UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-K
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1996
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the transition period from to
Commission File No. 1-985
 INGERSOLL-RAND COMPANY
 (Exact name of registrant as specified in its charter)

              New Jersey                        13-5156640
   (State or other jurisdiction of           (I.R.S. Employer
   incorporation or organization)           Identification No.)

       Woodcliff Lake, New Jersey                 07675
(Address of principal executive offices)        (Zip Code)	

Registrant's telephone number, including area code:(201)573-0123
Securities registered pursuant to Section 12(b) of the Act:

                                     Name of each exchange
  Title of each class                 on which registered
Series A Preference               New York, London and
  Stock Purchase Rights             Amsterdam Stock Exchanges
Common Stock, $2 par value        New York, London and
                                    Amsterdam Stock Exchanges	

Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
YES X NO
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K [ ]
The aggregate market value of common stock held by nonaffiliates on March 10, 1997 was $5,220,602,952 based on the closing price of such stock on the New York Stock Exchange. This includes the shares owned by the Registrant's Leveraged Employee Stock Ownership Plan.
The number of shares of common stock outstanding as of March 10, 1997 was 109,786,546.
DOCUMENTS INCORPORATED BY REFERENCE
Annual Report to Shareowners for fiscal year ended December 31, 1996. With the exception of those portions which are incorporated by reference into Parts I, II and IV of this Form 10-K Annual Report, the 1996 Annual Report to Shareowners is not to be deemed filed as part of this report.
Proxy Statement for Annual Meeting of Shareholders to be held on April 25, 1997. See Part III of this Form 10-K Annual Report for portions incorporated by reference. (A definitive proxy statement has been filed with the Commission since the close of the fiscal year).
PART I
Item 1. BUSINESS
 Ingersoll-Rand Company (the company) was organized in 1905 under the laws of the State of New Jersey as a consolidation of Ingersoll-Sergeant Drill Company and the Rand Drill Company, whose businesses were established in the early 1870's. Over the years, the company has supplemented its original business, which consisted primarily of the manufacture and sale of rock drilling equipment, with additional products which have been developed internally or obtained through acquisition.
The following acquisitions have been accounted for as purchases and, accordingly, each purchase price was allocated to the acquired assets and assumed liabilities based on their estimated fair values. The results of operations since the dates of acquisition are included in the consolidated financial statements.
o On August 27, 1996, the company acquired for $34.3 million in cash and the assumption of certain liabilities, substantially all of the assets of Zimmerman International Corp. (Zimmerman). Zimmerman manufactures equipment and systems that assist in handling or lifting tools, components and materials for a variety of industrial operations.
o On January 31, 1996, the company acquired for $95.4 million in cash and the assumption of certain liabilities, the Steelcraft Division of MascoTech, Inc. Steelcraft manufactures a wide range of cold-rolled and galvanized steel doors for use primarily in nonresidential construction.
o In May 1995, the company acquired Clark Equipment Company
(Clark) for approximately $1.5 billion in cash. Clark's business is the design, manufacture and sale of skid-steer loaders, compact excavators, agricultural equipment, asphalt paving equipment, transmissions for off-highway equipment (subsequently sold), golf cars and light utility vehicles.
Dispositions that the company has made in recent years are as follows:
o On February 14, 1997, the company sold Clark-Hurth Components Group to Dana Corporation. At December 31, 1996, the net assets subject to sale totalled $265.7 million and have been classified as current assets on the Consolidated Balance Sheet. Clark-Hurth Components had been reported as part of the Engineered Equipment Segment.
o In August 1996, the company agreed to sell the remaining assets of the Process Systems Group to Gencor Industries,Inc. The sale was completed during the fourth quarter of 1996 at a price of approximately $58 million in cash for a pretax gain of approximately $10 million. The Process Systems Group had been reported as part of the Engineered Equipment Segment.
o On March 26, 1996, the company sold the assets of the Pulp Machinery Division (the largest unit in the Process Systems Group) for approximately $122.3 million to Beloit Corporation, a subsidiary of Harnischfeger Industries, Inc., for a pretax gain of $45 million. In addition, in March 1996, the company sold an investment for a gain of $4.8 million.
o In May 1995, the company sold the domestic paving equipment business to Champion Road Machinery Limited of Canada. The sale was a preacquisition requirement, in order to satisfy concerns of the United States Justice Department, prior to the Clark acquisition. The company incurred a $7.1 million pretax loss associated with this sale.
During March 1997, the company was notified by regulatory authorities involved with the company's January 27, 1997, offer to acquire Newman Tonks Group PLC (Newman Tonks), that they would not challenge the proposed acquisition, valued at approximately $376 million (230 million pounds sterling). The company expects to complete its acquisition of Newman Tonks in April 1997.
Products
The company manufactures and sells primarily nonelectrical machinery and equipment. Principal products include the following:

Agricultural sprayers             Foundation drills
Air balancers                     Golf cars
Air compressors & accessories     Hoists
Air dryers                        Industrial pumps
Air logic controls                Lubrication equipment
Air motors                        Material handling equipment
Air tools                         Monitoring drills
Architectural hardware trim       Needle roller bearings
Asphalt compactors                Paving equipment
Automated-parts washing           Pneumatic cylinders
  systems                         Pneumatic valves
Automated production systems      Portable compressors
Automotive components             Portable generators
Ball bearings                     Portable light towers
Blasthole drills                  Road-building machinery
Compact hydraulic excavators      Rock drills
Construction equipment            Rock stabilizers
Diaphragm pumps                   Roller bearings
Door closers                      Rotary drills
Door hardware                     Rough-terrain forklifts
Door locks                        Skid-steer loaders
Engineered pumps                  Soil compactors
Engine-starting systems           Spray-coating systems
Exit devices                      Utility vehicles
Extrusion pump systems            Waterjet-cutting systems
Fastener-tightening systems       Water well drills
Fluid-handling equipment          Winches	

These products are sold primarily under the company's name and also under other names including ABG, Aro, Blaw-Knox, Bobcat, Centac, Charles Maire, Club Car, Ecoair, Fafnir, Ingersoll-Dresser Pumps, Jeumont-Schneider Pumps, Klemm, LCN, McCartney, Melroe, Montabert, NREC, Pacific, Pleuger, Schlage, Spra-Coupe, Steelcraft, Torrington, Von Duprin, Worthington and Zimmerman.
During the past three years, the division of the company's sales between capital goods and expendables has been in the approximate ratio of 58 percent and 42 percent, respectively. The company generally defines as expendables those products which are not capitalized by the ultimate user. Examples of such products are parts sold for replacement purposes, power tools and needle bearings.
Additional information on the company's business and financial information about industry segments is presented in Note 15 to the Consolidated Financial Statements included in the company's Annual Report to Shareowners for 1996, incorporated by reference in this Form 10-K Annual Report.
Distribution
The company's products are distributed by a number of methods which the company believes are appropriate to the type of product. Sales are made domestically through branch sales offices and through distributorships and dealers across the United States. International sales are made through approximately 60 subsidiary sales and service companies with a supporting chain of distributors in over 100 countries.
Working Capital
The working capital requirements of the company vary with respect to the many products and industries in which it is involved. In general, the requirements of its Engineered Equipment Segment, which manufactures machinery for specialized customer needs, involve a relatively long lead time and, at times, more significant company investment with respect to the particular product or order. Historically, these orders are generally covered by progress payments, which reduce the company's investment in the amount of inventory maintained by this segment. The products manufactured by the company's Standard Machinery and Bearings, Locks and Tools segments are more in the nature of standard equipment. Consequently, a wider variety must usually be more readily available to meet rapid delivery requirements. Such working capital requirements are not, however, in the opinion of management, materially different from those experienced by the company's major competitors.
Customers
No material part of the company's business is dependent upon a single customer or very few customers, the loss of any one of which would have a material adverse effect on the company's operations.
Competitive Conditions
The company's products are sold in highly competitive markets throughout the world against products produced by both foreign and domestic corporations. The principal methods of competition in these markets relate to price, quality and service. The company believes that it is one of the leading manufacturers in the world of a broad line of air compression systems, anti-friction bearings, construction equipment, air tools, pumps (through the IDP joint venture), golf cars and utility vehicles. In addition, the company believes it is a leading supplier in domestic markets for locks, other door hardware products, skid-steer loaders and asphalt paving equipment.
International Operations
Sales to customers outside the United States, including domestic sales for export, accounted for approximately 41 percent of the consolidated net sales in 1996. Information as to operating income by geographic area is set forth in Note 15 to the Consolidated Financial Statements included in the company's Annual Report to Shareowners for 1996, incorporated by reference in this Form 10-K Annual Report. Sales outside of the United States are made in more than 100 countries; therefore, the attendant risks of manufacturing or selling in a particular country, such as nationalization and establishment of common markets, would not have a significant effect on the company's international operations.
Raw Materials
The company manufactures many of the components included in its products. The principal raw materials required for the manufacture of the company's products are purchased from numerous suppliers, and the company believes that available sources of supply will generally be sufficient for its needs for the foreseeable future.
Backlog
The company's approximate backlog of orders at December 31, 1996, believed by it to be firm, was $335 million for the Standard Machinery Segment, $369 million for the Engineered Equipment Segment and $638 million for the Bearings, Locks and Tools Segment as compared to $389 million, $636 million and $564 million, respectively, at December 31, 1995. These backlog figures are based on orders received. While the major portion of the company's products are built in advance of order and either shipped or assembled from stock, orders for specialized machinery or specific customer application are submitted with extensive lead time and are often subject to revision, deferral, cancellation or termination. The company estimates that approximately 90 percent of the backlog will be shipped during the next twelve months.
Research, Engineering and Development
The company maintains extensive research, engineering and development facilities for experimenting, testing and developing high quality products. The company employs approximately 2,000 professional employees for its research, engineering and development activities. The company spent $209 million in 1996, $190 million in 1995 and $155 million in 1994 on research, engineering and development.
Patents and Licenses
The company owns numerous patents and patent applications and is licensed under others. While it considers that in the aggregate its patents and licenses are valuable, it does not believe that its business is materially dependent on its patents or licenses or any group of them. In the company's opinion, engineering and production skills, and experience are more responsible for its market position than patents or licenses.
Environmental Matters
The company has been and continues to be dedicated to an environmental program to reduce the utilization and generation of hazardous materials during the manufacturing process and to remediate identified environmental concerns. As to the latter, the company currently is engaged in site investigations and remedial activities to address environmental cleanup from past operations at current and former manufacturing facilities, including the facilities added through the Clark acquisition.
During 1996, the company spent approximately $8 million on capital projects for pollution abatement and control and an additional $6 million for environmental remediation expenditures at sites presently or formerly owned or leased by the company. It should be noted that these amounts are difficult to estimate because environmental improvement costs are generally a part of the overall improvement costs at a particular plant, and the accurate estimate of which portion of an improvement or a capital expenditure relates to an environmental improvement is difficult to ascertain. The company believes that these expenditure levels will continue and may increase over time. Given the evolving nature of environmental laws, regulations and technology, the ultimate cost of future compliance is uncertain.
The company is a party to environmental lawsuits and claims, and has received notices of potential violations of environmental laws and regulations from the Environmental Protection Agency and similar state authorities. It is identified as a potentially responsible party (PRP) for cleanup costs associated with off-site waste disposal at approximately 39 federal Superfund and state remediations sites (including Clark- acquired PRP locations), excluding sites as to which the company's records disclose no involvement or as to which the company's liability has been fully determined. For all sites there are other PRPs and in most instances, the company's site involvement is minimal. In estimating its liability, the company has not assumed it will bear the entire cost of remediation of any site to the exclusion of other PRPs who may be jointly and severally liable. The ability of other PRPs to participate has been taken into account, based generally on the parties' financial condition and probable contribution on a per site basis. Additional lawsuits and claims involving environmental matters are likely to arise from time to time in the future.
Although uncertainties regarding environmental technology, state and federal laws and regulations and individual site information make estimating the liability difficult, management believes that the total liability for the cost of remediation and environmental lawsuits and claims will not have a material effect on the financial condition, results of operations liquidity or cash flows of the company for any year. It should be noted that when the company estimates its liability for environmental matters, such estimates are based on current technologies and the company does not discount its liability or assume any insurance recoveries.
Employees
There are approximately 40,100 employees of the company throughout the world, of whom approximately 26,300 work in the United States and 13,800 in foreign countries. Approximately 29 percent of the company's United States production and maintenance employees, who work in 12 plants, are represented by 7 unions. The company believes relations with its employees are good.
Item 2. PROPERTIES
 The company's executive offices are located at Woodcliff Lake, New Jersey. Manufacturing and assembly operations are conducted in 49 plants in the United States; 5 plants in Canada; 25 plants in Europe; 7 plants in Asia; 6 plants in Latin America and 1 plant in Africa. The company also maintains various warehouses, offices and repair centers in the United States, Canada and abroad.
Substantially all plant facilities are owned by the company and the remainder are under long-term lease. The company believes that its plants and equipment have been well-maintained and are generally in good condition. The company has several closed facilities that it is actively marketing with the intent of selling them at their net realizable value.
The operating segments for which the facilities are primarily used are as described below. Facilities that produce products in several operating segments are classified by the products which they primarily manufacture. Facilities under long-term lease are included below and are not significant to each operating segment's total number of plants or square footage.
Standard Machinery
This segment's products include machinery regularly used in general manufacturing and in industries such as mining and construction. Products range from blasthole drills used in mining and construction, small air compressors found worldwide in auto service stations, skid-steer loaders and golf cars. The segment is aligned into five operating groups: Air Compressor, Construction and Mining, Melroe, Club Car and Mining Machinery (which was sold in 1993). The segment's remaining manufacturing locations are as follows:

                                       Approximate
                  Number of Plants    Square Footage

Domestic                   11            3,321,000
International              11            2,003,000

        Total              22            5,324,000	

Engineered Equipment
This segment is organized into three operating groups: Pump, Process Systems (which was sold in 1996) and Clark-Hurth (sold February 1997). The remaining products manufactured by this segment are predominantly pumps for diversified industrial use and specialty pumps for process, power generation and marine applications. The segment's remaining manufacturing facilities are as follows:

                                       Approximate
                  Number of Plants    Square Footage

Domestic                    7            1,682,000
International              15            1,883,000

        Total              22            3,565,000	

Bearings, Locks and Tools
This segment primarily serves the automotive, capital goods, energy and construction industries. Products in this segment include bearings for specialized and industrial application, locks and architectural hardware for residential and commercial buildings, air tools for industrial use, air winches, hoists and engine starting systems, and automated production systems for transportation equipment manufacturers. There are three operating groups in this segment: Bearings and Components Group, Production Equipment Group and Architectural Hardware Group (formerly known as Door Hardware Group). The segment's manufacturing facilities are as follows:

                                       Approximate
                  Number of Plants    Square Footage

Domestic                   31            6,743,000
International              18            2,437,000

        Total              49            9,180,000	

Item 3. LEGAL PROCEEDINGS
 In the normal course of business, the company is involved in a variety of lawsuits, claims and legal proceedings, including proceedings for off-site waste disposal cleanup of approximately 39 sites under federal Superfund and similar state laws. In the opinion of the company, pending legal matters are not expected to have a material adverse affect on the results of operations, financial condition, liquidity or cash flows.
See also the discussion under Item 1 - Environmental Matters.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of the company's security holders during the last quarter of its fiscal year ended December 31, 1996.
The following information is included in accordance with the provision of Part III, Item 10.

                        Date of
                       Service as    Principal Occupation and
                      an Executive   Other Information
Name and Age            Officer      for Past Five Years
James E. Perrella(61)     5/4/77     Chairman of the Board,
                                       President and Chief
                                       Executive Officer,
                                       Director (President and
                                       Director, 1992 - 1993)
J. Frank Travis(61)       2/7/90     Vice Chairman of the Board,
                                       (Executive Vice President
                                       1993-1996; Executive
                                       Vice President and
                                       President of the
                                       Production Equipment
                                       Group, 1994 - 1995; Vice
                                       President and President
                                       of the Bearings and
                                       Components Group, 1992 -
                                       1993)
Frank B. O'Brien (50)    3/10/97     Senior Vice President and
                                       Chief Financial Officer,
                                       (Nacco Industries, Inc.;
                                       Senior Vice President -
                                       Corporate Development and
                                       Chief Financial Officer,
                                       1994 - 1997; Senior Vice
                                       President - Corporate
                                       Development, 1993 - 1994;
                                       Vice President - Corporate
                                       Development 1987 - 1993)
William J. Armstrong(55)  8/3/83     Vice President and Treasurer
Paul L. Bergren(47)      12/2/92     Vice President, President
                                       of the Air Compressor
                                       Group, (President of
                                       Ingersoll-Rand Europe,
                                       1994 - 1997; Vice
                                       President and General
                                       Manager - Centrifugal Compressor
                                       Division, 1989 - 1992)
Gerard V. Geraghty (46)   5/2/96     Vice President and
                                       Comptroller (Controller -
                                       Operations, 1993 - 1996;
                                       Assistant Controller
                                       1988 - 1993)
Frederick W. Hadfield(60) 8/1/79     Vice President and President
                                       of Ingersoll Dresser Pump
                                       Company (Vice President,
                                       1979 - 1994)
Brian D. Jellison(51)     2/7/96     Vice President and President
                                       of the Architectural
                                       Hardware Group (President
                                       of the Door Hardware
                                       Group, 1994 - 1995;
                                       President, Von Duprin,
                                       1988 - 1994)
Daniel E. Kletter(58)     2/7/90     Vice President (Vice
                                       President and President of
                                       the Construction and
                                       Mining Group, 1989 - 1994)
Steven T. Martin (55)     5/2/96     Vice President and President
                                       of Production Equipment
                                       Group (President of
                                       Production Equipment Group
                                       1995 - 1996; Vice
                                       President and General
                                       Manager Fafnir Bearings
                                       Division of Torrington,
                                       1986 - 1995)
Patricia Nachtigal(50)   11/2/88     Vice President and General
                                       Counsel
Allen M. Nixon(56)        2/1/95     Vice President and President
                                       of Bearing and Components
                                       Group (Vice President and
                                       General Manager Torrington
                                       Needle Bearings Division,
                                       1983 - 1994)
James R. O'Dell(58)      12/3/88     Vice President
Nicholas J. Pishotti(56) 4/10/95     Vice President - Strategic
                                       Sourcing (General Manager,
                                       Aircraft Engine Sourcing
                                       Department, General
                                       Electric Company, 1988 -
                                       1995)
Donald H. Rice(52)        2/1/95     Vice President (Executive
                                       Director - Human Resources
                                       1994; Vice President,
                                       Human Resources - Bearings
                                       and Components Group, 1988
                                       - 1993)
Gerald E. Swimmer(52)     5/1/82     Vice President
R. Barry Uber(51)         2/7/90     Vice President and President
                                       of the Construction and
                                       Mining Group (Vice
                                       President and President of
                                       the Production Equipment
                                       Group, 1990 - 1994)
Ronald G. Heller(50)      2/6/91     Secretary and Assistant
                                       General Counsel	

No family relationship exists between any of the above-listed executive officers of the company. All officers are elected to hold office for one year or until their successors are elected and qualify.
PART II
Item 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
 Information regarding the principal market for the company's common stock and related stockholder matters are as follows:
Quarterly share prices and dividends for the common stock are shown in the following tabulation. The common shares are listed on the New York Stock Exchange and also on the London and Amsterdam exchanges.

                                        Common Stock
                           High            Low         Dividend
1996
First quarter           $42 7/8        $35 1/8            $.185
Second quarter           44 3/8         37 1/4             .185
Third quarter            47 1/2         37 7/8             .205
Fourth quarter           47 5/8         40 5/8             .205
1995
First quarter           $34            $28 3/8            $.185
Second quarter           39 3/8         32 5/8             .185
Third quarter            42 3/8         35 5/8             .185
Fourth quarter           38 5/8         33 5/8             .185	

The Bank of New York (Church Street Station, P.O. Box 11258, New York, NY 10286-1258, (800)524-4458) is the transfer agent, registrar and dividend reinvestment agent.
There are no significant restrictions on the payment of dividends. The approximate number of record holders of common stock as of March 10, 1997 was 13,000.
Item 6. SELECTED FINANCIAL DATA
 Selected financial data for the five years ended December 31, 1996, is as follows (in millions except per share amounts):

December 31               1996        1995        1994        1993      1992

Net sales             $6,702.9    $5,729.0    $4,507.5    $4,021.1  $3,783.8

Net earnings (loss)      358.0       270.3       211.1       142.5    (234.4)

Total assets           5,621.6     5,563.3     3,596.9     3,375.3   3,387.6

Long-term debt         1,163.8     1,304.4       315.9       314.1     355.6

Shareowners' equity    2,090.8     1,795.5     1,531.3     1,349.8   1,293.4

Earnings (loss) per
  common share           $3.33       $2.55       $2.00       $1.36    $(2.25)

Dividends per
  common share            0.78        0.74        0.72        0.70      0.69	

Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 Management's discussion and analysis of financial condition and results of operations is included as Financial Review and Management Analysis in Exhibit 13 - the Annual Report to Shareowners for 1996 and is incorporated by reference in this Form 10-K Annual Report.
Safe Harbor Statement
Information provided by the company in this 1996 Annual Report on Form 10-K, in other such reports, in press releases and in statements made by employees in oral discussions may constitute or contain "forward-looking statements" as that term is defined in the Private Securities Litigation Reform Act of 1995 or by the Securities and Exchange Commission in its rules, regulations and releases. Forward-looking statements by their nature involve risk and uncertainty.
The company cautions investors that forward-looking statements are not guarantees of future performance. A variety of factors could cause business conditions and actual results to differ materially from expected results contained in forward- looking statements. The company includes among those factors the following: changes in the rate of economic growth in the United States and in other major international economies, such as Germany; impacts of unusual items resulting from ongoing evaluations of organizational structures, business strategies and acquisitions and dispositions; significant changes in trade, monetary and fiscal policies worldwide; currency fluctuations among the U.S. dollar and other currencies; demand for company products; distributor inventory levels; performance issues with key suppliers and subcontractors; failure to achieve the company's productivity targets; costs and effects of unanticipated legal and administrative proceedings; and, competitor actions, such as unanticipated pricing actions or product and cost reduction strategies.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following financial statements and supplementary financial information included in the accompanying Annual Report to Shareowners for 1996 are incorporated by reference in this Form 10-K Annual Report:
(a) The consolidated financial statements and the report thereon of Price Waterhouse LLP dated February 4, 1997, are included as Exhibit 13 - the Annual Report to Shareowners (excluding the Financial Review and Management Analysis) for 1996.
(b) The unaudited quarterly financial data for the two-year period ended December 31, 1996, is as follows (in millions except per share amounts):

                                                                 Earnings
                                                                      per
                       Net      Cost of   Operating        Net     common
1996                 sales   goods sold      income   earnings      share

First quarter     $1,604.9     $1,208.8      $150.6     $ 74.5      $0.70
Second quarter     1,761.9      1,338.0       176.3       92.3       0.86
Third quarter      1,595.8      1,206.7       148.7       81.9       0.76
Fourth quarter     1,740.3      1,276.4       207.9      109.3       1.01
  Year 1996       $6,702.9     $5,029.9      $683.5     $358.0      $3.33

1995

First quarter     $1,185.6     $  893.1      $ 89.2    $  46.3      $0.44
Second quarter     1,392.1      1,051.0       118.7       66.6       0.63
Third quarter      1,521.3      1,163.2       119.1       61.8       0.58
Fourth quarter     1,630.0      1,202.9       170.0       95.6       0.90
  Year 1995       $5,729.0     $4,310.2      $497.0     $270.3      $2.55	

o The reductions in LIFO inventory quantities increased net earnings per share by $0.01 and $0.02 in the second and fourth quarters of 1996, respectively, and $0.02 in the fourth quarter of 1995.
o The first quarter of 1995 does not include the results of Clark Equipment Company (see Note 2 to the Consolidated Financial Statements included in the company's Annual Report to Shareowners for 1996, incorporated by reference in this Form 10-K Annual Report).
Item 9. CHANGES IN AND DISAGREEMENTS WITH INDEPENDENT ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by Item 10 is (i) incorporated by reference in this Form 10-K Annual Report from pages 1 through 5, 17 and 18 of the company's definitive proxy statement for the Annual Meeting of Shareholders to be held on April 25, 1997, and (ii) included after Item 4 in Part I of this Form 10-K Annual Report.
Item 11. EXECUTIVE COMPENSATION
 Information on executive compensation is incorporated by reference in this Form 10-K Annual Report from pages 7 through 17 of the company's definitive proxy statement for the Annual Meeting of Shareholders to be held on April 25, 1997.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
 Information on security ownership of directors and nominees, directors and officers as a group and certain beneficial owners is incorporated by reference in this Form 10-K Annual Report on pages 4 and 5 of the company's definitive proxy statement for the Annual Meeting of Shareholders to be held on April 25, 1997.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information required by Item 13 is incorporated by reference in this Form 10-K Annual Report from page 17 of the company's definitive proxy statement for the Annual Meeting of Shareholders to be held on April 25, 1997.
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) 1. and 2. Financial statements and financial statement schedules The financial statements, together with the report thereon of Price Waterhouse LLP dated February 4, 1997, included as Exhibit 13 (excluding Financial Review and Management Analysis) and the unaudited quarterly financial data included in Part II Item 8(b) are incorporated by reference in this Form 10-K Annual Report. The financial statement schedule listed in the accompanying index should be read in conjunction with the financial statements in such Annual Report to Shareowners for 1996.
Separate financial statements for all 50 percent or less owned companies, accounted for by the equity method have been omitted because no individual entity constitutes a significant subsidiary.
3. Exhibits

                     The exhibits listed on the accompanying
                 index to exhibits are filed as part of this Form
                 10-K Annual Report.

(b)              Reports on Form 8-K
                 None.	

INGERSOLL-RAND COMPANY
INDEX TO FINANCIAL STATEMENTS
AND FINANCIAL STATEMENT SCHEDULES
 (Item 14 (a) 1 and 2)
Form
10-K

Consolidated Financial Statements:
  Report of independent accountants                          *
  Consolidated balance sheet at
    December 31, 1996 and 1995                               *
  For the years ended December 31, 1996, 1995
    and 1994:
    Consolidated statement of income                         *
    Consolidated statement of shareowners'
      equity                                                 *
    Consolidated statement of cash flows                     *
  Notes to consolidated financial statements                 *
Selected unaudited quarterly financial data                 **

Financial Statement Schedule:
  Report of independent accountants on
    financial statement schedule                     See below
  Consolidated schedule for the years ended
    December 31, 1996, 1995 and 1994:
    Schedule II -- Valuation and Qualifying
      Accounts                                       See below	

* See Exhibit 13 - Ingersoll-Rand Company Annual Report to Shareowners for 1996.
** See Item 8 - Financial Statements and Supplementary Data. Financial statement schedules not included in this Form 10-K Annual Report have been omitted because they are not applicable or the required information is shown in the financial statements or notes thereto.
Financial statements of the company's 50 percent or less owned companies, are omitted because individually they do not meet the significant subsidiary test of Rule 3-09 of Regulation S-X.
REPORT OF INDEPENDENT ACCOUNTANTS ON
FINANCIAL STATEMENT SCHEDULE
To the Board of Directors of Ingersoll-Rand Company:
Our audits of the consolidated financial statements referred to in our report dated February 4, 1997, which is included as part of Exhibit 13 - the Annual Report to Shareowners for 1996 of Ingersoll-Rand Company, (which report and consolidated financial statements are incorporated by reference in this Annual Report on Form 10-K), also included an audit of the Financial Statement Schedule listed in Item 14(a) of this Form 10-K. In our opinion, this Financial Statement Schedule presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements.

