-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, TF9N8mwAoIJynB0ouZ4jNhilAVRLX+d6zErE+4uvC0j1YbgmIIIL7PhKq0qwmKiZ XVpgP/xEGrJ4TT8bh1bxFA== 0000067347-99-000004.txt : 19990210 0000067347-99-000004.hdr.sgml : 19990210 ACCESSION NUMBER: 0000067347-99-000004 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19981226 FILED AS OF DATE: 19990209 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MODINE MANUFACTURING CO CENTRAL INDEX KEY: 0000067347 STANDARD INDUSTRIAL CLASSIFICATION: MOTOR VEHICLE PARTS & ACCESSORIES [3714] IRS NUMBER: 390482000 STATE OF INCORPORATION: WI FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-01373 FILM NUMBER: 99525438 BUSINESS ADDRESS: STREET 1: 1500 DEKOVEN AVE CITY: RACINE STATE: WI ZIP: 53403 BUSINESS PHONE: 4146361200 10-Q 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended December 26, 1998 ----------------- OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 1-1373 ------ MODINE MANUFACTURING COMPANY (Exact name of registrant as specified in its charter) WISCONSIN 39-0482000 --------------------------------------------- ------------------- (State or other jurisdiction of incorporation (I.R.S. Employer or organization) Identification No.) 1500 DeKoven Avenue, Racine, Wisconsin 53403-2552 ---------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (414) 636-1200 --------------- NOT APPLICABLE ---------------------------------------------------------------------- (Former name or former address, if changed since last report.) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ----- ----- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Class Outstanding at February 5, 1999 ------------------------------ ------------------------------- Common Stock, $0.625 Par Value 29,509,029 MODINE MANUFACTURING COMPANY INDEX Page No. -------- PART I. FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Balance Sheets - December 26 and March 31, 1998 3 Consolidated Statements of Earnings - For the Three Months Ended December 26, 1998 and 1997 and the Nine Months Ended December 26, 1998 and 1997 4 Consolidated Statements of Cash Flows - For the Nine Months Ended December 26, 1998 and 1997 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 17 Item 5. Other Information 18 Item 6. Exhibits and Reports on Form 8-K 18 Signatures 21 MODINE MANUFACTURING COMPANY CONSOLIDATED BALANCE SHEETS December 26, 1998 and March 31, 1998 (In thousands, except per-share amounts) (Unaudited)
December 26, 1998 March 31,1998 ----------------- ------------- ASSETS - ------ Current assets: Cash and cash equivalents $ 36,231 $ 36,410 Trade receivables, less allowance for doubtful accounts of $3,994 and $4,585 174,548 162,177 Inventories 160,208 152,674 Deferred income taxes and other current assets 39,859 41,922 -------- -------- Total current assets 410,846 393,183 -------- -------- Other assets: Property, plant, and equipment -- net 296,659 248,253 Investment in affiliates 36,120 8,376 Goodwill and other intangible assets -- net 82,928 59,355 Deferred charges and other noncurrent assets 52,639 49,857 -------- -------- Total other assets 468,346 365,841 -------- -------- Total assets $879,192 $759,024 ======== ======== LIABILITIES AND SHAREHOLDERS' INVESTMENT - ---------------------------------------- Current liabilities: Short-term debt $ 44,269 $ 20,878 Long-term debt -- current portion 8,264 2,835 Accounts payable 79,700 84,345 Accrued compensation and employee benefits 47,611 48,081 Income taxes 15,843 10,073 Accrued expenses and other current liabilities 28,068 26,516 -------- -------- Total current liabilities 223,755 192,728 -------- -------- Other liabilities: Long-term debt 148,239 89,587 Deferred income taxes 13,732 14,258 Other noncurrent liabilities 41,758 39,976 -------- -------- Total other liabilities 203,729 143,821 -------- -------- Total liabilities 427,484 336,549 -------- -------- 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 13,318 12,384 Retained earnings 457,899 423,001 Foreign currency translation adjustment (6,614) (8,102) Treasury stock at cost: 872 and 678 shares, respectively (29,753) (20,977) Restricted stock - unamortized value (2,106) (2,795) -------- -------- Total shareholders' investment $451,708 $422,475 -------- -------- Total liabilities and shareholders' investment $879,192 $759,024 ======== ======== (See accompanying notes to consolidated financial statements.)
MODINE MANUFACTURING COMPANY CONSOLIDATED STATEMENTS OF EARNINGS For the three months ended December 26, 1998 and 1997 For the nine months ended December 26, 1998 and 1997 (In thousands, except per-share amounts) (Unaudited)
