filings.toolsLennox International (LII) 10-K risk factor changes: FY2020 vs FY2019
The 2020-12-31 10-K against the 2019-12-31 one, compared heading by heading and sentence by sentence.
Item 1A13 rewritten23 added11 removed124 unchanged
All filing items1,191 rewritten635 added494 removed1,278 unchanged
Summary
counted, not written
- Item 1A lists 19 risk factor headings: 1 new, 0 reworded and 18 unchanged since FY2019. 0 headings from FY2019 no longer appear.
- Sentence by sentence, 635 added, 494 removed, 1,191 rewritten and 1,278 unchanged across 16 items that differ.
New Item 1A headings (1)
- The COVID-19 pandemic has disrupted our business operations and results of operations.
Removed Item 1A headings (0)
Every FY2019 risk factor heading is still here, word for word or reworded.
A heading is new when no FY2019 heading matches it after ignoring case and punctuation, and reworded when it shares at least 60 percent of its words with one that went away. All current risk factor headings.
Sentences by item
22 items, with every count and a link to each item that changed
Underlined words on a shaded ground are new in FY2020; struck-through words were in FY2019. Sentences that are wholly new or wholly gone are labelled rather than marked.
Item 1A. Risk Factors
13 rewritten, 23 added, 11 removed, 124 unchanged
We may not be able to adapt to market changes as quickly or effectively as our current [removed: and future competitors.]
[removed: Specifically, changes] [added: For example,] in [removed: environmental and energy efficiency standards and regulations, such as the recent amendments to] [added: 2016,] the Montreal Protocol [added: was amended] to phase down the use of hydrofluorocarbons, [added: which] may particularly have a significant impact on the types of products that we are allowed to develop and [removed: sell, and the types of products that are developed and sold by our competitors.][added: sell.]
Our inability or delay in developing or marketing products that match customer demand [removed: and that meet] [added: while also meeting] applicable efficiency and environmental standards may negatively impact our results.
Future legislation or [removed: regulations, including] [added: regulations relating to] environmental [removed: matters,] [added: policies,] product certification, product liability, taxes, [added: amount and availability of] tax incentives and other matters, may impact the results of each of our operating segments and our consolidated results.
Net sales outside of the United States comprised [removed: 13.2%] [added: 13.0%] of our net sales in [removed: 2019.][added: 2020.]
Any significant interruptions in production at one or more of our facilities, or at a facility of one of our [added: key] suppliers, could negatively impact our ability to deliver our products to our customers.
We experienced such an event in July 2018, when our manufacturing facility in Marshalltown, Iowa was severely damaged by a [removed: tornado.][added: tornado and when suppliers experienced disruptions due to COVID-19.]
[added: Alternatively, if we increase our] prices in response to increases in the prices or quantities of raw materials or components or if we encounter significant supply interruptions, our competitive position could be adversely affected, which may result in depressed sales and profitability.
[added: If we are unable to] successfully do those things, we may not realize the anticipated benefits associated with such transactions, which could adversely affect our business and results of operations.
As of February [removed: 7, 2020,] [added: 5, 2021,] approximately [removed: 27%] [added: 26%] of our workforce, including international locations, was unionized.
We are involved in various claims and lawsuits incidental to our business, including those involving product liability, labor relations, alleged exposure to asbestos-containing materials and environmental matters, some of which claim significant [removed: damages.]
As of December 31, [removed: 2019,] [added: 2020,] we had goodwill of [removed: $186.5] [added: $186.9] million on our Consolidated Balance Sheet.
Any future determination that an impairment of the value of goodwill occurred would require a write-down of the impaired portion of goodwill to fair [removed: value and would reduce our assets and stockholders’ equity and could have a material adverse effect on our results of operations.]
Business and Operational Risks
and future competitors.
We manufacture many of our products at single-location production facilities.
In certain instances, we heavily rely on suppliers who also may concentrate production in single locations or source unique, necessary products from only one supplier.
Industry Risks
Legal, Tax and Regulatory Risks
Specifically, changes in environmental and energy efficiency standards and regulations related to global climate change are being implemented to curtail the use of hydrofluorocarbons which are used in refrigerants that are essential to many of our products.
damages.
General Risk Factors
The COVID-19 pandemic has disrupted our business operations and results of operations.
A novel strain of coronavirus or, COVID-19, surfaced in late 2019 and has spread around the world.
In 2020, the spread of COVID-19 and the developments surrounding the global pandemic disrupted our business operations and affected our results of operations.
For example, in response to the COVID-19 pandemic, various national, state, and local governments where we, our suppliers, and our customers operate issued decrees prohibiting certain businesses from continuing to operate and certain classes of workers from reporting to work.
Those decrees resulted in supply chain disruption and higher absenteeism in our factories.
Additionally, certain of our manufacturing facilities experienced short-term suspensions of operations for COVID-19 employee health concerns.
We implemented several cost reduction actions in the second quarter of 2020, including employee terminations, temporary facility closures and cancellations of certain sales and marketing activities, and revised our financial outlook downward to account for COVID-19’s expected economic impact on our Company and future uncertainty.
By the end of 2020, numerous countries including, the United States, Canada, United Kingdom, European Union, and Mexico had approved various forms of a vaccine for COVID-19 and began distributing them to their citizens in hope of slowing the spread of COVID-19.
The timing of any positive impact from the vaccines is uncertain.
Additionally, it is unknown if current vaccines will work on the new strains of the coronavirus which have been reported in numerous countries, including the United Kingdom and United States.
As the COVID-19 pandemic continues, health concern risks remain, and we cannot predict whether any of our manufacturing, operational or distribution facilities will experience disruptions, or how long such disruptions would last.
It also remains unclear how various national, state, and local governments will react if the distribution of vaccines is slower than expected.
If the COVID-19 pandemic worsens or the pandemic continues longer than presently expected, COVID 19 would continue to impact our results of operations, financial position and cash flows.
value and would reduce our assets and stockholders’ equity and could have a material adverse effect on our results of operations.
The demand for our products and services could also be affected by the size and availability of tax incentives for purchasers of our products and services.
For example, in December 2019, a strain of coronavirus surfaced in Wuhan, China.
Lennox has two small offices in Shanghai and Shenzhen, China with 30 employees devoted to supply chain, engineering, and trade compliance matters.
We also source components from approximately 24 suppliers located throughout China.
At the time of this filing, the outbreak has been largely concentrated in China, although cases have been confirmed in other countries.
The extent to which the coronavirus impacts our results will depend on future developments, which are highly uncertain and unpredictable, including new information concerning the severity of the coronavirus and the actions to contain or treat its impact, among others.
We manufacture many of our products at single-location production facilities, and we rely on certain suppliers who also may concentrate production in single locations.
See Item 7.
“Management’s Discussion and Analysis of Financial Condition and Results of Operations - Business Overview - Marshalltown Tornado.”
Alternatively, if we increase our
If we are unable to
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
147 rewritten, 119 added, 68 removed, 213 unchanged
[removed: See] [added: Refer to] Note [removed: 5] [added: 14] in the Notes to the Consolidated Financial Statements for [removed: additional information.][added: more details.]
[removed: | • |] [added: -] Diluted earnings per share from continuing operations were [removed: $10.38] [added: $9.26] per share in [removed: 2019] [added: 2020] compared to [removed: $8.77] [added: $10.38] per share in [removed: 2018. |][added: 2019.]
[removed: | • |] [added: -] In [removed: 2019,] [added: 2020,] we returned [removed: $111] [added: $118] million to shareholders through dividend payments and we used [removed: $400] [added: $100] million to purchase [removed: 1.5] [added: 0.4] million shares of stock under our Share Repurchase Plans. [removed: We also received $44 million in net proceeds from the sale of our Kysor Warren business. |]
[removed: Despite the impact of the tornado at our Marshalltown facility, the] [added: The] Residential Heating & Cooling segment performed well in [removed: 2019,] [added: 2020,] with a 3% increase in net sales and a [removed: $65] [added: $36] million [removed: increase] [added: decrease] in segment profit compared to [removed: 2018, including] [added: 2019 primarily due to] the insurance proceeds received for lost profits in 2019.
Our Commercial Heating & Cooling segment [removed: also performed well in 2019 with] [added: saw] a [removed: 5% increase] [added: decrease] in net sales [added: of 15%] and [removed: an $8] [added: a $29] million [removed: increase] [added: decrease] in segment profit compared to [removed: 2018.][added: 2019 primarily due to lower sales volumes.]
Sales in our Refrigeration segment decreased [removed: 25%] [added: 17%] and segment profit decreased [removed: $7] [added: $29] million compared to [removed: 2018 mostly] [added: 2019 primarily] due to [added: lower sales volume and] the [removed: sale] [added: loss] of [added: sales volume from] our [removed: Australia, Asia, South America, and] [added: divested] Kysor Warren [removed: businesses.][added: business.]
| | [added: | |] For the Years Ended December 31, | | | | | | | | | | | | | | | | | | | | [added: | | | | | | | | | | | | |]
| | [removed: 2019] | | [removed: | | | | | 2018 | | | |] [added: 2019] | | | [removed: 2017] | | | [added: 2018] | | |
| | [added: | |] Dollars | | | | [added: | |] Percent | | | [added: | | |] Dollars | | | | [added: | |] Percent | | | [added: | | |] Dollars | | | | [added: | |] Percent | | [added: |]
| Net sales | [added: | |] $ | [removed: 3,807.2] [added: 3,634.1] | | | [added: | |] 100.0 | [added: |] % | | [added: | |] $ | [removed: 3,883.9] [added: 3,807.2] | | | [added: | |] 100.0 | [added: |] % | | [added: | |] $ | [removed: 3,839.6] [added: 3,883.9] | | | [added: | |] 100.0 | [added: |] % |
| Cost of goods sold | [removed: 2,727.4] | | [added: 2,594.0] | | [removed: 71.6] | [added: | | | 71.4 | |] % | | [removed: 2,772.7] | | [added: 2,727.4] | | [removed: 71.4] | [added: | | | 71.6 | |] % | | [removed: 2,714.4] | | [added: 2,772.7] | | [removed: 70.7] | [added: | | | 71.4 | |] % |
| Gross profit | [removed: 1,079.8] | | [added: 1,040.1] | | [removed: 28.4] | [added: | | | 28.6 | |] % | | [removed: 1,111.2] | | [added: 1,079.8] | | [removed: 28.6] | [added: | | | 28.4 | |] % | | [removed: 1,125.2] | | [added: 1,111.2] | | [removed: 29.3] | [added: | | | 28.6 | |] % |
| Selling, general and administrative expenses | [removed: 585.9] | | [added: 555.9] | | [removed: 15.4] | [added: | | | 15.3 | |] % | | [removed: 608.2] | | [added: 585.9] | | [removed: 15.7] | [added: | | | 15.4 | |] % | | [removed: 637.7] | | [added: 608.2] | | [removed: 16.6] | [added: | | | 15.7 | |] % |
| Losses (gains) and other expenses, net | [removed: 8.3] | | [added: 7.4] | | [added: | | | |] 0.2 | [added: |] % | | [removed: 13.4] | | [added: 8.3] | | [removed: 0.3] | [added: | | | 0.2 | |] % | | [removed: 7.1] | | [added: 13.4] | | [removed: 0.2] | [added: | | | 0.3 | |] % |
| Restructuring charges | [removed: 10.3] | | [added: 10.8] | | [added: | | | |] 0.3 | [added: |] % | | [removed: 3.0] | | [added: 10.3] | | [removed: 0.1] | [added: | | | 0.3 | |] % | | [removed: 3.2] | | [added: 3.0] | | [added: | | | |] 0.1 | [added: |] % |
| Loss (gain), net on sale of businesses and related property | [removed: 10.6] | | [added: —] | | [removed: 0.3] | [added: | | | — | |] % | | [removed: 27.0] | | [added: 10.6] | | [removed: 0.7] | [added: | | | 0.3 | |] % | | [removed: 1.1] | | [added: 27.0] | | [removed: —] | [added: | | | 0.7 | |] % |
| [removed: Gain] [added: Loss (gain)] from [removed: insurance recoveries,] [added: natural disasters,] net of [removed: losses incurred] [added: insurance recoveries] | [removed: (178.8] | | [removed: )] [added: 3.1] | | [removed: (4.7] | [removed: )%] | | [removed: (38.3] | [added: 0.1] | [removed: )] | [added: %] | [removed: (1.0] | [removed: )%] | | [removed: —] [added: (178.8)] | | | | [removed: —] | [added: | (4.7) | |] % | [added: | | | (38.3) | | | | | | (1.0) | | % |]
| Income from equity method investments | [removed: (13.4] | | [removed: )] [added: (15.6)] | | [removed: (0.4] | [removed: )%] | | [removed: (12.0] | [added: (0.4)] | [removed: )] | [added: %] | [removed: (0.3] | [removed: )%] | | [removed: (18.4] [added: (13.4)] | | [removed: )] | | [removed: (0.5] | [removed: )%] | [added: (0.4) | | % | | | | (12.0) | | | | | | (0.3) | | % |]
| Operating income | [added: | |] $ | [removed: 656.9] [added: 478.5] | | | [removed: 17.3] | [added: | 13.2 | |] % | | [added: | |] $ | [removed: 509.9] [added: 656.9] | | | [removed: 13.1] | [added: | 17.3 | |] % | | [added: | |] $ | [removed: 494.5] [added: 509.9] | | | [removed: 12.9] | [added: | 13.1 | |] % |
| Loss from discontinued operations | [removed: (0.1] | | [removed: )] [added: (0.8)] | | [added: | | | |] — | [added: |] % | | [removed: (1.3] | | [removed: )] [added: (0.1)] | | [added: | | | |] — | [added: |] % | | [removed: (1.4] | | [removed: )] [added: (1.3)] | | [added: | | | |] — | [added: |] % |
| Net income | [added: | |] $ | [removed: 408.7] [added: 356.3] | | | [removed: 10.7] | [added: | 9.8 | |] % | | [added: | |] $ | [removed: 359.0] [added: 408.7] | | | [removed: 9.2] | [added: | 10.7 | |] % | | [added: | |] $ | [removed: 305.7] [added: 359.0] | | | [removed: 8.0] | [added: | 9.2 | |] % |
| | [added: | |] For the Years Ended December 31, | | | | | | | [added: | |]
| | [added: | | 2020 | | | | | | | | | | | |] 2019 | | | | [added: | | | | | | | |] 2018 | | | [added: | | | | | |]
| Realized losses (gains), net on settled futures contracts | [added: | |] $ | 0.4 | | | [added: | |] $ | [removed: (0.4] [added: (0.4)] | [removed: )] |
| Foreign currency exchange (gains) losses, net | [removed: (1.5] | | [removed: )] [added: (1.5)] | | [added: | | | |] 1.7 | | |
| (Gains) losses on disposal of fixed assets | [removed: (0.2] | | [removed: )] [added: (0.2)] | | [added: | | | |] 0.7 | | |
| Other operating (gains) losses | [removed: (1.7] | | [removed: )] [added: (1.7)] | | [added: | | | |] — | | |
| Change in unrealized (gains) losses, net of unsettled futures contracts | [removed: (0.5] | | [removed: )] [added: (0.5)] | | [added: | | | |] 1.5 | | |
| Asbestos-related litigation | [added: | |] 3.1 | | | | [added: | |] 4.0 | | |
| Special legal contingency charges | [added: | |] 1.2 | | | | [added: | |] 1.9 | | |
| Environmental liabilities | [added: | |] 5.7 | | | | [added: | |] 2.2 | | |
| Other items, net | [removed: 1.8] | | [added: —] | | [added: | | | |] 1.8 | | |
| Losses (gains) and other expenses, net | [added: | |] $ | 8.3 | | | [added: | |] $ | 13.4 | |
[removed: Additionally, the] [added: The net] change in unrealized [removed: (gains) losses, net] [added: losses] on unsettled futures contracts was due to [removed: higher] [added: changes in] commodity prices relative to the unsettled futures contract prices.
