-----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, N8Mh0xbQxWWA0c0ZR2QKYGD/rAtzqaQZWSsYaHTNjazkUkhm3GWOSQDEzmjvDin3 XvTiIYRAN0+a4gnhKj/rng== 0000067347-97-000015.txt : 19970805 0000067347-97-000015.hdr.sgml : 19970805 ACCESSION NUMBER: 0000067347-97-000015 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19970626 FILED AS OF DATE: 19970804 SROS: NASD 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: 1934 Act SEC FILE NUMBER: 001-01373 FILM NUMBER: 97650771 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 June 26, 1997 ------------- 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 August 1, 1997 ------------------------------ ----------------------------- Common Stock, $0.625 Par Value 29,767,543 MODINE MANUFACTURING COMPANY INDEX PART I. FINANCIAL INFORMATION Page No. -------- Item 1. Financial Statements Consolidated Balance Sheets - June 26 and March 31, 1997 3 Consolidated Statements of Earnings - For the Three Months Ended June 26, 1997 and 1996 4 Consolidated Statements of Cash Flows - For the Three Months Ended June 26, 1997 and 1996 5 Notes to Consolidated Financial Statements 6-7 Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition 8-10 PART II. OTHER INFORMATION Item 1. Legal Proceedings 11 Item 6. Exhibits and Reports on Form 8-K 12-13 Signatures 13 MODINE MANUFACTURING COMPANY CONSOLIDATED BALANCE SHEETS (In thousands, except per-share amounts) June 26, 1997 and March 31, 1997 (Unaudited)
June 26, 1997 March 31, 1997 ------------- -------------- ASSETS - ------ Current assets: Cash and cash equivalents $ 37,380 $ 34,822 Trade receivables, less allowance for doubtful accounts of $4,526 and $4,140 164,906 149,800 Inventories 144,024 142,115 Deferred income taxes and other current assets 37,853 39,405 -------- -------- Total current assets 384,163 366,142 -------- -------- Other assets: Property, plant, and equipment - net 214,812 210,115 Investment in affiliates 9,582 9,497 Intangible assets, less accumulated amortization of $13,991 and $12,885 61,445 62,948 Deferred charges and other noncurrent assets 47,064 46,253 -------- -------- Total other assets 332,903 328,813 -------- -------- Total assets $717,066 $694,955 ======== ======== LIABILITIES AND SHAREHOLDERS' INVESTMENT - ---------------------------------------- Current liabilities: Short-term debt $ 3,622 $ 2,962 Long-term debt - current portion 14,194 14,061 Accounts payable 71,817 72,173 Accrued compensation and employee benefits 48,588 44,497 Income taxes 15,905 7,535 Accrued expenses and other current liabilities 26,409 28,771 -------- -------- Total current liabilities 180,535 169,999 -------- -------- Other liabilities: Long-term debt 85,872 85,197 Deferred income taxes 13,346 13,331 Other noncurrent liabilities 41,265 40,740 -------- -------- Total other liabilities 140,483 139,268 -------- -------- Total liabilities 321,018 309,267 -------- -------- 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 10,380 9,760 Retained earnings 390,419 378,740 Foreign currency translation adjustment (3,838) (3,016) Treasury stock at cost: 568 and 509 shares, respectively (16,411) (14,949) Restricted stock - unamortized value (3,466) (3,811) -------- --------- Total shareholders' investment 396,048 385,688 -------- --------- Total liabilities and shareholders' investment $717,066 $694,955 ======== ======== (See accompanying notes to consolidated financial statements.)
