Lennox International (LII) 10-K risk factor changes: FY2017 vs FY2016

If any of the following risks or those disclosed in our other SEC filings actually [removed: occur,] [added: occurs,] our business, financial condition or results of operations could be materially adversely affected.

The sales, gross margins and profitability for each of our segments could be directly impacted by changes in legislation, trade agreements or government regulations, such as the changes to taxes, tariffs and trade [removed: agreements being discussed by the new U.S. administration.][added: agreements.]

International transactions may involve increased financial and legal risks due to differing legal systems and customs in foreign countries, as well as compliance [added: with anti-corruption laws such as the U.S. Foreign Corrupt Practices Act and the U.K. Bribery Act.]

Net sales outside of the United States comprised 18.5% of our net sales in [removed: 2016.][added: 2017.]

[removed: For example, we are continuing to reorganize our North] American distribution network in order to better serve our customers' needs by deploying parts and equipment inventory closer to them and are expanding our sourcing activities outside of the U.S. We also continue to rationalize and reorganize various support and administrative functions in order to reduce ongoing selling and administrative expenses.

As of February 6, [removed: 2017,] [added: 2018,] approximately [removed: 23%] [added: 27%] of our workforce, including international locations, was unionized.

As of December 31, [removed: 2016,] [added: 2017,] we had goodwill of [removed: $195.1] [added: $200.5] million on our Consolidated Balance Sheet.

Despite our security measures as well as those of our business partners and third-party service providers, the information systems we rely upon may be vulnerable to interruption or damage from computer hackings, computer viruses, worms or other destructive or disruptive software, process breakdowns, [removed: denial of service attacks, malicious social engineering or other malicious activities, or any combination thereof.]

For example, we are continuing to reorganize our North

denial of service attacks, malicious social engineering or other malicious activities, or any combination thereof.

with anti-corruption laws such as the U.S. Foreign Corrupt Practices Act and the U.K. Bribery Act.

We sell our products and services through a combination of direct sales, distributors and company-owned [removed: parts and supplies] stores.

We seek to mitigate the impact of commodity price volatility through a combination of pricing actions, [removed: commodity] [added: vendor] contracts, improved production efficiency and cost reduction initiatives.

| • | Net sales increased [removed: $174.2] [added: $198] million, or [removed: 5%,] [added: 5.4%,] to [removed: $3,642] [added: $3,840] million in [removed: 2016] [added: 2017] from [removed: $3,467] [added: $3,642] million in [removed: 2015.] [added: 2016.] |

| • | Net income in [removed: 2016] [added: 2017] increased to [removed: $278] [added: $306] million from [removed: $187] [added: $278] million in [removed: 2015.] [added: 2016.] |

The Residential Heating & Cooling segment led our overall financial performance in [removed: 2016,] [added: 2017,] with a [removed: 7.2%] [added: 7.0%] increase in net sales and a [removed: $70] [added: $25] million increase in segment profit compared to [removed: 2015.][added: 2016.]

This segment's results benefited from [removed: industry] [added: market] growth in the replacement and new construction markets [removed: as well as market share gains.][added: and favorable foreign currency exchange rates.]

Our Commercial Heating & Cooling segment also performed well in [removed: 2016] [added: 2017] with a [removed: 3.5%] [added: 6.1%] increase in net sales and a [removed: $19] [added: $8] million increase in segment profit compared to [removed: 2015.][added: 2016.]

This segment's results benefited from market growth in North [removed: America and material cost savings.][added: America.]

Sales in our Refrigeration segment were up [removed: 1.3%] [added: slightly] and segment profit increased [removed: $16] [added: $4] million compared to [removed: 2015.][added: 2016.]

| | [removed: 2016] [added: 2017] | | | | | | | [removed: 2015] [added: 2016] | | | | | | | [removed: 2014] [added: 2015] | | | | | |

| Net sales | $ | [removed: 3,641.6] [added: 3,839.6] | | | 100.0 | % | | $ | [removed: 3,467.4] [added: 3,641.6] | | | 100.0 | % | | $ | [removed: 3,367.4] [added: 3,467.4] | | | 100.0 | % |

| Cost of goods sold | [removed: 2,565.1] [added: 2,714.4] | | | | [removed: 70.4] [added: 70.7] | % | | [removed: 2,520.0] [added: 2,565.1] | | | | [removed: 72.7] [added: 70.4] | % | | [removed: 2,464.1] [added: 2,520.0] | | | | [removed: 73.2] [added: 72.7] | % |

| Gross profit | [removed: 1,076.5] [added: 1,125.2] | | | | [removed: 29.6] [added: 29.3] | % | | [removed: 947.4] [added: 1,076.5] | | | | [removed: 27.3] [added: 29.6] | % | | [removed: 903.3] [added: 947.4] | | | | [removed: 26.8] [added: 27.3] | % |

| Selling, general and administrative expenses | [removed: 621.0] [added: 637.7] | | | | [removed: 17.1] [added: 16.6] | % | | [removed: 580.5] [added: 621.0] | | | | [removed: 16.7] [added: 17.1] | % | | [removed: 573.7] [added: 580.5] | | | | [removed: 17.0] [added: 16.7] | % |

| Losses and other expenses, net | [removed: 11.3] [added: 8.2] | | | | [removed: 0.3] [added: 0.2] | % | | [removed: 21.7] [added: 11.3] | | | | [removed: 0.6] [added: 0.3] | % | | [removed: 6.8] [added: 21.7] | | | | [removed: 0.2] [added: 0.6] | % |

| Restructuring charges | [removed: 1.8] [added: 3.2] | | | | [removed: —] [added: 0.1] | % | | [removed: 3.2] [added: 1.8] | | | | [removed: 0.1] [added: —] | % | | [removed: 1.9] [added: 3.2] | | | | 0.1 | % |

| Goodwill impairment | — | | | | — | % | | [removed: 5.5] [added: —] | | | | [removed: 0.2] [added: —] | % | | [removed: —] [added: 5.5] | | | | [removed: —] [added: 0.2] | % |

| Impairment of assets | — | | | | — | % | | [removed: 44.5] [added: —] | | | | [removed: 1.3] [added: —] | % | | [removed: —] [added: 44.5] | | | | [removed: —] [added: 1.3] | % |

| Pension settlement | [removed: 31.4] [added: —] | | | | [removed: 0.9] [added: —] | % | | [removed: —] [added: 31.4] | | | | [removed: —] [added: 0.9] | % | | — | | | | — | % |

| Income from equity method investments | (18.4 | | ) | | (0.5 | )% | | [removed: (13.4] [added: (18.4] | | ) | | [removed: (0.4] [added: (0.5] | )% | | [removed: (13.8] [added: (13.4] | | ) | | (0.4 | )% |

| Operating income | $ | [removed: 429.4] [added: 494.5] | | | [removed: 11.8] [added: 12.9] | % | | $ | [removed: 305.4] [added: 429.4] | | | [removed: 8.8] [added: 11.8] | % | | $ | [removed: 334.7] [added: 305.4] | | | [removed: 9.9] [added: 8.8] | % |

| Loss from discontinued operations | [removed: (0.8] [added: (1.4] | | ) | | — | % | | [removed: (0.6] [added: (0.8] | | ) | | — | % | | [removed: (2.3] [added: (0.6] | | ) | | [removed: (0.1] [added: —] | [removed: )%] [added: %] |

| Net income | $ | [removed: 277.8] [added: 305.7] | | | [removed: 7.6] [added: 8.0] | % | | $ | [removed: 186.6] [added: 277.8] | | | [removed: 5.4] [added: 7.6] | % | | $ | [removed: 205.8] [added: 186.6] | | | [removed: 6.1] [added: 5.4] | % |

| | [removed: 2016] [added: 2017] | | | | | | | [removed: 2015] [added: 2016] | | | | | | | [removed: 2014] [added: 2015] | | | | | |

| U.S. | $ | [removed: 2,966.8] [added: 3,128.7] | | | 81.5 | % | | $ | [removed: 2,793.4] [added: 2,966.8] | | | [removed: 80.6] [added: 81.5] | % | | $ | [removed: 2,576.4] [added: 2,793.4] | | | [removed: 76.5] [added: 80.6] | % |

| Canada | [removed: 218.8] [added: 237.8] | | | | [removed: 6.0] [added: 6.2] | | | [removed: 217.7] [added: 218.8] | | | | [removed: 6.3] [added: 6.0] | | | [removed: 236.3] [added: 217.7] | | | | [removed: 7.0] [added: 6.3] | |

| International | [removed: 456.0] [added: 473.1] | | | | [removed: 12.5] [added: 12.3] | | | [removed: 456.3] [added: 456.0] | | | | [removed: 13.1] [added: 12.5] | | | [removed: 554.7] [added: 456.3] | | | | [removed: 16.5] [added: 13.1] | |

| Total net sales | $ | [removed: 3,641.6] [added: 3,839.6] | | | 100.0 | % | | $ | [removed: 3,467.4] [added: 3,641.6] | | | 100.0 | % | | $ | [removed: 3,367.4] [added: 3,467.4] | | | 100.0 | % |

[removed: Offsetting these increases were decreases of 20 bps from unfavorable mix, 20 bps from unfavorable foreign] currency adjustments, 20 bps for investments in distribution and other growth initiatives, and increased product warranty costs decreased our profit margin by 10 bps.

| Losses on disposal of fixed assets | [removed: 0.5] [added: 0.2] | | | | [removed: 0.6] [added: 0.5] | | |

| Net change in unrealized [removed: (gains)] losses [added: (gains)] on unsettled futures contracts | (3.6 | | ) | | 0.6 | | |

| Asbestos-related litigation | [removed: 6.3] [added: 3.5] | | | | [removed: 3.0] [added: 6.3] | | |

Segment profit in 2016 increased $70 million due to $51 million in lower commodities and material costs, $33 million from higher sales volume and $12 million from favorable factory productivity which includes the addition of a second factory in Mexico, [added: and $5 million in other product costs.]

[removed: Partially offsetting these increases was $6 million from unfavorable price and mix combined,] $4 million of unfavorable foreign currency exchange rates, $11 million in distribution investments, and $10 million of SG&A expenses to support wage inflation and investments in information technology and research and development.

Year Ended December 31, [removed: 2015] [added: 2017] Compared to Year Ended December 31, [removed: 2014] [added: 2016] - Consolidated Results

The increase in volume was [removed: driven by] [added: primarily due to market growth in] our Residential Heating [removed: & Cooling,] [added: and Cooling and] Commercial Heating [removed: & Cooling] and [removed: Refrigeration] [added: Cooling] segments.

