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, 2008. 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 plc (IR-Ireland), an Irish public limited company, and its consolidated subsidiaries (we, our, the Company) is a diversified, global company that provides products, services and solutions to enhance the quality and comfort of air in homes and buildings, transport and protect food and perishables, secure homes and commercial properties, and increase industrial productivity and efficiency. Our business segments consist of Air Conditioning Systems and Services, Climate Control Technologies, Industrial Technologies and Security Technologies, each with strong brands and leading positions within their respective markets. 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; and

• 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 transformed our enterprise portfolio by divesting cyclical, low-growth and asset-intensive businesses. In addition, our acquisition strategy has helped deliver more consistent revenue and earnings performance across all phases of the economic cycle. Aside from our portfolio transformation, 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.

On March 5, 2009, our board of directors approved a reorganization of the Company that would change the jurisdiction of incorporation of our parent company from Bermuda to Ireland (the Reorganization). The first step in the Reorganization was the establishment of Ingersoll-Rand Company Limited's (IR-Limited) tax residency in Ireland, which occurred in March 2009.

As the next step, we changed the place of incorporation of the parent company of Ingersoll Rand from Bermuda to Ireland pursuant to a scheme of arrangement under Bermuda law (the Scheme of Arrangement). On April 1, 2009, IR-Limited formed IR-Ireland, as a direct subsidiary. On April 20, 2009, IR-Limited petitioned the Supreme Court of Bermuda to order the calling of a meeting of the Class A common shareholders of IR-Limited to approve the Scheme of Arrangement. On April 23, 2009, the Supreme Court of Bermuda ordered IR-Limited to seek the approval of its Class A common shareholders on the Scheme of Arrangement. On June 3, 2009, IR-Limited receive the requisite approval from its Class A common shareholders and, on June 11, 2009, the Supreme Court of Bermuda issued an order (the Sanction Order) approving the Scheme of Arrangement.

On June 30, 2009, IR-Limited filed the Sanction Order with the Bermuda Registrar of Companies and, at 12:01 a.m. on July 1, 2009 (the Transaction Time) the following steps occurred simultaneously:

• All fractional shares of IR-Limited held of record were cancelled and IR-Limited paid to each holder of fractional shares that were cancelled an amount based on the average of the high and low trading prices of the IR-Limited Class A common shares on the New York Stock Exchange on June 29, 2009.

• All previously outstanding whole Class A common shares of IR-Limited were cancelled.

• IR-Limited issued to IR-Ireland 319,166,220 Class A common shares.

• IR-Ireland issued 319,166,220 ordinary shares to holders of whole IR-Limited Class A common shares that were cancelled as a part of the Scheme of Arrangement.

• All previously outstanding ordinary shares of IR-Ireland held by IR-Limited and its nominees were acquired by IR-Ireland and cancelled for no consideration.

As a result of the Reorganization, IR-Limited became a wholly-owned subsidiary of IR-Ireland and the Class A common shareholders of IR-Limited became ordinary shareholders of IR-Ireland.

At the Transaction Time, IR-Limited completed the transfer of all the outstanding shares of Ingersoll-Rand Global Holding Company Limited (IR-Global) to Ingersoll-Rand International Holding Limited (IR-International), another wholly-owned indirect subsidiary of IR-Limited incorporated in Bermuda, whereupon IR-International assumed the obligations of IR-Limited as an issuer or guarantor, as the case may be, under the indentures governing the Company's outstanding notes, medium-term notes and debentures. IR-Ireland and IR-Limited also fully and unconditionally guarantee the payment obligations of IR-International, IR-Global and Ingersoll-Rand Company, a wholly-owned indirect subsidiary of IR-Limited incorporated in New Jersey (IR-New Jersey), as the case may be, as the issuers of debt securities under these indentures. Neither IR-Ireland nor IR-Limited has issued or intends to issue guarantees in respect of any indebtedness incurred by Trane. In addition, any securities issued by the Company

On July 1, 2009, IR-Global amended and restated its commercial paper program (the Commercial Paper Program) pursuant to which IR-Global may issue, on a private placement basis, unsecured commercial paper notes up to a maximum aggregate amount outstanding at any time of $2.25 billion. Under the Commercial Paper Program, IR-Global may issue notes from time to time, and the proceeds of the financing will be used for general corporate purposes. Each of IR-Ireland, IR-Limited and IR-International has provided an irrevocable and unconditional guarantee for the notes issued under the Commercial Paper Program.