Three months ended Nine months ended -------------------- -------------------- December 26 December 26 -------------------- -------------------- 1998 1997 1998 1997 -------------------- -------------------- Net Sales $284,355 $267,699 $830,420 $785,428 Cost of sales 207,242 192,114 598,891 559,513 -------- -------- -------- -------- Gross profit 77,113 75,585 231,529 225,915 Selling, general, and administrative expenses 51,020 45,015 145,022 135,839 -------- -------- -------- -------- Income from operations 26,093 30,570 86,507 90,076 Non-operating income 4,852 1,918 12,041 5,993 Interest expense (1,718) (842) (3,743) (2,950) Non-operating expense (1,265) (1,634) (4,515) (4,859) -------- -------- -------- -------- Earnings before income taxes 27,962 30,012 90,290 88,260 Provision for income taxes 10,621 12,176 33,788 34,010 -------- -------- -------- -------- Net earnings $ 17,341 $ 17,836 $ 56,502 $ 54,250 ======== ======== ======== ======== Net earnings per share of common stock - Basic $0.59 $0.60 $1.91 $1.82 - Assuming dilution $0.58 $0.59 $1.88 $1.79 ======== ======== ======== ======== Dividends per share $0.21 $0.19 $0.63 $0.57 ======== ======== ======== ======== Weighted average shares -- basic 29,548 29,720 29,603 29,762 Weighted average shares -- diluted 29,992 30,316 30,075 30,297 ======== ======== ======== ======== (See accompanying notes to consolidated financial statements.)
MODINE MANUFACTURING COMPANY CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) For the Nine Months Ended December 26, 1998 and 1997 (Unaudited)
Nine months ended December 26 ----------------------------- 1998 1997 ---------- ---------- Net cash provided by operating activities $ 89,925 $ 72,160 Cash flows from investing activities: Expenditures for property, plant, and equipment (68,988) (52,668) Acquisitions, excluding cash acquired (19,826) - Investments in affiliates (17,085) - Proceeds from dispositions of property, plant, and equipment 315 1,883 Other -- net (170) (91) -------- -------- Net cash (used for) investing activities (105,754) (50,876) Cash flows from financing activities: Increase in short-term debt -- net 22,895 11,158 Additions to long-term debt 45,773 15,179 Reductions of long-term debt (22,631) (27,273) Issuance of common stock, including treasury stock 3,012 3,364 Purchase of treasury stock (14,765) (11,480) Cash dividends paid (18,634) (16,960) -------- -------- Net cash provided by/(used for) financing activities 15,650 (26,012) -------- -------- Net (decrease) in cash and cash equivalents (179) (4,728) Cash and cash equivalents at beginning of period 36,410 34,822 -------- -------- Cash and cash equivalents at end of period $ 36,231 $ 30,094 ======== ======== (See accompanying notes to consolidated financial statements.)
MODINE MANUFACTURING COMPANY ---------------------------- NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) ------------------------------------------------------ 1. The amounts of raw material, work in process and finished goods cannot be determined exactly except by physical inventories. Based on partial interim physical inventories and percentage relationships at the time of complete physical inventories, Management believes the amounts shown below are reasonable estimates of raw material, work in process and finished goods. (In Thousands) ------------------------------------------------------------- December 26, 1998 March 31, 1998 ------------------------------------------------------------- Raw materials $ 36,458 $ 41,164 Work in process 41,197 41,231 Finished goods 82,553 70,279 -------- -------- Total inventories $160,208 $152,674 ======== ======== 2. Property, plant, and equipment is composed of: (In Thousands) ------------------------------------------------------------- December 26, 1998 March 31, 1998 ------------------------------------------------------------- Gross property, plant & equipment $586,225 $510,868 Less accumulated depreciation (289,566) (262,615) -------- -------- Net property, plant & equipment $296,659 $248,253 ======== ======== 3. Intangible assets include: (In Thousands) ------------------------------------------------------------- December 26, 1998 March 31, 1998 Goodwill and other intangible assets $106,114 $76,505 Less accumulated amortization (23,186) (17,150) -------- ------- Net goodwill and other intangible assets $ 82,928 $59,355 ======== ======= 4. Recent developments concerning legal proceedings reported in the Company's Form 10-K report for the year ended March 31, 1998, are updated in Part II, Other Information, Item 1, Legal Proceedings. While the outcome of these proceedings is uncertain, in the opinion of the Company's management, any liabilities that may result from such proceedings are not reasonably likely to have a material effect on the Company's liquidity, financial condition, or results of operations. 