x
|
ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934
|
o
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934
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Bermuda
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75-2993910
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(State
or other jurisdiction of
incorporation
or organization)
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(I.R.S.
Employer
Identification
No.)
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Title
of each class
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Name
of each exchange on which registered
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Class
A Common Shares,
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New
York Stock Exchange
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Par
Value $1.00 per Share
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Accelerated
filer o
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Non-accelerated
filer o
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Smaller
reporting company o
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(Do
not check if a smaller reporting
company)
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Page
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Part
I
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Item
1.
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Business
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4
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Item
1A.
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Risk
Factors
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11
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Item
1B.
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Unresolved
Staff Comments
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16
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Item
2.
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Properties
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16
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Item
3.
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Legal
Proceedings
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18
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Item
4.
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Submission
of Matters to a Vote of Security Holders
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19
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Part II
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Item
5.
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Market
for Registrant's Common Equity, Related Stockholder Matters and
Issuer Purchases of Equity Securities
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21
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Item
6.
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Selected
Financial Data
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23
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Item
7.
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Management's
Discussion and Analysis of Financial Condition and Results of
Operations
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24
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Item
7A.
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Quantitative
and Qualitative Disclosure About Market Risk
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52
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Item
8.
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Financial
Statements and Supplementary Data
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53
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Item
9.
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Changes
in and Disagreements with Independent Accountants on Accounting and
Financial Disclosure
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54
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Item
9A.
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Controls
and Procedures
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54
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Item
9B.
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Other
Information
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54
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Part III
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Item
14.
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Principal
Accountant Fees and Services
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55
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Part
IV
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Item
15.
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Exhibits
and Financial Statements Schedule
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56
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Signatures
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64
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·
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Dramatic
Growth,
by developing innovative products and solutions that improve our
customers’ operations, expanding highly profitable recurring revenues and
executing strategic acquisitions;
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·
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Operational
Excellence,
by fostering a lean culture of continuous improvement and cost control;
and
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·
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Dual
Citizenship,
by encouraging our employees’ active collaboration with colleagues across
business units and geographic regions to achieve superior business
results.
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·
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help
enhance business growth;
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·
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create
a more favorable corporate structure for expansion of our
current business;
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·
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improve
expected cash flow for use in investing in the development of
higher-growth product lines and
businesses;
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·
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improve
expected cash flow for use in reducing the amount of our
debt;
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·
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reduce
our
worldwide effective tax rate;
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·
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enable
us
to
implement our business strategy more effectively;
and
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·
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expand
our
investor base as our
shares may become more attractive to non-U.S.
investors.
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Climate
Control Technologies
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||
Refrigerated
display cases
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||
Refrigeration
systems
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||
Transport
temperature control systems
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||
Industrial
Technologies
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Air
balancers
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Fluid-handling
equipment
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Air
compressors & accessories
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Golf
vehicles
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Air
treatment
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Lubrication
equipment
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Air
motors
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Material
handling equipment
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Air
and electric tools
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Microturbines
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Blowers
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Piston
pumps
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Diaphragm
pumps
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Utility
vehicles
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Engine-starting
systems
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Security
Technologies
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Automatic
doors
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Electrical
security products
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Biometric
access control systems
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Electronic
access-control systems
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Door
closers and controls
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Exit
devices
|
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Door
locks, latches and locksets
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Portable
security products
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Doors
and door frames (steel)
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Dollar
amounts in millions
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2007
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2006
|
|||||
Climate
Control Technologies
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$
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507.2
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$
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435.8
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|||
Industrial
Technologies
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429.8
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357.7
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|||||
Security
Technologies
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216.5
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182.8
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|||||
Total
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$
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1,153.5
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$
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976.3
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·
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countries
could change regulations or impose currency restrictions and other
restraints;
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·
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in
some countries, there is a risk that the government may expropriate
assets;
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·
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some
countries impose burdensome tariffs and
quotas;
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·
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national
and international conflict, including terrorist acts, could significantly
impact our financial condition and results of operations;
and
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·
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economic
downturns, political instability and war or civil disturbances may
disrupt
production and distribution logistics or limit sales in individual
markets.
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·
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increase
our vulnerability to general adverse economic and industry conditions;
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·
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limit
our flexibility in planning for, or reacting to, changes in our businesses
and the industries in which we operate;
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·
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restrict
our ability to exploit business opportunities;
and
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·
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make
it more difficult for us to satisfy our payment obligations with
respect
to our outstanding indebtedness.
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·
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encountering
difficulties identifying and executing
acquisitions;
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·
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increased
competition for targets, which may increase acquisition
costs;
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·
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consolidation
in our industries reducing the number of acquisition
targets;
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·
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competition
laws and regulations preventing us from making certain acquisitions;
and
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·
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the
ability to secure necessary
financing.
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·
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the
business culture of the acquired business may not match well with
our
culture;
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·
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technological
and product synergies, economies of scale and cost reductions may
not
occur as expected;
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·
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management
may be distracted from overseeing existing operations by the need
to
integrate acquired businesses;
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·
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we
may acquire or assume unexpected
liabilities;
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·
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unforeseen
difficulties may arise in integrating operations and
systems;
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·
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we
may fail to retain and assimilate employees of the acquired business;
and
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·
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we
may experience problems in retaining customers and integrating customer
bases.
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Climate Control Technologies
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||||
Americas
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Europe, Middle East, Africa
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Asia Pacific
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Londrina,
Brazil
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Kolin,
Czech Republic
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Luoyang,
China
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Monterrey,
Mexico
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Galway,
Ireland
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Shenzen,
China
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Mexico
City, Mexico
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Barcelona,
Spain
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Suzhou,
China
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Arecibo,
Puerto Rico
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Pamplona,
Spain
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Tauranga,
New Zealand
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Ciales,
Puerto Rico
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Peralta,
Spain
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|||
Chino,
California
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||||
Louisville,
Georgia
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Suwanee,
Georgia
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Minneapolis,
Minnesota
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||||
Bridgeton,
Missouri
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||||
Hastings,
Nebraska
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Gloversville,
New York
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Industrial Technologies
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||||
Americas
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Europe, Middle East, Africa
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Asia Pacific
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Montreal,
Canada
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Douai,
France
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Guanbxi,
China
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Augusta,
Georgia
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Wasquehal,
France
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Changzhou,
China
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Campbellsville,
Kentucky
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Oberhausen,
Germany
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Nanjing,
China
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Rochester
Hills, Michigan
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Fogliano
Redipuglia, Italy
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Shanghai,
China
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Madison
Heights, Michigan
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Vignate,
Italy
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Ahmadabad,
India
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Davidson,
North Carolina
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Pavlovo,
Russia
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New
Delhi, India
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Mocksville,
North Carolina
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||||
Athens,
Pennsylvania
|
||||
West
Chester, Pennsylvania
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||||
Seattle,
Washington
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Security Technologies
|
||||
Americas
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Europe, Middle East, Africa
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Asia Pacific
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Ensenada,
Mexico
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Feuquieres,
France
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Shanghai,
China
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Tecate,
Mexico
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Renchen,
Germany
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Auckland,
New Zealand
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||
San
Jose, California
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Faenza,
Italy
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|||
Security,
Colorado
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Monsampolo,
Italy
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|||
New
Haven, Connecticut
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Duzce,
Turkey
|
|||
Princeton,
Illinois
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Birmingham,
UK
|
|||
Indianapolis,
Indiana
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||||
Cincinnati,
Ohio
|
||||
Caracas,
Venezuela
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Name and Age
|
Date of Service as
an Executive Officer
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Principal Occupation and
Other Information for Past Five Years
|
||
Herbert
L. Henkel (59)
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4/5/1999
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Chairman
of Board and Chief Executive Officer, President and Director
|
||
James
V. Gelly (48)
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10/6/2007
|
Senior
Vice President and Chief Financial Officer (since October 2007);
Rockwell
Automation, Chief Financial Officer, (2004-2007); Honeywell International,
Vice President and Treasurer (1999-2003)
|
||
Marcia
J. Avedon (46)
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2/7/2007
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Senior
Vice President, Human Resources and Communication (since February
2007);
(Merck & Co., Inc., Senior Vice President, Human Resources 2003-2006;
Vice President, Talent Management & Organizational Effectiveness
2002-2003; Honeywell International, Vice President, Corporate Human
Resources, 2001-2002)
|
||
James
R. Bolch (50)
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10/16/2005
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Senior
Vice President and President, Industrial Technologies Sector (since
October 2005); (Schindler Elevator Corporation, Executive Vice President,
Service Business 2004-2005; United Technologies Corporation, UTC
Power,
Vice President Operations, 2001-2003)
|
||
William
B. Gauld (54)
|
10/2/2006
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Senior
Vice President, Enterprise Services (since October 2006); (Principal,
The
W Group, 2005-2006; Pearson, plc, Chief Information Officer,
2001-2005)
|
||
Michael
W. Lamach (44)
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2/16/2004
|
Senior
Vice President and President, Security Technologies (since February
2004);
(Johnson Controls, Inc., Group Vice President and Managing Director
Europe/Asia 2003-2004; Group Vice President and General Manager,
Asia
2002-2003; Group Vice President and General Manager, Customer Business
Units, 1999-2002)
|
||
Patricia
Nachtigal (61)
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11/2/1988
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Director
(since January 1, 2002); Senior Vice President and General Counsel
|
||
Steven
R. Shawley (55)
|
8/1/2005
|
Senior
Vice President and President, Climate Control Technologies (since
August
2005); (President Climate Control Americas, 2003-2005; President,
Thermo
King North America 2002-2003, Vice President and Controller,
1998-2002)
|
||
Richard
W. Randall (57)
|
10/1/2002
|
Vice
President and Controller (since October 2002); (President, Engineered
Solutions, Industrial Solutions Sector, April 2002-September 2002;
Vice
President, Finance and Sector Controller, Industrial Solutions Sector
2001-2002; Vice President and Controller, Bearings and Components,
Industrial Productivity Sector,
1999-2001)
|
|
Common
shares
|
|||||||||
2007
|
High
|
Low
|
Dividend
|
|||||||
First
quarter
|
$
|
45.42
|
$
|
38.75
|
$
|
0.18
|
||||
Second
quarter
|
55.99
|
43.61
|
0.18
|
|||||||
Third
quarter
|
55.99
|
47.21
|
0.18
|
|||||||
Fourth
quarter
|
55.55
|
43.60
|
0.18
|
|||||||
|
||||||||||
2006
|
|
|
|
|
||||||
First
quarter
|
$
|
43.65
|
$
|
38.15
|
$
|
0.16
|
||||
Second
quarter
|
47.63
|
39.47
|
0.16
|
|||||||
Third
quarter
|
43.25
|
35.29
|
0.18
|
|||||||
Fourth
quarter
|
41.21
|
36.71
|
0.18
|
Total number of
|
Approximate dollar
|
||||||||||||
shares purchased
|
value of shares still
|
||||||||||||
Total number
|
as part of the
|
available to be
|
|||||||||||
of shares
|
Average
|
publicly announced
|
purchased under
|
||||||||||
purchased
|
price
paid
|
program
|
the program
|
||||||||||
Period
|
(000's)
|
per share
|
(000's)
|
($000's)
|
|||||||||
10/01/2007
- 10/31/2007
|
1,097.1
|
$
|
54.01
|
1,097.1
|
$
|
2,000,100
|
|||||||
11/01/2007
- 11/30/2007
|
-
|
-
|
-
|
2,000,100
|
|||||||||
12/01/2007
- 12/31/2007
|
-
|
-
|
-
|
2,000,100
|
|||||||||
Total
|
1,097.1
|
|
|
1,097.1
|
|
|
At
and for the years ended December 31,
|
2007
|
2006
|
2005
|
2004
|
2003
|
|||||||||||
Net
revenues
|
$
|
8,763.1
|
$
|
8,033.7
|
$
|
7,263.7
|
$
|
6,663.2
|
$
|
6,083.4
|
||||||
Earnings
from continuing operations
|
733.1
|
765.0
|
731.8
|
554.2
|
362.5
|
|||||||||||
Earnings
from discontinued operations
|
3,233.6
|
267.5
|
322.4
|
664.5
|
282.0
|
|||||||||||
Total
assets
|
14,376.2
|
12,145.9
|
11,756.4
|
11,414.6
|
10,664.9
|
|||||||||||
Total
debt
|
1,453.7
|
1,984.6
|
2,117.0
|
1,880.4
|
2,315.4
|
|||||||||||
Shareholders'
equity
|
7,907.9
|
5,404.8
|
5,761.9
|
5,733.8
|
4,493.3
|
|||||||||||
Basic
earnings per common share:
|
||||||||||||||||
Continuing
operations
|
$
|
2.52
|
$
|
2.39
|
$
|
2.17
|
$
|
1.60
|
$
|
1.06
|
||||||
Discontinued
operations
|
11.12
|
0.84
|
0.95
|
1.92
|
0.82
|
|||||||||||
Diluted
earnings per common share:
|
||||||||||||||||
Continuing
operations
|
$
|
2.48
|
$
|
2.37
|
$
|
2.14
|
$
|
1.58
|
$
|
1.05
|
||||||
Discontinued
operations
|
10.95
|
0.83
|
0.95
|
1.89
|
0.82
|
|||||||||||
Dividends
per common share
|
$
|
0.72
|
$
|
0.68
|
$
|
0.57
|
$
|
0.44
|
$
|
0.36
|
1. |
Earnings
and dividends per common share amounts have been restated to reflect
a
two-for-one stock split that occurred in August
2005.
|
2. |
2006 –
2003 amounts have been restated to reflect Compact Equipment and
the Road
Development business unit as discontinued operations.
|
· |
Dramatic
Growth,
by developing innovative products and solutions that improve our
customers’ operations, expanding highly profitable recurring revenues and
executing strategic acquisitions;
|
· |
Operational
Excellence,
by fostering a lean culture of continuous improvement and cost control;
and
|
· |
Dual
Citizenship,
by encouraging our employees’ active collaboration with colleagues across
business units and geographic regions to achieve superior business
results.
|
|
|
%
of
|
|
%
of
|
|
%
of
|
|||||||||||||
Dollar amounts in millions, except per share data
|
2007
|
Revenues
|
2006
|
Revenues
|
2005
|
Revenues
|
|||||||||||||
Net
revenues
|
$
|
8,763.1
|
$
|
8,033.7
|
$
|
7,263.7
|
|||||||||||||
Cost
of goods sold
|
6,272.0
|
71.6%
|
|
5,768.4
|
71.8%
|
|
5,203.2
|
71.6%
|
|
||||||||||
Selling
and administrative expenses
|
1,433.3
|
16.3%
|
|
1,266.8
|
15.8%
|
|
1,172.7
|
16.2%
|
|
||||||||||
Operating
income
|
1,057.8
|
12.1%
|
|
998.5
|
12.4%
|
|
887.8
|
12.2%
|
|
||||||||||
Interest
expense
|
(136.2
|
)
|
(133.6
|
)
|
(145.1
|
)
|
|||||||||||||
Other
income, net
|
15.9
|
|
(7.3
|
)
|
|
|
50.1
|
|
|||||||||||
Earnings
before income taxes
|
937.5
|
857.6
|
792.8
|
||||||||||||||||
Provision
for income taxes
|
204.4
|
|
|
92.6
|
|
61.0
|
|
||||||||||||
Earnings
from continuing operations
|
733.1
|
765.0
|
731.8
|
||||||||||||||||
Discontinued
operations, net of tax
|
3,233.6
|
|
267.5
|
|
322.4
|
|
|||||||||||||
Net
earnings
|
$
|
3,966.7
|
|
|
$
|
1,032.5
|
|
$
|
1,054.2
|
|
|
||||||||
|
|||||||||||||||||||
Diluted
earnings per common share:
|
|||||||||||||||||||
Continuing
operations
|
$
|
2.48
|
$
|
2.37
|
$
|
2.14
|
|||||||||||||
Discontinued
operations
|
10.95
|
|
|
0.83
|
|
0.95
|
|
|
|||||||||||
Net
earnings
|
$
|
13.43
|
|
|
$
|
3.20
|
|
|
$
|
3.09
|
|
|
Volume/product
mix
|
4.0%
|
|
||
Pricing
|
2.0%
|
|
||
Currency
exchange rates
|
2.5%
|
|
||
Acquisitions
|
0.5%
|
|
||
Total
|
9.0%
|
|
Volume/product
mix
|
7.0%
|
|
||
Pricing
|
2.0%
|
|
||
Acquisitions
|
1.5%
|
|
||
Currency
exchange rates
|
0.5%
|
|
||
Total
|
11.0%
|
|
In
millions
|
2007
|
2006
|
2005
|
|||||||
Interest
income
|
$
|
36.2
|
$
|
15.9
|
$
|
29.1
|
||||
Exchange
gain (loss)
|
(2.8
|
)
|
(21.3
|
)
|
6.8
|
|||||
Minority
interests
|
(14.3
|
)
|
(14.9
|
)
|
(12.7
|
)
|
||||
Earnings
from equity investments
|
1.0
|
(0.1
|
)
|
4.1
|
||||||
Other
|
(4.2
|
)
|
13.1
|
22.8
|
||||||
Other
income, net
|
$
|
15.9
|
$
|
(7.3
|
)
|
$
|
50.1
|
|
Percent
of pretax income
|
|||||||||
|
2007
|
2006
|
2005
|
|||||||
Statutory
U.S. rate
|
35.0
|
%
|
35.0
|
%
|
35.0
|
%
|
||||
Increase
(decrease) in rates resulting from:
|
||||||||||
Non-U.S.
