Trane Technologies (TT) 10-Q 7 May 10 2010 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information
	3 Months Ended Mar. 31, 2010	Apr. 30, 2010
Document Type	10-Q
Amendment Flag	false
Document Period End Date	2010-03-31
Document Fiscal Year Focus	2,010
Document Fiscal Period Focus	Q1
Trading Symbol	IR
Entity Registrant Name	Ingersoll-Rand plc
Entity Central Index Key	0001466258
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		321,903,126

CONDENSED CONSOLIDATED INCOME S

CONDENSED CONSOLIDATED INCOME STATEMENT (USD $)
In Millions, except Per Share data	3 Months Ended Mar. 31, 2010	3 Months Ended Mar. 31, 2009
Net revenues	2953.4	2932.9
Cost of goods sold	-2173.3	-2206.4
Selling and administrative expenses	-646.6	-676.6
Operating income	133.5	49.9
Interest expense	-71.2	-67.4
Other, net	8.1	12.5
Earnings (loss) before income taxes	70.4	(5)
Benefit (provision) for income taxes	(54)	-10.5
Earnings (loss) from continuing operations	16.4	-15.5
Discontinued operations, net of tax	-10.4	-6.3
Net earnings (loss)	6	-21.8
Less: Net earnings (loss) attributable to noncontrolling interests	-4.6	-4.9
Net earnings (loss) attributable to Ingersoll-Rand plc	1.4	-26.7
Amounts attributable to Ingersoll-Rand plc ordinary shareholders:
Continuing operations	11.8	-20.4
Discontinued operations	-10.4	-6.3
Net earnings (loss) attributable to Ingersoll-Rand plc	1.4	-26.7
Basic:
Continuing operations	0.04	-0.06
Discontinued operations	-0.04	-0.02
Net earnings (loss)		-0.08
Diluted:
Continuing operations	0.04	-0.06
Discontinued operations	-0.04	-0.02
Net earnings (loss)		-0.08
Weighted-average shares outstanding
Basic	322.7	320.5
Diluted	336.6	320.5
Dividends declared per ordinary share	0.07	0.36

CONDENSED CONSOLIDATED BALANCE

CONDENSED CONSOLIDATED BALANCE SHEET (USD $)
In Millions	Mar. 31, 2010	Dec. 31, 2009
Current assets:
Cash and cash equivalents	599.1	876.7
Accounts and notes receivable, net	2172.9	2120.2
Inventories	1,364	1193.2
Other current assets	684	637.2
Total current assets	4,820	4827.3
Property, plant and equipment, net	1855.8	1912.8
Goodwill	6,544	6,606
Intangible assets, net	4987.3	5042.8
Other noncurrent assets	1509.6	1602.1
Total assets	19716.7	19,991
Current liabilities:
Accounts payable	1193.9	1,079
Accrued compensation and benefits	438.2	492.8
Accrued expenses and other current liabilities	1566.7	1529.7
Short-term borrowings and current maturities of long-term debt	1007.6	1191.7
Total current liabilities	4206.4	4293.2
Long-term debt	2923.7	2904.9
Postemployment and other benefit liabilities	1,924	1954.2
Deferred and noncurrent income taxes	1,848	1933.3
Other noncurrent liabilities	1663.6	1699.7
Total liabilities	12565.7	12785.3
Temporary equity	26.7	30
Ingersoll-Rand plc shareholders' equity:
Ordinary shares	321.5	320.6
Capital in excess of par value	2379.8	2347.6
Retained earnings	4816.9	4837.9
Accumulated other comprehensive income (loss)	-500.8	-434.3
Total Ingersoll-Rand plc shareholders' equity	7017.4	7071.8
Noncontrolling interests	106.9	103.9
Total shareholders' equity	7124.3	7175.7
Total liabilities and shareholders' equity	19716.7	$19,991

CONDENSED CONSOLIDATED STATEMEN

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (USD $)
In Millions	3 Months Ended Mar. 31, 2010	3 Months Ended Mar. 31, 2009
Cash flows from operating activities:
Net earnings (loss)	$6	-21.8
(Income) loss from discontinued operations, net of tax	10.4	6.3
Adjustments to arrive at net cash provided by (used in) operating activities:
Depreciation and amortization	112.1	102.5
Stock settled share-based compensation	19.4	22.2
Changes in other assets and liabilities, net	-242.6	-41.1
Other, net	42.3	-16.1
Net cash provided by (used in) continuing operating activities	-52.4	52
Net cash provided by (used in) discontinued operating activities	(10)	-11.1
Cash flows from investing activities:
Capital expenditures	-34.3	-58.9
Acquisition of businesses, net of cash acquired	-3.3
Proceeds from sale of property, plant and equipment	1.7	8.7
Other, net		-0.1
Net cash provided by (used in) continuing investing activities	-35.9	-50.3
Cash flows from financing activities:
Proceeds from bridge loan		196
Commercial paper program (net)	69.5	-165.2
Other short-term borrowings (net)	4.1	6.5
Proceeds from long-term debt	19
Payments of long-term debt	-262.1	-7.6
Net proceeds (repayments) in debt	-169.5	29.7
Dividends paid to ordinary shareholders	-22.5	-57.4
Acquisitions of noncontrolling interests		-1.5
Proceeds from exercise of stock options	10.4	0.6
Other, net	-1.6	-2.2
Net cash provided by (used in) continuing financing activities	-183.2	-30.8
Effect of exchange rate changes on cash and cash equivalents	3.9	-16.4
Net increase (decrease) in cash and cash equivalents	-277.6	-56.6
Cash and cash equivalents - beginning of period	876.7	550.2
Cash and cash equivalents - end of period	599.1	493.6

