-----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, M5STfmP9jYJ8UQMlOjLEGLcSpxt9FXqtg8oIglKKdsrMfnqdVKxUcMqF9fCZHCIM MKWpa05L95sBPmNj/FyHrg== 0000067347-99-000020.txt : 19990809 0000067347-99-000020.hdr.sgml : 19990809 ACCESSION NUMBER: 0000067347-99-000020 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19990626 FILED AS OF DATE: 19990806 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: 99679406 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, 1999 ------------- 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 (I.R.S. Employer incorporation 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 5, 1999 ------------------------------- ----------------------------- Common Stock, $0.625 Par Value 29,525,980 MODINE MANUFACTURING COMPANY INDEX Page No. -------- PART I. FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Balance Sheets - June 26 and March 31, 1999 3 Consolidated Statements of Earnings - For the Three Months Ended June 26, 1999 and 1998 4 Consolidated Condensed Statements of Cash Flows - For the Three Months Ended June 26, 1999 and 1998 5 Notes to Consolidated Condensed Financial Statements 6-9 Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition 10-13 PART II. OTHER INFORMATION Item 1. Legal Proceedings 14 Item 4. Submission of Matters to a Vote of Security Holders 15 Item 6. Exhibits and Reports on Form 8-K 16 Signatures 18 MODINE MANUFACTURING COMPANY CONSOLIDATED BALANCE SHEETS (In thousands, except per-share amounts) June 26, 1999 and March 31, 1999 (Unaudited)
June 26, 1999 March 31, 1999 ASSETS Current assets: Cash and cash equivalents $ 41,919 $ 49,163 Trade receivables, less allowance for doubtful accounts of $3,868 and $3,749 186,765 182,910 Inventories 187,900 178,949 Deferred income taxes and other current assets 42,098 42,074 -------- -------- Total current assets 458,682 453,096 -------- -------- Noncurrent assets: Property, plant, and equipment--net 309,518 303,764 Investment in affiliates 27,932 24,327 Goodwill and other intangible assets--net 77,924 80,411 Deferred charges and other noncurrent assets 55,396 54,141 -------- -------- Total noncurrent assets 470,770 462,643 -------- -------- Total assets $929,452 $915,739 ======== ======== LIABILITIES AND SHAREHOLDERS' INVESTMENT Current liabilities: Short-term debt $ 71,601 $ 68,998 Long-term debt -- current portion 4,261 4,766 Accounts payable 89,956 97,443 Accrued compensation and employee benefits 50,207 48,869 Income taxes 18,115 9,694 Accrued expenses and other current liabilities 25,914 26,825 -------- -------- Total current liabilities 260,054 256,595 -------- -------- Noncurrent liabilities: Long-term debt 141,517 143,838 Deferred income taxes 20,661 20,533 Other noncurrent liabilities 41,552 41,554 -------- -------- Total noncurrent liabilities 203,730 205,925 -------- -------- Total liabilities 463,784 462,520 -------- -------- 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 13,528 13,543 Retained earnings 481,420 469,142 Accumulated other comprehensive loss (18,896) (18,341) Treasury stock at cost: 796 and 817 shares, respectively (27,631) (28,198) Restricted stock - unamortized value (1,717) (1,891) -------- -------- Total shareholders' investment 465,668 453,219 -------- -------- Total liabilities and shareholders' investment $929,452 $915,739 ======== ======== (See accompanying notes to consolidated financial statements.)
MODINE MANUFACTURING COMPANY CONSOLIDATED STATEMENTS OF EARNINGS For the three months ended June 26, 1999 and 1998 (In thousands, except per-share amounts) (Unaudited)
Three months ended June 26 -------------------------- 1999 1998 -------- -------- Net sales $283,847 $273,104 Cost of sales 201,882 194,646 -------- -------- Gross profit 81,965 78,458 Selling, general, and administrative expenses 51,744 45,612 -------- -------- Income from operations 30,221 32,846 Interest expense (1,593) (1,046) Other income --net 2,674 856 -------- -------- Earnings before income taxes 31,302 32,656 Provision for income taxes 11,793 12,576 -------- -------- Net earnings $ 19,509 $ 20,080 ======== ======== Net earnings per share of common stock - Basic $0.66 $0.68 - Assuming dilution $0.65 $0.67 ======== ======== Dividends per share $0.23 $0.21 ======== ======== Weighted average shares - basic 29,529 29,644 Weighted average shares - assuming dilution 29,849 30,185 ======== ======== (See accompanying notes to consolidated financial statements.)
MODINE MANUFACTURING COMPANY CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (In thousands) For the Three Months Ended June 26, 1999 and 1998 (Unaudited)
Three months ended June 26 -------------------------- 1999 1998 -------- -------- Net cash provided by operating activities $16,431 $20,393 Cash flows from investing activities: Expenditures for property, plant, and equipment (22,661) (24,117) Investment in affiliates (600) - Proceeds from dispositions of assets 27 14 Other -- net (290) (140) ------- ------- Net cash (used for) investing activities (23,524) (24,243) Cash flows from financing activities: Increase in short-term debt -- net 3,587 1,694 Additions to long-term debt 5,685 8,166 Reductions of long-term debt (2,710) (1,944) Issuance of common stock, including treasury stock 1,063 1,323 Purchase of treasury stock (984) (4,132) Cash dividends paid (6,792) (6,228) ------- ------- Net cash (used for) financing activities (151) (1,121) ------- ------- Net (decrease) in cash and cash equivalents (7,244) (4,971) Cash and cash equivalents at beginning of period 49,163 36,410 ------- ------- Cash and cash equivalents at end of period $41,919 $31,439 ======= ======= (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, 1999 March 31, 1999 ------------------------------------------------------------ Raw materials $ 41,655 $ 40,529 Work in process 39,291 41,863 Finished goods 106,954 96,557 -------- -------- Total inventories $187,900 $178,949 ======== ======== 2. Property, plant, and equipment is composed of: (In thousands) ------------------------------------------------------------ June 26, 1999 March 31, 1999 ------------------------------------------------------------ Gross, property, plant & equipment $606,744 $594,646 Less accumulated depreciation (297,226) (290,882) -------- -------- Net property, plant & equipment $309,518 $303,764 ======== ======== 3. Intangible assets include: (In thousands) ------------------------------------------------------------ June 26, 1999 March 31, 1999 ------------------------------------------------------------ Goodwill $91,509 $92,548 Patents and product technology 8,389 8,389 Other intangibles 3,308 3,326 Less accumulated amortization (25,282) (23,852) ------- ------- Net intangible assets $77,924 $80,411 ======= ======= 4. Segment data: (In thousands) ------------------------------------------------------------------------- Sales Operating income Quarter ended June 26, 1999 1998 1999 1998 ------------------------------------------------------------------------- Sales and operating income: Original Equipment $121,073 $131,301 $ 21,109 $ 20,236 Distributed Products 84,591 70,272 7,656 9,190 European Operations 88,068 79,860 8,919 10,086 ------------------------------------------------------------------------- Segment sales and operating income 293,732 281,433 37,684 39,512 Corporate & administrative expenses - - (7,480) (6,674) Eliminations (9,885) (8,329) 17 8 Other items not allocated to segments - - 1,081 (190) ------------------------------------------------------------------------ Total net sales and income before taxes $283,847 $273,104 $31,302 $32,656 ------------------------------------------------------------------------ June 26, March 31, Period ending 1999 1999 ------------------------------------------------------------------------ Assets: Original Equipment $ 153,267 $ 157,466 Distributed Products 174,838 158,386 European Operations 235,925 237,036 Corporate & Administrative 390,060 377,592 Eliminations (24,638) (14,741) ------------------------------------------------------------------------ Total assets $ 929,452 $ 915,739 ------------------------------------------------------------------------ 5. Recent developments concerning legal proceedings reported in the Modine Manufacturing Company ("Modine or the Company") Form 10-K report for the year ended March 31, 1999, are updated in Part II, Other Information, Item 1, Legal Proceedings. While the outcome of these proceedings is uncertain, in the opinion of Modine's management, any liabilities that may result from such proceedings are not reasonably likely to have a material effect on Modine's liquidity, financial condition, or results of operations. 