TRANSPRO, INC. 100 GANDO DRIVE NEW HAVEN, CT 06513 September 16, 2004 VIA EDGAR Securities and Exchange Commission 450 Fifth Street N.W. Washington, DC 20549 Attention: Beverly A. Singleton Re: Transpro, Inc. Item 4.01 Form 8-K, filed August 26, 2004 File No. 1-13894 Dear Ms. Singleton: I am attaching the response of Transpro, Inc. (the "Company") to the comments of the staff (the "Staff") of the Securities and Exchange Commission (the "Commission") contained in the Staff's letter dated September 9, 2004 relating to the above-referenced filings. We have recited the comment of the Staff in bold type below, and have followed each comment with the response of the Company. We intend to revise our 10-Q/A Amendment No. 1 for the quarter ended March 31, 2004 as promptly as practicable following the Staff's review of this response letter. As requested in your letter, Transpro, Inc. acknowledges that: - - the Company is responsible for the adequacy and accuracy of the disclosure in these filings; - - Staff comments or changes to disclosure in response to Staff comments in the filings reviewed by the Staff do not foreclose the Commission from taking any action with respect to the filing; and - - the Company may not assert Staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States. Please contact Kenneth T. Flynn, Jr., Controller at (203) 859-3557, or the undersigned at (203) 859-3552, should you have any questions regarding this response. Very truly yours, /s/ Richard A. Wisot - -------------------- Richard A. Wisot Vice President and Chief Financial Officer ITEM 4.01 OF FORM 8-K REPORTABLE CONDITION: INTERNAL CONTROL WEAKNESS 1. WE NOTE THE DISCLOSURE REGARDING A MATERIAL WEAKNESS RELATED TO CERTAIN INTERNAL CONTROLS THAT IS CONSIDERED TO BE A REPORTABLE CONDITION. PLEASE PROVIDE US SUPPLEMENTALLY, WITH A COPY OF ALL WRITTEN REPORTS, LETTERS OR COMMUNICATIONS FROM PRICEWATERHOUSECOOPERS, LLP TO MANAGEMENT, THE BOARD OF DIRECTORS OR THE AUDIT COMMITTEE REGARDING THE MATERIAL WEAKNESS IN INTERNAL CONTROLS. Response: We have attached a written presentation from PricewaterhouseCoopers LLP ("PwC") to the Company's Audit Committee which was presented at the meeting of the Audit Committee held on August 12, 2004. We have also provided miscellaneous email correspondence from PwC to Company management. There were no further written reports, letters or communications from PwC to management, the Board of Directors or the Audit Committee regarding the material weakness in internal controls. 2. REFER TO THE MATERIAL WEAKNESS RELATED TO CERTAIN INTERNAL CONTROLS SURROUNDING THE PROPER REPORTING PERIOD IN WHICH TO RECOGNIZE REVENUES FOR SALES WITH FOB DESTINATION SHIPPING TERMS. TELL US THE NATURE AND TERMS OF THE SHIPPING ARRANGEMENTS AND WHY THE RESTATED FINANCIAL STATEMENTS NOW COMPLY WITH GAAP AND SAB 101. Response: Traditionally, with isolated exceptions, the Company's customer agreements contained the shipping terms "FOB Shipping Point." These terms resulted in revenue being recognized at the time products were shipped from Company facilities to the customer. The Company's accounting systems were configured on this basis. During recent years, certain new customers negotiated the shipping terms "FOB Destination", which result in the recognition of revenue upon receipt by the customer. At the end of the fourth quarter of 2003, management reviewed the issue of revenue recognition and determined that two of its larger retail customers had written agreements which included shipping terms of FOB Destination. As a result, an adjustment was recorded to reverse the impact of shipments which were not received by the customers before the end of 2003 in accordance with GAAP. During the review of the results for the second quarter of 2004, management determined that a more extensive review was required to determine which of its customers had agreements with shipping terms of FOB Destination. As a result, reported results for the first quarter of 2004 were restated, with sales being reduced by $1.3 million and pretax profit lowered by $0.2 million. The impact on other periods was evaluated and determined not to be material. In addition to the review of customer contracts, the Company has revised its procedures to properly determine at the end of each quarterly reporting period the amount of shipments which have not been received by customers with FOB Destination terms, and ensure that these sales are reversed and properly accounted for in accordance with GAAP. The Company is also attempting to change all customer shipping terms to FOB Shipping Point. MARCH 31, 2004 QUARTERLY REPORT ON FORM 10-Q, AS AMENDED 3. REFERENCE IS MADE TO THE ITEM 4.01 FORM 8-K AND THE MATERIAL WEAKNESS COMMUNICATED TO YOU BY PRICEWATERHOUSECOOPERS, LLP. ALSO REFER TO THE ITEM 4 DISCLOSURES IN YOUR MARCH 31, 2004 QUARTERLY REPORT ON FORM 10-Q, AS AMENDED. WE NOTE YOU DO NOT DISCLOSE THE CONCLUSIONS ABOUT THE EFFECTIVENESS OF YOUR DISCLOSURE CONTROLS AND PROCEDURES, AS REQUIRED UNDER ITEM 307(A) OF REGULATION S-K. THE MATERIAL CONTROL WEAKNESS DISCLOSED IN YOUR ITEM 4.01 FORM 8-K AND AS DUPLICATED HERE, APPEAR TO INDICATE YOU MAY LACK THE NECESSARY DISCLOSURE CONTROLS AND PROCEDURES, AS WELL AS INTERNAL CONTROLS NECESSARY TO PROVIDE TRUE AND ACCURATE ITEM 4 DISCLOSURES IN THE FORM 10-Q. ALSO, PLEASE NOTE THAT MANAGEMENT MAY NOT STATE THAT ITS CONTROLS ARE EFFECTIVE "EXCEPT" TO THE EXTENT THAT CERTAIN PROBLEMS HAVE BEEN IDENTIFIED OR EXPRESS SIMILAR QUALIFIED CONCLUSIONS. RATHER, MANAGEMENT MUST TAKE THOSE PROBLEMS INTO ACCOUNT WHEN CONCLUDING WHETHER THE CONTROLS ARE EFFECTIVE. IF THE CONTROLS ARE INEFFECTIVE, MANAGEMENT SHOULD STATE THE SPECIFIC REASONS WHY THEY ARE INEFFECTIVE. PLEASE REVISE YOUR ITEM 4 DISCLOSURES IN THE FORM 10-Q TO COMPLY WITH ITEM 307 OF REGULATION S-K. Response: In response to this comment, the Company proposes to replace Part I, Item 4 in its entirety with the following: ITEM 4. CONTROLS AND PROCEDURES The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Company's Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to the Company's management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure based on the definition of "disclosure controls and procedures" in Rule 13a-15(e). In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. The Company carried out an evaluation, under the supervision and with the participation of the Company's management, including the Company's Chief Executive Officer and the Company's Chief Financial Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures as of March 31, 2004. In conjunction with the evaluation carried out as of June 30, 2004, the Company detected a material internal control weakness associated with