operations
|
(21.0
|
)
|
(28.2
|
)
|
(26.4
|
)
|
||||
Tax
reserves
|
8.0
|
4.8
|
2.2
|
|||||||
Other
adjustments
|
(0.2
|
)
|
(0.8
|
)
|
(3.1
|
)
|
||||
Effective
tax rate
|
21.8
|
%
|
10.8
|
%
|
7.7
|
%
|
Dollar
amounts in millions
|
2007
|
%
change
|
2006
|
%
change
|
2005
|
|||||||||||
Net
revenues
|
$
|
3,372.4
|
6.4%
|
|
$
|
3,171.0
|
11.1%
|
|
$
|
2,853.6
|
||||||
Operating
income
|
382.6
|
7.5%
|
|
356.0
|
13.0%
|
|
315.1
|
|||||||||
Operating
margin
|
11.3
|
%
|
11.2
|
%
|
11.0
|
%
|
Dollar
amounts in millions
|
2007
|
%
change
|
2006
|
%
change
|
2005
|
|||||||||||
Net
revenues
|
$
|
2,877.1
|
11.6%
|
|
$
|
2,577.7
|
11.6%
|
|
$
|
2,310.4
|
||||||
Operating
income
|
392.0
|
11.4%
|
|
351.8
|
16.6%
|
|
301.6
|
|||||||||
Operating
margin
|
13.6
|
%
|
13.6
|
%
|
13.1
|
%
|
Dollar
amounts in millions
|
2007
|
%
change
|
2006
|
%
change
|
2005
|
|||||||||||
Net
revenues
|
$
|
2,513.6
|
10.0%
|
|
$
|
2,285.0
|
8.8%
|
|
$
|
2,099.7
|
||||||
Operating
income
|
433.5
|
8.3%
|
|
400.2
|
5.1%
|
|
380.7
|
|||||||||
Operating
margin
|
17.2
|
%
|
17.5
|
%
|
18.1
|
%
|
In
millions
|
2007
|
2006
|
2005
|
|||||||
Revenues
|
$
|
2,957.8
|
$
|
3,375.7
|
$
|
3,283.2
|
||||
|
||||||||||
Pre-tax
earnings (loss) from operations
|
(82.5
|
)
|
376.6
|
413.6
|
||||||
Pre-tax
gain on sale
|
4,382.6
|
1.1
|
4.4
|
|||||||
Tax
expense
|
(1,066.5
|
)
|
(110.2
|
)
|
(95.6
|
)
|
||||
Discontinued
operations, net
|
$
|
3,233.6
|
$
|
267.5
|
$
|
322.4
|
In
millions
|
2007
|
2006
|
2005
|
|||||||
Compact
Equipment, net of tax
|
$
|
2,927.1
|
$
|
240.4
|
$
|
284.7
|
||||
Road
Development, net of tax
|
672.5
|
62.9
|
36.6
|
|||||||
Other
discontinued operations, net of tax
|
(366.0
|
)
|
(35.8
|
)
|
1.1
|
|||||
Total
discontinued operations, net of tax
|
$
|
3,233.6
|
$
|
267.5
|
$
|
322.4
|
In
millions
|
2007
|
2006
|
2005
|
|||||||
Net
revenues
|
$
|
2,705.9
|
$
|
2,648.4
|
$
|
2,610.1
|
||||
|
||||||||||
After-tax
earnings from operations
|
$
|
275.1
|
$
|
240.4
|
$
|
284.7
|
||||
Gain
on sale, net of tax of $939.0
|
2,652.0
|
-
|
-
|
|||||||
Total
discontinued operations, net of tax
|
$
|
2,927.1
|
$
|
240.4
|
$
|
284.7
|
In
millions
|
2007
|
2006
|
2005
|
|||||||
Net
revenues
|
$
|
251.9
|
$
|
727.3
|
$
|
673.1
|
||||
|
||||||||||
After-tax
earnings from operations
|
$
|
37.8
|
$
|
62.9
|
$
|
36.6
|
||||
Gain
on sale, net of tax of $164.4
|
634.7
|
-
|
-
|
|||||||
Total
discontinued operations, net of tax
|
$
|
672.5
|
$
|
62.9
|
$
|
36.6
|
In
millions
|
2007
|
2006
|
2005
|
|||||||
Retained
costs, net of tax
|
$
|
(340.9
|
)
|
$
|
(36.5
|
)
|
$
|
(34.1
|
)
|
|
Net
gain (loss) on disposals, net of tax
|
(25.1
|
)
|
0.7
|
35.2
|
||||||
Total
discontinued operations, net of tax
|
$
|
(366.0
|
)
|
$
|
(35.8
|
)
|
$
|
1.1
|
In
millions
|
2007
|
2006
|
2005
|
|||||||
Operating
cash flow provided by (used in) continuing operations
|
$
|
829.9
|
$
|
813.1
|
$
|
440.9
|
||||
Investing
cash flow provided by (used in) continuing operations
|
6,052.4
|
(28.7
|
)
|
(688.6
|
)
|
|||||
Financing
cash flow provided by (used in) continuing operations
|
(2,563.1
|
)
|
(1,343.2
|
)
|
(875.7
|
)
|
In
millions
|
2007
|
2006
|
2005
|
|||||||
Cash
and cash equivalents
|
$
|
4,735.3
|
$
|
355.8
|
$
|
876.0
|
||||
Total
debt
|
1,453.7
|
1,984.6
|
2,117.0
|
|||||||
Total
shareholders' equity
|
7,907.9
|
5,404.8
|
5,761.9
|
|||||||
Debt-to-total
capital ratio
|
15.4
|
%
|
26.6
|
%
|
26.7
|
%
|
|
Short-term
|
Long-term
|
|||||
Moody's
|
P-2
|
|
|
A3
|
|
||
Standard
and Poor's
|
|
|
A-2
|
|
|
BBB+
|
|
|
|
|
Interest
|
|
|
Total
|
|||||||||||||||
|
|
|
|
payments on
|
|
|
contractual
|
|||||||||||||||
Payments
|
Short-term
|
Long-term
|
|
long-term
|
Purchase
|
Operating
|
cash
|
|||||||||||||||
due
by period
|
debt
|
debt
|
|
debt
|
obligations
|
leases
|
obligations
|
|||||||||||||||
Less
than 1 year
|
$
|
59.9
|
$
|
681.1
|
* |
|
$
|
84.4
|
$
|
639.0
|
$
|
54.2
|
$
|
1,518.6
|
||||||||
1
-
3 years
|
-
|
18.3
|
89.1
|
187.5
|
81.0
|
375.9
|
||||||||||||||||
3
-
5 years
|
-
|
18.1
|
86.1
|
-
|
43.8
|
148.0
|
||||||||||||||||
More
than 5 years
|
-
|
676.3
|
316.6
|
-
|
24.8
|
1,017.7
|
||||||||||||||||
Total
|
$
|
59.9
|
$
|
1,393.8
|
$
|
576.2
|
$
|
826.5
|
$
|
203.8
|
$
|
3,060.2
|
In
millions
|
2007
|
2006
|
2005
|
|||||||
Net
periodic pension benefit cost
|
$
|
11.5
|
$
|
32.7
|
$
|
32.4
|
||||
Net
curtailment and settlement (gains) losses
|
63.5
|
-
|
4.0
|
|||||||
Net
periodic pension benefit (income) cost after
|
||||||||||
net
curtailment and settlement (gains) losses
|
$
|
75.0
|
$
|
32.7
|
$
|
36.4
|
||||
|
||||||||||
Amounts
recorded in continuing operations
|
$
|
20.6
|
$
|
38.3
|
$
|
45.8
|
||||
Amounts
recorded in discontinued operations
|
54.4
|
(5.6
|
)
|
(9.4
|
)
|
|||||
Total
|
$
|
75.0
|
$
|
32.7
|
$
|
36.4
|
In
millions
|
2007
|
2006
|
2005
|
|||||||
Net
periodic postretirement benefit cost
|
$
|
78.1
|
$
|
79.2
|
$
|
74.0
|
||||
Net
curtailment and settlement (gains) losses
|
(265.9
|
)
|
-
|
-
|
||||||
Net
periodic postretirement benefit (income) cost
after
net curtailment and settlement (gains) losses
|
$
|
(187.8
|
)
|
$
|
79.2
|
$
|
74.0
|
|||
|
||||||||||
Amounts
recorded in continuing operations
|
$
|
22.7
|
$
|
25.7
|
$
|
25.1
|
||||
Amounts
recorded in discontinued operations
|
(210.5
|
)
|
53.5
|
48.9
|
||||||
Total
|
$
|
(187.8
|
)
|
$
|
79.2
|
$
|
74.0
|
·
|
ARPC’s
interpretation of a widely accepted forecast of the population
likely to
have been occupationally exposed to
asbestos;
|
·
|
epidemiological
studies estimating the number of people likely to develop asbestos-related
diseases such as mesothelioma and lung
cancer;
|
·
|
the
Company’s historical experience with the filing of non-malignancy claims
against it and the historical ratio between the numbers of non-malignancy
and lung cancer claims filed against the
Company;
|
·
|
ARPC’s
analysis of the number of people likely to file an asbestos-related
personal injury claim against the Company based on such epidemiological
and historical data and the Company’s most recent three-year claims
history;
|
·
|
an
analysis of the Company’s pending cases, by type of disease
claimed;
|
·
|
an
analysis of the Company’s most recent three-year history to determine the
average settlement and resolution value of claims, by type of disease
claimed;
|
·
|
an
adjustment for inflation in the future average settlement value
of claims,
at a 2.5% annual inflation rate, adjusted downward to 1.5% to take
account
of the declining value of claims resulting from the aging of the
claimant
population;
|
·
|
an
analysis of the period over which the Company has and is likely
to resolve
asbestos-related claims against it in the
future.
|
|
2002
|
|
2003
|
|
2004
|
|
2005
|
|
2006
|
|
2007
|
||||||||
Open
claims - January 1
|
77,675
|
96,294
|
104,513
|
105,811
|
102,968
|
101,709
|
|||||||||||||
New
claims filed
|
37,172
|
30,843
|
13,541
|
11,132
|
6,457
|
5,398
|
|||||||||||||
Claims
settled
|
(16,443
|
)
|
(21,096
|
)
|
(11,503
|
)
|
(12,505
|
)
|
(6,558
|
)
|
(5,005
|
)
|
|||||||
Claims
dismissed
|
(2,110
|
)
|
(1,528
|
)
|
(740
|
)
|
(1,470
|
)
|
(1,158
|
)
|
(1,479
|
)
|
|||||||
Open
claims - December 31
|
96,294
|
104,513
|
105,811
|
102,968
|
101,709
|
100,623
|
In
millions
|
2007
|
2006
|
|||||
Balance
at beginning of year
|
$
|
137.1
|
$
|
135.2
|
|||
Reductions
for payments
|
(68.5
|
)
|
(61.7
|
)
|
|||
Accruals
for warranties issued during the current period
|
80.1
|
66.1
|
|||||
Changes
for accruals related to preexisting warranties
|
(7.8
|
)
|
(6.9
|
)
|
|||
Acquisitions
|
-
|
0.4
|
|||||
Translation
|
6.0
|
4.0
|
|||||
Balance
at end of the year
|
$
|
146.9
|
$
|
137.1
|
·
|
Allowance
for doubtful accounts – The Company has provided an allowance for
doubtful accounts receivable which represents the best estimate
of
probable loss inherent in the Company’s accounts receivable portfolio.
This estimate is based upon the Company’s policy, derived from its
knowledge of its end markets, customer base and
products.
|
·
|
Goodwill
and indefinite-lived intangible assets – The Company has significant
goodwill and other intangible assets on its balance sheet related
to
acquisitions. The valuation and classification of these assets
involves
significant judgments and the use of estimates. The testing of
these
intangibles under established accounting guidelines for impairment
also
requires significant use of judgment and assumptions, particularly
as it
relates to the determination of fair market value. The Company’s goodwill
and other indefinite-lived intangible assets are tested and reviewed
annually for impairment or when there is a significant change in
circumstances. The Company believes that its use of estimates and
assumptions are reasonable and comply with generally accepted accounting
principles. Changes in business conditions could potentially require
future adjustments to these valuations.
|
·
|
Long-lived
assets and finite-lived intangibles - Long-lived assets and finite-lived
intangibles are reviewed for impairment whenever events or changes
in
circumstances indicate that the carrying amount of an asset may
not be
recoverable. Assets are grouped with other assets and liabilities
at the
lowest level for which identifiable cash flows can be generated.
Impairment in the carrying value of an asset would be recognized
whenever
anticipated future undiscounted cash flows from an asset are less
than its
carrying value. The impairment is measured as the amount by which
the
carrying value exceeds the fair value of the asset as determined
by an
estimate of discounted cash flows. The Company believes that its
use of
estimates and assumptions are reasonable and comply with generally
accepted accounting principles. Changes in business conditions
could
potentially require future adjustments to these valuations.
|
·
|
Loss
contingencies – Liabilities are recorded for various contingencies arising
in the normal course of business, including litigation and administrative
proceedings, environmental and asbestos matters and product liability,
product warranty, worker’s compensation and other claims. The Company has
recorded reserves in the financial statements related to these
matters,
which are developed using input derived from actuarial estimates
and
historical and anticipated experience data depending on the nature
of the
reserve, and in certain instances with consultation of legal counsel,
internal and external consultants and engineers. Subject to the
uncertainties inherent in estimating future costs for these types
of
liabilities, the Company believes its estimated reserves are reasonable
and does not believe the final determination of the liabilities
with
respect to these matters would have a material effect on the financial
condition, results of operations, liquidity or cash flows of the
Company
for any year.
|
·
|
Asbestos
Matters - Certain wholly owned subsidiaries of the Company are
named as
defendants in asbestos-related lawsuits in state and federal courts.
The
Company records a liability for its actual and anticipated future
claims
as well as an asset for anticipated insurance settlements. Although
the
Company was neither a manufacturer or producer of asbestos, some
of its
formerly manufactured components from third party suppliers utilized
asbestos related components. As a result, amounts related to asbestos
are
recorded within Discontinued operations, net of tax. Refer to Note
20,
Commitments and Contingencies, in the consolidated financial statements
for further details of asbestos-related
matters.
|
·
|
Revenue
Recognition – Revenue is recognized and earned when all of the following
criteria are satisfied: (a) persuasive evidence of a sales arrangement
exists; (b) price is fixed or determinable; (c) collectibility
is
reasonably assured; and (d) delivery has occurred or service has
been
rendered. Delivery generally occurs when the title and the risks
and
rewards of ownership have substantially transferred to the customer.
Revenue from maintenance contracts or extended warranties is recognized
on
a straight-line basis over the life of the contract, unless another
method
is more representative of the costs incurred. The Company enters
into
agreements that contain multiple elements, such as equipment, installation
and service revenue. For multiple-element arrangements, the Company
recognizes revenue for delivered elements when the delivered item
has
stand-alone value to the customer, fair values of undelivered elements
are
known, customer acceptance has occurred, and there are only customary
refund or return rights related to the delivered elements.
|
·
|
Income
taxes - Deferred tax assets and liabilities are determined based
on
temporary differences between financial reporting and tax bases
of assets
and liabilities, applying enacted tax rates expected to be in effect
for
the year in which the differences are expected to reverse. The
Company
recognizes future tax benefits, such as net operating losses and
non-U.S.
tax credits, to the extent that realizing these benefits is considered
in
its judgment to be more likely than not. The Company regularly
reviews the
recoverability of its deferred tax assets considering its historic
profitability, projected future taxable income, timing of the reversals
of
existing temporary differences and the feasibility of its tax planning
strategies. Where appropriate, the Company records a valuation
allowance
with respect to a future tax
benefit.
|
·
|
Employee
benefit plans – The Company provides a range of benefits to eligible
employees and retired employees, including pensions, postretirement
and
postemployment benefits. Determining the cost associated with such
benefits is dependent on various actuarial assumptions including
discount
rates, expected return on plan assets, compensation increases,
employee
mortality and turnover rates and health-care cost trend rates.
Actuarial
valuations are performed to determine expense in accordance with
generally
accepted accounting principles in the United States. Actual results
may
differ from the actuarial assumptions and are generally accumulated
and
amortized into earnings over future periods. Effective December
31, 2006,
these effects are generally recognized in shareholders’ equity on an
annual basis, due to the adoption of SFAS 158. The Company reviews
its
actuarial assumptions at each measurement date and makes modifications
to
the assumptions based on current rates and trends, if appropriate.
The
discount rate, the rate of compensation increase and the expected
long-term rates of return on plan assets are determined as of the
measurement date. The discount rate reflects a rate at which pension
benefits could be effectively settled. It is established and based
primarily on the yields of high-quality fixed-income investments
available
and expected to be available during the life of the plans, a study
based
on the Citigroup Pension Liability index, and a review of the current
yields reported by Moody’s on AA corporate bonds. The rate of compensation
increase is dependent on expected future compensation levels. The
expected
long-term rates of return are projected to be the rates of return
to be
earned over the period until the benefits are paid, which should
reflect
the rates of return on present investments, and on reinvestments
over the
period. The expected long-term rate of return on plan assets is
based on
what is achievable given the plan’s investment policy and the types of
assets held. Historical asset return trends for the larger plans
are
reviewed over fifteen, ten and five-year periods. The actual rates
of
return for plan assets over the last fifteen-year period have exceeded
the
expected rates of return used. The Company believes that the assumptions
utilized in recording its obligations under its plans are reasonable
based
on input from its actuaries, outside investment advisors and information
as to assumptions used by plan
sponsors.
|
In
millions, except per share amounts
|
2007
|
||||||||||||
First
Quarter
|
|
Second
Quarter
|
|
Third
Quarter
|
|
Fourth
Quarter
|
|||||||
Net
revenues
|
$
|
1,976.2
|
$
|
2,224.6
|
$
|
2,239.0
|
$
|
2,323.3
|
|||||
Cost
of goods sold
|
1,416.0
|
1,589.7
|
1,608.2
|
1,658.1
|
|||||||||
Operating
income
|
208.6
|
274.1
|
276.3
|
298.8
|
|||||||||
Net
earnings
|
217.5
|
964.1
|
266.6
|
2,518.5
|
|||||||||
Earnings
per common share:
|
|||||||||||||
Basic
|
$
|
0.71
|
$
|
3.21
|
$
|
0.94
|
$
|
9.23
|
|||||
Diluted
|
$
|
0.70
|
$
|
3.17
|
$
|
0.92
|
$
|
9.06
|
|||||
|
2006
|
||||||||||||
|
First
Quarter
|
|
|
Second
Quarter
|
|
|
Third
Quarter
|
|
|
Fourth
Quarter
|
|||
Net
revenues
|
$
|
1,804.6
|
$
|
2,048.1
|
$
|
2,038.0
|
$
|
2,143.0
|
|||||
Cost
of goods sold
|
1,300.7
|
1,463.1
|
1,465.3
|
1,539.3
|
|||||||||
Operating
income
|
197.9
|
252.5
|
269.0
|
279.1
|
|||||||||
Net
earnings
|
253.2
|
313.5
|
243.8
|
222.0
|
|||||||||
Earnings
per common share:
|
|||||||||||||
Basic
|
$
|
0.77
|
$
|
0.96
|
$
|
0.77
|
$
|
0.72
|
|||||
Diluted
|
$
|
0.76
|
$
|
0.95
|
$
|
0.76
|
$
|
0.72
|
1.
|
In
the second quarter of 2007, basic and diluted earnings per common
share
included $2.25 and $2.22, respectively, related to the gain on
sale of
discontinued operations. For a further discussion of discontinued
operations, see Footnote 4, Divestitures and Discontinued Operations,
to
the consolidated financial
statements.
|
2.
|
In
the fourth quarter of 2007, basic and diluted earnings per common
share
included $9.48 and $9.30, respectively, related to the gain on
sale of
discontinued operations. In addition, basic and diluted earnings
per
common share included a charge of $1.02 and $1.00, respectively
relating
to asbestos matters for a previously divested business of the Company.
