SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 26, 1999
------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File Number 1-1373
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MODINE MANUFACTURING COMPANY
(Exact name of registrant as specified in its charter)
WISCONSIN 39-0482000
--------------------------------------------- -------------------
(State or other jurisdiction of incorporation (I.R.S. Employer
or organization) Identification No.)
1500 DeKoven Avenue, Racine, Wisconsin 53403-2552
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (262) 636-1200
--------------
NOT APPLICABLE
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(Former name or former address, if changed since last report.)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
---- ----
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Class Outstanding at November 5, 1999
------------------------------ -------------------------------
Common Stock, $0.625 Par Value 29,515,364
<PAGE>
MODINE MANUFACTURING COMPANY
INDEX
Page No.
--------
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets -
September 26 and March 31, 1999 3
Consolidated Statements of Earnings -
For the Three Months Ended
September 26, 1999 and 1998
and the Six Months Ended
September 26, 1999 and 1998 4
Consolidated Statements of Cash Flows -
For the Six Months Ended September 26,
1999 and 1998 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis
of Results of Operations and Financial
Condition 10
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 16
Item 5. Other Information 17
Item 6. Exhibits and Reports on Form 8-K 18
Signatures 20
<PAGE>
<TABLE>
MODINE MANUFACTURING COMPANY
CONSOLIDATED BALANCE SHEETS
September 26, 1999 and March 31, 1999
(In thousands, except per-share amounts)
(Unaudited)
<CAPTION>
September 26, 1999 March 31, 1999
------------------ --------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 57,014 $ 49,163
Trade receivables, less allowance for
doubtful accounts of $3,981 and
$3,749, respectively 186,337 182,910
Inventories 182,566 178,949
Deferred income taxes and other
current assets 44,139 42,074
-------- --------
Total current assets 470,056 453,096
-------- --------
Noncurrent assets:
Property, plant, and equipment -- net 326,697 303,764
Investment in affiliates 27,919 24,327
Goodwill and other intangible assets--net 76,368 80,411
Deferred charges and other noncurrent
assets 56,317 54,141
-------- --------
Total noncurrent assets 487,301 462,643
-------- --------
Total assets $957,357 $915,739
======== ========
<CAPTION>
LIABILITIES AND SHAREHOLDERS' INVESTMENT
<S> <C> <C>
Current liabilities:
Short-term debt $ 71,709 $ 68,998
Long-term debt -- current portion 5,693 4,766
Accounts payable 79,123 97,443
Accrued compensation and employee
benefits 47,846 48,869
Income taxes 7,723 9,694
Accrued expenses and other current
liabilities 30,716 26,825
-------- --------
Total current liabilities 242,810 256,595
-------- --------
Other liabilities:
Long-term debt 177,567 143,838
Deferred income taxes 20,481 20,533
Other noncurrent liabilities 41,944 41,554
-------- --------
Total noncurrent liabilities 239,992 205,925
-------- --------
Total liabilities 482,802 462,520
-------- --------
<PAGE>
Shareholders' investment:
Preferred stock, $0.025 par value,
authorized 16,000 shares, issued - none - -
Common stock, $0.625 par value,
authorized 80,000 shares, issued
30,342 shares 18,964 18,964
Additional paid-in capital 13,586 13,543
Retained earnings 489,167 469,142
Accumulated other comprehensive loss (18,230) (18,341)
Treasury stock at cost: 788 and 817
shares, respectively (27,381) (28,198)
Restricted stock - unamortized value (1,551) (1,891)
-------- --------
Total shareholders' investment 474,555 453,219
-------- --------
Total liabilities and shareholders'
investment $957,357 $915,739
======== ========
<FN>
(See accompanying notes to consolidated financial statements.)
</TABLE>
<PAGE>
<TABLE>
MODINE MANUFACTURING COMPANY
CONSOLIDATED STATEMENTS OF EARNINGS
For the three months ended September 26, 1999 and 1998
For the six months ended September 26, 1999 and 1998
(In thousands, except per-share amounts)
(Unaudited)
<CAPTION>
Three months ended Six months ended
----------------------- -----------------------
September 26 September 26
----------------------- -----------------------
1999 1998 1999 1998
----------------------- -----------------------
<S> <C> <C> <C> <C>
Net Sales $286,691 $272,961 $570,538 $546,065
Cost of sales 207,103 197,003 408,985 391,649
-------- -------- -------- --------
Gross profit 79,588 75,958 161,553 154,416
Selling, general, and administrative expenses 54,707 48,390 106,451 94,002
-------- -------- -------- --------
Income from operations 24,881 27,568 55,102 60,414
Interest expense (1,921) (979) (3,514) (2,025)
Other income -- net 921 3,083 3,595 3,939
-------- -------- -------- --------
Earnings before income taxes 23,881 29,672 55,183 62,328
Provision for income taxes 8,785 10,591 20,578 23,167
-------- -------- -------- --------
Net earnings $ 15,096 $ 19,081 $ 34,605 $ 39,161
======== ======== ======== ========
Net earnings per share of common stock
- Basic $0.51 $0.64 $1.17 $1.32
- Assuming dilution $0.51 $0.63 $1.16 $1.30
======== ======== ======== ========
Dividends per share $0.23 $0.21 $0.46 $0.42
======== ======== ======== ========
Weighted average shares -- basic 29,536 29,617 29,532 29,631
Weighted average shares -- assuming dilution 29,838 30,049 29,844 30,117
======== ======== ======== ========
<FN>
(See accompanying notes to consolidated financial statements.)