6. The computational components of basic and diluted earnings per share are as follows: (In thousands, except per-share amounts) ----------------------------------------------------------------------- Three months ended June 26 1999 1998 Net earnings per share of common stock: -------------------------------------- - basic $0.66 $0.68 - assuming dilution $0.65 $0.67 Numerator: --------- Income available to common shareholders $19,509 $20,080 Denominator: ----------- Weighted average shares outstanding - basic 29,529 29,644 Effect of dilutive securities - options* 320 541 ------- ------- Weighted average shares outstanding - assuming dilution 29,849 30,185 ------------------------------------------------------------------- * There were outstanding options to purchase common stock at prices that exceeded the average market price for the income statement period as follows: 1999 1998 ------ ------ Average market price per share $30.45 $34.90 Number of shares 690 None 7. Comprehensive earnings, which represents net earnings adjusted by the change in foreign-currency translation and minimum pension liability recorded in shareholders' equity for the 3 months ended June 26, 1999 and 1998, were $18,954 and $20,470, respectively. 8. In June 1999, the Financial Accounting Standards Board issued SFAS No.137 deferring the effective date of SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities." The statement is now effective for fiscal years beginning after June 15, 2000. Modine will adopt SFAS No. 133 beginning April 1, 2001. Adoption of this statement is not expected to have a material effect on Modine's financial position or results of operations. 9. The accompanying consolidated financial statements, which have not been audited by independent certified public accountants, were prepared in conformity with generally accepted accounting principles and such principles were applied on a basis consistent with the preparation of the consolidated financial statements in Modine's March 31, 1999 Annual Report filed with the Securities and Exchange Commission. The financial information furnished includes all normal recurring accrual adjustments that 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 2000 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 Modine's 1999 Annual Report to shareholders which statements and notes were incorporated by reference in Modine's Form 10-K Report for the year ended March 31, 1999. MANAGEMENT'S DISCUSSION AND ANALYSIS OF --------------------------------------- RESULTS OF OPERATIONS AND FINANCIAL CONDITION --------------------------------------------- The following discussion and analysis provides information that Management believes is relevant to an assessment and understanding of Modine's consolidated results of operations and financial condition. This discussion should be read in conjunction with the consolidated financial statements and notes thereto. RESULTS OF OPERATIONS - --------------------- Comparison of the First Quarter of 1999-2000 with the First - ----------------------------------------------------------- Quarter of 1998-99 - ------------------ Record first quarter net sales of $283.8 million were a 4% improvement over the $273.1 million reported in the first quarter of last year. Diversification of markets again allowed Modine to increase total revenues despite a major slump in industry sales to the off- highway market in the original equipment and European operations segments. Modine's shipments to both the agricultural - and construction-equipment customers had the greatest quarter-over- quarter decrease. Revenues from the automotive aftermarket in the distributed products segment had the largest quarterly growth, due mainly to the acquisition of Core Holdings. Sales to OEM customers in the medium -and heavy-truck market recorded the second highest growth, most of which came from the original equipment segment in North America. Overall revenues from the European operations segment grew 10% despite a small negative currency-translation effect from a stronger U.S. dollar. Sales to the automotive market in Europe remained strong. Gross margin, as a percentage of sales, was 28.9%. This was a slight improvement over the 28.7% earned in the first quarter of the previous year. Improvements in portions of the original equipment segment (truck and automotive markets) offset lower margins earned in the distributed products segment (aftermarket), original equipment segment (construction and agricultural markets), and European operations segment. Selling, general and administrative expenses of $51.7 million increased 13.4% over last year's first quarter while increasing to 18.2% from 16.7% as a percentage of sales. A significant factor contributing to the increase was the inclusion of the Core Holdings acquisition (October 1998) business activity in the current year's quarter. Without the effect of the Core activity, selling, general and administrative expenses would have grown by only 2.0% in absolute dollars. Average outstanding debt levels increased $94.0 million, or approximately 79%, from the same quarter a year ago while interest expense increased 52%, or $0.5 million. Prior year acquisition activity and capital expenditures to build infrastructure were the main contributors to the increase in borrowing levels. Interest expense grew at a slower rate, in part, due to higher capitalized interest associated with capital projects. Net non-operating income grew by $1.8 million from the same quarter of the previous year. Additional royalty income from an expanding number of worldwide licensing agreements for Modine's proprietary, PF technology was the main factor contributing to the increase. Also contributing to the growth in non-operating earnings were higher earnings from unconsolidated affiliates located in France and Brazil. The provision for income taxes in the current quarter was $11.8 million (a 37.7% effective rate) compared to last years' first quarter expense of $12.6 million (or 38.5% effective rate). The favorable rate decline was mainly due to the differential in foreign tax rates. Net earnings for the quarter of $19.5 million were the second highest in our history at $0.66 basic, and $0.65 diluted earnings per share compared to last year's first quarter net earnings of $20.1 million, or $0.68 basic and $0.67 diluted. Return on shareholders' investment was 17 percent during the three-month period and, again, was near the middle of our target range of 15-20 percent. Outlook for the Remainder of the Year - ------------------------------------- As Management looks out over the balance of the fiscal year, with the continued downturn in the worldwide agricultural and construction markets and milder weather