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, 1996
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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 18-23 herein.
Page 1 of 121
<PAGE>
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. [X]
Approximately 47% of the outstanding shares are held by non-affiliates.
The aggregate market value of these shares was approximately
$360,548,785 based on the market price of $25.75 per share on June 18, 1996.
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 29,791,265 at June 18, 1996.
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, 1996 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)
1996 Definitive Proxy Statement dated
June 7, 1996 Part III of Form 10-K
(Items 10, 11, 12, 13)
<PAGE>
TABLE OF CONTENTS
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MODINE MANUFACTURING COMPANY - FORM 10-K
FOR THE YEAR ENDED MARCH 31, 1996
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 14
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Item 6 - Selected Financial Data 15
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Item 7 - Management's Discussion and Analysis of
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Financial Condition and Results of Operations 15
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Item 8 - Financial Statements & Supplementary Data 15
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Item 9 - Changes in and Disagreements with
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Accountants on Accounting and Financial
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Disclosure 16
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<PAGE>
10-K Pages
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Part III
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Items 10 and 11 - Directors and Executive
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Officers of the Registrant; Executive
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Compensation 16
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Item 12 - Security Ownership of Certain Beneficial
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Owners and Management 17
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Item 13 - Certain Relationships and Related
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Transactions 17
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Part IV
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Item 14 - Exhibits, Financial Statement Schedules,
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and Reports on Form 8-K 17
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1) Financial Statements
2) Financial Statement Schedules
3) Consent of Independent Accountants
4) Exhibit Index
Signatures 24
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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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1996 1995 1994 1993 1992
Radiators & Radiator 41% 42% 45% 45% 45%
Cores
Vehicular Condensers
& Evaporators 17% 14% 12% 12% 13%
Oil Coolers 16% 16% 15% 13% 13%
Charge Air Coolers 12% 12% 11% 10% 7%
Building HVAC 8% 9% 11% 14% 15%
Miscellaneous 6% 7% 6% 6% 7%
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:
<PAGE>
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,
and which owned 100% of The Radman Corporation, Ltd., a Canadian federal
company which licenses certain trademarks to automotive radiator repair
shops. On April 1, 1996 the Radman Corporation, Ltd. was amalgamated with
and into Modine of Canada, Ltd. and ceased to exist as a separate entity as
of that date.
The Company operates a subsidiary, Modine Transferencia de Calor, S.A. de
C.V., a Mexican company which manufactures, assembles, and exports to the
U.S., heat exchangers for a variety of non-vehicular applications.
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.
Europe
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The Company operates a subsidiary, NRF 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 July, 1995, the Company acquired, through its acquisition of Signet
Systems, Inc., all of the issued and outstanding stock of Signet Systems
GmbH located in Goch, Germany. Signet Systems GmbH is a supplier of
climate-control systems and components to the automotive, truck, and off-
highway vehicle markets in Europe.
In May, 1995, the Company, through its subsidiary NRF 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 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 third quarter of fiscal 1993-94, the Company acquired, through
Modine Holding 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 L&R in Hungaro Langerer
Gepjarmutechnikai Kft., a Hungarian company. The Filderstadt-Bernhausen
operation manufactures heat exchangers for the truck, bus, and industrial
<PAGE>
markets and also includes research and development and administrative
facilities. The Pleizhausen operation manufactures aluminum heat
exchangers for the passenger car market.
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.
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
Berndorf, Austria; and the re-opened plant location in Uden, The
Netherlands; (2) L & R Heavy Duty business unit which includes the Modine
GmbH 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 BV in Mill, the Netherlands.
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 12.9%, 13.8% and 14.3% for fiscal years ended in 1996, 1995 and
1994, respectively. Estimated after-tax earnings on export sales as a
percentage of total net earnings were 12.9%, 13.8% and 14.3% for fiscal
<PAGE>
years ended in 1996, 1995 and 1994, respectively. Royalties from foreign
licensees as a percentage of total earnings were 1.0%, 1.0% and 2.1% 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.
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 1996
Annual Report to Shareholders and is incorporated herein by reference at
Note 18 on Page 28 therein.
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 37.7% of the Company's sales in
the fiscal year ended March 31, 1996. These customers, listed
alphabetically, were: American Honda Motor Co., Inc., BMW, Caterpillar
Company, Chrysler Motor Corporation, Fiat, Ford Motor Company, John Deere,
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.
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, steel and aluminum and have a relatively short
manufacturing cycle. The Company's operating units maintain their own
inventories and production schedules. Current production capacity
(including additional capacity planned to become operational this year) is
capable of handling the sales volumes expected in fiscal 1996-97.
<PAGE>
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 1997 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 1995-96 amounted to
$14,256,000; in fiscal 1994-95 amounted to $10,907,000; and in fiscal
1993-94 amounted to approximately $9,509,000. 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
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 has thus far achieved a corporate-
wide reduction in wastes of over 65% through calendar year 1995. The
program is currently being modified to include better tracking mechanisms
and a new, innovative method of classifying and ranking wastes based on
degree of toxicity. 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
<PAGE>
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 a 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 one of these sites, no
evidence exists to establish that Modine ever disposed of its hazardous
wastes there; at the remaining four sites, Modine's involvement is as a de
minimis PRP (potentially responsible party), having less than a one percent
share of the wastes disposed.
Seven of the Company's manufacturing facilities currently have been
identified as requiring soil and/or groundwater 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.
Recent environmental legislation will require significant capital equipment
expenditures over the next five to six years. For the fiscal year ending
March 31, 1996 capital expenditures and expenses were $980,000. 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 1996-97, approximately $2,750,000 may be invested in air and
water pollution control equipment, process changes, and hazardous waste
minimization equipment and programs in order to comply with existing and
new federal, state and local environmental laws and regulations. Operating
expenses of some facilities may be increased because of such equipment but
the competitive position of the Company is not expected to change
materially.
Employees
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The number of persons employed by the Company at March 31, 1996, was
approximately 7,600.
<PAGE>
Seasonal Nature of Business
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In recent years the Company's business has become more continuous and
less seasonal. However, a degree of seasonality may still be experienced
since the Aftermarket, Commercial Products, Heating, and Signet Systems
Divisions are affected by weather patterns, constructions starts, and other
factors. Sales to original equipment manufacturers are dependent upon the
demand for new vehicles and equipment. The following quarterly net sales
detail for the past five years illustrates the degree of fluctuation:
Fiscal
Year Fiscal
Ended First Second Third Fourth Year
March 31 Quarter Quarter Quarter Quarter Total
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($ In Thousands)
1996 $239,216 $254,292 $252,817 $244,168 $990,493
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
Five-year $170,904 $182,064 $188,614 $192,513 $734,095
Average
Percent 23% 25% 26% 26% 100%
of 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. Additional
technical support functions are located in Harrodsburg, Kentucky and
Bernhausen, Germany. 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.
<PAGE>
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 21 9 30
Distribution 3 1 4
Sales & Service
Centers/Offices 14 15 1 30
Joint Ventures 1 1
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Total 38 25 2 65
Total square footage of the 65 facilities is approximately 6,482,930
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 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-
<PAGE>
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 February 1996, the U.S.
Court of Appeals for the Federal Circuit, upheld the patent as valid and
enforceable and remanded the case back to the ITC for a determination with
respect to Showa infringement. 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. Both 1994 suits have been stayed pending the
outcome of re-examination in the U. S. Patent Office of the patents
involved. All legal and court costs associated with these cases 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.
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 1995-96 and 1994-95. As of April 1, 1996,
shareholders of record numbered approximately 4,713; it is estimated that
beneficial owners numbered at least 12,500.
1995-96 1994-95
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Quarter High Low Dividends High Low Dividends
First $39.75 $31.50 $.15 $30.00 $23.75 $.13
Second 40.50 28.75 .15 29.00 24.75 .13
Third 32.00 24.00 .15 31.25 25.25 .13
Fourth 26.50 22.50 .15 34.75 27.00 .13
TOTAL $.60 $.52
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<PAGE>
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, $120,399,000 was available for these purposes
at March 31, 1996. (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.
ITEM 6. SELECTED FINANCIAL DATA.
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Fiscal Year ended March 31
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1996 1995 1994 1993 1992
Sales (in thousands) $990,493 $913,010 $669,553 $570,839 $526,580
Net earnings (in
thousands) 61,399 68,442 43,990*** 19,987** 28,019
Total assets (in
thousands) 671,836 590,187 509,981 405,187 383,475
Long-term debt (in
thousands) 87,809 62,220 77,646 52,350 74,295
Dividends per share* .60 .52 .46 .42 .38
Net earnings per share* 2.02 2.24 1.44*** .66** .93
* 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 1995-96 Annual Report to Shareholders, pages 4, 5, 6, 7, 8,
9, 10, 11, 12, 13, 14, 15, 16 and 18, attached as Exhibit 13.
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
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The report of Coopers & Lybrand LLP dated May 1, 1996, 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
1995-96 Annual Report to Shareholders are incorporated herein by reference.
With the exception of the aforementioned information, no other data
appearing in the 1995-96 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.
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 7, 1996 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 57 President and Chief Executive Officer 1981
D. R. Johnson 54 Executive Vice President, Operations 1988
W. E. Pavlick 62 Senior Vice President, General Counsel
and Secretary 1979
V. S. Frangopoulos 60 Group Vice President, Off-Highway
Products 1981
M. G. Baker 56 Group Vice President, Distributed
Products 1987
L. D. Howard 52 Group Vice President, Europe 1991
D. B. Rayburn 48 Group Vice President, Highway Products 1991
J. H. Firestone 58 Vice President, Quality & Environment 1990
<PAGE>
Officer
Name Age Position Since
---- --- -------- -------
J. J. Hankey 46 Vice President and General Manager,
Commercial Products Division 1992
R. L. Hetrick 54 Vice President, Human Resources 1989
R. W. Possehl 51 Vice President, Administration 1985
A. D. Reid 54 Vice President, Finance and Chief
Financial Officer 1985
R. S. Bullmore 46 Corporate Controller 1983
R. M. Gunnerson 47 Treasurer 1977
D. R. Zakos 42 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. 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 one other executive officer
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 7, 1996 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 7, 1996 on page 14 under
the heading "Transactions" attached to this report.
PART IV
-------
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
- ------- -------------------------------------------------------
FORM 8-K.
--------
<PAGE>
(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, 1996, 1995, and 1994 15
Consolidated Balance Sheets at March 31, 1996
and 1995 17
Consolidated Statements of Cash Flows for the
years ended March 31, 1996, 1995, and 1994 19
Consolidated Statements of Shareholders'
Investment for the years ended March 31, 1996,
1995, and 1994 20
Notes to Consolidated Financial Statements 21 - 28
Independent Auditors' Report 29
* Incorporated by reference from the indicated
pages of the 1995-96 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, 1996 26
Schedule II - Valuation and Qualifying Accounts
for the years ended March 31, 1996, 1995 and 1994 116
(3) Consent of Independent Accountants 98
(4) Exhibit Index 18
(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.
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.
<PAGE>
Reference Number
per Item 601 of
Regulation S-K Page
- --------------- ----
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). 27
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.
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).
<PAGE>
Reference Number
per Item 601 of
Regulation S-K Page
- --------------- ----
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) (filed by reference to the
Registrant's Annual Report on Form 10-K
for the fiscal year ended March 31, 1995).
10(h) 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(i) Director Emeritus Agreements between the
Registrant and Neal D. Crane and Bernard H.
Regenburg (filed by reference to the
Registrant's Annual Report on Form 10-K for
the fiscal year ended March 31, 1992).
10(j) 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.
<PAGE>
Reference Number
per Item 601 of
Regulation S-K Page
- --------------- ----
10(k) 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(l) 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(m) 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(n) 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(o) 1994 Stock Award Plan [a part of the 1985
Incentive Stock Plan].
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(p) 1994 Incentive Compensation Plan (filed
by reference to the exhibit contained
within the Registrant's 1994 Proxy
Statement dated June 10, 1994).
10(q) 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(r) 1995 Stock Award Plan [a part of the 1994
Incentive Compensation Plan] (filed by
reference to the exhibit contained within
<PAGE>
Reference Number
per Item 601 of
Regulation S-K Page
- --------------- ----
the Registrant's Annual Report on Form 10-K
for the fiscal year 1995).
10(s) 1995 Stock Option Agreements (incentive and
non-qualified) [a part of the 1994
Incentive Compensation Plan] (filed by
reference to the exhibit contained within
the Registrant's Annual Report on Form 10-K
for the fiscal year 1995).
10(t) 1995 Stock Option Agreement [a part of the
1994 Stock Option Plan for Non-Employee
Directors] (filed by reference to the exhibit
contained within the Registrant's Annual
Report on Form 10-K for the fiscal year 1995).
*10(u) 1996 Stock Option Agreements (incentive and
non-qualified) [a part of the 1994 Incentive
Compensation Plan]. 39
*10(v) 1996 Stock Award Plan [a part of the 1994
Incentive Compensation Plan]. 53
*11 Statement re: computation of per share
earnings. 59
12 Not applicable.
*13 1995-96 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. 60
16 Not applicable.
18 Not applicable.
*21 List of subsidiaries of the Registrant. 96
22 Not applicable.
*23 Consent of independent certified public
accountants. 98
24 Not applicable.
*27 Financial Data Schedule 99
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. 100
None Appendix (filed pursuant to Item 304 of
Regulation S-T). 117
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 June 7, 1996, was filed by the Company.
This report, filed in connection with the Company's mailing of its Annual
Report to Shareholders and its sales forecast for the upcoming year
contained therein, includes as exhibits (1) the news release containing the
sales forecast and (2) a statement of the important factors and assumptions
regarding forward-looking statements.
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 19, 1996 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.
R. T. SAVAGE June 19, 1996
- -------------------------------------- -------------
R. T. Savage, President, Chief Date
Executive Officer and Director
A. D. REID June 19, 1996
- -------------------------------------- -------------
A. D. Reid, Vice President and Date
Chief Financial Officer
<PAGE>
W. E. PAVLICK June 19, 1996
- -------------------------------------- -------------
W. E. Pavlick, Senior Vice President, Date
General Counsel and Secretary
R. J. DOYLE June 19, 1996
- -------------------------------------- -------------
R. J. Doyle, Director Date
T. J. GUENDEL June 19, 1996
- -------------------------------------- -------------
T. J. Guendel, Director Date
F. W. JONES June 19, 1996
- -------------------------------------- -------------
F. W. Jones, Director Date
D. J. KUESTER June 19, 1996
- -------------------------------------- -------------
D. J. Kuester, Director Date
V. L. MARTIN June 19, 1996
- -------------------------------------- -------------
V. L. Martin, Director Date
G. L. NEALE June 19, 1996
- -------------------------------------- -------------
G. L. Neale, Director Date
S. W. TISDALE June 19, 1996
- -------------------------------------- -------------
S. W. Tisdale, Director Date
M. T. YONKER June 19, 1996
- -------------------------------------- -------------
M. T. Yonker, Director Date
<PAGE>
Coopers
& Lybrand LLP
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 1996 annual report to shareholders of Modine Manufacturing
Company and Subsidiaries on page 29 herein. In connection with our audits
of such financial statements, we have also audited the related financial
statement schedules listed in the index on page 18 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, 1996
<PAGE>
EXHIBIT 3(b)
RESTATED
BY-LAWS
OF
MODINE MANUFACTURING COMPANY
(as adopted July 17, 1969)
(as amended September 17, 1970)
(as amended September 16, 1971)
(as amended May 4, 1972)
(as amended March 20, 1974)
(as amended September 18, 1974)
(as amended May 19, 1976)
(as amended July 21, 1976)
(as amended May 18, 1977)
(as amended July 20, 1977)
(as amended October 18, 1978)
(as amended May 16, 1979)
(as amended July 18, 1979)
(as amended October 17, 1979)
(as amended October 15, 1980)
(as amended May 1, 1981)
(as amended May 5, 1982 to be effective
July 21, 1982)
(as amended August 17, 1982)
(as amended February 18, 1987)
(as amended March 18, 1987)
(as amended July 15, 1987)
(as amended February 15, 1989)
(as amended May 19, 1993)
(as amended October 20, 1993)
(as amended November 17, 1993)
(as amended March 16, 1994 to be effective
July 20, 1994)
(as amended May 17, 1995 to be effective
July 19, 1995)
ARTICLE I. STOCKHOLDERS
------------------------
1.01. Annual Meeting. The annual meeting of
--------------
stockholders of the Company shall be held each year at such time
and place, either within or without the State of Wisconsin, as
shall be determined by the Board of Directors at a meeting prior
to the date otherwise provided herein for such stockholders'
meeting; in the absence or failure of the Board to designate a
time and place, then at the principal office of the Company in
Racine, Wisconsin, on the third Wednesday in July, at 9:30
o'clock A.M., for the purpose of election of directors and for
the transaction of such other business as may properly come
before the meeting.
