UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

_______________________

FORM 10-Q

(MARK ONE)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY
PERIOD ENDED MARCH 31, 2002

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____ to _____

_______________________

Commission file number 001-15149

LENNOX INTERNATIONAL INC.
Incorporated pursuant to the Laws of the State of DELAWARE

_______________________

Internal Revenue Service Employer Identification No. 42-0991521

2140 LAKE PARK BLVD.
RICHARDSON, TEXAS 75080
(972) 497-5000

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

YES /X/ NO

As of May 13, 2002, the number of shares outstanding of the registrant's
common stock, par value $.01 per share, was 57,143,480.

LENNOX INTERNATIONAL INC.

INDEX

Page No.

Part I. Financial Information

Item 1. Financial Information

Consolidated Balance Sheets-March 31, 2002 (Unaudited)
and December 31, 2001......................................... 3

Consolidated Statements of Income (Unaudited)-Three Months
Ended March 31, 2002 and 2001................................. 4

Consolidated Statements of Cash Flows (Unaudited)-Three Months
Ended March 31, 2002 and 2001................................. 5

Notes to Consolidated Financial Statements,(Unaudited)........ 6

Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations..................................... 11

Item 3. Quantitative and Qualitative Disclosures About Market Risk.... 15

Part II. Other Information

Item 4. Exhibits and Reports on Form 8-K.............................. 16

PART I -- FINANCIAL INFORMATION

Item 1. Financial Statements

LENNOX INTERNATIONAL INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
As of March 31, 2002 and December 31, 2001
(In thousands, except share data)

ASSETS

March 31, December 31,
2002 2001
---- ----
(unaudited)
CURRENT ASSETS:

Cash and cash equivalents..................................................... $ 25,068 $ 34,393
Accounts and notes receivable, net............................................ 339,748 291,485
Inventories................................................................... 297,586 281,170
Deferred income taxes......................................................... 44,136 42,662
Other assets.................................................................. 62,022 63,655
---------- ----------
Total current assets........................................................ 768,560 713,365
PROPERTY, PLANT AND EQUIPMENT, net.............................................. 281,371 291,531
GOODWILL, net................................................................... 414,916 704,713
OTHER ASSETS.................................................................... 119,012 84,379
---------- ----------
TOTAL ASSETS................................................................ $1,583,859 $1,793,988
========== ==========

LIABILITIES AND STOCKHOLDERS EQUITY
CURRENT LIABILITIES
Short-term debt............................................................... $ 33,715 $ 23,701
Current maturities of long-term debt.......................................... 27,817 28,895
Accounts payable.............................................................. 271,251 242,534
Accrued expenses.............................................................. 247,462 249,546
Income taxes payable.......................................................... 14,007 9,870
----------- ----------
Total current liabilities................................................... 594,252 554,546
LONG-TERM DEBT.................................................................. 462,385 465,163
DEFERRED INCOME TAXES........................................................... 630 673
POSTRETIREMENT BENEFITS, OTHER THAN PENSIONS.................................... 13,404 14,014
OTHER LIABILITIES............................................................... 104,643 103,301
----------- ----------
Total liabilities........................................................... 1,175,314 1,137,697
MINORITY INTEREST............................................................... 1,738 1,651
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,
61,062,051 shares and 60,690,198 shares issued
for 2002 and 2001, respectively............................................. 611 607
Additional paid-in capital.................................................... 375,806 372,877
Retained earnings............................................................. 129,496 383,566
Accumulated other comprehensive loss.......................................... (64,862) (68,278)
Deferred compensation......................................................... (3,578) (3,710)
Treasury stock, at cost, 3,005,861 and 2,980,846 shares
for 2002 and 2001, respectively............................................. (30,666) (30,422)
---------- ----------
Total stockholders' equity.................................................. 406,807 654,640
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY.................................. $1,583,859 $1,793,988
========== ==========
</table>

The accompanying notes are an integral part of these consolidated financial
statements.

CONSOLIDATED STATEMENTS OF INCOME
For the Three Months Ended March 31, 2002 and 2001
(Unaudited, in thousands, except per share data)

For the
Three Months Ended
March 31,
------------------------------
2002 2001
---- ----

NET SALES....................................................................... $ 675,774 $ 715,966
COST OF GOODS SOLD.............................................................. 466,899 502,381
---------- ----------
Gross Profit.................................................................. 208,875 213,585
OPERATING EXPENSES:
Selling, general and administrative expense................................... 199,385 217,556
Restructurings................................................................ 653 --
---------- ----------
Income (loss) from operations............................................... 8,837 (3,971)
INTEREST EXPENSE, net........................................................... 7,883 12,777
OTHER........................................................................... (85) 663
MINORITY INTEREST............................................................... 66 107
---------- ----------
Income (loss) before income taxes and cumulative effect of
accounting change........................................................... 973 (17,518)
PROVISION FOR (BENEFIT FROM) INCOME TAXES....................................... 402 (7,270)
---------- ----------
Income (loss) before cumulative effect of accounting change................. 571 (10,248)
---------- ----------
CUMULATIVE EFFECT OF ACCOUNTING CHANGE.......................................... 249,224 --
---------- ----------
Net loss.................................................................... $ (248,653) $ (10,248)
========== ==========

INCOME (LOSS) PER SHARE BEFORE CUMULATIVE
EFFECT OF ACCOUNTING CHANGE:
Basic......................................................................... $ 0.01 $ (0.18)
Diluted....................................................................... $ 0.01 $ (0.18)

CUMULATIVE EFFECT OF ACCOUNTING CHANGE PER SHARE:
Basic......................................................................... $ (4.39) $ --
Diluted....................................................................... $ (4.39) $ --

NET LOSS PER SHARE:
Basic......................................................................... $ (4.38) $ (0.18)
Diluted....................................................................... $ (4.38) $ (0.18)

</table>

The accompanying notes are an integral part of these consolidated financial
statements.

