Condensed Consolidating Financial Statements (Tables)

9 Months Ended

Sep. 30, 2017

Condensed Financial Information of Parent Company Only Disclosure [Abstract]

Lennox International Inc. and Subsidiaries

Condensed Consolidating Balance Sheets

As of September 30, 2017



(Amounts in millions)	Parent			Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations			Consolidated
ASSETS
Current Assets:
Cash and cash equivalents	$	1.2		$	22.4	$	37.1	$	—		$	60.7
Accounts and notes receivable, net	—			35.5		562.6		—			598.1
Inventories, net	—			392.2		143.5		(4.8		)	530.9
Other assets	14.2			34.3		60.7		(28.3		)	80.9
Total current assets	15.4			484.4		803.9		(33.1		)	1,270.6
Property, plant and equipment, net	—			243.7		135.2		(4.3		)	374.6
Goodwill	—			117.8		65.7		17.1			200.6
Investment in subsidiaries	1,212.8			383.7		—		(1,596.5		)	—
Deferred income taxes	11.0			112.0		32.5		(12.2		)	143.3
Other assets, net	1.8			42.1		24.1		(1.4		)	66.6
Intercompany (payables) receivables, net	(453.9		)	461.3		95.1		(102.5		)	—
Total assets	$	787.1		$	1,845.0	$	1,156.5	$	(1,732.9	)	$	2,055.7
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Short-term debt	$	—		$	—	$	326.0	$	—		$	326.0
Current maturities of long-term debt	21.9			0.3		0.2		—			22.4
Accounts payable	21.3			252.7		120.5		—			394.5
Accrued expenses	5.7			216.6		56.1		—			278.4
Income taxes (receivable) payable	(55.7		)	60.4		48.5		(50.8		)	2.4
Total current liabilities	(6.8		)	530.0		551.3		(50.8		)	1,023.7
Long-term debt	761.1			14.3		0.3		—			775.7
Post-retirement benefits, other than pensions	—			1.9		—		—			1.9
Pensions	—			77.1		13.1		—			90.2
Other liabilities	0.3			119.9		11.5		—			131.7
Total liabilities	754.6			743.2		576.2		(50.8		)	2,023.2
Commitments and contingencies
Total stockholders' equity	32.5			1,101.8		580.3		(1,682.1		)	32.5
Total liabilities and stockholders' equity	$	787.1		$	1,845.0	$	1,156.5	$	(1,732.9	)	$	2,055.7

Lennox International Inc. and Subsidiaries

Condensed Consolidating Balance Sheets

As of December 31, 2016



(Amounts in millions)	Parent			Guarantor Subsidiaries		Non- Guarantor Subsidiaries			Eliminations			Consolidated
ASSETS
Current Assets:
Cash and cash equivalents	$	1.2		$	17.1	$	31.9		$	—		$	50.2
Accounts and notes receivable, net	—			30.6		439.2			—			469.8
Inventories, net	—			314.7		108.9			(5.1		)	418.5
Other assets	12.8			48.8		67.5			(61.7		)	67.4
Total current assets	14.0			411.2		647.5			(66.8		)	1,005.9
Property, plant and equipment, net	—			237.6		123.8			—			361.4
Goodwill	—			134.9		60.2			—			195.1
Investment in subsidiaries	1,166.9			524.7		(0.5		)	(1,691.1		)	—
Deferred income taxes	6.8			113.5		31.1			(14.7		)	136.7
Other assets, net	3.6			40.0		19.0			(1.4		)	61.2
Intercompany (payables) receivables, net	(382.4		)	375.2		80.4			(73.2		)	—
Total assets	$	808.9		$	1,837.1	$	961.5		$	(1,847.2	)	$	1,760.3
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Short-term debt	$	—		$	—	$	52.4		$	—		$	52.4
Current maturities of long-term debt	199.3			0.4		0.4			—			200.1
Accounts payable	18.5			248.5		94.2			—			361.2
Accrued expenses	6.3			206.3		53.3			—			265.9
Income taxes (receivable) payable	(54.0		)	89.8		52.5			(79.3		)	9.0
Total current liabilities	170.1			545.0		252.8			(79.3		)	888.6
Long-term debt	600.9			14.5		0.3			—			615.7
Post-retirement benefits, other than pensions	—			2.8		—			—			2.8
Pensions	—			75.5		12.0			—			87.5
Other liabilities	—			119.1		11.1			(2.5		)	127.7
Total liabilities	771.0			756.9		276.2			(81.8		)	1,722.3
Commitments and contingencies
Total stockholders' equity	37.9			1,080.2		685.3			(1,765.4		)	38.0
Total liabilities and stockholders' equity	$	808.9		$	1,837.1	$	961.5		$	(1,847.2	)	$	1,760.3