For
a further description of discontinued operations and asbestos matters,
see
Footnote 4, Divestitures and Discontinued Operations, and Footnote
20,
Commitments and Contingencies, respectively, to the consolidated
financial
statements.
|
Financial
statements and financial statement schedule
|
|
See
Item 8.
|
|
Exhibits
|
|
The
exhibits listed on the accompanying index to exhibits are filed
as part of
this Annual Report on Form 10-K.
|
2.1
|
Agreement
and Plan of Merger, dated as of October 31, 2001, among Ingersoll-Rand
Company Limited, Ingersoll-Rand Company and IR Merger Corporation.
(Previously filed with the Securities and Exchange Commission as
an
exhibit to Amendment No. 1 to the Registration Statement on Form
S-4 (No.
333-71642), filed October 30, 2001, and incorporated herein by
reference.)
|
2.2
|
Stock
and Asset Purchase Agreement, dated as of October 16, 2002, between
Ingersoll-Rand Company Limited, on behalf of itself and certain
of its
subsidiaries and The Timken Company, on behalf of itself and certain
of
its subsidiaries. (Previously filed with the Securities and Exchange
Commission as an exhibit to Form 8-K dated October 16, 2002, filed
October
17, 2002, and incorporated herein by
reference.)
|
2.3
|
Amendment
to the Stock and Asset Purchase Agreement, dated as of February
18, 2003,
amending the Stock Purchase Agreement, dated as of October 16,
2002,
between Ingersoll-Rand Company Limited, on behalf of itself and
certain of
its subsidiaries and The Timken Company, on behalf of itself and
certain
of its subsidiaries. (Previously filed with the Securities and
Exchange
Commission as an exhibit to Form Schedule 13D, filed February 28,
2003 by
Ingersoll-Rand Company and incorporated herein by
reference.)
|
2.4
|
Equity
Purchase Agreement between FRC Acquisition LLC, on behalf of itself
and
the other buyers named therein, and Ingersoll-Rand Company Limited,
on
behalf of itself and the other sellers named therein, dated August
25,
2004, in connection with the divestiture of Dresser-Rand. (Previously
filed with the Securities and Exchange Commission as an exhibit
to Form
8-K dated August 25, 2004, filed August 26, 2004, and incorporated
herein
by reference.)
|
2.5
|
Pricing
Agreement, dated as of May 24, 2005 among Ingersoll-Rand Company
Limited,
Banc of America Securities, LLC, Deutsche Bank Securities Inc.
and
Ingersoll-Rand Company. (Previously filed with the Securities and
Exchange
Commission as an exhibit to Form 8-K dated May 24, 2005, filed
May 27,
2005, and incorporated herein by
reference.)
|
2.6
|
Asset
and Stock Purchase Agreement, dated as of February 27, 2007, among
Ingersoll-Rand Company limited, on behalf of itself and the other
sellers
named therein, and AB Volvo (publ), on behalf of itself and the
other
buyers named therein. (Previously
filed with the Securities and Exchange Commission as an exhibit
to
Form 8-K dated February 27, 2007, filed February 28, 2007, and
incorporated herein by reference.)
|
2.7
|
Asset
and Stock Purchase Agreement, dated as of July 29, 2007, among
Ingersoll-Rand Company Limited, on behalf of itself and certain
of its
subsidiaries, and Doosan Infracore Co., Ltd. and Doosan Engine
Co.,
Ltd.,
on behalf of themselves and certain of their subsidiaries.
(Previously
filed with the Securities and Exchange Commission as an exhibit
to
Form 8-K dated July 29, 2007, filed July 31, 2007, and
incorporated herein by reference.)
|
2.8
|
Agreement
and Plan of Merger, dated as of December 15, 2007, among Ingersoll-Rand
Company Limited, Indian Merger Sub, Inc. and Trane Inc. (Previously
filed with the Securities and Exchange Commission as an exhibit
to
Form 8-K dated December 15, 2007, filed December 17, 2007, and
incorporated herein by reference.)
|
3.1
|
Memorandum
of Association of Ingersoll-Rand Company Limited. (Previously filed
with
the Securities and Exchange Commission as an exhibit to Amendment
No. 1 to
the Registration Statement on Form S-4 (No. 333-71642), filed October
30,
2001, and incorporated herein by
reference.)
|
3.2
|
Amended
and Restated Bye-Laws of Ingersoll-Rand Company Limited, dated
June 1,
2005. (Previously filed with the Securities and Exchange Commission
as an
exhibit to Form 10-Q for the quarter ended June 30, 2005, filed
August 5,
2005, and incorporated herein by
reference.)
|
4.1
|
Certificate
of Designation, Preferences and Rights of Series A Preference Shares
of
Ingersoll-Rand Company Limited. (Previously filed with the Securities
and
Exchange Commission as an exhibit to Amendment No. 1 to the Registration
Statement on Form S-4 (No. 333-71642), filed October 30, 2001,
and
incorporated herein by reference.)
|
4.2
|
Rights
Agreement between Ingersoll-Rand Company Limited and The Bank of
New York,
as Rights Agent. (Previously filed with the Securities and Exchange
Commission as an exhibit to Amendment No. 1 to the Registration
Statement
on Form S-4 (No. 333-71642), filed October 30, 2001, and incorporated
herein by reference.)
|
4.3
|
Voting
Agreement between Ingersoll-Rand Company Limited and Ingersoll-Rand
Company. (Previously filed with the Securities and Exchange Commission
as
an exhibit to Amendment No. 1 to the Registration Statement on
Form S-4
(No. 333-71642), filed October 30, 2001, and incorporated herein
by
reference.)
|
4.4
|
Indenture
dated as of August 1, 1986, between Ingersoll-Rand Company and
The Bank of
New York, as Trustee, as supplemented by first, second and third
supplemental indentures. (Previously filed with the Securities
and
Exchange Commission as an exhibit to Ingersoll-Rand Company’s Registration
Statement on Form S-3 (No. 333-39474), filed March 18, 1991, and
incorporated herein by reference, and to Ingersoll-Rand Company’s
Registration Statement on Form S-3 (No. 333-50902), filed November
29,
2000, and incorporated herein by
reference.)
|
4.5
|
Fourth
Supplemental Indenture, dated as of December 31, 2001, among
Ingersoll-Rand Company Limited, Ingersoll-Rand Company and The
Bank of New
York, as trustee. (Previously filed with the Securities and Exchange
Commission as an exhibit to Form 10-K for the year ended December
31,
2001, filed March 13, 2002, and incorporated herein by
reference.)
|
4.6 |
Credit
Agreement dated as of August
12, 2005,
among Ingersoll-Rand Company
and Ingersoll-Rand Company Limited,
the banks listed therein, and
Citicorp USA, Inc., as Syndication
Agent,
and
Bank of America,
N.A., Deutsche Bank Securities Inc., The
Bank of Tokyo-Mitsubishi,
Ltd., New York Branch and UBS Securities LLC, as Documentation
Agents, and
JPMorgan Chase Bank, N.A.,
as Administrative Agent, and
J.P. Morgan Securities Inc. and Citigroup Global Markets Inc.,
as Lead
Arrangers and Bookrunners. (Previously filed with the Securities
and
Exchange Commission as an exhibit to Form 10-K for the year ended
December
31, 2006, filed March 1, 2006,
and incorporated herein by reference.)
|
4.7
|
Credit
Agreement, dated as of June 25, 2004, among Ingersoll-Rand Company
and
Ingersoll-Rand Company Limited, the banks listed therein, The JPMorgan
Chase Bank, as Administrative Agent, Citibank N.A., and Deutsche
Bank
Securities Inc., as Co-Syndication Agents, and The Bank of
Tokyo-Mitsubishi, Ltd, as Documentation Agent, and J.P. Morgan
Securities
Inc., as Lead Arranger and Bookrunner. (Previously filed with the
Securities and Exchange Commission as an exhibit to Form 10-K for
the year
ended December 31, 2004, filed March 16, 2005, and incorporated
herein by
reference.)
|
4.8
|
Ingersoll-Rand
Company Limited and its subsidiaries are parties to several long-term
debt
instruments under which in each case the total amount of securities
authorized does not exceed 10% of the total assets of Ingersoll-Rand
Company Limited and its subsidiaries on a consolidated basis. (Pursuant
to
paragraph 4(iii) of Item 601(b) of Regulation S-K, Ingersoll-Rand
Company
Limited agrees to furnish a copy of such instruments to the Securities
and
Exchange Commission upon request.)
|
4.9
|
Indenture
dated as of May 24, 2005 among Ingersoll-Rand Company Limited,
Ingersoll-Rand Company and Wells Fargo Bank, N.A., as trustee.
(Previously
filed with the Securities and Exchange Commission as an exhibit
to Form
8-K dated May 24, 2005, filed May 27, 2005, and incorporated herein
by
reference.)
|
10.1 |
Management
Incentive Unit Plan of Ingersoll-Rand Company. Amendment to the
Management
Incentive Unit Plan, effective January 1, 1982. Amendment to the
Management Incentive Unit Plan, effective January 1, 1987. Amendment
to
the Management Incentive Unit Plan, effective June 3, 1987. (Previously
filed with the Securities and Exchange Commission as an exhibit
to Form
10-K of Ingersoll-Rand Company for the year ended December 31,
1993, filed
March 30, 1994, and incorporated herein by
reference.)
|
10.2
|
Reorganization
Amendment to Management Incentive Unit Plan, dated December 31,
2001.
(Previously filed with the Securities and Exchange Commission as
an
exhibit to Form 10-K for the year ended December 31, 2001, filed
March 13,
2002, and incorporated herein by
reference.)
|
10.3
|
Description
of Annual Incentive Arrangements for Chairman, President, Sector
Presidents and other Staff Officers of Ingersoll-Rand Company Limited.
(Previously filed with the Securities and Exchange Commission as
an
exhibit to Form 10-K for the year ended December 31, 2005, filed
March 1,
2006, and incorporated herein by
reference.)
|
10.4
|
Description
of Performance Share Program for Chairman, President and Chief
Executive
Officer and the other Participants of Ingersoll-Rand Company Limited.
Filed herewith.
|
10.5 |
Form
of Change in Control Agreement with Tier 1 Officers of Ingersoll-Rand
Company Limited, dated as of December 1, 2006. (Previously filed
with the
Securities and Exchange Commission as an exhibit to Form 8-K
dated
November 30, 2006, filed December 4, 2006, and incorporated herein
by
reference.)
|
10.6 |
Form
of Change in Control Agreement with Tier 2 Officers of Ingersoll-Rand
Company Limited, dated as of December 1, 2006. (Previously filed
with the
Securities and Exchange Commission as an exhibit to Form 8-K dated
November 30, 2006, filed December 4, 2006, and incorporated herein
by
reference.)
|
10.7
|
Executive
Supplementary Retirement Agreement for selected executive officers
of
Ingersoll- Rand Company. (Previously filed with the Securities
and
Exchange Commission as an exhibit to Form 10-K of Ingersoll-Rand
Company
for the year ended December 31, 1993, filed March 30, 1994, and
incorporated herein by reference.)
|
10.8 |
Executive
Supplementary Retirement Agreement for selected executive officers
of
Ingersoll-Rand Company. (Previously filed with the Securities and
Exchange
Commission as an exhibit to Form 10-K of Ingersoll-Rand Company
for the
year ended December 31, 1996, filed March 26, 1997, and incorporated
herein by reference.)
|
10.9
|
Forms
of insurance and related letter agreements with certain executive
officers
of Ingersoll-Rand Company. (Previously filed with the Securities
and
Exchange Commission as an exhibit to Form 10-K of Ingersoll-Rand
Company
for the year ended December 31, 1993, filed March 30, 1994, and
incorporated herein by reference.)
|
10.10
|
Amended
and Restated Supplemental Pension Plan, dated January 1, 2003.
(Previously
filed with the Securities and Exchange Commission as an exhibit
to Form
10-K for the year ended December 31, 2002, filed March 5, 2003,
and
incorporated herein by reference.)
|
10.11
|
First
Amendment to the Amended and Restated Supplemental Pension Plan,
dated
January 1, 2003. (Previously filed with the Securities and Exchange
Commission as an exhibit to Form 10-K for the year ended December
31,
2003, filed February 27, 2004, and incorporated herein by
reference.)
|
10.12
|
Amended
and Restated Supplemental Employee Savings Plan, dated January
1, 2003.
(Previously filed with the Securities and Exchange Commission as
an
exhibit to Form 10-K for the year ended December 31, 2002, filed
March 5,
2003, and incorporated herein by
reference.)
|
10.13 |
First
Amendment to the Amended and Restated Supplemental Employee Savings
Plan,
dated January
1, 2003. (Previously filed with the Securities and Exchange Commission
as
an exhibit to Form 10-K for the year ended December 31, 2003, filed
February 27, 2004, and incorporated herein by
reference.)
|
10.14 |
Incentive
Stock Plan of 1995. (Previously filed with the Securities and Exchange
Commission as Appendix A to the Notice of 1995 Annual Meeting of
Shareholders and Proxy Statement of Ingersoll-Rand Company dated
March 15,
1995, and incorporated herein by
reference.)
|
10.15 |
Reorganization
Amendment to Incentive Stock Plan of 1995, dated December 21, 2001.
(Previously filed with the Securities and Exchange Commission as
an
exhibit to Form 10-K for the year ended December 31, 2001, filed March 13,
2002, and incorporated herein by
reference.)
|
10.16 |
Senior
Executive Performance Plan. (Previously filed with the Securities
and
Exchange Commission as Appendix A to the Notice of 2000 Annual
Meeting of
Shareholders and Proxy Statement of Ingersoll-Rand Company, dated
March 7,
2000, and incorporated herein by
reference.)
|
10.17 |
Amended
and Restated Elected Officers Supplemental Plan, dated December
31, 2004.
(Previously filed with the Securities and Exchange Commission as
an
exhibit to Form 10-K for the year ended December 31, 2004, filed
March 16,
2005, and incorporated herein by
reference.)
|
10.18
|
Amendment,
dated February 1, 2006, to Amended and Restated Elected Officers
Supplemental Plan, dated December 31, 2004. (Previously filed with
the
Securities and Exchange Commission as an exhibit to Form 10-K for
the year
ended December 31, 2005, filed March 1, 2006, and incorporated
herein by
reference.)
|
10.19
|
Elected
Officers Supplemental Plan II, dated February 1, 2006. (Previously
filed
with the Securities and Exchange Commission as an exhibit to Form
10-K for
the year ended December 31, 2005, filed March 1, 2006, and incorporated
herein by reference.)
|
10.20 |
Amended
and Restated Incentive Stock Plan of 1998. (Previously filed
with the
Securities and Exchange Commission as an exhibit to the Registration
Statement on Form S-8 (No. 333-130047), filed December 1, 2005,
and
incorporated herein by
reference.)
|
10.21
|
Amendment
to the Ingersoll-Rand Company Limited Amended and Restated Incentive
Stock
Plan of 1998, dated December 7, 2005. (Previously filed with the
Securities and Exchange Commission as an exhibit to
Form 8-K dated December 7, 2005, filed December 9, 2005, and incorporated
herein by reference.)
|
10.22
|
Composite
Employment Agreement with Chief Executive Officer. (Previously
filed with the Securities and Exchange Commission as an
exhibit to
Form 10-K of Ingersoll-Rand Company for the year ended December
31, 1999,
filed March 30, 2000, and incorporated herein by
reference.)
|
10.23 |
Employment
Agreement with Michael Lamach, Senior Vice President. (Previously
filed
with the Securities and Exchange Commission as an exhibit to Form
10-K for
the year ended December 31, 2003, filed February 27, 2004, and
incorporated herein by reference.)
|
10.24
|
Employment
Agreement with James R. Bolch, Senior Vice President. (Previously
filed
with the Securities and Exchange Commission as an exhibit to Form
10-K for
the year ended December 31, 2005, filed March 1, 2006, and incorporated
herein by reference.)
|
10.25
|
Addendum,
dated December 8, 2005, to Employment Agreement with James R. Bolch.