patterns that impact our aftermarket business, and the accompanying price pressure as a result of seasonal inventory builds, we expect sales to increase about four percent and earnings to be flat on a year-over-year basis. This forecast assumes no acquisitions. In fiscal 1999-2000, we intend to continue laying the foundation for faster growth that we expect to begin next year. We are confident in our ability to grow both sales and earnings more rapidly in the future. These forward-looking statements regarding sales and earnings are subject to certain risks and uncertainties that 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, 1999 and March 31, 1999 - --------------------------------------------------- Current assets - -------------- Cash and cash equivalents of $41.9 million decreased $7.2 million from the March 31, 1999 balance. Cash provided by operating activities and increased borrowing during the quarter were more than offset by capital expenditures and the quarterly dividend payment. Trade receivables of $186.8 million were up $3.9 million (2%) over year-end primarily due to increased sales volumes (up 1% over the previous quarter), and normal seasonal promotions. Inventory levels grew $9.0 million to $187.9 million compared to year-end. This increase was principally in finished goods levels in the Distributed Products segment. This can be attributed to normal seasonal activity, which includes the Core Holdings acquisition made last October. The current ratio of 1.8 to 1 with net working capital of $198.6 million remains virtually unchanged from March 1999 levels. Higher accounts receivables, inventory, and lower accounts payable were principally offset by higher income taxes payable and lower cash and cash equivalents at the end of the period. Noncurrent assets - ----------------- Net property, plant and equipment of $309.5 million grew $5.8 million over year-end. Capital expenditures during the quarter exceeded depreciation, retirements, and foreign currency translation. Continuing facility construction and expansion costs in the Netherlands, Italy and Germany, ongoing costs associated with the implementation of SAP financial systems in North America, construction of a just-in-time assembly plant in Toledo, Ohio for a DaimlerChrysler program, and costs associated with equipping the new Technical Center in Racine were among the items contributing to the increase shown. Outstanding commitments for capital expenditures were $32.2 million at June 26, 1999. Approximately two-thirds of the commitments relate to Modine's European operations. The outstanding commitments will be financed through a combination of funds generated from continuing operations and third party borrowing as required. Investments in unconsolidated affiliates of $27.9 million was $3.6 million higher than year-end primarily a result of favorable Brazilian exchange rates in connection with our investment in Radiadores Visconde, Ltda. Intangible assets decreased by $2.5 million. Amortization and foreign currency translations were the main items contributing to the change. Deferred charges and other noncurrent assets increased $1.3 million. The net increase is primarily the result of continuing recognition of the surplus in Modine's overfunded pension plans. Current Liabilities - ------------------- Accounts payable and other current liabilities of $166.1 million were $7.1 million lower than March 1999. Normal timing differences in the level of operating activity were responsible for the decrease. Accrued income taxes increased $8.4 million from timing differences in making estimated payments and certain federal tax benefits. Debt - ---- Outstanding debt decreased by $0.2 million from the March 1999 balance of $217.6 million. Additional short-term borrowing of $3.6 million and net long-term borrowing of $3.0 was more than offset by foreign exchange rate impact of a stronger dollar. Consolidated available lines of credit were unchanged during the quarter. Domestically, Modine's multi-currency revolver is fully utilized. Foreign unused lines of credit were $2.0 million. Total debt as a percentage of shareholders' equity decreased from 48.0% to 46.7%. Shareholders' Investment - ------------------------ Total shareholders' investment increased by $12.4 million to a total of $465.7 million. The net increase resulted primarily from net earnings of $19.5 million for the first three months. Offsetting items included an unfavorable foreign currency translation impact of $0.6 million during the quarter and dividends paid to shareholders of $6.8 million. 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 were funded through normal operating cash flow. The total cost associated with the required modifications was not 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 was addressed by an external party. The systems conversion and testing of all critical systems was completed by May 8, 1999, and was conducted by Modine internal staff. Computer hardware and LAN infrastructure were also converted to ensure compliance in its business system and desktop operations. The year 2000 costs for North America were $5.7 million. Other accomplishments in North America included the conversion of business systems in Mexico and Canada to achieve year 2000 compliance through a controlled series of system migration and software upgrades. Outside North America, Year 2000 compliance was achieved by replacing current applications with SAP, a Year 2000 compliant package of integrated manufacturing and financial software. Also included were hardware migrations, LAN e-mail and desktop upgrades and replacements. The Company's Year 2000 European cost for remediation is approximately $4.6 million, of which 96% has been expended. Remediation of critical systems has been completed successfully at all sites. One non-critical project remains and is 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, 91% of the surveys have been returned. To validate our supplier responses, we also have conducted a series of on-site supplier Y2K audits. Those suppliers not able to validate their Y2K readiness, have been directed to retain an additional 30 days of inventory. 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 specializing in this type of activity. The facilities evaluation was completed in the fourth calendar quarter of 1998. Dependent upon formal risk assessments by facility and corporate teams, recommended actions included testing, repair, replacement, upgrading, and/or retirement of specific systems or components. Modine completed its systems remediation efforts of critical activities by the second quarter of 1999. Cost for the inventory assessment was $300,000. Remediation costs were $250,000. Customer Audit: Modine has been asked and has participated -------------- in independent and specific customer audits to ensure Y2K compliance to our customer base. Modine has fared well in those reviews and is actively involved in keeping the exchange of information on going between Modine and its customer base. Risks & Contingency Planning: The failure to correct a ---------------------------- material Year 2000 problem could result in an interruption of 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 has developed and implemented contingency plans in the critical areas of the business. We have already developed operational and supplier contingency plans for all our manufacturing and distribution facilities and plan to continue refining our systems contingency plans throughout 1999, wherever the risk warrants it. PART II. OTHER INFORMATION Item 1. Legal Proceedings. In the normal course of business, Modine 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 