8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act

of 1934

Date of Report (Date of earliest event reported): October 19, 2006

Modine Manufacturing Company

(Exact name of registrant as specified in its charter)

Wisconsin	1-1373	39-0482000
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification Number)

1500 DeKoven Avenue, Racine, Wisconsin	53403
Address of principal executive offices	Zip Code

Registrant's telephone number, including area code: (262) 636-1200

_____________________

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (See General Instruction A.2. below):

[ ]Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[ ]Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[ ]Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

F-

INFORMATION TO BE INCLUDED IN THE REPORT

Item 2.02Results of Operations and Financial Condition

On October 19, 2006, Registrant issued a press release announcing the results of operations and financial condition for the second quarter ended September 26, 2006. The text of that release and financial statements are attached hereto as Exhibit 99.1.

Item 9.01Financial Statements and Exhibits

(c)Exhibits

The following exhibit is being furnished herewith:

99.1Press Release dated October 19, 2006 announcing the results of operations and financial condition for the second quarter ended September 26, 2006.

F-

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 hereunto duly authorized.

Modine Manufacturing Company

By: /s/ D.B. Rayburn

 D.B. Rayburn

 President and Chief Executive Officer

By: /s/ D.R. Zakos

D.R. Zakos

Vice President, General Counsel and

Secretary

Date: October 19, 2006

F-

Exhibit No.Description

99.1Press Release dated October 19, 2006 announcing the results of operations and financial condition for the second quarter ended September 26, 2006.

EX-99

               NEWS RELEASE

For Immediate Release

Investor Contact: Wendy Wilson262-636-8434 w.wilson@na.modine.com

Media Contact: Lori Stafford262-636-1001 l.stafford@na.modine.com

Modine Reports Record Fiscal 2007 Second Quarter Sales of $438 Million and Net Earnings from Continuing Operations of $0.35 per Share

Racine, WI, October 19, 2006 - Modine Manufacturing Company (NYSE: MOD), a diversified global leader in thermal management technology and solutions, today reported preliminary net earnings of $0.35 per fully diluted share from continuing operations for its fiscal 2007 second quarter ended September 26, 2006, compared with $0.41 per fully diluted share, in the second quarter of fiscal 2006. Two significant items that are outside the normal course of business affected fiscal 2007 second quarter results from continuing operations: 1) an $8.0 million tax benefit, or $0.24 per fully diluted share, related to the closure of Modine’s Taiwan facility; and 2) post tax charges of $3.3 million, or $0.10 per fully diluted share, related to the impact of Modine’s recently announced repositioning activities. Excluding the impact of these significant items, net earnings were $0.21 per fully diluted share.*

The following table reconciles the estimated significant differences in earnings from continuing operations from the second quarter of fiscal 2006 to the second quarter of fiscal 2007:

($’s in millions, after tax)

Second quarter fiscal 2006 earnings

from continuing operations$14.3

Impact of differences in current year:

Taiwan tax benefit    8.0

Repositioning activities    (3.3)

Net impact of commodity prices        (6.9)

Customer price decreases         (4.0)

Original Equipment-Asia shortfall(mainly strike related) (2.5)

Volume impact    1.5

Operating efficiencies     2.2

Other insignificant differences2.1

Second quarter fiscal 2007 earnings

from continuing operations$11.4

The company’s underlying operational results were impacted by incrementally higher commodity prices - copper up 100 percent and aluminum up 32 percent over last year - as well as continuing customer pricing pressures in the company’s vehicular business. In addition, the company’s Original Equipment- Asia segment was adversely impacted by a strike at a customer facility in Korea. These were partially offset by increased volumes in the company’s truck and heavy-duty markets, and operating efficiencies.

“We continue to experience a challenging year but I’m confident in the strategy we’ve developed and our ability to execute. We anticipated these challenges and developed, implemented and have made solid progress on our five point plan to improve margins and meet our growth and return on average capital employed (ROACE)* goals,” said David B. Rayburn, Modine President and Chief Executive Officer. “Bottom line, we have the right strategy, we are putting the right people in the right positions and we are taking the steps necessary to improve our financial performance.”

