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, 2001
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 LIMITED
(Exact name of registrant as specified in its charter)
BERMUDA N/A
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Clarendon House
2 Church Street
Hamilton HM 11, Bermuda
(Address of principal executive offices)
Registrant's telephone number, including area code: (441)295-2838
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
Class A Common Shares,
Par Value $1.00 per
Share New York Stock Exchange
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 [X]
The aggregate market value of common stock held by nonaffiliates
on March 4, 2002 was $8,968,446,161 based on the closing price of
such stock on the New York Stock Exchange.
The number of common A shares outstanding as of March 4, 2002 was
168,307,565.
DOCUMENTS INCORPORATED BY REFERENCE
Annual Report to Shareholders for the fiscal year ended
December 31, 2001. With exception of those portions which are
incorporated by reference into Parts I, II and IV of this Form 10-
K Annual Report, the 2001 Annual Report to Shareholders is not to
be deemed filed as part of this report.
Portions of the registrant's proxy statement to be filed within
120 days of the close of the registrant's fiscal year in
connection with the registrant's Annual General Meeting of
Shareholders to be held May 1, 2002 are incorporated by reference
into Part III of this Form 10-K.
PART I
Item 1. BUSINESS
Effective December 31, 2001, Ingersoll-Rand Company Limited, a
Bermuda company (IR-Limited or the company) became the successor
to Ingersoll-Rand Company, a New Jersey corporation (IR-New
Jersey), following a corporate reorganization (the
reorganization). IR-New Jersey was organized in 1905. The
reorganization was accomplished through a merger of a newly-
formed merger subsidiary into IR-New Jersey. IR-New Jersey, the
surviving company, continues to exist as an indirect, wholly-
owned subsidiary of IR-Limited. IR-Limited and its subsidiaries
will continue to conduct the businesses previously conducted by
IR-New Jersey and its subsidiaries. The reorganization has been
accounted for as a reorganization of entities under common
control and accordingly it did not result in any changes to the
consolidated amounts of assets, liabilities, and shareholders'
equity.
During 2001, the company continued the restructuring program and
productivity initiatives that were initiated in 2000, which
includes such actions as employee severance, plant
rationalizations, organizational realignments consistent with the
company's market-based structure and the consolidation of back-
office processes. In response to continued weakness in its major
end markets, the company initiated a second phase of
restructuring and productivity initiatives in the fourth quarter
of 2001 focused on reducing general and administrative expenses
and is expected to cost $150 million and be completed by the end
of 2002. The programs have resulted in the closure of 20 plants
and a workforce reduction of more than 3,900 employees. Charges
for restructuring and productivity initiatives for 2001 totaled
$216.9 million.
During 2001, the consolidated financial statements were restated
to report Dresser-Rand Company (Dresser-Rand) on a fully-
consolidated basis since the February 2000 acquisition of the
remaining 51%. Previously, the company reported the results and
net assets of Dresser-Rand as assets held for sale. The company
owned 49% of Dresser-Rand in 1999 and accounted for it under the
equity method.
In 2001, the company acquired twelve entities for cash of $158.3
million and treasury stock of $15.3 million. The major
acquisitions by segment are as follows:
Climate Control
O Grenco Transportkoeling B.V., based in the Netherlands, a
transport refrigeration sales and service business.
O National Refrigeration Services, Inc. (NRS), based in
Atlanta, Georgia, a leading provider of commercial refrigeration
products and services for food storage, distribution and display
throughout the United States.
O Taylor Industries Inc., based in Des Moines, Iowa and an
affiliated business, Taylor Refrigeration (Taylor), distributes,
installs and services refrigeration equipment, food service
equipment and electric doors.
Engineered Solutions
O Nadella S.A., based in France, supplies precision needle
bearings for automotive and industrial applications. Nadella was
previously 50% owned by the company.
Infrastructure
O Superstav spol. s.r.o., based in the Czech Republic, and
Earth Force America, Inc. based in South Carolina, both of which
are manufacturers of compact tractor loader backhoes.
Security and Safety
O Kryptonite Corporation, based in Massachusetts, a leading
manufacturer of locks for recreational and portable security
applications.
O ITO Emniyet Kilit Sistemleri A., based in Turkey, a leading
manufacturer and distributor of locks, cylinders and keys.
The company adopted Emerging Issues Task Force Issue No. 00-25
"Vendor Income Statement Characterization of Consideration Paid
to a Reseller of the Vendor's Products" in the fourth quarter of
2001. Upon adoption, financial statements for all periods
presented have been restated to comply with the income statement
classification of reseller finance costs and cooperative
advertising programs, which resulted in decreases to net sales of
$28.6 million, $24.0 million, and $23.6 million, decreases in
cost of goods sold of $13.1 million, $15.8 million, and $17.7
million, increases in selling and administrative expenses of
$18.5 million, $21.3 million, and $13.7 million, and decreases in
interest expense of $34.0 million, $29.5 million, and $19.6
million in 2001, 2000, and 1999, respectively.
The company is a leading provider of security and safety, climate
control, industrial solutions and infrastructure products. In
each of these markets, the company offers a diverse product
portfolio that includes well-recognized industrial and commercial
brands. During 2001, the company expanded its Industrial
Solutions Sector to include Dresser-Rand, renamed its Bearings
and Components Segment to Engineered Solutions and aggregated its
tools and related production equipment operations, previously
reported as part of the Industrial Products Segment, in the Air
and Productivity Solutions Segment. Club Car has been added to
the Infrastructure Segment.
Climate Control 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
for protecting food and other perishables. Climate Control
includes Themo King and Hussmann. 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. Climate Control 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 Solutions is composed of a diverse group of businesses
focused on providing solutions to enhance customers' industrial
efficiency. Industrial Solutions consists of the following three
segments, Air and Productivity Solutions, Dresser-Rand, and
Engineered Solutions.
Air and Productivity Solutions is engaged in the design,
manufacture, sale and service of air compressors, fluid products,
microturbines, and industrial tools.
Dresser-Rand is engaged in the design, manufacture, sale and
service of gas compressors, gas and steam turbines, and
generators.
Engineered Solutions is engaged in the design, manufacture, sale
and service of precision bearing products and motion control
components and assemblies. It includes both Automotive and
Industrial Engineered Solutions and was formerly known as
Bearings and Components.
Infrastructure supplies products and services for all types of
construction projects, industrial and commercial development, and
golf and utility vehicles. Products include Bobcat skid-steer
loaders and compact hydraulic excavators, Blaw-Knox and ABG
pavers, Ingersoll-Rand compactors, drilling equipment, portable
power products, and Club Car golf and utility vehicles.
Security and Safety manufactures and markets architectural
hardware and access-control products and service to customers
seeking to enhance productivity and security for residential,
commercial and institutional buildings. 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.
Products
Principal products of the company include the following:
Air balancers Golf cars
Air compressors & 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 accessories Portable compressors
Biometric access control Portable generators
systems Portable light towers
Blasthole drills Portable security products
Compact hydraulic excavators Refrigerated display cases
Compact tractor-loader- Refrigeration systems
backhoes 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 (steel) handlers
Drilling equipment and Skid-steer loaders
accessories Soil compactors
Electrical security products Spray-coating systems
Electronic access control Telescopic material handlers
systems Transport temperature
Engine-starting systems control systems
Exit devices Turbo machinery
Extrusion pump systems Utility vehicles
Fastener-tightening systems Waterjet-cutting systems
Fluid-handling equipment Water-well drills
Gas compressors Winches
These products are sold primarily under the company's name and
also under other names including ABG, Blaw-Knox, Bobcat, Club
Car, Datum, Dresser-Rand, 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 67 percent and 33 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 in the U.S. through branch sales offices
and through distributors and dealers across the United States.
Non-U.S. 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 U.S. and
non-U.S. 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
U.S. markets for locks, other door hardware products, skid-steer
loaders and asphalt paving equipment.
