EXHIBIT 13
INGERSOLL-RAND COMPANY LIMITED
2001 FINANCIAL REPORT
Consolidated Statement of Income
In millions except per share amounts
For the years ended December 31 2001 2000 1999
Net sales $9,682.0 $9,597.6 $7,819.0
Cost of goods sold 7,611.5 7,141.4 5,673.2
Selling and administrative
expenses 1,454.2 1,279.6 1,066.1
Restructuring charges 93.1 87.2 -
Operating income 523.2 1,089.4 1,079.7
Interest expense (253.0) (255.3) (183.5)
Other income (expense), net (6.8) 35.8 3.1
Minority interests (20.1) (39.3) (29.1)
Earnings before income taxes 243.3 830.6 870.2
(Benefit)/provision for income
taxes (2.9) 284.4 307.1
Earnings from continuing
operations 246.2 546.2 563.1
Discontinued operations
(net of tax) - 123.2 28.0
Net earnings $ 246.2 $ 669.4 $ 591.1
Basic earnings per share:
Continuing operations $1.49 $3.39 $3.44
Discontinued operations - 0.76 0.17
$1.49 $4.15 $3.61
Diluted earnings per share:
Continuing operations $1.48 $3.36 $3.40
Discontinued operations - 0.76 0.17
$1.48 $4.12 $3.57
See accompanying Notes to Consolidated Financial Statements.
Consolidated Balance Sheet
In millions except share amounts
December 31
2001 2000
Assets
Current assets:
Cash and cash equivalents $ 114.0 $ 97.0
Marketable securities 7.4 130.4
Accounts and notes receivable, less
allowances of $54.3 in 2001 and
$48.5 in 2000 1,482.9 1,671.0
Inventories 1,295.3 1,242.3
Prepaid expenses and deferred income taxes 288.2 235.5
3,187.8 3,376.2
Property, plant and equipment, net 1,633.0 1,653.4
Intangible assets, net 5,689.3 5,372.2
Deferred income taxes - 152.9
Other assets 553.6 497.9
$11,063.7 $11,052.6
Liabilities and Equity
Current liabilities:
Accounts payable $ 761.0 $ 681.4
Accrued expenses and other current
liabilities 1,526.3 1,561.0
Loans payable 563.7 2,126.1
2,851.0 4,368.5
Long-term debt 2,900.7 1,540.4
Deferred income taxes 170.1 -
Postemployment and other benefit liabilities 920.4 957.8
Minority interests 110.5 113.4
Other liabilities 194.4 188.8
7,147.1 7,168.9
Company obligated mandatorily redeemable
preferred securities of subsidiary trust
holding solely debentures of the company - 402.5
Shareholders' equity:
Common shares (168,003,884 and 171,466,627
shares issued in 2001 and 2000,
respectively) 168.0 343.1
Capital in excess of par value 324.2 258.8
Retained earnings 3,745.8 3,612.7
4,238.0 4,214.6
Unallocated LESOP shares, at cost - (1.8)
Treasury stock, at cost - (471.0)
Accumulated other comprehensive income (321.4) (260.6)
Shareholders' equity 3,916.6 3,481.2
$11,063.7 $11,052.6
See accompanying Notes to Consolidated Financial Statements.
Consolidated Statement of Shareholders' Equity
In millions
Capital in Accumulated
Total excess other
shareholders' Common stock of par Retained Unallocated Treasury comprehensive Comprehensive
equity Amount Shares value earnings LESOP stock income income
<c> <c> <c> <c> <c> <c> <c> <c> <c>
Balance at December 31, 1998 $2,721.8 $337.8 168.9 $133.4 $2,567.3 $(27.0) $(150.9) $(138.8)
Net earnings 591.1 591.1 $591.1
Foreign currency translation (48.0) (48.0) (48.0)
Total comprehensive income $543.1
Shares issued under stock and
incentive plans 94.8 4.5 2.3 90.3
Allocation of LESOP shares 24.6 14.1 10.5
Purchase of treasury shares (205.8) (205.8)
Cash dividends (105.3) (105.3)
Balance at December 31, 1999 3,073.2 342.3 171.2 237.8 3,053.1 (16.5) (356.7) (186.8)
Net earnings 669.4 669.4 $669.4
Foreign currency translation (90.2) (90.2) (90.2)
Unrealized gain on marketable
securities 16.4 16.4 16.4
Total comprehensive income $595.6
Acquisition of business 6.4 6.4
Shares issued under stock and
incentive plans 11.7 0.8 0.3 10.3 0.6
Allocation of LESOP shares 25.4 10.7 14.7
Purchase of treasury shares (121.3) (121.3)
Cash dividends (109.8) (109.8)
Balance at December 31, 2000 3,481.2 343.1 171.5 258.8 3,612.7 (1.8) (471.0) (260.6)
Net earnings 246.2 246.2 $246.2
Foreign currency translation (45.9) (45.9) (45.9)
Cumulative effect of change
in accounting principal
(SFAS 133), net of tax (1.2) (1.2) (1.2)
Cash flow hedges, net of tax:
Unrealized (loss) gain 1.5 1.5 1.5
Reclassification adjustments 1.2 1.2 1.2
Reclassification to realized on
marketable securities,
net of tax (16.4) (16.4) (16.4)
Total comprehensive income $185.4
Acquisition of business 15.3 15.3
Shares issued under stock and
incentive plans 15.3 0.6 0.4 14.7
Allocation of LESOP shares 2.5 0.7 1.8
Purchase of treasury shares (72.5) (72.5)
Stock issued related to equity-
linked securities 402.5 16.7 8.3 385.8
Treasury stock cancellation - (24.4) (12.2) (503.8) 528.2
Common stock conversion - (168.0) 168.0
Cash dividends (113.1) (113.1)
Balance at December 31, 2001 $3,916.6 $168.0 168.0 $324.2 $3,745.8 $ - $ - (321.4)
See accompanying Notes to Consolidated Financial Statements.
Consolidated Statement of Cash Flows
In millions
For the years ended December 31 2001 2000 1999
Cash flows from operating activities:
Income from continuing operations $ 246.2 $ 546.2 $563.1
Adjustments to arrive at net cash provided by
operating activities:
Restructure charges 93.1 87.2 -
Depreciation and amortization 362.5 327.1 272.4
Gain on sale of businesses - (42.9) (14.6)
Loss/(gain) on sale of property, plant and
equipment 1.6 (5.1) (3.4)
Minority interests, net of dividends (3.4) 4.9 (0.2)
Equity earnings/losses, net of dividends (1.5) 0.8 (28.5)
Deferred income taxes 23.4 13.6 62.2
Other items 10.6 35.7 40.9
Changes in assets and liabilities
(Increase)/decrease in:
Accounts and notes receivable 229.4 (31.6) (57.7)
Inventories (24.1) (160.2) 56.7
Other current and noncurrent assets (172.9) 3.1 12.8
Increase/(decrease) in:
Accounts payable and accruals 40.0 50.3 (55.6)
Other current and noncurrent liabilities (203.3) (92.1) 6.6
Net cash provided by operating activities 601.6 737.0 854.7
Cash flows from investing activities:
Capital expenditures (200.6) (201.3) (190.5)
Proceeds from sales of property, plant and
equipment 41.7 28.5 30.4
Acquisitions, net of cash * (158.3) (2,288.0) (161.2)
Proceeds from business dispositions 17.5 977.3 84.8
Decrease/(increase) in marketable securities 97.2 (6.3) 1.5
Cash provided by/(invested in) or advances
from/(to) equity companies 15.7 12.2 (2.0)
Net cash used in investing activities (186.8) (1,477.6) (237.0)
Cash flows from financing activities:
(Decrease)/increase in short-term borrowings (1,026.1) 950.2 (36.8)
Proceeds from long-term debt 1,493.8 3.1 21.5
Payments of long-term debt (681.8) (80.9) (252.2)
Net change in debt (214.1) 872.4 (267.5)
Proceeds from exercise of stock options 9.7 8.3 70.2
Dividends paid (113.1) (109.8) (105.3)
Purchase of treasury stock (72.5) (121.3) (205.8)
Other - - 63.3
Net cash (used in)/provided by financing
activities (390.0) 649.6 (445.1)
Net cash (used in)/provided by discontinued
operations - (22.1) 14.6
Effect of exchange rate changes on cash and cash
equivalents (7.8) (12.8) (7.8)
Net increase/(decrease) in cash and cash
equivalents 17.0 (125.9) 179.4
Cash and cash equivalents-beginning of year 97.0 222.9 43.5
Cash and cash equivalents-end of year $ 114.0 $ 97.0 $ 222.9
*Acquisitions:
Working capital, other than cash $ (5.9) $ (376.8) $ (61.0)
Property, plant and equipment (41.6) (487.2) (13.0)
Intangibles and other assets (126.6) (1,806.2) (101.4)
Long-term debt and other liabilities 0.5 375.7 14.2
Treasury stock issued 15.3 6.5 -
Net cash used to acquire businesses $ (158.3) $(2,288.0) $(161.2)
Cash paid during the year for:
Interest, net of amounts capitalized $ 293.4 $ 346.8 $ 230.4
Income taxes 154.6 175.7 217.7
In 1999, the company acquired the remaining 49% interest in
Ingersoll-Dresser Pump Company in a noncash transaction by
issuing a note for $377.0 million.
