`================================================================================

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                              WASHINGTON, DC 20549

                                    FORM 10-Q

(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2006

                                       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 1-13894

                          PROLIANCE INTERNATIONAL, INC.
             (Exact name of registrant as specified in its charter)

                DELAWARE                                 34-1807383
      (State or other jurisdiction                    (I.R.S. Employer
    of incorporation or organization)               Identification No.)

                  100 Gando Drive, New Haven, Connecticut 06513
          (Address of principal executive offices, including zip code)

                                 (203) 401-6450
              (Registrant's telephone number, including area code)

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 for 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 [X] No [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of "accelerated
filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check
one): Large Accelerated Filer [ ] Accelerated Filer [ ] Non-Accelerated Filer
[X]

Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [ ] No [X]

      The number of shares of common stock, $.01 par value, outstanding as of
August 1, 2006 was 15,465,740.

Exhibit Index is on page 27 of this report.

================================================================================


                                        1



                                                  INDEX

                                                                                                 PAGE
                                                                                               ---------

PART I.    FINANCIAL INFORMATION

           Item 1.       Financial Statements

                         Condensed Consolidated Statements of Operations for the Three and
                             Six Months Ended June 30, 2006 and 2005                                   3

                         Condensed Consolidated Balance Sheets at June 30, 2006 and
                             December 31, 2005                                                         4

                         Condensed Consolidated Statements of Cash Flows for the Six Months
                             Ended June 30, 2006 and 2005                                              5

                         Notes to Condensed Consolidated Financial Statements                          6

           Item 2.       Management's Discussion and Analysis of Financial Condition and
                             Results of Operations                                                    15

           Item 3.       Quantitative and Qualitative Disclosures About Market Risk                   24

           Item 4.       Controls and Procedures                                                      24

PART II.   OTHER INFORMATION

           Item 1A.      Risk Factors                                                                 26

           Item 4.       Submission of Matters to a Vote of Security Holders                          26

           Item 6.       Exhibits                                                                     27

           Signatures                                                                                 28



                                        2



                          PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS



                                      PROLIANCE INTERNATIONAL, INC.
                             CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

                                                               Three Months               Six Months
                                                              Ended June 30,            Ended June 30,
(Unaudited)                                                ---------------------    ----------------------
(in thousands, except per share amounts)                      2006        2005         2006         2005
                                                           ---------   ---------    ---------    ---------

Net sales                                                  $ 112,110   $  58,962    $ 203,446    $ 107,270
Cost of sales                                                 83,074      47,537      153,462       86,878
                                                           ---------   ---------    ---------    ---------
Gross margin                                                  29,036      11,425       49,984       20,392
Selling, general and administrative expenses                  24,376      10,878       47,308       21,453
Restructuring charges                                            134       1,105          654        1,367
                                                           ---------   ---------    ---------    ---------
Operating income (loss) from continuing operations             4,526        (558)       2,022       (2,428)
Interest expense                                               2,691       1,892        4,944        3,349
                                                           ---------   ---------    ---------    ---------
Income (loss) from continuing operations before taxes          1,835      (2,450)      (2,922)      (5,777)
Income tax provision (benefit)                                   793        (359)       1,095       (1,414)
                                                           ---------   ---------    ---------    ---------
Income (loss) from continuing operations                       1,042      (2,091)      (4,017)      (4,363)
Income from discontinued operation, net of income tax of
  $506 for 2005                                                   --          --           --          848
Gain on sale of discontinued operation, net of income
  tax of $2,331 for 2005                                          --          --           --        3,899
                                                           ---------   ---------    ---------    ---------
Net income (loss)                                          $   1,042   $  (2,091)   $  (4,017)   $     384
                                                           =========   =========    =========    =========

Basic income (loss) per common share:
   From continuing operations                              $    0.07   $   (0.30)   $   (0.27)   $   (0.62)
   From discontinued operation                                    --          --           --         0.12
   From gain on sale of discontinued operation                    --          --           --         0.55
                                                           ---------   ---------    ---------    ---------
   Net income (loss)                                       $    0.07   $   (0.30)   $   (0.27)   $    0.05
                                                           =========   =========    =========    =========

Diluted income (loss) per common share:
   From continuing operations                              $    0.07   $   (0.30)   $   (0.27)   $   (0.62)
   From discontinued operation                                    --          --           --         0.12
   From gain on sale of discontinued operation                    --          --           --         0.55
                                                           ---------   ---------    ---------    ---------
   Net income (loss)                                       $    0.07   $   (0.30)   $   (0.27)   $    0.05
                                                           =========   =========    =========    =========

Weighted average common shares - basic                        15,256       7,107       15,256        7,107
                                                           =========   =========    =========    =========
                               - diluted                      15,838       7,107       15,256        7,107
                                                           =========   =========    =========    =========


        The accompanying notes are an integral part of these statements.


                                        3



                                                  PROLIANCE INTERNATIONAL, INC.
                                              CONDENSED CONSOLIDATED BALANCE SHEETS

                                                                                                    June 30,        December 31,
                                         ASSETS                                                       2006              2005
                                                                                                 ---------------   ---------------
(in thousands, except share data)                                                                  (unaudited)

Current assets:
     Cash and cash equivalents                                                                   $         4,812   $         4,566
     Accounts receivable (less allowances of $4,409 and $5,391)                                           76,892            58,296
     Inventories:
         Raw material and component parts                                                                 23,768            21,813
         Work in process                                                                                   3,909             4,070
         Finished goods                                                                                  106,053            95,167
                                                                                                 ---------------   ---------------
              Total inventories                                                                          133,730           121,050
                                                                                                 ---------------   ---------------
     Other current assets                                                                                  5,328             4,955
                                                                                                 ---------------   ---------------
Total current assets                                                                                     220,762           188,867
                                                                                                 ---------------   ---------------
Property, plant and equipment                                                                             43,666            42,037
Accumulated depreciation and amortization                                                                (23,228)          (21,704)
                                                                                                 ---------------   ---------------
       Net property, plant and equipment                                                                  20,438            20,333
                                                                                                 ---------------   ---------------
Other assets                                                                                               9,140             8,139
                                                                                                 ---------------   ---------------
Total assets                                                                                     $       250,340   $       217,339
                                                                                                 ===============   ===============
                           LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
     Revolving credit facility and current portion of long-term debt                             $        56,497   $        39,705
     Accounts payable                                                                                     68,600            50,956
     Accrued liabilities                                                                                  30,208            29,702
                                                                                                 ---------------   ---------------
Total current liabilities                                                                                155,305           120,363
                                                                                                 ---------------   ---------------
Long-term liabilities:
     Long-term debt                                                                                        1,817             2,228
     Other long-term liabilities                                                                           8,152             7,499
                                                                                                 ---------------   ---------------
Total long-term liabilities                                                                                9,969             9,727
                                                                                                 ---------------   ---------------
Commitments and contingent liabilities
Stockholders' equity:
     Preferred stock, $.01 par value: Authorized 2,500,000 shares; issued and
        outstanding as follows:
         Series A junior participating preferred stock, $.01 par value:
               Authorized 200,000 shares; issued and outstanding -- none at June
               30, 2006 and December 31, 2005                                                                 --                --
         Series B convertible preferred stock, $.01 par value: Authorized 30,000 shares;
               issued and outstanding; -- 12,781 shares at June 30, 2006 and December
               31, 2005 (liquidation preference $1,278)                                                       --                --
     Common Stock, $.01 par value: Authorized 47,500,000 shares; 15,507,676
        shares issued at June 30, 2006; 15,297,769 shares issued at December
        31, 2005; 15,465,740 shares outstanding at June 30, 2006; 15,255,833 shares
        outstanding at December 31, 2005                                                                     155               152
     Paid-in capital                                                                                     105,765           105,642
     Accumulated deficit                                                                                 (15,897)          (11,848)
     Accumulated other comprehensive loss                                                                 (4,942)           (6,682)
     Treasury stock, at cost, 41,936 shares at June 30, 2006 and December 31, 2005                           (15)              (15)
                                                                                                 ---------------   ---------------
Total stockholders' equity                                                                                85,066            87,249
                                                                                                 ---------------   ---------------
Total liabilities and stockholders' equity                                                       $       250,340   $       217,339
                                                                                                 ===============   ===============


        The accompanying notes are an integral part of these statements.


