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                 SECURITIES AND EXCHANGE COMMISSION
                      Washington, D.C. 20549
                           ------------
                             FORM 10-K
                  FOR ANNUAL AND TRANSITION REPORTS
               PURSUANT TO SECTIONS 13 OR 15(d) OF THE
                   SECURITIES EXCHANGE ACT OF 1934
(Mark One)
   [X]        ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
              OF THE SECURITIES EXCHANGE ACT OF 1934
   For the fiscal year ended December 31, 1998
                             OR
   [ ]        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  1-7955
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            INTERNATIONAL COMFORT PRODUCTS CORPORATION
         ------------------------------------------------------
       (Exact Name of Registrant as Specified in Its Charter)

         Canada                                          98-0045209
-------------------------------                      -------------------
(State or other jurisdiction of                        (I.R.S. Employer
incorporation or organization)                       Identification No.)

 66th Floor, 1 First Canadian Place, Toronto, Ontario, Canada     M5X 1B8
 ------------------------------------------------------------   ----------
     (Address of principal executive offices)                   (Zip Code)

Registrant's telephone number, including area code:  (615) 771-0200
                                                     --------------
Securities Registered Pursuant to Section 12(b) of the Act:
    Title of each class           Name of each exchange on which registered
    -------------------           -----------------------------------------
     Ordinary Shares                      American Stock Exchange
     Ordinary Shares                      Toronto Stock Exchange

     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 [  ].

     Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of the registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-
K or any amendment to Form 10-K.   [ ]

     As of March 19, 1999, there were 24,475,701 Ordinary Shares of
International Comfort Products Corporation outstanding and held by non-
affiliates with an aggregate market value of $192,746,145.

     As of March 19, 1999, there were 40,694,778 Ordinary Shares of
International Comfort Products Corporation outstanding.

                  DOCUMENTS INCORPORATED BY REFERENCE

              DOCUMENT                               Incorporated into
     -------------------------------------------     -----------------
     Portions of the Definitive Proxy Statement
     for Annual Meeting of Shareholders on May 19,            Part III
     1999 (hereinafter the "1999 Proxy Statement")
     to be filed within 120 days after the end of the
     fiscal year ended December 31, 1998
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                                PART I

ITEM 1. BUSINESS.

GENERAL

The Registrant, International Comfort Products Corporation (formerly Inter-City
Products Corporation), is referred to herein as the "Company" and such
reference includes both the Registrant and its consolidated subsidiaries,
unless otherwise indicated.

The Company is one of the leading designers, manufacturers and marketers of
central air conditioning and heating products for residential and light
commercial use in the United States and Canada.  The Company also has recently
emphasized its presence in other international markets, primarily Mexico, Latin
America and southern Europe.  Its principal brand names are widely recognized 
in the industry and include Heil, Tempstar, Comfortmaker, MagicAire and ICP 
Commercial. Management believes that the Company and its products are known 
for their quality, reliability and customer service.

The Company designs, manufactures, sells and distributes a complete range of
central air conditioners, heat pumps and combination gas/electric units
(collectively, "unitary air conditioners" or "cooling products"), and gas, oil
and electric furnaces ("heating products") along with related parts and
accessories for the residential and light commercial markets.  The Company's
products are sold primarily through a network of approximately 400 independent
heating, ventilation and air conditioning ("HVAC") distributors in the United
States, Canada and other international markets.  These distributors are the
Company's link to dealers and, in turn, to consumers.  The Company's products
are also marketed through independent air conditioning and refrigeration
wholesalers, major commercial contractors and builders. 

In 1998, the Company had net sales of $733.5 million.  For 1998, sales of
cooling products accounted for approximately 64.1% (1997 - 61.3%; 1996 -
61.7%) of net sales and revenue from heating products were approximately
22.3% (1997 - 25.7%; 1996 - 27.1%) of net sales.  In 1998, service parts and
other income accounted for 13.6% (1997 - 13.0%; 1996 - 11.2%) of net sales. 
Management believes that in 1998 the Company derived approximately 70% of its
sales from the replacement, repair and renovation market and approximately 30%
from the new construction market.  In 1998, the Company derived approximately
81% of its net sales from sales in the United States, approximately 11% from
sales in Canada, and approximately 8% of its net sales from sales in other
international markets.  Financial information by geographic area is disclosed
in Note 14 to the Consolidated Financial Statements and is incorporated herein
by reference.

The Company was formed by articles of amalgamation dated September 1, 1988 as
amended by articles of arrangement dated April 18, 1990 under the laws of the
Province 

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of Manitoba and subsequently continued under the Canada Business Corporations 
Act effective August 14, 1992.   The Company's primary heating and cooling 
subsidiaries are International Comfort Products Corporation (USA) ("ICP USA") 
and International Comfort Products Corporation (Canada) ("ICP Canada").

STRATEGY

Since 1995, the Company has undertaken a strategic initiative to (i) reduce 
manufacturing and overhead costs, (ii) reduce lead times for processing 
customer orders, (iii) improve product quality and customer service, (iv) 
broaden product offerings while rationalizing stockkeeping units (SKUs) within
product lines, and (v) improve and expand the Company's distribution network. 
These restructuring efforts included:

*       consolidation of production at ICP (USA)'s Lewisburg, Tennessee
          manufacturing facility;
*       write-off of discontinued businesses and nonperforming assets;
*       rationalization of its management structure by removing a layer of
          management;
*       revision to distributor credit terms;
*       major streamlining of manufacturing practices;
*       reduction of inventory in the factory and in the distribution system;
*       introduction of a second tier, competitive, entry-level line of 
          products;
*       termination of underperforming distributors and addition of new 
          distributors;
*       implementation of effective working capital management practices; and
*       improvements in operations, product quality, and customer service.

Although the immediate results of the Company's strategic initiative severely
depressed 1995 revenues and earnings, management believes that the steps it
undertook allowed the Company to return to profitability in 1996 and positioned
the Company for continued growth.

In addition to continuing the Company's implementation of its 1995 initiatives,
the Company is committed to (i) growing its net sales in excess of industry 
growth rates; (ii) improving profitability; and (iii) managing working capital.
The Company seeks to achieve these goals through the implementation of the 
following strategies:

INCREASE RESIDENTIAL MARKET SHARE IN THE UNITED STATES AND CANADA.  The Company
intends to increase its market share by (i) further strengthening its
relationship with its distributors by reducing customer lead times, and
providing superior training and marketing support, (ii) expanding the
distribution network in low market share geographic areas and rationalizing the
existing distribution network, (iii) broadening its offering of aftermarket
parts and other HVAC related supplies to provide distributors with the benefits
of one-stop shopping, and (iv) developing strategic relationships with national
accounts, including builders, distributors, contractors and private label
resellers.

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EXPAND ITS COMMERCIAL MARKET PRODUCT OFFERINGS AND GAIN MARKET SHARE.  The
Company intends to continue to increase its commercial sales by (i) employing
a two-tier product strategy to provide competitive entry level commercial
products, (ii) extending ICP Commercial distribution networks for national
distribution of the ICP Commercial brand product, (iii) strengthening the
existing distribution network of the Company's other commercial brands,
(iv) continuing the use of independent manufacturers' representatives to
solicit sales of ICP Commercial brand product for installation in commercial
buildings, (v) expanding product offerings for commercial applications and (vi)
expanding commercial products to include those with capacity of up to 40 tons.

In 1998, the Company introduced its ICP Commercial brand, which was offered
through 35 distributors who met business practice expectations, sales targets
and marketing and merchandising standards.  The Company is supporting the ICP
Commercial distributors by engaging independent manufacturers' representatives
to encourage engineers, designers and architects to specify ICP Commercial
brand product for installation in commercial buildings.  The Company's other
commercial brand products will continue to be marketed through its existing
distribution network.

PURSUE INTERNATIONAL OPPORTUNITIES.  The Company intends to continue expansion
of its operations outside the United States and Canada.  In Latin America and
Europe, the Company initially establishes HVAC parts distribution outlets, and
introduces HVAC equipment after the parts business has established cash flow
and customer traffic.  The Company believes this strategy of overseas expansion
creates the opportunity to generate early cash flow and a market presence
without risking a substantial amount of capital.

The first phase of the Company's Latin American strategy was to establish a
brand-name parts distribution business for the air conditioning and
refrigeration repair service sector.  In 1997, the Company opened its first
parts stores in Monterrey, Mexico and Sao Paulo, Brazil.  In 1998, the
Company's second phase of the strategy for introducing air conditioning
products, both residential and commercial, was implemented.  Three warehouses 
in Miami will be consolidated into a new 100,000 square foot distribution
center with double the amount of space in late 1999 to service the Latin 
American market.  The Company has two distribution operations in Mexico and a 
distribution center is scheduled to open in Argentina in 1999.

In Europe, the Company acquired Industrias HVH, S.A., a distribution company,
in Spain in December 1997 with outlets in Madrid and Barcelona.  Industrias
HVH began to market the Company's products in mid-1998.  Effective September 1,
1998, the Company acquired 80 percent of Frigoram Commerciale, S.p.A., an 
Italian distributor of HVAC parts and components.  Both acquisitions give the 
Company a low-cost foothold in the European market as a prelude to further 
expansion.

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AUGMENT INTERNALLY GENERATED GROWTH BY ACQUIRING BUSINESSES WITH COMPLEMENTARY
NEW PRODUCTS, TECHNOLOGY AND MANUFACTURING RESOURCES.  The Company intends to
consider acquisitions that support its growth strategy and leverage and expand
its distribution network, purchasing power and manufacturing capabilities.  The
Company expects its acquisitions to be both domestic and international.  In
addition to the three acquisitions completed in 1998, effective March 1, 1999, 
the Company acquired the assets of Dettson Inc. ("Dettson") of Sherbrooke, 
Quebec and Granby Steel Tank Inc. ("Granby") of Granby, Quebec.  Dettson 
manufactures warm air oil furnaces, oil water heaters, and gas and oil boilers 
for residential and light commercial applications under the brand names of 
Dettson and Clare.  Granby manufactures steel tanks for oil storage under the 
Granby Steel Tank brand name.  Combined sales of Dettson and Granby were 
approximately $35.0 million in 1998.

CONTINUE TO REDUCE MANUFACTURING COSTS AND STANDARDIZE COMPONENTS.  By reducing
costs, the Company can continue to lower its break-even point for its
operations.  Management believes that its positive results of operations for
1998 resulted in large part from continuing structural cost reductions achieved
during the prior three years.  Management believes it is necessary to continue
productivity gains in order to offset the effects of inflation.

REDUCE LEAD TIME.  The Company also intends to further reduce the lead time
required for customer orders (the time from receipt of an order to the time the
order is shipped). Further reductions in lead time will reduce inventory
requirements for the Company's distributors and make the Company a more
attractive supplier of heating and cooling products.  The Company also believes
that shortened lead times will enable it and its customers to react to market
trends and fluctuations in weather faster and with less impact than many of its
competitors.  The Company currently is able to meet 98 percent of orders for
residential products in 14 days or less.

EXPAND STRATEGIC RELATIONSHIPS.  The Company also intends to increase its core
residential sales by building relationships with national accounts, such as
contractor buying groups, distributor consolidators, and major home builders. 
The Company currently has agreements to supply certain products under its brand
names or private labels to Watsco, Pameco, Sears, and 25 national and 15 
regional homebuilders.

BRAND AND MARKETING STRATEGY.  In 1998, the Company successfully launched its
brand strategy with distributors and began its national advertising campaign. 
The Company intends to increase its aided brand awareness and enhance the 
confidence of distributors, contractors and end-users of the Company's brands 
through the following marketing initiatives: (i) continuing national 
advertising; (ii) establishing brand positioning versus competitor brands; and
(iii) differentiating its products, distribution and programs by brand to 
focus on key contractor segments.

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ACQUISITIONS

Effective March 1, 1999, ICP (Canada) acquired the assets and assumed certain
liabilities of Dettson and Granby.  Combined estimated 1998 sales of Dettson
and Granby were approximately $35.0 million. This acquisition will be included
in the consolidated financial statements of the Company upon the effective
date of acquisition.

Effective September 1, 1998, ICP (USA) completed the purchase of 80 percent of
the outstanding share capital of Frigoram Commerciale S.p.A. ("Frigoram") of
Milan, Italy.  Frigoram is a distributor of parts and components for HVAC
equipment and also manufactures condensing units for applications in commercial
applications.

Effective May 31, 1998, ICP (USA) acquired substantially all of the assets and
assumed certain liabilities of Watsco Components, Inc. and P.E./Del Mar, Inc.
(collectively now known as "A-1 Components") for 1,488,162 ordinary shares of
the Company.  A-1 Components, which is located in Hialeah, Florida, is
principally engaged in the production of mechanical components, electronic
controls, and service equipment for the HVAC and refrigeration industries.  
A-1 Component's 1998 sales were approximately $14 million since the date of 
acquisition.

Effective January 31, 1998, ICP (USA) acquired United Electric Company ("United
Electric") of Wichita Falls, Texas, a manufacturer of hydronic and direct
expansion blower and HVAC coils, fan coils, and hydronic unit ventilators for
commercial HVAC systems.  United Electric's 1998 sales were approximately $26
million.

PRODUCTS

The Company designs, manufactures, and markets heating and cooling systems for
single family homes, mobile homes and multi-family apartment buildings, as well
as light commercial properties such as schools, restaurants, small business
offices, retail stores, and other industrial and commercial buildings.

The Company's products are:

Air Conditioners.  The Company's air conditioners consist of split system and
packaged air conditioners, split system and packaged heat pumps, and
combination gas/electric units.  The Company's residential unitary air 
conditioners range in capacity from one to five tons, while its commercial 
unitary packaged and split systems range in capacity from three to 20 tons 
(one ton of cooling capacity equals 12,000 British Thermal Units per hour 
("BTU/hr.")).  By the end of 1999, the Company will manufacture and market a 
commercial system with a capacity of up to 40 tons.

Split system and packaged air conditioners
A split system air conditioner consists of an outdoor unit containing a
compressor, heat exchanger, airflow system and associated controls, connected
to a heat

                                    -5-
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exchanger/indoor blower system.  A packaged air conditioner consists of a 
self-contained cooling system in a single weatherized cabinet.

Split system and packaged heat pumps
These systems are used for heating as well as cooling systems.  A split system
heat pump is similar to a split system air conditioner, but also includes a
refrigerant reversing valve, special controls and auxiliary heat (usually
electric).  A packaged heat pump is similar to a packaged air conditioner and
includes a reversing valve, special controls and auxiliary heat.

Combination gas/electric units
A combination gas/electric unit is a self-contained packaged air conditioner
with a gas furnace heat exchanger and special controls in a single weatherized
cabinet.

Gas, Oil and Electric Furnaces
The Company's residential furnaces range in capacity from 50,000 to 150,000
BTU/hr., while its light commercial heating line features furnaces ranging in 
capacity up to 290,000 BTU/hr.

Parts and Accessories
The Company also conducts an active parts business under the "FAST" (Factory
Authorized Service Technology) trademark in the United States and Canada.  The
parts area has shifted from a primary emphasis on serving warranty claims to
being a one-stop shopping counter that a distributor, dealer or contractor
might need to service heating and cooling systems.

Brand Names
The Company offers its various products under several brand names - Heil,
Tempstar, Arcoaire, Comfortmaker, Airquest, KeepRite, Lincoln and the recently
added ICP Commercial.  United Electric sells its products under the MagicAire
brand.  The Company believes that its products are widely recognized for their
quality, customer service, and reliability.

Sales and Distribution
The Company's products are sold primarily through a network of approximately
400 independent HVAC distribution companies with over 1,800 locations in the
United States, Canada and other international markets.  These distribution
companies are the Company's link to dealers and, in turn, to consumers. 
Distributors sell the Company's products to installers in the replacement and
renovation businesses as well as building contractors in the new housing and
light commercial construction sectors.  Approximately 70 percent of the
Company's products are used to replace existing systems, with the balance
installed in new construction projects.  The Company is also focused on
building relationships with national accounts, such as contractor buying
groups, distributor consolidators, major homebuilders and retail chains.

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The Company offers distributors a variety of advantages designed to promote
maximum profitability to the Company and its distributors.  A network of
regional sales managers, field sales and customer service personnel is
accessible to distributors to coordinate promotional activities and to quickly
resolve any product problems.  To improve communications with distributors, the
Company has developed and will implement a program in 1999 designed to give 
them computer access to the Company's inventory records.  Such improved 
communications will facilitate the Company's demand flow production system, 
permitting the Company to tailor its manufacturing schedule to the specific 
product lines in the greatest demand.  Allowing distributor access to available
inventory levels has the additional benefit of permitting distributors to 
reduce their inventory levels while being assured of an adequate and timely 
supply of products.  The on-line program also permits distributors to process 
warranty claims through a computer network linked with the Company.

The Company monitors monthly shipments and inventory levels from a
representative sampling of distributors.  This sampling allows the Company to
gauge future sales demand and improves the communication between the different
functions that are involved in forecasting and scheduling production.

In Canada, the Company markets its products through four primary channels. 
KeepRite, Arcoaire and Comfortmaker brand residential central heating and air
conditioning products are sold through independent air conditioning and
refrigeration wholesalers and HVAC distributors in all provinces in Canada. 
KeepRite brand commercial products are sold through independent distributors
and major commercial contractors across Canada.  Heil brand residential
products are sold directly to distributors and installing dealers by
distribution centres, which are wholly-owned by the Company in Ontario, Quebec
and the western provinces.  Tempstar brand products are sold through plumbing
and heating wholesaler outlets owned by Westburne Industrial Enterprises on an
exclusive basis in all provinces in Canada.  Lincoln brand oil and electric
furnaces are sold by the Company's Lincoln Barriere division in eastern Canada.

In 1998, the Company generated approximately $60.0 million in export revenue
(1997 - $26.7 million; 1996 - $8.2 million).  The Company's principal markets
for international sales are in Latin America and Europe.

The Company also offers extensive training courses at its national training
center in LaVergne and other selected locations.  The courses are designed to
help improve business and technical skills and include small business
management, dealer sales, distributor sales, residential application and
design, introduction to heating and air conditioning, heat pump service and
troubleshooting, gas furnace installation and service fundamentals and
troubleshooting. 

The Company conducts advertising to enhance consumer awareness and to position
its principal brands as premier residential heating and cooling products within
their respective target markets.  The advertising program is complemented with
trade

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advertising that focuses on dealers who install the Company's products and who
influence the sale of heating and cooling products at the consumer level.

The Company offers a cooperative program to its distributors, which subsidizes
local advertising, training and other promotional and developmental costs.  In
addition, the Company enables its distributors to offer various incentives to
their dealer customers.

Competition
Based on the Company's industry knowledge and industry statistics in 1998,
seven manufacturers (including the Company) represented approximately 95% of 
the market, with individual market shares ranging from 10% to 22% and the 
Company having approximately 11% of the residential and light commercial HVAC 
market.  The Company's six largest competitors in this market are Carrier 
Corporation, Goodman Manufacturing Corporation, Rheem Manufacturing, The Trane 
Company, York International Corporation, and Lennox Industries Inc.  Several of
the Company's competitors have greater financial and other resources than the 
Company.  There can be no assurance that competitive pressures will not 
materially and adversely affect the Company's business, financial condition or 
results of operations.

Manufacturing
Substantially, all of the Company's residential cooling and heating products
are manufactured at a company-owned, 1,010,000 square foot facility located in
Lewisburg, Tennessee.  The Company focuses on lean production from its plant,
supported by the latest cost-cutting technology and a "just-in-time" production
system.  This system is designed to minimize raw material and in process
inventories through close coordination of delivery of raw materials and
components from outside suppliers at the manufacturing facility.  The
production process facilitates the manufacturing of standardized products.  By
manufacturing standardized products and using more adaptable equipment, the
Company is able to reduce the time necessary to set up the production line to
manufacture a particular model and to change the production line to manufacture
other similar models.

While most of the components used by the Company are purchased from outside
suppliers, the Company manufactures selected components where it is
cost-efficient. For example, the Company produces heat transfer surfaces, or
coils, for its air conditioners as well as patented heat exchangers used in its
furnaces.  The Company imposes strict quality control standards through a Total
Quality Management Program covering all aspects of the manufacturing process. 
A majority of the units produced are tested and key statistics from selected
units are recorded prior to shipment.  In addition, several are randomly
selected each day for a quality audit of construction and performance.  In
1996, the Company adopted the ISO 9000 standards, which set quality guidelines
for manufacturers and require an independent party to audit and document the
compliance guidelines twice a year.  Seven assembly lines at the Company's 
Lewisburg facility received their ISO 9001 recertification in August 1998.

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Facilities
In 1995, the Company constructed a 500,000 square foot distribution center in
Lewisburg, adjacent to the manufacturing facility.  All marketing, finance and
administrative functions were consolidated at the manufacturing and
distribution facilities in Lewisburg in 1995.  The Company relocated its
engineering and research laboratories to the Lewisburg plant from its LaVergne
facility in 1998.  The Company leases parts warehouses in LaVergne and 
Manchester, Tennessee.

In Canada, the Company owns two main facilities.  Oil and electric furnaces are
manufactured in Laval, Quebec and the former manufacturing facility located in
Brantford, Ontario is being utilized as ICP (Canada)'s primary distribution
center.  The Company also leases other distribution facilities in Ontario,
Quebec, Manitoba and British Columbia.

Raw Materials and Purchased Components
The Company purchases all raw materials and most components used in the
manufacturing process. Purchased materials and components include copper,
aluminum, steel, wire, compressors, motors, capacitors, fasteners, controls, 
valves and insulating materials.  When practical, the Company establishes 
multiple sources for the purchase of raw materials and components in an 
attempt to ensure competitive pricing, supply flexibility and protection from 
supply disruption.  The Company works closely with major suppliers to ensure 
that all major components meet quality and performance standards.  The Company
deals with approximately 250 suppliers, of whom 65 firms represent 95 percent 
of its purchasing expenditures.  Typically, outside suppliers provide 
warranties on all major purchased components.  The Company believes that it has
adequate sources of raw materials and components for its manufacturing
requirements.

