EXHIBIT 13
                                                     Page 1 of 65
                                                                 










                         INGERSOLL-RAND

                              1996

                         ANNUAL REPORT

                               TO

                          SHAREOWNERS








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                       Table of Contents


Financial Review and Management Analysis                     3-24

Consolidated Statement of Income                               25

Consolidated Balance Sheet                                  26-27

Consolidated Statement of Shareowners' Equity               28-29

Consolidated Statement of Cash Flows                        30-31

Notes to the Consolidated Statements                        32-63

Report of Management                                           64

Report of Independent Accountants                              65





                                                       Page 3 of 65


                     Ingersoll-Rand Company
            Financial Review and Management Analysis


1996 Compared to 1995


A third consecutive year of record sales and earnings was
established in 1996.  These financial achievements were the results
of a strong domestic economy, moderate economic growth in selected
international markets and the continued success of the company's
asset-management, strategic-sourcing and productivity-improvement
programs.

  Sales for 1996 totalled $6.7 billion, which generated $683.5
million of operating income and $358.0 million of net earnings (or
$3.33 per share).  These results include a full year's benefit of
the May 31, 1995, acquisition of Clark Equipment Company (Clark).
The company's 1996 results, excluding the positive effect of the
Clark acquisition, also established company records.

  The 1996 year included a net benefit of $12.6 million to the
company's operating income relating to the following items:

- the sales of the Process Systems Group, which generated $55
  million of operating income ($34.7 million after-tax, or 32
  cents per share);

- a charge of $30 million to operating income for the realignment
  of the company's foreign operations ($18.9 million after-tax, or
  18 cents per share);

- a charge of $7 million to operating income associated with the
  exit or abandonment of selected European product lines ($4.5
  million after-tax, or four cents per share); and

- a $5.4 million charge to operating income to close an Ingersoll-
  Dresser Pump Company (IDP) steel foundry (approximately $2.0
  million after-tax, or two cents per share).

  The company's outlook for 1997 calls for steady improvement in
operating results based on continued stability in our domestic
markets and strengthening in our international markets.  These
expectations will be supported by aggressive asset-management,
strategic-sourcing and productivity-improvement programs.


                                                       Page 4 of 65



  A comparison of key financial data between 1996 and 1995 follows:

o Net sales in 1996 established a record at $6.7 billion,
  reflecting a 17-percent improvement over 1995's total of $5.7
  billion.  Sales for 1996, excluding Clark, exceeded 1995's total
  by approximately six percent.

o Cost of goods sold in 1996 was 75.0 percent of sales compared to
  75.2 percent in 1995.  Partial liquidations of LIFO (last-in,
  first-out) inventory lowered 1996 costs by $4.8 million ($2.9
  million after-tax, or three cents per share) as compared to a
  $3.4 million ($2.1 million after-tax, or two cents per share)
  liquidation in 1995.  Excluding the effects of the LIFO
  liquidations, the 1996 cost of goods sold relationship to sales
  would have been 75.1 percent versus 75.3 percent for 1995.
  Excluding Clark's results and the effect of the noncomparable
  items from 1996 and 1995, the relationship of cost of goods sold
  to sales improved slightly in 1996.

o Administrative, selling and service engineering expenses were
  14.8 percent of sales in 1996, compared to 16.1 percent for
  1995.  This marked improvement reflects the net benefit of the
  company's cost-containment and productivity-improvement
  programs, which more than offset the effects of inflation on
  salaries, benefits, materials and other similiar items.  The
  full year effect of the Clark acquisition did not cause a
  disproportionate benefit to the 1996 improvement.

o Operating income for the year totalled $683.5 million, a 37.5-
  percent increase over 1995's operating income of $497.0 million.
  Excluding Clark's results, operating income in 1996 totalled
  $527.9 million, reflecting a 21.3-percent increase over 1995's
  level without Clark.  In addition, the noncomparable items in
  1996 contributed a $12.6-million benefit to operating income.
  Excluding these items and Clark's results, operating income for
  the year reflected an 18-percent improvement over 1995.

o Interest expense for the year totalled $119.9 million.  The
  interest expense reported for 1996 was almost evenly divided
  between interest expense from the combined operations of
  Ingersoll-Rand and Clark, and interest expense associated with
  the Clark acquisition.  Interest expense for 1995 totalled $86.6
  million.


                                                       Page 5 of 65



o Other income (expense), net, is essentially the sum of three
  activities:  (i) foreign exchange, (ii) equity interests in
  partially-owned equity companies, and (iii) other miscellaneous
  income and expense items.  In 1996, these activities resulted in
  a net expense of $1.0 million, an unfavorable change of $10.4
  million compared to 1995's net other income of $9.4 million.  A
  review of the components of this category shows that:

     o    foreign exchange activity for 1996 totalled $4.8 million
     of losses, as compared to $6.2 million of losses in 1995;

     o    earnings from equity interests in partially-owned equity
     companies were approximately $8 million lower than 1995's
     level; and

     o    other net miscellaneous expense items were approximately
     $3.8 million higher than the prior year's level, principally
     due to miscellaneous foreign taxes not based on income.

o Dresser-Rand Company (Dresser-Rand) is a partnership between the
  company and Dresser Industries, Inc. (Dresser), which is engaged
  worldwide in the reciprocating compressor and turbomachinery
  businesses.  The company's pretax profits from its interest in
  Dresser-Rand for 1996 totalled $23.0 million, a modest
  improvement over the $22.0 million in the prior year. Dresser-
  Rands's results included a disappointing 1996 fourth quarter,
  which was adversely affected by cost overruns on a few major
  orders, higher legal expenses and an increase in foreign taxes.

o Ingersoll-Dresser Pump Company is another partnership between
  the company and Dresser, in which the company owns the majority
  interest.  In 1996, the minority interest charge was $17.3
  million, as compared to the 1995 charge of $12.7 million.  This
  charge reflects the portion of IDP's earnings that was allocable
  to Dresser and indicates that IDP's earnings in 1996 were
  significantly higher than those reported for 1995.

o The company's effective tax rate for 1996 was 37.0 percent,
  which is consistent with the prior year.  The variance from the
  35.0 percent statutory rate was due primarily to the higher tax
  rates associated with foreign earnings, the effect of state and
  local taxes, and the nondeductibility of the goodwill associated
  with acquisitions.



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  At December 31, 1996, employment totalled 41,874.  This
represents a net increase of 741 employees over last year's level
of 41,133.  This increase is mainly due to the net result of
employees from businesses acquired and sold during the year.

Liquidity and Capital Resources
The company's financial position at December 31, 1996, reflects the
following notable changes from last year:

o the reclassification of $132.5 million of Medium Term
Notes, issued to finance the Clark acquisition, from
long-term debt to current maturities of long-term debt,
because repayment will occur during the third quarter of
1997; and

o the reclassification of the net assets of Clark-Hurth
to assets held for sale, which was sold in Februrary 1997.
Included in these net assets were approximately $200 million
of net assets previously classified as noncurrent.

     The following table contains several key measures which the
company's management uses to gauge the company's financial
performance, all of which showed improvement in 1996:

                                        1996      1995      1994
Working capital (in millions)         $1,245    $1,016      $963
Current ratio                            2.0       1.8       1.9
Debt-to-total capital ratio               39%       45%       22%
Average working capital
  to net sales                          16.9%     17.3%     20.4%
Average days outstanding
  in receivables                        56.1      63.1      64.6
Average months' supply
  of inventory                           3.0       3.3       3.7

  Ingersoll-Rand, as a large multinational company, maintains
significant operations in foreign countries.  The movement of the
U.S. dollar against foreign currencies has an impact on the
company's financial position.  Generally, the functional currency
of the company's foreign subsidiaries is their local currency, the
currency in which they transact their business.  The company
manages exposure to changes in foreign currency exchange rates
through its normal operating and financing activities, as well as
through the use of forward exchange contracts.  The company


                                                       Page 7 of 65



attempts, through its hedging activities, to mitigate the impact on
income of changes in foreign exchange rates.  Additionally, the
company maintains operations in countries with hyperinflationary
economies and in countries where the company's operations transact
business in U.S. dollars.  The functional currency of these
operations has been and will remain the U.S. dollar.  (Additional
information on the company's use of financial instruments can be
found in Note 9 to the Consolidated Financial Statements.)

  The following highlights the financial results and financial
condition of the company's operations, with the impact of currency
variations where appropriate:

o Cash and cash equivalents totalled $184.1 million at December
  31, 1996, a $46.8-million increase over the prior year-end
  balance of $137.3 million.  In evaluating the net change in cash
  and cash equivalents, cash flows from operating, investing and
  financing activities, and the effect of exchange rate changes,
  should be considered.  Cash flows from operating activities
  provided $385.7 million, investing activities used $149.9
  million and financing activities used $196.5 million.  Exchange
  rate changes during 1996 increased cash and cash equivalents by
  $7.5 million.

o Marketable securities totalled $8.0 million at the end of 1996,
  $1.3 million below the balance at December 31, 1995.  The
  reduction was due to the maturity of certain securities and
  their conversion into cash and cash equivalents and minimal
  exchange rate fluctuations.

o Receivables totalled $1,066.2 million at December 31, 1996,
  compared to $1,109.9 million at the prior year end, a net
  decrease of $43.7 million.  Currency translation decreased the
  receivable balance during the year by $6.5 million,
  acquisitions added approximately $19 million and the
  reclassification of the assets held for sale reduced the balance
  by approximately $41 million.  Dispositions reduced receivables
  by $15.9 million.  The company's focus on decreasing its
  receivable base through its asset-management program produced a
  reduction in the average days outstanding in receivables to 56.1
  days from 1995's level of 63.1 days.

o Inventories amounted to $775.1 million at December 31, 1996, a
  reduction of $137.5 million from last year's level of $912.6
  million.  Acquisitions accounted for a $13-million increase,

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  while dispositions reduced inventories by $48 million. The
  reclassification of assets held for sale reduced inventories by
  approximately $92 million.  The remaining net decrease was due
  primarily to currency movements. The company's emphasis on
  inventory control was demonstrated by the reduction of the
  average months' supply of inventory to 3.0 months at December
  31, 1996, compared to 3.3 months at the prior year end.

o Prepaid expenses totalled $74.1 million at the end of the year,
  $16.1 million higher than the balance at December 31, 1995.  The
  primary cause for the increase in 1996 was higher deposits
  relating to benefit plans.  Foreign exchange activity and
  acquisitions had minimal effect on prepaid expenses.

o Deferred income taxes (current) of $162.4 million at December
  31, 1996, represented the deferred tax benefit of the difference
  between the book and tax values of various current assets and
  liabilities.  A schedule of the components for this balance is
  in Note 14 to the Consolidated Financial Statements.  The
  year-end balance represented an increase of $43.9 million from
  the December 31, 1995, level.  Changes due to foreign currency
  movements had minimal effect on the year's activity.

o The investment in Dresser-Rand Company totalled $152.6 million
  at December 31, 1996.  This represented a net increase of $58.7
  million from the prior year balance of $93.9 million.  The
  components of the change for 1996 consisted of income for the
  current year of $23 million, a $92.1 million change in the
  advance account between the entities, a minor increase caused by
  translation, and a reduction caused by a return of capital of
  $56.7 million.

o The investments in partially-owned equity companies at December
  31, 1996, totalled $223.6 million, which approximated the 1995
  balance of $223.3 million.  Income and dividends from
  investments in partially-owned equity companies were $19.4
  million and $6.8 million, respectively.  Amounts due from these
  units decreased from $20.4 million to $18.3 million at December
  31, 1996.  Currency movements primarily relating to partially-
  owned equity companies in Japan caused approximately a $10-
  million decrease in 1996.

o Net property, plant and equipment decreased by $133 million in
  1996 to a year-end balance of $1,145.4 million.  Fixed assets
  from acquisitions during 1996 added $33.1 million.  Capital

                                                       Page 9 of 65



  expenditures in 1996 totalled $195 million.  The
  reclassification of the fixed assets associated with Clark-Hurth
  reduced the balance by approximately $136 million.  Dispositions
  reduced the balance by $40.4 million.  In addition, foreign
  exchange fluctuations decreased the net fixed asset values in
  U.S. dollars by approximately $5 million.  The remaining net
  decrease was the result of depreciation, and sales and
  retirements.

o Intangible assets, net, totalled $1,178.0 million at December
  31, 1996, as compared to $1,253.6 million at December 31, 1995,
  for a net decrease of $75.6 million.  Acquisitions added
  approximately $81 million of intangibles, primarily goodwill,
  during 1996. The reclassification of the intangible assets
  relating to the Clark-Hurth sale reduced the balance by
  approximately $119 million at December 31, 1996.  Amortization
  expense accounted for a reduction of $38.0 million.

o Deferred income taxes (noncurrent) totalled $162.6 million at
  December 31, 1996, which was $27.8 million higher than the 1995
  balance. A listing of the components which comprised the balance
  at December 31, 1996, can be found in Note 14 to the
  Consolidated Financial Statements.

o Other assets totalled $223.8 million at year end, a decrease of
  $9.9 million from the December 31, 1995, balance of $233.7
  million.  Other assets increased approximately $12 million due
  to prepaid pensions, which was more than offset by decreases due
  to dispositions and the reclassification of assets held for
  sale. Foreign exchange activity in 1996 had a minimal effect on
  the account balance during the year.

