Ingersoll Rand
Sanford Bernstein
Strategic Decisions Conference 2007
Safe Harbor
Today’s presentation includes forward
looking statements that involve risks.
Please refer to Form 10Q for the year
ending March 31, 2007 for details on
factors that may influence results.
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Strong Foundation for the Future
Diversified business portfolio
Industry
Geography
Recurring revenue
Dramatic growth
Operational excellence
Enterprise leverage
Strong balance sheet, cash position and cash generation
Positioned to Deliver Solid
Financial Results in All Economic Cycles
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Where We Were
Heavy Machinery
Deep Cyclical
Engineered Products
Product-centric
Match GDP Growth
Change Averse
Low Tech
Disconnected Businesses
Happy to Be Good
Old Ingersoll Rand
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Portfolio Transformation 2000 through 2007
Strategic review of prospects for all businesses
Strengthened core businesses
Improved marginal performers
Divested non-core operations ($6.5 Billion revenues)
Pumps
Bearings
Drills
Dresser-Rand
Road Development
Bobcat, Utility and Attachments in process
Made 65 bolt-on acquisitions since 2000 ($3 Billion revenues)
Core Platform to Deliver Consistent Growth
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Sale to Volvo Construction AB of Sweden
$1.3 Billion net proceeds
Completed April 30, 2007
Record substantial earnings gain on sale in 2Q
Net cash proceeds $1.05 Billion
Sale of Road Development Business
Reinvesting Cash Proceeds
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Exploring Strategic Alternatives for
Bobcat and Construction-Related Businesses
Businesses included
Bobcat: Compact Equipment
Utility Equipment: Portable Power products
Attachments for Construction Equipment
2006 Revenues: $2.6 Billion
Explore alternatives
Sale of businesses
Spin-off to shareholders
Expect to conclude process in second half of 2007
Strategic Repositioning of Ingersoll Rand as a
Diversified Industrial Company
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Where We Are Going
Heavy Machinery
Deep Cyclical
Engineered Products
Product-centric
Match GDP Growth
Change Averse
Low Tech
Disconnected Businesses
Diversified Industrial
Balanced Across the Cycle
Commercial Businesses
Customer Focused
Outpacing Market Growth
Change Culture
Innovative, Visionary
Leveraged Enterprise
Working to Be Great
Old Ingersoll Rand
New Ingersoll Rand
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Ingersoll Rand Ongoing Business Segments
Three Core Segments.
Club Car Moved to Industrial Technologies
Transport
Refrigeration
Stationary
Refrigeration
Mechanical Security
Electronic and
Biometric
Security
Systems Integration
Access control
Air Systems
Tools and Fluid
Power
Club Car
Bobcat
Utility
Attachments
Climate Control
Technologies
Security
Technologies
Industrial
Technologies
Compact
Equipment
Technologies
Ongoing Segments
Discontinued
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A Balanced, Global Growth Portfolio
Diversified Product and Geographic Mix;
Growth in High Potential Markets
Climate Control
Technologies
40%
Security
Technologies
28%
Industrial
Technologies
32%
2006 Pro Forma Revenues Excludes Road
Development, Bobcat, Utility and
Attachments
North America
62%
Europe
23%
Asia
10%
Latin
America
5%
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Powerful Market Leading Brands
#1 N. America
lock and door
hardware
#1 Worldwide
golf cars
#1 N. America
remote display
cases
#1 N. American
service provider
#1 Worldwide
transport
refrigeration
#1 or #2 in Major Markets
#1 N. America
air compressors,
air tools
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Dramatic Growth ...
Operational Excellence ...
Dual Citizenship ...
