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, 1999
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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 ______
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 15-21 herein.
Page 1 of 209
<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
--- ---
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 56% of the outstanding shares are held by non-
affiliates. The aggregate market value of these shares was
approximately $503,597,917 based on the market price of $30.4375
per share on June 15, 1999. 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 29,545,199 at June 15, 1999.
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, 1999 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)
1999 Definitive Proxy Statement dated
June 10, 1999 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, 1999
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, Year 2000,
Euro Conversion 5
Item 2 - Properties 10
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Item 3 - Legal Proceedings 10
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Item 4 - Submission of Matters To A Vote of Security
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Holders 11
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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 11
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Item 6 - Selected Financial Data 12
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Item 7 - Management's Discussion and Analysis of
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Financial Condition and Results of
----------------------------------
Operations 12
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Item 8 - Financial Statements & Supplementary Data 13
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<PAGE>
10-K Pages
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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 13
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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 13
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Item 12 - Security Ownership of Certain Beneficial
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Owners and Management 14
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Item 13 - Certain Relationships and Related
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Transactions 14
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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 15
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1) Financial Statements
2) Financial Statement Schedules
3) Consent of Independent Accountants
4) Exhibit Index
Signatures 22
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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 is an independent, worldwide leader in heat-transfer and
heat storage technology serving vehicular, industrial, commercial,
and building HVAC (heating, ventilating, air conditioning) markets.
Modine develops, manufactures, and markets heat exchangers and systems
for use in various OEM (original equipment manufacturer) applications
and for sale to the automotive aftermarket (as replacement parts) and
to a wide array of building markets. The primary markets consist of:
- Automobile, truck and bus manufacturers;
- Farm implement manufacturers
- Heating and cooling equipment manufacturers;
- Construction contractors;
- Wholesalers of plumbing and heating equipment;
- Radiator repair shops; and
- Wholesalers of auto repair parts.
We distribute our products through:
- Company salespersons;
- Independent manufacturers' representatives;
- Independent warehouse distributors;
- Mass merchandisers and
- National accounts.
Our operations are organized on the basis of market categories or
geographical responsibility, as follows:
Original Equipment, which provides heat-transfer products,
generally from business units in North America, to original-
equipment manufacturers of on-highway and off-highway
vehicles, as well as to industrial- and commercial-equipment
manufacturers, located primarily in North America;
Distributed Products, which provides heat-transfer products
primarily for the North American vehicular replacement market
and the building HVAC market, from business units in North
America; and
European Operations, which provides heat-transfer products,
primarily to European original-equipment manufacturers of on-
highway and off-highway vehicles, industrial equipment
manufacturers, and the vehicular replacement market from
business units in Europe.
<PAGE>
The Company has assigned specific business units to a segment based
principally on these defined markets and their geographical location.
The Company's three reportable segments offer a broad line of
products that can be categorized as follows:
Percentage of total company revenue by product
----------------------------------------------
Years ended March 31
1999 1998 1997
---- ---- ----
Radiators & Radiator 39% 40% 39%
Cores
Vehicular Air 19% 20% 22%
Conditioning
Oil Coolers 16% 17% 16%
Charge Air Coolers 12% 12% 11%
Building HVAC 7% 8% 8%
Miscellaneous 7% 3% 4%
Geographical Areas
- ------------------
We maintain administrative organizations in two regions - North
America and Europe - to facilitate financial and statutory
reporting and tax compliance on a worldwide basis and to support
the three business units.
Our operations are located in the following countries:
North America Europe South America Asia/Pacific
- ------------- ------ ------------- ------------
Canada Austria Brazil Japan
Mexico Belgium
United States Denmark
England
France
Germany
Hungary
Italy
Netherlands
Poland
Spain
Switzerland
Our non-U.S. subsidiaries and affiliates manufacture and sell a
number of vehicular and industrial products similar to those
produced in the U.S. In addition to normal business risks,
operations outside the U.S. are subject to others such as
changing political, economic and social environments, changing
governmental laws and regulations, currency revaluations and
market fluctuations.
You can find more information in "Note 19. Business Segments" on
pages 31-32 of our 1999 Annual Report.
<PAGE>
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 11.5%, 12.6% and 11.8% for fiscal
years ended in 1999, 1998 and 1997, respectively. Estimated
after-tax earnings on export sales as a percentage of total net
earnings were 11.5%, 12.6% and 11.8% for fiscal years ended in
1999, 1998 and 1997, respectively. Royalties from foreign
licensees as a percentage of total earnings were 5.5%, 2.5% and
1.6% 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
- -------------------------------
Financial information relating to the Company's foreign and
domestic operations is included in the Company's 1998-1999 Annual
Report to Shareholders and is incorporated herein by reference at
Note 19 on Pages 31-32 therein.
Events subsequent to the End of the Quarter
- -------------------------------------------
On June 10, 1999, the Company mailed its Annual Report to Shareholders
and released its sales forecast for the upcoming year. See Current
Reports on Form 8-K at page 21 herein for further details.
Competitive Position
- --------------------
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
- -------------------
Ten customers accounted for approximately 44.3% of the Company's sales
in the fiscal year ended March 31, 1999. These customers, listed
alphabetically, were: BMW, Caterpillar, Chrysler, DaimlerChrysler,
Fiat, Ford, John Deere, Navistar International, Paccar and Volkswagen.
Goods are supplied to these customers on the basis of individual purchase
<PAGE>
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
- -----------------
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 aluminum, copper, brass, and steel 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 1999-2000.
Raw Materials
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Aluminum, copper, brass, steel, and solder, all essential to the
business, are purchased regularly from several domestic and foreign
producers. In general, the Company does not rely on any one supplier
for these materials, which are for the most part available from
numerous sources in quantities required by the Company. The Company
normally does not experience material shortages within its operations
and believes that producers' supplies of these materials will be
adequate through the end of fiscal year 2000.
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
- ------------------------
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 1999 amounted to
$18,252,000; in fiscal 1998 amounted to $16,816,000; and in fiscal 1997
amounted to approximately $16,804,000. There were no significant
expenditures on research activities that 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
<PAGE>
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 systems designs.
Environmental Matters
- ---------------------
Modine has a long standing corporate environmental policy which
demonstrates the Company's commitment to the environment and
compliance with all environmental laws and regulations worldwide.
Modine continues to appraise environmental issues and regulatory
compliance with a proactive approach. The benefits realized from the
Company's environmental programs include conserved resources, more
efficient manufacturing processes, minimized liability exposure and
reduced operational costs. Modine evaluates the performance of the
Company's environmental programs through continuous monitoring,
auditing and accounting systems. The Company constantly examines its
operations and processes to minimize their impact on the environment.
In calendar 1996, the Company revised its corporate waste minimization
program, which originated in 1991, to encompass all by-products of the
manufacturing process. From calendar 1996 to calendar 1998, a 9%
reduction in by-product generation was achieved.
Modine accrues for environmental remediation activities relating to past
operations - including those under the Comprehensive Environmental
Response, Compensation, and Liability Act (CERCLA), often referred to
as "Superfund", and under the Resource Conservation and Recovery Act
(RCRA) - when it is probable that a liability has been incurred and
reasonable estimates can be made. 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 investigative and/or
remedial work to ensure sufficient protection to the environment.
Six 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.
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 seven
waste disposal sites. These sites are not company owned and
allegedly contain wastes attributable to Modine from past
operations. For the seven sites currently known, the Company's
potential liability will be significantly less than the total
site remediation because the percentage of material attributable
to Modine is relatively low ("de minimis"), there may be
insufficient documentation linking Modine to the site, and the
other PRPs have the financial resources to meet their obligations.
Recent environmental legislation will require significant capital
equipment expenditures over the next four to five years. For the
<PAGE>
fiscal year ending March 31, 1999 capital expenditures related to
environmental projects were $1.6 million. These environmental
expenditures include capital outlays to retrofit existing
facilities, as well as those associated with new facilities and
other compliance costs. Modine currently expects expenditures
for environmentally related capital projects to be about $1.4
million in 1999-2000.
Environmental expenses charged to current operations, including
remediation costs, totaled about $1.7 million for the fiscal year
ending March 31, 1999. These expenses include operation and
maintenance costs for solid waste treatment, storage, and disposal
and for costs incurred in conducting environmental compliance
activities; and for other matters. Operating expenses of some
facilities may increase during fiscal year 1999-2000 because of
such charges but the competitive position of the Company is not
expected to change materially. Although environmental costs are
substantial, the Company has no reason to believe such costs vary
significantly from similar costs incurred by other companies engaged
in similar businesses.
Employees
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The number of persons employed by the Company at March 31, 1999,
was approximately 8,700.
Seasonal Nature of Business
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Distributed Products may still experience a degree of seasonality
since the aftermarket and heating domains are affected by weather
patterns, constructions starts, and other factors. On an overall
Company basis, there is no significant degree of seasonality as
indicated by the percentages below. Sales to original equipment
manufacturers are dependent upon the demand for new vehicles and
equipment. The following quarterly net sales detail illustrates
the degree of fluctuation for the past five years:
Fiscal Year Fiscal
Ended First Second Third Fourth Year
March 31 Quarter Quarter Quarter Quarter Total
----------- ------- ------- ------- ------- ------
($ In Thousands)
1999 $273,104 $272,961 $284,355 $281,027 $1,111,447
1998 256,923 260,806 267,699 254,990 1,040,418
1997 248,514 254,224 252,972 243,336 999,046
1996 239,216 254,292 252,817 244,168 990,493
1995 208,436 221,760 240,505 242,309 913,010
Five-year $245,238 $252,809 $259,670 $253,166 $1,010,883
Average
Percent 24% 25% 26% 25% 100%
of Year
<PAGE>
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.
Year 2000
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Information required hereunder regarding Year 2000 is
incorporated by reference from the Company's 1998-1999 Annual
Report to Shareholders, pages 16 and 17, attached as Exhibit 13.
Euro Conversion
- ---------------
Information required hereunder regarding Euro Conversion is
incorporated by reference from the Company's 1998-1999 Annual
Report to Shareholders, at page 17, attached as Exhibit 13.
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.
The Company's facilities, on an operating segment basis, are as
follows:
Type of Original Distributed European Corporate &
Facility Equipment Products Operations Other Total
- -------- --------- ----------- ---------- ----------- -----
Manufacturing 16 8 12 --- 36
Distribution -- 4 1 --- 5
Sales & Service
Centers/Offices 2 14 20 1 37
Joint Ventures 3 3 6
Total 18 26 36 4 84
<PAGE>
The Company's facilities, on a geographic basis, are as follows:
Type of North South Asia/
Facility America Europe America Pacific Total
- -------- ------- ------ ------- ------- -----
Manufacturing 23 13 --- --- 36
Distribution 4 1 --- --- 5
Sales & Service
Centers/Offices 16 20 --- 1 37
Joint Ventures 1 3 1 1 6
Total 44 37 1 2 84
Total square footage of the 84 facilities is approximately
8,192,000 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 against Mitsubishi Motor
Sales of America, Inc., and Showa Aluminum Corporation, alleging
infringement of the Company's patent on parallel-flow air-conditioning
condensers. The suit seeks an injunction to prohibit continued
infringement, an accounting for damages, a trebling of such damages for
willful infringement, and reimbursement of attorneys' fees. In December
1991, the Company submitted a complaint to the U.S. International Trade
commission (ITC) requesting that the ITC ban the import and sale of
parallel-flow air-conditioning condensers and systems or vehicles that
contain them, which are the subject of the November 1991 lawsuit. In
August, 1997, the ITC issued an Order excluding from U.S. import Showa
<PAGE>
condensers that infringe Modine Manufacturing Company's parallel-flow
patent. The ITC's Order covers condensers, their parts, and certain
products including them, such as air-conditioning kits and systems. It
directs the U.S. Customs Service to exclude from importation into the
United States such products manufactured by Showa Aluminum Corporation
of Japan and Showa Aluminum Corporation of America. The decision is
based on a Modine U.S. patent covering condensers with tube hydraulic
diameters less than 0.04822 inches. The Showa companies must certify
to Customs officials that any condenser items imported by them do not
infringe Modine's parallel-flow patent. The Showa companies must also
file annual reports with the ITC regarding their sales of Showa parallel-
flow condensers in the United States. In July, 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.
In October of 1997, Modine was issued a Japanese patent covering parallel-
flow air-conditioning condensers having tube hydraulic diameters less than
0.070 inches. In August of 1998, the Company filed a patent infringement
suit in Japan against Showa with respect to this patent seeking an injunction
and damages. Several patents have been issued to Modine by the European
Patent Office, one having been rejected at the opposition level, which is
being appealed. 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.
Under the rules of the Securities and Exchange Commission, certain
environmental proceedings are not deemed to be ordinary or routine
proceedings incidental to the Company's business and are required to be
reported in the Company's annual and/or quarterly reports. The Company
is not currently a party to any such proceedings.
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
- ------ -------------------------------------------------
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 1998-99 and 1997-98.
As of April 1, 1999, shareholders of record numbered approximately
6,528; it is estimated that beneficial owners numbered about 13,500.
<PAGE>
1998-99 1997-98
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Quarter High Low Dividends High Low Dividends
First $37.500 $32.313 $.21 $30.063 $24.750 $.19
Second 36.500 27.750 .21 35.000 28.500 .19
Third 38.625 26.625 .21 36.000 33.125 .19
Fourth 38.000 25.250 .21 35.813 32.000 .19
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TOTAL $.84 $.76
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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, $186,737,000 was available
for these purposes at March 31, 1999. (However, dividend 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.
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. During fiscal 1996-1997, the
Company amended the Plan increasing the price from $21.25 to $95.00 per
unit. 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 $0.0125 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 an amendment to 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
----------------------------------------------------
1999 1998 1997 1996 1995
Sales (in thousands) $1,111,447 $1,040,418 $999,046 $990,493 $913,010
Net earnings (in
thousands) 73,943 72,471 63,763 61,399 68,442
Total assets (in
thousands) 915,739 759,024 694,955 671,836 590,187
Long-term debt (in
thousands) 143,838 89,587 85,197 87,809 62,220
Dividends per share .84 .76 .68 .60 .52
Net earnings per share
- Basic 2.50 2.44 2.14 2.07 2.31
- Assuming dilution 2.46 2.39 2.10 2.03 2.25
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
- ------ -----------------------------------------------------------
AND RESULTS OF OPERATIONS.
-------------------------
Certain information required hereunder is incorporated by reference from
the Company's 1998-99 Annual Report to Shareholders, pages 12-20 and 22,
attached as Exhibit 13.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
- ------ -------------------------------------------
The report of PricewaterhouseCoopers LLP dated April 28, 1999,
the Consolidated Statements of Earnings, and the related
Consolidated Balance Sheets, Cash Flows, Shareholders'
Investment, and Notes to Consolidated Financial Statements,
appearing on pages 19, 21, 23, 24, and 25-33, respectively, of
the Company's 1998-99 Annual Report to Shareholders are
incorporated herein by reference. With the exception of the
aforementioned information, no other data appearing in the 1998-
99 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
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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 3 - 4 and pages 9, 10, 14, and
15, of the Company's definitive Proxy Statement dated June 10,
1999 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 - 13.
<PAGE>
Executive Officers of Registrant
Officer
Name Age Position Since
- ---- --- -------- -------
R. T. Savage* 60 Chairman 1981
D. R. Johnson* 57 President and Chief Executive 1988
Officer
D. B. Rayburn* 51 Executive Vice President, Original 1991
Equipment
W. E. Pavlick 65 Senior Vice President, General
Counsel and Secretary 1979
M. G. Baker 59 Group Vice President, Distributed 1987
Products
V. S. Frangopoulos 63 Group Vice President, Off-Highway 1981
Products
L. D. Howard 55 Group Vice President, Europe 1991
E. T. Thomas 45 Group Vice President, Highway 1998
Products
A. C. DeVuono 50 Vice President, Technical Services 1996
R. L. Hetrick 57 Vice President, Human Resources 1989
R. W. Possehl 54 Vice President, Administration 1985
A. D. Reid 57 Vice President, Finance and Chief 1985
Financial Officer
R. S. Bullmore 49 Corporate Controller 1983
G. A. Fahl 44 Environmental Health & Safety 1998
Officer
C. C. Harper 45 Chief Information Officer 1998
D. B. Spiewak 45 Treasurer 1998
D. R. Zakos 45 Associate General Counsel and 1985
Assistant Secretary
* Prior to March 31 and April 1, 1998: R. T. Savage was
Chairman, President and Chief Executive Officer (now retired);
D. R. Johnson was President and Chief Operating Officer; and
D. B. Rayburn was Group Vice President, Highway Products.
There are no family relationships among the executive officers and
directors. All of the above officers have been employed by Modine in
various capacities during the last five years, except A. C. DeVuono,
E. T. Thomas, C. C. Harper, and D. B. Spiewak.
Mr. DeVuono joined Modine on March 4, 1996, as Director, Technical
Services. He was promoted to Vice President, Technical Services in
October, 1996. Before joining Modine, he was a staff scientist at
the Lawrence Berkeley National Laboratory of the University of
California. Prior to that, he spent 10 years with Battelle Memorial
Institute in Columbus, Ohio, as a principal research scientist, and
also has previous affiliations with the teaching faculties of the
Ohio State University and the University of Illinois.
Mr. Thomas joined Modine on August 3, 1998 as Group Vice President,
Highway Products. Mr. Thomas previously worked at Eaton Corporation
for nine years where he had been General Manager of the Fluid Power
Division. Before that, he was General Manager of Eaton's Torque
Control Products Division. He also served Eaton as a Plant Manager
and Manager of Strategic Planning and Acquisition Analysis. Prior to
joining Eaton, Mr. Thomas spent eleven years at General Motors as a
member of the Corporate Financial Staff.
<PAGE>
Mr. Harper was promoted to Chief Information Officer on October 21,
1998. Mr. Harper joined Modine in January, 1997 as Director of
Information Systems. Previous to Modine, Mr. Harper had been
employed by Tenneco Incorporated for 14 years in a number of
technical and managerial positions.
Mr. Spiewak joined Modine as Treasurer on September 21, 1998. Mr.
Spiewak came to Modine from Alliant Foodservice, Inc., formerly a
part of Kraft Foods. Prior to Alliant, Mr. Spiewak spent eight
years with Illinois Tool Works, Inc. as Manager, Treasury Systems.
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.
Information relating to the employment agreements, termination
and change-in-control arrangements is incorporated by reference
from the Company's 1998-1999 definitive Proxy Statement dated
June 10, 1999 attached to this Report at page 16 and 17 therein.
The Company's stock option and stock award plans contain certain
provisions relating to change-in-control or other specified
transactions that may, if authorized by the Officer Nomination
and Compensation Committee of the board, accelerate or otherwise
release shares granted or awarded under those plans.
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 10, 1999 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 10, 1999 on page 22
under the heading "Transactions" attached to this Report.
PART IV
-------
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS
- ------- ----------------------------------------------------
ON FORM 8-K.
-----------
(a) The following documents are filed as part of this Report:
<PAGE>
Page in
Annual Report*
-------------
(1) Financial Statements:
Consolidated Statements of Earnings for the
years ended March 31, 1999, 1998, and 1997 19
Consolidated Balance Sheets at March 31, 1999
and 1998 21
Consolidated Statements of Cash Flows for the
years ended March 31, 1999, 1998, and 1997 23
Consolidated Statements of Shareholders'
Investment for the years ended March 31,
1999, 1998, and 1997 24
Notes to Consolidated Financial Statements 25 - 33
Independent Accountants' Report 33
* Incorporated by reference from the indicated
pages of the 1998-99 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, 1999 23
Schedule II - Valuation and Qualifying Accounts
for the years ended March 31, 1999, 1998 and
1997 24
(3) Consent of Independent Accountants 177
(4) Exhibit Index 15
(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). 25
*3(b) Restated By-Laws (as amended). 33
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, 1998).
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, 1997).
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
Quarterly Report on Form 10-Q dated
December 26, 1996).
4(b)(iv) Rights Agreement Amendment No. 4 dated
as of November 10, 1997 between the
Registrant and Norwest Bank Minnesota,
N.A. (Rights Agent) (filed by reference
to the exhibit contained within the
Registrant's Quarterly Report on
Form 10-Q dated December 26, 1997).
<PAGE>
Reference Number
per Item 601 of
Regulation S-K Page
- ---------------- ----
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, 1997).
10(b) Employment Agreement between the
Registrant and D. R. Johnson (filed
by reference to the Registrant's
Quarterly Report on Form 10-Q dated
November 1, 1996).
10(c) 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, 1997).
*10(d) 1985 Stock Option Plan for Non-Employee
Directors (as amended). 44
*10(e) Pension and Disability Plan For Salaried
Employees of Modine Manufacturing
Company (as amended). 51
10(f) 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(g) Modine Manufacturing Company Executive
Supplemental Stock Plan (as amended). 132
10(h) 1994 Stock Award Plan [a part of the
1985 Incentive Stock Plan].
10(i) 1994 Incentive Compensation Plan
as amended) (filed by reference to
<PAGE>
Reference Number
per Item 601 of
Regulation S-K Page
- ---------------- ----
the Registrant's Annual Report on
Form 10-K for the fiscal year ended
March 31, 1997).
10(j) 1994 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, 1997).
10(k) 1995 Stock Award Plan [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(l) 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(m) 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(n) 1996 Stock Award Plan [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 1996).
10(o) 1996 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 1996).
10(p) 1996 Stock Option Agreement [a part of
the 1994 Stock Option Plan for Non-
Employee Directors].
Note: The 1996 Stock Option Agreement
----
is not materially different from the
1995 Non-Employee Directors Stock Option
Agreement filed with the Registrant's
<PAGE>
Reference Number
per Item 601 of
Regulation S-K Page
- ---------------- ----
Annual Report on Form 10-K for the
fiscal year 1995.
10(q) 1997 Stock Award Plan [a part of the
1994 Incentive Compensation Plan].
Note: The 1997 Stock Award Plan is
----
not materially different from the
1996 Stock Award Plan filed with
the Registrant's Annual Report on
Form 10-K for the fiscal year 1996.
10(r) 1997 Stock Option Agreements (incentive
and non-qualified) [a part of the 1994
Incentive Compensation Plan].
Note: The 1997 Stock Option Agreements
----
are not materially different from the
1996 Stock Option Agreements filed with
the Registrant's Annual Report on Form
10-K for the fiscal year 1996.
10(s) 1997 Stock Option Agreement [a part
of the 1994 Stock Option Plan for
Non-Employee Directors].
Note: The 1997 Stock Option Agreement
----
is not materially different from the
1995 Non-Employee Directors Stock
Option Agreement filed with the
Registrant's Annual Report or Form
10-K for the fiscal year 1995.
10(t) 1998 Stock Award Plan [a part of the
1994 Incentive Compensation Plan].
Note: The 1998 Stock Award Plan is
----
not materially different from the
1996 Stock Award Plan filed with
the Registrant's Annual Report on
Form 10-K for fiscal year 1996.
10(u) 1998 Stock Option Agreements (incentive
and non-qualified) [a part of the 1994
Incentive Compensation Plan].
Note: The 1998 Stock Option Agreements
----
are not materially different from the
1996 Stock Option Agreements filed with
<PAGE>
Reference Number
per Item 601 of
Regulation S-K Page
- ---------------- ----
the Registrant's Annual Report on Form
10-K for the fiscal year 1996.
10(v) 1998 Stock Option Agreement [a part of
the 1994 Stock Option Plan for Non-
Employee Directors].
Note: The 1998 Stock Option Agreement
----
is not materially different from the
1995 Non-Employee Directors Stock
Option Agreement filed with the
Registrant's Annual Report on Form
10-K for the fiscal year 1995.
10(w) 1999 Stock Option Agreements (incentive
and non-qualified) [a part of the 1994
Incentive Compensation Plan].
Note: The 1999 Stock Option Agreements
----
are not materially different from the
1996 Stock Option Agreements filed with
the Registrant's Annual Report on Form
10-K for the fiscal year 1996.
10(x) 1999 Stock Option Agreement [a part of
the 1994 Stock Option Plan for Non-
Employee Directors].
Note: The 1998 Stock Option Agreement is
----
not materially different from the 1995
Non-Employee Directors Stock Option
Agreement filed with the Registrant's
Annual Report on Form 10-K for the
fiscal year 1995.
11 Not applicable.
12 Not applicable.
*13 1998-99 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. 136
16 Not applicable.
18 Not applicable.
*21 List of subsidiaries of the Registrant. 176
<PAGE>
Reference Number
per Item 601 of
Regulation S-K Page
- ---------------- ----
22 Not applicable.
*23 Consent of independent accountants. 178
24 Not applicable.
*27 Financial Data Schedules -- Fiscal 1999
(electronic transmission only)
28 Not applicable.
*99(a) Definitive Proxy Statement of the
Registrant dated June 10, 1999. 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. 179
*99(b) Appendix (filed pursuant to Item 304 of
Regulation S-T). 207
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 10, 1999, 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.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Modine Manufacturing Company
Date: June 16,1999 By: D. R. JOHNSON
--------------------------------
D. R. Johnson, 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 16, 1999
- -------------------------------------- -------------
R. T. Savage, Chairman and Director Date
D. R. JOHNSON June 16, 1999
- -------------------------------------- -------------
D. R. Johnson, President and Date
Chief Executive Officer and Director
A. D. REID June 16,1999
- -------------------------------------- -------------
A. D. Reid, Vice President, Finance Date
and Chief Financial Officer
W. E. PAVLICK June 16,1999
- -------------------------------------- -------------
W. E. Pavlick, Senior Vice President, Date
General Counsel and Secretary
R. J. DOYLE June 16,1999
- -------------------------------------- -------------
R. J. Doyle, Director Date
F. W. JONES June 16,1999
- -------------------------------------- -------------
F. W. Jones, Director Date
D. J. KUESTER June 16,1999
- -------------------------------------- -------------
D. J. Kuester, Director Date
<PAGE>
V. L. MARTIN June 16,1999
- -------------------------------------- -------------
V. L. Martin, Director Date
S. W. TISDALE June 16,1999
- -------------------------------------- -------------
S. W. Tisdale, Director Date
M. T. YONKER June 16,1999
- -------------------------------------- -------------
M. T. Yonker, Director Date
<PAGE>
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 as of March 31, 1999 and
1998, and for each of the three years in the period ending
March 31, 1999, has been incorporated by reference in this
Form 10-K from page 33 of the 1999 Annual Report to Shareholders
f Modine Manufacturing Company and Subsidiaries. In connection
with our audits of such financial statements, we have also
audited the related financial statement schedule listed in the
index on page 15 of this Form 10-K.
In our opinion, the financial statement schedule 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.
PRICEWATERHOUSECOOPERS LLP
PricewaterhouseCoopers LLP
Chicago, Illinois
April 28, 1999
<PAGE>
MODINE MANUFACTURING COMPANY AND SUBSIDIARIES
(A Wisconsin Corporation)
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
for the years ended March 31, 1999, 1998 and 1997
($ In Thousands)
Col. A Col. B Col. C Col. D Col. E
- ------ ------ ------ ------ ------
Additions
(1) (2)
Charged Balance
Balance at to Costs Charged at
Beginning and to Other End of
Description of Period Expenses Accounts Deductions Period
- ----------- ---------- -------- -------- ---------- -------
1999:
Intangible Assets -
Accumulated
Amortization $17,150 $5,856 $846(B) $0(C) $23,852
------- ------ ------- ----- -------
Allowance for
Doubtful Accounts $4,585 $(427) $5(B) $414(A) $3,749
------- ------ ------- ------- ------
1998:
Intangible Assets -
Accumulated
Amortization $12,885 $4,761 $(496)(B) $0(C) $17,150
------- ------ --------- ------- -------
Allowance for
Doubtful Accounts $4,140 $1,029 $(70)(B) $514(A) $4,585
------- ------ -------- ------- ------
1997:
Intangible Assets -
Accumulated
Amortization $8,689 $4,937 $(741)(B) $0(C) $12,885
------- ------ --------- ------- -------
Allowance for
Doubtful Accounts $5,052 $(117) $(168)(B) $627(A) $4,140
------- ------ --------- ------- ------
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.
<PAGE>
EXHIBIT 3(a)
RESTATED
ARTICLES OF INCORPORATION
OF
MODINE MANUFACTURING COMPANY
(July 17, 1969)
(As Amended 7-20-77)
(As Amended 2-18-81)
(As Amended 7-20-83)
(As Amended 7-18-84)
(As Amended 7-17-85)
(As Amended 7-16-86)
(As Amended 7-19-89)
(As Amended 7-20-94)
ARTICLE I
The name of this Corporation shall be:
"MODINE MANUFACTURING COMPANY."
ARTICLE II
The period of existence of this Corporation shall be
perpetual.
ARTICLE III
The purpose or purposes for which this Corporation
is organized is to engage in any lawful activity within
the purposes for which corporations may be organized
under the Wisconsin Business Corporation Law. In
particular, but without limitation thereto by reason of
such enumeration, this Corporation may and shall have as
its powers, objects and purposes to manufacture, buy,
sell, deal in, engage in, conduct and carry on the
business of manufacturing of all kinds of goods, wares,
products, com-modities, supplies and merchandise of
every description; and to acquire, own, use, convey,
pledge, lease, exchange, sell, mortgage, encumber and
otherwise dispose of real and personal property,
improvements or chattels, real, tangible and intangible
property, property of mixed characteristics, patents,
franchises, privileges, and rights of any and all kinds
and wheresoever situated.
The Corporation, by action of the Board of
Directors, shall have power to borrow funds and issue
evidences of indebtedness of any and all kinds therefor,
to secure the same, and to issue bonds, debentures, or
other obligations, either non-convertible or convertible
into the Corporation's Capital Stock, and upon such
terms as may be fixed by the Board of Directors prior to
the issue of such bonds, debentures or other
<PAGE>
obligations. The Corporation, by action of the Board of
Directors, shall have the right to purchase, take,
receive, or otherwise acquire, hold, own, pledge,
transfer, or otherwise dispose of its own shares of
Corporation stock provided that no such acquisition,
directly or indirectly, of its own shares for a
consideration other than its own shares of equal or
subordinate rank shall be made unless either (a) the net
assets of the Corporation remaining after such
acquisition would be not less than the aggregate
preferential amount payable in the event of voluntary
liquidation to the holders of shares having preferential
rights to assets of the Corporation in the event of
liquidation, and at the time of such acquisition the
Corporation is not and would not thereby be rendered
insolvent; or (b) the Corporation has at the time of
such acquisition unreserved and unrestricted earned
surplus (as such terms are defined by Wisconsin Business
Corporation Law) equal to the cost of such shares.
ARTICLE IV
The aggregate number of shares of Capital Stock which
the Corporation shall have authority to issue is ninety-six
million (96,000,000) shares, of which eighty million
(80,000,000) shares shall be shares of Common Stock
(hereinafter called "Common Stock") of the par value of
Sixty-two and one/half cents ($0.625) per share, and
sixteen million (16,000,000) shares shall be shares of
Preferred Stock (hereinafter called "Preferred Stock")
of the par value of Two and one/half Cents ($0.025) per
share.
Shares of Preferred Stock may be divided into and
issued in series, from time to time, with each such
series to be so designated as to distinguish the shares
thereof from the shares of all other series of Preferred
Stock. All shares of Preferred Stock shall be identical
except as to the following rights and preferences, as to
which there may be variations between different series:
The rate of dividend, the price at and the terms and
conditions on which shares of Preferred Stock may be
redeemed; the amount payable upon shares of Preferred
Stock in event of voluntary or involuntary liquidation;
sinking fund provisions for redemption or purchase of
shares of Preferred Stock; and the terms and conditions
on which shares of Preferred Stock may be converted into
other series or classes of capital stock, if the shares
of any series of Preferred Stock are issued with the
privilege of conversion. Each such series of Preferred
Stock shall have such designations, preferences,
limitations and relative rights as shall be stated and
expressed in the resolution or resolutions providing for
the issue of such series of Preferred Stock adopted by
the Board of Directors of the Corporation, subject to
the limitations prescribed by law and in accordance with
the provisions hereof, the Board of Directors being
hereby expressly vested with authority to adopt any such
<PAGE>
resolution or resolutions as they may deem advisable
thereon.
The holders of shares of the Preferred Stock of
each series shall be entitled to receive, when and as
declared by the Board of Directors, out of funds legally
available for the payment of dividends, dividends at the
rates fixed by the Board of Directors for such series,
and no more, before any dividends, other than dividends
payable in Common Stock, shall be declared and paid, or
set apart for payment, on the Common Stock with respect
to the same dividend period.
Whenever, at any time, dividends on the then
outstanding Preferred Stock as may be required with
respect to any series outstanding shall have been paid
or declared and set apart for payment on the then
outstanding Preferred Stock, the Board of Directors may,
subject to the provisions of the resolution or
resolutions creating any series of Preferred Stock,
declare and pay dividends on the Common Stock, and the
holders of shares of Preferred Stock shall not be
entitled to share therein.
The holders of shares of the Preferred Stock of
each series shall be entitled upon liquidation or
dissolution or upon the distribution of the assets of
the Corporation to such preference as provided in the
resolution or resolutions creating such series of
Preferred Stock, and no more, before any distribution of
the assets of the Corporation shall be made to the
holders of the shares of the Common Stock. Whenever the
holders of shares of Preferred Stock shall have been
paid the full amounts to which they shall be entitled,
the holders of shares of the Common Stock shall be
entitled to share ratably in all assets of the
Corporation remaining.
At all meetings of the shareholders of the
Corporation, the holders of shares of the Common Stock
and of the Preferred Stock of the Corporation shall be
entitled to one vote for each share of Capital Stock
held by them. The holders of shares of the Preferred
Stock shall have such right to vote as a class as may be
provided by the Wisconsin Business Corporation Law and
as may be provided in the resolution or resolutions
creating such series of Preferred Stock.
No holder of shares of Capital Stock of this
Corporation shall have any pre-emptive, preferential or
other right to subscribe for or purchase any part of the
unissued Capital Stock or Capital Stock of this
Corporation held in the Corporate Treasury, whether now
or hereafter authorized, or of other securities of this
Corporation of any type or class which are convertible
into Capital Stock of this Corporation excepting as the
Preferred Stock hereinabove provided may be convertible
into shares of the Common Stock of this Corporation.
<PAGE>
ARTICLE V
The Board of Directors of this Corporation shall
consist of such number of members as the By-Laws may
provide, but not less than seven (7) members, divided
into three (3) classes, (divided as evenly in number as
possible) with not more than one class of Directors to
be elected at each annual meeting of shareholders,
excluding election to fill vacancies.
ARTICLE VI
The address of the registered office of this
Corporation at the time of the adoption of these
Restated Articles of Incorporation is 1500 DeKoven
Avenue, Racine, Wisconsin 53401, and the name of its
registered agent at such address is W. E. Pavlick.)
ARTICLE VII
Vote Required for Certain Business Combinations
Section A. Higher Vote for Certain Business Combinations.
Except as set forth in Section (B) of this Article VII,
(1) the affirmative vote required by the
Wisconsin Business Corporation Law, Chapter
180 of the Wisconsin Statutes, of at least
two-thirds of the outstanding shares of all
classes of stock of the corporation generally
possessing voting rights in elections for
directors, considered for this purpose as one
class, shall be required for
(a) the merger or consolidation of
the corporation with or into any
Interested Person or any Affiliate or
Associate of any Interested Person (as
hereinafter defined); or
(b) the sale, lease, exchange, or other
disposition of all or substantially
all the property and assets of the
corporation to or with any Interested
Person or any Affiliate or Associate of
any Interested Person; or
(c) the acquisition by the corporation of
all or substantially all the assets of
any Interested Person or any Affiliate
or Associate of any Interested Person
other than in the ordinary course of
business; or
(d) the reclassification of the shares of
stock of the corporation generally
<PAGE>
possessing voting rights in elections
of directors, the purchase by the
corporation of such shares, or the
issuance by the corporation of such
shares or any securities convertible
thereto or exchangeable therefor which
in any such case has the effect,
directly or indirectly, of increasing the
proportionate share of the outstanding
shares of any class of equity or
convertible securities of the corporation
which are directly or indirectly owned by
any Interested Person; and
(2) notwithstanding the provisions of (1),
above, if the aggregate amount of the cash and
the fair market value of the consideration
other than cash (as provided in Section
(C)(7)) to be received per share by the
holders of the Common Stock of the corporation
in any transaction described in (1), above, is
less than the highest of
(a) the highest price per share, (including
any brokerage commissions, transfer taxes
and soliciting dealer's fees) paid or agreed
to be paid by any Interested Person to acquire
beneficial ownership of any shares of such
Common Stock (with appropriate adjustments for
recapitalizations, and for stock splits, stock
dividends and like distributions), or
(b) the per share book value of such Common Stock
at the end of the fiscal quarter immediately
preceding the record date for the determination
of stockholders entitled to vote on or consent
to such transaction, or
(c) the fair market value per share of Common Stock
on the date of the first public announcement of
the proposed transaction (the "Announcement
Date") or the date on which the Interested
Person becomes an Interested Person (the
"Determination Date") (whichever is higher),
then both the affirmative vote required by (1),
above, and the affirmative vote or consent of the
holders of not less than two-thirds of the Non-
Interested Outstanding Shares (as hereinafter
defined) of stock of the corporation entitled
to vote in elections for directors, voting as one
class for purposes of this Article VII, shall be
required to adopt, approve or authorize any such
transaction.
Section B. When Higher Vote Not Required.
The provisions of Section (A)(2) of this Article
VII shall not be applicable to any of the
<PAGE>
transactions specified herein if such transaction
is approved by a resolution adopted by the majority
vote of the Board of Directors. If the Board of
Directors so approves any such transaction which,
under the Business Corporation Law, Chapter 180 of
the Wisconsin Statutes, in addition requires the
approval of the shareholders, such transaction may
be effected upon receiving the affirmative vote of
at least two-thirds of the outstanding shares of
all classes of stock generally possessing voting
rights in elections for directors, considered for
this purpose as one class, it being the intention
of the corporation in these circumstances to elect
expressly the affirmative voting requirements of
the Wisconsin Business Corporation Law.
Section C. Definitions.
For purposes of this Article VII
(1) an "Interested Person" is any individual,
partnership, corporation or other entity which
as of the record date for the determination of
shareholders entitled to notice of and to vote
on or consent to the adoption, authorization,
or approval of any transaction referred to in
this Article VII is, or at any time within the
preceding twelve months has been, the
Beneficial Owner (as hereinafter defined) of 5
percent or more of the outstanding shares of
stock of the corporation entitled to vote in
elections for directors;
(2) an "Interested Person" shall be deemed to
be the "Beneficial Owner" of shares of stock
of the corporation
(a) which such Interested Person or
any of its Affiliates or Associates (as
such terms are hereinafter defined) owns,
directly or indirectly, whether of record
or not,
(b) which such Interested Person or any of
its Affiliates or Associates has the right
to acquire pursuant to any agreement, or
upon exercise of conversion rights, warrants
or options, or otherwise, or
(c) which are beneficially owned, directly or
indirectly, (including shares deemed owned
through application of clauses (a) and (b)
above) by any other individual, partnership,
corporation or other entity with which such
Interested Person or any of its Affiliates
or Associates has any agreement, arrangement
or understanding for the purpose of acquiring,
holding, voting or disposing of stock of the
corporation;
<PAGE>
(3) "Non-Interested Outstanding Shares" are
the issued and outstanding shares of the
corporation entitled to vote in elections for
directors, other than any shares of which an
Interested Person is the Beneficial Owner as
of the record date for the determination of
shareholders entitled to notices of and to
vote on or consent to the adoption,
authorization or approval of any transaction
referred to in this Article VII;
(4) an "Affiliate" of an Interested Person is
any individual, partnership, corporation or
other entity that directly, or indirectly
through one or more intermediaries, controls,
or is controlled by, or is under common
control with, the Interested Person; and
(5) an "Associate" of an Interested Person is
(a) any partnership, corporation or other
entity of which such Interested Person
is an officer or partner or is, directly
or indirectly, the Beneficial Owner of
10 percent or more of any class of
equity securities,
(b) any trust or estate in which such
Interested Person has a substantial
beneficial interest or as to which such
Interested Person serves as trustee or in
a similar capacity, or
(c) any relative or spouse of such Interested
Person or any relative of such spouse, who
has the same home as such Interested Person
or who is a Director or Officer of such
Interested Person or any corporation which
controls or is controlled by such Interested
Person.
(6) for purposes of determining whether an
Interested Person is the Beneficial Owner of 5
percent or more of the outstanding shares of
stock of the corporation entitled to vote in
elections for directors, the outstanding
shares of stock of the corporation shall
include shares deemed owned through
application of clauses (a), (b), or (c) of
paragraph (C)(2), above, but shall not include
any other shares which may be issuable
pursuant to any agreement or upon exercise of
conversion rights, warrants or options, or
otherwise.
