-----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, H0POta0r+cWVXxnCIlmUHmnSz9dp4+UcpW8YN461sbCDHMlelrWMcnRhT8AGu8DM a9RPSnDoAD+WhBRVfJuscw== 0000050485-99-000006.txt : 19990629 0000050485-99-000006.hdr.sgml : 19990629 ACCESSION NUMBER: 0000050485-99-000006 CONFORMED SUBMISSION TYPE: 11-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19981231 FILED AS OF DATE: 19990628 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: 99653936 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, 1998 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 pan, if Different from that of the issuer named below: INGERSOLL-RAND COMPANY SAVINGS AND STOCK INVESTMENT PLAN B. Name of the issuer of the securities held pursuant to the plan and the address of its prinicipal executive office: Ingersoll-Rand Company P.O. Box 8738 Woodcliff Lake, New Jersey 07675 REQURIED INFORMATION A. Financial Statements and Schedules Index to Financial Statements Report of Independent Accountants Statements of Finacial Condition at December 31, 1998 and 1997 Statements of Income and Changes in Plan/Fund Equty for the Year Ended December 31, 1998 and 1997 Notes to Financial Statements Schedule I - Item 27a - Schedule of Assets Held For Investment Purposes at December 31, 1998 Schedule V - Item 27d - Schedule of Reportable Transactions for the Year Ended December 31, 1998 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 _______________ By: ___________________________ Donald H. Rice Benefits Committee Chairman INGERSOLL-RAND COMPANY SAVINGS AND STOCK INVESTMENT PLAN INDEX TO FINANCIAL STATEMENTS INDEPENDENT AUDITORS' REPORT 5-6 FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997: Statements of Financial Condition Combined Plan Summary 8 Supplemental Information by Fund: Fixed Income Fund 9 Mutual Fund 10 Ingersoll-Rand Company Stock Fund 11 Loan Fund 12 Statements of Income and Changes in Plan Equity Combined Plan Summary 8 Supplemental Information by Fund: Fixed Income Fund 9 Mutual Fund 10 Ingersoll-Rand Company Stock Fund 11 Loan Fund 12 Notes to Financial Statements 14-32 SUPPLEMENTAL SCHEDULES (Combined Investment Trust): Schedule I - Item 27a - Schedule of Assets Held for Investment Purposes at December 31, 1998 33-34 Schedule V - Item 27d - Schedule of Reportable Transactions for the year ended December 31, 1998 35-36 Other schedules required by Section 2520.103-10 of the DOL Rules and Regulations for Reporting and Disclosure under ERISA have been omitted because they are not applicable. INDEPENDENT AUDITORS' REPORT To the Ingersoll-Rand Company Benefits Committee and Participants in the Ingersoll-Rand Company Savings and Stock Investment Plan Woodcliff Lake, New Jersey We have audited the accompanying statement of financial condition of the Ingersoll-Rand Company Savings and Stock Investment Plan as of December 31, 1998 and the related statement of income and changes in plan equity for the year then ended. These financial statements are the responsibility of the Ingersoll-Rand Company Benefits Committee (the "Benefits Committee"). Our responsibility is to express an opinion on these financial statements based on our audit. The financial statements of the Ingersoll-Rand Company Savings and Stock Investment Plan for the year ended December 31, 1997 were audited by other auditors whose report, dated June 5, 1998, expressed an unqualified opinion on those statements. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the Benefits Committee, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, such 1998 financial statements present fairly, in all material respects, the financial condition of the Plan as of December 31, 1998 and the income and changes in plan equity for the year then ended in conformity with generally accepted accounting principles. Our audit was conducted for the purpose of forming an opinion on the basic 1998 financial statements taken as a whole. The supplemental schedules listed in the Table of Contents are presented for the purpose of additional analysis and are not a required part of the basic financial statements, but are supplementary information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. The supplemental information by fund in the statements of financial condition and the statements of changes in fund equity is presented for the purpose of additional analysis rather than to present the financial condition and changes in fund equity of the individual funds. The supplemental schedules and supplemental information by fund is the responsibility of the Benefits Committee. Such supplemental schedules and supplemental information by fund have been subjected to the auditing procedures applied in our audit of the basic 1998 financial statements and, in our opinion, are fairly stated in all material respects when considered in relation to the basic 1998 financial statements taken as a whole. /S/ Deloitte & Touche DELOITTE & TOUCHE LLP Florham Park, New Jersey June 20, 1999 INGERSOLL-RAND COMPANY SAVINGS AND STOCK INVESTMENT PLAN FINANCIAL STATEMENTS * * * * * * DECEMBER 31, 1998 AND 1997 