MODINE MANUFACTURING COMPANY CONSOLIDATED STATEMENTS OF EARNINGS For the three months ended June 26, 1997 and 1996 (In thousands, except per-share amounts) (Unaudited)
Three months ended June 26 ----------------------------- 1997 1996 ---------- ---------- Net sales $256,923 $248,514 Cost of sales 181,882 181,163 -------- -------- Gross profit 75,041 67,351 Selling, general, and administrative expenses 44,549 42,099 -------- -------- Income from operations 30,492 25,252 Non-operating income 1,890 2,627 Interest expense (1,135) (1,302) Non-operating expense (1,427) (1,387) -------- -------- Earnings before income taxes 29,820 25,190 Provision for income taxes 11,635 8,800 -------- -------- Net earnings $ 18,185 $ 16,390 ======== ======== Net earnings per share of common stock* $0.60 $0.54 ======== ======== Dividends per share $0.19 $0.17 ======== ======== Average common shares and common share equivalents outstanding 30,389 30,404 ======== ======== (See accompanying notes to consolidated financial statements.) *(See Exhibit 11 for computation of earnings per share.)
MODINE MANUFACTURING COMPANY CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) For the Three Months Ended June 26, 1997 and 1996 (Unaudited)
Three months ended June 26 ----------------------------- 1997 1996 ---------- ---------- Net cash provided by operating activities $ 23,430 $ 23,527 Cash flows from investing activities: Expenditures for property, plant, and equipment (14,656) (16,668) Acquisitions, net of cash acquired 0 (1,829) Proceeds from dispositions of assets (8) 52 Other - net (41) (131) -------- -------- Net cash (used for) investing activities (14,705) (18,576) Cash flows from financing activities: Increase/(decrease) in short-term debt - net 688 (3,249) Additions to long-term debt 2,202 8,289 Reductions of long-term debt (1,092) (3,078) Issuance of common stock, including treasury stock 392 2,504 Purchase of treasury stock (2,698) (1,025) Cash dividends paid (5,659) (5,064) -------- -------- Net cash (used for) financing activities (6,167) (1,623) -------- -------- Net increase in cash and cash equivalents 2,558 3,328 Cash and cash equivalents at beginning of period 34,822 17,958 -------- -------- Cash and cash equivalents at end of period $ 37,380 $ 21,286 ======== ======== (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) ----------------------------------------------------------- June 26, 1997 March 31, 1997 ----------------------------------------------------------- Raw materials $ 38,587 $ 41,592 Work in process 36,746 37,317 Finished goods 68,691 63,206 -------- -------- Total inventories $144,024 $142,115 ======== ======== 2. Property, plant, and equipment is composed of: (In Thousands) ----------------------------------------------------------- June 26, 1997 March 31, 1997 ----------------------------------------------------------- Gross, property, plant & equipment $472,371 $458,914 Less accumulated depreciation (257,559) (248,799) -------- -------- Net property, plant & equipment $214,812 $210,115 ======== ======== 3. Recent developments concerning legal proceedings reported in the Company's Form 10-K report for the year ended March 31, 1997, 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 consolidated financial position. 4. In June of 1997, the Financial Accounting Standards Board issued Statement No. 130, "Reporting Comprehensive Income" and Statement No. 131, "Disclosures about Segments of an Enterprise and Related Information." Under the new reporting and disclosure requirements promulgated in these statements, the Company is required to, and will adopt the provisions beginning in its fiscal 1998-99 year. 5. 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, 1997 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 three months of fiscal 1998 are not necessarily indicative of the results to be expected for the full year. 6. 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 1997 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, 1997. 