Rayburn outlined Modine’s five-point plan to improve margins and drive progress toward the company’s growth and ROACE goals. The elements of the plan are:

·   Reduce selling, general and administrative (SG&A) expenses by $20 million. In the first six months of this fiscal year, the company initiated an early retirement program in the U.S. and reconfigured its internal structure to simplify and flatten the organization, and to improve its focus on products and operations.

·   Reposition the manufacturing footprint with a focus on low cost countries. The company announced the closure of two plants in the U.S. and the construction of a new plant in China to serve the Chinese and Korean domestic markets and a new plant in Mexico, to serve customers in the U.S. Additional actions will be forthcoming.

·   Diversify. Modine completed its acquisition of Radiadores Visconde in Brazil.

·   Increase low cost country sourcing. The company’s initiatives are progressing as it increasingly uses sources in areas that will enable margin improvement.

·   Increase focus on technology development.The company introduced new green technology, an Idle-Off Demonstrator with fuel cells and CO₂, to help heavy truck customers cut emissions and save money. The company continues to commit additional resources to enhance its technology efforts.

Other Second Quarter Items

·   Earnings before interest, taxes, depreciation and amortization (EBITDA)* was $23.9 million, down 44.2 percent, from $42.9 million in the second quarter of fiscal 2006. EBITDA in the fiscal 2007 second quarter includes $4.5 million, pre-tax, of costs associated with the company’s ongoing global repositioning efforts.

·   ROACE was 8.8 percent compared to 9.8 percent in the second fiscal quarter last year.

·   Modine announced several new business wins - all supporting its four to six percent organic revenue growth goal. The company:

o   Entered into a contract to supply Volvo with exhaust gas recirculation coolers;

o   Won a $13.0 million contract to supply DEUTZ AG with exhaust gas recirculation coolers; and,

o   Received an award of $50.0 million in new business from DENSO to produce radiators, parallel flow condensers, charge air coolers and power-steering oil coolers to support their thermal systems business.

Second quarter sales from continuing operations reached a record $437.5 million, an 8.3 percent improvement from $404.2 million in the second fiscal 2006 quarter. Excluding the impact of acquisitions and foreign currency exchange rate changes, underlying sales grew by $2.2 million, or 0.5 percent. Sales volumes were positively impacted by strength in the truck and heavy-duty markets, as well as revenues from the May 2006 acquisition of the remaining 50 percent of RV that the company did not already own. Net earnings from continuing operations of $11.4 million declined from $14.3 million in the same period last year, primarily driven by factors reviewed above - higher commodity pricing, customer pricing pressure from vehicular customers, a customer strike and a repositioning charge. Additionally, during the second quarter, the company was able to recover a portion of its investment in its Taiwan business through the recognition of an $8.0 million tax benefit.

Operating cash flow for the second quarter of fiscal 2007 was $35.7 million. ROACE for the four quarters ended September 26, 2006 was 8.8 percent compared with 9.8 percent for the same period a year ago and 9.7 percent at the end of fiscal 2006. Modine's ROACE target is 11.0-12.0 percent through a cycle.

Second quarter fiscal 2007 selling, general and administrative (SG&A) expenses increased $4.9 million from fiscal 2006, primarily driven by approximately $1.9 million of repositioning costs and additional SG&A associated with the acquisition of RV. Absent these factors, SG&A was consistent with the comparable quarter in the 2006 fiscal year. As a percentage of sales, SG&A expenses decreased from 14.0 percent to 13.6 percent - excluding repositioning costs and the impact of Modine’s acquisition in Brazil. The company expects to realize the benefits from its programs to reduce SG&A costs in its upcoming quarters. Modine’s goal is to reduce these expenses by $20.0 million, or approximately 10.0 percent on an annualized basis.