INGERSOLL-RAND COMPANY SAVINGS AND STOCK INVESTMENT PLAN COMBINED PLAN SUMMARY STATEMENTS OF FINANCIAL CONDITION At December 31, 1998 1997 Assets: Investments at current value - Combined Trust Fixed Income Fund $ 226,002,416 $207,301,167 Combined Trust Mutual Fund 355,707,045 297,485,385 Combined Trust Ingersoll-Rand Company Stock Fund 294,035,795 279,232,315 875,745,256 784,018,867 Participant loans receivable 27,689,595 29,593,236 Contributions receivable 3,991,733 3,641,479 Due from merged Plan 31,987,570 - Total assets 939,414,154 817,253,582 Plan equity $ 939,414,154 $817,253,582 STATEMENTS OF INCOME AND CHANGES IN PLAN EQUITY For the years ended December 31, 1998 1997 Contributions: Participants $ 51,206,693 $ 48,958,935 Investment income: Dividends 18,022,005 15,748,925 Interest 15,578,911 13,935,929 Net appreciation of investments 103,899,604 127,336,002 Net investment income 137,500,520 157,020,856 Total additions 188,707,213 205,979,791 Participant withdrawals and distributions 97,447,697 69,382,379 Net increase prior to transfers 91,259,516 136,597,412 Transfers (to) from other funds, net (480,632) 75,161 Transfers from other plans, net 31,381,688 147,429,670 Net increase in plan equity 122,160,572 284,102,243 Plan equity at beginning of year 817,253,582 533,151,339 Plan equity at end of year $ 939,414,154 $817,253,582 See notes to the financial statements. INGERSOLL-RAND COMPANY SAVINGS AND STOCK INVESTMENT PLAN SUPPLEMENTAL INFORMATION BY FUND FIXED INCOME FUND STATEMENTS OF FINANCIAL CONDITION For the years ended December 31, 1998 1997 Assets: Investments at current value - Combined Trust Fixed Income Fund $ 226,002,416 $207,301,167 Contribution receivable 1,257,209 1,203,008 Due from merged Plan 14,601,325 - Total assets 241,860,950 208,504,175 Fund equity $ 241,860,950 $208,504,175 STATEMENTS OF INCOME AND CHANGES IN FUND EQUITY For the years ended December 31, 1998 1997 Contributions: Participants $ 15,503,969 $ 17,385,533 Investment income: Interest 13,241,170 11,766,892 Net investment income 13,241,170 11,766,892 Total additions 28,745,139 29,152,425 Participant withdrawals and distributions 36,034,892 28,652,944 Net (decrease) increase prior to transfers (7,289,753) 499,481 Transfers from (to) other funds, net 26,054,326 (12,938,145) Transfers from other plans, net 14,592,202 79,700,542 Net increase in fund equity 33,356,775 67,261,878 Fund equity at beginning of year 208,504,175 141,242,297 Fund equity at end of year $ 241,860,950 $208,504,175 See notes to the financial statements. INGERSOLL-RAND COMPANY SAVINGS AND STOCK INVESTMENT PLAN SUPPLEMENTAL INFORMATION BY FUND MUTUAL FUND STATEMENTS OF FINANCIAL CONDITION At December 31, 1998 1997 Assets: Investments at current value - Combined Trust Mutual Fund $ 355,707,045 $297,485,385 Contribution receivable 2,204,643 1,988,616 Due from merged Plan 17,109,390 - Total assets 375,021,078 299,474,001 Fund equity $ 375,021,078 $299,474,001 STATEMENTS OF INCOME AND CHANGES IN FUND EQUITY For the years ended December 31, 1998 1997 Contributions: Participants $ 28,880,868 $ 25,998,175 Investment income: Dividends 14,129,543 11,837,276 Net appreciation of investments 60,281,031 51,883,324 Net investment income 74,410,574 63,720,600 Total additions 103,291,442 89,718,775 Participant withdrawals and distributions 31,456,280 20,427,493 Net increase prior to transfers 71,835,162 69,291,282 Transfers (to) from other funds, ne t (13,092,655) 8,695,034 Transfers from other plans, net 16,804,570 59,731,125 Net increase in fund equity 75,547,077 137,717,441 Fund equity at beginning of year 299,474,001 161,756,560 Fund equity at end of year $ 375,021,078 $299,474,001 See notes to the financial statements. INGERSOLL-RAND COMPANY SAVINGS AND STOCK INVESTMENT PLAN SUPPLEMENTAL INFORMATION BY FUND COMPANY STOCK FUND STATEMENTS OF FINANCIAL CONDITION At December 31, 1998 1997 Assets: Investments at current value - Combined Trust Ingersoll-Rand Company Stock Fund $ 294,035,795 $279,232,315 Contribution receivable 529,881 449,855 Due from merged Plan 276,855 - Total assets 294,842,531 279,682,170 Fund equity $ 294,842,531 $279,682,170 STATEMENTS OF INCOME AND CHANGES IN FUND EQUITY For the years ended December 31, 1998 1997 Contributions: Participants $ 6,821,856 $ 5,575,227 Investment income: Dividends 3,892,462 3,911,649 Net appreciation of investments 43,618,573 75,452,678 Net investment income 47,511,035 79,364,327 Total additions 54,332,891 84,939,554 Participant withdrawals and distributions 28,314,520 19,084,567 Net increase prior to transfers 26,018,371 65,854,987 Transfers (to) from other funds, net (10,964,486) 4,505,992 Transfers from other plans, net 106,476 4,181,923 Net increase in fund equity 15,160,361 74,542,902 Fund equity at beginning of year 279,682,170 205,139,268 Fund equity at end of year $ 294,842,531 $279,682,170 See notes to the financial statements. INGERSOLL-RAND COMPANY SAVINGS AND STOCK INVESTMENT PLAN SUPPLEMENTAL INFORMATION BY FUND LOAN FUND STATEMENTS OF FINANCIAL CONDITION At December 31, 1998 1997 Assets: Participant loans receivable $ 27,689,595 $ 29,593,236 Plan equity $ 27,689,595 $ 29,593,236 STATEMENTS OF INCOME AND CHANGES IN FUND EQUITY For the years ended December 31, 1998 1997 Transfers from other funds for loans $ 12,769,065 $ 14,223,700 Interest income from loans 2,337,741 2,169,037 Total additions 15,106,806 16,392,737 Participant distributions 1,642,005 1,217,375 Net increase prior to transfers 13,464,801 15,175,362 Transfers to other funds for repayments (15,246,882) (14,411,420) Transfers (to) from other plans, net (121,560) 3,816,080 Net (decrease) increase in fund equity (1,903,641) 4,580,022 Fund equity at beginning of year 29,593,236 25,013,214 Fund equity at end of year $ 27,689,595 $ 29,593,236 See notes to the financial statements. INGERSOLL-RAND COMPANY SAVINGS AND STOCK INVESTMENT PLAN NOTES TO FINANCIAL STATEMENTS 1. PLAN DESCRIPTION The following brief description of the Ingersoll-Rand Company Savings and Stock Investment Plan (the "Plan") provides only general information. Participants should refer to the Plan Document for a more complete description of the Plan's provisions. General - Ingersoll-Rand Company (the "Company") adopted the Plan for eligible employees at participating locations. Eligible employees may participate in the Plan on the first day of the month following 30 calendar days of employment. The Chase Manhattan Bank ("Chase") and PricewaterhouseCoopers are the trustee and recordkeeper of the Plan, respectively. The Benefits Committee, which is appointed by the Company's Board of Directors (or its delegate), administers the plan. The Finance Committee of the Company's Board of Directors establishes the Plan's investment policies. The Company intends to continue the Plan indefinitely. However, the Company retains the right to discontinue the Plan. If the Company discontinues the Plan, all participant account balances become fully vested at the termination date. Contributions - Participants may contribute as basic contributions one to six percent (in whole percentages) of their compensation through payroll deductions. Participants contributing six percent of compensation may contribute an additional one to ten percent of compensation as supplemental contributions. 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 Company contributes to the Plan via a matching contribution and a Company retirement contribution. The Company matches basic contributions at a rate determined by the Company's Board of Directors. The Plan requires that Company matching contributions be at least 25 percent, but no more than 100 percent of participants' basic contributions. For 1998 and 1997, the Company matching contribution was set at 50 percent of 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 by the Plan. Effective October 1, 1995, for Company matching contributions, and effective March 1, 1996, for Company retirement contributions, the Plan was amended to provide for an offset to the Company contributions under the Plan with an equivalent benefit to the Plan participants under the Ingersoll-Rand/Clark Leveraged Employee Stock Ownership Plan (LESOP), a participating plan in the Ingersoll-Rand Company Combined Investment Trust (the "Combined Trust"). Amounts accrued under the Plan prior to the effective dates of these amendments remain in the Plan unaffected. Participant contributions are always 100 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 a participant's employment terminates due to disability, retirement or death. Investment Options - The Plan assets are held in the Combined Trust, together with assets from other participating Plans. Participants may invest their contributions, in multiples of one percent, in one or more of the following funds: Fixed Income Fund - A fund that invests in securities that produce a fixed rate of return. Investments may include United States government securities, corporate bonds, notes, debentures, convertible securities, preferred stocks, investment funds or investment contracts. Mutual Fund - Prior to March 1, 1997, participants could select from the following mutual funds: Fidelity Fund, Fidelity Growth and Income Portfolio, Fidelity U.S. Equity Index Portfolio, and Fidelity Magellan Fund. After March 1, 1997, participants were able to select from the following mutual funds: Fidelity Growth and Income Portfolio, Fidelity Magellan Fund, Templeton Foreign Fund, Fidelity Contra Fund, Fidelity Low-Priced Stock Fund, Fidelity U.S. Equity Index Commingled Pool Fund (formerly known as the Fidelity Institutional S&P 500 Index), Putnam Vista Fund and Putnam New Opportunities Fund. Each fund consists of a portfolio of common stocks or other securities based on the fund's investment objective. Prospectuses are available from the respective fund's management company. Ingersoll-Rand Company Stock Fund - A fund consisting primarily of the Company's Common Stock. Prior to December 1, 1998, this fund limited a participant's investment to 50% of current contributions or account balance on transfers. Effective December 1, 1998, participants are permitted to invest up to 