Gross profit margins for [removed: 2015 increased 50] [added: 2017 decreased 30] basis points ("bps") to [removed: 27.3%] [added: 29.3%] compared to [removed: 26.8%] [added: 29.6%] in [removed: 2014.][added: 2016.]

SG&A expenses increased by [removed: $7] [added: $17] million in [removed: 2015] [added: 2017] compared to [removed: 2014.][added: 2016.]

As a percentage of net sales, SG&A expenses decreased [removed: 30] [added: 50] bps from [removed: 17.0%] [added: 17.1%] to [removed: 16.7%] [added: 16.6%] in the same periods.

Losses and other expenses, net for [removed: 2015] [added: 2017] and [removed: 2014] [added: 2016] included the following (in millions):

| • | Operating income in 2017 was $495 million compared to $429 million in 2016. The increase was primarily due to increased sales, sourcing and engineering-led cost reductions, and a reduction in pension settlement costs partially offset by an increase in commodities in 2017. |

| • | Diluted earnings per share from continuing operations were $7.17 per share in 2017 compared to $6.34 per share in 2016. |

| • | We generated $325 million of cash flow from operating activities in 2017 compared to $374 million in 2016. The decrease was primarily due to an increase in working capital, partially offset by a reduction in pension contributions and an increase in net income. |

| • | In 2017, we returned $80 million to shareholders through dividend payments and we used $250.0 million to purchase 1.5 million shares of stock under our share repurchase plans. |

This segment's profit benefited from sourcing and engineering-led cost reductions partially offset by lower factory productivity.

On a consolidated basis, our gross profit margins decreased to 29.3% in 2017 due primarily to unfavorable commodities, factory inefficiencies, and continued investment in distribution expansion.

These declines were partially offset by favorable price and mix and sourcing and engineering-led cost reductions across our business.

Net sales increased 5.4% in 2017 compared to 2016, primarily driven by volume increases.

Changes in foreign currency exchange rates and the effects of price and mix also had positive impacts on net sales.

We saw margin decreases of 80 bps from higher commodity costs, 50 bps for investments in distribution expansion, and 40 bps from other product costs.

These decreases were offset by increases of 100 bps from sourcing and engineering-led cost reductions and 40 bps from favorable price and mix.

SG&A increased due to general wage inflation, increased healthcare costs and increased investment in information technology and research and development partially offset by decreases in incentive compensation.

| | 2017 | | | | 2016 | | |

| Environmental liabilities | 2.2 | | | | 1.9 | | |

Foreign currency exchange gains increased in 2017 primarily due to improvement in foreign exchange rates in our primary markets.

The special legal contingency charges increased primarily due to costs associated with the matter reported to the Securities and Exchange Commission and Department of Justice.

We performed a qualitative impairment analysis and noted no indicators of goodwill impairment through December 31, 2017.

In addition, we recorded a pension settlement charge of $31 million in the fourth quarter of 2016.

We did not have similar funding or pension buyout activity in 2017.

The 2017 effective tax rate was negatively impacted by recent changes in U.S. tax legislation that reduced the value of our deferred tax assets by $31.8 million, partially offset by the benefit from the impact of excess tax benefits of $23.6 million.

The 2016 effective tax rate was not impacted by either U.S. tax rate changes or the impact of excess tax benefits.

We expect our effective tax rate will be between 22% and 24% in future years due to the changes in U.S. tax legislation excluding the impact of excess tax benefits.

| | 2017 | | | | 2016 | | | | Difference | | | | % Change | |

| Net sales | $ | 2,140.4 | | | $ | 2,000.8 | | | $ | 139.6 | | | 7.0 | % |

| Profit | $ | 373.9 | | | $ | 348.8 | | | $ | 25.1 | | | 7.2 | % |

Residential Heating & Cooling net sales increased 7% in 2017 compared to 2016.

Sales volume increased by 7% primarily due to market growth.

Segment profit in 2017 increased $25 million due to $39 million from higher sales volume, $21 million from sourcing and engineering-led cost reductions, $15 million from favorable price, $5 million from favorable foreign currency, $2 million from lower warranty expense, and $1 million from higher income from equity method investments.

Partially offsetting these increases was $20 million in higher commodity costs, $15 million in SG&A expenses to support investments in technology and research and development, incremental headcount and higher personnel costs, $12 million in freight and distribution investments, $6 million from unfavorable mix, and $5 million from increases in other product costs.

| | 2017 | | | | 2016 | | | | Difference | | | | % Change | |

| Net sales | $ | 973.8 | | | $ | 917.9 | | | $ | 55.9 | | | 6.1 | % |

| Profit | $ | 157.3 | | | $ | 149.3 | | | $ | 8.0 | | | 5.4 | % |

| % of net sales | 16.2 | | % | | 16.3 | | % | | | | | | | |

Sales volume increased by 5% primarily due to market growth and 1% from favorable foreign currency.

Segment profit in 2017 increased $8 million compared to 2016 due to $14 million from higher sales volume, $7 million from sourcing and engineering-led cost reductions, and $1 million in favorable foreign currency.

Partially offsetting these increases was $5 million from warranty and other product costs, $4 million of higher commodity costs, $3 million from factory inefficiencies, $1 million in higher SG&A expenses, and $1 million in freight and distribution investments.

| | 2017 | | | | 2016 | | | | Difference | | | | % Change | |

| Net sales | $ | 725.4 | | | $ | 722.9 | | | $ | 2.5 | | | 0.3 | % |

| Profit | $ | 72.6 | | | $ | 68.9 | | | $ | 3.7 | | | 5.4 | % |

| % of net sales | 10.0 | | % | | 9.5 | | % | | | | | | | |

| | |

| --- | --- |

| • | Operational income from continuing operations in 2016 was $429 million compared to $305 million in 2015. The increase was primarily due to increased sales and reductions in our commodities and material costs in 2016 as well as the goodwill and asset impairment charges in 2015. |

| • | Diluted earnings per share from continuing operations were $6.34 per share in 2016 compared to $4.11 per share in 2015, including non-cash impairment charges in our refrigerated display case business in 2015. |

| • | We generated $355 million of cash flow from operating activities in 2016 compared to $331 million in 2015. |

| • | In 2016, we returned $69 million through dividend payments. |

This segment's results benefited from industry growth and market share gains.

On a consolidated basis, our gross profit margins increased to 29.6% in 2016 due primarily to favorable price and material cost savings across our business.

These improvements were partially offset by unfavorable foreign exchange rates, unfavorable mix, and continued investment in distribution expansion in our Residential Heating & Cooling segment.

We expect our effective tax rate to be approximately 32% in future years due to sustainable benefits from reorganization of our international subsidiaries that will enable us to utilize foreign tax credits and other benefits.

and $5 million in other product costs.

Net sales increased 3% in 2015 compared to 2014, with sales volume up approximately 6% and price and mix up approximately 1%.

The benefit of price and mix was a combination of price increases across all segments and favorable product mix

predominantly in our Residential Heating & Cooling segment.

Partially offsetting these increases was a 4% decrease from foreign currency exchange rates.

Lower material costs increased our profit margin by 200 bps, increased factory productivity increased our profit margin by 20 bps and reduced product warranty costs increased our profit margin by 10 bps.

Offsetting these increases were decreases of 70 bps from unfavorable mix, 50 bps from unfavorable foreign currency adjustments, 20 bps from lower refrigerant pricing on our Australia wholesale business when compared to the prior year, 30 bps for investments in distribution and other growth initiatives, and 10 bps from one-time inventory write down costs.

The dollar increase in SG&A expenses was principally due to increased incentive compensation, general wage inflation, and health care costs.

| | 2015 | | | | 2014 | | |

| Environmental liabilities | 1.0 | | | | 2.0 | | |

| Other items, net | — | | | | 0.3 | | |

Foreign currency exchange losses increased in 2015 primarily due to the Canadian dollar exchange rates.

The special legal contingency charges primarily increased for our estimate of costs expected to be incurred for an attempted class action lawsuit.

During the fourth quarter we completed a strategic review of our North American supermarket display cases and systems business.

As a result, we performed a quantitative impairment analysis for this business unit using the market approach.

Based on the results of the quantitative impairment test, we recorded goodwill impairment of $5.5 million.

No other indicators of goodwill impairment were identified through December 31, 2015.

During the fourth quarter we completed a strategic review of our North American supermarket display cases and systems business.

As a result, we performed an impairment analysis using a market approach and determined that intangible and certain long-lived assets relating to our North American supermarket business were impaired and we recorded a charge of $45 million in "Asset Impairment" in the Consolidated Statement of Operations.

Our effective tax rates differ from the statutory federal rate of 35% for certain items, including tax credits, state and local taxes, non-deductible expenses, foreign taxes at rates other than 35% and other permanent tax differences.

The Loss from discontinued operations related to the Service Experts business sold in March 2013 and the Hearth business sold in April 2012.

In 2014, there were $4 million of pre-tax losses incurred primarily related to changes in retained product liabilities and general liabilities for Service Experts and Hearth.

| | 2015 | | | | 2014 | | | | Difference | | | | % Change | |

| Net sales | $ | 1,866.9 | | | $ | 1,736.5 | | | $ | 130.4 | | | 7.5 | % |

| Profit | $ | 278.4 | | | $ | 235.8 | | | $ | 42.6 | | | 18.1 | % |

| % of net sales | 14.9 | | % | | 13.6 | | % | | | | | | | |

Residential Heating & Cooling net sales increased 8% in 2015 compared to 2014 driven by strong volume increases and favorable price and mix.

Sales volume increases contributed 7% and were attributable to industry growth in new construction and replacement markets and market share gains.

Benefits of price increases and favorable product mix contributed 2%.

Changes in foreign currency exchange rates unfavorably impacted net sales by 1%.

Shown in the table below are our three business segments, the key products, services and well-known product and brand names within each segment and net sales in [removed: 2016] [added: 2017] by segment.