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 First Quarter of 1997-98 with the First Quarter - ----------------------------------------------------------------- of 1996-97 - ---------- Net sales for the first quarter of fiscal 1997-98 were a record $256.9 million, up 3.4% from the $248.5 million reported in the first quarter of last year. Sales increased in five of Modine's six major markets. The largest revenue increase was to the industrial market, particularly due to the good business with engine manufacturers both domestically and abroad. In the medium-heavy truck market, sales to North American heavy-truck OEM's showed a good increase over the prior year. Sales to the building market, particularly from components sold to residential and commercial air- conditioning OEM's, registered significant gains on a year-over- year basis. Dollar-denominated sales to the passenger-car and light-truck market were down somewhat from the year before while unit sales were up, particularly in Europe. Gross margin increased 2.1%, as a percentage of sales, over the first quarter of the previous year to 29.2% from 27.1%. Improvements shown in Europe and the North American truck and automotive aftermarket were primarily responsible for the change. Selling, general and administrative expenses increased 5.8% over last year's first quarter while only increasing 0.4% as a percent of sales. A number of categories registered small increases over a year ago. Average outstanding debt levels declined $8.6 million, or approximately 8.0%, from the same quarter a year ago while interest expense declined 12.8%, or $0.2 million from a year ago. The lower interest expense can be primarily attributed to a continuing reduction in higher rate domestic debt through normally scheduled repayments. Net non-operating income declined by $0.8 million. A one-time reserve adjustment in fiscal 1996-97, relating to changes in the sales organization in Europe, was the main factor contributing to the year-over-year change. The effective tax rate of 39.0%, increased by 4.1% when compared to the same period last year. The main factors responsible for the increase were higher earnings in Europe and lower tax loss carryforwards. Net earnings for the first quarter were a record $18.2 million or $.60 per share, up 11.0% from last year's $16.4 million, or $.54 per share. Increased contribution from Europe and from the North American truck market and the automotive aftermarket had the greatest impact on the gain in earnings, more than offsetting the effect of a stronger U.S. dollar. Outlook for the Remainder of the Year - ------------------------------------- As forecast in the annual report, the company's margins have continued to improve. If the markets the Company serves remain strong, with the economies of the United States and Europe continuing to hold up, fiscal-year earnings growth of about 10 percent is achievable on the more modest sales increase that is expected. 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 June 26, 1997 and March 31, 1997 - --------------------------------------------------- Current Assets - -------------- Cash and cash equivalents increased by $2.6 million to a total of $37.4 million. The Company's primary sources of liquidity and capital resources were cash provided by operations and the utilization of available borrowing facilities. Net trade receivables increased $15.1 million. Higher sales and normal seasonal marketing programs contributed to the increase. Inventory levels declined by $1.9 million. Among the items effecting inventory were higher sales volumes, exchange rate fluctuations in Europe, process and product line changes at certain manufacturing facilities as well as ongoing management efforts to control inventory levels. Deferred income taxes and other current assets decreased $1.6 million due primarily to reductions in other receivables and unbilled customer tooling. Working capital increased approximately 4% to $203.6 million from $196.1 million while the current ratio decreased slightly to 2.1 to 1 from 2.2 to 1. A number of categories experienced changes, but the largest items influencing the change were increases in trade receivables, income taxes payable, and accrued compensation and employee benefits. Property, Plant and Equipment - ----------------------------- Net property, plant and equipment increased $4.7 million to $214.8 million as capital expenditures exceeded depreciation, retirements and foreign currency translation adjustments. Outstanding material commitments for capital expenditures were $50.5 million at June 26, 1997 compared to $27.0 million at March 31, 1997. The largest commitment of approximately $21.6 million relates to the construction of the new technical center in Racine, Wisconsin. Approximately $12.7 million of the outstanding commitment amount covers facility expansions, improvements, equipment upgrades, and new equipment for a number of European plants. The outstanding commitments will be financed primarily through internally generated cash. Intangible Assets - ----------------- Intangible assets decreased $1.5 million. Amortization and foreign currency translations were the main items contributing to the change. Deferred Charges and Other Noncurrent Assets - -------------------------------------------- Deferred charges and other noncurrent assets increased $0.8 