/S/ Price Waterhouse LLP
PRICE WATERHOUSE LLP
Morristown, New Jersey
February 4, 1997	

CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus constituting part of the Registration Statement on Form S-3 (No. 33-60249) and to the incorporation by reference in the Registration Statements on Form S-8 (No. 333-19445, No. 333- 00829, No. 33-35229, No. 2-98258 and Post-Effective Amendment No. 4 to No. 2-64708) of Ingersoll-Rand Company of our report dated February 4, 1997, which is included as part of Exhibit 13 - the Annual Report to Shareowners for 1996, which is incorporated in this Annual Report on Form 10-K. We also consent to the incorporation by reference of our report on the Financial Statement Schedule, which appears on this page.

/S/ Price Waterhouse LLP
PRICE WATERHOUSE LLP
Morristown, New Jersey
March 26, 1997	

SCHEDULE II
INGERSOLL-RAND COMPANY
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 and 1994
 (Amounts in millions)

                                 Additions
                                charged to
                    Balance at   costs and               Balance
                     beginning    expenses  Deductions    at end
Description            of year         (*)        (**)   of year

1996
Doubtful accounts       $38.3       $ 8.6       $12.6      $34.3

1995
Doubtful accounts       $25.9       $17.8       $ 5.4      $38.3

1994
Doubtful accounts       $22.1       $12.6       $ 8.8      $25.9	

(*) "Additions" include foreign currency translation.
(**) "Deductions" include accounts and advances written off, less recoveries.
INGERSOLL-RAND COMPANY
INDEX TO EXHIBITS
 (Item 14(a))

Description
2 Agreement and Plan of Merger, dated as of April 9, 1995 by and among Ingersoll-Rand Company, CEC Acquisition Corp. and Clark Equipment Company (Incorporated by reference from Amendment No. 2 to Schedule 14D-1 with respect to the tender offer by CEC Acquisition Corp., a wholly-owned subsidiary of Ingersoll-Rand Company, for shares of Clark Equipment Company.)
3 (i) Amendment to Restated Certificate of Incorporation of Ingersoll-Rand Company filed May 28, 1992. Incorporated by reference to Form 10-K of Ingersoll-Rand Company for Fiscal Year Ended December 31, 1993. (See pages 30-32 of the 1993 Form 10-K).
3 (ii) Restated Certificate of Incorporation of Ingersoll-Rand Company as amended through May 28, 1992. Incorporated by reference to Form 10-K of Ingersoll-Rand Company for Fiscal Year Ended December 31, 1993. (See pages 33-60 of the 1993 Form 10-K).
3 (iii) By-Laws of Ingersoll-Rand Company, as amended through September 4, 1996. (Filed herewith).
4 (i) Rights Agreement, dated as of December 7, 1988, as amended by Amendment No. 1 thereto dated as of December 7, 1994. Incorporated by reference from Form 8-A of Ingersoll- Rand Company filed on December 12, 1988, and Form 8-A/A of Ingersoll-Rand Company filed December 15, 1994.
4 (ii) Indenture, dated as of August 1, 1996 between Ingersoll-Rand Company and the Bank of New York, as Trustee, as supplemented. (Incorporated by reference to Exhibits 4.1, 4.2 and 4.3 of the company's Form S-3 Registration Statement No. 33-39474).
4 (iii) Ingersoll-Rand Company is a party 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 and its subsidiaries on a consolidated basis. Pursuant to paragraph 4(iii)(A) of Item 601(b) of Regulation S-K, Ingersoll-Rand Company agrees to furnish a copy of such instruments to the Securities and Exchange Commission upon request.
10 (iii) The following exhibits constitute management contracts or compensatory plans or arrangements required by Item 601 of Regulation S-K.
10 (iii) (a) 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. Incorporated by reference to Form 10-K of Ingersoll-Rand Company for Fiscal Year Ended December 31, 1993. (See pages 78-92 of the 1993 Form 10-K).
10 (iii) (b) Ingersoll-Rand Company Directors Deferred Compensation and Stock Award Plan. (Filed herewith).
10 (iii) (c) Forms of Contingent Compensation Agreements with Vice Presidents and/or Group Presidents of Ingersoll-Rand Company. (Filed herewith).
10 (iii) (d) Description of Bonus Arrangements for Chairman, President and Staff Officers. Incorporated by reference to Form 10-K of Ingersoll-Rand Company for Fiscal Year Ended December 31, 1993. (See page 100 of the 1993 Form 10-K).
10 (iii) (e) Form of Change of Control Agreement with Chairman and Chief Executive Officer of Ingersoll-Rand Company. Incorporated by reference to Form 10-K of Ingersoll-Rand Company for Fiscal Year Ended December 31, 1995. (See pages 48-64 of the 1995 Form 10-K).
10 (iii) (f) Form of Change of Control Agreement with selected executive officers other than Chairman of Ingersoll-Rand Company. Incorporated by reference to Form 10-K of Ingersoll-Rand Company for Fiscal Year Ended December 31, 1995. (See pages 65-84 of the 1995 Form 10-K).
10 (iii) (g) (1) Executive Supplementary Retirement Agreement for selected executive officers. Incorporated by reference to Form 10-K of Ingersoll-Rand Company for Fiscal Year Ended December 31, 1993. (See pages 127-132 of the 1993 Form 10-K).
10 (iii) (g) (2) Executive Supplementary Retirement Agreement for selected executive officers. (Filed herewith).
10 (iii) (h) Incentive Stock Plan of 1985 of Ingersoll- Rand Company. Incorporated by reference to Form 10-K of Ingersoll-Rand Company for Fiscal Year Ended December 31, 1993. (See pages 133-151 of the 1993 Form 10-K).
10 (iii) (i) Forms of insurance and related letter agreements with certain executive officers. Incorporated by reference to Form 10-K of Ingersoll-Rand Company for Fiscal Year Ended December 31, 1993. (See pages 152-160 of the 1993 Form 10-K).
10 (iii) (j) Incentive Stock Plan of 1990 of Ingersoll- Rand Company. Incorporated by reference to Form 10-K of Ingersoll-Rand Company for Fiscal Year Ended December 31, 1993. (See pages 161-182 of the 1993 Form 10-K).
10 (iii) (k) Restated Supplemental Pension Plan. Incorporated by reference to Form 10-K of Ingersoll-Rand Company for Fiscal Year Ended December 31, 1995. (See pages 85-91 of the 1995 Form 10-K).
10 (iii) (l) Supplemental Stock and Savings Investment Plan effective as of January 1, 1989. Incorporated by reference to Form 10-K of Ingersoll-Rand Company for Fiscal Year Ended December 31, 1993. (See pages 189-198 of the 1993 Form 10-K).
10 (iii) (m) Supplemental Retirement Account Plan effective as of January 1, 1989. Incorporated by reference to Form 10-K of Ingersoll-Rand Company for Fiscal Year Ended December 31, 1993. (See pages 199-206 of the 1993 Form 10-K).
10 (iii) (n) Incentive Stock Plan of 1995 of Ingersoll- Rand Company. Incorporated by reference to the Notice of 1995 Annual Meeting of Shareholders and Proxy Statement dated March 15, 1995. (See Appendix A of the Proxy Statement dated March 15, 1995).
10 (iii) (o) Senior Executive Performance Plan. Incorporated by reference to the Notice of 1995 Annual Meeting of Shareholders and Proxy Statement dated March 15, 1995. (See Appendix B of the Proxy Statement dated March 15, 1995).
10 (iii) (p) Elected Officers Supplemental Plan. Incorporated by reference to Form 10-K of Ingersoll-Rand Company for Fiscal Year Ended December 31, 1995. (See pages 92-108 of the 1995 Form 10-K).
10 (iii) (q) Selected Executive Officer Employment Agreement. Incorporated by reference to Form 10-K of Ingersoll-Rand Company for Fiscal Year Ended December 31, 1995. (See pages 109-111 of the 1995 Form 10-K).
10 (iii) (r) Executive Deferred Compensation and Stock Award Plan. (Filed herewith).
10 (iii) (s) Senior Vice President and Chief Financial Officer Employment Agreement. (Filed herewith).
11 (i) Computation of Primary Earnings Per Share. (Filed herewith).
11 (ii) Computation of Fully Diluted Earnings Per Share. (Filed herewith).
12 Computations of Ratios of Earnings to Fixed Charges. (Filed herewith).
13 Ingersoll-Rand Company Annual Report to Shareowners for 1996. (Not deemed to be filed as part of this report except to the extent incorporated by reference).(Filed herewith).
18 Letter dated August 11, 1995 from Price Waterhouse LLP regarding change in accounting method. Incorporated by reference to Form 10-Q of Ingersoll-Rand Company for the quarterly period ended June 30, 1995 reported under Item 6, Exhibits.
21 List of Subsidiaries of Ingersoll-Rand Company. (Filed herewith).
27 Financial Data Schedule.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
INGERSOLL-RAND COMPANY
 (Registrant)

By      /S/  Frank B. O'Brien

Date    March 26, 1997	

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

      Signature                   Title                 Date

                           Chairman, President,
                         Chief Executive Officer
                         and Director (Principal
/S/ James E. Perrella      Executive Officer)     March 26, 1997
(James E. Perrella)

                         Senior Vice President
                         Chief Financial Officer
                          (Principal Financial
/S/ Frank B. O'Brien            Officer)          March 26, 1997
 (Frank B. O'Brien)

                         Vice President and
                              Comptroller
                         (Principal Accounting
/S/ Gerard V. Geraghty          Officer)          March 26, 1997
 (Gerard V. Geraghty)

/S/ Theodore H. Black           Director          March 26, 1997
(Theodore H. Black)

/S/ Joseph P. Flannery          Director          March 26, 1997
(Joseph P. Flannery)

/S/ Constance J. Horner         Director          March 26, 1997
 (Constance J. Horner)

/S/ H. William Lichtenberger    Director          March 26, 1997
(H. William Lichtenberger)

/S/ Theodore E. Martin          Director          March 26, 1997
 (Theodore E. Martin)

/S/ Cedric E. Ritchie           Director          March 26, 1997
(Cedric E. Ritchie)

/S/ Orin R. Smith               Director          March 26, 1997
(Orin R. Smith)

/S/ Richard J. Swift            Director          March 26, 1997
(Richard J. Swift)

/S/ Frank Travis                Director          March 26, 1997
(J. Frank Travis)

/S/ Tony L. White               Director          March 26, 1997
(Tony L. White)	

EXHIBIT 3(iii)
Page 1 of 17
BY-LAWS
of
INGERSOLL-RAND COMPANY
As amended through September 4, 1996
Page 2 of 17
BY-LAWS
of
INGERSOLL-RAND COMPANY
ARTICLE I.
STOCKHOLDERS' MEETINGS
Section 1. Annual Meeting: The annual meeting of the Stockholders of the Company shall be held on the fourth Thursday of April, in each year, or such other date as the Board of Directors may determine, at such hour and at such place within or without the State of New Jersey as may be fixed by the Board of Directors and stated in the notice of the meeting, for the election of Directors of the Company and for the transaction of such other business as may come before it in accordance with the provisions of these By-Laws.
At any such annual meeting of Stockholders, only such business shall be conducted as shall have been brought before the meeting
(a) by or at the direction of the Board of Directors, or (b) by any Stockholder entitled to vote at such meeting who complies with the procedures set forth in this Section 1. Any Stockholder entitled to vote at such meeting may propose business to be included in the agenda of such meeting only if written notice of such Stockholder's intent is given to the Secretary of the Company, either by personal delivery or by United States mail, postage prepaid, not later than 90 days in advance of the anniversary of the immediately preceding annual meeting or if the date of the annual meeting of Stockholders occurs more than 30 days before or 60 days after the anniversary of such immediately preceding annual meeting, not later than the close of business on the seventh day following the date on which notice of such meeting is given to Stockholders. A Stockholder's notice to the Secretary shall set forth in writing as to each matter such Stockholder proposes to bring before the annual meeting (a) a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting, (b) the name and address, as they
Page 3 of 17
appear on the Company's books, of the Stockholder proposing such business, (c) the class and number of shares of the Company which are beneficially owned by the Stockholder and (d) any material interest of the Stockholder in such business. Notwithstanding anything in these By-Laws to the contrary, no business shall be conducted at an annual meeting except in accordance with the procedures set forth in this Section 1. The officer of the Company or other person presiding at the annual meeting shall, if the facts so warrant, determine and declare to the meeting that business was not properly brought before the meeting in accordance with the provisions of this Section 1, and, if such officer or other person should so determine, he or she shall so declare to the meeting and any such business not properly brought before the meeting shall not be transacted.
Section 2. Special Meetings: Special meetings of the Stockholders may be held at the principal office of the Company in the State of New Jersey or at such other place within or without said State as may from time to time be designated by the Board of Directors and stated in the notice of the meeting, whenever called in writing by the Chairman of the Board, the Vice-Chairman or the President or by vote of a majority of the Board of Directors. At any special meeting of the Stockholders, only such business shall be conducted as shall have been brought before the meeting by or at the direction of the Board of Directors and such business shall be confined to the object or objects stated in the notice thereof.
Section 3. Quorum: Unless otherwise provided in the Certificate of Incorporation of this Company or by statute, the presence in person or by proxy of the holders of record of the shares entitled to cast a majority of the votes at any meeting of the Stockholders shall constitute a quorum at such meeting. Whenever the holders of any class or series of shares are entitled to vote separately on a specified item of business, the presence in person or by proxy of the holders of record of the shares of such class or series entitled to cast a majority of the votes thereon shall constitute a quorum for the transaction of such specified item of business.
Page 4 of 17
If the holders of the amount of stock necessary to constitute a quorum shall fail to attend in person or by proxy at the time and place fixed by these By-Laws for an annual meeting, or as fixed by notice, as above provided for a special meeting, a majority in interest of the Stockholders present, in person or by proxy, may adjourn from time to time without notice other than announcement at the meeting until the holders of the amount of stock requisite to constitute a quorum shall attend. At any such adjourned meeting at which a quorum shall be present, any business may be transacted which might have been transacted at the meeting as originally notified.
Section 4. Organization: The Chairman of the Board shall call meetings of the Stockholders to order and shall act as Chairman of such meetings. In the absence of the Chairman of the Board, the Vice-Chairman or the President, or in his absence an Executive Vice President shall preside: and in the absence of any of the foregoing officers, the Stockholders present, or the Board of Directors, may appoint any Stockholder to act as Chairman of any meeting.
The Secretary of the Company shall act as Secretary of all meetings of the Stockholders. In the absence of the Secretary at any meeting of the Stockholders, the presiding officer may appoint any person to act as Secretary of the Meeting.
Section 5. Voting: At each meeting of the Stockholders, every Stockholder shall be entitled to vote in person or by proxy appointed by instrument in writing subscribed by such Stockholder or by his duly authorized attorney and delivered to the inspectors at the meeting. The votes for Directors and, upon demand of any Stockholder, the votes upon any question before the meeting shall be by ballot.
Section 6. Inspectors: At each annual stated meeting of the Stockholders for the election of Directors, the presiding officer of such meeting shall appoint two persons to act as inspectors, who shall be sworn to perform their duties in accordance with the laws of the State of New Jersey, and who shall return a formal certificate.
Page 5 of 17
Section 7. Nominations of Directors: Nominations for the election of Directors may be made by the Board of Directors or any Stockholder entitled to vote for the election of Directors. Any Stockholder entitled to vote for the election of Directors at a meeting or to express a consent in writing without a meeting may nominate a person or persons for election as a Director only if written notice of such Stockholder's intent to make such nomination is given to the Secretary of the Company, either by personal delivery or United States mail, postage prepaid, not later than (a) with respect to an election to be held at an annual meeting of Stockholders, 90 days in advance of the anniversary of the immediately preceding annual meeting or if the date of the annual meeting of Stockholders occurs more than 30 days before or 60 days after the anniversary of such immediately preceding annual meeting, not later than the close of business on the seventh day following the date on which notice of such meeting is given to Stockholders and (b) in the case of any Stockholder who wishes to nominate a person or persons for election as a Director pursuant to consents in writing by Stockholders without a meeting (to the extent election by such consents is permitted under applicable law and the Company's Certificate of Incorporation), 60 days in advance of the date on which materials soliciting such consents are first mailed to Stockholders or, if no such materials are required to be mailed under applicable law, 60 days in advance of the date on which the first such consent in writing is executed. Each such notice shall set forth the name and address of the Stockholder who intends to make the nomination and of the person or persons to be nominated for election as a Director, a representation that the Stockholder is a holder of record of stock of the Company entitled to vote at such meeting or to express such consent in writing and intends to appear in person or by proxy at the meeting to nominate the person or persons specified in the notice or to execute such a consent in writing to elect such person or persons as a Director, a description of all arrangements or understandings between the Stockholder and each nominee and any other person or persons (naming such person or persons) pursuant to which the nomination or nominations for election as a Director are to be made by the Stockholder, such other information regarding each nominee proposed by such Stockholder as would have been required to be included in a proxy statement filed pursuant to the proxy rules of the Securities and Exchange Commission if
Page 6 of 17
such nominee had been nominated, or was intended to be nominated, for election as a Director by the Board of Directors, and the consent of each nominee to serve as a Director of the Company if so elected. The Board of Directors may refuse to acknowledge the nomination of any person not made in compliance with the foregoing procedures.
ARTICLE II.
BOARD OF DIRECTORS
Section 1. Number and Election: The business and property of the Company shall be managed by a Board of eleven Directors. The number of Directors may be altered from time to time by the alteration of these By-Laws, provided that, as required by the Restated Certificate of Incorporation, the Board shall never consist of less than eight members.
As provided in the Restated Certificate of Incorporation, the Board of Directors shall be divided into three classes, two consisting of four Directors each and the remaining consisting of three Directors. At each annual election, the successors to the Directors of the class whose terms shall expire in that year shall be elected to hold office for a term of three years, so that the term of office of one class of Directors shall expire in each year. Each Director shall serve for the term for which such Director shall have been elected and until such Director's successor shall have been duly elected.
Notwithstanding the foregoing provisions of this Section 1, if and as long as the Restated Certificate of Incorporation provides for the election of additional Directors by class or classes of stock, such additional Directors shall be elected in the manner and for the term provided in the Restated Certificate of Incorporation.
Page 7 of 17
Section 2. Vacancies: Subject to any requirements of the Certificate of Incorporation with respect to the filling of vacancies among additional Directors elected by a class or classes of stock, if the office of any Director becomes vacant, the remaining Directors may, by a majority vote, elect a successor who shall hold office until the next succeeding annual meeting of the Stockholders and until his successor shall have been elected and qualified.
Section 3. Place of Meetings: The Directors may hold their meetings and may have an office and keep the books of the Company (except as otherwise may be provided for by law) in such place or places in the State of New Jersey or outside of the State of New Jersey as the Board from time to time may determine.
Section 4. Regular Meetings: Regular meetings of the Board of Directors shall be held at such times and intervals as the Board may from time to time determine. It shall be the duty of the Secretary to send a notice to each of the Directors at his address as it appears on the books of the Company at least two
(2) days before the holding of each regular meeting, but a failure of the Secretary to send such notice shall not invalidate any proceedings of the said Board.
Section 5. Special Meetings: Special meetings of the Board of Directors shall be held whenever called by the Chairman of the Board or the Vice-Chairman or the President, or by one-third (1/3) of the Directors for the time being in office.
The Secretary shall give notice of each special meeting by mailing the same at least two (2) days before the meeting, or by telegraphing the same at least one (1) day before the meeting to each Director, but such notice may be waived by any Director. At any meeting at which every Director shall be present, even without notice, any business may be transacted.
Page 8 of 17
Section 6. Quorum: Six (6) members of the Board of Directors, but not less than one-third (1/3) of the entire Board, shall constitute a quorum for the transaction of business; but if at any meeting of the Board there be less than a quorum present, those present may adjourn the meeting from time to time. At meetings of the Board of Directors, business shall be transacted in such order as from time to time the Board may determine.
Section 7. Director Emeritus: The Board of Directors may appoint a person who has served with distinction and who has retired from the Board upon reaching mandatory retirement as provided herein to the position of Director Emeritus. A Director Emeritus shall be invited to attend all meetings of the Board and shall receive the same compensation as that paid to outside Directors. While serving as a Director Emeritus, he shall not be considered a retired director for pension benefit purposes; however, any pension benefits to which he may be entitled will commence upon his cessation of service as a Director Emeritus. He shall be appointed by the Board for a one-year term and may be reappointed from time to time by action of the Board. While the presence of a Director Emeritus at a Board meeting will not be considered for quorum or voting purposes, nevertheless, his advice and counsel on all matters to come before the Board is invited.
ARTICLE III.
COMMITTEES
The Board of Directors may appoint from their number such standing committees as they deem best and to the extent permitted by statute may invest them with such of their own powers as they may deem advisable, subject to such conditions as they may prescribe.
Page 9 of 17
ARTICLE IV.
OFFICERS
Section 1. Officers: The executive officers of the Company shall include a Chairman of the Board of Directors, President, Treasurer and Secretary and may also include one or more Vice-Chairmen, Executive Vice Presidents, Senior Vice Presidents, Vice Presidents, and such other officers as the Board of Directors shall deem necessary or otherwise appropriate to elect. The Chief Executive Officer may hold the title of Chairman of the Board, or President, or both titles.
The Board of Directors may appoint such other officers and advisory boards as they shall deem necessary, who shall have such authority and who shall perform such duties as from time to time may be prescribed by the Board of Directors.
Any executive officer elected by the Board of Directors may be removed at any time with or without cause by the affirmative vote of two-thirds (2/3) of the entire Board of Directors.
Any other appointed or elected officer, agent, employee or member of an advisory board may be removed at any time with or without cause by affirmative vote of the Directors or by the Committee or superior officer upon whom such power of removal may be conferred.
Section 2. Powers and Duties: The Chairman of the Board shall preside at all meetings of the Board of Directors and Stockholders. Subject to designation by the Board of Directors he shall be the Chief Executive Officer of the Company, and he shall have responsibility for the active management of the business of the Company. He may sign and execute contracts and agreements authorized by the Board, delegate other officers to do so and may, from time to time, require from other officers and from employees of the Company opinions, reports or information
Page 10 of 17
upon any matter specified by him or generally upon the interests or affairs of the Company under the supervision of such officers or employees respectively. He may appoint and remove assistant officers and other employees and agents. He may exercise any other powers conferred upon him by the Board of Directors.
Other officers shall have all the usual and customary powers and shall perform all the usual and customary duties incident to their respective offices and, in addition thereto and to any duties specifically prescribed by any subsequent provisions of these By-Laws, they shall respectively perform such other general or special duties as may from time to time be assigned to them by the Board of Directors or the Chief Executive Officer.
The Board of Directors may appoint an officer to act as Chief Financial Officer of the Company, who shall have responsibility for the financial affairs of the Company. He will be responsible for the preparation of the financial statements of the Company, and such other duties as from time to time may be assigned to him by the Board of Directors or the Chief Executive Officer. The Board of Directors may appoint an officer to act as General Counsel of the Company, who shall have responsibility for the legal affairs of the Company. The Board of Directors may appoint the Comptroller to be the principal accounting and financial control officer of the Company.
Securities of other corporations or interests in other entities held by the Company may be voted by the Chairman of the Board or by any other person designated by the Board of Directors or Chief Executive Officer.
Section 3. Term: The executive officers elected by the Board of Directors shall hold office for one year or until their successors are elected and qualify. The Chairman, and any Vice-Chairman, shall be elected by the Directors from among their own number. One person may hold more than one office.
Page 11 of 17
ARTICLE V.
BILLS, NOTES, AND CHECKS
All bills, notes, checks or other negotiable instruments of the Company shall be made in the name of the Company and shall be signed by two executive officers or by any two persons duly authorized by the Board of Directors. No officers or agents of the Company, either singly or together shall have power to make any bill, note or check or other negotiable instrument in the name of the Company to bind the Company thereby, except as in this Article prescribed and provided.
No officer or agent of this Company shall have power to endorse in the name, for or in behalf of the Company, any note, bill of exchange, draft, check or other written instrument for the payment of money, save only for purposes of the discount or the collection of the said instrument, unless thereunto duly and specially authorized by the vote of the Directors of this Company entered on the minutes of said Board.
ARTICLE VI.
CAPITAL STOCK
Section 1. Certificates for Shares: The certificates for shares of the capital stock of the Company shall be in such form not inconsistent with the Certificate of Incorporation as shall be prepared or be approved by the Board of Directors. The certificates shall be signed by or bear thereon the facsimile signature of the Chairman, the Vice-Chairman, President, or an Executive Vice President, or a Vice President, and also be signed by or bear thereon the facsimile signature of the Treasurer or an Assistant Treasurer. The certificates shall be consecutively numbered. The name of the person owning the shares represented thereby, with the number of such shares and the date of issue, shall be entered in the Company's books.
Page 12 of 17
Section 2. Transfers: Shares of the capital stock of the Company shall be transferred only on the books of the Company by the holder thereof in person or by his attorney, upon surrender of the certificate or certificates properly endorsed. The Board of Directors shall have power and authority to make all such rules and regulations as it may deem expedient concerning the issue, transfer and registration of certificates for shares of the capital stock of the Company. The Board of Directors may appoint Transfer Agents and Stock Registrars and may require all stock certificates to bear the signatures of such a Transfer Agent and of such a Registrar of Transfers, or any of them.
The stock transfer books may be closed for such period next preceding any Stockholders' meeting, or the payment of dividends as the Board of Directors may from time to time determine, and during such period no stock shall be transferable.
The Board of Directors may also fix in advance a date not more than 60 nor less than 10 days preceding the date of any meeting of Stockholders, nor more than 60 days preceding the date for the payment of any dividend on the Common Stock or any series of Preference Stock, or the date for allotment of rights, or the date when any change or conversion or exchange of capital stock shall go into effect, as a record date for the determination of the Stockholders entitled to notice of and to vote at any such meeting, or entitled to receive payment of any such dividend, or any such allotment of rights, or to exercise the rights in respect to any such change, conversion or exchange of capital stock. In such cases only Stockholders of record on the date so fixed shall be entitled to such notice of and vote at such meeting, or to receive payment of such dividend, or allotment of rights, or to exercise such rights, as the case may be, and notwithstanding any transfer of any stock on the books of the Company after any such record date fixed as aforesaid.
Section 3. Lost Stock Certificates: In case any stock certificate shall be lost, the Board of Directors may order a new certificate to be issued in its place upon receiving such proof of loss and such security therefor as may be satisfactory to it.
Page 13 of 17
ARTICLE VII.
THE CORPORATE SEAL
The Corporate Seal of the Company shall consist of a circle formed by the words "Ingersoll-Rand Company" and the letters "N.
J." with the words "Corporate Seal" and the figures "1905" in the center.
The Seal shall be attested by the signature of the Secretary or the Assistant Secretary or of the Treasurer or the Assistant Treasurer.
When authorized by the Board of Directors, the Secretary shall affix the Seal, or cause it to be affixed, to all documents executed on behalf of the Company. The Board of Directors may also specifically or generally authorize other persons to affix the Seal.
ARTICLE VIII.
REACQUIRED SHARES
When shares of the Company are reacquired by the Company by purchase, by redemption or by their conversion into other shares of the Company, such shares shall be treated by the Company as treasury shares, unless and to the extent the Board of Directors determines at any time that any such shares shall be cancelled.
Page 14 of 17
ARTICLE IX.
INDEMNIFICATION OF DIRECTORS, OFFICERS AND OTHERS
Section 1. Right to Indemnification: Each person who was or is made a party or is threatened to be made a party to or is involved in any pending, threatened or completed civil, criminal, administrative or arbitrative action, suit or proceeding, or any appeal therein or any inquiry or investigation which could lead to such action, suit or proceeding ("proceeding"), by reason of his or her being or having been a Director or officer of the Company or of any constituent corporation absorbed by the Company in a consolidation or merger, or by reason of his or her being or having been a Director, officer, trustee, employee or agent of any other corporation (domestic or foreign) or of any partnership, joint venture, sole proprietorship, trust, employee benefit plan or other enterprise (whether or not for profit), serving as such at the request of the Company or of any such constituent corporation, or the legal representative of any such Director, officer, trustee, employee or agent, shall be indemnified and held harmless by the Company to the fullest extent permitted by the New Jersey Business Corporation Act, as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Company to provide broader indemnification rights than said Act permitted prior to such amendment), from and against any and all reasonable costs, disbursements and attorneys' fees, and any and all amounts paid or incurred in satisfaction of settlements, judgments, fines and penalties, incurred or suffered in connection with any such proceeding, and such indemnification shall continue as to a person who has ceased to be a Director, officer, trustee, employee or agent and shall inure to the benefit of his or her heirs, executors, administrators and assigns; provided, however, that there shall be no indemnification hereunder with respect to any settlement or other nonadjudicated disposition of any proceeding unless the Company has given its prior consent to such settlement or
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disposition. The right to indemnification conferred in this
Section 1 shall be a contract right and shall include the right to be paid by the Company the expenses incurred in connection with any proceeding in advance of the final disposition of such proceeding as authorized by the Board of Directors; provided, however, that, if the New Jersey Business Corporation Act so requires, the payment of such expenses incurred by a Director or officer in his or her capacity as a Director or officer in advance of the final disposition of a proceeding shall be made only upon receipt by the Company of an undertaking, by or on behalf of such Director or officer, to repay all amounts so advanced if it shall ultimately be determined that such Director or officer is not entitled to be indemnified under this Section 1 or otherwise. The Company may, by action of its Board of Directors, provide for indemnification and advancement of expenses to employees and agents of the Company with the same scope and effect as the foregoing indemnification of Directors and officers.
Section 2. Right of Claimant to Bring Suit: If a claim under
Section 1 of this Article IX is not paid in full by the Company within thirty days after a written request has been received by the Company, the claimant may at any time thereafter apply to a court for an award of indemnification by the Company for the unpaid amount of the claim and, if successful on the merits or otherwise in connection with any proceeding, or in the defense of any claim, issue or matter therein, the claimant shall be entitled also to be paid by the Company any and all expenses incurred or suffered in connection with such proceeding. It shall be a defense to any such action (other than an action brought to enforce a claim for the advancement of expenses incurred in connection with any proceeding where the required undertaking, if any, has been tendered to the Company) that the claimant has not met the standard of conduct which makes it permissible under the New Jersey Business Corporation Act for the Company to indemnify the claimant for the amount claimed, but the burden of proving such defense shall be on the Company. Neither the failure of the Company (including its Board of Directors, independent legal counsel or its stockholders) to have made a determination prior to the commencement of such proceeding that indemnification of the claimant is proper in the circumstances because he or she has met the applicable standard of conduct set
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forth in the New Jersey Business Corporation Act, nor an actual determination by the Company (including its Board of Directors, independent legal counsel or its stockholders) that the claimant has not met such applicable standard of conduct, nor the termination of any proceeding by judgment, order, settlement, conviction or upon a plea of nolo contendere or its equivalent, shall be a defense to the action or create a presumption that the claimant has not met the applicable standard of conduct.
Section 3. Non-Exclusivity of Rights: The right to indemnification and advancement of expenses provided by or granted pursuant to this Article IX shall not exclude or be exclusive of any other rights, including the right to be indemnified against any and all reasonable costs, disbursements and attorneys' fees, and any and all amounts paid or incurred in satisfaction of settlements, judgments, fines and penalties incurred or suffered in proceedings by or in the right of the Company, to which any person may be entitled under a certificate of incorporation, by-law, agreement, vote of stockholders, or otherwise, provided that no indemnification shall be made to or on behalf of any person if a judgment or other final adjudication adverse to such person establishes that such person has not met the applicable standard of conduct required to be met under the New Jersey Business Corporation Act.
ARTICLE X.
AMENDMENTS
The Board of Directors may, by a majority vote of the entire Board, make By-Laws and from time to time alter, amend or repeal any By-Law, but any By-Law made by the Board of Directors may be altered or repealed by the Stockholders at any annual or special meeting. Notice of such proposed alteration, amendment or repeal of any By-Law shall be included in the notice of the meeting of the Directors or Stockholders.
Page 17 of 17
ARTICLE XI.
AUDITORS
The Board of Directors may appoint a firm of certified public accountants to audit the books and accounts of the Company for the calendar year in which such appointment is made.

