|  |
|--|
|  |
|  |
|  |
|  |

UNITEDSTATESSECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM10-K

ANNUAL REPORT PURSUANT TO SECTIONS 13 OR 15(d)OFTHE SECURITIES EXCHANGE ACT OF 1934

(Mark One)

|        |                                                                                      |
|--------|--------------------------------------------------------------------------------------|
|   | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OFTHE SECURITIES EXCHANGE ACT OF 1934 |

Forthe fiscal year ended December   31,   2005

OR

|        |                                                                                         |
|--------|-----------------------------------------------------------------------------------------|
|   | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934 |

Forthe transition periodfrom                    to                    .

Commission file number 1-13894

PROLIANCE INTERNATIONAL, INC.

(Exact name of Registrant as specified in itscharter)

|                                                               |  |                                  |  |  |  |  |
|---------------------------------------------------------------|--|----------------------------------|--|--|--|--|
| Delaware                                                      |  | 34-1807383                       |
| (State orother jurisdiction of incorporation or organization) |  | (IRS Employer IdentificationNo.) |
|                                                               |

100 Gando Drive, New Haven,Connecticut 06513

(Address of principalexecutive offices, including zip code)

(203)401-6450

(Registrant's telephonenumber, including area code)

Securitiesregistered pursuant to Section 12 (b) of the Act:

|                             |  |                                          |  |  |  |  |
|-----------------------------|--|------------------------------------------|--|--|--|--|
| Title of each class         |  | Name of each exchange on whichregistered |
| CommonStock, $.01 Par Value |  | American StockExchange                   |
|                             |

Securities registered pursuantto Section 12 (g) of the Act:

NONE

Indicate by check mark if the registrant is awell-known seasoned issuer, as defined in Rule 405 of the SecuritiesAct.

Yes       No 

Indicate by check mark if the registrant is notrequired to file reports pursuant to Section 13 or Section 15(d) of theAct.

Yes       No 

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

Yes       No

Indicate by check mark if disclosureof delinquent filers pursuant to Item 405 of Regulation S-K is notcontained herein, and will not be contained, to the best ofRegistrant's knowledge, in definitive proxy or informationstatements incorporated by reference in Part III of this Form 10-K orany amendment to this Form 10-K. 

Indicate by check mark whether the registrant is alarge accelerated filer, an accelerated filer, or a non-acceleratedfiler. See definition of ‘‘accelerated filer and largeaccelerated filer’’ in Rule 12b-2 of the Exchange Act.

Check one:     Large accelerated filer                  Accelerated filer                  Non-accelerated filer

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

Yes       No

The aggregate market value of votingand non-voting common stock held by non-affiliates of the Registrant atJune  30,   2005 was $42,572,305. On March1,   2006, there were 15,255,833 outstanding shares of theRegistrant's common stock.

Documents Incorporatedby Reference

Portions of the Proxy Statementfor the 2006 Annual Meeting of Stockholders are incorporated byreference into Part III of this report.

ExhibitIndex is on pages 64 through 66 of this report.

|  |
|--|
|  |
|  |
|  |
|  |

----

PROLIANCE INTERNATIONAL,INC.INDEX TO ANNUAL REPORT ON FORM 10-K YEAR ENDED DECEMBER 31,2005

|            |  |                                                                                                             |        |        |    |        |  |  |  |  |
|------------|--|-------------------------------------------------------------------------------------------------------------|--------|--------|----|--------|--|--|--|--|
|       |  |                                                                                                        |        | Page   |
| PARTI      |  |                                                                                                        |   |   |
| Item1.     |  | Business                                                                                                    |        |   | 1  |   |
| Item 1A.   |  | Risk Factors                                                                                                |        |   | 8  |   |
| Item 1B.   |  | Unresolved StaffComments                                                                                    |        |   | 13 |   |
| Item2.     |  | Properties                                                                                                  |        |   | 13 |   |
| Item3.     |  | Legal Proceedings                                                                                           |        |   | 14 |   |
| Item 4.    |  | Submission ofMatters to a Vote of Security Holders                                                          |        |   | 14 |   |
| PARTII     |  |                                                                                                        |   |   |
| Item5.     |  | Market for Registrant's Common Equity, RelatedStockholder Matters and Issuer Purchases of Equity Securities |        |   | 16 |   |
| Item 6.    |  | Selected FinancialData                                                                                      |        |   | 17 |   |
| Item7.     |  | Management's Discussion and Analysis of FinancialCondition and Results of Operations                        |        |   | 18 |   |
| Item 7A.   |  | Quantitative andQualitative Disclosures About Market Risk                                                   |        |   | 29 |   |
| Item 8.    |  | FinancialStatements and Supplementary Data                                                                  |        |   | 30 |   |
| Item 9.    |  | Changes in andDisagreements with Accountants on Accounting andFinancialDisclosure                           |        |   | 62 |   |
| Item9A.    |  | Controls and Procedures                                                                                     |        |   | 62 |   |
| Item 9B.   |  | OtherInformation                                                                                            |        |   | 63 |   |
| PARTIII    |  |                                                                                                        |   |   |
| Item10.    |  | Directors and Executive Officers of the Registrant                                                          |        |   | 63 |   |
| Item 11.   |  | ExecutiveCompensation                                                                                       |        |   | 63 |   |
| Item12.    |  | Security Ownership of Certain Beneficial Owners andManagement and Related Stockholder Matters               |        |   | 63 |   |
| Item 13.   |  | CertainRelationships and Related Transactions                                                               |        |   | 63 |   |
| Item 14.   |  | PrincipalAccountant Fees and Services                                                                       |        |   | 63 |   |
| PARTIV     |  |                                                                                                        |   |   |
| Item15.    |  | Exhibits and Financial Statement Schedules                                                                  |        |   | 63 |   |
| Signatures |  |                                                                                                        | 67     |   |
|            |

ii

----

PART I

Item 1.    Business

Proliance International,Inc., formerly known as Transpro, Inc., (the‘‘Company’’) designs, manufactures and marketsradiators, radiator cores, heater cores, air conditioning parts(including condensers, compressors, accumulators and evaporators) andother heat exchange products for the automotive and light truckaftermarket. In addition, the Company designs, manufactures anddistributes radiators, radiator cores, charge air coolers, oil coolersand other specialty heat exchangers for the heavy duty heat exchangeraftermarket.

Recent Transactions

On July22,  2005, following receipt of approval of the Company'sstockholders, the Company completed its merger transaction pursuant towhich Modine Aftermarket Holdings, Inc. (‘‘ModineAftermarket’’) merged into the Company (‘‘themerger’’). Modine Aftermarket was spun off from ModineManufacturing Company (‘‘Modine’’) immediatelyprior to the merger and held Modine's aftermarket business. Uponeffectiveness of the merger, the Company changed its name to‘‘Proliance International, Inc.’’(‘‘Proliance’’). In connection with the merger,the Company issued a total of 8,145,810 shares of its common stock toModine shareholders, or 0.235681 shares for each outstanding Modinecommon share. Immediately after the effectiveness of the merger, priorTranspro, Inc. shareholders owned 48% of the combined company ona fully diluted basis, while Modine shareholders owned the remaining52%. For accounting purposes, Proliance is the acquirer. As aresult of the merger, the Company is predominantly a supplier ofheating and cooling components and systems to the automotive and heavyduty aftermarkets in North and Central America and Europe. Thistransaction is described in Note 5 of the Notes to ConsolidatedFinancial Statements contained in Item 8 of this Report.

On March  1,  2005, the Company sold its Heavy DutyOEM business to Modine for $17  million in cash. The Heavy DutyOEM business manufactured and distributed heat exchangers to heavy dutytruck and industrial and off-highway original equipment manufacturers.Net proceeds from the sale were used to reduce borrowings under theCompany’s credit facility and fund operations. This transactionis described in Note 4 of the Notes to Consolidated FinancialStatements contained in Item 8 of this Report. As a result of the sale,the Company is predominantly a supplier of heating and coolingcomponents and systems to the automotive and heavy dutyaftermarkets.

Origins of the Business

TheCompany's origins date back to 1915 when a predecessor of theCompany’s former G&O division commenced operations in NewHaven, Connecticut, as a manufacturer of radiators for custom builtautomobiles, fire engines and original equipment manufacturers. AllenTelecom Inc. (‘‘Allen,’’ formerly The AllenGroup Inc.) acquired G&O in 1970 as part of its strategy to becomea broad-based automotive supplier. The Company’s GO/DANIndustries (‘‘GDI’’) division was formed in1990 when Allen contributed a portion of its G&O division and otherassets, which together represented all of Allen's aftermarketradiator business, and Handy & Harman contributed substantially allof the assets of its then wholly-owned subsidiaries, Daniel RadiatorCorporation, Jackson Industries, Inc., Lexington Tube Co., Inc. and USAuto Radiator Manufacturing Corporation, to form a 50/50 joint venturepartnership.

In 1995, Allen contributed all of the assetsand liabilities of G&O and its specialty fabricated metal productsbusiness along with its interest in GDI, to the Company. Immediatelythereafter, Allen caused GDI to redeem Handy & Harman’sownership interest in GDI. On September  29,  1995, Allenspun off the Company to Allen’s stockholders. The Company addedreplacement automotive air conditioning condensers to its aftermarketproduct line with the acquisition of substantially all of the assetsand the assumption of certain liabilities, of Rahn Industries effectiveAugust  1996. The Company added other replacement automotive airconditioning parts to its aftermarket product line with the acquisitionof the outstanding stock of Evap, Inc., which subsequently becameReady-Aire, in 

1

----

a purchase transaction effective August1,  1998. The Company added re-manufactured automotive airconditioning compressors to its aftermarket product line with theacquisition of the outstanding stock of A/C Plus, Inc. in a purchasetransaction effective February  1,  1999, which became partof Ready-Aire.

Management has looked to grow the businessthrough a combination of internal growth, including the addition of newcustomers and new products, and strategic acquisitions. OnDecember  27,  2002, the Company acquired certain assets ofFedco Automotive Components Company(‘‘Fedco’’), based in Buffalo, New York, awholly-owned subsidiary of Tomkins PLC. This acquisition strengthenedthe Company’s position in the complete heater market andprovided the Company with a new major customer relationship, thecapability to produce aluminum heaters in-house and the ability tomaximize the benefits generated by its in-house production ofcopper/brass heater cores at its Mexico plant.

OnFebruary  1,  2005, the Company announced that it had signeddefinitive agreements, subject to customary closing conditionsincluding shareholder approval, providing for the merger of theaftermarket business of Modine into the Company and Modine’sacquisition of the Company’s Heavy Duty OEM business unit for$17  million in cash. The merger transaction, which was completedon July  22,  2005, as noted above, is expected to result inthe Company having 2006 consolidated annual sales of over $400million and adds manufacturing and distribution locations in the U.S.,Europe, Mexico and Central America. In addition, the Company is nowfocused predominantly on supplying heating and cooling components andsystems to the automotive and heavy duty aftermarkets in North andCentral America and Europe. The merger transaction and Heavy Duty OEMsale are further described in Notes 4 and 5 of the Notes toConsolidated Financial Statements contained in Item 8 of thisReport.

Current Structure

Subsequent to themerger with Modine Aftermarket and the sale of the Heavy Duty OEMbusiness, the Company has been reorganized into two reporting segments,based upon the geographic area served – Domestic andInternational. The Domestic marketplace supplies heat exchange and airconditioning products to the automotive and light truck aftermarket andheat exchange products to the heavy duty aftermarket in the UnitedStates and Canada. The International segment includes heat exchange andair conditioning products for the automotive and light truckaftermarket and heat exchange products for the heavy duty aftermarketin Mexico, Europe and Central America. Each product group within theDomestic segment constitutes an operating segment and has beenaggregated for purposes of reporting business segment information.

Markets

The automotive and heavy truck partsindustries target two distinct markets, the aftermarket and theoriginal equipment manufacturer (‘‘OEM’’)market. The products and services used to maintain and repairautomobiles, vans, light trucks and heavy trucks, as well asaccessories not supplied with such vehicles when manufactured, form therespective automotive and heavy truck aftermarkets. The manufacture ofindividual component parts for use in the original equipmentmanufacturing process of automobiles, vans, light trucks, heavy trucksand other heavy equipment forms the automotive and heavy duty OEMmarkets. Following the sale of Proliance’s Heavy Duty OEMbusiness unit in March  2005, the Company sells its products andservices predominantly to the automotive and light truck and heavy dutyaftermarkets.

As a result of the Modine Aftermarketmerger, the Company, through its NRF business unit in Europe, suppliesspecialty coolers for OE marine applications. The product is primarilyused on inland and smaller sea-going vessels such as tugs, ferries,barges and service vessels.

Principal Products andServices

The Company designs, manufactures and marketsradiators, radiator cores, heater cores, air conditioning parts(including condensers, compressors, accumulators and evaporators) andother heat 

2

----

exchange products for the automotive and lighttruck aftermarket. In addition, the Company designs, manufactures anddistributes radiators, radiator cores, charge air coolers, charge aircooler cores, oil coolers and other specialty heat exchangers for theheavy duty aftermarket.

Trade sales by theCompany’s product lines for the three years ended December31 are as follows:

|                                     |  |        |         |        |  |        |         |        |  |        |         |        |  |  |
|-------------------------------------|--|--------|---------|--------|--|--------|---------|--------|--|--------|---------|--------|--|--|
|                                |  | 2005   |         | 2004   |  | 2003   |
| Heat exchange products              |  | $      | 255,202 |   |  | $      | 197,941 |   |  | $      | 178,917 |   |
| Temperature control products        |  |   | 41,636  |   |  |   | 20,492  |   |  |   | 19,945  |   |
| Trade sales of continuingoperations |  | $      | 296,838 |   |  | $      | 218,433 |   |  | $      | 198,862 |   |
|                                     |

A description of theparticular products offered by the Company in its targeted markets isset forth below.

Automotive and Light Truck Heat ExchangeProducts

The Company provides one of the most extensiveproduct ranges of high-quality radiators, radiator cores, heater cores,and air conditioning condensers, compressors and parts to theautomotive and light truck aftermarket.

The purpose of aradiator is to cool the engine. A radiator acts as a heat exchanger,removing heat from engine coolant as it passes through the radiator.The construction of a radiator usually consists of: the radiator core,which consists of coolant-carrying tubes and a large cooling area madeup of metal fins, a receiving (inlet) tank, a dispensing (outlet) tankand side columns. In operation, coolant is pumped from the engine tothe inlet tank where it spreads through the tubes. As the enginecoolant passes through the tubes, it loses its heat to the air streamthrough the fins connected to the tubes. After passing through thetubes, the reduced temperature coolant enters the outlet tank and isthen re-circulated through the engine.

CompleteRadiators.    The Company's domestic segment lines ofcomplete radiators are produced for automobile and light truckapplications and consist of more than 1,050 models, which are able toservice approximately 95% of the automobiles and light trucks inthe United States. The Company has established itself as an industryleader with its well-recognized line of Ready-Rad®radiators. The Ready Rad® Plus line with adaptablefittings has become popular because of its ability to fit therequirements of a broad line of vehicles, enabling distributors toservice a larger number of vehicles with lower inventory levels.Complete radiators are constructed of both copper/brass and aluminum.As a result of the merger, the Company also offers radiators under theModine® and the Pro SeriesTM brands.Complete radiators are also sold across Western Europe under theNRFTM brand and in Mexico and Central America throughMexPar.

The Company also sells its ReadyRad® Heatbuster(‘‘Heatbuster’’) line of complete radiators.This line of replacement radiators is specially designed to provideapproximately 20% more cooling capability than a standardradiator. The Heatbuster line is an ideal replacement radiator forvehicles used for towing, hauling, plowing or off-highway purposes, andas a result, it has been particularly popular in the growing lighttruck and SUV segments of the automotive fleet.

Radiator Cores.    A radiator core is the largestand most expensive component of a complete radiator. The Company'sReady-Core® line consists of over 1,700 models ofradiator cores for automobiles and light trucks. Given the wide rangeof cores required by today's automobile and truck fleet, there aremany times when a specific core is not readily available. In thesecases, the Company can produce a new core, on demand, within severalhours and provide same day or next day service to virtually the entireUnited States and Canada using its ten strategically positionedregional manufacturing plant locations. The Company also utilizes itsregional plant locations in Europe and Mexico to provide the sameservice into these markets.

HeaterCores.    The Company produces more than 450 different heatercore models for domestic and foreign cars and light trucks, which coverthe requirements of more than 95% of the automobiles and lighttrucks on the road today. A heater core is part of a vehicle'sheater system through which heated 

3

----

coolant from the engine cooling system flows.The warm air generated as the liquid flows through the heater core isthen propelled into the vehicle’s passenger compartment by afan. Heater cores are offered using both copper/brass and aluminumconstruction. The Company's Ready-Aire® line ofheater cores is recognized as an industry leader and its models utilizeboth cellular and tubular technology. Heaters are sold in North Americaand on a limited basis in Europe.

Automotive and Light TruckAir Conditioning Products

While the Company’sautomotive and light truck air conditioning products are sold primarilyin the domestic segment, demand for these products in Europe has beenincreasing over the last several years. Air conditioning products inthe domestic segment are marketed under the Ready-Aire®and AirPro Quality Parts® brands.

AirConditioning Compressors.    The Company distributes more than1,400 models of new and re-manufactured air conditioning compressorsfor domestic and import applications in the automotive and light truckaftermarkets. The compressor is designed to compress low-pressure vaporrefrigerant, which is drawn from the evaporator into a high-pressuregas, and then pumped to the condenser.

AirConditioning Condensers.    Air conditioning condensers are acomponent of a vehicle’s air conditioning system designed toconvert the air conditioner refrigerant from a high-pressure gas to ahigh-pressure liquid by passing it through the air-cooled condenser.More than 450 condenser part numbers are currently cataloged anddistributed in the domestic segment.

Air ConditioningAccumulators.    The Company offers over 600 accumulator/driermodels. Accumulators act as a reservoir that prevents liquidrefrigerant from reaching the compressor. The accumulator uses a dryingagent to remove moisture from the system and a filter screen to trapany solid contaminants.

Air ConditioningEvaporators.    The Company offers over 600 evaporator models.Automotive air conditioning evaporators are designed to remove heatfrom the passenger compartment. The evaporator is generally locatedunder the dashboard or adjacent to the firewall and functions as a heatexchanger by passing low pressure liquid refrigerant through itspassageways. Warm air is forced from the passenger compartment over theevaporator which cools the air for the vehicle cabin. The refrigerantbecomes a low-pressure vapor and is then re-compressed by thecompressor and re-circulated.

Air Conditioning Partsand Supplies.    The Company sells an extensive line of otherair conditioning parts and supplies. These other component partsinclude hose and tube assemblies, blowers and fan clutches.

Heavy Duty Heat Exchange Products

The Companydesigns, manufactures and markets radiators, complete truck radiators,radiator cores and charge air coolers to customers in the heavy dutyaftermarket. All products are custom designed and produced to support avariety of unique engine cooling configurations for heavy-duty trucks,buses, specialty equipment, industrial and marine applications such asconstruction and military vehicles, stationary power generationequipment and inland sea-going vessels.

CompleteRadiators.    The Company custom designs, manufactures and sellsa wide range of heavy duty radiator models to meet customerspecifications. Certain of the Company’s radiators are soldunder the widely-recognized Ultra-Fused® brand name andthe Beta Weld® brand name, utilizing weldedtube-to-header core construction and are expressly engineered to meetcustomer specifications and withstand a variety of demanding customerapplications. The Company offers a line of more than 200 models ofcomplete truck radiators designed for the over-the – road market.The Company also has a line of tractor radiators which are designed tomeet the needs of customers marketing to the agricultural/farm market.The line has over 40 models and covers popular tractor models.Domestically, radiators are sold under the TruckToughTM and Tractor ToughTM brands. TheCompany also sells complete heavy duty radiators in Europe, Mexico andCentral America.

4

----

Radiator Cores.    Heavytruck and industrial radiator cores are constructed of extremelydurable components in order to meet the demands of the heavy dutycommercial marketplace. The Company domestically offers approximately8,500 models of heavy duty radiator cores to serve many different needsin a variety of markets. In addition, the Company produces‘‘special order’’ radiator cores upon requestfrom customers. A heavy truck or industrial radiator core is normallymuch larger than an automotive core and typically sells for three tofour times the price of an automotive core. The Company also sellsheavy duty radiator cores in Europe and in Mexico.