LENNOX INTERNATIONAL INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three Months Ended March 31, 2002 and 2001
(Unaudited, in thousands)

For the
Three Months Ended
March 31,
------------------------------
2002 2001
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:

Net loss ..................................................................... $ (248,653) $ (10,248)
Adjustments to reconcile net loss to net cash (used in) provided by
operating activities:
Minority interest......................................................... 66 107
Joint venture profit...................................................... (628) (41)
Non-cash cumulative effect of accounting change........................... 249,224 --
Depreciation and amortization............................................. 15,411 21,741
Loss on disposal of equipment............................................. 6 113
Other..................................................................... 1,100 983
Changes in assets and liabilities, net of effects of acquisitions:
Accounts and notes receivable............................................. (49,154) 27,121
Inventories............................................................... (15,451) (23,814)
Other current assets...................................................... 4,151 (8,841)
Accounts payable.......................................................... 28,133 2,686
Accrued expenses.......................................................... (1,779) 14,813
Deferred income taxes..................................................... 4,196 (150)
Income taxes payable and receivable....................................... 2,478 (12,287)
Long-term warranty, deferred income and other liabilities................. 4,465 (4,033)
---------- ----------
Net cash (used in) provided by operating activities..................... (6,435) 8,150

CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from the disposal of property, plant and equipment................... 427 769
Purchases of property, plant and equipment.................................... (4,685) (5,036)
Acquisitions, net of cash acquired............................................ -- (1,413)
---------- ----------
Net cash used in investing activities................................... (4,258) (5,680)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from revolving short-term debt....................................... 8,739 1,997
Proceeds from (repayments of) revolving long-term debt........................ 7,300 (14,558)
Repayment of long-term debt................................................... (12,000) --
Sales of common stock......................................................... 2,933 1,036
Repurchases of common stock................................................... (244) (214)
Cash dividends paid........................................................... (5,374) (5,274)
---------- ----------
Net cash provided by (used in) financing activities..................... 1,354 (17,013)

DECREASE IN CASH AND CASH EQUIVALENTS........................................... (9,339) (14,543)
EFFECT OF EXCHANGE RATES ON CASH AND CASH EQUIVALENTS........................... 14 (601)
---------- ----------
CASH AND CASH EQUIVALENTS, beginning of period.................................. 34,393 40,633
---------- ----------
CASH AND CASH EQUIVALENTS, end of period........................................ $ 25,068 $ 25,489
========== ==========

Supplementary disclosures of cash flow information:
Cash paid during the period for:
Interest.................................................................... $ 4,570 $ 11,612
========== ==========

Income taxes................................................................ $ 2,705 $ 2,380
========== ==========

The accompanying notes are an integral part of these consolidated financial
statements.

LENNOX INTERNATIONAL INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

1. Basis of Presentation and other Accounting Information:

The accompanying unaudited consolidated balance sheet as of March 31, 2002,
and the consolidated statements of income and cash flows for the three months
ended March 31, 2002 and 2001 should be read in conjunction with Lennox
International Inc.'s (the "Company"; or "LII") consolidated financial statements
and the accompanying footnotes as of December 31, 2001 and 2000 and for each of
the three years in the period ended December 31, 2001. In the opinion of
management, the accompanying consolidated financial statements contain all
material adjustments, consisting principally of normal recurring adjustments,
necessary for a fair presentation of the Company';s financial position, results
of operations, and cash flows. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted pursuant to
applicable rules and regulations, although the Company believes that the
disclosures herein are adequate to make the information presented not
misleading. The operating results for the interim periods are not necessarily
indicative of the results to be expected for a full year.

The Company's fiscal year ends on December 31 of each year, and the
Company's quarters are each comprised of 13 weeks. For convenience, throughout
these financial statements, the 13 weeks comprising each three month period are
denoted by the last day of the respective calendar quarter.

2. Reportable Business Segments:

In accordance with Statement of Financial Accounting Standards No. 131,
"Disclosures About Segments of an Enterprise and Related Information," the
Company discloses business segment data for its reportable business segments,
which have been determined using the "management approach." The management
approach is based on the way segments are organized within the Company for
making operating decisions and assessing performance. The Company's business
operations are organized within five reportable business segments as follows (in
thousands):

Three Months Ended
March 31,
-------------------------
Net Sales 2002 2001
--------- ---- ----
North American residential............ $275,209 $282,025
North American retail................. 205,014 222,424
Commercial air conditioning........... 86,804 93,378
Commercial refrigeration.............. 85,263 85,089
Heat transfer (1)..................... 48,676 58,275
Eliminations.......................... (25,192) (25,225)
-------- --------
$675,774 $715,966
======== ========