o Accounts payable and accruals totalled $1,095.4 million at
  December 31, 1996, a decrease of $34.4 million from last year's
  balance of $1,129.8 million.  The reclassification of assets
  held for sale and dispositions decreased accounts payable and
  accruals by $69.2 million.  Restructure of operations added
  approximately $37 million.  Acquisition activity during 1996
  accounted for a $9.4-million increase and foreign exchange
  activity during the year resulted in a decrease of $12.6
  million.

o Loans payable were $162.3 million at the end of 1996, which
reflects a $6.9-million increase over the $155.4 million at


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December 31, 1995.  Current maturities of long-term debt,
included in loans payable, were $133.2 million and $102.9
million at December 31, 1996 and 1995, respectively.  The
company's aggressive cash-management program decreased short-
term debt,while foreign currency fluctuations increased short-
term debt during 1996 by $4.6 million.  The reclassification of
Clark-Hurth debt to assets held for sale totalled $5.7 million.
The change in current maturities of long-term debt included
movement to current maturities of $135.7 million, payments of
$104.4 million and foreign exchange activity.

o Long-term debt, excluding current maturities, totalled $1,163.8
  million, a decrease of $140.6 million from the prior year's
  balance of $1,304.4 million.  Reductions in long-term debt were
  the result of the reclassifications of $135.7 million of current
  maturities to loans payable and $5.1 million related to Clark-
  Hurth debt reclassified to assets held for sale.  Foreign
  currency fluctuations had a minimal effect.

o Postemployment liabilities at December 31, 1996, totalled $814.7
  million, a decrease of $17.4 million from the December 31, 1995,
  balance.  Postemployment liabilities include medical and life
  insurance postretirement benefits, long-term pension and other
  noncurrent postemployment accruals.  The 1996 activity included
  reductions of $22.9 million attributed to units, which were
  either sold in 1996 or early 1997.  Postemployment liabilities
  represent the company's noncurrent liabilities in accordance
  with Statement of Financial Accounting Standard(SFAS) Nos. 87,
  106 and 112. (See Notes 16 and 17 to the Consolidated Financial
  Statements for additional information.)

o The Ingersoll-Dresser Pump Company minority interest, which
  represents Dresser's interest in the IDP joint venture, totalled
  $113.4 million and $170.8 million at December 31, 1996 and 1995,
  respectively.  Earnings allocable to IDP's minority interest
  totalled $17.3 million for 1996.  At December 31, 1996, Dresser
  had advances payable to IDP totalling $85.5 million, which was
  shown as a reduction in IDP's minority interest.

o Other liabilities (noncurrent) at December 31, 1996, totalled
  $148.7 million, which were $17.4 million higher than the balance
  at December 31, 1995.  These obligations are not expected to be
  paid out in the next year. These accruals generally cover
  environmental, insurance, legal and other contractual
  obligations.

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o At the time of its acquisition by the company, Clark sponsored a
  Leveraged Employee Stock Ownership Plan (LESOP) for eligible
  employees.  In connection with the acquisition, the company
  purchased the LESOP's Clark shares for $176.6 million.  The
  company determined it would continue the LESOP to fund certain
  employee benefit plans.  At December 31, 1996, approximately 1.5
  million shares of the company's common stock were unallocated
  and the $55.6 million paid by the LESOP for those unallocated
  shares was classified as a reduction of shareowners' equity
  pending allocation to participants.  (See Note 12 to the
  Consolidated Financial Statements for additional information.)

  Other information concerning the company's financial resources,
commitments and plans is as follows:

  The average amount of short-term borrowings outstanding,
excluding current maturities of long-term debt, was $58.0 million
in 1996, compared to $156.1 million in 1995.  The weighted average
interest rate during 1996 was 7.8%, compared to 8.3% during the
previous year.  The maximum amounts outstanding during 1996 and
1995, were $181.7 million and $222.0 million, respectively.

  The company had $800 million in domestic short-term credit lines
at December 31, 1996, and $491.5 million of foreign credit
available for working capital purposes, all of which were unused at
the end of the year.  These facilities exceed projected
requirements for 1997 and provide direct support for commercial
paper and indirect support for other financial instruments, such as
letters of credit and comfort letters.

  At December 31, 1996, the debt-to-total capital ratio was 39
percent, as compared to 45 percent at the prior year end.  The
significant improvement in the ratio at December 31, 1996, was
primarily due to the company's continuing focus on cash management
and an increase in the company's equity.

  In 1996, foreign currency translation adjustments decreased
shareowners' equity by $16.5 million.  Translation adjustments of
$6.3 million relating to the sale of foreign investments were
included in income upon the sale of these businesses. The remaining
change of $10.2 million was due to the strengthening of the U.S.
dollar against other currencies in countries where the company has
significant operations and the local currencies are the functional
currencies.  Currency changes in Australia, Belgium, Germany,
Italy, Japan, Singapore, South Africa and the United Kingdom
accounted for nearly all of the change.

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  As a result of the Clark acquisition, the company is involved in
certain repurchase arrangements relating to product-distribution
and product-financing activities.  As of December 31, 1996,
repurchase arrangements relating to product financing by an
independent finance company approximated $106 million.  It is not
practicable to determine the additional amount subject to
repurchase solely under dealer distribution agreements. Upon the
termination of a dealer, a newly selected dealer generally acquires
the assets of the prior dealer and assumes any related financial
obligation.  Accordingly, the risk of loss to the company is
minimal. Historically, Clark incurred only immaterial losses
relating to these arrangements.

  In 1996, the company continued to sell an undivided fractional
ownership interest in designated pools of accounts and notes
receivable up to a maximum of $150 million.  Similar agreements
have been in effect since 1987.  These agreements expire in one-
and two-year periods based on the particular pool of receivables
sold.  The company intends to renew these agreements at their
expiration dates with either the current institution or another
financial institution using the basic terms and conditions of the
existing agreements.  At December 31, 1996 and 1995, $150 million
of such receivables remained uncollected.

  Capital expenditures were $195 million and $212 million in 1996
and 1995, respectively.  The company continues investing to improve
manufacturing productivity, reduce costs and provide environmental
enhancements, and advanced technologies for existing facilities.
The capital expenditure program for 1997 is estimated at
approximately $200 million, including amounts approved in prior
periods.  There are no planned projects, either individually or in
the aggregate, that represent a material commitment for the
company.  Many of these projects are subject to review and
cancellation at the option of the company without incurring
substantial charges.

Environmental Matters
The company has been and continues to be dedicated to an
environmental program to reduce the utilization and generation of
hazardous materials during the manufacturing process and to
remediate identified environmental concerns.  As to the latter, the
company currently is engaged in site investigations and remedial
activities to address environmental cleanup from past operations at
current and former manufacturing facilities, including the
facilities added through the Clark acquisition.

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  During 1996, the company spent approximately $8 million on
capital projects for pollution abatement and control and an
additional $6 million for environmental remediation expenditures at
sites presently or formerly owned or leased by the company. It
should be noted that these amounts are difficult to estimate
because environmental improvement costs are generally a part of the
overall improvement costs at a particular plant, and the accurate
estimate of which portion of an improvement or a capital
expenditure relates to an environmental improvement is difficult to
ascertain.  The company believes that these expenditure levels will
continue and may increase over time.  Given the evolving nature of
environmental laws, regulations and technology, the ultimate cost
of future compliance is uncertain.

  The company is 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 is identified as a potentially
responsible party (PRP) for cleanup costs associated with off-site
waste disposal at approximately 39 federal Superfund and state
remediation sites (including Clark-acquired PRP locations),
excluding sites as to which the company's records disclose no
involvement or as to which the company's liability has been fully
determined.  For all sites there are other PRPs and in most
instances, the company's site involvement is minimal. In estimating
its liability, the company has not assumed it will 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 generally on 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.

  Although uncertainties regarding environmental technology, state
and federal laws and regulations and individual site information
make estimating the liability difficult, management believes that
the total liability for the cost of remediation and environmental
lawsuits and claims will not have a material effect on the
financial condition, results of operations, liquidity or cash flows
of the company for any year.  It should be noted that when the
company estimates its liability for environmental matters, such
estimates are based on current technologies and the company does
not discount its liability or assume any insurance recoveries.



                                                      Page 14 of 65



1995 Compared to 1994

1995 went down in the company's history as a year of financial
records and the year of our largest acquisition.  Our financial
achievements in 1995 were the result of a solid and stable domestic
economy for most of our company's products, moderately growing
European markets and the continuing benefits from asset-management
and productivity-improvement programs, which are becoming a daily
thought process for more and more of our employees.

  Sales for 1995 exceeded $5.7 billion, which generated $497
million of operating income and $270 million of net earnings
($2.55 per share).  These results included our successful
acquisition of Clark, effective June 1, 1995.  Our 1995 results,
before considering the positive benefits from the Clark
acquisition, would have also established company records.

  The Clark acquisition (which is described in Note 2 to the
Consolidated Financial Statements) added more than $1 billion of
sales on an annualized basis to the company's results.   Products
included Melroe's Bobcat skid-steer loaders and compact excavators,
Clark-Hurth axles and transmissions (sold February 1997), Blaw-Knox
pavers and Club Car golf cars and utility vehicles.

  The company's economic outlook for 1996 was fairly consistent
with 1995 and called for a steady improvement in operating results
based on continued stability in our domestic markets and continued
strength in our international markets.  These expectations were
bolstered by aggressive asset-management and productivity-
improvement programs, as well as the company's focus on total
quality management and reengineering efforts to accelerate our
efficiency gains.

  A comparison of key financial data between 1995 and 1994 follows:

o Net sales in 1995 established a record at $5.7 billion,
  reflecting a 27-percent improvement over 1994's total of $4.5
  billion.  Sales for 1995, excluding Clark, exceeded last year's
  total by approximately ten percent, and also established a new
  record.

o Cost of goods sold in 1995 was 75.2 percent of sales compared to
  74.9 percent in 1994.  Partial liquidations of LIFO (last-in,
  first-out) inventory lowered 1995 costs by only $3.4 million


                                                      Page 15 of 65



  ($2.1 million after-tax, or two cents per share) as compared to
  an $11.6 million ($7.1 million after-tax, or seven cents per
  share) liquidation in 1994.  Excluding the effects of the LIFO
  liquidations, the 1995 cost of goods sold percentage
  relationship to sales would have been 75.3 percent versus 75.2
  percent for 1994.  The percentage of cost of goods sold to sales
  improved approximately one percent, excluding Clark and the loss
  on the paving business (a preacquisition requirement) from the
  calculation.  This reduction represents the benefits derived
  from the company's continuing productivity-improvement and
  reengineering programs.

o Administrative, selling and service engineering expenses were
  16.1 percent of sales in 1995, compared to 16.7 percent for
  1994.  The marked improvement was due to the continued effect of
  the company's efforts from productivity-improvement programs and
  the benefit of leverage from the increased sales volume, which
  were large enough to offset the effects of inflation for
  salaries, services, etc.  The effect of the Clark acquisition
  did not have a material impact on these percentages in 1995.

o Operating income for 1995 totalled $497.0 million, a 32-percent
  increase over 1994's operating income of $377.0 million.
  Operating income in 1995, without Clark-related activities,
  totalled $435.1 million, reflecting a 15-percent increase over
  1994's level.

o Interest expense for 1995 totalled $86.6 million, which was
  almost double 1994's level.  Interest costs associated with
  Clark's existing debt and its acquisition totalled $47.7
  million.  The company's interest expense, without Clark, would
  have been $38.9 million, an 11.2-percent reduction from the
  company's 1994 interest expense total of $43.8 million.  This
  was the result of lower interest rates and the company's
  aggressive asset-management program.

o Other income (expense), net, is essentially the sum of three
  activities:  (i) foreign exchange, (ii) equity interests in
  partially-owned equity companies, and (iii) other miscellaneous
  income and expense items.  In 1995, this category netted to an
  income balance of $9.4 million, a favorable change of $24.1
  million over 1994's net expense of $14.7 million.  A review of
  the components of this category shows that:


                                                      Page 16 of 65


     o    foreign exchange activity for 1995 totalled $6.2 million
     of losses, as compared to the $6.1 million of losses in 1994;

     o    earnings from equity interests in partially-owned equity
     companies were approximately $12.5 million higher than 1994's
     level, which included a loss on the sale of a partially-owned
     company; and

     o    other net miscellaneous expense items were approximately
     one-half the 1994 level, principally due to higher gains on
     the sale of fixed assets, higher royalty earnings and a
     favorable benefit from the activities of the Clark units.

o Dresser-Rand Company is a partnership between the company and
  Dresser.  The company's pretax profits from its interest in
  Dresser-Rand for 1995 totalled $22.0 million, as compared to
  $24.6 million in 1994.  The reduction is primarily attributed to
  lower sales volumes in 1995, when compared to 1994.  However,
  Dresser-Rand began 1996 with a backlog in excess of $950
  million.

o Ingersoll-Dresser Pump Company is another partnership between
  the company and Dresser in which the company owns the majority
  interest.  In 1995, the minority interest charge was $12.7
  million, as compared to the 1994 charge of $13.2 million.  This
  charge reflects the portion of IDP's earnings that was allocable
  to our joint-venture partner and indicates that IDP's earnings
  in 1995 were lower than in 1994.

o The company's effective tax rate for 1995 was 37.0 percent,
  which represents a slight increase over the 36.0 percent
  reported for 1994.  The variance from the 35.0 percent statutory
  rate was due primarily to the higher tax rates associated with
  foreign earnings, the effect of state and local taxes, and the
  nondeductibility of the goodwill associated with the Clark
  acquisition.

