☑ |
QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
☐ |
TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Wisconsin
|
|
39-0482000
|
(State or other jurisdiction of incorporation or organization)
|
|
(I.R.S. Employer Identification No.)
|
1500 DeKoven Avenue, Racine, Wisconsin
|
|
53403
|
(Address of principal executive offices)
|
|
(Zip Code)
|
Title of each class
|
Trading Symbol(s)
|
Name of each exchange on which registered
|
|
|
|
Common Stock, $0.625 par value
|
MOD
|
New York Stock Exchange LLC
|
Large Accelerated Filer ☑
|
Accelerated Filer ☐
|
|
|
Non-accelerated Filer ☐
|
Smaller reporting company ☐
|
|
|
|
Emerging growth company ☐
|
PART I. FINANCIAL INFORMATION
|
|
|
|
|
|
1
|
||
|
|
|
22
|
||
|
|
|
28
|
||
|
|
|
28
|
||
|
|
|
PART II. OTHER INFORMATION
|
|
|
|
|
|
29
|
||
|
|
|
29
|
||
31
|
||
|
|
|
32
|
|
Three months ended
June 30,
|
|||||||
|
2019
|
2018
|
||||||
Net sales
|
$
|
529.0
|
$
|
566.1
|
||||
Cost of sales
|
445.6
|
471.8
|
||||||
Gross profit
|
83.4
|
94.3
|
||||||
Selling, general and administrative expenses
|
63.5
|
59.3
|
||||||
Restructuring expenses
|
1.8
|
0.2
|
||||||
Operating income
|
18.1
|
34.8
|
||||||
Interest expense
|
(5.9
|
)
|
(6.2
|
)
|
||||
Other expense – net
|
(1.1
|
)
|
(1.1
|
)
|
||||
Earnings before income taxes
|
11.1
|
27.5
|
||||||
Provision for income taxes
|
(2.9
|
)
|
(5.0
|
)
|
||||
Net earnings
|
8.2
|
22.5
|
||||||
Net earnings attributable to noncontrolling interest
|
(0.2
|
)
|
(0.5
|
)
|
||||
Net earnings attributable to Modine
|
$
|
8.0
|
$
|
22.0
|
||||
|
||||||||
Net earnings per share attributable to Modine shareholders:
|
||||||||
Basic
|
$
|
0.16
|
$
|
0.43
|
||||
Diluted
|
$
|
0.16
|
$
|
0.43
|
||||
|
||||||||
Weighted-average shares outstanding:
|
||||||||
Basic
|
50.7
|
50.3
|
||||||
Diluted
|
51.1
|
51.2
|
|
Three months ended
June 30,
|
|||||||
|
2019
|
2018
|
||||||
Net earnings
|
$
|
8.2
|
$
|
22.5
|
||||
Other comprehensive income (loss):
|
||||||||
Foreign currency translation
|
1.8
|
(25.1
|
)
|
|||||
Defined benefit plans, net of income taxes of $0.3 and $0.3 million
|
1.1
|
1.0
|
||||||
Cash flow hedges, net of income taxes of $(0.3) and $0.1 million
|
(0.8
|
)
|
0.4
|
|||||
Total other comprehensive income (loss)
|
2.1
|
(23.7
|
)
|
|||||
|
||||||||
Comprehensive income (loss)
|
10.3
|
(1.2
|
)
|
|||||
Comprehensive income attributable to noncontrolling interest
|
(0.1
|
)
|
(0.1
|
)
|
||||
Comprehensive income (loss) attributable to Modine
|
$
|
10.2
|
$
|
(1.3
|
)
|
|
June 30, 2019
|
March 31, 2019
|
||||||
ASSETS
|
||||||||
Cash and cash equivalents
|
$
|
29.1
|
$
|
41.7
|
||||
Trade accounts receivable – net
|
336.9
|
338.6
|
||||||
Inventories
|
216.2
|
200.7
|
||||||
Other current assets
|
69.7
|
65.8
|
||||||
Total current assets
|
651.9
|
646.8
|
||||||
Property, plant and equipment – net
|
479.1
|
484.7
|
||||||
Intangible assets – net
|
114.4
|
116.2
|
||||||
Goodwill
|
168.5
|
168.5
|
||||||
Deferred income taxes
|
98.2
|
97.1
|
||||||
Other noncurrent assets
|
89.2
|
24.7
|
||||||
Total assets
|
$
|
1,601.3
|
$
|
1,538.0
|
||||
|
||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
||||||||
Short-term debt
|
$
|
121.5
|
$
|
66.0
|
||||
Long-term debt – current portion
|
33.5
|
48.6
|
||||||
Accounts payable
|
272.9
|
280.9
|
||||||
Accrued compensation and employee benefits
|
77.5
|
81.7
|
||||||
Other current liabilities
|
52.8
|
39.9
|
||||||
Total current liabilities
|
558.2
|
517.1
|
||||||
Long-term debt
|
302.2
|
335.1
|
||||||
Deferred income taxes
|
8.6
|
8.2
|
||||||
Pensions
|
100.2
|
101.7
|
||||||
Other noncurrent liabilities
|
85.8
|
34.8
|
||||||
Total liabilities
|
1,055.0
|
996.9
|
||||||
Commitments and contingencies (see Note 17)
|
||||||||
Shareholders’ equity:
|
||||||||
Preferred stock, $0.025 par value, authorized 16.0 million shares, issued - none
|
-
|
-
|
||||||
Common stock, $0.625 par value, authorized 80.0 million shares, issued 53.3 million and 52.8 million shares
|
33.2
|
33.0
|
||||||
Additional paid-in capital
|
240.2
|
238.6
|
||||||
Retained earnings
|
480.1
|
472.1
|
||||||
Accumulated other comprehensive loss
|
(176.2
|
)
|
(178.4
|
)
|
||||
Treasury stock, at cost, 2.5 million and 2.1 million shares
|
(37.0
|
)
|
(31.4
|
)
|
||||
Total Modine shareholders’ equity
|
540.3
|
533.9
|
||||||
Noncontrolling interest
|
6.0
|
7.2
|
||||||
Total equity
|
546.3
|
541.1
|
||||||
Total liabilities and equity
|
$
|
1,601.3
|
$
|
1,538.0
|
|
Three months ended June 30,
|
|||||||
2019
|
2018
|
|||||||
Cash flows from operating activities:
|
||||||||
Net earnings
|
$
|
8.2
|
$
|
22.5
|
||||
Adjustments to reconcile net earnings to net cash provided by (used for) operating activities:
|
||||||||
Depreciation and amortization
|
18.9
|
19.4
|
||||||
Stock-based compensation expense
|
1.7
|
2.0
|
||||||
Deferred income taxes
|
(0.5
|
)
|
1.0
|
|||||
Other – net
|
0.9
|
0.6
|
||||||
Changes in operating assets and liabilities:
|
||||||||
Trade accounts receivable
|
1.6
|
(18.6
|
)
|
|||||
Inventories
|
(15.0
|
)
|
(21.7
|
)
|
||||
Accounts payable
|
(3.8
|
)
|
15.4
|
|||||
Other assets and liabilities
|
(11.5
|
)
|
(24.7
|
)
|
||||
Net cash provided by (used for) operating activities
|
0.5
|
(4.1
|
)
|
|||||
|
||||||||
Cash flows from investing activities:
|
||||||||
Expenditures for property, plant and equipment
|
(20.3
|
)
|
(22.6
|
)
|
||||
Other – net
|
1.8
|
2.9
|
||||||
Net cash used for investing activities
|
(18.5
|
)
|
(19.7
|
)
|
||||
|
||||||||
Cash flows from financing activities:
|
||||||||
Borrowings of debt
|
342.1
|
105.9
|
||||||
Repayments of debt
|
(329.1
|
)
|
(72.7
|
)
|
||||
Dividend paid to noncontrolling interest
|
(1.3
|
)
|
(1.8
|
)
|
||||
