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

                                  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 September 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
November 6, 2006 was 15,458,417.

Exhibit Index is on page 30 of this report.

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


                                        1



                                      INDEX



                                                                            PAGE
                                                                            ----

PART I. FINANCIAL INFORMATION
   Item 1. Financial Statements
           Condensed Consolidated Statements of Operations for the
              Three and Nine Months Ended September 30, 2006 and 2005         3
           Condensed Consolidated Balance Sheets at September 30, 2006
              and December 31, 2005                                           4
           Condensed Consolidated Statements of Cash Flows for the
              Nine Months Ended September 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                                      17
   Item 3. Quantitative and Qualitative Disclosures About Market Risk        28
   Item 4. Controls and Procedures                                           28

PART II. OTHER INFORMATION
   Item 1A. Risk Factors                                                     30
   Item 6.  Exhibits                                                         30
   Signatures                                                                31



                                        2



                          PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

                          PROLIANCE INTERNATIONAL, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS



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

Net sales                                                  $120,734   $101,953   $324,180   $209,223
Cost of sales                                                90,327     86,893    243,789    173,771
                                                           --------   --------   --------   --------
Gross margin                                                 30,407     15,060     80,391     35,452
Selling, general and administrative expenses                 23,923     21,043     71,231     42,496
Restructuring charges                                           837      1,507      1,491      2,874
                                                           --------   --------   --------   --------
Operating income (loss) from continuing operations            5,647     (7,490)     7,669     (9,918)
Interest expense                                              3,634      2,171      8,578      5,520
                                                           --------   --------   --------   --------
Income (loss) from continuing operations before taxes         2,013     (9,661)      (909)   (15,438)
Income tax provision (benefit)                                  754        208      1,849     (1,206)
                                                           --------   --------   --------   --------
Income (loss) from continuing operations                      1,259     (9,869)    (2,758)   (14,232)
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
Extraordinary income - negative goodwill                         --     13,207         --     13,207
                                                           --------   --------   --------   --------
Net income (loss)                                          $  1,259   $  3,338   $ (2,758)  $  3,722
                                                           ========   ========   ========   ========
Basic income (loss) per common share:
   From continuing operations                              $   0.08   $  (0.75)  $  (0.18)  $  (1.55)
   From discontinued operation                                   --         --         --       0.09
   From gain on sale of discontinued operation                   --         --         --       0.42
   From extraordinary income - negative goodwill                 --       1.00         --       1.44
                                                           --------   --------   --------   --------
   Net income (loss)                                       $   0.08   $   0.25   $  (0.18)  $   0.40
                                                           ========   ========   ========   ========
Diluted income (loss) per common share:
   From continuing operations                              $   0.08   $  (0.75)  $  (0.18)  $  (1.55)
   From discontinued operation                                   --         --         --       0.09
   From gain on sale of discontinued operation                   --         --         --       0.42
   From extraordinary income - negative goodwill                 --       1.00         --       1.44
                                                           --------   --------   --------   --------
   Net income (loss)                                       $   0.08   $   0.25   $  (0.18)  $   0.40
                                                           ========   ========   ========   ========
Weighted average common shares - basic                       15,256     13,241     15,256      9,189
                                                           ========   ========   ========   ========
                               - diluted                     15,803     13,241     15,256      9,189
                                                           ========   ========   ========   ========


        The accompanying notes are an integral part of these statements.


                                        3



                          PROLIANCE INTERNATIONAL, INC.
                      CONDENSED CONSOLIDATED BALANCE SHEETS



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

Current assets:
   Cash and cash equivalents                                            $  6,231       $  4,566
   Accounts receivable (less allowances of $4,905 and $5,391)             74,207         58,296
   Inventories:
      Raw material and component parts                                    24,679         21,813
      Work in process                                                      3,371          4,070
      Finished goods                                                     108,988         95,167
                                                                        --------       --------
         Total inventories                                               137,038        121,050
                                                                        --------       --------
   Other current assets                                                    4,670          4,955
                                                                        --------       --------
Total current assets                                                     222,146        188,867
                                                                        --------       --------
Property, plant and equipment                                             42,907         42,037
Accumulated depreciation and amortization                                (22,717)       (21,704)
                                                                        --------       --------
   Net property, plant and equipment                                      20,190         20,333
                                                                        --------       --------
Other assets                                                               8,814          8,139
                                                                        --------       --------
Total assets                                                            $251,150       $217,339
                                                                        ========       ========

                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
   Revolving credit facility and current portion of long-term debt      $ 60,894       $ 39,705
   Accounts payable                                                       64,235         50,956
   Accrued liabilities                                                    29,785         29,702
                                                                        --------       --------
Total current liabilities                                                154,914        120,363
                                                                        --------       --------
Long-term liabilities:
   Long-term debt                                                          1,626          2,228
   Other long-term liabilities                                             7,811          7,499
                                                                        --------       --------
Total long-term liabilities                                                9,437          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 September 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 September 30, 2006 and December
         31, 2005 (liquidation preference $1,278)                             --             --
   Common Stock, $.01 par value:  Authorized 47,500,000 shares;
      15,500,353 shares  issued at September 30, 2006; 15,297,769
      shares issued at December 31, 2005; 15,458,417 shares
      outstanding at September 30, 2006; 15,255,833 shares
      outstanding at December 31, 2005                                       155            152
   Paid-in capital                                                       105,779        105,642
   Accumulated deficit                                                   (14,654)       (11,848)
   Accumulated other comprehensive loss                                   (4,466)        (6,682)
   Treasury stock, at cost, 41,936 shares at September 30, 2006
      and December 31, 2005                                                  (15)           (15)
                                                                        --------       --------
Total stockholders' equity                                                86,799         87,249
                                                                        --------       --------
Total liabilities and stockholders' equity                              $251,150       $217,339
                                                                        ========       ========


        The accompanying notes are an integral part of these statements.