Operations by Geographic Area
Sales to customers outside the United States accounted for
approximately 37 percent of the consolidated net sales in 2001.
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 non-U.S. 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, 2001,
believed by it to be firm, was $321.2 million for Climate
Control, $153.4 million for Air and Productivity Solutions,
$300.2 million for Engineered Solutions, $760.1 million for
Dresser-Rand, $170.1 million for Infrastructure and $72.6 million
for Security and Safety as compared to $306.5 million, $144.0
million, $329.7 million, $557.5 million, $198.5 million and $77.5
million respectively, at December 31, 2000. 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 1,900 professional
employees for its research and development activities. The
company spent $215.4 million in 2001, $198.2 million in 2000 and
$186.2 million in 1999 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 2001, the company spent approximately $2.0 million on
capital projects for pollution abatement and control, and an
additional $7.8 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 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 56,000 employees of the company
throughout the world, of whom approximately 32,000 work in the
United States and 24,000 outside the United States. The company
believes relations with its employees are good.
Item 2. PROPERTIES
Manufacturing and assembly operations are conducted in 65 plants
in the United States; 7 plants in Canada; 33 plants in Europe; 17
plants in Asia and 8 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.
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's manufacturing locations are as follows:
Approximate
Number of Plants Square Footage
United States 13 4,220,000
Non-U.S. 18 4,548,000
Total 31 8,768,000
Air and Productivity Solutions manufacturing facilities are as
follows:
Approximate
Number of Plants Square Footage
United States 10 1,882,000
Non-U.S. 11 1,706,000
Total 21 3,588,000
Engineered Solutions manufacturing facilities are as follows:
Approximate
Number of Plants Square Footage
United States 14 3,423,000
Non-U.S. 13 2,240,000
Total 27 5,663,000
Dresser-Rand's manufacturing facilities are as follows:
Approximate
Number of Plants Square Footage
United States 3 2,464,000
Non-U.S. 7 2,738,000
Total 10 5,202,000
Infrastructure's manufacturing facilities are as follows:
Approximate
Number of Plants Square Footage
United States 11 3,210,000
Non-U.S. 7 1,069,000
Total 18 4,279,000
Security and Safety's manufacturing facilities are as follows:
Approximate
Number of Plants Square Footage
United States 14 2,071,000
Non-U.S. 9 750,000
Total 23 2,821,000
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 cleanups 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
On December 14, 2001 the company's shareholders were asked to
vote on the change of the company's place of incorporation from
New Jersey to Bermuda. The shareholders approved the proposal by
a vote of 113,915,706 (89%) to 14,332,195 (11%), with 1,309,232
shares that abstained from voting The company has approximately
168 million shares outstanding.
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 (53) 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)
Gordon A. Mapp (55) 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 (55) 11/2/88 Director of the Board
(since 1/1/02), Senior
Vice President (since
June 2000) and General
Counsel (Vice President
1988-2000)
Michael D. Radcliff (51) 1/15/01 Senior Vice President,
President, Global
Business Services, 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)
Donald H. Rice (57) 2/1/96 Senior Vice President (since
2001), Global Business Services
and Human Resources, (2000-
2001)(Vice President, Human
Resources, 1995-2000)
Randy P. Smith (52) 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 (55) 1/8/01 Senior Vice President and Sector
President, Industrial Solutions
(since January 2001); (The
Stanley Works, Vice President,
Operational Excellence, 1997-2000,
Vice President, Operations,
1995-1997)
Christopher P. Vasiloff (50) 11/1/01 Senior Vice President and Sector
President, Infrastructure Sector
(since November 2001); (President,
Portable Power, Infrastructure
Sector, 2000-2001; Vice President
and General Manager Portable
Compressor Division and Rotary
Recip. Compressor Division, Air
Compressor Group, 1996-2000)
Steven R. Shawley (49) 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 shareholder matters are as follows:
Quarterly share prices and dividends for the Class A common
shares are shown in the following tabulation. The common shares
are listed on the New York Stock Exchange.
Common Stock
High Low Dividend
2001
First quarter $48.84 $37.75 $0.17
Second quarter 50.28 38.20 0.17
Third quarter 45.20 30.41 0.17
Fourth quarter $45.66 $32.50 $0.17
2000
First quarter $57.75 $34.13 $0.17
Second quarter 51.38 39.38 0.17
Third quarter 48.75 31.88 0.17
Fourth quarter $44.81 $29.50 $0.17
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 Class A
common shares as of February 28, 2002 was 10,495.
Item 6. SELECTED FINANCIAL DATA
Selected financial data for the five years ended December 31, is
as follows (in millions except per share amounts):
2001 2000 1999 1998 1997
Net sales $ 9,682.0 $9,597.6 $7,819.0 $7,517.6 $6,355.1
Earnings from continuing
operations 246.2 546.2 563.1 481.6 367.6
Total assets 11,063.7 11,052.6 8,390.4 7,918.1 8,026.7
Long-term debt 2,900.7 1,540.4 2,113.3 2,166.0 2,528.0
Shareholders' equity 3,916.6 3,481.2 3,073.2 2,721.8 2,357.7
Basic earnings per share:
Continuing operations $1.49 $3.39 $3.44 $2.94 $2.25
Discontinued operations - 0.76 0.17 0.17 0.08
Diluted earnings per share:
Continuing operations $1.48 $3.36 $3.40 $2.91 $2.23
Discontinued operations - 0.76 0.17 0.17 0.08
Dividends per common
share 0.68 0.68 0.64 0.60 0.57
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
During 2001, the following significant events occurred that affect
year-to-year comparisons:
Effective December 31, 2001, Ingersoll-Rand Company Limited, a Bermuda
company (IR-Limited or the company) became the successor to Ingersoll-
Rand Company, a New Jersey corporation (IR-New Jersey), following a
corporate reorganization (the reorganization). The reorganization was
accomplished through a merger of a newly-formed merger subsidiary into
IR-New Jersey. IR-New Jersey, the surviving company, continues to
exist as an indirect, wholly-owned subsidiary of IR-Limited. IR-
Limited and its subsidiaries continue to conduct the businesses
previously conducted by IR-New Jersey and its subsidiaries. The
reorganization has been accounted for as a reorganization of entities
under common control and accordingly it did not result in any changes
to the consolidated amounts of assets, liabilities, and stockholders'
equity.
During 2001, the consolidated financial statements were restated to
report Dresser-Rand Company (Dresser-Rand) on a fully-consolidated
basis since the February 2000 acquisition of the remaining 51%.
Previously, the company reported the results and net assets of Dresser-
Rand as assets held for sale. The company owned 49% of Dresser-Rand in
1999 and accounted for it under the equity method.
During 2001, the company expanded its Industrial Solutions Sector to
include Dresser-Rand, renamed its Bearings and Components Segment, to
Engineered Solutions and aggregated its tools and related production
equipment operations, previously reported as part of the Industrial
Products Segment, in the Air and Productivity Solutions Segment. Club
Car has been added to the Infrastructure Segment. All segment data
presented reflects the new segment structure.
In 2001, the company acquired twelve entities for cash of $158.3
million and treasury stock of $15.3 million. The major acquisitions
by segment are as follows:
Climate Control
O Grenco Transportkoeling B.V., based in the Netherlands, a
transport refrigeration sales and service business. National
Refrigeration Services, Inc. (NRS), based in Atlanta, Georgia, a
leading provider of commercial refrigeration products and
services for food storage, distribution and display throughout
the United States.
O Taylor Industries Inc., based in Des Moines, Iowa and an
affiliated business, Taylor Refrigeration (Taylor), distributes,
installs and services refrigeration equipment, food service
equipment and electric doors.
Engineered Solutions
O Nadella S.A., based in France, supplies precision needle
bearings for automotive and industrial applications. Nadella was
previously 50% owned by the company.
Infrastructure
O Superstav spol. s.r.o., based in the Czech Republic, and
Earth Force America, Inc. based in South Carolina, both of which
are manufacturers of compact tractor loader backhoes.
