Participant completes and returns to the Administrative Committee to designate one or more Beneficiaries. 2.6 "Cash Incentive Compensation Award" means the Participant's annual cash incentive compensation award (annual cash bonus award). 2.7 "Change in Control" means a "change in control of the Company" (as set forth in the Company's Incentive Stock Plan of 1998) or any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all, or substantially all, of the assets of the Company, other than any sale, lease, exchange or other transfer to any person or entity where the Company owns, directly or indirectly, at least 80 percent of the outstanding voting securities of such person or entity after any such transfer, unless a different definition is used for purposes of any severance of employment agreement or change of control arrangement between the Company and a Participant, in which event such definition shall apply. 2.8 "Code" means the Internal Revenue Code of 1986, as amended from time to time. 2.9 "Compensation Committee" means the Compensation and Nominating Committee of the Board of Directors of the Company. 2.10 "Deferral Account" means, for each Plan Year, (i) the sum of all of a Participant's Deferral Amounts, plus (ii) amounts credited in accordance with all the applicable crediting provisions of the Plan that relate to the Participant's Deferral Account, less (iii) all distributions made to the Participant or to the Participant's Beneficiary pursuant to the Plan that relate to the Participant's Deferral Account. 2.11 "Deferral Amount" means the amount of a Participant's Cash Incentive Compensation Award, Base Salary and Dividends on Stock Grants actually deferred under the Plan by the Participant pursuant to Section 4 for any one Plan Year. 2.12 "Disability" means the Participant is eligible to receive benefits under a long-term disability plan maintained by the Company. 2.13 "Discretionary Company Contribution" means an additional amount to be credited to a Participant's Discretionary Contribution Account for a Plan Year. 2.14 "Discretionary Company Contribution Account" means, for each Plan Year, (i) the sum of all of a Participant's Discretionary Company Contributions, plus (ii) amounts credited in accordance with all the applicable crediting provisions of the Plan that relate to the Participant's Discretionary Company Contribution Account, less (iii) all distributions made to the Participant or to the Participant's Beneficiary pursuant to the Plan that relate to the Participant's Discretionary Company Contribution Account. 2.15 "Dividends on Stock Grants" means the dividend equivalents on deferred and/or unearned stock grants paid or payable to a Participant pursuant to the Ingersoll-Rand Company Incentive Stock Plan of 1998. 2.16 "Early Distribution" means an election by the Participant, pursuant to Section 7.5, to receive a distribution of amounts from the Participant's Deferral Account, IR Stock Account, vested Discretionary Company Contribution Account and vested Supplemental Contribution Account with respect to a specific Plan Year prior to the time at which such Participant would otherwise be entitled to such amounts. 2.17 "Elected Officer" means an officer of the Company elected to such position by the Board of Directors of the Company. 2.18 "Election Form" means the form or forms established from time to time by the Administrative Committee that a Participant completes, signs and returns to the Administrative Committee to make an election under the Plan. An Election Form also includes any other method approved by the Administrative Committee, in its sole and absolute discretion, that a Participant may use to make an election under the Plan. The terms and conditions specified in the Election Form(s) are incorporated by reference herein and form a part of the Plan. If there is a conflict between the Election Form and the Plan, the terms of the Plan shall control and govern. 2.19 "Eligible Employee" means an Elected Officer or, an individual who is among a select group of management and highly compensated employees of the Company who has been selected by the Administrative Committee, in its sole and absolute discretion, to participate in the Plan. 2.20 "ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time. 2.21 "Investment Option Subaccounts" means the separate subaccounts, each of which corresponds to an investment option elected by the Participant or, as provided in Section 6.3 regarding Discretionary Company Contributions, the Administrative Committee, with respect to a Participant's Deferral Accounts and/or Discretionary Company Contribution Accounts, as applicable. 2.22 "IR Stock" means the common stock of the Company. 2.23 "IR Stock Account" means, for each Plan Year, (i) the sum of all of a Participant's Deferral Amounts and Discretionary Company Contributions that are deemed to be invested in IR Stock, plus (ii) amounts credited in accordance with all the applicable crediting provisions of the Plan that relate to the Participant's IR Stock Account, less (iii) all distributions made to the Participant or to the Participant's Beneficiary pursuant to the Plan that relate to the Participant's IR Stock Account. 2.24 "Participant" means an Eligible Employee participating in the Plan in accordance with the provisions of Section 4. 2.25 "Plan Year" means a calendar year. 2.26 "Retirement" means termination of employment by a Participant after he or she has attained age 65 (62 for Elected Officers) or termination at or after age 55 with at least five (5) years of Service. 2.27 "Return" means, for each investment option, an amount equal to the net investment return (including changes in value and distributions) for each such investment option during each business day. 2.28 "Service" means periods of service with the Company as determined by the Administrative Committee in its sole and absolute discretion. 2.29 "Supplemental Contribution" means an additional amount to be credited to a Participant's Supplemental Contribution Account equal to twenty percent (20%) of the Participant's Cash Incentive Compensation Award and Base Salary that is deferred under the Plan for a Plan Year and that is designated by the Participant on an Election Form at the time of making the deferral election to be deemed to be invested in the IR Stock Account. Supplemental Contributions shall be available and credited only to Participants whose job category indicates specified ownership guidelines as determined by the Compensation Committee in its sole and absolute discretion. 2.30 "Supplemental Contribution Account" means, for each Plan Year, (i) the sum of all of a Participant's Supplemental Contributions, plus (ii) amounts credited in accordance with all the applicable crediting provisions of the Plan that relate to the Participant's Supplemental Contribution Account, less (iii) all distributions made to the Participant or to the Participant's Beneficiary pursuant to the Plan that relate to the Participant's Supplemental Contribution Account. 2.31 "Trust" means the Ingersoll-Rand Company Deferred Compensation Trust Agreement, dated as of January 1, 2001 between the Company and the trustee named therein, as amended from time to time. 2.32 "Unforeseeable Financial Emergency" means severe financial hardship to the Participant resulting from a sudden and unexpected illness or accident of the Participant or a dependent of the Participant, loss of the Participant's property due to casualty or other similar or extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant. The circumstances that would constitute an unforeseeable financial emergency will depend upon the facts of each case, but, in any case, a hardship benefit may not be made to the extent that such hardship is or may be relieved (i) through reimbursement or compensation by insurance or otherwise, (ii) by liquidation of the Participant's assets, to the extent the liquidation of assets would not itself cause severe financial hardship, or (iii) by cessation of Deferral Amounts under the Plan. SECTION 3 ADMINISTRATION OF THE PLAN The Plan shall be administered by the Compensation Committee (or any successor committee). The Compensation Committee has delegated authority to the Administrative Committee to administer the Plan in accordance with the provisions of this Section. Notwithstanding the previous sentence, the Compensation Committee shall retain authority for determining (i) a Participant's eligibility to receive Supplemental Contributions, and (ii) eligibility for, and the amount of, Discretionary Company Contributions with respect to Participants whose job category indicate specified ownership guidelines as determined by the Compensation Committee. The primary responsibility of the Administrative Committee is to administer the Plan for the exclusive benefit of Participants and their Beneficiaries, subject to the specific terms of the Plan. The Administrative Committee shall administer the Plan in accordance with its terms to the extent consistent with applicable law, and shall have the power to determine all questions arising in connection with the administration, interpretation, and application of the Plan. Any such determination by the Administrative Committee shall be conclusive and binding upon all affected parties. Any denial by the Administrative Committee of a claim for benefits under the Plan by a Participant or Beneficiary shall be stated in writing by the Administrative Committee and delivered or mailed to the Participant or Beneficiary. Such notice shall set forth the specific reasons for the Administrative Committee's decision. In addition, the Administrative Committee shall afford a reasonable opportunity to any Participant or Beneficiary whose claim for benefits has been denied for a review of the decision denying this claim. SECTION 4 PARTICIPATION, DEFERRAL ELECTION AND INVESTMENT ELECTION. 