Lennox International (LII) 10-K risk factor changes: FY2018 vs FY2017

Although the industry has improved [removed: for] [added: over] the last several years, our sales may not continue to improve or such improvement may be limited or lower than expected.

Net sales outside of the United States comprised [removed: 18.5%] [added: 15.7%] of our net sales in [removed: 2017.][added: 2018.]

We are engaged in various manufacturing rationalization actions designed to achieve our strategic priorities of [removed: manufacturing] [added: manufacturing,] sourcing and distribution excellence and of lowering our cost structure.

As of February 6, [removed: 2018,] [added: 2019,] approximately [removed: 27%] [added: 28%] of our workforce, including international locations, was unionized.

As of December 31, [removed: 2017,] [added: 2018,] we had goodwill of [removed: $200.5] [added: $186.6] million on our Consolidated Balance Sheet.

For more detailed information regarding our reportable segments, see Note [removed: 18] [added: 20] in the Notes to the Consolidated Financial Statements.

| • | Net income in [removed: 2017] [added: 2018] increased to [removed: $306] [added: $359] million from [removed: $278] [added: $306] million in [removed: 2016.] [added: 2017.] |

| • | Diluted earnings per share from continuing operations were [removed: $7.17] [added: $8.77] per share in [removed: 2017] [added: 2018] compared to [removed: $6.34] [added: $7.17] per share in [removed: 2016.] [added: 2017.] |

| • | We generated [removed: $325] [added: $496] million of cash flow from operating activities in [removed: 2017] [added: 2018] compared to [removed: $374] [added: $325] million in [removed: 2016.] [added: 2017.] The [removed: decrease] [added: increase] was primarily due to [removed: an increase in working capital, partially offset by] a [removed: reduction] [added: decrease] in [removed: pension contributions] [added: working capital] and an increase in net income. |

[removed: The Residential] [added: Our Commercial] Heating & Cooling segment [removed: led our overall financial performance] [added: also performed well] in [removed: 2017,] [added: 2018] with a [removed: 7.0%] [added: 7.2%] increase in net sales and a [removed: $25] [added: $2] million increase in segment profit compared to [removed: 2016.][added: 2017.]

[removed: Our Commercial] [added: Despite the impact of the tornado at our Marshalltown facility the Residential] Heating & Cooling segment [removed: also] performed well in [removed: 2017] [added: 2018,] with a [removed: 6.1%] [added: 4.0%] increase in net sales and a [removed: $8] [added: $26] million increase in segment profit compared to [removed: 2016.][added: 2017, including the insurance proceeds received for lost profits in 2018.]

On a consolidated basis, our gross profit margins decreased to [removed: 29.3%] [added: 28.6%] in [removed: 2017] [added: 2018] due primarily to unfavorable commodities, factory [removed: inefficiencies,] [added: inefficiencies due to disruption caused by the tornado at our Marshalltown facility,] and [removed: continued investment in] [added: higher freight and] distribution [removed: expansion.][added: costs.]

| | [removed: 2017] [added: 2018] | | | | | | | [removed: 2016] [added: 2017] | | | | | | | [removed: 2015] [added: 2016] | | | | | |

| Net sales | $ | [removed: 3,839.6] [added: 3,883.9] | | | 100.0 | % | | $ | [removed: 3,641.6] [added: 3,839.6] | | | 100.0 | % | | $ | [removed: 3,467.4] [added: 3,641.6] | | | 100.0 | % |

| Cost of goods sold | [removed: 2,714.4] [added: 2,772.7] | | | | [removed: 70.7] [added: 71.4] | % | | [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] | % |

| Gross profit | [removed: 1,125.2] [added: 1,111.2] | | | | [removed: 29.3] [added: 28.6] | % | | [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] | % |

| Selling, general and administrative expenses | [removed: 637.7] [added: 608.2] | | | | [removed: 16.6] [added: 15.7] | % | | [removed: 621.0] [added: 637.7] | | | | [removed: 17.1] [added: 16.6] | % | | [removed: 580.5] [added: 621.0] | | | | [removed: 16.7] [added: 17.1] | % |

| Losses [added: (gains)] and other expenses, net | [removed: 8.2] [added: 13.4] | | | | [removed: 0.2] [added: 0.3] | % | | [removed: 11.3] [added: 7.1] | | | | [removed: 0.3] [added: 0.2] | % | | [removed: 21.7] [added: 11.3] | | | | [removed: 0.6] [added: 0.3] | % |

| Restructuring charges | [removed: 3.2] [added: 3.0] | | | | 0.1 | % | | [removed: 1.8] [added: 3.2] | | | | [removed: —] [added: 0.1] | % | | [removed: 3.2] [added: 1.8] | | | | [removed: 0.1] [added: —] | % |

| Pension settlement | [removed: —] [added: 0.4] | | | | — | % | | [removed: 31.4] [added: —] | | | | [removed: 0.9] [added: —] | % | | [removed: —] [added: 31.4] | | | | [removed: —] [added: 0.9] | % |

| Income from equity method investments | [removed: (18.4] [added: (12.0] | | ) | | [removed: (0.5] [added: (0.3] | )% | | (18.4 | | ) | | (0.5 | )% | | [removed: (13.4] [added: (18.4] | | ) | | [removed: (0.4] [added: (0.5] | )% |

| Operating income | $ | [removed: 494.5] [added: 509.5] | | | [removed: 12.9] [added: 13.1] | % | | $ | [removed: 429.4] [added: 494.5] | | | [removed: 11.8] [added: 12.9] | % | | $ | [removed: 305.4] [added: 429.4] | | | [removed: 8.8] [added: 11.8] | % |

| Loss from discontinued operations | [removed: (1.4] [added: (1.3] | | ) | | — | % | | [removed: (0.8] [added: (1.4] | | ) | | — | % | | [removed: (0.6] [added: (0.8] | | ) | | — | % |

| Net income | $ | [removed: 305.7] [added: 359.0] | | | [removed: 8.0] [added: 9.2] | % | | $ | [removed: 277.8] [added: 305.7] | | | [removed: 7.6] [added: 8.0] | % | | $ | [removed: 186.6] [added: 277.8] | | | [removed: 5.4] [added: 7.6] | % |

| U.S. | $ | [removed: 3,128.7] [added: 3,275.9] | | | [removed: 81.5] [added: 84.3] | % | | $ | [removed: 2,966.8] [added: 3,128.7] | | | 81.5 | % | | $ | [removed: 2,793.4] [added: 2,966.8] | | | [removed: 80.6] [added: 81.5] | % |

| Canada | [removed: 237.8] [added: 254.8] | | | | [removed: 6.2] [added: 6.6] | | | [removed: 218.8] [added: 237.8] | | | | [removed: 6.0] [added: 6.2] | | | [removed: 217.7] [added: 218.8] | | | | [removed: 6.3] [added: 6.0] | |

| International | [removed: 473.1] [added: 353.2] | | | | [removed: 12.3] [added: 9.1] | | | [removed: 456.0] [added: 473.1] | | | | [removed: 12.5] [added: 12.3] | | | [removed: 456.3] [added: 456.0] | | | | [removed: 13.1] [added: 12.5] | |

| Total net sales | $ | [removed: 3,839.6] [added: 3,883.9] | | | 100.0 | % | | $ | [removed: 3,641.6] [added: 3,839.6] | | | 100.0 | % | | $ | [removed: 3,467.4] [added: 3,641.6] | | | 100.0 | % |

Losses [added: (Gains)] and Other Expenses, Net

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

| Losses [added: (gains)] and other expenses, net | $ | [removed: 8.2] [added: 7.1] | | | $ | 11.3 | |

For more information on our derivatives, see Note [removed: 8] [added: 9] in the Notes to the Consolidated Financial Statements.

Refer to Note [removed: 10] [added: 11] in the Notes to the Consolidated Financial Statements for more information on litigation, including the asbestos-related litigation, and the environmental liabilities.

For more information on our restructuring activities, see Note [removed: 16] [added: 18] in the Notes to the Consolidated Financial Statements.

Refer to Note [removed: 4] [added: 5] in the Notes to the Consolidated Financial Statements for more information on goodwill.

We did not have any impairments of assets related to continuing operations in [removed: 2017 and 2016.][added: 2018 or 2017.]

Refer to Note [removed: 12] [added: 13] in the Notes to the Consolidated Financial Statements for more information on pensions and employee benefit plans.

We expect our effective tax rate will be between 22% and [removed: 24%] [added: 23%] in future years [removed: due to the changes in U.S. tax legislation] excluding the impact of excess tax benefits.