For the Three Months Ended March 31,
---------------------------------------
Income (Loss) from Operations 2002 2001 2001 Adjusted(2)
------------------------------ ---- ---- ------------

North American residential(3)......... $ 14,849 $ 12,306 $ 13,024
North American retail................. (2,793) (9,973) (6,684)
Commercial air conditioning........... (163) (1,817) (1,992)
Commercial refrigeration.............. 8,259 6,221 6,431
Heat transfer......................... (800) 1,788 2,012
Corporate and other................... (9,933) (11,003) (10,901)
Eliminations.......................... (582) (1,493) (1,493)
-------- -------- ---------
$ 8,837 $ (3,971) $ 397
======== ======== =========
- ----------
<FN>
(1) The Heat Transfer segment had intersegment sales of $5,731 and $7,036 for
the three months ended March 31, 2002 and 2001, respectively.

(2) Reported segment income (loss) from operations for the three months ended
March 31, 2001 has been adjusted to reflect the discontinuation of goodwill
amortization under Statement of Financial Accounting Standards No. 142,
"Goodwill and Other Intangible Assets."

(3) Includes $653 restructuring charge in 2002.
</fn>

As of March 31, As of March 31,
Total Assets 2002 2001
------------ ---- ----
North American residential............ $ 424,190 $ 475,494
North American retail................. 512,850 702,451
Commercial air conditioning........... 161,244 156,206
Commercial refrigeration.............. 233,246 224,971
Heat transfer......................... 114,446 125,083
Corporate and other................... 158,155 126,995
Eliminations.......................... (20,272) (17,212)
---------- ----------
$1,583,859 $1,793,988
========== ==========

3. Inventories:

Components of inventories are as follows (in thousands):

As of March 31, As of December 31,
2002 2001
---- ----
Finished goods........................ $ 191,886 $ 179,965
Repair parts.......................... 37,077 37,197
Work in process....................... 22,017 17,664
Raw materials......................... 93,574 95,438
---------- ----------
344,554 330,264
Reduction for last-in, first-out...... (46,968) (49,094)
---------- ----------
$ 297,586 $ 281,170
========== ==========

<4. Shipping and Handling:

Shipping and handling costs are included as part of Selling, General and
Administrative Expense in the accompanying Consolidated Statements of Income in
the following amounts (in thousands):

Three Months Ended
March 31,
-------------------
2002 2001
---- ----
$29,643 $30,955

5. Lines of Credit and Financing Arrangements:

The Company has bank lines of credit aggregating $405 million, of which
$260 million was borrowed and outstanding, and $33 million was committed to
standby letters of credit at March 31, 2002. The remaining $112 million was
available for future borrowings, subject to covenant limitations. Included in
the lines of credit are two domestic facilities in the amounts of $300 million
and $30 million, each governed by agreements between the Company and syndicates
of banks. The facilities contain certain financial covenants and bear interest,
at the Company's option, at a rate equal to either (a) the greater of the
bank's prime rate or the federal funds rate plus 0.5% or (b) the London
Interbank Offered Rate plus a margin equal to 0.5% to 2.25%, depending upon the
ratio of total funded debt to earnings before interest, taxes, depreciation and
amortization ("EBITDA"). The Company pays a commitment fee equal to 0.10% to
0.30% of the unused commitment, depending upon the ratio of total funded debt to
EDITDA. The agreements place restrictions on the Company's ability to incur
additional indebtedness, encumber its assets, sell its assets, or pay dividends.

6. Earnings per Share:

Basic earnings per share are computed by dividing net income by the
weighted average number of common shares outstanding during the period. Diluted
earnings per share are computed by dividing net income by the sum of the
weighted average number of shares and the number of equivalent shares assumed
outstanding, if dilutive, under the Company's stock-based compensation
plans. Weighted average shares outstanding used to calculate diluted earnings
per share are determined as follows (in thousands):

Three Months Ended
March 31,
-----------------------
2002 2001
----- ----
Weighted average shares outstanding.................. 56,769 55,775
Effect of diluted securities attributable to stock
options and performance share awards............... 877 --
------- ------
Weighted average shares outstanding, as adjusted..... 57,646 55,775
======= ======

7. Derivatives:

The Company hedges its exposure to the fluctuation on the prices paid for
copper and aluminum by purchasing futures contracts on these metals. Gains or
losses recognized on the closing of these contracts negate the losses or gains
realized through physical deliveries of these metals. Quantities covered by
these commodity futures contracts are for less than expected actual quantities
to be purchased. As of March 31, 2002, the Company had metals futures contracts
maturing at various dates through March 31, 2004 with a fair value as an asset
of $1.7 million. These are hedges of forecasted transactions, and under
Statement of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities," such contracts are to be considered cash
flow hedges. Accordingly, the Company recorded an after-tax credit of $1.0
million to Accumulated Other Comprehensive Loss, a direct component of owner's
equity. The credit to Accumulated Other Comprehensive Loss will be reclassified
into earnings when the related inventory is sold, generally within three to six
months.