4.1 Participation and Deferral Election. Any Eligible Employee may elect to participate in the Plan for a given Plan Year by filing a completed Election Form for the Plan Year in the manner prescribed by the Administrative Committee. The Election Form must specify the percentage or dollar amount of any Deferral Amount otherwise payable during such Plan Year that will be deferred under the Plan. Notwithstanding the previous sentence, an election to defer Dividends on Stock Grants shall be equal to one hundred percent (100%) of the Dividends on Stock Grants. The minimum total dollar amount of a Participant's Deferral Amount that a Participant may defer under the Plan for any Plan Year is $5,000. Any election to defer a Deferral Amount is irrevocable upon the filing of the Election Form, and must be properly completed and filed no later than the November 30 immediately preceding such Plan Year, or such other date as the Administrative Committee may specify. An Eligible Employee who fails to file a properly completed Election Form by such date will be ineligible to defer a Deferral Amount under the Plan for the following Plan Year. In addition, the Administrative Committee, in its sole and absolute discretion, may establish from time to time such other enrollment requirements as it determines are necessary or proper. Notwithstanding anything to the contrary, the Administrative Committee, in its sole and absolute discretion, shall determine from time to time the percentage of Base Salary that may be deferred by Participants under the Plan in any Plan Year. Once such a determination is made the percentage shall remain in effect until changed by the Administrative Committee. If the Administrative Committee determines in good faith that a Participant no longer qualifies as a member of a select group of management or highly compensated employees, as membership in such group is determined in accordance with ERISA Sections 201(2), 301(a)(3) and 401(a)(1), the Administrative Committee shall have the right, in its sole and absolute discretion, to (i) terminate any deferral election the Participant has made for the remainder of the Plan Year in which the Participant's membership status changes, (ii) prevent the Participant from making future deferral elections and/or (iii) immediately distribute the Participant's then vested Account Balances and terminate the Participant's participation in the Plan. 4.2 Investment Election. In accordance with procedures established by the Administrative Committee in its sole and absolute discretion, prior to the time a Participant's Deferral Amounts are credited to a Participant's Deferral Account pursuant to Section 6.1, the Participant shall designate, on an Election Form, the types of investment options in which the Participant's Deferral Amounts will be deemed to be invested for purposes of determining the amount of earnings to be credited to the Participant's Deferral Account and, with respect to Deferral Amounts that are designated by the Participant to be deemed to be invested in IR Stock, the IR Stock Account. Subject to the right of the Administrative Committee to direct the types of investment options in which a Participant's Discretionary Company Contributions will be deemed to be invested as described in Section 6.3, in the event a Participant receives a Discretionary Company Contribution, the Participant shall, at the time designated by the Administrative Committee, in its sole and absolute discretion, designate, on an Election Form, the types of investment options in which the Participant's Discretionary Company Contributions will be deemed to be invested for purposes of determining the amount of earnings to be credited to the Participant's Discretionary Company Contribution Account and, with respect to Discretionary Company Contributions that are designated by the Participant to be deemed to be invested in IR Stock, the IR Stock Account. Subject to Section 6.4, in making the designations pursuant to this Section, the Participant may specify that all or any portion of the Participant's Deferral Amount and, subject to Section 6.3, Discretionary Company Contributions be deemed to be invested, in whole percentage increments, in one or more of the types of investment options provided under the Plan as communicated from time to time by the Administrative Committee. A Participant may change the designation made under this Section with respect to prior and/or future Deferral Amounts and/or, subject to Section 6.3, prior and/or future Discretionary Company Contributions by filing an Election Form no later than the time specified by the Administrative Committee, in its sole and absolute discretion, to be effective as of the first business day of the following month. Except for Discretionary Company Contributions that the Administrative Committee, pursuant to Section 6.3, has directed the investment options in which a Participant's Discretionary Company Contributions shall be deemed to be invested, if a Participant fails to elect a type of investment option under this Section, he or she shall be deemed to have elected the investment option designated by the Administrative Committee as the default investment option. SECTION 5 VESTING 5.1. Deferral Amounts. A Participant shall be fully vested in his or her Deferral Account. 5.2. Supplemental Contributions. A Participant shall vest in his or her Supplemental Contribution Account on the earliest of: (i) the fifth anniversary of the date the Supplemental Contribution is credited to the Participant's Supplemental Contribution Account; (ii) the date of the Participant's Retirement; (iii) the Participant's Disability, (iv) the Participant's death; (v) a Change in Control; or (vi) a termination of the Plan pursuant to Section 9.2. 5.3 Discretionary Contributions. A Participant shall vest in his or her Discretionary Company Contribution Account on the earliest of (i) the date determined by the Administrative Committee; (ii) the date of the Participant's Disability; (iii) the date of the Participant's death; (iv) a Change in Control or (v) a termination of the Plan pursuant to Section 9.2. SECTION 6 ACCOUNTS AND VALUATIONS 6.1 Deferral Accounts. The Administrative Committee shall establish and maintain a separate Deferral Account for each Participant for each Plan Year. All Deferral Amounts, other than Deferral Amounts that are deemed, at the Participant's election, to be invested in IR Stock shall be credited to the Participant's Deferral Account on the date when the Deferral Amount would otherwise be paid to the Participant. All Deferral Amounts that are deemed, at the Participant's election, to be invested in IR Stock shall be credited to the Participant's IR Stock Account as described in Section 6.4. Each Participant's Deferral Accounts shall be divided into Investment Option Subaccounts. A Participant's Deferral Accounts shall be credited as follows: (a) On the day a Deferral Amount is credited to a Participant's Deferral Account, the Administrative Committee shall credit the Investment Option Subaccounts of the Participant's Deferral Account with an amount equal to the Participant's Deferral Amount in accordance with the Participant's Election Form; that is, the portion of the Participant's Deferral Amount that the Participant has elected to be deemed to be invested in a certain type of investment option shall be credited to the Investment Option Subaccount corresponding to that investment option, and (b) Each business day, each Investment Option Subaccount of a Participant's Deferral Account shall be adjusted for earnings or losses in an amount equal to that determined by multiplying the balance credited to such Investment Option Subaccount as of the prior day plus contributions credited that day to the Investment Option Subaccount by the Return for the corresponding investment option. 