(7) fair market value of consideration other
than cash will be determined by the Board of
Directors prior to submission of the proposed
business combination to the shareholders.
<PAGE>
. . . . . . . .
These Restated Articles of Incorporation together with the
Amendments adopted July 18, 1984, July 17, 1985, July 16, 1986,
July 19, 1989 and July 20, 1994 shall supersede and take the place
of the theretofore existing Articles of Incorporation of this
Corporation and any and all amendments thereto.
<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)
(as amended October 16, 1996 to be effective
October 16, 1996)
(as amended December 17, 1997)
(as amended March 18, 1998 to be effective July 15, 1998)
(as amended January 20, 1999)
(as amended March 17, 1999 to be effective July 21, 1999)
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.
1.02. Special Meetings. Special meetings of the
----------------
stockholders may be called by the Chairman of the Board or the
<PAGE>
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
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.
<PAGE>
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: one class consisting of two directors; one class
consisting of four directors and one 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 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.
<PAGE>
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
of Incorporation, or by these by-laws, may exercise all the
powers, including specific powers, of the Company.
<PAGE>
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 Chairman 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 Chairman, 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 Chairman, 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 Chairman, 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 Chairman, 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
Chairman, 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,
such certificate may, nevertheless, be adopted and issued and
<PAGE>
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 Chairman, 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 Chairman or
President, and in such manner, including facsimile and printed
signatures, as may be designated by the Chairman or 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
Chairman or 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
<PAGE>
and certify to such 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
Chairman or 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 Chairman of this Company if he be present, or in his absence
by the President or any Vice President of this Company who may be
present, and (b) whenever, in the judgment of the Chairman, or in
his absence, of the President or 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 Chairman,
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(d)
MODINE MANUFACTURING COMPANY
1985 STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS
(as amended July 19, 1989)
(as amended January 15, 1997)
1. PURPOSE. The Modine Manufacturing Company 1985 Stock
Option Plan for Non-Employee Directors (the "Directors' Plan") is
intended to promote the interests of Modine Manufacturing Company
(the "Company") and its stockholders by increasing the potential
compensation of the non-employee members of the Company's Board
of Directors and Directors Emeriti, thereby assisting the Company
in its efforts to attract and retain well qualified individuals
to serve as its directors and to retain the counsel of Directors
Emeriti. Options granted under the Directors' Plan are intended
to be of a type that does not meet all of the requirements of
Section 422A of the Internal Revenue Code of 1954 as heretofore
and hereafter amended, and the Directors' Plan shall be construed
so as to carry out that intention.
2. ADMINISTRATION.
(a) Procedure; Disinterested Directors. The Board will
----------------------------------
administer the Plan; provided, however, that the Board may
appoint a committee (the "Committee") of two (2) or more
directors to administer the Plan 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 "Exchange Act").
(b) Powers. Grants of Options under the Plan and the
------
amount, price, and timing of the awards to be granted will be
automatic as described in Section 5. However, all questions of
interpretation of the Plan will be determined by the Board or the
Committee, as applicable, and such determination will be final
and binding upon all parties.
(c) Section 16 Compliance. Transactions under this
---------------------
Directors' Plan are intended to comply with all applicable
conditions of Rule 16b-3 or its successors under the Exchange
Act. To the extent any provision of the Directors' Plan or
action by the Board or Committee fails to so comply, it shall be
deemed null and void, to the extent permitted by law and deemed
advisable by the Board or Committee. In addition, to the extent
a participant (who is also a Reporting Person under Rule 16b-3 or
its successors) engages in an opposite way transaction that
jeopardizes the exemption, it shall be deemed null and void.
3. PARTICIPANTS. Participants shall consist of all present
or future directors of the Company who are not salaried employees
of the Company and Directors Emeriti.
4. SHARES RESERVED UNDER THE DIRECTORS' PLAN. There is
hereby reserved for issuance under the Directors' Plan an
<PAGE>
aggregate of 500,000 shares of Common Stock, $0.625 par value,
which may be authorized but heretofore unissued shares or shares
reaquired by the Company, including shares purchased on the open
market. Any shares subject to Directors' Stock Options or
issued under such options may thereafter be subject to new
options under this Directors' Plan, if there is a lapse,
expiration or termination of any such options prior to issuance
of the shares or if shares are issued under such options, and
thereafter are reacquired by the Company pursuant to rights
reserved by the Company upon issuance thereof.
5. NUMBER OF SHARES TO BE GRANTED EACH ELIGIBLE DIRECTOR;
EXERCISE.
(a) Upon adoption of this Plan by the Board of Directors
the Committee shall grant to each director immediately:
( i) an option for that number of shares equal to the
multiple of 200 and the number of years (whole years
and partial years) that such director has served
as a director of the Company; and
(ii) an option for that number of shares equal to 500
shares for each 12-month period remaining in such
director's unexpired term on the Board of Directors,
plus 500 shares for any fractional 12-month period
remaining in such term.
(b) Within thirty (30) days after election or re-election to
the Board of Directors by the Company's stockholders, the
Committee shall grant to each director so elected or
re-elected, an option for that number of shares equal to
the multiple of 500 and the number of years in the term
to which he has been elected to the Company's Board of
Directors.
(c) Upon adoption of this Plan by the Board of Directors,
the Committee shall grant to each then existing Director
Emeritus an option for twenty-four hundred (2,400) shares.
(d) An option may be exercised in whole at any time or in
part from time to time.
6. OPTION PRICE; TERM. Directors' Stock Options shall
consist of options to purchase shares of Common Stock at purchase
prices not less than 100 percent of the fair market value of the
shares on the date the option is granted. Such options will be
exercisable not 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
and, in the case of Directors Emeriti, such stock options shall
terminate no later than three (3) year from the date of grant.
7. ADJUSTMENT PROVISIONS. If the Company shall at any time
change the number of issued shares of Common Stock without new
consideration to the Company (by stock dividends, stock splits,
or similar transactions), the total number of shares reserved for
issuance under this Directors' Plan and the number of shares
covered by each outstanding Director's Stock Option shall be
<PAGE>
adjusted so that the aggregate consideration payable to the
Company, if any, and the value of each such option shall not be
changed. Directors' Stock Options may also contain provisions
for their continuation or for other equitable adjustments after
changes in the Common Stock resulting from reorganization, sale,
merger, consolidation or similar occurrences.
8. NONTRANSFERABILITY. Each Director's Stock Option granted
under the Directors' Plan to a participant shall not be
transferable by him otherwise than by will or the laws of
descent and distribution, and shall be exercisable, during his
lifetime, only by him. In the event of the death of a
participant prior to termination of any Director's Stock Options
held by him hereunder, each Director's Stock Option theretofore
granted to him shall be exercisable to the extent provided
therein but not later than one year after his death (and not
beyond the stated duration of the Director's Stock Option). Any
such exercise shall be made only:
(a) By the executor or administrator of the estate of the
deceased participant or the person or persons to whom
the deceased participant's rights under the Director's
Stock Option shall pass by will or the laws of descent
and distribution; and
(b) To the extent, if any, that the deceased participant
was entitled at the date of his death.
9. OTHER PROVISIONS. The award of any Director's Stock
Option under the Directors' Plan may also be subject to such
other provisions (whether or not applicable to the Director's
Stock Option awarded to any other participant) as the Committee
determines appropriate, including without limitation, provisions
for the installment purchase of Common Stock under Directors'
Stock Options, provisions to assist the participant in financing
the acquisition of Common Stock, provisions for the forfeiture
of, or restriction on resale or other disposition of shares
acquired under Directors' Stock Options, provisions giving the
Company the right to repurchase shares acquired under Directors'
Stock Options in the event the participant elects to dispose of
such shares, provisions to comply with federal and state
securities laws, or understandings or conditions as to the length
of the participant's term as a director in addition to those
specifically provided for under the Directors' Plan.
10. TENURE. A participant's right, if any, to continue to
serve the Company as a director shall not be enlarged or
otherwise affected by his designation as a participant under the
Directors' Plan.
11. DURATION, AMENDMENTS AND TERMINATION. No Director's
Stock Option shall be granted more than ten years after the date
of adoption of this Directors' Plan; provided, however, that the
terms and conditions applicable to Directors' Stock Options
granted within such period may thereafter be amended or modified
by mutual agreement between the Company and the participant or
such other person as may then have an interest therein. Also, by
mutual agreement between the Company and a participant hereunder,
or under any future plan of the Company, Directors' Stock Options
<PAGE>
may be granted to such participant in substitution and exchange
for and in cancellation of, any Directors' Stock Options
previously granted such participant under this Directors' Plan.
The Committee may amend the Directors' Plan from time to time or
terminate the Directors' Plan at any time. However, no action
authorized by this paragraph shall reduce the amount of any
existing Directors' Stock Options or change the terms and
conditions thereof without the participant's consent. No
amendment of the Directors' Plan shall, without approval of the
stockholders of the Company (i) increase the total number of
shares which may be issued under the Directors' Plan or increase
the amount or type of Directors' Stock Options that may be
granted under the Directors' Plan; (ii) change the minimum
purchase price of shares of Common Stock which may be made
subject to Directors' Stock Options under the Directors' Plan; or
(iii) modify the requirements as to eligibility for Directors'
Stock Options under the Directors' Plan.
12. SHAREHOLDER APPROVAL; EFFECTIVE DATE. The Directors'
Plan has been adopted by the Board of Directors on January 16,
1985, and shall be effective as of such date, subject to approval
by the shareholders of the Company. Such adoption shall be null
and void if shareholder approval is not obtained within 12 months
of the adoption of the Directors' Plan by the Board of Directors.
13. FORM OF PAYMENT. Payments required upon a particular
exercise of Directors' Stock Options under the Directors' Plan
may, at the Company's discretion, and in such manner as the
Company shall determine, be made in the form of Company stock as
well as cash or any combination of Company stock and cash.
<PAGE>
EXHIBIT 10(e)
MODINE PENSION AND DISABILITY PLAN
-----------------------------------------
TWENTY-FIFTH AMENDMENT AND RESTATEMENT
---------------------------------------------
for
SALARIED EMPLOYEES
---------------------
of
MODINE MANUFACTURING COMPANY
----------------------------------
<PAGE>
TABLE OF CONTENTS
ARTICLE PAGE
- ------- ----
PURPOSE . . . . . . . . . . . . . . . . . . . . . . 2
I DEFINITIONS AND CONSTRUCTION
Section 1.1 Definitions. . . . . . . . . . . . . 3
Section 1.2 Construction . . . . . . . . . . . . 10
II PARTICIPATION AND ELIGIBILITY
Section 2.1 Participation. . . . . . . . . . . . 10
Section 2.2 Eligibility Service. . . . . . . . . 11
Section 2.3 Credited Service . . . . . . . . . . 12
Section 2.4 Break in Service . . . . . . . . . . 14
Section 2.5 Maternity and Paternity Leave . . . 15
Section 2.6 Military Service . . . . . . . . . . 16
Section 2.7 Effect of Transfer and/or Merger . . 16
Section 2.8 Effect of Rehire . . . . . . . . . . 18
Section 2.9 Foreign Participants . . . . . . . . 20
III PENSION REQUIREMENTS
Section 3.1 Normal Retirement. . . . . . . . . . 20
Section 3.2 Early Retirement . . . . . . . . . . 21
Section 3.3 Special Early Retirement . . . . . . 21
Section 3.4 Disability Retirement. . . . . . . . 22
Section 3.5 Deferred Vested Pension. . . . . . . 23
Section 3.6 Death Benefit. . . . . . . . . . . . 24
Section 3.7 Medicare Part B Premium
Supplemental Benefit . . . . . . . 24
IV AMOUNT OF RETIREMENT PENSION
Section 4.1 Normal Retirement Pension. . . . . . 25
Section 4.2 Early Retirement Pension . . . . . . 27
Section 4.3 Special Early Retirement Pension . . 28
Section 4.4 Disability Retirement Pension. . . . 29
Section 4.5 Deferred Vested Pension. . . . . . . 29
Section 4.6 Death Benefit . . . . . . . . . . . 29
Section 4.7 Medicare Part B Premium
Supplemental Benefit . . . . . . . 30
Section 4.8 Maximum Pension . . . . . . . . . . 30
Section 4.9 Top-Heavy Provisions . . . . . . . . 32
V MANNER OF PAYMENT AND OPTIONAL BENEFITS
Section 5.1 Coverage Prior to Retirement . . . . 38
Section 5.2 Coverage Option Upon Retirement or
Other Termination of Employment . . 39
Section 5.3 Forms of Benefit . . . . . . . . . . 40
Section 5.4 Rules. . . . . . . . . . . . . . . . 41
Section 5.5 Lump Sum and other Manner of Payment 43
Section 5.6 Limitations. . . . . . . . . . . . . 44
-i-
<PAGE>
ARTICLE PAGE
- ------- ----
VI PLAN FINANCING
Section 6.1 Contributions . . . . . . . . . . . 45
Section 6.2 Trust Fund . . . . . . . . . . . . . 45
VII ADMINISTRATION
Section 7.1 Allocation of Responsibility Among
Fiduciaries for Plan and Trust
Administration . . . . . . . . . . 46
Section 7.2 Appointment of Board. . . . . . . . 47
Section 7.3 Claims Procedure. . . . . . . . . . 47
Section 7.4 Records and Reports . . . . . . . . 48
Section 7.5 Other Board Powers and Duties . . . 48
Section 7.6 Rules and Decisions . . . . . . . . 49
Section 7.7 Board Procedures. . . . . . . . . . 50
Section 7.8 Authorization of Benefit Payments . 50
Section 7.9 Application and Forms for Pension . 50
Section 7.10 Facility of Payment . . . . . . . . 51
VIII MISCELLANEOUS
Section 8.1 Nonguarantee of Employment. . . . . 51
Section 8.2 Rights to Trust Assets. . . . . . . 52
Section 8.3 Nonalienation of Benefits . . . . . 52
IX AMENDMENTS AND ACTION BY EMPLOYER
Section 9.1 Amendments . . . . . . . . . . . . 53
Section 9.2 Action by Company . . . . . . . . . 53
X SUCCESSOR COMPANY AND MERGER OR CONSOLIDATION OF PLANS
Section 10.1 Successor Company . . . . . . . . . 53
Section 10.2 Plan Assets . . . . . . . . . . . . 53
XI RESTRICTIONS ON BENEFITS PAYABLE TO HIGHLY COMPENSATED
PARTICIPANTS . . . . . . . . . . . . . . . . . . 55
XII PLAN TERMINATION
Section 12.1 Right to Terminate . . . . . . . . 57
Section 12.2 Partial Termination . . . . . . . . 58
Section 12.3 Liquidation of Trust Fund . . . . . 58
Section 12.4 Manner of Distribution. . . . . . . 63
Section 12.5 Residual Amounts. . . . . . . . . . 64
-ii-
<PAGE>
MODINE MANUFACTURING COMPANY
MODINE PENSION AND DISABILITY PLAN FOR SALARIED EMPLOYEES
TWENTY-FIFTH AMENDMENT AND RESTATEMENT
WHEREAS, the Company established the Modine Pension and
Disability Plan for Salaried Employees effective January 1, 1951,
adopted a First Amendment thereto effective January 1, 1951, a
Second Amendment thereto effective April 1, 1954, a Third
Amendment thereto effective January 1, 1956, a Fourth Amendment
and Restatement thereof effective April 1, 1960, a Fifth
Amendment thereto effective January 1, 1961, a Sixth Amendment
thereto effective April 29, 1965, a Seventh Amendment thereto
effective July 15, 1965, an Eighth Amendment thereto effective
December 1, 1968, a Ninth Amendment thereto effective July 2,
1969, a Tenth Amendment thereto effective April 1, 1972, an
Eleventh Amendment and Restatement thereof effective January 1,
1976, a Twelfth Amendment and Restatement thereof effective
January 1, 1979, a Thirteenth Amendment thereto effective January
1, 1979, a Fourteenth Amendment thereto effective January 1,
1983, a Fifteenth Amendment thereto effective May 19, 1983, a
Sixteenth Amendment thereto effective January 1, 1984, a
Seventeenth Amendment thereto effective October 1, 1984, an
Eighteenth Amendment thereto effective October 1, 1984, a
Nineteenth Amendment thereto effective December 19, 1985, a
Twentieth Amendment and Restatement thereof effective April 1,
1986, a Twenty-first Amendment thereto effective January 1, 1987,
a Twenty-second Amendment thereto effective April 1, 1988, a
Twenty-third Amendment thereto effective April 1, 1989, and a
Twenty-fourth Amendment thereto effective May 16, 1990, and
WHEREAS, it is the desire of the Company to again amend and
restate such Plan as hereinafter set forth,
NOW, THEREFORE, the Company does hereby adopt a "Twenty-
Fifth Amendment and Restatement" to the Modine Pension Plan for
Salaried Employees and does hereby amend such Plan as set forth
herein.
PURPOSE
Effective as of January 1, 1951, Modine Manufacturing
Company adopted the MODINE PENSION AND DISABILITY PLAN FOR
SALARIED EMPLOYEES and executed a trust agreement to provide
retirement benefits for its employees.
The Plan was subsequently amended; and effective as of
February 20, 1991, the Company adopted the amended and restated
Plan, as set forth herein. The Modine Salaried Employees
Retirement Trust Agreement which was established by agreement
executed on July 30, 1951, as amended to date is intended to form
a part of the Plan.
The Plan and Trust are intended to meet the requirements of
Sections 401(a) and 501(a) of the Internal Revenue Code of 1954,
as amended by the Employee Retirement Income Security Act of 1974.
<PAGE>
The provisions of this Plan shall apply to an employee who
terminates employment on or after the Effective Date. The rights
and benefits, if any, of a former employee shall be determined in
accordance with the provisions of the Plan in effect on the date
his employment terminated.
ARTICLE I
DEFINITIONS AND CONSTRUCTION
---------------------------------
Section 1.1 Definitions: Where the following words and
----------- -----------
phrases appear in this Plan, they shall have the respective
meanings set forth below, unless the context clearly indicates to
the contrary:
(a) Accrued Benefit. The amount calculated in accordance
---------------
with Section 4.1 for Retirement at Normal
Retirement Date. In calculating the Section 4.1
amount, for purposes of the Accrued Benefit, only
Average Annual Earnings and Credited Service
accumulated prior to the date of determination shall
be considered. The Accrued Benefit, however, shall
not be less than the minimum benefit specified in
Section 4.1. "Date of determination" shall be the
latest of
(1) the last working day of the Participant
with the Company,
(2) when a doctor certifies that the
Participant is totally and permanently disabled,
(3) the last day the Participant receives
salary continuation benefits, or
(4) the date of actual Retirement of the
Participant as defined by the Plan.
(b) Actuarial (or Actuarially) Equivalent: Equality in
-------------------------------------
value of the aggregate amounts expected to be
received under different forms of payment, based on
actuarial assumptions approved from time to time by
the Board of Administration. The annuity factors
applicable as of the effective date, are attached
hereto and identified as Exhibit A.
(c) Actuary: The individual actuary or firm of actuaries
-------
selected by the Company to provide actuarial services
in connection with the administration of the Plan.
(d) Annual Earnings: The amount of base pay paid to a
---------------
Participant during the calendar year for personal
services rendered to the Company, including (but not
<PAGE>
limited to) vacation pay, short-term disability,
authorized paid leaves of absence, bonuses, overtime,
overtime premium pay and any reduction in such base
pay under a Company salary or wage reduction plan.
The Annual Earnings of a Foreign Participant,
eligible to participate under Section 2.7(c) hereof,
shall be recorded in U.S. Dollars. The applicable
exchange rate shall be the exchange rate on the last
day of the applicable calendar year (or the last day
of employment, if other than the last day of the
calendar year). Total Annual Earnings of a
Participant in any calendar year, including any
calendar year prior to April 1, 1989, shall not
exceed $222,220, adjusted for changes in the cost of
living as provided in Section 415(d) of the Internal
Revenue Code. However, the Accrued Benefit
determined applying this limit shall not be less than
the Accrued Benefit determined on April 1, 1989
without regard to this limit.
For a Participant who transferred from a position
of employment with Modine Heat Transfer, Inc., a
wholly-owned subsidiary of the Company, Annual
Earnings shall include Annual Earnings as determined
under any other benefit plan covering the Participant
before his transfer.
(e) Authorized Leave of Absence: Any absence authorized
---------------------------
by the Company under the Company's standard
personnel practices, provide that the Participant
returns within the period specified in the Authorized
Leave of Absence.
(f) Average Annual Earnings: The arithmetic average of a
-----------------------
Participant's Annual Earnings for the highest
five consecutive calendar years during the last ten
years immediately preceding the earlier of the
calendar year of the termination of service with the
Company, or the calendar year in which a lump-sum
amount is paid under Section 5.5(b). When a
Participant accumulates, on or before termination of
service, one year of Credited Service in the calendar
year of such termination under Section 2.3 hereof,
his Annual Earnings for such calendar year, paid on
or before his termination, shall be considered in
determining his Average Annual Earnings, and may be
one of the highest five consecutive calendar years
used in calculating such Average Annual Earnings.
(g) Board: The Board of Administration as defined in
-----
ARTICLE VII.
(h) Company: Modine Manufacturing Company, a corporation
-------
organized and existing under the laws of the
State of Wisconsin, its wholly-owned domestic
<PAGE>
subsidiaries as of January 1, 1979, or its successor
or successors.
(i) Covered Compensation: With respect to an Employee,
--------------------
the average of the contribution and benefit basis
in effect under Section 230 of the Social Security
Act for each year in the 35-year period ending with
the year in which the Employee attains, or would
attain, Social Security Retirement Age as defined in
Section 415(b)(8) of the Internal Revenue Code.
Should the "date of determination" of the Accrued
Benefit of such Employee, as defined in Section 1.1(a),
precede his Social Security Retirement Age, the
contribution and benefit basis for each year from date
of determination to his Social Security Retirement Age
shall be assumed to be the contribution and benefit
basis for the year of his date of determination.
(j) Credited Service: The period of a Participant's
----------------
employment considered in determining the amount
of benefit payable to or on behalf of a Participant
in accordance with Section 2.3.
(k) Death Benefit: The payment made pursuant to this Plan
------------
to the surviving beneficiary, however designated
or selected, in accordance with Section 3.6.
(l) Disability: A physical or mental condition which
----------
totally and presumably permanently prevents a
Participant from engaging in any substantially
gainful activity as determined in accordance with the
provisions of Section 3.4.
(m) ERISA: Public Law No. 93-406, the Employee Retirement
-----
Income Security Act of 1974, as amended from time to
time.
(n) Effective Date: February 20, 1991, the date on which
--------------
the provisions of this Amended and Restated Plan
became effective.
(o) Eligibility Service: The period of a Participant's
-------------------
employment considered in the determination of his
eligibility for vested benefits under the Plan, in
accordance with Section 2.2.
(p) Employee: Any salaried employee of the Company who,
--------
on or after the Effective Date, is receiving
remuneration for personal services rendered to the
Company (or would be receiving such remuneration
except for an Authorized Leave of Absence).
<PAGE>
(q) Fiduciaries: The Board of Administration, the
-----------
Investment Committee, the Investment Manager and
the Trustee, but only with respect of the specific
responsibilities of each for Plan and Trust
administration, all as described in Section 7.1.
(r) Normal Retirement Date: The earlier of (i) the
----------------------
Participant's 65th birthday or (ii) the date in
which the Participant has both reached age 62 and
accumulated thirty or more years of Eligibility
Service.
(s) PBGC: Pension Benefit Guaranty Corporation, a body
----
corporate within the Department of Labor
established under the provisions of TITLE IV of
ERISA.
(t) Participant: An Employee participating in the Plan in
-----------
accordance with the provisions of Section 2.1.
(u) Pension: A series of monthly monetary amounts which
-------
are payable to a person who is entitled to receive
benefits under the Plan.
(v) Plan: Modine Pension Plan for Salaried Employees as
----
set forth herein, and as amended from time to time.
(w) Plan Year: The 12-month period commencing April 1
---------
and ending on March 31.
(x) Retirement: Termination of employment for reason
----------
other than death after a Participant has
fulfilled all requirements for a Normal, Early, or
Disability Retirement Pension. Retirement shall be
considered as commencing on the day immediately
following a Participant's last day of employment (or
Authorized Leave of Absence, if later). For the
purposes of this Plan, Retirement shall also be
considered as commencing on the day a Participant
receives a lump-sum amount under Section 5.5(b)
hereof.
(y) Social Security Retirement Age: The age of a
------------------------------
Participant used to determine when full,
unreduced Social Security Benefits will be paid.
(z) Trust: The fund known as the Modine Salaried
-----
Employees Retirement Trust Fund, maintained in
accordance with the terms of the Trust Agreement, as
<PAGE>
from time to time amended, which constitutes a part of
this Plan.
(aa) Trustee: The corporation or individuals appointed by
-------
the Board of Directors of the Company to hold the
assets of the Trust.
Section 1.2 Construction: The masculine gender, where
----------- ------------
appearing in the Plan, shall be deemed to include the feminine
gender, and the singular may include the plural, unless the
context clearly indicates to the contrary. The words "hereof,"
"herein," "hereunder" and other similar compounds of the word
"here" shall mean and refer to the entire Plan, not to any
particular provision or Section.
ARTICLE II
PARTICIPATION AND ELIGIBILITY
----------------------------------
Section 2.1 Participation:
----------- -------------
(a) An Employee shall become a Participant in the Plan as
follows:
(1) Any Employee covered by the Plan prior
to the Effective Date shall continue to
participate in accordance with the provisions of
the Plan as amended.
(2) Any Employee employed on the Effective
Date but not covered by the Plan previously or
any Employee hired after the Effective Date
shall become a Participant when and if he
completes a 12-month period (12 consecutive
complete calendar months) from the date of hire
of not less than 1,000 hours of employment. He
shall become a Participant on the earliest April 1
or October 1 following such 12-month period.
"Hours of Employment" shall include hours
actually worked for the Company, to be credited
for the period during which the duties are
performed. "Hours of Employment" shall also
include periods of paid holidays, compensated
short-term illness or disability, paid vacation,
and other Authorized Leaves of Absence for which
a Participant is paid or entitled to payment.
Such "Hours of Employment" shall be credited to
the period or periods in which the period during
which no services are performed occurs. "Hours
of Employment" shall also include any hours for
which a Participant shall be entitled to an
award for back pay, but only to the extent that
such hours are not included above, such hours to
be credited to the period or periods to which
the award for back pay pertains.
<PAGE>
(b) For an Employee returning after a Break in
Service as defined in Section 2.4, the provisions of
said Section shall apply.
(c) A former Employee entitled to receive a Pension
under the Plan shall continue as a Participant until
the date of his death.
Section 2.2 Eligibility Service: A Participant's
----------- -------------------
eligibility for benefits under the Plan shall be determined by
his period of Eligibility Service, in accordance with the
following:
(a) Eligibility Service Prior to the Effective Date: For
-----------------------------------------------
a Participant covered by the Plan prior to the
Effective Date, Eligibility Service shall be credited
under the provisions of the Plan as then in effect;
except that, for an Employee whose Normal Retirement
Date preceded the Effective Date, Eligibility Service
shall include the period of service from his Normal
Retirement Date to the Effective Date.
(b) Eligibility Service From and After the Effective Date:
-----------------------------------------------------
Subject to the Break in Service provisions of
Section 2.4, a Participant shall accrue a year of
Eligibility Service for each calendar year in which
he has 1,000 or more Hours of Employment as defined
in Section 2.1(a)(2); and including the calendar year
in which he Retires provided he has 1000 or more
Hours of Employment in that calendar year by his date
of Retirement. A Participant shall also accrue a
year of Eligibility Service for each calendar year in
which he serves in the military, up to a total of
four years. When an Employee becomes a Participant
initially, or following a Break in Service, his
service enabling participation is included for the
purpose of computing Eligibility Service.
Section 2.3 Credited Service: For the purpose of
----------- ----------------
calculating Retirement Benefits under ARTICLE IV, a Participant's
Credited Service shall be determined as follows:
(a) Credited Service Prior to the Effective Date: For a
--------------------------------------------
Participant covered by the plan prior to the
Effective Date, Credited Service shall be credited
under the provisions of the Plan as then in effect;
except that, for an Employee whose Normal Retirement
Date preceded the Effective Date, Credited Service
shall include the period of service from his Normal
Retirement Date to the Effective Date.
(b) Credited Service On and After the Effective Date:
------------------------------------------------
Subject to the Break in Service provisions of
<PAGE>
Section 2.4, a Participant shall accrue one year of
Credited Service for each calendar year in which he
has 1,800 or more hours of eligible employment, and
one-tenth of a year of Credited Service for each 180
hours of eligible employment in the calendar year in
which he has less than 1,800 hours of eligible
employment; and including hours of eligible
employment in the year in which he Retires
accumulated to his date of Retirement; however, no
Credited Service shall be accrued where there are
fewer than 500 hours of eligible employment in the
calendar year; and total Credited Service cannot
exceed 40 (except in the event that Participant has
over 40 years of Credited Service as of the Effective
Date, in which event his Credited Service shall be
the years of Credited Service as of his Effective
Date). Except that when an Employee on or after the
Effective Date becomes a Participant initially, or
following a Break in Service, his service enabling
participation even if less than 500 hours in the
calendar year in which he becomes an Employee is
included for the purpose of computing Credited
Service. Hours of eligible employment shall include
hours actually worked for the Company, to be credited
for the period during which the duties are performed.
Hours of eligible employment shall also include
periods of paid holidays, compensated short-term
illness or disability, paid vacation, and other
leaves of absence granted by the Company for which a
Participant is paid or entitled to payment. The
period for which a Participant is absent from work
and receiving Workers' Compensation benefits from the
Company shall be counted as hours of eligible
employment at the rate of 40 hours per week. Such
hours of eligible employment shall be credited for
the period or periods in which the period during
which no services were performed occurs. Hours of
eligible employment shall be credited for a period of
Military Service which shall not exceed four years.
Hours of eligible employment shall also include any
hours for which a Participant shall be entitled to an
award for back pay, but only to the extent that such
hours are not included above, such hours to be
credited for the period or periods to which the award
for back pay pertains.
Section 2.4 Break in Service: After the Effective Date, a
----------- ----------------
calendar year during which a Participant completes less than 500
Hours of Employment shall constitute a Break in Service. Hours
of Employment shall include the periods set forth in Section 2.2
for Eligibility Service from and after the Effective Date. Upon
incurring a Break in Service, an Employee's rights and benefits
under the Plan shall be determined in accordance with his
Eligibility Service, Credited Service and Annual Earnings at the
time of the Break in Service. A former Participant who
subsequently completes a 12-month period from his date of re-
employment or anniversary thereof of not less than 1,000 Hours of
Employment, and who at the time of a Break in Service satisfied
<PAGE>
the vesting requirements of Section 3.5, shall have his pre-break
Eligibility Service and Credited Service restored in determining
his rights and benefits under the Plan. Such former Participant
who at the time of a Break in Service had not satisfied the
requirements for a vested benefit under Section 3.5 shall have
his pre-break Eligibility Service and Credited Service restored
only if either (1) the number of consecutive years of Break in
Service is five or less, or (2) the number of consecutive years
of Break in Service was less than the aggregate number of years
of pre-break Service. A re-employed Participant who is entitled
to restored Eligibility Service and Credited Service shall be
deemed to participate as of his re-employment date.
Section 2.5 Maternity and Paternity Leave: An authorized
----------- -----------------------------
Leave of Absence due to (1) pregnancy of the Participant, (2)
birth of a child of the Participant, (3) placement of a child in
connection with adoption of the child by the Participant, or (4)
caring for a child during the period immediately following birth
or placement for adoption, shall not constitute a Break in
Service, provided that such Leave of Absence is not for a period
longer than one 12-month period in which such Participant
completes less than 500 hours of employment. Such 12-month
period applies only to a year in which either (i) the absence
begins, or (ii) the following year if it would not otherwise be a
Break in Service in the first year. An Authorized Leave of
Absence under this Section is one in which the Participant was on
a Leave of Absence due to one of the permitted reasons, and such
Participant provides the Board with an acceptable certification
that the leave was taken for one of the permitted reasons.
Section 2.6 Military Service: An Authorized Leave of
----------- ----------------
Absence due to service in the Armed Forces of the United States
shall not constitute a Break in Service, provided such service
does not exceed four years, and further provided that the
Employee returns to employment with the Company within ninety
(90) days after his separation from Active Duty.
Section 2.7 Effect of Transfer and/or Merger:
----------- --------------------------------
(a) A Participant who transferred from a position of
employment with the Company not covered by the Plan,
shall have his service with the Company credited for
Eligibility Service and Credited Service as if he had
been a Participant under the Plan. Any benefit or
service under any other benefit plan covering the
Participant before the transfer shall be extinguished
and discontinued. Upon the subsequent termination or
retirement of such Participant, the amount of his
benefit thereafter shall be determined under the
applicable provisions of whichever pension plan or
pension agreement of the Company covers such
Participant at the time of his subsequent termination
or retirement.
(b) A Participant who was an active full-time
employee of a predecessor company which merged into
<PAGE>
the Company prior to the Effective Date, shall have
his former service credited on the same basis as if
he had been a Participant under the Plan during the
period of time he was employed by the Company and its
predecessor.
(c) A Participant who transfers from a position of
employment with the Company covered by the Plan to a
position of salaried employment with the Company not
covered by the Plan, shall continue to be covered by
the Plan and shall have his service with the Company
credited for Eligibility Service and Credited
Service. For the purposes of this paragraph (c), the
term "Company" shall mean Modine Manufacturing
Company, a corporation organized and existing under
the laws of the State of Wisconsin, its subsidiaries
and affiliates, whether foreign or domestic, existing
as of the Effective Date or to come into existence at
any future time.
(d) A Participant who transfers from a position of
employment with Modine Heat Transfer, Inc., a wholly-
owned subsidiary of the Company, shall have his
service with Modine Heat Transfer, Inc. credited for
Eligibility Service and Credited Service as credited
under any other benefit plan covering the Participant
immediately preceding his transfer.
Section 2.8 Effect of Rehire: A Participant who returns to
----------- ----------------
employment with the Company:
(a) While receiving Retirement Pension payments under
Sections 3.1, 3.2, 3.3 or 3.4, may elect either:
(1) to continue to receive such Pension
payments, which shall be adjusted as of January 1
of each year of such re-employment only for
any additional Credited Service accumulated
during the immediately preceding calendar year;
but his Average Annual Earnings and Primary
Social Security Benefit or Covered Compensation,
and any early payment reduction under Section
4.2(b), shall not be increased or reduced; or
(2) to have any further Pension payments
suspended until he again retires, at which time
his Pension Benefit shall be recalculated based
upon Average Annual Earnings, Covered
Compensation and Credited Service as of his
Retirement Date, but reduced by the Actuarial
Equivalent of any such Pension payments he
received prior to such subsequent Retirement.
(b) While receiving Deferred Vested Pension payments
under Section 3.5 hereof:
(1) If the Company, at the time of rehire,
determines that he will complete a 12-month
<PAGE>
period of not less than 1000 Hours of Employment
from his date of rehire, he shall have any
further Pension payments suspended until he
retires, at which time his Pension payable shall
be recalculated based upon Average Annual
Earnings, Covered Compensation and Credited
Service at Retirement Date, but reduced by the
Actuarial Equivalent of any such Pension
payments he received prior to such subsequent
Retirement.
(2) If the Company, at time of rehire,
determines that he will not complete 1000 Hours
of Employment in the 12-month period from his
date of rehire, he shall continue to receive
such Pension payments, which shall not be
increased or reduced by such re- employment.
However, in the event he subsequently completes
a 12-month period from his date of re-employment
or anniversary thereof of not less than 1000
hours of employment, he may elect either:
(i) to continue to receive such
Pension payments, which shall be adjusted
as of January 1 of each year of such re-
employment only for any additional Credited
Service accumulated during the immediately
preceding calendar year; but his Average
Annual Earnings and Primary Social Service
Benefit or Covered Compensation, and any
early payment reduction under Section
4.2(b), shall not be increased or reduced;
or
(ii) to have any further Pension payments
suspended until he Retires, at which time
his Pension Benefit shall be recalculated
based upon Average Annual Earnings, Covered
Compensation and Credited Service as of his
Retirement Date, but reduced by the Actuarial
Equivalent of any such Pension payments he
received prior to such subsequent Retirement.
(c) After having received a lump-sum payment of his
Pension Benefit under Section 5.5(b) hereof, he shall
receive no further Pension payments.
Section 2.9 Foreign Participants: For all purposes of this
----------- --------------------
Plan, all benefits of an Employee of a foreign subsidiary or
affiliate of the Company eligible to participate under Section
2.7(c) hereof, and the calculations thereof, shall be recorded in
U.S. Dollars. Where required for such recording, the applicable
exchange rate shall be the exchange rate on the date of pension
determination; except that, for determination of any annual or
other periodic earnings of such an Employee, the exchange rate on
the last day of the applicable period shall be used.
<PAGE>
ARTICLE III
PENSION REQUIREMENTS
--------------------
Section 3.1 Normal Retirement: A Participant with five or
----------- -----------------
more years of Eligibility Service shall be eligible for a on-
forfeitable Normal Retirement Pension if his employment is
terminated on or after his Normal Retirement Date.
Section 3.2 Early Retirement: A Participant shall be
----------- ----------------
eligible for an Early Retirement Pension if his employment is
terminated on or after reaching age 55 and after he has
accumulated five or more years of Eligibility Service. Payment
of an Early Retirement Pension shall commence as of the first day
of the month following the month of the Participant's 65th
birthday. However, if a Participant requests the Board to
authorize the commencement of his Early Retirement Pension as of
the first day of the month following his Retirement, or as of the
first day of any subsequent month which precedes his sixty-fifth
birthday, his Pension shall commence as of the date determined by
the Board, but the amount thereof shall be reduced as provided in
Section 4.2.
Section 3.3 Special Early Retirement: A Participant, other
----------- ------------------------
than an officer or one of the twenty-five highest-paid employees
of the Company, who has attained age 60 and has accumulated ten
or more years of Eligibility Service and
(a) Retires on or after the Effective Date at the
request of the Company (1) due to a change in, or
elimination of his job or (2) because he is, in the
opinion of the Company, no longer physically or
mentally able to fulfill the requirements of any
qualified job available, or
(b) Has been employed by the Company as a pilot for a
period of at least the five consecutive calendar
years immediately preceding the year in which he
attains age 60,
shall be eligible for a Special Early Retirement Benefit in
accordance with Section 4.3.
Section 3.4 Disability Retirement: A Participant shall be
----------- ---------------------
eligible for a Disability Retirement Pension if his employment is
terminated by reason of permanent Disability after he has
accumulated 10 or more years of Eligibility Service. Payment of
a Disability Retirement Pension shall commence as of the first
day of the month following his sixty-fifth birthday.
A Participant shall be deemed to be totally and permanently
disabled only if and when (a) he has been totally disabled by
bodily injury or disease so as to be prevented thereby from
engaging in any regular occupation or employment for remuneration
or profit, except such employment as is found by the Board to be
<PAGE>
for the purpose of rehabilitation or not incompatible with the
finding of total and permanent disability; and (b) in the opinion
of the Board such total disability will be permanent and
continuous for the remainder of his life.
Notwithstanding any other provision of this Section, no
Participant shall qualify for a Disability Retirement Pension if
the Board determines that his Disability results from (a) chronic
alcoholism, (b) self-addiction to narcotics, (c) an injury
suffered while engaged in a felonious or criminal act or
enterprise, or (d) service in the Armed Forces of the United
States or the Merchant Marine which entitles the Participant to a
veteran's disability pension; but this provision shall not
prevent the Participant from qualifying for a Pension under
another provision of the Plan.
Disability shall be considered to have ended and entitlement
to a Disability Retirement Pension shall cease if, prior to his
65th birthday, the Participant (a) is re-employed by the Company;
(b) engages in any substantially gainful activity, except for
such employment as is found by the Board to be for the primary
purpose of rehabilitation or not incompatible with a finding of
total and permanent disability; (c) has sufficiently recovered,
in the opinion of the Board based on a medical examination by a
doctor or clinic appointed by the Board, to be able to engage in
regular employment with the Company and refuses an offer of
employment of the Company; or (d) refuses to undergo any medical
examination requested by the Board, provided that a medical
examination shall not be required more frequently than twice in
any calendar year. If entitlement to a Disability Retirement
Pension ceases in accordance with the provisions of this
paragraph, such a Participant shall not be prevented from
qualifying for a Pension under another provision of the Plan
based on his Eligibility Service, Credited Service and Annual
Earnings prior to Disability Retirement.