Foreign currency exchange gains increased in [removed: 2019] [added: 2020] primarily due to strengthening in foreign exchange rates in our primary markets.
The special legal contingency charges in [removed: 2019] [added: 2020] relate to outstanding legal settlements.
We performed a qualitative impairment analysis and noted no indicators of goodwill impairment for the year ended December 31, [removed: 2019.][added: 2020.]
| | [added: | |] For the Years Ended December 31, | | | | | | | | | | | | | | [added: | | | | | | |]
| | [added: | |] 2019 | | | | [added: | |] 2018 | | | | [added: | |] Difference | | | | [added: | |] % Change | | [added: |]
| Net sales | [added: | |] $ | 2,291.1 | | | [added: | |] $ | 2,225.0 | | | [added: | |] $ | 66.1 | | | [removed: 3.0] | [removed: %] | [added: 3% | | |]
*Impact of COVID-19 Pandemic and the Resulting Changes to our 2020 Financial Performance*
A novel strain of coronavirus or, COVID-19, surfaced in late 2019 and has spread around the world.
In 2020, the spread of COVID-19 and the developments surrounding the global pandemic disrupted our business operations and affected our results of operations.
For example, in response to the COVID-19 pandemic, various national, state, and local governments where we, our suppliers, and our customers operate issued decrees prohibiting certain businesses from continuing to operate and certain classes of workers from reporting to work.
Those decrees resulted in supply chain disruption, higher absenteeism in our factories, and negatively impacted net sales for our Commercial and Refrigeration segments.
Additionally, certain of our manufacturing facilities experienced short-term suspensions of operations for COVID-19 employee health concerns.
We implemented several cost reduction actions in the second quarter of 2020, including employee terminations, temporary facility closures and cancellations of certain sales and marketing activities, and revised our financial outlook downward to account for COVID-19’s expected economic impact on our Company and future uncertainty.
As the COVID-19 pandemic continues, health concern risks remain, and we cannot predict whether any of our manufacturing, operational or distribution facilities will experience disruptions, or how long such disruptions would last.
It also remains unclear how various national, state, and local governments will react if the distribution of vaccines is slower than expected.
If the COVID-19 pandemic worsens or the pandemic continues longer than presently expected, COVID 19 would continue to impact our results of operations, financial position and cash flows.
- Net sales decreased $173 million, or 5%, to $3,634 million in 2020 from $3,807 million in 2019.
- Operating income in 2020 was $479 million compared to $657 million in 2019, which included $179 million net gain from insurance recoveries.
- Net income in 2020 decreased to $356 million from $409 million in 2019.
- We generated $612 million of cash flow from operating activities in 2020 compared to $396 million in 2019.
The
increase was primarily due to a decrease in working capital.
Results for the year were mixed and adversely impacted by the economic downturn caused by the COVID-19 pandemic.
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Net sales decreased 5% in 2020 compared to 2019, driven by lower sales volumes of 5% and a 1% decline related to the sale of our Kysor Warren business in the first quarter of 2019, partially offset by improved combined price and mix of 1%.
These were partially offset by 120 bps from unfavorable combined price and mix, 30 bps from higher product warranties, and 10 bps from other product costs.
| | | | 2020 | | | | | | 2019 | | |
| Other operating (gains) losses, net | | | (2.2) | | | | | | (1.7) | | |
| Asbestos charges | | | 5.6 | | | | | | 3.1 | | |
| Losses from pandemic | | | 8.3 | | | | | | — | | |
The charges incurred related to the COVID-19 pandemic related primarily to facility cleaning costs and sanitization supplies to ensure the health and safety of our employees.
Restructuring charges were $10.8 million in 2020 compared to $10.3 million in 2019.
The charges in 2020 related primarily to several cost reduction actions taken in response to the economic impact of the COVID-19 pandemic on our business.
These actions consisted of employee terminations for positions that were no longer needed to support the business, selective facility closures, and cancellations of certain sales and marketing activities.
Net interest expense of $28 million in 2020 decreased from $48 million in 2019 primarily due to lower borrowing and lower borrowing costs.
Refer to Note 13 in the Notes to the Consolidated Financial Statements for more information on income taxes.
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| | | | 2020 | | | | | | 2019 | | | | | | Difference | | | | | | % Change | | |
| Net sales | | | $ | 2,361.5 | | | | | $ | 2,291.1 | | | | | $ | 70.4 | | | | | 3% | | |
| Profit | | | $ | 428.5 | | | | | $ | 464.6 | | | | | $ | (36.1) | | | | | (8)% | | |
| % of net sales | | | 18.1 | | % | | | | 20.3 | | % | | | | | | | | | | | | |
Segment profit in 2020 declined $36 million compared to 2019 due to $99 million of non-recurring insurance proceeds for lost profits related to the Marshalltown tornado, $10 million of higher warranty and other product costs, $5 million of higher tariffs on Chinese imports, $3 million of combined price and mix, and $1 million of factory inefficiency.
Partially offsetting these declines was $25 million of lower SG&A, $25 million of engineering and sourcing led cost reductions, $17 million from lower commodity costs, $8 million of lower freight and distribution expense, $5 million of higher sales volume, and $2 million of higher income from equity method investments.
*Marshalltown Tornado*
On July 19, 2018, our manufacturing facility in Marshalltown, Iowa was damaged by a tornado.
Insurance covered the repair or replacement of our assets that suffered damage or loss and, in 2018 and 2019, we worked closely with our insurance carriers and claims adjusters to ascertain the amount of insurance recoveries due to us as a result of the damage and loss we suffered.
Our insurance policies also provided business interruption coverage, including lost profits, and reimbursement for other expenses and costs that were incurred relating to the damages and losses suffered.
For the year ended December 31, 2019, we incurred expenses of $64 million related to damages caused by the tornado, which included site clean-up and demolition, factory inefficiencies, freight to move product to other warehouses, professional fees, and sales and marketing promotional costs.
In December 2019, we reached a final settlement with our insurance carriers for the losses we suffered from the tornado.
The settlement allowed for total cumulative insurance recoveries of $367.5 million, of which $243 million was received for the year ended December 31, 2019.
We allocated the first $64 million of insurance recoveries received in 2019 to cover our expenses, we allocated $80 million for capital expenditures related to rebuilding costs, and the remaining $99 million of insurance recoveries represents amounts for lost profits.
These amounts are included in Gain from insurance recoveries, net of losses incurred in the Consolidated Statements of Operations.
| | |
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| • | Net sales decreased $77 million, or 2.0%, to $3,807 million in 2019 from $3,884 million in 2018. Sales growth in our Residential Heating & Cooling and Commercial Heating & Cooling segments was offset by a sales decline in our Refrigeration segment due to the sale of our Australia, Asia, and South America businesses in 2018, and the sale of our Kysor Warren business in the first quarter of 2019. |
| • | Operating income in 2019 was $657 million compared to $510 million in 2018. The increase was primarily due to increased sales in our Residential Heating & Cooling and Commercial Heating & Cooling segments, sourcing and engineering-led cost reductions, and a larger gain from insurance proceeds received related to the Marshalltown tornado. |
| • | Net income in 2019 increased to $409 million from $359 million in 2018. |
| • | We generated $396 million of cash flow from operating activities in 2019 compared to $496 million in 2018. The decrease was primarily due to an increase in working capital. |
This segment’s results were driven by higher volumes and price and mix gains.
On a consolidated basis, our gross profit margins decreased to 28.4% in 2019 due primarily to unfavorable commodities, factory inefficiencies, and higher freight and distribution costs.
These declines were partially offset by favorable price and mix, sourcing and engineering-led cost reductions across our business, and the divestiture of our Kysor Warren business which had lower margins.
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The realized losses on settled futures contracts in 2019 were attributable to changes in commodity prices relative to our settled futures contract prices, as commodity prices have decreased in 2019 relative to 2018.
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million of unfavorable mix, $10 million of higher other product costs, $6 million of higher commodities, and $1 million of unfavorable foreign exchange rates.
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.
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 decreased primarily due to the sale of our divested businesses in Australia, Asia and South America.
| | 2018 | | | | 2017 | | |
| Asbestos-related litigation | 4.0 | | | | 3.5 | | |
| Contractor tax payments | — | | | | 0.1 | | |
Restructuring charges were $3.0 million in 2018 compared to $3.2 million in 2017.
The charges in 2018 and 2017 were primarily for projects to realign resources and enhance manufacturing and distribution capabilities.
In 2018, 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 7 of the Notes to the Consolidated Financial Statements).
goodwill impairments 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.
Net interest expense of $38 million in 2018 increased from $31 million in 2017 primarily due to an increase in our average borrowings and rising interest rates.
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 related to stock-based compensation of $23.6 million.
An excerpt. Shown here: 40 of 147 rewritten, 40 of 119 added and 40 of 68 removed. The counts are complete. For every sentence, read Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations in the FY2020 filing and the FY2019 filing.
Item 1. Business
41 rewritten, 36 added, 17 removed, 172 unchanged
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: 2019] [added: 2020] by segment.
