EX-99.1 2 d33261exv99w1.htm PRESS RELEASE exv99w1
 

Exhibit 99.1
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 — February 21, 2006) — Lennox International Inc. (NYSE: LII) today announced record sales, net income and earnings per share for the fourth quarter and full-year 2005.
     “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)
                 
    December 31,     December 31,  
    2005     2004  
    (unaudited)          
ASSETS
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 tax1
     (34.1 )     (0.46 )                
Realized gains on settled futures contracts, net of income tax1
     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 tax2
     (12.6 )     (0.17 )                
Realized gains on settled futures contracts, net of income tax2
     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 Ended     Nine Months 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 Ended     Six Months 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 Ended     Nine Months 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)
                         
    September 30,     June 30,     March 31,  
    2005     2005     2005  
    Restated     Restated     Restated  
ASSETS
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