News Release

Printer Friendly Version View printer-friendly version
<< Back
Lennox International Announces Record Sales, Net Income and EPS for Fourth Quarter and Full-Year 2005; Quarterly 2005 Financial Statements Restated for Futures Contracts

DALLAS, Feb. 21 /PRNewswire-FirstCall/ -- Lennox International Inc. (NYSE: LII) today announced record sales, net income and earnings per share for the fourth quarter and full-year 2005.

(Logo: http://www.newscom.com/cgi-bin/prnh/20020304/DAM053LOGO )

"2005 was a record-breaking year for Lennox International," said Bob Schjerven, CEO. "Supported by enhanced operational efficiencies, improved pricing, favorable weather patterns, and sustained strength in the residential new construction market, LII set several key performance records for the year."

Sales for full-year 2005 increased 13% to a record $3.4 billion, with all company business segments contributing to the growth. The company reported net income of $151 million, or $2.11 per diluted share. Adjusted income from continuing operations for full-year 2005, as reconciled in the attached reconciliation to U.S. GAAP table, was $130 million, or $1.83 per share, comparing very favorably with $91 million, or $1.39 per share, in 2004.

LII's focus on cash flow and debt reduction continued to be very effective. The company generated $227 million in cash from operations and invested $63 million in capital expenditures, resulting in full-year free cash flow of $164 million. LII repurchased $13 million in common stock in the fourth quarter. Total debt of $121 million at the end of 2005 was a reduction of $190 million from the prior year, primarily due to conversion of $144 million in outstanding convertible notes. The company's debt to capitalization ratio was 13% at December 31, 2005.

Fourth quarter sales increased 17%, or 18% in constant currencies, to $871 million and net income was $42 million, or $0.55 per share. Adjusted income from continuing operations was $34 million or $0.46 per share, compared to adjusted income from continuing operations of $20 million, or $0.30 per share, in the prior year's fourth quarter. In addition, the utilization of tax loss carry-forwards and other tax items provided a one-time tax benefit of $4 million that contributed $0.05 to the fourth quarter's earnings per share.

Accounting for Futures Contracts

In connection with the completion of year-end procedures related to the accounting for futures contracts for copper and aluminum, the company determined these futures contracts did not qualify for hedge accounting under Statement of Financial Accounting Standards No. 133 "Accounting for Derivative Instruments and Hedging Activities," as the company's documentation did not fully comply with the requirements set forth in the standard. This determination resulted in two different types of adjustments to the company's financial statements.

First, the company recorded an unrealized gain of $23 million pre-tax, or $15 million after-tax, to (gains), losses and other expenses for the year ended December 31, 2005. This resulted in an increase in net income of $6 million, or $0.08 per share, in the first quarter 2005; a decrease in net income of $3 million, or $0.05 per share, in the second quarter 2005; and an increase in net income of $6 million, or $0.09 per share, in the third quarter, by releasing amounts previously recorded in the accumulated other comprehensive income (loss) component of stockholders' equity. The cumulative impact to previously reported earnings for the nine-month period ended September 30, 2005 is an increase of $9 million. A positive impact to net income of $6 million, or $0.08 per share, also resulted in the fourth quarter 2005.

Second, the company realized pre-tax gains of $17 million related to settled futures contracts in 2005. Of these gains, $9 million was previously included in cost of goods sold for the nine-month period ended September 30, 2005 and was reclassified to (gains), losses and other expenses. The amounts of the reclassifications were $2 million, $3 million, and $4 million for the first, second, and third quarters of 2005, respectively, and had no impact on previously reported net income. For the fourth quarter of 2005, an $8 million gain was recorded in (gains), losses and other expenses.

These adjustments do not affect the company's cash flows and, the impact on prior years' results was not material. A summary of the financial impact on select line items and restated quarterly financial statements for 2005 are included with this release and, accordingly, investors should no longer rely on previously published quarterly financial statements for 2005.

2006 Outlook

"Our company is truly at a new and very exciting point in our history, and we are focused on continuing the momentum in 2006," said Schjerven. "We expect full-year diluted earnings per share will be in the range of $2.00 to $2.10." As announced earlier this month, LII will close its current operations in Bellevue, Ohio and consolidate manufacturing, distribution, research & development, and administration for Allied Air Enterprises operations in South Carolina, in a phased process expected to be completed by the end of first quarter 2007. As a result, LII expects to incur after-tax restructuring charges of approximately $13 million. The company stated its 2006 guidance assumes this charge will be offset through gains and other positive non- operating items.