Description of Company

Description of Company
	3 Months Ended Mar. 31, 2010
Description of Company	Note 1 Description of Company Ingersoll-Rand plc (IR-Ireland), an Irish public limited company, and its consolidated subsidiaries (the Company) is a diversified, global company that provides products, services and solutions to enhance the quality and comfort of air in homes and buildings, transport and protect food and perishables, secure homes and commercial properties, and increase industrial productivity and efficiency. The Companys business segments consist of Climate Solutions, Residential Solutions, Industrial Technologies and Security Technologies, each with strong brands and leading positions within their respective markets. The Company generates revenue and cash primarily through the design, manufacture, sale and service of a diverse portfolio of industrial and commercial products that include well-recognized, premium brand names such as Club Car, Hussmann, Ingersoll-Rand, Schlage, Thermo King and Trane. On July1, 2009, Ingersoll-Rand Company Limited (IR-Limited), a Bermuda company, completed a reorganization to change the jurisdiction of incorporation of the parent company of Ingersoll Rand from Bermuda to Ireland (the Ireland Reorganization). As a result, IR-Ireland replaced IR-Limited as the ultimate parent company effective July1, 2009. In conjunction with the Ireland Reorganization, IR-Limited became a wholly-owned subsidiary of IR-Ireland and the ClassA common shareholders of IR-Limited became ordinary shareholders of IR-Ireland. Unless otherwise indicated, all references to the Company prior to July1, 2009 relate to IR-Limited. The Ireland Reorganization did not have a material impact on the Companys financial results. Ingersoll-Rand plc will continue to be subject to United States Securities and Exchange Commission reporting requirements and prepare financial statements in accordance with U.S. Generally Accepted Accounting Principles (GAAP). Shares of Ingersoll-Rand plc will continue to trade on the New York Stock Exchange under the symbol IR, the same symbol under which the Ingersoll-Rand Company Limited ClassA common shares previously traded.

Basis of Presentation

Basis of Presentation
	3 Months Ended Mar. 31, 2010
Basis of Presentation	Note 2 Basis of Presentation The accompanying condensed consolidated financial statements reflect the consolidated operations of the Company and have been prepared in accordance with GAAP as defined by the Financial Accounting Standards Board (FASB) within the FASB Accounting Standards Codification (FASB ASC). In the opinion of management, the accompanying condensed consolidated financial statements contain all adjustments, which include normal recurring adjustments, necessary to present fairly the consolidated unaudited results for the interim periods presented. The accompanying condensed consolidated financial statements should be read in conjunction with the consolidated financial statements included in the Ingersoll-Rand plc Annual Report on Form 10-K for the year ended December31, 2009. Certain reclassifications of amounts reported in prior years have been made to conform to the 2010 classification. During the fourth quarter of 2009, the sales price condition set forth in the indenture agreement for the Companys Exchangeable Senior Notes (the Notes) was satisfied and the Notes became exchangeable at the holders option during the first quarter 2010. As the debt and equity components of the Notes are accounted for separately, the Company changed the classification of $315.0 million associated with the debt portion of the Notes from Long-term debt to Short-term borrowings and current maturities of long-term debt in the December31, 2009 Condensed Consolidated Balance Sheet of this Form 10-Q. In addition, the Company changed the classification of $30.0 million associated with the equity portion of the Notes from Capital in excess of par to Temporary equity to reflect the amount of equity that could result in cash settlement at December31, 2009. At the close of business on June5, 2008 (the Acquisition Date), the Company completed its acquisition of 100% of the outstanding common shares of Trane Inc. (Trane). Trane, formerly American Standard Companies Inc., provides systems and services that enhance the quality and comfort of the air in homes and buildings around the world. Tranes systems and services have leading positions in premium commercial, residential, institutional and industrial markets, a reputation for reliability, high quality and product innovation and a powerful distribution network. The results of operations of Trane have been included in the condensed consolidated financial statements for all periods presented.

Inventories

Inventories
	3 Months Ended Mar. 31, 2010
Inventories	Note 3 Inventories Depending on the business, U.S. inventories are stated at the lower of cost or market using the last-in, first-out (LIFO) method or the lower of cost or market using the first-in, first-out (FIFO) method. Non-U.S. inventories are primarily stated at the lower of cost or market using the FIFO method. The major classes of inventory are as follows: In millions March31, 2010 December31, 2009 Raw materials $ 364.6 $ 353.6 Work-in-process 263.5 222.4 Finished goods 818.5 700.1 1,446.6 1,276.1 LIFO reserve (82.6 ) (82.9 ) Total $ 1,364.0 $ 1,193.2

Goodwill

Goodwill
	3 Months Ended Mar. 31, 2010
Goodwill	Note 4 Goodwill The changes in the carrying amount of goodwill are as follows: In millions Climate Solutions Residential Solutions Industrial Technologies Security Technologies Total December31, 2009 $ 4,978.3 $ 682.3 $ 372.9 $ 572.5 $ 6,606.0 Acquisitions and adjustments 3.1 3.1 Translation (47.2 ) (4.3 ) (13.6 ) (65.1 ) March31, 2010 $ 4,934.2 $ 682.3 $ 368.6 $ 558.9 $ 6,544.0 As a result of the annual impairment testing in the fourth quarter of 2008, the Company recognized a pre-tax, non-cash charge of $2,840.0 million related to the impairment of goodwill within the following segments: In millions Total Climate Solutions $ (839.8 ) Residential Solutions (1,656.2 ) Security Technologies (344.0 ) Total $ (2,840.0 ) The Company does not have any accumulated impairment losses subsequent to the adoption of Statement of Financial Accounting Standards No.142, Goodwill and Other Intangible Assets other than the amounts recorded in 2008.

