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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

 

FORM 10-K

☑	ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended March 31, 2015

 

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

(Exact name of registrant as specified in its charter)

 

Registrant's telephone number, including area code (262) 636‑1200

Securities registered pursuant to Section 12(b) of the Act:

 

 

Securities Registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes ☐    No ☑

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

Yes ☐    No ☑

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☑    No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes ☑   No ☐

 

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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.  ☑

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).

Yes ☐    No ☑

Approximately 97 percent of the outstanding shares are held by non-affiliates.  The aggregate market value of these shares was approximately $550 million based upon the market price of $11.87 per share on September 30, 2014, the last day of our most recently completed second fiscal quarter.  Shares of common stock held by each executive officer and director and by each person known to beneficially own more than 10 percent of the outstanding common stock have been excluded in that such persons may be deemed to be affiliates.  The determination of affiliate status is not necessarily a conclusive determination for other purposes.

The number of shares outstanding of the registrant's common stock, $0.625 par value, was 47,895,824 at May 22, 2015.

An Exhibit Index appears at pages 77-79 herein.

Portions of the following documents are incorporated by reference into the parts of this Form 10‑K designated to the right of the document listed.

 

 

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MODINE MANUFACTURING COMPANY

TABLE OF CONTENTS

 

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ITEM 1.

BUSINESS.

Modine Manufacturing Company specializes in thermal management systems and components, bringing heating and cooling technologies and solutions to diversified global markets.  We are a leading global developer, manufacturer and marketer of heat exchangers and systems for use in on-highway and off-highway original equipment manufacturer (“OEM”) vehicular applications, and to a wide array of building, industrial and refrigeration markets.  Products include radiators and radiator cores, condensers, oil coolers, charge air coolers, heat-transfer modules and assemblies, exhaust gas recirculation (“EGR”) coolers, and building heating, ventilating and air conditioning (“HVAC”) equipment.  Our primary customers across the globe are:

- Automobile, truck, bus, and specialty vehicle OEMs;

- Agricultural, industrial and construction equipment OEMs;

- Heating, ventilation and cooling OEMs;

- Construction architects and contractors; and

- Wholesalers of heating equipment.

We focus our development efforts on solutions that meet the ever-increasing heat transfer needs of OEMs and other customers within the automobile, commercial vehicle, construction, agricultural, industrial and commercial HVAC industries.  Our products and systems typically are aimed at solving complex heat transfer challenges requiring effective thermal management.  Typical customer and market demands include products and systems that are lighter weight, more compact, more efficient and more durable to meet customer standards as they work to ensure compliance with increasingly stringent global emissions, fuel economy and energy efficiency requirements.  Our heritage provides a depth and breadth of expertise in thermal management, which, when combined with our global manufacturing presence, standardized processes, and state-of-the-art technical resources, enables us to rapidly bring highly valued, customized solutions to our customers.

History

Modine was incorporated under the laws of the State of Wisconsin on June 23, 1916 by its founder, Arthur B. Modine.  Mr. Modine’s “Turbotube” radiators became standard equipment on the famous Ford Motor Company Model T.  When he died at the age of 95, A.B. Modine had personally been granted a total of 120 U.S. patents for his heat transfer innovations.  The standard of innovation exemplified by A.B. Modine remains the cornerstone of Modine today.

Terms and Year References

When we use the terms “Modine,” “we,” “us,” the “Company,” or “our” in this report, unless the context otherwise requires, we are referring to Modine Manufacturing Company.  Our fiscal year ends on March 31 and, accordingly, all references to a particular year mean the fiscal year ended March 31 of that year, unless indicated otherwise.

Business Strategy and Results

We focus on thermal management leadership and highly engineered product and service innovations for diversified, global markets and customers.  We are committed to enhancing our presence around the world and serving our customers where they are located.  We create value by focusing on customer partnerships and providing innovative solutions for our customers' thermal management problems.

Our strategy for improved profitability is grounded in diversifying our markets and customer base, differentiating our products and services, both technically and commercially, and partnering with customers to deliver the right products in the right markets.  Our top five customers are in three different markets – automotive, commercial vehicle, and off-highway – and our ten largest customers accounted for 63 percent of our fiscal 2015 sales.  In fiscal 2015, 64 percent of our total sales were generated from customers outside of the U.S., with 55 percent of total sales generated by foreign operations and 9 percent generated by exports from the U.S.  In fiscal 2014, 66 percent of our total sales were generated from customers outside of the U.S., with 56 percent of total sales generated by foreign operations and 10 percent generated by exports from the U.S.  In fiscal 2013, 61 percent of our total sales were generated from customers outside of the U.S., with 54 percent of total sales generated by foreign operations and 7 percent generated by exports from the U.S.

 

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During fiscal 2015, our consolidated sales were $1.50 billion, a 1 percent increase from $1.48 billion in fiscal 2014.  Sales volume increases to our HVAC and commercial vehicle customers were partially offset by lower sales volume to our off-highway customers and a $42.5 million unfavorable impact of foreign currency exchange rate changes, primarily associated with the strengthening of the U.S. dollar.  Gross profit increased $8.3 million to $246.5 million in fiscal 2015 compared with the prior year, primarily due to sales volume improvements and lower warranty costs.  Selling, general and administrative (“SG&A”) expenses increased slightly to $184.5 million in fiscal 2015, compared with $181.7 million in fiscal 2014.

In an effort to optimize our cost structure and improve efficiency of our operations, we have engaged in restructuring activities in our Europe, North America, and South America segments.  As a result, we recorded $4.7 million of restructuring expenses during fiscal 2015.  In addition, we recorded a $7.8 million goodwill impairment charge related to our South America segment in fiscal 2015, primarily caused by a decline in the financial outlook for the segment due to the weak economic environment in Brazil.  We also sold a wind tunnel in our Europe segment in fiscal 2015, an asset which we no longer considered to be a core asset.  As a result of this sale, we recorded a gain of $3.2 million.

Operating income improved $15.5 million in fiscal 2015 compared with the prior year, primarily due to lower restructuring expenses, higher gross profit on increased sales volume, and the gain on the sale of the wind tunnel, partially offset by the goodwill impairment charge.

A key metric by which we measure our performance is return on average capital employed (“ROACE”).  We define ROACE as operating income, less restructuring expenses, impairment charges, certain other adjustments, income tax at a 30 percent rate, and earnings attributable to noncontrolling interest; divided by the average of debt plus Modine shareholders’ equity.  We have established a long-term goal of achieving ROACE of 15 percent.  ROACE was 7.8 percent in fiscal 2015 compared with 8.7 percent in fiscal 2014.  The lower ROACE in fiscal 2015 was primarily due to higher capital employed in fiscal 2015.  Capital employed was negatively impacted by the $119 million reversal of U.S. income tax valuation allowances on March 31, 2014.  See Note 8 of the Notes to Consolidated Financial Statements for further information.

ROACE is not a measure derived under generally accepted accounting principles (“GAAP”) and should not be considered as a substitute for any measure derived in accordance with GAAP.  We believe that ROACE provides investors with helpful information about our performance, our ability to provide an acceptable return on capital, and our ability to fund future growth.  This measure may not be comparable with similar measures presented by other companies.  The following schedule provides a reconciliation of ROACE to the most directly comparable financial measures calculated and presented in accordance with GAAP:

 

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Products

We offer a broad line of products that are categorized as a percentage of net sales as follows:

*Typically include components such as radiators, oil coolers, charge air coolers, condensers and other purchased components.

Competitive Position

We compete with many manufacturers of heat transfer and HVAC products, some of which are divisions of larger companies.  The markets for our products are increasingly competitive and have changed significantly in the past few years.  Our traditional OEM customers are faced with dramatically increased international competition and have expanded their global manufacturing footprint to compete in local markets.  Some of these market changes have caused us to experience competition from suppliers in other parts of the world that enjoy economic advantages such as lower labor costs, lower healthcare costs, and lower tax rates.  As a result, we have expanded and continue to expand our geographic footprint, in part to provide more flexibility to serve our customers around the globe.  Our customers also continue to ask us, as well as their other primary suppliers, to provide research and development (“R&D”), design, and validation support for new potential projects.  This combined work effort often results in stronger customer relationships and more partnership opportunities for us.  It can also introduce risk, to the extent that these requests come at a time when actual business awards are pending.

Business Segments

We have assigned specific businesses to segments based principally on defined markets and geographic locations.  Each operating segment is managed by a vice president or managing director and has separate financial results reviewed by our chief operating decision maker.  These results are used by management in evaluating the performance of each business segment and in making decisions on the allocation of resources among our various businesses.  During fiscal 2015, we changed the name of our Commercial Products segment to Building HVAC in order to better reflect the nature of the segment’s product lines.  There were no changes to the operations or reported financial results of the segment as a result.  Financial information related to our operating segments is included in Note 21 of the Notes to Consolidated Financial Statements.

North America, South America, Europe, and Asia Segments

The continued globalization of our OEM customer base has led to the necessity of viewing our strategic approach, product offerings and competitors on a global basis.  This trend offers significant opportunities for us with our market positioning, including our presence in key global markets (U.S., Europe, Brazil, China, India, South Korea, Japan, Russia, and Mexico) and a global product-based organization with expertise to solve technical challenges.  We are recognized for having strong technical support, product breadth and the ability to support global standard designs for our customers.

 

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Our main vehicular competitors, AKG Group, BorgWarner, Dana Corporation, Delphi Corporation, Denso Corporation, Mahle Behr, Tata Toyo, TitanX, T. Rad Co. Ltd., Valeo SA, Visteon Corporation and Zhejiang Yinlun Machinery Co. Ltd., have a multi-regional or worldwide presence.  Increasingly, we face heightened competition as these competitors expand their product offerings and manufacturing footprints through expansion into low-cost countries or low-cost sourcing initiatives.  In addition, competitors from some of the low-cost regions are aligning their presence for OEM market expansion.