  At December 31, 1995, employment totalled 41,133.  This
represents a net increase of 5,201 employees over 1994's level of
35,932.  The Clark acquisition added 5,304 new employees, while
employment levels in the company's traditional businesses declined
by 103 people during 1995.

  The following highlights the financial results and financial
condition of the company's operations, with the impact of currency
variations where appropriate:

                                                      Page 17 of 65



o Cash and cash equivalents totalled $137.3 million at December
  31, 1995, a $69.7-million decrease from the December 31, 1994,
  balance of $207.0 million.  In evaluating the net change in cash
  and cash equivalents, cash flows from operating, investing and
  financing activities, and the effect of exchange rate changes,
  should be considered.  Cash flows from operating activities
  totalled $403.6 million, investing activities used $1,307.9
  million and financing activities generated funds of $830.2
  million.  Exchange rate changes during 1995 increased cash and
  cash equivalents by approximately $4.4 million.

o Marketable securities totalled $9.3 million at the end of 1995,
  $5.1 million more than the balance at December 31, 1994. The
  increase was due to the investment of excess cash in various
  securities by foreign subsidiaries at favorable interest rates.
  Foreign marketable securities decreased slightly during the year
  due to foreign exchange rate fluctuations.

o Receivables totalled $1,109.9 million at December 31, 1995,
  compared to $949.4 million at December 31, 1994, for a net
  increase of $160.5 million.  Currency translation increased the
  receivable balance during the year by $16.0 million, while
  acquisitions added approximately $193 million during 1995.
  However, the company's focus on decreasing its receivable base
  through its asset-management program produced a $50.9-million
  reduction in receivables during the year, in spite of the heavy
  sales volume in the fourth quarter of 1995.  The average days
  outstanding in receivables decreased to 63.1 days from 1994's
  level of 64.6 days, as benefits from the company's asset-
  management program were beginning to be realized.

o Inventories amounted to $912.6 million at December 31, 1995, an
  increase of $233.3 million over the December 31, 1994, level of
  $679.3 million.  Currency movements accounted for a $10.6
  million increase in inventory for the year, while acquisitions
  (net of a contribution to a joint venture) accounted for an
  additional $207.5 million increase in inventory.  The remaining
  increase of $15.2 million reflects a year-end inventory build to
  fulfill new orders during the first few months of the year based
  on the company's sales growth and backlog.  However, the
  company's emphasis on inventory control was reflected in the
  reduction of the average months' supply of inventory, which was
  3.3 months at December 31, 1995, compared to 3.7 months at
  December 31, 1994.


                                                      Page 18 of 65



o Prepaid expenses totalled $58.0 million at the end of 1995,
  $14.2 million higher than the balance at December 31, 1994.
  Foreign exchange activity had a minimal effect on the balance in
  this account, while acquisition activity accounted for an
  additional $8.3 million of the increase.  The remaining net
  increase for the year was due to a general increase in the
  company's prepaid expenses.

o Deferred income taxes (current) of $118.5 million at December
  31, 1995, represent the deferred tax benefit of the difference
  between the book and tax values of various current assets and
  liabilities.  A schedule of the components for this balance is
  in Note 14 to the Consolidated Financial Statements.  The
  year-end balance represented a decrease of $0.7 million from the
  December 31, 1994, level.  Changes due to foreign currency
  movements had no effect on the year's activity.

o The investment in Dresser-Rand Company totalled $93.9 million at
  December 31, 1995.  This represented a net increase of
  approximately $3.2 million from 1994's balance of $90.7 million.
  The components of the change for 1995 consisted of income for
  the current year of $22.0 million and an $18.8-million change in
  the advance account between the entities.

o The investments in partially-owned equity companies at December
  31, 1995, totalled $223.3 million, $49.4 million higher than the
  1994 balance.  Income and dividends from investments in
  partially-owned equity companies were $26.2 million and $6.7
  million, respectively.  Amounts due from these units increased
  from $3.4 million to $20.4 million at December 31, 1995.
  Currency movements relating to partially-owned equity companies
  were approximately $1 million in 1995. During 1995, the company
  contributed approximately $11 million of assets for an equity
  interest in a European joint venture. These assets were
  principally inventory and fixed assets.

o Net property, plant and equipment increased by $319.1 million in
  1995 to a year-end balance of $1,278.4 million.  Fixed assets
  from acquisitions during 1995 added $292.0 million.  Capital
  expenditures in 1995 totalled $211.7 million, a 33-percent
  increase over 1994's level.  Foreign exchange fluctuations
  increased the net fixed asset values in U.S. dollars by
  approximately $12 million.  The remaining net decrease was the
  result of depreciation, sales and retirements, and a
  contribution of assets to a joint-venture company.

                                                      Page 19 of 65



o Intangible assets, net, totalled $1,253.6 million at December
  31, 1995, as compared to $124.5 million at December 31, 1994,
  for a net increase of $1,129.1 million.  Acquisitions added
  $1,122.1 million of intangibles, primarily goodwill, during
  1995.  Goodwill from the Clark acquisition was approximately
  $740 million.  In addition, Clark had approximately $380 million
  of goodwill when acquired.  Amortization expense accounted for a
  reduction of $25.3 million.  The remaining net change was
  attributable to an increase from currency fluctuations and an
  increase in the required pension intangible asset.

o Deferred income taxes (noncurrent) totalled $134.8 million at
  December 31, 1995.  This net deferred asset arose in 1992
  primarily because of the tax effects related to the adoption of
  SFAS No. 106 (Postretirement Benefits Other Than Pensions). The
  1995 balance was $60.4 million higher than the 1994 balance
  principally due to taxes associated with or assumed as a result
  of the Clark acquisition.  A listing of the components which
  comprised the balance at December 31, 1995, can be found in Note
  14 to the Consolidated Financial Statements.

o Other assets totalled $233.7 million at December 31, 1995, an
  increase of $62.5 million from the December 31, 1994, balance of
  $171.2 million.  The change in the account balance was primarily
  due to an increase in prepaid pensions and other noncurrent
  assets of approximately $19 million, with acquisition activity
  accounting for the balance of the increase.  Foreign exchange
  activity in 1995 had a minimal effect on the account balance
  during the year.

o Accounts payable and accruals totalled $1,129.8 million at
  December 31, 1995, an increase of $246.0 million from December
  31, 1994's balance of $883.8 million.  Acquisition activity
  during 1995 accounted for $258.9 million of the increase and
  foreign exchange activity during the year added an additional
  $17.9 million.  The company's aggressive cash-management program
  accounted for the balance of the reduction.

o Loans payable were $155.4 million at the end of 1995 and reflect
  a $38.2 million increase over the $117.2 million at December 31,
  1994.  Current maturities of long-term debt, included in loans
  payable, were $102.9 million and $4.2 million at December 31,
  1995 and 1994, respectively.  The company's aggressive cash-
  management program accounted for an $81.5-million reduction in
  short-term debt for 1995, while acquisition activity and

                                                      Page 20 of 65
  
  
  
  foreign currency fluctuations increased short-term debt during
  1995 by $15.0 million and $5.9 million, respectively.  The
  change in current maturities of long-term debt included movement
  to current maturities of $103.5 million, payments of $17.9
  million, acquired debt of $12.8 million and foreign exchange
  activity.

o Long-term debt, excluding current maturities, totalled $1,304.4
  million at December 31, 1995, an increase of $988.5 million over
  the December 31, 1994, balance of $315.9 million. The
  acquisition of Clark resulted in $900 million of long-term debt
  relating to the purchase of Clark.  The consolidation of Clark
  added another $195.4 million of debt to the company's balance
  sheet.  Foreign currency fluctuations increased this liability
  by an additional $0.9 million.  Reductions of $109.4 million in
  long-term debt were caused by the reclassification of $103.5
  million of current maturities to loans payable and the early
  payment of an additional $5.9 million of debt during the year.

o Postemployment liabilities at December 31, 1995, totalled $832.1
  million, an increase of $313.8 million over the December 31,
  1994, balance.  Postemployment liabilities include medical and
  life insurance postretirement benefits, long-term pension and
  other noncurrent postemployment accruals. The increase in the
  liability during 1995 was almost exclusively related to the
  Clark acquisition.  Postemployment liabilities represent the
  company's noncurrent liabilities in accordance with SFAS Nos.
  87, 106 and 112. (See Notes 16 and 17 to the Consolidated
  Financial Statements for additional information.)

o The Ingersoll-Dresser Pump Company minority interest, which
  represents Dresser's interest in the IDP joint venture, totalled
  $170.8 million and $154.1 million at December 31, 1995 and 1994,
  respectively.  Earnings allocable to IDP's minority interest
  totalled $12.7 million for 1995, while increases due to
  translation adjustments totalled $2.9 million.  At December 31,
  1995, Dresser had loans payable to IDP totalling $9.7 million,
  which was shown as a reduction in IDP's minority interest.

o Other liabilities (noncurrent) at December 31, 1995, totalled
  $131.3 million, which were $94.0 million higher than the balance
  at December 31, 1994.  The net increase for 1995 was almost
  exclusively related to the Clark acquisition.  These obligations
  were not expected to be paid out in the company's next business


                                                      Page 21 of 65


  cycle.  These accruals generally covered environmental
  obligations, legal and other contractual obligations.

o At December 31, 1995, approximately 1.9 million shares of the
  company's common stock were unallocated and the $70.2 million
  paid by the LESOP for those unallocated shares was classified as
  a reduction of shareowners' equity pending allocation to
  participants. (See Note 12 to the Consolidated Financial
  Statements for additional information.)

  Other information concerning the company's financial resources,
commitments and plans is as follows:

  The average amount of short-term borrowings outstanding,
excluding current maturities of long-term debt, was $156.1 million
in 1995, compared to $141.9 million in 1994.  The weighted average
interest rate during 1995 was 8.3%, compared to 6.8% during 1994.
The maximum amounts outstanding during 1995 and 1994 were $222.0
million and $181.6 million, respectively.  The increase in the 1995
average amount of short-term borrowings outstanding was
attributable to short-term financings related to the Clark
acquisition.

  The company had $800 million in domestic short-term credit lines
at December 31, 1995, and $676 million of foreign credit available
for working capital purposes, all of which were unused at the end
of the year.  These facilities provide direct support for
commercial paper and indirect support for other financial
instruments, such as letters of credit and comfort letters.

  At December 31, 1995, the debt-to-total capital ratio was 45
percent, as compared to 22 percent at December 31, 1994.  The
significant change in the ratio at December 31, 1995, was primarily
due to the acquisition of Clark, which initially added
approximately $1.5 billion of debt to the company's balance sheet,
generating an initial debt-to-total capital ratio of 55 percent.
Since the acquisition, the company's continuing programs of
inventory reductions and spending controls to generate cash were
used to reduce the company's overall debt obligations and lower the
debt-to-total capital ratio to the 45-percent relationship at
December 31, 1995.

  In 1995, foreign currency adjustments increased shareowners'
equity by approximately $20.7 million.  The change was due to the
weakening of the U.S. dollar against other currencies in countries
where the company has significant operations and the local

                                                      Page 22 of 65



currencies are the functional currencies.  Currency fluctuations in
France, Germany, Italy, India, Japan, Singapore and Spain accounted
for over 90 percent of the change.  Inventories, accounts
receivable, net property, plant and equipment, accounts payable and
loans payable were the principal accounts affected.

  As a result of the Clark acquisition, the company is involved in
certain repurchase arrangements relating to product-distribution
and product-financing activities.  As of December 31, 1995,
repurchase arrangements relating to product financing by an
independent finance company approximated $102 million.  It is not
practicable to determine the additional amount subject to
repurchase solely under dealer-distribution agreements.  Under the
repurchase arrangements relating to product-distribution and
product-financing activities when dealer terminations do occur, a
newly selected dealer generally acquires the assets of the prior
dealer and assumes any related financial obligation.  Accordingly,
the risk of loss to the company is minimal. Historically, Clark
incurred only immaterial losses relating to these arrangements.

  In 1995, the company continued to sell an undivided fractional
ownership interest in designated pools of accounts and notes
receivable up to a maximum of $150 million.  Similar agreements
have been in effect since 1987.  These agreements expire in one-
and two-year periods based on the particular pool of receivables
sold.  The company intends to renew these agreements at their
expiration dates with either the current institution or another
financial institution using the basic terms and conditions of the
existing agreements.  At December 31, 1995 and 1994, $150 million
and $125 million, respectively, of such receivables remained
uncollected.

REVIEW OF BUSINESS SEGMENTS

Standard Machinery
Standard Machinery Segment sales were $2.9 billion, an increase of
28.3 percent over the $2.3 billion reported for 1995.  Operating
income for 1996 totalled $295.5 million, representing an increase
of 32.7 percent over last year's total of $222.6 million. Effective
June 1, 1995, this segment now includes all of the operations of
Clark, except for Clark-Hurth.  Excluding the sales from the Clark
operations, 1996 sales were $1.8 billion, or $84.5 million higher
than 1995's level.  Operating income, excluding the Clark
operations, was $137.6 million (or 12.4 percent below 1995's
results).  This amount included $28 million of charges associated


                                                      Page 23 of 65



with the European realignment and exit or abandonment of selected
European product lines.

  The Construction and Mining Group's sales for 1996, excluding the
Blaw-Knox unit acquired from Clark, were up slightly over last
year's level due to stronger domestic markets.  The group's
operating income and operating income margins were down from 1995's
levels because the majority of the realignment and product exit
costs for 1996 applied to this group.  Sales for the Air Compressor
Group were approximately seven percent higher than 1995's level
based on continued strong demand for its products, domestically and
internationally.  The group reported improvement in operating
income for the year.  The operations of the Clark units, which are
Melroe Company, Club Car, and Blaw-Knox,  generated over $1.1
billion in sales and produced over $150 million of operating income
for the first full year of operation under the company's ownership.