5. The computation of basic and diluted earnings per share is as follows: (In thousands, except per-share amounts) ---------------------------------------------------------------------- Three months Nine months ended ended December 26 December 26 ---------------------------------------------------------------------- 1998 1997 1998 1997 ---------------------------------------------------------------------- Net earnings per share of ------------------------- common stock: ------------ - Basic $0.59 $0.60 $1.91 $1.82 - Assuming dilution $0.58 $0.59 $1.88 $1.79 Numerator: ---------- Income available to common shareholders $17,341 $17,836 $56,502 $54,250 Denominator: ------------ Weighted average shares outstanding - Basic 29,548 29,720 29,603 29,762 Effect of dilutive securities - options* 444 596 472 535 ------- ------- ------- ------- Weighted average shares outstanding - Assuming dilution 29,992 30,316 30,075 30,297 * There were outstanding options to purchase common stock at prices that exceeded the average market price for the income statement period as follows: Average market price per share $33.68 $34.42 $33.61 $31.81 Number of shares 297 None 297 45 6. On August 6, 1998, the Company completed the acquisition of a 50% interest in Radiadores (Visconde) Ltda., a Brazilian heat transfer company. The investment included cash and a promissory note. The investment is accounted for using the equity method. The company's share of the results of operations is currently included in the consolidated financial statements using a two-month delay. The Company anticipates that the results will be reported using a one- month delay by the end of the fourth quarter. Visconde employs approximately 750 people at facilities in San Paulo. It 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. On October 8, 1998, the Company completed 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 $24.3 million. The transaction was financed with cash, existing short-term borrowing facilities and $3.9 million of promissory notes to the seller. The investment is accounted for using the purchase method. Goodwill created by the acquisition is $22.5 million and is being amortized on a straight-line basis over 15 years. The results of operations are included in the consolidated financial statements for the quarter since the effective date of the acquisition. Core Holdings had sales of $54.1 million in 1997. Its 350 employees operate out of more than 50 locations throughout the southeastern United States. Core Holdings also ships its full line of air-conditioning parts to warehouse distributors in other geographic markets. It distributes primarily to radiator shops, air-conditioning shops, specialty repair shops and garages. In addition, it manufactures air-conditioning parts at a plant in Texas. The investments do not have a material effect on the consolidated results of operations and, accordingly, pro- forma financial information is not presented. 7. On April 1, 1998, the Company adopted Financial Accounting Standards Board Statement No. 130, "Reporting Comprehensive Income," which became effective for interim and annual financial statement periods in fiscal years beginning after December 15, 1997. This pronouncement established new standards for reporting comprehensive income and its components; however, the adoption of SFAS No. 130 has had no impact on the Company's net income or shareholders' equity. For the Company, the difference between net income as historically reported in the statements of consolidated income, and comprehensive income, is foreign currency translation recorded in shareholders' equity. Comprehensive earnings for the periods ended December 26, 1998 and 1997, respectively, were $19,459 thousand and $17,765 thousand for the three months and $57,990 thousand and $50,765 thousand for the nine months. 8. On June 15, 1998, the Financial Accounting Standards Board 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 all fiscal quarters of fiscal years beginning after June 15, 1999. The Company will adopt SFAS 133 beginning April 1, 2000. Adoption of this statement is not expected to have a material effect on earnings or financial position. 9. The accompanying consolidated financial statements, which have not been audited by independent certified public accountants, were prepared in conformity with generally accepted accounting principles and such principles were applied on a basis consistent with the preparation of the consolidated financial statements in the Company's March 31, 1998 Annual Report filed with the Securities and Exchange Commission. The financial information furnished includes all normal recurring accrual adjustments which are, in the opinion of Management, necessary for a fair statement of results for the interim period. Results for the first nine months of fiscal 1999 are not necessarily indicative of the results to be expected for the full year. 10. 