The North America, South America, Europe, and Asia segments represent our original equipment segments and serve the following markets:

Market Overview – During fiscal 2015, the North America commercial vehicle market experienced significant volume improvements, particularly in heavy-duty trucks, and we expect the market to remain relatively strong in fiscal 2016.  Favorable economic conditions and freight fundamentals suggest solid underlying freight demand and improved profits for truck fleets, although these gains may be offset by the introduction of new government regulations.  In recent years, new trucks in the U.S., Canada, and the Eurozone have become more expensive due to enhanced vehicle technology, but the enhancements have resulted in improved fuel economy.  Truck buyers making initial capital outlays can expect to experience improved fuel economy and reduced fuel expenses.  These market conditions, coupled with older truck fleets and tight shipping capacity, are expected to result in year-over-year increases in North America truck production.  In Europe, we anticipate Euro 6 commercial vehicle orders to remain relatively slow in the near term, an effect persisting from the pre-buy of Euro 5 truck platforms during fiscal 2014 and compounded by recent unfavorable economic conditions in certain European countries.  Despite these recent challenges, we expect commercial vehicle demand in Europe to improve in fiscal 2016 compared with fiscal 2015.

Other trends influencing the commercial vehicle market include a call by global commercial vehicle manufacturers to standardize U.S., Canada, and Eurozone emission regulations.  If global truck OEMs are successful, this likely would lead to further consolidation of our customer base and competitors, as they leverage higher volumes, consolidate development costs, and rationalize distribution channels.   Additionally, truck makers are evaluating alternative powertrains and fuels, electrification, waste heat recovery and other technologies aimed to improve vehicle efficiency.

OEMs continue to expect greater supplier support and seek new technology solutions at lower prices for their thermal management needs.  In general, this creates a challenge to the supply base, but also an opportunity for suppliers who develop innovative solutions at a competitive cost.  Global standardization, fuel economy and emissions regulations are driving the advancement of product development worldwide and are creating demand for incremental thermal transfer products that we are well positioned to support.

Products – Powertrain cooling (engine cooling modules, radiators, charge air coolers, condensers, oil coolers, fan shrouds, and surge tanks); on-engine cooling (EGR coolers, engine oil coolers, fuel coolers, charge air coolers and intake air coolers); and auxiliary coolers (transmission and retarder oil coolers and power steering coolers).

Customers – Commercial, medium- and heavy-duty truck and engine manufacturers; bus and specialty vehicle manufacturers.

Primary Competitors – Mahle Behr; TitanX; T. Rad Co. Ltd.; BorgWarner; and Tata Toyo.

Market Overview – The global off-highway markets declined during fiscal 2015.  The U.S. agricultural market has been under pressure from low commodity prices and associated demand, a trend that we expect to continue in fiscal 2016.  We expect these markets will continue to be negatively impacted by higher used equipment inventories, which could suppress new equipment sales, the absence of tax benefits available to customers, and the uncertain interest rate environment.  We expect modest improvements in the European construction and agricultural equipment markets, as we expect Eurozone economic conditions to slowly improve, aided by recent monetary stimulus efforts.  Many mining equipment buyers continued to cut capital investment plans as it appears this market is progressing through a multiple-year cycle of demand declines.  The mining equipment markets remained depressed during fiscal 2015 and are showing little signs of improving in fiscal 2016, especially in the U.S.  The construction market was mixed in fiscal 2015, as some regions began to show signs of improvement during the year, while others remained depressed.  In South America, we anticipate a decline in the agricultural market during fiscal 2016. In Asia, we expect that the China and Korea excavator markets will remain depressed.

 

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Overall, off-highway market trends include a migration toward global machine platforms, where economically feasible, driving the multi-region assembly of a common design platform.  OEMs often prefer global suppliers with local production capabilities.  We are recognized as having strong technical support capabilities, product breadth, and the ability to support global standard designs and local manufacturing operations for our customers.

Products – Powertrain cooling (engine cooling modules, radiators, condensers, charge air coolers, fuel coolers and oil coolers); auxiliary coolers (power steering coolers and transmission oil coolers); and on-engine cooling (EGR coolers, engine oil coolers, fuel coolers, charge air coolers and intake air coolers).

Customers – Construction, agricultural, and mining equipment and engine manufacturers, and industrial manufacturers of material handling equipment, generator sets and compressors.

Primary Competitors – Adams Thermal Systems Inc.; AKG Group; Denso Corporation; Zhejiang Yinlun Machinery Co., Ltd.; ThermaSys Corp.; Doowon; Donghwan; T. Rad Co. Ltd.; Mahle Industrial Thermal Systems; KALE OTO RADYATÖR; and RAAL.

Market Overview – The global automotive market improved in most regions during fiscal 2015, and we expect this trend to continue in fiscal 2016, supported by favorable oil prices and accommodative monetary policies.  Structurally, albeit slowly, the automotive market is beginning to move away from traditional internal combustion engines towards alternative powertrains, such as electric, hybrid, or fuel cell.  This shift is expected to increase the thermal requirements for these vehicles and we are capitalizing on this trend by applying our base heat transfer components to new applications.  We expect our global automotive market production to increase in fiscal 2016, with modest improvements in both North America and Europe and new product launches driving sales volume growth in Asia.

Products – Powertrain cooling (engine cooling assemblies, radiators, condensers and charge air coolers); auxiliary cooling (power steering coolers and transmission oil coolers); component assemblies; radiators for special applications; on-engine cooling (EGR coolers, engine oil coolers, fuel coolers, charge air coolers and intake air coolers); and battery cooling (layered core battery chillers).

Customers – Automobile, light truck, and power sports vehicle and engine manufacturers.

 

Primary Competitors – Mahle Behr; Dana Corporation; Delphi Corporation; Denso Corporation; Visteon Corporation; BorgWarner; and Valeo SA.

Building HVAC Segment

Market Overview – The North American heating market has experienced significant volume increases over the past two years.  We expect modest improvement in the North American heating market in fiscal 2016, given the significant market growth seen in the past two fiscal years.  We anticipate market demand for our data center cooling, ventilation, and geothermal heat pump products to increase in fiscal 2016.  Continued growth in global computing power, coupled with increasing requirements for energy-efficient and green solutions, will continue to drive increased demand for our data center cooling products, especially our high-density and free-cooling solutions.  Likewise, a steadily-improving economy, improvement in construction markets, and energy efficiency legislation is expected to drive increased demand for our ventilation and geothermal products.

Products – Unit heaters (gas-fired, hydronic, electric and oil-fired); duct furnaces (indoor and outdoor); infrared units (high- and low-intensity); hydronic products (commercial fin-tube radiation, cabinet unit heaters, and convectors); roof-mounted direct- and indirect-fired makeup air units; commercial packaged rooftop ventilation units; unit ventilators; single packaged vertical units; geothermal and water-source heat pumps; precision air conditioning units for data center applications; air-handling units; chillers; ceiling cassettes; and condensing units.

Customers – Mechanical contractors; HVAC wholesalers; installers; and end users in a variety of commercial and industrial applications, including banking and finance, data center management, education, hospitality, telecommunications, entertainment arenas, hotels, restaurants, hospitals, warehousing, manufacturing, and food and beverage processing.

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Primary Competitors – Lennox International Inc. (ADP); CES (Reznor); Mestek Inc. (Sterling); Emerson Electric Company (Liebert); Stulz; Schneider Electric (APC / Uniflair); Johnson Controls, Inc. (York); Daikin (McQuay International); System Air (ChangeAir); Bard Manufacturing; and Aaon, Inc.

Geographical Areas

We maintain administrative organizations in four geographical regions - North America, South America, Europe, and Asia - to facilitate customer support, development and testing, and other administrative functions.  We operate in the following countries:

Our non-U.S. subsidiaries and affiliates manufacture and sell a number of vehicular, building HVAC, and industrial products similar to those produced in the U.S.  In addition to normal business risks, operations outside the U.S. are subject to other risks such as changing political, economic and social environments, changing governmental laws, taxes and regulations, foreign currency volatility, and market fluctuations.

Exports

Export sales from the U.S. to foreign countries as a percentage of net sales were 9 percent, 10 percent, and 7 percent in fiscal 2015, 2014 and 2013, respectively.

We believe our international presence has positioned us to share profitably in the anticipated long-term growth of the global vehicular, commercial, industrial, and building HVAC markets.  We are committed to increasing our involvement and investment in international markets in the years ahead.

Foreign and Domestic Operations

Financial information relating to our foreign and domestic operations is included in Note 21 of the Notes to Consolidated Financial Statements.

Customer Dependence

Our ten largest customers, certain of which are conglomerates, accounted for 63 percent of our sales in fiscal 2015.  These customers, listed alphabetically, were: BMW; Caterpillar; Daimler AG (including Daimler Trucks, Mercedes- Benz, Mitsubishi Fuso Trucks, Thomas Buses and Western Star Trucks); Deere & Company; Denso Corporation; Ford Motor Co.; Navistar; Volkswagen AG (including Audi, MAN, Porsche and Scania); Volvo; and ZF Friedrichshafen AG.  In fiscal 2015, Daimler AG and Volkswagen AG each accounted for 10 percent or more of our sales.  In fiscal 2014 and 2013, Daimler AG was the only customer that accounted for 10 percent or more of our sales.  Generally, we supply products to our customers on the basis of individual purchase orders received from them.  When it is in the customer's and our best interests, we utilize long‑term sales agreements to minimize investment risks and provide the customer with a proven source of competitively priced products.  These contracts are, on average, three years in duration and may include built-in pricing adjustments.

 

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Backlog of Orders

Our operating segments maintain their own inventories and production schedules.  We believe that our current production capacity is capable of handling the sales volume expected in fiscal 2016 and beyond.

Raw Materials

Aluminum, nickel and steel are purchased from several domestic and foreign suppliers.  In general, we do not rely on any one supplier for these materials, which are, for the most part, available from numerous sources in quantities required by us.  The supply of copper and brass material is highly concentrated between two global suppliers.  We normally do not experience material shortages and believe that our suppliers’ production of these metals will be adequate throughout the next fiscal year.  Metals pricing with our raw material and major fabricated component suppliers are typically adjusted on a quarterly basis.  When possible, we have made material pass-through arrangements with key customers, which allow us to pass material cost increases and decreases to our customers.  When utilized, however, these pass-through arrangements are typically limited to the underlying cost of the material based upon the London Metal Exchange, and do not include related premiums or fabrication costs.  In addition, there can be a time lag between the time of the material price increase or decrease and the time that we adjust the price with our customer.  This time lag typically ranges from three months to one year.