EXHIBIT 10(iii)(b)
Page 1 of 9
Ingersoll-Rand Company
Directors Deferred Compensation and Stock Award Plan
ARTICLE I. Purpose
Ingersoll-Rand Company ("I-R") has established the Directors Deferred Compensation and Stock Award Plan (the "Plan") to enable members of the Board of Directors (the "Board") who are not then I-R employees ("Non-employee Directors") to defer receipt of compensation for their services as Non-employee Directors to later years and to provide part of the compensation for their services as Non-employee Directors in shares of I-R Common Stock ("Shares") which will be deferred.
ARTICLE II. Maintenance of Records
I-R shall maintain a Deferred Compensation Account for each Non- employee Director, which shall be credited in accordance with the terms of this Plan and the elections of each Non-employee Director pursuant to this Plan.
ARTICLE III. Deferral of Stock Awards and Deferral of Fees
(A) Deferred Stock Award Amount
Each Non-employee Director shall receive an annual award on the date of the first Board of Directors meeting after each annual meeting of shareholders in the form of a promise by I-R to deliver 400 Shares ("Share Units"), or such other amount as may from time to time be established by resolution of the Board. Annual awards of Share Units shall be credited to the Deferred Compensation Account of each Non-employee Director and Shares in respect of such Share Units shall be delivered in accordance with the provisions of Article VII hereof. The issuance and delivery of Shares in respect of such Share Units shall be deferred until the Non-employee Director ceases to be a member of the Board.
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(B) Deferred Amounts Upon Termination of the Retirement Plan
The Shares in respect of Share Units credited to the Deferred Compensation Accounts of the Non-employee Directors pursuant to the resolutions adopted by the Board on November 6, 1996, with respect to the elimination of retirement payments to Non-employee Directors shall be delivered in accordance with the provisions of Article VII hereof. The issuance and delivery of such Shares shall be deferred until the Non- employee Director ceases to be a member of the Board.
(C) Election to Defer Fees in Share Units
Any Non-employee Director may elect to defer receipt of all or any portion of the retainer and meeting fees ("Fees") to be earned by such Non-employee Director by indicating his or her election to the Secretary of I-R on an election form supplied by the Secretary ("Deferral Election"). The Director's election must specify (i) the portion of such Fees to be deferred,
(ii) the period for which Fee payments are to be deferred pursuant to such Deferral Election, up to the date a director ceases to be a member of the Board ("Deferral Period") and (iii) the time(s) of payment or delivery. Each Deferral Election is irrevocable with respect to the compensation payable for the Deferral Period to which it applies, except in the event a director ceases to be a member of the Board.
(D) Credit for Deferred Fees and Company Supplemental Contributions
(1) The Deferred Compensation Account will be credited with the number of Share Units equal to the number of Shares, including fractions, which could have been purchased had the amount of the Fees accrued during a Deferral Period, plus Company supplemental contributions equal to 20 percent of the Fees accrued during such Deferral Period, been used to purchase Shares on the date such Fees would have been paid had they not been deferred, at a price equal to the Share Fair Market Value, as defined below, on such date.
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(2) "Share Fair Market Value" shall be the mean of the high and low prices of Shares on the New York Stock Exchange - Composite Tape on the date in question, provided that if no sales of Shares were made on the Exchange on that date, the mean of the high and low prices reported for the preceding day on which sales of Shares were made on the Exchange.
(E) Vesting of Company Matching Contributions
Company supplemental contributions shall vest upon the earlier of either five years from the date of grant or cessation of service on the Board by reason of normal retirement or death.
(F) Advance Notice of Election
Any Deferral Election with respect to Fees to be earned during a calendar year shall be delivered to the Secretary of I-R prior to the beginning of any calendar year or, with respect to a new Director, before the effective date of his or her election to the Board.
Each Non-employee Director who does not provide notice to the Secretary of a Deferral Election in accordance with the preceding sentence will be deemed not to have elected to defer receipt of any Fees (other than amounts automatically deferred).
(G) Duration of Election
A Deferral Election may be made annually for the succeeding calendar year or, at the Non-employee Director's direction, it may continue from year to year unless a written request to modify or terminate that election for a subsequent period is submitted to the Secretary of I-R on or before the date 15 days prior to the beginning of the subsequent calendar year.
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ARTICLE IV. VOTING RIGHTS
Share Units shall not have voting rights.
ARTICLE V. Dividends, Distributions and Adjustments
Whenever a cash dividend or any other distribution is paid with respect to Shares, the Deferred Compensation Account of each Non-employee Director shall be credited with an additional number of Share Units, equal to the number of Shares, including fractional Shares, that could have been purchased had such dividend or other distribution been paid on each Share Unit in the Deferred Compensation Account (on the record date for such dividend or distribution) and the amount of such dividend or value of such other distribution been used to acquire additional Shares at the Share Fair Market Value on the date such dividend or other distribution is paid. The value of any such other distribution on or related to Shares shall, at the option of the Board (or an authorized Committee of the Board), be either determined by the Board or independently established.
The number of Share Units shall be fully adjusted upon the occurrence of any stock split, stock dividend, recapitalization, merger or similar event, and shall be appropriately adjusted for the value (determined in the manner provided above with respect to distributions) of any right, privilege or opportunity provided or offered by I-R to holders of Shares.
ARTICLE VI. Conversion of Deferred Compensation Account Balances
A Non-employee Director's cash balance in the deferred compensation program as of December 31, 1996 will be transferred to an equivalent balance in the Director's Deferred Compensation Account as of January 1, 1997. The Deferred Compensation Account shall be credited with the number of Share Units equal to the number of Shares, including fractions, which could have been purchased with such cash account balance on January 2, 1997, at Share Fair Market Value on such date.
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ARTICLE VII. Delivery
Delivery of Shares equal to the number of Share Units credited to the Deferred Compensation Account will be made to a Non-employee Director in accordance with his or her applicable Deferral Elections or, if no election applies, promptly after the date on which the Non-employee Director ceases to be a member of the Board.
In the case of Shares to be delivered pursuant to a Deferral Election, Shares shall be delivered on the delivery date specified in the Deferral Election. In the case of Shares to be delivered promptly after the date on which a Director ceases to be a member of the Board, Shares shall be delivered as soon as practicable after such date. In any case when Shares are delivered, a cash payment will be made in lieu of delivering a fractional share.
In the event of a Non-employee Director's death, the Shares in respect of Share Units credited to his or her Deferred Compensation Account shall be delivered to the Non-employee Director's estate or beneficiary, as appropriate.
ARTICLE VIII. Authorization and Source of Shares
Shares necessary to meet the obligations of the Plan have been reserved and authorized pursuant to resolutions adopted by the Board on November 6, 1996, and additional Shares shall be reserved and authorized for delivery under the Plan from time to time. These Shares may be provided from newly- issued or treasury Shares.
ARTICLE IX. Alienability
Prior to delivery of Shares by I-R pursuant to Article VII, no Non-employee Director shall have any right to sell, pledge, transfer, assign or hypothecate any Share Units or Shares, or any right to receive any Share Units or Shares, credited to him under this Plan and such Share Units or Shares shall not be subject to execution, attachment, garnishment or similar process.
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ARTICLE X. Non-Employee Director's Rights Unsecured
The right of a Non-employee Director to receive any Shares hereunder shall rank as an unsecured claim against I-R. Assets that may be set aside for I-R's convenience with respect to the Plan shall not in any way be held in trust for, or be subject to any prior claim by, a Non-Employee Director or beneficiary.
ARTICLE XI. Change of Control
(A) For purposes hereof,
(1) "Affiliate" shall mean, when used to indicate a relationship with a specified person, a person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, such specified person.
(2) "Associate" shall mean, when used to indicate a relationship with a specified person, (a) any corporation, partnership, or other organization of which such specified person is an officer or partner,
(b) any trust or other estate in which such specified person has a substantial beneficial interest or as to which such specified person serves as trustee or in a similar fiduciary capacity, (c) any relative or spouse of such specified person, or any relative of such spouse who has the same home as such specified person, or who is a Director or officer of the Company or any of its parents or subsidiaries, and (d) any person who is a director, officer, or partner of such specified person or of any corporation (other than the Company or any wholly-owned subsidiary of the Company), partnership or other entity which is an Affiliate of such specified person.
(3) "Beneficial Owner" shall have the same meaning as such term is defined by Rule 13d-3 under the Securities Exchange Act of 1934 (or any successor provision at the time in effect); provided, however, that any individual, corporation, partnership, group, association, or other person or entity which has the
Page 7 of 9
right to acquire any of the Company's outstanding securities entitled to vote generally in the election of directors at any time in the future, whether such right is contingent or absolute, pursuant to any agreement, arrangement, or understanding or upon exercise of conversion rights, warrants or options, or otherwise, shall be deemed the Beneficial Owner of such securities.
(4) "Change in Control" shall mean the occurrence of either of the following:
(a) any individual, corporation, partnership, group, association or other person or entity, together with its Affiliates and Associates (other than a trustee or other fiduciary holding securities under an employee benefit plan of the company), is or becomes the Beneficial Owner of securities of the Company representing 20 percent or more of the combined voting power of the Company's then outstanding securities entitled to vote generally in the election of directors, unless a majority of the Continuing Directors determines in their sole discretion that, for purposes of this Plan, a Change in Control has not occurred;
(b) the Continuing Directors shall at any time fail to constitute a majority of the members of the Board of Directors; or
(c) any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all, or substantially all, of the assets of the Company, other than any sale, lease, exchange or other transfer to any person or entity where the Company owns, directly or indirectly, at least 80 percent of the outstanding voting securities of such person or entity after any such transfer.
(5) "Continuing Director" shall mean a Director who either was a member of the Board of Directors on January 1, 1997 or who became a member of the Board of Directors subsequent to such date and whose election,
Page 8 of 9
or nomination for election by the Company's shareholders, was Duly Approved by the Continuing Directors of the Board of Directors at the time of such nomination or election, either by a specific vote or by approval of the proxy statement issued by the Company on behalf of the Board of Directors in which such person is named as a nominee for Director, without due objection to such nomination.
(6) "Duly Approved by the Continuing Directors" shall mean an action approved by the vote of at least a majority of the Continuing Directors then on the Board of Directors, except, if the votes of such Continuing Directors in favor of such action would be insufficient to constitute an act of the Board of Directors if a vote by all of its members were to have been taken, then such term shall mean an action approved by the unanimous vote of the Continuing Directors then on the Board of Directors so long as there are at least three Continuing Directors on the Board of Directors at the time of such unanimous vote.
(B) Upon the occurrence of a Change of Control, all deferrals pursuant to the Plan shall immediately terminate and Deferred Compensation Account amounts shall become immediately payable whether or not otherwise vested. Each Non-employee Director's Deferred Compensation Account shall be converted to cash in an amount equal to the highest Fair Market Value of one Share during the 60 days preceding the date on which the Change in Control occurs multiplied by the number of Share Units in the account. Deferred Compensation Account cash amounts shall be delivered to each director within thirty days of the Change of Control.
ARTICLE XII. Effective Date
The Plan is effective January 1, 1997.
Page 9 of 9
ARTICLE XIII. Amendment and Termination
The Board (or an authorized Committee of the Board) may at any time terminate, and may at any time and from time to time and in any respect amend, the Plan for any reason provided, however, that no amendment or termination of the Plan shall impair the right of any Director to receive amounts which have been credited to his or her Deferred Compensation Account pursuant to Articles III, V and VI prior to such amendment or termination.

EXHIBIT 10(iii)(c)
Page 1 of 4
TO: GROUP PRESIDENT
SUBJECT: BONUS CONTRACT FOR 1997
The bonus plan applying to you for 1997 is outlined below:
1. Should your operating group attain worldwide operating income of $________, you will receive a bonus of % of your annual salary rate in effect on December 31, 1997.
2a. For each $_________ by which your worldwide operating income exceeds $___________ up to $___________, you will receive __% of your salary. For each $_________ over $___________, you will receive _% of your salary.
2b. If you achieve a productivity improvement of ___%, you will receive an additional _% of your salary.
3. If you attain _____% accounts receivable and inventory as a percent of sales, you will receive _% of your salary. For each ___% reduction thereafter, you will receive an additional _% of your salary.
4. You may receive an additional discretionary award of up to __% of your salary. The award will be based upon your individual achievements and the accomplishments of your Group. Your performance related to reengineering of business processes will be a major factor in determining the amount of bonus awarded under this paragraph especially in our company-wide procurement initiative. Any award also will be dependent upon the Company's overall performance.
5. The maximum bonus award on the sum of paragraphs (1) and
(2) will be limited to __% of your salary. The maximum bonus award on paragraph (3) will be __% of salary. The maximum bonus award on paragraph (4) will be __% of salary. The maximum award on the sum of paragraphs (1) through
(4) will be limited to ___% of salary.
Page 2 of 4
BONUS CONTRACT FOR 1997 - GROUP PRESIDENT
6. Should the Company achieve or exceed Earnings Per Share of $____, the total bonus percentage earned by you under paragraphs (1) through (5) will be increased in accordance with the following schedule:

EARNINGS PER
   SHARE            BONUS % EARNED PAR.1-5
  ATTAINED                INCREASED BY

  $____                       10%
  $____                       15%
  $____                       20%
  $____                       25%	

7. The maximum bonus award for paragraphs (1) through (6) will be limited to ___% of your annual salary rate in effect on December 31, 1997.
8. Acquisitions, divestitures, changes in assignment, changes in accounting procedures or tax law, abnormal deviations to plan in other income and expenses in your financial income statements, and/or corrections in historical data during 1997 may necessitate pro rata adjustments in the above goals and/or actual operating results. Any such changes will be advised as soon as possible.
9. The results will be tabulated by the Corporate Controller's Office and reflected on Operating Income and Accounts Receivable and Inventory Reports.
10. It is the present intention of the Company to decide the amount of bonus for 1997 in February 1998. If the above objectives are not attained, any bonus award made will be at the sole discretion of the Company.
11. The Company will be the final arbiter of interpretation of the above arrangements.

/S/ J. E. Perrella                  /S/ J. F. Travis
   J. E. Perrella                     J. F. Travis
     Chairman                         Vice Chairman	

Page 3 of 4
TO: VICE PRESIDENT
SUBJECT: BONUS CONTRACT FOR 1997
The bonus plan applying to you for 1997 is outlined below:
1. Should a net reduction in direct purchase cost of $__________ be attained, you will receive a bonus of __% of your annual salary rate in effect on December 31, 1997.
2. For each additional $_________ in net reduction in direct purchase cost over $__________, you will receive ___% of your salary.
3. You will receive a bonus for the average months' supply of inventory on hand for the entire company determined in accordance with the following: For average months' supply of inventory on hand of ___ months, you will receive _% of your salary. For each ___ months' reduction below ___ months, you will receive _% of your salary.
4. You may receive an additional discretionary award of up to __% of your salary. The award will be based upon your implementing the strategic sourcing process throughout the company, the establishment of the organization structure and the success in gaining the support of the operating divisions and groups.
5. The maximum bonus award on the sum of paragraphs (1) and
(2) will be limited to __% of your salary. The maximum bonus award on paragraph (3) will be __% of salary. The maximum bonus award on paragraph (4) will be __% of salary. The maximum award on the sum of paragraphs (1) through (4) will be limited to ___% of salary.
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BONUS CONTRACT FOR 1997 - VICE PRESIDENT
6. Should the Company achieve or exceed Earnings Per Share of $____, the total bonus percentage earned by you under paragraphs
(1) through (5) will be increased in accordance with the following schedule:

EARNINGS PER
   SHARE            BONUS % EARNED PAR.1-5
  ATTAINED                INCREASED BY

  $____                       10%
  $____                       15%
  $____                       20%
  $____                       25%	

7. The maximum bonus award for paragraphs (1) through (6) will be limited to ___% of your annual salary rate in effect on December 31, 1997.
8. Acquisitions, divestitures, changes in assignment, changes in accounting procedures or tax law, abnormal deviations to plan in other income and expenses in your financial income statements, and/or corrections in historical data during 1997 may necessitate pro rata adjustments in the above goals and/or actual results. Any such changes will be advised as soon as possible.
9. The results will be tabulated by the Corporate Controller's Office.
10. It is the present intention of the Company to decide the amount of bonus for 1997 in February 1998. If the above objectives are not attained, any bonus award made will be at the sole discretion of the Company.
11. The Company will be the final arbiter of interpretation of the above arrangements.

/S/ J. E. Perrella                  /S/ J. F. Travis
   J. E. Perrella                     J. F. Travis
     Chairman                         Vice Chairman	

EXHIBIT 10(iii)(g)(2)
Page 1 of 7
INGERSOLL-RAND COMPANY
Executive Supplementary Retirement Agreement
THIS AGREEMENT, effective as of the ___ day of __________, 19__, is by and between the Ingersoll-Rand Company of Woodcliff Lake, New Jersey, hereinafter called the Company, and _____________, hereinafter called the Employee (certain other definitions are defined in Schedule A, incorporated herein by reference).
WHEREAS, the Company values the efforts, abilities and accomplishments of the Employee as an important member of management and recognizes that his future services are vital to its continued growth and profits, and the Company in order to retain the services of the Employee is willing to provide benefits for him or for his designated beneficiary as set out below,
WHEREAS, the Employee in the past was eligible to purchase life insurance coverage equal to two and one-half times his current salary and average incentive compensation for the most recent five years under the Company's existing life insurance plan, and his eligibility thereunder has been changed to two times said salary and incentive compensation base, as a result of being a corporate officer and determined by the Board of Directors to be a participant in the Executive Supplementary Retirement Agreement,
NOW, THEREFORE, it is mutually agreed that:
1. Subject to paragraph 5 hereof, the Company shall, unless the Employee's employment has been terminated for "Cause", pay the Employee (or in the event of the Employee's death, to his beneficiary) the sum of $_________ in 120 equal monthly installments. Such payments shall commence as of the first day of the month following the month when the Employee attains normal retirement age, or if later, upon termination of his employment.
2. If the Employee dies prior to commencement of payments hereunder, the Company shall pay the sum of $__________ in 120 equal monthly installments to the beneficiary of the Employee. The death benefit paid pursuant to this paragraph 2 shall commence as of the first day of the month following the Employee's date of death.
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3. If the Employee becomes "Disabled" while employed by the Company prior to commencement of payments hereunder, the Company shall pay the sum of $____________ in 120 equal monthly installments to the Employee (or in the event of the Employee's death, to his beneficiary). Such payments shall terminate if the Employee recovers from such disability, and following such recovery, any eligibility for benefits which he might then or subsequently have under paragraph 1 or 2 of this Agreement shall be subject to the limitation contained in paragraph 4 below. The disability benefit paid pursuant to this paragraph 3 shall commence as of the first day of the month in which the Employee becomes Disabled.
4. In no event shall the Employee, if he becomes eligible for a benefit under paragraph 3, receive any benefit under paragraphs 1 or 2 of the Agreement while a benefit is being paid under paragraph 3. In no event shall the total payments made by the Company to the Employee (and his beneficiary) under paragraphs 1, 2, and 3 of this Agreement exceed the sum of $____________.
5. In the event that an Employee who voluntarily terminated employment with the Company (other than for "Good Reason") engages in "Competition" with the Company within three years after such termination of employment, no further benefits shall be payable hereunder. In the event that the Employee retires from the Company before attaining age 62 (other than for "Good Reason" or because he becomes "Disabled"), no benefits shall be payable hereunder.
6. The Employee may designate a beneficiary in writing to receive the benefits payable pursuant to this Agreement. Such beneficiary may be changed by the Employee from time to time by written notice delivered by the Employee to the Company. If no designated beneficiary survives the Employee, any payments pursuant to this Agreement made subsequent to the Employee's death shall be made to the Employee's estate.
7. Neither the Employee nor any designated beneficiary shall have any right to sell, assign, transfer or otherwise convey the right to receive any payments hereunder.
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8. Any payments under this Agreement shall be independent of, and in addition to, those under any other plan, program or agreement which may be in effect between the parties hereto, or any other compensation payable to the Employee by the Company. This Agreement shall not be construed as a contract of employment nor does it restrict the right of the Company to discharge the Employee or the right of the Employee to terminate employment.
9. The Company shall be under no obligation whatsoever to purchase or maintain any contract, policy, or other asset to provide the benefits under this Agreement. Furthermore, any contract, policy or other asset which the Company may utilize to assure itself of the funds to provide the benefits hereunder shall not serve in any way as security to the Employee for the Company's performance under this Agreement. The rights accruing to the Employee or his designated beneficiary shall be solely those of an unsecured creditor of the Company. The law of the State of New Jersey shall govern this Agreement.
10. The Company agrees that it will not merge, consolidate, or combine with any other business entity unless and until the succeeding or continuing corporation or business entity expressly assumes and confirms in writing the obligations of the Company to the Employee under this Agreement.
11. This Agreement cancels and supersedes all previous Executive Supplementary Retirement Agreements, specifically including the Agreement dated ____________________.
12. This Agreement may not be amended except by a written agreement signed by the Company and the Employee.
13. Where appropriate in this Agreement, words used in the singular shall include the plural and words used in the masculine shall include the feminine.
Page 4 of 7
IN WITNESS WHEREOF, the parties hereto have executed this Agreement effective as of the day and year first hereinabove written.
Ingersoll-Rand Company
By
Chairman
Employee
Page 5 of 7
Schedule A
Certain Definitions
As used in this Agreement, the following terms have the meanings indicated:
"Cause" shall be limited to (a) action by the Employee involving willful criminal misconduct, or (b) the Employee being convicted of a felony, in each case having a material adverse effect on the Company.
"Competition" shall mean performance, without the prior written consent of the Company, of services as an officer, employee, agent or consultant in a business that is directly competitive with any business of the Company with respect to which the Employee had responsibility while he was employed by the Company.
"Disabled" as applied to the Employee, means that (a) he has been totally incapacitated by bodily injury or disease so as to be prevented thereby from engaging in any occupation or employment for remuneration or profit, (b) such total incapacity shall have continued for a period of six consecutive months and (c) such total incapacity will, in the opinion of a qualified physician, be permanent and continuous during the remainder of the Employee's life.
"Good Reason" shall mean any of the following (without the Employee's express prior written consent):
(i) The assignment to the Employee by the Company of duties inconsistent with the Employee's positions immediately prior to such assignment, duties, responsibilities, titles or offices or any removal of the Employee from or any failure to re-elect the Employee to any of such positions, except in connection with the termination of the Employee's employment for Cause, Disability, or as a result of the Employee's death or by the Employee other than for Good Reason;
Page 6 of 7
(ii) A reduction by the Company of the Employee's base salary as in effect at the date hereof or as the same may have been increased prior to such reduction;
(iii) A failure by the Company to continue any bonus plans in which the Employee may be entitled to participate during employment (the "Bonus Plans") (provided that such plans may be modified from time to time but shall be deemed terminated if they do not remain substantially in the forms in effect when such plans are adopted) or plans providing the Employee with substantially similar benefits ("Substitute Plans"), or a failure by the Company to continue the Employee as a participant in the Bonus Plans or the Substitute Plans on at least the same basis as the Employee participates at the dates of adoption of the Bonus Plans or Substitute Plans, respectively;
(iv) A relocation of the Company's principal executive offices to a location that is more than 35 miles farther from the Employee's residence at the date hereof or the Company's requiring the Employee to be based anywhere other than the location at which the Employee at the date hereof performs the Employee's duties, except for required travel on the Company's business to an extent substantially consistent with the Employee's business travel obligations at the date hereof or any adverse change in the office assignment or secretarial and other support accorded to the Employee at the date hereof;
(v) A failure by the Company to continue in effect any benefit or compensation plan or stock option plan (including any pension, profit sharing, bonus, life insurance, health, accidental death or dismemberment or disability plan) in which the Employee is participating at the date hereof (or in the case of plans adopted after the date hereof and providing a type of benefit not provided by the Company at the date hereof, at the respective dates of adoption of such plans) or plans providing the Employee with substantially similar benefits or the taking of any action by the Company which would adversely affect the Employee's participation in or reduce the Employee's benefits under any of such plans;
Page 7 of 7
(vi) The taking of any action of the Company which would deprive the Employee of any material fringe benefit enjoyed by the Employee at the date hereof (or in the case of a fringe benefit not provided by the Company on date hereof, at the respective dates of adoption of such plans first providing such fringe benefits) or the failure by the Company to provide the Employee with the number of paid vacation days to which the Employee is entitled in accordance with the Company's practices at the date hereof;
(vii) The failure by the Company to obtain the specific assumption of this Agreement by a successor or assignee of the Company or any person acquiring substantially all of the Company's assets.

