UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2000
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File No. 1-985
INGERSOLL-RAND COMPANY
(Exact name of registrant as specified in its charter)
New Jersey 13-5156640
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Woodcliff Lake, New Jersey 07677
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:(201)573-0123
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
Series A Preference
Stock Purchase Rights New York, London and Amsterdam
Common Stock, $2 par value New York, London and Amsterdam
Income PRIDES New York
Growth PRIDES New York
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of registrant's knowledge,
in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K [ ]
The aggregate market value of common stock held by nonaffiliates
on March 5, 2001 was $7,433,814,574 based on the closing price of
such stock on the New York Stock Exchange. This includes the
shares owned by the Registrant's Leveraged Employee Stock
Ownership Plan.
The number of shares of common stock outstanding as of March 5,
2001 was 160,259,428.
DOCUMENTS INCORPORATED BY REFERENCE
Consolidated Financial Statements for fiscal year ended
December 31, 2000, incorporated by reference in the company's
Current Report on Form 8-K, dated February 9, 2001.
Proxy Statement for Annual Meeting of Shareholders to be held
on May 2, 2001. See Part III of this Form 10-K Annual Report for
portions incorporated by reference. (A definitive proxy
statement has been filed with the Commission since the close of
the fiscal year).
PART I
Item 1. BUSINESS
Ingersoll-Rand Company (the company) was organized in 1905 under
the laws of the State of New Jersey as a consolidation of
Ingersoll-Sergeant Drill Company and the Rand Drill Company,
whose businesses were established in the early 1870's. Over the
years, additional products which have been developed internally
or obtained through acquisition have supplemented the original
business.
The company is a leading provider of security and safety, climate
control, industrial productivity and infrastructure products. In
each of these markets, the company offers a diverse product
portfolio that includes well-recognized industrial and commercial
brands.
Climate Control - Offers a range of temperature-control products
for protecting food and other perishables. Products include:
Thermo King transport temperature control units for truck
trailers, small trucks, seagoing containers and air conditioning
for buses, and Hussmann refrigerated display cases for
supermarkets, delicatessens and other commercial and
institutional refrigeration applications.
Industrial Productivity - Has a diverse group of businesses
offering products and services to enhance industrial efficiency.
These products and services include: Ingersoll-Rand air
compressors and components for compressed-air systems, tools and
material handling equipment, and fluid handling products, Club
Car golf cars and utility vehicles, and Torrington bearings,
components and motion-control technologies.
Infrastructure - Supplies products and services for all types of
construction projects and industrial and commercial development,
including Bobcat compact equipment and Ingersoll-Rand road
pavers, compactors, portable-power products and drilling
equipment.
Security and Safety - Markets architectural hardware and access-
control products and services for residential, commercial and
institutional buildings. Led by the familiar Schlage brand,
products include locks and locksets, door closers, exit devices,
steel doors and frames, power-operated doors, architectural
columns and biometric and electronic access control technologies.
During 2000, the company announced the formation of the
Independent Power Segment. The new segment, which includes the
company's PowerWorks microturbine technologies, will focus on
identifying, developing and marketing alternative-power and
energy-management solutions. The Independent Power Segment will
be reported as part of the company's Industrial Productivity
Sector beginning in 2001.
The company has undertaken a restructuring program which includes
such actions as plant rationalizations, organizational
realignments consistent with the company's new market-based
structure and the consolidation of back-office processes.
Restructuring charges incurred consist of costs associated with
severance and other employee termination benefits, and facility
exit costs including lease terminations. Current year charges of
$76.2 million related to employee severance and other employee
termination costs cover approximately 2,100 employees, of which
55% have been terminated as of December 31, 2000. The
restructuring plan is expected to be substantially complete by
the end of 2001.
In June 2000, the company acquired Hussmann International, Inc.
(Hussmann), for approximately $1.7 billion in cash after
consideration of amounts paid for outstanding stock options, debt
retirement, employee contracts and transaction costs. Hussmann's
business is the design, production, installation and service of
merchandising and refrigeration systems for the global food
industry. Hussmann is included in the Climate Control Sector.
During 2000, the company acquired Sambron S.A. (Sambron) for
approximately $19.0 million. Sambron manufactures and
distributes a range of telescopic material handlers and is
included in the Infrastructure Sector. For approximately $23.0
million in cash, the company purchased a majority interest in
Zexel Cold Systems, a manufacturer of bus air-conditioning
equipment and refrigeration units for small trucks and is
included in the Climate Control Sector. The company purchased
Interflex Datensysteme GmbH (Interflex) for approximately $60.0
million. Interflex provides integrated products and services for
electronic access control, time and attendance recording,
personnel scheduling and industrial data management and is
included in the Security and Safety Sector.
On August 12, 1999, the company announced its intention to
dispose of its interest in Dresser-Rand Company (D-R), a joint
venture involved in the reciprocating compressor and turbo
machinery business, and Ingersoll-Dresser Pump Company (IDP), a
joint venture involved in the pump equipment business. On
October 5, 1999, the joint venture partner, as permitted under
the joint venture agreements, elected to sell its share of the
joint ventures to the company. Effective December 31, 1999, the
company completed the purchase of the joint venture partner's 49%
share of IDP for a net purchase price of approximately $377
million payable by the issuance of a promissory note, which was
redeemed On January 14, 2000. The acquisition of the joint
venture partner's 51% share of D-R was completed on February 2,
2000 at a net purchase price of approximately $543.0 million.
On August 8, 2000, the company sold IDP for $775 million in cash
and realized an after-tax gain of $124.8 million. The assets of
IDP had been classified as assets held for sale.
On September 5, 2000, the company completed the sale of the
reciprocating gas compressor packaging and rental business of D-R
for $190 million. The remaining net assets of D-R have been
reported as assets held for sale in the company's financial
statements.
Products
Principal products of the company include the following:
Air balancers Fluid-handling equipment
Air compressors & Golf cars
accessories Hoists
Air dryers Hydraulic breakers
Air logic controls Lubrication equipment
Air motors Microturbines
Air and electric tools Material handling equipment
Asphalt compactors Needle roller bearings
Asphalt pavers Paving equipment
Automated dispensing systems Piston pumps
Automatic doors Pneumatic breakers
Automotive components Pneumatic cylinders
Ball bearings Pneumatic valves
Bath fittings and Portable compressors
accessories Portable generators
Biometric access control Portable light towers
systems Refrigerated display cases
Blasthole drills Refrigeration systems
Compact hydraulic excavators Road-building machinery
Construction equipment Rock drills
Diaphragm pumps Rock stabilizers
Door closers and controls Roller bearings
Door locks, latches & Rotary drills
locksets Rough-terrain material
Doors and door frames handlers
(steel) Skid-steer loaders
Drilling equipment and Soil compactors
accessories Spray-coating systems
Electrical security products Telescopic material handlers
Electronic access control Transport temperature
systems control systems
Engine-starting systems Utility vehicles
Exit devices Waterjet-cutting systems
Extrusion pump systems Water-well drills
Fastener-tightening systems Winches
These products are sold primarily under the company's name and
also under other names including ABG, Blaw-Knox, Bobcat, Club
Car, Dor-O-Matic, Fafnir, Falcon, Glynn-Johnson, Hussmann,
Johnstone, LCN, Legge, Monarch, Montabert, Normbau,
Schlage, Steelcraft, Thermo King, Torrington, Von Duprin and
Zimmerman.
During the past three years, the division of the company's sales
between capital goods and expendables has been in the approximate
ratio of 64 percent and 36 percent, respectively. The company
generally defines as expendables those products which are not
capitalized by the ultimate user. Examples of such products are
parts sold for replacement purposes, power tools and needle
bearings.
Additional information on the company's business and financial
information about industry segments is presented in the
Consolidated Financial Statements.
Distribution
The company's products are distributed by a number of methods
which the company believes are appropriate to the type of
product. Sales are made domestically through branch sales
offices and through distributorships and dealers across the
United States. International sales are made through numerous
subsidiary sales and service companies with a supporting chain of
distributors in over 100 countries.
Working Capital
The products manufactured by the company must usually be readily
available to meet rapid delivery requirements. Such working
capital requirements are not, however, in the opinion of
management, materially different from those experienced by the
company's major competitors.
Customers
No material part of the company's business is dependent upon a
single customer or very few customers, the loss of any one of
which would have a material adverse effect on the company's
operations.
Competitive Conditions
The company's products are sold in highly competitive markets
throughout the world against products produced by both foreign
and domestic corporations. The principal methods of competition
in these markets relate to price, quality and service. The
company believes that it is one of the leading manufacturers in
the world of a broad line of air compression systems, anti-
friction bearings, construction equipment, transport temperature
control products, refrigerated display merchandisers,
refrigeration systems and controls, air tools, golf cars and
utility vehicles. In addition, the company believes it is a
leading supplier in domestic markets for locks, other door
hardware products, skid-steer loaders and asphalt paving
equipment.
International Operations
Sales to customers outside the United States accounted for
approximately 34 percent of the consolidated net sales in 2000.
Sales outside of the United States are made in more than 100
countries; therefore, the attendant risks of manufacturing or
selling in a particular country, such as nationalization and
establishment of common markets, would not have a significant
effect on the company's international operations.
Raw Materials
The company manufactures many of the components included in its
products. The principal raw materials required for the
manufacture of the company's products are purchased from numerous
suppliers, and the company believes that available sources of
supply will generally be sufficient for its needs for the
foreseeable future.
