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NEW YORK, April 25 /PRNewswire-FirstCall/ — The following letter was today mailed to shareholders of Insituform Technologies, Inc. by Water Asset Management LLC:
It’s Time to Retire Insituform’s Incumbent Board of Directors

April 25, 2008

To Our Fellow Stockholders of Insituform Technologies, Inc.:

We are writing to seek your support at the upcoming Annual Meeting of Stockholders, now scheduled for May 19. The future of your investment, and ours, depends on the outcome of this meeting. While management has properly identified that there is a tremendous and unmet worldwide demand for sewer and water infrastructure repair, the current Board has failed to take advantage of this exceptional opportunity. We believe it is time to retire the incumbent Board of Directors and to replace them with our nominees, who have the professional experience and are committed to increasing shareholder value. Here is why:
— Insituform’s shares have lost 13.2% of their value over the past five
years while the company’s two handpicked indexes for comparison have
increased in value by 391.7% and 224.0%, respectively.(1)
— The company’s operating expenses have not been well controlled.
— The existing Board has stagnated, with little changeover in at least
the past five years.
— The company recently hired its fourth CEO in five years.
— Recently, the Board left Insituform’s CFO spot vacant for 18 months.
— The Board has undertaken value destroying acquisitions.
— The company has implemented an ill conceived pricing strategy that
values revenues over profitability.

Last August, after the prior “permanent” CEO resigned under fire, the Board embarked on yet another attempt to turn the company around and to hire a fourth CEO in a five-year span. We subsequently urged the Board, both publicly and in private, not to hire a new CEO before undertaking a swift and efficient process to explore a sale of the company at a premium to a well-capitalized, better-managed strategic buyer. Such a buyer could realize substantial synergistic savings from an acquisition while leveraging the company’s international footprint.
On April 7th, the company announced that the Board had completed a previously unannounced “review of the company’s strategic options” and had unanimously concluded that executing the company’s business plan and hiring a new CEO were the best ways to enhance shareholder value. Well, where are the details of that business plan? It sounds like the business plan is simply to cut costs by $8 million and then back to business as usual. We believe the Board’s decisions were fundamentally flawed - both in process and substance - and designed to further entrench the current board at the expense of shareholders:
— The Board was unwilling to engage in any dialogue with any potential
buyers and simply rejected the notion of a sale of the company. The
company has stated that the Board considered “today’s highly uncertain
financial markets and the worst M&A environment in recent years” and
stated that now is not the right time to sell the company. But what the
company has failed to disclose, astoundingly, is that Merrill Lynch &
Co., its financial advisor, was not authorized to solicit interest in a
sale from possible buyers. Hiding behind a “report” from Merrill, the
Board has decided that the company is not for sale at any price. While
we are well aware of the current difficult M&A and financing
environment, we are aware of and have spoken with potential strategic
buyers whose inquiries were rebuffed by the Board. Although it may turn
out that, after an in-depth evaluation, a sale at this time is not the
best course of action, it is unacceptable for the incumbent Board to
make this decision without soliciting any bids.

— The Board hired a new CEO, prior to exploring sale options, and under
terms disadvantageous to shareholders if a buyer were to emerge.
Compounding their failure to prudently explore a potential sale of the
company, the incumbent Board hired a new CEO with an employment and
severance package that accelerates upon a change of control and will
cost shareholders ~ $3.7 million if a bidder emerges. Moreover, at a
time when the company is looking to international opportunities, the
Board hired a CEO without any significant international operating
experience. That is a curious decision given that two company directors
have disclosed that the Board has placed international operations under
the new CEO’s direct control, leaving another executive in charge
domestically.

