SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
WISCONSIN 39-0482000
-------------------------------- ---------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1500 DeKoven Avenue, Racine, Wisconsin 53403
------------------------------------------ ---------------------
(Address of principal executive offices) (Zip Code)
|
Securities Registered pursuant to Section 12(g) of the Act:
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ]
Approximately 58% of the outstanding shares are held by non-affiliates. The aggregate market value of these shares was approximately $459,219,002 based on the market price of $27.0625 per share on June 20, 2000. The remaining outstanding shares are owned or controlled by or for directors, officers, employees, retired employees, and their families.
The number of shares outstanding of the registrant's Common Stock, $0.625 par value, was 29,256,606 at June 20, 2000.
An Exhibit index appears at pages 15-21 herein.
Portions of the following documents are incorporated by reference into the parts of this Form 10-K designated to the right of the document listed.
Incorporated Document Location in Form 10-K
--------------------- ---------------------
Annual Report to Shareholders for the
fiscal year ended March 31, 2000 Part I of Form 10-K
(Item 1)
Part II of Form 10-K
(Items 7, 8)
Part IV of Form 10-K
(Item 14)
2000 Definitive Proxy Statement dated
June 9, 2000 Part III of Form 10-K
(Items 10, 11, 12, 13)
|
Cover
Table of Contents
Part I
------
Item 1 - Business
-------------------
General, Developments and Strategy,
Geographical Areas, Exports, Foreign
and Domestic Operations, Events Subsequent
to the End of the Quarter, Competitive
Position, Customer Dependence, Backlog
of Orders, Raw Materials, Patents,
Research and Development, Environmental,
Health and Safety Matters, Employees,
Seasonal Nature of Business, Working
Capital Items, Year 2000, Euro Conversion 5
Item 2 - Properties 10
---------------------
Item 3 - Legal Proceedings 11
----------------------------
Item 4 - Submission of Matters To A Vote of
---------------------------------------------
Security Holders 12
----------------
Part II
-------
Item 5 - Market for Registrant's Common Equity
------------------------------------------------
and Related Stockholder Matters 12
-------------------------------
Item 6 - Selected Financial Data 13
----------------------------------
Item 7 - Management's Discussion and Analysis
-----------------------------------------------
of Financial Condition and Results
----------------------------------
of Operations 13
-------------
Item 8 - Financial Statements & Supplementary Data 13
----------------------------------------------------
|
10-K Pages
----------
Item 9 - Changes in and Disagreements with Accountants
--------------------------------------------------------
on Accounting and Financial Disclosure 13
---------------------------------------
Part III
--------
Items 10 and 11 - Directors and Executive Officers
----------------------------------------------------
of the Registrant; Executive Compensation 14
-----------------------------------------
Item 12 - Security Ownership of Certain Beneficial
---------------------------------------------------
Owners and Management 15
---------------------
Item 13 - Certain Relationships and Related Transactions 15
---------------------------------------------------------
Part IV
-------
Item 14 - Exhibits, Financial Statement Schedules, and
-------------------------------------------------------
Reports on Form 8-K 15
-------------------
1) Financial Statements
2) Financial Statement Schedules
3) Consent of Independent Accountants
4) Exhibit Index
Signatures 22
----------
|
Throughout this Report, the terms "Modine," the "Company" and/or the "Registrant" refer to Modine Manufacturing Company and consolidated subsidiaries.
Modine was incorporated under the laws of the State of Wisconsin on June 23, 1916.
Modine is an independent, worldwide leader in heat-transfer and heat storage technology serving vehicular, industrial, commercial, and building HVAC (heating, ventilating, air conditioning) markets. Modine develops, manufactures, and markets heat exchangers and systems for use in various OEM (original equipment manufacturer) applications and for sale to the automotive aftermarket (as replacement parts) and to a wide array of building markets. The primary markets consist of:
- Automobile, truck and bus manufacturers;
- Farm implement manufacturers
- Heating and cooling equipment manufacturers;
- Construction contractors;
- Wholesalers of plumbing and heating equipment;
- Radiator repair shops; and
- Wholesalers of auto repair parts.
We distribute our products through:
- Company salespersons;
- Independent manufacturers' representatives;
- Independent warehouse distributors;
- Mass merchandisers and
- National accounts.
Our operations are organized on the basis of market categories or geographical responsibility, as follows:
Original Equipment, which provides heat-transfer products, generally from business units in North America, to original- equipment manufacturers of on-highway and off-highway vehicles, as well as to industrial- and commercial-equipment manufacturers, located primarily in North America;
Distributed Products, which provides heat-transfer products primarily for the North American vehicular replacement market and the building HVAC market, from business units in North America; and
European Operations, which provides heat-transfer products, primarily to European original-equipment manufacturers of on- highway and off-highway vehicles, industrial equipment manufacturers, and the vehicular replacement market from business units in Europe.
The Company has assigned specific business units to a segment based principally on these defined markets and their geographical location.
The Company's three reportable segments offer a broad line of products that can be categorized as follows:
Years ended March 31
2000 1999 1998
---- ---- ----
Radiators & Radiator 31% 32% 33%
Cores
Vehicular Air 12% 12% 14%
Conditioning
Oil Coolers 16% 16% 17%
Charge Air Coolers 9% 8% 9%
Building HVAC 7% 7% 7%
Modules/Packages 22% 22% 17%
Miscellaneous 3% 3% 3%
|
We remain committed to the vision of "creating value through technology." We will continue using our intellectual skills to strengthen our position in key traditional markets. At the same time, we will leverage those strengths into new, dynamic, rapidly growing markets that need heat- transfer solutions to solve complex problems.
The creation process encompasses growth as a key focus for Modine. We have identified many ways to continue building our basic businesses through increasing marketshare, providing more content per application, and making strategic acquisitions. An ongoing process is in place to evaluate the markets that we currently serve and to allocate our resources to those with the best growth opportunities. We are also focusing on the most-promising new markets and new products.
Like growth, profitability also is a key focus for Modine. We are concentrating heavily on managing our selling, general, and administrative expenses through numerous cost-saving initiatives, a reevaluation of our processes, and control of staff costs. In addition, we are evaluating the profitability of current product lines and plants, with the objective of improving our overall returns.
A last, key focus involves asset utilization. We have made substantial investments in new, highly efficient plants and equipment along with state-of-the-art technical centers. All of these are critical to our strategy of generating growth through technological leadership.
We maintain administrative organizations in two regions - North America and Europe - to facilitate financial and statutory reporting and tax compliance on a worldwide basis and to support the three business units.
Our operations are located in the following countries:
North America Europe South America Central America Asia/Pacific
------------- ------ ------------- --------------- ------------
Canada Austria Brazil El Salvador Japan
Mexico Belgium
United States Denmark
England
France
Germany
Hungary
Italy
Netherlands
Poland
Spain
Switzerland
|
Our non-U.S. subsidiaries and affiliates manufacture and sell a number of vehicular and industrial products similar to those produced in the U.S. In addition to normal business risks, operations outside the U.S. are subject to others such as changing political, economic and social environments, changing governmental laws and regulations, currency revaluations and market fluctuations.
You can find more information in "Note 19. Business Segments" on pages 31-33 of our 2000 Annual Report.
In addition, the Company exports to foreign countries and receives royalties from foreign licensees. Export sales as a percentage of total sales were 11.1%, 11.5% and 12.6% for fiscal years ended in 2000, 1999 and 1998, respectively. Estimated after-tax earnings on export sales as a percentage of total net earnings were 11.1%, 11.5% and 12.6% for fiscal years ended in 2000, 1999 and 1998, respectively. Royalties from foreign licensees as a percentage of total earnings were 4.8%, 5.5% and 2.5% for the last three fiscal years, respectively.
Modine believes its international presence has positioned the Company to profitably share in the anticipated long-term growth of the global vehicular and industrial markets. Modine is committed to increasing its involvement and investment in international markets in the years ahead.
Financial information relating to the Company's foreign and domestic operations is included in the Company's 2000 Annual Report to Shareholders and is incorporated herein by reference at Note 19 on pages 31-33 therein.
The Company competes with several manufacturers of heat transfer products, some of which are divisions of larger companies and some of which are independent companies. The Company also competes for business with parts manufacturing divisions of some of its major customers. The markets for the Company's products are increasingly competitive and have changed significantly in the past few years as the Company's traditional OEM customers in the United States, faced with dramatically increased international competition, have expanded their worldwide sourcing of parts to better compete with lower-cost imports. These market changes have caused the Company to experience competition from suppliers in other parts of the world which enjoy economic advantages such as lower labor costs, lower health care costs, and other factors. In addition, our customers have asked the Company, as they have asked all primary suppliers, to participate directly and more substantially in research and development, design, and validation responsibilities that should result in stronger relationships and more partnership opportunities.
Ten customers accounted for approximately 45.9% of the Company's sales in the fiscal year ended March 31, 2000. These customers, listed alphabetically, were: BMW, Caterpillar, DaimlerChrysler, Fiat, Ford, John Deere, International Truck (formerly Navistar International), NAPA, Paccar and Volkswagen. Goods are supplied to these customers on the basis of individual purchase orders received from them. When it is in the customer's and the Company's best interests, the Company utilizes long-term supply agreements to minimize investment risks and provide a proven source of competitively priced products. There are no other relationships between the Company and its customers.
While the Company has a large backlog of orders, the backlog is not deemed significant or material; backlog historically has had little relation to shipments. Modine's products are produced from readily available materials such as aluminum, copper, brass, and steel and have a relatively short manufacturing cycle. The Company's operating units maintain their own inventories and production schedules. Current production capacity (including additional capacity planned to become operational this year) is capable of handling the sales volumes expected in fiscal 2001.
Aluminum, copper, brass, steel, and solder, all essential to the business, are purchased regularly from several domestic and foreign producers. In general, the Company does not rely on any one supplier for these materials, which are for the most part available from numerous sources in quantities required by the Company. The Company normally does not experience material shortages within its operations and believes that producers' supplies of these materials will be adequate through the end of fiscal year 2001.
The Company, and certain of its wholly-owned subsidiaries, own outright or are licensed to produce products under a number of patents and licenses. These patents and licenses, which have been obtained over a period of years, will expire at various times. Because the Company is involved with many product lines, the Company believes that its business as a whole is not materially dependent upon any particular patent or license, or any particular group of patents or licenses. Modine considers each of its patents, trademarks and licenses to be of value and aggressively defends its rights throughout the world against infringement. See also Item 3 - Legal Proceedings.
The Company remains committed to its vision of "creating value through technology." Company-sponsored research activities relate to the development of new products, processes, or services, or the improvement of existing products, processes, and services. Expenditures in fiscal 2000 amounted to $20,528,000; in fiscal 1999 amounted to $18,252,000; and in fiscal 1998 amounted to approximately $16,816,000. There were no significant expenditures on research activities that were customer- sponsored. Over the course of the last few years, the Company has become involved in a number of industry or university sponsored research organizations. These consortia conduct research and provide data on technical topics deemed to be of interest to the Company for practical applications in the markets the Company serves. The research and data developed is generally shared among the member companies. In addition, to achieve efficiencies and lower developmental costs, Modine's research and engineering groups work closely with Modine's customers on special projects and systems designs.
Modine has a long standing corporate environmental policy which demonstrates the Company's commitment to the environment and compliance with all environmental laws and regulations worldwide. Modine continues to appraise environmental issues and regulatory compliance with a proactive approach. The benefits realized from the Company's environmental programs include conserved resources, more efficient manufacturing processes, minimized liability exposure and reduced operational costs. Modine evaluates the performance of the Company's environmental programs through continuous monitoring, auditing and accounting systems. The Company constantly examines its operations and processes to minimize their impact on the environment. In calendar 1996, the Company revised its corporate waste minimization program, which originated in 1991, to encompass all by-products of the manufacturing process in North America. Despite the increases in North American sales volumes from calendar 1996 to 1999, the company achieved a 26% reduction in by-product generation over that same period.
Modine accrues for environmental remediation activities relating to past operations - including those under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA),
often referred to as "Superfund", and under the Resource Conservation and Recovery Act (RCRA) - when it is probable that a liability has been incurred and reasonable estimates can be made. In addition, an obligation may arise when a facility is closed or sold. These expenditures most often relate to facilities and sites where past operations followed practices and procedures that were considered acceptable under then-existing regulations, but will now require investigative and/or remedial work to ensure sufficient protection to the environment.
Five of the Company's manufacturing facilities currently have been identified as requiring soil and/or groundwater remediation. Because of the joint and several liability of former landowners, contractual obligations, and certain state programs that provide for partial reimbursement of certain remediation costs, it is unlikely these remediation efforts will have a material effect on the Company's consolidated financial condition.
Although there are no currently known liabilities that might have a material effect on the Company's consolidated net assets, the Environmental Protection Agency ("EPA") has designated Modine as a potentially responsible party ("PRP") for remediation of six waste disposal sites. These sites are not company owned and allegedly contain wastes attributable to Modine from past operations. For the six sites currently known, the Company's potential liability will be significantly less than the total site remediation because the percentage of material attributable to Modine is relatively low ("de minimis"), there may be insufficient documentation linking Modine to the site, and the other PRPs have the financial resources to meet their obligations.
Environmental regulations, as well as the company's policy to continuously improve upon its environmental management programs, will require significant capital equipment expenditures over the coming years. For the fiscal year ending March 31, 2000 capital expenditures related to environmental projects were $1.1 million. These environmental expenditures include capital outlays to retrofit existing facilities, as well as those associated with new facilities and other compliance costs. Modine currently expects expenditures for environmentally related capital projects to be about $2.5 million in fiscal 2001.
Environmental expenses charged to current operations, including remediation costs, totaled about $3.5 million for the fiscal year ending March 31, 2000. These expenses include solid waste disposal and operating and maintenance costs incurred in conducting environmental compliance activities; and for other matters. Operating expenses of some facilities may increase during fiscal year 2001 because of such charges but the competitive position of the Company is not expected to change materially. Although environmental costs are substantial, the Company has no reason to believe such costs vary significantly from similar costs incurred by other companies engaged in similar businesses.
The number of persons employed by the Company at March 31, 2000, was approximately 8,300.
Distributed Products may still experience a degree of seasonality since the demand for aftermarket and HVAC products are affected by weather patterns, constructions starts, and other factors. On an overall Company basis, there is no significant degree of seasonality as indicated by the percentages below. Sales to original equipment manufacturers are dependent upon the demand for new vehicles and equipment. The following quarterly net sales detail illustrates the degree of fluctuation for the past five years:
Fiscal Year Fiscal
Ended First Second Third Fourth Year
March 31 Quarter Quarter Quarter Quarter Total
----------- ------- ------- ------- ------- -----
($ In Thousands)
2000 $283,847 $286,691 $283,520 $285,211 $1,139,269
1999 273,104 272,961 284,355 281,027 1,111,447
1998 256,923 260,806 267,699 254,990 1,040,418
1997 248,514 254,224 252,972 243,336 999,046
1996 239,216 254,292 252,817 244,168 990,493
Five-year 260,321 265,795 268,273 261,746 1,056,135
Average
Percent 25% 25% 25% 25% 100%
of Year
|
The Company's products for the original equipment market are manufactured on an as ordered basis. Therefore, large inventories of such products are not necessary, nor is the amount of products returned significant. In the HVAC and aftermarket areas, due to the distribution systems and seasonal sales programs, varying levels of finished goods inventory are necessary. This inventory is spread throughout the distribution systems. In these areas, in general, the industry and the Company make use of extended terms of payment for customers on a limited and/or seasonal basis.
Information required hereunder regarding Year 2000 is incorporated by reference from the Company's 2000 Annual Report to Shareholders, pages 16 and 17, attached as Exhibit 13.
Information required hereunder regarding Euro Conversion is incorporated by reference from the Company's 2000 Annual Report to Shareholders, at page 17, attached as Exhibit 13.
The Company's general offices, along with laboratory, experimental and tooling facilities, are maintained in Racine, Wisconsin. Additional technical support functions are located in Harrodsburg, Kentucky and Bernhausen, Germany. Almost all of the Company's manufacturing and larger distribution centers are owned outright. A few manufacturing facilities and numerous regional sales and service centers, distribution centers and offices are occupied under various lease arrangements.
The Company's facilities, on an operating segment basis, are as follows:
Type of Original Distributed European Corporate & Facility Equipment Products Operations Other Total -------- --------- ----------- ---------- ----------- ----- Manufacturing 16 7 12 -- 35 Distribution -- 4 1 -- 5 Sales & Service Centers/Offices 2 13 20 1 36 Joint Ventures 3 3 6 Total 18 24 36 4 82 |
The Company's facilities, on a geographic basis, are as follows:
Type of North South Asia/ Central Facility America Europe America Pacific America Total -------- ------- ------ ------- ------- ------- ----- Manufacturing 22 13 -- -- -- 35 Distribution 4 1 -- -- -- 5 Sales & Service Centers/Offices 14 20 -- 1 1 36 Joint Ventures 1 3 1 1 -- 6 Total 41 37 1 2 1 82 |
Total square footage of the 82 facilities is approximately 8,263,635 square feet.
The Company currently uses its facilities for the purposes as noted above.
The Company's facilities, in general, are well maintained and conform to the sales, distribution, or manufacturing operations for which they are being used, and their productive capacity is, from time to time, adjusted and expanded as necessitated by product market considerations and customer growth.
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.
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 1999, the U.S. Patent Office Board of Appeals rejected the Company's 1994 PF patent which rejection is being appealed to the Court of Appeals for the Federal Circuit.
In October of 1997, Modine was issued a Japanese patent covering parallel-flow air-conditioning condensers having tube hydraulic diameters less than 0.070 inches.
In August of 1998, the Company filed a patent infringement suit in Japan against Showa with respect to this patent seeking an injunction and damages. Several patents have been issued to Modine by the European Patent Office, one having been rejected at the opposition
level, which is being appealed and another having been approved at the opposition level.
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.
Omitted as not applicable.
The Company's Common Stock is quoted on the National Association of Securities Dealers' Automated Quotation system ("NASDAQ") as a National Market issue. The Company's trading symbol is "MODI." The table below shows the range of high and low bid information for the Company's Common Stock for fiscal years 1999-00 and 1998-99. As of April 1, 2000, shareholders of record numbered approximately 5,914; it is estimated that beneficial owners numbered about 14,500.
1999-00 1998-99
--------------------------- ---------------------------
Quarter High Low Dividends High Low Dividends
First $34.00 $26.50 $.23 $37.500 $32.313 $.21
Second 34.13 24.25 .23 36.500 27.750 .21
Third 29.63 23.00 .23 38.625 26.625 .21
Fourth 26.69 21.00 .23 38.000 25.250 .21
---- ----
TOTAL $.92 $.84
------------------------------------------------------------------------
|
Certain of the Company's financing agreements require it to maintain specific financial ratios and place certain limitations on the use of retained earnings for the payment of cash dividends and the acquisition of treasury stock. Under the most restrictive, $192,158,000 was available for these purposes at March 31, 2000. (However, dividend payments may not exceed $50,000,000 in any fiscal year.) Other loan agreements give certain existing unsecured lenders security equal to any future secured borrowing.
In October 1986, the Company adopted a shareholder rights plan and issued one right for each share of common stock. The rights are not currently exercisable but will become exercisable 10 days after a shareholder has acquired 20 percent or more, or commenced a tender or exchange offer for 30 percent or more, of the Company's common stock. Each right will initially entitle the holder to purchase a unit of 1/100 Preferred Series A Participating Stock. During fiscal 1996-1997, the Company amended the Plan increasing the price from $21.25 to $95.00 per unit. In the event of certain mergers, sales of assets, or self-dealing transactions involving a 20 percent or more shareholder, each right not owned by such 20 percent or more shareholder will be modified so that it will then be exercisable for common stock having a market value of twice the exercise price of the right. The rights are redeemable in whole by the Company, at a price of $0.0125 per right, at any time before 20 percent or more of the Company's common stock has been acquired. On January 18, 1995, the Board of Directors of the Company authorized an amendment to the Rights Agreement by extending the final expiration date of the Rights from October 27, 1996 to October 27, 2006. Accordingly, the Rights expire on October 27, 2006, unless previously redeemed.
ITEM 6. SELECTED FINANCIAL DATA.
------ -----------------------
Fiscal Year ended March 31
------------------------------------------------------
2000 1999 1998 1997 1996
Sales (in thousands) $1,139,269 $1,111,447 $1,040,418 $999,046 $990,493
Net earnings (in
thousands) 65,403 73,943 72,471 63,763 61,399
Total assets (in
thousands) 931,107 915,739 759,024 694,955 671,836
Long-term debt (in
thousands) 211,112 143,838 89,587 85,197 87,809
Dividends per share .92 .84 .76 .68 .60
Net earnings per share
- Basic 2.22 2.50 2.44 2.14 2.07
- Assuming dilution 2.20 2.46 2.39 2.10 2.03
|
Certain information required hereunder is incorporated by reference from the Company's 2000 Annual Report to Shareholders, pages 12-20 and 22, attached as Exhibit 13.
The Consolidated Statements of Earnings, and the related Consolidated Balance Sheets, Cash Flows, Shareholders' Investment, Notes to Consolidated Financial Statements, and the report of Pricewaterhouse- Coopers LLP dated April 26, 2000 appearing on pages 19, 21, 23, 24, and 25-33, respectively, of the Company's 2000 Annual Report to
Shareholders are incorporated herein by reference. With the exception of the aforementioned information, no other data appearing in the 2000 Annual Report to Shareholders is deemed to be filed as part of this Annual Report on Form 10-K. Individual financial statements of the Registrant are omitted because the Registrant is primarily an operating company, and the subsidiaries included in the consolidated financial statements are wholly-owned.
There were no disagreements on accounting or financial disclosures between the Company and its auditors.
The information about directors and executive officers and executive compensation on pages 3 - 5 and pages 10, 11, 15, and 16, of the Company's definitive Proxy Statement dated June 9, 2000 under the headings "Election of Directors," "Nominees to be Elected," "Directors Continuing in Service," and "Executive Compensation" attached to this report is incorporated herein by reference, but excluding the Officer Nomination and Compensation Committee Report on Executive Compensation and the Performance Graph on pages 11-14.
Executive Officers of Registrant
Officer
Name Age Position Since
---- --- -------- -----
R. T. Savage* 61 Chairman 1981
D. R. Johnson* 58 President and Chief Executive Officer 1988
D. B. Rayburn* 52 Executive Vice President, Operations 1991
W. E. Pavlick 66 Senior Vice President, General Counsel 1979
and Secretary
E. T. Thomas 46 Group Vice President 1998
C. R. Katzfey** 53 Group Vice President 2000
K. A. Feldmann** 46 Group Vice President 2000
A. C. DeVuono 51 Vice President, Technical Services 1996
R. L. Hetrick 58 Vice President, Human Resources 1989
R. W. Possehl 55 Vice President, Administration 1985
A. D. Reid 58 Vice President, Finance and Chief
Financial Officer 1985
R. S. Bullmore 50 Corporate Controller 1983
G. A. Fahl 45 Environmental, Health & Safety Officer 1998
C. C. Harper 46 Chief Information Officer 1998
D. B. Spiewak 46 Treasurer 1998
D. R. Zakos 46 Associate General Counsel and
Assistant Secretary 1985
L. D. Howard*** 56 Group Vice President, Europe 1991
|
* Prior to March 31 and April 1, 1998: R. T. Savage was Chairman, President and Chief Executive Officer (now retired); D. R. Johnson was President and Chief Operating Officer; and D. B. Rayburn was Group Vice President, Highway Products. ** K. A. Feldmann and C. R. Katzfey became officers on April 1, 2000. Prior to April 1, 2000, K. A. Feldmann was Heavy Duty Business Unit Managing Director and C. R. Katzfey was Truck Division General Manager. *** L. D. Howard retired April 1, 2000.
Officer positions are designated in Modine's By-Laws and the persons holding these positions are elected annually by the Board at its first meeting after the annual meeting of shareholders in July of each year.
There are no family relationships among the executive officers and directors. All of the above officers have been employed by Modine in various capacities during the last five years, except A. C. DeVuono, E. T. Thomas, C. C. Harper, and D. B. Spiewak.
Mr. DeVuono joined Modine on March 4, 1996, as Director, Technical Services. He was promoted to Vice President, Technical Services in October, 1996. Before joining Modine, he was a staff scientist at the Lawrence Berkeley National Laboratory of the University of California. Prior to that, he spent 10 years with Battelle Memorial Institute in Columbus, Ohio, as a principal research scientist, and also has previous affiliations with the teaching faculties of the Ohio State University and the University of Illinois.
Mr. Thomas joined Modine on August 3, 1998 as Group Vice President, Highway Products. Mr. Thomas previously worked at Eaton Corporation for nine years where he had been General Manager of the Fluid Power Division. Before that, he was General Manager of Eaton's Torque Control Products Division. He also served Eaton as a Plant Manager and Manager of Strategic Planning and Acquisition Analysis. Prior to joining Eaton, Mr. Thomas spent eleven years at General Motors as a member of the Corporate Financial Staff.
Mr. Harper was promoted to Chief Information Officer on October 21, 1998. Mr. Harper joined Modine in January, 1997 as Director of Information Systems. Previous to Modine, Mr. Harper had been employed by Tenneco Incorporated for 14 years in a number of technical and managerial positions.
Mr. Spiewak joined Modine as Treasurer on September 21, 1998. Mr. Spiewak came to Modine from Alliant Foodservice, Inc., formerly a part of Kraft Foods. Prior to Alliant, Mr. Spiewak spent eight years with Illinois Tool Works, Inc. as Manager, Treasury Systems.
There are no arrangements or understandings between any of the above officers and any other person pursuant to which he was elected an officer of Modine. Officers are elected annually at the first meeting of the Board of Directors after the Annual Meeting of Shareholders.
Information relating to the employment agreements, termination and change-in-control arrangements is incorporated by reference from the Company's 1999-2000 definitive Proxy Statement dated June 9, 2000 attached to this Report at page 17 and 18 therein.
The Company's stock option and stock award plans contain certain provisions relating to change-in-control or other specified transactions that may, if authorized by the Officer Nomination and Compensation Committee of the board, accelerate or otherwise release shares granted or awarded under those plans.
The information relating to stock ownership on pages 5 - 7 of the Company's definitive Proxy Statement dated June 9, 2000 under the headings "Principal Shareholders and Share Ownership of Directors and Executive Officers, "Principal Shareholders," and "Securities Owned by Management" attached to this report is incorporated herein by reference.
The information required by this item is incorporated by reference from the Company's definitive Proxy Statement dated June 9, 2000 on page 18 under the heading "Transactions" attached to this Report.
PART IV
-------
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
------- ----------------------------------------------------------------
(a) The following documents are filed as part of this Report:
Page in
Annual Report*
--------------
(1) Financial Statements:
Consolidated Statements of Earnings for
the years ended March 31, 2000,1999, and 1998. 19
Consolidated Balance Sheets at March 31, 2000
and 1999. 21
Consolidated Statements of Cash Flows for the
years ended March 31, 2000, 1999, and 1998. 23
Consolidated Statements of Shareholders'
Investment for the years ended March 31, 2000,
1999, and 1998. 24
Notes to Consolidated Financial Statements 25 - 33
Report of Independent Accountants 33
|
* Incorporated by reference from the indicated pages of the 1999-00 Annual Report to Shareholders
Page in
Form 10-K
---------
(2) Financial Statement Schedules:
Report of Independent Accountants on Financial
Statement Schedule for the three years ended
March 31, 2000 24
Schedule II - Valuation and Qualifying Accounts
for the years ended March 31, 2000, 1999, and 1998. 25
(3) Consent of Independent Accountants 133
(4) Exhibit Index 15
|
(b) All other schedules have been omitted as they are not applicable, not required, or because the required information is included in the financial statements.
The following exhibits are attached for information only unless specifically incorporated by reference in this Report:
Reference Number
per Item 601 of
Regulation S-K Page
---------------- ----
2 Not applicable.
3(a) Restated Articles of Incorporation (as
amended)(filed by reference to the
Registrant's Annual Report on Form 10-K
for the fiscal year ended March 31, 1999).
*3(b) Restated By-Laws (as amended). 26
4(a) Specimen Uniform Denomination Stock
Certificate of the Registrant (filed
by reference to the Registrant's Annual
Report on Form 10-K for the fiscal year
ended March 31, 1998).
4(b) 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). 37
*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). 40
|
Reference Number
per Item 601 of
Regulation S-K Page
---------------- ----
4(b)(iii) Rights Agreement Amendment No. 3 dated as
of October 15, 1996, between the Registrant
and First Chicago Trust Company of New York
(Rights Agent) (filed by reference to the
exhibit contained within the Registrant's
Quarterly Report on Form 10-Q dated
December 26, 1996).
4(b)(iv) Rights Agreement Amendment No. 4 dated as
of November 10, 1997 between the Registrant
and Norwest Bank Minnesota, N.A. (Rights
Agent) (filed by reference to the exhibit
contained within the Registrant's Quarterly
Report on Form 10-Q dated December 26, 1997).
Note: The amount of long-term debt authorized
----
under any instrument defining the rights of
holders of long-term debt of the Registrant,
other than as noted above, does not exceed ten
percent of the total assets of the Registrant
and its subsidiaries on a consolidated basis.
Therefore, no such instruments are required to
be filed as exhibits to this Form. The
Registrant agrees to furnish copies of such
instruments to the Commission upon request.
9 Not applicable.
10(a) Director Emeritus Retirement Plan (effective
April 1,1992) (filed by reference to the
Registrant's Annual Report on Form 10-K
for the fiscal year ended March 31, 1997).
