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Part I | ||
Part II | ||
LENNOX INTERNATIONAL INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In millions, except shares and par value) | |||||||
As of June 30, 2013 | As of December 31, 2012 | ||||||
(unaudited) | |||||||
ASSETS | |||||||
Current Assets: | |||||||
Cash and cash equivalents | $ | 45.3 | $ | 51.8 | |||
Accounts and notes receivable, net of allowances of $9.5 in 2013 and 2012 | 542.3 | 373.4 | |||||
Inventories, net | 469.2 | 374.8 | |||||
Deferred income taxes, net | 31.7 | 27.5 | |||||
Other assets | 41.4 | 61.0 | |||||
Assets of discontinued operations | — | 98.6 | |||||
Total current assets | 1,129.9 | 987.1 | |||||
Property, plant and equipment, net of accumulated depreciation of $600.4 and $584.8 in 2013 and 2012, respectively | 308.7 | 298.2 | |||||
Goodwill | 217.6 | 223.8 | |||||
Deferred income taxes | 113.9 | 102.8 | |||||
Other assets, net | 79.5 | 80.0 | |||||
Total assets | $ | 1,849.6 | $ | 1,691.9 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Current Liabilities: | |||||||
Short-term debt | $ | 125.9 | $ | 34.9 | |||
Current maturities of long-term debt | 0.4 | 0.7 | |||||
Accounts payable | 373.6 | 284.7 | |||||
Accrued expenses | 257.1 | 259.6 | |||||
Income taxes payable | 22.7 | 4.5 | |||||
Liabilities of discontinued operations | — | 55.2 | |||||
Total current liabilities | 779.7 | 639.6 | |||||
Long-term debt | 410.8 | 351.0 | |||||
Post-retirement benefits, other than pensions | 4.9 | 6.1 | |||||
Pensions | 137.5 | 134.4 | |||||
Other liabilities | 69.5 | 64.0 | |||||
Total liabilities | 1,402.4 | 1,195.1 | |||||
Commitments and contingencies | |||||||
Stockholders' equity: | |||||||
Preferred stock, $.01 par value, 25,000,000 shares authorized, no shares issued or outstanding | — | — | |||||
Common stock, $.01 par value, 200,000,000 shares authorized, 87,170,197 shares issued | 0.9 | 0.9 | |||||
Additional paid-in capital | 914.9 | 898.3 | |||||
Retained earnings | 794.7 | 744.4 | |||||
Accumulated other comprehensive loss | (103.1 | ) | (22.3 | ) | |||
Treasury stock, at cost, 37,250,915 shares and 36,937,632 shares in 2013 and 2012, respectively | (1,160.2 | ) | (1,124.5 | ) | |||
Total stockholders’ equity | 447.2 | 496.8 | |||||
Total liabilities and stockholders' equity | $ | 1,849.6 | $ | 1,691.9 |
LENNOX INTERNATIONAL INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited, in millions, except per share data) | |||||||||||||||
For the Three Months Ended June 30, | For the Six Months Ended June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Net sales | $ | 913.1 | $ | 840.4 | $ | 1,581.5 | $ | 1,454.8 | |||||||
Cost of goods sold | 659.1 | 632.3 | 1,165.5 | 1,105.8 | |||||||||||
Gross profit | 254.0 | 208.1 | 416.0 | 349.0 | |||||||||||
Operating Expenses: | |||||||||||||||
Selling, general and administrative expenses | 151.3 | 130.7 | 287.0 | 253.9 | |||||||||||
Losses and other expenses, net | 2.1 | 1.4 | 3.2 | — | |||||||||||
Restructuring charges | 2.4 | 0.1 | 2.9 | 2.7 | |||||||||||
Income from equity method investments | (4.2 | ) | (3.9 | ) | (7.4 | ) | (6.3 | ) | |||||||
Operational income from continuing operations | 102.4 | 79.8 | 130.3 | 98.7 | |||||||||||
Interest expense, net | 3.6 | 4.3 | 7.0 | 9.0 | |||||||||||
Other expense (income), net | (0.2 | ) | 0.1 | (0.1 | ) | 0.1 | |||||||||
Income from continuing operations before income taxes | 99.0 | 75.4 | 123.4 | 89.6 | |||||||||||
Provision for income taxes | 34.7 | 25.9 | 43.3 | 30.8 | |||||||||||
Income from continuing operations | 64.3 | 49.5 | 80.1 | 58.8 | |||||||||||
Discontinued Operations: | |||||||||||||||
Loss from discontinued operations before income taxes | — | (9.2 | ) | (13.4 | ) | (32.7 | ) | ||||||||
Benefit from income taxes | — | (4.4 | ) | (5.6 | ) | (12.5 | ) | ||||||||
Loss from discontinued operations | — | (4.8 | ) | (7.8 | ) | (20.2 | ) | ||||||||
Net income | $ | 64.3 | $ | 44.7 | $ | 72.3 | $ | 38.6 | |||||||
Earnings per share – Basic: | |||||||||||||||
Income from continuing operations | $ | 1.28 | $ | 0.97 | $ | 1.60 | $ | 1.15 | |||||||
Loss from discontinued operations | — | (0.09 | ) | (0.16 | ) | (0.39 | ) | ||||||||
Net income | $ | 1.28 | $ | 0.88 | $ | 1.44 | $ | 0.76 | |||||||
Earnings per share – Diluted: | |||||||||||||||
Income from continuing operations | $ | 1.26 | $ | 0.96 | $ | 1.57 | $ | 1.14 | |||||||
Loss from discontinued operations | — | (0.09 | ) | (0.15 | ) | (0.39 | ) | ||||||||
Net income | $ | 1.26 | $ | 0.87 | $ | 1.42 | $ | 0.75 | |||||||
Average shares outstanding: | |||||||||||||||
Basic | 50.2 | 51.0 | 50.2 | 50.9 | |||||||||||
Diluted | 50.9 | 51.6 | 51.0 | 51.5 | |||||||||||
Cash dividends declared per share | $ | 0.24 | $ | 0.18 | $ | 0.44 | $ | 0.36 |
LENNOX INTERNATIONAL INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited, in millions) | |||||||||||||||
For the Three Months Ended June 30, | For the Six Months Ended June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Net income | $ | 64.3 | $ | 44.7 | $ | 72.3 | $ | 38.6 | |||||||
Other comprehensive loss | |||||||||||||||
Foreign currency translation adjustments, net | (24.4 | ) | (24.8 | ) | (28.4 | ) | (9.1 | ) | |||||||
Reclassification of foreign currency translation gains into earnings | — | (3.7 | ) | (41.1 | ) | (3.7 | ) | ||||||||
Net change in pension and post-retirement liability | 0.3 | 7.0 | 1.2 | 6.5 | |||||||||||
Change in fair value of available-for-sale marketable equity securities | (3.2 | ) | 1.5 | (4.7 | ) | 1.8 | |||||||||
Net change in fair value of derivatives | (8.1 | ) | (5.4 | ) | (13.2 | ) | 3.4 | ||||||||
Reclassification of derivative losses into earnings | 1.6 | 1.6 | 1.2 | 3.5 | |||||||||||
Other comprehensive (loss) income before income taxes | (33.8 | ) | (23.8 | ) | (85.0 | ) | 2.4 | ||||||||
Tax benefit (expense) | 2.3 | (1.2 | ) | 4.2 | (4.9 | ) | |||||||||
Other comprehensive loss, net of tax | (31.5 | ) | (25.0 | ) | (80.8 | ) | (2.5 | ) | |||||||
Comprehensive income (loss) | $ | 32.8 | $ | 19.7 | $ | (8.5 | ) | $ | 36.1 |
LENNOX INTERNATIONAL INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS For the Six Months Ended June 30, 2013 and 2012 (Unaudited, in millions) | |||||||
2013 | 2012 | ||||||
Cash flows from operating activities: | |||||||
Net income | $ | 72.3 | $ | 38.6 | |||
Net loss from discontinued operations | 7.8 | 20.2 | |||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Income from equity method investments | (7.4 | ) | (6.3 | ) | |||
Dividends from affiliates | 1.7 | 2.0 | |||||
Restructuring expenses, net of cash paid | (0.5 | ) | 1.5 | ||||
Provision for bad debts | 1.9 | 1.3 | |||||
Unrealized loss (gain) on derivative contracts | 2.3 | (0.3 | ) | ||||
Stock-based compensation expense | 15.2 | 7.8 | |||||
Depreciation and amortization | 28.5 | 27.4 | |||||
Deferred income taxes | (1.0 | ) | 3.9 | ||||
Other items, net | 13.8 | 4.2 | |||||
Changes in assets and liabilities, net of effects of divestitures: | |||||||
Accounts and notes receivable | (177.1 | ) | (119.9 | ) | |||
Inventories | (118.3 | ) | (113.4 | ) | |||
Other current assets | (3.6 | ) | — | ||||
Accounts payable | 80.0 | 100.4 | |||||
Accrued expenses | (13.3 | ) | 14.7 | ||||
Income taxes payable and receivable | 12.9 | 7.7 | |||||
Other | 8.5 | 1.9 | |||||
Net cash used in discontinued operations | (12.0 | ) | (2.3 | ) | |||
Net cash used in operating activities | (88.3 | ) | (10.6 | ) | |||
Cash flows from investing activities: | |||||||
Proceeds from the disposal of property, plant and equipment | — | 0.1 | |||||
Purchases of property, plant and equipment | (23.4 | ) | (16.4 | ) | |||
Net proceeds from sale of businesses | 4.8 | 7.2 | |||||
Net cash used in discontinued operations | (0.1 | ) | (0.4 | ) | |||
Net cash used in investing activities | (18.7 | ) | (9.5 | ) | |||
Cash flows from financing activities: | |||||||
Short-term borrowings, net | 1.6 | 9.9 | |||||
Asset securitization borrowings | 270.0 | 310.0 | |||||
Asset securitization payments | (180.0 | ) | (310.0 | ) | |||
Long-term debt payments | (0.5 | ) | (0.6 | ) | |||
Borrowings from revolving credit facility | 700.5 | 526.0 | |||||
Payments on revolving credit facility | (640.5 | ) | (471.5 | ) | |||
Proceeds from employee stock purchases | 1.0 | 0.2 | |||||
Repurchases of common stock | (33.0 | ) | — | ||||
Repurchases of common stock to satisfy employee withholding tax obligations | (5.8 | ) | (2.6 | ) | |||
Excess tax benefits related to share-based payments | 3.4 | 1.2 | |||||
Cash dividends paid | (10.1 | ) | (18.3 | ) | |||
Net cash provided by financing activities | 106.6 | 44.3 | |||||
Increase (decrease) in cash and cash equivalents | (0.4 | ) | 24.2 | ||||
Effect of exchange rates on cash and cash equivalents | (6.1 | ) | (0.1 | ) | |||
Cash and cash equivalents, beginning of period | 51.8 | 45.0 | |||||
Cash and cash equivalents, end of period | $ | 45.3 | $ | 69.1 | |||
Supplementary disclosures of cash flow information: | |||||||
Cash paid during the period for: | |||||||
Interest, net | $ | 7.7 | $ | 9.5 | |||
Income taxes (net of refunds) | $ | 22.3 | $ | 8.0 |
As of June 30, 2013 | As of December 31, 2012 | ||||||
Finished goods | $ | 331.4 | $ | 258.0 | |||
Work in process | 14.5 | 12.0 | |||||
Raw materials and parts | 199.1 | 180.1 | |||||
545.0 | 450.1 | ||||||
Excess of current cost over last-in, first-out cost | (75.8 | ) | (75.3 | ) | |||
Total inventories, net | $ | 469.2 | $ | 374.8 |
Balance at December 31, 2012 | Acquisitions / (Dispositions) | Other(1) | Balance at June 30, 2013 | ||||||||||||
Residential Heating & Cooling | $ | 26.1 | $ | — | $ | — | $ | 26.1 | |||||||
Commercial Heating & Cooling | 63.8 | — | (0.2 | ) | 63.6 | ||||||||||
Refrigeration | 133.9 | — | (6.0 | ) | 127.9 | ||||||||||
$ | 223.8 | $ | — | $ | (6.2 | ) | $ | 217.6 |
As of June 30, 2013 | As of December 31, 2012 | ||||||
Commodity Price Hedges: | |||||||
Losses (gains) included in AOCI, net of tax | $ | 6.5 | $ | (1.1 | ) | ||
Expense for (benefit from) income taxes | (3.7 | ) | 0.7 |
As of June 30, 2013 | As of December 31, 2012 | ||||
(pounds) | (pounds) | ||||
Copper | 22.6 | 22.8 |
As of June 30, 2013 | As of December 31, 2012 | ||||
(pounds) | (pounds) | ||||
Copper | 2.3 | 2.1 | |||
Aluminum | 2.6 | 2.8 |
As of June 30, 2013 | As of December 31, 2012 | ||||
Notional Amounts: | |||||
Brazilian Real | 3.9 | 10.8 | |||
Mexican Peso | 255.0 | 220.2 | |||
Euro | 4.0 | 1.3 | |||
British Pound | 2.2 | 5.4 | |||
Indian Rupee | 192.0 | 19.5 | |||
Polish Zloty | 24.8 | 12.4 |
Fair Values of Derivative Instruments(1) | |||||||||||||||
Derivatives Designated as Hedging Instruments | Derivatives Not Designated as Hedging Instruments | ||||||||||||||
As of June 30, 2013 | As of December 31, 2012 | As of June 30, 2013 | As of December 31, 2012 | ||||||||||||
Current Assets: | |||||||||||||||
Other Assets | |||||||||||||||
Commodity futures contracts | $ | — | $ | 1.6 | $ | — | $ | 0.2 | |||||||
Foreign currency forward contracts | — | — | — | 0.1 | |||||||||||
Non-Current Assets: | |||||||||||||||
Other Assets, net | |||||||||||||||
Commodity futures contracts | — | 0.3 | — | — | |||||||||||
Total Assets | $ | — | $ | 1.9 | $ | — | $ | 0.3 | |||||||
Current Liabilities: | |||||||||||||||
Accrued Expenses | |||||||||||||||
Commodity futures contracts | $ | 9.2 | $ | — | $ | 1.3 | $ | — | |||||||
Foreign currency forward contracts | — | — | 0.8 | 0.1 | |||||||||||
Non-Current Liabilities: | |||||||||||||||
Other Liabilities | |||||||||||||||
Commodity futures contracts | 1.2 | — | 0.1 | — | |||||||||||
Total Liabilities | $ | 10.4 | $ | — | $ | 2.2 | $ | 0.1 |
Derivatives in Cash Flow Hedging Relationships | |||||||||||||||
For the Three Months Ended June 30, | For the Six Months Ended June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Amount of Loss Reclassified from AOCI into Income (Effective Portion): | |||||||||||||||
Commodity futures contracts(1) | $ | 1.6 | $ | 1.6 | $ | 1.2 | $ | 3.5 | |||||||
Interest rate swap(2) | — | 0.6 | — | 1.2 | |||||||||||
$ | 1.6 | $ | 2.2 | $ | 1.2 | $ | 4.7 | ||||||||
Amount of Loss (Gain) Recognized in Income on Derivatives (Ineffective Portion): | |||||||||||||||
Commodity futures contracts(3) | $ | — | $ | — | $ | 0.3 | $ | (0.1 | ) |
Derivatives Not Designated as Hedging Instruments | |||||||||||||||
For the Three Months Ended June 30, | For the Six Months Ended June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Amount of Loss (Gain) Recognized in Income on Derivatives: | |||||||||||||||
Commodity futures contracts(3) | $ | 1.0 | $ | 1.2 | $ | 1.8 | $ | (0.1 | ) | ||||||
Foreign currency forward contracts(3) | 1.3 | (0.3 | ) | 0.8 | (0.3 | ) | |||||||||
$ | 2.3 | $ | 0.9 | $ | 2.6 | $ | (0.4 | ) |
As of June 30, 2013 | As of December 31, 2012 | ||||||
Accrued expenses | $ | 23.5 | $ | 25.1 | |||
Other liabilities | 50.2 | 46.8 | |||||
$ | 73.7 | $ | 71.9 |
Total warranty liability as of December 31, 2012 | $ | 71.9 | |
Payments made in 2013 | (9.2 | ) | |
Changes resulting from issuance of new warranties | 14.7 | ||
Changes in estimates associated with pre-existing liabilities | (3.2 | ) | |
Changes in foreign currency translation rates and other | (0.5 | ) | |
Total warranty liability as of June 30, 2013 | $ | 73.7 |
Total accrued product quality issue as of December 31, 2012 | $ | 6.7 | |