determining the revenue recognition impact of shipping terms to certain customers near quarters' end. It was determined that $1.3 million of net sales and $0.2 million of net income associated with shipments having terms of FOB Destination had been recorded in the quarter ended March 31, 2004 instead of in the quarter ended June 30, 2004. As a result, the Company is restating its results for the quarter ended March 31, 2004 and filing this amended Form 10-Q. The Company has determined that the impact of this issue on other prior periods was not material. Based upon the foregoing facts, management has concluded that its disclosure controls and procedures contained a material weakness as of March 31, 2004 and were therefore not effective as of that date. Subsequent to the end of the second quarter of 2004 in conjunction with the preparation of the financial statements for that period, the Company has implemented process and control improvements to insure that revenue is recognized in the proper periods. Specifically, these procedures include a review of all customer contracts in place and the implementation of a policy requiring sign-off by a senior financial officer if any new customer contract is entered into or existing customer contract is revised to contain shipping terms other than "FOB Shipping Point." There have been no other changes in the Company's internal control over financial reporting during the quarter ended March 31, 2004 that have materially affected, or are reasonably likely to materially affect the Company's internal control over financial reporting. 4. ALSO, DISCLOSE ANY SIGNIFICANT CHANGES IN INTERNAL CONTROLS TO COMPLY WITH ITEM 307(B) OF REGULATION S-K. WE NOTE FROM THE 8-K DISCLOSURE THAT YOU HAVE IMPLEMENTED PROCESS AND CONTROL IMPROVEMENTS. Response: We have provided additional disclosure regarding changes in internal controls in response to the Staff's comment. We refer you to the proposed revised language in Part I, Item 4 provided above in response to comment 3. SUPPLEMENTAL DOCUMENTS: Materials Provided to Audit Committee Transpro, Inc. Report to the Audit Committee August 12, 2004 *connectedthinking [PRICEWATERHOUSECOOPERS LOGO OMITTED] Chronology of Sales Cutoff Issue o Q4 2003 o Transpro reversed $660 thousand of sales and $250 thousand of margin for shipments made to Advance in the last two days of the period o Q1 2004 o During the Q1 review, PwC inquired whether any cutoff issues exist at 3/31/04 and was informed that none existed o Q2 2004 o During the Q2 review, PwC inquired whether any cutoff issues exist and was provided with an analysis indicating an issue at Q1 and Q2 Page 2 PricewaterhouseCoopers August 12, 2004 Company Approach and Analysis o Data Accumulation o Sales for last four days of each period were analyzed o Proofs of delivery were obtained for shipments made in Q4 2003, Q1 2004 and Q2 2004 o Analysis of Data o The analysis indicates that three days reasonably approximate the period from shipment to customer receipt. The quarterly and annual impact for 2002 and 2003 were determined by applying the three day estimate o Legal Interpretations o Wiggin & Dana to provide written opinions: Required - supporting title and risk of loss passage when goods are placed on AutoZone-owned trucks - concluding that the Advance terms and company invoicing practices result in FOB shipping point and not FOB destination Page 3 PricewaterhouseCoopers August 12, 2004 Assessment of Financial Reporting Impact o Company's o Materiality evaluated from a quantitative and Assessment qualitative perspective o Conclusion to amend Q1 2004 Form 10-Q reducing revenues by $1.3 million and income by $249 thousand o Legal Counsel's o Wiggin & Dana was consulted and concurs with View the Company's conclusion o PwC's View o PwC agrees with the Company's conclusion o Internal Control o Disclosure of a material weakness in Item 4 of Form 10-Q. Page 4 PricewaterhouseCoopers August 12, 2004 Communications from PwC to Management [GRAPHIC OMITTED] Diana To "Rich Giannino" *rgiannino@transpro.com** @INTL Montauti/US/ABAS/PwC cc 07/20/2004 01:13 PM 860-241-7159 bcc Hartford, CT US Subject Re: FW: Delivery Status Notification (Failure) [GRAPHIC OMITTED] Also Rich, does your excel file give visibility to the book value of the sales (meaning, the related inventory value)? If yes, can you include this in the print out as well. Thanks, Diana Montauti PricewaterhouseCoopers LLP 100 Pearl Street Hartford, CT 06103 P:(860) 241-7159 F:(813) 207-3718 "Rich Giannino" *rgiannino@transpro.com** [GRAPHIC OMITTED] "Rich Giannino" *rgiannino@transpro.com** To Diana Montauti/US/ABAS/PwC@Americas-US 07/20/2004 11:44 AM cc Subject FW: Delivery Status Notification (Failure) Diana Received the email back for a second time with the same message. The file may be too large for what you have in your inbox. let me know if a print out is good enough or if you have another address to send it to. Rich -----Original Message----- From: System Administrator Sent: Tuesday, July 20, 2004 11:42 AM To: 'diana.montauti@us.pwc.com' Subject: Undeliverable: Delivery Status Notification (Failure) Your message did not reach some or all of the intended recipients. Subject: FW: Last 2 Sales Day for Ql & Q2 2004.xls The following recipient(s) could not be reached: 'diana.montauti@us.pwc.com' on 7/20/2004 11:42 AM This message is larger than the current system limit or the recipient's mailbox is full. Create a shorter message body or remove attachments and try sending it again. *tprnhmail.domain.com #5.2.3 smtp;552 5.2.3 Message exceeds maximum fixed size (14680064)** [GRAPHIC OMITTED] Diana To CDelucia@transpro.com Montauti/US/ABAS/PwC KFlynn@transpro.com, Neil G. Mitchill 07/23/2004 03:08 PM cc Jr./US/ABAS/PwC@Americas-US 860-241-7159 Hartford, CT bcc US Subject BOL and PO selections Hi Chris, As discussed with Ken, please pull the following selections (there are 10). We will need the Bill of Lading and the P.O. for each. Thank you, [GRAPHIC OMITTED] BOL and PO selections.xls Diana Montauti PricewaterhouseCoopers LLP 100 Pearl Street Hartford, CT 06103 P:(860) 241-7159 F:(813) 207-3718 Selections for BOL and PO ALT-HE Advance - -------------------------------------------------------------------------------- PART # QTY AMT DATE CUS CUS # BU LOC INV # - -------------------------------------------------------------------------------- 432184 4 335.92 6/30/2004 ADVANCE 30048 10579 MEMPHIS 3887254 - -------------------------------------------------------------------------------- 432392 12 1128.36 6/30/2004 ADVANCE 30048 10579 MEMPHIS 3887254 ALT-HE Advance - ----------------------------------------------------------------------------------- PART # DOC TYPE LINE