Hamilton, Bermuda-based Ingersoll-Rand Co. last week announced that, on Oct. 6, the company and its consolidated subsidiaries received a notice from the Internal Revenue Service containing proposed adjustments to the company’s tax filings in connection with an audit of the 1998 through 2000 tax years. The principal proposed adjustments consist of the disallowance of certain capital losses taken in the company’s tax returns in 1999 and 2000. The disallowance would result in additional taxes and penalties of approximately $155 million, plus interest to date of approximately $62 million. The company disputes the IRS’ position and intends to contest the proposed disallowance. The issues raised in the notice are not related to the company’s reorganization in Bermuda, which was effective Dec. 31, 2001.

The company will add approximately $27 million to its previously established reserves, and that amount, equal to approximately 8 cents per share, will be taken as a charge in the quarter ended Sept. 30, 2006. After taking this charge into account, the company believes that it has adequately reserved for the ultimate resolution of this issue. Should the IRS prevail in its disallowance of the capital losses and imposition of penalties and interest, it would result in a cash outflow of approximately $155 million, plus interest through the payment date.

Details on the third-quarter 2006 results and an updated full-year 2006 forecast will be provided as part of the company’s previously scheduled earnings release and investor conference call on Oct. 27.