Purchases of treasury stock under share repurchase program
|
(2.4
|
)
|
-
|
|||||
Financing fees paid
|
(1.1
|
)
|
-
|
|||||
Other – net
|
(2.7
|
)
|
(3.8
|
)
|
||||
Net cash provided by financing activities
|
5.5
|
27.6
|
||||||
|
||||||||
Effect of exchange rate changes on cash
|
(0.1
|
)
|
(1.8
|
)
|
||||
Net (decrease) increase in cash, cash equivalents and restricted cash
|
(12.6
|
)
|
2.0
|
|||||
|
||||||||
Cash, cash equivalents and restricted cash – beginning of period
|
42.2
|
40.3
|
||||||
Cash, cash equivalents and restricted cash – end of period
|
$
|
29.6
|
$
|
42.3
|
|
Common stock
|
Additional
paid-in
|
Retained
|
Accumulated
other
comprehensive
|
Treasury
stock, at
|
Non-
controlling
|
||||||||||||||||||||||||||
Shares
|
Amount
|
capital
|
earnings
|
loss
|
cost
|
interest
|
Total
|
|||||||||||||||||||||||||
Balance, March 31, 2018
|
52.3
|
$
|
32.7
|
$
|
229.9
|
$
|
394.9
|
$
|
(140.3
|
)
|
$
|
(27.1
|
)
|
$
|
8.4
|
$
|
498.5
|
|||||||||||||||
Adoption of new accounting guidance (Note 1)
|
-
|
-
|
-
|
(7.6
|
)
|
-
|
-
|
-
|
(7.6
|
)
|
||||||||||||||||||||||
Net earnings attributable to Modine
|
-
|
-
|
-
|
22.0
|
-
|
-
|
-
|
22.0
|
||||||||||||||||||||||||
Other comprehensive loss
|
-
|
-
|
-
|
-
|
(23.3
|
)
|
-
|
(0.4
|
)
|
(23.7
|
)
|
|||||||||||||||||||||
Stock options and awards
|
0.4
|
0.2
|
(0.2
|
)
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||||||||
Purchase of treasury stock
|
-
|
-
|
-
|
-
|
-
|
(3.7
|
)
|
-
|
(3.7
|
)
|
||||||||||||||||||||||
Stock-based compensation expense
|
-
|
-
|
2.0
|
-
|
-
|
-
|
-
|
2.0
|
||||||||||||||||||||||||
Dividend paid to noncontrolling interest
|
-
|
-
|
-
|
-
|
-
|
-
|
(1.8
|
)
|
(1.8
|
)
|
||||||||||||||||||||||
Net earnings attributable to noncontrolling interest
|
-
|
-
|
-
|
-
|
-
|
-
|
0.5
|
0.5
|
||||||||||||||||||||||||
Balance, June 30, 2018
|
52.7
|
$
|
32.9
|
$
|
231.7
|
$
|
409.3
|
$
|
(163.6
|
)
|
$
|
(30.8
|
)
|
$
|
6.7
|
$
|
486.2
|
|||||||||||||||
Balance, March 31, 2019
|
52.8
|
$
|
33.0
|
$
|
238.6
|
$
|
472.1
|
$
|
(178.4
|
)
|
$
|
(31.4
|
)
|
$
|
7.2
|
$
|
541.1
|
|||||||||||||||
Net earnings attributable to Modine
|
-
|
-
|
-
|
8.0
|
-
|
-
|
-
|
8.0
|
||||||||||||||||||||||||
Other comprehensive income (loss)
|
-
|
-
|
-
|
-
|
2.2
|
-
|
(0.1
|
)
|
2.1
|
|||||||||||||||||||||||
Stock options and awards
|
0.5
|
0.2
|
(0.1
|
)
|
-
|
-
|
-
|
-
|
0.1
|
|||||||||||||||||||||||
Purchase of treasury stock
|
-
|
-
|
-
|
-
|
-
|
(5.6
|
)
|
-
|
(5.6
|
)
|
||||||||||||||||||||||
Stock-based compensation expense
|
-
|
-
|
1.7
|
-
|
-
|
-
|
-
|
1.7
|
||||||||||||||||||||||||
Dividend paid to noncontrolling interest
|
-
|
-
|
-
|
-
|
-
|
-
|
(1.3
|
)
|
(1.3
|
)
|
||||||||||||||||||||||
Net earnings attributable to noncontrolling interest
|
-
|
-
|
-
|
-
|
-
|
-
|
0.2
|
0.2
|
||||||||||||||||||||||||
Balance, June 30, 2019
|
53.3
|
$
|
33.2
|
$
|
240.2
|
$
|
480.1
|
$
|
(176.2
|
)
|
$
|
(37.0
|
)
|
$
|
6.0
|
$
|
546.3
|
|
Three months ended June 30, 2019
|
|||||||||||||||
|
VTS
|
CIS
|
BHVAC
|
Segment
Total |
||||||||||||
Primary end market:
|
||||||||||||||||
Automotive
|
$
|
129.2
|
$
|
-
|
$
|
-
|
$
|
129.2
|
||||||||
Commercial vehicle
|
98.7
|
-
|
-
|
98.7
|
||||||||||||
Off-highway
|
73.9
|
-
|
-
|
73.9
|
||||||||||||
Commercial HVAC&R
|
-
|
130.9
|
38.0
|
168.9
|
||||||||||||
Data center cooling
|
-
|
24.2
|
10.6
|
34.8
|
||||||||||||
Industrial cooling
|
-
|
11.4
|
-
|
11.4
|
||||||||||||
Other
|
24.7
|
2.3
|
0.4
|
27.4
|
||||||||||||
Net sales
|
$
|
326.5
|
$
|
168.8
|
$
|
49.0
|
$
|
544.3
|
||||||||
|
||||||||||||||||
Geographic location:
|
||||||||||||||||
Americas
|
$
|
153.3
|
$
|
97.1
|
$
|
29.1
|
$
|
279.5
|
||||||||
Europe
|
126.1
|
58.6
|
19.9
|
204.6
|
||||||||||||
Asia
|
47.1
|
13.1
|
-
|
60.2
|
||||||||||||
Net sales
|
$
|
326.5
|
$
|
168.8
|
$
|
49.0
|
$
|
544.3
|
||||||||
|
||||||||||||||||
Timing of revenue recognition:
|
||||||||||||||||
Products transferred at a point in time
|
$
|
319.1
|
$
|
143.9
|
$
|
49.0
|
$
|
512.0
|
||||||||
Products transferred over time
|
7.4
|
24.9
|
-
|
32.3
|
||||||||||||
Net sales
|
$
|
326.5
|
$
|
168.8
|
$
|
49.0
|
$
|
544.3
|
|
Three months ended June 30, 2018
|
|||||||||||||||
|
VTS
|
CIS
|
BHVAC
|
Segment
Total |
||||||||||||
Primary end market:
|
||||||||||||||||
Automotive
|
$
|
145.1
|
$
|
-
|
$
|
-
|
$
|
145.1
|
||||||||
Commercial vehicle
|
99.7
|
-
|
-
|
99.7
|
||||||||||||
Off-highway
|
83.8
|
-
|
-
|
83.8
|
||||||||||||
Commercial HVAC&R
|
-
|
135.3
|
32.0
|
167.3
|
||||||||||||
Data center cooling
|
-
|
34.1
|
12.2
|
46.3
|
||||||||||||
Industrial cooling
|
-
|
11.5
|
-
|
11.5
|
||||||||||||
Other
|
24.2
|
3.0
|
0.8
|
28.0
|
||||||||||||
Net sales
|
$
|
352.8
|
$
|
183.9
|
$
|
45.0
|
$
|
581.7
|
||||||||
|
||||||||||||||||
Geographic location:
|
||||||||||||||||
Americas
|
$
|
150.9
|
$
|
104.8
|
$
|
25.3
|
$
|
281.0
|
||||||||
Europe
|
148.4
|
65.2
|
19.7
|
233.3
|
||||||||||||
Asia
|
53.5
|
13.9
|
-
|
67.4
|
||||||||||||
Net sales
|
$
|
352.8
|
$
|
183.9
|
$
|
45.0
|
$
|
581.7
|
||||||||
|
||||||||||||||||
Timing of revenue recognition:
|
||||||||||||||||
Products transferred at a point in time
|
$
|
342.8
|
$
|
153.6
|
$
|
45.0
|
$
|
541.4
|
||||||||
Products transferred over time
|
10.0
|
30.3
|
-
|
40.3
|
||||||||||||
Net sales
|
$
|
352.8
|
$
|
183.9
|
$
|
45.0
|
$
|
581.7
|
|
June 30, 2019
|
March 31, 2019
|
||||||
Contract assets
|
$
|
24.2
|
$
|
22.6
|
||||
Contract liabilities
|
4.9
|
4.0
|
• |
Level 1 – Quoted prices for identical instruments in active markets.
|
• |
Level 2 – Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs are observable in active markets.
|
• |
Level 3 – Model-derived valuations in which one or more significant inputs are not observable.