Backlog
The company's approximate backlog of orders at December 31, 2000,
believed by it to be firm, was $306.5 million for the Climate
Control Sector, $547.6 million for the Industrial Productivity
Sector, $124.6 million for the Infrastructure Sector and $77.5
million for the Security and Safety Sector as compared to $173.5
million, $536.3 million $151.8 million and $85.5 million
respectively, at December 31, 1999. These backlog figures are
based on orders received. While the major portion of the
company's products are built in advance of order and either
shipped or assembled from stock, orders for specialized machinery
or specific customer application are submitted with extensive
lead time and are often subject to revision, deferral,
cancellation or termination. The company estimates that
approximately 90 percent of the backlog will be shipped during
the next twelve months.
Research and Development
The company maintains extensive research and development
facilities for experimenting, testing and developing high quality
products. The company employs approximately 2,000 professional
employees for its research and development activities. The
company spent $188.4 million in 2000, $186.2 million in 1999 and
$169.6 million in 1998 on research and development.
Patents and Licenses
The company owns numerous patents and patent applications and is
licensed under others. While it considers that in the aggregate
its patents and licenses are valuable, it does not believe that
its business is materially dependent on its patents or licenses
or any group of them. In the company's opinion, engineering and
production skills, and experience are more responsible for its
market position than patents or licenses.
Environmental Matters
The company continues to be dedicated to an environmental program
to reduce the utilization and generation of hazardous materials
during the manufacturing process and to remediate identified
environmental concerns. As to the latter, the company currently
is engaged in site investigations and remedial activities to
address environmental cleanup from past operations at current and
former manufacturing facilities.
During 2000, the company spent approximately $5.0 million on
capital projects for pollution abatement and control, and an
additional $6.0 million for environmental remediation
expenditures at sites presently or formerly owned or leased by
the company. It should be noted that these amounts are difficult
to estimate because environmental improvement costs are generally
a part of the overall improvement costs at a particular plant.
Therefore, the accurate estimate of which portion of an
improvement or a capital expenditure relates to an environmental
improvement is difficult to ascertain. The company believes that
these expenditure levels will continue and may increase over
time. Given the evolving nature of environmental laws,
regulations and technology, the ultimate cost of future
compliance is uncertain.
The company is a party to environmental lawsuits and claims, and
has received notices of potential violations of environmental
laws and regulations from the Environmental Protection Agency and
similar state authorities. It is identified as a potentially
responsible party (PRP) for cleanup costs associated with off-
site waste disposal at approximately 26 federal Superfund and
state remediation sites, excluding sites as to which the
company's records disclose no involvement or as to which the
company's liability has been fully determined. For all sites
there are other PRPs and in most instances, the company's site
involvement is minimal. In estimating its liability, the company
has not assumed it will bear the entire cost of remediation of
any site to the exclusion of other PRPs who may be jointly and
severally liable. The ability of other PRPs to participate has
been taken into account, based generally on the parties'
financial condition and probable contributions on a per site
basis. Additional lawsuits and claims involving environmental
matters are likely to arise from time to time in the future.
Although uncertainties regarding environmental technology, state
and federal laws and regulations and individual site information
make estimating the liability difficult, management believes that
the total liability for the cost of remediation and environmental
lawsuits and claims will not have a material effect on the
financial condition, results of operations, liquidity or cash
flows of the company for any year. It should be noted that when
the company estimates its liability for environmental matters,
such estimates are based on current technologies, and the company
does not discount its liability or assume any insurance
recoveries.
Employees
There are approximately 51,000 employees of the company
throughout the world, of whom approximately 32,000 work in the
United States and 19,000 in foreign countries. The company
believes relations with its employees are good.
Item 2. PROPERTIES
The company's executive offices are located in Woodcliff Lake,
New Jersey. Manufacturing and assembly operations are conducted
in 64 plants in the United States; 5 plants in Canada; 33 plants
in Europe; 16 plants in Asia and 9 plants in Latin America. The
company also maintains various warehouses, offices and repair
centers throughout the world.
Substantially all plant facilities are owned by the company and
the remainder are under long-term lease. The company believes
that its plants and equipment have been well maintained and are
generally in good condition.
The reportable segments for which the facilities are primarily
used are described below. Facilities under long-term lease are
included below and are not significant to each operating
segment's total number of plants or square footage.
Climate Control
The Climate Control Sector focuses on markets requiring
refrigerant-gas compression technology and services to provide
gas pressure for distribution to end users or to maintain a
refrigeration cycle. This sector includes Thermo King transport
temperature control equipment, and Hussmann, a leader in display
case refrigeration, which was acquired in June 2000. Hussmann
experiences the greatest demand for its products in the third and
fourth quarters of the year. This demand results from the
customers' seasonal construction cycles and the desire to
complete stores prior to the year-end holiday season. The
sector's manufacturing locations are as follows:
Approximate
Number of Plants Square Footage
Domestic 16 4,169,000
International 23 4,892,000
Total 39 9,061,000
Industrial Productivity
The Industrial Productivity Sector is composed of a group of
businesses focused on providing solutions for customers to
enhance industrial efficiency. The Industrial Productivity
Sector consists of three segments:
O Air Solutions Segment provides equipment and services for
compressed air systems.
O Bearings and Components Segment provides motion control
technologies to the automotive and industrial markets.
These products include Torrington and Fafnir bearings and
components.
O Industrial Products Segment includes Club Car golf cars and
utility vehicles, tools and related industrial production
equipment.
The sector's manufacturing facilities are as follows:
Approximate
Number of Plants Square Footage
Domestic 25 5,711,000
International 20 3,354,000
Total 45 9,065,000
Infrastructure
The Infrastructure Sector designs, manufactures and markets
powered vehicles that are utilized in infrastructure development,
commercial construction and material movement fields. The
Infrastructure Sector includes Bobcat skid-steer loaders and
compact hydraulic excavators, Blaw-Knox and ABG pavers, and
Ingersoll-Rand compactors, drilling equipment, and portable
power products. The sector's manufacturing facilities are as
follows:
Approximate
Number of Plants Square Footage
Domestic 10 2,875,000
International 7 1,037,000
Total 17 3,912,000
Security and Safety
The Security and Safety Sector concentrates on manufacturing,
marketing, and managing the distribution channels required to
reach end user customers seeking products that enhance
productivity and security in the industrial, construction, and do-
it-yourself markets. Security and Safety includes architectural
hardware products, such as Schlage locks, Von Duprin exit
devices, door-control hardware, steel doors, and electronic
access control technologies including, power-operated doors and
architectural columns. The sector's manufacturing facilities are
as follows:
Approximate
Number of Plants Square Footage
Domestic 13 2,156,000
International 13 1,052,000
Total 26 3,208,000
Item 3. LEGAL PROCEEDINGS
In the normal course of business, the company is involved in a
variety of lawsuits, claims and legal proceedings, including
proceedings for off-site waste disposal cleanup of approximately
26 sites under federal Superfund and similar state laws. In the
opinion of the company, pending legal matters, are not expected
to have a material adverse effect on the results of operations,
financial condition, liquidity or cash flows.
See also the discussion under Item 1 - Environmental Matters.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of the company's security
holders during the last quarter of its fiscal year ended December
31, 2000.
The following information is included in accordance with the
provision of Part III, Item 10.
Date of
Service as Principal Occupation and
an Executive Other Information
Name and Age Officer for Past Five Years
Herbert L. Henkel(52) 4/5/99 Chairman of Board (since May
2000) and Chief Executive
Officer (since October
1999), President and
Director (since April
1999); (Chief Operating
Officer April 1999 -
October 1999; Textron,
President, February 1999
- March 1999 and Chief
Operating Officer, 1998 -
March 1999; President of
Textron's Industrial
Products Segment 1994-
1998)
David W. Devonshire (55) 1/12/98 Executive Vice President
(since January 2000)
and Chief Financial
Officer (since 1998);
(Senior Vice President,
1998 - January 2000; Owens
Corning, Senior Vice
President and Chief
Financial Officer, 1993 -
1997)
Brian D. Jellison (55) 2/7/96 Executive Vice President
(since 1998) and Sector
President, Infrastructure
(since July 2000); (Vice
President and President of
the Architectural Hardware
Group, 1995 - 1998)
Rone H. Lewis (56) 3/20/00 Senior Vice President (since
June 2000)and Sector
President, Independent
Power (since October
2000);(President
e-Business Sector, March
2000- January 2001;
Surety.com, Vice
President, Business
Development, 1996-2000)
Gordon A. Mapp (54) 6/14/00 Senior Vice President,
Sector President,
Climate Control (since
June 2000)
(President, Air Solutions
Group and Industrial
Productivity-Vice
President, 1999-2000;
President, Air Compressor
Group 1998-1999, Vice
President and General
Manager, North American
Division, Thermo King
1993-1998)
Patricia Nachtigal (54) 11/2/88 Senior Vice President (since
June 2000) and General
Counsel (Vice President
1988-2000)
Michael D. Radcliff (50) 1/15/01 Senior Vice President,
President, e-Business
Sector, and Chief
Technology Officer (since
January 2001); (Owens
Corning, Vice President
and CIO, and President and
CEO of Integrex (an Owens
Corning subsidiary) 1994
- 2000)
Don H. Rice (56) 2/1/96 Senior Vice President,
Global Business Services
and Human Resources,
(since 2000) (Vice
President, Human
Resources, 1995-2000)
Randy P. Smith (51) 2/3/00 Senior Vice President (since
June 2000)and Sector
President, Security and
Safety (since February
2000); (Vice President,
February 2000 - June 2000
Textron Fastening
Systems, President 1998-
2000, Emerson Electric,
President 1993-1998)
John E. Turpin (54) 1/8/01 Senior Vice President
and Sector President,
Industrial Productivity
(since January 2001); (The
Stanley Works, Vice
President, Operational
Excellence, 1997-2000,
Vice President,
Operations, 1995-1997)
Steven R. Shawley (48) 6/1/98 Vice President and
Controller (Controller
1998-1999, Thermo King
Business Unit Controller
1994-1998)
No family relationship exists between any of the above-listed
executive officers of the company. All officers are elected to
hold office for one year or until their successors are elected
and qualify.
