SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended March 31, 1996
--------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition period from to
-------- --------
Commission file number 1-1373
------
MODINE MANUFACTURING COMPANY
- ---------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
WISCONSIN 39-0482000
- -------------------------------- --------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1500 DeKoven Avenue, Racine, Wisconsin 53403
- ------------------------------------------- --------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (414) 636-1200
---------------
Securities Registered pursuant to Section 12(g) of the Act:
Common Stock, $0.625 par value
- ----------------------------------------------------------------------------
(Title of Class)
An Exhibit index appears at pages 18-23 herein.
Page 1 of 121
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months, and (2) has been subject to such
filing requirements for the past 90 days. Yes X No ____
-----
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
Approximately 47% of the outstanding shares are held by non-affiliates.
The aggregate market value of these shares was approximately
$360,548,785 based on the market price of $25.75 per share on June 18, 1996.
The remaining outstanding shares are owned or controlled by or for directors,
officers, employees, retired employees, and their families.
The number of shares outstanding of the registrant's Common Stock, $0.625
par value, was 29,791,265 at June 18, 1996.
DOCUMENTS INCORPORATED BY REFERENCE
- -----------------------------------
Portions of the following documents are incorporated by reference into the
parts of this Form 10-K designated to the right of the document listed.
Incorporated Document Location in Form 10-K
- --------------------- ---------------------
Annual Report to Shareholders for the
fiscal year ended March 31, 1996 Part I of Form 10-K
(Item 1)
Part II of Form 10-K
(Items 7, 8)
Part IV of Form 10-K
(Item 14)
1996 Definitive Proxy Statement dated
June 7, 1996 Part III of Form 10-K
(Items 10, 11, 12, 13)
TABLE OF CONTENTS
-----------------
MODINE MANUFACTURING COMPANY - FORM 10-K
FOR THE YEAR ENDED MARCH 31, 1996
10-K Pages
----------
Cover
Table of Contents
Part I
- ------
Item 1 - Business
-------------------
General, Foreign and Domestic Operations,
Competitive Position, Customer Dependence,
Backlog of Orders, Raw Materials, Patents,
Research and Development, Environmental
Matters, Employees, Seasonal Nature of
Business, Working Capital Items 5
Item 2 - Properties 12
---------------------
Item 3 - Legal Proceedings 13
----------------------------
Item 4 - Submission of Matters To A Vote of Security
------------------------------------------------------
Holders 14
-------
Part II
- -------
Item 5 - Market for Registrant's Common Equity and
----------------------------------------------------
Related Stockholder Matters 14
---------------------------
Item 6 - Selected Financial Data 15
----------------------------------
Item 7 - Management's Discussion and Analysis of
--------------------------------------------------
Financial Condition and Results of Operations 15
---------------------------------------------
Item 8 - Financial Statements & Supplementary Data 15
----------------------------------------------------
Item 9 - Changes in and Disagreements with
--------------------------------------------
Accountants on Accounting and Financial
---------------------------------------
Disclosure 16
----------
10-K Pages
----------
Part III
- --------
Items 10 and 11 - Directors and Executive
-------------------------------------------
Officers of the Registrant; Executive
-------------------------------------
Compensation 16
------------
Item 12 - Security Ownership of Certain Beneficial
--------------------------------------------------
Owners and Management 17
---------------------
Item 13 - Certain Relationships and Related
-------------------------------------------
Transactions 17
------------
Part IV
- -------
Item 14 - Exhibits, Financial Statement Schedules,
--------------------------------------------------
and Reports on Form 8-K 17
-----------------------
1) Financial Statements
2) Financial Statement Schedules
3) Consent of Independent Accountants
4) Exhibit Index
Signatures 24
- ----------
PART I
------
ITEM 1. BUSINESS.
- ------ --------
General
- -------
Throughout this Report, the terms "Modine," "the Company" and/or "the
Registrant" refer to Modine Manufacturing Company and consolidated
subsidiaries.
Modine was incorporated under the laws of the State of Wisconsin on
June 23, 1916.
Modine operates primarily in a single industry consisting of the
manufacture and sale of heat transfer equipment. This includes heat
exchangers for cooling all types of engines, transmissions, auxiliary
hydraulic equipment, air conditioning components used in cars, trucks, farm
and construction machinery and equipment, and heating and cooling equipment
for residential and commercial building HVAC (heating, ventilating, air
conditioning and refrigeration equipment). The principal markets consist
of automobile, truck and bus manufacturers, farm implement manufacturers,
heating and cooling equipment manufacturers, construction equipment
manufacturers, construction contractors, wholesalers of plumbing and
heating equipment, radiator repair shops, and wholesalers of auto repair
parts. The Company distributes its products through Company salesmen,
through independent manufacturer's representatives, independent warehouse
distributors, and mass merchandisers. No industry segment information is
required under Statement of Financial Accounting Standards Board, Number 14
"Financial Reporting for Segments of a Business Enterprise," since the
Company operates predominantly in a single industry.