(Previously filed with the Securities and Exchange Commission as
an
exhibit to Form 10-K for the year ended December 31, 2005, filed
March 1,
2006, and incorporated herein by
reference.)
|
10.26
|
Amended
and Restated Estate Enhancement Program, dated June 1, 1998, and
the
related form agreements. (Previously filed with the Securities
and
Exchange Commission as an exhibit to Form 10-Q for the quarter
ended March
31, 2006, filed May 5, 2006, and incorporated herein by
reference.)
|
10.27
|
First
Amendment to the Amended and Restated Estate Enhancement Program,
dated
December 31, 2001. (Previously filed with the Securities and Exchange
Commission as an exhibit to Form 10-Q for the quarter ended March
31,
2006, filed May 5, 2006, and incorporated herein by
reference.)
|
10.28 |
Employment
Agreement with William Gauld, Senior Vice President, dated September
7,
2006. (Previously filed with the Securities and Exchange Commission
as an
exhibit to Form 10-K for the year ended December 31, 2006, filed
March 1,
2007, and incorporated herein by reference.)
|
10.29 |
Employment
Agreement with Marcia J. Avedon, Senior Vice President, dated January
8,
2007. (Previously filed with the Securities and Exchange Commission
as an
exhibit to Form 10-K for the year ended December 31, 2006, filed
March 1,
2007, and incorporated herein by reference.)
|
10.30 |
Ingersoll-Rand
Company Limited Incentive Stock Plan of 2007. (Previously filed
with the
Securities and Exchange Commission as an exhibit to the Registration
Statement on Form S-8 (No. 333-143716), filed June 13, 2007, and
incorporated herein by reference.)
|
10.31 |
Director
Deferred Compensation Plan and Stock Award Plan, as amended and
restated
effective August 1, 2007. (Previously filed with the Securities
and
Exchange Commission as an exhibit to Form 8-K dated August 1, 2007,
filed
August 3, 2007, and incorporated herein by
reference.)
|
10.32 |
Director
Deferred Compensation Plan and Stock Award Plan II, as amended
and
restated effective August 1, 2007. (Previously filed with the Securities
and Exchange Commission as an exhibit to Form 8-K dated August
1, 2007,
filed August 3, 2007, and incorporated herein by
reference.)
|
10.33 |
Executive
Deferred Compensation Plan, as amended and restated effective August
1,
2007. (Previously filed with the Securities and Exchange Commission
as an
exhibit to Form 8-K dated August 1, 2007, filed August 3, 2007,
and
incorporated herein by reference.)
|
10.34 |
Executive
Deferred Compensation Plan II, as amended and restated effective
August 1,
2007. (Previously filed with the Securities and Exchange Commission
as an
exhibit to Form 8-K dated August 1, 2007, filed August 3, 2007,
and
incorporated herein by reference.)
|
10.35 |
Employment
Agreement with James V. Gelly dated September 24, 2007 and revised
September 28, 2007. (Previously filed with the Securities and Exchange
Commission as an exhibit to Form 8-K dated October 6, 2007, filed
October
9, 2007, and incorporated herein by
reference.)
|
10.36 |
Deferred
Prosecution Agreement between Ingersoll-Rand Company Limited and
the
United States Department of Justice, Criminal Division, Fraud Section
filed as of October 31, 2007. (Previously filed with the Securities
and
Exchange Commission as an exhibit to Form 8-K dated October 31,
2007,
filed November 1, 2007, and incorporated herein by
reference.)
|
10.37 |
Debt
Commitment Letter from JPMorgan Chase Bank, N.A., J.P. Morgan Securities
Inc., Credit Suisse, Cayman Islands Branch, Credit Suisse Securities
(USA)
LLC, Goldman Sachs Bank USA and Goldman Sachs Credit Partners L.P.,
dated
as of December 15, 2007. (Previously
filed with the Securities and Exchange Commission as an exhibit
to
Form 8-K dated December 15, 2007, filed December 17, 2007, and
incorporated herein by reference.)
|
12 |
Computations
of Ratios of Earnings to Fixed Charges. Filed
herewith.
|
21 |
List
of Subsidiaries of Ingersoll-Rand Company Limited. Filed
herewith.
|
23.1
|
Consent
of Independent Registered Public Accounting Firm. Filed
herewith.
|
23.2
|
Consent
of Analysis, Research & Planning Corporation. Filed
herewith.
|
31.1
|
Certification
of Chief Executive Officer Pursuant to Rule 13a–14(a) or Rule 15d–14(a),
as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
Filed herewith.
|
31.2
|
Certification
of Chief Financial Officer Pursuant to Rule 13a-14(a) or Rule 15d-14(a),
as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
Filed herewith.
|
32
|
Certifications
of Chief Executive Officer and Chief Financial Officer Pursuant
to Rule
13a-14(b) or Rule 15d-14(b) and 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Filed
herewith.
|
INGERSOLL
RAND COMPANY LIMITED
|
||||
(Registrant)
|
||||
|
|
|
|
|
|
|
|
By:
|
/S/
Herbert L. Henkel
|
|
|
|
|
(Herbert
L. Henkel)
|
|
|
|
|
Chief Executive Officer
|
|
|
|
Date:
|
February 29, 2008
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
|
|
Chairman,
President, Chief
|
|
|
/S/
Herbert L. Henkel
|
|
Executive
Officer and Director
|
|
|
(Herbert L. Henkel)
|
|
(Principal
Executive Officer)
|
|
February
29, 2008
|
|
|
|
|
|
|
|
Senior
Vice President and
|
|
|
/S/
James V. Gelly
|
|
Chief
Financial Officer
|
|
|
(James V. Gelly)
|
|
(Principal
Financial Officer)
|
|
February
29, 2008
|
|
|
|
|
|
/S/
Richard W. Randall
|
|
Vice
President and Controller
|
|
|
(Richard W. Randall)
|
|
(Principal
Accounting Officer)
|
|
February
29, 2008
|
|
|
|
|
|
/S/
Ann C. Berzin
|
|
|
|
|
(Ann C. Berzin)
|
|
Director
|
|
February
29, 2008
|
|
|
|
|
|
/S/
Gary D. Forsee
|
|
|
|
|
(Gary D. Forsee)
|
|
Director
|
|
February
29, 2008
|
|
|
|
|
|
/S/
Peter C. Godsoe
|
|
|
|
|
(Peter C. Godsoe)
|
|
Director
|
|
February
29, 2008
|
|
|
|
|
|
/S/
Constance Horner
|
|
|
|
|
(Constance Horner)
|
|
Director
|
|
February
29, 2008
|
|
|
|
|
|
/S/
H. William Lichtenberger
|
|
|
|
|
(H. William Lichtenberger)
|
|
Director
|
|
February
29, 2008
|
|
|
|
|
|
/S/
Theodore E. Martin
|
|
|
|
|
(Theodore E. Martin)
|
|
Director
|
|
February
29, 2008
|
|
|
|
|
|
/S/
Patricia Nachtigal
|
|
|
|
|
(Patricia Nachtigal)
|
|
Director
|
|
February
29, 2008
|
|
|
|
|
|
/S/
Orin R. Smith
|
|
|
|
|
(Orin R. Smith)
|
|
Director
|
|
February
29, 2008
|
|
|
|
|
|
/S/
Richard J. Swift
|
|
|
|
|
(Richard J. Swift)
|
|
Director
|
|
February
29, 2008
|
|
|
|
|
|
/S/
Tony L. White
|
|
|
|
|
(Tony L. White)
|
|
Director
|
|
February
29, 2008
|
Page
|
|
Report
of Independent Registered Public Accounting Firm
|
66
|
|
|
Consolidated
Statements of Income
|
67
|
|
|
Consolidated
Balance Sheets
|
68
|
|
|
Consolidated
Statements of Shareholders' Equity
|
69
|
|
|
Consolidated
Statements of Cash Flows
|
70
|
|
|
Notes
to Consolidated Financial Statements
|
71
|
|
|
Schedule
II - Valuation and Qualifying Accounts
|
118
|
For
the years ended December 31,
|
2007
|
2006
|
2005
|
|||||||
Net
revenues
|
$
|
8,763.1
|
$
|
8,033.7
|
$
|
7,263.7
|
||||
Cost
of goods sold
|
6,272.0
|
5,768.4
|
5,203.2
|
|||||||
Selling
and administrative expenses
|
1,433.3
|
1,266.8
|
1,172.7
|
|||||||
Operating
income
|
1,057.8
|
998.5
|
887.8
|
|||||||
Interest
expense
|
(136.2
|
)
|
(133.6
|
)
|
(145.1
|
)
|
||||
Other
income, net
|
15.9
|
(7.3
|
)
|
50.1
|
||||||
Earnings
before income taxes
|
937.5
|
857.6
|
792.8
|
|||||||
Provision
for income taxes
|
204.4
|
92.6
|
61.0
|
|||||||
Earnings
from continuing operations
|
733.1
|
765.0
|
731.8
|
|||||||
Discontinued
operations, net of tax
|
3,233.6
|
267.5
|
322.4
|
|||||||
Net
earnings
|
$
|
3,966.7
|
$
|
1,032.5
|
$
|
1,054.2
|
||||
|
||||||||||
Basic
earnings per common share:
|
||||||||||
Continuing
operations
|
$
|
2.52
|
$
|
2.39
|
$
|
2.17
|
||||
Discontinued
operations
|
11.12
|
0.84
|
0.95
|
|||||||
Net
earnings
|
$
|
13.64
|
$
|
3.23
|
$
|
3.12
|
||||
|
||||||||||
Diluted
earnings per common share:
|
||||||||||
Continuing
operations
|
$
|
2.48
|
$
|
2.37
|
$
|
2.14
|
||||
Discontinued
operations
|
10.95
|
0.83
|
0.95
|
|||||||
Net
earnings
|
$
|
13.43
|
$
|
3.20
|
$
|
3.09
|
December
31,
|
2007
|
2006
|
|||||
ASSETS
|
|||||||
Current
assets:
|
|||||||
Cash
and cash equivalents
|
$
|
4,735.3
|
$
|
355.8
|
|||
Marketable
securities
|
0.1
|
0.7
|
|||||
Accounts
and notes receivable, less allowance of $12.2 and $8.3 at December
31,
2007 and 2006, respectively
|
1,660.7
|
1,481.7
|
|||||
Inventories
|
827.2
|
837.7
|
|||||
Other
current assets
|
477.4
|
355.8
|
|||||
Assets
held for sale
|
-
|
2,506.1
|
|||||
Total
current assets
|
7,700.7
|
5,537.8
|
|||||
|
|||||||
Property,
plant and equipment, net
|
904.9
|
868.2
|
|||||
Goodwill
|
3,993.3
|
3,837.2
|
|||||
Intangible
assets, net
|
724.6
|
712.8
|
|||||
Other
noncurrent assets
|
1,052.7
|
1,189.9
|
|||||
Total
assets
|
$
|
14,376.2
|
$
|
12,145.9
|
|||
|
|||||||
LIABILITIES
AND EQUITY
|
|||||||
Current
liabilities:
|
|||||||
Accounts
payable
|
$
|
721.2
|
$
|
757.6
|
|||
Accrued
compensation and benefits
|
338.9
|
306.4
|
|||||
Accrued
expenses and other current liabilities
|
1,434.6
|
794.1
|
|||||
Short-term
borrowings and current maturities of long-term debt
|
741.0
|
1,079.4
|
|||||
Liabilities
held for sale
|
-
|
1,174.9
|
|||||
Total
current liabilities
|
3,235.7
|
4,112.4
|
|||||
|
|||||||
Long-term
debt
|
712.7
|
905.2
|
|||||
Postemployment
and other benefit liabilities
|
941.9
|
1,047.1
|
|||||
Other
noncurrent liabilities
|
1,480.5
|
602.8
|
|||||
Minority
interests
|
97.5
|
73.6
|
|||||
|
|||||||
Shareholders'
equity:
|
|||||||
Class
A common shares, $1 par value (370,035,087 and
|
|||||||
364,426,276
shares issued at December 31, 2007 and
|
|||||||
2006,
respectively, and net of 97,421,234 and 57,699,279
|
|||||||
shares
owned by subsidiary at December 31, 2007 and 2006,
respectively)
|
272.6
|
306.8
|
|||||
Retained
earnings
|
7,388.8
|
5,456.1
|
|||||
Accumulated
other comprehensive income (loss)
|
246.5
|
(358.1
|
)
|
||||
Total
shareholders' equity
|
7,907.9
|
5,404.8
|
|||||
Total
liabilities and shareholders' equity
|
$
|
14,376.2
|
$
|
12,145.9
|
|
Total
|
|
Capital
in
|
|
Accumulated other
|
|
|||||||||||||||||||
|
shareholders'
|
Common
stock
|
excess
of
|
Retained
|
comprehensive
|
Comprehensive
|
|||||||||||||||||||
In
millions, except per share amounts
|
equity
|
Amount
|
Shares
|
par
value
|
earnings
|
income
(loss)
|
income
|
||||||||||||||||||
Balance
at December 31, 2004
|
$
|
5,733.8
|
$
|
173.1
|
173.1
|
$
|
469.6
|
$
|
5,028.3
|
$
|
62.8
|
|
|||||||||||||
Net
earnings
|
1,054.2
|
|
|
|
1,054.2
|
|
$
|
1,054.2
|
|||||||||||||||||
Currency
translation
|
(267.7
|
)
|
|
|
|
|
(267.7
|
)
|
(267.7
|
)
|
|||||||||||||||
Change
in fair value of derivatives qualifying
|
|
|
|
|
|
|
|
||||||||||||||||||
as
cash flow hedges, net of tax of $2.0
|
5.7
|
|
|
|
|
5.7
|
5.7
|
||||||||||||||||||
Minimum
pension liability adjustment, net of tax of $35.6
|
71.6
|
|
|
|
|
71.6
|
71.6
|
||||||||||||||||||
Total
comprehensive income
|
|
|
|
|
|
|
$
|
863.8
|
|||||||||||||||||
Shares
issued under incentive stock plans
|
120.0
|
2.3
|
2.3
|
117.7
|
|
|
|
||||||||||||||||||
Repurchase
of common shares by subsidiary
|
(763.6
|
)
|
(19.4
|
)
|
(19.4
|
)
|
(587.3
|
)
|
(156.9
|
)
|
|
|
|||||||||||||
Stock
split
|
-
|
174.7
|
174.7
|
|
(174.7
|
)
|
|
|
|||||||||||||||||
Cash
dividends, declared and paid ($0.57 per share)
|
(192.1
|
)
|
|
|
|
(192.1
|
)
|
|
|
||||||||||||||||
Balance
at December 31, 2005
|
5,761.9
|
330.7
|
330.7
|
-
|
5,558.8
|
(127.6
|
)
|
|
|||||||||||||||||
Net
earnings
|
1,032.5
|
|
|
|
1,032.5
|
|
$
|
1,032.5
|
|||||||||||||||||
Currency
translation
|
258.8
|
|
|
|
|
258.8
|
258.8
|
||||||||||||||||||
Change
in fair value of marketable securities and
|
|
|
|
|
|
|
|
||||||||||||||||||
derivatives
qualifying as cash flow hedges,
|
|
|
|
|
|
|
|
||||||||||||||||||
net
of tax of $0.8
|
(7.3
|
)
|
|
|
|
|
(7.3
|
)
|
(7.3
|
)
|
|||||||||||||||
Minimum
pension liability adjustment, net of tax of $3.2
|
(9.2
|
)
|
|
|
|
|
(9.2
|
)
|
(9.2
|
)
|
|||||||||||||||
Total
comprehensive income
|
|
|
|
|
|
|
$
|
1,274.8
|
|||||||||||||||||
Adoption
of FASB Statement No. 158, net of tax of $268.2
|
(472.8
|
)
|
|
|
|
|
(472.8
|
)
|
|
||||||||||||||||
Shares
issued under incentive stock plans
|
111.2
|
3.8
|
3.8
|
107.4
|
|
|
|
||||||||||||||||||
Repurchase
of common shares by subsidiary
|
(1,096.3
|
)
|
(27.7
|
)
|
(27.7
|
)
|
(151.0
|
)
|
(917.6
|
)
|
|
|
|||||||||||||
Share-based
compensation
|
43.6
|
|
|
43.6
|
|
|
|
||||||||||||||||||
Cash
dividends, declared and paid ($0.68 per share)
|
(217.6
|
)
|
|
|
|
(217.6
|
)
|
|
|
||||||||||||||||
Balance
at December 31, 2006
|
5,404.8
|
306.8
|
306.8
|
-
|
5,456.1
|
(358.1
|
)
|
|
|||||||||||||||||
Adoption
of FIN 48
|
(145.6
|
)
|
|
|
|
(145.6
|
)
|
|
|
||||||||||||||||
Net
earnings
|
3,966.7
|
|
|
|
3,966.7
|
|
$
|
3,966.7
|
|||||||||||||||||
Currency
translation
|
411.9
|
|
|
|
|
411.9
|
411.9
|
||||||||||||||||||
Change
in fair value of marketable securities and derivatives qualifying as
cash flow hedges, net of tax of $1.7
|
(2.2
|
)
|
|
|
|
|
(2.2
|
)
|
(2.2
|
)
|
|||||||||||||||
Pension
and OPEB adjustments, net of tax of $130.0
|
194.9
|
|
|
|
|
194.9
|
194.9
|
||||||||||||||||||
Total
comprehensive income
|
|
|
|
|
|
|
$
|
4,571.3
|
|||||||||||||||||
Shares
issued under incentive stock plans
|
196.6
|
5.5
|
5.5
|
191.1
|
|
|
|
||||||||||||||||||
Repurchase
of common shares by subsidiary
|
(1,999.9
|
)
|
(39.7
|
)
|
(39.7
|
)
|
(281.6
|
)
|
(1,678.6
|
)
|
|
|
|||||||||||||
Share-based
compensation
|
90.5
|
|
|
90.5
|
|
|
|
||||||||||||||||||
Cash
dividends, declared and paid ($0.72 per share)
|
(209.8
|
)
|
|
|
|
(209.8
|
)
|
|
|
||||||||||||||||
Balance
at December 31, 2007
|
$
|
7,907.9
|
$
|
272.6
|
272.6
|
$
|
-
|
$
|
7,388.8
|
$
|
246.5
|
|
For
the years ended December 31,
|
2007
|
2006
|
2005
|
|||||||
Cash
flows from operating activities:
|
||||||||||
Net
earnings
|
$
|
3,966.7
|
$
|
1,032.5
|
$
|
1,054.2
|
||||
Income
from discontinued operations, net of tax
|
(3,233.6
|
)
|
(267.5
|
)
|
(322.4
|
)
|
||||
Adjustments
to arrive at net cash provided by operating activities:
|
||||||||||
Depreciation
and amortization
|
138.8
|
148.8
|
156.7
|
|||||||
(Gain)/loss
on sale of businesses
|
-
|
-
|
(1.5
|
)
|
||||||
(Gain)/loss
on sale of property, plant and equipment
|
(0.7
|
)
|
0.2
|
(3.1
|
)
|
|||||
Minority
interests, net of dividends
|
17.9
|
9.2
|
(1.3
|
)
|
||||||
Equity
earnings, net of dividends
|
(1.0
|
)
|
0.1
|
0.4
|
||||||
Stock
settled share based compensation
|
31.0
|
20.7
|
-
|
|||||||
Deferred
income taxes
|
146.6
|
27.8
|
26.2
|
|||||||
Other
items
|
30.6
|
(12.2
|
)
|
(49.0
|
)
|
|||||
Changes
in other assets and liabilities
|
||||||||||
(Increase)
decrease in:
|
||||||||||
Accounts
and notes receivable
|
46.2
|
(94.4
|
)
|
(115.1
|
)
|
|||||
Inventories
|
75.4
|
(21.4
|
)
|
20.6
|
||||||
Other
current and noncurrent assets
|
(32.3
|
)
|
(93.6
|
)
|
(222.4
|
)
|
||||
Increase
(decrease) in:
|
||||||||||
Accounts
payable
|
(88.1
|
)
|
182.1
|
5.7
|
||||||
Other
current and noncurrent liabilities
