Ingersoll Rand is a $13 billion global company that operates in two business segments: Climate and Industrial. It advances quality of life by creating comfortable, sustainable, and efficient environments through its portfolio of brands such as Club Car, Ingersoll Rand, Thermo King, and Trane. The company works to enhance air quality and comfort in homes and buildings, transport and protect food and perishables, and increase industrial productivity and efficiency. It is committed to sustainable progress and enduring results.

1. Ingersoll Rand advances the
quality of life by creating
comfortable, sustainable
and efficient environments.
Ingersoll Rand (NYSE:IR) advances the quality of
life by creating comfortable, sustainable and efficient
environments. Our people and our family of
brands—including Club Car®, Ingersoll Rand®,
Thermo King® and Trane®—work together to
enhance the quality and comfort of air in homes and
buildings; transport and protect food and
perishables; and increase industrial productivity and
efficiency. We are a $13 billion global business
committed to a world of sustainable progress and
enduring results.

2. 2
Safe Harbor
This presentation includes “forward-looking statements,” which are statements that are not
historical facts, including statements that relate to the mix of and demand for our products;
performance of the markets in which we operate; our share repurchase program including the
amount of shares to be repurchased and timing of such repurchases; our projected 2017 full-
year financial performance and targets including assumptions regarding our effective tax rate.
These forward-looking statements are based on our current expectations and are subject to
risks and uncertainties, which may cause actual results to differ materially from our current
expectations. Such factors include, but are not limited to, global economic conditions, the
outcome of any litigation, demand for our products and services, and tax law changes.
Additional factors that could cause such differences can be found in our Form 10-K for the year
ended December 31, 2015, Form 10-Q for the quarters ended March 31, 2016, June 30, 2016,
and September 30, 2016, and other SEC filings. We assume no obligation to update these
forward-looking statements.
This presentation also includes non-GAAP financial information which should be considered
supplemental to, not a substitute for, or superior to, the financial measure calculated in
accordance with GAAP. The definitions of our non-GAAP financial information and reconciliation
to GAAP is attached to the earnings news release that can be found at www.ingersollrand.com
and are defined in footnotes at the end of this presentation. All data for beyond the fourth
quarter of 2016 are estimates.
2

3. Key Facts
• Ingersoll Rand has been
listed continuously on the
New York Stock Exchange
since October 11, 1906
• Ingersoll Rand is the
16th oldest company and
the 12th oldest
continuously listed
company on the NYSE
• $20B Market cap
Trades on NYSE
• Ingersoll Rand is 145 years
old and was first
incorporated in 1905
• $13.5 Billion Revenue
• Two business segments
• Climate - Commercial
and Residential HVAC
and Transport
Refrigeration
• Industrial – Air
compression, Industrial
products, low speed
vehicles
Company Background
• Ingersoll Rand is
incorporated in Swords,
Ireland
• North American
Headquarters in
Davidson, NC
• 40,000 employees
• 51 manufacturing
locations
Company Background
Key Facts
3

4. 4
• A ~$10B group of six growth-oriented SBUs led by high-performing leaders and teams
• Trane and Thermo King are world leaders in HVAC and refrigerated transportation
• An outstanding network of global operations, channels and employees
• Stronger together with BOS linkage and commercial synergies
EMEA is Europe, Middle East, and Africa. Asia Pacific includes India. Services
includes aftermarket parts, accessories, and all types of service.
Commercial
HVAC
Residential
HVAC
HVAC
Parts & Supply
Transport
Solutions
68%
15%
11%
6%
North America
EMEA
Asia Pacific
Latin America
60%
40%
Equipment
Services
Climate Segment An Unmatched Strategic
Position

5. 5
• A $3.0B group of five growth-oriented Strategic Business Units
• Ingersoll Rand, ARO and Club Car are #1 or #2 brands in their core markets
• World-class engineered and mission-critical products, systems and services
• Balanced across industries, geographic regions, equipment and aftermarket
• SBUs are stronger together with BOS linkage and channel synergies
EMEA is Europe, Middle East, India and Africa. Services includes aftermarket parts,
accessories and service.
AIR Power Tools
Fluid
Management
Material
Handling
Club Car
55%
19%
21%
5%
North America
EMEIA
Asia Pacific
Latin America
65%
35%
Equipment
Services
Our Industrial Businesses are in Leading
Positions
5

