SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended March 31, 1995
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition period from to
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Commission file number 1-1373
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MODINE MANUFACTURING COMPANY
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(Exact name of registrant as specified in its charter)
WISCONSIN 39-0482000
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1500 DeKoven Avenue, Racine, Wisconsin 53403
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (414) 636-1200
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Securities Registered pursuant to Section 12(g) of the Act:
Common Stock, $0.625 par value
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(Title of Class)
An Exhibit index appears at pages 20-25 herein.
Page 1 of 117
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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,
and (2) has been subject to such filing requirements for the past
90 days. Yes X No ____
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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 registrant's knowledge,
in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
Approximately 51% of the outstanding shares are held by non-
affiliates. The aggregate market value of these shares was
approximately $571,194,144 based on the market price of $37.75
per share on June 20, 1995. The remaining outstanding shares are
owned or controlled by or for directors, officers, employees,
retired employees, and their families.
The number of shares outstanding of the registrant's Common
Stock, $0.625 par value, was 29,668,570 at June 20, 1995.
DOCUMENTS INCORPORATED BY REFERENCE
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Portions of the following documents are incorporated by reference
into the parts of this Form 10-K designated to the right of the
document listed.
Incorporated Document Location in Form 10-K
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Annual Report to Shareholders for the
fiscal year ended March 31, 1995 Part I of Form 10-K
(Item 1)
Part II of Form 10-K
(Items 7, 8)
Part IV of Form 10-K
(Item 14)
1995 Definitive Proxy Statement dated
June 9, 1995 Part III of Form 10-K
(Items 10, 11, 12, 13)
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TABLE OF CONTENTS
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MODINE MANUFACTURING COMPANY - FORM 10-K
FOR THE YEAR ENDED MARCH 31, 1995
10-K Pages
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COVER
TABLE OF CONTENTS
PART I
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Item 1 - Business
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General, Foreign and Domestic Operations,
Competitive Position, Customer Dependence,
Backlog of Orders, Raw Materials, Patents,
Research and Development, Environmental
Matters, Employees, Seasonal Nature of
Business, Working Capital Items 5
Item 2 - Properties 12
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Item 3 - Legal Proceedings 13
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Item 4 - Submission of Matters To A Vote of Security
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Holders 14
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PART II
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Item 5 - Market for Registrant's Common Equity and
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Related Stockholder Matters 15
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Item 6 - Selected Financial Data 16
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Item 7 - Management's Discussion and Analysis of
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Financial Condition and Results of Operations 16
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Item 8 - Financial Statements & Supplementary Data 16
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Item 9 - Changes in and Disagreements with Accountants
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on Accounting and Financial Disclosure 16
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10-K Pages
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PART III
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Items 10 and 11 - Directors and Executive Officers
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of the Registrant; Executive Compensation 17
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Item 12 - Security Ownership of Certain Beneficial Owners
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and Management 18
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Item 13 - Certain Relationships and Related Transactions 18
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PART IV
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Item 14 - Exhibits, Financial Statement Schedules, and
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Reports on Form 8-K 19
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1) Financial Statements
2) Financial Statement Schedules
3) Consent of Independent Accountants
4) Exhibit Index
SIGNATURES 26
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<PAGE>
PART I
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ITEM 1. BUSINESS.
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General
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Throughout this Report, the terms "Modine," "the Company" and/or "the
Registrant" refer to Modine Manufacturing Company and consolidated
subsidiaries.
Modine was incorporated under the laws of the State of Wisconsin
on June 23, 1916.
Modine operates primarily in a single industry consisting of the manufacture
and sale of heat transfer equipment. This includes heat exchangers for
cooling all types of engines, transmissions, auxiliary hydraulic equipment,
air conditioning components used in cars, trucks, farm and construction
machinery and equipment, and heating and cooling equipment for residential
and commercial building HVAC (heating, ventilating, air conditioning and
refrigeration equipment). The principal markets consist of automobile,
truck and bus manufacturers, farm implement manufacturers, heating and
cooling equipment manufacturers, construction equipment manufacturers,
construction contractors, wholesalers of plumbing and heating equipment,
radiator repair shops, and wholesalers of auto repair parts. The Company
distributes its products through Company salesmen, through independent
manufacturer's representatives, independent warehouse distributors, and
mass merchandisers. No industry segment information is required under
Statement of Financial Accounting Standards Board, Number 14 "Financial
Reporting for Segments of a Business Enterprise," since the Company
operates predominantly in a single industry.
Within this industry, the Company manufactures various products as is
demonstrated by the following table:
Years ended March 31
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1995 1994 1993 1992 1991
Radiators & Radiator Cores 42% 45% 45% 45% 51%
Oil Coolers 16% 15% 13% 13% 13%
Vehicular Condensers
& Evaporators 14% 12% 12% 13% 10%
Charge Air Coolers 12% 11% 10% 7% 6%
Building HVAC 9% 11% 14% 15% 14%
Miscellaneous 7% 6% 6% 7% 6%
A world trend has been consolidation to fewer but larger suppliers in the
markets the Company serves. To serve its global markets, Modine has
established manufacturing operations in North America, Europe, and
Asia/Pacific. The Company's significant international operations are
located in the following countries:
North America
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The Company maintains a Canadian subsidiary, Modine of Canada, Ltd., an
Ontario company, which manufactures cores for the automotive aftermarket,
<PAGE>
and which owns 100% of The Radman Corporation, Inc., a Canadian federal
company which licenses certain trademarks to automotive radiator repair
shops.
In May, 1995, the Company purchased its joint venture partner's 57% interest
in Radinam S.A., a Mexican producer of radiators and other automotive
components for original equipment manufacturers and the automotive
aftermarket. Radinam's manufacturing facilities are located in Mexico City.
South America
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During the past fiscal year, the Company sold its 36% joint venture interest
in McQuay do Brasil Industria e Comercio Ltda., a Brazilian manufacturer of
condensers and evaporators for the Brazilian automotive market and
miscellaneous refrigeration products.
Europe
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The Company operates a subsidiary, NRF Holding B.V., a Dutch company. NRF
produces replacement radiator cores, sheet metal radiators, and industrial
and marine heat exchangers. NRF also owns subsidiaries that export products
and distribute products throughout Europe.
The Company operates a subsidiary, Modine GmbH, based in Neuenkirchen,
Germany, which manufactures copper/brass sheet metal radiators for the
European industrial and agricultural markets.
In May, 1995 the Company, through its subsidiary NRF Holding B.V., acquired
Radiadores Montana S. A., a Spanish manufacturer and distributor of radiators,
radiator cores, oil coolers, heaters, and air conditioning condensers and
evaporators for the automotive aftermarket and for industrial applications.
In the third quarter of fiscal 1993-94, the Company acquired, through Modine
GmbH, the entire equity interest in Heinrich Langerer & Reich GmbH & Co.
("L&R") and certain specified liabilities. The acquisition includes plant,
equipment, and certain real property located in Pleizhausen, Germany, and the
equipment and leasehold interest in certain real property located in
Filderstadt-Bernhausen, Germany. The acquisition also includes the equity
interest held by Langerer & Reich in Hungaro Langerer Gepjarmutechnikai Kft.,
a Hungarian company. The Filderstadt-Bernhausen operation manufactures
non-ferrous metal and aluminum heat exchangers for the truck, bus, and
industrial markets and also includes research and development and
administrative facilities. The Pleizhausen operation manufactures aluminum
heat exchangers for the passenger car market.
In the fiscal 1994-95, an unoccupied NRF facility located in Uden, The
Netherlands was converted to allow production of aluminum vacuum brazed
products beginning in the fall of 1994. Modine Uden B.V. operates as part
of the L&R Automotive business group.
In the fourth quarter of fiscal 1993-94, the Company acquired its partner's
(Austria Metall AG) 50-percent ownership in the joint venture company Austria
Warmetauscher GmbH ("AWG"). The AWG facility, located in Berndorf, Austria,
manufactures aluminum air-conditioning condensers and oil coolers for a number
of European auto makers.
<PAGE>
The European operations have been reorganized into three business groups and
two support groups.
The three business groups are: (1) L & R Automobiltechnik, an automotive
business unit. It includes the L&R plant in Pleizhausen, Germany; AWG in
Austria; and a new plant location in Uden, The Netherlands; (2) L & R Heavy
Duty business unit which includes the operations in Neuenkirchen and the L&R
facilities in Bernhausen, Germany, and in Mezokovesd, Hungary; and (3) an
aftermarket business unit that operates under the aegis of the automotive
business unit. It includes NRF Holding BV.
The two support groups are: (1) a European central research group, that is
similar to Modine's Research and Development Department in Racine, Wisconsin;
and (2) a European central administration unit, that includes the functions
of MIS (Management Information Services); purchasing; quality and environment;
and the accounting functions of controlling, cost accounting, and financial
accounting.
The European operations are organized similarly to the way the Company is
organized in the United States, which allows Modine to be able to better
serve its markets in Europe with manufacturing in Europe.
The Company maintains sales subsidiaries and/or offices in Austria, England,
France, Italy, Germany, and The Netherlands.
The Company also maintains stocks of goods in bulk warehouses in Birmingham,
England; Rotterdam, The Netherlands; and Bremen, Germany as reserve inventory
for certain European customers.
Asia/Pacific
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The Company participates (50% interest) in a joint venture with Nippon Light
Metal, Ltd., a Japanese company. The joint venture company, Nikkei Heat
Exchanger Company, Ltd., produces automotive heat exchangers for sale to
original equipment manufacturers in the Japanese market.
The Company established a sales subsidiary in Japan, Modine Asia K.K., in
February, 1995.
Exports
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In addition, the Company exports to foreign countries and receives royalties
from foreign licensees. Export sales as a percentage of total sales were
13.8%, 14.3% and 14.0% for fiscal years ended in 1995, 1994 and 1993,
respectively. Estimated after-tax earnings on export sales as a percentage
of total net earnings were 13.8%, 14.3% and 14.0% for fiscal years ended in
1995, 1994 and 1993, respectively. Royalties from foreign licensees as a
percentage of total earnings were 1.0%, 2.1% and 5.4% for the last three
fiscal years, respectively.
Modine believes its international presence has positioned the Company to
profitably share in the anticipated long-term growth of the global vehicular
and industrial markets. Modine is committed to increasing its involvement
and investment in international markets in the years ahead.
<PAGE>
Foreign and Domestic Operations
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Financial information relating to the Company's foreign and domestic
operations, including export sales, is included in the Company's 1995 Annual
Report to Shareholders and is incorporated herein by reference at Note 19 on
Page 27 therein.
Events Subsequent to the End of the Quarter
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On April 24, 1995, The Equion Corporation and Modine announced a letter of
intent for Modine to purchase all of the business and assets of the Signet
Systems Division of Equion. The cash transaction is subject to a definitive
agreement and the approval of the boards of directors of both companies.
Signet is a full-service supplier of climate-control systems and components
to the automotive, truck, and off-highway vehicle markets both in North
America and Europe. Annualized sales are approaching $90 million. Signet
has a manufacturing plant in Harrodsburg, KY. The acquisition is expected
to close by the end of July.
On May 3, 1995, National Tube Holding Company, Inc., of Birmingham, Alabama,
and Modine announced a letter of intent for the acquisition of Modine's copper
tubing manufacturing business and assets located in Dowagiac, Michigan, by
National Tube. The purchase is subject to the approval of the boards of
directors of both companies and the working out of a definitive agreement.
The acquisition is expected to close by the end of August.
Competitive Position
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The Company competes with several manufacturers of heat transfer products,
some of which are divisions of larger companies and some of which are
independent companies. The Company also competes for business with parts
manufacturing divisions of some of its major customers. The markets for
the Company's products are increasingly competitive and have changed
significantly in the past few years as the Company's traditional OEM
customers in the United States, faced with dramatically increased
international competition, have expanded their worldwide sourcing of
parts to better compete with lower-cost imports. These market changes
have caused the Company to experience competition from suppliers in other
parts of the world which enjoy economic advantages such as lower labor
costs, lower health care costs, and other factors.
Customer Dependence
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Ten customers accounted for approximately 34.8% of the Company's sales
in the fiscal year ended March 31, 1995. These customers, listed
alphabetically, were: American Honda Motor Co., Inc., BMW, Caterpillar
Company, Chrysler Motor Corporation, Fiat, Ford Motor Company, MAN Truck,
Navistar, Paccar, Inc., and Volkswagen. Goods are supplied to these
customers on the basis of individual purchase orders received from them.
When it is in the customer's and the Company's best interests, the Company
utilizes long-term supply agreements to minimize investment risks and provide
a proven source of competitively priced products. There are no other
relationships between the Company and its customers.
<PAGE>
Backlog of Orders
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While the Company has a large backlog of orders, the backlog is not deemed
significant or material; backlog historically has had little relation to
shipments. Modine's products are produced from readily available materials
such as copper, brass and aluminum and have a relatively short manufacturing
cycle. The Company's operating units maintain their own inventories and
production schedules. Current production capacity is capable of handling
the sales volumes expected in fiscal 1995-1996.
Raw Materials
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Copper, brass, aluminum, steel, and solder, all essential to the business,
are purchased regularly from several domestic and foreign producers. The
Company normally does not experience material shortages within its operations
and believes that producers' supplies of these materials through the end of
fiscal year 1996 will be adequate.
Patents
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The Company, and certain of its wholly-owned subsidiaries, own outright or
are licensed to produce products under a number of patents and licenses.
These patents and licenses, which have been obtained over a period of years,
will expire at various times. Because the Company is involved with many
product lines, the Company believes that its business as a whole is not
materially dependent upon any particular patent or license, or any
particular group of patents or licenses. Modine considers each of its
patents, trademarks and licenses to be of value and aggressively defends
its rights throughout the world against infringement. See also Item 3 -
Legal Proceedings.
Research and Development
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Company-sponsored research activities relate to the development of new
products, processes, or services, or the improvement of existing products,
processes, and services. Expenditures in fiscal 1994-95 amounted to
$10,907,000; in fiscal 1993-94 amounted to $9,509,000; and in fiscal 1992-93
amounted to approximately $8,653,000. There were no significant expenditures
on research activities which were customer-sponsored. Over the course of the
last few years, the Company has become involved in a number of industry or
university sponsored research organizations. These consortia conduct research
and provide data on technical topics deemed to be of interest to the Company
for practical applications in the markets the Company serves. The research
and data developed is generally shared among the member companies. In
addition, to achieve efficiencies and lower developmental costs, Modine's
research and engineering groups work closely with Modine's customers on
special projects and system designs.
Environmental Matters
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It is Modine's policy to comply with all environmental laws and regulations
without regard to the degree of enforcement. In addition, the Company
analyzes its business decisions, operations and processes to find ways to
<PAGE>
eliminate or curtail pollution. Consistent with this philosophy, the Company
amended its corporate environmental policy in 1991 to include a waste
minimization program. This program established a corporate-wide goal of a
65% reduction in waste by the end of 1995. The Company has achieved
reductions of nearly 60% through calendar year 1994. Although environmental
compliance costs are substantial, the Company has no reason to believe such
costs vary significantly from similar costs incurred by other companies
engaged in similar businesses.
In addition to the various federal, state and local environmental laws and
regulations governing its operations and products, the Company (as well as
its competitors) is required to incur expenses for remedial actions at
various facilities and waste disposal sites. An obligation to take such
action may result from current laws, such as the federal Superfund law, or
the issuance of new regulations, or as the result of accidental leaks or
spills in the ordinary course of business. In addition, an obligation may
arise when a facility is closed or sold. These expenditures most often
relate to facilities and sites where past operations followed practices
and procedures that were considered acceptable under then-existing
regulations, but will now require investigatory and/or remedial work to
ensure sufficient protection to the environment.
Although there are no currently known liabilities that might have a material
effect on the Company's consolidated net assets, the Environmental Protection
Agency ("EPA") has designated Modine as a potentially responsible party
("PRP") for remediation of five hazardous waste sites. Under the federal
Superfund law, joint and several liability is imposed on all owners, operators
and generators involved at the designated sites. However, because of Modine's
extremely limited involvement as a generator of hazardous waste, it is
unlikely Modine would be required to make a material financial contribution
for remediation. At two of these sites, no evidence exists to establish that
Modine ever disposed of its hazardous wastes there; at the remaining three
sites, Modine's involvement is as a de minimis PRP (potentially responsible
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party), having less than a one percent share of the wastes disposed.
Five of the Company's manufacturing facilities currently have been identified
as requiring soil and/or water remediation. Because of the joint and several
liability of former landowners, contractual obligations, and certain state
programs that provide for partial reimbursement of certain remediation costs,
it is unlikely these remediation efforts will have a material effect on
the Company's consolidated financial condition.
The 1990 amendments to the Clean Air Act require a significant increase in
capital equipment expenditures over the next decade. For the fiscal year
ending March 31, 1995 capital expenditures and expenses were $1,918,500.
These environmental expenditures include capital outlays to retrofit existing
facilities, as well as those associated with new facilities and other
compliance costs. The expenditures relate mostly to air and water quality
projects and site clean-up activities at the Company's facilities.
In fiscal 1995-96 approximately $2,000,000 may be invested in air and water
pollution control equipment, process changes, underground tank modifications
and hazardous waste minimization equipment and programs in order to comply
with existing and new federal, state and local environmental laws and
regulations. Operating expenses of some facilities may be increased
because of such equipment but the competitive position of the Company is not
expected to change materially.
<PAGE>
Employees
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The number of persons employed by the Company at March 31, 1995,
was approximately 7,600.
Seasonal Nature of Business
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In recent years the Company's business has become more continuous and less
seasonal. However, a degree of seasonality may still be experienced since
the Aftermarket, Commercial Products, and Heating Divisions are affected by
weather patterns, constructions starts, and other factors. Sales to original
equipment manufacturers are dependent upon the demand for new vehicles and
equipment. The following quarterly net sales detail for the past five years
illustrates the degree of fluctuation:
Fiscal Year Fiscal
Ended First Second Third Fourth Year
March 31 Quarter Quarter Quarter Quarter Total
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($ In Thousands)
1995 $208,436 $221,760 $240,505 $242,309 $913,010
1994 147,171 156,964 172,351 193,067 669,553
1993 133,817 144,603 146,591 145,828 570,839
1992 125,879 132,702 130,805 137,194 526,580
1991 114,351 118,608 126,483 122,540 481,982
Five-year $145,931 $154,927 $163,347 $168,188 $632,393
average
Percent of 23% 24% 26% 27% 100%
Year
Working Capital Items
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The Company's products for the original equipment market are manufactured on
an as ordered basis. Therefore, large inventories of such products are not
necessary, nor is the amount of products returned significant. In the HVAC
and aftermarket areas, due to the distribution systems and seasonal sales
programs, varying levels of finished goods inventory are necessary. This
inventory is spread throughout the distribution systems. In these areas,
in general, the industry and the Company make use of extended terms of
payment for customers on a limited and/or seasonal basis.
ITEM 2. PROPERTIES.
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The Company's general offices, along with laboratory, experimental and
tooling facilities, are maintained in Racine, Wisconsin. Almost all of the
Company's manufacturing and larger distribution centers are owned outright.
A few manufacturing facilities and numerous regional sales and service
centers, distribution centers and offices are occupied under various lease
arrangements.
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The Company's facilities, on a geographic basis, are as follows:
Type of North Asia/
Facility America Europe Pacific Total
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Manufacturing 20 8 28
Distribution 4 1 5
Sales & Service
Centers/Offices 13 15 1 29
Joint Ventures 1 1
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Total 37 24 2 63
Total square footage of the 63 facilities is approximately 6,250,100 square
feet.
The Company currently uses its facilities for the purposes as noted above.
The Company's facilities, in general, are well maintained and conform to the
sales, distribution, or manufacturing operations for which they are being
used, and their productive capacity is, from time to time, adjusted and
expanded as necessitated by product market considerations and customer
growth.
ITEM 3. LEGAL PROCEEDINGS.
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In the normal course of business, the Company and its subsidiaries are named
as defendants in various lawsuits and enforcement proceedings by private
parties, the Occupational Safety and Health Administration, the Environmental
Protection Agency, other governmental agencies, and others in which claims,
such as personal injury, property damage, or antitrust and trade regulation
issues, are asserted against the Company. While the outcome of these
proceedings is uncertain, in the opinion of the Company's management and
counsel, any liabilities that may result from such proceedings are not
reasonably likely to have a material effect on the Company's liquidity,
financial condition or results of operations. Many of the pending damage
claims are covered by insurance and, in addition, the Company from time to
time establishes reserves for uninsured liabilities.
The Mitsubishi and Showa Litigation
-----------------------------------
In November, 1991, the Company filed a lawsuit in the Federal District Court
in Milwaukee, Wisconsin against Mitsubishi Motor Sales of America, Inc. and
Showa Aluminum Corporation, alleging infringement of the Company's Patent
No. 4,998,580 on parallel-flow air-conditioning condensers. The suit seeks
an injunction to prohibit continued infringement and accounting for damages,
a trebling of such damages for willful infringement, and reimbursement of
attorneys' fees. In December of 1991, the Company submitted a complaint to
the U. S. International Trade Commission (ITC) requesting that the ITC ban
the import and sale of parallel-flow air-conditioning condensers and systems
or vehicles that contain them, which are the subject of the aforementioned
<PAGE>
lawsuit. In July, 1993, the ITC reversed an earlier ruling by a hearing
officer and upheld, as valid and enforceable, the Company's 4,998,580 patent
on parallel-flow air-conditioning condensers. The ITC also ruled that
specific condensers from the two Japanese companies did not infringe the
Company's patent. Each of the parties appealed to the U.S. Court of Appeals
for the Federal Circuit the portion of the ITC opinion adverse to them. In
July of 1994, Showa filed a lawsuit against the Company in the Federal
District Court in Columbus, Ohio alleging infringement by the Company of
Showa's patents pertaining to double circuit condensers and baffles therefor
(In June, 1995, the Company filed a motion for partial summary judgment
against such lawsuit). In December of 1994, the Company filed another
lawsuit against Mitsubishi Motor Sales of America, Inc. and Showa Aluminum
Corporation in the Federal District Court in Milwaukee, Wisconsin pertaining
to the Company's newly-issued Patent No. 5,372,188 also pertaining to
parallel-flow air-conditioning condensers. All legal and court costs
associated with these cases have been expensed as they were incurred.
The McHenry EPA Litigation
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In June 1991, the U.S. Department of Justice, acting at the request of
the federal Environmental Protection Agency (EPA), filed suit against
the Company in the U.S. District Court for the Northern District of
Illinois. The complaint alleged violations of the federal Clean Water
Act at a manufacturing facility owned by the Company in McHenry, Illinois.
The alleged violations consisted of effluent discharges in excess of
permitted amounts and noncompliance with reporting and monitoring
requirements. Settlement negotiations have resulted in an agreement
whereby the Company has paid a fine of $750,000 and agreed to change the
effluent discharge system. Full reserves were established in fiscal 1993
for the fine and the $1,300,000 necessary for pond sludge removal. All
legal and court costs associated with the case have been expensed as they
were incurred.
Other previously reported legal proceedings have been settled or the issues
resolved so as to not merit further reporting.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
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Omitted as not applicable.
<PAGE>
PART II
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ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
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STOCKHOLDER MATTERS.
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The Company's Common Stock is quoted on the National Association of Securities
Dealers' Automated Quotation system ("NASDAQ") as a National Market issue.
The Company's trading symbol is "MODI." The table below shows the range of
high and low bid information for the Company's Common Stock for fiscal years
1994-95 and 1993-94. As of April 1, 1995, shareholders of record numbered
approximately 4,046; it is estimated that beneficial owners numbered at
least 12,000.
1994-95* 1993-94*
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Quarter High Low Dividends High Low Dividends
First $30.00 $23.75 $.13 $22.75 $19.50 $.115
Second 29.00 24.75 .13 23.75 19.75 .115
Third 31.25 25.25 .13 30.25 22.50 .115
Fourth 34.75 27.00 .13 31.25 24.75 .115
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TOTAL $.52 $.460
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* Adjusted for stock splits and stock dividends.
Certain of the Company's loan agreements limit the use of retained earnings
for the payment of cash dividends and the acquisition of treasury stock.
Under the most restrictive, $100,393,000 was available for these purposes
at March 31, 1995. (These restricted payments may not exceed $30,000,000
in any fiscal year.) In October 1986, the Company adopted a shareholder
rights plan and issued one right for each share of common stock. The rights
are not currently exercisable but will become exercisable 10 days after a
shareholder has acquired 20 percent or more, or commenced a tender or
exchange offer for 30 percent or more, of the Company's common stock.
Each right will initially entitle the holder to purchase a unit of 1/100
Preferred Series A Participating Stock at $21.25 per unit. However, in the
event of certain mergers, sales of assets, or self-dealing transactions
involving a 20 percent or more shareholder, each right not owned by such
20 percent or more shareholder will be modified so that it will then be
exercisable for common stock having a market value of twice the exercise
price of the right. The rights are redeemable in whole by the Company, at
a price of $.0125 per right, at any time before 20 percent or more of the
Company's common stock has been acquired. On January 18, 1995, the Board
of Directors of the Company authorized the amendment of the Rights Agreement
by extending the final expiration date of the Rights from October 27, 1996
to October 27, 2006. Accordingly, the Rights expire on October 27, 2006,
unless previously redeemed.
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA.
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Fiscal Year ended March 31
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1995 1994 1993 1992 1991
Sales (in thousands) $913,010 $669,553 $570,839 $526,580 $481,982
Net earnings (in
thousands) 68,442 43,990*** 19,987** 28,019 30,472
Total assets (in
thousands) 590,187 509,981 405,187 383,475 398,248
Long-term debt (in
thousands) 62,220 77,646 52,350 74,295 88,071
Dividends per share* .52 .46 .42 .38 .34
Net earnings per share* 2.24 1.44*** .66** .93 1.02
* Adjusted for stock splits and stock dividends.
** Includes recognition of an accounting change from the adoption of FAS 106,
resulting in a one-time after-tax expense of $13,700,000, or $.46 per
share.
***Includes recognition of an accounting change from the adoption of FAS 109,
resulting in a one-time after-tax benefit of $899,000, or $.03 per share.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
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AND RESULTS OF OPERATIONS.
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Certain information required hereunder is incorporated by reference from the
Company's 1994-95 Annual Report to Shareholders, pages 4, 7, 8, 11, 12, 14,
15, 16, and 18, attached as Exhibit 13.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
- ------ -------------------------------------------
The report of Coopers & Lybrand dated May 1, 1995, the Consolidated
Statements of Earnings, and the related Consolidated Balance Sheets, Cash
Flows, Shareholders' Investment, and Notes to Consolidated Financial
Statements, appearing on pages 15, 17, 19, 20, and 21-29 of the Company's
1994-95 Annual Report to Shareholders are incorporated herein by reference.
With the exception of the aforementioned information, no other data appearing
in the 1994-95 Annual Report to Shareholders is deemed to be filed as part of
this Annual Report on Form 10-K. Individual financial statements of the
Registrant are omitted because the Registrant is primarily an operating
company, and the subsidiaries included in the consolidated financial
statements are wholly-owned.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
- ------ -----------------------------------------------------------
AND FINANCIAL DISCLOSURE.