Patents

We own or license numerous patents related to our products and operations.  These patents and licenses have been obtained over a period of years and expire at various times.  Because we have many product lines, we believe that our business as a whole is not materially dependent upon any particular patent or license, or any particular group of patents or licenses. We consider each of our patents, trademarks and licenses to be of value and aggressively defend our rights throughout the world against infringement. We have been granted and/or acquired more than 2,000 patents worldwide over the life of our company.

Research and Development

We remain committed to our vision of creating value through technology and innovation.  We focus our engineering and R&D efforts on solutions that meet challenging heat transfer needs of OEMs and other customers within the commercial vehicle, automotive, construction, agricultural, industrial and building HVAC markets.  Our products and systems typically are aimed at solving difficult and complex heat transfer challenges requiring advanced thermal management.  Typical market demands are for products and systems that are lighter weight, more compact, more efficient and more durable to meet customer standards as customers work to ensure compliance with increasingly stringent global emissions and energy efficiency requirements.  Our heritage includes a depth and breadth of expertise in thermal management that, combined with our global manufacturing presence, standardized processes, and state-of-the-art technical resources, enables us to rapidly bring customized solutions to our customers.

R&D expenditures, including certain application engineering costs for specific customer solutions, were $62 million in fiscal 2015 and 2014 and $68 million in fiscal 2013.  Over the last three years, R&D expenditures have been between 4 and 5 percent of sales.  This level of investment reflects our continued commitment to R&D in an ever-changing market.  To achieve efficiencies and lower development costs, our R&D groups work closely with our customers on special projects and system designs.  Projects include next generation aluminum radiators, charge air coolers and waste heat recovery systems for the automotive, commercial vehicle, agricultural and construction markets, and EGR technology, which enables our customers to efficiently meet tighter regulatory emission standards.  Most of our current R&D activities are focused on internal development in the areas of powertrain cooling, engine, and building HVAC products.  We also collaborate with several industry, university, and government-sponsored research organizations that conduct research and provide data on technical topics of interest to us for practical applications in the markets we serve.  We received $1 million, $1 million, and $2 million of reimbursements from government-sponsored organizations during fiscal 2015, 2014 and 2013, respectively.

We continue to identify, evaluate and engage in external research projects that complement our strategic internal research initiatives in order to further leverage our significant thermal technology expertise and capability.

 

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Quality Improvement

Through our global Quality Management System (“QMS”), our manufacturing facilities in our North America, Europe, South America and Asia segments are registered to ISO 9001:2008 or ISO/TS 16949:2009 standards, helping to ensure that our customers receive high quality products and services from every facility.  While customer expectations for performance, quality and service have risen continuously over recent years, our QMS has allowed us to drive improvements in quality performance and has enabled the ongoing delivery of products and services that meet or exceed customer expectations.

The global QMS operates within the context of the Modine Operating System (“MOS”), which focuses on well-defined improvement principles and leadership behaviors to engage our teams in driving rapid improvements.  We drive sustainable and systematic continuous improvement throughout all functional areas and operating segments of the organization by utilizing the principles, processes and behaviors that are core to these systems.

Environmental, Health and Safety Matters

We are committed to preventing pollution, eliminating waste and reducing environmental risks.  Our facilities maintain Environmental Management System (“EMS”) certification to the international ISO14001 standard through independent third-party audits. All of our locations have established specific environmental improvement targets and objectives for the upcoming fiscal year.

In fiscal 2015, our carbon emissions, resulting from our on-site use of natural gas and propane and from our use of electricity generated by off-site sources, decreased slightly (normalized for sales) compared with the prior year.  We will continue to identify and implement carbon reduction opportunities when feasible over the upcoming fiscal year.

During fiscal 2015, our water consumption decreased 10 percent, saving nine million gallons of water. This decrease was a continuation of consecutive improvements over the past seven years, during which we have realized a cumulative 44 percent decrease in our water usage.  In fiscal 2015, we consumed 67 million fewer gallons of water than we did in fiscal 2008. As in previous years, we continue to systematically identify opportunities and implement measures to reduce waste and conserve natural resources within the EMS structure.

Our fiscal 2015 volatile organic air emissions decreased 20 percent compared with fiscal 2014, primarily due to operational improvements in a solvent cleaning process.  We are actively pursuing alternative manufacturing processes that use more environmentally-friendly materials.

Our commitment to environmental stewardship is reflected in our reporting of chemical releases, as monitored by the United States Environmental Protection Agency's Toxic Chemical Release Inventory program.  Our U.S. locations decreased their reported chemical releases by 98 percent over the 10-year period from 2003 to 2013. This long-term improvement is the result of manufacturing efficiencies and a transition to more environmentally-friendly manufacturing technologies and raw materials.

Our product portfolio reflects our sense of environmental responsibility.  We continue our development and refinement of environmentally-friendly product lines, including oil, fuel, and EGR coolers for diesel applications, light-weight and high-performance powertrain cooling heat exchangers, and our Advanced Cooling System technology. These products provide increased fuel economies and enable combustion technologies that reduce harmful gas emissions. Our Building HVAC segment offerings, including the Airedale SchoolMate geothermal heat pump, the Effinity⁹³, the most efficient gas-fired unit heater in North America, and the Atherion^TM Commercial Packaged Ventilation System, are helping commercial, industrial and residential users achieve high energy efficiencies and reduce utility costs. Our geothermal products feature innovative heat pump technologies, providing energy savings and reduced carbon emissions in both heating and cooling seasons.

Obligations for remedial activities may arise at our facilities due to past practices, or as a result of a property purchase or sale.  These expenditures most often relate to sites where past operations followed practices that were considered acceptable under then-existing regulations, but now require investigative and/or remedial work to ensure appropriate environmental protection or where we are a successor to the obligations of prior owners and current laws and regulations require investigative and/or remedial work to ensure sufficient environmental compliance.  Three of our currently-owned manufacturing facilities and two formerly-owned properties have been identified as requiring soil and/or groundwater remediation.  Environmental liabilities for investigative work and remediation at sites in the United States, Brazil, and Netherlands totaled $3.8 million at March 31, 2015.

 

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We recorded a fiscal 2015 global Recordable Incident Rate (“RIR” as defined by OSHA) of 1.63, which increased slightly over the fiscal 2014 rate of 1.59.  Our long-term safety performance, as indicated by RIR, improved 18 percent over the past five years.  We have consistently out-performed the private-industry RIR average, which, by comparison, was 3.10 in 2013.

For our U.S. locations, annual workers’ compensation claims reported in fiscal 2015 decreased approximately $2 million as compared with fiscal 2010, representing an 84 percent improvement. We attribute these lower claims to the continued strengthening of our safety culture.

Our behavior-based safety program is a proactive global effort under which we seek to correct at-risk behaviors, and positively reinforce safe behaviors. Our behavior-based safety program is our long-term commitment to improving our safety culture.

Employees

We employed approximately 6,900 persons worldwide as of March 31, 2015.

Seasonal Nature of Business

Our overall operating performance is generally not subject to a significant degree of seasonality, as sales to OEM customers are dependent upon market demand for new vehicles.  However, our second fiscal quarter production schedules are typically impacted by customer summer shut downs and our third fiscal quarter is affected by holiday schedules.   Additionally, our Building HVAC segment experiences some seasonality as demand for HVAC products can be affected by heating and cooling seasons, weather patterns, construction, and other factors.  Generally, sales volume within the Building HVAC segment is stronger in our second and third fiscal quarters, corresponding with demand for heating products.

Working Capital

We manufacture products for the original equipment markets on an as-ordered basis, which makes large inventories of such products unnecessary.  In our Building HVAC segment, we maintain varying levels of finished goods inventory due to seasonal demand and certain sales programs.  In these areas, we make use of extended payment terms, not to exceed 90 days, for our Building HVAC customers on a limited basis.  In our South America segment, we maintain higher levels of aftermarket product inventory in order to timely meet customer needs in the Brazilian automotive and commercial vehicle aftermarkets.  We do not experience a significant number of returned products within any of our operating segments.

Available Information

We make available, free of charge through our website, www.modine.com (Investors link), our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements, other Securities Exchange Act reports and all amendments to those reports as soon as reasonably practicable after such material is electronically filed with, or furnished to, the Securities and Exchange Commission (“SEC”).  Our reports are also available free of charge on the SEC’s website, www.sec.gov.  Also available free of charge on our website are the following corporate governance documents:

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Code of Ethics and Business Conduct, which is applicable to all Modine directors and employees, including the principal executive officer, the principal financial officer, and the principal accounting officer;

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Corporate Governance Guidelines;

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Audit Committee Charter;

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Officer Nomination and Compensation Committee Charter;

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Corporate Governance and Nominating Committee Charter; and

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Technology Committee Charter.

 

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All of the reports and corporate governance documents referred to above and other materials relating to corporate governance may also be obtained without charge by contacting Corporate Secretary, Modine Manufacturing Company, 1500 DeKoven Avenue, Racine, Wisconsin 53403-2552.  We do not intend to incorporate our internet website and the information contained therein or incorporated therein into this annual report on Form 10-K.

ITEM 1A.

RISK FACTORS.

Our business involves risks.  The following information about these risks should be considered carefully together with the other information contained in this report.  The risks described below are not the only risks we face.  Additional risks not currently known or deemed immaterial as of the date of this report may also adversely impact our business results.

A.	MARKET RISKS

Our OEM business, which accounts for approximately 84 percent of our business currently, is dependent upon the health of the customers and markets we serve.

We are highly susceptible to downward trends in the markets we serve as our customers’ sales and production levels are affected by general economic conditions, including access to credit, the price of fuel and electricity, employment levels and trends, interest rates, labor relations issues, regulatory requirements, trade agreements and other market factors, as well as by customer-specific issues.  Any significant decline in production levels for current and future customers could result in long-lived asset impairment charges and a reduction in our sales, thereby adversely impacting our results of operations and financial condition.

Our OEM customers continually seek price reductions from us.  These price reductions adversely affect our results of operations and financial condition.