Section 3.5 Deferred Vested Pension: A Participant shall
----------- -----------------------
be eligible for a Deferred Vested Pension in accordance with the
provisions of Section 4.5 if his employment is terminated before
death or Retirement but after he has accumulated at least five
years of Eligibility Service.
Section 3.6 Death Benefit: Upon the death of any
----------- -------------
Participant who retires and is entitled to Normal, Early, Special
Early, or Disability Retirement benefits, a Death Benefit shall
be payable as a lump sum to the surviving beneficiary designated
in writing by the Participant or, in the event of his failure to
designate a surviving beneficiary, to such relative or such other
person as the Board, in its sole discretion, shall determine.
Neither the Company nor the Trustee (in its capacity as such)
shall be named as beneficiary. A designation or change of
beneficiary shall be made in writing on such form or forms and
under such rules as the Board may require.
Section 3.7 Medicare Part B Premium Supplemental Benefit:
----------- --------------------------------------------
A Participant who retires with at least a total of five years of
<PAGE>
Eligibility Service with the Company and Modine Heat Transfer,
Inc., a wholly-owned subsidiary of the Company; or ten years of
total Eligibility Service with the Company, Modine Heat Transfer,
Inc., Sundstrand Heat Transfer, Inc., a Michigan corporation, and
Sundstrand Tubular Products, Inc., a Missouri corporation; and is
entitled to Normal, Early, Special Early, or Disability
Retirement benefits, including such Participant who retired prior
to the Effective Date, shall receive a monthly supplement equal
in amount to current premiums applicable to Medicare Part B
coverage of the Participant and his spouse at the time of
Retirement. Upon the death of the Participant, such supplement
shall be continued to his spouse at the time of Retirement until
her death.
ARTICLE IV
AMOUNT OF RETIREMENT PENSION
----------------------------
Section 4.1 Normal Retirement Pension: Subject to the
----------- -------------------------
provisions of Section 4.8, the monthly amount of the Normal
Retirement Pension on a single-life basis shall be equal to one-
twelfth (1/12) of the greater of:
(a) The Participant's Accrued Benefit determined as
of the Grandfather Benefit Date, as defined below,
under Section 1.1(a) as it existed on said
Grandfather Benefit Date; or
(b) (1) One and two-tenths (1.2%) percent of the
Participant's Average Annual Earnings for each
year of Credited Service up to a maximum forty
(40) years, plus
(2) Four hundred and seventy-five thousandths (.475%)
percent of his Average Annual Earnings in excess
of Covered Compensation for each year of Credited
Service up to a maximum of thirty-five (35) years.
"Grandfather Benefit Date" means (i) The earlier of the date
of the Participant's termination of employment or February 19,
1991 in the case of any Participant who is not a Super-Highly
Compensated Employee, as defined below, for either the Plan Year
beginning April 1, 1989 or the Plan Year beginning April 1, 1990,
(ii) March 31, 1989 in the case of any Participant who is a Super-
Highly Compensated Employee for the Plan Year beginning April 1,
1989, or (iii) March 31, 1990 in the case of any Participant who
is not a Super-Highly Compensated Employee for the Plan Year
beginning April 1, 1989 but is a Super-Highly Compensated
Employee for the Plan Year beginning April 1, 1990.
"Super-Highly Compensated Employee" means a highly
compensated employee within the meaning of Section 414(q)(1)(A)
or (B) of the Internal Revenue Code.
If such Participant retires subsequent to his 65th birthday,
his Normal Retirement Pension shall be equal to the monthly
amount based on Credited Service and Average Annual Earnings as
<PAGE>
of his date of Retirement, and Covered Compensation as of his
Social Security Retirement Age, or date of Retirement, if
earlier; except that Credited Service cannot exceed the greater
of 40, or Credited Service as of the Effective Date. If such
Participant retires subsequent to his 70th birthday, his Normal
Retirement Pension shall commence no later than April 1 of the
calendar year following the calendar year in which he reaches age
70-1/2. Such Normal Retirement Pension shall be recalculated
each year thereafter until Retirement, but will be reduced by the
actuarial value of any Pension received.
The preceding calculations notwithstanding, no monthly
Normal Retirement Pension shall be less than an amount computed
as follows: $10.00 for each year of Credited Service (computed
to the nearest 1/10th of a year). The Normal Retirement Pension
shall, in any event, be not less than an Early Retirement Pension
that would have been payable to the Participant upon an Early
Retirement under Section 3.2 hereof.
Such monthly Normal Retirement Pension of a Foreign
Participant, eligible to participate under Section 2.7(c) hereof,
shall be reduced by one-twelfth of any annual pension or similar
benefit to which such Participant is eligible under the laws of
the particular foreign country.
Section 4.2 Early Retirement Pension:
----------- ------------------------
(a) Subject to the provisions of Section 4.8, the
monthly amount of the Early Retirement Pension on a
single-life payable at the Participant's 65th
birthday shall be equal to:
(i) If he Retires prior to his 62nd
birthday, his Accrued Benefit;
(ii) If he Retires on or after his 62nd
birthday, the amount calculated in accordance
with Section 4.1 for a Normal Retirement
Pension, based on Credited Service, Average
Annual Earnings and Covered Compensation as of
his date of determination; but in any event, not
less than his Accrued Benefit.
(b) If payment of an Early Retirement Pension
commences before the Participant reaches age 62, the
amount of such Pension shall be reduced by 4/10 of
one percent for each month that the commencement date
of the Pension precedes the Participant's 62nd
birthday. If payment of an Early Retirement Pension
commences on or after the Participant reaches age 62,
the amount of such Pension shall not be reduced.
(c) The aggregate amount of the Pension Benefit
payments to such Participant who is to receive a
single-life annuity (Option X as set forth in Section
5.3(a)) may, with due regard to the wishes of the
Participant and with the approval of the Board, be
apportioned to provide uniform monthly payments from
<PAGE>
the fund for the balance of the life of the
Participant or to provide larger monthly payments
during the period of retirement prior to age 65, and
smaller payments thereafter so as to equate for or
offset the estimated Social Security Benefits or any
other type of benefit which foreseeably will become
payable to the Participant at age 65.
Section 4.3 Special Early Retirement Pension: Subject to
----------- --------------------------------
the provisions of Section 4.8, the monthly amount of the Special
Early Retirement Pension on a single-life basis payable at the
Participant's Retirement shall be equal to his Accrued Benefit
calculated in accordance with Section 4.1; except that for the
part of such calculation that applies to Average Annual Earnings
in excess of Covered Compensation (Subparagraph 4.1(b)(2)), the
calculated amount shall be reduced by 4/10 of one percent for
each month that the payment commencement date precedes the
Participant's 62nd birthday.
Section 4.4 Disability Retirement Pension: Subject to the
----------- -----------------------------
provisions of Section 4.8, the monthly amount of the Disability
Retirement Pension on a single-life basis, payable at age 65
shall be equal to the Participant's Accrued Benefit (except that
Covered Compensation shall be determined using the contribution
and benefit basis at age 65), assuming Average Annual Earnings at
the time of Disability continue to age 65 and assuming all years
between the Disability Retirement and age 65 are considered
Credited Service.
Section 4.5 Deferred Vested Pension: The amount of a
----------- -----------------------
Participant's Deferred Vested Pension on a single-life basis,
commencing as of his 65th birthday, shall be equal to his Accrued
Benefit.
Such a Participant may request the Board by filed
application to authorize commencement of his Pension as of the
beginning of any calendar month on or after the Participant has
reached age fifty-five; and his Pension shall commence as of the
date determined by the Board, but the amount thereof shall be
actuarially reduced.
Section 4.6 Death Benefit: The amount of Death Benefit
----------- -------------
payable to the surviving beneficiary of a Participant retiring on
or after the Effective Date (a) with a Normal Retirement Benefit,
or with an Early Retirement or Special Early Retirement Benefit
if the Participant is at or over age 62 at the time of
Retirement, is $1,500; (b) with an Early or Special Early
Retirement Benefit, if the Participant is under age 62 at the
time of Retirement, is $1,500 reduced by 2/10 of 1% for each
complete calendar month by which the Participant is under age 62
at the time of Retirement; and (c) with a Disability Retirement
Benefit is $1,500 reduced by 2/10 of 1% for each complete
calendar month by which the Participant is under age 62 when he
commences receipt of long-term disability benefits provided by
the Company. However, if the Participant is eligible for both a
<PAGE>
Company Group Life Insurance Benefit and a Death Benefit, he
shall be eligible only for the larger of the two benefits. No
Death Benefit shall be payable to the surviving beneficiary of a
Participant with a Deferred Vested Benefit.
Section 4.7 Medicare Part B Premium Supplemental Benefit:
----------- --------------------------------------------
The Participant shall receive a supplement to the Participant's
monthly Benefit payment equal to current premiums for Medicare
Part B coverage of the Participant and his spouse at the time of
Retirement. Upon the death of the Participant, such supplement
shall be continued to his spouse at the time of Retirement until
her death.
Section 4.8 Maximum Pension: The maximum benefit, when
----------- ---------------
expressed as a monthly pension, shall not exceed the greater of:
(a) the amount of any benefit vested as of December 31,
1986, or
(b) the lesser of:
(1) $9,080.25, or
(2) 100% of average monthly earnings during
the three years preceding Retirement, but not
less than $833.
These maximum limits are subject to the following:
(a) The maximum shall apply after any necessary
reduction for the joint and survivor pensions
described in Section 5.3.
(b) If benefits begin prior to Social Security
Retirement Age, the maximum benefit shall not exceed
the lesser of:
(1) The Actuarial Equivalent of the above
specified maximum benefit, or
(2) 100% of average monthly earnings during
the three years preceding Retirement, but not
less than $833.
(c) If benefits begin after Social Security
Retirement Age, the maximum benefit shall be the
Actuarial Equivalent of the above specified maximum
benefit.
(d) If the Participant has fewer than ten years of
Eligibility Service at Retirement, the applicable
maximum shall be multiplied by a fraction, of which
the numerator is Eligibility Service and the
denominator is 10.
(e) The maximum benefit, as stated above, shall be
increased as permitted by Internal Revenue Service
<PAGE>
Regulations to reflect cost of living adjustments;
and shall be decreased as may be required by the
Internal Revenue Code or Internal Revenue Service
Regulations in order to maintain qualification of the
Plan under the Internal Revenue Code. However, any
such decrease in the maximum benefit shall not reduce
the amount of any benefit vested as of the effective
date of such decrease.
Notwithstanding the foregoing, the pension payable under
this Plan may be reduced to the extent necessary as determined by
the Board, either to prevent disqualification of the Plan under
Section 415 of the Internal Revenue Code which imposes additional
limitations on the Pension payable to Participants who also may
be participating in another tax-qualified pension, profit
sharing, savings or stock bonus plan of the Company; or to
prevent this Plan from being considered a top-heavy plan under
Section 416 of the Internal Revenue Code. The Board shall advise
affected Participants of any additional limitation of their
Pensions required by the preceding sentence.
Section 4.9 Top-Heavy Provisions: Effective April 1, 1984,
----------- --------------------
should the Plan be determined to be a Top-Heavy Plan as defined
by Paragraph (a) of this Section 4.9, the provisions of this
Section 4.9 shall apply.
(a) The Plan will be considered a Top-Heavy Plan for
the Plan Year if as of the last day of the preceding
Plan Year,
(1) the present value of the Accrued Benefits of
Participants who are Key Employees (as defined
in Section 416(i) of the Internal Revenue Code,
but in making such determination considering
compensation as defined in Section 1.415-2(d)
of the Income Tax Regulations) exceeds 60% of
the present value of the Accrued Benefits of all
Participants (called hereafter the 60% Test) or
(2) the Plan is part of a required aggregation group
(as defined in Paragraph (g), below) and the
required aggregation group is Top-Heavy. However,
and not withstanding the results of the 60% Test,
the Plan shall not be considered a Top-Heavy Plan
for any Plan Year in which the Plan is a part of
the required or permissive aggregation group which
is not Top-Heavy. For the purposes of making the
60% Test for any Plan Year, Accrued Benefits shall
be those amounts calculated as of the first day of
the preceding Plan Year and the present value of
those amounts shall be based on the actuarial
assumptions used by the Actuary in the actuarial
valuation made as of the first day of such
preceding Plan Year.
(b) The minimum Normal Retirement Pension for a Participant
terminating employment at or after age 65, and a minimum
Accrued Benefit payable at Normal Retirement Date for a
<PAGE>
Participant who terminates employment prior thereto with
entitlement to a Pension, shall be equal to the product of
(1) 2% of his average monthly compensation,
as defined in Section 1.415-2(d) of the Income
Tax Regulations, during his five highest paid
consecutive calendar years of his employment (or
during his period of employment if less than 5
years) multiplied by
(2) The number of years in his first ten
years of employment after December 31, 1983 in
which the Plan is a Top-Heavy Plan.
(c) Notwithstanding the provisions of Sections 3.5
and 4.5, a Participant shall be eligible for a
Deferred Vested Pension if, while the Plan is a Top-
Heavy Plan, his employment is terminated before death
or Retirement after he has completed at least two
years of Eligibility Service. The amount of this
Deferred Vested Pension on a single-life basis,
commencing as of his 65th birthday, will be equal to
his vested percentage of his Accrued Benefit,
determined in accordance with the following table:
Years of Service Vested Percentage
---------------- -----------------
2 but less than 3 20%
3 but less than 4 40%
4 but less than 5 60%
5 but less than 6 80%
6 or more 100%
A Participant who had at least ten years of
Eligibility Service at the date of his termination of
employment may request the Board to authorize
commencement of his Deferred Vested Pension as of the
beginning of any calendar month on or after his 55th
birthday; and in such case, his Pension shall
commence as of the date requested, but the amount
thereof shall be reduced as provided in the second
paragraph of Section 4.5.
On the death of the Participant whose death
occurs prior to the date his pension commences
hereunder, who has completed less than ten years of
Eligibility Service at the date of his death but who
has earned a degree of vesting under the Plan prior
to his death pursuant to the provisions of this
Paragraph (c), a Pension shall be payable to his
spouse, if any. The Pension payable to the spouse of
such a Participant shall be equal to the amount the
spouse would have been entitled to receive had the
Participant commenced to receive a Deferred Vested
Pension under the provisions of this Paragraph (c)
and under the 50% Joint and Survivor provisions of
Section 5.1 as of his 65th birthday, based on his
Eligibility and Credited Service immediately prior to
<PAGE>
the earlier of his death or termination of
employment, and then died immediately thereafter.
The pension payable to such a spouse shall commence
as of the Participant's 65th birthday and shall
continue until the beginning of the month in which
the death of the spouse occurs.
(d) If the Plan becomes a Top-Heavy Plan and
subsequently ceases to be such, the minimum benefit
accrued under Paragraph (b) of this Section while the
Plan was top-heavy shall continue to apply. If the
Plan becomes a Top-Heavy Plan and subsequently ceases
to be such, the vesting schedule in Paragraph (c) of
this Section shall continue to apply in determining
the Deferred Vested Pension of any Participant who
had at least five years of Eligibility Service as of
the last day of the last Plan Year of top-heaviness.
For other Participants, such schedule shall apply
only to their Accrued Benefits as of such last day of
such Plan Year.
(e) For any Plan Year in which the Plan is a Top-
Heavy Plan, the determination of Maximum Benefits
under Section 415 of the Internal Revenue Code, as
incorporated by reference in Section 4.8 of the Plan,
shall substitute the number "1.00" for the number
"1.25" wherever it appears in calculating such
Maximum Benefit, except such substitution shall not
have the effect of reducing any Benefit accrued under
the Plan prior to the first day of the Plan Year in
which this provision becomes applicable.
(f) For aggregation with other Plans:
(i) If a Key Employee under this Plan also
participates in another plan of the Company
which is qualified under Internal Revenue Code
Section 401(a), or if this Plan and another Plan
must be aggregated so that either this Plan or
the other Plan will meet the anti-discrimination
and coverage requirements of Internal Revenue
Code Section 401(a)(4) or 410, then this Plan
and any such other Plan will be aggregated for
purposes of determining top-heaviness. This
Plan will automatically be deemed top-heavy if
such required aggregation of plans is top-heavy
as a group and will automatically be deemed not
top-heavy if such required aggregation of plans
is not top-heavy as a group.
(ii) Any other Plan of the Company which is qualified
under Internal Revenue Code Section 401(a), and
which is not in the required aggregation referenced
in Paragraph (i) above, may be aggregated with this
Plan (and with any other Plan as in the required
aggregation group in Paragraph (i) above) for
purposes of determining top-heaviness if such
aggregation will continue to meet the anti-
discrimination and coverage requirements of
<PAGE>
Internal Revenue Code Section 401(a)(4) and 410.
This Plan will automatically be deemed not top-heavy
if such permissive aggregation of plans is not
top-heavy as a group.
(iii) The top-heavy status of the Plans as a group
is determined by aggregating the plans'
respective top-heavy determinations that are
made as of determination dates that fall within
the same calendar year.
ARTICLE V
MANNER OF PAYMENT AND OPTIONAL BENEFITS
---------------------------------------
Section 5.1 Coverage Prior to Retirement: A joint and
----------- ----------------------------
survivor pension in accordance with Option B as set forth in
Section 5.3(c) shall be payable to the spouse of any married
Participant with five or more years of Eligibility Service who
dies before retiring from or otherwise leaving employment with
the Company.
(a) If such Participant had attained age 55, such
Pension, calculated in accordance with Section
5.3(c)(2), shall be equal to the amount the spouse
would have been entitled to receive if the
Participant had retired on the day immediately
preceding his death (and assuming, in the case of
such a Participant who dies while on Salary
Continuation or Long-term Disability, that the
Participant was entitled to receive an Early
Retirement Benefit on that day).
(b) If such Participant had not attained age 55,
Pension payments, calculated in accordance with
Section 5.3(c)(1), will commence the month following
the date the Participant would have reached age 55.
Such Pension shall be equal to the amount the spouse
would have been entitled to receive if the
Participant had reached age 55 on the day immediately
preceding the date Pension payment is to commence.
Section 5.2 Coverage Option Upon Retirement or Other
----------- ----------------------------------------
Termination of Employment:
- -------------------------
(a) Married Participants: Any married Participant, at the
--------------------
time of his Early, Special Early, Normal or
Disability Retirement, shall automatically have his
Early, Special Early, Normal or Disability Retirement
Pension converted into a joint and survivor pension
in the form of Option B as set forth in Section
5.3(c)(2) payable only to the spouse should the
spouse survive the Participant. Any married
Participant, upon leaving the Company prior to
<PAGE>
reaching age 55 after accumulating at least five years
of Eligibility Service, shall automatically have his
Deferred Vested Pension converted into a joint and
survivor pension in the form of Option B as set forth
in Section 5.3(c)(1) payable only to the spouse should
the spouse survive the Participant. In the alternative,
the Participant may elect, with the consent of his spouse
in accordance with Section 5.4, to receive any one of the
other forms of benefit as provided in Section 5.3.
(1) If such Participant then dies on or after
reaching age 55, such Pension will be determined
in accordance with and as stated in Section 5.1(a).
(2) If such Participant then dies before attaining
age 55, such Pension shall be determined by and be
in accordance with Section 5.1(b).
(b) Unmarried Participants: Any Participant unmarried at the
----------------------
time of his Early, Special Early, Normal or Disability
Retirement shall receive a benefit in the form of Option X
as set forth in Section 5.3(a) unless the Participant elects,
in accordance with Section 5.4, to receive an Option A form
of benefit as provided in Section 5.3(b), or an Option B form
of benefit as provided in Section 5.3(c)(1).
Section 5.3 Forms of Benefit: The forms of benefit are:
----------- ----------------
(a) Option X: A monthly benefit only for the life of
the Participant, as calculated in ARTICLE IV.
(b) Option A: A monthly benefit having an equivalent
actuarial value to Option X which will provide a
reduced net benefit payable during the life of the
Participant and, after the Participant's death, the
same reduced net benefit payable to and during the
life of the Partici-pant's surviving spouse or other
surviving beneficiary designated or elected in
writing in accordance with Sections 5.2 and 5.4.
(c) Option B:
(1) A monthly benefit having an equivalent actuarial
value to Option X which will provide a reduced net
benefit payable during the life of the Participant
and, after the Participant's death, one-half of such
reduced net benefit payable to and during the life of
his surviving spouse or other surviving beneficiary
designated or elected in writing in accordance with
Sections 5.2 and 5.4.
(2) A monthly benefit calculated in accordance with
paragraph (1), but with the benefit payable during
the life of the surviving spouse being calculated as
if the reduction in the benefit payable during the
life of the Participant had been reduced by one-half
of the actuarial reduction provided in paragraph (1).
<PAGE>
Section 5.4 Rules: An election of any form of benefit
----------- -----
shall be subject to the following rules:
(a) The Participant must make his election and designate
his surviving beneficiary in writing on a form provided
by and filed with the Company; and if the Participant is
married, any such election must be approved in writing by
the spouse and witnessed by a member of the Board of
Administration or its authorized agent, or by a notary
public.
(b) Any Participant who has elected a form of benefit
may revoke or change such election in the same manner
as set forth in paragraph (a) of this Section 5.4.
(c) If the designated or elected beneficiary of any
Participant shall die before the Participant has
retired from or otherwise left employment with the
Company, the Participant's election of an optional
benefit shall be treated as though his election of an
optional benefit had not been filed.
(d) If the designated or elected beneficiary of a
Participant shall die after the Participant shall
have retired from or otherwise left employment with
the Company, but prior to the death of the
Participant, the Participant shall continue to
receive the reduced net benefit provided under
Section 5.3(b) or 5.3(c).
(e) A Participant must make any election hereunder,
with the written consent of his spouse if necessary,
in the following manner. At least ninety (90) days
prior to the commencement of benefits, a Participant
(and if married, his spouse) shall be informed in
nontechnical terms of the effect of any such
election. In no event shall such election period end
less than ninety (90) days after such information is
provided, nor shall it end prior to the date benefits
are to commence. Any such election may subsequently
be revoked or changed at any time prior to the
Participant's Retirement during this election period.
Section 5.5 Lump Sum and other Manner of Payment:
----------- ------------------------------------
(a) Benefits shall be payable in monthly installments
unless the net amount payable, as a uniform amount for
the life of the Participant only, shall be $25.00 a
month or less, or if the value of the total benefit is
$3,500 or less, in which event payment may be made in
installments less frequent than monthly or in a lump sum
under rules prescribed by the Board. The value of such
total benefit shall be the present value of the monthly
benefit on an immediate annuity rate used by the PBGC.
(b) An Employee, who has reached age 62 and accumulated
thirty or more years of Eligibility Service by his
<PAGE>
62nd birthday, may elect that his Accrued Benefit be paid
immediately in a lump-sum amount even if he has not yet
retired, and no further pension payments shall be made to
him or any surviving spouse or other beneficiary. If such
Participant is married, such election must include the
written consent of his spouse. The amount of such lump
sum shall be the present value of the monthly benefit
based on an immediate annuity rate of 7%.
(c) In the event payment is made in installments (other
than in installments throughout the period for which
the benefit is payable) or in a lump sum, such payment
shall be the equivalent actuarial value (as determined
by the Actuary employed by the Company) of the monthly
installment payments based on the mortality tables and
interest rates at the time of such determination employed
in the actuarial evaluation of the Plan.
(d) At the written request of a Participant or beneficiary,
and with the approval of the Board, Normal Retirement
Benefits provided by the Plan may be paid in some form
other than that expressly described in the Plan,
provided that the payment or payments in such other
form shall be the Actuarial Equivalent of the Pension
Benefit otherwise payable. Prior to granting its
approval, the Board may require evidence of the state
of health of the Participant or his beneficiary.
Section 5.6 Limitations: A surviving spouse or designated
----------- -----------
beneficiary shall be entitled to a benefit under this ARTICLE V
only if
(a) he is made eligible by the operation of Sections
5.1 or 5.2, and 5.4, and
(b) the Participant prior to his death either:
(1) attains Normal Retirement age, or
(2) retires with an Early, Special Early,
Normal or Disability Retirement Benefit, or
(3) In the case of a married Participant, he
has accumulated five or more years of
Eligibility Service.
ARTICLE VI
PLAN FINANCING
--------------
Section 6.1 Contributions: No contributions shall be
----------- -------------
required or permitted under he Plan from any Participant. The
Company shall make contributions in such amounts and at such
times as determined to be consistent with Plan objectives.
Forfeitures arising under this Plan because of severance of
employment before a Participant becomes eligible for a Pension,
<PAGE>
or for any other reason, shall be applied to reduce the cost of
the Plan, not to increase the benefits otherwise payable to
Participants.
Section 6.2 Trust Fund: All contributions made by the
----------- ----------
Company under this Plan shall be paid to the Trustee and
deposited in the Trust Fund. Except as otherwise provided in
Section 12.5, all assets of the Trust Fund, including investment
income, shall be retained for the exclusive benefit of
Participants and their beneficiaries, shall be used to pay
benefits to such persons or to pay administrative expenses to the
extent not paid by the Company, and shall not revert to or inure
to the benefit of the Company. Notwithstanding anything herein
to the contrary, upon the Company's request, a contribution
conditioned upon qualification of the Plan or any amendment
thereof or upon the deductibility of the contribution under
Section 404 of the Internal Revenue Code of 1954, shall be
returned to the Company within one year after the payment of the
contribution, the denial of the qualification or the disallowance
of the deduction (to the extent disallowed), whichever is
applicable.
ARTICLE VII
ADMINISTRATION
--------------
Section 7.1 Allocation of Responsibility Among Fiduciaries
----------- ----------------------------------------------
for Plan and Trust Administration: The fiduciaries shall have
- ---------------------------------
only those specific powers, duties, responsibilities and
obligations as are specifically given them under the Plan or the
Trust. In general, the Company shall have the sole responsi-
bility for making the contributions necessary to provide benefits
under the Plan as specified in Article VI, and shall have the
sole authority to appoint or remove the Trustee, members of the
Board, Members of the Investment Committee and any Investment
Manager which may be provided for under the Trust, and to amend
or terminate, in whole or in part, the Plan or the Trust. The
Board shall have the sole responsibility for the administration
of the Plan, which responsibility is specifically described in
the Plan and the Trust. The Trustee shall be custodian of the
Trust assets as provided in the Trust Agreement and shall be
subject to the direction of the Company's Board of Directors, or
the Investment Committee and/or Investment Manager with regard to
management and control of the assets of the Plan, including
provisions relating to voting of proxies, and response to tender
offers as they apply to Company stock among the Trust assets.
Each Fiduciary warrants that any directions given, information
furnished, or action taken by it shall be in accordance with the
provisions of the Plan or the Trust, as the case may be,
authorizing or providing for such direction, information or
action. Furthermore, each Fiduciary may rely upon any such
direction, information or action of another Fiduciary as being
proper under this Plan or the Trust, and is not required under
this Plan or the Trust to inquire into the propriety of any such
direction, information or action. It is intended under this Plan
<PAGE>
and the Trust that each Fiduciary shall be responsible for the
proper exercise of its own powers, duties, responsibilities and
obligations under this Plan and the Trust, and shall not be
responsible for any act or failure to act of another Fiduciary.
No Fiduciary guarantees the Trust Fund in any manner against
investment loss or depreciation in asset value.
Section 7.2 Appointment of Board: The Plan shall be
----------- --------------------
administered by a Board of Administration consisting of at least
three persons who shall be appointed by and serve at the pleasure
of the Board of Directors of the Company. All usual and
reasonable expenses of the Board may be paid in whole or in part
by the Company, and any expenses not paid by the Company shall be
paid by the Trustee out of the principal or income of the Trust
Fund. Any members of the Board who are Employees shall not
receive compensation with respect to their services for the
Board.
Section 7.3 Claims Procedure: The Board shall make all
----------- ----------------
determinations as to the right of any person to a benefit. Any
denial by the Board of the claim for benefits under the Plan by a
Participant or beneficiary shall be stated in writing by the
Board and delivered or mailed to the Participant or beneficiary;
and such notice shall set forth the specific reasons for the
denial, written to the best of the Board's ability in a manner
that may be understood without legal or actuarial counsel. In
addition, the Board shall afford a reasonable opportunity to any
Participant or beneficiary whose claim for benefits has been
denied for a review of the decision denying the claim.
Section 7.4 Records and Reports: The Board shall exercise
----------- -------------------
such authority and responsibility as it deems appropriate in
order to comply with ERISA and governmental regulations issued
thereunder relating to records of Participants' Service, Accrued
Benefits and the percentage of such Benefits which are non-
forfeitable under the Plan; notifications to Participants; annual
registration with the Internal Revenue Service; annual reports to
the Department of Labor; reports to the Pension Benefit Guaranty
Corporation; and for any other similar purpose.
Section 7.5 Other Board Powers and Duties: The Board shall
----------- -----------------------------
have such duties and powers as may be necessary to discharge its
duties hereunder, including, but not by way of limitation, the
following:
(a) to construe and interpret the Plan, decide all
questions of eligibility and determine the amount,
manner and time of payment of any benefits hereunder;
(b) to prescribe procedures to be followed by Participants
or beneficiaries filing applications for benefits;
(c) to prepare and distribute, in such manner as the
Board determines to be appropriate, information
explaining the Plan;
<PAGE>
(d) to receive from the Company and from Participants
such information as shall be necessary for the proper
administration of the Plan;
(e) to furnish the Company, upon request, such annual
reports with respect to the administration of the
Plan as are reasonable and appropriate;
(f) to receive and review the periodic valuation of
the Plan made by the Actuary;
(g) to receive, review and keep on file (as it deems
convenient or proper) reports of the financial
condition, and of the receipts and disbursements, of
the Trust Fund from the Trustee;
(h) to appoint or employ individuals to assist in the
administration of the Plan and any other agents it
deems advisable, including legal and actuarial
counsel.
The Board shall have no power to add to, subtract from or modify
any of the terms of the Plan, or to change or add to any benefits
provided by the Plan, or to waive or fail to apply any
requirements of eligibility for a Pension under the Plan.
Section 7.6 Rules and Decisions: The Board may adopt such
----------- -------------------
rules and actuarial tables as it deems necessary, desirable, or
appropriate. All rules and decisions of the Board shall be
uniformly and consistently applied to all Participants in similar
circumstances. When making a determination or calculation, the
Board shall be entitled to rely upon information furnished by a
Participant or beneficiary, the Company, the legal counsel of the
Company, the Actuary, or the Trustee.
Section 7.7 Board Procedures: The Board may act at a
----------- ----------------
meeting or in writing without a meeting. The Board may elect one
of its members as chairman, appoint a secretary who may or may
not be a Board member, and advise the Trustee of such actions in
writing. The secretary shall keep a record of all meetings and
forward all necessary communications to the Company, the Trustee
or the Actuary. The Board may adopt such by-laws and regulations
as it deems desirable for the conduct of its affairs. All
decisions of the Board shall be made by majority vote, including
actions in writing taken without a meeting. A dissenting Board
member who, within a reasonable time after he has knowledge of
any action or failure to act by the majority, registers his
dissent in writing delivered to the other Board members, the
Company and the Trustee, shall not be responsible for any such
action or failure to act.
Section 7.8 Authorization of Benefit Payments: The Board
----------- ---------------------------------
shall issue directions to the Trustee concerning all benefits
which are to be paid from the Trust Fund pursuant to the
provisions of the Plan, and warrants that all such directions are
in accordance with this Plan.
<PAGE>
Section 7.9 Application and Forms for Pension: The Board
----------- ---------------------------------
may require a Participant to complete and file with the Board an
application for Pension and all other forms approved by the
Board, and to furnish all pertinent information requested by the
Board. The Board may rely upon all such information so furnished
it, including the Participant's current mailing address.
Section 7.10 Facility of Payment: Whenever, in the Board's
------------ -------------------
opinion, a person entitled to receive any payment of a benefit
hereunder or installment thereof is under a legal disability or
is incapacitated in any way so as to be unable to manage his
financial affairs, the Board may in its sole discretion direct
the Trustee to make payments to such person or to his legal
representative or to a relative or friend of such person for his
benefit, or the Board may direct the Trustee to apply the payment
for the benefit of such person in such manner as the Board
considers advisable. Any payment of a benefit or installment
thereof in accordance with the provisions of this Section shall
be a complete discharge of any liability for the making of such
payment under the provisions of the Plan.
ARTICLE VIII
MISCELLANEOUS
--------------
Section 8.1 Nonguarantee of Employment: Nothing contained
----------- --------------------------
in this Plan shall be construed as a contract of employment
between the Company and any Employee, or as a right of any
Employee to be continued in the employment of the Company, or as
a limitation of the right of the Company to discharge any of its
Employees, with or without cause.
Section 8.2 Rights to Trust Assets: No Employee shall have
----------- ----------------------
any right to, or interest in, any assets of the Trust Fund upon
termination of his employment or otherwise, except as provided
from time to time under this Plan, and then only to the extent of
the benefits payable under the Plan to such Employee out of the
assets of the Trust Fund. Except as otherwise may be provided
under TITLE IV of ERISA, all payments of benefits as provided for
in this Plan shall be made solely out of the assets of the Trust
Fund and none of the Fiduciaries shall be liable therefor in any
manner.
Section 8.3 Nonalienation of Benefits: Benefits payable
----------- -------------------------
under this Plan shall not be subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance, charge, garnishment, execution, or levy of any kind,
either voluntary or involuntary, including any such liability
which is for alimony or other payments for the support of a
spouse or former spouse, or for any other relative of the
Employee, prior to actually being received by the person entitled
to the benefit under the terms of the Plan; and any attempt to
anticipate, alienate, sell, transfer, assign, pledge, encumber,
<PAGE>
charge or otherwise dispose of any right to benefits payable
hereunder, shall be void. The Trust Fund shall not in any manner
be liable for, or subject to, the debts, contracts, liabilities,
engagements or torts of any person entitled to benefits hereunder.
ARTICLE IX
AMENDMENTS AND ACTION BY EMPLOYER
---------------------------------
Section 9.1 Amendments: The Company reserves the right to
----------- ----------
make from time to time any amendment or amendments to this Plan,
which do not cause any part of the Trust Fund to be used for, or
diverted to any purpose other than the exclusive benefit of
Participants or their beneficiaries; provided, however, that the
Company may make any amendment it determines necessary or
desirable, with or without retroactive effect, to comply with
ERISA.
Section 9.2 Action by Company: Any action by the Company
----------- -----------------
under this Plan may be by resolution of its Board of Directors,
or by any person or persons duly authorized by resolution of said
Board to take such action.
ARTICLE X
SUCCESSOR COMPANY AND MERGER OR CONSOLIDATION OF PLANS
------------------------------------------------------
Section 10.1 Successor Company: In the event of the
------------ -----------------
dissolution, merger, consolidation or reorganization of the
Company, provision may be made by which the Plan and Trust will
be continued by the successor; and, in that event, such successor
shall be substituted for the Company under the Plan. The
substitution of the successor shall constitute an assumption of
Plan liabilities by the successor and the successor shall have
all of the powers, duties and responsibilities of the Company
under the Plan.
Section 10.2 Plan Assets: In the event of any merger or
------------ -----------
consolidation of the Plan with, or transfer in whole or in part
of the assets and liabilities of the Trust Fund to another trust
fund held under, any other plan of deferred compensation
maintained or to be established for the benefit of all or some of
the Participants of this Plan, the assets of the Trust Fund
applicable to such Participants shall be merged, consolidated
with or transferred to the other trust fund only if:
(a) each Participant would (if either this Plan or
the other plan then terminated) receive a benefit
immediately after the merger, consolidation or
transfer which is equal to or greater than the
benefit he would have been entitled to receive
immediately before the merger, consolidation or
transfer (if this Plan had then terminated);
<PAGE>
(b) resolutions of the Board of Directors of the
Company under this Plan, and of any new or successor
employer of the affected Participants, shall
authorize such transfer of assets; and, in the case
of the new or successor employer of the affected
Participants, its resolutions shall include an
assumption of liabilities with respect to such
Participants' inclusion in the new employer's plan;
and
(c) such other plan and trust are qualified under Sections
401(a) and 501(a) of the Internal Revenue Code.
ARTICLE XI
RESTRICTION ON BENEFITS PAYABLE
TO HIGHLY COMPENSATED PARTICIPANTS
----------------------------------
This ARTICLE sets forth limitations required by the Internal
Revenue Service on the Pension benefits payable to certain
Participants. It shall apply to a Participant only if his
anticipated annual Pension exceeds $1,500 and the Participant was
among the 25 highest-paid employees of the Company on (a)
February 17, 1972, or (b) the date of the most recent amendment
which substantially increased Pension benefits (a "Substantive
Amendment Date"). The limitations set forth in this ARTICLE
shall become applicable if:
(a) the Plan is terminated within ten years after
February 17, 1972 (or a Substantive Amendment Date,
if applicable),
(b) the Pension of a Participant becomes payable
within such ten-year period (the limitations to
remain in effect until the later of the expiration of
the ten-year period or the date on which the full
current costs have been funded), or
(c) the Pension of a Participant becomes payable
after such ten-year period and the full current costs
of the ten-year period have not been funded (the
limitations to apply until the full current costs
have been funded).
If a Participant is subject to the provisions of this
ARTICLE, the annual Pension payable to him shall not exceed the
Pension which can be provided from the greatest of the following:
(a) The Company's contributions (or funds attributable
thereto) which would have been applied to provide
benefits for the Participant if the Plan had not been
amended on the Substantive Amendment Date and had
continued without change;
(b) $20,000;
(c) The sum of (1) the Company's contributions (or
funds attributable thereto) which would have been
<PAGE>
applied to provide benefits for the Participant if
the Plan had been terminated on the day before the
Substantive Amendment Date (if applicable) and (2) an
amount computed by multiplying the number of years
for which the current costs of the Plan have been met
after February 17, 1982 (or the Substantive Amendment
Date, if applicable) by 20% of the first $50,000 of
the Participant's Average Annual Earnings during his
last 5 years of employment.
The limitations described above may be exceeded for the
purpose of making current benefit payments to retired
Participants who would otherwise be subject to such restrictions,
provided that (a) the contributions which may be used for any
such retired Participant in accordance with the restrictions
heretofore indicated are applied to provide either a level amount
of Pension in the basic form of benefit provided for under the
Plan for such Participant, or a level amount of Pension in an
optional form of benefit not greater in amount than the level
amount of Pension under the basic form of benefit, and (b) the
Pension thus provided is supplemented by monthly payments to the
extent necessary to provide the full Pension in the basic form
called for by the Plan, and (c) such supplemental payments are
made only if the full current costs of the Plan have been met or
if the aggregate of such supplemental payments for all such
retired Participants does not exceed the aggregate Company
contributions already made under the Plan in the year then
current.
The limitations in this ARTICLE shall automatically become
inoperative and of no effect upon a ruling by the Internal
Revenue Service that they are not required.
ARTICLE XII
PLAN TERMINATION
----------------
Section 12.1 Right to Terminate: In accordance with the
------------ ------------------
procedures set forth in this ARTICLE, the Company may terminate
the Plan at any time. In the event of the dissolution, merger,
consolidation or reorganization of the Company, the Plan shall
terminate and the Trust Fund shall be liquidated unless the Plan
is continued by a successor to the Company in accordance with
Section 10.1. Subject to applicable requirements, if any, of
ERISA governing termination of "Employee Pension Benefit Plans,"
the Company shall direct and require the Trustee to liquidate the
Trust Fund, or the applicable portion thereof, in accordance with
the provisions of this ARTICLE.
Section 12.2 Partial Termination: Upon termination of the
------------ -------------------
Plan with respect to a group of Participants which constitutes a
partial termination of the Plan, the Trustee shall allocate and
segregate, for the benefit of the Participants with respect to
which the Plan is being terminated, the proportionate interest of
such Participants in the Trust Fund. Such proportionate interest
shall be determined by the Actuary. The Actuary shall make this
<PAGE>
determination on the basis of the contributions made by the
Company, the provisions of this ARTICLE, and such other
considerations as the Actuary deems appropriate. The Fiduciaries
shall have no responsibility with respect to the determination of
any such proportionate interest.
The funds so allocated and segregated shall be used by the
Trustee to pay benefits to or on behalf of Participants in
accordance with Section 12.3.
