-----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, BvQpR9+2Ok2Ueej+RiS/ABNmY4hhsrsnbI9AFQlwYWubex0T2OIOchqd89vGLkHS JxXjSBFcwkzyvnMV71yCNg== 0000050485-98-000006.txt : 19980630 0000050485-98-000006.hdr.sgml : 19980630 ACCESSION NUMBER: 0000050485-98-000006 CONFORMED SUBMISSION TYPE: 11-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19971231 FILED AS OF DATE: 19980629 SROS: NYSE 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: 11-K SEC ACT: SEC FILE NUMBER: 001-00985 FILM NUMBER: 98656058 BUSINESS ADDRESS: STREET 1: 200 CHESTNUT RIDGE RD STREET 2: PO BOX 8738 CITY: WOODCLIFF LAKE STATE: NJ ZIP: 07675 BUSINESS PHONE: 2015730123 MAIL ADDRESS: STREET 1: 200 CHESTNUT RIDGE ROAD CITY: WOODCLIFF LAKE STATE: NJ ZIP: 07675 11-K 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 11-K X ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 1997 or TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number A. Full title of the plan and address of the plan, if different from that of the issuer named below: INGERSOLL-RAND COMPANY SAVINGS AND STOCK INVESTMENT PLAN B. Name of issuer of the securities held pursuant to the plan and the address of its principal executive office: Ingersoll-Rand Company P. O. Box 8738 Woodcliff Lake, New Jersey 07675 REQUIRED INFORMATION A. Financial Statements and Schedules Index to Financial Statements Report of Independent Accountants Statements of Financial Condition at December 31, 1997 and 1996 Statements of Income and Changes in Plan/Fund Equity for the Year Ended December 31, 1997 and 1996 Notes to Financial Statements Schedule I - Item 27a - Schedule of Assets Held For Investment Purposes at December 31, 1997 Schedule V - Item 27d - Schedule of Reportable Transactions for the Year Ended December 31, 1997 B. Exhibit Consent of Independent Accountants SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Benefits Committee has duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized. Ingersoll-Rand Company Savings and Stock Investment Plan (Registrant) Date June 23, 1998 By: /S/ Donald H. Rice Donald H. Rice Benefits Committee Chairman INGERSOLL-RAND COMPANY SAVINGS AND STOCK INVESTMENT PLAN INDEX TO FINANCIAL STATEMENTS Report of Independent Accountants Statements of Financial Condition at December 31, 1997 and 1996 Combined Plan Summary Fixed Income Fund Mutual Fund Company Stock Fund Loan Fund Statements of Income and Changes in Plan/Fund Equity for the years ended December 31, 1997 and 1996 Combined Plan Summary Fixed Income Fund Mutual Fund Company Stock Fund Loan Fund Notes to Financial Statements Additional Information* (Combined Investment Trust): Schedule I - Item 27a - Schedule of Assets Held for Investment Purposes at December 31, 1997 Schedule V - Item 27d - Schedule of Reportable Transactions for the year ended December 31, 1997 *Other schedules required by Section 2520.103-10 of the DOL Rules and Regulations for Reporting and Disclosure under ERISA have been omitted because they are not applicable. Report of Independent Accountants June 5, 1998 To the Benefits Committee and Participants of the Ingersoll-Rand Company Savings and Stock Investment Plan In our opinion, the financial statements listed in the accompanying index present fairly, in all material respects, the financial condition of the Ingersoll-Rand Company Savings and Stock Investment Plan at December 31, 1997 and 1996, and the changes in its plan equity for the years then ended, in conformity with generally accepted accounting principles. These financial statements are the responsibility of the Benefits Committee; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by the Benefits Committee, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above. Our audits were performed for the purpose of forming an opinion on the basic financial statements taken as a whole. The additional information included in Schedule I and Schedule V of the Combined Investment Trust is presented for purposes of additional analysis and is not a required part of the basic financial statements but is additional information required by ERISA. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements, and in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. /S/ Price Waterhouse Price Waterhouse LLP Florham Park, New Jersey INGERSOLL-RAND COMPANY SAVINGS AND STOCK INVESTMENT PLAN COMBINED PLAN SUMMARY STATEMENTS OF FINANCIAL CONDITION At December 31 1997 1996 Assets: Investments at current value: Combined Trust Fixed Income Fund $ 207,301,167 $140,109,747 Combined Trust Mutual Fund 297,485,385 160,370,187 Combined Trust Ingersoll-Rand Company Stock Fund 279,232,315 204,726,590 784,018,867 505,206,524 Participant loans receivable 29,593,236 25,013,214 Contributions receivable 3,641,479 2,931,601 Total assets 817,253,582 533,151,339 Plan equity $ 817,253,582 $533,151,339 STATEMENTS OF INCOME AND CHANGES IN PLAN EQUITY For the years ended December 31 1997 1996 Contributions: Participants $ 48,958,935 $ 40,156,217 Investment income: Dividends 15,748,925 15,289,908 Interest 13,935,929 9,505,736 Net appreciation of investments 127,336,002 59,074,527 Net investment income 157,020,856 