100% of current contributions or account balance on transfers into this fund. Each fund reinvests its income in that fund. On any business day, participants may change their allocation of future contributions and transfer prior contributions between funds. Transfers of prior contributions must be made in whole percentages. Participants have several options that permit access to their contributions, earnings, and certain vested Company contributions. These options are subject to certain rules and restrictions. Distributions and Withdrawals - Plan distributions may be in the form of a lump sum or in such other manner that the Benefits Committee may permit. In addition, effective December 1, 1998, Plan participants who separate from service may elect distributions of at least $500 on a daily basis. Participants' accounts are kept in units and are valued on a daily basis. At December 31, 1998 and 1997, the number of participants with balances in the Plan approximated 23,500 and 18,200, respectively. The number of participants contributing to each of the Plan's funds at December 31, 1998, were approximately: Fixed Income Fund 8,700 Mutual Fund: Fidelity Growth and Income Portfolio 5,400 Fidelity Magellan Fund 3,900 Templeton Foreign Fund 1,100 Fidelity Contra Fund 1,800 Fidelity Low Priced Stock Fund 1,800 Fidelity U.S. Equity Index Commingled Pool Fund 4,300 Putnam Vista Fund 2,200 Putnam New Opportunities Fund 3,100 Ingersoll-Rand Company Stock Fund 5,200 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation - The Plan follows the accrual method of accounting. Use of Estimates - The preparation of financial statements in conformity with generally accepted accounting principles requires the Benefits Committee to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. Valuation of Investments - Plan assets are part of the Combined Trust, which provides unified investment management. Chase invests the Plan assets in the various Combined Trust investment funds. Separate participant accounts are maintained by investment fund. These accounts record contributions, withdrawals, transfers, earnings and changes in market value. The Putnam Guaranteed Horizon Accounts and the Putnam Managed Accounts are recorded at their respective contract values. Contract value equals principal plus cumulative interest earned, reduced by distributions. The Chase Domestic Liquidity Fund contains short-term debt, bank certificates of deposit and collateralized repurchase agreements. The carrying value of these investments is a reasonable estimate of their current value due to the short-term nature of the instruments. Rates of return on the money-market funds vary with the instruments purchased and changes in short-term interest rates. The financial statements report investments in the Mutual Funds and the Ingersoll-Rand Company Common Stock Fund at current value based on published market quotations. Security Transactions and Investment Income - Realized gains or losses on security transactions are recorded on the trade date. Realized gains or losses are the difference between the proceeds received and the participant's average unit cost. Dividend income is recorded on the ex-dividend date and interest income is recorded when earned. The statement of income and changes in plan equity includes unrealized appreciation or depreciation in accordance with the policy of stating investments at current value. Appreciation or depreciation of investments reflects both realized gains and losses and the change in unrealized appreciation and depreciation of investments. Contributions - Participant and Company matching contributions are contributed to the Combined Trust or the LESOP trust, as applicable, on a monthly basis. Participant contributions for each fund are based on the participants' investment decisions. Company retirement contributions are contributed to the Combined Trust or the LESOP after the end of each month or annually, as outlined in the Plan. The Company matching and retirement contributions may be made to the Combined Trust or LESOP in cash or Company stock. Forfeitures - Forfeitures of nonvested Company contributions occur when participants are terminated. Forfeitures of $195,011 in 1998 and $587,084 in 1997 were or will be used to reduce future Company contributions. Expenses of the Plan - Most expenses associated with the administration of the Plan and the Combined Trust are paid for by the Company. Expenses of the funds related to the investment and reinvestment of assets are included in the cost of the related investments. Benefit Obligations - Distributions to terminated employees are recorded in each fund's financial statements when paid. The approved and unpaid amounts were $3,295,148 and $2,850,775 at December 31, 1998 and 1997, respectively. These amounts will be reflected as liabilities on the Plan's Form 5500 in accordance with Department of Labor Regulations. 