Intangible Assets

Intangible Assets
	3 Months Ended Mar. 31, 2010
Intangible Assets	Note 5 Intangible Assets The following table sets forth the gross amount of the Companys intangible assets and related accumulated amortization: In millions March31, 2010 December31, 2009 Completed technologies/patents $ 202.4 $ 204.0 Customer relationships 2,347.1 2,358.4 Trademarks 104.5 111.2 Other 185.3 188.1 Total gross finite-lived intangible assets 2,839.3 2,861.7 Accumulated amortization (566.1 ) (533.0 ) Total net finite-lived intangible assets 2,273.2 2,328.7 Trademarks (indefinite-lived) 2,714.1 2,714.1 Total $ 4,987.3 $ 5,042.8 Intangible asset amortization expense was $38.8 million and $38.2 million for the three months ended March31, 2010 and 2009, respectively. Estimated amortization expense on existing intangible assets is approximately $160 million for each of the next five fiscal years.

Accounts Receivable Purchase Ag

Accounts Receivable Purchase Agreements
	3 Months Ended Mar. 31, 2010
Accounts Receivable Purchase Agreements	Note 6 Accounts Receivable Purchase Agreements In connection with the acquisition of Trane, the Company acquired Tranes accounts receivable purchase agreement (the Trane Facility) in the U.S.As part of the Trane Facility, Trane formed a special-purpose entity (SPE) for the sole purpose of buying and selling receivables generated by Trane.Under the Trane Facility, Trane, irrevocably and without recourse, transferred all eligible accounts receivable to the SPE, which, in turn, sold undivided ownership interests in them to a conduit administered by the participating bank.The assets of the SPE were not available to pay the claims of Trane or any of its subsidiaries. For the three months ended March31, 2009, the Company recorded a cash outflow of $12.8 million within cash flows from operating activities, which represented the decrease in the net interests in the receivables sold to the conduits. On March31, 2009, the Company expanded the existing Trane Facility to include originators from all four business segments (the Expanded IR Facility).Under the Expanded IR Facility, the Company continuously sold, through certain consolidated special purpose vehicles, designated pools of eligible trade receivables to an affiliated master special purpose vehicle (MSPV) which, in turn, sold undivided ownership interests to three conduits administered by unaffiliated financial institutions.The maximum purchase limit of the three conduits was $325.0 million.The Expanded IR Facility superseded the Trane Facility. At December31, 2009, the outstanding balance of eligible trade receivables sold to the MSPV was $544.2 million.However, no net interests were sold to any of the three conduits administered by unaffiliated financial institutions.On February17, 2010, the Company terminated the Expanded IR Facility prior to its expiration in March 2010.

Debt and Credit Facilities

Debt and Credit Facilities
	3 Months Ended Mar. 31, 2010
Debt and Credit Facilities	Note 7 Debt and Credit Facilities Short-term borrowings and current maturities of long-term debt consisted of the following: In millions March31, 2010 December31, 2009 Commercial paper $ 69.5 $ Debentures with put feature 343.6 343.6 Exchangeable senior notes 318.3 315.0 Current maturities of long-term debt 265.4 526.5 Other short-term borrowings 10.8 6.6 Total $ 1,007.6 $ 1,191.7 Commercial Paper Program The Company uses borrowings under its commercial paper program for general corporate purposes. At December31, 2009, the Company had no amounts outstanding after repaying $998.7 million during the year. These payments were funded primarily using cash generated from operations. At March31, 2010, the Companys outstanding balance was $69.5 million. Debentures with Put Feature At March31, 2010 and December31, 2009, the Company had outstanding $343.6 million of fixed rate debentures which only requires early repayment at the option of the holder. These debentures contain a put feature that the holders may exercise on each anniversary of the issuance date. If exercised, the Company is obligated to repay in whole or in part, at the holders option, the outstanding principal amount (plus accrued and unpaid interest) of the debentures held by the holder. If these options are not exercised, the final maturity dates would range between 2027 and 2028. In February 2010, holders of these debentures had the option to exercise the put feature on $37.2 million of the outstanding debentures, of which less than $0.1 million were exercised and repaid in February. Exchangeable Senior Notes Due 2012 In April 2009, the Company issued $345 million of 4.5% Exchangeable Senior Notes (the Notes) through its wholly-owned subsidiary, Ingersoll-Rand Global Holding Company Limited (IR-Global). The Notes are fully and unconditionally guaranteed by each of IR-Ireland, IR-Limited and Ingersoll-Rand International Holding Limited (IR-International). Interest on the Notes will be paid twice a year in arrears. In addition, holders may exchange their notes at their option prior to November15, 2011 in accordance with specified circumstances set forth in the indenture agreement or anytime on or after November15, 2011 through their scheduled maturity. Upon any exchange, the Notes will be paid in cash up to the aggregate principal amount of the notes to be exchanged, the remainder due on the option feature, if any, will be paid in cash, the Companys ordinary shares or a combination thereof at the option of the Company. The Notes are subject to certain customary covenants, however, none of these covenants are considered restrictive to the Companys operations. The Company accounts for the Notes in accordance with GAAP, which requires the Company to allocate the proceeds between debt and equity, in a manner that reflects the Companys nonconvertible debt borrowing rate. The Company allocated approximately $305 million of the gross proceeds to debt, with the remaining discount of approximately $40 million (approximately $39 million after allocat