Modine. While the outcome of these proceedings is uncertain, in the opinion of Modine's Management and counsel, any liabilities that may result from such proceedings are not reasonably likely to have a material effect on Modine's liquidity, financial condition or results of operations. Many of the pending damage claims are covered by insurance and, in addition, Modine from time to time establishes reserves for uninsured liabilities. The Mitsubishi and Showa Litigation ----------------------------------- In November 1991, the Company filed a lawsuit against Mitsubishi Motor Sales of America, Inc., and Showa Aluminum Corporation, alleging infringement of the Company's patent on parallel-flow air-conditioning condensers. The suit seeks an injunction to prohibit continued infringement, an accounting for damages, a trebling of such damages for willful infringement, and reimbursement of attorneys' fees. In December 1991, the Company submitted a complaint to the U.S. International Trade commission (ITC) requesting that the ITC ban the import and sale of parallel- flow air-conditioning condensers and systems or vehicles that contain them, which are the subject of the November 1991 lawsuit. In August, 1997, the ITC issued an Order excluding from U.S. import Showa condensers that infringe Modine Manufacturing Company's parallel-flow patent. The ITC's Order covers condensers, their parts, and certain products including them, such as air-conditioning kits and systems. It directs the U.S. Customs Service to exclude from importation into the United States such products manufactured by Showa Aluminum Corporation of Japan and Showa Aluminum Corporation of America. The decision is based on a Modine U.S. patent covering condensers with tube hydraulic diameters less than 0.04822 inches. The Showa companies must certify to Customs officials that any condenser items imported by them do not infringe Modine's parallel-flow patent. The Showa companies must also file annual reports with the ITC regarding their sales of Showa parallel-flow condensers in the United States. In July, 1994, Showa filed a lawsuit against the Company alleging infringement by the Company of certain Showa patents pertaining to condensers. In June 1995, the Company filed a motion for partial summary judgment against such lawsuit. In December of 1994, the Company filed another lawsuit against Mitsubishi and Showa pertaining to a newly issued patent on parallel-flow air-conditioning condensers. Both 1994 suits have been stayed pending the outcome of re-examination in the U.S. Patent Office of the patents involved. In October of 1997, Modine was issued a Japanese patent covering parallel-flow air-conditioning condensers having tube hydraulic diameters less than 0.070 inches. In August of 1998, the Company filed a patent infringement suit in Japan against Showa with respect to this patent seeking an injunction and damages. Several patents have been issued to Modine by the European Patent Office, one having been rejected at the opposition level, which is being appealed. All legal and court costs associated with these cases have been expensed as they were incurred. Other previously reported legal proceedings have been settled or the issues resolved so as to not merit further reporting. Under the rules of the Securities and Exchange Commission, certain environmental proceedings are not deemed to be ordinary or routine proceedings incidental to the Company's business and are required to be reported in the Company's annual and/or quarterly reports. The Company is not currently a party to any such proceedings. Item 4. Submission of Matters to a Vote of Security Holders The following are the results of voting by stockholders present or represented at the Annual Meeting of Stockholders on July 21, 1999: 1. Election of Directors. The following were elected to --------------------- serve as directors of the Company until 2002 (R. T. Savage until 2000) or until their successors are elected: Votes For Votes Withheld ---------- -------------- Richard T. Savage 25,010,099 467,007 Vincent L. Martin 25,023,629 453,478 Marsha C. Williams 25,028,717 448,390 2. Re-Approval of the 1994 Incentive Compensation Plan. --------------------------------------------------- The stockholders re-approved the Plan. There were 20,489,505 votes re-approving the Plan; 4,621,093 votes against; and 188,181 votes abstaining. 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 Restated By-Laws (as amended) (filed by reference to the Registrant's Annual Report on Form 10-K for the fiscal year ended March 31, 1999). 4(a) Rights Agreement dated as of October 16, 1986 between the Registrant and First Chicago Trust Company of New York (Rights Agent) (filed by reference to the Registrant's Annual Report on Form 10-K for the fiscal year ended March 31, 1997). 4(b)(i) Rights Agreement Amendment No. 1 dated as of January 18, 1995 between the Registrant and First Chicago Trust Company of New York (Rights Agent) (filed by reference to the exhibit contained within the Registrant's Current Report on Form 8-K dated January 13, 1995). 4(b)(ii) Rights Agreement Amendment No. 2 dated as of January 18, 1995 between the Registrant and First Chicago Trust Company of New York (Rights Agent) (filed by reference to the exhibit contained within the Registrant's Current Report on Form 8-K dated January 13, 1995). 4(b)(iii) Rights Agreement Amendment No. 3 dated as of October 15, 1996 between the Registrant and First Chicago Trust Company of New York (Rights Agent) (filed by reference to the exhibit contained within the Registrant's Quarterly Report on Form 10-Q dated December 26, 1996). 4(b)(iv) Rights Agreement Amendment No. 4 dated as of November 10, 1997 between the Registrant and Norwest Bank Minnesota, N.A., (Rights Agent) (filed by reference to the exhibit contained within the Registrant's Quarterly Report on Form 10-Q dated December 26, 1997). Note: The amount of long-term debt ---- authorized under any instrument defining the rights of holders of long- term debt of the Registrant, other than as noted above, does not exceed ten Reference Number per Item 601 of Regulation S-K Page - ---------------- ---- 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. 10* Change in Control and Termination Agreement dated as of May 20, 1999 between the Registrant and D. R. Johnson, President and Chief Executive Officer of the Registrant. 19 Note: Mr. D. B. Rayburn, Executive Vice ---- President, Original Equipment, has a Change of Control and Termination Agreement dated as of May 20, 1999. This Agreement is not materially different than the Agreement with Mr. Johnson. Note: Messrs. M. G. Baker, L. D. Howard, and ---- V. S. Frangopoulos (other named executive officers of the Registrant) also have entered into Change of Control and Termination Agreements dated as of May 20, 1999. These agreements are not materially different than the Agreement with Mr. Johnson except in the following respects: (a) 24-month Severance Period; and (b) a 13th month "window" in which the named executive officer can terminate and receive severance. 27* Financial Data Schedule (electronic transmission only). 99* Important Factors and Assumptions Regarding Forwarding-Looking Statements. 34 *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 10, 1999. 