3. FIXED INCOME FUND Investments in the Fixed Income Fund at December 31 were as follows: 1998 1997 Putnam Guaranteed Horizon Accounts $ 33,833,943 $ 39,701,027 Putnam Managed Accounts 140,431,941 136,945,125 Chase Domestic Liquidity Fund 29,793,375 33,095,881 MetLife Stable Income Fund 73,037,033 59,125,348 PIMCO Stable Value Fund 71,797,545 - Total Combined Trust Fixed Income Fund 348,893,837 268,867,381 Less: Other plans 122,891,421 61,566,214 Plan investment in Fixed Income Fund $226,002,416 $207,301,167 4. MUTUAL FUND Investments in the Mutual Fund at December 31 were as follows: 1998 1997 Fidelity Fund $ 714,058 $ 424,298 Fidelity Growth and Income Portfolio 115,129,445 89,016,560 Fidelity U.S. Equity Index Portfolio 1,078,526 705,452 Fidelity Magellan Fund 69,122,106 53,004,254 Templeton Foreign Fund 6,921,974 7,995,696 Fidelity Contra Fund 21,322,115 14,711,437 Fidelity Low Priced Stock Fund 17,601,769 18,848,539 Fidelity U.S. Equity Index Commingled Pool Fund 117,107,351 100,620,520 Putnam Vista Fund 32,992,446 30,301,501 Putnam New Opportunities Fund 41,152,100 31,730,581 Total Combined Trust Mutual Fund 423,141,890 347,358,838 Less: Other plans 67,434,845 49,873,453 Plan investment in Mutual Fund $355,707,045 $297,485,385 Net realized and unrealized appreciation (depreciation) of investments for the years ended December 31 were as follows: 1998 1997 Fidelity Fund $ 115,703 $ 986,287 Fidelity Growth and Income Portfolio 19,284,047 16,431,077 Fidelity U.S. Equity Index Portfolio 212,894 5,208,378 Fidelity Magellan Fund 14,089,078 8,513,494 Templeton Foreign Fund (1,211,980) (177,221) Fidelity Contra Fund 3,207,213 904,623 Fidelity Low Priced Stock Fund (1,631,387) 1,646,255 Fidelity U.S. Equity Index Commingled Pool Fund 27,532,736 20,368,899 Putnam Vista Fund 3,168,970 5,446,080 Putnam New Opportunities Fund 6,397,092 5,426,059 Total Combined Trust Mutual Fund 71,164,366 64,753,931 Less: Other plans 10,883,335 12,870,607 Net Plan appreciation $ 60,281,031 $ 51,883,324 5. INGERSOLL-RAND COMPANY STOCK FUND Investments in the Ingersoll-Rand Company Stock Fund at December 31 were as follows: 1998 1997 Ingersoll-Rand Company Common Stock $319,997,731 $295,081,502 Chase Domestic Liquidity Fund 1,594,830 3,564,578 Total Combined Trust Ingersoll-Rand Company Stock Fund 321,592,561 298,646,080 Less: Other plans 27,556,766 19,413,765 Plan investment in Ingersoll-Rand Company Stock Fund $294,035,795 $279,232,315 Net realized and unrealized appreciation of investments for the years ended December 31 were as follows: 1998 1997 Total Combined Trust Ingersoll-Rand Company Stock Fund $ 47,184,264 $80,697,853 Less: Other plans 3,565,691 5,245,175 Net Plan appreciation $ 43,618,573 $ 75,452,678 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, 1998 and 1997 was 7,932 and 8,363, respectively. The Benefits Committee establishes the loan interest rate and reviews the rate quarterly. The loan rate may be adjusted each quarter in order to reflect the current prime rate. The interest rate on new loans during 1998 and 1997 was 9%. Interest charges begin 60 days after the initial loan date. Loans are repaid in equal installments through payroll deductions over a maximum of five years. Loan repayments consist of interest and principal, and are reinvested according to the participant's current investment elections. If a participant terminates employment with the Company, any outstanding loan balance is considered a distribution. 7. TAX STATUS The Plan is intended to be qualified under Code Section 401(a) of the Internal Revenue Code of 1986 (the "Code") and is intended to be exempt from taxation under Section 501(a) of the Code. The Plan received a favorable IRS determination letter dated May 16, 1997. The Plan has been amended since receiving the determination letter. However, the Plan administrator believes that the Plan is currently designed and being operated in compliance with the applicable requirements of the Code. Therefore, no provision for income taxes has been included in the Plan's financial statements. 8. TRANSFERS TO/FROM OTHER PLANS Effective December 31, 1998, the LCN Closers Employees' Profit Sharing Plan (LCN) was merged into the Plan. During January, 1999, the existing participant balances in the LCN Plan were transferred to the investment options available in the Ingersoll-Rand Company Savings and Stock Investment Plan that were elected by each participant during December, 1998. 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. Existing participant balances in these plans were transferred to the investment options available in the Plan that were elected by each participant. 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 additional asset transfers from the Plan. In 1997, there were also transfers to (from) the Plan resulting from the transfer of Ingersoll-Dresser Pump Company and Dresser Industries employees. 