PART II
Item 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
Information regarding the principal market for the company's
common stock and related stockholder matters are as follows:
Quarterly share prices and dividends for the common stock are
shown in the following tabulation. The common shares are listed
on the New York Stock Exchange and also on the London and
Amsterdam exchanges.
Common Stock
High Low Dividend
2000
First quarter $57 3/4 $34 1/8 $.17
Second quarter 51 3/8 39 3/8 .17
Third quarter 48 3/4 31 7/8 .17
Fourth quarter 44 13/16 29 1/2 .17
1999
First quarter $52 7/16 $44 5/8 $.15
Second quarter 73 13/16 49 7/8 .15
Third quarter 67 11/16 53 .17
Fourth quarter 58 1/2 44 7/8 .17
The Bank of New York (Church Street Station, P.O. Box 11258, New
York, NY 10286-1258, (800)524-4458) is the transfer agent,
registrar and dividend reinvestment agent.
On March 5, 2001, as part of the consideration for the
acquisition of Taylor Industries, the company issued 352,812
shares of the company's common stock. These shares were
previously held as treasury stock and had not been registered.
There are no significant restrictions on the payment of
dividends. The approximate number of record holders of common
stock as of February 28, 2001 was 10,973.
Item 6. SELECTED FINANCIAL DATA
Selected financial data for the five years ended December 31, is
as follows (in millions except per share amounts):
2000 1999 1998 1997 1996
Net sales $ 8,798.2 $7,842.6 $7,540.2 $6,374.2 $5,973.5
Earnings from continuing
operations 546.2 563.1 481.6 367.6 342.3
Total assets 10,528.5 8,400.2 7,926.4 8,033.8 5,232.2
Long-term debt 1,540.1 2,113.3 2,166.0 2,528.0 1,163.8
Shareholders' equity 3,495.2 3,083.0 2,730.1 2,364.8 2,109.9
Basic earnings per share:
Continuing operations $3.39 $3.44 $2.94 $2.25 $2.12
Discontinued operations 0.76 0.17 0.17 0.08 0.10
Diluted earnings per share:
Continuing operations $3.36 $3.40 $2.91 $2.23 $2.11
Discontinued operations 0.76 0.17 0.17 0.08 0.10
Dividends per common
share 0.68 0.64 0.60 0.57 0.52
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Net earnings for 2000 were $669.4 million, or diluted earnings
per share of $4.12. For the year net earnings from continuing
operations were $546.2 million or diluted earnings per share of
$3.36. Net earnings from discontinued operations contributed
$123.2 million or $0.76 diluted earnings per share.
During 2000, the following significant events occurred that
affect year-to-year comparisons:
O On June 14, 2000, the company acquired Hussmann
International, Inc. (Hussmann), for approximately $1.7 billion in
cash including amounts paid for outstanding stock options, debt
retirement, employee contracts and transaction costs. Hussmann's
business is the design, production, installation and service of
merchandising and refrigeration systems for the global food
industry.
O In early 2000, the company completed the purchase of Dresser-
Rand Company (D-R) by acquiring the joint venture partner's 51%
share. The company had been reporting the results of D-R as
discontinued operations. Since the sale of D-R was not completed
within a year, D-R is now presented for all periods as results
from assets held for sale, net of tax.
O In order to reposition itself for the future, the company
began a program to restructure and initiate productivity
investments across its worldwide operations. The total pretax
cost of this program will be approximately $325 million and will
include plant rationalizations, organizational realignments
consistent with the company's new market-based structure and the
consolidation of back office processes. Every business sector has
been impacted by the program, which will result in closing over
50 facilities, 40% of which are factories, and an 8% reduction in
the workforce.
O The company implemented Emerging Issues Task Force Issue No.
00-10, "Accounting for Shipping and Handling Fees and Costs" in
the fourth quarter of 2000. This required the company to include
the revenues billed for shipping and handling in net sales. The
effect was to increase net sales and cost of goods sold by $180.6
million in 2000, $175.9 million in 1999, and $155.5 million in
1998.
Sales for 2000 were $8,798.2 million, an increase of
approximately 12% over the $7,842.6 million in 1999. This
increase includes the favorable effect of the Hussmann
acquisition. Excluding Hussmann, sales increased approximately
3%.
Cost of goods sold, and selling and administrative expenses in
2000 include charges for productivity investments. Productivity
investments consist of costs for equipment moving, facility
redesign, employee relocation and retraining, and systems
enhancements. Charges for productivity investments are expensed
as incurred. Productivity investments were incurred by all
business segments. The following table shows the 2000 results
adjusted for productivity investments:
Reported Productivity Adjusted
In millions results investments results
Cost of goods
sold $6,461.0 $22.0 $6,439.0
Selling and
administrative
expenses 1,146.7 28.0 1,118.7
Cost of goods sold in 2000 was 73.4% of sales as compared to
72.6% in 1999. Excluding productivity investments, the ratio was
73.2% of sales. The increase in the ratio of cost of goods sold
to sales was due to the inclusion of Hussmann, which historically
has had a higher ratio than the company has maintained.
Selling and administrative expenses were 13.0% of sales in 2000
as compared to 13.4% for 1999. Adjusted selling and
administrative expenses were 12.7% of sales in 2000. The decrease
in the ratio reflects that Hussmann's ratio was historically
lower than the company's.
Restructuring charges for 2000 were $76.2 million. The
restructuring program began in the third quarter of 2000 and is
expected to be substantially complete by the end of 2001.
Restructuring charges of $65.8 million consist of severance and
other employee termination costs, while facility exit costs
including lease terminations totaled $10.4 million. Charges
related to employee severance and other employee termination
costs cover approximately 2,100 employees, of which 55% were
terminated as of December 31, 2000.
Operating income for the year totaled $1,114.3 million, a slight
increase over 1999 operating income of $1,099.3 million.
Restructuring and productivity investments charges included in
operating income were $76.2 million and $50.0 million,
respectively. Excluding restructuring and productivity
investments, as well as the increase due to the inclusion of the
Hussmann acquisition, operating income increased by approximately
6%.
Interest expense for the year totaled $253.7 million versus
$203.1 million for 1999. The increase is due to the impact of
the debt incurred to purchase Hussmann. Interest expense from
the debt required to purchase D-R is included in results from
assets held for sale, net of tax.
Other income (expense), net, includes foreign exchange
activities, equity in earnings of partially owned affiliates, and
other miscellaneous income and expense items. In 2000, these
activities resulted in a net expense of $15.3 million, a
favorable change of $7.0 million from the $22.3 million net
expense reported in 1999. This positive change is attributable to
the gains from the sale of three joint ventures, partially offset
by higher foreign exchange losses.
The company's charges for minority interests are composed of two
items: (1) charges associated with the company's equity-linked
securities, and (2) interests of minority owners (less than 50%)
in consolidated subsidiaries of the company. Minority interest
charges increased due to higher earnings in jointly owned
entities in which the company has the majority ownership, while
charges for equity-linked securities were comparable.
Results from assets held for sale, net of tax, contains the
unsold portion of D-R. During the third quarter, the results
from D-R were reclassified from discontinued operations to
results from assets held for sale since its sale was not
completed within a year. The company's portion of the net
earnings of D-R for 2000 was $23.3 million. These earnings
include a $30.2 million after-tax gain on the sale of D-R's
compression services business, after-tax restructuring charges
and productivity investments of $9.9 million, interest expense
net of tax on acquisition debt, and a foreign sales corporation
tax benefit.
The company's effective tax rate for continuing operations was
34.1% in 2000 and 34.8% in 1999. The company's effective tax rate
for continuing operations excluding D-R and restructuring and
productivity investments charges was 34.8% in 2000 and 35.5% in
1999. The effective tax rate in 2000 includes tax credits
generated by the company's foreign sales corporation and other
ongoing tax planning initiatives. The variance between the
company's rate and the statutory rate of 35.0% is primarily due
to lower tax rates associated with foreign earnings, the foreign
sales corporation, tax benefits associated with income in Puerto
Rico, offset by the effect of state and local taxes and the
nondeductibility of goodwill.
Earnings from discontinued operations, net of tax, were $123.2
million for 2000. This represents the Ingersoll-Dresser Pump
Company (IDP) operating loss of $1.6 million in 2000, and an
after-tax gain of $124.8 million recorded on the sale of IDP (See
Note 4 to the Consolidated Financial Statements).
Outlook
The world economy in 2001 is difficult to predict. This is
especially true in the United States, where economic activity has
declined in the last several months of 2000. Declines have
occurred in key markets, particularly automotive, truck and
trailer, and road development. Construction markets have stayed
steady, but it is expected that they will also decline in the
first half of 2001. Stronger results are expected from the air
solutions, and security and safety businesses. The company
expects its revenue to be up slightly, driven by new product
introductions. The company's new product introductions
scheduled for 2001 include electronic access products, new
compact equipment offerings, a safe tire mounting system, new
climate control offerings as well as a 70 kilowatt microturbine.
