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Lennox International Reports Fourth Quarter Results

- 4Q08 adjusted EPS from continuing operations of $0.52; GAAP EPS from continuing operations of $0.21

- Full year 2008 adjusted EPS from continuing operations of $2.71; GAAP EPS from continuing operations of $2.15

- Full year cash from operations of $183 million and free cash flow of $121 million

- Restructuring initiatives on track and additional measures announced

- Reaffirm 2009 adjusted EPS guidance from continuing operations; GAAP EPS guidance from continuing operations now $1.91 to $2.31

DALLAS, Feb. 5 /PRNewswire-FirstCall/ -- Lennox International Inc. (NYSE: LII) today reported fourth quarter and full year 2008 results. Financial results presented have been adjusted for discontinued operations.

For the fourth quarter, revenue was $746 million, down 15% from the prior year, including a 5 point negative impact from foreign exchange. Adjusted EBIT margin was up 20 basis points to 6.7%. Diluted earnings per share from continuing operations on an adjusted basis, a non-GAAP measure, was $0.52 compared to $0.55 in the year-ago quarter. Diluted earnings per share from continuing operations on a GAAP basis was $0.21 compared to $0.59 in the year-ago quarter.

For the full year, revenue was $3.5 billion, down 7% from the prior year, including a 1 point benefit from foreign exchange. Adjusted EBIT margin was up 10 basis points to 7.6%. Diluted earnings per share from continuing operations on an adjusted basis, a non-GAAP measure, was $2.71 compared to $2.51 in the prior year, up 8%. Diluted earnings per share from continuing operations on a GAAP basis was $2.15 compared to $2.44 in the prior year, down 12%.

"Despite difficult market conditions, Lennox posted improved EBIT margins for both the fourth quarter and full year on strong cost controls and operational execution," said Todd Bluedorn, Chief Executive Officer. "Our cash generation was strong in 2008 and our free cash flow for the full year was $121 million. For 2009, we reaffirm our outlook provided in December of adjusted earnings per share from continuing operations in the range of $2.10 to $2.50. Our GAAP EPS guidance from continuing operations is now a range of $1.91 to $2.31, reflecting additional restructuring initiatives. While the global slowdown can be seen across our end markets, we continue to lower our cost structure and execute on our strategic priorities."

(Note: See attached schedules for full financial details, reconciliations of non-GAAP financial measures, and a description of adjusting items.)

FOURTH QUARTER 2008 FINANCIAL HIGHLIGHTS

Revenue: Revenue for the fourth quarter was $746 million, down 15% from the prior year. At constant currency, revenue was down 10%.

Gross Profit: Gross profit in the fourth quarter was $205 million, down 17% from adjusted gross profit of $247 million in the year-ago quarter, which excludes a $17 million favorable warranty adjustment. Adjusted gross margin declined slightly to 27.5% from 28.0% in the year-ago quarter, primarily due to lower volume and higher commodity costs, with offsets from improved pricing and favorable product mix.

Income from Continuing Operations: For the fourth quarter, adjusted income from continuing operations was $29 million, or $0.52 diluted earnings per share, compared to $36 million, or $0.55 diluted earnings per share from continuing operations in the fourth quarter of 2007. On a GAAP basis, fourth quarter 2008 income from continuing operations was $12 million, or $0.21 diluted earnings per share. Fourth quarter 2007 GAAP income from continuing operations was $39 million, with diluted earnings per share of $0.59.

Adjusted income from continuing operations for the fourth quarter of 2008 excludes net after-tax charges of $17.4 million, which are derived from:

  • $7.7 million charge from restructuring activities
  • $6.9 million charge for impairment of an equity method investment
  • $2.8 million charge primarily from the net change in unrealized losses on open futures contracts

FULL YEAR 2008 FINANCIAL HIGHLIGHTS

Revenue: For the full year, revenue was $3.5 billion, down 7% from the prior year. At constant currency, revenue was down 8%.