Within this industry, the Company manufactures various products as is
demonstrated by the following table :
Years ended March 31
--------------------------------------
1996 1995 1994 1993 1992
Radiators & Radiator 41% 42% 45% 45% 45%
Cores
Vehicular Condensers
& Evaporators 17% 14% 12% 12% 13%
Oil Coolers 16% 16% 15% 13% 13%
Charge Air Coolers 12% 12% 11% 10% 7%
Building HVAC 8% 9% 11% 14% 15%
Miscellaneous 6% 7% 6% 6% 7%
A world trend has been consolidation to fewer but larger suppliers in the
markets the Company serves. To serve its global markets, Modine has
established manufacturing operations in North America, Europe, and
Asia/Pacific. The Company's significant international operations are
located in the following countries:
North America
- -------------
The Company maintains a Canadian subsidiary, Modine of Canada, Ltd., an
Ontario company, which manufactures cores for the automotive aftermarket,
and which owned 100% of The Radman Corporation, Ltd., a Canadian federal
company which licenses certain trademarks to automotive radiator repair
shops. On April 1, 1996 the Radman Corporation, Ltd. was amalgamated with
and into Modine of Canada, Ltd. and ceased to exist as a separate entity as
of that date.
The Company operates a subsidiary, Modine Transferencia de Calor, S.A. de
C.V., a Mexican company which manufactures, assembles, and exports to the
U.S., heat exchangers for a variety of non-vehicular applications.
In May, 1995, the Company purchased its joint venture partner's 57%
interest in Radinam S.A., a Mexican producer of radiators and other
automotive components for original equipment manufacturers and the
automotive aftermarket. Radinam's manufacturing facilities are located in
Mexico City.
Europe
- ------
The Company operates a subsidiary, NRF B.V., a Dutch company. NRF produces
replacement radiator cores, sheet metal radiators, and industrial and
marine heat exchangers. NRF also owns subsidiaries that export products
and distribute products throughout Europe.
The Company operates a subsidiary, Modine GmbH, based in Neuenkirchen,
Germany, which manufactures copper/brass sheet metal radiators for the
European industrial and agricultural markets.
In July, 1995, the Company acquired, through its acquisition of Signet
Systems, Inc., all of the issued and outstanding stock of Signet Systems
GmbH located in Goch, Germany. Signet Systems GmbH is a supplier of
climate-control systems and components to the automotive, truck, and off-
highway vehicle markets in Europe.
In May, 1995, the Company, through its subsidiary NRF B.V., acquired
Radiadores Montana S. A., a Spanish manufacturer and distributor of
radiators, radiator cores, oil coolers, heaters, and air conditioning
condensers and evaporators for the automotive aftermarket and for
industrial applications.
In the fiscal 1994-95, an unoccupied NRF facility located in Uden, The
Netherlands was converted to allow production of aluminum vacuum brazed
products beginning in the fall of 1994. Modine Uden B.V. operates as part
of the L&R Automotive business group.
In the third quarter of fiscal 1993-94, the Company acquired, through
Modine Holding GmbH, the entire equity interest in Heinrich Langerer &
Reich GmbH & Co. ("L&R") and certain specified liabilities. The
acquisition includes plant, equipment, and certain real property located in
Pleizhausen, Germany, and the equipment and leasehold interest in certain
real property located in Filderstadt-Bernhausen, Germany. The acquisition
also includes the equity interest held by L&R in Hungaro Langerer
Gepjarmutechnikai Kft., a Hungarian company. The Filderstadt-Bernhausen
operation manufactures heat exchangers for the truck, bus, and industrial
markets and also includes research and development and administrative
facilities. The Pleizhausen operation manufactures aluminum heat
exchangers for the passenger car market.
In the fourth quarter of fiscal 1993-94, the Company acquired its partner's
(Austria Metall AG) 50-percent ownership in the joint venture company
Austria Warmetauscher GmbH ("AWG"). The AWG facility, located in Berndorf,
Austria, manufactures aluminum air-conditioning condensers and oil coolers
for a number of European auto makers.
The European operations have been reorganized into three business groups
and two support groups.
The three business groups are: (1) L & R Automobiltechnik, an automotive
business unit. It includes the L&R plant in Pleizhausen, Germany; AWG in
Berndorf, Austria; and the re-opened plant location in Uden, The
Netherlands; (2) L & R Heavy Duty business unit which includes the Modine
GmbH operations in Neuenkirchen and the L&R facilities in Bernhausen,
Germany, and in Mezokovesd, Hungary; and (3) an aftermarket business unit
that operates under the aegis of the automotive business unit. It includes
NRF BV in Mill, the Netherlands.
The two support groups are: (1) a European central research group, that is
similar to Modine's Research and Development Department in Racine,
Wisconsin; and (2) a European central administration unit, that includes
the functions of MIS (Management Information Services); purchasing; quality
and environment; and the accounting functions of controlling, cost
accounting, and financial accounting.
The European operations are organized similarly to the way the Company is
organized in the United States, which allows Modine to be able to better
serve its markets in Europe with manufacturing in Europe.
The Company maintains sales subsidiaries and/or offices in Austria,
England, France, Italy, Germany, and The Netherlands.
The Company also maintains stocks of goods in bulk warehouses in
Birmingham, England; Rotterdam, The Netherlands; and Bremen, Germany as
reserve inventory for certain European customers.
Asia/Pacific
- ------------
The Company participates (50% interest) in a joint venture with Nippon
Light Metal, Ltd., a Japanese company. The joint venture company, Nikkei
Heat Exchanger Company, Ltd., produces automotive heat exchangers for sale
to original equipment manufacturers in the Japanese market.