|
(267.6
|
)
|
(119.2
|
)
|
(108.1
|
)
|
||||
Net
cash (used in) provided by continuing operating activities
|
829.9
|
813.1
|
440.9
|
|||||||
Net
cash (used in) provided by discontinued operating
activities
|
66.2
|
141.7
|
399.8
|
|||||||
Cash
flows from investing activities:
|
||||||||||
Capital
expenditures
|
(119.7
|
)
|
(144.8
|
)
|
(86.1
|
)
|
||||
Proceeds
from sale of property, plant and equipment
|
14.2
|
9.6
|
16.3
|
|||||||
Acquisitions,
net of cash acquired
|
(25.7
|
)
|
(49.7
|
)
|
(484.7
|
)
|
||||
Proceeds
from business dispositions, net of cash
|
6,154.3
|
-
|
11.4
|
|||||||
Proceeds
from sales and maturities of marketable securities
|
0.7
|
155.8
|
-
|
|||||||
Purchase
of marketable securities
|
-
|
-
|
(152.6
|
)
|
||||||
Other
|
28.6
|
0.4
|
7.1
|
|||||||
Net
cash (used in) provided by continuing investing activities
|
6,052.4
|
(28.7
|
)
|
(688.6
|
)
|
|||||
Net
cash (used in) provided by discontinued investing
activities
|
(57.7
|
)
|
(132.5
|
)
|
(83.1
|
)
|
||||
Cash
flows from financing activities:
|
||||||||||
Increase
(decrease) in short-term borrowings
|
(409.9
|
)
|
369.2
|
(40.2
|
)
|
|||||
Proceeds
from long-term debt
|
2.0
|
4.0
|
301.7
|
|||||||
Payments
of long-term debt
|
(141.8
|
)
|
(513.7
|
)
|
(198.8
|
)
|
||||
Net
change in debt
|
(549.7
|
)
|
(140.5
|
)
|
62.7
|
|||||
Redemption
of preferred stock of subsidiaries
|
-
|
-
|
(73.6
|
)
|
||||||
Proceeds
from exercise of stock options
|
160.2
|
95.7
|
90.9
|
|||||||
Excess
tax benefit from share based compensation
|
36.1
|
15.5
|
-
|
|||||||
Dividends
paid
|
(209.8
|
)
|
(217.6
|
)
|
(192.1
|
)
|
||||
Repurchase
of common shares by subsidiary
|
(1,999.9
|
)
|
(1,096.3
|
)
|
(763.6
|
)
|
||||
Net
cash (used in) provided by continuing financing activities
|
(2,563.1
|
)
|
(1,343.2
|
)
|
(875.7
|
)
|
||||
Net
cash (used in) provided by discontinued financing
activities
|
-
|
-
|
-
|
|||||||
Effect
of exchange rate changes on cash and cash
equivalents
|
51.8
|
29.4
|
(14.2
|
)
|
||||||
Net
increase (decrease) in cash and cash equivalents
|
4,379.5
|
(520.2
|
)
|
(820.9
|
)
|
|||||
Cash
and cash equivalents - beginning of period
|
355.8
|
876.0
|
1,696.9
|
|||||||
Cash
and cash equivalents - end of period
|
$
|
4,735.3
|
$
|
355.8
|
$
|
876.0
|
||||
Cash
paid during the year for:
|
||||||||||
Interest,
net of amounts capitalized
|
$
|
95.3
|
$
|
105.2
|
$
|
131.2
|
||||
Income
taxes, net of refunds
|
$
|
470.1
|
$
|
195.3
|
$
|
270.0
|
Buildings
|
10 to 50
years
|
|||
Machinery
and equipment
|
3
to 12 years
|
|||
Software
|
2
to 7 years
|
Customer
relationships
|
20
- 40 years
|
|||
Trademarks
|
20
- 25 years
|
|||
Patents
|
5
- 15 years
|
|||
Other
|
5
- 20 years
|
In
millions
|
2007
|
2006
|
2005
|
|||||||
Revenues
|
$
|
2,957.8
|
$
|
3,375.7
|
$
|
3,283.2
|
||||
|
||||||||||
Pre-tax
earnings (loss) from operations
|
(82.5
|
)
|
376.6
|
413.6
|
||||||
Pre-tax
gain on sale
|
4,382.6
|
1.1
|
4.4
|
|||||||
Tax
expense
|
(1,066.5
|
)
|
(110.2
|
)
|
(95.6
|
)
|
||||
Discontinued
operations, net
|
$
|
3,233.6
|
$
|
267.5
|
$
|
322.4
|
In
millions
|
2007
|
2006
|
2005
|
|||||||
Compact
Equipment, net of tax
|
$
|
2,927.1
|
$
|
240.4
|
$
|
284.7
|
||||
Road
Development, net of tax
|
672.5
|
62.9
|
36.6
|
|||||||
Other
discontinued operations, net of tax
|
(366.0
|
)
|
(35.8
|
)
|
1.1
|
|||||
Total
discontinued operations, net of tax
|
$
|
3,233.6
|
$
|
267.5
|
$
|
322.4
|
In
millions
|
2007
|
2006
|
2005
|
|||||||
Net
revenues
|
$
|
2,705.9
|
$
|
2,648.4
|
$
|
2,610.1
|
||||
|
||||||||||
After-tax
earnings from operations
|
$
|
275.1
|
$
|
240.4
|
$
|
284.7
|
||||
Gain
on sale, net of tax of $939.0
|
2,652.0
|
-
|
-
|
|||||||
Total
discontinued operations, net of tax
|
$
|
2,927.1
|
$
|
240.4
|
$
|
284.7
|
In
millions
|
2007
|
2006
|
2005
|
|||||||
Net
revenues
|
$
|
251.9
|
$
|
727.3
|
$
|
673.1
|
||||
|
||||||||||
After-tax
earnings from operations
|
$
|
37.8
|
$
|
62.9
|
$
|
36.6
|
||||
Gain
on sale, net of tax of $164.4
|
634.7
|
-
|
-
|
|||||||
Total
discontinued operations, net of tax
|
$
|
672.5
|
$
|
62.9
|
$
|
36.6
|
In
millions
|
2007
|
2006
|
2005
|
|||||||
Retained
costs, net of tax
|
$
|
(340.9
|
)
|
$
|
(36.5
|
)
|
$
|
(34.1
|
)
|
|
Net
gain (loss) on disposals, net of tax
|
(25.1
|
)
|
0.7
|
35.2
|
||||||
Total
discontinued operations, net of tax
|
$
|
(366.0
|
)
|
$
|
(35.8
|
)
|
$
|
1.1
|
In
millions
|
2006
|
|||
Assets
|
||||
Current
assets
|
$
|
1,064.3
|
||
Property,
plant and equipment, net
|
408.1
|
|||
Goodwill
and other intangible assets, net
|
791.0
|
|||
Other
assets and deferred income taxes
|
242.7
|
|||
Assets
held for sale
|
$
|
2,506.1
|
||
|
||||
Liabilities
|
||||
Current
liabilities
|
$ |
676.1
|
||
Noncurrent
liabilities
|
498.8
|
|||
Liabilities
held for sale
|
$
|
1,174.9
|
|
Climate
|
|
|
|
|||||||||
|
Control
|
Industrial
|
Security
|
|
|||||||||
In
millions
|
Technologies
|
Technologies
|
Technologies
|
Total
|
|||||||||
Cost
of goods sold
|
$
|
22.3
|
$
|
0.6
|
$
|
1.9
|
$
|
24.8
|
|||||
Selling
and administrative
|
0.1
|
0.4
|
3.4
|
3.9
|
|||||||||
Total
|
$
|
22.4
|
$
|
1.0
|
$
|
5.3
|
$
|
28.7
|
|
Climate
|
|
|
|
|||||||||
|
Control
|
Industrial
|
Security
|
|
|||||||||
In
millions
|
Technologies
|
Technologies
|
Technologies
|
Total
|
|||||||||
Balance
at December 31, 2006
|
$
|
-
|
$
|
-
|
$
|
1.3
|
$
|
1.3
|
|||||
Additions
|
22.4
|
1.0
|
5.3
|
28.7
|
|||||||||
Cash
and non-cash uses
|
(3.0
|
)
|
(0.3
|
)
|
(2.7
|
)
|
(6.0
|
)
|
|||||
Currency
translation
|
1.4
|
-
|
0.1
|
1.5
|
|||||||||
Balance
at December 31, 2007
|
$
|
20.8
|
$
|
0.7
|
$
|
4.0
|
$
|
25.5
|
|
2007
|
2006
|
|||||||||||||||||
In
millions
|
Amortized
cost
or
cost
|
Unrealized
losses |
Fair
value
|
Amortized
cost
or
cost
|
Unrealized
losses
|
Fair
value
|
|||||||||||||
Short-term
marketable securities:
|
|||||||||||||||||||
Equity
securities
|
$
|
0.1
|
$
|
-
|
$
|
0.1
|
$
|
0.7
|
$
|
-
|
$
|
0.7
|
|||||||
Total
|
$
|
0.1
|
$
|
-
|
$
|
0.1
|
$
|
0.7
|
$
|
-
|
$
|
0.7
|
|||||||
|
|||||||||||||||||||
Long-term
marketable securities:
|
|||||||||||||||||||
Equity
securities
|
$
|
17.3
|
$
|
(4.9
|
)
|
$
|
12.4
|
$
|
18.7
|
$
|
(4.4
|
)
|
$
|
14.3
|
|||||
Total
|
$
|
17.3
|
$
|
(4.9
|
)
|
$
|
12.4
|
$
|
18.7
|
$
|
(4.4
|
)
|
$
|
14.3
|
In
millions
|
2007
|
2006
|
|||||
Raw
materials
|
$
|
323.2
|
$
|
353.8
|
|||
Work-in-process
|
163.4
|
186.3
|
|||||
Finished
goods
|
424.9
|
393.0
|
|||||
|
911.5
|
933.1
|
|||||
LIFO
reserve
|
(84.3
|
)
|
(95.4
|
)
|
|||
Total
|
$
|
827.2
|
$
|
837.7
|
In
millions
|
2007
|
2006
|
|||||
Land
|
$
|
65.4
|
$
|
59.1
|
|||
Buildings
|
485.7
|
438.7
|
|||||
Machinery
and equipment
|
1,056.6
|
999.7
|
|||||
Software
|
174.5
|
154.2
|
|||||
|
1,782.2
|
1,651.7
|
|||||
Accumulated
depreciation
|
(877.3
|
)
|
(783.5
|
)
|
|||
Total
|
$
|
904.9
|
$
|
868.2
|
|
Climate
|
|
|
|
|||||||||
|
Control
|
Industrial
|
Security
|
|
|||||||||
In
millions
|
Technologies
|
Technologies
|
Technologies
|
Total
|
|||||||||
Balance
at December 31, 2005
|
$
|
2,514.2
|
$
|
321.5
|
$
|
875.6
|
$
|
3,711.3
|
|||||
Acquisitions
and adjustments*
|
(22.2
|
)
|
14.3
|
17.9
|
10.0
|
||||||||
Currency
translation
|
53.1
|
5.4
|
57.4
|
115.9
|
|||||||||
Balance
at December 31, 2006
|
2,545.1
|
341.2
|
950.9
|
3,837.2
|
|||||||||
Acquisitions
and adjustments*
|
-
|
22.0
|
(6.1
|
)
|
15.9
|
||||||||
Currency
translation
|
68.7
|
8.7
|
62.8
|
140.2
|
|||||||||
Balance
at December 31, 2007
|
$
|
2,613.8
|
$
|
371.9
|
$
|
1,007.6
|
$
|
3,993.3
|
|
2007
|
2006
|
|||||||||||
|
Gross
|
Accumulated
|
Gross
|
Accumulated
|
|||||||||
In
millions
|
amount
|
amortization
|
amount
|
amortization
|
|||||||||
Customer
relationships
|
$
|
502.4
|
$
|
87.4
|
$
|
489.6
|
$
|
71.8
|
|||||
Trademarks
|
114.5
|
15.6
|
102.6
|
9.8
|
|||||||||
Patents
|
38.2
|
21.2
|
30.5
|
18.2
|
|||||||||
Other
|
53.4
|
29.0
|
48.9
|
23.7
|
|||||||||
Total
amortizable intangible assets
|
708.5
|
153.2
|
671.6
|
123.5
|
|||||||||
Indefinite-lived
intangible assets
|
169.3
|
-
|
164.7
|
-
|
|||||||||
Total
|
$
|
877.8
|
$
|
153.2
|
$
|
836.3
|
$
|
123.5
|
In
millions
|
2007
|
2006
|
|||||
Current
maturities of long-term debt
|
$
|
681.1
|
$
|
626.7
|
|||
Other
short-term borrowings
|
59.9
|
452.7
|
|||||
Total
|
$
|
741.0
|
$
|
1,079.4
|
In
millions
|
2007
|
2006
|
|||||
6.75%
Senior Notes Due 2008
|
$
|
-
|
$
|
124.9
|
|||
4.75%
Senior Notes Due 2015
|
299.1
|
299.0
|
|||||
9.00%
Debentures Due 2021
|
125.0
|
125.0
|
|||||
7.20%
Debentures Due 2007-2025
|
127.5
|
135.0
|
|||||
6.48%
Debentures Due 2025
|
149.7
|
149.7
|
|||||
Medium-term
Notes Due 2023, at an average rate of 8.22%
|
-
|
50.3
|
|||||
Other
loans and notes, at end-of-year average interest rates of
4.32%
|
|||||||
in
2007 and 4.73% in 2006, maturing in various amounts to
2016
|
11.4
|
21.3
|
|||||
Total
|
$
|
712.7
|
$
|
905.2
|
|
Debt
|
|||
In
millions
|
retirements
|
|||
2008
|
$
|
681.1
|
||
2009
|
9.4
|
|||
2010
|
8.9
|
|||
2011
|
8.9
|
|||
2012
|
9.2
|
|||
Thereafter
|
676.3
|
|||
Total
|
$
|
1,393.8
|
In
millions
|
2007
|
2006
|
|||||
Change
in benefit obligations:
|
|||||||
Benefit
obligation at beginning of year
|
$
|
1,035.2
|
$
|
1,009.3
|
|||
Service
cost
|
11.8
|
11.8
|
|||||
Interest
cost
|
54.2
|
55.0
|
|||||
Plan
participants' contributions
|
13.4
|
12.9
|
|||||
Actuarial
(gains) losses
|
(1.7
|
)
|
43.4
|
||||
Benefits
paid, net of Medicare Part D subsidy *
|
(88.9
|
)
|
(97.0
|
)
|
|||
Settlements/curtailments
|
(375.8
|
)
|
-
|
||||
Other
|
1.6
|
(0.2
|
)
|
||||
Benefit
obligations at end of year
|
$
|
649.8
|
$
|
1,035.2
|
|||
*
Amounts are net of Medicare Part D subsidy of $1.9 and $7.1 million
in
2007 and 2006, respectively
|
|||||||
Funded
status:
|
|||||||
Plan
assets less than benefit obligations
|
$
|
(649.8
|
)
|
$
|
(1,035.2
|
)
|
|
|
|||||||
Amounts
included in the balance sheet:
|
|||||||
Accrued
compensation and benefits
|
$
|
(51.1
|
)
|
$
|
(60.1
|
)
|
|
Liabilities
held for sale
|
-
|
(331.7
|
)
|
||||
Postemployment
and other benefit liabilities
|
(598.7
|
)
|
(643.4
|
)
|
|||
Total
|
$
|
(649.8
|
)
|
$
|
(1,035.2
|
)
|
In
millions
|
Prior
service
gains
|
Net
actuarial
losses
|
Total
|
|||||||
Balance
at December 31, 2006
|
$
|
21.8
|
$
|
(322.2
|
)
|
$
|
(300.4
|
)
|
||
Current
year changes recorded to Accumulated
|
||||||||||
other
comprehensive income (loss)
|
-
|
1.5
|
1.5
|
|||||||
Amortization
reclassified to earnings
|
(3.8
|
)
|
15.9
|
12.1
|
||||||
Settlements/curtailments
reclassified to earnings
|
(3.5
|
)
|
113.4
|
109.9
|
||||||
Balance
at December 31, 2007
|
$
|
14.5
|
$
|
(191.4
|
)
|
$
|
(176.9
|
)
|
In
millions
|
2007
|
2006
|
2005
|
|||||||
Service
cost
|
$
|
11.8
|
$
|
11.8
|
$
|
9.3
|
||||
Interest
cost
|
54.2
|
55.0
|
54.9
|
|||||||
Net
amortization of prior service gains
|
(3.8
|
)
|
(4.2
|
)
|
(4.2
|
)
|
||||
Net
amortization of net actuarial losses
|
15.9
|
16.6
|
14.0
|
|||||||
Net
periodic postretirement benefit cost
|
78.1
|
79.2
|
74.0
|
|||||||
Net
curtailment and settlement (gains) losses
|
(265.9
|
)
|
-
|
-
|
||||||
Net
periodic postretirement benefit (income) cost
|
||||||||||
after
net curtailment and settlement (gains) losses
|
$
|
(187.8
|
)
|
$
|
79.2
|
$
|
74.0
|
|||
Amounts
recorded in continuing operations
|
$
|
22.7
|
$
|
25.7
|
$
|
25.1
|
||||
Amounts
recorded in discontinued operations
|
(210.5
|
)
|
53.5
|
48.9
|
||||||
Total
|
$
|
(187.8
|
)
|
$
|
79.2
|
$
|
74.0
|
Assumptions:
|
2007
|
2006
|
2005
|
|||||||
Weighted-average
discount rate assumption to determine:
|
||||||||||
Benefit
obligations at December 31
|
6.00
|
%
|
5.50
|
%
|
5.50
|
%
|
||||
Net
periodic benefit cost
|
||||||||||
For
the period January 1 to April 30
|
5.50
|
%
|
5.50
|
%
|
5.75
|
%
|
||||
For
the period May 1 to November 30
|
5.75
|
%
|
5.50
|
%
|
5.75
|
%
|
||||
For
the period December 1 to December 31
|
6.00
|
%
|
5.50
|
%
|
5.75
|
%
|
||||
Assumed
health-care cost trend rates at December 31:
|
||||||||||
Current
year medical inflation
|
11.00
|
%
|
11.00
|
%
|
11.00
|
%
|
||||
Ultimate
inflation rate
|
5.25
|
%
|
5.25
|
%
|
5.25
|
%
|
||||
Year
that the rate reaches the ultimate trend rate
|
2014
|
2013
|
2012
|
1%
|
1%
|
||||||
In
millions
|
Increase
|
Decrease
|
|||||
Effect
on total of service and interest cost components
|
$
|
1.7
|
$
|
1.5
|
|||
Effect
on postretirement benefit obligation
|
30.1
|
26.2
|
Benefit
|
||||
In
millions
|
payments
|
|||
2008
|
$
|
51.1 | ||
2009
|
52.2
|
|||
2010
|
55.2
|
|||
2011
|
56.2
|
|||
2012
|
56.3
|
|||
2013
- 2017
|
280.4
|
In
millions
|
2007
|
2006
|
|||||
Change
in benefit obligations:
|
|||||||
Benefit
obligation at beginning of year
|
$
|
3,175.7
|
$
|
3,033.2
|
|||
Service
cost
|
52.0
|
54.6
|
|||||
Interest
cost
|
164.3
|
161.3
|
|||||
Employee
contributions
|
2.3
|
2.8
|
|||||
Acquisitions
|
0.7
|
-
|
|||||
Amendments
|
3.1
|
19.8
|
|||||
Expenses
paid
|
(4.2
|
)
|
(3.6
|
)
|
|||
Actuarial
(gains) losses
|
(83.6
|
)
|
7.4
|
||||
Benefits
paid
|
(202.4
|
)
|
(205.8
|
)
|
|||
Currency
translation
|
26.0
|
101.1
|
|||||
Curtailments
|
(22.2
|
)
|
0.6
|
||||
Settlements
|
(539.3
|
)
|
(8.2
|
)
|
|||
Other
|
-
|
12.5
|
|||||
Benefit
obligation at end of year
|
$
|
2,572.4
|
$
|
3,175.7
|
|||
Change
in plan assets:
|
|||||||
Fair
value at beginning of year
|
$
|
2,957.3
|
$
|
2,727.0
|
|||
Actual
return on assets
|
211.1
|
325.7
|
|||||
Company
contributions
|
25.5
|
31.6
|
|||||
Employee
contributions
|
2.3
|
2.8
|
|||||
Expenses
paid
|
(4.2
|
)
|
(3.6
|
)
|
|||
Benefits
paid
|
(202.4
|
)
|
(205.8
|
)
|
|||
Currency
translation
|
17.6
|
85.2
|
|||||
Settlements
|
(506.3
|
)
|
(8.0
|
)
|
|||
Other
|
-
|
2.4
|
|||||
Fair
value of assets end of year
|
$
|
2,500.9
|
$
|
2,957.3
|
|||
Funded
status:
|
|||||||
Plan
assets less than the benefit obligations
|
$
|
(71.5
|
)
|
$
|
(218.4
|
)
|
|
Amounts
included in the balance sheet:
|
|||||||
Long-term
prepaid expenses in other assets
|
$
|
166.9
|
$
|
95.8
|
|||
Assets
held for sale
|
-
|
23.5
|
|||||
Accrued
compensation and benefits
|
(24.5
|
)
|
(10.0
|
)
|
|||
Liabilities
held for sale
|
-
|
(67.7
|
)
|
||||
Postemployment
and other benefit liabilities
|
(213.9
|
)
|
(260.0
|
)
|
|||
Net
amount recognized
|
$
|
(71.5
|
)
|
$
|
(218.4
|
)
|
In
millions
|
Net
transition
obligation
|
Prior
service
cost
|
Net
actuarial
losses
|
Total
|
|||||||||
Balance
at December 31, 2006
|
$
|
(2.1
|
)
|
$
|
(63.0
|
)
|
$
|
(574.5
|
)
|
$
|
(639.6
|
)
|
|
Current
year changes recorded to Accumulated
|
|||||||||||||
other
comprehensive income (loss)
|
-
|
(3.1
|
)
|
66.0
|
62.9
|
||||||||
Amortization
reclassified to earnings
|
0.9
|
9.2
|
13.8
|
23.9
|
|||||||||
Settlements/curtailments
reclassified to earnings
|
0.2
|
12.4
|
106.1
|
118.7
|
|||||||||
Currency
translation
|
-
|
-
|
(4.1
|
)
|
(4.1
|
)
|
|||||||
Balance
at December 31, 2007
|
$
|
(1.0
|
)
|
$
|
(44.5
|
)
|
$
|
(392.7
|
)
|
$
|
(438.2
|
)
|
Weighted-average
assumptions used:
|
|||||||
Benefit
obligations at December 31,
|
2007
|
2006
|
|||||
Discount
rate:
|
|||||||
U.S.