Security and Safety
O Kryptonite Corporation, based in Massachusetts, a leading
manufacturer of locks for recreational and portable security
applications.
O ITO Emniyet Kilit Sistemleri A., based in Turkey, a leading
manufacturer and distributor of locks, cylinders and keys.
The company adopted Emerging Issues Task Force Issue No. 00-25 "Vendor
Income Statement Characterization of Consideration Paid to a Reseller
of the Vendor's Products" in the fourth quarter of 2001. Upon
adoption, financial statements for all periods presented have been
restated to comply with the income statement classification of
reseller finance costs and cooperative advertising programs, which
resulted in decreases to net sales of $28.6 million, $24.0 million and
$23.6 million, decreases in cost of goods sold of $13.1 million, $15.8
million and $17.7 million, increases in selling and administrative
expenses of $18.5 million, $21.3 million and $13.7 million, and
decreases in interest expense of $34.0 million, $29.5 million and
$19.6 million in 2001, 2000 and 1999, respectively.
During 2001, the company continued the restructuring program and
productivity initiatives that were initiated in 2000, which include
such actions as employee severance, plant rationalizations,
organizational realignments consistent with the company's market-based
structure and the consolidation of back-office processes. In response
to continued weakness in its major end markets, the company initiated
a second phase of restructuring and productivity initiatives in the
fourth quarter of 2001 focused on reducing general and administrative
expenses and is expected to cost $150 million and be completed by the
end of 2002. The programs have resulted in the closure of 20 plants
and a workforce reduction of more than 3,900 employees. Charges for
restructuring and productivity initiatives for full-year 2001 totaled
$216.9 million.
Results of Operations
Net earnings for 2001 were $246.2 million, or diluted earnings per
share of $1.48 as compared to $669.4 million and $4.12 per share, and
$591.1 million and $3.57 per share in 2000 and 1999, respectively.
All dollar amounts are in millions.
2001 2000 1999
Restructure Restructure
Reported and other Adjusted Reported and other Adjusted Reported
Results Charges Results Results Charges Results Results
<c> <c> <c> <c> <c> <c> <c>
Sales $9,682.0 $ - $9,682.0 $9,597.6 $ - $9,597.6 $7,819.0
Cost of goods sold 7,611.5 85.9 7,525.6 7,141.4 25.1 7,116.3 5,673.2
Selling and administrative
expenses 1,454.2 47.4 1,406.8 1,279.6 29.3 1,250.3 1,066.1
Restructuring charges 93.1 93.1 - 87.2 87.2 - -
Operating income $ 523.2 $(226.4) $ 749.6 $1,089.4 $(141.6) $1,231.0 $1,079.7
Operating margin 5.4% 7.7% 11.4% 12.8% 13.8%
Cost of goods sold, and selling and administrative expenses in 2001
and 2000 include other 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. Additionally in 2001, $9.5 million was included in selling
and administrative expenses for costs associated with the
reincorporation in Bermuda.
Revenues
2001 vs. 2000: Revenues for 2001 increased by approximately 1%,
compared to 2000. Excluding acquisitions, revenues declined by
approximately 8%. The poor economic conditions have significantly
impacted several of the company's end markets, and most major business
segments have experienced lower demand. Excluding acquisition
activity, revenues decreased in every segment.
2000 vs. 1999: Revenues for 2000 increased by approximately 23% when
compared with 1999. This increase includes the favorable effect of
the Hussmann acquisition, as well as the inclusion of Dresser-Rand.
Cost of Goods Sold
2001 vs. 2000: Cost of goods sold in 2001 was 78.6% of sales as
compared to 74.4% in 2000. Excluding productivity investments, the
ratio was 77.7% compared to 74.1%. The increase in the ratio of cost
of goods sold to sales was due to reduced volume, unfavorable product
mix, plant inefficiencies related to restructuring, and the full year
inclusion of Hussmann, which historically has had a higher ratio than
the other operations of the company. Additionally, cost of goods sold
in 2001 includes a $25 million benefit from payments received from the
U.S. Customs for antidumping claims.
2000 vs. 1999: Cost of goods sold in 2000 was 74.4% of sales as
compared to 72.6% in 1999. Excluding productivity investments, the
ratio was 74.1% in 2000. The increase in the ratio of cost of goods
sold to sales was mainly due to the inclusion of Hussmann.
Selling and Administrative Expenses
2001 vs. 2000: Selling and administrative expenses were 15.0% of
sales in 2001 as compared to 13.3% for 2000. Adjusted selling and
administrative expenses were 14.5% of sales in 2001 as compared to
13.0% in 2000. The increase in the ratio reflects acquisitions of
sales and service businesses that historically maintain higher ratios
than the company's, and lower sales volumes by almost all segments.
2000 vs. 1999: Selling and administrative expenses were 13.3% of
sales in 2000 as compared to 13.6% for 1999. Adjusted selling and
administrative expenses were 13.0% of sales in 2000.
Restructure
In 2000, the company began a program to restructure its worldwide
operations. The costs associated with this program included
severance, plant rationalizations, organizational realignments
consistent with the company's market-based structure and the
consolidation of back office processes. Due to continued weakness in
its major end markets, the company initiated a second phase of
restructuring in the fourth quarter of 2001 that will focus on
reducing general and administrative expenses. Restructure expense,
primarily related to severance, was $93.1 million in 2001 as compared
to $87.2 million in 2000.
Operating Income
2001 vs. 2000: Operating income for 2001 decreased by approximately
52% compared to 2000. Excluding restructure and other charges,
operating income decreased by approximately 39% from comparable 2000
results. Comparable operating income margins also declined
dramatically.
2000 vs. 1999: Operating income for 2000 increased slightly compared
to 1999. Excluding restructure and other charges, operating income
for 2000 increased by approximately 14% over 1999 due to the inclusion
of Hussmann and Dresser-Rand.
Interest Expense
2001 vs. 2000: Interest expense for 2001 totaled $253.0 million, a
decrease from 2000's total of $255.3 million. Lower average interest
rates, combined with a reduction in outstanding debt were offset by a
full year of interest associated with the debt incurred to purchase
Hussmann.
2000 vs. 1999: Interest expense of $255.3 million for 2000 was
significantly higher than the $183.5 million in 1999 due to the impact
of the debt incurred to purchase Hussmann and Dresser-Rand.
Other Income (Expense)
Other income (expense), net, includes foreign exchange activities,
equity in earnings of partially owned affiliates, and other
miscellaneous income and expense items.
2001 vs. 2000: In 2001, other income (expense), net, aggregated $6.8
million of net expense, as compared with $35.8 million of net income
in 2000. Included in 2001 is $25 million in benefits from payments
from U.S. Customs for antidumping claims associated with Engineered
Solutions for years prior to 2001, partially reduced by one-time costs
related to settlements of contract disputes. Additionally, 2001
includes increases in other normal miscellaneous expenses, which were
partially offset by an $8.8 million gain on the sale of stock received
in connection with the sale of Dresser-Rand's compression services
business. Included in 2000 is a $50.4 million gain on the sale of
Dresser-Rand's compression services business, which was partially
offset by foreign exchange losses.
2000 vs. 1999: In 2000, other income (expense), net, aggregated $35.8
million of net income, as compared with $3.1 million of net income in
1999. During 2000, the $50.4 million gain on the sale of the
compression services business of Dresser-Rand, offset by higher
foreign exchange losses, resulted in the increase.
Minority Interests
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.
2001 vs. 2000: Minority interests decreased from $39.3 million in
2000, to $20.1 million in 2001, mainly as a result of the conversion
of equity-linked securities into approximately 8.3 million common
shares in May 2001. This eliminated the charges associated with the
securities. Additionally, earnings from consolidated entities in
which the company has a majority ownership declined.