Changes in estimates associated with pre-existing liabilities | — | ||
Product quality claims paid in 2013 | (0.7 | ) | |
Total accrued product quality issue as of June 30, 2013 | $ | 6.0 |
As of June 30, 2013 | As of December 31, 2012 | ||||||
Short-Term Debt: | |||||||
Asset Securitization Program | $ | 120.0 | $ | 30.0 | |||
Foreign obligations | 5.9 | 4.9 | |||||
Total short-term debt | $ | 125.9 | $ | 34.9 | |||
Current maturities of long-term debt: | $ | 0.4 | $ | 0.7 | |||
Long-Term Debt: | |||||||
Capital lease obligations | $ | 15.8 | $ | 16.0 | |||
Domestic revolving credit facility | 195.0 | 135.0 | |||||
Senior unsecured notes | 200.0 | 200.0 | |||||
Total long-term debt | $ | 410.8 | $ | 351.0 | |||
Total debt | $ | 537.1 | $ | 386.6 |
As of June 30, 2013 | As of December 31, 2012 | ||||||
Eligible amount available under the ASP on qualified accounts receivable | $ | 160.0 | $ | 160.0 | |||
Beneficial interest sold | 120.0 | 30.0 | |||||
Remaining amount available | $ | 40.0 | $ | 130.0 |
For the Three Months Ended June 30, | For the Six Months Ended June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Interest expense (including fees) | $ | 0.3 | $ | 0.3 | $ | 0.6 | $ | 0.6 |
As of June 30, 2013 | As of December 31, 2012 | ||||
Weighted average borrowing rate | 1.48 | % | 1.46 | % |
Consolidated Indebtedness to Adjusted EBITDA Ratio no greater than | 3.5 : 1.0 |
Cash Flow to Net Interest Expense Ratio no less than | 3.0 : 1.0 |
• | We fail to pay any principal or interest when due on any other indebtedness or receivables securitization of at least $75.0 million; or |
• | We are in default in the performance of, or compliance with any term of any other indebtedness or receivables securitization in an aggregate principal amount of at least $75.0 million or any other condition exists which would give the holders the right to declare such indebtedness due and payable prior to its stated maturity. |
For the Three Months Ended June 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Pension Benefits | Other Benefits | ||||||||||||||
Service cost | $ | 1.2 | $ | 1.3 | $ | — | $ | — | |||||||
Interest cost | 4.2 | 4.3 | — | 0.1 | |||||||||||
Expected return on plan assets | (5.4 | ) | (4.7 | ) | — | — | |||||||||
Amortization of prior service cost | 0.1 | 0.1 | (0.7 | ) | (0.8 | ) | |||||||||
Recognized actuarial loss | 2.3 | 2.1 | 0.4 | 0.4 | |||||||||||
Settlements and curtailments | 0.7 | 6.3 | — | — | |||||||||||
Net periodic benefit cost (1) | $ | 3.1 | $ | 9.4 | $ | (0.3 | ) | $ | (0.3 | ) |
For the Six Months Ended June 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Pension Benefits | Other Benefits | ||||||||||||||
Service cost | $ | 2.6 | $ | 2.7 | $ | — | $ | 0.3 | |||||||
Interest cost | 8.3 | 8.6 | 0.1 | 0.3 | |||||||||||
Expected return on plan assets | (10.6 | ) | (9.4 | ) | — | — | |||||||||
Amortization of prior service cost | 0.2 | 0.2 | (1.5 | ) | (1.3 | ) | |||||||||
Recognized actuarial loss | 4.6 | 4.3 | 0.7 | 0.7 | |||||||||||
Settlements and curtailments | 1.2 | 6.3 | — | — | |||||||||||
Net periodic benefit cost (1) | $ | 6.3 | $ | 12.7 | $ | (0.7 | ) | $ | — |
For the Three Months Ended June 30, | For the Six Months Ended June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Compensation expense(1) | $ | 7.5 | $ | 4.0 | $ | 15.2 | $ | 7.8 |
AOCI Component | For the Three Months Ended June 30, 2013 | For the Six Months Ended June 30, 2013 | Affected Line Item in the Consolidated Statements of Operations | |||||||
Losses on cash flow hedges: | ||||||||||
Commodity derivative contracts | $ | (1.6 | ) | $ | (1.2 | ) | Cost of goods sold | |||
Interest rate derivative contracts | — | — | Interest expense, net | |||||||
(1.6 | ) | (1.2 | ) | Total before income taxes | ||||||
— | — | Provision for income taxes | ||||||||
$ | (1.6 | ) | $ | (1.2 | ) | Net of tax | ||||
Foreign currency translation adjustments: | ||||||||||
Sale of foreign business (1) | $ | — | $ | 41.1 | Loss from discontinued operations | |||||
Total reclassifications from AOCI | $ | (1.6 | ) | $ | 39.9 |
Gains / (Losses) on Cash Flow Hedges | Unrealized Gains / (Losses) on Available-for-Sale Securities | Defined Benefit Pension Plan Items | Foreign Currency Translation Adjustments | Total AOCI | ||||||||||||||||
Balance as of December 31, 2012 | $ | 1.1 | $ | 9.3 | $ | (147.5 | ) | $ | 114.8 | $ | (22.3 | ) | ||||||||
Other comprehensive income/(loss) before reclassifications | (8.8 | ) | (4.7 | ) | 1.0 | (28.4 | ) | (40.9 | ) | |||||||||||
Amounts reclassified from AOCI | 1.2 | — | — | (41.1 | ) | (39.9 | ) | |||||||||||||
Net other comprehensive income/(loss) | (7.6 | ) | (4.7 | ) | 1.0 | (69.5 | ) | (80.8 | ) | |||||||||||
Balance as of June 30, 2013 | $ | (6.5 | ) | $ | 4.6 | $ | (146.5 | ) | $ | 45.3 | $ | (103.1 | ) |
Incurred in 2013 | Incurred to Date | Total Expected to be Incurred | |||||||||
Severance and related expense | $ | 0.7 | $ | 11.9 | $ | 12.2 | |||||
Asset write-offs and accelerated depreciation | 0.4 | 1.4 | 1.4 | ||||||||
Equipment moves | — | 0.3 | 0.3 | ||||||||
Lease termination | — | 2.6 | 2.6 | ||||||||
Other | 1.8 | 7.3 | 7.4 | ||||||||
Total restructuring charges | $ | 2.9 | $ | 23.5 | $ | 23.9 |
Incurred in 2013 | Incurred to Date | Total Expected to be Incurred | |||||||||
Residential Heating & Cooling | $ | 1.4 | $ | 7.6 | $ | 7.7 | |||||
Commercial Heating & Cooling | 0.5 | 7.5 | 7.6 | ||||||||
Refrigeration | 1.0 | 8.4 | 8.6 | ||||||||
Corporate & Other | — | — | — | ||||||||
Total restructuring charges | $ | 2.9 | $ | 23.5 | $ | 23.9 |
Description of Reserves | Balance as of December 31, 2012 | Charged to Earnings | Cash Utilization | Non-Cash Utilization and Other | Balance as of June 30, 2013 | ||||||||||||||
Severance and related expense | $ | 0.7 | $ | 0.7 | $ | (0.8 | ) | $ | — | $ | 0.6 | ||||||||
Asset write-offs and accelerated depreciation | — | 0.4 | — | (0.4 | ) | — | |||||||||||||
Equipment moves | — | — | — | — | — | ||||||||||||||
Lease termination | 1.2 | — | (1.2 | ) | — | — | |||||||||||||
Other | 0.5 | 1.8 | (1.4 | ) | (0.1 | ) | 0.8 | ||||||||||||
Total restructuring reserves | $ | 2.4 | $ | 2.9 | $ | (3.4 | ) | $ | (0.5 | ) | $ | 1.4 |
For the Three Months Ended June 30, | For the Six Months Ended June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Net trade sales(1) | $ | — | $ | 112.4 | $ | 73.5 | $ | 194.3 | |||||||
Pre-tax operating loss (1)(2) | (0.4 | ) | (1.6 | ) | (15.5 | ) | (15.9 | ) | |||||||
Gain on sale of business | — | — | 1.7 | — |
As of June 30, 2013 | As of December 31, 2012 | ||||||
Assets of discontinued operations: | |||||||
Accounts receivable, net | $ | — | $ | 11.2 | |||
Inventories, net | — | 4.8 | |||||
Property, plant and equipment, net | — | 3.6 | |||||
Goodwill and intangible assets, net (1) | — | 66.2 | |||||
Deferred income taxes | — | 5.5 | |||||
Other assets | — | 7.3 | |||||
Liabilities of discontinued operations: | |||||||
Accounts payable | $ | — | $ | 16.7 | |||
Accrued expenses | — | 38.5 |
For the Three Months Ended June 30, | For the Six Months Ended June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Net trade sales(1) | $ | — | $ | 4.9 | $ | — | $ | 23.5 | |||||||
Pre-tax operating income (loss)(1) | 0.4 | (3.4 | ) | 0.5 | (11.9 | ) | |||||||||
Loss on sale of business | — | (3.8 | ) | — | (3.8 | ) |
(1) | Excludes eliminations of intercompany sales and any associated profit. |
For the Three Months Ended June 30, | For the Six Months Ended June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Net income | $ | 64.3 | $ | 44.7 | $ | 72.3 | $ | 38.6 | |||||||
Add: Loss from discontinued operations | — | 4.8 | 7.8 | 20.2 | |||||||||||
Income from continuing operations | $ | 64.3 | $ | 49.5 | $ | 80.1 | $ | 58.8 | |||||||
Weighted-average shares outstanding – basic | 50.2 | 51.0 | 50.2 | 50.9 | |||||||||||
Effect of diluted securities attributable to stock-based payments | 0.7 | 0.6 | 0.8 | 0.6 | |||||||||||
Weighted-average shares outstanding – diluted | 50.9 | 51.6 | 51.0 | 51.5 | |||||||||||
Earnings per share – Basic: | |||||||||||||||
Income from continuing operations | $ | 1.28 | $ | 0.97 | $ | 1.60 | $ | 1.15 | |||||||
Loss from discontinued operations | — | (0.09 | ) | (0.16 | ) | (0.39 | ) | ||||||||
Net income | $ | 1.28 | $ | 0.88 | $ | 1.44 | $ | 0.76 | |||||||
Earnings per share – Diluted: | |||||||||||||||
Income from continuing operations | $ | 1.26 | $ | 0.96 | $ | 1.57 | $ | 1.14 | |||||||
Loss from discontinued operations | — | (0.09 | ) | (0.15 | ) | (0.39 | ) | ||||||||
Net income | $ | 1.26 | $ | 0.87 | $ | 1.42 | $ | 0.75 |
For the Six Months Ended June 30, | ||||||
2013 | 2012 | |||||
Weighted-average number of shares | 0.1 | 1.1 | ||||
Price ranges per share | $ | 51.40 | $34.06 - $46.78 |
Segment | Product or Services | Markets Served | Geographic Areas | |||
Residential Heating & Cooling | Furnaces, air conditioners, heat pumps, packaged heating and cooling systems, indoor air quality equipment, comfort control products, replacement parts | Residential Replacement; Residential New Construction | United States Canada | |||
Commercial Heating & Cooling | Unitary heating and air conditioning equipment, applied systems, controls, installation and service of commercial heating and cooling equipment | Light Commercial | United States Canada Europe | |||
Refrigeration | Condensing units, unit coolers, fluid coolers, air cooled condensers, air handlers, process chillers, controls, compressorized racks, supermarket display cases and systems | Light Commercial; Food Preservation; Non-Food/Industrial | North America South America Europe Asia Pacific |
For the Three Months Ended June 30, | For the Six Months Ended June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Net Sales | |||||||||||||||
Residential Heating & Cooling | $ | 476.2 | $ | 411.9 | $ | 790.7 | $ | 684.5 | |||||||
Commercial Heating & Cooling | 229.6 | 221.4 | 392.6 | 378.1 | |||||||||||
Refrigeration | 207.3 | 207.1 | 398.2 | 392.2 | |||||||||||
$ | 913.1 | $ | 840.4 | $ | 1,581.5 | $ | 1,454.8 | ||||||||
Segment Profit (Loss) (1) | |||||||||||||||
Residential Heating & Cooling | $ | 66.2 | $ | 42.0 | $ | 86.7 | $ | 53.0 | |||||||
Commercial Heating & Cooling | 34.6 | 33.2 | 45.7 | 41.5 | |||||||||||
Refrigeration | 25.8 | 21.2 | 42.5 | 35.5 | |||||||||||
Corporate and other | (20.9 | ) | (15.4 | ) | (39.6 | ) | (29.4 | ) | |||||||
Subtotal that includes segment profit and eliminations | 105.7 | 81.0 | 135.3 | 100.6 | |||||||||||
Reconciliation to income from continuing operations before income taxes: | |||||||||||||||
Special product quality adjustment | 0.1 | 0.5 | (0.1 | ) | 0.1 | ||||||||||
Items in Losses and other expenses, net that are excluded from segment profit (loss) (2) | 0.8 | 0.6 | 2.2 | (0.9 | ) | ||||||||||
Restructuring charges | 2.4 | 0.1 | 2.9 | 2.7 | |||||||||||
Interest expense, net | 3.6 | 4.3 | 7.0 | 9.0 | |||||||||||
Other expense (income), net | (0.2 | ) | 0.1 | (0.1 | ) | 0.1 | |||||||||
Income from continuing operations before income taxes | $ | 99.0 | $ | 75.4 | $ | 123.4 | $ | 89.6 |
• | Special product quality adjustments; |
• | Items in Losses and other expenses, net (see table note 2 below); |
• | Restructuring charges; |
• | Goodwill, long-lived asset, and equity method investment impairments; |
• | Interest expense, net; |
• | Other expense (income), net |
Quoted Prices in Active Markets for Identical Assets (Level 1) | |||||||
As of June 30, 2013 | As of December 31, 2012 | ||||||
Investment in marketable equity securities (1) | $ | 6.7 | $ | 10.6 |
(1) | Investment in marketable equity securities is recorded in Other assets, net in the accompanying Consolidated Balance Sheets. |
Quoted Prices in Active Markets for Similar Instruments (Level 2) | |||||||
As of June 30, 2013 | As of December 31, 2012 | ||||||
Senior unsecured notes | $ | 202.1 | $ | 212.3 |
Parent | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Eliminations | Consolidated | |||||||||||||||
ASSETS | |||||||||||||||||||
Current Assets: | |||||||||||||||||||
Cash and cash equivalents | $ | 1.3 | $ | 20.3 | $ | 23.7 | $ | — | $ | 45.3 | |||||||||
Accounts and notes receivable, net | — | 1,082.8 | 561.5 | (1,102.0 | ) | 542.3 | |||||||||||||
Inventories, net | — | 342.2 | 137.2 | (10.2 | ) | 469.2 | |||||||||||||
Deferred income taxes, net | 4.7 | 23.0 | 5.7 | (1.7 | ) | 31.7 | |||||||||||||
Other assets | — | 36.7 | 82.1 | (77.4 | ) | 41.4 | |||||||||||||
Assets of discontinued operations | — | — | — | — | — | ||||||||||||||
Total current assets | 6.0 | 1,505.0 | 810.2 | (1,191.3 | ) | 1,129.9 | |||||||||||||
Property, plant and equipment, net | — | 231.9 | 76.8 | — | 308.7 | ||||||||||||||
Goodwill | — | 131.8 | 85.8 | — | 217.6 | ||||||||||||||
Deferred income taxes | 0.3 | 99.8 | 19.6 | (5.8 | ) | 113.9 | |||||||||||||
Other assets, net(1) | 2,293.5 | 529.6 | 24.0 | (2,767.6 | ) | 79.5 | |||||||||||||
Total assets | $ | 2,299.8 | $ | 2,498.1 | $ | 1,016.4 | $ | (3,964.7 | ) | $ | 1,849.6 | ||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||||||||||
Current liabilities: | |||||||||||||||||||
Short-term debt | $ | 87.0 | $ | — | $ | 53.6 | $ | (14.7 | ) | $ | 125.9 | ||||||||
Current maturities of long-term debt | — | 0.3 | 0.1 | — | 0.4 | ||||||||||||||
Accounts payable | 1,216.1 | 161.9 | 86.8 | (1,091.2 | ) | 373.6 | |||||||||||||
Accrued expenses | 13.5 | 183.3 | 60.6 | (0.3 | ) | 257.1 | |||||||||||||