                                        4



                                                  PROLIANCE INTERNATIONAL, INC.
                                         CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                                                                            Six Months
                                                                                                          Ended June 30,
(Unaudited)                                                                                      ---------------------------------
(in thousands)                                                                                        2006              2005
                                                                                                 ---------------   ---------------

Cash flows from operating activities:
     Net (loss) income                                                                           $        (4,017)  $           384
     Adjustments to reconcile net (loss) income to net cash (used in) operating
        activities of continuing operations:
         Income from discontinued operation                                                                   --            (1,354)
         Gain on sale of discontinued operation                                                               --            (6,230)
         Depreciation and amortization                                                                     2,336             2,222
         Deferred income taxes                                                                                --             1,376
         Provision for uncollectible accounts receivable                                                   1,192               833
         Non-cash restructuring charges                                                                      189               419
         Non-cash stock compensation costs                                                                   126                --
         Gain on sale of building                                                                           (138)             (138)
     Changes in operating assets and liabilities:
         Accounts receivable                                                                             (19,788)           (9,291)
         Inventories                                                                                     (12,680)          (13,559)
         Accounts payable                                                                                 17,644             8,944
         Accrued expenses                                                                                  1,628            (1,832)
         Other                                                                                             2,150               (46)
                                                                                                 ---------------   ---------------
Net cash (used in) operating activities of continuing operations                                         (11,358)          (18,272)
Net cash provided by operating activities of discontinued operation                                           --               852
                                                                                                 ---------------   ---------------
Net cash (used in) operating activities                                                                  (11,358)          (17,420)
                                                                                                 ---------------   ---------------
Cash flows from investing activities:
     Capital expenditures, net of normal sales and retirements                                            (2,595)           (3,754)
     Proceeds from sale of discontinued operation                                                             --            17,000
     Cash expenditures for restructuring costs on Modine Aftermarket
        acquisition balance sheet                                                                           (842)               --
     Cash expenditures for merger transaction costs                                                         (952)           (1,157)
                                                                                                 ---------------   ---------------
Net cash (used in) provided by investing activities                                                       (4,389)           12,089
                                                                                                 ---------------   ---------------
Cash flows from financing activities:
     Dividends paid                                                                                          (32)              (32)
     Net borrowings under revolving credit facility                                                       16,832             6,216
     Repayments of term loan and capital lease obligations                                                  (451)             (848)
     Deferred debt issue costs                                                                              (136)               --
     Proceeds from stock option exercise                                                                      --                11
                                                                                                 ---------------   ---------------
Net cash provided by financing activities                                                                 16,213             5,347
                                                                                                 ---------------   ---------------
Effect of exchange rate changes on cash                                                                     (220)               --
                                                                                                 ---------------   ---------------
Increase in cash and cash equivalents                                                                        246                16
     Cash and cash equivalents at beginning of period                                                      4,566               297
                                                                                                 ---------------   ---------------
     Cash and cash equivalents at end of period                                                  $         4,812   $           313
                                                                                                 ===============   ===============


        The accompanying notes are an integral part of these statements.


                                        5



                          PROLIANCE INTERNATIONAL, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - INTERIM FINANCIAL STATEMENTS

      The condensed consolidated financial information should be read in
conjunction with the Company's Annual Report on Form 10-K for the year ended
December 31, 2005 including the audited financial statements and notes thereto
included therein.

      The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with accounting principles generally accepted
in the United States of America for interim financial information and with the
instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do
not include all of the information and footnotes required by accounting
principles generally accepted in the United States of America for complete
financial statements. In the opinion of management, all adjustments considered
necessary for a fair presentation of consolidated financial position,
consolidated results of operations and consolidated cash flows have been
included in the accompanying unaudited condensed consolidated financial
statements. All such adjustments are of a normal recurring nature. Results for
the quarter and six months ended June 30, 2006 are not necessarily indicative of
results for the full year.

      Prior period amounts have been reclassified to conform to current year
classifications.

NOTE 2 - STOCK COMPENSATION COSTS

      Prior to January 1, 2006, the Company applied APB Opinion No. 25
"Accounting for Stock Issued to Employees" and related interpretations in
accounting for its stock option plans. Accordingly, no compensation cost was
recognized in the financial statements with respect to stock options. Had
compensation cost for the Company's plans been determined based on the fair
value at the grant dates for awards under the plans, consistent with Statement
of Financial Accounting Standards No. 123 "Accounting for Stock Based
Compensation", as amended by SFAS No. 148 "Accounting for Stock-Based
Compensation-Transition and Disclosure", the pro forma net (loss) income and
(loss) income per share would have been as follows:



                                                               Three Months           Six Months
    (in thousands, except per share amounts)                Ended June 30, 2005   Ended June 30, 2005
                                                            -------------------   -------------------

    Net (loss) income:
    As reported                                                   $(2,091)              $   384
    Stock-based compensation costs, net of tax                        (53)                  (97)
                                                                  -------               -------
    Pro forma                                                     $(2,144)              $   287
                                                                  =======               =======

    Basic and diluted net (loss) income per common share:
    As reported                                                   $ (0.30)              $  0.05
    Pro forma                                                     $ (0.30)              $  0.04


      On January 1, 2006, the Company adopted the provisions of SFAS No. 123(R),
"Share-Based Payment", which had been issued by the Financial Accounting
Standards Board in December 2004. SFAS No. 123(R) establishes standards for
accounting for transactions in which an entity exchanges its equity instruments
for


                                        6



goods or services that are based on the fair value of the entity's equity
instruments, focusing primarily on accounting for transactions in which an
entity obtains employee services in share-based payment transactions. SFAS No.
123(R) requires public entities to measure the cost of employee services
received in exchange for an award of equity instruments based on the grant-date
fair value of the award (with limited exceptions) and recognize the cost as a
charge to operating results over the period during which an employee is required
to provide service in exchange for the award, with the offset being additional
paid-in capital. In adopting SFAS No. 123(R), the Company was required to
recognize the unrecorded compensation expense related to unvested stock options
issued prior to January 1, 2006. Results for the six months ended June 30, 2006
include $2 thousand of compensation expense and additional paid-in capital
relating to these options, which amount was recorded in the first quarter of
2006.

      On March 2, 2006, the Board of Directors granted non-qualified stock
options to purchase 140,337 shares of common stock under the Equity Incentive
Plan, which plan was approved by shareholders at the Company's July 22, 2005
annual shareholders' meeting. These awards have a term of ten years and vest to
the employee 25% after each of the first four years after the grant date. The
options were granted at an exercise price of $5.27, which represents the closing
price of the Company's stock on the date of grant. During the quarter ended June
30, 2006, unvested options to purchase 9,152 shares from the original grants
were cancelled. Using the Black-Scholes option pricing model, the Company
determined that the fair value per option share granted was $2.90. Assumptions
used in the calculation included expected volatility of 52.94%, a risk free
interest rate of 4.50% and an expected life of six years. The Company will
record $380 thousand of compensation expense over the four year vesting period
of the options, subject to adjustment for the fair value of any unvested stock
options which are forfeited in the future. Results for the quarter and six
months ended June 30, 2006 included $23 thousand and $32 thousand, respectively,
of compensation expense related to these stock option grants. Other than the
option grant and cancellations noted above, there were no other changes in
outstanding stock options during the six months ended June 30, 2006.

      On March 2, 2006, the Board of Directors also granted 56,138 shares of
restricted stock under the Equity Incentive Plan. These shares vest in four
annual installments on the anniversary date of the grant. During the quarter
ended June 30, 2006, 3,661 unvested shares of restricted stock were cancelled.
Based on the market price of the common stock on the date of grant, $5.27 per
share, compensation expense of $277 thousand will be recognized over the vesting
period of the restricted shares. The offset will be common stock and paid-in
capital. This amount will be subject to adjustment for the fair value of any
unvested restricted shares which are forfeited in the future. Results for the
quarter and six months ended June 30, 2006 included compensation expense of $16
thousand and $23 thousand, respectively, related to these restricted shares. The
restricted stock is treated as issued and outstanding on the date of grant,
however it is excluded from the calculation of basic income (loss) per share
until the shares are vested.

      On March 2, 2006, the Board of Directors also granted 168,414 shares of
performance restricted stock under the Equity Incentive Plan. These shares vest
in four annual installments on the anniversary date of the grant, however these
shares will be forfeited to the extent certain pre-established net income and
cash flow targets for 2006 are not achieved. During the quarter ended June 30,
2006, 10,984 unvested shares of performance restricted stock were cancelled.
Based on the market price of the common stock on the date of grant, $5.27 per
share, compensation expense of $830 thousand will be recognized over the vesting
period of the performance restricted shares. The offset will be common stock and
paid-in capital. This will be subject to adjustment for the fair value of any
unvested performance restricted shares which are forfeited in the future.


                                        7



Results for the quarter and six months ended June 30, 2006 included compensation
expense of $49 thousand and $69 thousand, respectively, related to these
performance restricted shares. The performance restricted stock is treated as
issued and outstanding on the date of grant, however it is excluded from the
calculation of basic income (loss) per share until the shares are vested.