</TABLE>
<PAGE>
<TABLE>
MODINE MANUFACTURING COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
For the Six Months Ended September 26, 1999 and 1998
(Unaudited)
<CAPTION>
Six months ended September 26
-----------------------------
1999 1998
---------- ----------
<S> <C> <C>
Net cash provided by operating activities $29,689 $48,101
Cash flows from investing activities:
Expenditures for property, plant, and
equipment (48,390) (47,691)
Investments in affiliates (1,500) (17,066)
Proceeds from dispositions of property,
plant, and equipment 151 90
Other -- net (193) (64)
------- -------
Net cash used for investing activities (49,932) (64,731)
Cash flows from financing activities:
Increase (decrease) in short-term debt -- net 3,514 (4,170)
Additions to long-term debt 61,074 35,570
Reductions of long-term debt (22,683) (4,242)
Issuance of common stock, including
treasury stock 2,539 1,409
Purchase of treasury stock (2,767) (5,670)
Cash dividends paid (13,583) (12,447)
------- -------
Net cash provided from financing activities 28,094 10,450
------- -------
Net increase (decrease) in cash and
cash equivalents 7,851 (6,180)
Cash and cash equivalents at beginning
of period 49,163 36,410
------- -------
Cash and cash equivalents at end of period $57,014 $30,230
======= =======
<FN>
(See accompanying notes to consolidated financial statements.)
</TABLE>
<PAGE>
MODINE MANUFACTURING COMPANY
----------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
------------------------------------------------------
1. The amounts of raw material, work in process and finished
goods cannot be determined exactly except by physical
inventories. Based on partial interim physical inventories
and percentage relationships at the time of complete
physical inventories, Management believes the amounts shown
below are reasonable estimates of raw material, work in
process and finished goods.
(in thousands)
------------------------------------------------------------
September 26, 1999 March 31, 1999
------------------------------------------------------------
Raw materials $ 40,394 $ 40,529
Work in process 37,185 41,863
Finished goods 104,987 96,557
-------- --------
Total inventories $182,566 $178,949
======== ========
2. Property, plant, and equipment is composed of:
(in thousands)
------------------------------------------------------------
September 26, 1999 March 31, 1999
------------------------------------------------------------
Gross property,
plant & equipment $627,957 $594,646
Less accumulated
depreciation (301,260) (290,882)
-------- --------
Net property,
plant & equipment $326,697 $303,764
======== ========
3. Intangible assets include:
(in thousands)
------------------------------------------------------------
September 26, 1999 March 31, 1999
------------------------------------------------------------
Goodwill $91,750 $92,548
Patents and product
technology 8,389 8,389
Other intangibles 3,312 3,326
Less accumulated
amortization (27,083) (23,852)
------- -------
Net intangible assets $76,368 $80,411
======= =======
<PAGE>
4. Segment data:
(In thousands)
-------------------------------------------------------------------------
Sales Operating income*
----- -----------------
Quarter ended Sept. 26, 1999 1998 1999 1998
-------------------------------------------------------------------------
Sales and operating income:
Original Equipment $110,400 $115,662 $ 15,087 $ 11,951
Distributed Products 102,859 85,403 12,296 13,210
European Operations 83,432 79,324 5,936 9,194
-------------------------------------------------------------------------
Segment sales and
operating income 296,691 280,389 33,319 34,355
Corporate & administrative
expenses - - (6,926) (5,635)
Eliminations (10,000) (7,428) (37) (85)
Other items not allocated
to segments - - (2,475) 1,037
-------------------------------------------------------------------------
Total net sales and
earnings before taxes $286,691 $272,961 $ 23,881 $ 29,672
-------------------------------------------------------------------------
(In thousands)
-------------------------------------------------------------------------
Sales Operating income*
----- -----------------
Six months ended Sept. 26, 1999 1998 1999 1998
-------------------------------------------------------------------------
Sales and operating income:
Original Equipment $231,473 $246,963 $ 36,213 $ 32,204
Distributed Products 187,450 155,675 19,962 22,410
European Operations 171,500 159,184 15,074 19,494
-------------------------------------------------------------------------
Segment sales and
operating income 590,423 561,822 71,249 74,108
Corporate & administrative
expenses - - (13,171) (11,489)
Eliminations (19,885) (15,757) (20) (77)
Other items not allocated
to segments - - (2,875) (214)
------------------------------------------------------------------------
Total net sales and
earnings before taxes $570,538 $546,065 $ 55,183 $ 62,328
------------------------------------------------------------------------
*Beginning with the second quarter, management implemented a
change in the basis for measuring segment profit or loss.