10(b) Employment Agreement between the Registrant
and D. R. Johnson (filed by reference to the
Registrant's Quarterly Report on Form 10-Q
dated November 1, 1996).
10(c) 1985 Incentive Stock Plan (as amended) (filed
by reference to the Registrant's Annual Report
on Form 10-K for the fiscal year ended
March 31, 1997).
10(d) 1985 Stock Option Plan for Non-Employee
Directors (as amended)(filed by reference to
the Registrant's Annual Report on Form 10-K
for the fiscal year ended March 31, 1999).
10(e) Pension and Disability Plan For Salaried
Employees of Modine Manufacturing Company
(as amended) (filed by reference to the
Registrant's Annual Report on Form 10-K
for the fiscal year ended March 31, 1999).
|
Reference Number
per Item 601 of
Regulation S-K Page
---------------- ----
*10(f) Executive Supplemental Retirement Plan (as 43
amended).
10(g) Modine Manufacturing Company Executive
Supplemental Stock Plan (as amended) (filed
by reference to the Registrant's Annual
Report on Form 10-K for the fiscal year
ended March 31, 1999).
10(h) 1994 Incentive Compensation Plan (as amended)
(filed by reference to the Registrant's Annual
Report on Form 10-K for the fiscal year ended
March 31, 1997).
10(i) 1994 Stock Option Plan for Non-Employee
Directors (as amended) (filed by reference to
the Registrant's Annual Report on Form 10-K
for the fiscal year ended March 31, 1997).
*10(j) 1995 Stock Award Plan [a part of the 1994
Incentive Compensation Plan]. 48
*10(k) 1995 Stock Option Agreements (incentive and
non-qualified) [a part of the 1994
Incentive Compensation Plan]. 54
*10(l) 1995 Stock Option Agreement [a part of the
1994 Stock Option Plan for Non-Employee
Directors]. 66
10(m) 1996 Stock Award Plan [a part of the 1994
Incentive Compensation Plan] (filed by
reference to the exhibit contained within
the Registrant's Annual Report on Form
10-K for the fiscal year 1996).
10(n) 1996 Stock Option Agreements (incentive and
non-qualified) [a part of the 1994 Incentive
Compensation Plan] (filed by reference to the
exhibit contained within the Registrant's
Annual Report on Form 10-K for the fiscal year
1996).
10(o) 1996 Stock Option Agreement [a part of the
1994 Stock Option Plan for Non-Employee
Directors].
Note: The 1996 Stock Option Agreement
----
is not materially different from the
1995 Non-Employee Directors Stock Option
Agreement filed with this Annual Report
on Form 10-K as Exhibit 10(l).
|
Reference Number
per Item 601 of
Regulation S-K Page
---------------- ----
10(p) 1997 Stock Award Plan [a part of the 1994
Incentive Compensation Plan].
Note: The 1997 Stock Award Plan is not
----
materially different from the 1996 Stock
Award Plan filed with the Registrant's
Annual Report on Form 10-K for the fiscal
year 1996.
10(q) 1997 Stock Option Agreements (incentive
and non-qualified) [a part of the 1994
Incentive Compensation Plan].
Note: The 1997 Stock Option Agreements
----
are not materially different from the
1996 Stock Option Agreements filed with
the Registrant's Annual Report on Form
10-K for the fiscal year 1996.
10(r) 1997 Stock Option Agreement [a part of
the 1994 Stock Option Plan for Non-
Employee Directors].
Note: The 1997 Stock Option Agreement
----
is not materially different from the
1995 Non-Employee Directors Stock Option
Agreement filed with this Annual Report
on Form 10-K as Exhibit 10(l).
10(s) 1998 Stock Award Plan [a part of the
1994 Incentive Compensation Plan].
Note: The 1998 Stock Award Plan is not
----
materially different from the 1996 Stock
Award Plan filed with the Registrant's
Annual Report on Form 10-K for fiscal
year 1996.
10(t) 1998 Stock Option Agreements (incentive
and non-qualified) [a part of the 1994
Incentive Compensation Plan].
Note: The 1998 Stock Option Agreements
----
are not materially different from the
1996 Stock Option Agreements filed with
the Registrant's Annual Report on Form
10-K for the fiscal year 1996.
|
Reference Number
per Item 601 of
Regulation S-K Page
---------------- ----
10(u) 1998 Stock Option Agreement [a part of
the 1994 Stock Option Plan for Non-
Employee Directors].
Note: The 1998 Stock Option Agreement is
----
not materially different from the 1995
Non-Employee Directors Stock Option
Agreement filed with this Annual Report
on Form 10-K as Exhibit 10(l).
10(v) 1999 Stock Option Agreements (incentive
and non-qualified) [a part of the 1994
Incentive Compensation Plan].
Note: The 1999 Stock Option Agreements
----
are not materially different from the
1996 Stock Option Agreements filed with
the Registrant's Annual Report on Form
10-K for the fiscal year 1996.
10(w) 1999 Stock Option Agreement [a part of
the 1994 Stock Option Plan for Non-
Employee Directors].
Note: The 1999 Stock Option Agreement
----
is not materially different from the
1995 Non-Employee Directors Stock Option
Agreement filed with this Annual Report
on Form 10-K as Exhibit 10(l).
*10(x) 2000 Stock Award Plan [a part of the
1994 Incentive Compensation Plan]. 72
*10(y) 2000 Stock Option Agreements (incentive
and non-qualified) [a part of the 1994
Incentive Compensation Plan]. 78
Note: The 2000 Stock Option Agreements
----
are not materially different from the
1996 Stock Option Agreements filed with
the Registrant's Annual Report on Form
10-K for the fiscal year 1996.
11 Not applicable.
12 Not applicable.
*13 2000 Annual Report to Shareholders.
Except for the portions of the Report
expressly incorporated by reference,
|
Reference Number
per Item 601 of
Regulation S-K Page
---------------- ----
the Report is furnished solely for the
information of the Commission and is
not deemed "filed" as a part hereof. 91
16 Not applicable.
18 Not applicable.
*21 List of subsidiaries of the Registrant. 131
22 Not applicable.
*23 Consent of independent accountants. 133
24 Not applicable.
*27 Financial Data Schedules -- Fiscal 2000
(electronic transmission only)
28 Not applicable.
*99(a) Definitive Proxy Statement of the
Registrant dated June 9, 2000. Except
for the portions of the Proxy Statement
expressly incorporated by reference, the
Proxy Statement is furnished solely for
the information of the Commission and is
not deemed "filed" as a part hereof. 134
*99(b) Appendix (filed pursuant to Item 304 of
Regulation S-T). 156
Note: All Exhibits filed herewith are
----
current to the end of the reporting
period of the Form 10-K (unless
otherwise noted).
|
* Filed herewith.
A Current Report on Form 8-K, dated June 9, 2000, was filed by the Company. This report, filed in connection with the Company's mailing of its Annual Report to Shareholders and its sales forecast for the upcoming year contained therein, includes as exhibits (1) the news release containing the sales forecast and (2) a statement of the important factors and assumptions regarding forward-looking statements.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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
Date: June 21, 2000 By: D. R. JOHNSON
---------------------------------
D. R. Johnson, President and
Chief Executive Officer
|
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities indicated.
R. T. SAVAGE June 21, 2000 ---------------------------------------- ------------- R. T. Savage, Chairman and Director Date D. R. JOHNSON June 21, 2000 ---------------------------------------- ------------- D. R. Johnson, President and Date Chief Executive Officer and Director A. D. REID June 21, 2000 ---------------------------------------- ------------- A. D. Reid, Vice President, Finance Date and Chief Financial Officer W. E. PAVLICK June 21, 2000 ---------------------------------------- ------------- W. E. Pavlick, Senior Vice President, Date General Counsel and Secretary R. J. DOYLE June 21, 2000 ---------------------------------------- ------------- R. J. Doyle, Director Date F. P. INCROPERA June 21, 2000 ---------------------------------------- ------------- F. P. Incropera, Director Date F. W. JONES June 21, 2000 ---------------------------------------- ------------- F. W. Jones, Director Date D. J. KUESTER June 21, 2000 ---------------------------------------- ------------- D. J. Kuester, Director Date |
G. L. NEALE June 21, 2000 ---------------------------------------- ------------- G. L. Neale, Director Date M. C. WILLIAMS June 21, 2000 ---------------------------------------- ------------- M. C. Williams, Director Date M. T. YONKER June 21, 2000 ---------------------------------------- ------------- M. T. Yonker, Director Date |
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Directors Modine Manufacturing Company
Our audits of the consolidated financial statements referred to in our report dated April 26, 2000 appearing in the Annual Report to Shareholders of Modine Manufacturing Company and its Subsidiaries (which report and consolidated financial statements are incorporated by reference in this Annual Report on Form 10-K) also included an audit of the financial statement schedule listed in Item 14(a)(2) of this Form 10-K. In our opinion, this financial statement schedule presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements.
/s/ PricewaterhouseCoopers LLP Chicago, Illinois April 26, 2000 |
MODINE MANUFACTURING COMPANY AND SUBSIDIARIES
(A Wisconsin Corporation)
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
for the years ended March 31, 2000, 1999 and 1998
($ In Thousands)
Col. A Col. B Col. C Col. D Col. E
------ ------ ------ ------ ------
Additions
(1) (2)
Balance at Balance
Beginning Charged to Charged to at
of Costs and Other End of
Description Period Expenses Accounts Deductions Period
----------- ---------- ---------- ----------- ---------- -------
2000:
Intangible Assets-
Accumulated
Amortization $23,852 $8,390 $(1,093)(B) $ 80(C) $31,069
------- ------ ----------- --------- -------
Allowance for
Doubtful Accounts $ 3,749 $1,173 $ (8)(B) $ 478(A) $ 4,436
------- ------ ----------- --------- -------
Valuation
Allowance for
Deferred Tax Assets $ 5,154 $4,298(D) $ 856
------- --------- -------
1999:
Intangible Assets-
Accumulated
Amortization $17,150 $5,856 $ 846(B) $ 0(C) $23,852
------- ------ ----------- --------- -------
Allowance for
Doubtful Accounts $ 4,585 $ (427) $ 5(B) $ 414(A) $ 3,749
------- ------- ----------- --------- -------
Valuation
Allowance for
Deferred Tax Assets $ 3,947 $1,304(D) $ 97(D) $ 5,154
------- --------- --------- -------
1998:
Intangible Assets-
Accumulated
Amortization $12,885 $4,761 $ (496)(B) $ 0(C) $17,150
------- ------ ------------ --------- -------
Allowance for
Doubtful Accounts $ 4,140 $1,029 $ (70)(B) $ 514(A) $ 4,585
------- ------ ------------ --------- -------
Valuation
Allowance for
Deferred Tax Assets $ 4,127 $ 644(D) $ 824(D) $ 3,947
------- --------- --------- -------
|
Notes:
(A) Bad debts charged off during the year.
(B) Translation and other adjustments.
(C) Retirement of fully amortized intangibles.
(D) Includes foreign operating losses and tax credit carryforwards.
EXHIBIT 3(b)
RESTATED
BY-LAWS
OF
MODINE MANUFACTURING COMPANY
(as adopted July 17, 1969)
(as amended September 17, 1970)
(as amended September 16, 1971)
(as amended May 4, 1972)
(as amended March 20, 1974)
(as amended September 18, 1974)
(as amended May 19, 1976)
(as amended July 21, 1976)
(as amended May 18, 1977)
(as amended July 20, 1977)
(as amended October 18, 1978)
(as amended May 16, 1979)
(as amended July 18, 1979)
(as amended October 17, 1979)
(as amended October 15, 1980)
(as amended May 1, 1981)
(as amended May 5, 1982 to be effective July 21, 1982)
(as amended August 17, 1982)
(as amended February 18, 1987)
(as amended March 18, 1987)
(as amended July 15, 1987)
(as amended February 15, 1989)
(as amended May 19, 1993)
(as amended October 20, 1993)
(as amended November 17, 1993)
(as amended March 16, 1994 to be effective July 20, 1994)
(as amended May 17, 1995 to be effective July 19, 1995)
(as amended October 16, 1996 to be effective
October 16, 1996)
(as amended December 17, 1997)
(as amended March 18, 1998 to be effective July 15, 1998)
(as amended January 20, 1999)
(as amended March 17, 1999 to be effective July 21, 1999)
(as amended September 15, 1999)
(as amended March 15, 2000 to be effective July 19, 2000)
original stock transfer books shall be prima facie evidence as to the stockholders entitled to examine such list or transfer books or to vote at any meeting of stockholders.
The Board of Directors shall be divided into three classes: each class consisting of three directors. The term of office of a director shall be three years. The classes of directors shall be staggered so that each expires in succeeding years. At each annual meeting of stockholders, the number of directors equal to the number of the class whose terms expire at the time of such
meeting shall be elected to hold office until the third succeeding annual meeting and until their successors shall have been elected.
of Incorporation, or by these by-laws, may exercise all the powers, including specific powers, of the Company.
A director may be removed from office during the term of such office but only upon a showing of good cause, such removal to be by affirmative vote of a majority of the outstanding shares entitled to vote for the election of such director and which removal may only be taken at a special meeting of stockholders called for that purpose.
A special meeting of the stockholders as herein referred to may only be held after a hearing on the matter of cause claimed to exist has been held by the full Board of Directors of the Company at which hearing the director or directors proposed for removal shall be given an adequate opportunity for preparation and attendance in person (together with representation by counsel); provided, however, that such hearing shall be held only after written notice has been given to said director or directors proposed for removal specifying the matters of cause claimed to exist. The conclusions of said hearing shall be reported by the Board of Directors in writing accompanying the notice of the special stockholders' meeting sent to each stockholder eligible to vote at said special meeting.
to removal for cause, the remaining directors in office, by a majority vote, may appoint any qualified person to fill such vacancy, who shall hold office for the unexpired term and until his successor shall be duly chosen.
a Secretary, and a Treasurer, each of whom shall be elected by the Board of Directors. Such other officers and assistant officers as may be deemed necessary may be elected or appointed by the Board of Directors. Any two or more offices may be held by the same person, except the offices of President and Secretary and the offices of President and Vice President.
Any person made a party to or threatened with any civil, criminal, administrative or investigative action, suit or proceeding (other than an action by or in the right of the Company) by reason of the fact that he, his testator or intestate, is or was a Director, officer or employee of the Company or is or was serving at the request of the Company as a Director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, shall be indemnified by the Company against the reasonable expenses, including attorneys' fees, judgments, fines, and amounts paid in settlement, actually and necessarily incurred by him in connection with such action, suit or proceeding, or in connection with any appeal therein, if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Company, and with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. Such right of indemnification shall not be deemed exclusive of any other right to which such Director, officer, employee or agent may otherwise be entitled.
In case any officer who has signed, or whose facsimile signature has been placed upon a certificate has ceased to be an officer of the Company before such certificate has been issued, such certificate may, nevertheless, be adopted and issued and
delivered by the Company as though the officer who signed such certificate or whose facsimile signature shall have been used thereon, had not ceased to be such officer with the same effect as if he were such office at the date of its issue.
around the circumference, and the words "CORPORATE SEAL" in the center. If a facsimile or printed seal is used on stock certificates, it shall be similar in content and design to the above.
companies or other depositaries as may be selected by the Chairman or President, for the deposit of Company funds.
These by-laws may be amended, repealed or altered in whole or in part by the affirmative vote of not less than two- third (2/3) of the shares of the Company entitled to vote thereon, or by the affirmative vote of not less than two-thirds (2/3) of the full Board of Directors of the Company, at any regular meeting of the stockholders or of the Board of Directors, or any special meeting of the stockholders or Bard of Directors, provided that such action has been specified in the notice of any such meeting.
EXHIBIT 4(b)(i)
MODINE MANUFACTURING COMPANY
AND
THE FIRST NATIONAL BANK OF CHICAGO
Rights Agent
to
Rights Agreement
Dated as of October 15, 1986
This Amendment, when executed, shall constitute a valid and binding amendment to that certain Rights Agreement dated as of October 15, 1986 by and between Modine Manufacturing Company, a Wisconsin corporation (the "Company"), and The First National Bank of Chicago, a national banking association (the "Rights Agent").
Recitals
A. The Rights Agreement provides that the Company and the Rights Agent may supplement or amend the Rights Agreement from time to time.
B. The Rights Agent has consolidated all of its shareholder services, including the services contemplated by the Rights Agreement, in one business unit known as "First Chicago Trust Company of New York."
C. The Company and the Rights Agent desire to amend the Rights Agreement in accordance with the terms of this Amendment.
Agreement
1. In consideration of the Recitals and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Company and the Rights Agent agree, pursuant to the provisions set forth in the Rights Agreement, to amend the Rights Agreement as follows:
2. The Rights Agreement is amended by substituting, where applicable, "First Chicago Trust Company of New York" in place of "The First National Bank of Chicago" as the Rights Agent.
3. This Amendment shall be effective as of January 18, 1995.
4. The Company and the Rights Agent agree that all other terms, provisions, covenants, or restrictions of the Rights Agreement, to the extent not inconsistent with this Amendment, shall remain unchanged and in full force and effect.
5. Capitalized terms which are not defined in this Amendment have the meanings given such terms in the Rights Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and their respective corporate seals to be hereunto affixed and attested, as of the effective date hereof.
(SEAL)
MODINE MANUFACTURING COMPANY
Attest:
By W. E. PAVLICK By R. T. SAVAGE
---------------------- --------------------------
Title: Secretary Title: President and
Chief Executive
Officer
(SEAL)
|
FIRST CHICAGO TRUST COMPANY OF
NEW YORK
Attest: By s/M. Phalen By s/L. Woods ---------------------- --------------------------- Title: Vice President Title: Vice President |
EXHIBIT 4(b)(ii)
MODINE MANUFACTURING COMPANY
AND
FIRST CHICAGO TRUST COMPANY OF NEW YORK
Rights Agent
Amendment Number 2
to
Rights Agreement
Dated as of October 15, 1986
This Amendment, when executed, shall constitute a valid and binding amendment to that certain Rights Agreement dated as of October 15, 1986 by and between Modine Manufacturing Company, a Wisconsin corporation (the "Company"), and First Chicago Trust Company of New York (the "Rights Agent").
Recitals
A. The Rights Agreement provides that the Company and the Rights Agent may supplement or amend the Rights Agreement for the purpose of, among other things, extending the Final Expiration Date of the Rights.
B The Company and the Rights Agent desire to amend the Rights Agreement in accordance with the terms of this Amendment.
Agreement
1. In consideration of the Recitals and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Company and the Rights Agent agree, pursuant to the provision set forth in Section 26 of the Rights Agreement, to amend the Rights Agreement as follows:
2. Section 7(a)(i)of the Rights Agreement is amended by substituting the following:
(i) the close of business on October 27, 2006 (the "Final Expiration Date"), . . . ,
3. This Amendment shall be effective as of January 18, 1995.
4. The Company and the Rights Agent agree that all other terms, provisions, covenants, or restrictions of the Rights Agreement, to the extent not inconsistent with this Amendment, shall remain unchanged and in full force and effect.
5. Capitalized terms which are not defined in this Amendment have the meanings given such terms in the Rights Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and their respective corporate seals to be hereunto affixed and attested, as of the effective date hereof.
(SEAL)
MODINE MANUFACTURING COMPANY
Attest:
By W. E. PAVLICK By R. T. SAVAGE
---------------------- ---------------------------
Title: Secretary Title: President and
Chief Executive
Officer
(SEAL)
|
FIRST CHICAGO TRUST COMPANY OF
NEW YORK
Attest:
By s/M. Phalen By s/L. Woods ----------------------- ---------------------------- Title: Vice President Title: Vice President |
EXHIBIT 10(f)
MODINE MANUFACTURING COMPANY
EXECUTIVE SUPPLEMENTAL RETIREMENT PLAN
Modine Manufacturing Company (hereinafter called the "Company") has adopted the MODINE PENSION AND DISABILITY PLAN FOR SALARIED EMPLOYEES (hereinafter called the "Pension Plan"), and executed a Trust Agreement to provide retirement benefits for its employees. The Pension Plan and Trust is intended to meet requirements of Sections 401(a) and 501(a) of the Internal Revenue Code of 1954, as amended.
The Pension Plan contains provisions placing limitations on the maximum benefit which may be paid to a Participant in the Pension Plan in accordance with Sections 401(a)(17) and 415 of the Internal Revenue Code.
By resolution of November 14, 1979, the Board of Directors of the Company determined that the maximum benefit limitations in the Internal Revenue Code adversely affected the pension benefits of eligible employees. It therefore authorized the payment of supplemental retirement benefits of such employees impacted by these maximum benefit limitations.
As a formal expression on the intent of said resolution of the Board of Directors, the Company hereby establishes an unfunded "Executive Supplemental Retirement Plan" within the meaning of Sections 201(2), 301(a)(3), and 401(a)(1) of ERISA for a select group of highly compensated employees, to be effective for any eligible employee who terminates employment on or after November 14, 1979, (hereinafter called the "Plan").
the Company, but who are not members of the Officer Nomination and Compensation Committee.
(a) The amount of benefits payable under the Pension Plan if the limitations in Code Section 415 and 401(a)(17) were not applied, less
(b) The amount of benefits payable under the Pension Plan.
(a) There is no joint and survivor pension payable to the spouse of any married Participant who dies before retiring from or otherwise leaving employment with the Company.
(b) The monthly benefit to a Participant under the Plan shall be a monthly benefit only for the life of the Participant unless the Participant, prior to his retirement (as defined in the Pension Plan) elects one of the other optional Forms of Benefit as provided by the Pension Plan. An election of one optional form of benefit under the Pension Plan does not affect the right of the Participant to elect a different form of optional benefit under this Plan.
(c) Election of an optional form of benefit and designation of a surviving beneficiary shall be done in accordance with the rules set forth in the Pension Plan, except that any such election by a married Participant shall not require the written consent of his spouse.
(d) A Participant who is eligible to elect a lump-sum payment under the Pension Plan, may elect to have a lump-sum payment under this plan.
(e) Benefits under this Plan shall commence or be paid at a time to be determined by the Committee, but not earlier than the Date of Determination under the Pension Plan and not later than twelve months after the Participant has terminated his employment with the Company.
(f) If the commencement of benefit payments or a lump-sum
payment under this Plan occurs later than the
commencement of benefit payments or a lump-sum payment
under the Pension Plan, the amount of benefits under
this Plan shall be calculated in accordance with
Section 3.1 based upon the pension benefit as of the
date of commencement of benefit payments or the lump-
sum payment under this Plan (but not later than age 65).
IN WITNESS WHEREOF, MODINE MANUFACTURING COMPANY has caused this instrument to be executed by its duly authorized officers, this 16th day of July, 1987.
MODINE MANUFACTURING COMPANY
ATTEST:
MODINE MANUFACTURING COMPANY
EXECUTIVE SUPPLEMENTAL RETIREMENT PLAN
FIRST AMENDMENT
WHEREAS, the Company established the Modine Manufacturing Company Executive Supplemental Retirement Plan effective November 14, 1979, and
WHEREAS, it is the desire of the Company to amend such Plan as hereinafter set forth.
NOW, THEREFORE, the Company does hereby adopt the First Amendment to the Modine Manufacturing Company Executive Supplemental Retirement Plan to be effective as of October 1, 1994.
Section 3.2(d), is amended to read as follows in its entirety:
(d) A Participant, upon his retirement, may elect a one- time lump-sum payment of his benefit under this Plan, whether or not he is eligible to elect a lump-sum payment under the Pension Plan.
Except as expressly amended herein, the Modine Manufacturing Company Executive Supplemental Retirement Plan shall remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this First Amendment of the Modine Manufacturing Company Executive Supplemental Retirement Plan, this 19th day of October, 1994.
MODINE MANUFACTURING COMPANY
ATTEST:
EXHIBIT 10(j)
STOCK AWARD PLAN
1. PURPOSES OF PLAN. The purposes of the Stock Award
Plan of Modine Manufacturing Company ("Modine") are as follows:
A. To further the growth, success and interest of the
Company and its stockholders by enabling key
managerial employees of the Company, who have
responsibility for the administration of the affairs
of the Company, to acquire shares of Modine Common
Stock under the terms and conditions and in the
manner contemplated by this Plan, thereby increasing
their personal involvement in the fortunes of the
Company; and
B. To enable the Company to obtain and retain the
services of desirable key managerial employees by
providing such employees with an opportunity to become
owners of Modine Common Stock under the terms and
conditions and in the manner contemplated by this Plan.
The term "Company" as used herein shall mean Modine and its
majority owned subsidiaries, including subsidiaries which may
be created or acquired during the period of this Plan.
2. ADMINISTRATION OF PLAN. This Plan shall be
administered by the Officer Nomination and Compensation
Committee consisting of two or more directors of the Board of
Directors of Modine, none of whom shall be employees of the
Company. The Committee shall interpret the Plan and to the
extent and in the manner contemplated herein it shall exercise
the discretion granted to it as to the determination of who shall
participate in the Plan, and how many shares shall be awarded to
each participant. The Committee shall issue from time to time
such rules and interpretations as in its judgment are necessary
or appropriate in order to effectively administer the Plan.
3. ELIGIBLE EMPLOYEES. Employees including officers of
the Company who the Committee determines have and exercise
management functions and responsibilities shall be eligible for
participation under the Plan. However, no member of the Board
of Directors of the Company shall be eligible to participate
under the Plan unless such member is also an employee of the
Company, and no member of the Committee shall be eligible to
participate under the Plan.
4. SHARES SUBJECT TO PLAN. The Board of Directors and
the shareholders of the Company in July 1994 approved a broad
Incentive Compensation Plan providing for an aggregate of
3,000,000 shares of the Common Stock, $0.625 par value of
Modine for various plans adopted by the Board of Directors
under such authority. The 1994 Incentive Compensation Plan
permitted the use of either newly-issued shares, authorized but
heretofore unissued shares, or shares reacquired by the
Company, including shares purchased on the open market. If
shares issued pursuant hereto shall have been forfeited and
returned to Modine in connection with the restrictions imposed
upon such shares pursuant to this Plan, such forfeited shares
again shall become available for issuance under the Plan prior
to termination of the Plan.
5. RESTRICTIONS. All shares awarded pursuant to this
Plan shall be subject to the following restrictions:
(a) The shares may not be sold or otherwise alienated or
hypothecated as long as they are subject to
forfeiture provided in this Section 5.
(b) In the event of termination with the Company of a
participant prior to the beginning of the third year
after shares are awarded to him hereunder, if such
termination is for any reason other than normal
retirement, death, total disability or early
retirement with the consent of Modine's Board of
Directors or the Committee, the shares shall be
forfeited and returned to the Company; and if such
employment so terminates for any reason other than
those described above more than two (2) years after
but prior to the beginning of the seventh (7) year
after the granting of such stock awards, the shares
which are at the date of such termination of
employment still subject to the restrictions imposed
hereunder shall be forfeited and returned to the
Company.
(c) In the event a participant who has been awarded
shares hereunder terminates employment with the
Company because of normal retirement, death, total
disability or early retirement with the consent of
Modine's Board of Directors or of the Committee, the
shares so awarded shall not be subject to forfeit and
shall vest with the employee, or the employee's
designated legal representative in the event of
death. In the event a participant is subject to a
qualified domestic relations order, the shares so
awarded and to which the participant is otherwise
entitled under the terms of this Plan shall vest with
such person as designated by the qualified domestic
relations order.
(d) Except as otherwise provided above, the restrictions
imposed upon shares awarded to each participant
hereunder shall be removed as to one-fifth of the
aggregate number of shares awarded to the participant
at one time upon the expiration of each of the second,
third, fourth, fifth and sixth years after the
award of such shares hereunder.
(e) In the event at any time the Company is dissolved or
is a party to a merger or consolidation in which the
Company is not the surviving corporation, the
restrictions provided in this Section 5 shall
automatically cease as of the effective date of such
dissolution, merger or consolidation, as the case may
be.
(f) Notwithstanding any other terms or conditions
contained in this Plan, the restrictions provided in
this Section 5 shall automatically cease in the event
of a voluntary or involuntary termination with the
Company of a participant for any reason within a two-
year period after the occurrence of a Pre-Condition
described below in this subparagraph:
"Pre-Condition" means that a person (as defined in
Section 13(d) and 14(d)(2) of the Securities Exchange
Act of 1934, as amended), or a corporation or other
entity controlled by the person, has
(i) merged or consolidated with the Company,
(ii) acquired substantially all of the assets
of the Company, or
(iii) acquired securities of the Company having
at least 20% of the combined voting power
of the Company's then outstanding securities,
except in the case of a merger of another entity with
the Company where the Company is the surviving
corporation, the merger solely involved an
acquisition by the Company of another business entity
in which the Company issued its authorized but
unissued or treasury stock to stockholders of the
acquired entity, and over 80% of the combined voting
power of the Company's stock after the merger is
owned of record by stockholders of the Company prior
to the merger.
6. OTHER RESTRICTIONS. The Committee may impose such
other restrictions on any shares awarded pursuant to the Plan
as it may deem advisable, including, without limitation,
restrictions under the Securities Act of 1933 or the Securities
Exchange Act of 1934, as amended, under the requirements of any
stock exchange or any over-the-counter securities trading
market upon which such share or shares of the same class are
then listed and under any blue sky or securities laws
applicable to such shares.