<PAGE>
1.02. Special Meetings. Special meetings of the
----------------
stockholders may be called by the Chairman of the Board or the
President and shall be called by the President, or Secretary at
the request in writing of a majority of the Board of Directors,
or at the request of stockholders owning Ten Percent (10%) or
more in amount of the entire capital stock of the Company issued
and outstanding and entitled to vote. Such request shall state
the purpose or purposes of the proposed meeting. Business
transacted at all special meetings shall be confined to the
purposes stated in the notice of meeting.
1.03. Notice of Meetings. The Company shall notify
------------------
each shareholder who is entitled to vote at the meeting, and any
other shareholder entitled to notice under ch. 180, of the date,
time, and place of each annual or special shareholders' meeting.
In the case of special meetings, the notice shall also state the
meeting's purpose. Unless otherwise required by ch. 180, the
meeting notice shall be given at least five (5) days before the
meeting date. Notice may be given orally or communicated in
person, by telephone, telegraph, teletype, facsimile, other form
of wire or wireless communication, private carrier, or in any
other manner provided by ch. 180. Written notice, if mailed, is
effective when mailed; and such notice may be addressed to the
shareholder's address shown in the Company's current record of
shareholders. Written notice provided in any other manner is
effective when received. Oral notice is effective when
communicated.
1.04. Quorum. A quorum at any meeting of the
------
stockholders shall consist of a majority of the voting stock of
the Company represented in person or by proxy. Unless otherwise
provided in the Articles of Incorporation, by these by-laws, or
by the Wisconsin Business Corporation Law, a majority of such
quorum shall decide any questions that may come before the
meeting. Though less than a quorum of the outstanding shares are
represented at a meeting, a majority of the shares so represented
may adjourn the meeting from time to time without further notice.
At such adjourned meeting at which a quorum shall be present or
represented, any business may be transacted which might have been
transacted at the meeting as originally notified.
1.05. Order of Business. The order and conduct of
-----------------
business and matters of procedure at any meeting of stockholders
shall be determined by the Chairman.
1.06. List of Stockholders. The officer or agent
--------------------
having charge of the stock transfer books for shares of the
Company shall, before each meeting of stockholders, make a
complete list of the stockholders entitled to vote at such
meeting or any adjournment thereof, with the address of and the
number of shares held by each, which list shall be produced and
kept open at the time and place of the meeting and shall be
subject to the inspection of any stockholder during the whole
time of the meeting for the purposes of the meeting. The
<PAGE>
original stock transfer books shall be prima facie evidence as to
the stockholders entitled to examine such list or transfer books
or to vote at any meeting of stockholders.
1.07. Inspectors of Election. Two inspectors of
----------------------
election shall be appointed by the Board of Directors at or
before each stockholders' meeting at which an election of
directors shall take place; if no such appointment shall have
been made, or if the inspectors appointed by the Board shall
refuse to act, or fail to attend, then the appointment shall be
made by the Chairman at the meeting. The inspectors shall
receive and take in charge all proxies and ballots, and shall
decide all questions touching upon the qualification of voters,
and validity of proxies and the acceptance and rejection of
votes. In case of a tie vote by the inspectors on any questions,
the Chairman shall decide.
1.08. Voting of Shares. Each outstanding share shall
----------------
be entitled to one vote upon each matter submitted to a vote at a
meeting of stockholders, except to the extent that the voting
rights of the shares of any class or classes are enlarged,
limited or denied by the Wisconsin Business Corporation Law, the
Articles of Incorporation, or the resolution of the Board of
Directors creating such series of any class.
1.09. Proxies. At all meetings of stockholders, a
-------
stockholder entitled to vote may vote in person or by proxy
appointed in writing by the stockholder or by his duly authorized
attorney-in-fact. Such proxy shall be filed with the Secretary
of the Company before or at the time of meeting. Unless
otherwise provided in the proxy, a proxy may be revoked at any
time before it is voted either by written notice filed with the
Secretary or the acting secretary of the meeting or by oral
notice given by the stockholder to the presiding officer during
the meeting. The presence of a stockholder who has filed his
proxy shall not of itself constitute a revocation. No proxy
shall be valid after eleven (11) months from the date of its
execution, unless otherwise provided in the proxy. The Board of
Directors shall have the power and authority to make rules
establishing presumptions as to the validity and sufficiency of
proxies.
ARTICLE II. DIRECTORS
----------------------
2.01. Number, Classification and Terms of Directors.
---------------------------------------------
The number of directors shall be nine. Directors need not be
stockholders.
The Board of Directors shall be divided into
three classes: each class consisting of three directors.
The term of office of a director shall be three years.
The classes of directors shall be staggered so that each
expires in succeeding years. At each annual meeting of
stockholders, the number of directors equal to the number
<PAGE>
of the class whose terms expire at the time of such
meeting shall be elected to hold office until the third
succeeding annual meeting and until their successors shall
have been elected.
2.02. Annual Directors' Meetings. Annual meeting of
--------------------------
the Board of Directors shall be held immediately following the
annual meeting of stockholders. No notice of the annual meeting
of the Board of Directors shall be required.
2.03. Special Directors' Meetings. Special meetings
---------------------------
of the Board of Directors may be called by the Chairman of the
Board, the President, or Secretary on twenty-four (24) hours'
notice to each director.
2.04. Notice of Meetings; Waiver of Notice. Notice of
------------------------------------
each board of directors' meeting, except meetings pursuant to
Section 2.02 of these by-laws, shall be delivered to each
director at his or her business address or at such other address
as the director shall have designated in writing and filed with
the Secretary. Notice may be given orally or communicated in person,
by telephone, telegraph, teletype, facsimile, other form of wire or
wireless communication, private carrier, or in any other manner
provided by ch. 180. Written notice shall be deemed given at the
earlier of the time it is received or at the time it is deposited
with postage prepaid in the United States mail or delivered to the
private carrier. Oral notice is effective when communicated. A
director may waive notice required under this section or by-law at
any time, whether before or after the time of the meeting. The
waiver must be in writing, signed by the director, and retained
in the corporate record book. The director's attendance at or
participation in a meeting shall constitute a waiver of notice of
the meeting, unless the director at the beginning of the meeting or
promptly upon his or her arrival objects to holding the meeting or
transacting business at the meeting and does not thereafter vote for
or assent to action taken at the meeting. Neither the business to be
transacted at nor the purpose of any regular or special board of
directors meeting need be specified in the notice or waiver of notice
of the meeting.
2.05. Regular Meetings. Regular meetings of the directors
----------------
may be held without notice at such place and times as shall be
determined from time to time by resolution of the Board of Directors.
2.06. Quorum. A quorum at any meeting of the Board of
------
Directors shall consist of a majority of the entire membership of the
Board. Unless otherwise provided in the Articles of Incorporation,
these by-laws, or by law, a majority of such quorum shall decide all
questions that may come before the meeting.
2.07. General Powers of Directors. The Board of
---------------------------
Directors shall manage the business and affairs of the Company
and subject to the restrictions imposed by law, by the Articles
<PAGE>
of Incorporation, or by these by-laws, may exercise all the
powers, including specific powers, of the Company.
2.08. Compensation of Directors. The Board of
-------------------------
Directors, by the affirmative vote of a majority of the directors
then in office, and irrespective of any personal interest of any
of its members, shall have authority to establish reasonable
compensation of all directors for services to the Company as
directors, officers or otherwise, or to delegate such authority
to an appropriate committee. The Board of Directors also shall
have authority to provide for or to delegate authority to an
appropriate committee to provide for reasonable pensions,
disability or death benefits, employee stock options, and other
benefits or payments, to directors, officers and employees and to
their estates, families, dependents or beneficiaries on account
of prior services rendered by such directors, officers and
employees to the Company.
2.09. Resignation and Removal for Cause. Any director,
---------------------------------
member of a committee or other officer may resign at any time.
Such resignation shall be made in writing, and shall take effect
at the time specified therein, and if no time be specified, at the
time of its receipt by the President or Secretary. The acceptance
of a resignation shall not be necessary to make it effective.
A director may be removed from office during the term of
such office but only upon a showing of good cause, such removal to be
by affirmative vote of a majority of the outstanding shares entitled to
vote for the election of such director and which removal may only be
taken at a special meeting of stockholders called for that purpose.
A special meeting of the stockholders as herein referred
to may only be held after a hearing on the matter of cause claimed
to exist has been held by the full Board of Directors of the Company
at which hearing the director or directors proposed for removal shall
be given an adequate opportunity for preparation and attendance in
person (together with representation by counsel); provided, however,
that such hearing shall be held only after written notice has been
given to said director or directors proposed for removal specifying the
matters of cause claimed to exist. The conclusions of said hearing
shall be reported by the Board of Directors in writing accompanying
the notice of the special stockholders' meeting sent to each
stockholder eligible to vote at said special meeting.
2.10. Increase or Decrease of Number of Directors.
-------------------------------------------
Increase or decrease of the number of directors and
classification of such directors, may only be made by amendment
of these by-laws at a regular or special meeting called for that
purpose, and a vacancy created by an increase in the number of
directors may be filled at such meeting.
2.11. Filling of Vacancies. If the office of any
--------------------
director, member of a committee or other officer becomes vacant
for any reason, including vacancies on the Board of Directors due
to removal for cause, the remaining directors in office, by a
<PAGE>
majority vote, may appoint any qualified person to fill such
vacancy, who shall hold office for the unexpired term and until
his successor shall be duly chosen.
2.12. Informal Action by Directors. Any action
----------------------------
required or permitted by the Articles of Incorporation, these by-
laws or other provision of law, which might be taken at a
meeting of the Board of Directors or of a lawfully constituted
committee thereof, may be taken without a meeting if a consent in
writing, setting forth the action so taken, shall be signed by
all the directors, or by all of the members of such committee, as
the case may be.
2.13. Retirement. Each Director shall be retired at
----------
the close of the term in which he attains the age of seventy (70)
years except that this provision shall not apply to any Director
who has been exempted from this provision by a resolution passed
by a two-thirds vote of the Board of Directors. Upon such
retirement a Director may take the status of a Director Emeritus.
A Director Emeritus shall receive the notice of meetings of
Directors, shall be invited to and welcome at all meetings of the
Board and of the stockholders, and shall receive such
compensation and such reimbursement for reasonable expenses, if
any, for attendance at meetings as the Board of Directors shall
determine, provided, however, that such compensation shall not
exceed that received by a Director. A Director Emeritus shall
attend the meetings of the Board in a consultive capacity but
shall not be entitled to vote or have any duties or powers of a
Director of the Company.
2.14. Committees. The Board of Directors may by
----------
resolution or resolutions, adopted by a majority of the total
number of directors, designate one or more committees, each such
committee to consist of three or more directors elected by the
Board of Directors which, to the extent provided in said
resolution or resolutions, shall have and may exercise the powers
of the Board of Directors in the management of the business and
affairs of the corporation. Such committees shall have such
names as may be determined from time to time by resolution
adopted by the Board of Directors. A majority of the members of
any such committee may determine its action unless the Board of
Directors shall otherwise provide. The Board of Directors shall
have power at any time to fill vacancies in, to change the
membership of, or to dissolve any such committee. The Board of
Directors may elect one or more of its members as alternate
members of any committee who may take the place of any absent
member or members at any meeting of such committee.
ARTICLE III. OFFICERS
----------------------
3.01. Number. The principal officers of the Company
------
shall be a Chairman of the Board of Directors, a President, such
number of Vice Presidents as the Board of Directors shall elect,
a Secretary, and a Treasurer, each of whom shall be elected by
<PAGE>
the Board of Directors. Such other officers and assistant
officers as may be deemed necessary may be elected or appointed
by the Board of Directors. Any two or more offices may be held
by the same person, except the offices of President and Secretary
and the offices of President and Vice President.
3.02. Election and Term of Office. The officers of
---------------------------
the Company to be elected by the Board of Directors shall be
elected annually by the Board of Directors at the first meeting
of the Board of Directors held after each annual meeting of the
stockholders. If the election of officers shall not be held at
such meeting, such election shall be held as soon thereafter as
conveniently may be. Each officer shall hold office at the
pleasure of the Board of Directors or until his successor shall
have been duly elected or until his prior death, resignation or
removal.
3.03. Removal. Any officer or agent may be removed by
-------
the Board of Directors whenever in its judgment the best
interests of the Company will be served thereby, but such removal
shall be without prejudice to the rights provided by written
contract, if any, of the person so removed. Election or
appointment shall not of itself create contract rights.
3.04. Vacancies. A vacancy in any principal office
---------
because of death, resignation, removal, disqualification or
otherwise, shall be filled by the Board of Directors for the
unexpired portion of the term.
3.05. Chairman of the Board. The Chairman of the
---------------------
Board of Directors shall preside at all meetings of stockholders
and directors. In his absence, the Vice Chairman of the Board,
if there be one, otherwise the President, shall preside.
3.06. President. The President shall be the Chief
---------
Executive Officer of the Company, and subject to the control of the
Board of Directors, shall in general supervise and control all of
the business and affairs of the Company. He shall have authority,
subject to such rules as may be prescribed by the Board of Directors,
to appoint such agents and employees of the Company as he shall deem
necessary, to prescribe their powers, duties and compensation, and to
delegate authority to them. Such agents and employees shall hold
office at the discretion of the President. He shall have authority
to sign, execute and acknowledge, on behalf of the Company, all deeds,
mortgages, bonds, stock certificates, contracts, leases, reports and
all other documents or instruments necessary or proper to be executed
in the course of the Company's regular business, or which shall be
authorized by resolution of the Board of Directors; and, except as
otherwise provided by law or the Board of Directors, he may authorize
any Vice President or other officer or agent of the Company to sign,
execute and acknowledge such documents or instruments in his place
and stead. In general he shall perform all duties incident to the
office of President and such other duties as may be prescribed by
the Board of Directors from time to time.
<PAGE>
3.07. The Vice President. In the absence of the
------------------
President or in the event of his death, inability or refusal to
act, or in the event for any reason it shall be impracticable for
the President to act personally, the Vice President (or in the
event there be more than one Vice President, the Vice Presidents
in the order designated by the Board of Directors, or in the
absence of any designation, then in the order of their election)
shall perform the duties of the President, and when so acting,
shall have all the powers of and be subject to all the
restrictions upon the President. Any Vice President may sign,
with the Secretary or Assistant Secretary, certificates for
shares of the Company; and shall perform such other duties and
have such authority as from time to time may be delegated or
assigned to him by the President or by the Board of Directors.
The execution of any instrument of the Company by any Vice
President shall be conclusive evidence, as to third parties, of
his authority to act in the stead of the President.
3.08. The Secretary. The Secretary shall: (a) keep
-------------
the minutes of the meetings of the stockholders and of the Board
of Directors in one or more books provided for that purpose; (b)
see that all notices are duly given in accordance with the
provisions of these by-laws or as required by law; (c) be
custodian of the corporate records and of the seal of the Company
and see that the seal of the Company is affixed to all documents
the execution of which on behalf of the Company under its seal is
duly authorized; (d) sign with the President or a Vice President,
certificates for shares of the Company, the issuance of which
shall have been authorized by resolution of the Board of
Directors; and (e) in general perform all duties incident to the
office of Secretary as provided by the Wisconsin Business
Corporation Law and have such other duties and exercise such
authority as from time to time may be delegated or assigned to
him by the President or by the Board of Directors.