2000 vs. 1999: Minority interests charges increased from $29.1
million in 1999 to $39.3 million in 2000 due to higher earnings in
entities in which the company has the majority ownership, while
charges for equity-linked securities were comparable.
Provision for Income Taxes
As a result of the reorganization and subsequent incorporation in
Bermuda, as well as other tax planning strategies, the company had a
net tax benefit of $2.9 million for the year ended December 31, 2001.
This compared to a provision of $284.4 million, and an effective tax
rate of 34% for 2000 and a provision of $307.1 million, and an
effective tax rate of 35% for 1999. As a result of the
reincorporation from New Jersey to Bermuda, the company recorded a one
time tax benefit of $59.8 million related to the utilization of
previously limited foreign tax credits and net operating loss
carryforwards in certain non-U.S. jurisdictions. The reincorporation
is expected to provide annual tax savings of approximately $40 million
to $60 million beginning in 2002. Also in 2001, the company realized
a benefit of approximately $18.5 million related to prior year foreign
sales corporation benefits. The effective tax rate for 2002 is
expected to be approximately 20%.
Discontinued Operations
2000: 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.
1999: Earnings from discontinued operations, net of tax, for 1999
amounted to $28.0 million. This represents the company's 51% interest
in IDP, net of appropriate taxes.
Outlook
The direction of the world economy during 2002 is very difficult to
predict. There are many conflicting opinions about the prospects and
timing of a recovery. In 2001 the company saw declines in virtually
all of its key end markets, and expects to see declining markets for
the first half of 2002 with a stabilization and slow gradual recovery
in the second half of the year. First half 2002 revenues are
forecasted to decrease 3% to 4% compared to last year, while second
half revenues are expected to be up slightly compared with 2001.
Overall, the company sees 2002 revenues declining by 1% to 3% compared
to 2001.
Some of the key components expected to affect 2002 include major
benefits from restructuring programs and from tax savings associated
with the reincorporation in Bermuda, increased insurance and pension
expenses, investment spending on new products and growth initiatives,
results of new goodwill and intangible asset accounting and uncertain
volume.
The first half of 2002 will be challenging. A gradual improvement in
the North American economy coupled with tax and restructuring benefits
are expected to generate favorable year-over-year earnings comparisons
in the second half of 2002.
Review of Business Segments
During 2001, the company expanded its Industrial Solutions Sector to
include Dresser-Rand, renamed its Bearings and Components Segment to
Engineered Solutions and aggregated its tools and related production
equipment operations, previously reported as part of the Industrial
Products Segment, in the Air and Productivity Solutions Segment. Club
Car has been added to the Infrastructure Segment.
The modification resulted from a change in the management reporting
structure which occurred during the fourth quarter of 2001. Reportable
segments have been restated to reflect these changes.
The following table summarizes costs for restructure and productivity
investments by segment, for 2001 and 2000, in millions:
2001 2000
Productivity Productivity
Restructure Investments Restructure Investments
Climate Control $31.7 $ 32.1 $ 3.6 $ 6.9
Industrial Solutions
Air and Productivity
Solutions 16.2 21.6 16.5 6.0
Dresser-Rand 2.1 7.1 11.0 4.4
Engineered Solutions 19.6 15.3 11.5 1.3
Infrastructure 5.7 12.5 11.4 9.3
Security and Safety 3.0 25.2 15.1 8.9
Corporate 14.8 10.0 18.1 17.6
Total $93.1 $123.8 $87.2 $54.4
Climate Control
Climate Control is engaged in the design, manufacture, sale and
service of transport temperature control units, HVAC systems,
refrigerated display merchandisers, beverage coolers, and walk-in
storage coolers and freezers. It includes the market leading brands
of Thermo King and Hussmann. All dollar amounts are in millions.
2001 2000 1999
Sales $2,438.2 $2,002.4 $1,202.6
Operating income, reported $ 21.7 $ 206.3 $ 166.5
Operating margin, reported 0.9% 10.3% 13.8%
Operating income, before restructure
and other charges $ 85.5 $ 216.8 $ 166.5
Operating margin, before restructure
and other charges 3.5% 10.8% 13.8%
2001 vs. 2000: Climate Control revenues increased approximately 22%
due to the full year inclusion of Hussmann as well as the 2001
acquisitions of NRS and Taylor. The increase due to acquisitions was
substantially offset by lower Thermo King revenues, which resulted
from deterioration of worldwide markets, especially the U.S. truck and
trailer market. Operating income and margins decreased primarily due
to declining revenues in higher margin product lines, pricing pressure
in the container business, lower margins on acquired businesses and
reduced spending by major U.S. supermarket chains.
2000 vs. 1999: Revenues increased by approximately 67% due to the
acquisition of Hussmann in June 2000. Excluding Hussmann, operating
income and margins decreased due to a severe decline in the North
American truck and trailer market and continued weak truck and trailer
results in Europe. However, the bus air conditioning and sea-going
container business improved substantially.
Industrial Solutions
Industrial Solutions is composed of a diverse group of businesses
focused on providing solutions to enhance customers' industrial
efficiency. Industrial Solutions consists of the following three
segments; Air and Productivity Solutions, Dresser-Rand, and Engineered
Solutions.
Air and Productivity Solutions
Air and Productivity Solutions is engaged in the design, manufacture,
sale and service of air compressors, fluid products, microturbines
and industrial tools. All dollar amounts are in millions.
2001 2000 1999
Sales $1,308.0 $1,412.9 $1,381.4
Operating income, reported $ 52.7 $ 162.5 $ 159.3
Operating margin, reported 4.0% 11.5% 11.5%
Operating income, before restructure
and other charges $ 90.5 $ 185.0 $ 159.3
Operating margin, before restructure
and other charges 6.9% 13.1% 11.5%
2001 vs. 2000: Air and Productivity Solutions' revenues decreased by
approximately 7% primarily due to declining U.S. industrial activity,
which was partially offset by continued strong growth in aftermarket
service revenues. Operating income and margins also decreased due to
lower demand for medium and large compressors used in industrial
applications, as well as increased spending on development of the
PowerWorks microturbine.
2000 vs. 1999: Revenues increased by approximately 2%. Excluding
restructure and other charges, operating income and margins were
higher due to an increased emphasis on the aftermarket business and
ongoing cost and expense reduction activity, offset by spending on
development of the PowerWorks microturbine.
Dresser-Rand
Dresser-Rand is engaged in the design, manufacture, sale and service
of gas compressors, gas and steam turbines, and generators. All
dollar amounts are in millions.
2001 2000
Sales $881.3 $834.0
Operating income, reported $ 21.4 $ 4.6
Operating margin, reported 2.4% 0.6%
Operating income, before restructure
and other charges $ 30.6 $ 20.0
Operating margin, before restructure
and other charges 3.5% 2.4%
2001 vs. 2000: Dresser-Rand revenues increased by approximately 6%
due to increased volume. Operating income and margins were also up,
reflecting the increased volume and cost reductions from restructuring
actions. Prior to February 2000, the company only owned 49% of
Dresser-Rand and carried its investment on an equity basis.
Engineered Solutions
Engineered Solutions is engaged in the design, manufacture, sale and
service of precision bearing products and motion control components
and assemblies. It includes both Automotive and Industrial Engineered
Solutions. This segment was formerly known as Bearings and
Components. All dollar amounts are in millions.
2001 2000 1999
Sales $1,077.8 $ 1,185.4 $1,239.5
Operating income, reported $ 78.0 $ 159.8 $ 145.8
Operating margin, reported 7.2% 13.5% 11.8%
Operating income, before restructure
and other charges $ 112.9 $ 172.6 $ 145.8
Operating margin, before restructure
and other charges 10.5% 14.6% 11.8%
2001 vs. 2000: Engineered Solutions' revenues decreased by
approximately 9% due to lower volumes in the U.S. automotive and
industrial equipment markets. Operating income and margins also
decreased as a result of lower volumes. Operating income in 2001
includes a $25 million benefit from payments received from the U.S.