7. ESCROW OR LEGEND. In order to enforce the
restrictions imposed upon shares issued hereunder, the
Committee may require any participant to enter into an Escrow
Agreement providing that the certificates representing shares
issued pursuant to this Plan shall remain in the physical
custody of an escrow holder until any or all of the
restrictions imposed pursuant to this Plan have terminated and
the Committee may cause a legend or legends to be placed on any
certificates representing shares issued pursuant to this Plan,
which legend or legends shall make appropriate reference to the
restrictions imposed hereunder.
8. AMENDMENTS. This Plan may be amended at any time by
the Board of Directors of Modine, provided that no such
amendment shall increase the maximum number of shares that may
be issued pursuant to the Plan except pursuant to Section 4
hereunder without the further approval of the stockholders of
Modine.
9. TERMINATION. This Plan shall terminate and no
further shares shall be awarded or issued hereunder on July 19,
2004 or such earlier date as may be determined by the
Committee. The termination of this Plan, however, shall not
affect any restrictions previously imposed on shares issued
pursuant to this Plan.
EXHIBIT 10(k)
WITNESSETH:
WHEREAS, the Committee of the Board of Directors, which is authorized to administer the Plan (the "Committee"), is of the opinion that the interests of the Company and its subsidiaries will be advanced by encouraging and enabling certain key employees of the Company and its subsidiaries to acquire or increase their proprietary interest in the Company, thus providing them with a more direct stake in its welfare and assuring a closer identification of their interests with those of the Company; and
WHEREAS, the Committee believes that the acquisition of such an interest in the Company will stimulate the efforts of such employees and strengthen their desire to remain with the Company or one of its subsidiaries;
NOW, THEREFORE, in consideration of the aforementioned, and the covenants and agreements herein set forth, the Company grants this option (which is intended to qualify as an incentive stock option within the meaning of Section 422A of the Internal Revenue Code) to the Employee on the terms hereinafter expressed:
(a) Except for exercises under paragraph 5 below, this option may not be exercised for one year from the date when the Employee's present employment is first commenced.
(b) This option is intended to qualify as an incentive stock option so that the Employee may obtain preferential tax treatment and, consequently, certain limitations on disposition must be observed. In order to obtain preferential tax treatment, shares of capital stock transferred to the Employee pursuant to this Agreement may not be disposed of within twenty-four (24) months after the grant of such shares or twelve (12) months after exercise of such shares.
(c) If Employee is an officer of the Company subject to the reporting requirements of Section 16 of the Securities Exchange Act of 1934, this option may not be exercised by the Employee for six (6) months from the date of grant.
(d) This option may only be exercised, at any one time, exclusively in multiples of twenty-five (25) shares with a one hundred (100) share exercise minimum, except for the purchase of all shares then remaining subject to this option.
(e) This option may not be exercised beyond the shorter of:
(i) ten (10) years from the date hereof;
(ii) after an Employee has been terminated for cause (such as dishonesty or negligence in performance of Employee's duties). In such event the employee shall forfeit all unexercised options;
(iii) three (3) years (except as provided in paragraph 5) following termination of employment (if without cause) or retirement; provided, however, that this option must be exercised within ninety (90) days following termination of employment (if without cause) or retirement from the Company in order to obtain preferential tax treatment.
In the event this option is not exercised in accordance with subparagraphs (i), (ii) or (iii) above, it shall be forfeited as an unexercised option.
(f) To the extent required by the Internal Revenue Code, the aggregate fair market value (determined at the time the option is granted) of the Common Stock for which incentive stock options are exercisable for the first time by an option holder during any calendar year (under all the plans of the Company) shall not exceed $100,000. This limitation applies to Incentive Stock Options granted after 1986 only. Incentive Stock Options exercisable for the first time in a calendar year that exceed the $100,000 annual limit are denied preferential tax treatment.
(a) Check payable to the order of the Company, or Modine stock (the value of which shall be the fair market value of the stock on the day preceding the exercise date), or a combination of Modine stock and cash for the full purchase price of the shares purchased.
(a) The Employee shall have no interest in any such shares until payment for said shares is made in accordance with paragraph 3 hereinabove.
(b) The Company shall not be required to issue or deliver any certificate for its Common Stock purchased upon the exercise of this option prior to the admission of such shares to listing on any stock exchange or any over-the-counter quotation system on which shares may at that time be listed. In the event of the exercise of this option while the option class of stock is not so listed or admitted, the Company shall make prompt application for such listing or admission. If any time during the option period the Company shall be
advised by its counsel that the shares deliverable upon an exercise of the option are required to be registered under the Federal Securities Act of 1933 or any state securities law or that delivery of such shares must be accompanied or preceded by a prospectus, the Company will use its best efforts to effect such registration or provide such prospectus, but delivery of shares by the Company may be deferred until such registration is effected or such prospectus is available.
If during the term of this option the Common Stock of the Company shall be combined or be changed into the same or another kind of stock of the Company or into securities of another corporation, whether through recapitalization, reorganization, sale, merger, consolidation, or by other means, the Company shall cause adequate provision to be made whereby the Employee thereafter will be entitled to receive, upon the due exercise of any then unexercised portion of this option, the securities which the Employee would have been entitled to receive for Common Stock acquired through exercise of such portion of the option (regardless of whether or to what extent the option would then have been exercisable) immediately prior to the effective date of such recapitalization, reorganization, sale, merger, consolidation, or similar transaction. If appropriate, due adjustment shall be made in the per share or per unit price of the securities purchased on exercise of this option following said recapitalization, reorganization, sale, merger, consolidation, or similar transaction.
stock exchange or over-the-counter quotation system on which Modine Common Stock is traded on the date a determination is required to be made under the Plan or this Agreement, or if no stock is traded on that day then it shall equal the closing market price on the last preceding day on which such stock was traded on said exchange or system.
(a) Employee shall not render services for any organization or engage directly or indirectly in any business which, in the judgment of the Committee, is or becomes competitive with the Company, or which organization or business, or the rendering of services to such organization or business, is or becomes otherwise prejudicial to or in conflict with the interests of the Company;
(b) Employee shall comply fully with applicable laws and government regulations and maintain high ethical standards. Employee shall also comply with the Company's corporate policies, including, but not limited to, Policy No. G-2, Guideline for Business Conduct, and Policy No. G-3, Antitrust Compliance, and the Company's Agreement for Protection of Trade Secrets and Sales Data and for Assignment of Inventions; or
If Employee's employment has terminated, the judgment of the Committee shall be based on Employee's position and responsibilities while employed by the Company, Employee's post-employment responsibilities and position with the other organization or business, the extent of past, current and potential competition or conflict between the Company and the other organization or business, the effect on the Company's customers, suppliers and competitors of Employee's assuming the post-employment position, and such other considerations as are deemed relevant given the applicable facts and circumstances. If Employee retires, he shall be free, however, to purchase as an investment or
otherwise, stock or other securities of such organization or business so long as they are listed upon a recognized securities exchange or traded over-the-counter, and such investment does not represent a substantial investment to Employee or a greater than 10 percent equity interest in the organization or business.
Failure to comply with the provisions of paragraphs (a) or
(b) of this Paragraph 13 prior to, or during the
twenty-four (24) months after, any exercise pursuant to
this option shall cause such exercise to be rescinded. The
Company shall notify Employee in writing of any such
rescission within twenty-four (24) months after such
exercise. Within ten days after receiving such a notice
from the Company, Employee shall pay to the Company the
amount of any gain realized or payment received pertaining
to the rescinded exercise of this option. Such payment
shall be made either in cash or by returning to the Company
the number of shares of Common Stock that Employee received
in connection with the rescinded exercise.
IN WITNESS WHEREOF, the Company has caused this option to be executed on the date first above written.
ATTEST: MODINE MANUFACTURING COMPANY
By:
--------------------------- -----------------------------------
W. E. Pavlick, Secretary D. R. Johnson
President & Chief Executive Officer
Accepted and Agreed To:
---------------------------------------
Employee
|
WITNESSETH:
WHEREAS, The Committee of the Board of Directors, which is authorized to administer the Plan (the "Committee"), is of the opinion that the interests of the Company and its subsidiaries will be advanced by encouraging and enabling certain key employees of the Company and its subsidiaries to acquire or increase their proprietary interest in the Company, thus providing them with a more direct stake in its welfare and assuring a closer identification of their interests with those of the Company; and
WHEREAS, the Committee believes that the acquisition of such an interest in the Company will stimulate the efforts of such employees and strengthen their desire to remain with the Company or one of its subsidiaries;
NOW, THEREFORE, in consideration of the aforementioned, and the covenants and agreements herein set forth, the Company grants its option to the Employee on the terms hereinafter expressed:
(a) Except for exercise under paragraph 5 below, this option may not be exercised for one year from the date when the Employee's present employment with Modine first commenced.
(b) If Employee is an officer of the Company subject to the reporting requirements of Section 16 of the
Securities Exchange Act of 1934, this option may not be exercised by the Employee for six (6) months from the date of grant.
(c) Options may be exercised before the option period terminates without regard to the order of grant.
(d) This option may only be exercised, at any one time, exclusively in multiples of twenty-five (25) shares with a one hundred (100) share exercise minimum, except for the purchase of all shares then remaining subject to this option.
(e) This option may not be exercised beyond the shorter of:
(i) ten (10) years from the date hereof;
(ii) after an Employee has been terminated for cause (such as dishonesty or negligence in performance of Employee's duties). In such event the employee shall forfeit all unexercised options;
(iii) three (3) years (except as provided in paragraph 5) following termination of employment (if without cause) or retirement.
In the event this option is not exercised in accordance with subparagraphs (i), (ii) or (iii) above, it shall be forfeited as an unexercised option.
(a) Check payable to the order of the Company, or Modine Stock (the value of which shall be the fair market value of the stock on the day preceding the exercise date), or a combination of Modine stock and cash for the full purchase price of the shares purchased.
to whom the option passes by will or the laws of descent and distribution, but only within a period of (a) one year next succeeding the Employee's death, or (b) ten years from the date hereof, whichever period is shorter.
(a) The Employee shall have no interest in any such Shares until certificates for said Shares are issued.
(b) The Company shall not be required to issue or deliver any certificates for its Common Stock purchased upon the exercise of this option prior to the admission of such shares to listing on any stock exchange or any over-the-counter quotation system on which shares may at that time be listed. In the event of the exercise of this option while the option class of stock is not so listed or admitted, the Company shall make prompt application for such listing or admission. If any time during the option period the Company shall be advised by its counsel that the shares deliverable upon an exercise of the option are required to be registered under the Federal Securities Act of 1933 or any state securities law or that delivery of such shares must be accompanied or preceded by a prospectus, the Company will use its best efforts to effect such registration or provide such prospectus, but delivery of shares by the Company may be deferred until such registration is effected or such prospectus is available.
If during the term of this option the Common Stock of the Company shall be combined or be changed into the same or another kind of stock of the Company or into securities of another corporation, whether through recapitalization, reorganization, sale, merger, consolidation, or by other means, the Company shall cause adequate provision to be made whereby the Employee thereafter will be entitled to receive, upon the due exercise of any then unexercised
portion of this option, the securities which the Employee would have been entitled to receive for Common Stock acquired through exercise of such portion of the option (regardless of whether or to what extent the option would then have been exercisable) immediately prior to the effective date of such recapitalization, reorganization, sale, merger, consolidation, or similar transaction. If appropriate, due adjustment shall be made in the per share or per unit price to the securities purchased on exercise of this option following said recapitalization, sale, merger, consolidation, or similar transaction.
(a) Employee shall not render services for any organization or engage directly or indirectly in any business which, in the judgment of the Committee, is or becomes competitive with the Company, or which organization or business, or the rendering of
services to such organization or business, is or becomes otherwise prejudicial to or in conflict with the interests of the Company;
(b) Employee shall comply fully with applicable laws and government regulations and maintain high ethical standards. Employee shall also comply with the Company's corporate policies, including, but not limited to, Policy No. G-2, Guideline for Business Conduct, and Policy No. G-3, Antitrust Compliance, and the Company's Agreement for Assignment of Inventions.
If Employee's employment has terminated, the judgment of the Committee shall be based on Employee's position and responsibilities while employed by the Company, Employee's post-employment responsibilities and position with the other organization or business, the extent of past, current and potential competition or conflict between the Company and the other organization or business, the effect on the Company's customers, suppliers and competitors of Employee's assuming the post-employment position, and such other considerations as are deemed relevant given the applicable facts and circumstances. If Employee retires, he shall be free, however, to purchase as an investment or otherwise, stock or other securities of such organization or business so long as they are listed upon a recognized securities exchange or traded over-the-counter, and such investment does not represent a substantial investment to Employee or a greater than 10 percent equity interest in the organization or business.
Failure to comply with the provisions of paragraphs (a) or
(b) of this Paragraph 13 prior to, or during the
twenty-four (24) months after, any exercise pursuant to
this option shall cause such exercise to be rescinded.
The Company shall notify Employee in writing of any such
rescission within twenty-four (24) months after such
exercise. Within ten days after receiving such a notice
from the Company, Employee shall pay to the Company the
amount of any gain realized or payment received pertaining
to the rescinded exercise of this option. Such payment
shall be made either in cash or by returning to the
Company the number of shares of Common Stock that Employee
received in connection with the rescinded exercise.
IN WITNESS WHEREOF, the Company has caused this option to be executed on the date first above written.
ATTEST: MODINE MANUFACTURING COMPANY
By:
------------------------- ---------------------------------
W. E. Pavlick, Secretary D. R. Johnson, President and
Chief Executive Officer
Accepted and Agreed To:
-------------------------------------
|
Employee
EXHIBIT 10(l)
THIS DIRECTOR'S STOCK OPTION granted this day of
-----
, , by Modine Manufacturing Company, a Wisconsin
--------------- ------
corporation (the "Company"), to (the
-------------------------
"Director") under and pursuant to the Company's 1994 Stock
|
Option Plan For Non-Employee Directors (the "Directors' Plan").
WITNESSETH:
WHEREAS, the Board of Directors is of the opinion that the
interests of the Company will be advanced by encouraging and
enabling the non-employee directors of the Company to acquire or
increase their proprietary interest in the Company; and
WHEREAS, the Board of Directors believes that the acquisition
of such an interest will assist the Company in its efforts to
attract and retain well qualified individuals to serve as its directors;
NOW, THEREFORE, in consideration of the aforementioned, and
the covenants and agreements herein set forth, the Company grants
this option to the Director on the terms hereinafter expressed:
per share, being at least equal to 100% of the fair market
value of such shares on the date hereof.
manner provided in paragraph 3 hereof) in whole or in part,
from time to time after the date hereof; provided, however,
that this option may not be exercised beyond the shorter of:
(a) ten (10) years from the date hereof;
(b) after the Director has been removed for cause, in which
event the Director shall forfeit all unexercised options;
(c) except as provided in paragraphs 2(d) or 5, after
expiration of 90 days following the Director's
resignation from the Board of Directors or failure to
be re-elected to the Board of Directors by the
shareholders; or
(d) after expiration of 3 years following the
Director's retirement pursuant to the Company's
Director Emeritus Retirement Plan;
after such period the Director shall forfeit all unexercised
options.
Pursuant to Section 16 of the Securities Exchange Act of 1934,
stock subject to the exercise of this option may not be sold by
the Director for six (6) months from the date of grant.
appropriate notice in writing delivered to the Secretary of
the Company at 1500 DeKoven Avenue, Racine, Wis. 53403, and
accompanied by:
(a) Check payable to the order of the Company, or
Modine stock (the value of which shall be the fair
market value of the stock on the day preceding the
exercise date), or a combination of Modine stock and
cash for the full purchase price of the shares
purchased; and
(b) Written representation by the Director that at the
time of such exercise it is the Director's intention to
acquire the shares for investment and not for resale.
Such written representation shall not be required of
the purchaser under paragraph 5 below.
transferable by the Director otherwise than (a) by will or
the laws of descent and distribution, or (b) pursuant to a
qualified domestic relations order. This option is
exercisable during the Director's lifetime only by the
Director.
period, this option may be exercised in whole or in part in
the manner described in paragraph 3 hereof, by the
Director's estate or the person to whom the option passes by
will or the laws of descent and distribution, but only
within a period of one year next succeeding the Director's
death.
deliver certificates for stock purchased pursuant to an
exercise of this option subject to the following
limitations:
(a) The Director shall have no interest in any such
Shares until certificates for said Shares are issued.
(b) The Company shall not be required to issue or
deliver any certificate for its Common Stock purchased
upon the exercise of this option prior to the admission
of such shares to listing on any stock exchange or any
over-the-counter quotation system on which shares may
at that time be listed. In the event of the exercise
of this option while the option class of stock is not
so listed or admitted, the Company shall make prompt
application for such listing or admission. If any time
during the option period the Company shall be advised
by its counsel that the shares deliverable upon an
exercise of the option are required to be registered
under the Federal Securities Act of 1933 or any state
securities law or that delivery of such shares must be
accompanied or preceded by a prospectus, the Company
will use its best efforts to effect such registration
or provide such prospectus, but delivery of shares by
the Company may be deferred until such registration is
effected or such prospectus is available.
change in the number of issued shares of Common Stock of the
Company without new consideration to the Company therefor,
by reason of stock dividends, stock split-ups or like
recapitalizations, the number of shares which may thereafter
be purchased under this option shall be adjusted in the same
proportion as said change in issued shares. In such event,
the per share purchase price specified in paragraph 1 above
shall be adjusted so that the total consideration payable to
the Company for the adjusted number of shares remaining
subject to this option shall not be changed by reason of the
adjustment in number of shares.
If during the term of this option the Common Stock of the
Company shall be combined or be changed into the same or
another kind of stock of the Company or into securities of
another corporation, whether through recapitalization,
reorganization, sale, merger, consolidation, etc., the
Company shall cause adequate provision to be made whereby
the Director thereafter will be entitled to receive, upon
the due exercise of any then unexercised portion of this
option, the securities which the Director would have been
entitled to receive for Common Stock acquired through
exercise of such portion of the option (regardless of
whether or to what extent the option would then have been
exercisable) immediately prior to the effective date of such
recapitalization, reorganization, sale, merger,
consolidation, etc. If appropriate, due adjustment shall be
made in the per share or per unit price of the securities
purchased on exercise of this option following said
recapitalization, reorganization, sale, merger,
consolidation, etc.
shall equal the closing market price on the largest stock
exchange or the over the counter quotation system on which
Modine Common Stock is traded on the date a determination is
required to be made under the Directors' Plan or this
Agreement, or if no stock is traded on that day then it
shall equal the closing market price on the last preceding
day on which such stock was traded on said exchange or
system.
shall confer upon the Director any right to continue to
serve as a Director of the Company or in any way effect the
right of the Company to take any action against a Director
pursuant to law and/or the Company's Articles of
Incorporation or By-Laws.
conditions set forth in the 1994 Stock Option Plan for
Non-Employee Directors which is hereby incorporated by
reference including the requirement of shareholder approval
and to all determinations of the Committee which is
authorized to administer the Directors' Plan. As a
condition of granting the option herein granted, the
Director agrees, for himself and his personal
representatives, that any requirement or interpretation,
dispute, or disagreement which may arise under or as a
result of or pursuant to this Agreement or the Directors'
Plan shall be determined by the Committee in its sole
discretion, and that any interpretation or determination by
the Committee shall be final, binding and conclusive.
administered and governed in all respects in accordance with
the laws of the State of Wisconsin.
IN WITNESS WHEREOF, the Company has caused this option to be
executed on the date first above written.
ATTEST: MODINE MANUFACTURING COMPANY
By:
--------------------------------- ----------------------------
W. E. Pavlick, Secretary D. R. Johnson, President and
Chief Executive Officer
Accepted and Agreed To:
-------------------------------
Director
|
EXHIBIT 10(x)
2000 STOCK AWARD PLAN
1. PURPOSES OF PLAN. The purposes of the Stock Award
Plan of Modine Manufacturing Company ("Modine") are as follows:
A. To further the growth, success and interest of the
Company and its stockholders by enabling key
managerial employees of the Company, who have
responsibility for the administration of the affairs
of the Company, to acquire shares of Modine Common
Stock under the terms and conditions and in the
manner contemplated by this Plan, thereby increasing
their personal involvement in the fortunes of the
Company; and
B. To enable the Company to obtain and retain the
services of desirable key managerial employees by
providing such employees with an opportunity to
become owners of Modine Common Stock under the terms
and conditions and in the manner contemplated by this
Plan.
The term "Company" as used herein shall mean Modine and its
majority owned subsidiaries, including subsidiaries which may
be created or acquired during the period of this Plan.
2. ADMINISTRATION OF PLAN. This Plan shall be
administered by the Officer Nomination and Compensation
Committee consisting of two or more directors of the Board of
Directors of Modine, none of whom shall be employees of the
Company. The Committee shall interpret the Plan and to the
extent and in the manner contemplated herein it shall exercise
the discretion granted to it as to the determination of who shall
participate in the Plan, and how many shares shall be awarded
to each participant. The Committee shall issue from time to time
such rules and interpretations as in its judgment are necessary
or appropriate in order to effectively administer the Plan.
3. ELIGIBLE EMPLOYEES. Employees including officers of
the Company who the Committee determines have and exercise
management functions and responsibilities shall be eligible for
participation under the Plan. However, no member of the Board
of Directors of the Company shall be eligible to participate
under the Plan unless such member is also an employee of the
Company, and no member of the Committee shall be eligible to
participate under the Plan.
4. SHARES SUBJECT TO PLAN. The Board of Directors and
the shareholders of the Company in July 1994 approved a broad
Incentive Compensation Plan providing for an aggregate of
3,000,000 shares of the Common Stock, $0.625 par value of Modine
for various plans adopted by the Board of Directors under such
authority. The 1994 Incentive Compensation Plan permitted the
use of either newly-issued shares, authorized but heretofore
unissued shares, or shares reacquired by the Company, including
shares purchased on the open market. If shares issued pursuant
hereto shall have been forfeited and returned to Modine in
connection with the restrictions imposed upon such shares pursuant
to this Plan, such forfeited shares again shall become available
for issuance under the Plan prior to termination of the Plan.
5. RESTRICTIONS. All shares awarded pursuant to this
Plan shall be subject to the following restrictions:
(a) The shares may not be sold or otherwise alienated or
hypothecated as long as they are subject to
forfeiture provided in this Section 5.
(b) In the event of termination with the Company of a
participant prior to the beginning of the second year
after shares are awarded to him hereunder, if such
termination is for any reason other than normal
retirement, death, total disability or early
retirement with the consent of Modine's Board of
Directors or the Committee, the shares shall be
forfeited and returned to the Company; and if such
employment so terminates for any reason other than
those described above more than one (1) year after
but prior to the beginning of the sixth (6) year
after the granting of such stock awards, the shares
which are at the date of such termination of
employment still subject to the restrictions imposed
hereunder shall be forfeited and returned to the Company.
(c) In the event a participant who has been awarded
shares hereunder terminates employment with the
Company because of normal retirement, death, total
disability or early retirement with the consent of
Modine's Board of Directors or of the Committee, the
shares so awarded shall not be subject to forfeit and
shall vest with the employee, or the employee's
designated legal representative in the event of death.
In the event a participant is subject to a qualified
domestic relations order, the shares so awarded and to
which the participant is otherwise entitled under the
terms of this Plan shall vest with such person as
designated by the qualified domestic relations order.
(d) Except as otherwise provided above, the restrictions
imposed upon shares awarded to each participant
hereunder shall be removed as to one-fifth of the
aggregate number of shares awarded to the participant
at one time upon the expiration of each of the first,
second, third, fourth, and fifth years after the
award of such shares hereunder.
(e) In the event at any time the Company is dissolved or
is a party to a merger or consolidation in which the
Company is not the surviving corporation, the
restrictions provided in this Section 5 shall
automatically cease as of the effective date of such
dissolution, merger or consolidation, as the case may be.
(f) Notwithstanding any other terms or conditions
contained in this Plan, the restrictions provided in
this Section 5 shall automatically cease in the event
of a voluntary or involuntary termination with the
Company of a participant for any reason within a two-
year period after the occurrence of a Pre-Condition
described below in this subparagraph:
"Pre-Condition" means that a person (as defined in
Section 13(d) and 14(d)(2) of the Securities Exchange
Act of 1934, as amended), or a corporation or other
entity controlled by the person, has
(i) merged or consolidated with the Company,
(ii) acquired substantially all of the assets
of the Company, or
(iii) acquired securities of the Company having
at least 20% of the combined voting power
of the Company's then outstanding
securities,
except in the case of a merger of another entity with
the Company where the Company is the surviving
corporation, the merger solely involved an
acquisition by the Company of another business entity
in which the Company issued its authorized but
unissued or treasury stock to stockholders of the
acquired entity, and over 80% of the combined voting
power of the Company's stock after the merger is
owned of record by stockholders of the Company prior
to the merger.
6. OTHER RESTRICTIONS. The Committee may impose such
other restrictions on any shares awarded pursuant to the Plan
as it may deem advisable, including, without limitation,
restrictions under the Securities Act of 1933 or the Securities
Exchange Act of 1934, as amended, under the requirements of any
stock exchange or any over-the-counter securities trading
market upon which such share or shares of the same class are
then listed and under any blue sky or securities laws
applicable to such shares.
7. ESCROW OR LEGEND. In order to enforce the
restrictions imposed upon shares issued hereunder, the
Committee may require any participant to enter into an Escrow
Agreement providing that the certificates representing shares
issued pursuant to this Plan shall remain in the physical
custody of an escrow holder until any or all of the
restrictions imposed pursuant to this Plan have terminated and
the Committee may cause a legend or legends to be placed on any
certificates representing shares issued pursuant to this Plan,
which legend or legends shall make appropriate reference to the
restrictions imposed hereunder.
8. AMENDMENTS. This Plan may be amended at any time by
the Board of Directors of Modine, provided that no such
amendment shall increase the maximum number of shares that may
be issued pursuant to the Plan except pursuant to Section 4
hereunder without the further approval of the stockholders of
Modine.
9. TERMINATION. This Plan shall terminate and no
further shares shall be awarded or issued hereunder on July 19,
2004 or such earlier date as may be determined by the
Committee. The termination of this Plan, however, shall not
affect any restrictions previously imposed on shares issued
pursuant to this Plan.
EXHIBIT 10(y)
WITNESSETH:
WHEREAS, the Committee of the Board of Directors, which is authorized to administer the Plan (the "Committee"), is of the opinion that the interests of the Company and its subsidiaries will be advanced by encouraging and enabling certain key employees of the Company and its subsidiaries to acquire or increase their proprietary interest in the Company, thus providing them with a more direct stake in its welfare and assuring a closer identification of their interests with those of the Company; and
WHEREAS, the Committee believes that the acquisition of such an interest in the Company will stimulate the efforts of such employees and strengthen their desire to remain with the Company or one of its subsidiaries;
NOW, THEREFORE, in consideration of the aforementioned, and the covenants and agreements herein set forth, the Company grants this option (which is intended to qualify as an incentive stock option within the meaning of Section 422A of the Internal Revenue Code) to the Employee on the terms hereinafter expressed:
(a) Except for exercises under paragraph 5 below, this option may not be exercised for one year from the date when the Employee's present employment is first commenced.
(b) This option is intended to qualify as an incentive
stock option so that the Employee may obtain
preferential tax treatment and, consequently, certain
limitations on disposition must be observed. In order
to obtain preferential tax treatment, shares of capital
stock transferred to the Employee pursuant to this
Agreement may not be disposed of within twenty-four
(24) months after the grant of such shares or twelve
(12) months after exercise of such shares.
(c) If Employee is an officer of the Company subject to the reporting requirements of Section 16 of the Securities Exchange Act of 1934, this option may not be exercised by the Employee for six (6) months from the date of grant.
(d) This option may only be exercised, at any one time, exclusively in multiples of twenty-five (25) shares with a one hundred (100) share exercise minimum, except for the purchase of all shares then remaining subject to this option.
(e) This option may not be exercised beyond the shorter of:
(i) ten (10) years from the date hereof;
(ii) after an Employee has been terminated for cause (such as dishonesty or negligence in performance of Employee's duties). In such event the employee shall forfeit all unexercised options;
(iii) three (3) years (except as provided in paragraph
5) following termination of employment (if
without cause) or retirement; provided, however,
that this option must be exercised within ninety
(90) days following termination of employment
(if without cause) or retirement from the Company
in order to obtain preferential tax treatment.
In the event this option is not exercised in accordance with subparagraphs (i), (ii) or (iii) above, it shall be forfeited as an unexercised option.
(f) To the extent required by the Internal Revenue Code, the aggregate fair market value (determined at the time the option is granted) of the Common Stock for which incentive stock options are exercisable for the first time by an option holder during any calendar year (under all the plans of the Company) shall not exceed $100,000. This limitation applies to Incentive Stock Options granted after 1986 only. Incentive Stock Options exercisable for the first time in a calendar year that exceed the $100,000 annual limit are denied preferential tax treatment.
(a) Check payable to the order of the Company, or Modine stock (the value of which shall be the fair market value of the stock on the day preceding the exercise date), or a combination of Modine stock and cash, or attestation, i.e., by affidavit identifying for delivery specific already-owned shares of Modine Stock having a value equal to the aggregate exercise price, but not actually delivering such shares to Modine, for the full purchase price of the shares purchased.
(a) The Employee shall have no interest in any such shares until payment for said shares is made in accordance with paragraph 3 hereinabove.
