SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 26, 1996
-----------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File Number 1-1373
------
MODINE MANUFACTURING COMPANY
(Exact name of registrant as specified in its charter)
WISCONSIN 39-0482000
--------------------------------------------- -------------------
(State or other jurisdiction of incorporation (I.R.S. Employer
or organization) Identification No.)
1500 DeKoven Avenue, Racine, Wisconsin 53403-2552
--------------------------------------------- -------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (414) 636-1200
--------------
NOT APPLICABLE
----------------------------------------------------------------------
(Former name or former address, if changed since last report.)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
---- ----
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Class Outstanding at February 4, 1997
------------------------------ ---------------------------------
Common Stock, $0.625 Par Value 29,853,375
<PAGE>
MODINE MANUFACTURING COMPANY
INDEX
PART I. FINANCIAL INFORMATION Page No.
--------
Item 1. Financial Statements
Consolidated Balance Sheets -
December 26 and March 31, 1996 3
Consolidated Statements of Earnings -
For the Three Months Ended
December 26, 1996 and 1995
and the Nine Months Ended
December 26, 1996 and 1995 4
Consolidated Statements of Cash Flows -
For the Nine Months Ended December 26,
1996 and 1995 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis
of Results of Operations and Financial
Condition 8
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 13
Item 5. Other Events 14
Item 6. Exhibits and Reports on Form 8-K 14
Signatures 16
<PAGE>
<TABLE>
MODINE MANUFACTURING COMPANY
CONSOLIDATED BALANCE SHEETS
December 26, 1996 and March 31, 1996
(In thousands, except per-share amounts)
(Unaudited)
<CAPTION>
December 26, 1996 March 31,1996
----------------- -------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 31,488 $ 17,958
Trade receivables, less allowance for
doubtful accounts of $4,803 and $5,052 146,961 147,963
Inventories 137,591 150,000
Deferred income taxes and other
current assets 33,110 35,414
--------- ---------
Total current assets 349,150 351,335
--------- ---------
Other assets:
Property, plant, and equipment - net 207,825 201,341
Investment in affiliates 9,964 6,567
Intangible assets, less accumulated
amortization of $12,211 and $8,689 65,450 70,456
Deferred charges and other noncurrent
assets 45,373 42,137
--------- ---------
Total other assets 328,612 320,501
--------- ---------
Total assets $ 677,762 $ 671,836
========= =========
<CAPTION>
LIABILITIES AND SHAREHOLDERS' INVESTMENT
<S> <C> <C>
Current liabilities:
Short-term debt $ 5,163 $ 12,500
Long-term debt - current portion 14,175 12,552
Accounts payable 56,480 77,277
Accrued compensation and employee
benefits 45,333 42,941
Income taxes 5,905 7,598
Accrued expenses and other current
liabilities 28,715 28,163
--------- ---------
Total current liabilities 155,771 181,031
--------- ---------
Other liabilities:
Long-term debt 86,161 87,809
Deferred income taxes 12,258 12,220
Other noncurrent liabilities 42,794 41,356
--------- ---------
Total other liabilities 141,213 141,385
--------- ---------
Total liabilities 296,984 322,416
--------- ---------
<PAGE>
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 9,731 9,143
Retained earnings 368,943 339,193
Foreign currency translation adjustment 454 3,435
Treasury stock at cost: 484 and 583
shares, respectively (14,557) (17,607)
Restricted stock - unamortized value (2,757) (3,708)
--------- ---------
Total shareholders' investment $ 380,778 $ 349,420
--------- ---------
Total liabilities and shareholders'
investment $ 677,762 $ 671,836
========= =========
<FN>
(See accompanying notes to consolidated financial statements.)