Income taxes payable | (4.1 | ) | 49.6 | 41.0 | (63.8 | ) | 22.7 | ||||||||||||
Liabilities of discontinued operations | — | — | — | — | — | ||||||||||||||
Total current liabilities | 1,312.5 | 395.1 | 242.1 | (1,170.0 | ) | 779.7 | |||||||||||||
Long-term debt | 395.0 | 15.7 | 91.5 | (91.4 | ) | 410.8 | |||||||||||||
Post-retirement benefits, other than pensions | — | 4.9 | — | — | 4.9 | ||||||||||||||
Pensions | — | 119.0 | 18.5 | — | 137.5 | ||||||||||||||
Other liabilities | 1.7 | 64.2 | 10.8 | (7.2 | ) | 69.5 | |||||||||||||
Total liabilities | 1,709.2 | 598.9 | 362.9 | (1,268.6 | ) | 1,402.4 | |||||||||||||
Commitments and contingencies | |||||||||||||||||||
Total stockholders' equity | 590.6 | 1,899.2 | 653.5 | (2,696.1 | ) | 447.2 | |||||||||||||
Total liabilities and stockholders' equity | $ | 2,299.8 | $ | 2,498.1 | $ | 1,016.4 | $ | (3,964.7 | ) | $ | 1,849.6 |
(1) | Other assets, net consists primarily of Investments in subsidiaries which eliminate upon consolidation. |
Parent | Guarantor Subsidiaries | Non- Guarantor Subsidiaries | Eliminations | Consolidated | |||||||||||||||
ASSETS | |||||||||||||||||||
Current Assets: | |||||||||||||||||||
Cash and cash equivalents | $ | 1.0 | $ | 13.4 | $ | 37.4 | $ | — | $ | 51.8 | |||||||||
Accounts and notes receivable, net | — | 1,076.0 | 427.2 | (1,129.8 | ) | 373.4 | |||||||||||||
Inventories, net | — | 257.3 | 121.5 | (4.0 | ) | 374.8 | |||||||||||||
Deferred income taxes, net | — | 22.9 | 6.3 | (1.7 | ) | 27.5 | |||||||||||||
Other assets | (0.6 | ) | 23.8 | 97.5 | (59.7 | ) | 61.0 | ||||||||||||
Assets of discontinued operations | — | 21.2 | 77.4 | — | 98.6 | ||||||||||||||
Total current assets | 0.4 | 1,414.6 | 767.3 | (1,195.2 | ) | 987.1 | |||||||||||||
Property, plant and equipment, net | — | 239.7 | 58.5 | — | 298.2 | ||||||||||||||
Goodwill | — | 131.8 | 92.0 | — | 223.8 | ||||||||||||||
Deferred income taxes | — | 87.8 | 20.8 | (5.8 | ) | 102.8 | |||||||||||||
Other assets, net(1) | 2,176.3 | 488.5 | 30.3 | (2,615.1 | ) | 80.0 | |||||||||||||
Total assets | $ | 2,176.7 | $ | 2,362.4 | $ | 968.9 | $ | (3,816.1 | ) | $ | 1,691.9 | ||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||||||||||
Current liabilities: | |||||||||||||||||||
Short-term debt | $ | 101.9 | $ | — | $ | (51.0 | ) | $ | (16.0 | ) | $ | 34.9 | |||||||
Current maturities of long-term debt | — | 0.5 | 0.2 | — | 0.7 | ||||||||||||||
Accounts payable | 1,178.0 | 133.7 | 92.0 | (1,119.0 | ) | 284.7 | |||||||||||||
Accrued expenses | 2.5 | 196.6 | 60.8 | (0.3 | ) | 259.6 | |||||||||||||
Income taxes payable | (27.3 | ) | 35.1 | 38.5 | (41.8 | ) | 4.5 | ||||||||||||
Liabilities of discontinued operations | — | 42.3 | 12.9 | — | 55.2 | ||||||||||||||
Total current liabilities | 1,255.1 | 408.2 | 153.4 | (1,177.1 | ) | 639.6 | |||||||||||||
Long-term debt | 335.0 | 15.6 | 98.7 | (98.3 | ) | 351.0 | |||||||||||||
Post-retirement benefits, other than pensions | — | 6.1 | — | — | 6.1 | ||||||||||||||
Pensions | — | 114.7 | 19.7 | — | 134.4 | ||||||||||||||
Other liabilities | 0.5 | 60.1 | 10.6 | (7.2 | ) | 64.0 | |||||||||||||
Total liabilities | 1,590.6 | 604.7 | 282.4 | (1,282.6 | ) | 1,195.1 | |||||||||||||
Commitments and contingencies | |||||||||||||||||||
Total stockholders' equity | 586.1 | 1,757.7 | 686.5 | (2,533.5 | ) | 496.8 | |||||||||||||
Total liabilities and stockholders' equity | $ | 2,176.7 | $ | 2,362.4 | $ | 968.9 | $ | (3,816.1 | ) | $ | 1,691.9 |
(1) | Other assets, net consists primarily of Investments in subsidiaries which eliminate upon consolidation. |
Parent | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Eliminations | Consolidated | |||||||||||||||
Net Sales | $ | — | $ | 795.4 | $ | 208.2 | $ | (90.5 | ) | $ | 913.1 | ||||||||
Cost of goods sold | 0.1 | 575.0 | 169.9 | (85.9 | ) | 659.1 | |||||||||||||
Gross profit | (0.1 | ) | 220.4 | 38.3 | (4.6 | ) | 254.0 | ||||||||||||
Operating expenses: | |||||||||||||||||||
Selling, general and administrative expenses | — | 117.6 | 33.7 | — | 151.3 | ||||||||||||||
Losses and other expenses, net | 2.0 | (0.3 | ) | 0.4 | — | 2.1 | |||||||||||||
Restructuring charges | — | 1.2 | 1.2 | — | 2.4 | ||||||||||||||
Income from equity method investments | (63.7 | ) | 6.5 | (3.4 | ) | 56.4 | (4.2 | ) | |||||||||||
Operational income from continuing operations | 61.6 | 95.4 | 6.4 | (61.0 | ) | 102.4 | |||||||||||||
Interest expense, net | 3.7 | (0.6 | ) | 0.5 | — | 3.6 | |||||||||||||
Other expense, net | — | — | (0.2 | ) | — | (0.2 | ) | ||||||||||||
Income from continuing operations before income taxes | 57.9 | 96.0 | 6.1 | (61.0 | ) | 99.0 | |||||||||||||
Provision for income taxes | (2.0 | ) | 35.3 | 3.1 | (1.7 | ) | 34.7 | ||||||||||||
Income from continuing operations | 59.9 | 60.7 | 3.0 | (59.3 | ) | 64.3 | |||||||||||||
Loss from discontinued operations | — | 25.4 | (25.4 | ) | — | — | |||||||||||||
Net income | $ | 59.9 | $ | 86.1 | $ | (22.4 | ) | $ | (59.3 | ) | $ | 64.3 | |||||||
Other comprehensive loss | $ | (4.2 | ) | $ | 0.3 | $ | 38.7 | $ | (66.3 | ) | $ | (31.5 | ) |
Parent | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Eliminations | Consolidated | |||||||||||||||
Net Sales | $ | — | $ | 1,316.1 | $ | 397.7 | $ | (132.3 | ) | $ | 1,581.5 | ||||||||
Cost of goods sold | 0.1 | 979.4 | 313.2 | (127.2 | ) | 1,165.5 | |||||||||||||
Gross profit | (0.1 | ) | 336.7 | 84.5 | (5.1 | ) | 416.0 | ||||||||||||
Operating expenses: | |||||||||||||||||||
Selling, general and administrative expenses | — | 220.3 | 66.7 | — | 287.0 | ||||||||||||||
Losses and other expenses, net | 2.4 | 0.1 | 0.7 | — | 3.2 | ||||||||||||||
Restructuring charges | — | 1.5 | 1.4 | — | 2.9 | ||||||||||||||
Income from equity method investments | (71.6 | ) | 8.9 | (6.2 | ) | 61.5 | (7.4 | ) | |||||||||||
Operational income from continuing operations | 69.1 | 105.9 | 21.9 | (66.6 | ) | 130.3 | |||||||||||||
Interest expense, net | 7.0 | (1.1 | ) | 1.1 | — | 7.0 | |||||||||||||
Other expense, net | — | — | (0.1 | ) | — | (0.1 | ) | ||||||||||||
Income from continuing operations before income taxes | 62.1 | 107.0 | 20.9 | (66.6 | ) | 123.4 | |||||||||||||
Provision for income taxes | (3.3 | ) | 40.1 | 8.4 | (1.9 | ) | 43.3 | ||||||||||||
Income from continuing operations | 65.4 | 66.9 | 12.5 | (64.7 | ) | 80.1 | |||||||||||||
Loss from discontinued operations | — | 17.6 | (25.4 | ) | — | (7.8 | ) | ||||||||||||
Net income | $ | 65.4 | $ | 84.5 | $ | (12.9 | ) | $ | (64.7 | ) | $ | 72.3 | |||||||
Other comprehensive loss | $ | (7.6 | ) | $ | 1.1 | $ | (7.3 | ) | $ | (67.0 | ) | $ | (80.8 | ) |
Parent | Guarantor Subsidiaries | Non- Guarantor Subsidiaries | Eliminations | Consolidated | |||||||||||||||
Net Sales | $ | — | $ | 688.0 | $ | 206.4 | $ | (54.0 | ) | $ | 840.4 | ||||||||
Cost of goods sold | 0.1 | 526.1 | 160.0 | (53.9 | ) | 632.3 | |||||||||||||
Gross profit | (0.1 | ) | 161.9 | 46.4 | (0.1 | ) | 208.1 | ||||||||||||
Operating expenses: | |||||||||||||||||||
Selling, general and administrative expenses | — | 98.9 | 31.7 | 0.1 | 130.7 | ||||||||||||||
Losses and other expenses, net | (0.6 | ) | 1.3 | 0.6 | 0.1 | 1.4 | |||||||||||||
Restructuring charges | — | (0.1 | ) | 0.2 | — | 0.1 | |||||||||||||
Income from equity method investments | (50.3 | ) | (3.7 | ) | (3.1 | ) | 53.2 | (3.9 | ) | ||||||||||
Operational income from continuing operations | 50.8 | 65.5 | 17.0 | (53.5 | ) | 79.8 | |||||||||||||
Interest expense, net | 4.4 | (0.7 | ) | 0.6 | — | 4.3 | |||||||||||||
Other expense, net | — | — | 0.1 | — | 0.1 | ||||||||||||||
Income from continuing operations before income taxes | 46.4 | 66.2 | 16.3 | (53.5 | ) | 75.4 | |||||||||||||
Provision for income taxes | (1.4 | ) | 22.4 | 3.9 | 1.0 | 25.9 | |||||||||||||
Income from continuing operations | 47.8 | 43.8 | 12.4 | (54.5 | ) | 49.5 | |||||||||||||
Loss from discontinued operations | — | (2.9 | ) | (1.9 | ) | — | (4.8 | ) | |||||||||||
Net income | $ | 47.8 | $ | 40.9 | $ | 10.5 | $ | (54.5 | ) | $ | 44.7 | ||||||||
Other comprehensive loss | $ | (4.5 | ) | $ | (2.9 | ) | $ | (21.1 | ) | $ | 3.5 | $ | (25.0 | ) |
Parent | Guarantor Subsidiaries | Non- Guarantor Subsidiaries | Eliminations | Consolidated | |||||||||||||||
Net Sales | $ | — | $ | 1,160.0 | $ | 395.9 | $ | (101.1 | ) | $ | 1,454.8 | ||||||||
Cost of goods sold | 0.1 | 902.0 | 304.5 | (100.8 | ) | 1,105.8 | |||||||||||||
Gross profit | (0.1 | ) | 258.0 | 91.4 | (0.3 | ) | 349.0 | ||||||||||||
Operating expenses: | |||||||||||||||||||
Selling, general and administrative expenses | — | 187.3 | 66.5 | 0.1 | 253.9 | ||||||||||||||
Losses and other expenses, net | (2.2 | ) | 0.6 | 1.5 | 0.1 | — | |||||||||||||
Restructuring charges | — | 2.5 | 0.2 | — | 2.7 | ||||||||||||||
Income from equity method investments | (43.5 | ) | (1.6 | ) | (5.0 | ) | 43.8 | (6.3 | ) | ||||||||||
Operational income from continuing operations | 45.6 | 69.2 | 28.2 | (44.3 | ) | 98.7 | |||||||||||||
Interest expense, net | 8.8 | (1.2 | ) | 1.4 | — | 9.0 | |||||||||||||
Other expense, net | — | — | 0.1 | — | 0.1 | ||||||||||||||
Income from continuing operations before income taxes | 36.8 | 70.4 | 26.7 | (44.3 | ) | 89.6 | |||||||||||||
Provision for income taxes | (2.4 | ) | 25.0 | 6.7 | 1.5 | 30.8 | |||||||||||||
Income from continuing operations | 39.2 | 45.4 | 20.0 | (45.8 | ) | 58.8 | |||||||||||||
Loss from discontinued operations | — | (13.7 | ) | (6.5 | ) | — | (20.2 | ) | |||||||||||
Net income | $ | 39.2 | $ | 31.7 | $ | 13.5 | $ | (45.8 | ) | $ | 38.6 | ||||||||
Other comprehensive loss | $ | 2.3 | $ | (0.2 | ) | $ | (9.0 | ) | $ | 4.4 | $ | (2.5 | ) |
Parent | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Eliminations | Consolidated | |||||||||||||||
Cash flows from operating activities: | $ | (15.8 | ) | $ | 70.3 | $ | (142.8 | ) | $ | — | $ | (88.3 | ) | ||||||
Cash flows from investing activities: | |||||||||||||||||||
Proceeds from the disposal of property, plant and equipment | — | — | — | — | — | ||||||||||||||
Purchases of property, plant and equipment | — | (17.5 | ) | (5.9 | ) | — | (23.4 | ) | |||||||||||
Net proceeds from sale of businesses | 1.5 | — | 3.3 | — | 4.8 | ||||||||||||||
Net cash used in discontinued operations | — | (0.1 | ) | — | — | (0.1 | ) | ||||||||||||
Net cash used in investing activities | 1.5 | (17.6 | ) | (2.6 | ) | — | (18.7 | ) | |||||||||||
Cash flows from financing activities: | |||||||||||||||||||
Short-term borrowings, net | — | — | 1.6 | — | 1.6 | ||||||||||||||
Asset securitization borrowings | — | — | 270.0 | — | 270.0 | ||||||||||||||
Asset securitization payments | — | — | (180.0 | ) | — | (180.0 | ) | ||||||||||||
Long-term debt payments | — | (0.3 | ) | (0.2 | ) | — | (0.5 | ) | |||||||||||
Borrowings from revolving credit facility | 700.5 | — | — | — | 700.5 | ||||||||||||||
Payments on revolving credit facility | (640.5 | ) | — | — | — | (640.5 | ) | ||||||||||||
Proceeds from employee stock purchases | 1.0 | — | — | — | 1.0 | ||||||||||||||
Repurchases of common stock | (33.0 | ) | — | — | — | (33.0 | ) | ||||||||||||
Repurchases of common stock to satisfy employee withholding tax obligations | (5.8 | ) | — | — | — | (5.8 | ) | ||||||||||||
Excess tax benefits related to share-based payments | 3.4 | — | — | — | 3.4 | ||||||||||||||
Intercompany debt | (27.0 | ) | 9.7 | 17.3 | — | — | |||||||||||||
Intercompany financing activity | 26.1 | (55.2 | ) | 29.1 | — | — | |||||||||||||
Cash dividends paid | (10.1 | ) | — | — | — | (10.1 | ) | ||||||||||||
Net cash provided by financing activities | 14.6 | (45.8 | ) | 137.8 | — | 106.6 | |||||||||||||
Decrease in cash and cash equivalents | 0.3 | 6.9 | (7.6 | ) | — | (0.4 | ) | ||||||||||||
Effect of exchange rates on cash and cash equivalents | — | — | (6.1 | ) | — | (6.1 | ) | ||||||||||||
Cash and cash equivalents, beginning of period | 1.0 | 13.4 | 37.4 | — | 51.8 | ||||||||||||||
Cash and cash equivalents, end of period | $ | 1.3 | $ | 20.3 | $ | 23.7 | $ | — | $ | 45.3 |
Parent | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Eliminations | Consolidated | |||||||||||||||
Cash flows from operating activities: | $ | 34.6 | $ | (51.6 | ) | $ | 6.4 | $ | — | $ | (10.6 | ) | |||||||
Cash flows from investing activities: | |||||||||||||||||||
Proceeds from the disposal of property, plant and equipment | — | 0.1 | — | — | 0.1 | ||||||||||||||
Purchases of property, plant and equipment | — | (13.9 | ) | (2.5 | ) | — | (16.4 | ) | |||||||||||
Net proceeds from sale of businesses | — | 7.2 | — | — | 7.2 | ||||||||||||||
Net cash used in discontinued operations | — | (0.4 | ) | — | — | (0.4 | ) | ||||||||||||
Net cash used in investing activities | — | (7.0 | ) | (2.5 | ) | — | (9.5 | ) | |||||||||||
Cash flows from financing activities: | |||||||||||||||||||
Short-term borrowings, net | — | — | 9.9 | — | 9.9 | ||||||||||||||
Asset securitization borrowings | — | — | 310.0 | — | 310.0 | ||||||||||||||
Asset securitization payments | — | — | (310.0 | ) | — | (310.0 | ) | ||||||||||||
Long-term debt payments | — | (0.4 | ) | (0.2 | ) | — | (0.6 | ) | |||||||||||
Borrowings from revolving credit facility | 526.0 | — | — | — | 526.0 | ||||||||||||||
Payments on revolving credit facility | (471.5 | ) | — | — | — | (471.5 | ) | ||||||||||||
Proceeds from employee stock purchases | 0.2 | — | — | — | 0.2 | ||||||||||||||
Payments of deferred financing costs | — | — | — | — | — | ||||||||||||||