See accompanying Notes to Consolidated Financial Statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: A summary of
significant accounting policies used in the preparation of the
accompanying financial statements follows:
Basis of Presentation: The consolidated financial statements of
Ingersoll-Rand Company Limited, a Bermuda company (IR-Limited or the
company), have been prepared in accordance with generally accepted
accounting principles in the United States. IR-Limited is the successor
to Ingersoll-Rand Company, a New Jersey corporation (IR-New Jersey),
following a corporate reorganization (the reorganization) that became
effective on December 31, 2001. 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 shareholders' equity.
Principles of Consolidation: The consolidated financial statements
include all wholly owned and majority-owned subsidiaries. Intercompany
transactions and balances have been eliminated. Partially owned equity
affiliates are accounted for under the equity method. In conformity
with generally accepted accounting principles, management has used
estimates and assumptions that affect the reported amounts of assets,
liabilities, revenues and expenses, and the disclosure of contingent
assets and liabilities. Significant estimates include accounting for
doubtful accounts, amortization and depreciation, warranty, sales
allowances, taxes, environmental, product liability and other
contingencies. Actual results could differ from those estimates.
Reclassifications: Reclassifications were made to prior year amounts
to conform with the 2001 presentation. The accompanying consolidated
financial statements restate the previously presented amounts to report
Dresser-Rand Company (Dresser-Rand) on a fully consolidated basis since
acquisition. Previously, the company reported the results and net
assets of Dresser-Rand as assets held for sale.
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 were 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.
Cash Equivalents: The company considers all highly liquid investments,
consisting primarily of time deposits and commercial paper with
maturities of three months or less when purchased, to be cash
equivalents. Cash equivalents were $0.5 million and $1.0 million at
December 31, 2001 and 2000, respectively.
Inventories: Inventories are stated at cost, which is not in excess of
market. Most U.S. manufactured inventories, excluding the Climate
Control and Dresser-Rand Segments, are valued on the last-in, first-out
(LIFO) method. All other inventories are valued using the first-in,
first-out (FIFO) method.
Property, Plant and Equipment: Property, plant and equipment are
stated at cost, less accumulated depreciation. The company principally
uses accelerated depreciation methods for assets placed in service
prior to December 31, 1994. Assets acquired subsequent to that date
are depreciated using the straight-line method over their estimated
useful lives. At December 31, 2001 and 2000, gross land and buildings
totaled $761.7 million and $738.9 million, respectively, while gross
machinery and equipment totaled $1,887.2 million and $1,827.7 million,
respectively. Accumulated depreciation at December 31, 2001 and 2000
was $1,015.9 million and $913.2 million, respectively.
Intangible Assets: Goodwill, net, was $4.8 billion and $5.3 billion at
December 31, 2001 and 2000, respectively. Accumulated amortization
amounted to $554.4 million and $448.4 million at December 31, 2001 and
2000, respectively. In accordance with Statement of Financial
Accounting Standards (SFAS) No. 142, "Goodwill and Other Intangible
Assets," goodwill associated with acquisitions consummated after June
30, 2001 is not being amortized. All other goodwill has been amortized
on a straight-line basis over periods not to exceed 40 years through
December 31, 2001. Amortization expense for goodwill for 2001, 2000 and
1999 was $135.1 million, $135.3 million and $102.3 million,
respectively.
Other intangible assets, net, were $877.7 million and $104.2 million at
December 31, 2001 and 2000, respectively. These amounts include
capitalized software, debt issuance costs, and costs allocated to
patents, trademarks and other specifically identifiable assets arising
from acquisitions, which are being amortized on a straight-line basis
over their estimated useful lives. At December 31, 2001 and 2000,
accumulated amortization of other intangibles amounted to $86.0 million
and $43.0 million, respectively.
During 2001, the company reclassified certain amounts from goodwill to
other intangible assets as a result of final valuations on the 2000
acquisitions and increased goodwill associated with deferred tax
liabilities.
The carrying value of goodwill and other intangibles is reviewed if the
facts and circumstances, such as significant decline in sales, earnings
or cash flows or material adverse changes in the business climate,
suggest that it may be impaired. If this review indicates that
goodwill will not be recoverable as determined based on the estimated
undiscounted cash flows of the entity acquired, impairment is measured
by comparing the carrying value of goodwill to fair value. Fair value
is determined based on quoted market values, discounted cash flows or
appraisals.
Income Taxes: Deferred taxes are provided on temporary differences
between assets and liabilities for financial reporting and tax purposes
as measured by enacted tax rates expected to apply when temporary
differences are settled or realized. A valuation allowance is
established for deferred tax assets for which realization is not
likely.
Environmental Costs: Environmental expenditures relating to current
operations are expensed or capitalized as appropriate. Expenditures
relating to existing conditions caused by past operations, which do not
contribute to current or future revenues, are expensed. Costs to
prepare environmental site evaluations and feasibility studies are
accrued when the company commits to perform them. Liabilities for
remediation costs are recorded when they are probable and reasonably
estimable, generally no later than the completion of feasibility
studies or the company's commitment to a plan of action. The assessment
of this liability, which is calculated based on existing technology,
does not reflect any offset for possible recoveries from insurance
companies and is not discounted.
Revenue Recognition: Revenues are recognized on sales of product at the
time the goods are shipped and title has passed to the customer or when
services are performed. Provisions for discounts and rebates to
customers and other adjustments are provided for at the time of sale as
a reduction of revenue.
Research and Development Costs: Research and development expenditures,
including qualifying engineering costs, are expensed when incurred and
amounted to $215.4 million in 2001, $198.2 million in 2000 and $186.2
million in 1999.
Comprehensive Income: Comprehensive income includes net income, foreign
currency translation adjustments, amounts relating to cash flow hedges,
and unrealized holding gains and losses on marketable securities.
Foreign Currency: Assets and liabilities of non-U.S. entities, where
the local currency is the functional currency, have been translated at
year-end exchange rates, and income and expenses have been translated
using weighted average-for-the-year exchange rates. Adjustments
resulting from translation have been recorded in accumulated other
comprehensive income and are included in net earnings only upon sale or
liquidation of the underlying foreign investment.
For non-U.S. entities where the U.S. dollar is the functional currency,
inventory and property balances and related income statement accounts
have been translated using historical exchange rates, and resulting
gains and losses have been credited or charged to net earnings.
Foreign currency transactions and translations recorded in the income
statement decreased net earnings by $2.3 million and $7.6 million in
2001 and 2000 respectively, and increased net earnings by $2.5 million
in 1999. Accumulated other comprehensive income decreased in 2001 and
2000 by $60.8 million and $73.8 million, respectively, primarily due to
foreign currency equity adjustments related to translation.
Earnings Per Share: Basic earnings per share is based on the weighted
average number of common shares outstanding. Diluted earnings per
share is based on the weighted average number of common shares
outstanding as well as potentially dilutive common shares, which in the
company's case comprise shares issuable under stock benefit plans. The
weighted average number of common shares outstanding for basic earnings
per share calculations were 165.1 million, 161.2 million and 163.6
million for 2001, 2000 and 1999, respectively. For diluted earnings per
share purposes, these balances increased by 1.2 million, 1.2 million
and 2.1 million shares for 2001, 2000 and 1999, respectively. At
December 31, 2001, 2000 and 1999, 5.6 million, 6.5 million and 0.2
million shares, respectively, were excluded because the effect would be
anti-dilutive.
Stock-based Compensation: The company continues to apply the principles
of APB No. 25 "Accounting for Stock Issued to Employees," and has
provided pro forma fair value disclosures in Note 14.
New Accounting Standards: 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.
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.
Also in June 2001, the Financial Accounting Standards Board (FASB)
issued SFAS No. 141, "Business Combinations," and SFAS No. 142,
"Goodwill and Other Intangible Assets." The requirements and effects
of these pronouncements are discussed in Note 4.
In September 2000, the FASB issued SFAS 140, "Accounting for Transfers
and Servicing of Financial Assets and Extinguishments of Liabilities."
This statement is effective for transfers and services of financial
assets occurring after March 31, 2001, and is discussed in Note 10.
The company adopted SFAS No. 133 "Accounting for Derivative Instruments
and Hedging Activities" and its amendments as of January 1, 2001. The
requirements and effects of such adoption are discussed in Note 7.
