First Quarter 2004 Results

1
First Quarter2004 Results
2
Safe Harbor
Forward looking statements that involve risks.
Please refer to December 31, 2003, Form 10-K for
details on factors that influence results.
3
Diluted Earnings Per Share
First Quarter
Change
2004 2003
Continuing EPS .94 .53 77 Discontinued Ongoi
ng (.03) .06 Gain on
Sale - .31 CDSOA .11 - TOTAL 1.02
.90 13
Net Income from Continuing Ops. Increased 83,
77 Growth in Diluted EPS
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First Quarter Results

• Market showing steady improvement
• Gained market share through innovative products
  and solutions
• Expanded recurring revenue
• Revenue up 15 excluding Dresser-Rand
• Infrastructure ? 21
• Climate Control ? 14
• Security Safety ? 11
• Air Productivity Solutions ? 11

Strong First Quarter, Orders Up 29
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First Quarter Results 2004

• Operating margins improved
• Lowering cost base
• Lean Six Sigma processes
• Leveraging global business
• Competitive manufacturing footprint
• Operating margin improved to 10.3

Progressing Toward 15 Operating Margin Goal
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2003 Successful Product Launches
Over 200 Million in Revenue from New Products in
2003 Target Additional 200 Mil. in 2004
7
Air Solutions - Innovation
Nirvana Oil Free Introduced

• Unigy
• 7-15 Horsepower

Centac Plastic-bottle Blow Molding
8
Bobcat Driving Growth through Innovation
First Quarter Revenues Up 30, Orders Up 50
9
Club Car Precedent Launched in January 2004
Club Car Orders Up 25 in First Quarter
10
Club Car 4x4 Rough-terrain Vehicle
1,000 Orders Already Booked
11
Security Safety - Innovation

• Schlage D-Lock for demanding,
• high-traffic, commercial environment

Recognition Systems FingerKey DX for securing
highly sensitive areas with a small number of
users
Generating Strong Growth in Security Sector
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First Quarter Recurring Revenue
Millions
530
2003
20 Increase in Recurring Revenue Since 2002
13
Acquisition of Eco Kompressoren

• Air Solutions acquisition in the Netherlands
• Equipment and services for industrial markets
• Expansion in electronics, food and beverage
  industries
• Drive recurring revenue growth

Expect to Make Several Bolt-On Acquisitions in
2004 to Expand Product Lines and Global Reach
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Operational Excellence

• Continued focus on
• Managing controllable costs
• Working capital reduction
• Improving customer service
• Improved our operating margins and cash flow -
  45 contribution margin
• Able to offset Material Price Increases
• Sale of Drilling Solutions
• Lean Branch Progressing
• Progressing toward 25 Mil. profit improvement
  target
• On target to reach 15 operating margin during
  second half 2004

15
2004 First Quarter

• Encouraged by strong growth and earnings in core
  businesses
• On target to deliver improved earnings and cash
  flow
• Executing core strategies
• Dramatic Growth
• Investing in innovations
• Continuous improvement in efficiency
• Grow recurring revenue

On the Right Course to Achieve Profitable Growth
and ROIC Targets
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First Quarter 2004 Results
millions, except Diluted Earnings/Share (EPS)
Revenues 2,292.0 Operating income 236.9 Margin
10.3 Interest expense (40.9) Other
expense (5.2) Earnings before taxes, continuing
operations 190.8 Taxes, continuing
operations (25.8) Earnings after taxes,
continuing operations 165.0 Discontinued
operations, net of tax 14.5 Net earnings
179.5 EPS Diluted Continuing
operations 0.94 Discontinued operations 0.08
1.02
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Revenues Continuing Operations
2004 Q1 Results Year-over-year change
27
18
13
5
Latin America
Asia Pacific
North America
Europe
Excludes Dresser-Rand
Revenue Gains in All Major Geographic Regions
18
Climate Control
Millions

• Climate Control
• Revenue up 14 (9 ex. currency)
• Worldwide truck, trailer and bus
• Recurring revenue (27 of total)
• Operating margin improvement
• Revenue leverage and price
• Productivity program
• Climate Control Americas
• Revenue up 12
• Strong growth in Thermo King
• Positive end markets
• Operational improvement program
• Climate Control International
• Revenue up 18 (5 ex. currency)
• Gain in European markets for truck, trailer and
  display cases

638
558
Operating Margins
9.1
4.5
2004 2003
19
Air and Productivity Solutions
Millions

• Air Solutions
• Total revenue up 14 (9 ex. currency)
• New products and aftermarket sales
• Recurring revenue up 11 (49 of total)
• Productivity Solutions
• Total revenue up 6
• Recurring revenue up 9
• Margin improvement
• New products and services
• Productivity improvement program

344
311
Operating Margins
9.8
6.8
2004 2003
20
Dresser-Rand
Millions

• Buyout component revenues 53 million in 2003, 6
  million in 2004
• Bookings up 30
• Recurring revenue bookings increased 27
• Margins
• Productivity program impacting results
• After-market business strengthening

278
170
Operating Margins
1.5
4.9
2004 2003
21
Infrastructure
Millions

• Revenue increased by 21 (17 ex. currency)
• Bobcat revenue growth of more than 30 (28 ex.
  currency)
• Strong North American markets
• New product introductions
• Road Development revenue growth of 20 (13 ex.
  currency)
• Club Car
• Bookings increased by 25
• Strong demand for Precedent golf car
• Operating Margin Improvement
• Revenue growth leverage
• Favorable business mix
• New products

727
599
Operating Margins
12.6
10.9
2004 2003
22
Security and Safety
Millions

• Revenue grew by 11 (8 ex. currency)
• Growth in Residential and Commercial hardware
• Electronic Access and Solutions up 40
• Margins
• Strong operating margins in North America
• New product launch costs
• Higher volumes in Solutions business

415
375
Operating Margins
17.4
18.9
2004 2003
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Balance Sheet Indicators
2004
2003
Inventory Turns Receivables (DSO) Payables
(DPO) Total Debt Debt to Capital Capital
Expenditures Depreciation and Amortization
5.4 66 41 2.3 B 33.5 24 M 49 M
4.9 64 40 2.6 B 41.3 25 M 50 M
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2004 Earnings Outlook Second Quarter
Second Quarter EPS Continuing Operations 1.21 -
1.31 Discontinued Operations Legacy
Costs (0.05) Drilling Solutions 0.04 Total 1.20
- 1.30
Second Quarter EPS 1.20 - 1.30
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2004 Earnings Outlook Full Year
Full Year EPS Continuing Operations 4.37
4.52 Discontinued Operations Legacy Costs
Drilling Solutions (0.13) CDSOA from
2003 0.11 Total 4.35 - 4.50
Improved Outlook
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First Quarter2004 Results