9. COMBINED INVESTMENT TRUST FINANCIAL INFORMATION At December 31, 1998 and 1997, the Plan had an 80% and 85% 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 is substantially the same as the accrual basis of accounting. The financial statements with explanatory footnotes for the years ended December 31, 1998 and 1997 follow. COMBINED INVESTMENT TRUST STATEMENTS OF NET ASSETS At December 31 1998 1997 Investments: Fixed Income Fund - Putnam Guaranteed Horizon Accounts$ 33,833,943 $ 39,701,027 Chase Domestic Liquidity Fund 29,793,375 33,095,881 Putnam Managed Accounts 140,431,941 136,945,125 Metlife Stable Income Fund 73,037,033 59,125,348 PIMCO Stable Value Fund 71,797,545 - Total Fixed Income Fund 348,893,837 268,867,381 Mutual Fund - Fidelity Fund 714,057 424,298 Fidelity Growth and Income Portfolio 115,129,445 89,016,560 Fidelity U.S. Equity Index Portfolio 1,078,526 705,452 Fidelity Magellan Fund 69,122,106 53,004,254 Templeton Foreign Fund 6,921,974 7,995,696 Fidelity Contra Fund 21,322,115 14,711,437 Fidelity Low Priced Stock Fund 17,601,769 18,848,539 Fidelity U.S. Equity Index Commingled Pool Fund 117,107,351 100,620,520 Putnam Vista Fund 32,992,446 30,301,501 Putnam New Opportunities Fund 41,152,101 31,730,581 Total Mutual Fund 423,141,890 347,358,838 Ingersoll-Rand Company Common Stock Fund 321,592,561 298,646,080 Total investments at current value (cost $791,758,503 in 1998 and $681,640,301 in 1997) 1,093,628,288 914,872,299 Participant loans receivable 35,806,555 32,635,258 $ 1,129,434,843 $947,507,557 COMBINED INVESTMENT TRUST STATEMENTS OF CHANGES IN NET ASSETS For the years ended December 31 1998 1997 Additions to net assets: Contributions received $ 62,650,395 $ 61,301,154 Dividends and interest income from investments 42,039,999 34,903,371 Net appreciation of investments 118,348,630 145,451,784 Total additions 223,039,024 241,656,309 Participant withdrawals and distributions 99,491,491 87,845,689 Net increase prior to transfers 123,547,533 153,810,620 Transfers from other plans, net 58,379,753 137,542,781 Increase in net assets for the year 181,927,286 291,353,401 Net assets, beginning of year 947,507,557 656,154,156 Net assets, end of year $ 1,129,434,843 $947,507,557 NOTE A - TRUST DESCRIPTION The Combined Investment Trust (the "Combined Trust") provides unified investment management of the assets of several plans sponsored by Ingersoll-Rand Company and certain of its subsidiaries (collectively the "Companies"). The plans include the Ingersoll-Rand Company Savings Plan for Bargaining Unit Employees, the Ingersoll-Dresser Pump Company Savings and Investment Plan, the Ingersoll-Rand Company Savings and Stock Investment Plan, the I-R/Clark Leveraged Employee Stock Ownership Plan, the Ingersoll-Rand/Thermo King Savings and Stock Investment Plan and the Ingersoll-Rand/Thermo King Retirement Savings Plan of Puerto Rico. The participants of the individual plans are eligible employees of the Companies. The Chase Manhattan Bank ("Chase") and PricewaterhouseCoopers are the trustee and recordkeeper of the Combined Trust, respectively. The Combined Trust maintains separate participant accounts by investment fund 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 in the Combined Trust only through investment in the Fixed Income Fund and/or the Ingersoll-Rand Company Stock Fund of the Combined Trust. NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation - The Combined Trust uses the modified cash basis of accounting which is substantially the same as the accrual basis of accounting. Use of Estimates - The preparation of financial statements in conformity with generally accepted accounting principles requires the Benefits Committee to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. Valuation of Investments - The Putnam Guaranteed Horizon Accounts and the Putnam Managed Accounts are recorded at their respective contract values. Contract value equals principal plus cumulative interest earned, reduced by distributions. The Chase Domestic Liquidity Fund contains short-term debt, bank certificates of deposit and collateralized repurchase agreements. The carrying value of these investments is a reasonable estimate of their current value due to the short-term nature of the instruments. Rates of return on the money-market funds vary with the instruments purchased and changes in short-term interest rates. The financial statements report investments in the Mutual Funds (defined in Note C) and the Ingersoll-Rand Company Common Stock Fund at current value based on published market quotations. Security Transactions and Investment Income - Realized gains or losses on security transactions are recorded on the trade date. Realized gains or losses are the difference between the proceeds received and the participant's average unit cost. Dividend income is recorded on the ex-dividend date and interest income is recorded when earned. The statement of changes in net assets includes unrealized appreciation or depreciation in accordance with the policy of stating investments at current value. Appreciation or depreciation of investments reflects both realized gains and losses and the change in unrealized appreciation and depreciation of investments. Contributions and Expenses - The Combined Trust records contributions when received from the participating Plans. It reports disbursements from the participating Plans for participant