UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q



x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~June 30, 2018~~March 31, 2019



o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 001-34400

_____________________________

INGERSOLL-RAND PUBLIC LIMITED COMPANY

(Exact name of registrant as specified in its charter)



Ireland	98-0626632
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

170/175 Lakeview Dr.

Airside Business Park

Swords, Co. Dublin

Ireland

(Address of principal executive offices, including zip code)

+(353) (0) 18707400

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES x NO ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). YES x NO ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.



Large accelerated filer	x	Accelerated filer	¨

Non-accelerated filer	¨	Smaller reporting company	¨

		Emerging growth company	¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES ¨ NO x

The number of ordinary shares outstanding of Ingersoll-Rand plc as of ~~July 13, 2018~~April 19, 2019 was ~~245,309,566.~~241,158,226.

INGERSOLL-RAND PLC

FORM 10-Q

INDEX




PART I FINANCIAL INFORMATION		1

Item 1 -	Financial Statements	1

	Condensed Consolidated Statements of Comprehensive Income for the three ~~and six~~ months ended ~~June 30,~~March 31, 2019 and 2018 ~~and 2017~~	1

	Condensed Consolidated Balance Sheets at ~~June 30, 2018~~March 31, 2019 and December 31, ~~2017~~2018	2

	Condensed Consolidated Statements of Equity for the three months ended March 31, 2019 and 2018	3

	Condensed Consolidated Statements of Cash Flows for the ~~six~~three months ended ~~June 30,~~March 31, 2019 and 2018 ~~and 2017~~	34

	Notes to Condensed Consolidated Financial Statements	45

Item 2 -	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3634

Item 3 -	Quantitative and Qualitative Disclosures about Market Risk	4743

Item 4 -	Controls and Procedures	4743

PART II OTHER INFORMATION		4844

Item 1 -	Legal Proceedings	4844

Item 1A -	Risk Factors	4844

Item 2 -	Unregistered Sales of Equity Securities and Use of Proceeds	4845

Item 6 -	Exhibits	4946

SIGNATURES		5047

PART I - FINANCIAL INFORMATION


Item 1.	Financial Statements

INGERSOLL-RAND PLC

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)


	Three months ended						Six months ended						Three months ended
	June 30,						June 30,						March 31,
In millions, except per share amounts	2018			2017			2018			2017			2019			2018
Net revenues	$	4,357.7		$	3,908.4		$	7,742.2		$	6,909.0		$	3,575.9		$	3,384.5
Cost of goods sold	(2,964.1		)	(2,653.1		)	(5,384.3		)	(4,779.2		)	(2,517.3		)	(2,420.2		)
Selling and administrative expenses	(753.3		)	(697.7		)	(1,474.2		)	(1,357.2		)	(740.1		)	(720.9		)
Operating income	640.3			557.6			883.7			772.6			318.5			243.4
Interest expense	(50.3		)	(54.1		)	(123.2		)	(108.1		)	(50.9		)	(72.9		)
Other income/(expense), net	(3.5		)	(11.5		)	(7.5		)	(16.2		)	(18.8		)	(4.0		)
Earnings before income taxes	586.5			492.0			753.0			648.3			248.8			166.5
Provision for income taxes	(128.0		)	(138.1		)	(161.0		)	(166.8		)	(43.0		)	(33.0		)
Earnings from continuing operations	458.5			353.9			592.0			481.5			205.8			133.5
Discontinued operations, net of tax	(5.9		)	8.3			(15.3		)	1.8			(2.1		)	(9.4		)
Net earnings	452.6			362.2			576.7			483.3			203.7			124.1
Less: Net earnings attributable to noncontrolling interests	(4.5		)	(3.6		)	(8.2		)	(7.6		)	(3.8		)	(3.7		)
Net earnings attributable to Ingersoll-Rand plc	$	448.1		$	358.6		$	568.5		$	475.7		$	199.9		$	120.4
Amounts attributable to Ingersoll-Rand plc ordinary shareholders:
Continuing operations	$	454.0		$	350.3		$	583.8		$	473.9		$	202.0		$	129.8
Discontinued operations	(5.9		)	8.3			(15.3		)	1.8			(2.1		)	(9.4		)
Net earnings	$	448.1		$	358.6		$	568.5		$	475.7		$	199.9		$	120.4
Earnings (loss) per share attributable to Ingersoll-Rand plc ordinary shareholders:
Basic:
Continuing operations	$	1.83		$	1.37		$	2.35		$	1.84		$	0.83		$	0.52
Discontinued operations	(0.02		)	0.03			(0.07		)	—			(0.01		)	(0.04		)
Net earnings	$	1.81		$	1.40		$	2.28		$	1.84		$	0.82		$	0.48
Diluted:
Continuing operations	$	1.82		$	1.35		$	2.32		$	1.82		$	0.82		$	0.51
Discontinued operations	(0.03		)	0.03			(0.06		)	—			—			(0.03		)
Net earnings	$	1.79		$	1.38		$	2.26		$	1.82		$	0.82		$	0.48
Weighted-average shares outstanding:
Basic	247.5			256.4			248.9			257.9			242.5			250.4
Diluted	250.1			259.7			251.6			261.1			245.2			253.0
Dividends declared per ordinary share	$	0.98		$	0.40		$	1.43		$	0.80

Total comprehensive income	$	171.6		$	539.1		$	448.2		$	779.3		$	209.6		$	276.6
Less: Total comprehensive income attributable to noncontrolling interests	1.4			4.3			5.5			6.8			4.2			4.1
Total comprehensive income attributable to Ingersoll-Rand plc	$	170.2		$	534.8		$	442.7		$	772.5		$	205.4		$	272.5

See accompanying notes to Condensed Consolidated Financial Statements.

INGERSOLL-RAND PLC

CONDENSED CONSOLIDATED BALANCE SHEETS


	(Unaudited)						(Unaudited)
In millions	June 30, 2018			December 31, 2017			March 31, 2019			December 31, 2018
ASSETS
Current assets:
Cash and cash equivalents	$	969.5		$	1,549.4		$	1,907.4		$	903.4
Accounts and notes receivable, net	2,946.9			2,477.4			2,710.3			2,679.2
Inventories, net	1,733.3			1,555.4			1,983.7			1,677.8
Other current assets	512.0			536.9			483.3			471.6
Total current assets	6,161.7			6,119.1			7,084.7			5,732.0
Property, plant and equipment, net	1,646.8			1,551.3			1,738.4			1,730.8
Goodwill	6,001.1			5,935.7			5,968.6			5,959.5
Intangible assets, net	3,704.9			3,742.9			3,608.5			3,634.7
Other noncurrent assets	863.4			824.3			1,380.8			857.9
Total assets	$	18,377.9		$	18,173.3		$	19,781.0		$	17,914.9
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	1,832.1		$	1,556.1		$	1,800.1		$	1,705.3
Accrued compensation and benefits	428.4			509.7			363.4			531.6
Accrued expenses and other current liabilities	1,892.6			1,655.2			1,950.6			1,728.2
Short-term borrowings and current maturities of long-term debt	599.6			1,107.0			374.4			350.6
Total current liabilities	4,752.7			4,828.0			4,488.5			4,315.7
Long-term debt	3,738.9			2,957.0			5,226.5			3,740.7
Postemployment and other benefit liabilities	1,247.7			1,285.3			1,191.4			1,192.9
Deferred and noncurrent income taxes	735.4			757.5			527.2			538.4
Other noncurrent liabilities	1,079.5			1,138.6			1,424.6			1,062.4
Total liabilities	11,554.2			10,966.4			12,858.2			10,850.1
Equity:
Ingersoll-Rand plc shareholders’ equity:
Ordinary shares	269.8			274.0			265.5			266.4
Ordinary shares held in treasury, at cost	(1,719.3		)	(1,719.4		)	(1,719.4		)	(1,719.4		)
Capital in excess of par value	31.3			461.3
Retained earnings	9,109.9			8,903.2			9,298.3			9,439.8
Accumulated other comprehensive income (loss)	(904.6		)	(778.8		)	(958.6		)	(964.1		)
Total Ingersoll-Rand plc shareholders’ equity	6,787.1			7,140.3			6,885.8			7,022.7
Noncontrolling interests	36.6			66.6			37.0			42.1
Total equity	6,823.7			7,206.9			6,922.8			7,064.8
Total liabilities and equity	$	18,377.9		$	18,173.3		$	19,781.0		$	17,914.9

See accompanying notes to Condensed Consolidated Financial Statements.

INGERSOLL-RAND PLC

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(Unaudited)



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
In millions, except per share amounts	Total equity			Amount			Shares		Ordinary shares held in treasury, at cost			Capital in excess of par value			Retained earnings			Accumulated other comprehensive income (loss)			Noncontrolling Interest
Balance at December 31, 2018	$	7,064.8		$	266.4		266.4		$	(1,719.4	)	$	—		$	9,439.8		$	(964.1	)	$	42.1
Net earnings	203.7			—			—		—			—			199.9			—			3.8
Other comprehensive income (loss)	5.9			—			—		—			—			—			5.5			0.4
Shares issued under incentive stock plans	6.3			1.5			1.5		—			4.8			—			—			—
Repurchase of ordinary shares	(250.0		)	(2.4		)	(2.4	)	—			(34.6		)	(213.0		)	—			—
Share-based compensation	29.0			—			—		—			29.7			(0.7		)	—			—
Dividends declared to noncontrolling interest	(9.3		)	—			—		—			—			—			—			(9.3		)
Cash dividends declared	(127.7		)	—			—		—			—			(127.7		)	—			—
Other	0.1			—			—		—			0.1			—			—			—
Balance at March 31, 2019	$	6,922.8		$	265.5		265.5		$	(1,719.4	)	$	—		$	9,298.3		$	(958.6	)	$	37.0



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
In millions, except per share amounts	Total equity			Amount			Shares		Ordinary shares held in treasury, at cost			Capital in excess of par value			Retained earnings			Accumulated other comprehensive income (loss)			Noncontrolling Interest
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	124.1			—			—		—			—			120.4			—			3.7
Other comprehensive income (loss)	152.5			—			—		—			—			—			152.1			0.4
Shares issued under incentive stock plans	6.6			1.3			1.3		—			5.3			—			—			—
Repurchase of ordinary shares	(250.0		)	(2.8		)	(2.8	)	—			(247.2		)	—			—			—
Share-based compensation	30.0			—			—		—			30.5			(0.5		)	—			—
Dividends declared to noncontrolling interest	(11.0		)	—			—		—			—			—			—			(11.0		)
Adoption of ASU 2014-09	2.4			—			—		—			—			2.4			—			—
Adoption of ASU 2016-16	(9.1		)	—			—		—			—			(9.1		)	—			—
Cash dividends declared	(112.0		)	—			—		—			—			(112.0		)	—			—
Balance at March 31, 2018	$	7,140.4		$	272.5		272.5		$	(1,719.4	)	$	249.9		$	8,904.4		$	(626.7	)	$	59.7

See accompanying notes to Condensed Consolidated Financial Statements.

INGERSOLL-RAND PLC

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Six months ended						Three months ended
	June 30,						March 31,
In millions	2018			2017			2019			2018
Cash flows from operating activities:
Net earnings	$	576.7		$	483.3		$	203.7		$	124.1
Discontinued operations, net of tax	15.3			(1.8		)	2.1			9.4
Adjustments for non-cash transactions:
Asset impairment	—			8.4
Depreciation and amortization	187.8			174.1			89.3			93.4
Changes in assets and liabilities, net	(466.4		)	(323.3		)	(400.5		)	(330.7		)
Other non-cash items, net	101.1			81.6			68.3			58.0
Net cash provided by (used in) continuing operating activities	414.5			422.3			(37.1		)	(45.8		)
Net cash provided by (used in) discontinued operating activities	(36.8		)	(16.8		)	(15.5		)	(20.4		)
Net cash provided by (used in) operating activities	377.7			405.5			(52.6		)	(66.2		)
Cash flows from investing activities:
Capital expenditures	(163.4		)	(79.5		)	(60.8		)	(52.8		)
Acquisitions and equity method investments, net of cash acquired	(281.5		)	(39.9		)
Acquisitions of businesses, net of cash acquired							(22.0		)	(201.6		)
Other investing activities, net	—			0.5			6.4			(3.3		)
Net cash provided by (used in) continuing investing activities	(444.9		)	(118.9		)	(76.4		)	(257.7		)
Cash flows from financing activities:
Short-term borrowings (payments), net	242.6			—			23.9			247.9
Proceeds from long-term debt	1,147.0			—			1,497.9			1,147.0
Payments of long-term debt	(1,122.9		)	(7.6		)	—			(1,115.4		)
Net proceeds (repayments) from debt	266.7			(7.6		)
Net proceeds from (payments of) debt							1,521.8			279.5
Debt issuance costs	(11.6		)	(0.2		)	(10.6		)	(8.5		)
Dividends paid to ordinary shareholders	(221.8		)	(204.8		)	(127.7		)	(111.6		)
Dividends paid to noncontrolling interests	(35.5		)	(7.0		)	(9.3		)	(11.0		)
Acquisition of noncontrolling interest	—			(6.8		)
Repurchase of ordinary shares	(500.1		)	(575.2		)	(250.0		)	(250.0		)
Other financing activities, net	10.9			34.7			5.9			5.2
Net cash provided by (used in) continuing financing activities	(491.4		)	(766.9		)	1,130.1			(96.4		)
Effect of exchange rate changes on cash and cash equivalents	(21.3		)	75.7			2.9			46.0
Net increase (decrease) in cash and cash equivalents	(579.9		)	(404.6		)	1,004.0			(374.3		)
Cash and cash equivalents - beginning of period	1,549.4			1,714.7			903.4			1,549.4
Cash and cash equivalents - end of period	$	969.5		$	1,310.1		$	1,907.4		$	1,175.1

See accompanying notes to Condensed Consolidated Financial Statements.

INGERSOLL-RAND PLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1. Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of Ingersoll-Rand plc (Plc or Parent Company), a public limited company incorporated in Ireland in 2009, and its consolidated subsidiaries (collectively, the Company), reflect the consolidated operations of the Company and have been prepared in accordance with United States Securities and Exchange Commission (SEC) interim reporting requirements. Accordingly, the accompanying condensed consolidated financial statements do not include all disclosures required by accounting principles generally accepted in the United States of America (GAAP) for full financial statements and should be read in conjunction with the consolidated financial statements included in the Ingersoll-Rand plc Annual Report on Form 10-K for the year ended December 31, ~~2017~~2018. In the opinion of management, the accompanying condensed consolidated financial statements contain all adjustments, which include only normal recurring adjustments, necessary to fairly state the condensed consolidated results for the interim periods presented.

Note 2. Recent Accounting Pronouncements

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

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

~~Recently Issued~~ Accounting Pronouncements

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

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 is currently assessing the impact of this ASU on its financial statements.

In February 2016, the FASB issued ASU 2016-02, ~~"Leases" (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 Condensed 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 9, “Leases,” for a further discussion on the adoption of ASC 842.

Recently Issued Accounting Pronouncements

In August 2018, the FASB issued ASU 2018-15, "Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract" (ASU 2018-15), which aligns the requirements for capitalizing implementation costs in a cloud-computing arrangement service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. In addition, the guidance also ~~requires additional disclosures by lessees and contains targeted changes to accounting by lessors.~~clarifies the presentation requirements for reporting such costs in the financial statements. ASU ~~2016-02~~2018-15 is effective for annual reporting periods beginning after December 15, ~~2018, including interim periods within those annual periods,~~2019 with early adoption permitted. The ~~standard is required to be adopted at the earliest period presented using a modified retrospective approach. The~~ Company ~~continues to execute on its implementation plan and~~ is currently ~~gathering lease data to derive~~assessing the impact of the ASU on its financial statements. The adoption is anticipated to have a material impact on assets and liabilities due to the recognition of lease rights and obligations on the Balance Sheet effective January 1, 2019. However, the Company does not expect the adoption to have a material impact to its Statement of Cash Flows or Statement of Comprehensive Income.

Note 3. Inventories

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

The major classes of inventory were as follows:


In millions	June 30, 2018			December 31, 2017			March 31, 2019			December 31, 2018
Raw materials	$	532.8		$	502.8		$	609.7		$	550.5
Work-in-process	213.1			180.5			211.7			182.0
Finished goods	1,056.6			941.0			1,245.2			1,028.8
	1,802.5			1,624.3			2,066.6			1,761.3
LIFO reserve	(69.2		)	(68.9		)	(82.9		)	(83.5		)
Total	$	1,733.3		$	1,555.4		$	1,983.7		$	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 ~~$116.9~~$121.5 million and ~~$120.3~~$119.9 million at ~~June 30, 2018~~March 31, 2019 and December 31, ~~2017,~~2018, respectively.

Note 4. Goodwill

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

The changes in the carrying amount of goodwill for the ~~six~~three months ended ~~June 30, 2018~~March 31, 2019 were as follows:

In millions Climate Industrial Total
Net balance as of December 31, 2017 $ 5,065.1
$ 870.6
$ 5,935.7
Acquisitions ⁽¹⁾
120.4
1.8
122.2
Currency translation (49.1 ) (7.7 ) (56.8 )
Net balance as of June 30, 2018 $ 5,136.4
$ 864.7
$ 6,001.1

~~(1) Refer to Note 16, "Acquisitions and Divestitures" for more information regarding acquisitions during the period.~~



In millions	Climate			Industrial			Total
Net balance as of December 31, 2018	$	5,099.2		$	860.3		$	5,959.5
Acquisitions	14.6			—			14.6
Currency translation	(2.8		)	(2.7		)	(5.5		)
Net balance as of March 31, 2019	$	5,111.0		$	857.6		$	5,968.6

The net goodwill balances at ~~June 30, 2018~~March 31, 2019 and December 31, ~~2017~~2018 include $2,496.0 million of accumulated impairment. The accumulated impairment relates entirely to a charge in the fourth quarter of 2008 associated with the Climate segment.

Note 5. 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 amortized on a straight-line basis over their estimated useful lives.

The gross amount of the Company’s intangible assets and related accumulated amortization were as follows:


	June 30, 2018							December 31, 2017							March 31, 2019							December 31, 2018
In millions	Gross carrying amount		Accumulated amortization			Net carrying amount		Gross carrying amount		Accumulated amortization			Net carrying amount		Gross carrying amount		Accumulated amortization			Net carrying amount		Gross carrying amount		Accumulated amortization			Net carrying amount
Completed technologies/patents	$	207.6	$	(180.0	)	$	27.6	$	209.4	$	(177.3	)	$	32.1	$	207.7	$	(183.5	)	$	24.2	$	206.6	$	(182.0	)	$	24.6
Customer relationships	2,092.5		(1,116.2		)	976.3		2,068.9		(1,056.9		)	1,012.0		2,094.0		(1,207.3		)	886.7		2,086.8		(1,176.3		)	910.5
Other	85.1		(51.3		)	33.8		93.9		(52.7		)	41.2		84.4		(55.9		)	28.5		84.5		(54.4		)	30.1
Total finite-lived intangible assets	2,385.2		(1,347.5		)	1,037.7		2,372.2		(1,286.9		)	1,085.3		2,386.1		(1,446.7		)	939.4		2,377.9		(1,412.7		)	965.2
Trademarks (indefinite-lived)	2,667.2		—			2,667.2		2,657.6		—			2,657.6		2,669.1		—			2,669.1		2,669.5		—			2,669.5
Total	$	5,052.4	$	(1,347.5	)	$	3,704.9	$	5,029.8	$	(1,286.9	)	$	3,742.9	$	5,055.2	$	(1,446.7	)	$	3,608.5	$	5,047.4	$	(1,412.7	)	$	3,634.7

Intangible asset amortization expense was ~~$35.2~~$34.7 million and ~~$32.5~~$35.2 million for the three months ended ~~June 30,~~March 31, 2019 and 2018, ~~and 2017, respectively. Intangible asset amortization expense was $70.4 million and $64.7 million for the six months ended June 30, 2018 and 2017,~~ respectively.

Note 6. Debt and Credit Facilities

Short-term borrowings and current maturities of long-term debt consisted of the following:

In millions June 30,
2018 December 31,
2017
Debentures with put feature $ 343.0
$ 343.0
6.875% Senior notes due 2018 ⁽¹⁾
—

749.6
Commercial Paper 249.0

—
Other current maturities of long-term debt 7.6
7.7
Short-term borrowings —
6.7
Total $ 599.6
$ 1,107.0

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



In millions	March 31, 2019		December 31, 2018
Debentures with put feature	$	343.0	$	343.0
Commercial Paper	23.9		—
Other current maturities of long-term debt	7.5		7.6
Total	$	374.4	$	350.6

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 June 30, 2018.~~billion. The Company had ~~$249.0~~an outstanding balance of $23.9 million ofunder its commercial paper ~~outstanding~~program as of ~~June 30,~~March 31, 2019. However, no amounts were outstanding at December 31, 2018.

Debentures with Put Feature

At ~~June 30, 2018~~March 31, 2019 and December 31, ~~2017~~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 $37.2 million of the outstanding debentures in February ~~2018,~~2019, subject to the notice requirement. No material exercises were made.

