Divestitures and Discontinued Operations

3 Months Ended

Mar. 31, 2012

Discontinued Operations and Disposal Groups [Abstract]

Divestitures and Discontinued Operations

Divestitures and Discontinued Operations

Divested Operations

Hussmann Divestiture

On September 30, 2011, the Company completed a transaction to sell its Hussmann refrigerated display case business to a newly-formed affiliate (Hussmann Parent) of private equity firm Clayton Dubilier & Rice, LLC (CD&R).  This transaction included the equipment business and certain of the service branches in the U.S. and Canada, and the equipment, service and installation businesses in Mexico, Chile, Australia, New Zealand, and Japan (Hussmann Business).  The final transaction allowed Hussmann Parent the option to acquire the remaining North American Hussmann service and installation branches (Hussmann Branches).  Hussmann Parent completed the acquisition of the Hussmann Branches on November 30, 2011.  The Hussmann Business and Branches, which are reported as part of the Climate Solutions segment, manufacture, market, distribute, install, and service refrigerated display merchandising equipment, refrigeration systems, over the counter parts, and other commercial and industrial refrigeration applications.

The Hussmann Business divestiture was originally announced on April 21, 2011 and met the criteria for classification as held for sale treatment in accordance with GAAP during the first quarter of 2011. Therefore, the Company classified the assets and liabilities of the Hussmann Business as held for sale, reported the results in discontinued operations, and recognized a $186.3 million pre-tax impairment loss to write the net assets down to their estimated fair value in the first quarter of 2011 Form 10-Q filing. 

During the third quarter of 2011, the Company negotiated the final transaction to sell the Hussmann Business and Branches to CD&R in exchange for $370 million in cash, subject to purchase price adjustments, and common stock of Hussmann Parent, such that following the sale, CD&R would own cumulative convertible participating preferred stock of Hussmann Parent, initially representing 60% of the outstanding capital stock (on an as-converted basis) of Hussmann Parent, and the Company would own all of the common stock, initially representing the remaining 40% of the outstanding capital stock (on an as-converted basis) of Hussmann Parent. As a result of Hussmann Parent's required quarterly preferred dividend payment to CD&R being paid in the form of additional preferred shares, the Company's ownership percentage as of March 31, 2012 was 38.6%. The Company's ownership of common stock of Hussmann Parent represents significant continuing involvement. Therefore, the results of the Hussmann Business and Branches are included in continuing operations for all periods presented.  Based on these terms, the Company recorded a total pre-tax loss on sale/asset impairment charge of $646.9 million during the full year of 2011.

Results for the Hussmann Business and Branches for the three months ended March 31 were as follows:

In millions	2011
Net revenues	$	213.1
Loss on sale/asset impairment	(186.3		)
Net earnings (loss) attributable to Ingersoll-Rand plc	(191.1		)
Diluted earnings (loss) per share attributable to Ingersoll-Rand plc ordinary shareholders:	(0.56		)

The Company's ownership interest in Hussmann Parent is reported using the equity method of accounting subsequent to September 30, 2011.  The Company's equity investment in the Hussmann Parent is reported within Other noncurrent assets in the Condensed Consolidated Balance Sheet and the related equity earnings reported in Other, net within Net earnings.

Discontinued Operations

The components of Discontinued operations, net of tax for the three months ended March 31 were as follows:

In millions	2012			2011
Net revenues	$	—		$	15.9
Pre-tax earnings (loss) from operations	$	(13.1	)	$	(14.9	)
Pre-tax gain (loss) on sale	—			0.2
Tax benefit (expense)	10.9			5.6
Discontinued operations, net of tax	$	(2.2	)	$	(9.1	)

Discontinued operations, net of tax by business for the three months ended March 31 were as follows:

In millions	2012			2011
Integrated Systems and Services, net of tax	$	(0.2	)	$	(0.8	)
Other discontinued operations, net of tax	(2.0		)	(8.3		)
Discontinued operations, net of tax	$	(2.2	)	$	(9.1	)

Integrated Systems and Services Divestiture

On December 30, 2011, the Company completed the divestiture of its security installation and service business, which was sold under the Integrated Systems and Services brand in the United States and Canada, to Kratos Public Safety & Security Solutions, Inc. This business, which was previously reported as part of the Security Technologies segment, designs, installs and services security systems. The Company reported this business as a discontinued operation for all periods presented. In the fourth quarter of 2011, the Company recorded a pre-tax loss on sale of $6.7 million ($5.0 million after-tax) within discontinued operations.

Net revenues and after-tax earnings of the Integrated Systems and Services business for the three months ended March 31 were as follows:

In millions	2012			2011
Net revenues	$	—		$	15.9
After-tax earnings (loss) from operations	$	(0.2	)	$	(0.8	)
Gain (loss) on sale, net of tax	—			—
Discontinued operations, net of tax	$	(0.2	)	$	(0.8	)

Other Discontinued Operations

On November 30, 2007, the Company completed the sale of its Bobcat, Utility Equipment and Attachments businesses (collectively, Compact Equipment) to Doosan Infracore for gross proceeds of approximately $4.9 billion, subject to post-closing purchase price adjustments. Compact Equipment manufactured and sold compact equipment, including skid-steer loaders, compact track loaders, mini-excavators and telescopic tool handlers; portable air compressors, generators and light towers; general-purpose light construction equipment; and attachments. The Company was in dispute regarding post-closing matters with Doosan Infracore. During the second quarter of 2011, the Company collected approximately $48.3 million of its outstanding receivable from Doosan Infracore related to certain purchase price adjustments. During the second quarter of 2012, Doosan Infracore agreed to pay the Company a total of $46.5 million to settle the remaining disputed post-closing matters. The Company has received a payment of $5.65 million and Doosan Infracore has agreed to pay the remaining $40.85 million by April 30, 2012.

Other discontinued operations, net of tax from previously sold businesses is mainly related to postretirement benefits, product liability and legal costs (mostly asbestos-related) and tax effects of post-closing purchase price adjustments.