Engineered Equipment
Engineered Equipment Segment sales for 1996 totalled $1.3 billion,
or 7.5 percent above 1995's level.  Operating income was $108.5
million, which was more than double the 1995 total of $49.5
million.  Operating income included noncomparable gains of
approximately $55 million from the sales of the Process Systems
Group during 1996.  This segment includes the results of Clark-
Hurth Group (sold February 1997).In addition, it includes the pre-
sale activities of the Pulp Machinery Division (sold during the
first quarter of 1996) and the Process Systems units (sold
effective September 30, 1996).  These divisions were collectively
known as the Process Systems Group.  Clark-Hurth's sales for 1996
approximated $350 million, which generated a modest amount of
operating income.  Clark-Hurth's results for the year were
adversely affected by the depressed German economy and the
company's decision to sell this unit.

  IDP's sales for 1996 reflected an eight-percent improvement over
the prior year's level.  However, operating income, even after
considering the closing costs for a steel foundry, was up
significantly over 1995's results.

Bearings, Locks and Tools
In 1996, the Bearings, Locks and Tools Segment reported sales of
$2.5 billion, a 10.7-percent increase over the prior year.
Operating income totalled $323.3 million, an increase of more than
$54 million over the $269.1 million reported for 1995.


                                                      Page 24 of 65



  Bearings and Components Group sales for 1996 exceeded the prior
year's level by more than five percent.  A strong domestic
automotive industry and continued benefits from cost-containment
programs generated improved operating income and operating income
margins for this group in 1996.

  Architectural Hardware Group sales were significantly higher than
1995's level with approximately two-thirds of the increase
attributed to the January 31, 1996, acquisition of Steelcraft.  The
group's operating income for the year was above 1995's level by
approximately 30 percent, with one-third of the increase attributed
to Steelcraft.

  The Production Equipment Group sales in 1996 reflected a five-
percent improvement over the amount reported for the prior year.
However, operating income improved over 25 percent above 1995's
level due to a stronger domestic economy, improved markets in the
European-served area and the benefits derived from cost-containment
and productivity-improvement programs.


                                                      Page 25 of 65



Consolidated Statement of Income
In millions except per share amounts
For the years ended December 31     1996         1995         1994
Net sales                       $6,702.9     $5,729.0     $4,507.5
Cost of goods sold               5,029.9      4,310.2      3,377.1
Administrative, selling and
  service engineering
  expenses                         989.5        921.8        753.4
Operating income                   683.5        497.0        377.0
Interest expense                  (119.9)       (86.6)       (43.8)
Other income (expense), net         (1.0)         9.4        (14.7)
Dresser-Rand income                 23.0         22.0         24.6
Ingersoll-Dresser Pump
  minority interest                (17.3)       (12.7)       (13.2)
Earnings before income taxes       568.3        429.1        329.9
Provision for income taxes         210.3        158.8        118.8
Net earnings                    $  358.0     $  270.3     $  211.1
Net earnings per share             $3.33        $2.55        $2.00
See accompanying Notes to Consolidated Financial Statements.

                                                    Page 26 of 65



Consolidated Balance Sheet
In millions except share amounts
December 31                                     1996         1995
Assets
Current assets:
Cash and cash equivalents                   $  184.1     $  137.3
Marketable securities                            8.0          9.3
Accounts and notes receivable, less
  allowance for doubtful accounts of
  $34.3 in 1996 and $38.3 in 1995            1,066.2      1,109.9
Inventories                                    775.1        912.6
Prepaid expenses                                74.1         58.0
Assets held for sale                           265.7           --
Deferred income taxes                          162.4        118.5
                                             2,535.6      2,345.6
Investments and advances:
Dresser-Rand Company                           152.6         93.9
Partially-owned equity companies               223.6        223.3
                                               376.2        317.2
Property, plant and equipment, at cost:
Land and buildings                             637.9        682.9
Machinery and equipment                      1,465.8      1,522.3
                                             2,103.7      2,205.2
Less-accumulated depreciation                  958.3        926.8
                                             1,145.4      1,278.4
Intangible assets, net                       1,178.0      1,253.6
Deferred income taxes                          162.6        134.8
Other assets                                   223.8        233.7
                                            $5,621.6     $5,563.3


                                                    Page 27 of 65



Consolidated Balance Sheet (continued)
In millions except share amounts
December 31                                     1996         1995
Liabilities and Equity
Current liabilities:
Accounts payable and accruals               $1,095.4     $1,129.8
Loans payable                                  162.3        155.4
Customers' advance payments                     19.1         17.7
Income taxes                                    13.4         26.3
                                             1,290.2      1,329.2
Long-term debt                               1,163.8      1,304.4
Postemployment liabilities                     814.7        832.1
Ingersoll-Dresser Pump Company
  minority interest                            113.4        170.8
Other liabilities                              148.7        131.3
Shareowners' equity:
Common stock, $2 par value, authorized
  400,000,000 shares; issued:
  1996-110,276,506; 1995-109,704,883           220.6        219.4
Capital in excess of par value                 143.5        121.6
Earnings retained for use in the business    1,869.6      1,595.5
                                             2,233.7      1,936.5
Less: Unallocated LESOP shares, at cost         55.6         70.2
      Treasury stock, at cost                   11.5         11.5
      Foreign currency equity adjustment        75.8         59.3
Shareowners' equity                          2,090.8      1,795.5
                                            $5,621.6     $5,563.3
See accompanying Notes to Consolidated Financial Statements.


                                                              Page 28 of 65



Consolidated Statement of Shareowners' Equity

In millions except share amount
December 31                                  1996         1995        1994

Common stock, $2 par value:
  Balance at beginning of year           $  219.4     $  218.3    $  217.9
  Exercise of stock options                   1.1          1.0          .2
  Issuance of shares under
    stock plans                                .1           .1          .2
  Balance at end of year                    220.6        219.4       218.3
Capital in excess of par value:
  Balance at beginning of year              121.6         42.4        34.9
  Exercise of stock options
    including tax benefits                   17.5         14.6         3.3
  Issuance of shares under
    stock plans                               1.8          2.0         4.2
  Sale of treasury shares to LESOP             --         62.7          --
  Allocation of LESOP shares to
    employees                                 2.6          (.1)         --
  Balance at end of year                    143.5        121.6        42.4
Earnings retained for use
  in the business:
  Balance at beginning of year            1,595.5      1,403.7     1,268.5
  Net earnings                              358.0        270.3       211.1
  Cash dividends                            (83.9)       (78.5)      (75.9)
  Balance at end of year                  1,869.6      1,595.5     1,403.7
Unallocated leveraged employee
  stock ownership plan:
  Balance at beginning of year              (70.2)          --          --
  Purchase of treasury shares                  --        (73.1)         --
  Allocation of shares to employees          14.6          2.9          --
  Balance at end of year                    (55.6)       (70.2)         --
Treasury stock-at cost:
  Common stock, $2 par value:
  Balance at beginning of year              (11.5)       (53.1)      (53.1)
  Sale of treasury shares to LESOP             --         41.6          --
  Balance at end of year                    (11.5)       (11.5)      (53.1)
Foreign currency
  equity adjustment:
  Balance at beginning of year              (59.3)       (80.0)     (118.4)
  Adjustments due to:
    Translation changes                     (10.2)        20.7        38.4
    Dispositions                             (6.3)          --          --
  Balance at end of year                    (75.8)       (59.3)      (80.0)


                                                              Page 29 of 65



Consolidated Statement of Shareowners' Equity (continued)

In millions except share amount
December 31                                  1996         1995        1994

Total shareowners' equity                $2,090.8     $1,795.5    $1,531.3
Shares of Capital Stock
Common stock, $2 par value:
  Balance at beginning of year        109,704,883  109,168,872 108,939,462
  Exercise of stock options               519,550      474,250     112,850
  Issuance of shares under
    stock plans                            52,073       61,761     116,560
  Balance at end of year              110,276,506  109,704,883 109,168,872
Unallocated leveraged employee
  stock ownership plan:
  Common stock, $2 par value:
  Balance at beginning of year          1,937,198           --          --
  Purchase of treasury shares                  --    2,878,008          --
  LESOP shares allocated to
    employees                            (403,194)    (940,810)         --
  Balance at end of year                1,534,004    1,937,198          --
Treasury stock:
  Common stock, $2 par value:
  Balance at beginning of year            794,724    3,672,732   3,672,732
  Sale of shares to LESOP                      --   (2,878,008)         --
  Balance at end of year                  794,724      794,724   3,672,732

See accompanying Notes to Consolidated Financial Statements.


                                                              Page 30 of 65



Consolidated Statement of Cash Flows
In millions
For the years ended December 31              1996         1995       1994
Cash flows from operating activities:
 Net earnings                           $   358.0    $   270.3    $ 211.1
 Adjustments to arrive at net cash
   provided by operating activities:
   Depreciation and amortization            202.6        179.4      132.5
   (Gain)/loss on sale of businesses        (58.0)         7.1         --
   Gain on sale of property, plant
     and equipment                          (10.3)        (3.6)       (.1)
   Minority interests                        20.4         14.0       13.8
   Equity earnings/losses,
     net of dividends                       (35.6)       (41.5)     (36.4)
   Deferred income taxes                     (4.5)        15.1       14.2
   Other noncash items                       12.3          1.4      (10.5)
   Restructure of operations                 42.4           --         --
 Changes in assets and liabilities
   (Increase) decrease in:
     Accounts and notes receivable           (1.0)        50.9     (111.8)
     Inventories                             (5.3)       (15.2)      81.6
     Other current and noncurrent
       assets                               (36.8)       (33.1)     (14.6)
   (Decrease) increase in:
     Accounts payable and accruals          (17.8)       (37.9)      41.5
     Other current and noncurrent
        liabilities                         (80.7)        (3.3)     (19.5)
   Net cash provided by operating
      activities                            385.7        403.6      301.8

Cash flows from investing activities:
 Capital expenditures                      (195.0)      (211.7)    (158.6)
 Proceeds from sales of property,
   plant and equipment                       33.3         26.5        7.3
 Proceeds from business dispositions        183.8           --        2.2
 Acquisitions, net of cash*                (133.5)    (1,136.5)     (37.8)
 (Increase) decrease in marketable
   securities                                (3.6)        (4.6)       2.8
 Cash (invested in) or advances (to)
    from equity companies                   (34.9)        18.4       42.4
    Net cash used in investing
      activities                           (149.9)    (1,307.9)    (141.7)


                                                              Page 31 of 65



Consolidated Statement of Cash Flows (Continued)
In millions
For the years ended December 31               1996         1995       1994

Cash flows from financing activities:
 Decrease in short-term borrowings     $    (24.3)   $   (81.5)   $ (31.4)
 Debt issuance costs                           --         (6.0)        --
 Proceeds from long-term debt                  .1        901.7        2.3
  Payments of long-term debt               (104.7)       (23.7)     (85.7)
  Net change in debt                       (128.9)       790.5     (114.8)
 Proceeds from exercise of stock
   options and treasury stock sales          16.3        118.2        3.0
  Dividends paid                            (83.9)       (78.5)     (75.9)
   Net cash (used in) provided by
      financing activities                 (196.5)       830.2     (187.7)
Effect of exchange rate changes on cash
  and cash equivalents                        7.5          4.4        6.6
 Net increase (decrease) in cash
   and cash equivalents                      46.8        (69.7)     (21.0)
 Cash and cash equivalents-
    beginning of year                       137.3        207.0      228.0
Cash and cash equivalents-end of year   $   184.1    $   137.3    $ 207.0

*Acquisitions:
 Working capital, other than cash       $   (22.1)   $  (161.4)   $  15.9
 Property, plant and equipment              (33.1)      (292.0)     (39.8)
 Intangibles and other assets               (81.7)    (1,330.0)     (32.6)
 Long-term debt and other liabilities         3.4        646.9       18.7
   Net cash used to acquire businesses  $  (133.5)   $(1,136.5)   $ (37.8)

Cash paid during the year for:
 Interest, net of amounts capitalized   $   120.2    $    72.1    $  47.3
  Income taxes                              262.3        120.1      119.8
See accompanying Notes to Consolidated Financial Statements.



                                                           Page 32 of 65



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS




NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Ingersoll-Rand is a multinational manufacturer of primarily
nonelectrical industrial machinery and equipment.  The company's
principal lines of business are air compressors, architectural
hardware products, automotive parts and components, construction
equipment, golf cars and utility vehicles, pumps and tools. The
company's broad product line has applications in numerous
industries including automotive, construction, mining, utilities,
housing, recreational, as well as the general industrial market.
A summary of significant accounting policies used in the
preparation of the accompanying financial statements follows:

Principles of Consolidation:  The consolidated financial
statements include the accounts of all wholly-owned and
majority-owned subsidiaries.  Intercompany transactions and
balances have been eliminated.  Partially-owned equity companies
are accounted for under the equity method.  In conformity with
generally accepted accounting principles, management has used
estimates and assumptions that affect the reported amounts of
assets, liabilities, revenues and expenses, and the disclosure of
contingent assets and liabilities.  Actual results could differ
from those estimates.

Cash Equivalents:  The company considers all highly liquid
investments, consisting primarily of time deposits and commercial
paper with maturities of three months or less when purchased, to
be cash equivalents.  Cash equivalents were $20.7 million and
$40.0 million at December 31, 1996 and 1995, respectively.