These recent self serving decisions, along with the company’s well known long term record of poor performance, drive our decision to seek to replace the Board with new nominees.
What We Will Do If Elected to Replace the Incumbent Board
While we believe the incumbent Board should not have hired a new CEO before giving serious and active consideration to a sale of the company, we accept that Insituform has a new CEO. As a substantial shareholder, and as new directors, we are prepared and willing to work with him. In fact, we recently stated that if our nominees constitute a majority of the Board and the new CEO is not elected to the Board at the Annual Meeting, our nominees will support adding him back to the Board if he is willing to serve and if his appointment would not deadlock the Board as between our nominees, on the one hand, and the other company directors, on the other hand.
If our nominees are elected to replace the incumbent Board, we will immediately pursue a dual-track approach to enhance and maximize value for all stockholders:
— We will quickly and efficiently explore whether credible strategic
buyers are interested in buying the company at a premium, and present
any attractive bid to shareholders. Insituform has the market leading
position in repairing water and waste water pipes, and we will
determine whether the company’s inherent value can be can best be
realized through a combination with a larger, better capitalized
company. While we believe that Insituform can prosper as an independent
company with a new and engaged Board of Directors, we also believe that
other companies, particularly those that would enjoy substantial
synergies through a combination with Insituform, may be willing to pay
an attractive premium.
— We will simultaneously conduct a “lean” strategic deployment review to
identify, measure, and eliminate waste and inefficiency in the
company’s operations. Looking at the company from the outside, we have
identified a number of target areas for improvement, including:
- improving tube manufacturing efficiency through implementation of
“lean” business practices,
- improving the wet-out process by reducing exothermic occurrences,
reducing fixed costs through mobile wet-out technology, and reducing
inventory,
- implementing standardized metrics for installation crew efficiency to
determine which crews operate most efficiently so as to replicate best
business practices among all crews,
- improving and securing worker safety,
- reducing installation time through process-flow optimization, and
improving crew utilization through better scheduling practices and
greater geographic flexibility,
- improving strategic purchasing to reduce resin, fiber and other
materials costs,
- growing Insituform Blue sales in select international markets where
there are clearly defined economic incentives for reducing leakage and
the impact of drought,
- targeting industrial sales growth through techniques such as
highlighting avoided costs, and
- analyzing and reducing litigation expenses.

We will also actively use the talents and expertise of the new Board. Water Asset Management is the adviser to funds that invest exclusively in companies that source, store, transport, treat, meter and distribute water and wastewater. Our team has decades of water industry experience. We were attracted to Insituform, in particular, because of its global brand and market leading position. The funds we advise own 5.3% of Insituform’s outstanding common stock, and our goal is to enhance value for all stockholders.
— Each of our nominees brings to the Board important experience and
contacts that will add to the depth of the company’s management team
and help ensure that the Board’s oversight of, and guidance to,
management is effective and productive:
- Senator Alfonse M. D’Amato offers a wealth of experience in
governmental and international affairs on the federal, state and
municipal levels. Municipal wastewater markets are the primary focus
of the company’s US marketing efforts for rehabilitation projects, and
we believe Senator D’Amato’s experience, insight, and relationships
will be invaluable.
- Nickolas W. Vande Steeg is a former president of Parker-Hannifin
Corp., having held a variety of executive and operating management
positions over a 35 year career with that company. Parker Hannifin is
widely considered one of the best managed and most efficient companies
in the S&P 500. Mr. Vande Steeg has substantial experience in
successfully implementing “lean” business practices in a large global
enterprise and will provide significant leadership and insight to make
the company more efficient, flexible and competitive.
- Richard Onses is a water industry consultant based in Barcelona, Spain
and specializing in water utilities and water infrastructure projects.
He formerly headed business development at Sociedad General de Aguas
de Barcelona, SA, a large European water company, and has operated
water and waste water assets on three continents. Given the growth of
the company’s international operations, we believe that Mr. Onses’
international experience and contacts in the water industry will be a
valuable addition to the Board.
- Matthew J. Diserio and Disque D. Deane Jr. are President and Chief
Investment Officer, respectively, of Water Asset Management, which
invests exclusively in water-related companies globally. In addition
to vast experience in the water industry, Messrs. Deane and Diserio
will bring to the Board significant financial experience. We believe
their financial and water industry experience will be an important
addition to the new Board’s expertise in the current financial
environment, where creative approaches to financing municipal projects
can provide a critical competitive advantage.