(b) The Company shall not be required to issue or deliver any certificate for its Common Stock purchased upon the exercise of this option prior to the admission of such shares to listing on any stock exchange or any over-the-counter quotation system on which shares may at that time be listed. In the event of the exercise of this option while the option class of stock is not so listed or admitted, the Company shall make prompt application for such listing or admission. If any time during the option period the Company shall be advised by its counsel that the shares deliverable upon an exercise of the option are required to be registered
under the Federal Securities Act of 1933 or any state securities law or that delivery of such shares must be accompanied or preceded by a prospectus, the Company will use its best efforts to effect such registration or provide such prospectus, but delivery of shares by the Company may be deferred until such registration is effected or such prospectus is available.
If during the term of this option the Common Stock of the Company shall be combined or be changed into the same or another kind of stock of the Company or into securities of another corporation, whether through recapitalization, reorganization, sale, merger, consolidation, or by other means, the Company shall cause adequate provision to be made whereby the Employee thereafter will be entitled to receive, upon the due exercise of any then unexercised portion of this option, the securities which the Employee would have been entitled to receive for Common Stock acquired through exercise of such portion of the option (regardless of whether or to what extent the option would then have been exercisable) immediately prior to the effective date of such recapitalization, reorganization, sale, merger, consolidation, or similar transaction. If appropriate, due adjustment shall be made in the per share or per unit price of the securities purchased on exercise of this option following said recapitalization, reorganization, sale, merger, consolidation, or similar transaction.
closing market price on the last preceding day on which such stock was traded on said exchange or system.
(a) Conflict of Interest. Employee shall not render services for any organization or engage directly or indirectly in any business which, in the judgment of the Committee, is or becomes competitive with the Company, or which organization or business, or the rendering of services to such organization or business, is or becomes otherwise prejudicial to or in conflict with the interests of the Company (including but not limited to serving as an employee, consultant, advisor or in any other capacity to such organization or business, or participating in a hostile takeover attempt of the Company by such organization or business);
(b) Certain Prohibited Activities. Employee shall comply fully with applicable laws and government regulations (both civil and criminal) and maintain high ethical standards. Employee shall also comply with the Company's corporate policies, including, but not limited to, Policy No. G-2, Guideline for Business Conduct, and Policy No. G-3, Antitrust Compliance, and the Company's Agreement for Protection of Trade Secrets and Sales Data and for Assignment of Inventions; or
(c) Leaving the Company within One Year of Exercise. Employee shall not exercise any portion of this option and then leave the employment of the Company within one year after exercise for any reason except death, disability, normal retirement, or early retirement with the consent of the Board of Directors.
The judgment of the Committee shall be based on Employee's position and responsibilities while employed by the Company, Employee's post-employment responsibilities and position with the other organization or business, the extent of past,
current and potential competition or conflict between the Company and the other organization or business, the effect on the Company's customers, suppliers and competitors of Employee's assuming the post-employment position, and such other considerations as are deemed relevant given the applicable facts and circumstances. If Employee retires, he shall be free, however, to purchase as an investment or otherwise, stock or other securities of such organization or business so long as they are listed upon a recognized securities exchange or traded over-the-counter, and such investment does not represent a substantial investment to Employee or a greater than 10 percent equity interest in the organization or business.
Failure to comply with the provisions of paragraphs (a) or
(b) of this Paragraph 13 prior to, or during the twenty-four
(24) months after, any exercise pursuant to this option, or
failure to comply with the provisions of paragraph (c) of
this Paragraph 13 during the twelve (12) months after
exercise pursuant to this option, shall cause such exercise
to be subject to rescission. The Company shall notify
Employee in writing of any such rescission within
twenty-four (24) months after such exercise under paragraphs
(a) or (b) or within twelve (12) months after such exercise
under paragraph (c). In the event of notice of rescission,
Employee shall pay to the Company the amount of any gain
realized or payment received pertaining to the rescinded
exercise of this option.
By accepting this Agreement, Employee consents to a deduction from any amounts the Company owes Employee from time to time (including amounts owed to Employee as salary or other compensation, fringe benefits, or vacation pay, as well as any other amounts owed to Employee by the Company), to the extent of the amounts Employee owes the Company under paragraphs (a), (b), or (c) above. Whether or not the Company elects to make any set-off in whole or in part, if the Company does not recover by means of set-off the full amount Employee owes, calculated as set forth above, Employee agrees to pay immediately the unpaid balance to the Company. Such payment shall be made either in cash or by returning to the Company the number of shares of Common Stock that Employee received in connection with the rescinded exercise.
IN WITNESS WHEREOF, the Company has caused this option to be executed on the date first above written.
ATTEST: MODINE MANUFACTURING COMPANY
By:
-------------------------- ------------------------------------
W. E. Pavlick, Secretary D. R. Johnson
President & Chief Executive Officer
Accepted and Agreed To:
---------------------------------------
Employee
|
WITNESSETH:
WHEREAS, The Committee of the Board of Directors, which is authorized to administer the Plan (the "Committee"), is of the opinion that the interests of the Company and its subsidiaries will be advanced by encouraging and enabling certain key employees of the Company and its subsidiaries to acquire or increase their proprietary interest in the Company, thus providing them with a more direct stake in its welfare and assuring a closer identification of their interests with those of the Company; and
WHEREAS, the Committee believes that the acquisition of such an interest in the Company will stimulate the efforts of such employees and strengthen their desire to remain with the Company or one of its subsidiaries;
NOW, THEREFORE, in consideration of the aforementioned, and the covenants and agreements herein set forth, the Company grants its option to the Employee on the terms hereinafter expressed:
(a) Except for exercise under paragraph 5 below, this option may not be exercised for one year from the date when the Employee's present employment with Modine first commenced.
(b) If Employee is an officer of the Company subject to the reporting requirements of Section 16 of the Securities Exchange Act of 1934, this option may not be
exercised by the Employee for six (6) months from the date of grant.
(c) Options may be exercised before the option period terminates without regard to the order of grant.
(d) This option may only be exercised, at any one time, exclusively in multiples of twenty-five (25) shares with a one hundred (100) share exercise minimum, except for the purchase of all shares then remaining subject to this option.
(e) This option may not be exercised beyond the shorter of:
(i) ten (10) years from the date hereof;
(ii) after an Employee has been terminated for cause (such as dishonesty or negligence in performance of Employee's duties). In such event the employee shall forfeit all unexercised options;
(iii) three (3) years (except as provided in paragraph
5) following termination of employment (if
without cause) or retirement.
In the event this option is not exercised in accordance with subparagraphs (i), (ii) or (iii) above, it shall be forfeited as an unexercised option.
(a) Check payable to the order of the Company, or Modine Stock (the value of which shall be the fair market value of the stock on the day preceding the exercise date), or a combination of Modine stock and cash, or attestation, i.e., by affidavit identifying for delivery specific already-owned shares of Modine Stock having a value equal to the aggregate exercise price, but not actually delivering such shares to Modine, for the full purchase price of the shares purchased.
option passes by will or the laws of descent and distribution, but only within a period of (a) one year next succeeding the Employee's death, or (b) ten years from the date hereof, whichever period is shorter.
(a) The Employee shall have no interest in any such Shares until certificates for said Shares are issued.
(b) The Company shall not be required to issue or deliver any certificates for its Common Stock purchased upon the exercise of this option prior to the admission of such shares to listing on any stock exchange or any over-the-counter quotation system on which shares may at that time be listed. In the event of the exercise of this option while the option class of stock is not so listed or admitted, the Company shall make prompt application for such listing or admission. If any time during the option period the Company shall be advised by its counsel that the shares deliverable upon an exercise of the option are required to be registered under the Federal Securities Act of 1933 or any state securities law or that delivery of such shares must be accompanied or preceded by a prospectus, the Company will use its best efforts to effect such registration or provide such prospectus, but delivery of shares by the Company may be deferred until such registration is effected or such prospectus is available.
If during the term of this option the Common Stock of the Company shall be combined or be changed into the same or another kind of stock of the Company or into securities of another corporation, whether through recapitalization, reorganization, sale, merger, consolidation, or by other means, the Company shall cause adequate provision to be made whereby the Employee thereafter will be entitled to receive, upon the due exercise of any then unexercised portion of this option, the securities which the Employee would have been entitled to receive for Common Stock acquired through exercise of such portion of the option (regardless of
whether or to what extent the option would then have been exercisable) immediately prior to the effective date of such recapitalization, reorganization, sale, merger, consolidation, or similar transaction. If appropriate, due adjustment shall be made in the per share or per unit price to the securities purchased on exercise of this option following said recapitalization, sale, merger, consolidation, or similar transaction.
(a) Conflict of Interest. Employee shall not render services for any organization or engage directly or indirectly in any business which, in the judgment of the Committee, is or becomes competitive with the Company, or which organization or business, or the rendering of services to such organization or business, is or becomes otherwise prejudicial to or in conflict with the interests of the Company (including but not limited to serving as an employee, consultant, advisor
or in any other capacity to such organization or business, or participating in a hostile takeover attempt of the Company by such organization or business);
(b) Certain Prohibited Activities. Employee shall comply fully with applicable laws and government regulations (both civil and criminal) and maintain high ethical standards. Employee shall also comply with the Company's corporate policies, including, but not limited to, Policy No. G-2, Guideline for Business Conduct, and Policy No. G-3, Antitrust Compliance, and the Company's Agreement for Protection of Trade Secrets and Sales Data and for Assignment of Inventions; or
(c) Leaving the Company within One Year of Exercise. Employee shall not exercise any portion of this option and then leave the employment of the Company within one year after exercise for any reason except death, disability, normal retirement, or early retirement with the consent of the Board of Directors.
The judgment of the Committee shall be based on Employee's position and responsibilities while employed by the Company, Employee's post-employment responsibilities and position with the other organization or business, the extent of past, current and potential competition or conflict between the Company and the other organization or business, the effect on the Company's customers, suppliers and competitors of Employee's assuming the post-employment position, and such other considerations as are deemed relevant given the applicable facts and circumstances. If Employee retires, he shall be free, however, to purchase as an investment or otherwise, stock or other securities of such organization or business so long as they are listed upon a recognized securities exchange or traded over-the-counter, and such investment does not represent a substantial investment to Employee or a greater than 10 percent equity interest in the organization or business.
Failure to comply with the provisions of paragraphs (a) or
(b) of this Paragraph 13 prior to, or during the twenty-four
(24) months after, any exercise pursuant to this option, or
failure to comply with the provisions of paragraph (c) of
this Paragraph 13 during the twelve (12) months after
exercise pursuant to this option, shall cause such exercise
to be subject to rescission. The Company shall notify
Employee in writing of any such rescission within
twenty-four (24) months after such exercise under paragraphs
(a) or (b) or within twelve (12) months after such exercise
under paragraph (c). In the event of notice of rescission,
Employee shall pay to the Company the amount of any gain
realized or payment received pertaining to the rescinded
exercise of this option.
By accepting this Agreement, Employee consents to a deduction from any amounts the Company owes Employee from time to time (including amounts owed to Employee as salary or other compensation, fringe benefits, or vacation pay, as
well as any other amounts owed to Employee by the Company), to the extent of the amounts Employee owes the Company under paragraphs (a), (b), or (c) above. Whether or not the Company elects to make any set-off in whole or in part, if the Company does not recover by means of set-off the full amount Employee owes, calculated as set forth above, Employee agrees to pay immediately the unpaid balance to the Company. Such payment shall be made either in cash or by returning to the Company the number of shares of Common Stock that Employee received in connection with the rescinded exercise.
IN WITNESS WHEREOF, the Company has caused this option to be executed on the date first above written.
ATTEST: MODINE MANUFACTURING COMPANY
By:
-------------------------- ------------------------------------
W. E. Pavlick, Secretary D. R. Johnson, President and
Chief Executive Officer
Accepted and Agreed To:
----------------------------------------
|
Employee
EXHIBIT 13
Modine Manufacturing Company's fiscal-2000 sales rose 2.5 percent to $1.14 billion. The increases came mainly from the North American aftermarket and truck markets, and from the European automotive markets. Excluding the impact of changes in currency-exchange rates, worldwide consolidated sales were five-percent higher than the prior year.
Earnings for the fiscal year were negatively affected by increased aftermarket distribution costs and price pressures, new- plant startup costs, and the strong U.S. dollar.
In fiscal 2000, 45 percent of sales were outside the United States. Net sales from international operations were 34 percent of the total, and exports from the United States were 11 percent of total revenues.
In the Distributed Products segment, worldwide sales were up 10 percent, primarily from a full year's operation of a North American aftermarket acquisition compared with six months in the prior year. The Distributed Products segment provides heat-transfer products primarily for the North American vehicular replacement market and the building-HVAC&R (heating, ventilating, air-conditioning, & refrigeration) market.
The Original Equipment (North America) segment was down slightly. There was a small gain from the European Operations segment, which provides products from business units in Europe primarily to European original-equipment manufacturers (OEMs) of on- and off-highway vehicles, industrial-equipment manufacturers, and the vehicular replacement market. In both segments, sales to original-equipment manufacturers of heavy and medium trucks were up but sales to off-highway-equipment OEM customers declined substantially.
See Note 19 to the consolidated financial statements for more details of segment and geographic information.
Modine's fiscal 2000 revenues from its top ten customers, including their multiple brands and models, were 45.9 percent of total sales. All were less than 10 percent of total revenues. Overall, Modine continues to have a highly diversified customer base, which helps minimize the effect of various business cycles.
there and in their operations in other parts of the world - from North America to South Africa, Malaysia, and Egypt.
Also, Modine constructed a new plant in Pontevico, Italy, to add appropriate capacity for additional business from Fiat and others. The Toledo, Ohio, assembly plant, which was built to serve the new Daimler/Chrysler Jeep business, is complete and will be operational the summer of 2000. This facility will assemble automotive engine- cooling modules with components from several Modine facilities in the United States and Europe. The North American partnership with Daimler/Chrysler is helping to establish a stronger relationship between Modine's European operations and that customer.
Modine began construction of a technical center in Europe, similar to the state-of-the-art facility in Racine that began full operations last fall. The centers will help to validate new technologies and bring additional and incremental business programs to this and other market segments.
Modine's work in this market helped win a "Best of the Best" award for suppliers of engine power-train systems from Automotive Industries magazine in July 1999.
In Germany, the company finalized relocation of an aluminum plant from the Bernhausen facility to Kirchentellinsfurt. This new plant makes radiators for trucks and has been fully operational since the fall of 1999.
Globally, Modine continues to take on additional responsibility to offer its customers improved product designs, better delivery and warranty policies, and fully integrated systems for their vehicles instead of just components to fill their engine envelopes. Future changes by North American truck manufacturers will probably include adoption of aluminum radiators, much like in Europe. Modine will continue to work with these customers to validate the conversion for their heavy-truck cooling systems.
In an effort to help its truck customers comply with ever- increasing North American and European governmental emissions standards, Modine has made substantial research and development investments to supply exhaust-gas-recirculation coolers. These coolers, as discussed earlier in this report, will help to reduce emissions for diesel engines. The technology demands for this component are especially stringent because of the corrosive nature of exhaust gas. Modine has begun some production of this entirely new product category in Europe and will do so in North America later in fiscal 2001.
Modine's customers continue to demand more modular assemblies and complete heat-transfer systems. To help respond to the needs of these customers, Modine has invested in state-of-the-art technical
centers to serve customers on two continents. The technical centers facilitate the development of new technology that Modine produces for the heat-transfer industry.
Capital expenditures of $90.1 million in fiscal 2000 were similar to the prior year. Significant expenditures included those for: the installation and implementation of SAP financial software in the United States, major computing platform migration from Unisys mainframe to
HP/UNIX in the United States, replacement of two corporate airplanes, Racine Technical Center wind tunnel, European Technical Center, expansions of Modine's European facilities, process improvements, tooling for new products, and the addition of processing equipment at a number of facilities. Capital expenditures were financed primarily from cash generated internally, as well as some external borrowings.
Outstanding commitments for capital expenditures at March 31, 2000, were approximately $36.3 million. Most of the commitments relate to the European Technical Center, European plant expansions and conversions, the Racine Technical Center, new Chrysler Jeep programs, a new International Truck and Engine program, process improvements, tooling for new products, and various new equipment. Approximately $17.5 million of the outstanding commitment amount covers the European Technical Center, facility expansions, improvements, equipment upgrades, and new equipment for the European locations. A year earlier, there were outstanding commitments of $38.6 million.
Modine's investment in research and development of $20.5 million was 12 percent over the year before. The company's investments in creating new technology have shown a 12-percent compound annual growth rate over the last ten years. The 1,130 worldwide patents that Modine held at March 31, 2000, represented a six-percent increase from the prior year. Modine's research activities relate to the development of new products, processes, and services, or the improvement of existing products, processes, and services.
Modine keeps focused on continuous quality improvement through
several corporate quality initiatives. These initiatives include:
implementing one common, global, quality-management system; assuring
design, product, and process consistency; measuring and improving key
quality indicators; and recognizing quality achievement.
The global quality-management system is being implemented at all sites to help ensure that customers receive the same, high-quality products and services worldwide. It also minimizes the risks associated with unacceptable product quality and serves to exceed customer expectations - one of Modine's guiding principles.
Continuous quality improvement is measured by eleven quality indicators that include customer satisfaction, quality costs, and supplier performance. Executive management encourages and rewards continuous quality improvement throughout the company.
Modine's efforts to continuously improve its quality-management system resulted in numerous achievements worldwide during the last fiscal year. Three U.S. sites (Camdenton, Missouri; Jefferson City, Missouri; and the Commercial Heating, Ventilating, Air Conditioning, and Refrigeration Division in Racine, Wisconsin) were registered to ISO-9000. The Nuevo Laredo, Mexico, and Washington, Iowa, plants earned QS-9000 registration, and the European central administration and division-support functions earned registration to VDA6.1 in the last fiscal year. Twenty-nine Modine sites are now registered to
ISO-9000, QS-9000, or VDA6.1. Five sites (Camdenton, Missouri; Joplin, Missouri; Nuevo Laredo, Mexico; Trenton, Missouri; and Bernhausen, Germany) received quality awards from customers.
Modine divisions continue to pursue quality-system registration to ISO-9000, QS-9000, VDA6.1, and other international or customer standards to assist in obtaining new business, as well as to be recognized by current and future customers worldwide.
On a limited basis, Modine enters into foreign-exchange options and forward contracts on foreign currencies as hedges against the impact of currency fluctuations. See Note 14 to the consolidated financial statements.
Modine has a long-standing corporate environmental policy that demonstrates the company's commitment to the environment and compliance with all environmental laws and regulations worldwide. Modine continues to appraise environmental issues and regulatory compliance with a proactive approach. Expenditures to comply with these increasingly complex and stringent laws could be significant in future years but are not expected to have a material impact on the company's competitive or financial position. If new laws containing more-stringent requirements are enacted, expenditures may be higher than the estimates of future environmental costs provided below.
About $1.1 million in capital expenditures related to environmental projects were made in fiscal 2000. Modine currently expects expenditures for environmentally related, capital projects to be about $2.5 million in fiscal 2001.
Environmental expenses charged to current operations, including remediation costs, totaled about $3.5 million in fiscal 2000. These expenses include solid-waste disposal and operating and maintenance costs for air- and water-pollution-control facilities, environmental compliance activities, and other matters.
Modine accrues for environmental remediation activities relating to past operations - including those under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), often referred to as "Superfund," and under the Resource Conservation and Recovery Act (RCRA) - when it is probable that a liability has been incurred and reasonable estimates can be made.
Modine from time to time receives notices from the Environmental Protection Agency and state environmental agencies that the company is a "potentially responsible party" (PRP) under CERCLA and state law. These notices claim potential liability for remediation costs of disposal sites that are not company-owned and allegedly contain wastes attributable to Modine from past operations. Modine's share of remediation costs at these sites cannot be accurately predicted due to the large number of PRPs involved. For the six sites currently known, the company's potential liability will be significantly less
than the total site remediation cost, because the percentage of material attributable to Modine is relatively low.
It is likely that Modine will, in the future, incur additional remediation charges, but such costs are unknown and not determinable at this time. There are no currently known, unrecorded liabilities that would have a material effect on the company's consolidated financial position or results of operations.
The company's safety-management processes are currently driving changes in the organizational culture. In fiscal 2000, OSHA (Occupational Safety & Health Administration) recordable injuries for U.S. plants were reduced by 25 percent and restricted/lost-time cases were reduced by 19 percent. Modine also finished the year with incident rates below its Standard Industrial Classification (SIC) code rates, indicating performance relative to competition. SIC codes used were 3714 "Motor Vehicle Parts and Accessories" and 34 "Fabricated Metal Products." Based on data from the Bureau of Labor Statistics in 1998, Modine was under the recordable-incident average in both code 3714 and 34 by 23 percent and 38 percent respectively. It also did better than the industry standards in the restricted/lost-time category by 5 percent and 82 percent respectively.
Continuous improvement in health and safety resulted in a 50- percent reduction in recordable injuries and illnesses over the past four years. Plant recognition, through a newly launched program called "Modine Star," will elevate Modine's health and safety to a level that challenges the best in the industry.
To prepare for the Year 2000 issue, Modine initiated a number of global projects in early 1997 to identify, evaluate, and implement changes to its existing, computerized systems for its business. The total global cost was $9.8 million, with funding provided by cash flows from operations. The company's preparation paid off, as changes to all major, data-critical systems were successfully completed by the spring of 1999. Modine's global operations functioned normally throughout the entire Year 2000 process. Modine's remediation program comprehensively addressed its computerized systems, equipment, and facilities as well as its base of key suppliers to ensure that an adequate pipeline of material and services would enable Modine to support its customers without any business interruption to them. Along with the Y2K remediation, substantial enhancements were made in Modine's overall, technology infrastructure worldwide, most of which costs were capitalized.
The Euro was introduced in Europe on January 1, 1999. Eleven of the fifteen, member countries of the European Union agreed to adopt the Euro as their common legal currency on that date. Fixed conversion rates between these participating countries' existing currencies and the Euro have been established. The legacy currencies are scheduled to remain legal tender as denominations of the Euro until at least January 1, 2002, but not later than July 1, 2002. During this transition period, the parties may settle transactions using either the Euro or a participating country's legacy currency.
Certain of Modine's business functions in Europe introduced Euro- capability as of January 1, 1999, including systems for making and receiving certain payments, pricing, and invoicing. Other business functions and financial reporting are in the process of being converted to the Euro by the end of the transition period; however, some will be converted earlier where operationally efficient or cost effective, or to meet customer requirements. Any delays in the company's ability to become Euro-compliant, or in its key suppliers and customers to become Euro-compliant, could result in an interruption of the company's business activities or operations. The impact, if any, of these interruptions upon the results of operations, financial condition, and cash flows has not yet been determined.
These cautionary statements are being made pursuant to the provisions of the Private Securities Litigation Reform Act of 1995 and with the intention of obtaining the benefits of the "safe harbor" provisions of the Act. Investors are cautioned that any forward- looking statements made by Modine are not guarantees of future performance and that actual results may differ materially from those in the forward-looking statements as a result of various factors, including: customers' integration of products currently being supplied by the company; the success of Modine or its competitors in obtaining the business of the customer base; the ability to pass on increased costs to customers; variations in currency-exchange rates in view of a large portion of the company's business being 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-2001 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 of this report's writing.
For the year ended March 31, 2000, sales of $1.14 billion were 2.5-percent higher than last year's sales of $1.11 billion. Weaker European currencies had a negative translation effect on fiscal-2000 sales of approximately $28 million compared with the prior year. Excluding the impact of changes in currency-exchange rates, worldwide- consolidated sales were five-percent higher than the prior year.
Distributed Products segment sales were up ten percent, primarily due to a full year's operation of the Core Holdings, Inc., acquisition made mid-way through fiscal 1999. The European Operations segment
produced increased sales to the OEM-automotive market while sales to the off-highway markets declined in conjunction with the worldwide slowdown in these markets. The Original Equipment segment declined marginally, as strong sales to the heavy- and medium-truck market were more than offset by the continuing slowdown in sales to the construction and agricultural-equipment markets.
Net sales by U.S. facilities accounted for 66 percent of consolidated revenues for the year ended March 31, 2000, essentially unchanged from the 67 percent in the prior year. Approximately 17 percent of U.S. production was for export. Net sales of European Operations improved three percent year-over-year despite the negative impact of a stronger dollar internationally. Overall, 55 percent of net sales were to U.S. customers and 45 percent to non-U.S. customers, reflecting the company's continuing strong global presence.
For the year ended March 31, 1999, sales of $1.11 billion were seven-percent higher than the previous year's $1.04 billion. Sales in the Distributed Products segment were up six percent, primarily due to the Core Holdings, Inc., acquisition made mid-year. Net sales of the European Operations segment improved 16 percent year-over-year with improved automotive-OEM sales leading the way. Also influencing the European sales results were positive currency-translation effects of approximately $4.0 million compared with the prior year. The Original Equipment segment was essentially flat, with stronger sales to the truck market and lower sales to the agricultural-equipment market.
Sales for the year ended March 31, 1998, were $1.04 billion, up $41.4 million or four percent from the prior year. Increases were greatest in the medium- and heavy-truck markets, followed by the off-highway-equipment market, partially offset by a slight decline in the car and light-truck market due to currency-translation effects. With about one-third of Modine's annual sales being in other than U.S. currency, the stronger dollar again had a negative translation effect of approximately $45.5 million on fiscal-1998 consolidated sales, compared with the prior year.
Fiscal-2000 gross profit of $317.5 million grew by $7.6 million from the $309.9 million in the previous year while it remained steady at 28 percent of sales. Improvement recorded in the OE North America truck market was generally offset by lower gross-profit returns, as a percent of sales, earned by the company's other operations. Continuing pricing pressures in the aftermarket and new facility start-ups once again were major factors affecting profit margins.
Gross profit was 28 percent of sales for fiscal 1999, one percentage point lower than 1998, primarily due to temporary start-up inefficiencies at new European production and assembly facilities and to pricing constraints imposed by certain OEM customers.
For fiscal 1998, gross profit was 29 percent of sales, one percentage point higher than 1997, primarily due to efficiency improvements in Europe, the volume effect of the truck market, and reduced material costs.
SG&A expenses of $218.5 million in fiscal 2000 grew by $21.8 million, to 19 percent of sales from 18 percent of sales in the preceding year. Factors influencing the changes were: the full-year effect of Core Holdings, acquired in fiscal 1999; ongoing litigation costs to protect Modine patents; increased depreciation as the new technical center in Racine was put into service; and recent worldwide upgrades to computer-related business systems.
In fiscal 1999, SG&A expenses of $196.6 million, 18 percent of sales, were $13.3 million over last year's $183.3 million, yet remained the same as a percent of sales. Without the mid-year Core Holdings acquisition, SG&A expenses rose only three percent over the prior year.
Primarily as a result of sales increases, SG&A expense for fiscal 1998 increased by $6.8 million, or four percent, from the prior year to $183.3 million. As a percent of sales, however, SG&A remained flat at 18 percent.
Income from operations of $99.0 million for fiscal 2000 declined $14.3 million from the previous year. The 13-percent reduction is predominantly a result of higher SG&A costs as discussed in the preceding section.
Income from operations of $113.3 million for fiscal 1999 compares with $117.5 for the prior period. The four-percent decline was principally the result of start-up inefficiencies at new production facilities located in Europe and higher SG&A costs from including the Core Holdings acquisition for six months of fiscal 1999.
In fiscal 1998, income from operations was $117.5 million, up $16.6 million or 16 percent from the previous year. European operations, strong activity in the North American truck market, and lower material costs account for the majority of this increase.
In fiscal 2000, interest expense rose $2.7 million from the previous year to $8.5 million. Financing of technical center construction in the U.S. and Europe, expansion of European facilities, debt assumed and incurred in conjunction with a prior-year acquisition, and equity investments in joint ventures made in the prior year were the primary reasons for the growth in interest expense. Higher interest rates also influenced the increase.
Interest expense of $5.7 million in fiscal 1999 increased $1.7 million over fiscal 1998. The increase is the result of borrowing to provide financing for an acquisition, equity investments in joint ventures, and construction projects in Europe and North America. The increased borrowing was partially offset by improved borrowing rates.
Fiscal-1998 interest expense was $4.0 million, down $1.0 million or 19 percent from the prior year. Lower interest rates caused this reduction.
Other income in fiscal 2000 of $4.8 million declined by $5.7 million from the previous fiscal-year's total of $10.5 million, which included a large royalty settlement and also a gain relative to the earlier sale of a facility in Michigan.
In fiscal 1999, other income of $10.5 million was $8.0 million over the prior period. Patent royalty income, including the royalty settlement, increased $3.7 million, combined with $3.9 million recognized on the earlier sale of a non-strategic, copper-tubing facility in Michigan.
Other income for fiscal 1998 was $2.5 million, which was $0.6 million more than 1997. This increase was due, primarily, to increases in royalty income.
For fiscal 2000, the effective tax rate declined 6.0 percentage points to 31.4 percent. Foreign-tax-rate differentials and implementation of a tax strategy that allowed the company to release the tax-valuation allowance relating to a net-operating-loss carry- forward at a foreign subsidiary were the main factors contributing to the change.
The 37.4-percent effective tax rate for fiscal 1999 compares with a 37.5-percent rate for fiscal-year 1998. Higher state taxes, net of federal benefit, were more than offset by reduced taxation on non-U.S. earnings and losses and other changes.
The effective tax rate for fiscal 1998 was 37.5 percent, up 2.7 percentage points from fiscal 1997, due primarily to higher tax rates on increased foreign earnings. Also, use of tax losses carried forward in prior years in certain European operations resulted in an increased tax rate in fiscal 1998.