Inventories:  Inventories are generally stated at cost, which is
not in excess of market.  Domestic manufactured inventories of
standard products are valued on the last-in, first-out (LIFO)
method and all other inventories are valued using the first-in,
first-out (FIFO) method.

Property and Depreciation:  The company principally uses
accelerated depreciation methods for assets placed in service
prior to December 31, 1994, and the straight-line method for
assets acquired subsequent to that date.
                                                                        
                                                           Page 33 of 65



Intangible Assets:  Intangible assets primarily represent the
excess of the purchase price of acquisitions over the fair value
of the net assets acquired.  Such excess costs are being
amortized on a straight-line basis over various periods not
exceeding 40 years.  Goodwill at December 31, 1996 and 1995, was
$1.1 billion and $1.2 billion, respectively.  The carrying value
of goodwill is evaluated periodically in relation to the
operating performance and future undiscounted net cash flows of
the related business.  Intangible assets also represent costs
allocated to patents, tradenames and other specifically
identifiable assets arising from business acquisitions.  These
assets are amortized on a straight-line basis over their
estimated useful lives.  Accumulated amortization at December 31,
1996 and 1995, was $82.3 million and $47.0 million, respectively.
Amortization of intangible assets was $38.0 million, $25.3
million and $6.8 million in 1996, 1995 and 1994, respectively.

Income Taxes:  Deferred taxes are provided on temporary
differences between assets and liabilities for financial
reporting and tax purposes as measured by enacted tax rates
expected to apply when temporary differences are settled or
realized.

Environmental Costs:  Environmental expenditures relating to
current operations are expensed or capitalized as appropriate.
Expenditures relating to existing conditions caused by past
operations, which do not contribute to current or future
revenues, are expensed.  Costs to prepare environmental site
evaluations and feasibility studies are accrued when the company
commits to perform them.  Liabilities for remediation costs are
recorded when they are probable and reasonably estimable,
generally no later than the completion of feasibility studies or
the company's commitment to a plan of action.  The assessment of
this liability is calculated based on existing technology, does
not reflect any offset for possible recoveries from insurance
companies and is not discounted.  There were no material changes
in the liability for all periods presented.

Revenue Recognition:  Sales of products are recorded for
financial reporting purposes generally when the products are
shipped.

Research, Engineering and Development Costs:  Research and
development expenditures, including engineering costs, are

                                                           Page 34 of 65



expensed when incurred and amounted to $209.3 million in 1996,
$190.4 million in 1995 and $154.6 million in 1994.

Foreign Currency:  Assets and liabilities of foreign entities,
where the local currency is the functional currency, have been
translated at year-end exchange rates, and income and expenses
have been translated using weighted average-for-the-year exchange
rates.  Adjustments resulting from translation have been recorded
in shareowners' equity and are included in net earnings only upon
sale or liquidation of the underlying foreign investment.
  For foreign entities where the U.S. dollar is the functional
currency, including those operating in highly inflationary
economies, inventory and property balances and related income
statement accounts have been translated using historical exchange
rates, and resulting gains and losses have been credited or
charged to net earnings.
  Foreign currency transactions and translations recorded in the
income statement decreased net earnings by $3.5 million, $3.9
million and $5.1 million in 1996, 1995 and 1994, respectively.
Shareowners' equity was decreased in 1996 by $16.5 million,
increased in 1995 and 1994 by $20.7 million and $38.4 million,
respectively, due to foreign currency equity adjustments related
to translation and dispositions.
  The company hedges certain foreign currency transactions and
firm foreign currency commitments by entering into forward
exchange contracts (forward contracts).  Gains and losses
associated with currency rate changes on forward contracts
hedging foreign currency transactions are recorded currently in
income.  Gains and losses on forward contracts hedging firm
foreign currency commitments are deferred off-balance sheet and
included as a component of the related transaction, when
recorded; however, a loss is not deferred if deferral would lead
to the recognition of a loss in future periods.
  Cash flows resulting from forward contracts accounted for as
hedges of identifiable transactions or events are classified in
the same category as the cash flows from the items being hedged.

Earnings Per Share:  Net earnings per share of common stock are
earnings divided by the average number of common shares
outstanding during the year.  The effect of common stock
equivalents on earnings per share was not material.

Accounting Changes:  The company principally uses accelerated
depreciation methods for both tax and financial reporting
purposes for assets placed in service prior to December 31, 1994.


                                                           Page 35 of 65



The company changed to the straight-line method for financial
reporting purposes for assets acquired on or after January 1,
1995, while continuing to use accelerated depreciation for tax
purposes.  The straight-line method is the predominant method
used throughout the industries in which the company operates and
its adoption increases the comparability of the company's results
with those of its competitors.  The effect of the change on the
year ended December 31, 1995, increased net earnings by
approximately $6.8 million ($0.06 per share).


New Accounting Standards:  In March 1995, the Financial
Accounting Standards Board (FASB) issued Statement of Financial
Accounting Standards (SFAS) No. 121 "Accounting for Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of,"
which became effective on January 1, 1996.  The adoption of SFAS
No. 121 did not have a material impact on the company's
consolidated financial statements.  Also in 1995, the FASB issued
SFAS No. 123, "Accounting for Stock-Based Compensation," which
requires companies to measure employee stock compensation plans
based on the fair value method of accounting or to continue to
apply APB No. 25, "Accounting for Stock Issued to Employees," and
provide pro forma footnote disclosures under the fair value
method in SFAS No. 123.  The company will continue to apply the
principles of APB No. 25 and has provided pro forma fair value
disclosures in Note 13.  In June 1996, the FASB issued Statement
No. 125 "Accounting for Transfers and Servicing of Financial
Assets and Extinguishments of Liabilities."  Adoption of this
statement as of January 1, 1997, will have no material impact on
the financial statements.


NOTE 2 - ACQUISITIONS OF BUSINESSES:  On January 31, 1996, the
company acquired for $95.4 million in cash and the assumption of
certain liabilities, the Steelcraft Division of MascoTech, Inc.
Steelcraft manufactures a wide range of cold-rolled and
galvanized steel doors for use primarily in nonresidential
construction.  On August 27, 1996, the company acquired for $34.3
million in cash and the assumption of certain liabilities,
substantially all of the assets of Zimmerman International Corp.
(Zimmerman).  Zimmerman manufactures equipment and systems that
assist in handling or lifting tools, components and materials for
a variety of industrial operations.

  In May 1995, the company acquired Clark Equipment Company for
approximately $1.5 billion.  Clark's business was the design,


                                                           Page 36 of 65



manufacture and sale of compact construction machinery, asphalt
paving equipment, axles and transmissions for off-highway
equipment, and golf cars and utility vehicles.  Included among
the assets acquired by the company (indirectly through the
acquisition of the shares of Clark) were the Melroe Company, Blaw-
Knox Construction Equipment Company, Clark-Hurth Components and
Club Car, Inc.
  The results of Clark's operations have been included in the
consolidated financial statements from the acquisition date.  The
following unaudited pro forma consolidated results of operations
for the year ended December 31, 1995, reflect the acquisition as
though it occurred at the beginning of the period after
adjustments for the impact of interest on acquisition debt,
depreciation and amortization of assets, including goodwill, to
reflect the purchase price allocation, and the elimination of
Clark's income from discontinued operations related to its
disposition of its investments in VME Group N.V. and Clark
Automotive Products Corporation (in millions except per share
amounts):

For the year ended December 31, 1995                 (Unaudited)
  Sales                                                $6,346.1
  Net earnings                                            283.5
  Earnings per share                                      $2.67

  It should be noted that the company's actual results for 1995
(and the above pro forma amounts) were adversely affected by the
loss on the sale of the company's domestic paving business, which
was a preacquisition requirement to the Clark purchase.  The
above pro forma results are not necessarily indicative of what
the actual results would have been had the acquisition occurred
at the beginning of the period.  Further, the pro forma results
are not intended to be a projection of future results of the
combined companies.

  During 1994, the company made several acquisitions.  In April
1994, the company acquired full ownership of the ball bearing
joint venture with GMN Georg Mueller of America, Inc. for $4.9
million in cash.  The company previously owned 50 percent of the
joint venture.  The company acquired Montabert S.A., a French
manufacturer of hydraulic rock-breaking and drilling equipment on
June 30, 1994, for approximately $18.4 million, plus assumption
of liabilities.  In August 1994, the company acquired the Ecoair
air compressor product line from MAN Gutehoffnungshutte AG (MAN
GHH) for $10.6 million in cash.  The company also entered into a


                                                           Page 37 of 65



50/50 joint venture, GHH-RAND Schraubenkompressoren GmbH & Co. KG
(GHH-RAND) with MAN GHH to manufacture airends.  The company
invested approximately $17.6 million in GHH-RAND.  The company
also had several additional purchases of operations during the
year totalling $3.9 million in cash.
  These transactions have been accounted for as purchases and
accordingly, each purchase price was allocated to the acquired
assets and assumed liabilities based on their estimated fair
values.  The company has classified as intangible assets the
costs in excess of the fair value of the net assets of companies
acquired.  The results of all acquired operations have been
included in the consolidated financial statements from their
respective acquisition dates.


NOTE 3 - DISPOSITIONS AND RESTRUCTURE OF OPERATIONS:  In December
1996, the company announced that it would sell its Clark-Hurth
Group to Dana Corporation.  The sale price approximates the net
book value of the assets. At December 31, 1996, the net assets
subject to sale totalled $265.7 million and have been classified
as current assets on the Consolidated Balance Sheet. Clark-Hurth
Components has been reported as part of the Engineered Equipment
Segment.
  In August 1996, the company agreed to sell the remaining assets
of the Process Systems Group to Gencor Industries, Inc., subject
to certain closing conditions.  The sale was completed during the
fourth quarter of 1996 at a price of approximately $58 million in
cash for a pretax gain of approximately $10 million.  The Process
Systems Group has been reported as part of the Engineered
Equipment Segment.
  On March 26, 1996, the company sold the assets of the Pulp
Machinery Division (the largest unit in the Process Systems
Group) for approximately $122.3 million to Beloit Corporation, a
subsidiary of Harnischfeger Industries, Inc., for a pretax gain
of $45 million.  In addition, in March 1996, the company sold an
investment for a gain of $4.8 million.
  In the first and fourth quarters of 1996, the company accrued
for the realignment of its foreign operations, principally in
Europe.  These accruals were primarily for severance payments and
pension benefits associated with work force reductions.  Also in
the first quarter, accruals were established for the exit or
abandonment of selected European product lines and the closing of
a steel foundry.  These accruals totalled $42.4 million and were
charged to operating income.
                                                                        
                                                           Page 38 of 65



  On May 15, 1995, the company sold its domestic paving equipment
business to Champion Road Machinery Limited of Canada.  The sale
was a preacquisition requirement, in order to satisfy concerns of
the United States Justice Department, prior to the Clark
acquisition.  The company incurred a $7.1 million pretax loss
associated with this sale.
  In 1994, the assets of the IDP Australian operations were sold
in return for shares of the purchaser.  The company and Dresser
Industries sold IRI International Corporation, a 50/50 joint
venture that is a manufacturer of mobile drilling rigs, to a
third party.


NOTE 4 - INVENTORIES:  At December 31, inventories were as
follows:

In millions                                  1996           1995
Raw materials and supplies                 $156.2       $  211.8
Work-in-process                             238.7          326.1
Finished goods                              538.1          538.5
                                            933.0        1,076.4
Less-LIFO reserve                           157.9          163.8
Total                                      $775.1       $  912.6

  Work-in-process inventories are stated after deducting customer
progress payments of $24.9 million in 1996 and $38.8 million in
1995.  At December 31, 1996 and 1995, LIFO inventories comprised
approximately 43 percent and 41 percent, respectively, of
consolidated inventories.
  During the periods presented, certain inventory quantities were
reduced, resulting in partial liquidations of LIFO layers.  This
decreased cost of goods sold by $4.8 million in 1996, $3.4
million in 1995 and $11.6 million in 1994.  These liquidations
increased net earnings in 1996, 1995 and 1994 by approximately
$2.9 million ($0.03 per share), $2.1 million ($0.02 per share)
and $7.1 million ($0.07 per share), respectively.


NOTE 5 - INVESTMENTS IN PARTIALLY-OWNED EQUITY COMPANIES:  The
company has numerous investments, ranging from 20 percent to 50
percent, in companies that operate in similar lines of business.
  The company's investments in and amounts due from partially-
owned equity companies amounted to $205.3 million and $18.3
million, respectively, at December 31, 1996, and $202.9 million
and $20.4 million, respectively, at December 31, 1995.


                                                           Page 39 of 65



  The company's equity in the net earnings of its partially-owned
equity companies was $19.4 million, $26.2 million and $15.6
million in 1996, 1995 and 1994, respectively.
  The company received dividends based on its equity interests in
these companies of $6.8 million, $6.7 million and $3.8 million in
1996, 1995 and 1994, respectively.
  Summarized financial information for these partially-owned
equity companies at December 31, and for the years presented was:

In millions                                  1996           1995
Current assets                           $ 463.9          $467.6
Property, plant and
  equipment, net                           279.4           284.9
Other assets                                29.7            30.2
Total assets                             $ 773.0          $782.7
Current liabilities                      $ 243.7          $272.0
Long-term debt                              78.2            56.5
Other liabilities                           37.0            47.4
Total shareowners' equity                  414.1           406.8
Total liabilities
  and equity                             $ 773.0          $782.7

In millions                   1996           1995           1994
Net sales                  $ 890.5        $ 872.5         $701.0
Gross profit                 165.0          180.2          142.0
Net earnings                  42.6           55.8           33.7


NOTE 6 - DRESSER-RAND COMPANY:  Dresser-Rand Company is a
partnership between Dresser Industries, Inc. (51 percent), and
the company (49 percent) comprising the worldwide reciprocating
compressor and turbomachinery businesses of the two companies.
The company's investment in Dresser-Rand is accounted for using
the equity method of accounting.