plans
|
6.25
|
%
|
5.50
|
%
|
|||
Non-U.S.
plans
|
6.00
|
%
|
5.00
|
%
|
|||
Rate
of compensation increase:
|
|||||||
U.S.
plans
|
4.00
|
%
|
4.00
|
%
|
|||
Non-U.S.
plans
|
4.50
|
%
|
4.25
|
%
|
Benefit
|
||||
In
millions
|
payments
|
|||
2008
|
$
|
167.5
|
||
2009
|
168.1
|
|||
2010
|
184.6
|
|||
2011
|
163.4
|
|||
2012
|
171.1
|
|||
2013
- 2017
|
912.0
|
In
millions
|
2007
|
2006
|
2005
|
|||||||
Service
cost
|
$
|
52.0
|
$
|
54.6
|
$
|
52.9
|
||||
Interest
cost
|
164.3
|
161.3
|
161.3
|
|||||||
Expected
return on plan assets
|
(228.7
|
)
|
(218.9
|
)
|
(213.9
|
)
|
||||
Net
amortization of:
|
||||||||||
Prior
service costs
|
9.2
|
9.4
|
8.8
|
|||||||
Transition
amount
|
0.9
|
0.9
|
0.9
|
|||||||
Plan
net actuarial losses
|
13.8
|
25.4
|
22.4
|
|||||||
Net
periodic pension benefit cost
|
11.5
|
32.7
|
32.4
|
|||||||
Net
curtailment and settlement (gains) losses
|
63.5
|
-
|
4.0
|
|||||||
Net
periodic pension benefit cost after net
|
||||||||||
curtailment
and settlement (gains) losses
|
$
|
75.0
|
$
|
32.7
|
$
|
36.4
|
||||
Amounts
recorded in continuing operations
|
$
|
20.6
|
$
|
38.3
|
$
|
45.8
|
||||
Amounts
recorded in discontinued operations
|
54.4
|
(5.6
|
)
|
(9.4
|
)
|
|||||
Total
|
$
|
75.0
|
$
|
32.7
|
$
|
36.4
|
Weighted-average
assumptions used:
|
||||||||||
Net
periodic pension cost for the year ended December 31,
|
2007
|
2006
|
2005
|
|||||||
Discount
rate:
|
||||||||||
U.S.
plans
|
||||||||||
For
the period January 1 to April 30
|
5.50
|
%
|
5.50
|
%
|
5.75
|
%
|
||||
For
the period May 1 to November 30
|
5.75
|
%
|
5.50
|
%
|
5.75
|
%
|
||||
For
the period December 1 to December 31
|
6.25
|
%
|
5.50
|
%
|
5.75
|
%
|
||||
Non-U.S.
plans
|
||||||||||
For
the period January 1 to April 30
|
5.00
|
%
|
5.00
|
%
|
5.25
|
%
|
||||
For
the period May 1 to November 30
|
5.50
|
%
|
5.00
|
%
|
5.25
|
%
|
||||
For
the period December 1 to December 31
|
6.00
|
%
|
5.00
|
%
|
5.25
|
%
|
||||
Rate
of compensation increase:
|
||||||||||
U.S.
plans
|
4.00
|
%
|
4.00
|
%
|
4.00
|
%
|
||||
Non-U.S.
plans
|
||||||||||
For
the period January 1 to April 30
|
4.25
|
%
|
4.00
|
%
|
4.00
|
%
|
||||
For
the period May 1 to November 30
|
4.35
|
%
|
4.00
|
%
|
4.00
|
%
|
||||
For
the period December 1 to December 31
|
4.50
|
%
|
4.00
|
%
|
4.00
|
%
|
||||
Expected
return on plan assets:
|
||||||||||
U.S.
plans
|
8.50
|
%
|
8.50
|
%
|
8.75
|
%
|
||||
Non-U.S.
plans
|
7.25
|
%
|
7.25
|
%
|
7.50
|
%
|
Asset
category
|
2007
|
2006
|
|||||
Equity
securities
|
54.0
|
%
|
62.0
|
%
|
|||
Debt
securities
|
38.4
|
%
|
33.1
|
%
|
|||
Real
estate
|
0.4
|
%
|
0.3
|
%
|
|||
Other
(including cash)
|
7.2
|
%
|
4.6
|
%
|
|||
Total
|
100.0
|
%
|
100.0
|
%
|
In
millions
|
2007
|
2006
|
|||||
Currency
translation
|
$
|
675.8
|
$
|
263.9
|
|||
Fair
value of derivatives qualifying
|
|||||||
as
cash flow hedges, net of tax
|
(12.3
|
)
|
(10.5
|
)
|
|||
Unrealized
gain (loss) on marketable securities,
|
|||||||
net
of tax
|
(3.7
|
)
|
(3.3
|
)
|
|||
Pension
and postretirement obligation adjustments, net of tax
|
(413.3
|
)
|
(608.2
|
)
|
|||
Accumulated
other comprehensive income (loss)
|
$
|
246.5
|
$
|
(358.1
|
)
|
2007
|
2006
|
||||||
Dividend
yield
|
1.75
|
%
|
1.49
|
%
|
|||
Volatility
|
26.10
|
%
|
27.70
|
%
|
|||
Risk-free
rate of return
|
4.71
|
%
|
4.47
|
%
|
|||
Expected
life
|
4.70
years
|
4.42
years
|
Shares
|
Weighted-
|
Aggregate
|
Weighted-
|
||||||||||
subject
|
average
|
intrinsic
|
average
|
||||||||||
to
option
|
exercise
price
|
value (millions)
|
remaining
life
|
||||||||||
December
31, 2004
|
18,853,474
|
$
|
25.19
|
||||||||||
Granted
|
6,091,600
|
38.70
|
|||||||||||
Exercised
|
(3,921,949
|
)
|
23.10
|
||||||||||
Cancelled
|
(1,140,649
|
)
|
33.77
|
||||||||||
December
31, 2005
|
19,882,476
|
29.26
|
|||||||||||
Granted
|
3,305,190
|
39.33
|
|||||||||||
Exercised
|
(3,707,839
|
)
|
25.77
|
||||||||||
Cancelled
|
(314,885
|
)
|
38.82
|
||||||||||
December
31, 2006
|
19,164,942
|
31.54
|
|||||||||||
Granted
|
3,528,225
|
43.77
|
|||||||||||
Exercised
|
(5,386,093
|
)
|
29.70
|
||||||||||
Cancelled
|
(882,183
|
)
|
41.16
|
||||||||||
Outstanding
December 31, 2007
|
16,424,891
|
$
|
34.25
|
$
|
202.2
|
5.9
|
|||||||
Exercisable
December 31, 2007
|
11,874,003
|
$
|
31.16
|
$
|
181.8
|
4.9
|
Options
outstanding
|
Options
exercisable
|
||||||||||||||||
Number
|
Weighted-
|
Weighted-
|
Number
|
Weighted-
|
Weighted-
|
||||||||||||
outstanding
at
|
average
|
average
|
exercisable
at
|
average
|
average
|
||||||||||||
Range
of
|
December
31,
|
remaining
|
exercise
|
December
31,
|
remaining
|
exercise
|
|||||||||||
exercise
price
|
2007
|
life
|
price
|
2007
|
life
|
price
|
|||||||||||
$
15.00
|
-
|
$
20.00
|
1,369,234
|
4.6
|
$
|
19.52
|
1,369,234
|
4.6
|
$
|
19.52
|
|||||||
20.01
|
-
|
25.00
|
1,761,071
|
3.2
|
21.24
|
1,761,071
|
3.2
|
21.24
|
|||||||||
25.01
|
-
|
30.00
|
1,234,616
|
1.6
|
26.07
|
1,234,616
|
1.6
|
26.07
|
|||||||||
30.01
|
-
|
35.00
|
2,802,177
|
5.3
|
32.30
|
2,802,177
|
5.3
|
32.30
|
|||||||||
35.01
|
-
|
40.00
|
6,221,198
|
6.6
|
38.99
|
4,619,495
|
6.3
|
38.84
|
|||||||||
40.01
|
-
|
45.00
|
2,809,095
|
8.7
|
43.19
|
87,410
|
2.8
|
43.13
|
|||||||||
45.01
|
-
|
50.00
|
4,500
|
9.6
|
49.90
|
-
|
-
|
-
|
|||||||||
50.01
|
-
|
55.00
|
107,000
|
9.6
|
51.04
|
-
|
-
|
-
|
|||||||||
55.01
|
-
|
60.00
|
116,000
|
9.8
|
55.22
|
-
|
-
|
-
|
|||||||||
$
16.83
|
-
|
$
43.16
|
16,424,891
|
5.9
|
$
|
34.25
|
11,874,003
|
4.9
|
$
|
31.16
|
Shares
|
Weighted-
|
Aggregate
|
Weighted-
|
||||||||||
subject
|
average
|
intrinsic
|
average
|
||||||||||
to
exercise
|
exercise
price
|
value (millions)
|
remaining
life
|
||||||||||
December
31, 2004
|
1,609,798
|
$
|
25.12
|
||||||||||
Granted
|
617,700
|
38.69
|
|||||||||||
Exercised
|
(345,556
|
)
|
23.15
|
||||||||||
Cancelled
|
(112,808
|
)
|
29.95
|
||||||||||
December
31, 2005
|
1,769,134
|
30.05
|
|||||||||||
Granted
|
395,020
|
39.12
|
|||||||||||
Exercised
|
(327,717
|
)
|
24.49
|
||||||||||
Cancelled
|
(142,683
|
)
|
32.18
|
||||||||||
December
31, 2006
|
1,693,754
|
33.11
|
|||||||||||
Granted
|
-
|
-
|
|||||||||||
Exercised
|
(476,400
|
)
|
30.31
|
||||||||||
Cancelled
|
(47,377
|
)
|
34.72
|
||||||||||
Outstanding
December 31, 2007
|
1,169,977
|
$
|
33.99
|
$
|
14.6
|
5.8
|
|||||||
Exercisable
December 31, 2007
|
814,707
|
$
|
31.76
|
$
|
12.0
|
5.2
|
In
millions
|
2007
|
2006
|
2005
|
|||||||
Stock
options
|
$
|
21.4
|
$
|
13.6
|
$
|
1.0
|
||||
SARs
|
1.0
|
4.6
|
2.0
|
|||||||
Performance
shares
|
11.3
|
10.4
|
5.8
|
|||||||
Deferred
compensation
|
1.8
|
(0.6
|
)
|
(1.0
|
)
|
|||||
Other
|
-
|
-
|
0.1
|
|||||||
Pre-tax
expense
|
35.5
|
28.0
|
7.9
|
|||||||
Tax
benefit
|
13.6
|
10.7
|
3.0
|
|||||||
After
tax expense
|
$
|
21.9
|
$
|
17.3
|
$
|
4.9
|
||||
Amounts
recorded in continuing operations
|
$
|
21.9
|
$
|
17.3
|
$
|
4.9
|
||||
Amounts
recorded in discontinued operations
|
3.9
|
2.8
|
0.9
|
|||||||
Total
|
$
|
25.8
|
$
|
20.1
|
$
|
5.8
|
In
millions, except per share amounts
|
2005
|
|||
Net
earnings, as reported
|
$
|
1,054.2
|
||
Add:
Stock-based employee compensation expense
|
||||
included
in reported net income, net of tax
|
5.8
|
|||
Deduct:
Total stock-based employee compensation
|
||||
expense
determined under fair value based
|
||||
method
for all awards, net of tax
|
79.7
|
|||
Pro
forma net earnings
|
$
|
980.3
|
||
Basic
earnings per share:
|
||||
As
reported
|
$
|
3.12
|
||
Pro
forma
|
2.90
|
|||
Diluted
earnings per share:
|
||||
As
reported
|
$
|
3.09
|
||
Pro
forma
|
2.87
|
2005
|
||||
Dividend
yield
|
1.30%
|
|
||
Volatility
|
35.57%
|
|
||
Risk-free
rate of return
|
3.60%
|
|
||
Expected
life
|
5
years
|
In
millions
|
2007
|
2006
|
2005
|
|||||||
Interest
income
|
$
|
36.2
|
$
|
15.9
|
$
|
29.1
|
||||
Exchange
gain (loss)
|
(2.8
|
)
|
(21.3
|
)
|
6.8
|
|||||
Minority
interests
|
(14.3
|
)
|
(14.9
|
)
|
(12.7
|
)
|
||||
Earnings
from equity investments
|
1.0
|
(0.1
|
)
|
4.1
|
||||||
Other
|
(4.2
|
)
|
13.1
|
22.8
|
||||||
Other
income, net
|
$
|
15.9
|
$
|
(7.3
|
)
|
$
|
50.1
|
In
millions
|
2007
|
2006
|
2005
|
|||||||
United
States
|
$
|
(140.4
|
)
|
$
|
35.2
|
$
|
9.2
|
|||
Non-U.S.
|
1,077.9
|
822.4
|
783.6
|
|||||||
Total
|
$
|
937.5
|
$
|
857.6
|
$
|
792.8
|
In
millions
|
2007
|
2006
|
2005
|
|||||||
United
States
|
$
|
52.8
|
$
|
(32.7
|
)
|
$
|
(41.0
|
)
|
||
Non-U.S.
|
151.6
|
125.3
|
102.0
|
|||||||
Total
|
$
|
204.4
|
$
|
92.6
|
$
|
61.0
|
In
millions
|
2007
|
2006
|
2005
|
|||||||
Current
tax expense
|
$
|
57.8
|
$
|
64.8
|
$
|
34.8
|
||||
Deferred
tax expense
|
146.6
|
27.8
|
26.2
|
|||||||
Total
provision for income taxes
|
$
|
204.4
|
$
|
92.6
|
$
|
61.0
|
Percent
of pretax income
|
||||||||||
2007
|
2006
|
2005
|
||||||||
Statutory
U.S. rate
|
35.0
%
|
|
35.0%
|
|
35.0%
|
|
||||
Increase
(decrease) in rates resulting from:
|
||||||||||
Non-U.S.
operations
|
(21.0)
|
|
(28.2)
|
|
(26.4)
|
|
||||
Manufacturing
exemption / ETI / FSC
|
(0.9)
|
|
(0.5)
|
|
(0.7)
|
|
||||
State
and local income taxes, net of U.S. tax
|
(0.1)
|
|
(0.5)
|
|
(0.2)
|
|
||||
Puerto
Rico - Sec 936 Credit
|
-
|
-
|
(1.4)
|
|
||||||
Tax
reserves (including uncertain tax position reserves)*
|
8.0
|
4.8
|
2.2
|
|||||||
Other
adjustments
|
0.8
|
0.2
|
(0.8)
|
|
||||||
Effective
tax rate
|
21.8%
|
|
10.8%
|
|
7.7%
|
|
*
Includes interest and penalties on reserves of 4.2%, 3.1% and 3.1%
for
2007, 2006 and 2005, respectively
|
In
millions
|
2007
|
2006
|
|||||
Deferred
tax assets:
|
|||||||
Inventory
and accounts receivable
|
$
|
24.0
|
$
|
23.2
|
|||
Depreciation
and amortization
|
11.4
|
50.2
|
|||||
Postemployment
and other benefit liabilities
|
468.5
|
486.2
|
|||||
Other
reserves and accruals
|
334.9
|
325.2
|
|||||
Net
operating losses and credit carryforwards
|
445.7
|
615.3
|
|||||
Other
|
46.6
|
26.8
|
|||||
Gross
deferred tax assets
|
1,331.1
|
1,526.9
|
|||||
Less:
deferred tax valuation allowances
|
(207.4
|
)
|
(184.2
|
)
|
|||
Deferred
tax assets net of valuation allowances
|
1,123.7
|
1,342.7
|
|||||
Deferred
tax liabilities:
|
|||||||
Inventory
and accounts receivable
|
$
|
(11.6
|
)
|
$
|
(18.8
|
)
|
|
Depreciation
and amortization
|
(511.4
|
)
|
(444.6
|
)
|
|||
Postemployment
and other benefit liabilities
|
(39.0
|
)
|
(41.3
|
)
|
|||
Other
reserves and accruals
|
(11.7
|
)
|
(28.4
|
)
|
|||
Other
|
(8.3
|
)
|
(39.8
|
)
|
|||
Gross
deferred tax assets
|
(582.0
|
)
|
(572.9
|
)
|
|||
Net
deferred tax assets
|
$
|
541.7
|
$
|
769.8
|
Expiration
|
|||||||
In
millions
|
Amount
|
Period
|
|||||
U.S.
