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 18, 2020

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 18, 2020
(Michael W. Lamach)
/s/ Susan K. Carter		Senior Vice President and Chief Financial Officer (Principal Financial Officer)		February 18, 2020
(Susan K. Carter)
/s/ Christopher J. Kuehn		Vice President and Chief Accounting Officer (Principal Accounting Officer)		February 18, 2020
(Christopher J. Kuehn)
/s/ Kirk E. Arnold		Director		February 18, 2020
(Kirk E. Arnold)
/s/ Ann C. Berzin		Director		February 18, 2020
(Ann C. Berzin)
/s/ John Bruton		Director		February 18, 2020
(John Bruton)
/s/ Jared L. Cohon		Director		February 18, 2020
(Jared L. Cohon)
/s/ Gary D. Forsee		Director		February 18, 2020
(Gary D. Forsee)
/s/ Linda P. Hudson		Director		February 18, 2020
(Linda P. Hudson)
/s/ Myles P. Lee		Director		February 18, 2020
(Myles P. Lee)
/s/ Karen B. Peetz		Director		February 18, 2020
(Karen B. Peetz)
/s/ John P. Surma		Director		February 18, 2020
(John P. Surma)
/s/ Richard J. Swift		Director		February 18, 2020
(Richard J. Swift)
/s/ Tony L. White		Director		February 18, 2020
(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-5
Consolidated Balance Sheets	F-7
Consolidated Statements of Equity	F-8
Consolidated Statements of Cash Flows	F-9
Notes to Consolidated Financial Statements	F-10
Schedule II – Valuation and Qualifying Accounts	F-57

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, 2019 and 2018, 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, 2019, including the related notes and schedule of valuation and qualifying accounts for each of the three years in the period ended December 31, 2019 listed in the accompanying index (collectively referred to as the “consolidated financial statements”). We also have audited the Company's internal control over financial reporting as of December 31, 2019, 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, 2019 and 2018, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2019 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, 2019, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

Change in Accounting Principle

As discussed in Note 3 to the consolidated financial statements, the Company changed the manner in which it accounts for leases in 2019.

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.

As described in Management’s Report on Internal Control over Financial Reporting, management has excluded Precision Flow Systems (PFS) from its assessment of internal control over financial reporting as of December 31, 2019 because it was acquired by the Company in a purchase business combination during 2019. We have also excluded PFS from our 2019 audit of internal control over financial reporting. PFS is a wholly-owned subsidiary whose total assets and total revenues excluded from management’s assessment and our audit of internal control over financial reporting represent approximately 2% and approximately 1% respectively, of the related consolidated financial statement amounts as of and for the year ended December 31, 2019.

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

F-2

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.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (i) relate to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Liability for Asbestos-Related Matters

As described in Notes 3 and 22 to the consolidated financial statements, certain of the Company’s wholly-owned subsidiaries and former companies are named as defendants in asbestos-related lawsuits in state and federal courts for which management recorded asbestos-related liabilities of $547 million as of December 31, 2019. Management engaged 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. Management’s key assumptions underlying the estimated asbestos-related liabilities included the number of people likely to have been occupationally exposed to asbestos and likely to develop asbestos-related diseases such as mesothelioma and lung cancer, the number of people likely to file an asbestos-related personal injury claim against the Company, the average settlement and resolution value of claims, and the percentage of claims resolved with no payment.

The principal considerations for our determination that performing procedures relating to the liability for asbestos-related matters is a critical audit matter are (i) there was significant judgment by management in developing the estimate for asbestos-related liabilities, which in turn led to a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating audit evidence related to management’s estimate and the aforementioned assumptions underlying the estimated asbestos-related liabilities, and (ii) the audit effort involved the use of professionals with specialized skill and knowledge to assist in performing these procedures and evaluating the audit evidence obtained from these procedures.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to management’s estimate for asbestos-related matters, including controls over development of the aforementioned assumptions underlying the estimated asbestos-related liabilities. These procedures also included, among others, testing management’s process for developing the estimate for asbestos-related matters. This included evaluating the appropriateness of the estimate and the reasonableness of the aforementioned assumptions underlying the asbestos-related liabilities. Professionals with specialized skill and knowledge were used to assist in (i) evaluating whether the forecast of new claims that may be filed against the Company was reasonable considering recent Company experience and industry data, which represents the estimated number of individuals likely to have been occupationally exposed to asbestos and expected to develop asbestos-related diseases such as mesothelioma and lung cancer, (ii) evaluating whether the assumed number of people likely to file an asbestos-related personal injury claim against the Company was reasonable, considering the Company’s historical experience, (iii) evaluating whether the estimated average settlement and resolution value of claims was reasonable considering the Company’s historical experience, and (iv) evaluating whether the percentage of claims resolved with no payment was reasonable considering the Company’s historical experience. Procedures were also performed to test the accuracy of data provided by management, including the historical claims filed against the Company, and the cost of resolution for those historical claims.

Acquisition of Precision Flow Systems - Valuation of Customer Relationships

As described in Note 19 to the consolidated financial statements, on May 15, 2019 the Company acquired all the outstanding capital stock of Precision Flow Systems (PFS) for approximately $1.46 billion, of which approximately $458 million was allocated to the customer relationships intangible asset. The fair values of the customer relationship intangible assets were determined using the multi-period excess earnings method based on discounted projected net cash flows. Management’s key assumptions used in estimating future cash flows included projected revenue growth rates and customer attrition rates.

The principal considerations for our determination that performing procedures relating to the acquisition of PFS - valuation of customer relationships is a critical audit matter are (i) there was significant judgment by management in determining the fair value estimate using the multi-period excess earnings method, which in turn led to a high degree of auditor judgment, subjectivity, and

F-3

effort in performing procedures and evaluating audit evidence related to management’s fair value estimate and significant assumptions, including the revenue growth rates and the customer attrition rates used in the cash flow projections and the discount rate used to estimate present value of the projected future cash flows, and (ii) the audit effort involved the use of professionals with specialized skill and knowledge to assist in performing these procedures and evaluating the audit evidence obtained from these procedures.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the acquisition accounting, including controls over management’s valuation of acquired customer relationships and controls over development of the assumptions related to the valuation of the customer relationships, including the revenue growth rates, customer attrition rates, and the discount rate. These procedures also included, among others, (i) reading the purchase agreement, (ii) testing management’s process for developing the fair value estimate of the acquired customer relationships, (iii) testing management’s cash flow projections used to estimate the fair value of the customer relationships, and (iv) evaluating the reasonableness of significant assumptions used by management in estimating the fair value of the customer relationships, including the revenue growth rates, customer attrition rates, and the discount rate. Evaluating the reasonableness of the revenue growth rates and customer attrition rates involved considering the past performance of the acquired businesses, as well as economic and industry forecasts. Evaluating the reasonableness of the discount rate involved considering the cost of capital of comparable businesses, other industry factors, and the implied rate of return on the overall transaction. Professionals with specialized skill and knowledge were used to assist in the evaluation of the Company’s multi-period excess earnings method used to determine the fair value estimate of the acquired customer relationships and certain assumptions, including customer attrition rates and the discount rate.

/s/ PricewaterhouseCoopers LLP

Charlotte, North Carolina

February 18, 2020

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-4

Ingersoll-Rand plc Consolidated Statements of Comprehensive Income In millions, except per share amounts
For the years ended December 31,		2019				2018				2017
Net revenues		$	16,598.9			$	15,668.2			$	14,197.6
Cost of goods sold		(11,451.5		)		(10,847.6		)		(9,811.6		)
Selling and administrative expenses		(3,129.8		)		(2,903.2		)		(2,720.7		)
Operating income		2,017.6				1,917.4				1,665.3
Interest expense		(243.0		)		(220.7		)		(215.8		)
Other income/(expense), net		(33.0		)		(36.4		)		(31.6		)
Earnings before income taxes		1,741.6				1,660.3				1,417.9
Provision for income taxes		(353.7		)		(281.3		)		(80.2		)
Earnings from continuing operations		1,387.9				1,379.0				1,337.7
Discontinued operations, net of tax		40.6				(21.5		)		(25.4		)
Net earnings		1,428.5				1,357.5				1,312.3
Less: Net earnings attributable to noncontrolling interests		(17.6		)		(19.9		)		(9.7		)
Net earnings attributable to Ingersoll-Rand plc		$	1,410.9			$	1,337.6			$	1,302.6
Amounts attributable to Ingersoll-Rand plc ordinary shareholders:
Continuing operations		$	1,370.3			$	1,359.1			$	1,328.0
Discontinued operations		40.6				(21.5		)		(25.4		)
Net earnings		$	1,410.9			$	1,337.6			$	1,302.6
Earnings (loss) per share attributable to Ingersoll-Rand plc ordinary shareholders:
Basic:
Continuing operations		$	5.67			$	5.50			$	5.21
Discontinued operations		0.17				(0.09		)		(0.10		)
Net earnings		$	5.84			$	5.41			$	5.11
Diluted:
Continuing operations		$	5.61			$	5.43			$	5.14
Discontinued operations		0.16				(0.08		)		(0.09		)
Net earnings		$	5.77			$	5.35			$	5.05

F-5

Ingersoll-Rand plc Consolidated Statements of Comprehensive Income (continued) In millions, except per share amounts
For the years ended December 31,		2019				2018				2017
Net earnings		$	1,428.5			$	1,357.5			$	1,312.3
Other comprehensive income (loss):
Currency translation		(37.1		)		(230.6		)		450.3
Cash flow hedges
Unrealized net gains (losses) arising during period		(2.7		)		1.2				(1.8		)
Net gains (losses) reclassified into earnings		0.7				0.9				3.6
Tax (expense) benefit		0.9				(0.1		)		—
Total cash flow hedges, net of tax		(1.1		)		2.0				1.8
Pension and OPEB adjustments:
Prior service costs for the period		(5.7		)		(16.0		)		(3.8		)
Net actuarial gains (losses) for the period		(41.9		)		12.8				39.6
Amortization reclassified into earnings		48.1				50.7				52.1
Settlements/curtailments reclassified to earnings		2.2				2.5				7.7
Currency translation and other		(1.4		)		7.5				(15.4		)
Tax (expense) benefit		(4.7		)		(17.2		)		(20.1		)
Total pension and OPEB adjustments, net of tax		(3.4		)		40.3				60.1
Other comprehensive income (loss), net of tax		(41.6		)		(188.3		)		512.2
Comprehensive income, net of tax		$	1,386.9			$	1,169.2			$	1,824.5
Less: Comprehensive income attributable to noncontrolling interests		(18.5		)		(16.9		)		(10.2		)
Comprehensive income attributable to Ingersoll-Rand plc		$	1,368.4			$	1,152.3			$	1,814.3

See accompanying notes to Consolidated Financial Statements.