TYPE CHN GRP CODE GRP Quarter cpu Cost - ----------------------------------------------------------------------------------- 432184 RI S RTL 2nd Qtr 51.8738 207.4952 - ----------------------------------------------------------------------------------- 432392 RI S RTL 2nd Qtr 43.4357 521.2284 ALT-HE Autozone - ------------------------------------------------------------------------------- PART # QTY AMT DATE CUS CUS # BU LOC INV # - ------------------------------------------------------------------------------- 433716 26 2189.2 6/30/2004 ADVANCE 30048 10579 MEMPHIS 3887254 - ------------------------------------------------------------------------------- 432305 2 338.48 6/30/2004 ADVANCE 30048 10579 MEMPHIS 3887253 ALT-HE Autozone - ------------------------------------------------------------------------------------ PART # DOC TYPE LINE TYPE CHN GRP CODE GRP Quarter cpu Cost - ------------------------------------------------------------------------------------ 433716 RI S RTL 2nd Qtr 56.0983 1458.556 - ------------------------------------------------------------------------------------ 432305 RI S RTL 2nd Qtr 106.0662 212.1324 ALT-HE Ozark - -------------------------------------------------------------------------------- PART # QTY AMT DATE CUS CUS # BU LOC INV # - -------------------------------------------------------------------------------- 431405 7 755.44 6/30/2004 OZARK P_ 6897 10579 MEMPHIS 3887090 - -------------------------------------------------------------------------------- 433918 9 565.92 6/29/2004 OZARK P_ 6897 10579 MEMPHIS 3884735 ALT-HE Ozark - ----------------------------------------------------------------------------------- PART # DOC TYPE LINE TYPE CHN GRP CODE GRP Quarter cpu Cost - ----------------------------------------------------------------------------------- 431405 RI S RTL 2nd Qtr 58.8383 411.8681 - ----------------------------------------------------------------------------------- 433918 RI S RTL 2nd Qtr 45.4387 408.9483 ALT-HE CSK - -------------------------------------------------------------------------------- PART # QTY AMT DATE CUS CUS # BU LOC INV # - -------------------------------------------------------------------------------- 432391 7 779.31 6/30/2004 CSK AUTO 46164 10579 MEMPHIS 3887097 ALT-HE CSK - ----------------------------------------------------------------------------------- PART # DOC TYPE LINE TYPE CHN GRP CODE GRP Quarter cpu Cost - ----------------------------------------------------------------------------------- 432391 RI S RTL 2nd Qtr 43.4357 304.0499 ALT-HE Pep Boys - -------------------------------------------------------------------------------- PART # QTY AMT DATE CUS CUS # BU LOC INV # - -------------------------------------------------------------------------------- 433184 8 684.24 6/30/2004 PEP BOYS 7044 10579 MEMPHIS 3887129 ALT-HE Pep Boys - ----------------------------------------------------------------------------------- PART # DOC TYPE LINE TYPE CHN GRP CODE GRP Quarter cpu Cost - ----------------------------------------------------------------------------------- 433184 RI S RTL 2nd Qtr 52.2638 466.1104 ALT-TC Autozone - -------------------------------------------------------------------------------------- PART # QTY AMT DATE CUS CUS # BU LOC INV # - -------------------------------------------------------------------------------------- 2642 93 11000.04 3/30/2004 AUTOZONE 14289 11963 READY-AI 3738097 - -------------------------------------------------------------------------------------- CORE CH, 329 2138.5 3/30/2004 AUTOZONE 14289 11963 READY-AI 3738097 ALT-TC Autozone - ----------------------------------------------------------------------------- PART # DOC TYPE LINE TYPE CHN GRP CODE GRP Quarter cpu Cost - ----------------------------------------------------------------------------- 2642 RI S RTL 1st Qtr 0 0 - ----------------------------------------------------------------------------- CORE CH, RI I RTL 1st Qtr 0 0 [GRAPHIC OMITTED] Diana To KFlynn@transpro.com Montauti/US/ABAS/PwC cc Neil G. Mitchill Jr./US/ABAS/PwC@Americas-US 07/23/2004 03:20 PM 860-241-7159 bcc Hartford, CT US Subject Sales File and Agreement Pages Ken, As discussed. [GRAPHIC OMITTED] Last 2 Sales Day for Q1 & Q2 2004.zip [GRAPHIC OMITTED] Pep - AZ - CSK Page.pdf [GRAPHIC OMITTED] Advance page.PDF [GRAPHIC OMITTED] OReilley.pdf Diana Montauti PricewaterhouseCoopers LLP 100 Pearl Street Hartford, CT 06103 P: (860) 241-7159 F: (813) 207-3718 PwC Sales Cutoff Analysis - 2004 B.U. CUSTOMER Q1 3/30 Q1 3/31 Q2 6/29 Q2 6/30 ALT-HE Autozone 92,792 (9,125) 212,889 41,009 Advance (24,397) 38,932 (8,645) 100,881 CSK 5,435 25,982 3,308 52,198 Pep Boys 62,722 6,525 2,215 16,221 Ozark 147,180 216,002 247,244 153,663 ALT-TC Autozone 713,366 -- 10,994 6,166 CSK 4,158 72 14,049 16,148 Pep Boys 55,344 50,044 41,094 1,014 Proposition 65, the Merchandise shall be labeled so that the sale of the Merchandise by Pep Boys, assuming that Pep Boys has posted non-merchandise specific warning signs, will not cause Pep Boys to be in violation of Proposition 65); (h) all of the information provided by Manufacturer to Pep Boys with respect to the Merchandise shall be true and correct, and sufficient substantiation shall exist for the same for Pep Boys to publish and use the same in compliance with the provisions of all federal, state and local laws and regulations (and those of the Commonwealth of Puerto Rico) now in effect or hereafter enacted; (i) the equal opportunity requirements set forth in 41 CFR 60-1.4, 60-250.40 and 60-741.5, as amended, are incorporated herein, and Manufacturer shall comply with them while supplying the Merchandise to Pep Boys; and (j) Manufacturer will comply with all of the requirements set forth in Pep Boys' Bar Code Compliance Manual supplied from time to time. Manufacturer agrees to an annual Merchandise line review and to remove for full credit all slow moving and overstocked Merchandise and/or any Merchandise which was discontinued by Manufacturer. 10. PURCHASE ORDERS: NO MERCHANDISE SHALL BE SHIPPED UNLESS A PURCHASE ORDER HAS BEEN RECEIVED FROM PEP BOYS. Pep Boys shall have the right, at any time prior to shipment of the Merchandise to make changes to the applicable purchase order. 