NOTE 2 - RESTRUCTURING: During 2001, the company continued a
restructuring program that was 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 in the fourth quarter of 2001, which is focussed on
reducing general and administrative expense and is expected to 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 for full-year 2001 totaled $93.1
million.
The company recorded pretax restructuring charges by business segment
for the year ended December 31, as follows:
In millions 2001 2000
Climate Control $31.7 $ 36.6
Industrial Solutions
Air and Productivity Solutions 16.2 16.5
Dresser-Rand 2.1 11.0
Engineered Solutions 19.6 11.5
Infrastructure 5.7 11.4
Security and Safety 3.0 15.1
Corporate 14.8 18.1
Total $93.1 $87.2
A reconciliation of the restructuring provision is as follows:
Employee
termination Facility
In millions costs exit costs Total
Provision $74.2 $13.0 $87.2
Cash payments (33.7) (1.7) (35.4)
Non-cash write-offs (5.2) (8.6) (13.8)
Balance at December 31, 2000 35.3 2.7 38.0
Provision 80.0 13.1 93.1
Cash payments (74.7) (6.7) (81.4)
Non-cash write-offs (6.1) (2.0) (8.1)
Balance at December 31, 2001 $34.5 $ 7.1 $41.6
NOTE 3 - DISCONTINUED OPERATIONS: In August 1999, the company announced
its plan to divest Ingersoll-Dresser Pump Company (IDP). On August 8,
2000, the company sold IDP for $775.0 million. The company realized an
after-tax gain of $124.8 million. The net assets of IDP had been
classified as assets held for sale. IDP's results have been reported as
discontinued operations (net of tax) in the accompanying financial
statements.
Earnings from discontinued operations included the following results
for the years ended December 31:
In millions 2000 1999
Net sales $421.8 $837.9
Operating income 5.3 63.9
Other income (expense), net (1.2) 7.4
Interest expense (10.1) (1.4)
Minority interest - (23.7)
Earnings (loss) before income taxes (6.0) 46.2
Income taxes (4.4) 18.2
Earnings (loss) from operations (1.6) 28.0
Gain on disposal of discontinued
operations (net of tax) 124.8 -
Net earnings from discontinued
operations $123.2 $ 28.0
NOTE 4 - ACQUISITIONS OF BUSINESSES: In 2001, the company acquired 12
entities for cash of $158.3 million and treasury stock of $15.3
million. The following acquisitions account for the majority of all
acquisitions during the year.
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 American, 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.
In June 2000, the company acquired Hussmann International, Inc.
(Hussmann), for approximately $1.7 billion in cash after consideration
of amounts paid for outstanding stock options, debt retirement,
employee contracts and transaction costs. Hussmann's business is the
design, production, installation and service of merchandising and
refrigeration systems for the global food industry. Hussmann is
included in Climate Control.
The results of Hussmann's operations have been included in the
consolidated financial statements from acquisition date. The following
unaudited pro forma consolidated results for the years ended December
31, 2000 and 1999 reflect the acquisition as though it occurred at the
beginning of the respective periods after adjustments for interest on
acquisition debt, and depreciation and amortization of assets,
including goodwill:
In millions except per share amounts 2000 1999
Sales $10,231.4 $9,134.0
Net earnings 614.1 534.5
Continuing operations
Basic earnings per common share $3.04 $3.10
Diluted earnings per common share 3.02 3.05
The above pro forma results are not necessarily indicative of what the
actual results would have been had the acquisition occurred at the
beginning of the respective periods. Further, the pro forma results
are not intended to be a projection of future results of the combined
companies.
In connection with the Hussmann acquisition, purchase accounting
reserves were created for the closure and restructure of a number of
Hussmann facilities. The amounts are as follows:
Employee
termination Facility
In millions costs exit costs Total
Original reserves recorded $ 6.6 $17.3 $23.9
Cash payments (1.1) (0.6) (1.7)
Balance at December 31, 2000 5.5 16.7 22.2
Reserves 14.2 28.5 42.7
Cash payments (7.6) (22.1) (29.7)
Balance at December 31, 2001 $12.1 $23.1 $35.2
In February 2000, the company completed the purchase of the 51% of
Dresser-Rand not previously owned by acquiring the joint venture
partner's share for a net purchase price of approximately $543.0
million in cash.
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 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.
NOTE 5 - DISPOSITIONS: During 2000, the company sold the Compression
Services business of Dresser-Rand for a gain of $50.4 million, as
well as the Corona Clipper business for approximately $43.0 million,
which approximated book value. The company also sold its interests in
three joint ventures relating to the manufacture of full steering-column
assemblies for approximately $37.0 million in cash. In August 2000,
the company sold IDP for $775.0 million (Note 3).
During 1999, the company received proceeds of $47.0 million, which
approximated book value, on the sale of a portion of the Harrow
assets. In December 1999, the company also sold certain net assets of
the Automation Division of the Air and Productivity Solutions Segment.
The transaction resulted in a net gain of approximately $4.4 million.
The company also made several minor dispositions during 1999.
NOTE 6 - INVENTORIES: At December 31, inventories were as follows:
In millions 2001 2000
Raw materials and supplies $ 307.9 $ 358.4
Work-in-process 395.5 372.9
Finished goods 733.1 654.4
1,436.5 1,385.7
Less-LIFO reserve 141.2 143.4
Total $1,295.3 $1,242.3
Work-in-process inventories are stated after deducting customer
progress payments of $139.5 million in 2001 and $127.3 million in
2000. At December 31, 2001 and 2000, LIFO inventories comprised
approximately 33% and 36%, respectively, of consolidated inventories.
There were no material liquidations of LIFO layers for all periods
presented.
NOTE 7 - FINANCIAL INSTRUMENTS: The company, as a large multinational
company, maintains significant operations in countries other than the
United States. As a result of these global activities, the company is
exposed to changes in foreign currency exchange rates, which affect
the results of operations and financial condition. 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 financial instruments. Generally, the only financial
instruments the company utilizes are forward exchange contracts and
options.
The purpose of the company's currency hedging activities is to
mitigate the impact of changes in foreign currency exchange rates. The
company attempts to hedge transaction exposures through natural
offsets. To the extent that this is not practicable, major exposure
areas considered for hedging include foreign currency denominated
receivables and payables, intercompany loans, firm committed
transactions, and forecasted sales and purchases. The following table
summarizes by major currency the contractual amounts of the company's
forward contracts in U.S. dollars. Foreign currency amounts are
translated at year-end rates at the respective reporting date. The
"buy" amounts represent the U.S. equivalent of commitments to purchase
foreign currencies, and the "sell" amounts represent the U.S.
equivalent of commitments to sell foreign currencies. Some of the
forward contracts involve the exchange of two foreign currencies
according to local needs in foreign subsidiaries.
At December 31, the contractual amounts 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 contracts to hedge 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 summarized 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
SFAS 133, "Accounting for Derivative Instruments and Hedging
Activities," and its amendments, became effective for the company on
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. If a derivative qualifies for
cash flow hedge accounting the effective portion of changes in fair
value is recorded temporarily in other comprehensive income, then
recognized in earnings along with the related effects of the hedged
items. If a derivative qualifies for fair value hedge accounting, the
changes in fair value of the derivative and the hedged item are
recognized currently in earnings. There was no ineffective portion of
hedges reported in earnings in 2001.
The $1.2 million, after tax, recorded in equity at January 1, 2001,
upon the adoption of these new standards, was reclassified to earnings
during the year. Of the $1.5 million recorded in equity at December
31, 2001, $0.3 million is expected to be reclassified to earnings over
the twelve month period ending December 31, 2002, while $1.2 million,
related to an interest rate swap used as a cash flow hedge of the
forecasted issuance of debt that occurred in the second quarter, will
be reclassified to earnings over the next four years. The actual
amounts that will be reclassified to earnings over the next twelve
months will vary from this amount as a result of changes in market
conditions. No amounts were reclassified to earnings during the year
in connection with forecasted transactions that were no longer
considered probable of occurring.
At December 31, 2001, the maximum term of derivative instruments that
hedge forecasted transactions, for foreign currency hedges, was 12
months. At December 31, 2001, the maximum term of derivative
instruments that hedge forecasted transactions, for commodity hedges,
was 24 months.
Derivatives not designated as hedges primarily consist of options and
forward contracts. Although these instruments are effective as hedges
from an economic perspective, they do not qualify for hedge accounting
under SFAS No. 133, as amended.
The counterparties to the company's forward contracts consist of a
number of major international financial institutions. The company
could be exposed to loss in the event of nonperformance by the
counterparties. However, credit ratings and concentration of risk of
these financial institutions are monitored on a continuing basis and
present no significant credit risk to the company.