Condensed Consolidating Statements of Operations and Comprehensive Income

Lennox International Inc. and Subsidiaries

Condensed Consolidating Statements of Operations and Comprehensive Income

For the Three Months Ended September 30, 2017



(Amounts in millions)	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Net Sales	$	—		$	905.6		$	300.0		$	(153.3	)	$	1,052.3
Cost of goods sold	—			644.8			249.0			(155.2		)	738.6
Gross profit	—			260.8			51.0			1.9			313.7
Operating expenses:
Selling, general and administrative expenses	—			140.7			18.8			(0.8		)	158.7
Losses and other expenses, net	0.2			1.9			0.9			—			3.0
Restructuring charges	—			1.2			0.7			—			1.9
Income from equity method investments	(108.2		)	(21.7		)	(3.5		)	128.9			(4.5		)
Operating income	108.0			138.7			34.1			(126.2		)	154.6
Interest expense, net	6.2			(0.6		)	2.0			—			7.6
Other expense, net	—			—			0.2			(0.2		)	—
Income from continuing operations before income taxes	101.8			139.3			31.9			(126.0		)	147.0
Provision for income tax (benefit) expense	(1.7		)	30.5			13.5			0.7			43.0
Income from continuing operations	103.5			108.8			18.4			(126.7		)	104.0
Loss from discontinued operations, net of tax	—			—			(0.5		)	—			(0.5		)
Net income	$	103.5		$	108.8		$	17.9		$	(126.7	)	$	103.5
Other comprehensive income, net of tax	0.4			2.1			6.9			—			9.4
Comprehensive income (loss)	$	103.9		$	110.9		$	24.8		$	(126.7	)	$	112.9

Lennox International Inc. and Subsidiaries

Condensed Consolidating Statements of Operations and Comprehensive Income

For the Nine Months Ended September 30, 2017



(Amounts in millions)	Parent			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated
Net Sales	$	—		$	2,560.6		$	869.7		$	(482.4	)	$	2,947.9
Cost of goods sold	—			1,830.8			731.1			(479.5		)	2,082.4
Gross profit	—			729.8			138.6			(2.9		)	865.5
Operating expenses:
Selling, general and administrative expenses	—			419.2			61.6			(1.2		)	479.6
Losses (gains) and other expenses, net	1.1			5.8			1.7			(0.1		)	8.5
Restructuring charges	—			1.3			0.8			—			2.1
Income from equity method investments	(277.5		)	(52.0		)	(12.7		)	326.7			(15.5		)
Operating income	276.4			355.5			87.2			(328.3		)	390.8
Interest expense, net	20.9			(2.3		)	4.7			—			23.3
Other expense, net	—			—			—			(0.2		)	(0.2		)
Income from continuing operations before income taxes	255.5			357.8			82.5			(328.1		)	367.7
Provision for income tax (benefit) expense	(7.0		)	84.8			26.2			(0.2		)	103.8
Income from continuing operations	262.5			273.0			56.3			(327.9		)	263.9
Loss from discontinued operations, net of tax	—			—			(1.4		)	—			(1.4		)
Net income	$	262.5		$	273.0		$	54.9		$	(327.9	)	$	262.5
Other comprehensive income, net of tax	$	0.5		$	9.7		$	27.9		$	—		$	38.1
Comprehensive income (loss)	$	263.0		$	282.7		$	82.8		$	(327.9	)	$	300.6