Reject the Incumbent Board’s Scare Tactics

The company has stated that we have no strategic plan for Insituform and that we intend to seize control of the Board and pursue a fire sale of the company. THAT IS SIMPLY NOT TRUE. We own more than 5% of Insituform’s stock and have a history of being long term investors. We will execute on the two alternatives we have outlined above and use our extensive water industry contacts to enhance shareholder value for all stockholders.
We urge you to vote for our slate on our BLUE proxy card. We look forward to speaking with many of you in advance of the 2008 Annual Meeting.
In addition, please feel free to call our proxy advisors, MacKenzie Partners, Inc., at any time for further information at (800) 322-2885.
Very truly yours,

Matthew J. Diserio Disque D. Deane Jr.

(1) Represents total return for calendar years 2003 through 2007. The
company’s handpicked indexes are identified in the company’s Form 10-K
and in Water Asset Management’s proxy statement, filed March 10, 2008
and April 22, 2008, respectively, with the Securities and Exchange
Commission.

Water Asset Management LLC

PISCATAWAY, N.J., April 29 /PRNewswire-FirstCall/ — Trane Inc. today announced first-quarter income from continuing operations of $65.9 million or 33 cents per diluted share, up from $57.2 million or 28 cents per diluted share a year ago. The company had expected first-quarter income from continuing operations of $54.5 million-$60.5 million. Income from continuing operations included $3.3 million (after tax) or two cents per diluted share related to expenses for merger advisory fees for the planned acquisition by Ingersoll Rand and operational consolidation programs, as well as tax benefits. Sales were $1.71 billion, up 6.5 percent (up 4.2 percent in local currencies). Both the company’s former Vehicle Control Systems (WABCO) and Bath and Kitchen segments were classified as discontinued operations in 2007.
“We delivered a good first quarter,” said Fred Poses, chairman and CEO. “We saw continued growth in the commercial part of our business, with strong service sales and our broad global presence driving results. We continued to experience challenging residential conditions, although our residential sales outpaced the market. The growing focus on energy efficiency is benefiting our business, while increased commodity costs are hurting us.
“We made progress with Ingersoll Rand on the steps necessary for regulatory and shareowner approval in the second quarter. We received all required antitrust approvals, and Ingersoll Rand filed a registration statement on Form S-4 with the U.S. Securities and Exchange Commission (SEC). In addition, our two companies are working hard on integration planning in order to realize the cost-savings and operational benefits of the combination as quickly as possible,” said Poses.
During the second quarter, the company expects to hold a special meeting of shareholders to vote on the proposed acquisition of the company by Ingersoll Rand. If the acquisition is approved, Trane shareholders at the time of the sale can expect to receive $36.50 in cash and .23 Ingersoll Rand shares of common stock for each Trane share. The board of directors has established April 23, 2008, as the record date for shareholders entitled to vote at the special meeting. Trane’s board of directors will set the date of the special meeting after the SEC completes its review of Ingersoll Rand’s Form S-4 and the proxy statement/prospectus, which will be mailed to shareholders in preparation for the vote at the special meeting.
“We believe this sale offers an attractive price for our shareowners today and the opportunity to participate in a $17 billion global diversified company in the future,” said Poses. The company expects its board of directors to set second-quarter dividend record and payment dates during May prior to the anticipated completion of the sale to Ingersoll Rand.
2008 OUTLOOK
“We ended the quarter with a healthy global commercial equipment backlog of $1.046 billion, up 7 percent from the end of the first quarter in 2007,” said Poses. “In the second quarter, we expect our overall sales to increase 2- 4 percent. Because of further weakness in the residential market, we expect our second-quarter residential sales to decrease about 12 percent, and we expect growth of about 8 percent in our global commercial sales, which is less than originally estimated. As a result of these market conditions, we’re lowering our full-year sales growth estimate of 5-6 percent to 4-5 percent.