EXHIBIT 10(iii)(r)
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INGERSOLL-RAND COMPANY
EXECUTIVE DEFERRED COMPENSATION AND STOCK BONUS PLAN
1. Statement of Purpose The purpose of the Ingersoll-Rand Company Executive Deferred Compensation and Stock Bonus Plan (the "Plan") is to further increase the mutuality of interest between Ingersoll-Rand (the "Company"), the employees and stockholders by providing certain of the Company's highly compensated employees the opportunity to elect to defer receipt of cash compensation, and to have the deferred amounts treated as if invested in Company stock.
2. Definitions
2.1 Beneficiary - "Beneficiary" means the person or persons designated as such in accordance with Section 8.
2.2 Change in Control - "Change in Control" shall have the same meaning as a "change in control of the Company" (as set forth in the Company's Incentive Stock Plan of 1995), unless a different definition is used for purposes of any severance of employment agreement or change of control arrangement between the Company and a Participant, in which event such definition shall apply.
2.3 Class Year - "Class Year" means such calendar year for which Compensation may be deferred pursuant to the Plan.
2.4 Committee - "Committee" means the Compensation and Nominating Committee of the Board of Directors of the Company, which will administer the Plan pursuant to the provisions of Section 3 of the Plan.
2.5 Compensation - "Compensation" means the Participant's annual cash bonus award.
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2.6 Declining Balance Installments - "Declining Balance Installments" means a series of annual payments such that each payment is determined by taking the number of units in the Participant's Deferred Compensation Account as of the Distribution Date and dividing by the number of years of distributions remaining.
2.7 Deferral Amount - "Deferral Amount" means the amount of Elective Deferred Compensation actually deferred by the Participant.
2.8 Deferred Compensation Account - "Deferred Compensation Account" means the account maintained on the books of account of the Company for each Participant pursuant to Section 6.
2.9 Disability - "Disability" means the Participant is eligible to receive benefits under a long term disability plan maintained by the Company.
2.10 Distribution Date - "Distribution Date" means the date on which the Company makes distributions from the Participant's Deferred Compensation Account.
2.11 Election Form - "Election Form" means the form or forms attached to this Plan and filed with the Committee by the Participant in order to participate in the Plan. The terms and conditions specified in the Election Form(s) are incorporated by reference herein and form a part of the Plan.
2.12 Eligible Employee - "Eligible Employee" means Elected Officers of the Company, Division General Managers, and those other employees of the Company who have been selected by the Chief Executive Officer of the Company.
2.13 IR Stock - "IR Stock" means the common stock of Ingersoll-Rand Company.
2.14 Normal Retirement - "Normal Retirement" means termination of employment by a Participant after he/she has attained age 65 (62 for Elected Officers).
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2.15 Participant - "Participant" means an Eligible Employee participating in the Plan in accordance with the provisions of Section 4.
2.16 Supplemental Contribution - "Supplemental Contribution" means an additional amount to be credited to a Participant's Deferred Compensation Account equal to twenty percent (20%) of the Participant's Deferral Amount for a Class Year.
2.17 Valuation Date - "Valuation Date" means the date on which the value of a Participant's Deferred Compensation Account for each Class Year is determined as provided in Section 6 hereof.
3. Administration of the Plan This Plan shall be administered by the Committee (or any successor committee) of the Board of Directors of the Company. The primary responsibility of the Committee is to administer the Plan for the exclusive benefit of the Participants and their Beneficiaries, subject to the specific terms of the Plan. The Committee shall administer the Plan in accordance with its terms to the extent consistent with applicable law, and shall have the power to determine all questions arising in connection with the administration, interpretation, and application of the Plan. Any such determination by the Committee shall be conclusive and binding upon all affected parties. Any denial by the Committee of a claim for benefits under this Plan by a Participant or Beneficiary shall be stated in writing by the Committee and delivered or mailed to the Participant or Beneficiary. Such notice shall set forth the specific reasons for the Committee's decision. In addition, the Committee shall afford a reasonable opportunity to any Participant or Beneficiary whose claim for benefits has been denied for a review of the decision denying this claim.
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4. Participation Any Eligible Employee may elect to participate in the Plan for a given Class Year by filing a completed Election Form for the Class Year with the Committee. The Election Form must specify the percentage or dollar amount of any Compensation otherwise payable during such Class Year that will be deferred under the Plan. The minimum dollar amount that a Participant may defer under the Plan for any Class Year is $5,000. Any election to defer compensation is irrevocable upon the filing of the Election Form with the Committee, and must be completed and returned to the Committee no later than the December 31 immediately preceding such Class Year, or such earlier date as the Committee may specify. If an Eligible Employee fails to sign and return a properly completed Election Form by such date, the executive will be ineligible to defer Compensation under the Plan for the following Class Year.
5. Vesting of Deferred Compensation Account
5.1. Deferral Amount. A Participant shall vest immediately in the portion of his/her Deferred Compensation Account attributable to the Participant's Deferral Amount and any dividend equivalents credited thereto.
5.2. Supplemental Contribution. A Participant shall vest in the portion of his/her Deferred Compensation attributable to any Supplemental Contributions and any dividend equivalents credited thereto on the earliest of: (1) the fifth anniversary of the date the Supplemental Contribution is credited to the Participant's Deferred Compensation Account; (2) the date of the Participant's Normal Retirement; (3) the Participant's death; (4) a Change in Control; or (5) a termination of the Plan pursuant to Section 9.2.
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6. Accounts and Valuations
6.1 Deferred Compensation Accounts. The Committee shall establish and maintain a separate Deferred Compensation Account for each Participant for each Class Year. All Deferral Amounts shall be credited to the Participant's Deferred Compensation Account on the date when the Compensation is approved by the Company's Board of Directors.
6.2 Account Valuation. The value of each Deferred Compensation Account shall be based upon the value of IR Stock. All Deferral Amounts and related Supplemental Contributions shall be credited to a Participant's Deferred Compensation Account in units, or fractional units, with each unit having a value equivalent to one share of IR Stock. The number of such credited units shall be determined by dividing the value of the Participant's Deferral Amount (or Supplemental Contributions) by the mean of the high and low prices of one share of IR Stock on the New York Stock Exchange-Composite Tape on the date the Compensation is credited to the Participant's Deferred Compensation Account. Dividends paid on IR Stock shall be reflected in a Participant's Deferred Compensation Account by the crediting of additional units or fractional units, equal to the value of the dividends and based upon the mean of the high and low prices of one share of IR Stock on the New York Stock Exchange- Composite Tape on the date such dividends are paid.
6.3 Valuation in Event of Change in Control. In the event of a Change in Control, the value of each Deferred Compensation Account shall be determined by multiplying the number of units by the Fair Market Value of one share of Common Stock as provided in
Section 10(b) of the Company's Incentive Stock Plan of 1995 or, for those Participants with change in control arrangements, the Company Stock Value as defined thereunder.
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6.4 Changes in Capitalization. If there is any change in the number or class of shares of IR Stock through the declaration of a stock dividend or other extraordinary dividends, or recapitalization resulting in stock splits, or combinations or exchanges of such shares or in the event of similar corporate transactions, the units in each Participant's Deferred Compensation Account shall be equitably adjusted to reflect any such change in the number or class of issued shares of IR Stock or to reflect such similar corporate transaction.
7. Distribution of Accounts
7.1 Normal Retirement Benefits. For Participants who terminate as a result of Normal Retirement, all Deferred Compensation Account balances shall be distributed in a lump sum on the later of (i) the first business day of the sixth month following the Participant's Normal Retirement, or (ii) the first business day of the calendar year following the Participant's Normal Retirement. Notwithstanding the foregoing, the Participant may elect in writing (at least twelve months prior to Normal Retirement) to receive the Deferred Compensation Account balances in:
(a) a lump sum in January of the year specified by the Participant (but no later than five years following the Participant's Normal Retirement); or (b) in up to five annual installments payable each January commencing with the year following Normal Retirement. Annual installments shall be paid in Declining Balance Installments.
7.2 Termination of Employment Prior to Normal Retirement. If employment with the Company terminates prior to Normal Retirement, then the vested portion of the Participant's Deferred Compensation Accounts shall be distributed in a lump sum as soon as practicable following the Participant's termination of employment, unless the Committee, at their sole discretion, agrees to permit distribution alternatives such as those described in paragraph 7.l above. For purposes of this Plan, Disability shall be deemed not to be a termination of employment.
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7.3 Change in Control. In the event of a Change in Control, all Deferred Compensation Account balances shall be valued pursuant to Section 6.3, and shall be distributed in cash in a lump sum within thirty (30) days following Normal Retirement, unless the Participant elects in writing (at least twelve months prior to Normal Retirement) to receive the Deferred Compensation Account balance in: (a) a lump sum in January of the year specified by the Participant (but no later than five years following the Participant's Normal Retirement); or (b) in up to five annual installments payable each January commencing with the year following Normal Retirement. Annual installments shall be paid in Declining Balance Installments.the Change in Control.
7.4 Liquidating Distributions. Notwithstanding any provisions of the Plan to the contrary, the Company shall, as soon as practicable (but no later than 30 days) following the receipt of a written request from a Participant for a Liquidating Distribution, pay to the Participant the Participant's Liquidating Distribution Account Balance(s) in a lump sum. "Liquidating Distribution" shall mean a distribution requested by the Participant in writing directed to the Committee and specifically referencing this section and the Class Year(s) and Deferred Compensation Account(s) to which it applies. "Liquidating Distribution Account Balance" means that portion of the Deferred Compensation Account under the Plan in which the Participant is vested. Notwithstanding any provision of the Plan or the Participant's Election Form to the contrary, if the Participant requesting the Liquidating Distribution is, at the time of the request, an active employee of the Company, then for a period of two (2) Class Years following the year during which the request for the Liquidating Distribution is made, the Participant shall be ineligible to participate in the Plan with respect to any Compensation not yet deferred. In addition, the Participant shall forfeit any non-vested Supplemental Contributions in any Deferred Compensation Accounts distributed pursuant to this provision.
7.5 Hardship Benefit. In the event that the Committee, upon written petition of the Participant specifying the Class Year(s) and Deferred Compensation Account(s) from which payment shall be made, determines in its sole discretion, that the Participant has suffered an unforeseeable financial emergency, the Company may pay to the Participant in cash, as soon as
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practicable following such determination, an amount appropriate under the circumstances, not in excess of the portion of the Deferred Compensation Account(s) in which the Participant is vested. The Deferred Compensation Account(s) of the Participant shall thereafter be reduced to reflect the payment of a Hardship Benefit. In addition, the Participant shall forfeit any non-vested Supplemental Contributions, if any, attributable to that portion of a Deferred Compensation Account balance distributed to the Participant.
7.6 Form of Payments. Except as provided in Sections 7.3, 7.5, and 7.7 Aall benefits payable to a Participant or Beneficiary under the Plan shall be paid in IR Stock, with one share distributed for each unit. All fractional shares shall be payable in cash.
7.7 Taxes; Withholding. To the extent required by law, the Company shall withhold from payments made hereunder an amount equal to at least the minimum taxes required to be withheld by the federal or any state or local government.
8. Beneficiary Designation If a Participant dies prior to receiving all Deferred Compensation Account balances, then the Participant's Beneficiary shall receive any unpaid amounts. The Participant's Beneficiary under this Plan shall be the Participant's beneficiary under the Ingersoll-Rand Company Savings and Stock Investment Plan, unless the Participant designates another Beneficiary in writing, and such written designation has been received by the Committee. A Participant may change the designated Beneficiary under this Plan at any time by providing such designation in writing to the Committee.
If the Company is unable to determine a Participant's Beneficiary or if any dispute arises concerning a Participant's Beneficiary, the Company may pay benefits to the Participant's estate. Upon such payment, the Company shall have no further liability hereunder.
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If any distribution to a Beneficiary is to be made in installments, and the primary Beneficiary dies before receiving all installments, the remaining installments, if any, shall be paid to the estate of the primary Beneficiary.
9. Amendment and Termination of Plan
9.1 Amendment. The Plan may, at any time and from time to time, be amended without the consent of any Participant or Beneficiary, (a) by the Board of Directors of the Company, or (b) in the case of amendments which do not materially modify the provisions hereof, the Committee; provided, however, that no such amendment shall reduce any benefits accrued under the terms of this Plan prior to the date of amendment.
9.2 Termination of Plan
a. Company's Right to Terminate. The Board of Directors of the Company may terminate the Plan at any time and for any reason.
b. Payments Upon Termination. Upon any termination of the Plan under this section, Compensation shall prospectively cease to be deferred and, with respect to Compensation previously deferred, the Company shall pay to the Participant, in a lump sum, the value of his/her Deferred Compensation Accounts.
10. Miscellaneous
10.1 Unsecured General Creditor. Benefits under the Plan shall be payable by the Company out of its general funds. The Company shall have the right to establish a reserve or make any investment for the purposes of satisfying its obligations hereunder for payment of benefits at its discretion, provided, however, that no Participant or Beneficiary shall have any interest in such investment or reserve. To the extent that any person acquires a right to receive benefits under this
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Plan, such rights shall be no greater than the right of any unsecured general creditor of the Company. No Participant shall have any of the rights or privileges of a stockholder of the Company under the Plan, including as a result of the crediting of units to a Deferred Compensation Account, except at such time as IR Stock is actually delivered in settlement of a Deferred Compensation Account.
10.2 Entire Agreement; Successors. This Plan, including the Election Form and any subsequently adopted amendments to the Plan or Election Form, shall constitute the entire agreement or contract between the Company and any Participant regarding this Plan. There are no convenants, promises, agreements, conditions or understandings, either oral or written, between the Company and any Participant relating to the subject matter hereof, other than those set forth herein. This Plan and any amendment hereof shall be binding on the Company and the Participants and their respective heirs, administrators, trustees, successors and assigns, including but not limited to, any successors of the Company by merger, consolidation or otherwise by operation of law, and on all designated Beneficiaries of the Employee.
10.3 Non-Assignability. To the extent permitted by law, the right of any Participant or any Beneficiary in any benefit hereunder shall not be subject to attachment or any other legal process for the debts of such Participant or Beneficiary; nor shall any such benefit be subject to anticipation, alienation, sale, transfer, assignment or encumbrance.
10.4 No Contract of Employment. The establishment of this Plan or any modification hereof shall not give any Participant or other person the right to remain in the service of the Company or any of its subsidiaries, and all Participants and other persons shall remain subject to discharge to the same extent as if the Plan had never been adopted.
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10.5 Authorization and Source of Shares. Shares necessary to meet the obligations of the Plan have been reserved and authorized pursuant to resolutions adopted by the Board of Directors of the Company on December 4, 1996, and additional shares shall be reserved and authorized for delivery under the Plan from time to time. These shares may be provided from newly-issued or treasury shares.
10.6 Gender, Singular and Plural. All pronouns and any variations thereof shall be deemed to refer to the masculine, feminine, or neuter, as the identity of the person or persons may require. As the context may require, the singular may be read as the plural and the plural as the singular.
10.7 Captions. The captions to the articles, sections, and paragraphs of this Plan are for convenience only and shall not control or affect the meaning or construction of any of its provisions.
10.8 Applicable Law. This Plan shall be governed and construed in accordance with the laws of the State of New Jersey.
10.9 Severability. If any provisions of this Plan shall, to any extent, be invalid or unenforceable, the remainder of this Plan shall not be affected thereby, and each provision of this Plan shall be valid and enforceable to the fullest extent permitted by law.
10.10 Notice. Any notice or filing required or permitted to be given to the Committee shall be sufficient if in writing and hand delivered, or sent by registered or certified mail, to the principal office of the Company at 200 Chestnut Ridge Road, Woodcliff Lake, NJ 07675, directed to the attention of the Vice President, Human Resources. Such notice shall be deemed given as of the date of delivery or, if delivery is made by mail, as of the date shown on the postmark
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on the receipt for registration or certification. Any notice to the Participant shall be addressed to the Participant at the Participant's residence address as maintained in the Company's records. Any party may change the address for such party here set forth by giving notice of such change to the other parties pursuant to this Section.
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INGERSOLL-RAND COMPANY
Executive Deferred Compensation AND Stock Bonus Plan Election Form
Name: _______________________ Social Security No: __________
Complete Sections A and B of this Form. In order to be effective, you must submit your completed form to the Company by _____________, ______.
A. Deferred Compensation To complete this Section, indicate the total amount you want to defer (maximum 100%) from your annual cash bonus award otherwise payable to you in ________.
I elect to defer the following amount from my annual cash bonus award otherwise payable to me in _______ (select one):
1. [ ] ____________% of my award otherwise payable to me in _________.
2. [ ] $____________ (minimum $5,000) of the award otherwise payable to me in _______. If the total amount payable to me is less than the amount indicated, the deferral amount will be reduced to my total award.
3. [ ] I elect to defer that portion of my award that exceeds $____________. If the deferred amount so determined is less than $5,000, the deferred portion will be increased to $5,000.
4. [ ] I elect to defer that portion of my award that exceeds $____________. If the deferred amount so determined is less than $5,000, no amount will be deferred.
If the total annual cash bonus award payable to me is less than $5,000, no amount will be deferred.
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B. Acknowledgment
Sign and date this Section.
I agree to be bound by the terms and conditions of the Plan and agree that such terms and conditions shall be binding upon my beneficiaries and personal representatives. I further acknowledge that the receipt of this election form is not intended to indicate the amount of any bonus that I will receive, or that an award will be made. I further agree, as a condition to participate, to satisfy the following stock ownership guidelines. (These guidelines take into account all sources of Company stock, such as Savings Plan accumulations, as well as stock units under this Plan, but not unexercised stock options or Management Incentive Units.)

                                              Time to Achieve
    Position              Guideline Target    Guideline Target

Chairman, CEO             5 Times Salary          5 Years

Vice Chairman, President, 4 Times Salary          5 Years
EVP, SVP

Group Presidents &        3 Times Salary          4 Years
Elected Officers	

Other Participants 2 Times Salary 4 Years

Signature of Employee Date

EXHIBIT 10(iii)(s)
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January 20, 1997
Mr. Frank B. O'Brien
615 North Main Street
Chagrin Falls, OH 44022
Dear Frank:
On the basis of our discussions and your recent interviews with members of our management team, I am pleased to extend this written confirmation of our offer to become Senior Vice President and Chief Financial Officer of Ingersoll-Rand Company, reporting to me as Chairman and Chief Executive Officer.
The following confirms the terms and conditions of our offer:
1. Your starting base salary will be at an annual rate of $350,000, paid monthly.
2. You will participate in the Company's annual incentive plan. You are eligible commencing with 1997, for awards of up to 80% of salary depending on both corporate and individual performance. For 1997, your minimum bonus will be 40% of your base salary.
3. Upon joining the Company, you will receive an award of non- qualified stock options of 20,000 shares under our 1995 Incentive Stock Plan. This award is subject to the usual terms and conditions of awards under the Plan. You will be considered a full participant, and be eligible to receive further and potentially higher awards under the Plan in future years as administered by the Compensation Committee of the Board.
4. Ingersoll-Rand will provide you with a Stock Award of 12,000 shares, also administered under the terms of our 1995 Incentive Stock Plan.
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These awards vest in four annual installments, beginning in March 1997, depending upon the achievement of a predetermined performance target and your continued employment. You will receive an award agreement which explains vesting requirements and other terms and conditions of your award. Our stock awards also provide participants with dividend equivalents, and represent an attractive additional equity interest in our company. You can be considered for a larger award at any time based on your own and the Company's performance.
5. You will receive a benefit under the Executive Supplementary Retirement Agreement in an amount of $65,000 per year for ten years subject to your retirement at age 62, and subject to the provisions of this plan.
In addition, you will be eligible for a pension of 26% of your final eligible compensation at age 62, assuming you retire from the Company at that time. If you retire prior to age 62, your benefit would be subject to the terms and conditions of the company's qualified retirement plan.
For purposes of retirement benefits, eligible compensation is your final salary, plus the average of your five highest of your six most recent bonuses. Your 26% benefit will be calculated taking into account all sources including our qualified and non-qualified Pension Plan and Retirement Accounts, the employer portion of Ingersoll-Rand's 40l(k) Plan contributions, and your Social Security.
6. We will relocate you, your family and household goods to this area. Your relocation expenses, including shipment of household goods, real estate commissions and mortgage points will be reimbursed according to our policy. Ingersoll- Rand's relocation policy also provides for equity advances, at company discretion, to facilitate home purchases prior to sale of your existing residence. And, our program also includes the possibility of home purchase should that be necessary to effect a smooth transition. If, upon our shared assessment of comparative living costs we identify significant adverse variances or other relocation issues
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which would interfere with your transition to Northern New Jersey, the Company will make a special allowance to recognize the impact of such adverse variance, if any. This amount would not be tax protected.
7. Your medical and life insurance coverage with Ingersoll-Rand will commence on the first day of the month following 30 days of employment. Therefore, you may want to continue your coverage with your current employer under COBRA to avoid any gap in coverage.
8. In the unlikely event that you are involuntarily terminated by the company other than for cause (i.e., violation of law or serious breach of ethics), we will provide you with a severance payment equal to one year of salary plus your last annual bonus.
9. Our offer is conditioned upon satisfactorily completing a physical examination, which includes drug testing, and fulfilling the requirements of the Immigration Reform and Control Act of 1986.
Frank, I am personally looking forward to you joining Ingersoll- Rand. This is a time of challenge and opportunity for our company. I am confident your experience and leadership will help us reach our goals and create a mutually rewarding long-term relationship between us. I understand you plan to join us on March 10. Welcome!
Sincerely,

 /S/ James E. Perrella
James E. Perrella
Chairman	

Accepted:

/S/ Frank B. O'Brien	

                                                                                     EXHIBIT 11(i)

                                       INGERSOLL-RAND COMPANY
                             COMPUTATION OF PRIMARY EARNINGS PER SHARE
                  (In millions of dollars except for shares and per share amounts)

                                                          Years  ended  December 31,
                                        1996          1995          1994          1993          1992
PRIMARY EARNINGS PER SHARE:
Earnings before effect of
  accounting changes..........        $358.0        $270.3        $211.1       $163.5         $115.6
Effect of accounting changes:
  - Postemployment benefits               --            --            --        (21.0)            --
  - Postretirement benefits
    other than pensions.......            --            --            --           --         (332.0)
  - Income taxes..............            --            --            --           --          (18.0)
Net earnings (loss) applicable
  to common stock.............        $358.0        $270.3        $211.1       $142.5        $(234.4)

Average number of common
  shares outstanding..........   107,492,364   106,069,078   105,458,116  104,991,535    104,340,622

Primary earnings per share:
Earnings before effect of
  accounting changes..........         $3.33         $2.55         $2.00       $ 1.56         $ 1.11
  Effect of accounting changes:
    - Postemployment benefits             --            --            --        (0.20)            --
    - Postretirement benefits
      other than pensions.....            --            --            --           --          (3.19)
    - Income taxes............            --            --            --           --          (0.17)
Primary earnings (loss) per
  share.......................         $3.33         $2.55         $2.00        $ 1.36        $(2.25)

Notes:   All  common  share and per share amounts have  been  adjusted  for  the
2-for-1  stock  split which was made in the form of a stock  dividend  in  1992.
Shares  issuable  under outstanding stock plans, applying the  "Treasury  Stock"
method,  have been excluded from the computation of primary earnings  per  share
since  such  shares were less than 1% of common shares outstanding, as  follows:
1996 - 798,190; 1995 - 498,456; 1994 - 496,893; 1993 - 600,429; 1992 - 738,149.	

                                                                                      EXHIBIT 11(ii)
                                                                                      Page 1 of 2

                                       INGERSOLL-RAND COMPANY
                          COMPUTATION OF FULLY DILUTED EARNINGS PER SHARE
                  (In millions of dollars except for shares and per share amounts)
                                                       Years ended December 31,
                                        1996          1995          1994          1993          1992
FULLY DILUTED EARNINGS PER SHARE:
Earnings applicable to common
  stock before effect of
  accounting changes...........       $358.0        $270.3        $211.1        $163.5       $ 115.6
Effect of accounting changes:
  - Postemployment benefits....           --            --            --         (21.0)           --
  - Postretirement benefits
    other than pensions........           --            --            --            --        (332.0)
  - Income taxes...............           --            --            --            --         (18.0)
Net earnings (loss) applicable
  to common stock..............       $358.0        $270.3        $211.1        $142.5       $(234.4)

Average number of common
  shares outstanding...........  107,492,364   106,069,078   105,458,116   104,991,535   104,340,622
Number of common shares
  issuable assuming exercise
  under incentive stock plans..      798,190       498,456       496,893       600,429       738,149
Average number of outstanding
  shares as adjusted for
  fully diluted earnings per
  share calculations...........  108,290,554   106,567,534   105,955,009   105,591,964   105,078,771

                                                                                      EXHIBIT 11(ii)
                                                                                      Page 2 of 2
                                       INGERSOLL-RAND COMPANY
                          COMPUTATION OF FULLY DILUTED EARNINGS PER SHARE
                  (In millions of dollars except for shares and per share amounts)
                                            (Continued)

                                                       Years ended December 31,
                                        1996          1995          1994          1993          1992
Fully diluted earnings per share:
Earnings before effect of
  accounting changes...........        $3.31         $2.54         $1.99        $ 1.55        $ 1.10
  Effect of accounting changes:
    - Postemployment benefits..           --            --            --         (0.20)           --
    - Postretirement benefits
      other than pensions......           --            --            --            --         (3.16)
    - Income taxes.............           --            --            --            --         (0.17)
Fully diluted earnings (loss) per
  share........................        $3.31         $2.54         $1.99        $ 1.35        $(2.23)

Notes:  All common share and per share amounts have been adjusted for the
2-for-1 stock split which was made in the form of a stock dividend in 1992.
This calculation is presented in accordance with the Securities Exchange Act of
1934, although it is not required disclosure under APB Opinion No. 15. Net
earnings per share of common stock computed on a fully diluted basis are based
on the average number of common shares outstanding during each year after
adjustment for individual securities which may be dilutive.  Securities entering
into consideration in making this calculation are common shares issuable under
employee incentive stock plans.  Employee stock options outstanding have been
included in the calculation of fully diluted earnings per share by applying the
"Treasury Stock" Method quarterly.  Such calculations have been made using the
higher of the average month-end market prices or the market prices at the end of
the quarter, in order to reflect the maximum potential dilution.