The Company established a sales subsidiary in Japan, Modine Asia K.K., in
February, 1995.
Exports
- -------
In addition, the Company exports to foreign countries and receives
royalties from foreign licensees. Export sales as a percentage of total
sales were 12.9%, 13.8% and 14.3% for fiscal years ended in 1996, 1995 and
1994, respectively. Estimated after-tax earnings on export sales as a
percentage of total net earnings were 12.9%, 13.8% and 14.3% for fiscal
years ended in 1996, 1995 and 1994, respectively. Royalties from foreign
licensees as a percentage of total earnings were 1.0%, 1.0% and 2.1% for
the last three fiscal years, respectively.
Modine believes its international presence has positioned the Company to
profitably share in the anticipated long-term growth of the global
vehicular and industrial markets. Modine is committed to increasing its
involvement and investment in international markets in the years ahead.
Foreign and Domestic Operations
- -------------------------------
Financial information relating to the Company's foreign and domestic
operations, including export sales, is included in the Company's 1996
Annual Report to Shareholders and is incorporated herein by reference at
Note 18 on Page 28 therein.
Competitive Position
- --------------------
The Company competes with several manufacturers of heat transfer products,
some of which are divisions of larger companies and some of which are
independent companies. The Company also competes for business with parts
manufacturing divisions of some of its major customers. The markets for
the Company's products are increasingly competitive and have changed
significantly in the past few years as the Company's traditional OEM
customers in the United States, faced with dramatically increased
international competition, have expanded their worldwide sourcing of parts
to better compete with lower-cost imports. These market changes have
caused the Company to experience competition from suppliers in other parts
of the world which enjoy economic advantages such as lower labor costs,
lower health care costs, and other factors.
Customer Dependence
- -------------------
Ten customers accounted for approximately 37.7% of the Company's sales in
the fiscal year ended March 31, 1996. These customers, listed
alphabetically, were: American Honda Motor Co., Inc., BMW, Caterpillar
Company, Chrysler Motor Corporation, Fiat, Ford Motor Company, John Deere,
Navistar, Paccar, Inc. and Volkswagen. Goods are supplied to these
customers on the basis of individual purchase orders received from them.
When it is in the customer's and the Company's best interests, the Company
utilizes long-term supply agreements to minimize investment risks and
provide a proven source of competitively priced products. There are no
other relationships between the Company and its customers.
Backlog of Orders
- -----------------
While the Company has a large backlog of orders, the backlog is not deemed
significant or material; backlog historically has had little relation to
shipments. Modine's products are produced from readily available materials
such as copper, brass, steel and aluminum and have a relatively short
manufacturing cycle. The Company's operating units maintain their own
inventories and production schedules. Current production capacity
(including additional capacity planned to become operational this year) is
capable of handling the sales volumes expected in fiscal 1996-97.
Raw Materials
- -------------
Copper, brass, aluminum, steel, and solder, all essential to the business,
are purchased regularly from several domestic and foreign producers. The
Company normally does not experience material shortages within its
operations and believes that producers' supplies of these materials through
the end of fiscal year 1997 will be adequate.
Patents
- -------
The Company, and certain of its wholly-owned subsidiaries, own outright or
are licensed to produce products under a number of patents and licenses.
These patents and licenses, which have been obtained over a period of
years, will expire at various times. Because the Company is involved with
many product lines, the Company believes that its business as a whole is
not materially dependent upon any particular patent or license, or any
particular group of patents or licenses. Modine considers each of its
patents, trademarks and licenses to be of value and aggressively defends
its rights throughout the world against infringement. See also Item 3 -
Legal Proceedings.
Research and Development
- ------------------------
Company-sponsored research activities relate to the development of new
products, processes, or services, or the improvement of existing products,
processes, and services. Expenditures in fiscal 1995-96 amounted to
$14,256,000; in fiscal 1994-95 amounted to $10,907,000; and in fiscal
1993-94 amounted to approximately $9,509,000. There were no significant
expenditures on research activities which were customer-sponsored. Over
the course of the last few years, the Company has become involved in a
number of industry or university sponsored research organizations. These
consortia conduct research and provide data on technical topics deemed to
be of interest to the Company for practical applications in the markets the
Company serves. The research and data developed is generally shared among
the member companies. In addition, to achieve efficiencies and lower
developmental costs, Modine's research and engineering groups work closely
with Modine's customers on special projects and system designs.
Environmental Matters
- ---------------------
It is Modine's policy to comply with all environmental laws and regulations
without regard to the degree of enforcement. In addition, the Company
analyzes its business decisions, operations and processes to find ways to
eliminate or curtail pollution. Consistent with this philosophy, the
Company amended its corporate environmental policy in 1991 to include a
waste minimization program. This program has thus far achieved a corporate-
wide reduction in wastes of over 65% through calendar year 1995. The
program is currently being modified to include better tracking mechanisms
and a new, innovative method of classifying and ranking wastes based on
degree of toxicity. Although environmental compliance costs are
substantial, the Company has no reason to believe such costs vary
significantly from similar costs incurred by other companies engaged in
similar businesses.