Segment financial data for [removed: 2016, 2015] [added: 2017, 2016] and [removed: 2014,] [added: 2015,] including financial information about foreign and domestic operations, is included in Note 18 of the Notes to our Consolidated Financial Statements in “Item 8.

| Segment | | Products & Services | | Product and Brand Names | | [removed: 2016] [added: 2017] Net Sales (in millions) | | |

| Residential Heating & Cooling | | Furnaces, air conditioners, heat pumps, packaged heating and cooling systems, indoor air quality equipment, comfort control products, replacement parts and supplies | | Lennox, Dave Lennox Signature, Armstrong Air, Ducane, Aire-Flo, Air-Ease, Concord, Magic-Pak, ADP Advanced Distributor Products, iComfort and Lennox PartsPlus | | $ | [removed: 2,000.8] [added: 2,140.4] | |

| Commercial Heating & Cooling | | Unitary heating and air conditioning equipment, applied systems, controls, installation and service of commercial heating and cooling equipment, variable refrigerant flow commercial products | | Lennox, Allied Commercial, Magic-Pak, Raider, Landmark, Prodigy, Strategos, Energence, Lennox VRF and Lennox National Account Services | | [removed: 917.9] [added: 973.8] | | |

| Refrigeration | | Condensing units, unit coolers, fluid coolers, air cooled condensers, air handlers, process chillers, controls, compressorized racks, supermarket display cases and systems | | Heatcraft Worldwide Refrigeration, Bohn, Larkin, Climate Control, Chandler Refrigeration, Kysor/Warren, Friga-Bohn, HK Refrigeration, Hyfra, Kirby and Interlink | | [removed: 722.9] [added: 725.4] | | |

We are continuing to grow our network of [removed: 209] [added: 230] Lennox PartsPlus stores across the United States and Canada.

Our global manufacturing, distribution, sales and marketing footprint serves customers in over [removed: 70] [added: 115] countries worldwide.

We are growing our business by extending our successful business model and product knowledge [removed: into] [added: to capitalize on] additional domestic and international [removed: markets.][added: market opportunities.]

To maximize our buying effectiveness in the marketplace, we have a central strategic sourcing group that consolidates purchases of [added: certain materials, components and indirect items across business segments.]

Our strategic sourcing group also works with selected suppliers to reduce costs [removed: and improve quality and delivery performance by employing lean manufacturing and Six Sigma.]

We operate a global engineering and technology organization that focuses on new technology invention, product development, product quality improvements and process enhancements, including our development of next-generation [removed: thermostats and] control [removed: systems.][added: systems as well as heating and cooling products that include some of the most efficient products in their respective categories.]

| • | Commercial Heating & Cooling - United Technologies Corp. (Carrier, ICP Commercial); Ingersoll-Rand plc (Trane); Paloma Industries, Inc. (Rheem, Ruud); Johnson Controls, Inc. (York); Daikin Industries, Ltd. (Goodman, McQuay); Melrose [added: Industries PLC (Mammoth); and AAON, Inc.] |

[removed: | • | Refrigeration - Hussmann Corporation; Paloma Industries, Inc. (Rheem Manufacturing Company (Heat Transfer Products] Group)); Emerson Electric Co. (Copeland); United Technologies Corp. (Carrier); GEA Group (Kuba, Searle, Goedhart); Alfa Laval; Guntner GmbH; and Panasonic Corp. (Sanyo). [removed: |]

As of December 31, [removed: 2016,] [added: 2017,] we employed approximately [removed: 10,600] [added: 11,450] employees.

Approximately [removed: 5,100] [added: 5,200] of these employees were salaried and [removed: 5,500] [added: 6,250] were hourly.

Approximately [removed: 2,400] [added: 3,100] employees, including international locations, are represented by unions.

[added: Similar directives] are being introduced in other parts of the world, including the U.S. For example, California, China and Japan have all adopted standards possessing similar intent as RoHS.

Our executive officers, their present positions and their ages are as follows as of February 4, [removed: 2016:][added: 2018:]

| Todd M. Bluedorn | [removed: 53] [added: 54] | Chairman of the Board and Chief Executive Officer |

| Joseph W. Reitmeier | [removed: 52] [added: 53] | Executive Vice [removed: President and] [added: President,] Chief Financial Officer |

| Douglas L. Young | [removed: 54] [added: 55] | Executive Vice [removed: President and] [added: President,] President and Chief Operating Officer, [removed: LII] Residential Heating & Cooling |

| Terry L. Johnston | [removed: 59] [added: 60] | Executive Vice [removed: President and] [added: President,] President and Chief Operating Officer, [removed: LII] North America Commercial Heating & Cooling |

| [removed: David W. Moon] [added: Gary S Bedard] | [removed: 55] [added: 53] | Executive Vice [removed: President and] [added: President,] President and Chief Operating Officer, [removed: LII] Worldwide Refrigeration |

| Prakash Bedapudi | [removed: 50] [added: 51] | Executive Vice [removed: President and] [added: President,] Chief Technology Officer |

| Daniel M. Sessa | [removed: 52] [added: 53] | Executive Vice [removed: President and] [added: President,] Chief Human Resources Officer |

| John D. Torres | [removed: 58] [added: 59] | Executive Vice President, Chief Legal Officer and Secretary |

| [removed: Roy A. Rumbough, Jr.] [added: Chris A Kosel] | [removed: 61] [added: 50] | Vice President, [removed: Controller and] Chief Accounting Officer [added: and Controller] |

Mr. Bluedorn also serves on the Board of Directors of Eaton Corporation, a diversified industrial manufacturer, on the Board of Directors of Texas Instruments Incorporated, a global designer and manufacturer of [removed: semiconductors (effective March 1, 2017),] [added: semiconductors,] and on the Board of Trustees of Washington University in St. Louis.

Reitmeier was appointed Executive Vice [removed: President and] [added: President,] Chief Financial Officer in July 2012.

[removed: He is a] director of Watts Water Technologies, Inc., a global provider of plumbing, heating and water quality solutions for residential, industrial, municipal and commercial settings.

Young was appointed Executive Vice [removed: President and] [added: President,] President and Chief Operating Officer of LII's Residential Heating & Cooling segment in October 2006.

Johnston was appointed Executive Vice [removed: President and] [added: President,] President and Chief Operating Officer of LII's North America Commercial Heating & Cooling business in January 2013.

He is on the Board of Directors of CSW Industrials, Inc., a diversified industrial growth company with businesses in industrial products, [removed: coatings,] sealants and adhesives and specialty chemicals segments.

[removed: Moon] [added: Bedard] was appointed Executive Vice [removed: President and] [added: President,] President and Chief Operating Officer of LII's Worldwide Refrigeration business in [removed: August 2006.][added: October 2017.]

He holds a [removed: bachelor of science] [added: bachelor's degree] in [removed: civil engineering and an MBA] [added: accounting] from Texas A&M University.

Prakash Bedapudi was appointed Executive Vice [removed: President and] [added: President,] Chief Technology Officer in July 2008.

Sessa was appointed Executive Vice [removed: President and] [added: President,] Chief Human Resources Officer in June 2007.

Torres was appointed Executive Vice President [removed: and] [added: ,] Chief Legal Officer and Secretary in December 2008.

[removed: Rumbough, Jr.] [added: Kosel] was appointed Vice President, [removed: Controller and] Chief Accounting Officer [added: and Controller] in [removed: July 2006.][added: May 2017.]

| | | | | Total | | $ | 3,839.6 | |

and improve quality and delivery performance by employing lean manufacturing and Six Sigma.

| • | Refrigeration - Hussmann Corporation; Paloma Industries, Inc. (Rheem Manufacturing Company (Heat Transfer Products |

He is a

Gary S.

Since 2005, Mr. Bedard served as Vice President and General Manager, LII Residential Heating and Cooling.

He has also held the positions of Vice President, Residential Product Management, LII Worldwide Heating and Cooling, Director of Brand and Product Management, and District Manager for Lennox Industries’ New York District.

Prior to joining LII in 1998, Mr. Bedard spent eight years at York International in product management and sales leadership roles for commercial applied and unitary systems as well as residential systems.

Mr. Bedard has a bachelor’s degree in engineering management from the United States Military Academy at West Point.

Chris A.

He had previously served as Vice President, Business Analysis and Planning for the Company since 2016.

He also had served as Vice President, Finance and Controller / Director, Finance for the Company’s North America Commercial Business from 2015 - 2016 and Director, Financial Planning and Analysis for the Company’s Residential Business Unit from 2014 to 2015.

Prior to 2014 he had served as Director, Finance for the Company’s Parts Plus Business and Director of the Company’s Financial Shared Services function.

Prior to joining Lennox, he worked for Ernst & Young.

He is also a Certified Public Accountant.

| | | | | Total | | $ | 3,641.6 | |

Over the years, the “Lennox” brand has become inextricably linked with “Dave Lennox,” a highly recognizable advertising icon in the heating and cooling industry.

We utilize the “Dave Lennox” image in mass media advertising, as well as in numerous locally produced dealer advertisements, open houses and trade events.

certain materials, components and indirect items across business segments.

Industries PLC (Mammoth); and AAON, Inc.

Similar directives

David W.

He had previously served as Vice President and General Manager of Worldwide Refrigeration, Americas Operations since 2002.

Prior to serving in that position, he served as Managing Director in Australia beginning in 1999, where his responsibilities included heat transfer manufacturing and distribution, refrigeration wholesaling and manufacturing and HVAC manufacturing and distribution in Australia and New Zealand.

Mr. Moon originally joined LII in 1998 as Operations Director, Asia Pacific.

Prior to that time, Mr. Moon held various management positions at Allied Signal, Inc., Case Corporation, and Tenneco Inc. in the United States, Hong Kong, Taiwan and Germany.

Mr. Moon serves on the Board of Directors of American Woodmark Corporation, a kitchen and bath cabinet manufacturer.

Roy A.

He had previously served as Vice President, Corporate Controller of Maytag Corporation, a position he held since 2002.

From 1998 to 2002, he served as Vice President, Controller of Blodgett Corporation, a portfolio of food service equipment companies and former affiliate of Maytag.

Mr. Rumbough's career at Maytag spanned 17 years and included internal audit, financial planning and analysis, and business unit controller roles.

Prior to his career at Maytag, he worked for Deloitte and Touche, LLP.

He holds a bachelor of arts in accounting from North Carolina State University and an MBA from the Kellogg School of Management, Northwestern University.

In October 2016, we self-reported to the Securities and Exchange Commission (SEC) and the Department of Justice (DOJ) an alleged payment in the amount of 30,000 rubles (approximately US $475) to a Russian customs broker or official.

Under the oversight of our Audit Committee, we initiated an investigation into this matter with the assistance of external legal counsel and external forensic accountants.

The alleged payment was purportedly made to release a shipment of goods being held by Russian customs officials due to inaccurate paperwork.

The value of the shipment was approximately €62,000 (approximately US $68,500).