</TABLE>
<PAGE>
<TABLE>
MODINE MANUFACTURING COMPANY
CONSOLIDATED STATEMENTS OF EARNINGS
For the three months ended December 26, 1996 and 1995
For the nine months ended December 26, 1996 and 1995
(In thousands, except per-share amounts)
(Unaudited)
<CAPTION>
Three months ended Nine months ended
------------------------ ------------------------
December 26 December 26
------------------------ ------------------------
1996 1995 1996 1995
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net Sales $252,972 $252,817 $755,710 $746,325
Cost of sales 181,742 189,002 547,563 553,691
-------- -------- -------- --------
Gross profit 71,230 63,815 208,147 192,634
Selling, general, and administrative expenses 45,752 42,387 132,670 119,036
-------- -------- -------- --------
Income from operations 25,478 21,428 75,477 73,598
Non-operating income 1,945 5,639 6,461 10,350
Interest expense (1,157) (1,660) (4,021) (5,166)
Non-operating expense (1,812) (1,145) (4,644) (3,341)
-------- -------- -------- --------
Earnings before income taxes 24,454 24,262 73,273 75,441
Provision for income taxes 9,052 9,407 25,827 27,867
-------- ------- -------- --------
Net earnings $ 15,402 $ 14,855 $ 47,446 $ 47,574
======== ======== ======== ========
Net earnings per share of common stock* $0.51 $0.49 $1.56 $1.56
======== ======== ======== ========
Dividends per share $0.17 $0.15 $0.51 $0.45
======== ======== ======== ========
Average common shares and common share equivalents
outstanding 30,402 30,318 30,422 30,454
======== ======== ======== ========
<FN>
(See accompanying notes to consolidated financial statements.)
*See EXHIBIT 11 for computation of earnings per share.
</TABLE>
<PAGE>
<TABLE>
MODINE MANUFACTURING COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
For the Nine Months Ended December 26, 1996 and 1995
(Unaudited)
<CAPTION>
Nine months ended December 26
-----------------------------
1996 1995
-------- --------
<S> <C> <C>
Net cash provided by operating activities $ 74,842 $ 66,503
Cash flows from investing activities:
Expenditures for property, plant, and equipment (37,407) (39,066)
Acquisitions, net of cash acquired (1,829) (55,460)
Proceeds from sale of business 0 9,062
Investments in affiliates (4,031) 0
Proceeds from dispositions of property, plant,
and equipment 230 2,143
Other - net (34) 269
-------- --------
Net cash (used for) investing activities (43,071) (83,052)
Cash flows from financing activities:
(Decrease)/increase in short-term debt - net (6,802) 347
Additions to long-term debt 20,617 54,331
Reductions of long-term debt (17,411) (30,928)
Issuance of common stock, including treasury
stock 3,780 2,115
Purchase of treasury stock (3,208) (6,033)
Cash dividends paid (15,217) (13,345)
-------- --------
Net cash (used for)/provided by financing
activities (18,241) 6,487
-------- --------
Net increase/(decrease) in cash and cash
equivalents 13,530 (10,062)
Cash and cash equivalents at beginning of
period 17,958 32,691
-------- --------
Cash and cash equivalents at end of period $ 31,488 $ 22,629
======== ========
<FN>
(See accompanying notes to consolidated financial statements.)
</TABLE>
<PAGE>
MODINE MANUFACTURING COMPANY
----------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
------------------------------------------------------
1. The amounts of raw material, work in process and finished
goods cannot be determined exactly except by physical
inventories. Based on partial interim physical inventories
and percentage relationships at the time of complete
physical inventories, Management believes the amounts shown
below are reasonable estimates of raw material, work in
process and finished goods.
(In Thousands)
---------------------------------------------------------------
December 26, 1996 March 31, 1996
---------------------------------------------------------------
Raw materials $ 33,227 $ 38,307
Work in process 40,744 47,794
Finished goods 63,620 63,899
-------- --------
Total inventories $137,591 $150,000
======== ========
2. Property, plant, and equipment is composed of:
(In Thousands)
---------------------------------------------------------------
December 26, 1996 March 31, 1996
---------------------------------------------------------------
Gross, property,
plant & equipment $460,370 $433,881
Less accumulated
depreciation (252,545) (232,540)
-------- --------
Net property,
plant & equipment $207,825 $201,341
======== ========
3. Recent developments concerning legal proceedings reported in
the Company's Form 10-K report for the year ended March 31,
1996, are updated in Part II, Other Information, Item 1,
Legal Proceedings. While the outcome of these proceedings
is uncertain, in the opinion of the Company's Management, 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.
4. On October 31,1996, the Company through its wholly owned
subsidiary, Modine GmbH, completed the cash purchase of 41
percent of Constructions Mecaniques Mota, S.A. (CMM), based
near Marseilles in Provence, France. CMM, with employment of
about 150, annually produces about $22 million of tube-bundle
oil coolers for truck, industrial, and marine engines. Major
European vehicle manufacturers are among its customers.