Net earnings declined 12 percent in fiscal 2000 to $65.4 million ($2.20 per diluted share) from $73.9 million ($2.46 per diluted share). Return on average shareholder's investment (ROI) was 14 percent. As a percent of sales, net earnings dipped to 6 percent of sales in fiscal 2000. Increased aftermarket distribution costs and pricing pressures, new-plant start-up costs, and the adverse effect of a stronger U.S. dollar on international results were the major factors leading to lower earnings.
For the year ended March 31, 1999, net earnings were $73.9 million ($2.46 per diluted share), a $1.4-million or two-percent improvement over the prior year's $72.5 million ($2.39 per
diluted share). Net earnings were seven percent of sales, the same as the prior year, and a 17 percent ROI.
Net earnings in fiscal 1998 were $72.5 million, representing seven percent of sales and an 18-percent ROI. This was an increase of $8.7 million over fiscal 1997. Improved European operations, higher North American truck-market sales, and lower material costs were the major causes of this improvement.
CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands, except per-share amounts)
-----------------------------------------------------------------------------
For the years ended March 31 2000 1999 1998
-----------------------------------------------------------------------------
Net sales $1,139,269 $1,111,447 $1,040,418
Cost of sales 821,779 801,520 739,619
----------------------------------------
Gross profit 317,490 309,927 300,799
Selling, general, and
administrative expenses 218,452 196,636 183,323
----------------------------------------
Income from operations 99,038 113,291 117,476
Interest expense (8,467) (5,722) (4,010)
Other income - net 4,760 10,501 2,506
----------------------------------------
Earnings before income taxes 95,331 118,070 115,972
Provision for income taxes 29,928 44,127 43,501
----------------------------------------
Net earnings $ 65,403 $ 73,943 $ 72,471
========================================
Net earnings per share of
common stock:
Basic $2.22 $2.50 $2.44
Assuming dilution $2.20 $2.46 $2.39
----------------------------------------
The notes to consolidated financial statements are an integral
part of these statements.
|
Cash and cash equivalents decreased by $18.1 million to $31.1 million. Details of the sources and uses of funds can be found in the accompanying statement of cash flows.
Trade receivables, net of allowances for doubtful accounts, at $182.7 million, were essentially unchanged from the prior year.
Inventories declined by $10.4 million to $168.6 million with the majority of the change attributable to the off-highway market. The inventory turnover rate remained constant at 4.8 turns for the year.
Deferred income taxes and other current assets grew by $5.1 million to $47.2 million. A higher level of unbilled customer tooling was the main factor contributing to the increase.
The current ratio of 2.4-to-1 increased by 33 percent from last year's 1.8-to-1. The primary factor responsible for the change was the replacement of short-term debt with new long-term borrowing arrangements in Europe and the United States.
Net property, plant, and equipment of $338.0 million increased by $34.2 million due primarily to capital expenditures of $90.1 million. Continuing production- and test-facility expansions in Europe, equipment purchases for a new assembly facility in the United States, and preparation for the introduction of new customer programs over the next several years were the major factors contributing to the growth in fixed assets.
Investment in affiliates of $28.4 million increased $4.1 million in the current year, due chiefly to earnings and a favorable currency-translation impact recognized from Modine's 50-percent equity investment in Radiadores Visconde, Ltda., in Brazil.
Intangible assets of $70.3 million were $10.1 million lower than last year, largely as a result of amortization and the impact of foreign-currency translation.
Deferred charges and other noncurrent assets of $64.8 million increased $10.6 million over the prior period, primarily a result of a $5.4-million increase to the surplus in the company's over- funded pension plans and of a $4.8-million increase in deferred tax assets resulting from release of a tax-valuation allowance recorded the year before.
Short-term debt and the current portion of long-term debt, totaling $9.4 million, decreased by $64.3 million. Proceeds from a new, long-term, $60-million, multi-currency, revolving-credit agreement and a new, $53.0-million, Euro-denominated, credit agreement were applied, in part, to lower outstanding short-term debt.
Accounts payable decreased by $12.6 million to $84.9 million. Lower inventory levels, variations in the level of overall purchasing activity, and the favorable impact from foreign-currency translation were the main factors leading to the reduction.
Long-term debt increased by $67.3 million to $211.1 million at year-end. New long-term-credit facilities totaling $113.0 million were used to finance ongoing capital expenditures, to repay bank debt with less-favorable interest rates, and to reduce short-term debt as discussed above.
As a percent of shareholders' investment, long-term debt was 44.0 percent. Total debt to equity was 45.9 percent, down 2.1 percentage points from fiscal 1999.
Total shareholders' investment of $480.2 million increased $27.0 million over the prior period. The major change was from retained earnings, which benefited from net earnings of $65.4 million (less dividends paid of $27.1 million).
Accumulated other comprehensive loss of $21.6 million increased $3.3 million over the prior year. The most significant component was the foreign-currency translation adjustment, which increased $3.1 million. The Euro, which weakened against the dollar during the year, more than offset translation gains recorded on the company's equity investment in its Brazilian affiliate and reductions in the dollar value of loans outstanding denominated in foreign currencies.
During fiscal 2000, $12.1 million was expended to acquire 459,000 treasury shares, 300,000 shares of which were repurchased for $7.6 million under a buy-back program announced in October, while $5.9 million of treasury stock (195,000 shares) was used to satisfy requirements for stock options, stock awards, and employee stock-purchase plans. The number of shares of common stock outstanding at year-end dropped to 29,261,000 shares.
During fiscal 1999, $15.2 million was expended to acquire 418,000 treasury shares, while $8.0 million of treasury stock (279,000 shares) was used to satisfy requirements for stock options, stock awards, and employee stock-purchase plans. The number of shares of common stock outstanding at year-end was 29,525,000 shares.
During fiscal 1998, $17.0 million was expended to acquire 523,000 treasury shares, while 354,000 shares were used to satisfy requirements for stock options, stock awards, and employee stock- purchase plans. The number of shares of common stock outstanding at year-end was 29,664,000.
Book value per share increased by $1.06 during fiscal 2000 to $16.41, a 9.6-percent compound annual growth rate for the last five years.
CONSOLIDATED BALANCE SHEETS
(In thousands, except per-share amounts)
--------------------------------------------------------------------------
March 31 2000 1999
--------------------------------------------------------------------------
Assets
Current assets:
--------------
Cash and cash equivalents $ 31,070 $ 49,163
Trade receivables, less allowance for doubtful
accounts of $4,436 and $3,749 182,724 182,910
Inventories 168,597 178,949
Deferred income taxes and other current assets 47,164 42,074
----------------------
Total current assets 429,555 453,096
----------------------
Noncurrent assets:
-----------------
Property, plant, and equipment - net 337,987 303,764
Investment in affiliates 28,440 24,327
Goodwill and other intangible assets - net 70,339 80,411
Deferred charges and other noncurrent assets 64,786 54,141
----------------------
Total noncurrent assets 501,552 462,643
----------------------
Total assets $931,107 $915,739
======================
Liabilities and shareholders' investment
Current liabilities:
-------------------
Short-term debt $ 6,319 $ 68,998
Long-term debt - current portion 3,128 4,766
Accounts payable 84,893 97,443
Accrued compensation and employee benefits 46,479 48,869
Income taxes 7,336 9,694
Accrued expenses and other current liabilities 27,322 26,825
----------------------
Total current liabilities 175,477 256,595
----------------------
Noncurrent liabilities:
----------------------
Long-term debt 211,112 143,838
Deferred income taxes 24,536 20,533
Other noncurrent liabilities 39,740 41,554
----------------------
Total noncurrent liabilities 275,388 205,925
----------------------
Total liabilities 450,865 462,520
----------------------
|
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 13,573 13,543
Retained earnings 505,522 469,142
Accumulated other comprehensive loss (21,629) (18,341)
Treasury stock at cost: 1,081 and 817
common shares (34,394) (28,198)
Restricted stock - unamortized value (1,794) (1,891)
----------------------
Total shareholders' investment 480,242 453,219
----------------------
Total liabilities and shareholders'
investment $931,107 $915,739
======================
The notes to consolidated financial statements are an integral
part of these statements.
|
Net cash provided by operating activities in fiscal 2000 was $91.2 million, down $14.0 million from the prior year. Major items contributing to the overall change were lower earnings, a noncash adjustment for deferred income taxes that moved in the opposite direction from the previous year, and working-capital demands that were higher in fiscal 2000, which were partially offset by higher noncash depreciation and amortization adjustments.
Net cash provided by operating activities in fiscal 1999 was $105.2 million, up $2.2 million from the prior year as a result of higher earnings and positive noncash adjustments in deferred income taxes and in depreciation and amortization. These increases were offset in part as working-capital requirements grew from increased sales volume and the post-acquisition impact of the U.S. aftermarket expansion.
Net cash from operating activities in fiscal 1998 was $102.9 million, up $2.7 million from the prior year mainly as a result of higher earnings. Working-capital requirements grew as a result of the increased sales volume.
The company believes that cash, earnings, and borrowing capacity will continue to provide adequate support for the cash needs of its operations and long-term credit requirements, including capital expenditures and debt maturities.
Capital expenditures for fiscal 2000 were $90.1 million, slightly lower than prior year, and include: the on-going construction and equipment costs of new technical centers in North America and Europe, production and administrative facility expansion in Europe, replacement of two corporate aircraft, the migration to a new computer platform and implementation of new systems software in North America, and the costs associated with equipment and tooling for new customer programs.
Capital expenditures for fiscal 1999 were $90.9 million, $10.2 million higher than in fiscal 1998, reflecting: construction and equipment costs associated with the Racine Technical Center, continuing expansion and upgrading of our European production facilities, and tooling and equipment purchases at existing facilities in North America and Europe.
Capital expenditures for fiscal 1998 were $80.7 million, $26.2 million higher than in fiscal 1997, reflecting: construction of Racine Technical Center, upgrading and expanding European facilities, and process improvements at North American plants.
During fiscal 2000, Modine made an additional $2.7-million investment in Daikin-Modine, Inc. Total investment in the 50-percent- owned joint venture is $4.2 million. See note 10 to the consolidated financial statements for further detail.
During fiscal 1999, Modine acquired Core Holdings, Inc., of Orlando Florida, an aftermarket wholesale distributor. The cash cost of the acquisition was $19.8 million, net of cash acquired, and promissory notes to the sellers of $3.9 million. Investments in affiliates during the year consisted of the purchase of a 50- percent interest in Radiadores Visconde, Ltda., a Brazilian heat- transfer company based in S<o Paulo, Brazil, for $16.2 million in cash and a $10.0-million promissory note to the sellers. Modine also formed a new joint-venture company with Daikin Industries, Ltd. Investments made in fiscal 1999 in Daikin-Modine, Inc., totaled $1.5 million. See note 10 to the consolidated financial statements for further detail.
During fiscal 1998, Modine acquired 100 percent of the assets of Sun Technology Corporation in Michigan, a manufacturer of infrared heaters. The cash cost of the acquisition was $2.6 million, net of cash acquired and a promissory note to the seller for $0.3 million. See note 10 to the consolidated financial statements for further detail.
In fiscal 2000, company debt increased $21.4 million, primarily to support working-capital and capital-expenditure requirements. During the year, Modine entered into a 50.8-million-Euro ($53- million) term loan. Proceeds were used to pay down short-term,
European, bank debt. The company also entered into a long-term, $60-million, multi-currency, revolving-credit agreement that was used to replace short-term debt.
Overall, company debt increased by $72.0 million in fiscal 1999. New borrowings include short- and long-term debt used to provide financing for acquisitions, equity investments in affiliates, and construction projects in Europe and North America. Reductions in long-term debt resulted from refinancing existing bank debt in Europe with governmental loans and prepayment of an industrial revenue bond in the United States.
In fiscal 1998, company debt increased by $17.1 million. New borrowings included short-term debt to provide financing for construction projects in Europe and North America. Also, maturing debt was refinanced with long-term borrowing.
Treasury stock activity is detailed in Management's discussion of financial position and Note 16 to the consolidated financial statements.
Dividends for fiscal 2000 totaled $27.1 million, or 92 cents per share. This represented an increase of eight cents per share over the previous year. Dividends in fiscal 1999 and 1998 were $24.8 and $22.6 million, respectively, representing rates of 84 and 76 cents per share, respectively, and those dividends increased eight cents per share each year over the previous year.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
------------------------------------------------------------------------------
For the years ended March 31 2000 1999 1998
------------------------------------------------------------------------------
Cash flows from operating activities:
------------------------------------
Net earnings $ 65,403 $ 73,943 $ 72,471
Adjustments to reconcile net earnings with
cash provided by operating activities:
Depreciation and amortization 48,822 44,182 41,767
Pensions (2,686) (2,465) (2,256)
Loss from disposition of property, plant,
and equipment 582 123 837
Deferred income taxes (2,235) 5,652 (91)
Provision for losses on accounts receivable 734 (855) 497
Undistributed earnings of affiliates, net
of dividends received 800 841 679
Other - net 163 1,577 2,884
----------------------------
111,583 122,998 116,788
----------------------------
Change in operating assets and liabilities
excluding acquisitions:
Trade receivables (9,147) (15,100) (16,526)
Inventories 4,799 (6,789) (13,236)
Deferred income taxes and other current
assets (5,909) 4,661 (2,781)
Accounts payable (8,674) 4,819 13,855
Accrued compensation and employee benefits (2,936) (715) 3,724
Income taxes (1,257) (2,234) 3,081
Accrued expenses and other current
liabilities 2,743 (2,469) (1,977)
----------------------------
Net cash provided by operating activities 91,202 105,171 102,928
----------------------------
Cash flows from investing activities:
------------------------------------
Expenditures for property, plant, and
equipment (90,147) (90,860) (80,682)
Acquisitions, net of cash acquired -- (19,826) (2,604)
Proceeds from dispositions of assets 2,140 524 1,927
Investments in affiliates (2,700) (17,687) --
Increase in deferred charges and other
noncurrent assets (2,537) (895) (1,003)
Other - net (56) (150) (200)
----------------------------
Net cash used for investing activities (93,300) (128,894) (82,562)
|
Cash flows from financing activities:
------------------------------------
(Decrease)/increase in short-term debt - net (60,569) 48,112 18,597
Additions to long-term debt 129,818 46,810 27,102
Reductions of long-term debt (47,837) (22,924) (28,607)
Issuance of common stock, including
treasury stock 2,965 5,054 4,567
Purchase of treasury stock (12,102) (15,203) (16,990)
Cash dividends paid (27,102) (24,832) (22,605)
----------------------------
Net cash (used for)/provided by financing
activities (14,827) 37,017 (17,936)
----------------------------
Effect of exchange-rate changes on cash (1,168) (541) (842)
----------------------------
Net (decrease)/increase in cash and cash
equivalents (18,093) 12,753 1,588
Cash and cash equivalents at beginning of year 49,163 36,410 34,822
----------------------------
Cash and cash equivalents at end of year $ 31,070 $ 49,163 $ 36,410
============================
Cash paid during the year for:
Interest, net of amounts capitalized $ 8,297 $ 4,948 $ 4,434
Income taxes $ 33,314 $ 37,071 $ 37,715
----------------------------
The notes to consolidated financial statements are an integral
part of these statements.
|
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' INVESTMENT
(In thousands, except per-share amounts)
----------------------------------------------------------------------------------------------------------------------
Accumulated Restricted
For the years Additional other stock-
ended March 31, Common paid-in Retained comprehensive Treasury unamortized
2000, 1999, 1998 stock capital earnings income/(loss) stock value Total
----------------------------------------------------------------------------------------------------------------------
Balance, March 31, 1997 $18,964 $ 9,760 $378,740 $ (3,016) $(14,949) $(3,811) $385,688
----------------------------------------------------------------------------------------------------------------------
Net earnings -- -- 72,471 -- -- -- 72,471
Other comprehensive (loss):
Foreign-currency translation -- -- -- (5,086) -- -- (5,086)
Total comprehensive income -- -- -- -- -- -- 67,385
Cash dividends, $0.76 per share -- -- (22,605) -- -- -- (22,605)
Purchase of treasury stock -- -- -- -- (16,990) -- (16,990)
Stock options and awards
including related tax benefits -- 2,583 (5,585) -- 10,736 (798) 6,936
Employee stock-purchase and
-ownership plans -- 41 (20) -- 226 -- 247
Amortization of deferred
compensation under
restricted stock plans -- -- -- -- -- 1,814 1,814
----------------------------------------------------------------------------------------------------------------------
Balance, March 31, 1998 18,964 12,384 423,001 (8,102) (20,977) (2,795) 422,475
----------------------------------------------------------------------------------------------------------------------
Net earnings -- -- 73,943 -- -- -- 73,943
Other comprehensive (loss):
Foreign-currency translation -- -- -- (9,831) -- -- (9,831)
Minimum pension liability
(net of tax benefit of
$260) -- -- -- (408) -- -- (408)
Total comprehensive income -- -- -- -- -- -- 63,704
Cash dividends, $0.84 per share -- -- (24,832) -- -- -- (24,832)
Purchase of treasury stock -- -- -- -- (15,203) -- (15,203)
Stock options and awards
including related tax benefits -- 882 (2,970) -- 6,165 (11) 4,066
Employee stock-purchase and
-ownership plans -- 277 -- -- 1,817 -- 2,094
Amortization of deferred
compensation under
restricted stock plans -- -- -- -- -- 915 915
----------------------------------------------------------------------------------------------------------------------
Balance, March 31, 1999 18,964 13,543 469,142 (18,341) (28,198) (1,891) 453,219
----------------------------------------------------------------------------------------------------------------------
|
Net earnings -- -- 65,403 -- -- -- 65,403
Other comprehensive (loss):
Foreign-currency translation -- -- -- (3,144) -- -- (3,144)
Minimum pension liability
(net of tax benefit of $5) -- -- -- (144) -- -- (144)
Total comprehensive income -- -- -- -- -- -- 62,115
Cash dividends, $0.92 per share -- -- (27,102) -- -- -- (27,102)
Purchase of treasury stock -- -- -- -- (12,102) -- (12,102)
Stock options and awards
including related tax benefits -- 28 (1,798) -- 3,719 (975) 974
Employee stock-purchase and
-ownership plans -- 2 (123) -- 2,187 -- 2,066
Amortization of deferred
compensation under
restricted stock plans -- -- -- -- -- 1,072 1,072
----------------------------------------------------------------------------------------------------------------------
Balance, March 31, 2000 $18,964 $13,573 $505,522 $(21,629) $(34,394) $(1,794) $480,242
----------------------------------------------------------------------------------------------------------------------
The notes to consolidated financial statements are an integral
part of these statements.
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
statements. Investments in affiliated companies in which ownership exceeds 20 percent are accounted for by the equity method. The investments are stated at cost plus or minus a proportionate share of the undistributed net income (loss). Modine's share of the affiliates' net income (loss) is reflected in net earnings.
Maintenance and repair costs are charged to earnings as incurred. Costs of improvements are capitalized. Upon the sale or other disposition of an asset, the cost and related accumulated depreciation are removed from the accounts and the gain or loss is included in net earnings.
Modine monitors events or changes in circumstances for long- lived assets, which may result in the carrying amount of the assets exceeding the sum of the expected undiscounted future cash flows associated with such assets. The measurement of any impairment losses recognized is based on the difference between the fair values and the carrying amounts of the assets.
Research and development costs charged to operations totaled $20,528,000 in fiscal 2000, $18,252,000 in fiscal 1999, and $16,816,000 in fiscal 1998.
Modine's foreign subsidiaries have defined-benefit plans and/or termination indemnity plans covering substantially all of their eligible employees. The benefits under these plans are based on years of service and final average compensation levels. Funding is limited to statutory requirements.
The projected benefit obligation, accumulated benefit obligation, and fair value of plan assets for the pension plans with accumulated benefit obligations in excess of plan assets were $15,638,000, $14,306,000, and $687,000, respectively, as of March 31, 2000, and $18,220,000, $15,235,000, and $1,178,000, respectively, as of March 31, 1999.
Modine has several defined-contribution plans that cover most of its domestic employees. These 401(k) and savings plans provide company matching under various formulas. The cost of Modine's contributions to the plans (including retirement plans discussed in Note 18) for fiscal 2000, 1999, and 1998 were $7,744,000, $6,831,000, and $6,666,000, respectively.
The change in benefit obligations and plan assets as well as the funded status of Modine's pension and other postretirement plans were as follows:
(In thousands)
----------------------------------------------------------------------------
Pensions Other postretirement
------------------ --------------------
Years ended March 31 2000 1999 2000 1999
----------------------------------------------------------------------------
Change in benefit obligation:
Benefit obligation at
beginning of year $155,754 $137,090 $ 23,816 $ 22,706
Service cost 5,875 5,567 374 327
Interest cost 10,630 10,299 1,629 1,626
Plan amendments 1,256 344 -- --
Actuarial (gain)/loss (13,237) 7,302 (825) 974
Benefits paid (6,723) (4,945) (2,286) (2,234)
Settlement 166 -- -- --
Contributions by plan
participants -- -- 427 417
Currency-translation
adjustment (1,687) 97 -- --
----------------------------------------------------------------------------
Benefit obligation at
end of year $152,034 $155,754 $ 23,135 $ 23,816
----------------------------------------------------------------------------
Change in plan assets:
Fair value of plan assets
at beginning of year $196,396 $188,762 $ -- $ --
Actual return on plan assets 1,808 10,485 -- --
Employer contributions 5,025 2,218 1,859 1,817
Contributions by plan
participants -- -- 427 417
Benefits paid (6,723) (4,945) (2,286) (2,234)
Currency-translation
adjustment (172) (124) -- --
----------------------------------------------------------------------------
Fair value of plan
assets at end of year $196,334 $196,396 $ -- $ --
----------------------------------------------------------------------------
Funded status:
Funded status at end of year $ 44,300 $ 40,642 $(23,135) $(23,816)
Unrecognized net (gain)/loss (3,890) (6,060) (737) 42
Unrecognized prior service cost 3,028 2,306 (2,091) (2,564)
Unrecognized net
transition obligation 487 663 -- --
----------------------------------------------------------------------------
Net amount recognized $ 43,925 $ 37,551 $(25,963) $(26,338)
----------------------------------------------------------------------------
Amounts recognized in the
balance sheet consist of:
Prepaid benefit cost $ 56,974 $ 51,606 $ -- $ --
Accrued benefit liability (14,860) (15,526) (25,963) (26,338)
Intangible asset 994 991 -- --
Accumulated other
comprehensive income 817 480 -- --
----------------------------------------------------------------------------
Net amount recognized $ 43,925 $ 37,551 $(25,963) $(26,338)
----------------------------------------------------------------------------
|
Costs for Modine's pension and other postretirement benefit plans include the following components:
(In thousands)
---------------------------------------------------------------------------- Years ended March 31 2000 1999 1998 ---------------------------------------------------------------------------- Pensions: Components of net periodic benefit cost (gain): Service cost $ 5,875 $ 5,567 $ 5,280 Interest cost 10,630 10,299 9,625 Expected return on plan assets (17,567) (16,433) (14,925) Amortization of: Unrecognized net loss (gain) 95 (117) 108 Unrecognized prior service cost 380 340 437 Unrecognized net obligation (asset) 93 213 (288) Adjustment for settlement 574 -- -- ---------------------------------------------------------------------------- Net periodic benefit cost (gain) $ 80 $ (131) $ 237 ---------------------------------------------------------------------------- Other postretirement plans: Components of net periodic benefit cost: Service cost $ 374 $ 327 $ 310 Interest cost 1,629 1,626 1,624 Amortization of: Unrecognized net (gain) (46) (109) (87) Unrecognized prior service cost (473) (473) (473) ---------------------------------------------------------------------------- Net periodic benefit cost $ 1,484 $ 1,371 $ 1,374 ---------------------------------------------------------------------------- |
Years ended March 31 2000 1999
---------------- ---------------
U.S. Foreign U.S. Foreign
plans plans plans plans
----------------------------------------------------------------------------
Pensions:
Discount rate 7.5% 7.4% 7.0% 7.1%
Expected return on plan assets 9.0% 14.4% 9.0% 15.4%
Rate of compensation increase 4.0% 3.1% 4.5% 3.0%
----------------------------------------------------------------------------
Other postretirement plans:
Discount rate 7.5% 7.0%
Rate of compensation increase 4.0% 4.5%
----------------------------------------------------------------------------
|
With regards to the postretirement plans, for measurement purposes, a 6.0-percent healthcare-cost trend rate was assumed for fiscal year 2000 for pre-65 benefits and 5.0 percent for post-65 benefits. Pre-65 trend rates were assumed to decrease to 5.0 percent in fiscal 2001 and remain at that level thereafter.
Assumed healthcare-cost trend rates affect the amounts reported for the healthcare plan. A one-percentage-point change in assumed healthcare- cost trend rates would have the following effects:
(In thousands)
----------------------------------------------------------------------------
One percentage point
--------------------
Year ended March 31, 2000 increase decrease
----------------------------------------------------------------------------
Effect on total of service and interest cost $ 96 $ (95)
Effect on post-retirement benefit obligation 1,309 (1,244)
----------------------------------------------------------------------------
|
Modine leases various facilities and equipment. Rental expense under operating leases totaled $14,817,000 in fiscal 2000, $12,618,000 in fiscal 1999, and $10,912,000 in fiscal 1998.
2001 $8,637 2004 $2,321 2002 5,646 2005 1,703 2003 3,134 2006 and beyond 2,556 ---------------------------------------------------------------------------- Total future minimum rental commitments $23,997 ---------------------------------------------------------------------------- NOTE 5 Income taxes ---------------------- |
The U.S. and foreign components of earnings before income taxes
and the income tax expense consist of:
(In thousands)
---------------------------------------------------------------------------- Years ended March 31 2000 1999 1998 ---------------------------------------------------------------------------- Components of earnings before income taxes: United States $70,114 $ 98,945 $ 83,342 Foreign 25,217 19,125 32,630 ---------------------------------------------------------------------------- Total earnings before income taxes $95,331 $118,070 $115,972 ---------------------------------------------------------------------------- Income tax expense: Federal: Current $20,231 $ 22,983 $ 26,913 Deferred 2,959 4,995 (55) State: Current 3,319 4,836 4,008 Deferred 337 497 22 Foreign: Current 8,746 9,595 12,506 Deferred (5,664) 1,221 107 ---------------------------------------------------------------------------- Totals charged to earnings $29,928 $ 44,127 $ 43,501 ---------------------------------------------------------------------------- |
Years ended March 31 2000 1999 1998 ---------------------------------------------------------------------------- Statutory federal tax 35.0% 35.0% 35.0% State taxes, net of federal benefit 2.6 3.0 2.3 Taxes on non-U.S. earnings and losses (7.8) (0.2) 0.2 Other 1.6 (0.4) -- ---------------------------------------------------------------------------- Effective tax rate 31.4% 37.4% 37.5% ---------------------------------------------------------------------------- |
The significant components of deferred income-tax expense attributable to earnings before income taxes are as follows:
(In thousands)
---------------------------------------------------------------------------- Years ended March 31 2000 1999 1998 ---------------------------------------------------------------------------- Pensions $ 1,707 $1,294 $ 1,617 Depreciation 3,622 2,023 1,201 Inventories (575) (148) 432 Employee benefits 679 817 (1,357) Benefit of tax losses (7,185) (392) (162) Other (617) 3,119 (1,657) ---------------------------------------------------------------------------- Totals charged to earnings $(2,369) $6,713 $ 74 ---------------------------------------------------------------------------- |
The tax effects of temporary differences that give rise to
significant portions of the deferred tax assets and deferred tax
liabilities are as follows:
(In thousands)
----------------------------------------------------------------------------
March 31 2000 1999
---------------------------------------------------------------------------
Deferred tax assets:
Accounts receivable $ 1,366 $ 1,079
Inventories 5,660 4,488
Plant and equipment 937 566
Employee benefits 18,683 19,278
Net operating-loss and tax-credit carry-forwards 9,217 7,553
Other 7,747 6,867
-----------------
Total gross deferred assets 43,610 39,831
Less valuation allowance 856 5,154
-----------------
Net deferred tax assets 42,754 34,677
-----------------
Deferred tax liabilities:
Pension 22,012 20,034
Plant and equipment 14,846 11,046
Other 2,686 2,311
-----------------
Total gross deferred tax liabilities 39,544 33,391
----------------------------------------------------------------------------
Net deferred tax asset $ 3,210 $ 1,286
----------------------------------------------------------------------------
|
The valuation allowance for deferred tax assets as of April 1, 1999, was $5,154,000. The valuation allowance decreased by $4,298,000 during the year and relates primarily to certain, foreign, net-operating-loss carryforward activities. The implementation of a tax strategy allowed Modine to release a tax-valuation allowance relating to the net-operating- loss carryforward at a foreign subsidiary. Available positive evidence and projected future earnings of the foreign subsidiary will, more likely than not, result in the realization of the net-operating-loss carryforward.
At March 31, 2000, the company had tax-loss carryforwards of $21,628,000 existing in jurisdictions outside of the United States. If not utilized against taxable income, the tax losses will expire as follows:
2001 $184 2004 $ 471 2002 387 2005 2,405 2003 -- No expiration date 18,181 ---------------------------------------------------------------------------- |
The undistributed earnings of certain foreign subsidiaries and equity investment companies totaled $112,084,000 as of March 31, 2000. The earnings are considered permanently reinvested in foreign operations and, therefore, no provision has been made for any U.S. taxes.