F-6

Ingersoll-Rand plc

Consolidated Balance Sheets

In millions, except share amounts

December 31,		2019				2018
ASSETS
Current assets:
Cash and cash equivalents		$	1,303.6			$	903.4
Accounts and notes receivable, net		2,798.1				2,679.2
Inventories		1,712.2				1,677.8
Other current assets		403.3				471.6
Total current assets		6,217.2				5,732.0
Property, plant and equipment, net		1,806.2				1,730.8
Goodwill		6,783.1				5,959.5
Intangible assets, net		4,148.8				3,634.7
Other noncurrent assets		1,537.0				857.9
Total assets		$	20,492.3			$	17,914.9
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable		$	1,809.2			$	1,705.3
Accrued compensation and benefits		549.2				531.6
Accrued expenses and other current liabilities		1,853.0				1,728.2
Short-term borrowings and current maturities of long-term debt		650.5				350.6
Total current liabilities		4,861.9				4,315.7
Long-term debt		4,922.9				3,740.7
Postemployment and other benefit liabilities		1,221.9				1,192.9
Deferred and noncurrent income taxes		682.0				538.4
Other noncurrent liabilities		1,491.2				1,062.4
Total liabilities		13,179.9				10,850.1
Equity:
Ingersoll-Rand plc shareholders’ equity
Ordinary shares, $1 par value (262,804,939 and 266,405,347 shares issued at December 31, 2019 and 2018, respectively)		262.8				266.4
Ordinary shares held in treasury, at cost (24,499,897 and 24,500,054 shares at December 31, 2019 and 2018, respectively)		(1,719.4		)		(1,719.4		)
Retained earnings		9,730.8				9,439.8
Accumulated other comprehensive loss		(1,006.6		)		(964.1		)
Total Ingersoll-Rand plc shareholders’ equity		7,267.6				7,022.7
Noncontrolling interest		44.8				42.1
Total equity		7,312.4				7,064.8
Total liabilities and equity		$	20,492.3			$	17,914.9

See accompanying notes to Consolidated Financial Statements.

F-7

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, 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 (Stock Compensation)		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 (Revenue Recognition)		2.4				—				—			—				—				2.4				—				—
Adoption of ASU 2016-16 (Intra-Entity Transfers)		(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
Net earnings		1,428.5				—				—			—				—				1,410.9				—				17.6
Other comprehensive income (loss)		(41.6		)		—				—			—				—				—				(42.5		)		0.9
Shares issued under incentive stock plans		72.5				2.8				2.8			—				69.7				—				—				—
Repurchase of ordinary shares		(750.1		)		(6.4		)		(6.4	)						(136.1		)		(607.6		)		—				—
Share-based compensation		63.5				—				—			—				66.4				(2.9		)		—				—
Dividends declared to noncontrolling interest		(15.8		)		—				—			—				—				—				—				(15.8		)
Cash dividends declared ($2.12 per share)		(509.5		)		—				—			—				—				(509.5		)		—				—
Other		0.1				—				—			—				—				0.1				—				—
Balance at December 31, 2019		$	7,312.4			$	262.8			262.8			$	(1,719.4	)		$	—			$	9,730.8			$	(1,006.6	)		$	44.8

See accompanying notes to Consolidated Financial Statements.

F-8

Ingersoll-Rand plc

Consolidated Statements of Cash Flows

In millions

For the years ended December 31,		2019				2018				2017
Cash flows from operating activities:
Net earnings		$	1,428.5			$	1,357.5			$	1,312.3
Discontinued operations, net of tax		(40.6		)		21.5				25.4
Adjustments for non-cash transactions:
Depreciation and amortization		397.4				361.5				353.3
Pension and other postretirement benefits		110.2				104.2				113.0
Stock settled share-based compensation		66.4				78.8				70.8
Other non-cash items, net		54.0				(129.2		)		(121.9		)
Changes in other assets and liabilities, net of the effects of acquisitions:
Accounts and notes receivable		(53.2		)		(236.0		)		(156.7		)
Inventories		18.4				(169.9		)		(112.4		)
Other current and noncurrent assets		(229.5		)		35.3				(206.8		)
Accounts payable		80.6				120.7				167.2
Other current and noncurrent liabilities		124.1				(69.9		)		117.4
Net cash provided by (used in) continuing operating activities		1,956.3				1,474.5				1,561.6
Net cash provided by (used in) discontinued operating activities		(36.8		)		(66.7		)		(38.1		)
Net cash provided by (used in) operating activities		1,919.5				1,407.8				1,523.5
Cash flows from investing activities:
Capital expenditures		(254.1		)		(365.6		)		(221.3		)
Acquisitions and equity method investments, net of cash acquired		(1,539.7		)		(285.2		)		(157.6		)
Proceeds from sale of property, plant and equipment		3.8				22.1				1.5
Other investing activities, net		10.0				(0.7		)		2.7
Net cash provided by (used in) investing activities		(1,780.0		)		(629.4		)		(374.7		)
Cash flows from financing activities:
Short-term borrowings (payments), net		—				(6.4		)		(4.0		)
Proceeds from long-term debt		1,497.9				1,147.0				—
Payments of long-term debt		(7.5		)		(1,123.0		)		(7.7		)
Net proceeds from (payments of) debt		1,490.4				17.6				(11.7		)
Debt issuance costs		(13.1		)		(12.0		)		(0.2		)
Dividends paid to ordinary shareholders		(510.1		)		(479.5		)		(430.1		)
Dividends paid to noncontrolling interests		(15.8		)		(41.4		)		(15.8		)
Acquisition of noncontrolling interest		—				—				(6.8		)
Proceeds from shares issued under incentive plans		116.8				68.9				76.7
Repurchase of ordinary shares		(750.1		)		(900.2		)		(1,016.9		)
Other financing activities, net		(47.6		)		(32.2		)		(27.7		)
Net cash provided by (used in) financing activities		270.5				(1,378.8		)		(1,432.5		)
Effect of exchange rate changes on cash and cash equivalents		(9.8		)		(45.6		)		118.4
Net increase (decrease) in cash and cash equivalents		400.2				(646.0		)		(165.3		)
Cash and cash equivalents – beginning of period		903.4				1,549.4				1,714.7
Cash and cash equivalents – end of period		$	1,303.6			$	903.4			$	1,549.4
Cash paid during the year for:
Interest		$	220.9			$	200.6			$	210.0
Income taxes, net of refunds		$	425.3			$	375.4			$	286.7

See accompanying notes to Consolidated Financial Statements.

F-9

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 American Standard®, ARO®, Club Car®, Ingersoll-Rand®, Thermo King® and Trane®.

NOTE 2. PROPOSED REVERSE MORRIS TRUST TRANSACTION

In April 2019, the Company and Gardner Denver Holdings, Inc. (GDI) announced that they entered into definitive agreements pursuant to which the Company will separate its Industrial segment businesses (IR Industrial) by way of spin-off to the Company’s shareholders and then combine with GDI to create a new company focused on flow creation and industrial technologies. This business is expected to be renamed Ingersoll-Rand Inc. The Company’s remaining HVAC and transport refrigeration businesses, reported under the Climate segment, will focus on climate control solutions for buildings, homes and transportation. The Company will rename its remaining business Trane Technologies plc at the time the transaction closes. The transaction is expected to close by early 2020, subject to approval by GDI’s shareholders, regulatory approvals and customary closing conditions.

The transaction will be effected through a Reverse Morris Trust transaction, pursuant to which IR Industrial is expected to be spun-off to the Company’s shareholders and simultaneously merged with and surviving as a wholly-owned subsidiary of GDI. At the time of close, Trane Technologies plc will receive $1.9 billion in cash from IR Industrial, funded by newly-issued debt expected to be deemed issued under an existing credit agreement of GDI upon consummation of the merger. Upon close of the transaction, existing shareholders of the Company will receive 50.1% of the shares of Ingersoll-Rand Inc. on a fully diluted basis. Existing GDI shareholders will own 49.9% of the shares of Ingersoll-Rand Inc. on a fully diluted basis. The transaction is expected to be tax-free to the Company’s respective shareholders for U.S. federal income tax purposes.

NOTE 3. 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 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).

F-10

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 reflected in the Consolidated Statement of Comprehensive Income in the period that they are determined. The Company reserved $42.2 million and $32.7 million for doubtful accounts as of December 31, 2019 and 2018, 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, 2019 and 2018, approximately 54% and 56%, 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.

F-11

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	17	years
Patents	10	years
Other	10	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.

Business Combinations: In accordance with ASC 805, "Business Combinations" (ASC 805), acquisitions are recorded using the acquisition method of accounting. The Company includes the operating results of acquired entities from their respective dates of acquisition. The Company recognizes and measures the identifiable assets acquired, liabilities assumed, and any non-controlling interest as of the acquisition date fair value. The excess, if any, of total consideration transferred in a business combination over the fair value of identifiable assets acquired, liabilities assumed , and any non-controlling interest is recognized as goodwill. Costs incurred as a result of a business combination other than costs related to the issuance of debt or equity securities are recorded in the period the costs are incurred.

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 (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. 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 remediation 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.

F-12

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. For these arrangements, the cost-to-cost input method is used as it best depicts the transfer of control to the customer that occurs as the Company incurs costs. See Note 13 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, 2019, 2018 and 2017, these expenditures amounted to $237.0 million, $228.7 million and $210.8 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.

Recently Adopted Accounting Pronouncements

In February 2016, the FASB issued ASU 2016-02, “Leases” (ASC 842), 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 Company adopted this standard using a modified-retrospective approach as of January 1, 2019. Under this approach, the Company recognized and recorded a right-of-use (ROU) asset and related lease liability on the Consolidated Balance Sheet of $521 million with no impact to Retained earnings. Reporting periods prior to January 1, 2019 continue to be presented in accordance with previous lease accounting guidance under GAAP. As part of the adoption, the Company elected the package of practical expedients permitted under the transition guidance which includes the ability to carry forward historical lease classification. Refer to Note 11, “Leases,” for a further discussion on the adoption of ASC 842.

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

F-13

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 13, “Revenue,” for a further discussion on the adoption of ASC 606.

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.

Recently Issued Accounting Pronouncements

In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes" (ASU 2019-12), which simplifies certain aspects of income tax accounting guidance in ASC 740, reducing the complexity of its application. Certain exceptions to ASC 740 presented within the ASU include: intraperiod tax allocation, deferred tax liabilities related to outside basis differences, year-to-date loss in interim periods, among others. ASU 2019-12 is effective for annual reporting periods beginning after December 15, 2020 including interim periods therein with early adoption permitted. The Company is currently assessing the impact of the ASU on its financial statements.

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. Upon adoption, this ASU will be applied on a prospective basis and is not expected to have a material impact on the financial statements.

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses” (ASU 2016-13), which changes the impairment model for most financial assets and certain other instruments from an incurred loss model to an expected loss model. In addition, the guidance also requires incremental disclosures regarding allowances and credit quality indicators. ASU 2016-13 is required to be adopted using the modified-retrospective approach and will be effective in fiscal years beginning after December 15, 2019, including interim periods within those fiscal years, with early adoption permitted. Upon adoption, this ASU is not expected to have a material impact on the financial statements.

NOTE 4. INVENTORIES

Depending on the business, U.S. inventories are stated at the lower of cost or market using the LIFO method or the lower of cost or market using the 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		2019				2018
Raw materials		$	613.1			$	550.5
Work-in-process		209.2				182.0
Finished goods		975.5				1,028.8
		1,797.8				1,761.3
LIFO reserve		(85.6		)		(83.5		)
Total		$	1,712.2			$	1,677.8

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 $126.4 million and $119.9 million at December 31, 2019 and December 31, 2018, respectively.