The allegations are related to our subsidiary in Russia, which had 2016 annual sales of approximately US $4 million.

The scope of the investigation was later expanded to include our operations in Poland because our operations in Russia and Poland used the same third-party logistics provider.

To date, the investigation has not resulted in any evidence of other potentially improper payments.

However, the investigation has raised questions regarding possible irregularities with respect to possible non-compliance with customs documents and procedures related to these operations.

The investigation is ongoing.

We continue to fully cooperate with the SEC and the DOJ regarding this matter.

We do not anticipate any material adverse effect on our business or financial condition as a result of this matter.

For the fiscal year ended December 31, [removed: 2016][added: 2017]

| (State or other jurisdiction of [added: incorporation or organization)] | (I.R.S. Employer [added: Identification Number)] |

[removed: Large Accelerated Filer \[X\] Accelerated Filer \[ \]] [added: |] Non-Accelerated Filer [added: |] \[ \] [added: | |] Smaller Reporting Company [added: |] \[ \] [added: |]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange [removed: Act).][added: Act).Yes \[ \] No\[X\]]

As of June 30, [removed: 2016,] [added: 2017,] the aggregate market value of the common stock held by non-affiliates of the registrant was approximately [removed: $4.8] [added: $7.7] billion based on the closing price of the registrant's common stock on the New York Stock Exchange.

As of February 9, [removed: 2017,] [added: 2018,] there were [removed: 42,982,367] [added: 41,176,787] shares of the registrant's common stock outstanding.

Portions of the registrant's [removed: 2017] [added: 2018] Definitive Proxy Statement to be filed with the Securities and Exchange Commission in connection with the registrant's [removed: 2017] [added: 2018] Annual Meeting of Stockholders to be held on May [removed: 18, 2017] [added: 16, 2018] are incorporated by reference into Part III of this report.

For the Fiscal Year Ended December 31, [removed: 2016][added: 2017]

| ITEM 1. | [removed: [Business](#s1FFA7F13D57A545CA517B5215D891873)] [added: [Business](#sC56509D9B934596FB5C54C0911C9D3B4)] | [removed: [1](#s1FFA7F13D57A545CA517B5215D891873)] [added: [1](#sC56509D9B934596FB5C54C0911C9D3B4)] |

| ITEM 1A. | [Risk [removed: Factors](#sC2B2F07F8BE052C6BC209610F4A6D6CA)] [added: Factors](#s2D4C43FF95FE5622A2AD587BF9A6043B)] | [removed: [8](#sC2B2F07F8BE052C6BC209610F4A6D6CA)] [added: [8](#s2D4C43FF95FE5622A2AD587BF9A6043B)] |

| ITEM 1B. | [Unresolved Staff [removed: Comments](#s189880C3238D559E9116C8441E6AB57B)] [added: Comments](#s70EE2A2DC8F05895A2184950C10FE69F)] | [removed: [12](#s189880C3238D559E9116C8441E6AB57B)] [added: [12](#s70EE2A2DC8F05895A2184950C10FE69F)] |

| ITEM 2. | [removed: [Properties](#s6EBCAF6BC61256AAA50DA5CEA5E098DB)] [added: [Properties](#s61FA03543E265E9B9631876C5A6B6B4E)] | [removed: [13](#s6EBCAF6BC61256AAA50DA5CEA5E098DB)] [added: [13](#s61FA03543E265E9B9631876C5A6B6B4E)] |

| ITEM 3. | [Legal [removed: Proceedings](#s94AB94847E3C5814A4ED28955A50A0BB)] [added: Proceedings](#s3DE6304C5A6954E69B1A8FC7294370CF)] | [removed: [14](#s94AB94847E3C5814A4ED28955A50A0BB)] [added: [14](#s3DE6304C5A6954E69B1A8FC7294370CF)] |

| ITEM 4. | [Mine Safety [removed: Disclosures](#s0C4694DE8E035781802D38E685F685A4)] [added: Disclosures](#s8FA571E85A23589DB9FE8861653F6242)] | [removed: [14](#s0C4694DE8E035781802D38E685F685A4)] [added: [14](#s8FA571E85A23589DB9FE8861653F6242)] |

| ITEM 5. | [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity [removed: Securities](#sE459742307C65DCB8D38700FC4B7DF35)] [added: Securities](#s54AE20CD78AA5E6194912CDFCEE61AB0)] | [removed: [14](#sE459742307C65DCB8D38700FC4B7DF35)] [added: [14](#s54AE20CD78AA5E6194912CDFCEE61AB0)] |

| ITEM 6. | [Selected Financial [removed: Data](#sF6210B470FEB5568BC83E143D52E83E7)] [added: Data](#s3CC4AE2A9B20525EBC90AB267BDB50FD)] | [removed: [17](#sF6210B470FEB5568BC83E143D52E83E7)] [added: [16](#s3CC4AE2A9B20525EBC90AB267BDB50FD)] |

| ITEM 7. | [Management's Discussion and Analysis of Financial Condition and Results of [removed: Operations](#s380F8BD07EAD5AD0B6EF8C7E6C971EFC)] [added: Operations](#s6A58AE9A4C235C0F9742A30B2CE77587)] | [removed: [18](#s380F8BD07EAD5AD0B6EF8C7E6C971EFC)] [added: [17](#s6A58AE9A4C235C0F9742A30B2CE77587)] |

| ITEM 7A. | [Quantitative and Qualitative Disclosures about Market [removed: Risk](#sB77741E936765F87820FBAE615AD1EB8)] [added: Risk](#s528A01AE52E45855B588014778C2811A)] | [removed: [34](#sB77741E936765F87820FBAE615AD1EB8)] [added: [31](#s528A01AE52E45855B588014778C2811A)] |

| ITEM 8. | [Financial Statements and Supplementary [removed: Data](#s6EE4ADCE724150B2B5150C272E1906BB)] [added: Data](#s88A9FBAB0EDD5E9681C74A6DD5AE03E7)] | [removed: [35](#s6EE4ADCE724150B2B5150C272E1906BB)] [added: [33](#s88A9FBAB0EDD5E9681C74A6DD5AE03E7)] |

| ITEM 9. | [Changes in and Disagreements With Accountants on Accounting and Financial [removed: Disclosure](#s46E32295881B5A678EABD2BA02548C55)] [added: Disclosure](#s4051041560315194AE8FABE3ADC58A7C)] | [removed: [89](#s46E32295881B5A678EABD2BA02548C55)] [added: [91](#s4051041560315194AE8FABE3ADC58A7C)] |

| ITEM 9A. | [Controls and [removed: Procedures](#sB8794D9A9994587D8B0CC845C9B61F03)] [added: Procedures](#sCA6BF0E698C85677B59B09C03FD846DE)] | [removed: [89](#sB8794D9A9994587D8B0CC845C9B61F03)] [added: [91](#sCA6BF0E698C85677B59B09C03FD846DE)] |

| ITEM 9B. | [Other [removed: Information](#s5E648F7D31F85A8F8C7E308698AE680B)] [added: Information](#s420E75BBA70E5222A96BF8BF1D3E0FDB)] | [removed: [89](#s5E648F7D31F85A8F8C7E308698AE680B)] [added: [91](#s420E75BBA70E5222A96BF8BF1D3E0FDB)] |

| ITEM 10. | [Directors, Executive Officers and Corporate [removed: Governance](#sB8FF1B158C72517583BAC68D0251DB20)] [added: Governance](#s5A8A92F24A9155F38FE76D1CFE17D9E9)] | [removed: [89](#sB8FF1B158C72517583BAC68D0251DB20)] [added: [91](#s5A8A92F24A9155F38FE76D1CFE17D9E9)] |

| ITEM 11. | [Executive [removed: Compensation](#s1A5551880DDB5602ABB0B5C00A8308D2)] [added: Compensation](#s718371B318A553729193671008E0D762)] | [removed: [89](#s1A5551880DDB5602ABB0B5C00A8308D2)] [added: [91](#s718371B318A553729193671008E0D762)] |

| ITEM 12. | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder [removed: Matters](#s407AA84C04465670A7AFF3B8A03DC33D)] [added: Matters](#s3DF7B81BB4C05494A9E9AF470D43F90F)] | [removed: [90](#s407AA84C04465670A7AFF3B8A03DC33D)] [added: [91](#s3DF7B81BB4C05494A9E9AF470D43F90F)] |

| ITEM 13. | [Certain Relationships and Related Transactions, and Director [removed: Independence](#s52A242098C8459F78D58D36239244296)] [added: Independence](#s2F67D38203905446875D223BE778039A)] | [removed: [90](#s52A242098C8459F78D58D36239244296)] [added: [92](#s2F67D38203905446875D223BE778039A)] |

| ITEM 14. | [Principal Accounting Fees and [removed: Services](#s84A30983D309570188BAAA62EABDC306)] [added: Services](#s0098BF053D4051ECB9DED7073B6ED34A)] | [removed: [90](#s84A30983D309570188BAAA62EABDC306)] [added: [92](#s0098BF053D4051ECB9DED7073B6ED34A)] |

| ITEM 15. | [Exhibits and Financial Statement [removed: Schedules](#sE9A3E8BC83985A23A31153FA38F86DBE)] [added: Schedules](#sE3C8A911DBD75F2587DDDFE4FBAC422B)] | [removed: [90](#sE9A3E8BC83985A23A31153FA38F86DBE)] [added: [92](#sE3C8A911DBD75F2587DDDFE4FBAC422B)] |

| | [SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND [removed: RESERVES](#s0B258BA59FD652C3805575E448C759AC)] [added: RESERVES](#sC771C86B15A85F1D8E59DA2579619EEA)] | [removed: [93](#s0B258BA59FD652C3805575E448C759AC)] [added: [95](#sC771C86B15A85F1D8E59DA2579619EEA)] |

| | [INDEX TO [removed: EXHIBITS](#sE19037BF828F5E74B1D5E361B99F25C1)] [added: EXHIBITS](#s6C696AE6DE705D5AA6487DA55EFDEDC6)] | [removed: [94](#sE19037BF828F5E74B1D5E361B99F25C1)] [added: [96](#s6C696AE6DE705D5AA6487DA55EFDEDC6)] |