Refer to Note [removed: 9] [added: 10] in the Notes to the Consolidated Financial Statements for more information on the impact of recent changes in tax legislation.

Year Ended December 31, [removed: 2016] [added: 2018] Compared to Year Ended December 31, [removed: 2015] [added: 2018] - Consolidated Results

Gross profit margins for [removed: 2016 increased 230] [added: 2018 decreased 70] basis points [removed: ("bps")] [added: (“bps”)] to [removed: 29.6%] [added: 28.6%] compared to [removed: 27.3%] [added: 29.3%] in [removed: 2015.][added: 2017.]

As a percentage of net sales, SG&A expenses [removed: increased 40] [added: decreased 90] bps from [removed: 16.7%] [added: 16.6%] to [removed: 17.1%] [added: 15.7%] in the same periods.

Losses [added: (gains)] and other expenses, net for [removed: 2016] [added: 2018] and [removed: 2015] [added: 2017] included the following (in millions):

| Foreign currency exchange losses [added: (gains), net] | [removed: 2.2] [added: 1.7] | | | | [removed: 3.6] [added: (1.8] | | [added: )] |

| Net change in unrealized [removed: losses (gains)] [added: losses, net] on unsettled futures contracts | [removed: (3.6] [added: 1.5] | | [removed: )] | | [removed: 0.6] [added: 0.9] | | |

On July 19, 2018 our manufacturing facility in Marshalltown, Iowa was damaged by a tornado.

Insurance covers the repair or replacement of our assets that suffered damage or loss.

We are working closely with our insurance carriers and claims adjusters to ascertain the full amount of insurance recoveries due to us as a result of the damage and loss we suffered.

Our insurance policies also provide business interruption coverage, including lost profits, and reimbursement for other expenses and costs that have been incurred relating to the damages and losses suffered.

For the year ended December 31, 2018 we incurred expenses of $86.0 million related to damages caused by the tornado, which included the write-off of damaged property, equipment and inventory, freight to move product to other warehouses and professional fees to secure and maintain the site.

We have received insurance recoveries of $124.3 million for the year ended December 31, 2018.

We have allocated the first $96.9 million of insurance recoveries to cover our expenses and rebuilding costs incurred to date which is included in Gain from insurance recoveries, net of losses incurred in the Consolidated Statements of Operations.

The remaining $27.4 million of insurance recoveries represents amounts for lost profits and is shown in Insurance proceeds for lost profits in the Consolidated Statements of Operations.

In 2019, we expect to receive approximately $83 million of insurance proceeds related to lost profits and $149 million of insurance proceeds to fund the reconstruction of the facility and as reimbursement for other losses and expenses expected to be incurred.

As part of our recovery efforts, we have shifted production of certain products that were previously only produced at our Marshalltown facility to our other facilities.

We believe this provides increased manufacturing flexibility.

| • | Net sales increased $44 million, or 1.2%, to $3,884 million in 2018 from $3,840 million in 2017. |

| • | Operating income in 2018 was $510 million compared to $495 million in 2017. The increase was primarily due to increased sales, reductions in SG&A expenses, and insurance proceeds received for third-quarter lost profits, partially offset by lower gross profit. |

| • | In 2018, we returned $94 million to shareholders through dividend payments and we used $450 million to purchase 2.3 million shares of stock under our Share Repurchase Plans. We also received $115 million in net proceeds from the sale of our businesses in Australia, Asia and South America along with the sale of the related property. |

This segment’s results were driven by volume and price gains.

Sales in our Refrigeration segment decreased 15% and segment profit decreased $7 million compared to 2017 mostly due to the sale of our Australia, Asia and South America businesses.

| Loss (gain), net on sale of businesses and related property | 27.0 | | | | 0.7 | % | | 1.1 | | | | — | % | | — | | | | — | % |

| Gain from insurance recoveries, net of losses incurred | (10.9 | | ) | | (0.3 | )% | | — | | | | — | % | | — | | | | — | % |

| Insurance proceeds for lost profits | (27.4 | | ) | | (0.7 | )% | | — | | | | — | % | | — | | | | — | % |

Net sales increased 1.2% in 2018 compared to 2017, primarily driven by volume and price increases.

These increases were partially offset by the impact due to the sale of our Australia, Asia and South America businesses in our Refrigeration segment.

We saw margin decreases of 120 bps from higher commodity costs, 100 bps from higher freight and distribution costs, and 50 bps from other product costs.

These decreases were offset by increases of 130 bps from favorable price and mix and 70 bps from sourcing and engineering-led cost reductions.

SG&A expenses decreased by $30 million in 2018 compared to 2017.

SG&A decreased primarily due to the sale of our divested businesses in Australia, Asia and South America.

| | 2018 | | | | 2017 | | |

| Realized gains, net on settled futures contracts | $ | (0.4 | ) | | $ | (1.7 | ) |

| Losses on disposal of fixed assets | 0.7 | | | | 0.2 | | |

| Asbestos-related litigation | 4.0 | | | | 3.5 | | |

| Losses (gains) and other expenses, net | $ | 13.4 | | | $ | 7.1 | |

The special legal contingency charges decreased primarily due to lower legal costs associated with outstanding legal settlements.

In the current year, we wrote off $11.5 million of goodwill as a part of the completed sales of our Australia, Asia and South America businesses (discussed further in Note 17 of the Notes to the Consolidated Financial Statements).

Also, we did not record any goodwill impairments in 2017.

We did not have significant pension buyout activity in 2018 or 2017.

Income from equity method investments was $12 million in 2018 compared to $18 million in 2017.

The decrease is because the joint ventures have experienced increased costs related to commodities and components and have not passed these increased costs on through price increases.

The 2018 effective tax rate differs from the statutory rate of 21% primarily due to state and foreign taxes.

The 2017 effective tax rate was negatively impacted by 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.

| | 2018 | | | | 2017 | | | | Difference | | | | % Change | |

| Net sales | $ | 2,225.0 | | | $ | 2,140.4 | | | $ | 84.6 | | | 4.0 | % |

| | |

| --- | --- |

| • | Net sales increased $198 million, or 5.4%, to $3,840 million in 2017 from $3,642 million in 2016. |

| • | 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. |

| • | 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 results benefited from market growth in the replacement and new construction markets and favorable foreign currency exchange rates.

This segment's results benefited from market growth in North America.

Sales in our Refrigeration segment were up slightly and segment profit increased $4 million compared to 2016.

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

| Goodwill impairment | — | | | | — | % | | — | | | | — | % | | 5.5 | | | | 0.2 | % |

| Impairment of assets | — | | | | — | % | | — | | | | — | % | | 44.5 | | | | 1.3 | % |

| | | | | | | | |

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

| Acquisition expenses | 1.1 | | | | 0.4 | | |

The contractor tax payments relate to a charge for underpaid contractor taxes at one of our non-U.S. subsidiaries.

Asset Impairment

In 2016 our unfunded pension liability declined by $33 million to $89 million as the favorable impact of our $50 million discretionary contribution was partially offset by lower discount rates across all plans.

Net sales increased 5% in 2016 compared to 2015, with sales volume up approximately 5%.

The increase in volume was driven by all our business segments.

The effects of both changes in foreign currency exchange rates and the effects of price and mix were neutral to net sales.

Lower material costs increased our profit margin by 260 bps, increased factory productivity increased our profit margin by 30 bps, and other items contributed 10 bps.

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.

SG&A expenses increased by $41 million in 2016 compared to 2015.

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

| | 2016 | | | | 2015 | | |

| Realized losses on settled futures contracts | $ | 1.1 | | | $ | 1.9 | |

| Loss on disposal of fixed assets | 0.5 | | | | 0.6 | | |

| Asbestos charge | 6.3 | | | | 3.0 | | |

| Acquisition expenses | 0.4 | | | | 1.0 | | |

The special legal contingency charges primarily decreased as we settled an attempted class action lawsuit in 2015.

However in 2015 based on the results of the quantitative impairment test, we recorded goodwill impairment of $5.5 million related to our refrigerated display case business.

We did not have any impairments of assets related to continuing operations in 2016.

During the fourth quarter of 2015 we completed a strategic review of our refrigerated display case business.

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

In addition, as part of our ongoing strategy to de-risk our pension plan obligations, we completed a one-time, lump sum pension buyout in the fourth quarter of 2016 for certain vested participants.

As a result of the pension buy-out, we recorded a pension settlement charge of $31 million in the fourth quarter.

Income from equity method investments increased to $18 million in 2016 compared to $13 million in 2015 due to increases in earnings from our joint ventures.

Our effective tax rate declined in 2016 due to the benefit from a repatriation of earnings recognized in the second quarter.