The company expects Hussmann to add to earnings since it will be
included for a full year. The company also expects to receive
the initial benefit from productivity investments. The company
anticipates pricing pressure in certain end-markets and product
mix changes to negatively impact both revenue growth and
earnings. It is expected that the company will spend about 6
cents per share to commercialize the PowerWorks microturbine
product line.
Another significant factor in 2001 will be the conversion of the
equity-linked securities in May. This will add approximately 8
million shares to the total number of outstanding shares of
common stock, which will cause dilution of earnings per share.
The company believes that 2001 will be a challenging year, but
will produce another strong earnings performance.
Review of Business Segments
Climate Control
The Climate Control Sector includes Thermo King transport
temperature control equipment, and Hussmann display case
refrigeration. The sector's revenues for 2000 totaled $2,021.1
million compared with $1,221.8 million in 1999. The sector's
revenues increased approximately 65% due to the inclusion of
Hussmann, which was acquired on June 14, 2000. Operating income
for the year was $206.4 million, which included restructuring
charges of $3.6 million and productivity investments of $6.9
million. Operating income for 1999 totaled $166.5 million.
During 2000, the Thermo King business was adversely affected by a
severe decline in the North American truck and trailer market,
continued weak truck and trailer results in Europe, and the
unfavorable effect of currency. However, the bus air
conditioning and sea-going container businesses improved
substantially. Hussmann's operating results were consistent with
expectations, but reduced capital spending by several major
supermarket chains affected revenues. Operating margins for the
sector declined from 13.6% to 10.2% due to the inclusion of
Hussmann's results, the decline in truck and trailer market and
the unfavorable effect of foreign currency.
Industrial Productivity
The Industrial Productivity Sector is composed of a group of
businesses focused on providing solutions for customers to
enhance industrial efficiency. Reported revenues of $3,025.0
million increased slightly from those reported for 1999 of
$2,991.1 million. Operating income was $365.9 million, which
included $28.0 million of restructuring charges and $8.1 million
of productivity investments charges. Excluding these charges,
operating income was $402.0 million, an increase of 15.4% from
$348.5 million in 1999. This increase was primarily due to the
improved results in the Air Solutions, and Bearings and
Components businesses. The Industrial Productivity Sector
consists of three segments:
O Air Solutions, which provides equipment and services for
compressed air systems, reported sales of $859.5 million for
the year an improvement of 12.5% compared to 1999.
Operating income increased by approximately 21.5%, excluding
the effect of restructure charges of $10.5 million and
productivity investments of $4.3 million. The business'
performance benefited primarily from the increased emphasis
on the aftermarket business and ongoing cost and expense
reduction activity.
O Bearings and Components provides motion control
technologies to the automotive and industrial markets.
Revenues for the year declined slightly to $1,185.3 million,
from $1,239.5 million for 1999, due to lower volumes in the
automotive market. Operating income improved by 9.7%
including restructuring and other charges. Significant
ongoing cost and expense reduction activities and higher
aftermarket revenues contributed to this improvement.
Restructuring charges were $11.5 million for this segment,
while charges for productivity investments were $1.3
million. The downturn in the production of light trucks and
sport-utility vehicles affected the fourth-quarter 2000
revenues of this business.
O Industrial Products includes Club Carr golf cars and
utility vehicles, tools and related industrial production
equipment. Reported revenues of $980.2 million for the year
decreased slightly, compared to $987.3 million in 1999.
Excluding last year's revenues from the Automation Division
(sold in the fourth quarter of 1999), revenues increased by
6.7%. Operating income of $112.4 million for the year
includes charges for restructuring of $6.0 million and
productivity investments of $2.5 million. Lower margins
resulted from cost pressures in the European industrial
business and the unfavorable effects of currency.
Infrastructure
The Infrastructure Sector includes Bobcat compact equipment,
road pavers and compactors; portable power products, and drilling
equipment. This sector's revenues for the year totaled $2,341.7
million, versus $2,341.5 million for 1999. Bobcat's revenue
improvement due to volume gains was offset by lower sales in the
balance of the sector. Operating income of $375.5 million
includes charges for restructuring of $11.4 million and
productivity investments of $8.5 million. Excluding restructure
and productivity investments, operating income increased slightly
from the 1999 operating income level of $393.1 million.
Operating margins for the sector were impacted significantly by
foreign exchange. Bobcat acquired a new product line and
continues to introduce new products. This enables them to
maintain market share in the compact equipment market. Portable
power revenues declined as slowness in national rental accounts
occurred. Road development revenues also declined as domestic
market softness outweighed growth in Europe.
Security and Safety
The Security and Safety Sector includes architectural hardware
products and electronic access-control technologies. For this
sector, revenues increased by 9.5% to $1,410.4 million, when
compared to the prior year. Operating income for 2000 increased
to $271.6 million from $248.4 million in 1999. This sector's
operating income included $15.1 million and $8.9 million of
charges for restructure and productivity investments,
respectively. Revenue growth is attributable to continued
strength in both the commercial and residential markets. In
addition to higher volumes, profitability is due to productivity
improvements and the successful assimilation of recent
acquisitions.
Liquidity and Capital Resources
During 2000, the company acquired Hussmann for $1.7 billion in
cash, sold IDP for $775 million in cash, and acquired full
ownership of D-R for $543 million. The acquisitions of Hussmann
and D-R were financed principally by issuing short-term
commercial paper and from internally generated cash. The
acquisitions of Hussmann and D-R are discussed in Notes 5 and 3,
respectively, and the sale of IDP in Note 4, to the Consolidated
Financial Statements.
The following table contains several key measures used by
management to gauge the company's financial performance:
2000 1999 1998
Working capital (in millions) $(644) $1,129 $737
Current ratio 0.8 1.6 1.5
Debt-to-total capital ratio 48% 42% 44%
Average working capital
to net sales 1.5% 11.5% 10.5%
Average days outstanding
in receivables 53.3 48.8 51.5
Average months' supply
of inventory 2.3 2.4 2.4
Note: Working capital includes assets held for sale.
The company maintains significant operations in foreign
countries; therefore, the movement of the U.S. dollar against
foreign currencies has an impact on the company's financial
position. Generally, the functional currency of the company's
foreign subsidiaries is their local currency. The company
manages exposure to changes in foreign currency exchange rates
through its normal operating and financing activities, as well as
through the use of forward exchange contracts and options. The
company attempts, through its hedging activities, to mitigate the
impact on income of changes in foreign exchange rates.
(Additional information on the company's use of financial
instruments can be found in Note 10 to the Consolidated Financial
Statements.)
The following points highlight the financial results and
financial condition of the company's operations with the impact
of foreign currency translation where appropriate:
o Cash and cash equivalents totaled $74.4 million at December 31,
2000, a $148.5 million decrease from the prior year-end balance
of $222.9 million. Cash flows from operating activities
provided $774.1 million, investing activities used $1,537.2
million and financing activities provided $647.0 million. Net
cash used by discontinued operations was $22.1 million.
Exchange rate changes during 2000 decreased cash and cash
equivalents by $10.3 million.
o Receivables totaled $1,323.5 million at December 31, 2000,
compared to $988.5 million at the prior year end, a net
increase of $335.0 million. Acquisitions accounted for an
increase of $348.8 million. Receivables increased
approximately $58.0 million due to higher sales activity during
the latter part of the fourth quarter, which were offset by
reductions caused by exchange rate changes during 2000. The
company also sold an additional $40 million of accounts
receivable to a financial institution in 2000. The average
days outstanding in receivables was 53.3 days compared to the
1999 level of 48.8 days.
o Inventories amounted to $1,022.9 million at December 31, 2000,
an increase of $280.8 million from last year's level of $742.1
million. The net increase in inventories during 2000 is the
result of an increase from acquisitions of $132.7 million, a
reduction caused by exchange rate changes during the year of
$27.8 million, and an overall increase in inventories.
o Prepaid expenses totaled $82.0 million at the end of the year,
$21.3 million higher than the balance at December 31, 1999. The
increase is associated with pensions and acquisitions.
o Assets held for sale totaled $612.4 million. This reflects a
decrease of $187.3 million over the December 31, 1999, balance
of $799.7 million. The account balance at the end of 1999
primarily represented the company's investments in their
ventures in IDP and D-R. (See Notes 4 and 3 to the Consolidated
Financial Statements.) During the current year, activity in
this account included the operating results of the joint
ventures, the February 2000 purchase of the remaining 51%
interest in D-R for $543 million, the divestiture of IDP and
D-R compression services business as well as the net change in
the assets and liabilities of D-R. The company expects to
complete the sale of D-R in 2001.
o Deferred income taxes (current) of $82.0 million at December
31, 2000, represented the deferred tax benefit of the
difference between the book and tax values of various current
assets and liabilities. The components of the balance are
included in Note 17 to the Consolidated Financial Statements.
o Investments in and advances from partially owned equity
affiliates at December 31, 2000, totaled $167.6 million, a
decrease of $30.6 million over the 1999 balance of $198.2
million. During 2000, the company sold its interests in three
partially owned affiliates relating to the manufacture of
steering-column assemblies for approximately $37 million in
cash. Income and dividends from the investments in partially
owned equity affiliates were $8.9 million and $2.8 million,
respectively, in 2000. Amounts due from these units were $10.6
million at December 31, 2000. Currency movements were the
primary cause of the remaining change in the account balance.
o Net property, plant and equipment increased by $287.8 million
in 2000 to a year-end balance of $1,528.0 million. Capital
expenditures in 2000 totaled $186.6 million, and acquisitions,
net of dispositions added $296.9 million. Foreign exchange
fluctuations decreased net fixed assets by approximately $19.4
million. The remaining net decrease was the result of
depreciation and sales and retirements.