Segment financial data for [removed: 2019, 2018] [added: 2020, 2019] and [removed: 2017,] [added: 2018,] including financial information about foreign and domestic operations, is included in Note 3 of the Notes to our Consolidated Financial Statements in “Item 8.
| Segment | | [added: | | | |] Products & Services | | [added: | | | |] Product and Brand Names | | [removed: 2019] [added: | | | | 2020] Net Sales (in millions) | | |
| Residential Heating & Cooling | | [added: | | | |] Furnaces, air conditioners, heat pumps, packaged heating and cooling systems, indoor air quality equipment, comfort control products, replacement parts and supplies | | [added: | | | |] Lennox, Dave Lennox Signature Collection, Armstrong Air, Ducane, Air-Ease, Concord, [removed: Magic-Pak,] [added: MAGICPAK,] ADP Advanced Distributor Products, Allied, [removed: Healthy Climate,] Elite Series, Merit Series, Comfort Sync, [added: Humiditrol, Healthy Climate, Healthy Solutions,] iComfort and Lennox Stores | | [added: | | | |] $ | [removed: 2,291.1] [added: 2,361.5] | |
| Commercial Heating & Cooling | | [added: | | | |] Unitary heating and air conditioning equipment, applied systems, controls, installation and service of commercial heating and cooling equipment, variable refrigerant flow commercial products | | [added: | | | |] Lennox, Allied Commercial, Magic-Pak, Raider, Landmark, Prodigy, Strategos, Energence, Lennox VRF and Lennox National Account Services | | [removed: 947.4] | | | [added: | 800.9 | | |]
| Refrigeration | | [added: | | | |] Condensing units, unit coolers, fluid coolers, air cooled condensers, air handlers, process chillers, controls, compressorized racks. | | [added: | | | |] Heatcraft Worldwide Refrigeration, Lennox (Europe HVAC), Bohn, Larkin, Climate Control, Chandler Refrigeration, Friga-Bohn, HK Refrigeration, [removed: Hyfra] [added: Hyfra, IntelliGen] and Interlink | | [removed: 568.7] | | | [added: | 471.7 | | |]
The “Lennox” brands are sold directly to a network of approximately [removed: 7,000] [added: 9,000] independent installing dealers, making us one of the largest wholesale distributors of residential heating and air conditioning products in North America.
We continue to invest in our network of [removed: 221] [added: 220] Lennox Stores across the United States and Canada.
ADP sells ADP-branded evaporator coils to over [removed: 450] [added: 300] HVAC wholesale distributors across North America.
Our global manufacturing, distribution, sales and marketing footprint serves customers in over [removed: 113] [added: 112] countries worldwide.
We manufacture heating and cooling products in several locations in Europe and market these products through both direct and indirect distribution channels in Europe, [added: the United Kingdom,] Russia, [removed: Turkey] [added: Turkey, Africa,] and the Middle East.
We plan to expand our market position through organic growth while maintaining our focus on cost reductions to drive margin [removed: expansion and support growth in target business segments.][added: expansion.]
We distribute our “Armstrong Air,” “Ducane,” “Air-Ease,” “Concord,” [removed: “Magic-Pak”] [added: “MAGICPAK”] and “ADP Advanced Distributor Products” brands through the traditional independent distribution process pursuant to which we sell our products to distributors who, in turn, sell the products to installing contractors.
This joint venture provides us with compressors for our residential and commercial heating and [removed: cooling] [added: cooling,] and refrigeration businesses.
We leverage intellectual property and innovative [removed: designs across our]
[removed: | • |] [added: -] Residential Heating & Cooling [removed: -United Technologies Corp.] [added: - Carrier Global Corporation] (Carrier, Bryant, Payne, Tempstar, Comfortmaker, Heil, Arcoaire, KeepRite, Day & Night); [removed: Ingersoll-Rand] [added: Trane Technologies] plc (Trane, American Standard, Ameristar); Paloma Industries, Inc. (Rheem, Ruud, Weather King); Johnson Controls, Inc. (York, Luxaire, Coleman); Daikin Industries, Ltd. (Daikin, Goodman, Amana, GMC); and Melrose Industries PLC (Maytag, Westinghouse, Frigidaire, Tappan, Philco, Kelvinator, Gibson, Broan, NuTone). [removed: |]
[removed: | • |] [added: -] Commercial Heating & Cooling - [removed: United Technologies Corp.] [added: Carrier Global Corporation] (Carrier, ICP Commercial); [removed: Ingersoll-Rand] [added: Trane Technologies] plc (Trane); Paloma Industries, Inc. (Rheem, Ruud); Johnson Controls, Inc. (York); Daikin Industries, Ltd. (Goodman, McQuay); Melrose Industries PLC (Mammoth); and AAON, Inc. [removed: |]
[removed: | • |] [added: -] Refrigeration - Hussmann Corporation; Paloma Industries, Inc. (Rheem Manufacturing Company (Heat Transfer Products Group)); Emerson Electric Co. (Copeland); [removed: United Technologies Corp.] [added: Carrier Global Corporation] (Carrier); GEA Group (Kuba, Searle, Goedhart); Alfa Laval; Guntner GmbH; and Panasonic Corp. (Sanyo). [removed: |]
[removed: Approximately 4,700 of] [added: Of] these [removed: employees] [added: employees, approximately 4,500] were salaried and [removed: 6,500] [added: 5,800] were hourly.
The number of hourly workers [removed: we employ may vary] [added: varies] in order to match our labor needs during periods of fluctuating demand.
Approximately [removed: 3,000] [added: 2,700 of our] employees, including international locations, are represented by unions.
*Refrigerants.* The use of [removed: hydrochlorofluorocarbons (“HCFCs”) and] hydroflurocarbons (“HFCs”) as refrigerants for air conditioning and refrigeration equipment is [removed: common practice in the HVACR industry and is regulated.]
We believe we have complied with applicable rules and regulations in various countries governing the use of [removed: HCFCs and] HFCs.
All HVACR products and certain components of such products [removed: “put on the market” in the EU (whether or not manufactured in the EU)] are potentially subject to [removed: WEEE and RoHS.][added: these types of requirements.]
We [removed: are] actively [removed: monitoring] [added: monitor] the development [added: and evolution] of such [removed: directives] [added: requirements] and believe we are well positioned to comply with such directives in the required time frames.
Our executive officers, their present positions and their ages are as follows as of February [removed: 7, 2020:][added: 5, 2021:]
| Name | [added: | |] Age | [added: | |] Position | [added: | |]
| Todd M. Bluedorn | [removed: 56] | [added: | 57 | | |] Chairman of the Board and Chief Executive Officer | [added: | |]
| Joseph W. Reitmeier | [removed: 55] | [added: | 56 | | |] Executive Vice President, Chief Financial Officer | [added: | |]
| Douglas L. Young | [removed: 57] | [added: | 58 | | |] Executive Vice President, President and Chief Operating Officer, Residential Heating & Cooling | [added: | |]
| Gary S. Bedard | [removed: 55] | [added: | 56 | | |] Executive Vice President, President and Chief Operating Officer, Worldwide Refrigeration | [added: | |]
| Prakash Bedapudi | [removed: 53] | [added: | 54 | | |] Executive Vice President, Chief Technology Officer | [added: | |]
| Daniel M. Sessa | [removed: 55] | [added: | 56 | | |] Executive Vice President, Chief Human Resources Officer | [added: | |]
| John D. Torres | [removed: 61] | [added: | 62 | | |] Executive Vice President, Chief Legal Officer and Secretary | [added: | |]
| Elliot Zimmer | [removed: 43] | [added: | 44 | | |] Executive Vice President, President and Chief Operating Officer, North America Commercial Heating & Cooling | [added: | |]
| Chris A. Kosel | [removed: 53] | [added: | 54 | | |] Vice President, Chief Accounting Officer and Controller | [added: | |]
A graduate of the United States Military Academy at West Point with a bachelor of science in electrical engineering, Mr. Bluedorn [added: is Ranger qualified and] served in the [removed: United States] [added: U.S.] Army as a [removed: combat engineer] [added: Combat Engineer] officer [removed: and United States Army Ranger] from 1985 to 1990.
Mr. Bluedorn also serves on the Board of Directors of [removed: Eaton Corporation, a diversified industrial manufacturer, on the Board of Directors of] Texas Instruments Incorporated, a global designer and manufacturer of semiconductors, and on the Board of Trustees of Washington University in St. Louis.
He had previously served as Senior Vice President, General Counsel and Secretary for Freescale Semiconductor, a semiconductor [removed: manufacturer that was originally part of Motorola.]
He previously served as Vice President and General Manager, Lennox North America Commercial Equipment business [removed: since 2016;] [added: from 2016 to 2019;] Vice President, Worldwide Sourcing from 2011 to 2016; and Director of Business Development from 2010 to 2011.
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| | | | | | | | | | | | | Total | | | | | | $ | 3,634.1 | |
designs across our businesses.
Human Capital Management
Lennox’s success, in large part, relies on the character of our people.
That character is reflected in Lennox’s core values of integrity, respect and excellence.
Our continued success depends on our ability to attract, motivate, develop and retain employees who embody our core values.
Management strives to maintain the right number of employees with the necessary skills to match the expected demand for the products we manufacture and distribute.
As of December 31, 2020, we employed approximately 10,300 people.
We have identified priorities we believe are critical to our success in attracting, motivating, developing, and retaining employees.
These include among other things: (1) providing competitive compensation and benefit programs, (2) providing career development programs, (3) promoting health and safety, and (4) championing a diverse and inclusive work environment.
Our senior managers, together with our human resources team are devoted to promoting these priorities to ensure we remain an employer of choice.
We regularly conduct anonymous surveys to seek feedback from our employees on a variety of subjects, including safety, communications, diversity and inclusion, management support to succeed within our company, and career growth.
We found this especially useful in 2020 to understand and respond to the impact of COVID-19 on our workforce, both our onsite essential workers and our remote workers.
*Compensation and Benefit Programs*. We are committed to providing our employees with a competitive compensation package that rewards performance and achievement of desired business results.
Our compensation package consists of three primary benefits: pay (base pay and incentive programs), health and welfare benefits, and retirement contributions.
We analyze our compensation and benefits programs annually to ensure we remain competitive and make changes as necessary.
*Career Development Programs.* To help our employees succeed in their roles and grow their careers at Lennox, we provide numerous training and development programs.
One example is our “Career Journey” program which provides employees with engaging tools enabling them to reflect on skills and interests, and explore a variety of potential career paths.
Career Journey allows employees to have more meaningful career development conversations with their manager.
In addition to training and development programs we have a robust performance review and goal setting process for all employees.
We believe this helps ensure that employees meet expectations throughout the year while continuing development of their long-term careers at Lennox.
*Employee Health and Safety.* As part of our effort to attract and retain a competitive workforce, we are committed to ensuring that every employee returns home safe at the end of each day.
Safety is our top priority and our safety programs are succeeding to reduce risks across our operations.
In response to the COVID-19 pandemic, we have taken extensive actions that are aligned with the World Health Organization and Centers for Disease Control and Prevention to protect the health and safety of our workers.
*Diversity and Inclusion.* We are committed to a diverse workforce built on a foundation of respect and value for people of different backgrounds, experiences, and perspectives.
In 2020 we enhanced our diversity and inclusion programs by providing extensive unconscious bias training, increasing the focus on diversity and inclusion during our hiring processes, and expanding employee resource groups.
Our commitment to diversity and inclusion enables all employees to be creative, feel challenged, and thrive, which allows us to leverage the unique strengths of our employees to deliver innovative products and solutions for our customers.
Environmental laws affect or could affect our domestic operations.
common practice in the HVACR industry and is regulated.
*E-Waste and Related Compliance*.
Many countries around the world as well as many states in the US have enacted directives, laws, and regulations directed at preventing electrical and electronic equipment waste by encouraging reuse and recycling as well as restricting the use of hazardous products in electrical and electronic equipment.
We are not uniquely affected as compared to other manufacturers.
Mr. Bluedorn served on the Board of Directors of Eaton Corporation, a diversified industrial manufacturer from 2010 to 2020.
manufacturer that was originally part of Motorola.
| | | | | | | | | |
| | | | | Total | | $ | 3,807.2 | |
In the first quarter of 2019, we completed the sale of our Kysor Warren business.
businesses.
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| --- | --- |
Employees
As of December 31, 2019, we employed approximately 11,200 employees.
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 Act ("EPAct"), the Energy Policy and Conservation 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 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.
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 ratified by the United Sates and globally.
In addition, we are taking proactive steps to implement responsible use principles and guidelines with respect to limiting refrigerants from escaping into the atmosphere throughout the life span of our HVACR equipment.
*European WEEE and RoHS Compliance.* In the European marketplace, electrical and electronic equipment is required to comply with the Directive on Waste Electrical and Electronic Equipment (“WEEE”) and the Directive on Restriction of Use of Certain Hazardous Substances (“RoHS”).
WEEE aims to prevent waste by encouraging reuse and recycling and RoHS restricts the use of six hazardous substances in electrical and electronic products.
Because all HVACR manufacturers selling within or from the EU are subject to the standards promulgated under WEEE and RoHS, we believe that neither WEEE nor RoHS uniquely impacts us as compared to such other manufacturers.