Capital expenditures in 2006 are projected to be approximately $70 million including 13 SEER equipment costs carried over from 2005, the costs for a warehouse as part of the recently announced consolidation program, factory expansion to accommodate continued domestic Commercial Heating & Cooling growth, and IT investments for CRM software and the implementation of SAP in Europe.

Fourth Quarter Segment Performance

Residential Heating & Cooling segment revenue increased 33% during the quarter to $443 million. While market demand was very strong for cooling equipment in advance of the January 23, 2006 deadline for the new 13 SEER standard, the company also achieved double-digit growth in heating equipment shipments. Segment profit increased 30% to $48 million due to higher volumes and improved pricing. Benefits of $5 million from settled futures contracts were included in (gains), losses and other expenses and not included in segment profit.

Commercial Heating & Cooling revenue grew 5%, or 7% when adjusted for foreign exchange, to $162 million. Profit declined from $13 million in 2004 to $9 million. Sales and profitability improvements in North America were more than offset by a loss in European operations, due in part to expenses related to organizational changes and the inability to offset cost increases through higher prices. To improve performance in Europe, the management team was strengthened and its organization realigned to a more pan-European structure. Benefits of $1 million from settled futures contracts were included in (gains), losses and other expenses and not included in segment profit.

Service Experts sales were up 8%, or 7% adjusting for currency fluctuation, to $166 million. The segment posted an operating profit of $6 million for the quarter, or 3.7% of sales, compared with $1 million or 0.6% of sales in the previous year. Service Experts benefited from increased sales, more effective marketing, a leaner cost structure, and strengthened leadership at the center level.

Refrigeration segment revenue rose 3%, or 4% in constant currencies, led by strong sales growth in the Americas. Segment profit increased 4% to $12 million, due to improved volume and pricing in the Americas and Europe. Benefits of $2 million from settled futures contracts were included in (gains), losses and other expenses and not included in segment profit.

Conference call scheduled

Lennox International Inc. will hold a conference call to discuss financial results for the fourth quarter and full year 2005 on Tuesday, February 21 at 1:00 p.m. (CST). All interested parties are invited to listen as Bob Schjerven, CEO, and Sue Carter, CFO, comment on the company's operating results.

To listen, please call the conference call line at 612-332-0820 ten minutes prior to the scheduled start time and use reservation number 819877. The number of connections for this call is limited. This conference call will also be webcast on Lennox International's web site at http://www.lennoxinternational.com.

If you are unable to participate in this conference call, a replay will be available from 6:30 p.m. February 21 through February 28, 2006 by dialing 800- 475-6701, access code 819877. This call will also be archived on the company's web site.

Operating in over 100 countries, 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 Bill Moltner, 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, the impact of unfavorable weather and a decline in new construction activity on the demand for products and services, and the potential impact on operations related to implementation of new NAECA efficiency standards, that could cause actual results to differ materially from such statements. For information concerning these 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 Months and Twelve Months Ended December 31, 2005 and 2004
                     (In millions, except per share data)

                                   For the                  For the
                             Three Months Ended       Twelve Months Ended
                                December 31,               December 31,
                             2005         2004         2005         2004
                          (unaudited)  (unaudited)  (unaudited)
    NET SALES               $870.6       $741.4     $3,366.2     $2,982.7
    COST OF GOODS SOLD       585.0        503.3      2,258.2      1,985.2
      Gross Profit           285.6        238.1      1,108.0        997.5
    OPERATING EXPENSES:
    Selling, general and
     administrative expense  243.0        201.6        902.4        826.1
    (Gains), losses and
      other expenses, net    (18.8)           -        (50.2)           -
    Restructuring charge         -            -          2.4            -
    Goodwill impairment          -         (0.3)           -        208.0
      Operational income (loss)
       from continuing
       operations             61.4         36.8        253.4        (36.6)
    INTEREST EXPENSE, net      1.0          4.7         15.4         27.2
    OTHER (INCOME) EXPENSE       -         (0.2)         3.0         (0.8)
      Income (loss) from
       continuing operations
       before income taxes
       and cumulative effect
       of accounting change   60.4         32.3        235.0        (63.0)
    PROVISION FOR INCOME
     TAXES                    18.4         12.5         83.0         30.5
      Income (loss) from
      continuing operations
      before cumulative effect
      of accounting change    42.0         19.8        152.0        (93.5)
    CUMULATIVE EFFECT OF
     ACCOUNTING
     CHANGE, NET               0.1            -         (0.1)           -
      Income (loss) from
       continuing operations  41.9         19.8        152.1        (93.5)
    DISCONTINUED OPERATIONS:
     Loss from operations of
      discontinued operations  0.1          9.2          2.0         38.9
     Income tax benefit          -         (2.9)        (0.5)        (9.3)
     Loss on disposal of
      discontinued operations    -          9.6          0.1         14.9
     Income tax benefit          -         (3.1)        (0.2)        (3.6)
      Loss from discontinued
       operations              0.1         12.8          1.4         40.9
       Net income (loss)     $41.8         $7.0       $150.7      $(134.4)