|
|
Three months ended
June 30,
|
|||||||
|
2019
|
2018
|
||||||
Service cost
|
$
|
0.1
|
$
|
0.1
|
||||
Interest cost
|
2.3
|
2.4
|
||||||
Expected return on plan assets
|
(3.0
|
)
|
(3.0
|
)
|
||||
Amortization of unrecognized net loss
|
1.5
|
1.4
|
||||||
Net periodic benefit cost
|
$
|
0.9
|
$
|
0.9
|
|
Three months ended June 30,
|
|||||||||||||||
2019
|
2018
|
|||||||||||||||
Shares
|
Fair Value
Per Award
|
Shares
|
Fair Value
Per Award
|
|||||||||||||
Stock options
|
0.3
|
$
|
5.56
|
0.2
|
$
|
7.81
|
||||||||||
Restricted stock awards
|
0.3
|
$
|
13.26
|
0.2
|
$
|
17.90
|
||||||||||
Performance stock awards
|
0.3
|
$
|
13.26
|
0.2
|
$
|
17.90
|
|
Three months ended June 30,
|
|||||||
2019
|
2018
|
|||||||
Expected life of awards in years
|
6.3
|
6.3
|
||||||
Risk-free interest rate
|
2.2
|
%
|
2.8
|
%
|
||||
Expected volatility of the Company’s stock
|
39.2
|
%
|
39.7
|
%
|
||||
Expected dividend yield on the Company’s stock
|
0.0
|
%
|
0.0
|
%
|
|
Unrecognized
Compensation
Expense
|
Weighted-Average
Remaining Service
Period in Years
|
||||||
Stock options
|
$
|
3.6
|
3.1
|
|||||
Restricted stock awards
|
8.4
|
3.0
|
||||||
Performance stock awards
|
4.8
|
2.2
|
||||||
Total
|
$
|
16.8
|
2.8
|
|
Three months ended June 30,
|
|||||||
|
2019
|
2018
|
||||||
Employee severance and related benefits
|
$
|
1.5
|
$
|
0.1
|
||||
Other restructuring and repositioning expenses
|
0.3
|
0.1
|
||||||
Total
|
$
|
1.8
|
$
|
0.2
|
|
Three months ended June 30,
|
|||||||
|
2019
|
2018
|
||||||
Beginning balance
|
$
|
10.0
|
$
|
11.0
|
||||
Additions
|
1.5
|
0.1
|
||||||
Payments
|
(3.7
|
)
|
(5.8
|
)
|
||||
Effect of exchange rate changes
|
-
|
(0.5
|
)
|
|||||
Ending balance
|
$
|
7.8
|
$
|
4.8
|
|
Three months ended
June 30,
|
|||||||
|
2019
|
2018
|
||||||
Equity in earnings of non-consolidated affiliate
|
$
|
0.1
|
$
|
0.2
|
||||
Interest income
|
0.1
|
0.2
|
||||||
Foreign currency transactions (a)
|
(0.6
|
)
|
(0.8
|
)
|
||||
Net periodic benefit cost (b)
|
(0.7
|
)
|
(0.7
|
)
|
||||
Total other expense - net
|
$
|
(1.1
|
)
|
$
|
(1.1
|
)
|
(a) |
Foreign currency transactions primarily consist of foreign currency transaction gains and losses on the re-measurement or settlement of foreign currency-denominated assets and liabilities, including intercompany loans and transactions denominated in a foreign currency, along with gains and losses on certain foreign currency exchange contracts.
|
(b) |
Represents net periodic benefit cost, exclusive of service cost, for the Company's pension and postretirement plans.
|
|
Three months ended
June 30,
|
|||||||
|
2019
|
2018
|
||||||
Net earnings attributable to Modine
|
$
|
8.0
|
$
|
22.0
|
||||
Less: Undistributed earnings attributable to unvested shares
|
-
|
(0.1
|
)
|
|||||
Net earnings available to Modine shareholders
|
$
|
8.0
|
$
|
21.9
|
||||
|
||||||||
Weighted-average shares outstanding - basic
|
50.7
|
50.3
|
||||||
Effect of dilutive securities
|
0.4
|
0.9
|
||||||
Weighted-average shares outstanding - diluted
|
51.1
|
51.2
|
||||||
|
||||||||
Earnings per share:
|
||||||||
Net earnings per share - basic
|
$
|
0.16
|
$
|
0.43
|
||||
Net earnings per share - diluted
|
$
|
0.16
|
$
|
0.43
|
|
June 30, 2019
|
March 31, 2019
|
||||||
Cash and cash equivalents
|
$
|
29.1
|
$
|
41.7
|
||||
Restricted cash
|
0.5
|
0.5
|
||||||
Total cash, cash equivalents and restricted cash
|
$
|
29.6
|
$
|
42.2
|
|
June 30, 2019
|
March 31, 2019
|
||||||
Raw materials
|
$
|
134.1
|
$
|
122.8
|
||||
Work in process
|
35.6
|
32.2
|
||||||
Finished goods
|
46.5
|
45.7
|
||||||
Total inventories
|
$
|
216.2
|
$
|
200.7
|
|
June 30, 2019
|
March 31, 2019
|
||||||
Land
|
$
|
20.9
|
$
|
20.7
|
||||
Buildings and improvements (10-40 years)
|
281.0
|
285.9
|
||||||
Machinery and equipment (3-15 years)
|
858.7
|
848.7
|
||||||
Office equipment (3-10 years)
|
93.6
|
92.0
|
||||||
Construction in progress
|
62.6
|
57.4
|
||||||
|
1,316.8
|
1,304.7
|
||||||
Less: accumulated depreciation
|
(837.7
|
)
|
(820.0
|
)
|
||||
Net property, plant and equipment
|
$
|
479.1
|
$
|
484.7
|
|
VTS
|
CIS
|
BHVAC
|
Total
|
||||||||||||
Goodwill, March 31, 2019
|
$
|
0.5
|
$
|
153.9
|
$
|
14.1
|
$
|
168.5
|
||||||||
Effect of exchange rate changes
|
-
|
0.3
|
(0.3
|
)
|
-
|
|||||||||||
Goodwill, June 30, 2019
|
$
|
0.5
|
$
|
154.2
|
$
|
13.8
|
$
|
168.5
|
|
June 30, 2019
|
March 31, 2019
|
||||||||||||||||||||||
|
Gross
Carrying
Value
|
Accumulated
Amortization
|
Net
Intangible
Assets
|
Gross
Carrying
Value
|
Accumulated
Amortization
|
Net
Intangible
Assets
|
||||||||||||||||||
Customer relationships
|
$
|
61.7
|
$
|
(10.1
|
)
|
$
|
51.6
|
$
|
61.5
|
$
|
(9.1
|
)
|
$
|
52.4
|
||||||||||
Trade names
|
58.9
|
(14.1
|
)
|
44.8
|
58.9
|
(13.5
|
)
|
45.4
|
||||||||||||||||
Acquired technology
|
24.0
|
(6.0
|
)
|
18.0
|
23.9
|
(5.5
|
)
|
18.4
|
||||||||||||||||
Total intangible assets
|
$
|
144.6
|
$
|
(30.2
|
)
|
$
|
114.4
|
$
|
144.3
|
$
|
(28.1
|
)
|
$
|
116.2
|
|
Three months ended June 30,
|
|||||||
|
2019
|
2018
|
||||||
Beginning balance
|
$
|
9.2
|
$
|
9.3
|
||||
Warranties recorded at time of sale
|
1.4
|
1.4
|
||||||
Adjustments to pre-existing warranties
|
(0.6
|
)
|
(0.4
|
)
|
||||
Settlements
|
(0.9
|
)
|
(1.3
|
)
|
||||
Effect of exchange rate changes
|
-
|
(0.3
|
)
|
|||||
Ending balance
|
$
|
9.1
|
$
|
8.7
|
|
Balance Sheet Location
|
June 30, 2019
|
|
Lease Assets
|
|||
Operating lease ROU assets
|
Other noncurrent assets
|
$
|
64.9
|
Finance lease ROU assets (a)
|
Property, plant and equipment - net
|
8.8
|
|
Lease Liabilities
|
|||
Operating lease liabilities
|
Other current liabilities
|
$
|
12.9
|
Operating lease liabilities
|
Other noncurrent liabilities
|
50.7
|
|
Finance lease liabilities
|
Long-term debt - current portion
|
0.3
|
|
Finance lease liabilities
|
Long-term debt
|
3.6
|
(a) |
Finance lease ROU assets are recorded net of accumulated amortization of $1.4 million as of June 30, 2019.
|
|
Three months ended
June 30, 2019
|
|||
Operating lease expense (a)
|
$
|
5.2
|
||
Finance lease expense:
|
||||
Depreciation of ROU assets
|
0.1
|
|||
Interest on lease liabilities
|
-
|
|||
Total lease expense
|
$
|
5.3
|
(a) |
For the three months ended June 30, 2019, operating lease expense included $0.9 million of short-term lease expense. Variable lease expense was not significant.
