Condensed Consolidating Financial Statements:

The Company’s senior unsecured notes are unconditionally guaranteed by certain of the Company’s subsidiaries (the “Guarantor

Subsidiaries”) and are not secured by our other subsidiaries (the “Non-Guarantor Subsidiaries”). The Guarantor Subsidiaries are 100% owned, all guarantees are full and unconditional, and all guarantees are joint and several. As a result of the guarantee arrangements, we are required to present the following condensed consolidating financial statements.

On March 22, 2013, the Company sold its Service Experts business to a majority-owned entity of American Capital, Ltd. The primary subsidiary for the U.S. Service Experts business had previously been included as a "Guarantor Subsidiary" and the Canada Service Experts subsidiary had previously been included as a "Non-Guarantor Subsidiary." As of September 30, 2013, the U.S. and Canada Service Experts businesses were included in discontinued operations of the condensed consolidating financial statements.

The condensed consolidating financial statements reflect the investments in subsidiaries of the Company using the equity method of accounting. The principal elimination entries eliminate investments in subsidiaries and intercompany balances and transactions.

Condensed consolidating financial statements of the Company, its Guarantor Subsidiaries and Non-Guarantor Subsidiaries as of September 30, 2013 and December 31, 2012 and for the three and nine months ended September 30, 2013 and 2012 are shown on the following pages.

Lennox International Inc. and Subsidiaries

Condensed Consolidating Balance Sheets

As of September 30, 2013

(In millions)



	Parent			Guarantor Subsidiaries		Non-Guarantor Subsidiaries			Eliminations			Consolidated
ASSETS
Current Assets:
Cash and cash equivalents	$	1.5		$	15.3	$	21.0		$	—		$	37.8
Accounts and notes receivable, net	—			30.7		458.5			—			489.2
Inventories, net	—			290.3		140.2			(0.5		)	430.0
Deferred income taxes, net	2.5			23.0		5.8			(1.8		)	29.5
Other assets	31.8			55.4		76.6			(113.0		)	50.8
Assets of discontinued operations	—			—		0.3			(0.3		)	—
Total current assets	35.8			414.7		702.4			(115.6		)	1,037.3
Property, plant and equipment, net	—			234.1		80.7			—			314.8
Goodwill	—			140.4		78.4			—			218.8
Investment in subsidiaries	2,358.7			305.8		(0.5		)	(2,664.0		)	—
Deferred income taxes	0.2			98.7		18.7			(5.8		)	111.8
Other assets, net	4.3			52.6		17.5			(1.4		)	73.0
Intercompany receivables (payables), net	(1,503.8		)	1,424.4		79.4			—			—
Total assets	$	895.2		$	2,670.7	$	976.6		$	(2,786.8	)	$	1,755.7
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Short-term debt	$	—		$	—	$	167.9		$	—		$	167.9
Current maturities of long-term debt	—			0.6		0.2			—			0.8
Accounts payable	11.9			229.1		83.1			—			324.1
Accrued expenses	8.5			207.9		65.3			(0.3		)	281.4
Income taxes payable	—			76.9		56.4			(111.7		)	21.6
Liabilities of discontinued operations	—			—		—			—			—
Total current liabilities	20.4			514.5		372.9			(112.0		)	795.8
Long-term debt	249.5			16.5		0.2			—			266.2
Post-retirement benefits, other than pensions	—			3.8		—			—			3.8
Pensions	—			119.3		18.8			—			138.1
Other liabilities	0.4			66.7		9.6			(7.1		)	69.6
Total liabilities	270.3			720.8		401.5			(119.1		)	1,273.5
Commitments and contingencies
Total stockholders' equity	624.9			1,949.9		575.1			(2,667.7		)	482.2
Total liabilities and stockholders' equity	$	895.2		$	2,670.7	$	976.6		$	(2,786.8	)	$	1,755.7

Lennox International Inc. and Subsidiaries

Condensed Consolidating Balance Sheets

As of December 31, 2012

(In millions)