11. FREIGHT: Manufacturer will ship all Merchandise directly to Pep Boys' designated DCs F.O.B. Pep Boys' DC with Manufacturer responsible for all freight, shipping and insurance charges. Merchandise shall be packaged and shipped in accordance with Pep Boys' instructions and procedures, which may be modified from time to time by Pep Boys. The risk of loss with respect to any Merchandise shall not pass to Pep Boys until the Merchandise has been delivered in full conformity with the applicable purchase order and this Agreement to Pep Boys' designated DC. All Merchandise shall be subject to inspection and approval by Pep Boys within 24 hours after receipt, notwithstanding payment therefor, and may be rejected in whole or in part, as if it had never been accepted, if the Merchandise is not in compliance with the assurances set forth above. Manufacturer shall supply, at its sole cost and expense, all materials requested by Pep Boys for the repackaging of any Merchandise deemed by Pep Boys to be not sellable due to damaged packaging. 12. PACKAGING: Merchandise will be shipped in standard packaging, using specified part numbers and UPC codes. 13. LIFT OF PEP BOYS' EVAPORATOR INVENTORY. Manufacturer shall purchase Three Million Dollars ($3,000,000) (measured at Pep Boys' gross acquisition cost) of Pep Boys' undesirable evaporator inventory per the following: a. Pep Boys to remove undesirable evaporator inventory from Pep Boys' stores and to consolidate at Pep Boys' DCs. Pep Boys to appropriately package for truckload shipments and ship via Pep Boys' specified carrier. Pep Boys will pay freight from Pep Boys' DCs to Manufacturer. b. Manufacturer will issue check/three credits of Six hundred sixty-six thousand-six hundred and sixty six dollars (S666,666) each to Pep Boys on February 20, 2003 The Heat Transfer Professionals [TRANSPRO, INC. LOGO OMITTED] ADDENDUM TO VENDOR AGREEMENT This Addendum to Vendor Agreement is entered into by AutoZone, Inc. ("AutoZone"), a Nevada corporation, and Transpro, Inc. ("Transpro"), a Delaware corporation, as of the 31st day of October, 2003, and is attached to and made a part of the Vendor Agreement (the "Agreement") dated September 8, 2003 between AutoZone and Transpro, Inc. All capitalized terms not defined herein shall have the meanings ascribed to them in the Agreement. NOW, THEREFORE, in consideration of the premises and the mutual agreements of the parties set forth herein, and other good and valuable consideration, the receipt adequacy and sufficiency of which are hereby acknowledged, the parties hereby agree as follows; 1. LIFTED INVENTORY. (a) On the terms and subject to the conditions contained herein, AutoZone agrees to sell to Transpro, and Transpro agrees to purchase from AutoZone in accordance with the timeline specified herein, free and clear of any security interest, mortgage, lien, charge, restriction, encumbrance, conditional sale agreement, claim, pledge or right of any party (each a "Lien" and collectively, "Liens"), the types and quantities of accessories products identified on Schedule 1 hereto and as the same may be amended by the parties in writing at the time of each Closing (the "Lifted Inventory"). AutoZone warrants that it has good and marketable title to the Lifted Inventory free and clear of all Liens and that it has the right to sell the Lifted Inventory pursuant to the terms of this Addendum. For purposes of this Agreement, the parties agree that the Lifted Inventory shall only consist of and, accordingly, Transpro shall only purchase from AutoZone pursuant to the terms of this Addendum, Lifted Inventory in its original packaging and is in good and saleable condition. Transpro hereby acknowledges and agrees that, except as otherwise provided herein, all of the Lifted Inventory conveyed hereunder is being sold AS IS, WHERE IS in its current condition as of die date of the Closing (as defined below). Transpro acknowledges and agrees that lawful disposal of Lifted Inventory is the responsibility of Transpro. At all times after title to the Lifted Inventory has passed to Transpro pursuant to the terms of this Agreement, Transpro agrees to indemnify AutoZone against, and hold it harmless from, any liability, cost, loss, or expense arising out of any claim, demand, or action alleging that negligent, improper or illegal use or disposal of the Lifted Inventory has occurred. (b) The parties agree that the Lifted Inventory will be divided into three categories: Purchased Inventory, Slow Moving Inventory, and Non-Cross Inventory. The Lifted Inventory is divided into these categories in Schedule 1 and Schedule 2 of this Addendum. 2. SCHEDULE OF CLOSINGS. The parties acknowledge that the sale and purchase of the Lifted Inventory described in Section I above must be consummated in a manner that does not disrupt either party's normal business activities. Accordingly, the parties agree that each such sale and purchase transaction shall occur pursuant to separate "phased" closings of Midas distribution centers and Parts Warehouse, Inc. locations serviced by such closed Midas distribution center (each, a "Closing" and, collectively, the "Closings"), with the last Closing occurring no later than November 30, 2003. 3. DELIVERY. The parties agree to work together in good faith to develop an orderly delivery schedule for the Lifted Inventory which is mutually acceptable to the parties. AutoZone shall be responsible for the freight charges relating to all shipments of Lifted Inventory from AutoZone to Transpro (FOB shipment destination point). All right, title and interest in and to the Lifted Inventory shall transfer to Transpro upon completion of shipment and Transpro may dispose of the Lifted Inventory as Transpro, in its sole opinion deems appropriate. 4. PRICING. Transpro agrees to pay AutoZone an amount equal to the number of units per model lifted multiplied by the price per model as set forth on the price listing, which is attached hereto and incorporated herein as Schedule 2. for the Lifted Inventory (the "Price List"). The total amount to be paid by Transpro for 1 TERMS AND CONDITIONS -------------------- APPLICABLE TO MASTER VENDOR AGREEMENT ------------------------------------- 1. Pricing and Lead Times. CSK and Vendor shall mutually agree in writing upon the prices and lead times of each and every Product to be purchased by CSK from Vendor. Vendor shall offer CSK allowances, discounts, credits, prices and lead times that are equal to or better than those Vendor offers to any other customer. In the event that CSK orders a Product prior to Vendor and CSK reaching agreement upon the price, the price shall be the same as Vendor offers its best customer, unless CSK and Vendor subsequently agree to a lower price. Vendor shall provide CSK with ninety (90) days prior written notice of any proposed price increase. 