Restructuring Charges

9 Months Ended

Sep. 30, 2011

13. 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 15 for further discussion. Detailed below are the restructuring activities that we incurred additional expense in 2011.

2011 Plans

Corporate and Other

In the third quarter of 2011, we terminated our airplane lease, closed the aviation department, and reorganized certain support functions within our organization. Substantially all of the costs related to these activities were recognized in the third quarter of 2011 and consisted of $4.3 million in lease termination costs, $1.0 million in severance costs and $0.2 million in accelerated depreciation.

2010 Plans

Refrigeration

We began to exit certain Refrigeration manufacturing operations in Milperra, Australia in 2010, specifically our OEM coil manufacturing and contract coil manufacturing. In the first quarter of 2010, we began to exit OEM coil manufacturing. We reversed approximately $0.5 million in severance in the first nine months of 2011 to adjust estimated charges to actual. This activity was substantially complete in 2010. We initiated restructuring activities related to exiting contract coil manufacturing in the third quarter of 2010. In the first nine months of 2011, we recognized $1.4 million in other plant closure costs related to these restructuring activities. The total expected expenses for the OEM coil restructuring are $5.3 million and the contract coil manufacturing restructuring is $5.2 million.

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. We expect to complete this project in the fourth quarter of 2011. We recognized $4.6 million in severance, lease termination and other costs in the first nine months of 2011. The total expected expenses related to the second action for the administrative and management restructuring is $5.7 million.

2009 and Prior Plans

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. We reversed $0.1 million in severance charges in the first nine months of 2011 to adjust estimated charges to actual. The total expected restructuring charges for this consolidation is $6.3 million.

Residential Heating & Cooling

We consolidated our manufacturing operations from Blackville, South Carolina into our Orangeburg, South Carolina and Saltillo, Mexico operations. We expect to complete this consolidation in the fourth quarter of 2011. We recognized $0.8 million in restructuring charges in the first nine months of 2011 related to other plant closure costs. The total expected expenses for this consolidation is $13.6 million.

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. In the first nine months of 2011, we recognized $0.9 million primarily in other restructuring charges. The total expected restructuring charges for the regional distribution network is $4.9 million

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	$	2.1	$	46.6	$	47.0
Asset write-offs and accelerated depreciation		0.4		11.5		11.5
Equipment moves		0.6		1.8		2.3
Lease termination		6.0		8.4		8.4
Other		5.3		11.2		12.6

Total	$	14.4	$	79.5	$	81.8

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	$	2.2	$	17.8	$	19.8
Commercial Heating & Cooling		0.1		16.6		16.8
Service Experts		4.9		8.2		8.3
Refrigeration		1.7		19.9		19.9
Corporate & Other		5.5		17.0		17.0

Total	$	14.4	$	79.5	$	81.8

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 nine months of 2011 (in millions):


	Balance as of		Charged					Non-Cash			Balance as of
	December 31,		to		Cash			Utilization			September 30,
Description of Reserves	2010		Earnings		Utilization			and Other			2011
Severance and related expense	$	6.2	$	2.1	$	(3.8	)	$	—		$	4.5
Asset write-offs and accelerated depreciation		—		0.4		—			(0.4	)		—
Equipment moves		—		0.6		(0.6	)		—			—
Lease termination		0.3		6.0		(1.0	)		—			5.3
Other		0.7		5.3		(6.0	)		—			—

Total restructuring reserves	$	7.2	$	14.4	$	(11.4	)	$	(0.4	)	$	9.8