Financial Instruments

Financial Instruments
	3 Months Ended Mar. 31, 2010
Financial Instruments	Note 8 Financial Instruments In the normal course of business, the Company uses various financial instruments, including derivative instruments, to manage the risks associated with interest rate, currency rate, commodity price and share-based compensation exposures. These financial instruments are not used for trading or speculative purposes. On the date a derivative contract is entered into, the Company designates the derivative instrument either as a cash flow hedge of a forecasted transaction, a cash flow hedge of a recognized asset or liability, or as an undesignated derivative. The Company formally documents its hedge relationships, including identification of the derivative instruments and the hedged items, as well as its risk management objectives and strategies for undertaking the hedge transaction. This process includes linking derivative instruments that are designated as hedges to specific assets, liabilities or forecasted transactions. The Company also assesses both at the inception and at least quarterly thereafter, whether the derivatives used in cash flow hedging transactions are highly effective in offsetting the changes in the cash flows of the hedged item. Any ineffective portion of a derivative instruments change in fair value is recorded in the income statement in the period of change. If the hedging relationship ceases to be highly effective, or it becomes probable that a forecasted transaction is no longer expected to occur, the hedging relationship will be undesignated and any future gains and losses on the derivative instrument would be recorded in the income statement. The fair market value of derivative instruments are determined through market-based valuations and may not be representative of the actual gains or losses that will be recorded when these instruments mature due to future fluctuations in the markets in which they are traded. Currency and Commodity Derivative Instruments The notional amounts of the Companys currency derivatives were $906.2 million and $884.8 million at March31, 2010 and December31, 2009, respectively. At March31, 2010 and December31, 2009, a deferred loss of $1.3 million and $1.5 million, net of tax, respectively, was included in Accumulated other comprehensive income (AOCI) related to the fair value of the Companys currency derivatives designated as accounting hedges. The amount expected to be reclassified into earnings over the next twelve months is $1.3 million. The actual amounts that will be reclassified into earnings may vary from this amount as a result of changes in market conditions. Gains and losses associated with the Companys currency derivatives not designated as hedges are recorded in earnings as changes in fair value occur. At March31, 2010, the maximum term of the Companys currency derivatives was 12 months. As a result of the acquisition of Trane in June 2008, the Company assumed a cross currency swap that fixed, in U.S. dollars, the currency cash flows on the 60.0million 8.25% senior notes. These senior notes matured on June1, 2009 along with the cross currency swap. The cross currency swap met the criteria to be accounted for as a foreign currency cas

Pensions and Postretirement Ben

Pensions and Postretirement Benefits Other than Pensions
	3 Months Ended Mar. 31, 2010
Pensions and Postretirement Benefits Other than Pensions	Note 9 Pensions and Postretirement Benefits Other than Pensions The Company sponsors several U.S. and non-U.S. pension plans covering substantially all of our U.S. employees and retirees as well as a portion of our non-U.S. employees and retirees. In addition, postretirement plans provide certain benefits to eligible employees. Pension Plans The Company has noncontributory defined benefit pension plans covering substantially all U.S. employees. Most of the plans for non-collectively bargained U.S. employees provide benefits on an average pay formula while most plans for collectively bargained U.S. employees provide benefits on a flat benefit formula. Effective January1, 2010, non-collectively bargained U.S. employees of Trane began to participate in the Companys main pension plan for U.S. non-collectively bargained employees. In addition, the Company maintains pension plans for certain non-U.S. employees in other countries. These plans generally provide benefits based on earnings and years of service. The Company also maintains additional other supplemental benefit plans for officers and other key employees. The components of the Companys pension-related costs for the three months ended March31 are as follows: In millions 2010 2009 Service cost $ 25.7 $ 17.5 Interest cost 49.0 48.5 Expected return on plan assets (49.3 ) (43.9 ) Net amortization of: Prior service costs 2.0 2.1 Transition amount 0.1 Plan net actuarial losses 14.1 14.3 Net periodic pension benefit cost 41.5 38.6 Net curtailment and settlement (gains) losses 6.2 0.8 Net periodic pension benefit cost after net curtailment and settlement (gains) losses $ 47.7 $ 39.4 Amounts recorded in continuing operations $ 45.9 $ 36.6 Amounts recorded in discontinued operations 1.8 2.8 Total $ 47.7 $ 39.4 The Company made employer contributions of $27.9 million and $25.7 million to its defined benefit pension plans during the three months ended March31, 2010 and 2009, respectively. The curtailment and settlement losses in 2010 and 2009 are associated with lump sum distributions under supplemental benefit plans for officers and other key employees. Postretirement Benefits Other Than Pensions The Company sponsors several postretirement plans that provide for health-care benefits, and in some instances, life insurance benefits that cover certain eligible employees. These plans are unfunded and have no plan assets, but are instead funded by the Company on a pay as you go basis in the form of direct benefit payments. Generally, postretirement health benefits are contributory with contributions adjusted annually. Life insurance plans for retirees are primarily noncontributory. The components of net periodic postretirement benefit cost for the three months ended March31 are as follows: In millions 2010 2009 Service cost $ 2.4 $ 2.6 Interest cost 1