6.2 Supplemental Contribution Accounts. The Administrative Committee shall establish and maintain a separate Supplemental Contribution Account for each Plan Year for each Participant who receives a Supplemental Contribution for such Plan Year. All Supplemental Contributions shall be credited to the Participant's Supplemental Contribution Account on the same date that the Participant's Deferral Amount applicable to Base Salary or a Cash Incentive Compensation Award for which the Supplemental Contribution is being made is credited to the Participant's Deferral Account pursuant to Section 6.1. Notwithstanding anything to the contrary, a Participant may not designate the investment of Supplemental Contributions and all of a Participant's Supplemental Contributions shall be deemed to be invested in, and shall remain deemed to be invested in, IR Stock in the Participant's Supplemental Contribution Account until distributed from the Plan. All Supplemental Contributions shall be credited to a Participant's Supplemental Contribution Account in units or fractional units. The value of each unit shall be determined each business day and shall equal the closing price of one share of IR Stock on the New York Stock Exchange-Composite Tape. On each date that Supplemental Contributions are credited to a Participant's Supplemental Contribution Account, the number of units to be credited shall be determined by dividing the amount of such Supplemental Contributions by the value of a unit on such date. Dividends paid on IR Stock shall be reflected in a Participant's Supplemental Contribution Account by the crediting of additional units or fractional units. Such additional units or fractional units shall equal the value of the dividends based upon the closing price of one share of IR Stock on the New York Stock Exchange- Composite Tape on the date such dividends are paid. 6.3 Discretionary Company Contribution Accounts. The Administrative Committee shall establish and maintain a separate Discretionary Company Contribution Account for each Plan Year for each Participant who receives a Discretionary Company Contribution for such Plan Year. All Discretionary Company Contributions, other than those that are deemed, at the Participant's election or as directed by the Administrative Committee pursuant to the following paragraph, to be invested in IR Stock shall be credited to the Participant's Discretionary Company Contribution Account on the date determined by the Administrative Committee in its sole and absolute discretion. All Discretionary Company Contributions that are deemed, at the Participant's election or as directed by the Administrative Committee, to be invested in IR Stock shall be credited to the Participant's IR Stock Account as described in Section 6.4. Each Participant's Discretionary Company Contribution Accounts shall be divided into Investment Option Subaccounts. Notwithstanding the previous sentence, the Administrative Committee may, in its sole and absolute discretion, at the time a Discretionary Company Contribution is made, direct that a Participant's Discretionary Company Contribution be invested in any one or more of the Investment Option Subaccounts (including the IR Stock Account) and that such Discretionary Company Contribution remain invested in such Investment Option Subaccounts until at least such time as the Administrative Committee, in its sole and absolute discretion, determines that such Discretionary Company Contribution, or portion thereof, may be invested in Investment Option Subaccounts elected by the Participant. A Participant's Discretionary Company Contribution Accounts shall be credited as follows: (a) On the day a Discretionary Company Contribution is credited to a Participant's Discretionary Company Contribution Account, the Administrative Committee shall credit the Investment Option Subaccounts of the Participant's Discretionary Company Contribution Account with an amount equal to the Participant's Discretionary Company Contribution in accordance with the Participant's Election Form or as directed by the Administrative Committee; that is, the portion of the Participant's Discretionary Company Contribution that the Participant has elected, or that the Administrative Committee has directed, to be deemed to be invested in a certain type of investment option shall be credited to the Investment Option Subaccount corresponding to that investment option. (b) Each business day, each Investment Option Subaccount of a Participant's Discretionary Company Contribution Account shall be adjusted for earnings or losses in an amount equal to that determined by multiplying the balance credited to such Investment Option Subaccount as of the prior day plus contributions credited that day to the Investment Option Subaccount by the Return for the corresponding investment option. 6.4 IR Stock Accounts. The Administrative Committee shall establish and maintain a separate IR Stock Account for each Plan Year for each Participant who (i) elects to have all or a portion of his of her Deferral Amounts and/or Discretionary Company Contributions for such Plan Year invested in IR Stock or, (ii) receives a Discretionary Company Contribution which is directed, pursuant to Section 6.3, by the Administrative Committee to be deemed to be invested in IR Stock. All Deferral Amounts that are deemed, at the Participant's election, to be invested in IR Stock shall be credited to the Participant's IR Stock Account on the date when the Deferral Amount would otherwise be paid to the Participant. All Discretionary Company Contributions that are deemed, whether at the Participant's election or as directed by the Administrative Committee, to be invested in IR Stock shall be credited to the Participant's IR Stock Account on the date determined by the Administrative Committee in its sole and absolute discretion. Notwithstanding anything to the contrary, IR Stock credited to a Participant's IR Stock Account may not be designated by the Participant to be deemed to be invested in any other investment option and shall remain invested in IR Stock in such IR Stock Account until distributed from the Plan or until at least such time as the Administrative Committee, in its sole and absolute discretion determines, with respect to Discretionary Company Contributions that it directed be invested in IR Stock, that such Discretionary Company Contributions may be invested, at the Participant election, in other investment options available under the Plan. A Participant's IR Stock Accounts shall be credited as follows: (a) On the day a Deferral Amount or Discretionary Company Contribution is credited to a Participant's IR Stock Account, the Administrative Committee shall credit the IR Stock Account with an amount equal to the Participant's Deferral Amount and/or Discretionary Company Contribution. (b) All Deferral Amounts and Discretionary Company Contributions deemed to be invested in IR Stock in accordance with the Participant's Election Form or, with respect to Discretionary Company Contributions as directed by the Administrative Committee, shall be credited to a Participant's IR Stock Account in units or fractional units. The value of each unit shall be determined each business day and shall equal the closing price of one share of IR Stock on the New York Stock Exchange-Composite Tape. On each date that Deferral Amounts and/or Discretionary Company Contributions are credited to the Participant's IR Stock Account, the number of units to be credited shall be determined by dividing the amount of such Deferral Amounts and/or Discretionary Company Contributions by the value of a unit on such date. Dividends paid on IR Stock shall be reflected in a Participant's IR Stock Account by the crediting of additional units or fractional units. Such additional units or fractional units shall equal the value of the dividends based upon the closing price of one share of IR Stock on the New York Stock Exchange-Composite Tape on the date such dividends are paid. 6.5 Changes in Capitalization. If there is any change in the number or class of shares of IR Stock through the declaration of a stock dividend or other extraordinary dividends, or recapitalization resulting in stock splits, or combinations or exchanges of such shares or in the event of similar corporate transactions, the units in each Participant's IR Stock Account and Supplemental Contribution Account shall be equitably adjusted to reflect any such change in the number or class of issued shares of IR Stock or to reflect such similar corporate transaction. 6.6 Accounts are Bookkeeping Entries. Notwithstanding any other provision of the Plan that may be interpreted to the contrary, the investment options, including IR Stock, are to be used for measurement purposes only, and a Participant's election of any such investment option, the allocation to his or her Account Balances thereto, the calculation of additional amounts and the crediting or debiting of such amounts to a Participant's Account Balances shall not be considered or construed in any manner as an actual investment of his or her Account Balances in any such investment option. In the event that the Company or the trustee of the Trust, in its own discretion, decides to invest funds in any or all of the investment options, no Participant shall have any rights in or to such investments themselves. Without limiting the foregoing, a Participant's Account Balances shall at all times be a bookkeeping entry only and shall not represent any investment made on the Participant's behalf by the Company or the Trust. The Participant shall at all times remain an unsecured creditor of the Company. SECTION 7 DISTRIBUTION OF ACCOUNTS 7.1 Termination with Five Years of Service, Retirement, Disability and Death. A Participant who terminates employment after completing at least five (5) years of Service, reaches Retirement, incurs a Disability, or dies shall be paid his or her vested Account Balances (and after his or her death to his or her Beneficiary) in annual installments over ten (10) years beginning as soon as administratively practicable in the year following the Participant's