------------------------
There were no disagreements on accounting or financial disclosures between
the Company and its auditors.
<PAGE>
PART III
ITEMS 10 and 11. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT;
- --------------- ---------------------------------------------------
EXECUTIVE COMPENSATION.
----------------------
The information about directors and executive officers and executive
compensation on pages 2 - 4 and pages 8, 9, 12, and 13, of the Company's
definitive Proxy Statement dated June 9, 1995 under the headings "Election
of Directors", "Nominees to be Elected," "Directors Continuing in Service,"
and "Executive Compensation" attached to this report is incorporated herein
by reference, but excluding the Officer Nomination and Compensation Committee
Report on Executive Compensation and the Performance Graph on pages 10 - 12.
Executive Officers of Registrant
Officer
Name Age Position Since
---- --- -------- ------
R. T. Savage 56 President and Chief Executive Officer 1981
D. R. Johnson 53 Executive Vice President, Operations 1988
W. E. Pavlick 61 Senior Vice President, General Counsel
and Secretary 1979
V. S. Frangopoulos 59 Group Vice President, Off-Highway
Products 1981
M. G. Baker 55 Group Vice President, Distributed
Products 1987
L. D. Howard 51 Vice President and General Manager,
Modine Europe 1991
D. B. Rayburn 47 Group Vice President, Highway Products 1991
J. R. Dougall 59 Vice President and General Manager,
Heating Division 1985
J. H. Firestone 57 Vice President, Quality & Environment 1990
J. J. Hankey 45 Vice President and General Manager,
Commercial Products Division 1992
R. L. Hetrick 53 Vice President, Human Resources 1989
R. W. Possehl 50 Vice President, Administration 1985
A. D. Reid 53 Vice President, Finance and Chief
Financial Officer 1985
Z. P. Saperstein 64 Vice President, Technical Services 1983
R. S. Bullmore 45 Corporate Controller 1983
R. M. Gunnerson 46 Treasurer 1977
D. R. Zakos 41 Associate General Counsel and
Assistant Secretary 1985
There are no family relationships among the executive officers and directors.
All of the above officers have been employed by Modine in various capacities
during the last five years, except D. B. Rayburn and J. J. Hankey. Mr.
Rayburn joined the Company on February 18, 1991. Mr. Rayburn was Director
of Manufacturing for the Off-Highway Product and Drive Line Division of
Rockwell International Corporation, a manufacturer of military aircraft
and aerospace products, components for heavy duty highway and off-highway
vehicles and automobiles, high speed printing presses and controllers for
factory automation. Mr. Hankey joined the Company on October 18, 1990 at
the time of Modine's acquisition of the Heat Transfer Division of Sundstrand
Corporation. Mr. Hankey was Controller of the Heat Transfer Division, which
produces refrigeration and air conditioning coils, secondary heat exchangers
<PAGE>
for high-efficiency residential furnaces, extruded copper tubing, and complex
copper and aluminum tubular components. There are no arrangements or
understandings between any of the above officers and any other person pursuant
to which he was elected an officer of Modine. Officers are elected annually
at the first meeting of the Board of Directors after the Annual Meeting of
Shareholders. Mr. Savage and Mr. Pavlick have employment agreements with the
Company.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
- ------- --------------------------------------------------------------
The information relating to stock ownership on pages 5 - 7 of the Company's
definitive Proxy Statement dated June 9, 1995 under the headings "Principal
Shareholders and Share Ownership of Directors and Executive Officers,
"Principal Shareholders," and "Securities Owned by Management" attached to
this report is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
- ------- ----------------------------------------------
The information required by this item is incorporated by reference from the
Company's definitive Proxy Statement dated June 9, 1995 on page 14 under the
heading "Transactions" attached to this report.
<PAGE>
PART IV
-------
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
- ------- -------------------------------------------------------
FORM 8-K.
--------
(a)The following documents are filed as part of this Report:
Page in
Annual Report*
-------------
(1)Financial Statements:
Consolidated Statements of Earnings for the years ended
March 31, 1995, 1994, and 1993 15
Consolidated Balance Sheets at March 31, 1995 and 1994 17
Consolidated Statements of Cash Flows for the years
ended March 31, 1995, 1994, and 1993 19
Consolidated Statements of Shareholders' Investment
for the years ended March 31, 1995, 1994,
and 1993 20
Notes to Consolidated Financial Statements 21 - 28
Independent Auditors' Report 29
* Incorporated by reference from the indicated pages of
the 1994-95 Annual Report to Shareholders
Page in
Form 10-K
---------
(2)Financial Statement Schedules:
Report of Independent Accountants on Financial Statement
Schedules for the three years ended March 31, 1995 28
Schedule II - Valuation and Qualifying Accounts for the
years ended March 31, 1995, 1994 and 1993 113
(3)Consent of Independent Accountants 95
(4)Exhibit Index 20
(b)All other schedules have been omitted as they are not applicable,
not required, or because the required information is included in the
financial statements.
<PAGE>
The following exhibits are attached for information only unless
specifically incorporated by reference in this Report:
Reference Number
per Item 601 of
Regulation S-K Page
- ---------------- ----
2 Not applicable.
3(a) Restated Articles of Incorporation (as amended)
(filed by reference to the Registrant's Annual
Report on Form 10-K for the fiscal year ended
March 31, 1994).
3(b) Restated By-Laws (as amended) (filed by
reference to the Registrant's Annual Report
on Form 10-K for the fiscal year ended
March 31, 1994).
4(a) Specimen Uniform Denomination Stock Certificate
of the Registrant (filed by reference to the
Registrant's Annual Report on Form 10-K for the
fiscal year ended March 31, 1993).
4(b) Rights Agreement dated as of October 16, 1986
between the Registrant and First Chicago Trust
Company of New York (Rights Agent) (filed by
reference to the Registrant's Annual Report
on Form 10-K for the fiscal year ended
March 31, 1992).
4(b)(i) Rights Agreement Amendment No. 1 dated as of
January 18, 1995 between the Registrant and
First Chicago Trust Company of New York (Rights
Agent) (filed by reference to the exhibit
contained within the Registrant's Current
Report on Form 8-K dated January 13, 1995.)
4(b)(ii) Rights Agreement Amendment No. 2 dated as of
January 18, 1995 between the Registrant and
First Chicago Trust Company of New York (Rights
Agent) (filed by reference to the exhibit
contained within the Registrant's Current
Report on Form 8-K dated January 13, 1995.)
NOTE: The amount of long-term debt authorized under any
----
instrument defining the rights of holders of long-term debt
of the Registrant, other than as noted above, does not exceed
ten percent of the total assets of the Registrant and its
subsidiaries on a consolidated basis. Therefore, no such
instruments are required to be filed as exhibits to this
Form 10-K. The Registrant agrees to furnish copies of such
instruments to the Commission upon request.
9 Not applicable.
<PAGE>
Reference Number
per Item 601 of
Regulation S-K Page
- ---------------- ----
10(a) Director Emeritus Retirement Plan (effective
April 1, 1992) (filed by reference to the
Registrant's Annual Report on Form 10-K for
the fiscal year ended March 31, 1992).
10(b) 1978 Incentive Stock Plan (as amended) (filed
by reference to the Registrant's Annual Report
on Form 10-K for the fiscal year ended March 31,
1993).
10(c) Employment agreements between the Registrant
and R. T. Savage and W. E. Pavlick (filed by
reference to the Registrant's Annual Report on
Form 10-K for the fiscal year ended March 31,
1992).
10(d) 1985 Incentive Stock Plan (as amended) (filed
by reference to the Registrant's Annual Report
on Form 10-K for the fiscal year ended March 31,
1992).
10(e) 1985 Stock Option Plan for Non-Employee Directors
(as amended) (filed by reference to the
Registrant's Annual Report on Form 10-K for the
fiscal year ended March 31, 1994).
10(f) Pension and Disability Plan For Salaried Employees
of Modine Manufacturing Company (as amended)
(filed by reference to the Registrant's Annual
Report on Form 10-K for the fiscal year ended
March 31, 1994).
*10(g) Executive Supplemental Retirement Plan
(as amended). 29
10(h) 1989 Stock Award Plan [a part of the 1985
Incentive Stock Plan].
Note: The 1989 Plan is not materially
----
different from the 1987 Stock Award Plan
filed with the Registrant's Annual Report
on Form 10-K for the fiscal year 1993.
10(i) Modine Manufacturing Company Executive
Supplemental Stock Plan (as amended) (filed
by reference to the Registrant's Annual Report
on Form 10-K for the fiscal year ended March 31,
1994).
10(j) Director Emeritus Agreements between the
Registrant and Neal D. Crane and Bernard H.
Regenburg (filed by reference to the Registrant's
<PAGE>
Reference Number
per Item 601 of
Regulation S-K Page
- ---------------- ----
Annual Report on Form 10-K for the fiscal year
ended March 31, 1992).
10(k) Trust agreement relating to Two Million Dollar
split life insurance policy by and among the
Registrant, E. E. Richter and his spouse, and
Marshall & Ilsley Trust Company as Trustee
(filed by reference to the Registrant's Annual
Report on Form 10-K for the fiscal year ended
March 31, 1994).
10(l) 1990 Stock Award Plan [a part of the 1985
Incentive Stock Plan].
Note: The 1990 Plan is not materially different
----
from the 1987 Stock Award Plan filed with the
Registrant's Annual Report on Form 10-K for the
fiscal year 1993.
10(m) 1991 Stock Award Plan [a part of the 1985
Incentive Stock Plan].
Note: The 1991 Plan is not materially different
----
from the 1987 Stock Award Plan filed with the
Registrant's Annual Report on Form 10-K for the
fiscal year 1993.
10(n) Consulting Agreement between the Registrant and
E. E. Richter (filed by reference to the
Registrant's Annual Report on Form 10-K for the
fiscal year ended March 31, 1992).
10(o) 1992 Stock Award Plan [a part of the 1985
Incentive Stock Plan].
Note: The 1992 Plan is not materially different
----
from the 1987 Stock Award Plan filed with the
Registrant's Annual Report on Form 10-K for the
fiscal year 1993.
10(p) 1993 Stock Award Plan [a part of the 1985
Incentive Stock Plan].
Note: The 1993 Plan is not materially different
----
from the 1987 Stock Award Plan filed with the
Registrant's Annual Report on Form 10-K for the
fiscal year 1993.
10(q) 1994 Stock Award Plan [a part of the 1985
Incentive Stock Plan].
<PAGE>
Reference Number
per Item 601 of
Regulation S-K Page
- ---------------- ----
Note: The 1994 Plan is not materially different
from the 1987 Stock Award Plan filed with the
Registrant's Annual Report on Form 10-K for the
fiscal year 1993.
10(r) 1994 Incentive Compensation Plan (filed by
reference to the exhibit contained within
the Registrant's 1994 Proxy Statement dated
June 10, 1994).
10(s) 1994 Stock Option Plan for Non-Employee
Directors (filed by reference to the exhibit
contained within the Registrant's 1994 Proxy
Statement dated June 10, 1994).
*10(t) 1994 Stock Award Plan [a part of the 1994
Incentive Compensation Plan]. 34
*10(u) 1995 Stock Option Agreements (incentive and
non-qualified) [a part of the 1994
Incentive Compensation Plan]. 39
*10(v) 1995 Stock Option Agreement [a part of the
1994 Stock Option Plan for Non-Employee
Directors]. 50
*11 Statement re: computation of per share earnings. 56
12 Not applicable.
*13 1994-95 Annual Report to Shareholders. Except
for the portions of the Report expressly
incorporated by reference, the Report is
furnished solely for the information of the
Commission and is not deemed "filed" as a
part hereof. 57
16 Not applicable.
18 Not applicable.
*21 List of subsidiaries of the Registrant. 93
22 Not applicable.
*23 Consent of independent certified public
accountants. 95
24 Not applicable.
*27 Financial Data Schedule 96
28 Not applicable.
<PAGE>
Reference Number
per Item 601 of
Regulation S-K Page
- ---------------- ----
*99 Definitive Proxy Statement of the Registrant
dated June 9, 1995. Except for the portions
of the Proxy Statement expressly incorporated
by reference, the Proxy Statement is furnished
solely for the information of the Commission
and is not deemed "filed" as a part hereof. 97
None Appendix (filed pursuant to Item 304 of
Regulation S-T). 114
Note: All Exhibits filed herewith are current to
-----
the end of the reporting period of the Form 10-K
(unless otherwise noted).
* Filed herewith.
Current Reports on Form 8-K:
- ---------------------------
A Current Report on Form 8-K, dated January 18, 1995, was filed by the
Company on January 23, 1995. This report announced the amendment of
the Rights Agreement (regarding certain Preferred Share Purchase Rights
authorized as of October 15, 1986) by extending the final expiration of
the Rights from October 27, 1996 to October 27, 2006.
<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.
Modine Manufacturing Company
Date: June 21, 1995 By: R. T. SAVAGE
--------------------------------
R. T. Savage, President and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf
of the Registrant and in the capacities indicated.
E. E. RICHTER June 21, 1995
- ------------------------------------- -------------
E. E. Richter, Chairman and Director Date
R. T. SAVAGE June 21, 1995
- ------------------------------------- -------------
R. T. Savage, President, Chief Date
Executive Officer and Director
A. D. REID June 21, 1995
- ------------------------------------- -------------
A. D. Reid, Vice President and Date
Chief Financial Officer
W. E. PAVLICK June 21, 1995
- ------------------------------------- -------------
W. E. Pavlick, Senior Vice President, Date
General Counsel and Secretary
R. J. DOYLE June 21, 1995
- ------------------------------------- -------------
R. J. Doyle, Director Date
T. J. GUENDEL June 21, 1995
- ------------------------------------- -------------
T. J. Guendel, Director Date
F. W. JONES June 21, 1995
- ------------------------------------- -------------
F. W. Jones, Director Date
D. J. KUESTER June 21, 1995
- ------------------------------------- -------------
D. J. Kuester, Director Date
V. L. MARTIN June 21, 1995
- ------------------------------------- -------------
V. L. Martin, Director Date
<PAGE>
G. L. NEALE June 21, 1995
- ------------------------------------- -------------
G. L. Neale, Director Date
S. W. TISDALE June 21, 1995
- ------------------------------------- -------------
S. W. Tisdale, Director Date
M. T. YONKER June 21, 1995
- ------------------------------------- -------------
M. T. Yonker, Director Date
<PAGE>
Coopers
& Lybrand
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Directors
Modine Manufacturing Company
Our report on the consolidated financial statements of Modine
Manufacturing Company and Subsidiaries has been incorporated by
reference in this Form 10-K from the 1995 annual report to
shareholders of Modine Manufacturing Company and Subsidiaries on
page 29 therein. In connection with our audits of such financial
statements, we have also audited the related financial statement
schedules listed in the index on page 19 of this Form 10-K.
In our opinion, the financial statement schedules referred to
above, when considered in relation to the basic financial
statements taken as a whole, present fairly, in all material
respects, the information required to be included therein.
COOPERS & LYBRAND LLP
COOPERS & LYBRAND LLP
Chicago, Illinois
May 1, 1995
<PAGE>
EXHIBIT 10(g)
MODINE MANUFACTURING COMPANY
EXECUTIVE SUPPLEMENTAL RETIREMENT PLAN
PURPOSE
-------
Modine Manufacturing Company (hereinafter called the "Company")
has adopted the MODINE PENSION AND DISABILITY PLAN FOR SALARIED
EMPLOYEES (hereinafter called the "Pension Plan"), and executed a
Trust Agreement to provide retirement benefits for its employees.
The Pension Plan and Trust is intended to meet requirements of
Section 401(a) and 501(a) of the Internal Revenue Code of 1954,
as amended.
The Pension Plan contains provisions placing limitations on the
maximum benefit which may be paid to a Participant in the Pension
Plan in accordance with Sections 401(a)(17) and 415 of the
Internal Revenue Code.
By resolution of November 14, 1979, the Board of Directors of the
Company determined that the maximum benefit limitations in the
Internal Revenue Code adversely affected the pension benefits of
eligible employees. It therefore authorized the payment of
supplemental retirement benefits of such employees impacted by
these maximum benefit limitations.
As a formal expression on the intent of said resolution of the
Board of Directors, the Company hereby establishes an "Executive
Supplemental Retirement Plan" within the meaning of Sections
201(2), 301(a)(3), and 401(a)(1) of ERISA for a select group of
highly compensated employees, to be effective for any eligible
employee who terminates employment on or after November 14, 1979,
(hereinafter called the "Plan").
ARTICLE I
DEFINITIONS AND CONSTRUCTIONS
-----------------------------
Section 1.1 Definitions: Except as specified below or elsewhere
- ----------- -----------
in this Plan, the definitions of words and phrases appearing in
this Plan shall have the meanings as set forth in the Pension
Plan. Where the following words and phrases appear in this Plan,
they shall have the respective meanings herein set forth, unless
the context clearly indicates to the contrary:
(a) Code: The Internal Revenue Code as now in effect
----
or hereafter amended.
(b) Committee: The Plan Administrator consisting of
---------
at least three officers of the Company who are
appointed by the Officer Nomination and Compensation
Committee of the Company, but who are not members of
the Officer Nomination and Compensation Committee.
<PAGE>
(c) Effective Date: November 14, 1979, the date on
--------------
which the provisions of this Plan became effective.
Section 1.2: Except when otherwise indicated by the context,
- -----------
words in a masculine gender shall include the feminine and neuter
gender; the plural shall include the singular and the singular
shall include the plural.
Section 1.3: Employment Rights: Establishment of the Plan shall
- ----------- -----------------
not be construed to give any employee the right to be retained by
the Company or to any benefits not specifically provided by the Plan.
Section 1.4: Severability: In the event any provision of the
- ----------- ------------
Plan shall be held invalid or illegal for any reason, any illegality
or invalidity shall not affect the remaining part of the Plan, but
the Plan shall be construed and enforced as if the illegal or invalid
provisions had never been inserted, and the Company shall have the
privilege and opportunity to correct and remedy such questions of
illegality or invalidity by amendment as provided in the Plan.
Section 1.5. Applicable Law: This Plan is fully exempt from Titles II,
- ----------- --------------
III, and IV of ERISA. The Plan shall be governed and construed in
accordance with Title I of ERISA and the laws of the State of Wisconsin.
ARTICLE II
PARTICIPATION AND ELIGIBILITY
-----------------------------
Section 2.1 Participation: A Participant in the Pension Plan
- ----------- -------------
shall become a Participant in this Plan when any benefits payable
under the Pension Plan are reduced on account of the limitations
in Code Section 415 or Code Section 401(a)(17).
Section 2.2 Other Retirement Benefits: Section 2.1 shall not
- ----------- -------------------------
preclude any Employee who has entered into an agreement with the
Company in which is provided other supplemental retirement
benefits from participating in this plan and receiving such other
supplemental retirement benefits; provided, however, that such
Employee shall not receive the same benefit twice.
ARTICLE III
AMOUNT AND FORM OF BENEFIT PAYMENTS
-----------------------------------
Section 3.1 Amount of Benefits: Benefits payable under the Plan
- ----------- ------------------
shall be equal to:
(a) The amount of benefits payable under the Pension
Plan if the limitations in Code Section 415 and
401(a)(17) were not applied, less
<PAGE>
(b) The amount of benefits payable under the Pension Plan.
Section 3.2 Form of Benefit Payments: A Participant may elect
- ----------- ------------------------
the same manner of payment and optional benefits as are provided
in ARTICLE V of the Pension Plan, with the following exceptions:
(a) There is no joint and survivor pension payable to
the spouse of any married Participant who dies before
retiring from or otherwise leaving employment with the
Company.
(b) The monthly benefit to a Participant under the
Plan shall be a monthly benefit only for the life of
the Participant unless the Participant, prior to his
retirement (as defined in the Pension Plan) elects one
of the other optional Forms of Benefit as provided by
the Pension Plan. An election of one optional form of
benefit under the Pension Plan does not affect the
right of the Participant to elect a different form of
optional benefit under this Plan.
(c) Election of an optional form of benefit and
designation of a surviving beneficiary shall be done in
accordance with the rules set forth in the Pension
Plan, except that any such election by a married
Participant shall not require the written consent of
his spouse.
(d) A Participant who is eligible to elect a lump-sum
payment under the Pension Plan, may elect to have a
lump-sum payment under this Plan.
(e) Benefits under this Plan shall commence or be paid
at a time to be determined by the Committee, but not
earlier than the Date of Determination under the
Pension Plan and not later than twelve months after the
Participant has terminated his employment with the
Company.
(f) If the commencement of benefit payments or a lump-
sum payment under this Plan occurs later than the
commencement of benefit payments or a lump-sum payment
under the Pension Plan, the amount of benefits under
this Plan shall be calculated in accordance with
Section 3.1 based upon the pension benefit as of the
date of commencement of benefit payments or the lump-
sum payment under this Plan (but not later than age 65).
Section 3.3 Forfeiture of Benefits: Neither a Participant nor
- ----------- ----------------------
his beneficiary shall have any right to a benefit under this Plan
if the Committee or the Company determines that the Participant
engaged in a willful, deliberate, or gross act of commission or
omission which is injurious to the finances or reputation of the
Company.
<PAGE>
ARTICLE IV
GENERAL PROVISIONS
------------------
Section 4.1 Plan Financing: All benefits paid under this Plan
- ----------- --------------
shall be paid from the general assets of the Company. Such
amounts shall be reflected on the accounting records of the
Company but shall not be construed to create or require the
creation of a trust, custodial, or escrow account. No Employee
or Participant shall have any right, title or interest whatever
in or to any investment reserves, accounts, or funds that the
Company may purchase, establish, or accumulate to aid in
providing benefits under this Plan. Nothing contained in this
Plan, and no action taken pursuant to its provisions, shall
create a trust or fiduciary relationship of any kind between the
Company and the Employee or any other person. Neither an
Employee or any beneficiary of an Employee shall acquire any
interest greater than that of an unsecured creditor.
Section 4.2 Administration: This plan shall be administered by
- ----------- --------------
the Committee. The Committee shall have, to the extent
appropriate, the same powers, rights, duties and obligations with
respect to this Plan as it would have if it were charged with the
duties of the Board of Administration under the Pension Plan.
Section 4.3 Amendment and Termination: The Company reserves the
- ----------- -------------------------
right to amend this Plan from time to time and reserves the right
to terminate the Plan at any time, but any such amendment or
termination shall not have the effect of reducing or eliminating
any monthly benefit payable or accrued but not yet payable under
the terms of this Plan as of the date of the amendment or
termination.
Section 4.4 Action by the Company: Any action required of or
- ----------- ---------------------
permitted by the Company under this Plan shall be by resolution
of the Officers Nomination and Compensation Committee of the
Company, the Board of Directors of the Company or any person or
persons authorized by resolution of the Officers Nomination and
Compensation Committee, or the Board of Directors including, but
not limited to, the Committee.
Section 4.5 Tax Liability: The Company may withhold from any
- ----------- -------------
payment of benefits hereunder any taxes required to be withheld
in such sum as the Company may reasonably estimate to be
necessary to cover any taxes for which the Company may be liable
and which may be assessed with regard to such payment.
Section 4.6 Coordination with Pension Plan: Provisions of the
- ----------- ------------------------------
Pension Plan, not specifically excluded or revised by this Plan,
may be applied by the Committee or the Company in determining the
rights and obligations, and any limitations thereon, under this
Plan.
<PAGE>
IN WITNESS WHEREOF, MODINE MANUFACTURING COMPANY has caused this
instrument to be executed by its duly authorized officers, this
16th day of July, 1987.
MODINE MANUFACTURING COMPANY
By: /s/FRANK W. JONES
----------------------------
Title: Executive V.P.
----------------------------
ATTEST:
s/W. E. PAVLICK
- ------------------
Secretary
<PAGE>
EXHIBIT 10(G) continued
MODINE MANUFACTURING COMPANY
EXECUTIVE SUPPLEMENTAL RETIREMENT PLAN
FIRST AMENDMENT
WHEREAS, the Company established the Modine Manufacturing Company
Executive Supplemental Retirement Plan effective November 14, 1979, and
WHEREAS, it is the desire of the Company to amend such Plan as
hereinafter set forth.
NOW, THEREFORE, the Company does hereby adopt the First Amendment
to the Modine Manufacturing Company Executive Supplemental
Retirement Plan to be effective as of October 1, 1994.
Section 3.2(d), is amended to read as follows in its entirety:
(d) A Participant, upon his retirement, may elect a one-
time lump-sum payment of his benefit under this Plan,
whether or not he is eligible to elect a lump-sum
payment under the Pension Plan.
Except as expressly amended herein, the Modine Manufacturing
Company Executive Supplemental Retirement Plan shall remain in
full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this First
Amendment of the Modine Manufacturing Company Executive
Supplemental Retirement Plan, this 19th day of October, 1994.
MODINE MANUFACTURING COMPANY
By:/s/R. T. SAVAGE
----------------------------
ATTEST:
/s/W. E. PAVLICK
- ----------------
<PAGE>
EXHIBIT 10(t)
STOCK AWARD PLAN
1. PURPOSES OF PLAN. The purposes of the Stock Award Plan
of Modine Manufacturing Company ("Modine") are as follows:
A. To further the growth, success and interest of the
Company and its stockholders by enabling key managerial
employees of the Company, who have responsibility for
the administration of the affairs of the Company, to
acquire shares of Modine Common Stock under the terms
and conditions and in the manner contemplated by this
Plan, thereby increasing their personal involvement in
the fortunes of the Company; and
B. To enable the Company to obtain and retain the services
of desirable key managerial employees by providing such
employees with an opportunity to become owners of
Modine Common Stock under the terms and conditions and
in the manner contemplated by this Plan.
The term "Company" as used herein shall mean Modine and its
majority owned subsidiaries, including subsidiaries which may be
created or acquired during the period of this Plan.
2. ADMINISTRATION OF PLAN. This Plan shall be administered
by the Officer Nomination and Compensation Stock Option Committee
consisting of two three or more directors appointed by of the
Board of Directors of Modine, none of whom shall be employees of
<PAGE>
the Company. The Committee shall interpret the Plan and to the
extent and in the manner contemplated herein it shall exercise
the discretion granted to it as to the determination of who shall
participate in the Plan, and how many shares shall be awarded to
each participant. The Committee shall issue from time to time
such rules and interpretations as in its judgment are necessary
or appropriate in order to effectively administer the Plan.
3. ELIGIBLE EMPLOYEES. Employees including officers of
the Company who the Committee determines have and exercise
management functions and responsibilities shall be eligible for
participation under the Plan. However, no member of the Board of
Directors of the Company shall be eligible to participate under
the Plan unless such member he is also an employee of the
Company, and no member of the Committee shall be eligible to
participate under the Plan.