<PAGE>
5. In the third quarter, the Company announced that it will
invest $30 million at its corporate facilities in Racine,
Wisconsin to expand its existing testing capabilities by
building a unique, world-class, technical center that will
be devoted to heat-transfer technology. The company also
announced that it will be expanding its manufacturing
capacity in Europe. These projects will be financed through
a combination of funds generated from continuing operations
and outside borrowing as required.
6. On December 18, 1996, the Board of Directors of the company
authorized the amendment of the Shareholders' Rights
Agreement, commonly referred to as a "poison pill" defense
for hostile takeovers, by adjusting the purchase price of
one one-hundredth of a share of Series A Participating
Preferred Stock, par value $0.0125 per share, from a price
of $21.25 to a price of $95.00. All other terms,
provisions, covenants or restrictions of the rights
agreement, to the extent not inconsistent with the Board of
Directors' December 18, 1996 amendment action, remain
unchanged and in full force and effect. The initial
distribution of the rights was made in 1986 and, earlier,
their expiration date was extended until 2006. This action
was not taken in response to any specific effort to acquire
control of the company and the Board of Directors is not
aware of any such effort.
7. In October of 1995, the Financial Accounting Standards Board
issued Statement No. 123, "Accounting for Stock-Based
Compensation." Under the accounting and disclosure
requirements promulgated in the statement, the Company is
required to adopt the provisions in its fiscal 1996-97 year.
The Company, after evaluating the accounting and disclosure
alternatives provided for under the provisions of the
statement, has chosen to continue to measure stock-based
compensation costs as prescribed in APB Opinion 25. Pro
forma net earnings and earnings per share disclosures
required as a result of this decision will be presented in
the Company's fiscal 1996-97 annual report reflecting the
issuance of stock-based compensation in the fourth quarter.
8. The accompanying consolidated financial statements, which
have not been audited by independent certified public
accountants, were prepared in conformity with generally
accepted accounting principles and such principles were
applied on a basis consistent with the preparation of the
consolidated financial statements in the Company's March 31,
1996 Annual Report filed with the Securities and Exchange
Commission. The financial information furnished includes
all normal recurring accrual adjustments which are, in the
opinion of Management, necessary for a fair statement of
results for the interim period. Results for the first nine
months of fiscal 1997 are not necessarily indicative of the
results to be expected for the full year.
9. Certain notes and other information have been condensed or
omitted from these interim financial statements which
consolidate both domestic and foreign wholly-owned
<PAGE>
subsidiaries. Therefore, such statements should be read in
conjunction with the consolidated financial statements and
related notes contained in the Company's 1996 Annual Report
to stockholders which statements and notes were incorporated
by reference in the Company's Form 10-K Report for the year
ended March 31, 1996.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
---------------------------------------
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
---------------------------------------------
The following discussion and analysis provides information which
Management believes is relevant to an assessment and
understanding of the Company's consolidated results of operations
and financial condition. This discussion should be read in
conjunction with the consolidated financial statements and notes
thereto.
RESULTS OF OPERATIONS
- ---------------------
Comparison of the Third Quarter of 1996-97 with the Third Quarter
- -----------------------------------------------------------------
of 1995-96
- ----------
Net sales for the third quarter of fiscal 1996-97 were $253.0
million, essentially unchanged from the third quarter of last
year. Among the Company's worldwide markets, increases in sales
to industrial markets, to the aftermarket, and to the building-
HVAC market offset lower sales in the domestic automotive and
truck markets. European operations continued to demonstrate
strong sales volume growth. This sales growth was mitigated, in
part, by the currency impact of the stronger dollar when compared
to the same period a year ago.
Gross margin increased 3.0%, as a percentage of sales, over the
third quarter of the previous year to 28.2% from 25.2%. Declining
raw material costs (primarily copper and aluminum) from a year ago,
were an important factor in the overall improvement shown for the
quarter. Operating units showing the greatest improvement were
the Company's European operations, the Signet Systems subsidiary,
acquired last year, and aftermarket division.
Selling, general and administrative expenses increased 1.3% as a
percentage of sales, over the third quarter last year, while
increasing 7.9% in absolute dollar terms. While a number of
categories experienced changes, some of the larger changes
occurred in personnel related costs including hiring, relocation,
statutory and fringe benefit expenses.
Average outstanding debt levels during the quarter declined by
approximately $6.8 million, or 6.0% over the same period a year
ago. Correspondingly, interest expense decreased by 30.3%, or
0.5 million from a year ago. Lower interest expense can be
attributed to a continuing reduction in higher rate domestic debt
through normally scheduled repayments, lower interest rates on
certain non-domestic debt, and higher capitalized interest
expense associated with the Company's larger capital expenditure
program.