termination, Retirement, Disability or death unless an optional form of benefit payment is elected in accordance with the next sentence. For each Plan Year's Account Balance the Participant may elect an optional form of benefit payment in the manner prescribed by the Administrative Committee, in its sole and absolute discretion, from among the following: (1) A lump sum distribution to be paid as soon as administratively practicable in the year following the Participant's termination, Retirement, Disability or death; (2) Annual installments over five (5) years commencing as soon as administratively practicable in the year following the Participant's termination, Retirement, Disability or death; (3) Annual installments over fifteen (15) years commencing as soon as administratively practicable in the year following the Participant's termination, Retirement, Disability or death; and (4) A lump sum distribution which shall be paid as soon as administratively practicable in the year specified by the Participant on the Election Form. Such specified time shall be no less than one (1) year and no more than five (5) years following termination, Retirement, Disability or death. A Participant may elect, on an Election Form, to change the form and/or extend the timing of a distribution under this Section that he or she has previously elected to any other form of distribution or time permitted under this Section, provided that no such election shall be effective unless it is made at least one (1) year before the Participant's termination, Retirement, Disability or death, as applicable. In the event of the Participant's termination of employment with the Company with five (5) years of Service, Retirement, Disability or death prior to the elected date for one or more scheduled distributions prior to termination of employment under Section 7.2, the portion of the Participant's Account Balance associated with such distribution(s) shall be paid to the Participant (and after his or her death to his or her Beneficiary) in the same form as elected by the Participant under this Section. Notwithstanding any provision of the Plan to the contrary, if a Participant terminates employment after completing five (5) years of Service, has reached Retirement, incurs a Disability or dies while receiving annual installments prior to termination of employment pursuant to Section 7.2, such annual installments shall continue to be paid to the Participant (and after his or her death to his or her Beneficiary) in the same manner as if the Participant had not terminated employment, reached Retirement, incurred a Disability or died. All distributions under this Section shall be made on a pro rata basis from the Participant's Account Balances. 7.2 Scheduled Distributions Prior to Termination of Employment. A Participant may elect, on an Election Form, to receive a distribution of all or a portion of his or her Deferral Account, IR Stock Account and vested Discretionary Company Contribution Account with respect to a Plan Year(s) while still employed by the Company. A Participant's election for a distribution under this Section shall be permitted only if the date specified on the Election Form by the Participant for such distribution (in the event of a lump sum) or the commencement of such distribution (in the event of annual installments) is no earlier than two (2) years from the last day of the Plan Year for which the portion of the Deferral Account, IR Stock Account and vested Discretionary Company Contribution Account to be distributed is actually deferred. A Participant may elect, on an Election Form, to extend the date for any distribution under this Section with respect to any Plan Year, provided such election occurs at least one year before the date of distribution most recently elected for that Plan Year by the Participant and the extension is for a period of not less than two (2) years after the date of distribution most recently elected for that Plan Year by the Participant. The Participant shall have the right to extend the date for any distribution under this Section for a Plan Year twice. At the time an election for a distribution under this Section is made, the Participant shall also elect, on the Election Form, the form of payment of the distribution. The Participant shall elect either (i) a lump sum payment to be paid as soon as soon as administratively practicable in the year specified by the Participant on the Election Form or (ii) annual installments over two (2), three (3), four (4) or five (5) years beginning as soon as administratively practicable in the year specified by the Participant on the Election Form. A Participant may elect, on an Election Form, to change the form of payment for any distribution under this Section for any Plan Year to any other form of payment permitted under this Section, provided such election occurs at least one (1) year before the date of distribution previously elected by the Participant. All distributions under this Section shall be made on a pro rata basis from the Participant's Deferral Account(s), IR Stock Account(s) and vested Discretionary Company Contribution Account(s), as applicable. 7.3 Termination of Employment Prior to Completing Five (5) Years of Service. If a Participant's employment with the Company terminates prior to his or her completing five (5) years of Service, the vested portion of the Participant's Account Balances, if any, shall be distributed in a lump sum as soon as practicable in the year following the Participant's termination of employment. If a Participant's employment with the Company terminates prior to his or her completing five (5) years of Service while receiving annual installments prior to termination of employment pursuant to Section 7.2, such annual installments shall continue to be paid to the Participant (and after his or her death to his or her Beneficiary) in the same manner as if the Participant had not terminated employment prior to completing five (5) years of Service. For purposes of Section 7.3, Disability, death and Retirement shall be deemed not to be a termination of employment. 7.4 Hardship Distribution. In the event that the Administrative Committee, upon written petition of the Participant (or the Participant's Beneficiary) on an Election Form filed with the Administrative Committee specifying the Plan Year(s), from which payment shall be made, determines in its sole and absolute discretion, that the Participant (or the Participant's Beneficiary) has suffered an Unforeseeable Financial Emergency, the Company may pay to the Participant (or the Participant's Beneficiary) in a single cash lump sum from the Participant's Deferral Account(s), IR Stock Account(s), vested portion of the Discretionary Contribution Account(s) and the vested portion of the Supplemental Contribution Account(s) with respect to the specified Plan Year(s), as soon as practicable following such determination, an amount appropriate under the circumstances. All distributions under this Section shall be made on a pro rata basis from the Participant's Deferral Account(s), IR Stock Account(s), vested Discretionary Company Contribution Account(s) and vested Supplementary Contribution Account(s), as applicable. 7.5 Early Distributions (with forfeiture). A Participant shall be permitted to elect, on an Election Form, to receive an Early Distribution in whole percentages of up to 100% of his or her Deferral Account(s), IR Stock Account(s) and vested Discretionary Company Contribution Account(s) with respect to a specified Plan Year(s), subject to the following restrictions: (1) 10% of the amount elected by the Participant to be distributed as an Early Distribution shall be permanently forfeited and such forfeited amount shall be deducted from the amount to be distributed to the Participant. (2) If a Participant receives an Early Distribution, the Participant will be ineligible to participate in the Plan for the balance of the Plan Year in which the Early Distribution is received and for the following Plan Year. All Early Distributions shall be made on a pro rata basis from the Participant's Deferral Account(s), IR Stock Account(s) and vested Discretionary Company Contribution Account(s). (3) The Early Distribution shall be paid in a single cash lump sum as soon as administratively practicable after the Early Distribution election is made. 7.6 Form of Payments of IR Stock. Except as provided in Sections 7.4, all amounts in a Participant's IR Stock Account and Supplemental Contribution Account payable to a Participant or Beneficiary under the Plan shall be paid in IR Stock, with one share distributed for each unit. All fractional shares shall be payable in cash. All distributions from the Plan that are to be paid in a specified number of annual installments shall be paid so that the amount of each annual installment is determined by dividing the total remaining number of units in the Participant's Account Balance to be paid in annual installments, by the number of years of annual installments remaining. 