83,870,171 Total additions 205,979,791 124,026,388 Participant withdrawals and distributions 69,382,379 48,384,259 Total deductions 69,382,379 48,384,259 Net increase prior to transfers 136,597,412 75,642,129 Transfers from other funds, net 75,161 26 Transfers from (to) other plans, net 147,429,670 (7,209,907) Increase in plan equity 284,102,243 68,432,248 Plan equity at beginning of year 533,151,339 464,719,091 Plan equity at end of year $817,253,582 $533,151,339 The accompanying notes are an integral part of these financial statements. INGERSOLL-RAND COMPANY SAVINGS AND STOCK INVESTMENT PLAN FIXED INCOME FUND STATEMENTS OF FINANCIAL CONDITION At December 31 1997 1996 Assets: Investments at current value: Combined Trust Fixed Income Fund $207,301,167 $140,109,747 Contributions receivable 1,203,008 1,132,550 Total assets 208,504,175 141,242,297 Fund equity $208,504,175 $141,242,297 STATEMENTS OF INCOME AND CHANGES IN FUND EQUITY For the years ended December 31 1997 1996 Contributions: Participants $ 17,385,533 $ 16,129,982 Investment income: Interest 11,766,892 7,637,984 Total additions 29,152,425 23,767,966 Participant withdrawals and distributions 28,652,944 18,802,248 Total deductions 28,652,944 18,802,248 Net increase prior to transfers 499,481 4,965,718 Transfers (to) from other funds, net (12,938,145) 4,922,575 Transfers from (to) other plans, net 79,700,542 (3,678,692) Increase in fund equity 67,261,878 6,209,601 Fund equity at beginning of year 141,242,297 135,032,696 Fund equity at end of year $208,504,175 $141,242,297 The accompanying notes are an integral part of these financial statements. INGERSOLL-RAND COMPANY SAVINGS AND STOCK INVESTMENT PLAN MUTUAL FUND STATEMENTS OF FINANCIAL CONDITION At December 31 1997 1996 Assets: Investments at current value: Combined Trust Mutual Fund $297,485,385 $160,370,187 Contributions receivable 1,988,616 1,386,373 Total assets 299,474,001 161,756,560 Fund equity $299,474,001 $161,756,560 STATEMENTS OF INCOME AND CHANGES IN FUND EQUITY For the years ended December 31 1997 1996 Contributions: Participants $ 25,998,175 $ 19,025,763 Investment income: Dividends 11,837,276 11,564,017 Net appreciation of investments 51,883,324 12,252,556 Net investment income 63,720,600 23,816,573 Total additions 89,718,775 42,842,336 Participant withdrawals and distributions 20,427,493 10,423,098 Total deductions 20,427,493 10,423,098 Net increase prior to transfers 69,291,282 32,419,238 Transfers from other funds, net 8,695,034 4,292,235 Transfers from other plans, net 59,731,125 2,896,875 Increase in fund equity 137,717,441 39,608,348 Fund equity at beginning of year 161,756,560 122,148,212 Fund equity at end of year $299,474,001 $161,756,560 The accompanying notes are an integral part of these financial statements. INGERSOLL-RAND COMPANY SAVINGS AND STOCK INVESTMENT PLAN COMPANY STOCK FUND STATEMENTS OF FINANCIAL CONDITION At December 31 1997 1996 Assets: Investments at current value: Combined Trust Ingersoll-Rand Company Stock Fund $279,232,315 $204,726,590 Contributions receivable 449,855 412,678 Total assets 279,682,170 205,139,268 Fund equity $279,682,170 $205,139,268 STATEMENTS OF INCOME AND CHANGES IN FUND EQUITY For the years ended December 31 1997 1996 Contributions: Participants $ 5,575,227 $ 5,000,472 Investment Income: Dividends 3,911,649 3,725,891 Net appreciation of investments 75,452,678 46,821,971 Net investment income 79,364,327 50,547,862 Total additions 84,939,554 55,548,334 Participant withdrawals and distributions 19,084,567 18,016,417 Total deductions 19,084,567 18,016,417 Net increase prior to transfers 65,854,987 37,531,917 Transfers from (to) other funds, net 4,505,992 (9,572,174) Transfers from (to) other plans, net 4,181,923 (6,237,872) Increase in fund equity 74,542,902 21,721,871 Fund equity at beginning of year 205,139,268 183,417,397 Fund equity at end of year $279,682,170 $205,139,268 The accompanying notes are an integral part of these financial statements. INGERSOLL-RAND COMPANY SAVINGS AND STOCK INVESTMENT PLAN LOAN FUND STATEMENTS OF FINANCIAL CONDITION At December 31 1997 1996 Participant loans receivable $ 29,593,236 $ 25,013,214 Fund equity $ 29,593,236 $ 25,013,214 STATEMENTS OF INCOME AND CHANGES IN FUND EQUITY For the years ended December 31 1997 1996 Transfers from other funds for loans $ 14,223,700 $ 12,785,012 Interest income from loans 2,169,037 1,867,752 Transfers from other plans 3,816,080 - Total additions 20,208,817 14,652,764 Transfers to other funds for repayments 14,411,420 12,427,622 Transfers to other plans - 190,218 Participant distributions 1,217,375 1,142,496 Total deductions 15,628,795 13,760,336 Increase in fund equity 4,580,022 892,428 Fund equity at beginning of year 25,013,214 24,120,786 Fund equity at end of year $ 29,593,236 $ 25,013,214 The accompanying notes are an integral part of these financial statements. INGERSOLL-RAND COMPANY SAVINGS AND STOCK INVESTMENT PLAN NOTES TO FINANCIAL STATEMENTS NOTE 1 - DESCRIPTION OF THE PLAN: The following brief description of the Ingersoll-Rand Company Savings and Stock Investment Plan ("Plan") is for general information purposes. Participants should