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 the Company's 1998 Annual Report to stockholders which statements and notes were incorporated by reference in the Company's Form 10-K Report for the year ended March 31, 1998. MANAGEMENT'S DISCUSSION AND ANALYSIS OF --------------------------------------- RESULTS OF OPERATIONS AND FINANCIAL CONDITION --------------------------------------------- The following discussion and analysis provides information which Management believes is relevant to an assessment and understanding of the Company's consolidated results of operations and financial condition. This discussion should be read in conjunction with the consolidated financial statements and notes thereto. RESULTS OF OPERATIONS - --------------------- Comparison of the Third Quarter of 1998-99 with the Third Quarter - ----------------------------------------------------------------- of 1997-98 - ---------- Net sales for the third quarter of fiscal 1998-99 were $284.4 million, up 6.2% from the $267.7 million reported in the third quarter of last year. Quarterly sales increased substantially in Europe as a result of new programs. Currency translation effects had a small positive impact upon year over year sales for the quarter. On a worldwide basis the original-equipment automotive and industrial markets registered the largest sales increases. Domestic aftermarket sales were assisted by the recent acquisition of Core Holdings, Inc. Short-term softening in the agricultural- and construction- equipment market and the European truck market hampered revenue growth in the quarter. Also effecting the quarter were a slow seasonal start in the building-heating market as well as on-going pricing pressures in the North American aftermarket and in Europe. Gross margin decreased 1.1%, as a percentage of sales, over the third quarter of the previous year to 27.1% from 28.2%. Lower gross margins earned in recently opened European production facilities were the main factor leading to the decline. Selling, general and administrative expenses increased 13.3% over last year's third quarter while increasing 1.1% as a percentage of sales. Excluding the recent Core Holdings acquisition, selling, general and administrative expenses grew by only 5.5%, consistent with sales growth and inflation. Operating income decreased 2.2%, as a percentage of sales over last year's third quarter, to 9.2 % from 11.4%. Contributing factors were lower margins earned at newly opened production facilities in Europe and the effect of including the Core acquisition in the quarterly operating results for the first time. Average outstanding debt levels during the quarter increased by approximately $84.6 million, or 84.7%, from the same quarter a year ago while interest expense increased 104%, for the same time period. The October acquisition of Core Holdings, including higher interest rate debt assumed, and the joint venture purchase and start-up activity reported earlier in the year were the main factors leading to higher borrowing levels and interest expense. Non-operating income in the current quarter, included a gain on the sale of a closed facility in Michigan. The effective tax rate decreased by 2.6% when compared to the same period last year. The largest factor influencing the decrease was a differential in foreign tax rates compared to U.S. rates. Net earnings for the third quarter decreased 2.8% to $17.3 million, or $0.59 basic and $0.58 diluted earnings per share from last year's $17.8 million, or $0.60 basic and $0.59 diluted earnings per share. Annualized return on shareholders' investment, at 15.5% for the quarter, was in management's target range of 15-20%. Comparison of the First Nine Months of 1998-99 with the First - ------------------------------------------------------------- Nine Months of 1997-98 - ---------------------- Net sales for the first nine months of fiscal 1998-99 reached a record $830.4 million, up 5.7% from the $785.4 million reported in the first nine months of last year. Revenues from European operations were up significantly compared with the same period a year ago. Currency translation effects had a minimal impact upon year over year sales. On a worldwide basis the strongest sales increases were to the original-equipment automotive market and to the industrial market. Other major markets registered small increases except for the building-HVAC market which remained down for the year. Gross margin decreased 0.9%, as a percent of sales, over the first nine months of the previous year to 27.9% from 28.8%. Lower gross margins earned in recently opened European production facilities were a contributing factor to the overall decline. Selling, general and administrative expenses increased 6.8% over the first nine months last year while increasing 0.2% as a percentage of sales. Without the recent Core Holdings acquisition, these expenses grew by only 4.2%, consistent with sales growth and inflation. Operating income decreased by 4.0% over the first nine months of the previous year, while decreasing 1.1% as a percentage of sales. Among the contributing factors were