The computational components of basic and diluted earnings per share are as follows:
(In thousands, except per-share amounts)
----------------------------------------------------------------------------
Years ended March 31 2000 1999 1998
----------------------------------------------------------------------------
Net earnings per share of common stock:
Basic $2.22 $2.50 $2.44
Assuming dilution 2.20 2.46 2.39
Numerator:
Net earnings available to
common shareholders $65,403 $73,943 $72,471
Denominator:
Weighted average shares outstanding - basic 29,471 29,579 29,726
Effect of dilutive securities - options 232 436 563
---------------------------
Weighted average shares
outstanding - assuming dilution 29,703 30,015 30,289
There were outstanding options to
purchase common stock excluded from
the dilutive calculation because
their prices exceeded the average
market price for the earnings
statement periods as follows:
Average market price per share $27.03 $32.57 $32.63
Number of shares 1,169 645 318
----------------------------------------------------------------------------
|
Under Modine's cash management system, certain cash balances reflect credit balances to the extent that checks written have not yet been presented for payment. These credit balances, included in accounts payable, were approximately $7,699,000, $9,814,000, and $10,002,000 at March 31, 2000, 1999, and 1998, respectively.
All the short-term investments at March 31, 2000, 1999, and 1998, were of an initial duration of less than three months and were treated as cash equivalents, which approximate fair value.
Inventories include:
(In thousands)
----------------------------------------------------------------------------
March 31 2000 1999
----------------------------------------------------------------------------
Raw materials $ 35,872 $ 40,529
Work in process 39,146 41,863
Finished goods 93,579 96,557
----------------------------------------------------------------------------
Total inventories $168,597 $178,949
----------------------------------------------------------------------------
|
Property, plant, and equipment is composed of:
(In thousands)
----------------------------------------------------------------------------
March 31 Depreciable lives 2000 1999
----------------------------------------------------------------------------
Land -- $ 7,966 $ 7,922
Buildings and improvements 10-40 years 164,449 147,153
Machinery and equipment 3-12 years 336,064 304,659
Office equipment 3-14 years 48,754 40,803
Transportation equipment 3-7 years 14,924 17,817
Construction in progress -- 62,013 76,292
------------------
634,170 594,646
Less accumulated depreciation 296,183 290,882
----------------------------------------------------------------------------
|
Depreciation expense was $39,360,000, $37,411,000, and $35,192,000 for the fiscal years ended 2000, 1999, and 1998, respectively.
In the first quarter of fiscal 1999, Modine formed a joint-venture company with Daikin Industries, Ltd. Modine made investments in fiscal
1999 of $1,500,000 and in fiscal 2000 of $2,700,000. The 50-percent-owned joint venture, Daikin-Modine, Inc., is manufacturing a new line of packaged, rooftop, air-conditioning products using state-of-the-art technology, including Modine's patented PF (parallel flow) heat exchangers. On April 11, 2000, Modine announced that it reached a basic agreement with Daikin Industries, Ltd. to purchase their share of ownership in the joint-venture in June 2000. The operation will be restructured into Modine's Commercial HVAC&R Division upon completion of the transaction.
On August 6, 1998, Modine, through its wholly owned Brazilian subsidiary, purchased a 50-percent interest in Radiadores Visconde, Ltda., a Brazilian heat-transfer company based in Sao Paulo, Brazil. Visconde produces heat-exchanger components, assemblies, and modules primarily for the aftermarket but also for sale to original-equipment customers in the truck, engine, agricultural-tractor, hydraulic-system, compressor, marine, construction-equipment, power-generator, and industrial markets. The purchase price of $26,187,000 was financed through a combination of cash provided by operations, borrowing under Modine's revolver, and a promissory note in the amount of $10,000,000 to the sellers. Goodwill recorded as part of the investment was $17,536,000 and is being amortized on a straight-line basis over 15 years. The investment is being accounted for under the equity method using a one-month reporting delay.
On October 6, 1998, Modine finalized the acquisition of Core Holdings, Inc., of Orlando, Florida, an aftermarket wholesale distributor specializing in complete lines of vehicular engine- cooling and air-conditioning systems products. The acquisition purchase price was $24,300,000. The transaction was financed with cash, existing short-term borrowing facilities, and $3,921,000 of promissory notes to the sellers. The investment is accounted for using the purchase method. Goodwill, recognized as a result of the acquisition, was $25,261,000 and is being amortized on a straight-line basis over 15 years. The results of operations are included in the consolidated financial statements since the effective date of the acquisition.
Details of businesses acquired and equity investment transactions were as follows:
(In thousands)
----------------------------------------------------------------------------
Year ended March 31 2000 1999
----------------------------------------------------------------------------
Value of assets acquired, including
intangibles, excluding cash acquired
of $543 in fiscal 1999 $ -- $53,620
Liabilities assumed and created -- (43,794)
Equity investment in affiliates 2,700 27,687
----------------------------------------------------------------------------
Net cash paid for acquisitions and
equity investments $2,700 $37,513
----------------------------------------------------------------------------
|
Effective January 1, 1998, Modine acquired the business, assets, and certain liabilities of Sun Technology Corporation, located in Shelby Township, Michigan. Sun Technology manufactured Ray-Tec
infrared heaters for commercial, industrial, and residential buildings. The acquisition purchase price of $3,173,000 was paid for with cash and a promissory note for $320,000. Goodwill created by the acquisition was $2,226,000 and is being amortized over 15 years on a straight-line basis. The investment is being accounted for by the purchase method. The results of operations are included in the consolidated financial statements since the date of acquisition.
The investments presented above did not have a material effect on the consolidated results of operations and, accordingly, pro- forma information is not presented.
Intangible assets include:
(In thousands)
-------------------------------------------------------------------------
March 31 2000 1999
-------------------------------------------------------------------------
Goodwill $ 89,815 $ 92,548
Patents and product technology 8,389 8,389
Other intangibles 3,204 3,326
------------------
101,408 104,263
Less accumulated amortization 31,069 23,852
-------------------------------------------------------------------------
Net intangible assets $ 70,339 $ 80,411
-------------------------------------------------------------------------
|
Amortization expense for intangible assets was $8,390,000, $5,856,000, and $4,761,000 for the fiscal years ended 2000, 1999, and 1998, respectively.
Deferred charges and other noncurrent assets include:
(In thousands)
----------------------------------------------------------------------------
March 31 2000 1999
----------------------------------------------------------------------------
Prepaid pension costs - qualified and
nonqualified plans $57,421 $52,000
Other noncurrent assets 7,365 2,141
----------------------------------------------------------------------------
Total deferred charges and other
noncurrent assets $64,786 $54,141
----------------------------------------------------------------------------
|
Long-term debt at March 31, 2000 and 1999, includes:
(Dollars in thousands)
----------------------------------------------------------------------------
Fiscal
Interest rate at year of
Type of issue March 31, 2000 maturity 2000 1999
----------------------------------------------------------------------------
Denominated in
U.S. dollars:
Fixed rate -
Notes 5.00%-9.00% 2001-2004 $ 13,391 $ 15,825
Weighted average
interest rate 5.31%
Revenue bonds 7.50% 2003 750 1,100
Variable rate -
Note 6.50% 2003 55,000 1,660
Revenue bonds 3.85% 2008 3,000 3,000
Denominated in
foreign currency:
Fixed rate -
Notes and other debt 3.25%-11.00% 2004-2009 13,301 11,784
Weighted average
interest rate 3.92%
Variable rate -
Notes and other debt .30%-7.00% 2002-2010 128,798 115,235
Weighted average
interest rate 3.78%
------------------
214,240 148,604
Less current portion 3,128 4,766
----------------------------------------------------------------------------
Total $211,112 $143,838
----------------------------------------------------------------------------
|
During the second quarter of fiscal 2000, Modine entered into an unsecured $53,000,000 term loan denominated in Euros. This loan matures in August, 2001, with a one-year extension option subject to the lender's approval. In the fourth quarter of fiscal 2000, Modine entered into an unsecured $60,000,000 multi-currency revolving credit agreement with a term of three years. Certain of Modine's financing agreements require it to maintain specific financial ratios and place certain limitations on dividend payments and the acquisition of treasury stock. Other loan agreements give certain existing unsecured lenders security equal to any future secured borrowing. Modine is in compliance with these covenants at March 31, 2000.
At March 31, 2000, the carrying value of Modine's long-term debt approximates fair value.
Long-term debt matures as follows:
--------------------------------------------------------------------------- Years ending March 31 (In thousands) --------------------------------------------------------------------------- 2001 $ 3,128 2004 $12,002 2002 67,931 2005 1,735 2003 100,762 2006 and beyond 28,682 ---------------------------------------------------------------------------- |
Modine also maintains credit agreements with banks abroad. The foreign unused lines of credit at March 31, 2000, were approximately $27,888,000. Domestic unused lines of credit at March 31, 2000, were approximately $5,657,000. A maximum of $79,248,000 in short- term bank borrowings was outstanding during the year ended March 31, 2000. The weighted average interest rate on short-term borrowings was 4.67 percent at March 31, 2000, and 4.94 percent at March 31, 1999.
Interest expense charged to earnings was as follows:
(In thousands)
---------------------------------------------------------------------------- Years ended March 31 2000 1999 1998 ---------------------------------------------------------------------------- Gross interest cost $9,980 $7,538 $4,687 Capitalized interest on major construction projects (1,513) (1,816) (677) ---------------------------------------------------------------------------- Interest expense $8,467 $5,722 $4,010 ---------------------------------------------------------------------------- |
Modine uses derivative financial instruments in a limited way as a tool to manage its financial risk. Their use is restricted primarily to hedging assets and obligations already held by Modine and they are used to protect cash rather than generate income or engage in speculative activity. Leveraged derivatives are prohibited by company policy.
Modine from time to time enters into foreign-currency-exchange contracts, generally with terms of 90 days or less, to hedge specific foreign-currency-denominated transactions. The effect of this practice is to minimize the impact of foreign-exchange-rate movements on Modine's operating income. Modine's foreign-currency-exchange contracts do not subject it to significant risk due to exchange-rate movements because gains and losses on these contracts offset gains and losses on the assets and liabilities being hedged.
As of March 31, 2000 and 1999, the parent company had approximately $2,549,000 and $3,971,000, respectively, in outstanding forward foreign-exchange contracts denominated in Euros and French francs, respectively. The difference between these contracts' values and the fair value of these instruments in the aggregate was not material. Certain subsidiaries have transactions in currencies other than their functional currencies and, from time to time, enter into forward and option contracts to hedge the purchase of inventory or to sell nonfunctional currency receipts. Non-U.S. dollar financing transactions through intercompany loans or local borrowings in the corresponding currency generally are effective as hedges of long-term investments. See also Note 13.
Other noncurrent liabilities include:
(In thousands)
--------------------------------------------------------------------------- March 31 2000 1999 --------------------------------------------------------------------------- Postretirement benefits other than pensions $23,595 $24,119 Pensions 13,583 14,521 Other 2,562 2,914 --------------------------------------------------------------------------- Total other noncurrent liabilities $39,740 $41,554 --------------------------------------------------------------------------- |
Following is a summary of common and treasury stock activity.
----------------------------------------------------------------------------
Treasury stock
Common stock at cost
----------------- -------------------
shares amount shares amount
----------------------------------------------------------------------------
Balance March 31, 1997 30,342 $18,964 (509) $(14,949)
----------------------------------------------------------------------------
Purchase of treasury stock -- -- (523) (16,990)
Stock options and awards
including related tax benefits -- -- 346 10,736
Employee stock-purchase
and -ownership plans -- -- 8 226
----------------------------------------------------------------------------
Balance March 31, 1998 30,342 18,964 (678) (20,977)
----------------------------------------------------------------------------
Purchase of treasury stock -- -- (418) (15,203)
Stock options and awards
including related tax benefits -- -- 215 6,165
Employee stock-purchase
and -ownership plans -- -- 64 1,817
----------------------------------------------------------------------------
Balance March 31, 1999 30,342 18,964 (817) (28,198)
----------------------------------------------------------------------------
Purchase of treasury stock -- -- (459) (12,102)
Stock options and awards
including related tax benefits -- -- 124 3,719
Employee stock-purchase
and -ownership plans -- -- 71 2,187
----------------------------------------------------------------------------
Balance March 31, 2000 30,342 $18,964 (1,081) $(34,394)
----------------------------------------------------------------------------
|
Modine has a shareholder rights plan to protect against coercive takeover tactics. Under the plan, each share of Modine's common stock carries one right that entitles the holder to purchase a unit of 1/100 Preferred Series A Participating Stock at $95.00 per unit. The rights are not currently exercisable but will become exercisable 10 days after a shareholder has acquired 20 percent or more, or has
commenced a tender or exchange offer for 30 percent or more, of Modine's common stock. In the event of certain mergers, sales of assets, or self-dealing transactions involving a 20-percent-or-more shareholder, each right not owned by such 20-percent-or-more holder will be modified so that it will then be exercisable for common stock having a market value of twice the exercise price of the right. The rights are redeemable in whole by Modine, at a price of $0.0125 per right, at any time before 20 percent or more of Modine's common stock has been acquired. The rights expire on October 27, 2006, unless previously redeemed.
Activity in the plans for fiscal 2000, 1999, and 1998 resulted in the purchase of 487,000, 506,000, and 577,000 shares of Modine common stock, respectively. These purchases were made from the employee-pension-plan trusts, private purchases, and treasury shares. It is anticipated that future purchases will be made from all three sources at the discretion of the plans' administrative committees. Costs of Modine's contributions to the plans for fiscal 2000, 1999, and 1998 were $7,288,000, $6,321,000, and $6,179,000, respectively.
The 1985 and 1994 Incentive Stock Plans also provide for the granting of stock awards. Restricted stock awards were granted for 39,000, 1,500, and 25,000 shares in fiscal 2000, 1999, and 1998, respectively. Shares are awarded at no cost to the employee and are placed in escrow until certain employment restrictions lapse. The value of shares awarded is amortized over the five-to- six year restriction periods. The amounts charged to operations in fiscal 2000, 1999, and 1998 were $1,072,000, $915,000, and $1,814,000, respectively.
Following is a summary of incentive and nonqualified option activity under the plans.
----------------------------------------------------------------------------
Shares Weighted-average
in thousands) exercise price per share
----------------------------------------------------------------------------
Outstanding March 31, 1997 2,085 $20.27
----------------------------------------------------------------------------
Granted 318 33.56
Exercised (323) 13.33
----------------------------------------------------------------------------
Outstanding March 31, 1998 2,080 23.38
----------------------------------------------------------------------------
Granted 333 33.36
Exercised (215) 13.77
Forfeitures (18) 27.31
----------------------------------------------------------------------------
Outstanding March 31, 1999 2,180 25.82
----------------------------------------------------------------------------
Granted 343 25.86
Exercised (85) 10.59
----------------------------------------------------------------------------
Outstanding March 31, 2000 2,438 $26.36
----------------------------------------------------------------------------
|
Options outstanding and exercisable as of March 31, 2000:
----------------------------------------------------------------------------
Weighted- Weighted-average
average exercise price Shares
Range of exercise prices remaining life per share (in thousands)
----------------------------------------------------------------------------
$ 8.75 - 14.99 1.51 $11.56 157
15.00 - 24.99 4.01 20.17 530
25.00 - 34.99 7.20 29.55 1,751
----------------------------------------------------------------------------
|
A further 1,480,000 shares were available for the granting of additional options or awards at March 31, 2000.
Modine continues to account for its stock options using the intrinsic value method of accounting prescribed by Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees." Since the exercise price of the options that have been awarded was equal to the market price on the date of the grant, no compensation expense was required to be recognized. If the fair-value based method of accounting for the 2000, 1999, and 1998 stock option grants had been applied in accordance with SFAS No. 123, "Accounting for Stock-Based Compensation," Modine's net earnings and net earnings per share would have been reduced as summarized below:
(In thousands, except per-share amounts)
--------------------------------------------------------------------------- Years ended March 31 2000 1999 1998 --------------------------------------------------------------------------- Net earnings as reported $65,403 $73,943 $72,471 Net earnings pro forma 62,855 71,206 69,597 Net earnings per share (basic) as reported $2.22 $2.50 $2.44 Net earnings per share (basic) pro forma 2.13 2.41 2.34 ---------------------------------------------------------------------------- |
The following assumptions were used to compute the fair value of the option grants in fiscal 2000, 1999, and 1998 using the Black-Scholes option-pricing model: a risk-free interest rate of 5.82-6.60 percent, 4.53 percent, and 5.43 percent, respectively; stock volatility of 26.9-28.8 percent, 26.3 percent, and 27.0 percent, respectively; a dividend yield of 2.4-2.5 percent, 2.2 percent, and 2.2 percent, respectively; and, for each of the three years, an expected option life of five years.
Modine's product line consists of heat-transfer components and systems. Modine serves the vehicular, industrial, commercial, and building-HVAC original-equipment and replacement markets. Modine's segments, which are organized on the basis of market categories or geographical responsibility, are as follows: Original Equipment, which provides heat-transfer products, generally from business units in North America, to original-equipment manufacturers of on-highway and off-highway vehicles, as well as to industrial- and commercial- equipment manufacturers, located primarily in North America; Distributed Products, which provides heat-transfer products primarily for the North American vehicular replacement market and the building- HVAC market, from business units in North America; and European Operations, which provides heat-transfer products, primarily to European original-equipment manufacturers of on-highway and off-highway vehicles, industrial equipment manufacturers, and the vehicular replacement market from business units in Europe. Modine has assigned specific business units to a segment based principally on these defined markets and their geographical location. Each of Modine's segments is individually managed and has separate financial results reviewed by its chief, operating decisionmakers. These results are used by management both in evaluating the performance of, and in allocating current and future resources to, each of the segments. Modine evaluates segment performance based on operating income and the efficient use of long-lived and total assets. The accounting policies of the segments are the same as those of Modine as a whole.
Totals presented are inclusive of all adjustments needed to reconcile to the data provided in Modine's consolidated financial statements and related notes.
Segment data:
(In thousands)
---------------------------------------------------------------------------
Years ended March 31 2000 1999 1998
---------------------------------------------------------------------------
Sales:
Original Equipment $ 485,338 $ 491,532 $ 491,128
Distributed Products 351,790 320,320 300,989
European Operations 342,834 334,245 283,751
----------------------------------------
Segment sales 1,179,962 1,146,097 1,075,868
Eliminations (40,693) (34,650) (35,450)
---------------------------------------------------------------------------
Total net sales $1,139,269 $1,111,447 $1,040,418
---------------------------------------------------------------------------
Operating income:
Original Equipment $ 92,292 $ 92,488 $ 85,986
Distributed Products 39,179 49,041 51,004
European Operations 29,817 34,200 39,506
----------------------------------------
Segment operating income 161,288 175,729 176,496
Corporate & administrative
expenses (62,303) (62,546) (58,754)
Eliminations 53 108 (266)
Other items not allocated
to segments (3,707) 4,779 (1,504)
---------------------------------------------------------------------------
Earnings before
income taxes $ 95,331 $ 118,070 $ 115,972
---------------------------------------------------------------------------
|
Intersegment sales are accounted for based on an established markup over production costs.
At the end of the fourth quarter in fiscal 2000, several changes were introduced in the basis for measuring segment profit or loss. The amortization of goodwill was restored as a charge to SG&A expenses from other items not allocated to segments. Certain goodwill amortization previously recorded at Corporate was moved to the Distributed Products segment. Lastly, the allocation of Corporate headquarters functions was changed to include only a general building, technical center, and aircraft use allocation. These changes were introduced in preparation for using value-based- management criteria for assessing performance across the various business units within the segments. The corresponding prior years' data have been restated to reflect the effects of these changes.
Operating income for the reportable segments excludes all general corporate and administrative expenses except for certain expenses allocated for use of the company aircraft, technical center, and general building use. Functions included in corporate and administrative expenses include: certain research and development costs, information technology, quality assurance, legal, finance, human resources, environmental, amortization of goodwill from acquisitions that benefit the entire company, and other general corporate expenses.
Other items not allocated to segments include interest income and expenses, royalties, and dividend income.
(In thousands)
---------------------------------------------------------------------------
Years ended March 31 2000 1999 1998
---------------------------------------------------------------------------
Assets:
Original Equipment $265,495 $231,841 $223,222
Distributed Products 216,586 211,171 149,006
European Operations 235,093 237,036 188,214
Corporate & administrative 264,562 249,044 210,010
Eliminations (50,629) (13,353) (11,428)
---------------------------------------------------------------------------
Total assets $931,107 $915,739 $759,024
---------------------------------------------------------------------------
Capital expenditures:
Original Equipment $ 19,714 $ 24,766 $ 24,730
Distributed Products 4,506 5,088 7,068
European Operations 39,744 45,514 25,447
Corporate & administrative 26,272 15,542 23,319
Eliminations (89) (50) 118
---------------------------------------------------------------------------
Total capital expenditures $ 90,147 $ 90,860 $ 80,682
---------------------------------------------------------------------------
Depreciation and amortization expense:
Original Equipment $ 16,270 $ 15,764 $ 14,798
Distributed Products 7,618 6,477 5,064
European Operations 14,106 13,276 11,824
Corporate & administrative 10,955 8,788 10,185
Eliminations (127) (122) (104)
---------------------------------------------------------------------------
Total depreciation and
amortization expense $ 48,822 $ 44,183 $ 41,767
---------------------------------------------------------------------------
|
In the third and fourth quarters of fiscal 2000, changes were introduced by management in the basis of measuring segment assets. Since the third quarter, trade receivables previously reported as corporate and administrative assets have been reported directly in the individual segments. Since the fourth quarter, goodwill and its associated accumulated amortization previously reported in corporate and administrative assets has been reported in a segment if the benefit from the acquisition is directly associated with a single segment. As mentioned earlier, these changes were introduced in preparation for using value- based-management criteria for assessing performance within business units within the three segments.
Corporate assets include: cash and cash equivalents, accounts and notes receivable, investments in affiliates, intangibles, and significant long-lived assets. Eliminations consist primarily of intracompany loans and receivables.
Eliminations of capital expenditures are primarily due to sales between segments in excess of book value.
Geographic data:
(In thousands)
---------------------------------------------------------------------------
Years ended March 31 2000 1999 1998
---------------------------------------------------------------------------
Sales to unaffiliated
customers from company
facilities located in:
United States $ 757,074 $ 740,094 $ 719,221
Germany 212,474 221,725 178,855
Other countries 169,721 149,628 142,342
--------------------------------------------------------------------------
Net sales $1,139,269 $1,111,447 $1,040,418
--------------------------------------------------------------------------
Long-lived assets:
United States $ 364,456 $ 344,948 $ 278,959
Germany 71,422 61,258 43,260
Other countries 66,572 61,923 46,651
Eliminations (898) (5,486) (3,029)
--------------------------------------------------------------------------
Total long-lived assets $ 501,552 $ 462,643 $ 365,841
--------------------------------------------------------------------------
|
Net sales are attributed to countries based on the location of the selling unit. During the last three fiscal years, no single customer has accounted for more than ten percent of revenues. Long-lived assets are primarily physical property, plant, and equipment, but also include investments, intangibles, and other long-term assets. Eliminations are primarily intracompany loans and sales of property, plant, and equipment.
In the normal course of business, Modine and its subsidiaries have been named as defendants in various lawsuits and enforcement proceedings in which claims are asserted against Modine by private parties, the Occupational Safety and Health Administration, the Environmental Protection Agency, other governmental agencies, and others. Modine is also subject to other liabilities that arise in the ordinary course of its business. Based on the information available, Modine does not expect that any unrecorded liability related to these matters would have a material effect on the consolidated financial statements.
In November 1991, Modine filed a lawsuit against Mitsubishi Motor Sales of America, Inc., and Showa Aluminum Corporation, alleging infringement of Modine'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, Modine 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 of 1994, Showa filed a lawsuit against Modine alleging infringement by Modine of certain Showa patents pertaining to condensers. In June 1995, Modine filed a motion for partial summary judgment against such lawsuit. In December of 1994, Modine filed another lawsuit against Mitsubishi and Showa pertaining to a newly issued patent on parallel- flow air-conditioning condensers. Both 1994 suits have been stayed pending the outcome of re-examination in the U.S. Patent Office of the patents involved. In October of 1999, the U.S. Patent Office Board of Appeals rejected Modine's 1994 PF patent, which rejection is being appealed to the Court of Appeals for the Federal Circuit. In October of 1997, Modine was issued a Japanese patent covering parallel-flow air-conditioning condensers having tube hydraulic diameters less than 0.070 inches. In August of 1998, Modine 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, and a second having been validated at an opposition hearing. In February 2000, Modine filed a complaint against Delphi Automotive Systems Corporation in the U.S. District Court in Milwaukee, Wisconsin, alleging infringement of its PF patent. All legal and court costs associated with these cases have been expensed as they were incurred.
Quarterly financial data are summarized below:
(In thousands, except per-share amounts)
--------------------------------------------------------------------------- Fiscal 2000 quarters ended June Sept. Dec. March --------------------------------------------------------------------------- Net sales $283,847 $286,691 $283,520 $285,211 Gross profit 81,965 79,588 78,336 77,601 Net earnings 19,509 15,096 16,195 14,603 Net earnings per share of common stock: Basic $0.66 $0.51 $0.55 $0.50 Assuming dilution 0.65 0.51 0.55 0.49 --------------------------------------------------------------------------- --------------------------------------------------------------------------- Fiscal 1999 quarters ended June Sept. Dec. March --------------------------------------------------------------------------- Net sales $273,104 $272,961 $284,355 $281,027 Gross profit 78,458 75,958 77,113 78,398 Net earnings 20,080 19,081 17,341 17,441 Net earnings per share of common stock: Basic $0.68 $0.64 $0.59 $0.59 Assuming dilution 0.67 0.63 0.58 0.58 --------------------------------------------------------------------------- |
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Directors
Modine Manufacturing Company
Racine, Wisconsin
In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of earnings, cash flows, and shareholders' investment present fairly, in all material respects, the financial position of Modine Manufacturing Company and its subsidiaries at March 31, 2000 and 1999, and the results of their operations and their cash flows for each of the three years in the period ended March 31, 2000, in conformity with accounting priniciples generally accepted in the United States. These financial statements are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above.
PRICEWATERHOUSECOOPERS LLP
PricewaterhouseCoopers LLP
Chicago, Illinois
April 26, 2000
EXHIBIT 21
Subsidiaries of the Registrant
The table below indicates each of the Registrant's subsidiaries, each subsidiary's jurisdiction of incorporation, and the percentage of its voting securities owned by the Registrant or its subsidiaries.
State or
country of Percentage
incorporation of voting
Subsidiaries or organization securities Owned by
Industrial Airsystems, Inc. Minnesota 100% Registrant
Manufacturera Mexicana de
Partes de Automoviles,
S.A. ("Mexpar") Mexico 100% Registrant<F1>
Modine, Inc. Delaware 100% Registrant
Modine Acquisition Corp. Delaware 100% Registrant
Modine Aftermarket
Holdings, Inc. North Carolina 100% Registrant
Modine Asia K.K. Japan 100% Registrant
Modine Austria Ges.m.b.H Austria 100% Registrant
Modine do Brasil Ltda. Brazil 99% Modine, Inc.<F2>
Modine of Canada, Ltd. Canada 100% Registrant
Modine Climate Systems, Inc.<F3> Kentucky 100% Registrant
Modine Export Sales Corp. Barbados 100% Registrant
Modine Foundation, Inc. Wisconsin 100% Registrant
Modine Manufacturing Company
Foundation, Inc. Wisconsin 100% Registrant
Modine of Puerto Rico, Inc. Delaware 100% Registrant
Radman, Inc. Michigan 100% Registrant
TRT Heating Products, Inc. <F4> Rhode Island 100% Registrant
Modine Holding GmbH Germany 100% Modine, Inc.
Modine Transferencia de
Calor, S.A. de C.V. Mexico 99.6% Modine, Inc. <F2>
NRF B.V. The Netherlands 100% Modine, Inc.
Modine Climate Systems GmbH Germany 100% Modine Climate
Systems Inc.
Modine Automobiltechnik GmbH Germany 100% Modine Holding GmbH
Modine Bernhausen GmbH Germany 100% Modine Holding GmbH
Modine Europe GmbH Germany 100% Modine Holding GmbH
Modine Grundstucksverwaltungs
GmbH Germany 100% Modine Holding GmbH
Modine Hungaria Kft. Hungary 100% Modine Holding GmbH
Modine Kirchentellinsfurt
GmbH Germany 100% Modine Holding GmbH
Modine Montage GmbH Germany 100% Modine Holding GmbH
Modine Neuenkirchen GmbH Germany 100% Modine Holding GmbH
Modine Pontevico S.r.l. Italy 100% Modine Holding GmbH
--------------------------------
<F1> One share of Mexpar is held by Modine, Inc.
<F2> Balance of voting securities held by the Registrant.
<F3> Formerly known as Signet Systems, Inc.
<F4> Merged into Modine Manufacturing Company on April 1, 2000
|
EXHIBIT 21 continued
State or
country of Percentage
incorporation of voting
Subsidiaries or organization securities Owned by
Modine Tubingen GmbH Germany 100% Modine Holding GmbH
Modine Uden B.V. The Netherlands 100% Modine Holding GmbH
NRF B.V.B.A. Belgium 100% NRF B.V.
NRF Deutschland GmbH Germany 100% NRF B.V.
NRF Espania S.A. Spain 100% NRF B.V.
NRF France SARL France 100% NRF B.V.