Section 12.3 Liquidation of Trust Fund: Upon termination
------------ -------------------------
of the Plan, or upon termination of employment of a group of
Participants constituting a partial termination of the Plan, each
such Participant's Accrued Benefit, based on his Eligibility
Service, Credited Service and Annual Earnings prior to the date
of termination, shall become fully vested and nonforfeitable to
the extent funded. The assets of the Trust Fund, or the portion
thereof segregated in accordance with Section 12.2, shall be
liquidated (after provision is made for the expenses of
liquidation) by the payment or provision for the payment of
benefits in the following order of preference:
(a) Certain Benefits Payable Three Years Prior to
---------------------------------------------
Termination: The available assets of the Trust Fund
-----------
shall first be allocated to provide Pensions that
became payable three or more years before the
effective date of Plan termination, or that could
have become payable at the beginning of such three-
year period had the Participant not deferred the
commencement of his Pension by failing to elect
earlier commencement, or that could have become
payable had a Participant's Retirement occurred
immediately prior to the beginning of such three-year
period, provided that
(1) the portion of the Pension payable (or
that could have been payable) to a Participant
or the beneficiary of a Participant shall be
based on the provisions of the Plan in effect
five years prior to the effective date of Plan
termination; and for this purpose, the first
Plan Year in which an amendment became
effective, or was adopted if later, shall
constitute the first year an amendment was in
effect; and further provided that,
(2) if the Pension payable under the Plan
had been reduced, either by amendment or due to
the form in which the Pension is being paid,
during the three-year period ending on the
effective date of Plan termination, then the
lowest benefit in pay status (benefit paid or
payable) during such three-year period shall be
considered the benefit in pay status for
purposes of this category (a).
<PAGE>
(b) Other Benefits Eligible for Termination Insurance: To
the extent that the amount of a Pension has not been
provided in the foregoing category (a), the remaining
assets shall be allocated to provide any Pension
provided under the Plan for a Participant whose
employment terminated prior to the effective date of
Plan termination, or any immediate or deferred Pension
that would have been payable to or on behalf of a
Participant had his employment terminated for a reason
other than death on the effective date of Plan termination,
provided that the amount of a Pension to be provided under
this category (b) shall be determined as follows:
(1) the portion of the Pension payable (or
which could have been payable) to a Participant
or the beneficiary of a Participant based on the
provisions of the Plan in effect five years
prior to the effective date of Plan termination;
and for this purpose, the first Plan Year in
which an amendment became effective, or was
adopted if later, shall constitute the first
year an amendment was in effect; plus
(2) the portion of the Pension payable to a
Participant or the beneficiary of a Participant
which would have been included in subparagraph
(1) above had the Plan or a Plan amendment been
in effect five years prior to the effective date
of Plan termination, determined as follows: 20%
for each Plan Year (less than five) that the
Plan or an amendment thereto was in effect,
multiplied by the amount that would have been
included under subparagraph (1) for such
Participant or beneficiary had the Plan or the
amendment been in effect for five Plan Years as
of the effective date of Plan termination;
provided that,
(3) no benefit payable under this category (b) to a
Participant or beneficiary shall exceed an amount
with an actuarial value of a monthly benefit in
the form of a life-only annuity commencing at age
65 equal to $750 multiplied by a fraction, the
numerator of which is the contribution and benefit
base determined under Section 230 of the Social
Security Act in effect at the effective date of
Plan termination, and the denominator of which
is such contribution and benefit base in effect
in calendar year 1974.
(c) Other Vested Benefits: To the extent that the amount
---------------------
of a Pension has not been provided in the foregoing
categories (a) and (b), the remaining assets shall be
allocated to provide the benefit payable under the Plan
to or on behalf of a Participant whose employment
terminated prior to the effective date of Plan
termination, or that would have been payable to or on
behalf of a Participant had his employment terminated
<PAGE>
for a reason other than death on the effective date of
Plan termination, in the following order of preference:
(1) to any Participant who had retired prior
to the effective date of Plan termination under
either Section 3.1 or 3.3, or who was eligible
to retire on the effective date of Plan
termination under either of said Sections;
(2) to any Participant who had retired prior
to the effective date of Plan termination under
Section 3.2, or who was eligible to retire on
the effective date of Plan termination under
said Section or under Section 3.4; or
(3) to any Participant whose employment had
terminated prior to the effective date of Plan
termination with entitlement to a Deferred
Vested Pension under Section 3.5, or who would
have been eligible for a Deferred Vested Pension
under said Section had his employment terminated
on the effective date of Plan termination.
(d) Other Benefits: To the extent that the amount of a
--------------
Pension has not been provided in the foregoing
categories (a), (b) and (c), the remaining assets
shall be allocated to provide the benefit accrued
under the Plan, without regard to the satisfaction of
the vesting requirements of this Plan, with respect
to each Participant whose employment had not
terminated as of the effective date of Plan
termination, according to the respective actuarial
value of each such Participant's Accrued Benefit.
If the assets of the Trust Fund applicable to any of the
above categories are insufficient to provide full benefits for
all persons in such group, the benefits otherwise payable to such
persons shall be reduced proportionately. The Actuary shall
calculate the allocation of the assets of the Trust Fund in
accordance with the above priority categories, and certify his
calculations to the Fiduciaries. No liquidation of assets and
payment of benefits (or provision therefor) shall actually be
made by the Trustee until after it is advised by the Company in
writing that applicable requirements, if any, of ERISA governing
termination of "Employee Pension Benefit Plans" have been or are
being complied with or that appropriate authorizations, waivers,
exemptions or variances have been or are being obtained.
Section 12.4 Manner of Distribution: Subject to the
------------ ----------------------
foregoing provisions of this ARTICLE XII, any distribution after
termination of the Plan may be made, in whole or in part to the
extent that no discrimination in value results, in cash, in
securities or other assets in kind, or in nontransferable annuity
contracts, as he Board in its discretion shall determine.
<PAGE>
Section 12.5 Residual Amounts: In no event shall the
------------ ----------------
Company receive any amounts from the Trust Fund upon termination
of the Plan, except that, and notwithstanding any other provision
of the Plan, the Company shall receive such amounts, if any, as
may remain after the satisfaction of all liabilities of the Plan
and arising out of any variations between actual requirements and
expected actuarial requirements.
IN WITNESS WHEREOF, the parties hereto have executed this
"Twenty-Fifth Amendment and Restatement" to the Modine Pension
and Disability Plan for Salaried Employees, this 30th day of
April, 1991.
MODINE MANUFACTURING COMPANY
Attest:
W. E. PAVLICK s/A. F. Simpson
- --------------------------- BY:----------------------------
W. E. Pavlick, Secretary A. F. Simpson, Vice Chairman
STATE OF WISCONSIN)
)SS.
COUNTY OF RACINE )
On this 30th day of April, 1991, before me came A. F.
Simpson and W. E. Pavlick, to me known, who, being by me duly
sworn, did depose and say that they are residents of the State of
Wisconsin; that they are respectively Vice Chairman and Secretary
of Modine Manufacturing Company, the corporation described in and
which executed the foregoing instrument; that they know the seal
of said corporation and that the seal affixed to said instrument
is such corporate seal; that it was so affixed by order of the
Board of Directors of said corporation and that they signed their
names thereto by like order.
DONALD G. LAUTZ
----------------------------------
Notary Public, State of Wisconsin
STAMPED: My Commission is Permanent
<PAGE>
TWENTY-SIXTH AMENDMENT
to the
RESTATED MODINE MANUFACTURING COMPANY
PENSION AND DISABILITY PLAN
for
SALARIED EMPLOYEES
The Twenty-Sixth Amendment to the Modine Manufacturing Company
Pension and Disability Plan for Salaried Employees made this
15th day of November, 1993, to be effective January 1, 1994.
WHEREAS, the Resolution dated February 20, 1991, adopting the
restatement of such Pension and Disability Plan authorizes the
appropriate Officers of the Company to vary the terms of the Plan
to the extent necessary to qualify the Plan for federal income
tax purposes; and
WHEREAS, the Unemployment Compensation Amendment of 1992 and the
Omnibus Budget Reconciliation Act of 1993 require certain changes
in such Pension and Disability Plan to ensure continued
qualification of the Plan.
NOW, THEREFORE, said Restated Pension and Disability Plan is
hereby amended as follows, solely to effect the changes required
by the Unemployment Compensation Amendment of 1992 and the
Omnibus Budget Reconciliation Act of 1993.
Section 1.1(d), the last two sentences of the first paragraph are
- --------------
amended to read as follows:
Total Annual Earnings of a Participant in any calendar year,
including any calendar year prior to January 1, 1994, shall
not exceed $150,000.00, adjusted for changes in the cost of
living as provided in Section 401(a)(17) of the Internal
Revenue Code. However, the Accrued Benefit determined
applying this limit shall not be less than the Accrued
Benefit determined on January 1, 1994 without regard to this
limit.
Section 5.5(b), the last sentence only, is amended to read as
- --------------
follows:
The amount of such lump sum shall be the present value of
the monthly benefit based on an immediate annuity rate of
7%, or such lower annuity rate as may be required to comply
with Section 417(e)(3) of the Internal Revenue Code.
Section 5.5(e), is hereby added to read as follows in its
- --------------
entirety:
(e) A participant or surviving spouse, who is to receive
a lump sum benefit payment under either paragraph (a)
or paragraph (b) of this Section 5.5, may elect, in
accordance with Section 5.4, a direct trustee-to-
<PAGE>
trustee transfer of such payment to another qualified
trust as provided under Section 401(a)(31) of the
Internal Revenue Code.
Section 8.3, the following sentence is hereby added to read as
- -----------
follows:
This Section is subject to a court order relating to payment
of benefits under this Plan to an Alternate Beneficiary,
which order is determined by the Board to be a Qualified
Domestic Relations Order under Section 414(p) of the
Internal Revenue Code.
Article XI, is hereby amended to read as follows in its entirety:
- ----------
ARTICLE XI
----------
RESTRICTIONS ON BENEFITS TO HIGHLY COMPENSATED PARTICIPANTS
-----------------------------------------------------------
This ARTICLE sets forth limitations required by the Internal
Revenue Service on the Pension benefits payable to certain
Participants in the event a plan amendment or series of plan
amendments (including termination of the Plan, or any change
in the benefits, rights, or features of the Plan),
discriminates significantly in favor of certain Participants
in accordance with Regulation Section 1.401(a)(4)-5. It
shall apply to a Participant only if he was among the twenty-
five highest paid employees or former employees of the
Company on the effective date of such amendment or series of
amendments. The limitations set forth in this ARTICLE XI
shall become applicable if:
(a) After payment to such Participant of all benefits
payable to the Participant under the Plan, the value of
Plan assets would equal less than 110% of the value of
all current liabilities of the Plan, and
(b) The value of the benefits payable to such Participant
under the Plan equals or exceeds 1% of the value of
current liabilities of the Plan before such a
distribution, and
(c) The value of the benefits payable to such Participant
under the Plan equals or exceeds $3,500.00.
If a Participant is subject to the provisions of this
ARTICLE XI, the Annual Pension payable to him shall not
exceed an amount equal to the payment that would be made on
behalf of the Participant under a straight life annuity that
is the actuarial equivalent of the Accrued Benefit and other
benefits to which the Participant is entitled under the
Plan.
The limitations in this ARTICLE shall automatically become
inoperative and of no effect upon the ruling by the Internal
Revenue Service that they are not required.
<PAGE>
Except as expressly amended herein, the Modine Manufacturing
Company Pension and Disability Plan for Salaried Employees shall
remain in full force and effect.
MODINE MANUFACTURING COMPANY
By: R. T. SAVAGE
----------------------------
ATTEST:
W. E. PAVLICK
- -------------------------
<PAGE>
TWENTY-SEVENTH AMENDMENT
to the
RESTATED MODINE MANUFACTURING COMPANY
PENSION AND DISABILITY PLAN
FOR
SALARIED EMPLOYEES
WHEREAS, the Company established the Modine Pension and
Disability Plan for Salaried Employees effective January 1, 1951,
adopted a restatement thereof with a Twenty-Fifth Amendment
thereto effective February 20, 1991, and a Twenty-Sixth Amendment
thereto effective January 1, 1994, and
WHEREAS, it is the desire of the Company to again amend such Plan
as hereinafter set forth.
NOW, THEREFORE, the Company does hereby adopt this Twenty-Seventh
Amendment to the Modine Pension and Disability Plan for Salaried
Employees to be effective as of January 1, 1994.
Section 1.1(d), the dates in the last two sentences of the first
- --------------
paragraph are changed from January 1, 1994 to April 1, 1994.
Section 4.1(c) is hereby added to read as follows in its
- --------------
entirety:
"; or
(c) (1) The Participant's Accrued Benefit determined
as of April 1, 1994 under Section 1.1(a) as it
existed on said date, plus
(2) the benefit calculated in accordance with
subsection (b) of this Section 4.1, but with
Credited Service accrued only after March 31,
1994."
Except as expressly amended herein, the Modine Pension and
Disability Plan for Salaried Employees shall remain in full force
and effect.
MODINE MANUFACTURING COMPANY
By: R. T. SAVAGE
--------------------------------
Attest:
W. E. PAVLICK
- ------------------------
<PAGE>
TWENTY-EIGHTH AMENDMENT
to the
RESTATED MODINE MANUFACTURING COMPANY
PENSION AND DISABILITY PLAN
for
SALARIED EMPLOYEES
The Twenty-Eighth Amendment to the Modine Manufacturing Company
Pension and Disability Plan for Salaried Employees made this
3rd day of April, 1997.
WHEREAS, the Resolution of the Board of Directors dated March 19,
1997, approving the merger of Modine Heat Transfer, Inc. into the
Company, and providing for the Company as successor to Modine Heat
Transfer, Inc. as "The Company" in the Pension and Disability Plan
for Salaried and Non-Union Hourly Employees of Modine Heat Transfer,
Inc., authorizes the appropriate Officers of the Company to vary the
terms of this Plan to the extent necessary to exclude from
participation in this Plan employees covered by the Pension and
Disability Plan for Salaried and Non-Union Hourly Employees of
Modine Heat Transfer, Inc.; and
WHEREAS, the Resolution of the Board of Directors dated February 20,
1991, adopting the Restatement of this Pension and Disability Plan,
authorizes the appropriate Officers of the Company to vary the terms
of the Plan to the extent necessary to qualify the Plan for Federal
Income Tax purposes; and
WHEREAS, the Uniformed Services Employment and Re-Employment
Rights Act of 1994 and the Small Business Job Protection Act of
1996 require certain changes in this Pension and Disability Plan
to ensure continued qualification of the Plan.
NOW, THEREFORE, this Restated Pension and Disability Plan is hereby
amended as follows, solely to effect the changes required to exclude
employees participating in the Pension and Disability Plan for Salaried
and Non-Union Hourly Employees of Modine Heat Transfer, Inc., and the
changes required by the Uniformed Services Employment and Re-Employment
Rights Act of 1994 and the Small Business Job Protection Act of 1996:
Section 1.1(p), the following sentence is added:
- --------------
Excluded from this definition of "Employee" is any employee
employed by the Company at its facility in Camdenton,
Missouri, and any employee employed in the Modine Heat
Transfer Division of the Company.
Section 2.2(b), the second sentence is amended to read as
- --------------
follows, effective October 13, 1996:
A Participant shall also accrue a year of Eligibility
Service for each calendar year in which he serves in the
military, up to a total of five years.
Section 2.3(b), the seventh sentence is amended to read as
- --------------
follows, effective October 13, 1996:
<PAGE>
Hours of eligible employment shall be credited for a period
of Military Service which shall not exceed five years.
Section 2.6 is amended in its entirety to read as follows,
- -----------
effective October 13, 1996:
Section 2.6 Military Service: An Authorized Leave of
----------- ----------------
Absence due to service in the Armed Forces of the United
States shall not constitute a Break in Service, provided
such service does not exceed five (5) years, and further
provided that the Employee returns to employment with the
Company within ninety (90) days after his separation from
Active Duty.
Section 4.1, the second sentence of the fourth paragraph is
- -----------
replaced with the following sentences, effective April 1, 1997:
If such Participant retires subsequent to his 70th birthday,
his Normal Retirement Pension shall commence not later than
the first day of the month following the date of Retirement.
However, the Participant may elect commencement of his
Pension any time on or after April 1 of the calendar year
following the calendar year in which he reaches age 70 1/2.
Section 5.4(e), the second and third sentences are amended to read
- --------------
as follows:
A Participant must make any election hereunder, with the
written consent of his spouse if necessary, in the
following manner. No less than thirty (30) days or more
than ninety (90) days prior to the commencement of benefits,
a Participant (and if married, his spouse) shall be informed
in nontechnical terms of the effect of any such election. In
no event shall such election period end less than ninety (90)
days after such information is provided, nor shall it end prior
to the date benefits are to commence. Any such election may
subsequently be revoked or changed at any time prior to the
Participant's Retirement during this election period.
Except as expressly amended herein, the Modine Pension and Disability
Plan for Salaried Employees shall remain in full force and effect.
MODINE MANUFACTURING COMPANY
By: R. T. SAVAGE
------------------------------
ATTEST:
W. E. PAVLICK
- -----------------------------
<PAGE>
TWENTY-NINTH AMENDMENT
to the
RESTATED MODINE MANUFACTURING COMPANY
PENSION AND DISABILITY PLAN
for
SALARIED EMPLOYEES
The Twenty-Ninth Amendment to the Modine Manufacturing Company
Pension and Disability Plan for Salaried Employees made this
10th day of March, 1998.
WHEREAS, the Resolution of the Board of Directors dated February 20,
1991, adopting the Restatement of this Pension and Disability
Plan, authorizes the appropriate Officers of the Company to vary
the terms of the Plan to the extent necessary to qualify the Plan
for Federal Income Tax purposes; and
WHEREAS, the Internal Revenue Service has advised that certain
changes in the Restated Pension Plan are recommended to assure
continued qualification of the Pension Plan for Federal Income
Tax purposes; and
WHEREAS, the Small Business Job Protection Act of 1996, the Tax
Payer Relief Act of 1997, and the General Agreement on Trade and
Tariffs ("GATT") provide for certain changes in said Restated
Pension Plan.
NOW, THEREFORE, said Restated Pension Plan is hereby amended in
part as follows, effective April 1, 1998, solely to effect the
changes recommended by the Internal Revenue Service, and to
effect the changes provided by the Small Business Job Protection
Act of 1996, the Tax Payer Relief Act of 1997, and GATT:
Section 2.4, a new third sentence is added to read as follows:
- -----------
A leave of absence mandated by the Family and Medical Leave
Act is not included in determining whether a Participant has
experienced a Break-in-Service.
Section 2.7(a), the first sentence is replaced by the following
- --------------
two sentences:
(a) An Employee who transferred from a position of
employment with the Company not covered by the Plan, or
of employment with a related employer, shall have his
service credited for Eligibility Service and Credited
Service as if he had been an employee under the Plan.
A "related employer" includes any member of a
controlled group of corporations of which the Company
is a member, any trade or business (whether or not
incorporated) under common control with the Company,
and any named members of an affiliated service group of
which the Company is a member.
<PAGE>
Section 2.7(c), the first phrase is amended to read as follows:
- --------------
An Employee who transferred to or from a position of
employment with the Company not covered by the Plan, or of
employment with a related employer (as defined in Section
2.7(a)), ....
Section 3.1 is amended to read as follows in its entirety:
- -----------
Section 3.1 Normal Retirement: A Participant with five or
----------- -----------------
more years of Eligibility Service shall be eligible for a
Normal Retirement Pension, which shall commence as of the
first day of the month following the month of his
Retirement, if his employment is terminated on or after his
Normal Retirement Date.
Section 4.1, the second and third sentences of the fourth
- -----------
paragraph are amended to read as follows:
If such Participant retires subsequent to his 70th birthday,
his Normal Retirement Pension shall commence not later than
the first day of the month following the date of his
Retirement, unless the Participant is a five percent owner
of the Employer, in which case his Normal Retirement Pension
shall commence not later than April 1 of the calendar year
following the calendar year in which he reaches age 70 1/2.
Any Participant who is not a five percent owner of the
Employer may elect commencement of his Pension any time on
or after April 1 of the calendar year following the calendar
year in which he reaches age 70 1/2; and such Normal Retirement
Pension shall be recalculated each year thereafter until
Retirement, and will be reduced by the actuarial value of
any Pension received.
Section 4.8, the introduction of the first paragraph is amended
- -----------
to read as follows:
Section 4.8 Maximum Pension: The maximum benefit, when
----------- ---------------
expressed as a monthly pension, shall not exceed the lesser
of $7,500 (the "Dollar Limitation"), or 100% of the
Participant's average compensation (as defined by Reg.
Section 1.415(2)(d)(2) and (3)) during the three years
preceding Retirement to a minimum $833, below which the
maximum monthly benefit is $833 (the "Earnings Limitation").
The maximum benefits are subject to the following: ....
Section 4.8(b) is amended to read as follows:
- --------------
(b) If benefits begin prior to Social Security
Retirement Age, the maximum Dollar Limitation
applicable to such Pension shall be equal to the
actuarial equivalent of such maximum Dollar Limitation.
<PAGE>
For this purpose, "actuarial equivalent" shall be
determined using a monthly interest rate of 5/9 of one
percent for each of the 36 months preceding Social
Security Retirement Age, and the monthly interest rate
of 5/12 of one percent for each month preceding such 36
months.
Section 4.8(c) is amended to read as follows:
- --------------
(c) If benefits begin after Social Security Retirement
Age, the above specified maximum Dollar Limitation
shall be the actuarial equivalent of such maximum
Dollar Limitation, using an annual interest rate of 5%.
Section 4.8(d) is amended to read as follows:
- --------------
(d) If the Participant has fewer then ten years
participation in the Plan at Retirement, the Dollar
Limitation shall be multiplied by a fraction, of which
the numerator is the Participant's years of
participation in the Plan and the denominator is ten.
A new Section 4.8(e) is added (and (e) is relettered (f)), and
--------------
shall read as follows:
(e) If the Participant has fewer than ten years of
employment with the Company at Retirement, including
the year of Retirement and any years of employment with
any related employers (as defined in Section 2.7(a)),
the Earnings Limitation shall be multiplied by a
fraction, of which the numerator is such years of
employment and the denominator is ten.
Section 5.1(a), a sentence is added and shall read as follows:
- --------------
Such Pension shall commence the first day of the month
following the death of the Participant.
Section 5.2(a), the introduction is amended to read as follows:
- --------------
(a) Married Participants: Any married Participant who
--------------------
retires or otherwise leaves the Company with five or
more years of Eligibility Service, and any Participant
who marries following Retirement or other separation
from service at least one year prior to the
commencement of pension benefits to him, shall at the
time of such Retirement, termination or subsequent
marriage, automatically have his Pension converted to a
joint and survivor pension in the form of Option B as
set forth in Section 5.3(c), payable to the spouse if
the spouse survives the Participant, beginning the
first day of the month following the month in which
the death of the Participant occurs, unless, within the
<PAGE>
90-day period prior to the commencement of pension
benefits to the Participant, the Participant elects,
with the approval of his spouse and in accordance with
the procedures in Section 5.4, to receive one of the
other forms of benefit as provided in Section 5.3.
Section 5.3 is amended to read as follows in its entirety:
- -----------
Section 5.3 Forms of Benefit: The forms of benefit are:
-----------
(a) Option X: A monthly benefit only for the life
of the Participant, as calculated in ARTICLE IV.
(b) Option A: A monthly benefit having an equivalent
actuarial value to Option X which will provide a
reduced net benefit payable during the life of the
Participant and, after the Participant's death, the
same reduced net benefit payable, commencing the
first day of the month following the month in which
the Participant's death occurs, to and during the
life of the Participant's surviving spouse or other
surviving beneficiary designated or elected in writing
in accordance with Sections 5.2 and 5.4.
(c) Option B:
(1) A monthly benefit having an equivalent
actuarial value to Option X which will provide
a reduced net benefit payable during the life
of the Participant and, after the Participant's
death, one-half of such reduced net benefit
payable, commencing the first day of the month
following the month in which the Participant's
death occurs, to and during the life of the
Participant's surviving spouse or other surviving
beneficiary designated or elected in writing in
accordance with Sections 5.2 and 5.4. This option
shall be the automatic form of benefit for a
Participant who is married at the time of his
Early, Special Early, Normal, or Disability
Retirement.
(2) A monthly benefit calculated in accordance with
Paragraph (1), but with the benefit payable
during the life of the surviving spouse,
commencing the first day of the month following
the month in which the Participant's death occurs,
being calculated as if the reduction in the benefit
payable during the life of the Participant had been
reduced by one-half of the actuarial reduction
provided in Paragraph (1).
Section 5.4(a) is amended to read as follows:
- -------------
(a) The Participant must make his election and
designate his surviving beneficiary in writing on a
<PAGE>
form provided by and filed with the Company within
ninety (90) days prior to the commencement of pension
payments; and if the Participant is married, an
election of Option X as set forth in Section 5.3(a)
must receive the written consent of the spouse of the
Participant, such consent to be witnessed by a member
of the Board or designated agent of the Board, or by a
Notary Public.
Section 5.5(a) is amended to read as follows:
- --------------
(a) Benefits shall be payable in monthly installments
unless the net amount payable, as a uniform amount for
the life of the Participant only, shall be $25.00 a
month or less, or if the value of the total benefit is
$5,000 or less, in which event payment may be made in
installments less frequent than monthly or in a lump
sum under rules prescribed by the Board. For the
purpose of calculating the total value of this form of
benefit, such lump-sum value shall be calculated using
the mortality table prescribed by the Secretary of the
Treasury at an interest rate equal to the annual rate
of interest on 30-year Treasury securities as of the
second month prior to the beginning of the Plan Year in
which the distribution is made, as published by the
Board of Governors for the Federal Reserve System.
Section 5.5(b), the last sentence is amended to read as follows:
- --------------
The amount of such lump sum shall be the present value of
the monthly benefit, calculated using the mortality table
prescribed by the Secretary of the Treasury at an interest
rate equal to the annual rate of interest on 30-year
Treasury securities as of the second month prior to the
beginning of the Plan Year in which the distribution is
made, as published by the Board of Governors for the Federal
Reserve System; except that such interest rate shall not
exceed an immediate annuity rate of 7%.
Section 5.5(e) is amended to read as follows:
- --------------
(e) Notwithstanding any provision of this Plan to the
contrary that would otherwise limit a Distributee's
election under this Article, a Distributee may elect,
within ninety (90) days prior to a lump-sum benefit
payment under Section 5.5(a) or 5.5(b), to have any
portion of that lump-sum distribution paid directly to
an eligible retirement plan specified by the
Distributee in a direct roll-over.
(1) An "eligible retirement plan" is an individual
retirement account described in Section 408(a)
of the Internal Revenue Code, an individual
retirement annuity described in Section 408(b) of
the Code, an annuity plan described in Section
403(a) of the Code, or a qualified trust described
<PAGE>
in Section 401(a) of the Code, that accepts the
Distributees lump-sum distribution. However, in
the case of an eligible roll-over distribution to
the surviving spouse, an "eligible retirement
plan" is an individual retirement account or
individual retirement annuity.
(2) A "Distributee" includes an employee or
former employee. In addition, the employee's or
former employee's surviving spouse and employee's
or former employee's spouse or former spouse who
is the alternate payee under a Qualified Domestic
Relations Order, as defined in Section 414(p) of
the Code, are Distributees with regard to the
interest of the spouse or former spouse.
(3) A "direct roll-over" is a payment from
the Plan to the eligible retirement plan specified
by the Distributee.
Except as expressly amended herein, the Restated Pension Plan
shall remain in full force and effect.
MODINE MANUFACTURING COMPANY
By: D. R. JOHNSON
---------------------------
ATTEST:
D. R. ZAKOS
- --------------------------
<PAGE>
EXHIBIT 10(g)
MODINE MANUFACTURING COMPANY
EXECUTIVE SUPPLEMENTAL STOCK PLAN
Modine Manufacturing Company (hereinafter called the "Company")
has adopted the MODINE CONTRIBUTORY SALARIED EMPLOYEE STOCK
OWNERSHIP AND INVESTMENT PLAN (hereinafter called the "Stock
Plan"), and executed a Trust Agreement to receive contributions
to the Plan from and on behalf of its employees, such Stock Plan
and Trust being intended to meet requirements of Sections 401(a),
401(k), 409A, 501(a), 408 and 219 of the Internal Revenue Code of
1954, as amended.
The Stock Plan contains provisions placing limitations on the
maximum contributions which may be paid by or on behalf of a
Participant in the Stock Plan in accordance with Sections
401(a)(17), 415 and 416 of the Internal Revenue Code.
The Company and certain of its employees (hereinafter called
"Employees"), have entered into employment agreements by which
the Company has agreed to establish an unfunded "Executive
Supplemental Stock Plan" within the meaning of Sections 201(2),
301(a)(3), and 401(a)(1) of ERISA for the Employees. In
accordance with those agreements, the Company hereby establishes
the "Executive Supplemental Stock Plan" to be effective for any
eligible Employee who terminates employment on or after November
14, 1979 (hereinafter called the "Plan").
ARTICLE I
DEFINITIONS AND CONSTRUCTION
----------------------------
Section 1.1 Definitions: Except as specified below or elsewhere
- ----------- -----------
in this Plan, the definitions of words and phrases appearing in
this Plan shall have the meanings as set forth in the Stock Plan.
Where the following words and phrases appear in this Plan, they
shall have the respective meanings herein set forth, unless the
context clearly indicates to the contrary:
(a) Code: The Internal Revenue Code as now in effect or
----
hereafter amended.
(b) Committee: The Plan Administrator consisting of at
---------
least three officers of the Company who are appointed
by the Officer Nomination and Compensation Committee of
the Company, but who are not members of the Officer
Nomination and Compensation Committee.
(c) Effective Date: November 14, 1979, the date on which
--------------
the provisions of this Plan became effective.
<PAGE>
Section 1.2 Employment Rights: Establishment of the Plan shall
- ----------- -----------------
not be construed to give any Employee the right to be retained by
the Company or to any benefits not specifically provided by the
Plan.
Section 1.3 Severability: In the event any provision of the
- ----------- ------------
Plan shall be held invalid or illegal for any reason, any
illegality or invalidity shall not affect the remaining part of
the Plan, but the Plan shall be construed and enforced as if the
illegal or invalid provisions had never been inserted, and the
Company shall have the privilege and opportunity to correct and
remedy such questions of illegality or invalidity by amendment as
provided in the Plan.
Section 1.4 Applicable Law: This Plan is fully exempt from
- ----------- --------------
Titles II, III and IV of ERISA. The Plan shall be governed and
construed in accordance with Title I of ERISA and the laws of the
State of Wisconsin.
Section 1.5 Other Retirement Benefits: If the Employee has
- ----------- -------------------------
entered into an agreement with the Company in which is provided
other supplemental benefits, he shall not be precluded from
participating in this Plan and receiving such other supplemental
benefits; provided, however, that the Employee shall not receive
the same benefit twice.
ARTICLE II
AMOUNT AND FORM OF BENEFIT PAYMENTS
-----------------------------------
Section 2.1 Amount of Benefits: Benefits payable under the Plan
- ----------- ------------------
shall be equal to:
(a) Required Company Contributions payable to the Account
of the Employee in the Stock Plan Trust as if the
limitations in Code Sections 401(a)(17), 415 and 416
were not applied, less the amount paid to the Account
under the Stock Plan (hereinafter called the "basic non-
qualified contributions"), plus
(b) Dividends that would have accumulated if the basic non-
qualified contributions had been invested in Company
stock under the Stock Plan, plus
(c) The total appreciation that would have accumulated on
Company stock had the basic non-qualified contributions
been invested in Company stock under the Stock Plan.
Section 2.2 Form of Benefit Payment:
- ----------- -----------------------
(a) The benefits determined by Section 2.1 shall be paid by
a one-time lump-sum payment at a time determined by the
<PAGE>
Committee, but not later than twelve months after the
Employee has terminated his employment with the
Company.
(b) Should an eligible Employee die before receiving the
benefit payment, such payment shall be made to the
beneficiary selected by the Employee; but if such
beneficiary should predecease the Employee, the benefit
shall be paid to the Estate of the Employee.
ARTICLE III
GENERAL PROVISIONS
------------------
Section 3.1 Plan Financing: All benefits paid under this Plan
- ----------- --------------
shall be paid from the general assets of the Company. Such
amounts shall be reflected on the accounting records of the
Company but shall not be construed to create or require the
creation of a trust, custodial, or escrow account. Eligible
Employees shall not have any right, title or interest whatever in
or to any investment reserves, accounts, or funds that the
Company may purchase, establish, or accumulate to aid in
providing the benefit under this Plan. Nothing contained in this
Plan, and no action taken pursuant to its provisions, shall
create a trust or fiduciary relationship of any kind between the
Company and an Employee or any other person. Neither an Employee
or any beneficiary of an Employee shall acquire any interest
greater than that of an unsecured creditor.
Section 3.2 Administration: This Plan shall be administered by
- ----------- --------------
the Committee. The Committee shall have, to the extent
appropriate, the same powers, rights, duties, and obligations
with respect to this Plan as it would have if it were charged
with the duties of the Administrative Committee under the Stock
Plan.
Section 3.3 Amendment and Termination: The Company reserves the
- ----------- -------------------------
right to amend this Plan from time to time and reserves the right
to terminate the Plan at any time, but any such amendment or
termination shall not have the effect of reducing or eliminating
the benefit payable, or accrued but not yet payable, under the
terms of this Plan as of the date of the amendment or
termination.
Section 3.4 Action by the Company: Any action required of or
- ----------- ---------------------
permitted by the Company under this Plan shall be by resolution
of the Officers Nomination and Compensation Committee of the
Company, the Board of Directors of the Company or any person or
persons authorized by resolution of the Officers Nomination and
Compensation Committee, or the Board of Directors including, but
not limited to, the Committee.
Section 3.5 Tax Liability: The Company may withhold from any
- ----------- -------------
benefit payments hereunder any taxes required to be withheld in
<PAGE>
such sum as the Company may reasonably estimate to be necessary
to cover any taxes for which the Company may be liable or may be
assessed with regard to such payment.
Section 3.6 Coordination with Stock Plan: Provisions of the
- ----------- ----------------------------
Stock Plan, not specifically excluded or revised by this Plan,
may be applied by the Committee or the Company in determining the
rights and obligations, and any limitations thereon, under this
Plan.
IN WITNESS WHEREOF, MODINE MANUFACTURING COMPANY has caused this
instrument to be executed by its duly authorized officers, this
16th day of July, 1987.
MODINE MANUFACTURING COMPANY
By: FRANK W. JONES
-------------------------------
Title: Executive V.P.
----------------------------
ATTEST:
W. E. PAVLICK
- ------------------------
Secretary
<PAGE>
MODINE MANUFACTURING COMPANY
EXECUTIVE SUPPLEMENTAL STOCK PLAN
FIRST AMENDMENT
WHEREAS, the Company established the Modine Manufacturing Company
Executive Supplemental Stock Plan effective November 14, 1979, and
WHEREAS, it is the desire of the Company to amend such Plan as
hereinafter set forth.
NOW, THEREFORE, the Company does hereby adopt the First Amendment
to the Modine Manufacturing Company Executive Supplemental Stock
Plan to be effective as of January 1, 1991.
A new fourth paragraph of the introduction and stated purpose of
the Plan is added to read as follows in its entirety:
Effective January 1, 1991, such "Executive Supplemental Stock
Plan" shall include, as an additional "eligible Employee", any
Employee of the Company who elects to participate in the Stock
Plan, but whose maximum contributions are limited as stated
above. Such Employee may participate in this Executive
Supplemental Stock Plan by electing such participation before
the beginning of the period of service for which compensation,
applicable to such contributions, is payable.
Section 1.5 is amended to read as follows in its entirety:
- -----------
Section 1.5 Other Retirement Benefits: If the Employee has
----------- -------------------------
entered into an agreement with the Company in which is
provided other supplemental benefits, or to which
supplemental benefits he is otherwise eligible, he shall not
be precluded from participating in this Plan and receiving
such other supplemental benefits; provided, however, that
the Employee shall not receive the same benefit twice.
Except as expressly amended herein, the Modine Manufacturing
Company Executive Supplemental Stock Plan shall remain in full
force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this First
Amendment to the Modine Manufacturing Company Executive
Supplemental Stock Plan, this 20th day of October, 1993.
---- -------
MODINE MANUFACTURING COMPANY
By: R. T. SAVAGE
------------------------------
ATTEST:
W. E. PAVLICK
- ----------------------------
<PAGE>
EXHIBIT 13
Management's discussion & analysis of operations
- ------------------------------------------------
Modine Manufacturing Company's fiscal-1999 sales and
earnings rose to record levels. Sales increases came mainly from
Europe, with the largest factor being the BMW 3-Series automobile
contract. North American aftermarket sales also increased as a
result of the Core Holdings acquisition in October. A slowdown in
the production of agricultural equipment worldwide had a negative
impact on sales in the year, along with a warm winter, which
affected Modine's building-heating business. Results also were
impacted by a late softening in the European truck market. North
American truck demand remained strong.
Earnings were assisted by patent royalties and proceeds from
an earlier nonstrategic asset sale.
In total, 45 percent of sales were outside the United
States. Sales generated internationally were 33 percent. They
rose 16 percent to $371.4 million, while U.S. export sales, at
$128.4 million, decreased 2 percent from the year before.
The Original Equipment (North America) segment of Modine's
business experienced flat sales year over year. The medium- and
heavy-truck market remained strong while the agricultural-
equipment market softened. Several new programs with both truck
and automobile manufacturers will begin to take effect at the end
of the new fiscal year and are expected to grow considerably in
fiscal 2001.
Modine's Distributed Products segment provides heat-transfer
products primarily for the North American vehicular replacement
market and the building-HVAC&R (heating, ventilating, air-
conditioning, & refrigeration) market. Annual revenues grew 6
percent, benefiting from the acquisition during the year of an
aftermarket wholesale distributor specializing in complete lines
of products for vehicular engine-cooling and air-conditioning
systems. The acquisition added approximately 50 sales branches in
the southeastern United States plus an air-conditioning parts
plant in Texas. This strategic acquisition positions Modine's
North American vehicular aftermarket business as a broader-based
supplier in this fiercely competitive industry.
As the acquired line of air-conditioning parts is fully
introduced and distributed throughout North America, the revenues
and competitive position in this market will be enhanced both
with existing distribution and the auto repairshop customer.
Sales from the European Operations segment grew 18 percent
over the prior year. The start of a new program with BMW accounted
for much of the growth. This segment provides products from
business units in Europe primarily to European original-equipment
manufacturers of on- and off-highway vehicles, industrial-equipment
manufacturers, and the vehicular replacement market.
See Note 19 to the consolidated financial statements for
more details of segment and geographic information.
<PAGE>
Modine's 1998-99 revenues from its top ten customers were 44
percent of total sales. The company's largest customer
represented less than 9 percent of total revenues in fiscal 1999.
Overall, Modine continues to have a highly diversified customer
base, which helps minimize the effect of various business cycles.
Fiscal-year sales by market
- ---------------------------
OEM passenger-car and light-truck market: In fiscal 1999,
----------------------------------------
25 percent of Modine's sales were to worldwide original-equipment
manufacturers (OEMs) of passenger cars and light trucks. This
constitutes the company's largest single market, where revenues
grew 12 percent over the prior year. Seventy-three percent of
Modine's sales in this market are generated from European
customers. This is, in large part, due to the very high
percentage of North American auto business still being captive to
the large OEMs.
Production of underhood cooling modules for BMW's new 3-
series cars worldwide brought about significant revenue growth in
fiscal 1999. Modine continued to see more penetration in the
automotive, fluid-cooling market in both Europe and North
America, with substantial growth forecast in the next few years.
Construction of a new plant in Pontevico, Italy, was recently
completed. Startup production of heat-exchange components and modules
for the automotive market will begin this summer.
A new program with DaimlerChrysler in the United States will
also require construction of a new, assembly plant, near Toledo,
Ohio, this year as well as equipment additions to several other
U.S. plants.
Some new business acquired in Europe will give Modine an
initial foothold in the growing, local, dealer-kit, air-
conditioning market. The company holds a strong market position
for kits in the North American market.
OEM heavy- and medium-truck market: Sales to truckmakers
----------------------------------
worldwide grew 8 percent over the previous year and represented
18 percent of Modine's total revenues in fiscal 1999.
Approximately two thirds of the business is in North America,
where calendar-year 1998 saw record production of Class 8 trucks.
Medium-truck and bus production also was up. New business
including complete, in-cab, HVAC (heating, ventilating, air-
conditioning) systems for PACCAR, a global manufacturer of trucks,
is scheduled to begin by the end of the current fiscal year.
The truck market in Europe leveled off after half a year of
buoyant sales. Modine continues to have excellent growth
potential in Europe with recently awarded new business.
Key trends within the truck industry, which may also apply
to other OEM markets, include: the demand for more systems and
modules, rather than components; the shift of systems
responsibility to the supply base; the opportunity to supply
<PAGE>
completely new heat exchangers called exhaust-gas-recirculation
coolers; and the increasing realization by North American
truckmakers that aluminum radiators could replace those made of
copper and brass, which should cause a dramatic change in the
industry within the next three to five years. Modine is prepared
to respond positively to each of these trends.