4. SHARES SUBJECT TO PLAN. The Board of Directors and the
shareholders of the Company in July 1994 1985 approved a broad
Incentive Compensation Stock Plan providing for an aggregate of
3,000,000 1,250,000 shares of the Common Stock, $0.625 par value
of Modine for various plans adopted by the Board of Directors
under such authority. The 1994 Incentive Compensation Stock Plan
permitted the use of either newly-issued shares, authorized but
heretofore unissued shares, or shares reacquired by the Company,
including shares purchased on the open market. Inasmuch as the
shares of this Plan are awarded to employees without cost,
Wisconsin State law requires that heretofore unissued shares may
not be used but only those shares reacquired by the Company. If
<PAGE>
shares issued pursuant hereto shall have been forfeited and
returned to Modine in connection with the restrictions imposed
upon such shares pursuant to this Plan, such forfeited shares
again shall become available for issuance under the Plan prior to
termination of the Plan.
5. RESTRICTIONS. All shares awarded pursuant to this Plan
shall be subject to the following restrictions:
(a) The shares may not be sold or otherwise alienated or
hypothecated as long as they are subject to forfeiture
provided in this Section 5.
(b) In the event of termination with the Company of a
participant prior to the beginning of the third year
after shares are awarded to him hereunder, if such
termination is for any reason other than normal
retirement, death, total disability or early retirement
with the consent of Modine's Board of Directors or the
Committee, the shares shall be forfeited and returned
to the Company; and if such employment so terminates
for any reason other than those described above more
than two (2) years after but prior to the beginning of
the seventh (7) year after the granting of such stock
awards, the shares which are at the date of such
termination of employment still subject to the
restrictions imposed hereunder shall be forfeited and
returned to the Company.
<PAGE>
(c) In the event a participant who has been awarded shares
hereunder terminates his employment with the Company
because of normal retirement, death, total disability
or early retirement with the consent of Modine's Board
of Directors or of the Committee, the shares so awarded
shall not be subject to forfeit and shall vest with the
employee, or his the employee's designated legal
representative in the event of death. In the event a
participant is subject to a qualified domestic
relations order, the shares so awarded and to which the
participant is otherwise entitled under the terms of
this Plan shall vest with such person as designated by
the qualified domestic relations order.
(d) Except as otherwise provided above, the restrictions
imposed upon shares awarded to each participant
hereunder shall be removed as to one-fifth of the
aggregate number of shares awarded to him the
participant at one time upon the expiration of each of
the second, third, fourth, fifth, and sixth years after
his the award of such shares hereunder.
(e) In the event at any time the Company is dissolved or is
a party to a merger or consolidation in which the
Company is not the surviving corporation, the
restrictions provided in this Section 5 shall
automatically cease as of the effective date of such
dissolution, merger or consolidation, as the case may be.
<PAGE>
(f) Notwithstanding any other terms or conditions contained in
this Plan, the restrictions provided in this Section 5 shall
automatically cease in the event of a voluntary or involuntary
termination with the Company of a participant for any reason
within a two-year period after the occurrence of a Pre-Condition
described below in this subparagraph:
"Pre-Condition" means that a person (as defined in
Section 13(d) and 14(d)(2) of the Securities Exchange
Act of 1934, as amended), or a corporation or other
entity controlled by the person, has
(i) merged or consolidated with the Company,
(ii) acquired substantially all of the assets of
the Company, or
(iii) acquired securities of the Company having
at least 20% of the combined voting power
of the Company's then outstanding securities,
except in the case of a merger of another entity with
the Company where the Company is the surviving corporation,
the merger solely involved an acquisition by the Company of
another business entity in which the Company issued its
authorized but unissued or treasury stock to stockholders
of the acquired entity, and over 80% of the combined voting
power of the Company's stock after the merger is owned of
record by stockholders of the Company prior to the merger.
6. OTHER RESTRICTIONS. The Committee may impose such
other restrictions on any shares awarded pursuant to the Plan as
it may deem advisable, including, without limitation,
<PAGE>
restrictions under the Securities Act of 1933 or the Securities
Exchange Act of 1934, as amended, under the requirements of any
stock exchange or any over-the-counter securities trading market
upon which such share or shares of the same class are then listed
and under any blue sky or securities laws applicable to such shares.
7. ESCROW OR LEGEND. In order to enforce the restrictions
imposed upon shares issued hereunder, the Committee may require
any participant to enter into an Escrow Agreement providing that
the certificates representing shares issued pursuant to this Plan
shall remain in the physical custody of an escrow holder until
any or all of the restrictions imposed pursuant to this Plan have
terminated and the Committee may cause a legend or legends to be
placed on any certificates representing shares issued pursuant to
this Plan, which legend or legends shall make appropriate
reference to the restrictions imposed hereunder.
8. AMENDMENTS. This Plan may be amended at any time by
the Board of Directors of Modine, provided that no such amendment
shall increase the maximum number of shares that may be issued
pursuant to the Plan except pursuant to Section 4 hereunder
without the further approval of the stockholders of Modine.
9. TERMINATION. This Plan shall terminate and no further
shares shall be awarded or issued hereunder on January 16, 1995
July 19, 2004 or such earlier date as may be determined by the
Committee. The termination of this Plan, however, shall not
affect any restrictions previously imposed on shares issued
pursuant to this Plan.
<PAGE>
EXHIBIT 10(u)
MODINE MANUFACTURING COMPANY
INCENTIVE STOCK OPTION AGREEMENT
THIS INCENTIVE STOCK OPTION granted this day of ,
-------- ------------
19 , by Modine Manufacturing Company, a Wisconsin corporation (the
-----
"Company"), to (the "Employee") under and pursuant
-----------------------
to the Company's 1994 Incentive Compensation Plan, as amended (the "Plan").
WITNESSETH:
WHEREAS, the Committee of the Board of Directors, which is authorized
to administer the Plan (the "Committee"), is of the opinion that the
interests of the Company and its subsidiaries will be advanced by
encouraging and enabling certain key employees of the Company and its
ubsidiaries to acquire or increase their proprietary interest in the
Company, thus providing them with a more direct stake in its welfare and
assuring a closer identification of their interests with those of
the Company; and
WHEREAS, the Committee believes that the acquisition of such
an interest in the Company will stimulate the efforts of such
employees and strengthen their desire to remain with the Company
or one of its subsidiaries;
NOW, THEREFORE, in consideration of the aforementioned, and
the covenants and agreements herein set forth, the Company grants
this option (which is intended to qualify as an incentive stock
option within the meaning of Section 422A of the Internal Revenue
Code) to the Employee on the terms hereinafter expressed:
1. Option Grant. The Company hereby grants to the Employee an
option to purchase a total of shares of Common
-------------
Stock of the Company at the option price of $ per
---------
share, being at least equal to 100% of the fair market value
of such shares on the date hereof.
2. Time of Exercise; Exercise Limitation. This option may be
exercised (in the manner provided in paragraph 3 hereof) in
whole or in part, from time to time after the date hereof,
subject to the following limitations:
(a) Except for exercises under paragraph 5 below, this
option may not be exercised for one year from the date
when the Employee's present employment is first
commenced.
(b) This option is intended to qualify as an incentive
stock option so that the Employee may obtain
preferential tax treatment and, consequently, certain
limitations on disposition must be observed. In order
<PAGE>
to obtain preferential tax treatment, shares of capital
stock transferred to the Employee pursuant to this
Agreement may not be disposed of within twenty-four
(24) months after the grant of such shares or twelve
(12) months after exercise of such shares.
(c) If Employee is an officer of the Company subject to the
reporting requirements of Section 16 of the Securities
Exchange Act of 1934, this option may not be exercised
by the Employee for six (6) months from the date of
grant.
(d) This option may only be exercised, at any one time,
exclusively in multiples of twenty-five (25) shares
with a one hundred (100) share exercise minimum, except
for the purchase of all shares then remaining subject
to this option.
(e) This option may not be exercised beyond the shorter of:
(i) ten (10) years from the date hereof;
(ii) after an Employee has been terminated for cause
(such as dishonesty or negligence in performance
of Employee's duties). In such event the
employee shall forfeit all unexercised options;
(iii) three (3) years (except as provided in paragraph
5) following termination of employment (if
without cause) or retirement; provided, however,
that this option must be exercised within ninety
(90) days following termination of employment
(if without cause) or retirement from the
Company in order to obtain preferential tax
treatment.
In the event this option is not exercised in accordance
with subparagraphs (i), (ii) or (iii) above, it shall
be forfeited as an unexercised option.
(f) To the extent required by the Internal Revenue Code,
the aggregate fair market value (determined at the time
the option is granted) of the Common Stock for which
incentive stock options are exercisable for the first
time by an option holder during any calendar year
(under all the plans of the Company) shall not exceed
$100,000. This limitation applies to Incentive Stock
Options granted after 1986 only. Incentive Stock
Options exercisable for the first time in a calendar
year that exceed the $100,000 annual limit are denied
preferential tax treatment.
3. Exercise of Option. This option may be exercised only by
appropriate notice in writing delivered to the Secretary of
the Company at 1500 DeKoven Avenue, Racine, Wis. 53403, and
accompanied by:
(a) Check payable to the order of the Company, or Modine
stock (the value of which shall be the fair market
<PAGE>
value of the stock on the day preceding the exercise
date), or a combination of Modine stock and cash, for
the full purchase price of the shares purchased.
4. Nontransferability of Option. This option is not
transferable by the Employee otherwise than (a) by will or
the laws of descent and distribution, or (b) pursuant to a
qualified domestic relations order, and is exercisable,
during the Employee's lifetime, only by the Employee or his
legal representative.
5. Death or Disability of Employee. If the Employee dies
during the option period, this option may be exercised in
whole or in part and from time to time, in the manner
described in paragraph 3 hereof, by the Employee's estate or
the person to whom the option passes by will or the laws of
descent and distribution, but only within a period of (a)
one year next succeeding the Employee's death, or (b) ten
years from the date hereof, whichever period is shorter. If
the Employee becomes disabled during the option period, his
option may be exercised in whole or in part and from time to
time, in the manner described in paragraph 3 hereof, within
one year of retirement or other termination of employment
due to a determination of permanent and total disability;
except that any options exercised after one year of
retirement due to disability, but prior to expiration of
three years following such retirement, will be denied
preferential tax treatment.
6. Delivery of Certificates. The Company shall issue and
deliver certificates for stock purchased pursuant to an
exercise of this option subject to the following
limitations:
(a) The Employee shall have no interest in any such shares
until payment for said shares is made in accordance
with paragraph 3 hereinabove.
(b) The Company shall not be required to issue or deliver
any certificate for its Common Stock purchased upon the
exercise of this option prior to the admission of such
shares to listing on any stock exchange or any
over-the-counter quotation system on which shares may
at that time be listed. In the event of the exercise
of this option while the option class of stock is not
so listed or admitted, the Company shall make prompt
application for such listing or admission. If any time
during the option period the Company shall be advised
by its counsel that the shares deliverable upon an
exercise of the option are required to be registered
under the Federal Securities Act of 1933 or any state
securities law or that delivery of such shares must be
accompanied or preceded by a prospectus, the Company
will use its best efforts to effect such registration
or provide such prospectus, but delivery of shares by
the Company may be deferred until such registration is
effected or such prospectus is available.
<PAGE>
7. Adjustment Provisions. In the event that there is any
change in the number of issued shares of Common Stock of the
Company without new consideration to the Company therefor,
by reason of stock dividends, stock split-ups or like
recapitalizations, the number of shares which may thereafter
be purchased under this option shall be adjusted in the same
proportion as said change in issued shares. In such event,
the per share purchase price specified in paragraph 1 above
shall be adjusted so that the total consideration payable to
the Company for the adjusted number of shares remaining
subject to this option shall not be changed by reason of the
adjustment in number of shares.
If during the term of this option the Common Stock of the
Company shall be combined or be changed into the same or
another kind of stock of the Company or into securities of
another corporation, whether through recapitalization,
reorganization, sale, merger, consolidation, or by other
means, the Company shall cause adequate provision to be made
whereby the Employee thereafter will be entitled to receive,
upon the due exercise of any then unexercised portion of
this option, the securities which the Employee would have
been entitled to receive for Common Stock acquired through
exercise of such portion of the option (regardless of
whether or to what extent the option would then have been
exercisable) immediately prior to the effective date of such
recapitalization, reorganization, sale, merger,
consolidation, or similar transaction. If appropriate, due
adjustment shall be made in the per share or per unit price
of the securities purchased on exercise of this option
following said recapitalization, reorganization, sale,
merger, consolidation, or similar transaction.
8. Effect on Other Benefits. Neither this option, shares of
stock issued upon its exercise, any excess of market value
over option price, nor any other rights, benefits, values or
interests resulting from the granting of this option shall
be considered as compensation for purposes of any pension,
profit sharing, retirement plan, insurance plan, investment
or stock purchase plan, or any other employee benefit plan
of the Company or any of its subsidiaries.
9. Fair Market Value. For purposes hereof, "fair market value"
shall equal the closing market price on the largest stock
exchange or over-the-counter quotation system on which
Modine Common Stock is traded on the date a determination is
required to be made under the Plan or this Agreement, or if
no stock is traded on that day then it shall equal the
closing market price on the last preceding day on which such
stock was traded on said exchange or system.
10. Employee Not Deemed to be a Shareholder. The Employee shall
not be deemed to be a shareholder of the Company for any
purposes with respect to any option granted hereunder except
to the extent that such option shall have been exercised and
a stock certificate issued therefor.
11. No Right to Continued Employment. Nothing in this Agreement
or the Plan shall confer upon Employee any right to continue
<PAGE>
in the employment of the Company or in any way affect the
right of the Company to terminate Employee's employment at
any time.
12. Cancellation and Rescission of Stock Option. The Committee
may cancel this option at any time if Employee is not in
compliance with all other applicable provisions of this
option, the Plan, and with the following conditions:
(a) Employee shall not render services for any organization
or engage directly or indirectly in any business which,
in the judgment of the Committee, is or becomes
competitive with the Company, or which organization or
business, or the rendering of services to such
organization or business, is or becomes otherwise
prejudicial to or in conflict with the interests of the
Company;
(b) Employee shall comply fully with applicable laws and
government regulations and maintain high ethical
standards. Employee shall also comply with the
Company's corporate policies, including, but not
limited to, Policy No. G-2, Guideline for Business
Conduct, and Policy No. G-3, Antitrust Compliance, and
the Company's Agreement for Protection of Trade Secrets
and Sales Data and for Assignment of Inventions.
If Employee's employment has terminated, the judgment of the
Committee shall be based on Employee's position and
responsibilities while employed by the Company, Employee's
post-employment responsibilities and position with the other
organization or business, the extent of past, current and
potential competition or conflict between the Company and
the other organization or business, the effect on the
Company's customers, suppliers and competitors of Employee's
assuming the post-employment position, and such other
considerations as are deemed relevant given the applicable
facts and circumstances. If Employee retires, he shall be
free, however, to purchase as an investment or otherwise,
stock or other securities of such organization or business
so long as they are listed upon a recognized securities
exchange or traded over-the-counter, and such investment
does not represent a substantial investment to Employee or a
greater than 10 percent equity interest in the organization
or business.
Failure to comply with the provisions of paragraph (a) or
(b) of this Paragraph 13 prior to, or during the twenty-four
(24) months after, any exercise pursuant to this option
shall cause such exercise to be rescinded. The Company
shall notify Employee in writing of any such rescission
within twenty-four (24) months after such exercise. Within
ten days after receiving such a notice from the Company,
Employee shall pay to the Company the amount of any gain
realized or payment received pertaining to the rescinded
exercise of this option. Such payment shall be made either
in cash or by returning to the Company the number of shares
of Common Stock that Employee received in connection with
the rescinded exercise.
<PAGE>
13. Grant Subject to 1994 Incentive Compensation Plan. This
award is subject to all the terms and conditions set forth
in the 1994 Incentive Compensation Plan as amended which is
hereby incorporated by reference and to all determinations
of the Committee of the Board of Directors which is
authorized to administer the Plan. As a condition of
granting the option herein granted, the Employee agrees, for
himself and his personal representatives, that any
requirement or interpretation, dispute, or disagreement
which may arise under or as a result of or pursuant to this
Agreement or the Plan shall be determined by the Committee
in its sole discretion, and that any interpretation or
determination by the Committee shall be final, binding and
conclusive.
14. Governing Law. This Agreement shall be construed,
administered and governed in all respects in accordance with
the laws of the State of Wisconsin.
IN WITNESS WHEREOF, the Company has caused this option to be
executed on the date first above written.
ATTEST: MODINE MANUFACTURING COMPANY
By:
- ------------------------- ------------------------------------
W. E. Pavlick, Secretary R. T. Savage
President & Chief Executive Officer
Accepted and Agreed To:
-------------------------------------
Employee
<PAGE>
EXHIBIT 10(u) continued
MODINE MANUFACTURING COMPANY
NON-QUALIFIED STOCK OPTION AGREEMENT
THIS NON-QUALIFIED STOCK OPTION granted this day of
-------
January, 19 by Modine Manufacturing Company, a Wisconsin
----
corporation (the "Company"), to , (the
-------------------------
"Employee") under and pursuant to the Company's 1994 Incentive
Compensation Plan (the "Plan"), as amended.
WITNESSETH:
WHEREAS, The Committee of the Board of Directors, which is
authorized to administer the Plan (the "Committee"), is of the
opinion that the interests of the Company and its subsidiaries
will be advanced by encouraging and enabling certain key
employees of the Company and its subsidiaries to acquire or
increase their proprietary interest in the Company, thus
providing them with a more direct stake in its welfare and
assuring a closer identification of their interests with those of
the Company; and
WHEREAS, the Committee believes that the acquisition of such
an interest in the Company will stimulate the efforts of such
employees and strengthen their desire to remain with the Company
or one of its subsidiaries;
NOW, THEREFORE, in consideration of the aforementioned, and
the covenants and agreements herein set forth, the Company grants
its option to the Employee on the terms hereinafter expressed:
1. Option Grant. The Company hereby grants to the Employee an
------------
option to purchase a total of shares of Common
-----------
Stock of the Company at the option price of $ per
-----------
share, being at least equal to 100% of the fair market value
of such shares on the date hereof.
2. Time of Exercise. This option may be exercised (in the
----------------
manner provided in paragraph 3 hereof) in whole or in part,
from time to time after the date hereof, subject to the
following limitations:
(a) Except for exercise under paragraph 5 below, this
option may not be exercised for one year from the date
when the Employee's present employment with Modine
first commenced.
(b) If Employee is an officer of the Company subject to
the reporting requirements of Section 16 of the
<PAGE>
Securities Exchange Act of 1934, this option may not be
exercised by the Employee for six (6) months from the
date of grant.
(c) Options may be exercised before the option period
terminates without regard to the order of grant.
(d) This option may only be exercised, at any one time,
exclusively in multiples of twenty-five (25) shares
with a one hundred (100) share exercise minimum, except
for the purchase of all shares then remaining subject
to this option.
(e) This option may not be exercised beyond the shorter of:
(i) ten (10) years from the date hereof;
(ii) after an Employee has been terminated for cause
(such as dishonesty or negligence in performance
of Employee's duties). In such event the
employee shall forfeit all unexercised options;
(iii) three (3) years (except as provided in paragraph
5) following termination of employment (if
without cause) or retirement.
In the event this option is not exercised in accordance
with subparagraphs (i), (ii) or (iii) above, it shall
be forfeited as an unexercised option.
3. Exercise of Option. This option may be exercised only by
------------------
appropriate notice in writing delivered to the Secretary of
the Company at 1500 DeKoven Avenue, Racine, Wis. 53403 and
accompanied by:
(a) Check payable to the order of the Company, or Modine
Stock (the value of which shall be the fair market
value of the stock on the day preceding the exercise
date), or a combination of Modine stock and cash, for
the full purchase price of the shares purchased.
4. Nontransferability of Option. This option is not
----------------------------
transferable by the Employee otherwise than (a) by will or
the laws of descent and distribution, or (b) pursuant to a
qualified domestic relations order, and is exercisable,
during the Employee's lifetime, only by the Employee or his
legal representative.
5. Death of Employee. If the Employee dies during the option
-----------------
period, this option may be exercised in whole or in part and
from time to time, in the manner described in paragraph 3
hereof, by the Employee's estate or the person to whom the
option passes by will or the laws of descent and
distribution, but only within a period of (a) one year next
succeeding the Employee's death, or (b) ten years from the
date hereof, whichever period is shorter.
<PAGE>
6. Delivery of Certificates. The Company shall issue and
------------------------
deliver certificates for stock purchased pursuant to an
exercise of this option subject to the following
limitations:
(a) The Employee shall have no interest in any such Shares
until certificates for said Shares are issued.
(b) The Company shall not be required to issue or deliver
any certificates for its Common Stock purchased upon
the exercise of this option prior to the admission of
such shares to listing on any stock exchange or any
over-the-counter quotation system on which shares may
at that time be listed. In the event of the exercise
of this option while the option class of stock is not
so listed or admitted, the Company shall make prompt
application for such listing or admission. If any time
during the option period the Company shall be advised
by its counsel that the shares deliverable upon an
exercise of the option are required to be registered
under the Federal Securities Act of 1933 or any state
securities law or that delivery of such shares must be
accompanied or preceded by a prospectus, the Company
will use its best efforts to effect such registration
or provide such prospectus, but delivery of shares by
the Company may be deferred until such registration is
effected or such prospectus is available.
7. Adjustment Provisions. In the event that there is any
---------------------
change in the number of issued shares of Common Stock of the
Company without new consideration to the Company therefor,
by reason of stock dividends, stock split-ups or like
recapitalizations, the number of shares which may thereafter
be purchased under this option shall be adjusted in the same
proportion as said change in issued shares. In such event,
the per share purchase price specified in paragraph 1 above
shall be adjusted so that the total consideration payable to
the Company for the adjusted number of shares remaining
subject to this option shall not be changed by reason of the
adjustment in number of shares.
If during the term of this option the Common Stock of the
Company shall be combined or be changed into the same or
another kind of stock of the Company or into securities of
another corporation, whether through recapitalization,
reorganization, sale, merger, consolidation, or by other
means, the Company shall cause adequate provision to be made
whereby the Employee thereafter will be entitled to receive,
upon the due exercise of any then unexercised portion of
this option, the securities which the Employee would have
been entitled to receive for Common Stock acquired through
exercise of such portion of the option (regardless of
whether or to what extent the option would then have been
exercisable) immediately prior to the effective date of such
recapitalization, reorganization, sale, merger,
consolidation, or similar transaction. If appropriate, due
<PAGE>
adjustment shall be made in the per share or per unit price
to the securities purchased on exercise of this option
following said recapitalization, sale, merger,
consolidation, or similar transaction.
8. Effect on Other Benefits. Neither this option, shares of
------------------------
stock issued upon its exercise, any excess of market value
over option price, nor any other rights, benefits, values or
interests resulting from the granting of this option shall
be considered as compensation for purposes of any pension,
profit sharing, retirement plan, insurance plan, investment
or stock purchase plan, or any other employee benefit plan
of the Company or any of its subsidiaries.
9. Fair Market Value. For purposes hereof, "fair market value"
-----------------
shall equal the closing market price on the largest stock
exchange or over-the-counter quotation system on which
Modine Common Stock is traded on the date a determination is
required to be made under the Plan or this Agreement, or if
no stock is traded on that day then it shall equal the
closing market price on the last preceding day on which such
stock was traded on said exchange or system.
10. Employee Not Deemed to be a Shareholder. The Employee
---------------------------------------
shall not be deemed to be a shareholder of the Company for
any purposes with respect to any option granted hereunder
except to the extent that such option shall have been
exercised and a stock certificate issued therefor.
11. No Right to Continued Employment. Nothing in this Agreement
--------------------------------
or the Plan shall confer upon Employee any right to continue
in the employment of the Company or in any way effect the
right of the Company to terminate Employee's employment at
any time.
12. Cancellation and Rescission of Stock Option. The Committee
-------------------------------------------
may cancel this option at any time if Employee is not in
compliance with all other applicable provisions of this
option, the Plan, and with the following conditions:
(a) Employee shall not render services for any organization
or engage directly or indirectly in any business which,
in the judgment of the Committee, is or becomes
competitive with the Company, or which organization or
business, or the rendering of services to such
organization or business, is or becomes otherwise
prejudicial to or in conflict with the interests of the
Company;
(b) Employee shall comply fully with applicable laws and
government regulations and maintain high ethical
standards. Employee shall also comply with the
Company's corporate policies, including, but not
limited to, Policy No. G-2, Guideline for Business
<PAGE>
Conduct, and Policy No. G-3, Antitrust Compliance, and
the Company's Agreement for Assignment of Inventions.
If Employee's employment has terminated, the judgment of the
Committee shall be based on Employee's position and
responsibilities while employed by the Company, Employee's
post-employment responsibilities and position with the other
organization or business, the extent of past, current and
potential competition or conflict between the Company and
the other organization or business, the effect on the
Company's customers, suppliers and competitors of Employee's
assuming the post-employment position, and such other
considerations as are deemed relevant given the applicable
facts and circumstances. If Employee retires, he shall be
free, however, to purchase as an investment or otherwise,
stock or other securities of such organization or business
so long as they are listed upon a recognized securities
exchange or traded over-the-counter, and such investment
does not represent a substantial investment to Employee or a
greater than 10 percent equity interest in the organization
or business.
Failure to comply with the provisions of paragraph (a) or
(b) of this Paragraph 12 prior to, or during the twenty-four
(24) months after, any exercise pursuant to this option
shall cause such exercise to be rescinded. The Company
shall notify Employee in writing of any such rescission
within twenty-four (24) months after such exercise. Within
ten days after receiving such a notice from the Company,
Employee shall pay to the Company the amount of any gain
realized or payment received pertaining to the rescinded
exercise of this option. Such payment shall be made either
in cash or by returning to the Company the number of shares
of Common Stock that Employee received in connection with
the rescinded exercise.
13. Grant Subject to 1994 Incentive Compensation Plan. This
-------------------------------------------------
award is subject to all the terms and conditions set forth
in the 1994 Incentive Compensation Plan which is hereby
incorporated by reference and to all determinations of the
Committee of the Board of Directors which is authorized to
administer the Plan. As a condition of granting the option
herein granted, the Employee agrees, for himself and his
personal representatives, that any requirement or
interpretation, dispute, or disagreement which may arise
under or as a result of or pursuant to this Agreement or the
Plan shall be determined by the Committee in its sole
discretion, and that any interpretation or determination by
the Committee shall be final, binding and conclusive.
14. Governing Law. This Agreement shall be construed,
-------------
administered and governed in all respects in accordance with
the laws of the State of Wisconsin.
<PAGE>
IN WITNESS WHEREOF, the Company has caused this option to be
executed on the date first above written.
ATTEST: MODINE MANUFACTURING COMPANY
By:
- ----------------------------- ---------------------------
W. E. Pavlick, Secretary R. T. Savage, President and
Chief Executive Officer
Accepted and Agreed To:
---------------------------------
Employee
<PAGE>
EXHIBIT 10(v)
MODINE MANUFACTURING COMPANY
----------------------------
DIRECTOR'S STOCK OPTION AGREEMENT
---------------------------------
THIS DIRECTOR'S STOCK OPTION granted this day of
--------- -----------,
199 , by Modine Manufacturing Company, a Wisconsin corporation (the
---
"Company"), to (the "Director") under and pursuant to
------------------
the Company's 1994 Stock Option Plan For Non-Employee Directors (the
"Directors' Plan").