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.
| | | |
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An excerpt. Shown here: 40 of 41 rewritten, all 36 added and all 17 removed. The counts are complete. For every sentence, read Item 1. Business in the FY2020 filing and the FY2019 filing.
Item 3. Legal Proceedings
2 rewritten, 0 added, 0 removed, 3 unchanged
It is management’s opinion that none of these claims or lawsuits will have a material adverse effect, individually or in the aggregate, on our financial position, results of operations [removed: or]
[added: or] cash flows.
Cover and table of contents
45 rewritten, 21 added, 7 removed, 26 unchanged
[removed: Form 10-K][added: FORM 10-K]
| ☒ | [added: | |] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | [added: | |]
For the fiscal year [removed: ended December] [added: ended December] 31, [removed: 2019][added: 2020]
| ☐ | [added: | |] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | [added: | |]
| Delaware | [added: | |] 42-0991521 | [added: | |]
| (State or other jurisdiction of incorporation or organization) | [added: | |] (I.R.S. Employer Identification Number) | [added: | |]
[removed: 2140 Lake Park Blvd. Richardson, Texas 75080][added: Richardson, Texas 75080]
(Registrant’s telephone number, including area code): [removed: (972) 497-5000][added: (972) 497-5000]
| Title of each class | [added: | |] Trading Symbol(s) | [added: | |] Name of each exchange on which registered | [added: | |]
| Common stock, $0.01 par value per share | [added: | |] LII | [added: | |] New York Stock Exchange | [added: | |]
| Large Accelerated Filer | [added: | |] \[X\] | | [added: | | | |] Accelerated Filer | [added: | |] \[ \] | [added: | |]
| Non-Accelerated Filer | [added: | |] \[ \] | | [added: | | | |] Smaller Reporting Company | [added: | |] ☐ | [added: | |]
| | | | [added: | | | | | |] Emerging Growth Company | [added: | |] ☐ | [added: | |]
| 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. \[ \] | | | | | [added: | | | | | | | | | |]
As of June 30, [removed: 2019,] [added: 2020,] the aggregate market value of the common stock held by non-affiliates of the registrant was approximately [removed: $11] [added: $8.9] billion based on the closing price of the registrant’s common stock on the New York Stock Exchange.
As of February [removed: 7, 2020,] [added: 5, 2021,] there were [removed: 38,598,884] [added: 37,733,565] shares of the registrant’s common stock outstanding.
Portions of the registrant’s [removed: 2019] [added: 2020] Definitive Proxy Statement to be filed with the Securities and Exchange Commission in connection with the registrant’s [removed: 2019] [added: 2020] Annual Meeting of Stockholders to be held on May [removed: 21, 2020] [added: 20, 2021] are incorporated by reference into Part III of this report.
For the Fiscal Year Ended December 31, [removed: 2019][added: 2020]
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| PART I | | | [added: | | | | | |]
| ITEM 1. | [removed: [Business](#s0F37DB45E8E25A6CB5BDD9CBB5DA0768)] | [removed: [1](#s0F37DB45E8E25A6CB5BDD9CBB5DA0768)] | [added: [Business](#i2b8b74d6976e4dd2a02f0ed4691bb7be_13) | | | [1](#i2b8b74d6976e4dd2a02f0ed4691bb7be_13) | | |]
| ITEM 1A. | [added: | |] [Risk [removed: Factors](#s63C715D0029D5A9F8F029F97AD0EA500)] [added: Factors](#i2b8b74d6976e4dd2a02f0ed4691bb7be_16)] | [removed: [8](#s63C715D0029D5A9F8F029F97AD0EA500)] | [added: | [8](#i2b8b74d6976e4dd2a02f0ed4691bb7be_16) | | |]
| ITEM 1B. | [added: | |] [Unresolved Staff [removed: Comments](#sA74E136626585F1E92D52A28FE02DE18)] [added: Comments](#i2b8b74d6976e4dd2a02f0ed4691bb7be_19)] | [removed: [12](#sA74E136626585F1E92D52A28FE02DE18)] | [added: | [14](#i2b8b74d6976e4dd2a02f0ed4691bb7be_19) | | |]
| ITEM 2. | [removed: [Properties](#s7CFF76570963523EA863EDDFAA9ACF63)] | [removed: [13](#s7CFF76570963523EA863EDDFAA9ACF63)] | [added: [Properties](#i2b8b74d6976e4dd2a02f0ed4691bb7be_22) | | | [15](#i2b8b74d6976e4dd2a02f0ed4691bb7be_22) | | |]
| ITEM 3. | [added: | |] [Legal [removed: Proceedings](#sC5DC4FA5BF0550FBBFFED739C378444C)] [added: Proceedings](#i2b8b74d6976e4dd2a02f0ed4691bb7be_25)] | [removed: [13](#sC5DC4FA5BF0550FBBFFED739C378444C)] | [added: | [15](#i2b8b74d6976e4dd2a02f0ed4691bb7be_25) | | |]
| ITEM 4. | [added: | |] [Mine Safety [removed: Disclosures](#sD5AFC8643B465CA3ABBAFBE28126130E)] [added: Disclosures](#i2b8b74d6976e4dd2a02f0ed4691bb7be_28)] | [removed: [14](#sD5AFC8643B465CA3ABBAFBE28126130E)] | [added: | [16](#i2b8b74d6976e4dd2a02f0ed4691bb7be_28) | | |]
| PART II | | | [added: | | | | | |]
| ITEM 5. | [added: | |] [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity [removed: Securities](#s4DC3BDFC6ED2586BA441499BA4E21196)] [added: Securities](#i2b8b74d6976e4dd2a02f0ed4691bb7be_34)] | [removed: [14](#s4DC3BDFC6ED2586BA441499BA4E21196)] | [added: | [16](#i2b8b74d6976e4dd2a02f0ed4691bb7be_34) | | |]
| ITEM 6. | [added: | |] [Selected Financial [removed: Data](#s3C549911DCA5541EBCA60C53C456938D)] [added: Data](#i2b8b74d6976e4dd2a02f0ed4691bb7be_37)] | [removed: [15](#s3C549911DCA5541EBCA60C53C456938D)] | [added: | [17](#i2b8b74d6976e4dd2a02f0ed4691bb7be_37) | | |]
| ITEM 7. | [added: | |] [Management's Discussion and Analysis of Financial Condition and Results of [removed: Operations](#s9507DF6131D25BBF90CF61A500D5A6D1)] [added: Operations](#i2b8b74d6976e4dd2a02f0ed4691bb7be_40)] | [removed: [16](#s9507DF6131D25BBF90CF61A500D5A6D1)] | [added: | [17](#i2b8b74d6976e4dd2a02f0ed4691bb7be_40) | | |]
| ITEM 7A. | [added: | |] [Quantitative and Qualitative Disclosures about Market [removed: Risk](#s4DDDBF8C1D53506FA3B849D8BC35F2B3)] [added: Risk](#i2b8b74d6976e4dd2a02f0ed4691bb7be_73)] | [removed: [29](#s4DDDBF8C1D53506FA3B849D8BC35F2B3)] | [added: | [32](#i2b8b74d6976e4dd2a02f0ed4691bb7be_73) | | |]
| ITEM 8. | [added: | |] [Financial Statements and Supplementary [removed: Data](#s2EB24A5D616756838856C74B00264FE6)] [added: Data](#i2b8b74d6976e4dd2a02f0ed4691bb7be_76)] | [removed: [30](#s2EB24A5D616756838856C74B00264FE6)] | [added: | [33](#i2b8b74d6976e4dd2a02f0ed4691bb7be_76) | | |]
| ITEM 9. | [added: | |] [Changes in and Disagreements With Accountants on Accounting and Financial [removed: Disclosure](#s0E0C62EB6CFC5867A2B9BB3D79ECED80)] [added: Disclosure](#i2b8b74d6976e4dd2a02f0ed4691bb7be_196)] | [removed: [87](#s0E0C62EB6CFC5867A2B9BB3D79ECED80)] | [added: | [82](#i2b8b74d6976e4dd2a02f0ed4691bb7be_196) | | |]
| ITEM 9A. | [added: | |] [Controls and [removed: Procedures](#s0EEF77FA19A754619354D8B5F9656A85)] [added: Procedures](#i2b8b74d6976e4dd2a02f0ed4691bb7be_199)] | [removed: [87](#s0EEF77FA19A754619354D8B5F9656A85)] | [added: | [82](#i2b8b74d6976e4dd2a02f0ed4691bb7be_199) | | |]
| ITEM 9B. | [added: | |] [Other [removed: Information](#sE44EC321E82855A8A91D3930EB6BE97A)] [added: Information](#i2b8b74d6976e4dd2a02f0ed4691bb7be_202)] | [removed: [87](#sE44EC321E82855A8A91D3930EB6BE97A)] | [added: | [82](#i2b8b74d6976e4dd2a02f0ed4691bb7be_202) | | |]
| PART III | | | [added: | | | | | |]
| ITEM 10. | [added: | |] [Directors, Executive Officers and Corporate [removed: Governance](#sA0F59F66E4735705A6AF320A7EE24949)] [added: Governance](#i2b8b74d6976e4dd2a02f0ed4691bb7be_208)] | [removed: [87](#sA0F59F66E4735705A6AF320A7EE24949)] | [added: | [82](#i2b8b74d6976e4dd2a02f0ed4691bb7be_208) | | |]
| ITEM 11. | [added: | |] [Executive [removed: Compensation](#s8C2ADA24A53354259F90259C7664F8A5)] [added: Compensation](#i2b8b74d6976e4dd2a02f0ed4691bb7be_211)] | [removed: [87](#s8C2ADA24A53354259F90259C7664F8A5)] | [added: | [82](#i2b8b74d6976e4dd2a02f0ed4691bb7be_211) | | |]
| ITEM 12. | [added: | |] [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder [removed: Matters](#s47C213A80DDA51BFAC8D23DE5BEE09B3)] [added: Matters](#i2b8b74d6976e4dd2a02f0ed4691bb7be_214)] | [removed: [88](#s47C213A80DDA51BFAC8D23DE5BEE09B3)] | [added: | [82](#i2b8b74d6976e4dd2a02f0ed4691bb7be_214) | | |]
| ITEM 13. | [added: | |] [Certain Relationships and Related Transactions, and Director [removed: Independence](#s393010D187785B2C9D3C5F4B81A4069D)] [added: Independence](#i2b8b74d6976e4dd2a02f0ed4691bb7be_217)] | [removed: [88](#s393010D187785B2C9D3C5F4B81A4069D)] | [added: | [83](#i2b8b74d6976e4dd2a02f0ed4691bb7be_217) | | |]
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2140 Lake Park Blvd.
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Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report Yes ☒ No ☐
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| | | | [SIGNATURES](#i2b8b74d6976e4dd2a02f0ed4691bb7be_235) | | | [87](#i2b8b74d6976e4dd2a02f0ed4691bb7be_235) | | |
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| | [SIGNATURES](#sC9CB87C0FCFC5D0EB35B3FA49A4C4797) | [93](#sC9CB87C0FCFC5D0EB35B3FA49A4C4797) |
An excerpt. Shown here: 40 of 45 rewritten, all 21 added and all 7 removed. The counts are complete. For every sentence, read Cover and table of contents in the FY2020 filing and the FY2019 filing.