The carrying value of cash and cash equivalents, marketable
securities, accounts receivable, short-term borrowings and accounts
payable are a reasonable estimate of their fair value due to the short-
term nature of these instruments. The following table summarizes the
estimated fair value of the company's remaining financial instruments
at December 31:
In millions 2001 2000
Long-term debt:
Carrying value $2,900.7 $1,540.4
Estimated fair value 2,996.7 1,537.4
Currency contracts:
Contract (notional) amounts:
Buy contracts $ 208.4 $ 277.1
Sell contracts 250.0 223.0
Fair (market) values:
Buy contracts 206.7 289.7
Sell contracts 247.5 242.3
Commodity contracts:
Contract (notional) amounts:
Buy contracts $ 28.1 $ 34.0
Fair (market) values:
Buy contracts 25.5 34.2
Fair value of long-term debt was determined by reference to the
December 31, 2001 and 2000, market values of comparably rated debt
instruments. Fair values of forward contracts are based on dealer
quotes at the respective reporting dates.
NOTE 8 - LONG-TERM DEBT AND CREDIT FACILITIES:
At December 31, long-term debt consisted of:
In millions 2001 2000
5.75% Notes Due 2003 $ 600.0 $ -
6 7/8% Notes Due 2003 100.0 100.0
5.80% Notes Due 2004 249.8 -
6.25% Notes Due 2006 574.4 -
9% Debentures Due 2021 125.0 125.0
7.20% Debentures Due 2025 150.0 150.0
6.48% Debentures Due 2025 150.0 150.0
6.391% Debentures Due 2027 200.0 200.0
6.443% Debentures Due 2027 200.0 200.0
Medium-term Notes Due 2003-2028,
at an average rate of 6.56% 296.7 377.0
6.75% Senior Notes Due 2008 124.4 124.0
6.29% Securities Due 2003 32.5 -
Medium-term Notes Due 2023,
at an average rate of 8.22% 50.2 50.2
Other loans and notes, at end-
of-year average interest
rates of 3.997% in 2001
and 6.248% in 2000, maturing
in various amounts to 2015 47.7 64.2
$2,900.7 $1,540.4
Debt retirements for the next five years are as follows: $192.3
million in 2002, $838.3 million in 2003, $573.2 million in 2004,
$207.2 million in 2005 and $588.2 million in 2006.
In February 2001, the company issued $600 million of 5.75% notes due
February 2003. In May 2001, the company issued notes with a par value
of $575 million at 6.25% per annum due May 2006, and $250 million at
5.80% per annum due June 2004. The proceeds from these financings
were used to refinance short-term borrowings related to the
acquisition of Hussmann.
At December 31, 2001, the company's committed revolving credit lines
consisted of a 364-day line totaling $1.25 billion and a five-year
line totaling $1.25 billion. These lines were unused and provide
support for commercial paper and indirectly provide support for other
financing instruments, such as letters of credit and comfort letters,
as required in the normal course of business. The company compensates
banks for these lines with fees equal to a weighted average of 0.08%
per annum. Available foreign lines of credit were $1.0 billion, of
which $786.5 million were unused at December 31, 2001. No major cash
balances were subject to withdrawal restrictions. At December 31,
2001 and 2000, the average rate of interest for loans payable,
excluding the current portion of long-term debt, was 4.704% and
6.914%, respectively.
Capitalized interest on construction and other capital projects
amounted to $4.0 million, $4.4 million and $4.0 million in 2001, 2000
and 1999, respectively. Interest income, included in other income
(expense), net, was $9.8 million, $8.7 million and $5.4 million in
2001, 2000 and 1999, respectively.
NOTE 9 - COMMITMENTS AND CONTINGENCIES: The company is involved in
various litigations, claims and administrative proceedings, including
environmental matters, arising in the normal course of business. In
assessing its potential environmental liability, the company bases its
estimates on current technologies and does not discount its liability
or assume any insurance recoveries. Amounts recorded for identified
contingent liabilities are estimates, which are reviewed periodically
and adjusted to reflect additional information when it becomes
available. Subject to the uncertainties inherent in estimating future
costs for contingent liabilities, management believes that recovery or
liability with respect to these matters would not have a material
effect on the financial condition, results of operations, liquidity or
cash flows of the company for any year.
As of December 31, 2001, the company had no significant concentrations
of credit risk in trade receivables due to the large number of
customers which comprised its receivables base and their dispersion
across different industries and countries. In the normal course of
business, the company has issued several direct and indirect
guarantees, including performance letters of credit, totaling
approximately $239.0 million at December 31, 2001. The company sells
product under various arrangements through institutions that provide
leasing and product financing alternatives to retail and wholesale
customers. Under these arrangements, the company is contingently
liable for loan guarantees and residual values of equipment of
approximately $29.3 million after consideration of ultimate net loss
provisions. The risk of loss to the company is minimal, and
historically, only immaterial losses have been incurred relating to
these arrangements. Management believes these guarantees will not
adversely affect the consolidated financial statements.
Certain office and warehouse facilities, transportation vehicles and
data processing equipment are leased. Total rental expense was $108.8
million in 2001, $84.6 million in 2000 and $71.6 million in 1999.
Minimum lease payments required under noncancellable operating leases
with terms in excess of one year for the next five years and
thereafter, are as follows: $77.9 million in 2002, $58.6 million in
2003, $39.7 million in 2004, $24.7 million in 2005, $19.4 million in
2006 and $36.3 million thereafter.
NOTE 10 - SALES OF RECEIVABLES: 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.
The company has agreements under which several of its operating
subsidiaries sell a defined pool of trade accounts receivable to two
wholly owned special purpose subsidiaries of the company. The
subsidiaries, are separate legal entities, that hold these receivables
and sell undivided interests in such accounts receivable to financiers
who, in turn, purchase and receive ownership and security interests in
those receivables. As collections reduce accounts receivable included
in the pool, the operating subsidiaries sell new receivables to the
special purpose subsidiaries. The special purpose subsidiaries have
the risk of credit loss on the receivables and, accordingly, the full
amount of the allowance for doubtful accounts has been retained in the
Consolidated Balance Sheets. The operating subsidiaries retain
collection and administrative responsibilities for the participating
interests in the defined pool. The availability under the programs in
2001 is $300 million. At December 31, 2001, 2000 and 1999, $275
million, $210 million and $170 million, respectively, were utilized
under the program. Increases under the program are reflected as
operating activities in the Consolidated Statement of Cash Flows. The
proceeds of sale are less than the face amount of accounts receivable
sold by an amount to issue commercial paper backed by these accounts
receivable. The discount from the face amount is accounted for as a
loss on the sale of receivables and has been included in other income
(expense), net, in the Consolidated Statements of Income, and amounted
to $10.6 million, $11.4 million and $10.2 million in 2001, 2000 and
1999, respectively. The weighted average discount rate was 4.68%,
6.21% and 5.99% during the years 2001, 2000 and 1999, respectively.
The agreements between the special purpose corporations and the
financial institutions do not have a predefined expiration date. The
company is retained as the servicer of the pooled receivables. During
2001, 2000 and 1999, such sales of receivables amounted to $1,439.0
million, $753.0 million and $781.8 million, respectively.
Receivables, excluding the designated pool of accounts and note
receivable, sold during 2001 and 2000 with recourse amounted to $310.7
million and $240.3 million, respectively. At December 31, 2001 and
2000, $115.6 million and $108.2 million, respectively, of such
receivables sold remained uncollected and on the Consolidated Balance
Sheet.
NOTE 11 - EQUITY-LINKED SECURITIES: In March 1998, IR-New Jersey,
together with Ingersoll-Rand Financing I, a Delaware statutory
business trust of IR-New Jersey (Finance Trust), issued an aggregate
of (a) 16,100,000 equity-linked securities, and (b) 1,610,000 Finance
Trust 6.22% capital securities, each with a $25 stated liquidation
amount (the capital securities). The equity-linked securities
consisted of (a) 14,490,000 income equity-linked securities (income
securities), and (b) 1,610,000 growth equity-linked securities (growth
securities).
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.
NOTE 12 - COMMON STOCK: Effective December 31, 2001, IR-Limited became
the successor to IR-New Jersey, following a corporate reorganization.
The reorganization was accomplished through a merger of a newly-formed
merger subsidiary into IR-New Jersey. Upon consummation of the merger
the shares of IR-New Jersey common stock automatically became IR-
Limited Class A common shares. As part of the reorganization, IR-New
Jersey and certain of its subsidiaries, immediately prior to the
merger transferred shares of certain IR-New Jersey subsidiaries and
issued certain debt in exchange for which IR-Limited issued
135,250,003 Class B common shares. The Class B common shares are non-
voting and will pay comparable dividends to the Class A common shares.