o Intangible assets, net, totaled $5,105.3 million at December
31, 2000, as compared to $3,726.3 million at December 31, 1999,
for a net increase of $1,379.0 million. The amortization
expense for the current year was $135.4 million. Acquisition
activity accounted for $1.5 billion of the increase with the
remainder due to foreign currency translation.
o Deferred income taxes (noncurrent) totaled $114.1 million at
December 31, 2000, an amount that was $43.9 million lower than
the 1999 balance. The components of this amount at December 31,
2000, can be found in Note 17 to the Consolidated Financial
Statements.
o Other assets totaled $290.7 million at year end, an increase of
$81.5 million from the 1999 balance, primarily due to an
increase in prepaid pensions.
o Accounts payable and accruals totaled $1,698.7 million at
December 31, 2000, an increase of $474.3 million from the
previous year's balance of $1,224.4 million. Acquisitions, net
of dispositions, accounted for approximately $388.6 million of
the increase. Restructuring charges, and the timing of
payrolls and benefits accounted for the additional increase in
2000.
o Loans payable, including current maturities of long-term debt,
were $2,121.8 million at the end of 2000, which reflects a
significant increase of $1,626.3 million from the $495.5
million level at December 31, 1999. Loans payable at December
31, 2000, included approximately $742.9 million of current
maturities of long-term debt, while only $73.1 million were
included in the prior year end balance. The additional increase
in loans payable was due to acquisitions, principally Hussmann.
In February 2001, the company replaced a portion of loans
payable with long-term debt carrying an interest rate of 5.75%.
o Long-term debt, excluding current maturities, totaled $1,540.1
million, a reduction of approximately $573.2 million from the
prior year's balance of $2,113.3 million. Reductions in long-
term debt of $737.2 million and $6.4 million represent the
reclassification of the current maturities of long-term debt to
loans payable and the payments of long-term debt, respectively.
o Postemployment and other benefit liabilities at December 31,
2000, totaled $824.8 million, an increase of $19.8 million from
the December 31, 1999, balance. Postemployment liabilities
include medical and life insurance postretirement benefits,
long-term pension and other noncurrent benefit accruals. (See
Notes 18 and 19 to the Consolidated Financial Statements for
additional information.)
o Minority interest liabilities at December 31, 2000, totaled
$110.5 million, which represent a net increase of $14.8 million
over the balance at the end of the prior year. This liability
represents the ownership interests of other entities in certain
consolidated subsidiaries of the company.
o Other liabilities (noncurrent) at December 31, 2000, totaled
$188.8 million, an increase of $27.0 million compared to the
balance at December 31, 1999. The increase is associated with
acquisitions during 2000. Generally, these accruals cover
environmental, insurance, legal and other long-term contractual
obligations.
o In May 1997, the board of directors authorized the repurchase
of up to 15.0 million shares of the company's stock at
management's discretion. A total of 9.9 million shares have
been purchased since the inception of the program. During
2000, 3.0 million shares were repurchased. Treasury shares were
used during the past year for a small acquisition and in
connection with shares issued under stock incentive plans.
Other information concerning the company's financial resources,
commitments and plans is as follows:
The average short-term borrowings outstanding, excluding current
maturities of long-term debt, were $1,352.1 million in 2000,
compared to $104.8 million in 1999. The weighted average
interest rate during 2000 and 1999 was 6.6%. The maximum amounts
outstanding during 2000 and 1999 were $2,533.8 million and $422.4
million, respectively.
The company had $1.3 billion in domestic short-term credit lines
and $750.0 million in long-term credit lines at December 31,
2000, all of which were unused. Additionally, $602.8 million of
foreign credit lines were available for working capital purposes,
$433.3 million of which was unused at the end of the year. These
facilities exceed projected requirements for 2000 and provide
direct support for commercial paper and indirect support for
other financial instruments, such as letters of credit and
comfort letters.
In 2000, foreign currency translation adjustments decreased
shareholders' equity by $86.0 million. This was due to the
strengthening of the U.S. dollar against other currencies in
countries where the company has significant operations. Currency
fluctuations in the euro, euro-linked currencies and the British
pound accounted for nearly all of the change.
The company utilizes two wholly owned special purpose
subsidiaries to purchase accounts and notes receivable at a
discount from the company on a continuous basis. These special
purpose subsidiaries simultaneously sell an undivided interest in
these accounts and notes receivable to a financial institution up
to a maximum of $210.0 million in 2000 and $170.0 million in
1999. The agreements between the special purpose corporations and
the financial institution do not have predefined expiration
dates. The company is retained as the servicer of the pooled
receivables. At December 31, 2000 and 1999, $210.0 million and
$170.0 million of such receivables, respectively, remained
uncollected.
Capital expenditures were $186.6 million and $190.5 million in
2000 and 1999, respectively. The company continues investing to
improve manufacturing productivity, reduce costs, and provide
environmental enhancements and advanced technologies for existing
facilities. The capital expenditure program for 2001 is
estimated at approximately $220 million, including amounts
approved in prior periods. Many of these projects are subject to
review and cancellation at the option of the company without
incurring substantial charges. There are no planned projects,
either individually or in the aggregate, that represent a
material commitment for the company.
At December 31, 2000, employment totaled 50,855. This represents
an increase over the prior year's level of 46,062. This increase
is due to the acquisitions during the year offset by the
terminations under the company's restructuring program.
Financial Market Risk
The company generates foreign currency exposures in the normal
course of business. To mitigate the risk from foreign currency
exchange rate fluctuations, the company will generally enter into
forward currency exchange contracts for the purchase or sale of a
currency in accordance with the company's policies and
procedures. The company applies sensitivity analysis and value at
risk (VAR) techniques when measuring the company's exposure to
currency fluctuations. VAR is a measurement of the estimated
loss in fair value until currency positions can be neutralized,
recessed or liquidated and assumes a 95% confidence level with
normal market conditions. The potential one-day loss, as of
December 31, 2000, was $3.3 million and is considered
insignificant in relation to the company's results of operations
and shareholders' equity.
With regard to interest rate risk, the effect of a hypothetical
1% increase in interest rates, across all maturities, would
decrease the estimated fair value of the company's long-term debt
at December 31, 2000, from $1,537.1 million to an estimated fair
value of $1,465.0 million.
Environmental Matters
The company continues to be dedicated to an environmental program
to reduce the utilization and generation of hazardous materials
during the manufacturing process and to remediate identified
environmental concerns. As to the latter, the company currently
is engaged in site investigations and remedial activities to
address environmental cleanup from past operations at current and
former manufacturing facilities.
During 2000, the company spent approximately $5.0 million on
capital projects for pollution abatement and control, and an
additional $6.0 million for environmental remediation
expenditures at sites presently or formerly owned or leased by
the company. It should be noted that these amounts are difficult
to estimate because environmental improvement costs are generally
a part of the overall improvement costs at a particular plant.
Therefore, the accurate estimate of which portion of an
improvement or a capital expenditure relates to an environmental
improvement is difficult to ascertain. The company believes that
these expenditure levels will continue and may increase over
time. Given the evolving nature of environmental laws,
regulations and technology, the ultimate cost of future
compliance is uncertain.
The company is a party to environmental lawsuits and claims, and
has received notices of potential violations of environmental
laws and regulations from the Environmental Protection Agency and
similar state authorities. It is identified as a potentially
responsible party (PRP) for cleanup costs associated with off-
site waste disposal at approximately 26 federal Superfund and
state remediation sites, excluding sites as to which the
company's records disclose no involvement or as to which the
company's liability has been fully determined. For all sites
there are other PRPs and in most instances, the company's site
involvement is minimal. In estimating its liability, the company
has not assumed it will bear the entire cost of remediation of
any site to the exclusion of other PRPs who may be jointly and
severally liable. The ability of other PRPs to participate has
been taken into account, based generally on the parties'
financial condition and probable contributions on a per site
basis. Additional lawsuits and claims involving environmental
matters are likely to arise from time to time in the future.
Although uncertainties regarding environmental technology, state
and federal laws and regulations and individual site information
make estimating the liability difficult, management believes that
the total liability for the cost of remediation and environmental
lawsuits and claims will not have a material effect on the
financial condition, results of operations, liquidity or cash
flows of the company for any year. It should be noted that when
the company estimates its liability for environmental matters,
such estimates are based on current technologies, and the company
does not discount its liability or assume any insurance
recoveries.
New Accounting Standard
The company adopted SFAS No. 133 "Accounting for Derivative
Instruments and Hedging Activities" and its amendments as of
January 1, 2001. The statement requires all derivatives to be
recognized as assets or liabilities on the balance sheet and
measured at fair value. Changes in the fair value of derivatives
will be recognized in earnings or other comprehensive income,
depending on the designated purpose of the derivative. The
company recorded approximately $1.2 million after
tax as the cumulative effect adjustment as a decrease to
accumulated other comprehensive income at January 1, 2001.
1999 Compared to 1998
Sales for 1999 totaled $7.8 billion, which generated $1,099.3
million of operating income and $563.1 million of net earnings
from continuing operations ($3.40 diluted earnings per share).
Net earnings from discontinued operations totaled $28.0 million
($0.17 diluted earnings per share).
For 1998, sales were $7.5 billion, which generated $969.1 million
of operating income and produced net earnings from continuing
operations for the year of $481.6 million ($2.91 diluted earnings
per share). In 1998, net earnings from discontinued operations
totaled $27.5 million ($0.17 diluted earnings per share).