7.7 Taxes; Withholding. To the extent required by law, the Company, or the trustee of the Trust, shall withhold from payments made hereunder an amount equal to at least the minimum taxes required to be withheld by the federal or any state or local government. The amount to be withheld and the manner in which amounts shall be withheld shall be determined in the sole discretion of the Company or the trustee of the Trust. SECTION 8 BENEFICIARY DESIGNATION A Participant shall have the right to designate a Beneficiary(ies) to receive the Participant's Account Balances in the event the Participant dies prior to receiving all of his or her Account Balances. A Beneficiary designation shall be made, and may be amended at any time, by the Participant by filing a written designation with the Administrative Committee, on such form and in accordance with such procedures as the Administrative Committee shall establish from time to time. A Participant may change the designated Beneficiary under the Plan at any time by providing such designation in writing to the Administrative Committee. If a Participant fails to designate a Beneficiary(ies), or if all designated Beneficiaries predecease the Participant, the Participant's Beneficiary(ies) shall be deemed to be the Participant's estate. If the Company is unable to determine a Participant's Beneficiary or if any dispute arises concerning a Participant's Beneficiary, the Company may pay benefits to the Participant's estate. Upon such payment, the Company shall have no further liability hereunder. If any distribution to a Beneficiary is to be made in annual installments, and the Beneficiary dies before receiving all such installments, the value of the remaining installments, if any, shall be paid to the estate of the Beneficiary in a lump sum. SECTION 9 AMENDMENT AND TERMINATION OF PLAN 9.1 Amendment. The Plan may, at any time and from time to time, be amended without the consent of any Participant or Beneficiary, (a) by the Board of Directors of the Company, (b) by the Administrative Committee in the case of amendments which do not materially modify the provisions hereof (any amendment permitted be made by the Compensation Committee pursuant to (c) below shall be deemed to materially modify the provisions hereof), or (c) by the Compensation Committee in the case of an amendment to the amount to be credited to a Participant's Supplemental Contribution Account pursuant to Section 2.29; provided, however, that no amendment shall reduce any benefits accrued under the terms of the Plan prior to the date of amendment. 9.2 Termination of Plan a. Company's Right to Terminate. The Board of Directors of the Company may terminate the Plan at any time and for any reason. b. Payments Upon Termination. Upon any termination of the Plan under this Section, Base Salary, Cash Incentive Compensation Awards, Dividends on Stock Grants, Discretionary Company Contributions and Supplemental Contributions shall prospectively cease to be deferred and, with respect to all such amounts previously deferred, the Company shall pay to the Participant, in a lump sum, as soon as administratively practicable, the value of the Participant's Account Balances. SECTION 10 MISCELLANEOUS 10.1 Unsecured General Creditor. Benefits under the Plan shall be payable by the Company out of its general funds. The Company shall have the right to establish a reserve or make any investment for the purposes of satisfying its obligations hereunder for payment of benefits at its discretion, provided, however, that no Participant or Beneficiary shall have any interest in such investment or reserve. To the extent that any person acquires a right to receive benefits under the Plan, such rights shall be no greater than the right of any unsecured general creditor of the Company. No Participant shall have any of the rights or privileges of a stockholder of the Company under the Plan, including as a result of the crediting of units to a Participant's IR Stock Account or Supplemental Contribution Account, except at such time as distribution is actually made from the Participant's IR Stock Account or Supplemental Contribution Account, as applicable. 10.2 Entire Agreement; Successors. The Plan, including the Election Form and any subsequently adopted amendments to the Plan or Election Form, shall constitute the entire agreement or contract between the Company and any Participant regarding the Plan. There are no convenants, promises, agreements, conditions or understandings, either oral or written, between the Company and any Participant relating to the subject, matter hereof, other than those set forth herein. The Plan and any amendment hereof shall be binding on the Company and the Participants and, their respective heirs, administrators, trustees, successors and assigns, including but not limited to, any successors of the Company by merger, consolidation or otherwise by operation of law, and on all designated Beneficiaries of the Employee. 10.3 Non-Assignability. To the extent permitted by law, the right of any Participant or any Beneficiary in any benefit hereunder shall not be subject to attachment or any other legal process for the debts of such Participant or Beneficiary; nor shall any such benefit be subject to anticipation, alienation, sale, transfer, assignment or encumbrance. 10.4 No Contract of Employment. The establishment of the Plan or any modification hereof shall not give any Participant or other person the right to remain in the service of the Company or any of its subsidiaries, and all Participants and other persons shall remain subject to discharge to the same extent as if the Plan had never been adopted. 10.5 Authorization and Source of Shares. Shares of IR Stock necessary to meet the obligations of the Plan have been reserved and authorized pursuant to resolutions adopted by the Board of Directors of the Company on December 4, 1996, and additional shares of IR Stock shall be reserved and authorized for delivery under the Plan from time to time. These shares of IR Stock may be provided from newly-issued or treasury shares. 10.6 Singular and Plural. As the context may require, the singular may be read as the plural and the plural as the singular. 10.7 Captions. The captions to the articles, sections, and paragraphs of the Plan are for convenience only and shall not control or affect the meaning or construction of any of its provisions. 10.8 Applicable Law. The Plan shall be governed and construed in accordance with the laws of the State of New Jersey. 10.9 Severability. If any provisions of the Plan shall, to any extent, be invalid or unenforceable, the remainder of the Plan shall not be affected thereby, and each provision of the Plan shall be valid and enforceable to the fullest extent permitted by law. 10.10 Notice. Any notice or filing required or permitted to be given to the Administrative Committee shall be sufficient if in writing and hand delivered, or sent by registered or certified mail, to the principal office of the Company at 200 Chestnut Ridge Road, Woodcliff Lake, NJ 07677, directed to the attention of the Senior Vice President, Human Resources. Such notice shall be deemed given as of the date of delivery or, if delivery is made by mail, as of the date shown on the postmark on the receipt for registration or certification. Any notice to the Participant shall be addressed to the Participant at the Participant's residence address as maintained in the Company's records. Any party may change the address for such party here set forth by giving notice of such change to the other parties pursuant to this Section. IN WITNESS WHEREOF, the Company has caused this amendment and restatement to be executed by its duly authorized representative as of January 1, 2001. INGERSOLL-RAND COMPANY By: /s/ Donald H. Rice Donald H. Rice Senior Vice President Global Business Services and Human Resources EX-10 7 ex-10t.txt EXHIBIT 10III (T) - RONE H. LEWIS III Exhibit 10 (iii)(t) February 14, 2000 Mr. Rone H. Lewis III Dear Rone: I am pleased to offer you the position of Vice President, E-Commerce of Ingersoll-Rand Company and intend to recommend your election as an Officer of the Company to the Board of Directors. In this assignment you will report to the Office of the Chief Executive. The following is an outline of our offer: 1. Your starting salary will be at annual rate of $400,000 paid monthly. 2. You will be eligible for an annual incentive award, targeted at 90% of salary depending upon your performance and Ingersoll-Rand Company performance. 3. You have been recommended for an award of 40,000 non- qualified stock options. These awards are subject to approval by Ingersoll-Rand's Board of Directors and to the terms and conditions of awards made under our Incentive Stock Plan. Your award recommendation will go before the Compensation Committee of Ingersoll-Rand's Board at their first meeting following your first day of employment. These options will be priced after the stock market closes on the day they are approved by the Board at the Fair Market Value of Ingersoll-Rand stock. Thereafter, you will be considered a full participant in the plan and eligible to receive awards under the Plan in future years as administered by the Compensation Committee of the Board. All stock option awards vest over a three-year period, one-third each year. 4. Upon acceptance of this offer and commencement of employment, you will be awarded 4,000 performance shares of Ingersoll-Rand stock. These shares vest according to achievement of Ingersoll-Rand earnings per shares (EPS) annual growth targets, which, for performance year 2000, are currently set at 12%. These shares are distributed each February following the Board's approval of the Company's EPS performance. In subsequent years, you will be eligible for additional annual awards of similar value with qualifying criteria set at the time of each award. 