                                        4



                          PROLIANCE INTERNATIONAL, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS



                                                                          Nine Months
                                                                      Ended September 30,
(Unaudited)                                                           -------------------
(in thousands)                                                          2006       2005
                                                                      --------   --------

Cash flows from operating activities:
   Net (loss) income                                                  $ (2,758)  $  3,722
   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                                      3,717      3,411
      Deferred income taxes                                                --       1,376
      Provision for uncollectible accounts receivable                    1,872      1,254
      Non-cash restructuring charges                                       189      2,517
      Non-cash stock compensation costs                                    140         --
      Gain on sale of building                                            (207)      (207)
      Extraordinary income - negative goodwill                              --    (13,207)
   Changes in operating assets and liabilities:
      Accounts receivable                                              (17,783)   (13,199)
      Inventories                                                      (15,988)     3,065
      Accounts payable                                                  13,279     10,690
      Accrued expenses                                                   1,359        182
      Other                                                              3,326       (519)
                                                                      --------   --------
Net cash (used in) operating activities of continuing operations       (12,854)    (8,499)
Net cash provided by operating activities of discontinued operation         --        852
                                                                      --------   --------
Net cash (used in) operating activities                                (12,854)    (7,647)
                                                                      --------   --------
Cash flows from investing activities:
   Capital expenditures, net of normal sales and retirements            (3,688)    (5,968)
   Cash expenditures for restructuring costs on Modine Aftermarket
      acquisition balance sheet                                           (980)      (334)
   Cash on Modine Aftermarket acquisition on balance sheet                  --      3,726
   Cash expenditures for merger transaction costs                         (952)    (6,226)
   Proceeds from sale of discontinued operation                             --     17,000
                                                                      --------   --------
Net cash (used in) provided by investing activities                     (5,620)     8,198
                                                                      --------   --------
Cash flows from financing activities:
   Dividends paid                                                          (48)       (64)
   Net borrowings under revolving credit facility                       21,270      5,723
   Repayments of term loan and capital lease obligations                  (683)    (1,061)
   Deferred debt issue costs                                              (136)      (299)
   Proceeds from stock option exercise                                      --         15
                                                                      --------   --------
Net cash provided by financing activities                               20,403      4,314
                                                                      --------   --------
Effect of exchange rate changes on cash                                   (264)        28
                                                                      --------   --------
Increase in cash and cash equivalents                                    1,665      4,893
   Cash and cash equivalents at beginning of period                      4,566        297
                                                                      --------   --------
   Cash and cash equivalents at end of period                         $  6,231   $  5,190
                                                                      ========   ========


        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 nine months ended September 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 income and income per
share would have been as follows:



                                                      Three Months Ended      Nine Months Ended
(in thousands, except per share amounts)              September 30, 2005     September 30, 2005
                                                      ------------------     ------------------

Net income:
As reported                                                 $3,338                 $3,722
Stock-based compensation costs, net of tax                    (363)                  (491)
                                                            ------                 ------
Pro forma                                                   $2,975                 $3,231
                                                            ======                 ======

Basic and diluted net income per common share:
As reported                                                 $ 0.25                  $0.40
Pro forma                                                   $ 0.22                  $0.35


     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 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.


                                        6




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 nine months ended
September 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 nine months ended
September 30, 2006, unvested options to purchase 13,728 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 $367 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 nine
months ended September 30, 2006 include $19 thousand and $53 thousand,
respectively, of compensation expense related to these stock option grants.

     An analysis of the stock option activity in the Company's Stock Plan,
Directors Plan and Equity Incentive Plan for the nine months ended September 30,
2006 is as follows:

                                    Number of Options
                                    -----------------
Stock Plan
Outstanding at December 31, 2005         534,359
Canceled                                 (63,333)
                                         -------
Outstanding at September 30, 2006        471,026
                                         =======
Directors Plan
Outstanding at December 31, 2005          36,800
Granted                                       --
Canceled                                      --
                                         -------
Outstanding at September 30, 2006         36,800
                                         =======
Equity Incentive Plan
Outstanding at December 31, 2005          56,400
Granted                                  140,337
Canceled                                 (13,728)
                                         -------
Outstanding at September 30, 2006        183,009
                                         =======


                                       7



     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
equal annual installments on the anniversary date of the grant. During the nine
months ended September 30, 2006, 5,492 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 $267 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 nine months ended September 30, 2006 include compensation
expense of $16 thousand and $39 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 equal 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. In the third quarter,
management determined that it will not achieve the net income target for 2006,
resulting in an adjustment of $40 thousand to compensation expense previously
recorded in the first and second quarters of 2006. During the nine months ended
September 30, 2006, 16,476 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 $320 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. Results for the nine months ended September 30, 2006 include
compensation expense of $47 thousand, 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 nine months ended September
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 incurred in order to combine the operations of
Proliance and the Modine Aftermarket business or the benefits from these synergy
actions. These restructuring costs result from actions taken with respect to
both Proliance and Modine Aftermarket business operations, facilities and
associates. The charges were recorded based upon the nature and timing of these
integration actions. Pro forma unaudited results are as follows:


                                        8



                                          Three Months Ended   Nine Months Ended
(in thousands, except per share amounts)  September 30, 2005  September 30, 2005
                                          ------------------  ------------------
Net sales                                      $124,604            $333,001
Net income                                     $  3,481            $  1,095
Net income per share - basic and diluted       $   0.26            $   0.12

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 Loan
Agreement"). The amended Credit Facility changed 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 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 contained in the Fifteenth Amendment to the Loan Agreement,
which is described in Note 12 attached hereto, as well as all other covenants
contained in the Loan Agreement as of September 30, 2006.