Gross Profit: Gross profit for the year was $974 million, down 6% from adjusted gross profit of $1,031 million in the prior year, which excludes a $17 million favorable warranty adjustment. Adjusted gross margin increased 40 basis points to 28.0% compared to 27.6% in the prior year, primarily due to improved pricing and favorable product mix.

Income from Continuing Operations: Adjusted income from continuing operations for the full year was $158 million, or $2.71 diluted earnings per share, compared to $174 million, or $2.51 diluted earnings per share in 2007. On a GAAP basis, income from continuing operations was $125 million, or $2.15 diluted earnings per share, compared to $170 million, or $2.44 diluted earnings per share in 2007.

Adjusted income from continuing operations for 2008 excludes net after tax charges of $33.2 million, which are derived from:

  • $20.7 million charge from restructuring activities
  • $9.1 million charge for impairment of an equity method investment
  • $3.4 million charge primarily from the net change in unrealized losses on open futures contracts

Free Cash Flow and Total Debt: Cash generated from operations for the year was $183 million and the company invested $62 million in capital assets, resulting in free cash flow of $121 million versus $170 million in 2007. Total debt as of December 31, 2008 was $420 million. Total cash, cash equivalents and short-term investments were $156 million, and the current ratio exceeded 1.6.

During 2008, the company returned $344 million to shareholders through share repurchases of $311 million and dividend payments of approximately $33 million. The company repurchased 8,907,650 shares during 2008. The company has $285 million remaining of its outstanding $300 million share repurchase program after buying 603,007 shares in the fourth quarter.

BUSINESS SEGMENT FINANCIAL HIGHLIGHTS

Residential Heating and Cooling

  • 4Q08 revenue of $299 million, down 15% from $354 million in the year-ago quarter; down 13% at constant currency
  • 4Q08 segment profit of $27 million, down 12% from $31 million in 4Q07
  • 4Q08 segment profit margin of 9.1%, up 30 basis points from 8.8% in 4Q07
  • 2008 revenue of $1.5 billion, down 11% from $1.7 billion in 2007, with and without the effect of foreign exchange
  • 2008 segment profit of $146 million, down 16% from $174 million in 2007
  • 2008 profit margin of 9.8%, down 60 basis points from 10.4% in 2007

Fourth quarter and full year results were impacted by lower volume, with offsets from improved pricing, improved product mix, and lower expenses from cost reduction initiatives.

Commercial Heating and Cooling

  • 4Q08 revenue of $189 million, down 16% from $224 million in the year-ago quarter; down 11% at constant currency
  • 4Q08 segment profit of $20 million, down 17% from $24 million in 4Q07
  • 4Q08 segment profit margin of 10.6%, down 30 basis points from 10.9% in 4Q07
  • 2008 revenue of $835 million, down 5% from $875 million in 2007; down 7% at constant currency
  • 2008 segment profit of $93 million, down 8% from $101 million in 2007
  • 2008 profit margin of 11.2%, down 30 basis points from 11.5% in 2007

Fourth quarter and full year results were impacted by lower volume, with offsets from improved pricing and lower expenses from cost reduction initiatives. Product mix was favorable in the fourth quarter but was relatively flat for the full year.

Service Experts (Continuing Operations)

  • 4Q08 revenue of $145 million, down 13% from $166 million in the year-ago quarter; down 8% at constant currency
  • 4Q08 segment profit of $8 million, up 11% from $7 million in 4Q07
  • 4Q08 segment profit margin of 5.3%, up 110 basis points from 4.2% in 4Q07
  • 2008 revenue of $627 million, down 6% from $667 million in 2007, with and without the effect of foreign exchange
  • 2008 segment profit of $20 million, down 23% from $26 million in 2007
  • 2008 profit margin of 3.2%, down 70 basis points from 3.9% in 2007

Fourth quarter and full year results were impacted by lower volume, with offsets from improved pricing, favorable business mix, and lower expenses. In the fourth quarter, the company announced plans to exit from seven unprofitable service centers, which became discontinued operations.