WITNESSETH:
WHEREAS, the Board of Directors is of the opinion that the
interests of the Company will be advanced by encouraging and
enabling the non-employee directors of the Company to acquire or
increase their proprietary interest in the Company; and
WHEREAS, the Board of Directors believes that the
acquisition of such an interest will assist the Company in its
efforts to attract and retain well qualified individuals to serve
as its directors;
NOW, THEREFORE, in consideration of the aforementioned, and
the covenants and agreements herein set forth, the Company grants
this option to the Director on the terms hereinafter expressed:
<PAGE>
1. Option Grant. The Company hereby grants to the Director an
------------
option to purchase a total of shares of Common
-------------
Stock of the Company at the option price of $
----------
per share, being at least equal to 100% of the fair market
value of such shares on the date hereof.
2. Time of Exercise. This option may be exercised (in the
----------------
manner provided in paragraph 3 hereof) in whole or in part,
from time to time after the date hereof; provided, however,
that this option may not be exercised beyond the shorter of:
(a) ten (10) years from the date hereof;
(b) after the Director has been removed for cause, in which
event the Director shall forfeit all unexercised options;
(c) except as provided in paragraphs 2(d) or 5, after
expiration of 90 days following the Director's
resignation from the Board of Directors or failure to
be re-elected to the Board of Directors by the
shareholders,; or
(d) after expiration of 3 years following the
Director's retirement pursuant to the Company's
Director Emeritus Retirement Plan;
after such period the Director shall forfeit all unexercised options.
<PAGE>
Pursuant to Section 16 of the Securities Exchange Act of
1934, stock subject to the exercise of this option may not
be sold by the Director for six (6) months from the date of
grant.
3. Exercise of Option. This option may be exercised only by
------------------
appropriate notice in writing delivered to the Secretary of
the Company at 1500 DeKoven Avenue, Racine, Wis. 53403, and
accompanied by:
(a) Check payable to the order of the Company, or
Modine stock (the value of which shall be the fair
market value of the stock on the day preceding the
exercise date), or a combination of Modine stock and
cash, for the full purchase price of the shares
purchased; and
(b) Written representation by the Director that at the
time of such exercise it is the Director's intention to
acquire the shares for investment and not for resale.
Such written representation shall not be required of
the purchaser under paragraph 5 below.
4. Nontransferability of Option. This option is not transferable
----------------------------
by the Director otherwise than (a) by will or the laws of descent
and distribution, or (b) pursuant to a qualified domestic relations
order. This option is exercisable during the Director's lifetime
only by the Director.
<PAGE>
5. Death of Director. If the Director dies during the option
-----------------
period, this option may be exercised in whole or in part in
the manner described in paragraph 3 hereof, by the
Director's estate or the person to whom the option passes by
will or the laws of descent and distribution, but only
within a period of one year next succeeding the Director's
death.
6. Delivery of Certificates. The Company shall issue and
------------------------
deliver certificates for stock purchased pursuant to an
exercise of this option subject to the following
limitations:
(a) The Director shall have no interest in any such
Shares until certificates for said Shares are issued.
(b) The Company shall not be required to issue or
deliver any certificate for its Common Stock purchased
upon the exercise of this option prior to the admission
of such shares to listing on any stock exchange or any
over-the-counter quotation system on which shares may
at that time be listed. In the event of the exercise
of this option while the option class of stock is not
so listed or admitted, the Company shall make prompt
application for such listing or admission. If any time
during the option period the Company shall be advised
by its counsel that the shares deliverable upon an
exercise of the option are required to be registered
<PAGE>
under the Federal Securities Act of 1933 or any state
securities law or that delivery of such shares must be
accompanied or preceded by a prospectus, the Company
will use its best efforts to effect such registration
or provide such prospectus, but delivery of shares by
the Company may be deferred until such registration is
effected or such prospectus is available.
7. Adjustment Provisions. In the event that there is any
---------------------
change in the number of issued shares of Common Stock of the
Company without new consideration to the Company therefor,
by reason of stock dividends, stock split-ups or like
recapitalizations, the number of shares which may thereafter
be purchased under this option shall be adjusted in the same
proportion as said change in issued shares. In such event,
the per share purchase price specified in paragraph 1 above
shall be adjusted so that the total consideration payable to
the Company for the adjusted number of shares remaining
subject to this option shall not be changed by reason of the
adjustment in number of shares.
If during the term of this option the Common Stock of the
Company shall be combined or be changed into the same or
another kind of stock of the Company or into securities of
another corporation, whether through recapitalization,
reorganization, sale, merger, consolidation, etc., the
Company shall cause adequate provision to be made whereby
the Director thereafter will be entitled to receive, upon
the due exercise of any then unexercised portion of this
<PAGE>
option, the securities which the Director would have been
entitled to receive for Common Stock acquired through
exercise of such portion of the option (regardless of
whether or to what extent the option would then have been
exercisable) immediately prior to the effective date of such
recapitalization, reorganization, sale, merger,
consolidation, etc. If appropriate, due adjustment shall be
made in the per share or per unit price of the securities
purchased on exercise of this option following said
recapitalization, reorganization, sale, merger,
consolidation, etc.
8. Fair Market Value. For purposes hereof, "fair market value"
-----------------
shall equal the closing market price on the largest stock
exchange or the over the counter quotation system on which
Modine Common Stock is traded on the date a determination is
required to be made under the Directors' Plan or this
Agreement, or if no stock is traded on that day then it
shall equal the closing market price on the last preceding
day on which such stock was traded on said exchange or
system.
9. Tenure. Nothing in this Agreement or the Directors' Plan
------
shall confer upon the Director any right to continue to
serve as a Director of the Company or in any way effect the
right of the Company to take any action against a Director
pursuant to law and/or the Company's Articles of
Incorporation or By-Laws.
<PAGE>
10. Grant Subject to 1985 1994 Stock Option Plan for Non-
------------------------------------------------------
Employee Directors. This grant is subject to all the terms
------------------
and conditions set forth in the 1994 Stock Option Plan for
Non-Employee Directors which is hereby incorporated by
reference including the requirement of shareholder approval
and to all determinations of the Committee which is authorized
to administer the Directors' Plan. As a condition of granting
the option herein granted, the Director agrees, for himself and
his personal representatives, that any requirement or interpretation,
dispute, or disagreement which may arise under or as a result of or
pursuant to this Agreement or the Directors' Plan shall be determined
by the Committee in its sole discretion, and that any interpretation or
determination by the Committee shall be final, binding and conclusive.
11. Governing Law. This Agreement shall be construed, administered
-------------
and governed in all respects in accordance with the laws of the
State of Wisconsin.
IN WITNESS WHEREOF, the Company has caused this option to be
executed on the date first above written.
ATTEST: MODINE MANUFACTURING COMPANY
BY:
- ---------------------------- -------------------------------
W. E. Pavlick, Secretary R. T. Savage, President and
Chief Executive Officer
Accepted and Agreed To:
-----------------------------------
Director
<PAGE>
<TABLE>
EXHIBIT 11
Modine Manufacturing Company and Subsidiaries
Statement Re: Computation of Per Share Earnings
<CAPTION>
For The Year Ended March 31
1995 1994 1993
---- ---- ----
Primary
-------
<S> <C> <C> <C>
Weighted Average Shares Outstanding 29,682,441 29,557,695 29,426,083
Net Shares Issuable, Assuming Exercise
of Options and Stock Appreciation
Rights Using the Average Market
Price and Employing the Treasury
Stock Method 851,894 913,735 737,474
---------- ---------- ----------
Average Common Share and Common
Share Equivalents 30,534,335 30,471,430 30,163,557
========== ========== ==========
Net Earnings for the Period $68,442,000 $43,990,000 $19,987,000
=========== =========== ===========
Net Earnings per Share of Common
Stock $2.24 $1.44 $0.66
===== ===== =====
Fully Diluted
-------------
Weighted Average Shares Outstanding 29,682,441 29,557,695 29,426,083
Net Shares Issuable, Assuming Exercise
of Options and Stock Appreciation
Rights Using the Ending Market
Price (unless antidilutive) and
Employing the Treasury Stock
Method 938,642 946,339 854,938
---------- ---------- ----------
Average Common Shares and Common
Share Equivalents 30,621,083 30,504,034 30,281,021
========== ========== ==========
Net Earnings for the Period $68,442,000 $43,990,000 $19,987,000
Net Earnings per Share of Common
Stock $2.24 $1.44 $0.66
===== ===== =====
</TABLE>
<PAGE>
EXHIBIT 13
MANAGEMENT'S DISCUSSION AND ANALYSIS OF OPERATIONS
Modine Manufacturing Company continued its growth momentum during
- -----------------------------------------------------------------
the fiscal year.
- ---------------
Modine Manufacturing Company continued its growth momentum during
the fiscal year ended March 31, 1995. For the fifth consecutive
year, every quarter advanced in sales, compared with the prior
year. Approximately half of the fiscal year's 36.4-percent sales
increase came from two European acquisitions that were made
towards the end of the year before. The rest of the increase was
due to strong growth across all of Modine's operations.
Operating income rose to 12.3 percent of sales in fiscal 1995,
the fourth consecutive percentage increase. Important factors in
continuation of this trend included: fixed costs spread over higher
volume; a greater proportion of sales to original-equipment
manufacturers (OEMs); continuing benefits from cost-reduction efforts;
and productivity increases.
Modine's performance was up despite the adverse impact on
operating profit from the rise in costs for two major raw
materials. Copper prices rose steadily throughout fiscal 1995,
ending up 58-percent higher than at the prior year end. After
peaking in January, aluminum was up 44 percent in March compared
with twelve months earlier. Because of the high material content
of Modine's sales, these cost changes must be passed through to
our customers, but with somewhat of a delay and, therefore, a
dampening effect on operating margins.
The company's 1994-95 revenues from its top ten customers were 35
percent of total sales, the same as the year before. No single
customer dominated. Modine's sales to its largest customer were
less than seven percent in both fiscal 1995 and 1994.
Fiscal-year sales by market
- ---------------------------
The aftermarket is still the largest of the company's major
markets. This business was 24 percent of total sales in the
latest fiscal year, down from 29 percent in 1994 despite growing
14 percent year-over-year to record levels. The expansion of
Modine's OEM sales through the European acquisitions late in
fiscal 1994 caused the decrease in the proportion of sales that
went to aftermarket customers in fiscal 1995.
Primarily selling radiators and radiator cores as replacements in
passenger-car markets, the aftermarket business benefited from a
record number of vehicles in operation as well as of those in the
prime repair age, with the bulk of these sales in North America.
Modine's European aftermarket operations saw large percentage
increases during fiscal 1995. The new Mexican and Spanish
acquisitions will boost Modine's share of the worldwide
aftermarket in this new fiscal year.
<PAGE>
The major market with the greatest percentage growth consisted of
sales to OEM customers for passenger-car and light-truck
applications. Most of the 70-percent growth year-over-year was
due to the full-year effect of fiscal 1994's acquisitions. At 22
percent of total revenues, this was Modine's second largest
market. Some of the future growth in this market will come from
new products such as the aluminum Donut oil cooler and a latent-
heat battery that would help decrease emissions by enabling
immediate warm-up of a vehicle's engine, from increased sales of
PF air-conditioning components, and from the addition of climate-
control systems for vehicles through the impending Signet
acquisition.
OEMs of medium and heavy trucks made up the third largest market
for Modine with 17 percent of total sales. Company shipments grew
48 percent during fiscal 1995, aided considerably by the full
year's sales from the earlier European acquisitions. In North
America, a new Truck Division was created by splitting the
Automotive Division in two, to better focus resources and long-
term initiatives on the specific needs of each of these important
markets. Fiscal 1995 sales were aided by another record sales
year for the large, Class-8 trucks -- up 20 percent in the United
States and Canada. The ability to offer complete heating and
cooling systems in the future will provide additional impetus to
Modine's sales growth to this market.
Modine's sales to the industrial market grew 36 percent last year
to end up at 14 percent of the company's total. The inclusion of
L,ngerer & Reich (L&R) for a full 12 months was a large factor in
the growth, although sales to most parts of this diverse market
were stronger than in the previous year. Engine manufacturers
make up part of the industrial market; and, once again, some of
the market's growth came from increased truck sales in North
America because a part of the OEM engine output goes to various
truck manufacturers.
Sales to the building-HVAC (heating, ventilating, air-
conditioning) market were up 12 percent, reversing a small
decline in fiscal 1994. A strong U.S. economy and growth in
commercial-industrial construction combined with a recovery in
sales to OEMs for residential markets to effect Modine's results.
Despite a substantial increase overall in the fiscal year, this
market made up only nine percent of total revenues because of the
higher growth in other areas. The transfer of PF technology from
vehicular to building-HVAC markets plus new sales to
international customers should bolster expansion in the future.
Modine shipments to the off-highway-equipment market grew 23
percent with essentially no help from acquisitions. This category
was eight percent of overall sales in fiscal 1995. Shipments to
OEMs of construction and agricultural equipment improved with the
help of rising economies in most Western, developed countries.
The trend toward partnerships with customers continued, with
Modine assuming more responsibility for overall cooling design in
return for long-term agreements as a supplier. Customers also
continued their trend of purchasing more assembled cooling-system
modules, which will become even more important as Modine adds
<PAGE>
expertise for entire systems. Looking to the near future, the
initial phases of off-highway emission regulations begin in the
United States in January 1996. As this progresses, it should
result in more charge-air cooling sales as well as the need for
more efficient heat exchangers.
Sales by product in fiscal 1995
- -------------------------------
As mentioned earlier, modules consisting of several different
heat exchangers are gaining importance in satisfying customer
needs. The sales of these packaged assemblies has contributed to
Modine's recent success and will likely be even more significant
in the future. Entering the complete systems business will
accelerate this trend and Modine's overall sales in coming years.
Radiator sales in fiscal 1995 were two and a half times as large
as the next biggest product category. This product line,
consisting of both complete radiators and cores, made up 42
percent of total sales, with a year-over-year growth rate of 27
percent. The proportion going to OEM customers, as opposed to the
aftermarket, rose from 41 percent in fiscal 1994 to 48 percent
last year. The increase was due to L&R operations being a part of
Modine for a longer period in fiscal 1995.
Oil coolers constituted 16 percent of Modine's latest annual
sales. The product category grew 47 percent over the prior year's
total. Donut oil coolers made up the largest single type, and
future sales will be helped by the introduction of aluminum Donut
oil coolers and expanded applications of PF oil-cooling products.
The largest percentage increase in sales came from vehicular air-
conditioning condensers and evaporators. Shipments of these
products grew 55 percent in fiscal 1995 to reach 14 percent of
Modine's overall sales. The growth stemmed from the acquisition
of Austria W,rmetauscher GmbH as well as strong increases for
products such as PF condensers.
Modine's sales of charge-air coolers benefited from the L&R
acquisition, continuing their long growth trend as a major
product line. These heat exchangers were 12 percent of total
company revenues, based on a 47-percent increase over the
previous fiscal year.
Building-HVAC products grew 12 percent year-over-year and
represented nine percent of Modine's sales, as discussed earlier
in this report.
Capital expenditures and R&D
- ----------------------------
Capital expenditures of $34.1 million in fiscal 1995 were almost
17-percent higher than the prior year. Significant investments
were made at a number of locations, including: the Logansport,
Indiana, oil-cooler plant; the Trenton, Missouri, radiator
facility; and the Clinton, Tennessee, air-conditioning-components
plant.
<PAGE>
Outstanding commitments for capital expenditures at March 31,
1995, were approximately $13.6 million. Most relate to plant
expansions, process improvements, tooling for new products, and
various new equipment. About $5.1 million of the outstanding
commitments cover facility improvements and equipment upgrades
for the L&R locations. A year earlier, there were outstanding
commitments of $5.8 million. Capital expenditures are financed
from cash generated internally.
Modine's investment in research and development grew 14.7 percent
last year to $10.9 million, due in part to the L&R acquisition.
Coordinated R&D activities are underway in Europe and North
America, giving Modine the ability to efficiently serve its
customers' needs. The acquisition of Signet Systems will bring
additional valuable capabilities including a second full-vehicle
wind tunnel.
The primary focus of R&D continues to be the development of new
or improved products and processes in order to maintain Modine's
technological leadership in the heat-transfer industry. Among 11
U.S. patents issued last year was one that extends the range of
applications for PF technology. The company now owns 790 patents
worldwide.
Other operational activities
- ----------------------------
Modine expanded its international presence last year by opening
sales offices in: Yokohama, Japan; Gdansk, Poland; and Milan,
Italy. The Uden plant in The Netherlands was restarted for the
production of vacuum-brazed aluminum products.
Subsequent to the year end, Modine acquired a plant in Granada,
Spain; signed a letter of intent to purchase an operation in
Mexico City, Mexico; and announced its intention to sell the
Dowagiac, Michigan, copper-tubing extrusion business that came as
part of an October 1990 acquisition. The anticipated purchase of
Signet Systems will add plants in Harrodsburg, Kentucky, and
G"ch, Germany, plus a sales and engineering office in Detroit,
Michigan. The company intends to finance these acquisitions
through a combination of internally generated cash, proceeds from
the sale of the copper-tubing extrusion business, and some
additional debt.
Total worldwide employment at Modine expanded 10.7 percent to
7,551 because of increased production demands that resulted from
the 36.4-percent increase in sales.
During the last fiscal year, nine Modine plants earned a total of
18 new awards from new or existing customers. Nine plants also
received 18 recertifications from eight different customers.
Three building-HVAC plants maintained product certifications from
seven agencies on nine product types.
Fourteen U.S. manufacturing facilities have individually met or
exceeded their goals from a 1991 waste minimization program. The
objective was to reduce overall waste by 65 percent by December 1995.
The companywide results as of December 1994 reached a 58.7-percent
<PAGE>
reduction and Modine expects to meet its ambitious goal. Waste-
minimization efforts continue at all plants because the programs
reduce costs as well as benefit the environment.
Accounting changes
- ------------------
In the first quarter of fiscal 1994, the company adopted FASB
Statement 109, "Accounting for Income Taxes," with a resulting
increase in earnings of $0.9 million.
The company adopted FASB 106, relating to postretirement
benefits, in the 1993 fiscal year, as explained in Note 4.
Hedging and foreign currency exchange contracts
- -----------------------------------------------
On a limited basis, the company enters into foreign-exchange options
and forward contracts on foreign currencies and copper futures as hedges
against the impact of currency and raw-material price fluctuations.
See Note 14.
Environmental matters
- ---------------------
In fiscal 1995, the company set up additional reserves of
$415,000 for a Superfund assessment and $44,000 for the estimated
total environmental cleanup cost at a specific location in Missouri.
During the prior fiscal year, the company established reserves of
$533,000 for the estimated total environmental cleanup costs to
be incurred at specified locations in California and Illinois.
During fiscal 1993, the company reached a tentative agreement with
the Federal Environmental Protection Agency to pay a penalty of $750,000
and incur other expenses to change the effluent discharge system at the
McHenry, Illinois, manufacturing facility. See Note 20.
It is likely that the company will, in the future, incur additional
charges for environmental programs relating to past operations, but such
costs at this time are unknown and indeterminable. There are no other
currently known liabilities that would have a significant effect on the
company's consolidated financial position or results of operations.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
Sales
- -----
Sales of $913.0 million were up $243.5 million or 36.4 percent.
European acquisitions made late in the prior fiscal year were major
contributors to the continuing sales growth, accounting for approximately
one-half of the percentage increase for the year. European sales results
were also positively impacted by the strengthening value of the Deutsche
mark and other European currencies against the dollar. Strong sales growth
across all of Modine's domestic and other foreign operations contributed to
the remaining sales increase.
<PAGE>
Sales for the previous fiscal year were $669.6 million, up $98.7 million
or 17.3 percent. Acquisitions made in Europe, together with significant
sales increases to truck and engine manufacturers and to the passenger-
car aftermarket, were the major contributors to the sales growth.
Sales for the fiscal year ended March 1993 were also up, by $44.3 million
or 8.4 percent, with the majority of the improvement arising from increased
penetration in the medium- and heavy-truck markets.
Gross Profit
- ------------
Gross profit margin, at 29.4 percent of sales, declined 0.9 percentage
points. Higher raw material costs in two major component metals, copper
and aluminum, contributed to a portion of the reduction, as did higher
labor cost. While improvements have been made, the gross profit margins
generated by the recently acquired companies in Europe are not at the level
generally earned domestically. The full-year effect of including these
lower margins was also a factor in the overall gross-profit percentage
decrease.
Gross profit margin in the previous fiscal year, at 30.3 percent of
sales, was up 1.2 percent, largely as a result of increased sales volume
in most markets Modine serves.
Gross profit margin in fiscal 1993, at 29.1 percent, was up from 28.6
percent, mainly due to improved volume, particularly in the truck market,
and also from increased sales for European passenger cars. Cost of sales
was impacted by a reserve for a penalty of $750,000 plus other expenses
related to an action by the U.S. Environmental Protection Agency relative
to a manufacturing plant in Illinois.
Selling, general and administrative (SG&A)
- ------------------------------------------
SG&A expenses for the year totaled $156.2 million, up $29.5 million
or 23.2 percent from the previous year. Over 75 percent of the overall
dollar increase can be attributed to the full-year impact of the two
European companies acquired in fiscal 1994. SG&A expenses continued
to trend downward as a percentage of sales, declining to 17.1 percent
from 18.9 percent of sales the year before. Ongoing sales volume
increases, together with the careful monitoring of costs, are the
primary reasons for this positive trend.
SG&A expenses for the previous year totaled $126.7 million, an $18.4-
million or 17.0-percent increase. More than half of the dollar increase
came from the European acquisitions made during the year. As a percentage
of sales, SG&A declined to 18.9 percent from 19.0 percent the prior year.
SG&A in fiscal 1993 increased by $1.8 million or 1.7 percent while
decreasing as a percentage of sales from 20.2 percent to 19.0 percent.
Income from operations
- ----------------------
Fiscal 1995 income from operations, at $112.1 million, was up 47.0
percent from the prior year. Growing sales volumes and close monitoring
of overhead costs by management contributed to the continuation of this
favorable trend.
<PAGE>
Income from operations in fiscal 1994 and 1993 were $76.2
million and $57.5 million, respectively. On a percentage basis,
the two years increased by 32.5 percent and 30.5 percent,
respectively. As in the current year, volume increases and
continuing control over cost increases were the main factors
leading to the improvements shown.
Interest expense
- ----------------
Interest expense in the last year grew by 6.2 percent. The
full-year impact of foreign-denominated borrowing made in
conjunction with the prior year's acquisitions and the declining
dollar in relation to the Deutsche mark and other European
currencies increased interest expense. These increases were
offset in part by scheduled and discretionary reductions in
domestic borrowing and by a declining European interest-rate
environment, which the company utilized to restructure certain
foreign debt arrangements.
Interest expense for each of the previous two years was $6.0
million. Although outstanding debt at the end of fiscal 1994
increased by $32.6 million, interest expense remained essentially
unchanged. Scheduled repayments of domestic debt carrying higher
interest rates offset the increase in lower-rate foreign-
denominated debt that was outstanding for only four months of the
year. In fiscal 1993, discretionary debt repayments from
available cash led to a $1.2-million reduction in interest
expense.
Other income, net
- -----------------
Other income of $3.2 million remained relatively consistent
when compared with the prior years' totals of $2.8 million and
$2.5 million. Positively influencing the current year results
were foreign-currency transaction gains recorded as the result of
the declining dollar.
Provision for income taxes
- --------------------------
In the 1994-95 fiscal year, the income-tax rate was 37.1
percent, down 3.9 percent from the 41.0-percent level before the
effect of adopting FASB 109 the year before. The main items
leading to the rate reduction were: the net utilization of
certain foreign operating-loss-carryforwards and a reduction in
foreign joint-venture dividends, which are taxed on receipt.
In the prior year, the income-tax rate before the effect of
adopting FASB 109 was 41.0 percent, up from 38.2 percent in the
previous year. The increase was caused mainly by two factors: the
one-percent increase in the U.S. federal income-tax rate and the
fact that the recent European acquisitions placed a significantly
larger portion of the company's business in foreign countries.
The net income-tax rate in fiscal 1993, before the effect of
FASB 106, was 37.7 percent, up from the previous year's 35.5
percent. The major factors driving this increase were: reduced
<PAGE>
earnings in foreign joint ventures, which are booked on an after-
tax basis; and decreased earnings in a foreign subsidiary, which
was not subject to tax because of past losses.
Change in accounting for income taxes
- -------------------------------------
In the first quarter of fiscal 1994, Modine adopted FASB 109
recognizing a gain of $0.9 million, or 3 cents per share, which
was the net impact of adopting this accounting standard.
Change in accounting for postretirement benefits other than pensions
- --------------------------------------------------------------------
Modine adopted FASB 106 (effective as of the first quarter
of fiscal 1993) to recognize an after-tax charge of $13.7
million, or 46 cents per share, for all prior years' obligations.
Net earnings before the impact of accounting changes
- ----------------------------------------------------
Net earnings were $68.4 million, or 7.5 percent of sales, up
58.8 percent from the prior year net earnings before the
accounting change. This continued the string of record-setting
years for the company and is indicative of the wide success
experienced in the domestic and foreign markets that are being
served by the company. Positive contributions by operating units
acquired in Europe the year before were also a factor
contributing to the new earnings record.
Net earnings in fiscal 1994, before the impact of the
accounting change for income taxes, were $43.1 million or 6.4
percent of sales, up $9.4 million or 27.9 percent from the
previous year. Increased sales volume was the main factor
contributing to the record results achieved during the year.
Net earnings in fiscal 1993, before the accounting change
for postretirement benefits other than pensions, were $33.7
million or 5.9 percent of sales, up $5.7 million or 20.2 percent
from the year before. Once again, the improvements were largely
the result of increased sales volume.
Net earnings after the impact of accounting changes
- ---------------------------------------------------
Net earnings were $68.4 million, up $24.5 million from the
year before. There were no accounting changes adopted during the
last year that impacted earnings.
Net earnings for the company in the previous year, after the
effect of FASB 109 (which added $0.9 million to earnings), were
$44.0 million, up $24.0 million from the previous year when
earnings were reduced by $13.7 million for FASB 106 charges.
Net earnings in fiscal 1993 after the adoption of FASB 106
were $20.0 million, down $8.0 million or 28.7 percent from a year
earlier.
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands, except per-share amounts)
<CAPTION>
- -----------------------------------------------------------------------------
For the years ended March 31 1995 1994 1993
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
Net sales $913,010 $669,553 $570,839
Cost of sales 644,753 466,575 404,942
-------- -------- --------
Gross profit 268,257 202,978 165,897
Selling, general, and administrative
expenses 156,203 126,739 108,361
-------- -------- --------
Income from operations 112,054 76,239 57,536
Interest expense (6,384) (6,009) (5,953)
Other income - net 3,157 2,796 2,522
-------- -------- --------
Earnings before income taxes 108,827 73,026 54,105
Provision for income taxes 40,385 29,935 20,418
-------- -------- --------
Earnings before cumulative effect of
accounting changes 68,442 43,091 33,687
Cumulative effect of change in
accounting for:
Income taxes -- 899 --
Postretirement benefits other
than pensions (net of income
tax benefit of $8,046) -- -- (13,700)
-------- -------- --------
Net earnings $ 68,442 $ 43,990 $ 19,987
-------- -------- --------
Earnings per share of common stock
before cumulative effect of
accounting changes $2.24 $1.41 $1.12
Cumulative effect per share of
accounting changes -- 0.03 (0.46)
-------- -------- --------
Net earnings per share of common stock $2.24 $1.44 $0.66
-------- -------- --------
Average common shares and common share
equivalents outstanding 30,534 30,471 30,164
<FN>
The notes to consolidated financial statements are an integral
part of these statements.