The amortization of goodwill is no longer recorded as a
charge to SG & A expenses, but is now included in other
items not allocated to segments. This change was made by
management to provide a more consistent basis across the
segments for assessing performance. The quarterly and six-
month information presented above has been restated for
earlier periods to reflect the effects of this change.
<PAGE>
(In thousands)
------------------------------------------------------------------
September 26, March 31,
Period ending 1999 1999
------------------------------------------------------------------
Assets:
Original Equipment $202,772 $157,466
Distributed Products 172,721 158,386
European Operations 252,535 237,036
Corporate & Administrative 386,654 377,592
Eliminations (57,325) (14,741)
-----------------------------------------------------------------
Total assets $957,357 $915,739
-----------------------------------------------------------------
5. Recent developments concerning legal proceedings reported in
Modine Manufacturing Company ("Modine or Company") Form 10-K
report for the year ended March 31, 1999, are updated in Part
II, Other Information, Item 1, Legal Proceedings. While the
outcome of these proceedings is uncertain, in the opinion of
Modine's management, any liabilities that may result from such
proceedings are not reasonably likely to have a material effect on
Modine's liquidity, financial condition, or results of operations.
6. The net earnings per share of common stock and computation
components of basic and diluted earnings per share are as follows:
(In thousands, except per-share amounts)
-------------------------------------------------------------------------
Three months ended Six months ended
September 26 September 26
-------------------------------------------------------------------------
1999 1998 1999 1998
-------------------------------------------------------------------------
Net earnings per share of
common stock:
-------------------------
- basic $0.51 $0.64 $1.17 $1.32
- assuming dilution $0.51 $0.63 $1.16 $1.30
Numerator:
----------
Income available to
common shareholders $15,096 $19,081 $34,605 $39,161
Denominator:
-----------
Weighted average shares
outstanding - basic 29,536 29,617 29,532 29,631
Effect of dilutive
securities - options* 302 432 312 486
------- ------- ------- -------
Weighted average shares
outstanding - assuming
dilution 29,838 30,049 29,844 30,117
-------------------------------------------------------------------------
*There were outstanding options to purchase common
stock at prices that exceeded the average market
price for the income statement period as follows:
<PAGE>
Average market price
per share $30.30 $32.24 $30.37 $33.57
Number of shares 740 358 740 303
7. Comprehensive earnings (in thousands), which represents net
earnings adjusted by the change in foreign-currency translation
and minimum pension liability recorded in shareholders' equity
for the periods ended September 26, 1999 and 1998, respectively,
were $15,762 and $18,061 for three months, and $34,716 and
$38,531 for six months.
8. In June 1999, the Financial Accounting Standards Board
issued SFAS No.137 deferring the effective date of SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities."
The statement is now effective for fiscal years beginning after
June 15, 2000. Modine will adopt SFAS No. 133 beginning April 1,
2001. Adoption of this statement is not expected to have a
material effect on Modine's financial position or results of
operations.
9. On October 20, 1999, Modine announced it would begin a stock
buyback program with an initial commitment to repurchase 300,000
shares. Management is authorized to repurchase, each year, up to
ten percent of the outstanding stock. Modine has, in the past,
repurchased small numbers of shares for various employee stock
plans and other corporate purposes.
10. The accompanying consolidated financial statements, which
have not been audited by independent certified public
accountants, were prepared in conformity with generally
accepted accounting principles and such principles were
applied on a basis consistent with the preparation of the
consolidated financial statements in Modine's March 31, 1999
Annual Report filed with the Securities and Exchange
Commission. The financial information furnished includes
all normal recurring accrual adjustments which are, in the
opinion of Management, necessary for a fair statement of
results for the interim period. Results for the first six
months of fiscal 2000 are not necessarily indicative of the
results to be expected for the full year.