F-14

NOTE 5. PROPERTY, PLANT AND EQUIPMENT

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

In millions		2019				2018
Land		$	60.6			$	53.2
Buildings		921.2				870.7
Machinery and equipment		2,210.0				2,079.9
Software		847.9				831.4
		4,039.7				3,835.2
Accumulated depreciation		(2,233.5		)		(2,104.4		)
Total		$	1,806.2			$	1,730.8

Depreciation expense for the years ended December 31, 2019, 2018 and 2017 was $221.2 million, $217.4 million and $217.3 million, which include amounts for software amortization of $25.3 million, $25.7 million and $28.6 million, respectively.

NOTE 6. 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 reporting unit may be less than its carrying value.

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

In millions		Climate				Industrial				Total
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
Acquisitions (1)		45.3				801.3				846.6
Currency translation		(18.8		)		(4.2		)		(23.0		)
Net balance as of December 31, 2019		$	5,125.7			$	1,657.4			$	6,783.1

(1) Refer to Note 19, "Acquisitions and Divestitures" for more information regarding acquisitions.

The net goodwill balances at December 31, 2019, 2018 and 2017 include $2,496.0 million of accumulated impairment. The accumulated impairment relates entirely to a charge in 2008 associated with the Climate segment.

NOTE 7. 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.

F-15

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

		2019												2018
In millions		Gross carrying amount				Accumulated amortization				Net carrying amount				Gross carrying amount				Accumulated amortization				Net carrying amount
Customer relationships		$	2,562.1			$	(1,321.8	)		$	1,240.3			$	2,086.8			$	(1,176.3	)		$	910.5
Patents		207.6				(187.6		)		20.0				206.6				(182.0		)		24.6
Other		124.5				(73.1		)		51.4				84.5				(54.4		)		30.1
Total finite-lived intangible assets		$	2,894.2			$	(1,582.5	)		$	1,311.7			$	2,377.9			$	(1,412.7	)		$	965.2
Trademarks (indefinite-lived)		2,837.1				—				2,837.1				2,669.5				—				2,669.5
Total		$	5,731.3			$	(1,582.5	)		$	4,148.8			$	5,047.4			$	(1,412.7	)		$	3,634.7

Intangible asset amortization expense for 2019, 2018 and 2017 was $171.3 million, $139.3 million and $132.0 million, respectively. Future estimated amortization expense on existing intangible assets in each of the next five years amounts to approximately $177 million for 2020, $174 million for 2021, $174 million for 2022, $173 million for 2023, and $169 million for 2024. As a result of acquisitions that occurred throughout 2019, the Company recorded $687.7 million of intangible assets based on their estimated fair value. Refer to Note 19, "Acquisitions and Divestitures" for more information regarding acquisitions.

NOTE 8. DEBT AND CREDIT FACILITIES

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

In millions		2019				2018
Debentures with put feature		$	343.0			$	343.0
2.625% Senior notes due 2020 (1)		299.8				—
Other current maturities of long-term debt		7.7				7.6
Total		$	650.5			$	350.6

(1) The 2.625% Senior notes are due in May 2020.

The Company's short-term obligations primarily consist of current maturities of long-term debt. The weighted-average interest rate for Short-term borrowings and current maturities of long-term debt at December 31, 2019 and 2018 was 4.6% and 6.3%, 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, 2019. 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, 2019 and December 31, 2018.

Debentures with Put Feature

At December 31, 2019 and December 31, 2018, 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 2019, subject to the notice requirement. No material exercises were made in 2019 or 2018.

F-16

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

In millions		2019				2018
2.625% Senior notes due 2020 (1)		$	—			$	299.4
2.900% Senior notes due 2021		299.1				298.3
9.000% Debentures due 2021		124.9				124.9
4.250% Senior notes due 2023		697.8				697.1
7.200% Debentures due 2020-2025		37.3				44.8
3.550% Senior notes due 2024		496.6				495.9
6.480% Debentures due 2025		149.7				149.7
3.500% Senior notes due 2026		396.8				—
3.750% Senior notes due 2028		545.1				544.5
3.800% Senior notes due 2029		743.6				—
5.750% Senior notes due 2043		494.5				494.3
4.650% Senior notes due 2044		295.9				295.8
4.300% Senior notes due 2048		296.0				295.9
4.500% Senior notes due 2049		345.5				—
Other loans and notes		0.1				0.1
Total		$	4,922.9			$	3,740.7

(1) The 2.625% Senior notes are due in May 2020.

Scheduled maturities of long-term debt, including current maturities, as of December 31, 2019 are as follows:

In millions
2020	$	650.5
2021	431.6
2022	7.5
2023	705.3
2024	504.1
Thereafter	3,274.4
Total	$	5,573.4

Issuance of Senior Notes

In March 2019, the Company issued $1.5 billion principal amount of senior notes in three tranches through Ingersoll-Rand Luxembourg Finance S.A., an indirect, wholly-owned subsidiary. The tranches consist of $400 million aggregate principal amount of 3.500% senior notes due 2026, $750 million aggregate principal amount of 3.800% senior notes due 2029 and $350 million aggregate principal amount of 4.500% senior notes due 2049. The notes are fully and unconditionally guaranteed by each of Ingersoll Rand plc, Ingersoll-Rand Global Holding Company Limited, Ingersoll-Rand Lux International Holding Company S.à.r.l, Ingersoll-Rand Irish Holdings Unlimited Company, and Ingersoll-Rand Company. 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. During the three months ended March 31, 2019, the Company capitalized $13.1 million of debt issuance costs which will be amortized over the remaining life of the debt. The Company used the net proceeds to finance the acquisition of Precision Flow Systems (PFS) and for general corporate purposes.

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

F-17

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, one of which matures in March 2021 and the other in April 2023, 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, 2019 and December 31, 2018.

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, 2019 and December 31, 2018 was $6.2 billion and $4.2 billion, 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, 2019 are the same as those used at December 31, 2018.

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 23 for the Company's current guarantor structure.

NOTE 9. 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 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		2019				2018				2019				2018
Derivatives designated as hedges:
Currency derivatives		$	0.1			$	1.3			$	3.9			$	0.7
Derivatives not designated as hedges:
Currency derivatives		1.2				0.9				3.3				0.6
Total derivatives		$	1.3			$	2.2			$	7.2			$	1.3

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

F-18

Currency Hedging Instruments

The notional amount of the Company’s currency derivatives was $0.5 billion and $0.6 billion at December 31, 2019 and 2018, respectively. At December 31, 2019 and 2018, a net loss of $2.9 million and a net gain of $0.5 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 loss of $1.6 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, 2019, 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 2015, 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 $6.0 million and $6.7 million at December 31, 2019 and at December 31, 2018. The deferred gain at December 31, 2019 will continue to be amortized over the term of notes with maturities ranging from 2023 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, 2019 or 2018.

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		2019				2018				2017					2019				2018				2017
Currency derivatives designated as hedges		$	(2.7	)		$	1.2			$	(1.8	)		Cost of goods sold		$	(1.4	)		$	(0.8	)		$	(3.1	)
Interest rate swaps & locks		—				—				—				Interest expense		0.7				(0.1		)		(0.5		)
Total		$	(2.7	)		$	1.2			$	(1.8	)				$	(0.7	)		$	(0.9	)		$	(3.6	)

The following table represents the amounts associated with derivatives not designated as hedges affecting Other income(expense), net for the years ended December 31:

In millions		Amount of gain (loss) recognized in Net earnings
2019				2018				2017
Currency derivatives not designated as hedges		$	(6.4	)		$	(29.6	)		$	58.0
Total		$	(6.4	)		$	(29.6	)		$	58.0

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.

F-19

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 for the years ended December 31:

		Classification and amount of gain (loss) recognized in income on cash flow hedging relationships
		2019								2018
In millions		Cost of goods sold				Interest expense				Cost of goods sold				Interest expense
Total amounts presented in the Consolidated Statements of Comprehensive Income		$	(11,451.5	)		$	(243.0	)		$	(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		$	(1.4	)		$	—			$	(0.8	)		$	—
Amount excluded from effectiveness testing recognized in net earnings based on changes in fair value and amortization		$	(3.0	)		$	—			$	(0.1	)		$	—
Interest rate swaps & locks:
Amount of gain (loss) reclassified from AOCI and recognized into Net earnings		$	—			$	0.7			$	—			$	(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 10. 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.

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, 2019:

In Millions	Fair Value				Fair value measurements
	Level 1				Level 2				Level 3
Assets:
Derivative instruments	$	1.3			$	—			$	1.3			$	—
Liabilities:
Derivative instruments	$	7.2			$	—			$	7.2			$	—

F-20

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			$	—

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, 2019 are the same as those used at December 31, 2018. There have been no transfers between levels of the fair value hierarchy.

NOTE 11. LEASES

The Company’s lease portfolio includes various contracts for real estate, vehicles, information technology and other equipment. At contract inception, the Company determines a lease exists if the contract conveys the right to control an identified asset for a period of time in exchange for consideration. Control is considered to exist when the lessee has the right to obtain substantially all of the economic benefits from the use of an identified asset as well as the right to direct the use of that asset. If a contract is considered to be a lease, the Company recognizes a lease liability based on the present value of the future lease payments, with an offsetting entry to recognize a right-of-use asset. Options to extend or terminate a lease are included when it is reasonably certain an option will be exercised. As a majority of the Company’s leases do not provide an implicit rate within the lease, an incremental borrowing rate is used which is based on information available at the commencement date.

The following table includes a summary of the Company's lease portfolio and Balance Sheet classification:

In millions	Classification		December 31, 2019				January 1, 2019
Assets
Operating lease right-of-use assets (1)	Other noncurrent assets		$	560.0			$	517.1
Liabilities
Operating lease current	Other current liabilities		172.0				160.3
Operating lease noncurrent	Other noncurrent liabilities		394.4				360.5

(1) Per ASC 842, prepaid lease payments and lease incentives are recorded as part of the right-of-use asset. The net impact was $6.4 million and $3.7 million at December 31, 2019 and January 1, 2019, respectively.

The Company elected the practical expedient as an accounting policy election by class of underlying asset to account for each separate lease component of a contract and its associated non-lease component as a single lease component. This practical expedient was applied to all underlying asset classes. In addition, the Company elected the practical expedient to utilize a portfolio approach for the vehicle, information technology and equipment asset classes as the application of the lease model to the portfolio would not differ materially from the application of the lease model to the individual leases within the portfolio.

F-21

The following table includes lease costs and related cash flow information for the year ended December 31:

In millions	2019
Operating lease expense	$	206.1
Variable lease expense	29.9
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	204.2
Right-of-use assets obtained in exchange for new operating lease liabilities	201.9

Operating lease expense is recognized on a straight-line basis over the lease term. In addition, the Company has certain leases that contain variable lease payments which are based on an index, a rate referenced in the lease or on the actual usage of the leased asset. These payments are not included in the right-to-use asset or lease liability and are expensed as incurred as variable lease expense. The Company elected the practical expedient as an accounting policy election by class of underlying asset to not apply the balance sheet recognition criteria required in ASC 842 to leases with an initial lease term of twelve months or less. Payments for these leases are recognized on a straight-line basis over the lease term.

Maturities of lease obligations were as follows:

In millions	December 31, 2019
Operating leases:
2020	$	192.3
2021	151.6
2022	106.8
2023	75.3
2024	40.0
After 2024	68.1
Total lease payments	$	634.1
Less: Interest	(67.7		)
Present value of lease liabilities	$	566.4

At December 31, 2019, the weighted average remaining lease term was 4.7 years with a weighted average discount rate of 3.9%.