A challenge that we, along with other suppliers to vehicular OEMs, face is continued price reduction pressure from our customers.  Downward pricing pressure has been a characteristic of the automotive industry and is migrating to all of our vehicular OEM markets.  Virtually all such OEMs impose aggressive price reduction initiatives upon their suppliers, and we expect such actions to continue in the future.  In response, we must reduce our operating costs in order to maintain profitability.  We have taken, and will continue to take, steps to reduce our operating costs to offset customer price reductions; however, price reductions adversely affect our profit margins and are expected to do so in the future.  If we are unable to avoid price reductions for our customers, or if we are unable to offset price reductions through improved operating efficiencies and manufacturing processes, sourcing alternatives, technology enhancements and other cost reduction initiatives, our results of operations and financial condition could be adversely affected.

If we were to lose business with a major OEM customer, our revenue and profitability could be adversely affected.

Deterioration of a business relationship with a major OEM customer could cause our revenue and profitability to suffer.  We principally compete for new business both during the initial development of new models and upon the redesign of models by our major customers.  New model development generally begins two to five years prior to marketing such models to the public.  The failure to obtain new business on new models or to retain or increase business on redesigned existing models could adversely affect our business and financial results.  In addition, as a result of the relatively long lead times required for many of our complex components, it may be difficult in the short-term for us to obtain new sales to replace any unexpected decline in the sales of existing products.  We may incur significant expense in preparing to meet anticipated customer requirements that may not be recovered.  The loss of a major OEM customer, the loss of business with respect to one or more of the vehicle models that use our products, or a significant decline in the production levels of such vehicles could have an adverse effect on our business, results of operations and financial condition.

 

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We could be adversely affected if we experience shortages of components or materials from our suppliers.

In an effort to manage and reduce our cost of purchased goods and services, we, like many suppliers and customers, have been consolidating our supply base.  As a result, we are dependent upon limited sources of supply for certain components used in the manufacture of our products.  We select our suppliers based on total value (including price, delivery and quality), taking into consideration their production capacities, financial condition and ability to meet our demand.  In some cases, it can take several months or longer to find a supplier due to qualification requirements.  However, there can be no assurance that strong demand, capacity limitations, financial instability, or other problems experienced by our suppliers will not result in occasional shortages or delays in their supply of product to us.  If we were to experience a significant or prolonged shortage of critical components or materials from any of our suppliers and could not procure the components or materials from other sources, we would be unable to meet our production schedules and miss product delivery dates, which would adversely affect our sales, results of operations and customer relationships.

Fluctuations in costs of materials (including aluminum, steel, copper, nickel, other raw materials and energy) could place significant pressure on our results of operations.

Increases in the costs of materials could have a significant effect on our results of operations and on those of others in our industry.  We have sought to alleviate this risk by including material pass-through provisions in our customer contracts when possible.  Under these arrangements, we can pass certain material cost increases and decreases to our customers.  However, where these pass-through arrangements are utilized, there can be a time lag between the time of the material increase or decrease and the time of the pass-through.  This time lag can range between three months and one year.  To further mitigate our exposure, we have, from time to time, entered into forward contracts to hedge a portion of our forecasted aluminum and copper purchases.  However, these hedges may only partially offset increases in material costs, and significant increases could have an adverse effect on our results of operations.

The continual pressure to absorb costs adversely affects our profitability.

We continue to be pressured to absorb costs related to product design, engineering and tooling, as well as other costs previously paid directly by OEMs.  OEM customers often request that we pay for design, engineering and tooling costs that are incurred prior to the start of production and recover these costs through amortization in the piece price of the product.  Some of these costs cannot be capitalized, which adversely affects our profitability until the programs for which they have been incurred are launched.  If a given program is not launched, or is launched with significantly lower volumes than planned, we may not be able to recover the design, engineering and tooling costs from our customers, further adversely affecting our profitability.

We face strong competition.

The competitive environment has changed dramatically over the past few years as our traditional OEM customers, faced with intense international competition, have expanded their sourcing of components. As a result, we have experienced competition from suppliers in other parts of the world that enjoy economic advantages, such as lower labor costs, lower health care costs, lower tax rates, lower costs associated with legal compliance, and, in some cases, export or raw materials subsidies. Increased competition could adversely affect our business and our results of operations.

As a global company, we are subject to foreign currency rate fluctuations, and a significant movement between the U.S. dollar and the euro and Brazilian real, in particular, could have an adverse effect on our profitability.

Although our financial results are reported in U.S. dollars, a significant portion of our sales and operating costs are realized in euros, the Brazilian real and other currencies.  Our profitability is affected by movements of the U.S. dollar against the euro, the real and other currencies in which we generate revenues and incur expenses.  To the extent that we are unable to match revenues received in foreign currencies with costs paid in the same currency, exchange rate fluctuations in any such currency could have an adverse effect on our financial results.  During times of a strengthening U.S. dollar, our reported sales and earnings from our international operations will be lower because the applicable local currency will be translated into fewer U.S. dollars.  Significant long-term fluctuations in relative currency values, in particular a significant change in the relative values of the U.S. dollar, euro or real, could have an adverse effect on our results of operations and financial condition.

 

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B.	OPERATIONAL RISKS

We may be unable to maintain competitive cost structures within our business.

In efforts to optimize our cost structure and improve efficiency of our operations, we have engaged in restructuring activities in our Europe, North America and South America segments.  Successful implementation of these cost-reduction initiatives, and in particular the consolidation of manufacturing facilities in Europe and North America and headcount reductions in Brazil due to the economic slowdown, is critical to our future competitiveness and ability to improve profitability and generate a level of cost savings sufficient to effectively compete within those segments and across Modine as a whole.

We are in the midst of launching a significant number of new programs at our facilities across the world.  The success of these launches is critical to our business.

We design technologically advanced products, and the processes required to produce these products can be difficult and complex.  We commit significant time and financial resources to ensure the successful launch of new products and programs.  Managing product launches is difficult as we are launching many new products and programs in each of our segments.  Due to our high level of launch activity, we must appropriately deploy our operational and administrative resources to take advantage of this increase in our business.  If we do not successfully launch the products and programs, we may lose market share or damage relationships with our customers, which could negatively affect our business.  In addition, any failure in our manufacturing strategy for these new products or programs could result in production inefficiencies or long-lived asset impairment charges.

We are subject to risks related to our international operations.

We have manufacturing and technical facilities located in North America, South America, Europe, Asia, and Africa.  In fiscal 2015, 55 percent of our sales were from non-U.S. operations.  Consequently, our global operations are subject to numerous risks and uncertainties, including changes in monetary and fiscal policies, trade restrictions or prohibitions, import or other charges or taxes, fluctuations in foreign currency exchange and interest rates, limitations on the repatriation of funds, changing economic conditions, unreliable intellectual property protection and legal systems, insufficient infrastructures, social unrest, political instability and disputes, incompatible business practices, and international terrorism.  In addition, compliance with multiple and often conflicting laws and regulations of various countries is burdensome and expensive.

If we cannot differentiate ourselves from our competitors with our technology, our existing and potential customers may seek lower prices and our sales and earnings may be adversely affected.

Price, quality, delivery, technological innovation, and application engineering development are the primary elements of competition in our markets.  If we fail to keep pace with technological changes and cannot differentiate ourselves from our competitors with our technology or to provide high quality products and services, we may experience price erosion, lower sales, and lower margins.  Significant technological developments by others also could adversely affect our business and results of operations.

 

Developments or assertions by or against us relating to intellectual property rights could adversely affect our business.

We own significant intellectual property, including a large number of patents, trademarks, copyrights and trade secrets.  Our intellectual property plays an important role in maintaining our competitive position in a number of the markets we serve.  Developments or assertions by or against us relating to intellectual property rights could adversely affect our business and results of operations.

 

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We may be adversely affected by any disruption in our information technology systems.

Our operations are dependent upon our information technology systems, which encompass all of our major business functions.  A substantial disruption in our information technology systems for a prolonged time period, or a material breach of our information security, could result in delays in receiving inventory and supplies or filling customer orders, and/or the release of otherwise confidential information, adversely affecting our customer service and relationships as well as our reputation.  Our systems might be damaged or interrupted by natural or man-made events (caused by us, by our service providers or others) or by computer viruses, physical or electronic break-ins and similar disruptions affecting the internet. Such delays, problems or costs could have a material adverse effect on our business, financial condition, results of operations and reputation.

We may incur material losses and costs as a result of warranty and product liability claims and litigation.

In the event our products fail to perform as expected, we are exposed to warranty and product liability claims and may be required to participate in a recall or other field campaign of such products.  Many of our OEM customers have extended warranty protection for their vehicles, putting pressure on the supply base to extend warranty coverage as well.  Historically, we have experienced relatively low warranty charges from our customers due to our contractual arrangements and the quality, reliability and durability of our products.  If our customers demand higher warranty-related cost recoveries, or if our products fail to perform as expected, it could have a material adverse impact on our results of operations and financial condition.  We are also involved in various legal proceedings from time to time incidental to our business.  If any such proceeding has a negative result, it could adversely affect our business and results of operations.

We could be adversely impacted by the costs of environmental, health and safety regulations.

Our operations are subject to various federal, state, local and foreign laws and regulations governing, among other things, emissions to air, discharge to waters and the generation, handling, storage, transportation, treatment and disposal of waste and other materials.  The operation of our manufacturing facilities entails risks in these areas and there can be no assurance we will avoid material costs or liabilities relating to such matters.  Our financial responsibility to clean up contaminated property may extend to previously owned or used property, properties owned by unrelated companies, as well as properties we currently own and use, regardless of whether the contamination is attributable to prior owners.  In addition, potentially significant expenditures could be required in order to comply with evolving environmental, health and safety laws, regulations or other requirements that may be adopted or imposed in the future.

We are currently working with environmental consultants to remediate groundwater contamination at our facility in Brazil that has, over a period of years, migrated to neighboring properties, and subsurface contamination at our former manufacturing facility in the Netherlands.  Remediation of these contaminations could result in potentially significant expenditures.  See Note 19 of the Notes to Consolidated Financial Statements for further discussion.

C.	STRATEGIC RISK

Inability to identify and execute acquisitions may adversely impact our business and operating results.

We expect to pursue growth opportunities through acquisitions and business ventures.  There can be no assurance we will be able to identify attractive targets and successfully complete transactions in the future.  If we are unable to complete additional acquisitions, our growth may be limited.  Recent and future acquisitions will require integration of operations, sales and marketing, information technology, finance, and administrative functions.  If we are unable to successfully integrate acquisitions and operate these businesses profitably, we may not achieve the financial or operational success expected from the acquisitions.