Modine has started a new aluminum-radiator plant in
Kirchentellinsfurt, Germany, to serve the European market, where
almost all large trucks have aluminum radiators. The new plant is
part of the company's European strategic plan.
Order boards at North American truckmakers remain strong,
and Modine expects to see continued growth in both the heavy- and
medium-duty markets this year. In contrast, the European truck
market is expected to remain at current levels during fiscal 2000.
OEM industrial market: This market includes a diverse array
---------------------
of customers and industries whose products include engines,
generator sets, refrigeration equipment, compressors, lift
trucks, and other applications. Shipments to the OEM industrial
market were up 6 percent over the year before and made up 13
percent of Modine's consolidated revenues in fiscal 1999. Sales
growth to this market came primarily from increased business with
electrical-generating-set manufacturers in North America and from
a mix of industrial markets in Europe.
OEM off-highway market: After starting out the year at the
----------------------
highest levels in the last decade, global agricultural-equipment
markets began dropping sharply in mid-year. Construction-
equipment market volumes also began to weaken from record levels.
Modine's shipments to the off-highway market decreased 5 percent
during fiscal 1999 and represented 13 percent of total company
sales.
The agricultural-equipment market is expected to continue to
be slow during the current fiscal year while the construction-
equipment market is giving mixed signals. Growth among
construction-equipment manufacturers still appears to be focused
on small and light-sized equipment.
As this industry becomes more concentrated and global
through customer consolidations, there is a growing trend toward
establishing mutually beneficial partnerships with customers.
Modine assumes more responsibility for cooling-system design and
customers purchase fully assembled, cooling-system modules.
Regulations dealing with emissions and noise continue to be
phased in and will become more stringent over the next 10 years.
These increased regulations bode well for a strong growth in the
demand for Modine's proprietary technological and product-line
capabilities as customers increasingly require more charge-air
coolers and more-efficient heat exchangers.
In the current fiscal year and beyond, Modine will have
increased aluminum-based production capacity in North America
from the conversion of a former copper/brass plant in Camdenton,
Missouri. In addition, a new-product development team will be
<PAGE>
working to introduce more, new, higher-efficiency products for
this important market.
Vehicle aftermarket: Modine's replacement-parts business in the
-------------------
vehicular aftermarket grew 11 percent in the last fiscal year and was
23 percent of total consolidated sales. The main factor in the year-
over-year increase was the acquisition of Core Holdings in the south-
eastern United States in October, which added many more branches and
a full line of air-conditioning parts. In November, Modine completed
the construction of a new, aluminum-products plant in Mill, The
Netherlands, which added to the supply of aluminum products for the
European aftermarket. The company opened additional sales and service
centers in Barcelona and Valencia, Spain, and in Atlanta, Georgia,
during fiscal 1999. A larger sales and service center will be built
this year in Daventry, England, to add more capacity. Modine also
anticipates an expansion into the Central American market with the
opening this fiscal year of a sales branch in El Salvador.
In North America, the company secured the complete-radiator
business from another, major, national, autoparts chain in fiscal
1999 - Advance Auto Parts. In the new fiscal year, Modine will be
establishing sales branches in two areas where certain, outside
distributors once controlled sales to parts installers.
In a step toward more efficiency, Modine installed a
"paperless" inventory management system at the Kansas City,
Missouri, distribution center during the last year.
Building-HVAC market: Revenues from the building-HVAC
--------------------
(heating, ventilating, air-conditioning) market were essentially
flat, compared with the year before. This market accounted for 7
percent of Modine's total sales in fiscal 1999.
Modine formed a U.S. joint venture company in June 1998 with
Daikin Industries, Ltd., of Japan, one of the largest air-
conditioning manufacturers in the world. Based in Rockbridge,
Virginia, Daikin-Modine Inc. will produce a new line of packaged,
rooftop, heating and air-conditioning products using state-of-the-
art technology that is being jointly developed and includes
Modine's patented, PF heat-exchangers.
Sales of a new product, the Hot Dawg residential garage
heater, has quickly become a valuable, new, product line. It is
being sold though both traditional and new distribution channels.
In fiscal 1999, several new additions to the popular Breeze
suite of computer-based sales and training programs were introduced and
more are planned for the current year.
Sales by product line
- ---------------------
Modine continues to meet customer demands for more modular
assemblies and complete heat-transfer systems expected of a tier-
one supplier. The company's complete product-line offerings and
technical expertise make up a competitive advantage as customers
rely on Modine to solve their heating and cooling problems.
<PAGE>
Radiators: Radiators, including cores and those contained in
---------
various modules, made up 39 percent of Modine's total sales in
fiscal 1999, remaining the largest product-line category. Annual
sales of this line grew 5 percent over the prior year. A little
over half of these products are sold through Modine's aftermarket
operations in North America and Europe. Approximately one-quarter
of the radiator production is manufactured and sold by the
company's overseas plants.
A trend of this product line in the aftermarket is the
continuing shift of customer preference for complete replacement
radiators at the expense of radiator cores, which favors Modine's
strength in the aftermarket. Modine is also well-positioned to
supply the growing demand for aluminum replacement radiators. In
sales to OEM customers, the numbers of radiators sold as parts of
modules continues to grow.
Charge-air coolers: Sales of charge-air coolers increased
------------------
8 percent over the year before -- again recording the largest
percentage increase among the company's major product lines. They
accounted for 12 percent of Modine's total sales in fiscal 1999.
Charge-air coolers help to reduce emissions in diesel
engines by making turbo-charged or supercharged-systems operate
more efficiently. The systems are generally used to increase
engine power. Sales in North America are primarily to the truck
market, although there is a growing demand also in the off-
highway market. A significant portion of European sales of charge-
air coolers are for passenger cars.
Vehicular air-conditioning parts & systems: Modine's
------------------------------------------
vehicular air-conditioning product line had flat sales compared
with the prior year and made up 19 percent of total sales. An
increase from an aftermarket acquisition helped to offset lower
sales in the dealer-kit area, which has been declining in North
America but is still strong in Europe, where Modine has been
changing to become a supplier of dealer-certified kits. The
future of the vehicular air-conditioning product line rests in
complete systems to OEM customers, such as the new business that
Modine will be getting with PACCAR by the end of the current
fiscal year.
Oil coolers: The oil-cooler product line, which cools fluids
-----------
such as engine oil, transmission oil, and certain fuels, was also
flat in fiscal 1999. This category constituted 16 percent of
Modine's consolidated revenues in the last fiscal year.
Sales of Donut oil coolers -- including a new, aluminum
version -- experienced good demand during the year, and a major
portion of these products are exported to Europe from the United
States. Oil coolers are increasingly being included as parts of
underhood modules for vehicles.
<PAGE>
Building-HVAC: The building-HVAC product line made up
-------------
7 percent of total revenues on sales similar to the previous year.
Modine completed the integration of an infrared-heater
product line that had been acquired in January 1998 to expand the
company's product line. In addition, a market introduction is
underway for a redesigned duct furnace and make-up-air unit that
is a full-featured, high-performance product.
Capital expenditures
- --------------------
Capital expenditures of $90.9 million in fiscal 1999 were 13-
percent higher than the prior year. Significant expenditures
included those for the completion of the North American Technical
Center, expansions of Modine's European facilities, building-
improvement projects at domestic plant locations, process
improvements, tooling for new products, and the addition of
processing equipment at a number of facilities. Capital
expenditures were financed primarily from cash generated
internally, as well as some external borrowings.
Outstanding commitments for capital expenditures at March 31,
1999, were approximately $38.6 million. Most of the commitments
relate to the new European Technical Center, the European plant
expansions and conversions, a new North American automotive plant,
process improvements, tooling for new products, and other new
equipment. Approximately $26.5 million of the outstanding-commitment
amount covers projects in Europe. A year ago, outstanding commitments
were $48.1 million.
Research and development
- ------------------------
Modine's investment in research and development of $18.3
million in fiscal 1999 rose 9 percent over the year before.
Through the last 10 years, the company's investments in R&D
increased at an 11-percent compound annual growth rate.
The feature section earlier in this report discusses
Modine's emphasis on technological innovation. The 1,071
worldwide patents that Modine held at March 31, 1999, represented
a 7-percent increase from the prior year.
Employment
- ----------
Total worldwide employment at Modine was 8,671 on March 31,
1999, up 4 percent from the previous year, primarily due to an
acquisition in the North American aftermarket business.
The employee-safety philosophy at Modine is based upon
continuous improvement toward the ultimate goal of zero injuries.
Systems to measure the elements of our safety processes are in
place and a new focus toward reducing all OSHA (Occupational
Safety & Health Administration) recordable injuries is underway.
Increased attention to safety has resulted in a 19-percent
decrease in the number of recordable incidents in fiscal 1999 at
<PAGE>
all U.S. and Canadian facilities. Modine's rate is below its
industry average. The company's efforts in recent years have
translated into declining costs. Savings during the last fiscal
year were equivalent to more than four cents per share from
operations in North America.
Quality achievement
- -------------------
Modine is implementing one, common, quality-management
system at all sites to help ensure that customers receive the
same, high-quality products and services worldwide. The quality
management system is designed to minimize the risks associated
with unacceptable product quality and to maximize customer
satisfaction. This supports one of the company's guiding
principles - to "continuously improve in everything we do."
Modine's efforts to continuously improve its quality
management systems resulted in numerous achievements worldwide
during the last fiscal year. Nine sites (copper-brass radiator
manufacture in Bernhausen, Germany; engine components production
in Bernhausen; Mezokovesd, Hungary; Neuenkirchen, Germany;
Pliezhausen, Germany; Wackersdorf, Germany; Uden, The
Netherlands; Washington, Iowa; and Emporia, Kansas) were
registered to ISO-9002. The European central administration and
division-support functions also earned registration to ISO-9001.
The ISO standards address the quality-management-system
requirements that demonstrate Modine's capability to meet and
exceed customers' quality requirements and expectations. In
fiscal 1999, two plants (Clinton, Tennessee, and McHenry,
Illinois) upgraded their ISO registrations to include the QS-9000
quality-management-system requirements of DaimlerChrysler, Ford,
GM, and other U.S. automotive and truck manufacturers. QS-9000
incorporates ISO standards and, in the spirit of continuous
improvement, enhances quality systems while eliminating redundant
requirements. The Pemberville, Ohio, bolted-radiator plant also
earned QS-9000 registration in the last fiscal year.
Twenty-six Modine sites are now registered to ISO-9000, QS-
9000, or VDA6.1, the German automakers' quality-management-system
requirement that is similar to QS-9000. Five sites (Joplin,
Missouri; Logansport, Indiana; Lawrenceburg, Tennessee;
Pemberville, Ohio, bolted-radiator plant; and Trenton, Missouri)
received quality awards from customers.
Modine will continue to seek customer quality awards and
international registration of its quality systems.
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.
<PAGE>
Environmental matters
- ---------------------
Modine's policy is to comply with all applicable environmental
laws and to conduct worldwide business operations in an
environmentally responsible manner. Expenditures to comply with
these increasingly complex and stringent laws could be significant
in future years but are not expected to have a material impact on
the company's competitive or financial position. If new laws
containing more stringent requirements are enacted, expenditures
may be higher than the estimates of future environmental costs
provided below.
About $1.6 million in capital expenditures related to
environmental projects were made in 1998-99. Modine currently
expects expenditures for environmentally related, capital
projects to be about $1.4 million in 1999-00.
Environmental expenses charged to current operations, including
remediation costs, totaled about $1.7 million in fiscal 1999. These
expenses include operating and maintenance costs: for solid-waste
treatment, storage, and disposal and for air- and water-pollution-
control facilities; for costs incurred in conducting environmental-
compliance activities; and for other matters.
Modine accrues for environmental remediation activities relating
to past operations D including those under the Comprehensive
Environmental Response, Compensation, and Liability Act (CERCLA),
often referred to as "Superfund," and under the Resource Conservation
and Recovery Act (RCRA) -- when it is probable that a liability has
been incurred and reasonable estimates can be made.
Modine from time to time receives notices from the Environmental
Protection Agency and state environmental agencies that the company is
a "potentially responsible party" (PRP) under CERCLA and state law.
These notices claim potential liability for remediation costs of
disposal sites that are not company-owned and allegedly contain wastes
attributable to Modine from past operations. Modine's share of
remediation costs at these sites cannot be accurately predicted due
to the large number of PRPs involved. For the seven sites currently
known, the company's potential liability will be significantly less
than the total site remediation because the percentage of material
attributable to Modine is relatively low ("de minimus"), there may be
insufficient documentation linking Modine to the site, and the
other PRPs have the financial resources to meet their obligations.
It is likely that Modine will, in the future, incur additional
remediation charges, but such costs are unknown and not determinable
at this time. There are no currently known, unrecorded liabilities
that would have a material effect on the company's consolidated
financial position or results of operations.
Year 2000 remediation program
- -----------------------------
General: In response to the Year 2000 issue, Modine initiated
-------
a number of projects in early 1997 to identify, evaluate, and implement
changes to its existing, computerized, business systems. Each of the
<PAGE>
projects followed a four-phase approach that included inventory,
assessment, remediation or replacement, and system-integration testing.
All of the Year 2000 efforts were carried on globally; and plans,
executive sponsorship, and funding were put in place to address the
effort. A number of the company's current systems were already Year 2000
compliant and, where third-party software was being utilized, upgrades
to the vendor's Year 2000 compliant versions have been completed or are
in process. In addition to business systems, additional programs to
ensure supplier continuity and process capability were initiated. All
of the above projects are currently being funded through normal operating
cash flow. The total cost associated with the required modifications is
not expected to be material to Modine's consolidated results of
operations and financial position.
Business systems: In North America, an external party is
----------------
addressing the conversion and remediation effort of Modine's
internally developed systems. The external party is also validating
the Year 2000 changes with internally prepared test scripts. Computer
hardware and local-area-network (LAN) infrastructure is also in the
process of being converted to ensure compliance in business-system
and desktop operation. The expected, Year 2000 remediation cost for
North America is $5.7 million, of which approximately 95 percent
already has been expended. The systems conversion project is in the
last phase, system integration testing, and is being conducted by
Modine internal staff. The project is 95-percent complete and is
scheduled for a second-calendar-quarter 1999 completion.
Accomplishments in North America during the third fiscal quarter
include the conversion of business systems in Mexico and Canada
to achieve Year 2000 compliance through a controlled series of
system migration and software upgrades.
Outside North America, Year 2000 compliance is being achieved
by replacing current applications with SAP, a Year 2000 compliant
package of integrated manufacturing and financial software. Also
included are hardware migrations, LAN, E-mail and desktop upgrades
and replacements. The Year 2000 European cost associated with the
project is $4.5 million, of which 90 percent has been expended. The
project is progressing on schedule and, depending on site, is in
various stages of readiness. Remediation has been successfully
completed at most sites. Overall, the European project is 90-percent
complete and will be virtually complete by the end of the second
quarter of 1999, except for one remaining project that is scheduled
for a third-calendar-quarter 1999 completion.
Suppliers and customers: With respect to suppliers, Modine
-----------------------
has surveyed its material and service suppliers to determine
whether they are actively involved in Year 2000 remediation
projects that will ensure that services will continue without
interruption to any of Modine's business processes. The company
has since developed a second, more-detailed survey that has been
resent to our suppliers to gain better insight into their actual,
Year 2000 status. To date, 90 percent of the surveys have been
returned, of which 86 percent have indicated that they are or
will be compliant by July 1, 1999. The responses are being used
as the basis for developing specific contingency plans for those
suppliers who cannot meet our compliance deadline.
<PAGE>
With Modine's dependency on customers for sales and cash flow,
Year 2000 interruptions in those customers' operations could result in
reduced sales, increased inventory or receivable levels, and cash-flow
reductions. While these events are possible, Modine's customer base is
broad enough to minimize the effects of a single occurrence.
Facilities and embedded systems: In addition, for non-IT
-------------------------------
(information technology) areas, a major effort to assess Modine's
production facilities to include embedded systems is in process and
is being conducted by a third-party, consulting firm specialized in
this type of activity. The facilities evaluation was completed in the
fourth calendar-quarter of 1998. Dependent upon formal risk assessments
by facility and corporate teams, recommended actions include testing,
repair, replacement, upgrading, and/or retirement of specific systems
or components. Modine expects to complete any testing and/or any systems
remediation activities by the end of the second calendar-quarter of 1999,
and development of contingency plans, if needed, by the third calendar-
quarter of 1999. Cost for the inventory assessment is $300,000. The
projected budget for remediations is estimated to be $360,000.
Customer audits: Modine has been asked and has participated
---------------
in independent and specific customer audits to ensure Year 2000
compliance to our customer base. Modine has fared well in those
reviews and is actively involved in keeping the exchange of
information on-going between Modine and its customer base.
Risks and contingency planning: The failure to correct a
------------------------------
material, Year 2000 problem could result in an interruption of
business activities or operations. Modine's Year 2000 projects
were designed and implemented to significantly reduce that
possibility. Despite the significant efforts to address Year 2000
concerns, Modine could potentially experience disruptions to some
of its operations, including those resulting from noncompliant
systems used by its suppliers and customers. The company is
continuing to develop and refine contingency plans and will be
doing so throughout 1999 wherever the risk warrants it.
Euro conversion
- ---------------
The euro was introduced in Europe on January 1, 1999. Eleven
of the fifteen, member countries of the European Union agreed to
adopt the euro as their common legal currency on that date. Fixed
conversion rates between these participating countries' existing
currencies and the euro have been established. The legacy
currencies are scheduled to remain legal tender as denominations
of the euro until at least January 1, 2002, but not later than
July 1, 2002. During this transition period, the parties may
settle transactions using either the euro or a participating
country's legacy currency.
Certain of Modine's business functions in Europe introduced
euro-capability as of January 1, 1999, including systems for
making and receiving certain payments, pricing, and invoicing.
Other business functions and financial reporting will be
converted to the euro by the end of the transition period, but
<PAGE>
may be converted earlier where operationally efficient or cost
effective, or to meet customer requirements. Any delays in the
company's ability to become euro-compliant, or in its key suppliers
and customers to be euro-compliant, could result in an interruption
of the company's business activities or operations. The impact, if
any, of these interruptions upon the results of operations,
financial condition, and cash flows has not yet been determined.
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 nondomestic; the impact of Year 2000
compliance by the company or those entities with which the company
does business; 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-2000 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 & analysis of results of operations
- -----------------------------------------------------------
Sales
- -----
For the year ended March 31, 1999, sales of $1.11 billion were
7 percent higher than last year's $1.04 billion. Sales in the
Distributed Products segment were up primarily due to the Core
Holdings, Inc., acquisition made mid-year. The European Operations
segment had increased automotive-OEM sales. The Original Equipment,
North America, segment was essentially flat with stronger sales to
the truck market and lower sales to the agricultural-equipment market.
Net sales by U.S. facilities accounted for 67 percent of
consolidated revenues for the year ended March 31, 1999, compared
with 69 percent for the prior period. This reflects the trend of
growth opportunities outside the United States. Net sales for
<PAGE>
European Operations increased 16 percent year-over-year. The
stronger European currencies had a positive translation effect on
current-year net sales of approximately $4.0 million compared
with the prior year.
Sales for the year ended March 31, 1998, were $1.04 billion,
up $41.4 million or 4 percent from the prior year. Increases were
greatest in the medium- and heavy-truck markets, followed by the
off-highway-equipment market, partially offset by a slight decline
in the car and light-truck market due to currency-translation effects.
With about one-third of Modine's annual sales being in other than U.S.
currency, the stronger dollar again had a negative translation effect
of approximately $45.5 million on fiscal-1998 consolidated sales,
compared with the prior year.
Fiscal-1997 sales were $999.0 million, up $8.6 million or
1 percent from the prior year. A full year of sales from a fiscal-
1996 acquisition was partially offset by the mid-year sale of a
copper-tubing plant in Dowagiac, Michigan, in that same year.
Sales reductions included an unfavorable exchange-rate effect of
approximately $22 million and a reduction in demand for passenger-
car and truck components.
Gross profit
- ------------
Our current gross profit of $309.9 million (28 percent of
sales) compares with $300.8 million (29 percent of sales) for the
previous year-end. The principal factors responsible for the
current margin reduction are temporary start-up inefficiencies at
some of our new European production and assembly facilities and
pricing constraints imposed by certain OEM customers.
Gross profit was 29 percent of sales for fiscal 1998,
1 percentage point higher than 1997, primarily due to efficiency
improvements in Europe, the volume effect of the truck market,
and reduced material costs.
For fiscal 1997, gross profit was 28 percent of sales, 2
percentage points higher than the previous year, primarily due to
decreased material costs and to cost improvements mainly in Europe.
Selling, general, and administrative (SG&A) expenses
- ----------------------------------------------------
In fiscal 1999, SG&A expenses of $196.6 million, 18 percent of
sales, were $13.3 million over last year's $183.3 million, yet
remained the same as a percent of sales. Without the recent Core
Holdings acquisition, SG&A expenses rose only 3 percent over the
prior year.
Primarily as a result of sales increases, SG&A expense for
fiscal 1998 increased by $6.8 million, or 4 percent, from the
prior year to $183.3 million. As a percent of sales, however,
SG&A remained flat at 18 percent.
For fiscal 1997, SG&A expenses totaled $176.6 million, up
$15.5 million or 10 percent from the previous year. Major causes
for the increase were the inclusion of an acquisition for a full
<PAGE>
year plus additional sales branches and distribution expenses in
the aftermarket.
Income from operations
- ----------------------
Income from operations of $113.3 million for fiscal 1999
compare with $117.5 million for the prior period. The 4-percent
decline is principally a result of start-up inefficiencies at new
production facilities located in Europe and higher SG&A costs from
including the Core Holdings acquisition for six months of the
current year.
In fiscal 1998, income from operations was $117.5 million,
up $16.6 million or 16 percent. European operations, strong
activity in the North American truck market, and lower material
costs account for the majority of this increase.
Fiscal-1997 income from operations was $100.9 million, up
$6.6 million or 7 percent. The improvement was primarily due to
reduction in material prices and to cost improvements.
<TABLE>
Consolidated statements of earnings
(In thousands, except per-share amounts)
<CAPTION>
- ------------------------------------------------------------------------------
For the years ended March 31 1999 1998 1997
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
Net sales $1,111,447 $1,040,418 $999,046
Cost of sales 801,520 739,619 721,626
-----------------------------------
Gross profit 309,927 300,799 277,420
Selling, general, and administrative
expenses 196,636 183,323 176,552
-----------------------------------
Income from operations 113,291 117,476 100,868
Interest expense (5,722) (4,010) (4,972)
Other income -- net 10,501 2,506 1,887
-----------------------------------
Earnings before income taxes 118,070 115,972 97,783
Provision for income taxes 44,127 43,501 34,020
-----------------------------------
Net earnings $ 73,943 $ 72,471 $ 63,763
===================================
Net earnings per share of common stock:
Basic $2.50 $2.44 $2.14
Assuming dilution $2.46 $2.39 $2.10
-----------------------------------
<FN>
The notes to consolidated financial statements are an integral
part of these statements.
</TABLE>
Interest expense
- ----------------
Interest expense of $5.7 million increased $1.7 million over
fiscal 1998. The increase is the result of increased borrowing
<PAGE>
used to provide financing for the Core Holdings acquisition, the
equity investment in the Brazilian joint venture, and
construction projects in Europe and North America. The increased
borrowing was partially offset by improved borrowing rates.
Fiscal-1998 interest expense was $4.0 million, down $1.0
million or 19 percent from the prior year. Lower interest rates
caused this reduction.
Fiscal-1997 interest expense was $5.0 million, down $1.8
million or 27 percent from the prior year. Reduced debt and lower
interest rates allowed this decrease to occur.
Other income, net
- -----------------
In fiscal 1999, other income of $10.5 million was $8.0 million
more than the prior period. Patent royalty income increased $3.7
million, combined with $3.9 million received following the earlier
sale of a nonstrategic, copper-tubing facility.
Other income for fiscal 1998 was $2.5 million, which was
$0.6 million more than 1997. This increase was due primarily to
increases in royalty income.
For fiscal 1997, other income was $1.9 million, which was
$9.8 million less than the prior year, primarily due to a gain of
$5.0 million in fiscal 1996 from the sale of the company's copper-
tubing plant and to gains on the sale of other equipment.
Provision for income taxes
- --------------------------
The 37.4-percent effective tax rate for fiscal 1999 compares
with a 37.5-percent rate for fiscal-year 1998. Higher state
taxes, net of federal benefit, were more than offset by reduced
taxation on non-U.S. earnings and losses and other changes.
The effective tax rate for fiscal 1998 was 37.5 percent, up
2.7 percentage points from fiscal 1997, due primarily to higher tax
rates on increased foreign earnings. Also, the use of tax losses
carried forward and utilized in prior years in certain European
operations resulted in an increased tax rate in fiscal 1998.
For fiscal 1997, the effective tax rate was 34.8 percent,
down 3.3 percentage points from the prior year. The major cause
for this reduction was utilization of tax losses carried forward
from prior years in Modine's European operations.
Net earnings
- ------------
For the year ended March 31, 1999, net earnings were $73.9
million ($2.46 per diluted share), a $1.4-million or 2-percent
improvement over last year's $72.5 million ($2.39 per diluted
share). Return on average shareholders' investment (ROE) was 17
percent in 1999. As a percent of sales, fiscal 1999 net earnings
were 7 percent, similar to the prior year.
<PAGE>
Net earnings in fiscal 1998 were $72.5 million, representing
7 percent of sales and an 18-percent return on average shareholders'
investment (ROE). This is an increase of $8.7 million or 14 percentage
points over fiscal 1997. Improved European operations, higher North
American truck-market sales, and lower material costs were the major
causes of this improvement.
Fiscal-1997 net earnings of $63.8 million -- 6 percent of
sales and a 17-percent ROE -- were up 4 percent or $2.4 million
from the previous fiscal year. Lower material costs and other cost
improvements were the primary causes. The prior fiscal year included
$3.1 million, or approximately 10 cents per diluted share, relating
to a gain on the sale of the copper-tubing business.
Management's discussion of financial position
- ---------------------------------------------
Current assets
- --------------
Cash and cash equivalents increased by $12.8 million to
$49.2 million. Refer to the sources and uses of funds detail in
the accompanying statement of cash flows.
Trade receivables, net of allowances for doubtful accounts,
at $182.9 million, were up $20.7 million due to increased sales
levels and the addition of Core Holdings, Inc., in fiscal 1999.
Inventories increased by $26.3 million to $178.9 million to
support higher sales levels and reflect the addition of Core
Holdings, Inc.
The current ratio of 1.8-to-1 declined slightly from last
year's 2-to-1. An increase in short-term debt used to finance
production-facility expansion and the Core Holdings, Inc.,
acquisition contributed to the decline.
Noncurrent assets
- -----------------
Net property, plant, and equipment of $303.8 million increased
by $55.5 million due to capital expenditures of $90.9 million,
primarily relating to production-facility expansions in Europe and
the construction of the new Technical Center in Racine, Wisconsin.
Investment in affiliates increased $16.0 million in the
current year due to a 50-percent equity investment in Radiadores
Visconde, Ltda., in Brazil and to the newly formed joint venture
with Daikin Industries, Ltd., in Virginia. See Note 10 of the
company's annual report for additional information.
Intangible assets of $80.4 million were $21.1 million higher than
last year, largely as a result of the purchase of Core Holdings, Inc.
Deferred charges and other noncurrent assets of $54.1 million
increased $4.3 million over the prior period, primarily a result of a
$3.9-million increase to the surplus in the company's over-funded
pension plans.
<PAGE>
Current liabilities
- -------------------
Short-term debt and the current portion of long-term debt,
totaling $73.8 million, increased in net by $50.1 million, mainly due
to short-term borrowing in Europe and North America for the financing
of the Core Holdings, Inc., acquisition and for construction projects.
Accounts payable increased by $13.1 million to $97.4 million,
primarily from the effect of supporting a higher sales level and the
recent Core Holdings, Inc., acquisition.
Noncurrent liabilities
- ----------------------
Long-term debt increased by $54.3 million to $143.8 million at
year-end as a result of financing for the Core Holdings, Inc.,
acquisition, the investment in the Brazilian joint venture, and
facility expansions in North America and Europe.
Long-term debt was 32 percent of shareholders' investment. Total
debt to equity was 48.0 percent, up 21.2 percentage points from fiscal
1998.
Shareholders' investment
- ------------------------
Total shareholders' investment of $453.2 million increased $30.7
million over the prior period. The major change was in retained earnings,
which benefited from net earnings of $73.9 million (less dividends paid of
$24.8 million).
Accumulated other comprehensive loss of $18.3 million increased
$10.2 million over the prior year. The most significant component was the
foreign-currency-translation adjustment, which increased $9.8 million.
European currencies, which strengthened against the dollar during the
year, were more than offset by substantial translation losses recorded
on the company's equity investment in its Brazilian affiliate.
During fiscal 1999, $15.2 million was expended to acquire 418,000
treasury shares, while $8.0 million of treasury stock (279,000 shares)
was used to satisfy requirements for stock options, stock awards, and
employee stock-purchase plans.
During fiscal 1998, $17.0 million was expended to acquire an
additional 523,000 treasury shares; while 354,000 shares were used
to satisfy requirements for stock options, stock awards, and employee
stock-purchase plans.
During fiscal 1997, $6.8 million was expended to acquire an
additional 252,000 treasury shares; while 326,000 shares were
used to satisfy requirements for stock options, stock awards, and
employee stock-purchase plans.
Book value per share increased by $1.11 during the year to
$15.35, a 13-percent compound annual growth rate for the last
five years.
<PAGE>
<TABLE>
Consolidated balance sheets
(In thousands, except per-share amounts)
<CAPTION>
- -------------------------------------------------------------------------
March 31 1999 1998
- -------------------------------------------------------------------------
<S> <C> <C>
Assets
Current assets:
- --------------
Cash and cash equivalents $ 49,163 $ 36,410
Trade receivables, less allowance for
doubtful accounts of $3,749 and $4,585 182,910 162,177
Inventories 178,949 152,674
Deferred income taxes and other current assets 42,074 41,922
-------- --------
Total current assets 453,096 393,183
-------- --------
Noncurrent assets:
- -----------------
Property, plant, and equipment -- net 303,764 248,253
Investment in affiliates 24,327 8,376
Goodwill and other intangible assets -- net 80,411 59,355
Deferred charges and other noncurrent assets 54,141 49,857
-------- --------
Total noncurrent assets 462,643 365,841
-------- --------
Total assets $915,739 $759,024
======== ========
Liabilities and shareholders' investment
Current liabilities:
- -------------------
Short-term debt $ 68,998 $ 20,878
Long-term debt -- current portion 4,766 2,835
Accounts payable 97,443 84,345
Accrued compensation and employee benefits 48,869 48,081
Income taxes 9,694 10,073
Accrued expenses and other current liabilities 26,825 26,516
-------- --------
Total current liabilities 256,595 192,728
-------- --------
Noncurrent liabilities:
- ----------------------
Long-term debt 143,838 89,587
Deferred income taxes 20,533 14,258
Other noncurrent liabilities 41,554 39,976
-------- --------
Total noncurrent liabilities 205,925 143,821
-------- --------
Total liabilities 462,520 336,549
-------- --------
<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 13,543 12,384
Retained earnings 469,142 423,001
Accumulated other comprehensive loss (18,341) (8,102)
Treasury stock at cost: 817 and 678 common
shares (28,198) (20,977)
Restricted stock -- unamortized value (1,891) (2,795)
-------- --------
Total shareholders' investment 453,219 422,475
-------- --------
Total liabilities and shareholders'
investment $915,739 $759,024
======== ========
<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 provided by operating activities in fiscal 1999 was
$105.2 million, up $2.2 million from the prior year. Items
contributing to the overall change were higher earnings and positive
noncash adjustments in deferred income taxes and depreciation and
amortization. These increases were offset in part as working-capital
requirements grew from increased sales volume and the post-acquisition
impact of the United States aftermarket expansion.
Net cash from operating activities in fiscal 1998 was $102.9
million, up $2.7 million from the prior year mainly as a result
of higher earnings. Working-capital requirements grew as a result
of the increased sales volume and its net effect on receivables,
inventory, and payables.
Net cash from operating activities in fiscal 1997 was $100.2
million, up $15.6 million from the prior year as a result of
higher earnings and significantly higher noncash adjustments,
which were impacted in the prior year by the gains on sales of a
business and other assets. Also, depreciation was higher and
earnings from affiliates, net of dividends received, were lower.
Working capital demands were also lower than in fiscal 1996.
Capital expenditures
- --------------------
Capital expenditures for fiscal 1999 were $90.9 million,
$10.2 million higher than in fiscal 1998, reflecting: ongoing
<PAGE>
construction and equipment costs associated with the completion
of the Racine Technical Center, continuing expansion and
upgrading of our European facilities, and building-improvement
projects, process improvements, tooling for new products, and
equipment purchases at existing facilities in North America and
Europe.
Capital expenditures for fiscal 1998 were $80.7 million,
$26.2 million higher than in fiscal 1997, reflecting:
construction of the Racine Technical Center, upgrading and
expanding European facilities, and process improvements at North
American plants.
Capital expenditures for fiscal 1997 were $54.5 million,
slightly lower than the prior year, and included significant
capital improvements and expansions, including a new facility in
South Carolina and several projects in Europe.
Acquisitions and investments in affiliates
- ------------------------------------------
During fiscal 1999, Modine acquired Core Holdings, Inc., of
Orlando, Florida, an aftermarket wholesale distributor
specializing in complete lines of vehicular engine-cooling and
air-conditioning systems products. The cash cost of the
acquisition was $19.8 million, net of cash acquired, and
promissory notes to the sellers of $3.9 million. Investments in
affiliates during the year consisted of the purchase of a 50-
percent interest in Radiadores Visconde, Ltda., a Brazilian heat-
transfer company based in S<o Paulo, Brazil, for $16.2 million in
cash and a $10.0-million promissory note to the sellers. Modine
also formed a new joint-venture company with Daikin Industries,
Ltd., that will manufacture a new line of packaged, rooftop, air-
conditioning products. Investments made through year-end in
Daikin-Modine, Inc., totaled $1.5 million. See Note 10 to the
consolidated financial statements for further detail.
During fiscal 1998, Modine acquired 100 percent of the
assets of Sun Technology Corporation of Shelby Township,
Michigan, a manufacturer of infrared heaters. The cash cost of
the acquisition was $2.6 million, net of cash acquired and a
promissory note to the seller for $0.3 million. See Note 10 to
the consolidated financial statements for further detail.
In fiscal 1997, Modine acquired a 41.3-percent equity
interest in Constructions M_caniques Mota, S.A., an oil-cooler
manufacturer in France. The cost of the investment was $4.2
million. See Note 10 to the financial statements for further
detail.
Changes in debt: short- and long-term
- -------------------------------------
Overall, company debt increased by $72.0 million. New
borrowings include short- and long-term debt used to provide
financing for acquisitions, equity investments in affiliates, and
construction projects in Europe and North America. Reductions in
long-term debt resulted from refinancing existing bank debt in
Europe with governmental loans at more-favorable interest rates,
<PAGE>
prepayment of an industrial revenue bond in the United States,
and regularly scheduled repayments.
In fiscal 1998, company debt increased by $17.1 million. New
borrowings included short-term debt to provide financing for
construction projects in Europe and North America. Also, maturing
debt was refinanced with long-term borrowing.
During fiscal 1997, company debt increased by $1.9 million.
This increase included borrowings in French francs, for the
equity investment during the year, and some additional borrowings
in Germany and The Netherlands relative to facility expansion.
These borrowings were nearly offset by $15.7 million in
repayments of long-term debt and an $8.3-million repayment of
short-term debt.
Treasury stock
- --------------
Treasury stock activity is detailed in Management's
discussion of financial position and Note 16 to the consolidated
financial statements.
Dividends paid
- --------------
Dividends for fiscal 1999 totaled $24.8 million, or 84 cents
per share. This represented an increase of 8 cents per share over
the previous year. Dividends in fiscal 1998 and 1997 were $22.6
and $20.3 million, respectively, representing rates of 76 and 68
cents per share, respectively, and those dividends increased 8
cents per share each year over the previous year.
<PAGE>
<TABLE>
Consolidated statements of cash flows
(In thousands)
<CAPTION>
- --------------------------------------------------------------------------------
For the years ended March 31 1999 1998 1997
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities:
- ------------------------------------
Net earnings $ 73,943 $ 72,471 $ 63,763
Adjustments to reconcile net earnings with
cash provided by operating activities:
Depreciation and amortization 44,183 41,767 41,504
Pensions (2,465) (2,256) (2,275)
Loss from disposition of property,
plant, and equipment 123 837 1,038
Deferred income taxes 5,652 (91) (1,452)
Provision for losses on accounts receivable (855) 497 (866)
Undistributed earnings of affiliates, net
of dividends received 841 679 51
Other -- net 1,576 2,884 1,184
------------------------------
122,998 116,788 102,947
------------------------------
Change in operating assets and liabilities
excluding acquisitions:
Trade receivables (15,100) (16,526) (7,851)
Inventories (6,789) (13,236) 3,889
Deferred income taxes and other current
assets 4,661 (2,781) (2,725)
Accounts payable 4,819 13,855 (1,819)
Accrued compensation and employee benefits (715) 3,724 2,611
Income taxes (2,234) 3,081 (1,000)
Accrued expenses and other current
liabilities (2,469) (1,977) 4,178
------------------------------
Net cash provided by operating activities 105,171 102,928 100,230
------------------------------
Cash flows from investing activities:
- ------------------------------------
Expenditures for property, plant,
and equipment (90,860) (80,682) (54,529)
Acquisitions, net of cash acquired (19,826) (2,604) (1,629)
Proceeds from dispositions of assets 524 1,927 881
Investments in affiliates (17,687) -- (4,236)
Increase in deferred charges and other
noncurrent assets (895) (1,003) (1,805)
Other -- net (150) (200) (62)
------------------------------
Net cash used for investing activities (128,894) (82,562) (61,380)
------------------------------
<PAGE>
<S> <C> <C> <C>
Cash flows from financing activities:
- ------------------------------------
Increase/(decrease) in short-term
debt -- net 48,112 18,597 (8,330)
Additions to long-term debt 46,810 27,102 25,925
Reductions of long-term debt (22,924) (28,607) (15,681)
Issuance of common stock, including
treasury stock 5,054 4,567 4,265
Purchase of treasury stock (15,203) (16,990) (6,832)
Cash dividends paid (24,832) (22,605) (20,292)
Other -- net -- -- (347)
------------------------------
Net cash provided by/(used for) financing
activities 37,017 (17,936) (21,292)
------------------------------
Effect of exchange-rate changes on cash (541) (842) (694)
------------------------------
Net increase in cash and cash equivalents 12,753 1,588 16,864
Cash and cash equivalents at beginning of year 36,410 34,822 17,958
------------------------------
Cash and cash equivalents at end of year $ 49,163 $ 36,410 $ 34,822
==============================
Cash paid during the year for:
Interest, net of amounts capitalized $ 4,948 $ 4,434 $ 5,035
Income taxes 37,071 37,715 34,428
------------------------------
<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>
- ---------------------------------------------------------------------------------------------------------------------
Accumulated Restricted-
For the years Additional other stock
ended March 31, Common paid-in Retained comprehensive Teasury unamortized
1999, 1998, 1997 Stock capital earnings income/(loss) stock value Total
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, March 31, 1996 $18,964 $ 9,143 $339,193 $ 3,435 $(17,607) $(3,708) $349,420
Net earnings -- -- 63,763 -- -- -- 63,763
Other comprehensive (loss):
Foreign-currency translation -- -- -- (6,451) -- -- (6,451)
Total comprehensive income -- -- -- -- -- -- 57,312
Cash dividends, $0.68 per share -- -- (20,292) -- -- -- (20,292)
Purchase of treasury stock -- -- -- -- (6,832) -- (6,832)
Stock options and awards
including related tax benefits -- 603 (3,627) -- 6,299 (1,297) 1,978
Employee stock purchase and
ownership plans -- 14 (297) -- 3,191 -- 2,908
Amortization of deferred
compensation under
restricted stock plans -- -- -- -- -- 1,194 1,194
- ---------------------------------------------------------------------------------------------------------------------
Balance, March 31, 1997 18,964 9,760 378,740 (3,016) (14,949) (3,811) 385,688
- ---------------------------------------------------------------------------------------------------------------------
Net earnings -- -- 72,471 -- -- -- 72,471
Other comprehensive (loss):
Foreign-currency translation -- -- -- (5,086) -- -- (5,086)
Total comprehensive income -- -- -- -- -- -- 67,385
Cash dividends, $0.76 per share -- -- (22,605) -- -- -- (22,605)
Purchase of treasury stock -- -- -- -- (16,990) -- (16,990)
Stock options and awards
including related tax benefits -- 2,583 (5,585) -- 10,736 (798) 6,936
Employee stock purchase and
ownership plans -- 41 (20) -- 226 -- 247
Amortization of deferred
compensation under
restricted stock plans -- -- -- -- -- 1,814 1,814
- ---------------------------------------------------------------------------------------------------------------------
Balance, March 31, 1998 18,964 12,384 423,001 (8,102) (20,977) (2,795) 422,475
- ---------------------------------------------------------------------------------------------------------------------
<PAGE>
<S> <C> <C> <C> <C> <C> <C> <C>
Net earnings -- -- 73,943 -- -- -- 73,943
Other comprehensive (loss):
Foreign-currency translation -- -- -- (9,831) -- -- (9,831)
Minimum pension liability -- -- -- (408) -- -- (408)
Total comprehensive income -- -- -- -- -- -- 63,704
Cash dividends, $0.84 per share -- -- (24,832) -- -- -- (24,832)
Purchase of treasury stock -- -- -- -- (15,203) -- (15,203)
Stock options and awards
including related tax benefits -- 882 (2,970) -- 6,165 (11) 4,066
Employee stock purchase and
ownership plans -- 277 -- -- 1,817 -- 2,094
Amortization of deferred
compensation under
restricted stock plans -- -- -- -- -- 915 915
- ---------------------------------------------------------------------------------------------------------------------
Balance, March 31, 1999 $18,964 $13,543 $469,142 $(18,341) $(28,198) $(1,891) $453,219
- ---------------------------------------------------------------------------------------------------------------------
<FN>
The notes to consolidated financial statements are an integral
part of these statements.