    INCOME (LOSS) PER SHARE FROM
     CONTINUING OPERATIONS
     BEFORE CUMULATIVE
     EFFECT OF ACCOUNTING
     CHANGE:
      Basic                  $0.60        $0.33        $2.37       $(1.56)
      Diluted                $0.56        $0.30        $2.13       $(1.56)

    CUMULATIVE EFFECT OF
     ACCOUNTING
     CHANGE PER SHARE:
      Basic                     $-           $-           $-          $ -
      Diluted                   $-           $-           $-          $ -

    INCOME (LOSS) PER SHARE
     FROM CONTINUING
     OPERATIONS:
      Basic                  $0.60        $0.33        $2.37       $(1.56)
      Diluted                $0.56        $0.30        $2.13       $(1.56)

    LOSS PER SHARE FROM
     DISCONTINUED OPERATIONS:

      Basic                 $(0.01)      $(0.21)      $(0.02)      $(0.68)
      Diluted               $(0.01)      $(0.18)      $(0.02)      $(0.68)

    NET INCOME (LOSS)
     PER SHARE:
      Basic                  $0.59        $0.12        $2.35       $(2.24)
      Diluted                $0.55        $0.12        $2.11       $(2.24)

    AVERAGE SHARES
     OUTSTANDING:
      Basic                   70.3         60.4         64.2         60.0
      Diluted                 75.5         70.7         73.7         60.0

    CASH DIVIDENDS DECLARED
     PER SHARE:              $0.11        $0.10        $0.41       $0.385



                  LENNOX INTERNATIONAL INC. AND SUBSIDIARIES

                    SEGMENT REVENUES AND OPERATING PROFIT
   For the Three Months and Twelve Months Ended December 31, 2005 and 2004
                           (Unaudited, in millions)

                                   For the                  For the
                             Three Months Ended       Twelve Months Ended
                                December 31,               December 31,
                             2005         2004         2005         2004
    Net Sales
     Residential            $443.5       $332.8     $1,685.8     $1,419.8
     Commercial              162.4        155.1        651.7        580.8
      Heating and Cooling    605.9        487.9      2,337.5      2,000.6
     Service Experts         165.9        153.9        641.4        611.7
     Refrigeration           118.8        115.2        467.2        444.7
     Eliminations            (20.0)       (15.6)       (79.9)       (74.3)
                            $870.6       $741.4     $3,366.2     $2,982.7

    Segment Profit (Loss) (A)
     Residential             $48.4        $37.2       $197.5       $169.7
     Commercial                8.7         13.1         53.7         51.2
      Heating and Cooling     57.1         50.3        251.2        220.9
     Service Experts           6.2          1.0         17.0        (2.2)
     Refrigeration            11.5         11.1         40.3         42.7
     Corporate and other     (32.4)       (27.3)      (103.1)       (91.5)
     Eliminations              0.2          1.4          0.2          1.5
      Segment Profit          42.6         36.5        205.6        171.4
     Reconciliation to income
      (loss) from continuing
      operations before
      income taxes and
      cumulative effect of
      accounting change:
      (Gains), losses and other
       expenses, net         (18.8)           -        (50.2)            -
    Restructuring charge         -            -          2.4             -
    Goodwill impairment          -         (0.3)           -         208.0
    Interest expense, net      1.0          4.7         15.4          27.2
    Other (income) expense       -         (0.2)         3.0          (0.8)
                             $60.4        $32.3       $235.0        $(63.0)

    (A) Segment profit (loss) is based upon income (loss) from continuing
        operations before income taxes and cumulative effect of accounting
        change included in the accompanying consolidated statements of
        operations excluding Goodwill Impairment.