lower margins earned at newly opened production facilities in Europe and the effect of including the Core Holdings acquisition in the year-to-date operating results. Average outstanding debt levels during the first nine months increased by approximately $47.1 million, or 46.6%, over the same period a year ago. Corresponding interest expense increased by 26.9%, or $0.8 million, over the same nine-month period, a year ago. An increase in major property, plant and equipment projects resulted in larger amounts of interest being capitalized in the current period which partially offset the increased interest expense resulting from the October acquisition of Core Holdings and the joint venture activity reported earlier in the year. Non-operating income included an amount for past royalties related to worldwide licensing agreements for Modine's patented PF technology and a gain on the sale of a closed facility in Michigan. The effective tax rate decreased by 1.1% when compared to the same period last year. Net earnings for the nine months increased 4.2% to $56.5 million, or $1.91 basic and $1.88 diluted earnings per share from last year's $54.3 million, or $1.82 basic and $1.79 diluted earnings per share. Annualized return on shareholders' investment, at 17.2% for the nine months, was in management's target range of 15-20%. Year 2000 Remediation Program - ----------------------------- General ------- In response to the Year 2000 issue, the Company 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 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 the Company's consolidated results of operations and financial position. Business Systems ---------------- In North America, the conversion and remediation effort of the Company's internally developed systems is being addressed by an external party. The external party is also validating the Year 2000 changes with internally prepared tests scripts. Computer hardware and LAN infrastructure is also in the process of being converted to ensure compliance in its business system and desktop operation. The expected Year 2000 costs for North America are $4.5 million of which approximately 80% has been already expended. The systems conversion project is in the last phase, system integration testing, and is being conducted by Modine internal staff. The project is 80% complete, and is scheduled for a second calendar quarter 1999 completion. Recent accomplishments in North America during the 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 of 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 international cost associated with the project is $4.6 million of which 80% has been expended. The project is progressing and, depending on site, is in various stages of readiness, most of which are completed. Overall, the European project is 80% complete, and scheduled for a third calendar quarter 1999 completion. Suppliers & Customers --------------------- With respect to suppliers, the Company 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. 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, 85% of the surveys have been returned, of which 100% have indicated that they are or will be compliant by July 1, 1999. The responses are being used as the basis of developing specific contingency plans for those suppliers who cannot meet our compliance deadline. 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 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. Risks & Contingency Planning ---------------------------- The failure to correct a material Year 2000 problem could result in an interruption of the Company's business activities or operations. Modine's Year 2000 projects were designed and are being implemented to significantly reduce that possibility. Despite the significant efforts to address Year 2000 concerns, the Company 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 is actively involved in developing and implementing contingency plans in the critical areas of the business. We have already issued operational contingency plans to our manufacturing facilities and are continuing to formalize system and supplier contingency plans. The Company will continue that process throughout 1999 whenever the risk appears to be warranted. Euro Conversion - --------------- A single currency called 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 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. Outlook for the Remainder of the Year - ------------------------------------- Management expects short-term market factors to result in fiscal 1999 sales growth being close to earlier projections made last summer while earnings are anticipated to increase at a slightly lower percentage. Beginning in calendar year 2000, the Company expects to benefit from significant new business with large customers such as Chrysler and PACCAR. Improved profitability in Germany from new