refer to the Plan document for more complete information. The Ingersoll-Rand Company ("Company") adopted the Plan for eligible employees at participating locations. Eligible employees may participate the first day of the month following 30 calendar days of employment. Effective March 1, 1997, the Ingersoll-Rand Company Hourly Pension Plan (Plan 45), the Clark Savings and Investment Plan and the Ingersoll-Rand Company Retirement Account Plan were merged into the Ingersoll-Rand Company Savings and Stock Investment Plan. Existing participant balances in these plans were transferred to the investment options available in the Ingersoll-Rand Company Savings and Stock Investment Plan that were elected by each participant. Participants may contribute as basic contributions one to six percent (in whole percentages) of their compensation through payroll deductions. Participants contributing six percent of compensation may contribute an additional one to ten percent of compensation as supplemental contributions. Only basic contributions receive Company matching contributions. Participants may use before- or after-tax dollars for part or all of their contributions. Contributions are subject to varying limitations to ensure compliance with Internal Revenue Code requirements. Participants may change their contribution amounts at any time effective the first pay period of the following month, by contacting the recordkeeper through its Benefits Information Line (BIL). The Plan assets are held in the Combined Investment Trust ("Combined Trust"), together with assets from other participating plans. Participants may invest their contributions, in multiples of one percent, in one or more of the following funds: o Fixed Income Fund - A fund that invests in securities that produce a fixed rate of return. Investments may include United States government securities, corporate bonds, notes, debentures, convertible securities, preferred stocks, investment funds or investment contracts. o Mutual Fund - Prior to March 1, 1997, participants could select from the following mutual funds: Fidelity Fund, Fidelity Growth and Income Portfolio, Fidelity U.S. Equity Index Portfolio, and Fidelity Magellan Fund. After March 1, 1997, participants can select from the following mutual funds: Templeton Foreign Fund, Fidelity Growth and Income Portfolio, Fidelity Contra Fund, Fidelity Low-Priced Stock Fund, Fidelity U.S. Equity Index Commingled Pool Fund (formerly known as the Fidelity Institutional S&P 500 Index), Putnam Vista Fund, Putnam New Opportunities Fund and Fidelity Magellan Fund. o Company Stock Fund - A fund consisting primarily of the Company's common stock. This fund limits participant investment to 50% of current contributions or account balance on transfers. Each fund reinvests its income in that fund. The Company contributes to the Plan via a Company matching contribution and a Company retirement contribution. The Company matches basic contributions at a rate determined by the Company's board of directors. For 1997 and 1996, the match was set at 50 percent of basic contributions. The Plan requires that Company matching contributions be at least 25 percent, but no more than 100 percent of participants' basic contributions. As a Company retirement contribution, the Company contributes one percent of each eligible participant's monthly compensation to the Plan. An additional one percent is contributed to the Plan for employees who meet certain criteria, as outlined in the Plan. Effective October 1, 1995 for Company matching contributions, and effective March 1, 1996 for Company retirement contributions, the Plan was amended to provide for an offset to the Company contributions under the Plan with an equivalent benefit to the Plan participants under the Ingersoll-Rand/Clark Leveraged Employee Stock Ownership Plan (LESOP). Amounts accrued under the Plan prior to the effective dates of these amendments remain in the Plan unaffected. Participant contributions are always 100 percent vested. Effective March 1, 1997, Company matching and retirement contributions, including those provided to the LESOP, vest on a five-year, graded- vesting schedule. Employees are immediately 20 percent vested. After completing two years of service, the vested percentage increases in increments of 20 percent per year until fully vested after five years of service. All Company matching and retirement contributions become 100 percent vested if the participant's employment terminates under the terms of the plan due to disability, retirement or death. On any business day, participants may change their allocation of future contributions and transfer prior contributions between funds. Transfers of prior contributions are in whole percentages. Participants have several options that permit access to their contributions, earnings, and certain vested Company contributions. These options are subject to certain rules and restrictions. Plan distributions may be in the form of a lump sum, installments over a maximum of five years, or in such other manner that the Benefits Committee may permit. Participant accounts are kept in units or shares and