“We’re reaffirming our full-year estimate for income from continuing operations of $473.5 million-$503.5 million, up 18-26 percent,” said Poses. The full-year estimate is on a standalone basis and includes $17.2 million (after tax) for expenses related to merger advisory fees for the planned acquisition by Ingersoll Rand and operational consolidation programs, as well as tax benefits. “During the second quarter, we expect income from continuing operations of $145.2 million-$152.9 million, compared with $151.2 million in second quarter 2007. The second-quarter estimate includes $13.9 million (after tax) for merger advisory fees. Pricing, cost control and a lower tax rate are expected to help offset the impact of lower sales and higher commodity expenses.”
FIRST-QUARTER 2008 HIGHLIGHTS
For commercial customers, the company introduced Trane Tracer AdaptiView(TM) controls for CenTraVac(TM) chillers. Tracer AdaptiView allows a building’s operating staff to achieve a new level of chiller plant control and features a large color display and an ergonomic arm that enables viewing from any height or angle. The controls use open protocols and Trane’s Adaptive Control(TM) algorithms to deliver more hours of operation at peak efficiency than ever before.
For the residential market, the company introduced the Trane ComfortLink(TM) II and American Standard AccuLink(TM) systems, which feature technology advances that benefit both the contractor and the homeowner: automatic refrigerant charging technology, plug-and-play installation, remote system access and control options available through a mobile phone. In addition, the company launched the Trane XL 16c and American Standard 16 packaged units, which offer industry-leading efficiency and carry the Energy Star designation from the U.S. Environmental Protection Agency.
Large contracts signed during the quarter included ones for Altera Penang (Penang, Malaysia); Central Chaengwattana (Bangkok, Thailand); Conwood Company L.P. (Memphis, Tenn.); Daniel Boone Area School District (Birdsboro, Penn.); East-south Central Energy Supply district cooling project (Seoul, Korea); Gamsamdong Worldmark Westend - Taewoo Construction Company (Taegue City, South Korea); Idaho Falls School District (Idaho Falls, Idaho); Kent Park (Ankara, Turkey); KPN data warehouse (Almere, The Netherlands); Lan Bao Wan (Zhengzhou City, China); NASCAR Tower (Charlotte, N.C.); NEC (Birmingham, U.K.); Rochester Institute of Technology (Rochester, N.Y.); Sanofi Aventis (Chilly Mazarin, France); Seven Schools Project (Doha, Qatar); Sony Corporation Atsugi Technology Center (Atsugi City, Japan); and Taiwan Semiconductor Manufacturing Company (TSMC) 12P4 (Hsinchu City, Taiwan).
About Trane
Trane Inc. provides heating, ventilation and air conditioning (HVAC) systems and services that enhance the quality and comfort of the air in homes and buildings around the world. The company offers customers a broad range of energy-efficient HVAC systems; dehumidifying and air cleaning products; service and parts support; advanced building controls; and financing solutions. The company’s HVAC systems and services have leading positions in premium commercial, residential, institutional and industrial markets; a reputation for reliability, high quality and product innovation; and a powerful distribution network. Trane’s 2007 annual revenues were approximately $7.45 billion and the company has more than 29,000 employees worldwide. For more information, visit these Web sites: and .
On Feb. 1, 2007, Trane, then known as American Standard Companies and traded on the New York Stock Exchange (NYSE) under the symbol “ASD,” announced plans to separate its three businesses. On July 31, 2007, the company completed the spinoff of its Vehicle Control Systems business as an independent company known as WABCO . On Oct. 31, 2007, the company sold its Bath and Kitchen business to funds advised by Bain Capital Partners, LLC. On Nov. 28, 2007, the company changed its name to Trane to reflect its focus on its remaining business, Air Conditioning Systems and Services. On Dec. 17, 2007, Trane announced that it had entered into an agreement to be acquired by Ingersoll Rand .
PLEASE NOTE: Trane Chairman and CEO Frederic Poses and CFO Peter D’Aloia will discuss the company’s performance and provide guidance on a two-way conference call for financial analysts at 9 a.m. EST today. Related financial charts, reconciliations between GAAP and non-GAAP financial measures, and certain other information to be discussed on the conference call are available in the accompanying financial tables and under the heading, “Trane’s First- Quarter 2008 Results” on the company’s Web site, . Reporters and the public are invited to listen to the call, which will be broadcast on the company’s Web site and archived for one year. If you’re unable to connect to the company’s Web site, you may listen via telephone. The dial-in number is (719) 325-4932.
Please call five-to-10 minutes before the scheduled start time. The number of telephone connections is limited. A replay of the conference call will be available from noon EST today until midnight EST on May 6. For the replay, please dial (719) 457-0820. The replay access code is 4258359.