</TABLE>
MANAGEMENT'S DISCUSSION OF FINANCIAL POSITION
Current assets
- --------------
Cash and cash equivalents decreased by $5.8 million to $32.7
million. Sources and uses of cash are set forth in the
accompanying statement of cash flows.
Trade receivables, net of allowances for doubtful accounts,
increased by $34.9 million to $145.2 million, primarily as a
<PAGE>
result of increased sales in virtually all areas of the company's
business.
Inventories increased by $31.8 million to $136.1 million,
reflecting higher levels of inventory to support increased sales
volume, the increased cost of materials, and, to a lesser degree,
the valuation impact of the stronger European currencies on
foreign inventories.
Deferred income taxes and other current assets increased by
$7.7 million to $26.3 million, with the current deferred income-
tax change and foreign currency exchange contracts being
significant components. The foreign currency exchange contracts
are used to minimize the impact of exchange- rate movements on U.S.
trade receivables denominated in foreign currencies.
The current ratio increased slightly to 2.0 to 1 from 1.9 to 1.
Property, plant, and equipment (PP&E)
- -------------------------------------
PP&E increased by $6.9 million to $170.9 million as
expenditures for additional capacity and process improvements,
along with the increased dollar-equivalent value of overseas
assets, exceeded retirements and depreciation expense.
Investment in affiliates decreased $1.6 million, primarily
due to the company's sale of its 36-percent interest in McQuay do
Brasil.
Intangible assets increased by $2.1 million to $34.1
million, due to the increased dollar-equivalent of the foreign
portion of these assets.
Deferred charges and other noncurrent assets
- --------------------------------------------
This category increased by $4.1 million to $36.8 million,
primarily due to continuing recognition of a surplus in the
company's over-funded pension plans.
Current liabilities
- -------------------
Short-term debt increased by $2.8 million to $13.6 million,
reflecting the impact of the weaker dollar on this foreign debt.
Accounts payable increased by $18.6 million to $74.2
million, primarily due to the higher operating levels.
Accrued compensation and employee benefits increased by $4.4
million to $38.3 million, due to increased payroll tax and
vacation liabilities and additional workers' compensation reserves.
Accrued expenses and other current liabilities were up $4.1
million to $25.7 million, due primarily to the foreign currency
exchange contracts discussed above and some additional accruals
for warranties and rebates.
<PAGE>
Long-term debt
- --------------
Long-term debt decreased by $15.4 million to $62.2 million.
Net reductions in European debt along with normally scheduled and
discretionary domestic repayments were partially offset by the
$5.3-million translation impact of the stronger European
currencies on the foreign debt.
As a percent of shareholders' investment, long-term debt
declined to 20.2 percent from 30.8 percent, while total debt to
equity dropped to 28.1 percent from 39.4 percent.
Other noncurrent liabilities
- ----------------------------
Deferred income taxes increased $3.0 million to $13.0
million, due mainly to the continued recognition of the surplus
in the company's overfunded domestic pension plans and to the
recognition of certain environmental cleanup expenses from
previous years.
Other noncurrent liabilities increased by $6.3 million to
$37.1 million, primarily for the reclassification of unfunded
pensions at the company's foreign operations and the effect of
the exchange-rate changes.
Shareholders' investment
- ------------------------
Total shareholders' investment, at $308.3 million, increased
by $56.5 million with the major change being in retained
earnings, which benefited from net earnings of $68.4 million less
dividends paid of $15.4 million.
The foreign currency translation adjustment increased $5.0
million to $5.2 million as the effect of the stronger European
and Japanese currencies on net assets in those areas more than
offset declines associated with net assets in Mexico.
The treasury shares category increased by $3.1 million to
$16.7 million, although the total number of treasury shares on
hand dropped from 718,000 to 642,000, due to the higher average
cost of stock acquired.
Book value per share increased by $1.88 during the year to
$10.38 and has grown at a 10.9-percent compound annual rate since
fiscal 1985.
<PAGE>
<TABLE>
CONSOLIDATED BALANCE SHEETS
(In thousands, except per-share amounts)
<CAPTION>
- ------------------------------------------------------------------------
March 31 1995 1994
- ------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 32,691 $ 38,523
Trade receivables, less allowance for
doubtful accounts of $6,424 and $4,896 145,231 110,282
Inventories 136,114 104,323
Deferred income taxes and other current assets 26,346 18,610
-------- --------
Total current assets 340,382 271,738
-------- --------
Other assets:
Property, plant, and equipment - net 170,872 163,962
Investment in affiliates 8,016 9,593
Intangible assets _ net 34,090 31,946
Deferred charges and other noncurrent assets 36,827 32,742
-------- --------
Total other assets 249,805 238,243
-------- --------
Total assets $590,187 $509,981
======== ========
<PAGE>
<CAPTION>
Liabilities and shareholders' investment
<S> <C> <C>
Current liabilities:
Short-term debt $ 13,565 $ 10,785
Long-term debt _ current portion 10,853 10,796
Accounts payable 74,194 55,567
Accrued compensation and employee benefits 38,285 33,923
Income taxes 7,004 7,157
Accrued expenses and other current liabilities 25,748 21,633
-------- --------
Total current liabilities 169,649 139,861
-------- --------
Other liabilities:
Long-term debt 62,220 77,646
Deferred income taxes 12,958 9,986
Other noncurrent liabilities 37,088 30,743
-------- --------
Total other liabilities 112,266 118,375
-------- --------
Total liabilities 281,915 258,236
-------- --------
Shareholders' investment:
Preferred stock, $0.025 par value,
authorized 16,000 shares, issued - none -- --
Common stock, $0.625 par value, authorized
80,000 shares, issued 30,342 shares 18,964 18,964
Additional paid-in capital 7,897 6,457
Retained earnings 296,614 243,606
Foreign currency translation adjustment 5,159 186
Treasury stock at cost: 642 and 718 common
shares (16,669) (13,598)
Restricted stock - unamortized value (3,693) (3,870)
-------- --------
Total shareholders' investment 308,272 251,745
-------- --------
Total liabilities and shareholders'
investment $590,187 $509,981
======== ========
<FN>
The notes to consolidated financial statements are an integral
part of these statements.
</TABLE>
MANAGEMENT'S DISCUSSION OF CASH FLOWS
Net cash provided by operating activities
- -----------------------------------------
Cash flows from operating activities were $67.0 million,
down $8.3 million from the previous year. While earnings adjusted
for noncash items were up $33.3 million, working-capital items
required $36.3 million to cover the increased business level, as
opposed to last year's net drop in working-capital items of $5.3
million. The preponderance of the additional working-capital
requirements were to support U.S. operations.
<PAGE>
The largest change among working-capital items was an
increase in trade receivables of $31.5 million, which was
essentially a function of increased sales volume. Inventories
increased by $26.9 million as a result of increased levels needed
to support higher sales volumes and higher material costs. These
increases were partially offset by an increase in accounts
payable of $16.9 million, also as a result of the much higher
operating level than in the previous year, and increased accrued
expenses and other current liabilities of $7.7 million.
Cash flows from operating activities in the previous year
were $75.2 million, up $11.5 million. The most significant
changes were the increased earnings and net working-capital
contributions, primarily from inventory reductions of $9.6
million and accounts payable increases of $7.6 million, partially
offset by a trade receivables increase of $14.3 million.
In fiscal 1993, cash flows from operating activities were
$63.7 million, up $18.0 million. The adoption of FASB 106
affected earnings but did not reduce cash flows. Working capital
items contributed almost $2.8 million, due primarily to increases
in current liabilities, partially offset by inventory increases.
Capital expenditures
- --------------------
Capital expenditures were $34.1 million, up $5.0 million
from the prior year, reflecting capacity expansions and process
improvements, with an increasing emphasis on overseas locations.
Capital expenditures in the prior fiscal year were $29.2
million, up $5.6 million, reflecting building expansions and new
equipment.
In fiscal 1993, capital expenditures were $23.6 million, up
$6.7 million from one year earlier, as a result of several plant
expansions.
Acquisitions and investments in affiliates
- ------------------------------------------
The company disposed of its 36-percent interest in McQuay do
Brasil during fiscal 1995 for $1.5 million and incurred
additional costs of $0.3 million related to the prior year's
acquisitions.
During the prior year, the company made two acquisitions:
the purchase of a 100-percent interest in a German limited
partnership, L,ngerer & Reich, and purchase of the remaining 50-
percent interest from the company's partner in a joint-venture
company, Austria W,rmetauscher GmbH, for a combined net cash
price of $18.9 million. See Note 10.
Changes in debt: short- and long-term
- -------------------------------------
In the last year, the company made $9.8 million in scheduled
and $2.4 million in discretionary repayments of domestic long-
term debt. Approximately $9.5 million of foreign denominated long-
<PAGE>
term debt was converted to short-term debt, nearly equaling other
foreign short-term debt that was repaid during the year. Other
foreign long-term debt of $2.4 million was repaid while $3.4
million in new foreign debt was obtained.
During the prior year, the company borrowed $32.1 million to
repay acquired debt in Germany that had higher interest rates and
to increase its debt capacity. In addition, the company made
scheduled repayments of long-term debt totaling $9.8 million.
In fiscal 1993, overall debt was reduced by $11.8 million
(net), primarily as a result of discretionary debt repayments
from available cash.
Treasury stock
- --------------
During the year, $9.9 million was expended to acquire an
additional 336,000 treasury shares; 412,000 shares were used to
satisfy requirements for stock options, stock awards, and
employee stock purchase plans.
During fiscal 1994, $6.8 million was expended to acquire
264,000 treasury shares. The company used 349,000 as required for
stock options, stock awards, and employee stock-purchase plans.
The company expended $5.3 million in fiscal 1993 for the
purchase of 155,000 shares while using 243,000 shares for stock
options, stock awards, and employee stock-purchase plans. In
addition, an adjustment for the stock split, in the form of a 100-
percent stock dividend, increased treasury shares by 398,000.
Dividends paid
- --------------
Dividends were $15.4 million, representing a rate of 52
cents per share. An increase of 6 cents per share was effective
in May 1994.
Modine paid dividends of $13.6 million during the prior year
at the rate of 46 cents per share. An increase of four cents per
share was effective in May 1993.
Dividends paid in fiscal 1993 totaled $12.4 million, which
represented a rate of 42 cents per share after adjustment for the
two-for-one stock split in February 1993. The rate had been
increased by an adjusted four cents per share in May 1992.
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
<CAPTION>
- ------------------------------------------------------------------------------
For the years ended March 31 1995 1994 1993
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings $ 68,442 $43,990 $19,987
Adjustments to reconcile net earnings with
cash provided by operating activities:
Depreciation and amortization 34,482 28,114 25,549
Pensions (2,130) (2,581) (2,706)
Other postretirement benefits (169) 183 1,519
Deferred income taxes (241) (3,474) 660
Undistributed earnings of affiliates (1,301) (221) (790)
Loss from disposition of property, plant,
and equipment 487 1,017 232
Provision for losses on accounts receivable 1,375 1,267 1,135
Cumulative effect of accounting changes 0 (899) 13,700
Other - net 2,343 2,523 1,694
-------- ------- -------
103,288 69,919 60,980
-------- ------- -------
Change in operating assets and liabilities
excluding acquisitions:
Trade receivables (31,519) (14,328) (1,056)
Inventories (26,928) 9,560 (5,192)
Deferred income taxes and other current
assets (4,225) (2,807) 711
Accounts payable 16,895 7,640 2,102
Accrued compensation and employee benefits 2,094 3,916 1,480
Income taxes (327) 3,338 4,247
Accrued expenses and other current
liabilities 7,685 (1,996) 465
-------- ------- -------
Net cash provided by operating activities 66,963 75,242 63,737
-------- ------- -------
Cash flows from investing activities:
Expenditures for property, plant, and
equipment (34,101) (29,150) (23,575)
Acquisitions, net of cash acquired (254) (18,918) --
Investments in affiliates 1,500 -- --
Proceeds from dispositions of assets 1,118 1,057 196
(Increase) in deferred charges and other
noncurrent assets (1,053) (851) (633)
Other - net (52) 8 19
-------- ------- -------
Net cash (used for) investing activities (32,842) (47,854) (23,993)
-------- ------- -------
<PAGE>
<S> <C> <C> <C>
Cash flows from financing activities:
(Decrease)/increase in short-term debt - net (499) 3,736 (253)
Additions to long-term debt 3,392 33,158 2,475
Reductions of long-term debt (24,053) (42,472) (14,009)
Issuance of common stock, including treasury
stock 5,607 4,194 4,383
Purchase of treasury stock (9,946) (6,798) (5,331)
Cash dividends paid (15,434) (13,597) (12,351)
Other - net (279) (565) 246
-------- ------- -------
Net cash (used for) financing activities (41,212) (22,344) (24,840)
-------- ------- -------
Effect of exchange-rate changes on cash 1,259 (104) (113)
-------- ------- -------
Net (decrease)/increase in cash and cash
equivalents (5,832) 4,940 14,791
Cash and cash equivalents at beginning of year 38,523 33,583 18,792
-------- ------- -------
Cash and cash equivalents at end of year $ 32,691 $38,523 $33,583
======== ======= =======
Cash paid during the year for:
Interest, net of amounts capitalized $ 6,276 $ 5,534 $ 5,991
Income taxes $ 39,120 $29,306 $14,904
<FN>
The notes to consolidated financial statements are an integral
part of these statements.
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' INVESTMENT
(In thousands, except per-share amounts)
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
Foreign Restricted
For the years Additional currency Treasury stock stock-
ended March 31, Common Stock paid-in Retained translation at cost unamortized
1995, 1994, and 1993 shares amount capital earnings adjustment shares amount value
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, March 31, 1992 15,171 $ 9,482 $13,318 $205,577 $1,656 (493) $(11,714) $(3,316)
Net earnings -- -- -- 19,987 -- -- -- --
Cash dividends, $0.42 per
share -- -- -- (12,351) -- -- -- --
Purchase of treasury
stock -- -- -- -- -- (155) (5,331) --
Stock options and awards
including related tax
benefits -- -- 298 -- -- 162 3,639 (1,332)
Employee stock purchase
and ownership plans -- -- 1,083 -- -- 81 1,600 --
Foreign currency trans-
lation adjustment -- -- -- -- (296) -- -- --
Amortization of deferred
compensation under
restricted stock
plans -- -- -- -- -- -- -- 813
Stock split in the form
of a 100% dividend 15,171 9,482 (9,482) -- -- (398) -- --
------ ------- ------- -------- ------ ---- -------- -------
Balance, March 31, 1993 30,342 18,964 5,217 213,213 1,360 (803) (11,806) (3,835)
------ ------- ------- -------- ------ ---- -------- -------
Net earnings -- -- -- 43,990 -- -- -- --
Cash dividends, $0.46 per
share -- -- -- (13,597) -- -- -- --
Purchase of treasury
stock -- -- -- -- -- (264) (6,798) --
Stock options and awards
including related tax
benefits -- -- 64 -- -- 266 3,914 (987)
Employee stock purchase
and ownership plans -- -- 1,176 -- -- 83 1,092 --
Foreign currency trans-
lation adjustment -- -- -- -- (1,174) -- -- --
Amortization of deferred
compensation under
restricted stock
plans -- -- -- -- -- -- -- 952
------ ------- ------- -------- ------ ---- -------- -------
Balance, March 31, 1994 30,342 18,964 6,457 243,606 186 (718) (13,598) (3,870)
------ ------- ------- -------- ------ ---- -------- -------
<PAGE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net earnings -- -- -- 68,442 -- -- -- --
Cash dividends, $0.52
per share -- -- -- (15,434) -- -- -- --
Purchase of treasury
stock -- -- -- -- -- (336) (9,946) --
Stock options and awards
including related
tax benefits -- -- (79) -- -- 294 5,211 (851)
Employee stock purchase
and ownership plans -- -- 1,519 -- -- 118 1,664 --
Foreign currency trans-
lation adjustment -- -- -- -- 4,973 -- -- --
Amortization of deferred
compensation under
restricted stock
plans -- -- -- -- -- -- -- 1,028
------ ------- ------- -------- ------ ---- -------- -------
Balance, March 31, 1995 30,342 $18,964 $ 7,897 $296,614 $5,159 (642) $(16,669) $(3,693)
------ ------- ------- -------- ------ ---- -------- -------
<FN>
The notes to consolidated financial statements are an integral
part of these statements.
</TABLE>
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Significant accounting policies
-------------------------------
Consolidation principles: The consolidated financial
------------------------
statements include the accounts of Modine Manufacturing Company
and its wholly owned subsidiaries. Intercompany transactions and
balances have been eliminated. Operations of affiliates and
subsidiaries outside North America are included for periods
ending one month prior to the company's year end in order to
ensure timely preparation of the consolidated financial statements.
Investments in 20-percent- to 50-percent-owned affiliates, consisting
primarily of a 50-percent ownership in Nikkei Heat Exchanger Company,
Ltd., and a 43-percent ownership in Radinam S.A., are accounted for by
the equity method. The investments are stated at cost plus a
proportionate share of the undistributed net income. The
company's share of undistributed net income is reflected in net
earnings.
Translation of foreign currencies: Assets and liabilities
---------------------------------
of foreign subsidiaries and equity investments are translated
into U.S. dollars at year-end exchange rates and income and
expense items are translated at the average exchange rates for
the year. Resulting translation adjustments are reported
as a separate component of shareholders' investment. Translation
adjustments relating to countries with highly inflationary
economies and foreign currency transaction gains or losses are
included in net earnings.
Financial instruments: Foreign exchange options and forward
---------------------
contracts on foreign currencies and copper futures are entered
into by the company as hedges against the impact of currency and
raw material price fluctuations and are not used to engage in
speculation. Gains and losses are recognized when these
instruments are settled.
Postemployment benefits: The company adopted Financial
-----------------------
Accounting Standards Board (FASB) Statement No. 112, "Employers'
Accounting for Postemployment Benefits," in fiscal 1995. This
statement requires recognition of the cost of certain post-
employment benefits after employment but before retirement on
an accrual basis during the years that employees earn the
benefits. Implementation of this statement did not have
a material impact on the company's financial conditions or
results of operations.
Postretirement benefits other than pensions: In fiscal 1993,
-------------------------------------------
the company adopted FASB Statement No. 106, "Employers'
Accounting for Postretirement Benefits Other than Pensions."
Under this standard, the company is required to accrue the
estimated cost of retiree benefits, other than pensions, during
the employees' active service periods. The company previously
<PAGE>
recognized the cost of these health-care and life-insurance
benefits as claims were paid. The change did not affect cash flow.
Income taxes: The company adopted FASB Statement No. 109,
------------
"Accounting for Income Taxes," effective as of the beginning of
fiscal 1994. Deferred tax liabilities and assets are determined
based on the difference between the amounts reported in the
financial statement and the tax bases of assets and liabilities
using current statutory tax rates.
Cash equivalents: For purposes of the cash flows
----------------
statement, the company considers all highly liquid investments
with a maturity of three months or less to be cash equivalents.
Inventories: Inventories are valued at the lower of cost, on
-----------
a first-in, first-out basis, or market value.
Property, plant, and equipment: These assets are
------------------------------
stated at cost. Depreciation is provided using, principally, declining-
balance methods for machinery and equipment, and the straight-line
method for buildings and other assets over their expected useful lives.
Maintenance and repair costs are charged to earnings as incurred. Costs
of improvements are capitalized. Upon the sale or other disposition of
an asset, the cost and related accumulated depreciation are removed from
the accounts and the gain or loss is included in net earnings.
Intangible assets: The excess of cost over fair value of the net
-----------------
assets of businesses acquired is amortized using the straight-line method
over periods expected to be benefited (currently up to forty years). Costs
of acquired patents and product technology are amortized using the straight-
line method over the shorter of their estimated useful life or 15 years.
Per-share data: All share and per-share information has been restated,
--------------
where appropriate, to reflect the two-for-one stock split (in the form of
a 100-percent common-stock dividend) that was effective February 19, 1993.
2. Research and development costs
------------------------------
Research and development costs charged to operations totaled $10,907,000
in fiscal 1995, $9,509,000 in fiscal 1994, and $8,653,000 in fiscal 1993.
3. Pension plans
-------------
Domestic qualified defined-benefit plans: The company has several
noncontributory, defined-benefit, pension plans that cover most of its
domestic employees. The benefits provided are based primarily on years of
service and average compensation for the salaried plans and on a monthly
retirement benefit amount for the hourly plans. Funding policy for domestic
qualified plans is to contribute annually not less than the minimum required
by applicable law and regulation, nor more than the maximum amount that can
be deducted for federal income-tax purposes.
<PAGE>
Net pension credits, computed using the projected unit credit method,
include the following components:
(In thousands)
- ------------------------------------------------------------------------
Years ended March 31 1995 1994 1993
- ------------------------------------------------------------------------
Benefits earned during the year $ 3,532 $ 3,238 $ 2,595
Interest accrued on benefits earned
in prior years 5,978 5,419 4,968
Actual return on assets (21,470) (15,124) (10,735)
Net amortization and deferral 9,209 4,114 700
- ------------------------------------------------------------------------
Net pension (credit) $(2,751) $(2,353) $(2,472)
- ------------------------------------------------------------------------
Actuarial assumptions:
Discount rate (to calculate present
value of future benefits) 7.5% 7.5% 8.5%
Average salary-growth rate 5.5% 5.5% 5.5%
Return on plan assets 9.0% 9.0% 9.0%
- ------------------------------------------------------------------------
Funded status of the plans at March 31, 1995 and 1994:
(In thousands)
- ------------------------------------------------------------------------
Assets exceed Accumulated
accumulated benefits
March 31, 1995 benefits exceed assets
- ------------------------------------------------------------------------
Actuarial present value of benefit
obligations:
Vested $(56,120) $(1,204)
Nonvested (5,674) (395)
-------- -------
Accumulated benefit obligation (61,794) (1,599)
Effect of projected salary increases (22,853) --
-------- -------
Projected benefit obligation (84,647) (1,599)
Less: Plan assets at fair value 150,931 1,388
-------- -------
Plan assets in excess of/(less than)
projected benefit obligation 66,284 (211)
Adjusted for items not yet recognized
in earnings:
Unrecognized net benefit
(asset)/obligation remaining from
initial adoption of FASB Statement
No. 87 (2,348) (17)
Effect of benefit changes on
prior years' service cost 811 312
Remaining unrecognized net (gain)/loss (30,296) 430
Adjustment to recognize minimum liability -- (725)
-----------------------------------------------------------------------
Prepaid/(accrued) pension expense
included in balance sheets $ 34,451 $ (211)
- ------------------------------------------------------------------------
<PAGE>
(In thousands)
- ------------------------------------------------------------------------
Assets exceed Accumulated
accumulated benefits
March 31, 1994 benefits exceed assets
- ------------------------------------------------------------------------
Actuarial present value of
benefit obligations:
Vested $(51,870) $(1,076)
Nonvested (4,832) (149)
-------- -------
Accumulated benefit obligation (56,702) (1,225)
Effect of projected salary increases (20,092) --
-------- -------
Projected benefit obligation (76,794) (1,225)
Less: Plan assets at fair value 131,217 1,174
-------- -------
Plan assets in excess of/(less than)
projected benefit obligation 54,423 (51)
Adjusted for items not yet recognized
in earnings:
Unrecognized net benefit
(asset)/obligation remaining
from initial adoption of
FASB Statement No. 87 (4,222) 4
Effect of benefit changes on
prior years' service cost 1,349 120
Remaining unrecognized net (gain)/loss (21,154) 321
Adjustment to recognize minimum liability -- (445)
- ------------------------------------------------------------------------
Prepaid/(accrued) pension expense
included in balance sheets $ 30,396 $ (51)
- ------------------------------------------------------------------------
As of March 31, 1995 and 1994, the plans held 2,315,000 and
2,476,000 shares, respectively, of Modine common stock.
Defined-benefit plans of foreign subsidiaries: The company's recently
---------------------------------------------
acquired foreign subsidiaries have defined-benefit plans and/or termination
indemnity plans covering substantially all of their eligible employees. The
benefits under these plans are based on years of service and final average
compensation levels. Funding is limited to statutory requirements.
(In thousands)
- ------------------------------------------------------------------------
Year ended March 31 1995 1994
- ------------------------------------------------------------------------
Expense recognized $ 705 $ 134
Accumulated benefit obligation 10,351 7,616
Projected benefit obligation 11,290 8,303
Fair value of plan assets -- --
- ------------------------------------------------------------------------
Actuarial assumptions:
Discount rate (to calculate present
value of future benefits) 7.5% 7.5%
Average salary-growth rate 3.0%-5.5% 3.0%-5.5%
- ------------------------------------------------------------------------
<PAGE>
4. Postretirement benefits other than pensions
-------------------------------------------
The company and certain of its domestic subsidiaries provide selected
healthcare and life-insurance benefits for retired employees. Designated
employees may become eligible for those benefits when they retire.
In March 1993, the company adopted FASB Statement No. 106, "Employers'
Accounting for Postretirement Benefits Other Than Pension," retroactive to
April 1, 1992. This changed the company's accounting for those unfunded
postretirement benefits other than pensions from a cash to an accrual
basis, which recognizes the expected cost of providing those benefits
during the years employees render service. It also requires recognition
of the obligation owed to current and retired employees as of the effective
date of adoption. Adoption of the standard did not affect cash flow.
The company elected to recognize the full accumulated benefit
obligation at April 1, 1992, of $21,746,000 ($13,700,000 after tax,
or $0.46 per share) in fiscal 1993 earnings.
Postretirement benefit expense:
(In thousands)
- -----------------------------------------------------------------------
Year ended March 31 1995 1994 1993
- -----------------------------------------------------------------------
Service cost $ 214 $ 306 $ 769
Interest cost 1,202 1,318 1,812
Net amortization (657) (439) _
- -----------------------------------------------------------------------
Net periodic postretirement
benefit cost $ 759 $1,185 $2,581
- -----------------------------------------------------------------------
Postretirement benefit liability:
(In thousands)
- -----------------------------------------------------------------------
March 31 1995 1994
- -----------------------------------------------------------------------
Accumulated postretirement benefit obligation:
Retirees $12,157 $11,165
Fully eligible active plan
participants 1,794 3,049
Other active plan participants 2,858 4,464
Total accumulated postretirement benefit
obligation 16,809 18,678
Net gains/(losses) 1,069 763
Unamortized net reduction in obligation 5,365 4,006
- -----------------------------------------------------------------------
Accrued postretirement benefit
obligation $23,243 $23,447
- -----------------------------------------------------------------------
The accumulated postretirement benefit obligation declined at April 1,
1993, due to an amendment of certain of the company's retiree medical
coverage programs. An annual limit on the company's liability (a "cap")
was established that maximizes future costs at 200 percent of fiscal 1993
costs. The effect of this is being amortized as an offset to expense in
fiscal 1994 and in future years. The obligation was further reduced as a
result of comparable benefit limitations negotiated during fiscal 1994.