Customs for antidumping claims.
2000 vs. 1999: Revenues decreased approximately 4% due to lower
volumes in the automotive market as a result of a downturn in the
production of light trucks and sport-utility vehicles. Operating
income and margins increased due to significant ongoing cost and
expense reduction activities, as well as higher aftermarket revenues.
Infrastructure
Infrastructure is engaged in the design, manufacture, sale and service
of skid-steer loaders, mini-excavators, electric and gasoline powered
golf and utility vehicles, portable compressors and light towers, road
construction and repair equipment, and a broad line of drills and
drill accessories. It includes Bobcat, Club Car, Portable Power, Road
Development and Specialty Equipment. All dollar amounts are in
millions.
2001 2000 1999
Sales $2,570.3 $ 2,752.5 $2,707.3
Operating income, reported $ 219.7 $ 389.7 $ 416.9
Operating margin, reported 8.5% 14.2% 15.4%
Operating income, before restructure
and other charges $ 237.9 $ 410.4 $ 416.9
Operating margin, before restructure
and other charges 9.3% 14.9% 15.4%
2001 vs. 2000: Infrastructure revenues decreased by approximately 7%
along with dramatic declines in operating income and margins, as a
result of significantly reduced demand from large U.S. rental
companies and new equipment dealers who are aggressively managing
inventory, as well as weaker North American Road Development.
Operating margins also declined due to aggressive pricing and terms
offered by competitors.
2000 vs. 1999: Revenues increased by approximately 2%. Bobcat's
revenue improvement due to volume gains was offset by lower sales in
the rest of Infrastructure. Portable Power revenues declined as
slowness in national rental accounts occurred, while Road Development
revenues declined as a result of U.S. market softness.
Security and Safety
Security and Safety is engaged in the design, manufacture, sale and
service of locks, door closers, exit devices, door control hardware,
doors and frames, decorative hardware, and electronic and biometric
access control systems. All dollar amounts are in millions.
2001 2000 1999
Sales $1,406.4 $ 1,410.4 $1,288.2
Operating income, reported $ 230.8 $ 271.6 $ 248.4
Operating margin, reported 16.4% 19.3% 19.3%
Operating income, before restructure
and other charges $ 259.0 $ 295.6 $ 248.4
Operating margin, before restructure
and other charges 18.4% 21.0% 19.3%
2001 vs. 2000: Security and Safety revenues remained constant,
reflecting lower commercial and residential demand, offset by higher
electronic solutions' revenues. Operating income was also lower,
however margins remained strong. Lower operating income margins were
affected by increased development spending in the electronic security
solutions business.
2000 vs. 1999: Revenues increased approximately 10% due to continuing
strength in both the commercial and residential markets. Excluding
restructure and other charges, operating income and margins were also
higher. In addition to higher volumes, increased profitability was
due to productivity improvements and the successful assimilation of
acquisitions in 2000.
Liquidity and Capital Resources
The following table contains several key measures used by management
to gauge the company's financial performance. All dollar amounts are
in millions.
2001 2000 1999
Operating cash flow $601.6 $ 737.0 $854.7
Working capital $336.8 $(992.3) $964.1
Current ratio 1.1 0.8 1.6
Debt-to-total capital ratio 48% 49% 44%
Average working capital to net sales 0.2% (2.9)% 9.3%
Average days outstanding in receivables 54.2 56.3 49.0
Average months' supply of inventory 2.7 2.5 2.3
Note: 1999 working capital includes $582.8 million in assets held for
sale.
The company's primary source for liquidity has been operating cash
flow, supplemented by commercial paper. The company's ability to
borrow at a cost effective rate under the commercial paper program is
contingent upon maintaining an investment grade credit rating.
Additionally, the company has other short-term borrowing alternatives
should the need arise. At December 31, 2001, the company had $2.5
billion in U.S. credit lines available. The company has improved its
liquidity by refinancing $1.4 billion of short-term debt in 2001 with
long-term, fixed rate debt at rates ranging from 5.75% to 6.25%. Due
to this the company is less exposed to interest rate volatility and
refinancing risk. The company continues to utilize a program to
securitize accounts receivable to increase liquidity. During 2001, the
company had sold approximately $1,439 million under this program, with
$275 million outstanding at December 31, 2001.
In May 2001, equity-linked securities in the amount of $402.5 million
of Ingersoll-Rand Financing I, a Delaware statutory business trust of
IR-New Jersey, were exchanged for 8.3 million shares of common stock
issued by IR-New Jersey in accordance with common stock purchase
contracts issued by IR-New Jersey. Following the completion of these
transactions, $32.5 million of securities remain outstanding and are
included in long-term debt. The securities bear a distribution rate
of 6.29% per annum and will mature in May 2003.
During 2000, the company acquired Hussmann for $1.7 billion in cash,
sold IDP for $775 million in cash, and acquired full ownership of
Dresser-Rand for $543 million. The acquisitions of Hussmann and
Dresser-Rand were financed principally by issuing short-term
commercial paper and from internally generated cash.
The following table summarizes the company's contractual cash
obligations by required payment periods, in millions:
Payments due Long-term Operating Total contractual
by period debt leases cash obligations
2002 $ 192.3 $ 77.9 $ 270.2
2003 838.3 58.6 896.9
2004 573.2 39.7 612.9
2005 207.2 24.7 231.9
2006 588.2 19.4 607.6
Thereafter 694.5 36.3 730.8
Total $3,093.7 $256.6 $3,350.3
Financial Reporting Release No. 60, which was recently released by the
Securities and Exchange Commission, requires all registrants to
include a discussion of "critical" accounting policies or methods used
in the preparation of financial statements. The notes to the
financial statements include a summary of significant accounting
policies and methods used in the preparation of the consolidated
financial statements and the following reviews the more critical
accounting policies and methods used by the company:
O Revenue recognition - The company recognizes revenue on
sales of product at the time the goods are shipped and title has
passed to the customer or when the services are performed.
Provisions for discounts and rebates to the customers and other
adjustments are provided for at the time of sale as a reduction
to revenue.
O Depreciation and amortization - The company depreciates
property, plant and equipment and amortizes goodwill and other
intangible assets using primarily straight-line methods over the
estimated remaining useful lives. Beginning on January 1, 2002,
with the adoption of a new accounting standard, the company will
no longer be required to amortize a substantial portion of its
goodwill and other intangible assets.
O Hedging instruments - The effective portion of the change in
the fair value of cash flow hedges are temporarily recorded in
other comprehensive income, then recognized in earnings along
with the effects of the hedged item. The company does not use
derivatives for speculative purposes. A transition adjustment,
of $1.2 million, after tax, was recorded in equity upon adoption
of SFAS 133 and has been reclassed to earnings during the year.
Ending equity includes $1.5 million related to cash flow hedges.
The various instruments utilized are summarized later in
Management's Discussion and Analysis.
O Employee benefit plans - The company provides a range of
benefits to employees and retired employees, including pensions,
post-retirement, post-employment and health care benefits. The
company records annual amounts relating to these plans based on
calculations, which include various actuarial assumptions,
including discount rates, assumed rates of returns, compensation
increases, turnover rates and health care cost trend rates. The
company reviews its actuarial assumptions on an annual basis and
makes modifications to the assumptions based on current rates and
trends when it is deemed appropriate to do so. The effect of the
modifications is generally recorded or amortized over future
periods. The company believes that the assumptions utilized in
recording its obligations under its plans are reasonable based on
input from its actuaries and information as to assumptions used
by other employers.
O Commitments and contingencies - The company is involved in
various litigations, claims and administrative proceedings,
including environmental matters, arising in the normal course of
business. The company has recorded reserves in the financial
statements related to these matters which are developed based on
consultation with legal counsel and internal and external
consultants and engineers, depending on the nature of the
reserve. Subject to the uncertainties inherent in estimating
future costs for these types of liabilities, the company believes
its estimated reserves are reasonable and does not believe the
liability with respect to these matters would have a material
effect on the financial condition, results of operations,
liquidity or cash flows of the company for any year.