                                                           Page 40 of 65



  Summarized financial information for Dresser-Rand at December
31, and for the years presented was:

In millions                                  1996           1995
Current assets                           $  496.5       $  457.2
Property, plant and
  equipment, net                            262.5          239.3
Other assets                                 49.8           27.2
Total assets                                808.8          723.7
Deduct:
Current liabilities                         306.4          341.4
Other liabilities                           204.4          200.8
                                            510.8          542.2
Net partners' equity
  and advances                           $  298.0       $  181.5

In millions                    1996          1995           1994
Net sales                  $1,179.9      $1,081.4       $1,219.4
Gross profit                  226.7         212.5          203.1
Net earnings                   46.9          44.9           50.2

  The company's investment in Dresser-Rand was $149.4 million and
$182.8 million at December 31, 1996 and 1995, respectively.
Dresser-Rand owed the company $3.2 million at December 31, 1996,
and the company owed Dresser-Rand $88.9 million at December 31,
1995.  During 1996, Dresser-Rand approved and distributed $115.7
million of capital to its partners of which $56.7 million was
distributed to the company.


NOTE 7 - ACCOUNTS PAYABLE AND ACCRUALS:  Accounts payable and
accruals at December 31, were:

In millions                                  1996           1995
Accounts payable                         $  295.8       $  337.5
Accrued:
  Payrolls and benefits                     184.0          177.4
  Taxes                                      40.4           59.5
  Insurance and claims                      104.1          110.9
  Postemployment benefits                    99.4           98.5
  Warranties                                 45.0           52.3
  Interest                                   33.6           33.6
Other accruals                              293.1          260.1
                                         $1,095.4       $1,129.8


                                                           Page 41 of 65



NOTE 8 - LONG-TERM DEBT AND CREDIT FACILITIES:
At December 31, long-term debt consisted of:

In millions                                  1996           1995
6 7/8% Notes Due 2003                   $  100.0        $  100.0
9% Debentures Due 2021                     125.0           125.0
7.20% Debentures Due 2025                  150.0           150.0
6.48% Redeemable Debentures Due 2025       150.0           150.0
Medium Term Notes Due 1998-2004, at
  an average rate of 6.63%                 467.5           600.0
9.75% Clark Debentures Due 2001            100.0           100.0
Clark Medium Term Notes Due 1998-2023,
  at an average rate of 7.89%               60.2            60.2
Other domestic and foreign
  loans and notes, at end-
  of-year average interest
  rates of 5.53% in 1996
  and 6.53% in 1995, maturing
  in various amounts to 2025                11.1            19.2
                                        $1,163.8        $1,304.4

  Debt retirements for the next five years are as follows:
$133.2 million in 1997, $144.8 million in 1998, $100.9 million in
1999, $101.3 million in 2000 and $101.2 million in 2001.
  In June 1995, the company issued $150.0 million of debentures
at 7.20% per annum, which are not redeemable prior to maturity in
2025, but require annual installments of $7.5 million into a
sinking fund beginning June 1, 2006, and $150.0 million of
debentures at 6.48% per annum due in 2025, which may be repaid at
the option of the holder on June 1, 2005.  During July and August
1995, the company issued medium-term notes totalling $600.0
million at an average rate of 6.57% with maturities ranging from
1997 to 2004.  The proceeds from these financings were used to
refinance short-term borrowings related to the acquisition of
Clark.
  At December 31, 1996, the company had two five-year committed
revolving credit lines totalling $800.2 million, both of which
were unused.  These lines provide support for commercial paper
and indirectly provide support for other financial instruments,
such as letters of credit and comfort letters, as required in the
normal course of business.  The company compensates banks for
these lines with fees equal to .08% per annum.  Available foreign
lines of credit were $539.7 million, of which $491.5 million were
unused at December 31, 1996.  No major cash balances were subject
to withdrawal restrictions.  At December 31, 1996, the average


                                                           Page 42 of 65



rate of interest for loans payable, excluding the current portion
of long-term debt, was 10.7% and related primarily to foreign
loans totalling $28.3 million.
  Capitalized interest on construction and other capital projects
amounted to $4.6 million, $3.5 million and $3.2 million in 1996,
1995 and 1994, respectively.  Interest income, included in other
income (expense), net, was $10.3 million, $11.5 million and $11.5
million in 1996, 1995 and 1994, respectively.


NOTE 9 - FINANCIAL INSTRUMENTS:  The company, as a large
multinational company, maintains significant operations in
foreign countries.  As a result of these global activities, the
company is exposed to changes in foreign currency exchange rates,
which affect the results of operations and financial condition.
The company manages exposure to changes in foreign currency
exchange rates through its normal operating and financing
activities, as well as through the use of financial instruments.
Generally, the only financial instruments the company utilizes
are forward exchange contracts.
  The purpose of the company's hedging activities is to mitigate
the impact of changes in foreign currency exchange rates.  The
company attempts to hedge transaction exposures through natural
offsets. To the extent this is not practicable, major exposure
areas which are considered for hedging include, foreign currency
denominated receivables and payables, intercompany loans, firm
committed transactions, anticipated sales and purchases, and
dividends relating to foreign subsidiaries.  The following table
summarizes by major currency the contractual amounts of the
company's forward contracts in U.S. dollars.  Foreign currency
amounts are translated at year-end rates at the respective
reporting date.  The "buy" amounts represent the U.S. equivalent
of commitments to purchase foreign currencies, and the "sell"
amounts represent the U.S. equivalent of commitments to sell
foreign currencies.  Some of the forward contracts involve the
exchange of two foreign currencies according to local needs in
foreign subsidiaries.


                                                           Page 43 of 65



  At December 31, the contractual amounts were:

In millions                      1996                 1995
                             Buy      Sell        Buy      Sell
Australian dollars        $  9.7    $  1.8      $  -     $  1.4
Austrian schilling           4.3        -         9.6       1.6
Belgian francs               4.4        .5        3.2       8.3
Canadian dollars            15.2       5.5       10.4       6.6
Deutsche marks              10.9     131.3       10.2     135.6
Dutch guilders                -        2.1       20.2       7.8
French francs                4.8      14.1       24.1      38.5
Italian lira                31.7       4.5       41.1       6.9
Japanese yen                13.8       4.4       19.0       2.0
Pounds sterling             54.0     155.5       25.1     128.8
South African rand           1.5      14.8        3.5      12.8
Other                       10.2       5.4        6.5       6.2
  Total                   $160.5    $339.9     $172.9    $356.5

  Forward contracts for normal operating activities have
maturities of one to 12 months; and forward contracts for
intercompany loans have maturities that range from one month to
36 months.
  The company's forward contracts do not subject the company to
risk due to foreign exchange rate movement, since gains and
losses on these contracts generally offset losses and gains on
the assets, liabilities or other transactions being hedged.
  The counterparties to the company's forward contracts consist
of a number of major international financial institutions.  The
credit ratings and concentration of risk of these financial
institutions are monitored on a continuing basis and present no
significant credit risk to the company.
  The carrying value of cash and cash equivalents, marketable
securities (classified as held to maturity), accounts receivable,
short-term borrowings and accounts payable are a reasonable
estimate of their fair value due to the short-term nature of
these instruments.  The following table summarizes the estimated
fair value of the company's remaining financial instruments at
December 31:

                                                           Page 44 of 65



In millions                                  1996           1995
Long-term debt:
Carrying value                           $1,163.8       $1,304.4
Estimated fair value                      1,194.8        1,410.6

Forward contracts:
Contract (notional) amounts:
  Buy contracts                          $  160.5       $  172.9
  Sell contracts                            339.9          356.5
Fair (market) values:
  Buy contracts                             161.0          172.9
  Sell contracts                            349.5          356.8

  Fair value of long-term debt was determined by reference to the
December 31, 1996 and 1995, market values of comparably rated
debt instruments.  Fair values of forward contracts are based on
dealer quotes at the respective reporting dates.


NOTE 10 - COMMITMENTS AND CONTINGENCIES:  The company is involved
in various litigations, claims and administrative proceedings,
including environmental matters, arising in the normal course of
business.  In assessing its potential environmental liability,
the company bases its estimates on current technologies and does
not discount its liability or assume any insurance recoveries.
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, management believes that recovery or
liability with respect to these matters would not have a material
effect on the financial condition, results of operations,
liquidity or cash flows of the company for any year.
  In 1996, the company continued to sell an undivided interest in
designated pools of accounts and notes receivable up to a maximum
of $150 million.  Similar agreements have been in effect since
1987.  During 1996, 1995 and 1994, such sales amounted to $593.7
million, $533.7 million and $487.8 million, respectively. At
December 31, 1996 and 1995, $150 million of such sold receivables
remained uncollected.  The undivided interest in the designated
pool of receivables was sold with limited recourse.  These
agreements expire in one- and two-year periods based on the
particular pool of receivables sold.  The company intends to
renew these agreements at their expiration dates with either the
current financial institution or another financial institution,


                                                           Page 45 of 65



using the basic terms and conditions of the existing agreements.
The company has retained collection and administrative
responsibilities as agent for the purchaser for receivables sold.
  Receivables, excluding the designated pool of accounts and
notes receivable, sold during 1996, 1995 and 1994 with recourse,
amounted to $147.4 million, $175.9 million and $64.6 million,
respectively. At December 31, 1996 and 1995, $36.2 million and
$35.3 million, respectively, of such receivables sold remained
uncollected.
  As of December 31, 1996, the company had no significant
concentrations of credit risk in trade receivables due to the
large number of customers which comprised its receivables base
and their dispersion across different industries and countries.
  In the normal course of business, the company has issued
several direct and indirect guarantees, including performance
letters of credit, totalling approximately $138.4 million at
December 31, 1996.  Management believes these guarantees will not
adversely affect the consolidated financial statements.
  Additionally, the company has entered into certain repurchase
arrangements relating to product-distribution and product-
financing activities involving the company's continuing
operations.  As of December 31, 1996, repurchase arrangements
relating to product financing by an independent finance company
approximate $106 million.  It is not practicable to determine the
additional amount subject to repurchase solely under dealer-
distribution agreements.  The total exposure to loss on these
repurchase arrangements is subject to a $1 million ultimate net
loss provision.  The company has also guaranteed the residual
value of leased product in the aggregate amount of $24.9 million.
Upon the termination of a dealer, a newly selected dealer
generally acquires the assets of the prior dealer and assumes any
related financial obligation.  Accordingly, the risk of loss to
the company is minimal, and historically, only immaterial losses
have been incurred relating to these arrangements.
  Clark sold Clark Material Handling Company (CMHC), its forklift
truck business, to Terex Corporation (Terex) in 1992.  In 1996,
Terex sold CMHC to CMHC Acquisition Corp. (CMHCAC).   Terex and
CMHCAC assumed substantially all of the obligations for existing
and future product liability claims involving CMHC products.  In
the event that Terex and CMHCAC fail to perform or are unable to
discharge any of the assumed obligations, the company could be
required to discharge such obligations.  While the aggregate
losses associated with these obligations could be significant,
the company does not believe they would materially affect the
financial condition, the results of operations,


                                                           Page 46 of 65



liquidity or cash flows of the company in any year.
  Certain office and warehouse facilities, transportation
vehicles and data processing equipment are leased.  Total rental
expense was $66.9 million in 1996, $64.7 million in 1995 and
$56.2 million in 1994.  Minimum lease payments required under
noncancellable operating leases with terms in excess of one year
for the next five years and thereafter, are as follows: $37.3
million in 1997, $26.8 million in 1998, $15.4 million in 1999,
$8.7 million in 2000, $6.3 million in 2001 and $16.2 million
thereafter.


NOTE 11 - COMMON STOCK:  On December 7, 1988, the board of
directors adopted a Rights Plan (Plan) and declared a dividend
distribution of one right for each then outstanding share of the
company's common stock.  As a result of the two-for-one stock
split in 1992, each current outstanding share of the company's
common stock has one-half a right associated with it.  In
December 1994, the Plan was amended by the board of directors.
Under the Plan as amended, each right entitles the holder to
purchase 1/100th of a share of Series A preference stock at an
exercise price of $130.  The company has reserved 563,000 shares
of Series A preference stock for issuance upon exercise of the
rights.  The rights become exercisable in accordance with the
provisions of the Plan on (i) the tenth day following the
acquisition by a person or group of persons of 15 percent or more
of the company's common stock, (ii) the tenth day after the
commencement of a tender or exchange offer for 15 percent or more
of the company's common stock, or (iii) the determination by the
board of directors that a person is an Adverse Person as defined
in the Plan (Distribution Date).  Upon either a person's becoming
an Acquiring Person as defined in the Plan, or the board's
determination that a person is an Adverse Person, or the
occurrence of certain other events following the Distribution
Date, each holder of a right shall thereafter have a right to
receive the common stock of the company (or in certain
circumstances, the stock of an acquiring entity) for a price of
approximately half its value.  The rights are not exercisable by
any Acquiring Person or Adverse Person.  The Plan as amended
provides that the board of directors, at its option any time
after any person becomes an Acquiring Person or an Adverse
Person, may exchange all or part of the outstanding and
exercisable rights for shares of common stock, currently at an
exchange ratio of one right for two shares.  The right of the


                                                           Page 47 of 65



holders to exercise the rights to purchase shares automatically
terminates if the board orders an exchange of rights for shares.
The rights may be redeemed by the company for one cent per right
in accordance with the provisions of the Plan.  The rights will
expire on December 22, 1998, unless redeemed earlier by the
company.
  Shares held in treasury at December 31, 1996, will be used for
employee benefit plans and for other corporate purposes.