The Company purchases many of its components from suppliers who are certified
by the Company. Certified suppliers are judged by the Company to have quality
components that can be readily introduced into the production lines without
being inspected upon receipt.  The Company believes that the process of
certification identifies a small number of quality suppliers, which facilitates
the Company's "just-in-time" production system.

Research and Development
The Company is involved in laboratory testing and improvement of existing 
product lines and in the development and testing of new products for the United
States, Canadian, and international markets.  These activities are conducted in
the Company's laboratory facility located in Lewisburg, Tennessee.  The primary
objective is to conduct research to keep the Company's products competitive by 
improving product cost, safety, reliability and performance and ensuring 
compliance with environmental standards.  The Company's goal is to respond to 
market needs and the technological demands of government regulation.  The 
Company also strives to reduce manufacturing costs through cost control 
programs, standardization, size and weight

                                    -9-
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reduction, the application of new technology, and improvements in production 
techniques.

Close contact is maintained with marketing personnel to ensure that the final
product will meet customer needs, and with manufacturing personnel to ensure
that the product design is compatible with the Company's flexible manufacturing
process.  The Company's engineers also work closely with major component
suppliers to improve manufacturing efficiencies and keep abreast of new
technological advances.

During the past three fiscal years, research and development costs aggregated
approximately $9.1 million.

Patents and Trademarks
The Company holds numerous patents relating to the design and use of its
products that it considers important.  It is the Company's policy to obtain
patent protection for its new and developmental products and to enforce such
patent rights as appropriate.  The Company owns several trademarks that it 
considers important in the marketing of its products, including Heil, Tempstar,
KeepRite, Arcoaire, Comfortmaker, Lincoln, Airquest, MagicAire, ICP Commercial 
and FAST.  The Company believes that its rights in these trademarks are 
adequately protected.

Major Customers
During 1998, two customers accounted for approximately 13% and 11% of the 
Company's consolidated net sales and revenues from the Company's 10 largest
customers accounted for approximately 37% of consolidated net sales. 
While management believes its relationships with its distributors are
satisfactory, in the event of the loss of a significant distributor, the
Company's results of operations would be adversely effected in the event that
the Company is unable to satisfactorily replace the distributor.

Environmental Regulation and Proceedings
The Company and its operations are subject to a variety of federal, provincial,
state and local environmental laws and regulations, including, among others,
the Clean Air Act, the Clean Water Act, the Comprehensive Environmental,
Resource, Conservation and Liability Act, the Resource Conservation and
Recovery Act, the Occupational Health and Safety Act and the Toxic Substances
Control Act in the United States and the Canadian Environmental Protection Act,
the Fisheries Act (Canada), the Environmental Protection Act (Ontario), the
Gasoline Handling Act (Ontario), and the Environmental Quality Act (Quebec) in
Canada.  The Company believes that it is in substantial compliance in all
material aspects with such existing environmental laws and regulations.

Growing concern over potential ozone depletion has led to increased regulation
of high ozone depletion refrigerants, including the Montreal Protocol.  On
November 25, 1992, the Montreal Protocol was amended to phase-out the
production and use of hydrochlorofluorocarbons ("HCFCs"), beginning in 1996 and
ending in 2030.

                                    -10-
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In the United States, the 1990 Clean Air Act Amendments implement the Montreal
Protocol by establishing a program for limiting the production and use of
ozone-depleting chemicals.  Under the Clean Air Act, HCFC-22 (the only
refrigerant used in the Company's products) is designated as a "Class II
substance"; such substances are currently scheduled to be phased out under the
Clean Air Act Amendments between 2010 and 2020.

As a result of the recent amendments to the Montreal Protocol, the
Environmental Protection Agency ("EPA"), which is authorized under the Clean
Air Act to accelerate the statutory phase-out schedule for any Class II
substance, is likely to promulgate regulations to implement those amendments.
Alternatively, the EPA could adopt proposals made by various groups to
phase-out Class II substances, including HCFC-22, substantially earlier than
under the schedule provided by either the Clean Air Act or the Montreal
Protocol.  It is unclear which, if any, of these proposed schedules will be
adopted by the EPA.

In Canada, the Ozone-depleting Substance Regulations under the Canadian
Environmental Protection Act regulate the consumption of HCFCs by a system of
allowances and permits. It is anticipated that the Ozone-depleting Substance
Regulations will be amended to provide for a gradual phase-out of HCFCs 
between 2010 and 2020.

All cooling products manufactured by the Company contain HCFC-22.  This
refrigerant is sealed inside the air conditioner and is expected to remain
within the unit throughout the operating life of the system without leakage to
the atmosphere.  The Company believes that its operations comply with all
current legislation and regulations relating to refrigerants and that the
Montreal Protocol, the Clean Air Act Amendments and their implementing
regulations as currently in effect or any anticipated accelerated phase-out
will not have a material adverse impact on its operations over the next ten
years.  However, the Company believes that the implementation of more severe
restrictions on the use of Class II refrigerants could have such an impact.

Prior to the phase-out of HCFC-22, the industry and the Company must identify 
substitute refrigerants for use in cooling products.  The Company has been 
working closely with refrigerant manufacturers and others in the industry to 
develop new refrigerants that are compatible with its existing cooling product
lines.  Such new refrigerants may require the Company to modify the design of 
its cooling products.  The Company is unable to predict the precise extent of 
necessary modifications or the costs associated with the use of alternative 
refrigerants, but does not expect that either will have a material adverse 
effect on the industry unless the phase-out is accelerated more rapidly than is
currently anticipated under the Clean Air Act, the Canadian Environmental 
Protection Act or the Montreal Protocol.

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The Company and its operations are subject to foreign, federal, provincial,
state, municipal and local laws, codes, treaties and regulations that limit the
discharge of pollutants into the environment and establish requirements for the
treatment, storage, disposal and remediation of solid and hazardous wastes and
hazardous materials.  Certain federal, provincial and state environmental laws
and regulations impose liability on responsible parties, including past and
present owners and operators of sites, to clean up, or contribute to the cost
of cleaning up sites at which hazardous wastes or materials were disposed or
released.  The Company is involved in remedial action at its Lewisburg
manufacturing facility pursuant to these laws, but based on information
currently available, does not anticipate that such action will have a material
adverse effect on its financial condition or operations.

In December 1991, the Company and Flying J, Inc. ("Flying J") entered into a
cost sharing agreement whereby the Company participates with Flying J in the
financing of responses to environmental contamination at various refinery sites
sold by the Company to Flying J in 1980.  At the same time, the Company reached
a settlement with several of its insurance carriers whereby the insurers
reimburse the Company for a portion of its expenses at the refineries.  Ongoing
cleanup activities at four refinery sites are at different regulatory stages. 
Although the scope of the projects is becoming better understood and defined
with the various regulatory agencies, the ultimate scope of the projects
remains uncertain and it is not possible to definitively estimate the ultimate
costs of remediation of such environmental contamination.  At December 31,
1998, the Company has an accrual of $10.9 million for its estimated share of
future cleanup costs. The Company has offsetting receivables due from insurers
of $7.4 million included in the consolidated balance sheet.

Other Governmental Regulations
The Company is subject to regulations in the United States promulgated under
the 1987 National Appliance Energy Conservation Act, as amended, and various
state regulations concerning the energy efficiency of its products.  The
Company has developed and continues to develop products that will comply with
these regulations and does not believe that such regulations will have a
material adverse effect on its business.  The Company is also subject to the
energy efficiency requirements contained in the Energy Policy Act of 1992,
which became effective in 1994.  All of the Company's products comply with
these standards.

Backlog Orders
The backlog of orders was approximately $22.0 million at December 31, 1998
(1997 - $24.2 million, 1996 - $63.4 million).  The decline in backlog of orders
reflects the Company's shift away from advanced orders and pre-season sales
programs due to significantly shorter lead times on customer orders over the
past three years.

                                    -12-
<PAGE>
Export Sales
Export sales, being sales from the Company's North American operations to 
foreign customers and sales from international operations, amounted to 
approximately $60.0 million in 1998 (1997 - $26.7 million; 1996 - $8.2 
million).

Employees
At December 31, 1998, the Company had approximately 3,000 salaried and hourly
employees engaged in its operations. The hourly employees representing
approximately 2,000 of the total employees are represented under five
collective bargaining agreements with four unions. The renegotiation of these
collective agreements will occur during the years 1999 and 2001.  The Company
considers its labor relations to be satisfactory.

                                    -13-
<PAGE>
ITEM 2. PROPERTIES.

The major operating facilities, which are owned or leased by the Company at
December 31, 1998, are shown in the following table:
<TABLE>
<CAPTION>

                  OWNED/           AREA
LOCATION          LEASED         (SQ.FT.)       PRODUCTS/ACTIVITIES
--------------------------------------------------------------------------
<S>                <C>         <C>             <C>
UNITED STATES
Lewisburg, TN       O          1,010,000       Manufacture of residential and
                                               light commercial heating and
                                               cooling products
                    O            500,000       Distribution
LaVergne, TN (F1)   O            247,000       Training center
Nashville, TN       L            160,700       Service parts warehouse
Miami, FL           L             32,800       Parts and distribution
                    L              5,600       Parts and distribution
                    L              3,400       Parts and distribution
Tukwila, WA         L             22,000       Distribution
Wichita Falls, TX   O            155,700       Manufacture of commercial
                                               products
                    O             38,000       Manufacture of commercial
                                               products
Hialeah, FL         L            102,000       Manufacture of components
                    L             44,000       Manufacture of components
Franklin, TN        L             10,400       Executive office

CANADA
Brantford, ON       O            323,000       Distribution
                    L             22,500       Distribution
Laval, PQ           O             96,800       Manufacture of residential
                                               heating products
                    L             88,800       Distribution
Vaughan, ON         L             41,300       Distribution
Prince George, BC   L             28,100       Distribution
Winnipeg, MB        L             26,900       Distribution
Langley, BC         L             10,800       Distribution
Burnaby, BC         L             10,700       Distribution
Waterloo, ON        L             10,600       Distribution
Kelowna, BC         L              4,800       Distribution
Terrace, BC         L              4,800       Distribution

BRAZIL
Sao Paulo           L             10,800       Parts and distribution

MEXICO
Guadalajara         L             14,000       Parts and distribution
Monterrey           L             12,000       Parts and distribution

SPAIN
Madrid              L             11,400       Parts and distribution
Barcelona           L              3,900       Parts and distribution

ITALY
Milan               L             21,500       Parts and distribution 

</TABLE>
[FN]
<F1>
Research laboratory was relocated to the Lewisburg manufacturing facility in
1998.  The Company is currently subleasing approximately 111,000 sq. ft. of the
facility to a third party.
</FN>

                                    -14-
<PAGE>
ITEM 3. LEGAL PROCEEDINGS.

Legal proceedings pertaining to the Company and its subsidiaries are set forth
in Note 15 to the Company's Consolidated Financial Statements and are
incorporated herein by reference.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

During the fourth quarter of the fiscal year covered by this Annual
Report on Form 10-K, no matter was submitted to a vote of security holders,
through the solicitation of proxies or otherwise.

ITEM 4A. EXECUTIVE OFFICERS OF THE REGISTRANT.

The Company, in accordance with General Instruction G(3) to Form 10-K
and Instruction 3 to Item 401(b) of Regulation S-K, 17 C.F.R. Section
229.401, furnishes the following information with regard to its executive
officers as an additional item in Part I of this Annual Report on Form 10-K.
The following officers are those that the Company currently deems to be
"executive officers", as defined by the Securities and Exchange Commission.
<TABLE>
<CAPTION>
      Name                   Office                                            Age
      ----                   ------                                            ---
<S>                    <C>                                                     <C>
Richard W. Snyder      Chairman of the Board                                   60
W. Michael Clevy       President and Chief Executive Officer                   50
David P. Cain          Senior Vice President, General Counsel and Secretary    53
Stephen  L. Clanton    Senior Vice President, Chief Financial Officer and 
                         Treasurer                                             47
Douglas K. Gibbs       Senior Vice President , National Commercial Accounts
                         and President, Canadian Sales and Distribution Group  49
Francis C. Harrell     Senior Vice President, Business Development             59
Robert C. Henningsen   Senior Vice President, Human Resources and 
                         Administration                                        59
Herman V. Kling        Senior Vice President, Sales and Marketing              49
Augusto H. Millan      Senior Vice President and General Manager, 
                         International Sales and General Manager, 
                         Aftermarket Sales                                     49
David B. Schumacher    Vice President and General Manager, Commercial 
                         Products Group                                        39
Karla G. Smith         Vice President, Corporate Communications                37
James R. Wiese         Senior Vice President and General Manager,
                         Residential Products Group                            48
</TABLE>

There is no family relationship among the above or any of the directors of
the Company.  Although all executive officers are employees at will of the
Company, each executive officer of the Company generally is elected each year
for a term of one year.

Mr. Snyder, in 1982, founded SnyderGeneral Corporation ("SnyderGeneral"), a
manufacturer and marketer of air quality control products for the heating,
ventilating and air conditioning markets.  SnyderGeneral's residential air
conditioning and heating business was acquired by the Corporation in June 1991. 
Mr. Snyder is a former Chairman of the Air Conditioning and Refrigeration
Institute.  Mr. Snyder was elected Chairman of the Board of the Corporation in
June 1997.

                                    -15-
<PAGE>
Mr. Clevy joined the Corporation as President and Chief Operating Officer of
the Corporation's U.S. operating subsidiary, ICP (USA), in September 1994.  He
was appointed President and Chief Executive Officer of the Corporation in
December 1995.  Prior to joining the Corporation, he was Vice President of
Manufacturing and Technology of Carrier Corporation.

Mr. Cain joined the Corporation on January 25, 1977 as Superintendent of
Distribution.  Thereafter, he moved into Manufacturing from 1978 until 1980,
into Sales and Marketing until 1986, and finally into the Law department where
he advanced to Senior Vice President and General Counsel on January 1, 1993 and
Senior Vice President, General Counsel, and Secretary on June 4, 1996.

Mr. Clanton joined the Corporation as Senior Vice President, Chief Financial
Officer and Treasurer on July 8, 1996.  Prior to joining the Corporation, he
was Executive Vice President and Chief Financial Officer for Falcon Products
Inc., St. Louis, Missouri, from 1988 to 1996.

Mr. Gibbs joined the Corporation as Vice President, Business Development on
January 2, 1998.  He was appointed Senior Vice President, National Commercial
Accounts on December 1, 1998 and was recently appointed as President, Canadian
Sales and Distribution Group.  Prior to joining the Corporation, he was Vice 
President, National Accounts/Export Sales for Carrier Corporation from 1994
to 1997.

Mr. Harrell joined the Corporation as Vice President, Sales transferring from
SnyderGeneral on July 1, 1991.  He was appointed Senior Vice President,
Business Development on December 1, 1998 and was previously appointed Senior 
Vice President - USA Sales on January 1, 1995.

Mr. Henningsen joined the Corporation as General Manager, Human Resources on
June 1, 1987.  He was appointed as Vice President, Human Resources and
Administration on January 1, 1989.  He has served as Senior Vice President,
Human Resources and Administration since December 7, 1994.

Mr. Kling joined the Corporation as Senior Vice President, Marketing on
February 1, 1997.  He was appointed Senior Vice President - Sales and Marketing
on December 1, 1998.  Prior to joining the Corporation, he was Product Manager
for General Electric Company. He worked for General Electric in marketing,
customer service and sales for 20 years.

Mr. Millan joined the Corporation as Vice President, Financial Operations on
November 1, 1994.  He was appointed as Senior Vice President and General
Manager, International Sales and General Manager, Aftermarket Sales on January
1, 1996.  Prior to joining the Corporation, he was Managing Director of United
Technologies Corporation.

                                    -16-
<PAGE>
Mr. Schumacher joined the Corporation on March 1, 1992 as Manager - Development
Engineer transferring from SnyderGeneral.  He was promoted to Manager - Product
Marketing (ACO) on January 1, 1993 and to Senior Director, Product Marketing
on March 1, 1995.  He was appointed Vice President and General Manager,
Commercial Products Group on January 1, 1997.

Ms. Smith joined the Corporation as Manager - Communications on May 1, 1992
transferring from SnyderGeneral.  She was promoted to Director, Advertising and
Sales Promotion on February 1, 1994 and to Senior Director, Corporate
Communications on February 1, 1996.  She was appointed Vice President,
Corporate Communications on January 1, 1997.

Mr. Wiese joined the Corporation as Director, Dealer Development on August 22,
1988.  He was promoted to Senior Director - Sales on August 1, 1992.  He was
appointed Senior Vice President, Marketing on January 25, 1993 and has served
as Senior Vice President and General Manager, Residential Products Group since
January 1, 1997.





























                                    -17-

<PAGE>
                               PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

(a)     MARKET INFORMATION.  The Company's ordinary shares are traded on
the Toronto Stock Exchange ("TSE") and the American Stock Exchange ("AMEX")
under the symbol "ICP."  The following table sets forth the high and low
trading prices of the Company's ordinary shares as reported by the TSE and
AMEX during each of the fiscal quarters of the prior two fiscal years:

<TABLE>
<CAPTION>

   1998                    TSE-Cdn.$                  AMEX-U.S.$
   ---------------------------------------------------------------
                       High        Low           High         Low
   ---------------------------------------------------------------
   <S>                 <C>         <C>           <C>          <C>
   ---------------------------------------------------------------
    First Quarter      12.80       10.85          9.13         7.44

    Second Quarter     18.25       11.65         12.50         8.06

    Third Quarter      18.20       11.00         12.25         6.63

    Fourth Quarter     14.50       10.15          9.25         6.25
<CAPTION>

   1997                    TSE-Cdn.$                  AMEX-U.S.$
   ---------------------------------------------------------------
                       High        Low           High         Low
   ---------------------------------------------------------------
   <S>                 <C>         <C>           <C>          <C>
    First Quarter       7.35       3.90          5.38         2.88

    Second Quarter      8.25       6.30          6.06         4.56

    Third Quarter      12.85       8.00          9.50         5.19

    Fourth Quarter     13.25       9.70          9.06         6.31
   ---------------------------------------------------------------
</TABLE>

(b)     HOLDERS.  There were 1,416 shareholders of record as of December 31,
1998.

(c)     DIVIDENDS.  The Company has not paid a dividend on its ordinary
shares since 1990.  The Company currently intends to retain all earnings to
support the development and growth of the Company.  In addition, the
Company's senior debt issue limits the ability to pay dividends and
distributions on its ordinary shares.


                                -18-
<PAGE>
ITEM 6.  SELECTED FINANCIAL DATA.

<TABLE>
<CAPTION>
                                   NINE YEAR SUMMARY OF OPERATIONS
                                          (Canadian GAAP)
--------------------------------------------------------------------------------------------------------
For the Years
ended December 31       1998     1997     1996     1995     1994     1993     1992     1991     1990
--------------------------------------------------------------------------------------------------------
<S>                     <C>      <C>      <C>      <C>      <C>      <C>      <C>      <C>      <C>
OPERATIONS
(In Millions of
  U.S. Dollars)

Net sales               $ 733.5  $ 630.7  $ 641.9  $ 532.8  $ 635.2  $ 598.0  $ 566.7  $ 467.9  $ 473.8

Gross profit              155.2    127.0    124.1     65.4    112.9     99.6    121.3    102.3    108.6

Operating profit (loss)    58.8     41.5     33.4    (43.3)    17.6     (4.0)    14.6     16.7     27.3

Financial expenses         24.0     19.5     21.8     25.1     23.1     18.1     16.8     26.6     21.9

Income (loss) from
  continuing operations    35.2     22.0     11.6    (81.2)    (4.6)   (17.8)    (2.1)    (5.0)     1.7

Net income (loss)          35.2     22.0      8.5    (93.2)    (7.5)   (21.0)    (3.2)    (6.9)   153.3 
--------------------------------------------------------------------------------------------------------
PER ORDINARY SHARE
(In U.S. Dollars)

Income (loss) from
  continuing           
   operations           $ 0.86   $ 0.56   $ 0.30   $ (2.09) $ (0.20) $ (0.87) $ (0.26) $ (0.70) $ (0.29)

Net income (loss)
  after discontinued
   operations           $ 0.86   $ 0.56   $ 0.22   $ (2.40) $ (0.29) $ (1.00) $ (0.31) $ (0.86)  $ 21.83
--------------------------------------------------------------------------------------------------------
FINANCIAL POSITION
(In Millions of
  U.S. Dollars)

Total assets            $ 427.8  $ 352.0  $ 345.0  $ 345.8  $ 486.1  $ 490.2  $ 401.8  $ 420.5   $327.1

Working capital           158.9    136.6    103.8     60.5    153.0    167.5    102.9     73.8     45.2

Fixed assets (cost)       241.4    214.3    213.2    186.2    197.9    213.3    201.9    179.1    155.6

Debt*                     199.1    185.5    204.0    182.7    242.8    216.0    128.8    197.0    150.1
-------------------------------------------------------------------------------------------------------
</TABLE>

* Includes short-term borrowings and long-term debt.

                                -19-

<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
        RESULTS OF OPERATION.
------------------------------------------------------------------------------

International Comfort Products Corporation (ICP) reported its third consecutive
year of profits in 1998 with record net income of $35.2 million - a 60 percent
increase over the prior year.  Income before income tax recovery and
refinancing costs for 1998 was $39.8 million, or 98 cents per share, compared
with $22.0 million, or 56 cents per share in 1997, an increase of 81 percent
and 75 percent, respectively.  In 1998, net income was 86 cents per share,
compared with 56 cents per share in 1997. The net income growth was based on
a 16 percent improvement in net sales to $733.5 million.