 

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D.	FINANCIAL RISKS

Market trends and regulatory requirements may require additional funding for our pension plans.

We have several defined benefit pension plans that cover most of our domestic employees hired on or before December 31, 2003.  Our funding policy for these plans is to contribute annually, at a minimum, the amount necessary on an actuarial basis to provide for benefits in accordance with applicable laws and regulations.  Our domestic plans have an unfunded balance of $80 million.  During fiscal 2016, we anticipate making funding contributions totaling approximately $7 million related to these domestic plans.  Funding requirements for our defined benefit plans are dependent upon, among other things, interest rates, underlying asset returns, mortality rate tables, and the impact of legislative or regulatory changes.  Should changes in actuarial assumptions or other factors result in the requirement of significant additional funding contributions, our liquidity position could be adversely affected.

We may be subject to additional income tax expense or exposure due to negative or unexpected tax consequences.

Unfavorable changes in the financial outlook of our operations in certain jurisdictions could lead to adverse changes in our valuation allowance assertions for our deferred tax assets.  Additionally, the subjectivity of or changes in tax laws and regulations in jurisdictions where we have significant operations could materially affect our results of operations.  We are subject to tax audits by governmental authorities in each taxing jurisdiction in which we operate.  Unfavorable or unexpected outcomes from one or more such tax audits could adversely affect our results of operations and financial position.

 

 

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ITEM 2.

PROPERTIES.

Location of Facility	Building Space	Primary Use	Owned or Leased
North America Segment
Lawrenceburg, TN	453,800 sq. ft.	Manufacturing	143,800 Owned;
			310,000 Leased
Nuevo Laredo, Mexico	370,500 sq. ft.	Manufacturing	Owned
Jefferson City, MO	220,000 sq. ft.	Manufacturing	162,000 Owned;
			58,000 Leased
Washington, IA	165,400 sq. ft.	Manufacturing	148,800 Owned;
			16,600 Leased
McHenry, IL	164,700 sq. ft.	Manufacturing	Owned
Trenton, MO	159,900 sq. ft.	Manufacturing	Owned
Joplin, MO	139,500 sq. ft.	Manufacturing	Owned
Laredo, TX	45,000 sq. ft.	Warehouse	Leased
Europe Segment
Bonlanden, Germany	205,300 sq. ft.	Administrative & technology center	Owned
Kottingbrunn, Austria	220,600 sq. ft.	Manufacturing	Owned
Pontevico, Italy	150,700 sq. ft.	Manufacturing	Owned
Pliezhausen, Germany	125,900 sq. ft.	Manufacturing	48,400 Owned;
			77,500 Leased
Mezökövesd, Hungary	154,000 sq. ft.	Manufacturing	Owned
Wackersdorf, Germany	109,800 sq. ft.	Assembly	Owned
Kirchentellinsfurt, Germany	107,600 sq. ft.	Manufacturing	Owned
Uden, Netherlands	83,200 sq. ft.	Manufacturing	60,600 Owned;
			22,600 Leased
Neuenkirchen, Germany	76,400 sq. ft.	Manufacturing	Owned
Gyöngyös, Hungary	58,300 sq. ft.	Manufacturing	Leased
South America Segment
Sao Paulo, Brazil	342,900 sq. ft.	Manufacturing & technology center	Owned
Asia Segment
Chennai, India	118,100 sq. ft.	Manufacturing	Owned
Changzhou, China	107,600 sq. ft.	Manufacturing	Owned
Shanghai, China	80,300 sq. ft.	Manufacturing	Leased
Cheonan, South Korea	46,300 sq. ft.	Manufacturing (Joint Venture)	Leased
Building HVAC Segment
Leeds, United Kingdom	269,100 sq. ft.	Administrative & manufacturing	Leased	(a)
Leeds, United Kingdom	104,400 sq. ft.	Administrative & manufacturing	Leased (temporary)	(a)
Leeds, United Kingdom	55,700 sq. ft.	Manufacturing	Leased (temporary)	(a)
Leeds, United Kingdom	27,200 sq. ft.	Warehouse	Leased (temporary)	(a)
Consett, United Kingdom	30,000 sq. ft.	Administrative & manufacturing	Owned
Consett, United Kingdom	20,000 sq. ft.	Manufacturing	Leased
Buena Vista, VA	197,000 sq. ft.	Manufacturing	Owned
Lexington, VA	104,000 sq. ft.	Warehouse	Owned
West Kingston, RI	92,800 sq. ft.	Manufacturing	Owned
Corporate Headquarters
Racine, WI	458,000 sq. ft.	Headquarters & technology center	Owned

Name		Age		Position
Scott L. Bowser		50		Regional Vice President – Asia (July 2012 – Present); Regional Vice President – Americas (March 2009 – July 2012); Managing Director – Modine Brazil (April 2006 – March 2009); General Sales Manager – Truck Division (January 2002 – March 2006); Plant Manager at the Company’s Pemberville, OH plant (1998 – 2001).  Prior to joining Modine, Mr. Bowser held positions at The Pierce Company.
Thomas A. Burke		57		President and Chief Executive Officer (April 2008 – Present); Executive Vice President and Chief Operating Officer (July 2006 – March 2008); and Executive Vice President (May 2005 – July 2006).  Prior to joining Modine in May 2005, Mr. Burke held positions at Ford Motor Company and Visteon Corporation.
Margaret C. Kelsey		50		Vice President, Legal and Corporate Communications, General Counsel and Secretary (April 2014 – present); Vice President, General Counsel and Secretary (November 2008 – March 2014); Vice President Corporate Strategy and Business Development (May 2008 – October 2008); Vice President - Finance, Corporate Treasury and Business Development (January 2007 – April 2008); Corporate Treasurer & Assistant Secretary (January 2006 – December 2006); Senior Counsel & Assistant Secretary (April 2002 – December 2005); Senior Counsel (April 2001 – March 2002).  Prior to joining the Company in 2001, Ms. Kelsey was a partner with the law firm of Quarles & Brady LLP.
Michael B. Lucareli		46		Vice President, Finance and Chief Financial Officer (October 2011 – present); Vice President, Finance, Chief Financial Officer and Treasurer (July 2010 – October 2011); Vice President, Finance and Corporate Treasurer (May 2008 – July 2010); Managing Director Financial Operations (November 2006 – May 2008); Director, Financial Operations and Analysis (May 2004 – October 2006); Director, Business Development and Strategic Planning (November 2002 – May 2004); and Business Development and Investor Relations Manager (1999 – October 2002).  Prior to joining Modine, Mr. Lucareli held positions at Associated Bank, Alpha Investment Group and SEI Corporation.

Thomas F. Marry		54		Executive Vice President and Chief Operating Officer (February 2012 – Present); Executive Vice President – Europe, Asia and Commercial Products Group (May 2011 – February 2012); Regional Vice President – Asia and Commercial Products Group (November 2007 – May 2011); Managing Director – Powertrain Cooling Products (October 2006 – October 2007); General Manager – Truck Division (2003 – 2006); Director – Engine Products Group (2001 – 2003); Manager – Sales, Marketing and Product Development (1999 – 2001); Marketing Manager (1998 – 1999).  Prior to joining Modine, Mr. Marry held positions at General Motors, Robert Bosch and Milwaukee Electric Tool.
Matthew J. McBurney		45		Vice President, Building HVAC (May 2011 – Present); Director, Commercial Products Group (CPG) – North America (June 2007 – May 2011); Business and Product Development Manager – CPG (November 2006 – June 2007); Business Development Manager – CPG (May 2006 – October 2006); Plant Superintendent at the Company’s Richland, SC plant (November 2003 – May 2006); Program Manager - Automotive (March 2000 – November 2003). In addition, from 1992 through 2000, Mr. McBurney held various engineering positions at the Company.  Prior to joining Modine, Mr. McBurney was a Production Manager for Avenue International Radiator, Inc.
Holger Schwab		50		Regional Vice President – Europe (July 2012 – Present).  Prior to joining Modine, Mr. Schwab held various leadership positions at Valeo in North America and Europe and at Thermal Werke.
Scott D. Wollenberg		46		Regional Vice President – North America (July 2012 – Present); Chief Technology Officer (July 2011 – May 2013); Vice President – Global Research and Engineering (May 2010 – June 2011).  In addition, from 1992 through 2010, Mr. Wollenberg held various engineering and product management positions at the Company.  Prior to joining the Company in 1992, Mr. Wollenberg was in the co-operative engineering program at Harrison Radiator, a division of General Motors.

		Fiscal 2015								Fiscal 2014
Quarter		High				Low				High				Low
First		$	17.51			$	13.46			$	11.15			$	8.68
Second			16.15				11.87				14.78				10.88
Third			13.96				11.25				15.17				11.92
Fourth			13.82				12.11				15.69				10.79

						Indexed Returns
		Initial Investment				Years ended March 31,
Company / Index		March 31, 2010				2011				2012				2013				2014				2015
Modine Manufacturing Company		$	100			$	143.59			$	78.56			$	80.96			$	130.34			$	119.84
Russell 2000 Index			100				125.79				125.56				146.03				182.39				182.39
S&P MidCap 400 Industrials Index			100				134.13				137.84				171.58				211.94				225.97

		Years ended March 31,
(in millions, except per share amounts)		2015				2014				2013				2012				2011
Net sales		$	1,496.4			$	1,477.6			$	1,376.0			$	1,577.2			$	1,448.2
Earnings (loss) from continuing operations			22.2				131.9				(22.8	)			38.0				8.3
Total assets			931.6				1,032.3				818.8				893.5				917.7
Long-term debt - excluding current portion			129.6				131.2				132.5				141.9				138.6
Earnings (loss) per share from continuing operations - basic:			0.45				2.75				(0.52	)			0.81				0.18
Earnings (loss) per share from continuing operations - diluted:			0.44				2.72				(0.52	)			0.80				0.18