Charge Air Coolers.    The Company offers its heavyduty customers a wide range of custom-designed charge air coolermodels. A charge air cooler is a heat exchanger that is used to lowerthe temperature of air from a turbocharger that will be used in theengine combustion process, thus improving engine operating efficiencyand lowering emissions. The Company believes that the demand for chargeair coolers will continue to increase as the Company’s customersface increasing pressure to produce vehicles and equipment that aremore fuel efficient and less polluting. The Company has received fourU.S. patents and numerous foreign patents relating to its proprietaryUltra-Seal® grommeted charge air cooler. This productoffers significant improvements in performance and exceeds currentindustry guidelines for durability. The current line of complete chargeair coolers for the aftermarket has over 115 models available forsale.

Marine Products.    The Company’sNRF business unit in Europe distributes specialty coolers for OE marineinstallation

Financial Information About Industry Segments,Export Sales and Domestic and Foreign Operations

TheCompany operates in two business segments, domestic and international,in line with the geographic areas served. Applicable segment, productline and foreign operation information appears in Note 18 of the Notesto Consolidated Financial Statements contained in Item 8 of thisReport. Export sales from North America were below 10% of nettrade sales in the years ended December  31,  2005, 2004 and2003.

Customers

The Company sells its productsand services domestically to a wide variety and large number ofindustrial and commercial customers. The Company sells its automotiveand light truck products to national retailers of aftermarketautomotive products (such as AutoZone, Advance Auto Parts, Pep Boys,CSK and O’Reilly), warehouse distributors, radiator shops, hardparts jobbers (including Carquest, Aftermarket AutoParts Alliance andNAPA, the Automotive Parts Group of Genuine Parts Company) and othermanufacturers. In addition, as a result of the merger, the Companysells to more than 20,000 commercial customers through its 123 branchand agency locations located in the United States. The Company alsosupplies heavy duty heat exchange products to the heavy truck andindustrial equipment aftermarkets.

In Europe, CentralAmerica and Mexico, the Company services its customer base throughsales from its branch and manufacturing locations.

TheCompany’s largest customer is AutoZone, which accounted forapproximately 17%, 25% and 23% of net sales for2005, 2004 and 2003, respectively. In addition, Advance Auto Partsaccounted for approximately 13%, 17% and 14% ofnet sales for 2005, 2004 and 2003 respectively. No other customerindividually represented more than 10% of net trade sales in anyof the years reported. The loss of one of the major automotive andlight truck aftermarket customers indicated above or others could havea material adverse effect on the Company’s results ofoperations.

Sales and Marketing

The Companymaintains an in-house sales and marketing department to serve itsdomestic markets. By focusing its sales effort at the customer level,the Company enables its sales staff to develop a thorough understandingof technical and production capabilities and the overall market inwhich each customer operates. The Company has approximately 476individuals involved in sales and marketing 

5

----

efforts in the United States and Canada, whichincludes employees associated with our branch operations. The Companyalso utilizes independent manufacturers’ sales representativesto aid in its outside sales efforts in the aftermarket channels. Amajority of the Company’s domestic heat exchange sales aredistributed out of our warehouse located in Southaven, Mississippi,while air conditioning products are distributed from our warehouse inArlington, Texas. As a result of the merger, the Company also has 112branch and 11 agency sales locations through which it serves domesticcustomers. These branch locations stock products, take orders fromlocal customers, generally over the telephone or by fax, and supplyproduct to those customers through local deliveries.

InEurope there are 12 locations through which the Company’s 51sales and marketing people stock product, take orders from customersand distribute product to customers. The main European warehouse islocated in Mill, The Netherlands. In Mexico and Central America, thereare 9 locations through which orders are taken from customers andproduct is shipped to customers. The main warehouse is located inMexico City, Mexico.

Competition

The Companyfaces significant competition within each of the markets in which itoperates. In its domestic automotive and light truck heat exchangeproduct lines, the Company believes that it is among the majormanufacturers and that competition is widely distributed. The Companycompetes with the national producers of heat transfer products, such asVisteon, internal operations of the OEMs, offshore suppliers and, to alesser extent, local and regional manufacturers. In recent years, thedomestic heat exchange market has experienced a significant increase incompetitive pricing pressure, a changing customer base resulting infewer but larger customers and an increase in imports from China andother Asian countries. The Company’s primary competition in theair conditioning replacement parts business includes Four Seasons, adivision of Standard Motor Products, Visteon, offshore suppliers andnumerous regional operators. The domestic air conditioning market hasbeen influenced in recent years by excess customer inventory, anincrease in imports, improved original equipment manufacturer qualityand a shift in product demand from remanufactured to new compressors.The Company's principal methods of competition in the domesticmarkets are by emphasizing its product design, performance, price,customer service, warranty, product availability and timelydelivery.

The primary competitors in the domestic heavyduty aftermarket are regional manufacturers.

In Europe,Mexico and Central America, the Company faces competition fromaffiliates of the major automotive OEM’s and from automotiveaftermarket parts manufacturers located in the individualcountries.

Intellectual Property

The Companyowns a number of foreign and U.S. patents and trademarks. The patentsexpire on various dates from 2009 to 2019. In general, theCompany's patents cover certain of its radiator, heater, chargeair cooler and air conditioning accumulator manufacturing processes.The Company has entered into licensing and other agreements withrespect to certain patents, trademarks and manufacturing processes ituses in the operation of its business. The Company believes that itowns or has rights to all patents and other technology necessary forthe operation of its business. The Company does not consider any singlepatent or trademark or group of patents or trademarks to be material toits business as a whole.

Manufacturing

As aresult of the restructuring efforts undertaken during 2005 inconjunction with the merger, the Company has reduced the number oflocations where it produces product for the domestic automotive andlight truck marketplace. Production of copper/brass automotive andlight truck radiators previously performed in Emporia, Kansas, NuevoLaredo, Mexico and Mexpar’s Mexico City location is nowperformed only at the Company’s Mexpar Mexico City location.Aluminum radiators, 

6

----

previously produced in Emporia and NuevoLaredo are now produced only in Nuevo Laredo. Nuevo Laredo is also nowthe sole production location for copper/brass and aluminum heaters.Aluminum heaters were also previously produced in Buffalo, New York.The Company produces air conditioning parts at its facility located inArlington, Texas. There are currently 10 regional plant facilitieswhich produce heat exchange product for the domestic heavy dutyaftermarket.

In Europe, the main radiator manufacturingfacility is located in Mill, The Netherlands. There are also threeregional manufacturing facilities in Spain, England and France.

In addition to the copper/brass radiator manufacturing plantlocated in Mexico City, the Company also has four smaller regionalmanufacturing facilities in Mexico and El Salvador.

RawMaterials and Suppliers

The principal raw materials usedby the Company in its Automotive and Light Truck and Heavy Duty productlines are copper, brass and aluminum. Although copper, brass, aluminumand other primary materials are available from a number of vendors, theCompany has chosen to concentrate its sources with a limited number oflong-term suppliers. The Company believes this strategy results inpurchasing and operating economies. Outokumpu, a Swedish corporation,supplied the Company with approximately 100% of its copper andbrass requirements in 2005, 2004 and 2003, while the Company sourcedmost of its aluminum needs from Alcoa Inc. during the same periods. TheCompany has not experienced any significant supply problems for thesecommodities and does not anticipate any significant supply problems inthe foreseeable future.

The Company typically executespurchase orders for its anticipated copper and brass requirements threeto nine months prior to the actual delivery date. In periods ofabnormally high commodity market prices, the Company will place ordersonly for its current requirements. The purchase price for copper andbrass purchases is established at the time orders are placed by theCompany and not at the time of delivery. In the case of aluminumpurchases, the Company normally executes contracts up to three monthsprior to the actual delivery date and the purchase price is establishedat the time the purchase order is placed.

The Companypurchases some of its heat exchange and air conditioning productsutilizing supplier relationships with companies located in China andother Asian countries.

Backlog

The aftermarkettypically operates on a short lead time order basis. As such, backlogis not indicative of future overall sales levels.

Seasonality

The Company typically experiencesstronger second and third quarters and weaker first and fourth quartersdue to the seasonal, weather related fluctuations in sales volumes.Higher sales are reported during the spring and summer months, as thedemand for replacement radiators and air conditioning parts andsupplies increases, while lower sales levels are reported during thefall and winter months when only heater core products are insignificant demand.

Customer demand for heat exchange andair conditioning products is also influenced by weather. Extremes intemperatures, along with prolonged periods of hot and cold weatherincrease the need for replacement parts.

In recent years,the Company has also seen a change in the seasonality of ourcustomers’ buying habits. Previously customers would purchaseproduct from vendors prior to a selling season based upon theirestimated requirements. Now customers buy product in smaller quantitiescloser to the selling seasons, thus requiring vendors to potentiallycarry more inventory but nonetheless provide timely response tocustomer demands. This has added to the challenges associated withbeing an aftermarket parts supplier.

Research andDevelopment

Research and development expenses wereapproximately $0.2  million, $0.1  million and $0.3million in 2005, 2004 and 2003, respectively.

7

----

Employees

At December31,  2005, the Company had 2,275 employees. Of these employees,1,184 were covered by collective bargaining agreements. TheCompany’s collective bargaining agreements are independentlynegotiated at each manufacturing facility and expire on a staggeredbasis. Of the Company’s unionized employees, 69% areemployed at the Company’s Mexican plants and are represented bylocal Mexican labor unions, 28% are located in Europe, and theremainder are employed in the United States and are represented byseveral different labor unions. The Company has successfullyre-negotiated collective bargaining agreements over the last severalyears and feels labor relations are good, although there can be noassurance that the Company will not experience work stoppages in thefuture.

Environmental Matters

As is the casewith manufacturers of similar products, the Company uses certainhazardous substances in its operations, including certain solvents,lubricants, acids, paints and lead, and is subject to a variety ofenvironmental laws and regulations governing discharges to air andwater, the handling, storage and disposal of hazardous or solid wastematerials and the remediation of contamination associated with releasesof hazardous substances. These laws include the Resource Conservationand Recovery Act (as amended), the Clean Air Act (as amended), theClean Water Act of 1990 (as amended) and the ComprehensiveEnvironmental Response, Compensation and Liability Act (as amended).The Company believes that, as a general matter, its policies, practicesand procedures are properly designed to reasonably prevent risk ofenvironmental damage and financial liability to the Company. OnJanuary  27,  2003, the Company announced that it had signeda Consent Agreement with the State of Connecticut Department ofEnvironmental Protection. Under the agreement, the Company willvoluntarily initiate the investigation and cleanup of environmentalcontamination on property occupied by a wholly-owned subsidiary of theCompany over 20 years ago. The Company believes there will not be amaterial adverse impact to its financial results due to theinvestigation and cleanup activities. The Company also believes it isreasonably possible that environmental related liabilities might existwith respect to other industrial sites formerly owned or occupied bythe Company. Based upon information currently available, the Companybelieves that the cost of any potential remediation for which theCompany may ultimately be responsible will not have a material adverseeffect on the consolidated financial position, results of operation orliquidity of the Company.

In conjunction with the merger,Modine retained the environmental liability for environmentalremediation of soil and groundwater contamination at the facilitylocated in Mill, The Netherlands, which existed at the time of themerger. As part of the agreement to sell the Company’s HeavyDuty OEM business to Modine in March  2005, the Company retainedresponsibility for any environmental remediation which would resultfrom contamination existing on the date of the sale at theCompany’s former facility in Jackson, Mississippi, which wasincluded in the transaction.

The Company currently doesnot anticipate any material adverse effect on its consolidated resultsof operations, financial condition or competitive position as a resultof compliance with federal, state, local or foreign environmental lawsor regulations. However, risk of environmental liability and chargesassociated with maintaining compliance with environmental laws isinherent in the nature of the Company's business, and there is noassurance that material environmental liabilities and compliancecharges will not arise.

Available Information

The Company periodically files reports with the Securitiesand Exchange Commission. Copies of any filing may be obtained at nocharge by visiting the Company’s website atwww.pliii.com, the SEC’s website atwww.sec.gov or by writing to Investor Relations Department,Proliance International, Inc., 100 Gando Drive, New Haven, Connecticut06513.

Item 1A.    Risk Factors

Our businessis subject to a number of risks, some of which are discussed below.Other risks are presented elsewhere in this report and in theinformation incorporated by reference into this report. 

8

----

You should carefully consider the followingrisks in addition to the other information contained in this report andour other filings with the SEC, including our subsequent reports onForms 10-Q and 8-K, before deciding to buy, sell or hold our commonstock. The risks and uncertainties described below are not the onlyones facing the Company. Additional risks and uncertainties notpresently known to us or that we currently deem immaterial may alsoaffect our business operations. Any of these risks could materially andadversely affect the Company's business, financial condition andresults of operations, which in turn could materially and adverselyaffect the price of the Company's common stock.

Ourbusiness is impacted by customer concentration.

TheCompany's largest customers are AutoZone, which accounted forapproximately 17%, 25% and 23% of net sales for2005, 2004 and 2003, respectively and Advance Auto Parts, whichaccounted for approximately 13%, 17% and 14% ofnet sales for 2005, 2004 and 2003 respectively. The sale of theCompany’s OEM business during 2005 in order to becomepredominantly an aftermarket-focused company has increased its relianceon major retail customers. The loss of one of the major retailcustomers indicated above could have a material adverse effect on theCompany's results of operations. In addition, if one or more ofthe Company’s major customers were to initiate bankruptcy orinsolvency proceedings, it could render a material portion of theCompany’s accounts receivable uncollectible or substantiallyimpaired, which could have a material adverse effect on theCompany’s financial condition.

We are facing ongoingcompetitive pricing pressure.

The Company hasexperienced ongoing pressure from its customers to reduce the prices itcharges for its products. This is the result of a number of industrytrends, including the impact of offshore suppliers in the marketplace,the consolidated purchasing power of large customers and actions takenby some of our competitors in an effort to ‘‘winover’’ new business. To the extent this pricing pressurecontinues, it may impact the Company’s operating margins, whichcould have a material adverse effect on the Company’s financialcondition. In addition, this pricing pressure makes it more difficultto pass along to customers the effects of rising commodity costs facingthe Company.

We operate in a mature and highly competitiveindustry.

The principal markets in which theCompany competes are relatively mature, and future significantincreases in the Company's revenues will continue to be dependentupon the Company's ability to increase market share in the marketsin which it competes. As a result, the Company's ability toincrease its unit volume is largely dependent upon its ability todisplace sales currently made by its competitors. The Company cannotpredict whether it will be able to increase its market share in themarkets in which it competes.

The Company facessignificant competition within each of the markets in which itoperates. Some of the Company's competitors are divisions oflarger companies and some are independent companies. In its automotiveand light truck heat exchange product lines, the Company believes thatit is among the major North American aftermarket manufacturers and thatcompetition is widely distributed. The Company competes with nationalproducers of heat transfer products, internal operations of the OEMs,offshore suppliers and, to a lesser extent, local and regionalmanufacturers. The Company's primary competition in the airconditioning replacement parts business includes national producers,offshore suppliers and numerous regional operators. The Company'sprincipal methods of competition include product design, performance,price, customer service, warranty, product availability and timelydelivery. Some of the Company's competitors may enjoy economicadvantages such as lower labor and health care costs. Increasedcompetition may result in price reductions, reduced gross margins orloss of market share, any of which could seriously harm theCompany’s business, financial condition and results ofoperations.

We are subject to market risks regarding rawmaterials.

Most of the Company’s productsrequire the use of copper, brass or aluminum. Although copper, brass,aluminum and other primary materials are available from a number ofvendors, the Company 

9

----

has chosen to concentrate its sources with alimited number of long-term suppliers. If a supply problem were tooccur, it could have a material adverse effect on the Company’sfinancial condition. In addition, certain risks may arise in thevarious commodity markets in which the Company participates. Commodityprices in the copper, brass and aluminum markets are subject to changesbased on availability and other factors outside the Company’scontrol. Copper, brass and aluminum prices have risen substantially inthe past several years, and the Company has been generally unable topass through price increases to its customers in the automotive andlight truck aftermarket. Continued commodity price increases could havea material adverse effect on the Company’s results of operationsand financial condition.

Our business is dependent onoverall economic factors beyond our control.

Theoverall demand for aftermarket automotive and light truck parts isclosely correlated to overall miles driven by vehicle users. Therefore,a substantial increase in fuel prices or a general economic slowdowncould adversely impact the demand for the Company’s products.Concerns about inflation, decreased consumer confidence, reducedcorporate profits and capital spending, and recent internationalconflicts and terrorist and military actions may result in a downturnin worldwide economic conditions, particularly in the United States.These unfavorable economic conditions may have a negative impact oncustomer buying habits and market trends. If overall market conditionsworsen, the Company’s business, financial condition and resultsof operations may be materially and adversely affected.

We may have difficulties integrating the acquiredbusiness of Modine Aftermarket Holdings, Inc. into theCompany.

The Company faces risks related to therecently completed merger, pursuant to which Modine AftermarketHoldings, Inc. (the ‘‘Modine AftermarketBusiness’’), a former subsidiary of Modine ManufacturingCompany (‘‘Modine’’), merged with and into theCompany.

The Company’s failure to integrate theModine Aftermarket Business into its operations successfully and in atimely manner could reduce the Company's profitability. Themerger, completed on July  22,  2005, involved theintegration of businesses that previously have operated separately. TheCompany expects that the merger will result in efficiencies, businessopportunities and new prospects for growth. However, although many ofthe integration tasks have been completed, it is possible that theCompany may not realize portions of the expected efficiencies, businessopportunities and growth prospects, or that therestructuring/implementation costs could be underestimated, due to:

|  |              |                                                                  |
|--|--------------|------------------------------------------------------------------|
|  | •  | The risk that the businesses willnot be integrated successfully; |

|  |              |                                                                                                                                                    |
|--|--------------|----------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | The risk that the cost savingsand any revenue synergies from the transaction may not be fullyrealized or may take longer to realize than expected; |

|  |              |                                                                                                                        |
|--|--------------|------------------------------------------------------------------------------------------------------------------------|
|  | •  | Disruption from the transactionmaking it more difficult to maintain relationships with clients,employees or suppliers; |

|  |              |                                              |
|--|--------------|----------------------------------------------|
|  | •  | Thetransaction may involve unexpected costs; |

|  |              |                                                                                                  |
|--|--------------|--------------------------------------------------------------------------------------------------|
|  | •  | Increased competition and itseffect on pricing, spending, third-party relationships andrevenues; |

|  |              |                                                                         |
|--|--------------|-------------------------------------------------------------------------|
|  | •  | The risk of new andchanging regulation in the U.S. and internationally; |

|  |              |                                                                                                       |
|--|--------------|-------------------------------------------------------------------------------------------------------|
|  | •  | The possibility thatProliance’s historical businesses may suffer as a result of thetransaction. |

If these factors limit the Company'sability to integrate the operations of the Modine Aftermarket Businesssuccessfully or in a timely manner, the Company may not meetexpectations for future synergy savings.

We are subject torisks relating to outsourcing.

The Companyoutsources certain of its operating functions to third parties andrelies on those third parties to provide products and services on atimely and effective basis. Although the Company 

10

----

closely monitors the performance of thesethird parties and maintains back-up plans in case third parties areunable to perform as agreed, the Company does not ultimately controlthe performance of its outsourcing partners. The failure of third-partyoutsourcing partners to perform as expected or as required by contractcould have a material adverse effect on the Company’s ability toproperly carry-out its business functions on a correct and timelybasis.

We have takeover defense provisions that may inhibitan acquisition of the Company.

The Company hascertain anti-takeover measures that may affect the market price of theCompany's common stock. The Company's certificate ofincorporation, its by-laws and Delaware law contain several provisionsthat would make more difficult an acquisition of control of the Companyin a transaction not approved by the Company's board of directors.The Company's certificate of incorporation and by-laws includeprovisions such as:

|  |              |                                                                                                                                                                                                                                                                                                                                                                                                                         |
|--|--------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | Thedivision of the Company's board of directors into three classes,including related provisions (1) providing that vacancies on the boardmay only be filled by remaining board members and directors may only beelected at annual meetings or removed for cause and (2) requiring avote of holders of 80% of the Company's voting stock toamend the classified board and related provisions or to remove adirector; and |

|  |              |                                                                                                                                                      |
|--|--------------|------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | The ability ofthe Company's board of directors to issue shares of preferredstock in one or more series without further authorization ofshareholders. |

The classified board and related provisionsdescribed above will expire automatically at the 2009 annualshareholders meeting, and all directors will be elected for one-yearterms beginning with that meeting, including directors whose termsotherwise would have expired after that meeting.

We aresubject to interest rate and foreign currency risks.

The Company's interest expense is sensitive to changesin interest rates. At December  31,  2005, the Company had aLoan Agreement, under which $40.4  million was outstanding. Theweighted average interest rate on the Loan Agreement during 2005 was5.85%. Interest on the Loan Agreement is based on, at theCompany's option, the Eurodollar loan rate plus a Eurodollarmargin or the prime rate. The Eurodollar margin for the periodJuly  21,  2005 through April  21,  2006 is2% while thereafter it is between 1.75% and 2.25%.Factors outside of the Company’s control result in changes inboth the Eurodollar loan rate and the prime rate.