NOTE 5 - COMPREHENSIVE INCOME (LOSS)

     Total comprehensive income (loss) and its components are as follows:

                                 Three Months Ended   Nine Months Ended
                                    September 30,       September 30,
                                 ------------------   -----------------
(in thousands)                      2006     2005        2006     2005
                                   ------   ------     -------   ------
Net income (loss)                  $1,259   $3,338     $(2,758)  $3,722
Minimum pension liability              --       --          --       --
Foreign currency translation          476      692       2,216      692
                                   ------   ------     -------   ------
   Comprehensive income (loss)     $1,735   $4,030     $  (542)  $4,414
                                   ======   ======     =======   ======


                                        9



NOTE 6 - RESTRUCTURING 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.

     In August 2006, the Company announced that it would be relocating a portion
of the air conditioning parts manufacturing operation located in Arlington,
Texas to Nuevo Laredo, Mexico. The Company is taking these actions in order to
lower its manufacturing costs. Annual savings are expected to exceed the
restructuring costs incurred. The relocation and closing activities are expected
to be completed by the end of 2006 and will result in the Company incurring
approximately $100,000 to $130,000 of restructuring costs. Of these costs, a
majority will be associated with relocating inventory and fixed assets. All of
the aforementioned costs will result in future cash expenditures.

     In August 2006, the Company also announced that it would reduce the
salaried and hourly workforce at its MexPar manufacturing facility in Mexico
City, Mexico. The workforce reduction is associated with the Company's
conversion of radiator production from copper/brass construction to aluminum
construction in order to lower product costs. Some of the aluminum construction
product will be produced at the Company's Nuevo Laredo, Mexico facility and some
will be purchased. The workforce reductions commenced in the third quarter and
will be completed by the end of 2006. This will result in the Company incurring
approximately $600,000 to $700,000 of one-time personnel related termination
expenses associated with the elimination of approximately 100 positions. All of
the aforementioned costs will result in cash expenditures.

     In order to better align its go-to-market distribution strategy with
customer needs, on September 22, 2006, the Company announced that it would
commence the process of realigning its branch structure. This realignment
process will include the relocation, consolidation or closure of some branches
and the establishment of expanded relationships with key distribution partners
in some areas, as well as the opening of new branches, as appropriate. These
announced actions will result in the Company reducing the number of branch
locations from 123 to 101, reflecting the Company's desire to provide a rational
and appropriate distribution model in each geographic area where it does
business, while balancing distribution cost-to-market with maintaining
exceptional customer service. It is anticipated that these and future actions
will ultimately improve the Company's market position and business performance
by achieving better local branch utilization where multiple locations are
involved, and by establishing in some cases, relationships with distribution
partners to address geographic market areas that do not justify stand-alone
branch locations. The activities related to these locations are expected to be
completed by the end of 2006 and will result in the Company incurring
approximately $500,000 to $600,000 of


                                       10



restructuring costs. Of these costs, $200,000 to $300,000 are associated with
one-time employee termination costs and the remainder are costs associated with
the relocation of inventory and facility dispositions. All of the closing costs
will result in future cash expenditures. Annual savings are expected to
substantially exceed the costs incurred.

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

                                Workforce     Facility       Asset
(in thousands)                   Related   Consolidation  Write-down    Total
                                ---------  -------------  ----------   -------
Balance at December 31, 2005     $   283      $ 1,671       $  --      $ 1,954
Charge to operations                 993          309         189        1,491
Cash payments                     (1,143)      (1,126)         --       (2,269)
Non-cash write-off                    --           --        (189)        (189)
                                 -------      -------       -----      -------
Balance at September 30, 2006    $   133      $   854       $  --      $   987
                                 =======      =======       =====      =======

     Workforce-related costs accrued at September 30, 2006, will be paid through
the first half of 2007. 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.


                                       11



NOTE 7 - INCOME (LOSS) PER SHARE

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



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

Numerator:
Income (loss) from continuing operations                        $ 1,259   $(9,869)       $(2,758)  $(14,232)
Deduct preferred stock dividend                                     (16)      (16)           (48)       (48)
                                                                -------   -------        -------   --------
Income (loss) from continuing operations                        $ 1,243   $(9,885)       $(2,806)  $(14,280)
   available (attributable) to common stockholders
Income from discontinued operation, net of tax                       --        --             --        848
Gain on sale of discontinued operation, net of tax                   --        --             --      3,899
Extraordinary income - negative goodwill                             --    13,207             --     13,207
                                                                -------   -------        -------   --------
Net income (loss) available (attributable) to common
   stockholders - basic                                           1,243     3,322         (2,806)     3,674
Add back preferred stock dividend                                    16        --             --         --
                                                                -------   -------        -------   --------
Net income (loss) available (attributable) to common
   stockholders - diluted                                       $ 1,259   $ 3,322        $(2,806)  $  3,674
                                                                =======   =======        =======   ========
Denominator:
Weighted average common shares                                   15,458    13,241         15,413      9,189
Deduct - unvested restricted and performance
   restricted shares                                               (202)       --           (157)        --
                                                                -------   -------        -------   --------
Adjusted weighted average common shares - basic                  15,256    13,241         15,256      9,189
Unvested restricted and performance restricted shares                71        --             --         --
Dilutive effect of stock options                                    202        --             --         --
Dilutive effect of Series B preferred stock                         274        --             --         --
                                                                -------   -------        -------   --------
Adjusted weighted average common shares -diluted                 15,803    13,241         15,256      9,189
                                                                =======   =======        =======   ========
Basic income (loss) per common share:
   From continuing operations                                   $  0.08   $ (0.75)       $ (0.18)  $  (1.55)
   From discontinued operation                                       --        --             --       0.09
   From gain on sale of discontinued operation                       --        --             --       0.42
   From extraordinary income - negative goodwill                     --      1.00             --       1.44
                                                                =======   =======        =======   ========
   Net income (loss)                                            $  0.08   $  0.25        $ (0.18)  $   0.40
                                                                =======   =======        =======   ========
Diluted income (loss) per common share:
   From continuing operations                                   $  0.08   $ (0.75)       $ (0.18)  $  (1.55)
   From discontinued operation                                       --        --             --       0.09
   From gain on sale of discontinued operation                       --        --             --       0.42
   From extraordinary income - negative goodwill                     --      1.00             --       1.44
                                                                -------   -------        -------   --------
   Net income (loss)                                            $  0.08   $  0.25        $ (0.18)  $   0.40
                                                                =======   =======        =======   ========