11. Certain notes and other information have been condensed or
omitted from these interim financial statements which
consolidate both domestic and foreign wholly-owned
subsidiaries. Therefore, such statements should be read in
conjunction with the consolidated financial statements and
related notes contained in Modine's 1999 Annual Report to
stockholders which statements and notes were incorporated by
reference in Modine's Form 10-K Report for the year ended
March 31, 1999.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
---------------------------------------
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
---------------------------------------------
The following discussion and analysis provides information which
Management believes is relevant to an assessment and
understanding of Modine's consolidated results of operations and
financial condition. This discussion should be read in
conjunction with the consolidated financial statements and notes
thereto.
RESULTS OF OPERATIONS
- ---------------------
Comparison of the Second Quarter of 1999-2000 with the Second
- -------------------------------------------------------------
Quarter of 1998-99
- ------------------
Net sales for the second quarter of fiscal 1999-2000 were at a
record level for any quarter at $286.7 million, up 5.0% from the
$273.0 million reported in the second quarter of last year.
Aftermarket sales in the United States grew as a result of
incremental sales recorded by a regional distributor acquired in
October 1998. Overall revenues in the European Operations segment
grew a little over 5% despite the negative currency-translation
impact recorded in the quarter which lowered European sales by
6%. The Original Equipment segment recorded mixed results for
the quarter. Modine's sales to original-equipment-manufacturer
(OEM) customers in the truck and automobile markets continued to
grow while sales to the off-highway-equipment market remained
depressed by a global slowdown.
Gross margin at 27.8%, as a percentage of sales, was unchanged
from the second quarter of the previous year.
Selling, general and administrative expenses, at 19.1% of revenues,
were higher than historical averages primarily in the North American
aftermarket, which acquired a large, regional distributor in October
1998. These expenses are expected to decrease through recently
introduced cost-reduction programs which are focusing are improving
and streamlining order taking and distribution procedures.
Operating income of 8.7% was 1.4% lower as a percentage of sales
than last year as a result of the higher selling, general and
administrative expenses at the newly acquired aftermarket
distribution facilities mentioned above.
Interest expense increased $0.9 million, or 96%, from the same
quarter a year ago while average outstanding debt levels during
the quarter increased by approximately $94 million, or 69%.
Interest expense grew faster as the result of rising interest
rates compared to the same quarter a year ago. Net non-operating
income in the current quarter declined $2.2 million, or 70%, from
the same quarter last year which included a lump-sum payment
recorded as income for past royalties related to worldwide
licensing agreements for Modine's patented PF technology.
<PAGE>
The effective tax rate increased 1.1% when compared to the same
period last year. Higher effective federal and state income tax
rates were partially offset by lower effective foreign income tax
rates.
Net earnings for the second quarter of $15.1 million were 21%
lower than last year's second quarter. Earnings per share were
$0.51 basic and diluted, compared to $0.64 basic and $0.63
diluted in the prior year. The lower earnings, as expected, were
due in large part to a one-time lump-sum royalty payment recorded
as income in the second quarter last year and the higher SG&A
expense discussed above.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
------------------------------------
RESULTS OF OPERATIONS
---------------------
Comparison of the First Six Months of 1999-2000 with the First
- --------------------------------------------------------------
Six Months of 1998-99
- ---------------------
Record level net sales for the first six months of fiscal 1999-
2000 reached $570.5 million, a 4% improvement over last year's
record. The strongest sales increases for the first six months
of the year were recorded in the Distributed Products segment.
The increase is the result of incremental sales recorded by a
regional U.S. aftermarket distributor acquired in October 1998.
Revenues from European Operations segment were up 8% despite the
unfavorable currency-effect in the first half of the year of
approximately $6.1 million. Sales to original-equipment-
manufacturer (OEM) customers in the truck and automotive markets
of the Original Equipment segment were also ahead of last year,
but were partly offset by a continuing slowdown in the global,
off-highway-equipment market.
Gross margin of 28.3%, as a percent of sales, was unchanged from
the first six months of the previous year. Improvement in
Original Equipment segment was offset by lower gross margins
earned in recently opened European production facilities in the
European Operations segment and a small decline in the
Distributed Products segment.
Selling, general and administrative expenses of $106.5 million
increased 13.2% over the first six months of last year.
Approximately 90% of the increase can be attributed to a large
regional U.S. aftermarket distributor acquired in October 1998.
As previously mentioned, these expenses are expected to decrease
through cost-reduction programs as Modine continues with the
assimilation of these operations.
Operating income declined by 1.4%, as a percentage of sales, over
the first half of the previous year, as a result of higher
selling, general and administrative expenses at newly acquired
distribution facilities previously discussed.
