Restructuring Charges

6 Months Ended

Jun. 30, 2011

12. Restructuring Charges:

As part of our strategic priorities of manufacturing and sourcing excellence and expense reduction, we initiated various manufacturing rationalization actions designed to lower our cost structure. We expanded these expense reductions across the organization by initiating a number of activities to rationalize and reorganize various support and administrative functions. Restructuring charges are not included in our calculation of segment profit (loss), see Note 14 for further discussion. Detailed below are the restructuring activities that we anticipate incurring additional expense in 2011.

2010 Plans

Refrigeration

We began to exit certain Refrigeration manufacturing operations in Milperra, Australia in 2010, specifically our OEM coil manufacturing and contract coil. In the first quarter of 2010, we began to exit the OEM coil manufacturing with total expected restructuring charges of $5.3 million composed of $3.9 million in severance, $1.2 million in asset impairment charges, and $0.2 million in other charges. We reversed approximately $0.5 million in severance in the first half of 2011 to adjust estimated charges to actual. This activity was substantially complete in 2010. We initiated the restructuring activities related to exiting contract coil manufacturing in the third quarter of 2010. The total expected restructuring charges related to this activity were $4.8 million composed of $3.1 million in severance, $0.4 million in asset impairment and accelerated depreciation, and $1.3 million in other charges. In the first half of 2011, we recognized $0.7 million in other plant closure costs related to these restructuring activities.

Service Experts

We began to reorganize certain administrative functions and the management structure of our Service Experts business in 2010 and initiated two actions. The first action, started in the second quarter of 2010, was to reorganize the administrative operations of an acquired company. This project was completed in 2010. The second action, initiated in the fourth quarter of 2010, was to reorganize the management structure of our Service Experts business. Expected restructuring charges for this project are $2.8 million and consist of $1.6 million in severance charges, $0.2 million in lease termination costs, and $1.0 million in other restructuring costs. We anticipate this action to complete in the third quarter of 2011. We recognized $1.7 million in severance, lease termination and other costs in the first half of 2011.

2009 and Prior Plans

Refrigeration

In the fourth quarter of 2009, we began to consolidate certain Refrigeration manufacturing operations located in Parets, Spain into our existing operations in Genas, France. This activity had total restructuring charges of $8.4 million, consisting of $6.1 million in severance, $1.2 million in asset impairment and equipment moves, and $1.1 million in other charges, and was substantially complete by the fourth quarter of 2010.

Commercial Heating & Cooling

We completed the consolidation of certain manufacturing operations from Mions, France into our Longvic, France operations in the first quarter of 2010. This activity had total restructuring charges of $6.3 million which consisted primarily of severance charges. We reversed $0.1 million in severance charges in the first half of 2011 to adjust estimated charges to actual.

Residential Heating & Cooling

Included in our 2009 and Prior Plans was a consolidation of our manufacturing operations from Blackville, South Carolina into our Orangeburg, South Carolina and Saltillo, Mexico operations. The consolidation is expected to be complete by the fourth quarter of 2011 with expected total restructuring charges of $13.7 million. These charges consist of $3.0 million in severance, $7.1 million in equipment moves, asset impairment and accelerated depreciation, and $3.6 million in other costs. We recognized $0.6 million in restructuring charges in the first half of 2011 related to other plant closure costs.

Regional Distribution Network

In the fourth quarter of 2008, we commenced the transition of activities performed at our North American Parts Center in Des Moines, Iowa to other locations, including our North American Distribution Center in Marshalltown, Iowa. To date, we incurred $3.5 million, primarily severance costs, and we expect the total cost to be $4.4 million. The total expected costs of this project include $2.9 million in severance costs, $0.5 million in moving costs, and $1.0 million in other costs. In the first half of 2011, we recognized $0.3 million primarily in other restructuring charges.

Total Restructuring

Information regarding the restructuring charges for all plans is as follows (in millions):


					Total
	Charges		Charges		Charges
	Incurred in		Incurred to		Expected to
	2011		Date		be Incurred
Severance and related expense	$	—	$	50.5	$	50.7
Asset write-offs and accelerated depreciation		0.4		11.6		11.6
Equipment moves		0.3		1.5		2.2
Lease termination		0.2		2.6		2.6
Other		2.7		7.5		9.6

Total	$	3.6	$	73.7	$	76.7

Information regarding the restructuring charges by segment is as follows (in millions):


						Total
	Charges			Charges		Charges
	Incurred in			Incurred to		Expected to
	2011			Date		be Incurred
Residential Heating & Cooling	$	0.9		$	16.5	$	18.9
Commercial Heating & Cooling		(0.1	)		16.6		16.8
Service Experts		0.7			23.6		24.0
Refrigeration		2.1			5.5		5.5
Corporate & Other		—			11.5		11.5

Total	$	3.6		$	73.7	$	76.7

Restructuring reserves are included in Accrued Expenses in the accompanying Consolidated Balance Sheets. The table below details activity within the restructuring reserves for the first half of 2011 (in millions):


	Balance as of		Charged					Non-Cash			Balance as of
	December 31,		to		Cash			Utilization			June 30,
Description of Reserves	2010		Earnings		Utilization			and Other			2011
Severance and related expense	$	6.2	$	—	$	(2.7	)	$	—		$	3.5
Asset write-offs and accelerated depreciation		—		0.4		—			(0.4	)		—
Equipment moves		—		0.3		(0.3	)		—			—
Lease termination		0.3		0.2		(0.3	)		—			0.2
Other		0.7		2.7		(3.4	)		—			—

Total restructuring reserves	$	7.2	$	3.6	$	(6.7	)	$	(0.4	)	$	3.7