Reportable Business Segments

12 Months Ended

Dec. 31, 2011

Reportable Business Segments [Abstract]

Reportable Business Segments

21.  Reportable Business Segments:

We operate in four reportable business segments of the HVACR industry. Our segments are organized primarily by the nature of the products and services provided. The table below details the nature of the operations of each reportable segment:

Segment	Product or Services	Markets Served	Geographic Areas
Residential Heating & Cooling	Heating Air Conditioning Hearth Products	Residential Replacement Residential New Construction	United States Canada
Commercial Heating & Cooling	Rooftop Products Chillers Air Handlers	Light Commercial	United States Canada Europe
Service Experts	Equipment Sales Installation Maintenance Repair	Residential Light Commercial	United States Canada
Refrigeration	Unit Coolers Condensing Units Other Commercial Refrigeration Products Display Cases and Systems	Light Commercial Food Preservation and Non-Food/Industrial	United States Canada Europe Asia Pacific South America Mexico

Transactions between segments, such as products sold to Service Experts by the Residential Heating & Cooling segment, are recorded on an arm’s-length basis using the market price for these products. The eliminations of these intercompany sales and any associated profit are noted in the reconciliation of segment results to the income from continuing operations before income taxes below.

We use segment profit or loss as the primary measure of profitability to evaluate operating performance and to allocate capital resources. We define segment profit or loss as a segment’s income or loss from continuing operations before income taxes included in the accompanying Consolidated Statements of Operations excluding certain items. See the reconciliation of segment profit to Income from Continuing Operations Before Income Taxes below for more detail on the items excluded from segment profit.

Our corporate costs include those costs related to corporate functions such as legal, internal audit, treasury, human resources, tax compliance and senior executive staff. Corporate costs also include the long-term share-based incentive awards provided to employees throughout LII. We recorded these share-based awards as Corporate costs as they are determined at the discretion of the Board of Directors and based on the historical practice of doing so for internal reporting purposes.

Net sales and segment profit (loss) by business segment, along with a reconciliation of segment profit to Income from Continuing Operations Before Income Taxes are shown below (in millions):

	For the Years Ended December 31,
	2011			2010			2009
Net Sales
Residential Heating & Cooling	$	1,341.0		$	1,417.4		$	1,293.5
Commercial Heating & Cooling		696.0			620.0			594.6
Service Experts		528.6			590.3			535.4
Refrigeration		805.2			550.9			512.7
Eliminations(1)		(67.2	)		(82.2	)		(88.7	)
	$	3,303.6		$	3,096.4		$	2,847.5

Segment Profit (Loss)(2)
Residential Heating & Cooling	$	75.1		$	132.3		$	111.7
Commercial Heating & Cooling		79.4			69.3			49.3
Service Experts		1.5			19.3			16.6
Refrigeration		77.5			61.4			48.9
Corporate and other		(54.4	)		(65.5	)		(62.5	)
Eliminations(1)		(0.6	)		0.2			0.5
Subtotal that includes segment profit and eliminations		178.5			217.0			164.5
Reconciliation to income from continuing operations before income taxes:
Special product quality adjustments		(4.3	)		(0.2	)		18.3
Items in losses (gains) and other expenses, net that are excluded from segment profit(3)		4.5			11.2			(10.9	)
Restructuring charges		16.0			15.6			41.5
Impairment of assets		7.0			—			6.4
Goodwill impairment		7.6			—			—
Interest expense, net		16.8			12.8			8.2
Other expense, net		0.3			1.0			0.1
Income from continuing operations before income taxes	$	130.6		$	176.6		$	100.9

(1) Eliminations consist of intercompany sales between business segments, such as products sold to Service Experts by the Residential Heating & Cooling segment.

(2) We define segment profit and loss as a segment’s income or loss from continuing operations before income taxes included in the accompanying Consolidated Statements of Operations, excluding:

o Special product quality adjustments.

o Items within Losses (gains) and other expenses, net that are noted in(3).

o Restructuring charges.

o Goodwill and equity method investment impairments.

o Interest expense, net.

o Other expense, net.

(3) Items in Losses (gains) and other expenses, net that are excluded from segment profit are net change in unrealized gains and/or losses on open future contracts, realized gains and/or losses on marketable securities, special legal contingency charge, acquisition expenses and other items. For more information about Losses (gains) and other expenses, net see Note 24.

On a consolidated basis, no revenues from transactions with a single customer were 10% or greater of our consolidated net sales for any of the periods presented.

Total assets by business segment are shown below (in millions). The assets in the Corporate and other segment primarily consist of cash, short-term investments and deferred tax assets. Assets recorded in the operating segments represent those assets directly associated with those segments.

	For the Years Ended December 31,
	2011			2010
Total Assets
Residential Heating & Cooling	$	481.2		$	519.8
Commercial Heating & Cooling		257.3			252.7
Service Experts		182.0			186.2
Refrigeration		558.2			389.7
Corporate and other		234.8			354.9
Eliminations(1)		(7.8	)		(11.3	)
Total assets		1,705.7			1,692.0
Discontinued operations (See Note 19)		—			—
Total assets	$	1,705.7		$	1,692.0

(1) Eliminations consist of net intercompany receivables and intercompany profit included in inventory from products sold between business segments, such as products sold to Service Experts by the Residential Heating & Cooling segment.

Total capital expenditures by business segment are shown below (in millions):

	For the Years Ended December 31,
	2011		2010		2009
Capital Expenditures
Residential Heating & Cooling	$	12.1	$	19.4	$	31.7
Commercial Heating & Cooling		6.5		6.2		6.8
Service Experts		0.8		0.8		0.7
Refrigeration		13.2		6.9		7.4
Corporate and other		10.6		12.5		12.2
Total capital expenditures	$	43.2	$	45.8	$	58.8

There were no significant new capital leases in 2011, 2010 and 2009.

The depreciation and amortization expenses by business segment are shown below (in millions):

	For the Years Ended December 31,
	2011		2010		2009
Depreciation and Amortization
Residential Heating & Cooling	$	22.3	$	21.7	$	22.2
Commercial Heating & Cooling		7.7		8.0		8.0
Service Experts		2.0		2.2		1.9
Refrigeration		14.8		8.7		9.9
Corporate and other		13.6		12.9		10.9
Total depreciation and amortization	$	60.4	$	53.5	$	52.9

The equity method investees are shown below (in millions):

	For the Years Ended December 31,
	2011		2010		2009
Income from Equity Method Investments
Refrigeration	$	2.5	$	1.3	$	0.5
Corporate and other(1)		7.1		8.8		6.8
	$	9.6	$	10.1	$	7.3

(1) A significant portion of income for equity method investments is allocated to our Residential Heating & Cooling and Commercial Heating & Cooling segments. We allocated $4.9 million, $5.6 million, and $5.9 million to those segments in 2011, 2010 and 2009, respectively.

The following table sets forth certain financial information relating to our operations by geographic area based on the domicile of our operations (in millions):

	For the Years Ended December 31,
	2011		2010		2009
Net Sales to External Customers by Point of Shipment
United States	$	2,370.8	$	2,255.4	$	2,033.1
Canada		329.2		336.6		327.0
International		603.6		504.4		487.4
Total net sales to external customers	$	3,303.6	$	3,096.4	$	2,847.5

	As of December 31,
	2011		2010
Property, Plant and Equipment, net
United States	$	238.0	$	225.5
Mexico		28.0		33.0
Canada		5.2		6.0
International		38.7		59.8
Total property, plant and equipment, net	$	309.9	$	324.3