Second Quarter Segment Data and Performance

Second quarter sales for the Original Equipment - Americas segment increased $27.7 million, or 16.1 percent, to $200.3 million from $172.6 million reported one year ago with operating income of $16.4 million versus $22.9 million in the second quarter of fiscal 2006. The truck and the heavy-duty businesses both reported solid revenue improvements, partially offset by a decline in North American automotive sales. Sales attributable to RV had a $21.6 million positive impact on quarterly sales results. Excluding the positive impact of the RV acquisition, operating income was down across all businesses, due to continued pricing pressure and the effect of higher raw material costs, as well as $2.2 million in pre-tax costs incurred in the company’s repositioning efforts.

Second quarter sales for the Original Equipment - Europe segment increased 5.4 percent to $135.7 million from $128.7 million one year ago, due to the positive effect of foreign currency on the business with operating income of $12.7 million versus $17.0 million last year. The heavy-duty business showed revenue increases driven by strong volumes from the introduction of new programs, while the automotive business was slightly down. However, the revenue growth was more than offset by higher commodity costs and customer pricing pressures.

Sales for the Original Equipment - Asia segment in the second quarter decreased 15.5 percent to $42.0 million from $49.7 million one year ago, with an operating loss of ($4.0) million versus ($0.7) million in fiscal 2006, due to customer strike activity that caused unplanned shutdowns at the customer’s facilities. This disruption has ceased and current results indicate improvements in revenue and income from operations.

Sales for the Commercial Heating, Ventilating, Air Conditioning and Refrigeration (Commercial HVAC&R) segment increased 8.4 percent to $50.0 million from $46.1 million one year ago due primarily to strength of Airedale product sales to the North American school market. Operating income was $2.7 million versus $4.2 million in fiscal 2006 primarily because of softer North American sales of heating products (energy price related) that carry relatively higher margins and short term costs incurred as we introduce the Airedale products into the U.S. market.

Sales for the Other segment were $10.4 million up from $8.2 million one year ago with an operating loss of ($2.3) million versus ($3.2) million in fiscal 2006. The operating losses in both years are related to Modine’s Taiwan operations that ceased production in July 2006.

Balance Sheet and Cash Flow

In commenting on the company’s financial position, Bradley C. Richardson, Modine’s Executive Vice President Finance and Chief Financial Officer said, “We ended the second quarter with a solid balance sheet. During the first half of fiscal 2007, we funded capital expenditures of $39.0 million in support of new business and paid a per-share dividend in the amount of approximately $11.4 million. Our cash balance at the end of September 2006 was $18.4 million compared to $30.8 million at the end of the 2006 fiscal year as we remain focused on minimizing our on-hand cash balances by investing in the business and providing returns to our shareholders.”

Operating cash flow was $35.7 million in the first half of fiscal 2007 compared with $50.0 million in the first half of fiscal 2006 due to increased working capital needs and declining financial performance. Total debt at the end of the fiscal 2007 second quarter was $187.3 million compared with $157.8 million at the end of fiscal 2006. The total debt to capital (total debt plus shareholders’ equity) ratio increased to 26.5 percent compared with 23.8 percent at the end of fiscal 2006. The increase in Modine’s debt level in the first half of fiscal 2007 is primarily attributable to the company’s acquisition of its remaining 50 percent of RV. Additionally, the company repurchased $12.1 million of its outstanding stock in the first half of fiscal 2007, comprised of 453,700 shares, at an average price of $26.60.

Working capital of $144.9 million at the end of the fiscal 2007 second quarter was higher than the balance of $117.2 million at last fiscal year end primarily due to assets capitalized in conjunction with the company’s acquisition of RV and increased working capital needs.

