RACINE, Wis. — Modine Manufacturing Co. has reported fourth quarter fiscal 2008 net sales of $478.5 million, a loss from continuing operations before income taxes of $27.5 million and a loss from continuing operations of $40.3 million, or $1.26 per fully diluted share. Included in these results are repositioning charges of $8 million in connection with the company’s announced restructuring in its North American and European operations, long-lived asset impairment charges of approximately $16 million, including $12.1 million related to the company’s Korean operations, and a valuation allowance charge of $6.7 million recorded against its Korean net deferred tax assets. In addition, the company continues to be unable to benefit from taxable losses in the U.S., resulting in incremental valuation allowance charges of $17.6 million during the fourth quarter.

“In closing out a difficult fiscal 2008, our fourth quarter was particularly challenging for Modine as we took additional and necessary steps to address underlying business performance issues,” said Modine President and Chief Executive Officer Thomas Burke. “We are accelerating our efforts to improve our gross margin to ensure our long-term competitiveness. Our challenges in North America and Korea overshadowed the solid results we are experiencing in our Original Equipment – Europe, South America and Commercial Products segments. We are taking steps to realign our manufacturing footprint through the closure of three plants in North America and one in Europe. These actions are expected to result in annualized savings in a range of $20 million to $25 million and improve asset utilization in our North American operations when fully implemented over the next 18 to 24 months. We also have accelerated the pace of our portfolio rationalization strategy, including completion of the previously-announced sale of our Electronics Cooling business on May 1. In addition, we are embarking on a plan to address continued, significant underperformance in our Korea-based operations and we are taking actions currently in an effort to assist that business to achieve acceptable financial performance.”

“As we look toward our 18 to 24 month recovery plan and goal of achieving an 18 to 20 percent gross margin and an 11 to 12 percent return on average capital employed, we are moving forward in a decisive manner to address the fundamentals in our Korea-based business,” said Bradley Richardson, executive vice president, corporate strategy and chief financial officer. “Since the acquisition in 2004, this business has been unable to achieve the profitability, global capability and customer diversification that we envisioned. From a global perspective, Modine’s business strategy remains intact as we continue to focus on thermal management, technological differentiation, and diversification of products, markets, customers and geographies. With new program opportunities globally for our engine products, powertrain cooling solutions, commercial products and fuel cell technologies, the fundamental growth drivers of our business remain sound and we are committed to our underlying four to six percent compounded annual organic growth goal.

“Full year sales for the fiscal year ended March 31, increased by 7 percent to $1.85 billion from $1.72 billion reported in fiscal 2007. Excluding the impact of foreign currency exchange rate changes, underlying sales increased by $31.5 million, or 1.8 percent. Fiscal 2008 gross profit was $269.6 million, or 14.6 percent of sales, in comparison to the fiscal 2007 gross profit of $281 million, or 16.3 percent of sales. The fiscal 2008 gross profit included $5.4 million of repositioning costs, or 0.3 percent of sales, and the fiscal 2007 gross profit included $4.2 million of repositioning costs, or 0.2 percent of sales. This year-over-year decline in gross profit and margin was primarily driven by operating inefficiencies experienced in our Original Equipment – North America business. These inefficiencies were driven by the underutilization of our manufacturing facilities amid a slower-than-anticipated recovery in the heavy-duty truck market, as well as inefficiencies relating to facility closures, product transfers and new product launches as we realign our manufacturing footprint.

Fiscal 2008 loss from continuing operations before income taxes was $21.1 million, as compared to earnings from continuing operations before income taxes of $45.2 million reported during fiscal 2007. The 2008 fiscal year loss included asset impairment charges of $47.4 million including an impairment of the Original Equipment – North America goodwill balance of $23.8 million, a long-lived asset impairment charge in Korea of $12.1 million, and other long-lived asset impairment charges totaling $11.5 million. During fiscal 2008, the company reported an after-tax loss from continuing operations of $65.5 million, or $2.05 per fully diluted share, as compared to after-tax earnings from continuing operations of $38.9 million, or $1.21 per fully diluted share in fiscal 2007. The reduction in pre-tax results, in combination with $64.6 million of valuation allowance charges recorded during fiscal 2008, contributed to this year-over-year reduction in after-tax results.