		Years ended March 31,
		2015								2014								2013
(in millions)		$'s				% of sales				$'s				% of sales				$'s				% of sales
Net sales		$	1,496				100.0	%		$	1,478				100.0	%		$	1,376				100.0	%
Cost of sales			1,249				83.5	%			1,240				83.9	%			1,167				84.8	%
Gross profit			247				16.5	%			238				16.1	%			209				15.2	%
Selling, general and administrative expenses			184				12.3	%			182				12.3	%			166				12.1	%
Restructuring expenses			5				0.3	%			16				1.1	%			17				1.2	%
Impairment charges			8				0.5	%			3				0.2	%			26				1.9	%
Gain on sale of wind tunnel			(3	)			-0.2	%			-				-				-				-
Operating income (loss)			53				3.6	%			37				2.5	%			(1	)			0.0	%
Interest expense			(12	)			-0.8	%			(12	)			-0.8	%			(13	)			-0.9	%
Other income (expense) – net			-				-				(1	)			-0.1	%			-				-
Earnings (loss) from continuing operations before income taxes			41				2.8	%			24				1.6	%			(13	)			-0.9	%
(Provision) benefit for income taxes			(19	)			-1.3	%			108				7.3	%			(10	)			-0.7	%
Earnings (loss) from continuing operations		$	22				1.5	%		$	132				8.9	%		$	(23	)			-1.7	%

North America
		Years ended March 31,
		2015								2014								2013
(in millions)		$'s				% of sales				$'s				% of sales				$'s				% of sales
Net sales		$	574				100.0	%		$	569				100.0	%		$	565				100.0	%
Cost of sales			477				83.1	%			475				83.6	%			484				85.6	%
Gross profit			97				16.9	%			94				16.4	%			81				14.4	%
Selling, general and administrative expenses			50				8.7	%			50				8.6	%			40				7.2	%
Restructuring expenses			1				0.2	%			1				0.2	%			-				-
Impairment charges			-				-				1				0.2	%			2				0.3	%
Operating income		$	46				8.0	%		$	42				7.4	%		$	39				6.9	%

Europe
		Years ended March 31,
		2015								2014								2013
(in millions)		$'s				% of sales				$'s				% of sales				$'s				% of sales
Net sales		$	578				100.0	%		$	584				100.0	%		$	498				100.0	%
Cost of sales			509				88.1	%			513				87.9	%			437				87.7	%
Gross profit			69				11.9	%			71				12.1	%			61				12.3	%
Selling, general and administrative expenses			44				7.6	%			44				7.6	%			45				9.1	%
Restructuring expenses			2				0.4	%			15				2.6	%			17				3.4	%
Impairment charges			-				-				2				0.3	%			24				4.8	%
Gain on sale of wind tunnel			(3	)			-0.6	%			-				-				-				-
Operating income (loss)		$	26				4.5	%		$	10				1.6	%		$	(25	)			-5.0	%

South America
		Years ended March 31,
		2015								2014								2013
(in millions)		$'s				% of sales				$'s				% of sales				$'s				% of sales
Net sales		$	94				100.0	%		$	123				100.0	%		$	134				100.0	%
Cost of sales			82				87.2	%			102				83.1	%			111				83.2	%
Gross profit			12				12.8	%			21				16.9	%			23				16.8	%
Selling, general and administrative expenses			14				15.9	%			13				10.8	%			12				8.4	%
Restructuring expenses			2				1.6	%			-				-				-				-
Impairment charges			8				8.4	%			-				-				-				-
Operating (loss) income		$	(12	)			-13.1	%		$	8				6.1	%		$	11				8.4	%

Asia
		Years ended March 31,
		2015								2014								2013
(in millions)		$'s				% of sales				$'s				% of sales				$'s				% of sales
Net sales		$	81				100.0	%		$	72				100.0	%		$	60				100.0	%
Cost of sales			69				85.8	%			63				87.5	%			58				97.2	%
Gross profit			12				14.2	%			9				12.5	%			2				2.8	%
Selling, general and administrative expenses			12				13.9	%			12				17.2	%			11				17.6	%
Operating income (loss)		$	-				0.3	%		$	(3	)			-4.7	%		$	(9	)			-14.8	%

Building HVAC
		Years ended March 31,
		2015								2014								2013
(in millions)		$'s				% of sales				$'s				% of sales				$'s				% of sales
Net sales		$	186				100.0	%		$	146				100.0	%		$	139				100.0	%
Cost of sales			130				70.0	%			103				70.4	%			98				70.7	%
Gross profit			56				30.0	%			43				29.6	%			41				29.3	%
Selling, general and administrative expenses			37				19.8	%			34				23.2	%			31				22.1	%
Operating income		$	19				10.2	%		$	9				6.4	%		$	10				7.2	%

		March 31, 2015
(in millions)		Total				Less than 1 year				1 - 3 years				4 - 5 years				More than 5 years
Long-term debt		$	125.2			$	0.2			$	24.0			$	32.0			$	69.0
Interest associated with long-term debt			38.8				8.5				16.1				11.9				2.3
Capital lease obligations			4.9				0.3				0.6				0.6				3.4
Operating lease obligations			49.9				8.2				10.0				7.8				23.9
Capital expenditure commitments			15.5				13.0				2.5				-				-
Other long-term obligations			10.9				1.6				3.2				2.6				3.5
Total contractual obligations		$	245.2			$	31.8			$	56.4			$	54.9			$	102.1

		2015				2014				2013
Net sales		$	1,496.4			$	1,477.6			$	1,376.0
Cost of sales			1,249.9				1,239.4				1,167.4
Gross profit			246.5				238.2				208.6
Selling, general and administrative expenses			184.5				181.7				166.3
Restructuring expenses			4.7				16.1				17.0
Impairment charges			7.8				3.2				25.9
Gain on sale of wind tunnel			(3.2	)			-				-
Operating income (loss)			52.7				37.2				(0.6	)
Interest expense			(11.7	)			(12.4	)			(12.6	)
Other income (expense) – net			0.2				(0.8	)			0.2
Earnings (loss) from continuing operations before income taxes			41.2				24.0				(13.0	)
(Provision) benefit for income taxes			(19.0	)			107.9				(9.8	)
Earnings (loss) from continuing operations			22.2				131.9				(22.8	)
Earnings from discontinued operations, net of income taxes			0.6				-				-
Net earnings (loss)			22.8				131.9				(22.8	)
Net earnings attributable to noncontrolling interest			(1.0	)			(1.5	)			(1.4	)
Net earnings (loss) attributable to Modine		$	21.8			$	130.4			$	(24.2	)
Earnings (loss) per share from continuing operations attributable to Modine shareholders:
Basic		$	0.45			$	2.75			$	(0.52	)
Diluted		$	0.44			$	2.72			$	(0.52	)
Net earnings (loss) per share attributable to Modine shareholders:
Basic		$	0.46			$	2.75			$	(0.52	)
Diluted		$	0.45			$	2.72			$	(0.52	)
Weighted average shares outstanding:
Basic			47.2				46.9				46.6
Diluted			47.8				47.6				46.6

		2015				2014				2013
Net earnings (loss)		$	22.8			$	131.9			$	(22.8	)
Other comprehensive income (loss):
Foreign currency translation			(68.2	)			9.7				(17.1	)
Defined benefit plans, net of income taxes of ($13.2), $9.8 and $0 million			(26.7	)			13.9				(23.6	)
Cash flow hedges, net of income taxes of $0, $0.6 and $0 million			-				1.1				2.6
Total other comprehensive income (loss)			(94.9	)			24.7				(38.1	)
Comprehensive income (loss)			(72.1	)			156.6				(60.9	)
Comprehensive income attributable to noncontrolling interest			(0.8	)			(1.7	)			(1.4	)
Comprehensive income (loss) attributable to Modine		$	(72.9	)		$	154.9			$	(62.3	)

		2015				2014
ASSETS
Cash and cash equivalents		$	70.5			$	87.2
Trade accounts receivable – net			192.9				221.1
Inventories			107.7				116.8
Deferred income taxes			13.4				13.0
Other current assets			79.7				60.7
Total current assets			464.2				498.8
Property, plant and equipment – net			322.1				359.6
Intangible assets – net			9.9				12.4
Goodwill			16.2				28.7
Deferred income taxes			102.7				98.6
Other noncurrent assets			16.5				34.2
Total assets		$	931.6			$	1,032.3
LIABILITIES AND SHAREHOLDERS' EQUITY
Short-term debt		$	18.6			$	32.4
Long-term debt – current portion			0.5				0.8
Accounts payable			152.0				171.1
Accrued compensation and employee benefits			56.7				70.8
Other current liabilities			83.4				82.1
Total current liabilities			311.2				357.2
Long-term debt			129.6				131.2
Deferred income taxes			3.4				7.3
Pensions			110.4				81.0
Other noncurrent liabilities			16.4				27.0
Total liabilities			571.0				603.7
Commitments and contingencies (see Note 19)
Shareholders' equity:
Preferred stock, $0.025 par value, authorized 16.0 million shares, issued - none			-				-
Common stock, $0.625 par value, authorized 80.0 million shares, issued 48.6 million and 48.3 million shares			30.4				30.2
Additional paid-in capital			180.6				175.7
Retained earnings			359.8				338.0
Accumulated other comprehensive loss			(198.6	)			(103.9	)
Treasury stock, at cost, 0.7 million shares			(16.2	)			(15.2	)
Total Modine shareholders' equity			356.0				424.8
Noncontrolling interest			4.6				3.8
Total equity			360.6				428.6
Total liabilities and equity		$	931.6			$	1,032.3