3.09. The Treasurer. The Treasurer shall: (a) have
-------------
charge and custody of and be responsible for all funds and
securities of the Company; (b) receive and give receipts for
moneys due and payable to the Company from any source whatsoever,
and deposit all such moneys in the name of the Company in such
banks, trust companies or other depositaries as shall be selected
in accordance with the provisions of Section 6.07; and (c) in
general perform all of the duties incident to the office of
Treasurer and have such other duties and exercise such other
authority as from time to time may be delegated or assigned to
him by the President or by the Board of Directors.
3.10. Assistant Secretaries and Assistant Treasurers.
----------------------------------------------
There shall be such number of Assistant Secretaries and Assistant
Treasurers as the Board of Directors may from time to time
authorize and designate. The Assistant Secretaries and Assistant
Treasurers, in general, shall perform such duties and have such
authority as shall from time to time be delegated or assigned to
them by the Secretary or the Treasurer, respectively, or by the
President or the Board of Directors.
<PAGE>
3.11. Other Assistants and Acting Officers. The Board
------------------------------------
of Directors shall have the power to appoint any person to act as
assistant to any officer, or as agent for the Company in his
stead, or to perform the duties of such officer whenever for any
reason it is impracticable for such officer to act personally,
and such assistant or acting officer or other agent so appointed
by the Board of Directors shall have the power to perform all the
duties of the office to which he is so appointed to be assistant,
or as to which he is so appointed to act, except as such power
may be otherwise defined or restricted by the Board of Directors.
3.12. Salaries. The salaries of the principal
--------
officers shall be fixed from time to time by the Board of
Directors or by a duly authorized committee thereof, and no
officer shall be prevented from receiving such salary by reason
of the fact that he is also a director of the Company.
ARTICLE IV. INDEMNIFICATION BY THE COMPANY
-------------------------------------------
Any person made a party to or threatened with any
civil, criminal, administrative or investigative action, suit or
proceeding (other than an action by or in the right of the
Company) by reason of the fact that he, his testator or
intestate, is or was a Director, officer or employee of the
Company or is or was serving at the request of the Company as a
Director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, shall be
indemnified by the Company against the reasonable expenses,
including attorneys' fees, judgments, fines, and amounts paid in
settlement, actually and necessarily incurred by him in
connection with such action, suit or proceeding, or in connection
with any appeal therein, if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best
interests of the Company, and with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was
unlawful. Such right of indemnification shall not be deemed
exclusive of any other right to which such Director, officer,
employee or agent may otherwise be entitled.
ARTICLE V. CAPITAL STOCK
-------------------------
5.01 Certificates of Stock. Certificates of stock,
---------------------
numbered and with the seal of the Company affixed, signed by the
President, or a Vice President, and the Secretary or an Assistant
Secretary, shall be issued to each stockholder certifying the
number of shares owned by him in the Company. When such
certificates are countersigned by a transfer agent, or registered
by a registrar, the signatures of such officers may be
facsimiles. A facsimile or printed seal of the Company may be
affixed upon certificates of stock of the Company.
In case any officer who has signed, or whose facsimile
signature has been placed upon a certificate has ceased to be an
officer of the Company before such certificate has been issued,
<PAGE>
such certificate may, nevertheless, be adopted and issued and
delivered by the Company as though the officer who signed such
certificate or whose facsimile signature shall have been used
thereon, had not ceased to be such officer with the same effect
as if he were such office at the date of its issue.
5.02. Lost Certificates. A new certificate of stock
-----------------
may be issued in the place of any certificate theretofore issued
by the Company, alleged to have been lost or destroyed, and the
directors may, in their discretion, require the owner of the lost or
destroyed certificate, or his legal representative, to give the
Company a bond, in such sum as they may direct, not exceeding double
the value of the stock, to indemnify the Company against any claim
that may be made against it on account of the alleged loss of any
such certificate or the issuance of any such new certificate.
5.03. Transfer of Shares. Transfer of stock shall be
------------------
made only on the transfer books of the Company, kept at the
office of the Company or respective transfer agents designated to
transfer the stock, and before a new certificate is issued, the
old certificate shall be surrendered and cancelled.
5.04. Closing of Transfer Books. The Board of
-------------------------
Directors of the Company may provide that the stock transfer books
be closed for a period not to exceed, in any case, fifty (50) days
for the purpose of determining stockholders entitled to notice of
or to vote at any meeting of stockholders, or any adjournment
thereof, or entitled to receive payment of any dividend, or in
order to make a determination of stockholders for any other proper
purposes. If the stock transfer books shall be closed for the
purpose of determining stockholders entitled to notice of or to
vote at a meeting of stockholders, such books shall be closed for
at least ten (10) days immediately preceding such meeting. In lieu
of closing the stock transfer books, the Board of Directors may fix
in advance a date as the record date for any such determination of
stockholders, such date in any case to be not more than seventy (70)
days and, in case of a meeting of stockholders not less than ten (10)
days prior to the date on which the particular action, requiring such
determination of stockholders is to be taken. When a determination of
stockholder, entitled to vote at any meeting of stockholders has been
made as provided herein, such determination shall be applied to any
adjournment thereof except when the determination has been made
through the closing of the stock transfer books and the stated period
of closing has expired.
5.05. Dividends. The Board of Directors of the Company may
---------
from time to time, declare and the Company may pay dividends on its
outstanding shares in cash, property, or its own shares, as provided by law.
ARTICLE VI. MISCELLANEOUS
--------------------------
6.01. Corporate Seal. The corporate seal shall be a
--------------
round metallic disc, with the words "MODINE MANUFACTURING
<PAGE>
COMPANY, Wisconsin" around the circumference, and the words
"CORPORATE SEAL" in the center. If a facsimile or printed seal
is used on stock certificates, it shall be similar in content and
design to the above.
6.02. Fiscal Year. The fiscal year of the Company
-----------
shall begin on the first day of April in each year, and end on
the thirty-first day of March in the following year.
6.03. Contracts. The Board of Directors may authorize
---------
any officer or officers, agent or agents, to enter into any
contract or exercise or deliver any instrument in the name of and
on behalf of the Company, and such authorization may be general
or confined to specific instances. In the absence of other
designation, all deeds, mortgages, contracts, promissory notes,
and instruments of assignment or pledge made by the Company shall
be executed in the name of the Company by the President or one of
the Vice Presidents and by the Secretary, an Assistant Secretary,
the Treasurer or an Assistant Treasurer; the Secretary or an
Assistant Secretary, when necessary or required, shall affix the
corporate seal thereto; and when so executed no other party to
such instrument or any third party shall be required to make any
inquiry into the authority of the signing officer or officers.
6.04. Loans. No indebtedness for borrowed money shall
-----
be contracted on behalf of the Company and no evidence of such
indebtedness shall be issued in its name unless authorized by or
under the authority of a resolution of the Board of Directors.
Such authorization may be general or confined to specific
instances.
6.05. Drafts, Checks, etc. All checks, drafts or
-------------------
other orders for the payment of money issued in the name of the
Company shall be signed by such employee or employees, agent or
agents, of the Company as are appointed by the President, and in
such manner, including facsimile and printed signatures, as may
be designated by the President. In connection with the
furnishing of authorizing resolution and signature card forms
needed by commercial banks, the corporate Secretary, or any
Assistant Secretary, is authorized to execute and certify to such
forms as he may deem appropriate as adopted under the authority
of this by-law and as binding upon the Company in accordance
therewith, thereby empowering employees or agents appointed by
the President to sign checks, drafts, or other orders for the
payment of money in the name of the Company.
6.06. Deposits. All funds of the Company not
--------
otherwise employed shall be deposited from time to time to the
credit of the Company in such banks, trust companies or other
depositaries as may be selected by or under the authority of the
President. In connection with the furnishing of authorizing
resolution and signature card forms, needed by such banks, trust
companies or other depositaries, the corporate Secretary, or any
Assistant Secretary, is authorized to execute and certify to such
<PAGE>
forms as he may deem appropriate as adopted under the authority
of his by-law and as binding upon the Company in accordance
therewith, thereby designating such banks, trust companies or
other depositaries as may be selected by the President, for the
deposit of Company funds.
6.07. Voting of Securities Owned by this Company.
------------------------------------------
Subject always to the specific directions of the Board of Directors,
(a) any shares or other securities issued by any other corporation and
owned or controlled by this Company may be voted at any meeting of
security holders of such other corporation by the President of this
Company if he be present, or in his absence by any Vice President of
this Company who may be present, and (b) whenever, in the judgment of
the President, or in his absence, of any Vice President, it is desirable
for this Company to execute a proxy or written consent in respect to any
shares for other securities issued by any other corporation and owned by
this Company, such proxy or consent shall be executed in the name of
this Company by the President or one of the Vice Presidents of this
Company, without necessity of any authorization by the Board of Directors,
affixation of corporate seal or countersignature or attestation by another
officer. Any person or persons designated in the manner above stated as
the proxy or proxies of this Company shall have full right, power and
authority to vote the shares or other securities issued by such other
corporation and owned by this Company the same as such shares or other
securities might be voted by this Company.
ARTICLE VII. AMENDMENTS
------------------------
These by-laws may be amended, repealed or altered in whole or
in part by the affirmative vote of not less than two-third (2/3) of the
shares of the Company entitled to vote thereon, or by the affirmative vote
of not less than two-thirds (2/3) of the full Board of Directors of the
Company, at any regular meeting of the stockholders or of the Board of
Directors, or any special meeting of the stockholders or Bard of Directors,
provided that such action has been specified in the notice of any such
meeting.
<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 (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 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
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
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.
<PAGE>
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.
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
<PAGE>
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 (in its sole discretion) 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) Conflict of Interest. 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 (including but
not limited to serving as an employee, consultant, advisor
or in any other capacity to such organization or business,
or participating in a hostile takeover attempt of the
Company by such organization or business);
(b) Certain Prohibited Activities. Employee shall comply fully
with applicable laws and government regulations (both civil
and criminal) 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; or
(c) Leaving the Company within One Year of Exercise. Employee
shall not exercise any portion of this option and then leave
the employment of the Company within one year after exercise
for any reason except death, disability, normal retirement,
or early retirement with the consent of the Board of Directors.
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 paragraphs (a) or (b) of
this Paragraph 13 prior to, or during the twenty-four (24) months
after, any exercise pursuant to this option, or failure to comply
with the provisions of paragraph (c) of this Paragraph 13 during
the twelve (12) months after exercise pursuant to this option,
shall cause such exercise to be subject to rescission. The
<PAGE>
Company shall notify Employee in writing of any such rescission
within twenty-four (24) months after such exercise under paragraphs
(a) or (b) or within twelve (12) months after such exercise under
paragraph (c). In the event of notice of rescission, Employee
shall pay to the Company the amount of any gain realized or
payment received pertaining to the rescinded exercise of this
option.
By accepting this Agreement, Employee consents to a
deduction from any amounts the Company owes Employee from
time to time (including amounts owed to Employee as salary
or other compensation, fringe benefits, or vacation pay, as
well as any other amounts owed to Employee by the Company),
to the extent of the amounts Employee owes the Company under
paragraphs (a), (b), or (c) above. Whether or not the Company
elects to make any set-off in whole or in part, if the Company
does not recover by means of set-off the full amount Employee
owes, calculated as set forth above, Employee agrees to pay
immediately the unpaid balance to the Company. 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 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>
MODINE MANUFACTURING COMPANY
NON-QUALIFIED STOCK OPTION AGREEMENT
THIS NON-QUALIFIED STOCK OPTION granted this day of
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, 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").
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
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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
Securities Exchange Act of 1934, this option may not be
<PAGE>
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
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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
adjustment shall be made in the per share or per unit price
<PAGE>
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 (in its sole discretion) 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) Conflict of Interest. 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 (including but not
limited to serving as an employee, consultant, advisor
or in any other capacity to such organization or
business, or participating in a hostile takeover
attempt of the Company by such organization or
business);
<PAGE>
(b) Certain Prohibited Activities. Employee shall comply
fully with applicable laws and government regulations
(both civil and criminal) 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; or
(c) Leaving the Company within One Year of Exercise.
Employee shall not exercise any portion of this option
and then leave the employment of the Company within one
year after exercise for any reason except death,
disability, normal retirement, or early retirement with
the consent of the Board of Directors.
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 paragraphs (a) or
(b) of this Paragraph 13 prior to, or during the twenty-four
(24) months after, any exercise pursuant to this option, or
failure to comply with the provisions of paragraph (c) of
this Paragraph 13 during the twelve (12) months after
exercise pursuant to this option, shall cause such exercise
to be subject to rescission. The Company shall notify
Employee in writing of any such rescission within
twenty-four (24) months after such exercise under paragraphs
(a) or (b) or within twelve (12) months after such exercise
under paragraph (c). In the event of notice of rescission,
Employee shall pay to the Company the amount of any gain
realized or payment received pertaining to the rescinded
exercise of this option.
By accepting this Agreement, Employee consents to a
deduction from any amounts the Company owes Employee from
time to time (including amounts owed to Employee as salary
or other compensation, fringe benefits, or vacation pay, as
well as any other amounts owed to Employee by the Company),
to the extent of the amounts Employee owes the Company under
paragraphs (a), (b), or (c) above. Whether or not the
Company elects to make any set-off in whole or in part, if
the Company does not recover by means of set-off the full
<PAGE>
amount Employee owes, calculated as set forth above,
Employee agrees to pay immediately the unpaid balance to the
Company. 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.
IN WITNESS WHEREOF, the Company has caused this option to be
executed on the date first above written.
ATTEST: MODINE MANUFACTURING COMPANY
By:
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W. E. Pavlick, Secretary R. T. Savage, President and
Chief Executive Officer
Accepted and Agreed To:
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Employee
<PAGE>
EXHIBIT 10(v)
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
Committee consisting of two or more directors 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 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 approved a broad
Incentive Compensation Plan providing for an aggregate of
3,000,000 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 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. If 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.
<PAGE>
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.
(c) In the event a participant who has been awarded
shares hereunder terminates 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
<PAGE>
shares so awarded shall not be subject to forfeit and
shall vest with the employee, or 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 the
participant at one time upon the expiration of each
of the second, third, fourth, fifth, and sixth years
after 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.
(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-
<PAGE>
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,
restrictions under the Securities Act of 1933 or the Securities
Exchange Act of 1934, as amended, under the requirements of any
<PAGE>
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 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>
<TABLE>
EXHIBIT 11
Modine Manufacturing Company and Subsidiaries
Statement Re: Computation of Per Share Earnings
<CAPTION>
For The Year Ended March 31
1996 1995 1994
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Primary
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<S> <C> <C> <C>
Weighted Average Shares Outstanding 29,669,997 29,682,441 29,557,695
Net Shares Issuable, Assuming Exercise
of Options Using the Average
Market Price and Employing the
Treasury Stock Method 746,451 851,894 913,735
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Average Common Share and Common
Share Equivalents 30,416,448 30,534,335 30,471,430
========== ========== ==========
Net Earnings for the Period $61,399,000 $68,442,000 $43,990,000
=========== =========== ===========
Net Earnings per Share of Common
Stock $2.02 $2.24 $1.44
===== ===== =====
Fully Diluted
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Weighted Average Shares Outstanding 29,669,997 29,682,441 29,557,695
Net Shares Issuable, Assuming Exercise
of Options Using the Ending Market
Price (unless antidilutive) and
Employing the Treasury Stock Method 744,413 938,642 946,339
---------- ---------- ----------
Average Common Shares and Common
Share Equivalents 30,414,410 30,621,083 30,504,034
========== ========== ==========
Net Earnings for the Period $61,399,000 $68,442,000 $43,990,000
========== ========== ==========
Net Earnings per Share of Common Stock $2.02 $2.24 $1.44
===== ===== =====
</TABLE>
<PAGE>
EXHIBIT 13
Management's discussion and analysis of operations
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Modine Manufacturing Company finished its fiscal year ended
March 31, 1996, with an 8.5-percent sales increase to $990.5
million. Net earnings of $61.4 million, or $2.02 per share, were
higher than any time except for the record established the year before.
Income from operations was 84.1 percent of the prior year's
record. Higher material costs, increased competition in the North
American aftermarket that did not allow the pass-through of these
costs, a greater proportion of sales from Europe, new plant start-up
expenses, and the addition of several acquisitions held operating
income to 9.5 percent of sales in fiscal 1996. Operating income
rose in Europe although margins continued to be lower than in the
United States. European acquisitions made two years ago are still in
the process of being restructured and some productivity issues remain.