are valued on a daily basis. At December 31, 1997 and 1996, the number of participants with balances in the Plan approximated 18,200 and 15,100, respectively. The number of participants contributing to each of the Plan's funds at December 31, 1997, were approximately: Fixed Income Fund 15,300 Mutual Fund: Fidelity Fund - Fidelity Growth and Income Portfolio 5,900 Fidelity U.S. Equity Index Portfolio - Fidelity Magellan Fund 4,400 Templeton Foreign Fund 1,400 Fidelity Contra Fund 1,600 Fidelity Low Priced Stock Fund 1,900 Fidelity U.S. Equity Index Commingled Pool Fund 4,900 Putnam Vista Fund 2,500 Putnam New Opportunities Fund 3,100 Ingersoll-Rand Company Stock Fund 5,600 The Benefits Committee, which is appointed by the Company's board of directors (or its delegate), administers the Plan. The Finance Committee of the Company's board of directors establishes the Plan's investment policies. The Company intends to continue the Plan indefinitely. However, the Company retains the right to discontinue the Plan. If the Company discontinues the Plan, all participant account balances become fully vested at the termination date. In August 1997, the Company's board of directors declared a three-for- two stock split of the Company's common stock. The stock split was made in the form of a stock dividend and was paid on September 2, 1997. All prior year share amounts have been restated to reflect the stock split. NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: The Plan follows the accrual method of accounting. The Chase Manhattan Bank (Chase) and Coopers & Lybrand LLP are trustee and recordkeeper of the Plan, respectively. Use of Estimates: The preparation of financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from these estimates. Valuation of Investments: Plan assets are part of the Combined Trust, which provides unified investment management. Chase invests the Plan assets in the various Combined Trust investment funds. Separate participant accounts are maintained by investment fund. These accounts record contributions, withdrawals, transfers, earnings and changes in market value. The Putnam Guaranteed Horizon Accounts and the Putnam Managed Accounts are recorded at their respective contract value. Contract value equals principal plus cumulative interest earned, reduced by distributions. The Chase Domestic Liquidity Fund contains short-term debt, bank certificates of deposit and collateralized repurchase agreements. The carrying value of these investments is a reasonable estimate of their current value due to the short-term nature of the instruments. Rates of return on the money-market funds vary with the instruments purchased and changes in short-term interest rates. The financial statements report investments in the Mutual Fund and the Ingersoll-Rand Company Common Stock at current value based on published market quotations. Security Transactions and Investment Income: Realized gains or losses on security transactions are recorded on the trade date. Realized gains or losses are the difference between the proceeds received and the participant's average unit cost. Dividend income is recorded on the ex-dividend date and interest income is recorded when earned. The statement of income and changes in Plan/fund equity includes unrealized appreciation or depreciation in accordance with the policy of stating investments at current value. Appreciation or depreciation of investments reflects both realized gains and losses and the change in unrealized appreciation and depreciation of investments. Contributions: Participant and Company matching contributions are contributed to the Combined Trust or the LESOP trust, as applicable, on a monthly basis. Participant contributions for each fund are based on the participants' investment decisions. Company retirement contributions are contributed to the Combined Trust or the LESOP after the end of each month or annually, as outlined in the Plan. The Company matching and retirement contributions may be made to the Combined Trust or the LESOP in cash or Company stock. Forfeitures: Forfeitures of nonvested Company contributions occur when participants are terminated. Forfeitures of $587,084 in 1997 and $569,345 in 1996 were used to reduce future Company contributions. Expenses of the Plan: Most expenses for the administration of the Plan and the Combined Trust are paid for by the Company. Expenses of the funds related to the investment and reinvestment of assets are included in the cost of the related investments. Benefit Obligations: Distributions to terminated employees are recorded in each fund's financial statements, when paid. The approved and unpaid amounts were $2,850,775 and $1,720,418 at December 31, 1997 and 1996 respectively. These amounts will be reflected as liabilities on the Plan's Form 5500 in accordance with Department of Labor Regulations. NOTE 3 - FIXED INCOME FUND: Investments in the Fixed Income Fund at December 31 were as follows: 1997 1996 Putnam Guaranteed Horizon Accounts $ 39,701,027 $ 78,726,520 Putnam Managed Accounts 136,945,125 93,410,720 Chase Domestic Liquidity Fund 33,095,881 20,347,083 MetLife Stable Income Funds 