TheCompany has sales and manufacturing facilities in Europe and Mexico. Asa result, changes in the foreign currency exchange rates and changes inthe economic conditions in Europe and Mexico could affect theCompany’s financial results.

Our business could besubject to environmental liabilities.

As is thecase with manufacturers of similar products, the Company uses certainhazardous substances in its operations. The Company currently does notanticipate any material adverse effect on its consolidated results ofoperations, financial condition or competitive position as a result ofcompliance with Federal, state, local or foreign environmental laws orregulations; however, the risk of environmental liability and chargesassociated with maintaining compliance with environmental laws isinherent in the nature of the Company’s business, and there isno assurance that material environmental liabilities and compliancecharges will not arise in the future.

We could be subjectto material legal proceedings.

Various legalactions are pending against or involve the Company in the ordinarycourse of business with respect to such matters as product liability,casualty, environmental and employment-related claims. While none ofthe pending actions of this nature are material, there can be noassurance a material action arising in the ordinary course of businesswill not be asserted in the future. In addition, pursuant to anAgreement and Plan of Merger dated July  23,  1998 (the‘‘Purchase 

11

----

Agreement’’), the Companyacquired from Paul S. Wilhide (‘‘Wilhide’’) allof the common stock of EVAP, Inc. The consideration for thistransaction was a payment of $3  million in cash, the issuance of30,000 shares of the Company's Series B Convertible RedeemablePreferred Stock (the ‘‘Convertible Shares’’),and the potential for an ‘‘earn-out’’ paymentto Wilhide based on a calculation relating to EVAP's performanceduring the years 1999 and 2000. There is presently a dispute betweenthe Company and Wilhide relating to the calculation of the earn-out.Wilhide claims that the value of his earn-out is $3.75  million,while the Company believes that Wilhide is not entitled to anyearn-out. Under the payout formula in the Purchase Agreement, anyearn-out, which would include interest, may be payable to Wilhide incash. The Purchase Agreement includes an arbitration provision and thearbitration is currently proceeding before an arbitrator in Ft. Worth,Texas. While the arbitration schedule has not been finalized, it isanticipated that the arbitration hearing will occur and a decision willbe rendered in 2006. The Company is vigorously defending this matter.Depending on the amount and timing, an unfavorable resolution of thismatter could materially affect the Company's consolidatedfinancial position, future operations or cash flows in a particularperiod. The ultimate outcome at this time, however, is unknown.

Some of our activities may be restricted by the tax impact ofthe recent merger with the Modine Aftermarket Business.

Under applicable federal income tax rules, if the Companytakes certain actions within two years following completion of themerger, the spin-off of the Modine Aftermarket Business could result ina taxable event to Modine. If the Company were to take action thatwould result in the spin-off or the merger becoming taxable, theCompany would be required to indemnify Modine for the amount of anyresulting income tax to Modine under the terms of a tax sharingagreement entered into by the Company, Modine Aftermarket Holdings andModine. In order to avoid this potential liability, the Company agreed,in the tax sharing agreement, that it would not take actions that areinconsistent with the Company’s factual statements orrepresentations made in its representations letter to Modine inconnection with the IRS rulings or that cause the spin-off to becometaxable to Modine without obtaining either an unqualified opinion of anindependent nationally recognized tax counsel that such actions willnot cause the spin-off to become taxable or Modine's consent.

Changes in laws and regulations that affect the governance ofpublic companies have increased our operating expenses and willcontinue to do so.

Changes in the laws andregulations affecting public companies included in the Sarbanes-OxleyAct of 2002 have imposed new duties on us and on our executives,directors, attorneys and independent registered public accounting firm.In order to comply with these new rules, we have internally added staffpositions and hired a consulting advisory firm to assist us in theprocess, and we also expect to use additional services of our outsidelegal counsel, all of which will increase our operating expenses. Inparticular, we expect to incur additional administrative expenses as weimplement Section 404 of the Sarbanes-Oxley Act, which requiresmanagement to report on, and our independent registered publicaccounting firm to attest to, our internal controls. For example, weexpect to incur significant expenses in connection with theimplementation, documentation and testing of our existing controlsystems and possible establishment of new controls and systems.Management time associated with these compliance efforts necessarilyreduces time available for other operating activities, which couldadversely affect operating results. If we are unable to achieve fulland timely compliance with these regulatory requirements, we could berequired to incur additional costs, expend additional management timeon remedial efforts and make related public disclosures that couldadversely affect our stock price.

We are subject to risksrelated to future liquidity.

The future liquidityand ordinary capital needs of the Company in the short term areexpected to be met from a combination of cash flows from operations andborrowings under the loan agreement with its bank lenders. However, theCompany’s future cash flow may be impacted by a number offactors, including failure to meet financial covenants under its loanagreement, industry trends lengthening 

12

----

customer payment terms or the discontinuanceof currently utilized customer sponsored payment programs. Changes inpayment terms to one or more major suppliers could also have a materialadverse effect on the Company’s results of operations and futureliquidity. The Company currently utilizes customer-sponsored programsadministered by financial institutions in order to accelerate thecollection of funds and offset the impact of these lengthening customerpayment terms. However, there can be no assurance that theCompany’s customers will continue to make these programsavailable. In addition, the Company believes that the amount ofborrowings available under its loan agreement would not be sufficientto meet the capital needs for major growth initiatives, such assignificant acquisitions. If the Company were to implement major newgrowth initiatives, it would have to seek other sources or forms ofcapital. No assurance can be given that the Company would be successfulin securing such additional sources or forms of capital.

Item1B.    Unresolved Staff Comments

Not applicable.

Item 2.    Properties

The Company maintains itscorporate headquarters in New Haven, Connecticut and conducts itsoperations through the following principal facilities:

|                          |  |                          |  |              |  |                                                                                                 |  |                 |  |  |  |  |  |  |  |  |  |  |
|--------------------------|--|--------------------------|--|--------------|--|-------------------------------------------------------------------------------------------------|--|-----------------|--|--|--|--|--|--|--|--|--|--|
| Location                 |  | ApproximateSquareFootage |  | Owned/Leased |  | Product Line and Use                                                                            |  | LeaseExpiration |
| Southaven,Mississippi(1) |  | 520,000                  |  | Leased       |  | Distribution andwarehouse for heat exchange products                                            |  | 2009            |
| Mill, The Netherlands    |  | 274,380                  |  | Owned        |  | Office and manufacturing, distribution and warehouse for heatexchange products                  |  | —         |
| Nuevo Laredo,Mexico      |  | 180,328                  |  | Leased       |  | Manufacturing of heatexchange products                                                          |  | 2012            |
| Arlington, Texas         |  | 175,000                  |  | Leased       |  | Manufacturing ofremanufactured air conditioning compressors, air conditioning parts andsupplies |  | 2012            |
| Mexico City, Mexico      |  | 129,120                  |  | Owned        |  | Office and manufacturing,distribution and warehouse for heat exchange products                  |  | —         |
| Laredo, Texas            |  | 60,000                   |  | Leased       |  | Warehouse of heat exchange products, manufacturingof tubes for aftermarket radiators            |  | 2009            |
| Dallas, Texas            |  | 50,100                   |  | Leased       |  | Manufacturing of heavy duty heat exchange products                                              |  | 2007            |
| New Haven, Connecticut   |  | 44,000                   |  | Leased       |  | Corporate headquarters and test facility                                                        |  | 2009            |
|                          |

|  |
|--|
|  |  |
|  |

|     |                                                                                                                                                                                                                                                                                         |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (1) | Duringthe first quarter of 2005, the Company decided to relocate its 234,200square foot Memphis, Tennessee distribution center into a new 520,000square foot facility located in Southaven, Mississippi. The lease forthe Memphis facility was terminated without any terminationcosts. |

The Company believes its property andequipment are in good condition and suitable for its needs. The Companyhas sufficient capacity to increase production with respect to itsreplacement radiator product lines and its air conditioning replacementparts business. Domestically, the Company maintains a nationwidenetwork of 112 branch locations, which generally enable the Company toprovide its customers with same day delivery service. The Company alsodomestically serves the heavy duty aftermarket through ten regionalmanufacturing plants. A majority of these branch and plant facilitiesare leased and vary in size from 6,000 square feet to 30,000 squarefeet. Internationally, the Company maintains a network of owned andleased facilities to serve those markets. Information about long-termlease commitments appears in Note 16 of the Notes to ConsolidatedFinancial Statements contained in Item 8 of this Report.

13

----

Item 3.    Legal Proceedings

Various legal actions are pending against or involve theCompany in the ordinary course of business with respect to such mattersas product liability, casualty, environmental and employment-relatedclaims.

Pursuant to an Agreement and Plan of Merger datedJuly  23,  1998 (the ‘‘PurchaseAgreement’’), the Company acquired from Paul S. Wilhide(‘‘Wilhide’’) all of the common stock of EVAP,Inc. The consideration for this transaction was a payment of $3million in cash, the issuance of 30,000 shares of the Company’sSeries B Convertible Redeemable Preferred Stock (the‘‘Convertible Shares’’), and the potential foran ‘‘earn-out’’ payment to Wilhide based on acalculation relating to EVAP’s performance during the years 1999and 2000. There is presently a dispute between the Company and Wilhiderelating to the calculation of the earn-out. Wilhide claims that thevalue of his earn-out is $3.75  million, while the Companybelieves that Wilhide is not entitled to any earn-out. Under the payoutformula in the Purchase Agreement, any earn-out may be payable toWilhide in cash. The Purchase Agreement includes an arbitrationprovision and the arbitration is currently proceeding before anarbitrator in Ft. Worth, Texas. While the arbitration schedule has notbeen finalized, it is anticipated that the arbitration hearing willoccur, and a decision will be rendered during 2006. The Company intendsto vigorously defend this matter. Depending on the amount and timing,an unfavorable resolution of this matter could materially affect theCompany’s consolidated financial position, future operations orcash flows in a particular period. The ultimate outcome at this time,however, is unknown.

Item 4.    Submission of Matters to aVote of Security Holders

No matters were submitted to avote of security holders during the fourth quarter of the year endedDecember  31,  2005.

14

----

Executive Officers of theRegistrant:

|                       |  |     |  |                         |  |                                                                                                                                                                                                                                                                                                          |  |  |  |  |  |  |  |  |
|-----------------------|--|-----|--|-------------------------|--|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--|--|--|--|--|--|--|--|
| Name                  |  | Age |  | Served as Officer Since |  | Position or Office with theCompany & Business Experience During Past Five-YearPeriod                                                                                                                                                                                                                 |
| Charles E. Johnson    |  | 60  |  | March  2001             |  | President, Chief Executive Officer andDirector of Proliance International, Inc., since 2001; Chief ExecutiveOfficer and Director of Canadian General-Tower, Ltd., 1997 through 2001and, from 1996 President and Director; President and Chief OperatingOfficer of Equion Corporation, 1993 through 1996. |
| Jeffrey L. Jackson    |  | 58  |  | August  1995            |  | Vice President, Human Resources and Process of ProlianceInternational, Inc., since July  2001; Vice President, HumanResources of Proliance International, Inc., 1995 to July2001.                                                                                                                        |
| Richard A. Wisot      |  | 60  |  | June  2001              |  | Vice President, Treasurer, Secretary andChief Financial Officer of Proliance International, Inc. since 2001;Vice President, Treasurer and Chief Financial Officer of Ecoair Corp.,1997 through 2001; Vice President, Controller, Chief Accounting Officerof Echlin Inc., 1990 through 1996.              |
| David J.Albert        |  | 58  |  | June  2001              |  | Executive VicePresident, Operations, of Proliance International, Inc., effectiveMarch, 2005; Vice President, Operations of Proliance International,Inc., 2001 to March  2005; President and Chief Executive Officerof Hayden Industrial Products from 1996 through 2000.                                 |
| Kenneth T. Flynn, Jr. |  | 56  |  | September  2001         |  | Vice President and CorporateController of Proliance International, Inc. since 2001; Consultant,1999 through 2000; Vice President and Corporate Controller of EchlinInc., 1997 through 1999; Assistant Corporate Controller of Echlin Inc.,1985 through 1997.                                             |
|                       |

All officers are electedby the Board of Directors.

15

----

PART II

Item 5.    Market for Registrant's Common Equity, RelatedStockholder Matters and Issuer Purchases of Equity Securities

The Company's common stock is traded on the AmericanStock Exchange. The number of beneficial holders of the Company'scommon stock as of the close of business on March  10,  2006,was approximately 11,600. Information regarding per share market pricesfor the Company’s common stock is shown below for 2005 and 2004.Market prices are the daily high and low sales prices quoted on theAmerican Stock Exchange (AMEX).

|                              |  |                              |        |             |  |             |        |             |  |        |        |        |  |        |        |        |  |  |
|------------------------------|--|------------------------------|--------|-------------|--|-------------|--------|-------------|--|--------|--------|--------|--|--------|--------|--------|--|--|
|                         |  | Year Ended December31,  2005 |
|                         |  | 1st Quarter                  |        | 2nd Quarter |  | 3rd Quarter |        | 4th Quarter |
| Market priceof common stock: |  |                         |   |        |  |        |   |        |  |   |   |   |  |   |   |   |
| High                         |  | $                            | 8.20   |        |  | $           | 7.94   |        |  | $      | 6.90   |   |  | $      | 5.75   |   |
| Low                          |  | $                            | 5.85   |        |  | $           | 6.02   |        |  | $      | 5.35   |   |  | $      | 4.80   |   |
|                              |

|                              |  |                              |        |             |  |            |        |             |  |        |        |        |  |        |        |        |  |  |
|------------------------------|--|------------------------------|--------|-------------|--|------------|--------|-------------|--|--------|--------|--------|--|--------|--------|--------|--|--|
|                         |  | Year Ended December31,  2004 |
|                         |  | 1stQuarter                   |        | 2nd Quarter |  | 3rdQuarter |        | 4th Quarter |
| Market price of commonstock: |  |                         |   |        |  |       |   |        |  |   |   |   |  |   |   |   |
| High                         |  | $                            | 5.15   |        |  | $          | 7.00   |        |  | $      | 6.06   |   |  | $      | 6.75   |   |
| Low                          |  | $                            | 3.90   |        |  | $          | 4.82   |        |  | $      | 4.79   |   |  | $      | 5.00   |   |
|                              |

The Company discontinued itsquarterly common stock cash dividend in September  2000. Under theprovisions of the Loan and Security Agreement with Congress FinancialCorporation (New England) ("Loan Agreement")entered into on January  4,  2001, as amended, the Companymay pay common stock dividends and redeem common shares up to$3.0  million annually, so long as excess availability, as definedin the agreement, is at least $18.0  million for the 30consecutive days both prior to and following the payment date.

16

----

Item 6.    Selected FinancialData

The following selected financial data should beread in conjunction with ‘‘Item 7-Management’sDiscussion and Analysis of Financial Condition and Results ofOperations’’ and ‘‘Item 8-Financial Statementsand Supplementary Data.’’ The Company sold its Heavy DutyOEM business unit on March  1,  2005. Results of operationsof this business prior to its sale date have been shown as income fromdiscontinued operation in the consolidated financial statements.

|                                                       |  |                                  |         |         |  |        |         |         |  |        |         |         |  |        |         |         |  |        |         |         |  |  |
|-------------------------------------------------------|--|----------------------------------|---------|---------|--|--------|---------|---------|--|--------|---------|---------|--|--------|---------|---------|--|--------|---------|---------|--|--|
|                                                  |  | Year Ended December31,           |
|                                                  |  | 2005                             |         | 2004    |  | 2003   |         | 2002    |  | 2001   |
|                                                  |  | (in thousands, except sharedata) |
| Statement of operationsdata:(1)                       |  |                             |    |    |  |   |    |    |  |   |    |    |  |   |    |    |  |   |    |    |
| Netsales                                              |  | $                                | 296,838 |    |  | $      | 218,433 |    |  | $      | 198,862 |    |  | $      | 198,765 |    |  | $      | 173,390 |    |
| Grossmargin(2)                                        |  |                             | 49,408  |    |  |   | 43,858  |    |  |   | 34,464  |    |  |   | 42,454  |    |  |   | 29,427  |    |
| Restructuring and other special charges               |  |                             | 3,854   |    |  |   | — |    |  |   | 1,490   |    |  |   | 1,334   |    |  |   | 3,632   |    |
| (Loss) income from continuingoperations               |  |                             | (27,731 | )  |  |   | (349    | )  |  |   | (5,307  | )  |  |   | 5,200   |    |  |   | (16,127 | )  |
| Income (loss)from discontinued operations, net of tax |  |                             | 848     |    |  |   | 5,527   |    |  |   | 771     |    |  |   | 1,459   |    |  |   | (4,711  | )  |
| Gain on sale of discontinued operation, net of tax    |  |                             | 3,899   |    |  |   | — |    |  |   | — |    |  |   | — |    |  |   | — |    |
| Extraordinary item –negative goodwill           |  |                             | 13,053  |    |  |   | — |    |  |   | — |    |  |   | — |    |  |   | — |    |
| Cumulative effect of accounting change, net of tax    |  |                             | — |    |  |   | — |    |  |   | — |    |  |   | (4,671  | )  |  |   | — |    |
| Net (loss) income                                     |  | $                                | (9,931  | )  |  | $      | 5,178   |    |  | $      | (4,536  | )  |  | $      | 1,988   |    |  | $      | (20,838 | )  |
| Basic(loss) income per commonshare:                   |  |                             |    |    |  |   |    |    |  |   |    |    |  |   |    |    |  |   |    |    |
| Continuingoperations                                  |  | $                                | (2.59   | )  |  | $      | (0.06   | )  |  | $      | (0.76   | )  |  | $      | 0.73    |    |  | $      | (2.45   | )  |
| Discontinuedoperations                                |  |                             | 0.08    |    |  |   | 0.78    |    |  |   | 0.11    |    |  |   | 0.21    |    |  |   | (0.72   | )  |
| Gain on sale of discontinuedoperation                 |  |                             | 0.36    |    |  |   | — |    |  |   | — |    |  |   | — |    |  |   | — |    |
| Extraordinaryitem – negative goodwill           |  |                             | 1.22    |    |  |   | — |    |  |   | — |    |  |   | — |    |  |   | — |    |
| Cumulative effect of accounting change                |  |                             | — |    |  |   | — |    |  |   | — |    |  |   | (0.67   | )  |  |   | — |    |
| Net (loss) income                                     |  | $                                | (0.93   | )  |  | $      | 0.72    |    |  | $      | (0.65   | )  |  | $      | 0.27    |    |  | $      | (3.17   | )  |
| Diluted (loss) income percommonshare(3):              |  |                             |    |    |  |   |    |    |  |   |    |    |  |   |    |    |  |   |    |    |
| Continuingoperations                                  |  | $                                | (2.59   | )  |  | $      | (0.06   | )  |  | $      | (0.76   | )  |  | $      | 0.73    |    |  | $      | (2.45   | )  |
| Discontinuedoperations                                |  |                             | 0.08    |    |  |   | 0.78    |    |  |   | 0.11    |    |  |   | 0.21    |    |  |   | (0.72   | )  |
| Gain on sale of discontinuedoperation                 |  |                             | 0.36    |    |  |   | — |    |  |   | — |    |  |   | — |    |  |   | — |    |
| Extraordinaryitem    negative goodwill      |  |                             | 1.22    |    |  |   | — |    |  |   | — |    |  |   | — |    |  |   | — |    |
| Cumulative effect of accounting change                |  |                             | — |    |  |   | — |    |  |   | — |    |  |   | (0.66   | )  |  |   | — |    |
| Net (loss) income                                     |  | $                                | (0.93   | )  |  | $      | 0.72    |    |  | $      | (0.65   | )  |  | $      | 0.28    |    |  | $      | (3.17   | )  |
| Cash dividends per common share                       |  | $                                | — |    |  | $      | — |    |  | $      | — |    |  | $      | — |    |  | $      | — |    |
| Balance sheetdata(4):                                 |  |                             |    |    |  |   |    |    |  |   |    |    |  |   |    |    |  |   |    |    |
| Workingcapital(5)                                     |  | $                                | 68,504  |    |  | $      | 25,358  |    |  | $      | 23,028  |    |  | $      | 32,807  |    |  | $      | 31,505  |    |
| Total assets                                          |  | $                                | 217,339 |    |  | $      | 149,859 |    |  | $      | 157,178 |    |  | $      | 160,966 |    |  | $      | 129,683 |    |
| Long-term debt                                        |  | $                                | 2,228   |    |  | $      | 120     |    |  | $      | 1,306   |    |  | $      | 7,267   |    |  | $      | 7,998   |    |
| Total debt                                            |  | $                                | 41,933  |    |  | $      | 44,024  |    |  | $      | 50,944  |    |  | $      | 59,596  |    |  | $      | 37,663  |    |
| Stockholders’ equity                            |  | $                                | 87,249  |    |  | $      | 46,835  |    |  | $      | 43,620  |    |  | $      | 48,238  |    |  | $      | 48,965  |    |
|                                                       |

|  |
|--|
|  |  |
|  |

|     |                                                                                                |
|-----|------------------------------------------------------------------------------------------------|
| (1) | Certainprior period amounts have been reclassified to conform to the currentyear presentation. |

|     |                                                                                                                                   |
|-----|-----------------------------------------------------------------------------------------------------------------------------------|
| (2) | Gross margin includes$0.4  million, $0.5  million and $0.9  million ofrestructuring charges in 2005, 2002 and 2001, respectively. |

|     |                                                                                                                                                                                                                                                                                                             |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (3) | During 2005, 2004,2003 and 2001, the weighted average number of shares of common stockoutstanding used for basic earnings per share was also used incomputing diluted earnings per share due to the anti-dilutive impact ofcommon share equivalents on the loss per common share from continuingoperations. |

|     |                              |
|-----|------------------------------|
| (4) | As of the end of eachperiod. |

|     |                                                                                                                                                                     |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (5) | Working capitalrepresents the excess of current assets over current liabilities.Borrowings under the Revolving Credit facility are reflected as currentliabilities. |

17

----

Item 7.    Management'sDiscussion and Analysis of Financial Condition and Results ofOperations

Introduction

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

As a result of the mergerwith Modine Aftermarket Holdings, Inc. on July  22,  2005,the Company is organized into two segments based upon the geographicarea served – Domestic and International. The Domestic segmentincludes sales to customers located in the United States and Canada,while the International segment includes sales to customers located inMexico, Europe and Central America. Management evaluates theperformance of its reportable segments based upon operating income(loss) before taxes as well as cash flow from operations which reflectsoperating results and asset management.