GROWTH STRATEGY

Historically, ICP has manufactured and marketed heating and cooling systems
predominantly for use in residential applications in Canada and the United
States. In 1996, the Company launched a long-term strategy that focused on
cutting structural costs in its manufacturing and distribution processes and
growing revenue by following a five-point expansion plan. 

The "lean enterprise" process improvement continues with its emphasis on
engineering and production efficiencies, product quality, and responsive
customer service.  The target is a five percent annual productivity gain in
manufacturing.

The five-point revenue expansion strategy consists of (i) improving the
competitive position of core residential products; (ii) growing commercial
products sales; (iii) generating international sales, initially in Latin
America and Europe; (iv) increasing the North American and international sale
of parts and accessories; and (v) augmenting internal growth through
acquisitions, principally small and medium sized companies in complementary
markets.

The impact of the lean enterprise and revenue expansion initiatives are evident
in ICP's financial results for the past three years and had a cumulative impact
on the much improved financial position of the Company in 1998.















                                 -20-

<PAGE>
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                  CONDITION AND RESULTS OF OPERATIONS
------------------------------------------------------------------------------

COMPARATIVE PERFORMANCE AS PERCENTAGE OF NET SALES

The following table sets out information on the Company's financial performance
for the past three years, as expressed as a percentage of net sales.

<TABLE>
<CAPTION>
                                   1998             1997           1996
     --------------------------------------------------------------------
     <S>                           <C>              <C>            <C>
     Net sales                     100%             100%           100%
     Cost of sales                  78.9             79.9           80.7
     Gross profit                   21.1             20.1           19.3
     Selling, general and
       administrative expenses      13.1             13.6           14.1
     Operating profit                8.0              6.5            5.2
     Interest expense and 
       amortization of debt
       issuance costs                2.6              3.0            3.4
     Refinancing costs                .7               --             --
     Income before income taxes      4.7              3.5            1.8
     Income taxes                    (.1)              --             --
     Income from continuing 
       operations                    4.8              3.5            1.8
     Loss from discontinued 
       operations                     --               --            (.5)
     Net income                      4.8              3.5            1.3
     ====================================================================
</TABLE>

FISCAL 1998 COMPARED WITH FISCAL 1997

NET SALES

The 1998 growth in net sales to $733.5 million, compared with $630.7 million
in 1997, was in step with the Company's long-term strategic target of $1
billion in net sales by the end of 2000.

On a quarterly basis, 1998 revenue increased dramatically during the summer by
23 percent in the second quarter and 25 percent in the third quarter over the
same periods in 1997.  During the winter periods, net sales declined by nearly
three percent in the first quarter and increased by 16 percent in the fourth
quarter compared to the corresponding quarters in the prior year.

Approximately 57 percent of 1998 net sales were residential heating and cooling
systems in the United States with revenue of $413.6 million in 1998, a nine
percent increase over 1997.  A new series of high efficiency products were
launched, a comprehensive brand strategy was introduced on a national and
regional basis to improve marketing focus, and eleven new distributors were
added.

Revenue from U.S. commercial products and residential packaged products rose
by 34 percent to $135.6 million.  One-third of the higher sales reflected
internal growth as the Company launched the ICP Commercial brand and increased
its product offering from 12.5 tons to 20 tons. Two-thirds of the growth was
contributed by sales of MagicAire components for commercial systems produced
by United Electric Company located in Texas.  ICP acquired this company in
January 1998.

The international sale of residential and commercial cooling systems and parts
produced by ICP, as well as parts from other suppliers, grew by 125 percent to
$60 million in 1998. Just three years ago, when the first efforts were made to 
enter markets in Latin America and Europe, international sales were $6.4 
million.

                                 -21-
<PAGE>
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                  CONDITION AND RESULTS OF OPERATIONS
------------------------------------------------------------------------------

Following a disappointing performance in 1997, sales in Canada rebounded to
$80.2 million in 1998, an eight percent improvement reflecting the strong 
summer demand for air conditioning systems and the full-year impact of 
distribution companies acquired in 1997.

In the United States, aftermarket parts and accessories contributed $44.1
million to 1998 net sales, a 54 percent increase over 1997. The largest 
portion of the higher sales resulted from the May 31, 1998 acquisition of 
Watsco Components Inc., now known as A-1 Components Inc., a Florida 
manufacturer and distributor of electronic and mechanical parts.

Our global diversification program during the past three years has increased
international sales from about one percent of total net sales in 1996
to eight percent in 1998. U.S. sales represented approximately 81 percent in
1998, compared with 87 percent in 1996, while Canadian sales declined slightly
to 11 percent, compared with 12 percent in 1996.


GROSS PROFIT

Gross profit increased by $28.2 million to $155.2 million, or 21.1 percent of
net sales, compared with 20.1 percent in 1997. The full percentage point gain
in gross profit reflected lower material costs, increased plant efficiency and
higher fixed burden absorption at the manufacturing plant in Lewisburg,
Tennessee. 

Gross profit growth was reduced by two factors. An interruption in the supply
of a key component disrupted production during the peak season. This situation
has been corrected. Second, the Company's emphasis on developing a new
generation of products, scheduled to be introduced in late 1999, coupled with
the implementation of a new enterprise resource planning (ERP) system, held
factory cost reductions below levels achieved in recent years. The evolution
of more efficient manufacturing and distribution processes, however, is far
from complete and the new generation of products has been designed for improved
manufacturing capabilities.


SELLING, GENERAL & ADMINISTRATIVE EXPENSES

Selling, general and administrative (SG&A) expenses were $96.4 million in
1998, a 13 percent increase from $85.5 million a year earlier. The higher SG&A
expenses were consistent with rapid revenue growth in 1998 and represented 13.1
percent of net sales, an improvement from 13.6 percent in 1997.

Contributing to higher SG&A expenses were the full year's impact of developing
the support infrastructure for the international operations, including 
distribution facilities in Miami, Mexico and Brazil to serve the Latin 
American market and the 1997 acquisition of distribution channels in Western
Canada and Spain; the acquisitions of parts and components businesses in 
Florida and Italy in 1998; and advertising and promotional programs, including 
national advertising, for the new brand strategy launched in the United States.

The increase in SG&A expenses in 1998 were partially offset by the sale of two
U.S. distributor companies and five ICP-owned factory branches in 1997.

OPERATING PROFIT

The 1998 operating profit grew by 42 percent to $58.8 million from $41.5
million a year earlier. Earnings before interest, taxes, depreciation and
amortization (EBITDA) were $74.7 million, a 32 percent increase over the $56.6
million reported in 1997.

                                 -22-
<PAGE>
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                  CONDITION AND RESULTS OF OPERATIONS
------------------------------------------------------------------------------

FINANCIAL EXPENSES

Financial expenses increased by 23 percent to $24 million in 1998 from $19.5
million in 1997. Refinancing costs of $5 million included an early prepayment
premium of $2.3 million on the refinanced debt and the write-off of unamortized
debt issuance costs associated with the old senior notes.  Interest expense and
amortization of debt issuance costs were consistent with 1997 levels.

INCOME TAXES

The Company's U.S. subsidiaries have fully utilized their tax loss carry
forwards and have reinstated deferred tax assets and liabilities, resulting in
an income tax recovery of $0.4 million in 1998.  In 1997, the Company did not
record an income tax provision as a result of accumulated tax losses from
prior years.

NET INCOME

Net income totaled $35.2 million, or 86 cents per share, in 1998 compared with
$22.0 million, or 56 cents per share, in 1997. The improvement in net income 
was supported by the long-term strategy of enhancing the competitive position 
of core residential products and diversifying the revenue stream into new 
growth areas, such as commercial products and international sales.


FISCAL 1997 COMPARED WITH FISCAL 1996


NET SALES

Net sales were $630.7 million in 1997, compared with $641.9 million a year
earlier, a decline of $11.2 million, or 1.7 percent.  Two distributor companies
acquired in the second quarter of 1996 and sold in the third quarter of 1997
accounted for 3.3 percent of 1997 net sales, compared with 4.5 percent in 1996.

When the revenue of the distribution companies plus five factory branches sold
during 1997 is removed from the 1997 and 1996 results, ICP's 1997 net sales
increased slightly to $609.1 million from $607.1 million.  This occurred in a
year when North American industry sales declined by about five percent due to
the impact of a cool summer on the demand for air conditioning units. Higher
international, commercial and parts sales offset the revenue decline in ICP's
residential products.

Approximately 84 percent of the 1997 revenue was generated in the United
States, 12 percent in Canada and four percent in international markets,
compared with 87 percent, 12 percent and one percent, respectively, in 1996.

GROSS PROFIT

Despite lower production and sales volumes, gross profit increased by $2.9
million to $127.0 million, or 20.1 percent of net sales, in 1997, compared 
with 19.3 percent in 1996. The improved margin resulted primarily from
continuous cost savings and manufacturing efficiencies at the Lewisburg plant. 

SELLING, GENERAL & ADMINISTRATIVE EXPENSES

SG&A expenses, excluding warranty expense, were virtually unchanged in 1997 
compared with 1996. The higher expenses associated with two acquisitions in 
Western Canada, a distributor 

                                 -23-
<PAGE>
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                  CONDITION AND RESULTS OF OPERATIONS
------------------------------------------------------------------------------

company in Spain and the establishment of parts outlets in Latin America were 
offset by the cost savings resulting from the sale of the U.S. distribution 
companies.  Total SG&A declined as a percentage of net sales from 14.1 percent 
in 1996 to 13.6 percent in 1997, primarily due to reduced warranty expense.

Warranty expense declined in 1997, partly as a result of reductions in product
field failure rates and the progress made toward the Company's quality control
target of zero defects. The remainder of the decline in warranty expense
related to a specific provision recorded in 1996 for a component used by many
installers and supplied by other manufacturers.

The 1996 warranty expense also included a provision for the introduction of a
standard five-year limited warranty on replacement and service parts, replacing
the previous one-year warranty, and an additional provision for the packaged
terminal air conditioning product line sold at the end of 1994.

OPERATING PROFIT

The 1997 operating profit of $41.5 million was a 24 percent improvement over
the previous year of $33.4 million.  EBITDA was $56.6 million, compared with
$49.1 million in 1996.

FINANCIAL EXPENSES

Financial expenses declined to $19.5 million from $21.8 million in 1996.  The
downward trend reflected lower interest expense, which fell to $18.2 million
in 1997 versus $19.4 million in the previous year.  The reduction in interest
expense was the result of both lower interest rates and lower average borrowing
levels that declined, net of cash, to approximately $186 million in 1997 from
$196 million in 1996.

In 1997, $1.3 million of debt issuance costs were amortized, compared with $1.8
million in 1996.   In addition, $0.6 million of debt issuance costs were
written off in 1996.

INCOME TAXES

In 1997, the Company did not record an income tax provision as a result of 
accumulated tax losses from prior years.

DISCONTINUED OPERATIONS

In 1996, the Company incurred a $3.1 million loss on the sale of Thompson Pipe
& Steel Company, a steel pipe manufacturing company.

NET INCOME

Net income totaled $22.0 million, or 56 cents per share, in 1997 compared with
$8.5 million, or 22 cents per share, in 1996.  The improvement in 1997 net
income reflected structural cost reductions through the introduction of lean
production at the manufacturing plant and tight management of overhead costs
and financial expenses. The net income also benefited from the early results
of the long-term strategy to diversify the revenue stream beyond the mature
North American residential market into commercial products, aftermarket parts
and international sales. 

                                 -24-
<PAGE>
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                  CONDITION AND RESULTS OF OPERATIONS
------------------------------------------------------------------------------

LIQUIDITY AND CAPITAL RESOURCES

The Company has sufficient credit facilities and liquidity from free cash flow
to meet its current capital and operating requirements.

CASH FLOW

Before acquisitions and divestitures, free cash flow (cash from operations
adjusted for cash received from or utilized in investing activities) was $10.5
million in 1998, compared with $10.9 million in 1997.  After acquisitions and
divestitures, free cash flow was a negative $20.6 million in 1998, compared
with $31.9 million inflow in 1997.

The 1998 cash flow from operations was $24.5 million versus $19.2 million in
1997. The Company invested $31.1 million in acquisitions, resulting in the
negative free cash flow during 1998.

WORKING CAPITAL AND SHORT-TERM BORROWINGS

Working capital grew to $158.9 million at the 1998 year end from $136.6 million
in 1997, principally reflecting higher accounts receivable and inventories. 
Average net working capital was $179.2 million, a seven percent increase over 
1997, with net working capital turns of 5.2 in 1998 versus 5.0 in 1997.

Gross accounts receivable rose by 30 percent to $133.1 million at year end
primarily due to the acquisitions of the two U.S. companies and Italian
operation noted earlier and a temporary  disruption of December billings from
the November 1998 introduction of the new management information system.

Year-end inventories were $120.9 million in 1998 compared with $94.5 million
a year earlier. A key reason for the 28 percent increase was the need to
establish inventories for the international market. In addition to ICP products
and parts, the international operations stock and sell parts and components
supplied by other manufacturers.  A second reason for the higher inventories 
was the acquisition of two companies that manufacture and distribute 
components and parts -- United Electric Company and A-1 Components.  Both 
companies require inventory to meet customer orders on short notice.  
Nonetheless, the Company is committed to improve asset management in both its 
international and parts operations.  The inventory levels for North American 
commercial and residential products were lower in 1998 than at the end of 
1997.

Overall, average inventory was little changed from 1997 at $117.4 million,
versus $116.3 million. Average inventory turns improved from 4.3 in 1997 to 5.0
in 1998.

Higher accounts receivable and inventories were offset by lower cash at $10.5
million, versus $31.0 million at the 1997 year end, and higher account payables
at $58.4 million, versus $44.8 million a year earlier, both largely due to 1998
acquisitions.

CREDIT FACILITIES

The Company has negotiated credit facilities separately for the Canadian and
the U.S. operations.

The Canadian operating company has a Cdn. $30 million revolving credit
facility, which is sufficient to meet its needs.  The facility was arranged in
1996 and expires in December 1999. 

The U.S. operating company has a five-year $70 million receivables purchase
facility with a U.S. lender. This facility was arranged in July 1996. In July
1997, the U.S. company arranged a $15 million inventory credit facility.  The
U.S. operating company has adequate credit

                                 -25-
<PAGE>
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                  CONDITION AND RESULTS OF OPERATIONS
------------------------------------------------------------------------------

availability and expects to have more than sufficient cash flow from 
operations to meet its obligations in 1999.


LONG TERM DEBT

In May 1998, new financing was arranged for International Comfort Products 
Holdings, Inc. ("ICP Holdings"), a U.S. holding company, with $150 million of 
senior unsecured notes due in 2008 bearing interest at 8.625 percent and
guaranteed by the Company. The funds were primarily used to redeem $140 
million of 9.75 percent senior notes for the U.S. operating company due in 
March 2000. Long-term debt also includes a $25 million five-year unsecured 
term loan arranged for the Company's U.S. operations maturing in October 2001.

INTERCOMPANY DIVIDEND RESTRICTION

The Company has no substantial operations of its own and accordingly has no
independent means of generating revenue.  As a holding company, the Company's
internal source of funds to meet its cash needs, including payment of expenses,
are dividends and other permitted payments from its direct and indirect 
subsidiaries.  Certain of the Company's lending arrangements impose upon 
subsidiaries of ICP Holdings financial and operating covenants, including,
among others, requirements that subsidiaries of ICP Holdings maintain certain
financial ratios and satisfy certain financial tests, limit capital 
expenditures and restrict the ability of such subsidiaries to incur debt or
pay dividends.  Pursuant to the terms of the most restrictive covenant 
regarding restricted payments by such subsidiaries, as of December 31, 1998, 
$110.0 million of tangible net assets of subsidiaries of ICP Holdings were not
available for payment of dividends to ICP Holdings.  The Company does not 
believe that these restrictions presently impair the Company's ability to
conduct its business through its subsidiaries or to pursue its development
plans.

CAPITAL EXPENDITURES

The Company spent $14.0 million on capital improvements in 1998, compared with
$8.3 million in 1997. The investments were primarily made in company-wide new
information management systems, relocating and enhancing the engineering
laboratories at the Lewisburg manufacturing complex and retooling machinery
associated with new product development.

RISKS AND RISK MANAGEMENT

WEATHER RISK: An early and hot summer or an early and cold winter can create
a surge in sales.  Mild seasons, by contrast, undermine customer demand.  In
1998, for example, the early and hot summer increased the demand for air
conditioning units. To reduce the costs of exposure to short-term weather risk,
the Company has reduced the time it takes to fulfill a customer's order to 14
days for most products.  Production levels are also adjusted in step with
seasonal demand to avoid a costly inventory build-up.  Recent expansion into
Europe and Latin America should help to moderate North American seasonal
demands on manufacturing resources.

SUPPLIER RISK: For a variety of reasons, a key supplier could be unable to meet
the Company's requirements, as experienced briefly in 1998. Close relations are
maintained with 65 companies that provide 95 percent of the material used in
manufacturing.  Several suppliers consign inventory and the Company only pays
for components when they are used. Information

                                 -26-
<PAGE>
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                  CONDITION AND RESULTS OF OPERATIONS
------------------------------------------------------------------------------

management systems are integrated with key suppliers so that they can scan for
product use at the end of the production line, provide an invoice, and 
replenish inventory.

DISTRIBUTOR RISK: The Company's distribution system consists of approximately
400 distributors in Canada, the U.S. and internationally.  Distributor risk is
managed in part by terminating under performing distributors and replacing them
with more aggressive ones, as occurred in 1998 with the recruitment of 11 new
U.S. distributors. The Company also emphasizes a mutually beneficial
partnership with distributors, involving them in product design, monthly in-
plant product audits and other programs. 

MARKET RISK: The heating, ventilating and air conditioning market for
residential and commercial products in North America is approximately $6
billion a year at the manufacturing level and $25 billion at the final customer
level.  The Company faces six major competitors. As the North American industry
is mature, no new significant competitors are likely. The Company has improved 
its competitive position through a much lower cost structure and a change in 
its product mix.

ECONOMIC RISK: The Company faces the normal economic risks of any consumer-
oriented company -- such as changes in interest rates, employment levels,
consumer spending, and general consumer and business confidence in the economy.
Under adverse economic conditions, homeowners and commercial property owners
are more likely to repair rather than replace deteriorated and older heating
or cooling systems. The poor condition of many systems that have already been
repaired and the introduction of lower-cost entry-level systems tend to offset
this risk.  Internationally, the Company's operations are concentrated in 
Latin America and Europe with no exposure to markets in Southeast Asia.

FINANCIAL RISK: The Company's return to profitability, a much lower break-even
point, and adequacy of capital resources have mitigated financial risk.  The
Company's capitalization is more highly leveraged compared with other 
companies in and related to the industry.

FOREIGN EXCHANGE EXPOSURE: The Company has been reporting in U.S. dollars since
1994. The primary foreign exchange exposure has been to Canadian sales. Between
1995 and 1997, the Canadian dollar traded in a narrow band averaging $1.36 to
$1.38 to the U.S. dollar before deteriorating to an average of $1.48 in 1998. 
Sales in foreign currencies now represent approximately 15 percent of ICP's
total net sales. However, converting foreign currency sales into U.S. dollars
had minimal impact on 1998 earnings.  International sales will represent a
growing portion of future business, and hedging programs will be introduced to
offset foreign currency volatility.

FORWARD-LOOKING INFORMATION: Certain statements contained in this document
constitute forward-looking statements that are not historical. Forward-looking
statements involve risks and uncertainties, including but not limited to the
risk factors described previously. Actual results could differ materially from
those projected in the forward-looking statements as a result of these risks
and should not be relied upon as a prediction of actual future results. The
Company undertakes no obligation to update any forward-looking statements to
reflect events or

                                 -27-
<PAGE>
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                  CONDITION AND RESULTS OF OPERATIONS
------------------------------------------------------------------------------

circumstances after the date on which such statement is made, or to reflect 
the occurrence of unanticipated events.

YEAR 2000 COMPLIANCE RISK: The Company began to consider the implications of
the Year 2000 date change as early as 1996. A tactical team was formed in 1997,
and its 12 members represent all functions and areas of operation. Specific
team members are responsible for ICP's interface with third parties, including
financial institutions, utilities, freight carriers, distributors, suppliers
and equipment users. The team reports to the chief financial officer, who
reports to the board of directors at every board meeting.

In 1996, the Company decided to replace its entire information management
systems, primarily because the systems in place were obsolete. The Company 
believes that the new systems are Year 2000 compliant and integrate all aspects
of ICP's operations from ordering raw materials through to production of 
finished products, as well as for financial analysis and disclosure and general
management purposes.  Start-up of various areas of the new systems began in 
November 1998.  The total expected cost of the new information management 
system is approximately $8.5 million, the majority of which was capitalized in
1997 and 1998.

The Company's tactical plan to ensure Year 2000 compliance is a six-step
program involving: inventory and assessment, risk analysis, prioritization and
resource estimating, implementation of solutions, developing a backup plan, and
testing. Extensive test plans were developed in 1998 and final testing for
virtually all operations, systems and processes will be completed in the second
quarter of 1999. Final testing at the two U.S. subsidiary companies acquired
in 1998 will be completed in the second quarter of 1999. The compliance of the
Spanish and Italian subsidiaries was confirmed during their acquisition due
diligence.

In the case of third parties, the Company has contacted all suppliers and
reviewed the feedback.  Based on 250 suppliers, the response from 36 was
considered unacceptable and further actions are being taken to address their
compliance.  However, the Company cannot be sure that all aspects of the Year 
2000 issue, especially systems and processes controlled by suppliers, customers
and other third parties, will not adversely affect its operations.  A
contingency plan has been developed, including disaster recovery, in the event 
that items thought to be compliant turn out to be non-compliant.

The total expected cost to the Company in 1999 for Year 2000 compliance is not
anticipated to have a material adverse effect on its financial condition or 
results of operations.