Long-term debt, excluding current maturities, consisted of the following:

In millions June 30,
2018 December 31,
2017
2.875% Senior notes due 2019 ⁽¹⁾
—
349.4
2.625% Senior notes due 2020 299.2
298.9
2.900% Senior notes due 2021 297.9
—
9.000% Debentures due 2021 124.9
124.9
4.250% Senior notes due 2023 696.8
696.5
7.200% Debentures due 2019-2025 44.8
52.3
3.550% Senior notes due 2024 495.6
495.2
6.480% Debentures due 2025 149.7
149.7
3.750% Senior notes due 2028 544.2
—
5.750% Senior notes due 2043 494.2
494.0
4.650% Senior notes due 2044 295.7
295.6
4.300% Senior notes due 2048 295.7
—
Other loans and notes 0.2
0.5
Total $ 3,738.9
$ 2,957.0

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



In millions	March 31, 2019		December 31, 2018
2.625% Senior notes due 2020	$	299.5	$	299.4
2.900% Senior notes due 2021	298.5		298.3
9.000% Debentures due 2021	124.9		124.9
4.250% Senior notes due 2023	697.3		697.1
7.200% Debentures due 2020-2025	44.8		44.8
3.550% Senior notes due 2024	496.1		495.9
6.480% Debentures due 2025	149.7		149.7
3.500% Senior notes due 2026	396.4		—
3.750% Senior notes due 2028	544.6		544.5
3.800% Senior notes due 2029	743.0		—
5.750% Senior notes due 2043	494.3		494.3
4.650% Senior notes due 2044	295.8		295.8
4.300% Senior notes due 2048	295.9		295.9
4.500% Senior notes due 2049	345.4		—
Other loans and notes	0.3		0.1
Total	$	5,226.5	$	3,740.7

Issuance ~~and Redemption~~ of Senior Notes

In ~~February 2018,~~March 2019, the Company issued ~~$1.15~~$1.5 billion principal amount of senior notes in three tranches through an indirect, wholly-owned subsidiary. The tranches consist of ~~$300~~$400 million aggregate principal amount of ~~2.900%~~3.500% senior notes due ~~2021, $550~~2026, $750 million aggregate principal amount of ~~3.750%~~3.800% senior notes due ~~2028~~2029 and ~~$300~~$350 million aggregate principal amount of ~~4.300%~~4.500% senior notes due ~~2048.~~2049. The notes are fully and unconditionally guaranteed by each of Ingersoll Rand plc, Ingersoll-Rand ~~Irish Holdings Unlimited~~Global Holding Company Limited, Ingersoll-Rand Lux International Holding Company S.à.r.l, Ingersoll-Rand Irish Holdings Unlimited Company, and Ingersoll-Rand ~~Luxembourg Finance S.A.~~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. InThe Company intends to use the net proceeds to finance a pending acquisition (Refer to Note 17, "Acquisitions and Divestitures" for a further discussion on the pending acquisition). During the three months ended March ~~2018,~~31, 2019, the Company ~~used~~capitalized $13.1 million of debt issuance costs which will be amortized over the proceeds to fund the redemption of $750 million aggregate principal amount of 6.875% senior notes due 2018 and $350 million aggregate principal amount of 2.875% senior notes due 2019, with the remainder used for general corporate purposes. As a resultremaining life of the ~~early redemption, the Company recognized $15.4 million of premium expense and $1.2 million of unamortized costs in~~ ~~Interest expense.~~debt.

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 ~~June 30, 2018~~March 31, 2019 and December 31, 2017. On April 17, 2018, the Company entered into a new 5-year, $1.0 billion senior unsecured credit facility and terminated its 5-year, $1.0 billion facility set to expire in March 2019. As a result, the current maturity dates of the Facilities are March 2021 and April 2023.2018.

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 ~~June 30, 2018~~March 31, 2019 and December 31, ~~2017~~2018 was ~~$4.5~~$5.9 billion and ~~$4.4~~$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 ~~June 30, 2018~~March 31, 2019 are the same as those used at December 31, ~~2017.~~2018.

Note 7. 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 ~~rate~~ 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 into Accumulated other comprehensive income(AOCI). ~~Any ineffective portion of a derivative instrument’s change in fair value is recorded in~~ ~~Net earnings~~ ~~in the period of change.~~ 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 Condensed Consolidated Balance Sheets were as follows:


	Derivative assets				Derivative liabilities				Derivative assets				Derivative liabilities
In millions	June 30, 2018		December 31, 2017		June 30, 2018		December 31, 2017		March 31, 2019		December 31, 2018		March 31, 2019		December 31, 2018
Derivatives designated as hedges:
Currency derivatives designated as hedges	$	0.9	$	—	$	0.6	$	1.3	$	0.9	$	1.3	$	2.5	$	0.7
Derivatives not designated as hedges:
Currency derivatives not designated as hedges	1.6		7.2		16.2		1.2		0.5		0.9		0.8		0.6
Total derivatives	$	2.5	$	7.2	$	16.8	$	2.5	$	1.4	$	2.2	$	3.3	$	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.

Currency Derivative Instruments

The notional amount of the Company’s currency derivatives was $~~0.9~~$0.4 billion and $~~0.7~~$0.6 billion at ~~June 30, 2018~~ ~~and~~ ~~December~~March 31, ~~2017, respectively. At~~ ~~June 30, 2018~~2019 and December 31, ~~2017,~~2018, respectively. At March 31, 2019 and December 31, 2018, a net loss of $1.0 million and a net gain of ~~$0.2~~$0.5 million, ~~and $1.2 million~~, net of tax, respectively, was included in AOCI related to the fair value of the Company’s currency derivatives designated as accounting hedges. The amount expected to be reclassified into Net earnings over the next twelve months is a ~~gain~~loss of ~~$0.2~~$1.0 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 ~~June 30, 2018~~,March 31, 2019, the maximum term of the Company’s currency derivatives was approximately 12 ~~months.~~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 $~~7.0~~6.5 million at ~~June 30, 2018~~March 31, 2019 and ~~$6.6~~$6.7 million at December 31, ~~2017~~2018. The net deferred gain at ~~June 30, 2018~~March 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 ~~June 30, 2018~~March 31, 2019 or December 31, ~~2017.~~2018.

The following table represents the amounts associated with derivatives designated as hedges affecting Net earnings and AOCI for the three months ended ~~June 30:~~March 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							Amount of gain (loss) recognized in AOCI							Location of gain (loss) reclassified from AOCI and recognized into Net earnings		Amount of gain (loss) reclassified from AOCI and recognized into Net earnings
In millions	2018			2017				2018				2017			2019				2018					2019				2018
Currency derivatives designated as hedges	$	(0.7	)	$	(1.8	)		Cost of goods sold		$	0.1			$	(0.4	)	$	(1.5	)		$	2.1		Cost of goods sold		$	(0.3	)		$	(0.4	)
Interest rate swaps & locks	—			—			Interest expense		0.2				(0.2		)	—				—			Interest expense		0.2				(0.6		)
Total	$	(0.7	)	$	(1.8	)			$	0.3			$	(0.6	)	$	(1.5	)		$	2.1				$	(0.1	)		$	(1.0	)

The following table represents the amounts associated with derivatives not designated as hedges affecting Other income/(expense), net for the three months ended ~~June 30:~~March 31:

Amount of gain (loss)
recognized in Net earnings
In millions 2018 2017
Currency derivatives not designated as hedges $ (29.6 ) $ 13.8
Total $ (29.6 ) $ 13.8

~~The following table represents the amounts associated with derivatives designated as hedges affecting~~ ~~Net earnings~~ ~~and AOCI for the~~ ~~six~~ ~~months ended~~ ~~June 30~~:

Amount of gain (loss)
recognized in AOCI Location of gain (loss) reclassified from
AOCI and recognized
into Net earnings Amount of gain (loss)
reclassified from AOCI and
recognized into Net earnings
In millions 2018 2017 2018 2017
Currency derivatives designated as hedges $ 1.4
$ (0.6 ) Cost of goods sold $ (0.3 ) $ (0.7 )
Interest rate swaps & locks —
—
Interest expense (0.4 ) (0.3 )
Total $ 1.4
$ (0.6 )
$ (0.7 ) $ (1.0 )

~~The following table represents the amounts associated with derivatives not designated as hedges affecting~~ ~~Other income/(expense), net~~ ~~for the six months ended June 30:~~


	Amount of gain (loss) recognized in Net earnings					Amount of gain (loss) recognized in Net earnings
In millions	2018			2017		2019			2018
Currency derivatives not designated as hedges	$	(23.1	)	$	33.8	$	(3.1	)	$	9.7
Total	$	(23.1	)	$	33.8	$	(3.1	)	$	9.7

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

The following table presents the effects of the Company's designated financial instruments on the associated financial statement line item within the Consolidated Statement of Comprehensive Income where the financial instrument are recorded for the three months ended March 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	$	(2,517.3	)	$	(50.9	)	$	(2,420.2	)	$	(72.9	)
Gain (loss) on cash flow hedging relationships
Currency derivatives:
Amount of gain (loss) reclassified from AOCI and recognized into Net earnings	$	(0.3	)	$	—		$	(0.4	)	$	—
Amount excluded from effectiveness testing recognized in net earnings based on changes in fair value and amortization	$	(0.6	)	$	—		$	—		$	—
Interest rate swaps & locks:
Amount of gain (loss) reclassified from AOCI and recognized into Net earnings	$	—		$	0.2		$	—		$	(0.6	)

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 8. 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 ~~June 30, 2018:~~March 31, 2019:


In millions	Fair Value		Fair value measurements						Fair Value		Fair value measurements
In millions	Fair Value		Level 1		Level 2		Level 3		Fair Value		Level 1		Level 2		Level 3
Assets:
Derivative instruments	$	2.5	$	—	$	2.5	$	—	$	1.4	$	—	$	1.4	$	—
Liabilities:
Derivative instruments	$	16.8	$	—	$	16.8	$	—	$	3.3	$	—	$	3.3	$	—

The following table presents the Company’s fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis as of December 31, ~~2017:~~2018:


In Millions	Fair Value		Fair value measurements
In Millions	Fair Value		Level 1		Level 2		Level 3
In millions									Fair Value		Fair value measurements
In millions									Fair Value		Level 1		Level 2		Level 3
Assets:
Derivative instruments	$	7.2	$	—	$	7.2	$	—	$	2.2	$	—	$	2.2	$	—
Liabilities:
Derivative instruments	$	2.5	$	—	$	2.5	$	—	$	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 ~~June 30, 2018~~March 31, 2019 are the same as those used at December 31, ~~2017.~~2018. There have been no transfers between levels of the fair value hierarchy.

Note 9. 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	March 31, 2019		January 1, 2019
Assets
Operating lease right-of-use assets ⁽¹⁾	Other noncurrent assets	$	526.6	$	517.1
Liabilities
Operating lease current	Other current liabilities	163.7		160.3
Operating lease noncurrent	Other noncurrent liabilities	367.9		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 $5.0 million and $3.7 million at March 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.

The following table includes lease costs and related cash flow information for the three months ended March 31:



	Three months ended
In millions	2019
Operating lease expense	$	49.7
Variable lease expense	7.4
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	49.4
Right-of-use assets obtained in exchange for new operating lease liabilities	57.8

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	March 31, 2019
Operating leases
Remaining nine months of 2019	$	139.9
2020	152.7
2021	112.4
2022	66.9
2023	40.7
After 2023	78.4
Total lease payments	$	591.0
Less: Interest	(59.4		)
Present value of lease liabilities	$	531.6

At March 31, 2019, the weighted average remaining lease term was 4.7 years with a weighted average discount rate of 3.8%.

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

Note 9.10. Pensions and Postretirement Benefits Other than Pensions

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

Pension Plans

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

The components of the Company’s net periodic pension benefit cost for the three ~~and six~~ months ended ~~June 30~~March 31 were as follows:

Three months ended Six months ended
In millions 2018 2017 2018 2017
Service cost $ 17.9
$ 17.9
$ 35.8
$ 35.7
Interest cost 26.9
27.0
53.9
54.0
Expected return on plan assets (36.7 ) (35.2 ) (73.6 ) (70.4 )
Net amortization of:
Prior service costs 1.0
0.9
2.1
1.9
Net actuarial losses 12.5
13.5
25.0
27.1
Net periodic pension benefit cost $ 21.6
$ 24.1
$ 43.2
$ 48.3
Net curtailment and settlement (gains) losses 1.2
—
1.2
2.3
Net periodic pension benefit cost after net curtailment and settlement (gains) losses $ 22.8
$ 24.1
$ 44.4
$ 50.6
Amounts recorded in continuing operations:

Operating income $ 16.9
$ 17.2
$ 34.5
$ 34.3
Other income/(expense), net 3.8
4.5
5.7
11.5
Amounts recorded in discontinued operations 2.1
2.4
4.2
4.8
Total $ 22.8
$ 24.1
$ 44.4
$ 50.6

During the three months ended June 30, 2018, the Company recognized a settlement loss associated with lump sum distributions of a non-US defined benefit plan. During the six months ended June 30, 2017, the Company recognized a curtailment loss associated with certain defined benefit plan freezes that is effective on January 1, 2022.



	Three months ended
In millions	2019			2018
Service cost	$	18.1		$	17.9
Interest cost	29.8			27.0
Expected return on plan assets	(34.6		)	(36.9		)
Net amortization of:
Prior service costs	1.2			1.1
Net actuarial (gains) losses	13.4			12.5
Net periodic pension benefit cost	$	27.9		$	21.6
Net curtailment and settlement (gains) losses	1.6			—
Net periodic pension benefit cost after net curtailment and settlement (gains) losses	$	29.5		$	21.6
Amounts recorded in continuing operations:
Operating income	$	17.1		$	17.6
Other income/(expense), net	9.4			1.9
Amounts recorded in discontinued operations	3.0			2.1
Total	$	29.5		$	21.6

The Company made contributions to its defined benefit pension plans of $~~30.0~~18.6 million and $~~14.6~~10.9 million during the ~~six~~three months ended ~~June 30, 2018~~March 31, 2019 and ~~2017~~2018, respectively. The Company currently projects that it will contribute approximately ~~$80~~$104 million to its plans worldwide in ~~2018.~~2019.

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.

The components of net periodic postretirement benefit cost for the three ~~and six~~ months ended ~~June 30~~March 31 were as follows:


	Three months ended						Six months ended						Three months ended
In millions	2018			2017			2018			2017			2019			2018
Service cost	$	0.7		$	0.7		$	1.4		$	1.5		$	0.6		$	0.7
Interest cost	3.8			4.2			7.6			8.5			3.9			3.8
Net amortization of:
Prior service gains	(1.0		)	(2.1		)	(2.0		)	(4.3		)	(0.1		)	(1.0		)
Net actuarial losses	—			—			—			—
Net actuarial (gains) losses													(1.6		)	—
Net periodic postretirement benefit cost	$	3.5		$	2.8		$	7.0		$	5.7		$	2.8		$	3.5
Amounts recorded in continuing operations:
Operating income	$	0.7		$	0.7		$	1.4		$	1.5		$	0.6		$	0.7
Other income/(expense), net	2.0			1.7			4.0			2.9			1.7			2.0
Amounts recorded in discontinued operations	0.8			0.4			1.6			1.3			0.5			0.8
Total	$	3.5		$	2.8		$	7.0		$	5.7		$	2.8		$	3.5

Note ~~10.~~11. 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 Euro-denominated ordinary shares or preference shares outstanding at ~~June 30, 2018~~March 31, 2019 or December 31, ~~2017.~~2018.

Changes in ordinary shares and treasury shares for the ~~six~~three months ended ~~June 30, 2018 are~~March 31, 2019 were as follows:


In millions	Ordinary shares issued		Ordinary shares held in treasury	Ordinary shares issued		Ordinary shares held in treasury
December 31, 2017	274.0		24.5
December 31, 2018				266.4		24.5
Shares issued under incentive plans, net	1.4		—	1.5		—
Repurchase of ordinary shares	(5.6	)	—	(2.4	)	—
June 30, 2018	269.8		24.5
March 31, 2019				265.5		24.5

Share repurchases are made from time to time in accordance with ~~the Company's~~management's capital allocation strategy, subject to market conditions and regulatory requirements. ~~In April 2017, the Company completed a $1.5 billion share repurchase program that began in April 2014.~~ Shares ~~repurchased prior to October 2014 were~~acquired and canceled upon repurchase ~~and~~are accounted for as a reduction of Ordinary ~~shares~~Shares and Capital in excess of par value, or Retained earnings to the extent Capital in excess of par value ~~was~~is exhausted. ~~Beginning in October 2014, repurchased shares were~~Shares acquired and held in treasury ~~recognized at cost and~~are presented separately on the balance sheet as a reduction to Equity. and recognized at cost. In ~~February 2017,~~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 prior authorized share repurchase program. ~~Repurchases under this program, which began in May 2017, totaled approximately $600 million at December 31, 2017 and are held in treasury.~~ During the ~~six~~three months ended ~~June 30, 2018,~~March 31, 2019, the Company repurchased and canceled approximately ~~$500~~$250 million of its ordinary shares leaving approximately ~~$400 million~~$1.25 billion remaining under the ~~program at June 30, 2018.~~2018 Authorization.

~~The components of~~ ~~Equity~~ ~~for the six months ended June 30, 2018 were as follows:~~

In millions Shareholders’
equity Noncontrolling
interests Total
equity
Balance at December 31, 2017 $ 7,140.3
$ 66.6
$ 7,206.9
Net earnings 568.5
8.2
576.7
Currency translation (151.0 ) (2.7 ) (153.7 )
Derivatives qualifying as cash flow hedges, net of tax 1.8
—
1.8
Pension and OPEB adjustments, net of tax 23.4
—
23.4
Total comprehensive income (loss) 442.7
5.5
448.2
Share-based compensation 49.5
—
49.5
Adoption of ASC 606 2.4
—
2.4
Adoption of ASU 2016-16 (9.1 ) —
(9.1 )
Dividends declared to noncontrolling interests —
(35.5 ) (35.5 )
Dividends declared to ordinary shareholders (352.4 ) —
(352.4 )
Shares issued under incentive plans, net of tax benefit 13.8
—
13.8
Repurchase of ordinary shares (500.1 ) —
(500.1 )
Balance at June 30, 2018 $ 6,787.1
$ 36.6
$ 6,823.7

~~The components of~~ ~~Equity~~ ~~for the six months ended June 30, 2017 were as follows:~~

In millions Shareholders’
equity Noncontrolling
interests Total
equity
Balance at December 31, 2016 $ 6,643.8
$ 74.5
$ 6,718.3
Net earnings 475.7
7.6
483.3
Currency translation 288.9
(0.8 ) 288.1
Derivatives qualifying as cash flow hedges, net of tax 0.6
—
0.6
Pension and OPEB adjustments, net of tax 7.3
—
7.3
Total comprehensive income (loss) 772.5
6.8
779.3
Share-based compensation 40.1
—
40.1
Adoption of ASU 2016-09 ⁽¹⁾
15.1
—
15.1
Acquisition/divestiture of noncontrolling interests (4.9 ) (1.9 ) (6.8 )
Dividends declared to noncontrolling interests —
(7.0 ) (7.0 )
Dividends declared to ordinary shareholders (204.8 ) —
(204.8 )
Shares issued under incentive plans, net of tax benefit 35.0
—
35.0
Repurchase of ordinary shares (575.2 ) —
(575.2 )
Balance at June 30, 2017 $ 6,721.6
$ 72.4
$ 6,794.0

~~(1) The Company adopted ASU No. 2016-09, "Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting" (ASU 2016-09) on January 1, 2017.~~

Accumulated Other Comprehensive Income (Loss)

The changes in Accumulated other comprehensive income (loss) for the ~~six~~three months ended ~~June 30, 2018~~March 31, 2019 ~~are~~was as follows:


In millions	Derivative Instruments			Pension and OPEB			Foreign Currency Translation			Total			Derivative Instruments			Pension and OPEB			Foreign Currency Translation			Total
Balance at December 31, 2017	$	4.7		$	(494.3	)	$	(289.2	)	$	(778.8	)
Balance at December 31, 2018													$	6.7		$	(454.0	)	$	(516.8	)	$	(964.1	)
Other comprehensive income (loss) before reclassifications	1.4			4.8			(151.0		)	(144.8		)	(1.5		)	0.3			(2.4		)	(3.6		)
Amounts reclassified from AOCI	0.7			25.1			—			25.8			0.1			12.9			—			13.0
Provision for income taxes	(0.3		)	(6.5		)	—			(6.8		)	(0.4		)	(3.5		)	—			(3.9		)
Net current period other comprehensive income (loss)	$	1.8		$	23.4		$	(151.0	)	$	(125.8	)	$	(1.8	)	$	9.7		$	(2.4	)	$	5.5
Balance at June 30, 2018	$	6.5		$	(470.9	)	$	(440.2	)	$	(904.6	)
Balance at March 31, 2019													$	4.9		$	(444.3	)	$	(519.2	)	$	(958.6	)

The changes in Accumulated other comprehensive income (loss) for the ~~six~~three months ended ~~June 30, 2017~~March 31, 2018 ~~are~~was as follows:


In millions	Derivative Instruments			Pension and OPEB			Foreign Currency Translation			Total			Derivative Instruments			Pension and OPEB			Foreign Currency Translation			Total
Balance at December 31, 2016	$	2.9		$	(554.4	)	$	(739.0	)	$	(1,290.5	)
Balance at December 31, 2017													$	4.7		$	(494.3	)	$	(289.2	)	$	(778.8	)
Other comprehensive income (loss) before reclassifications	(0.6		)	(8.7		)	288.9			279.6			2.1			(4.6		)	143.9			141.4
Amounts reclassified from AOCI	1.0			24.7			—			25.7			1.0			12.6			—			13.6
Provision for income taxes	0.2			(8.7		)	—			(8.5		)	(0.3		)	(2.6		)	—			(2.9		)
Net current period other comprehensive income (loss)	$	0.6		$	7.3		$	288.9		$	296.8		$	2.8		$	5.4		$	143.9		$	152.1
Balance at June 30, 2017	$	3.5		$	(547.1	)	$	(450.1	)	$	(993.7	)
Balance at March 31, 2018													$	7.5		$	(488.9	)	$	(145.3	)	$	(626.7	)

The reclassifications out of Accumulated other comprehensive income (loss) for the three ~~and six~~ months ended ~~June 30~~March 31 were as follows:


	Three months ended						Six months ended						Three months ended
In millions	2018			2017			2018			2017			2019			2018

Derivative Instruments
Reclassifications of deferred (gains) losses ⁽¹⁾	$	(0.3	)	$	0.6		$	0.7		$	1.0		$	0.1		$	1.0
Provision for (benefit from) income taxes	—			0.3			0.2			0.2			0.3			0.2
Reclassifications, net of taxes	$	(0.3	)	$	0.9		$	0.9		$	1.2		$	0.4		$	1.2

Pension and Postretirement benefits
Amortization of service costs ⁽²⁾	$	—		$	(1.2	)	$	0.1		$	(2.4	)	$	1.1		$	0.1
Amortization of actuarial losses ⁽²⁾	12.5			13.5			25.0			27.1			11.8			12.5
Provision for (benefit from) income taxes	(3.9		)	(3.7		)	(6.5		)	(8.7		)	(3.5		)	(2.6		)
Reclassifications, net of taxes	$	8.6		$	8.6		$	18.6		$	16.0		$	9.4		$	10.0

Total reclassifications, net of taxes	$	8.3		$	9.5		$	19.5		$	17.2		$	9.8		$	11.2

(1) Reclassifications of interest rate swaps and locks are reflected within Interest expense; reclassifications of currency derivatives designated as hedges are reflected in Cost of goods sold.