                                       12



     The adjusted weighted average basic common shares outstanding was used in
the calculation of the diluted loss per common share for the nine months ended
September 30, 2006 and the three and nine months ended September 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.



                                                                  Three Months Ended          Nine Months Ended
                                                                     September 30,               September 30,
                                                                ---------------------       ---------------------
(in thousands)                                                     2006        2005            2006        2005
                                                                ---------   ---------       ---------   ---------

Net sales:
      Domestic                                                  $  92,890   $  91,355       $ 253,470   $ 198,625
      International                                                27,844      10,598          70,710      10,598
Intersegment sales:
      Domestic                                                      1,081          --           3,482          --
      International                                                 7,884          --          21,519          --
      Elimination of intersegment sales                            (8,965)         --         (25,001)         --
                                                                ---------   ---------       ---------   ---------
   Total net sales                                              $ 120,734   $ 101,953       $ 324,180   $ 209,223
                                                                =========   =========       =========   =========
Operating income (loss) from continuing operations:
Domestic                                                        $   6,418   $  (3,279)      $  12,506   $     368
Restructuring charges                                                (263)     (1,414)           (849)     (2,781)
                                                                ---------   ---------       ---------   ---------
   Domestic total                                                   6,155      (4,693)         11,657      (2,413)
                                                                ---------   ---------       ---------   ---------
International                                                       2,229         420           4,341         420
Restructuring charges                                                (574)        (93)           (642)        (93)
                                                                ---------   ---------       ---------   ---------
   International total                                              1,655         327           3,699         327
                                                                ---------   ---------       ---------   ---------
Corporate expenses                                                 (2,163)     (3,124)         (7,687)     (7,832)
                                                                ---------   ---------       ---------   ---------
   Total operating income (loss) from continuing
      operations                                                $   5,647   $  (7,490)      $   7,669   $  (9,918)
                                                                =========   =========       =========   =========



                                       13



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



                                                           Three Months Ended       Nine Months Ended
                                                              September 30,             September 30,
                                                          -------------------       -------------------
(in thousands)                                              2006       2005           2006       2005
                                                          --------   --------       --------   --------

Automotive and light truck heat exchange                  $ 74,057   $ 64,163       $200,663   $137,301
Automotive and light truck air conditioning                 23,770     21,934         58,733     37,772
Heavy duty heat exchange                                    22,907     15,856         64,784     34,150
                                                          --------   --------       --------   --------
   Total net sales                                        $120,734   $101,953       $324,180   $209,223
                                                          ========   ========       ========   ========


NOTE 9 - RETIREMENT AND POST-RETIREMENT PLANS

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

                                             Three Months Ended September 30,
                                        ---------------------------------------
                                        Retirement Plans   Postretirement Plans
                                        ----------------   --------------------
(in thousands)                             2006    2005         2006   2005
                                          -----   -----         ----   ----
Service cost                              $ 307   $ 289          $ 1    $ 1
Interest cost                               596     484           10     10
Expected return on plan assets             (625)   (552)         ---    ---
Amortization of net loss                    189     111            1      1
                                          -----   -----          ---    ---
   Net periodic benefit cost                467     332           12     12
Allocated to discontinued operation          --      --           --     --
                                          -----   -----          ---    ---
   Allocated to continuing operations     $ 467   $ 332          $12    $12
                                          =====   =====          ===    ===

                                             Nine Months Ended September 30,
                                        ----------------------------------------
                                         Retirement Plans   Postretirement Plans
                                        -----------------   --------------------
(in thousands)                            2006      2005         2006   2005
                                        -------   -------        ----   ----
Service cost                            $   860   $   672         $ 2    $ 2
Interest cost                             1,677     1,432          30     30
Expected return on plan assets           (1,750)   (1,707)        ---    ---
Amortization of net loss                    526       351           4      4
                                        -------   -------         ---    ---
   Net periodic benefit cost              1,313       748          36     36
Allocated to discontinued operation          --        66          --     --
                                        -------   -------         ---    ---
   Allocated to continuing operations   $ 1,313   $   682         $36    $36
                                        =======   =======         ===    ===

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 nine
months ended September 30, 2006, pension expense for these plans was $268
thousand and $753 thousand, respectively. For the three and nine months ended
September 30, 2005, pension expense for these plans was $88 thousand.

Pension contributions to domestic retirement plans in 2006 are currently
estimated to be $2.6 million.