59,125,348 - Total Combined Trust Fixed Income Fund 268,867,381 192,484,323 Less: Other plans 61,566,214 52,374,576 Plan investment in Fixed Income Fund $207,301,167 $140,109,747 NOTE 4 - MUTUAL FUND: Investments in the Mutual Fund at December 31 were as follows: 1997 1996 Fidelity Fund $ 424,298 $ 17,710,287 Fidelity Growth and Income Portfolio 89,016,560 64,067,743 Fidelity U.S. Equity Index Portfolio 705,452 71,666,187 Fidelity Magellan Fund 53,004,254 57,388,300 Templeton Foreign Fund 7,995,696 - Fidelity Contra Fund 14,711,437 - Fidelity Low Priced Stock Fund 18,848,539 - Fidelity U.S. Equity Index Commingled Pool Fund 100,620,520 - Putnam Vista Fund 30,301,501 - Putnam New Opportunities Fund 31,730,581 - Total Combined Trust Mutual Fund 347,358,838 210,832,517 Less: Other plans 49,873,453 50,462,330 Plan investment in Mutual Fund $297,485,385 $160,370,187 The total cost of the Combined Trust Mutual Funds was $285,756,879 and $165,220,983 at December 31, 1997 and 1996, respectively. Net realized and unrealized appreciation (depreciation) of investments for the years ended December 31, 1997 and 1996 was as follows: 1997 1996 Fidelity Fund $ 986,287 $ 1,033,725 Fidelity Growth and Income Portfolio 16,431,077 6,672,187 Fidelity U.S. Equity Index Portfolio 5,208,378 11,398,945 Fidelity Magellan Fund 8,513,494 (2,848,573) Templeton Foreign Fund (177,221) - Fidelity Contra Fund 904,623 - Fidelity Low Priced Stock Fund 1,646,255 - Fidelity U.S. Equity Index Commingled Pool Fund 20,368,899 - Putnam Vista Fund 5,446,080 - Putnam New Opportunities Fund 5,426,059 - Total Combined Trust Mutual Fund 64,753,931 16,256,284 Less: Other plans 12,870,607 4,003,728 Net plan appreciation $51,883,324 $ 12,252,556 NOTE 5 - COMPANY STOCK FUND: Investments in the Company Stock Fund at December 31 were as follows: 1997 1996 Ingersoll-Rand Company common stock $295,081,502 $223,084,354 Chase Domestic Liquidity Fund 3,564,578 1,763,709 Total Combined Trust Ingersoll-Rand Company Stock Fund 298,646,080 224,848,063 Less: Other plans 19,413,765 20,121,473 Plan investment in Ingersoll-Rand Company Stock Fund $279,232,315 $204,726,590 The Company Stock Fund investment in Company common stock at December 31, 1997 and 1996, included 7,285,963 shares and 7,495,056 shares, respectively. At December 31, 1997 and 1996, the average cost of these shares was $123,451,463 and $114,705,537, respectively. Net realized and unrealized appreciation of investments for the years ended December 31, 1997 and 1996 was as follows: 1997 1996 Combined Investment Trust $80,697,853 $51,347,920 Less: Other plans 5,245,175 4,525,949 Net Plan appreciation $75,452,678 $46,821,971 NOTE 6 - LOAN FUND: The Plan allows participants to borrow from their vested account balance subject to certain limits. Loans are withdrawn from the participants' accounts in a sequence outlined in the Plan. The number of loans outstanding at December 31, 1997 and 1996 was 8,363 and 8,122, respectively. The Benefits Committee establishes the loan interest rate and reviews the rate quarterly. The loan rate may be adjusted each quarter thereafter in order to reflect the current prime rate. In 1997 and 1996, the interest rate on new loans was 9%. Interest charges begin 60 days after the initial loan date. Loans are repaid in equal installments through payroll deductions over a maximum of five years. Loan repayments consist of interest and principal, and are reinvested according to the participant's current investment elections. If a participant terminates employment with the Company, any outstanding loan balance is considered a distribution. NOTE 7 - FEDERAL INCOME TAXES: In May 1997, a favorable determination letter was received from the Internal Revenue Service indicating that the Plan satisfied the requirements for qualification under Section 401(a) of the Internal Revenue Code. The trust established for the Plan is exempt from federal income tax under Section 501(a) of the Internal Revenue Code. Therefore, the financial statements do not provide for income taxes. Employees defer taxes on income earned, Company contributions, and contributions made under the salary deferral feature. Taxes on employee distributions depend on the form and amount of such payment. NOTE 8 - TRANSFERS (FROM) TO OTHER PLANS: Effective March 1, 1997, the Ingersoll-Rand Company Hourly Pension Plan (Plan 45), the Clark Savings and Investment Plan and the Ingersoll-Rand Company Retirement Account Plan were merged into the Plan, transferring approximately $158 million of assets. Approximately $9 million of investments related to the former employees of the Process Systems Group, which was sold in 1996, were transferred from the Plan in 1997. Other dispositions during 1997 resulted in approximately $1.2 million of investment assets transferred from the Plan. In 1997 and 1996, there were also transfers to (from) the Plan resulting from the transfer of Ingersoll-Dresser Pump Company and Dresser Industries employees. In 1996, there were transfers to the Plan resulting from the acquisition of the Steelcraft Division of MascoTech, Inc. of $8 million and transfers from the Plan of $15 million