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 5, 1999 By: W. E. PAVLICK --------------------------------------- W. E. Pavlick, Senior Vice President, General Counsel and Secretary EX-10 2 EXHIBIT 10 CHANGE IN CONTROL AND TERMINATION AGREEMENT Modine Manufacturing Company, a Wisconsin corporation ("Employer") and Donald R. Johnson ("Executive") hereby enter into a Change in Control and Termination Agreement, effective as of May 20 , 1999 ("Agreement"), and such Agreement is hereinafter - --------- set forth. WITNESSETH: WHEREAS, Executive is currently employed by Employer as its Chief Executive Officer; WHEREAS, Employer desires to provide security to Executive in connection with Executive's employment with Employer in the event of a Change in Control affecting Employer; and WHEREAS, Executive and Employer desire to enter into this Agreement pertaining to the terms of the security Employer is providing to Executive with respect to his employment in the event of a Change in Control; NOW, THEREFORE, in consideration of the mutual covenants and promises contained herein, and other good and valuable consideration, the receipt of which is hereby acknowledged, the parties agree as follows: 1. Term. The term of this Agreement shall be the period ---- beginning on the date hereof and terminating on the date 36 months after such date (the "Term"), provided that for each day from and after the date hereof the Term will automatically be extended for an additional day, unless either Employer or Executive has given written notice to the other party of its or his election to cease such automatic extension, in which case the Term shall be the 36-month period beginning on the date such notice is received by such other party. 2. Definitions. For purposes of this Agreement: ----------- (a) "Actual Bonus" shall mean the amount of Executive's incentive bonus compensation actually payable for a calendar year under an incentive compensation plan maintained by Employer; provided, however, that such amount shall in no event be less than the highest amount payable to Executive at any time during the Term. (b) "Affiliate" or "Associate" shall have the meaning set forth in Rule 12b-2 under the Securities Exchange Act of 1934. (c) "Base Salary" shall mean Executive's per annum base salary at the rate in effect on the date of a termination of employment under circumstances described in subsections 3(a) or (b) below; provided, however, that such rate shall in no event be less than the highest rate in effect for Executive at any time during the Term. (d) "Beneficiary" shall mean the person or entity designated by Executive, by written instrument delivered to Employer, to receive the benefits payable under this Agreement in the event of his death. If Executive fails to designate a Beneficiary, or if no Beneficiary survives Executive, such death benefits shall be paid: (i) to his surviving spouse; or (ii) if there is no surviving spouse, to his living descendants per stirpes; or ----------- (iii) if there is neither a surviving spouse nor descendants, to his duly appointed and qualified executor or personal representative. (e) A "Change in Control" shall be deemed to take place on the occurrence of any of the following events: (1) The commencement by an entity, person or group (other than Employer or an Affiliate or Associate) of a tender offer for at least 30% of the outstanding capital stock of Employer entitled to vote in elections of directors ("Voting Power"); (2) The effective time of (i) a merger or consolidation of Employer with one or more other corporations as a result of which the holders of the outstanding Voting Power of Employer immediately prior to such merger or consolidation (other than the surviving or resulting corporation or any Affiliate or Associate thereof) hold less than 50% of the Voting Power of the surviving or resulting corporation, or (ii) a transfer of 30% of the Voting Power, or a Substantial Portion of the Property, of Employer other than to an entity of which Employer owns at least 50% of the Voting Power; or (3) During any period of 24 months that ends during the Term, regardless of whether such period commences before or after the effective date of this Agreement, the persons who at the beginning of such 24-month period were directors of Employer cease for any reason to constitute at least a majority of the Board of Directors of Employer. (f) "Code" shall mean the Internal Revenue Code of 1986, as amended. (g) "Defined Contribution Plan" shall mean any Retirement Plan that is a defined contribution plan as defined in Section 3(34) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"). (h) "Five-Year Average Actual Bonus" shall mean the average of Executive's Actual Bonuses (determined without reference to the proviso in subsection 2(a)) payable for the five-year period ending on December 31 of the calendar year immediately preceding the calendar year of Executive's termination of employment. (i) "Five-Year Average Base Salary" shall mean the average of Executive's per annum Base Salary (determined without reference to the proviso in subsection 2(c)) payable for the five-year period ending on December 31 of the calendar year immediately preceding the calendar year of Executive's termination of employment. (j) "Good Cause" shall be deemed to exist if, and only if: (1) Executive engages in an act of dishonesty constituting a felony that results or is intended to result directly or indirectly in gain or personal enrichment at the expense of Employer; or (2) Executive breaches any provision of Section 8 (relating to confidential information), and such breach results in a demonstrably material injury to Employer. (k) "Pension Plan" shall mean any Retirement Plan that is a defined benefit plan as defined in Section 3(35) of ERISA. (l) "Retirement Plan" shall mean any qualified or supplemental employee pension benefit plan, as defined in Section 3(2) of ERISA, currently or hereinafter made available by Employer in which Executive is eligible to participate. (m) "Severance Period" shall mean the period beginning on the date Executive's employment with Employer terminates under circumstances described in subsection 3(a) and ending on the date 36 months thereafter. (n) "Substantial Portion of the Property of Employer" shall mean 50% of the aggregate book value of the assets of Employer and its Affiliates and Associates as set forth on the most recent balance sheet of Employer, prepared on a consolidated basis, by its regularly employed, independent, certified public accountants. (o) "Target Bonus" shall mean the amount of Executive's target annual incentive bonus compensation for the calendar year in which the date of a termination of employment under circumstances described in subsection 3(a) below occurs, under the incentive bonus compensation plan maintained by Employer for such year; provided, however, that such amount shall in no event be less than the highest amount in effect for Executive at any time during the term. (p) "Welfare Plan" shall mean any health and dental plan, disability plan, survivor income plan or life insurance plan, as defined in Section 3(1) of ERISA, currently or hereafter made available by Employer in which Executive is eligible to participate. 