Repurchases of common stock to satisfy employee withholding tax obligations | (2.6 | ) | — | — | — | (2.6 | ) | ||||||||||||
Excess tax benefits related to share-based payments | 1.2 | — | — | — | 1.2 | ||||||||||||||
Intercompany debt | 0.8 | 0.4 | (1.2 | ) | — | — | |||||||||||||
Intercompany financing activity | (70.4 | ) | 73.1 | (2.7 | ) | — | — | ||||||||||||
Cash dividends paid | (18.3 | ) | — | — | — | (18.3 | ) | ||||||||||||
Net cash provided by financing activities | (34.6 | ) | 73.1 | 5.8 | — | 44.3 | |||||||||||||
Increase in cash and cash equivalents | — | 14.5 | 9.7 | — | 24.2 | ||||||||||||||
Effect of exchange rates on cash and cash equivalents | — | — | (0.1 | ) | — | (0.1 | ) | ||||||||||||
Cash and cash equivalents, beginning of period | 1.0 | 9.7 | 34.3 | — | 45.0 | ||||||||||||||
Cash and cash equivalents, end of period | $ | 1.0 | $ | 24.2 | $ | 43.9 | $ | — | $ | 69.1 |
• | Net sales in the second quarter increased $73 million, or 9%, from $840 million in 2012 to $913 million in 2013. Foreign currency exchange rates were neutral to net sales quarter over quarter. |
• | Operational income from continuing operations for the second quarter of 2013 was $102 million compared to $80 million for the same quarter of 2012. The increase was primarily due to higher volumes, higher gross profit margins from favorable price and mix and product cost savings, partially offset by higher freight and distribution costs and higher incentive compensation due to overall improved operating results in 2013. |
• | Net income for the second quarter of 2013 was $64 million compared to $45 million in the second quarter of 2012. |
• | Diluted earnings per share from continuing operations were $1.26 per share in the second quarter of 2013 compared to $0.96 per share in the second quarter of 2012. |
• | We used $88 million of cash for operating activities in the first half of 2013 compared to $11 million in the first half of 2012. |
For the Three Months Ended June 30, | ||||||||||||||||
Dollars | Percent Change Fav/(Unfav) | Percent of Sales | ||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Net sales | $ | 913.1 | $ | 840.4 | 8.7 | % | 100.0 | % | 100.0 | % | ||||||
Cost of goods sold | 659.1 | 632.3 | (4.2 | ) | 72.2 | 75.2 | ||||||||||
Gross profit | 254.0 | 208.1 | 22.1 | 27.8 | 24.8 | |||||||||||
Selling, general and administrative expenses | 151.3 | 130.7 | (15.8 | ) | 16.6 | 15.6 | ||||||||||
Losses and other expenses, net | 2.1 | 1.4 | 50.0 | 0.2 | 0.2 | |||||||||||
Restructuring charges | 2.4 | 0.1 | (2,300.0 | ) | 0.3 | — | ||||||||||
Income from equity method investments | (4.2 | ) | (3.9 | ) | 7.7 | (0.5 | ) | (0.5 | ) | |||||||
Operational income from continuing operations | $ | 102.4 | $ | 79.8 | 28.3 | % | 11.2 | % | 9.5 | % |
For the Three Months Ended June 30, | |||||||
2013 | 2012 | ||||||
Realized loss on settled future contracts | $ | 0.4 | $ | 0.7 | |||
Foreign currency exchange loss (gain) | 0.9 | (0.1 | ) | ||||
Loss on disposal of fixed assets | — | 0.2 | |||||
Net change in unrealized losses on unsettled futures contracts | 0.7 | 0.5 | |||||
Other items, net | 0.1 | 0.1 | |||||
Losses and other expenses, net | $ | 2.1 | $ | 1.4 |
For the Three Months Ended June 30, | ||||||||||||||
2013 | 2012 | Difference | % Change | |||||||||||
Net sales | $ | 476.2 | $ | 411.9 | $ | 64.3 | 15.6 | % | ||||||
Profit | $ | 66.2 | $ | 42.0 | $ | 24.2 | 57.6 | % | ||||||
% of net sales | 13.9 | % | 10.2 | % |
For the Three Months Ended June 30, | ||||||||||||||
2013 | 2012 | Difference | % Change | |||||||||||
Net sales | $ | 229.6 | $ | 221.4 | $ | 8.2 | 3.7 | % | ||||||
Profit | $ | 34.6 | $ | 33.2 | $ | 1.4 | 4.2 | % | ||||||
% of net sales | 15.1 | % | 15.0 | % |
For the Three Months Ended June 30, | ||||||||||||||
2013 | 2012 | Difference | % Change | |||||||||||
Net sales | $ | 207.3 | $ | 207.1 | $ | 0.2 | 0.1 | % | ||||||
Profit | $ | 25.8 | $ | 21.2 | $ | 4.6 | 21.7 | % | ||||||
% of net sales | 12.4 | % | 10.2 | % |
For the Six Months Ended June 30, | ||||||||||||||||
Dollars | Percent Change Fav/(Unfav) | Percent of Sales | ||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Net sales | $ | 1,581.5 | $ | 1,454.8 | 8.7 | % | 100.0 | % | 100.0 | % | ||||||
Cost of goods sold | 1,165.5 | 1,105.8 | (5.4 | ) | 73.7 | 76.0 | ||||||||||
Gross profit | 416.0 | 349.0 | 19.2 | 26.3 | 24.0 | |||||||||||
Selling, general and administrative expenses | 287.0 | 253.9 | (13.0 | ) | 18.1 | 17.5 | ||||||||||
Losses and other expenses, net | 3.2 | — | (100.0 | ) | 0.2 | — | ||||||||||
Restructuring charges | 2.9 | 2.7 | (7.4 | ) | 0.2 | 0.2 | ||||||||||
Income from equity method investments | (7.4 | ) | (6.3 | ) | 17.5 | (0.5 | ) | (0.4 | ) | |||||||
Operational income from continuing operations | $ | 130.3 | $ | 98.7 | 32.0 | % | 8.2 | % | 6.8 | % |
For the Six Months Ended June 30, | |||||||
2013 | 2012 | ||||||
Realized loss on settled future contracts | $ | 0.4 | $ | 1.0 | |||
Foreign currency exchange loss (gain) | 0.6 | (0.3 | ) | ||||
Loss on disposal of fixed assets | — | 0.2 | |||||
Net change in unrealized losses (gains) on unsettled futures contracts | 1.8 | (1.2 | ) | ||||
Special legal contingency charge | 0.2 | — | |||||
Other items, net | 0.2 | 0.3 | |||||
Losses and other expenses, net | $ | 3.2 | $ | — |
For the Six Months Ended June 30, | ||||||||||||||
2013 | 2012 | Difference | % Change | |||||||||||
Net sales | $ | 790.7 | $ | 684.5 | $ | 106.2 | 15.5 | % | ||||||
Profit | $ | 86.7 | $ | 53.0 | $ | 33.7 | 63.6 | % | ||||||
% of net sales | 11.0 | % | 7.7 | % |
For the Six Months Ended June 30, | ||||||||||||||
2013 | 2012 | Difference | % Change | |||||||||||
Net sales | $ | 392.6 | $ | 378.1 | $ | 14.5 | 3.8 | % | ||||||
Profit | $ | 45.7 | $ | 41.5 | $ | 4.2 | 10.1 | % | ||||||
% of net sales | 11.6 | % | 11.0 | % |
For the Six Months Ended June 30, | ||||||||||||||
2013 | 2012 | Difference | % Change | |||||||||||
Net sales | $ | 398.2 | $ | 392.2 | $ | 6.0 | 1.5 | % | ||||||
Profit | $ | 42.5 | $ | 35.5 | $ | 7.0 | 19.7 | % | ||||||
% of net sales | 10.7 | % | 9.1 | % |
For the Six Months Ended June 30, | |||||||
2013 | 2012 | ||||||
Net cash used in operating activities | $ | (88.3 | ) | $ | (10.6 | ) | |
Net cash used in investing activities | (18.7 | ) | (9.5 | ) | |||
Net cash provided by financing activities | 106.6 | 44.3 |
Maximum Capacity | Outstanding Borrowings | Available for Future Borrowings | |||||||||
Short-Term Debt: | |||||||||||
Foreign obligations | $ | 30.8 | $ | 5.9 | $ | 24.9 | |||||
Asset Securitization Program (1) | 160.0 | 120.0 | 40.0 | ||||||||
Total short-term debt | $ | 190.8 | $ | 125.9 | $ | 64.9 | |||||
Current Maturities: | |||||||||||
Capital lease obligations | $ | 0.4 | $ | 0.4 | $ | — | |||||
Long-Term Debt: | |||||||||||
Capital lease obligations | $ | 15.8 | $ | 15.8 | $ | — | |||||
Domestic revolving credit facility (2) | 650.0 | 195.0 | 405.0 | ||||||||
Senior unsecured notes | 200.0 | 200.0 | — | ||||||||
Total long-term debt | 865.8 | 410.8 | 405.0 | ||||||||
Total debt | $ | 1,057.0 | $ | 537.1 | $ | 469.9 |
Total Number of Shares Purchased (1) | Average Price Paid per Share (including fees) | Total Number of Shares Purchased As Part of Publicly Announced Plans | Approximate Dollar Value of Shares that may yet be Purchased Under the Plans (in millions) | ||||||||||
April 1 through April 30 | 11,112 | $ | 62.26 | — | $ | 371.2 | |||||||
May 1 through May 31 | 397,022 | 63.16 | 383,656 | 348.1 | |||||||||
June 1 through June 30 | 139,295 | 63.15 | 138,875 | 338.2 | |||||||||
547,429 | 522,531 |
3.1 | Restated Certificate of Incorporation of Lennox International Inc. (“LII”) (filed as Exhibit 3.1 to LII’s Registration Statement on Form S-1 (Registration Statement No. 333-75725) filed on April 6, 1999 and incorporated herein by reference). |
3.2 | Amended and Restated Bylaws of LII (filed as Exhibit 3.1 to LII’s Current Report on Form 8-K filed on September 21, 2012 and incorporated herein by reference). |
4.1 | Specimen Stock Certificate for the Common Stock, par value $.01 per share, of LII (filed as Exhibit 4.1 to LII’s Amendment to Registration Statement on Form S-1/A (Registration No. 333-75725) filed on June 16, 1999 and incorporated herein by reference). |
4.2 | Indenture, dated as of May 3, 2010, between LII and U.S. Bank National Association, as trustee (filed as Exhibit 4.3 to LII’s Post-Effective Amendment No. 1 to Registration Statement on S-3 (Registration No. 333-155796) filed on May 3, 2010, and incorporated herein by reference). |
4.3 | Form of First Supplemental Indenture among LII, the guarantors party thereto and U.S. Bank National Association, as trustee (filed as Exhibit 4.11 to LII’s Post-Effective Amendment No. 1 to Registration Statement on S-3 (Registration No. 333-155796) filed on May 3, 2010, and incorporated herein by reference). |
4.4 | Second Supplemental Indenture dated as of March 28, 2011, among Heatcraft Inc., a Mississippi corporation, Heatcraft Refrigeration Products LLC, a Delaware limited liability company and Advanced Distributor Products LLC, a Delaware limited liability company (the “Guarantors”), LII, and each other then existing Guarantor under the Indenture dated as of May 3, 2010, and U.S. Bank National Association as Trustee (filed as Exhibit 4.4 to LII’s Quarterly Report on Form 10-Q filed on April 26, 2011, and incorporated herein by reference). |
4.5 | Form of 4.900% Note due 2017 (filed as Exhibit 4.3 to LII’s Current Report on Form 8-K filed on May 6, 2010 and incorporated herein by reference). |
31.1 | Certification of the principal executive officer (filed herewith). |
31.2 | Certification of the principal financial officer (filed herewith). |
32.1 | Certification of the principal executive officer and the principal financial officer pursuant to 18 U.S.C. Section 1350 (furnished herewith). |
* | In accordance with Regulation S-T, the XBRL-related information in Exhibit No. (101) to this Quarterly Report on Form 10-Q shall be deemed “furnished” and not “filed.” |
1. | I have reviewed this quarterly report on Form 10-Q of Lennox International Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ Todd M. Bluedorn | |
Todd M. Bluedorn | |
Chief Executive Officer |
1. | I have reviewed this quarterly report on Form 10-Q of Lennox International Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ Joseph W. Reitmeier | |
Joseph W. Reitmeier | |
Chief Financial Officer |
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ Todd M. Bluedorn | |
Todd M. Bluedorn | |
Chief Executive Officer |
/s/ Joseph W. Reitmeier | |
Joseph W. Reitmeier | |
Chief Financial Officer |
Condensed Consolidating Financial Statements (Details 2) (USD $)
In Millions, unless otherwise specified |
6 Months Ended | |
---|---|---|
Jun. 30, 2013
|
Jun. 30, 2012
|
|
Condensed Consolidating Statements of Cash Flows | ||
Cash flows from operating activities: | $ (88.3) | $ (10.6) |
Cash flows from investing activities: | ||
Proceeds from the disposal of property, plant and equipment | 0 | 0.1 |
Purchases of property, plant and equipment | (23.4) | (16.4) |
Net proceeds from sale of businesses | 4.8 | 7.2 |
Net cash used in discontinued operations | (0.1) | (0.4) |
Net cash used in investing activities | (18.7) | (9.5) |
Cash flows from financing activities: | ||
Short-term borrowings, net | 1.6 | 9.9 |
Asset securitization borrowings | 270.0 | 310.0 |
Asset securitization payments | (180.0) | (310.0) |
Long-term debt payments | (0.5) | (0.6) |
Borrowings from revolving credit facility | 700.5 | 526.0 |
Payments on revolving credit facility | (640.5) | (471.5) |
Proceeds from employee stock purchases | 1.0 | 0.2 |
Payments of deferred financing costs | 0 | |
Repurchases of common stock | (33.0) | 0 |
Repurchases of common stock to satisfy employee withholding tax obligations | (5.8) | (2.6) |
Excess tax benefits related to share-based payments | 3.4 | 1.2 |
Intercompany debt | 0 | 0 |
Intercompany financing activity | 0 | 0 |
Cash dividends paid | (10.1) | (18.3) |
Net cash provided by financing activities | 106.6 | 44.3 |
Decrease in cash and cash equivalents | (0.4) | 24.2 |
Effect of exchange rates on cash and cash equivalents | (6.1) | (0.1) |
Cash and cash equivalents, beginning of period | 51.8 | 45.0 |
Cash and cash equivalents, end of period | 45.3 | 69.1 |
Parent [Member]
|
||
Condensed Consolidating Statements of Cash Flows | ||
Cash flows from operating activities: | (15.8) | 34.6 |
Cash flows from investing activities: | ||
Proceeds from the disposal of property, plant and equipment | 0 | 0 |
Purchases of property, plant and equipment | 0 | 0 |
Net proceeds from sale of businesses | 1.5 | 0 |
Net cash used in discontinued operations | 0 | 0 |
Net cash used in investing activities | 1.5 | 0 |
Cash flows from financing activities: | ||
Short-term borrowings, net | 0 | 0 |
Asset securitization borrowings | 0 | 0 |
Asset securitization payments | 0 | 0 |
Long-term debt payments | 0 | 0 |
Borrowings from revolving credit facility | 700.5 | 526.0 |
Payments on revolving credit facility | (640.5) | (471.5) |
Proceeds from employee stock purchases | 1.0 | 0.2 |
Payments of deferred financing costs | 0 | |
Repurchases of common stock | (33.0) | |
Repurchases of common stock to satisfy employee withholding tax obligations | (2.6) | |
Excess tax benefits related to share-based payments | 3.4 | 1.2 |