5. You will be eligible for the complete program of employee benefits offered to all Ingersoll-Rand salaried employees in accordance with the terms and conditions of those plans. Further, as an Officer of the Company, you will be nominated for membership in the company's Elected Officer Supplemental (Pension) Plan, under the terms and conditions of that plan. 6. You are eligible for the Company's Relocation Program, a copy of which is attached. 7. You will be provided a company car in accordance with our company car policy. 8. This offer is contingent upon satisfactorily passing a drug test and fulfilling the requirements of the Immigration Reform and Control Act of 1986. Rone, I believe this offer represents an excellent opportunity for you to immediately become a valuable addition to our Company. My colleagues who have had a chance to meet with you share this belief, and we look forward to your joining us on or before April 3, 2000. Welocme! Sincerely, /s/ Herb Henkel Herb Henkel President and Chief Executive Officer Enclosures cc: D.H. Rice R.C. Butler EX-10 8 ex-10u.txt EXHIBIT 10III (U) - MICHAEL D. RADCLIFF Exhibit 10 (iii)(u) December 27, 2000 Mr. Michael D. Radcliff Dear Michael: I am pleased to offer you the position of Senior Vice President of Ingersoll-Rand Company, President, E-Business & Chief Technology Officer reporting to me. You will be nominated for election to Senior Vice President, Ingersoll Rand Company at the February meeting of the Compensation and Nominating Committee of our Board of Directors (the "Committee"). The following is an outline of our offer: 1. Your starting base salary will be at an annual rate of $350,000 paid monthly. 2. You will be eligible for an annual incentive opportunity targeted at 70% of salary depending upon your performance and Ingersoll-Rand Company performance. 3. Upon relocation to North Carolina, you will receive a $100,000 relocation support payment. 4. You will be recommended for an award of 40,000 (forty thousand) non-qualified stock options. All stock option awards vest over a three-year period, one third each year. This award is subject to approval by the Compensation and Nominating Committee (the "Committee") of Ingersoll-Rand's Board of Directors and to the terms and conditions of awards made under our Incentive Stock Plan. Your award recommendation will be considered by the Committee at their first meeting following your first day of employment. These options will be priced at the Fair Market Value of Ingersoll- Rand stock, at the stock market close on the day following approval by the Committee. Thereafter, you will be considered a full participant and be eligible to receive awards, at a target of 40,000 stock options, under the plan in future years as administered by the Committee. Upon acceptance of this offer and commencement of employment, the Company will recommend that the Committee award you 5,000 performance shares for 2001. These performance shares vest according to achievement of Ingersoll-Rand earnings per share (EPS) growth targets and sector operating income goals. These shares are distributed February following the Board's approval of the Company EPS performance. In subsequent years, you will be eligible for additional annual awards of similar value with qualifying criteria set at the time of each award. 4. You will be eligible for the complete program of employee benefits offered to all Ingersoll-Rand salaried employees in accordance with the terms and conditions of those plans. Please note that your medical and life insurance coverage with Ingersoll-Rand will commence on the first day of the month following employment. Further, as an Officer of the Company, you will be nominated for membership in the company's Elected Officer Supplemental (Pension) Plan, under the terms and conditions of that plan. 5. The Company will recommend to the Committee that you be offered a standard officer's change of control agreement. 6. You will be entitled to paid vacation in accordance with company policy, which in your case is four weeks per calendar year. 7. If applicable, you will be eligible for the company's Relocation Program, a copy of which is enclosed. 8. You will be provided a company car in accordance with our company car policy. 9. You will be eligible for the company's Executive Health Program. 10. You will be eligible for the company's Tax, Estate and Financial Planning service provided by Ayco Corporation to Officers. 11. In the event of an involuntary termination from Ingersoll-Rand for other than gross cause, the Company will provide a severance payment of twelve months base salary and twelve months medical and dental benefits. 12. This offer is conditional upon satisfactorily passing a drug test, finalization of our reference checking and fulfilling the requirements of the Immigration Reform and Control Act of 1986. Michael, we all believe that you can make a significant contribution in this new role and would very much like to have you on our executive team. In the meantime, please contact Gillian Scholes (201/573 3009) or myself if you have any questions. Sincerely, /s/ Herbert L. Henkel Herbert L. Henkel Chairman, President and Chief Executive Officer cc: R. C. Butler G. Scholes Offer Accepted By: /s/ Michael D. Radcliff Date: January 12, 2001 Michael D. Radcliff EX-10 9 ex-10v.txt EXHIBIT 10III (V) - RANDY SMITH Exhibit 10 (iii)(v) January 25, 2000 Mr. Randy Smith Dear Randy: I am pleased to offer you the position of President, Security and Safety Sector of Ingersoll-Rand Company and intend to recommend your election as an Officer of the Company to the Board of Directors. The following is an outline of our offer: 1. Your starting base salary will be at an annual rate of $400,000 paid monthly. 2. You will be eligible for an annual incentive award, targeted at 90% of salary depending upon your performance and Ingersoll-Rand Company performance. 3. You have been recommended for an award of 50,000 non- qualified stock options (a 10,000 share non-recurring sign-on award and a 40,000 share regular annual award). These awards are subject to approval by Ingersoll-Rand's Board of Directors and to the terms and conditions of awards made under our Incentive Stock Plan. Your award recommendation will go before the Compensation Committee of Ingersoll-Rand's Board at their first meeting following your first day of employment. These options will be priced after the stock market closes on the day they are approved by the Board at the Fair Market Value of Ingersoll-Rand stock. Thereafter, you will be considered a full participant in the Plan and eligible to receive awards under the Plan in future years as administered by the Compensation Committee of the Board. All stock option awards vest ratably over a three-year period, one-third each year. 4. Upon acceptance of this offer and commencement of employment, you will be awarded 4,000 performance shares of Ingersoll-Rand stock. These shares vest according to achievement of Ingersoll-Rand earnings per share (EPS) annual growth targets, which, for performance year 2000, are currently set at 12%. These shares are distributed each February following the Board's approval of the Company's EPS performance. In subsequent years, you will be eligible for additional annual awards of similar value. 5. You will be eligible for the complete program of employee benefits offered to all Ingersoll-Rand salaried employees in accordance with the terms and conditions of those Plans. Further, as an Officer of the Company, you will be nominated for membership in the company's Elected Officer Supplemental (Pension) Plan, under the terms and conditions of that Plan, except as modified below: The Elected Officer Supplemental Plan (EOSP) provides retirement benefits at normal retirement age, which for Officers is 62, based on a percentage of your defined final earnings (final salary plus the average of the highest five of your last six bonuses). In your case, Ingersoll-Rand will establish your target percentage at 50% of final pay at age 62, taking into account Ingersoll-Rand's Qualified and Non-qualified Defined Benefit Pension Plans (Plan One and the Excess Plan), and your other vested retirement benefits from previous employment. Once we know the precise details of your age, employment date, and previously vested benefits, we will provide an exhibit showing the estimated value of this arrangement. While some of these provisions are tailored to your personal circumstances and therefore are outside of the strict provisions of the EOSP, except as provided for here, the provisions of the EOSP will govern all determinations. 6. You are eligible for the Company's Relocation Program, a copy of which is attached. 7. You will be provided a company car in accordance with our company car policy and club membership appropriate to support business effectiveness. 