Fair Value Measurement

Fair Value Measurement
	3 Months Ended Mar. 31, 2010
Fair Value Measurement	Note 10 Fair Value Measurement FASB ASC 820, Fair Value Measurements and Disclosures (ASC 820) establishes a framework for measuring fair value that is based on the inputs market participants use to determine the fair value of an asset or liability and establishes a fair value hierarchy to prioritize those inputs. The fair value hierarchy is comprised of three levels that are described below: Level 1 Inputs based on quoted prices in active markets for identical assets or liabilities. Level 2 Inputs other than Level 1 quoted prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the asset or liability. Level 3 Unobservable inputs based on little or no market activity and that are significant to the fair value of the assets and liabilities. The fair value hierarchy requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Observable inputs are obtained from independent sources and can be validated by a third party, whereas unobservable inputs reflect assumptions regarding what a third party would use in pricing an asset or liability based on the best information available under the circumstances. A financial instruments categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Assets and liabilities measured at fair value on a recurring basis at March31, 2010 are as follows: Fair value measurements Total In millions Level 1 Level 2 Level3 fairvalue Assets: Cash and cash equivalents $ 599.1 $ $ $ 599.1 Marketable securities 12.2 12.2 Derivative instruments 19.5 19.5 Benefit trust assets 15.9 151.4 167.3 Total $ 627.2 $ 170.9 $ $ 798.1 Liabilities: Derivative instruments $ $ 3.9 $ $ 3.9 Benefit trust liabilities 17.3 150.7 168.0 Total $ 17.3 $ 154.6 $ $ 171.9 The methodologies used by the Company to determine the fair value of its financial assets and liabilities at March31, 2010 are the same as those used at December31, 2009.

Shareholders' Equity

Shareholders' Equity
	3 Months Ended Mar. 31, 2010
Shareholders' Equity	Note 11 Shareholders Equity IR-Ireland is the successor to IR-Limited, following the Ireland Reorganization which became effective on July1, 2009. Upon consummation, the IR-Limited ClassA common shares were cancelled and all previous holders were issued ordinary shares of IR-Ireland. The Ireland Reorganization was accounted for as a reorganization of entities under common control and accordingly, did not result in any changes to the consolidated amounts of assets, liabilities and shareholders equity. The reconciliation of ordinary shares is as follows: In millions Total December31, 2009 320.6 Shares issued under incentive plans 0.9 March31, 2010 321.5 The components of shareholders equity for the three months ended March31, 2010 are as follows: In millions IR-Ireland shareholders equity Noncontrolling interests Total shareholders equity Balance at December31, 2009 $ 7,071.8 $ 103.9 $ 7,175.7 Net earnings (loss) 1.4 4.6 6.0 Currency translation (99.7 ) (99.7 ) Change in value of marketable securities and derivatives qualifying as cash flow hedges, net of tax 1.1 1.1 Pension and OPEB adjustments, net of tax 32.2 32.2 Total comprehensive income (65.0 ) 4.6 (60.4 ) Share-based compensation 19.4 19.4 Dividends to noncontrolling interests (1.6 ) (1.6 ) Dividends to ordinary shareholders (22.5 ) (22.5 ) Accretion of exchangeable senior notes 3.3 3.3 Shares issued under incentive plans 10.4 10.4 Balance at March31, 2010 $ 7,017.4 $ 106.9 $ 7,124.3 The components of shareholders equity for the three months ended March31, 2009 are as follows: In millions IR-Limited shareholders equity Noncontrolling interests Total shareholders equity Balance at December31, 2008 $ 6,661.4 $ 100.7 $ 6,762.1 Net earnings (loss) (26.7 ) 4.9 (21.8 ) Currency translation (161.1 ) (161.1 ) Change in value of marketable securities and derivatives qualifying as cash flow hedges, net of tax (2.9 ) (2.9 ) Pension and OPEB adjustments, net of tax 23.8 23.8 Total comprehensive income (166.9 ) 4.9 (162.0 ) Share-based compensation 22.2 22.2 Acquisition of noncontrolling interests (0.1 ) (1.4 ) (1.5 ) Dividends to noncontrolling interests (2.2 ) (2.2 ) Dividends to common shareholders (119.0 ) (119.0 ) Other (0.9 ) (0.9 ) Balance at March31, 2009 $ 6,396.7 $ 102.0 $ 6,498.7