Refrigeration

  • 4Q08 revenue of $131 million, down 17% from $158 million in the year-ago quarter; down 4% at constant currency
  • 4Q08 segment profit of $11 million, down 24% from $15 million in 4Q07
  • 4Q08 segment profit margin of 8.6%, down 90 basis points from 9.5% in 4Q07
  • 2008 revenue of $618 million, up 2% from $608 million in 2007; down 1% at constant currency
  • 2008 segment profit of $60 million, down 2% from $62 million in 2007
  • 2008 profit margin of 9.7%, down 40 basis points from 10.1% in 2007

Fourth quarter and full year results were impacted by lower volume, with offsets from improved pricing and lower expenses from cost reduction initiatives.

2009 FULL YEAR OUTLOOK

The company reaffirms its 2009 outlook originally provided on December 17, 2008, except for a lower GAAP EPS from continuing operations range due to additional restructuring charges expected in the first quarter. The charges relate to the recently announced plans to close the company's Blackville, South Carolina facility.

  • Revenue down 8-12%, including 5 points of negative foreign exchange impact
  • Adjusted EPS from continuing operations in the range of $2.10 to $2.50
  • GAAP EPS from continuing operations in the range of $1.91 to $2.31, down from prior guidance of $2.05 to $2.45
  • Capital expenditures of approximately $80 million
  • Tax rate of 36-37%

CONFERENCE CALL INFORMATION

A conference call to discuss the company's fourth quarter results will be held this morning at 9:30 a.m. (Central). To listen, please call the conference call line at 612-288-0329 at least 10 minutes prior to the scheduled start time and use reservation number 981987. This conference call will also be webcast on Lennox International's web site at http://www.lennoxinternational.com.

A replay will be available from 12:00 p.m. (Central) February 5 through February 12 by dialing 800-475-6701 (USA) or 320-365-3844 (International) using access code 981987. This call will also be archived on the company's web site.

Lennox International Inc. is a global leader in the heating, air conditioning, and refrigeration markets. Lennox International stock is traded on the New York Stock Exchange under the symbol "LII". Additional information is available at: http://www.lennoxinternational.com or by contacting Steve Harrison, vice president, investor relations, at 972-497-6670.

This news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are subject to numerous risks and uncertainties including the impact of higher raw material prices, LII's ability to implement price increases for its products and services, and the impact of unfavorable weather and a decline in new construction activity on the demand for products and services that could cause actual results to differ materially from such statements. For information concerning these and other risks and uncertainties, see LII's publicly available filings with the Securities and Exchange Commission. LII disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.



                     LENNOX INTERNATIONAL INC. AND SUBSIDIARIES

                       CONSOLIDATED STATEMENTS OF OPERATIONS
         For the Three and Twelve Months Ended December 31, 2008 and 2007
                 (Unaudited, in millions, except per share data)

                                         For the              For the
                                       Three Months         Twelve Months
                                          Ended                Ended
                                       December 31,         December 31,
                                      2008     2007       2008       2007

    NET SALES                        $746.4   $882.8   $3,481.4   $3,735.3
    COST OF GOODS SOLD                541.5    618.7    2,507.9    2,687.4
          Gross profit                204.9    264.1      973.5    1,047.9
    OPERATING EXPENSES:
      Selling, general and
       administrative expenses        157.4    194.8      724.4      773.4
      Losses (gains) and other
       expenses, net                    2.9     (1.3)      (1.9)      (6.7)
      Restructuring charges            11.5     11.0       30.4       25.2
      Impairment of equity method
       investment                       6.9        -        9.1          -
      Income from equity method
       investments                     (0.6)    (1.7)      (8.6)     (10.6)
           Operational income from
            continuing operations      26.8     61.3      220.1      266.6
    INTEREST EXPENSE, net               3.4      2.0       13.7        6.8
    OTHER (INCOME) EXPENSE, NET        (0.1)     0.4        0.1        0.7
           Income from continuing
            operations before income
            taxes
                                       23.5     58.9      206.3      259.1
    PROVISION FOR INCOME TAXES         11.7     20.0       81.2       89.5
           Income from continuing
            operations                 11.8     38.9      125.1      169.6
    DISCONTINUED OPERATIONS
      Loss from discontinued
       operations                       2.2      0.2        3.7        0.9
      Income tax benefit               (0.8)    (0.1)      (1.4)      (0.3)
         Loss from discontinued
          operations                    1.4      0.1        2.3        0.6
           Net income                 $10.4    $38.8     $122.8     $169.0

