Fourth Quarter 2004 Results

1
Fourth Quarter 2004 Results
2
Safe Harbor
Todays presentation includes forward looking
statements that involve risks. Please refer to
September 30, 2004 Form 10Q for details on
factors that influence results.
3
Ingersoll-Rand Diluted EPS 2004 vs. 2003
4Q
Full Year
2004
2003
2004
2003

• Continuing Operations 1.27 0.92 4.73 3.09
• Discontinued Operations
• Legacy Costs (0.05) (0.02) (0.17) (0.13)
• Earnings from Discontinued 0.03 0.19 0.24 0.3
  8
• Tax Benefits 0.06 - 0.07 -
• CDSOA 0.06 - 0.17 -
• Gain on Sale 1.58 0.03 1.91 0.40
• Total Discontinued Operations 1.68 0.20 2.22 0
  .65
• Total EPS 2.95 1.12 6.95 3.74

4
Strong Performance in 2004

• Markets have improved
• Generated revenue and earnings growth
• Leveraging market growth
• Innovation
• Recurring revenue
• Reducing costs
• Increasing productivity
• Pricing actions

Capitalizing on Improving Markets
5
Divestiture of Major Business Lines

• Divestiture of non-core operations (3.3 Billion
  of sales)
• Pumps ? Divested in 2000
• Bearings ? Divested in 2002
• Drills ? Divested in 2004
• Dresser-Rand ? Divested in 2004

Divested Business That Did Not Meet Requirements
for Growth and ROIC
6
Ingersoll-Rand Revenue by Business

• of Total Revenue
• 1984 1994 2004
• Business Sold
• Automotive Components 19 25 -
• Mining Process 44 31 -
• 63 56 -
• Climate Control - - 30
• Bobcat and Club Car - - 24
• 54
• Security Safety 11 11 19
• Industrial Solutions 18 21 16
• Road Utility 8 12 11
• 37 44 46
• 100 100 100

Primarily Pumps, Dresser-Rand, Drills and
Underground Mining Equipment
Substantial Upgrade of Portfolio
7
2004 Revenue from Continuing Operations
Climate Control 30
Road Utility 11
Industrial Solutions 16
Bobcat Club Car 24
Security Safety 19
9.4 Billion Diversified Industrial Company
8
Innovation
11 Organic Revenue Growth 2004
300 Million of Net Revenue From Innovation in
2004
9
Recurring Revenue
Millions
1,910
2004
of Total
20
13
Recurring Revenue Doubled Since 2000
10
Acquisition of CISA

• Founded 1926
• Manufactures and sells security products
• Electronic locking systems
• Cylinders
• Door closers
• Safes and padlocks
• Revenues approximately 285 Million
• Operating margin approximately 15

Acquisition Expected to be 8 to 10 Cents
Accretive to EPS in 2005
11
Operational Excellence
Operating Margin
2.4 Point Gain
Progressing Toward 15 Target
12
Balance Sheet
Debt to Capital
47.4
46.3
33.4
24.2
2003
2004
2002
2001
1.9
3.2
3.4
2.3
Total Debt ( Bil)
Net Debt at Year End 2004 Approximates 175 Mil.
13
Free Cash Flow
FCF Mil.
After CAPEX, Dividends, Pension Contributions
616
600
507
500
400
300
200
100
0
03
04
Excluding restructuring
3.86 Billion FCF 1998 2004
14
Cash Deployment - 2005

• Growth of current strategic platforms by bolt-on
  acquisitions
• New products and technologies
• Expand geographic coverage
• Accelerate growth of recurring revenue
• Dividends
• Target 25 to 30 of 3 year average pre-dividend
  FCF
• Yield consistent with diversified industrials
• Share buyback 10 million share authorization
• Excellent value at current prices
• Seven million shares remaining

Reinvestment Strategy to Maximize Total Return to
Shareholders
15
Fourth Quarter 2004 Results
16
Revenues
Fourth Quarter Year-Over-Year Growth
13
5
6
(4)
Asia Pacific
Latin America
Europe
North America
Revenue Gains in North America, Europe, and Latin
America
17
Climate Control
Millions

• Climate Control Americas
• Revenue down 1
• Continued growth in transport
• Lower display case volume, depressed national
  account spending
• Climate Control International
• Revenue down 5
• Decline in container business
• Strong European transport
• Lower display case volume
• Operating margin improvement
• Positive product mix
• Benefits of integration

752
2
734
Operating Margins
11.0
9.5
2004
2003
18
Industrial Solutions
Millions

• Air Solutions
• Revenue up 15
• Recurring revenue up 13
• New product growth
• Productivity Solutions
• Revenue up 15
• Growth in industrial assembly
• New product introductions
• Operating margin improvement
• Revenue leverage
• New products
• Productivity improvement
• Strong operating performance

423
17
361
Operating Margins
13.5
10.6
2004
2003
19
Infrastructure

• Bobcat
• Revenue up 21
• Increased parts and attachments
• Strong North American market
• New product introductions
• Road Development
• Revenue up 27
• Strength in North America
• Club Car
• Revenue up 16
• Strong growth for Precedent
• Operating Margin Improvement
• New product profitability
• Leverage from growth
• Raw material inflation pressure

Millions
844
20
702
Operating Margins
13.1
10.7
2004
2003
20
Security and Safety
Millions

• Revenue up 6
• Strong North American residential revenues
• Continued strength in Electronic Access Control
• New product introductions
• Operating Margins
• Strength in North American mechanical products
• New product margins
• Revenue leverage
• Adverse impact of material cost inflation

6
458
432
Operating Margins
20.5
20.8
2004
2003
21
Balance Sheet Indicators
2004
2003
Inventory Turns Receivables (DSO) Payables
(DPO) Total Debt Debt to Capital Capital
Expenditures Depreciation and Amortization
5.8 56 37 1.9 B 24 108 M 174 M
6.6 56 37 2.3 B 33 100 M 169 M
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2005 Earnings Outlook-Full Year 2005

• Build on momentum generated in recent years
• Orders increased by 7 in 4Q 2004
• Organic revenue growth 6 to 8 for total IR
• CISA to add 3 percentage points to growth
• Minimizing material cost increases, reducing
  operating costs, and increasing working capital
  turns
• Higher operating margins
• Tax rate for 2005 forecasted at 15

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2005 Earnings Outlook Full Year
2004 Continuing Operations 4.73 Operations
Improvement 1.07 1.37 Growth
Investments (.35) Lower Interest, Shares and FX
Impact .20 2005 Continuing Operations 5.65 -
5.95 Discontinued Operations (0.20) 2005 Total
Company 5.45 - 5.75
Full Year 2005 EPS of 5.45 to 5.75
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2005 Earnings Outlook First Quarter

• Organic revenue growth 9, 12 total
• Projected revenue growth by sector
• Climate Control 4 to 6
• Industrial Solutions 8 to 10
• Infrastructure 12 to 15
• Bobcat and Club Car
• Road Development and Utility Equipment
• Security and Safety 6 to 8 organic,
  CISA to add 60 Million to revenues

25
2005 Earnings Outlook First Quarter
First Quarter EPS Continuing Operations 1.15 -
1.25 Discontinued Operations (0.05) Total
Operations 1.10 - 1.20
Continuing Operations Improvement of 25 to 36
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Fourth Quarter 2004 Results