NRF Handelgesellschaft mbH Austria 100% NRF B.V
NRF Italia SRL Italy 100% NRF B.V.
NRF Poland Spolka Z.O.O. Poland 100% NRF B.V.
NRF Services AS Denmark 100% NRF B.V.
NRF Switzerland AG Switzerland 100% NRF B.V.
NRF UK Ltd. United Kingdom 100% NRF B.V.
|
EXHIBIT 23
Consent of Independent Accountants
We hereby consent to the incorporation by reference in the Registration Statement on Form S-8 (File Numbers 2-63714, 2-86984, 2-87299, 2-86985, 33-1764, 33-58544, 2-55398, 33-66436, 33-66438, 33-66442, 33-66440, 33-54719, 33-54721, 33-54723, 33-54725, 333-29789, 333-52639, 333-78991, 333-78989, 333-66111, 333-66115, 333-66109 and 333-71523) of Modine Manufacturing Company and Subsidiaries of our report dated April 26, 2000 relating to the financial statements of Modine Manufacturing Company and Subsidiaries, which appears in the Annual Report to Shareholders, which is incorporated in this Annual Report on Form 10-K. We also consent to the incorporation by reference of our report dated April 26, 2000 relating to the financial statement schedule, which appears in this Form 10-K.
PRICEWATERHOUSECOOPERS LLP
PricewaterhouseCoopers LLP
Chicago, Illinois
June 21, 2000
| ARTICLE 5 |
| THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED BALANCE SHEET AND CONSOLIDATED STATEMENT OF EARNINGS FOR THE PERIOD ENDING 3/31/00 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS |
| MULTIPLIER: 1,000 |
| PERIOD TYPE | YEAR |
| FISCAL YEAR END | MAR 31 2000 |
| PERIOD START | APR 1 1999 |
| PERIOD END | MAR 31 2000 |
| CASH | 31,070 |
| SECURITIES | 0 |
| RECEIVABLES | 187,160 |
| ALLOWANCES | 4,436 |
| INVENTORY | 168,597 |
| CURRENT ASSETS | 429,555 |
| PP&E | 634,170 |
| DEPRECIATION | 296,183 |
| TOTAL ASSETS | 931,107 |
| CURRENT LIABILITIES | 175,477 |
| BONDS | 211,112 |
| PREFERRED MANDATORY | 0 |
| PREFERRED | 0 |
| COMMON | 18,964 |
| OTHER SE | 461,278 |
| TOTAL LIABILITY AND EQUITY | 931,107 |
| SALES | 1,139,269 |
| TOTAL REVENUES | 1,139,269 |
| CGS | 821,779 |
| TOTAL COSTS | 821,779 |
| OTHER EXPENSES | 0 |
| LOSS PROVISION | 1,173 |
| INTEREST EXPENSE | 8,467 |
| INCOME PRETAX | 95,331 |
| INCOME TAX | 29,928 |
| INCOME CONTINUING | 65,403 |
| DISCONTINUED | 0 |
| EXTRAORDINARY | 0 |
| CHANGES | 0 |
| NET INCOME | 65,403 |
| EPS BASIC | 2.22 |
| EPS DILUTED | 2.20 |
EXHIBIT 99(a)
notice
of meeting
and proxy
statement
annual meeting
2000
of shareholders
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
Date: Wednesday, July 19, 2000
Time: 9:30 a.m.
Place: 1500 DeKoven Ave.
Racine, WI 53403
Record Date: May 30, 2000
|
Matters to be voted on:
1. Election of three directors; and
2. Any other matters properly brought before the
shareholders at the meeting.
By order of the Board of Directors,
W. E. PAVLICK
W. E. PAVLICK, Secretary
June 9, 2000
Contents
Page
----
General Information About Voting 2
Proposal No. 1: Election of Directors 3
|
PROXY STATEMENT
Your vote at the annual meeting is important to us. Please vote your shares of Common Stock by calling a toll-free telephone number or by completing the enclosed proxy card and returning it to us in the enclosed envelope. This proxy statement has information about the annual meeting and was prepared by the Company's management for the Board of Directors. This proxy statement was first mailed to shareholders on June 9, 2000.
PROXY STATEMENT
GENERAL INFORMATION ABOUT VOTING
You can vote your shares of common stock if our records show that you owned the shares on May 30, 2000. A total of 29,264,026 shares of common stock can vote at the annual meeting. You get one vote for each share of common stock. The holders of common stock do not have cumulative voting rights. The enclosed proxy card shows the number of shares you can vote.
Starting this year, stockholders of record can give a proxy to be voted at the meeting by calling a toll-free telephone number or, if you prefer, you may mail in the enclosed proxy card as you have in the past. Stockholders who hold their shares in "street name" will continue to vote their shares in the manner required by their brokers.
The telephone voting procedure has been set up for your convenience and has been designed to authenticate your identity, to allow you to give voting instructions, and to confirm that those instructions have been recorded properly.
The enclosed proxy card contains instructions for telephone and mail voting. Whichever method you use, the proxies identified on the back of the proxy card will vote your shares in accordance with your instructions. If you submit a proxy card without giving specific voting instructions, the proxies will vote those shares as recommended by the Board of Directors.
The matters described in this proxy statement are the only matters we know will be voted on at the annual meeting. If other matters are properly presented at the meeting, the proxyholders will vote your shares as they see fit.
You can revoke your proxy card by:
- Submitting a new proxy card;
- Giving written notice before the meeting to the Secretary
of the Company, stating that you are revoking your proxy
card; or
- Attending the meeting and voting your shares in person.
Unless you decide to vote your shares in person, you should revoke your prior proxy card in the same way you initially submitted it - that is, by telephone or mail.
Although we encourage you to complete and return the proxy card or vote by phone to ensure that your vote is counted, you can attend the annual meeting and vote your shares in person.
If your shares are held in the name of your broker, or other nominee, that party should give you instructions for voting your shares.
We will hold the annual meeting if holders of a majority of the shares of common stock entitled to vote either appear by proxy or attend the meeting. If you appear by proxy, your shares will be counted to determine whether we have a quorum even if you abstain or fail to vote on any of the proposals listed on the proxy card.
If your shares are held in the name of a nominee, and you do not tell the nominee how to vote your shares (so-called "broker nonvotes"), the nominee can vote them as it sees fit only on matters that are determined to be routine, and not on any other proposal. Broker nonvotes will be counted as present to determine if a quorum exists but will not be counted as present and entitled to vote on any nonroutine proposal.
Norwest Bank Minnesota, NA, (Wells Fargo) Shareowner Services, an independent tabulator, will count the vote under the supervision of Inspectors of Election appointed by the Board.
We do. In addition to sending you these materials, some of our employees may contact you by telephone, mail, or in person. None of these employees will receive any extra compensation for doing this.
1. ELECTION OF DIRECTORS
The Board of Directors currently consists of ten members.
R. T. Savage is retiring from the Board and is not a nominee for election in 2000.
By Board of Directors' action in March, 2000, effective as of July 19, 2000, the authorized number of directors will be fixed at nine. The Restated By-Laws of the Company, as amended in March, 2000, effective as of July 19, 2000, will classify the Board of Directors into three classes: each class consisting of three directors; with each class of directors serving three-year terms of office. Each class of directors is staggered so that each expires in succeeding years.
This year the terms of Frank W. Jones, Dennis J. Kuester, and Michael T. Yonker expire at the 2000 Annual Meeting of Shareholders. Messrs. Jones, Kuester, and Yonker have been nominated for a new three-year term expiring at the Annual Meeting in 2003.
While it is not anticipated that any of the nominees will be unable to take office, if such is the case, proxies will be voted in favor of such other person or persons as the Board of Directors may propose to fill the three directorships. In accordance with the Restated By-Laws, a director shall hold office until the Annual Meeting for the year in which his or her term expires and until his or her successor shall be elected and qualify; subject, however, to prior death, resignation, retirement, disqualification, or removal from office. Vacancies may be filled by the remaining directors.
The nominees for the Board of Directors, the directors whose terms will continue, their ages, other directorships, and their tenure and expiration dates of their terms are set forth as follows:
FRANK W. JONES Director since 1982
Mr. Jones, 60, is an independent management consultant, Tucson, Arizona. He is also a director of Jason Incorporated, Ingersoll Milling Machine Co., Star Cutter Co., Gardner Publications, Inc., and General Tool Co. Term to expire in 2000.
DENNIS J. KUESTER Director since 1993
Mr. Kuester, 58, is President of Marshall & Ilsley Corporation and of M&I Marshall & Ilsley Bank, and Chairman of M&I Data Services, Inc., a Milwaukee, Wisconsin, bank holding company, bank, and banking services company, respectively. He is also a director of M&I Data Services, Inc., M&I Marshall & Ilsley Bank, Marshall & Ilsley Corporation, Super Steel Products Corp., TYME Corporation, and Krueger International. Term to expire in 2000.
MICHAEL T. YONKER Director since 1993
Mr. Yonker, 57, is retired. Prior to June 15, 1998, he was President and Chief Executive Officer of Portec, Inc., Lake
Forest, Illinois, a manufacturer of material handling equipment. He is also a director of Woodward Governor Company. Term to expire in 2000.
FRANK P. INCROPERA Director since 1999
Dr. Incropera, 60, is the McCloskey Dean of the University of Notre Dame's College of Engineering, South Bend, Indiana, and has served in that position since 1998. Prior to that, he served as the Head of the School of Mechanical Engineering at Purdue University, West Lafayette, Indiana. Term to expire in 2002.
VINCENT L. MARTIN Director since 1992
Mr. Martin, 60, is Chairman, Chief Executive Officer (through June 30, 1999), and a director of Jason Incorporated, a diversified manufacturing company based in Milwaukee, Wisconsin. He is also a director of Crane Manufacturing & Service. Term to expire in 2002.
MARSHA C. WILLIAMS Director since 1999
Ms. Williams, 49, is Chief Administrative Officer of Crate & Barrel, a privately held retailer of home furnishings and accessories headquartered in Northbrook, Illinois. Previously, Ms. Williams had been Vice President and Treasurer of Amoco Corporation and Carson Pirie Scott & Company, and Vice President of The First National Bank of Chicago. She is also a director of Chicago Bridge & Iron, Davis Funds and Selected Funds. Term to expire in 2002.
DONALD R. JOHNSON Director since 1997
Mr. Johnson, 58, is President and Chief Executive Officer of the Company. He is also a director of Grede Foundries, Inc. and the M&I Marshall & Ilsley Bank. Term to expire in 2001.
GARY L. NEALE Director since 1977
Mr. Neale, 60, is Chairman, President, Chief Executive Officer, and a director of NiSource, Inc., Hammond, Indiana, a holding company for gas and electric utilities and other energy-related subsidiaries. He is also a director of Chicago Bridge & Iron. Term to expire in 2001.
RICHARD J. DOYLE Director since 1987
Mr. Doyle, 67, is retired. Prior to April 30, 1998, he was Chief Executive Officer and a director of three private
electrical contracting corporations. Prior to January 1, 1989, Mr. Doyle was a Vice President of Borg-Warner Corporation, Chicago, Illinois, a diversified manufacturing and services company, and President and Chief Executive Officer of Borg-Warner Automotive, Inc., Troy, Michigan, a subsidiary of Borg-Warner Corporation. Term to expire in 2001.
The Board of Directors recommends a vote FOR all of the director-nominees, Mr. Jones, Mr. Kuester, and Mr. Yonker.
PRINCIPAL SHAREHOLDERS AND SHARE OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table shows the number of shares of common stock beneficially owned by each person who we know beneficially owns more than 5% of the common stock.
Title Name and Address of Amount and Nature of Percent
of Class Beneficial Ownership Beneficial Ownership of Class
-------- ------------------------------ --------------------------- --------
Common Administrative Committee of 4,727,175** Power to vote 16.16%
Modine Contributory Employee Plans' stock
Stock Ownership & Investment not voted by
Plans, 1500 DeKoven Avenue, employees
Racine, Wisconsin 53403-2552 owning it
Members: D. B. Spiewak,
R. L. Hetrick and D. R. Zakos*
Common Gabelli Funds, Inc. and 5,244,702*** Sole or shared 17.92%
affiliates voting and/or
One Corporate Center power to
Rye, New York 10580-1434 dispose of
stock
------------------------------------------------------------------------------
|
* M&I Marshall and Ilsley Trust Company is trustee and holder of record of the Modine Contributory Employee Stock Ownership and Investment Plans, Employees' Retirement Trusts and 401(k) Retirement Plans stock, and is the escrow agent for participants' stock under the 1995 through 2000 Stock Award Plans. The Marshall & Ilsley Trust Company, as custodian, may be viewed as having voting or dispositive authority in certain situations pursuant to Department of Labor regulations or interpretations or federal case law. Pursuant to SEC Rule 13d-4, inclusion of such shares in this statement shall not be construed as an admission that the Reporting Person or its subsidiaries are, for purposes of Sections 13(d) or 13(g) of the Act, the beneficial owners of such securities. D. J. Kuester is president of Marshall & Ilsley Corporation and of M&I Marshall & Ilsley Bank. M&I Marshall & Ilsley Corporation and its subsidiaries specifically disclaim beneficial ownership of stock held by these plans and trusts.
** As of March 31, 2000.
*** Based on a Schedule 13D dated October 11, 1999, by Gabelli Funds, Inc. and affiliates.
We know of no other person or group that is a beneficial owner of five percent (5%) or more of the Company's common stock.
The following table shows the number of shares of common stock beneficially owned as of March 31, 2000 by:
- each director;
- each executive officer named in the Summary Compensation
Table on page 10; and
- the directors and executive officers as a group.
Title Name of Amount and Nature of Percent
of Class Beneficial Owner Beneficial Ownership of Class
-------- ---------------- -------------------- --------
Common R. J. Doyle* 52,000(a) **
Common F. P. Incropera* 15,000(a) **
Common F. W. Jones* 86,050(a) **
Common D. J. Kuester* 36,000(b) **
Common V. L. Martin* 52,200(c) **
Common G. L. Neale* 63,917(a) **
Common M. C. Williams* 20,000(a) **
Common M. T. Yonker* 37,000(a) **
Common R. T. Savage* 316,319(d) 1.08%
Common D. R. Johnson 304,742(e) 1.04%
Common E. T. Thomas 49,289(e) **
Common W. E. Pavlick 300,543(e) 1.03%
Common D. B. Rayburn 159,120(e) **
Common L. D. Howard 229,911(e) **
Common All executive
officers and
directors as a
group (23 persons) 2,336,802(f) 7.98%
|
* Non-employee directors have the right to acquire additional shares of common stock (not listed in the above table) through the exercise
of options automatically granted upon re-election pursuant to the 1994 Stock Option Plan for Non-Employee Directors discussed on page 9.
** Denotes less than one percent of shares outstanding.
(a) The 52,000 shares listed for Mr. Doyle include options to acquire 45,000 shares; the 15,000 shares listed for Mr. Incropera include options to acquire 15,000 shares; the 86,050 shares listed for Mr. Jones include options to acquire 45,000 shares; the 63,917 shares listed for Mr. Neale include options to acquire 45,000 shares; the 20,000 shares listed for Ms. Williams include options to acquire 20,000 shares and the 37,000 shares listed for Mr. Yonker include options to acquire 35,000 shares.
(b) The 36,000 shares listed for Mr. Kuester exclude shares held of record by M&I Marshall & Ilsley Bank. See footnote to the Five Percent Stock Ownership table. This number includes options to acquire 35,000 shares.
(c) The 52,200 shares listed for Mr. Martin include options to acquire 50,000 shares and include 200 shares held in trusts for his children with Mr. Martin as trustee.
(d) The 316,319 shares listed for Mr. Savage include options to acquire 144,126 shares.
(e) The 304,742 shares listed for Mr. Johnson include 2,288 shares held by Mr. Johnson's wife, options to acquire 210,000 shares, 23,600 restricted shares awarded to Mr. Johnson and 2,879.5 units held in the form of Modine Common Stock Fund Units (Modine 401(k) Retirement Plan and Deferred Compensation Plan) (each Unit consisting of Modine common stock and a cash component); the 49,289 shares listed for Mr. Thomas include options to acquire 40,000 shares, 5,000 restricted shares awarded to Mr. Thomas, and 3,963.4 units held in the form of Modine Common Stock Fund Units (Modine 401(k) Retirement Plan and Deferred Compensation Plan) (each Unit consisting of Modine common stock and a cash component); the 300,543 shares listed for Mr. Pavlick include 3,271 shares held by Mr. Pavlick's wife, options to acquire 98,700 shares, 3,100 restricted shares awarded to Mr. Pavlick and 713.6 units held in the form of Modine Common Stock Fund Units (Modine 401(k) Retirement Plan and Deferred Compensation Plan) (each Unit consisting of Modine common stock and a cash component); the 159,120 shares listed for Mr. Rayburn include options to acquire 131,375 shares, 14,200 restricted shares awarded to Mr. Rayburn and 2,411.3 units held in the form of Modine Common Stock Fund Units (Modine 401(k) Retirement Plan and Deferred Compensation Plan) (each Unit consisting of Modine common stock and a cash component); and the 229,911 shares listed for Mr. Howard include options to acquire 118,000 shares, 9,800 restricted shares awarded to Mr. Howard and 846.7 units held in the form of Modine Common Stock Fund Units (Modine 401(k) Retirement Plan and Deferred Compensation Plan) (each Unit consisting of Modine common stock and a cash component).
The awards granted pursuant to the 1995 through 1998 Stock Award Plan are subject to restrictions that lapse annually in fifths over a period commencing at the end of the second year from the date of grant. The awards granted pursuant to the 2000 Stock Award Plan are subject to restrictions that lapse annually in fifths over a period commencing at the end of the first year from the date of grant.
(f) This number includes 619,678 shares held by officers (other than the five named executive officers) as a group (9 persons) and includes options to acquire 379,000 shares; 5,000 shares awarded pursuant to the 1995 through 1998 Stock Award Plan are subject to restrictions that lapse annually in fifths over a period commencing at the end of the second year from the date of grant while the awards granted pursuant to the 2000 Stock Award Plan are subject to restrictions that lapse annually in fifths over a period commencing at the end of the first year from the date of grant; and 5,532.1 units held in the form of Modine Common Stock Fund Units (Modine 401(k) Retirement Plan and Deferred Compensation Plan) (each Unit consisting of Modine common stock and a cash component).
Approximately forty-two percent (42%) of all outstanding shares are owned or controlled by or for directors, officers, employees, retired employees, and their families.
BOARD MEETINGS, COMMITTEES AND COMPENSATION
The Board of Directors held eight regular meetings during the fiscal year. An additional seven meetings were held by standing Committees of the board. The following chart describes the function and membership of each committee and the number of times it met in 1999-2000:
Audit Committee - 3 meetings
- recommends engagement of auditors;
- meets with independent auditors to:
- discuss plan and scope of audit;
- review results of audit;
- evaluates internal audit procedures and accounting controls;
- approves budget for non-audit services; and
- reviews and approves audit and non-audit fees.
R. J. Doyle, Chair
F. W. Jones
V. L. Martin
G. L. Neale
M. C. Williams
Officer Nomination and Compensation Committee - 2 meetings
- reviews candidates for positions as Company officers;
- makes recommendations to Board on candidates;
- makes recommendations to Board on compensation for officers;
- administers the 1985 Incentive Stock Plan; and
- administers the 1994 Incentive Compensation Plan.
G. L. Neale, Chair
R. J. Doyle
D. J. Kuester
V. L. Martin
M. T. Yonker
Pension Committee - 2 meetings
- provides oversight for pension trust investments.
F. W. Jones, Chair
D. J. Kuester
M. C. Williams
M. T. Yonker
The Board of Directors does not have a committee that nominates directors since nomination and review of director candidates is a function of the full Board. In addition, shareholders who wish to nominate candidates for election to the Board may do so.
All directors attended seventy-five percent or more of all Board meetings and meetings of Committees of which they were members during the fiscal year, except G. L. Neale and M. C. Williams.
Generally, if a shareholder intends to propose business or make a nomination for the election of directors at an annual meeting, or make a nomination for the election of directors at a special meeting of shareholders, the Company must receive written notice of such intention. The deadline for shareholder nominations for directors and proposals at the 2000 Annual Meeting of Shareholders was February 4, 2000.
Non-employee directors receive:
- a retainer fee of $6,000 per quarter;
- $1,000 for each Board, committee and special meeting attended;
- an additional $1,000 for acting as Chairman of the Audit
Committee;
- reimbursement for travel, lodging, and related expenses
incurred in attending Board and committee meetings; and
- travel-accident and director and officer liability insurance.
Directors who are officers of the Company do not receive any fees in addition to their remuneration as officers. Commencing
April 1, 1998, in lieu of all other Board compensation, the Chairman of the Board has received a retainer fee of $12,000 per quarter.
Directors of the Company who are not employees are eligible to participate in the 1994 Stock Option Plan for Non-Employee Directors (the "Directors' Plan") which is authorized to grant non-qualified stock options through July 20, 2004, on up to 500,000 shares of the Company's common stock. These options are granted at one hundred percent of the fair market value on the date of the grant and will expire no later than ten years after the date they are granted and will terminate no later than three years after termination of director status for any reason other than death. Within 30 days after election or re-election to the Board, each director so elected or re-elected is automatically granted an option for that number of shares equal to the multiple of 5,000 and the number of years in the term to which such director has been so elected or re-elected. The Directors' Plan may be administered by the Board or by a committee of two or more directors of the Company if deemed necessary or advisable in order to comply with the exemptive rules promulgated pursuant to Section 16(b) of the Securities Exchange Act of 1934, as amended. The Board or any such committee shall have no authority to administer the Directors' Plan with respect to the selection of participants under the plan or the timing, pricing, or amounts of any grants.
The Board of Directors has adopted the Modine Manufacturing Company Director Emeritus Retirement Plan (the "Director Emeritus Retirement Plan") whereby any person (non-employee) who is or becomes a director of Modine on or after April 1, 1992, and who retires from the Board will be paid a retirement benefit equal to the annualized rate at which directors are being paid for their services to the Company as directors (including Board meeting attendance fees but excluding any applicable committee attendance fees) as in effect at the time such director ceases his service as a director. The retirement benefit will continue until the period of time the retirement benefit paid equals the period of time of the director's Board services. If a director dies before or after retirement, his or her spouse or other beneficiary will receive the applicable retirement benefit. In the event of a change in control (as defined in the Plan) of Modine, each eligible director, or his or her spouse or other beneficiary entitled to receive a retirement benefit through him or her, would be entitled to receive a lump-sum payment equal to the present value of the total of all benefit payments which would otherwise be payable under the Director Emeritus Retirement Plan. The retirement benefit is not payable if the director directly or indirectly competes with the Company or if the director is convicted of fraud or a felony and such fraud or felony is determined by disinterested members of the Board of Directors to have damaged Modine.
EXECUTIVE COMPENSATION
The following table sets forth compensation awarded to, earned by, or paid to the Company's Chief Executive Officer and the four most highly compensated executive officers other than the Chief Executive
Officer who were serving as executive officers at March 31, 2000, for services rendered to the Company and its subsidiaries during fiscal 1999-2000. Also included is salary, bonus, restricted common stock awards, and stock option information for fiscal years ended March 31, 1999, and March 31, 1998.
SUMMARY COMPENSATION TABLE
Annual Compensation (1) Long-Term Compensation
------------------------ -------------------------------------
Restricted Stock All Other
Year Name Principal Position Salary Bonus Stock(2) Options(3) Comp.(4)
------------------------------------------------------------------------------------------------------------------------
1999/2000 D. R. Johnson President and Chief $500,000 $220,000 $187,500 35,000 $33,792
1998/1999 Executive Officer 452,500 321,275 0 30,000 34,734
1997/1998 President and Chief 326,250 219,240 254,531 30,000 24,160
Operating Officer
1999/2000 D. B. Rayburn Executive Vice President, $305,000 $111,833 $125,000 25,000 $20,137
Operations
1998/1999 Executive Vice President, 262,000 155,017 0 20,000 20,100
1997/1998 Original Equipment 205,000 120,540 152,719 15,000 15,277
1999/2000 E. T. Thomas* Group Vice President $232,500 $ 71,610 $ 87,500 15,000 $15,272
1998/1999 Group Vice President, 140,000 88,200 49,406 25,000 7,845
Highway Products
1999/2000 L. D. Howard** Group Vice President, $250,000 $ 77,000 $ 0 0 $16,512
1998/1999 Europe 237,000 117,789 0 15,000 18,260
1997/1998 200,000 114,800 135,760 15,000 14,895
1999/2000 W. E. Pavlick Senior Vice President, $207,000 $ 63,756 $ 0 8,000 $13,871
1998/1999 General Counsel and 198,500 98,655 0 11,000 15,339
1997/1998 Secretary 180,500 103,607 50,910 11,000 13,460
* Mr. Thomas joined Modine on August 3, 1998, at which time he
received 10,000 stock options and 1,500 shares as stock awards
in addition to the 15,000 stock options granted in January 1999.
** Mr. Howard retired April 1, 2000.
(1) Excludes "Other Annual Compensation" under Securities and
Exchange Commission regulations since such does not exceed
the lesser of $50,000 or 10% of each individual's combined
salary and bonus.
(2) The Restricted Stock awarded to an employee on January 19,
2000, was awarded at no cost to the employee but the market
price of $25 was used to calculate the dollar value of such
long-term compensation.
The total number of restricted shares and the aggregate
market value at March 31, 2000, were: Mr. Johnson - 23,600
shares valued at $592,950; Mr. Rayburn - 14,200 shares
valued at $356,775; Mr. Thomas - 5,000 shares valued at
$125,625; Mr. Howard - 9,800 shares valued at $246,225; and
Mr. Pavlick - 3,100 shares valued at $77,887.50. Dividends
|
are paid on the restricted shares at the same time and the
same rate as dividends paid to shareholders of unrestricted
shares. Aggregate market value is based on a fair market
value of $25.125 at March 31, 2000.
The stock awarded pursuant to the 1995 through 1998 Stock
Award Plan was granted to an employee at no cost and placed
in escrow until the beginning of the third, fourth, fifth,
sixth, and seventh years, respectively, at which time one-
fifth of the shares are released to the employee. The awards
granted pursuant to the 2000 Stock Award Plan are subject to
restrictions that lapse annually in fifths over a period
commencing at the end of the first year from the date of grant.
In the event of retirement, the shares may, if authorized by
the Officer Nomination and Compensation Committee of the Board,
be released at an earlier date. In the event of a change-in-
control, the share restrictions will lapse.
(3) The 1994 Incentive Compensation Plan authorized the Officer
Nomination and Compensation Committee of the Board to grant
stock options (incentive stock options and non-qualified stock
options) and other stock-based rights through July 20, 2004, on
up to 3,000,000 shares of the Company's common stock. Incentive
stock options and non-qualified stock options granted are at one
hundred percent of the fair market value on the date of the grant
and will expire no later than ten years after the date of the grant.
Grants pursuant to the Plan may be made to such officers or certain
other employees as shall be determined by the Committee.
Upon the exercise of the option, the optionee may pay the purchase
price in cash, stock, optioned stock, or a combination thereof.
The optionee may also satisfy any tax withholding obligation by
using optioned stock. In the event of a sale, merger, consolidation,
or other specified transaction involving the Company, the optionee
will have the right to receive (regardless of whether or to what
extent the option would then have been exercisable) the difference
between the exercise price and the fair market value of the stock.
(4) Includes employer matching contributions to the Company Tax Saver
(401(k)) Plan, Stock Purchase Plan, Executive Supplemental Stock
Plan, and, since January 1, 1999, the Modine 401(k) Retirement Plan
and the Modine Non-Qualified Deferred Compensation Plan. The Company
has a program (the Executive Supplemental Stock Plan and, after
January 1, 1999, the Modine Non-Qualified Deferred Compensation Plan)
to pay, out of general assets, an amount substantially equal to the
difference between the amount that would have been allocated to a
participant's account as Company matching contributions, in the
absence of legislation limiting such allocations, and the amount
actually allocated under the plans. Payment of this amount and
appreciation thereon is deferred until termination of service or
retirement. Because the Company's contributions to the Executive
Supplemental Retirement Plan and the Modine Non-Qualified Deferred
Compensation Plan are actuarially based and are not allocated to the
individual named executive officers' accounts until retirement, such
contributions are not readily ascertainable and are not included in
this column. See page 16 herein regarding the Pension Plan Table
for additional information.
|
The Officer Nomination and Compensation Committee has provided the following report on Executive Compensation:
The Company's executive compensation philosophy is designed to address the needs of the Company, its executives, and its shareholders.
The specific factors underlying the Committee's decision with respect to compensation for each of the named executives for the last fiscal year are two-fold:
1. The first factor is the ability to accomplish the Company's goal of preserving and enhancing the shareholders' investment over the long-term without bearing undue risk in the process. The Committee recognizes that there will be short-term fluctuations in the Company's business and is of the opinion that incentive compensation should be based primarily upon attainment of the Company's goals over a longer period of time. It is the Committee's intention to compensate its executive officers appropriately for superior performance; however, inherent in attaining the Company's goal is the premise that shareholder assets will not be wasted by the payment of excessive compensation.
2. The second factor underlying the Committee's compensation decision is that achieving the foregoing Company goals can only be accomplished by the retention of competent, highly skilled people. Accordingly, the design of the compensation package must include sufficient tools to assure retention of key individuals.
Numerous other criteria are considered in the compensation decision, including high ethical standards, concern for employees, regard for the environment, and commitment to the highest levels of product quality and customer service. Each of these criteria is an intrinsic part of attaining the Company's long-term goals.