Intercompany debt | (27.0) | 0.8 |
Intercompany financing activity | 26.1 | (70.4) |
Cash dividends paid | (10.1) | (18.3) |
Net cash provided by financing activities | 14.6 | (34.6) |
Decrease in cash and cash equivalents | 0.3 | 0 |
Effect of exchange rates on cash and cash equivalents | 0 | 0 |
Cash and cash equivalents, beginning of period | 1.0 | 1.0 |
Cash and cash equivalents, end of period | 1.3 | 1.0 |
Guarantor Subsidiaries [Member]
|
||
Condensed Consolidating Statements of Cash Flows | ||
Cash flows from operating activities: | 70.3 | (51.6) |
Cash flows from investing activities: | ||
Proceeds from the disposal of property, plant and equipment | 0 | 0.1 |
Purchases of property, plant and equipment | (17.5) | (13.9) |
Net proceeds from sale of businesses | 0 | 7.2 |
Net cash used in discontinued operations | (0.1) | (0.4) |
Net cash used in investing activities | (17.6) | (7.0) |
Cash flows from financing activities: | ||
Short-term borrowings, net | 0 | 0 |
Asset securitization borrowings | 0 | 0 |
Asset securitization payments | 0 | 0 |
Long-term debt payments | (0.3) | (0.4) |
Borrowings from revolving credit facility | 0 | 0 |
Payments on revolving credit facility | 0 | 0 |
Proceeds from employee stock purchases | 0 | 0 |
Payments of deferred financing costs | 0 | |
Repurchases of common stock | 0 | |
Repurchases of common stock to satisfy employee withholding tax obligations | 0 | |
Excess tax benefits related to share-based payments | 0 | 0 |
Intercompany debt | 9.7 | 0.4 |
Intercompany financing activity | (55.2) | 73.1 |
Cash dividends paid | 0 | 0 |
Net cash provided by financing activities | (45.8) | 73.1 |
Decrease in cash and cash equivalents | 6.9 | 14.5 |
Effect of exchange rates on cash and cash equivalents | 0 | 0 |
Cash and cash equivalents, beginning of period | 13.4 | 9.7 |
Cash and cash equivalents, end of period | 20.3 | 24.2 |
Non-Guarantor Subsidiaries [Member]
|
||
Condensed Consolidating Statements of Cash Flows | ||
Cash flows from operating activities: | (142.8) | 6.4 |
Cash flows from investing activities: | ||
Proceeds from the disposal of property, plant and equipment | 0 | 0 |
Purchases of property, plant and equipment | (5.9) | (2.5) |
Net proceeds from sale of businesses | 3.3 | 0 |
Net cash used in discontinued operations | 0 | 0 |
Net cash used in investing activities | (2.6) | (2.5) |
Cash flows from financing activities: | ||
Short-term borrowings, net | 1.6 | 9.9 |
Asset securitization borrowings | 270.0 | 310.0 |
Asset securitization payments | (180.0) | (310.0) |
Long-term debt payments | (0.2) | (0.2) |
Borrowings from revolving credit facility | 0 | 0 |
Payments on revolving credit facility | 0 | 0 |
Proceeds from employee stock purchases | 0 | 0 |
Payments of deferred financing costs | 0 | |
Repurchases of common stock | 0 | |
Repurchases of common stock to satisfy employee withholding tax obligations | 0 | |
Excess tax benefits related to share-based payments | 0 | 0 |
Intercompany debt | 17.3 | (1.2) |
Intercompany financing activity | 29.1 | (2.7) |
Cash dividends paid | 0 | 0 |
Net cash provided by financing activities | 137.8 | 5.8 |
Decrease in cash and cash equivalents | (7.6) | 9.7 |
Effect of exchange rates on cash and cash equivalents | (6.1) | (0.1) |
Cash and cash equivalents, beginning of period | 37.4 | 34.3 |
Cash and cash equivalents, end of period | 23.7 | 43.9 |
Eliminations [Member]
|
||
Condensed Consolidating Statements of Cash Flows | ||
Cash flows from operating activities: | 0 | 0 |
Cash flows from investing activities: | ||
Proceeds from the disposal of property, plant and equipment | 0 | 0 |
Purchases of property, plant and equipment | 0 | 0 |
Net proceeds from sale of businesses | 0 | 0 |
Net cash used in discontinued operations | 0 | 0 |
Net cash used in investing activities | 0 | 0 |
Cash flows from financing activities: | ||
Short-term borrowings, net | 0 | 0 |
Asset securitization borrowings | 0 | 0 |
Asset securitization payments | 0 | 0 |
Long-term debt payments | 0 | 0 |
Borrowings from revolving credit facility | 0 | 0 |
Payments on revolving credit facility | 0 | 0 |
Proceeds from employee stock purchases | 0 | 0 |
Payments of deferred financing costs | 0 | |
Repurchases of common stock | 0 | |
Repurchases of common stock to satisfy employee withholding tax obligations | 0 | |
Excess tax benefits related to share-based payments | 0 | 0 |
Intercompany debt | 0 | 0 |
Intercompany financing activity | 0 | 0 |
Cash dividends paid | 0 | 0 |
Net cash provided by financing activities | 0 | 0 |
Decrease in cash and cash equivalents | 0 | 0 |
Effect of exchange rates on cash and cash equivalents | 0 | 0 |
Cash and cash equivalents, beginning of period | 0 | 0 |
Cash and cash equivalents, end of period | $ 0 | $ 0 |
Comprehensive Income (Notes)
|
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Jun. 30, 2013
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Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Comprehensive Income | Comprehensive Income: The following table provides information on items not reclassified in their entirety from AOCI to Net Income in the accompanying Consolidated Statements of Operations (in millions):
(1) The reclassification of foreign currency translation adjustments relates to the sale of the Service Experts business in the first quarter of 2013. Refer to Note 13 for details. The following table provides information on changes in AOCI by component (net of tax) for the six months ended June 30, 2013 (in millions):
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Lines of Credit and Financing Arrangements (Details 2) (Eligible amounts available and beneficial interest sold [Member], USD $)
In Millions, unless otherwise specified |
Jun. 30, 2013
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Dec. 31, 2012
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---|---|---|
Eligible amounts available and beneficial interest sold [Member]
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||
Eligible amounts available and beneficial interests sold | ||
Eligible amount available under the ASP on qualified accounts receivable | $ 160.0 | $ 160.0 |
Beneficial interest sold | 120.0 | 30.0 |
Remaining amount available | $ 40.0 | $ 130.0 |
Consolidated Statements of Operations (USD $)
In Millions, except Per Share data, unless otherwise specified |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2013
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Jun. 30, 2012
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Jun. 30, 2013
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Jun. 30, 2012
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Income Statement [Abstract] | ||||
Net sales | $ 913.1 | $ 840.4 | $ 1,581.5 | $ 1,454.8 |
Cost of goods sold | 659.1 | 632.3 | 1,165.5 | 1,105.8 |
Gross profit | 254.0 | 208.1 | 416.0 | 349.0 |
Operating Expenses: | ||||
Selling, general and administrative expenses | 151.3 | 130.7 | 287.0 | 253.9 |
Losses and other expenses, net | 2.1 | 1.4 | 3.2 | 0 |
Restructuring charges | 2.4 | 0.1 | 2.9 | 2.7 |
Income from equity method investments | (4.2) | (3.9) | (7.4) | (6.3) |
Operational income from continuing operations | 102.4 | 79.8 | 130.3 | 98.7 |
Interest expense, net | 3.6 | 4.3 | 7.0 | 9.0 |
Other expense (income), net | (0.2) | 0.1 | (0.1) | 0.1 |
Income from continuing operations before income taxes | 99.0 | 75.4 | 123.4 | 89.6 |
Provision for income taxes | 34.7 | 25.9 | 43.3 | 30.8 |
Income from continuing operations | 64.3 | 49.5 | 80.1 | 58.8 |
Discontinued Operations: | ||||
Loss from discontinued operations before income taxes | 0 | (9.2) | (13.4) | (32.7) |
Benefit from income taxes | 0 | (4.4) | (5.6) | (12.5) |
Loss from discontinued operations | 0 | (4.8) | (7.8) | (20.2) |
Net income | $ 64.3 | $ 44.7 | $ 72.3 | $ 38.6 |
Earnings per share – Basic: | ||||
Income from continuing operations | $ 1.28 | $ 0.97 | $ 1.60 | $ 1.15 |
Loss from discontinued operations | $ 0.00 | $ (0.09) | $ (0.16) | $ (0.39) |
Net income | $ 1.28 | $ 0.88 | $ 1.44 | $ 0.76 |
Earnings per share – Diluted: | ||||
Income from continuing operations | $ 1.26 | $ 0.96 | $ 1.57 | $ 1.14 |
Loss from discontinued operations | $ 0.00 | $ (0.09) | $ (0.15) | $ (0.39) |
Net income | $ 1.26 | $ 0.87 | $ 1.42 | $ 0.75 |
Average shares outstanding: | ||||
Basic | 50.2 | 51.0 | 50.2 | 50.9 |
Diluted | 50.9 | 51.6 | 51.0 | 51.5 |
Cash dividends declared per share | $ 0.24 | $ 0.18 | $ 0.44 | $ 0.36 |
Derivatives
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6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivatives | Derivatives: Objectives and Strategies for Using Derivative Instruments Commodity Price Risk We utilize a cash flow hedging program to mitigate our exposure to volatility in the prices of metal commodities used in our production processes. Our hedging program includes the use of futures contracts, which we enter into using a dollar cost averaging strategy, to lock in prices. As a result, we are subject to derivative losses should the metal commodity prices decrease and gains should the prices increase. A higher percentage of commodity price exposures are hedged near term with lower percentages hedged at future dates, providing us with protection against near-term price volatility while allowing us to adjust to market price movements over time. Interest Rate Risk A portion of our debt bears interest at variable interest rates, and as a result, we are subject to variability in the cash paid for interest. In order to mitigate a portion of that risk, we may choose from time to time to engage in an interest rate swap hedging strategy to eliminate the variability of interest payment cash flows. Prior to 2013, we used an interest rate swap hedge to fix the interest payments associated with the first $100 million of the total variable-rate debt outstanding under our revolving credit facility that is solely due to changes in the benchmark interest rate. The variable portion of the interest rate swap was tied to the 1-Month LIBOR (the benchmark interest rate). On a monthly basis, the interest rates for both the interest rate swap and the underlying debt were reset, the swap was settled with the counterparty, and the interest was paid. The interest rate swap was classified as a cash flow hedge. That interest rate swap expired on October 12, 2012, and, subsequently, we were no longer hedged against interest rate risk. Foreign Currency Risk Foreign currency exchange rate movements create a degree of risk by affecting the U.S. dollar value of assets and liabilities arising in foreign currencies. We seek to mitigate the impact of short-term currency exchange rate movements on certain short-term transactions by periodically entering into foreign currency forward contracts. These forward contracts are not designated as hedges and generally expire during the quarter that we enter into them. By entering into these forward contracts, we lock in exchange rates that would otherwise cause losses should the U.S. dollar appreciate and gains should the U.S. dollar depreciate. Cash Flow Hedges We include unrealized gains or losses from our commodity cash flow hedges in accumulated other comprehensive income (“AOCI”). The gains or losses in AOCI related to commodity price hedges are expected to be reclassified into earnings within the next 18 months based on the prices of the commodities at the settlement dates. Assuming that commodity prices remain constant, we expect to reclassify $5.8 million of derivative losses into earnings within the next 12 months. Commodity futures contracts that are designated as cash flow hedges and that are in place as of June 30, 2013 are scheduled to mature through December 2014. We recorded the following amounts related to our cash flow hedges (in millions):
We had the following outstanding commodity futures contracts designated as cash flow hedges (in millions):
Derivatives not Designated as Cash Flow Hedges For commodity derivatives not designated as cash flow hedges, we follow the same hedging strategy as derivatives designated as cash flow hedges, except that we elect not to designate these derivatives as cash flow hedges at the inception of the arrangement. We had the following outstanding commodity futures contracts not designated as cash flow hedges (in millions):
We also had the following outstanding foreign currency forward contracts not designated as cash flow hedges (local currency, in millions):
Information About the Locations and Amounts of Derivative Instruments The following tables provide the locations and amounts of derivative fair values in the Consolidated Balance Sheets and derivative gains and losses in the Consolidated Statements of Operations (in millions):
(1) All derivative instruments are classified as Level 2 within the fair value hierarchy. See Note 16 for more information.
(1) The loss was recorded in Cost of goods sold in the accompanying Consolidated Statements of Operations. (2) The loss was recorded in Interest expense, net in the accompanying Consolidated Statements of Operations. (3) The loss (gain) was recorded in Losses and other expenses, net in the accompanying Consolidated Statements of Operations. |
General (Policies)
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6 Months Ended |
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Jun. 30, 2013