The authorized share capital of IR-Limited is $1,175,010,000,
consisting of (1) 1,175,000,000 common shares, par value $1.00 per
share, which common shares consist of (a) 600,000,000 Class A common
shares and (b) 575,000,000 Class B common shares, and (2) 10,000,000
preference shares, par value $0.001 per share, which preference shares
consist of 600,000 Series A preference shares and such other series of
preference shares as may be designated from time to time with the
respective rights and restrictions determined by the board of
directors. Class A common shares (and associated preference share
purchase rights) were issued to holders of IR-New Jersey common stock
in the merger. None of the preference shares were outstanding at
December 31, 2001.
Class A common shares issued were 168,003,884 at $1.00 par value at
December 31, 2001 compared to 171,466,627 common shares at $2.00 par
value at December 31, 2000. The decrease in the par value of common
shares from, $2.00 to $1.00 is recorded as an increase to capital in
excess of par value and a decrease in common stock on the Consolidated
Statement of Shareholders' Equity.
At December 31, 2001, treasury shares outstanding of 12.2 million were
retired due to the reorganization by reducing capital in excess of par
by $503.8 million and common stock by $24.4 million.
The company has adopted a shareholder rights plan to protect
shareholders from attempts to acquire control of the company at an
inadequate price. The plan will expire on December 22, 2008, unless
earlier redeemed or exchanged by the company, as provided in the
rights plan.
NOTE 13 - LEVERAGED EMPLOYEE STOCK OWNERSHIP PLAN: The company
sponsors a Leveraged Employee Stock Ownership Plan (LESOP) for
eligible employees. The LESOP was used to fund certain employee
benefit plans. At December 31, 2001, the LESOP had allocated all
shares to employee accounts.
NOTE 14 - INCENTIVE STOCK PLANS: Under the company's Incentive Stock
Plans, key employees have been granted options to purchase Class A
common shares at prices not less than the fair market value at the
date of the grant. Options issued before December 31, 1998, became
exercisable one year after the date of the grant and expire at the end
of 10 years. Options issued after January 1, 1999, become exercisable
ratably over a three-year period from their date of grant and expire
at the end of 10 years. The plans, approved in 1990, 1995 and 1998,
also authorize stock appreciation rights (SARs) and stock awards,
which result in compensation expense.
Under SFAS No. 123, compensation cost for the applicable provisions of
the company's incentive stock plans would be determined based upon the
fair value at the grant date for awards issued since 1996. Applying
this methodology would have reduced net earnings and diluted earnings
per share by approximately $30.5 million and $0.18 per share for 2001;
$16.7 million and $0.10 per share for 2000; and $8.5 million and $0.05
per share for 1999. The average fair values of the options granted
during 2001, 2000, and 1999 were estimated at $14.60, $16.89, and
$14.15, respectively, on the date of grant, using the Black-Scholes
option-pricing model, which included the following assumptions:
2001 2000 1999
Dividend yield 1.65% 1.32% 1.27%
Volatility 37.59% 34.31% 29.59%
Risk-free interest rate 5.01% 6.45% 4.93%
Expected life 5 years 4 years 4 years
Changes in options outstanding under the plans were as follows:
Shares subject Option Price Weighted average
to option range per share exercise price
January 1, 1999 6,834,525 $14.77 - $47.03 $32.43
Granted 2,816,480 49.09 - 69.75 50.50
Exercised (2,216,558) 14.77 - 46.00 31.74
Cancelled (93,590) 26.21 - 26.63 48.99
December 31, 1999 7,340,857 $15.13 - $69.75 $39.35
Granted 2,626,785 37.63 - 53.03 51.41
Exercised (243,499) 15.13 - 42.31 28.78
Cancelled (392,630) 20.67 - 62.59 46.77
December 31, 2000 9,331,513 $15.13 - $69.75 $42.75
Granted 4,245,465 40.42 - 49.14 41.31
Exercised (346,266) 15.13 - 42.31 27.52
Cancelled (159,736) 33.67 - 53.03 49.40
December 31, 2001 13,070,976 $20.67 - $69.75 $42.77
At December 31, 2001, there were 761,239 SARs outstanding with no stock
options attached. The company has reserved 8,397,409 shares for future
awards at December 31, 2001. In addition, 295,416 shares of Class A
common shares were reserved for future issue, contingent upon
attainment of certain performance goals and future service and 342,476
shares have been earned but deferred at December 31, 2001.
The following table summarizes information concerning currently
outstanding and exercisable options:
Options Options
outstanding exercisable
Weighted Weighted Weighted
Number average average Number average
Range of outstanding remaining exercise exercisable exercise
exercise price at 12/31/01 life price at 12/31/01 price
$20.67-$26.21 1,559,150 2.99 $24.06 1,559,150 $24.06
28.54- 40.47 1,000,900 5.85 34.68 891,198 34.13
40.53- 40.53 3,093,053 9.01 40.53 - -
40.75- 42.31 1,587,170 6.56 42.00 1,332,544 42.24
42.84- 48.13 1,091,926 8.57 45.47 712,896 45.11
49.09- 49.09 1,857,310 6.94 49.09 1,352,993 49.09
49.14- 51.09 443,100 7.92 50.46 266,666 51.09
53.03- 53.03 2,199,117 8.05 53.03 785,303 53.03
53.62- 65.41 221,250 7.54 62.21 147,493 62.21
69.75- 69.75 18,000 7.34 69.75 18,000 69.75
$20.67-$69.75 13,070,976 7.19 $42.77 7,066,243 $40.83
The weighted average number of shares exercisable and the weighted
average exercise prices were 5,466,455 shares at a price of $36.87 for
December 31, 2000, and 4,524,667 shares at a price of $32.53 for
December 31, 1999.
The company also maintains a shareholder-approved Management Incentive
Unit Award Plan. Under the plan, participating executives are awarded
incentive units. When dividends are paid on Class A common shares,
dividends are awarded to unit holders, one-half of which is paid in
cash, the remaining half of which is credited to the participant's
account in the form of so-called Class A common share equivalents. The
fair value of accumulated common share equivalents is paid in cash
upon the participant's retirement. The number of common share
equivalents credited to participants' accounts at December 31, 2001
and 2000, are 347,177 and 399,352, respectively.
NOTE 15 - INCOME TAXES: Earnings before income taxes for the years
ended December 31, were taxed within the following jurisdictions:
In millions 2001 2000 1999
United States $ 88.7 $674.8 $694.4
Non-U.S. 154.6 155.8 175.8
Total $243.3 $830.6 $870.2
The provision for income taxes was as follows:
In millions 2001 2000 1999
Current tax expense:
United States $(24.1) $228.4 $227.7
Non-U.S. 46.5 43.5 37.6
Total current 22.4 271.9 265.3
Deferred tax expense:
United States (15.2) 17.5 26.4
Non-U.S. (10.1) (5.0) 15.4
Total deferred (25.3) 12.5 41.8
Total provision for
income taxes $ (2.9) $284.4 $307.1
The provision for income taxes differs from the amount of income
taxes determined by applying the applicable U.S. statutory income
tax rate to pretax income, as a result of the following differences:
Percent of pretax income
2001 2000 1999
Statutory U.S. rate 35.0% 35.0% 35.0%
Increase (decrease) in rates
resulting from:
Amortization of goodwill 10.5 2.8 2.0
Non-U.S. operations (31.6) (0.8) (1.0)
Foreign sales corporation (9.5) (3.1) (1.7)
State and local income taxes,
net of U.S. tax (3.8) 2.2 2.1
Puerto Rico - Sec 936 Credit (6.0) (1.7) (1.7)
Other 4.2 (0.2) 0.6
Effective tax rate (1.2)% 34.2% 35.3%
A summary of the deferred tax accounts at December 31, follows:
In millions 2001 2000 1999
Current deferred assets and (liabilities):
Differences between book and tax bases
of inventories and receivables $ 34.2 $ 34.4 $ 31.0
Differences between book and tax
expense for other employee related
benefits and allowances 67.3 75.8 43.6
Other reserves and valuuation
allowances in excess of tax deductions 71.7 26.3 42.0
Other differences between tax and
financial statement values 21.7 9.2 (11.1)
Gross current deferred net tax assets 194.9 145.7 105.5
Noncurrent deferred tax assets and
(liabilities):
Postretirement and postemployment
benefits other than pensions in
excess of tax deductions 300.0 312.6 287.3
Other reserves in excess of tax expense 153.3 125.9 119.2
Tax depreciation/amortization in excess
of book depreciation/amortization (511.7) (166.9) (128.1)
Pension contributions in excess of
book expense (41.0) (44.2) (38.5)
Taxes provided for undistributed
accumulated subsidiary earnings (5.8) (22.5) (22.5)
Gross noncurrent deferred net tax
assets and (liabilityies) (105.2) 204.9 217.4
Less: deferred tax valuation
allowances (64.9) (52.0) (37.9)
Total net deferred tax assets $ 24.8 $298.6 $285.0
A total of $5.8 million of deferred taxes have been provided for a
portion of the undistributed earnings of the company's subsidiaries. As
to the remainder, these earnings have been, and under current plans,
will continue to be reinvested and it is not practicable to estimate
the amount of additional taxes which may be payable upon distribution.