10-K 1 lii-20171231x10k.htm 10-K

| | | | | |

| --- | --- | --- | --- | --- |

| | | | | |

| Large Accelerated Filer | \[X\] | | Accelerated Filer | \[ \] |

| | | | Emerging growth company | \[ \] |

| If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. \[ \] | | | | |

| | [SIGNATURES](#s6E2747CAA1DE583AB68A403D141BC264) | [93](#s6E2747CAA1DE583AB68A403D141BC264) |

10-K 1 lii-20161231x10k.htm 10-K

| incorporation or organization) | Identification Number) |

Yes \[ \] No \[X\]

| | [SIGNATURES](#s7E8D3EECC1EF5332BFCE98062AD81FE5) | [91](#s7E8D3EECC1EF5332BFCE98062AD81FE5) |

The following chart lists our principal domestic and international manufacturing, distribution and office facilities as of December 31, [removed: 2016] [added: 2017] and indicates the business segment that uses such facilities, the approximate size of such facilities and whether such facilities are owned or leased.

| Lenexa, KS | Residential & Commercial Heating & Cooling | Distribution | [removed: 115] [added: 147] | Leased |

| Orlando, FL | Residential & Commercial Heating & Cooling | Distribution | [removed: 85] [added: 173] | Leased |

| East Fife, WA | Residential & Commercial Heating & Cooling | Distribution | 112 | Leased |

Our common stock is listed for trading on the New York Stock Exchange under the symbol “LII.” The high and low sales prices for our common stock for each quarterly period during [removed: 2016] [added: 2017] and [removed: 2015] [added: 2016] were as follows:

| First Quarter | $ | [removed: 136.32] [added: 172.96] | | | $ | [removed: 105.65] [added: 147.54] | | | $ | [removed: 111.15] [added: 136.32] | | | $ | [removed: 92.94] [added: 105.65] | |

| Second Quarter | [removed: 143.19] [added: 192.58] | | | | [removed: 131.90] [added: 161.11] | | | | [removed: 118.43] [added: 143.19] | | | | [removed: 104.94] [added: 131.90] | | |

| Third Quarter | [removed: 164.02] [added: 187.49] | | | | [removed: 141.90] [added: 160.18] | | | | [removed: 126.85] [added: 164.02] | | | | [removed: 106.81] [added: 141.90] | | |

| Fourth Quarter | [removed: 164.57] [added: 213.78] | | | | [removed: 140.97] [added: 177.68] | | | | [removed: 138.57] [added: 164.57] | | | | [removed: 109.87] [added: 140.97] | | |

During [removed: 2016] [added: 2017] and [removed: 2015,] [added: 2016,] we declared quarterly cash dividends as set forth below:

| First Quarter | $ | [removed: 0.36] [added: 0.43] | | | $ | [removed: 0.30] [added: 0.36] | |

| Second Quarter | [removed: 0.43] [added: 0.51] | | | | [removed: 0.36] [added: 0.43] | | |

| Third Quarter | [removed: 0.43] [added: 0.51] | | | | [removed: 0.36] [added: 0.43] | | |

| Fourth Quarter | [removed: 0.43] [added: 0.51] | | | | [removed: 0.36] [added: 0.43] | | |

| Fiscal Year | $ | [removed: 1.65] [added: 1.96] | | | $ | [removed: 1.38] [added: 1.65] | |

As of the close of business on February 9, [removed: 2017,] [added: 2018,] approximately [removed: 702] [added: 650] holders of record held our common stock.

The graph assumes that $100 was invested on December 31, [removed: 2011,] [added: 2012,] with dividends reinvested.

[removed: ][added: ]

Our Board of Directors has authorized a total of $2 billion towards the repurchase of shares of our common stock (collectively referred to as the "Share Repurchase Plans"), including [removed: an additional] [added: a] $550 million share repurchase [removed: that was authorized] [added: authorization] in 2016.

The Share Repurchase Plans authorize open market repurchase transactions and do not have [removed: an] [added: a stated] expiration date.

As of December 31, [removed: 2016, $646] [added: 2017, $396] million of shares may yet be repurchased under the Share Repurchase Plans.

In the fourth quarter of [removed: 2016,] [added: 2017,] we purchased shares of our common stock as follows:

(1) Includes the surrender to LII of [removed: 44,532] [added: 49,508] shares of common stock to satisfy employee tax-withholding obligations in connection with the exercise of vested stock appreciation rights and the vesting of restricted stock units.

(2) Includes final settlement of shares repurchased in Accelerated Share Repurchase Plan (ASR) executed in the third quarter of [removed: 2016.][added: 2017.]

(3) After [removed: $200] [added: a $75] million payment for Accelerated Share Repurchase Plan (ASR) executed in February [removed: 2016 and] [added: 2017,] $100 million payment for [added: an] ASR executed in [removed: August 2016.][added: April 2017 and $75 million payment for an ASR executed in July 2017.]

Final settlement of the February ASR occurred in the [added: second quarter, final settlement for the April ASR occurred in the] third quarter and the final settlement of the [removed: August] [added: July] ASR occurred in [added: the] fourth quarter.

The [removed: February] [added: February, April] and [removed: August] [added: July] ASRs were [removed: offered] [added: effected] pursuant to a previously announced repurchase plan.

| | 2017 | | | | | | | | 2016 | | | | | | |

| | 2017 | | | | 2016 | | |

| October 1 through October 31 (2) | 7,426 | | | $ | 193.24 | | | — | | | 396.0 | |

| November 1 through November 30 | 73,837 | | | 172.61 | | | | 68,381 | | | 396.0 | |

| December 1 through December 31 | 36,626 | | | 206.49 | | | | — | | | 396.0 | |

| | 117,889 | | | | | | | 68,381 | | | | |

| | 2016 | | | | | | | | 2015 | | | | | | |

| | 2016 | | | | 2015 | | |

| October 1 through October 31 (2) | 163,558 | | | $ | 155.81 | | | 163,501 | | | 396.0 | |

| November 1 through November 30 | 3,804 | | | 146.46 | | | | — | | | 396.0 | |

| December 1 through December 31 | 40,671 | | | 157.02 | | | | — | | | 646.0 | |

| | 208,033 | | | | | | | 163,501 | | | | |

The following table presents selected financial data for each of the five years ended December 31, [removed: 2016] [added: 2017] to [removed: 2012] [added: 2013] (in millions, except per share data):

| | [removed: 2016] [added: 2017] | | | | [removed: 2015] [added: 2016] | | | | [removed: 2014] [added: 2015] | | | | [removed: 2013] [added: 2014] | | | | [removed: 2012] [added: 2013] | | |

| Net Sales | $ | [removed: 3,641.6] [added: 3,839.6] | | | $ | [removed: 3,467.4] [added: 3,641.6] | | | $ | [removed: 3,367.4] [added: 3,467.4] | | | $ | [removed: 3,199.1] [added: 3,367.4] | | | $ | [removed: 2,949.4] [added: 3,199.1] | |

| Operating Income | [removed: 429.4] [added: 494.5] | | | | [removed: 305.4] [added: 429.4] | | | | [removed: 334.7] [added: 305.4] | | | | [removed: 289.0] [added: 334.7] | | | | [removed: 219.1] [added: 289.0] | | |

| Income From Continuing Operations | [removed: 278.6] [added: 307.1] | | | | [removed: 187.2] [added: 278.6] | | | | [removed: 208.1] [added: 187.2] | | | | [removed: 179.9] [added: 208.1] | | | | [removed: 135.0] [added: 179.9] | | |

| Net Income | [removed: 277.8] [added: 305.7] | | | | [removed: 186.6] [added: 277.8] | | | | [removed: 205.8] [added: 186.6] | | | | [removed: 171.8] [added: 205.8] | | | | [removed: 90.0] [added: 171.8] | | |

| Basic Earnings Per Share From Continuing Operations | [removed: 6.41] [added: 7.28] | | | | [removed: 4.17] [added: 6.41] | | | | [removed: 4.35] [added: 4.17] | | | | [removed: 3.61] [added: 4.35] | | | | [removed: 2.66] [added: 3.61] | | |

| Diluted Earnings Per Share From Continuing Operations | [removed: 6.34] [added: 7.17] | | | | [removed: 4.11] [added: 6.34] | | | | [removed: 4.28] [added: 4.11] | | | | [removed: 3.55] [added: 4.28] | | | | [removed: 2.63] [added: 3.55] | | |

| Cash Dividends Declared Per Share | [removed: 1.65] [added: 1.96] | | | | [removed: 1.38] [added: 1.65] | | | | [removed: 1.14] [added: 1.38] | | | | [removed: 0.92] [added: 1.14] | | | | [removed: 0.76] [added: 0.92] | | |

| Capital Expenditures [removed: (1)] | $ | [removed: 84.3] [added: 98.3] | | | $ | [removed: 69.9] [added: 84.3] | | | $ | [removed: 88.4] [added: 69.9] | | | $ | [removed: 78.3] [added: 88.4] | | | $ | [removed: 50.2] [added: 78.3] | |

| Research and Development Expenses [removed: (1)] | [removed: 64.6] [added: 73.6] | | | | [removed: 62.3] [added: 64.6] | | | | [removed: 60.7] [added: 62.3] | | | | [removed: 53.7] [added: 60.7] | | | | [removed: 49.5] [added: 53.7] | | |

| Total Assets | $ | [removed: 1,760.3] [added: 1,891.5] | | | $ | [removed: 1,677.4] [added: 1,760.3] | | | $ | [removed: 1,764.3] [added: 1,677.4] | | | $ | [removed: 1,626.7] [added: 1,764.3] | | | $ | [removed: 1,691.9] [added: 1,626.7] | |

| Total Debt | [removed: 868.2] [added: 1,004.0] | | | | [removed: 741.1] [added: 868.2] | | | | [removed: 925.6] [added: 741.1] | | | | [removed: 400.4] [added: 925.6] | | | | [removed: 386.6] [added: 400.4] | | |

| Stockholders' Equity | [removed: 38.0] [added: 50.1] | | | | [removed: 101.6] [added: 38.0] | | | | [removed: 9.0] [added: 101.6] | | | | [removed: 485.7] [added: 9.0] | | | | [removed: 498.3] [added: 485.7] | | |

To understand the factors that may affect comparability, the financial data should be read in conjunction with Item 7, "Management's Discussion and Analysis of [removed: Financial Condition and Results of Operations," and the Consolidated Financial Statements and the related Notes to the Consolidated Financial Statements in Item 8, "Financial Statements and Supplementary Data," of this Form 10-K.]

Financial Condition and Results of Operations," and the Consolidated Financial Statements and the related Notes to the Consolidated Financial Statements in Item 8, "Financial Statements and Supplementary Data," of this Form 10-K.