withdrawals, loans and Plan to Plan transfers when paid. Most expenses for the administration of the participating Plans and the Combined Trust are paid for by the Companies. Expenses of the funds related to the investment and reinvestment of assets are included in the cost of the related investments. NOTE C - INVESTMENTS At December 31, 1998 and 1997, 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, 1998 were: Average Guaranteed Rate Maturity Amount Yield of Return Date $33,833,943 4.59% 6.224% November 15, 1999 The Putnam Guaranteed Horizon Accounts under contract at December 31, 1997 were: Average Guaranteed Rate Maturity Amount Yield of Return 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 Managed Accounts under contract at December 31, 1998 were: Average Guaranteed Rate Maturity Amount Yield of Return Date $ 105,713,723 5.54% 6.373% None - end upon written notice 34,718,218 5.36 6.09 None - end upon written notice $ 140,431,941 The Putnam Managed Accounts under contract at December 31, 1997 were: Average Guaranteed Rate Maturity Amount Yield of Return 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 net crediting rate for all synthetic investment contracts is reset twice a year, on January 1 and July 1. In no event is the net crediting rate reset below 0%. The Chase Domestic Liquidity Fund reported an annualized rate of return as of December 31 of 5.42% in 1998 and 5.65% in 1997. The Metropolitan Life Insurance (MetLife) Stable Income Fund invests in a group annuity contract which is carried at contract value, an approximation of current value. Interest rates credited to the fund were 6.33% from January 1, 1998 through May 31, 1998; 6.14% from June 1, 1998 through December 31, 1998; and 6.27% in 1997. This contract has no expiration date. The MetLife group annuity contract consists principally of an investment agreement between the Company and MetLife in which MetLife maintains a separate account for the investment of participants' assets in an actively managed institutional bond fund. The PIMCO Stable Value Fund was purchased by the Plan on August 3, 1998. The fund is comprised of a separate account fixed income portfolio actively managed by PIMCO and a book value wrap contract issued by AIG Financial Products. The book value wrap contract allows for the portfolio to be carried at contract value, which equals net deposits plus credited interest. The contract has no expiration date. Interest rates credited to the fund were 6.31% from August 3, 1998 through September 30, 1998 and 6.18% from October 1, 1998 through December 31, 1998. The total cost of the Combined Trust Mutual Fund was $308,807,364 and $285,756,879 at December 31, 1998 and 1997, respectively. The Company Stock Fund investment in Ingersoll-Rand Company common stock at December 31, 1998 and 1997, included 6,817,526 shares and 7,285,963 shares, respectively. At December 31, 1998 and 1997, the average cost of these shares was $132,462,472 and $123,451,463, respectively. Net realized gain (loss) on securities sold of the Combined Trust's investments for the years ended December 31 was as follows: 1998 1997 Mutual Fund: Fidelity Fund $ 6,051 $ 2,814,917 Fidelity Growth and Income Portfolio 6,509,327 4,802,439 Fidelity U.S. Equity Index Portfolio 48,428 29,744,529 Fidelity Magellan Fund 3,114,960 3,886,631 Templeton Foreign Fund (365,827) 562,003 Fidelity Contra Fund 442,112 212,092 Fidelity Low Priced Stock Fund 119,790 260,284 Fidelity U.S. Equity Index Commingled Pool Fund 6,369,851 1,839,454 Putnam Vista Fund 1,070,041 2,947,297 Putnam New Opportunities Fund 1,117,066 1,158,185 Total Mutual Fund 18,431,799 48,227,831 Ingersoll-Rand Company Common Stock 31,279,147 19,210,842 Net realized gain $49,710,946 $67,438,673 Net unrealized gain (loss) of the Combined Trust's investments for the years ended December 31 was as follows: 1998 1997 Mutual Fund: Fidelity Fund $ 109,653 $(1,828,630) Fidelity Growth and Income Portfolio 12,774,721 11,628,638 Fidelity U.S. Equity Index Portfolio 164,466 (24,536,151) Fidelity Magellan Fund 10,974,118 4,626,863 Templeton Foreign Fund (846,153) (739,224) Fidelity Contra Fund 2,765,101 692,531 Fidelity Low Priced Stock Fund (1,751,178) 1,385,971 Fidelity U.S. Equity Index Commingled Pool Fund 21,162,885 18,529,445 Putnam Vista Fund 2,098,929 2,498,783 Putnam New Opportunities Fund 5,280,025 4,267,874 Total Mutual Fund 52,732,567 16,526,100 Ingersoll-Rand Company Common Stock 15,905,117 61,487,011 Net unrealized gain $68,637,684 $78,013,111 NOTE D - TAX STATUS The Ingersoll-Rand Company Savings Plan for Bargaining Unit Employees, the Ingersoll-Dresser Pump Company Savings and Investment Plan, the Ingersoll-Rand Company Savings and Stock Investment Plan, and the I-R/Clark Leveraged Employee Stock Ownership Plan are intended to be qualified under Code Section 401(a) of the Internal Revenue Code of 1986 (the "Code") and are intended to be exempt from taxation under Section 501(a) of the Code. Each Plan has received a favorable determination letter from the Internal Revenue Service. Determination letters for the Ingersoll-Rand/Thermo King Savings and Stock Investment Plan and the Ingersoll-Rand/Thermo King Retirement Savings Plan of Puerto Rico were filed in December, 1998. A favorable determination on these letters from the Internal Revenue Service is pending. The Plan administrator believes that the Plans are currently designed and being operated in compliance with the applicable requirements of the Code. Therefore, no provision for income taxes has been included in the Trust's financial statements. 