FUTURE EXPECTATIONS

The long-term strategic plan developed by management in 1996 in consultation
with the board of directors was reviewed and updated in 1998. The 1998
financial results are consistent with the long-term strategic plan. The plan
established a revenue target of $1 billion by the end of 2000. Higher profits
will reflect progress to this target, coupled with continued efficiency gains
in manufacturing and distribution and tight management of SG&A expenses.

                                 -28-
<PAGE>
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                  CONDITION AND RESULTS OF OPERATIONS
------------------------------------------------------------------------------

The Company anticipates further gains in core residential products with the
planned introduction of a new generation of home comfort products in 1999 and
continued aggressive brand marketing both nationally and regionally. 
Commercial products are expected to accelerate growth based on the winning of
national accounts, broader North American market acceptance of the new ICP
Commercial brand, and improved sales of MagicAire commercial components. The
international area is gaining market recognition and sales impetus from the
entry initiatives taken in the past three years and should also experience 
accelerated revenue growth.  Aftermarket parts and accessories are gradually 
finding its competitive position and should do better in the near future, 
especially as the lean enterprise concept takes hold at A-1 Components. These 
growth expectations will be augmented as appropriate by further acquisitions.


ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

The following discusses the Company's exposure to market risk related to 
changes in interest rates and foreign currency exchange rates.  This 
discussion contains forward-looking statements that are subject to risks and 
uncertainties.  Actual results could vary materially as a result of a number 
of factors including those set forth below.

FOREIGN CURRENCY EXCHANGE RATE RISK: The Company's revenue from international 
operations outside of North America amounted to approximately $60.0 million in
1998 (1997 - $26.7 million; 1996 - $8.2 million), which equates to 
approximately 8% of consolidated net sales (1997 - 4%; 1996 - 1%).  The 
Company's net sales in Canada were $80.2 million in 1998 (1997 - $74.0 million;
1996 - $75.2 million), or approximately 11% of consolidated net sales in 1998 
(1997 - 12%; 1996 - 12%).  The effect of foreign currency exchange rate 
fluctuations on the Company in 1998, 1997 and 1996 was not material.  To the 
extent that the Company expands its international operations, the Company may
be exposed to increased risk from foreign currency exchange rate fluctuations.

INTEREST RATE RISK: The Company does not have significant exposure to changing
interest rates relating to the $150.0 million 8.625% senior unsecured notes 
since the interest rate on these notes is fixed.  In 1998, the Company entered
into an interest rate swap agreement through a U.S. lender to fix the interest
rate on its $25.0 million term bank loan at 5.97% maturing in October 2001.
Accordingly, the Company has minimal interest rate risk associated with 
changing interest rates for these debt instruments.





                                 -29-
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.


         The consolidated financial statements of the registrant and its
subsidiaries, together with all notes thereto, are set forth immediately
following this page as pages 32 through 67 of this Annual Report on Form 10-
K.
---------------------------------------------------------------------------

                          ARTHUR ANDERSEN LLP

---------------------------------------------------------------------------
                           AUDITORS' REPORT
---------------------------------------------------------------------------


To the Shareholders of
International Comfort Products Corporation

We have audited the consolidated balance sheets of International Comfort
Products Corporation and its subsidiaries as at December 31, 1998 and 1997 and
the consolidated statements of income and deficit and cash flows for the years
then ended. These consolidated financial statements are the responsibility of 
the Company's management.  Our responsibility is to express an opinion on 
these consolidated financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally
accepted in Canada. Those standards require that we plan and perform an audit
to obtain reasonable assurance whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements.  An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation.

In our opinion, these consolidated financial statements present fairly, in all
material respects, the financial position of International Comfort Products
Corporation and its subsidiaries as at December 31, 1998 and 1997 and the 
results of their operations and cash flows for the years then ended in 
accordance with accounting principles generally accepted in Canada.





 /s/ Arthur Andersen LLP


February 12, 1999
Mississauga, Canada

                                -30-


<PAGE>
PricewaterhouseCoopers
-----------------------------------------------------------------------------
                                               [ PricewaterhouseCoopers LLP
                                               [ 145 King Street West
                                               [ Toronto, Ontario
                                               [ Canada M5H 1V8
                                               [ Telephone +1 (416) 869-1130
                                               [ Facsimile +1 (416) 863-0926
                                               [ Direct fax:  (416) 941-8446

To The Shareholders
Inter-City Products Corporation


AUDITORS' REPORT


We have audited the consolidated statements of income and deficit and cash
flows of Inter-City Products Corporation for the year ended December 31, 1996.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audit.

We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform an audit to obtain
reasonable assurance whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also
includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation.

In our opinion, these consolidated financial statements present fairly, in all
material respects, the results of operations of Inter-City Products Corporation
and its cash flows for the year ended December 31, 1996 in accordance with
generally accepted accounting principles.




/s/ PricewaterhouseCoopers LLP

Chartered Accountants
Toronto, Ontario

February 11, 1997

                                -31-
<PAGE>
                INTERNATIONAL COMFORT PRODUCTS CORPORATION
               CONSOLIDATED STATEMENTS OF INCOME AND DEFICIT
              For the Years Ended December 31, 1998 and 1997
    (With Comparative Figures for the Year Ended December 31, 1996 - Note 17)
                      (In Millions of U.S. Dollars)
----------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                1998        1997      1996
----------------------------------------------------------------------------
<S>                                           <C>         <C>        <C>
Net Sales                                     $ 733.5      $ 630.7   $ 641.9
Cost of Sales                                   578.3        503.7     517.8
----------------------------------------------------------------------------
Gross Profit                                    155.2        127.0     124.1
Selling, General and Administrative Expenses     96.4         85.5      90.7
----------------------------------------------------------------------------
Operating Profit                                 58.8         41.5      33.4
----------------------------------------------------------------------------

Financial Expenses
  Interest expense                               18.0         18.2      19.4
  Amortization of debt issuance costs             1.0          1.3       1.8
  Refinancing costs                               5.0           -         .6
----------------------------------------------------------------------------
                                                 24.0         19.5      21.8
----------------------------------------------------------------------------
Income Before Income Taxes                       34.8         22.0      11.6
Income Taxes (note 11)                             .4           -         -
----------------------------------------------------------------------------
Income From Continuing Operations                35.2         22.0      11.6
Loss From Discontinued Operations                  -            -       (3.1)
----------------------------------------------------------------------------
Net Income                                       35.2         22.0       8.5
Deficit - Beginning of the Year                (116.4)      (138.4)   (146.9)
----------------------------------------------------------------------------
Deficit - End of the Year                     $ (81.2)     $(116.4)  $(138.4)
============================================================================
</TABLE>

Income Per Ordinary Share (note 12)


                       see accompanying notes

                               -32-

<PAGE>
              INTERNATIONAL COMFORT PRODUCTS CORPORATION
                      CONSOLIDATED BALANCE SHEETS
                   As at December 31, 1998 and 1997
                    (In Millions of U.S. Dollars)
-------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                      1998         1997
-------------------------------------------------------------------------
<S>                                                  <C>          <C>
ASSETS
Current Assets
  Cash and cash equivalents                          $  10.5      $  31.0
  Accounts receivable - trade (less allowance
    for doubtful accounts; 1998 - $5.2; 1997 - $6.0)   127.9         96.5
  Note receivable (note 2)                                -           7.7
  Inventories (note 3)                                 120.9         94.5
  Prepaid expenses and other                             5.7          5.9
  Deferred income taxes                                 12.8          1.7
-------------------------------------------------------------------------
                                                       277.8        237.3
-------------------------------------------------------------------------

Fixed Assets (note 4)
  Property, plant and equipment - at cost              241.4        214.3
  Accumulated depreciation                             139.8        120.7
-------------------------------------------------------------------------
                                                       101.6         93.6
-------------------------------------------------------------------------

Intangible Assets, net (note 5)                         35.8         11.0

Other Assets, net (note 6)                              12.6         10.1
-------------------------------------------------------------------------
                                                     $ 427.8      $ 352.0
=========================================================================
</TABLE>


/s/ W. Michael Clevy                   /s/ David A. Rattee
----------------------------------     -----------------------------------
Director                                Director


                         see accompanying notes

                                -33-


<PAGE>
              INTERNATIONAL COMFORT PRODUCTS CORPORATION
                      CONSOLIDATED BALANCE SHEETS
                   As at December 31, 1998 and 1997
                    (In Millions of U.S. Dollars)
-------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                      1998         1997
-------------------------------------------------------------------------
<S>                                                  <C>          <C>
LIABILITIES
Current Liabilities
  Short-term borrowings (note 7)                     $  22.0      $  19.7
  Accounts payable                                      58.4         44.8
  Accrued liabilities                                   28.1         26.5
  Product warranty                                       9.7          9.5
  Current portion of long-term debt (note 8)              .7           .2
-------------------------------------------------------------------------
                                                       118.9        100.7

Long-Term Debt (note 8)                                176.4        165.6
Product Warranty                                        13.2         16.2
Environmental Liabilities                               11.9         12.9
Other Long-Term Liabilities                             11.1          5.1
-------------------------------------------------------------------------
                                                       331.5        300.5
-------------------------------------------------------------------------

Commitments and Contingencies (note 15)

SHAREHOLDERS' EQUITY
Ordinary Shares (note 9)                               182.3        171.2
Deficit                                                (81.2)      (116.4)
Foreign Currency Translation Adjustment (note 10)       (4.8)        (3.3)
-------------------------------------------------------------------------
                                                        96.3         51.5
-------------------------------------------------------------------------
                                                     $ 427.8      $ 352.0
=========================================================================
</TABLE>

                        see accompanying notes

                                -34-


<PAGE>
                 INTERNATIONAL COMFORT PRODUCTS CORPORATION
                   CONSOLIDATED STATEMENTS OF CASH FLOWS
              For the Years Ended December 31, 1998 and 1997
   (With Comparative Figures for the Year Ended December 31, 1996 - Note 17)
                      (In Millions of U.S. Dollars)
-----------------------------------------------------------------------------
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------
Cash provided by (used in):                                       1998        1997      1996
---------------------------------------------------------------------------------------------
<S>                                                              <C>         <C>      <C>
OPERATING
  Net income                                                     $  35.2     $ 22.0   $  8.5
  Adjustments to reconcile net income to 
    net cash provided by operating activities:
  Depreciation and amortization                                     17.0       16.4     17.5
  Deferred income taxes, net                                        (4.7)        -        -
  Write-off of debt issuance costs                                   2.3         -        .6
  Changes in assets and liabilities, net of acquisitions:
    (Increase) decrease in receivables                             (13.1)     (36.6)     8.5
    (Increase) decrease in inventories                             (14.1)      10.2    (14.1)
    (Increase) decrease in prepaid expenses and other                2.2       (3.0)     8.9
    Increase (decrease) in accounts payable, accrued 
      liabilities and product warranty                               (.3)      10.2    (15.3)
---------------------------------------------------------------------------------------------
  Net cash provided by operating activities                         24.5       19.2     14.6
---------------------------------------------------------------------------------------------

INVESTING
  Property, plant and equipment, net                               (14.0)      (8.3)    (9.8)
  Acquisitions of subsidiaries (note 2)                            (31.1)      (3.6)      -
  Proceeds from sale of Coastline and General (note 2)                -        24.6       -
---------------------------------------------------------------------------------------------
  Net cash (used in) provided by investing activities              (45.1)      12.7     (9.8)
---------------------------------------------------------------------------------------------

FINANCING   
  Ordinary shares issued                                             1.2        2.0       .5
  Ordinary shares repurchased                                       (4.4)        -        -
  Long-term debt issued                                            150.0         -        -
  Repayment of long-term debt                                     (140.3)        -        -
  Proceeds (repayments) on short-term borrowings                     2.3      (20.5)     1.6
  Refinancing costs                                                 (8.7)        -      (4.5)
  Other                                                               -          -       2.2
---------------------------------------------------------------------------------------------
  Net cash provided by (used in) financing activities                 .1      (18.5)     (.2)
---------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                   (20.5)      13.4      4.6
CASH AND CASH EQUIVALENTS - BEGINNING OF THE YEAR                   31.0       17.6     13.0
---------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS - END OF THE YEAR                      $  10.5     $ 31.0   $ 17.6
=============================================================================================

Supplemental disclosure of cash flow information:
  Cash paid for interest                                         $  20.0     $ 18.1   $ 19.7
  Cash paid for income taxes                                     $   1.8         -        -

</TABLE>
                         see accompanying notes

                                -35-


<PAGE>
                 INTERNATIONAL COMFORT PRODUCTS CORPORATION
                   CONSOLIDATED STATEMENTS OF CASH FLOWS
              For the Years Ended December 31, 1998 and 1997
   (With Comparative Figures for the Year Ended December 31, 1996 - Note 17)
                      (In Millions of U.S. Dollars)
-----------------------------------------------------------------------------

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:

During 1998, the Company acquired substantially all of the assets and assumed 
certain liabilities of Watsco Components, Inc. and P.E./Del Mar, Inc. for
consideration of 1,488,162 ordinary shares of the Company valued at $14.3.

During 1998, the Company issued a note payable for approximately $1.5 as
partial consideration for the acquisition of Frigoram Commerciale S.p.A.

During 1997, the Company acquired four distributors for consideration that
included the assumption of debt of $2.0.

During 1996, the Company acquired Coastline Distribution, Inc. and General
Heating and Cooling Company for consideration of the assumption of debt of
$15.3.






















                         see accompanying notes



                                -36-


<PAGE>
                INTERNATIONAL COMFORT PRODUCTS CORPORATION
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              For the Years Ended December 31, 1998 and 1997
   (With Comparative Figures for the Year Ended December 31, 1996 - Note 17)
          (In Millions of U.S. Dollars Unless Otherwise Stated)
----------------------------------------------------------------------------

1.      SIGNIFICANT ACCOUNTING POLICIES

        BASIS OF PRESENTATION

        International Comfort Products Corporation, formerly Inter-City
        Products Corporation, is a Canadian holding company which has two
        primary operating subsidiaries: International Comfort Products
        Corporation (USA) ("ICP (USA)"), and International Comfort Products
        Corporation (Canada) ("ICP (Canada)").

        These consolidated financial statements have been prepared in 
        accordance with accounting principles generally accepted ("GAAP") in 
        Canada which differ in certain respects with accounting principles in 
        the United States.  The differences between GAAP in Canada and the 
        United States as they affect the Company are described in note 16.

        CONSOLIDATION

        The consolidated financial statements include the assets, liabilities
        and operating results of all subsidiary companies from the dates of
        acquisition, on the basis of purchase accounting.  All significant
        intercompany transactions have been eliminated.

        NATURE OF OPERATIONS

        The Company manufactures and markets central air conditioning and
        heating products for residential and light commercial use primarily in
        the United States and Canada.  At the end of 1998, the Company's
        network consisted of approximately 400 independent distributors, of
        which two distributors accounted for approximately 13% and 11% of the 
        Company's net sales.  The Company's network also includes company-owned
        distribution centers in Canada, Mexico, Brazil, Italy and Spain.

        FOREIGN CURRENCY TRANSLATION

        The assets and liabilities of the Company's Canadian and foreign
        operations are translated into United States dollars at the rate of
        exchange in effect at the balance sheet date. Revenues and expenses are
        translated at the average exchange rates prevailing during the year.
        The unrealized translation gains and losses are accumulated in a
        separate component of shareholders' equity.

        REVENUE AND EXPENSE RECOGNITION

        Product sales are recognized at the time of shipment.  Selling, general
        and administrative costs are charged to expense as incurred. 

        CASH AND CASH EQUIVALENTS

        Short-term deposits with original maturities of three months or less
        are considered to be cash equivalents.


                                -37-


<PAGE>
                INTERNATIONAL COMFORT PRODUCTS CORPORATION
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              For the Years Ended December 31, 1998 and 1997
   (With Comparative Figures for the Year Ended December 31, 1996 - Note 17)
          (In Millions of U.S. Dollars Unless Otherwise Stated)
----------------------------------------------------------------------------

1.      SIGNIFICANT ACCOUNTING POLICIES (CONT'D)

        INVENTORIES

        Raw materials and supplies, work in process and finished goods, are
        valued at the lower of cost (first-in, first-out) or net realizable
        value.

        FIXED ASSETS

        Fixed assets are recorded at cost less accumulated depreciation.
        Depreciation is provided on a straight-line basis at the following
        annual rates based on the estimated useful lives of the applicable
        assets:

<TABLE>
<CAPTION>
        <S>                                          <C>
        Buildings and improvements                   2.5% - 10%
        Machinery, equipment and furniture             5% - 20%
        Tooling and drawings                          10% - 33%
        Land improvements                              5% - 10%
</TABLE>

        INTANGIBLE AND OTHER ASSETS

        Intangible and other assets include amounts paid for patents, trade-
        names, goodwill and debt issuance costs.  Amortization of intangible
        assets is provided on a straight-line basis over various periods, not
        exceeding thirty years.  The realizability of goodwill and other
        intangibles is evaluated periodically as events and circumstances
        indicate a possible inability to recover their carrying amount.  Such
        evaluation is based on undiscounted cash flow projections.  The
        analyses necessarily involve significant management judgment regarding
        such projections and the actual results could differ materially from
        these projections.  Amortization of debt issuance costs is provided on
        a straight-line basis over the term of the related debt.


        INCOME TAXES

        The Company follows the deferral method of tax allocation in accounting
        for income taxes. Under this method, timing differences between
        accounting and taxable income result in the recording of deferred
        income taxes.

        PRODUCT WARRANTY

        A liability for estimated warranty expense is established by a charge
        against operations at the time products are sold.  The subsequent costs
        incurred for warranty claims serve to reduce the product warranty
        liability.  The actual warranty costs the Company will ultimately pay
        could differ materially from this estimate.  The Company offers and
        sells extended warranty contracts for its products through certain
        distributors.  The revenue for such contracts is deferred and
        recognized over the life of the contract on a straight-line basis.


                                -38-

<PAGE>
                INTERNATIONAL COMFORT PRODUCTS CORPORATION
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              For the Years Ended December 31, 1998 and 1997
   (With Comparative Figures for the Year Ended December 31, 1996 - Note 17)
          (In Millions of U.S. Dollars Unless Otherwise Stated)
----------------------------------------------------------------------------

1.      SIGNIFICANT ACCOUNTING POLICIES (CONT'D)

        POSTRETIREMENT BENEFITS OTHER THAN PENSIONS

        The Company provides certain healthcare and life insurance benefits
        for its retired employees.  The Company accounts for these benefit
        payments on a cash basis.

        FINANCIAL INSTRUMENTS

        Periodically, the Company enters into interest rate swap agreements to
        hedge portions of its interest rate exposures.  Net receipts or
        payments under the Company's swap agreements are accrued as adjustments
        to interest expense.  The Company does not believe it is subject to any
        significant concentration of credit risk with counterparties.

        MANAGEMENT ESTIMATES

        The preparation of financial statements in conformity with generally
        accepted accounting principles requires management to make estimates
        and assumptions that affect the reported amounts of assets and
        liabilities and disclosure of contingent assets and liabilities at the
        date of the financial statements and the reported amounts of revenues
        and expenses during the reporting period.   Such estimates include, but
        are not limited to, allowance for doubtful accounts, product warranty,
        environmental liability, sales returns and allowances, inventory
        obsolescence, pension obligation assumptions, and self-insured product
        liability and medical claims.  Actual results could differ from these
        estimates.

        RECLASSIFICATIONS

        Certain comparative figures have been reclassified to conform to
        current financial statement presentations.

2.      ACQUISITIONS AND DIVESTITURES

        Effective September 1, 1998, ICP (USA) completed the purchase of
        eighty-percent (80%) of the outstanding share capital of Frigoram
        Commerciale S.p.A. ("Frigoram"), of Milan, Italy for approximately $5.8
        in cash and notes payable of approximately $1.5.  Frigoram is a
        distributor of parts and components for heating, ventilating and air
        conditioning ("HVAC") equipment and also manufactures condensing units 
        for applications in commercial refrigeration.

        Effective May 31, 1998, the Company acquired substantially all of the
        assets and assumed certain liabilities of Watsco Components, Inc. and
        P.E./Del Mar, Inc. (collectively now known as "A-1 Components") for
        1,488,162 ordinary shares of the Company valued at $14.3.  A-1
        Components, which is located in Hialeah, Florida, is principally
        engaged in the production of parts and components used in the
        manufacturing and servicing of HVAC equipment.


                                -39-


<PAGE>
                INTERNATIONAL COMFORT PRODUCTS CORPORATION
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              For the Years Ended December 31, 1998 and 1997
   (With Comparative Figures for the Year Ended December 31, 1996 - Note 17)
          (In Millions of U.S. Dollars Unless Otherwise Stated)
----------------------------------------------------------------------------

2.      ACQUISITIONS AND DIVESTITURES (CONT'D)

        Effective January 31, 1998, ICP (USA) acquired all of the outstanding
        shares of United Electric Company ("United Electric") of Wichita Falls,
        Texas for approximately $25.3 in cash.  United Electric is a
        manufacturer of air conditioning components for commercial HVAC
        systems.

        The above-noted acquisitions have been accounted for by the purchase
        method with the results of operations included in these financial
        statements from the various effective dates.  Details of the net assets
        acquired are as follows:


<TABLE>
<CAPTION>
                                United                   A-1
        Net Assets Acquired    Electric    Frigoram   Components    Total
        ------------------------------------------------------------------
        <S>                    <C>         <C>        <C>           <C>
        Working capital        $  4.3      $ 3.3      $  4.8        $ 12.4
        Fixed assets              5.7         .1         3.1           8.9
        Intangible and other
          assets                 15.3        3.9         6.4          25.6
        ------------------------------------------------------------------
        Net acquisition cost   $ 25.3      $ 7.3      $ 14.3        $ 46.9
        ==================================================================
</TABLE>

        During 1997, the Company acquired four distributors for total
        consideration of approximately $5.6, comprised of cash payments of $3.6
        and assumption of debt of $2.0. The total goodwill recorded on these
        transactions was approximately $2.8.