NOTE 12 - LEVERAGED EMPLOYEE STOCK OWNERSHIP PLAN:  At the time
of its acquisition by the company, Clark sponsored a Leveraged
Employee Stock Ownership Plan (LESOP) for eligible employees.  In
connection with the acquisition, the company purchased the
LESOP's shares for $176.6 million.  The company determined it
would continue the LESOP to fund certain employee benefit plans.
Accordingly, on September 28, 1995, the company sold 2,878,008
shares of its common stock held in treasury to the LESOP, for a
price of $36.25 per share (the closing price of the common stock
on September 27, 1995, on the New York Stock Exchange) or an
aggregate of $104.3 million.  At December 31, 1996, approximately
1.5 million of these shares remain unallocated and the $55.6
million paid by the LESOP for those unallocated shares is
classified as a reduction of shareowners' equity pending
allocation to participants.  At December 31, 1996, the LESOP owed
the company $29.9 million payable in monthly installments through
2001.  Company contributions to the LESOP and dividends on
unallocated shares are used to make loan principal and interest
payments.  With each principal and interest payment, the LESOP
allocates a portion of the common stock to participating
employees.


NOTE 13 - INCENTIVE STOCK PLANS:  Under the company's Incentive
Stock Plans, key employees have been granted options to purchase
common shares at prices not less than the fair market value at
the date of grant.  Options become exercisable one year after the
date of the grant and expire at the end of ten years.  The plans,
approved in 1985, 1990 and 1995, also authorize stock
appreciation rights (SARs) and stock awards. If SARs issued in
conjunction with stock options are exercised, the related stock
options are cancelled; conversely, the exercise of stock options
cancels the SARs.
  As permitted by SFAS No. 123, "Accounting for Stock Based
Compensation," the company continues to account for its stock
plans in accordance with Accounting Principles Board Opinion No.


                                                           Page 48 of 65



25, "Accounting for Stock Issued to Employees," and its related
interpretations.  Accordingly, compensation expense has been
recognized for SARs (which were generally settled for cash) and
for stock awards.  Had compensation cost for the applicable
provisions of the company's incentive stock plans been determined
based upon the fair value at the grant date for awards issued in
1995 and 1996 in accordance with the methodology prescribed under
SFAS No. 123, the company's net earnings and earnings per share
would have been reduced by approximately $6.7 million (or six
cents per share) in 1996 and $1.6 million (or one cent per share)
in 1995.  The 1996 effect on earnings includes approximately $2.9
million (or three cents per share) attributed to the company's
revocation as of December 15, 1996, of 1,839,000 SARs which were
previously attached to stock options.  The average fair values of
the options granted during 1996 and 1995 were estimated at $10.97
and $8.65, respectively, on the date of grant, using the Black-
Scholes option-pricing model which included the following
assumptions:
                                            1996            1995
  Dividend yield                           1.86%           2.04%
  Volatility                              22.52%          22.69%
  Risk-free interest rate                  6.17%           6.42%
  Forfeiture rate                             --             --
  Expected life                          4 years         4 years

  Changes in options outstanding under the plans were as follows:

                               Shares subject       Option price
                                    to option    range per share
January 1, 1995                     3,384,300       $10.04-37.19
Granted                               988,900        34.75-40.06
Exercised                             749,800        10.04-34.94
Cancelled                              21,000              34.94
December 31, 1995                   3,602,400       $11.95-40.06
Granted                             1,266,500        37.44-46.69
Exercised                             898,800        11.95-36.25
December 31, 1996                   3,970,100       $20.75-46.69


                                                            Page 49 of 65


  At December 31, 1996, there were also 168,500 SARs outstanding with
no stock options attached.  The company has reserved 3,982,345 shares
for future awards at December 31, 1996.  In addition, 309,528
shares of common stock were reserved for future issue, contingent
upon attainment of certain performance goals and future service.

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

                                     Options                Options
                                   Outstanding            Exercisable
                               Weighted    Weighted               Weighted
                     Number     Average     Average    Number     Average
     Range of     Outstanding  Remaining   Exercise  Exercisable  Exercise
  Exercise Price  at 12/31/96    Life       Price    at 12/31/96    Price

  $20.75-25.00       257,500      3.6      $22.39      257,500     $22.39
   25.01-30.00       194,000      3.6       26.89      194,000      26.89
   30.01-35.00     1,382,700      6.6       33.23    1,382,700      33.23
   35.01-40.00     2,075,900      8.9       38.03      859,400      36.24
   40.01-45.00        51,000      9.4       42.20       10,000      40.06
   45.01-46.69         9,000      9.9       46.69            -          -
  $20.75-46.69     3,970,100                         2,703,600


  The company also maintains a shareowner-approved Management
Incentive Unit Award Plan.  Under the plan, qualifying executives
are awarded incentive units.  When dividends are paid on common
stock, dividends are awarded to unit holders, one-half of which
is paid in cash, the remaining half of which is credited to the
participant's account in the form of so-called common stock
equivalents.  The fair value of accumulated common stock
equivalents is paid in cash upon the participant's retirement.
The number of common stock equivalents credited to participants'
accounts at December 31, 1996 and 1995, are 265,109 and 288,837,
respectively.


NOTE 14 - INCOME TAXES:  Earnings before income taxes for the
years ended December 31, were taxed within the following
jurisdictions:

In millions                    1996          1995           1994
United States                $467.3        $308.0         $279.4
Foreign                       101.0         121.1           50.5
Total                        $568.3        $429.1         $329.9


                                                                Page 50 of 65



  The provision for income taxes was as follows:

In millions                    1996          1995           1994
Current tax expense:
  United States              $186.6        $101.3         $ 69.8
  Foreign                      49.5          42.7           34.8
  Total current               236.1         144.0          104.6
Deferred tax expense:
  United States               (16.4)         10.6           30.3
  Foreign                     ( 9.4)          4.2          (16.1)
  Total deferred              (25.8)         14.8           14.2
  Total provision for
    income taxes             $210.3        $158.8         $118.8

  The provision for income taxes differs from the amount of
income taxes determined by applying the applicable U.S. statutory
income tax rate to pretax income, as a result of the following
differences:
                                       Percent of pretax income
                                     1996       1995       1994
Statutory U.S. rates                 35.0%      35.0%      35.0%
Increase (decrease) in rates
  resulting from:
  Foreign operations                   .8        1.0         .3
  Earnings/losses of equity
   companies                          (.8)      (1.8)       (.9)
  State and local income taxes,
    net of U.S. tax                   1.5        1.3        1.6
  Other                                .5        1.5         --
Effective tax rates                  37.0%      37.0%      36.0%


                                                              Page 51 of 65


  A summary of the deferred tax accounts at December 31, follows:

In millions                                      1996       1995       1994
Current deferred assets and (liabilities):
  Differences between book and tax bases
    of inventories and receivables             $ 37.9     $ 30.8     $ 36.5
  Differences between book and tax
    expense for other employee related
    benefits and allowances                      39.3       35.3       33.9
  Provisions for restructure of
    operations and plant closings
    not yet deductible for tax purposes          11.1        9.4        6.4
  Other reserves and valuation
    allowances in excess of tax deductions       61.6       53.1       32.5
  Other differences between tax and
    financial statement values                   12.5      (10.1)       9.9
    Gross current deferred net tax assets       162.4      118.5      119.2


                                                             Page 52 of 65



In millions                                      1996       1995       1994

Noncurrent deferred tax assets and
  (liabilities):
  Tax items associated with equity
    companies                                    10.7       11.1       13.0
  Postretirement and postemployment
    benefits other than pensions in
    excess of tax deductions                    246.7      252.5      159.9
  Other reserves in excess of tax expense        80.5       65.0       36.3
  Tax depreciation in excess of book
    depreciation                                (60.2)     (85.5)     (46.0)
  Pension contributions in excess of
    book expense                                (52.0)     (51.2)     (47.5)
  Taxes provided for unrepatriated
    foreign earnings                            (28.5)     (28.5)     (20.1)
    Gross noncurrent deferred net tax assets    197.2      163.4       95.6
    Less:  deferred tax valuation allowances    (34.6)     (28.6)     (21.2)
      Total net deferred tax assets            $325.0     $253.3     $193.6
  A total of $28.5 million of deferred taxes have been provided for
a portion of the undistributed earnings of subsidiaries operating
outside of the United States.  As to the remainder, these earnings
have been, and under current plans will continue to be reinvested
and it is not practicable to estimate the amount of additional
taxes which may be payable upon repatriation.

                                                      Page 53 of 65



NOTE 15 - BUSINESS SEGMENT INFORMATION:   A description of
business segments and operations by business segment and
geographic area for the three years ended December 31, 1996, were
as follows:

DESCRIPTION OF BUSINESS SEGMENTS
Ingersoll-Rand's operations are organized into three worldwide
business segments:  Standard Machinery; Engineered Equipment; and
Bearings, Locks and Tools.

Standard Machinery
The segment's products are categorized into five groups:

  Air Compressor - products include portable, reciprocating,
rotary and centrifugal air compressors, vacuum pumps, air drying
and filtering systems, and other compressor accessories.  The
products are used primarily to supply pressurized air to
industrial plants, refineries, chemical plants, electrical
utilities and service stations.

  Construction and Mining - manufactures vibratory compactors,
asphalt pavers, rock drills, blasthole drills, water-well drills,
crawler drills, jumbo drills, jackhammers and rock and roof
stabilizers primarily for the construction, highway maintenance,
metals-mining and well-drilling industries.

  Melroe - manufactures skid-steer loaders, compact hydraulic
excavators and self-propelled agricultural sprayers.  The
products are used primarily by the construction and agricultural
industries.

  Club Car - manufactures golf cars and utility vehicles which
are used primarily in the golf and resort industries.

  Mining Machinery(1) - products included continuous and long-
wall mining machines, crushers, coal haulers and mine-service
vehicles, which principally served the underground coal-mining
industry.

Engineered Equipment
The segment's products are categorized into three groups:

  Pump - manufactures centrifugal and reciprocating pumps.  These
products serve oil production and refining, chemical


                                                      Page 54 of 65



process, marine, agricultural, electric utility and general
manufacturing industries.

  Process Systems(2) - consisted of pulp and paper processing
equipment, pelleting equipment, filters, aerators and dewatering
systems.  This equipment was used in the pulp and paper, food and
agricultural, and minerals-processing industries.

  Clark-Hurth(3) - manufactured a broad line of axles and
transmissions for the off-highway vehicle industry.

Bearings, Locks and Tools
The segment's products are categorized into three groups:

  Bearings and Components - principal products include needle
bearings, needle roller bearings, needle rollers, thrust
bearings, tapered roller bearings, drawn cup bearings,
high-precision ball bearings, spherical bearings, radial
bearings, universal joints, dowel pins, swagers and precision
components. These products are sold principally to durables-
industry customers primarily in the automotive and aerospace
markets.

  Production Equipment - manufactures air-powered tools, hoists
and winches, air motors and air starters, automated assembly and
test systems, air and electric automated fastener tightening
systems, and waterjet cutting systems.  These products are sold
to general manufacturing industries and to the appliance,
aircraft, construction and automotive industries.

  Architectural Hardware(4) - major products include locks, steel
doors, door closers and exit devices used in commercial and
residential construction and the retail hardware market.

(1)
  The Mining Machinery Group was sold during 1993.
(2)
  The Process Systems Group was sold during 1996.
(3)
  Clark-Hurth was sold in February 1997.
(4)
  Prior to January 1, 1996, the Door Hardware Group.



<TABLE>
Operations by Business Segments                                            Page 55 of 65
Dollar amounts in millions
For the years ended                         % of                % of                 % of
December 31                         1996   total        1995   total         1994   total
Standard Machinery
<S>                             <C>          <C>    <C>          <C>     <C>          <C>
Sales                           $2,913.1     43%    $2,270.6     40%     $1,445.7     32%
Operating income                   295.5     41%       222.6     41%        122.4     30%
Operating income as % of sales      10.1%                9.8%                 8.5%
Identifiable assets              2,560.2             2,528.0              1,099.6
Depreciation and amortization       81.7                62.7                 31.5
Capital expenditures                59.9                56.7                 30.9

Engineered Equipment
Sales                            1,307.7     20%     1,216.2     21%        926.4     21%
Operating income                   108.5     15%        49.5      9%         35.3      8%
Operating income as % of sales       8.3%                4.1%                 3.8%
Identifiable assets                904.0             1,061.8                634.5
Depreciation and amortization       44.5                40.0                 28.8
Capital expenditures                36.7                42.3                 30.3

Bearings, Locks and Tools
Sales                            2,482.1     37%     2,242.2     39%      2,135.4     47%
Operating income                   323.3     44%       269.1     50%        256.6     62%
Operating income as % of sales      13.0%               12.0%                12.0%
Identifiable assets              1,391.0             1,208.1              1,185.1
Depreciation and amortization       74.0                75.0                 70.9
Capital expenditures                97.2               107.9                 97.0

Total
Sales                            6,702.9    100%     5,729.0    100%      4,507.5    100%
Operating income                   727.3    100%       541.2    100%        414.3    100%
Operating income as % of sales      10.9%                9.4%                 9.2%
Identifiable assets              4,855.2             4,797.9              2,919.2
Depreciation and amortization      200.2               177.7                131.2
Capital expenditures               193.8               206.9                158.2
General corporate expenses
  charged to operating income      (43.8)              (44.2)               (37.3)
Operating income                   683.5               497.0                377.0

                                                                           Page 56 of 65

Operations  by Business  Segments
(continued)
Dollar amounts in millions
For the years ended                         % of                % of                 % of
December 31                         1996   total        1995   total         1994   total
Unallocated
Interest expense                  (119.9)              (86.6)               (43.8)
Other income (expense), net         (1.0)                9.4                (14.7)
Dresser-Rand income                 23.0                22.0                 24.6
IDP minority interest              (17.3)              (12.7)               (13.2)
Earnings before income taxes
  and effect of accounting
  changes                          568.3               429.1                329.9
Corporate assets (a)               766.4               765.4                677.7

Total assets                    $5,621.6            $5,563.3             $3,596.9

(a)  Corporate assets consist primarily of cash  and
cash equivalents, marketable securities, investments
and   advances,  and  other  assets   not   directly
associated   with  the  operations  of  a   business
segment.