Prior Period Disclosures

As a result of adopting ASC 842 on January 1, 2019, the Company is required to present future minimum lease commitments for operating leases having initial or noncancellable lease terms in excess of one year that were previously disclosed in our 2018 Annual Report on Form 10-K and accounted for under previous lease guidance. Commitments as of December 31, 2018 were as follows:

In millions	December 31, 2018
Operating leases
2019	$	197.1
2020	152.0
2021	107.4
2022	68.4
2023	42.2
After 2023	42.7
Total	$	609.8

F-22

NOTE 12. 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.

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

In millions		2019				2018
Change in benefit obligations:
Benefit obligation at beginning of year		$	3,465.3			$	3,742.2
Service cost		73.6				75.0
Interest cost		119.1				109.7
Employee contributions		1.1				1.1
Amendments		5.7				16.1
Actuarial (gains) losses		422.8				(224.8		)
Benefits paid		(225.3		)		(218.9		)
Currency translation		9.0				(34.8		)
Curtailments, settlements and special termination benefits		(3.1		)		(4.6		)
Other, including expenses paid		(17.0		)		4.3
Benefit obligation at end of year		$	3,851.2			$	3,465.3
Change in plan assets:
Fair value at beginning of year		$	2,766.9			$	3,063.1
Actual return on assets		526.1				(125.9		)
Company contributions		83.1				86.9
Employee contributions		1.1				1.1
Benefits paid		(225.3		)		(218.9		)
Currency translation		12.0				(32.8		)
Settlements		(5.3		)		(9.8		)
Other, including expenses paid		(21.8		)		3.2
Fair value of assets end of year		$	3,136.8			$	2,766.9
Net unfunded liability		$	(714.4	)		$	(698.4	)
Amounts included in the balance sheet:
Other noncurrent assets		$	50.4			$	49.9
Accrued compensation and benefits		(8.7		)		(25.9		)
Postemployment and other benefit liabilities		(756.1		)		(722.4		)
Net amount recognized		$	(714.4	)		$	(698.4	)

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, 2019, approximately seven percent of the Company's projected benefit obligation relates to plans that cannot be funded.

F-23

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, 2018		$	(31.2	)		$	(820.6	)		$	(851.8	)
Current year changes recorded to AOCI		(5.7		)		(35.2		)		(40.9		)
Amortization reclassified to earnings		5.0				54.3				59.3
Settlements/curtailments reclassified to earnings		—				2.2				2.2
Currency translation and other		(0.5		)		(0.9		)		(1.4		)
December 31, 2019		$	(32.4	)		$	(800.2	)		$	(832.6	)

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

		2019			2018
Discount rate:
U.S. plans		3.22	%		4.21	%
Non-U.S. plans		1.66	%		2.47	%
Rate of compensation increase:
U.S. plans		4.00	%		4.00	%
Non-U.S. plans		3.75	%		4.00	%

The accumulated benefit obligation for all defined benefit pension plans was $3,734.5 million and $3,364.6 million at December 31, 2019 and 2018, 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 $3,405.7 million, $3,308.2 million and $2,645.1 million, respectively, as of December 31, 2019, and $3,075.2 million, $2,992.0 million and $2,330.4 million, respectively, as of December 31, 2018.

Pension benefit payments are expected to be paid as follows:

In millions
2020	$	215.3
2021	219.1
2022	226.1
2023	230.7
2024	221.0
2025-2029	1,136.7

F-24

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

In millions		2019				2018				2017
Service cost		$	73.6			$	75.0			$	70.8
Interest cost		119.1				109.7				109.0
Expected return on plan assets		(138.5		)		(146.6		)		(141.7		)
Net amortization of:
Prior service costs (benefits)		5.0				4.2				3.8
Plan net actuarial (gains) losses		54.3				51.3				56.8
Net periodic pension benefit cost		113.5				93.6				98.7
Net curtailment, settlement, and special termination benefits (gains) losses		4.5				2.3				5.6
Net periodic pension benefit cost after net curtailment and settlement (gains) losses		$	118.0			$	95.9			$	104.3
Amounts recorded in continuing operations:
Operating income		$	69.8			$	72.7			$	68.2
Other income/(expense), net		36.1				14.6				25.4
Amounts recorded in discontinued operations		12.1				8.6				10.7
Total		$	118.0			$	95.9			$	104.3

Net periodic pension benefit cost for 2020 is projected to be approximately $89 million. The amounts expected to be recognized in net periodic pension benefit cost during 2020 for prior service cost and plan net actuarial losses are approximately $5 million and $47 million, respectively.

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

		2019			2018			2017
Discount rate:
U.S. plans
Service cost		4.24	%		3.70	%		4.18	%
Interest cost		3.88	%		3.24	%		3.36	%
Non-U.S. plans
Service cost		2.81	%		2.52	%		2.66	%
Interest cost		2.83	%		2.46	%		2.50	%
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		5.75	%		5.50	%		5.50	%
Non-U.S. plans		3.25	%		3.25	%		3.25	%

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-25

The fair values of the Company’s pension plan assets at December 31, 2019 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		$	7.0			$	26.3			$	—			$	—			$	33.3
Equity investments:
Registered mutual funds – equity specialty		—				—				—				61.5				61.5
Commingled funds – equity specialty		—				—				—				665.2				665.2
		—				—				—				726.7				726.7
Fixed income investments:
U.S. government and agency obligations		—				528.5				—				—				528.5
Corporate and non-U.S. bonds(a)		—				1,393.0				0.4				—				1,393.4
Asset-backed and mortgage-backed securities		—				70.9				—				—				70.9
Registered mutual funds – fixed income specialty		—				—				—				103.3				103.3
Commingled funds – fixed income specialty		—				—				—				127.6				127.6
Other fixed income(b)		—				—				26.0				—				26.0
		—				1,992.4				26.4				230.9				2,249.7
Derivatives		—				0.4				—				—				0.4
Real estate(c)		—				—				3.4				—				3.4
Other(d)		—				—				114.1				—				114.1
Total assets at fair value		$	7.0			$	2,019.1			$	143.9			$	957.6			$	3,127.6
Receivables and payables, net																		9.2
Net assets available for benefits																		$	3,136.8

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

(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-26

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 10, "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 $83.1 million in 2019, $86.9 million in 2018, and $101.4 million in 2017 and currently projects that it will contribute approximately $90 million to its plans worldwide in 2020. 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 2020 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 $140.2 million, $131.9 million, and $118.7 million in 2019, 2018 and 2017, respectively. The Company’s contributions relating to non-U.S. defined contribution plans and other non-U.S. benefit plans were $56.7 million, $52.0 million and $47.7 million in 2019, 2018 and 2017, 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, 2019, 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		2019				2018				2017
Total contributions		$	10.4			$	9.8			$	9.0

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-27

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

In millions		2019				2018
Benefit obligation at beginning of year		$	442.7			$	528.0
Service cost		2.6				2.8
Interest cost		14.8				14.4
Plan participants’ contributions		7.7				9.1
Actuarial (gains) losses		6.7				(60.4		)
Benefits paid, net of Medicare Part D subsidy (1)		(45.6		)		(50.2		)
Other		(0.1		)		(1.0		)
Benefit obligations at end of year		$	428.8			$	442.7

(1) Amounts are net of Medicare Part D subsidy of $0.8 million and $0.9 million in 2019 and 2018, respectively

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

In millions		December 31, 2019				December 31, 2018
Accrued compensation and benefits		$	(41.0	)		$	(45.1	)
Postemployment and other benefit liabilities		(387.8		)		(397.6		)
Total		$	(428.8	)		$	(442.7	)

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, 2018		$	0.3			$	90.4			$	90.7
Gain (loss) in current period		—				(6.7		)		(6.7		)
Amortization reclassified to earnings		(0.3		)		(10.9		)		(11.2		)
Balance at December 31, 2019		$	—			$	72.8			$	72.8

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

In millions		2019				2018				2017
Service cost		$	2.6			$	2.8			$	3.1
Interest cost		14.8				14.4				15.7
Net amortization of:
Prior service costs (benefits)		(0.3		)		(3.8		)		(8.6		)
Net actuarial (gains) losses		(10.9		)		(1.0		)		0.1
Net periodic postretirement benefit cost		$	6.2			$	12.4			$	10.3
Amounts recorded in continuing operations:
Operating income		$	2.6			$	2.8			$	3.1
Other income/(expense), net		3.2				7.3				5.6
Amounts recorded in discontinued operations		0.4				2.3				1.6
Total		$	6.2			$	12.4			$	10.3

Postretirement cost for 2020 is projected to be approximately $8 million. The amount expected to be recognized in net periodic postretirement benefits cost in 2020 for net actuarial gains is approximately $5 million.

F-28

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

		2019			2018			2017
Discount rate:
Benefit obligations at December 31		2.99	%		4.05	%		3.38	%
Net periodic benefit cost
Service cost		4.13	%		3.47	%		3.82	%
Interest cost		3.67	%		2.94	%		2.99	%
Assumed health-care cost trend rates at December 31:
Current year medical inflation		6.75	%		6.45	%		6.85	%
Ultimate inflation rate		4.75	%		5.00	%		5.00	%
Year that the rate reaches the ultimate trend rate		2028			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, 2019:

In millions		1% Increase				1% Decrease
Effect on total of service and interest cost components of current year benefit cost		$	0.5			$	(0.4	)
Effect on benefit obligation at year-end		11.8				(10.6		)

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
2020	$	41.9
2021	41.5
2022	39.5
2023	37.1
2024	35.0
2025 — 2029	142.7

NOTE 13. 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. For these arrangements, the cost-to-cost input method is used as it best depicts the transfer of control to the customer that occurs as the Company incurs costs.

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.

F-29

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 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 22, "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 includes variable consideration in the estimated transaction price when it is probable that significant reversal of revenue recognized would not occur when the uncertainty associated with variable consideration is subsequently resolved. The Company considers historical data in determining its best estimates of variable consideration, and the related accruals are recorded using the expected value method. The Company has performance guarantees related to energy savings contracts that are provided under the maintenance portion of contracting and installation agreements extending from 2020-2047. 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 and whether the sales price for each obligation is representative of standalone selling price. If available, the Company utilizes observable prices for goods or services sold separately to similar customers in similar circumstances to evaluate relative standalone selling price. List prices are used if they are determined to be representative of standalone selling prices. Where necessary, the Company ensures that the total transaction price is then allocated to the distinct performance obligations based on the determination of their relative standalone selling price at the inception of the arrangement.

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.

F-30

Disaggregated Revenue

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

In millions	2019				2018
Climate
United States	$	9,143.5			$	8,285.4
Non-U.S.	3,932.4				4,058.4
Total Climate	$	13,075.9			$	12,343.8
Industrial
United States	$	1,811.4			$	1,763.6
Non-U.S.	1,711.6				1,560.8
Total Industrial	$	3,523.0			$	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	2019				2018
Climate
Equipment	$	8,968.1			$	8,425.6
Services and parts	4,107.8				3,918.2
Total Climate	$	13,075.9			$	12,343.8
Industrial
Equipment	$	2,171.4			$	2,023.3
Services and parts	1,351.6				1,301.1
Total Industrial	$	3,523.0			$	3,324.4

Revenue from goods and services transferred to customers at a point in time accounted for approximately 85% and 84% of the Company's revenue for the years ended December 31, 2019 and 2018, respectively.