Share-Based Compensation

Share-Based Compensation
	3 Months Ended Mar. 31, 2010
Share-Based Compensation	Note 12 Share-Based Compensation The Company records share-based compensation awards using a fair value method and recognizes compensation expense for an amount equal to the fair value of the share-based payment issued in its financial statements. The Companys share-based compensation plans include programs for stock options and restricted stock units (RSUs), stock appreciation rights (SARs), performance shares and deferred compensation. Stock Options/Restricted Stock Units The Companys equity grant approach allows for eligible participants to receive (i)stock options, (ii)RSUs or (iii)a combination of both stock options and RSUs. Since annual equity grants are made in February, the Company grants a significant number of options and RSUs during the first quarter of the year. The following table illustrates those granted during the three months ended March31: 2010 2009 Number granted Weighted- averagefair valueperaward Number granted Weighted- averagefair valueperaward Stock options 2,576,250 $ 10.12 4,051,032 $ 5.65 RSUs 764,587 $ 31.68 921,182 $ 16.85 The fair value of each of the Companys stock option and RSU awards is expensed on a straight-line basis over the required service period, which is generally the three-year vesting period. However, for stock options and RSUs granted to retirement eligible employees, the Company recognizes expense for the fair value at the grant date. SARs All SARs outstanding as of March31, 2010 are vested and expire ten years from the date of grant. All SARs exercised are settled with the Companys ordinary shares. The Company did not grant SARS during the three months ended March31, 2010 and does not anticipate additional grants in the future. Performance Shares The Company has a Performance Share Program (PSP) for key employees. The program provides awards based on performance against pre-established objectives. The annual target award level is expressed as a number of the Companys ordinary shares. All PSP awards are settled in the form of ordinary shares. During the three months ended March31, 2010, the Company awarded approximately 0.4million shares to eligible employees. Deferred Compensation The Company allows key employees to defer a portion of their eligible compensation into a number of investment choices, including its ordinary share equivalents. Any amounts invested in ordinary share equivalents will be settled in ordinary shares of the Company at the time of distribution. Other Plans The Company maintains a shareholder-approved Management Incentive Unit Award Plan. Under the plan, participating key employees were awarded incentive units. When dividends are paid on ordinary shares, phantom dividends are awarded to unit holders, one-half of which is paid in cash, the remaining half of which is credited to the participants accounts in the form of ordinary share equivalents. The value of the actual incentive units is never paid to participants, and only the fair value of accumulated ordinary share equivalents is paid in cash upon the participants retirement. The Company has issued stock grants to certa

Restructuring Activities

Restructuring Activities
	3 Months Ended Mar. 31, 2010
Restructuring Activities	Note 13 Restructuring Activities Restructuring charges recorded during the three months ended March31, 2010 and 2009 were as follows: March31, In millions 2010 2009 Climate Solutions $ 5.0 $ 0.3 Residential Solutions 1.2 0.2 Industrial Technologies 1.3 8.8 Security Technologies 3.0 0.1 Corporate and Other (0.1 ) 1.5 Total $ 10.4 $ 10.9 Cost of goods sold $ 7.4 $ 3.3 Selling and administrative 3.0 7.6 Total $ 10.4 $ 10.9 The changes in the restructuring reserve were as follows: In millions Climate Solutions Residential Solutions Industrial Technologies Security Technologies Corporate and Other Total December31, 2009 $ 16.3 $ 7.8 $ 4.3 $ 18.2 $ 8.3 $ 54.9 Additions 5.0 1.2 1.3 3.0 (0.1 ) 10.4 Cash and non-cash uses (11.2 ) (2.5 ) (2.2 ) (1.6 ) (2.3 ) (19.8 ) Currency translation (0.9 ) (0.9 ) March31, 2010 $ 10.1 $ 6.5 $ 3.4 $ 18.7 $ 5.9 $ 44.6 In October 2008, the Company announced an enterprise-wide restructuring program necessitated by the lower demand in many of the Companys end markets resulting from the overall deterioration in global economic conditions that began in the second half of 2008 and continued through 2009. The program included streamlining the footprint of manufacturing facilities and reducing the general and administrative cost base across all sectors of the Company. During the three months ended March31, 2009, the Company incurred costs of $10.9 million associated with this program. During the three months ended March31, 2010, the Company incurred costs of $10.4 million associated with ongoing restructuring actions. These actions included workforce reductions as well as the consolidation of manufacturing facilities in an effort to increase efficiencies across multiple lines of business. As of March31, 2010, the Company had $44.6 million accrued for costs associated with these ongoing restructuring actions, of which a majority will be paid throughout the remainder of 2010.

Other, Net

Other, Net
	3 Months Ended Mar. 31, 2010
Other, Net	Note 14 Other, Net The components of Other, net for the three months ended March31 are as follows: In millions 2010 2009 Interest income $ 2.4 $ 4.3 Exchange gain (loss) (0.3 ) 1.4 Earnings from equity investments 2.7 1.4 Other 3.3 5.4 Other, net $ 8.1 $ 12.5

Income Taxes

Income Taxes
	3 Months Ended Mar. 31, 2010
Income Taxes	Note 15 Income Taxes The provision for income taxes involves a significant amount of management judgment regarding interpretation of relevant facts and laws in the jurisdictions in which the Company operates. Future changes in applicable laws, projected levels of taxable income and tax planning could change the effective tax rate and tax balances recorded by the Company. In addition, tax authorities periodically review income tax returns filed by the Company and can raise issues regarding its filing positions, timing and amount of income or deductions, and the allocation of income among the jurisdictions in which the Company operates. A significant period of time may elapse between the filing of an income tax return and the ultimate resolution of an issue raised by a revenue authority with respect to that return. In the normal course of business the Company is subject to examination by taxing authorities throughout the world, including such major jurisdictions as Brazil, Canada, Germany, Ireland, Italy, the Netherlands and the United States. In general, the examination of the Companys material tax returns is completed for the years prior to 2000, with certain matters being resolved through appeals and litigation. On July20, 2007, the Company received a notice from the IRS containing proposed adjustments to the Companys tax filings in connection with an audit of the 2001 and 2002 tax years. The IRS did not contest the validity of the Companys reincorporation in Bermuda. The most significant adjustments proposed by the IRS involve treating the entire intercompany debt incurred in connection with the Companys reincorporation in Bermuda as equity. As a result of this recharacterization, the IRS disallowed the deduction of interest paid on the debt and imposed dividend withholding taxes on the payments denominated as interest. The IRS also asserted an alternative argument to be applied if the intercompany debt is respected as debt. In that circumstance, the IRS proposed to ignore the entities that hold the debt and to which the interest was paid and impose 30% withholding tax on a portion of the interest payments as if they were made directly to a company that was not eligible for reduced U.S. withholding tax under a U.S. income tax treaty. The IRS asserted under this alternative theory that the Company owes additional taxes with respect to 2002 of approximately $84 million plus interest. If either of these positions were upheld in their entirety the Company would be required to record additional charges. The Company strongly disagreed with the view of the IRS and filed a protest with the IRS in the third quarter of 2007. On January12, 2010, the Company received an amended notice from the IRS eliminating its assertion that the intercompany debt incurred in connection with the Companys reincorporation in Bermuda should be treated as equity. However, the IRS continues to assert the alternative position described above and proposes adjustments to the Companys 2001 and 2002 tax filings. In addition, the IRS provided notice on January19, 2010, that it is assessing penalties of 30% on the asserted underpayment of tax described above. The Co