Pursuant to the terms of our credit facility entered into on August 12, 2005 and our credit facility entered into on June 27, 2008 (the Credit Facilities), at the Transaction Time, IR-Ireland and IR-International became guarantors to such Credit Facilities. In connection therewith, IR-Ireland and IR-International entered into Addendums on July 1, 2009 to become parties to the Credit Facilities.

In connection with the Transaction, effective as of the Transaction Time, IR-Ireland assumed the existing obligations of IR-Limited under the equity incentive plans and other similar employee award plans of Ingersoll Rand (collectively, the Plans), including all awards issued thereunder. Furthermore, the Plans have been or will be amended by IR-Limited to provide (1) that shares of IR-Ireland will be issued, held available or used to measure benefits as appropriate under the Plans, in lieu of shares of IR-Limited, including upon exercise of any options or share appreciation rights or upon the vesting of restricted stock units or performance units issued under those Plans; and
(2) for the appropriate substitution of IR-Ireland for IR-Limited in those Plans.

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. 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.

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, we have seen weaker demand for many of our products and services during the second half of 2008 continue into the first half of 2009.

Despite the increasingly challenging economic environment, we continue to execute our business strategy. The divestiture of both Compact Equipment and the Road Development business unit in 2007, in addition to the acquisition of Trane in 2008, has enabled us to become more balanced across the products we offer. In addition, our current enterprise-wide restructuring actions, initiated in the fourth quarter of 2008, are designed to streamline the footprint of our manufacturing facilities and reduce our general and administrative cost base.

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

For 2009, we expect current market conditions to negatively affect our financial results. Declining markets in North America and Western Europe partially offset by slight to moderate growth in the developing economies of China and Latin America will have a negative impact. In addition, with approximately 36% of our revenues generated outside of the U.S., the recent appreciation of the U.S. dollar against most major currencies could negatively impact our 2009 revenue.

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

Debt Issuance

We recently completed a comprehensive financing program that significantly enhanced our liquidity and debt profile. Actions taken include the issuance of $1.0 billion in long-term debt (Senior Notes and Exchangeable Senior Notes) in April 2009 and the replacement of our Trane accounts receivable purchase program in March 2009 with a new accounts receivable purchase program that now encompasses originators from all four of our business segments. The proceeds from our debt issuance were used to repay the $950.0 million outstanding under our senior unsecured bridge loan facility. The new accounts receivable purchase program is expected to be a source of an additional $150 million to $200 million in liquidity.

Restructuring Actions

In order to build a strong business foundation for the future by dealing with the current and expected future slowing end market demand, we implemented productivity actions in 2008. In addition, in the fourth quarter of 2008, we initiated enterprise-wide restructuring actions in order to streamline both our manufacturing footprint and our general and administrative cost base. Projected costs will approximate $140 million, $70.7 million of which occurred in the fourth quarter of 2008 and $52.0 of which occurred in the first half of 2009. Together, these combined actions are expected to generate approximately $160 million and $200 million of annual pretax savings in 2009 and 2010, respectively.

Acquisitions

At the close of business on June 5, 2008 (the Acquisition Date), we completed our 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.

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.

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, Trane has been included in the statement of financial position at June 30, 2009 and December 31, 2008. The results of operations of Trane have been included in the condensed consolidated statement of operations and cash flows for the three and six months ended June 30, 2009 and since the Acquisition Date for the three and six months ended June 30, 2008. For further details on the acquisition of Trane, see Note 4 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. Compact Equipment manufactured and sold 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. We are currently in the process of resolving the final purchase price adjustments with Doosan Infracore.