2. Allowances and Discounts. Vendor shall deduct all applicable allowances and discounts from the amount invoiced to CSK. At CSK's option, any allowance or discount may be used by CSK as a credit against amounts due Vendor to the extent Vendor has not previously deducted such allowances and discounts in full from the amount due from CSK. If for six consecutive months, Vendor's records indicate that CSK has a credit balance. Vendor shall promptly pay the amount of any credit balance to CSK. 3. Ordering, Delivery, and Inspection. Vendor shall supply all Products ordered by CSK during the term of this MVA in accordance with previously agreed lead times. If the parties have not agreed upon specific lead times, Vendor shall supply the Products in accordance with their best lead times at no additional cost. Nothing contained herein shall require CSK to order any Products from Vendor. CSK may cancel any order placed with Vendor, without cost if CSK determines in its sole discretion that it no longer requires the Product. Products shall be packed by Vendor for shipment to CSK in accordance with written instructions provided by CSK. If CSK has not provided such written instructions, Vendor shall pack Products for shipment in accordance with good commercial practice so that Products arrive at their destination undamaged. Vendor shall ship Products to CSK in the manner mutually agreed by the parties in writing. If the parties have not so mutually agreed in writing, Vendor shall deliver Product FOB to CSK's designated location at no additional cost to CSK. Vendor shall fill CSK's orders at a rate of no less than 95% on the first pass, unless Vendor has agreed to a higher fill rate. As used in this MVA, the terms "purchase order" and "order" shall include each other, as well as any other form of request from CSK to Vendor to ship Product to CSK, including requests by EDI and correspondence. All Product furnished hereunder is subject to inspection and approval by CSK upon receipt, notwithstanding prior payments or acceptance of previously shipped similar Product, and may be rejected in whole or in part, by CSK if inferior in quality or workmanship or if not in conformity with representations made by Vendor or for any other sufficient reason. Further, if after receipt of any Product or any part thereof, the Product is determined by CSK in its good faith discretion to be contaminated, not in compliance with the terms, specifications or requirements of this MVA or otherwise unfit for sale, such Product is subject to rejection at that time as if it had never been accepted. If so rejected by CSK, such Product (and in case of Product shipped in excess of a purchase order, the excess) shall be subject to return to Vendor, at Vendor's expense for transportation both ways, labor and other costs of unloading and reloading, trucking and similar costs. Product so rejected may not be replaced except upon receipt of written instructions from CSK. In no event shall CSK's acceptance of any Product be deem a waiver by CSK of any rights with respect to the accepted Product, or with respect to any other Products. Vendor shall reimburse CSK for any costs, damage or expense incurred by CSK arising or resulting from the sale by CSK of Product which is not in conformance with the terms, requirements and specifications applicable to such Product. Page 5 of 9 Rev 1/25/00 Purchase Level Goals Rebate Amount ------------------------ ------------- $22,000,000 - 23,999,999 0.5 $24,000,000 - 25,999,999 0.9 $26,000,000 - 27,999,999 1.3 $28,000,000 - 29,999,999 1.7 $30,000,000 - plus 2.1 All rebates will be paid on total net sales. All credits will be issued within 30 days of Volume Incentive period end. Example One: Advance Purchase $24,500,000 x 0.9 = $220,500 rebate paid to Buyer Example Two: Advance Purchase $26,500,000 x 1.3 = $344,500 rebate paid to Buyer 12. Freight Terms - Seller will ship prepaid F.O.B. from shipping point to Buyer's distribution centers minimum orders of $1,500. PDQ warehouse orders will be shipped prepaid on minimum orders of $750. 13. Shipments - Seller will ship to Buyer all Products in accordance with Seller's current Vendor Service Agreement which is incorporated herein. 14. Net Purchases - Net Purchases will be defined as gross purchases less credits for alleged defective returns. No other credits or deductions will be allowed in determining Net Purchases. 15. Term - Upon acceptance of this Agreement by Buyer and Seller, this instrument shall constitute an agreement for the term of three (3) years, effective May 19, 2002 through May 19, 2005. 16. Pricing - Seller agrees to hold quoted prices for the term of this agreement except in the event where there are substantial increases in raw materials and or freight cost not controlled by Seller. Raw materials will be defined as only aluminum, copper, brass, lead, and tin. Freight cost will be defined as fuel only. Seller agrees to supply Buyer a quote attachment (A) and both Buyer and Seller will approve such quote prior to signing. 17. Catalog - Seller agrees to provide Buyer an up to date catalog or supplement each year at no additional cost. Current paper catalog requirements are two per Buyer's store per catalog. Electronic revisions are required in the QuickCat format or APAA format at no additional cost. 3 PAYMENT TERMS ------------- ALL DATING SHALL BEGIN AT THE DATE OF RECEIPT OF THE GOODS AT 0'REILLY'S DOCK ON ALL PROX (PROXIMO) DATINGS, GOODS INVOICED AFTER THE 25TH OF A MONTH SHALL BE PAYABLE AS IF RECEIVED IN THE FOLLOWING MONTH. INVOICES SHOULD BE MAILED ON THE SAME DAY GOODS ARE SHIPPED AND SHALL DATE FROM O'REILLY'S RECEIPT OF THE GOODS. 0% Cash Discount 120 days until discount payment is due, net 121 days. ________ 15th prox, net _______ days ______ % Early Pay/Anticipation Discount ----------------------------------------------------------------------------------------- O'Reilly's Purchase Order terms should read as follows: ---------------------------------------------------------------------------- Operating Order or Changeover Terms: ----------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------- QUALITY ------- Vendor agrees to supply O'Reilly Auto Parts product that meets or exceeds the original equipment manufacturers specifications. Any changes in product makeup or design from those agreed upon by O'Reilly Auto Parts at time of original purchase must be communicated to the Product Manager with said list of changes, along with specifications and independent lab test results. Any product that does not hold up to these standards, or changes that create lessor quality than those agreed upon, will bring about immediate termination of our association. SHIPPING AGREEMENT ------------------ COMMITTED DISTRIBUTION CENTERS YOUR SHIPPING POINTS LEAD TIME PENALTY - ------------------------------------------------------ -------------------- ----------------- ------- SPRINGFIELD: 233 S. Patterson, Springfield, MO 65802 MEMPHIS, TN days ___% ------------ -------- KANSAS CITY: 4134 Front St, Kansas City, MO 64120 MEMPHIS, TN days ___% ------------ -------- OKLAHOMA CITY: 11 S. MacArthur, Oklahoma City, OK 73127 MEMPHIS, TN days ___% ------------ -------- DES MOINES: 1800 Guthrie, Des Moines, IA 50316 MEMPHIS, TN days ___% ------------ -------- HOUSTON: 8601 Tavenor, Houston, TX 77075 MEMPHIS, TN days ___% ------------ -------- MCALLEN: 820 South 23rd, McAllen, TX 78501 MEMPHIS, TN days ___% ------------ -------- DALLAS 301 Neal Street, Seagoville, TX 75159 MEMPHIS, TN days ___% ------------ -------- LITTLE ROCK, 4350 Stockton Drive, Little Rock, AR 72117 MEMPHIS, TN days ___% ------------ -------- NASHVILLE: 485 Craighead Street, Nashville, TN 37204 MEMPHIS, TN days ___% ------------ -------- KNOXVILLE: 915 North Cherry Street, Knoxville, TN 37917 MEMPHIS, TN days ___% ------------ -------- ALABAMA: 120 Jacintoport Blvd., Saraland, AL 36571 MEMPHIS, TN days ___% ------------ -------- Vendor guarantees to ship at a minimum fill rate of 93% within ____ 15_____ days from date of order until receipt on our dock or a penalty of 15% of the total not shipped will be charged on a monthly basis for stock orders shipped out of our Memphis DC ONLY. ALL MERCHANDISE TO BE SHIPPED F.O.B DESTINATION FREIGHT REQUIREMENTS - ----------------------------------------------- -------------------- [X] Prepaid Pounds Dollars ------ ------ [_] Collect Units Cases ------ ------ [_] F.O.B. Pallets Other ------ ------ Split Shipment Dropoff Charge? ------------------------------------------------------------------------------------------------------ Pick-up Allowance? ----------------------------------------------------------------------------------------------------------------- Pallet Charges? ----------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------- ------- ------- ------- ------- SHIPPING REQUIREMENTS - --------------------- O'Reilly Auto Parts requires that the following guidelines be stricly adhered to for shipments coming into our distribution facilities: 1. All shipments must include a packing list. --- ---- 2. All packing lists being released with the shipments need to be placed in one carton and the outside of the carton should be marked: "Packing List Enclosed". 3. The carton containing the packing list(s) should be placed on the top layer of the skid. 4. The bill of lading provided to the freight carrier should list all purchase order numbers that are included in that shipment. This information should also appear on the freight carriers bill of lading. 5. All shipments must be separated by each individual DSO code/purchase order number and not mixed on pallets. Should we receive merchandise improperly we will impose a penalty accordingly to cover the added expense of processing your order. This penalty will be $50.00 per each occurrence at each DC location. 3 [PRICEWATERHOUSECOOPERS LOGO OMITTED] - -------------------------------------------------------------------------------- Sales Cutoff 1. Data validation 2. Bills of lading / Purchase orders / Invoices 3. Verify shipping point / destination for items shipped on last two days 4. Detail of credits (summary by customer) 5. Impact of non-retail customers 6. Impact of other quarters 7. Schedule of quarterly financial data and trends (Sales / Margin / Pretax income) 8. Legal Counsel 9. Audit Committee 10. PwC Risk Management TRANSPRO, INC. SALES CUTOFF REVIEW DATA AND ANALYSIS REQUIREMENTS 1. Data Collection a. Populate sales data matrix b. Obtain the following information for ME -2 and ME -1 day sales (source from amounts which generated reported financials): i. Customer name ii. Ship/invoice date iii. Invoice amount iv. Cost amount v. Ship From location vi. Ship To location vii. Shipping terms c. Customer shipping terms i. Query of customers and related terms d. Summary of customer waterfall allowances 2. Data Validation a. Sample of bill of ladings, purchase orders, and invoices to validate two day cutoff assumptions [GRAPHIC OMITTED] Diana TO RGiannino@transpro.com Montauti/US/ABAS/PwC cc KFlynn@transpro.com 07/26/2004 10:08 AM bcc 860-241-7159 Hartford, CT Subject Quarterly data file US Rich, Here is the updated electronic version of the spreadsheet reviewed in this morning's meeting. [GRAPHIC OMITTED] Analytic of Sales by Customer by Qtr by day.xls Diana Montauti PricewaterhouseCoopers LLP 100 Pearl Street Hartford, CT 06103 P: (860) 241-7159 F: (813) 207-3718 TRANSPRO, INC. SALES CUTOFF REVIEW 2002 2003 2004 ----------------- ----------------- ------- Q1 Q2 Q3 Q4 Ql Q2 Q3 Q4 Q1 Q2 ALT-HE Total Gross Sales Autozone Advance Pep Boys Ozark CSK Other FOB Destination Other FOB Shipping Point Total 0 0 0 0 0 0 0 0 0 0 Actual sales for quarter end Difference 0 0 0 0 0 0 0 0 0 0 Month end -3 Days Autozone Advance Pep Boys Ozark CSK Other FOB Destination Other FOB Shipping Point Total 0 0 0 0 0 0 0 0 0 0 Month end -2 Days Autozone Advance Pep Boys Ozark CSK Other FOB Destination Other FOB Shipping Point Total 0 0 0 0 0 0 0 0 0 0 Month end -1 Day Autozone Advance Pep Boys Ozark CSK Other FOB Destination Other FOB Shipping Point Total 0 0 0 0 0 0 0 0 0 0 ALT-TC Total Gross Sales Autozone Pep Boys CSK Other FOB Destination Other FOB Shipping Point Total 0 0 0 0 0 0 0 0 0 0 Actual sales for the quarter end Difference 0 0 0 0 0 0 0 0 0 0 Month end -3 Days Autozone Pep Boys CSK Other FOB Destination Other FOB Shipping Point Total 0 0 0 0 0 0 0 0 0 0 Month end -2 Days Autozone Pep Boys CSK Other FOB Destination Other FOB Shipping Point Total 0 0 0 0 0 0 0 0 0 0 Month end -1 Day Autozone Pep Boys CSK Other FOB Destination Other FOB Shipping Point Total 0 0 0 0 0 0 0 0 0 0 [GRAPHIC OMITTED] Diana To CSawicki@transpro.com Montauti/US/ABAS/PwC cc 07/27/2004 10:47 AM 860-241-7159 bcc Hartford, CT US Subject files Hi Chet, I haven't seen the other files come through yet (for all quarters other than Q1 2004). Can you resend to me? Thanks, Diana Montauti PricewaterhouseCoopers LLP 100 Pearl Street Hartford, CT 06103 P: (860) 241-7159 F: (813) 207-3718 [GRAPHIC OMITTED] Thomas To "Ken Flynn" *KFLYNN@transpro.com** @INTL Gaidimas/US/ABAS/PwC rwisot@transpro.com, Raj K. 08/02/2004 05:45 PM cc Dansinghani/US/ABAS/PwC@Americas-US, Jeremy J. (860)241-7019 Budzian/US/ABAS/PwC@Americas-US Hartford US bcc John F Gabranski/US/ABAS/PwC@Americas-US Subject Re: FW: Freight Policy Change [GRAPHIC OMITTED] Ken, Any thought to explicitly indicating that the new terms will be FOB shipping point? Tom "Ken Flynn" *KFLYNN@transpro.com** [GRAPHIC OMITTED] "Ken Flynn" *KFLYNN@transpro.com** To Thomas Gaidimas/US/ABAS/PwC@Americas-US 08/02/2004 05:33 PM cc Subject FW: Freight Policy Change FYI, this is the letter which has been sent to each of the five FOB destination customers. - ---------------------------------------- From: Cindy O'Brien