Federal net operating loss carryforwards
|
$
|
608.4
|
2022-2027
|
||||
U.S.
Federal credit carryforwards
|
130.5
|
2012-2027
|
|||||
U.S.
State net operating loss carryforwards
|
1,879.0
|
2008-2027
|
|||||
Non-U.S.
net operating loss carryforwards
|
731.9
|
2008-Unlimited
|
|||||
Non-U.S.
credit carryforwards
|
13.4
|
Unlimited
|
In
millions
|
2007
|
|||
Balance
at January 1, 2007
|
$
|
457.0
|
||
Additions
based on tax positions related to the current year
|
22.5
|
|||
Additions
based on tax positions related to prior years
|
75.5
|
|||
Reductions
based on tax positions related to prior years
|
(33.6
|
)
|
||
Reductions
related to settlements with tax authorities
|
(141.0
|
)
|
||
Reductions
related to lapses of statute of limitations
|
(0.6
|
)
|
||
Balance
at December 31, 2007
|
$
|
379.8
|
In
millions
|
2007
|
2006
|
2005
|
|||||||
Weighted-average
number of basic shares
|
290.7
|
319.9
|
337.6
|
|||||||
Shares
issuable under incentive stock plans
|
4.6
|
3.2
|
3.7
|
|||||||
Weighted-average
number of diluted shares
|
295.3
|
323.1
|
341.3
|
|||||||
Anti-dilutive
shares
|
0.2
|
3.2
|
0.1
|
·
|
ARPC’s
interpretation of a widely accepted forecast of the population likely
to
have been occupationally exposed to
asbestos;
|
·
|
epidemiological
studies estimating the number of people likely to develop asbestos-related
diseases such as mesothelioma and lung
cancer;
|
·
|
the
Company’s historical experience with the filing of non-malignancy claims
against it and the historical ratio between the numbers of non-malignancy
and lung cancer claims filed against the
Company;
|
·
|
ARPC’s
analysis of the number of people likely to file an asbestos-related
personal injury claim against the Company based on such epidemiological
and historical data and the Company’s most recent three-year claims
history;
|
·
|
an
analysis of the Company’s pending cases, by type of disease
claimed;
|
·
|
an
analysis of the Company’s most recent three-year history to determine the
average settlement and resolution value of claims, by type of disease
claimed;
|
·
|
an
adjustment for inflation in the future average settlement value of
claims,
at a 2.5% annual inflation rate, adjusted downward to 1.5% to take
account
of the declining value of claims resulting from the aging of the
claimant
population;
|
·
|
an
analysis of the period over which the Company has and is likely to
resolve
asbestos-related claims against it in the
future.
|
2002
|
2003
|
2004
|
2005
|
2006
|
2007
|
||||||||||||||
Open
claims - January 1
|
77,675
|
96,294
|
104,513
|
105,811
|
102,968
|
101,709
|
|||||||||||||
New
claims filed
|
37,172
|
30,843
|
13,541
|
11,132
|
6,457
|
5,398
|
|||||||||||||
Claims
settled
|
(16,443
|
)
|
(21,096
|
)
|
(11,503
|
)
|
(12,505
|
)
|
(6,558
|
)
|
(5,005
|
)
|
|||||||
Claims
dismissed
|
(2,110
|
)
|
(1,528
|
)
|
(740
|
)
|
(1,470
|
)
|
(1,158
|
)
|
(1,479
|
)
|
|||||||
Open
claims - December 31
|
96,294
|
104,513
|
105,811
|
102,968
|
101,709
|
100,623
|
In
millions
|
2007
|
2006
|
|||||
Balance
at beginning of year
|
$
|
137.1
|
$
|
135.2
|
|||
Reductions
for payments
|
(68.5
|
)
|
(61.7
|
)
|
|||
Accruals
for warranties issued during the current period
|
80.1
|
66.1
|
|||||
Changes
for accruals related to preexisting warranties
|
(7.8
|
)
|
(6.9
|
)
|
|||
Acquisitions
|
-
|
0.4
|
|||||
Translation
|
6.0
|
4.0
|
|||||
Balance
at end of the year
|
$
|
146.9
|
$
|
137.1
|
Dollar
amounts in millions
|
2007
|
2006
|
2005
|
|||||||
Climate
Control Technologies
|
||||||||||
Revenues
|
$
|
3,372.4
|
$
|
3,171.0
|
$
|
2,853.6
|
||||
Operating
income
|
382.6
|
356.0
|
315.1
|
|||||||
Operating
income as a percentage of revenues
|
11.3
|
%
|
11.2
|
%
|
11.0
|
%
|
||||
Depreciation
and amortization
|
48.9
|
52.1
|
53.7
|
|||||||
Capital
expenditures
|
38.9
|
25.6
|
10.4
|
|||||||
Industrial
Technologies
|
||||||||||
Revenues
|
2,877.1
|
2,577.7
|
2,310.4
|
|||||||
Operating
income
|
392.0
|
351.8
|
301.6
|
|||||||
Operating
income as a percentage of revenues
|
13.6
|
%
|
13.6
|
%
|
13.1
|
%
|
||||
Depreciation
and amortization
|
36.2
|
32.4
|
26.8
|
|||||||
Capital
expenditures
|
41.2
|
55.6
|
35.1
|
|||||||
Security
Technologies
|
||||||||||
Revenues
|
2,513.6
|
2,285.0
|
2,099.7
|
|||||||
Operating
income
|
433.5
|
400.2
|
380.7
|
|||||||
Operating
income as a percentage of revenues
|
17.2
|
%
|
17.5
|
%
|
18.1
|
%
|
||||
Depreciation
and amortization
|
46.6
|
42.6
|
44.6
|
|||||||
Capital
expenditures
|
34.4
|
43.6
|
22.8
|
|||||||
Total
revenues
|
$
|
8,763.1
|
$
|
8,033.7
|
$
|
7,263.7
|
||||
Operating
income from reportable segments
|
1,208.1
|
1,108.0
|
997.4
|
|||||||
Unallocated
corporate expense
|
(150.3
|
)
|
(109.5
|
)
|
(109.6
|
)
|
||||
Total
operating income
|
$
|
1,057.8
|
$
|
998.5
|
$
|
887.8
|
||||
Total
operating income as a percentage of revenues
|
12.1
|
%
|
12.4
|
%
|
12.2
|
%
|
||||
Depreciation
and amortization from reportable segments
|
131.7
|
127.1
|
125.1
|
|||||||
Unallocated
depreciation and amortization
|
7.1
|
21.7
|
31.6
|
|||||||
Total
depreciation and amortization
|
$
|
138.8
|
$
|
148.8
|
$
|
156.7
|
||||
Capital
expenditures from reportable segments
|
114.5
|
124.8
|
68.3
|
|||||||
Corporate
capital expenditures
|
5.2
|
20.0
|
17.8
|
|||||||
Total
capital expenditures
|
$
|
119.7
|
$
|
144.8
|
$
|
86.1
|
In
millions
|
2007
|
2006
|
2005
|
|||||||
Revenues
|
||||||||||
United
States
|
$
|
4,756.0
|
$
|
4,570.9
|
$
|
4,221.5
|
||||
Non-U.S.
|
4,007.1
|
3,462.8
|
3,042.2
|
|||||||
Total
|
$
|
8,763.1
|
$
|
8,033.7
|
$
|
7,263.7
|
In
millions
|
2007
|
|
|
2006
|
|||
Long-lived
assets
|
|||||||
United
States
|
$
|
820.5
|
$
|
841.3
|
|||
Non-U.S.
|
639.6
|
574.9
|
|||||
Total
|
$
|
1,460.1
|
$
|
1,416.2
|
Condensed
Consolidating Income Statement
|
||||||||||||||||
For
the year ended December 31, 2007
|
||||||||||||||||
IR
|
IR
|
Other
|
Consolidating
|
IR
Limited
|
||||||||||||
In
millions
|
Limited
|
New Jersey
|
Subsidiaries
|
Adjustments
|
Consolidated
|
|||||||||||
Net
revenues
|
$
|
-
|
$
|
932.2
|
$
|
7,830.9
|
$
|
-
|
$
|
8,763.1
|
||||||
Cost
of goods sold
|
-
|
644.1
|
5,627.9
|
-
|
6,272.0
|
|||||||||||
Selling
and administrative expenses
|
32.7
|
304.6
|
1,096.0
|
-
|
1,433.3
|
|||||||||||
Operating
(loss) income
|
(32.7
|
)
|
(16.5
|
)
|
1,107.0
|
-
|
1,057.8
|
|||||||||
Equity
earnings in affiliates (net of tax)
|
4,101.0
|
197.6
|
2,563.1
|
(6,861.7
|
)
|
-
|
||||||||||
Interest
expense
|
(39.8
|
)
|
(69.9
|
)
|
(26.5
|
)
|
-
|
(136.2
|
)
|
|||||||
Intercompany
interest and fees
|
(53.8
|
)
|
(684.0
|
)
|
737.8
|
-
|
-
|
|||||||||
Other
income, net
|
(8.0
|
)
|
71.4
|
(47.5
|
)
|
-
|
15.9
|
|||||||||
Earnings
(loss) before income taxes
|
3,966.7
|
(501.4
|
)
|
4,333.9
|
(6,861.7
|
)
|
937.5
|
|||||||||
(Benefit)
provision for income taxes
|
-
|
(167.8
|
)
|
372.2
|
-
|
204.4
|
||||||||||
Earnings
(loss) from continuing operations
|
3,966.7
|
(333.6
|
)
|
3,961.7
|
(6,861.7
|
)
|
733.1
|
|||||||||
Discontinued
operations, net of tax
|
-
|
2,896.7
|
336.9
|
-
|
3,233.6
|
|||||||||||
Net
earnings (loss)
|
$
|
3,966.7
|
$
|
2,563.1
|
$
|
4,298.6
|
$
|
(6,861.7
|
)
|
$
|
3,966.7
|
|||||
Condensed
Consolidating Income Statement
|
||||||||||||||||
For
the year ended December 31, 2006
|
||||||||||||||||
|
|
|
IR
|
|
|
IR
|
|
|
Other
|
|
|
Consolidating
|
|
|
IR
Limited
|
|
In
millions
|
Limited
|
|
|
New Jersey
|
|
|
Subsidiaries
|
|
|
Adjustments
|
|
|
Consolidated
|
|||
Net
revenues
|
$
|
-
|
$
|
928.2
|
$
|
7,105.5
|
$
|
-
|
$
|
8,033.7
|
||||||
Cost
of goods sold
|
-
|
663.8
|
5,104.6
|
-
|
5,768.4
|
|||||||||||
Selling
and administrative expenses
|
16.3
|
253.2
|
997.3
|
-
|
1,266.8
|
|||||||||||
Operating
(loss) income
|
(16.3
|
)
|
11.2
|
1,003.6
|
-
|
998.5
|
||||||||||
Equity
earnings in affiliates (net of tax)
|
1,116.6
|
607.4
|
159.3
|
(1,883.3
|
)
|
-
|
||||||||||
Interest
expense
|
(30.3
|
)
|
(77.6
|
)
|
(25.7
|
)
|
-
|
(133.6
|
)
|
|||||||
Intercompany
interest and fees
|
(32.9
|
)
|
(645.0
|
)
|
677.9
|
-
|
-
|
|||||||||
Other
income, net
|
(4.6
|
)
|
64.9
|
(67.6
|
)
|
-
|
(7.3
|
)
|
||||||||
Earnings
(loss) before income taxes
|
1,032.5
|
(39.1
|
)
|
1,747.5
|
(1,883.3
|
)
|
857.6
|
|||||||||
(Benefit)
provision for income taxes
|
-
|
(192.1
|
)
|
284.7
|
-
|
92.6
|
||||||||||
Earnings
(loss) from continuing operations
|
1,032.5
|
153.0
|
1,462.8
|
(1,883.3
|
)
|
765.0
|
||||||||||
Discontinued
operations, net of tax
|
-
|
6.3
|
261.2
|
-
|
267.5
|
|||||||||||
Net
earnings (loss)
|
$
|
1,032.5
|
$
|
159.3
|
$
|
1,724.0
|
$
|
(1,883.3
|
)
|
$
|
1,032.5
|
Condensed
Consolidating Income Statement
|
||||||||||||||||
For
the year ended December 31, 2005
|
||||||||||||||||
IR
|
IR
|
Other
|
Consolidating
|
IR
Limited
|
||||||||||||
In
millions
|
Limited
|
New
Jersey
|
Subsidiaries
|
Adjustments
|
Consolidated
|
|||||||||||
Net
revenues
|
$
|
-
|
$
|
1,008.1
|
$
|
6,255.6
|
$
|
-
|
$
|
7,263.7
|
||||||
Cost
of goods sold
|
-
|
754.8
|
4,448.4
|
-
|
5,203.2
|
|||||||||||
Selling
and administrative expenses
|
1.2
|
264.2
|
907.3
|
-
|
1,172.7
|
|||||||||||
Operating
(loss) income
|
(1.2
|
)
|
(10.9
|
)
|
899.9
|
-
|
887.8
|
|||||||||
Equity
earnings in affiliates (net of tax)
|
1,104.8
|
487.1
|
268.9
|
(1,860.8
|
)
|
-
|
||||||||||
Interest
expense
|
(9.1
|
)
|
(106.3
|
)
|
(29.7
|
)
|
-
|
(145.1
|
)
|
|||||||
Intercompany
interest and fees
|
(38.4
|
)
|
(425.8
|
)
|
464.2
|
-
|
-
|
|||||||||
Other
income, net
|
(1.9
|
)
|
108.8
|
(56.8
|
)
|
-
|
50.1
|
|||||||||
Earnings
(loss) before income taxes
|
1,054.2
|
52.9
|
1,546.5
|
(1,860.8
|
)
|
792.8
|
||||||||||
(Benefit)
provision for income taxes
|
-
|
(185.4
|
)
|
246.4
|
-
|
61.0
|
||||||||||
Earnings
(loss) from continuing operations
|
1,054.2
|
238.3
|
1,300.1
|
(1,860.8
|
)
|
731.8
|
||||||||||
Discontinued
operations, net of tax
|
-
|
30.6
|
291.8
|
-
|
322.4
|
|||||||||||
Net
earnings (loss)
|
$
|
1,054.2
|
$
|
268.9
|
$
|
1,591.9
|
$
|
(1,860.8
|
)
|
$
|
1,054.2
|
Condensed
Consolidating Balance Sheet
|
||||||||||||||||
December
31, 2007
|
||||||||||||||||
IR
|
IR
|
Other
|
Consolidating
|
IR
Limited
|
||||||||||||
In
millions
|
Limited
|
New
Jersey
|
Subsidiaries
|
Adjustments
|
Consolidated
|
|||||||||||
Current
assets:
|
||||||||||||||||
Cash
and cash equivalents
|
$
|
0.6
|
$
|
545.5
|
$
|
4,189.2
|
$
|
-
|
$
|
4,735.3
|
||||||
Marketable
securities
|
-
|
-
|
0.1
|
-
|
0.1
|
|||||||||||
Accounts
and notes receivable, net
|
0.4
|
266.4
|
1,393.9
|
-
|
1,660.7
|
|||||||||||
Inventories,
net
|
-
|
78.7
|
748.5
|
-
|
827.2
|
|||||||||||
Prepaid
expenses and deferred income taxes
|
-
|
137.2
|
340.2
|
-
|
477.4
|
|||||||||||
Assets
held for sale
|
-
|
-
|
-
|
-
|
-
|
|||||||||||
Accounts
and notes receivable affiliates
|
13.5
|
7,630.2
|
25,528.6
|
(33,172.3
|
)
|
-
|
||||||||||
Total
current assets
|
14.5
|
8,658.0
|
32,200.5
|
(33,172.3
|
)
|
7,700.7
|
||||||||||
Investment
in affiliates
|
10,033.7
|
9,221.1
|
40,217.2
|
(59,472.0
|
)
|
-
|
||||||||||
Property,
plant and equipment, net
|
-
|
152.9
|
752.0
|
-
|
904.9
|
|||||||||||
Intangible
assets, net
|
-
|
79.9
|
4,638.0
|
-
|
4,717.9
|
|||||||||||
Other
assets
|
1.5
|
704.6
|
346.6
|
-
|
1,052.7
|
|||||||||||
Total
assets
|
$
|
10,049.7
|
$
|
18,816.5
|
$
|
78,154.3
|
$
|
(92,644.3
|
)
|
$
|
14,376.2
|
|||||
Current
liabilities:
|
||||||||||||||||
Accounts
payable and accruals
|
$
|
6.9
|
$
|
529.7
|
$
|
1,958.1
|
$
|
-
|
$
|
2,494.7
|
||||||
Loans
payable and current maturities
|
||||||||||||||||
of
long-term debt
|
-
|
555.4
|
185.6
|
-
|
741.0
|
|||||||||||
Liabilities
held for sale
|
-
|
-
|
-
|
-
|
-
|
|||||||||||
Accounts
and note payable affiliates
|
89.1
|
7,010.2
|
26,073.0
|
(33,172.3
|
)
|
-
|
||||||||||
Total
current liabilities
|
96.0
|
8,095.3
|
28,216.7
|
(33,172.3
|
)
|
3,235.7
|
||||||||||
Long-term
debt
|
299.1
|
403.2
|
10.4
|
-
|
712.7
|
|||||||||||
Note
payable affiliate
|
1,550.0
|
2,097.4
|
-
|
(3,647.4
|
)
|
-
|
||||||||||
Other
noncurrent liabilities
|
196.7
|
1,917.0
|
406.2
|
-
|
2,519.9
|
|||||||||||
Total
liabilities
|
2,141.8
|
12,512.9
|
28,633.3
|
(36,819.7
|
)
|
6,468.3