                  LENNOX INTERNATIONAL INC. AND SUBSIDIARIES

                         CONSOLIDATED BALANCE SHEETS
                As of December 31, 2005 and December 31, 2004
                (In millions, except share and per share data)

                                    ASSETS
                                                    December 31,  December 31,
                                                       2005           2004
                                                    (unaudited)
    CURRENT ASSETS:
     Cash and cash equivalents                        $213.5          $60.9
     Accounts and notes receivable, net                508.4          472.5
     Inventories                                       242.4          247.2
     Deferred income taxes                              20.3           13.1
     Other assets                                       62.6           45.9
     Assets held for sale                                  -            5.1
      Total current assets                           1,047.2          844.7
    PROPERTY, PLANT AND EQUIPMENT, net                 255.7          234.0
    GOODWILL, net                                      223.9          225.4
    DEFERRED INCOME TAXES                               71.9           82.8
    OTHER ASSETS                                       138.9          131.7
      TOTAL ASSETS                                  $1,737.6       $1,518.6

                     LIABILITIES AND STOCKHOLDERS' EQUITY

    CURRENT LIABILITIES:
     Short-term debt                                    $1.2           $6.0
     Current maturities of long-term debt               11.3           36.4
     Accounts payable                                  296.8          237.0
     Accrued expenses                                  321.7          286.3
     Income taxes payable                               24.8           14.6
     Liabilities held for sale                           0.7            3.7
      Total current liabilities                        656.5          584.0
    LONG-TERM DEBT                                     108.0          268.1
    POSTRETIREMENT BENEFITS, OTHER THAN PENSIONS        15.1           14.2
    PENSIONS                                            80.8          105.5
    OTHER LIABILITIES                                   82.8           73.9
      Total liabilities                                943.2        1,045.7

    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,
      74,671,494 shares and 66,367,987
      shares issued for 2005 and 2004,
      respectively                                       0.7            0.7
     Additional paid-in capital                        649.3          454.1
     Retained earnings                                 191.0           66.8
     Accumulated other comprehensive income              0.4            0.7
     Deferred compensation                                 -          (18.2)
     Treasury stock, at cost, 3,635,947 shares and
      3,044,286 for 2005 and 2004, respectively        (47.0)         (31.2)
     Total stockholders' equity                        794.4          472.9
     TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY     $1,737.6       $1,518.6



                  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 net income (loss) to adjusted income from continuing
    operations

                                     For the Twelve Months Ended December 31,
                                     2005        EPS         2004        EPS
    Net income (loss), as reported  $150.7      $2.11      $(134.4)    $(2.24)
      Loss from discontinued
       operations                      1.4       0.02         40.9       0.68
    Income (loss) from continuing
     operations                      152.1       2.13        (93.5)     (1.56)
     (Gains), losses and other
      expenses, net of income tax(1) (34.1)     (0.46)
     Realized gains on settled
      futures contracts, net
      of income tax(1)                10.7       0.14
    Restructuring charge,
     net of income tax                 1.6       0.02
    Goodwill impairment,
     net of income tax                                       184.8
    Adjusted income from
     continuing operations          $130.3       $1.83       $91.3       $1.39

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

                                               For the Twelve Months Ended
                                                   December 31, 2005
                                          Pre-tax   Tax (Benefit)  After-tax
                                        (Gain) Loss   Provision   (Gain) Loss
    Realized gains on settled futures
     contracts                           $ (16.7)        $6.0        $(10.7)
    Unrealized gains on open futures
     contracts                             (23.3)         8.4         (14.9)
    Gain on sale of LII's 45% interest
     in its heat transfer joint venture
     to Outokumpu                           (9.3)         2.3          (7.0)
    Estimated on-going remediation costs
     in conjunction with the joint
     remediation agreement LII
     entered into with Outokumpu             2.2         (0.8)          1.4
    Other items, net                        (3.1)         0.2          (2.9)
    (Gains), losses and other
     expenses, net                       $ (50.2)       $16.1       $ (34.1)


                                       For the Three Months Ended December 31,
                                        2005       EPS         2004        EPS
    Net income, as reported            $41.8      $0.55        $7.0      $0.12
     Loss from discontinued operations   0.1       0.01        12.8       0.18
    Income from continuing operations   41.9       0.56        19.8       0.30
     (Gains), losses and other
      expenses, net of income tax(2)   (12.6)     (0.17)
     Realized gains on settled futures
      contracts, net of income tax(2)    5.1       0.07
     Goodwill impairment, net of
      income tax                                              (0.2)
    Adjusted income from continuing
     operations                        $34.4      $0.46       $19.6      $0.30


