The following Management's Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from the results discussed in the forward-looking statements. Factors that might cause a difference include, but are not limited to, those discussed under Part II, Item 1A - Risk Factors in this Quarterly Report on Form 10-Q and under Part I, Item 1A - Risk Factors in the Annual Report on Form 10-K for the fiscal year ended December 31, 2007. The following section is qualified in its entirety by the more detailed information, including our financial statements and the notes thereto, which appears elsewhere in this Quarterly Report.

Overview

Organizational
Ingersoll-Rand Company Limited (IR Limited), a Bermuda company, and its consolidated subsidiaries (we, our or the Company) is a leading innovation and solutions provider with strong brands and leading positions within our markets. We operate in four business segments: Air Conditioning Systems and Services, Climate Control Technologies, Industrial Technologies and Security Technologies. We generate revenue and cash primarily through the design, manufacture, sale and service of a diverse portfolio of industrial and commercial products that include well-recognized, premium brand names such as Club Car®, Hussmann®, Ingersoll Rand®, Schlage®, Thermo King® and Trane®.

We are dedicated to inspiring progress for our Customers, Shareholders, Employees and Communities by achieving:

· Dramatic Growth, by focusing on innovative solutions for our customers

· Operational Excellence, by pursuing continuous improvement in all of our operations

· Dual Citizenship, by bringing together the talents of all Ingersoll Rand people to leverage the capabilities of our global enterprise

To achieve these goals and to become a more diversified company with strong growth prospects, we have transformed our enterprise portfolio by divesting cyclical, low-growth and asset-intensive businesses, in addition to strategic acquisitions that enhance and broaden our value proposition to our customers. We continue to focus on increasing our recurring revenue stream, which includes revenues from parts, service, used equipment and rentals. We also intend to continuously improve the efficiencies, capabilities, products and services of our high-potential businesses.

Trends and Economic Events
We are a global corporation with worldwide operations. As a global business, our operations are affected by worldwide, regional and industry-specific economic factors, as well as political factors, wherever we operate or do business. Although our geographic and industry diversity, as well as the diversity of our product sales and services, has helped limit the impact of any one industry or the economy of any single country on our consolidated operating results, we have seen a general decrease in economic activity worldwide and weaker demand for many of our products and services, as discussed further below.

Given the broad range of products manufactured and geographic markets served, management uses a variety of factors to predict the outlook for the Company. We monitor key competitors and customers in order to gauge relative performance and the outlook for the future. In addition, our order rates are indicative of future revenue and thus a key measure of anticipated performance. In those industry segments where we are a capital equipment provider, revenues depend on the capital expenditure budgets and spending patterns of our customers, who may delay or accelerate purchases in reaction to changes in their businesses and in the economy.

Our revenues from continuing operations for the first nine months of 2008 increased 48.4% compared with the same period in 2007, primarily associated with the Trane acquisition. Excluding the results of Trane, our revenues from continuing operations for the first nine months of 2008 increased approximately 5.7% compared with the same period of 2007, despite an increasingly challenging economic environment.

The recent extreme volatility and disruption of financial markets in the United States, Europe and Asia have contributed to weakening worldwide economic conditions. In addition, the uncertainty related to the cost and availability of credit has further depressed the overall business climate. As a result, many of our end markets have experienced overall softening in demand. Consequently, we expect to see declining markets in North America and Western Europe, partially offset by moderate growth in the developing economies of Eastern Europe, Asia and Latin America. Despite the current economic turmoil, we have a solid foundation of global brands and leading market shares in all of our major product lines. In addition, our growing geographic and industry diversity coupled with our large installed product base provides growth opportunities within our service, parts and replacement revenue streams.

Recent Developments
Restructuring Actions
In order to deal with the current and expected future slowing end market demand as well as build a strong business foundation for the future, we have implemented productivity actions in 2008. In addition, in the fourth quarter of 2008, we expect to initiate enterprise-wide restructuring actions in order to streamline both our manufacturing footprint and our general and administrative cost base. Projected costs will approximate $110 million with a majority of these costs expected to be expensed in 2008. Together, these combined actions are expected to generate approximately $100 million of annual pretax savings in both 2009 and 2010.

