Item 16. FORM 10-K SUMMARY

Not applicable.

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 PLC

(Registrant)

By:		/s/ Michael W. Lamach
		Michael W. Lamach
		Chairman of the Board and Chief Executive Officer
Date:		February 12, 2019

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

Signature		Title		Date
/s/ Michael W. Lamach		Chairman of the Board and Chief Executive Officer (Principal Executive Officer)		February 12, 2019
(Michael W. Lamach)
/s/ Susan K. Carter		Senior Vice President and Chief Financial Officer (Principal Financial Officer)		February 12, 2019
(Susan K. Carter)
/s/ Christopher J. Kuehn		Vice President and Chief Accounting Officer (Principal Accounting Officer)		February 12, 2019
(Christopher J. Kuehn)
/s/ Kirk E. Arnold		Director		February 12, 2019
(Kirk E. Arnold)
/s/ Ann C. Berzin		Director		February 12, 2019
(Ann C. Berzin)
/s/ John Bruton		Director		February 12, 2019
(John Bruton)
/s/ Jared L. Cohon		Director		February 12, 2019
(Jared L. Cohon)
/s/ Gary D. Forsee		Director		February 12, 2019
(Gary D. Forsee)
/s/ Linda P. Hudson		Director		February 12, 2019
(Linda P. Hudson)
/s/ Myles P. Lee		Director		February 12, 2019
(Myles P. Lee)
/s/ Karen B. Peetz		Director		February 12, 2019
(Karen B. Peetz)
/s/ John P. Surma		Director		February 12, 2019
(John P. Surma)
/s/ Richard J. Swift		Director		February 12, 2019
(Richard J. Swift)
/s/ Tony L. White		Director		February 12, 2019
(Tony L. White)

INGERSOLL-RAND PLC

Index to Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm	F-2
Consolidated Statements of Comprehensive Income	F-3
Consolidated Balance Sheets	F-5
Consolidated Statements of Equity	F-6
Consolidated Statements of Cash Flows	F-7
Notes to Consolidated Financial Statements	F-8
Schedule II – Valuation and Qualifying Accounts	F-55

F-1

Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors of Ingersoll-Rand plc

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of Ingersoll-Rand plc and its subsidiaries (the “Company”) as of December 31, 2018 and 2017, and the related consolidated statements of comprehensive income, of equity and of cash flows for each of the three years in the period ended December 31, 2018, including the related notes and schedule of valuation and qualifying accounts for each of the three years in the period ended December 31, 2018 appearing under Item 16 (collectively referred to as the “consolidated financial statements”). We also have audited the Company's internal control over financial reporting as of December 31, 2018, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2018 and 2017, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2018 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2018, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

Basis for Opinions

The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ PricewaterhouseCoopers LLP

Charlotte, North Carolina

February 12, 2019

We have served as the Company’s auditor since at least 1906. We have not been able to determine the specific year we began serving as auditor of the Company.

F-2

Ingersoll-Rand plc Consolidated Statements of Comprehensive Income In millions, except per share amounts
For the years ended December 31,		2018				2017				2016
Net revenues		$	15,668.2			$	14,197.6			$	13,508.9
Cost of goods sold		(10,847.6		)		(9,811.6		)		(9,307.9		)
Selling and administrative expenses		(2,903.2		)		(2,720.7		)		(2,597.8		)
Operating income		1,917.4				1,665.3				1,603.2
Interest expense		(220.7		)		(215.8		)		(221.5		)
Other income/(expense), net		(36.4		)		(31.6		)		359.6
Earnings before income taxes		1,660.3				1,417.9				1,741.3
Provision for income taxes		(281.3		)		(80.2		)		(281.5		)
Earnings from continuing operations		1,379.0				1,337.7				1,459.8
Discontinued operations, net of tax		(21.5		)		(25.4		)		32.9
Net earnings		1,357.5				1,312.3				1,492.7
Less: Net earnings attributable to noncontrolling interests		(19.9		)		(9.7		)		(16.5		)
Net earnings attributable to Ingersoll-Rand plc		$	1,337.6			$	1,302.6			$	1,476.2
Amounts attributable to Ingersoll-Rand plc ordinary shareholders:
Continuing operations		$	1,359.1			$	1,328.0			$	1,443.3
Discontinued operations		(21.5		)		(25.4		)		32.9
Net earnings		$	1,337.6			$	1,302.6			$	1,476.2
Earnings (loss) per share attributable to Ingersoll-Rand plc ordinary shareholders:
Basic:
Continuing operations		$	5.50			$	5.21			$	5.57
Discontinued operations		(0.09		)		(0.10		)		0.13
Net earnings		$	5.41			$	5.11			$	5.70
Diluted:
Continuing operations		$	5.43			$	5.14			$	5.52
Discontinued operations		(0.08		)		(0.09		)		0.13
Net earnings		$	5.35			$	5.05			$	5.65

F-3

Ingersoll-Rand plc Consolidated Statements of Comprehensive Income (continued) In millions, except per share amounts
For the years ended December 31,		2018				2017				2016
Net earnings		$	1,357.5			$	1,312.3			$	1,492.7
Other comprehensive income (loss):
Currency translation		(230.6		)		450.3				(233.8		)
Cash flow hedges
Unrealized net gains (losses) arising during period		1.2				(1.8		)		2.2
Net gains (losses) reclassified into earnings		0.9				3.6				(4.8		)
Tax (expense) benefit		(0.1		)		—				0.4
Total cash flow hedges, net of tax		2.0				1.8				(2.2		)
Pension and OPEB adjustments:
Prior service costs for the period		(16.0		)		(3.8		)		(6.2		)
Net actuarial gains (losses) for the period		12.8				39.6				23.6
Amortization reclassified into earnings		50.7				52.1				57.5
Settlements/curtailments reclassified to earnings		2.5				7.7				2.1
Currency translation and other		7.5				(15.4		)		22.5
Tax (expense) benefit		(17.2		)		(20.1		)		(23.5		)
Total pension and OPEB adjustments, net of tax		40.3				60.1				76.0
Other comprehensive income (loss), net of tax		(188.3		)		512.2				(160.0		)
Comprehensive income, net of tax		$	1,169.2			$	1,824.5			$	1,332.7
Less: Comprehensive income attributable to noncontrolling interests		(16.9		)		(10.2		)		(26.1		)
Comprehensive income attributable to Ingersoll-Rand plc		$	1,152.3			$	1,814.3			$	1,306.6

See accompanying notes to Consolidated Financial Statements.

F-4

Ingersoll-Rand plc

Consolidated Balance Sheets

In millions, except share amounts

December 31,		2018				2017
ASSETS
Current assets:
Cash and cash equivalents		$	903.4			$	1,549.4
Accounts and notes receivable, net		2,679.2				2,477.4
Inventories, net		1,677.8				1,555.4
Other current assets		471.6				536.9
Total current assets		5,732.0				6,119.1
Property, plant and equipment, net		1,730.8				1,551.3
Goodwill		5,959.5				5,935.7
Intangible assets, net		3,634.7				3,742.9
Other noncurrent assets		857.9				824.3
Total assets		$	17,914.9			$	18,173.3
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable		$	1,705.3			$	1,556.1
Accrued compensation and benefits		531.6				509.7
Accrued expenses and other current liabilities		1,728.2				1,655.2
Short-term borrowings and current maturities of long-term debt		350.6				1,107.0
Total current liabilities		4,315.7				4,828.0
Long-term debt		3,740.7				2,957.0
Postemployment and other benefit liabilities		1,192.9				1,285.3
Deferred and noncurrent income taxes		538.4				757.5
Other noncurrent liabilities		1,062.4				1,138.6
Total liabilities		10,850.1				10,966.4
Equity:
Ingersoll-Rand plc shareholders’ equity
Ordinary shares, $1 par value (266,405,347 and 273,980,824 shares issued at December 31, 2018 and 2017, respectively)		266.4				274.0
Ordinary shares held in treasury, at cost (24,500,054 and 24,501,667 shares at December 31, 2018 and 2017, respectively)		(1,719.4		)		(1,719.4		)
Capital in excess of par value		—				461.3
Retained earnings		9,439.8				8,903.2
Accumulated other comprehensive loss		(964.1		)		(778.8		)
Total Ingersoll-Rand plc shareholders’ equity		7,022.7				7,140.3
Noncontrolling interest		42.1				66.6
Total equity		7,064.8				7,206.9
Total liabilities and equity		$	17,914.9			$	18,173.3

See accompanying notes to Consolidated Financial Statements.

F-5

Ingersoll-Rand plc

Consolidated Statements of Equity

						Ingersoll-Rand plc shareholders’ equity
In millions, except per share amounts		Total equity				Ordinary shares							Ordinary shares held in treasury, at cost				Capital in excess of par value				Retained earnings				Accumulated other comprehensive income (loss)				Noncontrolling Interest
		Amount				Shares
Balance at December 31, 2015		$	5,879.2			$	269.0			269.0			$	(452.6	)		$	223.3			$	6,897.9			$	(1,120.9	)		$	62.5
Net earnings		1,492.7				—				—			—				—				1,476.2				—				16.5
Other comprehensive income (loss)		(160.0		)		—				—			—				—				—				(169.6		)		9.6
Shares issued under incentive stock plans		60.4				2.7				2.7			—				57.7				—				—				—
Repurchase of ordinary shares		(250.1		)		—				—			(250.1		)		—				—				—				—
Share-based compensation		61.6				—				—			—				66.0				(4.4		)		—				—
Dividends declared to noncontrolling interest		(14.1		)		—				—			—				—				—				—				(14.1		)
Cash dividends declared ($1.36 per share)		(351.0		)		—				—			—				—				(351.0		)		—				—
Other		(0.4		)		—				—			—				(0.5		)		0.1				—				—
Balance at December 31, 2016		$	6,718.3			$	271.7			271.7			$	(702.7	)		$	346.5			$	8,018.8			$	(1,290.5	)		$	74.5
Net earnings		1,312.3				—				—			—				—				1,302.6				—				9.7
Other comprehensive income (loss)		512.2				—				—			—				—				—				511.7				0.5
Shares issued under incentive stock plans		51.2				2.3				2.3			—				48.9				—				—				—
Repurchase of ordinary shares		(1,016.9		)		—				—			(1,016.9		)		—				—				—				—
Share-based compensation		67.9				—				—			—				70.8				(2.9		)		—				—
Dividends declared to noncontrolling interest		(15.8		)		—				—			—				—				—				—				(15.8		)
Adoption of ASU 2016-09 (See Note 2)		15.1				—				—			—				—				15.1				—				—
Acquisition/divestiture of noncontrolling interest		(7.3		)		—				—			—				(5.0		)		—				—				(2.3		)
Cash dividends declared ($1.70 per share)		(430.2		)		—				—			—				—				(430.2		)		—				—
Other		0.1				—				—			0.2				0.1				(0.2		)		—				—
Balance at December 31, 2017		$	7,206.9			$	274.0			274.0			$	(1,719.4	)		$	461.3			$	8,903.2			$	(778.8	)		$	66.6
Net earnings		1,357.5				—				—			—				—				1,337.6				—				19.9
Other comprehensive income (loss)		(188.3		)		—				—			—				—				—				(185.3		)		(3.0		)
Shares issued under incentive stock plans		43.1				2.1				2.1			—				41.0				—				—				—
Repurchase of ordinary shares		(900.2		)		(9.7		)		(9.7	)		—				(581.2		)		(309.3		)		—				—
Share-based compensation		74.7				—				—			—				78.8				(4.1		)		—				—
Dividends declared to noncontrolling interest		(41.4		)		—				—			—				—				—				—				(41.4		)
Adoption of ASU 2014-09 (See Note 2)		2.4				—				—			—				—				2.4				—				—
Adoption of ASU 2016-16 (See Note 2)		(9.1		)		—				—			—				—				(9.1		)		—				—
Cash dividends declared ($1.96 per share)		(480.8		)		—				—			—				—				(480.8		)		—				—
Other		—				—				—			—				0.1				(0.1		)		—				—
Balance at December 31, 2018		$	7,064.8			$	266.4			266.4			$	(1,719.4	)		$	—			$	9,439.8			$	(964.1	)		$	42.1

See accompanying notes to Consolidated Financial Statements.

F-6

Ingersoll-Rand plc

Consolidated Statements of Cash Flows

In millions

For the years ended December 31,		2018				2017				2016
Cash flows from operating activities:
Net earnings		$	1,357.5			$	1,312.3			$	1,492.7
Discontinued operations, net of tax		21.5				25.4				(32.9		)
Adjustments for non-cash transactions:
Asset impairment		—				8.4				—
Depreciation and amortization		361.5				353.3				352.2
Gain on sale of Hussmann equity investment		—				—				(397.8		)
Gain on sale of joint venture		—				(1.5		)		—
Other non-cash items, net		(78.5		)		(55.8		)		35.6
Changes in other assets and liabilities
Accounts and notes receivable		(236.0		)		(156.7		)		(101.3		)
Inventories		(169.9		)		(112.4		)		26.8
Other current and noncurrent assets		35.3				(206.8		)		(24.5		)
Accounts payable		120.7				167.2				103.6
Other current and noncurrent liabilities		62.4				228.2				(21.4		)
Net cash provided by (used in) continuing operating activities		1,474.5				1,561.6				1,433.0
Net cash provided by (used in) discontinued operating activities		(66.7		)		(38.1		)		88.9
Net cash provided by (used in) operating activities		1,407.8				1,523.5				1,521.9
Cash flows from investing activities:
Capital expenditures		(365.6		)		(221.3		)		(182.7		)
Acquisitions and equity method investments, net of cash acquired		(285.2		)		(157.6		)		(9.2		)
Proceeds from sale of property, plant and equipment		22.1				1.5				9.5
Proceeds from sale of Hussmann equity investment		—				—				422.5
Other investing activities, net		(0.7		)		2.7				—
Net cash provided by (used in) investing activities		(629.4		)		(374.7		)		240.1
Cash flows from financing activities:
Short-term borrowings (payments), net		(6.4		)		(4.0		)		(150.7		)
Proceeds from long-term debt		1,147.0				—				—
Payments of long-term debt		(1,123.0		)		(7.7		)		—
Net proceeds (repayments) of debt		17.6				(11.7		)		(150.7		)
Debt issuance costs		(12.0		)		(0.2		)		(2.1		)
Dividends paid to ordinary shareholders		(479.5		)		(430.1		)		(348.6		)
Dividends paid to noncontrolling interests		(41.4		)		(15.8		)		(14.1		)
Acquisition of noncontrolling interest		—				(6.8		)		—
Proceeds from shares issued under incentive plans		68.9				76.7				62.9
Repurchase of ordinary shares		(900.2		)		(1,016.9		)		(250.1		)
Other financing activities, net		(32.2		)		(27.7		)		(24.2		)
Net cash provided by (used in) financing activities		(1,378.8		)		(1,432.5		)		(726.9		)
Effect of exchange rate changes on cash and cash equivalents		(45.6		)		118.4				(57.2		)
Net increase (decrease) in cash and cash equivalents		(646.0		)		(165.3		)		977.9
Cash and cash equivalents – beginning of period		1,549.4				1,714.7				736.8
Cash and cash equivalents – end of period		$	903.4			$	1,549.4			$	1,714.7
Cash paid during the year for:
Interest		$	200.6			$	210.0			$	209.3
Income taxes, net of refunds		$	375.4			$	286.7			$	334.3

See accompanying notes to Consolidated Financial Statements.

F-7

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. DESCRIPTION OF COMPANY

Ingersoll-Rand plc (Plc or Parent Company), a public limited company incorporated in Ireland in 2009, and its consolidated subsidiaries (collectively, we, our, the Company) is a diversified, global company that provides products, services and solutions to enhance the quality, energy efficiency and comfort of air in homes and buildings, transport and protect food and perishables and increase industrial productivity and efficiency. The Company's business segments consist of Climate and Industrial, both with strong brands and highly differentiated products within their respective markets. The Company generates 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 Ingersoll-Rand®, Trane®, Thermo King®, American Standard®, ARO®, and Club Car®.

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A summary of significant accounting policies used in the preparation of the accompanying Consolidated Financial Statements follows:

Basis of Presentation: The accompanying Consolidated Financial Statements reflect the consolidated operations of the Company and have been prepared in accordance with U.S. Generally Accepted Accounting Principles (GAAP) as defined by the Financial Accounting Standards Board (FASB) within the FASB Accounting Standards Codification (ASC). Intercompany accounts and transactions have been eliminated. The assets, liabilities, results of operations and cash flows of all discontinued operations have been separately reported as discontinued operations for all periods presented. Certain reclassifications of amounts reported in prior periods have been made to conform with the current period presentation. The Company has revised its supplemental cash flow information in prior years to properly reflect cash paid during the year for interest.

The Consolidated Financial Statements include all majority-owned subsidiaries of the Company. A noncontrolling interest in a subsidiary is considered an ownership interest in a majority-owned subsidiary that is not attributable to the parent. The Company includes Noncontrolling interest as a component of Total equity in the Consolidated Balance Sheet and the Net earnings attributable to noncontrolling interests are presented as an adjustment from Net earnings used to arrive at Net earnings attributable to Ingersoll-Rand plc in the Consolidated Statement of Comprehensive Income. Partially-owned equity affiliates represent 20-50% ownership interests in investments where the Company demonstrates significant influence, but does not have a controlling financial interest. Partially-owned equity affiliates are accounted for under the equity method.

Use of Estimates: The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosures of contingent assets and liabilities at the date of the financial statements as well as the reported amounts of revenues and expenses during the reporting period. Estimates are based on several factors including the facts and circumstances available at the time the estimates are made, historical experience, risk of loss, general economic conditions and trends, and the assessment of the probable future outcome. Actual results could differ from those estimates. Estimates and assumptions are reviewed periodically, and the effects of changes, if any, are reflected in the statement of operations in the period that they are determined.

Currency Translation: Assets and liabilities of non-U.S. subsidiaries, where the functional currency is not the U.S. dollar, have been translated at year-end exchange rates, and income and expense accounts have been translated using average exchange rates throughout the year. Adjustments resulting from the process of translating an entity’s financial statements into the U.S. dollar have been recorded in the equity section of the Consolidated Balance Sheet within Accumulated other comprehensive income (loss). Transactions that are denominated in a currency other than an entity’s functional currency are subject to changes in exchange rates with the resulting gains and losses recorded within Net earnings.

Cash and Cash Equivalents: Cash and cash equivalents include cash on hand, demand deposits and all highly liquid investments with original maturities at the time of purchase of three months or less. The Company maintains amounts on deposit at various financial institutions, which may at times exceed federally insured limits. However, management periodically evaluates the credit-worthiness of those institutions and has not experienced any losses on such deposits.

Allowance for Doubtful Accounts: The Company maintains an allowance for doubtful accounts receivable which represents the best estimate of probable loss inherent in the Company's accounts receivable portfolio. This estimate is based upon a two-step policy that results in the total recorded allowance for doubtful accounts. The first step is to record a portfolio reserve based on the aging of the outstanding accounts receivable portfolio and the Company's historical experience with the Company's end markets, customer base and products. The second step is to create a specific reserve for significant accounts as to which the customer's ability to satisfy their financial obligation to the Company is in doubt due to circumstances such as bankruptcy, deteriorating operating results or financial position. In these circumstances, management uses its judgment to record an allowance based on the best estimate of probable loss, factoring in such considerations as the market value of collateral, if applicable. Actual results could differ from those estimates. These estimates and assumptions are reviewed periodically, and the effects of changes, if any, are

F-8

reflected in the Consolidated Statement of Comprehensive Income in the period that they are determined. The Company reserved $32.7 million and $26.9 million for doubtful accounts as of December 31, 2018 and 2017, respectively.