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

                                  For the Three Months Ended December 31, 2005
                                      Pre-tax        Tax          After-tax
                                        Gain       Provision
        Gain
    Realized gains on settled
     futures contracts                $ (8.0)        $2.9           $(5.1)
    Unrealized gains on open
     futures contracts                  (9.3)         3.3            (6.0)
    Other items, net                    (1.5)           -            (1.5)
    (Gains), losses and other
     expenses, net                   $ (18.8)        $6.2         $ (12.6)


    Free Cash Flow

                                                      For the       For the
                                                   Three Months  Twelve Months
                                                       Ended          Ended
                                                    December 31,  December 31,
                                                        2005          2005

    Net cash provided by operating activities          $72.4         $226.9
     Purchases of property, plant and equipment        (21.3)         (63.3)
    Free cash flow                                     $51.1         $163.6


    Operational Working Capital - Continuing Operations

                                                                  December 31,
                                                                      2005
                                                    December 31,    Trailing
                                                       2005       12 Mo. Avg.
    Accounts and Notes Receivable, Net                $508.4
     Allowance for Doubtful Accounts                    16.7
    Accounts and Notes Receivable, Gross               525.1         $526.7

    Inventories                                        242.4
     Excess of current Cost Over Last-in, First-out     55.1
    Inventories as Adjusted                            297.5          323.3

    Accounts Payable                                  (296.8)        (292.9)

    Operating Working Capital (a)                     $525.8         $557.1

    Net Sales, Trailing Twelve Months (b)          $ 3,366.2       $3,366.2

    Operational Working Capital Ratio (a/b)             15.6%          16.5%

    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.



                  LENNOX INTERNATIONAL INC. AND SUBSIDIARIES
           Futures Contracts Impact on Previously Reported Amounts
                           (Unaudited, in millions)

During the fourth quarter of 2005, the Company determined that its futures contracts for copper and aluminum did not qualify for hedge accounting. The following provides the impact on previously reported amounts within the Company's first, second and third quarters of 2005 related to the Company's accounting for futures contracts for copper and aluminum. Amounts are in millions and items in parenthesis represent a decrease from the amounts previously reported.

                                           For the Three Months Ended
                                        March 31,    June 30,   September 30,
                                          2005         2005         2005
                                                Increase (Decrease)

    Cost of goods sold                    $2.0         $2.8         $ 4.0

    Gross profit                          (2.0)        (2.8)         (4.0)

       Realized gains on settled
        futures contracts previously
        included in cost of goods sold     2.0          2.8           3.9

       Unrealized gains (losses) on open
        futures contracts previously
        included in accumulated other
        comprehensive income (loss)        9.5         (5.5)         10.1

    (Gains), losses and other
     expenses, net                        11.5         (2.7)         14.0

    Operational income from continuing
     operations                            9.5         (5.5)         10.0

    Income from continuing operations
     before income taxes and cumulative
     effect of accounting change           9.5         (5.5)         10.0

    Provision for income taxes previously
     included in accumulated
     other comprehensive income (loss)     3.4         (2.0)          3.7

    Income from continuing operations
     before cumulative effect of
     accounting change                     6.1         (3.5)          6.3

    Income from continuing operations      6.1         (3.5)          6.3

    Net income and retained earnings       6.1         (3.5)          6.3



                  LENNOX INTERNATIONAL INC. AND SUBSIDIARIES

                     CONSOLIDATED STATEMENT OF OPERATIONS
                  For the Three Months Ended March 31, 2005
               (Unaudited, in millions, except per share data)

                                                          For the
                                                     Three Months Ended
                                                       March 31, 2005
                                                          Restated

    NET SALES                                             $ 700.3
    COST OF GOODS SOLD                                      480.5
     Gross Profit                                           219.8
    OPERATING EXPENSES:
     Selling, general and administrative expense            204.3
     (Gains), losses and other expenses, net                (11.5)
      Operational income from continuing operations          27.0
    INTEREST EXPENSE, net                                     5.5
    OTHER EXPENSE                                             0.1
     Income from continuing operations before income taxes   21.4
    PROVISION FOR INCOME TAXES                                7.8
     Income from continuing operations                       13.6
    DISCONTINUED OPERATIONS:
     Loss from operations of discontinued operations          1.6
     Income tax benefit                                      (0.4)
     Loss on disposal of discontinued operations              0.1
     Income tax benefit                                      (0.2)
      Loss from discontinued operations                       1.1
       Net income                                           $12.5