        On September 30, 1997, ICP (USA) sold substantially all of the assets
        and liabilities of General Heating and Cooling Company ("General"), a
        heating and cooling products distributor, and a company-owned factory
        branch for net book value of approximately $10.0.  The total
        consideration was comprised of a cash payment of $2.3 and a current
        note receivable of $7.7, which was paid in March 1998.  In 1997,
        General and the factory branch contributed net sales of approximately
        $19.2.

        On January 27, 1997, ICP (USA) sold Coastline Distribution, Inc.
        ("Coastline"), a heating and cooling products distributor, and four
        company-owned factory branches for net book value of approximately
        $22.3, the proceeds of which were used to repay short-term borrowings. 
        In July 1996, ICP (USA) acquired all of the outstanding shares of
        Coastline and General.

        In 1996, the Company recorded a loss from discontinued operations from
        Thompson Pipe and Steel Company, a steel pipe manufacturing subsidiary,
        which was sold in May 1996.


                                -40-


<PAGE>
                INTERNATIONAL COMFORT PRODUCTS CORPORATION
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              For the Years Ended December 31, 1998 and 1997
   (With Comparative Figures for the Year Ended December 31, 1996 - Note 17)
          (In Millions of U.S. Dollars Unless Otherwise Stated)
----------------------------------------------------------------------------

3.      INVENTORIES

        Inventories are classified as follows:
<TABLE>
<CAPTION>

                                            1998            1997
        --------------------------------------------------------
        <S>                                <C>            <C>
        Finished goods                     $  69.3        $ 58.8
        Raw materials and work in process     20.2          13.4
        Service parts                         31.4          22.3
        --------------------------------------------------------
                                           $ 120.9        $ 94.5
        ========================================================
</TABLE>


4.      FIXED ASSETS

        Fixed assets are classified as follows:
<TABLE>
<CAPTION>
                           1998                             1997
-----------------------------------------------------------------------------
                           Accumu-                         Accumu-
                           lated        Net                lated       Net
                          Depreci-      Book              Depreci-     Book
                 Cost      ation       Value      Cost     ation      Value
-----------------------------------------------------------------------------
<S>              <C>       <C>        <C>         <C>       <C>       <C>
Machinery,
  equipment and
  furniture      $ 119.2   $  68.2    $  51.0     $ 100.2   $  59.7   $  40.5

Buildings and
  improvements      55.5      24.3       31.2        51.3      18.0      33.3

Tooling and 
  drawings          55.6      43.4       12.2        51.3      38.9      12.4

Land and land
  improvements      11.1       3.9        7.2        11.5       4.1       7.4
-----------------------------------------------------------------------------
                 $ 241.4   $ 139.8    $ 101.6     $ 214.3   $ 120.7   $  93.6
=============================================================================
</TABLE>

        Depreciation expense for the year amounted to $14.4 (1997 - $14.2; 
        1996 - $14.1).


                                -41-


<PAGE>
                INTERNATIONAL COMFORT PRODUCTS CORPORATION
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              For the Years Ended December 31, 1998 and 1997
   (With Comparative Figures for the Year Ended December 31, 1996 - Note 17)
          (In Millions of U.S. Dollars Unless Otherwise Stated)
----------------------------------------------------------------------------

5.      INTANGIBLE ASSETS

        Intangible assets, net of accumulated amortization, are classified as
        follows:
<TABLE>
<CAPTION>
                                           1998          1997
        ------------------------------------------------------
        <S>                               <C>           <C>
        Goodwill                          $ 32.1        $  7.0
        Patents                              2.0           2.4
        Tradenames and other                 1.7           1.6
        ------------------------------------------------------
                                          $ 35.8        $ 11.0
        ======================================================
</TABLE>

        Amortization of intangible assets during the year was $1.5 (1997 - $.9;
        1996 - $1.6).  The accumulated amortization of intangible assets at
        December 31, 1998, was $12.2 (1997 - $10.5).


6.      OTHER ASSETS

        Other assets are classified as follows:
<TABLE>
<CAPTION>
                                                   1998          1997
        --------------------------------------------------------------
        <S>                                       <C>           <C>
        Debt issuance costs, net                  $  6.8        $  4.3
        Due from insurers on environmental claim     5.2           5.0
        Other                                         .6            .8
        --------------------------------------------------------------
                                                  $ 12.6        $ 10.1
        ==============================================================
</TABLE>


7.      SHORT-TERM BORROWINGS

        The details of short-term borrowings at December 31 are as follows:
<TABLE>
<CAPTION>
                                                       1998          1997
        -------------------------------------------------------------------
        <S>                                            <C>           <C>
        ICP (USA) - Receivables Purchase Agreement     $ 10.0        $ 10.0
        ICP (Canada)                                     10.7           8.8
        Other                                             1.3            .9
        -------------------------------------------------------------------
                                                       $ 22.0        $ 19.7
        ===================================================================
</TABLE>


                                -42-


<PAGE>
                INTERNATIONAL COMFORT PRODUCTS CORPORATION
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              For the Years Ended December 31, 1998 and 1997
   (With Comparative Figures for the Year Ended December 31, 1996 - Note 17)
          (In Millions of U.S. Dollars Unless Otherwise Stated)
----------------------------------------------------------------------------

7.      SHORT-TERM BORROWINGS (CONT'D)

        (a)     ICP (USA)

                Receivables Purchase Agreement
                In 1996, ICP (USA) entered into a five year agreement to sell
                on a revolving basis, up to a $70.0 undivided participation
                ownership interest in a designated pool of its accounts
                receivable. This transfer of receivables does not constitute
                a sale for accounting purposes on the basis that all the
                significant risks and rewards of ownership of the receivables
                are not transferred to the purchaser.  Accordingly, the pool
                of receivables of $10.0 is included in accounts receivable at
                December 31, 1998 (1997 - $10.0).  

                The receivables purchase agreement requires ICP (USA) to pay
                fees plus certain administrative costs.  At December 31, 1998,
                the cost of the receivable facility including unused line fees
                was 10.75% (1997 - 10.4%).

                Revolving Credit Facility
                ICP (USA) has a $15.0 million revolving credit facility of
                which $.1 was utilized at December 31, 1998 (1997 - nil).  The
                facility accrues interest at prime or LIBOR plus 1.5% and is
                secured by inventories.

        (b)     ICP (CANADA)
                ICP (Canada) has a Cdn. $30.0 million revolving credit
                facility, of which $10.7 and $8.8 (Cdn. $16.4 million and 
                $12.6 million) was utilized at December 31, 1998 and 1997, 
                respectively. This three-year facility was established on
                December 19, 1996. ICP (Canada)'s revolving credit facility
                accrues interest at prime plus 1.0% per annum or at Bankers'
                Acceptance rates plus a stamping fee of 2.0% as selected by
                the Company (7.1% at December 31, 1998).  All of ICP
                (Canada)'s assets are pledged as collateral under its facility
                which contains covenants, the most restrictive of which
                require it to maintain a certain minimum interest coverage 
                ratio and net worth and precludes the payment of dividends.

                At December 31, 1998, the restricted net assets of ICP
                (Canada) were approximately $8.0.  Subsequent to year-end, ICP
                (Canada) obtained a waiver of its covenant breach for the
                minimum interest coverage ratio, which existed at December 31,
                1998.  The Company has guaranteed ICP (Canada)'s borrowings.

        (c)     The maximum amount of short-term borrowings outstanding,
                including the advances received under the receivables purchase
                agreement at any month-end during the year ended December 31,
                1998, was $43.8 (1997 - $65.9).  The average short-term
                borrowings outstanding, including the advances received under
                the receivables purchase agreement, calculated by averaging
                month-end balances, during the year ended December 31, 1998,
                was $29.5 (1997 - $39.2).




                                -43-


<PAGE>
                INTERNATIONAL COMFORT PRODUCTS CORPORATION
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              For the Years Ended December 31, 1998 and 1997
   (With Comparative Figures for the Year Ended December 31, 1996 - Note 17)
          (In Millions of U.S. Dollars Unless Otherwise Stated)
----------------------------------------------------------------------------

7.      SHORT-TERM BORROWINGS (CONT'D)

                The weighted average interest rate on the outstanding short-
                term borrowings at December 31, 1998, was 7.6% (1997 - 8.2%). 
                Weighted average interest rates are calculated based on actual
                interest rates in effect and the short-term borrowings
                outstanding at the respective year-ends.


8.      LONG-TERM DEBT

        The details of long-term debt are as follows:

<TABLE>
<CAPTION>
                                                            1998        1997
                -------------------------------------------------------------
                <S>                                        <C>        <C>
                8.625% Senior Notes due May 15, 2008       $ 150.0    $    -
                9.75% Senior Notes due March 1, 2000            -       140.0
                Term bank loan, due 2000 and 2001             25.0       25.0
                Notes payable                                  2.1         .8
                -------------------------------------------------------------
                                                             177.1      165.8
                Current portion of notes payable included
                  in current liabilities                        .7         .2
                -------------------------------------------------------------
                                                           $ 176.4    $ 165.6
                =============================================================
</TABLE>

        (a)     On May 13, 1998, International Comfort Products Holdings, Inc.
                ("ICP Holdings"), a wholly-owned subsidiary of the Company,
                issued $150.0 of 8.625% senior unsecured notes ("Senior Notes")
                in an institutional private placement in the United States. The
                net proceeds of the offering were used to redeem the 9.75% 
                senior secured notes due 2000 in the principal amount of $140.0
                and for general corporate purposes.  The Company expensed 
                refinancing costs of $5.0 including an early prepayment 
                premium of $2.3 on the refinanced debt and the write-off of 
                unamortized debt issuance costs associated with the 9.75% 
                senior notes.








                                -44-


<PAGE>
                INTERNATIONAL COMFORT PRODUCTS CORPORATION
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              For the Years Ended December 31, 1998 and 1997
   (With Comparative Figures for the Year Ended December 31, 1996 - Note 17)
          (In Millions of U.S. Dollars Unless Otherwise Stated)
----------------------------------------------------------------------------

8.      LONG-TERM DEBT (CONT'D)

                The Senior Notes are guaranteed by the Company and are
                repayable on May 15, 2008.  The Senior Notes are not
                redeemable at ICP Holdings' option prior to May 2003, except
                in the event of a change in control.  In this case, ICP
                Holdings is obligated to purchase the entire outstanding
                Senior Notes at a purchase price of 101% of the principal
                amount thereof plus accrued interest.  Thereafter, the Senior
                Notes will be redeemable, in whole or in part, at the option
                of ICP Holdings.  In addition, prior to 2001, ICP Holdings
                may, at its option, redeem up to an aggregate of 35% of the
                principal amount of Senior Notes with proceeds made available
                to it by the Company from a public equity offering. 

                Interest on the Senior Notes is payable semiannually beginning
                in November 1998.  The Senior Notes indenture contains certain
                financial covenants, which limit certain transactions
                including the payment of dividends.  The Senior Notes were
                trading at 101/102 (bid/offer) at December 31, 1998.

                Agreements governing the terms of certain of the Company's
                debt contain certain covenants which, among other things,
                place limitations on the ability of subsidiaries of ICP
                Holdings to pay dividends and make other restricted payments,
                as defined, to ICP Holdings.  Pursuant to the terms of the
                most restrictive covenant regarding restricted payments, $110.0
                of tangible net assets of subsidiaries of ICP Holdings was not
                available for payment of dividends to ICP Holdings as of
                December 31, 1998.

        (b)     In 1996, ICP (USA) arranged an unsecured term bank loan in the
                amount of $25.0 due in full by October 15, 2001.  The Company
                is required to repay $15.0 in 2000 and $10.0 in 2001.  The
                term bank loan accrues interest at LIBOR plus 0.25% (5.35% at
                December 31, 1998) and has been guaranteed by an unaffiliated 
                third party.  The guarantor holds a $15.0 subordinated security
                interest in ICP (Canada)'s receivables and inventories, and the
                shares of ICP (Canada) have been pledged in support of the 
                guarantee.  The pledge agreement contains certain covenants, 
                the most restrictive of which requires ICP (Canada) to maintain
                a minimum level of receivables and inventories in excess of its
                borrowings. On April 15, 1998, ICP (USA) entered into an
                interest rate swap agreement through a U.S. lender to fix the
                interest rate on this debt.  The agreement matures in October
                2001 and carries a fixed rate of 5.97%.

        (c)     Under the provisions of the various loan agreements and
                indentures, the Company is required to make installments of
                $.7, $15.7, $10.7, nil, and nil during the next five years
                beginning in 1999.


                                -45-


<PAGE>
                INTERNATIONAL COMFORT PRODUCTS CORPORATION
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              For the Years Ended December 31, 1998 and 1997
   (With Comparative Figures for the Year Ended December 31, 1996 - Note 17)
          (In Millions of U.S. Dollars Unless Otherwise Stated)
----------------------------------------------------------------------------

9.      SHARE CAPITAL

        (a)     ORDINARY SHARES

        (i)     AUTHORIZED AND OUTSTANDING
                The Company is authorized to issue an unlimited number of
                ordinary shares.  Changes in the issued and outstanding
                ordinary shares for the years 1998, 1997 and 1996 are as
                follows:
<TABLE>
<CAPTION>
                                                    1998                 1997                1996
                ------------------------------------------------------------------------------------------
                                             Number      Amount   Number      Amount   Number      Amount
                ------------------------------------------------------------------------------------------
                <S>                          <C>         <C>      <C>         <C>      <C>         <C>
                Issued and outstanding
                  Beginning of the year      39,847,112  $ 171.2  39,260,322  $ 169.2  39,042,574  $ 166.5
                
                Acquisition of A-1
                  Components                  1,488,162     14.3        -          -         -          -

                Issued under the Employee
                  Stock Option Plan              89,800       .2     474,200      1.3        -          -

                Issued under the Share
                  Ownership Savings Plan         87,540       .8      95,920       .6     201,763       .5

                Issued under the Directors'
                  Share Compensation
                  Arrangement                    27,327       .2      16,670       .1      15,985       -

                Receipt of Funds from
                  Trustee for 1990 Plan of
                  Arrangement                      -          -         -          -         -         2.2

                Shares repurchased             (593,400)    (4.4)       -          -         -          -
                ------------------------------------------------------------------------------------------
                Issued and outstanding
                  End of the year            40,946,541  $ 182.3  39,847,112  $ 171.2  39,260,322  $ 169.2
                ==========================================================================================
</TABLE>

                On September 28, 1998, the Company commenced a share
                repurchase program for up to 5% or approximately 2,073,000 of
                its ordinary shares over the next twelve months.  As of
                December 31, 1998, the Company had repurchased 593,400
                ordinary shares for cancellation.

        (ii)    Employee Stock Option Plan
                A maximum of 4,000,000 ordinary shares has been reserved for
                issuance to officers and employees of the Company under the
                Employee Stock Option Plan.  The term of all options cannot
                exceed ten years from the date the option is granted and are
                vested at an annual rate of 20% per year on a cumulative
                basis, except in certain circumstances where the exercise of
                such options would be accelerated.

                                -46-


<PAGE>
                INTERNATIONAL COMFORT PRODUCTS CORPORATION
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              For the Years Ended December 31, 1998 and 1997
   (With Comparative Figures for the Year Ended December 31, 1996 - Note 17)
          (In Millions of U.S. Dollars Unless Otherwise Stated)
----------------------------------------------------------------------------

9.      SHARE CAPITAL (CONT'D)

        (a)     ORDINARY SHARES (CONT'D)

        (ii)    EMPLOYEE STOCK OPTION PLAN (CONT'D)

                The Board of Directors establishes the option exercise price
                at the time each option is authorized which cannot be less than
                the weighted average sales price per share on The Toronto
                Stock Exchange on the business day preceding the date of
                authorization.

                Changes in the stock options outstanding from January 1, 1996
                to December 31, 1998 are as follows:     

<TABLE>
<CAPTION>
                                                      1998        1997         1996
                ----------------------------------------------------------------------
                <S>                                 <C>         <C>          <C>
                Balance - Beginning of the year     1,959,800   1,720,000      776,000
                Granted                               360,000     770,000    1,000,000
                Exercised                             (89,800)   (474,200)        -
                Canceled                              (18,000)    (56,000)     (56,000)
                ----------------------------------------------------------------------
                Balance - End of the year           2,212,000   1,959,800    1,720,000
                ======================================================================
</TABLE>

                The details of the options outstanding at December 31, 
                1998, at each exercise price are as follows:

<TABLE>
<CAPTION>

                Exercise Price                                     Number of
                     (Cdn.$)             Expiry Date               Shares
                ------------------------------------------------------------
                <S>                       <C>                     <C>
                $ 3.10                    February - May 2000      50,000
                $ 3.50                    August 24, 2001          65,000
                $ 3.10                    December 19, 2001       208,000
                $15.30 - $16.00           December 19, 2001        70,000
                $ 2.80                    April 16, 2003          643,000
                $16.00                    April 16, 2003           95,000
                $ 3.90 - $4.20            July 2003               112,000
                $ 3.83                    November 29, 2003        10,000
                $ 5.20                    January 31, 2004         45,000
                $ 5.80                    February 28, 2004         9,000
                $12.75 - $16.00           April 28, 2004          170,000
                $ 7.05                    April 29, 2004          710,000
                $15.30                    April 29, 2004           25,000
                                                                ---------
                                                                2,212,000
                                                                =========
</TABLE>

                                -47-


<PAGE>
                INTERNATIONAL COMFORT PRODUCTS CORPORATION
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              For the Years Ended December 31, 1998 and 1997
   (With Comparative Figures for the Year Ended December 31, 1996 - Note 17)
          (In Millions of U.S. Dollars Unless Otherwise Stated)
----------------------------------------------------------------------------

9.      SHARE CAPITAL (CONT'D)

        (a)     ORDINARY SHARES (CONT'D)

        (iii)   SHARE OWNERSHIP SAVINGS PLAN

                Effective July 1, 1992, certain employees of the Company were
                eligible to participate in the Company's Share Ownership
                Savings Plan (the "Savings Plan"). Generally, the Savings Plan
                is available to all non-union employees following the
                completion of one year of continuous service with the Company.
                The Savings Plan allows eligible employees to contribute from
                one to six percent of their salary to the Savings Plan. The
                Company is required to match 25% of the employees'
                contributions and may make additional annual contributions of
                up to 75% of the employees' contribution at its discretion. 
                In February 1997, the hourly employees began participating in
                an hourly savings plan with no matching company contributions. 
                In 1998, the Company's expense with respect to both savings
                plans was $.2 (1997 - $.3).

        (iv)    LONG-TERM INCENTIVE PLAN

                Effective April 29, 1997, the Company adopted the 1997 Long-
                Term Incentive Plan  (the "1997 Plan") which will provide
                deferred compensation opportunities to certain senior managers
                of the Company.  This deferred cash compensation plan is based
                on the awarding of Performance Units to participants, the 
                benefit of which is related to the appreciation in the stock
                price of the ordinary shares of the Company.

                The 1997 Plan is comprised of (i) Three year Performance Units
                which are awarded, valued and paid at the end of a three
                calendar year period (the "Performance Period"), and (ii)
                Long-term Performance Units which are awarded at the end of
                the Performance Period, but paid upon retirement, according to
                a vesting schedule, and subject to forfeiture.  

                On April 29, 1997, the Company awarded target thresholds of
                177,500 Performance Units and 180,000 Long-term Performance
                Units to senior management at a grant price of Cdn. $7.05.  
                Compensation expense for the 1997 Plan is measured as the 
                difference between the market price at the end of the year and
                the grant price of the units.  The compensation expense for 
                1998 relating to the 1997 Plan is $.2 (1997 - $.4).

                                -48-


<PAGE>
                INTERNATIONAL COMFORT PRODUCTS CORPORATION
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              For the Years Ended December 31, 1998 and 1997
   (With Comparative Figures for the Year Ended December 31, 1996 - Note 17)
          (In Millions of U.S. Dollars Unless Otherwise Stated)
----------------------------------------------------------------------------

9.      SHARE CAPITAL (CONT'D)

        (b)     PREFERENCE SHARES

                The Company is authorized to issue an unlimited number of
                Class A preference shares issuable in series and rank senior
                to the Class B preference shares and ordinary shares as to
                dividends and participation in certain distributions of assets
                on liquidation.  Any series of the Class A shares may be made
                convertible into ordinary shares and have no voting rights as
                a class.  The Company is also authorized to issue an unlimited
                number of Class B preference shares issuable in series and
                rank senior to ordinary shares and junior to the Class A
                preference shares as to dividends and participation in certain
                distributions of assets on liquidation.  Any series of the 
                Class B shares may be made convertible into ordinary shares 
                and have no voting rights as a class.

                As of December 31, 1998, the Company has not issued any Class
                A or B preference shares.


10.     FOREIGN CURRENCY TRANSLATION ADJUSTMENT

        The Company adopted the United States dollar as its reporting currency,
        effective January 1, 1994.  Accordingly, the foreign currency
        translation adjustment, which is included as a component of
        shareholders' equity, represents the unrealized gain or loss on
        translation of financial statements of self-sustaining operations up
        to December 31, 1998.  Prior to 1994, this adjustment represented the
        unrealized gain or loss on translation of financial statements of self-
        sustaining operations in the United States.  Changes during the
        respective years are as follows:

<TABLE>
<CAPTION>
                                            1998         1997         1996
        --------------------------------------------------------------------
        <S>                                 <C>          <C>          <C>
        Cumulative unrealized loss at
          January 1                         $(3.3)       $(2.0)       $(1.1)

        Unrealized loss on
          translation of net assets          (1.5)        (1.3)         (.9)
        --------------------------------------------------------------------
        Cumulative unrealized loss
          at December 31                    $(4.8)       $(3.3)       $(2.0)
        ====================================================================
</TABLE>

        The rate of exchange as at December 31, 1998 was U.S. $1.00 = Cdn.
        $1.5303 (1997 - U.S. $1.00 = Cdn. $1.4291), and the average rate for
        the year was U.S. $1.00 = Cdn. $1.4833  (1997 - U.S. $1.00 = Cdn.
        $1.3847; 1996 - U.S. $1.00 = Cdn. $1.3636).