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, accrued compensation and employee benefits and other accrued expenses increased $1.4 million. Normal timing differences in the level of operating activity were responsible for the increase. Accrued income taxes increased $8.4 million from normal timing differences in making estimated tax payments together with an increase in the effective tax rate. Debt - ---- Total outstanding debt increased by $1.5 million. Short-term debt increased $0.7 million while long-term debt increased by $0.8 million. The changes in short-term debt occurred at the Company's European subsidiaries. Consolidated available lines of credit decreased during the quarter by $1.0 million. The foreign unused lines of credit at June 26, 1997 were $6.7 million, while the Company had $12.5 million available under a domestic multicurrency revolving credit agreement. The total debt to equity ratio decreased from 26.5% to 26.2% during the quarter. Shareholders' Investment - ------------------------ Total shareholders' investment increased by $10.4 million to a total of $396.0 million. The net increase resulted primarily from record first quarter net earnings of $18.2 million. The value of the dollar increased relative to other currencies during the quarter, resulting in an unfavorable foreign currency translation impact of $0.8 million. Dividends paid to shareholders of $5.7 million, net treasury stock purchases of $1.5 million; and other minor changes to the capital accounts also contributed to the change. PART II. OTHER INFORMATION Item 1. Legal Proceedings. In the normal course of business, the Company and its subsidiaries are named as defendants in various lawsuits and enforcement proceedings by private parties, the Occupational Safety and Health Administration, the Environmental Protection Agency, other governmental agencies, and others in which claims, such as personal injury, property damage, or antitrust and trade regulation issues, are asserted against the Company. While the outcome of these proceedings is uncertain, in the opinion of the Company's Management and counsel, any liabilities that may result from such proceedings are not reasonably likely to have a material effect on the Company's liquidity, financial condition or results of operations. Many of the pending damage claims are covered by insurance and, in addition, the Company from time to time establishes reserves for uninsured liabilities. The Mitsubishi and Showa Litigation ----------------------------------- In November 1991, the Company filed a lawsuit against Mitsubishi Motor Sales of America, Inc., and Showa Aluminum Corporation, alleging infringement of the Company's patent on parallel-flow air-conditioning condensers. The suit seeks an injunction to prohibit continued infringement, an accounting for damages, a trebling of such damages for willful infringement, and reimbursement of attorneys' fees. In December 1991, the Company submitted a complaint to the U.S. International Trade Commission (ITC) requesting that the ITC ban the import and sale of parallel- flow air-conditioning condensers and systems or vehicles that contain them, which are the subject of the aforementioned lawsuit. In July 1993, the ITC reversed an earlier ruling by a hearing officer and upheld, as valid and enforceable, the Company's basic patent on parallel-flow air-conditioning condensers. The ITC also ruled that specific condensers from the two Japanese companies did not infringe the Company's patent. Each of the parties appealed, to the U.S. Court of Appeals for the Federal Circuit, the portion of the ITC opinion adverse to them. In February 1996, the U.S. Court of Appeals for the Federal Circuit, upheld the patent as valid and enforceable and remanded the case to the ITC for a determination with respect to Showa infringement. In July of 1994, Showa filed a lawsuit against the Company alleging infringement by the Company of certain Showa patents pertaining to condensers. (In June 1995, the Company filed a motion for partial summary judgment against such lawsuit). In December of 1994, the Company filed another lawsuit against Mitsubishi and Showa pertaining to a newly issued patent on parallel-flow air-conditioning condensers. Both 1994 suits have been stayed pending the outcome of re-examination in the U.S. Patent Office of the patents involved. 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 6. Exhibits and Reports on Form 8-K. (a) Exhibits: -------- The following exhibits are included for information only unless specifically incorporated by reference in this report: Reference Number per Item 601 of Regulation S-K Page - ---------------- ---- 4(a) Rights Agreement dated as of October 16, 1986 between the Registrant and First Chicago Trust Company of New York (Rights Agent) (filed by reference to the Registrant's Annual Report on Form 10-K for the fiscal year ended March 31, 1997). 