In order toevaluate market trends and changes, management utilizes a variety ofeconomic and industry data including miles driven by vehicles, averageage of vehicles, gasoline usage and pricing and automotive and lighttruck vehicle population data. In addition, we also utilize Class 7 and8 truck production data and industrial and off-highway equipmentproduction data.

Management looks to grow the businessthrough a combination of internal growth, including the addition of newcustomers and new products, and strategic acquisitions. OnFebruary  1,  2005, the Company announced that it had signeddefinitive agreements, subject to customary closing conditionsincluding shareholders’ approval, providing for the merger ofModine Aftermarket into the Company and Modine’s acquisition ofthe Company’s Heavy Duty OEM business unit. Note 5 of the Notesto Consolidated Financial Statements contained in this Form 10-K,describes the merger with the Aftermarket business of Modine which wascompleted on July  22,  2005. The transaction will likelyincrease the Company’s 2006 consolidated annual sales to over$400  million and adds manufacturing and distribution locations inthe U.S., Europe, Mexico and Central America. In addition, the Companywill now be focused predominantly on supplying heating and coolingcomponents and systems to the automotive and heavy duty aftermarkets inNorth and Central America and Europe. As a result of this transaction,the Company has a stronger balance sheet and is better positioned toface the market challenges of the future. In conjunction with themerger, the Company’s name was changed from Transpro, Inc. toProliance International, Inc. The Company had also announced that, inconjunction with the merger, it was undertaking a restructuringprogram, which was expected to total $10  million to $14million of restructuring costs over the next 12 to 18 months and wouldgenerate savings in excess of $30  million on an annualized basis,when completed. These costs will include restructuring costs charged tooperations, restructuring costs accrued on the acquisition balancesheet and integration costs charged to operations. Approximately $10.5million was spent or committed during 2005. The Company has acted toaccelerate as many restructuring activities as possible into a shortertime frame and has worked to add additional actions to help offsetunfavorable market conditions. At this time the Company anticipatesthat most activities will be completed by mid 2006 and that the fullyear 2007 impact will be $45  million to $48  million. Ofthis, approximately $3  million was realized in 2005 and anadditional $37  million is anticipated in 2006. These savings willbe offset in part by rising commodity costs and continued competitiveprice pressure.

As discussed in Note 4 of the Notes toConsolidated Financial Statements contained in this Form 10-K, theCompany completed the sale of its Heavy Duty OEM Business to ModineManufacturing Company on March  1,  2005 for $17.0million in cash. The gain from the sale of the business of $6.2million before taxes of $2.3  million has been included in theoperating results for the year ended December  31,  2005.Operating results of the Heavy Duty OEM business unit for periods priorto the sale are shown as a discontinued operation in the ConsolidatedStatement of Operations included herein. The proceeds from the salewere utilized to reduce outstanding borrowings under theCompany’s revolving credit and term loan agreements and fundoperations.

18

----

In early 2005, prior to the closingof the Modine Aftermarket merger, the Company commenced certain costreduction activities with the opening of a new distribution facility inSouthaven, Mississippi and the related closure of two warehousinglocations and a return goods facility in Memphis, Tennessee. Inaddition, the Company closed its aluminum heater manufacturing plant inBuffalo, New York, and relocated this production to an existingfacility in Mexico.

Results of Operations

Comparisonof Year Ended December  31,  2005 to 2004

Netsales from continuing operations for the year ended December31,  2005 of $296.8  million were $78.4  million or35.9% above the $218.4  million in 2004. The 2005 resultsincluded $68.9  million of sales by businesses acquired fromModine for the period July  22,  2005 through the end of theyear and $227.9  million of sales by historical Proliance businessunits. Domestic automotive and light truck heat exchange product salesduring 2005 were $186.8  million, including $27.2  millionresulting from the business acquired in the Modine Aftermarket merger,compared to $164.8  million in 2004. While unit volumes wereadversely impacted by changes in customer buying habits and a shorterthan normal selling season due to weather conditions, heat exchangeproduct sales were also lowered by the impact of continuing competitivepricing pressures. These pricing pressures, which result in the Companylowering average selling prices, are expected to have an impact onresults in 2006 as well. In the domestic temperature control productlines, sales were $39.1  million in 2005 compared to $20.5million in 2004 reflecting $9.2  million from the businessesacquired in the Modine Aftermarket merger, combined with increasedsales volume primarily attributable to a new customer added in 2005.Demand for both automotive and light truck heat exchange andtemperature control products in 2005 was impacted by‘‘flat’’ miles driven statistics compared to2004, the first time that this has been reported by the Federal HighwayAdministration in over 25 years. Domestic heavy duty product sales were$39.3  million in 2005 compared to $33.1  million in 2004 andincluded $0.9  million from the businesses acquired in the ModineAftermarket merger. Heavy duty product sales benefited from new productlines recently introduced into the marketplace, pricing actions and anincrease in unit volume caused by the positive effects of an improvingeconomy in the marketplaces served by these products. Internationalsegment sales of $31.6  million in 2005 reflect sales generatedfrom the businesses in Europe, Mexico and Central America which wereacquired in the Modine Aftermarket merger. The Company’soperating unit in Europe is reported on a one-month lag. As a result,2005 results for this business are from July  22,  2005, thedate of the merger, through November  30,  2005.

Gross margin, as a percentage of net sales, was 16.6%in 2005 versus 20.1% in 2004. This reduction reflects actionstaken at our Nuevo Laredo facility to lower production levels in orderto reduce inventory levels and generate cash flow. As a result, therewas a $3.4  million increase in unabsorbed overhead which loweredgross margin during the period. While the Company expects to continueto take actions in 2006 to lower inventories further, it does notanticipate that these actions will have the same impact on unabsorbedoverhead in 2006. Margins in 2005 were also impacted, for the thirdconsecutive year, by double digit increases in commodity costs. As anexample, copper prices during 2005 rose approximately 30% andwere at their highest levels at year end. In early 2006, prices havecontinued to rise; however, it is unclear how long this trend willcontinue. Within the automotive and light truck heat exchange productlines, the Company has been unable to recover these commodity costincreases due to market conditions; however, in the heavy duty heatexchange product lines, it has had some success. The Company intends tocontinue to attempt to recover these rising costs wherever and wheneverpossible. Automotive and light truck heat exchange product margins werealso lowered by the increasing competitive pricing pressure beingexperienced in this market. These competitive pricing pressures areexpected to have an impact on margins in 2006 as well. Gross margin wasalso impacted by the $2.5  million write-off of the fair marketvalue adjustment of inventory which was recorded as part of the mergerpurchase accounting entry, with respect to the Modine Aftermarkettransaction. Margins in 2005 were also lowered by $0.4  million asa result of restructuring costs associated with the write down ofinventory to net realizable value and by a increase in the accrual forcustomer adjustments due to lower than anticipated sales in aparticular 

19

----

product category. In conjunction with theModine merger, the Company announced a restructuring program initiallyexpected to take 12 - 18 months, which would generate over $30million in future cost reductions. As of December  31,  2005,the Company has completed a major portion of these activities andexpects to begin experiencing the benefits of these actions early in2006. Annualized savings as a result of the restructuring actions arenow expected to be between $45  million and $48  million onan annualized basis when completed for the full year. While the Companycontinues to be focused on cost reduction actions to negate risingcosts, there can be no assurance that it will be able to do so in thefuture.

Selling, general and administrative expensesincreased as a percentage of net sales to 22.3% in 2005 from18.3% in 2004. While spending increased by $26.3  millionor 66%, this was largely attributable to the impact of themerger. Costs associated with operating the seventy-four branchlocations added as a result of the merger are included in selling,general and administrative expense. In addition, the Company incurredapproximately $1.5  million of costs associated with theintegration of IT, communications and financial information of the twobusinesses as well as costs associated with the Company’s namechange from Transpro, Inc. to Proliance International, Inc. Inaddition, the year-over-year increase reflects $1  million ofcosts attributable to the Sarbanes-Oxley compliance activitiesinitiated during the year, approximately $1.6  million from higheremployee health care costs and approximately $0.9  million fromhigher freight costs caused by the rising price of fuel. It isanticipated that costs associated with the Company’sSarbanes-Oxley compliance activities will be even higher in 2006, asboth domestic and international operations prepare for theDecember  31,  2006 compliance deadline, and that health carecosts will also continue to rise. Selling, general and administrativeexpense levels were lowered by $0.8  million in 2005 due to thesale of surplus machinery and equipment acquired in the merger. Theseassets had been written down to a zero net book value in the purchaseaccounting entry and the cash proceeds were recorded as a gain on saleof fixed assets.

Restructuring charges of $3.9million for 2005 represent costs associated with the closure of twowarehousing locations and a return goods facility in Memphis,Tennessee, in conjunction with the opening of a new distributionfacility in Southaven, Mississippi, along with the closure of theCompany’s aluminum heater manufacturing facility in Buffalo, NewYork and the relocation of these activities to an existing facility inNuevo Laredo, Mexico. In addition, the Company incurred costsassociated with restructuring activities impacting existing Proliancefacilities, which were part of the $10  million to $14million restructuring program announced at the time of the merger.These included costs associated with the closure of branch and plantlocations and their consolidation into existing Modine aftermarketfacilities, the closure of the Company’s New Haven, Connecticuttube mill and the relocation of copper/brass radiator production fromthe Company’s Nuevo Laredo manufacturing facility to the MexicoCity facility acquired in the merger. Restructuring costs areassociated with the movement of inventory and fixed assets, one-timepersonnel-related costs and the write down of fixed assets, with nofuture use, to net realizable value and are recorded when incurred.These activities are expected to be completed early in 2006 and willresult in the Company recording additional restructuring costs at thattime. Costs associated with the restructuring of Modine facilities wererecorded as accrued liabilities on the acquisition balance sheet.

Interest costs in 2005 of $8.0  million were $3.2million above last year due to higher discounting fees associated withparticipating in customer sponsored vendor payment programs and higheraverage interest rates which were offset partially by the impact oflower average debt levels. Discounting fees for 2005 were $4.0million compared to $1.5  million in 2004. This reflects increasedparticipation in the programs offered by our customers. Thesediscounting fees are also impacted by the rising interest rates and theCompany’s higher sales levels to customers offering theseprograms. The Company expects to continue participating in theseprograms in 2006, as long as this is a cost effective method ofborrowing, and expense levels will continue to be impacted by risingdiscount rates and the levels of receivables discounted. Averageinterest rates on our revolving credit facility were 5.85% in2005 compared to 4.29% in 2004, while average debt levels were$48.3  million in 2005 vs. $50.9  million in 2004.

20

----

The effective tax rate in 2005 forcontinuing operations reflects the realization of a deferred tax assetestablished in 2004 along with foreign and state income tax provisions.A federal tax benefit on the entire loss from continuing operations wasnot recorded in 2005 due to the existence of the Company’s taxvaluation reserve. In 2004, the effective tax rate included a taxbenefit of $0.9  million to reflect the reversal of a portion ofthe deferred tax valuation reserve in anticipation of the gain to berecorded in 2005 as a result of the sale of the Heavy Duty OEM businessunit offset by a state and foreign provision.

The lossfrom continuing operations in 2005 was $27.7  million, or $2.59per basic and diluted share, compared to a loss of $0.3  million,or $0.06 per basic and diluted share in 2004.

As a resultof the sale of the Heavy Duty OEM business on March  1,2005, as described in Note 4 of the accompanying Notes to ConsolidatedFinancial Statements, the results of this business are treated as adiscontinued operation. For the period prior to the sale in 2005, thediscontinued operation reported income after taxes of $0.8million or $0.08 per basic and diluted share, compared to income aftertaxes of $5.5  million, or $0.78 per basic and diluted share, forall of 2004.

The difference between the $17.0million selling price and the net book value of the Heavy Duty OEMassets which were sold, less transaction costs, resulted in therecording of a gain on sale after tax of $3.9  million or $0.36per basic and diluted share in 2005.

As a result ofrecording the merger with Modine Aftermarket during the third quarterof 2005, there was an excess of net assets acquired over considerationpaid, which generated negative goodwill of $13.1  million or $1.22per basic and diluted share, which was written off as extraordinaryincome. The amount of negative goodwill at year end reflects areduction of $0.1  million from the amount recorded at the time ofthe acquisition due to adjustments of estimates made in the originalopening balance sheet.

The net loss for 2005 was$9.9  million or $0.93 per basic and diluted share, compared tonet income of $5.2  million, or $0.72 per basic and diluted sharea year ago.

Comparison of Year Ended December  31,2004 to 2003

Net sales for the year ended December31,  2004 increased 9.8% or $19.5  million to$218.4  million as compared to $198.9  million in 2003. Allsales in 2004 and 2003 were in the domestic segment. Domesticautomotive and light truck heat exchange product sales of $164.8million were 11.4% above 2003 resulting from product lineexpansions by several major retail customers, the addition of newcustomers and increased customer demand. These impacts were partiallyoffset by growing competitive pricing pressures on certain productlines which caused the Company to decrease average selling prices andprecluded the Company from passing on to customers the impacts ofrising commodity costs. While miles driven have increased slightly in2004 as compared to 2003, they continue to be pressured by rising fuelcosts. The Company’s potential market continues to grow slowly,as the number of older cars requiring heat exchanger productreplacement increases and the number of light trucks and SUV’son the road has continued to grow. Domestic automotive and light trucktemperature control product sales of $20.5  million were2.7% above 2003 levels due to the impact of new customeradditions. These impacts were offset in part by unit volume declinescaused by changes in customer buying habits, higher levels of customerinventories going into the year and wet and cool weather conditions.These new customer additions should provide the Company with a strongercustomer base should market conditions improve. Domestic heavy dutyproduct sales of $33.1  million were 7.0% or $2.2million above 2003 levels. Sales grew as a result of new productprograms, pricing actions and improved economic conditions whichgenerated stable product demand as compared to marketplace declinesexperienced during the past several years. Heavy duty product volume isdependent on economic conditions impacting the marketplaces which itserves.

Gross margin, as a percentage of sales, was20.1% in 2004 compared to 17.3% in 2003. The 2004improvement reflects lower product costs due to higher productionlevels, improved efficiency and the impact of cost reduction programsimplemented during the past three years. These cost reduction programsincluded the relocation of all copper/brass heater production toMexico, improvements to 

21

----

aluminum heater production, sourcing ofproduct from lower cost offshore suppliers, conversion of products toaluminum from copper/brass and improvements of production efficiency.These actions offset the impacts of rising commodity costs affectingall segments and the competitive pricing pressures impacting thedomestic automotive and light truck heat exchange products. In 2003,margins were adversely impacted by production cutbacks impactingautomotive and light truck heat exchange products in the fourth quarterof 2002. These cutbacks resulted in higher actual inventory costs atthe end of 2002, which translated into lower gross margins in 2003 asthe product was sold. Margins last year were also adversely impacted bystart-up problems with the Company’s new aluminum tube mill andother manufacturing issues. These items did not recur in 2004.

Selling, general and administrative expenses in 2004increased by 10.5% to $40.0  million when compared to 2003,while expenses increased as a percentage of sales to 18.3%compared to 18.2% in 2003. The higher expense level isattributable to increased sales related expenses caused by theyear-over-year sales improvement, higher freight costs reflectingrising fuel costs and increased incentive compensation accrualsattributable to the year-over-year improvement in operating results.This impact was offset by the Company’s cost reduction effortsover the past three years to lower branch and administrative spendingrelative to sales, and improve operating efficiencies. It is expectedthat the Company will continue to benefit from these and future costreduction activities.

Restructuring and other specialcharges of $1.5  million in 2003 represented costs associated withthe closure of two regional heavy duty plants in North Kansas City,Missouri and Phoenix, Arizona; the closure of the Charlotte, NorthCarolina branch facility, the movement of Fedco copper/brass inventoryand machinery (acquired at the end of 2002) to Mexico and a program ofsalaried headcount reductions. No restructuring costs were recorded in2004, and all cash outflows associated with the 2003 and prior yearrestructuring activities were completed in 2004.

Interestcosts of $4.8  million in 2004 were $1.1  million above 2003levels as the impact of higher discounting charges from theCompany’s expanded participation in customer sponsored paymentprograms and higher average interest rates offset the impact of loweraverage debt levels. Discounting expense increased to $1.5million in 2004 from $0.4  million in 2003 as the Companyparticipated in additional customer sponsored payment programs, as theywere made available, in an effort to counteract the impact of longercustomer payment terms. These discounting expenses are impacted by therising interest rates and the Company’s higher sales levels tocustomers offering these programs. Average interest rates under ourLoan and Security Agreement (‘‘LoanAgreement’’), with Congress Financial Corporation (NewEngland), an affiliate of Wachovia Bank N.A., in 2004 were 4.29%compared with 4.13% in 2003, while average debt levels were$50.9  million in 2004 vs. $55.5  million in 2003.

The effective tax rate in both 2004 and 2003 reflects stateand foreign provisions, and changes in the deferred tax valuationallowance. In the fourth quarter of 2004, the Company recorded a taxbenefit of $0.9  million to reflect the reversal of a portion ofits deferred tax valuation reserve in anticipation of the gain to berecorded in 2005 as a result of the sale of its Heavy Duty OEM businessunit. The tax provision in 2003 also includes a tax benefit of$1.4  million for refundable income taxes associated with filingthe Company’s 2002 Federal Income Tax return.

Theloss from continuing operations was $0.3  million or $0.06 perbasic and diluted share in 2004 compared to a loss of $5.3million or $0.76 per basic and diluted share in 2003. Income from thediscontinued operation, net of income taxes, was $5.5  million or$0.78 per basic and diluted share in 2004 compared to income of$0.8  million or $0.11 per basic and diluted share in 2003.

Net income in 2004 improved to $5.2  million or $0.72per basic and diluted share compared to a net loss of $4.5million or $0.65 per basic and diluted share in 2003, reflecting thesales and operational improvements discussed above.