    EARNINGS PER SHARE - BASIC:
      Income from continuing
       operations                     $0.22    $0.61      $2.21      $2.56
      Loss from discontinued
       operations                     (0.03)       -      (0.04)     (0.01)
           Net income                 $0.19    $0.61      $2.17      $2.55

    EARNINGS PER SHARE - DILUTED:
      Income from continuing
       operations                     $0.21    $0.59      $2.15      $2.44
      Loss from discontinued
       operations                     (0.03)       -      (0.04)     (0.01)
           Net income                 $0.18    $0.59      $2.11      $2.43

    AVERAGE SHARES OUTSTANDING:
      Basic                            55.3     63.4       56.7       66.4
      Diluted                          56.7     66.3       58.3       69.4

    CASH DIVIDENDS DECLARED PER
      SHARE                           $0.14    $0.14      $0.56      $0.53



                     LENNOX INTERNATIONAL INC. AND SUBSIDIARIES

                           SEGMENT NET SALES AND PROFIT
    For the Three Months and Twelve Months Ended December 31, 2008 and 2007
                             (Unaudited, in millions)

                                         For the              For the
                                       Three Months        Twelve Months
                                          Ended                Ended
                                       December 31,         December 31,
                                      2008     2007       2008       2007
    Net Sales
      Residential Heating &
       Cooling                       $299.4   $354.1   $1,493.4   $1,669.6
      Commercial Heating &
       Cooling                        189.2    224.4      835.3      875.0
      Service Experts                 144.5    165.7      626.6      667.1
      Refrigeration                   131.5    157.6      618.2      607.7
      Eliminations (A)                (18.2)   (19.0)     (92.1)     (84.1)
                                     $746.4   $882.8   $3,481.4   $3,735.3

    Segment Profit (Loss) (B)
      Residential Heating &
       Cooling                        $27.3    $31.2     $145.8     $174.4
      Commercial Heating &
       Cooling                         20.1     24.4       93.3      101.0
      Service Experts                   7.7      6.9       20.0       26.1
      Refrigeration                    11.3     14.9       60.2       61.5
      Corporate and other             (16.7)   (20.9)     (53.8)     (85.0)
      Eliminations (A)                    -      0.8       (0.6)       0.6
      Subtotal that includes
       segment profit and
       eliminations                    49.7     57.3      264.9      278.6
      Reconciliation to income
       from continuing
       operations:
        Warranty program
         adjustment                       -    (16.9)         -      (16.9)
        Losses (gains) and other
         expenses, net of gain
         on sale of fixed assets        7.5     (1.3)       3.0       (6.4)
        Restructuring charges          11.5     11.0       30.4       25.2
        Impairment of equity
         investment                     6.9        -        9.1          -
        Interest expense, net           3.4      2.0       13.7        6.8
        Other (income) expense, net    (0.1)     0.4        0.1        0.7

        Less: Realized (losses)
         gains on settled
         futures contracts             (1.9)     0.7       (0.9)       3.9
        Less: Foreign currency
         exchange (losses) gains       (1.1)     2.5        3.2        6.2
                                      $23.5    $58.9     $206.3     $259.1



    (A)  Eliminations consist of intercompany sales between business segments,
         such as products sold to Service Experts by the Residential Heating &
         Cooling segment.

    (B)  The Company defines segment profit and loss as a segment's income or
         loss from continuing operations before income taxes included in the
         accompanying Consolidated Statements of Operations:
             Excluding:
             --  Gains and/or losses and other expenses, net except for
                 gains and/or losses on the sale of fixed assets.
             --  Restructuring charges.
             --  Goodwill and equity method investment impairments.
             --  Interest expense, net.
             --  Other expense, net.
             Less amounts included in Losses (Gains) and Other Expenses, net:
                 --  Realized gains and/or losses on settled futures
                     contracts.
                 --  Foreign currency exchange gains and/or losses.