Divestitures and Discontinued O

Divestitures and Discontinued Operations
	3 Months Ended Mar. 31, 2010
Divestitures and Discontinued Operations	Note 16 Divestitures and Discontinued Operations The components of discontinued operations for the three months ended March31 are as follows: In millions 2010 2009 Revenues $ $ Pre-tax earnings (loss) from operations $ (11.6 ) $ (19.3 ) Pre-tax gain (loss) on sale (0.4 ) 4.7 Tax expense 1.6 8.3 Discontinued operations, net $ (10.4 ) $ (6.3 ) Discontinued operations by business for the three months ended March31 are as follows: In millions 2010 2009 Compact Equipment, net of tax $ 1.3 $ (0.4 ) Road Development, net of tax 0.3 4.6 Other discontinued operations, net of tax (12.0 ) (10.5 ) Total discontinued operations, net of tax $ (10.4 ) $ (6.3 ) Compact Equipment Divestiture On November30, 2007, the Company completed the sale of its Bobcat, Utility Equipment and Attachments businesses (collectively, Compact Equipment) to Doosan Infracore for gross proceeds of approximately $4.9 billion, subject to post-closing purchase price adjustments. Compact Equipment manufactured and sold compact equipment, including skid-steer loaders, compact track loaders, mini-excavators and telescopic tool handlers; portable air compressors, generators and light towers; general-purpose light construction equipment; and attachments. The Company is currently in the process of resolving the final purchase price adjustments with Doosan Infracore. Road Development Divestiture On April30, 2007, the Company completed the sale of its Road Development business unit to AB Volvo (publ) for cash proceeds of approximately $1.3 billion. The Road Development business unit manufactured and sold asphalt paving equipment, compaction equipment, milling machines and construction-related material handling equipment. Other Discontinued Operations The Company has retained costs from previously sold businesses that mainly include costs related to postretirement benefits, product liability and legal costs (mostly asbestos-related).

Earnings Per Share

Earnings Per Share (EPS)
	3 Months Ended Mar. 31, 2010
Earnings Per Share (EPS)	Note 17 Earnings Per Share (EPS) Basic EPS is calculated by dividing Net earnings (loss) attributable to Ingersoll-Rand plc by the weighted-average number of ordinary shares outstanding for the applicable period. Diluted EPS is calculated after adjusting the denominator of the basic EPS calculation for the effect of all potentially dilutive ordinary shares, which in the Companys case, includes shares issuable under share-based compensation plans and the effects of the Exchangeable Senior Notes issued in April 2009. The following table summarizes the weighted-average number of ordinary shares outstanding for basic and diluted earnings per share calculations: In millions 2010 2009 Weighted-average number of basic shares 322.7 320.5 Shares issuable under incentive stock plans 4.7 Exchangeable senior notes 9.2 Weighted-average number of diluted shares 336.6 320.5 Anti-dilutive shares 14.5 34.0 As the Company experienced a net loss in the first quarter of 2009, the Company has not included the impact of shares issuable under incentive stock plans in the calculation of diluted EPS as the result would have an antidilutive effect on EPS.

Business Segment Information

Business Segment Information
	3 Months Ended Mar. 31, 2010
Business Segment Information	Note 18 Business Segment Information In the fourth quarter of 2009, the Company realigned its external reporting structure to more closely reflect our corporate and business strategies and to promote additional productivity and growth. The Companys segments are now as follows: Climate Solutions, Residential Solutions, Industrial Technologies and Security Technologies. As part of the change, the Company eliminated the Air Conditioning Systems and Services segment which represented the acquired Trane businesses and created two new reportable segments, the Climate Solutions segment and the Residential Solutions segment. A summary of operations by reportable segment for the three months ended March31 is as follows: In millions 2010 2009 Net revenues Climate Solutions $ 1,620.5 $ 1,600.2 Residential Solutions 395.4 392.7 Industrial Technologies 544.7 537.6 Security Technologies 392.8 402.4 Total $ 2,953.4 $ 2,932.9 Operating income (loss) Climate Solutions $ 30.2 $ 4.3 Residential Solutions 14.7 (4.3 ) Industrial Technologies 59.3 17.2 Security Technologies 64.8 64.9 Unallocated corporate expense (35.5 ) (32.2 ) Total $ 133.5 $ 49.9