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying unaudited Consolidated Balance Sheet as of June 30, 2013, the accompanying unaudited Consolidated Statements of Operations for the three and six months ended June 30, 2013 and 2012, the accompanying unaudited Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2013 and 2012, and the accompanying unaudited Consolidated Statements of Cash Flows for the six months ended June 30, 2013 and 2012 should be read in conjunction with our audited consolidated financial statements and footnotes included in our Annual Report on Form 10-K for the year ended December 31, 2012. The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. The accompanying consolidated financial statements contain all material adjustments, consisting principally of normal recurring adjustments, necessary for a fair presentation of our financial position, results of operations and cash flows. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to applicable rules and regulations, although we believe that the disclosures herein are adequate to make the information presented not misleading. The operating results for the interim periods are not necessarily indicative of the results that may be expected for a full year. Our fiscal year ends on December 31 and each of our quarters are comprised of 13 weeks. For convenience, throughout these financial statements, the 13 weeks comprising each quarterly period are denoted by the last day of the respective calendar quarter. |
Use of Estimates | Use of Estimates The preparation of financial statements requires us to make estimates and assumptions about future events. These estimates and the underlying assumptions affect the amounts of assets and liabilities reported, disclosures about contingent assets and liabilities, and reported amounts of revenues and expenses. Such estimates include the valuation of accounts receivable, inventories, goodwill, intangible assets and other long-lived assets, contingencies, guarantee obligations, indemnifications, and assumptions used in the calculation of income taxes, pension and post-retirement medical benefits, and stock-based compensation among others. These estimates and assumptions are based on our best estimates and judgment. We evaluate these estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment. We believe these estimates and assumptions to be reasonable under the circumstances and will adjust such estimates and assumptions when facts and circumstances dictate. Volatile equity, foreign currency and commodity markets combine to increase the uncertainty inherent in such estimates and assumptions. Future events and their effects cannot be determined with precision and actual results could differ significantly from these estimates. Changes in these estimates resulting from continuing changes in the economic environment will be reflected in the financial statements in future periods. |
Reclassifications | Reclassifications Certain amounts have been reclassified from the prior year presentation to conform to the current year presentation. |
Discontinued Operations (Details) (USD $)
In Millions, unless otherwise specified |
3 Months Ended | 6 Months Ended | ||
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Jun. 30, 2013
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Jun. 30, 2012
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Jun. 30, 2013
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Jun. 30, 2012
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Service Experts [Member]
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Summary of net trade sales and pre-tax operating losses | ||||
Net trade sales | $ 0 | $ 112.4 | $ 73.5 | $ 194.3 |
Pre-tax operating income (loss) | (0.4) | (1.6) | (15.5) | (15.9) |
Gain on sale of business | 0 | 0 | 1.7 | 0 |
Hearth [Member]
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Summary of net trade sales and pre-tax operating losses | ||||
Net trade sales | 0 | 4.9 | 0 | 23.5 |
Pre-tax operating income (loss) | 0.4 | (3.4) | 0.5 | (11.9) |
Gain on sale of business | $ (3.8) | $ (3.8) |
Lines of Credit and Financing Arrangements (Details Textual) (Foreign Obligations [Member], USD $)
In Millions, unless otherwise specified |
Jun. 30, 2013
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Dec. 31, 2012
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Foreign Obligations [Member]
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Lines of Credit and Financing Arrangements (Textual) [Abstract] | ||
Borrowings under foreign lines of credit facility | $ 5.9 | $ 4.9 |
Restructuring Charges
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6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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Restructuring Charges [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring Charges | Restructuring Charges: As part of the efforts to achieve our strategic priorities of manufacturing and sourcing excellence and expense reduction, we initiated various rationalization actions designed to lower our cost structure. As more fully explained in Note 15, restructuring charges are not included in our calculation of segment profit (loss). Below are details of the significant ongoing restructuring action in 2013. Regional Distribution Network In the fourth quarter of 2008, our Residential Heating & Cooling segment 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 six months of 2013, we recorded expense of $1.4 million with an expected $0.1 million of costs remaining for this restructuring activity. As of June 30, 2013, we have incurred $7.6 million in costs related to this restructuring activity. Total Restructuring Restructuring charges can include severance costs to eliminate a specified number of employees, infrastructure charges to vacate facilities and consolidate operations, lease termination costs and other related costs. Restructuring charges are generally recorded based on planned employee termination dates and site closure and consolidation plans. The timing of associated cash payments is dependent upon the type of restructuring charge and can extend over a multi-year period. Information regarding the restructuring charges for all ongoing plans related to continuing operations is as follows (in millions):
Information regarding the restructuring charges by segment is as follows (in millions):
Restructuring reserves related to continuing operations are included in Accrued expenses in the accompanying Consolidated Balance Sheets. The table below details activity within the restructuring reserves (in millions):
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Commitments and Contingencies (Details 1) (USD $)
In Millions, unless otherwise specified |
0 Months Ended | 3 Months Ended | 6 Months Ended |
---|---|---|---|
Mar. 22, 2013
sqft
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Jun. 30, 2013
|
Jun. 30, 2013
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Loss Contingencies [Line Items] | |||
Product Warranty Accrual, Preexisting, Increase (Decrease) | $ (3.2) | ||
Liability for Asbestos and Environmental Claims, Net, Claims Paid | (0.1) | 0.5 | |
Operating Lease Term | 6 years | ||
Area of Leased Office Building | 192,000 | ||
Purchase Price of Property at End of Lease Term | 41.2 | ||
Percentage of Lease Balance as Final Payment End of Lease Term | 86.00% | ||
Annual Warranty Review [Member]
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Loss Contingencies [Line Items] | |||
Product Warranty Accrual, Preexisting, Increase (Decrease) | $ 3.2 |
Lines of Credit and Financing Arrangements (Details Textual 1) (USD $)
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3 Months Ended | |
---|---|---|
Jun. 30, 2013
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Dec. 31, 2012
|
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Lines of Credit and Financing Arrangements (Textual) [Abstract] | ||
Maximum securitization, amount | $ 160,000,000 | |
Maximum securitization as percentage of net pool balance | 100.00% | |
Program fee | 0.60% | |
Average floating commercial paper rate | 0.82% | 0.85% |
Unused fee | 102.00% | |
Fixed rate of agreement | 0.30% | |
Domestic revolving credit facility [Member]
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Line of Credit Facility [Line Items] | ||
Domestic Revolving Credit Facility | 650,000,000 | |
Borrowings under Domestic Revolving Credit Facility | 195,000,000 | |
Committed standby letters of credit | 50,000,000 | |
Available for future borrowings | 405,000,000 | |
Extended maturity date | Oct. 31, 2016 | |
Maximum increase in borrowings under Domestic Revolving Credit Facility | $ 100,000,000 | |
Indebtedness to Adjusted EBITDA Ratio | 3.5 | |
Cash Flow to Net Interest Expense ratio | 3.0 |
Condensed Consolidating Financial Statements (Tables)
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6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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Condensed Consolidating Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Condensed Consolidating Financial Statements | Condensed consolidating financial statements of the Company, its Guarantor Subsidiaries and Non-Guarantor Subsidiaries as of June 30, 2013 and December 31, 2012 and for the three and six months ended June 30, 2013 and 2012 are shown on the following pages. Lennox International Inc. and Subsidiaries Condensed Consolidating Balance Sheets As of June 30, 2013 (In millions)
Lennox International Inc. and Subsidiaries Condensed Consolidating Balance Sheets As of December 31, 2012 (In millions)
Lennox International Inc. and Subsidiaries Condensed Consolidating Statements of Operations For the Three Months Ended June 30, 2013 (In millions)
Lennox International Inc. and Subsidiaries Condensed Consolidating Statements of Operations For the Six Months Ended June 30, 2013 (In millions)
Lennox International Inc. and Subsidiaries Condensed Consolidating Statements of Operations For the Three Months Ended June 30, 2012 (In millions)
Lennox International Inc. and Subsidiaries Condensed Consolidating Statements of Operations For the Six Months Ended June 30, 2012 (In millions)
Lennox International Inc. and Subsidiaries Condensed Consolidating Statements of Cash Flows For the Six Months Ended June 30, 2013 (In millions)
Lennox International Inc. and Subsidiaries Condensed Consolidating Statements of Cash Flows For the Six Months Ended June 30, 2012 (In millions)
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Derivatives (Tables)
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6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amounts related to cash flow hedges | We recorded the following amounts related to our cash flow hedges (in millions):
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Outstanding commodity futures contracts designated as cash flow hedges | We had the following outstanding commodity futures contracts designated as cash flow hedges (in millions):
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Outstanding commodity futures contracts not designated as cash flow hedges | We had the following outstanding commodity futures contracts not designated as cash flow hedges (in millions):
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Outstanding foreign currency forward contracts not designated as cash flow hedges | We also had the following outstanding foreign currency forward contracts not designated as cash flow hedges (local currency, in millions):
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Location and amounts of derivative fair values in Consolidated Balance Sheets and derivative gains and losses in Consolidated Statements of Operations | The following tables provide the locations and amounts of derivative fair values in the Consolidated Balance Sheets and derivative gains and losses in the Consolidated Statements of Operations (in millions):
(1) All derivative instruments are classified as Level 2 within the fair value hierarchy. See Note 16 for more information. |
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Effect of Derivative Instruments on Consolidated Statements of Operations |
(1) The loss was recorded in Cost of goods sold in the accompanying Consolidated Statements of Operations. (2) The loss was recorded in Interest expense, net in the accompanying Consolidated Statements of Operations. (3) The loss (gain) was recorded in Losses and other expenses, net in the accompanying Consolidated Statements of Operations. |
Goodwill (Tables)
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6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill | The changes in the carrying amount of goodwill for the first six months of 2013, in total and by segment, are summarized in the table below (in millions):
(1) Other consists of changes in foreign currency translation rates. |
Derivatives (Details Textual) (USD $)
In Millions, unless otherwise specified |
6 Months Ended | 3 Months Ended | |
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Jun. 30, 2013
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Dec. 31, 2012
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Jun. 30, 2013
Commodity Futures Contracts [Member]
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Derivative Instruments, Gain (Loss) [Line Items] | |||