business, efficiency improvements, and a reduced workforce are also anticipated. These forward-looking statements regarding sales and earnings are subject to certain risks and uncertainties which could cause actual results to differ materially from those projected. See "Important Factors and Assumptions Regarding Forward-Looking Statements" attached hereto as exhibit 99 and incorporated herein by reference. FINANCIAL CONDITION - ------------------- Comparison between December 26, 1998 and March 31, 1998 - ------------------------------------------------------- Current Assets - -------------- Cash and cash equivalents decreased by $0.2 million to a total of $36.2 million. The Company's primary sources of liquidity and capital resources were cash provided by operations and the use of available borrowing facilities. Net trade receivables increased $12.4 million, or 7.6%. Approximately $2.4 million of the increase can be attributed to the recent Core Holdings acquisition. The remainder of the overall increase can be attributed to higher sales for the third quarter of fiscal 98-99 in the amount of $29.4 million or 11.5% compared to the sales in the fourth quarter of the prior year. Overall inventory levels increased by $7.5 million. While the acquisition of Core Holdings increased inventories by more than this amount, others factors affecting inventory levels were ongoing management efforts to control inventory levels, changes in sales volumes, exchange rate fluctuations in Europe, process and product line changes at certain manufacturing facilities and a normal seasonal decline in the HVAC division. Deferred income taxes and other current assets decreased $2.1 million. The largest items influencing change were a reduction in unbilled customer tooling, an increase in foreign currency contracts hedging sales in French francs, an increase in receivables from the company's stock plans trustee and the Core Holdings acquisition. Working capital decreased approximately 6.7% to $187.1 million from $200.5 million and the current ratio declined slightly to 1.8 to 1 from 2.0 to 1. A number of categories experienced changes, with the largest item influencing the change being an increase in debt due within one year. Partially offsetting this change were increases in both trade receivables and inventory. The Core Holdings acquisition was also a factor contributing to the overall changes recorded. Property, Plant and Equipment - ----------------------------- Net property, plant and equipment increased $48.4 million to $296.7 million as capital expenditures exceeded depreciation, retirements and foreign currency translation impact. Outstanding material commitments for capital expenditures were $49.6 million at December 26, 1998, compared to $48.1 million at March 31, 1998. The largest commitment of approximately $27.2 million is related to facility expansions, improvements, equipment upgrades, and new equipment for a number of European plants. Another $4.2 million relates to the construction of a new technical center in Racine, Wisconsin. The outstanding commitments will be financed primarily through internally generated cash and external borrowing, as required. Goodwill and Other Intangible Assets - ------------------------------------ Goodwill and other intangible assets, net of accumulated amortization increased $23.6 million. The main factor contributing to the increase was the $21.5 million recorded in conjunction with the Core Holdings acquisition Amortization and foreign currency translations were also factors contributing to the overall change. Deferred Charges and Other Noncurrent Assets - -------------------------------------------- Deferred charges and other noncurrent assets increased $2.8 million. The net increase is primarily the result of continuing recognition of the surplus in the Company's overfunded pension plans. Current Liabilities - ------------------- Accounts payable and various accrued expenses decreased $3.6 million. An increase of $7.0 million from the Core acquisition was offset by normal timing differences in the level of operating activity in other areas of the company. Accrued income taxes increased $5.8 million with Core contributing $1.7 million of the increase with the remainder arising from normal timing differences in making estimated tax payments and federal tax benefits resulting from the exercise of stock options. Debt - ---- Outstanding debt increased by $87.5 million from March 31, 1998. Long-term debt increased by $64.1 million. The major events influencing the change were the purchase of Core Holdings, Inc., headquartered in Miami, the purchase of a 50% interest in Radiadores Visconde located in Brazil, the startup of the newly formed joint venture company, Daikin-Modine, Inc., and capital expenditures in Europe for facility expansion and modernization. Most of the increase in the long-term