(2) Reclassifications of the service cost component of pension and postretirement benefit costs are reflected within Operating income; the remaining components are included within Other income/(expense), net.

Note ~~11.~~12. Revenue

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

~~Performance Obligations~~

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

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

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

~~Contracting and Installation~~. The Company enters into various construction-type contracts to design, deliver and build integrated solutions to meet customer specifications. These transactions, primarily included within the Climate segment, provide services that range from the development and installation of new HVAC systems to the design and integration of critical building systems 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 19, "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. The Company’s contracts with customers, dealers and distributors include several forms of sales incentive programs (variable consideration) which are estimated and included in the transaction price. They include, but are not limited to, discounts (i.e. net 30 type), coupons, and rebates where the customer does not have to provide any additional requirements to receive the discount. The Company records an accrual (contra receivable) and a sales deduction for its best estimate determined using the expected value method. In addition, sales returns and customer disputes involving a question of quantity or price are also accounted for as variable consideration. All other incentives or incentive programs where the customer is required to reach a certain sales level, remain a customer for a certain period of time, provide a rebate form or is subject to additional requirements are accounted for as a reduction of revenue and establishment of a liability for its best estimate determined using the expected value method. The Company considers historical data in determining its best estimates of variable consideration. These estimates are reviewed regularly for appropriateness, considering also whether the estimates should be constrained in order to avoid a significant reversal of revenue recognition in a future period. If updated information or actual amounts are different from previous estimates of variable consideration, the revisions are included in the results for the period in which they become known through a cumulative effect adjustment to revenue. In addition, the Company’s contracts with customers generally do not include significant financing components or noncash consideration.

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

Disaggregated Revenue

~~A summary of~~ Net revenues by destination for the three ~~and six~~ months ended ~~June 30, 2018 is~~March 31 were as follows:


					Three months ended
In millions	Three months ended		Six months ended		2019		2018
Climate
United States	$	2,410.4	$	4,122.2	$	1,940.0	$	1,711.8
Non-U.S.	1,083.4		1,981.4		863.7		898.0
Total Climate	$	3,493.8	$	6,103.6	$	2,803.7	$	2,609.8
Industrial
United States	$	450.6	$	865.2	$	390.8	$	414.6
Non-U.S.	413.3		773.4		381.4		360.1
Total Industrial	$	863.9	$	1,638.6	$	772.2	$	774.7

~~A summary of~~ Net revenues by major type of good or service for the three ~~and six~~ months ended ~~June 30, 2018 is~~March 31 were as follows:


					Three months ended
In millions	Three months ended		Six months ended		2019		2018
Climate
Equipment	$	2,454.8	$	4,226.3	$	1,938.3	$	1,771.5
Services and parts	1,039.0		1,877.3		865.4		838.3
Total Climate	$	3,493.8	$	6,103.6	$	2,803.7	$	2,609.8
Industrial
Equipment	$	534.9	$	1,005.5	$	462.2	$	470.6
Services and parts	329.0		633.1		310.0		304.1
Total Industrial	$	863.9	$	1,638.6	$	772.2	$	774.7

Revenue from goods and services transferred to customers at a point in time accounted for approximately 85% of the Company's revenue for the ~~six~~three months ended ~~June 30, 2018.~~March 31, 2019.

Contract Balances

The opening and closing balances of contract assets and contract liabilities arising from contracts with customers for the period ended ~~June 30, 2018~~March 31, 2019 and December 31, ~~2017~~2018 were as follows:


In millions	June 30, 2018		December 31, 2017		March 31, 2019		December 31, 2018
Contract assets	$	199.6	$	166.0	$	222.5	$	210.9
Contract liabilities	864.6		814.2		893.4		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 Condensed 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 three ~~and six~~ months ended ~~June 30, 2018,~~March 31, 2019, changes in contract asset and liability balances were not materially impacted by any other factors.

Approximately ~~75%~~30% of the contract liability balance at December 31, 2018 was recognized as revenue during the ~~beginning~~three months ended March 31, 2019. Additionally, approximately 27% of the ~~period is~~contract liability balance at March 31, 2019 was classified as noncurrent and not expected to be recognized as revenue ~~during 2018. 10% of this amount was recognized during~~in the three months ended June 30, 2018 and 40% of this amount was recognized during the six months ended June 30, 2018. The remaining 25% of the contract liability balance at the beginning of the period is included within ~~Other noncurrent liabilities~~ ~~and expected to be recognized as revenue during 2019 or thereafter.~~

~~ASC 606 adoption impact~~

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

contract, the Company will have no alternative use for the equipment as well as the right to payment for performance completed to date. This change results in accelerated recognition of revenue and increases the balance of contract assets compared to the previous revenue recognition standard.

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

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

Three months ended June 30, 2018 Six months ended June 30, 2018
In millions As Reported Balances Without Adoption of ASC 606 Effect of Change Higher/(Lower) As Reported Balances Without Adoption of ASC 606 Effect of Change Higher/(Lower)
Net revenues $ 4,357.7
$ 4,353.7
$ 4.0
$ 7,742.2
$ 7,734.9
$ 7.3
Cost of goods sold (2,964.1 ) (2,960.9 ) 3.2
(5,384.3 ) (5,377.9 ) 6.4
Selling and administrative expenses (753.3 ) (753.3 ) —
(1,474.2 ) (1,474.2 ) —
Operating income 640.3
639.5
0.8
883.7
882.8
0.9
Interest expense (50.3 ) (50.3 ) —
(123.2 ) (123.2 ) —
Other income/(expense), net (3.5 ) (3.5 ) —
(7.5 ) (7.5 ) —
Earnings before income taxes 586.5
585.7
0.8
753.0
752.1
0.9
Provision for income taxes (128.0 ) (127.8 ) 0.2
(161.0 ) (160.8 ) 0.2
Earnings from continuing operations $ 458.5
$ 457.9
$ 0.6
$ 592.0
$ 591.3
$ 0.7

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

June 30, 2018
In millions As Reported Balances Without Adoption of ASC 606 Effect of Change Higher/(Lower)
Assets
     Accounts and notes receivable, net $ 2,946.9
$ 2,949.7
$ (2.8 )
     Inventories, net 1,733.3
1,739.7
(6.4 )
     Other current assets 512.0
501.4
10.6
     Other noncurrent assets 863.4
863.4
—

Liabilities
     Accrued expenses and other current liabilities $ 1,892.6
$ 1,891.9
$ 0.7
     Deferred and noncurrent income taxes 735.4
735.4
—
     Other noncurrent liabilities 1,079.5
1,079.5
—

Equity
     Retained earnings $ 9,109.9
$ 9,109.2
$ 0.7
next 12 months.

Note ~~12.~~13. Share-Based Compensation

The Company accounts for stock-based compensation plans in accordance with ASC 718, "Compensation - Stock Compensation" (ASC 718), which requires a fair-value based method for measuring the value of stock-based compensation. Fair value is measured once at the date of grant and is not adjusted for subsequent changes. The Company’s share-based compensation plans include programs for stock options, restricted stock units (RSUs), performance share units (PSUs) and deferred compensation.

Compensation Expense

Share-based compensation expense is related to continuing operations and is included in Selling and administrative expenses. The expense recognized for the three ~~and six~~ months ended ~~June 30~~March 31 was as follows:


	Three months ended						Six months ended						Three months ended
In millions	2018			2017			2018			2017			2019			2018
Stock options	$	5.7		$	4.0		$	18.0		$	12.7		$	11.8		$	12.3
RSUs	8.7			6.6			22.0			16.9			13.0			13.3
Performance shares	6.9			6.8			11.3			11.2			4.4			4.4
Deferred compensation													0.9			1.0
Other	1.2			1.7			2.0			3.1			1.4			(0.2		)
Pre-tax expense	22.5			19.1			53.3			43.9			31.5			30.8
Tax benefit	(5.5		)	(7.3		)	(13.0		)	(16.8		)	(7.6		)	(7.5		)
After-tax expense	$	17.0		$	11.8		$	40.3		$	27.1		$	23.9		$	23.3

Grants issued during the ~~six~~three months ended ~~June 30~~March 31 were as follows:


	2018			2017			2019			2018
	Number granted	Weighted- average fair value per award		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	1,524,625	$	15.49	1,517,235	$	13.46	1,259,344	$	17.09	1,414,411	$	15.57
RSUs	317,073	$	89.69	335,743	$	80.36	242,104	$	100.70	279,901	$	89.97
Performance shares ⁽¹⁾	357,096	$	106.06	391,772	$	93.17	306,352	$	110.57	352,794	$	106.09

(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 an expense for the entire 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 three the~~six~~ months ended ~~June 30~~March 31:


	2018		2017		2019		2018
Dividend yield	2.00	%	2.00	%	2.09	%	2.00	%
Volatility	21.64	%	22.46	%	21.46	%	21.65	%
Risk-free rate of return	2.48	%	1.80	%	2.49	%	2.48	%
Expected life in years	4.8		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 U.S. 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.

Performance Shares

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

Beginning with the 2018 grant year, PSU awards are earned based 50% upon a performance condition, measured by relative Cash Flow Return on Invested Capital (CROIC) ~~growth~~ to the industrial group of companies in the S&P 500 Index over a 3-year performance period, and 50% upon a market condition, measured by the Company's relative total shareholder return (TSR) as compared to the TSR of the industrial group of companies in the S&P 500 Index over a 3-year performance period. The fair value of the market condition is estimated using a Monte Carlo Simulation approach in a risk-neutral framework based upon historical volatility, risk-free rates and correlation matrix. Awards granted prior to 2018 are earned based 50% upon a performance condition, measured by relative 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 500 Index over a 3-year performance 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 ~~13.~~14. Restructuring Activities

The Company incurs ~~ongoing~~ costs associated with announced restructuring initiatives intended to result in improved operating performance, profitability and working capital levels. Actions associated with these initiatives may include workforce reduction, improving manufacturing productivity, realignment of management structures and rationalizing certain assets. The following table details restructuring charges recorded during the three ~~and six~~ months ended ~~June 30:~~March 31:


	Three months ended				Six months ended				Three months ended
In millions	2018		2017		2018		2017		2019		2018
Climate	$	4.2	$	1.8	$	8.1	$	29.8	$	5.2	$	3.9
Industrial	1.5		3.4		37.2		8.1		11.0		35.7
Corporate and Other	1.4		0.3		6.2		0.3		0.9		4.8
Total	$	7.1	$	5.5	$	51.5	$	38.2	$	17.1	$	44.4

Cost of goods sold	$	2.5	$	2.3	$	39.0	$	32.6	$	13.8	$	36.5
Selling and administrative expenses	4.6		3.2		12.5		5.6		3.3		7.9
Total	$	7.1	$	5.5	$	51.5	$	38.2	$	17.1	$	44.4

The changes in the restructuring reserve for the ~~six~~three months ended ~~June 30, 2018~~March 31, 2019 were as follows:


In millions	Climate			Industrial			Corporate and Other			Total			Climate			Industrial			Corporate and Other			Total
December 31, 2017	$	7.4		$	6.1		$	2.5		$	16.0
December 31, 2018													$	18.9		$	29.9		$	2.6		$	51.4
Additions, net of reversals ⁽¹⁾	8.1			33.1			6.2			47.4			5.2			5.4			0.9			11.5
Cash paid/other	(9.5		)	(5.4		)	(6.4		)	(21.3		)	(7.2		)	(12.4		)	(1.2		)	(20.8		)
June 30, 2018	$	6.0		$	33.8		$	2.3		$	42.1
March 31, 2019													$	16.9		$	22.9		$	2.3		$	42.1

(1) Excludes the non-cash costs of asset rationalizations ($~~4.1~~5.6 million).

~~Ongoing~~Current restructuring actions ~~primarily~~ 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 ~~first quarter of 2018,~~three months ended March 31, 2019, costs associated with announced restructuring actions primarily included the ~~Company announced plans~~following:

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

the plan to close a Non-U.S. manufacturing facility within the Industrial segment and relocate to other U.S. and Non-U.S. facilities 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 ~~June 30, 2018,~~March 31, 2019, the Company had $42.1 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. In addition, the Company incurred $0.6 million of non-qualified restructuring charges during six months ended June 30, 2018, which represent costs that are directly attributable to restructuring activities, but do not fall into the severance, exit or disposal category. These non-qualified restructuring charges were incurred to improve the Company's cost structure.

Note ~~14.~~15. Other Income/(Expense), Net

The components of Other income/(expense), net for the three ~~and six~~ months ended ~~June 30~~March 31 are as follows:


	Three months ended						Six months ended						Three months ended
In millions	2018			2017			2018			2017			2019			2018
Interest income	$	2.6		$	1.3		$	6.2		$	4.4
Interest income (loss)													$	(0.6	)	$	3.6
Exchange gain (loss)	(1.8		)	(3.4		)	(9.1		)	(1.5		)	(4.3		)	(7.3		)
Other components of net periodic benefit cost	(5.8		)	(6.2		)	(9.7		)	(14.4		)	(11.1		)	(3.9		)
Other activity, net	1.5			(3.2		)	5.1			(4.7		)	(2.8		)	3.6
Other income/(expense), net	$	(3.5	)	$	(11.5	)	$	(7.5	)	$	(16.2	)	$	(18.8	)	$	(4.0	)

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 and defense of asbestos-related claims, insurance settlements on asbestos-related matters and the revaluation of asbestos recoveries. Refer to Note ~~19,~~20, "Commitments and Contingencies," for more information regarding asbestos-related matters.

Note ~~15.~~16. Income Taxes

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

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

The Company continues to evaluate how the provisions of the Act will be accounted for under ASC 740, “Income Taxes” (ASC 740). The analysis is provisional and is subject to change due to the additional time required to accurately calculate and review the complex tax law. The Company will continue to assess any regulatory guidance that is issued which could have an impact on the provisional estimates. In addition, the Company is gathering information and performing additional analysis on these estimates, including, but not limited to, the amount of earnings and profits subject to the transition tax, the calculation of foreign tax credits, the local tax treatment of future distributions of unremitted earnings and in regard to the remeasurement of U.S. deferred taxes, the filing of its 2017 federal and state income tax returns. Measurement period adjustments will be reported as a component of

~~Provision for income taxes~~ ~~in the reporting period the amounts are determined. The final accounting will be completed no later than one year from the enactment of the Act.~~

During the three months ended June 30, 2018, the Company recognized measurement period adjustments for (1) the remeasurement of U.S. deferred tax balances for the reduction in the tax rate and (2) the taxes accrued relating to the change in permanent reinvestment assertion for unremitted earnings of certain foreign subsidiaries. A reconciliation of provisional amounts and related measurement period adjustments are as follows:

In millions Provisional Amounts Reported Measurement Period Adjustments Updated Provisional Amounts
Remeasurement of deferred tax balances $ (300.6 ) $ (1.9 ) $ (302.5 )
Transition tax 160.7
—
160.7
Change in permanent reinvestment assertion 118.9
3.5
122.4
Income tax benefit, net $ (21.0 ) $ 1.6
$ (19.4 )

The Company accounts for its Provision for income taxes in accordance with ASC 740, which requires an estimate of the annual effective income tax rate for the full year to be applied to the respective interim period, taking into account year-to-date amounts and projected results for the full year. For the ~~six~~three months ended ~~June 30,~~March 31, 2019 and March 31, 2018, ~~and June 30, 2017,~~ the Company's effective income tax rate was ~~21.4%~~17.3% and ~~25.7%~~19.8%, respectively. The effective income tax rate for the ~~six~~three months ended ~~June 30, 2018~~March 31, 2019 was ~~higher~~lower than the U.S. statutory rate of 21% primarily due to ~~U.S. state and local income taxes and certain non-deductible employee expenses partially offset by~~ excess tax benefits from employee share-based payments, the deduction for Foreign Derived Intangible Income and earnings in non-U.S. jurisdictions, which in aggregate have a lower effective tax ~~rate~~rate. These amounts were partially offset by U.S. state and ~~a reduction to the interest liability associated with the Company's unrecognized tax benefits.~~local taxes and certain non-deductible employee expenses. The effective tax rate for the ~~six~~three months ended ~~June 30, 2017~~March 31, 2018 was lower than the U.S. statutory rate of ~~35%~~21% primarily due to excess tax benefits from employee share-based payments and earnings in non-U.S. jurisdictions, which in aggregate have a lower effective tax rate. These amounts were partially offset by ~~a non-cash charge during the second quarter of 2017 related to the establishment of a valuation allowance on certain net deferred tax assets in Brazil of approximately $33 million.~~U.S. state and local income taxes.

Total unrecognized tax benefits as of ~~June 30, 2018~~March 31, 2019 and December 31, ~~2017~~2018 were ~~$120.7~~$87.3 million and ~~$120.5~~$83.0 million, respectively. Although management believes its tax positions and related provisions reflected in the Condensed Consolidated Financial Statements are fully supportable, it recognizes that these tax positions and related provisions may be challenged by various tax authorities. These tax positions and related provisions are reviewed on an ongoing basis and are adjusted as additional facts and information become available, including progress on tax audits, changes in interpretations of tax laws, developments in case law and closing of statute of limitations. To the extent that the ultimate results differ from the original or adjusted estimates of the Company, the effect will be recorded in Provision for income taxes.

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

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 is complete or effectively settled for the years prior to 2008, with certain matters prior to 2008 being resolved through appeals and litigation and also unilateral procedures as provided for under double tax treaties.