FinancialCondition, Liquidity and Capital Resources

In 2005,operating activities generated cash flow of $2.7  million. Thiswas comprised of $1.8  million generated by continuing operationsand $0.9  million generated by the discontinued heavy duty OEM

22

----

business prior to its sale on March1,  2005. For the full year, continuing operations accountsreceivable levels were lowered by $7.2  million as the impact ofincreased balances reflecting higher sales levels was more than offsetby the Company’s continued participation in customer sponsoredpayment programs and other collection actions. The Company intends tocontinue using these customer sponsored programs to accelerate thecollection of customer receivables as long as they are offered at acost effective discount rate. Continuing operations inventory levelsfor the full year were lowered by $8.7  million, due to actionsundertaken by management in the second half of the year. Productionlevels at the Company’s manufacturing plants were lowered andthe level of purchases from outside third parties was reduced in orderto lower inventory levels which had risen due to a slow start to thenormal selling season and inventory added by the merger with Modine.While these production cutbacks resulted in increased levels ofunabsorbed overhead being changed against operations, the Company wasable to generate cash which was utilized to pay down debt levels andfund operations. Accounts payable levels rose by $8.5  million asthe Company attempted to balance vendor payments with the continuingtrend towards longer customer payment terms. During the second half of2005, continuing operations generated $20.8  million of cash flowfrom operating activities which offset the $19.4  million of cashflow used by operations during the first half of 2005. This cash flowin the second half of the year is largely due to inventory reductionprograms initiated by the Company. These programs included cutbacks inproduction and purchasing levels and actions to lower inventory levelsadded as a result of the Modine Aftermarket merger. Additional fundswere also generated by the collection of accounts receivable. Fundsgenerated were utilized for operating activities and to fundrestructuring actions with occurred in the second half of the year.

Cash flow generated from operating activities during 2004 was$13.5  million. Of this amount, $9.2  million was generatedby continuing operations and $4.3  million by our discontinuedoperation. Income from continuing operations was a loss of $0.3million compared to a net loss of $5.3  million in 2003 reflectingincreased sales levels and the Company’s cost reductionactivities. Continuing operations accounts receivable levels decreasedby $7.0  million as the Company accelerated the collection ofcertain customer receivables utilizing cost effective customersponsored payment programs administered by financial institutions,which offset the impact of increased receivable balances as a result ofhigher sales levels. These accelerated collections were done in aneffort to offset the continuing trend towards longer customer paymentterms by ‘‘blue chip’’ customers, at a costeffective discount rate. Inventory levels grew $3.6  million inorder to support the higher anticipated sales levels and the sourcingof product from off shore suppliers. Inventory turns approximated thelevels achieved in 2003 reflecting management’s efforts tobalance inventory levels in line with customer service requirements.Accounts payable were reduced by $0.3  million. Accrued expensesrose by $1.7  million due in part to management incentive accrualswhich were zero a year ago.

In 2003, cash flow fromoperating activities was $8.7  million. Continuing operationsprovided $7.8  million and our discontinued operation provided$0.9  million. Accounts receivable levels decreased by $10.5million as the Company accelerated the collection of certain customerreceivables utilizing a cost effective customer sponsored paymentprogram administered by a financial institution. Inventory levels grewby $6.2  million due to the soft market conditions experienced formost of the year, which included a shorter than normal peak sellingseason for heat exchanger and air conditioning products. In addition,the higher inventory levels reflected the purchase of acompetitor’s inventory from a major customer during the fourthquarter and the requirement to build inventory in anticipation of newAutomotive and Light Truck customer programs which were expected tocommence in early 2004. Accounts payable rose by $8.4  million asa result of the growth in inventory levels as well as theCompany’s efforts to balance payable outflows with cashcollections.

Capital expenditures by continuingoperations were $8.9  million for 2005, compared with $3.2million in 2004. Expenditures for 2005 were primarily associated withthe opening of a new distribution center located in Southaven,Mississippi, the implementation of new product introductions and costreduction activities. At December  31,  2005, there are nomaterial outstanding capital commitments. Capital expenditures areestimated to approximate $10.0  million to $11.0  million in2006, which will include expenditures associated with the upgrade ofcomputer systems in Mexico and Europe, the conversion 

23

----

of Modine computer systems in the U.S. to theCompany’s, new product introductions and cost reduction actions.It is anticipated that these expenditures will either be funded byoperations, leasing actions or from borrowings under the existingrevolving credit agreement.

During 2005, in a non-cashtransaction, the Company entered into a long-term capital lease for thepurchase of racking to be used at its new distribution center. Inaddition, during the third quarter of 2004, in a non-cash transaction,the Company sold $1.6  million of inventory and fixed assets,associated with its condenser product line, at its net book value, to avendor in return for a reduction in the Company’s accountspayable to that vendor and a 24-month supply agreement commencing onJanuary  1,  2005.

As further disclosed in Note5 of the Notes to Consolidated Financial Statements, on July22,  2005, the Company completed its merger with ModineAftermarket. Transaction costs approximated $8.7  million, ofwhich $6.4  million has been paid during 2005, $0.9  millionwas payable at December  31,  2005 and $1.4  million hadbeen paid during 2004. During 2005, the Company had expenditures of$3.0 million associated with restructuring activities impacting Modinefacilities which were accrued on the acquisition balance sheet.

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

OnMay  1,  2003, the Company completed the sale of its GandoDrive headquarters facility in New Haven, Connecticut and entered intoa lease of its currently occupied space used for offices, test facilityand tube mill operations. As a result, the Company repaid the$5.0  million Industrial Revenue Bond on the facility, createdgreater availability of funds under its credit agreement and eliminatedan underutilized asset. The gain on the sale of the building, ofapproximately $1.6  million, is being recognized equally over thesix-year initial term of the lease on the facility.

Cashdividends paid to a preferred shareholder were approximately $0.1million in 2005, 2004 and 2003.

At December31,  2005, total debt outstanding was $41.9  million;$2.1  million lower than a year earlier. This reduction reflectsthe utilization of funds generated by operating activities and from thesale of the Heavy Duty OEM business. At December  31,  2005,the Company had $17.5  million available for future borrowingsunder its Loan Agreement and was in compliance with the covenantscontained in the Loan Agreement.

Total debt at the end of2004 was $44.0  million compared with $50.9  million at theend of 2003. This $6.9  million reduction reflects the utilizationof funds generated by operating activities.

In 2003,total debt was lowered by $8.7  million reflecting the pay down ofthe $5.0  million Industrial Revenue Bond, at the time theCompany’s headquarters facility was sold, and the utilization ofcash flow generated by operations.

On November19,  2004, the Company entered into an amendment to its LoanAgreement which increased loan availability by $1.0  million as aresult of a reduction in an availability reserve contained in theAgreement. In addition, the minimum adjusted net worth requirementunder the agreement was increased from $37.0  million to$40.0  million for all periods after September  30,2004.

On July  22,  2005, in connection withthe merger of the Company with the aftermarket business of Modine, theCompany amended its $80.0  million credit facility (the‘‘Loan Agreement’’) with Wachovia CapitalFinancial Corporation (New England), formerly known as CongressFinancial Corporation (New England) effective July  21,2005. The amended credit facility consists of a revolving credit linewith maximum borrowings of $78.3  million and a $1.7  millionterm loan, each of which was amended to expire on July  21,2009 (subject to renewal on an annual basis thereafter). Under theamended credit facility, the interest rate is 2% over aEurodollar-based rate through April  21,  2006 and rangesfrom 1.75% to 2.25% over such rate thereafter. Theamended credit facility also provides that the Company may paydividends or repurchase capital stock of up to $3.0  millionannually, as long as excess availability is at least $18.0million for the 30 consecutive days both prior to and 

24

----

following the payment date. The amendedcredit facility also amends the borrowing base calculation such that(i) up to $55.0  million in respect of eligible inventory may becounted and (ii) availability reserves may be revised for dilution inrespect of the Company’s accounts. The amended facility addsfinancial covenants for (i) minimum EBITDA (tested quarterly commencingSeptember  30,  2005 and not required if excess availabilityexceeds $15.0  million), (ii) minimum excess availability($5.0  million at all times through June  30,  2006 and$13.0  million immediately after giving effect to the Modinemerger), and (iii) capital expenditures (not to exceed $12.0million in any calendar year end, if financed under the creditfacility). The Company was required to, and did, satisfy customaryconditions to the amendment of the credit facility and obtainedWachovia’s consent to the merger.

On October20,  2005, the Company further amended its Loan and SecurityAgreement. Under the amended Loan Agreement, the Unused Line Fee wasreduced through June  30,  2006. The amended Loan Agreementalso changes financial covenants for (i) minimum EBITDA (testedquarterly commencing September  30,  2005 and not required ifExcess Availability exceeds $15.0  million) such that minimumEBITDA for the September  30,  2005 and December31,  2005 test dates is a higher negative amount, and (ii) minimumExcess Availability ($5.0  million at all times through June30,  2006) so as to give no effect to the limitations on ExcessAvailability imposed by the Maximum Credit under the amended LoanAgreement of $80.0  million or the Revolving Loan Ceiling. Theamended Loan Agreement also added a financial covenant requiring thatconsolidated inventory, excluding the Company’s NRF and Mexparsubsidiaries, as of December  31,  2005 would not exceed$122.0  million. The Company was in compliance with this covenant.The Company was required to, and did, satisfy customary conditions tothe amendment of the Loan Agreement.

The future liquidityand ordinary capital needs of the Company in the short term areexpected to be met from a combination of cash flows from operations andborrowings under the Loan Agreement. The Company’s workingcapital requirements peak during the second and third quarters,reflecting the normal seasonality in the Automotive and Light Truckproduct lines. In addition, the Company’s future cash flow maybe impacted by industry trends lengthening customer payment terms orthe discontinuance of currently utilized customer sponsored paymentprograms. The loss of one or more of the Company’s significantcustomers or changes in payment terms to one or more major supplierscould also have a material adverse effect on the company’sresults of operations and future liquidity. The Company utilizescustomer-sponsored programs administered by financial institutions inorder to accelerate the collection of funds and offset the impact ofthese lengthening customer payment terms. The Company intends tocontinue utilizing these programs as long as they are a cost effectivetool to accelerate cash flow. The Company believes that its cash flowfrom operations, together with borrowings under its Loan Agreement,will be adequate to meet its near-term anticipated ordinary capitalexpenditures and working capital requirements. However, the Companybelieves that the amount of borrowings available under the LoanAgreement would not be sufficient to meet the capital needs for majorgrowth initiatives, such as significant acquisitions. If the Companywere to implement major new growth initiatives, it would have to seekother sources or forms of capital. However, no assurance can be giventhat the Company would be successful in securing such additionalsources or forms of capital.

As a result of the mergerwith the aftermarket business of Modine, the Company’s liquidityimproved as the assets being acquired were debt free and the acquiredbalance sheet included $6.3  million in cash. We presentlyestimate that the costs of the business realignment and other actionsnecessary to effectively integrate the business will be funded fromcash transferred in the merger, generated by the operations acquired,including cost savings, or result from borrowings under theCompany’s Loan Agreement.

25

----

The following table summarizes theCompany’s outstanding material contractual obligations as ofDecember  31,  2005:

|                             |  |                       |        |           |  |           |         |              |  |        |         |        |  |        |         |        |  |        |        |        |  |  |
|-----------------------------|--|-----------------------|--------|-----------|--|-----------|---------|--------------|--|--------|---------|--------|--|--------|---------|--------|--|--------|--------|--------|--|--|
|                        |  | Payments Due byPeriod |
| Type ofObligation           |  | Less Than1 Year       |        | 2-3 Years |  | 4-5 Years |         | Over 5 Years |  | Total  |
|                        |  | (inthousands)         |
| Revolving creditfacility(1) |  | $                     | 38,805 |      |  | $         | — |         |  | $      | — |   |  | $      | — |   |  | $      | 38,805 |   |
| Term loan                   |  |                  | 340    |      |  |      | 680     |         |  |   | 567     |   |  |   | — |   |  |   | 1,587  |   |
| Pension plancontribution    |  |                  | 3,305  | (2)  |  |      | — |         |  |   | — |   |  |   | — |   |  |   | 3,305  |   |
| Capitallease obligations    |  |                  | 560    |      |  |      | 848     |         |  |   | 133     |   |  |   | — |   |  |   | 1,541  |   |
| Operating leases            |  |                  | 8,336  |      |  |      | 10,258  |         |  |   | 5,068   |   |  |   | 2,254   |   |  |   | 25,916 |   |
| Purchase obligations        |  |                  | 26,243 | (3)  |  |      | — |         |  |   | — |   |  |   | — |   |  |   | 26,243 |   |
| Total                       |  | $                     | 77,589 |      |  | $         | 11,786  |         |  | $      | 5,768   |   |  | $      | 2,254   |   |  | $      | 97,397 |   |
|                             |

|  |
|--|
|  |  |
|  |

|     |                                                                                                                                                                                                                   |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (1) | Borrowingsclassified as a current liability in the Consolidated Balance Sheetincluded in this Report. Based upon year end borrowing levels andinterest rates, annual interest cost would approximate $2.4million. |

|     |                                                                                                                                                                                                                                                                                                   |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) | Pension plancontributions reflect expected disbursements in 2006 as calculated bythe Company’s third-party actuary. Estimated contributions forfuture years are not currently determinable as they will be impacted bychanges in discount rates, pension plan performance and otherfactors. |

|     |                                                                                                                                                                                                                   |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (3) | Purchase obligationsfor goods and services outstanding at the end of the year whichnormally are consumed over a period of less than 12 months. This is notreflective of total consumption over a 12-month period. |

Critical Accounting Estimates

The preparation offinancial statements in conformity with accounting principles generallyaccepted in the United States of America requires estimates andassumptions that affect the reported amounts of assets and liabilities,revenues and expenses, and related disclosures of contingent assets andliabilities in the consolidated financial statements and accompanyingnotes. A company’s critical accounting estimates, as set forthby the U.S. Securities and Exchange Commission, are those which aremost important to the portrayal of its financial condition and resultsof operations and often require the utilization of estimates orsubjective judgment. Based upon this definition, we have identified thecritical accounting estimates addressed below. Although we believe thatour estimates and assumptions are reasonable, they are based uponinformation presently available. Actual results may differ from theseestimates under different assumptions or conditions. The Company alsohas other key accounting policies, which involve the use of estimates,which are further described in Note 2, ‘‘Summary ofSignificant Accounting Policies’’, of the Notes toConsolidated Financial Statements contained herein.

Revenue Recognition.    Sales are recognizedeither when products are shipped to the customer or when products arereceived by the customer in accordance with the invoice shipping terms.Sales are recorded net of sales rebates, cash discounts, returns andadvertising and other allowances. Accruals for warranty costs, salesreturns and allowances are provided at the time of sale based uponhistorical experience or agreements currently in place with customers.The Company will also accrue for unusual warranty exposures at the timethe exposure is identified and quantifiable based upon analyses ofexpected product failure rates and engineering cost estimates. Inconnection with multi-year agreements with certain customers, theCompany incurs customer acquisition costs which are capitalized andamortized over the life of the agreement. The Company also establishesreserves for uncollectible trade accounts receivable based uponhistorical experience, anticipated business trends and the currenteconomic conditions. Customer account balances are written off at thetime they are deemed fully uncollectible. Changes in ourcustomers’ financial condition or other factors could cause ourestimates of uncollectible accounts receivable or the amortizationperiods of customer acquisition costs to vary.

Inventory Valuation.    Inventories are valued atthe lower of cost (first-in, first-out method) or market. This requiresthe Company to make judgments about the likely method of disposition ofits inventory and expected recoverable value upon disposition.Inventories are reviewed on a continuing basis, and 

26

----

provisions are also made for slow moving andobsolete inventory based upon estimates of historical or expected usageas well as the expected recoverable value upon disposition.

Impairment of Long-Lived Assets.    In the eventthat facts and circumstances indicate that the carrying amounts of abusiness unit’s long-lived assets may be impaired, an evaluationof recoverability would be performed. If an evaluation is required, theestimated future undiscounted cash flows of the business unit,associated with the long-lived assets, would be compared to theasset’s carrying amount to determine if a write-down isrequired. If this review indicates that the assets will not berecoverable, the carrying value of the Company’s assets would bereduced to their estimated fair value. The estimates used indetermining whether an impairment exists involve future cash flows ofeach business unit, which are based upon expected revenue trends, costof production and operating expenses.

IncomeTaxes.    Deferred tax assets and liabilities are recordedbased on the difference between the financial statement and tax basesof assets and liabilities using enacted tax rates in effect for theyear in which the differences are expected to reverse. A valuationallowance is recorded to reduce the carrying amount of deferred taxassets if it is more likely than not that those such assets will not berealized. Changes to the valuation allowance are based on theevaluation of all available evidence supporting the Company’sability to utilize tax benefits prior to their expiration.

Pension Plans.    The Company establishes andperiodically reviews the assumptions used in the measurement of itsretirement plans. The discount rate used in the assumption will changein relation to increases or decreases in applicable published bondindices. At December  31,  2005, the discount rate fordomestic plans was 5.88%. The return on assets for domesticplans reflects the long-term rate of return on plan assets expected tobe realized over a ten year or longer period. As such, it will normallynot be adjusted for short-term trends in the stock or bond markets. Inaddition, the rate of return will reflect the investment allocationcurrently used to manage the pension portfolio. The Company’sdomestic pension plan assumptions currently include a 9%long-term annual rate of return, which is based upon the currentportfolio allocation, long-term rates of return for similar investmentvehicles and economic and other indicators of future performance.Differences between actual and assumed portfolio performance as well asthe impact of changes in discount rates are included in the calculationof the Company’s accrued pension costs by a third-party actuary.In the future, the unrecognized net loss, of $6.9  million atDecember  31,  2005, along with changes in any of theunderlying pension assumptions, and the ongoing performance of the planassets, will impact future funding requirements, minimum pensionliability adjustments and net pension cost amounts. Absent any otherchanges, a 1% change in the discount rate increases or decreasespension expense by $0.3  million per year, the pension benefitobligation by $3.5  million and the minimum pension liabilityadjustment in Shareholders’ Equity by $4.1  million.

Loss Reserves.    The Company has other lossexposures such as self-insurance, environmental and litigation forwhich it determines the need and amount of reserves. Reserves areestablished using estimates, judgments and consistent methodologies todetermine the exposure and ultimate potential liability.

Inflation

The overall impact of the low rate ofUnited States inflation in recent years has resulted in no significantimpact on labor costs and general services utilized by the Company. Theprincipal raw materials used in the Company’s replacementradiator and heater core product lines are copper and brass. TheCompany also uses aluminum for its radiator, charge air cooler,condenser and heater core product lines. Copper, brass, aluminum andother primary metals used in the Company’s business aregenerally subject to commodity pricing and variations in the marketprices for such materials. Although these materials are available froma number of vendors, the Company has chosen to concentrate its sourceswith a limited number of long-term suppliers. The Company typicallyexecutes purchase orders for its copper and brass requirements three tonine months prior to the actual delivery date. In periods of abnormallyhigh commodity market prices, the Company will place orders

27

----

only for its current requirements. In eithercase, the purchase price for such copper, brass and aluminum isestablished at the time such orders are placed by the Company and notat the time of delivery.

The Company also manages itsmetals commodity pricing exposure by attempting to pass through anycost increases to its customers. During 2003, 2004 and 2005, commodityprices increased significantly over the prior year. While the Companyhas been successful in passing through some price increases on itsheavy duty products, on its automotive and light truck heat exchangeproducts, it has been unable to do so. As a result, the Company hasbeen forced to generate other cost reduction activities in order tooffset these impacts. There is no assurance that the Company will besuccessful in raising prices to its customers in the future or that itwill be able to generate sufficient cost reductions to offset risingcommodity prices. The Company currently does not use financialderivatives or other methods to hedge transactions with respect to itsmetals consumption.

Environmental Matters

TheCompany is subject to Federal, foreign, state and local laws designedto protect the environment and believes that, as a general matter, itspolicies, practices and procedures are properly designed to reasonablyprevent risk of environmental damage and financial liability to theCompany. On January  27,  2003, the Company signed a ConsentAgreement with the State of Connecticut Department of EnvironmentalProtection. Under the agreement the Company will voluntarily initiatethe investigation and cleanup of environmental contamination onproperty occupied by a wholly-owned subsidiary of the Company over 20years ago. The Company also believes there will not be any materialadverse impact to its financial results due to the investigation andcleanup activities. The Company also believes it is reasonably possiblethat environmental related liabilities might exist with respect toother industrial sites formerly owned or occupied by the Company. Basedupon information currently available, the Company believes that thecost of any potential remediation for which the Company may ultimatelybe responsible will not have a material adverse effect on theconsolidated financial position, results of operations or liquidity ofthe Company.

The Company currently does not anticipateany material adverse effect on its consolidated results of operations,financial condition or competitive position as a result of compliancewith Federal, state, local or foreign environmental laws orregulations. However, risk of environmental liability and chargesassociated with maintaining compliance with environmental laws isinherent in the nature of the Company's business, and there is noassurance that material environmental liabilities and compliancecharges will not arise.