Derivatives scheduled to mature | December 2014 | ||
Cash flow hedge derivative gains (losses) expected to be reclassified into earnings within the next 12 months | $ 5.8 | ||
Derivatives (Textual) [Abstract] | |||
Hedged value of revolving credit facility | $ 100 | ||
Variable Interest Rate Swap Expiration Date | Oct. 12, 2012 | ||
Variable portion of the interest rate swap tied | 1-Month LIBOR |
Discontinued Operations (Tables)
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6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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Service Experts [Member]
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Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of net trade sales and pre-tax operating losses | A summary of net trade sales, pre-tax operating losses and other supplemental information for our Service Experts business is detailed below (in millions):
(1) Excludes eliminations of intercompany sales and any associated profit. (2) Pre-tax operating loss for the six months ended June 30, 2013 includes $2.3 million in retention bonus and severance costs and $0.2 million in stock-based compensation expense |
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Assets and liabilities of the discontinued operations | The assets and liabilities of the Service Experts business include the following in the accompanying Consolidated Balance Sheets (in millions):
(1) Includes goodwill of $66.0 million as of December 31, 2012. No goodwill impairments were recorded in 2013, and all goodwill was eliminated on March 22, 2013 as a result of the sale of the business. |
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Hearth [Member]
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Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of net trade sales and pre-tax operating losses | A summary of net trade sales and pre-tax operating losses for our Hearth business is detailed below (in millions):
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Assets and liabilities of the discontinued operations | accompanying Consolidated Balance Sheets as of June 30, 2013 or December 31, 2012. |
Goodwill (Details) (USD $)
In Millions, unless otherwise specified |
6 Months Ended | |||
---|---|---|---|---|
Jun. 30, 2013
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Goodwill | ||||
Goodwill, Beginning Balance | $ 223.8 | |||
Acquisitions/(Dispositions) | 0 | |||
Other | (6.2) | [1] | ||
Goodwill, Ending Balance | 217.6 | |||
Residential Heating & Cooling [Member]
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Goodwill | ||||
Goodwill, Beginning Balance | 26.1 | |||
Acquisitions/(Dispositions) | 0 | |||
Other | 0 | [1] | ||
Goodwill, Ending Balance | 26.1 | |||
Commercial Heating & Cooling [Member]
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Goodwill | ||||
Goodwill, Beginning Balance | 63.8 | |||
Acquisitions/(Dispositions) | 0 | |||
Other | (0.2) | [1] | ||
Goodwill, Ending Balance | 63.6 | |||
Refrigeration [Member]
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Goodwill | ||||
Goodwill, Beginning Balance | 133.9 | |||
Acquisitions/(Dispositions) | 0 | |||
Other | (6.0) | [1] | ||
Goodwill, Ending Balance | $ 127.9 | |||
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Commitments and Contingencies (Details 2) (USD $)
In Millions, unless otherwise specified |
Jun. 30, 2013
|
Dec. 31, 2012
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Total liabilities for estimated warranty | ||
Accrued expenses | $ 23.5 | $ 25.1 |
Other liabilities | 50.2 | 46.8 |
Total liabilities for estimated warranty | $ 73.7 | $ 71.9 |
Stock-Based Compensation (Tables)
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6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of stock -based compensation expense in operations | Stock-based compensation expense related to continuing operations is included in Selling, General and Administrative expenses in the accompanying Consolidated Statements of Operations as follows (in millions):
(1) Stock-Based Compensation expense is recorded in our Corporate and other business segment. |
Comprehensive Income (Details 1) (USD $)
In Millions, unless otherwise specified |
6 Months Ended |
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Jun. 30, 2013
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Changes in AOCI by component (net of tax) [Roll Forward] | |
Balance as of December 31, 2012 | $ (22.3) |
Other comprehensive income/(loss) before reclassifications | (40.9) |
Amounts reclassified from AOCI | (39.9) |
Net other comprehensive income/(loss) | (80.8) |
Balance as of March 31, 2013 | (103.1) |
Gains / (Losses) on Cash Flow Hedges [Member]
|
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Changes in AOCI by component (net of tax) [Roll Forward] | |
Balance as of December 31, 2012 | 1.1 |
Other comprehensive income/(loss) before reclassifications | (8.8) |
Amounts reclassified from AOCI | 1.2 |
Net other comprehensive income/(loss) | (7.6) |
Balance as of March 31, 2013 | (6.5) |
Unrealized Gains / (Losses) on Available-for-Sale Securities [Member]
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Changes in AOCI by component (net of tax) [Roll Forward] | |
Balance as of December 31, 2012 | 9.3 |
Other comprehensive income/(loss) before reclassifications | (4.7) |
Amounts reclassified from AOCI | 0 |
Net other comprehensive income/(loss) | (4.7) |
Balance as of March 31, 2013 | 4.6 |
Defined Benefit Pension Plan Items [Member]
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Changes in AOCI by component (net of tax) [Roll Forward] | |
Balance as of December 31, 2012 | (147.5) |
Other comprehensive income/(loss) before reclassifications | 1.0 |
Amounts reclassified from AOCI | 0 |
Net other comprehensive income/(loss) | 1.0 |
Balance as of March 31, 2013 | (146.5) |
Foreign Currency Translation Adjustments [Member]
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Changes in AOCI by component (net of tax) [Roll Forward] | |
Balance as of December 31, 2012 | 114.8 |
Other comprehensive income/(loss) before reclassifications | (28.4) |
Amounts reclassified from AOCI | (41.1) |
Net other comprehensive income/(loss) | (69.5) |
Balance as of March 31, 2013 | $ 45.3 |
Reportable Business Segments (Details) (USD $)
In Millions, unless otherwise specified |
3 Months Ended | 6 Months Ended | ||
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Jun. 30, 2013
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Jun. 30, 2012
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Jun. 30, 2013
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Jun. 30, 2012
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Segment Reporting Information [Line Items] | ||||
Other Nonoperating Income (Expense) | $ (0.2) | $ 0.1 | $ (0.1) | $ 0.1 |
Residential Heating & Cooling [Member] | United States [Member]
|
||||
Summary of nature of operations of reportable segment | ||||
Product or Services | Furnaces, air conditioners, heat pumps, packaged heating and cooling systems, indoor air quality equipment, comfort control products, replacement parts | |||
Markets Served | Residential Replacement; Residential New Construction | |||
Residential Heating & Cooling [Member] | Canada [Member]
|
||||
Summary of nature of operations of reportable segment | ||||
Product or Services | Furnaces, air conditioners, heat pumps, packaged heating and cooling systems, indoor air quality equipment, comfort control products, replacement parts | |||
Markets Served | Residential Replacement; Residential New Construction | |||
Commercial Heating & Cooling [Member] | United States [Member]
|
||||
Summary of nature of operations of reportable segment | ||||
Product or Services | Unitary heating and air conditioning equipment, applied systems, controls, installation and service of commercial heating and cooling equipment | |||
Markets Served | Light Commercial | |||
Commercial Heating & Cooling [Member] | Canada [Member]
|
||||
Summary of nature of operations of reportable segment | ||||
Product or Services | Unitary heating and air conditioning equipment, applied systems, controls, installation and service of commercial heating and cooling equipment | |||
Markets Served | Light Commercial | |||
Commercial Heating & Cooling [Member] | Europe [Member]
|
||||
Summary of nature of operations of reportable segment | ||||
Product or Services | Unitary heating and air conditioning equipment, applied systems, controls, installation and service of commercial heating and cooling equipment | |||
Markets Served | Light Commercial | |||
Refrigeration [Member] | United States [Member]
|
||||
Summary of nature of operations of reportable segment | ||||
Product or Services | Condensing units, unit coolers, fluid coolers, air cooled condensers, air handlers, process chillers, controls, compressorized racks, supermarket display cases and systems | |||
Refrigeration [Member] | Canada [Member]
|
||||
Summary of nature of operations of reportable segment | ||||
Product or Services | Condensing units, unit coolers, fluid coolers, air cooled condensers, air handlers, process chillers, controls, compressorized racks, supermarket display cases and systems | |||
Markets Served | Light Commercial Food Preservation; Non-Food/Industrial | |||
Refrigeration [Member] | Europe [Member]
|
||||
Summary of nature of operations of reportable segment | ||||
Product or Services | Condensing units, unit coolers, fluid coolers, air cooled condensers, air handlers, process chillers, controls, compressorized racks, supermarket display cases and systems | |||
Markets Served | Light Commercial Food Preservation; Non-Food/Industrial | |||
Refrigeration [Member] | North America [Member]
|
||||
Summary of nature of operations of reportable segment | ||||
Markets Served | Light Commercial; Food Preservation; Non-Food/Industrial | |||
Refrigeration [Member] | South America [Member]
|
||||
Summary of nature of operations of reportable segment | ||||
Product or Services | Condensing units, unit coolers, fluid coolers, air cooled condensers, air handlers, process chillers, controls, compressorized racks, supermarket display cases and systems | |||
Markets Served | Light Commercial Food Preservation; Non-Food/Industrial | |||
Refrigeration [Member] | Asia Pacific [Member]
|
||||
Summary of nature of operations of reportable segment | ||||
Product or Services | Condensing units, unit coolers, fluid coolers, air cooled condensers, air handlers, process chillers, controls, compressorized racks, supermarket display cases and systems | |||
Markets Served | Light Commercial Food Preservation; Non-Food/Industrial |
Comprehensive Income (Details) (USD $)
In Millions, unless otherwise specified |
3 Months Ended | 6 Months Ended | ||||||
---|---|---|---|---|---|---|---|---|
Jun. 30, 2013
|
Jun. 30, 2012
|
Jun. 30, 2013
|
Jun. 30, 2012
|
|||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||||||||
Cost of goods sold | $ 659.1 | $ 632.3 | $ 1,165.5 | $ 1,105.8 | ||||
Net sales | 913.1 | 840.4 | 1,581.5 | 1,454.8 | ||||
Interest expense, net | 3.6 | 4.3 | 7.0 | 9.0 | ||||
Income tax expense | 34.7 | 25.9 | 43.3 | 30.8 | ||||
Discontinued operations | 0 | (4.8) | (7.8) | (20.2) | ||||
Reclassification out of Accumulated Other Comprehensive Income [Member]
|
||||||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||||||||
Total reclassifications from AOCI | (1.6) | 39.9 | ||||||
Gains/(Losses) on cash flow hedges [Member] | Reclassification out of Accumulated Other Comprehensive Income [Member]
|
||||||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||||||||
Reclassifications from AOCI, before tax | (1.6) | (1.2) | ||||||
Income tax expense | 0 | 0 | ||||||
Total reclassifications from AOCI | (1.6) | (1.2) | ||||||
Foreign currency translation adjustments [Member] | Reclassification out of Accumulated Other Comprehensive Income [Member]
|
||||||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||||||||
Discontinued operations | 0 | [1] | 41.1 | [1] | ||||
Commodity derivative contracts [Member] | Gains/(Losses) on cash flow hedges [Member] | Reclassification out of Accumulated Other Comprehensive Income [Member]
|
||||||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||||||||
Cost of goods sold | (1.6) | (1.2) | ||||||
Interest rate derivative contracts [Member] | Gains/(Losses) on cash flow hedges [Member] | Reclassification out of Accumulated Other Comprehensive Income [Member]
|
||||||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||||||||
Interest expense, net | $ 0 | $ 0 | ||||||
|
Derivatives (Details 2)
In Millions, unless otherwise specified |
Jun. 30, 2013
Brazilian Real [Member]
BRL
|
Dec. 31, 2012
Brazilian Real [Member]
BRL
|
Jun. 30, 2013
Mexican Peso [Member]
MXN
|
Dec. 31, 2012
Mexican Peso [Member]
MXN
|
Jun. 30, 2013
Euro [Member]
EUR (€)
|
Dec. 31, 2012
Euro [Member]
EUR (€)
|
Jun. 30, 2013
British Pound [Member]
GBP (£)
|
Dec. 31, 2012
British Pound [Member]
GBP (£)
|
Jun. 30, 2013
Indian Rupee [Member]
INR
|
Dec. 31, 2012
Indian Rupee [Member]
INR
|
Jun. 30, 2013
Polish Zloty [Member]
PLN
|
Dec. 31, 2012
Polish Zloty [Member]
PLN
|
---|---|---|---|---|---|---|---|---|---|---|---|---|
Outstanding foreign currency forward contracts not designated as cash flow hedges | ||||||||||||