Note ~~16.~~17. Acquisitions and Divestitures

Acquisitions ~~and Equity Method Investments~~

During the ~~six~~three months ended ~~June 30, 2018,~~March 31, 2019, the Company ~~acquired several businesses and~~ entered into a ~~joint venture.~~final, binding and irrevocable offer letter with Silver II GP Holdings S.C.A., an affiliate of BC Partners Advisors L.P. and The ~~aggregate~~Carlyle Group (the Seller) pursuant to which the Company made a binding offer to acquire the precision flow systems management business (PFS) for approximately $1.45 billion in cash, ~~paid, net~~subject to working capital and certain other adjustments (the Acquisition). PFS is a manufacturer of ~~cash acquired, totaled $281.5 million~~precision flow control equipment including precision dosing pumps and controls that serve the global water, oil and gas, agriculture, industrial and specialty market segments. The offer was ~~funded through cash on hand. Acquisitions are recorded using~~subject to completion of the ~~acquisition method~~information and consultation processes with employee representative bodies of ~~accounting~~PFS in ~~accordance with ASC 805 "Business Combinations." As a result,~~applicable jurisdictions. The process was completed in April 2019 and the ~~aggregate price has been allocated~~Seller accepted the offer. Completion of the Acquisition is subject to ~~assets acquired~~customary closing conditions and ~~liabilities assumed based on~~is expected to close mid-year 2019 subject to regulatory approvals. The results of PFS will be included in the ~~estimate~~Company’s consolidated financial statements as of ~~fair market value of such assets and liabilities~~

at the date of ~~acquisition. Ownership interests in a joint venture are accounted for under the equity method when the Company does not have a controlling financial interest~~acquisition and reported within ~~Other noncurrent assets~~ on the ~~Balance Sheet.~~

Primary activity during 2018 relates to the acquisition of ICS Group Holdings Limited in January 2018. The business, reported within the Climate segment, specializes in the temporary rental of energy efficient chillers for commercial and industrial buildings across Europe. In addition, the Company continues to acquire independent dealers to expand its distribution network. Intangible assets associated with these acquisitions totaled $41.8 million and primarily relate to trademarks and customer relationships. Any excess of the purchase price over the estimated fair value of net assets acquired is recognized as goodwill and totaled $122.2 million. For certain acquisitions, the Company is still in the process of valuing the acquired assets and liabilities assumed and will adjust preliminary values, if necessary, through measurement period adjustments once fair value estimates are finalized. The impact of these acquisitions are not considered material to the Company’s results of operations.

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

Divestitures

The Company has retained costs from previously sold businesses that ~~mainly~~primarily include ongoing expenses ~~related to~~for postretirement benefits, product liability and legal ~~costs (mostly asbestos related)~~costs. In addition, the Company includes amounts related to the 2013 spin-off of our commercial and residential security business, now an independent public company operating under the name of Allegion plc (Allegion). The components of Discontinued operations, net of tax for the three ~~and six~~ months ended ~~June 30~~March 31 were as follows:


	Three months ended						Six months ended					Three months ended
In millions	2018			2017			2018			2017		2019			2018
Pre-tax earnings (loss) from discontinued operations	$	(8.6	)	$	10.0		$	(20.7	)	$	0.9	$	(1.9	)	$	(12.1	)
Tax benefit (expense)	2.7			(1.7		)	5.4			0.9		(0.2		)	2.7
Discontinued operations, net of tax	$	(5.9	)	$	8.3		$	(15.3	)	$	1.8	$	(2.1	)	$	(9.4	)

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. Refer to Note ~~19,~~20, "Commitments and Contingencies," for more information related to asbestos.

Note ~~17.~~18. Earnings Per Share (EPS)

Basic EPS is calculated by dividing Net earnings attributable to Ingersoll-Rand plc by the weighted-average number of ordinary shares outstanding for the applicable period. Diluted EPS is calculated after adjusting the denominator of the basic EPS calculation for the effect of all potentially dilutive ordinary shares, which in the Company’s case, includes shares issuable under share-based compensation plans. The following table summarizes the weighted-average number of ordinary shares outstanding for basic and diluted earnings per share calculations for the three ~~and six~~ months ended ~~June 30~~March 31:


	Three months ended		Six months ended		Three months ended
In millions	2018	2017	2018	2017
In millions, except per share amounts					2019		2018
Weighted-average number of basic shares	247.5	256.4	248.9	257.9	242.5		250.4
Shares issuable under incentive stock plans	2.6	3.3	2.7	3.2	2.7		2.6
Weighted-average number of diluted shares	250.1	259.7	251.6	261.1	245.2		253.0
Anti-dilutive shares	2.1	1.2	1.6	1.6	1.4		1.7

Dividends declared per ordinary share					$	0.53	$	0.45

Note ~~18.~~19. Business Segment Information

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

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

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

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

A summary of operations by reportable segment for the three ~~and six~~ months ended ~~June 30~~March 31 was as follows:


	Three months ended						Six months ended						Three months ended
In millions	2018			2017			2018			2017			2019			2018
Net revenues
Climate	$	3,493.8		$	3,143.8		$	6,103.6		$	5,467.9		$	2,803.7		$	2,609.8
Industrial	863.9			764.6			1,638.6			1,441.1			772.2			774.7
Total	$	4,357.7		$	3,908.4		$	7,742.2		$	6,909.0		$	3,575.9		$	3,384.5
Segment operating income
Climate	$	582.7		$	527.1		$	843.1		$	744.4		$	313.1		$	260.4
Industrial	121.2			92.2			181.1			158.0			83.9			59.9
Unallocated corporate expense	(63.6		)	(61.7		)	(140.5		)	(129.8		)	(78.5		)	(76.9		)
Operating income	$	640.3		$	557.6		$	883.7		$	772.6		$	318.5		$	243.4

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

In millions December 31, 2017
United States $ 1,878.1
Non-U.S. 758.5
Total $ 2,636.6

Note ~~19.~~20. Commitments and Contingencies

The Company is involved in various litigations, claims and administrative proceedings, including those related to environmental, asbestos, and product liability matters. In accordance with ASC 450, ~~"Contingencies,"~~"Contingencies" (ASC 450), the Company records accruals for loss contingencies when it is both probable that a liability will be incurred and the amount of the loss can be reasonably estimated. Amounts recorded for identified contingent liabilities are estimates, which are reviewed periodically and adjusted to reflect additional information when it becomes available. Subject to the uncertainties inherent in estimating future costs for contingent liabilities, except as expressly set forth in this note, management believes that any liability which may result from these legal matters would not have a material adverse effect on the financial condition, results of operations, liquidity or cash flows of the Company.

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 ~~June 30, 2018~~March 31, 2019 and December 31, ~~2017,~~2018, the Company has recorded reserves for environmental matters of ~~$42.8~~$42.0 million and ~~$41.9~~$41.2 million, respectively. Of these amounts, ~~$37.2~~$36.8 million and ~~$36.8~~$36.1 million, respectively, relate to remediation of sites previously disposed of 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 ~~assist in calculating~~perform a detailed analysis and project an ~~estimate~~estimated range of the Company’s total liability for pending and unasserted future asbestos-related ~~claims~~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 ~~annually performs a detailed analysis with the assistance of an outside expert to update its estimated asbestos-related liability.~~are recorded separately as services are incurred. The methodology used to ~~project the Company’s total liability for pending and unasserted potential future asbestos-related claims relied~~prepare estimates relies upon and ~~included~~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 ~~most recent three-year~~ 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 ~~most recent three-year~~ 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 ~~1.5%~~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.~~future (currently projected through 2053).

At ~~June 30, 2018~~March 31, 2019 and December 31, ~~2017~~,2018, over 8075 percent of the open and active claims against the Company are ~~non-malignancy~~non-malignant or unspecified disease claims. In addition, the Company has a number of claims ~~many of~~ which have been placed on inactive or ~~deferral~~deferred dockets and ~~the vast majority of which~~expected to have little or no settlement value against the ~~Company, particularly in light of recent changes in the legal and judicial treatment of such claims.~~

Company.

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


In millions	June 30, 2018		December 31, 2017		March 31, 2019		December 31, 2018
Accrued expenses and other current liabilities	$	48.9	$	48.2	$	65.5	$	63.3
Other noncurrent liabilities	516.4		556.6		526.8		548.3
Total asbestos-related liabilities	$	565.3	$	604.8	$	592.3	$	611.6

Other current assets	$	63.9	$	56.1	$	70.0	$	69.2
Other noncurrent assets	192.1		210.3		191.2		199.0
Total asset for probable asbestos-related insurance recoveries	$	256.0	$	266.4	$	261.2	$	268.2

The Company's asbestos insurance receivables related to Ingersoll-Rand Company and Trane were ~~$130.5~~$139.6 million and ~~$125.5~~$121.6 million at ~~June 30, 2018, respectively,~~March 31, 2019, and $141.7 million and $~~138.5 million~~ ~~and $127.9~~126.5 million at December 31, ~~2017~~2018~~, respectively.~~. The receivable attributable to Trane for probable insurance recoveries as of ~~June 30, 2018~~March 31, 2019 is entirely supported by settlement agreements between Trane and the respective insurance carriers. Most of these settlement agreements constitute “coverage-in-place” arrangements, in which the insurer signatories agree to reimburse Trane for specified portions of its costs for asbestos bodily injury claims and Trane agrees to certain claims-handling protocols and grants to the insurer signatories certain releases and indemnifications.

The costs associated with the settlement and defense of asbestos-related claims, insurance settlements on asbestos-related matters and the revaluation of the Company's liability for potential future claims are included in the income statement within continuing operations or discontinued operations depending on the business to which they relate. ~~The income (expense) associated with these transactions, for the three and six months ended June 30, were as follows:~~

Three months ended Six months ended
In millions 2018 2017 2018 2017
Continuing operations $ (0.7 ) $ (2.6 ) $ 0.8
$ (2.6 )
Discontinued operations (2.3 ) 16.0
(9.5 ) 12.7
Total $ (3.0 ) $ 13.4
$ (8.7 ) $ 10.1

~~Ongoing income~~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. ~~During the second quarter of 2017, the Company reached a settlement with insurance carriers related to Ingersoll Rand Company asbestos matters. Ongoing income~~Income and expenses associated with Trane’s asbestos-related matters are recorded within Other income/(expense), net as part of continuing operations.

The income (expense) associated with these transactions, for the three months ended March 31, were as follows:



	Three months ended
In millions	2019			2018
Continuing operations	$	(1.8	)	$	1.5
Discontinued operations	(3.0		)	(7.2		)
Total	$	(4.8	)	$	(5.7	)

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~~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~~Company's asbestos claim defense and indemnity costs. The responding defendants generally challenged the ~~Company’s~~Company's right to recovery, and raised various coverage defenses. Since filing the actions, ~~Ingersoll-Rand~~Ingersoll Rand Company has settled with approximately two-thirds of the insurer defendants, and has dismissed one of the actions in its entirety.

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

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

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

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

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

The amounts recorded by the Company for asbestos-related liabilities and insurance-related assets are based on currently available information. The Company’s actual liabilities or insurance recoveries could be significantly higher or lower than those recorded if assumptions used in the calculations vary significantly from actual results. Key variables in these assumptions include the number and type of new claims to be filed each year, the average cost of resolution of each such new claim, the resolution of coverage issues with insurance carriers, and the solvency risk with respect to the Company’s insurance carriers. Furthermore, predictions with respect to these variables are subject to greater uncertainty as the projection period lengthens. Other factors that may affect the Company’s liability include uncertainties surrounding the litigation process from jurisdiction to jurisdiction and from case to case, reforms that may be made by state and federal courts, and the passage of state or federal tort reform legislation.

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

Warranty Liability

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

The changes in the standard product warranty liability for the ~~six~~three months ended ~~June 30~~March 31 were as follows:


In millions	2018			2017			2019			2018
Balance at beginning of period	$	270.5		$	261.6		$	278.9		$	270.5
Reductions for payments	(74.0		)	(65.8		)	(33.8		)	(35.5		)
Accruals for warranties issued during the current period	75.1			64.3			36.9			34.0
Changes to accruals related to preexisting warranties	4.5			2.4			(1.1		)	1.0
Translation	(1.5		)	3.4			(0.4		)	1.5
Balance at end of period	$	274.6		$	265.9		$	280.5		$	271.5

Standard product warranty liabilities are classified as Accrued expenses and other current liabilities or Other noncurrent liabilities based on their expected term. The Company's total current standard product warranty reserve at ~~June 30, 2018~~March 31, 2019 and December 31, ~~2017~~2018 was $~~147.5~~$152.5 million and $~~144.5~~$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 ~~six~~three months ended ~~June 30~~March 31 were as follows:


In millions	2018			2017			2019			2018
Balance at beginning of period	$	293.0		$	295.9		$	292.2		$	293.0
Amortization of deferred revenue for the period	(54.6		)	(52.8		)	(27.2		)	(26.0		)
Additions for extended warranties issued during the period	57.0			55.2			28.4			23.8
Changes to accruals related to preexisting warranties	(0.1		)	0.7			(0.2		)	(0.3		)
Translation	(0.9		)	1.1			—			0.4
Balance at end of period	$	294.4		$	300.1		$	293.2		$	290.9

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 revenue. The Company's total current extended warranty liability at ~~June 30, 2018~~March 31, 2019 and December 31, ~~2017~~2018 was ~~$102.8~~$103.4 million and $~~100.0~~$103.1 million,, respectively.

~~Other Commitments and Contingencies~~

Trane has performance guarantees related to energy savings contracts, totaling approximately $450 million extending from 2018-2038. These guarantees are provided under the maintenance portion of contracting and installation agreements. Through

~~June 30, 2018, the Company has experienced no significant losses under such arrangements and considers the probability of any significant future losses to be remote.~~

Note ~~20.~~21. Guarantor Financial Information

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

The following table shows the Company’s guarantor relationships as of ~~June 30, 2018:~~March 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.à.r.l. (Lux International)	None	All notes issued by Global Holding and Lux Finance
Ingersoll-Rand Global Holding Company Limited (Global Holding)	2.900% Senior notes due 2021 4.250% Senior notes due 2023 3.750% Senior notes due 2028 5.750% Senior notes due 2043 4.300% Senior notes due 2048	All notes issued by Lux Finance
Ingersoll-Rand Company (New Jersey)	9.000% Debentures due 2021 7.200% Debentures due 2019-2025 6.480% Debentures due 2025 Puttable debentures due 2027-2028	All notes issued by Global Holding and Lux Finance
Ingersoll-Rand Luxembourg Finance S.A. (Lux Finance)	2.625% Notes due 2020 3.550% Notes due 2024 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 all 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 ~~June 30, 2018.~~March 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.

Condensed Consolidating Statement of Comprehensive Income

For the three months ended ~~June 30, 2018~~March 31, 2019

In millions Plc Irish
Holdings Lux International Global
Holding New
Jersey Lux
Finance Other
Subsidiaries Consolidating
Adjustments
Consolidated
Net revenues $ —
$ —
$ —
$ —
$ 345.1
$ —
$ 4,111.4
$ (98.8 ) $ 4,357.7
Cost of goods sold —
—
—
—
(252.2 ) —
(2,810.7 ) 98.8
(2,964.1 )
Selling and administrative expenses (4.5 ) —
(0.1 ) —
(126.3 ) 0.1
(622.5 ) —
(753.3 )
Operating income (loss) (4.5 ) —
(0.1 ) —
(33.4 ) 0.1
678.2
—
640.3
Equity earnings (loss) in subsidiaries, net of tax 460.8
461.0
368.1
372.7
402.0
49.4
—
(2,114.0 ) —
Interest expense —
—
—
(26.7 ) (11.8 ) (11.8 ) —
—
(50.3 )
Intercompany interest and fees (8.5 ) —
14.4
(50.5 ) 9.0
(1.2 ) 36.8
—
—
Other income/(expense), net —
—
(0.2 ) —
(4.5 ) —
1.2
—
(3.5 )
Earnings (loss) before income taxes 447.8
461.0
382.2
295.5
361.3
36.5
716.2
(2,114.0 ) 586.5
Benefit (provision) for income taxes 0.3
—
(0.3 ) 17.8
18.8
—
(164.6 ) —
(128.0 )
Earnings (loss) from continuing operations 448.1
461.0
381.9
313.3
380.1
36.5
551.6
(2,114.0 ) 458.5
Discontinued operations, net of tax —
—
—
—
(7.5 ) —
1.6
—
(5.9 )
Net earnings (loss) 448.1
461.0
381.9
313.3
372.6
36.5
553.2
(2,114.0 ) 452.6
Less: Net earnings attributable to noncontrolling interests —
—
—
—
—
—
(4.5 ) —
(4.5 )
Net earnings (loss) attributable to Ingersoll-Rand plc $ 448.1
$ 461.0
$ 381.9
$ 313.3
$ 372.6
$ 36.5
$ 548.7
$ (2,114.0 ) $ 448.1

Other comprehensive income (loss), net of tax (277.9 ) (277.3 ) (266.3 ) (171.8 ) (171.6 ) (90.6 ) (283.4 ) 1,261.0
(277.9 )
Comprehensive income (loss) attributable to Ingersoll-Rand plc $ 170.2
$ 183.7
$ 115.6
$ 141.5
$ 201.0
$ (54.1 ) $ 265.3
$ (853.0 ) $ 170.2

~~Condensed Consolidating Statement of Comprehensive Income~~

~~For the six months ended June 30, 2018~~


In millions	Plc			Irish Holdings			Lux International			Global Holding			New Jersey			Lux Finance			Other Subsidiaries			Consolidating Adjustments			Consolidated			Plc			Irish Holdings		Lux International			Global Holding			New Jersey			Lux Finance			Other Subsidiaries			Consolidating Adjustments			Consolidated
Net revenues	$	—		$	—		$	—		$	—		$	692.7		$	—		$	7,252.1		$	(202.6	)	$	7,742.2		$	—		$	—	$	—		$	—		$	325.4		$	—		$	3,340.4		$	(89.9	)	$	3,575.9
Cost of goods sold	—			—			—			—			(506.0		)	—			(5,080.9		)	202.6			(5,384.3		)	—			—		—			—			(251.8		)	—			(2,355.4		)	89.9			(2,517.3		)
Selling and administrative expenses	(6.2		)	—			(0.1		)	(0.1		)	(262.6		)	0.1			(1,205.3		)	—			(1,474.2		)	(1.7		)	—		(0.2		)	(0.1		)	(108.7		)	(0.1		)	(629.3		)	—			(740.1		)
Operating income (loss)	(6.2		)	—			(0.1		)	(0.1		)	(75.9		)	0.1			965.9			—			883.7			(1.7		)	—		(0.2		)	(0.1		)	(35.1		)	(0.1		)	355.7			—			318.5
Equity earnings (loss) in subsidiaries, net of tax	585.0			584.5			479.0			491.0			564.7			88.6			—			(2,792.8		)	—			229.0			229.1		142.5			161.2			162.3			43.1			—			(967.2		)	—
Interest expense	—			—			—			(77.0		)	(23.6		)	(22.4		)	(0.2		)	—			(123.2		)	—			—		—			(26.6		)	(11.6		)	(12.7		)	—			—			(50.9		)
Intercompany interest and fees	(9.5		)	—			18.4			(78.3		)	15.3			(3.6		)	57.7			—			—			(29.0		)	—		9.0			(61.3		)	49.5			1.4			30.4			—			—
Other income/(expense), net	—			—			(0.2		)	0.7			(8.1		)	0.1			—			—			(7.5		)	—			—		59.1			—			(7.3		)	—			(70.6		)	—			(18.8		)
Earnings (loss) before income taxes	569.3			584.5			497.1			336.3			472.4			62.8			1,023.4			(2,792.8		)	753.0			198.3			229.1		210.4			73.2			157.8			31.7			315.5			(967.2		)	248.8
Benefit (provision) for income taxes	(0.8		)	—			—			35.5			35.2			—			(230.9		)	—			(161.0		)	1.6			—		—			20.5			9.9			—			(75.0		)	—			(43.0		)
Earnings (loss) from continuing operations	568.5			584.5			497.1			371.8			507.6			62.8			792.5			(2,792.8		)	592.0			199.9			229.1		210.4			93.7			167.7			31.7			240.5			(967.2		)	205.8
Discontinued operations, net of tax	—			—			—			—			(16.8		)	—			1.5			—			(15.3		)	—			—		—			—			(6.3		)	—			4.2			—			(2.1		)
Net earnings (loss)	568.5			584.5			497.1			371.8			490.8			62.8			794.0			(2,792.8		)	576.7			199.9			229.1		210.4			93.7			161.4			31.7			244.7			(967.2		)	203.7
Less: Net earnings attributable to noncontrolling interests	—			—			—			—			—			—			(8.2		)	—			(8.2		)	—			—		—			—			—			—			(3.8		)	—			(3.8		)
Net earnings (loss) attributable to Ingersoll-Rand plc	$	568.5		$	584.5		$	497.1		$	371.8		$	490.8		$	62.8		$	785.8		$	(2,792.8	)	$	568.5		$	199.9		$	229.1	$	210.4		$	93.7		$	161.4		$	31.7		$	240.9		$	(967.2	)	$	199.9

Other comprehensive income (loss), net of tax	(125.8		)	(125.4		)	(122.1		)	(66.0		)	(66.4		)	(53.3		)	(137.6		)	570.8			(125.8		)	5.5			5.6		3.8			0.6			0.8			2.8			0.8			(14.4		)	5.5
Comprehensive income (loss) attributable to Ingersoll-Rand plc	$	442.7		$	459.1		$	375.0		$	305.8		$	424.4		$	9.5		$	648.2		$	(2,222.0	)	$	442.7		$	205.4		$	234.7	$	214.2		$	94.3		$	162.2		$	34.5		$	241.7		$	(981.6	)	$	205.4