Net non-operating income decreased by $4.4 million. The decrease
is primarily the result of the $3.5 million gain recognized from
the sale of the Company's copper-tubing business in the prior year.
<PAGE>
The effective tax rate decreased by 1.8% when compared to the
same period last year. The main factor responsible for the
decrease was the net utilization of certain foreign operating
loss carryforwards.
Net earnings for the third quarter were $15.4 million or $.51 per
share, up 3.7% from last year's $14.9 million, or $.49 per share.
Net earnings were up 21.2% excluding a gain in the third quarter
last year of $2.1 million, or $.07 per share, from the sale of
the Company's copper-extrusion operations in Dowagiac, Michigan.
MANAGEMENT'S DISCUSSION AND ANALYSIS
------------------------------------
RESULTS OF OPERATIONS
---------------------
Comparison of the First Nine Months of 1996-97 with the First
- -------------------------------------------------------------
Nine Months of 1995-96
- ----------------------
Net sales for the first nine months of fiscal 1996-97 were $755.7
million, up 1.3% from the $746.3 million reported in the first
nine months of last year. Sales generated by Signet Systems,
acquired in July 1995, and strong sales volume growth by the
Company's European operations were the major factors leading to
the overall sales improvement shown from a year ago. Neutralizing
most of these gains were the loss of sales from the copper tubing
business, sold in October 1995, the currency impact of the stronger
dollar in Europe, and lower sales by the Company's domestic
automotive, truck, and building-HVAC businesses.
Modine's worldwide shipments during the first nine months grew
the most in the passenger-car and light-truck market with the
largest sales growth to European customers. The second largest
gain was recorded in agricultural- and construction segments of
the off-highway market. The remaining markets demonstrated
modest growth except for the medium- heavy-truck market and the
building-HVAC market, which registered declines.
Gross margin increased 1.7%, as a percentage of sales, over the
first nine months of the previous year to 27.5% from 25.8%.
Among those contributing to the overall improvement were the
Company's European operations, Signet Systems, and the North
American aftermarket.
Selling, general and administrative expenses increased 1.7% as a
percentage of sales, over the first nine months last year, while
increasing 11.5% in overall dollar terms. Over 33% of the
increase can be attributed to including an additional four months
of operating activity in the current year by Signet Systems,
which was acquired at the end of July 1995. The remaining dollar
increase is primarily due to higher personnel costs, which
includes hiring, relocation, statutory and fringe benefit costs,
and additional goodwill amortization resulting from acquisitions
made in the prior year.
<PAGE>
Average outstanding debt levels during the first nine months rose
by approximately $3.4 million, or 3.2%, over the same period a
year ago. Interest expense, however decreased by 22.2% over the
same nine month period, a year ago. Lower interest expense can be
attributed to a continuing reduction in higher rate domestic debt
through normally scheduled repayments, lower interest rates on
certain non-domestic debt, and higher capitalized interest
expense associated with the Company's larger capital expenditure
program.
The effective tax rate decreased by 1.7% when compared to the
same period last year. The reduction is the result of completed
IRS reviews and the net utilization of certain foreign operating
loss carryforwards, offset in part, by other smaller changes.
Net earnings for the nine months were $47.4 million, or $1.56 per
share, essentially the same as last year's $47.6 million, or
$1.56 per share.
Outlook for the Remainder of the Year
- -------------------------------------
Modine's earlier stated outlook of approximately 4% higher
earnings for the fiscal year ending March 1997 remains unchanged
despite lower than projected sales growth. The translation
effect of a stronger dollar has impacted foreign currency
denominated sales. The company also has experienced lower than
anticipated revenues from some domestic markets. Fiscal 1997
sales are likely to total a little over $1 billion. These
forward-looking statements regarding sales and earnings are
subject to certain risks and uncertainties which could cause
actual results to differ materially from those projected. See
"Important Factors and Assumptions Regarding Forward-Looking
Statements" attached hereto as Exhibit 99 and incorporated herein
by reference.
<PAGE>
FINANCIAL CONDITION
-------------------
Comparison between December 26, 1996 and March 31, 1996
- -------------------------------------------------------
Current Assets
- --------------
Cash and cash equivalents increased by $13.5 million to a total
of $31.5 million. The Company's primary sources of liquidity and
capital resources were cash provided by operations and the use of
available borrowing facilities.