	Parent			Guarantor Subsidiaries		Non- Guarantor Subsidiaries			Eliminations			Consolidated
ASSETS
Current Assets:
Cash and cash equivalents	$	1.0		$	13.4	$	37.4		$	—		$	51.8
Accounts and notes receivable, net	—			225.8		344.7			(197.1		)	373.4
Inventories, net	—			257.3		121.5			(4.0		)	374.8
Deferred income taxes, net	—			22.9		6.3			(1.7		)	27.5
Other assets	2.0			19.7		78.1			(38.8		)	61.0
Assets of discontinued operations	—			25.2		78.4			(5.0		)	98.6
Total current assets	3.0			564.3		666.4			(246.6		)	987.1
Property, plant and equipment, net	—			239.7		58.5			—			298.2
Goodwill	—			131.8		92.0			—			223.8
Investment in subsidiaries	2,179.9			337.0		(0.2		)	(2,516.7		)	—
Deferred income taxes	—			87.8		20.8			(5.8		)	102.8
Other assets, net	3.7			53.0		23.3			—			80.0
Intercompany receivables (payables), net	(1,289.8		)	1,013.6		89.8			186.4			—
Total assets	$	896.8		$	2,427.2	$	950.6		$	(2,582.7	)	$	1,691.9
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Short-term debt	$	—		$	—	$	34.9		$	—		$	34.9
Current maturities of long-term debt	—			0.5		0.2			—			0.7
Accounts payable	—			198.6		86.1			—			284.7
Accrued expenses	2.5			196.6		60.8			(0.3		)	259.6
Income taxes payable	(27.3		)	35.0		38.5			(41.7		)	4.5
Liabilities of discontinued operations	—			42.3		12.9			—			55.2
Total current liabilities	(24.8		)	473.0		233.4			(42.0		)	639.6
Long-term debt	335.0			15.6		0.4			—			351.0
Post-retirement benefits, other than pensions	—			6.1		—			—			6.1
Pensions	—			114.7		19.7			—			134.4
Other liabilities	0.5			60.1		9.2			(7.3		)	62.5
Total liabilities	310.7			669.5		262.7			(49.3		)	1,193.6
Commitments and contingencies
Total stockholders' equity	586.1			1,757.7		687.9			(2,533.4		)	498.3
Total liabilities and stockholders' equity	$	896.8		$	2,427.2	$	950.6		$	(2,582.7	)	$	1,691.9

Lennox International Inc. and Subsidiaries

Condensed Consolidating Statements of Operations

For the Three Months Ended September 30, 2013

(In millions)



	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Net Sales	$	—		$	668.4		$	221.7		$	(22.1	)	$	868.0
Cost of goods sold	—			494.5			161.7			(25.6		)	630.6
Gross profit	—			173.9			60.0			3.5			237.4
Operating expenses:
Selling, general and administrative expenses	—			107.5			29.4			—			136.9
Losses and other expenses, net	(1.7		)	2.0			(0.6		)	—			(0.3		)
Restructuring charges	—			0.1			0.2			—			0.3
Income from equity method investments	(65.5		)	(14.9		)	(2.5		)	79.6			(3.3		)
Operational income from continuing operations	67.2			79.2			33.5			(76.1		)	103.8
Interest expense, net	3.5			(0.4		)	0.7			—			3.8
Other expense, net	—			—			—			—			—
Income from continuing operations before income taxes	63.7			79.6			32.8			(76.1		)	100.0
Provision for income taxes	(0.6		)	22.7			10.7			1.4			34.2
Income from continuing operations	64.3			56.9			22.1			(77.5		)	65.8
Loss from discontinued operations	—			(1.5		)	—			—			(1.5		)
Net income	$	64.3		$	55.4		$	22.1		$	(77.5	)	$	64.3
Other comprehensive income	$	4.5		$	0.8		$	3.5		$	0.4		$	9.2

Lennox International Inc. and Subsidiaries

Condensed Consolidating Statements of Operations

For the Nine Months Ended September 30, 2013

(In millions)