Condensed Consolidating Statement of Comprehensive Income

For the three months ended ~~June 30, 2017~~March 31, 2018

In millions Plc Irish
Holdings Lux International Global
Holding New
Jersey Lux
Finance Other
Subsidiaries Consolidating
Adjustments
Consolidated
Net revenues $ —
$ —
$ —
$ —
$ 326.5
$ —
$ 3,669.5
$ (87.6 ) $ 3,908.4
Cost of goods sold —
—
—
—
(229.1 ) —
(2,511.6 ) 87.6
(2,653.1 )
Selling and administrative expenses (5.9 ) —
(0.1 ) —
(101.1 ) (0.1 ) (590.5 ) —
(697.7 )
Operating income (loss) (5.9 ) —
(0.1 ) —
(3.7 ) (0.1 ) 567.4
—
557.6
Equity earnings (loss) in subsidiaries, net of tax 371.2
369.6
348.5
277.1
335.4
21.2
—
(1,723.0 ) —
Interest expense —
—
—
(31.8 ) (11.9 ) (10.1 ) (0.3 ) —
(54.1 )
Intercompany interest and fees (7.3 ) —
(10.0 ) (43.7 ) (77.1 ) (1.9 ) 140.0
—
—
Other income/(expense), net —
—
—
—
0.4
—
(11.9 ) —
(11.5 )
Earnings (loss) before income taxes 358.0
369.6
338.4
201.6
243.1
9.1
695.2
(1,723.0 ) 492.0
Benefit (provision) for income taxes 0.6
—
—
27.5
27.7
—
(193.9 ) —
(138.1 )
Earnings (loss) from continuing operations 358.6
369.6
338.4
229.1
270.8
9.1
501.3
(1,723.0 ) 353.9
Discontinued operations, net of tax —
—
—
—
6.2
—
2.1
—
8.3
Net earnings (loss) 358.6
369.6
338.4
229.1
277.0
9.1
503.4
(1,723.0 ) 362.2
Less: Net earnings attributable to noncontrolling interests —
—
—
—
—
—
(3.6 ) —
(3.6 )
Net earnings (loss) attributable to Ingersoll-Rand plc $ 358.6
$ 369.6
$ 338.4
$ 229.1
$ 277.0
$ 9.1
$ 499.8
$ (1,723.0 ) $ 358.6

Other comprehensive income (loss), net of tax 176.2
175.8
161.0
136.3
136.1
24.1
178.4
(811.7 ) 176.2
Comprehensive income (loss) attributable to Ingersoll-Rand plc $ 534.8
$ 545.4
$ 499.4
$ 365.4
$ 413.1
$ 33.2
$ 678.2
$ (2,534.7 ) $ 534.8

~~Condensed Consolidating Statement of Comprehensive Income~~

~~For the six months ended June 30, 2017~~


in millions	Plc			Irish Holdings		Lux International			Global Holding			New Jersey			Lux Finance			Other Subsidiaries			Consolidating Adjustments			Consolidated			Plc			Irish Holdings		Lux International		Global Holding			New Jersey			Lux Finance			Other Subsidiaries			Consolidating Adjustments			Consolidated
Net revenues	$	—		$	—	$	—		$	—		$	642.8		$	—		$	6,447.3		$	(181.1	)	$	6,909.0		$	—		$	—	$	—	$	—		$	347.6		$	—		$	3,140.7		$	(103.8	)	$	3,384.5
Cost of goods sold	—			—		—			—			(463.7		)	—			(4,496.6		)	181.1			(4,779.2		)	—			—		—		—			(253.8		)	—			(2,270.2		)	103.8			(2,420.2		)
Selling and administrative expenses	(8.2		)	—		(0.1		)	(0.9		)	(222.4		)	(0.2		)	(1,125.4		)	—			(1,357.2		)	(1.7		)	—		—		(0.1		)	(136.3		)	—			(582.8		)	—			(720.9		)
Operating income (loss)	(8.2		)	—		(0.1		)	(0.9		)	(43.3		)	(0.2		)	825.3			—			772.6			(1.7		)	—		—		(0.1		)	(42.5		)	—			287.7			—			243.4
Equity earnings (loss) in subsidiaries, net of tax	496.1			487.0		442.4			300.1			442.5			27.2			—			(2,195.3		)	—			124.2			123.5		110.9		118.3			162.7			39.2			—			(678.8		)	—
Interest expense	—			—		—			(63.5		)	(23.8		)	(20.4		)	(0.4		)	—			(108.1		)	—			—		—		(50.3		)	(11.8		)	(10.6		)	(0.2		)	—			(72.9		)
Intercompany interest and fees	(13.1		)	—		(23.5		)	(86.4		)	(151.3		)	(3.8		)	278.1			—			—			(1.0		)	—		4.0		(27.8		)	6.3			(2.4		)	20.9			—			—
Other income/(expense), net	—			—		—			—			(2.3		)	—			(13.9		)	—			(16.2		)	—			—		—		0.7			(3.6		)	0.1			(1.2		)	—			(4.0		)
Earnings (loss) before income taxes	474.8			487.0		418.8			149.3			221.8			2.8			1,089.1			(2,195.3		)	648.3			121.5			123.5		114.9		40.8			111.1			26.3			307.2			(678.8		)	166.5
Benefit (provision) for income taxes	0.9			—		—			54.9			77.7			—			(300.3		)	—			(166.8		)	(1.1		)	—		0.3		17.7			16.4			—			(66.3		)	—			(33.0		)
Earnings (loss) from continuing operations	475.7			487.0		418.8			204.2			299.5			2.8			788.8			(2,195.3		)	481.5			120.4			123.5		115.2		58.5			127.5			26.3			240.9			(678.8		)	133.5
Discontinued operations, net of tax	—			—		—			—			0.4			—			1.4			—			1.8			—			—		—		—			(9.3		)	—			(0.1		)	—			(9.4		)
Net earnings (loss)	475.7			487.0		418.8			204.2			299.9			2.8			790.2			(2,195.3		)	483.3			120.4			123.5		115.2		58.5			118.2			26.3			240.8			(678.8		)	124.1
Less: Net earnings attributable to noncontrolling interests	—			—		—			—			—			—			(7.6		)	—			(7.6		)	—			—		—		—			—			—			(3.7		)	—			(3.7		)
Net earnings (loss) attributable to Ingersoll-Rand plc	$	475.7		$	487.0	$	418.8		$	204.2		$	299.9		$	2.8		$	782.6		$	(2,195.3	)	$	475.7		$	120.4		$	123.5	$	115.2	$	58.5		$	118.2		$	26.3		$	237.1		$	(678.8	)	$	120.4

Other comprehensive income (loss), net of tax	296.8			296.1		275.9			214.3			214.0			60.2			296.5			(1,357.0		)	296.8			152.1			151.9		144.2		105.8			105.2			37.3			145.8			(690.2		)	152.1
Comprehensive income (loss) attributable to Ingersoll-Rand plc	$	772.5		$	783.1	$	694.7		$	418.5		$	513.9		$	63.0		$	1,079.1		$	(3,552.3	)	$	772.5		$	272.5		$	275.4	$	259.4	$	164.3		$	223.4		$	63.6		$	382.9		$	(1,369.0	)	$	272.5

Condensed Consolidating Balance Sheet

~~June 30, 2018~~March 31, 2019


In millions	Plc		Irish Holdings		Lux International		Global Holding		New Jersey		Lux Finance			Other Subsidiaries		Consolidating Adjustments			Consolidated		Plc		Irish Holdings		Lux International		Global Holding		New Jersey		Lux Finance		Other Subsidiaries		Consolidating Adjustments			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	—	$	—	$	0.7	$	—	$	—	$	0.1		$	968.7	$	—		$	969.5	$	—	$	0.1	$	0.1	$	—	$	—	$	1,207.3	$	699.9	$	—		$	1,907.4
Accounts and notes receivable, net	—		—		0.2		—		169.3		—			2,777.4		—			2,946.9		—		—		0.2		—		167.0		—		2,543.1		—			2,710.3
Inventories, net	—		—		—		—		161.5		—			1,571.8		—			1,733.3		—		—		—		—		159.7		—		1,824.0		—			1,983.7
Other current assets	0.2		—		7.9		11.7		109.1		—			383.6		(0.5		)	512.0		2.0		—		7.7		—		113.4		—		360.9		(0.7		)	483.3
Intercompany receivables	27.8		—		313.1		—		2,278.2		—			5,707.5		(8,326.6		)	—		98.0		—		27.1		—		4,148.8		304.5		5,237.9		(9,816.3		)	—
Total current assets	28.0		—		321.9		11.7		2,718.1		0.1			11,409.0		(8,327.1		)	6,161.7		100.0		0.1		35.1		—		4,588.9		1,511.8		10,665.8		(9,817.0		)	7,084.7
Property, plant and equipment, net	—		—		0.1		—		321.5		—			1,325.2		—			1,646.8		—		—		0.1		—		304.0		—		1,434.3		—			1,738.4
Goodwill and other intangible assets, net	—		—		—		—		432.0		—			9,274.0		—			9,706.0		—		—		—		—		430.1		—		9,147.0		—			9,577.1
Other noncurrent assets	—		—		4.0		187.2		437.6		—			610.2		(375.6		)	863.4		—		—		8.0		179.7		782.8		—		746.4		(336.1		)	1,380.8
Investments in consolidated subsidiaries	8,672.2		8,633.1		3,233.3		11,061.9		11,552.4		1,191.4			—		(44,344.3		)	—		9,452.4		9,410.9		4,011.7		11,886.6		10,158.5		1,309.7		—		(46,229.8		)	—
Intercompany notes receivable	—		—		1,000.0		—		—		—			1,249.7		(2,249.7		)	—		—		—		1,331.9		—		—		—		2,249.7		(3,581.6		)	—
Total assets	$	8,700.2	$	8,633.1	$	4,559.3	$	11,260.8	$	15,461.6	$	1,191.5		$	23,868.1	$	(55,296.7	)	$	18,377.9	$	9,552.4	$	9,411.0	$	5,386.8	$	12,066.3	$	16,264.3	$	2,821.5	$	24,243.2	$	(59,964.5	)	$	19,781.0
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable and accrued expenses	$	140.7	$	—	$	0.2	$	80.1	$	538.1	$	6.9		$	3,387.6	$	(0.5	)	$	4,153.1	$	10.3	$	—	$	—	$	77.4	$	641.6	$	20.6	$	3,364.9	$	(0.7	)	$	4,114.1
Short-term borrowings and current maturities of long-term debt	—		—		—		—		350.4		249.0			0.2		—			599.6		—		—		—		—		350.3		23.9		0.2		—			374.4
Intercompany payables	1,772.4		2.5		843.2		3,356.3		2,015.3		299.7			37.2		(8,326.6		)	—		2,656.3		—		1,419.9		3,601.1		1,783.4		0.4		355.2		(9,816.3		)	—
Total current liabilities	1,913.1		2.5		843.4		3,436.4		2,903.8		555.6			3,425.0		(8,327.1		)	4,752.7		2,666.6		—		1,419.9		3,678.5		2,775.3		44.9		3,720.3		(9,817.0		)	4,488.5
Long-term debt	—		—		—		2,328.8		319.4		1,090.4			0.3		—			3,738.9		—		—		—		2,330.6		319.5		2,576.2		0.2		—			5,226.5
Other noncurrent liabilities	—		—		—		66.8		1,186.5		—			2,184.9		(375.6		)	3,062.6		—		—		—		5.9		1,283.5		—		2,189.9		(336.1		)	3,143.2
Intercompany notes payable	—		—		—		2,249.7		—		—			—		(2,249.7		)	—		—		—		—		2,249.7		—		—		1,331.9		(3,581.6		)	—
Total liabilities	1,913.1		2.5		843.4		8,081.7		4,409.7		1,646.0			5,610.2		(10,952.4		)	11,554.2		2,666.6		—		1,419.9		8,264.7		4,378.3		2,621.1		7,242.3		(13,734.7		)	12,858.2
Equity:
Total equity	6,787.1		8,630.6		3,715.9		3,179.1		11,051.9		(454.5		)	18,257.9		(44,344.3		)	6,823.7		6,885.8		9,411.0		3,966.9		3,801.6		11,886.0		200.4		17,000.9		(46,229.8		)	6,922.8
Total liabilities and equity	$	8,700.2	$	8,633.1	$	4,559.3	$	11,260.8	$	15,461.6	$	1,191.5		$	23,868.1	$	(55,296.7	)	$	18,377.9	$	9,552.4	$	9,411.0	$	5,386.8	$	12,066.3	$	16,264.3	$	2,821.5	$	24,243.2	$	(59,964.5	)	$	19,781.0

Condensed Consolidating Balance Sheet

December 31, ~~2017~~2018


In millions	Plc		Irish Holdings		Lux International				Global Holding		New Jersey		Lux Finance			Other Subsidiaries		Consolidating Adjustments			Consolidated		Plc		Irish Holdings		Lux International		Global Holding		New Jersey		Lux Finance		Other Subsidiaries		Consolidating Adjustments			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	—	$	—	$	0.6			$	—	$	359.3	$	—		$	1,189.5	$	—		$	1,549.4	$	—	$	0.1	$	0.2	$	—	$	363.5	$	—	$	539.6	$	—		$	903.4
Accounts and notes receivable, net	—		—		—				—		166.5		—			2,310.9		—			2,477.4		—		—		0.1		—		183.4		—		2,495.7		—			2,679.2
Inventories, net	—		—		—				—		168.5		—			1,386.9		—			1,555.4		—		—		—		—		146.6		—		1,531.2		—			1,677.8
Other current assets	0.2		—		5.7				112.6		76.2		—			342.2		—			536.9		0.2		—		7.8		—		101.0		—		363.4		(0.8		)	471.6
Intercompany receivables	1,819.1		9,912.2		2,036.8				—		1,849.9		—			5,014.8		(20,632.8		)	—		59.5		—		3.9		—		3,851.0		0.1		3,838.0		(7,752.5		)	—
Total current assets	1,819.3		9,912.2		2,043.1				112.6		2,620.4		—			10,244.3		(20,632.8		)	6,119.1		59.7		0.1		12.0		—		4,645.5		0.1		8,767.9		(7,753.3		)	5,732.0
Property, plant and equipment, net	—		—		—				—		310.6		—			1,240.7		—			1,551.3		—		—		0.1		—		314.6		—		1,416.1		—			1,730.8
Goodwill and other intangible assets, net	—		—		—				—		436.0		—			9,242.6		—			9,678.6		—		—		—		—		432.1		—		9,162.1		—			9,594.2
Other noncurrent assets	—		—		—				185.4		471.1		—			550.8		(383.0		)	824.3		—		—		8.0		180.0		498.1		—		610.6		(438.8		)	857.9
Investments in consolidated subsidiaries	7,318.1		1,684.2		2,953.9				10,480.3		10,923.7		1,150.9			—		(34,511.1		)	—		9,308.9		9,267.8		3,935.4		11,743.2		9,923.2		1,264.2		—		(45,442.7		)	—
Intercompany notes receivable																							—		—		—		—		—		—		2,249.7		(2,249.7		)	—
Total assets	$	9,137.4	$	11,596.4	$	4,997.0			$	10,778.3	$	14,761.8	$	1,150.9		$	21,278.4	$	(55,526.9	)	$	18,173.3	$	9,368.6	$	9,267.9	$	3,955.5	$	11,923.2	$	15,813.5	$	1,264.3	$	22,206.4	$	(55,884.5	)	$	17,914.9
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable and accrued expenses	$	8.5	$	—	$	0.2			$	27.3	$	572.3	$	6.9		$	3,105.8	$	—		$	3,721.0	$	11.3	$	—	$	0.1	$	41.7	$	599.6	$	6.9	$	3,306.3	$	(0.8	)	$	3,965.1
Short-term borrowings and current maturities of long-term debt	—		—		—				749.6		350.4		—			7.0		—			1,107.0		—		—		—		—		350.4		—		0.2		—			350.6
Intercompany payables	1,988.3		—		9,316.7				5,481.1		1,790.0		523.3			1,533.4		(20,632.8		)	—		2,334.6		—		132.9		3,518.7		1,700.9		0.2		65.2		(7,752.5		)	—
Total current liabilities	1,996.8		—		9,316.9			��	6,258.0		2,712.7		530.2			4,646.2		(20,632.8		)	4,828.0		2,345.9		—		133.0		3,560.4		2,650.9		7.1		3,371.7		(7,753.3		)	4,315.7
Long-term debt	—		—		—				1,539.9		326.8		1,089.7			0.6		—			2,957.0		—		—		—		2,330.0		319.5		1,091.0		0.2		—			3,740.7
Other noncurrent liabilities	0.3		—		—				92.4		1,251.8		—			2,219.9		(383.0		)	3,181.4		—		—		—		5.5		1,100.5		—		2,126.5		(438.8		)	2,793.7
Intercompany notes payable																							—		—		—		2,249.7		—		—		—		(2,249.7		)	—
Total liabilities	1,997.1		—		9,316.9				7,890.3		4,291.3		1,619.9			6,866.7		(21,015.8		)	10,966.4		2,345.9		—		133.0		8,145.6		4,070.9		1,098.1		5,498.4		(10,441.8		)	10,850.1
Equity:
Total equity	7,140.3		11,596.4		(4,319.9		)		2,888.0		10,470.5		(469.0		)	14,411.7		(34,511.1		)	7,206.9		7,022.7		9,267.9		3,822.5		3,777.6		11,742.6		166.2		16,708.0		(45,442.7		)	7,064.8
Total liabilities and equity	$	9,137.4	$	11,596.4	$	4,997.0			$	10,778.3	$	14,761.8	$	1,150.9		$	21,278.4	$	(55,526.9	)	$	18,173.3	$	9,368.6	$	9,267.9	$	3,955.5	$	11,923.2	$	15,813.5	$	1,264.3	$	22,206.4	$	(55,884.5	)	$	17,914.9

Condensed Consolidating Statement of Cash Flows

For the ~~six~~three months ended ~~June 30, 2018~~March 31, 2019


in millions	Plc			Irish Holdings			Lux International			Global Holding			New Jersey			Lux Finance			Other Subsidiaries			Consolidating Adjustments			Consolidated			Plc			Irish Holdings		Lux International			Global Holding			New Jersey			Lux Finance			Other Subsidiaries			Consolidating Adjustments			Consolidated
CASH FLOWS FROM OPERATING ACTIVITIES:
Net cash provided by (used in) continuing operating activities	$	80.0		$	(2.7	)	$	17.6		$	(94.4	)	$	439.1		$	(24.6	)	$	(0.5	)	$	—		$	414.5		$	92.9		$	—	$	(0.1	)	$	(21.2	)	$	(346.8	)	$	(1.0	)	$	239.1		$	—		$	(37.1	)
Net cash provided by (used in) discontinued operating activities	—			—			—			—			(38.3		)	—			1.5			—			(36.8		)	—			—		—			—			(19.7		)	—			4.2			—			(15.5		)
Net cash provided by (used in) operating activities	80.0			(2.7		)	17.6			(94.4		)	400.8			(24.6		)	1.0			—			377.7			92.9			—		(0.1		)	(21.2		)	(366.5		)	(1.0		)	243.3			—			(52.6		)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures	—			—			—			—			(55.4		)	—			(108.0		)	—			(163.4		)	—			—		—			—			(6.7		)	—			(54.1		)	—			(60.8		)
Acquisitions and equity method investments, net of cash acquired	—			—			—			—			—			—			(281.5		)	—			(281.5		)
Acquisitions of businesses, net of cash acquired																												—			—		—			—			—			—			(22.0		)	—			(22.0		)
Other investing activities, net	—			—			(4.0		)	—			3.0			—			1.0			—			—			—			—		—			—			1.0			—			5.4			—			6.4
Intercompany investing activities, net	872.3			(668.1		)	741.2			—			(800.5		)	—			468.2			(613.1		)	—			—			—		0.6			—			2.5			(303.1		)	66.1			233.9			—
Net cash provided by (used in) continuing investing activities	872.3			(668.1		)	737.2			—			(852.9		)	—			79.7			(613.1		)	(444.9		)	—			—		0.6			—			(3.2		)	(303.1		)	(4.6		)	233.9			(76.4		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds (repayments) from debt	—			—			—			31.6			(7.5		)	249.0			(6.4		)	—			266.7
Net proceeds from (payments of) debt																												—			—		—			—			—			1,521.8			—			—			1,521.8
Debt issuance costs	—			—			—			(11.6		)	—			—			—			—			(11.6		)	—			—		—			—			(0.2		)	(10.4		)	—			—			(10.6		)
Dividends paid to ordinary shareholders	(221.8		)	—			—			—			—			—			—			—			(221.8		)	(127.7		)	—		—			—			—			—			—			—			(127.7		)
Dividends paid to noncontrolling interests	—			—			—			—			—			—			(35.5		)	—			(35.5		)	—			—		—			—			—			—			(9.3		)	—			(9.3		)
Repurchase of ordinary shares	(500.1		)	—			—			—			—			—			—			—			(500.1		)	(250.0		)	—		—			—			—			—			—			—			(250.0		)
Other financing activities, net	13.8			—			—			—			(0.4		)	—			(2.5		)	—			10.9			6.3			—		—			—			(0.4		)	—			—			—			5.9
Intercompany financing activities, net	(244.2		)	670.8			(754.7		)	74.4			100.7			(224.3		)	(235.8		)	613.1			—			278.5			—		(0.6		)	21.2			6.8			—			(72.0		)	(233.9		)	—
Net cash provided by (used in) continuing financing activities	(952.3		)	670.8			(754.7		)	94.4			92.8			24.7			(280.2		)	613.1			(491.4		)	(92.9		)	—		(0.6		)	21.2			6.2			1,511.4			(81.3		)	(233.9		)	1,130.1
Effect of exchange rate changes on cash and cash equivalents	—			—			—			—			—			—			(21.3		)	—			(21.3		)	—			—		—			—			—			—			2.9			—			2.9
Net increase (decrease) in cash and cash equivalents	—			—			0.1			—			(359.3		)	0.1			(220.8		)	—			(579.9		)	—			—		(0.1		)	—			(363.5		)	1,207.3			160.3			—			1,004.0
Cash and cash equivalents - beginning of period	—			—			0.6			—			359.3			—			1,189.5			—			1,549.4			—			0.1		0.2			—			363.5			—			539.6			—			903.4
Cash and cash equivalents - end of period	$	—		$	—		$	0.7		$	—		$	—		$	0.1		$	968.7		$	—		$	969.5		$	—		$	0.1	$	0.1		$	—		$	—		$	1,207.3		$	699.9		$	—		$	1,907.4