Contract Balances

The opening and closing balances of contract assets and contract liabilities arising from contracts with customers for the period ended December 31, 2019 and December 31, 2018 were as follows:

In millions	2019				2018
Contract assets	$	190.2			$	210.9
Contract liabilities	1,042.9				846.2

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 years ended December 31, 2019 and 2018, changes in contract asset and liability balances were not materially impacted by any other factors.

Approximately 58% of the contract liability balance at December 31, 2018 was recognized as revenue during the year ended December 31, 2019. Additionally, approximately 32% of the contract liability balance at December 31, 2019 was classified as noncurrent and not expected to be recognized as revenue in the next 12 months.

F-31

NOTE 14. 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, 2019 or 2018.

The changes in ordinary shares and treasury shares for the year ended December 31, 2019 are as follows:

In millions	Ordinary shares issued			Ordinary shares held in treasury
December 31, 2018	266.4			24.5
Shares issued under incentive plans	2.8			—
Repurchase of ordinary shares	(6.4	)		—
December 31, 2019	262.8			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 (the 2017 Authorization) upon completion of the prior authorized share repurchase program. Repurchases under the 2017 Authorization began in May 2017 and ended in December 2018, completing the program. In October 2018, the Company's Board of Directors authorized the repurchase of up to $1.5 billion of its ordinary shares under a share repurchase program (2018 Authorization) upon completion of the 2017 Authorization. No material amounts were repurchased under this program in 2018. During the year ended December 31, 2019, the Company repurchased and canceled approximately $750 million of its ordinary shares leaving approximately $750 million remaining under the 2018 Authorization.

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, 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	)
Other comprehensive income (loss) attributable to Ingersoll-Rand plc		(1.1		)		(3.4		)		(38.0		)		(42.5		)
December 31, 2019		$	5.6			$	(457.4	)		$	(554.8	)		$	(1,006.6	)

The amounts of Other comprehensive income (loss) attributable to noncontrolling interests for 2019, 2018 and 2017 were $0.9 million, $(3.0) million and $0.5 million, respectively, related to currency translation.

NOTE 15. 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 19.1 million remains available as of December 31, 2019 for future incentive awards.

F-32

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		2019				2018				2017
Stock options		$	20.2			$	23.5			$	19.5
RSUs		26.5				30.4				26.4
PSUs		17.9				23.0				23.0
Deferred compensation		3.1				3.4				3.1
Other		3.5				0.5				1.6
Pre-tax expense		71.2				80.8				73.6
Tax benefit		(17.3		)		(19.6		)		(28.2		)
After-tax expense		$	53.9			$	61.2			$	45.4

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

	2019							2018							2017
	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	1,286,857			$	17.17			1,541,025			$	15.51			1,518,335			$	13.46
RSUs	268,465			$	102.98			327,411			$	90.07			372,443			$	81.09
Performance shares (1)	312,362			$	111.12			363,342			$	106.31			419,404			$	93.68

(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:

		2019			2018			2017
Dividend yield		2.06	%		2.00	%		2.00	%
Volatility		21.46	%		21.64	%		22.46	%
Risk-free rate of return		2.46	%		2.48	%		1.80	%
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.

•	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.

F-33

Changes in options outstanding under the plans for the years 2019, 2018 and 2017 are as follows:

		Shares subject to option			Weighted- average exercise price				Aggregate intrinsic value (millions)				Weighted- average remaining life (years)
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
December 31, 2018		6,285,351			66.95
Granted		1,286,857			101.42
Exercised		(2,076,338	)		56.17
Cancelled		(76,624	)		92.38
Outstanding December 31, 2019		5,419,246			$	78.91			$	292.7			6.8
Exercisable December 31, 2019		2,689,923			$	64.22			$	184.8			5.4

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

										Options outstanding									Options exercisable
Range of exercise price										Number outstanding at December 31, 2019			Weighted- average remaining life (years)		Weighted- average exercise price				Number outstanding at December 31, 2019			Weighted- average remaining life (years)		Weighted- average exercise price
$	20.01			—		$	30.00			42,296			1.0		$	24.72			42,296			1.0		$	24.72
30.01				—		40.00				140,778			1.7		34.07				140,778			1.7		34.07
40.01				—		50.00				820,185			5.0		48.46				820,185			5.0		48.46
50.01				—		60.00				291,706			3.9		59.41				291,706			3.9		59.41
60.01				—		70.00				417,212			4.7		66.99				417,212			4.7		66.99
70.01				—		80.00				14,031			7.0		75.67				—			0.0		—
80.01				—		90.00				1,228,171			6.8		80.84				638,735			6.6		80.33
90.01				—		100.00				1,242,338			7.8		90.12				334,982			7.8		90.07
100.01				—		110.00				1,193,089			8.9		101.29				4,029			7.9		101.22
110.01				—		125.00				29,440			9.5		122.34				—			0.0		—
$	24.23			—		$	124.95			5,419,246			6.8		$	78.91			2,689,923			5.4		$	64.22

At December 31, 2019, there was $12.1 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, 2019 and 2018 was $124.5 million and $74.1 million, respectively. Generally, stock options expire ten years from their date of grant.

F-34

The following table summarizes RSU activity for the years 2019, 2018 and 2017:

		RSUs			Weighted- average grant date fair value
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
Granted		268,465			102.98
Vested		(364,817	)		70.26
Cancelled		(20,947	)		89.64
Outstanding and unvested at December 31, 2019		604,340			$	93.56

At December 31, 2019, there was $16.3 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) 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.

F-35

The following table summarizes PSU activity for the maximum number of shares that may be issued for the years 2019, 2018 and 2017:

		PSUs			Weighted-average grant date fair value
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
Granted		312,362			111.12
Vested		(539,402	)		53.76
Forfeited		(34,194	)		106.14
Outstanding and unvested at December 31, 2019		984,930			$	103.12

At December 31, 2019, there was $17.6 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 16. 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		2019				2018				2017
Climate		$	50.8			$	34.1			$	42.3
Industrial		37.5				49.9				14.5
Corporate and Other		1.8				9.4				4.9
Total		$	90.1			$	93.4			$	61.7
Cost of goods sold		$	72.7			$	72.3			$	46.8
Selling and administrative expenses		17.4				21.1				14.9
Total		$	90.1			$	93.4			$	61.7

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The changes in the restructuring reserve were as follows:

In millions		Climate				Industrial				Corporate and Other				Total
December 31, 2017		$	7.4			$	6.1			$	2.5			$	16.0
Additions, net of reversals (1)		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
Additions, net of reversals (2)		48.1				20.7				1.8				70.6
Cash paid/Other		(43.2		)		(39.1		)		(2.8		)		(85.1		)
December 31, 2019		$	23.8			$	11.5			$	1.6			$	36.9

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

(2) Excludes the non-cash costs of asset rationalizations ($19.5 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. During the year ended December 31, 2019, costs associated with announced restructuring actions primarily included the following:

•	the plan to close a U.S. manufacturing facility within the Industrial segment and relocate production to other U.S. and Non-U.S. facilities announced in 2019; and

•	the plan to close two U.S. manufacturing facilities within the Climate segment and relocate production to another existing U.S. facility announced in 2018.

Amounts recognized primarily relate to severance and exit costs. In addition, the Company also includes costs that are directly attributable to the restructuring activity but do not fall into the severance, exit or disposal categories. As of December 31, 2019, the Company had $36.9 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 17. OTHER INCOME/(EXPENSE), NET

The components of Other income/(expense), net for the years ended December 31, 2019, 2018 and 2017 are as follows:

In millions		2019				2018				2017
Interest income		$	3.1			$	6.4			$	9.4
Foreign currency exchange gain (loss)		(12.3		)		(17.6		)		(8.8		)
Other components of net periodic benefit cost		(39.3		)		(21.9		)		(31.0		)
Other activity, net		15.5				(3.3		)		(1.2		)
Other income/(expense), net		$	(33.0	)		$	(36.4	)		$	(31.6	)

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 includes items associated with Trane U.S. Inc. for the settlement of asbestos-related claims, insurance settlements on asbestos-related matters and the revaluation of its liability for potential future claims and recoveries. Refer to Note 22, "Commitments and Contingencies," for more information regarding asbestos-related matters.

NOTE 18. INCOME TAXES

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	2019				2018				2017
United States (1)	$	960.6			$	971.6			$	(17.6	)
Non-U.S.	781.0				688.7				1,435.5
Total	$	1,741.6			$	1,660.3			$	1,417.9

(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		2019				2018				2017
Current tax expense (benefit):
United States		$	203.4			$	231.9			$	102.2
Non-U.S.		133.5				193.2				95.4
Total:		336.9				425.1				197.6
Deferred tax expense (benefit):
United States		35.7				(83.2		)		(234.7		)
Non-U.S.		(18.9		)		(60.6		)		117.3
Total:		16.8				(143.8		)		(117.4		)
Total tax expense (benefit):
United States		239.1				148.7				(132.5		)
Non-U.S.		114.6				132.6				212.7
Total		$	353.7			$	281.3			$	80.2

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
		2019			2018			2017
Statutory U.S. rate		21.0	%		21.0	%		35.0	%
Increase (decrease) in rates resulting from:
Non-U.S. tax rate differential (a)		(1.9	)		(1.8	)		(28.8	)
Tax on U.S. subsidiaries on non-U.S. earnings (b)		1.1			0.7			0.8
State and local income taxes (c)		3.1			0.1			1.2
Valuation allowances (d)		(2.4	)		0.7			2.8
Change in permanent reinvestment assertion (b), (e)		—			(2.3	)		8.4
Transition tax (e)		—			1.5			11.3
Remeasurement of deferred tax balances (e)		—			0.3			(21.2	)
Stock based compensation		(1.5	)		(0.9	)		(1.7	)
Foreign derived intangible income		(0.7	)		(1.1	)		—
Reserves for uncertain tax positions		(0.3	)		(0.8	)		(0.9	)
Provision to return and other true-up adjustments		0.1			(0.7	)		(1.7	)
Other adjustments		1.8			0.2			0.5
Effective tax rate		20.3	%		16.9	%		5.7	%

(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 foreign tax credits

(c)	Net of changes in state valuation allowances

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

(e)	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, 2019, 2018 and 2017 was $33.1 million, $25.4 million and $19.7 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		2019				2018
Deferred tax assets:
Inventory and accounts receivable		$	17.7			$	20.3
Fixed assets and intangibles		35.3				39.2
Operating lease liabilities		140.2				—
Postemployment and other benefit liabilities		392.5				386.1
Product liability		70.0				95.1
Other reserves and accruals		157.1				147.6
Net operating losses and credit carryforwards		659.2				589.9
Other		40.6				34.9
Gross deferred tax assets		1,512.6				1,313.1
Less: deferred tax valuation allowances		(373.7		)		(332.2		)
Deferred tax assets net of valuation allowances		$	1,138.9			$	980.9
Deferred tax liabilities:
Inventory and accounts receivable		$	(20.0	)		$	(18.6	)
Fixed assets and intangibles		(1,358.3		)		(1,220.9		)
Operating lease right-of-use assets		(140.2		)		—
Postemployment and other benefit liabilities		(11.0		)		(9.7		)
Other reserves and accruals		(12.5		)		(11.8		)
Product liability		—				(1.2		)
Undistributed earnings of foreign subsidiaries		(39.3		)		(39.5		)
Other		(22.2		)		(10.6		)
Gross deferred tax liabilities		(1,603.5		)		(1,312.3		)
Net deferred tax assets (liabilities)		$	(464.6	)		$	(331.4	)

At December 31, 2019, 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 $4.4 billion which if distributed would result in additional taxes, which may be payable upon distribution, of approximately $400.0 million.