A comparison of key financial data between 1999 and 1998 follows:
o Net sales in 1999 amounted to $7.8 billion, reflecting a 4.0%
improvement over the 1998 total of $7.5 billion. Net sales for
1999 and 1998 include increases of $175.9 million and $155.5
million, respectively, for the implementation of EITF No. 00-
10, "Accounting for Shipping and Handling Fees and Costs."
o Cost of goods sold in 1999 was 72.6% of sales, compared to
73.5% in 1998. The ratio of cost of goods sold to sales
reflected a marked improvement in 1999 compared to 1998 based
on the continued success of the company's asset-management,
strategic-sourcing and productivity improvement programs. Cost
of goods sold includes the reclassification of shipping and
handling fees.
o Selling and administrative expenses were 13.4% of sales in
1999, compared to 13.6% for 1998. This decrease is attributable
to the company's cost-containment programs.
o Operating income for the year totaled $1,099.3 million, a 13.4%
increase compared to 1998 operating income of $969.1 million.
The ratio of operating income to sales in 1999 was 14.0%,
compared to 12.9% for the prior year. This improvement was the
combined effect of the company's aggressive productivity-
improvement and procurement programs, and the continued
stability of domestic markets.
o Interest expense for the year totaled $203.1 million versus
$224.1 million for 1998. The reduction in interest expense
totaled $21.0 million principally due to lower average
outstanding debt balances during 1999 when compared to the
prior year.
o Other income (expense), net, is the sum of foreign exchange
activities, equity in earnings of partially owned affiliates,
and other miscellaneous income and expense items. In 1999,
these activities resulted in a net expense of $22.3 million, an
unfavorable change of $7.0 million compared to the 1998 net
other expense of $15.3 million. This change was caused by
lower earnings from partially owned equity affiliates, lower
miscellaneous income and higher miscellaneous expenses, which
were offset by a favorable change in foreign currency activity
in 1999 when compared to the prior year.
o The company's charges for minority interests are composed of
two items: (1) charges associated with the company's equity-
linked securities (issued during the first quarter of 1998),
which totaled $25.6 million in 1999 and $19.7 million in 1998,
and (2) interests of minority owners (less than 50%) in a
consolidated unit of the company, which totaled $3.5 million in
1999 and $3.8 million in 1998.
o Results from assets held for sale (net of tax) represents the
company's equity in the earnings of D-R. Equity earnings of
D-R were $18.2 million in 1999 and $26.1 million in 1998.
o The company's effective tax rates for 1999 and 1998 were 34.8%
and 34.2%, respectively. The variance from the 35.0% statutory
rate primarily was due to lower tax rates associated with
foreign earnings, the foreign sales corporation, favorable tax
benefits associated with income earned in Puerto Rico, offset
by the effect of state and local taxes and the nondeductibility
of a portion of goodwill.
o Discontinued operations (net of tax) for 1999 amounted to $28.0
million, which was $0.5 million higher than the $27.5 million
for the year ended December 31, 1998. This category represents
the company's 51% interest in IDP, net of appropriate taxes.
Additional information on discontinued operations is contained
throughout this report and in Note 4 to the Consolidated
Financial Statements.
At December 31, 1999, employment totaled 46,062. This represents
a slight decrease from 1998's level of 46,525.
During 1999, the company made progress in improving its liquidity
and capital resources through its aggressive asset management
programs and the ability to generate $854.7 million of cash flow
from its operations. These actions contributed to the company's
reduction in its debt-to-total capital ratio from 44% at the end
of 1998 to 42% at December 31, 1999. In addition, adjusting the
December 31, 1999, short-term liability for the purchase of the
remaining interest in IDP lowers the debt-to-total capital ratio
to 38%.
The following points highlight the financial results and
financial condition of the company's operations with the impact
of foreign currency translation where appropriate:
o Cash and cash equivalents totaled $222.9 million at December
31, 1999, a $179.4 million increase from the prior year-end
balance of $43.5 million. Cash flows from operating activities
provided $854.7 million, investing activities used $237.0
million and financing activities used $445.1 million. Exchange
rate changes during 1999 decreased cash and cash equivalents by
$7.8 million.
o Receivables totaled $988.5 million at December 31, 1999,
compared to $963.7 million at the prior year end, a net
increase of $24.8 million. The increase is attributable to
higher sales activity during the latter part of the fourth
quarter and acquisitions, which were offset by reductions
caused by exchange rate changes during 1999. The company
focuses on decreasing its receivables base through its asset-
management program, which produced a reduction in the average
days outstanding in receivables to 48.8 days from the 1998
level of 51.5 days.
o Inventories amounted to $742.1 million at December 31, 1999, a
decrease of $82.7 million from 1998's level of $824.8 million.
The net reduction to inventories during 1999 is the net result
of the reduction caused by exchange rate changes during the
year of $31.5 million, the company's effort to reduce
inventories, and the net effect of reductions caused by
dispositions exceeding increases from acquisitions.
o Prepaid expenses totaled $60.7 million at the end of 1999, $5.0
million higher than the balance at December 31, 1998. The
increase is associated with a general increase in prepaid
expense accounts from acquired companies during the year.
o Assets held for sale totaled $799.7 million. This reflects an
increase of $399.6 million compared to the December 31, 1998,
balance of $400.1 million. The account balance at the end of
1998 primarily represents the company's investments in IDP and
D-R, which are now identified as discontinued operations and
results from assets held for sale (net of tax), respectively.
(See Notes 4 and 3 to the Consolidated Financial Statements.)
During 1999, this account was increased by the operating
results of the joint ventures, and the December 31, 1999,
purchase of the remaining 49% interest in IDP for $377.0
million, as well as the net change in the assets and
liabilities of IDP.
o Deferred income taxes (current) of $53.9 million at December
31, 1999, represented the deferred tax benefit of the
difference between the book and tax values of various current
assets and liabilities. The components of the balance are
included in Note 17 to the Consolidated Financial Statements.
o Investments in and advances with partially owned equity
affiliates at December 31, 1999, totaled $198.2 million, an
increase of $14.6 million compared to the 1998 balance of
$183.6 million. This category includes the company's
investments in partially owned equity affiliates (i.e. 50% or
less ownership). Income and dividends from the investments in
partially owned equity affiliates were $9.5 million and $6.4
million, respectively, in 1999. Amounts due to these units
increased $1.5 million from December 31, 1998. Currency
movements were the primary cause of the remaining change in the
account balance.
o Net property, plant and equipment increased by $3.5 million in
1999 to a year-end balance of $1,240.2 million. Capital
expenditures in 1999 totaled $190.5 million, and acquisitions
(net of dispositions) added $2.7 million. Foreign exchange
fluctuations decreased net fixed assets by approximately $21.2
million. The remaining net decrease was the result of
depreciation and sales and retirements.
o Intangible assets, net, totaled $3,726.3 million at December
31, 1999, as compared to $3,765.8 million at December 31, 1998,
for a net decrease of $39.5 million. The amortization expense
for 1999 was $112.8 million. Acquisition activity and the
effects of foreign currency translation accounted for the
balance of the change.
o Deferred income taxes (noncurrent) totaled $158.0 million at
December 31, 1999, an amount that was $48.0 million lower than
the 1998 balance. The components comprising the balance at
December 31, 1999, can be found in Note 17 to the Consolidated
Financial Statements.
o Other assets totaled $209.2 million at December 31, 1999, an
increase of $33.5 million from the 1998 balance, primarily due
to an increase in prepaid pensions of $32.0 million.
o Accounts payable and accruals totaled $1,224.4 million at
December 31, 1999, a decrease of $60.0 million from 1998's
balance of $1,284.4 million. Reduced inventory levels at year
end and acquisitions, net of dispositions, along with the
timing of payrolls and benefits accounted for the reduction in
1999.
o Loans payable including current maturities of long-term debt,
were $495.5 million at the end of 1999, which reflects a $177.5
million increase from the $318.0 million level at December 31,
1998. Approximately $252.2 million of current maturities of
long-term debt were repaid in 1999. The balance at the end of
1999 included a $377.0 million note payable issued in
connection with the company's purchase of the remaining
interest in the IDP joint venture. Excluding this item, loans
payable would have reflected a reduction from the 1998 year-end
balance of approximately $200.0 million.
o Long-term debt, excluding current maturities, totaled $2,113.3
million, a reduction of approximately $52.7 million from the
prior year's balance of $2,166.0 million. Reductions in long-
term debt of $73.1 million represent the reclassification of
the current maturities of long-term debt to loans payable. Long-
term financings for plant and office expansions accounted for
the modest increase in debt activity for the year.
o Postemployment and other benefit liabilities at December 31,
1999, totaled $805.0 million, a decrease of $15.5 million from
the December 31, 1998, balance. Postemployment liabilities
include medical and life insurance postretirement benefits,
long-term pension and other noncurrent benefit accruals. (See
Notes 18 and 19 to the Consolidated Financial Statements for
additional information.)
o Minority interest liabilities at December 31, 1999, totaled
$95.7 million, which represented a net increase of $62.1
million from the balance at the end of the prior year. This
liability represents the ownership interests of other entities
in certain consolidated subsidiaries of the company. The
increase for 1999 primarily represents an equity interest
purchase by a vendor in an entity controlled by the company.
o Other liabilities (noncurrent) at December 31, 1999, totaled
$161.8 million, an increase of $9.3 million from the balance at
December 31, 1998. The increase is associated with acquisitions
during 1999. These obligations are not expected to be paid in
the next year. Generally, these accruals cover environmental,
insurance, legal and other long-term contractual obligations.