</TABLE>
<PAGE>
Notes to consolidated financial statements
- ------------------------------------------
note 1 Significant accounting policies
- ---------------------------------------
Basis of presentation: The financial statements are prepared
---------------------
in conformity with generally accepted accounting principles in
the United States. These principles require management to make
certain estimates and assumptions in determining the company's
assets, liabilities, revenue, expenses, and related disclosures.
Actual amounts could differ from those estimates.
Consolidation principles: The consolidated financial
------------------------
statements include the accounts of Modine Manufacturing Company
and its majority-owned subsidiaries. Material intercompany
transactions and balances are eliminated in consolidation.
Operations of 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 affiliated
companies in which ownership exceeds 20 percent 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 the affiliates' net income is reflected in net
earnings.
Translation of foreign currencies: Assets and liabilities of
---------------------------------
foreign subsidiaries and equity investments are translated into
U.S. dollars at year-end exchange rates, and income and expense
items are translated at the average exchange rates for the year.
Resulting translation adjustments are reported as an other-
comprehensive-income item, included in 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.
Income taxes: Deferred tax liabilities and assets are
------------
determined based on the difference between the amounts reported
in the financial statements 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.
Earnings per share: In fiscal 1998, the company adopted
------------------
Statement of Financial Accounting Standards (SFAS) No. 128,
<PAGE>
OEarnings per Share.O Accordingly, basic earnings per share is
calculated based on the weighted average number of common shares
outstanding during the year, while diluted earnings per share is
calculated based on the dilutive effect of common shares that
could be issued. All prior-period amounts have been restated for
comparable purposes. Also see Note 6.
Cash equivalents: For purposes of the cash flows statement,
----------------
the company considers all highly liquid investments with original
maturities 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.
The company monitors events or changes in circumstances for
long-lived assets, which may result in the carrying amount of the
assets exceeding the sum of the expected future cash flows
associated with such assets. The measurement of any impairment
losses to be recognized is to be based on the difference between
the fair values and the carrying amounts of the assets.
Intangible assets: The excess of cost over fair value of the
-----------------
net assets of businesses acquired is amortized using the straight-
line method primarily over a fifteen-year period. 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.
Stock-based compensation: Stock-based compensation is
------------------------
recognized using the intrinsic value method. Accordingly, compensation
cost for stock options is measured at the excess, if any, of the quoted
market price of the company stock at the date of the grant over the
amount an employee must pay to acquire the stock. Also see Note 18.
<PAGE>
Comprehensive income: In fiscal 1999, the company adopted
--------------------
SFAS No. 130, "Reporting Comprehensive Income," which requires
presentation of comprehensive income and its separate components
in the financial statements.
Pensions and other postretirement benefits: In fiscal 1999,
------------------------------------------
the company adopted SFAS No. 132, "Employers' Disclosures About
Pensions and Other Postretirement Benefits," which revises
disclosures about pension and other postretirement benefit plans.
Also see Note 3.
Segment and geographic information: In fiscal 1999, the
----------------------------------
company adopted SFAS No. 131, "Disclosures About Segments of an
Enterprise and Related Information," which revises reporting and
disclosure requirements for operating segments. Also see Note 19.
Accounting principles to be adopted: In 1998, the Financial
-----------------------------------
Accounting Standards Board (FASB) issued SFAS No. 133, "Accounting
for Derivative Instruments and Hedging Activities." The statement
requires companies to recognize all derivatives as either assets
or liabilities, with the instruments measured at fair value. The
accounting for changes in fair value, gains, or losses depends on
the intended use of the derivative and its resulting designation.
The statement is effective for fiscal years beginning after June 15,
1999. The company will adopt SFAS No. 133 beginning April 1, 2000.
Adoption of this statement is not expected to have a material effect
on the company's financial position or results of operations.
Reclassifications: Certain prior-year amounts have been
-----------------
reclassified to conform with the current-year presentation.
note 2 Research and development costs
- --------------------------------------
Research and development costs charged to operations totaled
$18,252,000 in fiscal 1999, $16,816,000 in fiscal 1998, and
$16,804,000 in fiscal 1997.
note 3 Pension and other postretirement benefit plans
- ------------------------------------------------------
Pensions: 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 some hourly
plans. Other hourly plans are based on a monthly retirement
benefit amount. 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. Plan assets
principally consist of equity and fixed-income securities. As of
March 31, 1999 and 1998, the plans held 1,420,000 and 1,624,000
shares, respectively, of Modine common stock.
<PAGE>
The company's 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.
The projected benefit obligation, accumulated benefit
obligation, and fair value of plan assets for the pension plans
with accumulated benefit obligations in excess of plan assets
were $18,220,000, $15,235,000, and $1,178,000, respectively, as
of March 31, 1999, and $15,679,000, $12,831,000, and $1,063,000,
respectively, as of March 31, 1998.
The company has several, qualified, defined-contribution
plans that cover most of its domestic employees. These 401(k) and
savings plans provide company matching under various formulas.
The cost of the company's contributions to the plans (including
stock-purchase plans discussed in Note 18) for fiscal 1999, 1998,
and 1997 were $6,831,000, $6,666,000, and $6,424,000,
respectively.
Other postretirement plans: The company and certain of its
--------------------------
domestic subsidiaries provide selected healthcare and life-
insurance benefits for retired employees. Designated employees
may become eligible for those benefits when they retire. These
plans are unfunded. The company periodically amends the plans,
changing the contribution rate of retirees and the amounts and
forms of coverage. An annual limit on the company's liability (a
"cap") was established for most plans between fiscal 1994 and
fiscal 1996 after original recognition of the liability in fiscal
1993. It maximizes future costs at 200 percent of the company's
then-current cost. These changes reduced the accrued obligation
and the reduction is being amortized as a component of the
benefit cost.
The change in benefit obligations and plan assets as well as
the funded status of the company's pension and other
postretirement plans were as follows:
<PAGE>
(In thousands)
- ------------------------------------------------------------------------------
Pensions Other postretirement
------------------- ---------------------
Years ended March 31 1999 1998 1999 1998
- ------------------------------------------------------------------------------
Change in benefit
obligation:
Benefit obligation at
beginning of year $137,090 $122,641 $ 22,706 $ 22,501
Service cost 5,567 5,280 327 310
Interest cost 10,299 9,625 1,626 1,624
Plan amendments 344 819 -- --
Actuarial loss 7,302 5,866 974 --
Benefits paid (4,945) (6,345) (2,234) (2,098)
Contribution by plan
participants -- -- 417 369
Currency-translation
adjustment 97 (796) -- --
- ------------------------------------------------------------------------------
Benefit obligation at
end of year $155,754 $137,090 $ 23,816 $ 22,706
- ------------------------------------------------------------------------------
Change in plan assets:
Fair value of plan assets
at beginning of year $188,762 $161,058 $ -- $ --
Actual return on plan
assets 10,485 29,388 -- --
Employer contributions 2,218 4,661 1,817 1,729
Expected contribution
by plan participants -- -- 417 369
Benefits paid (4,945) (6,345) (2,234) (2,098)
Currency-translation
adjustment (124) -- -- --
- ------------------------------------------------------------------------------
Fair value of plan
assets at end of year $196,396 $188,762 $ -- $ --
- ------------------------------------------------------------------------------
Funded status:
Funded status at end
of year $ 40,642 $ 51,672 $(23,816) $(22,706)
Unrecognized net
(gain)/loss (6,060) (19,341) 42 (1,041)
Unrecognized prior
service cost 2,306 2,305 (2,564) (3,036)
Unrecognized net
transition obligation 663 751 -- --
- ------------------------------------------------------------------------------
Net amount
recognized $ 37,551 $ 35,387 $(26,338) $(26,783)
- ------------------------------------------------------------------------------
<PAGE>
Amounts recognized
in the balance sheet
consist of:
Prepaid benefit cost $ 51,606 $ 47,559 $ -- $ --
Accrued benefit liability (15,526) (12,977) (26,338) (26,783)
Intangible asset 991 805 -- --
Accumulated other
comprehensive
income 480 -- -- --
- ------------------------------------------------------------------------------
Net amount
recognized $ 37,551 $ 35,387 $(26,338) $(26,783)
- ------------------------------------------------------------------------------
Cost for the company's pension and other postretirement
benefit plans include the following components:
(In thousands)
- ---------------------------------------------------------------------------
Years ended March 31 1999 1998 1997
- ---------------------------------------------------------------------------
Pensions:
Components of net periodic
benefit cost (gain):
Service cost $ 5,567 $ 5,280 $ 4,912
Interest cost 10,299 9,625 8,497
Expected return on plan assets (16,433) (14,925) (12,354)
Amortization of:
Unrecognized net loss (gain) (117) 108 (1,899)
Unrecognized prior service cost 340 437 372
Unrecognized net obligation (asset) 213 (288) (506)
- ---------------------------------------------------------------------------
Net periodic benefit cost (gain) $ (131) $ 237 $ (978)
- ---------------------------------------------------------------------------
Other postretirement plans:
Components of net periodic
benefit cost
Service cost $ 327 $ 310 $ 323
Interest cost 1,626 1,624 1,653
Amortization of:
Unrecognized net (gain) (109) (87) (50)
Unrecognized prior service cost (473) (473) (473)
- ---------------------------------------------------------------------------
Net periodic benefit cost $ 1,371 $ 1,374 $ 1,453
- ---------------------------------------------------------------------------
<PAGE>
The following weighted-average assumptions were used to
determine the company's obligation under the plans:
- ---------------------------------------------------------------------------
Years ended March 31 1999 1998
---------------- -----------------
U.S. Foreign U.S. Foreign
plans plans plans plans
- ---------------------------------------------------------------------------
Pensions:
Discount rate 7.0% 7.1% 7.5% 7.8%
Expected return on plan assets 9.0% 15.4% 9.0% 12.5%
Rate of compensation increase 4.5% 3.0% 5.0% 3.6%
- ---------------------------------------------------------------------------
Postretirement plans:
Discount rate 7.0% 7.5%
Rate of compensation increase 4.5% 5.5%
- ---------------------------------------------------------------------------
With regards to the postretirement plans, for measurement
purposes, a 6.0-percent healthcare-cost trend rate was assumed
for fiscal year 2000 for pre-65 benefits and 5.0 percent for post-
65 benefits. Pre-65 trend rates were assumed to decrease to 5.0
percent in fiscal 2001 and remain at that level thereafter.
Assumed healthcare-cost trend rates affect the amounts reported
for the healthcare plan. A one-percentage-point change in assumed
healthcare-cost trend rates would have the following effects:
(In thousands)
- -------------------------------------------------------------------------
One percentage point
--------------------
Year ended March 31, 1999 increase decrease
- -------------------------------------------------------------------------
Effect on total of service and interest cost $82 $(103)
Effect on post-retirement benefit obligation 1,231 (1,457)
- -------------------------------------------------------------------------
note 4 Leases
- --------------
The company leases various facilities and equipment. Rental
expense under operating leases totaled $12,618,000 in fiscal
1999, $10,912,000 in fiscal 1998, and $11,876,000 in fiscal 1997.
Future minimum rental commitments at March 31, 1999, under
noncancelable leases were:
(In thousands)
- -------------------------------------------------------------------------
Years ending March 31
- -------------------------------------------------------------------------
2000 $8,012 2003 $ 927
2001 5,156 2004 727
2002 2,251 2005 and beyond 2,039
- -------------------------------------------------------------------------
Total future minimum rental commitments $19,112
- -------------------------------------------------------------------------
<PAGE>
note 5 Income taxes
- --------------------
The U.S. and foreign components of earnings before income
taxes and the income tax expense consist of:
(In thousands)
- ---------------------------------------------------------------------------
Years ended March 31 1999 1998 1997
- ---------------------------------------------------------------------------
Components of earnings before
income taxes:
United States $ 98,945 $ 83,342 $88,406
Foreign 19,125 32,630 9,377
- ---------------------------------------------------------------------------
Total earnings before
income taxes $118,070 $115,972 $97,783
- ---------------------------------------------------------------------------
Income tax expense:
Federal:
Current $ 22,983 $ 26,913 $25,171
Deferred 4,995 (55) 265
State:
Current 4,836 4,008 3,769
Deferred 497 22 134
Foreign:
Current 9,595 12,506 6,692
Deferred 1,221 107 (2,011)
- ---------------------------------------------------------------------------
Totals charged to earnings $ 44,127 $ 43,501 $34,020
- ---------------------------------------------------------------------------
Income-tax expense attributable to earnings before income taxes
differed from the amounts computed by applying the statutory U.S.
federal income-tax rate as a result of the following:
- ---------------------------------------------------------------------------
Years ended March 31 1999 1998 1997
- ---------------------------------------------------------------------------
Statutory federal tax 35.0% 35.0% 35.0%
State taxes, net of federal benefit 3.0 2.3 2.6
Taxes on non-U.S. earnings
and losses (0.2) 0.2 (2.2)
Other (0.4) -- (0.6)
- ---------------------------------------------------------------------------
Effective tax rate 37.4% 37.5% 34.8%
- ---------------------------------------------------------------------------
The significant components of deferred income-tax expense
attributable to earnings before income taxes are as follows:
<PAGE>
(In thousands)
- ---------------------------------------------------------------------------
Years ended March 31 1999 1998 1997
- ---------------------------------------------------------------------------
Pensions $1,294 $1,617 $ 1,473
Depreciation 2,023 1,201 627
Inventories (148) 432 161
Employee benefits 817 (1,357) (994)
Other 2,727 (1,819) (2,879)
- ---------------------------------------------------------------------------
Totals charged to earnings $6,713 $ 74 $(1,612)
- ---------------------------------------------------------------------------
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 1999 1998
- --------------------------------------------------------------------------
Deferred tax assets:
Accounts receivable $ 1,079 $ 1,421
Inventories 4,488 3,401
Plant and equipment 566 1,127
Employee benefits 19,278 20,067
Net operating-loss and tax-credit carry-forwards 7,553 6,144
Other 6,867 7,380
-------------------
Total gross deferred assets 39,831 39,540
Less valuation allowance 5,154 3,947
-------------------
Net deferred tax assets 34,677 35,593
-------------------
Deferred tax liabilities:
Pension 20,034 18,585
Plant and equipment 11,046 9,376
Other 2,311 1,497
-------------------
Total gross deferred tax liabilities 33,391 29,458
- --------------------------------------------------------------------------
Net deferred tax asset $ 1,286 $ 6,135
- --------------------------------------------------------------------------
The valuation allowance for deferred tax assets as of April 1,
1998, was $3,947,000. The allowance increased by $1,207,000
during the year and relates primarily to certain, foreign, net-
operating-loss carryforward activities.
At March 31, 1999, the company had tax-loss carry-forwards
of $15,924,000 existing in jurisdictions outside the United
States. If not utilized against taxable income, $293,000,
$439,000, and $538,000 of tax losses will expire in 2001, 2002,
and 2005 respectively. The remaining $14,654,000 of tax losses
have no time limit.
The undistributed earnings of certain foreign subsidiaries
and joint-venture companies totaled $85,180,000 as of March 31,
<PAGE>
1999. The earnings are considered permanently reinvested in
foreign operations and, therefore, no provision has been made for
any U.S. taxes.
note 6 Earnings per share
- --------------------------
The computational components of basic and diluted earnings
per share are as follows:
(In thousands, except per-share amounts)
- --------------------------------------------------------------------------
Years ended March 31 1999 1998 1997
- --------------------------------------------------------------------------
Net earnings per share of
common stock:
Basic $2.50 $2.44 $2.14
Assuming dilution 2.46 2.39 2.10
Numerator:
Net earnings available to
common shareholders $73,943 $72,471 $63,763
Denominator:
Weighted average shares
outstanding -- basic 29,579 29,726 29,833
Effect of dilutive securities --
options 436 563 520
---------------------------
Weighted average shares
outstanding -- assuming dilution 30,015 30,289 30,353
There were outstanding options
to purchase common stock
excluded from the dilutive
calculation because their prices
exceeded the average market
price for the earnings statement
periods as follows:
Average market price per share $32.57 $32.63 $26.27
Number of shares 645 318 516
- --------------------------------------------------------------------------
note 7 Cash and cash equivalents
- ---------------------------------
Under the company's cash management system, certain cash
balances reflect credit balances to the extent that checks
written have not yet been presented for payment. These credit
balances, included in accounts payable, were approximately
$9,814,000, $10,002,000, and $10,732,000 at March 31, 1999, 1998,
and 1997, respectively.
All the short-term investments at March 31, 1999, 1998, and
1997, were of a duration of less than three months and were
treated as cash equivalents, which approximate fair value.
note 8 Inventories
- -------------------
Inventories include:
<PAGE>
(In thousands)
- -------------------------------------------------------------
March 31 1999 1998
- -------------------------------------------------------------
Raw materials $ 40,529 $ 41,164
Work in process 41,863 41,231
Finished goods 96,557 70,279
- -------------------------------------------------------------
Total inventories $178,949 $152,674
- -------------------------------------------------------------
note 9 Property, plant, and equipment
- --------------------------------------
Property, plant, and equipment is composed of:
(In thousands)
- ---------------------------------------------------------------------
March 31 Depreciable lives 1999 1998
- ---------------------------------------------------------------------
Land -- $ 7,922 $ 6,016
Buildings and improvements 10-40 years 147,153 119,517
Machinery and equipment 3-12 years 304,659 268,157
Office equipment 5-14 years 40,803 36,584
Transportation equipment 3-7 years 17,817 17,181
Construction in progress -- 76,292 63,413
------------------
594,646 510,868
Less accumulated depreciation 290,882 262,615
- ---------------------------------------------------------------------
Net property, plant, and equipment $303,764 $248,253
- ---------------------------------------------------------------------
Depreciation expense was $37,411,000, $35,192,000, and
$35,288,000 for the fiscal years ended 1999, 1998, and 1997,
respectively.
note 10 Acquisitions and equity investments
- --------------------------------------------
In the first quarter of fiscal 1999, the company formed a
joint-venture company with Daikin Industries, Ltd. Through March
31,1999, the company has made investments of $1,500,000. The 50-
percent-owned joint venture, Daikin-Modine, Inc., will
manufacture a new line of packaged, rooftop, air-conditioning
products using state-of-the-art technology, including Modine's
patented PF (parallel flow) heat exchangers. The results of
operations are included in the consolidated financial statements
under the equity method.
On August 6, 1998, the company, through its wholly owned
subsidiary Modine Do Brasil, Ltda., purchased a 50-percent
interest in Radiadores Visconde, Ltda., a Brazilian heat-transfer
company based in S<o Paulo, Brazil. Visconde produces heat-
exchanger components, assemblies, and modules primarily for the
aftermarket but also for sale to original-equipment customers in
the truck, engine, agricultural-tractor, hydraulic-system,
compressor, marine, construction-equipment, power-generator, and
industrial markets. The purchase price of $26,187,000 was
<PAGE>
financed through a combination of cash provided by operations,
new borrowing under the increased revolver, and a promissory note
in the amount of $10,000,000 to the sellers. Goodwill recorded as
part of the investment was $17,536,000 and is being amortized on
a straight-line basis over 15 years. The investment is being
accounted for under the equity method using a one-month reporting
delay.
On October 6, 1998, the company finalized the acquisition of
Core Holdings, Inc., of Orlando, Florida, an aftermarket
wholesale distributor specializing in complete lines of vehicular
engine-cooling and air-conditioning systems products. The
acquisition purchase price was $24,300,000. The transaction was
financed with cash, existing short-term borrowing facilities, and
$3,921,000 of promissory notes to the sellers. The investment is
accounted for using the purchase method. Goodwill, recognized as
a result of the acquisition, was $25,261,000 and is being
amortized on a straight-line basis over 15 years. The results of
operations are included in the consolidated financial statements
since the effective date of the acquisition.
Details of businesses acquired and equity investment
transactions were as follows:
(In thousands)
- ---------------------------------------------------------------------
Year ended March 31 1999
- ---------------------------------------------------------------------
Value of assets acquired, including intangibles,
excluding cash acquired of $543 $53,620
Liabilities assumed and created (43,794)
Equity investment in affiliates 27,687
- ---------------------------------------------------------------------
Net cash paid for acquisitions and equity investments $37,513
- ---------------------------------------------------------------------
Effective January 1, 1998, the company acquired the
business, assets, and certain liabilities of Sun Technology
Corporation, located in Shelby Township, Michigan. Sun Technology
manufactures Ray-Tec infrared heaters for commercial, industrial,
and residential buildings. The acquisition purchase price of
$3,173,000 was paid for with cash and a promissory note for
$320,000. Goodwill created by the acquisition was $2,226,000 and
is being amortized over 15 years on a straight-line basis. The
investment is being accounted for by the purchase method. The
results of operations are included in the consolidated financial
statements since the date of acquisition.
On October 31, 1996, the company, through its wholly owned
subsidiary, Modine GmbH, purchased 41.33 percent of Constructions
M_caniques Mota, S.A. (CMM), based near Marseilles in Provence,
France. CMM produces tube-bundle oil coolers for truck,
industrial, and marine engines. Major European vehicle
manufacturers are among its customers. The purchase price of
$4,236,000 was paid for by using an existing, unsecured,
revolving-credit arrangement. Goodwill recorded as part of the
investment was $2,476,000 and is being amortized on a straight-
line basis over 15 years. The investment is being accounted for
under the equity method.
<PAGE>
The investments presented above did not have a material
effect on the consolidated results of operations and,
accordingly, pro-forma information is not presented.
note 11 Intangible assets
- --------------------------
Intangible assets include:
(In thousands)
- --------------------------------------------------------------------
March 31 1999 1998
- --------------------------------------------------------------------
Goodwill $ 92,548 $ 67,020
Patents and product technology 8,389 8,389
Other intangibles 3,326 1,096
------------------
104,263 76,505
Less accumulated amortization 23,852 17,150
- --------------------------------------------------------------------
Net intangible assets $ 80,411 $ 59,355
- --------------------------------------------------------------------
Amortization expense for intangible assets was $5,856,000,
$4,761,000, and $5,022,000 for the fiscal years ended 1999, 1998,
and 1997, respectively.
note 12 Deferred charges and other noncurrent assets
- -----------------------------------------------------
Deferred charges and other noncurrent assets include:
(In thousands)
- ----------------------------------------------------------------------
March 31 1999 1998
- ----------------------------------------------------------------------
Prepaid pension costs -- qualified and
nonqualified plans $52,000 $48,086
Other noncurrent assets 2,141 1,771
- ----------------------------------------------------------------------
Total deferred charges and other
noncurrent assets $54,141 $49,857
- ----------------------------------------------------------------------
note 13 Indebtedness
- ---------------------
Long-term debt at March 31, 1999 and 1998, includes:
<PAGE>
(Dollars in thousands)
- ------------------------------------------------------------------------------
Fiscal
Interest rate at year of
Type of issue March 31, 1999 maturity 1999 1998
- ------------------------------------------------------------------------------
Denominated in
U.S. dollars:
Fixed rate --
Notes 5.00%-9.00% 2001-2003 $ 15,825 $ --
Weighted average
interest rate 5.38%
Revenue bonds 7.50% 2003 1,100 1,450
Variable rate--
Notes 5.61%-7.75% 2000 1,660 1,870
Weighted average
interest rate 5.82%
Revenue bonds 3.15% 2008 3,000 5,940
Denominated in
foreign currency:
Fixed rate --
Notes and other
debt 4.00%-11.00% 2004-2009 11,784 1,901
Weighted average
interest rate 4.23%
Variable rate --
Notes and other
debt 0.45%-3.78% 2000-2005 115,235 81,261
Weighted average
interest rate 3.26%
-----------------
148,604 92,422
Less current portion 4,766 2,835
- ------------------------------------------------------------------------------
Total $143,838 $89,587
- ------------------------------------------------------------------------------
During the second quarter of fiscal 1998, the company
increased its unsecured, multi-currency revolver from $25,000,000
to $50,000,000. Certain of the company's financing agreements
require it to maintain specific financial ratios and place
certain limitations on dividend payments and the acquisition of
treasury stock. Other loan agreements give certain existing
unsecured lenders security equal to any future secured borrowing.
At March 31, 1999, the carrying value of the company's long-
term debt approximates fair value.
Long-term debt matures as follows:
- ---------------------------------------------------------------------------
Years ending March 31 (In thousands)
- ---------------------------------------------------------------------------
2000 $ 4,766 2003 $49,350
2001 42,441 2004 11,621
2002 1,890 2005 and beyond 38,536
- ---------------------------------------------------------------------------
<PAGE>
The company also maintains credit agreements with banks
abroad. The foreign unused lines of credit at March 31, 1999, were
approximately $2,834,000. The company's revolver was fully utilized
as of March 31, 1999. A maximum of $69,998,000 in short-term bank
borrowings was outstanding during the year ended March 31, 1999.
The weighted average interest rate on short-term borrowings was
4.94 percent at March 31, 1999, and 5.60 percent at March 31, 1998.
Interest expense charged to earnings was as follows:
(In thousands)
- ---------------------------------------------------------------------
Years ended March 31 1999 1998 1997
- ---------------------------------------------------------------------
Gross interest cost $7,538 $4,687 $5,483
Capitalized interest on major
construction projects (1,816) (677) (511)
- ---------------------------------------------------------------------
Interest expense $5,722 $4,010 $4,972
- ---------------------------------------------------------------------
note 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 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, 1999 and 1998, the parent company had
approximately $3,971,000 and $2,819,000, respectively, in
outstanding forward foreign-exchange contracts denominated in
French francs. 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 nonfunctional currency receipts. Non-U.S.
dollar financing transactions through intercompany loans or local
borrowings in the corresponding currency generally are effective
as hedges of long-term investments. See also Note 13.
note 15 Other noncurrent liabilities
- -------------------------------------
Other noncurrent liabilities include:
<PAGE>
(In thousands)
- ----------------------------------------------------------------------
March 31 1999 1998
- ----------------------------------------------------------------------
Postretirement benefits other
than pensions $24,119 $25,272
Pensions 14,521 12,186
Other 2,914 2,518
- ----------------------------------------------------------------------
Total other noncurrent liabilities $41,554 $39,976
- ----------------------------------------------------------------------
note 16 Common and treasury stock
- ----------------------------------
Following is a summary of common and treasury stock
activity.
- ------------------------------------------------------------------------------
Treasury stock
Common stock at cost
----------------- ------------------
shares amount shares amount
- ------------------------------------------------------------------------------
Balance March 31, 1996 30,342 $18,964 (583) $(17,607)
- ------------------------------------------------------------------------------
Purchase of treasury stock -- -- (252) (6,832)
Stock options and awards
including related tax benefits -- -- 214 6,299
Employee stock-purchase and
-ownership plans -- -- 112 3,191
- ------------------------------------------------------------------------------
Balance March 31, 1997 30,342 18,964 (509) (14,949)
- ------------------------------------------------------------------------------
Purchase of treasury stock -- -- (523) (16,990)
Stock options and awards
including related tax benefits -- -- 346 10,736
Employee stock-purchase and
-ownership plans -- -- 8 226
- ------------------------------------------------------------------------------
Balance March 31, 1998 30,342 18,964 (678) (20,977)
- ------------------------------------------------------------------------------
Purchase of treasury stock -- -- (418) (15,203)
Stock options and awards
including related tax benefits -- -- 215 6,165
Employee stock-purchase and
-ownership plans -- -- 64 1,817
- ------------------------------------------------------------------------------
Balance March 31, 1999 30,342 $18,964 (817) $(28,198)
- ------------------------------------------------------------------------------
note 17 Shareholder rights plan
- --------------------------------
The company has a shareholder rights plan to protect against
coercive takeover tactics. Under the 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 $95.00 per unit. The rights are not currently exercisable but
<PAGE>
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.
note 18 Stock option, award, and purchase plans
- ------------------------------------------------
Stock option and award plans: In July of 1985 and 1994,
----------------------------
shareholders approved plans providing for the granting of options to
officers, other key employees, and to nonemployee directors to purchase
common stock of the company. Options granted under the plans, which vest
immediately, 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 1985 and 1994 Incentive Stock Plans also provide for the
granting of stock awards. Restricted stock awards were granted for
1,500, 25,000, and 52,000 shares in fiscal 1999, 1998, and 1997,
respectively. Shares are awarded at no cost to the employee 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 1999, 1998, and
1997 were $915,000, $1,814,000, and $1,194,000, respectively.
Following is a summary of incentive and nonqualified option
activity under the plans.
- --------------------------------------------------------------------------
Shares Weighted-average
(in thousands) exercise price per share
- --------------------------------------------------------------------------
Outstanding March 31, 1996 1,936 $18.46
- --------------------------------------------------------------------------
Granted 312 25.33
Exercised (163) 8.35
- --------------------------------------------------------------------------
Outstanding March 31, 1997 2,085 20.27
- --------------------------------------------------------------------------
Granted 318 33.56
Exercised (323) 13.33
- --------------------------------------------------------------------------
Outstanding March 31, 1998 2,080 23.38
- --------------------------------------------------------------------------
Granted 333 33.36
Exercised (215) 13.77
Forfeitures (18) 27.31
- --------------------------------------------------------------------------
Outstanding March 31, 1999 2,180 $25.82
- --------------------------------------------------------------------------
<PAGE>
Options outstanding and exercisable as of March 31, 1999:
- -----------------------------------------------------------------------------
Weighted- Weighted-average
average exercise price per Shares
Range of exercise prices remaining life share (in thousands)
- -----------------------------------------------------------------------------
$ 8.75 - 14.99 2.16 $10.99 238
15.00 - 24.99 5.01 20.17 530
25.00 - 34.99 7.60 30.44 1,412
- -----------------------------------------------------------------------------
Total outstanding and
exercisable $25.82 2,180
- -----------------------------------------------------------------------------
A further 1,862,000 shares were available for the granting
of additional options or awards at March 31, 1999.
The company has elected to continue to measure compensation
cost using the intrinsic value method of accounting prescribed by
Accounting Principles Board Opinion No. 25, OAccounting for Stock
Issued to Employees.O Accordingly, no compensation cost has been
recognized related to its stock option plans. If the fair-value
based method of accounting for the 1999, 1998, and 1997 stock
option grants had been applied in accordance with SFAS No. 123,
OAccounting for Stock-Based Compensation,O the company's net
earnings and net earnings per share would have been reduced as
summarized below:
(In thousands, except per-share amounts)
- ----------------------------------------------------------------------
Years ended March 31 1999 1998 1997
- ----------------------------------------------------------------------
Net earnings as reported $73,943 $72,471 $63,763
Net earnings pro forma 71,206 69,597 61,375
Net earnings per share (basic)
as reported $2.50 $2.44 $2.14
Net earnings per share (basic)
pro forma 2.41 2.34 2.06
- ----------------------------------------------------------------------
The following assumptions were used to compute the fair
value of the option grants in fiscal 1999, 1998, and 1997 using
the Black-Scholes option-pricing model: a risk-free interest rate
of 4.53 percent, 5.43 percent, and 6.26 percent, respectively;
stock volatility of 26.3 percent, 27.0 percent, and 30.0 percent,
respectively; and, for each of the three years, a dividend yield
of 2.2 percent and expected option lives of five years.
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.
<PAGE>
Activity in the plans for fiscal 1999, 1998, and 1997
resulted in the purchase of 506,000, 577,000, and 670,000 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 1999, 1998, and 1997 were $6,321,000, $6,179,000, and
$5,930,000, respectively.
note 19 Segment and geographic information
- -------------------------------------------
In fiscal 1999, the company adopted SFAS No. 131,
"Disclosures about Segments of an Enterprise and Related
Information," which requires companies to report information
about their operating segments, products, geographic areas, and
major customers.
The company's product line consists of heat-transfer
components and systems. The company serves the vehicular,
industrial, commercial, and building-HVAC original-equipment and
replacement markets. The company's segments, which are organized
on the basis of market categories or geographical responsibility,
are as follows: Original Equipment, which provides heat-transfer
products, generally from business units in North America, to
original-equipment manufacturers of on-highway and off-highway
vehicles, as well as to industrial- and commerical-equipment
manufacturers, located primarily in North America; Distributed
Products, which provides heat-transfer products primarily for the
North American vehicular replacement market and the building HVAC
market, from business units in North America; and European
Operations, which provides heat-transfer products, primarily to
European original-equipment manufacturers of on-highway and off-
highway vehicles, industrial equipment manufacturers, and the
vehicular replacement market from business units in Europe. The
company has assigned specific business units to a segment based
principally on these defined markets and their geographical
location. Each of the company's segments is individually managed
and has separate financial results reviewed by the company's
chief, operating decisionmakers. These results are used by
management both in evaluating the performance of, and in
allocating current and future resources to, each of the segments.
The company evaluates segment performance based on operating
income and the efficient use of long-lived and total assets. The
accounting policies of the segments are the same as those of the
company as a whole.
Totals presented are inclusive of all adjustments needed to
reconcile to the data provided in the company's consolidated
financial statements and related notes.
<PAGE>
Segment data:
(In thousands)
- ------------------------------------------------------------------------------
Sales Operating income
----------------------- -------------------
Years ended March 31 1999 1998 1999 1998
- ------------------------------------------------------------------------------
Sales and operating
income:
Original Equipment $ 491,532 $ 491,128 $ 68,911 $ 63,765
Distributed Products 320,320 300,989 37,989 39,366
European Operations 334,245 283,751 34,200 39,506
- ------------------------------------------------------------------------------
Segment sales and
operating income 1,146,097 1,075,868 141,100 142,637
Corporate &
administrative
expenses -- -- (27,917) (24,895)
Eliminations (34,650) (35,450) 108 (266)
Other items not
allocated to segments -- -- 4,779 (1,504)
- ------------------------------------------------------------------------------
Total net sales and
and income before
taxes $1,111,447 $1,040,418 $118,070 $115,972
- ------------------------------------------------------------------------------
Intersegment sales are accounted for based on an established
markup over production costs.
Operating income for reportable segments excludes
unallocated general corporate and administrative expenses, which
include certain portions of: personnel costs, facility costs,
research and development costs, amortization of goodwill, and
other general corporate expenses.
Other items not allocated to segments include interest
income and expenses, royalties, and dividend income.
At the end of fiscal 1998, management introduced significant
intracompany pricing policy changes. Fiscal 1999 and 1998 sales
and operating income reflect these changes. Management has
determined that it is impractical to restate fiscal 1997 sales
and operating profit to put them on a comparable basis.
<PAGE>
(In thousands)
- -----------------------------------------------------------------------------
Years ended March 31 1999 1998 1997
- -----------------------------------------------------------------------------
Assets:
Original Equipment $157,466 $161,901 $145,983
Distributed Products 158,386 120,983 108,469
European Operations 237,036 188,214 168,728
Corporate & administrative 377,592 300,697 283,359
Eliminations (14,741) (12,771) (11,584)
- -----------------------------------------------------------------------------
Total assets $915,739 $759,024 $694,955
- -----------------------------------------------------------------------------
Capital expenditures:
Original Equipment $ 24,766 $ 24,730 $ 21,864
Distributed Products 5,088 7,068 6,465
European Operations 45,514 25,447 21,659
Corporate & administrative 15,542 23,319 5,573
Eliminations (50) 118 (1,032)
- -----------------------------------------------------------------------------
Total capital expenditures $ 90,860 $ 80,682 $ 54,529
- -----------------------------------------------------------------------------
Depreciation and amortization
expense:
Original Equipment $ 15,764 $ 14,798 $ 13,556
Distributed Products 5,376 4,916 5,339
European Operations 13,276 11,824 12,299
Corporate & administrative 9,889 10,333 10,363
Eliminations (122) (104) (53)
- -----------------------------------------------------------------------------
Total depreciation and
amortization expense $ 44,183 $ 41,767 $ 41,504
- -----------------------------------------------------------------------------
Corporate assets include: cash and cash equivalents, accounts and
notes receivable, investments in affiliates, intangibles, and significant
long-lived assets. Eliminations consist primarily of intracompany loans
and receivables.
Eliminations of capital expenditures are primarily due to sales
between segments in excess of book value.
Geographic data:
<PAGE>
(In thousands)
- --------------------------------------------------------------------------
Years ended March 31 1999 1998 1997
- --------------------------------------------------------------------------
Sales to unaffiliated customers
from company facilities
located in:
United States $ 740,094 $ 719,221 $682,533
Germany 221,725 178,855 177,306
Other countries 149,628 142,342 139,207
- --------------------------------------------------------------------------
Net sales $1,111,447 $1,040,418 $999,046
- --------------------------------------------------------------------------
Long-lived assets:
United States $ 344,948 $ 278,959 $250,623
Germany 61,258 43,260 40,213
Other countries 61,923 46,651 40,999
Eliminations (5,486) (3,029) (3,022)
- --------------------------------------------------------------------------
Total long-lived assets $ 462,643 $ 365,841 $328,813
- --------------------------------------------------------------------------
Net sales are attributed to countries based on the location of the
selling unit. During the last three fiscal years, no single customer has
accounted for more than ten percent of revenues.
Long-lived assets are primarily physical property, plant, and
equipment, but also include investments, intangibles, and other
long-term assets. Eliminations are primarily intracompany loans and
sales of property, plant, and equipment.
note 20 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 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 November 1991 lawsuit.
In August 1997, the ITC issued an Order excluding from U.S.
import Showa condensers that infringe Modine Manufacturing
<PAGE>
Company's parallel-flow patent. The ITC's Order covers
condensers, their parts, and certain products including them,
such as air-conditioning kits and systems. It directs the U.S.
Customs Service to exclude from importation into the United
States such products manufactured by Showa Aluminum Corporation
of Japan and Showa Aluminum Corporation of America. The decision
is based on a Modine U.S. patent covering condensers with tube
hydraulic diameters less than 0.04822 inches. The Showa companies
must certify to Customs officials that any condenser items imported
by them do not infringe Modine's parallel-flow patent. The Showa
companies must also file annual reports with the ITC regarding
their sales of Showa parallel-flow condensers in the United States.
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. In
October of 1997, Modine was issued a Japanese patent covering
parallel-flow air-conditioning condensers having tube hydraulic
diameters less than 0.070 inches. In August of 1998, the company
filed a patent infringement suit in Japan against Showa with respect
to this patent seeking an injunction and damages. Several patents have
been issued to Modine by the European Patent Office, one having been
rejected at the opposition level, which is being appealed. All legal
and court costs associated with these cases have been expensed as they
were incurred.
note 21 Quarterly financial data (unaudited)
- ---------------------------------------------
Quarterly financial data are summarized below:
(In thousands, except per-share amounts)
- -----------------------------------------------------------------------------
Fiscal 1999 quarters ended June Sept. Dec. March
- -----------------------------------------------------------------------------
Net sales $273,104 $272,961 $284,355 $281,027
Gross profit 78,458 75,958 77,113 78,398
Net earnings 20,080 19,081 17,341 17,441
Net earnings per share
of common stock:
Basic $0.68 $0.64 $0.59 $0.59
Assuming dilution 0.67 0.63 0.58 0.58
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
Fiscal 1998 quarters ended June Sept. Dec. March
- -----------------------------------------------------------------------------
Net sales $256,923 $260,806 $267,699 $254,990
Gross profit 75,041 75,289 75,585 74,884
Net earnings 18,185 18,229 17,836 18,221
Net earnings per share
of common stock:
Basic $0.61 $0.61 $0.60 $0.62
Assuming dilution 0.60 0.60 0.59 0.60
- -----------------------------------------------------------------------------
<PAGE>
Independent accountants' report
To the Shareholders and Board of Directors
Modine Manufacturing Company
Racine, Wisconsin
In our opinion, the accompanying consolidated balance sheets
and the related consolidated statements of earnings, cash flows,
and shareholders' investment present fairly, in all material
respects, the financial position of Modine Manufacturing Company
and subsidiaries at March 31, 1999 and 1998, and the results of
their operations and their cash flows for each of the three years
in the period ended March 31, 1999, in conformity with generally
accepted accounting principles. 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 of these
statements in accordance with generally accepted auditing
standards which 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, assessing the accounting
principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the
opinion expressed above.