Fiscal 2007 Outlook

In commenting on Modine’s fiscal 2007 outlook, Rayburn said, “It’s clear that fiscal 2007 is a year of transition. We are faced with key opportunities this year and some ongoing challenges. An important note to remember is while truck volumes are anticipated to decline from current historical levels after the January 1, 2007 emissions law change goes into effect, the company has partially offset this decline by securing new business from Freightliner that has significantly increased our share of the U.S. truck market , as well as our content per vehicle. Additionally, we should benefit from the positive influences from the accretive acquisition of RV and the closing of the company’s Taiwan operation that has historically operated in a loss position. We will continue to be challenged by the effects that ongoing high raw material costs have on our margins. We are currently hedging 60 percent of our forecasted aluminum needs, and generally we are able to pass higher commodity costs to our customers on a lag basis - on average over a ten-month period. As well, demands from our original equipment customers for price-downs on our products will continue downward pressure on margins.”

Rayburn added, “Our five-point plan and our recent internal structural reorganization that places a more strategic emphasis on our products and performance will make us a more cost competitive, innovative and efficient technology provider to our customers and help build a larger backlog of business.”

Conference Call and Webcast

Modine will conduct a conference call on Thursday, October 19, 2006 at 11:00 a.m. EDT (10:00 a.m. CDT) to discuss additional details regarding the company’s performance for the fiscal 2007 second quarter. President and Chief Executive Officer, Dave Rayburn and Executive Vice President Finance and Chief Financial Officer, Brad Richardson will host the call. Participants should dial 800.289.0496 and international participants should dial 913.981.5519. A replay will be available through November 2, 2006 by calling 719.457.0820 or 888.203.1112. Use Passcode 8084135.

Additionally, an audio Webcast of the conference call, both live and as a replay, is accessible through the “Investor Relations” section of Modine’s Web site at www.modine.com. Listeners are encouraged to log on to the Webcast about 10 minutes before the start of the conference call.

About Modine

Modine, with fiscal 2006 revenues of $1.6 billion, specializes in thermal management systems and components, bringing highly engineered heating and cooling technology and solutions to diversified global markets. Modine products are used in light, medium and heavy-duty vehicles, HVAC equipment, industrial equipment, refrigeration systems, fuel cells, and electronics. The company employs approximately 9,000 people at 34 facilities worldwide. For more information about Modine, visit www.modine.com.

Forward-Looking Statements

Statements made in this press release regarding future matters are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements, including those regarding a positive impact from new business programs, accretive acquisitions, acceleration of technology, achievement of cost reductions, expansion into niche markets, refocus in global manufacturing footprint, increased cash flow and continued strong financial returns are based on Modine’s current expectations. Modine’s actual results, performance or achievements may differ materially from those expressed or implied in these statements because of certain risks and uncertainties, including international economic changes and challenges; market acceptance and demand for new products and technologies; the ability of Modine to integrate the acquired operations and employees in a timely and cost-effective manner; the ability of Modine, its customers and suppliers to achieve projected sales and production levels; unanticipated product or manufacturing difficulties; and other factors affecting the company’s business prospects discussed in filings made by the company, from time to time, with the SEC including the factors discussed item 1A, Risk Factors, and in the “Cautionary Factors” section in Item 7 of the company’s most recent Annual Report on Form 10-K and its periodic reports on Form 10-Q. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise.

Modine’s financial results, as reported herein, are preliminary and subject to possible adjustments.

*Non-GAAP Financial Disclosures

Financial information excluding restructuring charges and tax benefits in this press release are not measures that are defined in generally accepted accounting principles (GAAP). These items are measures that management believes are important to adjust for in order to have a meaningful comparison to prior and future periods and to provide a basis for future projections and for estimating our earnings growth prospects. Non-GAAP measures are used by management as a performance measure to judge profitability of our business absent the restructuring and tax related items. Management analyzes the company’s business performance and trends excluding amounts related to the restructuring and tax benefits. These measures, as well as EBITDA and ROACE, provide a more consistent view of performance than the closest GAAP equivalent for management and investors. Management compensates for this by using these measures in combination with the GAAP measures. The presentation of the non-GAAP measures in this press release are made alongside the most directly comparable GAAP measures.