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 December 31, 1998, the assets of the LCN Closers Employees' Profit Sharing Plan (LCN) were merged into the Combined Trust. During January, 1999, the existing participant balances in the LCN Plan were transferred to the investment options available in the Ingersoll-Rand Company Savings and Stock Investment Plan that were elected by each participant during December, 1998. Effective March 1, 1997, the assets of the Ingersoll-Rand Company Hourly Pension Plan (Plan 45) and the Clark Savings and Investment Plan were transferred into the Combined Trust. Additionally in 1997, approximately $40 million, net, was transferred from the I-R/ Clark Leveraged Employee Stock Ownership Plan. Additional investments related to the former employees of the Process Systems Group, which was sold in 1996, were transferred from the Combined Trust in 1997. There were also transfers from the Combined Trust to Ingersoll-Rand Company Pension Plan One and the Dresser Industries Savings Plan. ****** INGERSOLL-RAND COMPANY COMBINED INVESTMENT TRUST SCHEDULE I ITEM 27A- SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES YEAR ENDED DECEMBER 31, 1998 Identity of Issue Description of Shares, Units Cost of Current Investment Principal Amount Asset Value Guaranteed Investment Contracts: Putnam Guaranteed Horizon Accounts: Contract VI 6.224%; 11/15/99 - 33,833,943 33,833,943 Putnam Managed Account I 6.090%; no maturity - 34,718,218 34,718,218 Putnam Managed Account II 6.373%; no maturity - 105,713,723 105,713,723 Metropolitan Life Group Annuity Contract - 73,037,033 73,037,033 Insurance Company PIMCO Stable Value Group Annuity Contract - 71,797,545 71,797,545 Contract Templeton Foreign Fund Open-end mutual fund 825,027 8,507,351 6,921,974 Fidelity Contrafund Open-end mutual fund 375,455 17,864,483 21,322,115 Putnam Vista Fund Open-end mutual fund 2,524,288 28,394,735 32,992,446 Fidelity U.S. Equity Open-end mutual fund 3,361,290 77,415,022 117,107,351 Index Commingled Pool Fund Fidelity Low Priced Stock Open-end mutual fund 770,318 17,966,975 17,601,769 Fund Fidelity Growth and Open-end mutual fund 2,511,550 77,647,493 115,129,445 Income Portfolio Putnam New Opportunities Open-end mutual fund 704,297 31,604,202 41,152,101 Fund Fidelity Magellan Fund Open-end mutual fund 572,108 48,163,436 69,122,106 Fidelity U.S. Equity Open-end mutual fund 24,534 698,226 1,078,526 Index Portfolio Fidelity Fund Open-end mutual fund 19,462 545,441 714,057 Ingersoll-Rand Company Class A 6,817,526 132,462,472 319,997,731 Common Stock Chase Domestic Liquidity Money Market Fund 31,388,205 31,388,205 31,388,205 Fund Participant Loans Due 1/1/98 - 12/31/03; - 35,806,555 35,806,555 Receivable 6%-9% TOTAL INVESTMENTS 827,565,058 1,129,434,843
INGERSOLL-RAND COMPANY COMBINED INVESTMENT TRUST SCHEDULE V ITEM 27D - SCHEDULE OF REPORTABLE TRANSACTIONS YEAR ENDED DECEMBER 31, 1998 Identity of Description of Purchase Selling Expense Cost of Current Net Gain / Party Involved Asset Price Price Incurred Asset Value Of (Loss) With Asset on Transaction Transaction Date Single Transactions: Chase Domestic Money Market Liquidity Fund Fund $49,163,946 $ - $ - $ - $ 49,163,946 $ - Chase Domestic Money Market Liquidity Fund Fund - 70,205,491 - 70,205,491 70,205,491 - PIMCO Stable Group Annuity Value Fund Contract 70,000 - - - 70,000 - Series of Transactions: Chase Domestic Money Market Liquidity Fund Fund 197,521,827 - - - 197,521,827 - Chase Domestic Money Market Liquidity Fund Fund - 202,794,080 - 202,794,080 202,794,080 - Fidelity Growth and Income Portfolio Open-end Mutual Fund 28,827,316 - - - 202,827,316 - Fidelity Growth and Income Portfolio Open-end Mutual Fund - 15,489,149 - 21,998,477 15,489,149 6,509,328 Ingersoll-Rand Company Common Stock Class A 21,912,363 - 15,138 - 21,897,225 - Ingersoll-Rand Company Common Stock Class A - 10,473,011 18,012 36,099,523 10,473,011 25,608,500 PIMCO Stable Value Contract Group Annuity Contract 70,345,870 - - - 70,345,870 -
EXHIBIT INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference in the Registration Statement on Form S-8 No. 333-42133 of Ingersoll-Rand Company of our report dated June 20, 1999 which appears elsewhere in this Form 11-K. /S/ Deloitte & Touche DELOITTE & TOUCHE LLP Parsippany, New Jersey June 24, 1999 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 relating to the financial statements, which appears in this Form 11-K. /s/PricewaterhouseCoopers LLP PRICEWATERHOUSECOOPERS LLP Florham Park, New Jersey June 24, 1999 -----END PRIVACY-ENHANCED MESSAGE-----