The company's 1995-96 revenues from its top ten customers were
38 percent of total sales, compared with 35 percent the year before.
Modine continues to have a diversified sales base -- its largest
customer represented less than seven percent of total revenues in
both fiscal 1996 and 1995.
Acquisitions and divestiture
- ----------------------------
At the end of August, Modine purchased a new plant in Richland
County, South Carolina. It will serve customers in the passenger-car
and light-truck market. The plant will produce PF (parallel-flow)
transmission oil coolers, giving the company the ability to support
the expanding use of PF products in more applications and by more
customers. The facility will begin production this summer.
A former production facility in Uden, The Netherlands, was
reactivated last year to begin producing oil coolers as well as
latent-heat batteries -- a new product line that is being
introduced to the luxury-car market in Europe.
Modine also acquired several existing companies in fiscal 1996,
the largest of which was Signet Systems, 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. On
July 31, the acquisition added nearly 400 employees located at plants
in Harrodsburg, Kentucky, and Goch, Germany, and at a sales and
engineering office in Detroit, Michigan. This strategic acquisition
of the respected, well-established, systems supplier complements
Modine's other divisions, which provide state-of-the-art heat
exchangers for similar markets and customers.
In May, Modine purchased Radiadores Montana S.A., a Spanish
manufacturer and distributor to the automotive aftermarket.
Montana also makes a variety of heat exchangers for on- and off-
highway vehicles and for industrial applications.
Also in May, Modine acquired its partner's majority ownership
of a joint-venture company in Mexico City, Mexico. The joint-venture
operation, Mexpar, a Modine licensee since 1961, had been partially
<PAGE>
owned since 1985. Mexpar makes automotive radiators, primarily for
the aftermarket. It also serves original-equipment manufacturers of
vehicles in Mexico.
And, in November, Modine purchased the business and certain
assets of Emmett Radiator Supply, Inc., in El Paso, Texas, and
Emmett Radiator Supply, Inc., in Albuquerque, New Mexico, both of
which have become additional Modine sales branches in the aftermarket.
In a divestiture in October, Modine sold the business and assets
of its extruded copper-tubing business, located in Dowagiac, Michigan,
which it had acquired through the purchase of the Heat Transfer Division
of Sundstrand Corporation in 1990.
Fiscal-year sales by market
- ---------------------------
The worldwide passenger-car and light-truck original-equipment-
manufacturer (OEM) market was the largest market for Modine sales in
1995-96. Company shipments rose $41.4 million to customers in this
market and were about 24 percent of Modine's most recent annual sales.
New revenues from Signet plus good increases in Europe, particularly
in air-conditioning components, contributed to this growth.
OEM customers in the passenger-car market continue to stress
supplier partnerships and purchasing alliances, enhancing the
opportunities of more value-added suppliers such as Modine. The
company is working to gain more market share in the new year, both
in North America and Europe, and sees future opportunities with
Pacific Rim customers.
Aftermarket sales constituted the second-largest category in
fiscal 1996 with 23 percent of the total. A small slippage of Modine's
North American aftermarket sales from record levels was offset by growing
business in Europe, aided by the Radiadores Montana acquisition.
The North American aftermarket has been beset with increased
off-shore competition offering a few, high-volume products at very
low prices. Modine plans to increase its sales with a number of
strategies, including broader distribution, continued cost reduction,
and intensified marketing efforts, such as the introduction of a
lifetime, limited warranty for complete radiators sold by Modine
in the aftermarket.
Sales to OEMs of medium and heavy trucks were 17 percent of the
company's total business last year. Growth in Europe and new business
from Signet added to Modine's strong position in this market.
One of the major trends in the truck industry has been an OEM
emphasis on suppliers taking responsibility for systems. For Modine,
that means the entire under-hood cooling system, including radiators,
charge-air coolers, oil coolers, condensers, shrouds, surge tanks,
shutters, and numerous brackets -- in addition to Signet's climate-
control systems. This is a trend that will be accelerated as the truck
manufacturers bring out new vehicles, which plays into Modine's strength,
given the company's strong product offerings.
The largest year-over-year percentage-increase in sales was to the
off-highway equipment market, where Modine's business was up 27 percent.
<PAGE>
The market grew to become 12 percent of the fiscal-1996 total, compared
with 10 percent in fiscal 1995. Volumes were at the highest level in the
last decade. Modine operations in both Europe and North America shared
this growth in sales to OEMs of earthmoving, construction, and agricultural
equipment.
As is the trend in other markets, Modine will be assuming more
responsibility for cooling system design in partnership with its off-
highway-equipment customers, having the competitive advantage of a full
line of product offerings and the technical expertise to design complete
systems. Stricter emissions regulations over the next five years, which
will benefit Modine because of the need for more charge-air coolers and
for more efficient heat exchangers in general, speak well for the future.
The company will take advantage of these opportunities by introducing new,
higher-efficiency products and by increasing capacity to serve our
customers' needs.
Modine's sales to the industrial market were up modestly in fiscal
1996 and continued to represent 12 percent of total revenues. The
industrial market consists of a multitude of different applications and
customers worldwide and, for the most part, tends to follow general
economic trends rather than any particular industry cycle. A large part
of Modine's industrial sales go to engine manufacturers, and a portion
of those engines are destined for large trucks; thus, the industrial
market reflects, to some degree, the North American truck industry's
production levels.
Building-HVAC sales declined to eight percent of Modine's total
revenues in fiscal 1996. This was primarily due to lower sales to
manufacturers of residential equipment, caused by large inventories of
high-efficiency furnaces and by vertical integration of some products
by various OEMs. Increasing softness in the commercial building market
also affected results.
Future growth for Modine in the residential part of this market
could come from the acceptance of PF heat exchangers and other new
products in the industry.
Sales by product in fiscal 1996
- -------------------------------
Cooling systems and modules with multiple heat exchangers continue
to show sales growth. OEM customers require more of these packaged
assemblies from suppliers, and Modine has positioned itself to take
advantage of this trend.
A Modine product line that is benefiting from the systems trend
is vehicular air-conditioning. Sales of these products -- including
condensers, evaporators, and climate-control systems -- recorded the
highest fiscal-1996 growth in both dollars and percentage. The net
increase of $45.0 million came substantially from the addition of Signet
and from continued growth in Europe. The number of new cars sold with
air-conditioning in Europe is considerably smaller than in the United
States but is expanding rapidly. Modine's prospects look good for
continued growth in this product line.
The radiator category, which includes both complete radiators and
cores, retained the largest position in total sales at 41 percent.
Excellent sales increases in the European aftermarket, combined with
<PAGE>
good growth to European OEM customers, more than offset the small
slippage in sales in the North American aftermarket.
Sales of oil coolers continued to make up 16 percent of Modine's
total. Advances were led by revenue increases from European operations
in addition to sales of Albraze + and PF oil coolers. Future growth will
be boosted as the reactivated facility in The Netherlands and the new
plant in South Carolina are fully launched.
Charge-air coolers remained the fastest-growing product line for
Modine in the last decade with a 35-percent 10-year compound annual
growth rate. They had the second-highest percentage increase in fiscal
1996 and made up 12 percent of total sales for the year.
Building-HVAC products declined nine percent from the previous
year and decreased to eight percent of total sales in 1995-96, as
discussed earlier in this report.
Capital expenditures and R&D
- ----------------------------
Capital expenditures of $55.7 million in fiscal 1996 were
63-percent higher than the prior year and were a record for Modine.
These investments are being made to accommodate future growth,
reduce costs, and introduce new products. Significant investments
included: purchase of a new plant in South Carolina; reopening
and equipping of a plant in The Netherlands; plant expansions,
particularly in Europe; process improvements and other
productivity enhancements; tooling for new products; and
additional process equipment at a number of facilities.
Investments in property, plant, and equipment will be in the
$60-70-million range over the next several years as Modine
secures adequate plant capacity to meet customer needs. Capital
expenditures have been and are expected to be financed mostly
from cash generated internally.
Outstanding commitments for capital expenditures at March 31,
1996, were approximately $17.1 million. Most of these commitments
relate to plant expansions, process improvements, tooling for new
products, and various new equipment. About $4.5 million of the
commitments covers facility improvements and equipment upgrades
for Modine Europe locations. A year earlier, there were outstanding
commitments of $13.6 million.
Modine's investment in research and development amounted to
$14.3 million in fiscal 1996, 31-percent higher than the prior
year's total. The addition of Signet System's R&D operations was
the major portion of the increase.
Development of new or improved products and processes that
will enable Modine to remain the technological leader in heat
transfer will continue to be the most important objective of R&D.
In addition to numerous proprietary technologies, Modine owned a
total of 841 patents worldwide at the end of fiscal 1996, versus
821 the year before.
Modine has a number of new products under development. In
the building-HVAC market, for example, the company has proceeded
<PAGE>
to field trials of PF products for residential, room air-
conditioners in the United States. If the trials and accelerated
lab tests are successful, orders could be received for the 1997
"build season." The company is also approaching the stage for
extended field tests of an innovative design in heat exchangers
for high-efficiency residential furnaces.
Employment and plant recognition
- --------------------------------
Total worldwide employment at Modine was 7,561 on March 31,
1996, compared with 7,551 at the end of the previous fiscal year.
These employees enabled eight Modine plants to earn 11
awards from customers. Six plants also received recertifications
from their customers.
Modine's Logansport, Indiana, plant recently joined the Granada,
Spain, facility as a registered ISO 9002 producer, in addition to the
Mill, Holland, site, which is registered to ISO 9001. The International
Organization for Standardization (ISO) develops common manufacturing,
trade, and communications standards to facilitate the worldwide exchange
of goods and services.
Hundreds of employees at 22 U.S. manufacturing facilities have
participated in a five-year program by serving on their plants' waste-
minimization teams, by taking an active role in recycling, and by
implementing new processes and procedures and coming up with new
ideas to help Modine reduce its waste. They achieved a 56-percent
overall reduction in waste company-wide by the program's end, which
helped reduce costs as well as benefit the environment. These
facilities have been joined by a Canadian and Mexican plant in a
new waste-minimization program that began January 1. Our experience
has taught us to consider the effect of waste when working on a job
or when designing or starting a new process.
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.
Hedging and foreign-currency-exchange contracts
- -----------------------------------------------
On a limited basis, Modine enters into foreign-exchange options
and forward contracts on foreign currencies as hedges against the
impact of currency fluctuations. See Note 14 to the consolidated
financial statements.
Environmental matters
- ---------------------
During the year ended in March 1996, Modine was able to reduce
by $240,000 the reserve set up in the previous year for a Superfund
assessment.
<PAGE>
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, Modine established reserves of
$533,000 for the estimated total environmental cleanup costs to
be incurred at specified locations in California and Illinois.
The California site has since been remediated to the satisfaction
of appropriate authorities.
It is likely that Modine will, in the future, incur additional
charges for environmental programs relating to past operations, but
such costs are unknown and indeterminable at this time. There are no
currently known, unrecorded liabilities that would have a significant
effect on the company's consolidated financial position or results of
operations.
Forward-looking statements
- --------------------------
Other than historical matters or comparative results, the matters
discussed in Management's discussion and analysis of operations and in
the Letter to shareholders, particularly the sales forecast and factors
affecting earnings, include forward-looking statements that involve
risks and uncertainties. These cautionary statements are being made
pursuant to the provisions of the Private Securities Litigation Reform
Act of 1995 and with the intention of obtaining the benefits of the "safe
harbor" provisions of the Act. Investors are cautioned that any forward-
looking statements made by Modine are not guarantees of future performance
and that actual results may differ materially from those in the forward-
looking statements as a result of various factors, including: customers'
integration of products currently being supplied by the company; the
success of Modine or its competitors in obtaining the business of the
customer base; the ability to pass on increased costs to customers;
variations in currency-exchange rates in view of a large portion of the
company's business being nondomestic; labor relations at Modine, its
customers, and its suppliers, which may affect the continuous supply of
product; and the ability to improve acquisitions' operations.
In making statements about Modine's fiscal-1997 operating results,
management has assumed relatively stable economic conditions in the
United States and worldwide, no unanticipated swings in the business
cycles affecting customer industries, and a reasonable legislative and
regulatory climate in those countries where Modine does business.
Readers are cautioned not to place undue reliance on Modine's
forward-looking statements, which speak only as of the date of this
report's writing.
Management's discussion and analysis of results of operations
- -------------------------------------------------------------
Sales
- -----
Sales for fiscal 1996 were $990.5 million, up $77.5 million or
8.5 percent from the prior year. The company's European operations
generated almost 70 percent of the sales increase, or approximately
<PAGE>
$54.0 million, with over half of the European sales gain arising from
favorable currency-exchange rates. The acquisition of Signet Systems
as of July 31,1995, also contributed $46.7 million. There were some
fall-offs, the largest of which came as a result of the sale of the
Dowagiac copper-tubing plant in October 1995. Declines also occurred
in portions of the passenger-car and building-HVAC components.
Sales for the previous fiscal year were $913.0 million, up
$243.5 million or 36.4 percent. The full-year impact of the
prior year's European acquisitions, the strengthening value of
European currencies against the dollar, and strong sales growth
across all of Modine's domestic and other foreign operations were
the major contributors to the sales growth.
Sales for the fiscal year ended March 1994 were also up, by
$98.7 million or 17.3 percent. European acquisitions for part of
the year, together with significant sales increases to truck and
engine manufacturers as well as to the passenger-car aftermarket,
accounted for much of the growth.
Gross profit
- ------------
Gross profit was 25.8 percent for the year, 2.7 percentage
points lower than the previous year. The primary cause was increased
material costs, not all of which were recovered by price increases to
customers. Some of these costs were recovered, but with a time lag.
This continued a trend that began in the previous year but that
subsided in the fourth quarter with some decreases in raw material
costs. Also contributing to the decline were a higher percentage of
total sales by the company's European operations, and the results
from the newly acquired Signet Systems, both of which are generally
earning lower gross margins than the overall company average.
Gross-profit margin in the previous fiscal year, at 28.5 percent
of sales, was down 1.2 percent. Contributing factors included higher
raw material and labor costs in addition to generally lower gross-
profit margins at recently acquired European locations.
Gross-profit margin in fiscal 1994, at 29.7 percent, was up
1.2 percent, largely as a result of increased sales volume in most
markets Modine serves.
Selling, general, and administrative (SG&A)
- -------------------------------------------
SG&A expense for the year totaled $161.1 million, up just $12.7
million or 8.5 percent from the previous year. Included in the current
year was the eight-month effect of the Signet Systems acquisition. Other
changes were not significant. SG&A was unchanged as a percentage of sales
at 16.3 percent in both current and prior years.
SG&A expenses for the previous year totaled $148.4 million, a
$26.0-million or 21.2-percent increase. Over 70 percent of the increase
can be attributed to the full-year impact of two European acquisitions
made in fiscal 1994. SG&A declined to 16.3 percent of sales from 18.3
percent the year before.
<PAGE>
SG&A in fiscal 1994 increased by $17.1 million or 16.2 percent
while decreasing as a percentage of sales from 18.5 percent to 18.3
percent.
Income from operations
- ----------------------
Income from operations in fiscal 1996 was $94.3 million, down
$17.8 million or 15.9 percent, primarily due to cost increases, mostly
in materials, and only partial success in recovering these cost increases
from customers.
Income from operations in fiscal 1995 and 1994 was $112.1 million
and $76.2 million, respectively. On a percentage basis, the two years
increased by 47.0 percent and 32.5 percent, respectively. Sales volume
increases and continuing control over cost increases were the main
factors leading to the improvements in both years.
Interest expense
- ----------------
Interest expense, at $6.8 million, was up $0.4 million or
6.9 percent as a result of increased borrowings related primarily
to the Signet acquisition at the end of July 1995. Overall,
interest rates were lower than the previous year.
Interest expense in the previous year grew by 6.2 percent,
due mainly to 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. 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 in fiscal 1994 was $6.0 million. Although
outstanding debt at the end of the year increased by $32.6 million,
interest expense remained essentially unchanged from the prior year.
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.