O Accrued liabilities - The company has accrued liabilities
for product liability claims, workers compensation matters and
product warranty issues. The company has recorded reserves in
the financial statements related to these matters, which are
developed using input derived from actuarial estimates and
historical and anticipated experience data depending on the
nature of reserve. The company believes its estimated reserves
are reasonable.
O Allowance for doubtful accounts and inventory reserves - The
company has provided an allowance for doubtful account
receivables and inventory reserves based upon its knowledge of
its end markets, customer base and products.
The preparation of all financial statements includes the use of
estimates and assumptions that affect a number of amounts included in
the company's financial statements. If actual amounts are ultimately
different from previous estimates, the revisions are included in the
company's results for the period in which the actual amounts become
known. Historically, the aggregate differences, if any, between the
company's estimates and actual amounts in any year, have not had a
significant impact on the consolidated financial statements.
The average short-term borrowings outstanding, excluding current
maturities of long-term debt, were $997.9 million in 2001, compared to
$1,352.1 million in 2000. The weighted average interest rate during
2001 and 2000 was 5.5% and 6.6%. The maximum amounts outstanding
during 2001 and 2000 were $1,505.8 million and $2,533.8 million,
respectively.
The company had $1.25 billion in U.S. short-term credit lines and
$1.25 billion in long-term credit lines at December 31, 2001, all of
which were unused. Additionally, $1.0 billion of non-U.S. credit
lines were available for working capital purposes, $786.5 million of
which was unused at the end of the year. These facilities exceed
projected requirements for 2002 and provide direct support for
commercial paper and indirect support for other financial instruments,
such as letters of credit and comfort letters.
In 2001 and 2000, foreign currency translation adjustments decreased
shareholders' equity by $45.9 million and $90.2 million, respectively.
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 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 $300.0
million in 2001 and $240.0 million in 2000. 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, 2001 and 2000, $275.0
million and $210.0 million of such receivables, respectively, remained
uncollected.
Capital expenditures were $200.6 million and $201.3 million in 2001
and 2000, 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 2002 is estimated at approximately
$200.0 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, 2001, 2000 and 1999, employment totaled 55,898, 56,688
and 46,062, respectively. The decrease from 2000 to 2001 was due to
terminations from the company's restructuring program, which were
partially offset by acquisitions. The increase from 1999 to 2000 was
due to acquisitions during the year, which were partially offset by
terminations under the company's restructuring program.
Financial Market Risk
The company is exposed to fluctuations in the price of major raw
materials used in the manufacturing process, foreign currency
fluctuations and interest rate charges. From time to time the company
enters into agreements to reduce its raw material, foreign currency
and interest rate risks. Such agreements hedge only specific
transactions or commitments. To minimize the risk of counter party
non-performance, such agreements are made only through major financial
institutions with significant experience in such financial
instruments.
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 or options 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, 2001, was $3.1 million and is considered
insignificant in relation to the company's results of operations and
shareholders' equity.
The company maintains significant operations in countries other than
the U.S.; 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 non-U.S.
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.
At December 31, the contractual amounts of foreign currency contracts
were:
In millions 2001 2000
Buy Sell Buy Sell
British pounds $ 14.0 $ 8.8 $ 59.5 $ 4.6
Canadian dollars 137.6 9.6 106.8 33.1
Euro and euro-linked
currencies 23.0 185.6 75.8 157.7
Japanese yen 21.6 27.3 27.6 0.3
Other 12.2 18.7 7.4 27.3
Total $208.4 $250.0 $277.1 $223.0
Starting in late 1999, the company began purchasing on a limited
basis, commodity derivatives to hedge the variable portion in supplier
contracts of the costs of metals used in its products. Gains and
losses on the derivatives are included in cost of sales in the same
period as the hedged transaction.
The following table summarizes commodity contracts by maturity:
Commodity contracts 2002 2003 Total
Aluminum
Contract amount in millions $17.7 - $17.7
Contract quantity (in 000 lbs.) 28.9 - 28.9
Copper
Contract amount in millions $ 8.3 - $ 8.3
Contract quantity (in 000 lbs.) 10.9 - 10.9
Zinc
Contract amount in millions - $2.1 $ 2.1
Contract quantity (in 000 lbs.) - 5.5 5.5
Total
Contract amount in millions $26.0 $2.1 $28.1
Contract quantity (in 000 lbs.) 39.8 5.5 45.3
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,
2001, from $2,996.7 million to an estimated fair value of $2,889.6
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 2001, the company spent approximately $2.0 million on capital
projects for pollution abatement and control, and an additional $7.8
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, an 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 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, U.S.
federal and state 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 Standards
The FASB issued Statement of Financial Accounting Standards ("SFAS")
No. 140, "Accounting for Transfers and Servicing of Financial Assets
and Extinguishments of Liabilities", which became effective for the
company on March 31, 2001. The statement revises the accounting
standards for securitizations and other transfers of financial assets
and collateral and requires certain disclosures. This statement is
effective for transfers and servicing of financial assets and
extinguishments of liabilities occurring after March 31, 2001.
Adoption of SFAS No. 140 had no effect on the company's consolidated
financial position, consolidated results of operations, or liquidity.
For all business combinations subsequent to June 30, 2001, the company
applied the provisions of SFAS No. 141 "Business Combinations" and
SFAS No. 142 "Goodwill and Other Intangible Assets." Under the
provisions of these standards, goodwill and intangible assets deemed
to have indefinite lives are no longer subject to amortization, while
all other intangible assets are to be amortized over their estimated
useful lives. Amortization expense related to goodwill was $135.1
million in 2001, $135.3 million in 2000 and $102.3 million in 1999.
Additional provisions of SFAS No. 141 and No. 142, including annual
impairment testing for goodwill and intangible assets, became
effective for the company on January 1, 2002. The company is currently
determining the impact of adopting these provisions under the
transition provisions of the statements, and anticipates that it may
record an impairment charge.
In June 2001, SFAS No. 143, "Accounting for Asset Retirement
Obligations" was issued. The standard requires that legal obligations
associated with the retirement of tangible long-lived assets be
recorded at fair value when incurred and is effective January 1, 2003,
for the company. The company is currently reviewing the provisions of
SFAS No. 143 to determine the standard's impact upon adoption.
In August 2001, SFAS No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets" was issued, which provides guidance on
the accounting for the impairment or disposal of long-lived assets and
was adopted January 1, 2002, by the company. Adoption of SFAS No. 144
did not have a material effect on the company's consolidated financial
position or results of operations.
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 representing the cumulative effect adjustment as a
decrease to accumulated other comprehensive income at January 1, 2001.
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 dated February 5, 2002, are included as
Exhibit 13-The Annual Report to Shareholders for 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
2001 sales goods sold income earnings
First quarter $2,291.3 $1,787.3 $ 138.6 $ 49.3
Second quarter 2,459.3 1,933.3 162.4 62.9
Third quarter 2,374.9 1,865.0 115.5 33.9
Fourth quarter 2,556.5 2,025.9 106.7 100.1
Year 2001 $9,682.0 $7,611.5 $ 523.2 $246.2
2000
First quarter $2,163.2 $1,607.0 $ 258.7 $136.1
Second quarter 2,476.8 1,829.0 333.3 175.3
Third quarter 2,504.6 1,883.9 235.4 251.9
Fourth quarter 2,453.0 1,821.5 262.0 106.1
Year 2001 $9,597.6 $7,141.4 $1,089.4 $669.4
All amounts shown have been restated to reflect adoption of
Emerging Issues Task Force Issue No. 00-25 "Vendor Income
Statement Characterization of Consideration Paid to a Reseller
of the Vendor's Products" in the fourth quarter of 2001.