Interest expense increased $1.5 million, or 74% over the same six
month period a year ago. Average outstanding debt levels increased
at a similar percentage. Financing of ongoing construction projects
and debt acquired and incurred in conjunction with acquisitions in
the prior year were the primary reasons for the growth in interest
expense. Net non-operating income in the prior year included a lump-
sum payment recorded as income for past royalties related to worldwide
licensing agreements for Modine's patented PF technology.
The effective tax rate increased by 0.1% when compared to the
same period last year.
Net earnings for the first six months of the current year were
$34.6 million, or $1.17 basic and $1.16 diluted earnings per
<PAGE>
share. This compares to $39.2 million, or $1.32 basic and $1.30
diluted earnings per share, for the same six month period the
year before. The lower earnings, as expected, were due in large
part to the one-time lump-sum royalty payment recorded as income
in the second quarter last year and higher SG&A expenses.
Annualized return on shareholders' investment, at 15% was within
management's target range.
Outlook for the Remainder of the Year
- -------------------------------------
For the next two quarters, we expect the current environment to
continue and the fiscal-year changes in sales and earnings to be
similar to the first six months. Our expectation is that results
will then begin to improve. Our five-year plan has large,
incremental increases in revenues. Currently, about 50 percent
of plan sales to OEM customers are booked, coming from ten, new,
multiyear programs. Customers include global automotive, truck,
and off-highway original-equipment manufacturers. Production for
the first of these new programs begins next fiscal year and
others begin shortly thereafter. In addition, Modine continues
to actively seek acquisitions that will complement its progress
into vehicular modules and systems, which is an important part of
our strategy for the future. We feel very confident in our
future and optimistic about Modine's growth prospects. Forward
looking statements about sales, earnings, and operations in this
Outlook involve both risks and uncertainties, as detailed in
Exhibit 99 to this Form 10-Q.
FINANCIAL CONDITION
- -------------------
Comparison between September 26, 1999 and March 31, 1999
- --------------------------------------------------------
Current assets
- --------------
Cash and cash equivalents of $57.0 million were $7.9 million
higher than March 31, 1999. Cash provided by operating
activities and increased borrowing for the first six months
exceeded capital expenditures, investments in affiliates and the
quarterly dividend payments.
Trade receivables of $186.3 million were up $3.4 million (2%)
over year-end primarily due to increased sales volume (up 2% over
the fourth fiscal quarter in 1998-99), and normal seasonal
promotions in the HVAC&R market.
Overall inventory levels grew $3.6 million to $182.6 million
compared to year-end. The increase was in the finished goods
levels at certain U.S. aftermarket distribution centers and
relates to normal seasonal activity.
Deferred income taxes and other current assets increased by $2.1
million over year-end. Higher royalties receivable and increases
in deferred taxes were the major items contributing to the change.
<PAGE>
Working capital of $ 227.2 million increased 15.6% over year-end.
The current ratio increased slightly to 1.9 to 1 from 1.8 to 1.
Increases in cash, trade receivables, inventories, and lower
accounts payable, were only partly offset by higher short-term
debt and accrued expenses.
Property, Plant and Equipment
- -----------------------------
Net property, plant and equipment increased $22.9 million to
$326.7 million as capital expenditures exceeded depreciation,
retirements and foreign currency translation impact. Continuing
facility construction and expansion costs in Germany, Italy, and
the Netherlands, ongoing costs associated with the implementation
of SAP financial systems in North America, and costs associated
with new equipment and tooling for new customer programs were
among the items contributing to the increase shown. Outstanding
capital expenditure commitments were $41.2 million at September 26,
1999, compared to $38.6 million at March 31, 1999. The largest
commitment is related to the construction of a new technical
center/administration building in Germany. The outstanding
commitments will be financed primarily through internally
generated cash and external borrowing, as required.
Investment in Affiliates
- ------------------------
Investments of $27.9 million were $3.6 million higher than at
March 31, 1999. A $1.5 million additional investment into the
Daikin-Modine joint venture combined with the favorable exchange
rate impact in connection with our Brazil investment in
Radiadores Visconde, Ltda. lead to the overall increase shown.
Intangible Assets
- -----------------
Intangible assets, net of accumulated amortization declined $4.0
million. Amortization and foreign currency translations were the
main factors contributing to the change.
Deferred Charges and Other Assets
- ---------------------------------
Deferred charges and other assets increased $2.2 million. The
net increase is primarily the result of continuing recognition of
the surplus in Modine's overfunded pension plans.
Current Liabilities
- -------------------
Accounts payable and other current liabilities of $157.7 million
were $15.5 million lower than March 1999. Normal timing
differences in the level of operating activity were responsible
for the decline. Accrued income taxes decreased $2.0 million
from timing differences in making estimated payments and certain
federal tax benefits.