                                        INGERSOLL-RAND COMPANY                       EXHIBIT 12
                          COMPUTATIONS  OF RATIOS OF EARNINGS TO  FIXED  CHARGES     Page 1 of 2
                                     (Dollar Amounts in Millions)

                                                                 Years     Ended
December 31,
Fixed charges:                                    1996       1995       1994        1993       1992
  Interest expense...........................    $122.4    $ 90.0     $ 46.9      $ 60.2    $  64.7
  Amortization of debt discount and expense..      1.5         .8         .4          .7         .3
  Rentals (one-third of rentals).............     22.4       21.6       18.8        19.4       20.8
  Capitalized interest.......................      4.6        3.6        3.2         3.1        3.5
Total fixed charges..........................    $150.9    $116.0     $ 69.3      $ 83.4    $  89.3

Net earnings (loss)..........................   $358.0     $270.3     $211.1      $142.5    $(234.4)
Add:   Minority income (loss) of majority-
         owned subsidiaries..................     18.9       14.5       15.1        13.6      (33.2)
       Taxes on income.......................    210.3      158.9      118.8        90.0       67.4
       Fixed charges.........................    150.9      116.0       69.3        83.4       89.3
       Effect of accounting changes..........       --         --         --        21.0      350.0
Less:  Capitalized interest..................      4.6        3.6        3.2         3.0        3.4
       Undistributed earnings (losses) from
         less than 50% owned affiliates......    (23.1)      33.3       33.3        40.0       16.6
Earnings available for fixed charges ........   $756.6     $522.8     $377.8      $307.5    $ 219.1

Ratio of earnings to fixed charges ..........     5.01(1)    4.51       5.46        3.69(2)    2.45(3)
Undistributed earnings (losses) from less
    than 50% owned affiliates:
  Equity in earnings (losses)................   $ 36.4     $ 36.6     $ 36.6      $ 42.1    $  17.9
    Less:  Amounts distributed...............     59.5        3.3        3.3         2.1        1.3
  Undistributed earnings (losses) from
    less-than 50% owned affiliates...........   $(23.1)    $ 33.3     $ 33.3      $ 40.0    $  16.6

(1)  The 1996 calculation includes the effect of a $42.4 million pretax charge mainly
     relating to the realignment of the company's foreign operations.  The 1996 calculation
     also includes the $55 million of pretax income relating to the sales of the Process Systems Group.
(2)  The 1993 calculation includes the effect of the $5 million pretax charge
     relating to the restructure of the company's underground mining machinery
     business.  Excluding this amount, the ratio would have been 3.75.

                                        INGERSOLL-RAND COMPANY                       EXHIBIT 12
                          COMPUTATIONS  OF RATIOS OF EARNINGS TO  FIXED  CHARGES     Page 2 of 2
                                     (Dollar Amounts in Millions)

(3)  The company's portion of the earnings and fixed charges of the
     Dresser-Rand Company are included through September 30, 1992.   Effective
     October 1, 1992, the company's ownership interest in the Dresser-Rand
     Company was reduced from 50% to 49%.  The 1992 calculation includes  (i)
     the effect of the $10 million pretax charge relating to the restructure  of
     the company's aerospace bearings business and (ii) the full effect of the
     $70 million pretax restructure of operations charge relating to the
     Ingersoll-Dresser Pump Company.  Excluding the 1992 restructure charges
     the ratio would have been 3.35.	

EXHIBIT 13
Page 1 of 65
INGERSOLL-RAND
1996
ANNUAL REPORT
TO
SHAREOWNERS
Page 2 of 65
Table of Contents

Financial Review and Management Analysis                     3-24

Consolidated Statement of Income                               25

Consolidated Balance Sheet                                  26-27

Consolidated Statement of Shareowners' Equity               28-29

Consolidated Statement of Cash Flows                        30-31

Notes to the Consolidated Statements                        32-63

Report of Management                                           64

Report of Independent Accountants                              65	

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Ingersoll-Rand Company
Financial Review and Management Analysis
1996 Compared to 1995
A third consecutive year of record sales and earnings was established in 1996. These financial achievements were the results of a strong domestic economy, moderate economic growth in selected international markets and the continued success of the company's asset-management, strategic-sourcing and productivity-improvement programs.
Sales for 1996 totalled $6.7 billion, which generated $683.5 million of operating income and $358.0 million of net earnings (or $3.33 per share). These results include a full year's benefit of the May 31, 1995, acquisition of Clark Equipment Company (Clark). The company's 1996 results, excluding the positive effect of the Clark acquisition, also established company records.
The 1996 year included a net benefit of $12.6 million to the company's operating income relating to the following items:
- - the sales of the Process Systems Group, which generated $55 million of operating income ($34.7 million after-tax, or 32 cents per share);
- - a charge of $30 million to operating income for the realignment of the company's foreign operations ($18.9 million after-tax, or 18 cents per share);
- - a charge of $7 million to operating income associated with the exit or abandonment of selected European product lines ($4.5 million after-tax, or four cents per share); and
- - a $5.4 million charge to operating income to close an Ingersoll- Dresser Pump Company (IDP) steel foundry (approximately $2.0 million after-tax, or two cents per share).
The company's outlook for 1997 calls for steady improvement in operating results based on continued stability in our domestic markets and strengthening in our international markets. These expectations will be supported by aggressive asset-management, strategic-sourcing and productivity-improvement programs.
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A comparison of key financial data between 1996 and 1995 follows:
o Net sales in 1996 established a record at $6.7 billion, reflecting a 17-percent improvement over 1995's total of $5.7 billion. Sales for 1996, excluding Clark, exceeded 1995's total by approximately six percent.
o Cost of goods sold in 1996 was 75.0 percent of sales compared to 75.2 percent in 1995. Partial liquidations of LIFO (last-in, first-out) inventory lowered 1996 costs by $4.8 million ($2.9 million after-tax, or three cents per share) as compared to a $3.4 million ($2.1 million after-tax, or two cents per share) liquidation in 1995. Excluding the effects of the LIFO liquidations, the 1996 cost of goods sold relationship to sales would have been 75.1 percent versus 75.3 percent for 1995. Excluding Clark's results and the effect of the noncomparable items from 1996 and 1995, the relationship of cost of goods sold to sales improved slightly in 1996.
o Administrative, selling and service engineering expenses were 14.8 percent of sales in 1996, compared to 16.1 percent for 1995. This marked improvement reflects the net benefit of the company's cost-containment and productivity-improvement programs, which more than offset the effects of inflation on salaries, benefits, materials and other similiar items. The full year effect of the Clark acquisition did not cause a disproportionate benefit to the 1996 improvement.
o Operating income for the year totalled $683.5 million, a 37.5- percent increase over 1995's operating income of $497.0 million. Excluding Clark's results, operating income in 1996 totalled $527.9 million, reflecting a 21.3-percent increase over 1995's level without Clark. In addition, the noncomparable items in 1996 contributed a $12.6-million benefit to operating income. Excluding these items and Clark's results, operating income for the year reflected an 18-percent improvement over 1995.
o Interest expense for the year totalled $119.9 million. The interest expense reported for 1996 was almost evenly divided between interest expense from the combined operations of Ingersoll-Rand and Clark, and interest expense associated with the Clark acquisition. Interest expense for 1995 totalled $86.6 million.
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o Other income (expense), net, is essentially the sum of three activities: (i) foreign exchange, (ii) equity interests in partially-owned equity companies, and (iii) other miscellaneous income and expense items. In 1996, these activities resulted in a net expense of $1.0 million, an unfavorable change of $10.4 million compared to 1995's net other income of $9.4 million. A review of the components of this category shows that:
o foreign exchange activity for 1996 totalled $4.8 million of losses, as compared to $6.2 million of losses in 1995;
o earnings from equity interests in partially-owned equity companies were approximately $8 million lower than 1995's level; and
o other net miscellaneous expense items were approximately $3.8 million higher than the prior year's level, principally due to miscellaneous foreign taxes not based on income.
o Dresser-Rand Company (Dresser-Rand) is a partnership between the company and Dresser Industries, Inc. (Dresser), which is engaged worldwide in the reciprocating compressor and turbomachinery businesses. The company's pretax profits from its interest in Dresser-Rand for 1996 totalled $23.0 million, a modest improvement over the $22.0 million in the prior year. Dresser- Rands's results included a disappointing 1996 fourth quarter, which was adversely affected by cost overruns on a few major orders, higher legal expenses and an increase in foreign taxes.
o Ingersoll-Dresser Pump Company is another partnership between the company and Dresser, in which the company owns the majority interest. In 1996, the minority interest charge was $17.3 million, as compared to the 1995 charge of $12.7 million. This charge reflects the portion of IDP's earnings that was allocable to Dresser and indicates that IDP's earnings in 1996 were significantly higher than those reported for 1995.
o The company's effective tax rate for 1996 was 37.0 percent, which is consistent with the prior year. The variance from the 35.0 percent statutory rate was due primarily to the higher tax rates associated with foreign earnings, the effect of state and local taxes, and the nondeductibility of the goodwill associated with acquisitions.
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At December 31, 1996, employment totalled 41,874. This represents a net increase of 741 employees over last year's level of 41,133. This increase is mainly due to the net result of employees from businesses acquired and sold during the year.
Liquidity and Capital Resources
The company's financial position at December 31, 1996, reflects the following notable changes from last year:
o the reclassification of $132.5 million of Medium Term Notes, issued to finance the Clark acquisition, from long-term debt to current maturities of long-term debt, because repayment will occur during the third quarter of 1997; and
o the reclassification of the net assets of Clark-Hurth to assets held for sale, which was sold in Februrary 1997. Included in these net assets were approximately $200 million of net assets previously classified as noncurrent.
The following table contains several key measures which the company's management uses to gauge the company's financial performance, all of which showed improvement in 1996:

                                        1996      1995      1994
Working capital (in millions)         $1,245    $1,016      $963
Current ratio                            2.0       1.8       1.9
Debt-to-total capital ratio               39%       45%       22%
Average working capital
  to net sales                          16.9%     17.3%     20.4%
Average days outstanding
  in receivables                        56.1      63.1      64.6
Average months' supply
  of inventory                           3.0       3.3       3.7	

Ingersoll-Rand, as a large multinational company, maintains significant operations in foreign countries. The movement of the U.S. dollar against foreign currencies has an impact on the company's financial position. Generally, the functional currency of the company's foreign subsidiaries is their local currency, the currency in which they transact their business. The company manages exposure to changes in foreign currency exchange rates through its normal operating and financing activities, as well as through the use of forward exchange contracts. The company
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attempts, through its hedging activities, to mitigate the impact on income of changes in foreign exchange rates. Additionally, the company maintains operations in countries with hyperinflationary economies and in countries where the company's operations transact business in U.S. dollars. The functional currency of these operations has been and will remain the U.S. dollar. (Additional information on the company's use of financial instruments can be found in Note 9 to the Consolidated Financial Statements.)
The following highlights the financial results and financial condition of the company's operations, with the impact of currency variations where appropriate:
o Cash and cash equivalents totalled $184.1 million at December 31, 1996, a $46.8-million increase over the prior year-end balance of $137.3 million. In evaluating the net change in cash and cash equivalents, cash flows from operating, investing and financing activities, and the effect of exchange rate changes, should be considered. Cash flows from operating activities provided $385.7 million, investing activities used $149.9 million and financing activities used $196.5 million. Exchange rate changes during 1996 increased cash and cash equivalents by $7.5 million.
o Marketable securities totalled $8.0 million at the end of 1996, $1.3 million below the balance at December 31, 1995. The reduction was due to the maturity of certain securities and their conversion into cash and cash equivalents and minimal exchange rate fluctuations.
o Receivables totalled $1,066.2 million at December 31, 1996, compared to $1,109.9 million at the prior year end, a net decrease of $43.7 million. Currency translation decreased the receivable balance during the year by $6.5 million, acquisitions added approximately $19 million and the reclassification of the assets held for sale reduced the balance by approximately $41 million. Dispositions reduced receivables by $15.9 million. The company's focus on decreasing its receivable base through its asset-management program produced a reduction in the average days outstanding in receivables to 56.1 days from 1995's level of 63.1 days.
o Inventories amounted to $775.1 million at December 31, 1996, a reduction of $137.5 million from last year's level of $912.6 million. Acquisitions accounted for a $13-million increase,
Page 8 of 65
while dispositions reduced inventories by $48 million. The reclassification of assets held for sale reduced inventories by approximately $92 million. The remaining net decrease was due primarily to currency movements. The company's emphasis on inventory control was demonstrated by the reduction of the average months' supply of inventory to 3.0 months at December 31, 1996, compared to 3.3 months at the prior year end.
o Prepaid expenses totalled $74.1 million at the end of the year, $16.1 million higher than the balance at December 31, 1995. The primary cause for the increase in 1996 was higher deposits relating to benefit plans. Foreign exchange activity and acquisitions had minimal effect on prepaid expenses.
o Deferred income taxes (current) of $162.4 million at December 31, 1996, represented the deferred tax benefit of the difference between the book and tax values of various current assets and liabilities. A schedule of the components for this balance is in Note 14 to the Consolidated Financial Statements. The year-end balance represented an increase of $43.9 million from the December 31, 1995, level. Changes due to foreign currency movements had minimal effect on the year's activity.
o The investment in Dresser-Rand Company totalled $152.6 million at December 31, 1996. This represented a net increase of $58.7 million from the prior year balance of $93.9 million. The components of the change for 1996 consisted of income for the current year of $23 million, a $92.1 million change in the advance account between the entities, a minor increase caused by translation, and a reduction caused by a return of capital of $56.7 million.
o The investments in partially-owned equity companies at December 31, 1996, totalled $223.6 million, which approximated the 1995 balance of $223.3 million. Income and dividends from investments in partially-owned equity companies were $19.4 million and $6.8 million, respectively. Amounts due from these units decreased from $20.4 million to $18.3 million at December 31, 1996. Currency movements primarily relating to partially- owned equity companies in Japan caused approximately a $10- million decrease in 1996.
o Net property, plant and equipment decreased by $133 million in 1996 to a year-end balance of $1,145.4 million. Fixed assets from acquisitions during 1996 added $33.1 million. Capital
Page 9 of 65
expenditures in 1996 totalled $195 million. The reclassification of the fixed assets associated with Clark-Hurth reduced the balance by approximately $136 million. Dispositions reduced the balance by $40.4 million. In addition, foreign exchange fluctuations decreased the net fixed asset values in U.S. dollars by approximately $5 million. The remaining net decrease was the result of depreciation, and sales and retirements.
o Intangible assets, net, totalled $1,178.0 million at December 31, 1996, as compared to $1,253.6 million at December 31, 1995, for a net decrease of $75.6 million. Acquisitions added approximately $81 million of intangibles, primarily goodwill, during 1996. The reclassification of the intangible assets relating to the Clark-Hurth sale reduced the balance by approximately $119 million at December 31, 1996. Amortization expense accounted for a reduction of $38.0 million.
o Deferred income taxes (noncurrent) totalled $162.6 million at December 31, 1996, which was $27.8 million higher than the 1995 balance. A listing of the components which comprised the balance at December 31, 1996, can be found in Note 14 to the Consolidated Financial Statements.
o Other assets totalled $223.8 million at year end, a decrease of $9.9 million from the December 31, 1995, balance of $233.7 million. Other assets increased approximately $12 million due to prepaid pensions, which was more than offset by decreases due to dispositions and the reclassification of assets held for sale. Foreign exchange activity in 1996 had a minimal effect on the account balance during the year.
o Accounts payable and accruals totalled $1,095.4 million at December 31, 1996, a decrease of $34.4 million from last year's balance of $1,129.8 million. The reclassification of assets held for sale and dispositions decreased accounts payable and accruals by $69.2 million. Restructure of operations added approximately $37 million. Acquisition activity during 1996 accounted for a $9.4-million increase and foreign exchange activity during the year resulted in a decrease of $12.6 million.
o Loans payable were $162.3 million at the end of 1996, which reflects a $6.9-million increase over the $155.4 million at
Page 10 of 65
December 31, 1995. Current maturities of long-term debt, included in loans payable, were $133.2 million and $102.9 million at December 31, 1996 and 1995, respectively. The company's aggressive cash-management program decreased short- term debt,while foreign currency fluctuations increased short- term debt during 1996 by $4.6 million. The reclassification of Clark-Hurth debt to assets held for sale totalled $5.7 million. The change in current maturities of long-term debt included movement to current maturities of $135.7 million, payments of $104.4 million and foreign exchange activity.
o Long-term debt, excluding current maturities, totalled $1,163.8 million, a decrease of $140.6 million from the prior year's balance of $1,304.4 million. Reductions in long-term debt were the result of the reclassifications of $135.7 million of current maturities to loans payable and $5.1 million related to Clark- Hurth debt reclassified to assets held for sale. Foreign currency fluctuations had a minimal effect.
o Postemployment liabilities at December 31, 1996, totalled $814.7 million, a decrease of $17.4 million from the December 31, 1995, balance. Postemployment liabilities include medical and life insurance postretirement benefits, long-term pension and other noncurrent postemployment accruals. The 1996 activity included reductions of $22.9 million attributed to units, which were either sold in 1996 or early 1997. Postemployment liabilities represent the company's noncurrent liabilities in accordance with Statement of Financial Accounting Standard(SFAS) Nos. 87, 106 and 112. (See Notes 16 and 17 to the Consolidated Financial Statements for additional information.)
o The Ingersoll-Dresser Pump Company minority interest, which represents Dresser's interest in the IDP joint venture, totalled $113.4 million and $170.8 million at December 31, 1996 and 1995, respectively. Earnings allocable to IDP's minority interest totalled $17.3 million for 1996. At December 31, 1996, Dresser had advances payable to IDP totalling $85.5 million, which was shown as a reduction in IDP's minority interest.
o Other liabilities (noncurrent) at December 31, 1996, totalled $148.7 million, which were $17.4 million higher than the balance at December 31, 1995. These obligations are not expected to be paid out in the next year. These accruals generally cover environmental, insurance, legal and other contractual obligations.
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o At the time of its acquisition by the company, Clark sponsored a Leveraged Employee Stock Ownership Plan (LESOP) for eligible employees. In connection with the acquisition, the company purchased the LESOP's Clark shares for $176.6 million. The company determined it would continue the LESOP to fund certain employee benefit plans. At December 31, 1996, approximately 1.5 million shares of the company's common stock were unallocated and the $55.6 million paid by the LESOP for those unallocated shares was classified as a reduction of shareowners' equity pending allocation to participants. (See Note 12 to the Consolidated Financial Statements for additional information.)
Other information concerning the company's financial resources, commitments and plans is as follows:
The average amount of short-term borrowings outstanding, excluding current maturities of long-term debt, was $58.0 million in 1996, compared to $156.1 million in 1995. The weighted average interest rate during 1996 was 7.8%, compared to 8.3% during the previous year. The maximum amounts outstanding during 1996 and 1995, were $181.7 million and $222.0 million, respectively.
The company had $800 million in domestic short-term credit lines at December 31, 1996, and $491.5 million of foreign credit available for working capital purposes, all of which were unused at the end of the year. These facilities exceed projected requirements for 1997 and provide direct support for commercial paper and indirect support for other financial instruments, such as letters of credit and comfort letters.
At December 31, 1996, the debt-to-total capital ratio was 39 percent, as compared to 45 percent at the prior year end. The significant improvement in the ratio at December 31, 1996, was primarily due to the company's continuing focus on cash management and an increase in the company's equity.
In 1996, foreign currency translation adjustments decreased shareowners' equity by $16.5 million. Translation adjustments of $6.3 million relating to the sale of foreign investments were included in income upon the sale of these businesses. The remaining change of $10.2 million was due to the strengthening of the U.S. dollar against other currencies in countries where the company has significant operations and the local currencies are the functional currencies. Currency changes in Australia, Belgium, Germany, Italy, Japan, Singapore, South Africa and the United Kingdom accounted for nearly all of the change.
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As a result of the Clark acquisition, the company is involved in certain repurchase arrangements relating to product-distribution and product-financing activities. As of December 31, 1996, repurchase arrangements relating to product financing by an independent finance company approximated $106 million. It is not practicable to determine the additional amount subject to repurchase solely under dealer distribution agreements. Upon the termination of a dealer, a newly selected dealer generally acquires the assets of the prior dealer and assumes any related financial obligation. Accordingly, the risk of loss to the company is minimal. Historically, Clark incurred only immaterial losses relating to these arrangements.
In 1996, the company continued to sell an undivided fractional ownership interest in designated pools of accounts and notes receivable up to a maximum of $150 million. Similar agreements have been in effect since 1987. These agreements expire in one- and two-year periods based on the particular pool of receivables sold. The company intends to renew these agreements at their expiration dates with either the current institution or another financial institution using the basic terms and conditions of the existing agreements. At December 31, 1996 and 1995, $150 million of such receivables remained uncollected.
Capital expenditures were $195 million and $212 million in 1996 and 1995, respectively. The company continues investing to improve manufacturing productivity, reduce costs and provide environmental enhancements, and advanced technologies for existing facilities. The capital expenditure program for 1997 is estimated at approximately $200 million, including amounts approved in prior periods. There are no planned projects, either individually or in the aggregate, that represent a material commitment for the company. Many of these projects are subject to review and cancellation at the option of the company without incurring substantial charges.
Environmental Matters
The company has been and continues to be dedicated to an environmental program to reduce the utilization and generation of hazardous materials during the manufacturing process and to remediate identified environmental concerns. As to the latter, the company currently is engaged in site investigations and remedial activities to address environmental cleanup from past operations at current and former manufacturing facilities, including the facilities added through the Clark acquisition.
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During 1996, the company spent approximately $8 million on capital projects for pollution abatement and control and an additional $6 million for environmental remediation expenditures at sites presently or formerly owned or leased by the company. It should be noted that these amounts are difficult to estimate because environmental improvement costs are generally a part of the overall improvement costs at a particular plant, and the accurate estimate of which portion of an improvement or a capital expenditure relates to an environmental improvement is difficult to ascertain. The company believes that these expenditure levels will continue and may increase over time. Given the evolving nature of environmental laws, regulations and technology, the ultimate cost of future compliance is uncertain.
The company is a party to environmental lawsuits and claims, and has received notices of potential violations of environmental laws and regulations from the Environmental Protection Agency and similar state authorities. It is identified as a potentially responsible party (PRP) for cleanup costs associated with off-site waste disposal at approximately 39 federal Superfund and state remediation sites (including Clark-acquired PRP locations), excluding sites as to which the company's records disclose no involvement or as to which the company's liability has been fully determined. For all sites there are other PRPs and in most instances, the company's site involvement is minimal. In estimating its liability, the company has not assumed it will bear the entire cost of remediation of any site to the exclusion of other PRPs who may be jointly and severally liable. The ability of other PRPs to participate has been taken into account, based generally on the parties' financial condition and probable contributions on a per site basis. Additional lawsuits and claims involving environmental matters are likely to arise from time to time in the future.
Although uncertainties regarding environmental technology, state and federal laws and regulations and individual site information make estimating the liability difficult, management believes that the total liability for the cost of remediation and environmental lawsuits and claims will not have a material effect on the financial condition, results of operations, liquidity or cash flows of the company for any year. It should be noted that when the company estimates its liability for environmental matters, such estimates are based on current technologies and the company does not discount its liability or assume any insurance recoveries.
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1995 Compared to 1994
1995 went down in the company's history as a year of financial records and the year of our largest acquisition. Our financial achievements in 1995 were the result of a solid and stable domestic economy for most of our company's products, moderately growing European markets and the continuing benefits from asset-management and productivity-improvement programs, which are becoming a daily thought process for more and more of our employees.
Sales for 1995 exceeded $5.7 billion, which generated $497 million of operating income and $270 million of net earnings ($2.55 per share). These results included our successful acquisition of Clark, effective June 1, 1995. Our 1995 results, before considering the positive benefits from the Clark acquisition, would have also established company records.
The Clark acquisition (which is described in Note 2 to the Consolidated Financial Statements) added more than $1 billion of sales on an annualized basis to the company's results. Products included Melroe's Bobcat skid-steer loaders and compact excavators, Clark-Hurth axles and transmissions (sold February 1997), Blaw-Knox pavers and Club Car golf cars and utility vehicles.
The company's economic outlook for 1996 was fairly consistent with 1995 and called for a steady improvement in operating results based on continued stability in our domestic markets and continued strength in our international markets. These expectations were bolstered by aggressive asset-management and productivity- improvement programs, as well as the company's focus on total quality management and reengineering efforts to accelerate our efficiency gains.
A comparison of key financial data between 1995 and 1994 follows:
o Net sales in 1995 established a record at $5.7 billion, reflecting a 27-percent improvement over 1994's total of $4.5 billion. Sales for 1995, excluding Clark, exceeded last year's total by approximately ten percent, and also established a new record.
o Cost of goods sold in 1995 was 75.2 percent of sales compared to 74.9 percent in 1994. Partial liquidations of LIFO (last-in, first-out) inventory lowered 1995 costs by only $3.4 million
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($2.1 million after-tax, or two cents per share) as compared to an $11.6 million ($7.1 million after-tax, or seven cents per share) liquidation in 1994. Excluding the effects of the LIFO liquidations, the 1995 cost of goods sold percentage relationship to sales would have been 75.3 percent versus 75.2 percent for 1994. The percentage of cost of goods sold to sales improved approximately one percent, excluding Clark and the loss on the paving business (a preacquisition requirement) from the calculation. This reduction represents the benefits derived from the company's continuing productivity-improvement and reengineering programs.
o Administrative, selling and service engineering expenses were 16.1 percent of sales in 1995, compared to 16.7 percent for 1994. The marked improvement was due to the continued effect of the company's efforts from productivity-improvement programs and the benefit of leverage from the increased sales volume, which were large enough to offset the effects of inflation for salaries, services, etc. The effect of the Clark acquisition did not have a material impact on these percentages in 1995.
o Operating income for 1995 totalled $497.0 million, a 32-percent increase over 1994's operating income of $377.0 million. Operating income in 1995, without Clark-related activities, totalled $435.1 million, reflecting a 15-percent increase over 1994's level.
o Interest expense for 1995 totalled $86.6 million, which was almost double 1994's level. Interest costs associated with Clark's existing debt and its acquisition totalled $47.7 million. The company's interest expense, without Clark, would have been $38.9 million, an 11.2-percent reduction from the company's 1994 interest expense total of $43.8 million. This was the result of lower interest rates and the company's aggressive asset-management program.
o Other income (expense), net, is essentially the sum of three activities: (i) foreign exchange, (ii) equity interests in partially-owned equity companies, and (iii) other miscellaneous income and expense items. In 1995, this category netted to an income balance of $9.4 million, a favorable change of $24.1 million over 1994's net expense of $14.7 million. A review of the components of this category shows that:
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o foreign exchange activity for 1995 totalled $6.2 million of losses, as compared to the $6.1 million of losses in 1994;
o earnings from equity interests in partially-owned equity companies were approximately $12.5 million higher than 1994's level, which included a loss on the sale of a partially-owned company; and
o other net miscellaneous expense items were approximately one-half the 1994 level, principally due to higher gains on the sale of fixed assets, higher royalty earnings and a favorable benefit from the activities of the Clark units.
o Dresser-Rand Company is a partnership between the company and Dresser. The company's pretax profits from its interest in Dresser-Rand for 1995 totalled $22.0 million, as compared to $24.6 million in 1994. The reduction is primarily attributed to lower sales volumes in 1995, when compared to 1994. However, Dresser-Rand began 1996 with a backlog in excess of $950 million.
o Ingersoll-Dresser Pump Company is another partnership between the company and Dresser in which the company owns the majority interest. In 1995, the minority interest charge was $12.7 million, as compared to the 1994 charge of $13.2 million. This charge reflects the portion of IDP's earnings that was allocable to our joint-venture partner and indicates that IDP's earnings in 1995 were lower than in 1994.
o The company's effective tax rate for 1995 was 37.0 percent, which represents a slight increase over the 36.0 percent reported for 1994. The variance from the 35.0 percent statutory rate was due primarily to the higher tax rates associated with foreign earnings, the effect of state and local taxes, and the nondeductibility of the goodwill associated with the Clark acquisition.
At December 31, 1995, employment totalled 41,133. This represents a net increase of 5,201 employees over 1994's level of 35,932. The Clark acquisition added 5,304 new employees, while employment levels in the company's traditional businesses declined by 103 people during 1995.
The following highlights the financial results and financial condition of the company's operations, with the impact of currency variations where appropriate:
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o Cash and cash equivalents totalled $137.3 million at December 31, 1995, a $69.7-million decrease from the December 31, 1994, balance of $207.0 million. In evaluating the net change in cash and cash equivalents, cash flows from operating, investing and financing activities, and the effect of exchange rate changes, should be considered. Cash flows from operating activities totalled $403.6 million, investing activities used $1,307.9 million and financing activities generated funds of $830.2 million. Exchange rate changes during 1995 increased cash and cash equivalents by approximately $4.4 million.
o Marketable securities totalled $9.3 million at the end of 1995, $5.1 million more than the balance at December 31, 1994. The increase was due to the investment of excess cash in various securities by foreign subsidiaries at favorable interest rates. Foreign marketable securities decreased slightly during the year due to foreign exchange rate fluctuations.
o Receivables totalled $1,109.9 million at December 31, 1995, compared to $949.4 million at December 31, 1994, for a net increase of $160.5 million. Currency translation increased the receivable balance during the year by $16.0 million, while acquisitions added approximately $193 million during 1995. However, the company's focus on decreasing its receivable base through its asset-management program produced a $50.9-million reduction in receivables during the year, in spite of the heavy sales volume in the fourth quarter of 1995. The average days outstanding in receivables decreased to 63.1 days from 1994's level of 64.6 days, as benefits from the company's asset- management program were beginning to be realized.
o Inventories amounted to $912.6 million at December 31, 1995, an increase of $233.3 million over the December 31, 1994, level of $679.3 million. Currency movements accounted for a $10.6 million increase in inventory for the year, while acquisitions (net of a contribution to a joint venture) accounted for an additional $207.5 million increase in inventory. The remaining increase of $15.2 million reflects a year-end inventory build to fulfill new orders during the first few months of the year based on the company's sales growth and backlog. However, the company's emphasis on inventory control was reflected in the reduction of the average months' supply of inventory, which was 3.3 months at December 31, 1995, compared to 3.7 months at December 31, 1994.
Page 18 of 65
o Prepaid expenses totalled $58.0 million at the end of 1995, $14.2 million higher than the balance at December 31, 1994. Foreign exchange activity had a minimal effect on the balance in this account, while acquisition activity accounted for an additional $8.3 million of the increase. The remaining net increase for the year was due to a general increase in the company's prepaid expenses.
o Deferred income taxes (current) of $118.5 million at December 31, 1995, represent the deferred tax benefit of the difference between the book and tax values of various current assets and liabilities. A schedule of the components for this balance is in Note 14 to the Consolidated Financial Statements. The year-end balance represented a decrease of $0.7 million from the December 31, 1994, level. Changes due to foreign currency movements had no effect on the year's activity.
o The investment in Dresser-Rand Company totalled $93.9 million at December 31, 1995. This represented a net increase of approximately $3.2 million from 1994's balance of $90.7 million. The components of the change for 1995 consisted of income for the current year of $22.0 million and an $18.8-million change in the advance account between the entities.
o The investments in partially-owned equity companies at December 31, 1995, totalled $223.3 million, $49.4 million higher than the 1994 balance. Income and dividends from investments in partially-owned equity companies were $26.2 million and $6.7 million, respectively. Amounts due from these units increased from $3.4 million to $20.4 million at December 31, 1995. Currency movements relating to partially-owned equity companies were approximately $1 million in 1995. During 1995, the company contributed approximately $11 million of assets for an equity interest in a European joint venture. These assets were principally inventory and fixed assets.
o Net property, plant and equipment increased by $319.1 million in 1995 to a year-end balance of $1,278.4 million. Fixed assets from acquisitions during 1995 added $292.0 million. Capital expenditures in 1995 totalled $211.7 million, a 33-percent increase over 1994's level. Foreign exchange fluctuations increased the net fixed asset values in U.S. dollars by approximately $12 million. The remaining net decrease was the result of depreciation, sales and retirements, and a contribution of assets to a joint-venture company.
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o Intangible assets, net, totalled $1,253.6 million at December 31, 1995, as compared to $124.5 million at December 31, 1994, for a net increase of $1,129.1 million. Acquisitions added $1,122.1 million of intangibles, primarily goodwill, during 1995. Goodwill from the Clark acquisition was approximately $740 million. In addition, Clark had approximately $380 million of goodwill when acquired. Amortization expense accounted for a reduction of $25.3 million. The remaining net change was attributable to an increase from currency fluctuations and an increase in the required pension intangible asset.
o Deferred income taxes (noncurrent) totalled $134.8 million at December 31, 1995. This net deferred asset arose in 1992 primarily because of the tax effects related to the adoption of SFAS No. 106 (Postretirement Benefits Other Than Pensions). The 1995 balance was $60.4 million higher than the 1994 balance principally due to taxes associated with or assumed as a result of the Clark acquisition. A listing of the components which comprised the balance at December 31, 1995, can be found in Note 14 to the Consolidated Financial Statements.
o Other assets totalled $233.7 million at December 31, 1995, an increase of $62.5 million from the December 31, 1994, balance of $171.2 million. The change in the account balance was primarily due to an increase in prepaid pensions and other noncurrent assets of approximately $19 million, with acquisition activity accounting for the balance of the increase. Foreign exchange activity in 1995 had a minimal effect on the account balance during the year.
o Accounts payable and accruals totalled $1,129.8 million at December 31, 1995, an increase of $246.0 million from December 31, 1994's balance of $883.8 million. Acquisition activity during 1995 accounted for $258.9 million of the increase and foreign exchange activity during the year added an additional $17.9 million. The company's aggressive cash-management program accounted for the balance of the reduction.
o Loans payable were $155.4 million at the end of 1995 and reflect a $38.2 million increase over the $117.2 million at December 31, 1994. Current maturities of long-term debt, included in loans payable, were $102.9 million and $4.2 million at December 31, 1995 and 1994, respectively. The company's aggressive cash- management program accounted for an $81.5-million reduction in short-term debt for 1995, while acquisition activity and
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foreign currency fluctuations increased short-term debt during 1995 by $15.0 million and $5.9 million, respectively. The change in current maturities of long-term debt included movement to current maturities of $103.5 million, payments of $17.9 million, acquired debt of $12.8 million and foreign exchange activity.
o Long-term debt, excluding current maturities, totalled $1,304.4 million at December 31, 1995, an increase of $988.5 million over the December 31, 1994, balance of $315.9 million. The acquisition of Clark resulted in $900 million of long-term debt relating to the purchase of Clark. The consolidation of Clark added another $195.4 million of debt to the company's balance sheet. Foreign currency fluctuations increased this liability by an additional $0.9 million. Reductions of $109.4 million in long-term debt were caused by the reclassification of $103.5 million of current maturities to loans payable and the early payment of an additional $5.9 million of debt during the year.
o Postemployment liabilities at December 31, 1995, totalled $832.1 million, an increase of $313.8 million over the December 31, 1994, balance. Postemployment liabilities include medical and life insurance postretirement benefits, long-term pension and other noncurrent postemployment accruals. The increase in the liability during 1995 was almost exclusively related to the Clark acquisition. Postemployment liabilities represent the company's noncurrent liabilities in accordance with SFAS Nos. 87, 106 and 112. (See Notes 16 and 17 to the Consolidated Financial Statements for additional information.)
o The Ingersoll-Dresser Pump Company minority interest, which represents Dresser's interest in the IDP joint venture, totalled $170.8 million and $154.1 million at December 31, 1995 and 1994, respectively. Earnings allocable to IDP's minority interest totalled $12.7 million for 1995, while increases due to translation adjustments totalled $2.9 million. At December 31, 1995, Dresser had loans payable to IDP totalling $9.7 million, which was shown as a reduction in IDP's minority interest.
o Other liabilities (noncurrent) at December 31, 1995, totalled $131.3 million, which were $94.0 million higher than the balance at December 31, 1994. The net increase for 1995 was almost exclusively related to the Clark acquisition. These obligations were not expected to be paid out in the company's next business
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cycle. These accruals generally covered environmental obligations, legal and other contractual obligations.
o At December 31, 1995, approximately 1.9 million shares of the company's common stock were unallocated and the $70.2 million paid by the LESOP for those unallocated shares was classified as a reduction of shareowners' equity pending allocation to participants. (See Note 12 to the Consolidated Financial Statements for additional information.)
Other information concerning the company's financial resources, commitments and plans is as follows:
The average amount of short-term borrowings outstanding, excluding current maturities of long-term debt, was $156.1 million in 1995, compared to $141.9 million in 1994. The weighted average interest rate during 1995 was 8.3%, compared to 6.8% during 1994. The maximum amounts outstanding during 1995 and 1994 were $222.0 million and $181.6 million, respectively. The increase in the 1995 average amount of short-term borrowings outstanding was attributable to short-term financings related to the Clark acquisition.
The company had $800 million in domestic short-term credit lines at December 31, 1995, and $676 million of foreign credit available for working capital purposes, all of which were unused at the end of the year. These facilities provide direct support for commercial paper and indirect support for other financial instruments, such as letters of credit and comfort letters.
At December 31, 1995, the debt-to-total capital ratio was 45 percent, as compared to 22 percent at December 31, 1994. The significant change in the ratio at December 31, 1995, was primarily due to the acquisition of Clark, which initially added approximately $1.5 billion of debt to the company's balance sheet, generating an initial debt-to-total capital ratio of 55 percent. Since the acquisition, the company's continuing programs of inventory reductions and spending controls to generate cash were used to reduce the company's overall debt obligations and lower the debt-to-total capital ratio to the 45-percent relationship at December 31, 1995.
In 1995, foreign currency adjustments increased shareowners' equity by approximately $20.7 million. The change was due to the weakening of the U.S. dollar against other currencies in countries where the company has significant operations and the local
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currencies are the functional currencies. Currency fluctuations in France, Germany, Italy, India, Japan, Singapore and Spain accounted for over 90 percent of the change. Inventories, accounts receivable, net property, plant and equipment, accounts payable and loans payable were the principal accounts affected.
As a result of the Clark acquisition, the company is involved in certain repurchase arrangements relating to product-distribution and product-financing activities. As of December 31, 1995, repurchase arrangements relating to product financing by an independent finance company approximated $102 million. It is not practicable to determine the additional amount subject to repurchase solely under dealer-distribution agreements. Under the repurchase arrangements relating to product-distribution and product-financing activities when dealer terminations do occur, a newly selected dealer generally acquires the assets of the prior dealer and assumes any related financial obligation. Accordingly, the risk of loss to the company is minimal. Historically, Clark incurred only immaterial losses relating to these arrangements.
In 1995, the company continued to sell an undivided fractional ownership interest in designated pools of accounts and notes receivable up to a maximum of $150 million. Similar agreements have been in effect since 1987. These agreements expire in one- and two-year periods based on the particular pool of receivables sold. The company intends to renew these agreements at their expiration dates with either the current institution or another financial institution using the basic terms and conditions of the existing agreements. At December 31, 1995 and 1994, $150 million and $125 million, respectively, of such receivables remained uncollected.
REVIEW OF BUSINESS SEGMENTS
Standard Machinery
Standard Machinery Segment sales were $2.9 billion, an increase of 28.3 percent over the $2.3 billion reported for 1995. Operating income for 1996 totalled $295.5 million, representing an increase of 32.7 percent over last year's total of $222.6 million. Effective June 1, 1995, this segment now includes all of the operations of Clark, except for Clark-Hurth. Excluding the sales from the Clark operations, 1996 sales were $1.8 billion, or $84.5 million higher than 1995's level. Operating income, excluding the Clark operations, was $137.6 million (or 12.4 percent below 1995's results). This amount included $28 million of charges associated
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with the European realignment and exit or abandonment of selected European product lines.
The Construction and Mining Group's sales for 1996, excluding the Blaw-Knox unit acquired from Clark, were up slightly over last year's level due to stronger domestic markets. The group's operating income and operating income margins were down from 1995's levels because the majority of the realignment and product exit costs for 1996 applied to this group. Sales for the Air Compressor Group were approximately seven percent higher than 1995's level based on continued strong demand for its products, domestically and internationally. The group reported improvement in operating income for the year. The operations of the Clark units, which are Melroe Company, Club Car, and Blaw-Knox, generated over $1.1 billion in sales and produced over $150 million of operating income for the first full year of operation under the company's ownership.
Engineered Equipment
Engineered Equipment Segment sales for 1996 totalled $1.3 billion, or 7.5 percent above 1995's level. Operating income was $108.5 million, which was more than double the 1995 total of $49.5 million. Operating income included noncomparable gains of approximately $55 million from the sales of the Process Systems Group during 1996. This segment includes the results of Clark- Hurth Group (sold February 1997).In addition, it includes the pre- sale activities of the Pulp Machinery Division (sold during the first quarter of 1996) and the Process Systems units (sold effective September 30, 1996). These divisions were collectively known as the Process Systems Group. Clark-Hurth's sales for 1996 approximated $350 million, which generated a modest amount of operating income. Clark-Hurth's results for the year were adversely affected by the depressed German economy and the company's decision to sell this unit.
IDP's sales for 1996 reflected an eight-percent improvement over the prior year's level. However, operating income, even after considering the closing costs for a steel foundry, was up significantly over 1995's results.
Bearings, Locks and Tools
In 1996, the Bearings, Locks and Tools Segment reported sales of $2.5 billion, a 10.7-percent increase over the prior year. Operating income totalled $323.3 million, an increase of more than $54 million over the $269.1 million reported for 1995.
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Bearings and Components Group sales for 1996 exceeded the prior year's level by more than five percent. A strong domestic automotive industry and continued benefits from cost-containment programs generated improved operating income and operating income margins for this group in 1996.
Architectural Hardware Group sales were significantly higher than 1995's level with approximately two-thirds of the increase attributed to the January 31, 1996, acquisition of Steelcraft. The group's operating income for the year was above 1995's level by approximately 30 percent, with one-third of the increase attributed to Steelcraft.
The Production Equipment Group sales in 1996 reflected a five- percent improvement over the amount reported for the prior year. However, operating income improved over 25 percent above 1995's level due to a stronger domestic economy, improved markets in the European-served area and the benefits derived from cost-containment and productivity-improvement programs.
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Consolidated Statement of Income
In millions except per share amounts