At December 31, 2019, the Company had the following operating loss, capital 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		$	766.2			2020-2038
U.S. Federal credit carryforwards		140.6				2022-2028
U.S. Capital loss carryforwards		36.3				Unlimited
U.S. State net operating loss carryforwards		3,119.7				2020-Unlimited
U.S. State credit carryforwards		35.2				2020-Unlimited
Non-U.S. net operating loss carryforwards		865.8				2020-Unlimited
Non-U.S. credit carryforwards		7.7				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		2019				2018				2017
Beginning balance		$	332.2			$	344.6			$	184.5
Increase to valuation allowance		46.0				54.9				176.5
Decrease to valuation allowance		(56.8		)		(55.1		)		(19.1		)
Write off against valuation allowance		—				(4.6		)		—
Acquisition and purchase accounting		53.3				—				—
Accumulated other comprehensive income (loss)		(1.0		)		(7.6		)		2.7
Ending balance		$	373.7			$	332.2			$	344.6

During 2019, the Company recorded a $50.5 million reduction in valuation allowance on deferred tax assets primarily related to non-U.S. net operating losses. In addition, the Company recorded a $19.3 million increase in a valuation allowance for certain state net deferred tax assets as a result of revised projections of future state taxable income during the carryforward period. In addition, the Company recorded a $53.3 million valuation allowance in acquisition accounting related to deferred tax assets acquired in the PFS acquisition, primarily related to foreign tax credits, capital loss carryforwards and non-U.S. net operating loss carryforwards.

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 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 Tax Cuts and Jobs Act (the Act).

Unrecognized tax benefits

The Company has total unrecognized tax benefits of $78.2 million and $83.0 million as of December 31, 2019, and December 31, 2018, respectively. The amount of unrecognized tax benefits that, if recognized, would affect the continuing operations effective tax rate are $54.1 million as of December 31, 2019. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

In millions		2019				2018				2017
Beginning balance		$	83.0			$	120.5			$	107.1
Additions based on tax positions related to the current year		4.1				3.4				6.2
Additions based on tax positions related to prior years		10.0				23.5				16.8
Reductions based on tax positions related to prior years		(14.0		)		(47.2		)		(8.6		)
Reductions related to settlements with tax authorities		(0.9		)		(14.2		)		(4.8		)
Reductions related to lapses of statute of limitations		(2.9		)		(0.9		)		(1.3		)
Translation (gain) loss		(1.1		)		(2.1		)		5.1
Ending balance		$	78.2			$	83.0			$	120.5

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 $16.9 million and $20.7 million at December 31, 2019 and December 31, 2018, respectively. For the year ended December 31, 2019 and December 31, 2018, the Company recognized a $1.0 million and a $13.4 million tax benefit, 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 $4.4 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

F-40

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 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 2011, with certain matters prior to 2011 being resolved through appeals and litigation and also unilateral procedures as provided for under double tax treaties.

Tax Cuts and Job Act

In December 2017, the U.S. enacted the Act which made 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 provided guidance on accounting for the tax effects of the Act and allowed for adjustments to provisional amounts during a measurement period of up to one year. In accordance with SAB 118, we 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, we recognized a net provisional income tax benefit of $21.0 million associated with these items in the fourth quarter of 2017. We completed the accounting for the income tax effects of the Act during 2018 and recorded $9.0 million of net measurement period adjustments as a component of Provision for income taxes during the year to increase the net provisional income tax benefit recorded as of December 31, 2017.

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	)

NOTE 19. ACQUISITIONS AND DIVESTITURES

Acquisitions and Equity Method Investments

During 2019, the Company acquired several businesses that complement existing products and services. Primary activity during 2019 related to the acquisition of PFS, reported within the Industrial segment. On May 15, 2019, the Company acquired all the outstanding capital stock of PFS, a manufacturer of precision flow control equipment including precision dosing pumps and controls that serve the global water, oil and gas, agriculture, industrial and specialty market segments. Total cash paid, net of cash acquired, was approximately $1.46 billion. In addition, the Company acquired an independent dealer to support the ongoing strategy to expand our distribution network as well as other businesses that strengthen the Company's product portfolios, reported within the Climate segment.

The aggregate cash paid for all acquisitions in 2019, net of cash acquired, totaled $1.54 billion and was financed through a combination of the issuance of senior notes and cash on hand. Refer to Note 8, "Debt and Credit Facilities" for more information regarding financing. Acquisitions are recorded using the acquisition method of accounting in accordance with ASC 805, "Business Combinations" (ASC 805). 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. Intangible assets associated with these acquisitions totaled $687.7 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 $846.6 million.

F-41

The preliminary allocation of the purchase price and related measurement period adjustments related to the PFS acquisition were as follows:

In millions	Preliminary May 15, 2019				Measurement Period Adjustments				As Adjusted May 15, 2019
Current assets	$	124.8			$	(0.9	)		$	123.9
Intangibles	662.2				—				662.2
Goodwill	888.0				(86.7		)		801.3
Other noncurrent assets	48.4				(1.9		)		46.5
Accounts payable, accrued expenses and other liabilities	(72.3		)		2.3				(70.0		)
Noncurrent deferred tax liabilities	(195.9		)		88.3				(107.6		)
Total purchase price, net of cash acquired	$	1,455.2			$	1.1			$	1,456.3

Accounts receivable and current liabilities were stated at their historical carrying values, which approximates fair value given the short-term nature of these assets and liabilities. The estimate of fair value for inventory and property, plant and equipment are based on an assessment of the acquired assets condition as well as an evaluation of current market value of such assets. Measurement period adjustments primarily relate to changes in estimated deferred taxes as additional information was obtained during the measurement period, including assessment of realizability of certain acquired deferred tax assets and tax rates applicable to non-US intangible assets.

The Company recorded intangible assets based on their preliminary estimate of fair value, which consisted of the following:

In millions	Weighted-average useful life (in years)		May 15, 2019
Customer relationships	14		$	457.6
Trade names	Indefinite		168.2
Other	7		36.4
Total			$	662.2

The valuation of intangible assets was determined using an income approach methodology. The fair values of the customer relationship intangible assets were determined using the multi-period excess earnings method based on discounted projected net cash flows associated with the net earnings attributable to the acquired customer relationships. These projected cash flows are estimated over the remaining economic life of the intangible asset and are considered from a market participant perspective. Key assumptions used in estimating future cash flows included projected revenue growth rates and customer attrition rates. The projected future cash flows are discounted to present value using an appropriate discount rate. The fair values of the trade name intangible assets were estimated utilizing the relief from royalty method which is a form of the income approach based on royalty rates determined from observed market royalties applied to projected revenue supporting the trade names and discounted to present value using an appropriate discount rate. Any excess of the purchase price over the estimated fair value of net assets was recognized as goodwill. The goodwill is attributed primarily to the fair value of the expected cost synergies and revenue growth from PFS businesses and is not expected to be deductible for tax purposes.

The results of PFS are reported within the Industrial segment from the date of acquisition. During 2019, the Company incurred $12.9 million of acquisition-related costs which are included in Selling and administrative expenses in the accompanying Consolidated Statements of Comprehensive Income. The Company has not included pro forma financial information required under ASC 805 as the pro forma impact was deemed not material.

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. 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 related 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 acquired 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.

F-42

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, focuses 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. Acquisitions within the Climate segment primarily consisted of independent dealers which support the ongoing strategy to expand the Company's distribution network. Acquisitions within the Industrial segment primarily consisted of a telematics business which builds upon our growing portfolio of connected assets. The aggregate cash paid, net of cash acquired, totaled $157.6 million and was funded through cash on hand.

Divestitures

The Company has retained obligations from previously sold businesses, including amounts related to the 2013 spin-off of its commercial and residential security business, that primarily include ongoing expenses for postretirement benefits, product liability and legal costs. The components of Discontinued operations, net of tax for the years ended December 31 are as follows:

In millions		2019				2018				2017
Pre-tax earnings (loss) from discontinued operations		$	54.8			$	(85.5	)		$	(34.0	)
Tax benefit (expense)		(14.2		)		64.0				8.6
Discontinued operations, net of tax		$	40.6			$	(21.5	)		$	(25.4	)

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 and recoveries. Refer to Note 22, "Commitments and Contingencies," for more information related to asbestos.

NOTE 20. 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		2019			2018			2017
Weighted-average number of basic shares outstanding		241.6			247.2			254.9
Shares issuable under incentive stock plans		2.8			2.9			3.2
Weighted-average number of diluted shares outstanding		244.4			250.1			258.1
Anti-dilutive shares		—			1.5			1.6
Dividends declared per ordinary share		2.12			1.96			1.70

NOTE 21. 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 AdvantageTM and NexiaTM; 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, fluid management systems, as well as Club Car ® golf, utility and rough terrain vehicles.

F-43

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.

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

Dollar amounts in millions		2019				2018				2017
Climate
Net revenues		$	13,075.9			$	12,343.8			$	11,167.5
Segment operating income		1,908.5				1,766.2				1,572.7
Segment operating income as a percentage of net revenues		14.6		%		14.3		%		14.1		%
Depreciation and amortization		258.0				252.0				247.6
Capital expenditures		188.1				217.3				103.8
Industrial
Net revenues		3,523.0				3,324.4				3,030.1
Segment operating income		455.0				405.3				357.6
Segment operating income as a percentage of net revenues		12.9		%		12.2		%		11.8		%
Depreciation and amortization		108.6				79.2				77.3
Capital expenditures		48.7				80.9				57.4
Total net revenues		$	16,598.9			$	15,668.2			$	14,197.6
Reconciliation to Operating Income
Segment operating income from reportable segments		$	2,363.5			$	2,171.5			$	1,930.3
Unallocated corporate expense		(345.9		)		(254.1		)		(265.0		)
Total operating income		$	2,017.6			$	1,917.4			$	1,665.3
Total operating income as a percentage of revenues		12.2		%		12.2		%		11.7		%
Depreciation and Amortization
Depreciation and amortization from reportable segments		$	366.6			$	331.2			$	324.9
Unallocated depreciation and amortization		30.8				30.3				28.4
Total depreciation and amortization		$	397.4			$	361.5			$	353.3
Capital Expenditures
Capital expenditures from reportable segments		$	236.8			$	298.2			$	161.2
Corporate capital expenditures		17.3				67.4				60.1
Total capital expenditures		$	254.1			$	365.6			$	221.3

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

In millions		2019				2018
United States		$	2,327.3			$	1,914.7
Non-U.S.		790.6				781.3
Total		$	3,117.9			$	2,696.0

NOTE 22. 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

F-44

legal matters would not have a material adverse effect on the financial condition, results of operations, liquidity or cash flows of the Company.

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.

Reserves for environmental matters are classified as Accrued expenses and other current liabilities or Other noncurrent liabilities based on their expected term. As of December 31, 2019 and 2018, the Company has recorded reserves for environmental matters of $42.6 million and $41.2 million, respectively. Of these amounts $37.5 million and $36.1 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, 2019, over 73 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.