Inventories: Depending on the business, U.S. inventories are stated at the lower of cost or market using the last-in, first-out (LIFO) method or the lower of cost or market using the first-in, first-out (FIFO) method. Non-U.S. inventories are primarily stated at the lower of cost or market using the FIFO method. At December 31, 2018 and 2017, approximately 56% and 51%, respectively, of all inventory utilized the LIFO method.

Property, Plant and Equipment: Property, plant and equipment are stated at cost, less accumulated depreciation. Assets placed in service are recorded at cost and depreciated using the straight-line method over the estimated useful life of the asset except for leasehold improvements, which are depreciated over the shorter of their economic useful life or their lease term. The range of useful lives used to depreciate property, plant and equipment is as follows:

Buildings	10	to	50	years
Machinery and equipment	2	to	12	years
Software	2	to	7	years

Major expenditures for replacements and significant improvements that increase asset values and extend useful lives are also capitalized. Capitalized costs are amortized over their estimated useful lives using the straight-line method. Repairs and maintenance expenditures that do not extend the useful life of the asset are charged to expense as incurred. The carrying amounts of assets that are sold or retired and the related accumulated depreciation are removed from the accounts in the year of disposal, and any resulting gain or loss is reflected within current earnings.

Per ASC 360, "Property, Plant, and Equipment," (ASC 360) the Company assesses the recoverability of the carrying value of its property, plant and equipment whenever events or changes in circumstances indicate that the carrying amount of the asset group may not be recoverable. Recoverability is measured by a comparison of the carrying amount of an asset group to the future net undiscounted cash flows expected to be generated by the asset group. If the undiscounted cash flows are less than the carrying amount of the asset group, an impairment loss is recognized for the amount by which the carrying value of the asset group exceeds the fair value of the asset group.

Goodwill and Intangible Assets: The Company records as goodwill the excess of the purchase price over the fair value of the net assets acquired in a business combination. In accordance with ASC 350, "Intangibles-Goodwill and Other," (ASC 350) goodwill and other indefinite-lived intangible assets are tested and reviewed annually for impairment during the fourth quarter or whenever there is a significant change in events or circumstances that indicate that the fair value of the asset is more likely than not less than the carrying amount of the asset.

Impairment of goodwill is assessed at the reporting unit level and begins with an optional qualitative assessment to determine if it is more likely than not that the fair value of each reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the goodwill impairment test under ASC 350. For those reporting units that bypass or fail the qualitative assessment, the test compares the carrying amount of the reporting unit to its estimated fair value. If the estimated fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is not impaired. To the extent that the carrying value of the reporting unit exceeds its estimated fair value, an impairment loss will be recognized for the amount by which the reporting unit's carrying amount exceeds its fair value, not to exceed the carrying amount of goodwill in that reporting unit.

Intangible assets such as patents, customer-related intangible assets and other intangible assets with finite useful lives are amortized on a straight-line basis over their estimated economic lives. The weighted-average useful lives approximate the following:

Customer relationships	20	years
Completed technology/patents	10	years
Other	20	years

The Company assesses the recoverability of the carrying value of its intangible assets with finite useful lives whenever events or changes in circumstances indicate that the carrying amount of the asset group may not be recoverable. Recoverability is measured by a comparison of the carrying amount of an asset group to the future net undiscounted cash flows expected to be generated by the asset group. If the undiscounted cash flows are less than the carrying amount of the asset group, an impairment loss is recognized for the amount by which the carrying value of the asset group exceeds the fair value of the asset group.

Employee Benefit Plans: The Company provides a range of benefits, including pensions, postretirement and postemployment benefits to eligible current and former employees. Determining the cost associated with such benefits is dependent on various actuarial assumptions, including discount rates, expected return on plan assets, compensation increases, mortality, turnover rates, and healthcare cost trend rates. Actuaries perform the required calculations to determine expense in accordance with GAAP. Actual results may differ from the actuarial assumptions and are generally accumulated into Accumulated other comprehensive income

F-9

(loss) and amortized into Net earnings over future periods. The Company reviews its actuarial assumptions at each measurement date and makes modifications to the assumptions based on current rates and trends, if appropriate.

Loss Contingencies: Liabilities are recorded for various contingencies arising in the normal course of business, including litigation and administrative proceedings, environmental matters, product liability, product warranty, worker’s compensation and other claims. The Company has recorded reserves in the financial statements related to these matters, which are developed using input derived from actuarial estimates and historical and anticipated experience data depending on the nature of the reserve, and in certain instances with consultation of legal counsel, internal and external consultants and engineers. Subject to the uncertainties inherent in estimating future costs for these types of liabilities, the Company believes its estimated reserves are reasonable and does not believe the final determination of the liabilities with respect to these matters would have a material effect on the financial condition, results of operations, liquidity or cash flows of the Company for any year.

Environmental Costs: The Company is subject to laws and regulations relating to protecting the environment. 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. Liabilities for remediation costs are recorded when they are probable and can be reasonably estimated, generally no later than the completion of feasibility studies or the Company’s commitment to a plan of action. The assessment of this liability, which is calculated based on existing technology, does not reflect any offset for possible recoveries from insurance companies, and is not discounted.

Asbestos Matters: Certain of the Company's wholly-owned subsidiaries and former companies are named as defendants in asbestos-related lawsuits in state and federal courts. The Company records a liability for actual and anticipated future claims as well as an asset for anticipated insurance settlements. Asbestos-related defense costs are excluded from the asbestos claims liability and are recorded separately as services are incurred. None of the Company's existing or previously-owned businesses were a producer or manufacturer of asbestos. The Company records certain income and expenses associated with asbestos liabilities and corresponding insurance recoveries within discontinued operations, net of tax, as they relate to previously divested businesses, except for amounts associated with Trane U.S. Inc.’s asbestos liabilities and corresponding insurance recoveries which are recorded within continuing operations.

Product Warranties: Standard product warranty accruals are recorded at the time of sale and are estimated based upon product warranty terms and historical experience. The Company assesses the adequacy of its liabilities and will make adjustments as necessary based on known or anticipated warranty claims, or as new information becomes available. The Company's extended warranty liability represents the deferred revenue associated with its extended warranty contracts and is amortized into Revenue on a straight-line basis over the life of the contract, unless another method is more representative of the costs incurred. The Company assesses the adequacy of its liability by evaluating the expected costs under its existing contracts to ensure these expected costs do not exceed the extended warranty liability.

Income Taxes: Deferred tax assets and liabilities are determined based on temporary differences between financial reporting and tax bases of assets and liabilities, applying enacted tax rates expected to be in effect for the year in which the differences are expected to reverse. The Company recognizes future tax benefits, such as net operating losses and tax credits, to the extent that realizing these benefits is considered in its judgment to be more likely than not. The Company regularly reviews the recoverability of its deferred tax assets considering its historic profitability, projected future taxable income, timing of the reversals of existing temporary differences and the feasibility of its tax planning strategies. Where appropriate, the Company records a valuation allowance with respect to a future tax benefit.

Revenue Recognition: Revenue is recognized when control of a good or service promised in a contract (i.e., performance obligation) is transferred to a customer. Control is obtained when a customer has the ability to direct the use of and obtain substantially all of the remaining benefits from that good or service. A majority of the Company's revenues are recognized at a point-in-time as control is transferred at a distinct point in time per the terms of a contract. However, a portion of the Company's revenues are recognized over time as the customer simultaneously receives control as the Company performs work under a contract. See Note 11 to the Consolidated Financial Statements for additional information regarding revenue recognition.

Research and Development Costs: The Company conducts research and development activities for the purpose of developing and improving new products and services. These expenditures are expensed when incurred. For the years ended December 31, 2018, 2017 and 2016, these expenditures amounted to $228.7 million, $210.8 million and $207.9 million, respectively.

Recent Accounting Pronouncements

The FASB ASC is the sole source of authoritative GAAP other than the Securities and Exchange Commission (SEC) issued rules and regulations that apply only to SEC registrants. The FASB issues an Accounting Standards Update (ASU) to communicate changes to the codification. The Company considers the applicability and impact of all ASU's. ASU's not listed below were assessed and determined to be either not applicable or are not expected to have a material impact on the consolidated financial statements.

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Recently Adopted Accounting Pronouncements

In August 2017, the FASB issued ASU 2017-12, "Derivatives and hedging (Topic 815): Targeted improvements to accounting for hedging activities" (ASU 2017-12). This standard more closely aligns the results of cash flow and fair value hedge accounting with risk management activities through changes to both the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results in the financial statements. This standard also addresses specific limitations in current GAAP by expanding hedge accounting for both nonfinancial and financial risk components and by refining the measurement of hedge results to better reflect an entity’s hedging strategies. Additionally, by aligning the timing of recognition of hedge results with the earnings effect of the hedged item for cash flow and net investment hedges, and by including the earnings effect of the hedging instrument in the same income statement line item in which the earnings effect of the hedged item is presented, the results of an entity’s hedging program and the cost of executing that program will be more visible to users of financial statements. ASU 2017-12 is effective for annual reporting periods beginning after December 15, 2018 with early adoption permitted. The Company adopted this standard on October 1, 2018 with no material impact to the financial statements.

In October 2016, the FASB issued ASU 2016-16, “Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory” (ASU 2016-16) which removed the prohibition in Topic 740 against the immediate recognition of the current and deferred income tax effects of intra-entity transfers of assets other than inventory. As a result, the income tax consequences of an intra-entity transfer of assets other than inventory will be recognized in the current period income statement rather than being deferred until the assets leave the consolidated group. The Company applied ASU 2016-16 on a modified retrospective basis through a cumulative-effect adjustment which reduced Retained earnings by $9.1 million as of January 1, 2018.

In May 2014, the FASB issued ASU No. 2014-09, "Revenue from Contracts with Customers" (ASC 606), which created a comprehensive, five-step model for revenue recognition that requires a company to recognize revenue to depict the transfer of promised goods or services to a customer at an amount that reflects the consideration it expects to receive in exchange for those goods or services. Under ASC 606, a company will be required to use more judgment and make more estimates when considering contract terms as well as relevant facts and circumstances when identifying performance obligations, estimating the amount of variable consideration in the transaction price and allocating the transaction price to each separate performance obligation. The Company adopted this standard on January 1, 2018 using the modified retrospective approach and recorded a cumulative effect adjustment to increase Retained earnings by $2.4 million with related amounts not materially impacting the Balance Sheet. Refer to Note 11, “Revenue,” for a further discussion on the adoption of ASC 606.

In March 2017, the FASB issued ASU 2017-07, "Compensation-Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost" (ASU 2017-07) which changes the way employers that sponsor defined benefit pension and/or postretirement benefit plans reflect net periodic benefit costs in the income statement. Under the previous standard, the multiple components of net periodic benefit costs are aggregated and reported within the operating section of the income statement or capitalized into assets when appropriate. The new standard requires a company to present the service cost component of net periodic benefit cost in the same income statement line as other employee compensation costs with the remaining components of net periodic benefit cost presented separately from the service cost component and outside of any subtotal of operating income, if one is presented. In addition, only the service cost component will be eligible for capitalization in assets. The Company adopted this standard on January 1, 2017 applying the presentation requirements retrospectively.

In March 2016, the FASB issued ASU No. 2016-09, "Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting" (ASU 2016-09) which simplifies several aspects of the accounting for employee share-based payment transactions. The standard makes several modifications to the accounting for forfeitures, employer tax withholding on share-based compensation and the financial statement presentation of excess tax benefits or deficiencies. In addition, ASU 2016-09 clarifies the statement of cash flows presentation for certain components of share-based awards. The Company adopted this standard on January 1, 2017 and prospectively presented any excess tax benefits or deficiencies in the income statement as a component of Provision for income taxes rather than in the Equity section of the Balance Sheet. As part of the adoption, the Company reclassified $15.1 million of excess tax benefits previously unrecognized on a modified retrospective basis through a cumulative-effect adjustment to increase Retained earnings as of January 1, 2017. In addition, the statement of cash flows for the twelve months ended December 31, 2016 was retrospectively adjusted to present $21.7 million of excess tax benefits as an operating activity rather than a financing activity.

Recently Issued Accounting Pronouncements

In August 2018, the FASB issued ASU 2018-15, "Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract" (ASU 2018-15), which aligns the requirements for capitalizing implementation costs in a cloud-computing arrangement service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. In addition, the guidance also clarifies the presentation requirements for reporting such costs in the financial statements. ASU 2018-15 is effective for annual reporting periods beginning after December 15, 2019 with early adoption permitted. The Company is currently assessing the impact of the ASU on its financial statements.

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In February 2018, the FASB issued ASU 2018-02, "Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income" (ASU 2018-02), which allows companies to reclassify stranded tax effects in Accumulated other comprehensive income (loss) that have been caused by the Tax Cuts and Jobs Act of 2017 (the Act) to Retained earnings for each period in which the effect of the change in the U.S. federal corporate income tax rate is recorded. ASU 2018-02 is effective for annual reporting periods beginning after December 15, 2018 with early adoption permitted. However, the FASB has made the reclassification optional. As a result, the Company assessed the impact of the ASU on its financial statements and will not exercise the option to reclassify the stranded tax effects caused by the Act.

In February 2016, the FASB issued ASU 2016-02, "Leases" (ASU 2016-02), which requires the lease rights and obligations arising from lease contracts, including existing and new arrangements, to be recognized as assets and liabilities on the balance sheet. The standard also requires additional disclosures by lessees and contains targeted changes to accounting by lessors. ASU 2016-02 is effective for annual periods beginning after December 15, 2018, including interim periods within those annual periods, with early adoption permitted. The FASB allows the option to adopt the standard using a modified retrospective approach through a cumulative-effect adjustment to retained earnings applied either to the beginning of the earliest period presented or the beginning of the period of adoption. The Company will adopt the new guidance effective January 1, 2019 using a modified retrospective approach through a cumulative-effect adjustment to retained earnings as of the beginning of the period of adoption. The Company expects the estimated right-of-use asset and related lease liability recognized on the Balance Sheet to approximate $500 million. However, the Company does not expect the adoption to have a material impact to its Statement of Cash Flows or Statement of Comprehensive Income.

NOTE 3. INVENTORIES

Depending on the business, U.S. inventories are stated at the lower of cost or market using the last-in, first-out (LIFO) method or the lower of cost or market using the first-in, first-out (FIFO) method. Non-U.S. inventories are primarily stated at the lower of cost or market using the FIFO method.

At December 31, the major classes of inventory were as follows:

In millions		2018				2017
Raw materials		$	550.5			$	502.8
Work-in-process		182.0				180.5
Finished goods		1,028.8				941.0
		1,761.3				1,624.3
LIFO reserve		(83.5		)		(68.9		)
Total		$	1,677.8			$	1,555.4

The Company performs periodic assessments to determine the existence of obsolete, slow-moving and non-saleable inventories and records necessary provisions to reduce such inventories to net realizable value. Reserve balances, primarily related to obsolete and slow-moving inventories, were $119.9 million and $120.3 million at December 31, 2018 and December 31, 2017, respectively.

NOTE 4. PROPERTY, PLANT AND EQUIPMENT

At December 31, the major classes of property, plant and equipment were as follows:

In millions		2018				2017
Land		$	53.2			$	52.0
Buildings		870.7				770.1
Machinery and equipment		2,079.9				2,019.5
Software		831.4				822.7
		3,835.2				3,664.3
Accumulated depreciation		(2,104.4		)		(2,113.0		)
Total		$	1,730.8			$	1,551.3

Depreciation expense for the years ended December 31, 2018, 2017 and 2016 was $217.4 million, $217.3 million and $216.7 million, which include amounts for software amortization of $25.7 million, $28.6 million and $35.9 million, respectively.

F-12

NOTE 5. GOODWILL

The Company records as goodwill the excess of the purchase price over the fair value of the net assets acquired in a business combination. Measurement period adjustments may be recorded once a final valuation has been performed. Goodwill is tested and reviewed annually for impairment during the fourth quarter or whenever there is a significant change in events or circumstances that indicate that the fair value of the asset may be less than the carrying amount of the asset.

The changes in the carrying amount of Goodwill are as follows:

In millions		Climate				Industrial				Total
Net balance as of December 31, 2016		$	4,879.1			$	779.3			$	5,658.4
Acquisitions (1)		26.3				60.5				86.8
Currency translation		159.7				30.8				190.5
Net balance as of December 31, 2017		5,065.1				870.6				5,935.7
Acquisitions (1)		118.1				1.8				119.9
Currency translation		(84.0		)		(12.1		)		(96.1		)
Net balance as of December 31, 2018		5,099.2				860.3				5,959.5

(1) Refer to Note 17, "Acquisitions and Divestitures" for more information regarding acquisitions.

The net goodwill balances at December 31, 2018, 2017 and 2016 include $2,496.0 million of accumulated impairment. The accumulated impairment relates entirely to a charge in the fourth quarter of 2008 associated with the Climate segment.

The Company performed its annual goodwill impairment test during the fourth quarter of 2018 and determined that the estimated fair value of each reporting unit exceeded their respective carrying value. As a result, no impairment charges were recorded during the year. However, the Climate Latin America reporting unit is at risk of impairment as its estimated fair value exceeded its carrying value by 1.1%. The reporting unit has approximately $190 million of goodwill as of December 31, 2018. A significant increase in the discount rate, decrease in the long-term growth rate, or substantial reductions in end markets and volume assumptions could have a negative impact on its estimated fair value. With all other assumptions and trends remaining constant for each independent variable, a 0.5% increase in the discount rate combined with a 0.5% decrease in the long-term growth rate would result in an approximate $15 million impairment for this reporting unit.

NOTE 6. INTANGIBLE ASSETS

Indefinite-lived intangible assets are tested and reviewed annually for impairment during the fourth quarter or whenever there is a significant change in events or circumstances that indicate that the fair value of the asset may be less than the carrying amount of the asset. All other intangible assets with finite useful lives are being amortized on a straight-line basis over their estimated useful lives.

The following table sets forth the gross amount and related accumulated amortization of the Company’s intangible assets at December 31:

		2018												2017
In millions		Gross carrying amount				Accumulated amortization				Net carrying amount				Gross carrying amount				Accumulated amortization				Net carrying amount
Completed technologies/patents		$	206.6			$	(182.0	)		$	24.6			$	209.4			$	(177.3	)		$	32.1
Customer relationships		2,086.8				(1,176.3		)		910.5				2,068.9				(1,056.9		)		1,012.0
Other		84.5				(54.4		)		30.1				93.9				(52.7		)		41.2
Total finite-lived intangible assets		$	2,377.9			$	(1,412.7	)		$	965.2			$	2,372.2			$	(1,286.9	)		$	1,085.3
Trademarks (indefinite-lived)		2,669.5				—				2,669.5				2,657.6				—				2,657.6
Total		$	5,047.4			$	(1,412.7	)		$	3,634.7			$	5,029.8			$	(1,286.9	)		$	3,742.9

Intangible asset amortization expense for 2018, 2017 and 2016 was $139.3 million, $132.0 million and $132.0 million, respectively. Future estimated amortization expense on existing intangible assets in each of the next five years amounts to approximately $139 million for 2019, $137 million for 2020, $137 million for 2021, $137 million for 2022, and $135 million for 2023.