Other income, net
- -----------------
Other income, at $11.7 million, was $8.5-million higher than the
previous year, primarily because of an approximately $5.0-million gain
on the sale of the company's copper-tubing plant. Also included in this
category was a gain on sale of certain equipment no longer required by
the company and a number of lesser value items.
Other income of $3.2 million in the prior year was relatively
consistent when compared with the fiscal-1994 total of $2.8 million.
Provision for income taxes
- --------------------------
The company had a slightly higher effective tax rate in fiscal
1996, at 38.1 percent versus 37.1 percent a year ago. Higher tax rates
on increased foreign earnings were the primary factor.
<PAGE>
In the prior year, the income-tax rate was 37.1 percent,
reduced mainly by two factors: the net utilization of certain
foreign operating-loss-carryforwards and a reduction in foreign
joint-venture dividends, which are taxed on receipt.
The net income-tax rate in fiscal 1994, before the effect of
FASB 109, was 41.0 percent, up from the previous year's 38.2
percent due to a one-percent increase in the U.S. federal rate
and to a larger portion of company business in foreign countries.
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.
Net earnings before the impact of accounting changes
- ----------------------------------------------------
The company had net earnings of $61.4 million (6.2 percent
of sales and 18.7 percent ROE), down $7.0 million or 10.3
percent from the previous year. The reduction was primarily due
to increased material costs and only partial success in
recovering the increases from customers, particularly in the
aftermarket, with a time lag for those costs that were recovered.
Net earnings in fiscal 1995 were $68.4 million or 7.5 percent
of sales, up 58.8 percent from prior-year net earnings before FASB
109. Factors driving the increase were the wide success in domestic
and foreign markets being served by the company and the positive
contributions made by operating units acquired in Europe.
Net earnings in fiscal 1994, before 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.
Net earnings after the impact of accounting changes
- ---------------------------------------------------
There were no accounting changes in the current fiscal year
and net earnings remained at $61.4 million.
Net earnings in the previous year were $68.4 million, up
$24.5 million from the year before. There were no accounting
changes adopted during fiscal 1995 that impacted earnings.
Net earnings for the company in fiscal 1994, 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 a change in accounting
for postretirement benefits other than pensions.
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands, except per-share amounts)
<CAPTION>
- -----------------------------------------------------------------------------------------
For the years ended March 31 1996 1995 1994
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net sales $990,493 $913,010 $669,553
Cost of sales 735,120 652,541 470,880
------------------------------------------
Gross profit 255,373 260,469 198,673
Selling, general, and administrative
expenses 161,082 148,415 122,434
------------------------------------------
Income from operations 94,291 112,054 76,239
Interest expense (6,825) (6,384) (6,009)
Other income -- net 11,683 3,157 2,796
------------------------------------------
Earnings before income taxes 99,149 108,827 73,026
Provision for income taxes 37,750 40,385 29,935
------------------------------------------
Earnings before cumulative effect of
accounting changes 61,399 68,442 43,091
Cumulative effect of change in accounting
for income taxes -- -- 899
------------------------------------------
Net earnings $ 61,399 $ 68,442 $ 43,990
------------------------------------------
Earnings per share of common stock before
cumulative effect of accounting changes $2.02 $2.24 $1.41
Cumulative effect per share of accounting
changes -- -- 0.03
------------------------------------------
Net earnings per share of common stock $2.02 $2.24 $1.44
------------------------------------------
Average common shares and common share
equivalents outstanding 30,416 30,534 30,471
<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 $14.7 million to $18.0
million. Sources and uses of cash are set forth in the accompanying
statement of cash flows.
Trade receivables, net of allowances for doubtful accounts, at
$148.0 million were up $2.7 million due to the acquisition of Signet
Systems with a partial offset from the divestiture of the extruded
copper-tubing business. Days sales outstanding remained essentially
unchanged.
<PAGE>
Inventories increased by $13.9 million to $150.0 million,
mainly due to the Signet acquisition, partly offset by the tubing-
business divestiture. The weakening of the dollar also had an
effect on increasing the translation value of European
inventories.
Deferred income taxes and other current assets increased by
$9.1 million to $35.4 million. An increase in tooling charges
billable but not yet billed and an increase in deferred income-
tax items were the major causes of the change.
The current ratio decreased slightly to 1.9 to 1 from 2.0 to 1.
Noncurrent assets
- -----------------
Property, plant, and equipment increased by $30.5 million to
$201.3 million due to acquisitions less divestiture and to
capital expenditures during the year, which were the highest ever
and well in excess of retirements and depreciation expense.
Investment in affiliates decreased by $1.4 million,
primarily due to the 57-percent joint-venture interest in Radinam
S. A. being purchased during the year, leading to the full
consolidation of this unit. Offsetting the decrease, in part, was
the greater earnings from the company's Japanese joint venture, NEX.
Intangible assets increased by $36.4 million to $70.5 million,
due mostly to goodwill resulting from the acquisition of Signet Systems.
Deferred charges and other noncurrent assets increased by $5.3
million to $42.1 million, primarily due to continued recognition of a
surplus in the company's over-funded pension plans.
Current liabilities
- -------------------
Short-term debt and long-term debt, current portion, remained in
net almost unchanged.
Accounts payable increased by $3.1 million to $77.3 million,
primarily reflecting higher activity, partly from acquisitions.
Accrued compensation and employee benefits increased by $4.7
million to $42.9 million due mainly to increases in workers'
compensation reserves and other postretirement benefits, including
those associated with the acquisitions.
Accrued expenses and other current liabilities increased
$2.4 million to $28.2 million, mostly due to increases arising
from the newly acquired companies.
Noncurrent liabilities
- ----------------------
Long-term debt increased by $25.6 million to $87.8 million
at year end due mainly to additional borrowings as a result of
the acquisitions and to the higher level of capital expenditures.
<PAGE>
As a percent of shareholders' investment, long-term debt was
25.1 percent, while total debt to equity was 32.3 percent.
Other noncurrent liabilities increased by $4.3 million to
$41.4 million, primarily due to increases in postretirement
benefits other than pensions associated with the Signet acquisition.
Shareholders' investment
- ------------------------
Total shareholders' investment increased by $41.1 million to
$349.4 million, with the major component being retained earnings,
which benefited from net earnings of $61.4 million (less
dividends paid of $17.8 million).
The foreign-currency translation adjustment decreased $1.7
million as European currencies strengthened against the dollar
from exchange rates at the beginning of the year.
During the year, $8.7 million was expended to acquire an
additional 278,000 treasury shares; 337,000 shares were used to
satisfy requirements for stock options, stock awards, and
employee stock-purchase plans.
During the previous year, $9.9 million was expended to
acquire an additional 336,000 treasury shares. The company used
412,000 shares, as required, for stock options, stock awards, and
employee stock-purchase plans.
In fiscal 1994, $6.8 million was expended to purchase
264,000 treasury shares, while using 349,000 shares for stock
options, stock awards, and employee stock-purchase plans.
Book value per share increased by $1.36 during the year to
$11.74. This has grown at an 11.0 percent compound annual rate
since fiscal 1986.
<PAGE>
<TABLE>
CONSOLIDATED BALANCE SHEETS
(In thousands, except per-share amounts)
<CAPTION>
- ------------------------------------------------------------------------------
March 31 1996 1995
- ------------------------------------------------------------------------------
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 17,958 $ 32,691
Trade receivables, less allowance for doubtful
accounts of $5,052 and $6,424 147,963 145,231
Inventories 150,000 136,114
Deferred income taxes and other current assets 35,414 26,346
-----------------------
Total current assets 351,335 340,382
Noncurrent assets:
Property, plant, and equipment -- net 201,341 170,872
Investment in affiliates 6,567 8,016
Intangible assets -- net 70,456 34,090
Deferred charges and other noncurrent assets 42,137 36,827
-----------------------
Total noncurrent assets 320,501 249,805
-----------------------
Total assets $671,836 $590,187
=======================
Liabilities and shareholders' investment
Current liabilities:
Short-term debt $ 12,500 $ 13,565
Long-term debt -- current portion 12,552 10,853
Accounts payable 77,277 74,194
Accrued compensation and employee benefits 42,941 38,285
Income taxes 7,598 7,004
Accrued expenses and other current liabilities 28,163 25,748
-----------------------
Total current liabilities 181,031 169,649
-----------------------
Noncurrent liabilities:
Long-term debt 87,809 62,220
Deferred income taxes 12,220 12,958
Other noncurrent liabilities 41,356 37,088
-----------------------
Total noncurrent liabilities 141,385 112,266
-----------------------
Total liabilities 322,416 281,915
-----------------------
<PAGE>
<S> <C> <C>
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 9,143 7,897
Retained earnings 339,193 296,614
Foreign-currency translation adjustment 3,435 5,159
Treasury stock at cost: 583 and
642 common shares (17,607) (16,669)
Restricted stock -- unamortized value (3,708) (3,693)
-----------------------
Total shareholders' investment 349,420 308,272
-----------------------
Total liabilities and shareholders'
investment $671,836 $590,187
=======================
<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
- -----------------------------------------
Net cash from operating activities was $84.6 million, up $17.6
million from the previous year. Earnings, adjusted for noncash items,
were down $15.3 million from the prior year. This was caused by lower
earnings plus larger noncash adjustments, primarily for: depreciation
and amortization; the divestiture of the extruded copper-tubing
business; the sale of fixed assets; and the ability to reduce the
allowance for doubtful accounts. The demand for working capital was
lower than the previous year when new operations and sales growth
caused substantial increases. This difference more than offset
effects of the earnings shortfall.
The largest changes among the working-capital items were a
decrease of $12.3 million in trade receivables due to reductions
at several divisions and an increase of $6.3 million in deferred
income taxes and other current assets.
Cash flows from operating activities in the previous year
were $67.0 million, down $8.3 million. While earnings adjusted
for non-cash items were up $33.3 million, working capital items
required $36.3 million to cover the increased business level, as
opposed to the prior 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.
The largest change among working-capital items in fiscal 1995
was an increase in trade receivables of $31.5 million, which was
essentially a function of increased sales volume. The overall quality
of receivables was down slightly, reflecting some longer collection
<PAGE>
times. 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 due to the much higher operating level than in the
previous year and to increased accrued expenses and other current
liabilities of $7.7 million.
In fiscal 1994, cash flows from operating activities 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.
Capital expenditures
- --------------------
Capital expenditures for the year were $55.7 million, up $21.6
million from the prior year, reflecting a new facility in South
Carolina and reopening a facility in The Netherlands, along with
other capacity expansions and process improvements, both in the
United States and in Europe.
Capital expenditures in the prior fiscal year 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.
In fiscal 1994, capital expenditures were $29.2 million, up
$5.6 million, reflecting building expansions and new equipment.
Acquisitions, divestiture, sales of assets, and investments in
- --------------------------------------------------------------
affiliates
- ----------
During the year, the company acquired 100 percent of the
assets of Signet Systems, Inc., an air-conditioning systems
business located in Harrodsburg, Kentucky, and Goch, Germany, and
of Radiadores Montana, a Spanish aftermarket company. Modine also
purchased the remaining 57-percent interest in Radinam S.A., a
joint venture company in Mexico. The combined net cash price of
all acquisitions was $56.8 million. See Note 10 to the
consolidated financial statements for further details.
The company disposed of its extruded copper-tubing plant in
Dowagiac, Michigan, for $9.1 million. See Note 10.
For a combined price of $3.9 million, Modine also disposed
of other equipment that was no longer required.
During the prior year, the company disposed of its 36-percent
interest in McQuay do Brasil for $1.5 million and incurred additional
costs of $0.3 million related to the fiscal 1994 acquisitions.
In the 1994 fiscal year, Modine made two acquisitions: the
purchase of a 100-percent interest in a German limited
partnership, Langerer & Reich, and purchase of the remaining 50-
percent interest from Modine's partner in a joint-venture
<PAGE>
company, Austria Warmetauscher 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 $10.6 million in scheduled
and $35.3 million in discretionary repayments of long-term debt. The
company also added $70.0 million to its long-term debt during the
year, partly due to the acquisitions and partly to replace certain
portions of the long-term debt that was repaid during the year.
During the prior year, Modine 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-
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.
In fiscal 1994, the company borrowed $32.1 million to repay
acquired debt in Germany and to increase its debt capacity. In
addition, the company made scheduled repayments of long-term debt
totaling $9.8 million.
Treasury stock -- see page 16.
- ------------------------------
Dividends paid
- --------------
Dividends for the current fiscal year were $17.8 million,
representing a rate of 60 cents per share. An increase of 8 cents
per share was declared, effective in May 1995.
Dividends during the previous fiscal year 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 1994
fiscal year at the rate of 46 cents per share. An increase of
four cents per share was effective in May 1993.
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
<CAPTION>
- --------------------------------------------------------------------------------------------------
For the years ended March 31 1996 1995 1994
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings $61,399 $ 68,442 $43,990
Adjustments to reconcile net earnings with cash provided
by operating activities:
Depreciation and amortization 39,641 34,482 28,114
Gain on sale of business (5,009) -- --
Pensions and other postretirement benefits (3,124) (2,299) (2,398)
(Gain)/loss from disposition of property, plant, and
equipment (1,852) 487 1,017
Deferred income taxes (1,759) (241) (3,474)
Provision for losses on accounts receivable (1,477) 1,375 1,267
Undistributed earnings of affiliates (1,202) (1,301) (221)
Cumulative effect of accounting changes -- -- (899)
Other -- net 1,421 2,343 2,523
----------------------------------
88,038 103,288 69,919
----------------------------------
Change in operating assets and liabilities
excluding acquisitions:
Trade receivables 12,303 (31,519) (14,328)
Inventories (3,706) (26,928) 9,560
Deferred income taxes and other current assets (6,286) (4,225) (2,807)
Accounts payable (2,716) 16,895 7,640
Accrued compensation and employee benefits 1,447 2,094 3,916
Income taxes (1,996) (327) 3,338
Accrued expenses and other current liabilities (2,504) 7,685 (1,996)
----------------------------------
Net cash provided by operating activities 84,580 66,963 75,242
----------------------------------
Cash flows from investing activities:
Expenditures for property, plant, and equipment (55,689) (34,101) (29,150)
Acquisitions, net of cash acquired (56,798) (254) (18,918)
Proceeds from sale of business 9,117 -- --
Proceeds from dispositions of assets 3,895 1,118 1,057
Investments in affiliates -- 1,500 --
(Increase) in deferred charges and other noncurrent
assets (296) (1,053) (851)
Other -- net 13 (52) 8
----------------------------------
Net cash (used for) investing activities (99,758) (32,842) (47,854)
----------------------------------
<PAGE>
<S> <C> <C> <C>
Cash flows from financing activities:
(Decrease)/increase in short-term debt -- net (2,007) (499) 3,736
Additions to long-term debt 69,967 3,392 33,158
Reductions of long-term debt (45,861) (24,053) (42,472)
Issuance of common stock, including treasury stock 5,275 5,607 4,194
Purchase of treasury stock (8,740) (9,946) (6,798)
Cash dividends paid (17,802) (15,434) (13,597)
Other -- net (9) (279) (565)
----------------------------------
Net cash provided by/(used for) financing activities 823 (41,212) (22,344)
----------------------------------
Effect of exchange-rate changes on cash (378) 1,259 (104)
----------------------------------
Net (decrease)/increase in cash and cash equivalents (14,733) (5,832) 4,940
Cash and cash equivalents at beginning of year 32,691 38,523 33,583
----------------------------------
Cash and cash equivalents at end of year $17,958 $ 32,691 $38,523
==================================
Cash paid during the year for:
Interest, net of amounts capitalized $ 6,849 $ 6,276 $ 5,534
Income taxes $37,716 $ 39,120 $29,306
<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
1996, 1995, and 1994 shares amount capital earnings adjustment shares amount value
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
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
translation 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)
- ---------------------------------------------------------------------------------------------------------------------
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
translation 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)
- ---------------------------------------------------------------------------------------------------------------------
<PAGE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net earnings -- -- -- 61,399 -- -- -- --
Cash dividends, $0.60 per
share -- -- -- (17,802) -- -- -- --
Purchase of treasury stock -- -- -- -- -- (278) (8,740) --
Stock options and awards
including related tax
benefits -- -- 879 (704) -- 191 4,005 (1,120)
Employee stock-purchase
and -ownership plans -- -- 367 (314) -- 146 3,797 --
Foreign-currency
translation adjustment -- -- -- -- (1,724) -- -- --
Amortization of deferred
compensation under
restricted stock plans -- -- -- -- -- -- -- 1,105
- ---------------------------------------------------------------------------------------------------------------------
Balance, March 31, 1996 30,342 $18,964 $9,143 $339,193 $3,435 (583) $(17,607) $(3,708)
- ---------------------------------------------------------------------------------------------------------------------
<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 the United States and Canada 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., 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.