by focusing on innovative solutions
for our customers
by pursuing continuous improvement
in all our operations
by leveraging enterprise-wide strengths
Ingersoll Rand is a global
diversified enterprise with market
leading brands
We are dedicated to driving
Shareholder Value by achieving:
Dramatic Growth
Innovation
Recurring Revenue
Acquisitions
2006 and 2007
Growth Initiatives
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Market-Defining Innovations
Innovation Across Our Businesses
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Innovation
Net Revenue from Innovation
$ Millions
Over $1.3 Billion in 2006 Revenues from Products
Introduced Over the Last 3 Years
2006
$225
2005
$335
$300
2004
$200
2003
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Recurring Revenue
Recurring Revenue More than Doubled Since 2000
$ Millions
21%
% of
Total
2000
$1,190
16%
2001
$1,323
2002
$1,455
2003
$1,705
2005
$2,173
$2,413
2006
2004
$1,908
11% Growth
in 2006
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Acquisitions
More than 65 acquisitions since 2000; added more than
$3 billion in revenues
Continuing progress in 2006
ZEKS compressed-air treatment technologies
BOC Edwards low-pressure air business
Geith attachments
Expanding into New Products and Markets
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Increase Investments for Growth in 2006 and 2007
New product/new customer development
Expand geographic reach
Channel expansion
Recurring revenue growth
Completed $80 Mil. program in 2006, additional
investment in 2007
Grow 2x GDP in Developed Countries
Grow 20% to 25% in Developing World
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Annual Revenues
Demonstrating Growth Across Our Businesses
2004
13.9%
$9,394
2005
12.3%
$10,547
YOY
Growth
2003
8.8%
$8,249
2001
$7,389
$7,583
2002
2.6%
2006
8.2%
$11,409
Target 4-6% Organic Growth
8-12% Overall Growth
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Operational Excellence
Reduce costs
Improve processes
Increase efficiency
Institutionalize a continuous-improvement culture
Focus On Reducing Working Capital and CAPEX
A Simple Story; a Complex Effort:
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Manufacturing Efficiency Gained from
Restructuring and Operational Excellence
2001 2002 2003 2004 2005 2006
2001 2002 2003 2004 2005 2006
Total Manufacturing Square Feet (Millions)
Revenue Per Square Foot
Doubled Revenues Per Square Foot
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Operational Excellence
Expanding Lean Six Sigma
Positive impact on operations
Reduce costs, working capital
and CAPEX
Formalized business operating
system
Continuous improvement
Repeatable results across
business processes
Optimize processes using lean
methods and Six Sigma tools
Significant change to operating
culture
Improved Business Execution
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Operating Margin
2001
2002
2003
2004
2005
2006
5.1%
7.6%
9.5%
11.9%
12.9%
12.6%
15% Target
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Earnings Per Share
As Reported Continuing Operations Minus Discontinued Legacy Costs
Annual
Change
$.38
$.88
$1.48
$2.28
$2.99
$3.20
2001
2002
130%
2003
68%
2004
54%
2005
31%
2006
7%
12% to 15%
Target Growth
CAGR 53%
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14.2%
ROIC
2004
13.0%
2005
14.0%
2003
8.3%
2001
8.6%
9.8%
2002
Improving the Way We Leverage Our Capital
Target 15%
2006
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Available Cash Flow
$ Millions
* Excluding restructuring
$850 Million Target for 2007
2001
2002
2003
2004
2005
2006
$618*
$687*
$630
$804
$784
$760
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Dividend Growth
Enhancing Shareholder Value
2004
22%
2005
30%
2003
6%
2002
2006
19%
$0.00
$0.05
$0.10
$0.15
$0.20
Per Share of Class A Common Stock
$0.34
$0.36
$0.44
$0.57
$0.68
Quarterly
Amount
YOY
Growth
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Share Repurchase - 2006
Completed $2 Billion repurchase first authorized in 2004
Purchased 2.6 Million shares in October 2006
Purchased 51 Million shares since start of program,
reduced outstanding share count by 14%
New repurchase program authorized for $2 Billion in
December 2006
Repurchase increased to $4 Billion in May 2007
Deploying Cash to Create Shareholder Value
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Cash Deployment and Investment Priorities
Supplement organic growth
Expect to make value creating
acquisitions in 2007
Will not relax criteria
No unrelated businesses
$4 Billion repurchase authorization
$2 Billion complete by 3Q 2007
Timing of second $2 Billion based on
timing of divestitures and acquisition
opportunities
Increasing R&D and engineering
expenditures
Operational Excellence investments to
reduce costs and increase productivity
Balanced Approach to Cash Deployment
Review dividend in August
Acquisitions
Share buy-back
Internal Investments
Dividends
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2002-2006
2002-May 2007
Ingersoll Rand
S&P 500
S&P Industrial
Machinery
103%
26%
74%
Ingersoll Rand
S&P 500
S&P Industrial
Machinery
153%
37%
90%
Total Return to Shareholders
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Total Return to Shareholders
2002 to May 2007
44%
68%
91%
91%
132%
142%
153%
191%
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P/E Ratio
P/E Below Peer Group
13.9x
15.0x
15.8x
16.4x
16.9x
18.2x
18.6x
19.2x
Price Earnings Ratio Based on
Projected 2007 Earnings
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Opportunity Ahead
Diversified business portfolio and lean business model to
dampen impact of market cycles
Deploying cash to generate value for shareholders
Additional purchasing power from sale of businesses
Increased investments for growth and operational excellence
Well positioned to deliver
Consistent profitable growth
Strong cash flow
Successfully Executing Sound Long-term Growth Strategy
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