Item 2. Properties
31 rewritten, 14 added, 4 removed, 4 unchanged
The following chart lists our principal domestic and international manufacturing, distribution and office facilities as of December 31, [removed: 2019] [added: 2020] and indicates the business segment that uses such facilities, the approximate size of such facilities and whether such facilities are owned or leased.
| Location | [added: | |] Segment | [added: | |] Type or Use of Facility | [added: | |] Approx. Sq. Ft. (In thousands) | [added: | |] Owned/Leased | [added: | |]
| Marshalltown, IA | [added: | |] Residential Heating & Cooling | [added: | |] Manufacturing & Distribution | [added: | |] 1,000 | [added: | |] Owned & Leased | [added: | |]
| Orangeburg, SC | [added: | |] Residential Heating & Cooling | [added: | |] Manufacturing & Distribution | [removed: 750] | [added: | 900 | | |] Owned & Leased | [added: | |]
| Saltillo, Mexico | [added: | |] Residential Heating & Cooling | [added: | |] Manufacturing & Distribution | [added: | |] 638 | [added: | |] Owned | [added: | |]
| Grenada, MS | [added: | |] Residential Heating & Cooling | [added: | |] Manufacturing & Distribution | [added: | |] 395 | [added: | |] Owned & Leased | [added: | |]
| Romeoville, IL | [added: | |] Residential Heating & Cooling | [added: | |] Distribution & Office | [added: | |] 697 | [added: | |] Leased | [added: | |]
| McDonough, GA | [added: | |] Residential Heating & Cooling | [added: | |] Distribution | [added: | |] 254 | [added: | |] Leased | [added: | |]
| Grove City, OH | [added: | |] Residential Heating & Cooling | [added: | |] Distribution | [added: | |] 279 | [added: | |] Leased | [added: | |]
| Pittston, PA | [added: | |] Residential Heating & Cooling | [added: | |] Distribution | [added: | |] 144 | [added: | |] Leased | [added: | |]
| Concord, NC | [added: | |] Residential Heating & Cooling | [added: | |] Distribution | [added: | |] 123 | [added: | |] Leased | [added: | |]
| [removed: Blythewood, SC] [added: Lenexa, KS] | [added: | |] Residential [added: & Commercial] Heating & Cooling | [added: | |] Distribution | [added: | |] 147 | [added: | |] Leased | [added: | |]
| Eastvale, CA | [added: | |] Residential & Commercial Heating & Cooling | [added: | |] Distribution | [added: | |] 377 | [added: | |] Leased | [added: | |]
| Carrollton, TX | [added: | |] Residential & Commercial Heating & Cooling | [added: | |] Distribution | [added: | |] 252 | [added: | |] Leased | [added: | |]
| Brampton, Canada | [added: | |] Residential & Commercial Heating & Cooling | [added: | |] Distribution | [added: | |] 251 | [added: | |] Leased | [added: | |]
| Houston, TX | [added: | |] Residential & Commercial Heating & Cooling | [added: | |] Distribution | [added: | |] 204 | [added: | |] Leased | [added: | |]
| Orlando, FL | [added: | |] Residential & Commercial Heating & Cooling | [added: | |] Distribution | [added: | |] 173 | [added: | |] Leased | [added: | |]
| Middletown, PA | [added: | |] Residential & Commercial Heating & Cooling | [added: | |] Distribution | [added: | |] 166 | [added: | |] Leased | [added: | |]
| [removed: Lenexa, KS] [added: East Fife, WA] | [added: | |] Residential & Commercial Heating & Cooling | [added: | |] Distribution | [removed: 147] | [added: | 112 | | |] Leased | [added: | |]
| [removed: East Fife, WA] [added: Calgary, Canada] | [added: | |] Residential & Commercial Heating & Cooling | [added: | |] Distribution | [removed: 112] | [added: | 145 | | |] Leased | [added: | |]
| [removed: Calgary, Canada] [added: Jessup, PA] | [removed: Residential &] [added: | |] Commercial Heating & Cooling | [added: | |] Distribution | [removed: 145] | [added: | 130 | | |] Leased | [added: | |]
| Stuttgart, AR | [added: | |] Commercial Heating & Cooling | [added: | |] Manufacturing | [added: | |] 750 | [added: | |] Owned | [added: | |]
| Longvic, France | [added: | |] Refrigeration | [added: | |] Manufacturing | [added: | |] 142 | [added: | |] Owned | [added: | |]
| Longvic, France | [added: | |] Refrigeration | [added: | |] Distribution | [added: | |] 133 | [added: | |] Owned | [added: | |]
| Burgos, Spain | [added: | |] Refrigeration | [added: | |] Manufacturing | [added: | |] 140 | [added: | |] Owned | [added: | |]
| Mions, France | [added: | |] Refrigeration | [added: | |] Research & Development | [added: | |] 129 | [added: | |] Owned | [added: | |]
| Genas, France | [added: | |] Refrigeration | [added: | |] Manufacturing, Distribution & Offices | [added: | |] 111 | [added: | |] Owned | [added: | |]
| Tifton, GA | [added: | |] Refrigeration | [added: | |] Manufacturing & Distribution | [added: | |] 738 | [added: | |] Owned & Leased | [added: | |]
| Stone Mountain, GA | [added: | |] Refrigeration | [added: | |] Manufacturing & Business Unit Headquarters | [added: | |] 139 | [added: | |] Owned | [added: | |]
| Richardson, TX | [added: | |] Corporate and other | [added: | |] Corporate Headquarters | [added: | |] 356 | [added: | |] Owned & Leased | [added: | |]
| Carrollton, TX | [added: | |] Corporate and other | [added: | |] Research & Development | [added: | |] 294 | [added: | |] Owned | [added: | |]
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| Chennai, India | | | Corporate and other | | | Research & Development & Office | | | 67 | | | Leased | | |
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| Dallas, TX | Commercial Heating & Cooling | Distribution | 227 | Leased |
| Jessup, PA | Commercial Heating & Cooling | Distribution | 130 | Leased |
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
8 rewritten, 7 added, 8 removed, 9 unchanged
As of the close of business on February [removed: 7, 2020,] [added: 5, 2021,] approximately [removed: 594] [added: 573] holders of record held our common stock.
The graph assumes that $100 was invested on December 31, [removed: 2014,] [added: 2015,] with dividends reinvested.
Our peer group includes AAON, Inc., [removed: Ingersoll-Rand plc,] Comfort Systems USA, Inc., [removed: United Technologies Corporation,] Johnson Controls Inc., and Watsco, Inc. Peer group returns are weighted by market capitalization.
[removed: ][added: ]
As of December 31, [removed: 2019, $546] [added: 2020, $446] million is available to repurchase shares under the Share Repurchase Plans.
In the fourth quarter of [removed: 2019,] [added: 2020,] we purchased shares of our common stock as follows:
| | [added: | |] Total Shares Purchased (1) | | | [added: | | |] Average Price Paid per Share (including fees) | | | | [added: | |] Shares Purchased As Part of Publicly Announced Plans | | | [added: | | |] Approximate Dollar Value of Shares that may yet be Purchased Under the Plans (in millions) [removed: (2)] | | [added: |]
(1) [removed: Includes the surrender of 27,703] [added: These] shares of common stock [added: were surrendered] to LII to satisfy employee tax-withholding obligations in connection with the exercise of [removed: vested stock appreciation rights and the vesting of restricted stock units.][added: long-term incentive awards.]
Two companies previously included in the peer group index, Ingersoll-Rand plc and United Technologies Corporation, were removed due to their spin-off transactions during 2020.
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| October 1 through October 31 | | | 3,991 | | | | | | $ | 284.87 | | | | | — | | | | | | 446.0 | | |
| November 1 through November 27 | | | 6,089 | | | | | | 301.55 | | | | | | — | | | | | | 446.0 | | |
| November 28 through December 31 | | | 17,515 | | | | | | 280.11 | | | | | | — | | | | | | 446.0 | | |
| | | | 27,595 | | | | | | | | | | | | — | | | | | | | | |
| | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| October 1 through October 31 | 6,012 | | | $ | 243.91 | | | — | | | 46.0 | |
| November 1 through November 30 | 3,910 | | | 251.04 | | | | — | | | 46.0 | |
| December 1 through December 31 | 17,781 | | | 260.39 | | | | — | | | 546.0 | |
| | 27,703 | | | | | | | — | | | | |
(2) After $100.0 million, $150.0 million and $150.0 million share repurchases from stock market transactions during the first, second and third quarters, respectively, which were executed pursuant to previously announced Share Repurchase Plans.
See Note 6 in the Notes to the Consolidated Financial Statements for further details.
Item 6. Selected Financial Data
18 rewritten, 4 added, 2 removed, 2 unchanged
The following table presents selected financial data for each of the five years ended December 31, [removed: 2019] [added: 2020] to [removed: 2015] [added: 2016] (in millions, except per share data):
| | [added: | |] For the Years Ended December 31, | | | | | | | | | | | | | | | | | | | [added: | | | | | | | |]
| | [added: | | 2020 | | | | | |] 2019 | | | | [added: | |] 2018 | | | | [removed: 2017] | | [added: 2017] | | [removed: 2016] | | | | [removed: 2015] [added: 2016] | | |
| Statements of Operations Data: | | | | | | | | | | | | | | | | | | | | [added: | | | | | | | | | |]
| Net Sales | [added: | |] $ | [removed: 3,807.2] [added: 3,634.1] | | | [added: | |] $ | [removed: 3,883.9] [added: 3,807.2] | | | [added: | |] $ | [removed: 3,839.6] [added: 3,883.9] | | | [added: | |] $ | [removed: 3,641.6] [added: 3,839.6] | | | [added: | |] $ | [removed: 3,467.4] [added: 3,641.6] | |
| Operating Income | [added: | | 478.5 | | | | | |] 656.9 | | | | [added: | |] 509.9 | | | | [removed: 494.5] | | [added: 494.5] | | [removed: 429.4] | | | | [removed: 305.4] [added: 429.4] | | |
| Income From Continuing Operations | [added: | | 357.1 | | | | | |] 408.8 | | | | [added: | |] 360.3 | | | | [removed: 307.1] | | [added: 307.1] | | [removed: 278.6] | | | | [removed: 187.2] [added: 278.6] | | |
| Net Income | [added: | | 356.3 | | | | | |] 408.7 | | | | [added: | |] 359.0 | | | | [removed: 305.7] | | [added: 305.7] | | [removed: 277.8] | | | | [removed: 186.6] [added: 277.8] | | |
| Basic Earnings Per Share From Continuing Operations | [added: | | 9.32 | | | | | |] 10.49 | | | | [added: | |] 8.87 | | | | [removed: 7.28] | | [added: 7.28] | | [removed: 6.41] | | | | [removed: 4.17] [added: 6.41] | | |
| Diluted Earnings Per Share From Continuing Operations | [added: | | 9.26 | | | | | |] 10.38 | | | | [added: | |] 8.77 | | | | [removed: 7.17] | | [added: 7.17] | | [removed: 6.34] | | | | [removed: 4.11] [added: 6.34] | | |
| Cash Dividends Declared Per Share | [added: | | 3.08 | | | | | |] 2.95 | | | | [added: | |] 2.43 | | | | [removed: 1.96] | | [added: 1.96] | | [removed: 1.65] | | | | [removed: 1.38] [added: 1.65] | | |
| Other Data: | | | | | | | | | | | | | | | | | | | | [added: | | | | | | | | | |]
| Capital Expenditures | [added: | |] $ | [removed: 105.6] [added: 78.5] | | | [added: | |] $ | [removed: 95.2] [added: 105.6] | | | [added: | |] $ | [removed: 98.3] [added: 95.2] | | | [added: | |] $ | [removed: 84.3] [added: 98.3] | | | [added: | |] $ | [removed: 69.9] [added: 84.3] | |
| Research and Development Expenses | [added: | | 66.8 | | | | | |] 69.9 | | | | [added: | |] 72.2 | | | | [removed: 73.6] | | [added: 73.6] | | [removed: 64.6] | | | | [removed: 62.3] [added: 64.6] | | |
| Balance Sheet Data at Period End: | | | | | | | | | | | | | | | | | | | | [added: | | | | | | | | | |]
| Total Assets | [added: | |] $ | [removed: 2,034.9] [added: 2,032.5] | | | [added: | |] $ | [removed: 1,817.2] [added: 2,034.9] | | | [added: | |] $ | [removed: 1,891.5] [added: 1,817.2] | | | [added: | |] $ | [removed: 1,760.3] [added: 1,891.5] | | | [added: | |] $ | [removed: 1,677.4] [added: 1,760.3] | |
| Total Debt | [added: | | 980.6 | | | | | |] 1,171.2 | | | | [added: | |] 1,041.3 | | | | [removed: 1,004.0] | | [added: 1,004.0] | | [removed: 868.2] | | | | [removed: 741.1] [added: 868.2] | | |
| Stockholders’ (Deficit) Equity | [removed: (170.2] | | [removed: )] [added: (17.1)] | | [removed: (149.6] | | [removed: )] | | [removed: 50.1] [added: (170.2)] | | | | [removed: 38.0] | | [added: (149.6)] | | [removed: 101.6] | | | [added: | 50.1 | | | | | | 38.0 | | |]
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Item 8. Financial Statements and Supplementary Data
803 rewritten, 380 added, 354 removed, 685 unchanged
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: 2019,] [added: 2020,] 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: 2019,] [added: 2020,] 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: 2019,] [added: 2020,] 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: 2019] [added: 2020] and [removed: 2018,] [added: 2019,] the related consolidated statements of operations, comprehensive (loss) income, stockholders’ (deficit) equity, and cash flows for each of the years in the three-year period ended December 31, [removed: 2019,] [added: 2020,] and the related notes and Schedule II [removed: -] [added: –] 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: 2019,] [added: 2020,] based on criteria established in *Internal Control [removed: -] [added: –] 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: 2019] [added: 2020] and [removed: 2018,] [added: 2019,] and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, [removed: 2019,] [added: 2020,] 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: 2019,] [added: 2020] based on criteria established in *Internal Control [removed: -] [added: –] Integrated Framework (2013)* issued by the Committee of Sponsoring Organizations of the Treadway Commission.