In 2015, there were $1 million of pre-tax losses incurred primarily related to changes in retained product liabilities and general liabilities for Service Experts and Hearth.

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: 2017] [added: 2018] by segment.

Segment financial data for [removed: 2017, 2016] [added: 2018, 2017] and [removed: 2015,] [added: 2016,] including financial information about foreign and domestic operations, is included in Note [removed: 18] [added: 20] of the Notes to our Consolidated Financial Statements in “Item 8.

| Segment | | Products & Services | | Product and Brand Names | | [removed: 2017] [added: 2018] 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: 2,140.4] [added: 2,225.0] | |

| 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: 973.8] [added: 1,043.5] | | |

| 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: 725.4] [added: 615.4] | | |

We are continuing to grow our network of [removed: 230] [added: 240] Lennox PartsPlus stores across the United States and Canada.

ADP sells its own ADP branded evaporator coils to over [removed: 400] [added: 450] HVAC wholesale distributors across North America.

Our global manufacturing, distribution, sales and marketing footprint serves customers in over [removed: 115] [added: 103] countries worldwide.

We have manufacturing locations in Germany, [removed: France, Brazil] [added: France] and [removed: China.][added: Spain.]

We plan to expand our market position through organic growth [removed: and acquisitions] while maintaining our focus on cost reductions to drive margin expansion and support growth in target business segments.

This strategy is supported by the following [removed: five] [added: four] strategic priorities:

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

Compressors, motors and controls constitute our most significant component purchases, while steel, copper and aluminum [removed: account for the bulk of our raw material purchases.]

We own [added: an] equity [removed: interests] [added: interest] in [added: a] joint [removed: ventures] [added: venture] that [removed: manufacture] [added: manufactures] compressors.

[removed: These] [added: This] joint [removed: ventures] [added: venture] provide us with compressors for our residential and commercial heating and cooling and refrigeration businesses.

[added: | • | 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). [added: |]

As of December 31, [removed: 2017,] [added: 2018,] we employed approximately [removed: 11,450] [added: 11,350] employees.

Approximately [removed: 5,200] [added: 4,950] of these employees were salaried and [removed: 6,250] [added: 6,400] were hourly.

Approximately [removed: 3,100] [added: 3,175] employees, including international locations, are represented by unions.

Environmental laws that affect or could affect our domestic operations include, among others, the National Appliance Energy Conservation Act of 1987, as amended (“NAECA”), the Energy Policy [removed: Act,] [added: Act ("EPAct"),] the Energy Policy and Conservation [removed: Act,] [added: Act ("EPCA"),] the Clean Air Act, the Clean Water Act, the Resource Conservation and Recovery Act, the Comprehensive Environmental Response, Compensation and Liability Act, the National Environmental Policy [removed: Act,] [added: Act ("NEPA"),] the Toxic Substances Control Act, any regulations promulgated under these acts and various other international, federal, state and local laws and regulations governing environmental matters.

We are prepared to have compliant products in place in advance of the [removed: effectiveness] [added: effective dates] of all such regulations being considered by the U.S. Department of Energy.

The U.S. Congress and the Environmental Protection Agency are considering steps to phase down the future use of HFCs in HVACR products and an international accord was adopted in October 2016 which would significantly phase-down the use of HFCs when [removed: ratified.][added: ratified by the United Sates and globally.]

For more information, see Note [removed: 10] [added: 11] in the Notes to our Consolidated Financial Statements.

Our executive officers, their present positions and their ages are as follows as of February 4, [removed: 2018:][added: 2019:]

| Todd M. Bluedorn | [removed: 54] [added: 55] | Chairman of the Board and Chief Executive Officer |

| Joseph W. Reitmeier | [removed: 53] [added: 54] | Executive Vice President, Chief Financial Officer |

| Douglas L. Young | [removed: 55] [added: 56] | Executive Vice President, President and Chief Operating Officer, Residential Heating & Cooling |

| Terry L. Johnston | [removed: 60] [added: 61] | Executive Vice President, President and Chief Operating Officer, North America Commercial Heating & Cooling |

| Gary [removed: S] [added: S.] Bedard | [removed: 53] [added: 54] | Executive Vice President, President and Chief Operating Officer, Worldwide Refrigeration |

| Prakash Bedapudi | [removed: 51] [added: 52] | Executive Vice President, Chief Technology Officer |

| Daniel M. Sessa | [removed: 53] [added: 54] | Executive Vice President, Chief Human Resources Officer |

| John D. Torres | [removed: 59] [added: 60] | Executive Vice President, Chief Legal Officer and Secretary |

| Chris [removed: A] [added: A.] Kosel | [removed: 50] [added: 51] | Vice President, Chief Accounting Officer and Controller |

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

Mr. Young serves on the Board of Directors of Beacon Roofing Supply, a general building material distributor and is [removed: on] [added: a past Chairman of] the Board of Directors of AHRI (the Air-Conditioning, Heating, and Refrigeration Institute), the trade association for the HVACR and water heating equipment industries.

| | | | | Total | | $ | 3,883.9 | |

During 2018, we completed the sale of our Australia, Asia and South America businesses.

account for the bulk of our raw material purchases.

industrial, municipal and commercial settings.

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

In Australia and New Zealand, we are the leading wholesale distribution business serving the HVACR industry with more than 60 locations serving our customers, which also includes the sale of refrigerant.

Geographic Expansion.

We are growing our business by extending our successful business model and product knowledge to capitalize on additional domestic and international market opportunities.

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

For more information, see Note [removed: 10] [added: 11] in the Notes to the Consolidated Financial Statements.

For the fiscal year ended December 31, [removed: 2017][added: 2018]

As of June 30, [removed: 2017,] [added: 2018,] the aggregate market value of the common stock held by non-affiliates of the registrant was approximately [removed: $7.7] [added: $8] billion based on the closing price of the [removed: registrant's] [added: registrant’s] common stock on the New York Stock Exchange.

As of February [removed: 9, 2018,] [added: 8, 2019,] there were [removed: 41,176,787] [added: 39,872,002] shares of the [removed: registrant's] [added: registrant’s] common stock outstanding.

Portions of the [removed: registrant's 2018] [added: registrant’s 2019] Definitive Proxy Statement to be filed with the Securities and Exchange Commission in connection with the [removed: registrant's 2018] [added: registrant’s 2019] Annual Meeting of Stockholders to be held on May [removed: 16, 2018] [added: 23, 2019] are incorporated by reference into Part III of this report.

| ITEM 1. | [removed: [Business](#sC56509D9B934596FB5C54C0911C9D3B4)] [added: [Business](#sCC1ECBFC55F45A879422E547F4E9270B)] | [removed: [1](#sC56509D9B934596FB5C54C0911C9D3B4)] [added: [1](#sCC1ECBFC55F45A879422E547F4E9270B)] |

| ITEM 1A. | [Risk [removed: Factors](#s2D4C43FF95FE5622A2AD587BF9A6043B)] [added: Factors](#sF936E883B6695D8A8711DEFDC541138B)] | [removed: [8](#s2D4C43FF95FE5622A2AD587BF9A6043B)] [added: [8](#sF936E883B6695D8A8711DEFDC541138B)] |

| ITEM 1B. | [Unresolved Staff [removed: Comments](#s70EE2A2DC8F05895A2184950C10FE69F)] [added: Comments](#s1D59009475DE53319B9C57861E2FF5FB)] | [removed: [12](#s70EE2A2DC8F05895A2184950C10FE69F)] [added: [12](#s1D59009475DE53319B9C57861E2FF5FB)] |

| ITEM 2. | [removed: [Properties](#s61FA03543E265E9B9631876C5A6B6B4E)] [added: [Properties](#s2FB3B6A21B9D5F26ADAFE3B98E74768A)] | [removed: [13](#s61FA03543E265E9B9631876C5A6B6B4E)] [added: [13](#s2FB3B6A21B9D5F26ADAFE3B98E74768A)] |

| ITEM 3. | [Legal [removed: Proceedings](#s3DE6304C5A6954E69B1A8FC7294370CF)] [added: Proceedings](#sF220B98F4FA05CEB92AED7F11B6DEB11)] | [removed: [14](#s3DE6304C5A6954E69B1A8FC7294370CF)] [added: [14](#sF220B98F4FA05CEB92AED7F11B6DEB11)] |

| ITEM 4. | [Mine Safety [removed: Disclosures](#s8FA571E85A23589DB9FE8861653F6242)] [added: Disclosures](#s7413A4204D795DD6B1F9A0A4F0F9175A)] | [removed: [14](#s8FA571E85A23589DB9FE8861653F6242)] [added: [14](#s7413A4204D795DD6B1F9A0A4F0F9175A)] |