                                -49-


<PAGE>
                INTERNATIONAL COMFORT PRODUCTS CORPORATION
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              For the Years Ended December 31, 1998 and 1997
   (With Comparative Figures for the Year Ended December 31, 1996 - Note 17)
          (In Millions of U.S. Dollars Unless Otherwise Stated)
----------------------------------------------------------------------------

11.     INCOME TAXES

        The components of income before income taxes and the income tax
        provision (recovery) are as follows:

<TABLE>
<CAPTION>
                                           1998         1997         1996
        -------------------------------------------------------------------
        <S>                              <C>          <C>          <C>
        Income before income taxes
          Canada                         $  (1.4)     $  (.3)      $  2.0
          United States                     35.7        22.3          9.6
          Other countries                     .5          -            -
        -------------------------------------------------------------------
                                         $  34.8      $ 22.0       $ 11.6
        ===================================================================

        Current income tax provision
          Canada                         $    .7      $   -        $   -
          United States                      3.2          .6           -
          Other countries                     .4          -            -
        -------------------------------------------------------------------
                                             4.3          .6           -
        -------------------------------------------------------------------

        Deferred income tax recovery
          Canada                              -           -            -
          United States                     (4.7)        (.6)          -
          Other countries                     -           -            -
        -------------------------------------------------------------------

                                            (4.7)        (.6)          -
        -------------------------------------------------------------------

        Total income tax recovery        $   (.4)     $   -        $   -
        ===================================================================


</TABLE>





                                 -50-


<PAGE>
                INTERNATIONAL COMFORT PRODUCTS CORPORATION
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              For the Years Ended December 31, 1998 and 1997
   (With Comparative Figures for the Year Ended December 31, 1996 - Note 17)
          (In Millions of U.S. Dollars Unless Otherwise Stated)
----------------------------------------------------------------------------

11.     INCOME TAXES (CONT'D)

        A reconciliation between the combined statutory and the effective rate
        of income tax is provided below:
<TABLE>
<CAPTION>

                                            1998         1997         1996
        ---------------------------------------------------------------------
        <S>                                 <C>          <C>          <C>
        Income before income taxes          $  34.8      $  22.0      $  11.6
        Combined statutory tax rate            38.0%        38.0%        38.0%
        ---------------------------------------------------------------------

        Computed income tax provision          13.2          8.3          4.4
        Increase (decrease) resulting from:
          Non-deductible amortization            .5           .3           .3
          Recognized benefit of losses and
            expenses                             -           (.8)        (1.6)
          Reinstatement of net deferred 
            taxes                              (4.7)          -            -
          Utilization of loss carryforwards   (10.8)        (7.5)        (3.3)
          Other                                 1.4          (.3)          .2
        ---------------------------------------------------------------------

        Actual income tax recovery          $   (.4)     $    -       $    -
        =====================================================================
        Effective rate of income tax                         not          not
          recovery                             (1.1%)    meaningful   meaningful
        =====================================================================
</TABLE>












                                 -51-


<PAGE>
                INTERNATIONAL COMFORT PRODUCTS CORPORATION
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              For the Years Ended December 31, 1998 and 1997
   (With Comparative Figures for the Year Ended December 31, 1996 - Note 17)
          (In Millions of U.S. Dollars Unless Otherwise Stated)
----------------------------------------------------------------------------

11.     INCOME TAXES (CONT'D)

        At December 31, 1998, the Company had the following approximate 
        amounts available to reduce future years' earnings for income tax 
        purposes, the effect of which has not been recognized in the financial 
        statements.

<TABLE>
<CAPTION>
        ---------------------------      ------------------------------
          Losses for tax purposes
              expiring in                            Canada
        ---------------------------      ------------------------------
        <S>       <C>                                <C>
                  2001                               $  5.1
                  2002                                  6.2
                  2003                                  2.9
                  2004                                  1.6
                  2005                                  2.4
        ---------------------------------------------------------------
        Total losses                                   18.2

        Other deductions and basis
          differences not yet taken as
          a deduction for income tax
          purposes                                     19.9
        ---------------------------------------------------------------
                                                     $ 38.1
        ===============================================================
</TABLE>


        The Company has recognized the effect of approximately $13.3 of
        deductions and basis differences not yet taken as a deduction for
        income tax purposes relating to the Company's U.S. subsidiaries in the
        consolidated financial statements. 




                                 -52-


<PAGE>
                INTERNATIONAL COMFORT PRODUCTS CORPORATION
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              For the Years Ended December 31, 1998 and 1997
   (With Comparative Figures for the Year Ended December 31, 1996 - Note 17)
          (In Millions of U.S. Dollars Unless Otherwise Stated)
----------------------------------------------------------------------------

12.     INCOME PER ORDINARY SHARE

        The basic income per ordinary share is calculated on the weighted
        average number of shares outstanding during the respective years as
        follows:
<TABLE>
<CAPTION>
        --------------------------------------------------------------------
                                             1998         1997       1996
        --------------------------------------------------------------------
        <S>                                  <C>          <C>        <C>
        Income to ordinary shareholders 
          before discontinued operations     $  35.2      $  22.0    $  11.6
        Loss from discontinued operations         -            -        (3.1)
        --------------------------------------------------------------------

        Net income to ordinary shareholders  $  35.2      $  22.0    $   8.5
        ====================================================================

        Weighted average number of ordinary
          shares outstanding during the 
          year (in millions)                 40.742       39.664     39.161
        ====================================================================
        Income per ordinary share
          From continuing operations         $ 0.86       $ 0.56     $ 0.30
          After discontinued operations      $ 0.86       $ 0.56     $ 0.22
        ====================================================================
</TABLE>

        The calculation of net income per ordinary share on a fully 
        diluted basis assumes the exercise of outstanding stock options 
        if such action would result in dilution of earnings per share.  
        In 1998, fully diluted net income per ordinary share was 
        approximately $0.83.













                                 -53-


<PAGE>
                INTERNATIONAL COMFORT PRODUCTS CORPORATION
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              For the Years Ended December 31, 1998 and 1997
   (With Comparative Figures for the Year Ended December 31, 1996 - Note 17)
          (In Millions of U.S. Dollars Unless Otherwise Stated)
----------------------------------------------------------------------------

13.     PENSION PLANS
       
        The Company has various defined benefit pension plans available to 
        substantially all permanent full-time employees. The total pension 
        expense for 1998 amounted to $ 2.6 (1997 - $2.9; 1996 - $2.8) and is 
        comprised of the following: 

<TABLE>
<CAPTION>
                                           1998         1997       1996
        ------------------------------------------------------------------
        <S>                                <C>          <C>        <C>
        Current service costs              $  2.7       $  2.4     $  2.3
        Interest costs on projected 
          benefit obligation                  4.7          4.5        4.1
        Return on assets held in the plans   (5.1)        (4.3)      (4.5)
        Net amortization and deferral          .3           .3         .9
        ------------------------------------------------------------------
                                           $  2.6       $  2.9     $  2.8
        ==================================================================
</TABLE>

        The actuarial present value of accrued pension benefits represents the
        discounted value of benefits expected to be paid to plan members, based
        on projected salaries and wages prorated on service.  No escalation of 
        wages is used to determine the actuarial present value of accrued 
        pension benefits since the pension benefit is fixed and subject to
        renegotiations.

        Certain key assumptions used in determining both the pension expense
        for 1998 and the actuarial present value of accrued pension benefits
        as at December 31, 1998 are as follows:

<TABLE>
<CAPTION>
                                                          Canadian    U.S.
                                                           Plans     Plans
        ------------------------------------------------------------------
        <S>                                                <C>       <C>
        Discount rate                                      6.75%     6.75%
        Rate of increase of compensation levels            4.25%     4.50%
        Expected long-term rates of return on plan assets  8.00%     9.00%
        ------------------------------------------------------------------
</TABLE>






                                 -54-


<PAGE>
                INTERNATIONAL COMFORT PRODUCTS CORPORATION
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              For the Years Ended December 31, 1998 and 1997
   (With Comparative Figures for the Year Ended December 31, 1996 - Note 17)
          (In Millions of U.S. Dollars Unless Otherwise Stated)
----------------------------------------------------------------------------

13.     PENSION PLANS (CONT'D)

        The status of pension plans at December 31, 1998, is as follows:
<TABLE>
<CAPTION>
                                                        Canadian     U.S.
                                                          Plans     Plans
        -------------------------------------------------------------------
        <S>                                             <C>         <C>
        Actuarial present value of
          Vested benefit obligations                    $  14.0     $  49.7
          Nonvested benefit obligations                      -          1.7
        -------------------------------------------------------------------

        Accumulated benefit obligations                    14.0        51.4
        Additional amounts related to projected salary
          increases                                          .5        12.2
        -------------------------------------------------------------------

        Total projected benefit obligations                14.5        63.6
        Plan assets at market value                        14.7        44.8
        -------------------------------------------------------------------
        Plan assets in excess of (less than) projected
          benefit obligations                                .2       (18.8)
        Unrecognized net loss                                .7        14.1
        Unrecognized prior service cost                      .1         3.8
        Unrecognized net (asset) obligation                 (.4)        1.1
        -------------------------------------------------------------------

        Prepaid pension cost                            $    .6     $    .2
        ===================================================================
</TABLE>









                                 -55-


<PAGE>
                INTERNATIONAL COMFORT PRODUCTS CORPORATION
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              For the Years Ended December 31, 1998 and 1997
   (With Comparative Figures for the Year Ended December 31, 1996 - Note 17)
          (In Millions of U.S. Dollars Unless Otherwise Stated)
----------------------------------------------------------------------------

14.     BUSINESS SEGMENTS

        Management has determined that the Company operates within one business
        segment: the design, manufacture and distribution of heating and
        cooling systems and related aftermarket products.

<TABLE>
<CAPTION>
Geographic
Information              Net Sales              Fixed Assets and Goodwill
---------------- ---------------------------  ----------------------------
                 1998      1997      1996     1998       1997      1996
                 ---------------------------  ----------------------------
<S>              <C>       <C>       <C>      <C>        <C>       <C>
Canada           $  80.2   $  74.0   $  75.2  $   6.6    $   7.5   $   5.4
United States      593.3     530.0     558.5    121.2       91.1      99.3
Other countries     60.0      26.7       8.2      5.9        2.0        .2
                 ---------------------------  ----------------------------
                 $ 733.5   $ 630.7   $ 641.9  $ 133.7    $ 100.6   $ 104.9
                 ===========================  ============================
</TABLE>

        The Company attributes net sales to the various geographic areas based
        on customers' locations.

        During the year, two customers accounted for approximately 13% and
        11% of the Company's net sales, and the Company's 10 largest customers 
        accounted for approximately 37% of net sales.





















                                 -56-


<PAGE>
                INTERNATIONAL COMFORT PRODUCTS CORPORATION
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              For the Years Ended December 31, 1998 and 1997
   (With Comparative Figures for the Year Ended December 31, 1996 - Note 17)
          (In Millions of U.S. Dollars Unless Otherwise Stated)
----------------------------------------------------------------------------

15.     COMMITMENTS AND CONTINGENCIES

        (a)     In 1991, the Company and Flying J, Inc. ("Flying J") entered
                into a cost sharing agreement whereby the Company will
                participate with Flying J in the financing of future cleanup
                activities for environmental contamination at various refinery
                sites sold by the Company to Flying J in 1980. This settlement
                does not affect claims by Flying J or the Company against
                third parties who may be responsible for contribution to
                refinery cleanup costs. In 1991, the Company also reached a
                settlement with several of its insurance carriers whereby the
                insurers will reimburse the Company for a portion of the
                expenses the Company will incur in the cleanup activities at
                the refineries.  Ongoing cleanup activities at four refinery
                sites are at different regulatory stages. 

                Although the scope of the projects is becoming better
                understood and defined with the various regulatory agencies,
                the ultimate scope of the projects remains uncertain and it is
                not possible to definitively estimate the ultimate costs of
                remediation of such environmental contamination. At December
                31, 1998, the Company has an accrual of $10.9 for its
                estimated share of future cleanup costs, of which $10.3 is
                included in Environmental Liabilities and $.6 in Accrued
                liabilities.  The Company has offsetting receivables due from
                insurers of $5.0 and $2.4 which are included in Other Assets
                and Accounts receivable, respectively.

                The undiscounted cash flows are estimated to be as follows:
<TABLE>
<CAPTION>
                           -----------             ------
                              Year
                           -----------             ------
                           <S>                     <C>
                              1999                 $   .6
                              2000                    1.1
                              2001                     .7
                              2002                     .4
                              2003                     .5
                           Thereafter                 7.6
                                                   ------
                                                   $ 10.9
                                                   ======
</TABLE>









                                 -57-


<PAGE>
                INTERNATIONAL COMFORT PRODUCTS CORPORATION
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              For the Years Ended December 31, 1998 and 1997
   (With Comparative Figures for the Year Ended December 31, 1996 - Note 17)
          (In Millions of U.S. Dollars Unless Otherwise Stated)
----------------------------------------------------------------------------

15.     COMMITMENTS AND CONTINGENCIES (CONT'D)

        (b)     In February 1995, an action was commenced against ICP (Canada)
                in the Ontario Court (General Division) (the "Court"), for
                damages for breach of contract or negligence in the amount of
                $4.9 (Cdn $7.0 million), plus interest and costs, arising out
                of alleged defective cooling banks which were designed,
                manufactured and delivered by Unifin International, a former
                division of ICP (Canada) ("Unifin"), to the plaintiffs between
                1981 and 1984.

                The Company has filed a Statement of Defense with the Court
                that denies the plaintiffs' allegations and intends to
                vigorously defend its position against the claim. The Company
                has notified its primary and umbrella liability insurance
                carriers for their possible involvement with this claim.  The
                Company believes that it has insurance coverage for this
                claim.

        (c)     The Company and its subsidiaries are parties to various other
                claims and lawsuits.  The Company believes that such
                proceedings will not have a material effect on the Company's
                financial position or future operating results, although no
                assurance can be given with respect to the ultimate outcome
                for any such litigation.

        (d)     The Company leases certain facilities and equipment under
                noncancelable operating leases. Lease rental expense during
                the current year amounted to $5.3 (1997 - $4.0; 1996 - $5.9).
                The approximate aggregate minimum annual rentals under long-
                term leases in future years at December 31, 1998, are as 
                follows:

<TABLE>
<CAPTION>
                           -----------              ------
                              Year
                           -----------              ------
                              <S>                    <C>
                              1999                  $  4.3
                              2000                     3.7
                              2001                     2.8
                              2002                     2.2
                              2003                     1.9
                            Thereafter                 2.7
                                                    ------
                                                    $ 17.6
                                                    ======
</TABLE>








                                 -58-


<PAGE>
                INTERNATIONAL COMFORT PRODUCTS CORPORATION
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              For the Years Ended December 31, 1998 and 1997
   (With Comparative Figures for the Year Ended December 31, 1996 - Note 17)
          (In Millions of U.S. Dollars Unless Otherwise Stated)
----------------------------------------------------------------------------

16.     SIGNIFICANT DIFFERENCES BETWEEN CANADIAN AND 
        U.S. ACCOUNTING PRACTICES

        Accounting principles adopted by the Company as reflected in these
        consolidated financial statements in accordance with Canadian GAAP are
        generally consistent with accounting principles accepted in the United
        States ("U.S. GAAP") with certain exceptions.  The following
        reconciliations reflect the differences in these accounting principles
        where applicable to the Company. If accounting principles generally
        accepted in the United States were followed, the effect on the
        consolidated financial statements would be:

        (a)     Net income in accordance with U.S. GAAP
<TABLE>
<CAPTION>
                                               ----------------------------
                                                 1998      1997      1996
                                               ----------------------------
        <S>                                    <C>        <C>       <C>
        Income from continuing
          operations (as reported)             $ 35.2     $ 22.0    $ 11.6

        U.S. GAAP adjustments
          Accounting for income taxes (1)         (.7)       (.7)      (.7)
          Postretirement benefits (2)            (2.1)      (1.9)     (1.8)
          Loss on extinguishment of debt (3)      5.0         -         .6
        -------------------------------------------------------------------
        Adjusted income from 
          continuing operations                  37.4       19.4       9.7
        Loss from discontinued operations,
          net of income taxes                      -          -       (3.1)
        --------------------------------------------------------------------
        Income before extraordinary item         37.4       19.4       6.6

        Extraordinary item
          Loss on extinguishment of debt (3)     (5.0)        -        (.6)
        --------------------------------------------------------------------
        Net income under U.S. GAAP             $ 32.4     $ 19.4    $  6.0
        ====================================================================
</TABLE>








                                 -59-


<PAGE>
                INTERNATIONAL COMFORT PRODUCTS CORPORATION
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              For the Years Ended December 31, 1998 and 1997
   (With Comparative Figures for the Year Ended December 31, 1996 - Note 17)
          (In Millions of U.S. Dollars Unless Otherwise Stated)
----------------------------------------------------------------------------

16.     SIGNIFICANT DIFFERENCES BETWEEN CANADIAN AND 
        U.S. ACCOUNTING PRACTICES (CONT'D)


<TABLE>
<CAPTION>
                                    -------------------------------------
                                           1998      1997      1996
                                    -------------------------------------
        <S>                               <C>       <C>       <C>
        Weighted average number of
          ordinary shares outstanding
          during the year under U.S.
          GAAP (in millions)
            Basic                         40.742    39.664    39.161
            Diluted                       41.996    40.549    39.254

        Basic income per ordinary 
          share under U.S. GAAP 
          (in dollars)
            From continuing operations    $ 0.92    $ 0.49    $ 0.25
            Before extraordinary item     $ 0.92    $ 0.49    $ 0.17
            After extraordinary item      $ 0.80    $ 0.49    $ 0.15

        Diluted income per ordinary 
          share under U.S. GAAP 
          (in dollars)
            From continuing operations    $ 0.89    $ 0.48    $ 0.25
            Before extraordinary item     $ 0.89    $ 0.48    $ 0.17
            After extraordinary item      $ 0.77    $ 0.48    $ 0.15
</TABLE>















                                 -60-


<PAGE>
                INTERNATIONAL COMFORT PRODUCTS CORPORATION
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              For the Years Ended December 31, 1998 and 1997
   (With Comparative Figures for the Year Ended December 31, 1996 - Note 17)
          (In Millions of U.S. Dollars Unless Otherwise Stated)
----------------------------------------------------------------------------

16.     SIGNIFICANT DIFFERENCES BETWEEN CANADIAN AND 
        U.S. ACCOUNTING PRACTICES (CONT'D)

        (1)     This reconciling item reflects the application of Statement of
                Financial Accounting Standards ("SFAS") No. 109 "Accounting
                for Income Taxes".  Additionally, the following table outlines
                the significant components of the Company's deferred tax
                assets (liabilities) as at December 31, 1998 and 1997, under
                U.S. GAAP disclosure requirements.
<TABLE>
<CAPTION>
----------------------------------------------------------------------------
                                                   UNITED
DECEMBER 31, 1998                                  STATES   CANADA    TOTAL
----------------------------------------------------------------------------
<S>                                                <C>      <C>       <C>
Deferred tax assets
  Net operating losses and other carryforwards     $   .8   $  7.4    $  8.2
  Product liability and warranty                      9.1       .7       9.8
  Book over tax depreciation                           -       5.2       5.2
  Allowance for doubtful accounts                     1.4       -        1.4
  Employee benefits                                   6.5       -        6.5
  Other tax assets                                    2.4       .9       3.3
  Environmental liability                             1.9       -        1.9
----------------------------------------------------------------------------
Total deferred tax assets before allowance           22.1     14.2      36.3
Valuation allowance for deferred tax assets            -     (13.9)    (13.9)
----------------------------------------------------------------------------
Total deferred tax assets                            22.1       .3      22.4
----------------------------------------------------------------------------
Deferred tax liabilities
  Tax over book depreciation                        (13.5)      -      (13.5)
  Other tax liabilities                                -       (.3)      (.3)
----------------------------------------------------------------------------
Total deferred tax liabilities                      (13.5)     (.3)    (13.8)
----------------------------------------------------------------------------
Net deferred tax assets                            $  8.6   $   -     $  8.6
============================================================================
<CAPTION>
----------------------------------------------------------------------------
                                                   UNITED
DECEMBER 31, 1997                                  STATES   CANADA    TOTAL
----------------------------------------------------------------------------
Deferred tax assets
  Net operating losses and other carryforwards     $  8.7   $ 12.3    $ 21.0
  Product liability and warranty                     10.6       .8      11.4
  Allowance for doubtful accounts                     1.6       -        1.6
  Other tax assets                                   11.9      1.7      13.6
----------------------------------------------------------------------------
Total deferred tax assets before allowance           32.8     14.8      47.6
Valuation allowance for deferred tax assets         (18.2)   (14.3)    (32.5)
----------------------------------------------------------------------------
Total deferred tax assets                            14.6       .5      15.1
----------------------------------------------------------------------------
Deferred tax liabilities
  Tax over book depreciation                        (12.6)      -      (12.6)
  Other tax liabilities                              (1.4)     (.5)     (1.9)
----------------------------------------------------------------------------
Total deferred tax liabilities                      (14.0)     (.5)    (14.5)
----------------------------------------------------------------------------
Net deferred tax assets                            $   .6   $   -     $   .6
============================================================================
</TABLE>
                                 -61-<PAGE>
                INTERNATIONAL COMFORT PRODUCTS CORPORATION
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              For the Years Ended December 31, 1998 and 1997
   (With Comparative Figures for the Year Ended December 31, 1996 - Note 17)
          (In Millions of U.S. Dollars Unless Otherwise Stated)
----------------------------------------------------------------------------

16.     SIGNIFICANT DIFFERENCES BETWEEN CANADIAN AND 
        U.S. ACCOUNTING PRACTICES (CONT'D)

        (2)     This reconciling item reflects the application of SFAS No. 106
                "Employers' Accounting for Postretirement Benefits Other Than
                Pensions", for the Company's U.S. plans.  The standard
                requires, among other things, the recognition of
                postretirement benefits on an accrual basis.  Under Canadian 
                GAAP, the Company expenses such benefits as paid. 