Other information concerning the company's financial resources,
commitments and plans is as follows:
The average short-term borrowings outstanding, excluding current
maturities of long-term debt, was $104.8 million in 1999,
compared to $314.8 million in 1998. The weighted average
interest rate during 1999 was 6.6%, compared to 6.3% during 1998.
The maximum amounts outstanding during 1999 and 1998 were $422.4
million and $794.1 million, respectively.
The company had $1.3 billion in domestic short-term credit lines
and $750.0 million in long-term credit lines at December 31,
1999, all of which were unused. Additionally, $599.8 million of
foreign credit lines were available for working capital purposes,
$527.3 million of which was unused at the end of the year.
In 1999, foreign currency translation adjustments decreased
shareholders' equity by $46.5 million. This change was due to
the strengthening of the U.S. dollar against other currencies in
countries where the company has significant operations. Currency
changes in the euro, euro-linked currencies and the British pound
accounted for nearly all of the change.
Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET
RISK
The information under the caption "Financial Market Risk" in Item
7, Management's Discussion and Analysis of Financial Condition
and Results of Operations is incorporated herein by reference.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
(a) The consolidated financial statements and the report thereon
of PricewaterhouseCoopers LLP dated February 6, 2001, are
incorporated by reference to the company's Current Report on Form
8-K dated February 9, 2001.
(b) The unaudited quarterly financial data for the two-year
period ended December 31, is as follows (in millions except per
share amounts):
Net Cost of Operating Net
2000 sales goods sold income earnings
First quarter $2,020.4 $1,481.6 $ 269.3 $136.0
Second quarter 2,232.9 1,614.8 348.5 175.4
Third quarter 2,300.8 1,713.8 246.0 251.9
Fourth quarter 2,244.1 1,650.8 250.5 106.1
Year 2000 $8,798.2 $6,461.0 $1,114.3 $669.4
1999
First quarter $1,933.6 $1,432.7 $ 238.6 $121.1
Second quarter 2,089.6 1,516.0 304.8 166.6
Third quarter 1,888.9 1,367.5 272.9 137.5
Fourth quarter 1,930.5 1,374.7 283.0 165.9
Year 1999 $7,842.6 $5,690.9 $1,099.3 $591.1
All amounts shown have been restated to reflect adoption of
Emerging Issues Task Force Issue No. 00-10 "Accounting for
Shipping and Handling Fees and Costs" in the fourth quarter of
2000. The impact increased net sales and cost of goods sold by
$180.6 million for the year 2000 and $175.9 million for the year
1999.
2000 1999
Basic Diluted Basic Diluted
earnings earnings earnings earnings
per per per per
common common common common
share share share share
First quarter $0.84 $0.83 $0.74 $0.73
Second quarter 1.09 1.08 1.01 0.99
Third quarter 1.56 1.55 0.84 0.83
Fourth quarter 0.66 0.66 1.02 1.01
Year $4.15 $4.12 $3.61 $3.57
Item 9. CHANGES IN AND DISAGREEMENTS WITH INDEPENDENT
ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by Item 10 is (i) incorporated by
reference in this Form 10-K Annual Report from pages 4 through 6,
and 22 of the company's definitive proxy statement for the Annual
Meeting of Shareholders to be held on May 2, 2001, and (ii)
included after Item 4 in Part I of this Form 10-K Annual Report.
Item 11. EXECUTIVE COMPENSATION
Information on executive compensation is incorporated by
reference in this Form 10-K Annual Report from pages 7 through 17
of the company's definitive proxy statement for the Annual
Meeting of Shareholders to be held on May 2, 2001.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
Information on security ownership of directors and nominees,
directors and officers as a group and certain beneficial owners
is incorporated by reference in this Form 10-K Annual Report on
pages 3 and 4 of the company's definitive proxy statement for the
Annual Meeting of Shareholders to be held on May 2, 2001.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information required by Item 13 is incorporated by reference in
this Form 10-K Annual Report from page 22 of the company's
definitive proxy statement for the Annual Meeting of Shareholders
to be held on May 2, 2001.
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K
(a) 1. and 2. Financial statements and financial statement
schedules
The financial statements, together with the
report thereon of PricewaterhouseCoopers LLP
dated February 6, 2001, included as Exhibit 13
and the unaudited quarterly financial data
included in Part II Item 8(b) are incorporated
by reference in this Form 10-K Annual Report.
The financial statement schedule listed in the
accompanying index should be read in conjunction
with the financial statements in such Annual
Report to Shareholders for 2000.
Separate financial statements for all 50 percent
or less owned companies, accounted for by the
equity method have been omitted because no
individual entity constitutes a significant
subsidiary.
(b) Reports on Form 8-K
A Current Report on Form 8-K (Item 7) dated
November 3, 2000 reporting of pro forma
financial information reflecting Dresser-Rand
Company as continuing operations.
A Current Report on Form 8-K (Item 5) dated
February 6, 2001 reporting the Debt Securities
Underwriting Agreement Standard Provisions
relating to Registration Statement No. 333-
50902.
A Current Report on Form 8-K (Item 5) dated
February 9, 2001 reporting the filing of Exhibit
12 - Computation of the Ratio of Earnings to
Fixed Charges and Exhibit 13 - Audited Financial
Statements at and for the year ended December
31, 2000.
A Current Report on Form 8-K/A (Item 5) dated
February 9, 2001 amending the filing of Exhibit
23 - Consent of PricewaterhouseCoopers LLP.
3. Exhibits
The exhibits listed on the accompanying index to
exhibits are filed as part of this Form 10-K
Annual Report.
INGERSOLL-RAND COMPANY
INDEX TO FINANCIAL STATEMENTS
AND FINANCIAL STATEMENT SCHEDULES
(Item 14 (a) 1 and 2)
Form
10-K
Consolidated Financial Statements:
Report of independent accountants *
Consolidated balance sheet at
December 31, 2000 and 1999 *
For the years ended December 31, 2000, 1999
and 1998:
Consolidated statement of income *
Consolidated statement of shareholders'
equity *
Consolidated statement of cash flows *
Notes to consolidated financial statements *
Selected unaudited quarterly financial data **
Financial Statement Schedule:
Report of independent accountants on
financial statement schedule See below
Consolidated schedule for the years ended
December 31, 2000, 1999 and 1998:
Schedule II -- Valuation and Qualifying
Accounts See below
* Incorporated by reference to the company's Current Report
on Form 8-K dated February 9, 2001.
** See Item 8 Financial Statements and Supplementary Data.
Financial statement schedules not included in this Form 10-K
Annual Report have been omitted because they are not applicable
or the required information is shown in the financial statements
or notes thereto.
REPORT OF INDEPENDENT ACCOUNTANTS ON
FINANCIAL STATEMENT SCHEDULE
To the Board of Directors and Shareholders of Ingersoll-Rand
Company:
Our audits of the consolidated financial statements of Ingersoll-
Rand Company (the "company") referred to in our report dated
February 6, 2001, appearing in the company's Current Report on
Form 8-K, dated February 9, 2001 (which report and consolidated
financial statements are incorporated by reference in this Annual
Report on Form 10-K) also included an audit of the financial
statement schedule listed in Item 14(a)(2) of this Form 10-K. In
our opinion, this financial statement schedule presents fairly,
in all material respects, the information set forth therein when
read in conjunction with the related consolidated financial
statements.
/S/ PricewaterhouseCoopers LLP
PRICEWATERHOUSECOOPERS LLP
Florham Park, New Jersey
February 6, 2001
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the
Registration Statement on Form S-3 (No. 333-50902) and to the
incorporation by reference in the Registration Statements on Form
S-8 (No. 333-42133, No. 333-19445, No. 333-67257 and No. 333-
00829) of Ingersoll-Rand Company (the "company") of our report
dated February 6, 2001 relating to the financial statements which
appears in the company's Current Report on Form 8-K, dated
February 9, 2001, which is incorporated in this Annual Report on
Form 10-K. We also consent to the incorporation by reference of
our report dated February 6, 2001 relating to the financial
statement schedule, which appears in this Form 10-K.
/S/ PricewaterhouseCoopers LLP
PRICEWATERHOUSECOOPERS LLP
Florham Park, New Jersey
March 20, 2001
SCHEDULE II
INGERSOLL-RAND COMPANY
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 and 1998
(Amounts in millions)
Additions
charged to
Balance at costs and Balance
beginning expenses Deductions at end
Description of year (*) (**) of year
2000
Doubtful accounts $ 33.4 $ 16.6 $ 7.2 $ 42.8
1999
Doubtful accounts $ 35.4 $ 8.7 $ 10.7 $ 33.4
1998
Doubtful accounts $ 29.4 $ 10.5 $ 4.5 $ 35.4
(*) "Additions" include foreign currency translation and
business acquisitions.
(**) "Deductions" include accounts and advances written off,
less recoveries.
INGERSOLL-RAND COMPANY
INDEX TO EXHIBITS
(Item 14(a))
Description
3 (i) Restated Certificate of Incorporation of Ingersoll-Rand
Company, as amended through May 28, 1992. Incorporated by
reference to Form 10-K of Ingersoll-Rand Company for the year
ended December 31, 1993, filed March 30, 1994.
3 (ii) Amendment to Restated Certificate of Incorporation of
Ingersoll-Rand Company filed May 28, 1992. Incorporated by
reference to Form 10-K of Ingersoll-Rand Company for the year
ended December 31, 1993, filed March 30, 1994.
3 (iii) Amendment to Restated Certificate of Incorporation of
Ingersoll-Rand Company filed August 20, 1997. Incorporated by
reference to Form S-3 filed October 2, 1997.