*Change in Accounting [removed: Principles*][added: Principle*]
As discussed in Note 2 to the consolidated financial statements, the Company [removed: has] changed its method of accounting for leases as of January 1, 2019 due to the adoption of Accounting Standards Update (ASU) No. 2016-02, *Leases (Topic 842)*, as amended.
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 [removed: expenditures of the company are]
[added: expenditures of the company are] 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.
The Company’s product warranty liability was [removed: $113] [added: $120] million as of December 31, [removed: 2019.][added: 2020.]
The [added: following are the] primary procedures we performed to address this critical audit [removed: matter included the following.][added: matter.]
We [added: evaluated the design and] tested [added: the operating effectiveness of] certain internal controls over the Company’s estimate of the future failure rates by product category and controls to estimate the cost of failures by product category for products subject to warranty.
[removed: February 18, 2020][added: | | | | | | | | | | | | | | | | 2020 | | | | | | | | |]
[removed: | LENNOX INTERNATIONAL INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS] (In millions, except shares and par values) [removed: | | | | | | | |]
| | [added: | |] As of December 31, | | | | | | | [added: | |]
| | [added: | | 2020 | | | | | |] 2019 | | | | [added: | |] 2018 | | |
| ASSETS | | | | | | | | [added: | | | |]
| Current Assets: | | | | | | | | [added: | | | |]
| Cash and cash equivalents | [added: | |] $ | [removed: 37.3] [added: 123.9] | | | [added: | |] $ | [removed: 46.3] [added: 37.3] | |
| Short-term investments | [removed: 2.9] | | [added: 5.1] | | [removed: —] | | | [added: | 2.9 | | |]
| Accounts and notes receivable, net of allowances of [removed: $6.1] [added: $9.6] and [removed: $6.3] [added: $6.1] in [removed: 2019] [added: 2020] and [removed: 2018,] [added: 2019,] respectively | [removed: 477.8] | | [added: 448.3] | | [removed: 472.7] | | | [added: | 477.8 | | |]
| Inventories, net | [removed: 544.1] | | [added: 439.4] | | [removed: 509.8] | | | [added: | 544.1 | | |]
| Other assets | [removed: 58.8] | | [added: 70.9] | | [removed: 60.6] | | | [added: | 58.8 | | |]
| Total current assets | [removed: 1,120.9] | | [added: 1,087.6] | | [removed: 1,089.4] | | | [added: | 1,120.9 | | |]
| Property, plant and equipment, net of accumulated depreciation of [removed: $824.3] [added: $880.6] and [removed: $778.5] [added: $824.3] in [removed: 2019] [added: 2020] and [removed: 2018,] [added: 2019,] respectively | [removed: 445.4] | | [added: 464.3] | | [removed: 408.3] | | | [added: | 445.4 | | |]
| Right-of-use assets from operating leases | [removed: 181.6] | | [added: 194.4] | | [removed: —] | | | [added: | 181.6 | | |]
| Goodwill | [removed: 186.5] | | [added: 186.9] | | [removed: 186.6] | | | [added: | 186.5 | | |]
| Deferred income taxes | [removed: 21.5] | | [added: 13.2] | | [removed: 67.0] | | | [added: | 21.5 | | |]
| Other assets, net | [removed: 79.0] | | [added: 86.1] | | [removed: 65.9] | | | [added: | 79.0 | | |]
| Total assets | [added: | |] $ | [added: 2,032.5 | | | | | $ |] 2,034.9 | | | [added: | |] $ | 1,817.2 | |
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | | | | | | | | [added: | | | |]
| Current Liabilities: | | | | | | | | [added: | | | |]
| Current maturities of long-term debt | [removed: 321.9] | | [added: 9.9] | | [removed: 300.8] | | | [added: | 321.9 | | |]
| Current operating lease liabilities | [removed: 52.7] | | [added: 55.0] | | [removed: —] | | | [added: | 52.7 | | |]
| Accounts payable | [removed: 372.4] | | [added: 340.3] | | [removed: 433.3] | | | [added: | 372.4 | | |]
| Accrued expenses | [removed: 255.7] | | [added: 296.1] | | [removed: 272.3] | | | [added: | 255.7 | | |]
| Total current liabilities | [removed: 1,002.7] | | [added: 701.3] | | [removed: 1,008.5] | | | [added: | 1,002.7 | | |]
| Long-term debt | [removed: 849.3] | | [added: 970.7] | | [removed: 740.5] | | | [added: | 849.3 | | |]
February 16, 2021
| | | | 2020 | | | | | | 2019 | | |
CONSOLIDATED STATEMENTS OF OPERATIONS
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| Income tax (benefit) expense | | | (0.7) | | | | | | — | | | | | | 2.1 | | |
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LENNOX INTERNATIONAL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
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| Share of equity method investments other comprehensive income | | | (1.2) | | | | | | — | | | | | | — | | |
LENNOX INTERNATIONAL INC. AND SUBSIDIARIES
(In millions, except per share data)
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| Cumulative effect adjustment upon adoption of new accounting standard (ASU 2016-13) | | | | | | — | | | | | | — | | | | | | (1.3) | | | | | | — | | | | | | — | | | | | | — | | | | | | | | | | | | (1.3) | | |
| Share of equity method investments other comprehensive income | | | | | | — | | | | | | — | | | | | | — | | | | | | (1.2) | | | | | | — | | | | | | — | | | | | | | | | | | | (1.2) | | |
| Balance as of December 31, 2020 | | | | | | $ | 0.9 | | | | | $ | 1,113.2 | | | | | $ | 2,385.8 | | | | | $ | (97.2) | | | | | 48.8 | | | | | | $ | (3,419.8) | | | | | | | | | | | $ | (17.1) | |
LENNOX INTERNATIONAL INC. AND SUBSIDIARIES
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| Loss on sale of business | | | — | | | | | | 10.6 | | | | | | 27.0 | | |
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In
Impact of COVID-19 Pandemic
COVID-19 surfaced in late 2019 and has spread around the world, including to the United States.
In March 2020, the World Health Organization declared COVID-19 a pandemic.
The COVID-19 pandemic has disrupted our business operations and caused a significant unfavorable impact on our results of operations.
In response to the COVID-19 pandemic, various national, state, and local governments where we, our suppliers, and our customers operate issued decrees prohibiting certain businesses from continuing to operate and certain classes of workers from reporting to work.
As discussed in Note 9 to the consolidated financial statements, the Company has changed its method of accounting for revenue from contracts with customers as of January 1, 2018 due to the adoption of Accounting Standards Update (ASU) No. 2014-09, *Revenue from Contracts with Customers (Topic 606)*, as amended.
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| Income taxes payable | — | | | | 2.1 | | |
| LENNOX INTERNATIONAL INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (In millions, except per share data) | | | | | | | | | | | |
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| Balance as of December 31, 2016 | | $ | 0.9 | | | $ | 1,046.2 | | | $ | 1,353.0 | | | $ | (195.1 | ) | | 44.2 | | | $ | (2,167.4 | ) | | $ | 0.4 | | | $ | 38.0 | |
| Change in fair value of available-for-sale marketable equity securities | | — | | | | — | | | | — | | | | (0.5 | | ) | | — | | | — | | | | — | | | | (0.5 | | ) |
| Additional investment in subsidiary | | — | | | | — | | | | — | | | | — | | | | — | | | — | | | | (0.4 | | ) | | (0.4 | | ) |
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| --- | --- |
| Deferred financing costs | Effective interest method |
In assessing the fair
Volatile equity, foreign currency and commodity
The adoption of ASC 842 had a material impact on our Consolidated Balance Sheet due to the recognition of operating lease liabilities and the corresponding right-of-use assets.
Refer to Note 5 of the Notes to the Consolidated Financial Statements for additional information.
We are currently assessing the impact of ASU 2016-13, but do not expect it to have a material impact on our financial statements.
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| • | Insurance recoveries received for property damage incurred from natural disaster, and |
Assets
| Net income | $ | 408.7 | | | $ | 359.0 | | | $ | 305.7 | |
We adopted ASC 842 on January 1, 2019, using the modified retrospective method, with the cumulative-effect adjustment to the opening balance sheet of retained earnings as of the effective date.
The financial results reported in periods prior to January 1, 2019 are unchanged.
Upon adoption, we recognized almost all of our leases greater than one year in duration on the balance sheet as right-of-use assets and lease liabilities.
For income statement purposes, the FASB retained a dual model, requiring leases to be classified as either operating or finance.
Classification is based on criteria that are largely similar to those previously applied.
We have made certain assumptions in judgments when applying ASC 842.
Those judgments of most significance are as follows:
| • | We elected the package of practical expedients available for transition which allow us to not reassess: |
| ◦ | Whether expired or existing contracts contain leases under the new definition of a lease; |
| ◦ | Lease classification for expired or existing leases; and |
| ◦ | Whether previously capitalized initial direct costs would qualify for capitalization under ASC 842. |
| • | We did not elect to use hindsight for transition when considering judgments and estimates such as assessments of lessee options to extend or terminate a lease or purchase the underlying asset. |
| • | We did not elect to reassess whether land easements meet the definition of a lease if they were not accounted for as leases under the former rules. |
| • | For all asset classes, we elected to not recognize a right-of-use asset and lease liability for leases with a term of 12 months or less. |
| • | For all asset classes, we elected to not separate non-lease components from lease components to which they relate and have accounted for the combined lease and non-lease components as a single lease component. |
An excerpt. Shown here: 40 of 803 rewritten, 40 of 380 added and 40 of 354 removed. The counts are complete. For every sentence, read Item 8. Financial Statements and Supplementary Data in the FY2020 filing and the FY2019 filing.
Item 9A. Controls and Procedures
2 rewritten, 0 added, 1 removed, 9 unchanged
Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of December 31, [removed: 2019,] [added: 2020,] 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 [removed: other] changes [added: during the year ended December 31, 2020] in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
In the first quarter of 2019, we implemented new controls as part of our efforts to adopt ASU 2016-02, including 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.
Item 11. Executive Compensation
1 rewritten, 0 added, 0 removed, 0 unchanged
Incorporated herein by reference from the Company’s definitive proxy statement, which will be filed no later than 120 days after December 31, [removed: 2019.][added: 2020.]
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
1 rewritten, 0 added, 0 removed, 1 unchanged
Incorporated herein by reference from the Company’s definitive proxy statement, which will be filed no later than 120 days after December 31, [removed: 2019.][added: 2020.]
Item 13. Certain Relationships and Related Transactions and Director Independence
1 rewritten, 0 added, 0 removed, 0 unchanged
Incorporated herein by reference from the Company’s definitive proxy statement, which will be filed no later than 120 days after December 31, [removed: 2019.][added: 2020.]
Item 14. Principal Accounting Fees and Services
1 rewritten, 0 added, 0 removed, 1 unchanged
Incorporated herein by reference from the Company’s definitive proxy statement, which will be filed no later than 120 days after December 31, [removed: 2019.][added: 2020.]