The Company's executive compensation program is composed of an annual cash component, consisting of salary and a bonus based on the financial performance of the Company, and a long-term incentive component, currently consisting of stock awards and stock options.
For fiscal 1999-2000, the Company used a formula bonus program that does not commence payout until an after-tax return of 10% on
shareholders' investment is earned. Thereafter, Company executives can earn a cash bonus that increases at a linear rate with Company earnings and is proportional with the executive's level of management responsibility, including the Chief Executive Officer ("CEO"), who could earn a cash bonus of up to 120% of his base salary (the maximum payout under the program). All other incentive awards are calculated as a job-slotted percentage of the CEO's percent of earned award. By so doing, the entire management team shares the risks and rewards of overall Company performance.
For fiscal year 1999-2000, the Committee determined that several changes were appropriate, including base pay adjustments for certain named executive officers, to align compensation more closely with industry competitive compensation.
To further align the Company's executives' interests with those of the shareholder, the Compensation Committee utilizes long-term based incentives in the form of stock options and stock awards. Individual stock option grants are determined based on a subjective assessment of individual performance, contribution, and potential. The stock options currently granted are at market value and are exercisable within ten years of date of grant. The options may be rescinded at any time up until two years after exercise should the individual be terminated for cause, compete in any way against the Company, not fully comply with applicable laws and government regulations, fail to maintain high ethical standards, or breach the Company's policies such as Guidelines for Business Conduct, Antitrust Compliance, or confidentiality of proprietary technology and information.
The size of option grants is based upon many factors including (1) Company and individual performance, (2) previous grants of stock options and stock awards, and (3) the competitive market for long-term incentive compensation. Grants made in January 2000 reflect each of these factors including the increased reliance on long-term incentives seen in the U.S. market. As all grants are made at fair market value, it should be noted that executives receive no value from stock options unless all shareholders see an increase in the value of their holdings.
For the plan prior to 1998-99, stock awards were grants of Company stock to a limited number of top executives at no cost. These awards vest only at the rate of 20% per year commencing at the end of the second year after grant, acting thereby as both a retention tool and involving the executive in a longer-term stake in the Company. Stock awards not previously vested are terminated should the executive cease to be employed by the Company for any reason other than normal retirement or a change of control of the Company.
Beginning with the 1998-99 fiscal year and continuing for the 1999-2000 fiscal year, stock awards were provided on the basis of
meeting specified targets and will vest 20% per year commencing at the end of the first year. Achievement is measured based on the fiscal year's performance of specified percentages of sales growth and earnings per share growth over the prior year's results. The sales growth and earnings per share growth achievements are calculated separately and carry equal weight. Target achievement for each element will earn half of the target awards so that full target awards are earned if both goals are achieved. Each element has a minimum, target, and maximum goal.
For each fiscal year, the determination of the CEO's target shares was based on compensation data used to determine the CEO's base pay. The target stock award is set at the stock equivalent of a designated percentage (50%) of the CEO comparator group base pay. This amount is then divided by the stock price and rounded up to the nearest 500 share equivalent.
At minimum achievement of the goal, the plan pays 50% of the target awards for that goal. At maximum achievement, the plan will pay 150% of the target awards for that goal. Participants other than the CEO receive awards based on a specified percentage of the CEO's awards. The sales and earnings growth for both fiscal years did not reach minimum achievement of the goals and, accordingly, no restricted stock was awarded. A similar stock award program has been set for fiscal year 2000-2001.
Although performance goals were not achieved and no stock awards were therefore earned under the Plan, in keeping with the Company's executive retention philosophy, the Committee decided to provide discretionary stock awards similar to those used prior to 1998-99 (except that vesting commences at the end of the first year) to a limited number of key executives in January 2000. These awards were deemed necessary for retention purposes.
However, over the long term, each of the named executive officers is compensated through both the stock option and stock award programs as the Company sales and earnings per share and the Company stock price increases, which will also benefit the shareholders.
The Committee recognizes that effective management of the Company is a team effort, led by the CEO. The CEO and the named officers must possess the difficult-to-define qualities of leadership, ability to instill confidence in their actions, and the ability to inspire others to even greater effort. These qualities can only be determined through observation over a longer period of time and through the ultimate results attained. Accordingly, the CEO's and senior executive officers' team compensation decisions were not based solely on fiscal 1999-2000 annual financial results but were based on the compensation philosophy referenced above, on the Company's favorable return on shareholders' investment over the longer term and on the Committee's subjective assessment of the performance of the management team.
Since, as stated above, we believe that corporate management is a team effort, we also believe that it is appropriate for the CEO to select his team members and make a substantial contribution to the compensation decision for each of such team members. Accordingly, upon detailed consultation with the CEO, assessment of the experience, capabilities, and performance of each of the named executives toward attaining Company goals, and the policies and plans referenced above, compensation decisions were made. As a background for such decisions, the Compensation Committee reviewed several major compensation consultant data bases with respect to compensation. The compensation consultant data bases are large data bases of industrial companies that the Committee believes appropriately reflect the broad labor market for Modine executives. Within a range of acceptable total compensation for each individual, compensation is determined as described above.
Section 162(m) of the Internal Revenue Code, enacted in 1993, generally disallows a tax deduction to public companies for compensation over one million dollars paid to the Company's CEO and four other most highly compensated executive officers. Qualifying performance-based compensation will not be subject to the deduction limit if certain requirements are met. The Committee currently intends to structure its executive- compensation packages to meet these requirements.
None of the Committee members is or has been a Company officer or employee. No Company executive officer currently serves on the compensation committee or any similar committee of another public company.
G. L. Neale, Chair
R. J. Doyle
D. J. Kuester
V. L. Martin
M. T. Yonker
The following graph shows the cumulative total stockholder return on the Company's common stock over the last five fiscal years as compared with the returns of the Standard & Poor's 500 Stock Index and the NASDAQ Industrials Stock Index (non- financial index). The NASDAQ Industrials Stock Index consists of approximately 3,000 industrial companies (including Modine), and includes a broad range of manufacturers. The Company
believes, because of the diversity of its business, that comparison with this broader index is appropriate. The graph assumes $100 was invested on March 31, 1995, in the Company's common stock, the S&P 500 Stock Index, and the NASDAQ Industrials Stock Index and assumes reinvestment of dividends.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
Measurement Period (Fiscal Year Covered Modine NASDAQ S&P 500 -------------------- ---------- ---------- ----------- Measurement Pt. 4/1/95 100 100 100 FYE 96 81 135 132 FYE 97 77 146 158 FYE 98 111 218 235 FYE 99 92 305 279 FYE 00 86 599 330 |
The following table sets forth information about stock option grants during the last fiscal year for the five executive officers named in the Summary Compensation Table.
OPTION GRANTS IN LAST FISCAL YEAR
Potential Realizable
Value at Assumed Annual
Rates of Stock Appreciation -
Individual Grants Appreciation for Option Term(1)(2)(3)
---------------------------------------------- ---------------------------------------
% of Total
Options
Options Granted to Exercise Expiration
Name Granted Employees Price Date 0% 5% 10%
---- ------- ---------- -------- ---------- -- -- ---
D. R. Johnson 35,000 12.05% $25.00 1/19/2010 $0 $ 551,250 $ 1,391,250
D. B. Rayburn 25,000 8.61% $25.00 1/19/2010 $0 $ 393,750 $ 993,750
E. T. Thomas 15,000 5.16% $25.00 1/19/2010 $0 $ 236,250 $ 596,250
L. D. Howard 0 0% N/A N/A $0 $ 0 $ 0
W. E. Pavlick 8,000 2.75% $25.00 1/19/2010 $0 $ 126,000 $ 318,000
All Optionees 290,500 100% $25.00 1/19/2010 $0 $ 4,622,625 $ 11,666,625
All Shareholders N/A N/A N/A N/A $0 $465,805,148 $1,175,603,468
|
(1) All options granted are immediately exercisable except within
the first year of employment. Holders may use shares previously
owned or received upon exercise of options to exercise options.
The Company may accept shares to cover withholding or other
employee taxes.
(2) The dollar amounts under these columns are the result of
calculations at zero percent and at the five-percent and ten-
percent rates set by the Securities and Exchange Commission and,
therefore, are not intended to forecast possible future
appreciation, if any, of the Company's stock price.
(3) No gain to the optionee is possible without stock price
appreciation, which will benefit all shareholders
commensurately. A zero percent gain in stock price
appreciation will result in zero dollars for the optionee.
|
The following table sets forth information with respect to the five executive officers named in the Summary Compensation Table concerning the number of option exercises and value of options outstanding at the end of the last fiscal year.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
Total Value of
Total Number Unexercised
Number of of Unexercised In-the-Money
Shares Options Held Options Held at
Acquired on Value at Fiscal Year End (1) Fiscal Year End (1)
Name Exercise Realized Exercisable (2) Exercisable (2)
---- ----------- -------- ---------------------- -------------------
D. R. Johnson 0 $ 0 210,000 $ 238,125
D. B. Rayburn 0 $ 0 131,375 $ 200,859
E. T. Thomas 0 $ 0 40,000 $ 1,875
L. D. Howard 0 $ 0 118,000 $ 445,875
W. E. Pavlick 0 $ 0 98,700 $ 295,813
(1) All options granted are immediately exercisable except within
the first year of employment.
(2) Granted at fair market value on the date of Grant. Total
value of outstanding options is based on a fair market value
of Company stock of $25.125 as of March 31, 2000.
|
Pension Plan Table
------------------
The following table sets forth the estimated annual benefits
payable upon retirement at normal retirement age for the years of
service indicated under the Company's defined pension plan at the
indicated remuneration levels (average of five years' earnings).
----------------------------------------------------------------------
Average Annual Representative Years of Service
Earnings 15 Years 20 Years 25 Years 30 Years 35 Years
-------------- -------- -------- -------- -------- --------
$125,000 $ 28,905 $ 38,541 $ 48,176 $ 57,811 $ 67,446
200,000 47,749 63,666 79,582 95,498 111,415
275,000 66,593 88,791 110,988 133,186 155,383
350,000 85,437 113,916 142,394 170,873 199,352
425,000 104,280 139,041 173,801 208,561 243,321
500,000 123,124 164,166 205,207 246,248 287,290
575,000 141,968 189,291 236,613 283,936 331,258
650,000 160,812 214,416 268,019 321,623 375,227
725,000 179,655 239,541 299,426 359,311 419,196
----------------------------------------------------------------------
The five executive officers named in the Summary Compensation
Table participate on the same basis as other salaried employees in
the non-contributory Modine Pension and Disability Plan for Salaried
Employees. Because the Company's contributions to the plan are
actuarially based on all eligible salaried employees and are not
allocated to individual employee accounts, expenses for a specific
person cannot readily be separately or individually calculated.
Retirement benefits are based on an employee's earnings for the five
highest consecutive of the last ten calendar years preceding retirement
and on years of service. Applicable earnings include salary, bonuses,
and any deferred amount under the Modine Tax Saver (401(k)) Plan or,
since January 1, 1999, the Modine 401(k) Retirement Plan. They are
approximately the same as cash compensation reported in the Summary
Compensation Table, but on a calendar year rather than a fiscal year
basis. A minimum of five years of service is required for eligibility.
The principal benefit under the plan is a lifetime monthly benefit for
the joint lives of participants and their spouses based on the employee's
earnings and period of employment, and is not subject to offset by Social
Security benefits. Employees can retire with unreduced early retirement
benefits at age sixty-two or may be eligible for disability, deferred,
or other early retirement benefits depending on age and years of service
upon retirement or termination. In addition, an employee who has reached
age sixty-two and who has accumulated thirty or more years of eligible
service may request that the accrued benefit be paid immediately in a
lump-sum amount, even if not retired at the time of election.
Assuming continued employment until age sixty-five (sixty-six in
the case of Mr. Pavlick), the estimated credited years of service under
the plan for Messrs. Johnson, Rayburn, Thomas, Howard, and Pavlick are
twenty-eight, twenty-two, twenty-one, thirty-nine, and twenty-one years,
respectively.
Pension benefits under the plan are subject to possible limitations
imposed by the Employee Retirement Income Security Act of 1974 and
subsequent amendments thereto. To the extent that an individual employee's
|
retirement benefit exceeds these limits, the excess will be paid from
general operating funds of the Company.
Employees, including officers, may also qualify for long-term
disability payments of approximately sixty percent of their base salary,
up to a maximum of $15,000 per month, if they become disabled.
Employment Agreements, Termination and Change-of-Control Arrangements
---------------------------------------------------------------------
The Company entered into an employment contract effective
October 16, 1996, with Mr. D. R. Johnson covering his employment
for a two-year term; the change-of-control provisions were
amended May 20, 1999. The contract is automatically extended
annually for an additional year so that the remaining contract
term is between one and two years, unless notice is given by
either party to the contrary. This contract provides for a
minimum annual salary equal to that paid the past fiscal year to
Mr. Johnson plus bonus participation. Mr. Johnson will continue
to receive all employee benefits plus supplements to his
retirement pension and 401(k) benefits designed to provide him
with benefits that otherwise are reduced by statutory limitations
on qualified benefit plans. In the event of disability, salary
continuation is provided at a level of one hundred percent for
the first twelve months and up to sixty percent thereafter with
no maximum dollar amount.
In the event of a "Change-in-Control," as defined in the
Agreement, as amended, at any time during the 24 months after a
change in control occurs, if Mr. Johnson is terminated without
"Good Cause" or if Mr. Johnson terminates the Agreement, a 36-
month "Severance Period" is triggered during which Mr. Johnson is
entitled to receive an amount equal to three times the greater of:
- the sum of his base salary and target bonus; or
- the sum of his five-year average base salary and
five-year average actual bonus payable in a lump
sum within 60 days after the date of termination
of employment; and
- an amount equal to the pro-rata portion of the target
bonus for the calendar year in which his employment
terminated; and
- applicable benefits and credited service for pension
purposes for the 36-month period.
In the event of Mr. Johnson's death, such amounts will be
payable to his estate. Any stock options or stock awards will
immediately vest, or restrictions lapse, as the case may be, on the
date of termination. In the event a change in control occurs, and
if payments made to Mr. Johnson are subject to the excise tax
provisions of Section 4999 of the Internal Revenue Code, Mr. Johnson
will be entitled to receive a lump-sum payment (the "Gross-up Payment"),
sufficient to cover the full cost of such excise taxes and his federal,
state, and local income and employment taxes on the additional payment.
Mr. D. B. Rayburn has a similar Change-in-Control Agreement on
substantially the same terms and conditions as stated for Mr. Johnson.
Mr. Rayburn's Agreement was entered into on May 20, 1999.
|
As of February 26, 1997, the Company entered into change-in-
control agreements (the "Change-in-Control Agreements") with the
named executive officers (except Mr. Johnson and Mr. Rayburn and
Mr. Thomas, whose agreement is dated August 7, 1998) and certain
other key employees.
The Change-in-Control Agreements were amended and restated
May 20, 1999. In the event of a "Change-in-Control," as defined
in the Agreements, as amended and restated, certain key executives
(including the named executive officers other than Mr. Johnson and
Mr. Rayburn), if terminated by the Company for any reason other than
"Good Cause," or if terminated by the executive for "Good Reason"
within 24-months after the change in control occurs, or if terminated
by the executive for any reason during the 13th month after the change
in control, will trigger a 24-month "Severance Period" during which
the executive is entitled to receive an amount equal to two times the
greater of:
- the sum of his base salary and target bonus; or
- the sum of his five-year average base salary and five-
year average actual bonus payable in a lump sum within
60 days after the date of termination of employment; and
- an amount equal to the pro-rata portion of the target
bonus for the calendar year in which his employment
terminated; and
- applicable benefits and credited service for pension
purposes for the 24-month period.
In the event of the executive's death, such amounts will be
payable to his estate. Any stock option or stock awards will
immediately vest, or restrictions lapse, as the case may be, on
the date of termination. In the event a change in control
occurs, and if payments made to the executive are subject to the
excise tax provisions of Section 4999 of the Internal Revenue
Code, the executive will be entitled to receive a lump-sum
payment (the "Gross-up Payment"), sufficient to cover the full
cost of such excise taxes and the executive's federal, state, and
local income and employment taxes on the additional payment.
One other key executive also has a Change-in-Control
Agreement that was amended and restated on May 20, 1999. This
agreement is substantially identical to the change-in-control
agreements previously described for Mr. Johnson and Mr. Rayburn.
Mr. W. E. Pavlick also has a three-year employment contract
effective April 1, 1986, that is similar to Mr. Johnson's
employment contract.
TRANSACTIONS
In the regular course of business since April 1, 1999, the
Company has had transactions with corporations or other firms of
which certain non-employee directors are executive officers or
otherwise principally involved. Such transactions were in the
ordinary course of business and at competitive prices and terms.
The Company does not consider the amounts involved to be
material. The Company anticipates that similar transactions will
occur in fiscal year 2000-2001.
|
OTHER INFORMATION
Independent Accountants
-----------------------
PricewaterhouseCoopers LLP have been the independent certified
public accountants since 1935 and were selected as the Company's
auditors for the fiscal year ended March 31, 2000. They are appointed
by the Board of Directors of the Company and report to the Audit
Committee. A representative of PricewaterhouseCoopers LLP will not
be attending the 2000 Annual Meeting of Shareholders.
Section 16(a) Beneficial Ownership Reporting Compliance
-------------------------------------------------------
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers and directors, and persons who own more than ten
percent of a registered class of the Company's equity securities, to
file reports of ownership and changes in ownership with the Securities
and Exchange Commission and the National Association of Securities Dealers,
Inc. Officers, directors, and greater-than-ten-percent shareholders are
required by SEC regulation to furnish the Company with copies of all
Section 16(a) forms they file.
Based solely on review of the copies of such forms furnished to the
Company, the Company believes that, during the period April 1, 1999, to
March 31, 2000, all Section 16(a) filing requirements applicable to its
officers, directors, and greater-than-ten-percent beneficial owners were
complied with except that one Form 4 Report, covering a single option
exercise transaction, was filed late by R. L. Hetrick.
ADDITIONAL MATTERS
The Board of Directors is not aware of any other matters that will
be presented for action at the 2000 annual meeting. Should any additional
matters come before the meeting, the persons named in the enclosed proxy
will vote on those matters in accordance with their best judgment.
SHAREHOLDER PROPOSALS FOR 2001
If a shareholder wishes to present a proposal for consideration at
next year's Annual Meeting of Shareholders, such proposal must be received
at Modine's offices on or before February 5, 2001.
ANNUAL REPORT
The Annual Report of the Company, including financial statements
for the fiscal year ended March 31, 2000, is enclosed.
W. E. PAVLICK, Secretary
|
APPENDIX
Annual Meeting of Stockholders
Wednesday, July 19, 2000
9:30 a.m. CDT Modine shareholders can
build their investments in
Modine Manufacturing Company Modine through a no-cost
1500 DeKoven Avenue plan for automatically
Racine, Wisconsin 53403 reinvesting dividends and
making additional cash
purchases of Modine stock.
Systematic investments can be
established for your account
by authorizing direct
deductions from your bank
account on a monthly basis.
To receive material and
enrollment information, call
800-813-3324. The Modine
Manufacturing Company
Dividend Reinvestment and
Direct Stock Purchase Plan is
administered by the company's
transfer agent, Norwest (Wells
Fargo) Shareowner Services,
800-468-9716.
Modine Manufacturing Company
1500 DeKoven Avenue, Racine, Wisconsin 53403-2552 proxy
----------------------------------------------------------------------------
This proxy is solicited on behalf of the Board of Directors.
The undersigned hereby appoints D. R. Johnson and W. E. Pavlick, or either
of them, with full power of substitution to each, as attorneys and proxies
to represent the undersigned at the Annual Meeting of Stockholders of Modine
Manufacturing Company to be held at the corporate offices of Modine
Manufacturing Company, 1500 DeKoven Avenue, Racine, Wisconsin 53403 on the
19th day of July, 2000 at 9:30 a.m. CDT, and at any adjournment(s) thereof,
and to vote all shares of Common Stock which the undersigned may be entitled
to vote at said meeting as directed with respect to the proposals as set
forth in the Proxy Statement. The Board of Directors does not know of any
other business that may be presented for consideration at the Annual Meeting.
If any other business should properly come before the Meeting, the shares
represented by the proxies and voting instructions solicited thereby may be
discretionarily voted on such business in accordance with the best judgment
of the proxy holders.
You are encouraged to specify your choices by marking the appropriate boxes
on the reverse side, but you need not mark any boxes if you wish to vote in
accordance with the Board of Directors' recommendations. The tabulator
cannot vote your shares unless you sign, date and return this proxy card or
vote by telephone.
IF YOU VOTE BY PHONE, PLEASE DO NOT MAIL YOUR PROXY CARD
--------------------------------------------------------
See Reverse Side
|
Dear Shareholder: ------------------
/COMPANY # /
/CONTROL # /
------------------
Modine Manufacturing Company encourages you to take advantage of a new and
convenient way by which you can vote your shares. You can vote your shares
by telephone. This eliminates the need to return the proxy card.
To vote your shares by telephone you must use the control number printed in
the box at the top of this page. The series of numbers that appear in the
box above must be used to access the system.
To vote over the telephone:
- On a touch-tone telephone -- call 1-800-240-6326 -- 24 hours a day,
7 days a week, until 12:00 p.m. on July 18, 2000.
- You will be prompted to enter your 3-digit Company Number and your
7-digit Control Number which are located above.
- Follow the simple instructions the Voice provides you.
Your electronic vote authorizes the named Proxies in the same manner as if
you marked, signed, dated and returned the proxy card.
Modine Manufacturing Company 401(k) Retirement Plan
Voting Instructions to Trustee Marshall & Ilsley Trust Company for the Annual
Meeting of Stockholders
As a participant in the Modine Manufacturing Company 401(k) Plan, you have
the right to give instructions to the Plan Trustee as to the voting of certain
shares of Modine Manufacturing Company Common Stock allocated to your account
at the Annual Meeting of Shareholders or at any and all adjournments or
postponements of the Annual Meeting. In this regard, please indicate your
voting choices on this card, sign and date it, and return this card promptly
in the enclosed postage prepaid envelope or vote by phone. If your
instructions are not received at least five days prior to the Annual Meeting,
or if you do not respond, shares held in your account for which a proxy is
not received will be voted by the Trustee in its own discretion and in
accordance with ERISA.
Modine Manufacturing Company Contributory Employee Stock Ownership and
Investment Plan
Voting Instructions to Trustee Marshall & Ilsley Trust Company for the Annual
Meeting of Stockholders
As a participant in the Modine Manufacturing Company Contributory Employee
Stock Ownership and Investment Plan, you have the right to vote certain
shares of Modine Manufacturing Company Common Stock allocated to your account
at the Annual Meeting or at any and all adjournments or postponements of the
Annual Meeting. In this regard, please indicate your voting choices on this
card, sign and date it, and return this card promptly in the enclosed postage
prepaid envelope or vote by phone. If you do not respond, shares held in
your account for which a proxy is not received will be voted by the Trustee
in the same proportion as votes actually cast by plan participants.
Modine Subsidiaries 401(k) Defined Contribution Plan
Voting Instructions to Trustee New York Life Trust Company for the Annual
Meeting of Stockholders
As a participant in the Modine Subsidiaries 401(k) Defined Contribution Plan,
you have the right to vote certain shares of Modine Manufacturing Company
Common Stock allocated to your account at the Annual Meeting or at any and
all adjournments or postponements of the Annual Meeting. In this regard,
please indicate your voting choices on this card, sign and date it, and
|
return this card promptly in the enclosed postage prepaid envelope or vote by
phone. If you sign without otherwise marking the proxy, the securities will
be voted as recommended by the Board of Directors on all matters to be
considered at the meeting. For this meeting, the extent of New York Life
Trust Company's authority to vote your securities in the absence of your
instructions, as directed by the Administrative Fiduciary, is that securities
for which no voting instructions have been given shall be voted in the same
proportion as the vote of proxies returned.
PLEASE FOLD HERE
|
The Board of Directors Recommends a Vote FOR Item 1
1. Election of Directors: 01 Frank W. Jones / / Vote FOR all nominees / / WITHHOLD
02 Dennis J. Kuester except as marked Authority
03 Michael J. Yonker contrary below)
---------------------
(Instructions: To withhold authority to vote for any indicated nominee, / /
write the number(s) of the nominee(s) in the box provided to the right.) / /
---------------------
* NOTE * To consider and act upon such other matters as may properly come before the
meeting or any adjournments thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED OR, IF NO
DIRECTION IS GIVEN, WILL BE VOTED FOR EACH PROPOSAL.
---
Address Change? Mark Box / /
Indicate changes below:
Date_________________________, 2000
------------------------------------
/ /
/ /
------------------------------------
Signature(s) in Box
Please sign exactly as your name(s)
appear on Proxy. If held in joint
tenancy, all persons must sign.
Trustees, administrators, etc.,
should include title and authority.
Corporations should provide full
name of corporation and title of
authorized officer signing the proxy.
|
|
|
Pursuant to Item 304 of Regulation S-T, the following is a narrative description of graphic or image material incorporated by reference from the Company's 2000 Annual Report to Shareholders at Item 7. Management's Discussions and Analysis of Financial Condition and Results of Operations. Some pages contain illustrations of Modine products, customers and employees.
Page 12 of Annual Report
Net earnings by quarter
Dollars in millions
Measurement Period
(Fiscal Year Covered) 1ST QTR 2ND QTR 3RD QTR 4TH QTR
------- ------- ------- -------
FYE 1996 $15,983 $16,736 $14,855 $13,825
FYE 1997 16,390 15,654 15,402 16,317
FYE 1998 18,185 18,229 17,836 18,221
FYE 1999 20,080 19,081 17,341 17,441
FYE 2000 19,509 15,096 16,195 14,603
|
Net sales by quarter
Dollars in millions
Measurement Period
(Fiscal Year Covered) 1ST QTR 2ND QTR 3RD QTR 4TH QTR
------- ------- -------- --------
FYE 1996 $239,216 $254,292 $252,817 $244,168
FYE 1997 248,514 254,224 252,972 243,336
FYE 1998 256,923 260,806 267,699 254,990
FYE 1999 273,104 272,961 284,355 281,027
FYE 2000 283,847 286,691 283,520 285,211
|
Page 13 of Annual Report
Sales dollar distribution
FYE 99-00 FYE 98-99
--------- ---------
Material cost 40.1% 39.2%
Conversion Costs 32.0% 32.9%
Operating and Other Costs 19.5% 17.3%
Income Taxes 2.6% 4.0%
Dividends paid to shareholders 2.4% 2.2%
Earnings retained in the business 3.4% 4.4%
|
Page 14 of Annual Report
Shipments by market
Dollars in millions
FYE FYE FYE FYE FYE FYE FYE FYE FYE FYE
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
Aftermarket $156 $165 $169 $193 $220 $229 $229 $231 $258 $294
Off-highway equipment 58 48 48 55 94 120 127 147 140 107
Industrial 69 68 77 96 112 117 125 134 141 137
Heavy & med. trucks 50 51 86 107 158 168 154 184 200 222
Cars & light trucks 64 89 93 119 202 245 263 245 275 289
Miscellaneous 18 25 20 26 44 35 23 21 20 14
Building HVAC 67 81 78 74 83 76 78 78 77 76
FYE FYE FYE FYE FYE FYE FYE FYE FYE FYE
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
Aftermarket 32% 31% 30% 29% 24% 23% 23% 22% 23% 26%
Off-highway equipment 12 9 8 8 10 12 13 14 13 9
Industrial 14 13 13 14 12 12 13 13 13 12
Heavy & med. trucks 11 10 15 16 18 17 15 18 18 20
Cars & light trucks 13 17 16 18 22 25 26 24 25 25
Miscellaneous 4 5 4 4 5 3 2 1 1 1
Building HVAC 14 15 14 11 9 8 8 8 7 7
|
Page 15 of Annual Report
Shipments by product
Dollars in millions
FYE FYE FYE FYE FYE FYE FYE FYE FYE FYE
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
Building HVAC $ 67 $ 81 $ 78 $ 74 $ 83 $ 76 $ 78 $ 78 $ 77 $ 76
Miscellaneous 30 36 35 39 66 54 39 26 37 43
Charge-air coolers 31 39 59 73 107 118 107 97 93 100
Air conditioning 47 66 67 83 129 177 217 140 130 138
Oil coolers 65 67 74 99 145 155 163 172 182 182
Radiators 242 238 258 302 383 410 395 349 354 348
Modules/Packages * - - - - - - - 178 238 252
* New category (prior years are not restated)
|
FYE FYE FYE FYE FYE FYE FYE FYE FYE FYE
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
Building HVAC 14% 15% 14% 11% 9% 8% 8% 7% 7% 7%
Miscellaneous 6 7 6 6 7 5 4 3 3 3
Charge-air Coolers 6 7 10 11 12 12 11 9 8 9
Air conditioning 10 13 12 12 14 18 22 14 12 12
Oil Coolers 13 13 13 15 16 16 16 17 16 16
Radiators 51 45 45 45 42 41 39 33 32 31
Modules/Packages * 0 0 0 0 0 0 0 17 22 22
*New category (prior years are not restated)
|
Page 17 of Annual Report
Book value per share
Measurement Period
(Fiscal Year Covered) Book value/share
--------------------- ----------------
FYE 96 11.74
FYE 97 12.93
FYE 98 14.24
FYE 99 15.35
FYE 00 16.41
|