F-13

NOTE 7. DEBT AND CREDIT FACILITIES

At December 31, Short-term borrowings and current maturities of long-term debt consisted of the following:

In millions		2018				2017
Debentures with put feature		$	343.0			$	343.0
6.875% Senior notes due 2018 (1)		—				749.6
Other current maturities of long-term debt		7.6				7.7
Short-term borrowings		—				6.7
Total		$	350.6			$	1,107.0

(1) During the first quarter of 2018, the Company redeemed its 6.875% Senior notes due 2018.

The Company's short-term obligations primarily consist of current maturities of long-term debt. Other obligations relate to short-term lines of credit used to fund working capital requirements in certain non U.S. countries. The weighted-average interest rate for Short-term borrowings and current maturities of long-term debt at December 31, 2018 and 2017 was 6.3% and 6.7%, respectively.

Commercial Paper Program

The Company uses borrowings under its commercial paper program for general corporate purposes. The maximum aggregate amount of unsecured commercial paper notes available to be issued, on a private placement basis, under the commercial paper program is $2.0 billion as of December 31, 2018. Under the commercial paper program, the Company may issue notes from time to time through Ingersoll-Rand Global Holding Company Limited or Ingersoll-Rand Luxembourg Finance S.A. Each of Ingersoll-Rand plc, Ingersoll-Rand Irish Holdings Unlimited Company, Ingersoll-Rand Lux International Holding Company S.à.r.l., Ingersoll-Rand Global Holding Company Limited and Ingersoll-Rand Company provided irrevocable and unconditional guarantees for any notes issued under the commercial paper program. The Company had no outstanding balance under its commercial paper program as of December 31, 2018 and December 31, 2017.

Debentures with Put Feature

At December 31, 2018 and December 31, 2017, the Company had $343.0 million of fixed rate debentures outstanding which contain a put feature that the holders may exercise on each anniversary of the issuance date. If exercised, the Company is obligated to repay in whole or in part, at the holder’s option, the outstanding principal amount of the debentures plus accrued interest. If these options are not exercised, the final contractual maturity dates would range between 2027 and 2028. Holders of these debentures had the option to exercise the put feature on each of the outstanding debentures in 2018, subject to the notice requirement. No material exercises were made.

At December 31, long-term debt excluding current maturities consisted of:

In millions		2018				2017
2.875% Senior notes due 2019 (1)		$	—			$	349.4
2.625% Senior notes due 2020		299.4				298.9
2.900% Senior notes due 2021		298.3				—
9.000% Debentures due 2021		124.9				124.9
4.250% Senior notes due 2023		697.1				696.5
7.200% Debentures due 2019-2025		44.8				52.3
3.550% Senior notes due 2024		495.9				495.2
6.480% Debentures due 2025		149.7				149.7
3.750% Senior notes due 2028		544.5				—
5.750% Senior notes due 2043		494.3				494.0
4.650% Senior notes due 2044		295.8				295.6
4.300% Senior notes due 2048		295.9				—
Other loans and notes, at end-of-year average interest rates of 7.0% in 2018 and 5.71% in 2017, maturing in various amounts to 2023		0.1				0.5
Total		$	3,740.7			$	2,957.0

(1) During the first quarter of 2018, the Company redeemed its 2.875% Senior notes due 2019.

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Scheduled maturities of long-term debt, including current maturities, as of December 31, 2018 are as follows:

In millions
2019	$	350.6
2020	307.0
2021	430.7
2022	7.5
2023	704.6
Thereafter	2,290.9
Total	$	4,091.3

Issuance and Redemption of Senior Notes

In February 2018, the Company issued $1.15 billion principal amount of senior notes in three tranches through an indirect, wholly-owned subsidiary. The tranches consist of $300 million aggregate principal amount of 2.900% senior notes due 2021, $550 million aggregate principal amount of 3.750% senior notes due 2028 and $300 million aggregate principal amount of 4.300% senior notes due 2048. The notes are fully and unconditionally guaranteed by each of Ingersoll Rand plc, Ingersoll-Rand Irish Holdings Unlimited Company, Ingersoll-Rand Lux International Holding Company S.à.r.l, Ingersoll-Rand Company and Ingersoll-Rand Luxembourg Finance S.A. The Company has the option to redeem the notes in whole or in part at any time, prior to their stated maturity date at redemption prices set forth in the indenture agreement. The notes are subject to certain customary covenants, however, none of these covenants are considered restrictive to the Company’s operations. In March 2018, the Company used the proceeds to fund the redemption of $750 million aggregate principal amount of 6.875% senior notes due 2018 and $350 million aggregate principal amount of 2.875% senior notes due 2019, with the remainder used for general corporate purposes. As a result of the early redemption, the Company recognized $15.4 million of premium expense and $1.2 million of unamortized costs in Interest expense in 2018.

Other Credit Facilities

The Company maintains two 5-year, $1.0 billion revolving credit facilities (the Facilities) through its wholly-owned subsidiaries, Ingersoll-Rand Global Holding Company Limited and Ingersoll-Rand Luxembourg Finance S.A. (collectively, the Borrowers). Each senior unsecured credit facility provides support for the Company's commercial paper program and can be used for working capital and other general corporate purposes. Ingersoll-Rand plc, Ingersoll-Rand Irish Holdings Unlimited Company, Ingersoll-Rand Lux International Holding Company S.à.r.l. and Ingersoll-Rand Company each provide irrevocable and unconditional guarantees for these Facilities. In addition, each Borrower will guarantee the obligations under the Facilities of the other Borrower. Total commitments of $2.0 billion were unused at December 31, 2018 and December 31, 2017. On April 17, 2018, the Company entered into a new 5-year, $1.0 billion senior unsecured credit facility and terminated its 5-year, $1.0 billion facility set to expire in March 2019. As a result, the current maturity dates of the Facilities are March 2021 and April 2023.

Fair Value of Debt

The carrying value of the Company's short-term borrowings is a reasonable estimate of fair value due to the short-term nature of the instruments. The fair value of the Company's debt instruments at December 31, 2018 and December 31, 2017 was $4,244.0 million and $4,462.2 million, respectively. The Company measures the fair value of its long-term debt instruments for disclosure purposes based upon observable market prices quoted on public exchanges for similar assets. These fair value inputs are considered Level 2 within the fair value hierarchy. The methodologies used by the Company to determine the fair value of its long-term debt instruments at December 31, 2018 are the same as those used at December 31, 2017.

Guarantees

Along with Ingersoll-Rand plc, certain of the Company's 100% directly or indirectly owned subsidiaries have fully and unconditionally guaranteed, on a joint and several basis, public debt issued by other 100% directly or indirectly owned subsidiaries. Refer to Note 21 for the Company's current guarantor structure.

NOTE 8. FINANCIAL INSTRUMENTS

In the normal course of business, the Company is exposed to certain risks arising from business operations and economic factors. These fluctuations can increase the cost of financing, investing and operating the business. The Company may use various financial instruments, including derivative instruments, to manage the risks associated with interest rate, commodity price and foreign currency exposures. These financial instruments are not used for trading or speculative purposes. The Company recognizes all derivatives on the Consolidated Balance Sheet at their fair value as either assets or liabilities.

On the date a derivative contract is entered into, the Company designates the derivative instrument as a cash flow hedge of a forecasted transaction or as an undesignated derivative. The Company formally documents its hedge relationships, including identification of the derivative instruments and the hedged items, as well as its risk management objectives and strategies for

F-15

undertaking the hedge transaction. This process includes linking derivative instruments that are designated as hedges to specific assets, liabilities or forecasted transactions.

The Company assesses at inception and at least quarterly thereafter, whether the derivatives used in cash flow hedging transactions are highly effective in offsetting the changes in the cash flows of the hedged item. To the extent the derivative is deemed to be a highly effective hedge, the fair market value changes of the instrument are recorded to Accumulated other comprehensive income (AOCI). If the hedging relationship ceases to be highly effective, or it becomes probable that a forecasted transaction is no longer expected to occur, the hedging relationship will be undesignated and any future gains and losses on the derivative instrument will be recorded in Net earnings.

The fair values of derivative instruments included within the Consolidated Balance Sheet as of December 31 were as follows:

		Derivative assets								Derivative liabilities
In millions		2018				2017				2018				2017
Derivatives designated as hedges:
Currency derivatives		$	1.3			$	—			$	0.7			$	1.3
Derivatives not designated as hedges:
Currency derivatives		0.9				7.2				0.6				1.2
Total derivatives		$	2.2			$	7.2			$	1.3			$	2.5

Asset and liability derivatives included in the table above are recorded within Other current assets and Accrued expenses and other current liabilities, respectively.

Currency Hedging Instruments

The notional amount of the Company’s currency derivatives was $0.6 billion and $0.7 billion at December 31, 2018 and 2017, respectively. At December 31, 2018 and 2017, a net gain of $0.5 million and a net loss of $1.2 million, net of tax, respectively, was included in AOCI related to the fair value of the Company’s currency derivatives designated as accounting hedges. The amount expected to be reclassified into Net earnings over the next twelve months is a gain of $0.5 million. The actual amounts that will be reclassified to Net earnings may vary from this amount as a result of changes in market conditions. Gains and losses associated with the Company’s currency derivatives not designated as hedges are recorded in Net earnings as changes in fair value occur. At December 31, 2018, the maximum term of the Company’s currency derivatives was approximately 12 months, except for currency derivatives in place related to a certain long-term contract.

Other Derivative Instruments

Prior to 2005, the Company utilized forward-starting interest rate swaps and interest rate locks to manage interest rate exposure in periods prior to the anticipated issuance of certain fixed-rate debt. These instruments were designated as cash flow hedges and had a notional amount of $1.3 billion. Consequently, when the contracts were settled upon the issuance of the underlying debt, any realized gains or losses in the fair values of the instruments were deferred into AOCI. These deferred gains or losses are subsequently recognized in Interest expense over the term of the related notes. The net unrecognized gain in AOCI was $6.7 million and $6.6 million at December 31, 2018 and at December 31, 2017. The deferred gain at December 31, 2018 will be amortized over the term of notes with maturities ranging from 2018 to 2044. The amount expected to be amortized over the next twelve months is a net gain of $0.7 million. The Company has no forward-starting interest rate swaps or interest rate lock contracts outstanding at December 31, 2018 or 2017.

F-16

The following table represents the amounts associated with derivatives designated as hedges affecting Net earnings and AOCI for the years ended December 31:

		Amount of gain (loss) recognized in AOCI												Location of gain (loss) reclassified from AOCI and recognized into Net earnings		Amount of gain (loss) reclassified from AOCI and recognized into Net earnings
In millions		2018				2017				2016					2018				2017				2016
Currency derivatives designated as hedges		$	1.2			$	(1.8	)		$	2.2			Cost of goods sold		$	(0.8	)		$	(3.1	)		$	5.3
Interest rate swaps & locks		—				—				—				Interest expense		(0.1		)		(0.5		)		(0.5		)
Total		$	1.2			$	(1.8	)		$	2.2					$	(0.9	)		$	(3.6	)		$	4.8

The following table represents the amounts associated with derivatives not designated as hedges affecting Net earnings for the years ended December 31:

In millions		Location of gain (loss) recognized in Net earnings		Amount of gain (loss) recognized in Net earnings
2018				2017				2016
Currency derivatives		Other income/(expense), net		$	(29.6	)		$	58.0			$	(39.2	)
Total				$	(29.6	)		$	58.0			$	(39.2	)

The gains and losses associated with the Company’s undesignated currency derivatives are materially offset in Other income/(expense), net by changes in the fair value of the underlying transactions.

The following table presents the effects of the Company's designated financial instruments on the associated financial statement line item within the Consolidated Statement of Comprehensive Income where the financial instrument are recorded:

		Classification and amount of gain (loss) recognized in income on cash flow hedging relationships
		2018
In millions		Cost of goods sold				Interest expense
Total amounts presented in the Consolidated Statements of Comprehensive Income		$	(10,847.6	)		$	(220.7	)
Gain (loss) on cash flow hedging relationships
Currency derivatives:
Amount of gain (loss) reclassified from AOCI and recognized into Net earnings		$	(0.8	)		$	—
Amount excluded from effectiveness testing recognized in net earnings based on changes in fair value and amortization		$	(0.1	)		$	—
Interest rate swaps & locks:
Amount of gain (loss) reclassified from AOCI and recognized into Net earnings		$	—			$	(0.1	)

Concentration of Credit Risk

The counterparties to the Company’s forward contracts consist of a number of investment grade major international financial institutions. The Company could be exposed to losses in the event of nonperformance by the counterparties. However, the credit ratings and the concentration of risk in these financial institutions are monitored on a continuous basis and present no significant credit risk to the Company.

NOTE 9. FAIR VALUE MEASUREMENTS

ASC 820, "Fair Value Measurement," (ASC 820) defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 also establishes a three-level fair value hierarchy that prioritizes information used in developing assumptions when pricing an asset or liability as follows:

•	Level 1: Observable inputs such as quoted prices in active markets;

•	Level 2: Inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and

•	Level 3: Unobservable inputs where there is little or no market data, which requires the reporting entity to develop its own assumptions.

ASC 820 requires the use of observable market data, when available, in making fair value measurements. When inputs used to measure fair value fall within different levels of the hierarchy, the level within which the fair value measurement is categorized is based on the lowest level input that is significant to the fair value measurement.

F-17

The following table presents the Company’s fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis as of December 31, 2018:

In Millions	Fair Value				Fair value measurements
	Level 1				Level 2				Level 3
Assets:
Derivative instruments	$	2.2			$	—			$	2.2			$	—
Liabilities:
Derivative instruments	$	1.3			$	—			$	1.3			$	—

The following table presents the Company’s fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis as of December 31, 2017:

In Millions	Fair Value				Fair value measurements
	Level 1				Level 2				Level 3
Assets:
Derivative instruments	$	7.2			$	—			$	7.2			$	—
Liabilities:
Derivative instruments	$	2.5			$	—			$	2.5			$	—

Derivative instruments include forward foreign currency contracts and instruments related to non-functional currency balance sheet exposures. The fair value of the derivative instruments are determined based on a pricing model that uses spot rates and forward prices from actively quoted currency markets that are readily accessible and observable.

The carrying values of cash and cash equivalents, accounts receivable and accounts payable are a reasonable estimate of their fair value due to the short-term nature of these instruments. These methodologies used by the Company to determine the fair value of its financial assets and liabilities at December 31, 2018 are the same as those used at December 31, 2017. There have been no transfers between levels of the fair value hierarchy.

NOTE 10. PENSIONS AND POSTRETIREMENT BENEFITS OTHER THAN PENSIONS

The Company sponsors several U.S. defined benefit and defined contribution plans covering substantially all of the Company's U.S. employees. Additionally, the Company has many non-U.S. defined benefit and defined contribution plans covering eligible non-U.S. employees. Postretirement benefits other than pensions (OPEB) provide healthcare benefits, and in some instances, life insurance benefits for certain eligible employees.

Pension Plans

The noncontributory defined benefit pension plans covering non-collectively bargained U.S. employees provide benefits on a final average pay formula while plans for most collectively bargained U.S. employees provide benefits on a flat dollar benefit formula or a percentage of pay formula. The non-U.S. pension plans generally provide benefits based on earnings and years of service. The Company also maintains additional other supplemental plans for officers and other key or highly compensated employees.

F-18

The following table details information regarding the Company’s pension plans at December 31:

In millions		2018				2017
Change in benefit obligations:
Benefit obligation at beginning of year		$	3,742.2			$	3,531.9
Service cost		75.0				70.8
Interest cost		109.7				109.0
Employee contributions		1.1				1.1
Amendments		16.1				3.8
Actuarial (gains) losses		(224.8		)		175.8
Benefits paid		(218.9		)		(194.8		)
Currency translation		(34.8		)		69.6
Curtailments, settlements and special termination benefits		(4.6		)		(13.1		)
Other, including expenses paid		4.3				(11.9		)
Benefit obligation at end of year		$	3,465.3			$	3,742.2
Change in plan assets:
Fair value at beginning of year		$	3,063.1			$	2,797.1
Actual return on assets		(125.9		)		326.9
Company contributions		86.9				101.4
Employee contributions		1.1				1.1
Benefits paid		(218.9		)		(194.8		)
Currency translation		(32.8		)		59.0
Settlements		(9.8		)		(13.5		)
Other, including expenses paid		3.2				(14.1		)
Fair value of assets end of year		$	2,766.9			$	3,063.1
Net unfunded liability		$	(698.4	)		$	(679.1	)
Amounts included in the balance sheet:
Other noncurrent assets		$	49.9			$	61.7
Accrued compensation and benefits		(25.9		)		(15.3		)
Postemployment and other benefit liabilities		(722.4		)		(725.5		)
Net amount recognized		$	(698.4	)		$	(679.1	)

It is the Company’s objective to contribute to the pension plans to ensure adequate funds, and no less than required by law, are available in the plans to make benefit payments to plan participants and beneficiaries when required. However, certain plans are not or cannot be funded due to either legal, accounting, or tax requirements in certain jurisdictions. As of December 31, 2018, approximately seven percent of the Company's projected benefit obligation relates to plans that cannot be funded.

F-19

The pretax amounts recognized in Accumulated other comprehensive income (loss) are as follows:

In millions		Prior service benefit (cost)				Net actuarial gains (losses)				Total
December 31, 2017		$	(20.2	)		$	(833.5	)		$	(853.7	)
Current year changes recorded to AOCI		(16.0		)		(47.6		)		(63.6		)
Amortization reclassified to earnings		4.2				51.3				55.5
Settlements/curtailments reclassified to earnings (1)		0.2				2.3				2.5
Currency translation and other		0.6				6.9				7.5
December 31, 2018		$	(31.2	)		$	(820.6	)		$	(851.8	)

(1) Includes $0.2 million recorded in restructuring charges.

Weighted-average assumptions used to determine the benefit obligation at December 31 are as follows:

		2018			2017
Discount rate:
U.S. plans		4.21	%		3.54	%
Non-U.S. plans		2.47	%		2.29	%
Rate of compensation increase:
U.S. plans		4.00	%		4.00	%
Non-U.S. plans		4.00	%		4.00	%

The accumulated benefit obligation for all defined benefit pension plans was $3,364.6 million and $3,626.7 million at December 31, 2018 and 2017, respectively. The projected benefit obligation, accumulated benefit obligation, and fair value of plan assets for pension plans with accumulated benefit obligations more than plan assets were $3,075.2 million, $2,992.0 million and $2,330.4 million, respectively, as of December 31, 2018, and $3,291.4 million, $3,194.7 million and $2,554.0 million, respectively, as of December 31, 2017.

Pension benefit payments are expected to be paid as follows:

In millions
2019	$	232.2
2020	220.7
2021	219.6
2022	226.3
2023	229.1
2024 — 2028	1,125.4

F-20

The components of the Company’s net periodic pension benefit costs for the years ended December 31 include the following:

In millions		2018				2017				2016
Service cost		$	75.0			$	70.8			$	72.1
Interest cost		109.7				109.0				110.2
Expected return on plan assets		(146.6		)		(141.7		)		(146.1		)
Net amortization of:
Prior service costs (benefits)		4.2				3.8				4.7
Plan net actuarial (gains) losses		51.3				56.8				61.6
Net periodic pension benefit cost		93.6				98.7				102.5
Net curtailment, settlement, and special termination benefits (gains) losses		2.3				5.6				2.1
Net periodic pension benefit cost after net curtailment and settlement (gains) losses		$	95.9			$	104.3			$	104.6
Amounts recorded in continuing operations:
Operating income		$	72.7			$	68.2			$	69.3
Other income/(expense), net		14.6				25.4				25.5
Amounts recorded in discontinued operations		8.6				10.7				9.8
Total		$	95.9			$	104.3			$	104.6

Net periodic pension benefit cost for 2019 is projected to be approximately $113 million. The amounts expected to be recognized in net periodic pension benefit cost during 2019 for prior service cost and plan net actuarial losses are approximately $5 million and $54 million, respectively.