|
|
Three months ended
June 30, 2019
|
|||
Cash paid for amounts included in the measurement of lease liabilities:
|
||||
Operating cash flows for operating leases
|
$
|
3.7
|
||
Financing cash flows for finance leases
|
0.1
|
|||
ROU assets obtained in exchange for lease liabilities
|
||||
Operating leases
|
$
|
0.3
|
||
Finance leases
|
-
|
|
June 30, 2019
|
Weighted-average remaining lease term:
|
|
Operating leases
|
8.9 years
|
Finance leases
|
9.7 years
|
Weighted-average discount rate:
|
|
Operating leases
|
3.4%
|
Finance leases
|
2.0%
|
Fiscal Year
|
Operating Leases
|
Finance Leases
|
||||||
Remainder of fiscal 2020
|
$
|
11.4
|
$
|
0.4
|
||||
2021
|
13.4
|
0.5
|
||||||
2022
|
9.9
|
0.5
|
||||||
2023
|
8.0
|
0.5
|
||||||
2024
|
5.5
|
0.5
|
||||||
2025 and beyond
|
24.8
|
2.5
|
||||||
Total lease payments
|
73.0
|
4.9
|
||||||
Less: Interest
|
(9.4
|
)
|
(1.0
|
)
|
||||
Present value of lease liabilities
|
$
|
63.6
|
$
|
3.9
|
Fiscal Year
|
||||
2020
|
$
|
14.2
|
||
2021
|
12.4
|
|||
2022
|
9.1
|
|||
2023
|
7.1
|
|||
2024
|
4.7
|
|||
2025 and beyond
|
22.9
|
|||
Total
|
$
|
70.4
|
|
Fiscal year
of maturity
|
June 30, 2019
|
March 31, 2019
|
|||||||||
Term loans
|
2025
|
$
|
200.5
|
$
|
238.4
|
|||||||
6.8% Senior Notes
|
2021
|
81.0
|
85.0
|
|||||||||
5.8% Senior Notes
|
2027
|
50.0
|
50.0
|
|||||||||
Other (a)
|
-
|
8.1
|
14.3
|
|||||||||
339.6
|
387.7
|
|||||||||||
Less: current portion
|
(33.5
|
)
|
(48.6
|
)
|
||||||||
Less: unamortized debt issuance costs
|
(3.9
|
)
|
(4.0
|
)
|
||||||||
Total long-term debt
|
$
|
302.2
|
$
|
335.1
|
(a) |
Other long-term debt primarily includes borrowings by foreign subsidiaries and finance lease obligations.
|
Fiscal Year
|
||||
Remainder of 2020
|
$
|
24.0
|
||
2021
|
84.7
|
|||
2022
|
21.7
|
|||
2023
|
21.7
|
|||
2024
|
21.7
|
|||
2025 & beyond
|
165.8
|
|||
Total
|
$
|
339.6
|
|
Three months ended June 30, 2019
|
|||||||||||||||
|
Foreign
Currency
Translation
|
Defined
Benefit Plans
|
Cash Flow
Hedges
|
Total
|
||||||||||||
Beginning balance
|
$
|
(42.6
|
)
|
$
|
(136.3
|
)
|
$
|
0.5
|
$
|
(178.4
|
)
|
|||||
|
||||||||||||||||
Other comprehensive income (loss) before reclassifications
|
1.9
|
-
|
(1.0
|
)
|
0.9
|
|||||||||||
Reclassifications:
|
||||||||||||||||
Amortization of unrecognized net loss (a)
|
-
|
1.4
|
-
|
1.4
|
||||||||||||
Realized gains - net (b)
|
-
|
-
|
(0.1
|
)
|
(0.1
|
)
|
||||||||||
Income taxes
|
-
|
(0.3
|
)
|
0.3
|
-
|
|||||||||||
Total other comprehensive income (loss)
|
1.9
|
1.1
|
(0.8
|
)
|
2.2
|
|||||||||||
|
||||||||||||||||
Ending balance
|
$
|
(40.7
|
)
|
$
|
(135.2
|
)
|
$
|
(0.3
|
)
|
$
|
(176.2
|
)
|
|
Three months ended June 30, 2018
|
|||||||||||||||
|
Foreign
Currency
Translation
|
Defined
Benefit Plans
|
Cash Flow
Hedges
|
Total
|
||||||||||||
Beginning balance
|
$
|
(5.5
|
)
|
$
|
(134.9
|
)
|
$
|
0.1
|
$
|
(140.3
|
)
|
|||||
|
||||||||||||||||
Other comprehensive income before reclassifications
|
(24.7
|
)
|
-
|
0.5
|
(24.2
|
)
|
||||||||||
Reclassifications for amortization of unrecognized net loss (a)
|
-
|
1.3
|
-
|
1.3
|
||||||||||||
Income taxes
|
-
|
(0.3
|
)
|
(0.1
|
)
|
(0.4
|
)
|
|||||||||
Total other comprehensive income
|
(24.7
|
)
|
1.0
|
0.4
|
(23.3
|
)
|
||||||||||
|
||||||||||||||||
Ending balance
|
$
|
(30.2
|
)
|
$
|
(133.9
|
)
|
$
|
0.5
|
$
|
(163.6
|
)
|
(a) |
Amounts are included in the calculation of net periodic benefit cost for the Company's defined benefit plans, which include pension and other postretirement plans. See Note 4 for additional information about the Company's pension plans.
|
(b) |
Amount represent net gains and losses associated with cash flow hedges that were reclassified to net earnings.
|
|
Three months ended June 30,
|
|||||||||||||||||||||||
|
2019
|
2018
|
||||||||||||||||||||||
|
External Sales
|
Inter-segment
Sales
|
Total
|
External Sales
|
Inter-segment
Sales
|
Total
|
||||||||||||||||||
Net sales:
|
||||||||||||||||||||||||
VTS
|
$
|
312.6
|
$
|
13.9
|
$
|
326.5
|
$
|
338.3
|
$
|
14.5
|
$
|
352.8
|
||||||||||||
CIS
|
167.9
|
0.9
|
168.8
|
183.5
|
0.4
|
183.9
|
||||||||||||||||||
BHVAC
|
48.5
|
0.5
|
49.0
|
44.3
|
0.7
|
45.0
|
||||||||||||||||||
Segment total
|
529.0
|
15.3
|
544.3
|
566.1
|
15.6
|
581.7
|
||||||||||||||||||
Corporate and eliminations
|
-
|
(15.3
|
)
|
(15.3
|
)
|
-
|
(15.6
|
)
|
(15.6
|
)
|
||||||||||||||
Net sales
|
$
|
529.0
|
$
|
-
|
$
|
529.0
|
$
|
566.1
|
$
|
-
|
$
|
566.1
|
|
Three months ended June 30,
|
|||||||||||||||
|
2019
|
2018
|
||||||||||||||
|
$'s
|
% of sales
|
$'s
|
% of sales
|
||||||||||||
Gross profit:
|
||||||||||||||||
VTS
|
$
|
45.0
|
13.8
|
%
|
$
|
54.0
|
15.3
|
%
|
||||||||
CIS
|
24.3
|
14.4
|
%
|
28.6
|
15.6
|
%
|
||||||||||
BHVAC
|
13.7
|
27.9
|
%
|
11.6
|
25.9
|
%
|
||||||||||
Segment total
|
83.0
|
15.2
|
%
|
94.2
|
16.2
|
%
|
||||||||||
Corporate and eliminations
|
0.4
|
-
|
0.1
|
-
|
||||||||||||
Gross profit
|
$
|
83.4
|
15.8
|
%
|
$
|
94.3
|
16.7
|
%
|
|
Three months ended June 30,
|
|||||||
|
2019
|
2018
|
||||||
Operating income:
|
||||||||
VTS
|
$
|
17.3
|
$
|
25.5
|
||||
CIS
|
9.0
|
13.2
|
||||||
BHVAC
|
5.3
|
3.2
|
||||||
Segment total
|
31.6
|
41.9
|
||||||
Corporate and eliminations
|
(13.5
|
)
|
(7.1
|
)
|
||||
Operating income
|
$
|
18.1
|
$
|
34.8
|
|
June 30, 2019
|
March 31, 2019
|
||||||
Total assets: (a)
|
||||||||
VTS
|
$
|
767.9
|
$
|
749.9
|
||||
CIS
|
628.2
|
604.2
|
||||||
BHVAC
|
107.0
|
89.4
|
||||||
Corporate and eliminations
|
98.2
|
94.5
|
||||||
Total assets
|
$
|
1,601.3
|
$
|
1,538.0
|
(a) |
The Company adopted new lease accounting guidance and, as a result, recorded $61.3 million of operating lease assets on its consolidated balance sheet on April 1, 2019. See Note 1 for additional information.