2001 2000
Basic Diluted Basic Diluted
earnings earnings earnings earnings
per per per per
common common common common
share share share share
First quarter $0.31 $0.31 $0.84 $0.83
Second quarter 0.38 0.38 1.09 1.08
Third quarter 0.20 0.20 1.56 1.55
Fourth quarter 0.60 0.59 0.66 0.66
Year $1.49 $1.48 $4.15 $4.12
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 5 through 7,
and 23 of the company's definitive proxy statement for the Annual
Meeting of Shareholders to be held on May 1, 2002, 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 9 through 19
of the company's definitive proxy statement for the Annual
Meeting of Shareholders to be held on May 1, 2002.
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 4 and 5 of the company's definitive proxy statement for the
Annual Meeting of Shareholders to be held on May 1, 2002.
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 23 of the company's
definitive proxy statement for the Annual Meeting of Shareholders
to be held on May 1, 2002.
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
reports thereon of PricewaterhouseCoopers dated
February 5, 2002, and 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 2001.
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 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.
A Current Report on Form 8-K (Item 7) dated
September 30, 2001 reporting on the Restated
Consolidated Financial Statements reporting
Dresser-Rand Company on a fully consolidated
basis for the years ending December 31, 1997,
1998, 1999, 2000, and the first and second
quarters of 2001 and the amended Exhibit 12 -
Computations of Ratios of Earnings to Fixed
Charges.
A Current Report on Form 8-K (Item 7) dated
October 16, 2001 reporting on the Press Release
dated October 16, 2001 regarding Ingersoll-
Rand's Board of Directors Approval of Change in
Place of Incorporation to Bermuda.
A Current Report on Form 8-K (Item 5) dated
December 21, 2001 reporting on the $62 million
received by the Torrington Company relating to
the Continued Dumping and Subsidy Offset Act of
2000.
A Current Report on Form 8-K (Item 5 and Item 7)
dated December 31, 2001 reporting on the
corporate reorganization of the Company
resulting in its change in domicile from New
Jersey to Bermuda under the name Ingersoll-Rand
Company Limited.
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 LIMITED
INDEX TO FINANCIAL STATEMENTS
AND FINANCIAL STATEMENT SCHEDULES
(Item 14 (a) 1 and 2)
Form
10-K
Consolidated Financial Statements:
Reports of independent accountants *
Consolidated balance sheet at
December 31, 2001 and 2000 *
For the years ended December 31, 2001, 2000 and 1999:
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:
Reports of independent accountants on
financial statement schedule See below
Consolidated schedule for the years ended
December 31, 2001, 2000 and 1999:
Schedule II -- Valuation and Qualifying
Accounts See below
* See Exhibit 13 - Ingersoll-Rand Company Limited Annual
Report to Shareholders for 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 Limited:
Our audit of the 2001 consolidated financial statements referred
to in our report dated February 5, 2002, appearing in the 2001
Annual Report to Shareholders of Ingersoll-Rand Company Limited,
the successor company to Ingersoll-Rand Company, (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
PricewaterhouseCoopers
Hamilton, Bermuda
February 5, 2002
REPORT OF INDEPENDENT ACCOUNTANTS ON
FINANCIAL STATEMENT SCHEDULE
To the Board of Directors and Shareholders of Ingersoll-Rand
Company Limited:
Our audit of the 2000 and 1999 consolidated financial statements
referred to in our report dated February 6, 2001, appearing in
the 2001 Annual Report to Shareholders of Ingersoll-Rand Company
Limited, the successor company to Ingersoll-Rand Company, (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 Statements on Form S-3 (No. 333-66624) and S-8 (No.
333-67257, No. 333-35229, No. 333-00829, No. 333-19445, and No.
333-42133) of Ingersoll-Rand Company Limited, the successor
company to Ingersoll-Rand Company, of our report dated February
5, 2002 relating to the financial statements, which appears in
the Annual Report to Shareholders, which is incorporated in this
Annual Report on Form 10-K. We also consent to the incorporation
by reference of our report dated February 5, 2002 relating to the
financial statement schedule, which appears in this Form 10-K.
/S/ PricewaterhouseCoopers
PricewaterhouseCoopers
Hamilton, Bermuda
March 13, 2002
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the
Registration Statements on Form S-3 (No. 333-66624) and S-8 (No.
333-67257, No. 333-35229, No. 333-00829, No. 333-19445, and No.
333-42133) of Ingersoll-Rand Company Limited, the successor
company to Ingersoll-Rand Company, of our report dated February
6, 2001 relating to the financial statements, which appears in
the Annual Report to Shareholders, 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 13, 2002
SCHEDULE II
INGERSOLL-RAND COMPANY LIMITED
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 2001, 2000 and 1999
(Amounts in millions)
Additions
charged to
Balance at costs and Balance
beginning expenses Deductions at end
Description of year (*) (**) of year
2001
Doubtful accounts $ 48.5 $ 16.4 $ 10.6 $ 54.3
2000
Doubtful accounts $ 33.4 $ 22.3 $ 7.2 $ 48.5
1999
Doubtful accounts $ 35.4 $ 8.7 $ 10.7 $ 33.4
(*) "Additions" include foreign currency translation and
business acquisitions.
(**) "Deductions" include accounts and advances written off,
less recoveries.
INGERSOLL-RAND COMPANY LIMITED
INDEX TO EXHIBITS
(Item 14(a))
Description
2 Agreement and Plan of Merger, dated as of October 31, 2001,
among Ingersoll-Rand Company Limited, Ingersoll-Rand Company
and IR Merger Corporation. Incorporated by reference to
Amendment No. 1 to Form S-4. Registration Statement No, 333-
71642, filed October 30, 2001.
3.1 Memorandum of Association of Ingersoll-Rand Company Limited.
Incorporated by reference to Amendment No. 1 to Form S-4
Registration Statement No. 333-71642, filed October 30, 2001.
3.2 Amended and Restated Bye-Laws of Ingersoll-Rand Company
Limited. Incorporated by reference to Amendment No. 1 to Form
S-4 Registration Statement No. 333-71642, filed October 30,
2001.
4.1 Certificate of Designation, Preferences and Rights of Series
A Preference Shares of Ingersoll-Rand Company Limited.
Incorporated by reference to Amendment No. 1 to Form S-4
Registration Statement No. 333-71642, filed October 30, 2001.
4.2 Rights Agreement between Ingersoll-Rand Company Limited and
The Bank of New York, as Rights Agent. Incorporated by reference
to Amendment No. 1 to Form S-4 Registration Statement No. 333-
71642, filed October 30, 2001.
4.3 Voting Agreement between Ingersoll-Rand Company Limited and
Ingersoll-Rand Company. Incorporated by reference to
Amendment No. 1 to Form S-4 Registration Statement No. 333-
71642, filed October 30, 2001.
4.4 Indenture, dated as of August 1, 1986, between Ingersoll-Rand
Company and The Bank of New York, as Trustee, as supplemented
by first, second and third supplemental indentures.
Incorporated by reference to Ingersoll-Rand Company's Form S-
3 Registration Statement No. 33-39474 as filed March 18, 1991
and to Form S-3 Registration Statement No. 333-50902 as filed
November 29, 2000.
4.5 Fourth Supplemental Indenture, dated as of December 31, 2001,
among Ingersoll-Rand Company Limited, Ingersoll-Rand Company
and The Bank of New York, as trustee. Filed herewith.
4.6 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.
4.7 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.
4.8 Second Supplemental Indenture, dated December 31, 2001,
among Ingersoll Rand Company Limited, Ingersoll-Rand Company
and The Bank of New York. Filed herewith.
4.9 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.
4.10 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.
4.11 Credit Agreement dated as of July 2, 2001, among Ingersoll-
Rand Company, the banks listed therein, The Chase Manhattan
Bank, as Administrative Agent, Citibank N.A., and Deutsche
Banc Alex. Brown Inc., as Co-Syndication Agents, and The
Bank of Nova Scotia and Bank of Tokyo-Mitsubishi Trust
Company, as Co-Documentation Agents. Incorporated by
reference to Form 10-Q for the quarter ended June 30, 2001
of Ingersoll-Rand Company, filed August 2, 2001.