<PAGE>
Debt
- ----
Outstanding debt increased by $37.4 million from March 31, 1999,
primarily to support working capital and capital expenditure
requirements. Long-term debt increased by $34.7 million. Modine
entered into a Euro 50.8 million ($53.0 million) credit agreement
in the second quarter. A portion of the proceeds was used to pay
down the equivalent of $32 million in short and long-term
European bank debt. The U.S. portion of short-term debt
increased by $14 million, and the European portion decreased
$11.3 million.
Domestically, Modine's unused lines of credit were $0.7 million.
Non-U.S. unused lines of credit were $3.5 million. Total debt as
a percentage of shareholders' equity increased from 48.0% at
March 31, 1999 to 53.7%.
Shareholders' Investment
- ------------------------
Total shareholders' investment increased by $21.3 million to a
total of $474.6 million. The net increase came primarily from
net earnings of $34.6 million for the first six months, partially
offset with dividends paid to shareholders of $13.6 million.
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 projects followed a four-phase
approach, which 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 Modine'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. In addition to business systems, additional programs
to ensure supplier continuity and process capability were
initiated. All of the above projects were funded through normal
operating cash flow. The total cost associated with the required
modifications was not material to Modine's consolidated results
of operations and financial position.
Business Systems: In North America, the conversion and
----------------
remediation effort of Modine's internally developed systems was
addressed by an external party. The systems conversion and
testing of all critical systems was completed by May 8, 1999, and
was conducted by Modine internal staff. Computer hardware and
LAN infrastructure were also converted to ensure compliance in
its business system and desktop operations. The year 2000 costs
for North America were $5.7 million. Other accomplishments in
North America included the conversion of business systems in
Mexico and Canada to achieve year 2000 compliance through a
<PAGE>
controlled series of system migration and software upgrades.
Management has also initiated a freeze on all non-critical
information system modifications effective November 1, 1999
through January 10, 2000.
Outside North America, Year 2000 compliance was achieved by
replacing current applications with SAP, a Year 2000 compliant
package of integrated manufacturing and financial software. Also
included were hardware migrations, LAN e-mail and desktop
upgrades and replacements. Modine's Year 2000 European costs
for remediation were approximately $4.8 million. Remediation of
critical systems has been completed successfully at all sites.
Suppliers & 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 to Modine will continue without
interruption to any of Modine's business processes. Modine 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 validate our supplier responses, we also
have conducted a series of on-site supplier Y2K audits. Those
suppliers not able to validate their Y2K readiness, have been
directed to retain an additional 30 days of inventory. Our
manufacturing facilities are also reserving on-site inventory so
that our customer base is not affected by any unforeseen Y2K events.
With our dependency on customers for sales and cash flow, Year
2000 interruptions in our customers' operations could result in
reduced sales, increased inventory or receivable levels and cash
flow reductions. While these events are possible, our customer
base is broad enough to minimize the effects of a single occurrence.
Facilities & Embedded Systems: In addition, for non-IT
-----------------------------
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 included
testing, repair, replacement, upgrading, and/or retirement of
specific systems or components. Modine completed its systems
remediation efforts of critical activities by the second calendar
quarter of 1999. Cost for the inventory assessment was $300,000.
Remediation costs were $250,000.
Customer Audit: Modine has been asked and has participated
--------------
in independent and specific customer audits to ensure Y2K
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 & Contingency Planning: The failure to correct
----------------------------
a material Year 2000 problem could result in an interruption of
Modine's business activities or operations. Modine's Year 2000
<PAGE>
projects were designed and are being 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 non-compliant systems used by its suppliers and customers.
To alleviate those concerns, Modine has developed and implemented
contingency plans in the critical areas of the business. We have
developed operational and supplier contingency plans for all our
manufacturing and distribution facilities, increased stocking
plans where necessary, established on site millennium cutover
teams globally, and developed business system and plant equipment
testing procedures for January 1, 2000, two days prior to our
first day of production. Although we feel our contingency plans
are very mature, we will continue to refine them throughout 1999,
wherever the risk warrants it.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
In the normal course of business, the Company and its
subsidiaries are named as defendants in various lawsuits and
enforcement proceedings by private parties, the Occupational
Safety and Health Administration, the Environmental Protection
Agency, other governmental agencies, and others in which claims,
such as personal injury, property damage, or antitrust and trade
regulation issues, are asserted against the Company. While the
outcome of these proceedings is uncertain, in the opinion of the
Company's Management and counsel, any liabilities that may result
from such proceedings are not reasonably likely to have a
material effect on the Company's liquidity, financial condition
or results of operations. Many of the pending damage claims are
covered by insurance and, in addition, the Company from time to
time establishes reserves for uninsured liabilities.