8. This offer is condition upon satisfactorily passing a drug test and fulfilling the requirements of the Immigration Reform and Control Act of 1986. Randy, I believe this offer represents an excellent opportunity for you to immediately become a valuable addition to our Company. My colleagues who have had a chance to meet with you share this belief, and we look forward to your joining us on February 1, 2000. Welcome! Sincerely, /s/ Herb Henkel Herb Henkel Chief Executive Officer Enclosures cc: D. Rice R. Butler EX-10 10 ex-10w.txt EXHIBIT 10III (W) - JOHN E. TURPIN Exhibit 10(iii)(w) December 1, 2000 Mr. John E. Turpin Dear John: I am pleased to offer you the position of Sector President of Industrial Productivity reporting to me, with responsibility for the Industrial Productivity sector of Ingersoll-Rand Company. You will be nominated for election to Senior Vice President, Ingersoll Rand Company at the December meeting of the Compensation and Nominating Committee of our Board of Directors (the "Committee") to be effective your first day of work, which we have tentatively planned for January 2, 2000. The following is an outline of our offer: 1. Your starting base salary will be at an annual rate of $375,000 paid monthly. 2. You will be eligible for an annual incentive opportunity targeted at 90% ($350,000 target for 2001) of salary depending upon your performance and Ingersoll-Rand Company performance. The incentive for year 2000 will be guaranteed at $200,000 (less any pay-out from The Stanley Works for year 2000) payable in the first quarter of 2001, usually February. 3. You will be recommended for an award of 60,000 (sixty thousand) non-qualified stock options, which is comprised of 20,000 option shares as a sign on award and 40,000 option shares as your first annual award. This award is subject to approval by the Committee and to the terms and conditions of awards made under our Incentive Stock Plan. This award recommendation will be considered by the Committee at their December 2000 meeting to be awarded on your first day of employment. These options will be priced at the Fair Market Value of Ingersoll-Rand stock (using the definition in the Incentive Stock Plan of the average of the high and low price of Ingersoll-Rand stock on the New York Stock Exchange on your first day of employment). IR stock option awards vest over a three-year period, one third each year. Thereafter, you will be eligible to receive stock option awards under the Plan in future years as administered by the Compensation Committee of the Board. Currently your annual stock option award target is 40,000 shares. Upon acceptance of this offer and commencement of employment, the Company will recommend that the Committee award you 4,000 performance shares for 2001. These performance shares vest according to achievement of Ingersoll-Rand earnings per share (EPS) growth targets and sector operating income goals. These shares are distributed February following the Board's approval of the Company EPS performance. In subsequent years, you will be eligible for additional annual awards of similar value with qualifying criteria set at the time of each award. 4. You will be eligible for the complete program of employee benefits offered to all Ingersoll-Rand salaried employees in accordance with the terms and conditions of those plans. Please note that your medical and life insurance coverage with Ingersoll-Rand will commence on the first day of the month following employment. A summary of Ingersoll-Rand's key benefits is enclosed. Further, as an Officer of the Company, you will be nominated for membership in the company's Elected Officer Supplemental (Pension) Plan, under the terms and conditions of that plan. 5. The Company will recommend to the Committee that you be offered a standard officer's change of control agreement. 6. You will be entitled to paid vacation in accordance with company policy, which in your case is four weeks per calendar year. 7. If applicable, you will be eligible for the company's Relocation Program, a copy of which is enclosed. 8. You will be provided a company car in accordance with our company car policy. 9. You will be eligible for the company's Executive Health Program, a copy of which is enclosed. 10. You will be eligible for the company's Tax, Estate and Financial Planning service provided by Ayco Corporation to Officers. 11. In the event of an involuntary termination from Ingersoll-Rand for other than gross cause, the Company will provide a severance payment of twelve months base salary and twelve months medical and dental benefits. 12. This offer is conditional upon satisfactorily passing a drug test, finalization of our reference checking and fulfilling the requirements of the Immigration Reform and Control Act of 1986. John, we all believe that you can make a significant contribution in this new role and would very much like to have you on our executive team. In the meantime, please contact Gillian Scholes (201/573 3009) or myself if you have any questions. Sincerely, /s/ Herbert L. Henkel Chairman, President and Chief Executive Officer cc: R. C. Butler G. Scholes Offer Accepted By: /s/ John E. Turpin Date: December 12, 2000 John E. Turpin EX-11 11 ex-11.txt COMPUTATION OF EARNINGS PER SHARE Exhibit 11 INGERSOLL-RAND COMPANY COMPUTATION OF EARNINGS PER SHARE (In millions of dollars except for shares and per share amounts) Years ended December 31, 2000 1999 1998 1997 1996 Earnings from continuing operations applicable to common stock $546.2 $563.1 $481.6 $367.6 $342.3 Earnings from discontinued operations applicable to common stock 123.2 28.0 27.5 12.9 15.7 Net earnings applicable to common stock $669.4 $591.1 $509.1 $380.5 $358.0 Average number of common shares outstanding 161,205,386 163,644,073 163,669,777 163,206,932 161,238,547 Number of common shares issuable assuming exercise under incentive stock plans 1,205,463 2,108,724 1,812,035 1,617,803 1,031,137 Average number of outstanding shares for diluted earnings per share calculations 162,410,849 165,752,797 165,481,812 164,824,735 162,269,684 Basic earnings per share: Continuing operations $3.39 $3.44 $2.94 $2.25 $2.12 Discontinued operations 0.76 0.17 0.17 0.08 0.10 $4.15 $3.61 $3.11 $2.33 $2.22 Diluted earnings per share: Continuing operations $3.36 $3.40 $2.91 $2.23 $2.11 Discontinued operations 0.76 0.17 0.17 0.08 0.10 $4.12 $3.57 $3.08 $2.31 $2.21
Note: The results of Dresser-Rand Company have been reclassified from discontinued operations to continuing operations for all periods presented. EX-21 12 ex-21.txt LISTING OF INGERSOLL-RAND SUBSIDIARIES EXHIBIT 21 LIST OF SUBSIDIARIES OF INGERSOLL-RAND COMPANY The following list represents the principal subsidiaries of the company all of which (except as otherwise indicated) are deemed to be 100% owned, directly or indirectly, and whose financial statements are included in the consolidated statements. The subsidiary of Dresser-Rand Company, a general partnership, is now owned 100% by the company. The names of particular subsidiaries omitted, if considered in the aggregate as a single subsidiary, would not constitute a significant subsidiary. SUBSIDIARIES OF INGERSOLL-RAND COMPANY Aro International Corporation Delaware Clark Equipment Company Delaware Blaw-Knox Construction Equipment Corporation England Blaw-Knox Company England I-R E-Medical, Inc. Delaware Bobcat Corporation Japan Clark Business Services Corporation Michigan Bobcat Equipment Ltd. Canada Clark Distribution Services Inc. Michigan Clark Foreign Sales Corporation Barbados Checker Flag Parts, Inc. Minnesota Ingersoll-Rand Italiana S.p.A. Italy Ingersoll-Rand Services & Engineering Company Switzerland Ingersoll-Rand Acceptance Company S.A. Switzerland Ingersoll-Rand Construction Services Inc. Delaware Ingersoll-Rand Investment Company S.A. Switzerland Ingersoll-Rand Best-Matic AB Sweden Best-Matic International Ltd. England Best-Matic Vermogensverwaltungs GmbH Germany Thermo King Enterprises Company Delaware Club Car Inc. Delaware Club Car International Inc. Guam Club Car Limited New Zealand Erskine Manufacturing Company, Inc. Minnesota Perimeter Bobcat, Inc. Georgia Compagnie Ingersoll-Rand France Compressed Air Parts France France Ingersoll-Rand Equipements de Construction France Etablissements Montabert, S.A. France Ingersoll-Rand Service GmbH Germany Ingersoll-Rand Equipements de Production, S.A. France IR Services s.a.r.l France S.A. Etablissements Charles Maire France Bobcat France SA France Torrington France S.A.R.L. France D-R Acquisition, LLC Delaware Harrow Industries, Inc. Delaware Harrow Products, Inc. (Delaware) Delaware Harrow Products, Inc. Delaware Recognition Systems, Inc. California Hussmann International, Inc. Delaware Hussmann Corporation Missouri Hussmann Chile Chile Hussmann Guangzhou Refrigeration Company, Ltd. China Hussmann International Sales Corp. Barbados Hussmann Tempcool Holdings PTE Ltd. Singapore (50% owned by company) Hussmann Tempcool (Hong Kong) Ltd. Hong Kong Hussmann Tempcool (Malaysia)Sdn bhd Malaysia Hussmann Del Peru SA Peru Hussmann Tempcool Singapore Pte Ltd. Singapore Krack Corporation Illinois Luoyang Hussmann Refrigeration Co. Ltd (55% owned by the company) China Hussmann Holdings, Inc. (DE) Delaware Ingersoll-Rand Korea Korea IDP Acquisition, LLC Delaware Industria e Comercio Aro do Brasil Ltda. Brazil Ingersoll-Rand AB Sweden Ingersoll-Rand Argentina S.A.I.C. Argentina Ingersoll-Rand