For the years ended December 31     1996         1995         1994
Net sales                       $6,702.9     $5,729.0     $4,507.5
Cost of goods sold               5,029.9      4,310.2      3,377.1
Administrative, selling and
  service engineering
  expenses                         989.5        921.8        753.4
Operating income                   683.5        497.0        377.0
Interest expense                  (119.9)       (86.6)       (43.8)
Other income (expense), net         (1.0)         9.4        (14.7)
Dresser-Rand income                 23.0         22.0         24.6
Ingersoll-Dresser Pump
  minority interest                (17.3)       (12.7)       (13.2)
Earnings before income taxes       568.3        429.1        329.9
Provision for income taxes         210.3        158.8        118.8
Net earnings                    $  358.0     $  270.3     $  211.1
Net earnings per share             $3.33        $2.55        $2.00	

See accompanying Notes to Consolidated Financial Statements.
Page 26 of 65

Consolidated Balance Sheet
In millions except share amounts
December 31                                     1996         1995
Assets
Current assets:
Cash and cash equivalents                   $  184.1     $  137.3
Marketable securities                            8.0          9.3
Accounts and notes receivable, less
  allowance for doubtful accounts of
  $34.3 in 1996 and $38.3 in 1995            1,066.2      1,109.9
Inventories                                    775.1        912.6
Prepaid expenses                                74.1         58.0
Assets held for sale                           265.7           --
Deferred income taxes                          162.4        118.5
                                             2,535.6      2,345.6
Investments and advances:
Dresser-Rand Company                           152.6         93.9
Partially-owned equity companies               223.6        223.3
                                               376.2        317.2
Property, plant and equipment, at cost:
Land and buildings                             637.9        682.9
Machinery and equipment                      1,465.8      1,522.3
                                             2,103.7      2,205.2
Less-accumulated depreciation                  958.3        926.8
                                             1,145.4      1,278.4
Intangible assets, net                       1,178.0      1,253.6
Deferred income taxes                          162.6        134.8
Other assets                                   223.8        233.7
                                            $5,621.6     $5,563.3	

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Consolidated Balance Sheet (continued)
In millions except share amounts
December 31                                     1996         1995
Liabilities and Equity
Current liabilities:
Accounts payable and accruals               $1,095.4     $1,129.8
Loans payable                                  162.3        155.4
Customers' advance payments                     19.1         17.7
Income taxes                                    13.4         26.3
                                             1,290.2      1,329.2
Long-term debt                               1,163.8      1,304.4
Postemployment liabilities                     814.7        832.1
Ingersoll-Dresser Pump Company
  minority interest                            113.4        170.8
Other liabilities                              148.7        131.3
Shareowners' equity:
Common stock, $2 par value, authorized
  400,000,000 shares; issued:
  1996-110,276,506; 1995-109,704,883           220.6        219.4
Capital in excess of par value                 143.5        121.6
Earnings retained for use in the business    1,869.6      1,595.5
                                             2,233.7      1,936.5
Less: Unallocated LESOP shares, at cost         55.6         70.2
      Treasury stock, at cost                   11.5         11.5
      Foreign currency equity adjustment        75.8         59.3
Shareowners' equity                          2,090.8      1,795.5
                                            $5,621.6     $5,563.3	

See accompanying Notes to Consolidated Financial Statements.
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Consolidated Statement of Shareowners' Equity

In millions except share amount
December 31                                  1996         1995        1994

Common stock, $2 par value:
  Balance at beginning of year           $  219.4     $  218.3    $  217.9
  Exercise of stock options                   1.1          1.0          .2
  Issuance of shares under
    stock plans                                .1           .1          .2
  Balance at end of year                    220.6        219.4       218.3
Capital in excess of par value:
  Balance at beginning of year              121.6         42.4        34.9
  Exercise of stock options
    including tax benefits                   17.5         14.6         3.3
  Issuance of shares under
    stock plans                               1.8          2.0         4.2
  Sale of treasury shares to LESOP             --         62.7          --
  Allocation of LESOP shares to
    employees                                 2.6          (.1)         --
  Balance at end of year                    143.5        121.6        42.4
Earnings retained for use
  in the business:
  Balance at beginning of year            1,595.5      1,403.7     1,268.5
  Net earnings                              358.0        270.3       211.1
  Cash dividends                            (83.9)       (78.5)      (75.9)
  Balance at end of year                  1,869.6      1,595.5     1,403.7
Unallocated leveraged employee
  stock ownership plan:
  Balance at beginning of year              (70.2)          --          --
  Purchase of treasury shares                  --        (73.1)         --
  Allocation of shares to employees          14.6          2.9          --
  Balance at end of year                    (55.6)       (70.2)         --
Treasury stock-at cost:
  Common stock, $2 par value:
  Balance at beginning of year              (11.5)       (53.1)      (53.1)
  Sale of treasury shares to LESOP             --         41.6          --
  Balance at end of year                    (11.5)       (11.5)      (53.1)
Foreign currency
  equity adjustment:
  Balance at beginning of year              (59.3)       (80.0)     (118.4)
  Adjustments due to:
    Translation changes                     (10.2)        20.7        38.4
    Dispositions                             (6.3)          --          --
  Balance at end of year                    (75.8)       (59.3)      (80.0)	

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Consolidated Statement of Shareowners' Equity (continued)

In millions except share amount
December 31                                  1996         1995        1994

Total shareowners' equity                $2,090.8     $1,795.5    $1,531.3
Shares of Capital Stock
Common stock, $2 par value:
  Balance at beginning of year        109,704,883  109,168,872 108,939,462
  Exercise of stock options               519,550      474,250     112,850
  Issuance of shares under
    stock plans                            52,073       61,761     116,560
  Balance at end of year              110,276,506  109,704,883 109,168,872
Unallocated leveraged employee
  stock ownership plan:
  Common stock, $2 par value:
  Balance at beginning of year          1,937,198           --          --
  Purchase of treasury shares                  --    2,878,008          --
  LESOP shares allocated to
    employees                            (403,194)    (940,810)         --
  Balance at end of year                1,534,004    1,937,198          --
Treasury stock:
  Common stock, $2 par value:
  Balance at beginning of year            794,724    3,672,732   3,672,732
  Sale of shares to LESOP                      --   (2,878,008)         --
  Balance at end of year                  794,724      794,724   3,672,732	

See accompanying Notes to Consolidated Financial Statements.
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Consolidated Statement of Cash Flows
In millions
For the years ended December 31              1996         1995       1994
Cash flows from operating activities:
 Net earnings                           $   358.0    $   270.3    $ 211.1
 Adjustments to arrive at net cash
   provided by operating activities:
   Depreciation and amortization            202.6        179.4      132.5
   (Gain)/loss on sale of businesses        (58.0)         7.1         --
   Gain on sale of property, plant
     and equipment                          (10.3)        (3.6)       (.1)
   Minority interests                        20.4         14.0       13.8
   Equity earnings/losses,
     net of dividends                       (35.6)       (41.5)     (36.4)
   Deferred income taxes                     (4.5)        15.1       14.2
   Other noncash items                       12.3          1.4      (10.5)
   Restructure of operations                 42.4           --         --
 Changes in assets and liabilities
   (Increase) decrease in:
     Accounts and notes receivable           (1.0)        50.9     (111.8)
     Inventories                             (5.3)       (15.2)      81.6
     Other current and noncurrent
       assets                               (36.8)       (33.1)     (14.6)
   (Decrease) increase in:
     Accounts payable and accruals          (17.8)       (37.9)      41.5
     Other current and noncurrent
        liabilities                         (80.7)        (3.3)     (19.5)
   Net cash provided by operating
      activities                            385.7        403.6      301.8

Cash flows from investing activities:
 Capital expenditures                      (195.0)      (211.7)    (158.6)
 Proceeds from sales of property,
   plant and equipment                       33.3         26.5        7.3
 Proceeds from business dispositions        183.8           --        2.2
 Acquisitions, net of cash*                (133.5)    (1,136.5)     (37.8)
 (Increase) decrease in marketable
   securities                                (3.6)        (4.6)       2.8
 Cash (invested in) or advances (to)
    from equity companies                   (34.9)        18.4       42.4
    Net cash used in investing
      activities                           (149.9)    (1,307.9)    (141.7)	

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Consolidated Statement of Cash Flows (Continued)

In millions
For the years ended December 31               1996         1995       1994

Cash flows from financing activities:
 Decrease in short-term borrowings     $    (24.3)   $   (81.5)   $ (31.4)
 Debt issuance costs                           --         (6.0)        --
 Proceeds from long-term debt                  .1        901.7        2.3
  Payments of long-term debt               (104.7)       (23.7)     (85.7)
  Net change in debt                       (128.9)       790.5     (114.8)
 Proceeds from exercise of stock
   options and treasury stock sales          16.3        118.2        3.0
  Dividends paid                            (83.9)       (78.5)     (75.9)
   Net cash (used in) provided by
      financing activities                 (196.5)       830.2     (187.7)
Effect of exchange rate changes on cash
  and cash equivalents                        7.5          4.4        6.6
 Net increase (decrease) in cash
   and cash equivalents                      46.8        (69.7)     (21.0)
 Cash and cash equivalents-
    beginning of year                       137.3        207.0      228.0
Cash and cash equivalents-end of year   $   184.1    $   137.3    $ 207.0

*Acquisitions:
 Working capital, other than cash       $   (22.1)   $  (161.4)   $  15.9
 Property, plant and equipment              (33.1)      (292.0)     (39.8)
 Intangibles and other assets               (81.7)    (1,330.0)     (32.6)
 Long-term debt and other liabilities         3.4        646.9       18.7
   Net cash used to acquire businesses  $  (133.5)   $(1,136.5)   $ (37.8)

Cash paid during the year for:
 Interest, net of amounts capitalized   $   120.2    $    72.1    $  47.3
  Income taxes                              262.3        120.1      119.8	

See accompanying Notes to Consolidated Financial Statements.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
 Ingersoll-Rand is a multinational manufacturer of primarily nonelectrical industrial machinery and equipment. The company's principal lines of business are air compressors, architectural hardware products, automotive parts and components, construction equipment, golf cars and utility vehicles, pumps and tools. The company's broad product line has applications in numerous industries including automotive, construction, mining, utilities, housing, recreational, as well as the general industrial market. A summary of significant accounting policies used in the preparation of the accompanying financial statements follows:
Principles of Consolidation: The consolidated financial statements include the accounts of all wholly-owned and majority-owned subsidiaries. Intercompany transactions and balances have been eliminated. Partially-owned equity companies are accounted for under the equity method. In conformity with generally accepted accounting principles, management has used estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and the disclosure of contingent assets and liabilities. Actual results could differ from those estimates.
Cash Equivalents: The company considers all highly liquid investments, consisting primarily of time deposits and commercial paper with maturities of three months or less when purchased, to be cash equivalents. Cash equivalents were $20.7 million and $40.0 million at December 31, 1996 and 1995, respectively.
Inventories: Inventories are generally stated at cost, which is not in excess of market. Domestic manufactured inventories of standard products are valued on the last-in, first-out (LIFO) method and all other inventories are valued using the first-in, first-out (FIFO) method.
Property and Depreciation: The company principally uses accelerated depreciation methods for assets placed in service prior to December 31, 1994, and the straight-line method for assets acquired subsequent to that date.
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Intangible Assets: Intangible assets primarily represent the excess of the purchase price of acquisitions over the fair value of the net assets acquired. Such excess costs are being amortized on a straight-line basis over various periods not exceeding 40 years. Goodwill at December 31, 1996 and 1995, was $1.1 billion and $1.2 billion, respectively. The carrying value of goodwill is evaluated periodically in relation to the operating performance and future undiscounted net cash flows of the related business. Intangible assets also represent costs allocated to patents, tradenames and other specifically identifiable assets arising from business acquisitions. These assets are amortized on a straight-line basis over their estimated useful lives. Accumulated amortization at December 31, 1996 and 1995, was $82.3 million and $47.0 million, respectively. Amortization of intangible assets was $38.0 million, $25.3 million and $6.8 million in 1996, 1995 and 1994, respectively.
Income Taxes: Deferred taxes are provided on temporary differences between assets and liabilities for financial reporting and tax purposes as measured by enacted tax rates expected to apply when temporary differences are settled or realized.
Environmental Costs: Environmental expenditures relating to current operations are expensed or capitalized as appropriate. Expenditures relating to existing conditions caused by past operations, which do not contribute to current or future revenues, are expensed. Costs to prepare environmental site evaluations and feasibility studies are accrued when the company commits to perform them. Liabilities for remediation costs are recorded when they are probable and reasonably estimable, generally no later than the completion of feasibility studies or the company's commitment to a plan of action. The assessment of this liability is calculated based on existing technology, does not reflect any offset for possible recoveries from insurance companies and is not discounted. There were no material changes in the liability for all periods presented.
Revenue Recognition: Sales of products are recorded for financial reporting purposes generally when the products are shipped.
Research, Engineering and Development Costs: Research and development expenditures, including engineering costs, are
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expensed when incurred and amounted to $209.3 million in 1996, $190.4 million in 1995 and $154.6 million in 1994.
Foreign Currency: Assets and liabilities of foreign entities, where the local currency is the functional currency, have been translated at year-end exchange rates, and income and expenses have been translated using weighted average-for-the-year exchange rates. Adjustments resulting from translation have been recorded in shareowners' equity and are included in net earnings only upon sale or liquidation of the underlying foreign investment.
For foreign entities where the U.S. dollar is the functional currency, including those operating in highly inflationary economies, inventory and property balances and related income statement accounts have been translated using historical exchange rates, and resulting gains and losses have been credited or charged to net earnings.
Foreign currency transactions and translations recorded in the income statement decreased net earnings by $3.5 million, $3.9 million and $5.1 million in 1996, 1995 and 1994, respectively. Shareowners' equity was decreased in 1996 by $16.5 million, increased in 1995 and 1994 by $20.7 million and $38.4 million, respectively, due to foreign currency equity adjustments related to translation and dispositions.
The company hedges certain foreign currency transactions and firm foreign currency commitments by entering into forward exchange contracts (forward contracts). Gains and losses associated with currency rate changes on forward contracts hedging foreign currency transactions are recorded currently in income. Gains and losses on forward contracts hedging firm foreign currency commitments are deferred off-balance sheet and included as a component of the related transaction, when recorded; however, a loss is not deferred if deferral would lead to the recognition of a loss in future periods.
Cash flows resulting from forward contracts accounted for as hedges of identifiable transactions or events are classified in the same category as the cash flows from the items being hedged.
Earnings Per Share: Net earnings per share of common stock are earnings divided by the average number of common shares outstanding during the year. The effect of common stock equivalents on earnings per share was not material.
Accounting Changes: The company principally uses accelerated depreciation methods for both tax and financial reporting purposes for assets placed in service prior to December 31, 1994.
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The company changed to the straight-line method for financial reporting purposes for assets acquired on or after January 1, 1995, while continuing to use accelerated depreciation for tax purposes. The straight-line method is the predominant method used throughout the industries in which the company operates and its adoption increases the comparability of the company's results with those of its competitors. The effect of the change on the year ended December 31, 1995, increased net earnings by approximately $6.8 million ($0.06 per share).
New Accounting Standards: In March 1995, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 121 "Accounting for Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of," which became effective on January 1, 1996. The adoption of SFAS No. 121 did not have a material impact on the company's consolidated financial statements. Also in 1995, the FASB issued SFAS No. 123, "Accounting for Stock-Based Compensation," which requires companies to measure employee stock compensation plans based on the fair value method of accounting or to continue to apply APB No. 25, "Accounting for Stock Issued to Employees," and provide pro forma footnote disclosures under the fair value method in SFAS No. 123. The company will continue to apply the principles of APB No. 25 and has provided pro forma fair value disclosures in Note 13. In June 1996, the FASB issued Statement No. 125 "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities." Adoption of this statement as of January 1, 1997, will have no material impact on the financial statements.
NOTE 2 - ACQUISITIONS OF BUSINESSES: On January 31, 1996, the
company acquired for $95.4 million in cash and the assumption of certain liabilities, the Steelcraft Division of MascoTech, Inc. Steelcraft manufactures a wide range of cold-rolled and galvanized steel doors for use primarily in nonresidential construction. On August 27, 1996, the company acquired for $34.3 million in cash and the assumption of certain liabilities, substantially all of the assets of Zimmerman International Corp. (Zimmerman). Zimmerman manufactures equipment and systems that assist in handling or lifting tools, components and materials for a variety of industrial operations.
In May 1995, the company acquired Clark Equipment Company for approximately $1.5 billion. Clark's business was the design,
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manufacture and sale of compact construction machinery, asphalt paving equipment, axles and transmissions for off-highway equipment, and golf cars and utility vehicles. Included among the assets acquired by the company (indirectly through the acquisition of the shares of Clark) were the Melroe Company, Blaw- Knox Construction Equipment Company, Clark-Hurth Components and Club Car, Inc.
The results of Clark's operations have been included in the consolidated financial statements from the acquisition date. The following unaudited pro forma consolidated results of operations for the year ended December 31, 1995, reflect the acquisition as though it occurred at the beginning of the period after adjustments for the impact of interest on acquisition debt, depreciation and amortization of assets, including goodwill, to reflect the purchase price allocation, and the elimination of Clark's income from discontinued operations related to its disposition of its investments in VME Group N.V. and Clark Automotive Products Corporation (in millions except per share amounts):