|
|
|
Three months ended June 30,
|
|
|||||||||||||
|
|
2019
|
|
|
2018
|
|
||||||||||
(in millions)
|
|
$’s
|
|
% of sales
|
|
|
$’s
|
|
% of sales
|
|
||||||
Net sales
|
|
$
|
529.0
|
|
|
|
100.0
|
%
|
|
$
|
566.1
|
|
|
|
100.0
|
%
|
Cost of sales
|
|
|
445.6
|
|
|
|
84.2
|
%
|
|
|
471.8
|
|
|
|
83.3
|
%
|
Gross profit
|
|
|
83.4
|
|
|
|
15.8
|
%
|
|
|
94.3
|
|
|
|
16.7
|
%
|
Selling, general and administrative expenses
|
|
|
63.5
|
|
|
|
12.0
|
%
|
|
|
59.3
|
|
|
|
10.5
|
%
|
Restructuring expenses
|
|
|
1.8
|
|
|
|
0.3
|
%
|
|
|
0.2
|
|
|
|
-
|
|
Operating income
|
|
|
18.1
|
|
|
|
3.4
|
%
|
|
|
34.8
|
|
|
|
6.1
|
%
|
Interest expense
|
|
|
(5.9
|
)
|
|
|
-1.1
|
%
|
|
|
(6.2
|
)
|
|
|
-1.1
|
%
|
Other expense – net
|
|
|
(1.1
|
)
|
|
|
-0.2
|
%
|
|
|
(1.1
|
)
|
|
|
-0.2
|
%
|
Earnings before income taxes
|
|
|
11.1
|
|
|
|
2.1
|
%
|
|
|
27.5
|
|
|
|
4.9
|
%
|
Provision for income taxes
|
|
|
(2.9
|
)
|
|
|
-0.6
|
%
|
|
|
(5.0
|
)
|
|
|
-0.9
|
%
|
Net earnings
|
|
$
|
8.2
|
|
|
|
1.5
|
%
|
|
$
|
22.5
|
|
|
|
4.0
|
%
|
|
|
Three months ended June 30,
|
|
|||||||||||||
|
|
2019
|
|
|
2018
|
|
||||||||||
(in millions)
|
|
$’s
|
|
% of sales
|
|
|
$’s
|
|
% of sales
|
|
||||||
Net sales
|
|
$
|
326.5
|
|
|
|
100.0
|
%
|
|
$
|
352.8
|
|
|
|
100.0
|
%
|
Cost of sales
|
|
|
281.5
|
|
|
|
86.2
|
%
|
|
|
298.8
|
|
|
|
84.7
|
%
|
Gross profit
|
|
|
45.0
|
|
|
|
13.8
|
%
|
|
|
54.0
|
|
|
|
15.3
|
%
|
Selling, general and administrative expenses
|
|
|
26.1
|
|
|
|
8.0
|
%
|
|
|
28.4
|
|
|
|
8.1
|
%
|
Restructuring expenses
|
|
|
1.6
|
|
|
|
0.5
|
%
|
|
|
0.1
|
|
|
|
-
|
|
Operating income
|
|
$
|
17.3
|
|
|
|
5.3
|
%
|
|
$
|
25.5
|
|
|
|
7.2
|
%
|
|
|
Three months ended June 30,
|
|
|||||||||||||
|
|
2019
|
|
|
2018
|
|
||||||||||
(in millions)
|
|
$’s
|
|
% of sales
|
|
|
$’s
|
|
% of sales
|
|
||||||
Net sales
|
|
$
|
168.8
|
|
|
|
100.0
|
%
|
|
$
|
183.9
|
|
|
|
100.0
|
%
|
Cost of sales
|
|
|
144.5
|
|
|
|
85.6
|
%
|
|
|
155.3
|
|
|
|
84.4
|
%
|
Gross profit
|
|
|
24.3
|
|
|
|
14.4
|
%
|
|
|
28.6
|
|
|
|
15.6
|
%
|
Selling, general and administrative expenses
|
|
|
15.1
|
|
|
|
9.0
|
%
|
|
|
15.3
|
|
|
|
8.3
|
%
|
Restructuring expenses
|
|
|
0.2
|
|
|
|
0.1
|
%
|
|
|
0.1
|
|
|
|
0.1
|
%
|
Operating income
|
|
$
|
9.0
|
|
|
|
5.3
|
%
|
|
$
|
13.2
|
|
|
|
7.2
|
%
|
|
|
Three months ended June 30,
|
|
|||||||||||||
|
|
2019
|
|
|
2018
|
|
||||||||||
(in millions)
|
|
$’s
|
|
% of sales
|
|
|
$’s
|
|
% of sales
|
|
||||||
Net sales
|
|
$
|
49.0
|
|
|
|
100.0
|
%
|
|
$
|
45.0
|
|
|
|
100.0
|
%
|
Cost of sales
|
|
|
35.3
|
|
|
|
72.1
|
%
|
|
|
33.4
|
|
|
|
74.1
|
%
|
Gross profit
|
|
|
13.7
|
|
|
|
27.9
|
%
|
|
|
11.6
|
|
|
|
25.9
|
%
|
Selling, general and administrative expenses
|
|
|
8.4
|
|
|
|
17.2
|
%
|
|
|
8.4
|
|
|
|
18.8
|
%
|
Operating income
|
|
$
|
5.3
|
|
|
|
10.7
|
%
|
|
$
|
3.2
|
|
|
|
7.1
|
%
|
• |
Economic, social and political conditions, changes, challenges and unrest, particularly in the geographic, product and financial markets where we and our customers operate and compete, including, in particular, foreign currency exchange rate fluctuations, tariffs (and potential trade war impacts resulting from tariffs or retaliatory actions), inflation, changes in interest rates, recession and recovery therefrom, restrictions and uncertainty associated with cross-border trade, and the general uncertainties about the impact of regulatory and/or policy changes, including those related to tax and trade, that have been or may be implemented in the United States or by its trade partners, as well as continuing uncertainty regarding the timing and the short- and long-term implications of “Brexit”;
|
• |
The impact of potential price increases associated with raw materials, including aluminum, copper, steel and stainless steel (nickel), and other purchased component inventory including, but not limited to, increases in the underlying material cost based upon the London Metal Exchange and related premiums or fabrication costs. These prices may be impacted by a variety of factors, including changes in trade laws and tariffs and the behavior of our suppliers. This risk includes our ability to successfully manage our exposure and our ability to adjust product pricing in response to price increases, whether through our quotation process or through contract provisions for prospective price adjustments, as well as the inherent lag in timing of such contract provisions; and
|
• |
The impact of current and future environmental laws and regulations on our business and the businesses of our customers, including our ability to take advantage of opportunities to supply alternative new technologies to meet environmental and/or energy standards and objectives.
|
• |
The overall health and continually increasing price-down focus of our vehicular customers in light of economic and market-specific factors, and the potential impact on us from any deterioration in the stability or performance of any of our major customers;
|
• |
Unanticipated problems with suppliers meeting our time, quantity, quality and price demands, and the overall health of our suppliers, including their ability and willingness to supply our volume demands if their production capacity becomes constrained;
|
• |
Our ability to maintain current customer programs and compete effectively for new business, including our ability to offset or otherwise address increasing pricing pressures from competitors and price reduction and overall service pressures from customers, particularly in the face of macro-economic instability;
|
• |
Unanticipated product or manufacturing difficulties or operating inefficiencies, including unanticipated program launch and product transfer challenges and warranty claims;
|
• |
Unanticipated delays or modifications initiated by major customers with respect to program launches, product applications or requirements;
|
• |
Our ability to consistently structure our operations in order to develop and maintain a competitive cost base with appropriately skilled and stable labor, while also positioning ourselves geographically, so that we can continue to support our customers with the technical expertise and market-leading products they demand and expect from Modine;
|
• |
Our ability to effectively and efficiently complete restructuring activities and realize the anticipated benefits of those activities;
|
• |
Costs and other effects of the investigation and remediation of environmental contamination; particularly when related to the actions or inactions of others and/or facilities over which we have no control;
|
• |
Our ability to recruit and maintain talent, including personnel in managerial, leadership and administrative functions, in light of tightening global labor markets;
|
• |
Our ability to protect our proprietary information and intellectual property from theft or attack by internal or external sources;
|
• |
The impact of any substantial disruption or material breach of our information technology systems, and any related delays, problems or costs;
|
• |
Increasingly complex and restrictive laws and regulations, including those associated with being a U.S. public company and others present in various jurisdictions in which we operate, and the costs associated with compliance therewith;
|
• |
Work stoppages or interference at our facilities or those of our major customers and/or suppliers;
|
• |
The constant and increasing pressures associated with healthcare and associated insurance costs; and
|
• |
Costs and other effects of unanticipated litigation, claims, or other obligations.
|
• |
Our ability to successfully take advantage of our increased presence in the “industrial” markets, with our CIS and BHVAC businesses, while maintaining appropriate focus on the market opportunities presented by our VTS business;
|
• |
The success of our evaluation of strategic alternatives for our automotive business within our VTS segment in optimizing the segment’s future profitability;
|
• |
Our ability to identify and execute additional growth and diversification opportunities in order to position us for long-term success; and
|
• |
The potential expense, disruption or other impacts that could result from unanticipated actions by activist shareholders.