4(b)(i) Rights Agreement Amendment No. 1 dated as of January 18, 1995 between the Registrant and First Chicago Trust Company of New York (Rights Agent) (filed by reference to the exhibit contained within the Registrant's Current Report on Form 8-K dated January 13, 1995.) 4(b)(ii) Rights Agreement Amendment No. 2 dated as of January 18, 1995 between the Registrant and First Chicago Trust Company of New York (Rights Agent) (filed by reference to the exhibit contained within the Registrant's Current Report on Form 8-K dated January 13, 1995.) 4(b)(iii) Rights Agreement Amendment No. 3 dated as of October 15, 1996, between the Registrant and First Chicago Trust Company of New York (Rights Agent) (filed by reference to the exhibit contained within the Registrant's Quarterly Report on Form 10-Q dated December 26, 1996.) 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. Reference Number per Item 601 of Regulation S-K Page - ---------------- ---- Therefore, no such instruments are required to be filed as exhibits to this Form 10-Q. The Registrant agrees to furnish copies of such instruments to the Commission upon request. 11* Computation of per share earnings 14 27* Financial Data Schedule (electronic transmission only) 99* Important Factors and Assumptions Regarding Forwarding-Looking Statements 15 *Filed herewith. (b) Reports on Form 8-K: ------------------- The Company filed one Form 8-K to report that certain forward looking statements regarding forecasts of sales and earnings growth are subject to certain risks and uncertainties as explained therein. This Report is dated June 6, 1997. 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: August 1, 1997 By: W. E. PAVLICK ----------------------------------------- W. E. Pavlick, Senior Vice President, General Counsel and Secretary EX-11 2 EXHIBIT 11 MODINE MANUFACTURING COMPANY COMPUTATION OF PER SHARE EARNINGS (In thousands, except per share amounts)
Three months ended June 26 ---------------------------- 1997 1996 ---------- ---------- Primary - ------- Weighted average shares outstanding 29,801 29,780 Share equivalents for period prior to exercise (options exercised) 11 8 Net shares issuable, assuming exercise of options using average market price and employing the treasury stock method 577 616 ------- ------- Average common share and common share equivalents 30,389 30,404 ======= ======= Net earnings for the period $18,185 $16,390 ======= ======= Net earnings per share of common stock $0.60 $0.54 ======= ======= Fully Diluted - ------------- Weighted average shares outstanding 29,801 29,780 Share equivalents for period prior to exercise (options exercised) 11 8 Net shares issuable, assuming exercise of options using ending market price (unless antidilutive) and employing the treasury stock method 629 616 ------- ------- Average common share and common share equivalents 30,441 30,404 ======= ======= Net earnings for the period $18,185 $16,390 ======= ======= Net earnings per share of common stock $0.60 $ 0.54 ======= =======
EX-27 3
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED BALANCE SHEET AND CONSOLIDATED STATEMENT OF EARNINGS FOR THE PERIOD ENDING 6/26/97 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS MAR-31-1998 APR-1-1997 JUN-26-1997 37,380 0 169,432 4,526 144,024 384,163 472,371 257,559 716,066 180,535 85,872 0 0 18,964 377,084 717,066 256,923 256,923 181,882 181,882 0 359 1,135 29,820 11,635 18,185 0 0 0 18,185 0.60 0.60
EX-99 4 EXHIBIT 99 IMPORTANT FACTORS AND ASSUMPTIONS REGARDING FORWARD-LOOKING STATEMENTS These cautionary statements are being made pursuant to the provisions of the Private Securities Litigation Reform Act of 1995 and with the intention of obtaining the benefits of the "safe harbor" provisions of the Act. Investors are cautioned that any forward-looking statements made by Modine are not guarantees of future performance and that actual results may differ materially from those in the forward-looking statements as a result of various factors, including: customers' integration of products currently being supplied by the Company; the success of Modine or its competitors is obtaining the business of the customer base; the ability to pass on increased costs to customers; variations in currency-exchange rates in view of a large portion of the Company's business being nondomestic; 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-1998 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. -----END PRIVACY-ENHANCED MESSAGE-----