due to the sale of the Process Systems Group. NOTE 9 - COMBINED INVESTMENT TRUST FINANCIAL INFORMATION: At December 31, 1997 and 1996, the Plan had an 85% and 80% participation, respectively, in the Combined Investment Trust. The financial statements for the Combined Investment Trust are prepared on the modified cash basis of accounting, which in the case of the Combined Investment Trust is substantially the same as the accrual basis of accounting. The financial statements for the years ended December 31, 1997 and 1996 follow. COMBINED INVESTMENT TRUST STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS At December 31 1997 1996 Investments: Fixed Income Fund: Putnam Guaranteed Horizon Accounts $ 39,701,027 $ 78,726,520 Chase Domestic Liquidity Fund 33,095,881 20,347,083 Putnam Managed Accounts 136,945,125 93,410,720 MetLife Stable Income Fund 59,125,348 - Total Fixed Income Fund 268,867,381 192,484,323 Mutual Fund: Templeton Foreign Fund 7,995,696 - Fidelity Contra Fund 14,711,437 - Putnam Vista Fund 30,301,501 - Fidelity U.S. Equity Index Commingled Pool Fund 100,620,520 - Fidelity Low Priced Stock Fund 18,848,539 - Fidelity Growth and Income Portfolio 89,016,560 64,067,743 Putnam New Opportunities Fund 31,730,581 - Fidelity Magellan Fund 53,004,254 57,388,300 Fidelity U.S. Equity Index Portfolio 705,452 71,666,187 Fidelity Fund 424,298 17,710,287 Total Mutual Fund 347,358,838 210,832,517 Ingersoll-Rand Company Common Stock Fund 298,646,080 224,848,063 Total investments at current value (cost - $681,640,301 in 1997 and $471,872,442 in 1996) 914,872,299 628,164,903 Participant loans receivable 32,635,258 27,989,253 Net assets available for benefits $947,507,557 $656,154,156 The accompanying notes are an integral part of these financial statements. COMBINED INVESTMENT TRUST STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS At December 31 1997 1996 Additions to net assets: Contributions received $ 61,301,154 $ 51,149,315 Dividends and interest income from investments 34,903,371 31,806,347 Net appreciation of investments 145,451,784 67,604,204 Transfers from other plans 151,939,773 12,582,414 Total additions 393,596,082 163,142,280 Deductions from net assets: Participant withdrawals and distributions 87,845,689 61,649,249 Transfers to other plans 14,396,992 18,605,989 Transfers to other funds, net - - Total deductions 102,242,681 80,255,238 Increase in net assets for the year 291,353,401 82,887,042 Net assets, beginning of year 656,154,156 573,267,114 Net assets, end of year $947,507,557 $656,154,156 The accompanying notes are an integral part of these financial statements. NOTE A - GENERAL DESCRIPTION OF THE COMBINED INVESTMENT TRUST: The Combined Investment Trust (Combined Trust) provides unified investment management of the assets of several plans sponsored by Ingersoll-Rand Company or its subsidiaries. The participants of the individual plans are eligible employees of Ingersoll-Rand Company or its subsidiaries. The Chase Manhattan Bank (Chase) and Coopers & Lybrand LLP are the trustee and recordkeeper, respectively of the Combined Trust. The Combined Trust maintains separate participant accounts by investment fund in units. These accounts record contributions, withdrawals and transfers, and reflect investment earnings and changes in market value. Certain of these plans, namely the I-R/Clark Leveraged Employee Stock Ownership Plan, the Ingersoll-Rand/Thermo King Savings and Stock Investment Plan and the Ingersoll-Rand/Thermo King Retirement Savings Plan of Puerto Rico participate only through investment in the Fixed Income Fund and/or the Ingersoll-Rand Stock Fund of the Combined Trust. NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: The Combined Trust uses the modified cash basis of accounting which in the case of the Combined Trust is substantially the same as accrual basis accounting. Use of Estimates: The preparation of financial statements in accordance with generally accepted accounting principles requires the Benefits Committee to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. Valuation of Investments: The Putnam Guaranteed Horizon Accounts and the Putnam Managed Accounts are recorded at their respective contract value. Contract value equals principal plus cumulative interest earned, reduced by distributions. The Chase Domestic Liquidity Fund contains short-term debt, bank certificates of deposit and collateralized repurchase agreements. The carrying value of these investments is a reasonable estimate of their current value due to the short-term nature of the instruments. Rates of return on the money-market funds vary with the instruments purchased and changes in the short-term interest rates. The financial statements report investments in the Mutual Fund and the Ingersoll-Rand Company common stock at current value based on published market quotations. Security Transactions and Investment Income: Realized gains or losses on security transactions are recorded on the trade date. Realized gains or losses are the difference between the proceeds received and the participant's average unit cost. Dividend income is recorded on the ex-dividend date