6. 2016 REVENUE: $13.5B 33% Aftermarket
By End Markets
66%
North America
15%
Eur/ME
14%
Asia
5%
Latin
America
By Geography
5%Golf/Utility
16%Transport
Refrigeration
16%
Non-Res
Building
(Overseas)
31%Non-Res
Building
(N. America)
18%Industrial
Process
14%Residential,
(N. America)
67% New equipment
Represents Diverse End Markets and Geography
Climate
77%
Industrial
23%
By Segment
2016 Revenue Profile
2013 2014 2015
9.6
%
11.0
%
Adjusted Operating Margins
2016
11.9
%
11.4
%
6

7. 7
• Leading global brands and market positions
• Strong long-term growth drivers
- Macro drivers are energy efficiency and
sustainability
- Large installed base drives replacement
business and parts and service growth
- Global footprint and exposure to attractive
growing markets
- Organic growth enhanced by innovation
- Market recoveries
• Product/service offering underpinned by shared
technologies, materials, manufacturing, processes
and supply chain
• Continued margin and cash flow improvement
opportunity from operational/functional excellence
A world leader in creating comfortable, sustainable and
efficient environments
Ingersoll Rand: Foundational Strengths
7

8. 8
Urbanization
Energy Consumption
Food & Water Scarcity
Climate Change
Industrial Productivity
& Efficiency
Ingersoll Rand Possesses Expertise to
Address Pressing World Challenges
8

9. 9
Leading market sharesStrong, recognized brands Well positioned in both
geographic and end markets
Strategic Foundation Continues to
Underpin Top-Quartile Performance
Sustainable and Profitable
Growth, Cash Flow and Shareholder Value
Sustained
Growth
Operational
Excellence
Winning
Culture
Cash Flow /
Dynamic
Capital
Allocation
Strategic Foundation Continues to
Underpin Top-Quartile Performance
9

10. 10
Steady operating performance improvement
$11.5
$12.0
$12.5
$13.0
$13.5
$14.0
2013 2014 2015 2016
Net Revenue
3% CAGR
In Billions
$0.00
$1.00
$2.00
$3.00
$4.00
$5.00
2013 2014 2015 2016
Adjusted EPS
0%
5%
10%
15%
20%
25%
2013 2014 2015 2016
Cash Flow ROIC
6 Ppts
16% CAGR
2.3 Ppts
Steady Operating Performance Improvement
10
0%
2%
4%
6%
8%
10%
12%
14%
2013 2014 2015 2016
Adjusted Operating Margin

11. 11
2013 2014 2015 2016
1,345**
810
862
985**
Strong Balance Sheet and Free Cash Flow
$ Millions YE 13 YE 14 YE 15 YE 16
Cash 1,937 1,705 737 1,715
Debt 3,521 4,224 4,218 4,070
Net Debt 1,584 2,519 3,481 2,355
Free Cash Flow$ Millions
*Reported – includes Allegion security business and excludes restructuring and one-time spin costs and refinancing premium
**Excludes the impact of the IRS agreement and restructuring in 2015 and excludes restructuring and the proceeds on the sale of
Hussmann in 2016
Post
Security
Spin
1,151*
• 2011 to 2016 avg. FCF % of net income = 100%
• 2016 FCF % of adjusted net income = 121%
• FCF increase from higher operating results and working
capital management.
$5.14/share
11

12. 12
Strategic Business
Investment
Maintained Strong
Balance Sheet
at BBB Metrics
 Digital
 Energy efficiency
 Channel Expansion
 No meaningful debt
maturities until 2018
Building value through
acquisitions
 Working on our pipeline of
targets
$0.64
$0.84
$1.00
$1.16
$1.36
$1.60
2012 2013 2014 2015 2016 2017F
Share Repurchase – Minimum Offset
Dilution from Benefits Program
 2016: Repurchased 4.9M shares
for $250M
 2016 dividend increased to $1.60/
share
 20% annual CAGR 2012 to 2017
Competitive Dividend Payout
36
55
76
98
103
108
2011 2012 2013 2014 2015 2016
Cumulative share repurchase
2011 to 2016 --108 million shares
2016 Dynamic Capital Allocation Focused on Delivering
High Returns
12