Weighted-average assumptions used to determine net periodic pension cost for the years ended December 31 are as follows:

		2018			2017			2016
Discount rate:
U.S. plans
Service cost		3.70	%		4.18	%		4.25	%
Interest cost		3.24	%		3.36	%		3.29	%
Non-U.S. plans
Service cost		2.52	%		2.66	%		3.05	%
Interest cost		2.46	%		2.50	%		3.18	%
Rate of compensation increase:
U.S. plans		4.00	%		4.00	%		4.00	%
Non-U.S. plans		4.00	%		4.00	%		4.00	%
Expected return on plan assets:
U.S. plans		5.50	%		5.50	%		5.75	%
Non-U.S. plans		3.25	%		3.25	%		3.75	%

The expected long-term rate of return on plan assets reflects the average rate of returns expected on the funds invested or to be invested to provide for the benefits included in the projected benefit obligation. The expected long-term rate of return on plan assets is based on what is achievable given the plan’s investment policy, the types of assets held and target asset allocations. The expected long-term rate of return is determined as of the measurement date. The Company reviews each plan and its historical returns and target asset allocations to determine the appropriate expected long-term rate of return on plan assets to be used.

The Company's objective in managing its defined benefit plan assets is to ensure that all present and future benefit obligations are met as they come due. It seeks to achieve this goal while trying to mitigate volatility in plan funded status, contribution, and expense by better matching the characteristics of the plan assets to that of the plan liabilities. The Company utilizes a dynamic approach to asset allocation whereby a plan's allocation to fixed income assets increases as the plan's funded status improves. The Company monitors plan funded status and asset allocation regularly in addition to investment manager performance.

F-21

The fair values of the Company’s pension plan assets at December 31, 2018 by asset category are as follows:

		Fair value measurements												Net asset value				Total fair value
In millions		Level 1				Level 2				Level 3
Cash and cash equivalents		$	4.0			$	26.8			$	—			$	—			$	30.8
Equity investments:
Registered mutual funds – equity specialty		—				—				—				51.1				51.1
Commingled funds – equity specialty		—				—				—				520.7				520.7
		—				—				—				571.8				571.8
Fixed income investments:
U.S. government and agency obligations		—				476.2				—				—				476.2
Corporate and non-U.S. bonds(a)		—				1,225.8				—				—				1,225.8
Asset-backed and mortgage-backed securities		—				67.3				—				—				67.3
Registered mutual funds – fixed income specialty		—				—				—				135.1				135.1
Commingled funds – fixed income specialty		—				—				—				117.7				117.7
Other fixed income(b)		—				—				24.8				—				24.8
		—				1,769.3				24.8				252.8				2,046.9
Derivatives		—				(0.4		)		—				—				(0.4		)
Real estate(c)		—				—				4.1				—				4.1
Other(d)		—				—				101.6				—				101.6
Total assets at fair value		$	4.0			$	1,795.7			$	130.5			$	824.6			$	2,754.8
Receivables and payables, net																		12.1
Net assets available for benefits																		$	2,766.9

The fair values of the Company’s pension plan assets at December 31, 2017 by asset category are as follows:

		Fair value measurements												Net asset value				Total fair value
In millions		Level 1				Level 2				Level 3
Cash and cash equivalents		$	4.8			$	35.4			$	—			$	—			$	40.2
Equity investments:
Registered mutual funds – equity specialty		—				—				—				77.6				77.6
Commingled funds – equity specialty		—				—				—				674.7				674.7
		—				—				—				752.3				752.3
Fixed income investments:
U.S. government and agency obligations		—				517.5				—				—				517.5
Corporate and non-U.S. bonds(a)		—				1,336.8				—				—				1,336.8
Asset-backed and mortgage-backed securities		—				69.0				—				—				69.0
Registered mutual funds – fixed income specialty		—				—				—				111.0				111.0
Commingled funds – fixed income specialty		—				—				—				131.8				131.8
Other fixed income(b)		—				—				26.3				—				26.3
		—				1,923.3				26.3				242.8				2,192.4
Derivatives		—				(0.3		)		—				—				(0.3		)
Real estate(c)		—				—				4.9				—				4.9
Other(d)		—				—				79.0				—				79.0
Total assets at fair value		$	4.8			$	1,958.4			$	110.2			$	995.1			$	3,068.5
Receivables and payables, net																		(5.4		)
Net assets available for benefits																		$	3,063.1

(a)	This class includes state and municipal bonds.

(b)	This class includes group annuity and guaranteed interest contracts.

(c)	This class includes a private equity fund that invests in real estate.

(d)	This investment comprises the Company's non-significant, non-US pension plan assets. It primarily includes insurance contracts.

F-22

Cash equivalents are valued using a market approach with inputs including quoted market prices for either identical or similar instruments. Fixed income securities are valued through a market approach with inputs including, but not limited to, benchmark yields, reported trades, broker quotes and issuer spreads. Commingled funds are valued at their daily net asset value (NAV) per share or the equivalent. NAV per share or the equivalent is used for fair value purposes as a practical expedient. NAVs are calculated by the investment manager or sponsor of the fund. Private real estate fund values are reported by the fund manager and are based on valuation or appraisal of the underlying investments. Refer to Note 9, "Fair Value Measurements" for additional information related to the fair value hierarchy defined by ASC 820. There have been no significant transfers between levels of the fair value hierarchy.

The Company made required and discretionary contributions to its pension plans of $86.9 million in 2018, $101.4 million in 2017, and $56.4 million in 2016 and currently projects that it will contribute approximately $104 million to its plans worldwide in 2019. The Company’s policy allows it to fund an amount, which could be in excess of or less than the pension cost expensed, subject to the limitations imposed by current tax regulations. However, the Company anticipates funding the plans in 2019 in accordance with contributions required by funding regulations or the laws of each jurisdiction.

Most of the Company’s U.S. employees are covered by defined contribution plans. Employer contributions are determined based on criteria specific to the individual plans and amounted to approximately $131.9 million, $118.7 million, and $108.3 million in 2018, 2017 and 2016, respectively. The Company’s contributions relating to non-U.S. defined contribution plans and other non-U.S. benefit plans were $52.0 million, $47.7 million and $39.9 million in 2018, 2017 and 2016, respectively.

Multiemployer Pension Plans

The Company also participates in a number of multiemployer defined benefit pension plans related to collectively bargained U.S. employees of Trane. The Company's contributions, and the administration of the fixed retirement payments, are determined by the terms of the related collective-bargaining agreements. These multiemployer plans pose different risks to the Company than single-employer plans, including:

1.	The Company's contributions to multiemployer plans may be used to provide benefits to all participating employees of the program, including employees of other employers.

2.	In the event that another participating employer ceases contributions to a plan, the Company may be responsible for any unfunded obligations along with the remaining participating employers.

3.	If the Company chooses to withdraw from any of the multiemployer plans, the Company may be required to pay a withdrawal liability, based on the underfunded status of the plan.

As of December 31, 2018, the Company does not participate in any plans that are individually significant, nor is the Company an individually significant participant to any of these plans. Total contributions to multiemployer plans for the years ended December 31 were as follows:

In millions		2018				2017				2016
Total contributions		$	9.8			$	9.0			$	7.7

Contributions to these plans may increase in the event that any of these plans are underfunded.

Postretirement Benefits Other Than Pensions

The Company sponsors several postretirement plans that provide for healthcare benefits, and in some instances, life insurance benefits that cover certain eligible employees. These plans are unfunded and have no plan assets, but are instead funded by the Company on a pay-as-you-go basis in the form of direct benefit payments. Generally, postretirement health benefits are contributory with contributions adjusted annually. Life insurance plans for retirees are primarily noncontributory.

F-23

The following table details changes in the Company’s postretirement plan benefit obligations for the years ended December 31:

In millions		2018				2017
Benefit obligation at beginning of year		$	528.0			$	578.6
Service cost		2.8				3.1
Interest cost		14.4				15.7
Plan participants’ contributions		9.1				9.8
Actuarial (gains) losses		(60.4		)		(30.2		)
Benefits paid, net of Medicare Part D subsidy (1)		(50.2		)		(55.4		)
Special termination benefits recorded in restructuring		—				5.9
Other		(1.0		)		0.5
Benefit obligations at end of year		$	442.7			$	528.0

(1) Amounts are net of Medicare Part D subsidy of $0.9 million and $1.1 million in 2018 and 2017, respectively

The benefit plan obligations are reflected in the Consolidated Balance Sheets as follows:

In millions		December 31, 2018				December 31, 2017
Accrued compensation and benefits		$	(45.1	)		$	(48.5	)
Postemployment and other benefit liabilities		(397.6		)		(479.5		)
Total		$	(442.7	)		$	(528.0	)

The pre-tax amounts recognized in Accumulated other comprehensive income (loss) were as follows:

In millions		Prior service benefit (cost)				Net actuarial gains (losses)				Total
Balance at December 31, 2017		$	4.1			$	31.0			$	35.1
Gain (loss) in current period		—				60.4				60.4
Amortization reclassified to earnings		(3.8		)		(1.0		)		(4.8		)
Balance at December 31, 2018		$	0.3			$	90.4			$	90.7

The components of net periodic postretirement benefit (income) cost for the years ended December 31 were as follows:

In millions		2018				2017				2016
Service cost		$	2.8			$	3.1			$	3.7
Interest cost		14.4				15.7				17.5
Net amortization of:
Prior service costs (benefits)		(3.8		)		(8.6		)		(8.9		)
Net actuarial (gains) losses		(1.0		)		0.1				0.1
Net periodic postretirement benefit cost		$	12.4			$	10.3			$	12.4
Amounts recorded in continuing operations:
Operating income		$	2.8			$	3.1			$	3.7
Other income/(expense), net		7.3				5.6				4.6
Amounts recorded in discontinued operations		2.3				1.6				4.1
Total		$	12.4			$	10.3			$	12.4

Postretirement cost for 2019 is projected to be approximately $11 million. The amount expected to be recognized in net periodic postretirement benefits cost in 2019 for prior service gains and net actuarial gains are approximately $1 million and $7 million, respectively.

F-24

Weighted-average assumptions used to determine net periodic benefit cost for the years ended December 31 are as follows:

		2018			2017			2016
Discount rate:
Benefit obligations at December 31		4.05	%		3.38	%		3.73	%
Net periodic benefit cost
Service cost		3.47	%		3.82	%		3.97	%
Interest cost		2.94	%		2.99	%		2.99	%
Assumed health-care cost trend rates at December 31:
Current year medical inflation		6.45	%		6.85	%		7.25	%
Ultimate inflation rate		5.00	%		5.00	%		5.00	%
Year that the rate reaches the ultimate trend rate		2023			2023			2023

A 1% change in the assumed medical trend rate would have the following effects as of and for the year ended December 31, 2018:

In millions		1% Increase				1% Decrease
Effect on total of service and interest cost components of current year benefit cost		$	0.4			$	(0.4	)
Effect on benefit obligation at year-end		12.2				(11.0		)

Benefit payments for postretirement benefits, which are net of expected plan participant contributions and Medicare Part D subsidy, are expected to be paid as follows:

In millions
2019	$	45.9
2020	45.0
2021	43.0
2022	40.9
2023	38.4
2024 — 2027	158.5

NOTE 11. REVENUE

The Company recognizes revenue when control of a good or service promised in a contract (i.e., performance obligation) is transferred to a customer. Control is obtained when a customer has the ability to direct the use of and obtain substantially all of the remaining benefits from that good or service. A majority of the Company's revenues are recognized at a point-in-time as control is transferred at a distinct point in time per the terms of a contract. However, a portion of the Company's revenues are recognized over time as the customer simultaneously receives control as the Company performs work under a contract.

Performance Obligations

A performance obligation is a distinct good, service or a bundle of goods and services promised in a contract. The Company identifies performance obligations at the inception of a contract and allocates the transaction price to individual performance obligations to faithfully depict the Company’s performance in transferring control of the promised goods or services to the customer.

The following are the primary performance obligations identified by the Company:

Equipment and parts. The Company principally generates revenue from the sale of equipment and parts to customers and recognizes revenue at a point in time when control transfers to the customer. Transfer of control is generally determined based on the shipping terms of the contract. However, certain transactions within the Industrial segment include contracts to design, deliver and build highly engineered or customized equipment which have no alternative use for the Company in the event the customer cancels the contract. In addition, the Company has the right to payment for performance completed to date. As a result, revenues related to these contracts are recognized over time with progress towards completion measured using an input method as the basis to recognize revenue and an estimated profit. To-date efforts for work performed corresponds with and faithfully depicts transfer of control to the customer.

Contracting and Installation. The Company enters into various construction-type contracts to design, deliver and build integrated solutions to meet customer specifications. These transactions, primarily included within the Climate segment, provide services that range from the development and installation of new HVAC systems to the design and integration of critical building systems

F-25

to optimize energy efficiency and overall performance. These contracts have a typical term of less than one year and are considered a single performance obligation as multiple combined goods and services promised in the contract represent a single output delivered to the customer. Revenues associated with contracting and installation contracts are recognized over time with progress towards completion measured using an input method as the basis to recognize revenue and an estimated profit. To-date efforts for work performed corresponds with and faithfully depicts transfer of control to the customer.

Services and Maintenance. The Company provides various levels of preventative and/or repair and maintenance type service agreements for its customers. The typical length of a contract is 12 months but can be as long as 60 months. Revenues associated with these performance obligations are primarily recognized over time on a straight-line basis over the life of the contract as the customer simultaneously receives and consumes the benefit provided by the Company. However, if historical evidence indicates that the cost of providing these services on a straight-line basis is not appropriate, revenue is recognized over the contract period in proportion to the costs expected to be incurred while performing the service. Certain repair services do not meet the definition of over time revenue recognition as the Company does not transfer control to the customer until the service is completed. As a result, revenue related to these services is recognized at a point in time.

Extended warranties. The Company enters into various warranty contracts with customers related to its products. A standard warranty generally warrants that a product is free from defects in workmanship and materials under normal use and conditions for a certain period of time. The Company’s standard warranty is not considered a distinct performance obligation as it does not provide services to customers beyond assurance that the covered product is free of initial defects. An extended warranty provides a customer with additional time that the Company is liable for covered incidents associated with its products. Extended warranties are purchased separately and can last up to five years. As a result, they are considered separate performance obligations for the Company. Revenue associated with these performance obligations are primarily recognized over time on a straight-line basis over the life of the contract as the customer simultaneously receives and consumes the benefit provided by the Company. However, if historical evidence indicates that the cost of providing these services on a straight-line basis is not appropriate, revenue is recognized over the contract period in proportion to the costs expected to be incurred while performing the service. Refer to Note 20, "Commitments and Contingencies," for more information related to product warranties.

The transaction price allocated to performance obligations reflects the Company’s expectations about the consideration it will be entitled to receive from a customer. To determine the transaction price, variable and noncash consideration are assessed as well as whether a significant financing component exists. The Company’s contracts with customers, dealers and distributors include several forms of sales incentive programs (variable consideration) which are estimated and included in the transaction price. They include, but are not limited to, discounts, coupons, and rebates where the customer does not have to provide any additional requirements to receive the discount. The Company records an accrual (contra receivable) and a sales deduction for its best estimate determined using the expected value method. In addition, sales returns and customer disputes involving a question of quantity or price are also accounted for as variable consideration. All other incentives or incentive programs where the customer is required to reach a certain sales level, remain a customer for a certain period of time, provide a rebate form or is subject to additional requirements are accounted for as a reduction of revenue and establishment of a liability for its best estimate determined using the expected value method. The Company considers historical data in determining its best estimates of variable consideration. These estimates are reviewed regularly for appropriateness, considering also whether the estimates should be constrained in order to avoid a significant reversal of revenue recognition in a future period. If updated information or actual amounts are different from previous estimates of variable consideration, the revisions are included in the results for the period in which they become known through a cumulative effect adjustment to revenue. The Company has performance guarantees related to energy savings contracts that are provided under the maintenance portion of contracting and installation agreements extending from 2019-2047. These performance guarantees represent variable consideration and are estimated as part of the overall transaction price. The Company has not recognized any significant adjustments to the transaction price due to variable consideration.

The Company enters into sales arrangements that contain multiple goods and services, such as equipment, installation and extended warranties. For these arrangements, each good or service is evaluated to determine whether it represents a distinct performance obligation. The total transaction price is then allocated to the distinct performance obligations based on their relative standalone selling price at the inception of the arrangement. If available, the Company utilizes observable prices for goods or services sold separately to similar customers in similar circumstances to determine its relative standalone selling price. Otherwise, list prices are used if they are determined to be representative of standalone selling prices. If neither of these items are available at contract inception, judgment may be required and the Company will estimate standalone selling price based on its best estimate. The Company recognizes revenue for delivered goods or services when the delivered good or service is distinct, control of the good or service has transferred to the customer, and only customary refund or return rights related to the goods or services exist. The Company excludes from revenues taxes it collects from a customer that are assessed by a government authority. Excluding noncurrent contract liabilities, unsatisfied (or partially unsatisfied) performance obligations as of the end of the reporting period are expected to be recognized as revenue within the next 12 months.

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Disaggregated Revenue

A summary of Net revenues by destination for the year ended at December 31 is as follows:

In millions	2018
Climate
United States	$	8,285.4
Non-U.S.	4,058.4
Total Climate	$	12,343.8
Industrial
United States	$	1,763.6
Non-U.S.	1,560.8
Total Industrial	$	3,324.4

A summary of Net revenues by major type of good or service for the year ended at December 31 is as follows:

In millions	2018
Climate
Equipment	$	8,425.6
Services and parts	3,918.2
Total Climate	$	12,343.8
Industrial
Equipment	$	2,023.3
Services and parts	1,301.1
Total Industrial	$	3,324.4

Revenue from goods and services transferred to customers at a point in time accounted for approximately 84% of the Company's revenue for the year ended December 31, 2018.

Contract Balances

The opening and closing balances of contract assets and contract liabilities arising from contracts with customers for the period ended December 31, 2018 and December 31, 2017 were as follows:

In millions	2018				2017
Contract assets	$	210.9			$	166.0
Contract liabilities	846.2				814.2

The timing of revenue recognition, billings and cash collections results in accounts receivable, contract assets, and customer advances and deposits (contract liabilities) on the Consolidated Balance Sheet. In general, the Company receives payments from customers based on a billing schedule established in its contracts. Contract assets relate to the conditional right to consideration for any completed performance under the contract when costs are incurred in excess of billings under the percentage-of-completion methodology. Accounts receivable are recorded when the right to consideration becomes unconditional. Contract liabilities relate to payments received in advance of performance under the contract or when the Company has a right to consideration that is unconditional before it transfers a good or service to the customer. Contract liabilities are recognized as revenue as (or when) the Company performs under the contract. During the year ended December 31, 2018, changes in contract asset and liability balances were not materially impacted by any other factors.