NOTE 3 - MERGER WITH MODINE AFTERMARKET BUSINESS

      As described in more detail in Note 5 of the Notes to Consolidated
Financial Statements contained in the Company's Form 10-K for the year ended
December 31, 2005, on July 22, 2005, the Company completed its merger
transaction pursuant to which Modine Aftermarket Holdings, Inc. ("Modine
Aftermarket") merged into the Company. The following table summarizes unaudited
pro forma financial information for the three and six months ended June 30, 2005
assuming the Modine Aftermarket merger had occurred on January 1, 2005. The
Modine Aftermarket year end was March 31. The unaudited pro forma financial
information uses data corresponding to Proliance's reporting period. This
unaudited pro forma information does not represent what would have occurred if
the transaction had taken place on January 1, 2005 and does not reflect our
future consolidated results of operations or financial position. The unaudited
pro forma combined financial information also does not include any adjustments
to reflect restructuring costs expected to be incurred in order to combine the
operations of Proliance and the Modine Aftermarket business or the anticipated
benefits from these synergy actions. These restructuring costs are resulting
from actions taken with respect to both Proliance and Modine Aftermarket
business operations, facilities and associates. The charges are being recorded
based upon the nature and timing of these integration actions. Pro forma
unaudited results are as follows:



                                                            Three Months Ended    Six Months Ended
    (in thousands, except per share amounts)                  June 30, 2005        June 30, 2005
                                                            ------------------    ----------------

    Net sales                                                    $113,586             $208,397
    Net loss from continuing operations                          $ (2,930)            $ (7,133)
    Net loss per share from continuing operations:
       - Basic and diluted                                       $  (0.19)            $  (0.47)


NOTE 4 - AMENDMENT TO LOAN AND SECURITY AGREEMENT

      On March 31, 2006, the Company amended its Loan and Security Agreement
(the "Credit Facility") with Wachovia Capital Finance Corporation (New England),
formerly known as Congress Financial Corporation (New England) (the "Lender"),
pursuant to a Fourteenth Amendment to Loan and Security Agreement. The amended
Credit Facility changes financial covenants for (i) minimum earnings before
interest, taxes, depreciation and amortization ("EBITDA") (tested quarterly
commencing December 31, 2005 and not required if Excess Availability, as defined
in the agreement, equals or exceeds $15.0 million at all times during the three
month period immediately preceding such test date) such that minimum EBITDA
required during the twelve month periods ending on March 31, 2006, June 30,
2006, September 30, 2006, December 31, 2006, March 31, 2007 and June 30, 2007 is
reduced, and (ii) minimum Excess Availability ($3.0 million from March 31, 2006
through May 31, 2006 and $5.0 million from June 1, 2006 through June 30, 2006)
so as to give no effect to the limitations on Excess Availability imposed by the
maximum credit under the amended Credit Facility of $80.0 million or the
Revolving Loan Ceiling, as defined in the agreement. In addition, a Fixed Charge
Coverage Ratio financial covenant was added which requires that on December 31,
2007 and on each March 31, June 30, September 30, and December 31 thereafter, in
each case for the twelve months ended, a Fixed Charge Coverage


                                        8



Ratio, as defined in the Credit Facility, will be not less than 1.00 to 1.00.
Compliance with the Fixed Charge Coverage Ratio covenant will not be required on
any test date if Excess Availability equals or exceeds $15.0 million at all
times during the three month period immediately preceding such test date. The
Company was in compliance with the EBITDA covenant as well as all other
covenants contained in the Loan Agreement as of June 30, 2006.

NOTE 5 - OTHER COMPREHENSIVE LOSS

      Other comprehensive loss pertains to revenues, expenses, gains and losses
that are not included in net income (loss), but rather are recorded directly in
Stockholders' Equity. Prior to the Modine Aftermarket merger in July 2005, other
comprehensive loss reflected only minimum pension liability adjustments.
Subsequent to the merger, other comprehensive loss also reflects accumulated
foreign currency translation adjustments. Activity for the three months ended
March 31, 2006 and June 30, 2006 are as follows:

                                           Minimum       Foreign
                                           Pension      Currency
    (in thousands)                        Liability    Translation      Total
                                          ---------    -----------     -------
    Balance at December 31, 2005          $  (6,062)   $      (620)    $(6,682)
    First quarter activity                       --            122         122
                                          ---------    -----------     -------
    Balance March 31, 2006                   (6,062)          (498)     (6,560)
    Second quarter activity                      --          1,618       1,618
                                          ---------    -----------     -------
    Balance June 30, 2006                 $  (6,062)   $     1,120     $(4,942)
                                          =========    ===========     =======

There was no activity impacting the minimum pension liability adjustment during
either the three months ended March 31, 2005 or June 30, 2005.

NOTE 6 - RESTRUCTURING AND OTHER SPECIAL CHARGES

      In conjunction with the merger with Modine Aftermarket, the Company
commenced a 12 to 18 month restructuring program expected to result in one-time
charges of $10 million to $14 million. These actions have resulted in lower
costs and increased manufacturing and operating efficiencies and include
activities impacting existing Proliance locations, which resulted in charges to
the income statement, and activities impacting locations acquired in the Modine
Aftermarket merger, which costs were accrued on the opening balance sheet as a
purchase accounting entry. Activities under this program were accelerated and a
major portion of them were completed as of December 31, 2005. The remainder is
expected to be completed during 2006.

      During the first six months of 2006, the Company completed the relocation
of its copper/brass radiator production from Nuevo Laredo to its Mexico City
facility. This resulted in the recording of $0.5 million of restructuring costs
associated with the termination of 78 employees, facility consolidation costs
and the write-down of fixed assets, no longer required, to net realizable value.
The remaining $0.2 million of restructuring costs during the period were
primarily related to closing old Proliance facilities.

      The remaining restructuring reserve at June 30, 2006 was classified in
other accrued liabilities. A summary of the restructuring charges and payments
during the first six months of 2006 is as follows:


                                        9



                                           Workforce      Facility         Asset
    (in thousands)                          Related     Consolidation   Write-down     Total
                                           ---------    -------------   ----------    -------

    Balance at December 31, 2005           $     283    $      1,671    $       --    $ 1,954
    Charge to operations                         363             102           189        654
    Cash payments                               (595)           (872)           --     (1,467)
    Non-cash write-off                            --              --          (189)      (189)
                                           ---------    ------------    ----------    -------
    Balance at June 30, 2006               $      51    $        901    $       --    $   952
                                           =========    ============    ==========    =======


      The remaining accrual for facility consolidation consists primarily of
lease obligations and facility exit costs related to the acquired Modine
facilities, which are expected to be paid primarily by the end of 2006.


                                       10



NOTE 7 - INCOME (LOSS) PER SHARE

      The following table sets forth the computation of basic and diluted income
(loss) per share:



                                                          Three Months             Six Months
                                                         Ended June 30,          Ended June 30,
                                                      --------------------    --------------------
(in thousands, except per share data)                   2006        2005        2006        2005
                                                      --------    --------    --------    --------

Numerator:
Income (loss) from continuing operations              $  1,042    $ (2,091)   $ (4,017)   $ (4,363)
Deduct preferred stock dividend                            (16)        (16)        (32)        (32)
                                                      --------    --------    --------    --------
Income (loss) from continuing operations
    available (attributable) to common stockholders      1,026      (2,107)     (4,049)     (4,395)
Income from discontinued operation, net of tax              --          --          --         848
Gain on sale of discontinued operation, net of tax          --          --          --       3,899
                                                      --------    --------    --------    --------
Net income (loss) available (attributable) to
    common stockholders - basic                          1,026      (2,107)     (4,049)        352

Add back preferred stock dividend                           16          --          --          --
                                                      --------    --------    --------    --------
Net income (loss) available (attributable) to
    common stockholders - diluted                     $  1,042    $ (2,107)   $ (4,049)   $    352
                                                      ========    ========    ========    ========

Denominator:
Weighted average common shares                          15,476       7,107      15,403       7,107
Deduct - unvested restricted and performance
    restricted shares                                     (220)         --        (147)         --
                                                      --------    --------    --------    --------
Adjusted weighted average common shares -
    basic                                               15,256       7,107      15,256       7,107
Unvested restricted and performance restricted
    shares                                                 220          --          --          --
Dilutive effect of stock options                            96          --          --          --
Dilutive effect of Series B preferred stock                266          --          --          --
                                                      --------    --------    --------    --------
Adjusted weighted average common shares -
   diluted                                              15,838       7,107      15,256       7,107
                                                      ========    ========    ========    ========

Basic income (loss) per common share:
     From continuing operations                       $   0.07    $  (0.30)   $  (0.27)   $  (0.62)
     From discontinued operation                            --          --          --        0.12
     From gain on sale of discontinued operation            --          --          --        0.55
                                                      --------    --------    --------    --------
     Net income (loss)                                $   0.07    $  (0.30)   $  (0.27)   $   0.05
                                                      ========    ========    ========    ========
Diluted income (loss) per common share:
     From continuing operations                       $   0.07    $  (0.30)   $  (0.27)   $  (0.62)
     From discontinued operation                            --          --          --        0.12
     From gain on sale of discontinued operation            --          --          --        0.55
                                                      --------    --------    --------    --------
     Net income (loss)                                $   0.07    $  (0.30)   $  (0.27)   $   0.05
                                                      ========    ========    ========    ========



                                       11



      The adjusted weighted average basic common shares outstanding was used in
the calculation of the diluted loss per common share for the six months ended
June 30, 2006 and the three and six months ended June 30, 2005 as the use of
weighted average diluted common shares outstanding would have an anti-dilutive
effect on the loss from continuing operations per share.