13. 13
• Strong momentum and further upside
‒ Attractive end markets
‒ Leading brands and growth through
innovation
‒ Substantial position in developing
markets with significant potential
• Excellent management team executing
consistently on strategy
• Value creation model delivers
sustainable results and returns to
shareholders
‒ Growth
‒ Operational Excellence
‒ Dynamic capital allocation
Much Progress…
More Opportunity Ahead
13

14. Appendix

15. RESIDENTIAL HVAC
Heating, cooling, thermostat controls and home automation for
the residential market
COMMERCIAL HVAC
Air conditioning systems, services and solutions. Innovative
solutions geared toward making high performance buildings
reliable and safe, as well as healthy, comfortable and efficient
TRANSPORT REFRIGERATION
Manufacturing and innovation of transport temperature control
systems for a variety of mobile applications, including trailers,
truck bodies, buses, shipboard containers and rail cars
HVAC SERVICES AND PARTS
A complete selection of innovative parts, options and
accessories for optimal performance and reliability
Our Climate Businesses
15

16. COMPRESSION TECHNOLOGIES AND SERVICES
MATERIAL HANDLING
FLUID MANAGEMENT
CLUB CAR
POWER TOOLS
Rotary, centrifugal and reciprocating air compressors,
and treatment products with Comprehensive multi-
year service agreements, audits, parts, and
accessories
Hoists, winches and systems for
moving and positioning loads
Pumps and systems for fluid
handling, transfer, and application
Golf, commercial and utility
vehicles for transportation
Professional tools for fastening,
drilling, and surface preparation
Our Industrial Businesses
16

17. Fourth-Quarter 2016 Results
February 1, 2017

18. 18
Leading market sharesStrong, recognized brands Well positioned in both
geographic and end markets
Strategic Foundation Continues to
Underpin Top-Quartile Performance
Sustainable and Profitable
Growth, Cash Flow and Shareholder Value
Sustained
Growth
Operational
Excellence
Winning
Culture
Cash Flow /
Dynamic
Capital
Allocation
2

19. 19
Consistent Progress Against Key Metrics*
Net Revenue
Operating Margin
Adj. Continuing EPS*
Free Cash Flow*
Versus 2015
+2% reported
+3% organic
+60 bps
* Includes certain Non-GAAP financial measures. See the company’s Q4 2016 earnings release for additional details and
reconciliations.
+11%
+37%
Full Year 2016
$13,509M
11.6%
$4.13
$1.35B
>100% adj. net income
• FCF was 121% of adjusted net income*
• Full-year operating leverage of 44%
• Repurchased ~4.9M shares for $250M in 2016
3

20. 20
4
Steady Operating Performance Improvement
$11.5
$12.0
$12.5
$13.0
$13.5
$14.0
2013 2014 2015 2016
Net Revenue
3% CAGR
In Billions
$0.00
$1.00
$2.00
$3.00
$4.00
$5.00
2013 2014 2015 2016
Adjusted EPS
0%
5%
10%
15%
20%
25%
2013 2014 2015 2016
Cash Flow ROIC
6 Ppts
16% CAGR
0%
2%
4%
6%
8%
10%
12%
14%
2013 2014 2015 2016
Adjusted Operating Margin
2.3 Ppts

21. 21
• Continued strong operating results
– FCF $353M in Q4; $1.35B 2016
– Combined operating results for segments exceeded guidance
• EPS miss vs guidance driven by discrete items
• Robust Commercial & Residential performance
– Commercial bookings up high-single digits & Residential bookings up low-teens
– Margin expansion in both Commercial and Residential
Key Takeaways Q4 2016
• Industrial business steady on recovery path
– Revenue up sequentially vs. Q3
5