| ITEM 5. | [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity [removed: Securities](#s54AE20CD78AA5E6194912CDFCEE61AB0)] [added: Securities](#s179FAB63D7C95885B299764F8A118423)] | [removed: [14](#s54AE20CD78AA5E6194912CDFCEE61AB0)] [added: [14](#s179FAB63D7C95885B299764F8A118423)] |

| ITEM 6. | [Selected Financial [removed: Data](#s3CC4AE2A9B20525EBC90AB267BDB50FD)] [added: Data](#sEEB9B724ED075A45BCFA6F45A5E644E3)] | [removed: [16](#s3CC4AE2A9B20525EBC90AB267BDB50FD)] [added: [16](#sEEB9B724ED075A45BCFA6F45A5E644E3)] |

| ITEM 7. | [Management's Discussion and Analysis of Financial Condition and Results of [removed: Operations](#s6A58AE9A4C235C0F9742A30B2CE77587)] [added: Operations](#s5D8A09D50A0B595E9B7DED4E3BC45034)] | [removed: [17](#s6A58AE9A4C235C0F9742A30B2CE77587)] [added: [16](#s5D8A09D50A0B595E9B7DED4E3BC45034)] |

| ITEM 7A. | [Quantitative and Qualitative Disclosures about Market [removed: Risk](#s528A01AE52E45855B588014778C2811A)] [added: Risk](#sF1B2E739A71B5AD6B0F27AEDB023019F)] | [removed: [31](#s528A01AE52E45855B588014778C2811A)] [added: [30](#sF1B2E739A71B5AD6B0F27AEDB023019F)] |

| ITEM 8. | [Financial Statements and Supplementary [removed: Data](#s88A9FBAB0EDD5E9681C74A6DD5AE03E7)] [added: Data](#sE0C8D755F9425918AE7FDAEF7C021FCD)] | [removed: [33](#s88A9FBAB0EDD5E9681C74A6DD5AE03E7)] [added: [31](#sE0C8D755F9425918AE7FDAEF7C021FCD)] |

| ITEM 9. | [Changes in and Disagreements With Accountants on Accounting and Financial [removed: Disclosure](#s4051041560315194AE8FABE3ADC58A7C)] [added: Disclosure](#s8A1F79FF8C2453318105022FBFAD235C)] | [removed: [91](#s4051041560315194AE8FABE3ADC58A7C)] [added: [90](#s8A1F79FF8C2453318105022FBFAD235C)] |

| ITEM 9A. | [Controls and [removed: Procedures](#sCA6BF0E698C85677B59B09C03FD846DE)] [added: Procedures](#s204528A620D95328AF487D5EB777F345)] | [removed: [91](#sCA6BF0E698C85677B59B09C03FD846DE)] [added: [90](#s204528A620D95328AF487D5EB777F345)] |

| ITEM 9B. | [Other [removed: Information](#s420E75BBA70E5222A96BF8BF1D3E0FDB)] [added: Information](#sB482A5F59C275BC3AFF8808EC3E44E68)] | [removed: [91](#s420E75BBA70E5222A96BF8BF1D3E0FDB)] [added: [90](#sB482A5F59C275BC3AFF8808EC3E44E68)] |

| ITEM 10. | [Directors, Executive Officers and Corporate [removed: Governance](#s5A8A92F24A9155F38FE76D1CFE17D9E9)] [added: Governance](#s2E1C92E253885D77A5843B0CC35DAA8F)] | [removed: [91](#s5A8A92F24A9155F38FE76D1CFE17D9E9)] [added: [90](#s2E1C92E253885D77A5843B0CC35DAA8F)] |

| ITEM 11. | [Executive [removed: Compensation](#s718371B318A553729193671008E0D762)] [added: Compensation](#s7FE778A5685B51D9AD2424AB36BA5618)] | [removed: [91](#s718371B318A553729193671008E0D762)] [added: [91](#s7FE778A5685B51D9AD2424AB36BA5618)] |

| ITEM 12. | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder [removed: Matters](#s3DF7B81BB4C05494A9E9AF470D43F90F)] [added: Matters](#sCFFD5350D03F5A36BE3834479937843E)] | [removed: [91](#s3DF7B81BB4C05494A9E9AF470D43F90F)] [added: [91](#sCFFD5350D03F5A36BE3834479937843E)] |

| ITEM 13. | [Certain Relationships and Related Transactions, and Director [removed: Independence](#s2F67D38203905446875D223BE778039A)] [added: Independence](#s7E413E301F8754A88211B2865BED7C2C)] | [removed: [92](#s2F67D38203905446875D223BE778039A)] [added: [91](#s7E413E301F8754A88211B2865BED7C2C)] |

| ITEM 14. | [Principal Accounting Fees and [removed: Services](#s0098BF053D4051ECB9DED7073B6ED34A)] [added: Services](#sA6E971C3464D5C9F882717F2FADE220F)] | [removed: [92](#s0098BF053D4051ECB9DED7073B6ED34A)] [added: [91](#sA6E971C3464D5C9F882717F2FADE220F)] |

| ITEM 15. | [Exhibits and Financial Statement [removed: Schedules](#sE3C8A911DBD75F2587DDDFE4FBAC422B)] [added: Schedules](#sDE565FC0CBBF5A429D1000A45975FFFD)] | [removed: [92](#sE3C8A911DBD75F2587DDDFE4FBAC422B)] [added: [91](#sDE565FC0CBBF5A429D1000A45975FFFD)] |

| | [SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND [removed: RESERVES](#sC771C86B15A85F1D8E59DA2579619EEA)] [added: RESERVES](#s9C6CC5CA08AF51E08F99B6443EC8D42B)] | [removed: [95](#sC771C86B15A85F1D8E59DA2579619EEA)] [added: [94](#s9C6CC5CA08AF51E08F99B6443EC8D42B)] |

| | [INDEX TO [removed: EXHIBITS](#s6C696AE6DE705D5AA6487DA55EFDEDC6)] [added: EXHIBITS](#s084EF8FB236057839B265AB88DAD5355)] | [removed: [96](#s6C696AE6DE705D5AA6487DA55EFDEDC6)] [added: [95](#s084EF8FB236057839B265AB88DAD5355)] |

10-K 1 lii-20181231x10k.htm 10-K

For the Fiscal Year Ended December 31, 2018

| | [SIGNATURES](#s9062465AB48F5C648FAE7E88CDF48488) | [92](#s9062465AB48F5C648FAE7E88CDF48488) |

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

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

The following chart lists our principal domestic and international manufacturing, distribution and office facilities as of December 31, [removed: 2017] [added: 2018] and indicates the business segment that uses such facilities, the approximate size of such facilities and whether such facilities are owned or leased.

| Marshalltown, IA | Residential Heating & Cooling | Manufacturing & Distribution | [removed: 1,300] [added: 1,000] | Owned & Leased |

| Columbus, OH | Residential Heating & Cooling | Distribution | [removed: 279] [added: 144] | Leased |

| Denver, CO | Residential Heating & Cooling | Distribution | [removed: 50] [added: 49] | Leased |

| Houston, TX | Residential & Commercial Heating & Cooling | Distribution | [removed: 241] [added: 216] | Leased |

| Tifton, GA | Refrigeration | Manufacturing & Distribution | [removed: 570] [added: 738] | Owned & Leased |

| Pittston, PA | Residential Heating & Cooling | Distribution | 144 | Leased |

| Kansas City, MI | Residential Heating & Cooling | Distribution | 59 | Leased |

| St. Louis, MO | Residential Heating & Cooling | Distribution | 48 | Leased |

| Salt Lake City,UT | Residential Heating & Cooling | Distribution | 45 | Leased |

| Minneapolis, MN | Residential Heating & Cooling | Distribution | 44 | Leased |

| Dallas, TX | Commercial Heating & Cooling | Distribution | 227 | Leased |

| Norcross, GA | Commercial Heating & Cooling | Distribution | 95 | Leased |

| Milperra, Australia | Refrigeration | Distribution & Business Unit Headquarters | 416 | Owned |

| Midland, GA | Refrigeration | Warehousing & Offices | 138 | Leased |

| Mt. Wellington, New Zealand | Refrigeration | Distribution & Offices | 110 | Owned |

| San Jose dos Campos, Brazil | Refrigeration | Manufacturing, Warehousing & Offices | 98 | Owned |

| Wuxi, China | Refrigeration | Manufacturing | 89 | Owned & Leased |

Market [removed: Price] [added: Information] for Common Stock

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

During [removed: 2017] [added: 2018] and [removed: 2016,] [added: 2017,] we declared quarterly cash dividends as set forth below:

| First Quarter | $ | [removed: 0.43] [added: 0.51] | | | $ | [removed: 0.36] [added: 0.43] | |

| Second Quarter | [removed: 0.51] [added: 0.64] | | | | [removed: 0.43] [added: 0.51] | | |

| Third Quarter | [removed: 0.51] [added: 0.64] | | | | [removed: 0.43] [added: 0.51] | | |

| Fourth Quarter | [removed: 0.51] [added: 0.64] | | | | [removed: 0.43] [added: 0.51] | | |

| Fiscal Year | $ | [removed: 1.96] [added: 2.43] | | | $ | [removed: 1.65] [added: 1.96] | |

As of the close of business on February [removed: 9, 2018,] [added: 8, 2019,] approximately [removed: 650] [added: 621] holders of record held our common stock.