<PAGE>
This reduction is being amortized as an offset to expense in fiscal 1995
and also in future years.
The discount rate used in determining the accumulated postretirement
benefit obligation was 7.5 percent at March 31, 1995, 7.5 percent at
March 31, 1994, and 8.5 percent at March 31, 1993. The projected healthcare
costs trend rate used was 11 percent for fiscal 1995, 12 percent for fiscal
1994, and 13 percent for fiscal 1993, trending down gradually to 5 percent
over several years. The effects of these assumption changes on accrued
postretirement benefit cost and related expense are being amortized in
fiscal 1994 and in coming years.
The healthcare cost trend rate assumption has a significant effect on
the amounts reported. Increasing the assumed healthcare cost trend rates by
one percentage point in each year would have increased the accumulated
postretirement benefit obligation by $1,154,000 as of March 31, 1995, and
the net periodic postretirement benefit cost for fiscal 1995 by $70,000.
5. Leases
------
The company leases various facilities and equipment. Rental expense
under operating leases totaled $10,750,000 in fiscal 1995, $5,540,000 in
fiscal 1994, and $4,437,000 in fiscal 1993.
Future minimum rental commitments at March 31, 1995, under
noncancelable leases were:
Year ended March 31 (In thousands)
- ------------------------------------------------------------------------
1996 $8,188 1999 $ 1,735
1997 5,184 2000 1,291
1998 3,007 2001 and beyond 1,155
- ------------------------------------------------------------------------
Total future minimum rental commitments $20,560
- ------------------------------------------------------------------------
6. Income taxes
------------
The company adopted FASB Statement No. 109 effective April 1, 1993.
The cumulative effect of the adoption was to increase net income for the
fiscal year ended March 31, 1994, by $899,000.
Income-tax expense attributable to income from operations consists of:
(In thousands)
- -------------------------------------------------------------------------
Years ended March 31 1995 1994 1993
- -------------------------------------------------------------------------
Federal:
Current $32,745 $27,355 $17,608
Deferred (748) (3,720) (7,275)
State 6,203 4,371 1,280
Foreign:
Current 1,678 1,234 870
Deferred 507 (204) (111)
- --------------------------------------------------------------------------
Totals charged to earnings $40,385 $29,036 $12,372
- --------------------------------------------------------------------------
<PAGE>
Income-tax expense attributable to income from operations
differed from the amounts computed by applying the statutory U.S.
federal income-tax rate as a result of the following:
- -------------------------------------------------------------------------
Years ended March 31 1995 1994 1993
- -------------------------------------------------------------------------
Statutory federal tax 35.0% 35.0% 34.0%
State taxes, net of federal benefit 3.4 3.6 2.6
Taxes on non-U.S. earnings and losses (0.6) 2.3 --
Other (0.7) (1.1) 1.6
- -------------------------------------------------------------------------
Effective tax rate 37.1% 39.8% 38.2%
- -------------------------------------------------------------------------
The significant components of deferred income-tax expense
attributable to income from operations are as follows:
(In thousands)
- -------------------------------------------------------------------------
Years ended March 31 1995 1994 1993
- -------------------------------------------------------------------------
Pensions $1,591 $ 1,383 $ 1,355
Depreciation (754) (722) 123
Inventories (465) 389 917
Employee benefits (976) (1,892) (8,806)
Other 363 (3,082) (975)
- -------------------------------------------------------------------------
Totals charged to earnings $ (241) $(3,924) $(7,386)
- -------------------------------------------------------------------------
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities are as
follows:
(In thousands)
- -------------------------------------------------------------------------
March 31 1995 1994
- -------------------------------------------------------------------------
Deferred tax assets:
Accounts receivable $ 1,970 $ 1,420
Inventories 3,401 2,677
Employee benefits 16,951 15,655
Net operating-loss and tax-credit
carry-forwards 2,783 3,576
Environmental 131 1,741
Other 3,884 2,258
------- -------
Total gross deferred assets 29,120 27,327
Less valuation allowance 2,782 3,390
------- -------
Net deferred tax assets 26,338 23,937
Deferred tax liabilities:
Pension 13,918 11,957
Plant and equipment 8,369 8,751
Other 1,522 720
------- -------
Total gross deferred tax liabilities 23,809 21,428
- ------------------------------------------------------------------------
Net deferred tax asset $ 2,529 $ 2,509
- ------------------------------------------------------------------------
<PAGE>
The valuation allowance for deferred tax assets as of April 1,
1994, was $3,390,000. The valuation allowance decreased by $608,000
for the year ended March 31, 1995.
At March 31, 1995, the company had net foreign-tax-credit
carry-forwards for federal income-tax purposes of approximately
$481,000, of which $206,000 expire in 1996, $66,000 expire in
1997, $54,000 expire in 1998, and $155,000 expire in 1999.
The undistributed earnings of certain foreign subsidiaries
and joint-venture companies totaled $26,428,000 as of March 31,
1995. The earnings are considered permanently reinvested in
foreign operations and, therefore, no provision has been made
for any U.S. taxes.
7. Cash and cash equivalents
-------------------------
Under the company's cash management system, certain cash
balances reflect credit balances to the extent that checks written
have not yet been presented for payment. These credit balances,
included in accounts payable, were approximately $9,657,000,
$3,383,000, and $2,686,000 at March 31, 1995, 1994, and 1993,
respectively.
All the short-term investments at March 31, 1995, 1994, and
1993, were of a duration of less than three months and were treated
as cash equivalents, which approximate fair value.
8. Inventories
-----------
Inventories include:
(In thousands)
- ------------------------------------------------------------------------
March 31 1995 1994
- ------------------------------------------------------------------------
Raw materials $ 37,279 $ 27,952
Work in process 40,879 32,066
Finished goods 57,956 44,305
- ------------------------------------------------------------------------
Total inventories $136,114 $104,323
- ------------------------------------------------------------------------
<PAGE>
9. Property, plant, and equipment
------------------------------
Property, plant, and equipment is composed of:
(In thousands)
- ------------------------------------------------------------------------
March 31 Depreciable lives 1995 1994
- ------------------------------------------------------------------------
Land -- $ 4,568 $ 4,942
Buildings and improvements 10-40 years 100,640 91,384
Machinery and equipment 3-12 years 218,229 195,530
Office equipment 5-14 years 31,409 26,974
Transportation equipment 3-7 years 11,422 10,798
Construction in progress -- 20,250 16,958
-------- --------
386,518 346,586
-------- --------
Less accumulated depreciation 215,646 182,624
- ------------------------------------------------------------------------
Net property, plant, and equipment $170,872 $163,962
- ------------------------------------------------------------------------
Depreciation expense was $31,410,000, $25,429,000, and $23,989,000
for the fiscal years ended 1995, 1994, and 1993, respectively.
10. Acquisitions
------------
In the third quarter of fiscal 1994, the company acquired,
through its wholly owned subsidiary Modine GmbH, the entire
equity interest in Heinrich L,ngerer Verwaltungsgesellschaft mbH
and L,ngerer & Reich GmbH & Co. (collectively "L,ngerer & Reich")
and certain specified liabilities. The acquisition includes
plant, equipment, and certain real property located in
Pliezhausen, Germany, and the equipment and leasehold interest in
certain real property located in Filderstadt-Bernhausen, Germany.
The acquisition also includes the equity interest held by
L,ngerer & Reich in Hungaro L,ngerer Gepjarmutechnikai Kft., a
Hungarian joint venture. The Filderstadt-Bernhausen operation
manufactures copper/brass and aluminum heat exchangers for the
truck, bus, and industrial markets and also includes research and
development and administrative facilities. The Pliezhausen operation
manufactures aluminum heat exchangers for the passenger-car market.
In the fourth quarter of fiscal 1994, the company acquired
its partner's (Austria Metall AG) 50-percent ownership in the
joint venture company Austria W,rmetauscher GmbH (AWG). The AWG
facility, located in Berndorf, Austria, manufactures aluminum air-
conditioning condensers and oil coolers for a number of European
auto makers.
In both instances, the company intends to continue to use
the plants, machinery and equipment, and other assets acquired
for the manufacture of heat-transfer products. The combined
adjusted cash-purchase price of the acquisitions totaled
$20,012,000 and was paid for with cash provided by operations.
<PAGE>
Goodwill acquired in the acquisitions was $17,648,000 and is
being amortized over 15 years on a straight-line basis.
The results of operations of L,ngerer & Reich and AWG are
included in the consolidated financial statements since the
respective effective dates of acquisition, using a one-month
delay, consistent with the company's policy for reporting
overseas operations. Both of the acquisitions have been accounted
for using the purchase method. The company used the equity method
to account for its interest in AWG prior to majority ownership.
Details of businesses acquired in purchase transactions were
as follows:
(In thousands)
- ----------------------------------------------------------------------
Year ended March 31 1994
- ----------------------------------------------------------------------
Value of assets acquired, including intangibles,
excluding cash acquired of $840 $83,954
Liabilities assumed and created (62,069)
Equity investment in affiliates (2,713)
- ----------------------------------------------------------------------
Net cash paid for acquisitions $19,172
- ----------------------------------------------------------------------
The pro forma financial information is presented for
informational purposes only and does not necessarily reflect the
results of operations that would have occurred had the L,ngerer &
Reich acquisition taken place on the date assumed below, nor are
those results necessarily indicative of the results of future
combined operations. Excluded from the pro forma information
presented are the expected one-time costs of approximately
$2,600,000, or $1,300,000 after tax, to restructure the sales
representative network of L,ngerer & Reich. The AWG acquisition
did not have a material effect on the consolidated results of
operations and, accordingly, pro forma information is not
presented in the following table.
On a pro-forma basis, the unaudited consolidated results of
operations for fiscal 1994, and 1993, if Langerer &
Reich had been acquired on April 1, 1992, are as follows:
(Dollars in thousands, except per-share amounts)
- -----------------------------------------------------------------------
Year ended March 31 (unaudited) 1994 1993
- -----------------------------------------------------------------------
Net sales $746,470 $699,221
Earnings before cumulative effect of
accounting changes and nonrecurring charges 38,804 27,668
Net earnings before nonrecurring charges 39,703 13,968
Net earnings per share of common stock
before cumulative effects of accounting
changes and nonrecurring charges $1.27 $0.92
Net earnings per share of common stock before
nonrecurring charges 1.30 0.46
- -----------------------------------------------------------------------
<PAGE>
Subsequent to the fiscal year end, in April 1995, the
company announced its intent to acquire the business and assets
of the Signet Systems Division of The Equion Corporation. Signet
Systems, a supplier of climate-control systems and components to
vehicular markets in North America and Europe, is based in
Harrodsburg, Kentucky.
11. Intangible assets
-----------------
Intangibles include:
(In thousands)
- -------------------------------------------------------------------------
March 31 1995 1994
- -------------------------------------------------------------------------
Goodwill $29,335 $25,004
Patents and product technology 8,389 8,296
Other intangibles 3,930 3,706
------- -------
41,654 37,006
Less accumulated amortization 7,564 5,060
- -------------------------------------------------------------------------
Net intangible assets $34,090 $31,946
- -------------------------------------------------------------------------
Amortization expense for intangible assets was $2,044,000,
$1,733,000, and $890,000 for the fiscal years ended 1995, 1994,
and 1993, respectively.
12. Deferred charges and other noncurrent assets
--------------------------------------------
Deferred charges and other noncurrent assets include:
(In thousands)
- -------------------------------------------------------------------------
March 31 1995 1994
- -------------------------------------------------------------------------
Prepaid pension costs --
qualified and non-qualified plans $35,404 $31,297
Other noncurrent assets 1,423 1,445
- -------------------------------------------------------------------------
Total deferred charges and other
noncurrent assets $36,827 $32,742
- -------------------------------------------------------------------------
<PAGE>
13. Indebtedness
------------
Long-term debt at March 31, 1995 and 1994, includes:
(In thousands)
- ------------------------------------------------------------------------------
Fiscal
Interest rate at year of
Type of issue March 31, 1995 maturity 1995 1994
- ------------------------------------------------------------------------------
Denominated in
U.S. dollars:
Fixed rate -
Notes and other debt 9.25%-9.70% 1998 $28,400 $37,800
Weighted average
interest rate
March 31, 1995 9.32%
Revenue bonds 5.00%-7.50% 1996-2003 2,531 2,907
Weighted average
interest rate
March 31, 1995 7.47%
Variable rate --
Note 6.85% 1997 1,500 3,900
Revenue bonds 4.15%-4.50% 2008-2016 5,940 5,940
Weighted average
interest rate
March 31, 1995 4.32%
Denominated in foreign
currency:
Fixed rate -
notes and other debt 5.13%-11.00% 1996-2006 637 4,754
Weighted average
interest rate
March 31, 1995 7.24%
Variable rate -
notes and other debt 4.375%-6.00% 1997-2001 34,065 33,135
------- -------
Weighted average
interest rate
March 31, 1995 5.50%
73,073 88,436
Capital lease obligation -- 6
------- -------
73,073 88,442
Less current portion 10,853 10,796
- ------------------------------------------------------------------------------
Total $62,220 $77,646
- ------------------------------------------------------------------------------
In conjunction with the acquisition of L,ngerer & Reich, Modine
refinanced existing debt and debt capacity totaling $32,096,000 at a
variable rate. This agreement is currently scheduled to mature in fiscal
year 1997.
Certain of the company's loan agreements limit the use of retained
earnings for the payment of cash dividends and the acquisition of treasury
stock. Under the most restrictive, $100,393,000 was available for these
purposes at March 31, 1995. (However, these restricted payments may not
exceed $30,000,000 in any fiscal year.) Other loan agreements give certain
existing unsecured lenders security equal to any future secured borrowing.
The fair value of long-term debt was established by reference to the
public market for corporate securities. The estimated fair value of total
long-term debt including current portion was $74,111,000 at March 31, 1995,
and $90,663,000 at March 31, 1994.
<PAGE>
Long-term debt matures as follows:
- ---------------------------------------------------------------------
Year ended March 31 (In thousands)
- ---------------------------------------------------------------------
1996 $10,853 1999 $2,782
1997 40,126 2000 807
1998 11,562 2001 and beyond 6,943
- ---------------------------------------------------------------------
At March 31, 1995, the company had approximately $20,669,000
in unutilized bank lines of credit available. These lines of
credit do not require compensating balances; however, a nominal
commitment fee is paid. A maximum of $29,624,000 in short-term
bank borrowings were outstanding during the year ended March 31,
1995. The weighted average interest rate on short-term borrowings
was 5.68 percent at March 31, 1995, and 5.32 percent at March 31,
1994.
14. Foreign exchange contracts/derivatives
--------------------------------------
The company uses derivative financial instruments in a limited
way as a tool to manage the company's financial risk. Their use
is restricted primarily to hedging assets and obligations already
held by the company and they generally are used to protect cash of
the company rather than generate income or engage in speculative
activity. Leveraged derivatives are strictly prohibited by company
policy.
The company from time to time enters into foreign currency
exchange contracts, generally with terms of 90 days or less, to hedge
specific foreign-currency-denominated transactions. The effect of this
practice is to minimize the impact of foreign-exchange-rate movements
on the company's operating income. The company's foreign-currency-
exchange contracts do not subject the company to risk due to exchange-
rate movements because gains and losses on these contracts offset gains
and losses on the assets and liabilities being hedged.
As of March 31, 1995, the parent company had approximately
$3,088,000 of forward contracts outstanding, composed of $3,004,000
of forward foreign-exchange contracts denominated in French francs
and $84,000 in forward copper contracts. The difference between
these contracts' values and the fair value of these instruments in
the aggregate was not material at March 31,1995. Certain subsidiaries
have transactions in currencies other than their functional currencies
and, from time to time, enter into forward and option contracts to hedge
the purchase of inventory or to sell non-functional currency receipts.
Non-U.S. dollar financing transactions generally are effective as hedges
of long-term investments, intercompany loans, or local borrowings in the
corresponding currency. See also footnote number 13.
<PAGE>
15. Other noncurrent liabilities
----------------------------
Other noncurrent liabilities include:
(In thousands)
- -------------------------------------------------------------------------
March 31 1995 1994
- -------------------------------------------------------------------------
Postretirement benefits other than pensions $22,316 $22,555
Other 14,772 8,188
- -------------------------------------------------------------------------
Total other noncurrent liabilities $37,088 $30,743
- -------------------------------------------------------------------------
16. Capital stock
-------------
On January 20, 1993, the Board of Directors approved a two-
for-one stock split in the form of a 100-percent common-stock
dividend paid February 19 to shareholdersof record as of February
5, 1993. An amount equal to the $0.625 par value of the
additional common shares was transferred from additional paid-in
capital to common stock during fiscal 1993.
17. Shareholder rights plan
-----------------------
Each share of the company's common stock carries one right
that entitles the holder to purchase a unit of 1/100 Preferred
Series A Participating Stock at $21.25 per unit. The rights are
not currently exercisable but will become exercisable 10 days
after a shareholder has acquired 20 percent or more, or has
commenced a tender or exchange offer for 30 percent or more, of
the company's common stock. In the event of certain mergers,
sales of assets, or self-dealing transactions involving a 20-
percent-or-more shareholder, each right not owned by such 20-
percent-or-more holder will be modified so that it will then be
exercisable for common stock having a market value of twice the
exercise price of the right. The rights are redeemable in whole
by the company, at a price of $0.0125 per right, at any time
before 20 percent or more of the company's common stock has been
acquired. During fiscal 1995, the company extended the expiration
date of the rights, which will now expire on October 27, 2006,
unless previously redeemed.
18. Stock option and purchase plans
-------------------------------
Stock option plans: In July of 1978, 1985, and 1994,
shareholders approved plans providing for the granting of options
to officers, other key employees, and, in 1985 and 1994, to non-
employee directors to purchase common stock of the company.
Options granted under the plans are either nonqualified or
incentive stock options and carry a price equal to the market
price on the date of grant. Both incentive stock options and
nonqualified stock options terminate 10 years after date of
grant.
<PAGE>
The 1978, 1985, and 1994 Incentive Stock Plans also provide
for the granting of stock awards. Shares are awarded to the
employee at no cost and are placed in escrow until certain
employment restrictions lapse. The value of shares awarded
is amortized over the seven-year restriction period. The
amounts charged to operations in fiscal 1995, 1994, and 1993 were
$1,028,000, $952,000, and $813,000, respectively.
Following is a summary of activity under the two plans:
- ----------------------------------------------------------------------------
Shares Option/award
(in thousands) price range
- ----------------------------------------------------------------------------
Outstanding March 31, 1992 1,666 $ 1.45-12.50
---------------------------------------------------------------------------
Granted:
Incentive and nonqualified 347 16.25-18.25
Restricted stock awards 73 0
Exercised (319) 0-9.4375
---------------------------------------------------------------------------
Outstanding March 31, 1993 1,767 3.825-18.25
Granted:
Incentive and nonqualified 248 20.625-30.00
Restricted stock awards 33 0
Exercised (267) 0-12.50
---------------------------------------------------------------------------
Outstanding March 31, 1994 1,781 5.594-30.00
Granted:
Incentive and nonqualified 268 28.00-28.50
Restricted stock awards 31 0
Exercised (297) 0-18.25
Expired (17) 3.825
---------------------------------------------------------------------------
Outstanding March 31, 1995 1,766 $5.594-30.00
- ----------------------------------------------------------------------------
A further 3,246,000 shares were available for the granting
of additional options or awards at March 31, 1995.
Stock purchase plans: The company also has adopted several
defined-contribution plans. The plans permit employees to make
monthly investments at current market prices based on a specified
percentage of compensation. The company matches a portion of the
employees' contribution.
Activity in the plans for fiscal 1995, 1994, and 1993
resulted in the purchase of 589,000, 593,000, and 730,000 shares
of company stock, respectively. These purchases were made from
the employee pension plan trusts, private purchases, and treasury
shares. It is anticipated that future purchases will be made from
all three sources at the discretion of the plans' administrative
committees. Costs of the company's contributions to the plans for
fiscal 1995, 1994, and 1993 were $5,871,000, $5,099,000, and
$4,350,000, respectively.
<PAGE>
19. Segment and geographic area information
---------------------------------------
The company operates predominantly in a single industry, the
production and sale of heat-transfer equipment. Information about
the company by geographic operating area is presented below:
(In thousands)
- ----------------------------------------------------------------------------
Years ended March 31 1995 1994 1993
- ----------------------------------------------------------------------------
Sales to unaffiliated customers
from company facilities
located in:
United States $667,433 $574,895 $512,462
Europe 227,704 77,340 43,222
Canada and Latin America 17,873 17,318 15,155
- ----------------------------------------------------------------------------
Net sales $913,010 $669,553 $570,839
- ----------------------------------------------------------------------------
Sales between geographic areas:
United States $ 1,627 $ 1,558 $ 895
Europe 87 186 99
Canada and Latin America 2,520 1,299 54
- ----------------------------------------------------------------------------
Total inter-area sales $ 4,234 $ 3,043 $ 1,048
- ----------------------------------------------------------------------------
Operating profit or loss:
United States $129,509 $107,811 $ 61,665
Europe 7,861 (1,520) 651
Canada and Latin America 1,840 1,010 278
Corporate, eliminations, and other (30,383) (34,275) (8,489)
- ----------------------------------------------------------------------------
Earnings before income taxes $108,827 $ 73,026 $ 54,105
- ----------------------------------------------------------------------------
Identifiable assets:*
United States $411,811 $343,020 $321,921
Europe 135,239 113,273 29,562
Canada and Latin America 16,067 13,722 13,516
Corporate, eliminations, and other 27,070 39,966 40,188
- ----------------------------------------------------------------------------
Total assets $590,187 $509,981 $405,187
- ----------------------------------------------------------------------------
* Certain U.S. assets from prior years have been reclassified
to Corporate to conform to the 1995 presentation.
Included in the United States sales to unaffiliated
customers are export sales of $126,409,000, $95,699,000, and
$79,925,000, in fiscal 1995, 1994, and 1993, respectively, the
majority to customers in Europe. During the last three fiscal
years, no single customer has accounted for more than 10 percent
of revenues.
20. Contingencies and litigation
----------------------------
In the normal course of business, the company and its
subsidiaries have been named as defendants in various lawsuits
<PAGE>
and enforcement proceedings in which claims are asserted against
the company by private parties, the Occupational Safety and
Health Administration, the Environmental Protection Agency, other
governmental agencies, and others. The company is also subject to
other liabilities including environmental matters that arise in
the ordinary course of its business. Liabilities for
environmental matters are recorded when assessments and/or
remedial efforts are probable and the costs can be reasonably
estimated. During fiscal 1995, the company established additional
reserves of $415,000 for a Superfund assessment and $44,000 for
environmental cleanup at a specified location in Missouri. Based
on the information available, the company does not expect that
any unrecorded liability related to these matters would
materially affect the consolidated financial position or results
of operations.
In June 1991, the U.S. Department of Justice, acting at the
request of the federal Environmental Protection Agency (EPA),
filed suit against the company in the U.S. District Court for the
Northern District of Illinois. The complaint alleged violations
of the federal Clean Water Act at a manufacturing facility owned
by the company in McHenry, Illinois. The alleged violations
consisted of effluent discharges in excess of permitted amounts
and noncompliance with reporting and monitoring requirements.
Settlement negotiations resulted in an agreement whereby the
company paid a fine of $750,000 and agreed to change the effluent
discharge system. Full reserves were established in fiscal 1993
for the fine and the $1,300,000 necessary for pond sludge
removal. All legal and court costs associated with the case were
expensed as they were incurred.
In November 1991, the company filed a lawsuit against
Mitsubishi Motor Sales of America, Inc., and Showa Aluminum
Corporation, alleging infringement of the company's patent on
parallel-flow air-conditioning condensers. The suit seeks an
injunction to prohibit continued infringement, an accounting for
damages, a trebling of such damages for willful infringement, and
reimbursement of attorneys' fees. In December 1991, the company
submitted a complaint to the U.S. International Trade Commission
(ITC) requesting that the ITC ban the import and sale of parallel-
flow air-conditioning condensers and the systems or vehicles that
contain them, which are the subject of the aforementioned
lawsuit. In July 1993, the ITC reversed an earlier ruling by a
hearing officer and upheld, as valid and enforceable, the
company's basic patent on parallel-flow air-conditioning
condensers. The ITC also ruled that specific condensers from two
Japanese companies did not infringe the company's patent. Each of
the parties appealed, to the U.S. Court of Appeals for the
Federal Circuit, the portion of the ITC opinion adverse to them.
In July of 1994, Showa filed a lawsuit against the company
alleging infringement by the company of certain Showa patents
pertaining to condensers. In December of 1994, the company filed
another lawsuit against Mitsubishi and Showa pertaining to a
newly issued patent on parallel-flow air-conditioning condensers.
All legal and court costs associated with these cases have been
expensed as they were incurred.
<PAGE>
21. Quarterly financial data (unaudited)
------------------------------------
Quarterly financial data are summarized below:
(In thousands, except per-share amounts)
- ---------------------------------------------------------------------------
Fiscal 1995 quarters ended June Sept. Dec. March
- ---------------------------------------------------------------------------
Net sales $208,436 $221,760 $240,505 $242,309
Gross profit 58,489 65,916 69,593 74,259
Net earnings 14,830 16,801 17,413 19,398
Net earnings per share of
common stock $0.49 $0.55 $0.57 $0.63
- ---------------------------------------------------------------------------
(In thousands, except per-share amounts)
- ---------------------------------------------------------------------------
Fiscal 1994 quarters ended June Sept. Dec. March
- ---------------------------------------------------------------------------
Net sales $147,171 $156,964 $172,351 $193,067
Gross profit 43,446 48,634 52,412 58,486
Earnings before
cumulative effect of
accounting change 9,875 11,636 10,626 10,954
Earnings per share of
common stock before
cumulative effect of
accounting change $0.32 $0.39 $0.35 $0.35
Cumulative effect of
accounting change
(net of income-tax
effect)* $899 -- -- --
Net earnings $10,774 $11,636 $10,626 $10,954
Net earnings per share of
common stock $0.35 $0.39 $0.35 $0.35
- ---------------------------------------------------------------------------
* In fiscal 1994, the company adopted FASB Statement No. 109
"Accounting for Income Taxes."
<PAGE>
Independent Auditor's Report
To the Shareholders and Board of Directors
Modine Manufacturing Company
Racine, Wisconsin
We have audited the accompanying consolidated balance sheets of
Modine Manufacturing Company and Subsidiaries as of March 31,
1995 and 1994, and the related consolidated statements of
earnings, shareholders' investment, and cash flows for each of
the three years in the period ended March 31, 1995. 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 audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about 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. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the consolidated
financial position of Modine Manufacturing Company and
Subsidiaries as of March 31, 1995 and 1994, and the consolidated
results of their operations and their cash flows for each of the
three years in the period ended March 31, 1995, in conformity
with generally accepted accounting principles.