|
• |
Our ability to fund our global liquidity requirements efficiently for Modine’s current operations and meet our long-term commitments in the event of an unexpected disruption in or tightening of the credit markets or extended recessionary conditions in the global economy;
|
• |
The impact of potential increases in interest rates, particularly in LIBOR and the Euro Interbank Offered Rate (“EURIBOR”) in relation to our variable-rate debt obligations, and of the continued uncertainty around the utilization of LIBOR or alternative reference rates;
|
• |
Our ability to maintain our leverage ratio (net debt divided by Adjusted EBITDA, as defined in our credit agreements) in our target range of 1.5 to 2.5 in an efficient manner;
|
• |
The potential unfavorable impact of foreign currency exchange rate fluctuations on our financial results; and
|
• |
Our ability to effectively realize the benefits of deferred tax assets in various jurisdictions in which we operate.
|
Period
|
Total Number of
Shares Purchased
|
Average
Price Paid
Per Share
|
Total Number of
Shares Purchased
as Part of Publicly
Announced Plans
or Programs
|
Maximum
Number (or
Approximate Dollar
Value) of Shares
that May Yet Be
Purchased Under the
Plans or Programs (a)
|
April 1 – April 30, 2019
|
———
|
———
|
———
|
$49,431,509
|
May 1 – May 31, 2019
|
228,308 (b)
|
$12.93
|
29,250
|
$49,046,555
|
June 1 – June 30, 2019
|
194,321 (b)
|
$13.54
|
150,000
|
$46,985,524
|
Total
|
422,629 (b)
|
$13.21
|
179,250
|
(a) |
Effective October 30, 2018, the Board of Directors approved a two-year, $50.0 million share repurchase program, which allows the Company to repurchase Modine common stock through solicited and unsolicited transactions in the open market or in privately-negotiated or other transactions, at such times and prices and upon such other terms as the authorized officers of the Company deem appropriate.
|
(b) |
Consists of both shares acquired pursuant to the repurchase program described in (a) above and shares delivered back to the Company by employees and/or directors to satisfy tax withholding obligations that arise upon the vesting of stock awards. The Company, pursuant to its equity compensation plans, gives participants the opportunity to turn back to the Company the number of shares from the award sufficient to satisfy tax withholding obligations that arise upon the termination of restrictions. These shares are held as treasury shares.
|
• |
Severance pay in an amount equal to one year of Mr. Wollenberg’s annual salary of $367,000;
|
• |
A healthcare insurance subsidy;
|
• |
A prorated payment of his annual management incentive payment; and
|
• |
Accelerated or prorated vesting of certain previously granted unvested restricted stock, restricted stock units and performance shares under the Company’s long-term incentive plan (the “LTIP”), in accordance with the terms of the Agreement.
|
Exhibit No.
|
Description
|
|
Incorporated Herein By
Reference To
|
|
Filed
Herewith
|
|
|
|
|
|
|
Fourth Amended and Restated Credit Agreement dated as of June 28, 2019.
|
|
Exhibit 4.1 to Registrant’s Current Report on Form 8-K dated June 28, 2019
|
|
|
|
|
|
|
|
|
|
Form of Fiscal 2020 Modine Performance Stock Award Agreement
|
|
|
|
X
|
|
|
|
|
|
|
|
Form of Fiscal 2020 Modine Incentive Stock Options Award Agreement
|
|
|
|
X
|
|
|
|
|
|
|
|
Form of Fiscal 2020 Modine Restricted Stock Unit Award Agreement
|
|
|
|
X
|
|
|
|
|
|
|
|
Form of Fiscal 2020 Modine Non-Qualified Stock Option Award Agreement
|
|
|
|
X
|
|
|
|
|
|
|
|
Employment Retention Agreement for Scott Wollenberg, dated as of July 26, 2019
|
|
|
|
X
|
|
|
|
|
|
|
|
Rule 13a-14(a)/15d-14(a) Certification of Thomas A. Burke, President and Chief Executive Officer.
|
|
|
|
X
|
|
|
|
|
|
|
|
Rule 13a-14(a)/15d-14(a) Certification of Michael B. Lucareli, Vice President, Finance and Chief Financial Officer.
|
|
|
|
X
|
|
|
|
|
|
|
|
Section 1350 Certification of Thomas A. Burke, President and Chief Executive Officer.
|
|
|
|
X
|
|
|
|
|
|
|
|
Section 1350 Certification of Michael B. Lucareli, Vice President, Finance and Chief Financial Officer.
|
|
|
|
X
|
|
|
|
|
|
|
|
101.INS
|
Instance Document
|
|
|
|
X
|
|
|
|
|
|
|
101.SCH
|
XBRL Taxonomy Extension Schema
|
|
|
|
X
|
|
|
|
|
|
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
|
X
|
|
|
|
|
|
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
|
X
|
|
|
|
|
|
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
|
|
X
|
|
|
|
|
|
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
|
|
X
|
Full name of Grantee:
|
||
Date of Award:
|
May 29, 2019
|
|
Target number of Common Stock:
|
||
Performance Period:
|
April 1, 2019 to March 31, 2022
|
|
• |
Fees and expenses for restructuring consultants or financial advisors
|
|
• |
Employee severance, outplacement and related benefits
|
|
• |
Employee insurance and benefits continuation
|
|
• |
Contractual salary continuation for terminated employees
|
|
• |
Equipment transfers and facility preparation
|
|
• |
Environmental services (e.g., plant clean-up prior to sale)
|
|
• |
Fees and expenses for transaction advisors
|
|
• |
Integration expenses
|
|
• |
Other incremental costs and charges that are non-recurring and directly related to the transaction
|
|
• |
Fees and expenses for strategy advisory services associated with a specific transaction or unique project
|
|
• |
Unusual, non-recurring or extraordinary cash and non-cash charges or income
|
|
• |
The impact of the adoption of new U.S. GAAP accounting standards and significant changes in the Company’s accounting methods.
|
|
• |
The impact of significant divestitures, such that annual metrics will be calculated on a “continuing operations” basis for the periods following divestiture.
|
MODINE MANUFACTURING COMPANY
|
||
|
|
|
By:
|
|
|
Thomas A. Burke
|
||
President and Chief Executive Officer
|
Full name of Grantee:
|
||
Date of Award:
|
May 29, 2019
|
|
Exercise price per share:
|
||
Total number of shares:
|
||
Total exercise price:
|
Number of Shares of Common Stock
|
Vesting Date
|
|
25% of the total number of shares
|
May 29, 2020
|
|
25% of the total number of shares
|
May 29, 2021
|
|
25% of the total number of shares
|
May 29, 2022
|
|
25% of the total number of shares
|
May 29, 2023
|
|
(a) |
Because you are an executive officer of the Company subject to the reporting requirements of Section 16 of the Securities Exchange Act of 1934, the Option may not be exercised by you within six (6) months after the Grant Date; and
|
|
(b) |
The 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 these options.
|
MODINE MANUFACTURING COMPANY
|
||
|
|
|
By:
|
|
|
Thomas A. Burke
|
||
President and Chief Executive Officer
|
Full name of Grantee:
|
||
Date of Award:
|
May 29, 2019
|
|
Total number of Restricted Stock Units:
|
Number of RSUs that Vest
|
Restricted Period Expiration
|
|
25% of the total number of RSUs
|
May 29, 2020
|
|
25% of the total number of RSUs
|
May 29, 2021
|
|
25% of the total number of RSUs
|
May 29, 2022
|
|
25% of the total number of RSUs
|
May 29, 2023
|
MODINE MANUFACTURING COMPANY
|
||
|
|
|
By:
|
|
|
Thomas A. Burke
|
||
President and Chief Executive Officer
|
Full name of Grantee:
|
||
Date of Award:
|
May 29, 2019
|
|
Exercise price per share:
|
||
Total number of shares:
|
||
Total exercise price:
|
Number of Shares of Common Stock
|
Vesting Date
|
|
25% of the total number of shares
|
May 29, 2020
|
|
25% of the total number of shares
|
May 29, 2021
|
|
25% of the total number of shares
|
May 29, 2022
|
|
25% of the total number of shares
|
May 29, 2023
|
|
(a) |
Because you are an executive officer of the Company subject to the reporting requirements of Section 16 of the Securities Exchange Act of 1934, the Option may not be exercised by you within six (6) months after the Grant Date; and
|
|
(b) |
The 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 these options.
|
MODINE MANUFACTURING COMPANY
|
||
|
|
|
By:
|
|
|
Thomas A. Burke
|
||
President and Chief Executive Officer
|
|
1. |
Recitals. The
Recitals form an integral part of this Agreement and are incorporated herein as if fully set forth.
|
|
2. |
Job Responsibilities.
|
|
A. |
Project Specific Responsibilities: Mr. Wollenberg’s specific assignment for the Term of this Agreement will be lead of the Project Dakota Program Management Office (the “Project”). It is anticipated that this Project will continue
through the 2019 calendar year. Completion of the Project occurs upon the earlier of (i) one hundred eighty (180) days after the closing of the sale of the business or assets of the Project or (ii) one hundred eighty (180) days after
notification by Modine to terminate Mr. Wollenberg’s employment in accordance with Paragraph 7(B). (“Project Completion”).
|
|
B. |
General Responsibilities: Mr. Wollenberg, in addition to his Duties set forth above, shall perform such ancillary duties which are
within Mr. Wollenberg’s training and experience.
|
|
3. |
Term. This Agreement shall commence immediately and
will terminate upon Project Completion or as otherwise provided for in Paragraph 7 below.
|
|
4. |
Salary. Mr. Wollenberg’s salary shall be Three Hundred
Sixty-Seven Thousand ($367,000) Dollars per calendar year paid pursuant to Modine’s current pay periods for office personnel subject to all federal, state and local taxes. Mr. Wollenberg’s salary may
not be reduced during the term of this Agreement.
|
|
5. |
Benefits. Mr.