Acquisitions
At the close of business on June 5, 2008 (the Acquisition Date), we completed our previously announced acquisition of 100% of the outstanding common shares of Trane Inc. (Trane). Trane, previously named American Standard Companies Inc., provides systems and services that enhance the quality and comfort of the air in homes and buildings around the world. Trane's systems and services have leading positions in premium commercial, residential, institutional and industrial markets, a reputation for reliability, high quality and product innovation and a powerful distribution network. Trane's 2007 annual revenues were $7.5 billion.

We paid a combination of (i) 0.23 of an IR Limited Class A common share and (ii) $36.50 in cash, without interest, for each outstanding share of Trane common stock. The total cost of the acquisition was approximately $9.6 billion, including change in control payments and direct costs of the transaction. We financed the cash portion of the acquisition with a combination of cash on hand, commercial paper and a 364-day senior unsecured bridge loan facility.

The components of the purchase price were as follows:

In billions
Cash consideration                                                     $      7.3
Stock consideration (Issuance of 45.4 million IR Limited Class A
common shares)                                                                2.0
Estimated fair value of Trane stock options converted to 7.4 million
IR Limited stock options                                                      0.2
Transaction costs                                                             0.1
Total                                                                  $      9.6

As a result of the acquisition, the results of the operations of Trane have been included in the statement of financial position at September 30, 2008 and the consolidated statements of operations and cash flows since the Acquisition Date. For further details on the acquisition of Trane, see Footnote 3, Acquisition of Trane, Inc, in the Notes to Condensed Consolidated Financial Statements.

Divestitures
On November 30, 2007, we completed the sale of our Bobcat, Utility Equipment and Attachments business units (collectively, Compact Equipment) to Doosan Infracore for cash proceeds of approximately $4.9 billion, subject to post-closing purchase price adjustments. We recorded a gain on sale of $2,629.0 million (net of tax of $959.2 million). Compact Equipment manufactures and sells compact equipment including skid-steer loaders, compact track loaders, mini-excavators and telescopic tool handlers; portable air compressors, generators, light towers; general-purpose light construction equipment; and attachments.

On April 30, 2007, we completed the sale of our Road Development business unit to AB Volvo (publ) in all countries except for India, which closed on May 4, 2007, for cash proceeds of approximately $1.3 billion, subject to post-closing purchase price adjustments. We recorded a gain on sale of $633.1 million (net of tax of $163.3 million). The Road Development business unit manufactures and sells asphalt paving equipment, compaction equipment, milling machines and construction-related material handling equipment.

Results of Operations - Three Months Ended September 30, 2008 and 2007

                                                For the three months ended September 30,
                                                             % of                        % of
In millions, except per share amounts       2008          revenues         2007        revenues
Net revenues                            $      4,313.2                  $   2,239.0
Cost of goods sold                            (3,209.4 )        74.4 %     (1,608.2 )        71.8 %
Selling and administrative expenses             (756.4 )        17.5 %       (354.5 )        15.9 %
Operating income                                 347.4           8.1 %        276.3          12.3 %
Interest expense                                 (83.7 )                      (33.3 )
Other, net                                        (3.7 )                       (7.6 )
Earnings before income taxes                     260.0                        235.4
Provision for income taxes                       (26.3 )                      (37.8 )
Earnings from continuing operations              233.7                        197.6
Discontinued operations, net of tax               (6.0 )                       69.0
Net earnings                            $        227.7                  $     266.6

Diluted earnings per common share:
Continuing operations                   $         0.72                  $      0.68
Discontinued operations                          (0.02 )                       0.24
Net earnings                            $         0.70                  $      0.92

Net Revenues
Net revenues for the third quarter of 2008 increased by 92.6%, or $2,074.2
million, compared with 2007, which primarily resulted from the following:

Volume/product mix          -4.9 %
Pricing                      2.7 %
Currency exchange rates      2.5 %
Acquisitions                92.4 %
Other                       -0.1 %
Total                       92.6 %

The acquisition of Trane increased revenues $2,051.1 million. Excluding the results of Trane, revenues increased by 1.0%, or $23.1 million. Softening overall demand in many major end markets was the primary driver of the quarter's results. Excluding currency exchange rates, organic revenues declined. However, we continue to make progress in increasing recurring revenues, which improved by 9% over the third quarter of 2007 and accounted for 20% of net revenues.