Net trade receivables decreased $1.0 million, or less than 1.0%.
Overall inventory levels decreased by $12.4 million. Among the
items contributing to the decrease were changes in sales volumes,
exchange rate fluctuations in Europe, process and product line
changes taking place at certain manufacturing facilities and
continuing management efforts to monitor inventory levels.
Deferred income taxes and other current assets decreased 2.3
million. The decrease occurred primarily from reductions recorded
in unbilled customer tooling and non-trade receivables.
Working capital increased approximately 14% to $193.4 million
from $170.3 million while the current ratio increased to 2.2 to 1
from 1.9 to 1. A number of categories experienced changes, with
the largest items influencing the overall change being an
increase in cash, a reduction in inventories and a decrease in
accounts payable.
Property, Plant and Equipment
- -----------------------------
Net property, plant and equipment increased $6.5 million to
$207.8 million as capital expenditures exceeded depreciation,
retirements and foreign currency translations. Outstanding
material commitments for capital expenditures were $15.1 million
at December 26, 1996, compared to $17.1 million at March 31,1996.
Most of the commitments relate to plant expansions, tooling for
new products and various new equipment. The outstanding
commitments will be financed through internally generated cash.
Investment in Affiliates
- ------------------------
Investment in affiliates increased by $3.4 million. The primary
reason for the increase is the recent cash purchase of a 41%
interest in Constructions Mecaniques Mota, S.A.
Intangible Assets
- -----------------
Intangible assets, net of accumulated amortization declined $5.0
million. Amortization and foreign currency translations were the
main items contributing to the change.
<PAGE>
Deferred Charges and Other Assets
- ---------------------------------
Deferred charges and other assets increased $3.2 million. The
net increase is primarily the result of continuing recognition of
the surplus in the Company's overfunded pension plans.
Current Liabilities
- -------------------
Accounts payable and various accrued expenses decreased $17.9
million. Normal timing differences in the level of operating
activity and lower inventories were the main factors responsible
for the decline. Accrued income taxes decreased $1.7 million
from normal timing differences in making estimated payments and
federal tax benefits resulting from the exercise of stock
options.
Debt
- ----
Outstanding debt decreased by $7.4 million from March 31, 1996.
Long term debt was essentially unchanged while short-term debt
decreased by over $7.3 million. All of the change in short-term
debt occurred at the Company's European subsidiaries. Total debt
as a percentage of shareholders' equity decreased from 32.3% to
27.7% as cash generated by operating activities exceeded capital
expenditures and acquisitions for the nine months.
Consolidated available lines of credit decreased during the first
nine months by $11.9 million including a discontinuance of $10.0
million U.S. capacity. The European subsidiaries net committed
lines of credit decreased by $1.9 million. The foreign unused
lines of credit at December 26, 1996, were $9.3 million, while
the Company had $13.2 million available under a domestic multi-
currency revolving credit agreement.
Shareholders' Investment
- -----------------------
Total shareholders' investment increased by $31.4 million to a
total of $380.8 million. The net increase resulted primarily
from net earnings of $47.4 million for the first nine months.
The value of the dollar continued to strengthen during the
quarter resulting in an unfavorable foreign currency translation
impact of $2.1 million with the total unfavorable impact for nine
months reaching $3.0 million. Dividends paid to shareholders of
$15.2 million, net treasury stock transactions of $3.1 million,
and other smaller changes to the capital accounts also
contributed to the change from the beginning of the year.
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
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 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-conditioning condensers. The ITC also ruled
that specific condensers from the two Japanese companies did not
infringe the Company's patent. 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.
<PAGE>
Item 5. Other Events.
As previously reported, in May of 1986, the Board of Directors
authorized the Company to acquire up to 10% per year of the issued
and outstanding shares of the common stock of the Company. Pursuant
to this authorization, the Company purchases shares of its common
stock from time to time as such shares become available on the open
market or in private transactions for resale to the employee stock
purchase plans and for other corporate purposes. Since December 31,
1995, the Company has purchased at market price a total of 226,577
shares, 107,466 shares of which were purchased during the fourth
fiscal quarter of 1995-96, and 119,111 shares of which were purchased
from April 1, 1996 through December 31, 1996. The Company currently
has 488,789 shares (as of February 4, 1997) in its Treasury.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits:
--------
The following exhibits are included for information only unless
specifically incorporated by reference in this report:
Reference Number
per Item 601 of
Regulation S-K Page
- ---------------- ----
4(a) 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.)