Condensed Consolidating Statement of Cash Flows

For the ~~six~~three months ended ~~June 30, 2017~~March 31, 2018


in millions	Plc			Irish Holdings		Lux International			Global Holding			New Jersey			Lux Finance			Other Subsidiaries			Consolidating Adjustments			Consolidated			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	$	75.4		$	—	$	(17.5	)	$	(142.5	)	$	139.0		$	(23.7	)	$	391.6		$	—		$	422.3		$	102.6		$	—	$	—		$	(32.2	)	$	19.6		$	(0.3	)	$	(135.5	)	$	—		$	(45.8	)
Net cash provided by (used in) discontinued operating activities	—			—		—			—			(14.5		)	—			(2.3		)	—			(16.8		)	—			—		—			—			(20.3		)	—			(0.1		)	—			(20.4		)
Net cash provided by (used in) operating activities	75.4			—		(17.5		)	(142.5		)	124.5			(23.7		)	389.3			—			405.5			102.6			—		—			(32.2		)	(0.7		)	(0.3		)	(135.6		)	—			(66.2		)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures	—			—		—			—			(25.9		)	—			(53.6		)	��			(79.5		)	—			—		—			—			(8.8		)	—			(44.0		)	—			(52.8		)
Acquisitions and equity method investments, net of cash acquired	—			—		—			—			—			—			(39.9		)	—			(39.9		)
Acquisitions of businesses, net of cash acquired																											—			—		—			—			—			—			(201.6		)	—			(201.6		)
Other investing activities, net	—			—		—			—			—			—			0.5			—			0.5			—			—		(4.0		)	—			—			—			0.7			—			(3.3		)
Intercompany investing activities, net	—			—		1,153.0			142.7			—			11.7			589.4			(1,896.8		)	—			—			—		(0.5		)	—			(208.8		)	—			287.0			(77.7		)	—
Net cash provided by (used in) continuing investing activities	—			—		1,153.0			142.7			(25.9		)	11.7			496.4			(1,896.8		)	(118.9		)	—			—		(4.5		)	—			(217.6		)	—			42.1			(77.7		)	(257.7		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds (repayments) from debt	—			—		—			—			(7.5		)	—			(0.1		)	—			(7.6		)
Net proceeds from (payments of) debt																											—			—		—			31.6			—			247.9			—			—			279.5
Debt issuance costs	—			—		—			(0.2		)	—			—			—			—			(0.2		)	—			—		—			(8.5		)	—			—			—			—			(8.5		)
Dividends paid to ordinary shareholders	(204.8		)	—		—			—			—			—			—			—			(204.8		)	(111.6		)	—		—			—			—			—			—			—			(111.6		)
Dividends paid to noncontrolling interests	—			—		—			—			—			—			(7.0		)	—			(7.0		)	—			—		—			—			—			—			(11.0		)	—			(11.0		)
Acquisition of noncontrolling interest	—			—		—			—			—			—			(6.8		)	—			(6.8		)
Repurchase of ordinary shares	(575.2		)	—		—			—			—			—			—			—			(575.2		)	(250.0		)	—		—			—			—			—			—			—			(250.0		)
Other financing activities, net	35.0			—		—			—			(1.0		)	—			0.7			—			34.7			6.6			—		—			—			(0.4		)	—			(1.0		)	—			5.2
Intercompany financing activities, net	669.6			—		(1,135.4		)	—			(135.7		)	12.0			(1,307.3		)	1,896.8			—			252.4			—		4.0			9.1			(105.0		)	(247.5		)	9.3			77.7			—
Net cash provided by (used in) continuing financing activities	(75.4		)	—		(1,135.4		)	(0.2		)	(144.2		)	12.0			(1,320.5		)	1,896.8			(766.9		)	(102.6		)	—		4.0			32.2			(105.4		)	0.4			(2.7		)	77.7			(96.4		)
Effect of exchange rate changes on cash and cash equivalents	—			—		—			—			—			—			75.7			—			75.7			—			—		—			—			—			—			46.0			—			46.0
Net increase (decrease) in cash and cash equivalents	—			—		0.1			—			(45.6		)	—			(359.1		)	—			(404.6		)	—			—		(0.5		)	—			(323.7		)	0.1			(50.2		)	—			(374.3		)
Cash and cash equivalents - beginning of period	—			—		—			—			634.6			—			1,080.1			—			1,714.7			—			—		0.6			—			359.3			—			1,189.5			—			1,549.4
Cash and cash equivalents - end of period	$	—		$	—	$	0.1		$	—		$	589.0		$	—		$	721.0		$	—		$	1,310.1		$	—		$	—	$	0.1		$	—		$	35.6		$	0.1		$	1,139.3		$	—		$	1,175.1

Note 22. Proposed Reverse Morris Trust Transaction

In April 2019, the Company and Gardner Denver Inc. (GDI) announced that they had 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 it with GDI. The combined company (IndustrialCo) will be composed of the entirety of IR Industrial and GDI, including, subject to closing, the Company’s pending acquisition of PFS, which is expected to close mid-2019. The Company’s HVAC and transport refrigeration businesses, reported under the Climate segment, will focus on climate control solutions for buildings, homes and transportation (ClimateCo).

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, ClimateCo will receive $1.9 billion in cash from GDI. In the merger, existing shareholders of the Company will receive 50.1% of the shares of IndustrialCo on a fully diluted basis. Existing GDI shareholders will receive 49.9% of the shares of IndustrialCo on a fully diluted basis. The transaction is expected to be tax-free to the Company’s and GDI’s respective shareholders for U.S. federal income tax purposes.

The transaction is expected to close by early 2020, subject to approval by GDI’s shareholders, regulatory approvals and customary closing conditions.

Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from the results discussed in the forward-looking statements. Factors that might cause a difference include, but are not limited to, those discussed under Part II, Item 1A – Risk Factors in this Quarterly Report on Form 10-Q; and under Part I, Item 1A – Risk Factors in the Annual Report on Form 10-K for the fiscal year ended December 31, ~~2017~~2018. The following section is qualified in its entirety by the more detailed information, including our financial statements and the notes thereto, which appears elsewhere in this Quarterly Report.

Overview

Organizational

We are 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. Our business segments consist of Climate and Industrial, both with strong brands and highly differentiated products within their respective markets. We generate revenue and cash primarily through the design, manufacture, sale and service of a diverse portfolio of industrial and commercial products that include well-recognized, premium brand names such as Ingersoll-Rand^®, Trane^®, Thermo King^®, American Standard^®, ARO^®,and Club Car^®.

To achieve our mission of being a world leader in creating comfortable, sustainable and efficient environments, we continue to focus on growth by increasing our recurring revenue stream from parts, service, controls, used equipment and rentals; and to continuously improve the efficiencies and capabilities of the products and services of our businesses. We also continue to focus on operational excellence strategies as a central theme to improving our earnings and cash flows.

Trends and Economic Events

We are a global corporation with worldwide operations. As a global business, our operations are affected by worldwide, regional and industry-specific economic factors, as well as political factors, wherever we operate or do business. Our geographic and industry diversity, and the breadth of our product and services portfolios, have helped mitigate the impact of any one industry or the economy of any single country on our consolidated operating results.

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

Current economic conditions are showing positive trends in each of the segments in which we participate. Heating, Ventilation, and Air Conditioning (HVAC) equipment replacement, services, controls and aftermarket continue to experience strong demand. In addition, Residential and Commercial ~~new construction~~markets have seen continued momentum in the United States, ~~which is~~ positively impacting the results of our HVAC businesses. ~~However, markets in Europe, Middle East and Asia are mixed.~~ Global Industrial markets ~~are showing~~remain largely supportive of continued growth in both equipment and services. While geopolitical uncertainty exists in markets such as Europe, Asia and Latin America, we are confident we will continue our strong performance globally. In ~~2018,~~2019, we expect positive growth in both our Climate and Industrial segments, each benefiting from operational excellence initiatives, new product launches and continued productivity programs.

We believe we have a solid foundation of global brands ~~and strong market positions~~that are highly differentiated in all of our major product lines. Our growing geographic and industry diversity coupled with our large installed product base provides growth opportunities within our service, parts and replacement revenue streams. In addition, we are investing substantial resources to innovate and develop new products and services which we expect will drive our future growth.

Significant Events

~~Tax Cuts~~Pending Acquisition

During the three months ended March 31, 2019, we entered into a final, binding and ~~Job Act~~

~~In December 2017,~~irrevocable offer letter with Silver II GP Holdings S.C.A., an affiliate of BC Partners Advisors L.P. and The Carlyle Group (the Seller) pursuant to which we made a binding offer to acquire the U.S. enacted the Tax Cuts and Jobs Act (the “Act”) which makes widespread changes to the Internal Revenue Code. The Act, among other things, reduced the U.S. federal corporate tax rate from 35% to 21%, requires companies to pay a transition tax on earnings of certain foreign subsidiaries that were previously notprecision flow systems management business (PFS) for approximately $1.45 billion in cash, subject to ~~U.S. tax~~working capital and ~~creates new income taxes on~~ certain ~~foreign sourced earnings.~~other adjustments (the Acquisition). PFS is 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. The ~~SEC issued Staff Accounting Bulletin No. 118 (SAB 118) which provides guidance on accounting for the tax effects~~offer was subject to completion of the ~~Act~~information and ~~allows for adjustments to provisional amounts during a measurement period~~consultation processes with employee representative bodies of ~~up to one year. In accordance with SAB 118, we have made reasonable estimates related to (1)~~PFS in applicable jurisdictions. The process was completed in April 2019 and the ~~remeasurement of U.S. deferred tax balances for~~Seller accepted 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 2017. We are continuing to evaluate how the

~~provisions~~offer. Completion of the ~~Act will be accounted for under ASC 740, “Income Taxes” (ASC 740). The analysis is provisional and~~Acquisition is subject to ~~change due~~customary closing conditions and is expected to ~~the additional time required~~close mid-year 2019 subject to ~~accurately calculate and review the complex tax law. Measurement period adjustments~~regulatory approvals. The results of PFS will be ~~reported~~included in our consolidated financial statements as ~~a component of~~ ~~Provision for income taxes~~ ~~in the reporting period the amounts are determined. The final accounting will be completed no later than one year from the enactment~~ of the ~~Act. For~~date of acquisition and reported within the ~~quarter ended June 30, 2018, we recorded measurement period adjustments of $1.6 million, net to reduce the provisional amounts recorded as of December 31, 2017.~~Industrial segment.

Issuance ~~and Redemption~~ of Senior Notes

In ~~February 2018,~~March 2019, we issued ~~$1.15~~$1.5 billion principal amount of senior notes in three tranches through an indirect, wholly-owned subsidiary. The tranches consist of ~~$300~~$400 million aggregate principal amount of ~~2.900%~~3.500% 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. In March 2018, we used the proceeds to fund the redemption of2026, $750 million aggregate principal amount of ~~6.875%~~3.800% senior notes due ~~2018~~2029 and $350 million aggregate principal amount of ~~2.875%~~4.500% senior notes due ~~2019, with~~2049. We intend to use the ~~remainder used for general corporate purposes.~~

~~Acquisitions and Equity Method Investments~~

~~During~~net proceeds to finance the ~~six months ended June 30, 2018, we acquired several businesses and entered into a joint venture. The aggregate cash paid, net~~pending acquisition of cash acquired, totaled $281.5 million and was funded through cash on hand. Acquisition activity during 2018 primarily related to ICS Group Holdings Limited which was acquired 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, we continue to acquire independent dealers to expand our distribution network. In May 2018, we completed our investment of a 50% ownership interest in a joint venture with Mitsubishi Electric Corporation (Mitsubishi). The joint venture, reported within the Climate segment, will focus on marketing, selling and supporting variable refrigerant flow (VRF) and ductless heating and air conditioning systems through Trane, American Standard and Mitsubishi channels in the U.S. and select Latin American countries.PFS.

Share Repurchase Program and Dividends

Share repurchases are made from time to time in accordance with ~~our~~management's capital allocation strategy, subject to market conditions and regulatory requirements. In ~~February 2017,~~October 2018, our Board of Directors authorized the repurchase of up to $1.5 billion of our ordinary ~~shares. Repurchases~~shares under ~~this~~a share repurchase program ~~which began in May 2017, totaled approximately $600 million at December 31, 2017 and are held in treasury.~~(2018 Authorization) upon completion of the prior authorized share repurchase program. During the ~~six~~three months ended ~~June 30, 2018,~~March 31, 2019, we repurchased and canceled approximately ~~$500~~$250 million of our ordinary shares leaving approximately ~~$400 million~~$1.25 billion remaining under the ~~program~~2018 Authorization at ~~June 30, 2018.~~

March 31, 2019. In June 2018, we announced an increase in our quarterly share dividend from $0.45 to $0.53 per ordinary share. This reflects ~~a 18.0%~~an 18% increase that ~~will begin~~began with our September 2018 dividend payment.

Results of Operations

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

Our Industrial segment delivers products and services that enhance energy efficiency, productivity and operations. It includes compressed air and gas systems and services, power tools, material handling systems, ARO^®fluid management equipment, as well as Club Car ^®golf, utility and consumer low-speed vehicles.

Segment operating income is the measure of profit and loss that our 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, we believe that Segment operating income represents the most relevant measure of segment profit and loss. We define Segment operating margin as Segment operating income as a percentage of Net revenues.

On January 1, 2018, we adopted Accounting Standards Update 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. We 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~~. ~~Related amounts did not materially impact~~ ~~Net revenues~~, ~~Operating income~~ ~~or the Balance Sheet.~~

Three Months Ended ~~June 30, 2018~~March 31, 2019 Compared to the Three Months Ended ~~June 30, 2017~~March 31, 2018


Dollar amounts in millions	2018			2017			Period Change			2018 % of revenues		2017 % of revenues		2019			2018			Period Change			2019 % of revenues		2018 % of revenues
Net revenues	$	4,357.7		$	3,908.4		$	449.3						$	3,575.9		$	3,384.5		$	191.4
Cost of goods sold	(2,964.1		)	(2,653.1		)	(311.0		)	68.0	%	67.9	%	(2,517.3		)	(2,420.2		)	(97.1		)	70.4	%	71.5	%
Selling and administrative expenses	(753.3		)	(697.7		)	(55.6		)	17.3	%	17.8	%	(740.1		)	(720.9		)	(19.2		)	20.7	%	21.3	%
Operating income	640.3			557.6			82.7			14.7	%	14.3	%	318.5			243.4			75.1			8.9	%	7.2	%
Interest expense	(50.3		)	(54.1		)	3.8							(50.9		)	(72.9		)	22.0
Other income/(expense), net	(3.5		)	(11.5		)	8.0							(18.8		)	(4.0		)	(14.8		)
Earnings before income taxes	586.5			492.0			94.5							248.8			166.5			82.3
Provision for income taxes	(128.0		)	(138.1		)	10.1							(43.0		)	(33.0		)	(10.0		)
Earnings from continuing operations	458.5			353.9			104.6							205.8			133.5			72.3
Discontinued operations, net of tax	(5.9		)	8.3			(14.2		)					(2.1		)	(9.4		)	7.3
Net earnings	$	452.6		$	362.2		$	90.4						$	203.7		$	124.1		$	79.6

Net Revenues

Net revenues for the three months ended ~~June 30, 2018~~March 31, 2019 increased by ~~11.5%~~5.7%, or ~~$449.3~~$191.4 million, compared with the same period in ~~2017,~~2018, which resulted from the following:



Volume/product mix	~~7.5~~5.8	%
~~Acquisitions~~	~~1.0~~	%
Pricing	~~1.4~~2.3	%
Currency translation	~~1.6~~(2.4	)%
Total	~~11.5~~5.7	%

The increase was primarily driven by higher volumes in both our Climate and Industrial segments. Improved pricing ~~along with incremental revenues from acquisitions,~~ further contributed to the year-over-year increase. ~~In addition,~~However, each segment ~~benefited from favorable~~was impacted by unfavorable foreign currency exchange rate movements.

Our revenues by segment for the three ~~month period~~months ended ~~June 30 are~~March 31 were as follows:


Dollar amounts in millions	2018		2017		% change	2019		2018		% change
Climate	$	3,493.8	$	3,143.8	11.1%	$	2,803.7	$	2,609.8	7.4	%
Industrial	863.9		764.6		13.0%	772.2		774.7		(0.3	)%
Total	$	4,357.7	$	3,908.4		$	3,575.9	$	3,384.5

Climate

Net revenues for the three months ended ~~June 30, 2018~~March 31, 2019 increased by ~~11.1%~~7.4% or ~~$350.0~~$193.9 million, compared with the same period of ~~2017. The primary driver of the increase related to incremental volumes in each of our businesses. The~~2018.The components of the period change ~~are~~were as follows:



Volume/product mix	~~7.5~~7.1	%
~~Acquisitions~~	~~0.9~~	%
Pricing	~~1.4~~2.4	%
Currency translation	~~1.3~~(2.1	)%
Total	~~11.1~~7.4	%

Industrial

Net revenues for the three months ended ~~June 30, 2018 increased~~March 31, 2019 decreased by ~~13.0%~~0.3% or ~~$99.3~~$2.5 million, compared with the same period of ~~2017. The primary driver of the increase related to incremental volumes in each of our businesses.~~2018. The components of the period change ~~are~~were as follows:



Volume/product mix	~~7.3~~1.5	%
~~Acquisitions~~	~~1.4~~	%
Pricing	~~1.5~~1.4	%
Currency translation	~~2.8~~(3.2	)%
Total	~~13.0~~(0.3	)%

Operating Income/Margin

Operating margin increased ~~from 14.3%~~to 8.9% for the three months ended ~~June 30, 2017~~March 31, 2019 compared to ~~14.7%~~7.2% for the same period of 2018. The increase was primarily driven by pricing improvements in excess of material inflation (0.7%) , productivity benefits in excess of other inflation (0.5%) as well as higher volume/product mix (0.3%). In addition, lower spending on restructuring actions more than offset unfavorable foreign currency exchange rate movements (0.2%).

Our Operating income and Operating margin by segment were as follows:



Dollar amounts in millions	2019 Operating Income (Expense)			2018 Operating Income (Expense)			Period Change			2019 Operating Margin		2018 Operating Margin
Climate	$	313.1		$	260.4		$	52.7		11.2	%	10.0	%
Industrial	83.9			59.9			24.0			10.9	%	7.7	%
Unallocated corporate expenses	(78.5		)	(76.9		)	(1.6		)	N/A		N/A
Total	$	318.5		$	243.4		$	75.1		8.9	%	7.2	%

Climate

Operating margin increased to 11.2% for the three months ended March 31, 2019 compared to 10.0% for the same period of 2018. The increase was primarily driven by pricing improvements in excess of material inflation and productivity benefits in excess of other inflation. Year-over-year impacts of volume/product mix, foreign currency exchange rate movements and investment spending remained relatively flat.

Industrial

Operating margin increased to 10.9% for the three months ended March 31, 2019 compared to 7.7% for the same period of 2018. The increase was primarily the result of ~~favorable product mix~~lower spending on restructuring actions and ~~volume (0.8%) and pricing~~productivity benefits in excess of ~~material inflation (0.1%).~~other inflation. These amounts were partially offset by ~~increased investment and restructuring spending (0.4%) and step-up amortization related to recent acquisitions (0.1%).~~

Dollar amounts in millions 2018 Operating Income (Expense) 2017 Operating Income (Expense) Period Change 2018 Operating Margin 2017 Operating Margin
Climate $ 582.7
$ 527.1
$ 55.6
16.7 % 16.8 %
Industrial 121.2
92.2
29.0
14.0 % 12.1 %
Unallocated corporate expenses (63.6 ) (61.7 ) (1.9 ) N/A
N/A
Total $ 640.3
$ 557.6
$ 82.7
14.7 % 14.3 %

~~Climate~~

Operating margin decreased slightly for the three months ended June 30, 2018, compared to the same period of 2017. The Climate segment experienced favorable product mix and volume (0.7%) which was slightly more than offset by investment and restructuring spending (0.4%), other inflation in excess of productivity benefits (0.2%), step-up amortization related to recent acquisitions (0.1%), and material inflation in excess of pricing ~~(0.1%).~~

~~Industrial~~

Operating margin increased to 14.0% for the three months ended June 30, 2018 compared to 12.1% for the same period of 2017. The increase was primarily due to increased productivity in excess of other inflation (1.1%), favorable product miximprovements and ~~volume~~

~~(0.8%), pricing increases in excess of material inflation (0.3%) and favorable~~unfavorable foreign currency exchange rate ~~movements (0.2%). These amounts were partially offset by the timing of investment and restructuring spending (0.5%).~~movements.