                During 1998, the Company adopted SFAS No. 132 "Employer's
                Disclosures About Pensions and Other Postretirement Benefits",
                which modifies the disclosures required under U.S. GAAP.  The
                following provides such disclosure for the Company's pension
                and postretirement benefit plans.

                The following tables provide reconciliations of the changes in
                the plans' benefit obligations and fair values of the plans'
                assets, as well as their funded status for the years ended
                December 31, 1998 and 1997, respectively.
<TABLE>
<CAPTION>
                                         ------------------------------------
                                             Pension           Postretirement
-----------------------------------------------------------------------------
                                         1998       1997      1998      1997
-----------------------------------------------------------------------------
<S>                                     <C>       <C>        <C>       <C>
Reconciliation of benefit obligation:
  Obligation at January 1               $ 63.4    $ 58.6     $ 22.0    $ 18.9
    Service cost                           2.7       2.4        1.1       1.0
    Interest cost                          4.7       4.5        1.6       1.4
    Liability loss                         8.7       2.0        2.6       2.9
    Benefits paid                         (3.9)     (4.1)      (1.3)     (1.1)
    Change in plan provisions              2.5        -          -       (1.1)
-----------------------------------------------------------------------------
Obligation at December 31               $ 78.1    $ 63.4     $ 26.0    $ 22.0
=============================================================================
Reconciliation of fair value 
  of plan assets:
    Fair value of plan assets 
      at January 1                      $ 60.3    $ 50.7     $   -     $   -
    Actual return on plan assets           1.8      10.9         -         -
    Employer contributions                 3.1       2.1        1.3      1.1
    Benefits paid                         (3.9)     (4.1)      (1.3)    (1.1)
    Other                                 (1.8)       .7         -        -
----------------------------------------------------------------------------
Fair value of plan assets 
  at December 31                        $ 59.5    $ 60.3     $   -     $  -
============================================================================
</TABLE>

                                 -62-

<PAGE>
                INTERNATIONAL COMFORT PRODUCTS CORPORATION
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              For the Years Ended December 31, 1998 and 1997
   (With Comparative Figures for the Year Ended December 31, 1996 - Note 17)
          (In Millions of U.S. Dollars Unless Otherwise Stated)
----------------------------------------------------------------------------

16.     SIGNIFICANT DIFFERENCES BETWEEN CANADIAN AND 
        U.S. ACCOUNTING PRACTICES (CONT'D)

<TABLE>
<CAPTION>
                                         ------------------------------------
                                             Pension           Postretirement
-----------------------------------------------------------------------------
                                         1998       1997      1998      1997
-----------------------------------------------------------------------------
<S>                                     <C>       <C>        <C>       <C>
Funded status at December 31            $ (18.6)  $ (3.1)    $ (26.0)  $(22.0)
Unrecognized transition obligation           .7       .5         6.8      7.0
Unrecognized prior service cost             3.9      1.7          -        -
Unrecognized loss                          14.8      1.1         9.4      7.1
-----------------------------------------------------------------------------
Net amount recognized                   $    .8   $   .2     $  (9.8)  $ (7.9)
=============================================================================
</TABLE>

        The following table provides the amounts recognized in the consolidated
        balance sheets as of December 31, 1998 and 1997, respectively.

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------
                                         1998       1997      1998      1997
-----------------------------------------------------------------------------
<S>                                     <C>       <C>        <C>       <C>
Accrued liability                       $ (6.7)   $ (1.3)    $ (9.8)   $ (7.9)
Intangible assets                          3.5       1.2         -         -
Accumulated other comprehensive income     4.0        .3         -         -
-----------------------------------------------------------------------------
Net amount recognized                   $   .8    $   .2     $ (9.8)   $ (7.9)
=============================================================================
</TABLE>

        Certain of the Company's pension plans had accumulated benefit
        obligations in excess of plan assets.  For these plans, the accumulated
        benefit obligations and plan assets were $22.7 and $15.7, respectively,
        as of December 31, 1998.

        The amount included in other comprehensive income arising from a
        change to the additional minimum pension liability was $(3.7), $1.6, 
        and $(.4) for the three years ended December 31, 1998, 1997 and 1996, 
        respectively.

        Prior service costs are amortized on a straight-line basis over the 
        average remaining service lives of the covered group.





                                 -63-

<PAGE>
                INTERNATIONAL COMFORT PRODUCTS CORPORATION
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              For the Years Ended December 31, 1998 and 1997
   (With Comparative Figures for the Year Ended December 31, 1996 - Note 17)
          (In Millions of U.S. Dollars Unless Otherwise Stated)
----------------------------------------------------------------------------

16.     SIGNIFICANT DIFFERENCES BETWEEN CANADIAN AND 
        U.S. ACCOUNTING PRACTICES (CONT'D)

                The following table provides the components of net periodic
                benefit cost for postretirement healthcare benefits for each
                of the three years ended December 31, 1998:
<TABLE>
<CAPTION>
        -------------------------------------------------------------
                                        1998        1997         1996
        -------------------------------------------------------------
        <S>                            <C>         <C>          <C>
        Service cost                   $ 1.1       $ 1.0        $ 1.1
        Interest cost                    1.6         1.4          1.4
        Amortization of
          accumulated gains and losses    .3          .2           .2
        Amortization of
          transition obligation           .4          .4           .4
        -------------------------------------------------------------
        Net periodic postretirement
          benefit cost                 $ 3.4       $ 3.0        $ 3.1
        =============================================================
</TABLE>

                For measurement purposes of the postretirement benefit
                obligation, the Company used a discount rate of 6.75%.  In
                addition, a 6.0% and 5.5% annual rate of increase in per capita
                cost of covered healthcare benefits were assumed for 1998 and 
                1999, respectively, and 5% thereafter.  The assumptions used 
                in healthcare cost trend rates have significant effects
                on the amounts reported for the healthcare plans.  A one
                percentage point increase in assumed healthcare cost trend
                rates would increase the total service and interest cost
                components of the net periodic postretirement healthcare
                benefit cost by $.3 and would increase the healthcare
                component of the accumulated postretirement benefit obligation
                by $2.6.  Conversely, a one percentage point decrease in
                assumed healthcare cost trend rates would decrease the total
                service and interest cost components of the net periodic
                postretirement healthcare benefit cost by $.3 and would
                decrease the healthcare component of the accumulated
                postretirement benefit obligation by $2.5.



                                 -64-

<PAGE>
                INTERNATIONAL COMFORT PRODUCTS CORPORATION
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              For the Years Ended December 31, 1998 and 1997
   (With Comparative Figures for the Year Ended December 31, 1996 - Note 17)
          (In Millions of U.S. Dollars Unless Otherwise Stated)
----------------------------------------------------------------------------

16.     SIGNIFICANT DIFFERENCES BETWEEN CANADIAN AND 
        U.S. ACCOUNTING PRACTICES (CONT'D)

        (3)     Under Canadian GAAP, this item is included in income from
                continuing operations.  Under U.S. GAAP, such an item is
                treated as an extraordinary item.
 
(b)     Additional disclosures required under U.S. GAAP
 
        (1)     SFAS No. 123 "Accounting for Stock-Based Compensation", 
                permits the Company to continue to apply the recognition and 
                measurement principles of Accounting Principles Board Opinion 
                No. 25,  "Accounting for Stock Issued to Employees", to its 
                stock option plan.  If the compensation cost for the Company's
                stock option plan had been determined based on the fair value
                at the grant dates for the 1998, 1997 and 1996 options, 
                consistent with the method provided in SFAS 123, the Company's
                1998, 1997 and 1996 pro forma net income and earnings per 
                share would have been $30.8, $18.5 and $5.7, and $0.76, $0.47 
                and $0.15, respectively.  The weighted average fair values of 
                the 1998, 1997 and 1996 option grants are estimated on the 
                dates of grant using the Black-Scholes option pricing model 
                with the following assumptions: expected volatility for 1998, 
                1997 and 1996 was 56 percent, 70 percent and 53 percent, 
                respectively; risk-free interest rates for 1998, 1997 and 1996
                were 4.7%, 5.7% and 6.6%, respectively; and expected lives of 
                seven years for all three years.  The weighted average fair 
                values of the options granted in 1998, 1997 and 1996 were Cdn. 
                $7.22, Cdn. $4.39 and Cdn. $1.46, respectively.

        (2)     Research and development expenses in 1998, 1997 and 1996 were
                $3.2, $3.0 and $2.9, respectively.
 
        (3)     Under U.S. GAAP, comprehensive income as defined by SFAS No.
                130 "Reporting Comprehensive Income", was as follows:

<TABLE>
<CAPTION>
                                                1998       1997        1996
                                               -----------------------------
                <S>                            <C>        <C>         <C>
                Net income under U.S. GAAP     $ 32.4     $ 19.4      $ 6.0
                Other comprehensive income:
                  Foreign currency translation
                    adjustment                   (1.5)      (1.3)       (.9)
                  Minimum pension liability 
                    adjustment                   (3.7)       1.6        (.4)
                                               -----------------------------
                                                 (5.2)        .3       (1.3)
                                               -----------------------------
                Comprehensive income under 
                  U.S. GAAP                    $ 27.2     $ 19.7      $ 4.7
                                               =============================
</TABLE>

                                 -65-

<PAGE>
                INTERNATIONAL COMFORT PRODUCTS CORPORATION
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              For the Years Ended December 31, 1998 and 1997
   (With Comparative Figures for the Year Ended December 31, 1996 - Note 17)
          (In Millions of U.S. Dollars Unless Otherwise Stated)
----------------------------------------------------------------------------

16.     SIGNIFICANT DIFFERENCES BETWEEN CANADIAN AND 
        U.S. ACCOUNTING PRACTICES (CONT'D)


(c)     Consolidated Balance Sheets

<TABLE>
<CAPTION>
                                                             ---------------------------------------
                                                                                       AMOUNTS
                                                                 AMOUNTS             AS ADJUSTED
                                                              REPORTED UNDER       TO CONFORM WITH
                                                              CANADIAN GAAP           U.S. GAAP
                                                             ---------------------------------------
                                                               1998      1997      1998      1997 
                                                             ---------------------------------------
        <S>                                                   <C>       <C>       <C>       <C>
        Prepaid expenses and other (see note 16 (c)(1))       $   5.7   $   5.9   $   9.3   $   7.1
        Fixed assets (see note 16 (c)(2))                       101.6      93.6     103.1      95.5
        Intangible assets (see note 16 (c)(2))                   35.8      11.0      39.1      14.8
        Accrued liabilities (see note 16 (a)(2) and 16(c)(1))    28.1      26.5      37.4      28.9
        Other long-term liabilities (see note 16 (a)(2))         11.1       5.1      20.0      12.6
        Deficit                                                 (81.2)   (116.4)    (90.9)   (119.6)
        Shareholders' equity                                     96.3      51.5      86.6      48.3

</TABLE>

        (1)     Under SFAS No. 87  "Employers' Accounting for Pensions", the
                amount of the unfunded accumulated benefit obligation is
                calculated and separately recorded in the balance sheet as a
                liability, offset by a prepaid intangible asset and resulting
                reduction in shareholders' equity.

        (2)     Under SFAS No. 109, the Company was required to reflect
                additional deferred tax liabilities on the purchase accounting
                acquisition of ICP (USA) which were allocated to fixed assets
                and goodwill.


17.     PRIOR YEARS COMPARATIVE FIGURES

        The consolidated financial statements for the year ended December 31,
        1996, were audited by another public accounting firm which expressed
        their opinion without reservation on those consolidated financial
        statements in their report dated February 11, 1997.









                                 -66-

<PAGE>
                INTERNATIONAL COMFORT PRODUCTS CORPORATION
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              For the Years Ended December 31, 1998 and 1997
   (With Comparative Figures for the Year Ended December 31, 1996 - Note 17)
          (In Millions of U.S. Dollars Unless Otherwise Stated)
----------------------------------------------------------------------------

18.     SUMMARIZED FINANCIAL INFORMATION OF SUBSIDIARY

        ICP Holdings is the issuer of certain securities as to which a
        registration statement was declared effective under the Securities Act
        of 1933 in 1998.  As a result of that registration statement being
        declared effective, ICP Holdings ordinarily would be subject to the
        reporting requirements under Section 13 or 15(d) of the Securities Act
        of 1934 (the "Exchange Act").  Since these securities, however, are
        fully and unconditionally guaranteed by the Company and management has
        determined that such information is not material to the holder of the
        securities, the Company and ICP Holdings received an exemption from the
        reporting requirements of the Exchange Act.  Summarized financial
        information relating to ICP Holdings is presented herein as an addition
        to the notes to consolidated financial statements of the Company as
        follows:

<TABLE>
<CAPTION>

                                                 1998      1997      1996
                                                 ----      ----      ----
        <S>                                    <C>       <C>       <C>
        Condensed Statement of Income Data:
          Net Sales                            $ 682.1   $ 577.0   $ 587.6
          Gross Profit                           140.5     113.9     111.0
          Income From Continuing Operations       36.8      22.8       9.3
          Discontinued Operations                   -          -      (3.1)
          Net Income                              36.8      22.8       6.2

                                                 1998      1997
                                                 ----      ----
        <S>                                    <C>       <C>
        Condensed Balance Sheet Data:
          Current Assets                       $ 256.0   $ 207.3
          Total Assets                           399.5     316.1
          Current Liabilities                    113.5      94.2
          Total Liabilities                      338.0     289.3
          Shareholders' Equity                    61.5      26.8

</TABLE>
                                 -67-


<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
        AND FINANCIAL DISCLOSURE.

There are no Company disclosures required by Item 304 of Regulation
S-K, 17 C.F.R. Section 229.304.


                               PART III


ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

"Election of Directors" and "Section 16(a) Beneficial Ownership Reporting 
Compliance" contained in the 1999 Proxy Statement is incorporated herein by 
reference.  See also Item 4A, "Executive Officers of the Registrant" in Part 
I of this Annual Report on Form 10-K.


ITEM 11. EXECUTIVE COMPENSATION.

"Compensation of Executive Officers" contained in the 1999 Proxy Statement 
is incorporated herein by reference.  The matters labeled "Report of the 
Compensation and Pension Committee" and "Performance Graphs" contained in 
the 1999 Proxy Statement shall not be deemed incorporated by reference into 
this Annual Report on Form 10-K.


ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

"Security Ownership of Certain Beneficial Owners and Management" contained 
in the 1999 Proxy Statement is incorporated herein by reference.


ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

"Certain Transactions" contained in the 1999 Proxy Statement is incorporated 
herein by reference.

                                -68-


<PAGE>
                               PART IV

Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.

     (a)    The following documents are filed as a part of this Annual Report
            on Form 10-K:

           (1)  Financial Statements:
                Auditors' Reports

                Consolidated Balance Sheets - December 31, 1998 and 
                December 31, 1997.

                Consolidated Statements of Income and Deficit - Years ended
                December 31, 1998, December 31, 1997 and December 31, 1996.
   
                Consolidated Statements of Cash Flows - Years ended December
                31, 1998, December 31, 1997 and December 31, 1996.
   
                Notes to Consolidated Financial Statements - Years ended
                December 31, 1998, December 31, 1997 and December 31, 1996.

           (2)  Schedules

                Auditors' Reports

                Schedule I - Condensed Financial Information of the
                Registrant for the Years Ended December 31, 1998, 1997 
                and 1996.

                Schedule II - Consolidated Valuation and Qualifying 
                Accounts for the Years Ended December 31, 1998, 1997 and
                1996.

     All other schedules for which provision is made in the applicable
     accounting regulation of the Commission are not required under the 
     related instructions or are inapplicable, and therefore have been omitted.

           (3)  Those exhibits required to be filed as Exhibits to this 
     Annual Report on Form 10-K pursuant to Item 601 of Regulation S-K, 17
     C.F.R. Section 229.601, as follows:

     3(i), 4.1  Articles of Incorporation of International Comfort Products
                Corporation filed as Exhibit 3(i)/4.1 to the Company's
                Quarterly Report on Form 10-Q for the quarter ended September
                30, 1997 filed with the Commission on November 14, 1997, and
                incorporated herein by this reference.

                                -69-
<PAGE>
     3(ii), 4.2 Bylaws of International Comfort Products Corporation filed as
                Exhibit 1.2 to the Company's Annual Report on Form 20-F for
                the year ended December 31, 1993 filed with the Commission on
                June 29, 1994, and incorporated herein by this reference.

        4.3     Indenture dated as of May 13, 1998, by and among International
                Comfort Products Holdings, Inc. ("ICP Holdings"),
                International Comfort Products Corporation and United States
                Trust Company of New York, as Trustee, with respect to the
                Series A and Series B 8 5/8% Senior Notes due 2008, filed as
                Exhibit 4.5 to the Registrant's Registration Statement on Form
                S-4 (File No. 333-58837) filed with the Commission on July 10,
                1998, and incorporated herein by this reference.

        10.1    Master Trust Pooling and Service Agreement, dated as of July
                25, 1996 among Inter-City Products Receivables Company,
                L.P. ("ICP-Receivables"), International Comfort Products 
                Corporation (USA) ("ICP(USA)") and LaSalle National Bank, as
                Trustee filed as Exhibit 10.1 to Amendment No. 1 to the
                Registrants' Registration Statement on Form S-4 (File No.
                333-58837 and 333-58837-01) filed with the Commission on
                August 28, 1998, and incorporated herein by this reference.

        10.2    Series 1996-1 Supplement to Master Trust Pooling and Service
                Agreement, dated as of July 25, 1996 among ICP-Receivables,
                ICP(USA) and LaSalle National Bank, as Trustee (and correlative
                form of Class A (Series 1996-1) Certificate and form of Class
                B (Series 1996-1) Certificate, and form of Guaranty from
                ICP(USA) filed as Exhibit 10.2 to Amendment No. 1 to the
                Registrant's Registration Statement on Form S-4 (File No.
                333-58837 and 333-58837-01) filed with the Commission on
                August 28, 1998, and incorporated herein by this reference.

        10.3    Receivables Purchase Agreement dated as of July 25, 1996 among
                ICP(USA), Inter-City Products Partner Corporation
                ("ICP-Partner") and ICP-Receivables filed as Exhibit 10.3 to
                Amendment No. 1 to the Registrant's Registration Statement on
                Form S-4 (File No. 333-58837 and 333-58837-01) filed with the
                Commission on August 28, 1998, and incorporated herein by this
                reference.

        10.4    Certificate Purchase Agreement (Series 1996-1, Class A) dated
                as of July 25, 1996 among ICP-Receivables, ICP(USA), the
                Purchasers named therein and The Chicago Corporation, as Agent
                filed as Exhibit 10.4 to Amendment No. 1 to the Registrant's
                Registration Statement on Form S-4 (File No. 333-58837 and
                333-58837-01) filed with the Commission on August 28, 1998,
                and incorporated herein

                                -70-
<PAGE>
                by this reference.

        10.5    Certificate Purchase Agreement (Series 1996-1, Class B) dated
                as of July 25, 1996 among ICP-Receivables, ICP(USA) and Argos
                Funding Corp. filed as Exhibit 10.5 to Amendment No. 1 to the
                Registrant's Registration Statement on Form S-4 (File No.
                333-58837 and 333-58837-01) filed with the Commission on
                August 28, 1998, and incorporated herein by this reference.

        10.6    First Amendment to Certificate Purchase Agreement (Series
                1996-1, Class A) dated as of December 1, 1996 among
                ICP-Receivables, ICP(USA), the Purchasers named therein and The
                Chicago Corporation, as Agent filed as Exhibit 4.9 to the
                Company's Quarterly Report on Form 10-Q for the quarter ended
                September 30, 1997 filed with the Commission on November 14,
                1997, and incorporated herein by this reference.

        10.7    First Amendment to Receivables Purchase Agreement and Second
                Amendment to Certificate Purchase Agreement (Series 1996-1,
                Class A) dated as of January 27, 1997 among ICP(USA),
                ICP-Partner, General Heating and Cooling Company, Coastline
                Distribution, Inc., ICP-Receivables, Anagram Funding Corp. and
                ABN AMRO Chicago Corporation filed as Exhibit 10.7 to
                Amendment No. 1 to the Registrant's Registration Statement on
                Form S-4 (File No. 333-58837 and 333-58837-01) filed with the
                Commission on August 28, 1998, and incorporated herein by this
                reference.

        10.8    Second Amendment to Receivables Purchase Agreement as of
                September 30, 1997 among ICP(USA), ICP-Partner, General Heating
                and Cooling Company, ICP-Receivables, Anagram Funding Corp.
                and ABN AMRO Chicago Corporation filed as Exhibit 10.8 to
                Amendment No. 1 to the Registrant's Registration Statement on
                Form S-4 (File No. 333-58837 and 333-58837-01) filed with the
                Commission on August 28, 1998, and incorporated herein by this
                reference.

        10.9    Loan and Security Agreement dated as of July 18, 1997 between
                ICP(USA) and NationsBank, N.A. filed as Exhibit 10.9 to
                Amendment No. 1 to the Registrant's Registration Statement on
                Form S-4 (File No. 333-58837 and 333-58837-01) filed with the
                Commission on August 28, 1998, and incorporated herein by this
                reference.