Comments in this news release, particularly those related to guidance, contain certain forward-looking statements, which are based on management’s good faith expectations and beliefs concerning future developments. Forward- looking statements can be identified by the use of words such as “believe,”"expect,”"plans,”"strategy,”"prospects,”"estimate,”"project,”"anticipate,”"intends” and other words of similar meaning. Actual results may differ materially from these expectations as a result of many factors including (i) pricing changes to materials used to produce products and the ability to offset those changes through price increases; (ii) changes in U.S. or international economic conditions, such as inflation and interest rate and exchange rate fluctuations; (iii) the actual level of construction activity in the company’s end-markets; (iv) periodic adjustments to accruals for contingent liabilities, including accruals associated with litigation matters, government investigations, asbestos liabilities and asbestos insurance recoveries; and (v) the amount and timing of operational consolidation expenses and gains or losses on asset sales and tax items. Additional factors that could cause actual results to differ materially from expectations are set forth in the company’s 2007 Annual Report on Form 10-K and in the “Management’s Discussion and Analysis” section of the company’s Quarterly Reports on Form 10-Q. In addition, there are risks and uncertainties relating to the sale of Trane Inc. (”Trane”) to Ingersoll-Rand Company Limited (”Ingersoll Rand”), including the failure to obtain Trane stockholder approval or the failure to satisfy any of the other conditions to closing, costs relating to the proposed transaction, and disruption from the transaction making it more difficult to operate the business prior to closing of the transaction and to maintain relationships with customers, employees, distributors or suppliers. Trane does not undertake any obligation to update any forward-looking statements after the date on which such statements are made.
The transaction is subject to a vote of the Trane shareholders and requires registration of the shares of Ingersoll Rand to be issued in the merger. Accordingly, written communications regarding the transaction may be deemed to be solicitations of proxies or an offering prospectus and require the following legends:
This communication is being made in respect of the proposed merger transaction involving Ingersoll Rand, Trane and Indian Merger Sub, Inc. In connection with the proposed transaction, Ingersoll Rand filed a registration statement on Form S-4 containing a preliminary proxy statement/prospectus for shareholders of Trane, with the SEC, and Ingersoll Rand and Trane will be filing other documents regarding the proposed transaction with the SEC as well. BEFORE MAKING ANY VOTING OR INVESTMENT DECISION, INVESTORS ARE URGED TO READ THE FINAL PROXY STATEMENT/PROSPECTUS REGARDING THE PROPOSED TRANSACTION AND ANY OTHER RELEVANT DOCUMENTS CAREFULLY IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. The final proxy statement/prospectus will be mailed to Trane’s shareholders. Shareholders will be able to obtain a free copy of the proxy statement/prospectus, as well as other filings containing information about Ingersoll Rand and Trane, without charge, at the SEC’s Internet site (). Copies of the proxy statement/prospectus and the filings with the SEC that will be incorporated by reference in the proxy statement/prospectus can also be obtained, without charge, by directing a request to Ingersoll-Rand Company Limited, P.O. Box 0445, 155 Chestnut Ridge Road, Montvale, NJ 07645 Attention: Investor Relations, (201) 573-0123, or to Trane Inc., One Centennial Avenue, Piscataway, NJ 08855 Attention: Investor Relations, (732) 980-6125.
Ingersoll Rand, Trane and their respective directors and executive officers and other persons may be deemed to be participants in the solicitation of proxies in respect of the proposed transaction. Information regarding Ingersoll Rand’s directors and executive officers is available in Ingersoll Rand’s proxy statement for its 2008 annual meeting of stockholders and Ingersoll Rand’s 2007 Annual Report on Form 10-K, which were filed with the SEC on April 16, 2008 and February 29, 2008, respectively, and information regarding Trane’s directors and executive officers is available in Trane’s 2007 Annual Report on Form 10-K, which was filed with the SEC on February 20, 2008. Other information regarding the participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the proxy statement/prospectus and other relevant materials to be filed with the SEC when they become available.
Trane
Statement of Operations
(Unaudited)