(1) Amounts exclude capital expenditures and research and development expenses related to discontinued operations.

Management, including our Chief Executive Officer and Chief Financial Officer, has undertaken an assessment of the effectiveness of the Company's internal control over financial reporting as of December 31, [removed: 2016,] [added: 2017,] based on criteria established in Internal Control - Integrated Framework (2013) by the Committee of Sponsoring Organizations of the Treadway Commission.

Based on this assessment, management concluded that as of December 31, [removed: 2016,] [added: 2017,] the Company's internal control over financial reporting was effective.

KPMG LLP, the independent registered public accounting firm that audited the Company's consolidated financial statements, has issued an audit report including an opinion on the effectiveness of our internal control over financial reporting as of December 31, [removed: 2016,] [added: 2017,] a copy of which is included herein.

[removed: The] [added: To the Stockholders and] Board of Directors [removed: and Stockholders]

We have audited the accompanying consolidated balance sheets of Lennox International Inc. and subsidiaries (the Company) as of December 31, [removed: 2016 and 2015,] [added: 2017] and [added: 2016,] the related consolidated statements of operations, comprehensive income, stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, [removed: 2016.][added: 2017, and the related notes and Schedule II - Valuation and Qualifying Accounts and Reserves (collectively, the consolidated financial statements).]

We also have audited the Company’s internal control over financial reporting as of December 31, [removed: 2016,] [added: 2017,] based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway [removed: Commission (COSO).][added: Commission.]

Our responsibility is to express an opinion on [removed: these] [added: the Company’s] consolidated financial statements and [removed: the Schedule and] an opinion on the Company’s internal control over financial reporting based on our audits.

We conducted our audits in accordance with the standards of the [removed: Public Company Accounting Oversight Board (United States).][added: PCAOB.]

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the [added: consolidated] financial statements are free of material [removed: misstatement] [added: misstatement, whether due to error or fraud,] and whether effective internal control over financial reporting was maintained in all material respects.

Our audits [removed: of the consolidated financial statements] [added: also] included [removed: examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing] [added: evaluating] the accounting principles used and significant estimates made by management, [removed: and] [added: as well as] evaluating the overall [added: presentation of the consolidated] financial [removed: statement presentation.][added: statements.]

A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable [removed: assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.]

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, [removed: 2016] [added: 2017] and [removed: 2015,] [added: 2016,] and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, [removed: 2016,] [added: 2017,] in conformity with U.S. generally accepted accounting principles.

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, [removed: 2016,] [added: 2017,] based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway [removed: Commission (COSO).][added: Commission.]

| | [added: 2017 | | | |] 2016 | | | | 2015 | | |

| Cash and cash equivalents | $ | [removed: 50.2] [added: 68.2] | | | $ | [removed: 38.9] [added: 50.2] | |

| Accounts and notes receivable, net of allowances of [removed: $6.7] [added: $5.9] and [removed: $6.3] [added: $6.7] in [removed: 2016] [added: 2017] and [removed: 2015,] [added: 2016,] respectively | [removed: 469.8] [added: 506.5] | | | | [removed: 422.8] [added: 469.8] | | |

| Inventories, net | [removed: 418.5] [added: 484.2] | | | | [removed: 418.8] [added: 418.5] | | |

| Other assets | [removed: 67.4] [added: 78.4] | | | | [removed: 57.7] [added: 67.4] | | |

| Total current assets | [removed: 1,005.9] [added: 1,137.3] | | | | [removed: 938.2] [added: 1,005.9] | | |

| Property, plant and equipment, net of accumulated depreciation of [removed: $717.2] [added: $774.2] and [removed: $682.9] [added: $717.2] in [removed: 2016] [added: 2017] and [removed: 2015,] [added: 2016,] respectively | [removed: 361.4] [added: 397.8] | | | | [removed: 339.6] [added: 361.4] | | |

| Goodwill | [removed: 195.1] [added: 200.5] | | | | 195.1 | | |

| Deferred income taxes | [removed: 136.7] [added: 94.4] | | | | [removed: 145.7] [added: 136.7] | | |

| Other assets, net | [removed: 61.2] [added: 61.5] | | | | [removed: 58.8] [added: 61.2] | | |

| Total assets | $ | [added: 1,891.5 | | | $ |] 1,760.3 | | | $ | 1,677.4 | |

| Short-term debt | $ | [removed: 52.4] [added: 0.9] | | | $ | [removed: 204.1] [added: 52.4] | |

| Current maturities of long-term debt | [removed: 200.1] [added: 32.6] | | | | [removed: 31.0] [added: 200.1] | | |

| Accounts payable | [removed: 361.2] [added: 348.6] | | | | [removed: 320.1] [added: 361.2] | | |

| Accrued expenses | [removed: 265.9] [added: 270.3] | | | | [removed: 242.6] [added: 265.9] | | |

| Income taxes payable | [removed: 9.0] [added: 2.1] | | | | [removed: 26.0] [added: 9.0] | | |

| Total current liabilities | [removed: 888.6] [added: 654.5] | | | | [removed: 823.8] [added: 888.6] | | |

| Long-term debt | [removed: 615.7] [added: 970.5] | | | | [removed: 506.0] [added: 615.7] | | |

| Post-retirement benefits, other than pensions | [removed: 2.8] [added: 2.6] | | | | [removed: 4.1] [added: 2.8] | | |

| Pensions | [removed: 87.5] [added: 84.5] | | | | [removed: 120.8] [added: 87.5] | | |

| Other liabilities | [removed: 127.7] [added: 129.3] | | | | [removed: 121.1] [added: 127.7] | | |

| Total liabilities | [removed: 1,722.3] [added: 1,841.4] | | | | [removed: 1,575.8] [added: 1,722.3] | | |

| Additional paid-in capital | [removed: 1,046.2] [added: 1,061.5] | | | | [removed: 1,002.4] [added: 1,046.2] | | |

| Retained earnings | [removed: 1,353.0] [added: 1,575.9] | | | | [removed: 1,146.7] [added: 1,353.0] | | |

| Accumulated other comprehensive loss | [removed: (195.1] [added: (157.4] | | ) | | [removed: (204.7] [added: (195.1] | | ) |

| Treasury stock, at cost, [removed: 44,195,250] [added: 45,361,145] shares and [removed: 42,491,910] [added: 44,195,250] shares for [removed: 2016] [added: 2017] and [removed: 2015,] [added: 2016,] respectively | [removed: (2,167.4] [added: (2,430.8] | | ) | | [removed: (1,844.1] [added: (2,167.4] | | ) |

| Noncontrolling interests | [removed: 0.4] [added: —] | | | | 0.4 | | |

Opinions on the Consolidated Financial Statements and Internal Control Over Financial Reporting

Change in Accounting Principle

As discussed in Note 2 to the consolidated financial statements, in 2017 the Company adopted Accounting Standards Update No. 2016-09, Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, which requires entities to record all tax effects related to share-based payments at settlement or expiration through the income statement.

Basis for Opinion

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

Definition and Limitations of Internal Control Over Financial Reporting

assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

We have served as the Company’s auditor since 2002.

February 16, 2018

| | 2017 | | | | 2016 | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Net income | | — | | | | — | | | | 305.7 | | | | — | | | | — | | | — | | | | — | | | | 305.7 | | |

| Treasury stock purchases | | — | | | | — | | | | — | | | | — | | | | 1.6 | | | (276.1 | | ) | | — | | | | (276.1 | | ) |

| Balance as of December 31, 2017 | | $ | 0.9 | | | $ | 1,061.5 | | | $ | 1,575.9 | | | $ | (157.4 | ) | | 45.4 | | | $ | (2,430.8 | ) | | $ | — | | | $ | 50.1 | |

We recognize deferred tax assets and liabilities for the future tax consequences attributable to differences between the financial

Revenue for equipment sales is recognized in line with shipping terms, revenue for installation services is recognized when completed, and revenue related to maintenance and repair services is recognized when such services are performed.

Such estimates include the valuation of accounts receivable, inventories,

Recently Adopted Accounting Guidance

On March 30, 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-09, Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, which changes the accounting for certain aspects of share-based payments to employees.

The new guidance requires entities to record all tax effects related to share-based payments at settlement or expiration through the income statement and the excess tax benefit to be recorded when it arises, subject to normal valuation allowance considerations.

This is in comparison to the prior requirement that these excess tax benefits be recognized in additional paid-in capital.

The new guidance also requires excess tax benefits to be classified along with other income tax cash flows as an operating activity in the statement of cash flows rather than, as previously required, a financing activity.

We have adopted ASU 2016-09 effective January 1, 2017 on a prospective basis where permitted by the new standard.

As a result of this adoption:

| • | We recognized discrete tax benefits of $23.6 million in the income taxes line item of our consolidated statements of operations for the twelve months ended December 31, 2017 related to excess tax benefits upon vesting or settlement in that period. |

| • | We elected to adopt the cash flow presentation of the excess tax benefits retrospectively where these benefits are classified along with other income tax cash flows as operating cash flows. |

| • | We have elected to continue to estimate the number of stock-based awards expected to vest, rather than electing to account for forfeitures as they occur to determine the amount of compensation cost to be recognized in each period. |

| • | We excluded the excess tax benefits from the assumed proceeds available to repurchase shares in the computation of our diluted earnings per share for the year ended December 31, 2017. |

Recent Accounting Pronouncements

On May 28, 2014, the Financial Accounting Standard Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-09, Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers.

The ASU will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective.

The new standard is effective for us on January 1, 2018.

Early application is not permitted.

We have substantially completed our evaluation of the effect that ASU 2014-09 will have on our Consolidated Financial Statements and related disclosures.

The ASU will not have a material impact on the amount and timing of revenue recognition, but it will require us to enhance our disclosures to provide additional information relating to disaggregated revenue, contract assets and liabilities, and remaining performance obligations.

We are currently in the process of preparing these additional disclosures, including updating our internal controls related to the additional data and disclosures to be provided upon adoption of the new standard.

In connection with our audits of the consolidated financial statements, we have audited Schedule II - Valuation and Qualifying Accounts and Reserves (the Schedule).

Additionally, Schedule II - Valuation and Qualifying Accounts and Reserves, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

February 21, 2017

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Balance as of December 31, 2013 | 87.2 | | | 0.9 | | | | 912.7 | | | | 870.5 | | | | (61.1 | | ) | | 38.1 | | | (1,238.1 | | ) | | 0.8 | | | | 485.7 | | |

| Treasury stock purchases | — | | | — | | | | (117.3 | | ) | | — | | | | — | | | | 5.2 | | | (455.4 | | ) | | — | | | | (572.7 | | ) |

If the expected future cash flows do not exceed the carrying value of the asset or assets being reviewed, an impairment loss is recognized based on the excess of the carrying amount of the impaired assets over their fair value.