In addition to the various federal, state and local environmental laws and
regulations governing its operations and products, the Company (as well as
its competitors) is required to incur expenses for remedial actions at
various facilities and waste disposal sites. An obligation to take such
action may result from current laws, such as the federal Superfund law, or
the issuance of new regulations, or as a result of accidental leaks or
spills in the ordinary course of business. In addition, an obligation may
arise when a facility is closed or sold. These expenditures most often
relate to facilities and sites where past operations followed practices and
procedures that were considered acceptable under then-existing regulations,
but will now require investigatory and/or remedial work to ensure
sufficient protection to the environment.
Although there are no currently known liabilities that might have a
material effect on the Company's consolidated net assets, the Environmental
Protection Agency ("EPA") has designated Modine as a potentially
responsible party ("PRP") for remediation of five hazardous waste sites.
Under the federal Superfund law, joint and several liability is imposed on
all owners, operators and generators involved at the designated sites.
However, because of Modine's extremely limited involvement as a generator
of hazardous waste, it is unlikely Modine would be required to make a
material financial contribution for remediation. At one of these sites, no
evidence exists to establish that Modine ever disposed of its hazardous
wastes there; at the remaining four sites, Modine's involvement is as a de
minimis PRP (potentially responsible party), having less than a one percent
share of the wastes disposed.
Seven of the Company's manufacturing facilities currently have been
identified as requiring soil and/or groundwater remediation. Because of
the joint and several liability of former landowners, contractual
obligations, and certain state programs that provide for partial
reimbursement of certain remediation costs, it is unlikely these
remediation efforts will have a material effect on the Company's
consolidated financial condition.
Recent environmental legislation will require significant capital equipment
expenditures over the next five to six years. For the fiscal year ending
March 31, 1996 capital expenditures and expenses were $980,000. These
environmental expenditures include capital outlays to retrofit existing
facilities, as well as those associated with new facilities and other
compliance costs. The expenditures relate mostly to air and water quality
projects and site clean-up activities at the Company's facilities.
In fiscal 1996-97, approximately $2,750,000 may be invested in air and
water pollution control equipment, process changes, and hazardous waste
minimization equipment and programs in order to comply with existing and
new federal, state and local environmental laws and regulations. Operating
expenses of some facilities may be increased because of such equipment but
the competitive position of the Company is not expected to change
materially.
Employees
- ---------
The number of persons employed by the Company at March 31, 1996, was
approximately 7,600.
Seasonal Nature of Business
- ---------------------------
In recent years the Company's business has become more continuous and
less seasonal. However, a degree of seasonality may still be experienced
since the Aftermarket, Commercial Products, Heating, and Signet Systems
Divisions are affected by weather patterns, constructions starts, and other
factors. Sales to original equipment manufacturers are dependent upon the
demand for new vehicles and equipment. The following quarterly net sales
detail for the past five years illustrates the degree of fluctuation:
Fiscal
Year Fiscal
Ended First Second Third Fourth Year
March 31 Quarter Quarter Quarter Quarter Total
- -------- ------- ------- ------- ------- -----
($ In Thousands)
1996 $239,216 $254,292 $252,817 $244,168 $990,493
1995 208,436 221,760 240,505 242,309 913,010
1994 147,171 156,964 172,351 193,067 669,553
1993 133,817 144,603 146,591 145,828 570,839
1992 125,879 132,702 130,805 137,194 526,580
Five-year $170,904 $182,064 $188,614 $192,513 $734,095
Average
Percent 23% 25% 26% 26% 100%
of Year
Working Capital Items
- ---------------------
The Company's products for the original equipment market are manufactured
on an as ordered basis. Therefore, large inventories of such products
are not necessary, nor is the amount of products returned significant.
In the HVAC and aftermarket areas, due to the distribution systems and
seasonal sales programs, varying levels of finished goods inventory are
necessary. This inventory is spread throughout the distribution systems.
In these areas, in general, the industry and the Company make use of
extended terms of payment for customers on a limited and/or seasonal
basis.
ITEM 2. PROPERTIES.
- ------ ----------
The Company's general offices, along with laboratory, experimental and
tooling facilities, are maintained in Racine, Wisconsin. Additional
technical support functions are located in Harrodsburg, Kentucky and
Bernhausen, Germany. Almost all of the Company's manufacturing and larger
distribution centers are owned outright. A few manufacturing facilities
and numerous regional sales and service centers, distribution centers and
offices are occupied under various lease arrangements.
The Company's facilities, on a geographic basis, are as follows:
Type of North Asia/
Facility America Europe Pacific Total
-------- ------- ------ ------- -----
Manufacturing 21 9 30
Distribution 3 1 4
Sales & Service
Centers/Offices 14 15 1 30
Joint Ventures 1 1
-- -- -- --
Total 38 25 2 65
Total square footage of the 65 facilities is approximately 6,482,930
square feet.
The Company currently uses its facilities for the purposes as noted above.
The Company's facilities, in general, are well maintained and conform to
the sales, distribution, or manufacturing operations for which they are
being used, and their productive capacity is, from time to time, adjusted
and expanded as necessitated by product market considerations and customer
growth.
ITEM 3. LEGAL PROCEEDINGS.
- ------ -----------------
In the normal course of business, the Company and its subsidiaries are
named as defendants in various lawsuits and enforcement proceedings by
private parties, the Occupational Safety and Health Administration, the
Environmental Protection Agency, other governmental agencies, and others in
which claims, such as personal injury, property damage, or antitrust and
trade regulation issues, are asserted against the Company. While the
outcome of these proceedings is uncertain, in the opinion of the Company's
management and counsel, any liabilities that may result from such
proceedings are not reasonably likely to have a material effect on the
Company's liquidity, financial condition or results of operations. Many of
the pending damage claims are covered by insurance and, in addition, the
Company from time to time establishes reserves for uninsured liabilities.