22. 22
Q4 2016 Guidance to Actual Bridge
Q4 2016 Adjusted EPS Guidance (at mid-point) $0.91
Operations earnings 0.01
Corporate Costs (0.04)
Foreign Exchange Losses (0.01)
Higher Tax rate (0.03)
Q4 Actual Adjusted EPS $0.84
• Combined operating results for Climate & Industrial exceeded guidance.
• Higher than anticipated corporate costs were driven by stock-based and
annual incentive-based compensation and increased IT infrastructure and
security investments.
• Higher than anticipated profits from high tax jurisdictions caused an increase
in the tax rate.
Highlights
6

23. 23
Q4 Total Company Performance
Operating MarginNet Revenue
10.8%
10.3%
Q4 '15 Q4 '16
$3,326 $3,359
Q4 '15 Q4 '16
14.2%
13.4%
Q4 '15 Q4 '16
+1%
+2%
Organic
-50 bps
Adj. Operating Margin*
11.3% 10.8%
Adj. OI + D&A %**
* Adjusted margin excludes restructuring in 2015 and 2016
** Adjusted operating income + depreciation and amortization divided by revenue
-80 bps
• Revenue up 1%, +2% organic
• Adj. margin 10.8%, down 50 bps Y-O-Y
• Adj. EPS of $0.84 , down 11%
Highlights
7

24. 24
8
Y-O-Y
%
Change
Reported Organic
Q1 2015 3% 5%
Q2 2% 4%
Q3 (2%) 1%
Q4 1% 2%
Q1 2016 1% 4%
Q2 2% 3%
Q3 2% 3%
Q4 6% 7%
Climate C
Commercial HVAC + low-teens
- N. America + low-teens
- L. America + low-teens
- EMEA + mid-single digits
- Asia + high-teens
Residential HVAC + low-teens
Transport + mid-single digits
Total + 9%, +10% Organic
Industrial
Compression Tech - low-single digits
Industrial Products - low-single digits
Small Elec. Vehicle + low-single digits
Total - 2%, -1% Organic
Y-O-Y Change in Organic Bookings
Very Strong Q4 Bookings Led by Commercial and
Residential Businesses

25. 25
North America
Europe
Asia
Latin America
Climate
Industrial
Climate
Industrial
Revenue change Y-O-Y Q4 Reported Q4 Organic
Climate +3% +4%
Industrial -4% -3%
Total +1% +2%
Climate
Industrial
Climate
Industrial
Middle East/Africa
Climate
Industrial
C O N S O L I D A T E D R E S U L T S
Q4 Segment Organic Revenue Change
by Region
9

26. 26
E n t e r p r i s e
Lower Q4 Margin Primarily due to Steel Inflation and
Higher Than Anticipated Corporate Costs
• Improvements in material productivity offset by other inflation, including higher
than anticipated corporate costs resulted in a 40 bps headwind
• Solid operational performance offset by steel inflation
• The company continues to invest in products, while expanding channels
Highlights
10.8% (0.2) (0.3) 10.3%
4Q 2015 Volume / Mix / FX Price/Material
Inflation
Productivity/Other
Inflation
Investment/Other 4Q 2016
0.4 (0.4)
(0.2) Investment
(0.1) Other/Rest
-50 bps
10

27. 27
C L I M A T E S E G M E N T
Q4 Strong Commercial and Residential HVAC
Offsetting Transport Results
Operating MarginNet Revenue
12.9%
13.6%
Q4 '15 Q4 '16
$2,492 $2,559
Q4 '15 Q4 '16
15.4% 15.8%
Q4 '15 Q4 '16
+3%
+4%
Organic
+70 bps
Adj. OI + D&A %**
+40 bps
Adj. Operating Margin*
12.9% 13.6%
* Adjusted margin excludes restructuring in 2015 and 2016
** Adjusted operating income + depreciation and amortization divided by revenue
• Strong Commercial and Residential HVAC revenue growth
• Strong unitary and aftermarket
• Operations performance delivered 70 bps of adjusted operating margin improvement
Highlights
11