debt was domestic. During this time, short-term debt increased by $23.4 million. The U.S. portion of short-term debt increased by $19.0 million and the European portion outstanding increased $4.4 million. Consolidated available lines of credit increased by $1.4 million. Domestically, the Company's multi-currency revolver was increased from $25 million to $50 million, and is fully utilized. Foreign unused lines of credit at December 26, 1998 were $14.7 million. Total debt as a percentage of shareholders' equity increased from 26.8% to 44.4%. Shareholders' Investment - ------------------------ Total shareholders' investment increased by $29.2 million to a total of $451.7 million. The net increase came primarily from net earnings of $56.5 million for the first nine months. Dividends paid to shareholders of $18.6 million, net treasury stock activity of $8.8 million, favorable foreign currency translation impact of $1.5, and other minor changes to the capital accounts also contributed to the change. Other - ----- Subsequent to the end of the third quarter, recent economic events in Brazil led to the devaluation of its currency. As a result of the devaluation and subsequent exchange rate movements, the value of the Company's investment in its recently formed Brazilian joint venture has been affected. Although the devaluation is expected to have a minimal impact on the Company's fourth quarter net earnings, it will unfavorably impact the foreign currency translation adjustment to be reported in shareholders' equity and comprehensive earnings if exchange rates remain at their current levels. 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 in the Federal District Court in Milwaukee, Wisconsin against Mitsubishi Motor Sales of America, Inc. and Showa Aluminum Corporation, alleging infringement of the Company's Patent No. 4,998,580 on parallel- flow air-conditioning condensers. The suit seeks an injunction to prohibit continued infringement and accounting for damages, a trebling of such damages for willful infringement, and reimbursement of attorneys' fees. In December of 1991, the Company submitted a complaint to the U. S. International Trade Commission (ITC) requesting that the ITC ban the import and sale of parallel-flow air-conditioning condensers and systems or vehicles that contain them, which are the subject of the aforementioned lawsuit. In 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 flow path 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 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 in the Federal District Court in Columbus, Ohio alleging infringement by the Company of Showa's patents pertaining to double circuit condensers and baffles therefor (In June, 1995, the Company filed a motion for partial summary judgment against such lawsuit). In December of 1994, the Company filed another lawsuit against Mitsubishi Motor Sales of America, Inc. and Showa Aluminum Corporation in the Federal District Court in Milwaukee, Wisconsin pertaining to the Company's newly-issued Patent No. 5,372,188 also pertaining to parallel-flow air-conditioning condensers but having tube flow path hydraulic diameters less than 0.070 inches. 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 has been issued Japanese Patent No. 2,132,321 covering parallel-flow air conditioning condensers having tube flow path 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 such patent seeking an injunction and damages. A similar patent has been issued to the Company by the European Patent Office and is currently in the opposition stage. All legal and court costs associated with these cases have been expensed as they were incurred. Other previously reported legal proceedings have been settled or the issues resolved so as to not merit further reporting. Item 5. Other Information. On October 8, 1998, the Company completed 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. For additional information see footnote 6 to the Notes to Consolidated Financial Statements (Unaudited) herein. Subsequent to the end of the quarter, on January 20, 1999, the Company's Board of Directors elected Marsha Williams to serve as a new director of the corporation, expanding the number of board members to ten. Please see the Company's News Release dated February 8, 1999, attached to this Report Form 10-Q as Exhibit 99(b), for further information. As previously reported, in May of 1986, the Board of Directors authorized the Company to acquire up to 10% per year of the issued and outstanding shares of the common stock of the Company. Pursuant to this authorization, the Company purchases shares of its common stock from time to time as such shares become available on the open market, from the Company's pension plans, or in private transactions for resale to the employee stock purchase plans and for other corporate purposes. Since December 31, 1996, the Company has purchased at market price a total of 1,058,203 shares, 132,884 shares of which were purchased during the fourth fiscal quarter of 1996-97; 362,427 shares of which were purchased from April 1, 1996 through December 31, 1997; 160,293 shares of which were purchased during the fourth fiscal quarter of 1997-98, and 402,599 shares of which were purchased from April 1, 1998 through December 31, 1998. The Company currently has 833,135 shares (as of February 5, 1999) in its Treasury. Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits: -------- The following exhibits are included for information only unless specifically incorporated by reference in this report: Reference Number per Item 601 of Regulation S-K Page - -------------- ---- 3(a) Restated Articles of Incorporation (as amended) (filed by reference to the Registrant's Annual Report on Form 10-K for the fiscal year ended March 31, 1994). 3(b)* Restated By-Laws (as amended January 20, 1999). 22 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). Reference Number per Item 601 of Regulation S-K Page - -------------- ---- 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. 27* Financial Data Schedule (electronic transmission only). 99(a)* Important Factors and Assumptions Regarding Forwarding-Looking Statements. 33 99(b)* News Release dated February 8, 1999 regarding new director. 34 *Filed herewith. (b) Reports on Form 8-K: ------------------- The Company filed no Reports on Form 8-K during the quarter ended December 26, 1998. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. MODINE MANUFACTURING COMPANY (Registrant) By: A. D. REID --------------------------------------- A. D. Reid, Vice President, Finance and Chief Financial Officer (Principal Financial Officer) Date: February 8, 1998 By: W. E. PAVLICK --------------------------------------- W. E. Pavlick, Senior Vice President, General Counsel and Secretary EX-3 2 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) 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 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. 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: a 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 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 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 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 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 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 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. 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 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 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 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. EX-99 3 EXHIBIT 99(a) IMPORTANT FACTORS AND ASSUMPTIONS REGARDING FORWARD-LOOKING STATEMENTS These cautionary statements are being made pursuant to the provisions of the Private Securities Litigation Reform Act of 1995 and with the intention of obtaining the benefits of the "safe harbor" provisions of the Act. Investors are cautioned that any forward-looking statements made by Modine are not guarantees of future performance and that actual results may differ materially from those in the forward-looking statements as a result of various factors, including: customers' integration of products currently being supplied by the Company; the success of Modine or its competitors in obtaining the business of the customer base; the ability to pass on increased costs to customers; variations in currency-exchange rates in view of a large portion of the Company's business being non-domestic; 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-1999 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. EX-99 4 EXHIBIT 99(b) NEWS RELEASE Release Date: Immediate Modine Manufacturing Company Contact: Gerald J. Sweda 1500 DeKoven Avenue Racine, Wisconsin 53403-2552 Telephone: (414) 636-1361 Modine board elects new director RACINE, Wis., Feb. 8, 1999 - The Modine Manufacturing Company (Nasdaq: MODI) Board of Directors has elected Marsha Williams to serve as a new director of the corporation, expanding the number of board members to ten. Since May 1998, Williams has been chief administrative officer for Crate & Barrel, a privately held specialty chain owned by the German company Otto Versand. Previously, she had been vice president & treasurer of Amoco Corporation and Carson Pirie Scott & Company, and vice president of The First National Bank of Chicago. Williams is a 1973 graduate of Wellesley College and earned an MBA in 1976 at the University of Chicago Graduate School of Business. Modine is a world leader at solving heating and cooling problems in vehicles, buildings, and off-highway and industrial equipment. Modine has annualized sales of more than $1 billion and has 8,800 employees worldwide. -----END PRIVACY-ENHANCED MESSAGE-----