                                       14



NOTE 10 - SUPPLEMENTAL CASH FLOW INFORMATION

     Supplemental cash flow information is as follows:



                                                                                Nine Months Ended
                                                                                   September 30,
                                                                                -----------------
(in thousands)                                                                    2006      2005
                                                                                 ------   -------

Non-cash investing and financing activity:
      Entered into capital lease obligation                                      $   --   $ 1,673
                                                                                 ======   =======
      Common stock issued for net assets of Modine Aftermarket Business          $   --   $50,667
                                                                                 ======   =======
      Accrued expense for unpaid merger transaction costs                        $   --   $ 1,052
                                                                                 ======   =======
Supplemental disclosure of cash flow information:
   Cash paid during the period for:
      Interest                                                                   $7,761   $ 4,823
                                                                                 ======   =======
      Income taxes                                                               $1,028   $   722
                                                                                 ======   =======


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.

     In September 2006, the Financial Accounting Standards Board issued FASB
Statement 158 ("FAS 158") "Employers' Accounting for Defined Benefit Pension and
other Postretirement Plans." FAS 158 will require the Company to show the funded
status of its pension and retiree health care plans as a prepaid asset or
accrued liability, and to show the net deferred and unrecognized gains and
losses related to the retirement plans, net of tax, as part of accumulated other
comprehensive income in shareholders' equity. Previously, the net deferred and
unrecognized gains and losses were netted in the prepaid asset or accrued
liability recorded for the retirement plans. The Company will adopt the balance
sheet provisions of FAS 158, as required, at December 31, 2006. Because the
actuarial valuation of the retirement plan obligations at year end has not yet
been completed, and because the fair value of retirement plan assets is subject
to change based on market fluctuations through December 31, the Company is not
yet able to estimate the impact of FAS 158 on its balance sheet.

     Also, in September 2006, the Securities and Exchange Commission issued
Staff Accounting Bulletin ("SAB") 108 concerning the Quantification of
Misstatements in Financial Statements. This will be effective for years ending
after November 15, 2006 and requires registrants to perform both of the two
acceptable approaches in quantifying misstatements. The "rollover" approach
focuses on the amount by which the current year income statement is misstated
while the "iron curtain" approach focuses on the misstatement of the balance
sheet. Previously, a registrant could use one or the other approach to determine
whether a misstatement had a material impact. The Company is currently
evaluating what impact, if any, this will have on our reported results.


                                       15



NOTE 12 - SUBSEQUENT EVENTS

     On October 23, 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 the Fifteenth Amendment to the Loan and Security Agreement (the
"Amendment"). The Amendment, which is effective as of September 30, 2006,
revises certain financial covenants such that the (i) minimum EBITDA (which is
tested quarterly) required during the twelve-month period ended on September 30,
2006 is reduced from $4.0 million to $750,000 (compliance with the covenant is
not required if Excess Availability exceeds $15.0 million at all times during
the three-month period immediately preceding such test date), and (ii) the
requirement of $5.0 million minimum Excess Availability is extended until
Lender's receipt of the Company's December 31, 2006 audited financial
statements. In addition, the Inventory Loan Limit was reduced from $55.0 million
to $49.0 million in October 2006, $46.0 million in November 2006, $43.0 million
in December 2006 and $40.0 million thereafter.


                                       16



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 $40 million is anticipated to be realized in
2006 and the balance is anticipated to be achieved in 2007. These savings have
been partially offset by rising commodity costs and continued competitive price
pressure.


                                       17



     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.

     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 SEPTEMBER 30, 2006 VERSUS QUARTER ENDED SEPTEMBER 30, 2005

     Net sales from continuing operations for the third quarter of 2006 of
$120.7 million were $18.8 million or 18.4% above the third quarter of 2005. The
2006 third quarter results included $42.8 million of sales by businesses
acquired from Modine and $77.9 million of sales by historical Proliance business
units. In the third quarter of 2005, net sales included $34.6 million of sales
by business acquired from Modine and $67.4 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.
The 2006 third quarter results include sales by businesses acquired from Modine
for the entire quarter, while last year's results include them only from the
date of acquisition, July 22, 2005. In addition, the 2005 results were impacted
because the Company reports the European business acquired from Modine on a
one-month lag. Domestic segment sales in the third quarter of 2006 were $92.9
million compared to $91.4 million in the 2005 third quarter. Heat exchange
product unit volume was stronger than the third quarter last year despite the
fact that the domestic marketplace in the third quarter of 2006 has been
impacted by high fuel costs, which appear to have negatively impacted consumer
driving activity which in turn impacted overall product demand. In addition, the
Company continues to experience the impact of ongoing competitive pricing
pressure on its domestic heat exchange products. Despite this pressure, the
Company has been taking pricing actions, to the extent that the markets allow,
in an effort to offset rising commodity costs. The Domestic marketplace is also
experiencing a change in that more sales are being directed towards wholesale
customers. As a result of this shift in customer mix, the Company experiences
lower sales through its branch locations, which translate into lower average
selling prices for its domestic heat exchange products. Milder than normal
weather, at the beginning of the quarter, led to a shorter than typical summer
air conditioning parts selling season. Air conditioning unit volume has also
been adversely influenced by the impacts of high fuel costs and local
competition. Domestic heavy duty product sales benefited from the impact of new
product introductions, along with an ability to pass along to customers a
portion of the impact of rising commodity costs. International segment sales in
the third quarter of 2006 were $27.8 million compared to $10.6 million in the
third quarter of 2005. This increase reflects sales generated from the
businesses in Europe, Mexico and Central America, which were acquired in the
Modine Aftermarket merger, for the entire quarter. 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 $74.0 million for the three months