The graph assumes that $100 was invested on December 31, [removed: 2012,] [added: 2013,] with dividends reinvested.

[removed: ][added: ]

Our Board of Directors has authorized a total of [removed: $2] [added: $2.5] billion towards the repurchase of shares of our common stock (collectively referred to as the [removed: "Share] [added: “Share] Repurchase [removed: Plans"),] [added: Plans”),] including a [removed: $550] [added: $500] million share repurchase authorization in [removed: 2016.][added: March 2018.]

As of December 31, [removed: 2017, $396] [added: 2018, $446] million [removed: of shares] may [removed: yet] be [removed: repurchased] [added: used to repurchase shares] under the Share Repurchase Plans.

In the fourth quarter of [removed: 2017,] [added: 2018,] we purchased shares of our common stock as follows:

| | Total Shares Purchased (1) | | | Average Price Paid per Share (including fees) | | | | Shares Purchased As Part of Publicly Announced Plans | | | Approximate Dollar Value of Shares that may yet be Purchased Under the Plans (in millions) [removed: (3)] [added: (2)] | |

(1) Includes the surrender to LII of [removed: 49,508] [added: 27,808] 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.

[removed: (3)] [added: (2)] After [removed: a $75] [added: $150] million payment for Accelerated Share Repurchase Plan (ASR) executed in February [removed: 2017, $100] [added: 2018, $200.2] million [removed: payment for an ASR executed in April 2017] [added: share repurchase from open market transactions during the second quarter] and [removed: $75] [added: $100] million [removed: payment for an ASR executed in July 2017.][added: share repurchase from open market transactions during the fourth quarter.]

The [removed: February, April] [added: ASR] and [removed: July ASRs were effected] [added: the stock repurchase was executed] pursuant to a previously announced repurchase plan.

| | | | | | | | |

| | 2018 | | | | 2017 | | |

| October 1 through October 31 | 74,796 | | | $ | 200.02 | | | 74,300 | | | 530.9 | |

| November 1 through November 30 | 423,374 | | | 204.95 | | | | 415,434 | | | 445.8 | |

| December 1 through December 31 | 19,372 | | | 210.37 | | | | — | | | 445.8 | |

| | 517,542 | | | | | | | 489,734 | | | | |

Final settlement of the ASR occurred in April 2018.

See Note 16 in the Notes to the Consolidated Financial Statements for further details.

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

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

| | Price Range per Common Share | | | | | | | | | | | | | | |

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

| | High | | | | Low | | | | High | | | | Low | | |

| First Quarter | $ | 172.96 | | | $ | 147.54 | | | $ | 136.32 | | | $ | 105.65 | |

| Second Quarter | 192.58 | | | | 161.11 | | | | 143.19 | | | | 131.90 | | |

| Third Quarter | 187.49 | | | | 160.18 | | | | 164.02 | | | | 141.90 | | |

| Fourth Quarter | 213.78 | | | | 177.68 | | | | 164.57 | | | | 140.97 | | |

| | Dividends per Common Share | | | | | | |

| | 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 | | | | |

(2) Includes final settlement of shares repurchased in Accelerated Share Repurchase Plan (ASR) executed in the third quarter of 2017.

Final settlement of the February ASR occurred in the second quarter, final settlement for the April ASR occurred in the third quarter and the final settlement of the July ASR occurred in the fourth quarter.

The following table presents selected financial data for each of the five years ended December 31, [removed: 2017] [added: 2018] to [removed: 2013] [added: 2014] (in millions, except per share data):

| | [removed: 2017] [added: 2018] | | | | [removed: 2016] [added: 2017] | | | | [removed: 2015] [added: 2016] | | | | [removed: 2014] [added: 2015] | | | | [removed: 2013] [added: 2014] | | |

| Net Sales | $ | [removed: 3,839.6] [added: 3,883.9] | | | $ | [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] | |

| Operating Income | [removed: 494.5] [added: 509.5] | | | | [removed: 429.4] [added: 494.5] | | | | [removed: 305.4] [added: 429.4] | | | | [removed: 334.7] [added: 305.4] | | | | [removed: 289.0] [added: 334.7] | | |

| Income From Continuing Operations | [removed: 307.1] [added: 360.3] | | | | [removed: 278.6] [added: 307.1] | | | | [removed: 187.2] [added: 278.6] | | | | [removed: 208.1] [added: 187.2] | | | | [removed: 179.9] [added: 208.1] | | |

| Net Income | [removed: 305.7] [added: 359.0] | | | | [removed: 277.8] [added: 305.7] | | | | [removed: 186.6] [added: 277.8] | | | | [removed: 205.8] [added: 186.6] | | | | [removed: 171.8] [added: 205.8] | | |

| Basic Earnings Per Share From Continuing Operations | [removed: 7.28] [added: 8.87] | | | | [removed: 6.41] [added: 7.28] | | | | [removed: 4.17] [added: 6.41] | | | | [removed: 4.35] [added: 4.17] | | | | [removed: 3.61] [added: 4.35] | | |

| Diluted Earnings Per Share From Continuing Operations | [removed: 7.17] [added: 8.77] | | | | [removed: 6.34] [added: 7.17] | | | | [removed: 4.11] [added: 6.34] | | | | [removed: 4.28] [added: 4.11] | | | | [removed: 3.55] [added: 4.28] | | |

| Cash Dividends Declared Per Share | [removed: 1.96] [added: 2.43] | | | | [removed: 1.65] [added: 1.96] | | | | [removed: 1.38] [added: 1.65] | | | | [removed: 1.14] [added: 1.38] | | | | [removed: 0.92] [added: 1.14] | | |

| Capital Expenditures | $ | [removed: 98.3] [added: 95.2] | | | $ | [removed: 84.3] [added: 98.3] | | | $ | [removed: 69.9] [added: 84.3] | | | $ | [removed: 88.4] [added: 69.9] | | | $ | [removed: 78.3] [added: 88.4] | |

| Research and Development Expenses | [removed: 73.6] [added: 72.2] | | | | [removed: 64.6] [added: 73.6] | | | | [removed: 62.3] [added: 64.6] | | | | [removed: 60.7] [added: 62.3] | | | | [removed: 53.7] [added: 60.7] | | |

| Total Assets | $ | [removed: 1,891.5] [added: 1,817.2] | | | $ | [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] | |

| Total Debt | [removed: 1,004.0] [added: 1,041.3] | | | | [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: Stockholders'] [added: Stockholders’ (Deficit)] Equity | [removed: 50.1] [added: (149.6] | | [added: )] | | [removed: 38.0] [added: 50.1] | | | | [removed: 101.6] [added: 38.0] | | | | [removed: 9.0] [added: 101.6] | | | | [removed: 485.7] [added: 9.0] | | |

To understand the factors that may affect comparability, the financial data should be read in conjunction with Item 7, [removed: "Management's] [added: “Management’s] Discussion and Analysis of [added: 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.

Management, including our Chief Executive Officer and Chief Financial Officer, has undertaken an assessment of the effectiveness of the [removed: Company's] [added: Company’s] internal control over financial reporting as of December 31, [removed: 2017,] [added: 2018,] 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: 2017,] [added: 2018,] the [removed: Company's] [added: Company’s] internal control over financial reporting was effective.

KPMG LLP, the independent registered public accounting firm that audited the [removed: Company's] [added: 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: 2017,] [added: 2018,] a copy of which is included herein.