    INCOME PER SHARE FROM CONTINUING OPERATIONS:
     Basic                                                  $0.22
     Diluted                                                $0.21

    LOSS PER SHARE FROM DISCONTINUED OPERATIONS:
     Basic                                                 $(0.02)
     Diluted                                               $(0.02)

    NET INCOME PER SHARE:
     Basic                                                  $0.20
     Diluted                                                $0.19

    AVERAGE SHARES OUTSTANDING:
    Basic                                                    61.5
    Diluted                                                  72.4

    Cash Dividends Declared Per Share                       $0.10



                  LENNOX INTERNATIONAL INC. AND SUBSIDIARIES

                    CONSOLIDATED STATEMENTS OF OPERATIONS
           For the Three Months and Six Months Ended June 30, 2005
               (Unaudited, in millions, except per share data)

                                                     For the       For the
                                                   Three Months   Six Months
                                                      Ended         Ended
                                                     June 30,      June 30,
                                                       2005          2005
                                                     Restated      Restated

    NET SALES                                        $ 867.8       $1,568.1
    COST OF GOODS SOLD                                 576.6        1,057.1
     Gross Profit                                      291.2          511.0
    OPERATING EXPENSES:
     Selling, general and administrative expense       224.9          429.2
    (Gains), losses and other expenses, net             (6.0)         (17.5)
     Restructuring charge                                2.2            2.2
      Operational income from continuing operations     70.1           97.1
    INTEREST EXPENSE, net                                4.6           10.1
    OTHER INCOME                                        (0.6)          (0.5)
     Income from continuing operations before
      income taxes                                      66.1           87.5
    PROVISION FOR INCOME TAXES                          24.6           32.4
     Income from continuing operations                  41.5           55.1
    DISCONTINUED OPERATIONS:
     Loss from operations of discontinued operations     0.2            1.8
     Income tax benefit                                    -           (0.4)
     Loss on disposal of discontinued operations           -            0.1
     Income tax benefit                                    -           (0.2)
      Loss from discontinued operations                  0.2            1.3
       Net income                                      $41.3          $53.8

    INCOME PER SHARE FROM CONTINUING
    OPERATIONS:
     Basic                                             $0.67          $0.89
     Diluted                                           $0.59          $0.80

    LOSS PER SHARE FROM DISCONTINUED OPERATIONS:
     Basic                                                $-         $(0.02)
     Diluted                                              $-         $(0.02)

    NET INCOME PER SHARE:
     Basic                                             $0.67          $0.87
     Diluted                                           $0.59          $0.78

    AVERAGE SHARES OUTSTANDING:
    Basic                                               62.0           61.7
    Diluted                                             72.8           72.5

    Cash Dividends Declared Per Share                  $0.10          $0.20



                  LENNOX INTERNATIONAL INC. AND SUBSIDIARIES

                    CONSOLIDATED STATEMENTS OF OPERATIONS
        For the Three Months and Nine Months Ended September 30, 2005
               (Unaudited, in millions, except per share data)

                                                     For the        For the
                                                  Three Months    Nine Months
                                                      Ended          Ended
                                                  September 30,  September 30,
                                                      2005            2005
                                                    Restated        Restated

    NET SALES                                        $927.5       $2,495.6
    COST OF GOODS SOLD                                616.1        1,673.2
     Gross Profit                                     311.4          822.4
    OPERATING EXPENSES:
    Selling, general and administrative expense       230.2          659.4
    (Gains), losses and other expenses, net           (13.9)         (31.4)
    Restructuring charge                                0.2            2.4
     Operational income from continuing
      operations                                       94.9          192.0
    INTEREST EXPENSE, net                               4.3           14.4
    OTHER EXPENSE                                       3.5            3.0
     Income from continuing operations before
     income taxes and cumulative effect of
     accounting change                                 87.1          174.6
    PROVISION FOR INCOME TAXES                         32.2           64.6
     Income from continuing operations before
      cumulative effect of accounting change           54.9          110.0
    CUMULATIVE EFFECT OF ACCOUNTING
    CHANGE, NET                                        (0.2)          (0.2)
     Income from continuing operations                 55.1          110.2
    DISCONTINUED OPERATIONS:
     Loss from operations of discontinued operations    0.1            1.9
     Income tax benefit                                (0.1)          (0.5)
     Loss on disposal of discontinued operations          -            0.1
     Income tax benefit                                   -           (0.2)
      Loss from discontinued operations                   -            1.3
       Net income                                     $55.1         $108.9