                   LENNOX INTERNATIONAL INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                         As of December 31, 2008 and 2007
                  (In millions, except share and per share data)

                                                        2008       2007
                                                    (Unaudited)
                                  ASSETS
    CURRENT ASSETS:
      Cash and cash equivalents                        $122.1     $145.5
      Short-term investments                             33.4       27.7
      Accounts and notes receivable, net                369.6      492.0
      Inventories, net                                  298.3      325.2
      Deferred income taxes                              24.2       30.9
      Other assets                                       87.4       49.4
          Total current assets                          935.0    1,070.7
    PROPERTY, PLANT AND EQUIPMENT, net                  329.5      317.8
    GOODWILL, net                                       232.3      262.8
    DEFERRED INCOME TAXES                               113.5       94.0
    OTHER ASSETS                                         49.2       69.3
          TOTAL ASSETS                               $1,659.5   $1,814.6

                   LIABILITIES AND STOCKHOLDERS' EQUITY
    CURRENT LIABILITIES:
      Short-term debt                                    $6.1       $4.8
      Current maturities of long-term debt                0.6       36.4
      Accounts payable                                  234.5      289.2
      Accrued expenses                                  331.1      352.7
      Income taxes payable                                3.7        1.1
          Total current liabilities                     576.0      684.2
    LONG-TERM DEBT                                      413.7      166.7
    POSTRETIREMENT BENEFITS, OTHER THAN PENSIONS         12.5       16.2
    PENSIONS                                            107.7       34.8
    OTHER LIABILITIES                                    91.0      104.2
          Total liabilities                           1,200.9    1,006.1

    COMMITMENTS AND CONTINGENCIES
    STOCKHOLDERS' EQUITY:
      Preferred stock, $.01 par value, 25,000,000
       Shares authorized, no shares issued or
       outstanding                                          -          -
      Common stock, $.01 par value, 200,000,000 shares
       authorized, 84,215,904 shares and 81,897,439
        shares issued for 2008 and 2007, respectively     0.8        0.8
      Additional paid-in capital                        805.6      760.7
      Retained earnings                                 538.8      447.4
      Accumulated other comprehensive (loss) income     (98.8)      63.6
      Treasury stock, at cost,  29,109,058 shares and
       19,844,677 shares for 2008
       and 2007, respectively                          (787.8)    (464.0)
          Total stockholders' equity                    458.6      808.5
          TOTAL LIABILITIES AND STOCKHOLDERS'
           EQUITY                                    $1,659.5   $1,814.6



                   LENNOX INTERNATIONAL INC. AND SUBSIDIARIES

            Reconciliation to U.S. GAAP (Generally Accepted Accounting
                              Principles) Measures
             (Unaudited, in millions, except per share and ratio data)


    Reconciliation of Income From Continuing Operations to Adjusted Income
    From Continuing Operations

                             For the Three Months Ended December 31, 2008

                                 Net Change in
                                  Unrealized
                                   Losses on
                                     Open
                                    Futures
                                   Contracts              Impairment
                                   and Other              of Equity
                             As      Items, Restructuring   Method      As
                          Reported    Net      Charges    Investment Adjusted
    NET SALES              $746.4     $-         $-           $-      $746.4
    COST OF GOODS SOLD      541.5      -          -            -       541.5
          Gross profit      204.9      -          -            -       204.9
    OPERATING
     EXPENSES:
        Selling, general
         and
         administrative
           expenses         157.4      -          -            -       157.4
        Losses
         (gains) and
         other expenses,
         net(1)               2.9   (4.5)         -            -        (1.6)
        Restructuring
         charges             11.5      -      (11.5)           -           -
        Impairment of
         equity method
         investment           6.9      -          -         (6.9)          -
        Income from
         equity method
         investments         (0.6)     -          -            -        (0.6)
           Operational
            income from
            continuing
            operations       26.8    4.5       11.5          6.9        49.7
    INTEREST EXPENSE, net     3.4      -          -            -         3.4
    OTHER EXPENSE, NET       (0.1)     -          -            -        (0.1)
           Income from
            continuing
            operations
            before income
            taxes            23.5    4.5       11.5          6.9        46.4
    PROVISION FOR
     INCOME TAXES            11.7    1.7        3.8            -        17.2
           Income from
            continuing
            operations      $11.8   $2.8       $7.7         $6.9       $29.2