Commitments and Contingencies

Commitments and Contingencies
	3 Months Ended Mar. 31, 2010
Commitments and Contingencies	Note 19 Commitments and Contingencies The Company is involved in various litigations, claims and administrative proceedings, including those related to environmental and product liability matters. Amounts recorded for identified contingent liabilities are estimates, which are reviewed periodically and adjusted to reflect additional information when it becomes available. Subject to the uncertainties inherent in estimating future costs for contingent liabilities, management believes that any liability which may result from these legal matters would not have a material adverse effect on the financial condition, results of operations, liquidity or cash flows of the Company. Environmental Matters The Company continues to be dedicated to an environmental program to reduce the utilization and generation of hazardous materials during the manufacturing process and to remediate identified environmental concerns. As to the latter, the Company is currently engaged in site investigations and remediation activities to address environmental cleanup from past operations at current and former manufacturing facilities. The Company is sometimes a party to environmental lawsuits and claims and has received notices of potential violations of environmental laws and regulations from the Environmental Protection Agency and similar state authorities. It has also been identified as a potentially responsible party (PRP) for cleanup costs associated with off-site waste disposal at federal Superfund and state remediation sites. For all such sites, there are other PRPs and, in most instances, the Companys involvement is minimal. In estimating its liability, the Company has assumed it will not bear the entire cost of remediation of any site to the exclusion of other PRPs who may be jointly and severally liable. The ability of other PRPs to participate has been taken into account, based generally on the parties financial condition and probable contributions on a per site basis. Additional lawsuits and claims involving environmental matters are likely to arise from time to time in the future. During the three months ended March31, 2010, the Company spent $3.1 million for environmental remediation at sites presently or formerly owned or leased by us. As of March31, 2010 and December31, 2009, the Company has recorded reserves for environmental matters of $90.1 million and $93.3 million, respectively. The Company believes that these expenditures will continue and may increase over time. Given the evolving nature of environmental laws, regulations and technology, the ultimate cost of future compliance is uncertain. Asbestos Matters Certain wholly-owned subsidiaries of the Company are named as defendants in asbestos-related lawsuits in state and federal courts. In virtually all of the suits, a large number of other companies have also been named as defendants. The vast majority of those claims has been filed against either Ingersoll-Rand Company (IR-New Jersey) or Trane and generally allege injury caused by exposure to asbestos contained in certain historical products sold by IR-New Jersey or Trane, primarily pumps, boilers and railroad brake shoes. Neither

Guarantor Financial Information

Guarantor Financial Information
	3 Months Ended Mar. 31, 2010
Guarantor Financial Information	Note 20 Guarantor Financial Information Ingersoll-Rand plc, an Irish public limited company (IR-Ireland), is the successor to Ingersoll-Rand Company Limited, a Bermuda company (IR-Limited), following a corporate reorganization that became effective on July1, 2009 (the Ireland Reorganization). IR-Limited is the successor to Ingersoll-Rand Company, a New Jersey corporation (IR-New Jersey), following a corporate reorganization that occurred on December31, 2001 (the Bermuda Reorganization). Both the Ireland Reorganization and Bermuda Reorganization were accounted for as a reorganization of entities under common control and accordingly, did not result in any changes to the consolidated amounts of assets, liabilities and shareholders equity. As a part of the Bermuda Reorganization, IR-Limited issued non-voting, Class B common shares to IR-New Jersey and certain IR-New Jersey subsidiaries in exchange for a $3.6 billion note and shares of certain IR-New Jersey subsidiaries. The note, which is due in 2011, has a fixed rate of interest of 11%per annum payable semi-annually and imposes certain restrictive covenants upon IR-New Jersey. At March31, 2010, $1.0 billion of the original $3.6 billion note remains outstanding. In 2002, IR-Limited contributed the note to a wholly-owned subsidiary, which subsequently transferred portions of the note to several other subsidiaries, all of which are included in the Other Subsidiaries below. Accordingly, the subsidiaries of IR-Limited remain creditors of IR-New Jersey. In addition, as part of the Bermuda Reorganization, IR-Limited fully and unconditionally guaranteed all of the issued public debt securities of IR-New Jersey. IR-New Jersey unconditionally guaranteed payment of the principal, premium, if any, and interest on IR-Limiteds 4.75% Senior Notes due in 2015 in the aggregate principal amount of $300 million. The guarantee is unsecured and provided on an unsubordinated basis. The guarantee ranks equally in right of payment with all of the existing and future unsecured and unsubordinated debt of IR-New Jersey. During 2008, the Company revised the guarantor financial statements for all periods presented in order to reflect Ingersoll-Rand Global Holding Company Limited (IR-Global) as a stand-alone subsidiary. IR-Global issued public debt that is guaranteed by IR-Limited. As part of the Ireland Reorganization, the guarantor financial statements were further revised to present IR-Ireland as the ultimate parent company and Ingersoll-Rand International Holding Limited (IR-International) as a stand-alone subsidiary. In addition, the guarantee structure was updated to reflect the newly created legal structure under which (i)IR-International assumed the obligations of IR-Limited as issuer or guarantor, as the case may be, and (ii)IR-Ireland and IR-Limited fully and unconditionally guaranteed the obligations under the various indentures covering the currently outstanding public debt of Ingersoll-Rand plc and its subsidiaries. Neither IR-Ireland nor IR-Limited has issued or intends to issue guarantees in respect of any indebtedness incurred by Trane. Also as part of the Ireland Reorganization, IR-Limited tra