Definition - Return on average capital employed (ROACE) The sum of, net earnings and adding back after-tax interest (interest expense less the tax benefit at the total company effective tax rate), divided by the average, total debt plus shareholders' equity: this is a financial measure of the profit generated on the total capital invested in the company before any interest expenses payable to lenders, net of any tax effect.

Definition - Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) The sum of, net earnings and adding back provision for income taxes, interest expense, discontinued operations, depreciation and amortization: this is a financial measure of the profit generated excluding the above mentioned items.

Modine Manufacturing Company
Consolidated statements of earnings (unaudited)
(In thousands, except per-share amounts)
Three months ended September 26,								Six months ended September 26,
		2006			2005			2006			2005
Net sales	$	437,512		$	404,152		$	867,905		$	800,990
Cost of sales		369,706			324,366			724,003			640,932
Gross profit		67,806			79,786			143,902			160,058
Selling, general, & administrative expenses		61,590			56,651			116,652			107,204
Restructuring		1,375			-			2,225			-
Income from operations		4,841			23,135			25,025			52,854
Interest expense		(2,417	)		(1,837	)		(4,427	)		(3,381	)
Other income - net		1,382			607			2,891			3,278
Earnings from continuing operations before income taxes		3,806			21,905			23,489			52,751
Benefit from/provision for income taxes		(7,608	)		7,583			(4,222	)		17,731
Earnings from continuing operations		11,414			14,322			27,711			35,020
Earnings from discontinued operations (net of income taxes)		-			404			-			457
Loss on spin off of discontinued operations		-			(54,068	)		-			(54,068	)
Cumulative effect of accounting change (net of income taxes)		-			-			70			-
Net earnings (loss)	$	11,414			($39,342	)	$	27,781			($18,591	)
Earnings from continuing operations as a percent of net sales*		2.6	%		3.5	%		3.2	%		4.4	%
Earnings per share of common stock -basic:
Continuing operations	$	0.35		$	0.42		$	0.86		$	1.02
Earnings from discontinued operations		-			0.01			-			0.01
Loss on spin off of discontinued operations		-			(1.57	)		-			(1.57	)
Cumulative effect of accounting change		-			-			-			-
Net earnings(loss) -basic	$	0.35			($1.14	)	$	0.86			($0.54	)
Earnings per share of common stock -diluted:
Continuing operations	$	0.35		$	0.41		$	0.86		$	1.01
Earnings from discontinued operations		-			0.01			-			0.01
Loss on spin off of discontinued operations		-			(1.56	)		-			(1.56	)
Cumulative effect of accounting change		-			-			-			-
Net earnings(loss) -diluted	$	0.35			($1.14	)	$	0.86			($0.54	)
Weighted average shares outstanding:
Basic		32,171			34,185			32,192			34,257
Diluted		32,230			34,779			32,288			34,705
Net cash provided by operating activities	$	29,586		$	27,739		$	35,675		$	49,992
Dividends paid per share	$	0.1750		$	0.1750		$	0.3500		$	0.3500
Comprehensive earnings, which represents net earnings adjusted by the post-tax change in foreign-currency translation, minimum pension liability and the effective portion of cash flow hedges recorded in shareholders' equity, for the 3 month period ended September 26, 2006
and 2005, were $7,759 and ($37,211), respectively, and for the 6 month period ended September 26, 2006 and 2005, were $36,305 and ($34,885), respectively.
* A Non-GAAP measure
Condensed consolidated balance sheets (unaudited)
(In thousands)
September 26, 2006					March 31, 2006
Assets
Cash and cash equivalents	$	18,426		$	30,798
Short term investments		2,612			-
Trade receivables - net		253,208			254,681
Inventories		123,723			90,227
Other current assets		49,687			36,489
Total current assets		447,656			412,195
Property, plant, and equipment - net		506,050			467,600
Other noncurrent assets		168,357			172,300
Total assets	$	1,122,063		$	1,052,095
Liabilities and shareholders' equity
Debt due within one year	$	9,050		$	6,108
Accounts payable		177,093			187,048
Other current liabilities		116,572			101,793
Total current liabilities		302,715			294,949
Long-term debt		178,269			151,706
Deferred income taxes		42,639			38,424
Other noncurrent liabilities		77,727			61,591
Total liabilities		601,350			546,670
Shareholders' equity		520,713			505,425
Total liabilities & shareholders' equity	$	1,122,063		$	1,052,095