During 2001, the company determined that it no longer required deferred
taxes of $16.7 million, which had been recorded with respect to such
earnings in prior years and accordingly reduced the deferred tax
liability recording a current tax benefit for such amount.
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.
NOTE 16 - POSTRETIREMENT BENEFITS OTHER THAN PENSIONS: The company
sponsors several postretirement plans that cover most U.S. employees.
These plans provide for health care benefits and in some instances, life
insurance benefits. Postretirement health plans are contributory and are
adjusted annually. Life insurance plans are noncontributory. When
fulltime employees retire from the company between age 55 and 65, most are
eligible to receive, at a cost to the retiree, certain health care
benefits identical to those available to active employees. After
attaining age 65, an eligible retiree's health care benefit coverage
becomes coordinated with Medicare. The company funds the benefit costs
principally on a pay-as-you-go basis. The company retained retiree health
care benefits as a liability for all qualified retired IDP employees.
Summary information on the company's plans at December 31, was as
follows:
In millions 2001 2000
Change in benefit obligations:
Benefit obligation at beginning of year $ 730.0 $ 566.4
Service cost 9.9 9.3
Interest cost 56.1 48.9
Plan participants' contributions 4.3 4.3
Acquisitions - 140.1
Actuarial losses 181.4 3.1
Benefits paid (68.6) (55.2)
Curtailment/special termination benefits - 13.3
Other 0.5 (0.2)
Benefit obligation at end of year $ 913.6 $ 730.0
Funded status:
Plan assets less than benefit obligations $(913.6) $(730.0)
Unrecognized:
Prior service gains (45.4) (49.9)
Plan net losses/(gains) 131.4 (55.0)
Accrued costs in the balance sheet $(827.6) $(834.9)
Weighted-average assumptions:
Discount rate 7.25% 7.75%
Current year medical inflation 11.00% 6.75%
Ultimate inflation rate (2008) 5.25% 5.25%
The components of net periodic postretirement benefits cost for
the years ended December 31, were as follows:
In millions 2001 2000 1999
Service cost $ 9.9 $ 9.3 $ 8.8
Interest cost 56.1 48.9 38.0
Net amortization of
unrecognized prior
service (gains) (4.5) (4.4) (4.2)
Net periodic postretirement
benefits cost $61.5 $53.8 $42.6
A 1% change in the medical trend rate assumed for postretirement
benefits would have the following effects at December 31, 2001:
In millions 1% Increase 1% Decrease
Effect on total of service and
interest cost components $ 5.1 $ 4.5
Effect on postretirement
benefit obligation 74.3 58.2
NOTE 17 - PENSION PLANS: The company has noncontributory pension plans
covering substantially all U.S. employees. In addition, certain employees
in other countries are covered by pension plans. The company's U.S.
salaried plans principally provide benefits based on a career average
earnings formula. The company's hourly pension plans provide benefits
under flat benefit formulas. Non-U.S. plans provide benefits based on
earnings and years of service. Most of the non-U.S. plans require
employee contributions based on the employee's earnings. In addition,
the company maintains other supplemental benefit plans for officers
and other key employees. The company's policy is to fund an amount which
could be in excess of the pension cost expensed, subject to the limitations
imposed by current statutes or tax regulations. The company retained the
pension plan liabilities and related plan assets for all vested
IDP plan participants.
Information regarding the company's pension plans at December 31, was
as follows:
In millions 2001 2000
Change in benefit obligations:
Benefit obligation at beginning of year $2,372.7 $1,934.7
Service cost 47.0 42.6
Interest cost 170.6 151.7
Employee contributions 4.4 4.7
Amendments 8.1 1.3
Acquisitions 10.8 386.1
Expenses paid (3.6) (2.3)
Actuarial losses/(gains) 99.1 (17.9)
Benefits paid (201.1) (157.1)
Foreign exchange impact (17.5) (44.4)
IDP obligation - 65.7
Curtailments and other 5.0 7.6
Benefit obligation at end of year $2,495.5 $2,372.7
Change in plan assets:
Fair value at beginning of year $2,640.0 $2,246.9
Actual return on assets 10.8 106.4
Company contributions 64.2 27.5
Employee contributions 4.4 4.7
Acquisitions 12.7 407.2
Expenses paid (3.6) (1.9)
Benefits paid (204.6) (160.8)
Foreign exchange impact (14.2) (40.8)
Assets from IDP - 50.8
Other 0.1 -
Fair value of assets at end of year $2,509.8 $2,640.0
In millions 2001 2000
Funded status:
Plan assets in excess of benefit
obligations $ 14.3 $ 267.3
Unrecognized:
Net transition asset 5.1 19.0
Prior service costs 52.4 50.6
Plan net losses (gains) 119.5 (238.5)
Net amount recognized $ 191.3 $ 98.4
Costs included in the balance sheet:
Prepaid benefit cost $ 270.9 $ 196.9
Accrued benefit liability (79.6) (103.3)
Intangible asset - 4.8
Net amount recognized $ 191.3 $ 98.4
Weighted-average assumptions:
Discount rate:
U.S. plans 7.25% 7.75%
International plans 6.00% 6.00%
Rate of compensation increase:
U.S. plans 5.00% 5.50%
International plans 3.50% 3.50%
Expected return on plan assets:
U.S. plans 9.00% 9.00%
International plans 7.75% 7.75%
The components of the company's pension related costs (income) for
the years ended December 31, include the following:
In millions 2001 2000 1999
Service cost $ 47.0 $ 42.6 $ 42.0
Interest cost 170.6 151.7 132.1
Expected return on plan assets (226.7) (213.5) (183.0)
Net amortization of unrecognized:
Prior service costs 6.0 6.1 5.9
Transition amount 0.2 0.7 0.7
Plan net (gains)/losses (4.6) (8.5) 2.9
Net pension (income) cost (7.5) (20.9) 0.6
Curtailment losses 11.2 11.5 0.4
Net pension cost (income) after
curtailments $ 3.7 $ (9.4) $ 1.0
The projected benefit obligation, accumulated benefit obligation, and
fair value of plan assets for pension plans with accumulated benefit
obligations more than plan assets were $435.7 million, $397.1 million
and $317.2 million, respectively, as of December 31, 2001 and $199.5
million, $161.5 million and $75.8 million, respectively, as of December
31, 2000.
Plan investment assets of U.S. plans are balanced between equity
securities and cash equivalents or debt securities. Assets of non-U.S.
plans are invested principally in equity securities.
Most of the company's U.S. employees are covered by savings and other
defined contribution plans. Employer contributions and costs are
determined based on criteria specific to the individual plans
and amounted to approximately $44.0 million, $44.7 million and $25.1
million in 2001, 2000 and 1999, respectively. The company's costs
relating to non-U.S. defined contribution plans, insured plans and
other non-U.S. benefit plans were $6.5 million, $6.7 million and $4.1
million in 2001, 2000 and 1999, respectively.
NOTE 18 - BUSINESS SEGMENT INFORMATION: 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 Solution Segment. Club Car has been added to the
Infrastructure Segment.
The accounting policies of the operating segments are the same as those
described in the summary of significant accounting policies except that
the operating segments' results are prepared on a management basis that
is consistent with the manner in which the company disaggregates
financial information for internal review and decision making. The
company evaluates performance based on operating income and operating
income contribution rates. Intercompany sales transactions are entirely
contained within each segment and are eliminated at the segment level. A
description of the company's reportable segments is as follows:
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. The segment includes Thermo King and Hussmann.
Industrial Solutions is composed of a group of businesses focused on
providing solutions for customers to enhance industrial efficiency.
Industrial Solutions consists of the following:
Air and Productivity Solutions is engaged in the design, manufacture,
sale and service of air compressors, fluid products, microturbines, and
industrial tools. It comprises Industrial Air Solutions and
Productivity Solutions, and has been aggregated based primarily on the
nature of products and services, and the nature of their production
processes.
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. The segment includes both Automotive and Industrial
Engineered Solutions. Operating income in 2001 includes a $25 million
benefit from payments received from the U.S. Customs for antidumping
claims.
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 comprises Bobcat, Club Car, Portable Power, Road
Development, and Specialty Equipment.
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.