NOTE 8 - BUSINESS SEGMENT DATA

      Subsequent to the merger with Modine Aftermarket and the sale of the Heavy
Duty OEM business, the Company was reorganized into two segments, based upon the
geographic area served - Domestic and International. The Domestic marketplace
supplies heat exchange and air conditioning products to the automotive and light
truck aftermarket and heat exchange products to the heavy duty aftermarket in
the United States and Canada. The International segment includes heat exchange
and air conditioning products for the automotive and light truck aftermarket and
heat exchange products for the heavy duty aftermarket in Mexico, Europe and
Central America.

The table below sets forth information about the reported segments. Previous
year's data has been restated based upon the new segments.



                                                            Three Months                 Six Months
                                                           Ended June 30               Ended June 30,
                                                      ------------------------    ------------------------
(in thousands)                                           2006          2005          2006          2005
                                                      ----------    ----------    ----------    ----------

Net sales:
    Domestic                                          $   88,064    $   58,962    $  160,580    $  107,270
    International                                         24,046            --        42,866            --
Intersegment sales:
    Domestic                                               1,267            --         2,401            --
    International                                          7,378            --        13,627            --
    Elimination of intersegment sales                     (8,645)           --       (16,028)           --
                                                      ----------    ----------    ----------    ----------
 Total net sales                                      $  112,110    $   58,962    $  203,446    $  107,270
                                                      ==========    ==========    ==========    ==========

Operating income (loss) from continuing operations:
Domestic                                              $    5,808    $    2,878    $    6,088    $    3,598
Restructuring charges                                       (108)       (1,105)         (586)       (1,367)
                                                      ----------    ----------    ----------    ----------
   Domestic total                                          5,700         1,773         5,502         2,231
                                                      ----------    ----------    ----------    ----------
International                                              1,615            --         2,112            --
Restructuring charges                                        (26)           --           (68)           --
                                                      ----------    ----------    ----------    ----------
   International total                                     1,589            --         2,044            --
                                                      ----------    ----------    ----------    ----------
Corporate expenses                                        (2,763)       (2,331)       (5,524)       (4,659)
                                                      ----------    ----------    ----------    ----------
   Total operating income (loss) from continuing
     operations                                       $    4,526    $     (558)   $    2,022    $   (2,428)
                                                      ==========    ==========    ==========    ==========



                                       12



          An analysis of total net sales by product line is as follows:



                                                  Three Months           Six Months
                                                  Ended June 30        Ended June 30,
                                               -------------------   -------------------
(in thousands)                                   2006       2005       2006       2005
                                               --------   --------   --------   --------

Automotive and light truck heat exchange       $ 68,483   $ 37,578   $126,606   $ 73,138
Automotive and light truck air conditioning      21,770     10,994     34,963     15,838
Heavy duty heat exchange                         21,857     10,390     41,877     18,294
                                               --------   --------   --------   --------
  Total net sales                              $112,110   $ 58,962   $203,446   $107,270
                                               ========   ========   ========   ========


NOTE 9 - RETIREMENT AND POST-RETIREMENT PLANS

      The components of net periodic benefit costs for the three and six months
ended June 30, 2006 and 2005 are as follows:



                                                       Three Months Ended June 30
                                               -------------------------------------------
                                                 Retirement Plans     Postretirement Plans
                                               --------------------   --------------------
(in thousands)                                   2006        2005        2006       2005
                                               --------    --------    --------   --------

Service cost                                   $    286    $    150    $      1   $      1
Interest cost                                       536         372          10         10
Expected return on plan assets                     (559)       (453)         --         --
Amortization of net loss                            168          94           1          1
                                               --------    --------    --------   --------
Net periodic benefit cost                           431         163          12         12
Allocated to discontinued operation                  --          --          --         --
                                               --------    --------    --------   --------
Allocated to continuing operations             $    431    $    163    $     12   $     12
                                               ========    ========    ========   ========




                                                        Six Months Ended June 30
                                               -------------------------------------------
                                                 Retirement Plans     Postretirement Plans
                                               --------------------   --------------------
(in thousands)                                   2006        2005        2006       2005
                                               --------    --------    --------   --------

Service cost                                   $    552    $    382    $      1   $      2
Interest cost                                     1,081         948          20         20
Expected return on plan assets                   (1,125)     (1,154)         --         --
Amortization of net loss                            338         239           3          2
                                               --------    --------    --------   --------
Net periodic benefit cost                           846         415          24         24
Allocated to discontinued operation                  --          66          --         --
                                               --------    --------    --------   --------
Allocated to continuing operations             $    846    $    349    $     24   $     24
                                               ========    ========    ========   ========


As a result of the merger with Modine Aftermarket in July 2005, the Company
participates in foreign multi-employer pension plans. For the three and six
months ended June 30, 2006, pension expense for these plans was $352 thousand
and $569 thousand, respectively.


                                       13



NOTE 10 - SUPPLEMENTAL CASH FLOW INFORMATION

         Supplemental cash flow information is as follows:

                                                        Six Months Ended
                                                            June 30,
                                                       -------------------
(in thousands)                                           2006       2005
                                                       --------   --------
Non-cash investing and financing activity:
    Entered into capital lease obligation              $     --   $  1,345
                                                       ========   ========

Supplemental disclosure of cash flow information:
 Cash paid during the period for:
    Interest                                           $  4,449   $  2,920
                                                       ========   ========
    Income taxes                                       $    621   $    656
                                                       ========   ========

NOTE 11 - RECENT ACCOUNTING PRONOUNCEMENTS

      In July 2006, the Financial Accounting Standards Board issued FASB
Interpretation No. 48 ("FIN 48") "Accounting for Uncertainty in Income Taxes."
This will be effective for fiscal years beginning after December 15, 2006, and
will result in financial statements reflecting the expected future tax
consequences of uncertain tax positions. The Company is currently evaluating
what impact, if any, this will have on our reported results.


                                       14



ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
        RESULTS OF OPERATIONS

INTRODUCTION

      The Company designs, manufactures and markets radiators, radiator cores,
heater cores, air conditioning parts (including condensers, compressors,
accumulators and evaporators) and other heat exchange products for the
automotive and light truck aftermarket. In addition, the Company designs,
manufactures and distributes radiators, radiator cores, charge air coolers,
charge air cooler cores, oil coolers, condensers and other specialty heat
exchangers for the heavy duty aftermarket.

      As a result of the merger with Modine Aftermarket Holdings, Inc. on July
22, 2005, the Company is organized into two segments based upon the geographic
area served - Domestic and International. The Domestic segment includes sales to
customers located in the United States and Canada, while the International
segment includes sales to customers located in Mexico, Europe and Central
America. Management evaluates the performance of its reportable segments based
upon operating income (loss) before taxes as well as cash flow from operations
of these segments which reflects operating results and asset management.

      In order to evaluate market trends and changes, management utilizes a
variety of economic and industry data including miles driven by vehicles,
average age of vehicles, gasoline usage and pricing and automotive and light
truck vehicle population data. In addition, we also utilize Class 7 and 8 truck
production data and industrial and off-highway equipment production data.