Item 15. Exhibits and Financial Statement Schedules
45 rewritten, 9 added, 14 removed, 7 unchanged
[removed: | • |] [added: -] Report of Independent Registered Public Accounting Firm [removed: |]
[removed: | • |] [added: -] Consolidated Balance Sheets as of December 31, [removed: 2019] [added: 2020] and [removed: 2018 |][added: 2019]
[removed: | • |] [added: -] Consolidated Statements of Operations for the Years Ended December 31, [removed: 2019, 2018] [added: 2020, 2019] and [removed: 2017 |][added: 2018]
[removed: | • |] [added: -] Consolidated Statements of Comprehensive Income for the Years Ended December 31, [removed: 2019, 2018] [added: 2020, 2019] and [removed: 2017 |][added: 2018]
[removed: | • |] [added: -] Consolidated Statements of Stockholders’ (Deficit) Equity for the Years Ended December 31, [removed: 2019, 2018] [added: 2020, 2019] and [removed: 2017 |][added: 2018]
[removed: | • |] [added: -] Consolidated Statements of Cash Flows for the Years Ended December 31, [removed: 2019, 2018] [added: 2020, 2019] and [removed: 2017 |][added: 2018]
[removed: | • |] [added: -] Notes to the Consolidated Financial Statements for the Years Ended December 31, [removed: 2019, 2018] [added: 2020, 2019] and [removed: 2017 |][added: 2018]
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: 2019, 2018] [added: 2020, 2019] and [removed: 2017] [added: 2018] (see Schedule II immediately following the signature page of this Annual Report on Form 10-K).
| 3.1 | [added: | |] [Restated Certificate of Incorporation of Lennox International Inc. (“LII”) (filed as Exhibit 3.1 to LII’s Registration Statement on Form S-1 (Registration Statement No. 333-75725) filed on April 6, 1999 and incorporated herein by reference).](http://www.sec.gov/Archives/edgar/data/1069202/0000950134-99-002720-index.html) | [added: | |]
| 3.2 | [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 reference).](http://www.sec.gov/Archives/edgar/data/1069202/000119312513474576/d644537d8k.htm) | [added: | |]
| 4.2 | [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 reference).](http://www.sec.gov/Archives/edgar/data/1017609/000095012310042399/d72548exv4w3.htm) | [added: | |]
| 4.3 | [removed: [Form of First] [added: | | [Sixth] Supplemental [removed: Indenture] [added: Indenture, dated as of November 3, 2016,] among LII, [added: each other existing Guarantor under] the [removed: guarantors party thereto] [added: Indenture, dated as of May 3, 2010, as subsequently supplemented,] and [removed: U.S.] [added: US] Bank National Association, as trustee (filed as Exhibit [removed: 4.11] [added: 4.2] to LII’s [removed: Post-Effective Amendment No. 1 to Registration Statement] [added: Current Report] on [removed: S-3 (Registration No. 333-155796)] [added: Form 8-K] filed on [removed: May] [added: November] 3, [removed: 2010,] [added: 2016,] and incorporated herein by [removed: reference)](http://www.sec.gov/Archives/edgar/data/1017609/000095012310042399/d72548exv4w11.htm).] [added: reference).](http://www.sec.gov/Archives/edgar/data/1069202/000119312516758285/d284193dex42.htm)] | [added: | |]
| [removed: 4.4] [added: 4.6] | [removed: [Sixth] [added: | | [Ninth] Supplemental Indenture, dated [removed: as of November 3, 2016,] [added: July 30, 2020,] among LII, each [removed: other] existing Guarantor under the Indenture, dated as of May 3, 2010, as subsequently supplemented, and [removed: US] [added: U.S.] Bank National Association, as trustee (filed as Exhibit 4.2 to LII’s Current Report on Form 8-K filed on [removed: November 3, 2016,] [added: July 30, 2020,] and incorporated herein by [removed: reference).](http://www.sec.gov/Archives/edgar/data/1069202/000119312516758285/d284193dex42.htm)] [added: reference).](http://www.sec.gov/Archives/edgar/data/1069202/000119312520203588/d22651dex42.htm)] | [added: | |]
| 4.5 | [removed: [Seventh] [added: | | [Eighth] Supplemental Indenture, dated as of [removed: January 23, 2019,] [added: May 22, 2020,] among [removed: LII Mexico Holdings Ltd.,] Lennox [added: Switzerland GmbH, Lennox] International Inc., 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 [removed: 4.5] [added: 4.7] to LII’s [removed: Annual] [added: Quarterly] Report on Form [removed: 10-K] [added: 10-Q] filed on [removed: February 19,2019] [added: July 20, 2020] and incorporated herein by [removed: reference).](http://www.sec.gov/Archives/edgar/data/1069202/000106920219000008/lii-ex45_20181231x10k.htm)] [added: reference)](http://www.sec.gov/Archives/edgar/data/1069202/000106920220000039/lii-ex472020lennoxeigh.htm)[.](http://www.sec.gov/Archives/edgar/data/1069202/000106920220000039/lii-ex472020lennoxeigh.htm)] | [added: | |]
| [removed: 4.6] [added: 4.4] | [added: | |] [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 herein by reference).](http://www.sec.gov/Archives/edgar/data/1069202/000119312516758285/d284193dex42.htm) | [added: | |]
| [removed: 4.7] [added: 4.9] | [added: | |] [Description of Securities (filed [removed: herewith).](https://www.sec.gov/Archives/edgar/data/1069202/000106920220000004/lii-ex4720191231x10k.htm)] [added: herewith)](https://www.sec.gov/Archives/edgar/data/1069202/000106920221000007/lii-ex49_20201231x10k.htm)] | [added: | |]
| 10.1 | [removed: [Sixth] [added: | | [Seventh] Amended and Restated Credit Facility [removed: Agreement] [added: Agreement,] dated as of [removed: August] [added: July] 30, [removed: 2016,] [added: 2020,] among Lennox International Inc., a Delaware corporation, the Lenders party thereto, and JPMorgan Chase Bank, N.A., as Administrative Agent (filed as [removed: Exhibit 10.1] [added: Exhibit](http://www.sec.gov/Archives/edgar/data/1069202/000119312520203588/d22651dex101.htm) [10.1] to [removed: LII's] [added: LII’s] Current Report on Form 8-K filed on [removed: September 2, 2016] [added: July 30, 2020,] and incorporated herein by [removed: reference)](http://www.sec.gov/Archives/edgar/data/1069202/000119312516700842/d247473dex101.htm)] [added: reference).](http://www.sec.gov/Archives/edgar/data/1069202/000119312520203588/d22651dex101.htm)] | [added: | |]
| [removed: 10.4] [added: 10.3] | [removed: [Third Amendment (Incremental Amendment)] [added: | | [Amendment No. 10] to [removed: Sixth] Amended and Restated [removed: Credit Facility Agreement] [added: Receivables Purchase Agreement,] dated as of [removed: January 22,] [added: November 13,] 2019, among [added: LPAC Corp., as the Seller,] Lennox [added: Industries Inc., as the Master Servicer, Lennox] International Inc., [added: Victory Receivables Corporation, as] a [removed: Delaware corporation,] [added: Purchaser, MUFG Bank, Ltd., formerly known as The Bank of Tokyo-Mitsubishi UFJ, Ltd., as administrative agent for] the [removed: lenders from time to time party thereto,] [added: Investors, the purchaser agent for the MUFG Purchaser Group] and [removed: J.P.Morgan Chase] [added: a MUFG Liquidity] Bank, [added: Wells Fargo Bank,] N.A., as [removed: Administrative Agent] [added: the purchaser agent for the WFB Purchaser Group and a WFB Liquidity Bank, and PNC Bank, N.A., as the purchaser agent for the PNC Purchaser Group and a PNC Liquidity Bank, including attachments] (filed as Exhibit 10.1 to LII’s Current Report on Form 8-K filed on [removed: January 25,] [added: November 19,] 2019, and incorporated herein by [removed: reference).](http://www.sec.gov/Archives/edgar/data/1069202/000106920219000002/exhibit10120188k.htm)] [added: reference).](http://www.sec.gov/Archives/edgar/data/1069202/000119312519295555/d822980dex101.htm)] | [added: | |]
| [removed: 10.5] [added: 10.2] | [added: | |] [Form of [removed: Sixth] [added: Seventh] Amended and Restated Subsidiary [removed: Guarantee] [added: Guaranty] Agreement for the [removed: Sixth] [added: Seventh] Amended and Restated Credit Facility dated as of [removed: August] [added: July] 30, [removed: 2016] [added: 2020] signed by Allied Air Enterprises LLC, Advanced Distributor Products LLC, Heatcraft Inc., Heatcraft Refrigeration Products LLC, Lennox Global [removed: Ltd.,] [added: LLC,] Lennox Industries Inc., LGL Australia (US) Inc., Lennox National Account Services [removed: LLC and] [added: LLC,] LGL Europe Holding Co. [added: and Lennox Switzerland GmbH] (filed as Exhibit C in Exhibit 10.1 to LII's Current Report on Form 8-K filed on [removed: September 2, 2016] [added: July 30, 2020] and incorporated herein by [removed: reference).](http://www.sec.gov/Archives/edgar/data/1069202/000119312516700842/d247473dex101.htm)] [added: reference)](http://www.sec.gov/Archives/edgar/data/1069202/000119312520203588/d22651dex101.htm)] | [added: | |]
| [removed: 10.17*] [added: 10.4*] | [added: | |] [Lennox International Inc. 2019 Equity and Incentive Compensation Plan (filed as Exhibit 10.1 to LII’s Current Report on Form 8-K filed on May 24, 2019, and incorporated herein by reference).](http://www.sec.gov/Archives/edgar/data/1069202/000119312519157041/d752008dex101.htm) | [added: | |]
| [removed: 10.18*] [added: 10.5*] | [added: | |] [Form of Long-Term Incentive Award Agreement for U.S. Employees - Vice President and Above (for use under the 2019 Incentive [removed: Plan) (filed herewith).](https://www.sec.gov/Archives/edgar/data/1069202/000106920220000004/lii-ex101820191231x10k.htm)] [added: Plan)](http://www.sec.gov/Archives/edgar/data/1069202/000106920220000004/lii-ex101820191231x10k.htm) [(filed as Exhibit 10.18 to LII’s Annual Report on Form 10-K filed on February 18,2020 and incorporated herein by reference).](http://www.sec.gov/Archives/edgar/data/1069202/000106920220000004/lii-ex101820191231x10k.htm)] | [added: | |]
| [removed: 10.19*] [added: 10.6*] | [added: | |] [Form of Restricted Stock Unit Award Agreement for Non-Employee Directors (for use under the 2019 Incentive [removed: Plan) (filed herewith).](https://www.sec.gov/Archives/edgar/data/1069202/000106920220000004/lii-ex101920191231x10k.htm)] [added: Plan)](http://www.sec.gov/Archives/edgar/data/1069202/000106920220000004/lii-ex101920191231x10k.htm) [(filed as Exhibit 10.1](http://www.sec.gov/Archives/edgar/data/1069202/000106920220000004/lii-ex101920191231x10k.htm)[9](http://www.sec.gov/Archives/edgar/data/1069202/000106920220000004/lii-ex101920191231x10k.htm) [to LII’s Annual Report on Form 10-K filed on February 18,2020 and incorporated herein by reference).](http://www.sec.gov/Archives/edgar/data/1069202/000106920220000004/lii-ex101920191231x10k.htm)] | [added: | |]
| [removed: 10.20*] [added: 10.7*] | [added: | |] [Form of Short-Term Incentive Program for Lennox International Inc. and its [removed: Subsidiaries (filed herewith).](https://www.sec.gov/Archives/edgar/data/1069202/000106920220000004/lii-ex102020191231x10k.htm)] [added: Subsidiaries](http://www.sec.gov/Archives/edgar/data/1069202/000106920220000004/lii-ex102020191231x10k.htm) [(filed as Exhibit 10.20 to LII’s Annual Report on Form 10-K filed on February 18,2020 and incorporated herein by reference)](http://www.sec.gov/Archives/edgar/data/1069202/000106920220000004/lii-ex102020191231x10k.htm)[.](http://www.sec.gov/Archives/edgar/data/1069202/000106920220000004/lii-ex102020191231x10k.htm)] | [added: | |]
| [removed: 10.21*] [added: 10.8*] | [added: | |] [Lennox International Inc. Profit Sharing Restoration Plan, as amended and restated as of January 1, 2009 (filed as Exhibit 10.3 to LII's Current Report on Form 8-K filed on December 17, 2008 and incorporated herein by reference).](http://www.sec.gov/Archives/edgar/data/1069202/000136231008008300/c78431exv10w3.htm) | [added: | |]
| [removed: 10.22*] [added: 10.9*] | [added: | |] [Lennox International Inc. Supplemental Retirement Plan, as amended and restated as of January 1, 2009 (filed as Exhibit 10.2 to LII's Current Report on Form 8-K filed on December 17, 2008 and incorporated herein by reference).](http://www.sec.gov/Archives/edgar/data/1069202/000136231008008300/c78431exv10w2.htm) | [added: | |]
| [removed: 10.23*] [added: 10.10*] | [added: | |] [Amendment Number One to the Lennox International Inc. Supplemental Retirement Plan, as amended and restated as of January 1, 2009, dated December 28, 2018 (filed as Exhibit 10.23 to LII’s Annual Report on Form 10-K filed on February 19,2019 and incorporated herein by reference).](http://www.sec.gov/Archives/edgar/data/1069202/000106920219000008/lii-ex1023_20181231x10k.htm) | [added: | |]
| [removed: 10.24*] [added: 10.11*] | [added: | |] [Lennox International Inc. Supplemental Restoration Retirement Plan, effective as of January 1, 2019, dated December 28, 2018 (filed as Exhibit 10.24 to LII’s Annual Report on Form 10-K filed on February 19,2019 and incorporated herein by reference).](http://www.sec.gov/Archives/edgar/data/1069202/000106920219000008/lii-ex1024_20181231x10k.htm) | [added: | |]