The Company also hedges its exposure to fluctuations in foreign currency
exchange rates incurred by its Australian subsidiary. This subsidiary
manufactures sophisticated machine tools, which generally require long
manufacturing and installation times and which generally are sold at prices
denominated in the local currency of the purchasing entity. This exposure to the
fluctuations in foreign currency exchange rates is hedged through the sale of
futures contracts for the various currencies. Since the customers are not
invoiced and payments are not received until the equipment has been installed
and operating satisfactorily, the currency futures contracts are deemed to be
cash flow hedges and as such are recorded at fair value with an offset to
accumulated other comprehensive income (loss) until realized. Gains or losses on
the currency futures are transferred from accumulated other comprehensive income
(loss) to the income statement when the related equipment is sold, generally
within three to six months. As of March 31, 2002, the Company had currency
futures contracts maturing at various dates through December 31, 2002, for which
the fair value was a liability of $0.7 million. Accordingly, $0.4 million, net
of applicable income tax, was charged to Accumulated Other Comprehensive Loss.

8. Comprehensive Loss:

Comprehensive loss is computed as follows (in thousands):

Three Months Ended
March 31,
-------------------------
2002 2001
---- ----
Net loss................................... $(248,653) $(10,248)
Foreign currency translation adjustments... (289) (23,558)
Derivatives................................ 3,704 (5,027)
--------- ---------
Total comprehensive loss................... $(245,238) $(38,833)
========= =========

9. Restructuring Charges:

The Company recorded pre-tax restructuring charges totaling $73.2 million
in 2001. The restructuring charges were related to closures of manufacturing
plants in Toronto, Ontario, Canada and Brookvale, NSW, Australia. Charges were
also recorded for closing and consolidating a distribution facility in the U.S.,
for office consolidation of the Company's corporate headquarters, for
elimination of excess manufacturing capacity in Europe and for final close-down
costs for its Mexico sales operation. These restructuring charges also included
the closure of certain retail centers and the merger of certain other retail
centers.

Changes in the Company's restructuring reserve since December 31, 2001 are
summarized as follows (in thousands):

December 31, 2001 March 31, 2002
Reserve Payments Other Reserve
------- -------- ----- -------

Severance and Benefits................ $ 5,621 $3,864 $ (216) $ 1,973
Contract Exit Costs................... 15,039 423 1,604 13,012
------- ------ ------- -------
Total............................... $20,660 $4,287 $ 1,388 $14,985
======= ====== ======= =======

Unpaid severance and benefits and unpaid contract exit costs as of March
31, 2002 are expected to be paid by the end of 2002.

The Company incurred an additional $0.7 million of restructuring charges in
the first quarter of 2002 related to the 2001 restructuring projects summarized
above.

10. Goodwill:

On January 1, 2002, the Company adopted Statement of Financial Accounting
Standards No. 142, "Goodwill and Other Intangible Assets" ("SFAS No. 142"), and
recorded a $285.7 million impairment of goodwill ($248.7 million, net of taxes).
The adoption of SFAS No. 142 requires that goodwill and other intangible assets
with an indefinite useful life no longer be amortized as expenses of operations
but rather tested at least annually by applying a fair-value-based test. During
the first quarter of 2002, LII, in consultation with independent valuation
advisors, conducted such tests. The charge relates primarily to the 1998 - 2000
acquisitions of the Company's retail and hearth products operations where lower
than expected operating results occurred. The fair value of the related
reporting units was determined based on a combination of the latest earnings
forecasts using discounted values of projected cash flows and market values of
comparable businesses.

The changes in the carrying amount of goodwill for the quarter ended March
31, 2002, in total and by segment, are as follows (in thousands):

Balance Goodwill Foreign Currency Balance
Segment December 31, 2001 Impairment Translation & Other March 31, 2002
------- ----------------- ---------- ------------------- --------------

North American residential.... $104,089 $ (77,124) $ -- $ 26,965
North American retail......... 510,804 (200,514) (4,773) 305,517
Commercial air conditioning... 18,471 -- (179) 18,292
Commercial refrigeration...... 54,313 -- 882 55,195
Heat transfer................. 17,036 (8,047) (42) 8,947
-------- --------- ------- ---------
Total..................... $704,713 $(285,685) $(4,112) $ 414,916
======== ========= ======= =========

The following reflects the Company's income (loss) before the cumulative
effect of accounting change and income (loss) adjusted to exclude goodwill
amortization for all periods presented (in thousands):

Ended Ended
March 31, 2002 March 31, 2001
-------------- --------------

Income (loss) before cumulative effect of accounting change.................... $ 571 $ (10,248)
Add back: goodwill amortization, net of income tax............................ -- 3,821
----------- ---------
Adjusted income (loss) before cumulative effect of accounting change........... $ 571 $ (6,427)
=========== =========

Basic and diluted earnings per share:
Income (loss) before cumulative effect of accounting change.................. $ 0.01 $ (0.18)
Add back: goodwill amortization, net of income tax.......................... -- 0.07
----------- ---------
Adjusted income (loss) before cumulative effect of
accounting change.......................................................... $ 0.01 $ (0.11)
=========== =========

Reported net loss.............................................................. $ (248,653) $ (10,248)
Add back: goodwill amortization, net of income tax............................ -- 3,821
----------- ---------
Adjusted net loss.............................................................. $ (248,653) $ (6,427)
=========== =========

Basic and diluted earnings per share:
Reported net loss............................................................. $ (4.38) $ (0.18)
Add back: goodwill amortization.............................................. -- 0.07
----------- ---------
Adjusted net loss............................................................ $ (4.38) $ (0.11)
=========== =========