PRICEWATERHOUSECOOPERS LLP
PricewaterhouseCoopers LLP
Chicago, Illinois
April 28, 1999
<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.
<TABLE>
<CAPTION>
State or
country of Percentage
incorporation of voting
Subsidiaries or organization securities Owned by
<S> <C> <C> <C>
Industrial Airsystems, Inc. Minnesota 100% Registrant
Manufacturera Mexicana de
Partes de Automoviles,
S.A. ("Mexpar") Mexico 100% Registrant<F1>
Modine, Inc. Delaware 100% Registrant
Modine Acquisition Corp. Delaware 100% Registrant
Modine Aftermarket
Holdings, Inc. North Carolina 100% Registrant
Modine Asia K.K. Japan 100% Registrant
Modine Austria Ges.m.b.H Austria 100% Registrant
Modine do Brasil Ltda. Brazil 99% Modine, Inc.<F2>
Modine of Canada, Ltd. Canada 100% Registrant
Modine Climate Systems, Inc.<F3> Kentucky 100% Registrant
Modine Export Sales Corp. Barbados 100% Registrant
Modine Foundation, Inc. Wisconsin 100% Registrant
Modine Manufacturing Company
Foundation, Inc. Wisconsin 100% Registrant
Modine of Puerto Rico, Inc. Delaware 100% Registrant
Radman, Inc. Michigan 100% Registrant
TRT Heating Products, Inc. Rhode Island 100% Registrant
Modine Holding GmbH Germany 100% Modine, Inc.
Modine Transferencia de Calor,
S.A. de C.V. Mexico 99.6% Modine, Inc.<F2>
NRF B.V. The Netherlands 100% Modine, Inc.
Modine Climate Systems GmbH Germany 100% Modine Climate
Systems Inc.
Modine Automobiltechnik GmbH Germany 100% Modine Holding GmbH
Modine Bernhausen GmbH Germany 100% Modine Holding GmbH
Modine Europe GmbH Germany 100% Modine Holding GmbH
Modine Grundstucksverwaltungs
GmbH Germany 100% Modine Holding GmbH
Modine Hungarian Kft. Hungary 100% Modine Holding GmbH
Modine Kirchentellinsfurt GmbH Germany 100% Modine Holding GmbH
Modine Montage GmbH Germany 100% Modine Holding GmbH
Modine Neuenkirchen GmbH Germany 100% Modine Holding GmbH
Modine SRL Italy 100% Modine Holding GmbH
Modine Tubingen GmbH Germany 100% Modine Holding GmbH
Modine Uden B.V. The Netherlands 100% Modine Holding GmbH
- ----------------------------------
<F1> One share of Mexpar is held by Modine, Inc.
<F2> Balance of voting securities held by the Registrant.
<F3> Formerly known as Signet Systems, Inc.
<PAGE>
EXHIBIT 21 continued
State or
country of Percentage
incorporation of voting
Subsidiaries or organization securities Owned by
<S> <C> <C> <C>
NRF B.V.B.A. Belgium 100% NRF B.V.
NRF Deutschland GmbH Germany 100% NRF B.V.
NRF Espania S.A. Spain 100% NRF B.V.
NRF France SARL France 100% NRF B.V.
NRF Handelgesellschaft mbH Austria 100% NRF B.V.
NRF Italia SRL Italy 100% NRF B.V.
NRF Poland Spolka Z.O.O. Poland 100% NRF B.V.
NRF Services AS Denmark 100% NRF B.V.
NRF Switzerland AG Switzerland 100% NRF B.V.
NRF UK Ltd. United Kingdom 100% NRF B.V.
</TABLE>
<PAGE>
EXHIBIT 23
Consent of Independent Accountants
We hereby consent to the incorporation by reference in the Registration
Statement 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, 33-54725, 333-29789, 333-52639, 333-78991
and 333-78989) of Modine Manufacturing Company and Subsidiaries of our
reports dated April 28, 1999 on our audits of the consolidated financial
statements and financial statement schedule of Modine Manufacturing
Company and Subsidiaries as of March 31, 1999 and 1998, and for each
of the three years in the period ended March 31, 1999, which reports
are included in the 1999 Annual Report, which is incorporated herein
by reference or included in this Annual Report on Form 10-K.
PRICEWATERHOUSECOOPERS LLP
PricewaterhouseCoopers LLP
Chicago, Illinois
June 16, 1999
<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 3/31/99 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-31-1999
<PERIOD-START> APR-1-1998
<PERIOD-END> MAR-31-1999
<CASH> 49,163
<SECURITIES> 0
<RECEIVABLES> 186,659
<ALLOWANCES> 3,749
<INVENTORY> 178,949
<CURRENT-ASSETS> 453,096
<PP&E> 594,646
<DEPRECIATION> 290,882
<TOTAL-ASSETS> 915,739
<CURRENT-LIABILITIES> 256,595
<BONDS> 143,838
0
0
<COMMON> 18,964
<OTHER-SE> 434,255
<TOTAL-LIABILITY-AND-EQUITY> 915,739
<SALES> 1,111,447
<TOTAL-REVENUES> 1,111,447
<CGS> 801,520
<TOTAL-COSTS> 801,520
<OTHER-EXPENSES> 0
<LOSS-PROVISION> (427)
<INTEREST-EXPENSE> 5,722
<INCOME-PRETAX> 118,070
<INCOME-TAX> 44,127
<INCOME-CONTINUING> 73,943
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 73,943
<EPS-BASIC> 2.50<F1>
<EPS-DILUTED> 2.46
<FN>
<F1>BASIC EPS - TO REFLECT ADOPTION OF FASB 128.
</FN>
</TABLE>
EXHIBIT 99(a)
notice
of meeting
and proxy
statement
annual meeting
1999
of shareholders
M O D I N E
<PAGE>
- ----------------------------------------------------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
- ----------------------------------------------------------------------------
Date: Wednesday, July 21, 1999
Time: 9:30 a.m.
Place: 1500 DeKoven Ave.
Racine, WI 53403
Record Date: May 28, 1999
Matters to be voted on:
1. Election of three directors;
2. Re-approval of the 1994 Incentive Compensation Plan; and
3. Any other matters properly brought before the shareholders at
the meeting.
By orders of the Board of Directors,
W. E. PAVLICK
W. E. PAVLICK, Secretary
June 10, 1999
Contents
Page
----
General Information About Voting 2
Proposal No. 1: Election of Directors 3
Proposal No. 2: Re-approval of 1994
Incentive Compensation Plan 17
PROXY STATEMENT
Your vote at the annual meeting is important to us. Please vote
your shares of Common Stock by completing the enclosed proxy card
and returning it to us in the enclosed envelope. This proxy
statement has information about the annual meeting and was
prepared by the Company's management for the Board of Directors.
This proxy statement was first mailed to shareholders on June 10,
1999.
<PAGE>
PROXY STATEMENT
Annual Shareholders' Meeting of Modine Manufacturing Company--1999
- -----------------------------------------------------------------------
GENERAL INFORMATION ABOUT VOTING
Who can vote?
- ------------
You can vote your shares of common stock if our records show that you
owned the shares on May 28, 1999. A total of 29,528,785 shares of common
stock can vote at the annual meeting. You get one vote for each share of
common stock. The holders of common stock do not have cumulative voting
rights. The enclosed proxy card shows the number of shares you can vote.
How do I vote by proxy?
- ----------------------
Follow the instructions on the enclosed proxy card to vote on each
proposal to be considered at the annual meeting. Sign and date the proxy
card and mail it back in the enclosed envelope. The proxyholders named
on the proxy card will vote your shares as you instruct. If you sign and
return the proxy card but do not vote on a proposal, the proxyholders
will vote for you on that proposal. Unless you instruct otherwise, the
proxyholders will vote for each of the three director nominees and for
the re-approval of the 1994 Incentive Compensation Plan.
What if other matters come up at the annual meeting?
- ---------------------------------------------------
The matters described in this proxy statement are the only matters
we know will be voted on at the annual meeting. If other matters are
properly presented at the meeting, the proxyholders will vote your
shares as they see fit.
Can I change my vote after I return my proxy card?
- -------------------------------------------------
Yes. At any time before the vote on a proposal, you can change
your vote either by giving the Company's secretary a written notice
revoking your proxy card or by signing, dating, and returning to us a
new proxy card. We will honor the proxy card with the latest date.
Can I vote in person at the annual meeting rather than by completing
- --------------------------------------------------------------------
the proxy card?
- --------------
Although we encourage you to complete and return the proxy card to
ensure that your vote is counted, you can attend the annual meeting and
vote your shares in person.
What do I do if my shares are held in "street name"?
- ---------------------------------------------------
If your shares are held in the name of your broker, or other
nominee, that party should give you instructions for voting your shares.
<PAGE>
How are votes counted?
- ---------------------
We will hold the annual meeting if holders of a majority of the
shares of common stock entitled to vote either sign and return their
proxy cards or attend the meeting. If you sign and return your proxy
card, your shares will be counted to determine whether we have a quorum
even if you abstain or fail to vote on any of the proposals listed on
the proxy card.
If your shares are held in the name of a nominee, and you do not
tell the nominee how to vote your shares (so-called "broker nonvotes"),
the nominee can vote them as it sees fit only on matters that are
determined to be routine, and not on any other proposal. Broker
nonvotes will be counted as present to determine if a quorum exists
but will not be counted as present and entitled to vote on any
nonroutine proposal.
Who pays for this proxy solicitation?
- ------------------------------------
We do. In addition to sending you these materials, some of our
employees may contact you by telephone, by mail, or in person. None of
these employees will receive any extra compensation for doing this.
1. ELECTION OF DIRECTORS
The Board of Directors currently consists of ten members.
Stuart W. Tisdale is retiring from the Board and is not a nominee
for election in 1999.
By Board of Directors' action in March, 1999, effective as of
July 21, 1999, the authorized number of directors will be fixed at nine.
The Restated By-Laws of the Company, as amended in March, 1999, effective
as of July 21, 1999, will classify the Board of Directors into three
classes: one class consisting of two directors; one class consisting of
four directors; and one class consisting of three directors; with each
class of directors serving three-year terms of office. Each class of
directors is staggered so that each expires in succeeding years.
This year the terms of Vincent L. Martin, Richard T. Savage, and
Marsha C. Williams (who was elected for the first time to the Board of
Directors in January 1999) expire at the 1999 Annual Meeting of
Shareholders. Mr. Martin and Ms. Williams have been nominated for a
new three-year term expiring at the Annual Meeting in 2002. Mr. Savage
has requested that he serve as a board member only one more year.
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.
<PAGE>
The nominees for the Board of Directors, the directors whose terms
will continue, their ages, other directorships, and their tenure and
expiration dates of their terms are set forth as follows:
Nominees to be Elected
- ----------------------
VINCENT L. MARTIN Director since 1992
Mr. Martin, 59, is Chairman, Chief Executive Officer (through
June 30, 1999), 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 2002.
MARSHA C. WILLIAMS Director since 1999
Ms. Williams, 49, is Chief Administrative Officer of Crate &
Barrel, a privately held retailer of home furnishings and
accessories headquartered in Northbrook, Illinois. Previously,
Ms. Williams had been Vice President and Treasurer of Amoco
Corporation and Carson Pirie Scott & Company, and Vice President
of The First National Bank of Chicago. Term to expire in 2002.
RICHARD T. SAVAGE Director since 1989
Mr. Savage, 60, is Chairman of the Board of the Company. Prior to
April 1, 1998, Mr. Savage was Chairman and Chief Executive Officer
of the Company. He is also a director of Twin Disc, Inc. Term to
expire in 2000.
Directors Continuing in Service
- -------------------------------
DONALD R. JOHNSON Director since 1997
Mr. Johnson, 57, is President and Chief Executive Officer of the
Company. He is also a director of Grede Foundries, Inc. and the
M&I Bank of Racine. Term to expire in 2001.
GARY L. NEALE Director since 1977
Mr. Neale, 59, is Chairman, President, Chief Executive Officer,
and a director of NiSource, Inc., Hammond, Indiana, a holding
company for gas and electric utilities and other energy-related
subsidiaries. He is also a director of Chicago Bridge & Iron.
Term to expire in 2001.
RICHARD J. DOYLE Director since 1987
Mr. Doyle, 67, is retired. Prior to April 30, 1998, he was Chief
Executive Officer and a director of three private electrical
contracting corporations. Prior to January 1, 1989, Mr. Doyle was a
Vice President of Borg-Warner Corporation, Chicago, Illinois, a
diversified manufacturing and services company, and President and
<PAGE>
Chief Executive Officer of Borg-Warner Automotive, Inc., Troy,
Michigan, a subsidiary of Borg-Warner Corporation. Term to expire
in 2001.
FRANK W. JONES Director since 1982
Mr. Jones, 59, is an independent management consultant, Tucson,
Arizona. He is also a director of Jason Incorporated, D. T.
Industries, Inc., Ingersoll Milling Machine Co., Star Cutter Co.,
Gardner Publications, Inc., and General Tool Co. Term to expire
in 2000.
DENNIS J. KUESTER Director since 1993
Mr. Kuester, 57, is President of Marshall & Ilsley Corporation
and of M&I Marshall & Ilsley Bank, and Chairman 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,
Marshall & Ilsley Corporation, Super Steel Products Corp., TYME
Corporation, and Krueger International. Term to expire in 2000.
MICHAEL T. YONKER Director since 1993
Mr. Yonker, 56, is retired. Prior to June 15, 1998, he was
President and Chief Executive Officer of Portec, Inc., Lake Forest,
Illinois, a manufacturer of material handling equipment. He is also
a director of Woodward Governor Company. Term to expire in 2000.
PRINCIPAL SHAREHOLDERS AND SHARE OWNERSHIP OF DIRECTORS AND EXECUTIVE
OFFICERS
Principal Shareholders
- ----------------------
The following table shows the number of shares of common stock
beneficially owned by each person who we know beneficially owns more
than 5% of the common stock.
<PAGE>
Title Name and Address of Amount and Nature of Percent
of Class Beneficial Ownership Beneficial Ownership of Class
- -------- ---------------------------- ---------------------------- --------
Common Administrative Committee of 5,004,868** Power to vote 16.95%
Modine Contributory Employee Plans' stock
Stock Ownership & Investment not voted by
Plans, 1500 DeKoven Avenue, employees
Racine, Wisconsin 53403-2552 owning it
Members: A. D. Reid, R. L.
Hetrick and D. R. Zakos*
Common Gabelli Funds, Inc. and 4,932,220*** Sole or shared 16.71%
affiliates voting and/or
One Corporate Center power to dispose
Rye, New York 10580-1434 of stock
- ------------------------------------------------------------------------------
* M&I Marshall and Ilsley Trust Company is trustee and holder
of record of the Modine Contributory Employee Stock Ownership
and Investment Plans, Employees Retirement Trusts and 401(k)
Retirement Plans stock, and is the escrow agent for participants
stock under the 1994 through 1998 Stock Award Plans. The Marshall
& Ilsley Trust Company, as custodian, may be viewed as having
voting or dispositive authority in certain situations pursuant
to Department of Labor regulations or interpretations or federal
case law. Pursuant to SEC Rule 13d-4, inclusion of such shares
in this statement shall not be construed as an admission that the
Reporting Person or its subsidiaries are, for purposes of Sections
13(d) or 13(g) of the Act, the beneficial owners of such securities.
D. J. Kuester is president of Marshall & Ilsley Corporation and of
M&I Marshall & Ilsley Bank. M&I Marshall & Ilsley Corporation and
its subsidiaries specifically disclaim beneficial ownership of stock
held by these plans and trusts.
** As of March 31, 1999.
*** Based on a Schedule 13D dated April 15, 1999, by Gabelli
Funds, Inc. and affiliates.
We know of no other person or group which is a beneficial owner of
five percent (5%) or more of the Company's common stock.
Securities Owned by Management
- ------------------------------
The following table shows the number of shares of common stock
beneficially owned as of March 31, 1999 by:
- each director;
- each executive officer named in the Summary Compensation Table on
page 9; and
- the directors and executive officers as a group.
<PAGE>
Title Name of Amount and Nature of Percent
of Class Beneficial Owner Beneficial Ownership of Class
- -------- ---------------- -------------------- --------
Common R. J. Doyle* 52,000(a) **
Common F. W. Jones* 86,050(a) **
Common D. J. Kuester* 36,000(b) **
Common V. L. Martin* 37,200(c) **
Common G. L. Neale* 63,917(a) **
Common S. W. Tisdale* 42,604(a) **
Common M. C. Williams* 5,000(a) **
Common M. T. Yonker* 37,000(a) **
Common R. T. Savage 315,835(d) 1.07%
Common D. R. Johnson 266,401(d) **
Common V. S. Frangopoulos 304,690(d) 1.03%
Common M. G. Baker 244,835(d) **
Common D. B. Rayburn 132,863(d) **
Common L. D. Howard 234,520(d) **
Common All executive
officers and
directors as a
group (25 persons) 2,726,743(e) 9.24%
* 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.
(a) The 52,000 shares listed for Mr. Doyle include options to acquire
45,000 shares; the 86,050 shares listed for Mr. Jones include options
to acquire 45,000 shares; the 63,917 shares listed for Mr. Neale
include options to acquire 45,000 shares; the 42,604 shares listed
for Mr. Tisdale include options to acquire 30,000 shares; the 5,000
shares listed for Ms. Williams include options to acquire 5,000 shares
and the 37,000 shares listed for Mr. Yonker include options to acquire
35,000 shares.
(b) The 36,000 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. This number includes options to acquire 35,000 shares.
<PAGE>
(c) The 37,200 shares listed for Mr. Martin include options to acquire
35,000 shares and include 200 shares held in trusts for his
children with Mr. Martin as trustee.
(d) The 315,835 shares listed for Mr. Savage include options to acquire
139,126 shares; the 266,401 shares listed for Mr. Johnson include
2,288 shares held by Mr. Johnson's wife, options to acquire 175,000
shares, and 23,200 restricted shares awarded to Mr. Johnson; the
304,690 shares listed for Mr. Frangopoulos include options to
acquire 101,166 shares, and 11,600 restricted shares awarded to
Mr. Frangopoulos; the 244,835 shares listed for Mr. Baker include
options to acquire 137,024 shares, and 10,340 restricted shares
awarded to Mr. Baker; the 132,863 shares listed for Mr. Rayburn
include options to acquire 106,375 shares, and 13,240 restricted
shares awarded to Mr. Rayburn; the 234,520 shares listed for Mr.
Howard include options to acquire 118,000 shares, and 14,100
restricted shares ward to Mr. Howard.
All awards listed are pursuant to the 1994 through 1998 Stock
Award Plan grants but subject to restrictions that lapse annually
in fifths over a period commencing at the end of the second year
from the date of grant.
(e) This number includes 867,829 shares held by officers (other than the
five named executive officers) as a group (11 persons) and includes
options to acquire 445,550 shares, and 11,040 shares awarded pursuant
to the 1994 through 1998 Stock Award Plan grants but subject to
restrictions that lapse annually in fifths over a period commencing
at the end of the second year from the date of grant.
Approximately forty-four percent (44%) 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 eight regular meetings during the fiscal
year. An additional eight meetings were held by standing Committees of
the board. the following chart described the function and membership of
each committee and the number of times it met in 1998-1999:
Audit Committee - 3 meetings
Function
- --------
- recommends engagement of auditors;
- meets with independent auditors to:
- discuss plan and scope of audit;
- review results of audit;
- evaluates internal audit procedures and accounting controls;
- approves budget for non-audit services;
- reviews and approves audit and non-audit fees.
<PAGE>
Members
- -------
R. J. Doyle, Chair
F. W. Jones
V. L. Martin
G. L. Neale
S. W. Tisdale
Officer Nomination and Compensation Committee - 3 meetings
Function
- --------
- reviews candidates for positions as Company officers;
- makes recommendations to Board on candidates;
- makes recommendations to Board on compensation for officers;
- administers the 1985 Incentive Stock Plan;
- administers the 1994 Incentive Compensation Plan.
Members
- -------
G. L. Neale, Chair
D. J. Kuester
V. L. Martin
S. W. Tisdale
M. T. Yonker
Pension Committee - 2 meetings
Function
- --------
- provides oversight for pension trust investments.
Members
- -------
F. W. Jones, Chair
R. J. Doyle
D. J. Kuester
M. T. Yonker
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. In addition, shareholders who wish to
nominate candidates for election to the Board may do so.
Generally, if a shareholder intends to propose business or make
a nomination for the election of directors at an annual meeting, or
make a nomination for the election of directors at a special meeting
of shareholders, the Company must receive written notice of such
intention. The deadline for shareholder nominations for directors
and proposals at the 1999 Annual Meeting of Shareholders was
February 6, 1999.
<PAGE>
Compensation of Directors
- -------------------------
Directors of the Company who are not employees were paid a
retainer fee of $6,000 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. Commencing April 1, 1998, in lieu of all
other Board compensation, the Chairman of the Board receives a retainer
fee of $12,000 per quarter. Directors who are officers do not receive
any fees in addition to their remuneration as officers. The Company
also reimburses its directors for travel, lodging, and related expenses
incurred in attending Board and Committee meetings, and it provides
each director with travel-accident and director and officer liability
insurance.
Directors of the Company who are not employees are eligible to
participate in the 1994 Stock Option Plan for Non-Employee Directors
(the "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 the Board or 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 or her 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 or her spouse or other beneficiary entitled
to receive a retirement benefit through him or her, 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
<PAGE>
fraud or felony is determined by disinterested members of the Board of
Directors to have damaged Modine.
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, 1999 for services rendered
to the Company and its subsidiaries during fiscal 1998-1999. Also included
is salary, bonus, restricted common stock awards, and stock option
information for fiscal years ended March 31, 1998, and March 31, 1997.
<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>
1998/99 D. R. Johnson President and Chief $452,500 $321,275 $ 0 30,000 $34,734
1997/98 Executive Officer 326,250 219,240 254,531 30,000 24,160
1996/97 President and Chief 282,500 174,020 252,500 25,000 20,969
Operating Officer
1998/99 D. B. Rayburn Executive Vice President, $262,000 $155,017 $ 0 20,000 $20,100
1997/98 Original Equipment 205,000 120,540 152,719 15,000 15,277
1996/97 Group Vice President, 192,500 103,758 126,250 15,000 14,370
Highway Products
1998/99 M. G. Baker Group Vice President, $237,500 $118,037 $ 0 15,000 $18,299
1997/98 Distributed Products 200,500 117,894 101,813 15,000 14,955
1996/97 192,500 103,758 101,000 15,000 14,392
1998/99 L. D. Howard Group Vice President, $237,000 $117,789 $ 0 15,000 $18,260
1997/98 Europe 200,000 114,800 135,760 15,000 14,895
1996/97 185,000 99,715 151,500 15,000 13,802
1998/99 V. S. Frangopoulos Group Vice President, $225,000 $111,825 $ 0 10,000 $17,405
1997/98 Off-Highway Products 210,000 123,480 101,813 15,000 15,664
1996/97 202,000 124,432 101,000 15,000 15,128
<FN>
(1) Excludes "Other Annual Compensation" under Securities and Exchange
Commission 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, 1999, were: Mr. Johnson - 23,200 shares valued
at $651,050; Mr. Rayburn - 13,240 shares valued at $371,548; Mr.
Baker - 10,340 shares valued at $290,166; Mr. Howard - 14,100
shares valued at $395,681; and Mr. Frangopoulos - 11,600 shares
valued at $325,505. Dividends are paid on the restricted shares
<PAGE>
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 $28.0625 at March 31, 1999.
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. For fiscal 1998-1999, restricted stock
awards contained an incentive component so that awards are made
contingent on meeting specified performance targets. In the event of
retirement, the shares may, if authorized by the Officer Nomination
and Compensation Committee of the Board, be released at an earlier
date. In the event of a change-in-control, the share restrictions
will lapse.
(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, optioned stock, or a combination thereof.
The optionee may also satisfy any tax withholding obligation by
using optioned stock. 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) Includes employer matching contributions to the Company Tax Saver
(401(k)) Plan, Stock Purchase Plan, Executive Supplemental Stock
Plan, and since January 1, 1999, the Modine 401(k) Retirement Plan
and the Modine Non-Qualified Deferred Compensation Plan. The
Company has a program (the Executive Supplemental Stock Plan and,
after January 1, 1999, the Modine Non-Qualified Deferred
Compensation 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. Because the Company's
contributions to the Executive Supplemental Retirement Plan and the
Modine Non-Qualified Deferred Compensation Plan are actuarially
based and are not allocated to the individual named executive
officers' accounts until retirement, such contributions are not
readily ascertainable and are not included in this column. See
page 15 herein regarding the Pension Plan Table for additional
information.
</TABLE>
<PAGE>
Officer Nomination and Compensation Committee Report on Executive
- -----------------------------------------------------------------
Compensation
- ------------
The Officer Nomination and Compensation Committee has provided the
following report on Executive Compensation:
Compensation Philosophy
-----------------------
The Company's executive compensation philosophy is designed to
address the needs of the Company, its executives, and its shareholders.
The specific factors underlying the Committee's decision with
respect to compensation for each of the named executives for the last
fiscal year are two-fold:
1. The first factor is 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.
For fiscal 1998-99, the Company continued to use a formula bonus
program that does not commence payout until a pre-tax return of 15
percent on shareholders' investment is earned. 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 120% of his base salary
<PAGE>
(the maximum payout under the program) in fiscal 1998-99. 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 1998-99, the Committee determined that several changes
were appropriate, including base pay adjustments for certain named
executive officers to industry medians, and the introduction of an
incentive feature for the restricted stock awards so that such awards
are made contingent upon earnings per share growth and sales growth in
the fiscal year over the prior fiscal year.
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. Individual
stock option grants are determined based on a subjective assessment of
individual performance, contribution, and potential. In fiscal 1998-99
revised individual stock awards were provided to the named executives
and certain other officers. The Committee may consider previous stock
option and stock award grants when determining annual stock option and
stock award grants under these 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.
For the plan prior to 1998/99, stock awards are grants of Company
stock to a limited number of top executives as indicated above, at no
cost. These awards vest only at the rate of 20 percent per year
commencing at the end of the second 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.
Beginning with the 1998-99 fiscal year, stock awards were provided
on the basis of meeting specified targets and will vest 20 percent per
year commencing at the end of the first year. Achievement is measured
based on the fiscal year's performance of specified percentages of
sales growth and earnings per share growth over the prior year's
results. The sales growth and earnings per share growth achievements
are calculated separately and carry equal weight. Target achievement
for each element will earn half of the target awards so that full
target awards are earned if both goals are achieved. Each element has
a minimum, target, and maximum goal.
For the 1998-99 fiscal year, the determination of the CEO's target
shares was based on compensation data used to determine the CEO's base
<PAGE>
pay. The target stock award is set at the stock equivalent of a
designated percentage (50% in 1998-99) of the CEO comparator group base
pay. This amount is then divided by the stock price and rounded up to
the nearest 500 share equivalent.
At minimum achievement of the goal, the plan pays 50% of the target
awards for that goal. At maximum achievement, the plan will pay 150%
of the target awards for that goal. Participants other than the CEO
receive awards based on a specified percentage of the CEO's awards.
While the Company achieved record sales and earnings for the 1998-99
fiscal year, the sales and earnings growth did not reach minimum
achievement of the goals, and accordingly, no restricted stock was
awarded. A similar stock award program has been set for fiscal year
1999-2000.
Consequently, each of the named executive officers is compensated
over the long-term, through both the stock option and stock award
programs as the Company sales and earnings per share and the Company
stock price increases, which will also benefit 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 the ability 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 decisions were not based solely on fiscal
1998-99 annual financial results but were based on the compensation
policies referenced above and on the Company's favorable return on
shareholders' investment over the longer term and on the Committee's
subjective assessment of the performance of the management team.
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 and plans 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 are 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.
<PAGE>
Compliance with Internal Revenue Code Section 162(m)
----------------------------------------------------
Section 162(m) of the Internal Revenue Code, enacted in 1993, generally
disallows a tax deduction to public companies for compensation over one
million dollars 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 Committee currently intends to structure its executive-compensation
packages to meet these requirements.
Compensation Committee Interlocks and Insider Participation
-----------------------------------------------------------
None of the Committee members is or has been a Company officer or
employee. No Company executive officer currently serves on the
compensation committee or any similar committee of another public company.
G. L. Neale, Chair S. W. Tisdale
D. J. Kuester M. T. Yonker
V. L. Martin
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 March 31, 1994, in the Company's
common stock, the S&P 500 Stock Index, and the NASDAQ Industrials Stock
Index and assumes reinvestment of dividends.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
Measurement Period
(Fiscal Year Covered) Modine NASDAQ S&P 500
- ------------------------ --------- ------------ -----------
Measurement Pt. 4/1/94 100 100 100
FYE 95 133 110 116
FYE 96 107 148 153
FYE 97 102 160 184
FYE 98 147 239 272
FYE 99 122 332 323
Options Granted
- ---------------
The following table sets forth information about stock option
grants during the last fiscal year for the five executive officers
named in the Summary Compensation Table.
<PAGE>
<TABLE>
OPTION GRANTS IN LAST FISCAL YEAR
<CAPTION>
Potential Realizable
Value at Assumed Annual
Rates of Stock Appreciation -
Individual Grants Appreciation for Option Term(1)(2)(3)
----------------------------------------------- -------------------------------------
% of Total
Options
Options Granted to Exercise Expiration
Name Granted Employees Price Date 0% 5% 10%
- ----------------- ---------- ---------- -------- ---------- -- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
D. R. Johnson 30,000 10.42% $33.25 1/20/2009 $0 $ 628,425 $ 1,586,025
D. B. Rayburn 20,000 6.94% $33.25 1/20/2009 $0 418,950 1,057,350
M. G. Baker 15,000 5.21% $33.25 1/20/2009 $0 314,213 793,013
L. D. Howard 15,000 5.21% $33.25 1/20/2009 $0 314,213 793,013
V. S. Frangopoulos 10,000 3.47% $33.25 1/20/2009 $0 209,475 528,675
All Optionees 288,000 100% $33.25 1/20/2009 $0 6,032,880 15,225,840
All Shareholders N/A N/A N/A N/A $0 $618,307,965 $1,560,491,531
<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 Securities and Exchange Commission 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 stock price
appreciation, which will benefit all shareholders commensurately.
A zero percent gain in stock price appreciation will result in zero
dollars for the optionee.
</TABLE>
Option Exercises and Fiscal Year-End Values
- -------------------------------------------
The following table sets forth information with respect to the
five executive officers named in the Summary Compensation Table
concerning the number of option exercises and value of options
outstanding at the end of the last fiscal year.
<PAGE>
<TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
<CAPTION>
Total Value of
Total Number Unexercised
Number of of Unexercised In-the-Money
Shares Options Held 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>
D. R. Johnson 0 $ 0 175,000 $458,250
D. B. Rayburn 0 $ 0 106,375 $346,961
M. G. Baker 16,674 $ 442,404 137,024 $945,929
L. D. Howard 0 $ 0 118,000 $643,750
V. S. Frangopoulos 41,960 $1,031,648 101,166 $288,751
<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 $28.0625 as of March 31, 1999.
</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 $ 29,051 $ 38,734 $ 48,418 $ 58,101 $ 67,785
200,000 47,894 63,859 79,824 95,789 111,754
275,000 66,738 88,984 111,230 133,476 155,723
350,000 85,582 114,109 142,637 171,164 199,691
425,000 104,426 139,234 174,043 208,851 243,660
500,000 123,269 164,359 205,449 246,539 287,629
- ----------------------------------------------------------------------------
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.
<PAGE>
Retirement benefits are based on an employee's earnings for the five
highest consecutive of the last ten calendar 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 or,
since January 1, 1999, the Modine 401(k) Retirement 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. Johnson, Rayburn,
Baker, Howard, and Frangopoulos are twenty-eight, twenty-two, twenty-
five, thirty-nine, and twenty-eight 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 $15,000 per month, if they become disabled.
Employment Agreements, Termination
and Change-of-Control Arrangements
- ----------------------------------
The Company entered into an employment contract effective October 16,
1996, with Mr. D. R. Johnson covering his employment for a two-year term;
the change-of-control provisions were amended May 20, 1999. The contract
is automatically extended annually for an additional year so that the
remaining contract term is between one and two 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.
Johnson plus bonus participation. Mr. Johnson will continue to receive
all employee benefits, plus supplements to his retirement pension and
401(k) benefits designed to provide him with benefits which otherwise
are reduced by statutory limitations on qualified benefit plans. In the
event of disability, salary continuation is provided at a level of one
hundred percent for the first twelve months and up to sixty percent
thereafter with no maximum dollar amount.
In the event of a "Change-in-Control," as defined in the
Agreement, as amended, at any time during the 24 months after a change
in control occurs, if Mr. Johnson is terminated without "Good Cause" or
if Mr. Johnson terminates the Agreement, a 36-month "Severance Period"
<PAGE>
is triggered during which Mr. Johnson is entitled to receive an amount
equal to three times the greater of (a) the sum of his base salary and
target bonus or (b) the sum of his five-year average base salary and
five-year average actual bonus payable in a lump sum within 60 days
after the date of termination of employment. Mr. Johnson will also
receive an amount equal to the pro-rata portion of the target bonus for
the calendar year in which his employment terminated, plus applicable
benefits and credited service for pension purposes for the 36-month
period. In the event of Mr. Johnson's death, such amounts will be
payable to his estate. Any stock options or stock awards will
immediately vest, or restrictions lapse, as the case may be, on the
date of termination. In the event a change in control occurs, and if
payments made to Mr. Johnson are subject to the excise tax provisions
of Section 4999 of the Internal Revenue Code, Mr. Johnson will be
entitled to receive a lump-sum payment (the "Gross-up Payment"),
sufficient to cover the full cost of such excise taxes and his federal,
state and local income and employment taxes on the additional payment.
Mr. D. B. Rayburn has a similar Change-in-Control Agreement on
substantially the same terms and conditions as stated for Mr. Johnson.
Mr. Rayburn's Agreement was entered into on May 20, 1999.
As of February 26, 1997, the Company entered into change-in-
control agreements (the "Change-in-Control Agreements") with the named
executive officers (except Mr. Johnson and Mr. Rayburn) and certain
other key employees.
The Change-in-Control Agreements were amended and restated May 20,
1999. In the event of a "Change-in-Control," as defined in the
Agreements, as amended and restated, certain key executives (including
the named executive officers other than Mr. Johnson and Mr. Rayburn),
if terminated by the Company for any reason other than "Good Cause," or
if terminated by the executive for "Good Reason" within 24-months after
the change in control occurs, or if terminated by the executive for any
reason during the 13th month after the change in control, will trigger
a 24-month "Severance Period" during which the executive is entitled to
receive an amount equal to two times the greater of (a) the sum of his
base salary and target bonus or (b) the sum of his five-year average
base salary and five-year average actual bonus payable in a lump sum
within 60 days after the date of termination of employment. The
executive will also receive an amount equal to the pro-rata portion of
the target bonus for the calendar year in which his employment
terminated, plus applicable benefits and credited service for pension
purposes for the 24-month period. In the event of the executive's
death, such amounts will be payable to his estate. Any stock option or
stock awards will immediately vest, or restrictions lapse, as the case
may be, on the date of termination. In the event a change in control
occurs, and if payments made to the executive are subject to the excise
tax provisions of Section 4999 of the Internal Revenue Code, the
executive will be entitled to receive a lump-sum payment (the "Gross-up
Payment"), sufficient to cover the full cost of such excise taxes and
the executive's federal, state and local income and employment taxes on
the additional payment.
One other key executive also has a Change-in-Control Agreement
that was amended and restated on May 20, 1999. This agreement is
substantially identical to the change-in-control agreements previously
described for Mr. Johnson and Mr. Rayburn.
<PAGE>
2. 1994 INCENTIVE COMPENSATION PLAN
In January, 1994 the Board adopted, and the shareholders
subsequently approved on July 20, 1994, the Company's 1994 Incentive
Compensation Plan (the "Plan"). There are presently 1,517,100 shares
of the Company's common stock authorized for issuance under the Plan.
The Board is re-submitting the Plan for shareholder approval so
that the award of stock-based and cash incentives to covered employees
may continue to be structured so as to comply with the requirements of
Section 162(m) of the Internal Revenue Code of 1986. Under Section
162(m) of the Internal Revenue Code of 1986, as amended, and the
regulations promulgated thereunder (together, "Section 162(m)"),
compensation paid to certain executive officers ("covered employees")
in excess of $1 million is not deductible by the Company unless such
compensation is performance-based, as defined by Section 162(m), and
certain other requirements are met. If the Plan is not approved by the
shareholders, the Compensation Committee will consider whether it is
appropriate to take any alternate action or actions that would allow
the Company to award annual incentives to covered employees that are
fully deductible by the Company under the Internal Revenue Code.
Because executive officers (who may also be members of the Board)
are eligible to be designated as participants and to receive awards under
the Plan, each of them has an interest in the adoption of this proposal.
Summary
The following is a general description of the principal features
of the Plan. It is qualified in its entirety by reference to the
complete text of the Plan, which is attached to the proxy statement as
Exhibit A and is incorporated herein by reference.
Term. The Plan was effective as of July 20, 1994. The Plan has
----
no fixed expiration date; however, no stock options or other benefits
included in the Plan may be granted after July 19, 2004. However,
because the Committee will have discretion under the Plan to fix
performance goals annually, current applicable law requires that the
Plan be submitted to shareholders for approval every five years in
order to continue to permit payment of incentives that qualify as
performance-based compensation under Section 162(m).
Administration. The Plan is administered by a committee
--------------
("Committee") of at least two outside directors (as defined under
federal securities laws and Section 162(m)). The Committee has the
exclusive authority to interpret, administer, and make determinations
under the Plan, including the exclusive authority to select
participants and approve incentive awards under the Plan.
Eligible Participants. Participation in the Plan is limited to
---------------------
key executives of the Company and/or its subsidiaries who are
designated by the Committee as participants for a given performance
period (a calendar year or other period designated by the Committee).
As the participants in the Plan will be selected by the Committee
and management in their discretion, it is not possible to indicate the
<PAGE>
number or names of positions or participants who may be eligible for
awards or benefits under the Plan and no allocation or other
determination has been made prospectively as to the types or amounts of
awards or benefits that may be made. During 1998-1999, options to
purchase 288,000 shares were granted to employees as a group, including
90,000 shares granted to current named executive officers as a group.
In 1998-1999, no restricted stock awards were granted to current named
executive officers or other employees. For additional information on
cash bonuses, restricted stock awards, and stock options provided to
the named executive officers, refer to the Summary Compensation Table
on page 9 of this Proxy Statement, Footnote 3 on page 10, and the
Option Grants in Last Fiscal Year Table on page 14.
Approximately 90 executives are currently eligible to be selected
by the Committee.
Performance Criteria. Under the Plan, the Committee may establish
--------------------
one or more objective performance goals for each year (or other
performance period), based on one or more of the following criteria as
applied to the relevant business unit or units or to the Company as a
whole, or to any combination thereof: Earnings before interest, taxes,
depreciation and amortization ("EBITDA"); earnings before interest and
taxes ("EBIT"); free cash flow; return on assets (ROA); return on
investment (ROI); return on sales (ROS); economic profit/economic value
added (EP/EVA); earnings growth; sales growth; earnings per share
growth; and stock price. The formulas may include or exclude items to
measure the specific objectives, such as losses from discontinued
operations, extraordinary gains and losses, the cumulative effect of
accounting changes, acquisitions or divestitures, foreign exchange
impacts and any unusual, nonrecurring gain or loss.
The Committee may also establish target and maximum incentive
award opportunities for the performance period for each participant and
will establish the objective formula or standard that the Committee
will use to determine the amount of incentive compensation that may be
payable, to the extent that the performance goals are achieved.