Recently Issued AccountingStandards

In December  2004, the FASB issued arevised SFAS No. 123(R), ‘‘Share-BasedPayment.’’ SFAS 123(R) establishes standards for theaccounting for transactions in which an entity exchanges its equityinstruments for goods or services or incurs liabilities in exchange forgoods or services that are based on the fair value of theentity’s equity instruments, focusing primarily on accountingfor transactions in which an entity obtains employee services inshare-based payment transactions. SFAS No. 123(R) requires publicentities to measure the cost of employee services received in exchangefor an award of equity instruments based on the grant-date fair valueof the award (with limited exceptions) and recognize the cost over theperiod during which an employee is required to provide service inexchange for the award. The Company is required to adopt SFAS No.123(R) as of January  1,  2006. The ultimate impact, ofrecording non-cash stock compensation expense, on the future results ofoperations as a result of adopting SFAS No 123(R) is not determinableas it is dependent on the number of options granted after the effectivedate.

Forward-Looking Statements and Cautionary Factors

Statements included in this filing, which are not historicalin nature, are forward-looking statements made pursuant to the safeharbor provisions of the Private Securities Litigation Reform Act of1995. Statements relating to the future financial performance of theCompany are subject to the detailed 

28

----

factors set forth in Item 1A – RiskFactors, included in this Form 10-K. Such statements are based upon thecurrent beliefs and expectations of Proliance management and aresubject to significant risks and uncertainties. Actual results maydiffer from those set forth in the forward-looking statements. Whenused in this filing the terms ‘‘anticipate,’’‘‘believe,’’‘‘estimate,’’‘‘expect,’’ ‘‘may,’’‘‘objective,’’‘‘plan,’’ ‘‘possible,’’‘‘potential,’’‘‘project,’’ ‘‘will’’and similar expressions identify forward-looking statements. Theforward-looking statements contained herein are made as of the datehereof, and we do not undertake any obligation to update anyforward-looking statements, whether as a result of future events, newinformation or otherwise.

Item 7A.    Quantitative andQualitative Disclosures About Market Risk

The Companyhas certain exposures to market risk related to changes in interestrates, foreign currency exchange rates, credit and commodities.

The Company’s interest rate risk is sensitive tochanges in interest rates. At December  31,  2005, theCompany had a Loan Agreement, under which $40.4  million wasoutstanding. The weighted average interest rate on the Loan Agreementduring 2005 was 5.85%. Interest on the Loan Agreement is basedon, at the Company’s option, the Eurodollar loan rate plus aEurodollar margin or the prime rate. The Eurodollar margin for theperiod July  21,  2005 through April  21,  2006 is2% while thereafter it is between 1.75% and 2.25%.The impact of a 10% change in market interest rates would nothave a material impact on the Company’s results ofoperations.

The Company has sales and manufacturingfacilities in Europe and Mexico. As a result, changes in foreigncurrency exchange rates and changes in the economic conditions inEurope and Mexico could affect financial results. The Company hasaccounted for transactions associated with these foreign operations inaccordance with the guidance established under Financial AccountingStandards No. 52, ‘‘Foreign CurrencyTranslation.’’ As of December  31,  2005, theCompany’s foreign subsidiaries had net current assets (definedas current assets less current liabilities) subject to foreign currencytranslation risk of $32.8  million. The potential decrease in thenet current assets from a hypothetical 10% adverse change inquoted foreign currency exchange rates at December  31,  2005would be $3.2  million. This sensitivity analysis assumes aparallel shift in foreign currency exchange rates. Exchange ratesrarely all move in the same direction relative to the dollar. Thisassumption may overstate or understate the impact of changing exchangerates on individual assets and liabilities denominated in a foreigncurrency.

The Company is subject to a concentration ofcredit risk primarily with its trade accounts receivable. The largestconcentration is with retail customers in the Company’s Domesticsegment where the top five customers comprise 47% of net salesin 2005 and 30% of the outstanding trade accounts receivablebalance at December  31,  2005. The loss of one or more ofthese customers could have a material adverse effect on theCompany’s results of operations. The Company grants credit tocustomers who meet pre-established credit requirements, and generallyrequires no collateral from its customers. Estimates of potentialcredit losses are based upon historical experience, customerinformation and management’s expectations of the industry andthe overall economy. As of December  31,  2005, the Companyhad no other significant concentration of credit risk.

Certain risks may arise in the various commodity markets inwhich the Company participates. Commodity prices in the copper, brassand aluminum markets may be subject to changes based on availability.The Company conducts its purchasing of such commodities generallythrough three to nine month purchase order commitments; however, thispractice may be modified in periods of rising prices. See‘‘Raw Materials and Suppliers’’ in Item 1 ofthis Report and ‘‘Inflation’’ in Item 7 of thisReport for additional information on commodity purchasing.

29

----

Item 8.    Financial Statements andSupplementary Data

INDEX TO CONSOLIDATED FINANCIALSTATEMENTS

|                                                                                                                       |  |        |  |  |  |  |
|-----------------------------------------------------------------------------------------------------------------------|--|--------|--|--|--|--|
|                                                                                                                  |  | Page   |
| FinancialStatements:                                                                                                  |  |   |
| Reports of IndependentRegistered Public Accounting Firms                                                              |  | 31     |
| Consolidated Statements of Operations for theYears Ended December  31,  2005,2004 and 2003                            |  | 33     |
| Consolidated Balance Sheets at December31,  2005 and 2004                                                             |  | 34     |
| ConsolidatedStatements of Cash Flows for the Years Ended December  31,2005,2004 and 2003                              |  | 35     |
| ConsolidatedStatements of Changes in Stockholders’ Equity for the YearsEnded December  31,  2005, 2004 and 2003 |  | 36     |
| Notes to Consolidated FinancialStatements                                                                             |  | 37     |
| FinancialStatement Schedule:                                                                                          |  |   |
| Schedule II –Valuation and Qualifying Accounts for the Years Ended December31,  2005, 2004 and 2003             |  | 62     |
|                                                                                                                       |

30

----

Report of Independent Registered PublicAccounting Firm

To the Board of Directors andStockholders of Proliance International, Inc.:

We haveaudited the accompanying consolidated balance sheets of ProlianceInternational, Inc. and subsidiaries (formerly Transpro, Inc.) as ofDecember  31,  2005 and 2004 and the related consolidatedstatements of operations, changes in stockholders’ equity, andcash flows for the years then ended. We have also audited theinformation for the years ended December  31,  2005 and 2004set forth in financial statement schedule II included herein. Theseconsolidated financial statements and financial statement schedule arethe responsibility of the Company’s management. Ourresponsibility is to express an opinion on these financial statementsand financial statement schedule based on our audits.

Weconducted our audits in accordance with the standards of the PublicCompany Accounting Oversight Board (United States). Those standardsrequire that we plan and perform the audit to obtain reasonableassurance about whether the financial statements and financialstatement schedule are free of material misstatement. The Company isnot required to have, nor were we engaged to perform, an audit of itsinternal control over financial reporting. Our audits includedconsideration of internal control over financial reporting as a basisfor designing audit procedures that are appropriate in thecircumstances, but not for the purpose of expressing an opinion on theeffectiveness of the Company’s internal control over financialreporting. Accordingly, we express no such opinion. An audit alsoincludes examining, on a test basis, evidence supporting the amountsand disclosures in the financial statements and schedule, assessing theaccounting principles used and significant estimates made bymanagement, as well as evaluating the overall presentation of thefinancial statements and schedule. We believe that our audits provide areasonable basis for our opinion.

In our opinion, theconsolidated financial statements referred to above present fairly, inall material respects, the financial position of ProlianceInternational, Inc. and subsidiaries at December  31,  2005and 2004, and the results of their operations and their cash flows forthe years then ended in conformity with accounting principles generallyaccepted in the United States of America. Also, in our opinion, thefinancial statement schedule presents fairly, in all material respects,the information set forth therein for the years ended December31,  2005 and 2004.

|                           |  |  |
|---------------------------|--|--|
| /s/ BDO Seidman, LLP      |
| New York, NYMarch30, 2006 |
|                           |

31

----

Report of Independent Registered PublicAccounting Firm

To the Board of Directors andStockholders of Proliance International, Inc. (formerly known asTranspro, Inc.):

In our opinion, the consolidatedstatements of operations, cash flows, and changes instockholders’ equity for the year ended December  31,2003 present fairly, in all material respects, the results ofoperations and cash flows of Proliance International, Inc. (formerlyknown as Transpro, Inc.) and its subsidiaries for the year endedDecember  31,  2003, in conformity with accounting principlesgenerally accepted in the United States of America. In addition, in ouropinion, the financial statement schedule listed in the accompanyingindex presents fairly, in all material respects, the information setforth therein for the year ended December  31,  2003 whenread in conjunction with the related consolidated financial statements.These financial statements and the financial statement schedule are theresponsibility of the Company's management. Our responsibility isto express an opinion on these financial statements and the financialstatement schedule based on our audit. We conducted our audit of thesestatements in accordance with the standards of the Public CompanyAccounting Oversight Board (United States). Those standards requirethat we plan and perform the audit to obtain reasonable assurance aboutwhether the financial statements are free of material misstatement. Anaudit includes examining, on a test basis, evidence supporting theamounts and disclosures in the financial statements, assessing theaccounting principles used and significant estimates made bymanagement, and evaluating the overall financial statementpresentation. We believe that our audit provides a reasonable basis forour opinion.

|                                                                                   |  |  |
|-----------------------------------------------------------------------------------|--|--|
| /s/ PricewaterhouseCoopers LLP                                                    |
| Hartford,CTMarch  17,  2004, except for Note 4, forwhich thedate is June  14,2005 |
|                                                                                   |

32

----

PROLIANCE INTERNATIONAL,INC.CONSOLIDATED STATEMENTS OF OPERATIONS(in thousands,except per share amounts)

|                                                                                                   |  |                         |         |         |  |        |         |         |  |        |         |         |  |  |
|---------------------------------------------------------------------------------------------------|--|-------------------------|---------|---------|--|--------|---------|---------|--|--------|---------|---------|--|--|
|                                                                                              |  | Years Ended December31, |
|                                                                                              |  | 2005                    |         | 2004    |  | 2003   |
| Net sales                                                                                         |  | $                       | 296,838 |    |  | $      | 218,433 |    |  | $      | 198,862 |    |
| Cost of sales                                                                                     |  |                    | 247,430 |    |  |   | 174,575 |    |  |   | 164,398 |    |
| Gross margin                                                                                      |  |                    | 49,408  |    |  |   | 43,858  |    |  |   | 34,464  |    |
| Selling,general and administrative expenses                                                       |  |                    | 66,313  |    |  |   | 39,987  |    |  |   | 36,183  |    |
| Restructuringcharges                                                                              |  |                    | 3,854   |    |  |   | — |    |  |   | 1,490   |    |
| Operating (loss) income from continuingoperations                                                 |  |                    | (20,759 | )  |  |   | 3,871   |    |  |   | (3,209  | )  |
| Interest expense                                                                                  |  |                    | 7,958   |    |  |   | 4,812   |    |  |   | 3,739   |    |
| Loss from continuingoperations before taxes                                                       |  |                    | (28,717 | )  |  |   | (941    | )  |  |   | (6,948  | )  |
| Income tax (benefit)                                                                              |  |                    | (986    | )  |  |   | (592    | )  |  |   | (1,641  | )  |
| Loss from continuing operations                                                                   |  |                    | (27,731 | )  |  |   | (349    | )  |  |   | (5,307  | )  |
| Incomefrom discontinued operation, net of $506, $200 and $478 of income taxin 2005, 2004 and 2003 |  |                    | 848     |    |  |   | 5,527   |    |  |   | 771     |    |
| Gain on sale of discontinued operation, netof income tax of $2,331                                |  |                    | 3,899   |    |  |   | — |    |  |   | — |    |
| Extraordinary income – negativegoodwill                                                     |  |                    | 13,053  |    |  |   | — |    |  |   | — |    |
| Net (loss) income                                                                                 |  | $                       | (9,931  | )  |  | $      | 5,178   |    |  | $      | (4,536  | )  |
| Basic(loss) income per commonshare:                                                               |  |                    |    |    |  |   |    |    |  |   |    |    |
| From continuingoperations                                                                         |  | $                       | (2.59   | )  |  | $      | (0.06   | )  |  | $      | (0.76   | )  |
| From discontinued operation                                                                       |  |                    | 0.08    |    |  |   | 0.78    |    |  |   | 0.11    |    |
| Fromgain on sale of discontinued operation                                                        |  |                    | 0.36    |    |  |   | — |    |  |   | — |    |
| Fromextraordinary income – negative goodwill                                                |  |                    | 1.22    |    |  |   | — |    |  |   | — |    |
| Net (loss) income per commonshare – basic                                                   |  | $                       | (0.93   | )  |  | $      | 0.72    |    |  | $      | (0.65   | )  |
| Diluted (loss) income percommon share:                                                            |  |                    |    |    |  |   |    |    |  |   |    |    |
| Fromcontinuing operations                                                                         |  | $                       | (2.59   | )  |  | $      | (0.06   | )  |  | $      | (0.76   | )  |
| From discontinued operation                                                                       |  |                    | 0.08    |    |  |   | 0.78    |    |  |   | 0.11    |    |
| Fromgain on sale of discontinued operation                                                        |  |                    | 0.36    |    |  |   | — |    |  |   | — |    |
| Fromextraordinary income – negative goodwill                                                |  |                    | 1.22    |    |  |   | — |    |  |   | — |    |
| Net (loss) income per commonshare – diluted                                                 |  | $                       | (0.93   | )  |  | $      | 0.72    |    |  | $      | (0.65   | )  |
| Weighted average commonshares – basic                                                       |  |                    | 10,714  |    |  |   | 7,106   |    |  |   | 7,106   |    |
| Weighted average commonshares and equivalents – diluted                                     |  |                    | 10,714  |    |  |   | 7,106   |    |  |   | 7,106   |    |
|                                                                                                   |

The accompanying notes are anintegral part of these consolidated financialstatements.

33

----

PROLIANCE INTERNATIONAL,INC.CONSOLIDATED BALANCE SHEETS(in thousands, exceptshare data)

|                                                                                                                                                                                                           |  |             |         |         |  |        |         |         |  |  |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--|-------------|---------|---------|--|--------|---------|---------|--|--|
|                                                                                                                                                                                                      |  | December31, |
| ASSETS                                                                                                                                                                                                    |  | 2005        |         | 2004    |
| Currentassets:                                                                                                                                                                                            |  |        |    |    |  |   |    |    |
| Cash and cashequivalents                                                                                                                                                                                  |  | $           | 4,566   |    |  | $      | 297     |    |
| Accounts receivable (less allowance of $5,391 and$2,746)                                                                                                                                                  |  |        | 58,296  |    |  |   | 34,429  |    |
| Inventories                                                                                                                                                                                               |  |        | 121,050 |    |  |   | 71,211  |    |
| Deferred income taxes                                                                                                                                                                                     |  |        | — |    |  |   | 1,490   |    |
| Other current assets                                                                                                                                                                                      |  |        | 4,955   |    |  |   | 2,708   |    |
| Current assets ofdiscontinued operation                                                                                                                                                                   |  |        | — |    |  |   | 11,403  |    |
| Total current assets                                                                                                                                                                                      |  |        | 188,867 |    |  |   | 121,538 |    |
| Property, plant andequipment, net                                                                                                                                                                         |  |        | 20,333  |    |  |   | 16,135  |    |
| Long-term assets of discontinued operation                                                                                                                                                                |  |        | — |    |  |   | 6,565   |    |
| Other assets                                                                                                                                                                                              |  |        | 8,139   |    |  |   | 5,621   |    |
| Totalassets                                                                                                                                                                                               |  | $           | 217,339 |    |  | $      | 149,859 |    |
| LIABILITIES ANDSTOCKHOLDERS’EQUITY                                                                                                                                                                  |  |        |    |    |  |   |    |    |
| Currentliabilities:                                                                                                                                                                                       |  |        |    |    |  |   |    |    |
| Revolving creditfacility and current portion of long-term debt                                                                                                                                            |  | $           | 39,705  |    |  | $      | 43,904  |    |
| Accounts payable                                                                                                                                                                                          |  |        | 50,956  |    |  |   | 26,647  |    |
| Accruedliabilities                                                                                                                                                                                        |  |        | 29,702  |    |  |   | 17,453  |    |
| Current liabilities of discontinued operation                                                                                                                                                             |  |        | — |    |  |   | 8,176   |    |
| Total current liabilities                                                                                                                                                                                 |  |        | 120,363 |    |  |   | 96,180  |    |
| Long-term debt                                                                                                                                                                                            |  |        | 2,228   |    |  |   | 120     |    |
| Retirement and postretirement obligations                                                                                                                                                                 |  |        | 5,822   |    |  |   | 4,896   |    |
| Deferred income taxes                                                                                                                                                                                     |  |        | 899     |    |  |   | 620     |    |
| Other long-term liabilities                                                                                                                                                                               |  |        | 778     |    |  |   | 1,208   |    |
| Totallong-term liabilities                                                                                                                                                                                |  |        | 9,727   |    |  |   | 6,844   |    |
| Commitments and contingentliabilities                                                                                                                                                                     |  |        |    |    |  |   |    |    |
| Stockholders’equity                                                                                                                                                                                 |  |        |    |    |  |   |    |    |
| Preferred stock,$.01 par value: Authorized 2,500,000 shares; issued and outstanding asfollows:                                                                                                            |  |        |    |    |  |   |    |    |
| Series Ajunior participating preferred stock, $.01 parvalue:                                                                                                                                              |  |        |    |    |  |   |    |    |
| Authorized 200,000 shares;issued and outstanding – none at December  31,  2005and 2004                                                                                                              |  |        | — |    |  |   | — |    |
| Series B convertible preferred stock, $.01par value:                                                                                                                                                      |  |        |    |    |  |   |    |    |
| Authorized 30,000shares; issued and outstanding – 12,781 at December31,  2005 and 2004 (liquidation preference $1,278)                                                                              |  |        | — |    |  |   | — |    |
| Common stock,$.01 par value: Authorized 47,500,000 and 17,500,000 shares, issued15,297,769 and 7,147,959 shares, outstanding 15,255,833 and 7,106,023shares at December  31,  2005 and 2004, respectively |  |        | 152     |    |  |   | 71      |    |
| Paid-in capital                                                                                                                                                                                           |  |        | 105,642 |    |  |   | 55,041  |    |
| Accumulateddeficit                                                                                                                                                                                        |  |        | (11,848 | )  |  |   | (1,853  | )  |
| Accumulated other comprehensive loss                                                                                                                                                                      |  |        | (6,682  | )  |  |   | (6,409  | )  |
| Treasury stock,at cost, 41,936 shares at December  31,  2005 and 2004                                                                                                                                     |  |        | (15     | )  |  |   | (15     | )  |
| Totalstockholders’ equity                                                                                                                                                                           |  |        | 87,249  |    |  |   | 46,835  |    |
| Total liabilities andstockholders’ equity                                                                                                                                                           |  | $           | 217,339 |    |  | $      | 149,859 |    |
|                                                                                                                                                                                                           |

The accompanying notes are anintegral part of these consolidated financial statements.