As discussed in notes 1, 4, and 6 to the consolidated financial
statements, the company changed its method of accounting for
income taxes in fiscal 1994 and changed its method of accounting
for postretirement benefits other than pensions in fiscal 1993.
COOPERS & LYBRAND LLP
Chicago, Illinois
May 1, 1995
<PAGE>
EXHIBIT 21
Subsidiaries of the Registrant
The table below indicates each of the Registrant's subsidiaries, each
subsidiary's jurisdiction of incorporation, and the percentage of its
voting securities owned by the Registrant or its subsidiaries.
State or
country of Percentage
incorporation of voting
Subsidiaries: or organization securities Owned by
- ---------------------------- --------------- ---------- --------
Modine Great Lakes, Inc. Ohio 100% Registrant
Modine Midwest, Inc. Indiana 100% Registrant
Modine North Central, Inc. Minnesota 100% Registrant
Modine Western, Inc. California 100% Registrant
Modine Southeast, Inc. Florida 100% Registrant
Modine of Puerto Rico, Inc. Delaware 100% Registrant
Modine of Canada, Ltd. Ontario, Canada 100% Registrant
Modine Export Sales Corp. Virgin Islands 100% Registrant
Modine, Inc. Delaware 100% Registrant
Modine Europe BV The Netherlands 100% Registrant
Modine Handelsgesellschaft mbH Austria 100% Registrant
Modine Piedmont, Inc. North Carolina 100% Registrant
Modine GmbH Germany 100% Modine, Inc.
TRT Heating Products, Inc. Rhode Island 100% Registrant
Industrial Airsystems, Inc. Minnesota 100% Registrant
NRF Holding BV ("NRF") The Netherlands 100% Modine, Inc.
Modine Heat Transfer, Inc. Michigan 100% Registrant
Modine Transferencia de Calor,
SA de CV Mexico 99.6%* Modine, Inc
NRF Services BV The Netherlands 100% NRF
NRF Radiateuren BV The Netherlands 100% NRF
NRF Thermal Engineering BV The Netherlands 100% NRF
Skopimex BV The Netherlands 100% NRF
NRF France SarL France 100% NRF
NRF AS Denmark 100% NRF
NRF BvbA Belgium 100% NRF
NRF Ltd. England 100% NRF
NRF GmbH Austria 100% NRF
NRF GmbH Germany 100% NRF
Austria Warmetauscher GmbH Austria 100% Registrant
Langerer & Reich GmbH ("L&R") Germany 100% Modine GmbH
Modine Verwaltungs GmbH Germany 100% Modine GmbH
Langerer & Reich Automobiltechnik
GmbH Germany 100% L&R
Hungaro Langerer Gep. Kft. Hungary 100% L&R
Modine Asia K.K. Japan 100% Registrant
Modine Uden B.V. The Netherlands 100% Modine GmbH
Modine S.r.l. Italy 100% Modine GmbH
Radiadores Montana S.A. Spain 100% NRF
Radinam S.A. de C.V. Mexico 100%** Registrant
* Balance of voting securities held by the Registrant.
** One share certificate is held by Modine, Inc.
EXHIBIT 23
Coopers
& Lybrand
Consent of Independent Accounts
We consent to the incorporation by reference to the registration
statement of Modine Manufacturing Company and Subsidiaries on Form S-8
(File Numbers 2-63714, 2-86984, 2-87299, 2-86985, 33-1764, 33-58544, 2-
55398, 33-66436, 33-66438, 33-66442, 33-66440, 33-54719, 33-54721, 33-
54723 and 33-54725) of our report dated May 1, 1995 on our audits of
the consolidated financial statements and financial statement
schedules of Modine Manufacturing Company and Subsidiaries as of March 31,
1995 and 1994, and for the years ended March 31, 1995, 1994 and 1993,
which report is included in this Annual Report on Form 10-K.
COOPERS & LYBRAND LLP
/s/COOPERS & LYBRAND LLP
Chicago, Illinois
June 21, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE CONSOLIDATED BALANCE SHEET AND CONSOLIDATED STATEMENT OF EARNINGS
FOR PERIOD ENDING 3/31/95 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1995
<PERIOD-START> APR-01-1994
<PERIOD-END> MAR-31-1995
<CASH> 32,691
<SECURITIES> 0
<RECEIVABLES> 151,655
<ALLOWANCES> 6,424
<INVENTORY> 136,114
<CURRENT-ASSETS> 340,382
<PP&E> 386,518
<DEPRECIATION> 215,646
<TOTAL-ASSETS> 590,187
<CURRENT-LIABILITIES> 169,649
<BONDS> 62,220
<COMMON> 18,964
0
0
<OTHER-SE> 289,308
<TOTAL-LIABILITY-AND-EQUITY> 590,187
<SALES> 913,010
<TOTAL-REVENUES> 913,010
<CGS> 644,753
<TOTAL-COSTS> 644,753
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 1,542
<INTEREST-EXPENSE> 6,384
<INCOME-PRETAX> 108,827
<INCOME-TAX> 40,385
<INCOME-CONTINUING> 68,442
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 68,442
<EPS-PRIMARY> 2.24
<EPS-DILUTED> 2.24
</TABLE>
EXHIBIT 99
notice
of meeting
and proxy
statement
annual meeting
1995
of shareholders
M O D I N E
<PAGE>
M O D I N E
- ---------------------------------------------------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS, JULY 19, 1995
TO THE SHAREHOLDERS:
The Annual Meeting of the Shareholders of Modine Manufacturing Company
will be held at the offices of the Company, 1500 DeKoven Avenue, Racine,
Wisconsin, on Wednesday, July 19, 1995, at 9:30 a.m. for the following
purposes:
1. To elect three directors to serve until the Annual Meeting
in 1998.
2. To transact any other business that may properly come before
the meeting or any adjournment thereof.
The transfer books of the Company will not be closed, but only
shareholders of record at the close of business on May 30, 1995, are entitled
to notice of and to vote at this meeting.
In order that your stock may be represented at the meeting, in case you
are not personally present, PLEASE SIGN THE ENCLOSED PROXY AND RETURN IT IN
THE ENCLOSED ENVELOPE.
By order of the Board of Directors
W. E. PAVLICK, Secretary
June 9, 1995
YOUR VOTE IS IMPORTANT!
Please date, sign, and return
the enclosed Proxy immediately.
<PAGE>
PROXY STATEMENT
Annual Shareholders' Meeting of Modine Manufacturing Company--1995
- -----------------------------------------------------------------------
GENERAL INFORMATION
The solicitation of the enclosed proxy is made by and on behalf
of the Board of Directors of Modine Manufacturing Company, 1500 DeKoven
Avenue, Racine, Wisconsin 53403 (hereinafter called the "Company") for
use at the Annual Meeting of Shareholders of the Company to be held on
July 19, 1995, or at any adjournment thereof.
A person giving the proxy has the power to revoke it at any time
prior to the exercise thereof by giving notice in writing to the Secretary
of the shareholders' meeting or by oral notice to the presiding officer
during the meeting. Unless revoked, properly executed proxies will be
voted in accordance with the instructions of the shareholder. If no
specific instructions are given, the shares represented by the proxy
will be voted FOR the election of directors.
With regard to the election of directors, votes may be cast in favor
or withheld; votes that are withheld will be excluded entirely from the
vote and will have no effect.
In their discretion the Proxies are authorized to vote upon such
other business as may come before the meeting. Holders of record at the
close of business on May 30, 1995, are entitled to one vote for each share
of stock held. It is intended that these proxy materials will be sent to
shareholders on or about June 9, 1995. The total number of shares of
Common Stock outstanding and entitled to vote at the meeting is 29,688,821
shares; no Preferred Stock is presently outstanding. The holders of Common
Stock of the Company do not have cumulative voting rights.
1. ELECTION OF DIRECTORS
The Board of Directors currently consists of ten members.
Pursuant to the By-Laws, E. E. Richter is retiring and is not a
nominee for election in 1995. The office of Chairman of the Board of
Directors currently held by Mr. Richter will not be filled. Mr. R. T.
Savage, President and Chief Executive Officer, will assume the duties
of the Chairman effective July 19, 1995.
By Board of Directors action in May, 1995, effective as of July 19,
1995, the authorized number of directors will be fixed at nine. The
Restated By-Laws of the Company, as amended in May 1995, effective as of
July 19, 1995, classify the Board of Directors into three classes of
directors, with each director serving a term of office of three years.
Each class of directors is staggered so that each expires in succeeding
years. This year, the terms of Thomas J. Guendel, Gary L. Neale, and
Richard J. Doyle expire at the 1995 Annual Meeting of Shareholders and
each of them has been nominated for a new three year term expiring at
the Annual Meeting in 1998.
Each of these nominees has indicated his willingness to serve if
elected. While it is not anticipated that any of the nominees will be
unable to take office, if such is the case proxies will be voted in favor
of such other person or persons as the Board of Directors may propose to
<PAGE>
fill the three directorships. In accordance with the Restated By-Laws, a
director shall hold office until the Annual Meeting for the year in which
his term expires and until his successor shall be elected and qualify,
subject, however, to prior death, resignation, retirement, disqualification,
or removal from office. Vacancies may be filled by the remaining directors.
The nominees for the Board of Directors, and the directors whose
terms will continue, their ages, other directorships, and their tenure and
expiration dates of their terms, are set forth on the following pages:
Nominees to be Elected
- ----------------------
THOMAS J. GUENDEL Director since 1980
Age 67
Mr. Guendel is the retired Chairman of the Board and Chief
Executive Officer of Portec, Inc., Lake Forest, Illinois, a
manufacturer of railroad, construction, and material handling
equipment. He is an Adjunct Professor, Lake Forest Graduate
School of Management. Term to expire in 1998.
GARY L. NEALE Director since 1977
Age 55
Mr. Neale is Chairman, President and Chief Executive Officer
and director of NIPSCO Industries, Inc., Hammond, Indiana, a
holding company for gas and electric utilities and other
energy related subsidiaries. Term to expire in 1998.
RICHARD J. DOYLE Director since 1987
Age 63
Mr. Doyle is Chairman, Chief Executive Officer and director of
three private electrical contracting corporations. Prior to his
retirement January 1, 1989, Mr. Doyle was a Vice President of
Borg-Warner Corporation, Chicago, Illinois, a diversified
manufacturing and services company, and President and Chief
Executive Officer of Borg-Warner Automotive, Inc., Troy, Michigan,
a subsidiary of Borg-Warner Corporation. Term to expire 1998.
Directors Continuing in Service
- -------------------------------
FRANK W. JONES Director since 1982
Age 55
Mr. Jones is an independent management consultant, Tucson,
Arizona. He is also a director of Jason Incorporated, Met
Coil Systems Corp., Ingersoll Milling Machine Co., Star
Cutter Co., Gardner Publications, Inc., General Tool Co.,
and TRAK International, Inc. Term to expire in 1997.
<PAGE>
DENNIS J. KUESTER Director since 1993
Age 53
Mr. Kuester is President of Marshall & Ilsley Corporation and of
M&I Marshall & Ilsley Bank, and Chairman and Chief Executive
Officer of M&I Data Services, Inc., a Milwaukee, Wisconsin, bank
holding company, bank, and banking services company, respectively.
He is also a director of M&I Data Services, Inc., M&I Marshall &
Ilsley Bank, M&I Corporation, Interstate Forging Industries,
Inc., Super Steel Products Corp., TYME Corporation, and Krueger
International. Term to expire in 1997.
MICHAEL T. YONKER Director since 1993
Age 52
Mr. Yonker is President and Chief Executive Officer of Portec, Inc.,
Lake Forest, Illinois, a manufacturer of railroad, construction, and
material handling equipment. Prior to joining Portec, Inc. in 1989,
Mr. Yonker served in various capacities at P.T. Components, FMC
Corporation, and Exxon Corporation. He is also a director of Crown
Anderson, Inc. and Woodward Governor Company. Term to expire in 1997.
STUART W. TISDALE Director since 1987
Age 66
Mr. Tisdale is the retired Chairman, Chief Executive Officer and a
director of WICOR, Inc., Milwaukee, Wisconsin, a holding company whose
primary subsidiaries are Wisconsin Gas Company, a public utility,
Sta-Rite Industries, a manufacturer of pumps and fluid handling systems,
and SHURflo Pump Manufacturing Company, a manufacturer of small high-
performance pumps, valves, motors and systems. He is also a director
of Marshall & Ilsley Corporation and Twin Disc, Inc. Term to expire
in 1996.
VINCENT L. MARTIN Director since 1992
Age 55
Mr. Martin is Chairman, President and Chief Executive Officer, and
director of Jason Incorporated, a diversified manufacturing company
based in Milwaukee, Wisconsin. He is also a director of Crane
Manufacturing & Service, Bank One Wisconsin Corporation, and Oldenburg
Group, Inc. Term to expire in 1996.
RICHARD T. SAVAGE Director since 1989
Age 56
Mr. Savage is President and Chief Executive Officer of the Company.
He will assume the duties of Chairman of the Board effective July 19,
1995. He is also a director of Twin Disc, Inc., and M&I Bank of
Racine. Term to expire in 1996.
<PAGE>
PRINCIPAL SHAREHOLDERS AND SHARE OWNERSHIP OF DIRECTORS AND EXECUTIVE
OFFICERS
Principal Shareholders
The following table sets forth information based upon the records of
the Company and filings with the Securities and Exchange Commission ("SEC")
as of March 31, 1995, with respect to each person known to be the beneficial
owner of more than five percent (5%) of any class of the Company's voting
securities.
Title Name and Address of Amount and Nature of Percent
of Class Beneficial Ownership Beneficial Ownership(f) of Class
- -------- --------------------------- -------------------------- --------
Common Investment Committee of 2,314,844 Power to vote 7.79 %
Modine Manufacturing and dispose of
Company Employees' Retire- Trusts' stock
ment Trusts, 1500 DeKoven
Avenue, Racine, WI.
Members: R. T. Savage,
A. D. Reid, V. S.
Frangopoulos, D. R.
Johnson and W. E. Pavlick*
Common Administrative Committee 5,705,579 Power to vote 19.21%
of Modine Contributory Plans' stock
Employee Stock Ownership not voted by
& Investment Plans, employees
1500 DeKoven Avenue, owning it
Racine, WI. Members:
R. M. Gunnerson, R. L.
Hetrick, and D. R. Zakos*
Common Mario T. Gabelli, GAMCO 1,914,576 Sole or shared 6.47 %
Investors, Inc., Gabelli voting and/or
& Company, Inc. and power to dispose
Gabelli Funds, Inc. of stock
655 Third Avenue, New
York, NY 10017**
- ------------------------------------------------------------------------------
* M&I Marshall and Ilsley Bank is trustee and holder of
record of the Modine Contributory Employee Stock
Ownership and Investment Plans' and Retirement Trusts'
stock and is the escrow agent for participants' stock
under the 1990 through 1995 Stock Award Plans. D. J.
Kuester is President of Marshall & Ilsley Corporation
and of M&I Marshall & Ilsley Bank.
** Based on a joint Schedule 13D filed as of May 10, 1994,
by Mario T. Gabelli, GAMCO Investors, Inc., Gabelli &
Company, Inc., and Gabelli Funds, Inc.
The Company knows of no other person or group which is a beneficial
owner of five percent or more of the Company's Common Stock.
<PAGE>
Securities Owned by Management
- ------------------------------
The table below reflects, as of March 31, 1995, the number of shares of
Common Stock beneficially owned by each of the directors of the Company,
each of the executive officers named in the Summary Compensation Table, and
the number of shares beneficially owned by all directors and executive
officers of the Company as a group.
Title Name of Amount and Nature of Percent
of Class Beneficial Owner Beneficial Ownership of Class
- -------- ------------------- -------------------- --------
Common R. J. Doyle* 22,000(a) **
Common T. J. Guendel* 77,008(b) **
Common F. W. Jones* 79,934(a) **
Common D. J. Kuester* 21,000(c) **
Common V. L. Martin* 21,300(d) **
Common G. L. Neale* 46,246(a) **
Common S. W. Tisdale* 46,061(a) **
Common M. T. Yonker* 20,000(a) **
Common R. T. Savage 442,553(e)(f) 1.49 %
Common D. R. Johnson 214,298(e)(f) **
Common V. S. Frangopoulos 343,961(e)(f) 1.15 %
Common M. G. Baker 238,348(e) **
Common W. E. Pavlick 286,259(e)(f) **
Common All executive
officers and
directors as a
group (25 persons) 2,864,505(g) 9.6 %
* Non-employee directors have the right to acquire additional
shares of Common Stock (not listed in the above table)
through the exercise of options automatically granted upon
re-election pursuant to the 1994 Stock Option Plan for Non-
Employee Directors discussed on Page 8 herein.
** Denotes less than one percent of shares outstanding.
(a) The 22,000 shares listed for Mr. Doyle include options to acquire
15,000 shares; the 79,934 shares listed for Mr. Jones include options
to acquire 45,000 shares; the 46,246 shares listed for Mr. Neale
include options to acquire 15,000 shares; the 46,061 shares listed
<PAGE>
for Mr. Tisdale include options to acquire 45,000 shares; and
the 20,000 shares listed for Mr. Yonker include options to acquire
20,000 shares.
(b) The 77,008 shares listed for Mr. Guendel include options to acquire
42,000 shares. This number includes 15,308 shares held by Mr. Guendel's
wife.
(c) The 21,000 shares listed for Mr. Kuester exclude shares held of record
by M&I Marshall & Ilsley Bank. See footnote to the Five Percent Stock
Ownership table on Page 5. This number includes options to acquire
20,000 shares.
(d) The 21,300 shares listed for Mr. Martin include options to acquire
20,000 shares and includes 300 shares held in a Children's Trust with
Mr. Martin as Trustee.
(e) The 442,553 shares listed for Mr. Savage include options to acquire
197,000 shares, and 50,000 restricted shares awarded to Mr. Savage;
the 214,298 shares listed for Mr. Johnson include 2,288 shares held
by Mr. Johnson's wife, options to acquire 131,750 shares, and 33,300
restricted shares awarded to Mr. Johnson; the 343,961 shares listed
for Mr. Frangopoulos include 4,800 shares owned by one of his
children, options to acquire 142,000 shares, and 33,200 restricted
shares awarded to Mr. Frangopoulos; the 238,348 shares listed for
Mr. Baker include options to acquire 137,800 shares, and 20,100
restricted shares awarded to Mr. Baker; the 286,259 shares listed
for Mr. Pavlick include 621 shares held by Mr. Pavlick's wife,
options to acquire 113,613 shares, and 20,300 restricted shares
awarded to Mr. Pavlick.
All awards listed are pursuant to the 1990 through 1995 Stock Award
Plan grants but subject to restrictions which lapse annually in fifths
over a period commencing at the beginning of the third year from the
date of grant.
(f) In addition to the beneficial ownership listed, R. T. Savage, A. D.
Reid, V. S. Frangopoulos, D. R. Johnson, and W. E. Pavlick comprise
the Investment Committee of the Modine Pension Plans appointed by
the Board of Directors. The Committee exercises investment and
voting control over the assets, including Modine Common Stock, held
of record by the Modine Pension Trusts of which M&I Marshall & Ilsley
Bank is trustee as described above.
(g) This number includes 1,005,537 shares held by officers (other than
the five named executive officers) as a group (12 persons) and
includes options to acquire 485,063 shares and 68,800 shares awarded
pursuant to the 1990 through 1995 Stock Award Plan grants but subject
to restrictions which lapse annually in fifths over a period commencing
at the beginning of the third year from the date of grant.
Approximately forty-nine percent (49%) of all outstanding shares are
owned or controlled by or for directors, officers, employees, retired
employees, and their families.
<PAGE>
BOARD MEETINGS, COMMITTEES AND COMPENSATION
The Board of Directors held nine regular meetings during the fiscal
year ended March 31, 1995. An additional eight meetings were held by the
standing Committees of the Board to assist the Board in carrying out its
responsibilities. A description of these committees and their functions
is set forth below.
The Audit Committee consists of five outside directors. Current
members are R. J. Doyle, Chairman, F. W. Jones, V. L. Martin, G. L.
Neale, and S. W. Tisdale. The Audit Committee recommends to the Board
of Directors the engagement of the independent auditors. Before the audit,
the Committee meets with the independent auditors to discuss the plan and
scope of the audit engagement. At the completion of the audit, the Committee
meets with the independent auditors to review the results of the audit, the
effectiveness of the Company's internal auditing procedures, and the adequacy
of the Company's internal accounting controls. The Committee also reviews
and approves the budget for each non-audit service, the audit and non-audit
fees, and their effect on the independence of the auditors. The Audit
Committee met a total of three times during the fiscal year ended March 31,
1995.
The Officer Nomination and Compensation Committee consists of five
outside directors. Current members of this Committee are G. L. Neale,
Chairman, T. J. Guendel, V. L. Martin, S. W. Tisdale, and M. T. Yonker.
This Committee reviews candidates for positions as Company officers and
makes recommendations to the Board on such candidates, makes recommendations
to the Board on compensation for the Company's officers, and administers the
Company's 1994 Incentive Compensation Plan. The Officer Nomination and
Compensation Committee met three times during the last fiscal year.
The Pension Committee consists of four outside directors. Current
members of this Committee are T. J. Guendel, Chairman, R. J. Doyle, F. W.
Jones, and D. J. Kuester. This Committee provides oversight with respect
to the investments of the Company's Pension Plan. The Pension Committee
met two times during the last fiscal year.
The Board of Directors does not have a committee which nominates
directors since nomination and review of director candidates is a function
of the full Board.
Compensation of Directors
- -------------------------
Directors of the Company who are not employees were paid a retainer
fee of $4,500 per quarter. In addition, Directors received a fee of $1,000
for each Board meeting attended and $850 for each Committee meeting attended
with the Chairman of the Audit Committee eligible for a fee of $1,700.
Effective April 1, 1995, the retainer fee was increased to $5,250 per quarter
and the Committee meeting fee was increased to $1,000. Directors who are
officers do not receive any fees in addition to their remuneration as
officers. The Company also reimburses its directors for travel, lodging,
and related expenses incurred in attending Board and Committee meetings,
and it provides each director with travel accident and director and officer
liability insurance.
Directors of the Company who are not employees are eligible to
participate in the 1994 Stock Option Plan for Non-Employee Directors (the
<PAGE>
"Directors' Plan") which is authorized to grant non-qualified stock options
through July 20, 2004, on up to 500,000 shares of the Company's Common Stock.
These options are granted at one hundred percent of the fair market value
on the date of the grant and will expire no later than ten years after the
date they are granted and will terminate no later than three years after
termination of director status for any reason other than death. Within
30 days after election or re-election to the Board, each director so elected
or re-elected is automatically granted an option for that number of shares
equal to the multiple of 5,000 and the number of years in the term to which
such director has been so elected or re-elected. The Directors' Plan may
be administered by a committee of two or more directors of the Company if
deemed necessary or advisable in order to comply with the exemptive rules
promulgated pursuant to Section 16(b) of the Securities Exchange Act of 1934,
as amended. The Board or any such committee shall have no authority to
administer the Directors' Plan with respect to the selection of participants
under the plan or the timing, pricing, or amounts of any grants.
The Board of Directors has adopted the Modine Manufacturing Company
Director Emeritus Retirement Plan (the "Director Emeritus Retirement Plan")
whereby any person (employee or non-employee) who is or becomes a director
of Modine on or after April 1, 1992, and who retires from the Board will be
paid a retirement benefit equal to the annualized rate at which directors
are being paid for their services to the Company as directors (including
Board meeting attendance fees but excluding any applicable committee
attendance fees) as in effect at the time such director ceases his service
as a director. The retirement benefit will continue until the period of
time the retirement benefit paid equals the period of time of the director's
Board services. If a director dies before or after retirement, his spouse
or other beneficiary will receive the applicable retirement benefit. In the
event of a change in control (as defined in the Plan) of Modine, each
eligible director, or his spouse or other beneficiary entitled to receive
a retirement benefit through him, would be entitled to receive a lump sum
payment equal to the present value of the total of all benefit payments
which would otherwise be payable under the Director Emeritus Retirement
Plan. The retirement benefit is not payable if the director directly or
indirectly competes with the Company or if the director is convicted of
fraud or a felony and such fraud or felony is determined by disinterested
members of the Board of Directors to have damaged the Company.
Two former directors (who retired prior to April 1, 1992) have
agreements with the Company whereby, as Directors Emeriti, they are entitled
to receive retainer fees and monthly meeting fees equal to the fees paid at
the time each retired from the Board for a period continuing until their
deaths.
EXECUTIVE COMPENSATION
Summary Compensation Table
- --------------------------
The following table sets forth compensation awarded to, earned by,
or paid to the Company's Chief Executive Officer and the four most highly
compensated executive officers other than the Chief Executive Officer who
were serving as executive officers at March 31, 1995, for services rendered
to the Company and its subsidiaries during fiscal 1994-1995. Also included
is salary, bonus, restricted Common Stock awards, and stock option
information for fiscal years ended March 31, 1993, and March 31, 1994.
<PAGE>
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Annual Compensation (1) Long-Term Compensation
----------------------- ----------------------------------
Restricted Stock All Other
Year Name Principal Position Salary Bonus Stock (2) Options(3) Comp.(4)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1994/95 R. T. Savage President & CEO $ 334,500 $ 334,500 $199,500 25,000 $24,958
1993/94 318,125 264,044 210,000 26,000 22,709
1992/93 292,000 175,200 273,750 36,000 21,607
1994/95 D. R. Johnson Executive VP, $ 214,000 $ 171,200 $156,750 20,000 $15,891
1993/94 Operations 185,125 122,923 150,000 19,000 13,807
1992/93 164,500 78,960 200,750 26,000 12,144
1994/95 V. S. Frangopoulos Group VP, Off- $ 188,000 $ 150,400 $142,500 15,000 $14,027
1993/94 Highway Products 177,125 117,611 150,000 19,000 13,214
1992/93 161,000 77,280 200,750 26,000 11,819
1994/95 M. G. Baker Group VP, $ 166,000 $ 116,200 $ 85,500 11,000 $12,357
1993/94 Distributed Products 151,125 87,804 81,000 12,000 7,989
1992/93 139,000 58,380 109,500 16,000 6,181
1994/95 W. E. Pavlick Senior VP, General $ 157,000 $ 109,900 $ 57,000 9,000 $11,280
1993/94 Counsel & Secretary 148,125 86,061 81,000 12,000 11,478
1992/93 138,000 57,960 109,500 16,000 10,213
<FN>
(1) Excludes "Other Annual Compensation" under SEC Regulations
since such does not exceed the lesser of $50,000 or 10% of
each individual's combined salary and bonus.
(2) The total number of restricted shares and the aggregate
market value at March 31, 1995, were: Mr. Savage - 50,000
shares valued at $1,675,000; Mr. Johnson - 33,300 shares
valued at $1,115,550; Mr. Frangopoulos - 33,200 shares
valued at $1,112,200; Mr. Baker - 20,100 shares valued at
$673,350; and Mr. Pavlick - 20,300 shares valued at
$680,050. Dividends are paid on the restricted shares at
the same time and the same rate as dividends paid to
shareholders of unrestricted shares. Aggregate market value
is based on a fair market value of $33.50 at March 31, 1995.