3. Benefits Upon Termination of Employment. (a) The --------------------------------------- following provisions will apply if a Change in Control occurs during the Term, and at any time during the 24 months after the Change in Control occurs (whether during or after the expiration of the Term), the employment of Executive with Employer is terminated by Employer for any reason other than Good Cause, or Executive terminates his employment with Employer for any reason: (1) Employer shall pay Executive an amount equal to three times the greater of: (A) the sum of Executive's Base Salary and Target Bonus, or (B) the sum of Executive's Five- Year Average Base Salary and Five-Year Average Actual Bonus. Such amount shall be paid to Executive in a lump sum within 60 days after his date of termination of employment. (2) Employer shall pay Executive an amount equal to the pro rata portion of the Target Bonus that is applicable to the period commencing on the first day of the calendar year in which the employment of Executive is terminated and ending on the date of such termination. Such amount shall be paid to Executive in a lump sum within 60 days after his date of termination of employment. (3) (A) Employer shall pay to Executive a monthly Supplemental Pension Benefit in an amount equal to the amount determined pursuant to clause (i) below less the amount determined pursuant to clause (ii) below: (i) the aggregate monthly amount of the pension benefit ("Pension") that would have been payable to Executive under all Pension Plans if that Pension were computed (A) by treating the Severance Period as service for all purposes of the Pension Plans and (B) by considering his monthly compensation during the Severance Period to be one-twelfth of his Base Salary and one-twelfth of the Target Bonus for all purposes of the Pension Plans; (ii) the aggregate monthly amount of any Pension actually paid to Executive under all Pension Plans. (B) The Supplemental Pension Benefit payable to Executive hereunder shall be paid (i) commencing at the later to occur of the last day of the Severance Period or the date payment of his Pension commences under the Pension Plans; and (ii) in the same form as is applicable to the Pension payable to Executive under the Pension Plans. (C) If Executive dies prior to commencement of payment to him of his Pension under the Pension Plans, under circumstances in which a death benefit under the Pension Plans is payable to his surviving spouse or other beneficiary, then Employer shall pay a monthly Supplemental Death Benefit to Executive's surviving spouse or other beneficiary entitled to receive the death benefit payable with respect to Executive under the Pension Plans in an amount equal to the amount determined pursuant to clause (i) below less the amount determined pursuant to clause (ii) below: (i) the aggregate monthly amount of the death benefit that would have been payable to the surviving spouse or other beneficiary of Executive under the Pension Plans if that death benefit were computed (A) by treating the Severance Period as service for all purposes of the Pension Plans and (B) by considering his monthly compensation during the Severance Period to be one-twelfth of his Base Salary and one-twelfth of the Target Bonus for all purposes of the Pension Plans; (ii) the aggregate monthly amount of any death benefit actually paid to the surviving spouse or other beneficiary of Executive under the Pension Plans. (D) The Supplemental Death Benefit payable with respect to Executive hereunder shall be payable at the same time, in the same form, and to the same persons as is applicable to the death benefit payable with respect to Executive under the Pension Plans. (E) Notwithstanding the foregoing provisions, the total of the actual years of service of Executive for purposes of each of the Pension Plans and the years of service for which credit is given pursuant to subparagraphs (3)(A) and (C) shall not exceed the maximum number of years of service, if any, that can be considered pursuant to the terms of such Pension Plan. (F) Any actuarial adjustments made under the Pension Plans with respect to the form or time of payment of a Pension or death benefit to Executive or his surviving spouse or other beneficiary under the Pension Plans shall also be applicable to the Supplemental Pension Benefit or Supplemental Death Benefit payable hereunder and shall be based upon the same actuarial assumptions as those specified in the Pension Plans. (4) (A) For each calendar year ending during the Severance Period, Employer shall pay to Executive a Supplemental Defined Contribution Benefit in an amount equal to the amount determined pursuant to clause (i) below less the amount determined pursuant to clause (ii) below: (i) the amount that would have been allocated to Executive's accounts under all Defined Contribution Plans ("Accounts") during such calendar year, assuming (A) that the amount of Executive's elective deferrals (as defined in Section 402(g)(3) of the Code) equals the amount of such elective deferrals Executive authorized in the calendar year immediately preceding the calendar year in which the date of commencement of the Severance Period occurs; (B) that all Employer contributions (except elective deferrals as defined in Section 402(g)(3) of the Code) were allocated to Executive's Accounts during such calendar year, in the amount that would have been allocated on behalf of Executive had Executive been actively employed during such calendar year; and (C) that Executive's rate of compensation (as defined in the applicable Defined Contribution Plan for purposes of determining Employer contributions) during such calendar year is identical to such rate of compensation on the date immediately preceding his termination of employment; (ii) the amount, if any, actually allocated to Executive's Accounts during such year; (B) Each Supplemental Defined Contribution Benefit shall be paid to Executive in a lump sum no later than 60 days after the end of each applicable calendar year during the Severance Period; (C) In the event of Executive's death prior to the end of the Severance Period, the Supplemental Defined Contribution Benefit shall continue to accrue for the duration of the Severance Period on the same basis as if Executive had not died. Such Supplemental Defined Contribution Benefit shall be payable to Executive's Beneficiary at the same time and manner as such Benefit would have been paid to Executive. (5) If upon the date of termination of Executive's employment Executive holds any options with respect to stock of Employer, all such options will immediately become vested and exercisable upon such date and will be exercisable for 36 months thereafter. Any restrictions on stock of Employer owned by Executive on the date of termination of his employment will lapse on such date. (6) During the Severance Period, Executive and his spouse and other dependents will continue to be covered by all Welfare Plans maintained by Employer in which he and his spouse and other dependents were participating immediately prior to the date of his termination as if he continued to be an employee of Employer and Employer will continue to pay the costs of coverage of Executive and his spouse and other dependents under such Welfare Plans on the same basis as is applicable to active employees covered thereunder; provided that, if participation in any one or more of such Welfare Plans is not possible under the terms thereof, Employer will provide substantially identical benefits. For purposes of the continuation of Executive's group health plan coverage required under Code Section 4980B, to the extent permitted by the applicable group health plan, (i) the period of extended coverage referred to in Code Section 4890B(f)(2)(B)(i)(I) shall commence on the first date that follows the end of the Severance Period, and (ii) the applicable notice period provided under Code Section 4980B(f)(6)(B) shall commence on the first date that follows the end of the Severance Period. (b) If the employment of Executive with Employer is terminated by Employer or Executive other than under circumstances set forth in subsection 3(a), Executive's Base Salary shall be paid through the date of his termination, and Employer shall have no further obligation to Executive or any other person under this Agreement. Such termination shall have no effect upon Employee's other rights, including but not limited to, rights under the Retirement Plans and the Welfare Plans. (c) Notwithstanding anything herein to the contrary, in the event Employer shall terminate the employment of Executive for Good Cause hereunder, Employer shall give Executive at least thirty (30) days prior written notice specifying in detail the reason or reasons for Executive's termination. (d) This Agreement shall have no effect, and Employer shall have no obligations hereunder, if Executive's employment terminates for any reason at any time other than during the 24 months following a Change in Control. 