34

----

PROLIANCE INTERNATIONAL,INC.CONSOLIDATED STATEMENTS OF CASH FLOWS

|                                                                                                                  |  |                          |         |         |  |        |         |         |  |        |         |         |  |  |
|------------------------------------------------------------------------------------------------------------------|--|--------------------------|---------|---------|--|--------|---------|---------|--|--------|---------|---------|--|--|
|                                                                                                             |  | YearsEnded December  31, |
| (inthousands)                                                                                                    |  | 2005                     |         | 2004    |  | 2003   |
| Cash flows fromoperating activities:                                                                             |  |                     |    |    |  |   |    |    |  |   |    |    |
| Net(loss) income                                                                                                 |  | $                        | (9,931  | )  |  | $      | 5,178   |    |  | $      | (4,536  | )  |
| Adjustments toreconcile net (loss) income to net cash provided by operatingactivities from continuingoperations: |  |                     |    |    |  |   |    |    |  |   |    |    |
| Income fromdiscontinued operation                                                                                |  |                     | (1,354  | )  |  |   | (5,727  | )  |  |   | (1,249  | )  |
| Gain on sale of discontinuedoperation                                                                            |  |                     | (6,230  | )  |  |   | — |    |  |   | — |    |
| Depreciation and amortization                                                                                    |  |                     | 4,547   |    |  |   | 4,707   |    |  |   | 4,626   |    |
| Deferred incometaxes                                                                                             |  |                     | 1,123   |    |  |   | (870    | )  |  |   | — |    |
| Provision for uncollectible accounts receivable                                                                  |  |                     | 2,433   |    |  |   | 509     |    |  |   | 499     |    |
| Non-cashrestructuring charges                                                                                    |  |                     | 1,851   |    |  |   | — |    |  |   | 68      |    |
| Gain on sale of building                                                                                         |  |                     | (276    | )  |  |   | (276    | )  |  |   | (181    | )  |
| Extraordinary income – negative goodwill                                                                   |  |                     | (13,053 | )  |  |   | — |    |  |   | — |    |
| Changes in operating assets and liabilities,net of acquisitions opening balancesheet:                            |  |                     |    |    |  |   |    |    |  |   |    |    |
| Accountsreceivable                                                                                               |  |                     | 7,182   |    |  |   | 6,987   |    |  |   | 10,509  |    |
| Inventories                                                                                                      |  |                     | 8,677   |    |  |   | (3,596  | )  |  |   | (6,215  | )  |
| Accounts payable                                                                                                 |  |                     | 8,538   |    |  |   | (331    | )  |  |   | 8,445   |    |
| Accrued liabilities                                                                                              |  |                     | 771     |    |  |   | 1,665   |    |  |   | 326     |    |
| Other                                                                                                            |  |                     | (2,456  | )  |  |   | 938     |    |  |   | (4,485  | )  |
| Net cash provided by operatingactivities of continuing operations                                                |  |                     | 1,822   |    |  |   | 9,184   |    |  |   | 7,807   |    |
| Net cash provided by operatingactivities of discontinued operation                                               |  |                     | 852     |    |  |   | 4,278   |    |  |   | 897     |    |
| Net cash provided by operating activities                                                                        |  |                     | 2,674   |    |  |   | 13,462  |    |  |   | 8,704   |    |
| Cash flows frominvestingactivities:                                                                              |  |                     |    |    |  |   |    |    |  |   |    |    |
| Capitalexpenditures by continuing operations                                                                     |  |                     | (8,892  | )  |  |   | (3,188  | )  |  |   | (4,476  | )  |
| Capitalexpenditures by discontinued operation                                                                    |  |                     | — |    |  |   | (1,701  | )  |  |   | (694    | )  |
| Sales andretirements of fixed assets                                                                             |  |                     | 901     |    |  |   | 194     |    |  |   | 115     |    |
| Cash on Modine Aftermarketacquisition balance sheet                                                              |  |                     | 6,300   |    |  |   | — |    |  |   | — |    |
| Cash expenditures forrestructuring costs on Modine Aftermarket acquisition balancesheet                          |  |                     | (3,039  | )  |  |   | — |    |  |   | — |    |
| Cashexpenditures for merger transaction costs                                                                    |  |                     | (6,426  | )  |  |   | (1,369  | )  |  |   | — |    |
| Proceeds fromsale of discontinued operation                                                                      |  |                     | 17,000  |    |  |   | — |    |  |   | — |    |
| Net proceeds from sale ofbuilding                                                                                |  |                     | — |    |  |   | — |    |  |   | 5,178   |    |
| Net cash provided by (used in)investing activities                                                               |  |                     | 5,844   |    |  |   | (6,064  | )  |  |   | 123     |    |
| Cashflows from financing activities (all from continuingoperations):                                             |  |                     |    |    |  |   |    |    |  |   |    |    |
| Dividendspaid                                                                                                    |  |                     | (64     | )  |  |   | (64     | )  |  |   | (64     | )  |
| Net repayments under revolving credit facility                                                                   |  |                     | (2,525  | )  |  |   | (6,068  | )  |  |   | (2,695  | )  |
| Repayment of Industrial Revenue Bond                                                                             |  |                     | — |    |  |   | — |    |  |   | (5,000  | )  |
| Repayments under term loan and capitalized leaseobligations                                                      |  |                     | (1,278  | )  |  |   | (1,140  | )  |  |   | (957    | )  |
| Deferred debt issuance costs                                                                                     |  |                     | (299    | )  |  |   | — |    |  |   | (71     | )  |
| Proceeds for stockoption exercises                                                                               |  |                     | 15      |    |  |   | — |    |  |   | — |    |
| Net cash used in financingactivities                                                                             |  |                     | (4,151  | )  |  |   | (7,272  | )  |  |   | (8,787  | )  |
| Effect of exchange rate changeson cash                                                                           |  |                     | (98     | )  |  |   | — |    |  |   | — |    |
| Net increase in cash and cashequivalents                                                                         |  |                     | 4,269   |    |  |   | 126     |    |  |   | 40      |    |
| Cash and cash equivalents at beginning of year                                                                   |  |                     | 297     |    |  |   | 171     |    |  |   | 131     |    |
| Cash and cash equivalents at end of year                                                                         |  | $                        | 4,566   |    |  | $      | 297     |    |  | $      | 171     |    |
|                                                                                                                  |

The accompanying notes are anintegral part of these consolidated financial statements.

35

----

PROLIANCE INTERNATIONAL,INC.CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’EQUITY(in thousands, except share data)

|                                                        |  |             |         |                 |  |                |         |                       |  |                                      |         |                           |  |        |         |         |  |        |         |         |  |        |         |         |  |  |
|--------------------------------------------------------|--|-------------|---------|-----------------|--|----------------|---------|-----------------------|--|--------------------------------------|---------|---------------------------|--|--------|---------|---------|--|--------|---------|---------|--|--------|---------|---------|--|--|
|                                                   |  | CommonStock |         | Paid-in Capital |  | Treasury Stock |         | (Accumulated Deficit) |  | Accumulated OtherComprehensive(Loss) |         | Total Stockholders'Equity |
| Balance at December  31,2002                           |  | $           | 71      |            |  | $              | 55,041  |                  |  | $                                    | (15     | )                    |  | $      | (2,367  | )  |  | $      | (4,492  | )  |  | $      | 48,238  |    |
| Netloss                                                |  |        | — |            |  |           | — |                  |  |                                 | — |                      |  |   | (4,536  | )  |  |   | — |    |  |   | (4,536  | )  |
| Adjustment for minimum pension liability               |  |        | — |            |  |           | — |                  |  |                                 | — |                      |  |   | — |    |  |   | (18     | )  |  |   | (18     | )  |
| Comprehensiveloss                                      |  |        | — |            |  |           | — |                  |  |                                 | — |                      |  |   | — |    |  |   | — |    |  |   | (4,554  | )  |
| Preferred stockdividends declared                      |  |        | — |            |  |           | — |                  |  |                                 | — |                      |  |   | (64     | )  |  |   | — |    |  |   | (64     | )  |
| Balance at December  31,2003                           |  |        | 71      |            |  |           | 55,041  |                  |  |                                 | (15     | )                    |  |   | (6,967  | )  |  |   | (4,510  | )  |  |   | 43,620  |    |
| Net income                                             |  |        | — |            |  |           | — |                  |  |                                 | — |                      |  |   | 5,178   |    |  |   | — |    |  |   | 5,178   |    |
| Adjustment for minimumpension liability                |  |        | — |            |  |           | — |                  |  |                                 | — |                      |  |   | — |    |  |   | (1,899  | )  |  |   | (1,899  | )  |
| Comprehensiveincome                                    |  |        | — |            |  |           | — |                  |  |                                 | — |                      |  |   | — |    |  |   | — |    |  |   | 3,279   |    |
| Preferred stockdividends declared                      |  |        | — |            |  |           | — |                  |  |                                 | — |                      |  |   | (64     | )  |  |   | — |    |  |   | (64     | )  |
| Balance at December  31,2004                           |  |        | 71      |            |  |           | 55,041  |                  |  |                                 | (15     | )                    |  |   | (1,853  | )  |  |   | (6,409  | )  |  |   | 46,835  |    |
| Net loss                                               |  |        | — |            |  |           | — |                  |  |                                 | — |                      |  |   | (9,931  | )  |  |   | — |    |  |   | (9,931  | )  |
| Adjustment for minimumpension liability                |  |        | — |            |  |           | — |                  |  |                                 | — |                      |  |   | — |    |  |   | 347     |    |  |   | 347     |    |
| Foreign current translation adjustment                 |  |        | — |            |  |           | — |                  |  |                                 | — |                      |  |   | — |    |  |   | (620    | )  |  |   | (620    | )  |
| Comprehensiveloss                                      |  |        | — |            |  |           | — |                  |  |                                 | — |                      |  |   | — |    |  |   | — |    |  |   | (10,204 | )  |
| Common stockissued for option exercises (4,000 shares) |  |        | — |            |  |           | 15      |                  |  |                                 | — |                      |  |   | — |    |  |   | — |    |  |   | 15      |    |
| Common stock issued for merger (8,145,810shares)       |  |        | 81      |            |  |           | 50,586  |                  |  |                                 | — |                      |  |   | — |    |  |   | — |    |  |   | 50,667  |    |
| Preferred stock dividends declared                     |  |        | — |            |  |           | — |                  |  |                                 | — |                      |  |   | (64     | )  |  |   | — |    |  |   | (64     | )  |
| Balance atDecember  31,  2005                          |  | $           | 152     |            |  | $              | 105,642 |                  |  | $                                    | (15     | )                    |  | $      | (11,848 | )  |  | $      | (6,682  | )  |  | $      | 87,249  |    |
|                                                        |

The accompanying notes are anintegral part of these consolidated financialstatements.

36

----

PROLIANCEINTERNATIONAL, INC. NOTES TO CONSOLIDATED FINANCIALSTATEMENTS

Note 1    Description of Business

Proliance International, Inc., formerly known as Transpro,Inc., (the ‘‘Company’’ or‘‘Proliance’’) designs, manufactures andmarkets radiators, radiator cores, heater cores, air conditioning parts(including condensers, compressors, accumulators and evaporators) andother heat transfer products for the automotive and light truckaftermarket. In addition, the Company designs, manufactures anddistributes radiators, radiator cores, charge air coolers, oil coolersand other specialty heat exchangers for the heavy duty heat exchangeraftermarket.

Note 2    Summary of Significant AccountingPolicies

Basis of Consolidation:    TheCompany’s consolidated financial statements include the accountsof all subsidiaries. Intercompany balances and transactions have beeneliminated. As a result of the sale of the Company’s Heavy DutyOEM business on March   1,   2005, as discussed in Note4, the accounts of the Heavy Duty OEM business unit have beensegregated and are shown in the consolidated financial statements andnotes thereto as a discontinued operation.

As a result ofthe merger with the Modine Aftermarket business on July22,   2005 (see Note 5), the reported results include asubsidiary located in Europe. The operating results of this businessare included in the Consolidated Statements of Operations on aone-month lag.

Cash and CashEquivalents:    The Company considers all highly liquidinvestments with maturities of three months or less at the time ofpurchase to be cash equivalents. Cash overdrafts if any, are classifiedas current liabilities. The amount reported in the balance sheet forcash and cash equivalents approximates its fair value.

Accounts Receivable:    The Company participates inseveral customer-sponsored payment programs in order to accelerate thecollection of outstanding accounts receivable and offset the impact oflengthening customer payment terms. When invoices are submitted to thefinancial institution designated in each customer program for payment,this is done without recourse. At the time cash is received,receivables are reduced, and a discounting fee, classified in interestexpense on the Consolidated Statement of Operations is recorded.Discounting fee expense for the years ended December31,   2005, 2004 and 2003 was $4.0   million,$1.5   million and $0.4   million, respectively. TheCompany establishes reserves for uncollectible trade accountsreceivable based upon historical experience, anticipated businesstrends and current economic conditions. Customer account balances arewritten off at the time they are deemed fully uncollectible.

Inventories:    Inventories are valued at the lowerof cost (first-in, first-out method) or market. Provisions are made forslow moving or obsolete inventory based upon historical usage andmanagement estimates of expected recovery.

Property,Plant and Equipment:    Property, plant and equipment isrecorded at cost. Ordinary maintenance and repairs are expensed, whilereplacements and betterments are capitalized. Land improvements,buildings and machinery are depreciated using the straight-line methodover their estimated useful lives which range up to forty years forbuildings and between three and ten years for machinery and equipment.Leasehold improvements are amortized over the lease term or theestimated useful lives of the improvements, whichever is shorter. Uponretirement or disposition of plant and equipment, the cost and relatedaccumulated depreciation are removed from the accounts and anyresulting gain or loss is recognized in the Company’sconsolidated statements of operations.

Goodwill:    Goodwill represents the excess of costover the fair value of assets acquired. The Company follows StatementNo. 142, ‘‘Goodwill and Other IntangibleAssets’’ (‘‘SFAS 142’’), whichrequires that goodwill and certain other intangible assets havingindefinite lives no longer be amortized to earnings, but instead besubject to periodic testing for impairment. Intangible assetsdetermined to have definitive lives will continue to be amortized overtheir useful lives. At December   31,   2005 and 2004, nogoodwill was recorded on the Consolidated Balance Sheet.

37

----

Impairment of Long-LivedAssets:    In the event that facts and circumstances indicatethat the carrying amounts of a business unit’s long-lived assetsmay be impaired, an evaluation of recoverability would be performed. Ifan evaluation is required, the estimated future undiscounted cash flowsassociated with the asset would be compared to the asset’scarrying amount to determine if a write-down is required. If thisreview indicates that the assets will not be recoverable, the carryingvalue of the Company’s assets would be reduced to theirestimated fair value.

Foreign CurrencyTranslation:    Assets and liabilities of foreign subsidiariesare translated into U.S. dollars at year-end exchange rates, and incomeand expense items are translated at the average exchange rates for theyear. Resulting translation adjustments are reported as othercomprehensive income (loss) in Shareholders’ Equity on theConsolidated Balance Sheet. Foreign currency transaction gains orlosses are included in the Consolidated Statement of Operations.

Revenue Recognition:    Sales are recognized eitherwhen products are shipped to the customer or when they are received bythe customer in accordance with the invoice shipping terms. Accrualsfor warranty costs, sales returns and allowances are provided at thetime of sale based upon historical experience or consistent withagreements currently in place with certain customers. In conjunctionwith multi-year agreements with certain customers, the Company incurscustomer acquisition costs which are capitalized and amortized, as areduction of net sales, over the life of the agreement. Deliverycharges billed to customers were not significant in 2005, 2004 or 2003.Freight costs for shipments of product to customers are included inselling, general and administrative expenses and amounted to$9.0   million, $5.9   million and $5.0   millionin 2005, 2004 and 2003, respectively.

AdvertisingCosts:    The Company offers certain customers advertising andmarketing allowances as a fixed percentage of sales. These allowancesare recorded as a reduction to net sales. In addition, the Companyincurs costs to advertise and promote its products. These costs, whichare not material, are included in selling, general and administrativeexpenses as incurred.

Research andDevelopment:    Research and development costs are expensed asincurred and approximated $0.2   million, $0.1   millionand $0.3   million in 2005, 2004 and 2003 respectively.

Stock Compensation Costs:    The Company appliesAPB Opinion No. 25 ‘‘Accounting for Stock Issued toEmployees’’ and related interpretations in accounting forits stock option plans. Accordingly, no compensation cost has beenrecognized in the financial statements. Had compensation cost for theCompany’s plans been determined based on the fair value at thegrant dates for awards under the plans, consistent with Statement ofFinancial Accounting Standards No. 123 ‘‘Accounting forStock Based Compensation,’’ as amended by SFAS No. 148‘‘Accounting for Stock-Based Compensation  –Transition and Disclosure’’, the pro forma net (loss)income and (loss) income per share for the three years endedDecember   31, would have been as follows:

|                                |  |                                         |         |         |  |        |        |         |  |        |        |         |  |  |
|--------------------------------|--|-----------------------------------------|---------|---------|--|--------|--------|---------|--|--------|--------|---------|--|--|
|                           |  | 2005                                    |         | 2004    |  | 2003   |
|                           |  | (in thousands, except pershare amounts) |
| Net (loss) income:             |  |                                    |    |    |  |   |   |    |  |   |   |    |
| As reported                    |  | $                                       | (9,931  | )  |  | $      | 5,178  |    |  | $      | (4,536 | )  |
| Stock based compensation costs |  |                                    | (491    | )  |  |   | (263   | )  |  |   | (240   | )  |
| Pro forma                      |  | $                                       | (10,422 | )  |  | $      | 4,915  |    |  | $      | (4,776 | )  |
|                                |

|                                            |  |                                         |        |         |  |        |        |        |  |        |        |         |  |  |
|--------------------------------------------|--|-----------------------------------------|--------|---------|--|--------|--------|--------|--|--------|--------|---------|--|--|
|                                       |  | 2005                                    |        | 2004    |  | 2003   |
|                                       |  | (in thousands, except pershare amounts) |
| Basic net (loss)income per common share:   |  |                                    |   |    |  |   |   |   |  |   |   |    |
| Asreported                                 |  | $                                       | (0.93  | )  |  | $      | 0.72   |   |  | $      | (0.65  | )  |
| Pro forma                                  |  |                                    | (0.98  | )  |  |   | 0.69   |   |  |   | (0.68  | )  |
| Diluted net (loss) incomeper common share: |  |                                    |   |    |  |   |   |   |  |   |   |    |
| Asreported                                 |  | $                                       | (0.93  | )  |  | $      | 0.72   |   |  | $      | (0.65  | )  |
| Pro forma                                  |  |                                    | (0.98  | )  |  |   | 0.69   |   |  |   | (0.68  | )  |
|                                            |

38

----

As a result of the merger withModine Aftermarket on July   22,   2005, all outstandingunvested employee stock options became fully vested, thus the remainingunrecorded stock compensation costs related to these options werereflected in the table above in 2005.

IncomeTaxes:    Deferred tax assets and liabilities are recorded basedon the difference between the financial statement and tax bases ofassets and liabilities using enacted tax rates in effect for the yearin which the differences are expected to reverse. A deferred taxvaluation allowance is recorded to reduce the carrying amount ofdeferred tax assets if it is more likely than not that such assets willnot be realized.

Concentration of Credit Risk andAvailability of Funds:    The Company is subject to aconcentration of credit risk primarily with its trade accountsreceivable. The largest concentration is with customers in theCompany’s Domestic segment where the top five customers comprise47% of net sales in 2005. The loss of one or more of thesecustomers could have a material adverse effect on the Company’sresults of operations. The Company grants credit to customers who meetpre-established credit requirements, and generally requires nocollateral from its customers. Estimates of potential credit losses arebased upon historical experience, customer information andmanagement’s expectations of the industry and the overalleconomy. As of December   31,   2005, the Company had noother significant concentrations of credit risk.

TheCompany’s financial statements have been prepared on the basisof continuity of operations as well as realization of assets and thesatisfaction of liabilities in the ordinary course of business. Thefuture liquidity and ordinary capital needs of the Company in the shortterm are expected to be met from a combination of cash flows fromoperations and borrowings under the Loan Agreement. TheCompany’s working capital requirements peak during the first andsecond quarters, reflecting the normal seasonality in the Domesticsegment. In addition, the Company’s future cash flow may beimpacted by industry trends towards lengthening customer payment termsor the extension of customer sponsored payment arrangements. TheCompany utilizes customer-sponsored payment programs administered byfinancial institutions in order to accelerate the collection ofreceivables and offset the impact of these longer terms. The Companyintends to continue utilizing these programs as long as it is a costeffective tool to accelerate cash flow. Management believes that cashflow from operations, together with the debt financing described inNote 10 herein, will be adequate to finance ongoing operations.However, management believes that the amount of funds available underthe Loan Agreement would not be sufficient to meet the capital needsfor major growth initiatives, such as significant acquisitions. If theCompany were to implement major new growth initiatives, it would haveto seek additional sources of capital. However, no assurance can begiven that the Company would be successful in securing such additionalsources of capital.

Use of Estimates:    Thepreparation of the consolidated financial statements in conformity withaccounting principles generally accepted in the United States ofAmerica requires management to make estimates and assumptions thataffect the reported amounts of assets and liabilities and disclosure ofcontingent assets and liabilities at the dates of the consolidatedfinancial statements and the reported amounts of revenues and expensesduring the reporting periods. Actual results could differ from thoseestimates.

Reclassification:    Certain priorperiod amounts have been reclassified to conform to the current yearpresentation.

Note 3    Recent AccountingPronouncements

In December   2004, the FASBissued a revised SFAS No. 123(R), ‘‘Share-BasedPayment’’. SFAS 123(R) establishes standards for theaccounting for transactions in which an entity exchanges its equityinstruments for goods or services or incurs liabilities in exchange forgoods or services that are based on the fair value of theentity’s equity instruments, focusing primarily on accountingfor transactions in which an entity obtains employee services inshare-based payment transactions. SFAS No. 123(R) requires publicentities to measure the cost of employee services received in exchangefor an award of equity instruments based on the grant-date fair valueof the award (with limited exceptions) and recognize the cost over theperiod during which an employee is required to provide service in

39

----

exchange for the award. The Company will berequired to adopt SFAS No. 123(R) as of January   1,2006. The ultimate impact, of recording non-cash stock compensationexpense, on the future results of operations as a result of adoptingSFAS No. 123(R) is not determinable as it is dependent on the number ofoptions granted after the effective date.