F-45

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:

In millions	December 31, 2019				December 31, 2018
Accrued expenses and other current liabilities	$	63.0			$	63.3
Other noncurrent liabilities	484.4				548.3
Total asbestos-related liabilities	$	547.4			$	611.6
Other current assets	$	66.2			$	69.2
Other noncurrent assets	237.8				199.0
Total asset for probable asbestos-related insurance recoveries	$	304.0			$	268.2

The Company's asbestos insurance receivable related to Ingersoll-Rand Company and Trane was $188.7 million and $115.3 million at December 31, 2019, and $141.7 million and $126.5 million at December 31, 2018, respectively. These receivables attributable to Ingersoll-Rand Company and Trane for probable insurance recoveries as of December 31, 2019 are entirely supported by settlement agreements between Ingersoll-Rand Company and Trane and their respective insurance carriers. Most of these settlement agreements constitute “coverage-in-place” arrangements, in which the insurer signatories agree to reimburse Ingersoll-Rand Company or Trane, as applicable, for specified portions of their respective costs for asbestos bodily injury claims and Ingersoll-Rand Company or Trane, as applicable, 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 and recoveries 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 continuing operations.

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

In millions		2019				2018				2017
Continuing operations		$	7.0			$	(10.4	)		$	(3.1	)
Discontinued operations		68.2				(56.5		)		(11.9		)
Total		$	75.2			$	(66.9	)		$	(15.0	)

During the year ended December 31, 2019, the Company reached settlements with several insurance carriers associated with pending asbestos insurance coverage litigation (as discussed below). All but one of these settlements relate to Ingersoll-Rand Company and are recorded within discontinued operations. The settlement that relates to Trane is recorded within continuing operations. 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.

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. As of December 31, 2019, Ingersoll-Rand Company has resolved both actions through settlements with all of the remaining solvent insurer defendants.

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 if assumptions used in the calculations vary significantly from actual results. Key assumptions underlying the estimated asbestos-related liabilities include the number of people occupationally exposed and likely to develop asbestos-related diseases such as mesothelioma and lung cancer, the number of people likely to file an asbestos-related personal injury claim against the Company, the average settlement and resolution of each claim and the percentage of claims resolved with no payment. Furthermore, predictions with respect to estimates of the liability are subject to greater uncertainty as the projection period lengthens. Other factors that

F-46

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	2019				2018
Balance at beginning of period	$	278.9			$	270.5
Reductions for payments	(153.1		)		(159.0		)
Accruals for warranties issued during the current period	155.9				158.2
Changes to accruals related to preexisting warranties	3.8				11.5
Translation	(0.8		)		(2.3		)
Balance at end of period	$	284.7			$	278.9

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, 2019 and December 31, 2018 was $157.6 million and $149.5 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	2019				2018
Balance at beginning of period	$	292.2			$	293.0
Amortization of deferred revenue for the period	(120.9		)		(115.0		)
Additions for extended warranties issued during the period	133.2				116.1
Changes to accruals related to preexisting warranties	(0.4		)		(0.5		)
Translation	—				(1.4		)
Balance at end of period	$	304.1			$	292.2

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, 2019 and December 31, 2018 was $107.3 million and $103.1 million, respectively. For the years ended December 31, 2019 and 2018, the Company incurred costs of $63.7 million and $63.2 million, respectively, related to extended warranties.

F-47

NOTE 23. 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, 2019:

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 2020-2025 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 3.500% Notes due 2026 3.800% Notes due 2029 4.650% Notes due 2044 4.500% Notes due 2049	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, 2019. 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.

Transfers of businesses within a consolidated group should be reflected on a retrospective basis in the Condensed Consolidating Financial Statements for all periods presented. As a result, the Company updated its Condensed Consolidating Financial Statements to recast the presentation of certain subsidiaries between the New Jersey and Other Subsidiaries columns in connection with the proposed separation of the Industrial Segment businesses. These modifications relate to fourth quarter 2019 intercompany transactions that changed the ownership of certain IR Industrial businesses reported in the New Jersey column to a newly created entity reported within the Other Subsidiaries column. The updated presentation is shown in the following tables:

F-48

Condensed Consolidating Statement of Comprehensive Income

For the year ended December 31, 2019

In millions	Plc				Irish Holdings				Lux International				Global Holding				New Jersey				Lux Finance				Other Subsidiaries				Consolidating Adjustments				Consolidated
Net revenues	$	—			$	—			$	—			$	—			$	—			$	—			$	16,598.9			$	—			$	16,598.9
Cost of goods sold	—				—				—				—				(18.3		)		—				(11,433.2		)		—				(11,451.5		)
Selling and administrative expenses	(16.1		)		—				(0.8		)		(0.3		)		(245.3		)		(0.3		)		(2,867.0		)		—				(3,129.8		)
Operating income (loss)	(16.1		)		—				(0.8		)		(0.3		)		(263.6		)		(0.3		)		2,298.7				—				2,017.6
Equity earnings (loss) in subsidiaries, net of tax	1,544.1				1,542.8				1,237.3				1,189.9				1,274.2				209.9				—				(6,998.2		)		—
Interest expense	—				—				—				(106.6		)		(46.2		)		(89.7		)		(0.5		)		—				(243.0		)
Intercompany interest and fees	(125.0		)		—				74.7				(294.8		)		159.2				26.5				159.4				—				—
Other income/(expense), net	(0.1		)		—				59.5				—				(12.0		)		4.7				(85.1		)		—				(33.0		)
Earnings (loss) before income taxes	1,402.9				1,542.8				1,370.7				788.2				1,111.6				151.1				2,372.5				(6,998.2		)		1,741.6
Benefit (provision) for income taxes	8.0				—				5.1				106.1				16.5				—				(489.4		)		—				(353.7		)
Earnings (loss) from continuing operations	1,410.9				1,542.8				1,375.8				894.3				1,128.1				151.1				1,883.1				(6,998.2		)		1,387.9
Discontinued operations, net of tax	—				—				—				—				36.2				—				4.4				—				40.6
Net earnings (loss)	1,410.9				1,542.8				1,375.8				894.3				1,164.3				151.1				1,887.5				(6,998.2		)		1,428.5
Less: Net earnings attributable to noncontrolling interests	—				—				—				—				—				—				(17.6		)		—				(17.6		)
Net earnings attributable to Ingersoll-Rand plc	$	1,410.9			$	1,542.8			$	1,375.8			$	894.3			$	1,164.3			$	151.1			$	1,869.9			$	(6,998.2	)		$	1,410.9
Other comprehensive income (loss), net of tax	(42.5		)		(42.2		)		(30.7		)		(16.6		)		(16.0		)		(13.7		)		(71.6		)		190.8				(42.5		)
Comprehensive income attributable to Ingersoll-Rand plc	$	1,368.4			$	1,500.6			$	1,345.1			$	877.7			$	1,148.3			$	137.4			$	1,798.3			$	(6,807.4	)		$	1,368.4

F-49

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	$	—			$	—			$	—			$	—			$	—			$	—			$	15,668.2			$	—			$	15,668.2
Cost of goods sold	—				—				—				—				(28.7		)		—				(10,818.9		)		—				(10,847.6		)
Selling and administrative expenses	(39.6		)		—				(0.4		)		(0.3		)		(86.5		)		(0.3		)		(2,776.1		)		—				(2,903.2		)
Operating income (loss)	(39.6		)		—				(0.4		)		(0.3		)		(115.2		)		(0.3		)		2,073.2				—				1,917.4
Equity earnings (loss) in subsidiaries, net of tax	1,460.9				1,458.6				1,183.7				1,190.5				1,213.0				195.6				—				(6,702.3		)		—
Interest expense	—				—				0.4				(130.3		)		(46.8		)		(43.0		)		(1.0		)		—				(220.7		)
Intercompany interest and fees	(92.7		)		—				41.1				(196.5		)		25.1				(11.2		)		234.2				—				—
Other income/(expense), net	—				—				(48.8		)		0.7				(10.5		)		0.1				22.1				—				(36.4		)
Earnings (loss) before income taxes	1,328.6				1,458.6				1,176.0				864.1				1,065.6				141.2				2,328.5				(6,702.3		)		1,660.3
Benefit (provision) for income taxes	9.0				—				—				86.2				145.0				—				(521.5		)		—				(281.3		)
Earnings (loss) from continuing operations	1,337.6				1,458.6				1,176.0				950.3				1,210.6				141.2				1,807.0				(6,702.3		)		1,379.0
Discontinued operations, net of tax	—				—				—				—				(20.1		)		—				(1.4		)		—				(21.5		)
Net earnings (loss)	1,337.6				1,458.6				1,176.0				950.3				1,190.5				141.2				1,805.6				(6,702.3		)		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			$	950.3			$	1,190.5			$	141.2			$	1,785.7			$	(6,702.3	)		$	1,337.6
Other comprehensive income (loss), net of tax	(185.3		)		(184.7		)		(174.2		)		(86.2		)		(86.2		)		(83.5		)		(256.2		)		871.0				(185.3		)
Comprehensive income attributable to Ingersoll-Rand plc	$	1,152.3			$	1,273.9			$	1,001.8			$	864.1			$	1,104.3			$	57.7			$	1,529.5			$	(5,831.3	)		$	1,152.3

F-50

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	$	—			$	—			$	—			$	—			$	—			$	—			$	14,197.6			$	—			$	14,197.6
Cost of goods sold	—				—				—				—				(25.2		)		—				(9,786.4		)		—				(9,811.6		)
Selling and administrative expenses	(15.6		)		—				(0.1		)		(1.2		)		(102.9		)		(0.2		)		(2,600.7		)		—				(2,720.7		)
Operating income (loss)	(15.6		)		—				(0.1		)		(1.2		)		(128.1		)		(0.2		)		1,810.5				—				1,665.3
Equity earnings (loss) in subsidiaries, net of tax	1,349.2				1,334.7				982.3				565.4				1,271.7				107.9				—				(5,611.2		)		—
Interest expense	—				—				—				(127.0		)		(47.2		)		(41.0		)		(0.6		)		—				(215.8		)
Intercompany interest and fees	(33.1		)		—				253.0				(493.9		)		(514.3		)		(8.2		)		796.5				—				—
Other income/(expense), net	—				—				0.1				—				(4.8		)		—				(26.9		)		—				(31.6		)
Earnings (loss) before income taxes	1,300.5				1,334.7				1,235.3				(56.7		)		577.3				58.5				2,579.5				(5,611.2		)		1,417.9
Benefit (provision) for income taxes	2.1				—				—				247.2				15.9				—				(345.4		)		—				(80.2		)
Earnings (loss) from continuing operations	1,302.6				1,334.7				1,235.3				190.5				593.2				58.5				2,234.1				(5,611.2		)		1,337.7
Discontinued operations, net of tax	—				—				—				—				(27.9		)		—				2.5				—				(25.4		)
Net earnings (loss)	1,302.6				1,334.7				1,235.3				190.5				565.3				58.5				2,236.6				(5,611.2		)		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			$	190.5			$	565.3			$	58.5			$	2,226.9			$	(5,611.2	)		$	1,302.6
Other comprehensive income (loss), net of tax	511.7				510.3				471.1				367.8				367.3				102.1				499.0				(2,317.6		)		511.7
Comprehensive income attributable to Ingersoll-Rand plc	$	1,814.3			$	1,845.0			$	1,706.4			$	558.3			$	932.6			$	160.6			$	2,725.9			$	(7,928.8	)		$	1,814.3