    INCOME PER SHARE
     FROM CONTINUING
     OPERATIONS -
     DILUTED                $0.21  $0.05      $0.14        $0.12       $0.52



    Note:  Management uses adjusted income from continuing operations, which
    is not defined by U.S. GAAP, to measure the Company's operating
    performance and to analyze period-over-period changes in operating income
    with and without the effects of certain losses (gains) and other expenses,
    net, restructuring charges, warranty program adjustment, certain tax items
    and impairment of equity method investment.  Management believes that
    excluding these effects is helpful in assessing the overall performance of
    the Company.

    (1)Losses (gains) and other expenses, net include the following:


                                 For the Three Months Ended December 31, 2008

                                                                  After-tax
                                    Pre-tax     Tax (Benefit)        Loss
                                   Loss (Gain)    Provision         (Gain)
    Realized losses on
     settled futures
     contracts                         1.9           (0.7)            1.2
    Net change in unrealized
     losses on open futures
     contracts                         4.6           (1.7)            2.9
    Foreign currency exchange
     loss                              1.1           (0.4)            0.7
    Gain on disposal of fixed
     assets, net                      (4.6)           0.7            (3.9)
    Other items, net                  (0.1)             -            (0.1)
    Losses (gains) and other
     expenses, net                    $2.9          $(2.1)           $0.8



                             For the Three Months Ended December 31, 2007

                                 Net Change in
                                  Unrealized
                                   Losses on
                                     Open
                                    Futures
                                   Contracts
                                   and Other               Warranty
                             As      Items, Restructuring   Program     As
                          Reported    Net      Charges    Adjustment Adjusted

    NET SALES              $882.8     $-         $-           $-      $882.8
    COST OF GOODS SOLD      618.7      -          -         16.9       635.6
          Gross profit
           (loss)           264.1      -          -        (16.9)      247.2
    OPERATING EXPENSES:
        Selling,
         general and
         administrative
         expenses           194.8      -          -            -       194.8
        Gains and other
         expenses, net(2)    (1.3)  (1.9)         -            -        (3.2)
        Restructuring
         charges             11.0      -      (11.0)           -           -
        Income from
         equity method
         investments         (1.7)     -          -            -        (1.7)
          Operational
           income (loss)
           from
           continuing
           operations        61.3    1.9       11.0        (16.9)       57.3
    INTEREST EXPENSE, net     2.0      -          -            -         2.0
    OTHER EXPENSE, NET        0.4      -          -            -         0.4
          Income (loss)
           from
           continuing
           operations
           before
           income taxes      58.9    1.9       11.0        (16.9)       54.9
    PROVISION FOR (BENEFIT
     FROM) INCOME TAXES      20.0    0.8        4.1         (6.4)       18.5
          Income (loss)
           from
           continuing
           operations       $38.9   $1.1       $6.9       $(10.5)      $36.4

    INCOME (LOSS) PER SHARE
     FROM CONTINUING
     OPERATIONS - DILUTED   $0.59  $0.02      $0.10       $(0.16)      $0.55


    (2)Gains and other expenses, net include the following:


                                 For the Three Months Ended December 31, 2007

                                     Pre-tax           Tax         After-tax
                                      (Gain)        Provision        (Gain)
                                       Loss         (Benefit)         Loss
    Realized gains on settled
     futures contracts                $(0.7)          $0.2           $(0.5)
    Net change in unrealized
     losses on open futures
     contracts                          2.2           (0.8)            1.4
    Foreign currency exchange gain     (2.5)           0.7            (1.8)
    Other items, net                   (0.3)             -            (0.3)
    Gains and other expenses, net     $(1.3)          $0.1           $(1.2)