We have audited the accompanying consolidated balance sheets of Lennox International Inc. and subsidiaries (the Company) as of December 31, [removed: 2017] [added: 2018] and [removed: 2016,] [added: 2017,] the related consolidated statements of operations, comprehensive [added: (loss)] income, stockholders’ [added: (deficit)] equity, and cash flows for each of the years in the three-year period ended December 31, [removed: 2017,] [added: 2018,] 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: 2017,] [added: 2018,] based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

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: 2017] [added: 2018] and [removed: 2016,] [added: 2017,] and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, [removed: 2017,] [added: 2018,] 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: 2017,] [added: 2018,] based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

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 [removed: being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable]

[added: being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable] 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.

| | [removed: As of] December 31, [added: 2018] | | | | | | | [added: | | | |]

| | [added: 2018 | | | |] 2017 | | | | 2016 | | |

| Cash and cash equivalents | $ | [removed: 68.2] [added: 46.3] | | | $ | [removed: 50.2] [added: 68.2] | |

| Accounts and notes receivable, net of allowances of [removed: $5.9] [added: $6.3] and [removed: $6.7] [added: $5.9] in [removed: 2017] [added: 2018] and [removed: 2016,] [added: 2017,] respectively | [removed: 506.5] [added: 472.7] | | | | [removed: 469.8] [added: 506.5] | | |

| Inventories, net | [removed: 484.2] [added: 509.8] | | | | [removed: 418.5] [added: 484.2] | | |

| Other assets | [removed: 78.4] [added: 60.6] | | | | [removed: 67.4] [added: 78.4] | | |

| Total current assets | [removed: 1,137.3] [added: 1,089.4] | | | | [removed: 1,005.9] [added: 1,137.3] | | |

| Property, plant and equipment, net of accumulated depreciation of [removed: $774.2] [added: $778.5] and [removed: $717.2] [added: $774.2] in [removed: 2017] [added: 2018] and [removed: 2016,] [added: 2017,] respectively | [removed: 397.8] [added: 408.3] | | | | [removed: 361.4] [added: 397.8] | | |

| Goodwill | [removed: 200.5] [added: 186.6] | | | | [removed: 195.1] [added: 200.5] | | |

| Deferred income taxes | [removed: 94.4] [added: 67.0] | | | | [removed: 136.7] [added: 94.4] | | |

| Other assets, net | [removed: 61.5] [added: 65.9] | | | | [removed: 61.2] [added: 61.5] | | |

| Total assets | $ | [added: 1,817.2 | | | $ |] 1,891.5 | | | $ | 1,760.3 | |

| LIABILITIES AND STOCKHOLDERS’ [added: (DEFICIT)] EQUITY | | | | | | | |

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

| Current maturities of long-term debt | [removed: 32.6] [added: 300.8] | | | | [removed: 200.1] [added: 32.6] | | |

| Accounts payable | [removed: 348.6] [added: 433.3] | | | | [removed: 361.2] [added: 348.6] | | |

| Accrued expenses | [removed: 270.3] [added: 272.3] | | | | [removed: 265.9] [added: 270.3] | | |

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

| Total current liabilities | [removed: 654.5] [added: 1,008.5] | | | | [removed: 888.6] [added: 654.5] | | |

| Long-term debt | [removed: 970.5] [added: 740.5] | | | | [removed: 615.7] [added: 970.5] | | |

| Pensions | [removed: 84.5] [added: 82.8] | | | | [removed: 87.5] [added: 84.5] | | |

| Total liabilities | [removed: 1,841.4] [added: 1,966.8] | | | | [removed: 1,722.3] [added: 1,841.4] | | |

| Stockholders' [removed: equity] [added: (deficit) equity:] | | | | | | | |

| Additional paid-in capital | [removed: 1,061.5] [added: 1,078.8] | | | | [removed: 1,046.2] [added: 1,061.5] | | |

| Retained earnings | [removed: 1,575.9] [added: 1,855.0] | | | | [removed: 1,353.0] [added: 1,575.9] | | |

| Accumulated other comprehensive loss | [removed: (157.4] [added: (188.8] | | ) | | [removed: (195.1] [added: (157.4] | | ) |

| Treasury stock, at cost, [removed: 45,361,145] shares [added: 47,312,248] and [removed: 44,195,250] [added: 45,361,145] shares for [removed: 2017] [added: 2018] and [removed: 2016,] [added: 2017,] respectively | [removed: (2,430.8] [added: (2,895.5] | | ) | | [removed: (2,167.4] [added: (2,430.8] | | ) |

| Total [removed: stockholders’] [added: stockholders' (deficit)] equity | [removed: 50.1] [added: (149.6] | | [added: )] | | [removed: 38.0] [added: 50.1] | | |

| Total liabilities and stockholders' [added: (deficit)] equity | $ | [removed: 1,891.5] [added: 1,817.2] | | | $ | [removed: 1,760.3] [added: 1,891.5] | |

| | For the [removed: Years] [added: Year] Ended December 31, [added: 2018] | | | | | | | | | | |

| | [removed: 2017] [added: 2018] | | | | [removed: 2016] [added: 2017] | | | | [removed: 2015] [added: 2016] | | |

As discussed in Note 2 to the consolidated financial statements, in 2018 the Company adopted Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (Topic 606), as amended.

February 19, 2019

| | 2018 | | | | 2017 | | |

| Other liabilities | 135.0 | | | | 131.9 | | |

| Loss (gain), net on sale of businesses and related property | 27.0 | | | | 1.1 | | | | — | | |

| Insurance proceeds for lost profits | (27.4 | | ) | | — | | | | — | | |

| Gain from insurance recoveries, net of losses incurred | (10.9 | | ) | | — | | | | — | | |

| Weighted Average Number of Shares Outstanding - Basic | 40.6 | | | | 42.2 | | | | 43.4 | | |

| Weighted Average Number of Shares Outstanding - Diluted | 41.1 | | | | 42.8 | | | | 44.0 | | |

| Reclassification of foreign currency translation adjustments into earnings | 27.9 | | | | — | | | | — | | |

| Cumulative effect adjustment upon adoption of new accounting standard (ASU 2016-16), (ASU 2018-02) and (ASC 606) | | — | | | | — | | | | 16.5 | | | | (22.7 | | ) | | — | | | — | | | | — | | | | (6.2 | | ) |

| Foreign currency translation adjustments | | — | | | | — | | | | — | | | | 11.0 | | | | — | | | — | | | | — | | | | 11.0 | | |

| Sale of marketable equity securities | | — | | | | — | | | | 1.8 | | | | (1.8 | | ) | | — | | | — | | | | — | | | | — | | |

| Treasury stock purchases | | — | | | | — | | | | — | | | | — | | | | 2.3 | | | (477.1 | | ) | | — | | | | (477.1 | | ) |

| Balance as of December 31, 2018 | | $ | 0.9 | | | $ | 1,078.8 | | | $ | 1,855.0 | | | $ | (188.8 | ) | | 47.3 | | | $ | (2,895.5 | ) | | $ | — | | | $ | (149.6 | ) |

| Net income | $ | 359.0 | | | $ | 305.7 | | | $ | 277.8 | |

| Gain on sale of real estate | (23.8 | | ) | | — | | | | — | | |

| Impairment/loss on the sale of Australia business | 13.3 | | | | — | | | | — | | |

| Impairment/loss on the sale of South America business | 37.5 | | | | — | | | | — | | |

| Gain from insurance recoveries, net of losses incurred | (10.9 | | ) | | — | | | | — | | |

| Income from equity method investments | (12.0 | | ) | | (18.4 | | ) | | (18.4 | | ) |

| Net proceeds from sale of businesses and related property | 114.7 | | | | — | | | | — | | |

| Insurance recoveries received for property damage incurred from natural disaster | 10.9 | | | | — | | | | — | | |

| Insurance recoveries received | $ | 124.3 | | | $ | — | | | $ | — | |

We have elected to recognize the revenue and cost for freight and shipping when control over the sale of goods passes to our customers.

We also adopted other new accounting standards during the first quarter of 2018.

The impact of these additional standards are discussed in their respective Notes to the Consolidated Financial Statements.

We have completed a qualitative and quantitative assessment of our lease portfolio and are in the process of finalizing the testing of our new lease accounting system and implementing new processes and controls to account for our leases in accordance with the new standard.

Upon adoption, we expect to record right-of-use assets and operating lease liabilities between $130 million and $160 million in our Consolidated Balance Sheet.

Revenue Recognition:

On January 1, 2018, we adopted the new accounting standard ASC 606, Revenue from Contracts with Customers and all the related amendments (“the new revenue standard”) and applied it to all contracts using the modified retrospective method.

We recognized the cumulative effect of initially applying the new revenue standard as an adjustment to the opening balance of retained earnings.

The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods.