Lennox International Inc. and Subsidiaries

Condensed Consolidating Statements of Operations and Comprehensive Income

For the Three Months Ended September 30, 2016



(Amounts in millions)	Parent			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated
Net Sales	$	—		$	870.5		$	186.9		$	(47.4	)	$	1,010.0
Cost of goods sold	—			603.4			143.7			(47.4		)	699.7
Gross profit	—			267.1			43.2			—			310.3
Operating expenses:
Selling, general and administrative expenses	—			135.9			20.6			—			156.5
(Gains) losses and other expenses, net	(1.1		)	1.1			0.7			—			0.7
Restructuring charges	—			0.5			0.1			—			0.6
Income from equity method investments	(105.0		)	(10.0		)	(3.2		)	113.8			(4.4		)
Operating income	106.1			139.6			25.0			(113.8		)	156.9
Interest expense, net	6.1			(0.5		)	1.4			—			7.0
Other expense, net	—			—			—			—			—
Income from continuing operations before income taxes	100.0			140.1			23.6			(113.8		)	149.9
Provision for income tax (benefit) expense	(1.7		)	42.3			7.6			—			48.2
Income from continuing operations	101.7			97.8			16.0			(113.8		)	101.7
Loss from discontinued operations, net of tax	—			—			—			—			—
Net income	$	101.7		$	97.8		$	16.0		$	(113.8	)	$	101.7
Other comprehensive income (loss), net of tax	2.7			(0.4		)	(2.3		)	(0.4		)	(0.4		)
Comprehensive income (loss)	$	104.4		$	97.4		$	13.7		$	(114.2	)	$	101.3

Lennox International Inc. and Subsidiaries

Condensed Consolidating Statements of Operations and Comprehensive Income

For the Nine Months Ended September 30, 2016



(Amounts in millions)	Parent			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated
Net Sales	$	—		$	2,368.8		$	514.1		$	(138.5	)	$	2,744.4
Cost of goods sold	—			1,675.6			396.3			(136.4		)	1,935.5
Gross profit	—			693.2			117.8			(2.1		)	808.9
Operating expenses:
Selling, general and administrative expenses	—			394.6			61.6			—			456.2
(Gains) losses and other expenses, net	(1.7		)	4.3			3.0			(0.1		)	5.5
Restructuring charges (gains)	—			1.5			(0.3		)	—			1.2
Income from equity method investments	(248.5		)	(19.5		)	(12.4		)	265.1			(15.3		)
Operating income	250.2			312.3			65.9			(267.1		)	361.3
Interest expense, net	17.7			(1.5		)	3.4			—			19.6
Other expense, net	—			—			(0.2		)	—			(0.2		)
Income from continuing operations before income taxes	232.5			313.8			62.7			(267.1		)	341.9
Provision for income tax (benefit) expense	(4.9		)	89.1			20.5			(0.7		)	104.0
Income from continuing operations	237.4			224.7			42.2			(266.4		)	237.9
Loss from discontinued operations, net of tax	—			—			0.6			—			0.6
Net income	$	237.4		$	224.7		$	41.6		$	(266.4	)	$	237.3
Other comprehensive income, net of tax	7.7			2.0			6.7			1.3			17.7
Comprehensive income (loss)	$	245.1		$	226.7		$	48.3		$	(265.1	)	$	255.0