The Mitsubishi 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 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
<PAGE>
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 1999, the U.S. Patent Office Board of Appeals
rejected the Company's 1994 PF patent which rejection is being
appealed to the Court of Appeals for the Federal Circuit.
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.
Item 5. Other Information.
On September 15, 1999, Frank P. Incropera was elected to serve as
a new director of the corporation with a term to expire in 2002.
This expands the number of board members to ten.
Incropera was named the McCloskey dean of the University of Notre
Dame's College of Engineering in 1998 after serving as the Head
of the School of Mechanical Engineering at Purdue University.
He received his B.S. degree from Massachusetts Institute of
Technology and his M.S. and Ph.D. degrees from Stanford
University, all in mechanical engineering. The recipient of
numerous academic and professional awards, he is the author or co-
author of nine books and more than 200 archival journal articles.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits:
---------
The following exhibits are included for information only unless
specifically incorporated by reference in this report:
<PAGE>
Reference Number
per Item 601 of
Regulation S-K Page
- -------------- ----
3* Restated By-Laws (as amended) 21
4(a) Rights Agreement dated as of October 16,
1986 between the Registrant and First
Chicago Trust Company of New York (Rights
Agent) (filed by reference to the
Registrant's Annual Report on Form 10-K
for the fiscal year ended March 31, 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).
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. The Registrant agrees
to furnish copies of such instruments to the
Commission upon request.
<PAGE>
Reference Number
per Item 601 of
Regulation S-K Page
- -------------- ----
27* Financial Data Schedule (electronic
transmission only).
99* Important Factors and Assumptions Regarding
Forwarding-Looking Statements. 32
*Filed herewith.
(b) Reports on Form 8-K:
-------------------
The Company filed one Report on Form 8-K during the quarter ended
September 26, 1999 introducing the new director as referenced in
Item 5. The date of the Report is September 15, 1999.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
MODINE MANUFACTURING COMPANY
(Registrant)
By: A. D. REID
---------------------------------------
A. D. Reid, Vice President,
Finance and Chief Financial Officer
(Principal Financial Officer)
Date: November 8, 1999 By: W. E. PAVLICK
----------------------------------------
W. E. Pavlick, Senior Vice President,
General Counsel and Secretary
<PAGE>
EXHIBIT 3
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)
(as amended September 15, 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.
<PAGE>
1.02. Special Meetings. Special meetings of the
----------------
stockholders may be called by the Chairman of the Board or the
President and shall be called by the President, or Secretary at
the request in writing of a majority of the Board of Directors,
or at the request of stockholders owning Ten Percent (10%) or
more in amount of the entire capital stock of the Company issued
and outstanding and entitled to vote. Such request shall state
the purpose or purposes of the proposed meeting. Business
transacted at all special meetings shall be confined to the
purposes stated in the notice of meeting.
1.03. Notice of Meetings. The Company shall notify
------------------
each shareholder who is entitled to vote at the meeting, and any
other shareholder entitled to notice under ch. 180, of the date,
time, and place of each annual or special shareholders' meeting.
In the case of special meetings, the notice shall also state the
meeting's purpose. Unless otherwise required by ch. 180, the
meeting notice shall be given at least five (5) days before the
meeting date. Notice may be given orally or communicated in
person, by telephone, telegraph, teletype, facsimile, other form
of wire or wireless communication, private carrier, or in any
other manner provided by ch. 180. Written notice, if mailed, is
effective when mailed; and such notice may be addressed to the
shareholder's address shown in the Company's current record of
shareholders. Written notice provided in any other manner is
effective when received. Oral notice is effective when
communicated.
1.04. Quorum. A quorum at any meeting of the
------
stockholders shall consist of a majority of the voting stock of
the Company represented in person or by proxy. Unless otherwise
provided in the Articles of Incorporation, by these by-laws, or
by the Wisconsin Business Corporation Law, a majority of such
quorum shall decide any questions that may come before the
meeting. Though less than a quorum of the outstanding shares are
represented at a meeting, a majority of the shares so represented
may adjourn the meeting from time to time without further notice.
At such adjourned meeting at which a quorum shall be present or
represented, any business may be transacted which might have been
transacted at the meeting as originally notified.
1.05. Order of Business. The order and conduct of
-----------------
business and matters of procedure at any meeting of stockholders
shall be determined by the Chairman.
1.06. List of Stockholders. The officer or agent
--------------------
having charge of the stock transfer books for shares of the
Company shall, before each meeting of stockholders, make a
complete list of the stockholders entitled to vote at such
meeting or any adjournment thereof, with the address of and the
number of shares held by each, which list shall be produced and
kept open at the time and place of the meeting and shall be
subject to the inspection of any stockholder during the whole
time of the meeting for the purposes of the meeting. The
<PAGE>
original stock transfer books shall be prima facie evidence as to
the stockholders entitled to examine such list or transfer books
or to vote at any meeting of stockholders.