</TABLE>














<TABLE>
                                                                             Page 57 of 65
Operations by Geographic Area
In millions
                                 United                        Other     Adjustments/
For the year 1996                States      Europe    International     Eliminations   Consolidated

<S>                            <C>         <C>                <C>            <C>            <C>
Sales to customers             $4,234.5    $1,939.5           $528.9         $  --          $6,702.9
Transfers between geographic
  areas                           689.0        49.8             43.5          (782.3)           --
Total sales and transfers      $4,923.5     1,989.3            572.4          (782.3)       $6,702.9
Operating income from
  operations                   $  578.0        92.9             55.1             1.3        $  727.3
General corporate expenses
  charged to operating income                                                                  (43.8)
Operating income                                                                            $  683.5
Identifiable assets at
  December 31, 1996            $3,262.1     1,286.6            323.8           (17.3)       $4,855.2
Corporate assets                                                                               766.4
Total assets at
  December 31, 1996                                                                         $5,621.6

For the year 1995

Sales to customers             $3,472.8     1,754.0            502.2              --        $5,729.0
Transfers between geographic
  areas                           568.5        60.9             42.5          (671.9)             --
Total sales and transfers      $4,041.3     1,814.9            544.7          (671.9)       $5,729.0
Operating income from
  operations                   $  391.5        97.5             51.7              .5        $  541.2
General corporate expenses
  charged to operating income                                                                  (44.2)
Operating income                                                                            $  497.0
Identifiable assets at
  December 31, 1995            $3,183.9     1,305.3            319.8           (11.1)       $4,797.9
Corporate assets                                                                               765.4
Total assets at
  December 31, 1995                                                                         $5,563.3

                                                                             Page 58 of 65
Operations by Geographic Area  (Continued)

                                 United                        Other     Adjustments/
For the year 1994                States      Europe    International     Eliminations   Consolidated

Sales to customers             $2,809.9     1,253.9            443.7              --        $4,507.5
Transfers between geographic
  areas                           429.7        54.7             34.1          (518.5)             --
Total sales and transfers      $3,239.6     1,308.6            477.8          (518.5)       $4,507.5
Operating income from
  operations                   $  335.8        43.2             34.5              .8        $  414.3
General corporate expenses
  charged to operating income                                                                  (37.3)
Operating income                                                                            $  377.0
Identifiable assets at
  December 31, 1994            $1,684.3       949.0            297.5           (11.6)       $2,919.2
Corporate assets                                                                               677.7
Total assets at
  December 31, 1994                                                                         $3,596.9


International sales of U.S. manufactured products in millions were $1,191.9 in
1996, $1,028.9 in 1995 and $743.3 in 1994.
</TABLE>

                                                             Page 59 of 65



NOTE 16 - PENSION PLANS:  The company has noncontributory pension plans
covering substantially all domestic employees.  In addition, certain
employees in other countries are covered by pension plans. The company's
domestic salaried plans principally provide benefits based on a career
average earnings formula.  The company's hourly pension plans provide
benefits under flat benefit formulas.  Foreign plans provide benefits
based on earnings and years of service.  Most of the foreign plans require
employee contributions based on the employee's earnings.  In addition, the
company maintains other supplemental benefit plans for officers and other
key employees.  The company's policy is to fund an amount which could be
in excess of the pension cost expensed, subject to the limitations imposed
by current statutes or tax regulations.
  The components of the company's pension cost for the years ended
December 31, include the following:

In millions                         1996        1995        1994
Benefits earned during the
  year                            $ 38.7     $  32.7      $ 31.7
Interest cost on projected
  benefit obligation               113.5        99.7        79.1
Actual return on plan assets      (193.8)     (261.2)        6.3
Net amortization and deferral       65.9       157.7       (99.6)
  Net pension cost                $ 24.3     $  28.9      $ 17.5

<TABLE>
                                                                   Page 60 of 65
                                                                                



  The status of employee pension benefit plans at December 31, 1996 and 1995,
was as follows:

                                              1996                          1995
                                    Overfunded    Underfunded     Overfunded  Underfunded
In millions                              plans          plans          plans        plans
Actuarial present value of
  projected benefit obligation,
  based on employment service to
  date and current salary levels:
  <S>                               <C>              <C>          <C>             <C>
  Vested employees                  $(1,194.1)       $(332.8)     $(1,101.2)      $(310.3)
  Nonvested employees                   (18.1)         (14.0)         (23.5)        (13.8)
  Accumulated benefit obligation     (1,212.2)        (346.8)      (1,124.7)       (324.1)
  Additional amount related to
    projected salary increases          (36.1)         (38.6)         (49.9)        (26.4)
Total projected benefit obligation   (1,248.3)        (385.4)      (1,174.6)       (350.5)
Funded assets at fair value           1,456.6          232.8        1,331.7         207.5
Assets in excess of (less than)
  projected benefit obligation          208.3         (152.6)         157.1        (143.0)
Unamortized net (asset) liability
  existing at date of adoption           (2.5)          17.2           (2.5)         19.0
Unrecognized prior service cost          35.6           12.8           18.6          11.5
Unrecognized net (gain) loss            (77.8)          23.9          (23.2)         (3.4)
Adjustment required to recognize
  minimum liability                        --          (14.6)            --         (16.4)
Prepaid (accrued) pension cost      $   163.6        $(113.3)     $   150.0       $(132.3)

</TABLE>

                                                                Page 61 of 65



  Plan investment assets of domestic plans are balanced between
equity securities and cash equivalents or debt securities.
Assets of foreign plans are invested principally in equity
securities.
  The present value of benefit obligations for domestic plans at
December 31, 1996 and 1995, was determined using an assumed
discount rate of 7.25%, an assumed rate of increase in future
compensation levels of 4.75%, and an expected long-term rate of
return on assets of 9.0%.  The weighted averages of the
actuarially assumed discount rate, long-term rate of return on
assets and the rate for compensation increases for foreign plans
were 8.5%, 9.0% and 6.0% in 1996, and 8.5%, 9.0% and 6.5% in
1995, respectively.
  Most of the company's domestic employees are covered by savings
and other defined contribution plans.  Employer contributions and
costs are determined based on criteria specific to the individual
plans and amounted to approximately $27.4 million, $24.9 million
and $21.7 million in 1996, 1995 and 1994, respectively.
  The company's costs relating to foreign defined contribution
plans, insured plans and other foreign benefit plans were
$8.2 million, $4.8 million and $4.3 million in 1996, 1995 and
1994, respectively.
  The existing pension rules require the recognition of a
liability in the amount that the company's unfunded accumulated
benefit obligation exceeds the accrued pension cost, with an
equal amount recognized as an intangible asset.  As a result, the
company recorded in 1996 a noncurrent liability of $14.6 million,
and a noncurrent liability of $16.2 million and a current
liability of $0.2 million in 1995.  Offsetting intangible assets
were recorded in the Consolidated Balance Sheets.

NOTE 17 - POSTRETIREMENT BENEFITS OTHER THAN PENSIONS:  In
addition to providing pension benefits, the company sponsors
several postretirement plans that cover most domestic employees.
These plans provide for health care benefits and in some
instances, life insurance benefits.  Postretirement health plans
are contributory and are adjusted annually.  Life insurance plans
are noncontributory.  When full-time employees retire from the
company between age 55 and age 65, most are eligible to receive,
at a cost to the retiree, certain health care benefits identical
to those available to active employees.  After attaining age 65,
an eligible retiree's health care benefit coverage becomes
coordinated with Medicare.  The company funds the benefit costs
principally on a pay-as-you-go basis.

                                                                Page 62 of 65



  Summary information on the company's plans at December 31, was
as follows:

In millions                                  1996           1995
Financial status of plans:
Accumulated postretirement benefits
   obligation (APBO):
   Retirees                               $(436.4)       $(462.9)
   Active employees                        (151.9)        (150.0)
                                           (588.3)        (612.9)
Plan assets at fair value                      --             --
Unfunded accumulated benefits
  obligation in excess of plan assets      (588.3)        (612.9)
Unrecognized net gain                       (42.3)          (9.9)
Unrecognized prior service benefits         (76.9)         (84.8)
Accrued postretirement benefits cost      $(707.5)       $(707.6)

  The components of net periodic postretirement benefits cost for
the years ended December 31, were as follows:

In millions                                1996     1995    1994
Service cost, benefits attributed to
  employee service during the year        $ 6.4    $ 5.2   $ 8.5
Interest cost on accumulated
  postretirement benefit obligation        40.6     37.6    26.9
Net amortization and deferral              (5.7)    (5.6)   (5.2)
Net periodic postretirement benefits cost $41.3    $37.2   $30.2

  The 1994 service cost of net periodic postretirement benefits
cost includes a settlement charge of $3.2 million relating to
retired employees from a closed facility.  The discount rate used
in determining the APBO was 7.25% at December 31, 1996 and 1995.
The assumed health care cost trend rates used in measuring the
accumulated postretirement benefits obligation were 9.35% in 1996
and 10.35% in 1995, respectively, declining each year to an
ultimate rate by 2003 of 4.75% in 1996 and 1995.
  Increasing the health care cost trend rate by 1.0% as of
December 31, 1996, would increase the APBO by 8%.  The effect of
this change on the sum of the service cost and interest cost
components of net periodic postretirement benefits cost for 1996
would be an increase of 7%.  In 1993, the company made several
modifications to the cost sharing provisions of the
postretirement plans.


                                                                Page 63 of 65



NOTE 18 - SUBSEQUENT EVENT:
On January 27, 1997, the company announced an offer to acquire
Newman Tonks Group PLC (Newman Tonks).  The offer values the
issued shares of Newman Tonks at approximately $376 million (230
million pounds sterling).  Newman Tonks, whose board of directors
has recommended acceptance of the company's offer, is a leading
manufacturer, specifier and supplier of a wide range of branded
architectural products for use in the building industry.


                                                                Page 64 of 65



Report of Management
     The accompanying consolidated financial statements have been
prepared by the company.  They conform with generally accepted
accounting principles and reflect judgments and estimates as to
the expected effects of incomplete transactions and events being
accounted for currently.  The company believes that the
accounting systems and related controls that it maintains are
sufficient to provide reasonable assurance that assets are
safeguarded, transactions are appropriately authorized and
recorded, and the financial records are reliable for preparing
such financial statements.  The concept of reasonable assurance
is based on the recognition that the cost of a system of internal
accounting controls must be related to the benefits derived.  The
company maintains an internal audit function that is responsible
for evaluating the adequacy and application of financial and
operating controls, and for testing compliance with company
policies and procedures.
     The Audit Committee of the board of directors is comprised
entirely of individuals who are not employees of the company.
This committee meets periodically with the independent
accountants, the internal auditors and management to consider
audit results and to discuss significant internal accounting
controls, auditing and financial reporting matters.  The Audit
Committee recommends the selection of the independent
accountants, who are then appointed by the board of directors,
subject to ratification by the shareowners.
     The independent accountants are engaged to perform an audit
of the consolidated financial statements in accordance with
generally accepted auditing standards.  Their report follows.


/S/ Gerard V. Geraghty
Gerard V. Geraghty
Vice President and Comptroller




                                                                Page 65 of 65



Report of Independent Accountants

Price Waterhouse LLP
4 Headquarters Plaza North
Morristown, NJ  07962


February 4, 1997

To the Board of Directors and
Shareowners of Ingersoll-Rand Company:


     In our opinion, the accompanying consolidated balance sheet
and the related consolidated statements of income, of
shareowners' equity and of cash flows present fairly, in all
material respects, the financial position of Ingersoll-Rand
Company and its subsidiaries at December 31, 1996 and 1995, and
the results of their operations and their cash flows for each of
the three years in the period ended December 31, 1996, in
conformity with generally accepted accounting principles.  These
financial statements are the responsibility of the Company's
management; our responsibility is to express an opinion on these
financial statements based on our audits.  We conducted our
audits of these statements in accordance with generally accepted
auditing standards which require that we plan and perform the
audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement.  An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management, and
evaluating the overall financial statement presentation.  We
believe that our audits provide a reasonable basis for the
opinion expressed above.

/s/ Price Waterhouse LLP
Price Waterhouse LLP