In millions Three Months Ended
except per share data March 31,
2008 2007

Sales $1,711.4 $1,607.5

Cost of sales 1,234.5 1,151.3

Selling and administrative expenses 355.2 337.5

Operating income 121.7 118.7

Interest expense 15.7 26.2

Other expense 9.4 0.8

Income from continuing operations
before income taxes (a) 96.6 91.7

Income taxes (a) 30.7 34.5

Income from continuing operations (a) 65.9 57.2

Income from discontinued operations,
net of income taxes - 116.1
Net income $65.9 $173.3

Net income per share:
Basic:
Income from continuing
operations $0.34 $0.29
Income from discontinued
operations - 0.57
Net income $0.34 $0.86

Diluted:
Income from continuing
operations $0.33 $0.28
Income from discontinued
operations - 0.56
Net income $0.33 $0.84

Average common shares outstanding
Basic 195.3 200.6
Diluted 200.3 206.2

(a) In 2008, income from continuing operations includes $1.0 million
($0.6 million after tax) of expenses related to operational
consolidation programs and $5.4 million ($4.1 million after tax) of
expenses for merger advisory fees related to the previously announced
pending Ingersoll Rand acquisition of Trane. In addition, the income
tax provision includes $1.4 million of tax benefits in 2008. In 2007,
income from continuing operations includes $0.3 million ($0.2 million
after tax) of expenses related to operational consolidation programs.
In addition, the income tax provision includes $1.2 million of tax
expense for tax items in 2007.

Trane
Data Supplement Sheet
(Unaudited)

Three Months Ended March 31,
Excluding
Foreign Exchange
In millions Translation
% Chg
vs.
% Chg Adjust- 2007
Reported Reported vs. ed Adjust-
2008 2007 2007 2008(a) ed (a)

Sales $1,711.4 $1,607.5 6.5% $1,674.5 4.2%

Operating Income $121.7(b) $118.7(b) 2.5% $118.8 0.1%

Operating Income as a
Percentage of Sales 7.1% 7.4% -0.3 7.1% -0.3
pts pts

Income from Continuing
Operations Before Income
Taxes $96.6 $91.7

Income from Continuing
Operations Before Income
Taxes as a Percentage of
Sales 5.6% 5.7%

Backlog $1,045.5 $974.8

(a) Approximately one-fourth of the Company’s business is outside the
U.S.; therefore, changes in exchange rates can have a significant
impact on the reported results of operations when presented in U.S.
dollars. Changes in sales and operating income excluding foreign
exchange translation effects are calculated using current year sales
and expenses translated at prior year exchange rates. Presenting
changes in sales and operating income excluding the effects of foreign
exchange translation is not in conformity with generally accepted
accounting principles (”GAAP”), but management analyzes the data in
this manner because it is useful to them for understanding operational
performance of the business. Management also uses data adjusted in
this manner for purposes of determining incentive compensation.
Accordingly, management believes that presenting information in this
manner is also useful to shareholders in understanding the performance
of the business. The changes in sales and operating income excluding
the effects of foreign exchange translation are not meant to be a
substitute for measurements prepared in conformity with GAAP nor to be
considered in isolation.