Modine Manufacturing Company
Condensed consolidated statements of cash flows (unaudited)
				(In thousands)
Six months ended September 26,	2006			2005
Net earnings (loss)	$	27,781			($ 18,591	)
Adjustments to reconcile net earnings(loss) with cash provided
by operating activities:
Depreciation and amortization		34,965			36,145
Loss on spin-off of aftermarket business		-			53,611
Other - net		(4,101	)		1,980
Net changes in operating assets and liabilities		(22,970	)		(23,153	)
Cash flows provided by operating activities		35,675			49,992
Cash flows from investing activities:
Expenditures for plant, property, & equipment		(38,958	)		(30,136	)
Acquisitions, net of cash		(11,096	)		(37,491	)
Spin-off of aftermarket business		-			(3,725	)
Proceeds for dispositions of assets		19			-
Other- net		146			198
Net cash used for investing activities		(49,889	)		(71,154	)
Cash flows from financing activities:
Net increase in debt		24,600			60,000
Settlement of derivative contract		(2,038	)		(1,794	)
Cash proceeds from exercise of stock options		1,175			8,597
Repurchase of common stock, treasury & retirement		(12,580	)		(24,261	)
Cash dividends paid		(11,351	)		(12,140	)
Other - net		2,685			4,526
Net cash provided by financing activities		2,491			34,928
Effect of exchange rate changes on cash		(649	)		(2,393	)
Net (decrease) / increase in cash and cash equivalents		(12,372	)		11,373
Cash and cash equivalents at beginning of the period		30,798			55,091
Cash and cash equivalents at end of the period	$	18,426		$	66,464

Modine Manufacturing Company
Return on average capital employed (unaudited)
				(Dollars in thousands)
Trailing four quarters ended September 26,	2006			2005
Net earnings	$	53,443		$	69,278
Plus interest expense net of tax benefit at total company effective tax rate		7,231			4,631
Net return	$	60,674		$	73,909
Divided by:
Average capital (debt + equity, last five quarter ends / divided by five)	$	688,180		$	757,951
Return on average capital employed		8.8	%		9.8	%
Interest expense	$	8,293		$	6,975
Total company effective tax rate		12.8	%		33.6	%
Tax benefit		1,062			2,344
Interest expense, net of tax benefit	$	7,231		$	4,631

Earnings before interest, taxes, depreciation and amortization (EBITDA) (unaudited)
										(Dollars in thousands)
	Three months ended September 26,						Six months ended September 26,
	2006			2005			2006			2005
Net earnings/(loss)	$	11,414			($39,342	)	$	27,781			($18,591	)
Provision for income taxes (a)		(7,608	)		7,583			(4,222	)		17,731
Interest expense		2,417			1,837			4,427			3,381
Discontinued operations (b)		-			(404	)		-			(457	)
Loss on spin off of discontinued operations (b)		-			54,068			-			54,068
Depreciation and amortization (c)		17,680			19,112			34,965			36,145
EBITDA	$	23,903		$	42,854		$	62,951		$	92,277
(a) Provision for income taxes for the six months ended September 26, 2006 includes $45 of taxes related to the cumulative effect
of accounting change.
(b) The calculation of EBITDA excludes the results of discontinued operations for the periods presented
(c) Depreciation and amortization of $489 and $1,594 for the three and six months ended September 26, 2005, respectively, related
to discontinued operations and were excluded from the depreciation and amortization as presented.