For the year ended December 31, 1995                 (Unaudited)
  Sales                                                $6,346.1
  Net earnings                                            283.5
  Earnings per share                                      $2.67	

It should be noted that the company's actual results for 1995 (and the above pro forma amounts) were adversely affected by the loss on the sale of the company's domestic paving business, which was a preacquisition requirement to the Clark purchase. The above pro forma results are not necessarily indicative of what the actual results would have been had the acquisition occurred at the beginning of the period. Further, the pro forma results are not intended to be a projection of future results of the combined companies.
During 1994, the company made several acquisitions. In April 1994, the company acquired full ownership of the ball bearing joint venture with GMN Georg Mueller of America, Inc. for $4.9 million in cash. The company previously owned 50 percent of the joint venture. The company acquired Montabert S.A., a French manufacturer of hydraulic rock-breaking and drilling equipment on June 30, 1994, for approximately $18.4 million, plus assumption of liabilities. In August 1994, the company acquired the Ecoair air compressor product line from MAN Gutehoffnungshutte AG (MAN GHH) for $10.6 million in cash. The company also entered into a
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50/50 joint venture, GHH-RAND Schraubenkompressoren GmbH & Co. KG (GHH-RAND) with MAN GHH to manufacture airends. The company invested approximately $17.6 million in GHH-RAND. The company also had several additional purchases of operations during the year totalling $3.9 million in cash.
These transactions have been accounted for as purchases and accordingly, each purchase price was allocated to the acquired assets and assumed liabilities based on their estimated fair values. The company has classified as intangible assets the costs in excess of the fair value of the net assets of companies acquired. The results of all acquired operations have been included in the consolidated financial statements from their respective acquisition dates.
NOTE 3 - DISPOSITIONS AND RESTRUCTURE OF OPERATIONS: In December
1996, the company announced that it would sell its Clark-Hurth Group to Dana Corporation. The sale price approximates the net book value of the assets. At December 31, 1996, the net assets subject to sale totalled $265.7 million and have been classified as current assets on the Consolidated Balance Sheet. Clark-Hurth Components has been reported as part of the Engineered Equipment Segment.
In August 1996, the company agreed to sell the remaining assets of the Process Systems Group to Gencor Industries, Inc., subject to certain closing conditions. The sale was completed during the fourth quarter of 1996 at a price of approximately $58 million in cash for a pretax gain of approximately $10 million. The Process Systems Group has been reported as part of the Engineered Equipment Segment.
On March 26, 1996, the company sold the assets of the Pulp Machinery Division (the largest unit in the Process Systems Group) for approximately $122.3 million to Beloit Corporation, a subsidiary of Harnischfeger Industries, Inc., for a pretax gain of $45 million. In addition, in March 1996, the company sold an investment for a gain of $4.8 million.
In the first and fourth quarters of 1996, the company accrued for the realignment of its foreign operations, principally in Europe. These accruals were primarily for severance payments and pension benefits associated with work force reductions. Also in the first quarter, accruals were established for the exit or abandonment of selected European product lines and the closing of a steel foundry. These accruals totalled $42.4 million and were charged to operating income.
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On May 15, 1995, the company sold its domestic paving equipment business to Champion Road Machinery Limited of Canada. The sale was a preacquisition requirement, in order to satisfy concerns of the United States Justice Department, prior to the Clark acquisition. The company incurred a $7.1 million pretax loss associated with this sale.
In 1994, the assets of the IDP Australian operations were sold in return for shares of the purchaser. The company and Dresser Industries sold IRI International Corporation, a 50/50 joint venture that is a manufacturer of mobile drilling rigs, to a third party.
NOTE 4 - INVENTORIES: At December 31, inventories were as
follows:

In millions                                  1996           1995
Raw materials and supplies                 $156.2       $  211.8
Work-in-process                             238.7          326.1
Finished goods                              538.1          538.5
                                            933.0        1,076.4
Less-LIFO reserve                           157.9          163.8
Total                                      $775.1       $  912.6	

Work-in-process inventories are stated after deducting customer progress payments of $24.9 million in 1996 and $38.8 million in 1995. At December 31, 1996 and 1995, LIFO inventories comprised approximately 43 percent and 41 percent, respectively, of consolidated inventories.
During the periods presented, certain inventory quantities were reduced, resulting in partial liquidations of LIFO layers. This decreased cost of goods sold by $4.8 million in 1996, $3.4 million in 1995 and $11.6 million in 1994. These liquidations increased net earnings in 1996, 1995 and 1994 by approximately $2.9 million ($0.03 per share), $2.1 million ($0.02 per share) and $7.1 million ($0.07 per share), respectively.
NOTE 5 - INVESTMENTS IN PARTIALLY-OWNED EQUITY COMPANIES: The
company has numerous investments, ranging from 20 percent to 50 percent, in companies that operate in similar lines of business.
The company's investments in and amounts due from partially- owned equity companies amounted to $205.3 million and $18.3 million, respectively, at December 31, 1996, and $202.9 million and $20.4 million, respectively, at December 31, 1995.
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The company's equity in the net earnings of its partially-owned equity companies was $19.4 million, $26.2 million and $15.6 million in 1996, 1995 and 1994, respectively.
The company received dividends based on its equity interests in these companies of $6.8 million, $6.7 million and $3.8 million in 1996, 1995 and 1994, respectively.
Summarized financial information for these partially-owned equity companies at December 31, and for the years presented was:

In millions                                  1996           1995
Current assets                           $ 463.9          $467.6
Property, plant and
  equipment, net                           279.4           284.9
Other assets                                29.7            30.2
Total assets                             $ 773.0          $782.7
Current liabilities                      $ 243.7          $272.0
Long-term debt                              78.2            56.5
Other liabilities                           37.0            47.4
Total shareowners' equity                  414.1           406.8
Total liabilities
  and equity                             $ 773.0          $782.7

In millions                   1996           1995           1994
Net sales                  $ 890.5        $ 872.5         $701.0
Gross profit                 165.0          180.2          142.0
Net earnings                  42.6           55.8           33.7	

NOTE 6 - DRESSER-RAND COMPANY: Dresser-Rand Company is a
partnership between Dresser Industries, Inc. (51 percent), and the company (49 percent) comprising the worldwide reciprocating compressor and turbomachinery businesses of the two companies. The company's investment in Dresser-Rand is accounted for using the equity method of accounting.
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Summarized financial information for Dresser-Rand at December 31, and for the years presented was:

In millions                                  1996           1995
Current assets                           $  496.5       $  457.2
Property, plant and
  equipment, net                            262.5          239.3
Other assets                                 49.8           27.2
Total assets                                808.8          723.7
Deduct:
Current liabilities                         306.4          341.4
Other liabilities                           204.4          200.8
                                            510.8          542.2
Net partners' equity
  and advances                           $  298.0       $  181.5

In millions                    1996          1995           1994
Net sales                  $1,179.9      $1,081.4       $1,219.4
Gross profit                  226.7         212.5          203.1
Net earnings                   46.9          44.9           50.2	

The company's investment in Dresser-Rand was $149.4 million and $182.8 million at December 31, 1996 and 1995, respectively. Dresser-Rand owed the company $3.2 million at December 31, 1996, and the company owed Dresser-Rand $88.9 million at December 31, 1995. During 1996, Dresser-Rand approved and distributed $115.7 million of capital to its partners of which $56.7 million was distributed to the company.
NOTE 7 - ACCOUNTS PAYABLE AND ACCRUALS: Accounts payable and
accruals at December 31, were:

In millions                                  1996           1995
Accounts payable                         $  295.8       $  337.5
Accrued:
  Payrolls and benefits                     184.0          177.4
  Taxes                                      40.4           59.5
  Insurance and claims                      104.1          110.9
  Postemployment benefits                    99.4           98.5
  Warranties                                 45.0           52.3
  Interest                                   33.6           33.6
Other accruals                              293.1          260.1
                                         $1,095.4       $1,129.8	

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NOTE 8 - LONG-TERM DEBT AND CREDIT FACILITIES:
 At December 31, long-term debt consisted of:

In millions                                  1996           1995
6 7/8% Notes Due 2003                   $  100.0        $  100.0
9% Debentures Due 2021                     125.0           125.0
7.20% Debentures Due 2025                  150.0           150.0
6.48% Redeemable Debentures Due 2025       150.0           150.0
Medium Term Notes Due 1998-2004, at
  an average rate of 6.63%                 467.5           600.0
9.75% Clark Debentures Due 2001            100.0           100.0
Clark Medium Term Notes Due 1998-2023,
  at an average rate of 7.89%               60.2            60.2
Other domestic and foreign
  loans and notes, at end-
  of-year average interest
  rates of 5.53% in 1996
  and 6.53% in 1995, maturing
  in various amounts to 2025                11.1            19.2
                                        $1,163.8        $1,304.4	

Debt retirements for the next five years are as follows:
$133.2 million in 1997, $144.8 million in 1998, $100.9 million in 1999, $101.3 million in 2000 and $101.2 million in 2001.
In June 1995, the company issued $150.0 million of debentures at 7.20% per annum, which are not redeemable prior to maturity in 2025, but require annual installments of $7.5 million into a sinking fund beginning June 1, 2006, and $150.0 million of debentures at 6.48% per annum due in 2025, which may be repaid at the option of the holder on June 1, 2005. During July and August 1995, the company issued medium-term notes totalling $600.0 million at an average rate of 6.57% with maturities ranging from 1997 to 2004. The proceeds from these financings were used to refinance short-term borrowings related to the acquisition of Clark.
At December 31, 1996, the company had two five-year committed revolving credit lines totalling $800.2 million, both of which were unused. These lines provide support for commercial paper and indirectly provide support for other financial instruments, such as letters of credit and comfort letters, as required in the normal course of business. The company compensates banks for these lines with fees equal to .08% per annum. Available foreign lines of credit were $539.7 million, of which $491.5 million were unused at December 31, 1996. No major cash balances were subject to withdrawal restrictions. At December 31, 1996, the average
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rate of interest for loans payable, excluding the current portion of long-term debt, was 10.7% and related primarily to foreign loans totalling $28.3 million.
Capitalized interest on construction and other capital projects amounted to $4.6 million, $3.5 million and $3.2 million in 1996, 1995 and 1994, respectively. Interest income, included in other income (expense), net, was $10.3 million, $11.5 million and $11.5 million in 1996, 1995 and 1994, respectively.
NOTE 9 - FINANCIAL INSTRUMENTS: The company, as a large
multinational company, maintains significant operations in foreign countries. As a result of these global activities, the company is exposed to changes in foreign currency exchange rates, which affect the results of operations and financial condition. The company manages exposure to changes in foreign currency exchange rates through its normal operating and financing activities, as well as through the use of financial instruments. Generally, the only financial instruments the company utilizes are forward exchange contracts.
The purpose of the company's hedging activities is to mitigate the impact of changes in foreign currency exchange rates. The company attempts to hedge transaction exposures through natural offsets. To the extent this is not practicable, major exposure areas which are considered for hedging include, foreign currency denominated receivables and payables, intercompany loans, firm committed transactions, anticipated sales and purchases, and dividends relating to foreign subsidiaries. The following table summarizes by major currency the contractual amounts of the company's forward contracts in U.S. dollars. Foreign currency amounts are translated at year-end rates at the respective reporting date. The "buy" amounts represent the U.S. equivalent of commitments to purchase foreign currencies, and the "sell" amounts represent the U.S. equivalent of commitments to sell foreign currencies. Some of the forward contracts involve the exchange of two foreign currencies according to local needs in foreign subsidiaries.
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At December 31, the contractual amounts were:

In millions                      1996                 1995
                             Buy      Sell        Buy      Sell
Australian dollars        $  9.7    $  1.8      $  -     $  1.4
Austrian schilling           4.3        -         9.6       1.6
Belgian francs               4.4        .5        3.2       8.3
Canadian dollars            15.2       5.5       10.4       6.6
Deutsche marks              10.9     131.3       10.2     135.6
Dutch guilders                -        2.1       20.2       7.8
French francs                4.8      14.1       24.1      38.5
Italian lira                31.7       4.5       41.1       6.9
Japanese yen                13.8       4.4       19.0       2.0
Pounds sterling             54.0     155.5       25.1     128.8
South African rand           1.5      14.8        3.5      12.8
Other                       10.2       5.4        6.5       6.2
  Total                   $160.5    $339.9     $172.9    $356.5	

Forward contracts for normal operating activities have maturities of one to 12 months; and forward contracts for intercompany loans have maturities that range from one month to 36 months.
The company's forward contracts do not subject the company to risk due to foreign exchange rate movement, since gains and losses on these contracts generally offset losses and gains on the assets, liabilities or other transactions being hedged.
The counterparties to the company's forward contracts consist of a number of major international financial institutions. The credit ratings and concentration of risk of these financial institutions are monitored on a continuing basis and present no significant credit risk to the company.
The carrying value of cash and cash equivalents, marketable securities (classified as held to maturity), accounts receivable, short-term borrowings and accounts payable are a reasonable estimate of their fair value due to the short-term nature of these instruments. The following table summarizes the estimated fair value of the company's remaining financial instruments at December 31:
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In millions                                  1996           1995
Long-term debt:
Carrying value                           $1,163.8       $1,304.4
Estimated fair value                      1,194.8        1,410.6

Forward contracts:
Contract (notional) amounts:
  Buy contracts                          $  160.5       $  172.9
  Sell contracts                            339.9          356.5
Fair (market) values:
  Buy contracts                             161.0          172.9
  Sell contracts                            349.5          356.8	

Fair value of long-term debt was determined by reference to the December 31, 1996 and 1995, market values of comparably rated debt instruments. Fair values of forward contracts are based on dealer quotes at the respective reporting dates.
NOTE 10 - COMMITMENTS AND CONTINGENCIES: The company is involved
in various litigations, claims and administrative proceedings, including environmental matters, arising in the normal course of business. In assessing its potential environmental liability, the company bases its estimates on current technologies and does not discount its liability or assume any insurance recoveries. Amounts recorded for identified contingent liabilities are estimates, which are reviewed periodically and adjusted to reflect additional information when it becomes available. Subject to the uncertainties inherent in estimating future costs for contingent liabilities, management believes that recovery or liability with respect to these matters would not have a material effect on the financial condition, results of operations, liquidity or cash flows of the company for any year.
In 1996, the company continued to sell an undivided interest in designated pools of accounts and notes receivable up to a maximum of $150 million. Similar agreements have been in effect since 1987. During 1996, 1995 and 1994, such sales amounted to $593.7 million, $533.7 million and $487.8 million, respectively. At December 31, 1996 and 1995, $150 million of such sold receivables remained uncollected. The undivided interest in the designated pool of receivables was sold with limited recourse. These agreements expire in one- and two-year periods based on the particular pool of receivables sold. The company intends to renew these agreements at their expiration dates with either the current financial institution or another financial institution,
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using the basic terms and conditions of the existing agreements. The company has retained collection and administrative responsibilities as agent for the purchaser for receivables sold.
Receivables, excluding the designated pool of accounts and notes receivable, sold during 1996, 1995 and 1994 with recourse, amounted to $147.4 million, $175.9 million and $64.6 million, respectively. At December 31, 1996 and 1995, $36.2 million and $35.3 million, respectively, of such receivables sold remained uncollected.
As of December 31, 1996, the company had no significant concentrations of credit risk in trade receivables due to the large number of customers which comprised its receivables base and their dispersion across different industries and countries.
In the normal course of business, the company has issued several direct and indirect guarantees, including performance letters of credit, totalling approximately $138.4 million at December 31, 1996. Management believes these guarantees will not adversely affect the consolidated financial statements.
Additionally, the company has entered into certain repurchase arrangements relating to product-distribution and product- financing activities involving the company's continuing operations. As of December 31, 1996, repurchase arrangements relating to product financing by an independent finance company approximate $106 million. It is not practicable to determine the additional amount subject to repurchase solely under dealer- distribution agreements. The total exposure to loss on these repurchase arrangements is subject to a $1 million ultimate net loss provision. The company has also guaranteed the residual value of leased product in the aggregate amount of $24.9 million. Upon the termination of a dealer, a newly selected dealer generally acquires the assets of the prior dealer and assumes any related financial obligation. Accordingly, the risk of loss to the company is minimal, and historically, only immaterial losses have been incurred relating to these arrangements.
Clark sold Clark Material Handling Company (CMHC), its forklift truck business, to Terex Corporation (Terex) in 1992. In 1996, Terex sold CMHC to CMHC Acquisition Corp. (CMHCAC). Terex and CMHCAC assumed substantially all of the obligations for existing and future product liability claims involving CMHC products. In the event that Terex and CMHCAC fail to perform or are unable to discharge any of the assumed obligations, the company could be required to discharge such obligations. While the aggregate losses associated with these obligations could be significant, the company does not believe they would materially affect the financial condition, the results of operations,
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liquidity or cash flows of the company in any year.
Certain office and warehouse facilities, transportation vehicles and data processing equipment are leased. Total rental expense was $66.9 million in 1996, $64.7 million in 1995 and $56.2 million in 1994. Minimum lease payments required under noncancellable operating leases with terms in excess of one year for the next five years and thereafter, are as follows: $37.3 million in 1997, $26.8 million in 1998, $15.4 million in 1999, $8.7 million in 2000, $6.3 million in 2001 and $16.2 million thereafter.
NOTE 11 - COMMON STOCK: On December 7, 1988, the board of
directors adopted a Rights Plan (Plan) and declared a dividend distribution of one right for each then outstanding share of the company's common stock. As a result of the two-for-one stock split in 1992, each current outstanding share of the company's common stock has one-half a right associated with it. In December 1994, the Plan was amended by the board of directors. Under the Plan as amended, each right entitles the holder to purchase 1/100th of a share of Series A preference stock at an exercise price of $130. The company has reserved 563,000 shares of Series A preference stock for issuance upon exercise of the rights. The rights become exercisable in accordance with the provisions of the Plan on (i) the tenth day following the acquisition by a person or group of persons of 15 percent or more of the company's common stock, (ii) the tenth day after the commencement of a tender or exchange offer for 15 percent or more of the company's common stock, or (iii) the determination by the board of directors that a person is an Adverse Person as defined in the Plan (Distribution Date). Upon either a person's becoming an Acquiring Person as defined in the Plan, or the board's determination that a person is an Adverse Person, or the occurrence of certain other events following the Distribution Date, each holder of a right shall thereafter have a right to receive the common stock of the company (or in certain circumstances, the stock of an acquiring entity) for a price of approximately half its value. The rights are not exercisable by any Acquiring Person or Adverse Person. The Plan as amended provides that the board of directors, at its option any time after any person becomes an Acquiring Person or an Adverse Person, may exchange all or part of the outstanding and exercisable rights for shares of common stock, currently at an exchange ratio of one right for two shares. The right of the
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holders to exercise the rights to purchase shares automatically terminates if the board orders an exchange of rights for shares. The rights may be redeemed by the company for one cent per right in accordance with the provisions of the Plan. The rights will expire on December 22, 1998, unless redeemed earlier by the company.
Shares held in treasury at December 31, 1996, will be used for employee benefit plans and for other corporate purposes.
NOTE 12 - LEVERAGED EMPLOYEE STOCK OWNERSHIP PLAN: At the time
of its acquisition by the company, Clark sponsored a Leveraged Employee Stock Ownership Plan (LESOP) for eligible employees. In connection with the acquisition, the company purchased the LESOP's shares for $176.6 million. The company determined it would continue the LESOP to fund certain employee benefit plans. Accordingly, on September 28, 1995, the company sold 2,878,008 shares of its common stock held in treasury to the LESOP, for a price of $36.25 per share (the closing price of the common stock on September 27, 1995, on the New York Stock Exchange) or an aggregate of $104.3 million. At December 31, 1996, approximately 1.5 million of these shares remain unallocated and the $55.6 million paid by the LESOP for those unallocated shares is classified as a reduction of shareowners' equity pending allocation to participants. At December 31, 1996, the LESOP owed the company $29.9 million payable in monthly installments through 2001. Company contributions to the LESOP and dividends on unallocated shares are used to make loan principal and interest payments. With each principal and interest payment, the LESOP allocates a portion of the common stock to participating employees.
NOTE 13 - INCENTIVE STOCK PLANS: Under the company's Incentive
Stock Plans, key employees have been granted options to purchase common shares at prices not less than the fair market value at the date of grant. Options become exercisable one year after the date of the grant and expire at the end of ten years. The plans, approved in 1985, 1990 and 1995, also authorize stock appreciation rights (SARs) and stock awards. If SARs issued in conjunction with stock options are exercised, the related stock options are cancelled; conversely, the exercise of stock options cancels the SARs.
As permitted by SFAS No. 123, "Accounting for Stock Based Compensation," the company continues to account for its stock plans in accordance with Accounting Principles Board Opinion No.
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25, "Accounting for Stock Issued to Employees," and its related interpretations. Accordingly, compensation expense has been recognized for SARs (which were generally settled for cash) and for stock awards. Had compensation cost for the applicable provisions of the company's incentive stock plans been determined based upon the fair value at the grant date for awards issued in 1995 and 1996 in accordance with the methodology prescribed under SFAS No. 123, the company's net earnings and earnings per share would have been reduced by approximately $6.7 million (or six cents per share) in 1996 and $1.6 million (or one cent per share) in 1995. The 1996 effect on earnings includes approximately $2.9 million (or three cents per share) attributed to the company's revocation as of December 15, 1996, of 1,839,000 SARs which were previously attached to stock options. The average fair values of the options granted during 1996 and 1995 were estimated at $10.97 and $8.65, respectively, on the date of grant, using the Black- Scholes option-pricing model which included the following assumptions:

                                          1996            1995
Dividend yield                           1.86%           2.04%
Volatility                              22.52%          22.69%
Risk-free interest rate                  6.17%           6.42%
Forfeiture rate                             --             --
Expected life                          4 years         4 years	

Changes in options outstanding under the plans were as follows:

                               Shares subject       Option price
                                    to option    range per share
January 1, 1995                     3,384,300       $10.04-37.19
Granted                               988,900        34.75-40.06
Exercised                             749,800        10.04-34.94
Cancelled                              21,000              34.94
December 31, 1995                   3,602,400       $11.95-40.06
Granted                             1,266,500        37.44-46.69
Exercised                             898,800        11.95-36.25
December 31, 1996                   3,970,100       $20.75-46.69	

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At December 31, 1996, there were also 168,500 SARs outstanding with no stock options attached. The company has reserved 3,982,345 shares for future awards at December 31, 1996. In addition, 309,528 shares of common stock were reserved for future issue, contingent upon attainment of certain performance goals and future service.
The following table summarizes information concerning currently outstanding and exercisable options:

                                   Options                Options
                                 Outstanding            Exercisable
                             Weighted    Weighted               Weighted
                   Number     Average     Average    Number     Average
   Range of     Outstanding  Remaining   Exercise  Exercisable  Exercise
Exercise Price  at 12/31/96    Life       Price    at 12/31/96    Price

$20.75-25.00       257,500      3.6      $22.39      257,500     $22.39
 25.01-30.00       194,000      3.6       26.89      194,000      26.89
 30.01-35.00     1,382,700      6.6       33.23    1,382,700      33.23
 35.01-40.00     2,075,900      8.9       38.03      859,400      36.24
 40.01-45.00        51,000      9.4       42.20       10,000      40.06
 45.01-46.69         9,000      9.9       46.69            -          -
$20.75-46.69     3,970,100                         2,703,600	

The company also maintains a shareowner-approved Management Incentive Unit Award Plan. Under the plan, qualifying executives are awarded incentive units. When dividends are paid on common stock, dividends are awarded to unit holders, one-half of which is paid in cash, the remaining half of which is credited to the participant's account in the form of so-called common stock equivalents. The fair value of accumulated common stock equivalents is paid in cash upon the participant's retirement. The number of common stock equivalents credited to participants' accounts at December 31, 1996 and 1995, are 265,109 and 288,837, respectively.
NOTE 14 - INCOME TAXES: Earnings before income taxes for the
years ended December 31, were taxed within the following jurisdictions:

In millions                    1996          1995           1994
United States                $467.3        $308.0         $279.4
Foreign                       101.0         121.1           50.5
Total                        $568.3        $429.1         $329.9	