Unallocated Corporate Expenses

Unallocated corporate expense for the three months ended ~~June 30, 2018~~March 31, 2019 increased by ~~$1.9~~$1.6 million compared with the same period of ~~2017. The increase in expenses primarily relates to higher~~2018. Higher compensation and benefit charges related to variable compensation and ~~restructuring actions.~~transaction costs associated with the pending acquisition of PFS more than offset lower functional costs.

Interest Expense

Interest expense for the three months ended ~~June 30, 2018~~March 31, 2019 decreased by $~~3.8~~22.0 million compared with the same period of ~~2017. During~~2018. The decrease primarily relates to the redemption of $1.1 billion of senior notes during the first quarter of 2018 in which we ~~issued $1.15 billion~~recognized $15.4 million of ~~senior notes~~premium expense and ~~redeemed $1.1 billion~~$1.2 million of ~~senior notes. The decrease primarily relates to~~unamortized costs in Interest expense. In addition, lower interest rates on ~~the~~ new debt ~~issuance. This amount was partially offset by interest costs associated with outstanding short-term-financing arrangements during~~issuances contributed to the ~~current period.~~year-over-year reduction.

Other Income/(Expense), Net

The components of Other income/(expense), net for the three months ended ~~June 30~~March 31 were as follows:


In millions	2018			2017			2019			2018
Interest income	$	2.6		$	1.3
Interest income (loss)							$	(0.6	)	$	3.6
Exchange gain (loss)	(1.8		)	(3.4		)	(4.3		)	(7.3		)
Other components of net periodic benefit cost	(5.8		)	(6.2		)	(11.1		)	(3.9		)
Other activity, net	1.5			(3.2		)	(2.8		)	3.6
Other income/(expense), net	$	(3.5	)	$	(11.5	)	$	(18.8	)	$	(4.0	)

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, we include 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. (Trane) for the settlement and defense of asbestos-related claims, insurance settlements on asbestos-related matters and the revaluation of its liability for potential future claims.

Provision for Income Taxes

For the three months ended ~~June 30, 2018,~~March 31, 2019, our effective tax rate was ~~21.8%~~17.3% which is ~~higher~~lower than the U.S. Statutory rate of 21% primarily due to ~~U.S. state~~excess tax benefits from employee share-based payments, the deduction for Foreign Derived Intangible Income and ~~local income taxes and certain non-deductible employee expense, partially offset by~~ earnings in non-U.S. jurisdictions, which in aggregate have a lower effective tax ~~rate~~rate. These amounts were partially offset by U.S. state and ~~a reduction to the interest liability associated with our unrecognized tax benefits.~~local income taxes and certain non-deductible employee expenses. The effective tax rate for the three months ended ~~June 30, 2017~~March 31, 2018 was ~~28.1%~~19.8% which is lower than the U.S. statutory rate of ~~35%~~21% primarily due to excess tax benefits from employee share-based payments and earnings in non-U.S. jurisdictions, which in aggregate have a lower effective tax rate. These amounts were partially offset by ~~a non-cash charge related to the establishment~~U.S. state and local income taxes.

Discontinued Operations

The components of ~~a valuation allowance on certain~~Discontinued operations, net ~~deferred~~of tax assets in Brazil. In general, when comparing the results of multiple reporting periods, among other factors, the mix of earnings between U.S. and foreign jurisdictions can cause variability on our overall effective tax rate.

~~Six Months EndedJune 30, 2018 Compared to the Six Months EndedJune 30, 2017~~

In millions, except per share amounts 2018 2017 Period Change 2018 % of
revenues 2017 % of
revenues
Net revenues $ 7,742.2
$ 6,909.0
$ 833.2

Cost of goods sold (5,384.3 ) (4,779.2 ) (605.1 ) 69.5 % 69.2 %
Selling and administrative expenses (1,474.2 ) (1,357.2 ) (117.0 ) 19.0 % 19.6 %
Operating income 883.7
772.6
111.1
11.4 % 11.2 %
Interest expense (123.2 ) (108.1 ) (15.1 )
Other income/(expense), net (7.5 ) (16.2 ) 8.7

Earnings before income taxes 753.0
648.3
104.7

Provision for income taxes (161.0 ) (166.8 ) 5.8

Earnings from continuing operations 592.0
481.5
110.5

Discontinued operations, net of tax (15.3 ) 1.8
(17.1 )
Net earnings $ 576.7
$ 483.3
$ 93.4

~~Net Revenues~~

~~Net revenues~~ for the ~~six~~three months ended ~~June 30, 2018 increased by 12.1%, or $833.2 million, compared with the same period in 2017, which resulted from the following:~~



~~Volume/product mix~~	~~7.6~~	%
~~Acquisitions~~	~~1.1~~	%
~~Pricing~~	~~1.1~~	%
~~Currency translation~~	~~2.3~~	%
~~Total~~	~~12.1~~	%

The increase was primarily driven by higher volumes in both our Climate and Industrial segments. Improved pricing, along with incremental revenues from acquisitions, further contributed to the year-over-year increase. In addition, each segment benefited from favorable foreign currency exchange rate movements.

~~Our revenues by segment for the six month period ended June 30 are as follows:~~

Dollar amounts in millions 2018 2017 % change
Climate $ 6,103.6
$ 5,467.9
11.6%
Industrial 1,638.6
1,441.1
13.7%
Total $ 7,742.2
$ 6,909.0

~~Climate~~

~~Net revenues~~ for the six months ended June 30, 2018 increased by 11.6% or $635.7 million, compared with the same period of 2017. The primary driver of the increase related to incremental volumes in each of our businesses. The components of the period change areMarch 31 were as follows:



~~Volume/product mix~~	~~7.6~~	%
~~Acquisitions~~	~~1.1~~	%
~~Pricing~~	~~1.0~~	%
~~Currency translation~~	~~1.9~~	%
~~Total~~	~~11.6~~	%



In millions	2019			2018
Pre-tax earnings (loss) from discontinued operations	$	(1.9	)	$	(12.1	)
Tax benefit (expense)	(0.2		)	2.7
Discontinued operations, net of tax	$	(2.1	)	$	(9.4	)

~~Industrial~~

~~Net revenues~~ for the six months ended June 30, 2018 increased by 13.7% or $197.5 million, compared with the same period of 2017. The primary driver of the increase related to incremental volumes in each of our businesses. The components of the period changeDiscontinued operations are ~~as follows:~~



~~Volume/product mix~~	~~7.3~~	%
~~Acquisitions~~	~~1.4~~	%
~~Pricing~~	~~1.3~~	%
~~Currency translation~~	~~3.7~~	%
~~Total~~	~~13.7~~	%

~~Operating Income/Margin~~

~~Operating margin increased~~retained costs from ~~11.2% for the six months ended June 30, 2017 to 11.4% for the same period in 2018. The increase was~~previously sold businesses that primarily the result of favorable product mix and volume (1.0%) and favorable foreign currency exchange rate movements (0.1%). These amounts were partially offset by increased investment and restructuring spending (0.5%), material inflation in excess of pricing (0.2%), other inflation in excess of productivity benefits (0.1%) and step-up amortization related to recent acquisitions (0.1%).

Dollar amounts in millions 2018 Operating Income (Expense) 2017 Operating Income (Expense) Period Change 2018 Operating Margin 2017 Operating Margin
Climate $ 843.1
$ 744.4
$ 98.7
13.8 % 13.6 %
Industrial 181.1
158.0
23.1
11.1 % 11.0 %
Unallocated corporate expenses (140.5 ) (129.8 ) (10.7 ) N/A
N/A
Total $ 883.7
$ 772.6
$ 111.1
11.4 % 11.2 %

~~Climate~~

Operating margin increased from 13.6% for the six months ended June 30, 2017 to 13.8% for the same period in 2018. The increase was due to favorable product mix and volume (0.8%), a decrease in restructuring actions and timing of investment spending (0.2%). These amounts were partially offset by other inflation in excess of productivity benefits (0.4%), material inflation in excess of pricing (0.3%), and step-up amortization related to recent acquisitions (0.1%).

~~Industrial~~

Operating margin increased to 11.1% for the six months ended June 30, 2018 compared to 11.0% for the same period of 2017. The increase was primarily due to favorable product mix and volume (1.4%), increased productivity in excess of other inflation (1.1%), pricing increases in excess of material inflation (0.3%) and favorable foreign currency exchange rate movements (0.3%). These amounts were partially offset by the timing of restructuring and investment spending (2.9%) and step-up amortization related to recent acquisitions (0.1%).

~~Unallocated Corporate Expenses~~

~~Unallocated corporate~~include ongoing expenses for ~~the six months ended June 30, 2018 increased by $10.7 million compared with the same period of 2017. The increase in expenses primarily relates to higher compensation~~postretirement benefits, product liability and ~~benefit charges related to variable compensation and restructuring actions.~~

~~Interest Expense~~

~~Interest expense~~ for the six months ended June 30, 2018 increased $15.1 million compared with the same period of 2017. During the first quarter of 2018, we issued $1.15 billion of senior notes and redeemed $1.1 billion of senior notes. The increase primarily relates to the redemption of the senior notes in which we recognized $15.4 million of premium expense and $1.2 million of unamortized costs in ~~Interest expense. This amount was partially offset by lower interest rates on the new senior notes issued during the period.~~

~~Other Income/(Expense), Net~~

~~The components of~~ ~~Other income/(expense), net~~ ~~for the six months ended June 30 are as follows:~~

In millions 2018 2017
Interest income $ 6.2
$ 4.4
Exchange gain (loss) (9.1 ) (1.5 )
Other components of net periodic benefit cost (9.7 ) (14.4 )
Other activity, net 5.1
(4.7 )
Other income/(expense), net $ (7.5 ) $ (16.2 )

~~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.legal costs. In addition, we include ~~the components of net periodic benefit cost for pension and post retirement obligations other than the service cost component. Other activity, net includes items~~costs associated with ~~Trane~~Ingersoll-Rand Company for the settlement and defense of asbestos-related claims, insurance settlements on asbestos-related matters and the revaluation of ~~its~~our liability for potential future claims.

~~Provision~~ A portion of the tax benefit (expense) in each period represents adjustments for ~~Income Taxes~~

~~For the six months ended June 30, 2018, our effective~~certain tax rate was 21.4% which is higher than the U.S. statutory rate of 21% primarily due to U.S. state and local income taxes and certain non-deductible employee expenses, partially offset by excess tax benefits from employee share-based payments, earnings in non-U.S. jurisdictions, which in aggregate have a lower effective tax rate and a reduction to the interest liabilitymatters associated with the 2013 spin-off of our ~~unrecognized tax benefits. The effective tax rate for~~commercial and residential security business, now an independent public company operating under the ~~six months ended June 30, 2017 was 25.7% which was lower than the U.S. statutory rate~~name of 35% primarily due to excess tax benefits from employee share-based payments and earnings in non-U.S. jurisdictions, which in aggregate have a lower effective tax rate, partially offset by a non-cash charge related to the establishment of a valuation allowance on certain net deferred tax assets in Brazil. In general, when comparing the results of multiple reporting periods, among other factors, the mix of earnings between U.S. and foreign jurisdictions can cause variability on our overall effective tax rate.Allegion plc (Allegion).

Liquidity and Capital Resources

We assess our liquidity in terms of our ability to generate cash to fund our operating, investing and financing activities. In doing so, we review and analyze our current cash on hand, the number of days our sales are outstanding, inventory turns, capital expenditure commitments and income tax payments. Our cash requirements primarily consist of the following:

Funding of working capital

Funding of capital expenditures

Dividend payments

Debt service requirements

Our primary sources of liquidity include cash balances on hand, cash ~~flows~~flow from operations, proceeds from debt offerings, commercial paper, and borrowing availability under our existing credit facilities. We earn a significant amount of our operating income in jurisdictions where it is deemed to be permanently reinvested. Our most prominent jurisdiction of operation is the U.S. We expect existing cash and cash equivalents available to the U.S. operations, the cash generated by our U.S. operations, our committed credit lines as well as our expected ability to access the capital and debt markets will be sufficient to fund our U.S. operating and capital needs for at least the next twelve months and thereafter for the foreseeable future. In addition, we expect existing non-U.S. cash and cash equivalents and the cash generated by our non-U.S. operations will be sufficient to fund our non-U.S. operating and capital needs for at least the next twelve months and thereafter for the foreseeable future.

As of ~~June 30, 2018,~~March 31, 2019, we had ~~approximately $1.0 billion~~$1,907.4 million of cash and cash equivalents on hand, of which ~~approximately $0.9 billion~~$1,833.4 million was held by non-U.S. subsidiaries. Cash and cash equivalents held by our non-U.S. subsidiaries are generally available for use in our U.S. operations via intercompany loans, equity infusions or via distributions from direct or indirectly owned non-U.S. subsidiaries for which we do not ~~elect~~assert permanent reinvestment. ~~We currently~~As a result of the Tax Cuts and Jobs Act in 2017, additional repatriation opportunities to access cash and cash equivalents held by non-U.S. subsidiaries have been created. In general, repatriation of cash to the U.S. can be completed with no ~~plans~~significant incremental U.S. tax. However, to the extent that we repatriate funds from non-U.S. subsidiaries for which we ~~elect~~assert permanent reinvestment ~~to fund our U.S. operations. However, if we decided to repatriate such funds~~ to fund our U.S. operations, we would be required to accrue and pay applicable non-U.S. taxes. As of March 31, 2019, we currently have no plans to repatriate funds from subsidiaries for which we assert permanent reinvestment.

March 31, 2019. In June 2018, we announced an increase in our quarterly share dividend from $0.45 to $0.53 per ordinary share. This reflects an ~~18.0%~~18% increase that ~~will begin~~began with our September 2018 dividend payment.

We continue to be active with acquisitions and joint venture activity. Since the beginning of 2018, we entered into a joint venture and acquired several businesses, including channel acquisitions, that complement existing products and services further growing our product portfolio. In addition, we expect to close on our pending acquisition of PFS mid-year 2019 and utilize the $1.5 billion proceeds of our debt issuance completed during the period to fund the transaction. Lastly, we incur ongoing costs associated with restructuring initiatives intended to result in improved operating performance, profitability and working capital levels. Actions associated with these initiatives may include workforce reductions, improving manufacturing productivity, realignment of management structures and rationalizing certain assets. We expect that our available cash flow, committed credit lines and access to the capital markets will be sufficient to fund share repurchases, dividends, ongoing restructuring actions, acquisitions and joint venture activity.

Liquidity

The following table contains several key measures of our financial condition and liquidity at the period ended:


In millions	June 30, 2018			December 31, 2017			March 31, 2019			December 31, 2018
Cash and cash equivalents	$	969.5		$	1,549.4		$	1,907.4		$	903.4
Short-term borrowings and current maturities of long-term debt	599.6			1,107.0			374.4			350.6
Long-term debt	3,738.9			2,957.0			5,226.5			3,740.7
Total debt	4,338.5			4,064.0			5,600.9			4,091.3
Total Ingersoll-Rand plc shareholders’ equity	6,787.1			7,140.3			6,885.8			7,022.7
Total equity	6,823.7			7,206.9			6,922.8			7,064.8
Debt-to-total capital ratio	38.9		%	36.1		%	44.7		%	36.7		%

Debt and Credit Facilities

Our short-term obligations primarily consist of current maturities of long-term debt and commercial paper. We have outstanding $343.0 million of fixed rate debentures that contain a put feature that the holders may exercise on each anniversary of the issuance date. If exercised, we are obligated to repay in whole or in part, at the holder’s option, the outstanding principal amount (plus accrued and unpaid interest) of the debentures held by the holder. In addition, we also maintain a commercial paper program which is used for general corporate purposes. Under the program, the maximum aggregate amount of unsecured commercial paper notes available to be issued, on a private placement basis, is ~~$2 billion as of June 30, 2018.~~$2.0 billion. We had ~~$249.0~~an outstanding balance of $23.9 million ofunder our commercial paper program at March 31, 2019. However, no amounts were outstanding at ~~June 30,~~December 31, 2018. See Note 6 to the Condensed Consolidated Financial Statements for additional information regarding the terms of our short-term obligations.

Our long-term obligations primarily consist of long-term debt with final maturity dates ranging between ~~2019~~2020 and ~~2048.~~2049. In addition, we maintain two 5-year, $1.0 billion revolving credit facilities. Each senior unsecured credit facility, one of which matures in March 2021 and the other in April 2023, provides support for our commercial paper program and can be used for working capital and other general corporate purposes. Total commitments of $2.0 billion were unused at ~~June 30, 2018~~March 31, 2019 and December 31, 2017. On April 17, 2018, the Company entered into a new 5-year, $1.0 billion senior unsecured credit facility and terminated its 5-year, $1.0 billion facility set to expire in March 2019. As a result, the current maturity dates of the revolving credit facilities are March 2021 and April 2023.

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. In March 2018, the Company used the proceeds to fund the redemption of $750 million aggregate principal amount of 6.875% senior notes due 2018 and $350 million aggregate principal amount of 2.875% senior notes due 2019, with the remainder used for general corporate purposes. As a result of the early redemption, the Company recognized $15.4 million of premium expense and $1.2 million of unamortized costs in ~~Interest expense~~.2018. See Note 6 and Note 2021 to the Condensed Consolidated Financial Statements for additional information regarding the terms of our long-term obligations and their related guarantees.

Cash Flows

The following table reflects the major categories of cash flows for the ~~six~~three months ended ~~June 30.~~March 31. For additional details, see the Condensed Consolidated Statements of Cash Flows in the condensed consolidated financial statements.


In millions	2018			2017			2019			2018
Net cash provided by (used in) continuing operating activities	$	414.5		$	422.3		$	(37.1	)	$	(45.8	)
Net cash provided by (used in) continuing investing activities	(444.9		)	(118.9		)	(76.4		)	(257.7		)
Net cash provided by (used in) continuing financing activities	(491.4		)	(766.9		)	1,130.1			(96.4		)

Operating Activities

Net cash ~~provided by~~used in continuing operating activities for the ~~six~~three months ended ~~June 30, 2018~~March 31, 2019 was ~~$414.5~~$37.1 million, of which net income provided ~~$880.9~~$363.4 million after adjusting for non-cash transactions. Changes in assets and liabilities, net used ~~$466.4~~$400.5 million. Improvements in accounts payable were more than offset by the seasonal increase to inventory balances and higher outstanding accounts receivable from higher sales volumes. Net cash ~~provided by~~used in continuing operating activities for the ~~six~~three months ended ~~June 30, 2017~~March 31, 2018 was ~~$422.3~~$45.8 million, of which net income provided ~~$745.6~~$284.9 million after adjusting for non-cash transactions. Changes in assets and liabilities, net used ~~$323.3~~$330.7 million. Improvements in accounts receivable and accounts payable were more than offset by the seasonal increase to inventory ~~balances and higher outstanding accounts receivable.~~balances.

Investing Activities

Cash flows from investing activities represents inflows and outflows regarding the purchase and sale of assets. Primary activities associated with these items include capital expenditures, proceeds from the sale of property, plant and equipment, acquisitions, investment in joint ventures and divestitures. During the ~~six~~three months ended ~~June 30, 2018,~~March 31, 2019, net cash used in investing activities from continuing operations was ~~$444.9~~$76.4 million. The primary driver of the usage is attributable to the acquisition of several businesses and the investment of a 50% ownership interest in a joint venture with Mitsubishi. The total outflow, net of cash acquired, was $281.5 million. Other outflows included capital expenditures, which totaled ~~$163.4~~$60.8 million. In addition, channel acquisitions that complement existing products and services were $22.0 million, net of cash acquired. Net cash used in investing activities from continuing operations for the ~~six~~three months ended ~~June 30, 2017~~March 31, 2018 was ~~$118.9~~ $257.7

million. The primary driver of the usage was attributable to ~~capital expenditures~~acquisitions during the period. The total outflow, net of ~~$79.5~~cash acquired, was $201.6 million. In addition, ~~we acquired several businesses during the period that complement existing products and services.~~capital expenditures totaled $52.8 million.