4.12 Amendment and Waiver, dated as of November 28, 2001, and
Ingersoll-Rand Company Limited, Ingersoll-Rand Company, JP
Morgan Chase Bank, as Administrative Agent, Citibank N.A.,
and Deutsche Banc Alex. Brown Inc., as Co-Syndication
Agents, and The Bank of Nova Scotia and Bank of Tokyo-
Mitsubishi Trust Company, as Co-Documentation Agents. Filed
herewith.
4.13 Credit Agreement, dated as of July 2, 2001, among Ingersoll-
Rand Company, the banks listed therein, The Chase Manhattan
Bank, as Administrative Agent, Citibank N.A., and Deutsche
Banc Alex. Brown Inc., as Co-Syndication Agents, and The
Bank of Nova Scotia and Bank of Tokyo-Mitsubishi Trust
Company, as Co-Documentation Agents. Incorporated by
reference to Form 10-Q for the quarter ended June 30, 2001
of Ingersoll-Rand Company, filed August 2, 2001.
4.14 Amendment and Waiver, dated as of November 28, 2001, among
Ingersoll-Rand Company Limited, Ingersoll-Rand Company, JP
Morgan Chase Bank, as Administrative Agent, Citibank N.A.,
and Deutsche Banc Alex. Brown Inc., as Co-Syndication
Agents, and The Bank of Nova Scotia and Bank of Tokyo-
Mitsubishi Trust Company, as Co-Documentation Agents. Filed
herewith.
4.15 Ingersoll-Rand Company Limited and its subsidiaries are par
ties 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
Limited and its subsidiaries on a consolidated basis.
Pursuant to paragraph 4 (iii) of Item 601(b) of Regulation
S-K, Ingersoll-Rand Company Limited agrees to furnish a copy
of such instruments to the Securities and Exchange
Commission upon request.
10.1 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.
10.2 Reorganization Amendment to Management Incentive Unit Plan,
dated December 31, 2001. Filed herewith.
10.3 Amended and Restated Director Deferred Compensation and Sto
ck Award Plan. Incorporated by reference to Form 10-K of
Ingersoll-Rand Company for the year ended December 31, 2000,
filed March 20, 2001.
10.4 First Amendment to Director Deferred Compensation and Stock
Award Plan. Filed herewith.
10.5 Description of Bonus Arrangement for Sector Presidents of
Ingersoll-Rand Company Limited. Filed herewith.
10.6 Description of Bonus Arrangement for Chairman, President and
Staff Officers of Ingersoll-Rand Company. Incorporated by
reference to Form 10-K of Ingersoll-Rand Company for the
year ended December 31, 1993, filed March 30, 1994.
10.7 Amended and Restated Change of Control Agreement with
Chairman, dated as of October 1, 2001. Filed herewith.
10.8 Amended and Restated Form of Change of Control Agreement
dated as of October 1, 2001, with selected executive officers
of Ingersoll-Rand Company other than Chairman. Filed herewith.
10.9 Executive Supplementary Retirement Agreement for selected
executive officers of Ingersoll-Rand Company. Incorporated
by reference to Form 10-K of Ingersoll-Rand Company for
the year ended December 31, 1993, filed March 30, 1994.
10.10 Executive Supplementary Retirement Agreement for selected
executive officers of Ingersoll-Rand Company. Incorporated
by reference to Form 10-K for the year ended December 31,
1996, filed March 26, 1997.
10.11 Forms of insurance and related letter agreements with
certain executive officers of Ingersoll-Rand Company.
Incorporated by reference to Form 10-K of Ingersoll-Rand
Company for the year ended December 31, 1993, filed March
30, 1994.
10.12 Restated Supplemental Pension Plan of Ingersoll-Rand
Company. Incorporated by reference to Form 10-K of Ingerso
ll-Rand Company for the year ended December 31, 1995,
filed March 29, 1996.
10.13 Reorganization Amendment to Supplemental Pension Plan,
dated December 31, 2001. Filed herewith.
10.14 Supplemental Savings and Stock 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.
10.15 First Amendment to Supplemental Savings and Stock
Investment Plan, dated December 31, 2001. Filed herewith.
10.16 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.
10.17 First Amendment to Supplemental Retirement Account Plan,
dated December 31, 2001. Filed herewith.
10.18 Incentive Stock Plan of 1995. 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.
10.19 Reorganization Amendment to Incentive Stock Plan of 1995,
dated December 21, 2001. Filed herewith.
10.20 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.
10.21 Amended and Restated Elected Officers Supplemental Plan. I
ncorporated by reference to Form 10-K of Ingersoll-Rand
Company for the year ended December 31, 1998, filed March
30, 1999.
10.22 First Amendment to Elected Officers Supplemental Plan,
dated March 22, 1999. Filed herewith.
10.23 Second Amendment to Elected Officers Supplemental Plan,
dated March 22, 1999. Filed herewith.
10.24 Third Amendment to Elected Officers Supplemental Plan,
dated December 31, 2001. Filed herewith.
10.25 Amended and Restated Executive Deferred Compensation
Plan. Incorporated by reference to Form 10-K for the year
ended December 31, 2000. Filed March 20, 2001.
10.26 First Amendment to Executive Deferred Compensation Plan,
dated December 31, 2001. Filed herewith.
10.27 Incentive Stock Plan of 1998. Incorporated by reference
to Appendix A to the Notice of 1998 Annual Meeting of
Shareholders and Proxy Statement of Ingersoll-Rand
Company, dated March 17, 1998.
10.28 Amendment of Incentive Stock Plan of 1998, dated May 2,
2001. Filed herewith.
10.29 Reorganization Amendment to Incentive Stock Plan of 1998,
dated December 31, 2001. Filed herewith.
10.30 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.
10.31 Employment Agreement with Michael Radcliff, Senior Vice
President. Incorporated by reference to Form 10-K of
Ingersoll-Rand for the year ended December 31, 2000.
Filed March 20, 2001.
10.32 Employment Agreement with Randy Smith, Senior Vice
President. Incorporated by reference to Form 10-K of Ingersoll-
Rand for the year ended December 31, 2000. Filed March 20, 2001.
10.33 Employment Agreement with John Turpin, Senior Vice Preside
nt. Incorporated by reference to Form 10-K of Ingersoll-
Rand for the year ended December 31, 2000. Filed March
20, 2001.
12 Computations of Ratios of Earnings to Fixed Charges. Filed
herewith.
13 Ingersoll-Rand Company Limited Annual Report to
Shareholders for 2001. Filed herewith. 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 Limited.
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 LIMITED
(Registrant)
By /S/ Herbert L. Henkel
Herbert L. Henkel
Date March 13, 2002
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 13, 2002
(Herbert L. Henkel)
Vice President and
Controller (Principal
/S/ Steven R, Shawley Financial and Accounting
(Steven R. Shawley) Officer) March 13, 2002
/S/ Ann C. Berzin Director March 13, 2002
(Ann C. Berzin)
/S/ Joseph P. Flannery Director March 13, 2002
(Joseph P. Flannery)
/S/ Peter C. Godsoe Director March 13, 2002
(Peter C. Godsoe)
/S/ Constance J. Horner Director March 13, 2002
(Constance J. Horner)
/S/ H. William Lichtenberger Director March 13, 2002
(H. William Lichtenberger)
/S/ Theodore E. Martin Director March 13, 2002
(Theodore E. Martin)
/S/ Patricia Nachtigal Director March 13, 2002
(Patricia Nachtigal)
/S/ Orin R. Smith Director March 13, 2002
(Orin R. Smith)
/S/ Richard J. Swift Director March 13, 2002
(Richard J. Swift)
/S/ Tony L. White Director March 13, 2002
(Tony L. White)