		Common stock								Additional paid-in capital				Retained earnings				Accumulated other comprehensive loss				Treasury stock, at cost				Non- controlling interest				Total
		Shares				Amount
Balance, March 31, 2012			47.4			$	29.6			$	168.3			$	231.8			$	(90.3	)		$	(14.5	)		$	1.2			$	326.1
Net loss attributable to Modine			-				-				-				(24.2	)			-				-				-				(24.2	)
Other comprehensive loss			-				-				-				-				(38.1	)			-				-				(38.1	)
Stock options and awards including related tax benefits			0.4				0.3				(0.2	)			-				-				-				-				0.1
Purchase of treasury stock			-				-				-				-				-				(0.1	)			-				(0.1	)
Stock-based compensation expense			-				-				3.1				-				-				-				-				3.1
Net earnings attributable to noncontrolling interest			-				-				-				-				-				-				1.4				1.4
Balance, March 31, 2013			47.8				29.9				171.2				207.6				(128.4	)			(14.6	)			2.6				268.3
Net earnings attributable to Modine			-				-				-				130.4				-				-				-				130.4
Other comprehensive income			-				-				-				-				24.5				-				0.2				24.7
Stock options and awards including related tax benefits			0.5				0.3				0.9				-				-				-				-				1.2
Purchase of treasury stock			-				-				-				-				-				(0.6	)			-				(0.6	)
Stock-based compensation expense			-				-				3.6				-				-				-				-				3.6
Dividend paid to noncontrolling interest			-				-				-				-				-				-				(0.5	)			(0.5	)
Net earnings attributable to noncontrolling interest			-				-				-				-				-				-				1.5				1.5
Balance, March 31, 2014			48.3				30.2				175.7				338.0				(103.9	)			(15.2	)			3.8				428.6
Net earnings attributable to Modine			-				-				-				21.8				-				-				-				21.8
Other comprehensive loss			-				-				-				-				(94.7	)			-				(0.2	)			(94.9	)
Stock options and awards including related tax benefits			0.3				0.2				0.9				-				-				-				-				1.1
Purchase of treasury stock			-				-				-				-				-				(1.0	)			-				(1.0	)
Stock-based compensation expense			-				-				4.0				-				-				-				-				4.0
Net earnings attributable to noncontrolling interest			-				-				-				-				-				-				1.0				1.0
Balance, March 31, 2015			48.6			$	30.4			$	180.6			$	359.8			$	(198.6	)		$	(16.2	)		$	4.6			$	360.6

		Years ended March 31,
		2015				2014				2013
Interest paid		$	10.3			$	12.6			$	11.6
Income taxes paid			15.9				11.4				12.4

		March 31, 2015
		Level 1				Level 2				Level 3				Total
Money market investments		$	-			$	8.1			$	-			$	8.1
Common stocks			40.5				2.2				-				42.7
Corporate bonds			-				23.5				-				23.5
Pooled equity funds			69.0				11.4				-				80.4
Pooled fixed-income funds			15.5				-				-				15.5
U.S. government and agency securities			-				39.8				-				39.8
Other			0.7				6.3				-				7.0
Total		$	125.7			$	91.3			$	-			$	217.0

		March 31, 2014
		Level 1				Level 2				Level 3				Total
Money market investments		$	-			$	11.3			$	-			$	11.3
Common stocks			40.1				2.1				-				42.2
Corporate bonds			-				21.3				-				21.3
Pooled equity funds			68.9				11.9				-				80.8
Pooled fixed-income funds			14.1				-				-				14.1
U.S. government and agency securities			-				37.0				-				37.0
Other			1.6				5.4				-				7.0
Total		$	124.7			$	89.0			$	-			$	213.7

		2015				2014				2013
Weighted average fair value of options		$	10.21			$	7.76			$	4.26
Expected life of awards in years			6.3				6.3				6.3
Risk-free interest rate			2.1	%			1.3	%			0.9	%
Expected volatility of the Company's stock			76.1	%			88.7	%			87.4	%
Expected dividend yield on the Company's stock			0.0	%			0.0	%			0.0	%

		Shares				Weighted average exercise price				Weighted average remaining contractual term (years)				Aggregate intrinsic value
Outstanding, beginning			1.6			$	13.15
Granted			0.1				14.94
Exercised			(0.1	)			8.71
Forfeited or expired			(0.1	)			29.41
Outstanding, ending			1.5			$	11.99				5.3			$	5.7
Exercisable, March 31, 2015			1.2			$	12.13				4.5			$	4.9

		2015				2014				2013
Intrinsic value of stock options exercised		$	0.4			$	1.1			$	0.1
Proceeds from stock options exercised		$	0.6			$	1.1			$	0.1

		Shares				Weighted average price
Non-vested balance, beginning			0.6			$	8.66
Granted			0.3				14.92
Vested			(0.2	)			9.73
Non-vested balance, ending			0.7			$	10.68

		Years ended March 31,
		2015				2014				2013
Employee severance and related benefits		$	1.2			$	14.8			$	14.9
Accelerated depreciation			-				4.3				-
Other restructuring and repositioning expenses			3.5				1.3				2.1
Total		$	4.7			$	20.4			$	17.0

		Years ended March 31,
		2015				2014
Beginning balance		$	19.4			$	11.6
Additions			1.2				14.8
Payments			(7.3	)			(7.8	)
Effect of exchange rate changes			(3.4	)			0.8
Ending balance		$	9.9			$	19.4

		Years ended March 31,
		2015				2014				2013
Equity in earnings of non-consolidated affiliate		$	0.6			$	0.7			$	0.3
Interest income			0.5				0.5				0.9
Foreign currency transactions			(0.9	)			(2.0	)			(1.1	)
Other non-operating income - net			-				-				0.1
Total other income (expense) - net		$	0.2			$	(0.8	)		$	0.2

		Years ended March 31,
		2015				2014				2013
Components of earnings (loss) from continuing operations before income taxes:
United States		$	31.1			$	14.1			$	10.2
Foreign			10.1				9.9				(23.2	)
Total earnings (loss) from continuing operations before income taxes		$	41.2			$	24.0			$	(13.0	)
Income tax expense (benefit):
Federal:
Current		$	0.4			$	(2.0	)		$	2.6
Deferred			7.1				(95.8	)			(2.6	)
State:
Current			-				0.2				0.2
Deferred			1.1				(21.4	)			(0.2	)
Foreign:
Current			12.7				10.0				6.4
Deferred			(2.3	)			1.1				3.4
Total income tax expense (benefit)		$	19.0			$	(107.9	)		$	9.8

		Years ended March 31,
		2015				2014				2013
Statutory federal tax			35.0	%			35.0	%			35.0	%
State taxes, net of federal benefit			2.4				2.1				(1.3	)
Taxes on non-U.S. earnings and losses			(4.9	)			(3.8	)			(23.8	)
Valuation allowance			8.3				(471.7	)			(59.3	)
Tax credits			(6.1	)			(7.1	)			37.0
Compensation			1.0				0.4				(13.0	)
Tax rate or law changes			1.2				(9.2	)			0.9
Uncertain tax positions net of settlements			2.2				0.4				(41.9	)
Brazil interest on equity			-				(1.7	)			3.2
Dividend repatriation			2.4				5.8				(11.4	)
Other			4.6				0.2				(0.8	)
Effective tax rate			46.1	%			(449.6	%)			(75.4	%)

		March 31,
		2015				2014
Deferred tax assets:
Accounts receivable		$	0.3			$	0.2
Inventories			3.8				4.1
Plant and equipment			0.8				2.4
Pension and employee benefits			50.5				39.1
Net operating loss, capital loss, and credit carryforwards			105.0				122.4
Other, principally accrued liabilities			6.8				10.3
Total gross deferred tax assets			167.2				178.5
Less: valuation allowance			(48.0	)			(61.2	)
Net deferred tax assets			119.2				117.3
Deferred tax liabilities:
Goodwill			0.6				4.2
Plant and equipment			5.3				7.6
Other			1.0				1.7
Total gross deferred tax liabilities			6.9				13.5
Net deferred tax asset		$	112.3			$	103.8

		March 31,
		2015				2014
Current deferred tax asset		$	13.4			$	13.0
Noncurrent deferred tax asset			102.7				98.6
Current deferred tax liability (other current liabilities)			(0.4	)			(0.5	)
Noncurrent deferred tax liability			(3.4	)			(7.3	)
Total		$	112.3			$	103.8

		Years ended March 31,
		2015				2014
Beginning balance		$	2.1			$	9.0
Gross increases - tax positions in prior period			3.1				2.5
Gross decreases - tax positions in prior period			-				(7.0	)
Gross increases - tax positions in current period			0.4				0.1
Settlements			-				(1.9	)
Lapse of statute of limitations			-				(0.8	)
Effect of exchange rate changes			-				0.2
Ending balance		$	5.6			$	2.1

Austria	Fiscal 2012 - 2014
Brazil	Calendar 2010 - 2014
Germany	Fiscal 2011 - 2014
United States	Fiscal 2012 – 2014

		Years ended March 31,
		2015				2014				2013
Basic:
Earnings (loss) from continuing operations		$	22.2			$	131.9			$	(22.8	)
Less: Net earnings attributable to noncontrolling interest			(1.0	)			(1.5	)			(1.4	)
Less: Undistributed earnings attributable to unvested shares			(0.2	)			(1.7	)			-
Earnings (loss) from continuing operations available to Modine shareholders			21.0				128.7				(24.2	)
Earnings from discontinued operations, net of income taxes			0.6				-				-
Net earnings (loss) available to Modine shareholders		$	21.6			$	128.7			$	(24.2	)
Weighted average shares outstanding - basic			47.2				46.9				46.6
Basic Earnings Per Share:
Earnings (loss) per share - continuing operations		$	0.45			$	2.75			$	(0.52	)
Earnings per share - discontinued operations			0.01				-				-
Net earnings (loss) per share - basic		$	0.46			$	2.75			$	(0.52	)
Diluted:
Earnings (loss) from continuing operations		$	22.2			$	131.9			$	(22.8	)
Less: Net earnings attributable to noncontrolling interest			(1.0	)			(1.5	)			(1.4	)
Less: Undistributed earnings attributable to unvested shares			(0.2	)			(0.9	)			-
Earnings (loss) from continuing operations available to Modine shareholders			21.0				129.5				(24.2	)
Earnings from discontinued operations, net of income taxes			0.6				-				-
Net earnings (loss) available to Modine shareholders		$	21.6			$	129.5			$	(24.2	)
Weighted average shares outstanding - basic			47.2				46.9				46.6
Effect of dilutive securities			0.6				0.7				-
Weighted average shares outstanding - diluted			47.8				47.6				46.6
Diluted Earnings Per Share:
Earnings (loss) per share - continuing operations		$	0.44			$	2.72			$	(0.52	)
Earnings per share - discontinued operations			0.01				-				-
Net earnings (loss) per share - diluted		$	0.45			$	2.72			$	(0.52	)

		March 31,
		2015				2014
Raw materials and work in process		$	80.7			$	89.2
Finished goods			27.0				27.6
Total inventories		$	107.7			$	116.8

		March 31,
		2015				2014
Land		$	8.2			$	10.4
Buildings and improvements (10-40 years)			221.0				228.1
Machinery and equipment (3-12 years)			652.0				715.1
Office equipment (3-10 years)			81.9				89.5
Construction in progress			31.7				35.5
			994.8				1,078.6
Less: accumulated depreciation			(672.7	)			(719.0	)
Net property, plant and equipment		$	322.1			$	359.6