1.07. Inspectors of Election. Two inspectors of
----------------------
election shall be appointed by the Board of Directors at or
before each stockholders' meeting at which an election of
directors shall take place; if no such appointment shall have
been made, or if the inspectors appointed by the Board shall
refuse to act, or fail to attend, then the appointment shall be
made by the Chairman at the meeting. The inspectors shall
receive and take in charge all proxies and ballots, and shall
decide all questions touching upon the qualification of voters,
and validity of proxies and the acceptance and rejection of
votes. In case of a tie vote by the inspectors on any questions,
the Chairman shall decide.
1.08. Voting of Shares. Each outstanding share shall
----------------
be entitled to one vote upon each matter submitted to a vote at a
meeting of stockholders, except to the extent that the voting
rights of the shares of any class or classes are enlarged,
limited or denied by the Wisconsin Business Corporation Law, the
Articles of Incorporation, or the resolution of the Board of
Directors creating such series of any class.
1.09. Proxies. At all meetings of stockholders, a
-------
stockholder entitled to vote may vote in person or by proxy
appointed in writing by the stockholder or by his duly authorized
attorney-in-fact. Such proxy shall be filed with the Secretary
of the Company before or at the time of meeting. Unless
otherwise provided in the proxy, a proxy may be revoked at any
time before it is voted either by written notice filed with the
Secretary or the acting secretary of the meeting or by oral
notice given by the stockholder to the presiding officer during
the meeting. The presence of a stockholder who has filed his
proxy shall not of itself constitute a revocation. No proxy
shall be valid after eleven (11) months from the date of its
execution, unless otherwise provided in the proxy. The Board of
Directors shall have the power and authority to make rules
establishing presumptions as to the validity and sufficiency of
proxies.
ARTICLE II. DIRECTORS
----------------------
2.01. Number, Classification and Terms of Directors.
---------------------------------------------
The number of directors shall be ten. Directors need not be
stockholders.
The Board of Directors shall be divided into three
classes: one class consisting of four directors; and two classes
consisting of three directors each. 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
<PAGE>
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.
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
<PAGE>
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.
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
<PAGE>
for any reason, including vacancies on the Board of Directors due
to removal for cause, the remaining directors in office, by a
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
<PAGE>
number of Vice Presidents as the Board of Directors shall elect,
a Secretary, and a Treasurer, each of whom shall be elected by
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
<PAGE>
incident to the office of President and such other duties as may be
prescribed by the Board of Directors from time to time.
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
<PAGE>
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.
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.
<PAGE>
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.
<PAGE>
ARTICLE VI. MISCELLANEOUS
--------------------------
6.01. Corporate Seal. The corporate seal shall be a
--------------
round metallic disc, with the words "MODINE MANUFACTURING
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
<PAGE>
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
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>
<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 9/26/99 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-2000
<PERIOD-START> APR-1-1999
<PERIOD-END> SEP-26-1999
<CASH> 57,014
<SECURITIES> 0
<RECEIVABLES> 190,318
<ALLOWANCES> 3,981
<INVENTORY> 182,566
<CURRENT-ASSETS> 470,056
<PP&E> 627,957
<DEPRECIATION> 301,260
<TOTAL-ASSETS> 957,357
<CURRENT-LIABILITIES> 242,810
<BONDS> 177,567
0
0
<COMMON> 18,964
<OTHER-SE> 455,591
<TOTAL-LIABILITY-AND-EQUITY> 957,357
<SALES> 570,538
<TOTAL-REVENUES> 570,538
<CGS> 408,985
<TOTAL-COSTS> 408,985
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 357
<INTEREST-EXPENSE> 3,514
<INCOME-PRETAX> 55,183
<INCOME-TAX> 20,578
<INCOME-CONTINUING> 34,605
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 34,605
<EPS-BASIC> 1.17
<EPS-DILUTED> 1.16
</TABLE>
EXHIBIT 99
IMPORTANT FACTORS AND ASSUMPTIONS
REGARDING FORWARD-LOOKING STATEMENTS
These cautionary statements are being made pursuant to the
provisions of the Private Securities Litigation Reform Act of
1995 and with the intention of obtaining the benefits of the
"safe harbor" provisions of the Act. Investors are cautioned
that any forward-looking statements made by Modine are not
guarantees of future performance and that actual results may
differ materially from those in the forward-looking
statements as a result of various factors, including:
customers' integration of products currently being supplied
by Modine; 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 Modine's
business being non-domestic; the impact of year 2000
compliance by Modine or those entities with which Modine 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
such statements are made.