        10.10   Amendment to Loan and Security Agreement made and entered into
                as of February 24, 1998 between NationsBank, N.A. and ICP(USA)
                filed as Exhibit 10.10 to Amendment No. 1 to the Registrant's
                Registration Statement on Form S-4 (File No. 333-58837 and
                333-58837-01) filed with the Commission on August 28, 1998,
                and

                                -71-
<PAGE>
                incorporated herein by this reference.

        10.11   Second Amendment to Loan and Security Agreement made and
                entered into as of May 13, 1998 between NationsBank, N.A. and
                ICP(USA) filed as Exhibit 10.10 to Amendment No. 1 to the
                Registrant's Registration Statement on Form S-4 (File No.
                333-58837 and 333-58837-01) filed with the Commission on
                August 28, 1998, and incorporated herein by this reference.

        10.12   Credit Agreement made and entered into as of December 16, 1996
                between Inter-City Products Corporation (Canada) ("ICP
                Canada"), G.C. McDonald Supply Limited, the Lenders named
                therein and General Electric Capital Canada Inc., as agent
                filed as Exhibit 10.12 to Amendment No. 1 to the Registrant's
                Registration Statement on Form S-4 (File No. 333-58837 and
                333-58837-01) filed with the Commission on August 28, 1998,
                and incorporated herein by this reference.

        10.13   First Amendment to Credit Agreement made and entered into as
                of May 13, 1998 between ICP Canada, G.C. McDonald Supply
                Limited, the Lenders named therein and General Electric
                Capital Canada Inc., as agent filed as Exhibit 10.13 to
                Amendment No. 1 to the Registrant's Registration Statement on
                Form S-4 (File No. 333-58837 and 333-58837-01) filed with the
                Commission on August 28, 1998, and incorporated herein by this
                reference.

        10.14   Second Amendment to Credit Agreement made and entered into as
                of July 21, 1998 between ICP Canada, G.C. McDonald Supply
                Limited, the Lenders named therein and General Electric
                Capital Canada Inc., as agent filed as Exhibit 10.14 to
                Amendment No. 1 to the Registrant's Registration Statement on
                Form S-4 (File No. 333-58837 and 333-58837-01) filed with the
                Commission on August 28, 1998, and incorporated herein by this
                reference.

        10.15   International Comfort Products Corporation Employee Stock
                Option Plan filed as Exhibit 4.1 to the Company's Registration
                Statement on Form S-8 filed with the Commission on March 16,
                1995, and incorporated herein by this reference.

        10.16   International Comfort Products Corporation Share Compensation
                Arrangement for Non-Employee Directors filed as Exhibit 10.3
                to the Company's Annual Report on Form 10-K for the year ended
                December 31, 1997 filed with the Commission on March 30, 1998,
                and incorporated herein by this reference.

                                -72-
<PAGE>
        10.17   International Comfort Products Corporation Long Term Incentive
                Plan filed as Exhibit 10.25 to ICP(USA)'s Registration
                Statement on Form S-1 (File No. 33-56238) filed with the
                Commission on December 23, 1992, and incorporated herein by
                reference.

        10.18   Amendment to International Comfort Products Corporation Long
                Term Incentive Plan filed as Exhibit 10.11 to ICP(USA)'s
                Annual Report on Form 10-K for the year ended December 31,
                1993 filed with the Commission on March 28, 1994, and
                incorporated herein by reference.

        10.19   International Comfort Products Corporation 1997 Long Term
                Incentive Plan for Senior Management filed as Exhibit 10.6 to
                the Company's Annual Report on Form 10-K for the year ended
                December 31, 1997 filed with the Commission on March 30, 1998,
                and incorporated herein by this reference.

        10.20   ICP(USA) Share Ownership Savings Plan filed as Exhibit 10.26
                to ICP(USA)'s Registration Statement on Form S-1 (File No.
                33-56238) filed with the Commission on December 23, 1992, and
                incorporated herein by this reference.

        10.21   Amendments to ICP(USA)'s Share Ownership Savings Plan filed
                as Exhibit 10.8 to the Company's Annual Report on Form 10-K
                for the year ended December 31, 1997 filed with the Commission
                on March 30, 1998, and incorporated herein by this reference.

        10.22   Retirement Plan for Salaried Employees filed as Exhibit 10.27
                to ICP(USA)'s Registration Statement on Form S-1 (File No.
                33-56238) filed with the Commission on December 23, 1992, and
                incorporated herein by this reference.

        10.23   Supplemental Retirement Benefit Agreement dated September 1,
                1994 with W. Michael Clevy filed as Exhibit 10.16 to ICP(USA)'s
                Annual Report on Form 10-K for the year ended December 31, 1995
                filed with the Commission on March 28, 1996, and incorporated 
                herein by this reference.

        10.24   Termination Agreement with W. Michael Clevy filed as Exhibit
                10.11 to the Company's Annual Report on Form 10-K for the year
                ended December 31, 1997 filed with the Commission on March 30,
                1998, and incorporated herein by this reference.

        10.25   Termination Agreement with Stephen L. Clanton filed as Exhibit
                10.12 to the Company's Annual Report on Form 10-K for the year
                ended December 31, 1997 filed with the Commission on March 30,
                1998, and incorporated herein by this reference.

                                -73-
<PAGE>
        10.26   Termination Agreement with Herman V. Kling *

        10.27   Change in Control Agreement with David P. Cain filed as
                Exhibit 10.15 to the Company's Annual Report on Form 10-K for
                the year ended December 31, 1997 filed with the Commission on
                March 30, 1998, and incorporated herein by this reference.

        10.28   Change in Control Agreement with Francis C. Harrell **

        10.29   Change in Control Agreement with Robert C. Henningsen **

        10.30   Change in Control Agreement with Augusto H. Millan **

        10.31   Change in Control Agreement with James R. Wiese **

        10.32   International Comfort Products Corporation 1998 Stock Option
                Plan filed as Exhibit 10.30 to the Registrant's Registration
                Statement on Form S-4 (File No. 333-58837) filed with the
                Commission on July 10, 1998, and incorporated herein by this
                reference.

        21      Subsidiaries of International Comfort Products Corporation

        23.1    Consent of Arthur Andersen LLP, independent chartered
                accountants

        23.2    Consent of PricewaterhouseCoopers LLP, independent chartered
                accountants

        27      Financial Data Schedule

        99.1    Schedule I - Condensed Financial Information

        99.2    Schedule II - Consolidated Valuation and Qualifying Accounts

----------------------
    * Document not filed because substantially identical to Exhibit 10.25
    ** Document not filed because substantially identical to Exhibit 10.27


     (b)    No Current Reports on Form 8-K were filed by the Company during 
            the last quarter of the period covered by this Annual Report on
            Form 10-K. 

     (c)    Exhibits -- the response to this portion of Item 14 is submitted
            as a separate section of this Report.  See Item 14(a).

     (d)    Financial Statement Schedules -- the response to this portion of
            Item 14 is submitted as a separate section of this Report.  See
            Item 14(a).

                                -74-
<PAGE>
                                SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) 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, on this  30th 
day of March, 1999.                                                  ------


                                 INTERNATIONAL COMFORT PRODUCTS CORPORATION

                                 By:/s/ S. Clanton
                                    ---------------------------
                                        Stephen L. Clanton
                                        Senior Vice President, Chief
                                          Financial Officer and Treasurer

     Pursuant to the requirements of the Securities Exchange Act of 
1934, this report has been signed by the following persons on behalf of the
registrant and in the capacities indicated on this  30th  day of March, 1999.
                                                   ------

         SIGNATURE                              TITLE

 /s/ Richard W. Snyder            Chairman of the Board and Director
-------------------------
(Richard W. Snyder)

 /s/ W. Michael Clevy             President, Chief Executive Officer
-------------------------           and Director
(W. Michael Clevy)

 /s/ David P. Cain                Senior Vice President, General Counsel
-------------------------           and Secretary
(David P. Cain)

 /s/ S.L. Clanton                 Senior Vice President, Chief Financial
-------------------------           Officer and Treasurer
(S.L. Clanton)

/s/ Richard C. Barnett            Director
-------------------------
(Richard C. Barnett)

 /s/ Stanley M. Beck              Director
-------------------------
(Stanley M. Beck)

 /s/ William G. Davis             Director
-------------------------
(William G. Davis)

 /s/ John F. Fraser               Director
-------------------------
(John F. Fraser)

 /s/ Roy T. Graydon               Director
-------------------------
(Roy T. Graydon)

                                  -75-
<PAGE>

 /s/ Marvin G. Marshall           Director
-------------------------
(Marvin G. Marshall)

 /s/ Ernest C. Mercier            Director
-------------------------
(Ernest C. Mercier)

 /s/ David H. Morris              Director
-------------------------
(David H. Morris)

 /s/ David A. Rattee              Director
-------------------------
(David A. Rattee)

 /s/ William A. Wilson            Director
-------------------------
(William A. Wilson)






























                                -76-


<PAGE>
                            EXHIBIT INDEX

                                                                 Sequential 
Exhibit No.               Description                            Page Number
----------       ----------------------------------              -----------
3(i), 4.1       Articles of Incorporation of International               IBR
                Comfort Products Corporation filed as Exhibit
                3(i)/4.1 to the Company's Quarterly Report on
                Form 10-Q for the quarter ended September 30,
                1997 filed with the Commission on November
                14, 1997, and incorporated herein by this
                reference.

3(ii), 4.2      Bylaws of International Comfort Products                 IBR
                Corporation filed as Exhibit 1.2 to the
                Company's Annual Report on Form 20-F for the
                year ended December 31, 1993 filed with the
                Commission on June 29, 1994, and incorporated
                herein by this reference.

4.3             Indenture dated as of May 13, 1998, by and               IBR
                among International Comfort Products
                Holdings, Inc. ("ICP Holdings"),
                International Comfort Products Corporation
                and United States Trust Company of New York,
                as Trustee, with respect to the Series A and
                Series B 8 5/8% Senior Notes due 2008, filed
                as Exhibit 4.5 to the Registrant's
                Registration Statement on Form S-4 (File No.
                333-58837) filed with the Commission on July
                10, 1998, and incorporated herein by this
                reference.

10.1            Master Trust Pooling and Service Agreement,              IBR
                dated as of July 25, 1996 among Inter-City
                Products Receivables Company, L.P. 
                ("ICP-Receivables"), International Comfort
                Products Corporation (USA) ("ICP(USA)") and 
                LaSalle National Bank, as Trustee filed as Exhibit
                10.1 to Amendment No. 1 to the Registrants'
                Registration Statement on Form S-4 (File No.
                333-58837 and 333-58837-01) filed with the
                Commission on August 28, 1998, and
                incorporated herein by this reference.

10.2            Series 1996-1 Supplement to Master Trust                 IBR
                Pooling and Service Agreement, dated as of
                July 25, 1996 among ICP-Receivables, ICP(USA)
                and LaSalle National Bank, as Trustee (and
                correlative form of Class A (Series 1996-1)
                Certificate and form of Class B (Series
                1996-1) Certificate, and form of Guaranty
                from ICP(USA) filed as Exhibit 10.2 to
                Amendment No. 1 to the Registrant's
                Registration Statement on Form S-4 (File No.
                333-58837 and 333-58837-01) filed with the
                Commission on August 28, 1998, and
                incorporated herein by this reference.

10.3            Receivables Purchase Agreement dated as of               IBR
                July 25, 1996 among ICP(USA), Inter-City
                Products Partner Corporation ("ICP-Partner")
                and ICP-Receivables filed as Exhibit 10.3 to
                Amendment No. 1 to the Registrant's
                Registration Statement on Form S-4 (File No.
                333-58837 and 333-58837-01) filed with the
                Commission on August 28, 1998, and
                incorporated herein by this reference.
<PAGE>
                            EXHIBIT INDEX
                                                                 Sequential 
Exhibit No.               Description                            Page Number
----------       ----------------------------------              -----------
10.4            Certificate Purchase Agreement (Series                   IBR
                1996-1, Class A) dated as of July 25, 1996
                among ICP-Receivables, ICP(USA), the
                Purchasers named therein and The Chicago
                Corporation, as Agent filed as Exhibit 10.4
                to Amendment No. 1 to the Registrant's
                Registration Statement on Form S-4 (File No.
                333-58837 and 333-58837-01) filed with the
                Commission on August 28, 1998, and
                incorporated herein by this reference.

10.5            Certificate Purchase Agreement (Series                   IBR
                1996-1, Class B) dated as of July 25, 1996
                among ICP-Receivables, ICP(USA) and Argos
                Funding Corp. filed as Exhibit 10.5 to
                Amendment No. 1 to the Registrant's
                Registration Statement on Form S-4 (File No.
                333-58837 and 333-58837-01) filed with the
                Commission on August 28, 1998, and
                incorporated herein by this reference.

10.6            First Amendment to Certificate Purchase                  IBR
                Agreement (Series 1996-1, Class A) dated as
                of December 1, 1996 among ICP-Receivables,
                ICP(USA), the Purchasers named therein and The
                Chicago Corporation, as Agent filed as
                Exhibit 4.9 to the Company's Quarterly Report
                on Form 10-Q for the quarter ended September
                30, 1997 filed with the Commission on
                November 14, 1997, and incorporated herein by
                this reference.

10.7            First Amendment to Receivables Purchase                  IBR
                Agreement and Second Amendment to Certificate
                Purchase Agreement (Series 1996-1, Class A)
                dated as of January 27, 1997 among ICP(USA),
                ICP-Partner, General Heating and Cooling
                Company, Coastline Distribution, Inc.,
                ICP-Receivables, Anagram Funding Corp. and
                ABN AMRO Chicago Corporation filed as Exhibit
                10.7 to Amendment No. 1 to the Registrant's
                Registration Statement on Form S-4 (File No.
                333-58837 and 333-58837-01) filed with the
                Commission on August 28, 1998, and
                incorporated herein by this reference.

10.8            Second Amendment to Receivables Purchase                 IBR
                Agreement as of September 30, 1997 among
                ICP(USA), ICP-Partner, General Heating and
                Cooling Company, ICP-Receivables, Anagram
                Funding Corp. and ABN AMRO Chicago 
                Corporation filed as Exhibit 10.8 to
                Amendment No. 1 to the Registrant's
                Registration Statement on Form S-4 (File No.
                333-58837 and 333-58837-01) filed with the
                Commission on August 28, 1998, and
                incorporated herein by this reference.

10.9            Loan and Security Agreement dated as of July             IBR
                18, 1997 between ICP(USA) and NationsBank,
                N.A. filed as Exhibit 10.9 to Amendment No.
                1 to the Registrant's Registration Statement
                on Form S-4 (File No. 333-58837 and
                333-58837-01) filed with the Commission on
                August 28, 1998, and incorporated herein by
                this reference.
<PAGE>
                            EXHIBIT INDEX
                                                                 Sequential 
Exhibit No.               Description                            Page Number
----------       ----------------------------------              -----------
10.10           Amendment to Loan and Security Agreement made            IBR
                and entered into as of February 24, 1998
                between NationsBank, N.A. and ICP(USA) filed
                as Exhibit 10.10 to Amendment No. 1 to the
                Registrant's Registration Statement on Form
                S-4 (File No. 333-58837 and 333-58837-01)
                filed with the Commission on August 28,
                1998, and incorporated herein by this
                reference.

10.11           Second Amendment to Loan and Security                    IBR
                Agreement made and entered into as of May 13,
                1998 between NationsBank, N.A. and ICP(USA)
                filed as Exhibit 10.10 to Amendment No. 1 to
                the Registrant's Registration Statement on
                Form S-4 (File No. 333-58837 and
                333-58837-01) filed with the Commission on
                August 28, 1998, and incorporated herein by
                this reference.

10.12           Credit Agreement made and entered into as of             IBR
                December 16, 1996 between Inter-City Products
                Corporation (Canada) ("ICP Canada"), G.C.
                McDonald Supply Limited, the Lenders named
                therein and General Electric Capital Canada
                Inc., as agent filed as Exhibit 10.12 to
                Amendment No. 1 to the Registrant's
                Registration Statement on Form S-4 (File No.
                333-58837 and 333-58837-01) filed with the
                Commission on August 28, 1998, and
                incorporated herein by this reference.

10.13           First Amendment to Credit Agreement made and             IBR
                entered into as of May 13, 1998 between ICP
                Canada, G.C. McDonald Supply Limited, the
                Lenders named therein and General Electric
                Capital Canada Inc., as agent filed as
                Exhibit 10.13 to Amendment No. 1 to the
                Registrant's Registration Statement on Form
                S-4 (File No. 333-58837 and 333-58837-01)
                filed with the Commission on August 28,
                1998, and incorporated herein by this
                reference.

10.14           Second Amendment to Credit Agreement made and            IBR
                entered into as of July 21, 1998 between ICP
                Canada, G.C. McDonald Supply Limited, the
                Lenders named therein and General Electric
                Capital Canada Inc., as agent filed as
                Exhibit 10.14 to Amendment No. 1 to the
                Registrant's Registration Statement on Form
                S-4 (File No. 333-58837 and 333-58837-01)
                filed with the Commission on August 28,
                1998, and incorporated herein by this
                reference.

<PAGE>
                            EXHIBIT INDEX

                                                                 Sequential 
Exhibit No.               Description                            Page Number
----------       ----------------------------------              -----------
10.15           International Comfort Products Corporation               IBR
                Employee Stock Option Plan filed as Exhibit
                4.1 to the Company's Registration Statement
                on Form S-8 filed with the Commission on
                March 16, 1995, and incorporated herein by
                this reference.

10.16           International Comfort Products Corporation               IBR
                Share Compensation Arrangement for
                Non-Employee Directors filed as Exhibit 10.3
                to the Company's Annual Report on Form 10-K
                for the year ended December 31, 1997 filed
                with the Commission on March 30, 1998, and
                incorporated herein by this reference.

10.17           International Comfort Products Corporation               IBR
                Long Term Incentive Plan filed as Exhibit
                10.25 to ICP(USA)'s Registration Statement on
                Form S-1 (File No. 33-56238) filed with the
                Commission on December 23, 1992, and
                incorporated herein by reference.

10.18           Amendment to International Comfort Products              IBR
                Corporation Long Term Incentive Plan filed as
                Exhibit 10.11 to ICP(USA)'s Annual Report on
                Form 10-K for the year ended December 31,
                1993 filed with the Commission on March 28,
                1994, and incorporated herein by reference.

10.19           International Comfort Products Corporation               IBR
                1997 Long Term Incentive Plan for Senior
                Management filed as Exhibit 10.6 to the
                Company's Annual Report on Form 10-K for the
                year ended December 31, 1997 filed with the
                Commission on March 30, 1998, and
                incorporated herein by this reference.

10.20           ICP(USA) Share Ownership Savings Plan filed              IBR
                as Exhibit 10.26 to ICP(USA)'s Registration
                Statement on Form S-1 (File No. 33-56238)
                filed with the Commission on December 23,
                1992, and incorporated herein by this
                reference.

10.21           Amendments to ICP(USA)'s Share Ownership                 IBR
                Savings Plan filed as Exhibit 10.8 to the
                Company's Annual Report on Form 10-K for the
                year ended December 31, 1997 filed with the
                Commission on March 30, 1998, and
                incorporated herein by this reference.

10.22           Retirement Plan for Salaried Employees filed             IBR
                as Exhibit 10.27 to ICP(USA)'s Registration
                Statement on Form S-1 (File No. 33-56238)
                filed with the Commission on December 23,
                1992, and incorporated herein by this
                reference.

10.23           Supplemental Retirement Benefit Agreement                IBR
                dated September 1, 1994 with W. Michael Clevy
                filed as Exhibit 10.16 to ICP(USA)'s Annual
                Report on Form 10-K for the year ended
                December 31, 1995 filed with the Commission
                on March 28, 1996, and incorporated herein by
                this reference.
<PAGE>
                            EXHIBIT INDEX
                                                                 Sequential 
Exhibit No.               Description                            Page Number
----------       ----------------------------------              -----------
10.24           Termination Agreement with W. Michael Clevy              IBR
                filed as Exhibit 10.11 to the Company's
                Annual Report on Form 10-K for the year ended
                December 31, 1997 filed with the Commission
                on March 30, 1998, and incorporated herein by
                this reference.

10.25           Termination Agreement with Stephen L. Clanton            IBR
                filed as Exhibit 10.12 to the Company's
                Annual Report on Form 10-K for the year ended
                December 31, 1997 filed with the Commission
                on March 30, 1998, and incorporated herein by
                this reference.

10.26           Termination Agreement with Herman V. Kling                *

10.27           Change in Control Agreement with David P.                IBR
                Cain filed as Exhibit 10.15 to the Company's
                Annual Report on Form 10-K for the year ended
                December 31, 1997 filed with the Commission
                on March 30, 1998, and incorporated herein by
                this reference.

10.28           Change in Control Agreement with Francis C. Harrell       **

10.29           Change in Control Agreement with Robert C. Henningsen     **

10.30           Change in Control Agreement with Augusto H. Millan        **

10.31           Change in Control Agreement with James R. Wiese           **

10.32           International Comfort Products Corporation               IBR
                1998 Stock Option Plan filed as Exhibit 10.30
                to the Registrant's Registration Statement on
                Form S-4 (File No. 333-58837) filed with the
                Commission on July 10, 1998, and incorporated
                herein by this reference.

21              Subsidiaries of International Comfort
                Products Corporation                                       84

23.1            Consent of Arthur Andersen LLP, independent
                chartered accountants                                      86

23.2            Consent of PricewaterhouseCoopers LLP,
                independent chartered accountants                          88

27              Financial Data Schedule                                    90

99.1            Schedule I - Condensed Financial Information               92

99.2            Schedule II - Consolidated Valuation and                   99
                Qualifying Accounts
----------------------
    IBR  Document incorporated by reference from previous filing
    *    Document not filed because substantially identical to Exhibit 10.25
    **   Document not filed because substantially identical to Exhibit 10.27