Identifiable intangible assets as of March 31, 2002 are recorded in Other
Assets in the Consolidated Balance Sheet and are comprised of the following (in
thousands):

Gross Accumulated
Amount Amortization
------ ------------
Patents............................. $ 6,500 $(1,071)
Deferred financing costs............ 5,109 (1,906)
Non-competes and other ............. 10,225 (4,639)
-------- -------
Total............................ $ 21,834 $(7,616)
======== =======

Amortization of intangible assets for the three months ended March 31, 2002
and March 31, 2001 was approximately $0.8 million and $1.5 million,
respectively. Amortization expense for 2002 to 2006 is estimated to be
approximately $5 million in 2002, $4 million in 2003, $3 million in 2004, $1
million in 2005 and $1 million in 2006. During 2004, the Company anticipates
that a certain non-compete agreement and certain deferred financing costs will
become fully amortized resulting in lower estimated aggregate amortization
expense in 2004, 2005 and 2006. As of March 31, 2002, the Company had $4.1
million of intangible assets, primarily trademarks, which are not subject to
amortization.

11. Subsequent Events:

On April 22, 2002, the Company announced it had entered into a memorandum
of agreement for the formation of a joint venture with Outokumpu Oyj of Finland
("Outokumpu"). Outokumpu will purchase a 55 percent interest in the Company's
heat transfer business segment for $55 million, with the Company retaining 45
percent ownership. After a period of three years, Outokumpu will have the option
to purchase the remainder of the business contingent upon several factors,
including operating performance of the joint venture. The agreement, which has
been approved by the board of directors of both companies and is contingent upon
regulatory approvals, is currently targeted for completion in mid-year 2002.

On May 8, 2002, the Company closed on the private placement of $143.75
million of its 6.25% convertible subordinated notes due 2009. The notes are
convertible into shares of LII common stock upon certain specified circumstances
at the option of the holder at a conversion price of $18.0875 per share. LII
used the net proceeds of the issuance to reduce its indebtedness under its
revolving credit facilities.

Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations

Overview

The Company participates in five reportable business segments of the
heating, ventilation, air conditioning and refrigeration ("HVACR") industry. The
first segment is the North American residential market, in which LII
manufactures and markets a full line of heating, air conditioning and hearth
products for the residential replacement and new construction markets in the
United States and Canada. The second segment is the North American retail market
which includes sales and installation of, and maintenance and repair services
for, HVACR equipment by LII-owned service centers in the United States and
Canada. The third segment is the global commercial air conditioning market, in
which LII manufactures and sells rooftop products and applied systems for
commercial applications. The fourth segment is the global commercial
refrigeration market, which consists of unit coolers, condensing units and other
commercial refrigeration products. The fifth segment is the heat transfer
market, in which LII designs, manufactures and sells evaporator and condenser
coils, copper tubing and related manufacturing equipment to original equipment
manufacturers and other specialty purchasers on a global basis.

LII sells its products to numerous types of customers, including
distributors, installing dealers, property owners, national accounts and
original equipment manufacturers. The demand for LII's products is influenced by
national and regional economic and demographic factors, such as interest rates,
the availability of financing, regional population and employment trends, new
construction and general economic conditions, especially consumer confidence. In
addition to economic cycles, demand for LII's products is seasonal and dependent
on the weather. Hotter than normal summers generate strong demand for
replacement air conditioning and refrigeration products and colder than normal
winters have the same effect on heating products. Conversely, cooler than normal
summers and warmer than normal winters depress sales of HVACR products.

The principal components of cost of goods sold are component costs, raw
materials, factory overhead, labor and estimated costs of warranty expense. The
principal raw materials used in LII's manufacturing processes are copper,
aluminum and steel. In instances where LII is unable to pass on to its customers
increases in the costs of copper and aluminum, LII enters into forward contracts
for the purchase of those materials. LII attempts to minimize the risk of price
fluctuations in key components by entering into contracts, typically at the
beginning of the year, which generally provide for fixed prices for its needs
throughout the year. These hedging strategies enable LII to establish product
prices for the entire model year while minimizing the impact of price increases
of components and raw materials on its margins. Warranty expense is estimated
based on historical trends and other factors.

LII's fiscal year ends on December 31 of each year and its fiscal quarters
are each comprised of 13 weeks. For convenience, throughout this
Management's Discussion and Analysis of Financial Condition and Results of
Operations, the 13 week periods comprising each fiscal quarter are denoted by
the last day of the calendar quarter.