    INCOME PER SHARE FROM CONTINUING OPERATIONS
     BEFORE CUMULATIVE EFFECT OF
     ACCOUNTING CHANGE:
      Basic                                           $0.87          $1.77
      Diluted                                         $0.76          $1.57

    CUMULATIVE EFFECT OF ACCOUNTING CHANGE
     PER SHARE:
      Basic                                           $0.01             $-
      Diluted                                            $-             $-

    INCOME PER SHARE FROM CONTINUING OPERATIONS:
      Basic                                           $0.88          $1.77
      Diluted                                         $0.76          $1.57

    LOSS PER SHARE FROM DISCONTINUED OPERATIONS:
      Basic                                              $-         $(0.02)
      Diluted                                            $-         $(0.02)

    NET INCOME PER SHARE:
      Basic                                           $0.88          $1.75
      Diluted                                         $0.76          $1.55

    AVERAGE SHARES OUTSTANDING:
      Basic                                            62.9           62.1
      Diluted                                          74.2           73.1

    CASH DIVIDENDS DECLARED PER SHARE:                $0.10          $0.30


                  LENNOX INTERNATIONAL INC. AND SUBSIDIARIES

                    SEGMENT REVENUES AND OPERATING PROFIT
                  For the Three Months Ended March 31, 2005
                           (Unaudited, in millions)

                                                     For the
                                                Three Months Ended
                                                     March 31,
                                                       2005
                                                     Restated
    Net Sales
     Residential                                     $ 342.7
     Commercial                                        126.2
      Heating and Cooling                              468.9
     Service Experts                                   135.9
     Refrigeration                                     111.9
     Eliminations                                      (16.4)
                                                     $ 700.3
    Segment Profit (Loss) (A)
     Residential                                       $28.4
     Commercial                                          4.4
      Heating and Cooling                               32.8
     Service Experts                                    (6.3)
     Refrigeration                                       8.4
     Corporate and other                               (19.3)
     Eliminations                                       (0.1)
      Segment Profit                                    15.5
     Reconciliation to income from continuing
      operations before income taxes
     (Gains), losses and other expenses, net           (11.5)
     Interest expense, net                               5.5
     Other expense                                       0.1
                                                       $21.4

    (A) Segment profit is based upon income (loss) from continuing operations
        before income taxes included in the accompanying consolidated
        statements of operations excluding Goodwill Impairment.



                  LENNOX INTERNATIONAL INC. AND SUBSIDIARIES

                    SEGMENT REVENUES AND OPERATING PROFIT
           For the Three Months and Six Months Ended June 30, 2005
                           (Unaudited, in millions)

                                                      For the       For the
                                                   Three Months   Six Months
                                                       Ended         Ended
                                                      June 30,      June 30,
                                                       2005           2005
                                                     Restated       Restated
    Net Sales
    Residential                                      $ 434.7        $ 777.4
    Commercial                                         171.2          297.4
    Heating and Cooling                                605.9        1,074.8
    Service Experts                                    167.8          303.7
    Refrigeration                                      116.9          228.8
    Eliminations                                       (22.8)         (39.2)
                                                     $ 867.8       $1,568.1

    Segment Profit (Loss) (A)
     Residential                                       $55.7          $84.1
     Commercial                                         14.7           19.1
      Heating and Cooling                               70.4          103.2
    Service Experts                                      9.2            2.9
    Refrigeration                                        9.5           17.9
    Corporate and other                                (22.9)         (42.2)
    Eliminations                                         0.1              -
      Segment Profit                                    66.3           81.8
    Reconciliation to income from continuing
    operations before income taxes:
     (Gains), losses and other expenses, net            (6.0)         (17.5)
      Restructuring charge                               2.2            2.2
      Interest expense, net                              4.6           10.1
      Other income                                      (0.6)          (0.5)
                                                       $66.1          $87.5

    Segment profit (loss) is based upon income (loss) from continuing
    operations before income taxes included in the accompanying consolidated
    statements of operations excluding Goodwill Impairment.