                                       18



ended September 30, 2006 compared to $64.2 million in the same period of 2005.
Worldwide air conditioning sales of $23.8 million in the third quarter of 2006
compared to $21.9 million in the third quarter a year ago. Worldwide heavy duty
sales were $22.9 million in the third quarter of 2006 compared to $15.9 million
in the third 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
25.2% during the third quarter of 2006 versus 14.8% in the third 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. The Company
continues to experience rising commodity prices and competitive pricing
pressure, which have offset some of the cost savings benefits. Copper costs have
almost doubled since a year ago, and the cost of aluminum has increased almost
40% in the same period. The Company has initiated 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. Margins in the third quarter of 2006 were
adversely impacted by the swing in customer mix of sales, away from the branch
locations and to our wholesale customer base, which generate a lower gross
margin as a percentage of sales. In the third quarter of 2005 gross margin was
lowered by a $1.1 million write-off of a portion of the fair market value
adjustment of inventory, which was recorded as part of the purchase accounting
entry, with respect to the Modine Aftermarket merger. Third quarter 2005 gross
margin was also reduced by $0.5 million as a result of restructuring costs
associated with the write down of inventory to net realizable value, by $2.6
million due to unabsorbed overhead due to production cutbacks at our Nuevo
Laredo facility and by $0.9 million of higher cost inventory acquired in the
merger. Gross margins in the fourth quarter of 2006 will continue to be
pressured by competitive pricing pressures and the change in customer mix which
impacted the third quarter. Commodity costs running through cost of sales in the
fourth quarter of 2006 will be at their highest level for the year. In addition,
production cutbacks being made at manufacturing facilities during the fourth
quarter of 2006, in order to lower inventory levels by year end, will result in
the period costing of unabsorbed overhead variances.

     Selling, general and administrative expenses decreased as a percentage of
net sales to 19.8% in the third quarter of 2006 from 20.6% in the third quarter
of 2005. This reduction reflects the impact of cost reduction activities
implemented after the Modine Aftermarket merger, which included a reduction in
the number of branch locations. During the third quarter of 2006, costs
attributable to the Sarbanes-Oxley compliance activities were $0.2 million
similar to the amount recorded in the third quarter last year. During the third
quarter of 2005, the Company incurred $1.1 million of costs associated with the
integration of IT, communications and financial information as a result of the
Modine Aftermarket merger as well as costs associated with the Company's name
change from Transpro, Inc. to Proliance International, Inc. Expense levels
during the third quarter of 2005 were lowered by a $0.5 million gain recorded
during the quarter due to the sale of surplus machinery and equipment acquired
in the merger. These assets had been written down to a zero net book value in
the purchase accounting entry. The remainder of the $2.9 million increase in
selling, general and administrative expenses over the third quarter of 2005 is
primarily attributable to a full quarter of operations of the Modine Aftermarket
businesses in 2006.

     During the third quarter of 2006, the Company reported $0.8 million of
restructuring costs primarily associated with the relocation of a portion of the
air conditioning parts manufacturing operation located in Arlington, Texas to
Nuevo Laredo, Mexico, workforce reductions at our MexPar manufacturing facility
in Mexico City, Mexico associated with the conversion of radiator production
from copper/brass construction to


                                       19



aluminum and changes in our go-to-market distribution strategy which has
resulted in our decision to reduce the number of branch locations. These costs
were attributable to one time workforce related costs and facility consolidation
costs. 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 third quarter of 2005 of $1.5 million were
associated 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, which was announced in the second
quarter of 2005. In addition, the Company incurred costs associated with
activities impacting existing Proliance facilities, which were part of the
restructuring program announced at the time of the merger. These included costs
associated with the closure of branch and plant locations and their
consolidation into existing Modine aftermarket facilities, the closure of the
Company's New Haven tube mill and the relocation of copper/brass radiator
production from the Company's Nuevo Laredo manufacturing facility to the Mexico
City facility. Restructuring costs are associated with the movement of inventory
and fixed assets, one-time personnel-related costs and the write down of fixed
assets, with no future use, to net realizable value.

     Interest expense in the third quarter of 2006 was $3.6 million, $1.5
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 $2.0 million in the third quarter of 2006, compared to $1.1 million
in the same period last year, reflecting higher levels of customer receivables
being collected utilizing these programs and rising discount rates, which
fluctuate in conjunction with the prime interest rate. Average interest rates on
the Company's revolving credit, and term loan borrowings were 7.8% in the third
quarter of 2006, compared to 6.0% in the same period last year. Average debt
levels were $61.6 million in 2006, compared to $52.9 million last year.
Year-over-year interest expense levels in the fourth quarter will continue to be
higher as a result of increases in interest rates and average debt levels while
discounting expense will be higher due to the increased level of activity using
the customer-sponsored vendor payment programs.

     In the third quarter of 2006 and 2005, 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 net income from continuing operations for the third quarter of 2006 was
$1.3 million, or $0.08 per basic and diluted share, compared to a net loss of
$9.9 million, or $0.75 per basic and diluted share for the third quarter of
2005.

     As a result of the merger with Modine Aftermarket on July 22, 2005, there
was an excess of net assets acquired ($92.8 million) over total consideration
paid ($59.3 million). This excess was first utilized to write down to zero the
acquired fixed and intangible assets ($20.3 million) while the remaining $13.2
million was recorded as negative goodwill and the write off was included as
extraordinary income in the determination of net income in the attached
Statements of Operations. The earnings per share impact of the negative goodwill
write-off was $1.00 per basic and diluted share for the third quarter of 2005.


                                       20



     Net income for the three months ended September 30, 2006 was $1.3 million
or $0.08 per basic and diluted share, compared to a net income of $3.3 million,
or $0.25 per basic and diluted share for the same period a year ago.