Financing Activities

Cash flows from financing activities represents inflows and outflows that account for external activities affecting equity and debt. Primary activities associated with these actions include paying dividends to shareholders, repurchasing our own shares, issuing our own stock and debt transactions. During the ~~six~~three months ended ~~June 30, 2018,~~March 31, 2019, net cash provided by financing activities from continuing operations was $1,130.1 million. The primary driver of the inflow related to the issuance of $1.5 billion of senior notes during the period to fund the pending acquisition of PFS. This amount was partially offset by dividends paid to ordinary shareholders of $127.7 million and the repurchase of $250.0 million in ordinary shares. Net cash used in financing activities from continuing operations for the three months ended March 31, 2018 was ~~$491.4~~$96.4 million. Primary drivers of the cash outflow include dividends paid to ordinary shareholders of ~~$221.8~~$111.6 million and the repurchase of ~~$500.1~~$250.0 million in ordinary shares. These amounts were partially offset by borrowings from commercial paper during the period. In addition, we issued $1.15 billion of senior notes during the three months ended March 31, 2018. The issuance was predominately offset by the redemption of $1.1 billion of senior notes. Net cash used in financing activities from continuing operations for the six months ended June 30, 2017 was $766.9 million. Dividends paid to ordinary shareholders of $204.8 million and the repurchase of $575.2 million in ordinary shares were the primary drivers of the cash outflow for the period.

Discontinued Operations

Cash flows from discontinued operations primarily represent ongoing costs associated with postretirement benefits, product liability and legal costs ~~(mostly asbestos-related)~~ from previously sold businesses. Net cash used in discontinued operating activities for the ~~six~~three months ended ~~June 30,~~March 31, 2019 and 2018 ~~and 2017~~ primarily relates to postretirement benefits and asbestos-related matters. In addition, net cash used in discontinued operating activities for the six months ended June 30, 2017 includes the proceeds from settlements with insurance carriers related to asbestos.ongoing costs.

Pensions

Our investment objective in managing defined benefit plan assets is to ensure that all present and future benefit obligations are met as they come due. We seek 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. We use a dynamic approach to asset allocation whereby a plan's allocation to fixed income assets increases as the plan's funded status improves. We monitor plan funded status and asset allocation regularly in addition to investment manager performance.

We monitor the impact of market conditions on our defined benefit plans on a regular basis. None of our defined benefit pension plans have experienced a significant impact on their liquidity due to the volatility in the markets. The Company currently projects

that it will contribute approximately ~~$80~~$104 million to its plans worldwide in ~~2018.~~2019. For further details on pension plan activity, see Note 910 to the condensed consolidated financial statements.

For a further discussion of Liquidity and Capital Resources, refer to Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” contained in the Company’s Annual Report on Form 10-K for the period ended December 31, ~~2017.~~2018.

Commitments and Contingencies

We are involved in various litigations, claims and administrative proceedings, including those related to asbestos, environmental, and product liability matters. 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 Note 1920 to the condensed consolidated financial statements, management believes that the liability which may result from these legal matters would not have a material adverse effect on our financial condition, results of operations, liquidity or cash flows.

Critical Accounting Policies

Management’s Discussion and Analysis of Financial Condition and Results of Operations are based upon our condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of financial statements in conformity with those accounting principles requires management to use judgments in making estimates and assumptions based on the relevant information available at the end of each period. These estimates and assumptions have a significant effect on reported amounts of assets and liabilities, revenue and expenses, as well as the disclosure of contingent assets and liabilities because they result primarily from the need to make estimates and assumptions on matters that are inherently uncertain. Actual results may differ from estimates.

Management believes there have been no significant policy changes during the ~~six~~three months ended ~~June 30, 2018~~March 31, 2019, to the items that we disclosed as our critical accounting policies in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, ~~2017~~2018 except for certain policy changes due to the adoption of ASC ~~606.~~842, "Leases." Refer to Note 2, "Recent Accounting Pronouncements" and Note ~~11, "Revenue"~~9, "Leases" for additional information related to the adoption of ASC ~~606.~~842.

Recent Accounting Pronouncements

See Note 2 to the Condensed Consolidated Financial Statements for a discussion of recent accounting pronouncements.

Safe Harbor Statement

Certain statements in this report, other than purely historical information, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements generally are identified by the words “believe,” “project,” “expect,” “anticipate,” “estimate,” “forecast,” “outlook,” “intend,” “strategy,” “plan,” “may,” “could,” “should,” “will,” “would,” “will be,” “will continue,” “will likely result,” or the negative thereof or variations thereon or similar terminology generally intended to identify forward-looking statements.

Forward-looking statements may relate to such matters as projections of revenue, margins, expenses, tax provisions, earnings, cash flows, benefit obligations, share or debt repurchases or other financial items; any statements of the plans, strategies and objectives of management for future operations, including those relating to any statements concerning expected development, performance or market share relating to our products and services; any statements regarding future economic conditions or our performance; any statements regarding pending investigations, claims or disputes; any statements of expectation or belief; and any statements of assumptions underlying any of the foregoing. These statements are based on currently available information and our current assumptions, expectations and projections about future events. While we believe that our assumptions, expectations and projections are reasonable in view of the currently available information, you are cautioned not to place undue reliance on our forward-looking statements. You are advised to review any further disclosures we make on related subjects in materials we file with or furnish to the SEC. Forward-looking statements speak only as of the date they are made and are not guarantees of future performance. They are subject to future events, risks and uncertainties - many of which are beyond our control - as well as potentially inaccurate assumptions, that could cause actual results to differ materially from our expectations and projections. We do not undertake to update any forward-looking statements.

Factors that might affect our forward-looking statements include, among other things:

overall economic, political and business conditions in the markets in which we operate;

the demand for our products and services;

competitive factors in the industries in which we compete;

changes in tax laws and requirements (including tax rate changes, new tax laws, new and/or revised tax law interpretations and any legislation that may limit or eliminate potential tax benefits resulting from our incorporation in a non-U.S. jurisdiction, such as Ireland);

trade protection measures such as import or export restrictions and requirements, the imposition of tariffs and quotas or revocation or material modification of trade agreements;

the outcome of any litigation, governmental investigations or proceedings;

the outcome of any income tax audits or settlements;

interest rate fluctuations and other changes in borrowing costs;

other capital market conditions, including availability of funding sources;

currency exchange rate fluctuations, exchange controls and currency devaluations;

availability of and fluctuations in the prices of key commodities;

impairment of our goodwill, indefinite-lived intangible assets and/or our long-lived assets;

climate change, changes in weather patterns, natural disasters and seasonal fluctuations;

the impact of potential information technology or data security breaches; and

the strategic acquisition of businesses, product lines and joint ventures;

Some of the significant risks and uncertainties that could cause actual results to differ materially from our expectations and projections are described more fully in the “Risk Factors” section of this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2017~~2018. There may also be other factors that have not been anticipated or that are not described in our periodic filings with the SEC, generally because we did not believe them to be significant at the time, which could cause results to differ materially from our expectations.

Item 3 – Quantitative and Qualitative Disclosures about Market Risk

For a discussion of the Company’s exposure to market risk, refer to Part II, Item 7A, “Quantitative and Qualitative Disclosures About Market Risk,” contained in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, ~~2017~~2018. There has been no significant change in our exposure to market risk as of the ~~second~~first quarter of ~~2018.~~2019.

Item 4 – Controls and Procedures

The Company’s management, including its Chief Executive Officer and Chief Financial Officer, have conducted an evaluation of the effectiveness of disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act)), as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded as of ~~June 30, 2018~~March 31, 2019, that the disclosure controls and procedures are effective in ensuring that all material information required to be filed in this Quarterly Report on Form 10-Q has been recorded, processed, summarized and reported when required and the information is accumulated and communicated to the Company's management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

There has been no change in the Company’s internal control over financial reporting that occurred during the ~~second~~first quarter of ~~2018~~2019 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1 – Legal Proceedings

In the normal course of business, we are involved in a variety of lawsuits, claims and legal proceedings, including commercial and contract disputes, employment matters, product liability claims, asbestos-related claims, environmental liabilities, intellectual property disputes, and tax-related matters. In our opinion, pending legal matters are not expected to have a material adverse impact on our results of operations, financial condition, liquidity or cash flows.

Asbestos-Related Matters

Certain of our wholly-owned subsidiaries and former companies 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 allege injury caused by exposure to asbestos contained in certain historical products, primarily pumps, boilers and railroad brake shoes. None of our existing or previously-owned businesses were a producer or manufacturer of asbestos.

See also the discussion contained in our Annual Report on Form 10-K for the period ended December 31, ~~2017~~2018 under Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations and also Note 1920 to the condensed consolidated financial statements in this Form 10-Q.

Item 1A – Risk Factors

~~There~~Other than as noted below, there have been no material changes to our risk factors contained in our Annual Report on Form 10-K for the period ended December ~~31, 2017 and our Quarterly Report on Form 10-Q for the period ended March~~ 31, 2018. For a further discussion of our Risk Factors, refer to the “Risk Factors” discussion contained in our Annual Report on Form 10-K for the period ended December 31, ~~2017~~2018.

The proposed Reverse Morris Trust transaction with Gardner Denver Inc. (GDI) is subject to various risks and uncertainties, and there is no assurance that the transaction will be completed on the terms or timeline contemplated, if at all.

The proposed separation of our Industrial segment businesses by way of spin-off to our shareholders and subsequent merger of the Industrial segment businesses into GDI, creating a combined company (IndustrialCo) may not be completed as currently contemplated or at all. Completion of the pending Reverse Morris Trust transaction is subject to the satisfaction or waiver of a number of conditions, including the receipt of approval of GDI stockholders and regulatory approvals, and there can be no assurance that we will receive the required approvals in a timely manner or at all, or that such approvals will not contain adverse conditions.

The completion of the pending Reverse Morris Trust transaction is also subject to our receipt of an opinion (i) from U.S. tax counsel regarding the qualification of each of the distribution of shares of a company comprised of our Industrial segment businesses to our shareholders, certain internal transactions undertaken in anticipation of such distribution and the subsequent merger of this company with GDI as a tax-free transaction for U.S. federal income tax purposes and (ii) from Irish tax counsel that there will be no adverse Irish tax consequences, other than in respect of certain tax matters relevant only to certain of our Irish shareholders, as a result of the transaction. The completion of the transaction is also subject to the receipt by GDI of an opinion from its U.S. tax counsel regarding the qualification of the merger as a tax-free transaction for U.S. federal income tax purposes.

If the transaction is not completed or not completed in the timeframe expected, our business, financial results and stock price may be adversely affected.

We are subject to business uncertainties while the Reverse Morris Trust transaction with GDI is pending and the transaction may have an adverse effect on us even if not completed.

Uncertainty about the effect of the pending Reverse Morris Trust transaction with GDI on our employees, customers, partners, and suppliers may have adverse effects on our business, financial condition and results of operations. Our employees may be distracted due to uncertainty about their future roles with each of the separate companies pending the completion of the transaction, and we may face challenges in attracting, retaining and motivating key employees. Some of our suppliers or customers may delay or defer decisions or may end their relationships with us or our Industrial segment businesses, which could negatively affect revenues, earnings and cash flows of ours and our ~~Quarterly Report~~Industrial segment businesses. Execution of the proposed transaction will require significant time and attention from management, which may distract management from the operation of our businesses and the execution of other initiatives that may have been beneficial to us. Any delays in completion of the proposed Reverse Morris Trust transaction may increase the amount of time, effort, and expense that we devote to the transaction. We will be required to pay certain costs and expenses relating to the transaction, such as legal, accounting and other professional fees, whether or not it is completed. We may experience negative reactions from the financial markets if we fail to complete the transaction. Any of these factors could have a material adverse effect on ~~Form 10-Q~~our financial condition, results of operations, cash flows and trading price.

We may be unable to achieve some or all of the benefits that we expect to achieve from the transaction.

Although we believe that the pending Reverse Morris Trust transaction will provide financial, operational, managerial and other benefits to us and our shareholders, the transaction may not provide the results on the scope or on the scale we anticipate, and the assumed benefits of the transaction may not be fully realized. Accordingly, the transaction might not provide us and our shareholders benefits or value in excess of the benefits and value that might have been created or realized had we retained the Industrial segment businesses or undertaken another strategic alternative involving such businesses. Following the separation, distribution and subsequent merger, our remaining company will be less diversified with a focus on the climate control solutions for buildings, homes and transportation and may be more vulnerable to changing market conditions, which could materially adversely affect our business, results of operations and financial condition. These changes may not meet some shareholders’ investment strategies, which could cause investors to sell their shares of our common stock and result in a decrease in the ~~period ended March 31, 2018.~~market price of our common stock.

There can be no assurances as to the value of the shares of IndustrialCo to be received by our stockholders in the Reverse Morris Trust transaction.

Our existing stockholders will receive 50.1% of the shares of IndustrialCo if the Reverse Morris Trust transaction is completed. The actual value of the IndustrialCo common stock to be received by our stockholders will depend on the value of such shares at the time of closing of the transaction, and our stockholders may receive more or less than the current value of our Industrial segment businesses. Following the Reverse Morris Trust transaction, our Industrial segment businesses and the GDI business could face difficulties in integrating their businesses, or the combined company could fail to realize the anticipated synergies, growth opportunities and other expected operational and financial benefits, as a result of which our stockholders may not receive the anticipated benefits of the merger.

Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities

The following table provides information with respect to purchases of our ordinary shares during the ~~second~~first quarter of ~~2018~~2019:

Period Total number of shares purchased (000's) (a) (b) Average price paid per share (a) (b) Total number of shares purchased as part of program (000's) (a) Approximate dollar value of shares still available to be purchased under the program ($000's) (a)
April 1 - April 30 0.4
$ 83.84
—
$ 650,017
May 1 - May 31 2,551.6
87.74
2,551.6
426,131
June 1 - June 30 301.9
88.96
293.7
400,017
Total 2,853.9
$ 87.87
2,845.3



Period	Total number of shares purchased (000's) (a) (b)	Average price paid per share (a) (b)		Total number of shares purchased as part of program (000's) (a)	Approximate dollar value of shares still available to be purchased under the program ($000's) (a)
January 1 - January 31	6.2	$	91.97	—	$	1,499,967
February 1 - February 28	2,235.7	103.30		1,924.9	1,301,501
March 1 - March 31	485.7	106.10		485.7	1,249,967
Total	2,727.6	$	103.77	2,410.6

(a) Share repurchases are made from time to time in accordance with management's capital allocation strategy, subject to market conditions and regulatory requirements. In ~~February 2017,~~October 2018, our Board of Directors authorized the repurchase of up to $1.5 billion of our ordinary shares under a ~~new~~ share repurchase program (2018 Authorization) upon completion of the prior authorized share repurchase program. ~~Repurchases~~During the three months ended March 31, 2019, we repurchased and canceled approximately $250 million of our ordinary shares leaving approximately $1.25 billion remaining under the new share repurchase program began in May 2017. Share repurchases are made from time to time in accordance with our capital allocation strategy, subject to market conditions and regulatory requirements. The repurchase program does not have a prescribed expiration date.2018 Authorization at March 31, 2019.

(b) We may also reacquire shares outside of the repurchase program from time to time in connection with the surrender of shares to cover taxes on vesting of share based awards. We reacquired ~~390~~6,188 shares in ~~April, 0~~January and 310,810 shares in ~~May and 8,223 shares in June~~February in transactions outside of the repurchase programs.

Item 6 – Exhibits

(a) Exhibits



Exhibit No.	Description	Method of Filing

~~10.1~~	Credit Agreement dated April 17, 2018 among Ingersoll-Rand Global Holding Company Limited, Ingersoll-Rand plc, Ingersoll-Rand Luxembourg Finance S.A., Ingersoll-Rand Lux International Holding Company S.à r.l., Ingersoll-Rand Irish Holdings Unlimited Company, Ingersoll-Rand Company, JPMorgan Chase Bank, N.A., as Administrative Agent, Citibank, N.A., as Syndication Agent, Bank of America, N.A., BNP Paribas, Deutsche Bank Securities Inc., Goldman Sachs Bank USA, Mizuho Bank, Ltd., and MUFG Bank Ltd. as Documentation Agents, and JPMorgan Chase Bank, N.A. and Citigroup Global Markets Inc., as joint lead arrangers and joint bookrunners, and certain lending institutions from time to time parties thereto.	~~Incorporated by reference to Exhibit 10.1 to the Company's Form 8-K (File No. 001-34400) filed with the SEC on April 19, 2018.~~

~~10.2~~	~~Form of Global Stock Option Award Agreement~~	~~Incorporated by reference to Exhibit 10.1 to the Company's Form 8-K (File No. 001-34400) filed with the SEC on June 12, 2018.~~

~~10.3~~	~~Form of Global Restricted Stock Unit Award Agreement~~	~~Incorporated by reference to Exhibit 10.2 to the Company's Form 8-K (File No. 001-34400) filed with the SEC on June 12, 2018.~~

~~10.4~~	~~Form of Global Performance Stock Unit Award Agreement~~	~~Incorporated by reference to Exhibit 10.3 to the Company's Form 8-K (File No. 001-34400) filed with the SEC on June 12, 2018.~~

31.1	Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) or Rule 15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.	Filed herewith.

31.2	Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) or Rule 15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.	Filed herewith.

32	Certifications of Chief Executive Officer and Chief Financial Officer Pursuant to Rule 13a-14(b) or Rule 15d-14(b) and 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.	Furnished herewith.

101	The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended ~~June 30, 2018,~~March 31, 2019, formatted in XBRL (Extensible Business Reporting Language): (i) the Condensed Consolidated Statements of Comprehensive Income, (ii) the Condensed Consolidated Balance Sheets, (iii) the Condensed Consolidated Statement of Cash Flows, and (iv) Notes to Condensed Consolidated Financial Statements.	Filed herewith.

INGERSOLL-RAND PLC

SIGNATURES

Pursuant to the requirements 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)

Date:	~~July 25, 2018~~April 30, 2019	/s/ Susan K. Carter
		Susan K. Carter, Senior Vice President and Chief Financial Officer Principal Financial Officer

Date:	~~July 25, 2018~~April 30, 2019	/s/ Christopher J. Kuehn
		Christopher J. Kuehn, Vice President and Chief Accounting Officer Principal Accounting Officer

5047



In millions	Shareholders’ equity			Noncontrolling interests			Total equity
Balance at December 31, 2017	$	7,140.3		$	66.6		$	7,206.9
Net earnings	568.5			8.2			576.7
Currency translation	(151.0		)	(2.7		)	(153.7		)
Derivatives qualifying as cash flow hedges, net of tax	1.8			—			1.8
Pension and OPEB adjustments, net of tax	23.4			—			23.4
Total comprehensive income (loss)	442.7			5.5			448.2
Share-based compensation	49.5			—			49.5
Adoption of ASC 606	2.4			—			2.4
Adoption of ASU 2016-16	(9.1		)	—			(9.1		)
Dividends declared to noncontrolling interests	—			(35.5		)	(35.5		)
Dividends declared to ordinary shareholders	(352.4		)	—			(352.4		)
Shares issued under incentive plans, net of tax benefit	13.8			—			13.8
Repurchase of ordinary shares	(500.1		)	—			(500.1		)
Balance at June 30, 2018	$	6,787.1		$	36.6		$	6,823.7



	Three months ended June 30, 2018								Six months ended June 30, 2018
In millions	As Reported			Balances Without Adoption of ASC 606			Effect of Change Higher/(Lower)		As Reported			Balances Without Adoption of ASC 606			Effect of Change Higher/(Lower)
Net revenues	$	4,357.7		$	4,353.7		$	4.0	$	7,742.2		$	7,734.9		$	7.3
Cost of goods sold	(2,964.1		)	(2,960.9		)	3.2		(5,384.3		)	(5,377.9		)	6.4
Selling and administrative expenses	(753.3		)	(753.3		)	—		(1,474.2		)	(1,474.2		)	—
Operating income	640.3			639.5			0.8		883.7			882.8			0.9
Interest expense	(50.3		)	(50.3		)	—		(123.2		)	(123.2		)	—
Other income/(expense), net	(3.5		)	(3.5		)	—		(7.5		)	(7.5		)	—
Earnings before income taxes	586.5			585.7			0.8		753.0			752.1			0.9
Provision for income taxes	(128.0		)	(127.8		)	0.2		(161.0		)	(160.8		)	0.2
Earnings from continuing operations	$	458.5		$	457.9		$	0.6	$	592.0		$	591.3		$	0.7



In millions	Provisional Amounts Reported			Measurement Period Adjustments			Updated Provisional Amounts
Remeasurement of deferred tax balances	$	(300.6	)	$	(1.9	)	$	(302.5	)
Transition tax	160.7			—			160.7
Change in permanent reinvestment assertion	118.9			3.5			122.4
Income tax benefit, net	$	(21.0	)	$	1.6		$	(19.4	)



Dollar amounts in millions	2018 Operating Income (Expense)			2017 Operating Income (Expense)			Period Change			2018 Operating Margin		2017 Operating Margin
Climate	$	582.7		$	527.1		$	55.6		16.7	%	16.8	%
Industrial	121.2			92.2			29.0			14.0	%	12.1	%
Unallocated corporate expenses	(63.6		)	(61.7		)	(1.9		)	N/A		N/A
Total	$	640.3		$	557.6		$	82.7		14.7	%	14.3	%