                  LENNOX INTERNATIONAL INC. AND SUBSIDIARIES

                    SEGMENT REVENUES AND OPERATING PROFIT
        For the Three Months and Nine Months Ended September 30, 2005
                           (Unaudited, in millions)

                                                     For the        For the
                                                  Three Months    Nine Months
                                                      Ended          Ended
                                                  September 30,  September 30,
                                                      2005            2005
                                                    Restated        Restated
    Net Sales
    Residential                                      $464.9       $1,242.3
    Commercial                                        191.9          489.3
     Heating and Cooling                              656.8        1,731.6
    Service Experts                                   171.8          475.5
    Refrigeration                                     119.6          348.4
    Eliminations                                      (20.7)         (59.9)
                                                     $927.5       $2,495.6
    Segment Profit (Loss) (A)
     Residential                                      $65.0         $149.1
     Commercial                                        25.9           45.0
      Heating and Cooling                              90.9          194.1
     Service Experts                                    7.9           10.8
     Refrigeration                                     10.9           28.8
     Corporate and other                              (28.5)         (70.7)
     Eliminations                                         -              -
      Segment Profit                                   81.2          163.0
     Reconciliation to income from
      continuing operations before
      income taxes and cumulative
      effect of accounting change:
      (Gains), losses and other expenses, net         (13.9)         (31.4)
       Restructuring charge                             0.2            2.4
       Interest expense, net                            4.3           14.4
       Other expense                                    3.5            3.0
                                                      $87.1         $174.6

    (A) Segment profit (loss) is based upon income (loss) from continuing
        operations before income taxes and cumulative effect of accounting
        change included in the accompanying consolidated statements of
        operations excluding Goodwill Impairment.



                  LENNOX INTERNATIONAL INC. AND SUBSIDIARIES

                         CONSOLIDATED BALANCE SHEETS
          As of September 30, 2005, June 30, 2005 and March 31, 2005
          (unaudited, in millions, except share and per share data)

                                    ASSETS

                                      September 30,   June 30,     March 31,
                                          2005         2005          2005
                                        Restated     Restated      Restated
    CURRENT ASSETS:
     Cash and cash equivalents           $176.2        $93.6         $84.2
     Accounts and notes receivable, net   567.4        541.6         449.8
     Inventories                          254.0        257.5         275.8
     Deferred income taxes                 19.2         17.6          16.8
     Other assets                          50.5         41.7          42.4
     Assets held for sale                   0.1          0.1           1.2
      Total current assets              1,067.4        952.1         870.2
    PROPERTY, PLANT AND EQUIPMENT, net    244.6        238.1         236.3
    GOODWILL, net                         225.6        219.1         222.5
    DEFERRED INCOME TAXES                  85.3         80.4          82.1
    OTHER ASSETS                          121.4        111.8         137.3
      TOTAL ASSETS                     $1,744.3     $1,601.5      $1,548.4

                     LIABILITIES AND STOCKHOLDERS' EQUITY

    CURRENT LIABILITIES:
     Short-term debt                       $2.5         $1.0          $3.8
     Current maturities of long-term debt 114.3         11.3          36.3
     Accounts payable                     312.9        294.7         281.6
     Accrued expenses                     311.6        282.7         259.9
     Income taxes payable                  46.4         40.4          20.1
     Liabilities held for sale              1.1          0.9           2.4
      Total current liabilities           788.8        631.0         604.1
    LONG-TERM DEBT                        119.3        263.0         269.1
    POSTRETIREMENT BENEFITS, OTHER
     THAN PENSIONS                         15.5         15.1          14.7
    PENSIONS                              106.1        105.6         105.1
    OTHER LIABILITIES                      80.5         85.7          78.6
      Total liabilities                 1,110.2      1,100.4       1,071.6

    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,
      68,313,156 shares, 66,948,311
      shares, and 67,005,959 shares
      issued at September 30, 2005,
      June 30, 2005 and March 31, 2005,
      respectively                          0.7          0.7           0.7
     Additional paid-in capital           519.2        463.9         465.1
     Retained earnings                    157.0        108.1          73.1
     Accumulated other comprehensive
      income (loss)                        (8.8)       (26.2)        (13.7)
     Deferred compensation                    -        (13.0)        (16.0)
     Treasury stock, at cost, 3,183,631
      shares, 3,107,074 shares, and
      3,106,822 shares at September 30,
      2005, June 30, 2005 and March 31,
      2005, respectively                  (34.0)       (32.4)        (32.4)
      Total stockholders' equity          634.1        501.1         476.8
    TOTAL LIABILITIES AND
     STOCKHOLDERS' EQUITY              $1,744.3     $1,601.5      $1,548.4

SOURCE Lennox International Inc.
CONTACT: Bill Moltner, vice president, investor relations of Lennox
International Inc., +1-972-497-6670