                                  For the Year Ended December 31, 2008

                                 Net Change in
                                  Unrealized
                                   Losses on
                                     Open
                                    Futures
                                   Contracts              Impairment
                                   and Other              of Equity
                             As      Items, Restructuring   Method      As
                          Reported    Net      Charges    Investment Adjusted
    NET SALES             $3,481.4      $-        $-          $-     $3,481.4
    COST OF GOODS SOLD     2,507.9       -         -           -      2,507.9
          Gross profit       973.5       -         -           -        973.5
    OPERATING EXPENSES:
        Selling, general
         and
         administrative
         expenses            724.4       -         -           -        724.4
        Gains and other
         expenses, net(3)     (1.9)   (5.2)        -           -         (7.1)
        Restructuring
         charges              30.4       -     (30.4)          -            -
        Impairment
         of equity
         method
         investment            9.1       -         -        (9.1)           -
        Income from
         equity method
         investments          (8.6)      -         -           -         (8.6)
             Operational
              income from
              continuing
              operations     220.1     5.2      30.4         9.1        264.8
    INTEREST EXPENSE, net     13.7       -         -           -         13.7
    OTHER EXPENSE, NET         0.1       -         -           -          0.1
             Income from
              continuing
              operations
              before income
              taxes          206.3     5.2      30.4         9.1        251.0
    PROVISION FOR INCOME
     TAXES                    81.2     1.8       9.7           -         92.7
           Income from
            continuing
            operations      $125.1    $3.4     $20.7        $9.1       $158.3

    INCOME PER SHARE FROM
     CONTINUING
     OPERATIONS
     - DILUTED               $2.15   $0.05     $0.35       $0.16        $2.71



    (3) Gains and other expenses, net include the following:


                                      For the Year Ended December 31, 2008

                                                                    After-tax
                                     Pre-tax Loss   Tax (Benefit)      Loss
                                        (Gain)        Provision       (Gain)
    Realized losses on
     settled futures
     contracts                           $0.9          $(0.3)          $0.6
    Net change in unrealized
     losses on open futures
     contracts                            5.1           (1.8)           3.3
    Foreign currency exchange gain       (3.2)          (0.3)          (3.5)
    Gain on disposal of fixed
     assets, net                         (4.8)           0.6           (4.2)
    Other items, net                      0.1              -            0.1
    Gains and other expenses, net       $(1.9)         $(1.8)         $(3.7)



                                 For the Year Ended December 31, 2007

                                 Net Change in
                                  Unrealized
                                   Losses on
                                     Open                 Warranty
                                    Futures                Program
                                   Contracts              Adjustment
                                   and Other                 and
                             As      Items, Restructuring Income Tax      As
                          Reported    Net      Charges     Items(5)   Adjusted
    NET SALES             $3,735.3     $-         $-          $-      $3,735.3
    COST OF GOODS SOLD     2,687.4      -          -        16.9       2,704.3
          Gross profit
           (loss)          1,047.9      -          -       (16.9)      1,031.0
    OPERATING EXPENSES:
        Selling, general
         and
         administrative
         expenses            773.4      -          -           -         773.4
        Gains and
         other expenses,
         net(4)               (6.7)  (3.7)         -           -        (10.4)
        Restructuring
         charges              25.2      -      (25.2)          -            -
        Income from
         equity method
         investments         (10.6)     -          -           -        (10.6)
          Operational
           income
           (loss) from
           continuing
           operations        266.6    3.7       25.2       (16.9)       278.6
    INTEREST EXPENSE, net      6.8      -          -           -          6.8
    OTHER EXPENSE, NET         0.7      -          -           -          0.7
          Income (loss)
           from
           continuing
           operations
           before
           income taxes      259.1    3.7       25.2       (16.9)       271.1
    PROVISION FOR
     (BENEFIT FROM)
     INCOME TAXES             89.5    1.2        9.4        (3.2)        96.9
          Income (loss)
           from
           continuing
           operations       $169.6   $2.5      $15.8      $(13.7)      $174.2

