Third Quarter 2006 Results

1
Third Quarter 2006 Results
October 27, 2006
2
Safe Harbor
Todays presentation includes forward looking
statements that involve risks. Please refer to
Form 10Q for the quarter ending June 30, 2006 for
details on factors that may influence results.
2
3
Third Quarter Results

• Reported EPS of 0.76
• 0.85 EPS excluding prior period tax charge
• Mid-range of 0.82 to 0.87 guidance
• Solid activity in most major end markets
• Commercial construction
• Industrial
• Transport refrigeration
• Residential building declined more sharply than
  expected
• Lower compact equipment shipments in N. America
• Slowing activity in residential security

3Q Earnings Consistent with Prior Forecast
4
Third Quarter Revenue Change

• Change
• Climate Control Technologies 14
• Construction Technologies 11
• Industrial Technologies 11
• Security Technologies 12
• Compact Vehicle Technologies (15)
• Total 6

Recurring Revenue Increased by 11
6 Revenue Growth at Lower End of Expected Range
of 6 to 8
5
Bobcat Compared to Residential
Timing Lag (Months)
Market Peak
Current Bobcat Decline Coincidental with
Residential Activity
6
North American Industry Retail Compact Loaders
Year-over-year Change
20
16
15
11
10
8
6
5
0
- 0.4
-5
- 4
-10
-15
-20
- 19
1Q
2Q
3Q
4Q
1Q
2Q
3Q
2005
2006
7
Bobcat Year-over-year Revenues Decline

• North America (30)
• Recurring and
• International 8
• Total (22)
• Industry Retail (10) pts. - 100 Million decline
  in industry retail compact loader volume
• Rental Channel (5) pts. - Primary national
  accounts
• Field Inventory (15) pts. - Dealers built
  inventory in 2005
• Adjustment Inventory liquidation in 2006
• (30) pts.

2005 Results Benefited from Hurricane Cleanups
8
Third Quarter Results

• Positive aspects of the quarter
• Strong revenue growth at Climate, Industrial,
  Construction and Security
• Revenue growth and margin improvement at Club Car
• Recurring Revenue growth
• Continued investment in new products and channel
  development
• New product introductions in all business
  segments in the second half

New products help to offset soft markets in N.
America
9
Investments for Growth 80 Million in 2006

• 20 Million in 3Q
• 52 million year-to-date
• Program largely complete by year end
• Expected additional revenues from investment
• 200 Million revenues in 2007
• 300 Million revenues in 2008

Initiatives Cover All Five Sectors
10
2006 Acquisitions

• ZEKS ? compressed air treatment products
• BOC Edwards ? extend range of products and
  services to low pressure compressed air
• Geith ? extend established attachment offerings
  for construction and compact equipment business

Acquisitions Add Over 100 Million to 2007
Revenues
11
Accelerated Share Repurchase in 3Q

• 3Q Purchased 16 Million shares for 610 Million
• Purchased 2.6 Million shares for 102 Million in
  October
• Repurchased 51 Million shares since inception of
  program ? reduced shares outstanding by 14
• Will review new proposal at future Board meeting

Completed 2 Billion Repurchase Authorization in
October
12
Third Quarter Results

• Challenging quarter
• Overall results disappointing
• Solid earnings
• Progress against strategic priorities
• Bobcat performance and poor operating leverage
• Taking immediate action
• Cost control
• Right sizing actions

Realize full benefits of corrective actions in
2007
13
Third Quarter 2006 Results
14
Third Quarter EPS Bridge
Continuing Operations Previous Outlook vs.
Actual Results
(.09)
.03
(.07)
.02
.88
Operations
.85 to .90
.03
Tax Penalty (Rounded)
Shares
Corporate
Corporate Unallocated
.79
Previous Outlook
2006
2006
15
Third Quarter EPS Bridge
Continuing Operations Q3 2005 compared to Q3
2006
(.09)
.06
.88
Tax Penalty (Rounded)
(.05)
.07
.05
Operations
Shares
Investments
.79
.75
2005
2006
2006
16
Revenues
Third Quarter Year-Over-Year Growth
Strong Growth in International Markets
17
Climate Control Technologies
Millions
826

• Climate Control Americas
• Revenues up 15
• Growth across all businesses
• Auxiliary power unit growth
• Climate Control International
• Revenues up 13
• European growth
• Marine container growth
• Operating Margin
• Price, growth leverage and productivity
  offsetting commodity inflation

14
723
Operating Margins
12.6
11.3
2005
2006
18
Compact Vehicle Technologies
Millions

• Bobcat revenues down 22
• North America decline of 35
• Market decline
• Field inventory reductions
• Prior year Gulf Coast clean-up
• International growth of 18
• Club Car revenues up 13
• Utility and Transport Vehicle growth
• Aftermarket growth
• International growth
• Operating Margin
• Volume de-leverage
• Product and geographic mix

637
-15
540
Operating Margins
11.6
14.6
2005
2006
19
Construction Technologies
Millions

• Road Development
• Revenues up 2
• International growth offsetting declines in
  domestic markets
• Utility Equipment Attachments
• Revenues up 23
• Double-digit growth in all three geographic
  regions
• Operating Margin
• Growth leverage and productivity offsetting
  unfavorable mix, inflation, and increased
  investments

325
11
292
Operating Margins
9.2
10.5
2005
2006
20
Industrial Technologies
Millions

• Air Solutions up 13
• Favorable worldwide markets driving growth in all
  major regions
• Recurring revenues up 8
• Productivity Solutions up 9
• New products
• Recurring revenues
• Strong international growth
• Operating Margin
• Higher growth of complete units
• Supply chain inefficiencies
• Partially offset by growth leverage, and improved
  pricing

486
11
437
Operating Margins
12.9
14.0
2005
2006
21
Security Technologies
Millions

• Revenue growth in all regions
• Americas up 6
• Commercial growth
• Residential slowing
• ESA up 16
• Asia Pacific up sharply
• Operating Margin
• Unfavorable geographic mix
• Material inflation
• Growth investments
• Partially offset by growth leverage, pricing, and
  productivity

590
12
527
Operating Margins
17.8
19.3
2005
2006
22
Balance Sheet Metrics
Q3 2006
Q3 2005
Inventory Turns 5.4 5.0 Receivables
(DSO) 61.6 66.7 Payables (DPO) 36.9 46.3 Total
Debt 2.2 B 2.1 B Debt to Capital 27.9 26.6 Cap
ital Expenditures 33 M 56 M Depreciation and
Amortization 46 M 49 M
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2006 Earnings Outlook

• Many key end-markets remained firm during 3Q
• Orders up 4
• Wide disparity in order growth by sector
• Expect 3 revenue growth in 4Q
• Higher material and transport costs
• Full-year material inflation 215 to 220 Million
• Inflation forecast increased by 30 Million
• Offset costs with productivity and pricing
• Additional cost containment activities included
  in forecast

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2006 Earnings Outlook Q4
EPS Continuing Operations 0.74 -
0.79 Discontinued Operations (0.04) Total
Operations 0.70 - 0.75
25
2006 Earnings Outlook Full Year
EPS Continuing Operations 3.28 -
3.33 Discontinued Operations (0.12) Total
Operations 3.16 - 3.21 Excluding Q3 tax
charge 3.25 - 3.30
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