Results of Operations

The following table sets forth, as a percentage of net sales, income data
for the three months ended March 31, 2002 and 2001:

Three Months Ended March 31,
----------------------------------
2002 2001 2001 Adjusted(1)
---- ---- --------------

Net sales.................................... 100.0% 100.0% 100.0%
Cost of goods sold........................... 69.1 70.2 70.2
----- ----- -----
Gross profit.............................. 30.9 29.8 29.8
Selling, general and administrative expense.. 29.5 30.4 29.8
Restructurings............................... 0.1 -- --
----- ----- -----
Income (loss) from operations............. 1.3 (0.6) 0.0
Interest expense, net........................ 1.2 1.8 1.8
Other........................................ 0.0 0.0 0.0
Minority interest............................ 0.0 0.0 0.0
----- ----- -----
Income (loss) before income taxes and
cumulative effect of accounting change.... 0.1 (2.4) (1.8)
Provision for (benefit from) income taxes.... 0.1 (1.0) (0.9)
----- ----- -----
Income (loss) before cumulative effect of
accounting change......................... 0.0 (1.4) (0.9)
Cumulative effect of accounting change....... 36.8 -- --
----- ----- -----
Net loss.................................. (36.8)% (1.4)% (0.9)%
===== ===== =====

- ----------
<FN>
(1) Income data, as a percentage of sales, has been adjusted for the three
months ended March 31, 2001 to reflect the discontinuation of goodwill
amortization under Statement of Financial Accounting Standards No. 142,
"Goodwill and Other Intangible Assets."
</FN>

The following table sets forth net sales by business segment and geographic
market (dollars in millions):

Three Months Ended March 31,
------------------------------------
2002 2001
--------------- ----------------
Amount % Amount %
------ ----- ------ ----
Business Segment:
North American residential.....$275.2 40.7% $282.0 39.4%
North American retail........... 205.0 30.3 222.4 31.1
Commercial air conditioning..... 86.8 12.8 93.4 13.0
Commercial refrigeration........ 85.3 12.6 85.1 11.9
Heat transfer................... 48.7 7.2 58.3 8.1
Eliminations.................... (25.2) (3.6) (25.2) (3.5)
-------- ----- ------ -----
Total net sales..............$675.8 100.0% $716.0 100.0%
====== ===== ====== =====

Geographic Market:
U.S.............................$533.5 78.9% $562.4 78.5%
International................... 142.3 21.1 153.6 21.5
------- ------ ------ ------
Total net sales..............$675.8 100.0% $716.0 100.0%
====== ===== ====== =====

Three Months Ended March 31, 2002 Compared to Three Months Ended March 31, 2001

Net sales. Net sales decreased $40.2 million, or 5.6%, to $675.8 million
for the three months ended March 31, 2002 from $716.0 million for the three
months ended March 31, 2001. Adjusted for the impact of currency translation,
net sales decreased 4.8% compared to the first three months of 2001.

Net sales in the North American residential segment were $275.2 million for
the three months ended March 31, 2002, a decrease of $6.8 million, or 2.4%, from
$282.0 million for the three months ended March 31, 2001. The decrease in net
sales was due largely to lower sales of hearth products. Adjusted for the impact
of currency translation, net sales declined 1.6% compared to the first three
months of 2001.

Net sales in the North American retail segment were $205.0 million for the
three months ended March 31, 2002, a decrease of $17.4 million, or 7.8%, from
$222.4 million for the three months ended March 31, 2001. LII realized an
additional week of net sales in 2002 in the North American retail segment when
compared to the same period last year. Due to the decentralized nature of LII's
retail operations, LII's reporting of retail results in the first quarter
historically lagged other operations by one week. However, with an enhanced
enterprise system in place in fiscal 2002, LII was able to synchronize the
timing of its retail results with the results of its other operations.
Accounting for the additional week added $11.7 million of net sales to the North
American retail segment results for the three months ended March 31, 2002. On a
same store basis, after adjusting for sold or closed service centers and the
additional week of results, net sales declined 8.7% for the three months ended
March 31, 2002 compared to the same period last year.

Commercial air conditioning segment net sales decreased $6.6 million, or
7.0%, to $86.8 million for the three months ended March 31, 2002 compared to the
three months ended March 31, 2001. Adjusted for the impact of currency
translation, net sales declined 5.6% compared to the first three months of 2001.
North American industry shipments of unitary commercial heating, ventilation and
air conditioning equipment were down approximately 17% in the first three months
of 2002 compared to the first three months of last year. As a result, the
Company outperformed the market due primarily to strong performance in the
Company's domestic national accounts business.

Net sales in the commercial refrigeration segment were $85.3 million for
the three months ended March 31, 2002, a slight increase from $85.1 million for
the three months ended March 31, 2001. Adjusted for the impact of currency
translation, net sales increased 2.6%, or $2.0 million. A strengthening order
rate for commercial refrigeration equipment in the Company's domestic and
European operations helped maintain sales levels in this segment.

Heat transfer segment revenues decreased $9.6 million, or 16.5%, to $48.7
million for the three months ended March 31, 2002 compared to the three months
ended March 31, 2001. Adjusted for the impact of currency translation, net trade
sales decreased 15.8% compared to the first three months of 2001. A continuing
soft economy in the United States coupled with project shortfalls in the
Company's Australian operations were the principal reasons for the decline.

Gross profit. Gross profit was $208.9 million for the three months ended
March 31, 2002, compared to $213.6 million for the three months ended March 31,
2001, a decrease of $4.7 million. Gross profit margin improved

from 29.8% for the three months ended March 31, 2001 to 30.9% for the three
months ended March 31, 2002. The primary cause of the increase in gross profit
margin was improvement in factory efficiencies, particularly in the areas of
labor utilization, purchasing savings and lower overhead.