During the year ended December 31, 2018, approximately 55% of the contract liability balance at the beginning of the period was recognized as revenue. The remaining 45% is expected to be recognized as revenue during 2019 or thereafter.

ASC 606 adoption impact

Under ASC 606, the majority of the Company’s revenue continues to be recognized on a similar basis as previous accounting standards. However, certain highly engineered products sold to customers within the Industrial segment for which revenue was previously recognized at a point in time meet the criteria of a performance obligation satisfied over time. These contracts consist

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of equipment that is highly engineered or customized to meet the customer’s requirements. In the event the customer cancels the contract, the Company will have no alternative use for the equipment as well as the right to payment for performance completed to date. This change results in accelerated recognition of revenue and increases the balance of contract assets compared to the previous revenue recognition standard.

The Company adopted ASC 606 on January 1, 2018 using the modified retrospective approach with a cumulative effect adjustment to increase Retained earnings by $2.4 million. As a result, the Company applied ASC 606 only to contracts that were not completed as of January 1, 2018. Comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods presented. The Company elected to reflect the aggregate effect of all contract modifications that occurred before the beginning of the earliest period presented in determining the transaction price, identifying the satisfied and unsatisfied performance obligations and allocating the transaction price to the satisfied and unsatisfied performance obligations for the modified contract at transition. The effects of this relief are immaterial.

The following table summarizes the impact of adopting ASC 606 on the Company’s Consolidated Statements of Comprehensive Income:

	Year Ended December 31, 2018
In millions	As Reported				Balances Without Adoption of ASC 606				Effect of Change Higher/(Lower)
Net revenues	$	15,668.2			$	15,651.0			$	17.2
Cost of goods sold	(10,847.6		)		(10,831.7		)		15.9
Selling and administrative expenses	(2,903.2		)		(2,903.2		)		—
Operating income	1,917.4				1,916.1				1.3
Interest expense	(220.7		)		(220.7		)		—
Other income/(expense), net	(36.4		)		(36.4		)		—
Earnings before income taxes	1,660.3				1,659.0				1.3
Provision for income taxes	(281.3		)		(281.0		)		0.3
Earnings from continuing operations	$	1,379.0			$	1,378.0			$	1.0

The following table summarizes the impact of adopting ASC 606 on the Company’s Balance Sheet:

	December 31, 2018
In millions	As Reported				Balances Without Adoption of ASC 606				Effect of Change Higher/(Lower)
Assets
Accounts and notes receivable, net	$	2,679.2			$	2,681.2			$	(2.0	)
Inventories, net	1,677.8				1,693.7				(15.9		)
Other current assets	471.6				454.2				17.4
Other noncurrent assets	857.9				857.9				—
Liabilities
Accrued expenses and other current liabilities	$	1,728.2			$	1,729.7			$	(1.5	)
Deferred and noncurrent income taxes	538.4				538.4				—
Other noncurrent liabilities	1,062.4				1,062.4				—
Equity
Retained earnings	$	9,439.8			$	9,438.8			$	1.0

NOTE 12. EQUITY

The authorized share capital of Ingersoll Rand plc is 1,185,040,000 shares, consisting of (1) 1,175,000,000 ordinary shares, par value $1.00 per share, (2) 40,000 ordinary shares, par value EUR 1.00 and (3) 10,000,000 preference shares, par value $0.001 per share. There were no preference shares or Euro-denominated ordinary shares outstanding at December 31, 2018 or 2017.

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The changes in ordinary shares and treasury shares for the year ended December 31, 2018 are as follows:

In millions	Ordinary shares issued			Ordinary shares held in treasury
December 31, 2017	274.0			24.5
Shares issued under incentive plans	2.1			—
Repurchase of ordinary shares	(9.7	)		—
December 31, 2018	266.4			24.5

Share repurchases are made from time to time in accordance with management's capital allocation strategy, subject to market conditions and regulatory requirements. Shares acquired and canceled upon repurchase are accounted for as a reduction of Ordinary Shares and Capital in excess of par value, or Retained earnings to the extent Capital in excess of par value is exhausted. Shares acquired and held in treasury are presented separately on the balance sheet as a reduction to Equity and recognized at cost. In February 2017, the Company's Board of Directors authorized the repurchase of up to $1.5 billion of its ordinary shares under a share repurchase program (2017 Authorization) upon completion of the prior authorized share repurchase program. Repurchases under the 2017 Authorization, which began in May 2017, totaled approximately $600 million at December 31, 2017 and were held in Treasury. The remaining $900 million of ordinary shares were repurchased and canceled during 2018. In October 2018, the Company's Board of Directors authorized the repurchase of up to $1.5 billion of its ordinary shares upon completion of the 2017 Authorization. However, no material amounts were repurchased under this program during 2018.

Other Comprehensive Income (Loss)

The changes in Accumulated other comprehensive income (loss) are as follows:

In millions		Derivative Instruments				Pension and OPEB Items				Foreign Currency Translation				Total
December 31, 2016		$	2.9			$	(554.4	)		$	(739.0	)		$	(1,290.5	)
Other comprehensive income (loss) attributable to Ingersoll-Rand plc		1.8				60.1				449.8				511.7
December 31, 2017		$	4.7			$	(494.3	)		$	(289.2	)		$	(778.8	)
Other comprehensive income (loss) attributable to Ingersoll-Rand plc		2.0				40.3				(227.6		)		(185.3		)
December 31, 2018		$	6.7			$	(454.0	)		$	(516.8	)		$	(964.1	)

The amounts of Other comprehensive income (loss) attributable to noncontrolling interests for 2018, 2017 and 2016 were $(3.0) million, $0.5 million and $9.6 million, respectively, related to currency translation.

NOTE 13. SHARE-BASED COMPENSATION

The Company accounts for stock-based compensation plans in accordance with ASC 718, "Compensation - Stock Compensation" (ASC 718), which requires a fair-value based method for measuring the value of stock-based compensation. Fair value is measured once at the date of grant and is not adjusted for subsequent changes. The Company’s share-based compensation plans include programs for stock options, restricted stock units (RSUs), performance share units (PSUs), and deferred compensation. Under the Company's incentive stock plan, the total number of ordinary shares authorized by the shareholders is 23.0 million, of which 22.9 million remains available as of December 31, 2018 for future incentive awards.

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Compensation Expense

Share-based compensation expense related to continuing operations is included in Selling and administrative expenses. The following table summarizes the expenses recognized:

In millions		2018				2017				2016
Stock options		$	23.5			$	19.5			$	18.1
RSUs		30.4				26.4				26.3
PSUs		23.0				23.0				19.9
Deferred compensation		3.4				3.1				3.2
Other		0.5				1.6				2.1
Pre-tax expense		80.8				73.6				69.6
Tax benefit		19.6				28.2				26.6
After-tax expense		$	61.2			$	45.4			$	43.0
Amounts recorded in continuing operations		$	61.2			$	45.4			$	43.0
Amounts recorded in discontinued operations		—				—				—
Total		$	61.2			$	45.4			$	43.0

Grants issued during the year ended December 31 were as follows:

	2018							2017							2016
	Number Granted			Weighted-average fair value per award				Number Granted			Weighted-average fair value per award				Number Granted			Weighted-average fair value per award
Stock options	1,541,025			$	15.51			1,518,335			$	13.46			1,958,476			$	9.42
RSUs	327,411			$	90.07			372,443			$	81.09			486,401			$	51.28
Performance shares (1)	363,342			$	106.31			419,404			$	93.68			597.088			$	53.82

(1) The number of performance shares represents the maximum award level.

Stock Options / RSUs

Eligible participants may receive (i) stock options, (ii) RSUs or (iii) a combination of both stock options and RSUs. The fair value of each of the Company’s stock option and RSU awards is expensed on a straight-line basis over the required service period, which is generally the 3-year vesting period. However, for stock options and RSUs granted to retirement eligible employees, the Company recognizes expense for the fair value at the grant date.

The average fair value of the stock options granted is determined using the Black Scholes option pricing model. The following assumptions were used during the year ended December 31:

		2018			2017			2016
Dividend yield		2.00	%		2.00	%		2.55	%
Volatility		21.64	%		22.46	%		28.60	%
Risk-free rate of return		2.48	%		1.80	%		1.12	%
Expected life in years		4.8			4.8			4.8

A description of the significant assumptions used to estimate the fair value of the stock option awards is as follows:

•	Volatility - The expected volatility is based on a weighted average of the Company’s implied volatility and the most recent historical volatility of the Company’s stock commensurate with the expected life.

•	Risk-free rate of return -The Company applies a yield curve of continuous risk-free rates based upon the published US Treasury spot rates on the grant date.

•	Expected life - The expected life of the Company’s stock option awards represents the weighted-average of the actual period since the grant date for all exercised or canceled options and an expected period for all outstanding options.

•	Dividend yield - The Company determines the dividend yield based upon the expected quarterly dividend payments as of the grant date and the current fair market value of the Company’s stock.

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•	Forfeiture Rate - The Company analyzes historical data of forfeited options to develop a reasonable expectation of the number of options to forfeit prior to vesting per year. This expected forfeiture rate is applied to the Company’s ongoing compensation expense; however, all expense is adjusted to reflect actual vestings and forfeitures.

Changes in options outstanding under the plans for the years 2018, 2017 and 2016 are as follows:

		Shares subject to option			Weighted- average exercise price				Aggregate intrinsic value (millions)				Weighted- average remaining life (years)
December 31, 2015		6,836,029			$	43.46
Granted		1,958,476			50.04
Exercised		(1,854,058	)		33.71
Cancelled		(93,552	)		56.22
December 31, 2016		6,846,895			47.81
Granted		1,518,335			80.27
Exercised		(1,789,615	)		42.79
Cancelled		(220,733	)		61.91
December 31, 2017		6,354,882			56.49
Granted		1,541,025			89.71
Exercised		(1,515,955	)		45.44
Cancelled		(94,601	)		79.53
Outstanding December 31, 2018		6,285,351			$	66.95			$	152.8			6.7
Exercisable December 31, 2018		3,262,865			$	55.76			$	115.7			5.3

The following table summarizes information concerning currently outstanding and exercisable options:

										Options outstanding									Options exercisable
Range of exercise price										Number outstanding at December 31, 2018			Weighted- average remaining life (years)		Weighted- average exercise price				Number outstanding at December 31, 2018			Weighted- average remaining life (years)			Weighted- average exercise price
$	10.01			—		$	20.00			34,551			0.1		$	13.49			34,551			0.1			$	13.49
20.01				—		30.00				78,051			1.7		24.95				78,051			1.7			24.95
30.01				—		40.00				265,557			2.7		34.41				265,557			2.7			34.41
40.01				—		50.00				1,764,942			6.0		47.97				1,189,081			5.6			46.98
50.01				—		60.00				586,455			4.9		59.57				572,668			4.9			59.69
60.01				—		70.00				743,796			5.7		67.04				743,796			5.7			67.04
70.01				—		80.00				14,031			8.0		75.67				—			—			—
80.01				—		90.00				1,440,841			7.8		80.75				375,001			7.6			80.31
90.01				—		100.00				1,340,727			8.9		90.07				4,160			2.3			90.07
100.01				—		110.00				16,400			9.9		101.21				—			—			—
$	13.49			—		$	101.21			6,285,351			6.7		$	66.95			3,262,865			5.3			$	55.76

At December 31, 2018, there was $11.5 million of total unrecognized compensation cost from stock option arrangements granted under the plan, which is primarily related to unvested shares of non-retirement eligible employees. The aggregate intrinsic value of options exercised during the year ended December 31, 2018 and 2017 was $74.1 million and $72.7 million, respectively. Generally, stock options expire ten years from their date of grant.

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The following table summarizes RSU activity for the years 2018, 2017 and 2016:

		RSUs			Weighted- average grant date fair value
Outstanding and unvested at December 31, 2015		922,611			$	58.14
Granted		486,401			51.28
Vested		(545,437	)		53.84
Cancelled		(27,826	)		58.19
Outstanding and unvested at December 31, 2016		835,749			$	56.95
Granted		372,443			81.09
Vested		(370,397	)		58.56
Cancelled		(34,096	)		63.79
Outstanding and unvested at December 31, 2017		803,699			$	67.09
Granted		327,411			90.07
Vested		(389,285	)		64.88
Cancelled		(20,186	)		77.95
Outstanding and unvested at December 31, 2018		721,639			$	78.40

At December 31, 2018, there was $16.8 million of total unrecognized compensation cost from RSU arrangements granted under the plan, which is related to unvested shares of non-retirement eligible employees.

Performance Shares

The Company has a Performance Share Program (PSP) for key employees. The program provides awards in the form of PSUs based on performance against pre-established objectives. The annual target award level is expressed as a number of the Company's ordinary shares based on the fair market value of the Company's stock on the date of grant. All PSUs are settled in the form of ordinary shares.

Beginning with the 2018 grant year, PSU awards are earned based 50% upon a performance condition, measured by relative Cash Flow Return on Invested Capital (CROIC) growth to the industrial group of companies in the S&P 500 Index over a 3-year performance period, and 50% upon a market condition, measured by the Company's relative total shareholder return (TSR) as compared to the TSR of the industrial group of companies in the S&P 500 Index over a 3-year performance period. The fair value of the market condition is estimated using a Monte Carlo Simulation approach in a risk-neutral framework based upon historical volatility, risk-free rates and correlation matrix. Awards granted prior to 2018 were earned based 50% upon a performance condition, measured by relative earnings-per-share (EPS) growth to the industrial group of companies in the S&P 500 Index over a 3-year performance period, and 50% upon a market condition measured by the Company's relative TSR as compared to the TSR of the industrial group of companies in the S&P Index over a 3-year performance period.

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The following table summarizes PSU activity for the maximum number of shares that may be issued for the years 2018, 2017 and 2016:

		PSUs			Weighted-average grant date fair value
Outstanding and unvested at December 31, 2015		1,448,232			$	63.18
Granted		597,088			53.82
Vested		(462,035	)		46.81
Forfeited		(159,489	)		56.25
Outstanding and unvested at December 31, 2016		1,423,796			$	65.34
Granted		419,404			93.68
Vested		(353,834	)		65.35
Forfeited		(124,830	)		73.40
Outstanding and unvested at December 31, 2017		1,364,536			$	73.31
Granted		363,342			106.31
Vested		(309,306	)		76.00
Forfeited		(172,408	)		90.89
Outstanding and unvested at December 31, 2018		1,246,164			$	79.83

At December 31, 2018, there was $18.6 million of total unrecognized compensation cost from PSU arrangements based on current performance, which is related to unvested shares. This compensation will be recognized over the required service period, which is generally the three-year vesting period.

Deferred Compensation

The Company allows key employees to defer a portion of their eligible compensation into a number of investment choices, including its ordinary share equivalents. Any amounts invested in ordinary share equivalents will be settled in ordinary shares of the Company at the time of distribution.

NOTE 14. RESTRUCTURING ACTIVITIES

The Company incurs costs associated with restructuring initiatives intended to result in improved operating performance, profitability and working capital levels. Actions associated with these initiatives include workforce reduction, improving manufacturing productivity, realignment of management structures and rationalizing certain assets. Restructuring charges recorded during the years ended December 31 were as follows:

In millions		2018				2017				2016
Climate		$	34.1			$	42.3			$	6.2
Industrial		49.9				14.5				20.5
Corporate and Other		9.4				4.9				8.8
Total		$	93.4			$	61.7			$	35.5
Cost of goods sold		$	72.3			$	46.8			$	9.8
Selling and administrative expenses		21.1				14.9				25.7
Total		$	93.4			$	61.7			$	35.5

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The changes in the restructuring reserve were as follows:

In millions		Climate				Industrial				Corporate and Other				Total
December 31, 2016		$	3.4			$	4.3			$	0.6			$	8.3
Additions, net of reversals (1)		25.6				14.5				4.9				45.0
Cash paid/Other		(21.6		)		(12.7		)		(3.0		)		(37.3		)
December 31, 2017		7.4				6.1				2.5				16.0
Additions, net of reversals (2)		16.3				49.9				9.4				75.6
Cash paid/Other		(4.8		)		(26.1		)		(9.3		)		(40.2		)
December 31, 2018		$	18.9			$	29.9			$	2.6			$	51.4

(1) Excludes the non-cash costs of asset rationalizations ($8.4 million) and pension-related impacts ($8.3 million).

(2) Excludes the non-cash costs of asset rationalizations ($12.3 million) and pension-related impacts ($5.5 million).

Current restructuring actions include general workforce reductions as well as the closure and consolidation of certain manufacturing facilities in an effort to improve the Company's cost structure. Amounts recognized primarily relate to severance and exit costs. However, the Company does include costs that are directly attributable to the restructuring activity but do not fall into the severance, exit or disposal categories. During the year ended December 31, 2018, costs associated with announced restructuring actions primarily included the following:

•	the plan to close a Non-U.S. manufacturing facility within the Industrial segment and relocate production to other U.S. and Non-U.S. facilities; and

•	the plan to close two U.S. manufacturing facilities within the Climate segment and relocate production to another existing U.S. facility.

As of December 31, 2018, the Company had $51.4 million accrued for costs associated with its ongoing restructuring actions, of which a majority is expected to be paid within one year. These actions primarily relate to workforce reduction benefits.

NOTE 15. OTHER INCOME/(EXPENSE), NET

The components of Other income/(expense), net for the years ended December 31, 2018, 2017 and 2016 are as follows:

In millions		2018				2017				2016
Interest income		$	6.4			$	9.4			$	8.0
Exchange gain (loss)		(17.6		)		(8.8		)		(2.0		)
Other components of net periodic benefit cost		(21.9		)		(31.0		)		(30.1		)
Income (loss) from equity investment		—				—				(0.8		)
Gain on sale of Hussmann equity investment		—				—				397.8
Other activity, net		(3.3		)		(1.2		)		(13.3		)
Other income/(expense), net		$	(36.4	)		$	(31.6	)		$	359.6

Other income /(expense), net includes the results from activities other than normal business operations such as interest income and foreign currency gains and losses on transactions that are denominated in a currency other than an entity’s functional currency. In addition, the Company includes the components of net periodic benefit cost for pension and post retirement obligations other than the service cost component. Other activity, net include costs associated with Trane U.S. Inc. (Trane) for the settlement and defense of asbestos-related claims, insurance settlements on asbestos-related matters and the revaluation of its liability for potential future claims. Refer to Note 20, "Commitments and Contingencies," for more information regarding asbestos-related matters. In addition, other activity, net for the year ended December 31, 2016 includes $16.4 million for the settlement of a lawsuit originally filed by a customer in 2012. The lawsuit related to a commercial HVAC contract entered into in 2001, prior to our acquisition of Trane. The charge represents the settlement and related legal costs recognized during 2016.

Sale of Hussmann Equity Investment

During 2011, the Company completed the sale of a controlling interest of its Hussmann refrigerated display case business (Hussmann) to a newly-formed affiliate of private equity firm Clayton Dubilier & Rice, LLC (CD&R). Per the terms of the agreement, CD&R’s ownership interest in Hussmann at the acquisition date was 60% with the remaining 40% being retained by the Company. As a result, the Company accounted for its interest in Hussmann using the equity method of accounting.

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On December 21, 2015, the Company announced it would sell its remaining equity interest in Hussmann as part of a transaction in which Panasonic Corporation would acquire 100 percent of Hussmann's outstanding shares. The transaction was completed on April 1, 2016. The Company received net proceeds of $422.5 million, for its interest and recognized a gain of $397.8 million on the sale.