	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Net Sales	$	—		$	1,984.5		$	619.3		$	(154.3	)	$	2,449.5
Cost of goods sold	—			1,473.9			474.9			(152.7		)	1,796.1
Gross profit	—			510.6			144.4			(1.6		)	653.4
Operating expenses:
Selling, general and administrative expenses	—			327.8			96.2			—			424.0
Losses and other expenses, net	0.8			2.2			—			(0.2		)	2.8
Restructuring charges	—			1.6			1.6			—			3.2
Income from equity method investments	(144.1		)	(6.0		)	(8.7		)	148.1			(10.7		)
Operational income from continuing operations	143.3			185.0			55.3			(149.5		)	234.1
Interest expense, net	10.6			(1.5		)	1.7			—			10.8
Other expense, net	—			—			(0.1		)	—			(0.1		)
Income from continuing operations before income taxes	132.7			186.5			53.7			(149.5		)	223.4
Provision for income taxes	(3.9		)	63.3			18.7			(0.6		)	77.5
Income from continuing operations	136.6			123.2			35.0			(148.9		)	145.9
Loss from discontinued operations	—			16.2			(25.5		)	—			(9.3		)
Net income	$	136.6		$	139.4		$	9.5		$	(148.9	)	$	136.6
Other comprehensive income (loss)	$	(3.1	)	$	1.9		$	(3.8	)	$	(66.6	)	$	(71.6	)

Lennox International Inc. and Subsidiaries

Condensed Consolidating Statements of Operations

For the Three Months Ended September 30, 2012

(In millions)



	Parent			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated
Net Sales	$	—		$	654.5		$	214.3		$	(59.1	)	$	809.7
Cost of goods sold	—			499.7			163.9			(58.8		)	604.8
Gross profit	—			154.8			50.4			(0.3		)	204.9
Operating expenses:
Selling, general and administrative expenses	—			99.2			26.8			(0.1		)	125.9
Losses and other expenses, net	0.1			(1.0		)	1.2			—			0.3
Restructuring charges	—			0.1			0.3			—			0.4
Income from equity method investments	(38.4		)	(6.5		)	(1.9		)	44.2			(2.6		)
Operational income from continuing operations	38.3			63.0			24.0			(44.4		)	80.9
Interest expense, net	4.3			(0.6		)	0.7			—			4.4
Other expense, net	—			—			—			—			—
Income from continuing operations before income taxes	34.0			63.6			23.3			(44.4		)	76.5
Provision for income taxes	(1.6		)	20.1			10.0			(1.7		)	26.8
Income from continuing operations	35.6			43.5			13.3			(42.7		)	49.7
Loss from discontinued operations	—			(12.6		)	(7.7		)	—			(20.3		)
Net income	$	35.6		$	30.9		$	5.6		$	(42.7	)	$	29.4
Other comprehensive income	$	5.6		$	4.6		$	17.4		$	1.9		$	29.5

Lennox International Inc. and Subsidiaries

Condensed Consolidating Statements of Operations

For the Nine Months Ended September 30, 2012

(In millions)



	Parent			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated
Net Sales	$	—		$	1,814.5		$	610.2		$	(160.2	)	$	2,264.5
Cost of goods sold	0.1			1,401.7			468.4			(159.6		)	1,710.6
Gross profit	(0.1		)	412.8			141.8			(0.6		)	553.9
Operating expenses:
Selling, general and administrative expenses	—			286.5			93.3			—			379.8
Losses and other expenses, net	(2.1		)	(0.4		)	2.7			—			0.2
Restructuring charges	—			2.6			0.5			—			3.1
Income from equity method investments	(81.9		)	(8.1		)	(6.9		)	88.1			(8.8		)
Operational income from continuing operations	83.9			132.2			52.2			(88.7		)	179.6
Interest expense, net	13.1			(1.8		)	2.1			—			13.4
Other expense, net	—			—			0.1			—			0.1
Income from continuing operations before income taxes	70.8			134.0			50.0			(88.7		)	166.1
Provision for income taxes	(4.0		)	45.1			16.7			(0.2		)	57.6
Income from continuing operations	74.8			88.9			33.3			(88.5		)	108.5
Loss from discontinued operations	—			(27.9		)	(12.6		)	—			(40.5		)
Net income	$	74.8		$	61.0		$	20.7		$	(88.5	)	$	68.0
Other comprehensive income	$	7.9		$	4.4		$	8.4		$	6.2		$	26.9

Lennox International Inc. and Subsidiaries

Condensed Consolidating Statements of Cash Flows

For the Nine Months Ended September 30, 2013

(In millions)