Selling, general and administrative expense. Selling, general and
administrative expenses ("SG&A") were $199.4 million for the three months ended
March 31, 2002, a decrease of $18.2 million, or 8.4%, from $217.6 million for
the three months ended March 31, 2001. Selling, general and administrative
expenses represented 29.5% and 30.4% of total revenues for the three months
ended 2002 and 2001, respectively. The first quarter of 2001 includes $4.4
million of goodwill amortization which has been discontinued with the adoption
of Statement of Financial Accounting Standards No. 142, "Goodwill and Other
Intangible Assets," ("SFAS No. 142") on January 1, 2002. The balance of the
SG&A decrease was largely due to cost reduction programs, expense control
initiatives and reductions in personnel, particularly in the North American
retail segment.

Restructurings. Pre-tax restructuring charges for the three months ended
March 31, 2002 were $0.7 million. These charges stem from personnel terminations
related to the restructuring program announced in 2001 and relate to LII's North
American residential segment. The tax benefit of these charges for the three
months ended March 31, 2002 was $0.3 million.

Interest expense, net. Interest expense, net, for the three months ended
March 31, 2002 was $7.9 million, a $4.9 million decline from $12.8 million in
the same period of last year. The decrease in interest expense is attributable
to lower debt levels and lower interest rates.

Other. Other expense (income) was $(0.1) million for the three months ended
March 31, 2002 and $0.7 million for the three months ended March 31, 2001. Other
expense (income) is primarily comprised of currency exchange gains or losses,
which relate principally to the Company's operations in Canada, Australia and
Europe.

Minority Interest. Minority interest was $0.1 million for the three months
ended March 31, 2002, essentially flat compared to the same period last year.

Provision for (benefit from) income taxes. The provision for (benefit from)
income taxes was $0.4 million for the three months ended March 31, 2002 and
$(7.3) million for the three months ended March 31, 2001. The effective tax rate
was 41.3% and 41.5% for the three months ended March 31, 2002 and 2001,
respectively. This rate differs from the statutory federal rate of 35.0%
principally due to state and local taxes, non-deductible goodwill expenses (in
2001 only), foreign operating losses for which no tax benefits have been
recognized and foreign taxes at rates other than 35%. The effective tax rate was
40.2% after excluding the tax benefit of $0.3 million as a result of
restructuring charges recognized during the three months ended March 31, 2002.
Had SFAS No. 142 been in effect in the first quarter of 2001, the tax benefit
would have been $0.5 million lower than reported.

Cumulative effect of accounting change. The cumulative effect of accounting
change represents an after-tax non-cash goodwill impairment charge of $249.2
million for the three months ended March 31, 2002. This charge resulted from the
adoption of SFAS No. 142 which became effective January 1, 2002 and requires
that goodwill and other intangible assets with an indefinite useful life no
longer be amortized as expenses of operations but rather be tested for
impairment at least annually by applying a fair-value-based test. During the
first quarter of 2002, LII, in consultation with independent valuation advisors,
conducted such fair-value-based tests and recorded a pre-tax goodwill impairment
charge of $285.7 million. The charge primarily relates to the Company's North
American retail and residential business segments. The tax benefit of this
charge was $36.5 million.

Liquidity and Capital Resources

Lennox's working capital and capital expenditure requirements are generally
met through internally generated funds and bank lines of credit.

During the first three months of 2002, cash used in operating activities
was $6.4 million compared to $8.2 million provided by operating activities for
the comparable period in 2001. If the effects of asset securitization were
excluded, the comparison would have been $11.9 million cash provided by
operating activities in 2002 and a usage of $21.4 million in 2001. The change is
a reflection of better management of working capital. Cash provided by (or used
in) financing activities for 2002 reflects $4.0 million in net proceeds from
debt.

Capital expenditures of $4.7 million and $5.0 million in 2002 and 2001,
respectively, were primarily for production equipment in the North American heat
transfer and residential products manufacturing plants.

The Company has bank lines of credit aggregating $405 million, of which
$260 million was borrowed and outstanding, and $33 million was committed to
standby letters of credit at March 31, 2002. The remaining $112 million was
available for future borrowings, subject to covenant limitations. Included in
the lines of credit are two domestic facilities in the amounts of $300 million
and $30 million, each governed by agreements between the Company and syndicates
of banks. The facilities contain certain financial covenants and bear interest,
at the Company's option, at a rate equal to either (a) the greater of the bank's
prime rate or the federal funds rate plus 0.5% or (b) the London Interbank
Offered Rate plus a margin equal to 0.5% to 2.25%, depending upon the ratio of
total funded debt to earnings before interest, taxes, depreciation and
amortization ("EBITDA"). The Company pays a commitment fee equal to 0.10% to
0.30% of the unused commitment, depending upon the ratio of total funded debt to
EDITDA. The agreements place restrictions on the Company's ability to incur
additional indebtedness, encumber its assets, sell its assets, or pay dividends.

Under an on-going asset securitization arrangement, the Company had sold,
at March 31, 2002, $124.8 million of receivables on a non-recourse basis. The
accounts receivable that were sold are shown as a reduction of accounts and
notes receivable in the accompanying Consolidated Balance Sheets. The discount
of $0.7 million incurred in the sale of such receivables is included as part of
Selling, General and Administrative Expense in the accompanying Consolidated
Statements of Income.

