Additional Highlights for the 2012 Third Quarter
Revenues: The company’s reported revenues declined by 8 percent to $3,593 million, compared with revenues of $3,910 million for the 2011 third quarter. Total revenues, excluding the results of Hussmann, were down 1 percent compared with 2011 (up 1 percent excluding currency). U.S. revenues, excluding Hussmann, were up 3 percent compared to 2011, and revenues from international operations declined by approximately 7 percent (down 1 percent excluding currency).
Operating Income and Margin: Operating income for the 2012 third quarter was $448 million, compared with $181 million ($415 million excluding Hussmann’s results and impairment costs) for the 2011 third quarter. The third-quarter operating margin was 12.5 percent compared with an operating margin of 4.6 percent (11.4 percent excluding Hussmann’s results and impairment costs) for the same period of 2011. The year-over-year margin improvement was due to higher prices and productivity, partially offset by inflation, unfavorable product mix, currency translation and increased investments.
Interest Expense and Other Income/Expense: Interest expense of $61 million for the third quarter of 2012 decreased by approximately $9 million compared with the same period last year due to lower debt balances. Other income totaled $17 million for the third quarter of 2012, compared with approximately $21 million of income for the 2011 third quarter. The year-over-year change was primarily due to currency losses and lower interest income.Taxes: The company had a tax rate of 16 percent in the third quarter of 2012. The rate for the third quarter of 2011 was 22 percent. During the three months ended Sept. 30, 2012, the company recorded a net discrete tax benefit of approximately $29 million, primarily resulting from the consolidation of legal entities outside of the United States. Third-Quarter Business Review Climate Solutions delivers energy-efficient solutions globally and includes Trane, which provides heating, ventilation and air conditioning (HVAC) systems and building services, parts, support and controls for commercial buildings, and Thermo King, the leader in transport temperature control solutions. The total results of the divested Hussmann refrigeration business are included through the third quarter of 2011. The company’s ownership interest in Hussmann was reported within other income/ expense using the equity method of accounting for the third quarter of 2012. Third-quarter 2011 results included approximately $282 million of revenues and $30 million of operating income attributable to Hussmann. Revenues for the third quarter of 2012 were $1,942 million and declined by 15 percent compared with the third quarter of 2011. Excluding Hussmann, revenue decreased by 3 percent (down 1 percent excluding currency). Bookings, excluding Hussmann, increased by 1 percent year-over-year (up 3 percent excluding currency).