NOTE 16. INCOME TAXES

In December 2017, the U.S. enacted the Tax Cuts and Jobs Act (the “Act”) which makes widespread changes to the Internal Revenue Code. The Act, among other things, reduced the U.S. federal corporate tax rate from 35% to 21%, requires companies to pay a transition tax on earnings of certain foreign subsidiaries that were previously not subject to U.S. tax and creates new income taxes on certain foreign sourced earnings.

The SEC issued Staff Accounting Bulletin No. 118 (SAB 118) which provides guidance on accounting for the tax effects of the Act and allows for adjustments to provisional amounts during a measurement period of up to one year. In accordance with SAB 118, the Company has made reasonable estimates related to (1) the remeasurement of U.S. deferred tax balances for the reduction in the tax rate (2) the liability for the transition tax and (3) the taxes accrued relating to the change in permanent reinvestment assertion for unremitted earnings of certain foreign subsidiaries. As a result, the Company recognized a net provisional income tax benefit of $21.0 million associated with these items in 2017.

During 2018, the Company recognized measurement period adjustments for (1) the remeasurement of U.S. deferred tax balances for the reduction in the tax rate, (2) the liability for the transition tax and (3) the taxes accrued relating to the change in permanent reinvestment assertion for unremitted earnings of certain foreign subsidiaries. In determining the measurement period adjustments, the Company assessed regulatory guidance that was issued to determine the impact on the provisional estimates recognized in 2017. In addition, the Company gathered information and performed additional analysis on these estimates, including, but not limited to, the amount of earnings and profits subject to the transition tax, the calculation of foreign tax credits, the local tax treatment of future distributions of unremitted earnings and in regard to the remeasurement of U.S. deferred taxes, the filing of its 2017 federal and state income tax returns. Measurement period adjustments were reported as a component of Provision for income taxes in the reporting period the amounts were determined. As of December 31, 2018, the Company finalized its provisional accounting under SAB 118.

A reconciliation of the provisional amounts reported to the final tax effect of the Act is as follows:

In millions	2017 Provisional Amounts Reported				2018 Measurement Period Adjustments				Final Tax Effects of the Act
Remeasurement of deferred tax balances	$	(300.6	)		$	4.8			$	(295.8	)
Transition tax	160.7				24.6				185.3
Change in permanent reinvestment assertion	118.9				(38.4		)		80.5
Income tax benefit, net	$	(21.0	)		$	(9.0	)		$	(30.0	)

Current and deferred provision for income taxes

Earnings before income taxes for the years ended December 31 were taxed within the following jurisdictions:

In millions	2018				2017				2016
United States (1)	$	971.6			$	(17.6	)		$	419.8
Non-U.S.	688.7				1,435.5				1,321.5
Total	$	1,660.3			$	1,417.9			$	1,741.3

(1) Amount reported in 2017 includes the impact of a premium paid of approximately $520 million related to the early retirement of certain intercompany debt obligations

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The components of the Provision for income taxes for the years ended December 31 were as follows:

In millions		2018				2017				2016
Current tax expense (benefit):
United States		$	231.9			$	102.2			$	179.6
Non-U.S.		193.2				95.4				135.7
Total:		425.1				197.6				315.3
Deferred tax expense (benefit):
United States		(83.2		)		(234.7		)		(6.7		)
Non-U.S.		(60.6		)		117.3				(27.1		)
Total:		(143.8		)		(117.4		)		(33.8		)
Total tax expense (benefit):
United States		148.7				(132.5		)		172.9
Non-U.S.		132.6				212.7				108.6
Total		$	281.3			$	80.2			$	281.5

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
		2018			2017			2016
Statutory U.S. rate		21.0	%		35.0	%		35.0	%
Increase (decrease) in rates resulting from:
Non-U.S. tax rate differential (a)		(1.8	)		(28.8	)		(14.7	)
Tax on U.S. subsidiaries on non-U.S. earnings (d)		0.7			0.8			0.9
State and local income taxes (b)		0.1			1.2			1.4
Valuation allowances (c)		0.7			2.8			0.1
Change in permanent reinvestment assertion (d), (f)		(2.3	)		8.4			—
Transition tax (f)		1.5			11.3			—
Remeasurement of deferred tax balances (f)		0.3			(21.2	)		—
Stock based compensation		(0.9	)		(1.7	)		—
Foreign derived intangible income		(1.1	)		—			—
Reserves for uncertain tax positions		(0.8	)		(0.9	)		0.1
Hussmann gain (e)		—			—			(5.7	)
Provision to return and other true-up adjustments		(0.7	)		(1.7	)		(0.6	)
Other adjustments		0.2			0.5			(0.3	)
Effective tax rate		16.9	%		5.7	%		16.2	%

(a)	Amount reported in 2017 includes the impact of a premium paid of approximately $520 million related to the early retirement of certain intercompany debt obligations

(b)	Net of changes in state valuation allowances

(c)	Primarily federal and non-U.S., excludes state valuation allowances

(d)	Net of foreign tax credits

(e)	Gain from sale of Hussmann equity investment

(f)	Provisional amounts reported under SAB 118 were finalized in 2018

Tax incentives, in the form of tax holidays, have been granted to the Company in certain jurisdictions to encourage industrial development. The expiration of these tax holidays varies by country. The tax holidays are conditional on the Company meeting certain employment and investment thresholds. The most significant tax holidays relate to the Company’s qualifying locations in China, Puerto Rico, Panama and Singapore. The benefit for the tax holidays for the years ended December 31, 2018, 2017 and 2016 was $25.4 million, $19.7 million and $23.3 million, respectively.

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Deferred tax assets and liabilities

A summary of the deferred tax accounts at December 31 are as follows:

In millions		2018				2017
Deferred tax assets:
Inventory and accounts receivable		$	20.3			$	17.4
Fixed assets and intangibles		39.2				10.4
Postemployment and other benefit liabilities		386.1				396.5
Product liability		95.1				95.4
Other reserves and accruals		153.9				134.8
Net operating losses and credit carryforwards		589.9				589.0
Other		28.6				22.7
Gross deferred tax assets		1,313.1				1,266.2
Less: deferred tax valuation allowances		(332.2		)		(344.6		)
Deferred tax assets net of valuation allowances		$	980.9			$	921.6
Deferred tax liabilities:
Inventory and accounts receivable		$	(18.6	)		$	(24.1	)
Fixed assets and intangibles		(1,220.9		)		(1,237.4		)
Postemployment and other benefit liabilities		(9.7		)		(9.6		)
Other reserves and accruals		(11.8		)		(1.5		)
Product liability		(1.2		)		(1.4		)
Undistributed earnings of foreign subsidiaries		(39.5		)		(137.7		)
Other		(10.6		)		(11.1		)
Gross deferred tax liabilities		(1,312.3		)		(1,422.8		)
Net deferred tax assets (liabilities)		$	(331.4	)		$	(501.2	)

At December 31, 2018, no deferred taxes have been provided for earnings of certain of the Company’s subsidiaries, since these earnings have been, and under current plans will continue to be permanently reinvested in these subsidiaries. These earnings amount to approximately $3.2 billion which if distributed would result in additional taxes, which may be payable upon distribution, of approximately $400.0 million.

At December 31, 2018, the Company had the following operating loss and tax credit carryforwards available to offset taxable income in prior and future years:

In millions		Amount				Expiration Period
U.S. Federal net operating loss carryforwards		$	680.2			2020-2036
U.S. Federal credit carryforwards		127.9				2022-Unlimited
U.S. State net operating loss carryforwards		3,317.0				2019-Unlimited
U.S. State credit carryforwards		30.4				2019-Unlimited
Non-U.S. net operating loss carryforwards		752.9				2019-Unlimited
Non-U.S. credit carryforwards		7.1				Unlimited

The U.S. state net operating loss carryforwards were incurred in various jurisdictions. The non-U.S. net operating loss carryforwards were incurred in various jurisdictions, predominantly in Belgium, Brazil, China, India, Luxembourg, Spain, and the United Kingdom.

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Activity associated with the Company’s valuation allowance is as follows:

In millions		2018				2017				2016
Beginning balance		$	344.6			$	184.5			$	213.1
Increase to valuation allowance		54.9				176.5				19.4
Decrease to valuation allowance		(55.1		)		(19.1		)		(43.5		)
Write off against valuation allowance		(4.6		)		—				—
Accumulated other comprehensive income (loss)		(7.6		)		2.7				(4.5		)
Ending balance		$	332.2			$	344.6			$	184.5

During 2018, the Company recorded a net addition to the valuation allowance related to excess foreign tax credits in the amount of $17.3 million. In addition, the Company recorded a $35 million reduction in a valuation allowance for certain state net deferred tax assets. The reduction in certain state net deferred tax assets is primarily the result of revised projections of future state taxable income during the carryforward period.

During 2017, the Company recorded a valuation allowance of approximately $30 million on certain net deferred tax assets in Brazil that were no longer expected to be realized. In addition, the Company recorded a valuation allowance of approximately $100 million related to excess foreign tax credits generated as a result of the Act.

Unrecognized tax benefits

The Company has total unrecognized tax benefits of $83.0 million and $120.5 million as of December 31, 2018, and December 31, 2017, respectively. The amount of unrecognized tax benefits that, if recognized, would affect the continuing operations effective tax rate are $60.8 million as of December 31, 2018. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

In millions		2018				2017				2016
Beginning balance		$	120.5			$	107.1			$	174.9
Additions based on tax positions related to the current year		3.4				6.2				5.9
Additions based on tax positions related to prior years		23.5				16.8				29.1
Reductions based on tax positions related to prior years		(47.2		)		(8.6		)		(37.6		)
Reductions related to settlements with tax authorities		(14.2		)		(4.8		)		(60.9		)
Reductions related to lapses of statute of limitations		(0.9		)		(1.3		)		(2.8		)
Translation (gain) loss		(2.1		)		5.1				(1.5		)
Ending balance		$	83.0			$	120.5			$	107.1

The Company records interest and penalties associated with the uncertain tax positions within its Provision for income taxes. The Company had reserves associated with interest and penalties, net of tax, of $20.7 million and $35.0 million at December 31, 2018 and December 31, 2017, respectively. For the year ended December 31, 2018 and December 31, 2017, the Company recognized a $13.4 million tax benefit and a $1.9 million tax expense, respectively, in interest and penalties, net of tax in continuing operations related to these uncertain tax positions.

The total amount of unrecognized tax benefits relating to the Company's tax positions is subject to change based on future events including, but not limited to, the settlements of ongoing audits and/or the expiration of applicable statutes of limitations. Although the outcomes and timing of such events are highly uncertain, it is reasonably possible that the balance of gross unrecognized tax benefits, excluding interest and penalties, could potentially be reduced by up to approximately $4 million during the next 12 months.

The provision for income taxes involves a significant amount of management judgment regarding interpretation of relevant facts and laws in the jurisdictions in which the Company operates. Future changes in applicable laws, projected levels of taxable income and tax planning could change the effective tax rate and tax balances recorded by the Company. In addition, tax authorities periodically review income tax returns filed by the Company and can raise issues regarding its filing positions, timing and amount of income or deductions, and the allocation of income among the jurisdictions in which the Company operates. A significant period of time may elapse between the filing of an income tax return and the ultimate resolution of an issue raised by a revenue authority with respect to that return. In the normal course of business the Company is subject to examination by taxing authorities throughout the world, including such major jurisdictions as Brazil, Canada, China, France, Germany, Ireland, Italy, Mexico, Spain, the Netherlands, the United Kingdom and the United States. These examinations on their own, or any subsequent litigation related to the examinations, may result in additional taxes or penalties against the Company. If the ultimate result of these audits differ from

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original or adjusted estimates, they could have a material impact on the Company’s tax provision. In general, the examination of the Company’s material tax returns are complete or effectively settled for the years prior to 2008, with certain matters prior to 2008 being resolved through appeals and litigation and also unilateral procedures as provided for under double tax treaties.

NOTE 17. ACQUISITIONS AND DIVESTITURES

Acquisitions and Equity Method Investments

During 2018, the Company acquired several businesses and entered into a joint venture. The aggregate cash paid, net of cash acquired, totaled $285.2 million and was funded through cash on hand. Acquisitions are recorded using the acquisition method of accounting in accordance with ASC 805 "Business Combinations." As a result, the aggregate price has been allocated to assets acquired and liabilities assumed based on the estimate of fair market value of such assets and liabilities at the date of acquisition. Ownership interests in a joint venture are accounted for under the equity method when the Company does not have a controlling financial interest and reported within Other noncurrent assets on the Balance Sheet.

Primary activity during 2018 relates to the acquisition of ICS Group Holdings Limited in January 2018. The business, reported within the Climate segment, specializes in the temporary rental of energy efficient chillers for commercial and industrial buildings across Europe. In addition, the Company continues to acquire independent dealers to expand its distribution network. Intangible assets associated with these acquisitions totaled $45.2 million and primarily relate to trademarks and customer relationships. The excess purchase price over the estimated fair value of net assets acquired was recognized as goodwill and totaled $119.9 million.

In addition, the Company completed its investment of a 50% ownership interest in a joint venture with Mitsubishi Electric Corporation (Mitsubishi) in May 2018. The joint venture, reported within the Climate segment, will focus on marketing, selling and supporting variable refrigerant flow (VRF) and ductless heating and air conditioning systems through Trane, American Standard and Mitsubishi channels in the U.S. and select Latin American countries. Ongoing results since the date of investment are accounted for under the equity method and are not considered material to the Company’s results of operations.

During 2017, the Company acquired several businesses, including channel acquisitions, that complement existing products and services. The aggregate cash paid, net of cash acquired, totaled $157.6 million and was funded through cash on hand. These acquisitions were recorded using the acquisition method of accounting in accordance with the accounting guidance for business acquisitions. As a result, the aggregate price has been allocated to assets acquired and liabilities assumed based on the estimate of fair market value of such assets and liabilities at the date of acquisition.

Divestitures

The Company has retained costs from previously sold businesses that primarily include expenses related to postretirement benefits, product liability and legal costs. In addition, the Company includes amounts related to the 2013 spin-off of our commercial and residential security business, now an independent public company operating under the name of Allegion plc (Allegion). The components of Discontinued operations, net of tax for the years ended December 31 are as follows:

In millions		2018				2017				2016
Pre-tax earnings (loss) from discontinued operations		$	(85.5	)		$	(34.0	)		$	28.1
Tax benefit (expense)		64.0				8.6				4.8
Discontinued operations, net of tax		$	(21.5	)		$	(25.4	)		$	32.9

Pre-tax earnings (loss) from discontinued operations includes costs associated with Ingersoll Rand Company for the settlement and defense of asbestos-related claims, insurance settlements on asbestos-related matters and the revaluation of its liability for potential future claims. Refer to Note 20, "Commitments and Contingencies," for more information related to asbestos. A portion of the tax benefit (expense) in each period represent adjustments for certain tax matters associated with Allegion.

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NOTE 18. EARNINGS PER SHARE (EPS)

Basic EPS is calculated by dividing Net earnings attributable to Ingersoll-Rand plc by the weighted-average number of ordinary shares outstanding for the applicable period. Diluted EPS is calculated after adjusting the denominator of the basic EPS calculation for the effect of all potentially dilutive ordinary shares, which in the Company’s case, includes shares issuable under share-based compensation plans. The following table summarizes the weighted-average number of ordinary shares outstanding for basic and diluted earnings per share calculations:

In millions		2018			2017			2016
Weighted-average number of basic shares outstanding		247.2			254.9			259.2
Shares issuable under incentive stock plans		2.9			3.2			2.5
Weighted-average number of diluted shares outstanding		250.1			258.1			261.7
Anti-dilutive shares		1.5			1.6			1.2

NOTE 19. BUSINESS SEGMENT INFORMATION

The accounting policies of the operating segments are the same as those described in the summary of significant accounting policies except that the operating segments’ results are prepared on a management basis that is consistent with the manner in which the Company prepares financial information for internal review and decision making. The Company largely evaluates performance based on Segment operating income and Segment operating margins. Intercompany sales between segments are considered immaterial.

The Company's Climate segment delivers energy-efficient products and innovative energy services. It includes Trane® and American Standard® Heating & Air Conditioning which provide heating, ventilation and air conditioning (HVAC) systems, and commercial and residential building services, parts, support and controls; energy services and building automation through Trane Building Advantage and Nexia; and Thermo King® transport temperature control solutions.

The Company's Industrial segment delivers products and services that enhance energy efficiency, productivity and operations. It includes compressed air and gas systems and services, power tools, material handling systems, ARO® fluid management equipment, as well as Club Car ® golf, utility and rough terrain vehicles.

Segment operating income is the measure of profit and loss that the Company's chief operating decision maker uses to evaluate the financial performance of the business and as the basis for performance reviews, compensation and resource allocation. For these reasons, the Company believes that Segment operating income represents the most relevant measure of segment profit and loss.

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A summary of operations by reportable segments for the years ended December 31 were as follows:

Dollar amounts in millions		2018				2017				2016
Climate
Net revenues		$	12,343.8			$	11,167.5			$	10,545.0
Segment operating income		1,766.2				1,572.7				1,537.5
Segment operating income as a percentage of revenues		14.3		%		14.1		%		14.6		%
Depreciation and amortization		252.0				247.6				225.2
Capital expenditures		217.3				103.8				78.2
Industrial
Net revenues		3,324.4				3,030.1				2,963.9
Segment operating income		405.3				357.6				300.3
Segment operating income as a percentage of revenues		12.2		%		11.8		%		10.1		%
Depreciation and amortization		79.2				77.3				67.2
Capital expenditures		80.9				57.4				36.3
Total net revenues		$	15,668.2			$	14,197.6			$	13,508.9
Reconciliation to Operating Income
Segment operating income from reportable segments		2,171.5				1,930.3				1,837.8
Unallocated corporate expense		(254.1		)		(265.0		)		(234.6		)
Total operating income		$	1,917.4			$	1,665.3			$	1,603.2
Total operating income as a percentage of revenues		12.2		%		11.7		%		11.9		%
Depreciation and Amortization
Depreciation and amortization from reportable segments		331.2				324.9				292.4
Unallocated depreciation and amortization		30.3				28.4				59.8
Total depreciation and amortization		$	361.5			$	353.3			$	352.2
Capital Expenditures
Capital expenditures from reportable segments		298.2				161.2				114.5
Corporate capital expenditures		67.4				60.1				68.2
Total capital expenditures		$	365.6			$	221.3			$	182.7

At December 31, summary of long-lived assets by geographic area were as follows:

In millions		2018				2017 (1)
United States		$	1,914.7			$	1,878.1
Non-U.S.		781.3				758.5
Total		$	2,696.0			$	2,636.6

(1) In the Company's Annual Report on Form 10-K for the year ended December 31, 2017, the amounts disclosed for long-lived assets by geographic area at December 31, 2017 were inadvertently misstated. Management determined the disclosure error was not material to the 2017 financial statements. The revised amounts have been included in table above.

NOTE 20. COMMITMENTS AND CONTINGENCIES

The Company is involved in various litigations, claims and administrative proceedings, including those related to environmental, asbestos, and product liability matters. In accordance with ASC 450, "Contingencies" (ASC 450), the Company records accruals for loss contingencies when it is both probable that a liability will be incurred and the amount of the loss can be reasonably estimated. 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, except as expressly set forth in this note, management believes that any liability which may result from these legal matters would not have a material adverse effect on the financial condition, results of operations, liquidity or cash flows of the Company.