Use of estimates: The preparation of the consolidated
----------------
financial statements requires the use of certain estimates and
assumptions by management in determining the company's assets,
liabilities, revenue, expenses, and related disclosures. Actual
results could differ from those estimates.
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 are entered into by the company as
hedges against the impact of currency fluctuations on certain sales
and purchase transactions 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
postemployment 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.
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
<PAGE>
based on the difference between the amounts reported in the
financial statement and the tax bases of assets and liabilities
using enacted tax rates in effect in the years in which the
differences are expected to reverse.
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 various periods not exceeding 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.
Environmental expenditures: Environmental expenditures
--------------------------
related to current operations that qualify as property, plant,
and equipment or that substantially increase the economic value
or extend the useful life of an asset are capitalized and all
other expenditures are expensed as incurred. Environmental
expenditures that relate to an existing condition caused by past
operations are expensed. Liabilities are recorded when
environmental assessments and/or remedial efforts are probable
and the costs can be reasonably estimated.
Accounting principles to be adopted: In 1995, the Financial
------------------------------------
Accounting Standards Board (FASB) issued Statement of Financial
Accounting Standards (SFAS) No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be
Disposed Of." This statement will be adopted by the company in
the fiscal year beginning April 1, 1996. Implementation of this
statement is not expected to have a material impact on the
consolidated financial statements.
In 1995, the FASB also issued SFAS No. 123, "Accounting for
Stock Based Compensation." Under the accounting and disclosure
requirements promulgated in the statement, the company must adopt
the provisions in its fiscal year beginning April 1, 1996. The
company is currently evaluating the accounting and disclosure
<PAGE>
alternatives provided for under the provisions of the statement.
At this time, management has not selected the planned method of
adoption and therefore cannot reasonably estimate the probable
impact, if any, on the consolidated statements.
Reclassifications: Certain prior-year amounts have been
------------------
reclassified to conform with the fiscal-1996 presentation.
2. Research and development costs
------------------------------
Research and development costs charged to operations totaled
$14,256,000 in fiscal 1996, $10,907,000 in fiscal 1995, and
$9,509,000 in fiscal 1994.
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 that basis or a monthly retirement
benefit amount for various 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. Fiscal-1996 results include plans of the company's
Signet acquisition and the effects of the Dowagiac divestiture.
Net pension credits, computed using the projected unit
credit method, include the following components:
(In thousands)
- -----------------------------------------------------------------------------
Years ended March 31 1996 1995 1994
- -----------------------------------------------------------------------------
Benefits earned during the year $ 4,035 $ 3,532 $ 3,238
Interest accrued on benefits
earned in prior years 6,720 5,978 5,419
Actual return on assets 2,941 (21,470) (15,124)
Net amortization and deferral 16,982) 9,209 4,114
- -----------------------------------------------------------------------------
Net pension (credit) $(3,286) $(2,751) $(2,353)
- -----------------------------------------------------------------------------
Actuarial assumptions:
Discount rate (to calculate
present value of future
benefits) 7.5% 7.5% 7.5%
Average salary-growth rate 5.5% 5.5% 5.5%
Return on plan assets 9.0% 9.0% 9.0%
- -----------------------------------------------------------------------------
<PAGE>
Funded status of the plans at March 31, 1996 and 1995:
(In thousands)
- -----------------------------------------------------------------------------
Assets exceed Accumulated
accumulated benefits
March 31, 1996 benefits exceed assets
- -----------------------------------------------------------------------------
Actuarial present value of benefit
obligations:
Vested $(64,865) $(42)
Nonvested (4,532) --
----------------------------
Accumulated benefit obligation (69,397) (42)
Effect of projected salary increases (28,295) --
----------------------------
Projected benefit obligation (97,692) (42)
Less: Plan assets at fair value 150,253 38
----------------------------
Plan assets in excess of/(less than)
projected benefit obligation 52,561 (4)
Adjusted for items not yet recognized
in earnings:
Unrecognized net benefit (asset)/
obligation remaining from initial
adoption of FASB Statement No. 87 (513) --
Effect of benefit changes on
prior years' service cost 1,229 --
Remaining unrecognized net (gain)/loss (13,571) 5
Adjustment to recognize minimum liability -- (5)
- ---------------------------------------------------------------------------
Prepaid/(accrued) pension expense
included in balance sheets $ 39,706 $(4)
- -----------------------------------------------------------------------------
<PAGE>
(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)
- -----------------------------------------------------------------------------
As of March 31, 1996 and 1995, the plans held 2,137,000 and
2,315,000 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 1996 1995
- -----------------------------------------------------------------------------
Expense recognized $ 1,148 $ 705
Accumulated benefit obligation 11,342 10,351
Projected benefit obligation 12,738 11,290
Fair value of plan assets 459 --
- -----------------------------------------------------------------------------
Actuarial assumptions:
Discount rate (to calculate present
value of future benefits) 7.5%-12.5% 7.5%
Average salary-growth rate 3.0%-8.5% 3.0%-5.5%
- -----------------------------------------------------------------------------
<PAGE>
Domestic qualified defined-contribution plans: The company has several
---------------------------------------------
401(k) and savings plans that cover most of its domestic employees. These
plans provide company matching under various formulas. The cost of the
company's contributions to the plans (including stock purchase plans
detailed in note 17) for fiscal 1996, 1995, and 1994 were $6,454,000,
$5,871,000, and $5,099,000, respectively.
4. Postretirement benefits other than pensions
-------------------------------------------
The company and certain of its domestic subsidiaries, including
its Signet acquisition, provide selected healthcare and life-insurance
benefits for retired employees. Designated employees may become eligible
for those benefits when they retire.
Postretirement benefit expense:
(In thousands)
- -------------------------------------------------------------------------
Year ended March 31 1996 1995 1994
- -------------------------------------------------------------------------
Service cost $ 293 $ 214 $ 306
Interest cost 1,525 1,202 1,318
Net amortization (582) (657) (439)
- -------------------------------------------------------------------------
Net periodic postretirement
benefit cost $1,236 $ 759 $1,185
- -------------------------------------------------------------------------
Postretirement benefit liability:
(In thousands)
- -------------------------------------------------------------------------
March 31 1996 1995
- -------------------------------------------------------------------------
Accumulated postretirement benefit obligation:
Retirees $17,199 $12,157
Fully eligible active plan participants 2,287 1,794
Other active plan participants 3,547 2,858
Total accumulated postretirement benefit
obligation 23,033 16,809
Net gains/(losses) 845 1,069
Unamortized net reduction in obligation 3,981 5,365
- -------------------------------------------------------------------------
Accrued postretirement benefit obligation $27,859 $23,243
- -------------------------------------------------------------------------
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. This reduction
is being amortized as an offset to expense in fiscal 1995 and also in future
years. The Signet acquisition added to the fiscal-1996 obligation while the
Dowagiac divestiture reduced it.
The discount rate used in determining the accumulated postretirement
benefit obligation was 7.5 percent at March 31, 1996 and 1995. The projected
<PAGE>
healthcare costs trend rates used were 10-11 percent for fiscal 1996, 11 per-
cent for fiscal 1995, and 12 percent for fiscal 1994, 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.
The healthcare-cost trend-rate assumption can have 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 $1,440,000 as of March 31, 1996, and
the net periodic postretirement benefit cost for fiscal 1996 by $96,000.
5. Leases
------
The company leases various facilities and equipment. Rental expense
under operating leases totaled $12,211,000 in fiscal 1996, $10,750,000 in
fiscal 1995, and $5,540,000 in fiscal 1994.
Future minimum rental commitments at March 31, 1996, under
noncancelable leases were:
- -------------------------------------------------------------------------
Year ended March 31 (In thousands)
- -------------------------------------------------------------------------
1997 $8,603 2000 $2,679
1998 5,546 2001 2,541
1999 3,743 2002 and beyond 687
- -------------------------------------------------------------------------
Total future minimum rental commitments $23,799
- -------------------------------------------------------------------------
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 1996 1995 1994
- ---------------------------------------------------------------------------
Federal:
Current $29,497 $32,745 $27,355
Deferred (979) (748) (3,720)
State 5,646 6,203 4,371
Foreign:
Current 4,613 1,678 1,234
Deferred (1,027) 507 (204)
- ---------------------------------------------------------------------------
Totals charged to earnings $37,750 $40,385 $29,036
- ---------------------------------------------------------------------------
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:
<PAGE>
- ---------------------------------------------------------------------------
Years ended March 31 1996 1995 1994
- ---------------------------------------------------------------------------
Statutory federal tax 35.0% 35.0% 35.0%
State taxes, net of federal benefit 3.6 3.4 3.6
Taxes on non-U.S. earnings and losses 0.7 (0.6) 2.3
Other (1.2) (0.7) (1.1)
- ---------------------------------------------------------------------------
Effective tax rate 38.1% 37.1% 39.8%
- ---------------------------------------------------------------------------
The significant components of deferred income-tax expense
attributable to income from operations are as follows:
(In thousands)
- ---------------------------------------------------------------------------
Years ended March 31 1996 1995 1994
- ---------------------------------------------------------------------------
Pensions $ 1,790 $1,591 $ 1,383
Depreciation (260) (754) (722)
Inventories (812) (465) 389
Employee benefits (727) (976) (1,892)
Other (1,997) 363 (3,082)
- ---------------------------------------------------------------------------
Totals charged to earnings $(2,006) $ (241) $(3,924)
- ---------------------------------------------------------------------------
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 1996 1995
- ---------------------------------------------------------------------------
Deferred tax assets:
Accounts receivable $ 1,458 $ 1,970
Inventories 3,998 3,401
Plant and equipment 712 --
Employee benefits 17,730 16,951
Net operating-loss and tax-credit
carry-forwards 4,177 2,783
Environmental -- 131
Other 5,539 3,884
------------------
Total gross deferred assets 33,614 29,120
Less valuation allowance 3,900 2,782
------------------
Net deferred tax assets 29,714 26,338
Deferred tax liabilities:
Pension 15,735 13,918
Plant and equipment 8,279 8,369
Other 927 1,522
------------------
Total gross deferred tax liabilities 24,941 23,809
- ---------------------------------------------------------------------------
Net deferred tax asset $ 4,773 $ 2,529
- ---------------------------------------------------------------------------
<PAGE>
The valuation allowance for deferred tax assets as of April 1, 1995,
was $2,782,000. The valuation allowance increased by $1,118,000 for the
year ended March 31, 1996.
At March 31, 1996, the company had net foreign-tax-credit carry-
forwards for federal income-tax purposes of approximately $201,000, of
which $67,000 expire in 1997, $38,000 expire in 1998 and $96,000 expire
in 1999.
The undistributed earnings of certain foreign subsidiaries and
joint-venture companies totaled $30,989,000 as of March 31, 1996. 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 $10,046,000, $9,657,000, and $3,383,000 at
March 31, 1996, 1995, and 1994, respectively.
All the short-term investments at March 31, 1996, 1995, and 1994,
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 1996 1995
- -------------------------------------------------------------------------
Raw materials $ 38,307 $ 37,279
Work in process 47,794 40,879
Finished goods 63,899 57,956
- -------------------------------------------------------------------------
Total inventories $150,000 136,114
- -------------------------------------------------------------------------
<PAGE>
9. Property, plant, and equipment
------------------------------
Property, plant, and equipment is composed of:
(In thousands)
- -------------------------------------------------------------------------
March 31 Depreciable lives 1996 1995
- -------------------------------------------------------------------------
Land -- $ 5,217 $ 4,568
Buildings and improvements 10-40 years 104,901 100,640
Machinery and equipment 3-12 years 234,614 218,229
Office equipment 5-14 years 34,375 31,409
Transportation equipment 3-7 years 16,194 11,422
Construction in progress -- 38,580 20,250
----------------------
433,881 386,518
Less accumulated depreciation 232,540 215,646
- ------------------------------------------------------------------------
Net property, plant, and equipment $201,341 $170,872
- -------------------------------------------------------------------------
Depreciation expense was $34,962,000, $31,410,000, and $25,429,000
for the fiscal years ended 1996, 1995, and 1994, respectively.
10. Acquisitions and divestiture
----------------------------
Acquisitions: In the first quarter of fiscal 1996, the company made
two small acquisitions. Effective April 1, 1995, the company, through its
wholly owned subsidiary NRF Holding B.V., acquired Radiadores Montana S.A.
based in Granada, Spain. Montana is a manufacturer and distributor to the
automotive aftermarket, producing radiators and radiator cores, oil coolers,
heaters, and air-conditioning condensers and evaporators for on- and off-
highway vehicles and for industrial applications. At the end of May, the
company acquired its partner's 57-percent ownership in the joint-venture
company Radinam S.A., which owns Mexpar (Manufacturera Mexicana de Partes
de Automoviles S.A. de C.V.), a radiator manufacturer in Mexico City.
Mexpar produces automotive radiators primarily for the aftermarket and
also serves original-equipment manufacturers of vehicles in Mexico.
As of July 31, the company acquired the business, assets, and certain
liabilities of the Signet Systems Division from The Equion Corporation. The
acquisition included the main plant in Harrodsburg, Kentucky, an operation
in Goch, Germany, and a sales and engineering office in Detroit, Michigan.
Signet is a full-service supplier of climate-control systems and components
to the automotive, truck, and off-highway vehicle markets in North America
and Europe.
In the third quarter of fiscal 1994, the company acquired the entire
equity interest in Heinrich Langerer Verwaltungsgesellschaft mbH and
Langerer & Reich GmbH & Co. (collectively "Langerer & Reich") and certain
specified liabilities. The acquisition included 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 Langerer & Reich in Hungaro Langerer Gepjarmutechnikai Kft., a
Hungarian joint venture. Langerer & Reich manufactures copper/brass and
<PAGE>
aluminum heat exchangers for the truck, bus, and industrial markets and
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 Warmetauscher GmbH (AWG). The AWG facility manufactures
aluminum air-conditioning condensers and oil coolers for a number of
European auto makers.
The combined adjusted purchase price of all the fiscal-1996
acquisitions totaled $64,210,000 and was paid for with cash
provided by operations, with new and existing unsecured revolving
credit arrangements, and promissory notes to Equion Corporation
totaling $5,000,000. Combined goodwill and other intangibles created
by the acquisition were $41,187,000 and $14,000 respectively. Goodwill
is being amortized on a straight-line basis over 15 years.
The combined adjusted cash-purchase price of the fiscal-1994
acquisitions totaled $20,012,000 and was paid for with cash provided
by operations. 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 are included in the consolidated
financial statements since the respective effective dates of
acquisition. The foreign operations are reported using a one-
month delay, which is consistent with the company's policy for
reporting operations outside the United States and Canada. All of
the acquisitions have been accounted for using the purchase
method. The company had used the equity method to account for its
interest in Radinam S.A. and AWG prior to majority ownership.
The company continues to use the plants, machinery and equipment,
and other assets acquired in these acquisitions for the
manufacture of heat-transfer products.
Details of businesses acquired in purchase transactions were
as follows:
(In thousands)
- -------------------------------------------------------------------------
Year ended March 31 1996 1994
- -------------------------------------------------------------------------
Value of assets acquired, including
intangibles, excluding cash acquired
of $2,412 and $840 respectively $89,096 $83,954
Liabilities assumed and created (29,036) (62,069)
Equity investment in affiliates (3,262) (2,713)
- -------------------------------------------------------------------------
Net cash paid for acquisitions $56,798 $19,172
- -------------------------------------------------------------------------
Divestiture: In October 1995, the company completed the sale of its
-----------
copper-extrusion business in Dowagiac, Michigan, to National Tube Holding
Company, Inc., of Birmingham, Alabama. Modine recognized a pretax gain of
$5,009,000, including $1,430,000 from the curtailment and settlement of
certain pension and benefit obligations, negotiated subsequent to the sale.