Cost of Goods Sold
Cost of goods sold as a percentage of revenue increased in the third quarter of 2008 to 74.4% compared with 71.8% for the same period of 2007. Excluding the results of Trane, cost of goods sold as a percentage of revenue would have been 72.3%. Higher material costs and unfavorable business and product mix more than offset price increases. In addition, decreased leverage due to lower volumes contributed to the year-over-year increase.

Selling and Administrative Expenses
Selling and administrative expenses as a percentage of revenue increased to 17.5% in the third quarter of 2008 compared with 15.9% for the same period of 2007. Excluding the results of Trane, selling and administrative expenses as a percentage of revenue would have been 16.3%. Decreased leverage due to lower volumes more than offset expense reduction and price increases. In addition, Trane integration costs added to the year-over-year increase.

Operating Income
Operating income for the third quarter of 2008 increased by 25.7% or $71.1 million, compared with the same period of 2007, primarily related to the acquisition of Trane. Excluding the results of Trane, operating income decreased by $18.4 million (6.7%), and operating margins decreased to 11.4% from 12.3%. This decrease was mainly due to lower volumes, increased material costs and unfavorable business and product mix. These decreases were partially offset by productivity actions and improved pricing.

Interest Expense
Interest expense for the third quarter of 2008 increased $50.4 million compared with the same period of 2007, primarily related to higher average debt balances used to fund the acquisition of Trane.

Other, Net
The components of "Other, net" for the three months ended September 30 are as
follows:

                                     Three months ended
                                       September 30,
In millions                           2008         2007
Interest income                    $       9.9    $   5.0
Exchange gain (loss)                     (11.0 )     (8.1 )
Minority interests                        (5.5 )     (4.5 )
Earnings from equity investments           1.4          -
Other                                      1.5          -
Other, net                         $      (3.7 )  $  (7.6 )

Provision for Income Taxes
Our third quarter 2008 effective tax rate was 10.1%, compared with 16.1% in the third quarter of 2007. The rate for the third quarter of 2008 reflects an expected annual rate of 20.6% before discrete benefits of $12.7 million. The increase in 2008 expected annual tax rate versus last year's expected annual rate as of September 30, 2007 is primarily attributable to an increase in income earned in higher tax rate jurisdictions as a result of changes in our inter-company debt structure.

Results of Operations - Nine Months Ended September 30, 2008 and 2007

                                               For the nine months ended September 30,
                                                             % of                       % of
In millions, except per share amounts       2008          revenues        2007        revenues
Net revenues                            $      9,557.3                  $  6,439.8
Cost of goods sold                            (6,946.4 )        72.7 %    (4,613.8 )       71.6 %
Selling and administrative expenses           (1,654.9 )        17.3 %    (1,067.0 )       16.6 %
Operating income                                 956.0          10.0 %       759.0         11.8 %
Interest expense                                (156.4 )                     (99.8 )
Other, net                                        61.4                         0.9
Earnings before income taxes                     861.0                       660.1
Provision for income taxes                      (153.2 )                     (97.9 )
Earnings from continuing operations              707.8                       562.2
Discontinued operations, net of tax              (42.4 )                     886.0
Net earnings                            $        665.4                  $  1,448.2

Diluted earnings per common share:
Continuing operations                   $         2.38                  $     1.87
Discontinued operations                          (0.14 )                      2.95
Net earnings                            $         2.24                  $     4.82

Net Revenues
Net revenues for the first nine months of 2008 increased by 48.4%, or $3,117.5
million, compared with 2007, which primarily resulted from the following:

Volume/product mix          -1.3 %
Pricing                      2.6 %
Currency exchange rates      3.6 %
Acquisitions                43.5 %
Other                        0.0 %
Total                       48.4 %

The acquisition of Trane increased revenues by $2,749.0 million. Excluding the results of Trane, revenues increased by 5.7%, or $368.5 million. Softening overall demand in many major end markets was the primary driver of the modest year-over-year growth. Excluding currency exchange rates, organic revenues increased modestly. However, we continue to make progress in increasing recurring revenues, which improved by 10% over the first nine months of 2007 and accounted for 19% of net revenues.