and interest income is recorded when earned. The statement of changes in net assets includes unrealized appreciation or depreciation in accordance with the policy of stating investments at current value. Appreciation or depreciation of investments reflects both realized gains and losses and the change in unrealized appreciation and depreciation of investments. Contributions and Expenses: The Combined Trust records contributions when received from the participating Plans. It reports disbursements from the participating Plans for participant withdrawals, loans and Plan to Plan transfers when paid. Most expenses for the administration of the participating Plans and the Combined Trust are paid for by the companies. Expenses of the funds related to the investment and reinvestment of assets are included in the cost of the related investments. Reclassifications: Certain prior year amounts have been reclassified to conform to the current year presentation. NOTE C - INVESTMENTS: At December 31, 1997 and 1996, certain assets of the Combined Trust were invested in synthetic investment contracts. The Putnam Guaranteed Horizon Accounts and the Putnam Managed Accounts consist principally of an investment agreement between the Company and Putnam and a wrapper contract with a financially responsible third party which provides liquidity or benefit-responsiveness. The Putnam Guaranteed Horizon Accounts under contract at December 31, 1997 were: Guaranteed Amount Average Yield Rate of Return Maturity Date $33,004,081 5.65% 6.224% November 15, 1999 6,696,946 5.12% 5.440% February 28, 1998 $39,701,027 The Putnam Guaranteed Horizon Accounts under contract at December 31, 1996 were: Guaranteed Amount Average Yield Rate of Return Maturity Date $ 6,742,584 5.78% 5.440% February 15, 1998 24,963,300 5.79% 7.438% December 22, 1997 15,214,111 5.33% 5.930% May 15, 1997 31,806,525 6.09% 6.224% November 15, 1999 $78,726,520 The Putnam Managed Accounts under contract at December 31, 1997 were: Net Crediting Average Interest Amount Yield Rate Maturity Date $100,561,308 6.16% 6.268% None-end upon written notice 36,383,817 6.03% 6.120% None-end upon written notice $136,945,125 The Putnam Managed Account under contract at December 31, 1996 was: Net Crediting Average Interest Amount Yield Rate Maturity Date $93,410,720 6.68% 6.05% None-end upon written notice The net crediting rate for all synthetic investment contracts is reset twice a year, on January 1 and July 1. In no event shall the net crediting rate be reset below 0%. The Chase Domestic Liquidity Fund reported an annualized rate of return as of December 31 of 5.65% in 1997 and 5.30% in 1996. The Metropolitan Life Insurance (MetLife) Stable Income Fund invests in a group annuity contract which is carried at contract value which approximates current value. Interest rates credited to the fund were 6.27% in 1997 and 6.40% in 1996. This contract has no expiration date. The MetLife group annuity contract consists principally of an investment agreement between the Company and MetLife in which MetLife maintains a separate account for the investment of participants' assets in an actively managed institutional bond fund. Net realized gain (loss) on securities sold of the Combined Trust's investments for the years ended December 31, 1997 and 1996 was as follows: 1997 1996 Mutual Fund: Fidelity Fund $ 2,814,917 $ 153,780 Fidelity Growth and Income Portfolio 4,802,439 1,043,544 Fidelity U.S. Equity Index Portfolio 29,744,529 3,323,568 Fidelity Magellan Fund 3,886,631 (686,940) Templeton Foreign Fund 562,003 - Fidelity Contra Fund 212,092 - Fidelity Low Priced Stock Fund 260,284 - Fidelity U.S. Equity Index Commingled Pool Fund 1,839,454 - Putnam Vista Fund 2,947,297 - Putnam New Opportunities Fund 1,158,185 - Total Mutual Fund 48,227,831 3,833,952 Ingersoll-Rand Company Common Stock 19,210,842 19,337,501 Net realized gain $67,438,673 $23,171,453 Net unrealized gain (loss) of the Combined Trust's investments for the years ended December 31, 1997 and 1996 was as follows: 1997 1996 Mutual Fund: Fidelity Fund $(1,828,630) $ 879,945 Fidelity Growth and Income Portfolio 11,628,638 5,628,643 Fidelity U.S. Equity Index Portfolio (24,536,151) 8,075,377 Fidelity Magellan Fund 4,626,863 (2,161,633) Templeton Foreign Fund (739,224) - Fidelity Contra Fund 692,531 - Fidelity Low Priced Stock Fund 1,385,971 - Fidelity U.S. Equity Index Commingled Pool Fund 18,529,445 - Putnam Vista Fund 2,498,783 - Putnam New Opportunities Fund 4,267,874 - Total Mutual Fund 16,526,100 12,422,332 Ingersoll-Rand Company Common Stock 61,487,011 32,010,419 Net unrealized gain $78,013,111 $44,432,751 NOTE D - FEDERAL INCOME TAXES: The Ingersoll-Rand Company Savings and Stock Investment Plan, the Ingersoll-Dresser Pump Company Savings and Investment Plan, the Ingersoll-Rand Company Savings Plan for Bargaining Unit Employees and the I-R/Clark Leveraged Employee Stock Ownership Plan have received favorable determination letters from the Internal Revenue Service, indicating that the plans satisfy the requirements for qualification under Section 401(a) of the Internal Revenue Code. Determination letters are