    INCOME (LOSS) PER
     SHARE FROM
     CONTINUING
     OPERATIONS -
     DILUTED                 $2.44  $0.04      $0.23      $(0.20)       $2.51



    (4)Gains and other expenses, net include the following:


                                       For the Year Ended December 31, 2007


                                      Pre-tax           Tax         After-tax
                                       (Gain)        Provision        (Gain)
                                        Loss         (Benefit)         Loss
    Realized gains on
     settled futures
     contracts                         $(3.9)          $1.3           $(2.6)
    Net change in
     unrealized losses
     on open futures contracts           3.3           (1.2)            2.1
    Foreign currency
     exchange gain                      (6.2)           2.1            (4.1)
    Gain on disposal
     of fixed assets, net               (0.3)           0.1            (0.2)
    Other items, net                     0.4              -             0.4
    Gains and other
     expenses, net                     $(6.7)          $2.3           $(4.4)


    (5)Warranty program adjustment and income tax items include the following:


                                    For the Year Ended December 31, 2007

                                                        Tax
                                      Pre-tax        Provision       After-tax
                                       Gain          (Benefit)          Gain
    Warranty program adjustment       $(16.9)           $6.4          $(10.5)
    Change in estimated tax gain
     from prior year                       -            (3.2)           (3.2)
                                      $(16.9)           $3.2          $(13.7)



    Reconciliation of Estimated Adjusted to GAAP Income per Share from
    Continuing Operations - Diluted

                                                           For the Year
                                                              Ended
                                                           December 31,
                                                               2009
                                                             ESTIMATED
    Adjusted income per share from continuing operations
     - diluted                                             $2.10 - $2.50
    Restructuring charges                                     (0.22)
    Net change in unrealized gains on open futures
     contracts                                                 0.03
    GAAP income per share from continuing operations
     - Diluted                                             $1.91 - $2.31



    Free Cash Flow

                                                     For the        For the
                                                   Three Months   Three Months
                                                      Ended          Ended
                                                   December 31,   December 31,
                                                       2008           2007
    Net cash provided by operating activities         $43.4         $128.2
    Purchase of property, plant and equipment         (23.8)         (24.5)
    Free cash flow                                    $19.6         $103.7



                                                   For the Year   For the Year
                                                      Ended          Ended
                                                   December 31,   December 31,
                                                       2008           2007
    Net cash provided by operating activities        $183.2         $239.9
    Purchase of property, plant and equipment         (62.1)         (70.2)
    Free cash flow                                   $121.1         $169.7



    Operational Working Capital

                                      December 31,                December 31,
                                         2008                        2007
                         December 31,  Trailing    December 31,    Trailing
                            2008      12 Mo. Avg.     2007        12 Mo. Avg.
    Accounts and
     Notes Receivable,
     Net                   $369.6                    $492.0
      Asset
       Securitization        30.0                         -
      Allowance for
       Doubtful
       Accounts              18.6                      17.1
    Accounts and
     Notes Receivable,
     Gross                  418.2        $528.0       509.1          $579.8

    Inventories             298.3                     325.2
      Excess of
       Current Cost
       Over Last-in,
       First-out             75.8                      70.4
    Inventories
     as Adjusted            374.1         430.7       395.6           445.1

    Accounts Payable       (234.5)       (324.4)     (289.2)         (340.1)

    Operating Working
     Capital (a)            557.8         634.3       615.5           684.8

    Net Sales, Trailing
     Twelve Months (b)    3,481.4       3,481.4     3,735.3         3,735.3

    Operational Working
     Capital Ratio (a/b)     16.0%         18.2%       16.5%           18.3%



    Note:  Management uses free cash flow and operational working capital,
    which are not defined by U.S. GAAP, to measure the Company's operating
    performance.  Free cash flow and operational working capital are also two
    of several measures used to determine incentive compensation for certain
    employees.

SOURCE: Lennox International Inc.

CONTACT:
Steve Harrison, vice president, investor relations of Lennox International Inc.
+1-972-497-6670

Web Site:
http://www.lennoxinternational.com/