We expect the impact of the adoption of the new standard to be immaterial to our net income on an ongoing basis.

The cumulative effect of the changes made to our consolidated January 1, 2018 balance sheet for the adoption of the new revenue standard was as follows (in millions):

| BALANCE SHEET | Balance at December 31, 2017 | | | | Adjustments Due to ASC 606 | | | | Balance at January 1, 2018 | | |

| Accounts payable | 348.6 | | | | 9.3 | | | | 357.9 | | |

| Retained earnings | 1,575.9 | | | | (1.0 | | ) | | 1,574.9 | | |

In accordance with the new revenue standard requirements, the disclosure of the impact of adoption on our Consolidated Balance Sheet and Consolidated Statement of Operations was as follows (in millions):

| | As Reported | | | | Balances Without Adoption of ASC 606 | | | | Effect of Change Higher/(Lower) | | |

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.

February 16, 2018

| Post-retirement benefits, other than pensions | 2.6 | | | | 2.8 | | |

| Other liabilities | 129.3 | | | | 127.7 | | |

| Noncontrolling interests | — | | | | 0.4 | | |

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

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

| Goodwill impairment | — | | | | — | | | | 5.5 | | |

| Asset impairment | — | | | | — | | | | 44.5 | | |

| Average shares outstanding: | | | | | | | | | | | |

| Basic | 42.2 | | | | 43.4 | | | | 44.9 | | |

| Diluted | 42.8 | | | | 44.0 | | | | 45.6 | | |

| Balance as of December 31, 2014 | | 0.9 | | | | 824.9 | | | | 1,022.1 | | | | (153.5 | | ) | | 42.5 | | | (1,686.0 | | ) | | 0.6 | | | | 9.0 | | |

| Change in fair value of available-for-sale marketable equity securities | | — | | | | — | | | | — | | | | 1.2 | | | | — | | | — | | | | — | | | | 1.2 | | |

| Additional investment in subsidiary | | — | | | | — | | | | — | | | | — | | | | — | | | — | | | | (0.2 | | ) | | (0.2 | | ) |

| Treasury stock purchases | | — | | | | 135.0 | | | | — | | | | — | | | | 0.8 | | | (167.0 | | ) | | — | | | | (32.0 | | ) |

| Impairment of assets | — | | | | — | | | | 44.5 | | |

| | |

| --- | --- |

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,

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. |

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.

It will be critical to identify leases embedded in a contract to avoid misstating the lessee’s balance sheet.

We will adopt the standard using the prospective approach and are still determining the effect of the standard on our ongoing financial reporting.

Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of December 31, [removed: 2017,] [added: 2018,] 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 [added: other] changes [removed: during the fourth quarter ended December 31, 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.

During the quarter ended December 31, 2018, we implemented new controls as part of our efforts to adopt ASU 2016-02.

We are implementing new controls related to monitoring the adoption process, implementing a new IT system to capture, calculate, and account for leases, and gather the necessary data to properly account for leases under ASC 842.

Incorporated herein by reference from the Company’s definitive proxy statement, which will be filed no later than 120 days after December 31, [removed: 2017.][added: 2018.]

Incorporated herein by reference from the Company’s definitive proxy statement, which will be filed no later than 120 days after December 31, [removed: 2017.][added: 2018.]

Incorporated herein by reference from the Company’s definitive proxy statement, which will be filed no later than 120 days after December 31, [removed: 2017.][added: 2018.]

Also, refer to Note [removed: 14] [added: 15] in the Notes to the Consolidated Financial Statements for additional information about our equity compensation plans.

Incorporated herein by reference from the Company’s definitive proxy statement, which will be filed no later than 120 days after December 31, [removed: 2017.][added: 2018.]

Incorporated herein by reference from the Company’s definitive proxy statement, which will be filed no later than 120 days after December 31, [removed: 2017.][added: 2018.]

| • | Consolidated Balance Sheets as of December 31, [removed: 2017] [added: 2018] and [removed: 2016] [added: 2017] |

| • | Consolidated Statements of Operations for the Years Ended December 31, [removed: 2017, 2016] [added: 2018, 2017] and [removed: 2015] [added: 2016] |

| • | Consolidated Statements of Comprehensive Income for the Years Ended December 31, [removed: 2017, 2016] [added: 2018, 2017] and [removed: 2015] [added: 2016] |

| • | Consolidated Statements of [removed: Stockholders'] [added: Stockholders’ (Deficit)] Equity for the Years Ended December 31, [removed: 2017, 2016] [added: 2018, 2017] and [removed: 2015] [added: 2016] |

| • | Consolidated Statements of Cash Flows for the Years Ended December 31, [removed: 2017, 2016] [added: 2018, 2017] and [removed: 2015] [added: 2016] |

| • | Notes to the Consolidated Financial Statements for the Years Ended December 31, [removed: 2017, 2016] [added: 2018, 2017] and [removed: 2015] [added: 2016] |

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: 2017, 2016] [added: 2018, 2017] and [removed: 2015] [added: 2016] (see Schedule II immediately following the signature page of this Annual Report on Form 10-K).

[removed: February 16,] [added: |] 2018 [added: | | | | | | | | | | | | | | | | | | | | | | | |]

| /s/ TODD M. BLUEDORN | | Chief Executive Officer and Chairman of the Board of Directors | February [removed: 16, 2018] [added: 19, 2019] |

| /s/ JOSEPH W. REITMEIER | | Executive Vice President and Chief Financial Officer | February [removed: 16, 2018] [added: 19, 2019] |

| /s/ CHRIS A. KOSEL | | Vice President, Controller and Chief Accounting Officer | February [removed: 16, 2018] [added: 19, 2019] |

| /s/ TODD J. TESKE | | Lead Director | February [removed: 16, 2018] [added: 19, 2019] |

| /s/ JANET K. COOPER | | Director | February [removed: 16, 2018] [added: 19, 2019] |

| /s/ JOHN E. MAJOR | | Director | February [removed: 16, 2018] [added: 19, 2019] |

| /s/ JOHN W. NORRIS, III | | Director | February [removed: 16, 2018] [added: 19, 2019] |

| /s/ KAREN H. QUINTOS | | Director | February [removed: 16, 2018] [added: 19, 2019] |

| /s/ KIM K.W. RUCKER | | Director | February [removed: 16, 2018] [added: 19, 2019] |

| /s/ MAX H. MITCHELL | | Director | February [removed: 16, 2018] [added: 19, 2019] |

| /s/ PAUL W. SCHMIDT | | Director | February [removed: 16, 2018] [added: 19, 2019] |

| /s/ GREGORY T. SWIENTON | | Director | February [removed: 16, 2018] [added: 19, 2019] |

For the Years Ended December 31, [removed: 2017, 2016] [added: 2018, 2017] and [removed: 2015][added: 2016]

| Allowance for doubtful accounts | $ | [removed: 7.9] [added: 5.9] | | | $ | [removed: 2.8] [added: 4.8] | | | $ | [removed: (4.9] [added: (3.7] | ) | | $ | [removed: 1.1] [added: 0.6] | | | $ | [removed: (0.6] [added: (1.3] | ) | | $ | 6.3 | |

| 3.2 | [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).](http://www.sec.gov/Archives/edgar/data/1069202/000119312513474576/d644537d8k.htm)] [added: reference).](http://www.sec.gov/Archives/edgar/data/1069202/000119312513474576/d644537dex31.htm)] |

| 4.3 | [Form of [removed: First] Supplemental Indenture among LII, the guarantors party thereto and U.S. Bank National Association, as trustee (filed as Exhibit 4.11 to LII’s Post-Effective Amendment No. 1 to Registration Statement on S-3 (Registration No. 333-155796) filed on May 3, 2010, and incorporated herein by reference)](http://www.sec.gov/Archives/edgar/data/1017609/000095012310042399/d72548exv4w11.htm). |

| 4.4 | [removed: [Second] [added: [Sixth] Supplemental [removed: Indenture] [added: Indenture,] dated as of [removed: March 28, 2011,] [added: November 3, 2016,] among [removed: 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, [removed: and] each other [removed: then] existing Guarantor under the [removed: Indenture] [added: Indenture,] dated as of May 3, 2010, [added: as subsequently supplemented,] and [removed: U.S.] [added: US] Bank National [removed: Association] [added: Association,] as [removed: Trustee] [added: trustee] (filed as Exhibit [removed: 4.4] [added: 4.2] to LII’s [removed: Quarterly] [added: Current] Report on Form [removed: 10-Q] [added: 8-K] filed on [removed: April 26, 2011,] [added: November 3, 2016,] and incorporated [removed: herein] by [removed: reference).](http://www.sec.gov/Archives/edgar/data/1069202/000095012311039069/d81114exv4w4.htm)] [added: reference).](http://www.sec.gov/Archives/edgar/data/1069202/000119312516758285/d284193dex42.htm)] |