The Mitsubishi and Showa Litigation
-----------------------------------
In November 1991, the Company filed a lawsuit in the Federal District Court
in Milwaukee, Wisconsin against Mitsubishi Motor Sales of America, Inc. and
Showa Aluminum Corporation, alleging infringement of the Company's Patent
No. 4,998,580 on parallel-flow air-conditioning condensers. The suit seeks
an injunction to prohibit continued infringement and accounting for
damages, a trebling of such damages for willful infringement, and
reimbursement of attorneys' fees. In December of 1991, the Company
submitted a complaint to the U. S. International Trade Commission (ITC)
requesting that the ITC ban the import and sale of parallel-flow air-
conditioning condensers and systems or vehicles that contain them, which
are the subject of the aforementioned lawsuit. In July 1993, the ITC
reversed an earlier ruling by a hearing officer and upheld, as valid and
enforceable, the Company's 4,998,580 patent on parallel-flow air-
conditioning condensers. The ITC also ruled that specific condensers from
the two Japanese companies did not infringe the Company's patent. Each of
the parties appealed to the U.S. Court of Appeals for the Federal Circuit
the portion of the ITC opinion adverse to them. In February 1996, the U.S.
Court of Appeals for the Federal Circuit, upheld the patent as valid and
enforceable and remanded the case back to the ITC for a determination with
respect to Showa infringement. In July of 1994, Showa filed a lawsuit
against the Company in the Federal District Court in Columbus, Ohio
alleging infringement by the Company of Showa's patents pertaining to
double circuit condensers and baffles therefor (In June, 1995, the Company
filed a motion for partial summary judgment against such lawsuit). In
December of 1994, the Company filed another lawsuit against Mitsubishi
Motor Sales of America, Inc. and Showa Aluminum Corporation in the Federal
District Court in Milwaukee, Wisconsin pertaining to the Company's newly-
issued Patent No. 5,372,188 also pertaining to parallel-flow air-
conditioning condensers. Both 1994 suits have been stayed pending the
outcome of re-examination in the U. S. Patent Office of the patents
involved. All legal and court costs associated with these cases have been
expensed as they were incurred.
Other previously reported legal proceedings have been settled or the issues
resolved so as to not merit further reporting.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
- ------ ---------------------------------------------------
Omitted as not applicable.
PART II
-------
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
- ------ -------------------------------------------------
STOCKHOLDER MATTERS.
-------------------
The Company's Common Stock is quoted on the National Association of
Securities Dealers' Automated Quotation system ("NASDAQ") as a National
Market issue. The Company's trading symbol is "MODI." The table below
shows the range of high and low bid information for the Company's Common
Stock for fiscal years 1995-96 and 1994-95. As of April 1, 1996,
shareholders of record numbered approximately 4,713; it is estimated that
beneficial owners numbered at least 12,500.
1995-96 1994-95
- -------------------------------------------------------------------------
Quarter High Low Dividends High Low Dividends
First $39.75 $31.50 $.15 $30.00 $23.75 $.13
Second 40.50 28.75 .15 29.00 24.75 .13
Third 32.00 24.00 .15 31.25 25.25 .13
Fourth 26.50 22.50 .15 34.75 27.00 .13
TOTAL $.60 $.52
- -------------------------------------------------------------------------
Certain of the Company's loan agreements limit the use of retained earnings
for the payment of cash dividends and the acquisition of treasury stock.
Under the most restrictive, $120,399,000 was available for these purposes
at March 31, 1996. (These restricted payments may not exceed $30,000,000
in any fiscal year.) In October 1986, the Company adopted a shareholder
rights plan and issued one right for each share of common stock. The
rights are not currently exercisable but will become exercisable 10 days
after a shareholder has acquired 20 percent or more, or commenced a tender
or exchange offer for 30 percent or more, of the Company's common stock.
Each right will initially entitle the holder to purchase a unit of 1/100
Preferred Series A Participating Stock at $21.25 per unit. However, in
the event of certain mergers, sales of assets, or self-dealing transactions
involving a 20 percent or more shareholder, each right not owned by such
20 percent or more shareholder will be modified so that it will then be
exercisable for common stock having a market value of twice the exercise
price of the right. The rights are redeemable in whole by the Company,
at a price of $.0125 per right, at any time before 20 percent or more of
the Company's common stock has been acquired. On January 18, 1995, the
Board of Directors of the Company authorized the amendment of the Rights
Agreement by extending the final expiration date of the Rights from
October 27, 1996 to October 27, 2006. Accordingly, the Rights expire on
October 27, 2006, unless previously redeemed.
ITEM 6. SELECTED FINANCIAL DATA.
- ------ -----------------------
Fiscal Year ended March 31
------------------------------------------------------
1996 1995 1994 1993 1992
Sales (in thousands) $990,493 $913,010 $669,553 $570,839 $526,580
Net earnings (in
thousands) 61,399 68,442 43,990*** 19,987** 28,019
Total assets (in
thousands) 671,836 590,187 509,981 405,187 383,475
Long-term debt (in
thousands) 87,809 62,220 77,646 52,350 74,295
Dividends per share* .60 .52 .46 .42 .38
Net earnings per share* 2.02 2.24 1.44*** .66** .93
* Adjusted for stock splits and stock dividends.