      Management looks to grow the business through a combination of internal
growth, including the addition of new customers and new products, and strategic
acquisitions. On February 1, 2005, the Company announced that it had signed
definitive agreements, subject to customary closing conditions including
shareholders' approval, providing for the merger of Modine Aftermarket into the
Company and Modine's acquisition of the Company's Heavy Duty OEM business unit.
The merger with the aftermarket business of Modine was completed on July 22,
2005. The merger transaction is expected to increase the Company's 2006
consolidated annual sales to over $400 million and adds manufacturing and
distribution locations in the U.S., Europe, Mexico and Central America. In
addition, the Company is now focused predominantly on supplying heating and
cooling components and systems to the automotive and heavy duty aftermarkets in
North and Central America and Europe. As a result of this transaction, the
Company has a stronger balance sheet and is better positioned to face the market
challenges of the future. In conjunction with the merger, the Company's name was
changed from Transpro, Inc. to Proliance International, Inc. The Company also
announced that, in conjunction with the merger, it was undertaking a
restructuring program, which was expected to total $10 million to $14 million of
restructuring costs over the 12 to 18 months following the merger and would
generate savings in excess of $30 million on an annualized basis, when
completed. The Company has acted to accelerate as many restructuring activities
as possible into a shorter time frame and has worked to add additional actions
to help offset unfavorable market conditions. At this time, the Company
anticipates that the full year 2007 cumulative cost savings impact will be $45
million to $48 million. Of this, approximately $3 million of savings was
realized in 2005, an additional $37 million is anticipated to be realized in
2006 and the balance is anticipated to be achieved in 2007. These savings will
be, however, impacted by rising commodity costs and continued competitive price
pressure.


                                       15



      The Company completed the sale of its Heavy Duty OEM business unit to
Modine Manufacturing Company on March 1, 2005 for $17.0 million in cash. The
gain from the sale of the business of $6.2 million before taxes of $2.3 million
has been included in the operating results for the year ended December 31, 2005.
Operating results of the Heavy Duty OEM business unit for periods prior to the
sale are shown as a discontinued operation in the Consolidated Statement of
Operations included herein. The proceeds from the sale were utilized to reduce
outstanding borrowings under the Company's revolving credit and term loan
agreement.

      In early 2005, prior to the closing of the Modine Aftermarket merger, the
Company commenced certain cost reduction activities with the opening of a new
distribution facility in Southaven, Mississippi and the related closure of two
warehousing locations and a return goods facility in Memphis, Tennessee. In
addition, the Company closed its aluminum heater manufacturing plant in Buffalo,
New York, and relocated this production to an existing facility in Mexico.
Expenditures for these actions were completed during 2005.

      Operating performance in any given quarter is not necessarily indicative
of performance for the full year as the Company's business is subject to
seasonal fluctuations. Sales peak during the second and third quarters due
principally to increased demand for replacement radiator and air conditioning
components in the Domestic segment.

OPERATING RESULTS

QUARTER ENDED JUNE 30, 2006 VERSUS QUARTER ENDED JUNE 30, 2005

      Net sales from continuing operations for the second quarter of 2006 of
$112.1 million were $53.1 million or 90.1% above the second quarter of 2005. The
2006 second quarter results included $38.8 million of sales by businesses
acquired from Modine and $73.3 million of sales by historical Proliance business
units. The sales by businesses acquired from Modine reflects management's
estimate due to the branch location, product and customer consolidation actions
which have occurred since the date of the acquisition. Domestic segment sales in
the second quarter of 2006 were $88.1 million compared to $59.0 million in the
2005 second quarter. The domestic marketplace in the second quarter of 2006 has
been impacted by rising fuel costs, which appear to have impacted consumer
driving activity which in turn impacted overall product demand. During the
second quarter of 2006, the Company also continued to experience the impact of
ongoing competitive pricing pressure on its domestic heat exchange products. The
Company has been taking pricing actions, to the extent that the markets allow,
in an effort to offset rising commodity costs. The majority of these pricing
actions will begin to be seen in the second half of the year. The Domestic
marketplace is also experiencing a change in that more sales are being directed
towards the major retailers. Milder than normal weather at the beginning of the
quarter led to a later than typical start to the summer air conditioning parts
selling season and unit volume has also been influenced by the impacts of rising
fuel costs. Domestic heavy duty product sales benefited from the impact of new
product introductions, an increase in unit volume caused by the positive effects
of strong freight cartage on the marketplaces served by this business along with
an ability to pass along to customers a portion of the impact of rising
commodity costs. International segment sales of $24.0 million reflect sales
generated from the businesses in Europe, Mexico and Central America which were
acquired in the Modine Aftermarket merger. International segment sales benefited
from new product introductions, pricing actions to offset rising commodity costs
and a stronger marketplace in most countries served. Worldwide heat exchange
sales were $68.5 million for the three months ended June 30, 2006 compared to
$37.6 million in the same period of 2005. Worldwide air conditioning sales of
$21.8 million in the second quarter of 2006 compare to $11.0 million in the
second quarter


                                       16



a year ago. Worldwide heavy duty sales were $21.9 million in the second quarter
of 2006 compared to $10.4 million in the second quarter of 2005. These sales
increases reflect the impact of the Modine Aftermarket merger and the Domestic
segment market conditions discussed above.

      Gross margin from continuing operations, as a percentage of net sales, was
25.9% during the second quarter of 2006 versus 19.4% in the second quarter of
2005. The improvement reflects lower product costs due to the benefits of
purchasing and manufacturing cost savings initiatives executed by the Company
during 2005 in conjunction with the Modine Aftermarket merger. In addition,
margin benefited from the incremental level of branch sales, added as a result
of the Modine Aftermarket merger, which are at higher margins, but were offset
by higher levels of branch operating expenses. The Company also continues to
experience rising commodity prices and competitive pricing pressure, which have
impacted results. Copper and aluminum market costs included in the results for
the second quarter are over their levels of a year ago, and they are continuing
to rise. The Company has begun initiating actions to offset the impacts of these
rising costs. These actions include customer pricing actions wherever possible,
a shift in product construction from copper/brass to aluminum along with other
cost reduction initiatives. Most of these actions will not be reflected in the
income statement until the second half of the year due to the turn-over of
inventory and the timing of pricing initiatives.

      Selling, general and administrative expenses increased as a percentage of
net sales to 21.7% in the second quarter of 2006 from 18.4% in the second
quarter of 2005. The increase primarily reflects the addition of the Modine
Aftermarket branch outlets, which represent a higher percentage of sales than
the Company's pre-merger historical levels. In addition, the Company is
experiencing higher freight costs caused by the rising price of fuel, and
approximately $0.1 million of integration costs primarily associated with
conversion of U.S. computer systems which efforts were essentially completed in
the second quarter of 2006. During the second quarter of 2006, costs
attributable to the Sarbanes-Oxley compliance activities were $0.3 million
compared to the $0.4 million recorded in the quarter last year. All other
selling, general and administrative expenses in 2006 are comparable to 2005 as a
percentage of sales.

      During the second quarter of 2006, the Company reported $0.1 million of
restructuring costs primarily associated with the relocation of the Nuevo Laredo
copper/brass radiator production to Mexico City. These activities which had been
initiated during the fourth quarter of 2005 resulted in the centralization of
copper/brass radiator production in Mexico City and aluminum radiator production
in Nuevo Laredo. These costs were attributable to facility consolidation costs
and the write-down of fixed assets, no longer required, to net realizable value.
These activities were part of the restructuring program which the Company
announced in 2005 in conjunction with the Modine Aftermarket merger. The
activities were originally expected to generate $30 million in annualized
savings, when completed; however, the Company now expects that these savings
will be between $45 million and $48 million on an annualized basis when
completed. Restructuring costs in the second quarter of 2005 of $1.1 million
were associated with the closure of two warehousing locations and a return goods
facility in Memphis, Tennessee, which were done in conjunction with the
previously announced opening of a new distribution facility in Southaven,
Mississippi, along with the closure of the Company's aluminum heater
manufacturing facility in Buffalo, New York and the relocation of these
activities to an existing facility in Nuevo Laredo, Mexico. The expenses reflect
the cost to relocate inventory and fixed assets, the write-down to net
realizable value of certain fixed assets being disposed, facility exit costs and
one-time employee severance costs.

                                       17


      Interest expense for the second quarter of $2.7 million was $0.8 million
above last year's levels due to the impact of higher discounting charges from
the Company's participation in customer-sponsored vendor payment programs along
with higher average interest rates and average debt levels. Discounting expense
was $1.4 million in the second quarter of 2006, compared to $1.0 million in the
same period last year, reflecting higher levels of customer receivables being
collected utilizing these programs and rising factoring rates, which fluctuate
in conjunction with the prime interest rate. Average interest rates on the
Company's revolving credit, and term loan borrowings were 7.3% in the second
quarter of 2006, compared to 5.82% in the same period last year. Average debt
levels were $56.6 million in 2006, compared to $45.5 million last year.
Year-over-year interest levels will continue to be higher as a result of
increases in interest rates and the Company's continued utilization of the
customer-sponsored vendor payment programs.