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Environmental Matters

The Company continues to be dedicated to environmental and sustainability programs to minimize the use of natural resources, and reduce the utilization and generation of hazardous materials from our manufacturing processes and to remediate identified environmental concerns. As to the latter, the Company is currently engaged in site investigations and remediation activities to address environmental cleanup from past operations at current and former manufacturing facilities.

The Company is sometimes 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 has also been identified as a potentially responsible party (PRP) for cleanup costs associated with off-site waste disposal at federal Superfund and state remediation sites. For all such sites, there are other PRPs and, in most instances, the Company’s involvement is minimal.

In estimating its liability, the Company has assumed it will not 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 on the Company's understanding of 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.

As of December 31, 2018 and 2017, the Company has recorded reserves for environmental matters of $41.2 million and $41.9 million, respectively. Of these amounts $36.1 million and $36.8 million, respectively, relate to remediation of sites previously disposed by the Company.

Asbestos-Related Matters

Certain wholly-owned subsidiaries and former companies of ours are named as defendants in asbestos-related lawsuits in state and federal courts. In virtually all of the suits, a large number of other companies have also been named as defendants. The vast majority of those claims have been filed against either Ingersoll-Rand Company or Trane U.S. Inc. (Trane) and generally allege injury caused by exposure to asbestos contained in certain historical products sold by Ingersoll-Rand Company or Trane, primarily pumps, boilers and railroad brake shoes. None of our existing or previously-owned businesses were a producer or manufacturer of asbestos.

The Company engages an outside expert to perform a detailed analysis and project an estimated range of the Company’s total liability for pending and unasserted future asbestos-related claims. In accordance with ASC 450, the Company records the liability at the low end of the range as it believes that no amount within the range is a better estimate than any other amount. Asbestos-related defense costs are excluded from the liability and are recorded separately as services are incurred. The methodology used to prepare estimates relies upon and includes the following factors, among others:

•	the outside expert’s interpretation of a widely accepted forecast of the population likely to have been occupationally exposed to asbestos;

•	epidemiological studies estimating the number of people likely to develop asbestos-related diseases such as mesothelioma and lung cancer;

•	the Company’s historical experience with the filing of non-malignancy claims and claims alleging other types of malignant diseases filed against the Company relative to the number of lung cancer claims filed against the Company;

•	the outside expert’s analysis of the number of people likely to file an asbestos-related personal injury claim against the Company based on such epidemiological and historical data and the Company’s claims history;

•	an analysis of the Company’s pending cases, by type of disease claimed and by year filed;

•	an analysis of the Company’s history to determine the average settlement and resolution value of claims, by type of disease claimed;

•	an adjustment for inflation in the future average settlement value of claims, at a 2.5% annual inflation rate, adjusted downward to 1.0% to take account of the declining value of claims resulting from the aging of the claimant population; and

•	an analysis of the period over which the Company has and is likely to resolve asbestos-related claims against it in the future (currently projected through 2053).

At December 31, 2018, over 75 percent of the open and active claims against the Company are non-malignant or unspecified disease claims. In addition, the Company has a number of claims which have been placed on inactive or deferred dockets and expected to have little or no settlement value against the Company.

The Company’s liability for asbestos-related matters and the asset for probable asbestos-related insurance recoveries are included in the following balance sheet accounts:

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In millions	December 31, 2018				December 31, 2017
Accrued expenses and other current liabilities	$	63.3			$	48.2
Other noncurrent liabilities	548.3				556.6
Total asbestos-related liabilities	$	611.6			$	604.8
Other current assets	$	69.2			$	56.1
Other noncurrent assets	199.0				210.3
Total asset for probable asbestos-related insurance recoveries	$	268.2			$	266.4

The Company's asbestos insurance receivable related to Ingersoll-Rand Company and Trane was $141.7 million and $126.5 million at December 31, 2018, and $138.5 million and $127.9 million at December 31, 2017, respectively. The receivable attributable to Trane for probable insurance recoveries as of December 31, 2018 is entirely supported by settlement agreements between Trane and the respective insurance carriers. Most of these settlement agreements constitute “coverage-in-place” arrangements, in which the insurer signatories agree to reimburse Trane for specified portions of its costs for asbestos bodily injury claims and Trane agrees to certain claims-handling protocols and grants to the insurer signatories certain releases and indemnifications.

The costs associated with the settlement and defense of asbestos-related claims, insurance settlements on asbestos-related matters and the revaluation of the Company's liability for potential future claims are included in the income statement within continuing operations or discontinued operations depending on the business to which they relate. Income and expenses associated with Ingersoll-Rand Company's asbestos-related matters are recorded within discontinued operations as they relate to previously divested businesses, primarily Ingersoll-Dresser Pump, which was sold by the Company in 2000. Income and expenses associated with Trane’s asbestos-related matters are recorded within Other income/(expense), net as part of continuing operations.

The income (expense) associated with these transactions for the years ended December 31, were as follows:

In millions		2018				2017				2016
Continuing operations		$	(10.4	)		$	(3.1	)		$	2.7
Discontinued operations		(56.5		)		(11.9		)		46.3
Total		$	(66.9	)		$	(15.0	)		$	49.0

During the year ended December 31, 2018, the Company's valuation model was updated to address a change in potential future claims. The adjustment, which increased the asbestos-related liability for both Ingersoll-Rand Company and Trane, was partially offset by asbestos-related receivables from insurance carriers. During the year ended December 31, 2017, the Company recorded an adjustment to update its liability for potential future claims. This amount was partially offset by asbestos-related settlements reached with various insurance carriers. Amounts recorded during the year ended December 31, 2016 included asbestos-related settlements with various insurance carriers.

In 2012 and 2013, Ingersoll-Rand Company filed actions in the Superior Court of New Jersey, Middlesex County, seeking a declaratory judgment and other relief regarding the Company's rights to defense and indemnity for asbestos claims. The defendants were several dozen solvent insurance companies, including companies that had been paying a portion of Ingersoll-Rand Company's asbestos claim defense and indemnity costs. The responding defendants generally challenged the Company's right to recovery, and raised various coverage defenses. Since filing the actions, Ingersoll Rand Company has settled with approximately two-thirds of the insurer defendants, and has dismissed one of the actions in its entirety.

The Company continually monitors the status of pending litigation that could impact the allocation of asbestos claims against the Company's various insurance policies. The Company has concluded that its Ingersoll-Rand Company insurance receivable is probable of recovery because of the following factors:

•	Ingersoll-Rand Company has reached favorable settlements regarding asbestos coverage claims for the majority of its recorded asbestos-related insurance receivable;

•	a review of other companies in circumstances comparable to Ingersoll-Rand Company, including Trane, and the success of other companies in recovering under their insurance policies, including Trane's favorable settlement discussed above;

•	the Company's confidence in its right to recovery under the terms of its policies and pursuant to applicable law; and

•	the Company's history of receiving payments under the Ingersoll-Rand Company insurance program, including under policies that had been the subject of prior litigation.

The amounts recorded by the Company for asbestos-related liabilities and insurance-related assets are based on currently available information. The Company’s actual liabilities or insurance recoveries could be significantly higher or lower than those recorded

F-43

if assumptions used in the calculations vary significantly from actual results. Key variables in these assumptions include the number and type of new claims to be filed each year, the average cost of resolution of each such new claim, the resolution of coverage issues with insurance carriers, and the solvency risk with respect to the Company’s insurance carriers. Furthermore, predictions with respect to these variables are subject to greater uncertainty as the projection period lengthens. Other factors that may affect the Company’s liability include uncertainties surrounding the litigation process from jurisdiction to jurisdiction and from case to case, reforms that may be made by state and federal courts, and the passage of state or federal tort reform legislation.

The aggregate amount of the stated limits in insurance policies available to the Company for asbestos-related claims acquired, over many years and from many different carriers, is substantial. However, limitations in that coverage, primarily due to the considerations described above, are expected to result in the projected total liability to claimants substantially exceeding the probable insurance recovery.

Warranty Liability

Standard product warranty accruals are recorded at the time of sale and are estimated based upon product warranty terms and historical experience. The Company assesses the adequacy of its liabilities and will make adjustments as necessary based on known or anticipated warranty claims, or as new information becomes available.

The changes in the standard product warranty liability for the year ended December 31, were as follows:

In millions	2018				2017
Balance at beginning of period	$	270.5			$	261.6
Reductions for payments	(159.0		)		(140.5		)
Accruals for warranties issued during the current period	158.2				141.9
Changes to accruals related to preexisting warranties	11.5				2.2
Translation	(2.3		)		5.3
Balance at end of period	$	278.9			$	270.5

Standard product warranty liabilities are classified as Accrued expenses and other current liabilities, or Other noncurrent liabilities based on their expected term. The Company's total current standard product warranty reserve at December 31, 2018 and December 31, 2017 was $149.5 million and $144.5 million, respectively.

The Company's extended warranty liability represents the deferred revenue associated with its extended warranty contracts and is amortized into Net revenues on a straight-line basis over the life of the contract, unless another method is more representative of the costs incurred. The Company assesses the adequacy of its liability by evaluating the expected costs under its existing contracts to ensure these expected costs do not exceed the extended warranty liability.

The changes in the extended warranty liability for the year ended December 31, were as follows:

In millions	2018				2017
Balance at beginning of period	$	293.0			$	295.9
Amortization of deferred revenue for the period	(115.0		)		(107.2		)
Additions for extended warranties issued during the period	116.1				100.8
Changes to accruals related to preexisting warranties	(0.5		)		1.3
Translation	(1.4		)		2.2
Balance at end of period	$	292.2			$	293.0

The extended warranty liability is classified as Accrued expenses and other current liabilities or Other noncurrent liabilities based on the timing of when the deferred revenue is expected to be amortized into Net revenues. The Company's total current extended warranty liability at December 31, 2018 and December 31, 2017 was $103.1 million and $100.0 million, respectively. For the years ended December 31, 2018 and 2017, the Company incurred costs of $63.2 million and $60.7 million, respectively, related to extended warranties.

Other Commitments and Contingencies

Certain office and warehouse facilities, transportation vehicles and data processing equipment are leased by the Company. Total rental expense was $261.3 million in 2018, $241.8 million in 2017 and $230.4 million in 2016. Minimum lease payments required under non-cancelable operating leases with terms in excess of one year for the next five years amounts to approximately: $197 million in 2019, $152 million in 2020, $107 million in 2021, $68 million in 2022, and $42 million in 2023.

Refer to Note 16 for a discussion of income tax-related contingencies.

F-44

NOTE 21. GUARANTOR FINANCIAL INFORMATION

Ingersoll-Rand plc (Plc or Parent Company) and certain of its 100% directly or indirectly owned subsidiaries provide guarantees of public debt issued by other 100% directly or indirectly owned subsidiaries. The following condensed consolidating financial information is provided so that separate financial statements of these subsidiary issuer and guarantors are not required to be filed with the U.S. Securities and Exchange Commission.

The following table shows the Company’s guarantor relationships as of December 31, 2018:

Parent, issuer or guarantors	Notes issued	Notes guaranteed (1)
Ingersoll-Rand plc (Plc)	None	All registered notes and debentures
Ingersoll-Rand Irish Holdings Unlimited Company (Irish Holdings)	None	All notes issued by Global Holding and Lux Finance
Ingersoll-Rand Lux International Holding Company S.a.r.l. (Lux International)	None	All notes issued by Global Holding and Lux Finance
Ingersoll-Rand Global Holding Company Limited (Global Holding)	2.900% Senior notes due 2021 4.250% Senior notes due 2023 3.750% Senior notes due 2028 5.750% Senior notes due 2043 4.300% Senior notes due 2048	All notes issued by Lux Finance
Ingersoll-Rand Company (New Jersey)	9.000% Debentures due 2021 7.200% Debentures due 2019-2025 6.480% Debentures due 2025 Puttable debentures due 2027-2028	All notes issued by Global Holding and Lux Finance
Ingersoll-Rand Luxembourg Finance S.A. (Lux Finance)	2.625% Notes due 2020 3.550% Notes due 2024 4.650% Notes due 2044	All notes and debentures issued by Global Holding and New Jersey

(1) All subsidiary issuers and guarantors provide irrevocable guarantees of borrowings, if any, made under revolving credit facilities

Each subsidiary debt issuer and guarantor is owned 100% directly or indirectly by the Parent Company. Each guarantee is full and unconditional, and provided on a joint and several basis. There are no significant restrictions of the Parent Company, or any guarantor, to obtain funds from its subsidiaries, such as provisions in debt agreements that prohibit dividend payments, loans or advances to the parent by a subsidiary.

Basis of presentation

The following Condensed Consolidating Financial Statements present the financial position, results of operations and cash flows of each issuer or guarantor on a legal entity basis. The financial information for all periods has been presented based on the Company’s legal entity ownerships and guarantees outstanding at December 31, 2018. Assets and liabilities are attributed to each issuer and guarantor generally based on legal entity ownership. Investments in subsidiaries of the Parent Company, subsidiary guarantors and issuers represent the proportionate share of their subsidiaries’ net assets. Certain adjustments are needed to consolidate the Parent Company and its subsidiaries, including the elimination of investments in subsidiaries and related activity that occurs between entities in different columns. These adjustments are presented in the Consolidating Adjustments column. This basis of presentation is intended to comply with the specific reporting requirements for subsidiary issuers and guarantors, and is not intended to present the Company’s financial position or results of operations or cash flows for any other purpose.

F-45

Condensed Consolidating Statement of Comprehensive Income

For the year ended December 31, 2018

In millions	Plc				Irish Holdings				Lux International				Global Holding				New Jersey				Lux Finance				Other Subsidiaries				Consolidating Adjustments				Consolidated
Net revenues	$	—			$	—			$	—			$	—			$	1,414.5			$	—			$	14,658.2			$	(404.5	)		$	15,668.2
Cost of goods sold	—				—				—				—				(1,044.0		)		—				(10,208.1		)		404.5				(10,847.6		)
Selling and administrative expenses	(39.5		)		—				(0.4		)		(0.3		)		(391.5		)		(0.3		)		(2,471.2		)		—				(2,903.2		)
Operating income (loss)	(39.5		)		—				(0.4		)		(0.3		)		(21.0		)		(0.3		)		1,978.9				—				1,917.4
Equity earnings (loss) in subsidiaries, net of tax	1,460.8				1,458.6				1,183.7				1,190.7				1,074.3				195.6				—				(6,563.7		)		—
Interest expense	—				—				0.4				(130.3		)		(46.8		)		(43.0		)		(1.0		)		—				(220.7		)
Intercompany interest and fees	(92.7		)		—				41.1				(196.5		)		122.8				(11.2		)		136.5				—				—
Other income/(expense), net	—				—				(48.8		)		0.7				(17.3		)		0.1				28.9				—				(36.4		)
Earnings (loss) before income taxes	1,328.6				1,458.6				1,176.0				864.3				1,112.0				141.2				2,143.3				(6,563.7		)		1,660.3
Benefit (provision) for income taxes	9.0				—				—				86.2				98.5				—				(475.0		)		—				(281.3		)
Earnings (loss) from continuing operations	1,337.6				1,458.6				1,176.0				950.5				1,210.5				141.2				1,668.3				(6,563.7		)		1,379.0
Gain (loss) from discontinued operations, net of tax	—				—				—				—				(20.1		)		—				(1.4		)		—				(21.5		)
Net earnings (loss)	1,337.6				1,458.6				1,176.0				950.5				1,190.4				141.2				1,666.9				(6,563.7		)		1,357.5
Less: Net earnings attributable to noncontrolling interests	—				—				—				—				—				—				(19.9		)		—				(19.9		)
Net earnings attributable to Ingersoll-Rand plc	$	1,337.6			$	1,458.6			$	1,176.0			$	950.5			$	1,190.4			$	141.2			$	1,647.0			$	(6,563.7	)		$	1,337.6
Other comprehensive income (loss), net of tax	(185.3		)		(184.7		)		(173.7		)		(85.7		)		(85.7		)		(83.5		)		(256.2		)		869.5				(185.3		)
Comprehensive income attributable to Ingersoll-Rand plc	$	1,152.3			$	1,273.9			$	1,002.3			$	864.8			$	1,104.7			$	57.7			$	1,390.8			$	(5,694.2	)		$	1,152.3

F-46

Condensed Consolidating Statement of Comprehensive Income

For the year ended December 31, 2017

In millions	Plc				Irish Holdings				Lux International				Global Holding				New Jersey				Lux Finance				Other Subsidiaries				Consolidating Adjustments				Consolidated
Net revenues	$	—			$	—			$	—			$	—			$	1,336.6			$	—			$	13,216.7			$	(355.7	)		$	14,197.6
Cost of goods sold	—				—				—				—				(957.9		)		—				(9,209.4		)		355.7				(9,811.6		)
Selling and administrative expenses	(15.6		)		—				(0.1		)		(1.2		)		(401.7		)		(0.2		)		(2,301.9		)		—				(2,720.7		)
Operating income (loss)	(15.6		)		—				(0.1		)		(1.2		)		(23.0		)		(0.2		)		1,705.4				—				1,665.3
Equity earnings (loss) in subsidiaries, net of tax	1,349.2				1,334.7				982.3				565.3				1,212.5				107.9				—				(5,551.9		)		—
Interest expense	—				—				—				(127.0		)		(47.2		)		(41.0		)		(0.6		)		—				(215.8		)
Intercompany interest and fees	(33.1		)		—				253.0				(493.9		)		(500.9		)		(8.2		)		783.1				—				—
Other income/(expense), net	—				—				0.1				—				(5.8		)		—				(25.9		)		—				(31.6		)
Earnings (loss) before income taxes	1,300.5				1,334.7				1,235.3				(56.8		)		635.6				58.5				2,462.0				(5,551.9		)		1,417.9
Benefit (provision) for income taxes	2.1				—				—				247.2				(42.4		)		—				(287.1		)		—				(80.2		)
Earnings (loss) from continuing operations	1,302.6				1,334.7				1,235.3				190.4				593.2				58.5				2,174.9				(5,551.9		)		1,337.7
Gain (loss) from discontinued operations, net of tax	—				—				—				—				(27.9		)		—				2.5				—				(25.4		)
Net earnings (loss)	1,302.6				1,334.7				1,235.3				190.4				565.3				58.5				2,177.4				(5,551.9		)		1,312.3
Less: Net earnings attributable to noncontrolling interests	—				—				—				—				—				—				(9.7		)		—				(9.7		)
Net earnings attributable to Ingersoll-Rand plc	$	1,302.6			$	1,334.7			$	1,235.3			$	190.4			$	565.3			$	58.5			$	2,167.7			$	(5,551.9	)		$	1,302.6
Other comprehensive income (loss), net of tax	511.7				510.3				472.5				369.3				368.8				102.1				499.0				(2,322.0		)		511.7
Comprehensive income attributable to Ingersoll-Rand plc	$	1,814.3			$	1,845.0			$	1,707.8			$	559.7			$	934.1			$	160.6			$	2,666.7			$	(7,873.9	)		$	1,814.3