Wollenberg will continue to participate in all employee benefit programs which are offered to other executive level employees of Modine, as may be amended from time to time. This includes, but is not limited to: group health
insurance, paid time off, performance bonus programs and equity grants.
|
|
6. |
Best Efforts, Exclusive Service. Mr. Wollenberg shall
devote his best efforts and all his attention, skill and efforts on a full-time basis to the business and affairs of Modine and the Project and shall not without prior, unanimous approval of Modine's Officers, which approval shall not
unreasonably be withheld, directly or indirectly, engage in or provide advice or assistance to any other business enterprise, whether or not competitive with Modine.
|
7.
|
Termination of Employment.
|
|
A. |
Termination “for cause”. Modine may terminate Mr. Wollenberg at any time and without notice if such termination is “for cause” as
that term is defined below. “For cause’ termination shall mean: (i) material breach by Mr. Wollenberg of any provision of this Agreement; (ii) commission of any material act of dishonesty or fraud with respect to Modine; or (iii)
conviction of a felony which in the reasonable judgment of Modine Board of Directors is likely to have a material adverse effect upon the business or reputation of Modine or which substantially relates to Mr. Wollenberg’s duties. In
the event Mr. Wollenberg is terminated pursuant to this Paragraph 7(A), Mr. Wollenberg is entitled to no severance compensation as outlined in Paragraph 7(F).
|
|
B. |
Termination By Modine Without Cause. In the event Modine elects to terminate Mr. Wollenberg’s employment for reasons other than
those set forth in Paragraph 7(A) (“without cause”), Modine must give Mr. Wollenberg no less than one hundred eighty (180) days’ advance notice of his termination date (“Notice Period”). If Modine no longer needs the services of Mr.
Wollenberg prior to the passage of the Notice Period, it may so inform Mr. Wollenberg, at which time he would be relieved of any continuing obligations to Modine, however, for purposes of this Agreement, Mr. Wollenberg’s date of
employment separation with Modine would be the date Modine informs Mr. Wollenberg he is relieved of his continuing obligations. Mr. Wollenberg would receive all salary he would have received during the remaining period of the Notice
Period. This payment will be in addition to the severance set forth in Paragraph 7(F). This amount will be paid to Mr. Wollenberg in a lump sum within sixty (60) days after Mr. Wollenberg separates employment with from the Modine.
Payment of this amount is contingent on the satisfaction of Paragraph 7(F)(7) (Release of Claims) of this Agreement.
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C. |
End of Project. Mr. Wollenberg’s continued employment with Modine is based upon Modine’s need to complete the Project. Mr.
Wollenberg agrees to remain with Modine until the Project is complete. Both parties acknowledge that the Project will continue through the 2019 calendar year. The Project Completion will be treated as a without cause termination by
Modine for purposes of Paragraph 7(F). Further, Modine may, at Project Completion, offer Mr. Wollenberg another position within Modine. Mr. Wollenberg may, but is not required, to accept such a position. The offering of the new
position within Modine does not alter Modine’s obligation to pay the separation benefits set forth in Paragraph 7(F). In the event that Mr. Wollenberg does accept such a position, Modine shall be required to make the payment in
accordance with Paragraph 7(F)(1), but shall not be required to provide the severance benefits described in Paragraphs 7(F)(2), 7(F)(3), 7(F)(4), and 7(F)(5). Notwithstanding the foregoing, the parties reserve the right to
negotiate any severance benefits that may be provided in the event of a severance from employment from any position subsequently accepted by Mr. Wollenberg.
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D. |
Voluntary Termination. Mr. Wollenberg may terminate his employment at Modine by giving Modine at least sixty (60) days' written
notice in advance. In the event Mr. Wollenberg voluntarily terminates his employment with Modine, Mr. Wollenberg is entitled to no severance compensation as outlined in Paragraph 7(F).
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E. |
Return of Property upon Termination. Upon termination of employment, for any reason, Mr. Wollenberg agrees forthwith to deliver to
Modine all equipment, notebooks and other data or records, whether written or in any other media, relating to Mr. Wollenberg's duties with Modine.
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F. |
Severance. In the event Mr. Wollenberg’s employment is terminated pursuant to Paragraph 7(B) or when this Agreement terminates
pursuant to Paragraph 7(C), Mr. Wollenberg will be entitled to receive as severance the following compensations and benefits:
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1. |
Severance Pay. Modine will pay to Mr. Wollenberg an amount equal to fifty-two (52) weeks of pay at the rate set forth in Paragraph 4 above. This severance will be paid to Mr. Wollenberg in a lump sum within five (5) business days
after execution of the General Release of Claims Agreement by Mr. Wollenberg and the passage of the seven (7) day revocation period.
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2. |
Health Insurance. Provided Mr. Wollenberg timely elects continuation coverage for Modine’s group health plan under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), Modine will continue to subsidize
the cost of its group health plan so that Mr. Wollenberg only pays the premiums amounts of active employees with the same coverage as of his separation of employment date, until the earliest of (a) the expiration of 12 months following
his separation of employment with Modine, (b) the date that Mr. Wollenberg becomes eligible for the group health plan of another employer, or (c) the date Mr. Wollenberg loses the right to COBRA continuation coverage under Modine’s
group health plan. Notwithstanding the foregoing, if at any time Modine determines, in its sole discretion, that its subsidy of the COBRA premiums on Mr. Wollenberg’s behalf reasonably could result in Modine or plan participants under
the group health plan incurring additional costs, penalties or taxes under applicable law (including, without limitation, Section 2716 of the Public Health Service Act, and Section 105(h) of the Internal Revenue Code) then in lieu of
subsidizing the COBRA premiums on Mr. Wollenberg’s behalf, Modine will instead pay Mr. Wollenberg on the last day of each remaining month for which Mr. Wollenberg is entitled to the COBRA subsidy, a fully taxable cash payment equal to
the COBRA subsidy for that month, subject to applicable tax withholding.
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3. |
FY20 MIP. Upon ONC Committee approval of any FY20 MIP payout, Mr. Wollenberg will receive his MIP compensation in accordance with the terms of the MIP, pursuant to Mr. Wollenberg’s target bonus percentage of fifty percent (50%) of
his base salary and payment conditioned on all MIP financial metrics being achieved. For purposes of calculation of the MIP compensation, Modine shall forecast financial metrics for FY20 as of Mr. Wollenberg’s termination date. Such
MIP compensation shall be prorated for the number of complete months of service in FY20. This amount will be paid to Mr. Wollenberg in a lump sum within five (5) business days after execution of the General Release of Claims Agreement
by Mr. Wollenberg and the passage of the seven (7) day revocation period.
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4. |
Equity Considerations.
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a. |
In partial consideration for Mr. Wollenberg accepting this position, Modine agrees that all unvested Restricted Stock and Restricted Stock Units granted in FY17, FY18 and FY19 shall vest upon Mr. Wollenberg’s separation of employment
with Modine.
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b. |
In partial consideration of Mr. Wollenberg remaining with Modine to Project Completion, the ONC Committee has approved accelerated vesting of certain outstanding equity grants held by Mr. Wollenberg. In addition, all LTIP
Performance Shares earned in accordance with the FY18-20 performance cycle will be vested in full at the earned payout percentage, and all LTIP Performance Shares earned in accordance with the FY19-21 performance cycle will be vested at
the earned payout percentage, but prorated for full months of active service provided by Mr. Wollenberg to Modine during this performance cycle. Mr. Wollenberg will be granted equity in connection with the FY20-22 performance cycle;
however, no accelerated vesting will occur with respect to this grant, and any unvested equity will be forfeited at the time of Mr. Wollenberg’s separation.