      In the second quarter of 2006, the effective tax rate included only a
foreign provision, as the reversal of the Company's deferred tax valuation
allowances offset a majority of the state and any federal income tax provisions.
The income tax benefit attributable to continuing operations in 2005 reflects a
federal income tax benefit on the pretax loss offset in part by a provision for
foreign income taxes.

      The net income from continuing operations for the second quarter of 2006
was $1.0 million, or $0.07 per basic and diluted share, compared to a net loss
of $2.1 million, or $0.30 per basic and diluted share for the second quarter of
2005.

SIX MONTHS ENDED JUNE 30, 2006 VERSUS JUNE 30, 2005

      For the six months ended June 30, 2006, net sales from continuing
operations of $203.4 million were $96.1 million or 89.6% above the same period
of the prior year. Included in the 2006 sales were $74.6 million from the
businesses added by the Modine Aftermarket merger and $128.8 million from
historical Proliance operations. The sales by businesses acquired from Modine
reflects management's estimate due to the branch location, product and customer
consolidation actions which have occurred since the date of the acquisition.
Domestic segment sales were $160.6 million for the first six months of 2006
compared to $107.3 million in the first six months of 2005. Domestic heat
exchange sales reflected higher than normal pre-season customer orders in the
first quarter of 2006, a shift of customer sales towards the major retailers,
continuing competitive pricing pressures and changing market conditions brought
on by rising fuel costs. Domestic air conditioning sales benefited from higher
pre-season orders from several of our major customers during the first quarter
of 2006 offset by a slow start to the summer selling season due to milder than
normal weather conditions. Domestic heavy duty product sales improved due to new
product introductions, an increase in unit volume caused by the positive effects
of strong freight cartage on the marketplaces served by this business along with
an ability to pass along to customers a portion of the impact of rising
commodity costs. International segment sales of $42.8 million reflect sales
generated from the businesses in Europe, Mexico and Central America which were
acquired in the Modine Aftermarket merger. International segment sales benefited
from new product introductions, pricing actions to offset rising commodity costs
and a stronger marketplace in most countries served. Worldwide heat exchange
sales for the first six months of 2006 were $126.6 million compared to $73.1
million in the first six months of 2005. Worldwide air conditioning sales were
$35.0 million in the first six months of 2006 compared to $15.8 million in the
same period of 2005 and worldwide heavy duty product sales were $41.9 million in
the first six months of 2006 compared to $18.3 million in the same period a year
ago. These sales increases reflect the impact of the Modine Aftermarket merger
and the Domestic segment market conditions discussed above.

                                       18


      Gross margins, as a percentage of net sales, for the first six months of
2006 were 24.6% compared with 19.0% a year ago. The improvement reflects lower
product costs due to the benefits of purchasing and manufacturing cost savings
initiatives executed by the Company during 2005 in conjunction with the Modine
Aftermarket merger. In addition, margin benefited from the incremental level of
branch sales, added as a result of the Modine Aftermarket merger, which are at
higher margins, but were offset by higher levels of branch operating expenses.
The Company also continues to experience the impact of rising commodity prices,
and competitive pricing pressure, which have offset some of the synergy benefits
from the Modine Aftermarket merger. During the second half of the year, the
Company will experience its highest copper and aluminum costs, as product
purchased at current commodity rates works its way through inventory. In order
to offset increases, the Company has begun initiating a number of action plans
which include customer pricing changes wherever possible, a shift in product
construction from copper/brass to aluminum along with other cost reduction
initiatives. The impact of any cost reduction actions will not be reflected in
the income statement until later in the year due to the turnover of inventory
and the timing of pricing initiatives.

      Selling, general and administrative expenses for the first six months of
2006 increased to 23.3% of sales versus 20.0% of sales a year ago. The increase
primarily reflects the addition of the Modine Aftermarket branch outlets, which
represent a higher percentage of sales than the Company's pre-merger historical
levels. In addition, the Company is experiencing higher freight costs caused by
the rising price of fuel, and approximately $0.3 million of integration costs
primarily associated with conversion of U.S. computer systems which efforts were
essentially completed in the second quarter of 2006. During the first half of
2006, costs attributable to the Sarbanes-Oxley compliance activities were $0.6
million, approximately equal to the same period last year. The remainder of the
$25.8 million increase in selling, general and administrative expenses over the
first six months of last year is attributable to the higher sales levels
generated by the Modine Aftermarket merger.

      During the first half of 2006, a majority of the $0.7 million
restructuring costs were associated with the relocation of the Nuevo Laredo
copper/brass radiator production to Mexico City. These activities which had been
initiated during the fourth quarter of 2005 resulted in the centralization of
copper/brass radiator production in Mexico City and aluminum radiator production
in Nuevo Laredo. The Company reported restructuring costs of $0.5 million
associated with the termination of 78 employees, facility consolidation costs
and the write-down of fixed assets, no longer required, to net realizable value.
The remaining restructuring costs in 2006 were primarily associated with the
closing of existing Proliance facilities. These activities were part of the
restructuring program which the Company announced in 2005 in conjunction with
the Modine Aftermarket merger. The activities were originally expected to
generate $30 million in cumulative annualized savings, when completed; however,
the Company now expects that these cumulative savings will be between $45
million and $48 million on an annualized basis when completed. Restructuring
charges of $1.4 million for the first six months of 2005 represent costs
associated with the closure of two warehousing locations and a return goods
facility in Memphis, Tennessee, in conjunction with the opening of a new
distribution facility in Southaven, Mississippi, which was announced in the
first quarter of 2005, along with the closure of the Company's aluminum heater
manufacturing facility in Buffalo, New York and the relocation of these
activities to an existing facility in Nuevo Laredo, Mexico.

                                       19


      Interest costs for the six months of 2006 were $1.6 million above last
year for the first six months of 2006, due to higher discounting fees associated
with participating in customer sponsored vendor payment programs, higher average
interest rates and higher average debt levels. Discounting fees for the first
six months of 2006 were $2.5 million compared to $1.7 million in 2005. This
reflects increased participation in the programs offered by our customers and
rising interest rates. Average interest rates on our revolving credit facility
were 7.04% in 2006 compared to 5.57% in 2005, while average debt levels were
$52.8 million in 2006 vs. $44.8 million in 2005. Interest rates in the second
half of the year will continue to show year over year increases due to the
rising prime rate.

         For the first six months of 2006, the effective tax rate included only
a foreign provision, as the reversal of the Company's deferred tax valuation
allowances offset a majority of the state and any federal income tax provisions.
The effective tax rate in 2005 reflects the realization of a deferred tax asset
established in 2004 and a foreign tax provision. A federal tax benefit on the
entire loss from continuing operations was not recorded in 2005 due to the
existence of the Company's tax valuation reserve.

      The loss from continuing operations for the first six months of 2006 was
$4.0 million, or $0.27 per basic and diluted share, compared to a loss of $4.4
million, or $0.62 per basic and diluted share for the first six months of 2005.
The change in loss per share reflects the increase in weighted average shares
outstanding as a result of the Modine Aftermarket merger in July 2005.

      As a result of the sale of the Heavy Duty OEM business on March 1, 2005,
the results of this business are treated as a discontinued operation. For the
period prior to the sale in 2005, the discontinued operation reported income
after taxes of $0.8 million or $0.12 per basic and diluted share.

      The difference between the $17.0 million selling price and the net book
value of the Heavy Duty OEM assets, which were sold less transaction costs,
resulted in the recording of a gain on sale after tax of $3.9 million or $0.55
per basic and diluted share in 2005.

      Net loss for the six months ended June 30, 2006 was $4.0 million or $0.27
per basic and diluted share, compared to a net income of $0.4 million, or $0.05
per basic and diluted share for the same period a year ago.

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

      During the first six months of 2006, cash used in operating activities was
$11.4 million. Continuing operations accounts receivable levels increased by
$19.8 million due to the seasonal nature of the Company's sales cycle which
peaks in the second and third quarters of the year. The Company continues to
utilize customer-sponsored vendor payment programs as a vehicle to accelerate
accounts receivable collections, as long as they are cost effective. Inventory
levels increased by $12.7 million reflecting rising commodity costs in addition
to an inventory build up to support the higher sales demand normally experienced
in the third quarter. The Company anticipates that inventory levels at the end
of 2006 will be lower than those at the end of 2005. Accounts payable levels
rose by $17.6 million due to the growth in inventory levels.