Sales by destination and long-lived assets by geographic area for
the years ended December 31 were as follows:
In millions 2001 2000 1999
Sales
United States $6,124.8 $5,989.4 $4,719.3
Non-U.S. 3,557.2 3,608.2 3,099.7
Total $9,682.0 $9,597.6 $7,819.0
In millions 2001 2000
Long-lived assets
United States $1,352.6 $1,432.1
Non-U.S. 689.3 545.1
Total $2,041.9 $1,977.2
A summary of operations by reportable segments for the years ended December
31, were as follows:
Dollar amounts in millions 2001 2000 1999
Climate Control
Sales $2,438.2 $2,002.4 $1,202.6
Operating income 21.7 206.3 166.5
Operating income as % of sales 0.9% 10.3% 13.8%
Depreciation and amortization 148.5 114.5 78.9
Industrial Solutions
Air and Productivity Solutions
Sales 1,308.0 1,412.9 1,381.4
Operating income 52.7 162.5 159.3
Operating income as % of sales 4.0% 11.5% 11.5%
Dresser-Rand
Sales 881.3 834.0 -
Operating income 21.4 4.6 -
Operating income as % of sales 2.4% 0.6% -
Engineered Solutions
Sales 1,077.8 1,185.4 1,239.5
Operating income 78.0 159.8 145.8
Operating income as % of sales 7.2% 13.5% 11.8%
Total Industrial Solutions
Sales 3,267.1 3,432.3 2,620.9
Operating income 152.1 326.9 305.1
Operating income as % of sales 4.7% 9.5% 11.6%
Depreciation and amortization 107.5 105.2 86.2
Infrastructure
Sales 2,570.3 2,752.5 2,707.3
Operating income 219.7 389.7 416.9
Operating income as % of sales 8.5% 14.2% 15.4%
Depreciation and amortization 66.1 66.4 64.7
Security and Safety
Sales 1,406.4 1,410.4 1,288.2
Operating income 230.8 271.6 248.4
Operating income as % of sales 16.4% 19.3% 19.3%
Depreciation and amortization 27.8 35.1 39.4
Total sales $9,682.0 $9,597.6 $7,819.0
Operating income from reportable
segments 624.3 1,194.5 1,136.9
Unallocated corporate expenses (101.1) (105.1) (57.2)
Total operating income $ 523.2 $1,089.4 $1,079.7
Total operating income as % of
sales 5.4% 11.4% 13.8%
Depreciation and amortization from
reportable segments 349.9 321.2 269.2
Unallocated depreciation and
amortization 12.6 5.9 3.2
Total depreciation and
amortization $ 362.5 $ 327.1 $ 272.4
NOTE 19 - INGERSOLL-RAND NEW JERSEY: As part of the reorganization IR-
Limited unconditionally guaranteed all of the issued public debt
securities of IR-New Jersey. The following condensed consolidated
financial information for IR-Limited (Parent), IR-New Jersey (Issuer),
and all their other subsidiaries is included so that separate financial
statements of IR-New Jersey are not required to be filed with the
Securities Exchange Commission. The condensed consolidating financial
statements present the Parent and Issuer investments in their
subsidiaries using the equity method of accounting.
Condensed Consolidating Balance Sheet
December 31, 2001
Other Consolidating
(In millions) IR-Limited IR-New Jersey Subsidiaries Adjustments Total
Current assets: <c> <c> <c> <c> <c>
Cash and cash equivalents $ - $ 23.4 $ 90.6 $ - $114.0
Marketable securities - - 7.4 - 7.4
Accounts and notes receivable, net - 128.3 1,354.6 - 1,482.9
Inventories - 134.8 1,160.5 - 1,295.3
Prepaid expenses and deferred income
taxes - 57.8 230.4 - 288.2
Accounts and notes receivable
affiliates - - 2,957.9 (2,957.9) -
Total current assets - 344.3 5,801.4 (2,957.9) 3,187.8
Investment in affiliates 5,547.5 12,825.5 8,708.2 (27,081.2) -
Property, plant and equipment, net - 238.9 1,394.1 - 1,633.0
Intangible assets, net - 145.0 5,544.3 - 5,689.3
Note receivable affiliate 3,647.4 - - (3,647.4) -
Other assets - 196.5 357.1 - 553.6
Total assets $9,194.9 $13,750.2 $21,805.1 $(33,686.5) $11,063.7
Current liabilities:
Accounts payable $ - $ 100.8 $ 660.2 $ - $ 761.0
Accrued expenses and other current
liabilities - 218.5 1,307.8 - 1,526.3
Loans payable - 449.7 114.0 - 563.7
Accounts and notes payable
affiliates - 2,650.0 307.9 (2,957.9) -
Total current liabilities - 3,419.0 2,389.9 (2,957.9) 2,851.0
Long-term debt - 2,650.6 250.1 - 2,900.7
Deferred income taxes - - 170.1 - 170.1
Minority interests - - 110.5 - 110.5
Note payable affiliate - 3,647.4 - (3,647.4) -
Other liabilities - 116.6 998.2 - 1,114.8
- 9,833.6 3,918.8 (6,605.3) 7,147.1
Shareholders' equity:
Class A common shares 168.0 - - - 168.0
Class B common shares 135.3 - - (135.3) -
Common shares - - 2,362.8 (2,362.8) -
Other shareholders' equity 8,891.6 4,039.4 15,787.8 (24,648.8) 4,070.0
Accumulated other comprehensive
income - (122.8) (264.3) 65.7 (321.4)
Total shareholders' equity 9,194.9 3,916.6 17,886.3 (27,081.2) 3,916.6
Total liabilities and
equity $9,194.9 $13,750.2 $21,805.1 $(33,686.5) $11,063.7
Condensed Consolidating Balance Sheet
December 31, 2000
Other Consolidating
(In millions) IR-Limited IR-New Jersey Subsidiaries Adjustments Total
<c> <c> <c> <c> <c>
Current assets:
Cash and cash equivalents$ - $ - $ 97.0 $ - $ 97.0
Marketable securities - 120.3 10.1 - 130.4
Accounts and notes receivable, net - 154.7 1,516.3 - 1,671.0
Inventories - 120.5 1,121.8 - 1,242.3
Prepaid expenses and deferred income
taxes - 223.7 11.8 - 235.5
Accounts and notes receivable
affiliates - - 2,028.0 (2,028.0) -
Total current assets - 619.2 4,785.0 (2,028.0) 3,376.2
Investment in affiliates - 8,281.7 - (8,281.7) -
Property, plant and equipment, net - 243.5 1,409.9 - 1,653.4
Intangible assets, net - 112.5 5,259.7 - 5,372.2
Deferred income taxes - - 152.9 - 152.9
Other assets - 99.7 398.2 - 497.9
Total assets $ - $9,356.6 $12,005.7 $(10,309.7) $11,052.6
Current liabilities:
Accounts payable $ - $ 123.2 $ 558.2 $ - $ 681.4
Accrued expenses and other current
liabilities - 508.7 1,052.3 - 1,561.0
Loans payable - 1,880.6 245.5 - 2,126.1
Accounts and notes payable affiliates - 2,028.0 - (2,028.0) -
Total current liabilities - 4,540.5 1,856.0 (2,028.0) 4,368.5
Long-term debt - 1,306.6 233.8 - 1,540.4
Minority interests - - 113.4 - 113.4
Other liabilities - 28.3 1,118.3 - 1,146.6
- 5,875.4 3,321.5 (2,028.0) 7,168.9
Company obligated mandatorily
redeemable preferred securities
of subsidiary trust holding
solely debentures of the company - - 402.5 - 402.5
Shareholders' equity:
Common stock - 343.1 164.9 (164.9) 343.1
Other shareholders' equity - 3,398.7 8,368.3 (8,368.3) 3,398.7
Accumulated other comprehensive
income - (260.6) (251.5) 251.5 (260.6)
Total shareholders' equity - 3,481.2 8,281.7 (8,281.7) 3,481.2
Total liabilities and equity $ - $9,356.6 $12,005.7 $(10,309.7) $11,052.6
Condensed Consolidating Income Statement
For the year ended December 31, 2001
Other Consolidating
(In millions) IR- Limited IR-New Jersey Subsidiaries Adjustments Total
<c> <c> <c> <c> <c>
Net sales $ - $1,200.0 $8,482.0 $ - $9,682.0
Cost of goods sold - 892.5 6,719.0 - 7,611.5
Selling and administrative expenses - 245.3 1,208.9 - 1,454.2
Restructuring charges - 25.5 67.6 - 93.1
Operating income - 36.7 486.5 - 523.2
Equity earnings in affiliates
(net of tax) - 336.9 - (336.9) -
Interest expense - (203.0) (50.0) - (253.0)
Intercompany interest and fees - (17.6) 17.6 - -
Other income (expense), net - (85.0) 78.2 - (6.8)
Minority interests - - (20.1) - (20.1)
Earnings before income taxes - 68.0 512.2 (336.9) 243.3
(Benefit)/provision for income taxes - (178.2) 175.3 - (2.9)
Net earnings $ - $ 246.2 $ 336.9 $(336.9) $ 246.2
Condensed Consolidating Income Statement
For the year ended December 31, 2000
Other Consolidating
(In millions) IR-Limited IR-New Jersey Subsidiaries Adjustments Total
<c> <c> <c> <c> <c>
Net sales $ - $1,302.2 $8,295.4 $ - $9,597.6
Cost of goods sold - 845.1 6,296.3 - 7,141.4
Selling and administrative expenses - 212.8 1,066.8 - 1,279.6
Restructuring charges - 35.5 51.7 - 87.2
Operating income - 208.8 880.6 - 1,089.4
Equity earnings in affiliates
(net of tax) - 725.8 - (725.8) -
Interest expense - (219.3) (36.0) - (255.3)