| [removed: 10.25*] [added: 10.12*] | [added: | |] [Form of Indemnification Agreement entered into between LII and certain executive officers and directors of LII (filed as Exhibit 10.15 to LII’s Registration Statement on Form S-1 (Registration No. 333-75725) filed on April 6, 1999 and incorporated herein by reference).](http://www.sec.gov/Archives/edgar/data/1069202/0000950134-99-002720-index.html) | [added: | |]
| [removed: 10.26*] [added: 10.13*] | [added: | |] [Form of Employment Agreement entered into between LII and certain executive officers of LII (filed as Exhibit 10.30 to LII's Annual Report on Form 10-K filed on February 27, 2007 and incorporated herein by reference).](http://www.sec.gov/Archives/edgar/data/1069202/000095013407004266/d43577exv10w30.htm) | [added: | |]
| [removed: 10.27*] [added: 10.14*] | [added: | |] [Form of Amendment to Employment Agreement entered into between LII and certain executive officers of LII (filed as Exhibit 10.2 to LII's Current Report on Form 8-K filed on December 12, 2007 and incorporated herein by reference).](http://www.sec.gov/Archives/edgar/data/1069202/000136231007003352/c71756exv10w2.htm) | [added: | |]
| [removed: 10.28*] [added: 10.15*] | [added: | |] [Form of Change of Control Agreement entered into between LII and certain executive officers of LII (filed as Exhibit 10.1 to LII's Current Report on Form 8-K filed on July 17, 2012 and incorporated herein by reference).](http://www.sec.gov/Archives/edgar/data/1069202/000119312512304640/d381083dex101.htm) | [added: | |]
| [removed: 10.29*] [added: 10.16*] | [added: | |] [Form of Change of Control Employment Agreement entered into between LII and certain executive officers of LII (filed as Exhibit 10.1 to LII's Current Report on Form 8-K filed on December 17, 2008 and incorporated herein by reference).](http://www.sec.gov/Archives/edgar/data/1069202/000136231008008300/c78431exv10w1.htm) | [added: | |]
| [removed: 10.30*] [added: 10.17*] | [added: | |] [Lennox International Inc. Directors' Retirement Plan (as Amended and Restated as of January 1, 2010) (filed as Exhibit 10.1 to LII's Current Report on Form 8-K filed on December 16, 2009 and incorporated herein by reference).](http://www.sec.gov/Archives/edgar/data/1069202/000095012309071289/c93749exv10w1.htm) | [added: | |]
| 21.1 | [added: | |] [Subsidiaries of LII (filed [removed: herewith).](https://www.sec.gov/Archives/edgar/data/1069202/000106920220000004/lii-ex21120191231x10k.htm)] [added: herewith).](https://www.sec.gov/Archives/edgar/data/1069202/000106920221000007/lii-ex211_20201231x10k.htm)] | [added: | |]
| 23.1 | [added: | |] [Consent of KPMG LLP (filed [removed: herewith).](https://www.sec.gov/Archives/edgar/data/1069202/000106920220000004/lii-ex23120191231x10k.htm)] [added: herewith).](https://www.sec.gov/Archives/edgar/data/1069202/000106920221000007/lii-ex231_20201231x10k.htm)] | [added: | |]
| 31.1 | [added: | |] [Certification of the principal executive officer (filed [removed: herewith).](https://www.sec.gov/Archives/edgar/data/1069202/000106920220000004/lii-ex31120191231x10k.htm)] [added: herewith).](https://www.sec.gov/Archives/edgar/data/1069202/000106920221000007/lii-ex311_20201231x10k.htm)] | [added: | |]
| 31.2 | [added: | |] [Certification of the principal financial officer (filed [removed: herewith).](https://www.sec.gov/Archives/edgar/data/1069202/000106920220000004/lii-ex31220191231x10k.htm)] [added: herewith).](https://www.sec.gov/Archives/edgar/data/1069202/000106920221000007/lii-ex312_20201231x10k.htm)] | [added: | |]
| 32.1 | [added: | |] [Certification of the principal executive officer and the principal financial officer pursuant to 18 U.S.C. Section 1350 (furnished [removed: herewith).](https://www.sec.gov/Archives/edgar/data/1069202/000106920220000004/lii-ex32120191231x10k.htm)] [added: herewith).](https://www.sec.gov/Archives/edgar/data/1069202/000106920221000007/lii-ex321_20201231x10k.htm)] | [added: | |]
| 101 | [added: | |] SCH Inline XBRL Taxonomy Extension Schema Document | [added: | |]
| 101 | [added: | |] CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document | [added: | |]
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| 4.7 | | | [Form of 1.350% Notes due 2025 (filed as Exhibit A in Exhibit 4.2 to LII’s Current Report on Form 8-K filed on July 30, 2020, and incorporated herein by reference)](http://www.sec.gov/Archives/edgar/data/1069202/000119312520203588/d22651dex42.htm)[.](http://www.sec.gov/Archives/edgar/data/1069202/000119312520203588/d22651dex42.htm) | | |
| 4.8 | | | [Form of 1.700% Notes due 2027 (filed as Exhibit B in Exhibit 4.2 to LII’s Current Report on Form 8-K filed on July 30, 2020, and incorporated herein by reference](http://www.sec.gov/Archives/edgar/data/1069202/000119312520203588/d22651dex42.htm)). | | |
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| 22.1 | | | [List of Guarantor Subsidiaries](https://www.sec.gov/Archives/edgar/data/1069202/000106920221000007/lii-exhibit22120201231x10k.htm) | | |
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| 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) |
| 10.3 | [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 herein by reference).](http://www.sec.gov/Archives/edgar/data/1069202/000106920218000009/lii-ex102xsecondamendmentt.htm) |
| 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) |
| 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) |
| 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) |
| 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) |
| 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). |
| 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) |
| 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 herein 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 herein by reference).](http://www.sec.gov/Archives/edgar/data/1069202/000106920218000020/liiex101_2018930-10q.htm) |
| 10.14 | [Amendment No. 9 to Amended and Restated Receivables Purchase Agreement, dated as of February 15, 2019, among LPAC Corp., as the Seller, Lennox Industries Inc., as the Master Servicer, Lennox International Inc., Victory Receivables Corporation, as a Purchaser, MUFG Bank, Ltd., formerly known as The Bank of Tokyo-Mitsubishi UFJ, Ltd., as administrative agent for the Investors, the purchaser agent for the MUFG Purchaser Group and a MUFG Liquidity Bank, Wells Fargo Bank, N.A., as the purchaser agent for the WFB Purchaser Group and a WFB Liquidity Bank, and PNC Bank, N.A., as the purchaser agent for the PNC Purchaser Group and a PNC Liquidity Bank, including attachments (filed herewith).](https://www.sec.gov/Archives/edgar/data/1069202/000106920220000004/lii-ex101420191231x10k.htm) |
| 10.15 | [Amendment No. 10 to Amended and Restated Receivables Purchase Agreement, dated as of November 13, 2019, among LPAC Corp., as the Seller, Lennox Industries Inc., as the Master Servicer, Lennox International Inc., Victory Receivables Corporation, as a Purchaser, MUFG Bank, Ltd., formerly known as The Bank of Tokyo-Mitsubishi UFJ, Ltd., as administrative agent for the Investors, the purchaser agent for the MUFG Purchaser Group and a MUFG Liquidity Bank, Wells Fargo Bank, N.A., as the purchaser agent for the WFB Purchaser Group and a WFB Liquidity Bank, and PNC Bank, N.A., as the purchaser agent for the PNC Purchaser Group and a PNC Liquidity Bank, including attachments (filed as Exhibit 10.1 to LII’s Current Report on Form 8-K filed on November 19, 2019, and incorporated herein by reference).](http://www.sec.gov/Archives/edgar/data/1069202/000119312519295555/d822980dex101.htm) |
An excerpt. Shown here: 40 of 45 rewritten, all 9 added and all 14 removed. The counts are complete. For every sentence, read Item 15. Exhibits and Financial Statement Schedules in the FY2020 filing and the FY2019 filing.
Item 16. . Form 10-K Summary
32 rewritten, 22 added, 8 removed, 13 unchanged
[removed: February 18, 2020][added: | 2020 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |]
| SIGNATURE | | [added: | | | |] TITLE | [added: | |] DATE | [added: | |]
| /s/ TODD M. BLUEDORN | | [added: | | | |] Chief Executive Officer and Chairman of the Board of Directors | [added: | |] February [removed: 18, 2020] [added: 16, 2021] | [added: | |]
| Todd M. Bluedorn | | [added: | | | |] (Principal Executive Officer) | | [added: | | | |]
| /s/ JOSEPH W. REITMEIER | | [added: | | | |] Executive Vice President and Chief Financial Officer | [added: | |] February [removed: 18, 2020] [added: 16, 2021] | [added: | |]
| Joseph W. Reitmeier | | [added: | | | |] (Principal Financial Officer) | | [added: | | | |]
| /s/ CHRIS A. KOSEL | | [added: | | | |] Vice President, Controller and Chief Accounting Officer | [added: | |] February [removed: 18, 2020] [added: 16, 2021] | [added: | |]
| Chris A. Kosel | | [added: | | | |] (Principal Accounting Officer) | | [added: | | | |]
| /s/ TODD J. TESKE | | [added: | | | |] Lead Director | [added: | |] February [removed: 18, 2020] [added: 16, 2021] | [added: | |]
| Todd J. Teske | | | | [added: | | | | | | | |]
| /s/ SHERRY L. BUCK | | [added: | | | |] Director | [added: | |] February [removed: 18, 2020] [added: 16, 2021] | [added: | |]
| Sherry L. Buck | | | | [added: | | | | | | | |]
| /s/ JANET K. COOPER | | [added: | | | |] Director | [added: | |] February [removed: 18, 2020] [added: 16, 2021] | [added: | |]
| Janet K. Cooper | | | | [added: | | | | | | | |]
| /s/ JOHN E. MAJOR | | [added: | | | |] Director | [added: | |] February [removed: 18, 2020] [added: 16, 2021] | [added: | |]
| John E. Major | | | | [added: | | | | | | | |]
| /s/ MAX H. MITCHELL | | [added: | | | |] Director | [added: | |] February [removed: 18, 2020] [added: 16, 2021] | [added: | |]
| Max H. Mitchell | | | | [added: | | | | | | | |]
| /s/ JOHN W. NORRIS, III | | [added: | | | |] Director | [added: | |] February [removed: 18, 2020] [added: 16, 2021] | [added: | |]
| John W. Norris, III | | | | [added: | | | | | | | |]
| /s/ KAREN H. QUINTOS | | [added: | | | |] Director | [added: | |] February [removed: 18, 2020] [added: 16, 2021] | [added: | |]
| Karen. H. Quintos | | | | [added: | | | | | | | |]
| /s/ KIM K.W. RUCKER | | [added: | | | |] Director | [added: | |] February [removed: 18, 2020] [added: 16, 2021] | [added: | |]
| Kim K.W. Rucker | | | | [added: | | | | | | | |]
| /s/ GREGORY T. SWIENTON | | [added: | | | |] Director | [added: | |] February [removed: 18, 2020] [added: 16, 2021] | [added: | |]
| Gregory T. Swienton | | | | [added: | | | | | | | |]
For the Years [removed: Ended December] [added: Ended December] 31, [removed: 2019, 2018 and 2017][added: 2020, 2019 and 2018]
| | [added: | |] Balance at beginning of year | | | | [added: | |] Additions charged to cost and expenses | | | | [added: | |] Write-offs | | | | [added: | |] Recoveries | | | | [added: | |] Other | | | | [added: | |] Balance at end of year | | |
| 2018 | | | | | | | | | | | | | | | | | | | | | | | | [added: | | | | | | | | | | | |]
| Allowance for doubtful accounts | [added: | |] $ | 5.9 | | | [added: | |] $ | 4.8 | | | [added: | |] $ | [removed: (3.7] [added: (3.7)] | [removed: )] | | [added: | |] $ | 0.6 | | | [added: | |] $ | [removed: (1.3] [added: (1.3)] | [removed: )] | | [added: | |] $ | 6.3 | |
| 2019 | | | | | | | | | | | | | | | | | | | | | | | | [added: | | | | | | | | | | | |]
| Allowance for doubtful accounts | [added: | |] $ | 6.3 | | | [added: | |] $ | 4.5 | | | [added: | |] $ | [removed: (4.9] [added: (4.9)] | [removed: )] | | [added: | |] $ | 1.6 | | | [added: | |] $ | [removed: (1.4] [added: (1.4)] | [removed: )] | | [added: | |] $ | 6.1 | |
February 16, 2021
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| /s/ SHANE D. WALL | | | | | | Director | | | February 16, 2021 | | |
| Shane D. Wall | | | | | | | | | | | |
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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Allowance for doubtful accounts | | | $ | 6.1 | | | | | $ | 8.1 | | | | | $ | (4.2) | | | | | $ | 1.2 | | | | | $ | (1.6) | | | | | $ | 9.6 | |
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| /s/ PAUL W. SCHMIDT | | Director | February 18, 2020 |
| Paul W. Schmidt | | | |
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| 2017 | | | | | | | | | | | | | | | | | | | | | | | |
| Allowance for doubtful accounts | $ | 6.7 | | | $ | 3.9 | | | $ | (5.6 | ) | | $ | 0.9 | | | $ | — | | | $ | 5.9 | |