		March 31, 2015												March 31, 2014
		Gross Carrying Value				Accumulated Amortization				Net Intangible Assets				Gross Carrying Value				Accumulated Amortization				Net Intangible Assets
Trade names		$	9.1			$	(5.8	)		$	3.3			$	10.1			$	(5.7	)		$	4.4
Acquired technology			5.6				(0.9	)			4.7				5.8				(0.2	)			5.6
Customer relationships			2.1				(0.2	)			1.9				2.4				-				2.4
Total intangible assets		$	16.8			$	(6.9	)		$	9.9			$	18.3			$	(5.9	)		$	12.4

Fiscal Year		Estimated Amortization Expense
2016		$	1.6
2017			1.6
2018			1.6
2019			1.5
2020			1.4
2021 & Beyond			2.2

		South America				Asia				Building HVAC				Total
Balance, March 31, 2013		$	12.2			$	0.5			$	16.0			$	28.7
Effect of exchange rate changes			(1.3	)			-				1.3				-
Balance, March 31, 2014			10.9				0.5				17.3				28.7
Impairment charge			(7.8	)			-				-				(7.8	)
Effect of exchange rate changes			(3.1	)			-				(1.6	)			(4.7	)
Balance, March 31, 2015		$	-			$	0.5			$	15.7			$	16.2

		Years ended March 31,
		2015				2014
Beginning balance		$	14.0			$	12.6
Accruals for warranties issued			5.8				6.0
Accruals related to pre-existing warranties			1.5				8.3
Settlements			(9.2	)			(13.0	)
Effect of exchange rate changes			(1.7	)			0.1
Ending balance		$	10.4			$	14.0

Fiscal Year
2016		$	8.2
2017			5.7
2018			4.3
2019			3.8
2020			4.0
2021 and beyond			23.9
Total		$	49.9

		Fiscal year of maturity			March 31, 2015				March 31, 2014
Foreign credit agreements		2016			$	0.2			$	0.5
6.8% Senior Notes		2017-2021				125.0				125.0
Revolving credit facility		2019				-				-
						125.2				125.5
Capital lease obligations		2016-2030				4.9				6.5
						130.1				132.0
Less: current portion						(0.5	)			(0.8	)
Total long-term debt					$	129.6			$	131.2

Fiscal Year
2016		$	0.5
2017			8.3
2018			16.3
2019			16.3
2020			16.3
2021 & beyond			72.4
Total		$	130.1

		2015				2014
Change in benefit obligation:
Benefit obligation at beginning of year		$	295.7			$	309.6
Service cost			0.5				0.6
Interest cost			13.0				13.0
Actuarial loss (gain)			40.6				(10.8	)
Benefits paid			(14.6	)			(18.6	)
Effect of exchange rate changes			(7.0	)			1.9
Benefit obligation at end of year		$	328.2			$	295.7
Change in plan assets:
Fair value of plan assets at beginning of year		$	213.7			$	200.6
Actual return on plan assets			10.8				22.2
Benefits paid			(14.6	)			(18.6	)
Employer contributions			7.1				9.5
Fair value of plan assets at end of year		$	217.0			$	213.7
Funded status at end of year		$	(111.2	)		$	(82.0	)
Amounts recognized in the consolidated balance sheets:
Current liability		$	(0.8	)		$	(1.0	)
Noncurrent liability			(110.4	)			(81.0	)
		$	(111.2	)		$	(82.0	)

		2015				2014				2013
Components of net periodic benefit cost:
Service cost		$	0.5			$	0.6			$	0.6
Interest cost			13.0				13.0				13.5
Expected return on plan assets			(16.7	)			(15.7	)			(16.1	)
Amortization of net actuarial loss			5.5				6.3				5.0
Net periodic benefit cost		$	2.3			$	4.2			$	3.0
Other changes in benefit obligation recognized in other comprehensive loss (income):
Net actuarial loss (gain)		$	46.4			$	(17.3	)		$	27.0
Amortization of net actuarial loss			(5.5	)			(6.3	)			(5.0	)
Total recognized in other comprehensive loss (income)		$	40.9			$	(23.6	)		$	22.0

		Target allocation				Plan assets
						2015				2014
Equity securities			55	%			55	%			57	%
Debt securities			38	%			36	%			37	%
Alternative assets			5	%			5	%			5	%
Cash			2	%			4	%			1	%
			100	%			100	%			100	%

Fiscal Year		Estimated pension benefit payments
2016		$	15.1
2017			15.7
2018			16.9
2019			17.2
2020			18.0
2021-2025			94.0

		Balance Sheet Location		March 31, 2015				March 31, 2014
Foreign exchange contracts		Other current liabilities		$	0.3			$	0.2
Commodity derivatives		Other current liabilities			0.1				0.1
Commodity derivatives		Other noncurrent liabilities			-				0.1

		March 31, 2015
		Amount of Loss Recognized in AOCI			Statement of Operations Location		Loss Reclassified from AOCI into Continuing Operations				Total Loss Recognized in Continuing Operations
Commodity derivatives		$	-		Cost of sales		$	-			$	0.2
Foreign exchange contracts			-		Other income (expense) - net			-				1.1
Total		$	-				$	-			$	1.3

		March 31, 2014
		Amount of Loss Recognized in AOCI			Statement of Operations Location		Loss Reclassified from AOCI into Continuing Operations				Total Loss Recognized in Continuing Operations
Commodity derivatives		$	-		Cost of sales		$	0.5			$	0.5
Total		$	-				$	0.5			$	0.5

		March 31, 2013
		Amount of Loss Recognized in AOCI			Statement of Operations Location		Loss Reclassified from AOCI into Continuing Operations				Total Loss (Gain) Recognized in Continuing Operations
Commodity derivatives		$	0.5		Cost of sales		$	2.6			$	4.6
Foreign exchange contracts			-		Other income (expense) - net			-				(0.3	)
Total		$	0.5				$	2.6			$	4.3

		Foreign Currency Translation				Cash Flow Hedges				Defined Benefit Plans				Total
Balance, March 31, 2014		$	27.3			$	-			$	(131.2	)		$	(103.9	)
Other comprehensive loss before reclassifications			(68.0	)			-				(45.2	)			(113.2	)
Reclassifications:
Amortization of unrecognized net loss (a)			-				-				5.4				5.4
Amortization of unrecognized prior service credit (a)			-				-				(0.1	)			(0.1	)
Income taxes			-				-				13.2				13.2
Total other comprehensive loss			(68.0	)			-				(26.7	)			(94.7	)
Balance, March 31, 2015		$	(40.7	)		$	-			$	(157.9	)		$	(198.6	)

		Foreign Currency Translation				Cash Flow Hedges				Defined Benefit Plans				Total
Balance, March 31, 2013		$	17.8			$	(1.1	)		$	(145.1	)		$	(128.4	)
Other comprehensive income before reclassifications			9.5				-				18.7				28.2
Reclassifications:
Amortization of unrecognized net loss (a)			-				-				6.2				6.2
Amortization of unrecognized prior service credit (a)			-				-				(1.2	)			(1.2	)
Commodity derivatives (b)			-				0.5				-				0.5
Income taxes			-				0.6				(9.8	)			(9.2	)
Total other comprehensive income			9.5				1.1				13.9				24.5
Balance, March 31, 2014		$	27.3			$	-			$	(131.2	)		$	(103.9	)

		Years ended March 31,
Net sales:		2015				2014				2013
North America		$	573.5			$	568.7			$	564.5
Europe			578.2				584.4				498.0
South America			93.9				122.7				133.8
Asia			81.2				71.5				59.5
Building HVAC			186.3				146.5				139.3
Segment total			1,513.1				1,493.8				1,395.1
Corporate and eliminations			(16.7	)			(16.2	)			(19.1	)
Net sales		$	1,496.4			$	1,477.6			$	1,376.0

		Years ended March 31,
		2015								2014								2013
Gross profit:		$'s				% of sales				$'s				% of sales				$'s				% of sales
North America		$	97.0				16.9	%		$	93.5				16.4	%		$	81.4				14.4	%
Europe			68.7				11.9	%			70.8				12.1	%			61.0				12.3	%
South America			12.1				12.8	%			20.8				16.9	%			22.5				16.8	%
Asia			11.5				14.2	%			8.9				12.5	%			1.7				2.8	%
Building HVAC			55.9				30.0	%			43.4				29.6	%			40.8				29.3	%
Segment total			245.2				16.2	%			237.4				15.9	%			207.4				14.9	%
Corporate and eliminations			1.3				-				0.8				-				1.2				-
Gross profit		$	246.5				16.5	%		$	238.2				16.1	%		$	208.6				15.2	%

		Years ended March 31,
Operating income:		2015				2014				2013
North America		$	45.9			$	42.1			$	39.2
Europe			25.7				9.6				(25.4	)
South America			(12.3	)			7.5				11.2
Asia			0.3				(3.3	)			(8.8	)
Building HVAC			19.1				9.4				10.0
Segment total			78.7				65.3				26.2
Corporate and eliminations			(26.0	)			(28.1	)			(26.8	)
Operating income (loss)		$	52.7			$	37.2			$	(0.6	)

		March 31,
		2015				2014
North America		$	231.8			$	218.1
Europe			283.1				367.9
South America			46.5				80.1
Asia			92.4				92.8
Building HVAC			131.4				132.7
Corporate and eliminations			146.4				140.7
Total assets		$	931.6			$	1,032.3

		Years ended March 31,
Capital expenditures:		2015				2014				2013
North America		$	25.9			$	18.9			$	19.0
Europe			21.5				22.9				16.5
South America			4.3				5.7				3.4
Asia			3.8				4.6				7.8
Building HVAC			2.8				1.0				3.1
Total capital expenditures		$	58.3			$	53.1			$	49.8

		Years ended March 31,
Depreciation and amortization expense:		2015				2014				2013
North America		$	18.1			$	19.3			$	20.1
Europe			19.8				26.6				23.4
South America			3.2				3.3				3.7
Asia			7.2				6.7				6.4
Building HVAC			3.3				2.2				2.2
Total depreciation and amortization expense		$	51.6			$	58.1			$	55.8