| 4.5 | [removed: [Fourth] [added: [Seventh] Supplemental Indenture, dated as of [removed: December 10, 2013] [added: January 23, 2019,] among [removed: Lennox National Account Services LLC, LGL Australia (US) Inc.,] [added: LII Mexico Holdings Ltd.,] Lennox International Inc., each other existing Guarantor under the Indenture, dated as of May 3, 2010, as subsequently supplemented, and [removed: U.S.] [added: US] Bank National [removed: Association (filed] [added: Association,] as [removed: Exhibit 4.5 to LII's Current Report on Form 10-K filed on February 13, 2014 and incorporated herein by reference).](http://www.sec.gov/Archives/edgar/data/1069202/000106920214000002/lii-ex45_20131231x10k.htm)] [added: trustee (filed herewith).](https://www.sec.gov/Archives/edgar/data/1069202/000106920219000008/lii-ex45_20181231x10k.htm)] |

| [removed: 4.7] [added: 4.6] | [removed: [Sixth Supplemental Indenture, dated as of November 3, 2016, among LII, each other existing Guarantor under the Indenture, dated as] [added: [Form] of [removed: May 3, 2010, as subsequently supplemented, and US Bank National Association, as trustee] [added: 3.000% Notes due 2023] (filed as Exhibit [added: A in Exhibit] 4.2 to LII’s Current Report on Form 8-K filed on November 3, 2016, and incorporated by reference).](http://www.sec.gov/Archives/edgar/data/1069202/000119312516758285/d284193dex42.htm) |

| [removed: 4.9] [added: 10.17*] | [removed: [Form of 4.900% Note due 2017] [added: [Lennox International Inc. 2010 Incentive Plan, as amended and restated] (filed as Exhibit [removed: 4.3] [added: 10.1] to [removed: LII’s] [added: LII's] Current Report on Form 8-K filed on May [removed: 6,] [added: 19,] 2010 and incorporated herein by [removed: reference).](http://www.sec.gov/Archives/edgar/data/1069202/000095012310045073/d72767exv4w3.htm)] [added: reference](http://www.sec.gov/Archives/edgar/data/1069202/000095012310051306/c01426exv10w1.htm)).] |

| [removed: 10.3] [added: 10.5] | [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 [added: C in Exhibit] 10.1 to LII's Current Report on Form 8-K filed on September 2, 2016 and incorporated herein by reference).](http://www.sec.gov/Archives/edgar/data/1069202/000119312516700842/d247473dex101.htm) |

| [removed: 10.4] [added: 10.6] | [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 reference).](http://www.sec.gov/Archives/edgar/data/1069202/000119312513446894/d631191dex101.htm) |

| [removed: 10.5] [added: 10.7] | [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 24, 2014 and incorporated herein by reference).](http://www.sec.gov/Archives/edgar/data/1069202/000119312514423340/d811279dex101.htm) |

| [removed: 10.6] [added: 10.8] | [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 18, 2014 and incorporated herein by reference).](http://www.sec.gov/Archives/edgar/data/1069202/000119312514446884/d838484dex101.htm) |

| [removed: 10.7] [added: 10.9] | [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 reference).](http://www.sec.gov/Archives/edgar/data/1069202/000119312515380409/d84922dex101.htm) |

| [removed: 10.8] [added: 10.10] | [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 reference)](http://www.sec.gov/Archives/edgar/data/1069202/000119312516642453/d218961dex101.htm). |

| [removed: 10.9] [added: 10.14] | [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 reference).](http://www.sec.gov/Archives/edgar/data/1069202/000119312513124282/d506512dex101.htm) |

| [removed: 10.10] [added: 10.11] | [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) |

| [removed: 10.11] [added: 10.15] | [Amended and Restated Participation Agreement, dated as of March 22, 2013, by and among Lennox International Inc., as lessee and BTMU Capital Leasing & Finance, Inc., as lessor (filed as Exhibit 10.2 to LII's Current Report on Form 8-K filed on March 25, 2013 and incorporated herein by reference).](http://www.sec.gov/Archives/edgar/data/1069202/000119312513124282/d506512dex102.htm) |

| [removed: 10.12] [added: 10.16] | [Amended and Restated Memorandum of Lease, Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture Filing, dated as of March 22, 2013, by and among Lennox International Inc., BTMU Capital Leasing and Finance, Inc. and David Parnell, as Deed of Trust Trustee, for the benefit of BTMU Capital Leasing & Finance, Inc. (filed as Exhibit 10.3 to LII's Current Report on Form 8-K filed on March 25, 2013 and incorporated herein by reference).](http://www.sec.gov/Archives/edgar/data/1069202/000119312513124282/d506512dex103.htm) |

| [removed: 10.13*] [added: 10.30*] | [Lennox International Inc. [removed: 2010 Incentive Plan, as amended] [added: Directors' Retirement Plan (as Amended] and [removed: restated] [added: Restated as of January 1, 2010)] (filed as Exhibit 10.1 to LII's Current Report on Form 8-K filed on [removed: May 19, 2010] [added: December 16, 2009] and incorporated herein by [removed: reference](http://www.sec.gov/Archives/edgar/data/1069202/000095012310051306/c01426exv10w1.htm)).] [added: reference).](http://www.sec.gov/Archives/edgar/data/1069202/000095012309071289/c93749exv10w1.htm)] |

| [removed: 10.14*] [added: 10.18*] | [Form of Long-Term Incentive Award Agreement for U.S. Employees - Vice President and Above (for use under the 2010 Incentive Plan) (filed [removed: herewith).](https://www.sec.gov/Archives/edgar/data/1069202/000106920218000004/lii-ex1014_20171231x10k.htm)] [added: herewith).](https://www.sec.gov/Archives/edgar/data/1069202/000106920219000008/lii-ex1018_20181231x10k.htm)] |

February 19, 2019

| 10.3 | [Second Amendment To Sixth Amended and Restated Credit Facility Agreement dated March 16, 2018, among Lennox International Inc., the lenders a party thereto, and J.P.Morgan Chase Bank, N.A., as Administrative Agent (filed as Exhibit 10.2 to LII’s Quarterly Report on Form 10-Q filed on April 23, 2018, and incorporated by reference).](http://www.sec.gov/Archives/edgar/data/1069202/000106920218000009/lii-ex102xsecondamendmentt.htm) |

| 10.4 | [Third Amendment (Incremental Amendment) to Sixth Amended and Restated Credit Facility Agreement dated as of January 22, 2019, among Lennox International Inc., a Delaware corporation, the lenders from time to time party thereto, and J.P.Morgan Chase Bank, N.A., as Administrative Agent (filed as Exhibit 10.1 to LII’s Current Report on Form 8-K filed on January 25, 2019, and incorporated by reference).](http://www.sec.gov/Archives/edgar/data/1069202/000106920219000002/exhibit10120188k.htm) |

| 10.12 | [Amendment No. 7 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 Quarterly Report on Form 10-Q filed on April 23, 2018, and incorporated by reference).](http://www.sec.gov/Archives/edgar/data/1069202/000106920218000009/lii-ex101xamendmentno7toam.htm) |

| 10.13 | [Amendment No. 8 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 MUFG Bank, Ltd., as Administrative Agent, BTMU Liquidity Bank, Wells Fargo Bank, National Association, a Liquidity Bank and PNC Bank, N National Association, a Purchaser Agent (filed as Exhibit 10.1 to LII’s Quarterly Report on Form 10-Q filed on October 22, 2018, and incorporated by reference).](http://www.sec.gov/Archives/edgar/data/1069202/000106920218000020/liiex101_2018930-10q.htm) |

| 10.20* | [Short-Term Incentive Program for Lennox International Inc. and its Subsidiaries (filed herewith).](https://www.sec.gov/Archives/edgar/data/1069202/000106920219000008/lii-ex1020_20181231x10k.htm) |

| 10.24* | [Lennox International Inc. Supplemental Restoration Retirement Plan, effective as of January 1, 2019, dated December 28, 2018 (filed herewith).](https://www.sec.gov/Archives/edgar/data/1069202/000106920219000008/lii-ex1024_20181231x10k.htm) |

| 2015: | | | | | | | | | | | | | | | | | | | | | | | |

| 4.6 | [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 reference).](http://www.sec.gov/Archives/edgar/data/1069202/000106920216000024/ex46fifthsupplementalinden.htm) |

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