4(b)(iii) Rights Agreement Amendment No. 3 dated as of
October 15, 1996 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-A dated December 18, 1996.)
Note: The amount of long-term debt
authorized under any instrument defining
<PAGE>
Reference Number
per Item 601 of
Regulation S-K Page
- ---------------- ----
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.
11* Computation of per share earnings 17
27* Financial Data Schedule (electronic
transmission only).
99* Important Factors and Assumptions
Regarding Forwarding-Looking Statements. 18
*Filed herewith.
(b) Reports on Form 8-K:
-------------------
The Company filed one Report on Form 8-K dated December 18, 1996,
to report that the Board of Directors of the Company authorized
the amendment of the Rights Agreement (regarding certain
Preferred Share Purchase Rights authorized as of October 15,
1986) by adjusting the purchase price of one one-hundredth of a
share of Series A Participating Preferred Stock, par value
$0.0125 per share, from a price of $21.25 to a price of $95.00.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
MODINE MANUFACTURING COMPANY
----------------------------
(Registrant)
By: A. D. REID
-------------------------------------
A. D. Reid, Vice President,
Finance and Chief Financial Officer
(Principal Financial Officer)
Date: February 5, 1997 By: W. E. PAVLICK
-------------------------------------
W. E. Pavlick, Senior Vice President,
General Counsel and Secretary
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<TABLE>
EXHIBIT 11
MODINE MANUFACTURING COMPANY
COMPUTATION OF PER SHARE EARNINGS
(In thousands, except per share amounts)
<CAPTION>
Three months ended Nine months ended
----------------------- ----------------------
December 26 December 26
----------------------- ----------------------
1996 1995 1996 1995
----------------------- ----------------------
<S> <C> <C> <C> <C>
Primary
Weighted average shares outstanding 29,848 29,641 29,831 29,655
Share equivalents for period prior to
exercise (options exercised) 15 12 34 26
Net shares issuable, assuming exercise
of options using average market price
and employing the treasury stock method. 539 665 557 773
-------- -------- -------- --------
Average common share and common
share equivalents 30,402 30,318 30,422 30,454
======== ======== ======== ========
Net earnings for the period $ 15,402 $ 14,855 $ 47,446 $ 47,574
======== ======== ======== ========
Net earnings per share of common stock $0.51 $0.49 $1.56 $1.56
======== ======== ======== ========
Fully Diluted
Weighted average shares outstanding 29,848 29,641 29,831 29,655
Share equivalents for period prior to
exercise (options exercised) 15 12 34 26
Net shares issuable, assuming exercise
of options using ending market price
(unless antidilutive) and employing
the treasury stock method 571 665 572 773
-------- -------- -------- --------
Average common share and common
share equivalents 30,434 30,318 30,437 30,454
======== ======== ======== ========
Net earnings for the period $ 15,402 $ 14,855 $ 47,446 $ 47,574
======== ======== ======== ========
Net earnings per share of common stock $0.51 $0.49 $1.56 $1.56
======== ======== ======== ========
</TABLE>
<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 12/26/96 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-START> APR-1-1996
<PERIOD-END> DEC-26-1996
<CASH> 31,488
<SECURITIES> 0
<RECEIVABLES> 151,764
<ALLOWANCES> 4,803
<INVENTORY> 137,591
<CURRENT-ASSETS> 349,150
<PP&E> 460,370
<DEPRECIATION> 252,545
<TOTAL-ASSETS> 677,762
<CURRENT-LIABILITIES> 155,771
<BONDS> 86,161
0
0
<COMMON> 18,964
<OTHER-SE> 361,814
<TOTAL-LIABILITY-AND-EQUITY> 677,762
<SALES> 755,710
<TOTAL-REVENUES> 755,710
<CGS> 547,563
<TOTAL-COSTS> 547,563
<OTHER-EXPENSES> 0
<LOSS-PROVISION> (68)
<INTEREST-EXPENSE> 4,021
<INCOME-PRETAX> 73,273
<INCOME-TAX> 25,827
<INCOME-CONTINUING> 47,446
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 47,446
<EPS-PRIMARY> 1.56
<EPS-DILUTED> 1.56
</TABLE>
EXHIBIT 99
IMPORTANT FACTORS AND ASSUMPTIONS
REGARDING FORWARD-LOOKING STATEMENTS
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 non-domestic; 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 such statements are made.
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