28. 28
I N D U S T R I A L S E G M E N T
Q4 Organic Revenues Declined by 3%
12.7%
10.5%
Q4 '15 Q4 '16
Operating Margin
$834
$800
Q4 '15 Q4 '16
Net Revenue
15.8%
13.5%
Q4 '15 Q4 '16
-4%
-3%
Organic
-220 bps
Adj. OI + D&A %**
-230 bps
Adj. Operating Margin*
13.8% 11.4%
* Adjusted operating margin excludes restructuring in 2015 and 2016
** Adjusted operating income + depreciation and amortization divided by revenue
• Q4 performance slightly exceeds revenue and operating margin guidance
• Continuing initiatives to drive margin improvements
Highlights
12

29. 29
2013 2014 2015 2016
1,345**
810
862
985**
Strong Balance Sheet and Free Cash Flow
$ Millions YE 13 YE 14 YE 15 YE 16
Cash 1,937 1,705 737 1,715
Debt 3,521 4,224 4,218 4,070
Net Debt 1,584 2,519 3,481 2,355
Free Cash Flow$ Millions
*Reported – includes Allegion security business and excludes restructuring and one-time spin costs and refinancing premium
**Excludes the impact of the IRS agreement and restructuring in 2015 and excludes restructuring and the proceeds on the sale of
Hussmann in 2016
Post
Security
Spin
1,151*
• 2011 to 2016 avg. FCF % of net income = 100%
• 2016 FCF % of adjusted net income = 121%
• FCF increase from higher operating results and working
capital management
$5.14/share
13

30. 30
2016 Dynamic Capital Allocation Focused on Delivering
High Returns
Strategic Business
Investment
Maintained Strong
Balance Sheet
at BBB Metrics
 Digital
 Energy efficiency
 Channel Expansion
 No meaningful debt
maturities until 2018
Building value through
acquisitions
 Working on our pipeline of
targets
$0.64
$0.84
$1.00
$1.16
$1.36
$1.60
2012 2013 2014 2015 2016 2017F
Share Repurchase – Minimum Offset
Dilution from Benefits Program
 YTD 2016: Repurchased 4.9M shares
for $250M
 Dividend increased to $1.60 / share
 20% annual CAGR 2012 to 2017
Competitive Dividend Payout
36
55
76
98
103
108
2011 2012 2013 2014 2015 2016
Cumulative share repurchase
2011 to 2016 --108 million shares
14

31. Guidance

32. 32
2017 Forecast for End-Market Performance
End Markets
Americas EMEA Asia Guidance
Commercial HVAC Up mid-single digits
Residential HVAC Up mid-single digits
Transport Down low-single digits
Compression-related
& Industrial Products
Down low-single digits
Golf / Utility Flat/Up low-single digits
Organic Revenue
16

33. 33
2017 Enterprise Guidance
FY Guidance
Climate
‒ Revenue Reported
‒ Revenue Organic
~3%
~4%
Adjusted Operating Margin 14.5% to 15.0%
Industrial
‒ Revenue Reported
‒ Revenue Organic
~-2%
~-1%
Adjusted Operating Margin 11.0% to 12.0%
Total
‒ Revenue Reported
‒ Revenue Organic
~2%
~3%
Adjusted Operating Margin 12.2% to 12.6%
17

34. 34
2017 Guidance: Full-year Continuing Adjusted
EPS $4.30 to $4.50
Full Year
Y-O-Y change in revenue
• Reported
• Organic
~2%
~3%
EPS continuing $4.15 to $4.35
Restructuring – (add back) ($0.15)
EPS continuing – adjusted $4.30 to $4.50
EPS – discontinued ($0.13)
Share Count – Millions ~262
Free Cash Flow $1.1B to $1.2B
Tax Rate 21% to 22%
Corporate G&A ~$240M
CAPEX ~$250M
18

35. 35
2017 Capital Allocation Priorities
• 2017 expected FCF range of $1.1B to $1.2B
• Continued investment in the core business
- Technology, channel expansion and productivity
enhancements
• Dividends of ~$420M ($1.60 per share, annualized)
• Target deployment of $1.5B for share buybacks and
acquisitions combined
- EPS guidance includes $250M (of $1.5B) share
buyback to offset dilution
19