4. Excise Tax. (a) In the event that a Change in Control ---------- shall occur, and a final determination is made by legislation, regulation, ruling directed to Executive or Employer, by court decision, or by independent tax counsel described in subsection (b) next below, that the aggregate amount of any payment made to Executive (1) hereunder, and (2) pursuant to any plan, program or policy of Employer in connection with, on account of, or as a result of, such Change in Control ("Total Payments") will be subject to the excise tax provisions of Section 4999 of the Code, or any successor section thereof, Executive shall be entitled to receive from Employer, in addition to any other amounts payable hereunder, a lump sum payment (the "Gross-Up Payment"), sufficient to cover the full cost of such excise taxes and Executive's federal, state and local income and employment taxes on this additional payment, so that the net amount retained by Executive, after the payment of all such excise taxes on the Total Payments, and all federal, state and local income and employment taxes and excise taxes on the Gross-Up Payment, shall be equal to the Total Payments. The Total Payments, however, shall be subject to any federal, state and local income and employment taxes thereon. For this purpose, Executive shall be deemed to be in the highest marginal rate of federal, state and local taxes. The Gross-Up Payment shall be made at the same time as the payments described in subsections 3(a)(1) and (2) above. (b) Employer and Executive shall mutually and reasonably determine the amount of the Gross-Up Payment to be made to Executive pursuant to the preceding subsection. Prior to the making of any such Gross-Up Payment, either party may request a determination as to the amount of such Gross-Up Payment. If such a determination is requested, it shall be made promptly, at Employer's expense, by independent tax counsel selected by Executive and approved by Employer (which approval shall not unreasonably be withheld), and such determination shall be conclusive and binding on the parties. Employer shall provide such information as such counsel may reasonably request, and such counsel may engage accountants or other experts at Employer's expense to the extent that they deem necessary or advisable to enable them to reach a determination. The term "independent tax counsel," as used herein, shall mean a law firm of recognized expertise in federal income tax matters that has not previously advised or represented either party. It is hereby agreed that neither Employer nor Executive shall engage any such firm as counsel for any purpose, other than to make the determination provided for herein, for three years following such firm's announcement of its determination. (c) In the event the Internal Revenue Service subsequently adjusts the excise tax computation made pursuant to subsections 4(a) and (b) above, Employer shall pay to Executive, or Executive shall pay to Employer, as the case may be, the full amount necessary to make either Executive or Employer whole had the excise tax initially been computed as subsequently adjusted, including the amount of any underpaid or overpaid excise tax, and any related interest and/or penalties due to the Internal Revenue Service. 5. Setoff. No payments or benefits payable to or with ------ respect to Executive pursuant to this Agreement shall be reduced by any amount Executive or his spouse or Beneficiary, or any other beneficiary under the Pension Plans, may earn or receive from employment with another employer or from any other source. 6. Mitigation. Executive shall not be required to ---------- mitigate the amount of compensation and benefits set forth above by seeking employment with others, or otherwise. 7. Death. If Executive's employment with Employer ----- terminates under circumstances described in subsections 3(a) or (b), then upon Executive's subsequent death, all unpaid amounts payable to Executive under subsections 3(a)(1) or (2) or 3(b), or Section 4, if any, shall be paid to his Beneficiary, all amounts payable under subsections 3(a)(3) and (4) shall be paid pursuant to the terms of said subsections to his spouse or other beneficiary under the applicable Retirement Plan, and if subsection 3(a) applies, his spouse and other dependents shall continue to be covered under all applicable Welfare Plans during the remainder of the Severance Period, if any, pursuant to subsection 3(a)(6). 8. Confidentiality and Non-competition. (a) Executive ----------------------------------- agrees not to disclose (during the Term or at any time thereafter) to any person not employed by the Employer, or not engaged to render services to the Employer, except with the prior written consent of an officer authorized to act in the matter by the Board of Directors of Employer, any confidential information obtained by him while in the employ of the Employer, including, without limitation, information relating to any of the Employer's inventions, processes, formulae, plans, devises, compilations of information, methods of distribution, customers, client relationships, marketing strategies or trade secrets; provided, however, that this provision shall not preclude the Executive from use or disclosure of information known generally to the public or of information not considered confidential by persons engaged in the business conducted by the Employer or from disclosure required by law or court order. The Agreement herein made in this Section 8 shall be in addition to, and not in limitation or derogation of, any obligation otherwise imposed by law upon the Executive in respect of confidential information and trade secrets of the Employer and its Affiliates. (b) There shall be no obligation on the part of the Employer to make any further payments or provide any benefits required under this Agreement if Executive shall, during the period that such payments are being made or benefits provided, engage in Competition with the Employer. "Competition" for purposes of this Agreement shall mean (i) taking a management position with or control of a business engaged in the design, development, manufacture, marketing or distribution of products, which constituted 5% or more of the sales of the Employer and its subsidiaries and affiliates during the last fiscal year of the Employer preceding the termination of the Executive's employment, in any geographical area in which the Employer, its subsidiaries or affiliates is at the time engaging in the design, development, manufacture, marketing or distribution of such products; provided, however, that in no event shall ownership of less than 5% of the outstanding capital stock entitled to vote for the election of directors of a corporation with a class of equity securities held of record by more than 500 persons, standing alone, be deemed Competition with the Employer, (ii) soliciting any person who is a customer of the businesses conducted by the Employer, or any business in which Executive has been engaged on behalf of the Employer and its subsidiaries or affiliates at any time during the term of this Agreement on behalf of a business described in clause (i) next above, or (iii) inducing or attempting to persuade any employee of the Employer or any of its subsidiaries or affiliates to terminate his employment relationship in order to enter into employment with a business described in clause (i) of this subsection 8(b). 