(b) In 2008, operating income includes $1.0 million of operational
consolidation expenses. In 2007, operating income includes $0.3
million of operational consolidation expenses.

Trane Inc.
Income from Continuing Operations Outlook
(Unaudited)

In millions Q2 2008 Q2 2007

Income from continuing operations (a) $145.2 - $152.9 $151.2

In millions FY 2008 FY 2007

Income from continuing operations (b) $473.5 - $503.5 $400.2

(a) In 2008, income from continuing operations includes $19.6 million
($13.9 million after tax) of expenses for merger advisory fees related
to the previously announced pending Ingersoll Rand acquisition of
Trane. In 2007, income from continuing operations includes
$0.9 million ($0.5 million after tax) of expenses related to
operational consolidation programs. In addition, the 2007 income tax
provision includes $1.7 million of tax benefits for tax items.

(b) In 2008, income from continuing operations includes $1.0 million
($0.6 million after tax) of expenses related to operational
consolidation programs and $25.0 million ($18.0 million after tax) of
expenses for merger advisory fees related to the previously announced
pending Ingersoll Rand acquisition of Trane. In addition, the 2008
income tax provision includes $1.4 million of tax benefits for tax
items. In 2007, income from continuing operations includes
$2.6 million ($2.0 million after tax) of expenses related to
operational consolidation programs. In addition, the 2007 income tax
provision includes $4.5 million of tax benefits for tax items.

Trane
Reconciliation of Net Cash Provided By
Continuing Operating Activities to Free Cash Flow
(Unaudited)

In millions Three Months Ended March 31,
2008 2007
Cash provided by continuing
operating activities:
Net Income $65.9 $173.3
Less: Income from
discontinued operations,
net of income taxes - 116.1
Income from continuing
operations 65.9 57.2

Adjustments to reconcile net
income to net cash (used)/
provided by continuing
operating activities (108.8) 4.0
Net cash (used)/provided by
continuing operating activities (42.9)(a) 61.2 (b)

Other deductions or additions to
reconcile to free cash flow:
Purchases of property,
plant, equipment and
computer software (36.0) (32.8)

Free cash flow $(78.9) $28.4

(a) Includes $9.1M of cash payments for merger advisory fees related
to the previously announced pending Ingersoll Rand acquisition of
Trane.

(b) Includes $64.9M receipt of cash from a trust related to an
insurance settlement in 2007.

Note: This statement reconciles net cash (used)/provided by operating
activities to free cash flow. Management uses free cash flow,
which is not defined by US GAAP, to measure the Company’s
operating performance. This measure should be considered in
addition to, not as a substitute for, GAAP measures. Free cash
flow is one of several measures used to determine incentive
compensation for certain employees.

Trane
Reconciliation of Net Cash Provided By
Continuing Operating Activities to Free Cash Flow
(Unaudited)

In millions Twelve Months Ended December 31,
2008 Estimate 2007

Net Cash provided by continuing
operating activities $ Approx. 638.0 $669.2

Other deductions or additions to
reconcile to Free Cash Flow:
Purchases of property, plant,
equipment and computer software Approx. (205.0) (169.0)
Proceeds from disposals of
property Approx. 17.0 -

Free cash flow $ Approx. 450.0 (a) $500.2 (b)

(a) Includes approximately $25.0M of cash payments for merger advisory
fees related to the previously announced pending Ingersoll Rand
acquisition of Trane.

(b) Includes $64.9M receipt of cash from a trust related to an
insurance settlement in 2007.

Note: This statement reconciles net cash (used)/provided by operating
activities to free cash flow. Management uses free cash flow,
which is not defined by US GAAP, to measure the Company’s
operating performance. This measure should be considered in
addition to, not as a substitute for, GAAP measures. Free cash
flow is one of several measures used to determine incentive
compensation for certain employees.

Trane