|
||||||||||
Shareholders'
equity:
|
||||||||||||||||
Class
A common shares
|
370.0
|
-
|
(97.4
|
)
|
-
|
272.6
|
||||||||||
Class
B common shares
|
270.6
|
-
|
-
|
(270.6
|
)
|
-
|
||||||||||
Common
shares
|
-
|
-
|
2,362.8
|
(2,362.8
|
)
|
-
|
||||||||||
Other
shareholders' equity
|
11,046.3
|
7,039.7
|
50,533.8
|
(61,231.0
|
)
|
7,388.8
|
||||||||||
Accumulated
other comprehensive income (loss)
|
568.5
|
(320.9
|
)
|
503.5
|
(504.6
|
)
|
246.5
|
|||||||||
12,255.4
|
6,718.8
|
53,302.7
|
(64,369.0
|
)
|
7,907.9
|
|||||||||||
Less:
Contra account
|
(4,347.5
|
)
|
(415.2
|
)
|
(3,781.7
|
)
|
8,544.4
|
-
|
||||||||
Total
shareholders' equity
|
7,907.9
|
6,303.6
|
49,521.0
|
(55,824.6
|
)
|
7,907.9
|
||||||||||
Total
liabilities and equity
|
$
|
10,049.7
|
$
|
18,816.5
|
$
|
78,154.3
|
$
|
(92,644.3
|
)
|
$
|
14,376.2
|
Condensed
Consolidating Balance Sheet
|
||||||||||||||||
December
31, 2006
|
||||||||||||||||
IR
|
IR
|
Other
|
Consolidating
|
IR
Limited
|
||||||||||||
In
millions
|
Limited
|
New
Jersey
|
Subsidiaries
|
Adjustments
|
Consolidated
|
|||||||||||
Current
assets:
|
||||||||||||||||
Cash
and cash equivalents
|
$
|
1.7
|
$
|
81.6
|
$
|
272.5
|
$
|
-
|
$
|
355.8
|
||||||
Marketable
securities
|
-
|
-
|
0.7
|
-
|
0.7
|
|||||||||||
Accounts
and notes receivable, net
|
0.3
|
177.6
|
1,303.8
|
-
|
1,481.7
|
|||||||||||
Inventories,
net
|
-
|
92.6
|
745.1
|
-
|
837.7
|
|||||||||||
Prepaid
expenses and deferred income taxes
|
0.4
|
374.8
|
(19.4
|
)
|
-
|
355.8
|
||||||||||
Assets
held for sale
|
-
|
500.1
|
2,006.0
|
-
|
2,506.1
|
|||||||||||
Accounts
and notes receivable affiliates
|
921.4
|
2,662.1
|
26,537.6
|
(30,121.1
|
)
|
-
|
||||||||||
Total
current assets
|
923.8
|
3,888.8
|
30,846.3
|
(30,121.1
|
)
|
5,537.8
|
||||||||||
Investment
in affiliates
|
7,130.9
|
11,565.2
|
31,009.6
|
(49,705.7
|
)
|
-
|
||||||||||
Property,
plant and equipment, net
|
-
|
170.0
|
698.2
|
-
|
868.2
|
|||||||||||
Intangible
assets, net
|
-
|
78.4
|
4,471.6
|
-
|
4,550.0
|
|||||||||||
Other
assets
|
1.7
|
1,129.8
|
58.4
|
-
|
1,189.9
|
|||||||||||
Total
assets
|
$
|
8,056.4
|
$
|
16,832.2
|
$
|
67,084.1
|
$
|
(79,826.8
|
)
|
$
|
12,145.9
|
|||||
Current
liabilities:
|
||||||||||||||||
Accounts
payable and accruals
|
$
|
6.3
|
$
|
361.3
|
$
|
1,490.5
|
$
|
-
|
$
|
1,858.1
|
||||||
Loans
payable and current maturities
|
||||||||||||||||
of
long-term debt
|
378.0
|
596.8
|
104.6
|
-
|
1,079.4
|
|||||||||||
Liabilities
held for sale
|
-
|
536.4
|
638.5
|
-
|
1,174.9
|
|||||||||||
Accounts
and note payable affiliates
|
779.0
|
7,035.7
|
22,306.4
|
(30,121.1
|
)
|
-
|
||||||||||
Total
current liabilities
|
1,163.3
|
8,530.2
|
24,540.0
|
(30,121.1
|
)
|
4,112.4
|
||||||||||
Long-term
debt
|
299.0
|
411.3
|
194.9
|
-
|
905.2
|
|||||||||||
Note
payable affiliate
|
950.0
|
2,697.4
|
-
|
(3,647.4
|
)
|
-
|
||||||||||
Other
noncurrent liabilities
|
239.3
|
1,437.5
|
46.7
|
-
|
1,723.5
|
|||||||||||
Total
liabilities
|
2,651.6
|
13,076.4
|
24,781.6
|
(33,768.5
|
)
|
6,741.1
|
||||||||||
Shareholders'
equity:
|
||||||||||||||||
Class
A common shares
|
364.5
|
-
|
(57.7
|
)
|
-
|
306.8
|
||||||||||
Class
B common shares
|
270.6
|
-
|
-
|
(270.6
|
)
|
-
|
||||||||||
Common
shares
|
-
|
-
|
2,362.8
|
(2,362.8
|
)
|
-
|
||||||||||
Other
shareholders' equity
|
9,403.3
|
4,815.3
|
43,957.1
|
(52,719.6
|
)
|
5,456.1
|
||||||||||
Accumulated
other comprehensive income (loss)
|
(36.4
|
)
|
(627.9
|
)
|
205.7
|
100.5
|
(358.1
|
)
|
||||||||
10,002.0
|
4,187.4
|
46,467.9
|
(55,252.5
|
)
|
5,404.8
|
|||||||||||
Less:
Contra account
|
(4,597.2
|
)
|
(431.6
|
)
|
(4,165.4
|
)
|
9,194.2
|
-
|
||||||||
Total
shareholders' equity
|
5,404.8
|
3,755.8
|
42,302.5
|
(46,058.3
|
)
|
5,404.8
|
||||||||||
Total
liabilities and equity
|
$
|
8,056.4
|
$
|
16,832.2
|
$
|
67,084.1
|
$
|
(79,826.8
|
)
|
$
|
12,145.9
|
Condensed
Consolidating Statement of Cash Flows
|
|||||||||||||
For
the year ended December 31, 2007
|
|||||||||||||
IR
|
IR
|
Other
|
IR
Limited
|
||||||||||
In
millions
|
Limited
|
New
Jersey
|
Subsidiaries
|
Consolidated
|
|||||||||
Net
cash (used in) provided by continuing operating activities
|
$
|
(100.0
|
)
|
$
|
(458.1
|
)
|
$
|
1,388.0
|
$
|
829.9
|
|||
Net
cash (used in) provided by discontinued operating
activities
|
-
|
(37.0
|
)
|
103.2
|
66.2
|
||||||||
Cash
flows from investing activities:
|
|||||||||||||
Capital
expenditures
|
-
|
(25.0
|
)
|
(94.7
|
)
|
(119.7
|
)
|
||||||
Proceeds
from sale of property, plant and equipment
|
-
|
4.6
|
9.6
|
14.2
|
|||||||||
Acquisitions,
net of cash
|
-
|
(0.6
|
)
|
(25.1
|
)
|
(25.7
|
)
|
||||||
Proceeds
from business dispositions
|
-
|
3,076.7
|
3,077.6
|
6,154.3
|
|||||||||
Proceedes
from the sale of marketable securities
|
-
|
-
|
0.7
|
0.7
|
|||||||||
Cash
provided by equity companies, net
|
-
|
(0.3
|
)
|
28.9
|
28.6
|
||||||||
Net
cash (used in) provided by continuing investing activities
|
-
|
3,055.4
|
2,997.0
|
6,052.4
|
|||||||||
Net
cash (used in) provided by discontinued investing
activities
|
-
|
(4.7
|
)
|
(53.0
|
)
|
(57.7
|
)
|
||||||
Cash
flows from financing activities:
|
|||||||||||||
Net
change in debt
|
(378.0
|
)
|
(49.4
|
)
|
(122.3
|
)
|
(549.7
|
)
|
|||||
Net
inter-company (payments) proceeds
|
776.2
|
(2,087.8
|
)
|
1,311.6
|
-
|
||||||||
Proceeds
from the exercise of stock options
|
160.2
|
-
|
-
|
160.2
|
|||||||||
Excess
tax benefit from stock-based compensation
|
-
|
29.1
|
7.0
|
36.1
|
|||||||||
Dividends
(paid) received
|
(459.5
|
)
|
16.4
|
233.3
|
(209.8
|
)
|
|||||||
Repurchase
of common shares by subsidiary
|
-
|
-
|
(1,999.9
|
)
|
(1,999.9
|
)
|
|||||||
Net
cash (used in) provided by continuing financing activities
|
98.9
|
(2,091.7
|
)
|
(570.3
|
)
|
(2,563.1
|
)
|
||||||
Net
cash (used in) provided by discontinued financing
activities
|
-
|
-
|
-
|
-
|
|||||||||
Effect
of exchange rate changes on cash and
|
|||||||||||||
cash
equivalents
|
-
|
-
|
51.8
|
51.8
|
|||||||||
Net
(decrease) increase in cash and cash equivalents
|
(1.1
|
)
|
463.9
|
3,916.7
|
4,379.5
|
||||||||
Cash
and cash equivalents - beginning of period
|
1.7
|
81.6
|
272.5
|
355.8
|
|||||||||
Cash
and cash equivalents - end of period
|
$
|
0.6
|
$
|
545.5
|
$
|
4,189.2
|
$
|
4,735.3
|
Condensed
Consolidating Statement of Cash Flows
|
|||||||||||||
For
the year ended December 31, 2006
|
|||||||||||||
IR
|
IR
|
Other
|
IR
Limited
|
||||||||||
In
millions
|
Limited
|
New
Jersey
|
Subsidiaries
|
Consolidated
|
|||||||||
Net
cash (used in) provided by continuing operating activities
|
$
|
(67.4
|
)
|
$
|
(83.1
|
)
|
$
|
963.6
|
$
|
813.1
|
|||
Net
cash (used in) provided by discontinued operating
activities
|
-
|
173.4
|
(31.7
|
)
|
141.7
|
||||||||
Cash
flows from investing activities:
|
|||||||||||||
Capital
expenditures
|
-
|
(44.0
|
)
|
(100.8
|
)
|
(144.8
|
)
|
||||||
Proceeds
from sale of property, plant and equipment
|
-
|
0.9
|
8.7
|
9.6
|
|||||||||
Acquisitions,
net of cash
|
-
|
(11.8
|
)
|
(37.9
|
)
|
(49.7
|
)
|
||||||
Proceeds
from business dispositions
|
-
|
-
|
-
|
-
|
|||||||||
Proceedes
from the sale of marketable securities
|
-
|
-
|
155.8
|
155.8
|
|||||||||
Cash
provided by equity companies, net
|
-
|
-
|
0.4
|
0.4
|
|||||||||
Net
cash (used in) provided by continuing investing activities
|
-
|
(54.9
|
)
|
26.2
|
(28.7
|
)
|
|||||||
Net
cash (used in) provided by discontinued investing
activities
|
-
|
(8.7
|
)
|
(123.8
|
)
|
(132.5
|
)
|
||||||
Cash
flows from financing activities:
|
|||||||||||||
Net
change in debt
|
379.1
|
(499.7
|
)
|
(19.9
|
)
|
(140.5
|
)
|
||||||
Net
inter-company (payments) proceeds
|
(7.3
|
)
|
323.0
|
(315.7
|
)
|
-
|
|||||||
Proceeds
from the exercise of stock options
|
95.7
|
-
|
-
|
95.7
|
|||||||||
Excess
tax benefit from stock-based compensation
|
-
|
8.9
|
6.6
|
15.5
|
|||||||||
Dividends
(paid) received
|
(423.9
|
)
|
15.6
|
190.7
|
(217.6
|
)
|
|||||||
Repurchase
of common shares by subsidiary
|
-
|
-
|
(1,096.3
|
)
|
(1,096.3
|
)
|
|||||||
Net
cash (used in) provided by continuing financing activities
|
43.6
|
(152.2
|
)
|
(1,234.6
|
)
|
(1,343.2
|
)
|
||||||
Net
cash (used in) provided by discontinued financing
activities
|
-
|
-
|
-
|
-
|
|||||||||
Effect
of exchange rate changes on cash and
|
|||||||||||||
cash
equivalents
|
-
|
-
|
29.4
|
29.4
|
|||||||||
Net
(decrease) increase in cash and cash equivalents
|
(23.8
|
)
|
(125.5
|
)
|
(370.9
|
)
|
(520.2
|
)
|
|||||
Cash
and cash equivalents - beginning of period
|
25.5
|
207.1
|
643.4
|
876.0
|
|||||||||
Cash
and cash equivalents - end of period
|
$
|
1.7
|
$
|
81.6
|
$
|
272.5
|
$
|
355.8
|
Condensed
Consolidating Statement of Cash Flows
|
|||||||||||||
For
the year ended December 31, 2005
|
|||||||||||||
IR
|
IR
|
Other
|
IR
Limited
|
||||||||||
In
millions
|
Limited
|
New
Jersey
|
Subsidiaries
|
Consolidated
|
|||||||||
Net
cash (used in) provided by continuing operating activities
|
$
|
(32.0
|
)
|
$
|
(381.3
|
)
|
$
|
854.2
|
$
|
440.9
|
|||
Net
cash (used in) provided by discontinued operating
activities
|
-
|
(111.0
|
)
|
510.8
|
399.8
|
||||||||
Cash
flows from investing activities:
|
|||||||||||||
Capital
expenditures
|
-
|
(38.0
|
)
|
(48.1
|
)
|
(86.1
|
)
|
||||||
Proceeds
from sale of property, plant and equipment
|
-
|
2.1
|
14.2
|
16.3
|
|||||||||
Acquisitions,
net of cash
|
-
|
-
|
(484.7
|
)
|
(484.7
|
)
|
|||||||
Proceeds
from business dispositions
|
-
|
3.7
|
7.7
|
11.4
|
|||||||||
Purchase
of marketable securities
|
-
|
-
|
(152.6
|
)
|
(152.6
|
)
|
|||||||
Cash
provided by equity companies, net
|
-
|
-
|
7.1
|
7.1
|
|||||||||
Net
cash (used in) provided by continuing investing activities
|
-
|
(32.2
|
)
|
(656.4
|
)
|
(688.6
|
)
|
||||||
Net
cash (used in) provided by discontinued investing
activities
|
-
|
(11.3
|
)
|
(71.8
|
)
|
(83.1
|
)
|
||||||
Cash
flows from financing activities:
|
|||||||||||||
Net
change in debt
|
297.4
|
(87.3
|
)
|
(147.4
|
)
|
62.7
|
|||||||
Net
inter-company (payments) proceeds
|
(134.8
|
)
|
(25.2
|
)
|
160.0
|
-
|
|||||||
Proceeds
from the exercise of stock options
|
90.9
|
-
|
-
|
90.9
|
|||||||||
Dividends
(paid) received
|
(359.2
|
)
|
13.2
|
153.9
|
(192.1
|
)
|
|||||||
Repurchase
of common shares by subsidiary
|
-
|
-
|
(763.6
|
)
|
(763.6
|
)
|
|||||||
Redemption
of preferred stock of subsidiary
|
(73.6
|
)
|
-
|
-
|
(73.6
|
)
|
|||||||
Net
cash (used in) provided by continuing financing activities
|
(179.3
|
)
|
(99.3
|
)
|
(597.1
|
)
|
(875.7
|
)
|
|||||
Net
cash (used in) provided by discontinued financing
activities
|
-
|
-
|
-
|
-
|
|||||||||
Effect
of exchange rate changes on cash and
|
|||||||||||||
cash
equivalents
|
-
|
-
|
(14.2
|
)
|
(14.2
|
)
|
|||||||
Net
increase in cash and cash equivalents
|
(211.3
|
)
|
(635.1
|
)
|
25.5
|
(820.9
|
)
|
||||||
Cash
and cash equivalents - beginning of period
|
236.8
|
842.2
|
617.9
|
1,696.9
|
|||||||||
Cash
and cash equivalents - end of period
|
$
|
25.5
|
$
|
207.1
|
$
|
643.4
|
$
|
876.0
|
Allowances
for Doubtful Accounts:
|
||||
Balance
December 31, 2004
|
$
|
45.0
|
||
Net
reductions in costs and expenses
|
(6.6
|
)
|
||
Deductions
*
|
(13.6
|
)
|
||
Business
acquisitions and divestitures, net
|
4.6
|
|||
Currency
translation
|
(1.1
|
)
|
||
Balance
December 31, 2005
|
28.3
|
|||
Net
reductions in costs and expenses
|
(11.4
|
)
|
||
Deductions
*
|
(11.4
|
)
|
||
Business
acquisitions and divestitures, net
|
1.4
|
|||
Currency
translation
|
1.4
|
|||
Balance
December 31, 2006
|
8.3
|
|||
Additions
charged to costs and expenses
|
9.8
|
|||
Deductions
*
|
(7.2
|
)
|
||
Business
acquisitions and divestitures, net
|
0.4
|
|||
Currency
translation
|
0.9
|
|||
Balance
December 31, 2007
|
$
|
12.2
|
(*)
"Deductions" include accounts and advances written off, less
recoveries.
|
Reserve
for LIFO:
|
||||
Balance
December 31, 2004
|
$
|
77.2
|
||
Additions
|
2.6
|
|||
Reductions
|
(1.9
|
)
|
||
Balance
December 31, 2005
|
77.9
|
|||
Additions
|
19.7
|
|||
Reductions
|
(2.2
|
)
|
||
Balance
December 31, 2006
|
95.4
|
|||
Additions
|
-
|
|||
Reductions
|
(11.1
|
)
|
||
Balance
December 31, 2007
|
$
|
84.3
|