** Includes recognition of an accounting change from the adoption of FAS 106,
resulting in a one-time after-tax expense of $13,700,000, or $.46 per
share.
***Includes recognition of an accounting change from the adoption of FAS 109,
resulting in a one-time after-tax benefit of $899,000, or $.03 per
share.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
- ------ -----------------------------------------------------------
AND RESULTS OF OPERATIONS.
-------------------------
Certain information required hereunder is incorporated by reference from
the Company's 1995-96 Annual Report to Shareholders, pages 4, 5, 6, 7, 8,
9, 10, 11, 12, 13, 14, 15, 16 and 18, attached as Exhibit 13.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
- ------ -------------------------------------------
The report of Coopers & Lybrand LLP dated May 1, 1996, the Consolidated
Statements of Earnings, and the related Consolidated Balance Sheets, Cash
Flows, Shareholders' Investment, and Notes to Consolidated Financial
Statements, appearing on pages 15, 17, 19, 20, and 21-29 of the Company's
1995-96 Annual Report to Shareholders are incorporated herein by reference.
With the exception of the aforementioned information, no other data
appearing in the 1995-96 Annual Report to Shareholders is deemed to be
filed as part of this Annual Report on Form 10-K. Individual financial
statements of the Registrant are omitted because the Registrant is
primarily an operating company, and the subsidiaries included in the
consolidated financial statements are wholly-owned.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
- ------ -----------------------------------------------------------
AND FINANCIAL DISCLOSURE.
------------------------
There were no disagreements on accounting or financial disclosures between
the Company and its auditors.
PART III
--------
ITEMS 10 and 11. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT;
- --------------- ---------------------------------------------------
EXECUTIVE COMPENSATION.
----------------------
The information about directors and executive officers and executive
compensation on pages 2 - 4 and pages 8, 9, 12, and 13, of the Company's
definitive Proxy Statement dated June 7, 1996 under the headings "Election
of Directors", "Nominees to be Elected," "Directors Continuing in Service,"
and "Executive Compensation" attached to this report is incorporated herein
by reference, but excluding the Officer Nomination and Compensation
Committee Report on Executive Compensation and the Performance Graph on
pages 10 - 12.
Executive Officers of Registrant
Officer
Name Age Position Since
---- --- -------- -------
R. T. Savage 57 President and Chief Executive Officer 1981
D. R. Johnson 54 Executive Vice President, Operations 1988
W. E. Pavlick 62 Senior Vice President, General Counsel
and Secretary 1979
V. S. Frangopoulos 60 Group Vice President, Off-Highway
Products 1981
M. G. Baker 56 Group Vice President, Distributed
Products 1987
L. D. Howard 52 Group Vice President, Europe 1991
D. B. Rayburn 48 Group Vice President, Highway Products 1991
J. H. Firestone 58 Vice President, Quality & Environment 1990
Officer
Name Age Position Since
---- --- -------- -------
J. J. Hankey 46 Vice President and General Manager,
Commercial Products Division 1992
R. L. Hetrick 54 Vice President, Human Resources 1989
R. W. Possehl 51 Vice President, Administration 1985
A. D. Reid 54 Vice President, Finance and Chief
Financial Officer 1985
R. S. Bullmore 46 Corporate Controller 1983
R. M. Gunnerson 47 Treasurer 1977
D. R. Zakos 42 Associate General Counsel and
Assistant Secretary 1985
There are no family relationships among the executive officers and
directors. All of the above officers have been employed by Modine in
various capacities during the last five years. There are no arrangements
or understandings between any of the above officers and any other person
pursuant to which he was elected an officer of Modine. Officers are
elected annually at the first meeting of the Board of Directors after the
Annual Meeting of Shareholders. Mr. Savage and one other executive officer
have employment agreements with the Company.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
- ------- ---------------------------------------------------
MANAGEMENT.
----------
The information relating to stock ownership on pages 5 - 7 of the Company's
definitive Proxy Statement dated June 7, 1996 under the headings "Principal
Shareholders and Share Ownership of Directors and Executive Officers,
"Principal Shareholders," and "Securities Owned by Management" attached to
this report is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
- ------- ----------------------------------------------
The information required by this item is incorporated by reference from the
Company's definitive Proxy Statement dated June 7, 1996 on page 14 under
the heading "Transactions" attached to this report.
PART IV
-------
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
- ------- -------------------------------------------------------
FORM 8-K.
--------
(a) The following documents are filed as part of this Report:
Page in
Annual Report*
-------------
(1) Financial Statements:
Consolidated Statements of Earnings for the
years ended March 31, 1996, 1995, and 1994 15
Consolidated Balance Sheets at March 31, 1996
and 1995 17
Consolidated Statements of Cash Flows for the
years ended March 31, 1996, 1995, and 1994 19
Consolidated Statements of Shareholders'
Investment for the years ended March 31, 1996,
1995, and 1994 20
Notes to Consolidated Financial Statements 21 - 28
Independent Auditors' Report 29
* Incorporated by reference from the indicated
pages of the 1995-96 Annual Report to Shareholders
Page in
Form 10-K
---------
(2) Financial Statement Schedules:
Report of Independent Accountants on Financial
Statement Schedules for the three years ended
March 31, 1996 26
Schedule II - Valuation and Qualifying Accounts
for the years ended March 31, 1996, 1995 and 1994 116
(3) Consent of Independent Accountants 98
(4) Exhibit Index 18
(b) All other schedules have been omitted as they are not applicable, not
required, or because the required information is included in the financial
statements.