On April 30, 2007, we completed the sale of our Road Development business unit to AB Volvo (publ) for cash proceeds of approximately $1.3 billion. The Road Development business unit manufactured and sold asphalt paving equipment, compaction equipment, milling machines and construction-related material handling equipment.

Results of Operations - Three Months Ended June 30, 2009 and 2008



                                                          For the three months ended June 30,
                                                                   % of                          % of
In millions, except per share amounts               2009         revenues         2008         revenues
Net revenues                                     $  3,473.8                    $  3,080.8
Cost of goods sold                                 (2,540.4 )        73.1 %      (2,196.1 )        71.3 %
Selling and administrative expenses                  (682.8 )        19.7 %        (523.1 )        17.0 %

Operating income                                      250.6           7.2 %         361.6          11.7 %
Interest expense                                      (81.9 )                       (45.6 )
Other, net                                              3.4                          32.7

Earnings (loss) before income taxes                   172.1                         348.7
Benefit (provision) for income taxes                  (32.8 )                       (79.7 )

Continuing operations                                 139.3                         269.0
Discontinued operations, net of tax                   (11.7 )                        (6.4 )

Net earnings (loss)                                   127.6                         262.6
Less: Net earnings attributable to
noncontrolling interests                               (5.5 )                        (6.5 )

Net earnings (loss) attributable to
Ingersoll-Rand Company Limited                   $    122.1                    $    256.1

Diluted net earnings (loss) per common share
attributable to Ingersoll-Rand Company Limited
common shareholders:
Continuing operations                            $     0.41                    $     0.90
Discontinued operations                               (0.03 )                       (0.02 )

Net earnings (loss)                              $     0.38                    $     0.88

The discussions that follow describe the significant factors contributing to the changes in our results of operations for the periods presented.

Net Revenues

Net revenues for the second quarter of 2009 increased by 12.8%, or $393.0
million, compared with 2008, which primarily resulted from the following:



                        Volume/product mix        -19.6 %
                        Pricing                     1.1 %
                        Currency exchange rates    -3.7 %
                        Acquisitions               35.0 %

                        Total                      12.8 %

The acquisition of Trane increased net revenues by 35.0%, or $1,078.3 million compared with the second quarter of 2008, which included the results of Trane since the Acquisition Date. All of our business segments experienced substantial volume declines compared with the second quarter of 2008 primarily associated with weak demand in many of our major end markets. In addition, negative currency impacts related to a stronger U.S. dollar were partially offset by modest price improvements across each of our businesses.

Cost of goods sold in the second quarter of 2009 increased by $344.3 million, or 15.7% compared with the same period in 2008, which included the results of Trane since the Acquisition Date. Trane contributed $801.1 million to the year-over-year increase. As a result, cost of goods sold as a percentage of revenue increased to 73.1% from 71.3%. In addition, cost of goods sold included $14.7 million of restructuring costs, which added a 0.4 point increase to cost of goods sold as a percentage of revenue. Productivity actions, expense reduction and improved pricing helped to mitigate the impact of the continued global weakness in our major end markets.

Selling and Administrative Expenses

Selling and administrative expense in the second quarter of 2009 increased by $159.7 million, or 30.5% compared with the same period in 2008, which included the results of Trane since the Acquisition Date. Trane contributed $238.3 million to the year-over-year increase. As a result, selling and administrative expense as a percentage of revenue increased to 19.7% from 17.0%. In addition, selling and administrative expense included $26.4 million of restructuring costs, which added a 0.8 point increase to selling and administrative expense as a percentage of revenue. Accelerated productivity actions and expense reduction partially offset the dramatic decline in volume experienced in the second quarter of 2009.

Operating Margin

Operating margin for the second quarter of 2009 decreased to 7.2% from 11.7% for the same period of 2008, which included the results of Trane since the Acquisition Date. The primary drivers of the decrease related to lower volumes and an unfavorable currency impact as well as lower margins in the acquired Trane business. In addition, restructuring costs of $41.1 million resulted in a 1.2 point decrease in second quarter 2009 operating margins. Productivity actions, expense reduction and improved pricing helped to mitigate the impact of the continued global weakness in our major end markets.