      Cash used in operating activities was $17.4 million in the first six
months of 2005. This was comprised of $18.3 million utilized by continuing
operations and $0.9 million generated by the discontinued Heavy Duty OEM
business prior to its sale. Continuing operations accounts receivable levels
increased by $9.3 million due to the seasonal increase in receivable balances
over year end levels. This impact reflected that the Company

                                       20


continued to accelerate the collection of customer receivables utilizing a cost
effective customer-sponsored vendor program administered by a financial
institution and by working directly with other customers. This accelerated
collection was done in an effort to offset the continuing trend towards longer
customer dating terms by "blue chip" customers. Inventory levels grew $13.6
million reflecting a build up in anticipation of demand adjustments as a result
of the merger transaction and restructuring activities, increases associated
with the relocation of aluminum heater manufacturing operations from Buffalo to
Mexico and higher than planned levels due to the drop in Domestic sales demand
attributable to the delayed start of the normal selling season. Accounts payable
rose by $8.9 million as a result of the growth in inventory levels as well as
our efforts to balance payables with the ongoing shift in customer receivables
mix toward longer payment cycles.

      During the first six months of 2006, the Company had $2.6 million of
capital expenditures primarily for cost reduction activities and U.S. computer
system upgrades to convert previously used Modine systems. The $3.8 million of
capital spending during the first six months of 2005 was primarily associated
with the opening of a new distribution center located in Southaven, Mississippi.
In addition, the Company entered into a long-term capital lease for the purchase
of racking to be used in the distribution center. The Company expects that total
capital expenditures for 2006 will be between $8.0 million and $10.0 million,
which will include expenditures associated with domestic and international
computer system upgrades, new product introductions and cost reduction
activities.

      During the second quarter of 2006, the Company announced that it had
entered into an agreement to purchase the heater core assets of Standard Motor
Products, Inc.'s Four Seasons Division. The transaction has an estimated net
purchase price of $1.5 million to $2.0 million and will close in two phases, the
first, which includes the fixed assets, is scheduled for late in the third
quarter of 2006 and the final closing will be no later than early in 2008.

      On March 1, 2005, the Company completed the sale of its Heavy Duty OEM
business for $17 million in cash. These proceeds were utilized to lower
outstanding borrowings under the revolving credit agreement and fund operations.

      Total debt at June 30, 2006 was $58.3 million, compared to $41.9 million
at the end of 2005 and $50.7 million at June 30, 2005. At June 30, 2006 the
Company had $16.9 million available for future borrowings under its Loan
Agreement.

      On March 31, 2006, the Company amended its Loan and Security Agreement
(the "Credit Facility") with Wachovia Capital Finance Corporation (New England),
formerly known as Congress Financial Corporation (New England) (the "Lender"),
pursuant to a Fourteenth Amendment to Loan and Security Agreement. The amended
Credit Facility changes financial covenants for (i) minimum earnings before
interest, taxes, depreciation and amortization ("EBITDA") (tested quarterly
commencing December 31, 2005 and not required if Excess Availability, as defined
in the agreement, equals or exceeds $15.0 million at all times during the three
month period immediately preceding such test date) such that minimum EBITDA
required during the twelve month periods ending on March 31, 2006, June 30,
2006, September 30, 2006, December 31, 2006, March 31, 2007 and June 30, 2007 is
reduced, and (ii) minimum Excess Availability ($3.0 million from March 31, 2006
through May 31, 2006 and $5.0 million from June 1, 2006 through June 30, 2006)
so as to give no effect to the limitations on Excess Availability imposed by the
maximum credit under the amended Credit Facility of $80.0 million or the
Revolving Loan Ceiling, as defined in the agreement. In addition, a Fixed Charge
Coverage Ratio


                                       21


financial covenant was added which requires that on December 31, 2007 and on
each March 31, June 30, September 30, and December 31 thereafter, in each case
for the 12 months ended, a Fixed Charge Coverage Ratio, as defined in the Credit
Facility, will be not less than 1.00 to 1.00. Compliance with the Fixed Charge
Coverage Ratio covenant will not be required on any test date if Excess
Availability equals or exceeds $15.0 million at all times during the three month
period immediately preceding such test date. The Company was in compliance with
the EBITDA covenant and all other covenants contained in the Loan Agreement as
of June 30, 2006.

      The future liquidity and ordinary capital needs of the Company in the
short term are expected to be met from a combination of cash flows from
operations and borrowings under the existing Loan Agreement. The Company's
working capital requirements peak during the second and third quarters,
reflecting the normal seasonality in the Automotive and Light Truck product
lines. In addition, the Company's future cash flow may be impacted by the
discontinuance of currently utilized customer sponsored payment programs. The
loss of one or more of the Company's significant customers or changes in payment
terms to one or more major suppliers could also have a material adverse effect
on the Company's results of operations and future liquidity. The Company
utilizes customer-sponsored programs administered by financial institutions in
order to accelerate the collection of funds and offset the impact of extended
customer payment terms. The Company intends to continue utilizing these programs
as long as they are a cost effective tool to accelerate cash flow. The Company
believes that its cash flow from operations, together with borrowings under its
Loan Agreement, will be adequate to meet its near-term anticipated ordinary
capital expenditures and working capital requirements. However, the Company
believes that the amount of borrowings available under the Loan Agreement would
not be sufficient to meet the capital needs for major growth initiatives, such
as significant acquisitions. If the Company were to implement major new growth
initiatives, it would have to seek additional sources of capital. However, no
assurance can be given that the Company would be successful in securing such
additional sources of capital.

      As a result of the merger with the aftermarket business of Modine, the
Company's liquidity improved as the assets acquired were debt free and the
acquired balance sheet included $6.3 million in cash. We presently estimate that
the costs of the business realignment and other actions necessary to effectively
integrate the business will be funded from cash transferred in the merger,
generated by the operations acquired, including cost savings, or result from
borrowings under the Company's Loan Agreement.

CRITICAL ACCOUNTING ESTIMATES

      The critical accounting estimates utilized by the Company remain unchanged
from those disclosed in its Annual Report on Form 10-K for the year ended
December 31, 2005.

      The preparation of interim financial statements involves the use of
estimates that are consistent with those used in the preparation of the annual
financial statements, with the exception of estimates used for quarterly income
taxes. For purposes of preparing our interim financial statements, we utilize an
estimated annual effective tax rate for ordinary items, which is re-evaluated
each period based on changes in the components to determine the annual effective
tax rate.


                                       22


RECENT ACCOUNTING PRONOUNCEMENTS

      The Company adopted the provisions of SFAS No. 123(R), "Accounting for
Stock-Based Compensation" on January 1, 2006 as described in Note 2 of the Notes
To Condensed Consolidated Financial Statements contained in this Form 10-Q. In
July 2006, the Financial Accounting Standards Board issued FASB Interpretation
No. 48 ("FIN 48") "Accounting for Uncertainty in Income Taxes." This will be
effective for fiscal years beginning after December 15, 2006, and will result in
financial statements reflecting the expected future tax consequences of
uncertain tax positions. The Company is currently evaluating what impact, if
any, this will have on our reported results.

FORWARD-LOOKING STATEMENTS AND CAUTIONARY FACTORS

      Statements included in Management's Discussion and Analysis of Financial
Condition and Results of Operations and elsewhere in this Form 10-Q, which are
not historical in nature, are forward-looking statements made pursuant to the
safe harbor provisions of the Private Securities Litigation Reform Act of 1995.
Statements relating to the future financial performance of the Company are
subject to business conditions and growth in the general economy and automotive
and truck business, the impact of competitive products and pricing, changes in
customer product mix, failure to obtain new customers or retain old customers or
changes in the financial stability of customers, changes in the cost of raw
materials, components or finished products and changes in interest rates. Such
statements are based upon the current beliefs and expectations of Proliance's
management and are subject to significant risks and uncertainties. Actual
results may differ from those set forth in the forward-looking statements. When
used herein the terms "anticipate," "believe," "estimate," "expect," "may,"
"objective," "plan," "possible," "potential," "project," "will" and similar
expressions identify forward-looking statements.

      In addition, the following factors relating to the Modine merger
transaction, among others, could cause actual results to differ from those set
forth in the forward-looking statements: (1) the risk that the businesses will
not be integrated successfully; (2) the risk that the cost savings and any
revenue synergies from the transaction may not be fully realized or may take
longer to realize than expected; (3) disruption from the transaction making it
more difficult to maintain relationships with clients, employees or suppliers;
(4) the transaction may involve unexpected costs; (5) increased competition and
its effect on pricing, spending, third-party relationships and revenues; (6) the
risk of new and changing regulation in the U.S. and internationally; (7) the
possibility that Proliance's historical businesses may suffer as a result of the
transaction; and (8) other uncertainties and risks beyond the control of
Proliance. Additional factors that could cause Proliance's results to differ
materially from those described in the forward-looking statements can be found
in the 2005 Annual Report on Form 10-K of Proliance, the Quarterly Reports on
Form 10-Q of Proliance, and Proliance's other filings with the SEC. The
forward-looking statements contained in this filing are made as of the date
hereof, and we do not undertake any obligation to update any forward-looking
statements, whether as a result of future events, new information or otherwise.