The following exhibits are attached for information only unless
specifically incorporated by reference in this Report:
Reference Number
per Item 601 of
Regulation S-K Page
- --------------- ----
2 Not applicable.
Reference Number
per Item 601 of
Regulation S-K Page
- --------------- ----
3(a) Restated Articles of Incorporation
(as amended) (filed by reference to
the Registrant's Annual Report on
Form 10-K for the fiscal year ended
March 31, 1994).
*3(b) Restated By-Laws (as amended). 27
4(a) Specimen Uniform Denomination Stock
Certificate of the Registrant (filed
by reference to the Registrant's Annual
Report on Form 10-K for the fiscal year
ended March 31, 1993).
4(b) Rights Agreement dated as of October 16,
1986 between the Registrant and First
Chicago Trust Company of New York (Rights
Agent) (filed by reference to the
Registrant's Annual Report on Form 10-K
for the fiscal year ended March 31, 1992).
4(b)(i) Rights Agreement Amendment No. 1 dated as
of January 18, 1995 between the Registrant
and First Chicago Trust Company of New York
(Rights Agent) (filed by reference to the
exhibit contained within the Registrant's
Current Report on Form 8-K dated January 13,
1995.)
4(b)(ii) Rights Agreement Amendment No. 2 dated as
of January 18, 1995 between the Registrant
and First Chicago Trust Company of New York
(Rights Agent) (filed by reference to the
exhibit contained within the Registrant's
Current Report on Form 8-K dated January 13,
1995.)
Note: The amount of long-term debt authorized under any
----
instrument defining the rights of holders of long-term debt
of the Registrant, other than as noted above, does not exceed
ten percent of the total assets of the Registrant and its
subsidiaries on a consolidated basis. Therefore, no such
instruments are required to be filed as exhibits to this
Form 10-K. The Registrant agrees to furnish copies of such
instruments to the Commission upon request.
9 Not applicable.
10(a) Director Emeritus Retirement Plan (effective
April 1, 1992) (filed by reference to the
Registrant's Annual Report on Form 10-K for
the fiscal year ended March 31, 1992).
Reference Number
per Item 601 of
Regulation S-K Page
- --------------- ----
10(b) 1978 Incentive Stock Plan (as amended) (filed
by reference to the Registrant's Annual Report
on Form 10-K for the fiscal year ended March 31,
1993).
10(c) Employment agreements between the Registrant
and R. T. Savage and W. E. Pavlick (filed by
reference to the Registrant's Annual Report
on Form 10-K for the fiscal year ended March 31,
1992).
10(d) 1985 Incentive Stock Plan (as amended) (filed
by reference to the Registrant's Annual Report
on Form 10-K for the fiscal year ended March 31,
1992).
10(e) 1985 Stock Option Plan for Non-Employee
Directors (as amended) (filed by reference to
the Registrant's Annual Report on Form 10-K for
the fiscal year ended March 31, 1994).
10(f) Pension and Disability Plan For Salaried
Employees of Modine Manufacturing Company
(as amended) (filed by reference to the
Registrant's Annual Report on Form 10-K
for the fiscal year ended March 31, 1994).
10(g) Executive Supplemental Retirement Plan
(as amended) (filed by reference to the
Registrant's Annual Report on Form 10-K
for the fiscal year ended March 31, 1995).
10(h) Modine Manufacturing Company Executive
Supplemental Stock Plan (as amended) (filed
by reference to the Registrant's Annual
Report on Form 10-K for the fiscal year
ended March 31, 1994).
10(i) Director Emeritus Agreements between the
Registrant and Neal D. Crane and Bernard H.
Regenburg (filed by reference to the
Registrant's Annual Report on Form 10-K for
the fiscal year ended March 31, 1992).
10(j) 1990 Stock Award Plan [a part of the 1985
Incentive Stock Plan].
Note: The 1990 Plan is not materially
----
different from the 1987 Stock Award Plan
filed with the Registrant's Annual Report
on Form 10-K for the fiscal year 1993.
Reference Number
per Item 601 of
Regulation S-K Page
- --------------- ----
10(k) 1991 Stock Award Plan [a part of the 1985
Incentive Stock Plan].
Note: The 1991 Plan is not materially
----
different from the 1987 Stock Award Plan
filed with the Registrant's Annual Report
on Form 10-K for the fiscal year 1993.
10(l) Consulting Agreement between the Registrant
and E. E. Richter (filed by reference to the
Registrant's Annual Report on Form 10-K for
the fiscal year ended March 31, 1992).
10(m) 1992 Stock Award Plan [a part of the 1985
Incentive Stock Plan].
Note: The 1992 Plan is not materially
----
different from the 1987 Stock Award Plan
filed with the Registrant's Annual Report
on Form 10-K for the fiscal year 1993.
10(n) 1993 Stock Award Plan [a part of the 1985
Incentive Stock Plan].
Note: The 1993 Plan is not materially
----
different from the 1987 Stock Award Plan
filed with the Registrant's Annual Report
on Form 10-K for the fiscal year 1993.