For those intangible assets which are evaluated using the two-step quantitative impairment test, we compare the estimated expected undiscounted future cash flows identified with each intangible asset or related asset group to the carrying amount of such assets.

Revenue for these services is recognized over the life of the contract.

| | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Segment: | Balance at December 31, 2014 (2) | | | | Impairment | | | | Other(1) | | | | Balance at December 31, 2015 | | | | Impairment | | | | Other(1) | | | | Balance at December 31, 2016 | | |

| | $ | 209.4 | | | $ | (5.5 | ) | | $ | (8.8 | ) | | $ | 195.1 | | | $ | — | | | $ | — | | | $ | 195.1 | |

(1) The impairment related to customer relationships has been removed from the gross amount as well as the accumulated amortization, but is included in amortization expense for the previous year.

(1) The impairment related to customer relationships has been removed from the gross amount as well as the accumulated amortization, but is included in amortization expense for the previous year.

| 2017 | $ | 0.4 | |

| 2018 | 0.4 | | |

| 2019 | 0.4 | | |

| Thereafter | 5.5 | | |

Deferred financing costs were reclassified out of intangible assets and removed from the tables above and are included as offsets against our debt balances as disclosed in Note 11.

| Polish Zloty | — | | | 25.4 | |

| Non-Current Liabilities: | | | | | | | | | | | | | | | |

| Commodity futures contracts (1) | $ | 12.3 | | | $ | 12.5 | | | $ | 5.8 | |

| Foreign currency forward contracts (2) | 4.3 | | | | 0.3 | | | | (0.8 | | ) |

| Other permanent items | 4.2 | | | | (9.1 | | ) | | (8.2 | | ) |

| Hedges | — | | | | 5.3 | | |

We do not need to generate additional U.S. federal income as we have sufficient carryback capacity to fully realize the federal deferred tax asset.

U.S. taxable income for the years ended December 31, 2016 and 2015 was $315.0 million and $225.7 million, respectively.

It is not practicable to estimate the amount of tax that might be payable because our intent is to permanently reinvest these earnings or to repatriate earnings when it is tax effective to do so.

| Increases related to current year tax positions | — | | |

| Settlement | (0.4 | | ) |

| Decreases related to prior year tax positions | — | | |

Included in the balance of unrecognized tax benefits as of December 31, 2016 are potential benefits of $2.4 million that, if recognized, would affect the effective tax rate on income from continuing operations.

Since January 1, 2016, numerous states, including Delaware, North Carolina and the District of Columbia have enacted legislation effective for tax years beginning on or after January 1, 2016, including changes to rates and apportionment methods.

The impact of these changes is immaterial.

In November 2015, the Financial Accounting Standards Board issued Accounting Standards Update No. 2015-17, Balance Sheet Classification of Deferred Taxes (Topic 740).

The Update requires that all deferred tax assets and liabilities be classified as noncurrent in a classified statement of financial position.

Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of December 31, [removed: 2016,] [added: 2017,] our disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed by us in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the applicable rules and forms, and that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

There were no changes during the fourth quarter ended December 31, [removed: 2016] [added: 2017] in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

[added: Also, refer to] Part I, Item 1 “Business - Executive Officers of the Company” of this Annual Report on Form [removed: 10-K] [added: 10-K, which] identifies our executive officers and is incorporated [removed: in this Item 10] [added: herein] by reference.

Incorporated herein by reference from the Company’s definitive proxy statement, which will be filed no later than 120 days after December 31, 2017.

The information in the sections of our 2017 Proxy Statement captioned “Proposal 1: Election of Directors, “Section 16(a) Beneficial Ownership Reporting Compliance,” and “Corporate Governance” is incorporated in this Item 10 by reference.

Incorporated herein by reference from the Company’s definitive proxy statement, which will be filed no later than 120 days after December 31, 2017.

The sections of our 2017 Proxy Statement captioned “Executive Compensation,” “Director Compensation,” “Corporate Governance - Compensation and Human Resources Committee” and “Certain Relationships and Related Party Transactions - Compensation Committee Interlocks and Insider Participation” are incorporated in this Item 11 by reference.

Incorporated herein by reference from the Company’s definitive proxy statement, which will be filed no later than 120 days after December 31, 2017.

The sections of our 2017 Proxy Statement captioned “Equity Compensation Plan Information” and “Ownership of Common Stock” are incorporated in this Item 12 by reference.

Incorporated herein by reference from the Company’s definitive proxy statement, which will be filed no later than 120 days after December 31, 2017.

The sections of our 2017 Proxy Statement captioned “Corporate Governance - Director Independence and - Board Committees” and “Certain Relationships and Related Party Transactions” are incorporated in this Item 13 by reference.

Incorporated herein by reference from the Company’s definitive proxy statement, which will be filed no later than 120 days after December 31, 2017.

The section of our 2017 Proxy Statement captioned “Proposal 2: Ratification of the Appointment of KPMG LLP as our Independent Registered Public Accounting Firm for the 2017 Fiscal year” is incorporated in this Item 14 by reference.

| • | Consolidated Balance Sheets as of December 31, [removed: 2016] [added: 2017] and [removed: 2015] [added: 2016] |

| • | Consolidated Statements of Operations for the Years Ended December 31, [removed: 2016, 2015] [added: 2017, 2016] and [removed: 2014] [added: 2015] |

| • | Consolidated Statements of Comprehensive Income for the Years Ended December 31, [removed: 2016, 2015] [added: 2017, 2016] and [removed: 2014] [added: 2015] |

| • | Consolidated Statements of Stockholders' Equity for the Years Ended December 31, [removed: 2016, 2015] [added: 2017, 2016] and [removed: 2014] [added: 2015] |

| • | Consolidated Statements of Cash Flows for the Years Ended December 31, [removed: 2016, 2015] [added: 2017, 2016] and [removed: 2014] [added: 2015] |

| • | Notes to the Consolidated Financial Statements for the Years Ended December 31, [removed: 2016, 2015] [added: 2017, 2016] and [removed: 2014] [added: 2015] |

The financial statement schedule included in this Annual Report on Form 10-K is Schedule II - Valuation and Qualifying Accounts and Reserves for the Years Ended December 31, [removed: 2016, 2015] [added: 2017, 2016] and [removed: 2014] [added: 2015] (see Schedule II immediately following the signature page of this Annual Report on Form 10-K).

Pursuant to the requirements of [removed: Section 13 or 15(d) of] the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

[removed: February 20, 2017] Chief Executive Officer

| /s/ TODD M. BLUEDORN | | Chief Executive Officer and Chairman of the Board of Directors | February [removed: 20, 2017] [added: 16, 2018] |

| /s/ JOSEPH W. REITMEIER | | Executive Vice President and Chief Financial Officer | February [removed: 20, 2017] [added: 16, 2018] |

| /s/ [removed: ROY] [added: CHRIS] A. [removed: RUMBOUGH] [added: KOSEL] | | Vice President, Controller and Chief Accounting Officer | February [removed: 20, 2017] [added: 16, 2018] |

| [removed: Roy] [added: Chris] A. [removed: Rumbough] [added: Kosel] | | (Principal Accounting Officer) | |

| /s/ TODD J. TESKE | | Lead Director | February [removed: 20, 2017] [added: 16, 2018] |

| /s/ JANET K. COOPER | | Director | February [removed: 20, 2017] [added: 16, 2018] |

| /s/ JOHN E. MAJOR | | Director | February [removed: 17, 2017] [added: 16, 2018] |

| /s/ JOHN W. NORRIS, III | | Director | February [removed: 20, 2017] [added: 16, 2018] |

| /s/ KAREN H. QUINTOS | | Director | February [removed: 20, 2017] [added: 16, 2018] |

| /s/ KIM K.W. RUCKER | | Director | February [removed: 19, 2017] [added: 16, 2018] |

| /s/ MAX H. MITCHELL | | Director | February [removed: 20, 2017] [added: 16, 2018] |

| /s/ PAUL W. SCHMIDT | | Director | February [removed: 20, 2017] [added: 16, 2018] |

| /s/ GREGORY T. SWIENTON | | Director | February [removed: 20, 2017] [added: 16, 2018] |

For the Years Ended December 31, [removed: 2016, 2015] [added: 2017, 2016] and [removed: 2014][added: 2015]

| 3.2 | [removed: Amended] [added: [Amended] and Restated Bylaws of LII (filed as Exhibit 3.1 to LII’s Current Report on Form 8-K filed on December 16, 2013 and incorporated herein by [removed: reference).] [added: reference).](http://www.sec.gov/Archives/edgar/data/1069202/000119312513474576/d644537d8k.htm)] |

| 4.2 | [removed: Indenture,] [added: [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 [removed: reference).] [added: reference).](http://www.sec.gov/Archives/edgar/data/1017609/000095012310042399/d72548exv4w3.htm)] |

| 4.3 | [removed: Form] [added: [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 [removed: reference).] [added: reference)](http://www.sec.gov/Archives/edgar/data/1017609/000095012310042399/d72548exv4w11.htm).] |

| 4.4 | [removed: Second] [added: [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 [removed: reference).] [added: reference).](http://www.sec.gov/Archives/edgar/data/1069202/000095012311039069/d81114exv4w4.htm)] |

| 4.5 | [removed: Fourth] [added: [Fourth] Supplemental Indenture, dated as of December 10, 2013 among Lennox National Account Services LLC, LGL Australia (US) Inc., Lennox International Inc., each other existing Guarantor under the Indenture, dated as of May 3, 2010, as subsequently supplemented, and U.S. Bank National Association (filed as Exhibit 4.5 to LII's Current Report on Form 10-K filed on February 13, 2014 and incorporated herein by [removed: reference).] [added: reference).](http://www.sec.gov/Archives/edgar/data/1069202/000106920214000002/lii-ex45_20131231x10k.htm)] |

| 4.6 | [removed: Fifth] [added: [Fifth] Supplemental Indenture, dated as of August 30, 2016, among LGL Europe Holding Co., each other existing Guarantor under the Indenture, dated as of May 3, 2010, as subsequently supplemented, and US Bank National Association (filed as Exhibit 4.6 to LII’s Quarterly Report on Form 10-Q filed on October 17, 2016, and incorporated by [removed: reference).] [added: reference).](http://www.sec.gov/Archives/edgar/data/1069202/000106920216000024/ex46fifthsupplementalinden.htm)] |