3 (iv) Amendment to Restated Certificate of Incorporation of
Ingersoll-Rand Company filed December 22, 1998. Filed herewith.
3 (v) By-Laws of Ingersoll-Rand Company, as amended through
May 4, 2000. Filed herewith.
4 (i) Rights Agreement, dated as of November 9, 1998.
Incorporated by reference from Form 8-A/A of Ingersoll-
Rand Company filed on November 13, 1998.
4 (ii) Indenture, dated as of August 1, 1986 between Ingersoll-
Rand Company and The Bank of New York, as Trustee, as
supplemented. Incorporated by reference to Exhibits 4.1, 4.2 and
4.3 of the company's Form S-3 Registration Statement
No. 33-39474 and Exhibit 4.2 to Form S-3 Registration Statement
No. 333-50902.
4(iii) Purchase Contract Agreement dated as of March 23, 1998
between Ingersoll-Rand Company and The Bank of New York, as
Purchase Contract Agent. Incorporated by reference to Form 10-K
of Ingersoll-Rand Company for the year ended December 31, 1998,
filed March 30, 1999.
4(iv) Pledge Agreement dated as of March 23, 1998 between
Ingersoll-Rand Company and The Chase Manhattan Bank, as
Collateral Agent, Custodial Agent and Securities Intermediary.
Incorporated by reference to Form 10-K of Ingersoll-Rand Company
for the year ended December 31, 1998, filed March 30, 1999.
4(v) Indenture dated as of March 23, 1998 between Ingersoll-Rand
Company and The Bank of New York, as trustee. Incorporated by
reference to Form 10-K of Ingersoll-Rand Company for the year
ended December 31, 1998, filed March 30, 1999.
4(vi) First Supplemental Indenture dated as of March 23, 1998
between Ingersoll-Rand Company and The Bank of New York, as
trustee. Incorporated by reference to Form 10-K of Ingersoll-Rand
Company for the year ended December 31, 1998, filed March 30,
1999.
4(vii) Amended and Restated Declaration of Trust for Ingersoll-
Rand Financing I, a Delaware statutory business trust, dated
March 23, 1998. Incorporated by reference to Form 10-K of
Ingersoll-Rand Company for the year ended December 31, 1998,
filed March 30, 1999.
4(viii) Guarantee Agreement dated as of March 23, 1998, between
Ingersoll-Rand Company and The First National Bank of Chicago, as
trustee. Incorporated by reference to Form 10-K of Ingersoll-Rand
Company for the year ended December 31, 1998, filed March 30,
1999.
4 (ix) (a) Ingersoll-Rand Company is a party to several long-term
debt instruments under which in each case the total amount of
securities authorized does not exceed 10% of the total assets of
Ingersoll-Rand Company and its subsidiaries on a consolidated
basis. Pursuant to paragraph 4(iii)(A) of Item 601(b) of
Regulation S-K, Ingersoll-Rand Company agrees to furnish a copy
of such instruments to the Securities and Exchange Commission
upon request.
10 (iii) The following exhibits constitute management contracts
or compensatory plans or arrangements required by Item 601 of
Regulation S-K.
10 (iii) (a) Management Incentive Unit Plan of Ingersoll-Rand
Company. Amendment to the Management Incentive Unit Plan,
effective January 1, 1982. Amendment to the Management
Incentive Unit Plan, effective January 1, 1987. Amendment to the
Management Incentive Unit Plan, effective June 3, 1987.
Incorporated by reference to Form 10-K of Ingersoll-Rand Company
for the year ended December 31, 1993, filed March 30, 1994.
10 (iii) (b) Amended and Restated Ingersoll-Rand Company Director
Deferred Compensation and Stock Award Plan. Filed herewith.
10 (iii) (c) Description of Bonus Arrangement for Sector
Presidents of Ingersoll-Rand Company. Filed herewith.
10 (iii) (d) Description of Bonus Arrangement for Chairman,
President and Staff Officers. Incorporated by reference to Form
10-K of Ingersoll-Rand Company for the year ended December 31,
1993, filed March 30, 1994.
10 (iii) (e) Amended and Restated Form of Change of Control
Agreement as of March 1, 1999 with Chairman of Ingersoll-Rand
Company. Incorporated by reference to Form 10-K of Ingersoll-
Rand Company for the year ended December 31, 1998, filed March
30, 1999.
10 (iii) (f) Amended and Restated Form of Change of Control
Agreement as of March 1, 1999, with selected executive officers
other than Chairman of Ingersoll-Rand Company. Incorporated by
reference to Form 10-K of Ingersoll-Rand Company for the year
ended December 31, 1998, filed March 30, 1999.
10 (iii) (g) Executive Supplementary Retirement Agreement for
selected executive officers. Incorporated by reference to Form
10-K of Ingersoll-Rand Company for the year ended December 31,
1993, filed March 30, 1994.
10 (iii) (h) Executive Supplementary Retirement Agreement for
selected executive officers. Incorporated by reference to Form
10-K for the year ended December 31, 1996, filed March 26, 1997.
10 (iii) (i) Forms of insurance and related letter agreements
with certain executive officers. Incorporated by reference to
Form 10-K of Ingersoll-Rand Company for the year ended December
31, 1993, filed March 30, 1994.
10 (iii) (j) Restated Supplemental Pension Plan. Incorporated
by reference to Form 10-K of Ingersoll-Rand Company for the year
ended December 31, 1995, filed March 29, 1996.
10 (iii) (k) Supplemental Stock and Savings Investment Plan
effective as of January 1, 1989. Incorporated by reference to
Form 10-K of Ingersoll-Rand Company for the year ended December
31, 1993, filed March 30, 1994.
10 (iii) (l) Supplemental Retirement Account Plan effective
as of January 1, 1989. Incorporated by reference to Form
10-K of Ingersoll-Rand Company for the year ended December 31,
1993, filed March 30, 1994.
10 (iii) (m) Incentive Stock Plan of 1995 of Ingersoll-Rand
Company. Incorporated by reference to the Notice of 1995 Annual
Meeting of Shareholders and Proxy Statement dated March 15, 1995.
See Appendix A of the Proxy Statement dated March 15, 1995.
10 (iii) (n) Senior Executive Performance Plan. Incorporated
by reference to the Notice of 2000 Annual Meeting of Shareholders
and Proxy Statement dated March 7, 2000. See Appendix A of the
Proxy Statement dated March 7, 2000.
10 (iii) (o) Amended and Restated Elected Officers Supplemental
Plan. Incorporated by reference to Form 10-K of Ingersoll-Rand
Company for the year ended December 31, 1998, filed March 30,
1999.
10 (iii) (p) Amended and Restated Executive Deferred Compensation
Plan. Filed herewith.
10 (iii) (q) Chief Financial Officer Employment Agreement.
Incorporated by reference to Form 10-K for the year ended
December 31, 1997, filed March 6, 1998.
10 (iii) (r) Incentive Stock Plan of 1998 of Ingersoll-Rand
Company. Incorporated by reference to Appendix A to the Notice
of 1998 Annual Meeting of Shareholders and Proxy Statement dated
March 17, 1998.
10 (iii) (s) Composite Employment Agreement with Chief Executive
Officer. Incorporated by reference to Form 10-K for the year
ended December 31, 1999, filed March 30, 2000.
10 (iii) (t) Employment Agreement with Senior Vice President
Rone Lewis. Filed herewith.
10 (iii) (u) Employment Agreement with Senior Vice President
Michael Radcliff. Filed herewith.
10 (iii) (v) Employment Agreement with Senior Vice President
Randy Smith. Filed herewith.
10 (iii) (w) Employment Agreement with Senior Vice President
John Turpin. Filed herewith.
11 Computation of Earnings Per Share. Filed herewith.
12 Computations of Ratios of Earnings to Fixed Charges.
Incorporated reference to the Current Report on Form 8-K filed
February 9, 2001.
13 Ingersoll-Rand Company Annual Report to Shareholders
for 2000. Incorporated by reference to the Current Report on
Form 8-K filed February 9, 2001. Not deemed to be filed as part
of this report except to the extent incorporated by reference.
21 List of Subsidiaries of Ingersoll-Rand Company.
Filed herewith.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly
authorized.
INGERSOLL-RAND COMPANY
(Registrant)
By /S/ David W. Devonshire
Date March 20, 2001
Pursuant to the requirements of the Securities Exchange Act
of 1934, this report has been signed below by the following
persons on behalf of the registrant and in the capacities and on
the dates indicated.
Signature Title Date
Chairman
President, Chief
Executive Officer
and Director (Principal
/S/ Herbert L. Henkel Executive Officer) March 20, 2001
(Herbert L. Henkel)
Executive Vice
President, Chief Financial
Officer (Principal
/S/ David W. Devonshire Financial Officer) March 20, 2001
(David W. Devonshire)
Vice President and
Controller (Principal
/S/ Steven R. Shawley Accounting Officer) March 20, 2001
(Steven R. Shawley)
/S/ Joseph P. Flannery Director March 20, 2001
(Joseph P. Flannery)
/S/ Peter C. Godsoe Director March 20, 2001
(Peter C. Godsoe)
/S/ Constance J. Horner Director March 20, 2001
(Constance J. Horner)
/S/ H. William Lichtenberger Director March 20, 2001
(H. William Lichtenberger)
/S/ Theodore E. Martin Director March 20, 2001
(Theodore E. Martin)
/S/ Orin R. Smith Director March 20, 2001
(Orin R. Smith)
/S/ Richard J. Swift Director March 20, 2001
(Richard J. Swift)
/S/ Tony L. White Director March 20, 2001
(Tony L. White)