Asia Pacific Inc. Delaware Ingersoll-Rand (Australia) Ltd. Australia Ingersoll-Rand South East Asia (Pte.) Ltd. Singapore Ingersoll-Rand Benelux, N.V. Belgium Thermo King Belgium N.V. Belgium Ingersoll-Rand China Limited Delaware Ingersoll-Rand (China) Investment Company Limited China Ingersoll-Rand(Guilin)Tools Company Limited China (90% owned by Company) Ingersoll-Rand (Wuxi) Road Machinery Company Limited China (92% owned by the company) Ingersoll-Rand Machinery(Shanghai) Company Limited China Nanjing Ingersoll-Rand Compressor Co. Ltd. (80% owned by Company) China Shanghai Ingersoll-Rand Compressor Limited (80% owned by the company) China Thermo King-Dalian Transport Refrigeration Company, Limited China (70% owned by the company) Torrington-Wuxi Bearings Company Limited (78% owned by the company) China Xuanhua Ingersoll-Rand Mining & Construction Mach. Ltd. (50% owned by Company) China Ingersoll-Rand Company (Chile) y Cia Ltda. Chile Ingersoll-Rand Czech Republic s.r.o. Czech Republic Ingersoll-Rand de Colombia S.A. Colombia Ingersoll-Rand de Puerto Rico, Inc. Puerto Rico Ingersoll-Rand Energy Systems Corporation Massachusetts Ingersoll-Rand Enhanced Recovery Company Delaware Ingersoll-Rand Europe France Ingersoll-Rand (India) Limited India (74% owned by the company) Ingersoll-Rand International Foreign Sales Corporation Guam Ingersoll-Rand International Holding Corporation New Jersey Ingersoll-Rand S.A. Switzerland Ingersoll-Rand Equipment & Consulting S.A.R.L. Switzerland Ingersoll-Rand Machinery & Services S.A.R.L. Switzerland Ingersoll-Rand Trading S.A. Switzerland Ingersoll-Rand International, Inc. Delaware Ingersoll-Rand International Sales Inc. Delaware Ingersoll-Rand Japan Ltd. Japan Zexel Cold Systems Company Japan (70% owned by the company) Ingersoll-Rand Canada Inc. Canada IR Deutsche Holding GmbH Germany Bobcat Parts Service GmbH Germany Normbau Beschlage und Ausstattungs GmbH Germany Interflex Datensysteme KG Germany GDK GmbH Germany Interflex Data Systens Ltd. England Interflex Time & Access Ltd. England Interflex Datensysteme Gesmbh Austria Interflex Datensysteme AG Switzerland (90% owned by the company) Lorenz Datensysteme GmbH Germany Interflex Datasystems B.V. Netherlands Interflex Belgium N.V./S.A. Belgium Ingersoll-Rand Wasserstrahl- Schneidtechnik GmbH Germany Ingersoll-Rand (Barbados) Corporation Barbados Ingersoll-Rand World Trade Ltd. Bermuda London Compressor Air Technologies Inc. Ontario Torrington Inc. Canada Ingersoll-Rand do Brasil Ltda. Brazil Ingersoll-Rand Philippines, Inc. Philippines Ingersoll-Rand S.A. de C.V. Mexico Ingersoll-Rand Transportation Services Company Delaware Ingersoll-Rand European Holding Company B.V. Netherlands Hussmann Netherlands B.V. Netherlands Fastecnica Instalacoese Assistencia Tecnica S/C Ltda Brazil Hussmann Australasia Limited New Zealand (66% owned by the company) McAlpine Hussmann (Australia) Pty Limited Australia Koolzone Asia Limited Hong Kong McAlpine Australia Pty Limited Australia McAlpine Hussmann Pty Limited Australia Triangle Refrigeration International Trading (Shanghai) Co. China Triangle Refrigeration Pty Ltd. Australia McAlpine Hussmann Ltd. New Zealand Contract Refrigeration Ltd. New Zealand Koxka New Zealand Ltd. New Zealand McAlpine Industries Ltd. New Zealand Hussmann do Brasil Ltda. Brazil Hussmann Canada Holdings, Ltd. Canada Hussmann Canada Inc. Canada Hussmann Holdings, Ltd. England Hussmann Europe Limited England Capital Metalwork Limited England Hussmann Refrigeration (Hungary) KFT Hungary (60% owned by the company) Hussmann Iberica S.L. Spain Koxka C.E., S.A. Spain Baes Industria Del Frio, S.A. Spain Compania de Refrigeracion Vedereca, S.A. Spain Kobol, S.A. Spain Hussmann-Mexico, S. de R.L. de C.V. Mexico Hussmann American, S. de R.L. de C.V. Mexico Industrias Frigorificas, S.A. de C.V. Mexico Industrias Gilvert, S.A. de C.V. Mexico Hussmann Inmoviliaria S.A. de C.V. Mexico Hussmann Region Andina SRL Chile Ingersoll-Rand Betiligungs GmbH Germany ABG Allgemeine Baumaschinen Gesellschaft GmbH Germany ABG France S.A.R.L. France I-R Beteiligungs und Grundstucksver- waltungs GmbH Germany Ingersoll-Rand GmbH Germany GHH-Rand Schraubenkompressoren GmbH Germany Thermo King Deutschland GmbH Germany Ingersoll-Rand Sales Company LLC Delaware Ingersoll-Rand Holdings Limited England Ingersoll-Rand Company Limited England A/S Parts Limited England Ingersoll-Rand Company (Ireland) Limited Ireland Ingersoll-Rand Company South Africa (Pty.) Limited South Africa Ingersoll-Rand Company Namibia (Pty.) Ltd. Namibia Ingersoll-Rand (New Zealand) Ltd. New Zealand GBS Europe Limited England Roconeco Limited England The Aro Corporation (UK) Limited England The Torrington Company Limited England NSK/Torrington Company Ltd. Japan (49% owned by the company) NT Acquisition Limited England Ingersoll-Rand European Sales Ltd England Compressed Air Parts Limited England C.A.P. Sales Limited England IR Security & Safety Limited England APT Laboratories Limited England Newman Tonks(Kings Norton) Limited England Newman Tonks Management Services Limited England Newman Tonks (Overseas Holdings) Limited England NT Access Limited England NT Architectural Hardware Limited England NT Door Controls Limited England NT Group Properties Ltd England NT Laidlaw Ltd England NT Legge Limited England NT Martin Roberts Ltd England NT Partition Systems Ltd England NT Projects Limited England NT Railing Systems Ltd England NT Security Limited England Torrington Ceska Republika s.r.o. Czech Republic Torrington GmbH Germany Torrington Nadellager GmbH Germany Ingersoll-Rand Wadco Tools Ltd. India (74% owned by the company) Ingersoll-Rand Western Hemisphere Trade Corporation Delaware Ingersoll-Rand Worldwide, Inc. Delaware Instrum-Rand (59.8% owned by the company) Russia IR Receivables Funding I Corporation Delaware IR Receivables Funding II Corporation Delaware McCartney Manufacturing Company, Inc. Kansas Roconeco Corporation South Carolina S&S Corporation Virginia SBG Holding Corp. Delaware Schlage Lock Company California Ingersoll-Rand Architectural Hardware Limited New Zealand Ingersoll-Rand Architectural Hardware (Australia) Pty. Limited Australia Newman Tonks Brussels NV Belgium Newman Tonks France SA France Mustad SA France Newman Tonks Investments, Inc. Delaware Newman Tonks Holdings, Inc. Delaware Monarch Hardware and Mfg.Co. Inc. Delaware MFP,Inc. Kentucky Newman Tonks, USA, Inc. Delaware ARMORO, Inc. California Dixie Pacific Manufacturing Company, Inc. Alabama Dor-O-Matic Inc. Illinois Dor-O-Matic of Mid Atlantic States, Inc. New Jersey NT Dor-O-Matic Limited England NT Dor-O-Matic Greendale Inc. Wisconsin NT Dor-O-Matic of Toronto Canada Falcon Lock California NT Asia (Hong Kong) Limited Hong Kong NT Asia (Singapore) Limited Singapore NT Randi A/S Denmark NT South Africa South Africa NT USA FSC INC. Barbados Touch-Plate International, Inc. California Von Duprin, Inc. Indiana Silver Holding Corp. Colorado Woodcliff Insurance Ltd. Bermuda Sonna B.V. Netherlands Sonna Rail B.V. Netherlands Steelcraft Holding Company Delaware Taylor Industries, Inc. Iowa Thermo King Corporation Delaware Thermo King Container-Denmark A/S Denmark Thermo King de Puerto Rico, Inc. Delaware Thermo King do Brasil, Ltda. Brazil Thermo King SVC, Inc. Delaware Thermo King Trading Company Delaware The Torrington Company (Delaware) Delaware Industrias del Rodamiento, S.A. Spain Ingersoll-Rand Iberica S.L. Spain Reftrans, S.A. (85% owned by the company) Spain Ingersoll-Rand Liability Management Company Michigan Kilian Manufacturing Corp. Delaware Torrington Holdings, Inc. Delaware Torrington Sales Limited Switzerland Tokyo Ryuki Seizo Co. Ltd. Japan SUBSIDIARIES OF DRESSER-RAND COMPANY Dresser-Rand Machinery Repair Belgie N.V. Belgium Dresser-Rand Canada, Inc. Canada Dresser-Rand C.I. Limited (Cayman Islands) Cayman Is. Dresser-Rand Compression Services S.A.-Switzerland Switzerland (60% owned by the company) Dresser-Rand Compressor Co. Ltd. Shanghai China Dresser-Rand de Mexico S.A. Mexico Dresser-Rand Global Services, LLC Delaware Dresser-Rand Holding Company Delaware Dresser-Rand Asia Pacific Sdn. Bhd. Malaysia Dresser-Rand B.V. Netherlands Dresser-Rand & Enserv Services Sdn. Bhd. Malaysia (49% owned by the company) Dresser-Rand de Venezuela, S.A. Venezuela Dresser-Rand Gesellschaft Mit Beschrankter Haftung Germany Dresser-Rand Japan, Ltd. Japan Dresser-Rand Overseas Sales Company Delaware Dresser-Rand Company Ltd.-UK England Dresser-Rand (UK) Ltd. England Dresser-Rand Sales Company S.A. Switzerland Dresser-Rand Services, S.a.r.l. Switzerland Turbodyne Electric Power Corporation Delaware Dresser-Rand India Private Limited India Dresser-Rand International B.V. Netherlands Dresser-Rand Italia S.r.l. Italy Dresser-Rand (Nigeria) Ltd. (50% owned by the company) Nigeria Dresser-Rand Power, Inc. Delaware Dresser-Rand A/S Norway Dresser-Rand Comercio e Industria Ltda. Brazil Dresser-Rand (SEA) Pte. Ltd. Singapore Dresser-Rand S.A.-France France Dresser-Rand Services B.V. Netherlands Dresser-Rand Czech S.R.O. Czech Rep. Engeturb Turbinas a Vapor Ltda. Brazil (75% owned by the company) Multiphase Power and Processing Technologies, LLC Delaware (50% owned by the company) Paragon Engineering Services, Inc. Texas (40% owned by the company) -----END PRIVACY-ENHANCED MESSAGE-----