NINE MONTHS ENDED SEPTEMBER 30, 2006 VERSUS SEPTEMBER 30, 2005

     For the nine months ended September 30, 2006, net sales from continuing
operations of $324.2 million were $115.0 million or 54.9% above the same period
of the prior year. Included in the 2006 sales were $117.4 million from the
businesses added by the Modine Aftermarket merger and $206.8 million from
historical Proliance operations. Sales for the first nine months of 2005
included $34.6 million from the businesses added by the Modine Aftermarket
merger and $174.6 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 $253.5 million for the
first nine months of 2006 compared to $198.6 million in the first nine 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. While domestic air
conditioning sales benefited from higher pre-season orders from several of our
major customers during the first quarter of 2006, this was offset by a shorter
than normal summer selling season due to milder 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 for the first nine months of 2006 were $70.7 million compared to
$10.6 million for the first nine months of 2005 reflecting sales generated from
the businesses in Europe, Mexico and Central America which were acquired in the
Modine Aftermarket merger. International segment sales benefitted 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 nine months of 2006 were $200.7 million compared to $137.3 million in
the first nine months of 2005. Worldwide air conditioning sales were $58.7
million in the first nine months of 2006 compared to $37.8 million in the same
period of 2005 and worldwide heavy duty product sales were $64.8 million in the
first nine months of 2006 compared to $34.1 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.

     Gross margins, as a percentage of net sales, for the first nine months of
2006 were 24.8% compared with 16.9% 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 fourth quarter of 2006, 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. While the impact of any cost reduction actions will not begin to be
reflected in the income statement until later in the year due to the turnover of
inventory and the timing of pricing initiatives, the majority will not


                                       21



be reflected in operating results until 2007. Margins for the first nine months
of 2005 were adversely impacted by unabsorbed overhead generated by production
cutbacks initiated in the third quarter of 2005 at our facility in Nuevo Laredo,
Mexico in order to reduce inventory levels, ongoing pricing pressure impacting
the domestic heat exchange product lines, continued rising commodity costs, the
higher cost of inventory acquired in the merger and the write-off of $1.1
million of the purchase accounting adjustment to reflect acquisition inventory
at fair market value. In addition, margins were lowered by $0.5 million of
restructuring costs which occurred in the third quarter of 2005.

     Selling, general and administrative expenses for the first nine months of
2006 increased to 22.0% of sales versus 20.3% 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 nine
months of 2006, costs attributable to the Sarbanes-Oxley compliance activities
were $0.8 million, approximately equal to the same period last year. Expense
levels in the first nine months of 2006 benefited from cost reduction actions
implemented subsequent to the Modine Aftermarket merger. The remainder of the
$28.7 million increase in selling, general and administrative expenses over the
first nine months of last year is attributable to the higher sales levels
generated by the Modine Aftermarket merger. During the first nine months of 2005
expenses included $1.2 million attributable to IT, communication and other costs
associated with the integration of two businesses as a result of the merger. In
addition, there were costs associated with the Company's name change, increased
freight costs reflecting the higher price of gasoline and higher employee health
care costs incurred in the first quarter of 2005, offset in part by a $0.5
million gain on the sale of surplus assets acquired in the merger.

     During the first nine months of 2006, the Company reported $1.5 million of
restructuring costs. These costs were associated with the completion of the
relocation of the Nuevo Laredo copper/brass radiator production to Mexico City,
the relocation of a portion of the air conditioning parts manufacturing
operation located in Arlington, Texas to Nuevo Laredo, Mexico, workforce
reductions at our MexPar manufacturing facility in Mexico City, Mexico
associated with the conversion of radiator production from copper/brass
construction to aluminum and changes in our go-to-market distribution strategy
which has resulted in our decision to close some branch locations. These costs
were attributable to one-time workforce related costs, facility consolidation
costs and the write-down to net realizable value of fixed assets which have no
future use. These activities were extensions of the restructuring program which
the Company announced in 2005 in conjunction with the Modine Aftermarket merger.
Restructuring charges of $2.9 million for the first nine 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, which was announced
in the second quarter of 2005. In addition, it reflects actions under the
restructuring program initiated in conjunction with the merger, which are
associated with existing Proliance facilities. This includes the closure of
plant and branch locations, the closure of a tube mill operation in New Haven,
Connecticut and the relocation of copper/brass production from our Nuevo Laredo
facility to our Mexico City facility.

     Interest costs for the first nine months of 2006 were $3.1 million above
the same period last year, due to higher discounting fees associated with
participating in customer sponsored vendor payment programs, higher


                                       22



average interest rates and higher average debt levels. Discounting fees for the
first nine months of 2006 were $4.5 million compared to $2.7 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 7.3% in 2006 compared to 5.7% in 2005, while average debt levels
were $55.8 million in 2006 vs. $47.5 million in 2005. Interest rates in the
fourth quarter of the year will continue to show year over year increases due to
a higher prime rate.

     For the first nine 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 nine months of 2006 was
$2.8 million, or $0.18 per basic and diluted share, compared to a loss of $14.2
million, or $1.55 per basic and diluted share for the first nine months of 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 $0.09 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 $0.42
per basic and diluted share in 2005.

     As a result of the merger with Modine Aftermarket on July 22, 2005, there
was an excess of net assets acquired ($92.8 million) over total consideration
paid ($59.3 million). This excess was first utilized to write down to zero the
acquired fixed and intangible assets ($20.3 million) while the remaining $13.2
million was recorded as negative goodwill and the write off was included as
extraordinary income in the determination of net income in the attached
Statements of Operations. The earnings per share impact of the negative goodwill
write-off was $1.44 per basic and diluted share for the first nine months of
2005.

     Net loss for the nine months ended September 30, 2006 was $2.8 million or
$0.18 per basic and diluted share, compared to a net income of $3.7 million, or
$0.40 per basic and diluted share for the same period a year ago.