36. 36
• U.S. Manufacturing
- In-region for-region manufacturing and supply chain strategy
- Sourcing with local U.S. vendors to lower manufacturing cycle
time
- ~95% of finished goods sold in U.S. are manufactured in the U.S.
 Net Exporter
• U.S. Corporate Tax Rate Reduction
- ~65% of revenues from the U.S.
- Pay significant U.S. taxes
- Reduction in the U.S. tax rate benefits Ingersoll Rand’s U.S.-
based earnings
Topics of Interest for 2017
20

37. 37
Topics of Interest for 2017
• Status of Industrial Segment
- Solid Q4 results
- Growth in food, pharma and tech verticals and aftermarket soft in
general industrial, large compressors and energy
- OPEX gains, restructuring and cost reductions drive improved
operating margins in 2017 despite low-single digit revenue decline
• Status of Climate Segment
- Commercial and Residential HVAC markets continue upward
momentum
- Expect Transport revenues to be down low-single digits Y-o-Y
- N. America trailer industry down low-teens
- Growth in Europe, Asia and in aftermarket partially offset lower
North American trailer revenues
21

38. 38
Topics of Interest for 2017
• Currency impact on 2017
- ~35% of revenues outside U.S.
- Expect weaker Euro and Asian currencies
- Net currency expected to have a ~1 percentage point drag
on revenues and a ~10 cent negative impact on 2017 EPS
• Price/Cost 2017
- Material inflation in Q4 results
- 2017 - Expect flat nonferrous cost, inflation in steel
- Targeting price/material inflation gap of 10 to 20 basis
points positive
22

39. 39
• Continued strong 2016 results driven by execution of our business operating
system
• Strong 2016 full-year cash conversion resulted in $1.35B of FCF
• Top-quartile organic growth, EPS growth and cash flow percentage of net
income
• Commercial HVAC business is strong driven by customer demand trends for
energy efficiency and productivity
• Expect continued progress through 2017 for Industrial, albeit quarterly results
may show some cyclicality
• Commodity inflation expected in 2017, primarily driven by steel. We expect
positive price/material cost spread of 10 to 20 basis points.
• 2017 targeted cash deployment of ~$1.5B for share buybacks and acquisitions
and ~$420M of dividends
• Adjusted EPS guidance tied to strength of business; adjusted EPS range of
$4.30 - $4.50
Summary: Top Quartile Performance with
Industrial Improving
23

40. Appendix

41. 41
Q4 Organic Revenue Up 2% Year-Over-Year
Reported 2015 2016
Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY
Climate 6% 2% 4% 2% 3% 3% 4% 3% 3% 3%
Industrial 7% (1%) (2%) 5% 2% (7%) (4%) Flat (4%) (4%)
Total 6% 2% 3% 3% 3% Flat 2% 2% 1% 2%
2013
Organic* 2015 2016
Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 4Q FY
Climate 9% 5% 8% 5% 7% 4% 5% 3% 4% 4%
Industrial 4% (4%) (2%) (2%) (1%) (5%) (3%) 1% (3%) (3%)
Total 8% 3% 6% 3% 5% 2% 3% 3% 2% 3%
*Organic revenues excludes acquisitions and currency 25

42. 42
Flat Organic
-7%
5%
-3%
-10%
5%
Reported
Organic*
*Organic revenues excludes acquisitions and currency
Q4 Revenue Up 1% and Organic Up 2%
3%
4%
-3%
Climate
Industrial
Reported
Organic*-4%
Segment Revenue Change
Geographic Revenue Change
Americas
Europe, Middle
East, Africa
Asia
N.A. Organic +6%
26

43. 43
Q4 2016 Y-O-Y Revenue Change
Reported Organic
Climate
- Commercial HVAC + Low-single + Mid-single
- Residential HVAC + Low teens + Low-teens
- Transport - Mid-single - Mid-single
Total Climate 3% 4%
Industrial
- Compression-related Products - Mid-single - Low-single
- Industrial Products - High-single - High-single
- Small Electric Vehicle + Low-single + Low-single
Total Industrial - 4% - 3%
Total Company 1% 2%
27