LII's domestic revolving and term loans contain certain financial covenant
restrictions. As of March 31, 2002, LII was in compliance with all covenant
requirements and LII believes that cash flow from operations, as well as
available borrowings under its revolving credit facility and other sources of
funding, will be sufficient to fund its operations for the foreseeable future.
LII is currently reviewing its capital structure, and this review may include
modifying current sources of capital or obtaining alternative sources of capital
with a goal of providing additional financial flexibility.

Recent Accounting Pronouncements

Statement of Financial Accounting Standards No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets" ("SFAS 144") became effective for
the Company on January 1, 2002. SFAS 144 addresses financial accounting and
reporting for the impairment of long-lived assets and for long-lived assets to
be disposed of. This statement supersedes SFAS 121; however, this statement
retains the fundamental provisions of SFAS 121 for (a) recognition and
measurement of the impairment of long-lived assets to be held and used and (b)
measurement of long-lived assets to be disposed of by sale. This Statement also
supersedes the accounting and reporting provisions of APB Opinion No. 30,
"Reporting the Results of Operations-Reporting the Effects of Disposal of a
Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring
Events and Transactions" for segments of a business to be disposed of. Through
March 31, 2002, the adoption of SFAS 144 has not had an effect on the Company's
financial position or results of operations.

Forward Looking Information

This Report contains forward-looking statements and information that are
based on the beliefs of Lennox's management as well as assumptions made by and
information currently available to management. All statements other than
statements of historical fact included in this Report constitute forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995, including but not limited to statements identified by the words "may,"
"will," "should," "plan, "predict," "anticipate," "believe," "intend,"
"estimate" and "expect" and similar expressions. Such statements reflect
Lennox's current views with respect to future events, based on what it believes
are reasonable assumptions; however, such statements are subject to certain
risks, uncertainties and assumptions. These include, but are not limited to,
warranty and product liability claims; ability to successfully complete and
integrate acquisitions; ability to manage new lines of business; the
consolidation trend in the HVACR industry; adverse reaction from customers to
the Company's acquisitions or other activities; the impact of the weather on
business; competition in the HVACR business; increases in the prices of
components and raw materials; general economic conditions in the U.S. and
abroad; labor relations problems; operating risks and environmental risks.
Should one or more of these risks or uncertainties materialize, or should
underlying assumptions prove incorrect, actual results may differ materially
from those in the forward-looking statements. Lennox disclaims any intention or
obligation to update or review any forward-looking statements or information,
whether as a result of new information, future events or otherwise.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Lennox's results of operations can be affected by changes in exchange
rates. Net sales and expenses in currencies other than the United States dollar
are translated into United States dollars for financial reporting purposes based
on the average exchange rate for the period. Net sales from outside the United
States represented 21.1% and 21.5% of total net sales for the three months ended
March 31, 2002 and 2001, respectively. Historically, foreign currency
transaction gains (losses) have not had a material effect on Lennox's overall
operations.

The Company from time to time enters into foreign exchange contracts to
hedge receivables or payables denominated in foreign currencies. These contracts
do not subject the Company to risk from exchange rate movements because the
gains or losses on the contracts offset losses or gains, respectively, on the
items being hedged. As of March 31, 2002, the Company had currency futures
contracts maturing at various dates through December 31, 2002, for which the
fair value was a liability of $0.7 million. Accordingly, an after-tax charge of
$0.4 million was recorded to Accumulated Other Comprehensive Loss.

The Company enters into commodity futures contracts to stabilize prices to
be paid for raw materials and parts containing high copper and aluminum content.
These contracts are for quantities equal to, or less than, quantities expected
to be consumed in future production. As of March 31, 2002, the Company had metal
futures contracts maturing at various dates through March 31, 2004 with a fair
value as an asset of $1.7 million. Accordingly, the Company recorded an
after-tax credit of $1.0 million to Accumulated Other Comprehensive Loss.

Item 4. Exhibits and Reports on Form 8-K.

Exhibit Number Description
- -------------- -----------
*3.1 -- Restated Certificate of Incorporation of Lennox (Incorporated
herein by reference to Exhibit 3.1 to Lennox' Registration
Statement on Form S-1 (Registration No. 333-75725)).

*3.2 -- Amended and Restated Bylaws of Lennox (Incorporated herein by
reference to Exhibit 3.2 to Lennox' Registration Statement on
Form S-1 (Registration No. 333-75725)).

*4.1 -- Specimen stock certificate for the Common Stock, par value $.01
per share, of Lennox (Incorporated herein by reference to Exhibit
4.1 to the Company's Registration Statement on Form S-1
(Registration No. 333-75725)).

10.1 -- Third Amendment to 364 Day Revolving Credit Facility Agreement
dated as of January 22, 2002 among Lennox, each of the lenders
listed as a lender or a terminating lender thereto, JPMorgan
Chase Bank, as administrative agent, and Wachovia Bank, N.A., as
syndication agent. (filed herewith).

10.2 -- Indenture dated as of May 8, 2002 between Lennox International
Inc. and The Bank of New York, as Trustee

10.3 -- Registration Right Agreement dated as of May 8, 2002 by and
between Lennox International Inc. and UBS Warburg LLC and the
Other Initial Purchasers

*Incorporated herein by reference as indicated.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

LENNOX INTERNATIONAL INC.

By: /s/ Richard A. Smith
----------------------
Principal Financial Officer
and Duly Authorized Signatory
Dated: May 14, 2002