Sent: Monday, August 02, 2004 5:28 PM To: Whitey McLean - NAW Cc: SR STAFF Subject: Freight Policy Change The following letter is being sent via overnight mail to AutoZone. **FOB Policy Change Ltr - Zone.doc**** Cindy O'Brien Transpro 800-755-2160 Ext 354[attachment "FOB Policy Change Ltr - Zone.doc" deleted by Thomas Gaidimas/US/ABAS/PwC] [GRAPHIC OMITTED] Thomas To "Ken Flynn" *KFLYNN@transpro.com**@INTL Gaidimas/US/ABAS/PwC cc "Rich Giannino" *rgiannino@transpro.com**, 08/02/2004 05:23 PM "Richard Wisot" *RWISOT@transpro.com** (860) 241-7019 Hartford bcc US Subject Re: Sales cutoff [GRAPHIC OMITTED] will do Ken Flynn" *KFLYNN@transpro.com** [GRAPHIC OMITTED] "Ken Flynn" *KFLYNN@transpro.com** To Thomas Gaidimas/US/ABAS/PwC@Americas-US 08/02/2004 05:16 PM cc "Richard Wisot" *RWISOT@transpro.com**, "Rich Giannino" *rgiannino@transpro.com** Subject Sales cutoff I've spoken with Rich G., and we should have information for you to go through tomorrow afternoon. Can you have Jeremy come up tomorrow afternoon? This would include sales summaries for the last four shipping days of each quarter and summaries of the deliveries on each of those days which were made prior to the end of the month. We're going to go over the information with Rich first thing in the morning, and will give you a telephone call to review the findings. [GRAPHIC OMITTED] Thomas To "Ken Flynn" *kflynn@transpro.com** Gaidimas/US/ABAS/PwC cc 08/06/2004 08:18 AM bcc Subject Re: Cutoff comparison It may be premature - ------Original Message------ From: "Ken Flynn" [KFLYNN@transpro.com] Sent: 08/06/2004 08:04 AM To: Thomas Gaidimas Cc: Richard Wisot" *RWISOT@transpro.com** Subject: RE: Cutoff comparison Tom, this would be the meeting to clear the quarter with them. From: thomas.gaidimas@us.pwc.com [mailto: thomas.gaidimas@us.pwc.com] Sent: Thursday, August 05, 2004 7:18 PM To: Ken Flynn Subject: Re: Cutoff comparison This the first I've heard of a call on Monday. What's the subject? - ------Original Message------ From: "Ken Flynn" [KFLYNN@transpro.com] Sent: 08/05/2004 06:02 PM To: Thomas Gaidimas; Neil Mitchill Jr.; Jeremy Budzian Cc: Richard Wisot" *RWISOT@tranapro.com** Subject: Cutoff comparison Attached is an updated comparison with receipt data for 2002. Tom, Rich wanted me to remind you that tomorrow we'll need an agenda for the Audit Committee conference call which we're going to try to set up for Monday. We'll also need an agenda for the meeting on Thursday. Rich and I will be in at 8 tomorrow morning so you can give us an update. [GRAPHIC OMITTED] Thomas To "Ken Flynn" *kflynn@transpro.com** Gaidimas/US/ABAS/PwC cc 08/05/2004 07:17 PM bcc Subject Re: Cutoff comparison This the first I've heard of a call on Monday, What's the subject? - ------Original Message------ From: "Ken Flynn" [KFLYNN@transpro.com] Sent: 08/05/2004 06:02 PM To: Thomas Gaidimas; Neil Mitchill Jr.; Jeremy Budzian Cc: Richard Wisot" *RWISOT@transpro.com** Subject: Cutoff comparison Attached is an updated comparison with receipt data for 2002. Tom, Rich wanted me to remind you that tomorrow we'll need an agenda for the Audit Committee conference call which we're going to try to set up for Monday. We'll also need an agenda for the meeting on Thursday. Rich and I will be in at 8 tomorrow morning so you can give us an update. [GRAPHIC OMITTED] Jeremy J. To Neil G. Mitchill Jr./US/ABAS/PwC@Americas-US Budzian/US/ABAS/PwC cc 09/13/2004 05:16 PM (860)241-7178 bcc Hartford US Subject Fw: Sales cutoff FYI - --- Forwarded by Jeremy J. Budzian/US/ABAS/PwC on 09/13/2004 05:16 PM --- [GRAPHIC OMITTED] Jeremy J. Budzian/US/ABAS/PwC To "Rich Giannino" *rgiannino@transpro.com**, "Steve Mucha" *SMucha@transpro.com**, 08/09/2004 05:46 PM s.miller@transpro.com (860)241-7178 cc "Ken Flynn" *KFLYNN@transpro.com** @INTL, Neil G. Hartford Mitchill Jr./US/ABAS/PwC@Americas-US US Subject Sales cutoff [GRAPHIC OMITTED] Rich / Steve and Sharon: We've been through the cutoff summary, sales & margin reports, pivot tables and PODs provided and here's where we stand as far as remaining questions / concerns: 1. Please email me the raw data files for all quarters prior to 4q 2003. As of Thursday, I had only requested 2q 2004, 1q 2004 and 4q 2003. I just want to do a sanity check on the earlier quarters as far as the mapping of the data from the G/L file dumps to the pivot tables, etc. 2. With respect to the AutoZone "private fleet" shipments, why were there no shipments on AZ trucks in 4q 2003? If on AZ trucks on 12/31/03, shouldn't they be included as eligible sales in 2003 consistent with the 2004 quarters? How were the AZ "private fleet" shipments verified? Also, we still need some evidence regarding the usage of AZ trucks for Ready Aire shipments of container #s 7264750 and 7284294 in 1q 2004. Also, how do we know Ready Aire container # 7342098 in 1q 2004 was on a AZ truck? How do we know AZ container # 7342141 (Paschall) for $162k in sales was not delivered on an AZ truck? In 2q 2004, we need evidence of the usage of AZ trucks for Ready Aire container #s 8475705 and 84753733. 3. Need to understand why the following were excluded from eligible sales - In 1q 2004, AZ container # 7309592 for $151k of sales rec'd on 03/29/04; In 2q 2004, AZ container # 36717 for $40k of sales rec'd on 06/30/04. 4. Need to understand why the following were included within eligible sales - In 1q 2004, Pep Boys container # 603512 for $36k of sales dropped on 03/30/04 and not signed by receiver until 04/02/04. Once the above questions are addressed, we will be comfortable with the impact summary prepared by Ken and discussed last Thursday. I'd be happy to walk you through any of these items in further detail at your convenience. Thanks, Jeremy (860) 241-7178 today (860) 728-6393 tomorrow [GRAPHIC OMITTED] Neil G. Mitchill To rwisot@transpro.com, kflynn@transpro.com Jr./US/ABAS/PwC cc 08/09/2004 06:01 PM 860-241-7390 bcc Hartford, CT Subject Cutoff Schedule US [GRAPHIC OMITTED] Sales Cutoff Analysis Transpro Inc 8-4-2004 3 days wo advance.xls Transpro, Inc. Evaluation of Sales Cutoff (ASSUMES 3 DAY EXCLUSION) Excludes Advance Q4 2001 YTD 2001 Q1 2002 Q2 2002 Q3 2002 Q4 2002 YTD 2002 ------------------ ------------------------------------------------ Reported pre-tax - continuing operations (6,331) (17,598) 103 1,722 2,213 (1,732) 2,306 Operating income reversal (108) (108) (427) (268) (198) (183) (183) Operating income addition -- -- 108 427 268 198 108 ------------------ ------------------------------------------------ Adjusted pre-tax income (loss) - cont ops (6,439) (17,708) (216) 1,881 2,283 (1,717) 2,231 ------------------ ------------------------------------------------ % change from reported pre-tax -1.7% -0.6% 309.7% -9.2% -3.2% 