pending for the new I-R/Thermo King Savings Plans. The Combined Trust is exempt from income tax under Section 501(a) of the Internal Revenue Code. Therefore, these financial statements do not provide for income taxes. NOTE E - PARTICIPANT LOANS RECEIVABLE: Participants in certain Plans may borrow from their vested account balances subject to terms defined by the individual Plans. NOTE F - TRANSFERS TO/FROM OTHER PLANS: Effective March 1, 1997, the Ingersoll-Rand Company Hourly Pension Plan (Plan 45) and the Clark Savings and Investment Plan were merged into the Combined Trust, transferring approximately $108 million of assets. Additionally in 1997, approximately $40 million, net, was transferred from the I-R/Clark Leveraged Employee Stock Ownership Plan. Approximately $9 million of investments remaining in 1997 related to the former employees of the Process Systems Group which was sold in 1996, were transferred out of the Combined Trust. In 1996, assets were transferred to the Combined Trust due to the establishment of the Savings Plan for Bargaining Unit Employees on January 1, 1996 and also due to the acquisition of the Steelcraft Division of MascoTech, Inc. In 1996, there were transfers from the Combined Trust to Ingersoll-Rand Company Pension Plan One and the Dresser Industries Savings Plan. Additionally, the assets related to the employees of the Pulp Machinery Division of the Process Systems Group which was sold in 1996, were transferred from the Combined Trust. SCHEDULE I INGERSOLL-RAND COMPANY COMBINED INVESTMENT TRUST ITEM 27A - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES DECEMBER 31, 1997 Shares, Units Description Principal Cost of Current Identity of Issue of Investment Amount Asset Value Guaranteed Investment Contracts: Putnam Guaranteed Horizon Accounts: Contract VI 6.224%; 11/15/99 - $ 33,004,081 $ 33,004,081 Contract IX 5.440%; 2/28/98 - 6,696,946 6,696,946 Putnam Managed Account I 6.268%; no maturity - 100,561,308 100,561,308 Putnam Managed Account II 6.120%; no maturity - 36,383,817 36,383,817 MetLife Insurance Company Group Annuity Contract - 59,125,348 59,125,348 Templeton Foreign Fund Open-end mutual fund 803,588 8,734,920 7,995,696 Fidelity ContraFund Open-end mutual fund 315,493 14,018,906 14,711,437 Putnam Vista Fund Open-end mutual fund 2,552,780 27,802,718 30,301,501 Fidelity U.S. Equity Index Commingled Pool Fund Open-end mutual fund 3,718,423 82,091,076 100,620,520 Fidelity Low Priced Stock Fund Open-end mutual fund 750,041 17,462,568 18,848,539 Fidelity Growth & Income Portfolio Open-end mutual fund 2,336,393 64,309,328 89,016,560 Putnam New Opportunities Fund Open-end mutual fund 652,222 27,462,707 31,730,581 Fidelity Magellan Fund Open-end mutual fund 556,358 43,019,703 53,004,254 Fidelity U.S. Equity Index Portfolio Open-end mutual fund 20,167 489,619 705,452 Fidelity Fund Open-end mutual fund 14,233 365,334 424,298 Ingersoll-Rand Company Common Stock Class A 7,285,963 123,451,463 295,081,502 Chase Domestic Liquidity Fund Money Market Fund 36,660,459 36,660,459 36,660,459 Participant Loans Receivable Due 1/1/97-12/31/02;9% - - 32,635,258 $681,640,301 $947,507,557
SCHEDULE V INGERSOLL-RAND COMPANY COMBINED INVESTMENT TRUST ITEM 27D - SCHEDULE OF REPORTABLE TRANSACTIONS FOR THE YEAR ENDED DECEMBER 31, 1997 (in 000's) Current Expense Value Incurred of Asset on Net Identity of Description Purchase Selling With Cost of Transaction Gain/ Party Involved of Asset Price Price Transaction Asset Date (Loss) Chase Domestic Money Market Liquidity Fund Fund 153,906 - - - 153,906 - Chase Domestic Money Market Liquidity Fund Fund - 139,628 - 139,628 139,628 - Fidelity Growth & Open-end Income Portfolio Mutual Fund 27,490 - - - 27,490 - Fidelity Growth & Open-end Income Portfolio Mutual Fund - 18,436 - 13,634 18,436 4,802 Fidelity Institutional Trust U.S. Equity Open-end Index Mutual Fund 84,694 - - - 84,694 - Fidelity Institutional Trust U.S. Equity Open-end Index Mutual Fund - 1,921 - 1,903 1,921 18 Fidelity Magellan Open-end Fund Mutual Fund 13,540 - - - 13,540 - Fidelity Magellan Open-end Fund Mutual Fund - 26,627 - 22,701 26,627 3,926 Fidelity U.S. Open-end Equity Index Fund Mutual Fund 3,408 - - - 3,408 - Fidelity U.S. Open-end Equity Index Fund Mutual Fund - 79,577 - 49,833 79,577 29,744 I-R Company Common Stock Class A 22,349 - 9 - 22,340 - I-R Company Common Stock Class A - 27,940 13 10,310 27,940 - Putnam Investments GIC Horizon V 7,44%;12/22/97 6,546 - - - 6,546 - Putnam Investments GIC Horizon V 7,44%;12/22/97 - 26,546 - 26,546 26,546 - Putnam New Opportunities Open-end Fund Mutual Fund 31,880 - - - 31,880 - Putnam New Opportunities Open-end Fund Mutual Fund - 5,575 - 4,417 5,575 1,158 Putnam Vista Open-end Fund Mutual Fund 33,546 - - - 33,546 - Putnam Vista Open-end Fund Mutual Fund - 8,691 - 5,744 8,691 2,947
EXHIBIT CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in the Registration Statement on Form S-8 No. 333-42133 of Ingersoll-Rand Company of our report dated June 5, 1998 which appears elsewhere in this Form 11-K. /S/ Price Waterhouse PRICE WATERHOUSE LLP Florham Park, New Jersey June 24, 1998 -----END PRIVACY-ENHANCED MESSAGE-----