10(o) 1994 Stock Award Plan [a part of the 1985
Incentive Stock Plan].
Note: The 1994 Plan is not materially
----
different from the 1987 Stock Award Plan
filed with the Registrant's Annual Report
on Form 10-K for the fiscal year 1993.
10(p) 1994 Incentive Compensation Plan (filed
by reference to the exhibit contained
within the Registrant's 1994 Proxy
Statement dated June 10, 1994).
10(q) 1994 Stock Option Plan for Non-Employee
Directors (filed by reference to the
exhibit contained within the Registrant's
1994 Proxy Statement dated June 10, 1994).
10(r) 1995 Stock Award Plan [a part of the 1994
Incentive Compensation Plan] (filed by
reference to the exhibit contained within
Reference Number
per Item 601 of
Regulation S-K Page
- --------------- ----
the Registrant's Annual Report on Form 10-K
for the fiscal year 1995).
10(s) 1995 Stock Option Agreements (incentive and
non-qualified) [a part of the 1994
Incentive Compensation Plan] (filed by
reference to the exhibit contained within
the Registrant's Annual Report on Form 10-K
for the fiscal year 1995).
10(t) 1995 Stock Option Agreement [a part of the
1994 Stock Option Plan for Non-Employee
Directors] (filed by reference to the exhibit
contained within the Registrant's Annual
Report on Form 10-K for the fiscal year 1995).
*10(u) 1996 Stock Option Agreements (incentive and
non-qualified) [a part of the 1994 Incentive
Compensation Plan]. 39
*10(v) 1996 Stock Award Plan [a part of the 1994
Incentive Compensation Plan]. 53
*11 Statement re: computation of per share
earnings. 59
12 Not applicable.
*13 1995-96 Annual Report to Shareholders.
Except for the portions of the Report
expressly incorporated by reference,
the Report is furnished solely for the
information of the Commission and is not
deemed "filed" as a part hereof. 60
16 Not applicable.
18 Not applicable.
*21 List of subsidiaries of the Registrant. 96
22 Not applicable.
*23 Consent of independent certified public
accountants. 98
24 Not applicable.
*27 Financial Data Schedule 99
28 Not applicable.
Reference Number
per Item 601 of
Regulation S-K Page
- --------------- ----
*99 Definitive Proxy Statement of the
Registrant dated June 9, 1995. Except
for the portions of the Proxy Statement
expressly incorporated by reference, the
Proxy Statement is furnished solely for
the information of the Commission and
is not deemed "filed" as a part hereof. 100
None Appendix (filed pursuant to Item 304 of
Regulation S-T). 117
Note: All Exhibits filed herewith are current to the end of the
----
reporting period of the Form 10-K (unless otherwise noted).
* Filed herewith.
Current Reports on Form 8-K:
- ---------------------------
A Current Report on Form 8-K, dated June 7, 1996, was filed by the Company.
This report, filed in connection with the Company's mailing of its Annual
Report to Shareholders and its sales forecast for the upcoming year
contained therein, includes as exhibits (1) the news release containing the
sales forecast and (2) a statement of the important factors and assumptions
regarding forward-looking statements.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
Modine Manufacturing Company
Date: June 19, 1996 By: R. T. SAVAGE
-----------------------------------
R. T. Savage, President and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities indicated.
R. T. SAVAGE June 19, 1996
- -------------------------------------- -------------
R. T. Savage, President, Chief Date
Executive Officer and Director
A. D. REID June 19, 1996
- -------------------------------------- -------------
A. D. Reid, Vice President and Date
Chief Financial Officer
W. E. PAVLICK June 19, 1996
- -------------------------------------- -------------
W. E. Pavlick, Senior Vice President, Date
General Counsel and Secretary
R. J. DOYLE June 19, 1996
- -------------------------------------- -------------
R. J. Doyle, Director Date
T. J. GUENDEL June 19, 1996
- -------------------------------------- -------------
T. J. Guendel, Director Date
F. W. JONES June 19, 1996
- -------------------------------------- -------------
F. W. Jones, Director Date
D. J. KUESTER June 19, 1996
- -------------------------------------- -------------
D. J. Kuester, Director Date
V. L. MARTIN June 19, 1996
- -------------------------------------- -------------
V. L. Martin, Director Date
G. L. NEALE June 19, 1996
- -------------------------------------- -------------
G. L. Neale, Director Date
S. W. TISDALE June 19, 1996
- -------------------------------------- -------------
S. W. Tisdale, Director Date
M. T. YONKER June 19, 1996
- -------------------------------------- -------------
M. T. Yonker, Director Date
Coopers
& Lybrand LLP
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Directors
Modine Manufacturing Company
Our report on the consolidated financial statements of Modine Manufacturing
Company and Subsidiaries has been incorporated by reference in this Form
10-K from the 1996 annual report to shareholders of Modine Manufacturing
Company and Subsidiaries on page 29 herein. In connection with our audits
of such financial statements, we have also audited the related financial
statement schedules listed in the index on page 18 of this Form 10-K.
In our opinion, the financial statement schedules referred to above, when
considered in relation to the basic financial statements taken as a whole,
present fairly, in all material respects, the information required to be
included therein.
COOPERS & LYBRAND LLP
Coopers & Lybrand LLP
Chicago, Illinois
May 1, 1996