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

     During the first nine months of 2006, cash used in operating activities was
$12.9 million. Continuing operations accounts receivable levels increased by
$17.8 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. Accounts
receivable levels at the end of 2006 are expected to approximate those at the
end of 2005. Inventory levels increased by $16.0 million reflecting rising
commodity costs in addition to an inventory build up to support seasonal sales
demand. The Company is taking actions in the fourth quarter of


                                       23



2006 to reduce production at its manufacturing locations and product purchases
in order to lower inventory levels by year-end. Inventory levels at the end of
2006 are expected to be lower than those at the end of 2005, despite the impacts
of higher commodity costs. Accounts payable levels rose by $13.3 million
primarily due to the growth in inventory levels.

     Cash used in operating activities was $7.6 million in the first nine months
of 2005. This was comprised of $8.5 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 $13.2
million from the beginning of the year due to the seasonal increase in
receivable balances over year-end levels and increased sales levels. This impact
was partially offset as the Company continued to accelerate the collection of
customer receivables utilizing cost effective customer-sponsored vendor programs
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 declined $3.1 million during the first nine months of 2005
reflecting production cutbacks during the third quarter, which more than offset
inventory increases experienced during the first six months of 2005. Production
cutbacks associated with efforts to better align inventory with changes in
customer demand and to reflect the impact of the merged Modine Aftermarket
business during the third quarter resulted in a $16.6 million reduction in
inventory levels. This represents the difference between inventory levels at
June 30, 2005 plus inventory added by the Modine Aftermarket merger less
inventory balances at September 30, 2005. Accounts payable rose by $10.7 million
during the first nine months of 2005 as a result of our efforts to balance
payables with the ongoing shift in customer receivables mix toward longer
payment cycles

     During the first nine months of 2006, the Company had $3.7 million of
capital expenditures primarily for cost reduction activities and U.S. computer
system upgrades to convert previously used Modine systems. The $6.0 million of
capital spending during the first nine months of 2005 was primarily associated
with the opening of a new distribution center located in Southaven, Mississippi
and cost reduction activities. 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
$7.0 million and $9.0 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 a total 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, was closed on October 10, 2006 at a
purchase price of $1.0 million 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 September 30, 2006 was $62.5 million, compared to $41.9
million at the end of 2005 and $50.4 million at September 30, 2005. At September
30, 2006 the Company had $13.6 million available for future borrowings under its
Loan Agreement.


                                       24



     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 Loan
Agreement"). The amended Credit Facility changed 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 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.

     On October 23, 2006, the Company amended its Credit Facility pursuant to
the Fifteenth Amendment to the Loan and Security Agreement (the "Amendment").
The Amendment, which is effective as of September 30, 2006, revises certain
financial covenants such that the (i) minimum EBITDA (which is tested quarterly)
required during the twelve-month period ending on September 30, 2006 is reduced
from $4.0 million to $750,000 (compliance with the covenant is not required if
Excess Availability exceeds $15.0 million at all times during the three-month
period immediately preceding such test date), and (ii) the requirement of $5.0
million minimum Excess Availability is extended until Lender's receipt of the
Company's December 31, 2006 audited financial statements. In addition, the
Inventory Loan Limit was reduced from $55.0 million to $49.0 million in October
2006, $46.0 million in November 2006, $43.0 million in December 2006 and $40.0
million thereafter. The Company was in compliance with the EBITDA covenant
contained in the Fifteenth Amendment and all other covenants contained in the
Loan Agreement as of September 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.


                                       25



However, no assurance can be given that the Company would be successful in
securing such additional sources of capital.

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.

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.

     In September 2006, the Financial Accounting Standards Board issued FASB
Statement 158 ("FAS 158") "Employers' Accounting for Defined Benefit Pension and
other Postretirement Plans." FAS 158 will require the Company to show the funded
status of its pension and retiree health care plans as a prepaid asset or
accrued liability, and to show the net deferred and unrecognized gains and
losses related to the retirement plans, net of tax, as part of accumulated other
comprehensive income in shareholders' equity. Previously, the net deferred and
unrecognized gains and losses were netted in the prepaid asset or accrued
liability recorded for the retirement plans. The Company will adopt the balance
sheet provisions of FAS 158, as required, at December 31, 2006. Because the
actuarial valuation of the retirement plan obligations at year end has not yet
been completed, and because the fair value of retirement plan assets is subject
to change based on market fluctuations through December 31, the Company is not
yet able to estimate the impact of FAS 158 on its balance sheet.

     Also, in September 2006, the Securities and Exchange Commission issued
Staff Accounting Bulletin ("SAB") 108 concerning the Quantification of
Misstatements in Financial Statements. This will be effective for years ending
after November 15, 2006 and requires registrants to perform both of the two
acceptable approaches in quantifying misstatements. The "rollover" approach
focuses on the amount by which the current year income statement is misstated
while the "iron curtain" approach focuses on the misstatement of the balance
sheet. Previously, a registrant could use one or the other approach to determine
whether a misstatement had a material impact. 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


                                       26



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.


                                       27



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 September
2006, the average monthly commodity market price for copper increased 63% and
aluminum increased 11%. These increases are in addition to the 42% copper
increase and 16% 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 where possible,
conversion of product construction from copper/brass to aluminum 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 September 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, which material weakness was previously reported in the second
quarter Form 10-Q, 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 had 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 were closed. The areas
most affected by this were 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,
during the third quarter of 2006 the Company filled several new staff positions,
centralized the accounting for U.S. operations financial results and made other
process improvements. However, many of these actions were not fully implemented
until late in the third quarter and therefore the Company has not had adequate
time to determine at September 30, 2006 whether these actions fully rectified
the material weakness as of that date.


                                       28



     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
conflicts of interest with respect to his ownership of a 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 nine months ended September 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 September 30, 2006 that have materially affected, or are reasonably likely
to materially affect, the Company's internal control over financial reporting.


                                       29



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 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.


                                       30



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


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


                                       31`