9. Forfeiture. If Executive shall at any time violate any ---------- obligation of his under Section 8 in a manner that results in demonstrably material injury to the Employer, he shall immediately forfeit his right to any benefits under this Agreement, and Employer shall thereafter have no further obligation hereunder to Executive or his spouse, Beneficiary or any other person. 10. Executive Assignment. No interest of Executive, his -------------------- spouse or any Beneficiary, or any other beneficiary under the Retirement Plans, under this Agreement, or any right to receive any payment or distribution hereunder, shall be subject in any manner to sale, transfer, assignment, pledge, attachment, garnishment, or other alienation or encumbrance of any kind, nor may such interest or right to receive a payment or distribution be taken, voluntarily or involuntarily, for the satisfaction of the obligations or debts of, or other claims against, Executive or his spouse, Beneficiary or other beneficiary, including claims for alimony, support, separate maintenance, and claims in bankruptcy proceedings. 11. Benefits Unfunded. All rights under this Agreement of ----------------- Executive and his spouse, Beneficiary or other beneficiary under the Retirement Plans, shall at all times be entirely unfunded, and no provision shall at any time be made with respect to segregating any assets of Employer for payment of any amounts due hereunder. None of Executive, his spouse, Beneficiary or any other beneficiary under the Retirement Plans shall have any interest in or rights against any specific assets of Employer, and Executive and his spouse, Beneficiary or other beneficiary shall have only the rights of a general unsecured creditor of Employer. Notwithstanding the preceding provisions of this Section, the Officer Nominating and Compensation Committee of the Board of Directors of Employer, in its discretion, shall have the right, at any time and from time to time, to cause amounts payable or potentially payable to Executive or his Beneficiary hereunder to be paid to the trustee of a Rabbi Trust or any similar trust to be established by Employer ("Trust"). 12. Waiver. No waiver by any party at any time of any ------ breach by the other party of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of any other provisions or conditions at the same time or at any prior or subsequent time. 13. Litigation Expenses. Employer shall pay Executive's ------------------- reasonable attorneys' fees and legal expenses in connection with any judicial proceeding to enforce, construe or determine the validity of this Agreement ("Litigation"), if Executive is a Prevailing Party in such Litigation. Executive shall be deemed a "Prevailing Party" if (a) a court enters a judgment in his favor in connection with such Litigation, or (b) Employer and Executive enter into a written agreement of settlement of such Litigation. If Executive is not a Prevailing Party in such Litigation, Employer shall pay Executive's reasonable attorney's fees and legal expenses in connection therewith, up to a maximum of $100,000. 14. Applicable Law. This Agreement shall be construed and -------------- interpreted pursuant to the laws of the State of Wisconsin. 15. Entire Agreement. This Agreement contains the entire ---------------- Agreement between the Employer and Executive and supersedes any and all previous agreements; written or oral; between the parties relating to the subject matter hereof, including without limitation the provisions of Sections 7.03(b)(iii), 9.01, 9.02 and 14.01 of the Agreement dated October 16, 1996 between Executive and Employer. No amendment or modification of the terms of this Agreement shall be binding upon the parties hereto unless reduced to writing and signed by Employer and Executive. 16. No Employment Contract. Nothing contained in this ---------------------- Agreement shall be construed to be an employment contract between Executive and Employer. 17. Counterparts. This Agreement may be executed in ------------ counterparts, each of which shall be deemed an original. 18. Severability. In the event any provision of this ------------ Agreement is held illegal or invalid, the remaining provisions of this Agreement shall not be affected thereby. 19. Successors. This Agreement shall be binding upon and ---------- inure to the benefit of the parties hereto and their respective heirs, representatives and successors. 20. Employment with an Affiliate. For purposes of this ---------------------------- Agreement, (A) employment or termination of employment of Executive shall mean employment or termination of employment with Employer and all Affiliates, (B) Base Salary, Target Bonus, Actual Bonus, Five-Year Average Base Salary and Five-Year Average Actual Bonus shall include remuneration received by Executive from Employer and all Affiliates, and (C) the terms Defined Contribution Plan, Pension Plan, Retirement Plan and Welfare Plan maintained or made available by Employer shall include any such plans of any Affiliate of Employer. 21. Notice. Notices required under this Agreement shall be ------ in writing and sent by registered mail, return receipt requested, to the following addresses or to such other address as the party being notified may have previously furnished to the other party by written notice: If to Employer: Modine Manufacturing Company 1500 DeKoven Avenue Racine, WI 53403 Attention: Legal Department If to Executive: Donald R. Johnson 5602 Five Mile Road Racine, WI 53402 IN WITNESS WHEREOF, Executive has hereunto set his hand, and Employer has caused these presents to be executed in its name on its behalf, all on the 27th day of May , 1999, effective _________ ________ May 20 , 1999. ____________ MODINE MANUFACTURING COMPANY By: D. B. RAYBURN --------------------------------- D. B. Rayburn Title: Executive Vice President, OE ------------------------------- DONALD R. JOHNSON -------------------------------- Donald R. Johnson, Executive 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 6/26/99 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS MAR-31-2000 APR-1-1999 JUN-26-1999 41,919 0 190,633 3,868 187,900 458,682 606,744 297,226 929,452 260,054 141,517 0 0 18,964 446,704 929,452 283,847 283,847 201,882 201,882 0 172 1,593 31,302 11,793 19,509 0 0 0 19,509 0.66 0.65
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 Modine; the success of Modine or its competitors in obtaining the business of the customer base; the ability to pass on increased costs to customers; variations in currency- exchange rates in view of a large portion of Modine's business being non-domestic; the impact of year 2000 compliance by Modine or those entities with which Modine does business; labor relations at Modine, its customers, and its suppliers, which may affect the continuous supply of product; and the ability to improve acquisitions' operations. In making statements about Modine's fiscal-2000 operating results, management has assumed relatively stable economic conditions in the United States and worldwide, no unanticipated swings in the business cycles affecting customer industries, and a reasonable legislative and regulatory climate in those countries where Modine does business. Readers are cautioned not to place undue reliance on Modine's forward-looking statements, which speak only as of the date such statements are made. -----END PRIVACY-ENHANCED MESSAGE-----