44. 44
Full-Year 2017 Guidance Bridge
2016 EPS Continuing Operations (GAAP)
2016 Restructuring + other one-time items*
$5.52
(1.39)
Operations – includes ($0.15) of restructuring 0.29 to 0.49
Currency (0.10)
Investments (0.15)
Tax rate/other (0.02)
2017 EPS Continuing Reported (GAAP) $4.15 to $4.35
2017 forecast restructuring (add back) (0.15)
2017 Continuing EPS (Adjusted) $4.30 to $4.50
*Includes restructuring, Hussmann gain on sale and 4Q legal settlement
28

45. 45
Non-GAAP Measures Definitions
Organic revenue is defined as GAAP net revenues adjusted for the impact of currency and acquisitions. Organic bookings
is defined as reported orders closed/completed in the current period adjusted for the impact of currency and acquisitions.
• Currency impacts on net revenues and bookings are measured by applying the prior year’s foreign currency exchange
rates to the current period’s net revenues and bookings reported in local currency. This measure allows for a direct
comparison of operating results excluding the year-over-year impact of foreign currency translation.
• Acquisition growth rate impacts from 2015 versus 2014 for both net revenues and orders are calculated by excluding
the net revenues and orders from companies acquired in 2015. We are adjusting the 2015 to 2014 growth rate
comparisons for the Engineered Centrifugal Compression business acquired in January 2015 and reported in our
Industrial segment, and the Frigoblock acquisition completed in March 2015 and reported in our Climate segment, to
allow for a direct comparison of operating results to prior periods.
Adjusted operating margin is defined as the ratio of adjusted operating income divided by net revenues.
• Adjusted operating income is defined as GAAP operating income plus restructuring expenses in 2016. In 2015
acquisition-related Inventory Step-up costs were also excluded from this measure. Please refer to the reconciliation of
GAAP to non-GAAP measures on tables 3 & 4 of the news release.
In 2016 Adjusted EPS is defined as GAAP EPS plus restructuring expenses and legal settlement, less the gain
recognized on the sale of the Hussmann equity interest in Q2 2016, net of tax impacts and a legal matter. In 2015
Adjusted EPS was defined as GAAP EPS plus restructuring expenses, acquisition inventory step-up costs, Venezuela re-
measurement of monetary assets and the IRS agreement, net of tax impacts. Please refer to the reconciliation of GAAP
to non-GAAP measures on tables 3 & 4 of the news release.
Legal Settlement of a lawsuit originally filed by a customer in 2012. The lawsuit related to a commercial HVAC contract
entered into in 2001, prior to our acquisition of Trane U.S. Inc. and the charge in the fourth quarter of 2016 represents the
settlement and related legal costs.
29

46. 46
Non-GAAP Measures Definitions
Free cash flow in 2016 and 2015 is defined as net cash provided by operating activities, less capital expenditures,
plus cash payments for restructuring. In 2015 this definition also excluded the cash impact of the IRS agreement
which occurred in the third and fourth quarters. Please refer to the free cash flow reconciliation on table 8 of the
news release.
Cash flow return on invested capital is defined as annual free cash flow divided by the sum of gross fixed assets,
receivables and inventory less accounts payables
Working Capital measures a firm’s operating liquidity position and its overall effectiveness in managing the
enterprises’ current accounts.
• Working capital is calculated by adding net accounts and notes receivables and inventories and subtracting
total current liabilities that exclude short term debt, dividend payables and income tax payables.
• Working capital as a percent of revenue is calculated by dividing the working capital balance (e.g. as of
December 31) by the annualized revenue for the period (e.g. reported revenues for the three months ended
December 31 multiplied by 4 to annualize for a full year).
Adjusted effective tax rate for Q4 2016 is defined as the ratio of income tax expense, plus or minus the tax effect
of adjustments for restructuring costs and legal settlement, divided by earnings from continuing operations before
income taxes plus restructuring expenses and legal settlement. Q4 2015 adjustments were comprised of
restructuring costs and acquisition inventory step-up charges. This measure allows for a direct comparison of the
effective tax rate between periods excluding adjustments.
Adjusted OI + D&A is defined as adjusted operating income plus depreciation and amortization expense.
Operating leverage is defined as the ratio of the change in adjusted operating income for the current period (e.g.
Q4 2016) less the prior period (e.g. Q4 2015), divided by the change in net revenues for the current period less
the prior period. 30