| 4.7 | [removed: Sixth] [added: [Sixth] Supplemental Indenture, dated as of November 3, 2016, among LII, each other existing Guarantor under the Indenture, dated as of May 3, 2010, as subsequently supplemented, and US Bank National Association, as trustee (filed as Exhibit 4.2 to LII’s Current Report on Form 8-K filed on November [removed: 3 ,] [added: 3,] 2016, and incorporated by [removed: reference).] [added: reference).](http://www.sec.gov/Archives/edgar/data/1069202/000119312516758285/d284193dex42.htm)] |

| 4.8 | [removed: Form] [added: [Form] of 3.000% Notes due 2023 (filed as Exhibit [removed: 4.3to] [added: A in Exhibit 4.2 to] LII’s Current Report on Form 8-K filed on November 3, 2016, and incorporated by [removed: reference).] [added: reference).](http://www.sec.gov/Archives/edgar/data/1069202/000119312516758285/d284193dex42.htm)] |

| 4.9 | [removed: Form] [added: [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 [removed: reference).] [added: reference).](http://www.sec.gov/Archives/edgar/data/1069202/000095012310045073/d72767exv4w3.htm)] |

| [removed: 10.1] [added: 10.4] | [removed: Amendment] [added: [Amendment] No. 2 to Amended and Restated Receivables Purchase Agreement, effective as of November 15, 2013, among LPAC Corp., as the Seller, Lennox Industries Inc., as the Master Servicer, Victory Receivables Corporation, as a Purchaser, The Bank of Tokyo-Mitsubishi UFJ, Ltd., New York Branch, as Administrative Agent, a Liquidity Bank, and the BTMU Purchaser Agent, and PNC Bank, National Association as a Liquidity Bank and the PNC Purchaser Agent (filed as Exhibit 10.1 to LII's Current Report on Form 8-K filed on November 19, 2013 and incorporated herein by [removed: reference).] [added: reference).](http://www.sec.gov/Archives/edgar/data/1069202/000119312513446894/d631191dex101.htm)] |

| [removed: 10.2] [added: 10.5] | [removed: Omnibus] [added: [Omnibus] Amendment No. 3 to the Amended and Restated Receivables Purchase agreement, effective as of November 21, 2014 among LPAC Corp., as the Seller, Lennox Industries Inc., as the Master Servicer, Victory Receivables Corporation, as a Purchaser, The Bank of Tokyo-Mitsubishi UFJ, Ltd., New York Branch, as Administrative Agent, a Liquidity Bank, and the BTMU Purchaser Agent, and PNC Bank, National Association, as a Liquidity Bank and the PNC Purchaser Agent (filed as Exhibit 10.1 to LII's Current Report on Form 8-K filed on November [removed: 21,] [added: 24,] 2014 and incorporated herein by [removed: reference).] [added: reference).](http://www.sec.gov/Archives/edgar/data/1069202/000119312514423340/d811279dex101.htm)] |

| [removed: 10.3] [added: 10.6] | [removed: Amendment] [added: [Amendment] to the Amended and Restated Receivables Purchase Agreement, effective as of December 15, 2014, among LPAC Corp., as the Seller, Lennox Industries Inc., as the Master Servicer, with Victory Receivables Corporation, as Purchaser, The Bank of Tokyo-Mitsubishi UFJ, Ltd., New York Branch, as Administrative Agent, a Liquidity Bank and the BTMU purchaser agent, and PNC Bank, National Association, as a Liquidity Bank and the PNC purchaser agent (filed as Exhibit 10.1 to LII's Current Report on Form 8-K filed on December [removed: 15,] [added: 18,] 2014 and incorporated herein by [removed: reference).] [added: reference).](http://www.sec.gov/Archives/edgar/data/1069202/000119312514446884/d838484dex101.htm)] |

| [removed: 10.4] [added: 10.1] | [removed: Sixth] [added: [Sixth] Amended and Restated Credit Facility Agreement dated as of August 30, 2016, among Lennox International Inc., a Delaware corporation, the Lenders party thereto, and JPMorgan Chase Bank, [removed: National Association,] [added: N.A.,] as Administrative Agent (filed as Exhibit 10.1 to LII's Current Report on Form 8-K filed on September 2, 2016 and incorporated herein by [removed: reference).] [added: reference)](http://www.sec.gov/Archives/edgar/data/1069202/000119312516700842/d247473dex101.htm)] |

| [removed: 10.5] [added: 10.7] | [removed: Amendment] [added: [Amendment] No. 4 to Amended and Restated Receivables Purchase Agreement among LPAC Corp., as the Seller, Lennox Industries Inc., as the Master Servicer, Victory Receivables Corporation, as Purchaser, The Bank of Tokyo-Mitsubishi UFJ, Ltd., New York Branch, as Administrative Agent, a Liquidity Bank and a Purchaser Agent, and PNC Bank, National Association, as a Liquidity Bank and a Purchaser Agent, effective as of November 13, 2015 (filed as Exhibit 10.1 to LII’s Current Report on Form 8-K filed on November 18, 2015 and incorporated herein by [removed: reference).] [added: reference).](http://www.sec.gov/Archives/edgar/data/1069202/000119312515380409/d84922dex101.htm)] |

| [removed: 10.6] [added: 10.3] | [removed: Form] [added: [Form] of Sixth Amended and Restated Subsidiary Guarantee Agreement for the Sixth Amended and Restated Credit Facility dated as of August 30, 2016 signed by Allied Air Enterprises LLC, Advanced Distributor Products LLC, Heatcraft Inc., Heatcraft Refrigeration Products LLC, Lennox Global Ltd., Lennox Industries Inc., LGL Australia (US) Inc., Lennox National Account Services LLC and LGL Europe Holding Co. (filed as Exhibit 10.1 to LII's Current Report on Form 8-K filed on September 2, 2016 and incorporated herein by [removed: reference).] [added: reference).](http://www.sec.gov/Archives/edgar/data/1069202/000119312516700842/d247473dex101.htm)] |

| [removed: 10.7] [added: 10.8] | [removed: Amendment] [added: [Amendment] No. 5 to Amended and Restated Receivables Purchase Agreement among LPAC Corp., as the Seller, Lennox Industries Inc., as the Master Servicer, Victory Receivables Corporation, as Purchaser and The Bank of Tokyo-Mitsubishi UFJ, Ltd., New York Branch, as Administrative Agent, a Liquidity Bank and a Purchaser Agent, (filed as Exhibit 10.1 to LII's Current Report on Form 8-K filed on July 6, 2016 and incorporated herein by [removed: reference).] [added: reference)](http://www.sec.gov/Archives/edgar/data/1069202/000119312516642453/d218961dex101.htm).] |

| [removed: 10.8] [added: 10.9] | [removed: Amended] [added: [Amended] and Restated Lease Agreement, dated as of March 22, 2013, by and between BTMU Capital Leasing & Finance, Inc., as lessor, and Lennox International Inc., as lessee (filed as Exhibit 10.1 to LII's Current Report on Form 8-K filed on March 25, 2013 and incorporated herein by [removed: reference).] [added: reference).](http://www.sec.gov/Archives/edgar/data/1069202/000119312513124282/d506512dex101.htm)] |

February 16, 2018

| | | | |

| | | | |

| 2017 | | | | | | | | | | | | | | | | | | | | | | | |

| Allowance for doubtful accounts | $ | 6.7 | | | $ | 3.9 | | | $ | (5.6 | ) | | $ | 0.9 | | | $ | — | | | $ | 5.9 | |

| 10.2 | [First Amendment to Sixth Amended and Restated Credit Facility Agreement dated as of October 20, 2016, among Lennox International Inc., a Delaware corporation, the Lenders party thereto, and JPMorgan Chase Bank, N.A., as Administrative Agent (filed as Exhibit 10.1 to LII's Quarterly Report on Form 10-Q filed on October 24, 2017, and incorporated herein by reference).](http://www.sec.gov/Archives/edgar/data/1069202/000106920217000013/lii-ex101_2017930x10qxfirs.htm) |

| 10.10 | [Amendment No. 6 to Amended and Restated Receivables Purchase Agreement among LPAC Corp., as the Seller, Lennox Industries Inc., as the Master Servicer, Victory Receivables Corporation, as Purchaser and The Bank of Tokyo-Mitsubishi UFJ, Ltd., New York Branch, as Administrative Agent, a Liquidity Bank and a Purchaser Agent, (filed as Exhibit 10.1 to LII's Current Report on Form 8-K filed on November 16, 2017 and incorporated herein by reference).](http://www.sec.gov/Archives/edgar/data/1069202/000119312517345550/d474880dex101.htm) |

| 10.24* | [Separation and General Release Agreement entered into between LII and David W. Moon, dated October 23, 2017 (filed herewith)](https://www.sec.gov/Archives/edgar/data/1069202/000106920218000004/lii-ex1024_20171231x10k.htm). |

| 21.1 | [Subsidiaries of LII (filed herewith).](https://www.sec.gov/Archives/edgar/data/1069202/000106920218000004/lii-ex211_20171231x10k.htm) |

| 23.1 | [Consent of KPMG LLP (filed herewith)](https://www.sec.gov/Archives/edgar/data/1069202/000106920218000004/lii-ex231_20171231x10k.htm). |

| /s/ TERRY D. STINSON | | Director | February 20, 2017 |

| Terry D. Stinson | | | |

| 2014: | | | | | | | | | | | | | | | | | | | | | | | |

| Allowance for doubtful accounts | $ | 9.8 | | | $ | 2.6 | | | $ | (4.6 | ) | | $ | 1.1 | | | $ | (1.0 | ) | | $ | 7.9 | |

| 10.11 | Mutual Release executed March 13, 2013 among JPMorgan Chase Bank, National Association, Service Experts LLC and Service Experts Heating & Air Conditioning LLC (filed as Exhibit 10.3 to LII's Current Report on Form 10-K filed on February 13, 2014 and incorporated herein by reference). |

| 10.15* | Amendment of Long-Term Incentive Award Agreements for U.S. Employees -Vice President and Above and U.S. Employees- Directors (filed as Exhibit 10.11 to LII's Current Report on Form 10-K filed on February 13, 2014 and incorporated herein by reference). |

| 21.1 | Subsidiaries of LII (filed herewith). |

| 23.1 | Consent of KPMG LLP (filed herewith). |