0.9% 3.3% Net Impact to period (108) (108) (319) 159 70 15 (75) Income tax (benefit) expense 6,889 2,710 (3,853) 177 513 (1,390) (4,353) Adjusted income (loss) before acct change & ext i (13,328) (20,416) 3,437 1,704 1,770 (327) 6,584 Cumulative effect of accounting change -- -- (4,671) -- -- -- (4,671) Adjusted Loss (income) before ext item (13,328) (20,416) (1,234) 1,704 1,770 (327) 1,913 Extraordinary item (150) (530) -- -- -- -- -- Adjusted Net (loss) income (13,478) (20,946) (1,234) 1,704 1,770 (327) 1,913 Reported Net (loss) income (13,370) (20,838) (915) 1,545 1,700 (342) 1,988 (108) (108) (319) 159 70 15 (75) 0.8% 0.5% 34.9% 10.3% 4.1% -4.4% -3.8% Period end pre-tax impact of ineligible sales 108 108 427 268 198 183 183 (Assumes full 3 day exclusion) Q1 2003 Q2 2003 Q3 2003 Q4 2003 YTD 2003 Q1 2004 Q2 2004 YTD 2004 ------------------------------------------------ ----------------------------- Reported pre-tax - continuing operations (4,736) (2,285) 2,899 (1,575) (5,699) (447) 851 404 Operating income reversal (120) (92) (205) 141 141 (249) (234) (234) Operating income addition 183 120 92 205 183 (141) 249 (141) ------------------------------------------------ ----------------------------- Adjusted pre-tax income (loss) - cont ops (4,675) (2,257) 2,788 (1,229) (5,375) (637) 666 29 ------------------------------------------------ ----------------------------- % change from reported pre-tax 1.3% 1.2% 3.9% 22.0% 5.7% -87.2% -1.8% 92.8% Net impact to period 63 28 (113) 348 324 (390) 15 (375) Income tax (benefit) expense (403) (1,678) 938 (20) (1,163) (34) 63 29 Adjusted Income (loss) before acct change & ext i (4272) (579) 1,848 (1,209) (4,212) (603) 803 -- Cumulative effect of accounting change -- -- -- -- -- -- -- -- Adjusted Loss (income) before ext item (4,272) (579) 1,848 (1,209) (4,212) (803) 803 -- Extraordinary item -- -- -- -- -- -- -- -- Adjusted Net (loss) income (4,272) (579) 1,848 (1,209) (4,212) (803) 803 -- Reported Net (loss) income (4,335) (607) 1,961 (1,555) (4,536) (413) 788 375 63 28 (113) 346 324 (390) 15 (375) -1.5% -4.6% -5.8% -22.3% -7.1% 94.4% 1.9% -100.0% Period end pre-tax impact of ineligible sales 120 92 205 -141 -141 249 234 234 (Assumes full 3 day exclusion) Reported Q4 2001 YTD 2001 Q1 2002 Q2 2002 Q3 2002 Q4 2002 YTD 2002 Reported Pre-Tax - Continuing Operations (6,331) (17,598) 103 1,722 2,213 (1,732) 2,306 Income tax (benefit) expense 6,889 2,710 (3,653) 177 513 (1,390) (4,353) Income (loss) before acct change & ext item (13,220) (20.308) 3,756 1,545 1,700 (342) 6,659 Cumulative effect of accounting change -- -- (4,671) -- -- -- (4,671) Loss (income) before ext item (13,220) (20,306) (915) 1,545 1,700 (342) 1,988 Extraordinary item (150) (530) -- -- -- -- -- Net (loss) income (13,370) (20,838) (915) 1,545 1,700 (342) 1,988 Tax rate -108.8% -15.4% -3548.8% 10.3% 23.2% 80.3% -188.8% Discrete tax items Reported Q1 2003 Q2 2003 Q3 2003 Q4 2003 YTD 2003 Q1 2004 Q2 2004 YTD 2004 Reported Pre-Tax - Continuing Operations (4,738) (2,285) 2,895 (1,575) (5,599) (447) 851 404 Income tax (benefit) expense (403) (1,678) 938 (20) (1,163) (34) 63 29 Income (loss) before acct change & ext item (4,335) (607) 1,961 (1,555) (4,536) (413) 788 375 Cumulative effect of accounting change -- -- -- -- -- -- -- -- Loss (income) before ext item (4,335) (607) 1,961 (1,555) (4,536) (413) 788 375 Extraordinary item -- -- -- -- -- -- -- -- Net (loss) income (4,335) (607) 1,961 (1,555) (4,536) (413) 788 375 Tax rate 8.5% 73.4% 32.4% 1.3% 20.4% 7.6% 7.4% Quart Discrete tax items [GRAPHIC OMITTED] Neil G. Mitchill To kflynn@transpro.com Jr./US/ABAS/PwC cc bcc Subject SAB 99 08/09/2004 06:40 PM 860-241-7390 Hartford, CT US Here you go.... [GRAPHIC OMITTED] SAB 99..doc [GRAPHIC OMITTED] Jeremy J. To Neil G. Mitchill Jr./US/ABAS/PwC@Americas-US Budzian/US/ABAS/PwC cc 09/13/2004 05:17 PM (860)241-7178 bcc Hartford US Subject Fw: restatement FYI - ----- Forwarded by Jeremy J. Budzian/US/ABAS/PwC on 09/13/2004 05:16 PM ----- [GRAPHIC OMITTED] Jeremy J. Budzian/US/ABAS/PwC To "Ken Flynn" *KFLYNN@transpro.com**@INTL, 08/10/2004 01:51 PM "Maurice Bafumi" *mbafumi@transpro.com** (860) 241-7178 cc Neil G. Mitchill Jr./US/ABAS/PwC@Americas-US Hartford US Subject RE: restatement [GRAPHIC OMITTED] Ken / Maurice: When the entries have been recorded, can you send me the revised management reporting package and the latest draft of the 10-Q? I will start going through this afternoon and will be down tomorrow to finish up. Thanks, Jeremy 728-6393 "Ken Flynn" *KFLYNN@transpro.com** [GRAPHIC OMITTED] "Ken Flynn" *KFLYNN@transpro.com** "Ken Flynn" *KFLYNN@transpro.com**, Neil G. Mitchill 08/10/2004 08:53 AM To Jr./US/ABAS/PwC@Americas-US, Jeremy J. Budzian/US/ABAS/PwC@Americas-US cc "Maurice Bafumi" *mbafumi@transpro.com** Subject RE: restatement I'm going to have Maurice make the entry rounded to the nearest thousand. - -------------------------------------------------------------------------------- From: Ken Flynn Sent: Tuesday, August 10, 2004 8:40 AM To: 'neil.g.mitchill.jr@us.pwc.com'; 'jeremy.j.budzian@us.pwc.com' Subject: restatement Ignore the 2002 and 2003 numbers. [GRAPHIC OMITTED] Neil G. Mitchill To rwisot@transpro.com Jr./US/ABAS/PwC cc 08/11/2004 01:43 PM 860-241-7390 bcc Hartford, CT US Subject Agenda for AC Meeting Rich, Attached is the agenda for tomorrow's meeting. Thanks [GRAPHIC OMITTED] Neil Transpro Q2 AC Agenda 8-12-04.doc TRANSPRO, INC. SECOND QUARTER 2004 AUDIT COMMITTEE MEETING AUGUST 12, 2004 [ ] Scope of Review [ ] Sales Cutoff & Ql 2004 Restatement [ ] Required Communications o Summary of unadjusted differences o Changes in significant accounting policies o Internal control weakness o Accounting and disclosure [ ] Other Matters o PwC continuance o Management letter [PRICEWATERHOUSECOOPERS LOGO OMITTED] [GRAPHIC OMITTED] Thomas To "Ken Flynn" *KFLYNN@transpro.com**@INTL Gaidimas/US/ABAS/PwC "Charley Johnson" *CJohnson@transpro.com**, "Grundei, 08/13/2004 02:03PM cc Michael" *MGrundei@wiggin.com**, Neil G. (860) 241-7019 Mitchill Hartford Jr./US/ABAS/PwC@Americas-US, "Richard Wisot" US *RWISOT@transpro.com** bcc Subject Re: 8-K draft [GRAPHIC OMITTED] Ken, No comments on the 8-k. Tom "Ken Flynn" *KFLYNN@transpro.com** [GRAPHIC OMITTED] "Ken Flynn" *KFLYNN@transpro.com** "Grundei, Michael" *MGrundei@wiggin.com**, 08/13/2004 11:07 AM Thomas To Gaidimas/US/ABAS/PwC@Americas-US, Neil G, Mitchill Jr./US/ABAS/PwC@Americas-US cc "Richard Wisot *RWISOT@transpro.com**, "Charley Johnson" *CJohnson@transpro.com** Subject 8-K draft Attached is a draft of the 8-K on Monday's press release for your review and comments. [attachment "8-K 2004 second quarter press release-Aug 16.doc" deleted by Thomas Gaidimas/US/ABAS/PwC]