Cost of Goods Sold
Cost of goods sold as a percentage of revenue increased to 72.7% in the first nine months of 2008 compared with 71.6% the same period of 2007. Excluding the results of Trane, cost of goods sold as a percentage of revenue would have been 71.6%. Higher material costs and unfavorable business and product mix more than offset price increases. In addition, decreased leverage due to lower volumes contributed to the year-over-year increase.

Selling and Administrative Expenses
Selling and administrative expenses as a percentage of revenue increased to 17.3% in the first nine months of 2008 compared with 16.6% for the same period of 2007. Excluding the results of Trane, selling and administrative expense as a percentage of revenue would have been 16.6%. Decreased leverage due to lower volumes more than offset expense reduction and price increases. In addition, Trane integration costs added to the year-over-year increase.

Operating Income
Operating income for the first nine months of 2008 increased by 26.0% or $197.0 million, compared with the same period of 2007, primarily related to the acquisition of Trane. Excluding the results of Trane, operating income increased by $41.4 million (5.5%) and operating margins remained flat at 11.8%. Lower volumes, higher commodity costs and an unfavorable business and product mix were offset by expense reduction, productivity actions and improved pricing. Trane integration costs also contributed to flat year-over-year growth.

Interest Expense
Interest expense for the first nine months of 2008 increased $56.6 million compared with the same period of 2007, primarily related to higher average debt balances used to fund the acquisition of Trane.

Other, Net
The components of "Other, net" for the nine months ended September 30 are as
follows:

                                     Nine months ended
                                       September 30,
In millions                          2008         2007
Interest income                    $     86.9    $   14.9
Exchange gain (loss)                    (15.5 )       0.6
Minority interests                      (15.9 )     (11.6 )
Earnings from equity investments          2.6         0.1
Other                                     3.3        (3.1 )
Other, net                         $     61.4    $    0.9

Provision for Income Taxes
Our effective tax rate for the first nine months of 2008 was 17.8%, compared with 14.8% in the first nine months of 2007. The rate for the nine months ended September 30, 2008 reflects an expected annual rate of 20.6% before discrete benefits of $24.9 million. The increase in 2008 expected annual tax rate versus last year's expected annual rate as of September 30, 2007 is primarily attributable to an increase in income earned in higher tax rate jurisdictions as a result of changes in our inter-company debt structure.

Review of Business Segments
We classify our businesses into four reportable segments based on industry and market focus: Air Conditioning Systems and Services, Climate Control Technologies, Industrial Technologies and Security Technologies. The segment discussions that follow describe the significant factors contributing to the changes in results for each segment included in continuing operations.

Air Conditioning Systems and Services
Air Conditioning Systems and Services provide systems and services that enhance the quality and comfort of the air in homes and buildings around the world. They offer customers a broad range of energy-efficient heating, ventilation and air conditioning systems; dehumidifying and air cleaning products; service and parts support; advanced building controls; and financing solutions. Their systems and services have leading positions in commercial, residential, institutional and industrial markets; a reputation for reliability, high quality and product innovation; and a powerful distribution network. This segment includes the American Standard and Trane brands.

                       Three              Nine
                    months ended      months ended
In millions         September 30      September 30
Net revenues       $       2,051.1   $       2,749.0
Operating income              89.5             155.6
Operating margin               4.4 %             5.7 %

The nine months ended September 30, 2008 include results since the Acquisition Date (June 5, 2008).