Condensed Consolidating Statements of Cash Flows

Lennox International Inc. and Subsidiaries

Condensed Consolidating Statements of Cash Flows

For the Nine Months Ended September 30, 2017



(Amounts in millions)	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Cash flows from operating activities	$	411.6		$	(2.4	)	$	(279.6	)	$	(0.6	)	$	129.0
Cash flows from investing activities:
Proceeds from the disposal of property, plant and equipment	—			0.1			—			0.1			0.2
Purchases of property, plant and equipment	—			(48.3		)	(12.2		)	—			(60.5		)
Net cash used in investing activities	—			(48.2		)	(12.2		)	0.1			(60.3		)
Cash flows from financing activities:
Short-term borrowings, net	—			—			(1.4		)	—			(1.4		)
Asset securitization borrowings	—			—			275.0			—			275.0
Asset securitization payments	—			—			—			—			—
Long-term debt payments	(200.0		)	(0.2		)	(0.1		)	(0.5		)	(200.8		)
Long-term borrowings	—			0.1			(0.1		)	—			—
Borrowings from credit facility	1,883.0			(0.2		)	(0.2		)	0.4			1,883.0
Payments on credit facility	(1,701.0		)	—			—			—			(1,701.0		)
Proceeds from employee stock purchases	2.3			—			—			—			2.3
Repurchases of common stock	(250.0		)	—			—			—			(250.0		)
Repurchases of common stock to satisfy employee withholding tax obligations	(16.0		)	—			—			—			(16.0		)
Intercompany debt	102.8			(34.8		)	(68.0		)	—			—
Intercompany financing activity	(174.3		)	91.0			82.7			0.6			—
Cash dividends paid	(58.4		)	—			—			—			(58.4		)
Net cash (used in) provided by financing activities	(411.6		)	55.9			287.9			0.5			(67.3		)
Increase (decrease) in cash and cash equivalents	—			5.3			(3.9		)	—			1.4
Effect of exchange rates on cash and cash equivalents	—			—			9.1			—			9.1
Cash and cash equivalents, beginning of period	1.2			17.1			31.9			—			50.2
Cash and cash equivalents, end of period	$	1.2		$	22.4		$	37.1		$	—		$	60.7

Lennox International Inc. and Subsidiaries

Condensed Consolidating Statements of Cash Flows

For the Nine Months Ended September 30, 2016



(Amounts in millions)	Parent				Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations		Consolidated
Cash flows from operating activities	$	15.5			$	262.2		$	(150.8	)	$	—	$	126.9
Cash flows from investing activities:
Purchases of property, plant and equipment	—				(52.4		)	(7.0		)	—		(59.4		)
Net cash used in investing activities	—				(52.4		)	(7.0		)	—		(59.4		)
Cash flows from financing activities:
Short-term borrowings, net	—				—			(2.1		)	—		(2.1		)
Asset securitization borrowings	—				—			145.0			—		145.0
Asset securitization payments	—				—			(20.0		)	—		(20.0		)
Long-term debt payments	(30.0		)		(0.6		)	(0.3		)	—		(30.9		)
Borrowings from credit facility	1,715.0				—			—			—		1,715.0
Payments on credit facility	(1,493.0		)		—			—			—		(1,493.0		)
Proceeds from employee stock purchases	1.9				—			—			—		1.9
Payments of deferred financing costs	(0.9		)		—			—			—		(0.9		)
Repurchases of common stock	(300.0		)		—			—			—		(300.0		)
Repurchases of common stock to satisfy employee withholding tax obligations	(26.3		)		—			—			—		(26.3		)
Intercompany debt	(6.6		)		(5.1		)	11.7			—		—
Intercompany financing activity	178.9				(196.0		)	17.1			—		—
Intercompany investments	—			—	—			—			—		—
Cash dividends paid	(50.5		)		—			—			—		(50.5		)
Net cash (used in) provided by financing activities	(11.5		)		(201.7		)	151.4			—		(61.8		)
Increase (decrease) in cash and cash equivalents	4.0				8.1			(6.4		)	—		5.7
Effect of exchange rates on cash and cash equivalents	—				—			3.2			—		3.2
Cash and cash equivalents, beginning of period	0.5				7.8			30.6			—		38.9
Cash and cash equivalents, end of period	$	4.5			$	15.9		$	27.4		$	—	$	47.8