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The provision for income taxes was as follows:

In millions                    1996          1995           1994
Current tax expense:
  United States              $186.6        $101.3         $ 69.8
  Foreign                      49.5          42.7           34.8
  Total current               236.1         144.0          104.6
Deferred tax expense:
  United States               (16.4)         10.6           30.3
  Foreign                     ( 9.4)          4.2          (16.1)
  Total deferred              (25.8)         14.8           14.2
  Total provision for
    income taxes             $210.3        $158.8         $118.8	

The provision for income taxes differs from the amount of income taxes determined by applying the applicable U.S. statutory income tax rate to pretax income, as a result of the following differences:

                                       Percent of pretax income
                                     1996       1995       1994
Statutory U.S. rates                 35.0%      35.0%      35.0%
Increase (decrease) in rates
  resulting from:
  Foreign operations                   .8        1.0         .3
  Earnings/losses of equity
   companies                          (.8)      (1.8)       (.9)
  State and local income taxes,
    net of U.S. tax                   1.5        1.3        1.6
  Other                                .5        1.5         --
Effective tax rates                  37.0%      37.0%      36.0%	

Page 51 of 65
A summary of the deferred tax accounts at December 31, follows:

In millions                                      1996       1995       1994
Current deferred assets and (liabilities):
  Differences between book and tax bases
    of inventories and receivables             $ 37.9     $ 30.8     $ 36.5
  Differences between book and tax
    expense for other employee related
    benefits and allowances                      39.3       35.3       33.9
  Provisions for restructure of
    operations and plant closings
    not yet deductible for tax purposes          11.1        9.4        6.4
  Other reserves and valuation
    allowances in excess of tax deductions       61.6       53.1       32.5
  Other differences between tax and
    financial statement values                   12.5      (10.1)       9.9
    Gross current deferred net tax assets       162.4      118.5      119.2	

Page 52 of 65

In millions                                      1996       1995       1994

Noncurrent deferred tax assets and
  (liabilities):
  Tax items associated with equity
    companies                                    10.7       11.1       13.0
  Postretirement and postemployment
    benefits other than pensions in
    excess of tax deductions                    246.7      252.5      159.9
  Other reserves in excess of tax expense        80.5       65.0       36.3
  Tax depreciation in excess of book
    depreciation                                (60.2)     (85.5)     (46.0)
  Pension contributions in excess of
    book expense                                (52.0)     (51.2)     (47.5)
  Taxes provided for unrepatriated
    foreign earnings                            (28.5)     (28.5)     (20.1)
    Gross noncurrent deferred net tax assets    197.2      163.4       95.6
    Less:  deferred tax valuation allowances    (34.6)     (28.6)     (21.2)
      Total net deferred tax assets            $325.0     $253.3     $193.6	

A total of $28.5 million of deferred taxes have been provided for a portion of the undistributed earnings of subsidiaries operating outside of the United States. As to the remainder, these earnings have been, and under current plans will continue to be reinvested and it is not practicable to estimate the amount of additional taxes which may be payable upon repatriation.
Page 53 of 65
NOTE 15 - BUSINESS SEGMENT INFORMATION: A description of
business segments and operations by business segment and geographic area for the three years ended December 31, 1996, were as follows:
DESCRIPTION OF BUSINESS SEGMENTS
 Ingersoll-Rand's operations are organized into three worldwide business segments: Standard Machinery; Engineered Equipment; and Bearings, Locks and Tools.
Standard Machinery
The segment's products are categorized into five groups:
Air Compressor - products include portable, reciprocating, rotary and centrifugal air compressors, vacuum pumps, air drying and filtering systems, and other compressor accessories. The products are used primarily to supply pressurized air to industrial plants, refineries, chemical plants, electrical utilities and service stations.
Construction and Mining - manufactures vibratory compactors, asphalt pavers, rock drills, blasthole drills, water-well drills, crawler drills, jumbo drills, jackhammers and rock and roof stabilizers primarily for the construction, highway maintenance, metals-mining and well-drilling industries.
Melroe - manufactures skid-steer loaders, compact hydraulic excavators and self-propelled agricultural sprayers. The products are used primarily by the construction and agricultural industries.
Club Car - manufactures golf cars and utility vehicles which are used primarily in the golf and resort industries.
Mining Machinery(1) - products included continuous and long- wall mining machines, crushers, coal haulers and mine-service vehicles, which principally served the underground coal-mining industry.
Engineered Equipment
The segment's products are categorized into three groups:
Pump - manufactures centrifugal and reciprocating pumps. These products serve oil production and refining, chemical
Page 54 of 65
process, marine, agricultural, electric utility and general manufacturing industries.
Process Systems(2) - consisted of pulp and paper processing equipment, pelleting equipment, filters, aerators and dewatering systems. This equipment was used in the pulp and paper, food and agricultural, and minerals-processing industries.
Clark-Hurth(3) - manufactured a broad line of axles and transmissions for the off-highway vehicle industry.
Bearings, Locks and Tools
The segment's products are categorized into three groups:
Bearings and Components - principal products include needle bearings, needle roller bearings, needle rollers, thrust bearings, tapered roller bearings, drawn cup bearings, high-precision ball bearings, spherical bearings, radial bearings, universal joints, dowel pins, swagers and precision components. These products are sold principally to durables- industry customers primarily in the automotive and aerospace markets.
Production Equipment - manufactures air-powered tools, hoists and winches, air motors and air starters, automated assembly and test systems, air and electric automated fastener tightening systems, and waterjet cutting systems. These products are sold to general manufacturing industries and to the appliance, aircraft, construction and automotive industries.
Architectural Hardware(4) - major products include locks, steel doors, door closers and exit devices used in commercial and residential construction and the retail hardware market.
(1)
The Mining Machinery Group was sold during 1993.
(2)
The Process Systems Group was sold during 1996.
(3)
Clark-Hurth was sold in February 1997.
(4)
Prior to January 1, 1996, the Door Hardware Group.

Operations by Business Segments                                            Page 55 of 65
Dollar amounts in millions
For the years ended                         % of                % of                 % of
December 31                         1996   total        1995   total         1994   total
Standard Machinery
Sales                           $2,913.1     43%    $2,270.6     40%     $1,445.7     32%
Operating income                   295.5     41%       222.6     41%        122.4     30%
Operating income as % of sales      10.1%                9.8%                 8.5%
Identifiable assets              2,560.2             2,528.0              1,099.6
Depreciation and amortization       81.7                62.7                 31.5
Capital expenditures                59.9                56.7                 30.9

Engineered Equipment
Sales                            1,307.7     20%     1,216.2     21%        926.4     21%
Operating income                   108.5     15%        49.5      9%         35.3      8%
Operating income as % of sales       8.3%                4.1%                 3.8%
Identifiable assets                904.0             1,061.8                634.5
Depreciation and amortization       44.5                40.0                 28.8
Capital expenditures                36.7                42.3                 30.3

Bearings, Locks and Tools
Sales                            2,482.1     37%     2,242.2     39%      2,135.4     47%
Operating income                   323.3     44%       269.1     50%        256.6     62%
Operating income as % of sales      13.0%               12.0%                12.0%
Identifiable assets              1,391.0             1,208.1              1,185.1
Depreciation and amortization       74.0                75.0                 70.9
Capital expenditures                97.2               107.9                 97.0

Total
Sales                            6,702.9    100%     5,729.0    100%      4,507.5    100%
Operating income                   727.3    100%       541.2    100%        414.3    100%
Operating income as % of sales      10.9%                9.4%                 9.2%
Identifiable assets              4,855.2             4,797.9              2,919.2
Depreciation and amortization      200.2               177.7                131.2
Capital expenditures               193.8               206.9                158.2
General corporate expenses
  charged to operating income      (43.8)              (44.2)               (37.3)
Operating income                   683.5               497.0                377.0

                                                                           Page 56 of 65

Operations  by Business  Segments
(continued)
Dollar amounts in millions
For the years ended                         % of                % of                 % of
December 31                         1996   total        1995   total         1994   total
Unallocated
Interest expense                  (119.9)              (86.6)               (43.8)
Other income (expense), net         (1.0)                9.4                (14.7)
Dresser-Rand income                 23.0                22.0                 24.6
IDP minority interest              (17.3)              (12.7)               (13.2)
Earnings before income taxes
  and effect of accounting
  changes                          568.3               429.1                329.9
Corporate assets (a)               766.4               765.4                677.7

Total assets                    $5,621.6            $5,563.3             $3,596.9

(a)  Corporate assets consist primarily of cash  and
cash equivalents, marketable securities, investments
and   advances,  and  other  assets   not   directly
associated   with  the  operations  of  a   business
segment.	

                                                                             Page 57 of 65
Operations by Geographic Area
In millions
                                 United                        Other     Adjustments/
For the year 1996                States      Europe    International     Eliminations   Consolidated

Sales to customers             $4,234.5    $1,939.5           $528.9         $  --          $6,702.9
Transfers between geographic
  areas                           689.0        49.8             43.5          (782.3)           --
Total sales and transfers      $4,923.5     1,989.3            572.4          (782.3)       $6,702.9
Operating income from
  operations                   $  578.0        92.9             55.1             1.3        $  727.3
General corporate expenses
  charged to operating income                                                                  (43.8)
Operating income                                                                            $  683.5
Identifiable assets at
  December 31, 1996            $3,262.1     1,286.6            323.8           (17.3)       $4,855.2
Corporate assets                                                                               766.4
Total assets at
  December 31, 1996                                                                         $5,621.6

For the year 1995

Sales to customers             $3,472.8     1,754.0            502.2              --        $5,729.0
Transfers between geographic
  areas                           568.5        60.9             42.5          (671.9)             --
Total sales and transfers      $4,041.3     1,814.9            544.7          (671.9)       $5,729.0
Operating income from
  operations                   $  391.5        97.5             51.7              .5        $  541.2
General corporate expenses
  charged to operating income                                                                  (44.2)
Operating income                                                                            $  497.0
Identifiable assets at
  December 31, 1995            $3,183.9     1,305.3            319.8           (11.1)       $4,797.9
Corporate assets                                                                               765.4
Total assets at
  December 31, 1995                                                                         $5,563.3

                                                                             Page 58 of 65
Operations by Geographic Area  (Continued)

                                 United                        Other     Adjustments/
For the year 1994                States      Europe    International     Eliminations   Consolidated

Sales to customers             $2,809.9     1,253.9            443.7              --        $4,507.5
Transfers between geographic
  areas                           429.7        54.7             34.1          (518.5)             --
Total sales and transfers      $3,239.6     1,308.6            477.8          (518.5)       $4,507.5
Operating income from
  operations                   $  335.8        43.2             34.5              .8        $  414.3
General corporate expenses
  charged to operating income                                                                  (37.3)
Operating income                                                                            $  377.0
Identifiable assets at
  December 31, 1994            $1,684.3       949.0            297.5           (11.6)       $2,919.2
Corporate assets                                                                               677.7
Total assets at
  December 31, 1994                                                                         $3,596.9

International sales of U.S. manufactured products in millions were $1,191.9 in
1996, $1,028.9 in 1995 and $743.3 in 1994.	

Page 59 of 65
NOTE 16 - PENSION PLANS: The company has noncontributory pension plans
covering substantially all domestic employees. In addition, certain employees in other countries are covered by pension plans. The company's domestic salaried plans principally provide benefits based on a career average earnings formula. The company's hourly pension plans provide benefits under flat benefit formulas. Foreign plans provide benefits based on earnings and years of service. Most of the foreign plans require employee contributions based on the employee's earnings. In addition, the company maintains other supplemental benefit plans for officers and other key employees. The company's policy is to fund an amount which could be in excess of the pension cost expensed, subject to the limitations imposed by current statutes or tax regulations.
The components of the company's pension cost for the years ended December 31, include the following:

In millions                         1996        1995        1994
Benefits earned during the
  year                            $ 38.7     $  32.7      $ 31.7
Interest cost on projected
  benefit obligation               113.5        99.7        79.1
Actual return on plan assets      (193.8)     (261.2)        6.3
Net amortization and deferral       65.9       157.7       (99.6)
  Net pension cost                $ 24.3     $  28.9      $ 17.5	

                                                                   Page 60 of 65

  The status of employee pension benefit plans at December 31, 1996 and 1995,
was as follows:

                                              1996                          1995
                                    Overfunded    Underfunded     Overfunded  Underfunded
In millions                              plans          plans          plans        plans
Actuarial present value of
  projected benefit obligation,
  based on employment service to
  date and current salary levels:
  Vested employees                  $(1,194.1)       $(332.8)     $(1,101.2)      $(310.3)
  Nonvested employees                   (18.1)         (14.0)         (23.5)        (13.8)
  Accumulated benefit obligation     (1,212.2)        (346.8)      (1,124.7)       (324.1)
  Additional amount related to
    projected salary increases          (36.1)         (38.6)         (49.9)        (26.4)
Total projected benefit obligation   (1,248.3)        (385.4)      (1,174.6)       (350.5)
Funded assets at fair value           1,456.6          232.8        1,331.7         207.5
Assets in excess of (less than)
  projected benefit obligation          208.3         (152.6)         157.1        (143.0)
Unamortized net (asset) liability
  existing at date of adoption           (2.5)          17.2           (2.5)         19.0
Unrecognized prior service cost          35.6           12.8           18.6          11.5
Unrecognized net (gain) loss            (77.8)          23.9          (23.2)         (3.4)
Adjustment required to recognize
  minimum liability                        --          (14.6)            --         (16.4)
Prepaid (accrued) pension cost      $   163.6        $(113.3)     $   150.0       $(132.3)	

Page 61 of 65
Plan investment assets of domestic plans are balanced between equity securities and cash equivalents or debt securities. Assets of foreign plans are invested principally in equity securities.
The present value of benefit obligations for domestic plans at December 31, 1996 and 1995, was determined using an assumed discount rate of 7.25%, an assumed rate of increase in future compensation levels of 4.75%, and an expected long-term rate of return on assets of 9.0%. The weighted averages of the actuarially assumed discount rate, long-term rate of return on assets and the rate for compensation increases for foreign plans were 8.5%, 9.0% and 6.0% in 1996, and 8.5%, 9.0% and 6.5% in 1995, respectively.
Most of the company's domestic employees are covered by savings and other defined contribution plans. Employer contributions and costs are determined based on criteria specific to the individual plans and amounted to approximately $27.4 million, $24.9 million and $21.7 million in 1996, 1995 and 1994, respectively.
The company's costs relating to foreign defined contribution plans, insured plans and other foreign benefit plans were $8.2 million, $4.8 million and $4.3 million in 1996, 1995 and 1994, respectively.
The existing pension rules require the recognition of a liability in the amount that the company's unfunded accumulated benefit obligation exceeds the accrued pension cost, with an equal amount recognized as an intangible asset. As a result, the company recorded in 1996 a noncurrent liability of $14.6 million, and a noncurrent liability of $16.2 million and a current liability of $0.2 million in 1995. Offsetting intangible assets were recorded in the Consolidated Balance Sheets.
NOTE 17 - POSTRETIREMENT BENEFITS OTHER THAN PENSIONS: In
addition to providing pension benefits, the company sponsors several postretirement plans that cover most domestic employees. These plans provide for health care benefits and in some instances, life insurance benefits. Postretirement health plans are contributory and are adjusted annually. Life insurance plans are noncontributory. When full-time employees retire from the company between age 55 and age 65, most are eligible to receive, at a cost to the retiree, certain health care benefits identical to those available to active employees. After attaining age 65, an eligible retiree's health care benefit coverage becomes coordinated with Medicare. The company funds the benefit costs principally on a pay-as-you-go basis.
Page 62 of 65
Summary information on the company's plans at December 31, was as follows:

In millions                                  1996           1995
Financial status of plans:
Accumulated postretirement benefits
   obligation (APBO):
   Retirees                               $(436.4)       $(462.9)
   Active employees                        (151.9)        (150.0)
                                           (588.3)        (612.9)
Plan assets at fair value                      --             --
Unfunded accumulated benefits
  obligation in excess of plan assets      (588.3)        (612.9)
Unrecognized net gain                       (42.3)          (9.9)
Unrecognized prior service benefits         (76.9)         (84.8)
Accrued postretirement benefits cost      $(707.5)       $(707.6)	

The components of net periodic postretirement benefits cost for the years ended December 31, were as follows:

In millions                                1996     1995    1994
Service cost, benefits attributed to
  employee service during the year        $ 6.4    $ 5.2   $ 8.5
Interest cost on accumulated
  postretirement benefit obligation        40.6     37.6    26.9
Net amortization and deferral              (5.7)    (5.6)   (5.2)	

Net periodic postretirement benefits cost $41.3 $37.2 $30.2
The 1994 service cost of net periodic postretirement benefits cost includes a settlement charge of $3.2 million relating to retired employees from a closed facility. The discount rate used in determining the APBO was 7.25% at December 31, 1996 and 1995. The assumed health care cost trend rates used in measuring the accumulated postretirement benefits obligation were 9.35% in 1996 and 10.35% in 1995, respectively, declining each year to an ultimate rate by 2003 of 4.75% in 1996 and 1995.
Increasing the health care cost trend rate by 1.0% as of December 31, 1996, would increase the APBO by 8%. The effect of this change on the sum of the service cost and interest cost components of net periodic postretirement benefits cost for 1996 would be an increase of 7%. In 1993, the company made several modifications to the cost sharing provisions of the postretirement plans.
Page 63 of 65
NOTE 18 - SUBSEQUENT EVENT:
 On January 27, 1997, the company announced an offer to acquire Newman Tonks Group PLC (Newman Tonks). The offer values the issued shares of Newman Tonks at approximately $376 million (230 million pounds sterling). Newman Tonks, whose board of directors has recommended acceptance of the company's offer, is a leading manufacturer, specifier and supplier of a wide range of branded architectural products for use in the building industry.
Page 64 of 65
Report of Management
The accompanying consolidated financial statements have been prepared by the company. They conform with generally accepted accounting principles and reflect judgments and estimates as to the expected effects of incomplete transactions and events being accounted for currently. The company believes that the accounting systems and related controls that it maintains are sufficient to provide reasonable assurance that assets are safeguarded, transactions are appropriately authorized and recorded, and the financial records are reliable for preparing such financial statements. The concept of reasonable assurance is based on the recognition that the cost of a system of internal accounting controls must be related to the benefits derived. The company maintains an internal audit function that is responsible for evaluating the adequacy and application of financial and operating controls, and for testing compliance with company policies and procedures.
The Audit Committee of the board of directors is comprised entirely of individuals who are not employees of the company. This committee meets periodically with the independent accountants, the internal auditors and management to consider audit results and to discuss significant internal accounting controls, auditing and financial reporting matters. The Audit Committee recommends the selection of the independent accountants, who are then appointed by the board of directors, subject to ratification by the shareowners.
The independent accountants are engaged to perform an audit of the consolidated financial statements in accordance with generally accepted auditing standards. Their report follows.

/S/ Gerard V. Geraghty
Gerard V. Geraghty
Vice President and Comptroller	

Page 65 of 65
Report of Independent Accountants
Price Waterhouse LLP
4 Headquarters Plaza North
Morristown, NJ 07962
February 4, 1997
To the Board of Directors and
Shareowners of Ingersoll-Rand Company:
In our opinion, the accompanying consolidated balance sheet and the related consolidated statements of income, of shareowners' equity and of cash flows present fairly, in all material respects, the financial position of Ingersoll-Rand Company and its subsidiaries at December 31, 1996 and 1995, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1996, in conformity with generally accepted accounting principles. These financial statements are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above.

/s/ Price Waterhouse LLP
Price Waterhouse LLP	

EXHIBIT 21
Page 1 of 4
LIST OF SUBSIDIARIES OF INGERSOLL-RAND COMPANY
The following list represents the principal subsidiaries of the company all of which (except as otherwise indicated) are deemed to be 100% owned, directly or indirectly, and whose financial statements are included in the consolidated statements. The subsidiaries of Ingersoll-Dresser Pump Company (IDP), a general partnership owned 51% by the company, are deemed to be 100% owned by IDP directly or indirectly. The names of particular subsidiaries omitted, if considered in the aggregate as a single subsidiary, would not constitute a significant subsidiary.
SUBSIDIARIES OF INGERSOLL-RAND COMPANY

Clark Equipment Company                             Delaware
  Automotive Products Company                       Delaware
  Blaw-Knox Construction Equipment Corporation      Delaware
    Clark Equity Company                            Delaware
    Clark Industries Company                        Delaware
      Blaw-Knox Company                             England
  Clark Business Services Corporation               Michigan
    Celfor Insurance Co., Ltd.                      Bermuda
    Clark Distribution Services Inc.                Michigan
      CDS Midwest, Inc.                             Michigan
    Clark Foreign Sales Corporation                 Barbados
    Clark-Hurth Components Marketing Company        Delaware
    Ingersoll-Rand Italiana S.p.A.                  Italy
    Ingersoll-Rand Services & Engineering Company   Switzerland
      Ingersoll-Rand Acceptance Company, S.A.       Switzerland
      Ingersoll-Rand Investment Company, S.A.       Switzerland
          G. Klemm Bohrtechnik GmbH                 Germany
    Melroe Equipment Limited                        Canada
    Melroe Parts Trading GmbH                       Germany
  Club Car, Inc.                                    Delaware
    Club Car International, Inc.                    Guam
    Club Car Limited                                New Zealand
Ingersoll-Rand China Limited                        Delaware
  Ingersoll-Rand China Investment Company Limited   China
    Torrington-Wuxi Bearings Company Limited        China
    (78% owned by the company)
Ingersoll-Rand International, Inc.                  Delaware
Ingersoll-Rand International Sales Inc.             Delaware
Ingersoll-Rand International Holding Corporation    New Jersey
  Ingersoll-Rand S.A.                               Switzerland	

Page 2 of 4

Ingersoll-Rand Worldwide, Inc.                      Delaware
NT Acquisition Limited                              England
Northern Research & Engineering Company             Massachusetts
Schlage Lock Company                                California
  Schlage (N.Z.) Limited                            New Zealand
  Von Duprin, Inc.                                  Indiana
Schlage de Mexico S.A. de C.V.                      Mexico
SEW Holding Corporation                             Colorado
  Woodcliff Insurance, Ltd.                         Bermuda
The Torrington Company                              Delaware
  Kilian Manufacturing Corporation                  Delaware
  Torrington Holdings, Inc.                         Delaware
  Industrias del Rodamiento S.A.                    Spain
    Ingersoll-Rand Iberica, S.L.                    Spain
Compagnie Ingersoll-Rand                            France
  Ingersoll-Rand Equipements de Production S.A.     France
  Ingersoll-Rand Equipements de Construction        France
    Etablissements Montabert S.A.                   France
  S.A. Charles Maire                                France
  Torrington France, S.A.R.L.                       France
Ingersoll-Rand Asia Pacific, Inc.                   Delaware
Ingersoll-Rand (Australia) Ltd.                     Australia
  Ingersoll-Rand S.E. Asia (Private), Limited       Singapore
Ingersoll-Rand Benelux                              Belgium
  N.V. Aro S.A.                                     Belgium
Ingersoll-Rand Canada, Inc.                         Canada
  Torrington, Inc.                                  Canada
    Torrington Industria e Comercio Ltda.           Brazil
  Ingersoll-Rand World Trade Ltd.                   Bermuda
  Ingersoll-Rand (Barbados) Corporation             Barbados
  3324745 Canada, Inc.                              Canada
    Torrington Beteiligungs GmbH                    Germany
Torrington GmbH                                     Germany
      Torrington Nadellager GmbH                    Germany
Ingersoll-Rand GesmbH (Austria)                     Austria
Ingersoll-Rand Sales Company Limited                Delaware
  Ingersoll-Rand European Sales Ltd.                England
  Ingersoll-Rand Holdings Limited                   England
    Ingersoll-Rand Company Limited                  England
      Ingersoll-Rand Company South Africa
      (Proprietary) Ltd.                            South Africa
    The Torrington Company Limited                  England
    The Aro Corporation (U.K.) Limited              England	

Page 3 of 4

Ingersoll-Rand Beteiligungs GmbH                    Germany
  ABG Allgemeine Baumaschinen-Gesellschaft mbH      Germany
  ABG Verwaltungs GmbH                              Germany
    ABG Werke GmbH                                  Germany
  Ingersoll-Rand GmbH                               Germany
  Ingersoll-Rand Beteiligungs und
    Grundstucksverwaltungs GmbH                     Germany
Ingersoll-Rand Europe                               France
Ingersoll-Rand (India) Ltd. (74% owned by
  the company)                                      India
Ingersoll-Rand Japan Ltd.                           Japan
Ingersoll-Rand Philippines, Inc.                    Philippines
Ingersoll-Rand AB                                   Sweden
Ingersoll-Rand S.A. de C.V.                         Mexico
Wadco Tools Limited (74% owned by the company)      India	

SUBSIDIARIES OF INGERSOLL-DRESSER PUMP COMPANY

Ingersoll-Dresser Pumps de Argentina, S.A.          Argentina
Ingersoll-Dresser Pumps (Australia) Pty. Limited    Australia
Ingersoll-Dresser Pumps GmbH                        Austria
Ingersoll-Dresser Pumps do Brazil
  Industria e Comercio Ltda.                        Brazil
Ingersoll-Dresser Pump Canada Inc.                  Canada
Ingersoll-Dresser Pumps de Colombia S.A.            Colombia
Worthington Centroamericana Ltda.                   Costa Rica
Ingersoll-Dresser Pompes                            France
  IDP Pleuger                                       France
  IDP International                                 France
Deutsche Ingersoll-Dresser Pumpen GmbH              Germany
  Ingersoll-Dresser Pump GmbH                       Germany
  Pleuger Worthington GmbH                          Germany
  Deutsche Worthington GmbH                         Germany
Ingersoll-Dresser Pumps S.p.A.                      Italy
  Worthington S.p.A.                                Italy
Ingersoll-Dresser Pump (Asia) Pte. Ltd.             Singapore
Ingersoll-Dresser Pump S.A.                         Switzerland
  Ingersoll-Dresser Pump Services Sarl              Switzerland
ID Pump AG                                          Switzerland
  Ingersoll-Dresser Pump Nederland B.V.             Netherlands	

Page 4 of 4

Ingersoll-Dresser Pumps (UK) Limited                England
  Ingersoll-Dresser Pumps Newark Limited            England
IDP Alternate Energy Company                        Delaware
  Pump Investments, Inc.                            Delaware
  Energy Hydro Inc.                                 Delaware
    Compania Ingersoll-Dresser Pump, S.A.           Spain
Ingersoll-Dresser Pumps (Thailand)Ltd.              Thailand	

ARTICLE 5	
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE DECEMBER 31, 1996 FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS	
MULTIPLIER: 1,000,000	

		
PERIOD TYPE	YEAR	
FISCAL YEAR END	DEC 31 1996	
PERIOD END	DEC 31 1996	
CASH	184	
SECURITIES	8	
RECEIVABLES	1,101	
ALLOWANCES	34	
INVENTORY	775	
CURRENT ASSETS	2,536	
PP&E	2,104	
DEPRECIATION	958	
TOTAL ASSETS	5,622	
CURRENT LIABILITIES	1,290	
BONDS	1,164	
COMMON	221	
PREFERRED MANDATORY	0	
PREFERRED	0	
OTHER SE	1,870	
TOTAL LIABILITY AND EQUITY	5,622	
SALES	6,703	
TOTAL REVENUES	6,703	
CGS	5,030	
TOTAL COSTS	5,030	
OTHER EXPENSES	0	
LOSS PROVISION	0	
INTEREST EXPENSE	120	
INCOME PRETAX	568	
INCOME TAX	210	
INCOME CONTINUING	358	
DISCONTINUED	0	
EXTRAORDINARY	0	
CHANGES	0	
NET INCOME	358	
EPS PRIMARY	3.33	
EPS DILUTED	3.31