	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations		Consolidated
Cash flows from operating activities:	$	(41.6	)	$	267.0		$	(160.4	)	$	—	$	65.0
Cash flows from investing activities:
Proceeds from the disposal of property, plant and equipment	—			0.1			—			—		0.1
Purchases of property, plant and equipment	—			(30.3		)	(10.7		)	—		(41.0		)
Net proceeds from sale of businesses	4.8			—			3.3			—		8.1
Net cash used in discontinued operations	—			(0.1		)	—			—		(0.1		)
Net cash used in investing activities	4.8			(30.3		)	(7.4		)	—		(32.9		)
Cash flows from financing activities:
Short-term borrowings, net	—			—			3.8			—		3.8
Asset securitization borrowings	—			—			330.0			—		330.0
Asset securitization payments	—			—			(200.0		)	—		(200.0		)
Long-term debt payments	—			(0.5		)	(0.2		)	—		(0.7		)
Borrowings from revolving credit facility	998.0			—			—			—		998.0
Payments on revolving credit facility	(1,083.5		)	—			—			—		(1,083.5		)
Proceeds from employee stock purchases	1.3			—			—			—		1.3
Repurchases of common stock	(66.0		)	—			—			—		(66.0		)
Repurchases of common stock to satisfy employee withholding tax obligations	(7.7		)	—			—			—		(7.7		)
Excess tax benefits related to share-based payments	4.7			—			—			—		4.7
Intercompany debt	(44.4		)	8.4			36.0			—		—
Intercompany financing activity	257.0			(242.7		)	(14.3		)	—		—
Cash dividends paid	(22.1		)	—			—			—		(22.1		)
Net cash used in financing activities	37.3			(234.8		)	155.3			—		(42.2		)
Decrease in cash and cash equivalents	0.5			1.9			(12.5		)	—		(10.1		)
Effect of exchange rates on cash and cash equivalents	—			—			(3.9		)	—		(3.9		)
Cash and cash equivalents, beginning of period	1.0			13.4			37.4			—		51.8
Cash and cash equivalents, end of period	$	1.5		$	15.3		$	21.0		$	—	$	37.8

Lennox International Inc. and Subsidiaries

Condensed Consolidating Statements of Cash Flows

For the Nine Months Ended September 30, 2012

(In millions)



	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations		Consolidated
Cash flows from operating activities:	$	21.4		$	83.4		$	(40.4	)	$	—	$	64.4
Cash flows from investing activities:
Proceeds from the disposal of property, plant and equipment	—			0.1			—			—		0.1
Purchases of property, plant and equipment	—			(21.5		)	(6.5		)	—		(28.0		)
Net proceeds from sale of businesses	—			10.1			—			—		10.1
Net cash used in discontinued operations	—			(0.4		)	0.1			—		(0.3		)
Net cash used in investing activities	—			(11.7		)	(6.4		)	—		(18.1		)
Cash flows from financing activities:
Short-term borrowings, net	—			—			1.3			—		1.3
Asset securitization borrowings	—			—			480.0			—		480.0
Asset securitization payments	—			—			(455.0		)	—		(455.0		)
Long-term debt payments	—			(0.6		)	(0.3		)	—		(0.9		)
Borrowings from revolving credit facility	696.0			—			—			—		696.0
Payments on revolving credit facility	(706.0		)	—			—			—		(706.0		)
Proceeds from employee stock purchases	0.3			—			—			—		0.3
Repurchases of common stock	(35.0		)	—			—			—		(35.0		)
Repurchases of common stock to satisfy employee withholding tax obligations	(3.4		)	—			—			—		(3.4		)
Excess tax benefits related to share-based payments	1.7			—			—			—		1.7
Intercompany debt	(5.3		)	(3.9		)	9.2			—		—
Intercompany financing activity	57.8			(55.3		)	(2.5		)	—		—
Cash dividends paid	(27.5		)	—			—			—		(27.5		)
Net cash used in financing activities	(21.4		)	(59.8		)	32.7			—		(48.5		)
Decrease in cash and cash equivalents	—			11.9			(14.1		)	—		(2.2		)
Effect of exchange rates on cash and cash equivalents	—			—			6.0			—		6.0
Cash and cash equivalents, beginning of period	1.0			9.7			34.3			—		45.0
Cash and cash equivalents, end of period	$	1.0		$	21.6		$	26.2		$	—	$	48.8