Appropriate adjustments may be made by the Committee in the foregoing
to reflect the impact of acquisitions, divestitures, changes in
accounting standards, or unusual or extraordinary events. These
criteria apply to "covered employees" as defined in Section 162(m),
which includes the Company's Chief Executive Officer and the four other
most highly compensated executive officers of the Company.
After the close of the performance period, the Committee will
determine the extent to which the performance goal or goals have been
achieved and incentive compensation that may be payable. The Committee
then has discretion to approve awards as it deems appropriate up to
these amounts; that is, the Committee may exercise its discretion to
reduce, but not to increase, the incentive award or awards that would
be payable on the basis of the level of performance achieved.
The Plan provides that any one participant may receive no more
than 150,000 shares in any one year. As discussed above, awards or
benefits under these terms will be based on the Company's future
performance. Accordingly, the amount of long-term incentive
compensation to be paid in the future to the Company's current and
future covered executives under these terms cannot be determined at
<PAGE>
this time, as actual amounts will depend on the size of such awards and
on actual performance. For an understanding of the size and structure
of these awards and benefits in the past, see the Summary Compensation
Table on page 9 of this Proxy Statement, Footnote 3 on page 10, and the
Option Grants in Last Fiscal Year Table on page 14. Additionally, the
Officer Nomination and Compensation Committee Report on Executive
Compensation on page 10 explains the Committee's current compensation
philosophy and the current performance criteria used for establishing
bonus, stock option, and restricted stock award compensation.
Benefits.
--------
Stock-based or cash benefits ("Benefits") under the Plan may be
granted, awarded, or paid in any one or a combination of Stock Purchase
Agreements, Stock Awards, Stock Options (incentive stock options and
non-qualified stock options), Stock Appreciation Rights, Restricted
Stock, Performance Unit Plans, Performance Share Plans, Book Value
Stock Plans, and annual Stock or Cash Incentive Plans.
The Company may enter into agreements with employees for the
present or future sale of shares to them at such prices as the
Committee may determine. The shares subject to any such agreement may
not be transferred to the employee (and the employee will have no
ownership right therein) until payment has been received in full.
Agreement may contain performance goals and restrictions on
transferability for stated periods and/or provisions obligating the
employee to resell his shares to the Company under stated
circumstances. Such restrictions and obligations will normally lapse
at stated intervals.
Stock awards will consist of shares to employees as a bonus for
services rendered and without other payment. It is anticipated that
such awards will be subject to performance goals and restrictions on
transferability for stated periods and/or forfeiture if the employee's
employment with the Company terminates. Such restrictions and risk of
forfeiture will normally lapse at stated intervals.
Stock options will consist of options (either incentive stock
options or non-qualified stock options) to purchase shares of common
stock. The Compensation Committee will establish the time or times at
which options may be exercised and whether all of the options may be
exercisable at one time or in increments over time. The option price
or procedure for setting the option price shall be set by the
Compensation Committee at the time of the granting of an option. For
incentive stock options, the option price may not be less than the fair
market value of the Company's stock on the date of grant. For non-
qualified stock options, the option price may be less than, equal to,
or greater than the fair market value of the Company's stock on the
date of grant. However, options granted at less than fair market value
may not qualify as performance-based compensation under Section 162(m)
and might be partially or wholly non-deductible if exercised by
individuals who are named executive officers in the Company's proxy
statement for the taxable year of exercise. The Committee also has the
authority to reset the price of any stock option after the original
grant and before exercise. In the event of stock dividends, splits,
and similar capital changes, the 1994 Plan provides for appropriate
adjustments in the number of shares available for options and the
number and option prices of shares subject to outstanding options. The
<PAGE>
term of a stock option will be determined by the Committee; however, an
incentive stock option will have a term of no more than ten years from
the date of the grant. Under certain circumstances, extensions or
other modifications to outstanding options might result in
disqualification of an option as performance-based compensation and
loss of deductions if the individual is a named executive officer in
the year in which the option is exercised. The purchase price of
option shares may be paid in cash, Company stock, a combination of
Company stock and cash, or such other legal and appropriate forms or
means that the Committee may determine. For non-qualified options, the
option holder must also pay the Company, at the time of purchase, the
amount of federal, state and local withholding taxes required to be
withheld by the Company. These taxes may be settled in cash or with
Company stock, including stock that is part of the award or that is
received upon exercise of the stock option that gives rise to the
withholding requirement. Shares of the Company's common stock also may
be used by participants for payment of the option price or satisfaction
of withholding tax obligations. The Plan also permits other forms of
payment if authorized by the Board and consistent with applicable law
and regulations.
Stock appreciation rights may be granted under the Plan with
respect to options granted concurrently or previously under the Plan.
Each stock appreciation right will permit the holder thereof to receive
up to 100%, or such lesser amount as set by the Committee, of the
difference between the market price (on the date of exercise) of the
shares to which it relates and the option price thereof. A stock
appreciation right will be exercisable at the time and to the extent
the option to which it relates is exercisable. Holders of stock
appreciation rights will be permitted to exercise the right or the
related option, but not both. Upon exercise, rights will be paid in
common stock of the Company or cash, or a combination thereof, as
determined by the Committee. Any exercise will reduce the shares
issuable under the Plan under which the related option was granted by
the number of shares with respect to which the right is exercised, even
if payment is made partly or wholly in cash.
Restricted stock may be subject to performance goals and becomes
vested in approximately equal installments over a period of time
specified from the date of grant thereof, with each such installment to
mature annually. Each installment becomes vested only if earned out by
the recipient by meeting the specified goals and remaining in the
employment of the Company, subject to certain exceptions.
A Performance Unit Plan will provide for units, contingently
granted, which entitle the employee to cash payments or their
equivalent in shares of stock valued at the time of the grant (i.e.,
the unit value remains constant and does not fluctuate with changes in
the market value of the stock), if predetermined objectives are met.
A Performance Share Plan will provide for artificial shares,
contingently granted, which entitle the employee to actual shares of
common stock or their cash equivalent at the time of payment (i.e., the
unit value may appreciate or decline depending on future market value
of the stock), if predetermined objectives are achieved.
A Book Value Stock Plan will permit the employee to purchase
shares of common stock at book value. Such "book value" stock may be
required to be resold to the Company upon termination of the employment
<PAGE>
relationship, or at other specified times at the then-book value of the
stock. On March 31, 1999, the book value of the Company's common stock
was $15.35 per share.
An annual Stock or Cash Incentive Plan will allow the employee to
receive, in addition to the employee's base salary, annual stock or
cash bonuses (portions of which may be paid quarterly over the course
of the fiscal year) based upon objective performance goals and the
financial performance of the Company.
As of March 31, 1999, the closing price of the Company's common
stock as reported on NASDAQ was $28.0625 per share.
Federal Income Tax Consequences Relating to the Plan
----------------------------------------------------
The federal income tax consequences of an employee's participation
in the Plan are complex and subject to change. The following
discussion is only a summary of the general rules applicable to stock
based compensation.
Incentive Stock Options
-----------------------
If an option granted under the Plan is treated as an incentive
stock option, the optionee will not recognize any income upon either
the grant or the exercise of the option and the Company will not be
allowed a deduction for federal tax purposes. Upon a sale of the
shares, the tax treatment to the optionee and the Company will depend
primarily upon whether the optionee has met certain holding period
requirements at the time he or she sells the shares. In addition, as
discussed below, the exercise of an incentive stock option may subject
the optionee to alternative minimum tax liability.
If an optionee exercises an incentive stock option and does not
dispose of the shares received within two years after the date of the
grant of such option or within one year after transfer of the shares to
him or her, any gain realized upon disposition will be characterized as
long-term capital gain, and in such case, the Company will not be
entitled to a federal tax deduction. If the optionee disposes of the
shares either within two years after the date the option is granted or
within one year after the transfer of the shares to him or her, such
disposition will be treated as a disqualifying disposition and an
amount equal to the lesser of (1) the fair market value of the shares
on the date of exercise minus the purchase price, or (2) the amount
realized on the disposition minus the purchase price, will be taxed as
ordinary income to the optionee in the taxable year in which the
disposition occurs. The excess, if any, of the amount realized upon
disposition over the fair market value at the time of the exercise of
the option will be treated as long-term capital gain if the shares have
been held for more than one year following the exercise of the option.
In the event of a disqualifying disposition, the Company may withhold
income taxes from the optionee's compensation with respect to the
ordinary income realized by the optionee as a result of the
disqualifying disposition.
The exercise of an incentive stock option may subject an optionee
to alternative minimum tax liability because the excess of the fair
market value of the shares at the time an incentive stock option is
<PAGE>
exercised over the purchase price of the shares is included in income
for purposes of the alternative minimum tax. Consequently, an optionee
may be obligated to pay alternative minimum tax in the year he or she
exercises an incentive stock option.
In general, there will be no federal tax consequences to the
Company upon the grant, exercise or termination of an incentive stock
option. However, in the event an optionee sells or disposes of stock
received upon the exercise of an incentive stock option in a
disqualifying disposition, the Company will be entitled to a deduction
for federal income tax purposes in an amount equal to the ordinary
income, if any, recognized by the optionee upon disposition of the
shares, provided that the deduction is now allowed under the Code.
Non-qualified Stock Options
---------------------------
Non-qualified stock options granted under the Plan do not qualify
as "incentive stock options" and will not qualify for any special tax
benefits to the optionee. An optionee generally will not recognize any
taxable income at the time he or she is granted a non-qualified option.
However, upon its exercise, the optionee will recognize ordinary income
for federal tax purposes measured by the excess of the then fair market
value of the shares over the option price. The income realized by the
optionee will be subject to income tax withholding.
The optionee's basis for determination of gain or loss upon the
subsequent disposition of shares acquired upon the exercise of a non-
qualified stock option will be the amount paid for such shares plus any
ordinary income recognized as a result of the exercise of such option.
Upon disposition of any shares acquired pursuant to the exercise of a
non-qualified stock option, the difference between the sale price and
the optionee's basis in the shares will be treated as a capital gain or
loss and will be characterized as long-term capital gain or loss if the
shares have been held for more than one year at the date of their
disposition.
In general, there will be no federal tax consequences to the
Company upon the grant or termination of a non-qualified stock option
or a sale or disposition of the shares acquired upon the exercise of a
non-qualified stock option. However, upon the exercise of a non-
qualified stock option, the Company will be entitled to a deduction for
federal income tax purposes equal to the amount of ordinary income that
an optionee is required to recognize as a result of the exercise,
provided that the deduction is not disallowed under the Code.
Stock Appreciation Rights
-------------------------
No income will be recognized by the recipient of a stock
appreciation right until shares representing the amount of the
appreciation or the cash equivalent, if so elected, are transferred to
the recipient pursuant to the exercise of the right. The amount of
such income will be equal to the fair market value of such shares on
the exercise date (or the cash equivalent), and will be ordinary
income. Subject to the applicable provisions of the Code, the Company
will be entitled to a deduction at the same time and in the same amount
as the employee realizes ordinary income as a result of the exercise of
the right.
<PAGE>
Stock Awards
------------
Generally, at the time the substantial risk of forfeiture
terminates with respect to a stock award, the then fair market value of
the stock will constitute ordinary income to the employee. Subject to
the applicable provisions of the Code, a deduction for federal income
tax purposes will be allowable to the Company in any amount equal to
the compensation realized by the employee.
Performance Unit Awards
-----------------------
The grant of a performance unit award generally will result in
taxable income to the employee on the earlier of actual receipt of
compensation pursuant to the award or when such compensation is
credited to the employee's account, or set apart, or otherwise made
available. Subject to the applicable provisions of the Code, a
deduction for federal income tax purposes will be allowable to the
Company in an amount equal to the compensation realized by the
employee.
Tax Deduction. The Company will be entitled to a deduction for
-------------
federal income tax purposes at the same time the participant recognizes
ordinary income under the rules described above. Under Section 162(m)
of the Code, there is a one million dollar cap on the amount of
compensation paid to certain executives ("covered employees") and that
may be deducted by the Company. However, excluded from the one million
dollar deduction limitation are certain shareholder approved
performance-based compensation plans, provided certain conditions are
met. Tax deductions resulting from the receipt of benefits granted by
the Committee under the Plan are intended to qualify for the exclusion.
Other Provisions. In the event of a change in control, as defined
----------------
and determined by the Committee, the Committee may deem all or part of
any incentive award opportunities to have been earned and/or may waive
or modify all or any part of any restrictions or conditions, all on
such basis as the Committee determines, and incentive awards may then
be paid, all on such basis, at such time, in such form, and subject to
such terms and conditions as the Committee may prescribe. During the
participant's lifetime, payments or distributions under the Plan may be
received only by the participant or his or her legal representative.
Shares of Restricted Stock during the applicable restriction period,
other derivative securities, rights to receive deferral payments and
any other rights or benefits under the Plan are not transferable or
assignable other than certain limited transfers on the participant's
death. The shares available under the Plan and the terms of incentive
award opportunities, are subject to adjustment to reflect certain
changes in the Company's Stock. The Plan also provides for tax
withholdings and for non-uniform determinations by the Committee, and
also permits the Committee to accelerate the time at which all or any
part of cash bonus or stock awards may be exercised or the time when
all or any part of deferrals and/or derivative securities will be paid
and permits the Company and its subsidiaries to compensate any key
executives and/or employees under separate bonus or incentive plans or
other compensation arrangements outside of the Plan.
<PAGE>
The Board of Directors or the Committee can amend the Plan from time
to time; however, certain amendments to the material terms of the Plan
would require shareholder approval for purposes of qualifying payments
under the Plan under Section 162(m) of the Code. The Plan can be terminated
or suspended at any time by the Board of Directors or the Committee.
The Board of Directors recommends that shareholders vote FOR re-
approval of the 1994 Incentive Compensation Plan.
The affirmative vote of a majority of the votes cast by the
shareholders is required for re-approval of the Plan.
TRANSACTIONS
In the regular course of business since April 1, 1998, 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 year 1999-2000.
OTHER INFORMATION
Independent Accountants
- -----------------------
PricewaterhouseCoopers LLP have been the independent certified
public accountants since 1935 and were selected as the Company's
auditors for the fiscal year ended March 31, 1999. They are appointed
by the Board of Directors of the Company and report to the Audit
Committee. A representative of PricewaterhouseCoopers LLP will not be
attending the 1999 Annual Meeting of Shareholders.
Section 16(a) Beneficial Ownership Reporting Compliance
- -------------------------------------------------------
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, 1998, to
March 31, 1999, 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 1999 annual meeting. Should any
<PAGE>
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 2000
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 5, 2000.
ANNUAL REPORT
The Annual Report of the Company, including financial statements
for the fiscal year ended March 31, 1999, is enclosed.
W. E. PAVLICK, Secretary
<PAGE>
EXHIBIT A
MODINE MANUFACTURING COMPANY
1994 INCENTIVE COMPENSATION PLAN
(as amended January 15, 1997)
(as amended January 21, 1998)
1. PURPOSE. The Modine Manufacturing Company 1994 Incentive
Compensation Plan (the "Plan") is intended to provide incentives which
will attract and retain highly competent persons as officers and key
employees of Modine Manufacturing Company (the "Company") and its
majority owned subsidiaries by providing them with opportunities to
acquire Common Stock of the Company ("Common Stock") , receive monetary
payments based on the value of such shares pursuant to the stock-based
benefits ("Benefits") described herein, or receive cash or Common Stock
bonuses upon attainment of specified financial goals of the Company.
2. ADMINISTRATION.
(a) Procedure. The Board of Directors of the Company shall
---------
supervise and administer the Plan. Any questions of interpretation of
the Plan or of any Benefits issued under it shall be determined by the
Board and such determination shall be final and binding upon all
persons.
(b) Committee. Any or all powers and discretion vested in the
---------
Board under this Plan may be exercised by a committee of at least two
directors (the "Committee") authorized by the Board to do so.
Composition of the Committee is intended to satisfy the requirements of
Rule 16 b-3 of the Securities and Exchange Act of 1934 (the "Exchange
Act") and Section 162(m) of the Internal Revenue Code. A majority of
members of the Committee shall constitute a quorum, and all
determinations of the Committee shall be made by a majority of its
members. Any determination of the Committee under the Plan may be made
without notice or meeting of the Committee, by a writing signed by a
majority of the Committee members.
(c) Powers of the Board. Subject to the provisions of the
-------------------
Plan, the Board shall have the authority, in its discretion: (i) to
grant or award Benefits under the Plan; (ii) to determine, in
accordance with the provisions of the Plan, the fair market value of
the Common Stock; (iii) to determine, in accordance with the provisions
of the Plan, the exercise price per share of options to be granted;
(iv) to determine the employees to whom, and the time or times at
which, options or other Benefits shall be granted and the number of
shares to be represented by each option or other Benefit; (v) to
interpret the Plan; (vi) to prescribe, amend, and rescind rules and
regulations relating to the Plan; (vii) to determine the terms and
provisions of each option or other Benefit granted or awarded (which
need not be identical) and, with the consent of the holder thereof,
modify or amend each option or other Benefit; (viii) to reduce the
exercise price per share of outstanding and unexercised options; (ix)
to accelerate or defer (with the consent of the optionee) the exercise
date of any option; (x) to authorize any person to execute on behalf of
<PAGE>
the Company any instrument required to effectuate the grant or award of
an option or other Benefit; and (xi) to make all other determinations
deemed necessary or advisable for the administration of the Plan.
(d) Effect of Decisions. All decisions, determinations, and
-------------------
interpretations of the Board, or the Committee, as the case may be,
shall be final and binding on all participants and any other holders of
any Benefits granted or awarded under the Plan.
(e) Section 16 Compliance. With respect to persons subject to
---------------------
Section 16 of the Exchange Act, transactions under this Plan are
intended to comply with all applicable conditions of Rule 16b-3 or its
successors under the Exchange Act. To the extent any provision of the
Plan or action by the Committee fails to so comply, it shall be deemed
null and void, to the extent permitted by law and deemed advisable by
the Committee. In addition, to the extent a participant (who is also a
Reporting Person under Rule 16b-3 or its successors) engages in an
opposite-way transaction within six months that jeopardizes the
exemption, it shall be deemed null and void.
3. PARTICIPANTS; GENERAL TERMS AND CONDITIONS.
(a) Employees. Participants will consist of such key employees
---------
(including officers) of the Company or any or all of its present or
future majority owned subsidiaries as the Board of Directors in its sole
discretion determines to be mainly responsible for the success and future
growth and profitability of the Company and whom the Board of Directors
may designate from time to time to receive Benefits under the Plan.
Benefits may be granted under this Plan to persons who have received
options or other Benefits under this or other plans of the Company.
(b) Maximum Number. The maximum number of shares with respect
--------------
to which a Benefit may be granted or awarded to any participant in any
one year of the Company shall not exceed one hundred fifty thousand
(150,000) shares.
(c) General Terms and Conditions. The Committee shall
----------------------------
determine the time or times at which Benefits shall be granted or
awarded, the number of Benefits granted or awarded (subject to the
limitation of this Section 3(b) above), and such other terms and
conditions of the Benefits in addition to those set forth in this Plan
which comply with applicable Internal Revenue Service, Securities and
Exchange Commission, or other laws and regulations, all as the
Committee deems appropriate.
4. BENEFITS.
(a) Types. Benefits under the Plan may be granted in any one
-----
or a combination of:
(1) Stock Purchase Agreements. Stock Purchase Agreements
-------------------------
will consist of agreements for the present or future sale of Common
<PAGE>
Stock by the Company to a participant at such prices and on such terms
and conditions as the Board or Committee deems appropriate.
(2) Stock Awards or Bonuses. Stock Awards or Bonuses will
-----------------------
consist of shares of Common Stock transferred to participants with or
without other payment therefor as a bonus for services rendered or to
be rendered to the Company and its majority owned subsidiaries.
(3) Stock Options (incentive stock options and
------------------------------------------
non-qualified stock options with or without tax offset
------------------------------------------------------
bonuses and discounted stock options):
-------------------------------------
(i) Exercise Price. Stock Options will consist of
--------------
options to purchase shares of Common Stock at purchase prices
determined by the Board or Committee at the date such option is
granted. Except regarding Incentive Stock Options, such option price
may be less than the fair market value of Common Stock on the date of
grant, but in no event shall the option price be less than the par
value of the shares. The fair market value shall be the closing price
per share of Common Stock on the National Association of Securities
Dealers Automated Quotation ("NASDAQ") National Market System on the date
of grant. If the Common Stock ceases to be listed on the NASDAQ National
Market System, the Board or Committee shall designate an alternative
method of determining the fair market value of the Common Stock.
(ii) Term. Such options will be exercisable not later
----
than ten years after the date they are granted and will terminate not
later than three years after termination of employment for any reason
other than death.
(4) Stock Appreciation Rights: Stock Appreciation Rights,
-------------------------
granted in conjunction with a stock option, will consist of rights to
receive an amount equal to the appreciation in fair market value since
the date of grant in lieu of exercising the corresponding stock option.
(5) Restricted Stock: Restricted Stock will consist of
----------------
shares of Common Stock which are transferred to the participant but
which carry restrictions such as a prohibition against disposition or
an option to repurchase in the event of employment termination, and may
be subject to a substantial risk of forfeiture. Shares of Restricted
Stock may be granted to the participant at no charge, or they may be
sold to the participant. Restrictions on the shares of stock may lapse
over a period of time. As the restrictions lapse, the participant has
unrestricted shares which then may be sold or transferred. If,
however, the restrictions are violated prior to their lapse, those
shares still subject to such restrictions are forfeited by the
participant, and must be returned to the Company.
(6) Performance Unit Plans: A Performance Unit Plan will
----------------------
provide for units, contingently granted, which entitle the participant
<PAGE>
to cash payments or their equivalent in shares of stock valued at the
time of the grant (i.e., the unit value remains constant and does not
fluctuate with changes in the market value of the stock), if
predetermined objectives are met.
(7) Performance Share Plans: A Performance Share Plan will
-----------------------
provide for artificial shares, contingently granted, which entitle the
participant to actual shares of Common Stock or their cash equivalent
at the time of payment (i.e., the unit value may appreciate or decline
depending on future market value of the stock), if predetermined
objectives are achieved.
(8) Book Value Stock Plans: A Book Value Stock Plan will
----------------------
permit the participant to purchase shares of Common Stock at book
value. Such "book value" stock may be required to be resold to the
Company upon termination of the employment relationship, or at other
specified times at the then book value of the stock.
(9) Annual Stock or Cash Incentive Plans. An annual Stock
------------------------------------
or Cash Incentive Plan will allow the participant to receive, in
addition to the participant's base salary, annual stock or cash bonuses
(portions of which may be paid quarterly over the course of the fiscal
year) based upon the financial performance of the Company. The
performance measurement for the stock or cash bonus will be determined
by the Board or Committee. The maximum annual formula award may be
fixed at up to one hundred twenty percent of the participant's base
salary with the Board or Committee designating the percentage level of
participation and maximum bonus for each officer of the Company while
management designates the percentage level of participation and maximum
bonus for other participants. The Board or Committee will determine
whether the bonuses will be payable to participants in stock or cash or
a combination of stock and cash.
(b) Written Agreement. Each grant or award of a Benefit shall
-----------------
be evidenced by an appropriate written agreement, the form of which
shall be consistent with the terms and conditions of the Plan and
applicable law and shall be signed by an officer of the Company and the
participant.
5. SHARES RESERVED UNDER THE PLAN. There is hereby reserved for
issuance under the Plan an aggregate of three million (3,000,000)
shares of Common Stock (except as supplemented hereinafter provided in
Section 8), $0.625 par value, which may be newly-issued shares,
authorized but heretofore unissued shares or shares reacquired by the
Company, including shares purchased on the open market. Any shares
subject to the options, rights, agreements, plans, or awards as
described hereinafter or issued under such options, rights, agreements,
plans, or awards may thereafter be subject to new options, rights,
agreements, plans or awards under this Plan if there is a lapse,
expiration or termination of any such options, rights, agreements,
plans or awards prior to issuance of the shares or payment of the
equivalent or if shares are issued under such options, rights,
agreements, plans, or awards, and thereafter are reacquired by the
Company pursuant to rights reserved by the Company upon issuance
thereof; provided, however, issued shares reacquired by the Company may
<PAGE>
only be subject to new options, rights, agreements, plans, or awards if
the participant received no benefit of ownership from the shares.
6. FORM OF PAYMENT. Payments required, if any, upon a
participant's exercise of Benefits under the Plan may be made in the
form of: (a) cash; (b) Company stock; (c) a combination of Company
stock and cash; or (d) such other forms or means which the Committee
shall determine in its discretion and in such manner as is consistent
with the Plan's purpose and applicable Internal Revenue Service,
Securities and Exchange Commission, or other laws or regulations.
7. WITHHOLDING TAXES. No later than the date as of which an
amount first becomes includible in the gross income of the participant
for federal income tax purposes with respect to any Benefit under the
Plan or with respect to any exercise of any stock option granted under
the Plan, the participant shall pay to the Company, or make
arrangements satisfactory to the Company regarding the payment of, any
federal, state, local or foreign taxes of any kind required by law to
be withheld. Such withholding obligations may be settled with Common
Stock, including Common Stock that is part of the award or that is
received upon the exercise of the stock option that gives rise to the
withholding requirement. The obligations of the Company under the Plan
shall be conditional upon such payment or arrangements, and the Company
shall, to the extent permitted by law, have the right to deduct any
such taxes from any payment otherwise due to the participant. The
Company may establish such procedures as it deems appropriate,
including the making of irrevocable elections or the timing of the use
of Common Stock, for the settlement of its withholding obligations.
8. ADJUSTMENT PROVISIONS.
(a) Changes in Capitalization. If the Company shall at any time
-------------------------
change the number of issued shares of Common Stock without new
consideration to the Company (by stock dividends, stock splits, or
similar transactions), the total number of shares reserved for issuance
under this Plan and the number of shares covered by each outstanding
Benefit shall be adjusted so that the aggregate consideration payable
to the Company, if any, and the value of each such Benefit shall not be
changed.
(b) Reorganization, Sale, etc. Benefits may also contain
--------------------------
provisions for their continuation, acceleration, immediate vesting, or
for other equitable adjustments after changes in the Common Stock
resulting from reorganization, sale, merger, consolidation,
dissolution, liquidation, or similar occurrences.
(1) Substitutions and Assumptions. If the Company acquires
-----------------------------
an entity which has issued and outstanding stock options or other
rights, the Company may substitute stock options or rights for options
or rights of such entity, including options or other rights to acquire
stock at less than 100% of the fair market price of the stock at grant.
The number and kind of such stock options and other rights shall be
determined by the Committee and the total number of shares reserved for
issuance under this Plan shall be appropriately adjusted consistent
with such determination and in such manner as the Committee may deem
equitable to prevent substantial dilution or enlargement of the
<PAGE>
Benefits granted to, or available for, present or future participants
of this Plan. The number of shares reserved for issuance pursuant to
Section 5 may be increased by the corresponding number of options or
other benefits assumed and, in the case of a substitution, by the net
increase in the number of shares subject to options or other benefits
before and after the substitution.
9. NONTRANSFERABILITY. Benefits (other than non-qualified stock
options) granted under the Plan to an employee shall not be
transferable by the participant otherwise than by will or the laws of
descent and distribution, or pursuant to a qualified domestic relations
order, and shall be exercisable, during the participant's lifetime,
only by the participant; non-qualified stock options granted under the
Plan to a participant may be assignable or transferable by the
participant to or for the benefit of a member of the participant's
family. In the event of the death of a participant during employment
or prior to the termination of any Benefit held by the participant
hereunder, each Benefit theretofore granted to the participant shall be
exercisable or payable to the extent provided therein but not later than
one year after the participant's death (and not beyond the stated duration
of the Benefit). Any such exercise or payment shall be made only:
(a) By or to the executor or administrator of the estate of the
deceased participant or the person or persons to whom the deceased
participant's rights under the Benefit shall pass by will or the laws
of descent and distribution; and
(b) To the extent, if any, that the deceased participant was
entitled at the date of the participant's death.
10. OTHER PROVISIONS. The award of any Benefit under the Plan may
also be subject to such other provisions (whether or not applicable to
the Benefit awarded to any other participant) as the Board or Committee
determines appropriate, including without limitation, provisions for
the installment purchase of Common Stock under such Benefits,
provisions to assist the participant in financing the acquisition of
Common Stock, provisions for prepayment at the participant's election
of the purchase price of Common Stock under such Benefits, provisions
for the forfeiture of, or restrictions on resale or other disposition
of shares acquired under such Benefits, provisions giving the Company
the right to repurchase shares acquired under any form of Benefit in
the event the participant elects to dispose of such shares, provisions
to comply with federal and state tax or securities laws, or
understandings or conditions as to the participant's employment in
addition to those specifically provided for under the Plan or written
agreement.
11. TENURE. A participant's right, if any, to continue to serve
the Company and its subsidiaries as an officer, employee, or otherwise,
shall not be enlarged or otherwise affected by designation as a
participant under the Plan.
12. EMPLOYEES IN FOREIGN COUNTRIES. The Board or Committee shall
have the authority to adopt such modifications, procedures, and
subplans as may be necessary or desirable to comply with provisions of
the laws of foreign countries in which the Company or its subsidiaries
may operate to assure the viability of the Benefits granted or awarded
to employees employed in such countries and to meet the objectives of
the Plan.
<PAGE>
13. DURATION, AMENDMENT AND TERMINATION. No Benefit shall be
granted more than ten years after the date of adoption of this Plan;
provided, however, that the terms and conditions applicable to any
Benefit granted within such period may thereafter be amended or
modified by mutual agreement between the Company and the participant or
such other persons as may then have an interest therein. Also, by
mutual agreement between the Company and a participant hereunder, or
under any future plan of the Company, Benefits may be granted to such
participant in substitution and exchange for, and in cancellation of,
any Benefits previously granted such participant under this Plan, or
any benefit previously or thereafter granted to him under any future
plan of the Company. The Board or Committee may amend the Plan from
time to time or terminate the Plan at any time. However, no action
authorized by this paragraph shall reduce the amount of any existing
Benefit or change the terms and conditions thereof without the
participant's consent. No amendment of the Plan shall, without
approval of the stockholders of the Company, (i) increase the total
number of shares which may be issued under the Plan or increase the
amount or type of Benefits that may be granted under the Plan; (ii)
change the minimum purchase price, if any, of shares of Common stock
which may be made subject to Benefits under the Plan; or (iii) modify
the requirements as to eligibility for Benefits under the Plan.
14. UNFUNDED STATUS OF PLAN. It is presently intended that the
Plan constitute an "unfunded" plan for incentive compensation. The
Board or Committee may authorize the creation of trusts or other
arrangements to meet the obligations created under the Plan to deliver
Common Stock or make payments; provided, however, that, unless the
Board or Committee otherwise determines, the existence of such trusts
or other arrangements is consistent with the "unfunded" status of the
Plan.
15. SHAREHOLDER APPROVAL. The Plan has been adopted by the Board
of Directors on March 15, 1994, and shall be effective upon approval by
the shareholders of the Company. Such adoption shall be null and void
if shareholder approval is not obtained within twelve months of the
adoption of the Plan by the Board of Directors.
<PAGE>
APPENDIX
Annual Meeting of Stockholders
Wednesday, July 21, 1999
9:30 a.m. CDT
Modine Manufacturing Company Modine shareholders can build
1500 DeKoven Avenue their investments in Modine
Racine, Wisconsin 53403 through a no-cost plan for
automatically reinvesting
dividends and making additional
cash purchases of Modine stock.
Systematic investments can be
established for your account
by authorizing direct deductions
from your bank account on a
monthly basis. To receive plan
material and enrollment
information, call 800-813-3324.
The Modine Manufacturing Company
Dividend Reinvestment and Direct
Stock Purchase Plan is
administered by the company's
transfer agent, Norwest Shareowner
Services, 800-468-9716.
Modine Manufacturing Company
1500 DeKoven Avenue, Racine, Wisconsin 53403-2552 proxy
- ------------------------------------------------------------------------------
This proxy is solicited on behalf of the Board of Directors.
The undersigned hereby appoints D. R. Johnson and W. E. Pavlick,
or either of them, with full power of substitution to each, as
attorneys and proxies to represent the undersigned at the Annual
Meeting of Stockholders of Modine Manufacturing Company to be held
at the corporate offices of Modine Manufacturing Company, 1500
DeKoven Avenue, Racine, Wisconsin 53403 on the 21st day of July,
1999 at 9:30 a.m. CDT, and at any adjournment(s) thereof, and to
vote all shares of Common Stock which the undersigned may be
entitled to vote at said meeting as directed below with respect to
the proposals as set forth in the Proxy Statement. The Board of
Directors does not know of any other business that may be
presented for consideration at the Annual Meeting. If any other
business should properly come before the Meeting, the shares
represented by the proxies and voting instructions solicited
thereby may be discretionarily voted on such business in
accordance with the best judgment of the proxy holders.
You are encouraged to specify your choices by marking the
appropriate boxes on the reverse side, but you need not mark any
boxes if you wish to vote in accordance with the Board of
Directors' recommendations. The tabulator cannot vote your shares
unless you sign, date and return this proxy card.
See reverse side
<PAGE>
Modine Manufacturing Company 401(k) Retirement Plan
Voting Instructions to Trustee Marshall & Ilsley Trust Company for
the Annual Meeting of Shareholders
As a participant in the Modine Manufacturing Company 401(k) Plan,
you have the right to give instructions to the Plan Trustee as to
the voting of certain shares of Modine Manufacturing Company
Common Stock allocated to your account at the Annual Meeting of
Shareholders or at any and all adjournments or postponements of
the Annual Meeting. In this regard, please indicate your voting
choices on this card, sign and date it, and return this card
promptly in the enclosed postage prepaid envelope. If your card
is not received at least five days prior to the Annual Meeting, or
if you do not return this card, shares held in your account for
which a proxy is not received will be voted by the Trustee in its
own discretion and in accordance with ERISA.
Modine Manufacturing Company Contributory Employee Stock Ownership
and Investment Plan
Voting Instructions to Trustee Marshall & Ilsley Trust Company for
the Annual Meeting of Shareholders
As a participant in the Modine Manufacturing Company Contributory
Employee Stock Ownership and Investment Plan, you have the right
to vote certain shares of Modine Manufacturing Company Common
Stock allocated to your account at the Annual Meeting or at any
and all adjournments or postponements of the Annual Meeting. In
this regard, please indicate your voting choices on this card,
sign and date it, and return this card promptly in the enclosed
postage prepaid envelope. If you do not return this card, shares
held in your account for which a proxy is not received will be
voted by the Trustee in the same proportion as votes actually cast
by plan participants.
Modine Subsidiaries 401(k) Defined Contribution Plan
Voting Instructions to Trustee New York Life Trust Company for the
Annual Meeting of Shareholders
As a participant in the Modine Subsidiaries 401(k) Defined
Contribution Plan, you have the right to vote certain shares of
Modine Manufacturing Company Common Stock allocated to your
account at the Annual Meeting or at any and all adjournments or
postponements of the Annual Meeting. In this regard, please
indicate your voting choices on this card, sign and date it, and
return this card promptly in the enclosed postage prepaid
envelope. If you sign without otherwise marking the proxy, the
securities will be voted as recommended by the Board of Directors
on all matters to be considered at the meeting. For this meeting,
the extent of New York Life Trust Company's authority to vote your
securities in the absence of your instructions, as directed by the
Administrative Fiduciary, is that securities for which no voting
instructions have been given shall be voted in the same proportion
as the vote of proxies returned.
Please fold here
<PAGE>
<TABLE>
<CAPTION>
The Board of Directors Recommends a Vote FOR Items 1 and 2
<S> <C> <C> <C>
1. Election of Directors: 01 Vincent L. Martin / / Vote FOR all nominees listed / / WITHHOLD
02 Richard T. Savage (except as marked contrary below) Authority
03 Marsha C. Williams
------------------------
(Instructions: To withhold authority to vote for any indicated nominee, / /
write the number(s) of the nominee(s) in the box provided to the right.) / /
------------------------
2. Re-approval of 1994 Incentive Compensation Plan / / For / / Against / / Abstain
* NOTE * To consider and act upon such other matters as may properly come
before the meeting or any adjournments thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE BOTED AS DIRECTOR OR, IF
NO DIRECTION IS GIVEN, WILL BE VOTED FOR EACH PROPOSAL.
Address Change? Mark Box / /
Indicate changes below: Date , 1999
---------------
------------------------------
/ /
/ /
------------------------------
Signature(s) in Box
Please sign exactly as your name(s) appear
on Proxy. If held in joint tenancy, all
persons must sign. Trustees, administrators,
etc., should include title and authority.
Corporations should provide full name of
corporation and title of authorized officer
signing the proxy.
</TABLE>
<PAGE>
EXHIBIT 99(b)
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 1998-99 Annual Report to Shareholders at Item 7.
Management's Discussions and Analysis of Financial Condition and
Results of Operations. Some pages contain illustrations of Modine
products, customers and employees.
Page 13 of Annual Report
<TABLE>
Shipments by market
Dollars in millions
<CAPTION>
FYE FYE FYE FYE FYE FYE FYE FYE FYE FYE
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Aftermarket $135 $156 $165 $169 $193 $220 $229 $229 $231 $258
Off-highway equipment 56 58 48 48 55 94 120 127 147 140
Industrial 58 69 68 77 96 112 117 125 134 141
Heavy & med. trucks 64 50 51 86 107 158 168 154 184 200
Cars & light trucks 63 64 89 93 119 202 245 263 245 275
Miscellaneous 13 18 25 20 26 44 35 23 21 20
Building HVAC 47 67 81 78 74 83 76 78 78 77
FYE FYE FYE FYE FYE FYE FYE FYE FYE FYE
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Aftermarket 31% 32% 31% 30% 29% 24% 23% 23% 22% 23%
Off-highway equipment 13 12 9 8 8 10 12 13 14 13
Industrial 13 14 13 13 14 12 12 13 13 13
Heavy & med. trucks 15 11 10 15 16 18 17 15 18 18
Cars & light trucks 14 13 17 16 18 22 25 26 24 25
Miscellaneous 3 4 5 4 4 5 3 2 1 1
Building HVAC 11 14 15 14 11 9 8 8 8 7
</TABLE>
<PAGE>
Page 14 of Annual Report
<TABLE>
Shipments by product
Dollars in millions
<CAPTION>
FYE FYE FYE FYE FYE FYE FYE FYE FYE FYE
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Building HVAC $ 47 $ 67 $ 81 $ 78 $ 74 $ 83 $ 76 $ 78 $ 78 $ 77
Miscellaneous 24 30 36 35 39 66 54 39 35 74
Charge-air coolers 25 31 39 59 73 107 118 107 126 136
Air conditioning 48 47 66 67 83 129 177 217 209 208
Oil coolers 62 65 67 74 99 145 155 163 179 180
Radiators 230 242 238 258 302 383 410 395 413 436
FYE FYE FYE FYE FYE FYE FYE FYE FYE FYE
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Building HVAC 11% 14% 15% 14% 11% 9% 8% 8% 8% 7%
Miscellaneous 5 6 7 6 6 7 5 4 3 7
Charge-air Coolers 6 6 7 10 11 12 12 11 12 12
Air conditioning 11 10 13 12 12 14 18 22 20 19
Oil Coolers 14 13 13 13 15 16 16 16 17 16
Radiators 53 51 45 45 45 42 41 39 40 39
</TABLE>
Page 17 of Annual Report
<TABLE>
Sales dollar distribution
<CAPTION>
FYE 98-99 FYE 97-98
<S> <C> <C>
Material cost 39.2% 38.7%
Employee salaries, wages, and
fringe benefits 30.5% 30.7%
All taxes (except payroll taxes) 4.3% 4.5%
Wear and exhaustion of facilities 3.4% 3.4%
All other costs 16.0% 15.7%
Dividends paid to shareholders 2.2% 2.2%
Earnings retained in the business 4.4% 4.8%
</TABLE>
<PAGE>
Page 18 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 1995 14,830 16,801 17,413 19,398
FYE 1996 15,983 16,736 14,855 13,825
FYE 1997 16,390 15,654 15,402 16,317
FYE 1998 18,185 18,229 17,836 18,221
FYE 1999 20,080 19,081 17,341 17,441
</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 1995 208,436 221,760 240,505 242,309
FYE 1996 239,216 254,292 252,817 244,168
FYE 1997 248,514 254,224 252,972 243,336
FYE 1998 256,923 260,806 267,699 254,990
FYE 1999 273,104 272,961 284,355 281,027
</TABLE>
Page 20 of Annual Report
<TABLE>
Book value per share
<CAPTION>
Measurement Period
(Fiscal Year Covered) Book value/share
<S> <C>
FYE 95 10.38
FYE 96 11.74
FYE 97 12.93
FYE 98 14.24
FYE 99 15.35
</TABLE>
<PAGE>