                                       23


ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

      The Company has certain exposures to market risk related to changes in
interest rates and foreign currency exchange rates, a concentration of credit
risk primarily with trade accounts receivable and the price of commodities used
in our manufacturing processes. Between the month of December 2005 and July
2006, average monthly commodity market price for copper increased 66% and
aluminum increased 11%. These increases are in addition to the 42% copper
increase and 17% aluminum increase experienced between January 1, 2005 and
December 31, 2005. The Company has begun to implement action plans to offset
these cost increases, including customer pricing actions, and various cost
reduction activities. There can be no assurance that the Company will be able to
offset these cost increases going forward. There have been no other material
changes in market risk since the filing of the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 2005.

ITEM 4. CONTROLS AND PROCEDURES

      The Company maintains disclosure controls and procedures that are designed
to ensure that information required to be disclosed in the Company's Exchange
Act reports is recorded, processed, summarized and reported within the time
periods specified in the SEC's rules and forms, and that such information is
accumulated and communicated to the Company's management, including its Chief
Executive Officer and Chief Financial Officer, as appropriate, to allow timely
decisions regarding required disclosure based on the definition of "disclosure
controls and procedures" in Rule 13a-15(e). In designing and evaluating the
disclosure controls and procedures, management recognizes that any controls and
procedures, no matter how well designed and operated, can provide only
reasonable assurance of achieving the desired control objectives, and management
necessarily is required to apply its judgment in evaluating the cost-benefit
relationship of possible controls and procedures.

      The Company carried out an evaluation, under the supervision and with the
participation of the Company's management, including the Company's Chief
Executive Officer and the Company's Chief Financial Officer, of the
effectiveness of the design and operation of the Company's disclosure controls
and procedures as of June 30, 2006. Based upon the foregoing, the Company's
Chief Executive Officer and Chief Financial Officer concluded that the Company's
disclosure controls and procedures were not effective at that date due to a
material weakness relating to a lack of adequate resources within the accounting
and finance department, resulting primarily from the recent merger with Modine
Aftermarket Holdings and recent increased operating activity at the Company. The
effect of the lack of resources has resulted in certain reviews of financial
information not being performed on a timely basis or at all, leading to
adjustments being made after the books and records are closed. The areas most
affected by this are revenue recognition and receivable reserves. A material
weakness is a significant deficiency or combination of significant deficiencies
that result in more than a remote likelihood that a material misstatement of the
financial statements will not be prevented or detected by the Company's internal
control structure. To correct this material weakness the Company has initiated
an employment search process to fill several new staff positions, has
centralized the accounting for U. S. operations financial results and is making
other process improvements.

      As reported in the first quarter Form 10-Q, the Company's Chief Executive
Officer and Chief Financial Officer concluded that the Company's disclosure
controls and procedures contained a material weakness as of March 31, 2006 and
were therefore not effective at that date. The material weakness in question
related to weaknesses in financial controls associated with foreign exchange
funds transfer and other procedures at its Nuevo Laredo, Mexico facility. In
March 2006, the Company became aware that a financial executive at its Nuevo
Laredo, Mexico facility had embezzled funds over a four-year period from the
Company's foreign exchange bank accounts and violated Company policy regarding
self-dealing with respect to his ownership of a


                                       24


warehouse facility leased to the Company. The aforementioned executive had
previously misappropriated and repaid $438,000 of funds and the Company is
taking action to recover an additional $516,000 which remains unpaid plus costs
and interest. The investigation regarding this incident is ongoing and the
Company has retained legal counsel and a forensic accountant to complete the
investigation. Costs associated with the investigation are being treated as
period costs and any gain will be recognized upon the future recovery of the
remaining funds. Subsequent to March 31, 2006, the Company has taken remedial
action with respect to internal controls surrounding its international
operations, including Nuevo Laredo, to provide for a review by headquarters
financial staff of all bank reconciliations and bank statements for its
international operations. The Company has also altered its internal controls at
the Nuevo Laredo, Mexico facility to provide that disbursements from its foreign
exchange account may only be made to other Company operating accounts.

      On July 22, 2005, the Company completed its merger with the aftermarket
business of Modine Manufacturing Company. This acquired business contained over
150 facilities located in North America, Central America and Europe and involved
the addition of 1,400 employees. As part of the post-closing integration of the
merged entity, the Company is engaged in a process of refining and harmonizing
the internal controls and processes of the acquired business with those of the
Company's historical operations in addition to closing and consolidating
facilities. This process was ongoing during the six months ended June 30, 2006,
and the Company believes that it will be completed by the end of 2006.

      During 2005, the Company began its project to become compliant with the
requirements of Section 404 of the Sarbanes-Oxley Act. As the Company is not
classified as an accelerated filer as of June 30, 2006, it will not have to be
compliant with Section 404 requirements until the end of 2007. While activities
to date involve reviewing the Company's documentation of control procedures
being followed and improving or strengthening these controls where necessary,
the Company plans to continue with documentation, assessment and improvement of
controls.

      Except as provided in the prior paragraphs, there have been no changes in
the Company's internal controls over financial reporting during the quarter
ended June 30, 2006 that have materially affected, or are reasonably likely to
materially affect, the Company's internal control over financial reporting.


                                       25


                           PART II. OTHER INFORMATION

ITEM 1A. RISK FACTORS

      In addition to the information contained in Part I, Item 3, of this
report, you should carefully consider the factors discussed in Part I, Item IA,
of our Annual Report on Form 10-K for the year ended December 31, 2005, which
could materially affect out business, financial condition or results of
operations.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

      At the Annual Meeting of Stockholders of the Company held on May 4, 2006,
two proposals were voted upon and approved by the Company's stockholders. A
brief discussion of each proposal voted upon at the Annual Meeting, and the
number of votes cast for, against and withheld, as well as the number of
abstentions to each proposal and broker non-votes are set forth below.

      A vote was taken for the election of three Directors of the Company to
hold office until the 2009 Annual Meeting. The aggregate numbers of shares of
Common Stock voted in person or by proxy for each nominee were as follows:

                  Nominee                For         Withheld
          -----------------------     ----------     ---------
          Paul R. Lederer             12,727,819     1,327,243
          William J. Abraham, Jr.     11,915,940     2,139,122
          Bradley C. Richardson       12,833,093     1,221,969

      The seven directors whose terms of office did not expire in 2006 continue
to serve as Directors until their applicable expiration date. They are:

      Barry R. Banducci
      Philip Wm. Colburn
      Charles E. Johnson
      Vincent L. Martin
      James R. Rulseh
      F. Alan Smith
      Michael T. Yonker

      A vote was taken on the proposal to ratify the appointment of BDO Seidman,
LLP as Proliance's independent registered public accounting firm for the year
ending December 31, 2006. The aggregate numbers of shares of Common Stock voted
in person or by proxy were as follows:

              For        Against    Abstain    Broker Non-Vote
          ------------  ---------  ---------  -----------------
           14,011,948    24,160     18,953            0


                                       26


      The foregoing proposals are described more fully in the Company's proxy
statement dated April 5, 2006, filed with the Securities and Exchange Commission
pursuant to Section 14 (a) of the Securities Act of 1934, as amended, and the
rules and regulations promulgated there under.

ITEM 6. EXHIBITS

      31.1  Certification of CEO in accordance with Section 302 of the
            Sarbanes-Oxley Act.
      31.2  Certification of CFO in accordance with Section 302 of the
            Sarbanes-Oxley Act.
      32.1  Certification of CEO in accordance with Section 906 of the
            Sarbanes-Oxley Act.
      32.2  Certification of CFO in accordance with Section 906 of the
            Sarbanes-Oxley Act.


                                       27


                                   SIGNATURES

      Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                          PROLIANCE INTERNATIONAL, INC.
                          (Registrant)


Date: August 14, 2006     By: /s/ Charles E. Johnson
                              --------------------------------------------------
                              Charles E. Johnson
                              President and Chief Executive Officer
                              (Principal Executive Officer)


Date: August 14, 2006     By: /s/ Richard A. Wisot
                              --------------------------------------------------
                              Richard A. Wisot
                              Vice President, Treasurer, Secretary, and Chief
                              Financial Officer (Principal Financial and
                              Accounting Officer)


                                       28`