Derivative, Notional Amount | 3.9 | 10.8 | 255.0 | 220.2 | € 4.0 | € 1.3 | £ 2.2 | £ 5.4 | 192.0 | 19.5 | 24.8 | 12.4 |
Discontinued Operations (Details Textual) (USD $)
In Millions, unless otherwise specified |
3 Months Ended | 6 Months Ended | 0 Months Ended | 6 Months Ended | 1 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2013
|
Jun. 30, 2012
|
Jun. 30, 2013
|
Jun. 30, 2012
|
Dec. 31, 2012
|
Mar. 22, 2013
Service Experts [Member]
|
Jun. 30, 2013
Service Experts [Member]
|
Jun. 30, 2013
Service Experts [Member]
Goodwill in assets of discontinued operations [Member]
|
Dec. 31, 2012
Service Experts [Member]
Goodwill in assets of discontinued operations [Member]
|
Apr. 30, 2012
Hearth [Member]
|
|||||
Discontinued Operations (Textual) [Abstract] | ||||||||||||||
Goodwill | $ 217.6 | $ 217.6 | $ 223.8 | $ 66.0 | ||||||||||
Goodwill impairment | 0 | |||||||||||||
Net proceeds from sale of discontinued operations | 10.4 | 10.1 | ||||||||||||
Working capital adjustment included in net proceeds from sale of discontinued operations | 3.8 | |||||||||||||
Sale of equipment | 0 | 0.1 | ||||||||||||
Severance expense | 2.3 | |||||||||||||
Stock-based compensation expense | $ 7.5 | [1] | $ 4.0 | [1] | $ 15.2 | $ 7.8 | $ 0.2 | |||||||
|
Inventories (Tables)
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2013
|
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Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of inventories | The components of inventories are as follows (in millions):
|
Consolidated Statements of Cash Flows (USD $)
In Millions, unless otherwise specified |
6 Months Ended | |
---|---|---|
Jun. 30, 2013
|
Jun. 30, 2012
|
|
Cash flows from operating activities: | ||
Net income | $ 72.3 | $ 38.6 |
Net loss from discontinued operations | 7.8 | 20.2 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Income from equity method investments | (7.4) | (6.3) |
Dividends from affiliates | 1.7 | 2.0 |
Restructuring expenses, net of cash paid | (0.5) | 1.5 |
Provision for bad debts | 1.9 | 1.3 |
Unrealized loss (gain) on derivative contracts | 2.3 | (0.3) |
Stock-based compensation expense | 15.2 | 7.8 |
Depreciation and amortization | 28.5 | 27.4 |
Deferred income taxes | (1.0) | 3.9 |
Other items, net | 13.8 | 4.2 |
Changes in assets and liabilities, net of effects of divestitures: | ||
Accounts and notes receivable | (177.1) | (119.9) |
Inventories | (118.3) | (113.4) |
Other current assets | (3.6) | 0 |
Accounts payable | 80.0 | 100.4 |
Accrued expenses | (13.3) | 14.7 |
Income taxes payable and receivable | 12.9 | 7.7 |
Other | 8.5 | 1.9 |
Net cash used in discontinued operations | (12.0) | (2.3) |
Net cash used in operating activities | (88.3) | (10.6) |
Cash flows from investing activities: | ||
Proceeds from the disposal of property, plant and equipment | 0 | 0.1 |
Purchases of property, plant and equipment | (23.4) | (16.4) |
Net proceeds from sale of businesses | 4.8 | 7.2 |
Net cash used in discontinued operations | (0.1) | (0.4) |
Net cash used in investing activities | (18.7) | (9.5) |
Cash flows from financing activities: | ||
Short-term borrowings, net | 1.6 | 9.9 |
Asset securitization borrowings | 270.0 | 310.0 |
Asset securitization payments | (180.0) | (310.0) |
Long-term debt payments | (0.5) | (0.6) |
Borrowings from revolving credit facility | 700.5 | 526.0 |
Payments on revolving credit facility | (640.5) | (471.5) |
Proceeds from employee stock purchases | 1.0 | 0.2 |
Repurchases of common stock | (33.0) | 0 |
Repurchases of common stock to satisfy employee withholding tax obligations | (5.8) | (2.6) |
Excess tax benefits related to share-based payments | 3.4 | 1.2 |
Cash dividends paid | (10.1) | (18.3) |
Net cash provided by financing activities | 106.6 | 44.3 |
Increase (decrease) in cash and cash equivalents | (0.4) | 24.2 |
Effect of exchange rates on cash and cash equivalents | (6.1) | (0.1) |
Cash and cash equivalents, beginning of period | 51.8 | 45.0 |
Cash and cash equivalents, end of period | 45.3 | 69.1 |
Cash paid during the period for: | ||
Interest, net | 7.7 | 9.5 |
Income taxes (net of refunds) | $ 22.3 | $ 8.0 |
Inventories
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2013
|
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Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventories | Inventories: The components of inventories are as follows (in millions):
|
Income Taxes
|
3 Months Ended |
---|---|
Jun. 30, 2013
|
|
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes: As of June 30, 2013, we had approximately $1.9 million in total gross unrecognized tax benefits. Of this amount, $1.5 million (net of federal benefit on state issues), if recognized, would be recorded through the Consolidated Statement of Operations. As of June 30, 2013, we had approximately $0.2 million (net of federal tax benefits) in interest and penalties recognized in income tax expense in accordance with FASB Accounting Standards Codification ("ASC") Topic 740. We are currently under examination for our U.S. federal income taxes for 2012 and 2013 and are subject to examination by numerous other taxing authorities in the U.S. and in jurisdictions such as Australia, Belgium, France, Canada, and Germany. We are generally no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by taxing authorities for years before 2007. Since January 1, 2013, numerous states, including New Mexico, enacted legislation effective for tax years beginning on or after January 1, 2013, including changes to rates. The impact of these changes is immaterial. On January 2, 2013, the American Taxpayer Relief Act of 2012 was enacted which retroactively reinstated and extended the Federal Research and Development Tax Credit (Federal R&D Tax Credit) from January 1, 2012 to December 31, 2013, in addition to other extenders. As a result, the Company's income tax provision for the first six months of calendar year 2013 includes a discrete tax benefit that will reduce the annual effective income tax rate. On a full year basis, the impact to the annual effective income tax rate is not expected to be material. |
Reportable Business Segments (Details 1) (USD $)
In Millions, unless otherwise specified |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2013
|
Jun. 30, 2012
|
Jun. 30, 2013
|
Jun. 30, 2012
|
|
Net sales, segment profit (loss) by business segment and reconciliation of segment profit (loss) to Income from Continuing Operations before income taxes | ||||
Number Of Business Segments | 3 | |||
Net Sales | ||||
Net Sales | $ 913.1 | $ 840.4 | $ 1,581.5 | $ 1,454.8 |
Segment Profit (Loss) | ||||
Subtotal that includes segment profit and eliminations | 105.7 | 81.0 | 135.3 | 100.6 |
Reconciliation to income from continuing operations before income taxes: | ||||
Special product quality adjustment | 0.1 | 0.5 | (0.1) | 0.1 |
Items in (Gains) losses and other expenses, net that are excluded from segment profit | 0.8 | 0.6 | 2.2 | (0.9) |
Restructuring charges | 2.4 | 0.1 | 2.9 | 2.7 |
Interest expense, net | 3.6 | 4.3 | 7.0 | 9.0 |
Other expense (income), net | (0.2) | 0.1 | (0.1) | 0.1 |
Income from continuing operations before income taxes | 99.0 | 75.4 | 123.4 | 89.6 |
Residential Heating & Cooling [Member]
|
||||
Net Sales | ||||
Net Sales | 476.2 | 411.9 | 790.7 | 684.5 |
Segment Profit (Loss) | ||||
Subtotal that includes segment profit and eliminations | 66.2 | 42.0 | 86.7 | 53.0 |
Commercial Heating & Cooling [Member]
|
||||
Net Sales | ||||
Net Sales | 229.6 | 221.4 | 392.6 | 378.1 |
Segment Profit (Loss) | ||||
Subtotal that includes segment profit and eliminations | 34.6 | 33.2 | 45.7 | 41.5 |
Refrigeration [Member]
|
||||
Net Sales | ||||
Net Sales | 207.3 | 207.1 | 398.2 | 392.2 |
Segment Profit (Loss) | ||||
Subtotal that includes segment profit and eliminations | 25.8 | 21.2 | 42.5 | 35.5 |
Corporate & other [Member]
|
||||
Segment Profit (Loss) | ||||
Subtotal that includes segment profit and eliminations | $ (20.9) | $ (15.4) | $ (39.6) | $ (29.4) |
Goodwill
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
|
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill | Goodwill: The changes in the carrying amount of goodwill for the first six months of 2013, in total and by segment, are summarized in the table below (in millions):
(1) Other consists of changes in foreign currency translation rates. We performed our annual goodwill impairment test in the first quarter of 2013 and did not recognize any impairments for our reporting units. We will continue to monitor our reporting units throughout the year to determine if a change in facts or circumstances warrants a re-evaluation of our goodwill for impairment. Refer to Note 13 for information on goodwill related to discontinued operations. |
Derivatives (Details) (Commodity Price Hedges [Member], Cash Flow Hedging [Member], USD $)
In Millions, unless otherwise specified |
Jun. 30, 2013
|
Dec. 31, 2012
|
---|---|---|
Commodity Price Hedges [Member] | Cash Flow Hedging [Member]
|
||
Amounts related to cash flow hedges | ||
Losses (gains) included in AOCI, net of tax | $ 6.5 | $ (1.1) |
Expense for (benefit from) income taxes | $ (3.7) | $ 0.7 |
Commitments and Contingencies (Tables)
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2013
|
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||
Summary of total liabilities for estimated warranty are included in the accompanying Consolidated Balance Sheets | Total liabilities for estimated product warranty costs related to continuing operations are included in the following captions on the accompanying Consolidated Balance Sheets (in millions):
|
||||||||||||||||||||||||||||||||||||||||||||||||
Summary of changes in the total warranty liabilities | The changes in total product warranty liabilities related to continuing operations for the six months ended June 30, 2013 were as follows (in millions):
|
||||||||||||||||||||||||||||||||||||||||||||||||
Summary of changes in the accrued product quality issue | The changes in the accrued product quality issues for the six months ended June 30, 2013 were as follows (in millions):
|
Comprehensive Income (Tables)
|
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
|
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Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Items not reclassified in their entirety from Accumulated Other Comprehensive Income to Net Income | The following table provides information on items not reclassified in their entirety from AOCI to Net Income in the accompanying Consolidated Statements of Operations (in millions):
(1) The reclassification of foreign currency translation adjustments relates to the sale of the Service Experts business in the first quarter of 2013. Refer to Note 13 for details. |
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Changes in AOCI by component (net of tax) | The following table provides information on changes in AOCI by component (net of tax) for the six months ended June 30, 2013 (in millions):
|
Earnings (Loss) Per Share (Details 1) (USD $)
In Millions, except Per Share data, unless otherwise specified |
3 Months Ended | |
---|---|---|
Jun. 30, 2013
|
Mar. 31, 2012
|
|
Stock appreciation rights were outstanding, but not included in the diluted loss per share calculation | ||
Weighted-average number of shares | 0.1 | 1.1 |
Price ranges per share, minimum | $ 51.40 | $ 34.06 |
Price ranges per share, maximum | $ 51.40 | $ 46.78 |
Fair Value Measurements (Tables)
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2013
|
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||
Assets and Liabilities Measured at Fair Value on a Recurring Basis | The following table presents the fair value hierarchy for those assets measured at fair value on a recurring basis (in millions):
|
||||||||||||||||||||||||||||||||||||||||||||
Other Fair Value Measurements | The estimated fair values of our Senior unsecured notes were as follows (in millions):
|
Earnings (Loss) Per Share (Details) (USD $)
In Millions, except Per Share data, unless otherwise specified |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2013
|
Jun. 30, 2012
|
Jun. 30, 2013
|
Jun. 30, 2012
|
|
Computations of basic and diluted earnings per share for income from continuing operations | ||||
Net income | $ 64.3 | $ 44.7 | $ 72.3 | $ 38.6 |
Add: Loss from discontinued operations | 0 | 4.8 | 7.8 | 20.2 |
Income from continuing operations | $ 64.3 | $ 49.5 | $ 80.1 | $ 58.8 |
Weighted-average shares outstanding - basic | 50.2 | 51.0 | 50.2 | 50.9 |
Effect of diluted securities attributable to stock-based payments | 0.7 | 0.6 | 0.8 | 0.6 |
Weighted-average shares outstanding - diluted | 50.9 | 51.6 | 51.0 | 51.5 |
Earnings per share: | ||||
Income from continuing operations, Basic | $ 1.28 | $ 0.97 | $ 1.60 | $ 1.15 |
Loss from discontinued operations, Basic | $ 0.00 | $ (0.09) | $ (0.16) | $ (0.39) |
Net income (loss), Basic | $ 1.28 | $ 0.88 | $ 1.44 | $ 0.76 |
Income from continuing operations, Diluted | $ 1.26 | $ 0.96 | $ 1.57 | $ 1.14 |
Loss from discontinued operations, Diluted | $ 0.00 | $ (0.09) | $ (0.15) | $ (0.39) |
Net income (loss), Diluted | $ 1.26 | $ 0.87 | $ 1.42 | $ 0.75 |
Lines of Credit and Financing Arrangements (Details 4)
|
Jun. 30, 2013
|
Dec. 31, 2012
|
---|---|---|
Summary of weighted average borrowing rate facility | ||
Weighted average borrowing rate | 1.48% | 1.46% |