<PAGE>
On a pro-forma basis, the unaudited consolidated results of operations
would have been as follows had the current year acquisitions and disposal
occurred on April 1, 1994:
(Dollars in thousands, except per-share amounts)
- -------------------------------------------------------------------------
Year ended March 31 (unaudited) 1996 1995
- -------------------------------------------------------------------------
Net sales $1,001,007 $976,653
Net earnings 59,807 65,588
Net earnings per share:
Primary $1.97 $2.15
Fully diluted 1.97 2.14
- -------------------------------------------------------------------------
The pro-forma financial information presented above is for informational
purposes only and does not necessarily reflect the results of operations
that would have occurred had the divestiture and acquisitions, completed
in fiscal 1996, taken place on the date assumed above, nor are those results
necessarily indicative of the results of future combined operations.
11. Intangible assets
-----------------
Intangibles include:
(In thousands)
- -----------------------------------------------------------------------
March 31 1996 1995
- -----------------------------------------------------------------------
Goodwill $69,973 $29,335
Patents and product technology 8,389 8,389
Other intangibles 783 3,930
- -----------------------------------------------------------------------
79,145 41,654
Less accumulated amortization 8,689 7,564
- -----------------------------------------------------------------------
Net intangible assets $70,456 $34,090
- -----------------------------------------------------------------------
Amortization expense for intangible assets was $3,574,000, $2,044,000,
and $1,733,000 for the fiscal years ended 1996, 1995, and 1994, respectively.
12. Deferred charges and other noncurrent assets
--------------------------------------------
Deferred charges and other noncurrent assets include:
(In thousands)
- -------------------------------------------------------------------------
March 31 1996 1995
- -------------------------------------------------------------------------
Prepaid pension costs -- qualified and
nonqualified plans $40,319 $35,404
Other noncurrent assets 1,818 1,423
- -------------------------------------------------------------------------
Total deferred charges and other
noncurrent assets $42,137 $36,827
- -------------------------------------------------------------------------
<PAGE>
13. Indebtedness
------------
Long-term debt at March 31, 1996 and 1995, includes:
(In thousands)
- -----------------------------------------------------------------------------
Fiscal
Interest rate at year of
Type of issue March 31, 1996 maturity 1996 1995
- -----------------------------------------------------------------------------
Denominated in
U.S. dollars:
Fixed rate --
Notes and other debt 9.25%-9.70% 1998 $19,000 $28,400
Weighted average
interest rate
March 31, 1996 9.32%
Revenue bonds 7.50% 2003 2,150 2,531
Variable rate --
Notes 6.17-8.25% 1997-1998 6,000 1,500
Weighted average
interest rate
March 31, 1996 7.73%
Revenue bonds 3.40%-3.90% 2008-2016 5,940 5,940
Weighted average
interest rate
March 31, 1996 3.50%
Denominated in
foreign currency:
Fixed rate -- notes
and other debt 7.52%-11.00% 1997-2006 362 637
Weighted average
interest rate
March 31, 1996 8.88%
Variable rate -- notes
and other debt 1.04%-10.85% 1998-2001 66,900 34,065
-----------------
Weighted average
interest rate
March 31, 1996 3.92%
100,352 73,073
Capital-lease obligation 9 --
-----------------
100,361 73,073
Less current portion 12,552 10,853
- -----------------------------------------------------------------------------
Total $87,809 $62,220
- -----------------------------------------------------------------------------
In conjunction with the acquisition of the Signet Systems Division,
Modine entered into a $25,000,000 revolving credit agreement that is
currently scheduled to mature in fiscal year 1999. At March 31, 1996,
$6,458,000 was utilized, with $18,542,000 available for use. Additionally,
two notes, totaling $5,000,000, were issued to the seller, with final payment
scheduled in fiscal year 1998.
Certain of the company's loan agreements limit the use of retained
earnings for the payment of cash dividends and the acquisition of treasury
<PAGE>
stock. Under the most restrictive, $120,399,000 was available for these
purposes at March 31, 1996. (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 $101,165,000 at March 31, 1996,
and $74,111,000 at March 31, 1995.
Long-term debt matures as follows:
- --------------------------------------------------------------------------
Year ended March 31 (In thousands)
- --------------------------------------------------------------------------
1997 $12,552 2000 $3,713
1998 38,299 2001 1,367
1999 37,993 2002 and beyond 6,437
- --------------------------------------------------------------------------
At March 31, 1996, the company had approximately $17,742,000 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 $13,572,000 in short-term bank borrowings were
outstanding during the year ended March 31, 1996. The weighted average
interest rate on short-term borrowings was 3.97 percent at March 31,
1996, and 5.68 percent at March 31, 1995.
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
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, 1996 and 1995, the parent company had approximately
$3,604,000 and $3,088,000, respectively, in outstanding contracts,
composed of $3,604,000 and $3,004,000 of forward foreign-exchange
contracts denominated in French francs and fiscal 1995's $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.
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
through intercompany loans or local borrowings in the corresponding
<PAGE>
currency generally are effective as hedges of long-term investments.
See also footnote number 13.
15. Other noncurrent liabilities
----------------------------
Other noncurrent liabilities include:
(In thousands)
- -------------------------------------------------------------------------
March 31 1996 1995
- -------------------------------------------------------------------------
Postretirement benefits other than pensions $26,263 $22,316
Pensions 12,912 12,741
Other 2,181 2,031
- -------------------------------------------------------------------------
Total other noncurrent liabilities $41,356 $37,088
- -------------------------------------------------------------------------
16. 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. The rights expire on October 27, 2006,
unless previously redeemed.
17. 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.
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 1996, 1995, and 1994 were
$1,105,000, $1,028,000, and $952,000, respectively.
<PAGE>
Following is a summary of activity under the two plans.
- --------------------------------------------------------------------------
Shares Option/award
(in thousands) price range
- --------------------------------------------------------------------------
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
- --------------------------------------------------------------------------
Granted:
Incentive and nonqualified 313 22.75-33.375
Restricted stock awards 50 0
Exercised (193) 0-30.00
- --------------------------------------------------------------------------
Outstanding March 31, 1996 1,936 $7.188-33.375
- --------------------------------------------------------------------------
A further 2,883,000 shares were available for the granting
of additional options or awards at March 31, 1996.
Stock purchase plans: The company also has adopted several
--------------------
defined-contribution stock purchase 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 1996, 1995, and 1994
resulted in the purchase of 590,000, 589,000, and 593,000 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 1996, 1995, and 1994 were $6,110,000, $5,871,000, and
$5,099,000, respectively.
18. 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:
<PAGE>
(In thousands)
- ----------------------------------------------------------------------------
Years ended March 31 1996 1995 1994
- ----------------------------------------------------------------------------
Sales to unaffiliated customers
from company facilities
located in:
United States $684,289 $667,433 $574,895
Europe 285,800 227,704 77,340
Canada and Latin America 20,404 17,873 17,318
- ----------------------------------------------------------------------------
Net sales $990,493 $913,010 $669,553
- ----------------------------------------------------------------------------
Sales between geographic areas:
United States $ 4,615 $ 2,401 $ 1,558
Europe 125 87 186
Canada and Latin America 4,021 2,520 1,299
- ----------------------------------------------------------------------------
Total inter-area sales $ 8,761 $ 5,008 $ 3,043
- ----------------------------------------------------------------------------
Operating profit or loss:
United States $ 97,113 $115,713 $ 96,507
Europe 8,861 7,861 (1,520)
Canada and Latin America 917 1,840 1,010
Corporate, eliminations, and other (7,742) (16,587) (22,971)
- ----------------------------------------------------------------------------
Earnings before income taxes $ 99,149 $108,827 $ 73,026
- ----------------------------------------------------------------------------
Identifiable assets:
United States $476,390 $411,811 $343,020
Europe 169,211 135,239 113,273
Canada and Latin America 24,932 16,067 13,722
Corporate, eliminations, and other 1,303 27,070 39,966
- ----------------------------------------------------------------------------
Total assets $671,836 $590,187 $509,981
- ----------------------------------------------------------------------------
Included in the United States sales to unaffiliated customers are
export sales of $127,335,000, $126,409,000, and $95,699,000, in fiscal
1996, 1995, and 1994, 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.
19. Contingencies and litigation
----------------------------
In the normal course of business, the company and its subsidiaries
have been named as defendants in various lawsuits 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 that arise
in the ordinary course of its business. Based on the information
available, the company does not expect that any unrecorded liability
related to these matters would have a material effect on the
consolidated financial statements.
In November 1991, the company filed a lawsuit against Mitsubishi
Motor Sales of America, Inc., and Showa Aluminum Corporation, alleging
<PAGE>
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 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 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
February 1996, the U.S. Court of Appeals for the Federal Circuit,
upheld the patent as valid and enforceable and remanded the case to
the ITC for a determination with respect to Showa infringement. In
July of 1994, Showa filed a lawsuit against the company alleging
infringement by the company of certain Showa patents pertaining to
condensers. (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 and Showa
pertaining to a newly issued patent on parallel-flow air-
conditioning condensers. Both 1994 suits have been stayed pending
the outcome of re-examination in the U.S. Patent Office of the
patents involved. All legal and court costs associated with these
cases have been expensed as they were incurred.
20. Quarterly financial data (unaudited)
------------------------------------
Quarterly financial data are summarized below:
(In thousands, except per-share amounts)
- -----------------------------------------------------------------------------
Fiscal 1996 quarters ended June Sept. Dec. March
- -----------------------------------------------------------------------------
Net sales $239,216 $254,292 $252,817 $244,168
Gross profit 60,882 67,937 63,815 62,739
Net earnings 15,983 16,736 14,855 13,825
Net earnings per share
of common stock $0.52 $0.55 $0.49 $0.46
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
Fiscal 1995 quarters ended June Sept. Dec. March
- -----------------------------------------------------------------------------
Net sales $208,436 $221,760 $240,505 $242,309
Gross profit 56,542 63,969 67,646 72,312
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
- -----------------------------------------------------------------------------
<PAGE>
Independent auditors' 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,
1996 and 1995, and the related consolidated statements of
earnings, shareholders' investment, and cash flows for each of
the three years in the period ended March 31, 1996. These
financial statements are the responsibility of the company's
management. Our responsibility is to express an opinion on these
financial statements based on our 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, 1996, and 1995, and the consolidated
results of their operations and their cash flows for each of the
three years in the period ended March 31, 1996, in conformity
with generally accepted accounting principles.
As discussed in notes 1 and 6 to the consolidated financial
statements, the company changed its method of accounting for
income taxes in fiscal 1994.
COOPERS & LYBRAND LLP
Coopers & Lybrand LLP
Chicago, Illinois
May 1, 1996
<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 Aftermarket
Holdings, Inc. North Carolina 100% Registrant <F1>
Modine of Puerto Rico, Inc. Delaware 100% Registrant
Modine of Canada, Ltd. Ontario, Canada 100% Registrant <F2>
Modine Export Sales Corp. Barbados 100% Registrant
Modine, Inc. Delaware 100% Registrant
Modine Handelsgesellschaft mbH Austria 100% Registrant
Modine Holding GmbH Germany 100% Modine, Inc.
TRT Heating Products, Inc. Rhode Island 100% Registrant
Industrial Airsystems, Inc. Minnesota 100% Registrant
NRF 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. <F3>
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
NRF SP ZOO Poland 100% NRF
Austria Warmetauscher GmbH Austria 100% Registrant
Langerer & Reich GmbH ("L&R") Germany 100% Modine Holding GmbH
Modine GmbH Germany 100% Modine Holding GmbH
Langerer & Reich
Automobiltechnik GmbH Germany 100% Modine Holding GmbH
Hungaro Langerer Gep. Kft. Hungary 100% Modine Holding GmbH
Modine Asia K.K. Japan 100% Registrant
Modine Uden B.V. The Netherlands 100% Modine Holding GmbH
Modine S.r.l. Italy 100% Modine Holding GmbH
Radiadores Montana S.A. Spain 100% NRF
Radman, Inc. Michigan 100% Registrant
Modine Foundation, Inc. Wisconsin 100% Registrant
Signet Systems, Inc. Kentucky 100% Registrant
Modine Manufacturing Company
Foundation, Inc. Wisconsin 100% Registrant
Manufactura Mexicana de
Partes de Automoviles, S.A.
("Mexpar") Mexico 100% Registrant <F4>
Signet Systems GmbH Germany 100% Signet Systems, Inc.
<F1> Modine Great Lakes, Inc., Modine Midwest, Inc., Modine North Central,
Inc., Modine Western, Inc., Modine Southeast, Inc., and Modine
Piedmont, Inc. were merged with and into Modine Aftermarket Holdings,
Inc., effective March 27, 1996.
<PAGE>
<F2> The Radman Corporation, Ltd. was amalgamated with and into Modine of
Canada, Ltd. effective April 1, 1996.
<F3> Balance of voting securities held by the Registrant.
<F4> Radinam S.A. de C.V. was merged with and into Mexpar effective May 1,
1996. One share certificate of Mexpar is held by Modine, Inc.
<PAGE>
EXHIBIT 23
Coopers
& Lybrand LLP
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, 1996 on our audits of
the consolidated financial statements and financial statement schedules
of Modine Manufacturing Company and Subsidiaries as of March 31, 1996
and 1995, and for the years ended March 31, 1996, 1995 and 1994, which
report is included in this Annual Report on Form 10-K.
COOPERS & LYBRAND LLP
Coopers & Lybrand LLP
Chicago, Illinois
June 19, 1996
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE CONSOLIDATED BALANCE SHEET AND CONSOLIDATED STATEMENT OF
EARNINGS FOR THE PERIOD ENDING 3/31/96 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-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 17,958
<SECURITIES> 0
<RECEIVABLES> 153,015
<ALLOWANCES> 5,052
<INVENTORY> 150,000
<CURRENT-ASSETS> 351,335
<PP&E> 433,881
<DEPRECIATION> 232,540
<TOTAL-ASSETS> 671,836
<CURRENT-LIABILITIES> 181,031
<BONDS> 87,809
0
0
<COMMON> 18,964
<OTHER-SE> 330,456
<TOTAL-LIABILITY-AND-EQUITY> 671,836
<SALES> 990,493
<TOTAL-REVENUES> 990,493
<CGS> 735,120
<TOTAL-COSTS> 735,120
<OTHER-EXPENSES> 0
<LOSS-PROVISION> (860)
<INTEREST-EXPENSE> 6,825
<INCOME-PRETAX> 99,149
<INCOME-TAX> 37,750
<INCOME-CONTINUING> 61,399
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 61,399
<EPS-PRIMARY> 2.02
<EPS-DILUTED> 2.02
</TABLE>
EXHIBIT 99
notice
of meeting
and proxy
statement
annual meeting
1996
of shareholders
M O D I N E
<PAGE>
M O D I N E
- -------------------------------------------------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS, JULY 17, 1996
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 17, 1996, at 9:30 a.m. for the
following purposes:
1. To elect three directors to serve until the Annual
Meeting in 1999.
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 28,
1996, 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 7, 1996
YOUR VOTE IS IMPORTANT!
Please date, sign, and return
the enclosed Proxy immediately.
<PAGE>
PROXY STATEMENT
Annual Shareholders' Meeting of Modine Manufacturing Company--1996
- ------------------------------------------------------------------
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 17, 1996, 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 28, 1996, 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 7, 1996. The total number of shares of Common Stock
outstanding and entitled to vote at the meeting is 29,786,556
shares; no Preferred Stock is currently 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 nine members.
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 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, the directors whose
terms will continue, their ages, other directorships, and their
<PAGE>
tenure and expiration dates of their terms are set forth on the
following pages:
Nominees to be Elected
- ----------------------
STUART W. TISDALE Director since 1987
Age 67
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
SHURflow Pump Manufacturing Company, a manufacturer of small
high performance pumps, valves, motors and systems. He is
also a director of M&I Marshall & Ilsley Bank, Marshall &
Ilsley Corporation and Twin Disc, Inc. Term to expire in
1999.