Operating income for the three months ended September 30, 2008 includes $149.9 million of costs related to purchase accounting. We expect $41.5 million of these costs to be an incremental expense in future periods as they primarily relate to the amortization of certain intangible assets that were fair valued at the Acquisition Date. In addition, we recorded $13.3 million of severance and other business integration costs associated with the acquisition. Operating income was $89.5 million for the three months ended September 30, 2008. Excluding non-recurring items, operating income would have been $197.9 million, increasing the operating margin to 9.6%.

Reported results for revenues and operating income for the three months and 25 days ended September 30, 2008 reflect year-to-date activity since the Acquisition Date (June 6, 2008 through September 30, 2008). Included in operating income is $194.9 million of costs related to purchase accounting. The Company expects $51.1 million of these costs to be an incremental expense in future periods as they primarily relate to the amortization of certain intangible assets that were fair valued as of the Acquisition Date. In addition, the Company recorded $23.6 million of severance and other business integration costs associated with the acquisition. Operating income was $155.6 million for the three months and 25 days ended September 30, 2008. Excluding non-recurring items, operating income would have been $299.4 million, increasing the operating margin to 10.9%.

Commercial results were balanced due to growth in both domestic and international markets. Parts, services and solutions improvements were primary drivers, in addition to Commercial Equipment. Residential results were impacted by continued weakness in the U.S. housing market.

Climate Control Technologies
Climate Control Technologies provides solutions for customers to transport,
preserve, store and display temperature-sensitive products by engaging in the
design, manufacture, sale and service of transport temperature control units,
refrigerated display merchandisers, beverage coolers, auxiliary power units and
walk-in storage coolers and freezers. This segment includes the Thermo King,
Hussmann and Koxka brands.

                         Three months ended                   Nine months ended
                            September 30,                       September 30,
In millions         2008       2007      % change       2008        2007       % change
Net revenues       $  895.0   $ 882.1           1.5 % $ 2,605.3   $ 2,457.0           6.0 %
Operating income      103.0     100.1           2.9 %     297.9       269.2          10.7 %

Net revenues for the third quarter of 2008 increased by 1.5% or $12.9 million, compared with the same period of 2007, primarily resulting from a favorable currency impact (4%) and improved pricing (1%). These gains were partially offset by lower volumes (3%). Operating income increased slightly during the third quarter of 2008, primarily due to improved pricing ($11 million), increased productivity ($9 million) and a favorable currency impact. These improvements were offset by higher material costs ($17 million) and lower volumes.

Net revenues for the first nine months of 2008 increased by 6.0% or $148.3 million, compared with the same period of 2007, primarily resulting from a favorable currency impact (5%) and improved pricing (1%). Operating income increased during the first nine months of 2008, primarily due to increased productivity ($42 million), improved pricing ($32 million) and a favorable currency impact ($11 million). These improvements were partially offset by higher material costs ($33 million), lower volumes ($14 million) and investments in new product development and productivity improvements ($9 million).

Net revenues for the segment increased slightly during the third quarter of 2008. Display cases and contracting revenue increased worldwide as a result of an improved market for display cases and growing parts and service revenues. In addition, sales of the TriPac® auxiliary unit increased sharply during the quarter due to the continued high cost of diesel fuel. The decline in the heavy truck market decreased refrigerated trailer and truck revenues in North America and Asia Pacific. Sea-going container revenues also decreased while bus and aftermarket revenues remained comparable to the prior year.

Industrial Technologies
Industrial Technologies is focused on providing solutions to enhance customers'
industrial and energy efficiency, mainly by engaging in the design, manufacture,
sale and service of compressed air systems, tools, fluid and material handling,
golf and utility vehicles and energy generation systems. This segment includes
the Ingersoll Rand and Club Car brands.

                                       47
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                         Three months ended                  Nine months ended
                           September 30,                       September 30,
In millions         2008      2007      % change       2008        2007       % change
Net revenues       $ 718.3   $ 701.5           2.4 % $ 2,267.8   $ 2,119.1           7.0 %
Operating income      81.4      93.4         -12.8 %     283.4       294.4          -3.7 %

Net revenues for the third quarter of 2008 increased by 2.4%, or $16.8 million, . . .