F-47

Condensed Consolidating Statement of Comprehensive Income

For the year ended December 31, 2016

In millions	Plc				Irish Holdings				Lux International				Global Holding				New Jersey				Lux Finance				Other Subsidiaries				Consolidating Adjustments				Consolidated
Net revenues	$	—			$	—			$	—			$	—			$	1,327.2			$	—			$	12,533.9			$	(352.2	)		$	13,508.9
Cost of goods sold	—				—				—				—				(982.2		)		—				(8,677.9		)		352.2				(9,307.9		)
Selling and administrative expenses	(16.9		)		—				(0.2		)		(0.1		)		(352.5		)		(0.5		)		(2,227.6		)		—				(2,597.8		)
Operating income (loss)	(16.9		)		—				(0.2		)		(0.1		)		(7.5		)		(0.5		)		1,628.4				—				1,603.2
Equity earnings (loss) in subsidiaries, net of tax	1,559.7				1,544.0				1,463.4				609.4				808.7				1,521.1				—				(7,506.3		)		—
Interest expense	—				—				—				(127.0		)		(47.9		)		(42.6		)		(4.0		)		—				(221.5		)
Intercompany interest and fees	(69.2		)		—				(46.4		)		(164.5		)		(277.2		)		(6.8		)		564.1				—				—
Other income/(expense), net	0.9				—				—				—				(13.8		)		—				372.5				—				359.6
Earnings (loss) before income taxes	1,474.5				1,544.0				1,416.8				317.8				462.3				1,471.2				2,561.0				(7,506.3		)		1,741.3
Benefit (provision) for income taxes	1.7				—				3.0				115.6				117.3				—				(519.1		)		—				(281.5		)
Earnings (loss) from continuing operations	1,476.2				1,544.0				1,419.8				433.4				579.6				1,471.2				2,041.9				(7,506.3		)		1,459.8
Gain (loss) from discontinued operations, net of tax	—				—				—				—				30.4				—				2.5				—				32.9
Net earnings (loss)	1,476.2				1,544.0				1,419.8				433.4				610.0				1,471.2				2,044.4				(7,506.3		)		1,492.7
Less: Net earnings attributable to noncontrolling interests	—				—				—				—				—				—				(16.5		)		—				(16.5		)
Net earnings attributable to Ingersoll-Rand plc	$	1,476.2			$	1,544.0			$	1,419.8			$	433.4			$	610.0			$	1,471.2			$	2,027.9			$	(7,506.3	)		$	1,476.2
Other comprehensive income (loss), net of tax	(169.6		)		(168.5		)		(166.8		)		(161.1		)		(161.5		)		5.0				33.3				619.6				(169.6		)
Comprehensive income attributable to Ingersoll-Rand plc	$	1,306.6			$	1,375.5			$	1,253.0			$	272.3			$	448.5			$	1,476.2			$	2,061.2			$	(6,886.7	)		$	1,306.6

F-48

Condensed Consolidating Balance Sheet

December 31, 2018

In millions	Plc				Irish Holdings				Lux International				Global Holding				New Jersey				Lux Finance				Other Subsidiaries				Consolidating Adjustments				Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	—			$	0.1			$	0.2			$	—			$	363.5			$	—			$	539.6			$	—			$	903.4
Accounts and notes receivable, net	—				—				0.1				—				183.4				—				2,495.7				—				2,679.2
Inventories, net	—				—				—				—				146.6				—				1,531.2				—				1,677.8
Other current assets	0.2				—				7.8				—				101.0				—				363.4				(0.8		)		471.6
Intercompany receivables	59.5				—				3.9				—				3,851.0				0.1				3,838.0				(7,752.5		)		—
Total current assets	59.7				0.1				12.0				—				4,645.5				0.1				8,767.9				(7,753.3		)		5,732.0
Property, plant and equipment, net	—				—				0.1				—				314.6				—				1,416.1				—				1,730.8
Goodwill and other intangible assets, net	—				—				—				—				432.1				—				9,162.1				—				9,594.2
Other noncurrent assets	—				—				8.0				180.0				498.1				—				610.6				(438.8		)		857.9
Investments in consolidated subsidiaries	9,308.9				9,267.8				3,935.4				11,743.2				9,923.2				1,264.2				—				(45,442.7		)		—
Intercompany notes receivable	—				—				—				—				—				—				2,249.7				(2,249.7		)		—
Total assets	$	9,368.6			$	9,267.9			$	3,955.5			$	11,923.2			$	15,813.5			$	1,264.3			$	22,206.4			$	(55,884.5	)		$	17,914.9
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable and accrued expenses	$	11.3			$	—			$	0.1			$	41.7			$	599.6			$	6.9			$	3,306.3			$	(0.8	)		$	3,965.1
Short-term borrowings and current maturities of long-term debt	—				—				—				—				350.4				—				0.2				—				350.6
Intercompany payables	2,334.6				—				132.9				3,518.7				1,700.9				0.2				65.2				(7,752.5		)		—
Total current liabilities	2,345.9				—				133.0				3,560.4				2,650.9				7.1				3,371.7				(7,753.3		)		4,315.7
Long-term debt	—				—				—				2,330.0				319.5				1,091.0				0.2				—				3,740.7
Other noncurrent liabilities	—				—				—				5.5				1,100.5				—				2,126.5				(438.8		)		2,793.7
Intercompany notes payable	—				—				—				2,249.7				—				—				—				(2,249.7		)		—
Total liabilities	2,345.9				—				133.0				8,145.6				4,070.9				1,098.1				5,498.4				(10,441.8		)		10,850.1
Equity:
Total equity	7,022.7				9,267.9				3,822.5				3,777.6				11,742.6				166.2				16,708.0				(45,442.7		)		7,064.8
Total liabilities and equity	$	9,368.6			$	9,267.9			$	3,955.5			$	11,923.2			$	15,813.5			$	1,264.3			$	22,206.4			$	(55,884.5	)		$	17,914.9

F-49

Condensed Consolidating Balance Sheet

December 31, 2017

In millions	Plc				Irish Holdings				Lux International				Global Holding				New Jersey				Lux Finance				Other Subsidiaries				Consolidating Adjustments				Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	—			$	—			$	0.6			$	—			$	359.3			$	—			$	1,189.5			$	—			$	1,549.4
Accounts and notes receivable, net	—				—				—				—				166.5				—				2,310.9				—				2,477.4
Inventories, net	—				—				—				—				168.5				—				1,386.9				—				1,555.4
Other current assets	0.2				—				5.7				112.6				76.2				—				342.2				—				536.9
Intercompany receivables	1,819.1				9,912.2				2,036.8				—				1,849.9				—				5,014.8				(20,632.8		)		—
Total current assets	1,819.3				9,912.2				2,043.1				112.6				2,620.4				—				10,244.3				(20,632.8		)		6,119.1
Property, plant and equipment, net	—				—				—				—				310.6				—				1,240.7				—				1,551.3
Goodwill and other intangible assets, net	—				—				—				—				436.0				—				9,242.6				—				9,678.6
Other noncurrent assets	—				—				—				185.4				471.1				—				550.8				(383.0		)		824.3
Investments in consolidated subsidiaries	7,318.1				1,684.2				2,953.9				10,480.3				10,923.7				1,150.9				—				(34,511.1		)		—
Total assets	$	9,137.4			$	11,596.4			$	4,997.0			$	10,778.3			$	14,761.8			$	1,150.9			$	21,278.4			$	(55,526.9	)		$	18,173.3
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable and accrued expenses	$	8.5			$	—			$	0.2			$	27.3			$	572.3			$	6.9			$	3,105.8			$	—			$	3,721.0
Short-term borrowings and current maturities of long-term debt	—				—				—				749.6				350.4				—				7.0				—				1,107.0
Intercompany payables	1,988.3				—				9,316.7				5,481.1				1,790.0				523.3				1,533.4				(20,632.8		)		—
Total current liabilities	1,996.8				—				9,316.9				6,258.0				2,712.7				530.2				4,646.2				(20,632.8		)		4,828.0
Long-term debt	—				—				—				1,539.9				326.8				1,089.7				0.6				—				2,957.0
Other noncurrent liabilities	0.3				—				—				92.4				1,251.8				—				2,219.9				(383.0		)		3,181.4
Total liabilities	1,997.1				—				9,316.9				7,890.3				4,291.3				1,619.9				6,866.7				(21,015.8		)		10,966.4
Equity:
Total equity	7,140.3				11,596.4				(4,319.9		)		2,888.0				10,470.5				(469.0		)		14,411.7				(34,511.1		)		7,206.9
Total liabilities and equity	$	9,137.4			$	11,596.4			$	4,997.0			$	10,778.3			$	14,761.8			$	1,150.9			$	21,278.4			$	(55,526.9	)		$	18,173.3

F-50

Condensed Consolidating Statement of Cash Flows

For the year ended December 31, 2018

In millions	Plc				Irish Holdings				Lux International				Global Holding				New Jersey				Lux Finance				Other Subsidiaries				Consolidating Adjustments				Consolidated
CASH FLOWS FROM OPERATING ACTIVITIES:
Net cash provided by (used in) continuing operating activities	$	78.8			$	(2.7	)		$	31.5			$	(217.6	)		$	1,544.4			$	(52.0	)		$	92.1			$	—			$	1,474.5
Net cash provided by (used in) discontinued operating activities	—				—				—				—				(65.3		)		—				(1.4		)		—				(66.7		)
Net cash provided by (used in) operating activities	78.8				(2.7		)		31.5				(217.6		)		1,479.1				(52.0		)		90.7				—				1,407.8
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures	—				—				—				—				(87.7		)		—				(277.9		)		—				(365.6		)
Acquisitions and equity method investments, net of cash acquired	—				—				—				—				—				—				(285.2		)		—				(285.2		)
Proceeds from sale of property, plant and equipment	—				—				—				—				9.0				—				13.1				—				22.1
Other investing activities, net	—				—				(7.9		)		—				3.0				—				4.2				—				(0.7		)
Intercompany investing activities, net	1,058.7				(481.2		)		545.4				9.5				287.1				—				2,641.1				(4,060.6		)		—
Net cash provided by (used in) investing activities	1,058.7				(481.2		)		537.5				9.5				211.4				—				2,095.3				(4,060.6		)		(629.4		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds (repayments) of debt	—				—				—				31.6				(7.5		)		—				(6.5		)		—				17.6
Debt issuance costs	—				—				—				(12.0		)		—				—				—				—				(12.0		)
Dividends paid to ordinary shareholders	(479.5		)		—				—				—				—				—				—				—				(479.5		)
Dividends paid to noncontrolling interests	—				—				—				—				—				—				(41.4		)		—				(41.4		)
Proceeds from shares issued under incentive plans	68.9				—				—				—				—				—				—				—				68.9
Repurchase of ordinary shares	(900.2		)		—				—				—				—				—				—				—				(900.2		)
Other financing activities, net	(25.8		)		—				—				—				(1.5		)		—				(4.9		)		—				(32.2		)
Intercompany financing activities, net	199.1				484.0				(569.4		)		188.5				(1,677.3		)		52.0				(2,737.5		)		4,060.6				—
Net cash provided by (used in) financing activities	(1,137.5		)		484.0				(569.4		)		208.1				(1,686.3		)		52.0				(2,790.3		)		4,060.6				(1,378.8		)
Effect of exchange rate changes on cash and cash equivalents	—				—				—				—				—				—				(45.6		)		—				(45.6		)
Net increase (decrease) in cash and cash equivalents	—				0.1				(0.4		)		—				4.2				—				(649.9		)		—				(646.0		)
Cash and cash equivalents - beginning of period	—				—				0.6				—				359.3				—				1,189.5				—				1,549.4
Cash and cash equivalents - end of period	$	—			$	0.1			$	0.2			$	—			$	363.5			$	—			$	539.6			$	—			$	903.4

F-51

Condensed Consolidating Statement of Cash Flows

For the year ended December 31, 2017

In millions	Plc				Irish Holdings				Lux International				Global Holding				New Jersey				Lux Finance				Other Subsidiaries				Consolidating Adjustments				Consolidated
CASH FLOWS FROM OPERATING ACTIVITIES:
Net cash provided by (used in) continuing operating activities	$	83.8			$	—			$	(42.8	)		$	(284.9	)		$	438.4			$	(48.0	)		$	1,415.1			$	—			$	1,561.6
Net cash provided by (used in) discontinued operating activities	—				—				—				—				(36.9		)		—				(1.2		)		—				(38.1		)
Net cash provided by (used in) operating activities	83.8				—				(42.8		)		(284.9		)		401.5				(48.0		)		1,413.9				—				1,523.5
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures	—				—				—				—				(74.2		)		—				(147.1		)		—				(221.3		)
Acquisitions and equity method investments, net of cash acquired	—				—				—				—				(2.7		)		—				(154.9		)		—				(157.6		)
Proceeds from sale of property, plant and equipment	—				—				—				—				—				—				1.5				—				1.5
Other investing activities, net	—				—				—				—				—				—				2.7				—				2.7
Intercompany investing activities, net	285.1				285.2				2,050.2				270.1				4,899.4				11.7				6,788.3				(14,590.0		)		—
Net cash provided by (used in) investing activities	285.1				285.2				2,050.2				270.1				4,822.5				11.7				6,490.5				(14,590.0		)		(374.7		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds (repayments) of debt	—				—				—				—				(7.5		)		—				(4.2		)		—				(11.7		)
Debt issuance costs	—				—				—				(0.2		)		—				—				—				—				(0.2		)
Dividends paid to ordinary shareholders	(430.1		)		—				—				—				—				—				—				—				(430.1		)
Dividends paid to noncontrolling interests	—				—				—				—				—				—				(15.8		)		—				(15.8		)
Acquisition of noncontrolling interest	—				—				—				—				—				—				(6.8		)		—				(6.8		)
Proceeds from shares issued under incentive plans	76.7				—				—				—				—				—				—				—				76.7
Repurchase of ordinary shares	(1,016.9		)		—				—				—				—				—				—				—				(1,016.9		)
Other financing activities, net	(25.4		)		—				—				—				(1.7		)		—				(0.6		)		—				(27.7		)
Intercompany financing activities, net	1,026.8				(285.2		)		(2,006.8		)		15.0				(5,490.1		)		36.3				(7,886.0		)		14,590.0				—
Net cash provided by (used in) financing activities	(368.9		)		(285.2		)		(2,006.8		)		14.8				(5,499.3		)		36.3				(7,913.4		)		14,590.0				(1,432.5		)
Effect of exchange rate changes on cash and cash equivalents	—				—				—				—				—				—				118.4				—				118.4
Net increase (decrease) in cash and cash equivalents	—				—				0.6				—				(275.3		)		—				109.4				—				(165.3		)
Cash and cash equivalents – beginning of period	—				—				—				—				634.6				—				1,080.1				—				1,714.7
Cash and cash equivalents – end of period	$	—			$	—			$	0.6			$	—			$	359.3			$	—			$	1,189.5			$	—			$	1,549.4

F-52

Condensed Consolidating Statement of Cash Flows

For the year ended December 31, 2016

In millions	Plc				Irish Holdings				Lux International				Global Holding				New Jersey				Lux Finance				Other Subsidiaries				Consolidating Adjustments				Consolidated
CASH FLOWS FROM OPERATING ACTIVITIES:
Net cash provided by (used in) continuing operating activities	$	(80.4	)		$	—			$	(42.0	)		$	(276.6	)		$	823.4			$	(47.3	)		$	1,055.9			$	—			$	1,433.0
Net cash provided by (used in) discontinued operating activities	—				—				—				—				86.4				—				2.5				—				88.9
Net cash provided by (used in) operating activities	(80.4		)		—				(42.0		)		(276.6		)		909.8				(47.3		)		1,058.4				—				1,521.9
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures	—				—				—				—				(73.7		)		—				(109.0		)		—				(182.7		)
Acquisitions and equity method investments, net of cash acquired	—				—				—				—				(9.2		)		—				—				—				(9.2		)
Proceeds from sale of property, plant and equipment	—				—				—				—				—				—				9.5				—				9.5
Proceeds from sale of Hussmann equity investment	—				—				—				—				—				—				422.5				—				422.5
Intercompany investing activities, net	(90.1		)		(19,465.7		)		6,181.4				(172.9		)		65.8				336.1				(2,226.8		)		15,372.2				—
Net cash provided by (used in) investing activities	(90.1		)		(19,465.7		)		6,181.4				(172.9		)		(17.1		)		336.1				(1,903.8		)		15,372.2				240.1
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds (repayments) of debt	—				—				—				—				(7.7		)		(143.0		)		—				—				(150.7		)
Debt issuance costs	—				—				—				(2.1		)		—				—				—				—				(2.1		)
Dividends paid to ordinary shareholders	(348.6		)		—				—				—				—				—				—				—				(348.6		)
Dividends paid to noncontrolling interests	—				—				—				—				—				—				(14.1		)		—				(14.1		)
Proceeds from shares issued under incentive plans	62.9				—				—				—				—				—				—				—				62.9
Repurchase of ordinary shares	(250.1		)		—				—				—				—				—				—				—				(250.1		)
Other financing activities, net	(24.2		)		—				—				—				—				—				—				—				(24.2		)
Intercompany financing activities, net	730.5				19,465.7				(6,139.4		)		440.2				(250.4		)		(145.9		)		1,271.5				(15,372.2		)		—
Net cash provided by (used in) financing activities	170.5				19,465.7				(6,139.4		)		438.1				(258.1		)		(288.9		)		1,257.4				(15,372.2		)		(726.9		)
Effect of exchange rate changes on cash and cash equivalents	—				—				—				—				—				—				(57.2		)		—				(57.2		)
Net increase (decrease) in cash and cash equivalents	—				—				—				(11.4		)		634.6				(0.1		)		354.8				—				977.9
Cash and cash equivalents – beginning of period	—				—				—				11.4				—				0.1				725.3				—				736.8
Cash and cash equivalents – end of period	$	—			$	—			$	—			$	—			$	634.6			$	—			$	1,080.1			$	—			$	1,714.7

F-53

NOTE 22. SUBSEQUENT EVENTS

On February 6, 2019, the Company entered into a final, binding and irrevocable offer letter with Silver II GP Holdings S.C.A., an affiliate of BC Partners Advisors L.P. and The Carlyle Group (the Seller) pursuant to which the Company made a binding offer to acquire the precision flow systems management business (the Business) for approximately $1.45 billion in cash, subject to working capital and certain other adjustments (the Acquisition). The Business is a manufacturer of precision flow control equipment including electric diaphragm pumps and controls that serve the global water, oil and gas, agriculture, industrial and specialty market segments. The offer is subject to completion of information and consultation processes with employee representative bodies of the Business in applicable jurisdictions. If the offer is accepted, completion of the Acquisition would be subject to customary closing conditions and expected to close mid-year 2019 subject to regulatory approvals. The results of the Business will be included in the Company’s consolidated financial statements as of the date of acquisition and reported within the Industrial segment.

F-54

SCHEDULE II

INGERSOLL-RAND PLC

VALUATION AND QUALIFYING ACCOUNTS

FOR THE YEARS ENDED December 31, 2018, 2017 AND 2016

(Amounts in millions)

Allowances for Doubtful Accounts:
Balance December 31, 2015	$	28.3
Additions charged to costs and expenses	7.9
Deductions (a)	(9.5		)
Business acquisitions and divestitures, net	—
Currency translation	(0.7		)
Balance December 31, 2016	26.0
Additions charged to costs and expenses	9.7
Deductions (a)	(9.7		)
Business acquisitions and divestitures, net	—
Currency translation	1.3
Balance December 31, 2017	26.9
Additions charged to costs and expenses	15.3
Deductions (a)	(9.1		)
Business acquisitions and divestitures, net	0.5
Currency translation	(0.9		)
Balance December 31, 2018	$	32.7

(a)	“Deductions” include accounts and advances written off, less recoveries.

F-55