F-51

Condensed Consolidating Balance Sheet

December 31, 2019

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			$	—			$	313.1			$	0.5			$	989.9			$	—			$	1,303.6
Accounts and notes receivable, net	—				—				0.2				—				0.7				—				2,797.2				—				2,798.1
Inventories	—				—				—				—				—				—				1,712.2				—				1,712.2
Other current assets	0.3				—				2.4				39.2				82.2				—				279.2				—				403.3
Intercompany receivables	40.0				—				89.7				—				4,644.9				1,473.7				4,967.0				(11,215.3		)		—
Total current assets	40.3				—				92.4				39.2				5,040.9				1,474.2				10,745.5				(11,215.3		)		6,217.2
Property, plant and equipment, net	—				—				—				—				156.9				—				1,649.3				—				1,806.2
Goodwill and other intangible assets, net	—				—				—				—				2.7				—				10,929.2				—				10,931.9
Other noncurrent assets	—				—				13.3				198.4				746.3				—				990.2				(411.2		)		1,537.0
Investments in consolidated subsidiaries	10,506.2				10,488.7				4,943.5				14,328.0				10,140.5				1,464.5				—				(51,871.4		)		—
Intercompany notes receivable	—				—				2,781.9				—				—				—				2,249.7				(5,031.6		)		—
Total assets	$	10,546.5			$	10,488.7			$	7,831.1			$	14,565.6			$	16,087.3			$	2,938.7			$	26,563.9			$	(68,529.5	)		$	20,492.3
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable and accrued expenses	$	10.1			$	—			$	—			$	17.8			$	438.7			$	23.3			$	3,721.5			$	—			$	4,211.4
Short-term borrowings and current maturities of long-term debt	—				—				—				—				350.4				299.8				0.3				—				650.5
Intercompany payables	3,268.8				—				2,917.4				3,920.5				1,058.9				29.4				20.3				(11,215.3		)		—
Total current liabilities	3,278.9				—				2,917.4				3,938.3				1,848.0				352.5				3,742.1				(11,215.3		)		4,861.9
Long-term debt	—				—				—				2,332.4				312.1				2,278.3				0.1				—				4,922.9
Other noncurrent liabilities	—				—				—				0.3				1,107.7				—				2,698.3				(411.2		)		3,395.1
Intercompany notes payable	—				—				—				3,699.7				—				—				1,331.9				(5,031.6		)		—
Total liabilities	3,278.9				—				2,917.4				9,970.7				3,267.8				2,630.8				7,772.4				(16,658.1		)		13,179.9
Equity:
Total equity	7,267.6				10,488.7				4,913.7				4,594.9				12,819.5				307.9				18,791.5				(51,871.4		)		7,312.4
Total liabilities and equity	$	10,546.5			$	10,488.7			$	7,831.1			$	14,565.6			$	16,087.3			$	2,938.7			$	26,563.9			$	(68,529.5	)		$	20,492.3

F-52

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			$	—			$	357.7			$	—			$	545.4			$	—			$	903.4
Accounts and notes receivable, net	—				—				0.1				—				1.5				—				2,677.6				—				2,679.2
Inventories	—				—				—				—				—				—				1,677.8				—				1,677.8
Other current assets	0.2				—				7.8				—				86.9				—				377.5				(0.8		)		471.6
Intercompany receivables	59.5				—				3.9				—				3,831.0				0.1				3,970.9				(7,865.4		)		—
Total current assets	59.7				0.1				12.0				—				4,277.1				0.1				9,249.2				(7,866.2		)		5,732.0
Property, plant and equipment, net	—				—				0.1				—				163.6				—				1,567.1				—				1,730.8
Goodwill and other intangible assets, net	—				—				—				—				6.8				—				9,587.4				—				9,594.2
Other noncurrent assets	—				—				8.0				180.0				508.4				—				613.2				(451.7		)		857.9
Investments in consolidated subsidiaries	9,308.9				9,267.8				3,935.4				11,742.6				10,778.8				1,264.2				—				(46,297.7		)		—
Intercompany notes receivable	—				—				—				—				—				—				2,249.7				(2,249.7		)		—
Total assets	$	9,368.6			$	9,267.9			$	3,955.5			$	11,922.6			$	15,734.7			$	1,264.3			$	23,266.6			$	(56,865.3	)		$	17,914.9
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable and accrued expenses	$	11.3			$	—			$	0.1			$	41.7			$	347.0			$	6.9			$	3,558.9			$	(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				1,879.0				0.2				—				(7,865.4		)		—
Total current liabilities	2,345.9				—				133.0				3,560.4				2,576.4				7.1				3,559.1				(7,866.2		)		4,315.7
Long-term debt	—				—				—				2,330.0				319.5				1,091.0				0.2				—				3,740.7
Other noncurrent liabilities	—				—				—				5.5				1,096.1				—				2,143.8				(451.7		)		2,793.7
Intercompany notes payable	—				—				—				2,249.7				—				—				—				(2,249.7		)		—
Total liabilities	2,345.9				—				133.0				8,145.6				3,992.0				1,098.1				5,703.1				(10,567.6		)		10,850.1
Equity:
Total equity	7,022.7				9,267.9				3,822.5				3,777.0				11,742.7				166.2				17,563.5				(46,297.7		)		7,064.8
Total liabilities and equity	$	9,368.6			$	9,267.9			$	3,955.5			$	11,922.6			$	15,734.7			$	1,264.3			$	23,266.6			$	(56,865.3	)		$	17,914.9

F-53

Condensed Consolidating Statement of Cash Flows

For the year ended December 31, 2019

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	$	191.7			$	—			$	134.8			$	(332.7	)		$	1,522.6			$	(66.1	)		$	506.0			$	—			$	1,956.3
Net cash provided by (used in) discontinued operating activities	—				—				—				—				(41.3		)		—				4.5				—				(36.8		)
Net cash provided by (used in) operating activities	191.7				—				134.8				(332.7		)		1,481.3				(66.1		)		510.5				—				1,919.5
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures	—				—				—				—				(12.7		)		—				(241.4		)		—				(254.1		)
Acquisitions and equity method investments, net of cash acquired	—				—				(58.0		)		(1,446.3		)		—				—				(35.4		)		—				(1,539.7		)
Proceeds from sale of property, plant and equipment	—				—				—				—				—				—				3.8				—				3.8
Other investing activities, net	—				—				—				—				4.3				—				5.7				—				10.0
Intercompany investing activities, net	150.4				149.8				(1,454.0		)		—				889.2				(1,449.9		)		2,040.1				(325.6		)		—
Net cash provided by (used in) investing activities	150.4				149.8				(1,512.0		)		(1,446.3		)		880.8				(1,449.9		)		1,772.8				(325.6		)		(1,780.0		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from (payments of) debt	—				—				—				—				(7.5		)		1,497.9				—				—				1,490.4
Debt issuance costs	—				—				—				—				(0.2		)		(12.9		)		—				—				(13.1		)
Dividends paid to ordinary shareholders	(510.1		)		—				—				—				—				—				—				—				(510.1		)
Dividends paid to noncontrolling interests	—				—				—				—				—				—				(15.8		)		—				(15.8		)
Proceeds from shares issued under incentive plans	116.8				—				—				—				—				—				—				—				116.8
Repurchase of ordinary shares	(750.1		)		—				—				—				—				—				—				—				(750.1		)
Other financing activities, net	(44.3		)		—				—				—				—				—				(3.3		)		—				(47.6		)
Intercompany financing activities, net	845.6				(149.9		)		1,377.1				1,779.0				(2,399.0		)		31.5				(1,809.9		)		325.6				—
Net cash provided by (used in) financing activities	(342.1		)		(149.9		)		1,377.1				1,779.0				(2,406.7		)		1,516.5				(1,829.0		)		325.6				270.5
Effect of exchange rate changes on cash and cash equivalents	—				—				—				—				—				—				(9.8		)		—				(9.8		)
Net increase (decrease) in cash and cash equivalents	—				(0.1		)		(0.1		)		—				(44.6		)		0.5				444.5				—				400.2
Cash and cash equivalents - beginning of period	—				0.1				0.2				—				357.7				—				545.4				—				903.4
Cash and cash equivalents - end of period	$	—			$	—			$	0.1			$	—			$	313.1			$	0.5			$	989.9			$	—			$	1,303.6

F-54

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	)		$	1,321.4			$	(52.0	)		$	315.1			$	—			$	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		)		1,256.1				(52.0		)		313.7				—				1,407.8
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures	—				—				—				—				(62.0		)		—				(303.6		)		—				(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				307.1				—				2,463.0				(3,902.5		)		—
Net cash provided by (used in) investing activities	1,058.7				(481.2		)		537.5				9.5				257.1				—				1,891.5				(3,902.5		)		(629.4		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from (payments 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		)		—				—				—				—				—				(6.4		)		—				(32.2		)
Intercompany financing activities, net	199.1				484.0				(569.4		)		188.5				(1,499.1		)		52.0				(2,757.6		)		3,902.5				—
Net cash provided by (used in) financing activities	(1,137.5		)		484.0				(569.4		)		208.1				(1,506.6		)		52.0				(2,811.9		)		3,902.5				(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		)		—				6.6				—				(652.3		)		—				(646.0		)
Cash and cash equivalents – beginning of period	—				—				0.6				—				351.1				—				1,197.7				—				1,549.4
Cash and cash equivalents – end of period	$	—			$	0.1			$	0.2			$	—			$	357.7			$	—			$	545.4			$	—			$	903.4

F-55

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	)		$	305.9			$	(48.0	)		$	1,547.6			$	—			$	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		)		269.0				(48.0		)		1,546.4				—				1,523.5
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures	—				—				—				—				(56.4		)		—				(164.9		)		—				(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				4,933.4				11.7				6,713.1				(14,548.8		)		—
Net cash provided by (used in) investing activities	285.1				285.2				2,050.2				270.1				4,874.3				11.7				6,397.5				(14,548.8		)		(374.7		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from (payments 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		)		—				—				—				—				—				(2.3		)		—				(27.7		)
Intercompany financing activities, net	1,026.8				(285.2		)		(2,006.8		)		15.0				(5,414.8		)		36.3				(7,920.1		)		14,548.8				—
Net cash provided by (used in) financing activities	(368.9		)		(285.2		)		(2,006.8		)		14.8				(5,422.3		)		36.3				(7,949.2		)		14,548.8				(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				—				(279.0		)		—				113.1				—				(165.3		)
Cash and cash equivalents – beginning of period	—				—				—				—				630.1				—				1,084.6				—				1,714.7
Cash and cash equivalents – end of period	$	—			$	—			$	0.6			$	—			$	351.1			$	—			$	1,197.7			$	—			$	1,549.4

F-56

SCHEDULE II

INGERSOLL-RAND PLC

VALUATION AND QUALIFYING ACCOUNTS

FOR THE YEARS ENDED DECEMBER 31 2019**,** 2018 AND 2017

(Amounts in millions)

Allowances for Doubtful Accounts:
Balance December 31, 2016	$	26.0
Additions charged to costs and expenses	9.7
Deductions (a)	(9.7		)
Currency translation	1.3
Other	(0.4		)
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
Additions charged to costs and expenses	15.2
Deductions (a)	(7.1		)
Business acquisitions and divestitures, net	1.5
Currency translation	(0.1		)
Balance December 31, 2019	$	42.2

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

F-57