Modine's moves will affect several of its U.S. plants

Modine Manufacturing Company, a world leader in designing and developing heating and cooling solutions for the automotive, truck, electronics cooling, heavy-duty and industrial markets, announced July 20 several key steps in its ongoing global competitiveness initiative intended to increase revenues by being more cost competitive. These include:

• A business relationship to provide components to a major global manufacturing company. The details of this relationship will be jointly announced within this fiscal quarter. The partnership will result in significant additional new business to Modine starting early in fiscal 2009;
• As a result of the above relationship, the company is announcing plans to build a new facility adjacent to its current Nuevo Laredo, Mexico facility. In addition, this new facility will serve as a critical element in the company's business growth strategy with other customer projects. This is an opportunity for Modine to leverage its current footprint in the Nuevo Laredo area and build on its cost competitive position;
• The closing of Modine's Richland, South Carolina plant and consolidating production into its facility in McHenry, Illinois to gain scale efficiencies in its U.S. manufacturing platform; and,
• A conditionally approved recommendation to close Modine's facility in Clinton, Tennessee, based on the anticipated phase out of certain Chrysler programs over the 2007-2009 periods. The recommendation is conditioned on the conclusion of decision bargaining with the union at the facility.

In commenting on these actions, David B. Rayburn, Modine's president and CEO, said, "Today's announcements, while difficult for those employees affected by our repositioning actions, validate that our plan to win more business by being a financially strong, cost competitive technology leader in our markets is working. Our moves to consolidate production in the U.S. will better utilize capacity and improve our fixed cost absorption. Expanding our facilities in Nuevo Laredo, Mexico to service our new business and that of our current customers goes far to support their needs for high-performance, high-technology components and systems in a cost-competitive manner."

The announcement will result in the company recording approximately $8.0 million in pre-tax charges over the closure period, consisting of $2.5 million of employee-related costs (subject to union decision bargaining), $1.5 million of asset related costs and $4.0 million of other related costs. The actions should be completed by the end of the company's 2008 fiscal year. Cash-related expenditures for these actions will be approximately $7.0 million.

Earlier in 2006, the company announced a two to three year global competitiveness program intended to reduce costs, accelerate technology development, and accelerate market and geographic expansion - all intended to stimulate growth and profits. More specifically, the company's goals are to:

• Reduce its selling, general and administrative (SG&A) expenses by approximately $20 million, or 10 percent, in the next 12 months, through a combination of early retirement programs, internal process improvements, and other actions.
• Enact a disciplined approach to global purchasing, emphasizing sourcing from low cost countries and leveraging scale;
• Accelerate expansion into new markets and geographies through acquisition and internal development;
• Accelerate technology development; and,
• Realign its global manufacturing footprint to leverage its manufacturing scale within the boundaries of its small plant philosophy -- increasing its fixed cost absorption -- and expand its manufacturing presence in low cost countries. Since the program was announced and excluding today's announcement, the company has reiterated its $300 million net new business trend.