Intercompany interest and fees - (42.1) 42.1 - -
Other income (expense), net - (68.0) 103.8 - 35.8
Minority interests - - (39.3) - (39.3)
Earnings before income taxes - 605.2 951.2 (725.8) 830.6
(Benefit)/provision for income taxes - (64.2) 348.6 - 284.4
Earnings from continuing operations - 669.4 602.6 (725.8) 546.2
Discontinued operations (net of tax) - - 123.2 - 123.2
Net earnings $ - $ 669.4 $ 725.8 $(725.8) $ 669.4
Condensed Consolidating Income Statement
For the year ended December 31, 1999
Other Consolidating
(In millions) IR-Limited IR-New Jersey Subsidiaries Adjustments Total
<c> <c> <c> <c> <c>
Net sales $ - $1,340.0 $6,479.0 $ - $7,819.0
Cost of goods sold - 944.9 4,728.3 - 5,673.2
Selling and administrative expenses - 240.8 825.3 - 1,066.1
Operating income - 154.3 925.4 - 1,079.7
Equity earnings in affiliates
(net of tax) - 640.4 - (640.4) -
Interest expense - (153.7) (29.8) - (183.5)
Intercompany interest and fees - (34.9) 34.9 - -
Other income (expense), net - (26.5) 29.6 - 3.1
Minority interests - - (29.1) - (29.1)
Earnings before income taxes - 579.6 931.0 (640.4) 870.2
(Benefit)/provision for income taxes - (11.5) 318.6 - 307.1
Earnings from continuing operations - 591.1 612.4 (640.4) 563.1
Discontinued operations (net of tax) - - 28.0 - 28.0
Net earnings $ - $ 591.1 $ 640.4 $(640.4) $ 591.1
Condensed Consolidating Statement of Cash Flows
For the year ended December 31, 2001
Other Consolidating
(In millions) IR-Limited IR-New Jersey Subsidiaries Adjustments Total
<c> <c> <c> <c> <c>
Net cash provided by operating
activities $ - $213.0 $388.6 $ - $601.6
Cash flows from investing activities:
Capital expenditures - (21.5) (179.1) - (200.6)
Proceeds from sale of property,
plant and equipment - - 41.7 - 41.7
Acquisitions, net of cash - (9.2) (149.1) - (158.3)
Proceeds from business dispositions - - 17.5 - 17.5
Decrease /(increase) in marketable
securities - 103.9 (6.7) - 97.2
Other, net - - 15.7 - 15.7
Net cash provided by/(used in)
investing activities - 73.2 (260.0) - (186.8)
Cash flows from financing activities:
Net change in debt - (86.9) (127.2) - (214.1)
Proceeds from the exercise of stock
options - 9.7 - - 9.7
Dividends paid - (113.1) - - (113.1)
Purchase of treasury stock - (72.5) - - (72.5)
Net cash (used in)/provided by
financing activities - (262.8) (127.2) - (390.0)
Effect of exchange rate changes on
cash and and cash equivalents - - (7.8) - (7.8)
Net increase/(decrease) in cash and
cash equivalents - 23.4 (6.4) - 17.0
Cash and cash equivalents - beginning
of period - - 97.0 - 97.0
Cash and cash equivalents - end of
period $ - $ 23.4 $ 90.6 $ - $114.0
Condensed Consolidating Statement of Cash Flows
For the year ended December 31, 2000
Other Consolidating
(In millions) IR-Limited IR-New Jersey Subsidiaries Adjustments Total
<c> <c> <c> <c> <c>
Net cash(used in)/provided by
operating activities $ - $(792.4) $1,409.1 $120.3 $737.0
Cash flows from investing activities:
Capital expenditures - (19.5) (181.8) - (201.3)
Proceeds from sale of property,
plant and equipment - 2.7 25.8 - 28.5
Acquisitions, net of cash - - (2,288.0) - (2,288.0)
Proceeds from business dispositions - - 977.3 - 977.3
Decrease/(increase) in marketable
securities - 120.3 (6.3) (120.3) (6.3)
Other, net - - 12.2 - 12.2
Net cash provided by/(used in)
investing activities - 103.5 (1,460.8) (120.3) (1,477.6)
Cash flows from financing activities:
Net change in debt - 794.1 78.3 - 872.4
Proceeds from the exercise of stock
options - 8.3 - - 8.3
Dividends paid - (109.8) - - (109.8)
Purchase of treasury stock - (121.3) - - (121.3)
Net cash provided by financing
activities - 571.3 78.3 - 649.6
Net cash used in discontinued
operations - - (22.1) - (22.1)
Effect of exchange rate changes on cash
and cash equivalents - - (12.8) - (12.8)
Net decrease in cash and cash
equivalents - (117.6) (8.3) - (125.9)
Cash and cash equivalents - beginning
of period - 117.6 105.3 - 222.9
Cash and cash equivalents - end of
period $ - $ - $ 97.0 $ - $ 97.0
Condensed Consolidating Statement of Cash Flows
For the year ended December 31, 1999
Other Consolidating
(In millions) IR-Limited IR-New Jersey Subsidiaries Adjustments Total
<c> <c> <c> <c> <c>
Net cash provided by operating
activities $ - $663.2 $191.5 $ - $854.7
Cash flows from investing activities:
Capital expenditures - (36.1) (154.4) - (190.5)
Proceeds from sale of property, plant
and equipment - 0.3 30.1 - 30.4
Acquisitions, net of cash - - (161.2) - (161.2)
Proceeds from business dispositions - 23.8 61.0 - 84.8
Decrease in marketable securities - - 1.5 - 1.5
Other, net - - (2.0) - (2.0)
Net cash (used in) investing
activities - (12.0) (225.0) - (237.0)
Cash flows from financing activities:
Net change in debt - (292.7) 25.2 - (267.5)
Proceeds from the exercise of stock
options - 70.2 - - 70.2
Dividends paid - (105.3) - - (105.3)
Purchase of treasury stock - (205.8) - - (205.8)
Other, net - - 63.3 - 63.3
Net cash (used in)/provided by
financing activities - (533.6) 88.5 - (445.1)
Net cash provided by discontinued
operations - - 14.6 - 14.6
Effect of exchange rate changes on
cash and and cash equivalents - - (7.8) - (7.8)
Net increase in cash and cash
equivalents - 117.6 61.8 - 179.4
Cash and cash equivalents - beginning
of period - - 43.5 - 43.5
Cash and cash equivalents - end of
period $ - $117.6 $105.3 $ - $222.9
Report of Independent Accountants
PricewaterhouseCoopers
Dorchester House
7 Church Street
Hamilton HM 11
Bermuda
February 5, 2002
To the Board of Directors and
Shareholders of Ingersoll-Rand Company Limited:
In our opinion, the accompanying Consolidated Balance Sheet and the
related Consolidated Statements of Income, Shareholders' Equity and
Cash Flows present fairly, in all material respects, the financial
position of Ingersoll-Rand Company Limited and its subsidiaries, the
successor company to Ingersoll-Rand Company, at December 31, 2001,
and the results of their operations and their cash flows for the
year then ended, in conformity with accounting principles generally
accepted in the United States of America. These financial
statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial
statements based on our audit. We conducted our audit of these
statements in accordance with auditing standards generally accepted
in the United States of America, which require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by
management, and evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis
for our opinion.
/s/PricewaterhouseCoopers
Report of Independent Accountants
PricewaterhouseCoopers LLP
400 Campus Drive
Florham Park, NJ 07932
U.S.A.
February 6, 2001
To the Board of Directors and
Shareholders of Ingersoll-Rand Company Limited:
In our opinion, the accompanying Consolidated Balance Sheet and the
related Consolidated Statements of Income, Shareholders' Equity and
Cash Flows present fairly, in all material respects, the financial
position of Ingersoll-Rand Company Limited and its subsidiaries, the
successor company to Ingersoll-Rand Company, at December 31, 2000
and the results of their operations and their cash flows for each of
the two years in the period ended December 31, 2000, in conformity
with accounting principles generally accepted in the United States
of America. These financial statements are the responsibility of
the Company's management; our responsibility is to express an
opinion on these financial statements based on our audits. We
conducted our audits of these statements in accordance with auditing
standards generally accepted in the United States of America, which
require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant
estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
/s/PricewaterhouseCoopers LLP