Restricted stock is awarded to an employee at no cost and
placed in escrow until the beginning of the third, fourth,
fifth, sixth, and seventh years respectively at which time one-
fifth of the shares are released to the employee. In the event
of retirement or a takeover of the Company, the shares may be
released at an earlier date.
(3) The 1994 Incentive Compensation Plan authorized the Officer
Nomination and Compensation Committee of the Board to grant
stock options (incentive stock options and non-qualified
stock options) and other stock-based rights through July 20,
2004, on up to 3,000,000 shares of the Company's common stock.
Incentive stock options and non-qualified stock options
granted are at one hundred percent of the fair market value
<PAGE>
on the date of the grant and will expire no later than ten
years after the date of the grant. Grants pursuant to the
Plan may be made to such officers or certain other employees
as shall be determined by the Committee.
Upon the exercise of the option, the optionee may pay the
purchase price in cash, stock, or a combination of cash and
stock. The optionee may also satisfy any tax withholding
obligation by using optioned shares. In the event of a sale,
merger, consolidation, or other specified transaction
involving the Company, the optionee will have the right to
receive (regardless of whether or to what extent the option
would then have been exercisable) the difference between the
exercise price and the fair market value of the stock.
(4) Employer matching contributions to the Company Tax Saver
(401(k)) Plan, Stock Purchase Plan, and Supplemental Executive
Retirement Plan. The Company has a program (the "Executive
Supplemental Stock Plan") to pay, out of general assets, an
amount substantially equal to the difference between the
amount that would have been allocated to a participant's
account as Company matching contributions, in the absence of
legislation limiting such allocations, and the amount
actually allocated under the plans. Payment of this amount
and appreciation thereon is deferred until termination of
service or retirement.
</TABLE>
Officer Nomination and Compensation Committee Report on Executive
- ------------------------------------------------------------------
Compensation
- ------------
The Officer Nomination and Compensation Committee has provided
the following report on Executive Compensation:
Compensation Philosophy
-----------------------
The Company's executive compensation philosophy is designed to
address the needs of the Company, its executives, and its shareholders.
The specific factors underlying the Committee's decision with
respect to compensation for each of the named executives for the
last fiscal year are two-fold:
1. The ability to accomplish the Company's goal of preserving
and enhancing the shareholders' investment over the long-
term without bearing undue risk in the process. The
Committee recognizes that there will be short-term
fluctuations in the Company's business and is of the
opinion that incentive compensation should be based
primarily upon attainment of the Company's goals over a
longer period of time. It is the Committee's intention
to compensate its executive officers appropriately for
superior performance; however, inherent in attaining the
Company's goal is the premise that shareholder assets
will not be wasted by the payment of excessive compensation.
<PAGE>
2. The second factor underlying the Committee's compensation
decision is that achieving the foregoing Company goals
can only be accomplished by the retention of competent,
highly skilled people. Accordingly, the design of the
compensation package must include sufficient tools to
assure retention of key individuals.
Numerous other criteria are considered in the compensation
decision, including high ethical standards, concern for
employees, regard for the environment, and commitment to the
highest levels of product quality and customer service. Each of
these criteria is an intrinsic part of attaining the Company's
long-term goals.
Total Annual Compensation
-------------------------
The Company's executive compensation program is composed of
an annual cash component, consisting of salary and a bonus based
on the financial performance of the Company, and a long-term
incentive component, currently consisting of stock awards and
stock options.
The compensation package design reflects the Committee's
belief that a larger than typical portion of compensation should
be based upon incentives. This results in the base salary of
Company executives being lower than those executives in
comparable companies and industries and with incentive compensation
being higher. Incentive compensation is established at a level
designed to ensure that, when such payouts are added to a
participant's base salary, the resultant compensation for above
average performance will exceed the average compensation level
for comparable companies. For fiscal 1994-95, the Company used a
formula bonus program which does not commence payout until a pre-
tax return of 15 percent on shareholders' investment is earned for the
shareholders. Thereafter, Company executives can earn a cash
bonus which increases at a linear rate with Company earnings and
is proportional with the executive's level of management
responsibility, including the Chief Executive Officer ("CEO"),
who could earn a cash bonus of up to 100% of his base salary (the
maximum payout under the program) in fiscal 1994-95. The formula
was modified in 1993-94 to increase the risk/reward scenario for
all Company executives. All other incentive awards are
calculated as a job slotted percentage of the CEO's percent of
earned award. By so doing, the entire management team shares the
risks and rewards of overall Company performance. For fiscal
1994-95, the total annual compensation provided was in accordance
with this philosophy.
Long-Term Compensation
----------------------
To further align the Company executives' interests with those
of the shareholder, the Compensation Committee utilizes long-term
stock based incentives in the form of stock options and stock
awards. The number of stock options and stock awards granted to
each executive officer is established for each person considering
the survey data described below. Individual awards are determined
based on a subjective assessment of individual performance,
contribution, and potential. The Committee generally considers
previous grant and award amounts when determining annual grants
or awards under its programs.
The stock options currently granted are at market value and
are exercisable within ten years of date of grant. The options
may be rescinded at any time up until two years after exercise
<PAGE>
should the individual be terminated for cause, compete in any way
against the Company, not fully comply with applicable laws and
government regulations, fail to maintain high ethical standards,
or breach the Company's policies such as Guidelines for Business
Conduct, Antitrust Compliance, or confidentiality of proprietary
technology and information.
Stock awards are grants of Company stock to a limited number
of top executives, at no cost. These awards vest only at the rate
of 20 percent per year commencing with the third year after grant,
acting thereby as both a retention tool and involving the
executive in a longer-term stake in the Company. Stock awards
not previously vested are terminated should the executive cease
to be employed by the Company for any reason other than
retirement or a takeover.
Consequently, the executive is compensated over the long-term,
through both the stock option and stock award programs, as the
Company stock price increases, which is for the benefit of the
shareholder.
Chief Executive Officer Compensation
------------------------------------
The Committee recognizes that effective management of the Company
is a team effort, led by the CEO. The CEO and the named officers must
possess the difficult to define qualities of leadership, ability to
instill confidence in their actions, and to inspire others to even
greater effort. These qualities can only be determined through
observation over a longer period of time and through the ultimate
results attained. Accordingly, the CEO's and senior executive officers'
team compensation decision was not based solely on fiscal 1994-95 annual
financial results but was based on the compensation policies referenced
above and the Company's favorable return on shareholders' investment
over the longer term and the Committee's subjective assessment of the
performance of the management team. The CEO's employment agreement
(described on page 14) only specifies minimum termination
compensation. Total Annual compensation is established by the
Compensation Committee.
Other Executive Officer Compensation
------------------------------------
Since, as stated above, we believe that corporate management
is a team effort, we also believe that it is appropriate for the
CEO to select his team members and make a substantial contribution
to the compensation decision for each of such team members.
Accordingly, upon detailed consultation with the CEO, assessment
of the experience, capabilities and performance of each of the
named executives toward attaining Company goals, and the policies
referenced above, compensation decisions were made. As a background
for such decisions, the Compensation Committee reviewed four major
compensation consultant data bases with respect to compensation.
The compensation consultant data bases and the comparator group of
companies used in the performance graph are both large data bases
of industrial companies which the Committee believes appropriately
reflect the broad labor market for Modine executives. Within a range
of acceptable total compensation for each individual, compensation was
determined as described above.
<PAGE>
Compliance with Internal Revenue Code Section 162(m)
----------------------------------------------------
Section 162(m) of the Internal Revenue Code, enacted in 1993,
generally disallows a tax deduction to public companies for
compensation over $1 Million paid to the Company's CEO and four
other most highly compensated executive officers. Qualifying
performance-based compensation will not be subject to the
deduction limit if certain requirements are met. The compensation
of the Company's CEO and the four other most highly compensated
executive officers currently does not approach the disqualifying
threshold. In the future, in the event the disqualifying threshold
becomes an issue, the Committee will weigh all the facts and
circumstances in existence at the time.
G. L. Neale, Chairman
T. J. Guendel
V. L. Martin
S. W. Tisdale
M. T. Yonker
Performance Graph
- -----------------
The following graph shows the cumulative total stockholder return
on the Company's Common Stock over the last five fiscal years as compared
with the returns of the Standard & Poor's 500 Stock Index and the NASDAQ
Industrials Stock Index (Non-financial Index). The NASDAQ Industrials
Stock Index consists of approximately 3,000 industrial companies (including
Modine), and includes a broad range of manufacturers. The Company believes,
because of the diversity of its business, that comparison with this broader
index is appropriate. The graph assumes $100 was invested on April 1, 1990,
in the Company's Common Stock, the S&P 500 Stock Index, and the NASDAQ
Industrials Stock Index and assumes reinvestment of dividends.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
Measurement Period
(Fiscal Year Covered) Modine S&P NASDAQ
- --------------------- ------ --- ------
Measurement Pt. 4/1/90 $100 $100 $100
FYE 91 108 114 118
FYE 92 194 127 147
FYE 93 225 146 159
FYE 94 299 148 174
FYE 95 396 172 190
Options Granted
- ---------------
The following table sets forth information about stock option grants
during the last fiscal year for the five executive officers named in the
Summary Compensation Table.
<PAGE>
<TABLE>
OPTION GRANTS IN LAST FISCAL YEAR
<CAPTION>
Potential Realizable
Value at Assumed Annual
Rates of Stock Appreciation
Individual Grants Appreciation for Option Term(1)(2)(3)
-------------------------------------------- --------------------------------------
% of Total
Options
Options Granted to Exercise Expiration
Name Granted Employees Price Date 0% 5% 10%
- ------------------ ------- ---------- -------- ----------- --- ------------ --------------
<S> <C> <C> <C> <C> <C> <C> <C>
R. T. Savage 25,000 11.2% $28.50 1/18/2005 $0 $ 448,875 $ 1,132,875
D. R. Johnson 20,000 9.0% $28.50 1/18/2005 $0 359,100 906,300
V. S. Frangopoulos 15,000 6.7% $28.50 1/18/2005 $0 269,325 679,725
M. G. Baker 11,000 4.9% $28.50 1/18/2005 $0 197,505 498,465
W. E. Pavlick 9,000 4.0% $28.50 1/18/2005 $0 161,595 407,835
All Optionees 223,000 100% $28.50 1/18/2005 $0 4,003,965 10,105,245
All Shareholders N/A N/A N/A N/A $0 $626,817,804 $1,581,968,742
<FN>
(1) All options granted are immediately exercisable. Holders may use shares
previously owned or received upon exercise of options to exercise options.
The Company may accept shares to cover withholding or other employee
taxes.
(2) The dollar amounts under these columns are the result of calculations
at zero percent and at the five-percent and ten-percent rates set by
the SEC and therefore are not intended to forecast possible future
appreciation, if any, of the Company's stock price.
(3) No gain to the optionee is possible without an increase in stock price
appreciation, which will benefit all shareholders commensurately. A
zero percent gain in stock price appreciation will result in zero
dollars for the optionee.
</TABLE>
Option Exercises and Fiscal Year-End Values
- -------------------------------------------
The following table sets forth information with respect to the five
executive officers named in the Summary Compensation Table concerning the
number of option exercises and value of options outstanding at the end of
the last fiscal year.
<PAGE>
<TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
<CAPTION>
Total Value of
Total Number Unexercised
Number of of Unexercised In-the Money
Shares Options Held at Options Held at
Acquired on Value Fiscal Year End (1) Fiscal Year End(1)
Name Exercise Realized Exercisable (2) Exercisable (2)
- ------------------ ------------- ----------- ------------------- ------------------
<S> <C> <C> <C> <C>
R. T. Savage 58,000 $1,244,290 197,000 $3,310,000
D. R. Johnson 1,000 20,562 131,750 2,128,109
V. S. Frangopoulos 14,800 316,588 142,000 2,458,500
M. G. Baker -0- -0- 137,800 2,768,667
W. E. Pavlick 21,587 483,157 113,613 2,181,130
<FN>
(1) All options granted are immediately exercisable.
(2) Granted at fair market value on the date of Grant. Total
value of outstanding options is based on a fair market value of
Company stock of $33.50 as of March 31, 1995.
</TABLE>
Pension Plan Table
- ------------------
The following table sets forth the estimated annual benefits payable
upon retirement at normal retirement age for the years of service indicated
under the Company's defined pension plan at the indicated remuneration levels
(average of five years earnings).
- ----------------------------------------------------------------------------
Average Annual Representative Years of Service
Earnings 15 Years 20 Years 25 Years 30 Years 35 Years
- -------------- -------- -------- -------- -------- --------
$125,000 $ 29,900 $ 39,850 $ 49,825 $ 59,800 $ 69,750
200,000 48,750 64,975 81,225 97,475 113,725
275,000 67,575 90,100 112,650 135,175 157,700
350,000 86,425 115,225 144,050 172,850 201,675
425,000 105,275 140,350 175,450 210,550 245,625
500,000 124,125 165,475 206,850 248,225 289,600
- ----------------------------------------------------------------------------
The five executive officers named in the Summary Compensation Table
participate on the same basis as other salaried employees in the non-
contributory Modine Pension and Disability Plan for Salaried Employees.
Because the Company's contributions to the plan are actuarially based on
all eligible salaried employees and are not allocated to individual
employee accounts, expenses for a specific person cannot readily be
<PAGE>
separately or individually calculated. Retirement benefits are based
on an employee's earnings for the five highest of the last ten years
preceding retirement and on years of service. Applicable earnings include
salary, bonuses, and any deferred amount under the Modine Tax Saver (401(k))
Plan. They are approximately the same as cash compensation reported in the
Summary Compensation Table, but on a calendar year rather than a fiscal year
basis. A minimum of five years of service is required for eligibility. The
principal benefit under the plan is a lifetime monthly benefit for the joint
lives of participants and their spouses based on the employee's earnings and
period of employment, and is not subject to offset by Social Security
benefits. Employees can retire with unreduced early retirement benefits at
age sixty-two or may be eligible for disability, deferred, or other early
retirement benefits depending on age and years of service upon retirement
or termination. In addition, an employee who has reached age sixty-two and
who has accumulated thirty or more years of eligible service may request that
the accrued benefit be paid immediately in a lump-sum amount, even if not
retired at the time of election.
Assuming continued employment until age sixty-five, the estimated
credited years of service under the plan for Messrs. Savage, Johnson,
Frangopoulos, Baker, and Pavlick are thirty-one, twenty-eight, twenty-eight,
twenty-five, and nineteen years, respectively.
Pension benefits under the plan are subject to possible limitations
imposed by the Employee Retirement Income Security Act of 1974 and subsequent
amendments thereto. To the extent that an individual employee's retirement
benefit exceeds these limits, the excess will be paid from general operating
funds of the Company.
Employees, including officers, may also qualify for long-term disability
payments of approximately sixty percent of their base salary, up to a maximum
of $8,000 per month, if they become disabled.
Employment Agreements
- ---------------------
The Company entered into an employment contract effective October 1,
1983, with Mr. Savage covering his employment for a three year term. The
contract is automatically extended annually for an additional year so that
the remaining contract term is between two and three years, unless notice
is given by either party to the contrary. This contract provides for a
minimum annual salary equal to that paid the past fiscal year to Mr. Savage
plus bonus participation. Mr. Savage will continue to receive all employee
benefits, plus supplements to his retirement pension and 401(k) benefits
designed to provide him with benefits which otherwise are reduced by
statutory limitations on qualified benefit plans. In the event of
disability, salary continuation is provided at a level of one hundred
percent for the first twelve months and up to sixty percent thereafter
with no maximum dollar amount. In the event of termination of the
contract by the Company other than for cause, death, or disability, or
by Mr. Savage upon a failure to be re-elected as an officer and/or a
director, a significant change in authority, a breach of the contract
by the Company, or a liquidation or merger of the Company where the
contract is not assumed, Mr. Savage would receive annually for the
remainder of the contract term, compensation equal to the average of
the five highest of the last ten years. Mr. Savage agrees to refrain
from competition with the Company during the length of the Agreement
<PAGE>
and for a period of two years after such Agreement is terminated,
except if such termination occurs after a change in control of the
Company. W. E. Pavlick has a similar agreement on substantially the
same terms and conditions as stated hereinabove.
Change-in-Control Arrangements
- ------------------------------
The Company's stock option and stock award plans contain certain
provisions relating to change-in-control or other specified transactions
that would accelerate or otherwise release shares granted or awarded under
those plans. See footnotes (2) and (3) to the Summary Compensation Table
herein.
TRANSACTIONS
In the regular course of business since April 1, 1994, the Company
has had transactions with corporations or other firms of which certain
non-employee directors are executive officers or otherwise principally
involved. Such transactions were in the ordinary course of business and
at competitive prices and terms.
The Company does not consider the amounts involved to be
material. The Company anticipates that similar transactions will
occur in fiscal 1994-95.
OTHER INFORMATION
Independent Auditors
- --------------------
Coopers & Lybrand have been the independent certified public accountants
since 1935 and were selected as the Company's accountants for the fiscal year
ended March 31, 1995. They are appointed by the Board of Directors of the
Company and report to the Audit Committee. A representative of Coopers &
Lybrand will not be attending the 1995 Annual Meeting of Shareholders.
Expenses of Solicitation
- ------------------------
The cost of soliciting proxies is being borne by the Company. In
addition to solicitation by mail, arrangements have been made with brokerage
houses, nominees, and other custodians and fiduciaries to send proxy material
to their principals and the Company will reimburse them for their expenses
in doing so. Proxies also may be solicited personally or by telephone or
other means of electronic communication by directors, officers, and a few
regular employees of the Company in addition to their usual duties. They
will not be specially compensated for these services.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
- --------------------------------------------------------------------
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers and directors, and persons who own more than ten percent
<PAGE>
of a registered class of the Company's equity securities, to file reports
of ownership and changes in ownership with the Securities and Exchange
Commission and the National Association of Securities Dealers, Inc.
Officers, directors, and greater than ten-percent shareholders are required
by SEC regulation to furnish the Company with copies of all Section 16(a)
forms they file.
Based solely on review of the copies of such forms furnished to the
Company, the Company believes that during the period April 1, 1994, to
March 31, 1995, all Section 16(a) filing requirements applicable to its
officers, directors, and greater than ten percent beneficial owners were
complied with, except that during 1993 and 1994 R. L. Hetrick timely
reported transactions but inadvertently did not include in those reports
certain small share acquisitions pursuant to the Company's Dividend
Reinvestment Plan. These omissions were corrected by the reporting of
these facts in Mr. Hetrick's year end Form 5.
ADDITIONAL MATTERS
The Board of Directors is not aware of any other matters that will
be presented for action at the 1995 annual meeting. Should any additional
matters come before the meeting, the persons named in the enclosed proxy
will vote on those matters in accordance with their best judgment.
SHAREHOLDER PROPOSALS FOR 1996
If a shareholder wishes to present a proposal for consideration at
next year's Annual Meeting of Shareholders, such proposal must be received
at Modine's offices on or before February 9, 1996.
ANNUAL REPORT
The Annual Report of the Company, including financial statements for
the fiscal year ended March 31, 1995, is enclosed.
W. E. PAVLICK, Secretary
<PAGE>
APPENDIX
Please mark your
/X/ votes as in this
example
FOR WITHHELD Nominees: Thomas J. Guendel
1. Election of Gary L. Neale
Directors / / / / Richard J. Doyle
For, except vote withheld from the This Proxy, when properly executed,
following nominee(s): will be voted in the manner directed
herein. If no direction is made,
___________________________________ this proxy will be voted FOR Item 1.
PLEASE MARK, DATE, EXECUTE AND
RETURN THIS PROXY PROMPTLY IN THE
ENCLOSED ENVELOPE.
SIGNATURE(S) _____________________________________ DATE___________ 1995
NOTE: Please sign exactly as name appears
hereon. Joint owners should each sign.
When signing as attorney, executor,
administrator, trustee or guardian,
please give full title as such.
<PAGE>
MODINE MANUFACTURING COMPANY
PROXY SOLICITED ON BEHALF OF BOARD OF DIRECTORS
The undersigned hereby appoints Richard T. Savage and Walter E. Pavlick,
with full power of substitution, proxies to vote at the Annual Meeting of
Shareholders of Modine Manufacturing Company (the "Company") to be held
on July 19, 1995 at 9:30 a.m., local time, and at any adjournment or
adjournments thereof, hereby revoking any proxies heretofore given, to
vote all shares of common stock of the Company held or owned by the
undersigned as directed below, and in their discretion upon such other
matters as may come before the meeting.
(To be Signed on Reverse Side)
<PAGE>
<TABLE>
MODINE MANUFACTURING COMPANY AND SUBSIDIARIES
(A Wisconsin Corporation)
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
for the years ended March 31, 1995, 1994 and 1993
($ In Thousands)
<CAPTION>
Col. A Col. B Col. C Col. D Col. E
- ------ ------ ------ ------ ------
Additions
----------------------
(1) (2)
Balance at Balance
Beginning Charged to Charged to at
of Costs and Other End of
Description Period Expenses Accounts Deductions Period
- ----------- ---------- ---------- ---------- ---------- -------
<S> <C> <C> <C> <C> <C>
1995:
Intangible Assets-
Accumulated
Amortization $5,060 $2,044 $730(B) $270(C) $7,564
====== ====== ==== ==== ======
Allowance for
Doubtful Accounts $4,896 $1,850 $139(B) $461(A) $6,424
====== ====== ==== ==== ======
1994:
Intangible Assets-
Accumulated
Amortization $4,054 $1,733 $(83)(B) $644(C) $5,060
====== ====== ===== ==== ======
Allowance for
Doubtful Accounts $2,976 $1,932 $879(B) $891(A) $4,896
====== ====== ==== ==== ======
1993:
Intangible Assets-
Accumulated
Amortization $3,211 $ 890 $ (2)(B) $ 45(C) $4,054
====== ====== ===== ==== ======
Allowance for
Doubtful Accounts $1,878 $1,705 $ -(B) $607(A) $2,976
====== ====== ===== ==== ======
<FN>
Notes:
(A) Bad debts charged off during the year.
(B) Balance acquired in acquisitions plus translation and other
adjustments.
(C) Retirement of fully amortized intangibles.
</TABLE>
<PAGE>
APPENDIX
Pursuant to Item 304 of Regulation S-T, the following is a narrative
description of graphic or image material incorporated by reference
from the Company's 1994-95 Annual Report to Shareholders at Item 7.
Management's Discussions and Analysis of Financial Condition and
Results of Operations.
Page 4 of Annual Report
<TABLE>
Net earnings by quarter
excluding accounting changes
Dollars in millions
<CAPTION>
Measurement Period
(Fiscal Year Covered) 1ST QTR 2ND QTR 3RD QTR 4TH QTR
<S> <C> <C> <C> <C>
FYE 1991 6,704 7,151 14,610 2,007
FYE 1992 6,481 7,387 6,482 7,669
FYE 1993 8,289 8,473 7,432 9,493
FYE 1994 9,875 11,636 10,626 10,954
FYE 1995 14,830 16,801 17,413 19,398
</TABLE>
<TABLE>
Net sales by quarter
Dollars in millions
<CAPTION>
Measurement Period
(Fiscal Year Covered) 1ST QTR 2ND QTR 3RD QTR 4TH QTR
<S> <C> <C> <C> <C>
FYE 1991 114,351 118,608 126,483 122,540
FYE 1992 125,879 132,702 130,805 137,194
FYE 1993 133,817 144,603 146,591 145,828
FYE 1994 147,171 156,964 172,351 193,067
FYE 1995 208,436 221,760 240,505 242,309
</TABLE>
<PAGE>
Page 7 of Annual Report
<TABLE>
Shipments by market
Dollars in millions
<CAPTION>
FYE FYE FYE FYE FYE FYE FYE FYE FYE FYE
1986 1987 1988 1989 1990 1991 1992 1993 1994 1995
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Aftermarket $90 $112 $132 $137 $135 $156 $165 $169 $193 $220
Off-highway equipment 22 24 30 48 56 58 48 48 55 68
Industrial 37 40 45 57 58 69 68 77 96 131
Heavy & med. trucks 38 42 44 54 64 50 51 86 107 158
Cars & light trucks 75 81 83 80 63 64 89 93 119 202
Miscellaneous 19 21 29 12 13 18 25 20 26 51
Building HVAC 31 29 32 36 47 67 81 78 74 83
FYE FYE FYE FYE FYE FYE FYE FYE FYE FYE
1986 1987 1988 1989 1990 1991 1992 1993 1994 1995
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Aftermarket 29% 32% 33% 32% 31% 32% 31% 30% 29% 24%
Off-highway equipment 7 7 8 12 13 12 9 9 8 8
Industrial 12 11 11 13 13 14 13 13 14 14
Heavy & med. trucks 12 13 12 13 15 11 10 15 16 17
Cars & light trucks 24 23 21 19 14 13 17 16 18 22
Miscellaneous 6 6 7 3 3 4 5 3 4 6
Building HVAC 10 8 8 8 11 14 15 14 11 9
</TABLE>
Page 7 of Annual Report
<TABLE>
Sales dollar distribution
<CAPTION>
FYE 94-95 FYE 93-94*
<S> <C> <C>
Materials and supplies 38.2% 37.6%
Employee wages, salaries, and
fringe benefits 28.5% 31.3%
All taxes (except payroll taxes) 4.9% 4.9%
Wear and exhaustion of facilities 3.4% 3.8%
All other costs 17.5% 15.9%
Dividends paid to shareholders 1.7% 2.0%
Earnings retained in the business 5.8% 4.5%
* Includes cumulative effects of accounting changes
</TABLE>
<PAGE>
Page 11 of Annual Report
<TABLE>
Shipments by product
Dollars in millions
<CAPTION>
FYE FYE FYE FYE FYE FYE FYE FYE FYE FYE
1986 1987 1988 1989 1990 1991 1992 1993 1994 1995
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Condensers &
evaporators $ 62 $ 65 $ 66 $ 63 $ 48 $ 47 $ 66 $ 67 $ 83 $129
Oil Coolers 34 39 46 57 62 65 67 74 99 145
Radiators 163 184 201 214 230 242 238 258 302 383
Charge-air coolers 6 14 20 21 25 31 39 59 72 107
Miscellaneous 16 18 30 33 24 30 36 35 39 66
Building HVAC 31 29 32 36 47 67 81 78 74 83
FYE FYE FYE FYE FYE FYE FYE FYE FYE FYE
1986 1987 1988 1989 1990 1991 1992 1993 1994 1995
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Condensers &
evaporators 20% 19% 17% 15% 11% 10% 13% 12% 12% 14
Oil Coolers 11 11 12 13 14 13 13 13 15 16
Radiators 52 53 51 51 53 51 45 45 45 42
Charge-air coolers 2 4 5 5 6 6 7 10 11 12
Miscellaneous 5 5 7 8 5 6 7 6 6 7
Building HVAC 10 8 8 8 11 14 15 14 11 9
</TABLE>
Page 16 of Annual Report
<TABLE>
Book value per share
<CAPTION>
Measurement Period
(Fiscal Year Covered) Book value/share
<S> <C>
FYE 91 6.95
FYE 92 7.32
FYE 93 7.55
FYE 94 8.50
FYE 95 10.38
</TABLE>
<PAGE>