VINCENT L. MARTIN Director since 1992
Age 56
Mr. Martin is Chairman, President, Chief Executive Officer,
and a director of Jason Incorporated, a diversified
manufacturing company based in Milwaukee, Wisconsin. He is
also a director of Crane Manufacturing & Service. Term to
expire in 1999.
RICHARD T. SAVAGE Director since 1989
Age 57
Mr. Savage is President and Chief Executive Officer of the
Company. He is also a director of Twin Disc, Inc., and M&I
Marshall & Ilsley Bank. Term to expire in 1999.
Directors Continuing in Service
- -------------------------------
THOMAS J. GUENDEL Director since 1980
Age 68
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.
<PAGE>
GARY L. NEALE Director since 1977
Age 56
Mr. Neale is Chairman, President, Chief Executive Officer,
and a 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 64
Mr. Doyle is Chairman, Chief Executive Officer, and a
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 in 1998.
FRANK W. JONES Director since 1982
Age 56
Mr. Jones is an independent management consultant, Tucson,
Arizona. He is also a director of Jason Incorporated,
Ingersoll Milling Machine Co., Star Cutter Co., Gardner
Publications, Inc., and General Tool Co. Term to expire in
1997.
DENNIS J. KUESTER Director since 1993
Age 54
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 53
Mr. Yonker is President and Chief Executive Officer of
Portec, Inc., Lake Forest, Illinois, a manufacturer of
railroad, construction, and material handling equipment.
He is also a director of Crown Anderson, Inc. and
Woodward Governor Company. Term to expire in 1997.
<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, 1996, 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 Administrative Committee 5,527,675 Power to vote 18.57%
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 Investment Committee of 2,136,597 Power to vote 7.18%
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 J. P. Morgan & Co., 1,829,600 Sole or shared 6.15%
Incorporated voting and/or
60 Wall Street power to dispose
New York, NY 10260** of stock
Common Mario T. Gabelli, GAMCO 1,624,950 Sole or shared 5.46%
Investors, Inc., Gabelli & voting and/or
Company, Inc., and Gabelli power to dispose
Funds, Inc., 655 Third of stock
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 1991 through 1996 Stock Award Plans. D. J.
Kuester is president of Marshall & Ilsley Corporation
and of M&I Marshall & Ilsley Bank.
** Based on a Schedule 13G filed as of December 29, 1995,
by J. P. Morgan & Co. Incorporated.
<PAGE>
*** Based on a joint Schedule 13D filed as of June 1, 1995,
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.
Securities Owned by Management
- ------------------------------
The table below reflects, as of March 31, 1996, 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* 37,000(a) **
Common T. J. Guendel* 85,508(b) **
Common F. W. Jones* 79,934(a) **
Common D. J. Kuester* 21,000(c) **
Common V. L. Martin* 22,500(d) **
Common G. L. Neale* 54,215(a) **
Common S. W. Tisdale* 46,082(a) **
Common M. T. Yonker* 20,000(a) **
Common R. T. Savage 475,632(e)(f) 1.60%
Common D. R. Johnson 226,305(e)(f) **
Common V. S. Frangopoulos 344,352(e)(f) 1.16%
Common M. G. Baker 245,982(e) **
Common D. B. Rayburn 88,623(e) **
Common All executive officers
and directors as a
group (25 persons) 3,018,687(g) 10.14%
* 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.
** Denotes less than one percent of shares outstanding.
<PAGE>
(a) The 37,000 shares listed for Mr. Doyle include options to
acquire 30,000 shares; the 79,934 shares listed for Mr.
Jones include options to acquire 45,000 shares; the 54,215
shares listed for Mr. Neale include options to acquire
30,000 shares; the 46,082 shares listed 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 85,508 shares listed for Mr. Guendel include options to
acquire 45,000 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 22,500 shares listed for Mr. Martin include options to
acquire 20,000 shares and include 500 shares held in trusts
for his children with Mr. Martin as trustee.
(e) The 475,632 shares listed for Mr. Savage include options to
acquire 229,000 shares, and 51,100 restricted shares awarded
to Mr. Savage; the 226,305 shares listed for Mr. Johnson
include 2,288 shares held by Mr. Johnson's wife, options to
acquire 144,750 shares, and 31,200 restricted shares awarded to
Mr. Johnson; the 344,352 shares listed for Mr. Frangopoulos
include 5,200 shares owned by one of his children, options to
acquire 140,302 shares, and 27,200 restricted shares awarded
to Mr. Frangopoulos; the 245,982 shares listed for Mr. Baker
include options to acquire 147,800 shares, and 17,560
restricted shares awarded to Mr. Baker; the 88,623 shares
listed for Mr. Rayburn include options to acquire 64,000
shares, and 16,160 restricted shares awarded to Mr. Rayburn.
All awards listed are pursuant to the 1991 through 1996
Stock Award Plan grants but subject to restrictions that
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 1,271,554 shares held by officers
(other than the five named executive officers) as a group
(12 persons) and includes options to acquire 581,613 shares,
and 57,700 shares awarded pursuant to the 1991 through 1996
Stock Award Plan grants but subject to restrictions that
lapse annually in fifths over a period commencing at the
beginning of the third year from the date of grant.
<PAGE>
Approximately forty-seven percent (47%) of all outstanding
shares are owned or controlled by or for directors, officers,
employees, retired employees, and their families.
BOARD MEETINGS, COMMITTEES AND COMPENSATION
The Board of Directors held nine regular meetings during the
fiscal year ended March 31, 1996. 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, 1996.
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 that
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 $5,250 per quarter. In addition, directors
received a fee of $1,000 for each Board meeting attended and
$1,000 for each Committee meeting attended with the Chairman of
the Audit Committee eligible for a fee of $2,000. Directors who
are officers do not receive any fees in addition to their
remuneration as officers. The Company also reimburses its
<PAGE>
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 "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
Modine.
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.
<PAGE>
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, 1996, for
services rendered to the Company and its subsidiaries during fiscal
1995-1996. Also included is salary, bonus, restricted Common Stock
awards, and stock option information for fiscal years ended March 31,
1994, and March 31, 1995.
<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>
1995/96 R. T. Savage President & Chief $348,500 $317,135 $398,125 32,000 $25,997
1994/95 Executive Officer 334,500 334,500 199,500 25,000 24,958
1993/94 318,125 264,044 210,000 26,000 22,709
1995/96 D. R. Johnson Executive Vice $236,000 $171,808 $170,625 25,000 $17,298
1994/95 President, 214,000 171,200 156,750 20,000 15,891
1993/94 Operations 185,125 122,923 150,000 19,000 13,807
1995/96 V. S. Frangopoulos Group Vice $195,000 $141,960 $ 91,000 15,000 $14,549
1994/95 President, 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
1995/96 M. G. Baker Group Vice $178,000 $113,386 $ 91,000 15,000 $13,279
1994/95 President, 166,000 116,200 85,500 11,000 12,357
1993/94 Distributed Products 151,125 87,804 81,000 12,000 7,989
1995/96 D. B. Rayburn Group Vice $171,000 $108,927 $113,750 15,000 $13,025
1994/95 President, 156,000 93,600 85,500 11,000 11,607
1993/94 Highway Products 140,125 69,782 81,000 10,000 10,445
<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, 1996, were: Mr. Savage - 51,100
shares valued at $1,354,150; Mr. Johnson - 31,200 shares
valued at $826,800; Mr. Frangopoulos - 27,200 shares valued
at $720,800; Mr. Baker - 17,560 shares valued at $465,340;
and Mr. Rayburn - 16,160 shares valued at $428,240.
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 $26.50 at March 31, 1996.
<PAGE>
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 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:
<PAGE>
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.
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
1995-96, the Company used a formula bonus program that 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 that 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 1995-96. 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 1995-96, the total annual compensation provided was in
accordance with this philosophy.
<PAGE>
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
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 shareholders.
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 1995-96 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. In 1996, for the fiscal year
ending March 31, 1997, the CEO, whose base pay is considerably
below the midpoint of CEO's in comparably sized companies as set
forth in survey data, was awarded an additional stock award of
7,500 shares in lieu of a base pay increase. The CEO's
employment agreement (described on page 17) only specifies
minimum termination compensation. Total annual compensation is
established by the Compensation Committee.
<PAGE>
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 several 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 is determined as
described above. Specifically in 1996, for the fiscal year ending
March 31, 1997, more aggressive changes in base pay were granted
for other than the CEO (discussed above) so as to bring the officer
corps base pay closer to the median of similarly sized companies.
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.
<PAGE>
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
Measurement Period
(Fiscal Year Covered) Modine NASDAQ S&P 500
- --------------------- ------ ------ -------
Measurement Pt. 4/1/91 100 100 100
FYE 92 181 124 111
FYE 93 209 134 128
FYE 94 277 147 130
FYE 95 368 161 150
FYE 96 297 214 198
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.
<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 32,000 11.9% $22.75 1/17/2006 $ 0 $ 458,645 $ 1,157,520
D. R. Johnson 25,000 9.3% $22.75 1/17/2006 $ 0 358,313 904,313
V. S. Frangopoulos 15,000 5.6% $22.75 1/17/2006 $ 0 214,988 542,588
M. G. Baker 15,000 5.6% $22.75 1/17/2006 $ 0 214,988 542,588
D. B. Rayburn 15,000 5.6% $22.75 1/17/2006 $ 0 214,988 542,588
All Optionees 268,000 100% $22.75 1/17/2006 $ 0 3,841,110 9,694,230
All Shareholders N/A N/A N/A N/A $ 0 $496,830,261 $1,253,904,945
<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
<PAGE>
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.
<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 Options Held at
Acquired on Value at Fiscal Year End (1) Fiscal Year End (1)
Name Exercise Realized Exercisable (2) Exercisable (2)
---- -------- -------- --------------- --------------
<S> <C> <C> <C> <C>
R. T. Savage -0- $ -0- 229,000 $2,192,000
D. R. Johnson 12,000 331,500 144,750 1,185,609
V. S. Frangopoulos 16,698 410,214 140,302 1,318,125
M. G. Baker 5,000 101,563 147,800 1,827,763
D. B. Rayburn -0- -0- 64,000 356,250
<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 $26.50 as of March 31, 1996.
</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 $ 29,441 $ 39,255 $ 49,069 $ 58,883 $ 68,697
200,000 48,285 64,380 80,475 96,570 112,665
275,000 67,129 89,505 111,882 134,258 156,634
350,000 85,973 114,630 143,288 171,945 200,603
425,000 104,816 139,755 174,694 209,633 244,572
500,000 123,660 164,880 206,100 247,320 288,540
- ---------------------------------------------------------------------------
<PAGE>
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
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 Rayburn are thirty-one, twenty-eight, twenty-
eight, twenty-five, and twenty-two 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
<PAGE>
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 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. One
other officer of the Company 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, 1995, 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 1996-97.
OTHER INFORMATION
Independent Auditors
- --------------------
Coopers & Lybrand have been the independent certified public
accountants since 1935 and were selected as the Company's
auditors for the fiscal year ended March 31, 1996. 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 1996 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
<PAGE>
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 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, 1995, to March 31, 1996, all Section 16(a) filing
requirements applicable to its officers, directors, and greater
than ten percent beneficial owners were complied with.
ADDITIONAL MATTERS
The Board of Directors is not aware of any other matters
that will be presented for action at the 1996 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 1997
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 8, 1997.
ANNUAL REPORT
The Annual Report of the Company, including financial
statements for the fiscal year ended March 31, 1996, is enclosed.
W. E. PAVLICK, Secretary
<PAGE>
APPENDIX
Please mark your
/X/ votes as in this
example
FOR WITHHELD
1. Election Nominees: Stuart W. Tisdale
of Vincent L. Martin
Directors / / / / Richard T. Savage
For, except vote withheld from This proxy, when properly executed,
the 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________________ 1996
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 17, 1996 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 on
the reverse side of this proxy, 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, 1996, 1995 and 1994
($ 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>
1996:
Intangible Assets-
Accumulated
Amortization $7,564 $3,575 $275(B) $2,726(C) $8,688
====== ====== ======= ========= ======
Allowance for
Doubtful Accounts $6,424 $ (965) $127(B) $ 534(A) $5,052
====== ======= ======= ========= ======
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
====== ====== ======= ========= ======
<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 1995-96 Annual Report to Shareholders at Item 7.
Management's Discussions and Analysis of Financial Condition and
Results of Operations. All pages contain illustrations of Modine
products and their applications.
Page 5 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 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
FYE 1996 15,983 16,736 14,855 13,825
</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 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
FYE 1996 239,216 254,292 252,817 244,168
</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
1987 1988 1989 1990 1991 1992 1993 1994 1995 1996
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Aftermarket $112 $132 $137 $135 $156 $165 $169 $193 $220 $229
Off-highway equipment 24 30 48 56 58 48 48 55 94 119
Industrial 40 45 57 58 69 68 77 96 112 117
Heavy & med. trucks 42 44 54 64 50 51 86 107 158 168
Cars & light trucks 81 83 80 63 64 89 93 119 202 244
Miscellaneous 21 29 12 13 18 25 20 26 44 37
Building HVAC 29 32 36 47 67 81 78 74 83 76
FYE FYE FYE FYE FYE FYE FYE FYE FYE FYE
1987 1988 1989 1990 1991 1992 1993 1994 1995 1996
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Aftermarket 32% 33% 32% 31% 32% 31% 30% 29% 24% 23%
Off-highway equipment 7 8 11 13 12 9 8 8 10 12
Industrial 11 11 13 13 14 13 13 14 12 12
Heavy & med. trucks 13 12 13 15 11 10 15 16 18 17
Cars & light trucks 23 21 19 14 13 17 16 18 22 24
Miscellaneous 6 7 3 3 4 5 4 4 5 4
Building HVAC 8 8 9 11 14 15 14 11 9 8
Fiscal 1995 figures restated to conform with fiscal 1996 classifications.
</TABLE>
Page 13 of Annual Report
<TABLE>
Sales dollar distribution
<CAPTION>
FYE 95-96 FYE 94-95
--------- ---------
<S> <C> <C>
Materials and supplies 41.1% 38.2%
Employee wages, salaries, and
fringe benefits 30.6% 29.6%
All taxes (except payroll taxes) 4.2% 4.9%
Wear and exhaustion of facilities 3.5% 3.4%
All other costs 14.4% 16.4%
Dividends paid to shareholders 1.8% 1.7%
Earnings retained in the business 4.4% 5.8%
Fiscal 1995 figures restated to conform with fiscal 1996 classification.
</TABLE>
<PAGE>
Page 9 of Annual Report
<TABLE>
Shipments by product
Dollars in millions
<CAPTION>
FYE FYE FYE FYE FYE FYE FYE FYE FYE FYE
1987 1988 1989 1990 1991 1992 1993 1994 1995 1996
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Condensers &
Evaporators $ 65 $ 66 $ 63 $ 48 $ 47 $ 66 $ 67 $ 83 $129 $174
Oil Coolers 39 46 57 62 65 67 74 99 145 155
Radiators 184 201 214 230 242 238 258 302 383 410
Charge-air Coolers 14 20 21 25 31 39 59 73 107 118
Miscellaneous 18 30 33 24 30 36 35 39 66 57
Building HVAC 29 32 36 47 67 81 78 74 83 76
FYE FYE FYE FYE FYE FYE FYE FYE FYE FYE
1987 1988 1989 1990 1991 1992 1993 1994 1995 1996
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Condensers &
Evaporators 19% 17% 15% 11% 10% 13% 12% 12% 14% 17%
Oil Coolers 11 12 13 14 13 13 13 15 16 16
Radiators 53 51 51 53 51 45 45 45 42 41
Charge-air Coolers 4 5 5 6 6 7 10 11 12 12
Miscellaneous 5 7 8 5 6 7 6 6 7 6
Building HVAC 8 8 8 11 14 15 14 11 9 8
</TABLE>
Page 16 of Annual Report
<TABLE>
Book value per share
<CAPTION>
Measurement Period
(Fiscal Year Covered) Book value/share
<S> <C>
FYE 92 7.32
FYE 93 7.55
FYE 94 8.50
FYE 95 10.38
FYE 96 11.74
</TABLE>
<PAGE>