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5. |
Outplacement Services. Modine will provide Mr. Wollenberg with executive outplacement services to assist him in this career transition. Said outplacement service will continue until such time as Mr. Wollenberg takes a full time
position in his field. Notwithstanding the foregoing, Modine shall pay the cost for twelve (12) months of such outplacement services and the cost of any services beyond twelve (12) months shall be the responsibility of Mr. Wollenberg.
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6. |
Payment Continuation. Modine agrees that the obligation regarding these severance benefits is partial consideration for Mr. Wollenberg’s agreement to stay with Modine and complete the Project. As such, Modine agrees that the
severance benefits once earned by Mr. Wollenberg will continue to be paid even in the event of Mr. Wollenberg’s death.
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7. |
Release of Claims. Modine shall not be obligated to provide any payments to Mr. Wollenberg under Paragraph 7(F) as a result of any termination of employment unless: (a) the Mr. Wollenberg first executes within twenty-one (21)
calendar days, or in the event that such termination of employment is “in connection with an exit incentive or other employment termination program” (as such phrase is defined in the Age Discrimination in Employment Act of 1967, as
amended), forty-five (45) calendar days, of Mr. Wollenberg’s (or such earlier date as may be required by Modine) a release of claims agreement substantially in the form attached hereto as Exhibit A, with such changes as Modine
may determine to be required or reasonably advisable, including but not limited to changes to make the release enforceable and otherwise compliant with applicable law (the “Release”), (b) Mr. Wollenberg does not revoke the
Release, and (c) the Release becomes effective and irrevocable in accordance with its terms. Notwithstanding the foregoing, the Release will not affect Mr. Wollenberg’s ability to enforce the terms, conditions and benefits set forth in
this Agreement.
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8. |
Section 409A.
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A. |
Interpretation. Compensation and benefits under this Agreement are intended to be exempt from or to comply with Code Section 409A
and the interpretive guidance thereunder, and any similar state laws (collectively, “Section 409A”), including but not limited to, the exceptions for short-term deferrals, separation pay arrangements, reimbursements and in-kind
distributions, and shall be administered accordingly. This Agreement shall be construed and interpreted with such intent, and the requirement of Treasury Regulation Section 1.409A-3(i)(2) shall be observed, if applicable. Each payment
under this Agreement or any benefit plan of Modine is intended to be treated as one of a series of separate payments for purposes of Section 409A and Treasury Regulation Section 1.409A-2(b)(2)(iii) (or any similar or successor
provisions, including without limitation any similar state law provisions).
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B. |
Required Payment Delays for Non-Qualified Deferred Compensation. If any payments are treated as non-qualified deferred compensation
subject to Section 409A, and if Mr. Wollenberg is deemed, at the time of separation from service to be a “specified employee” for purposes of Code Section 409A(a)(2)(B)(i), then to the extent delayed commencement of any portion of the
payments or benefits to which Mr. Wollenberg is entitled is required, such portion shall not be paid to Mr. Wollenberg before the earlier of (A) the first business day of the seventh month measured from the date of Mr. Wollenberg’s
“separation from service” with the Modine under Section 409A, or (B) the date of Mr. Wollenberg’s death. Upon the earlier of such dates, all deferred payments shall be paid to Mr. Wollenberg (or beneficiary or estate) as applicable,
in a single lump sum, and any remaining payments due shall be paid as otherwise provided in this Agreement. To the extent any payments are treated as non-qualified deferred compensation subject to Section 409A of the Code, if the time
period for consideration of a general release through the expiration of any applicable revocation period with respect to the general release begins in one taxable year and ends in the following taxable year, then payments shall not be
paid or commence being paid until the beginning of the second taxable year.
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C. |
No Warranty or Guaranty of Tax Treatment. Modine does not represent or guarantee that any particular federal or state income,
payroll or other tax treatment will result from the compensation or benefits payable under this Agreement. Modine does not represent that this Agreement complies with Section 409A and in no event shall Modine, its affiliates nor
their respective directors, officers, employees or advisers be liable for any additional tax, interest or penalty that may be imposed on Mr. Wollenberg (or any other individual claiming a benefit through Mr. Wollenberg) pursuant to
Section 409A or damages for failing to comply with Section 409A. Mr. Wollenberg is solely responsible for the proper tax reporting and timely payment of any tax or interest for which he or she is liable as a result of the
compensation or benefits payable pursuant to this Agreement.
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9. |
Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Wisconsin, and the parties agree and consent (subject to the Arbitration provision herein) to jurisdiction and venue in the courts of the State of Wisconsin to resolve any dispute
arising under this Agreement.
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10. |
Binding Effect. The rights accruing to Modine under this Agreement shall pass to its assigns or successors, and
Mr. Wollenberg's obligations set forth herein shall extend to Mr. Wollenberg's administrators, executors, personnel representatives, heirs, and assigns.
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11. |
Severability. Should any part, term or provision of
this Agreement be construed by any court of competent jurisdiction to be illegal or in conflict with any law of the State of Wisconsin, such part, term or provision shall be construed to afford Modine the maximum protection and
benefit permissible, and the validity of the remaining portions or provisions shall not be affected thereby.
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12. |
Modifications. This Agreement may not be changed,
modified, released, discharged, abandoned, or otherwise terminated, in whole or in part, except by an instrument in writing signed by an officer or other authorized executive of Modine and Mr. Wollenberg.
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13. |
Arbitration Clause. The parties expressly intend that the mandatory arbitration provisions of this Agreement shall be liberally construed so as to require the arbitration of all claims and disputes of every kind and nature, whether arising out of
contract, tort, statute, common law or any other theories of liability and/or recovery in law and/or equity.
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14. |
Entire Agreement. This Agreement, with the Release,
constitutes the entire agreement among the parties hereto with respect to employment, change in control, post-employment and compensation and benefit arrangements, and supersedes all prior agreements, promises, and representations
with respect to such arrangements whether in writing or otherwise, including without limitation the agreements, offer letters or other arrangements, including the letter agreement between Modine and Mr. Wollenberg dated February 25,
2019.
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/s/ Scott Wollenberg
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Scott Wollenberg
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By:
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/s/ Brian Agen
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Brian Agen, Vice President,
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Human Resources
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1. |
Mutual Release of Claims.
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2. |
Claims to Which Agreement Does Not Apply.
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3. |
Claims Released Include Age Discrimination.
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4. |
Agreement Covers Claims Against Related Parties.
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5. |
The Terms “Claims” and “Release” are Construed Broadly.
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6. |
Agreement Binding on Employee and Related Parties.
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7. |
Employee Rights and Protections.
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8. |
Additional Consideration.
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9. |
Representations.
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10. |
Opportunity to Consider this Release; Consultation with Attorney.
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11. |
Voluntary Agreement.
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12. |
Partial Invalidity of this Agreement.
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13. |
Return of Modine Property; Confidentiality.
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14. |
Headings.
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15. |
Applicable Law.
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16. |
Suit in Violation of this Agreement - Loss of Benefits and Payment of Costs.
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17. |
Non-disparagement.
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18. |
Preservation of Rights under Benefit Plans and Indemnities.
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19. |
7 Day Revocation Period.
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20. |
Total Amount of Severance Payments.
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21. |
Cooperation with Government Agencies.
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22. |
Entire Agreement.
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Employee's Signature
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Employee’s Name: |
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(please print) |
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Scott Wollenberg |
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Name: |
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Date: |
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Title: |
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1. |
I have reviewed this quarterly report on Form 10-Q of Modine Manufacturing Company for the quarter ended June 30, 2019;
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2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made,
not misleading with respect to the period covered by this report;
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3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of,
and for, the periods presented in this report;
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4. |
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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a. |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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b. |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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c. |
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by
this report based on such evaluation; and
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d. |
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5. |
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of
directors (or persons performing the equivalent functions):
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a. |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and
report financial information; and
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b. |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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Date: August 1, 2019
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/s/ Thomas A. Burke
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Thomas A. Burke
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President and Chief Executive Officer
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1. |
I have reviewed this quarterly report on Form 10-Q of Modine Manufacturing Company for the quarter ended June 30, 2019;
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2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made,
not misleading with respect to the period covered by this report;
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3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of,
and for, the periods presented in this report;
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4. |
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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a. |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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b. |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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c. |
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by
this report based on such evaluation; and
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d. |
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5. |
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of
directors (or persons performing the equivalent functions):
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a. |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and
report financial information; and
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b. |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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Date: August 1, 2019
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/s/ Michael B. Lucareli
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Michael B. Lucareli
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Vice President, Finance and Chief Financial Officer
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1. |
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
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2. |
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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Date: August 1, 2019
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/s/ Thomas A. Burke
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Thomas A. Burke
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President and Chief Executive Officer
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1. |
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
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2. |
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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Date: August 1, 2019
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/s/ Michael B. Lucareli
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Michael B. Lucareli
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Vice President, Finance and Chief Financial Officer
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