Interest Expense

Interest expense for the second quarter of 2009 increased $36.3 million compared with the same period of 2008, 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 June 30 are as follows:



                                                  Three months ended
                                                       June 30,
             In millions                          2009            2008
             Interest income                    $     3.3        $ 31.5
             Exchange gain (loss), net               (2.7 )        (2.9 )
             Earnings from equity investments         2.0           1.2
             Other                                    0.8           2.9

             Other, net                         $     3.4        $ 32.7

Provision for Income Taxes

Our tax rate, including discrete items, was 19% for the second quarter of 2009. We project an annual tax rate for 2009 to be approximately 18%. Our tax rate for the second quarter of 2008 was 23%.

Results of Operations - Six Months Ended June 30, 2009 and 2008



                                                           For the six months ended June 30,
                                                                  % of                            % of
In millions, except per share amounts             2009          revenues          2008          revenues
Net revenues                                   $  6,406.7                      $  5,244.1
Cost of goods sold                               (4,746.8 )         74.1 %       (3,737.1 )         71.3 %
Selling and administrative expenses              (1,359.4 )         21.2 %         (898.4 )         17.1 %

Operating income                                    300.5            4.7 %          608.6           11.6 %
Interest expense                                   (149.3 )                         (73.1 )
Other, net                                           15.8                            75.9

Earnings (loss) before income taxes                 167.0                           611.4
Benefit (provision) for income taxes                (43.2 )                        (126.8 )

Continuing operations                               123.8                           484.6
Discontinued operations, net of tax                 (18.1 )                         (36.5 )

Net earnings (loss)                                 105.7                           448.1
Less: Net earnings attributable to
noncontrolling interests                            (10.4 )                         (10.4 )

Net earnings (loss) attributable to
Ingersoll-Rand Company Limited                 $     95.3                      $    437.7
Diluted net earnings (loss) per common
share attributable to Ingersoll-Rand
Company Limited common shareholders:
Continuing operations                          $     0.35                      $     1.67
Discontinued operations                             (0.06 )                         (0.13 )

Net earnings (loss)                            $     0.29                      $     1.54

The discussions that follow describe the significant factors contributing to the changes in our results of operations for the periods presented.

Net Revenues

Net revenues for the first half of 2009 increased by 22.2%, or $1,162.6 million,
compared with 2008, which primarily resulted from the following:



                        Volume/product mix        -22.0 %
                        Pricing                     1.3 %
                        Currency exchange rates    -4.4 %
                        Acquisitions               47.3 %

                        Total                      22.2 %

The acquisition of Trane increased net revenues by 47.3%, or $2,478.0 million compared with the first half of 2008, which included the results of Trane since the Acquisition Date. All of our business segments experienced substantial volume declines compared to the first half of 2008 primarily

Cost of Goods Sold

Cost of goods sold in the first half of 2009 increased by $1,009.7 million, or 27.0% compared with the same period in 2008, which included the results of Trane since the Acquisition Date. Trane contributed $1,854.8 million to the year-over-year increase. As a result, cost of goods sold as a percentage of revenue increased to 74.1% from 71.3%. In addition, cost of goods sold included $17.9 million of restructuring costs, which added a 0.3 point increase to cost of goods sold as a percentage of revenue. Productivity actions, expense reduction and improved pricing helped to mitigate the impact of the continued global weakness in our major end markets.

Selling and Administrative Expenses

Selling and administrative expense in the first half of 2009 increased by $461.0 million, or 51.3% compared with the same period in 2008, which included the results of Trane since the Acquisition Date. Trane contributed $598.6 million to the year-over-year increase. As a result, selling and administrative expense as a percentage of revenue increased to 21.2% from 17.1%. In addition, selling and administrative expense included $34.1 million of restructuring costs, which . . .