Note 4    Sale ofHeavy Duty OEM Business

On March   1,2005, the Company completed the sale of its Heavy Duty OEM business toModine Manufacturing Company (‘‘Modine’’) for$17   million in cash. The Company recorded a gain of$3.9   million, which is net of $2.3   million of incometax, which is reported as a gain on sale of discontinued operation inthe Consolidated Statements of Operations. The Heavy Duty OEM businessmanufactured and distributed heat exchangers to heavy duty truck andindustrial and off-highway original equipment manufacturers. Netproceeds from the sale were used to reduce borrowings under theCompany’s credit facility and to fund operating activities.

Heavy Duty OEM results for all periods are shown in theattached Consolidated Statements of Operations as results ofdiscontinued operation. Net sales for the Heavy Duty OEM business were$9.3   million for the period January   1,   2005through the date of the sale, March   1,   2005, whilenet sales for the years ended December   31,   2004 and2003 were $49.7   million and $29.8   million,respectively. Income from discontinued operation for the periodJanuary   1,   2005 through the date of the sale,March   1,   2005, was $0.8   million, which isnet of $0.5   million of tax, and $5.5   million and$0.8   million for the years ended December   31,2004 and 2003, which are net of $0.2   million and $0.5million of tax, respectively. The Company did not allocate anyinterest expense to the discontinued operation.

AtDecember   31,   2004, discontinued operation’scurrent assets of $11.4   million included net accountsreceivable of $5.8   million; net inventories of $5.2million; and other current assets of $0.4   million.Discontinued operation’s non-current assets reflect grossproperty, plant and equipment of $22.5   million, less$15.9   million of accumulated depreciation. Discontinuedoperation’s current liabilities included $6.5   millionof accounts payable and $1.7   million of accrued expenses.

In conjunction with the sale of the Heavy Duty OEM businessto Modine, the Company entered into a supply agreement to continueproviding Modine’s Jackson, Mississippi plant, which wasacquired in the transaction, with products it had been purchasing fromProliance facilities. This agreement is anticipated to end in 2006.From the date of the sale through December   31,   2005,the Company recorded $6.4   million of net trade sales to Modineunder this supply agreement. During the year ended December 31, 2004and 2003, the Company's continuing operations had $6.9 millionand $3.8 million, respectively of intercompany sales with the HeavyDuty OEM business.

Note 5    Merger with Modine AftermarketBusiness

On July   22,   2005, followingreceipt of approval of the Company's stockholders, the Companycompleted its merger transaction pursuant to which Modine AftermarketHoldings, Inc. (‘‘Modine Aftermarket’’) mergedinto the Company. Modine Aftermarket was spun off from Modineimmediately prior to the merger and consisted of Modine'saftermarket business. The Modine Aftermarket business manufactured anddistributed heat exchange and temperature control products in North andCentral America and Europe. Upon effectiveness of the merger, theCompany changed its name to ‘‘Proliance International,Inc.’’ (‘‘Proliance’’). Inconnection with the merger, the Company has issued a total of 8,145,810shares of its common stock to Modine shareholders, or 0.235681 sharesfor each outstanding Modine common share. Immediately after theeffectiveness of the merger, prior Transpro, Inc. shareholders owned48% of the combined company on a fully diluted basis, whileModine shareholders owned the remaining 52%. For accountingpurposes, the Company was the acquirer. As a result of the merger, theCompany is focused predominantly on supplying heating and coolingcomponents and systems to the automotive and heavy duty aftermarkets inNorth and Central America and Europe.

40

----

The acquisition was accounted foras a purchase transaction, and accordingly, the assets and liabilitiesacquired were recorded at their estimated fair value on the date of theacquisition. The Consolidated Statements of Operations includes theresults of the acquired business for the period subsequent to theacquisition date.

The aggregate consideration paid forthe transaction was as follows:

|                                                 |  |                |        |        |  |  |
|-------------------------------------------------|--|----------------|--------|--------|--|--|
|                                            |  | (in thousands) |
| Value of common stockissued                     |  |           |   |   |
| Common stock                                    |  | $              | 81     |   |
| Paid in capital                                 |  |           | 50,586 |   |
| Total value ofcommon stock issued               |  |           | 50,667 |   |
| Proliancetransaction costs                      |  |           | 4,468  |   |
| Modine transactioncosts reimbursed by Proliance |  |           | 4,239  |   |
| Totalconsideration                              |  | $              | 59,374 |   |
|                                                 |

The sharesof stock issued were valued at $6.22 per share, which represented theaverage closing price of Proliance common stock for the two days beforeand after the merger agreement was announced.

Thefollowing table summarizes the estimated fair values of the assetsacquired and liabilities assumed at July   22,   2005.These amounts are based upon a preliminary opening balance sheet, whichis still subject to review and adjustments. The initial purchase priceallocations, recorded during the third quarter of 2005, have beenadjusted for changes in the estimates of the fair value of the assetsacquired and liabilities assumed.

|                               |  |                |         |        |  |  |
|-------------------------------|--|----------------|---------|--------|--|--|
|                          |  | (in thousands) |
| Current assets                |  | $              | 101,120 |   |
| Property, plant and equipment |  |           | 20,259  |   |
| Other assets                  |  |           | 4,932   |   |
| Assetsacquired                |  |           | 126,311 |   |
| Current liabilities           |  |           | 30,948  |   |
| Otherliabilities              |  |           | 2,677   |   |
| Liabilities assumed           |  |           | 33,625  |   |
| Net assetsacquired            |  | $              | 92,686  |   |
|                               |

Includedin current liabilities assumed were accrued expenses associated withrestructuring Modine facilities. The excess ($33.3   million) ofthe net assets acquired over the total consideration was first utilizedto write-down to zero the acquired property, plant and equipment andintangible assets of the Modine Aftermarket business (totaling$20.2   million). The remaining amount, $13.1   million,was included as extraordinary income negative goodwill, in thedetermination of net income in the accompanying Consolidated Statementsof Operations.

The following table summarizes unauditedpro forma financial information for the twelve months endedDecember   31,   2005 and 2004 assuming the ModineAftermarket merger had occurred on January   1,   2004.The Modine Aftermarket year end was March   31. The unauditedpro forma financial information uses data corresponding toProliance’s reporting period. This unaudited pro formainformation does not represent what would have occurred if thetransaction had taken place on January   1,   2004 anddoes not reflect our future consolidated results of operations orfinancial position. The unaudited pro forma combined financialstatements do not include any adjustments to reflect any of therestructuring costs expected to be incurred in order to combine theoperations of Proliance and the Modine Aftermarket business or theanticipated benefits from these synergy actions. These restructuringcosts will result from actions taken with respect to both Proliance andModine Aftermarket business operations, facilities and associates. Thecharges will be recorded based upon the nature and timing of theseintegration actions.

41

----

|                                              |  |                                      |         |         |  |        |         |         |  |  |
|----------------------------------------------|--|--------------------------------------|---------|---------|--|--------|---------|---------|--|--|
|                                         |  | Years Ended December31,              |
|                                         |  | 2005                                 |         | 2004    |
|                                         |  | (in thousands, except pershare data) |
| Netsales                                     |  | $                                    | 420,616 |    |  | $      | 430,141 |    |
| Net lossfrom continuing operations           |  | $                                    | (30,358 | )  |  | $      | (1,154  | )  |
| Net loss per share fromcontinuing operations |  |                                 |    |    |  |   |    |    |
| –basic                                 |  | $                                    | (1.99   | )  |  | $      | (0.08   | )  |
| – diluted                              |  | $                                    | (1.99   | )  |  | $      | (0.08   | )  |
|                                              |

During September, 2005, theCompany sold to Modine, surplus fixed assets, acquired in the merger,which had been written down to zero through the purchase accountingentry. As a result, the $0.5   million of proceeds were recordedas a gain on disposal of fixed assets and included as a reduction ofselling, general and administrative expenses in the accompanyingConsolidated Statements of Operations.

Note 6    Sale ofBuilding

On May   1,   2003, the Companycompleted the sale of its headquarters facility in New Haven,Connecticut. In conjunction with the sale, the Company entered into asix-year lease for the office, test lab and tube mill space, which itcurrently occupies. The proceeds from the sale were used to repay the$5.0   million outstanding balance of the Industrial RevenueBond (‘‘IRB’’) on the facility. The gain on thesale of the building, of approximately $1.6   million, is beingrecognized as income equally over the six-year term of the lease.During 2005, 2004 and 2003, the Company recorded a gain of $0.3million, $0.3   million and $0.2   million,respectively, in its results from operations. The minimum leaseobligation under the lease agreement is $0.3   million per yearor $2.0   million for the full term of the lease.

Note7    Restructuring Charges

On March30,   2005, the Company announced that it would be closing twowarehousing operations and a returns processing facility in Memphis,Tennessee in connection with the opening of a new distribution facilityin Southaven, Mississippi. The Company took these actions in order tostreamline its distribution network and enhance its commitment tocustomer service. The closing and relocation activities were completedby June   30,   2005 and resulted in the Companyincurring $0.5   million of restructuring costs.

On April   8,   2005 the Company announced thatit would close its aluminum heater manufacturing facility in Buffalo,New York and move all its aluminum heater production to its NuevoLaredo, Mexico facility. The Company took these actions in order toimprove its product cost position. The closing and relocationactivities were completed by September   30,   2005 andresulted in the Company incurring $1.0   million ofrestructuring costs. This closure resulted in the termination of 54employees.

In conjunction with the merger with ModineAftermarket, the Company commenced a 12- to 18-month restructuringprogram expected to result in one-time charges of $10   millionto $14   million. These actions are designed to lower costs andincrease manufacturing and operating efficiencies and includeactivities impacting existing Proliance locations, which resulted incharges to the income statement, and activities impacting locationsacquired in the Modine Aftermarket merger, which costs have beenaccrued on the opening balance sheet as a purchase accounting entry.Activities under this program were accelerated and a major portion ofthem have been completed as of December   31,   2005. Theremainder will be completed during the first half of 2006. Actionscompleted in 2005 resulted in the elimination of 247 employeepositions.

On July   25,   2005 the Companyannounced that it would close its Emporia, Kansas manufacturingfacility and move its radiator and oil cooler production to twoexisting facilities in Mexico. In addition, two heavy duty regionalplants and branch distribution centers in Denver, Colorado and Seattle,Washington were also closed and consolidated into existing facilities.The Company took these actions in order to lower its product costs andstreamline its manufacturing capabilities. The closing and

42

----

relocation actions related to the Emporia,Kansas facility were completed by the end of 2005. The closure andrelocation of the regional plant facilities were completed bySeptember   30,   2005. Costs associated with Modinefacilities were accrued on the opening balance sheet as a purchaseaccounting entry while costs associated with Proliance facilities areor will be included in the Statements of Operations as restructuringexpense as incurred. Cash expenditures for these activities willcontinue through 2006.

On July   29,   2005the Company announced that it would be closing 22 branch locationsthroughout the United States as another phase of its mergerrestructuring program. These facilities were combined into otherexisting Company branch locations. These actions were taken in order toeliminate duplicate facilities and lower distribution costs. Theclosure and consolidation actions were completed by the end of 2005.Costs associated with Modine facilities were accrued on the openingbalance sheet as a purchase accounting entry while costs associatedwith Proliance facilities have been included in the Statements ofOperations as restructuring expense. Cash expenditures for theseactivities will continue through 2006.

OnSeptember   23,   2005, the Company announced the closingof its copper/brass tube mill operation located in New Haven,Connecticut, as another phase of its previously announced restructuringprogram. The Company took this action in order to lower ongoing costs.The closing activities were completed during the fourth quarter of 2005and resulted in the Company incurring approximately $0.2million of restructuring costs. These costs which are associated withrelocating inventory and machinery and one-time personnel relatedexpenses associated with the elimination of nine full-time positionsare included in the Consolidated Statements of Operations asrestructuring expense. Cash expenditures will be completed in 2006.

On October   7,   2005, the Company announcedits decision to (i) close its distribution centers in Orlando, Floridaand Kansas City, Missouri and consolidate these activities into twoexisting facilities in Arlington, Texas and Southaven, Mississippi and(ii) consolidate the portion of its copper/brass radiator production,performed at its Nuevo Laredo, Mexico plant, into its Mexico City plantlocation.

The distribution center closings in Kansas Cityand Orlando and the associated relocation actions were essentiallycompleted by the end of 2005. In conjunction with these actions, theCompany incurred between $0.3   million and $0.4million in one-time cash costs related to the relocation of inventory,facility exit costs and personnel-related expenses associated with theelimination of 36 employment positions once these activities arecompleted. These costs have been accrued on the opening acquisitionbalance sheet, resulting in reduction of the negative goodwillgenerated by the transaction, as they related to the closure ofacquired facilities. Cash expenditures for these activities willcontinue through 2006.

The relocation of the Nuevo Laredocopper/brass radiator production to Mexico City is expected to becompleted during the first calendar quarter of 2006. When this actionis completed, the Company will have centralized its copper/brassradiator production in Mexico City and its aluminum radiator productionin Nuevo Laredo. Costs associated with this relocation, which areexpected to be $3.0   million to $3.5   million, will berecorded in the Consolidated Statements of Operations as restructuringexpenses as they are incurred. These include cash expenditures torelocate equipment and employee-related costs associated with theelimination of 194 positions, along with the non-cash write-off ofcertain inventory and the non-cash write-down of fixed assets, nolonger required, to net realizable value. The write-off of inventoryand fixed assets occurred in 2005. Other costs will be completed in2006. With the relocation of production to Mexico City, the Companyexpects to add 42 associates.

During 2003, the Companycompleted the $7.0   million restructuring program that it hadcommenced during the third quarter of 2001. The program was designedaround business initiatives to improve the Company’s operatingperformance, including the redesign of our distribution system,headcount reductions, the transfer of production between manufacturingfacilities and a reevaluation of our product offerings. The Companyalso added approximately $0.9   million of new restructuringprograms in 2003 to include the relocation of Fedco’s inventoryand machinery (acquired at the end of 

43

----

2002) to Mexico and salaried headcountreductions made in order to lower overall operating costs.Restructuring and other special charges of $1.5   million wererecorded during 2003 as a result of these activities.

Workforce related charges in 2003 represent the eliminationof 82 salaried and hourly positions as a result of the closure of twoHeavy Duty Aftermarket plants and salaried headcount reductions. Cashpayments for severance programs were completed during 2004. Facilityconsolidation costs in 2003 are associated with the closure of twoHeavy Duty Aftermarket plants in North Kansas City, Missouri andPhoenix, Arizona, the closure of the Charlotte, North CarolinaAutomotive and Light Truck branch and the relocation of the Fedcocopper/brass inventory and machinery from Buffalo to our existingfacility in Mexico. Cash payments were completed during 2004. Inconjunction with the closure of two Heavy Duty Aftermarket plants in2003, the Company also wrote down the related fixed assets andinventory to net realizable value and disposed of the assets.

The remaining restructuring reserve balance atDecember   31,   2003 and 2005 was classified in otheraccrued liabilities. At December   31,   2004, therestructuring reserve had a zero balance. A summary of restructuringcharges and payments during the three years ended December31,   2005 is as follows:

|                                              |  |                   |         |                        |  |                  |         |         |  |        |         |         |  |        |         |         |  |  |
|----------------------------------------------|--|-------------------|---------|------------------------|--|------------------|---------|---------|--|--------|---------|---------|--|--------|---------|---------|--|--|
|                                         |  | Workforce Related |         | Facility Consolidation |  | Asset Write-down |         | Total   |
|                                         |  | (inthousands)     |
| Balance atDecember   31,   2002              |  | $                 | 475     |                   |  | $                | 162     |    |  | $      | — |    |  | $      | 637     |    |
| Charge tooperations                          |  |              | 922     |                   |  |             | 500     |    |  |   | 68      |    |  |   | 1,490   |    |
| Cash payments                                |  |              | (1,198  | )                 |  |             | (639    | )  |  |   | — |    |  |   | (1,837  | )  |
| Non-cash write-off                           |  |              | — |                   |  |             | — |    |  |   | (68     | )  |  |   | (68     | )  |
| Balance atDecember   31,   2003              |  |              | 199     |                   |  |             | 23      |    |  |   | — |    |  |   | 222     |    |
| Cash payments                                |  |              | (199    | )                 |  |             | (23     | )  |  |   | — |    |  |   | (222    | )  |
| Balance at December   31,2004                |  | $                 | — |                   |  | $                | — |    |  | $      | — |    |  | $      | — |    |
| Charge to operations                         |  |              | 1,041   |                   |  |             | 1,388   |    |  |   | 1,851   |    |  |   | 4,280   |    |
| Modine Aftermarket acquisition balance sheet |  |              | 2,186   |                   |  |             | 2,647   |    |  |   | — |    |  |   | 4,833   |    |
| Cash payments                                |  |              | (2,944  | )                 |  |             | (2,364  | )  |  |   | — |    |  |   | (5,308  | )  |
| Non-cashwrite-off                            |  |              | — |                   |  |             | — |    |  |   | (1,851  | )  |  |   | (1,851  | )  |
| Balance atDecember   31,   2005              |  | $                 | 283     |                   |  | $                | 1,671   |    |  | $      | — |    |  | $      | 1,954   |    |
|                                              |

Of the $4.3   million ofrestructuring charges included in the Consolidated Statements ofOperations for the year ended December   31,   2005,$0.4   million was included in cost of sales as it representsthe write down of inventory to net realizable value.

Theremaining accrual for facility consolidations at December 31, 2005consists primarily of lease obligations and facility exit costs relatedto the acquired Modine facilities, which are expected to be paidprimarily in 2006.

Note 8    Inventory 

Inventory at December   31 consists of thefollowing:

|                                  |  |                |         |        |  |        |        |        |  |  |
|----------------------------------|--|----------------|---------|--------|--|--------|--------|--------|--|--|
|                             |  | 2005           |         | 2004   |
|                             |  | (in thousands) |
| Raw material and component parts |  | $              | 21,813  |   |  | $      | 16,437 |   |
| Work in progress                 |  |           | 4,070   |   |  |   | 3      |   |
| Finished goods                   |  |           | 95,167  |   |  |   | 54,771 |   |
| Total inventory                  |  | $              | 121,050 |   |  | $      | 71,211 |   |
|                                  |

44

----

Note9    Property, Plant and Equipment

Property, plantand equipment at December   31 consists of the following:

|                                          |  |                |         |         |  |        |         |         |  |  |
|------------------------------------------|--|----------------|---------|---------|--|--------|---------|---------|--|--|
|                                     |  | 2005           |         | 2004    |
|                                     |  | (in thousands) |
| Leasehold improvements                   |  | $              | 3,289   |    |  | $      | 1,924   |    |
| Machinery andequipment                   |  |           | 38,748  |    |  |   | 46,366  |    |
| Property, plant and equipment,gross      |  |           | 42,037  |    |  |   | 48,290  |    |
| Accumulateddepreciation and amortization |  |           | (21,704 | )  |  |   | (32,155 | )  |
| Property, plant and equipment, net       |  | $              | 20,333  |    |  | $      | 16,135  |    |
|                                          |

Assets acquired in the ModineAftermarket merger have been recorded with a zero cost and accumulateddepreciation due to the application of a portion of the excess of netassets acquired over the total consideration of the transaction.

The cost and accumulated depreciation of assets under capitallease obligations was $2.1   million and $0.4   millionat December   31,   2005 and $0.2   million and$0.1   million at December   31,   2004,respectively.

Note 10    Debt

Debt atDecember  31 consists of the following:

|                                  |  |                |        |        |  |        |        |        |  |  |
|----------------------------------|--|----------------|--------|--------|--|--------|--------|--------|--|--|
|                             |  | 2005           |        | 2004   |
|                             |  | (in thousands) |
| Revolving credit facility        |  | $              | 38,805 |   |  | $      | 42,530 |   |
| Term loan                        |  |           | 1,587  |   |  |   | 1,275  |   |
| Capitalized lease obligations    |  |           | 1,541  |   |  |   | 219    |   |
| Totaldebt                        |  |           | 41,933 |   |  |   | 44,024 |   |
| Less:                            |  |           |   |   |  |   |   |   |
| Revolving creditfacility         |  |           | 38,805 |   |  |   | 42,530 |   |
| Currentportion of long-term debt |  |           | 900    |   |  |   | 1,374  |   |
| Total long-term debt             |  | $              | 2,228  |   |  | $      | 120    |   |
|                                  |

On July  22,  2005, inconnection with the merger of the Company with the aftermarket businessof Modine, the Company amended its $80.0  million credit facilitywith Wachovia Capital Financial Corporation (New England), formerlyknown as Congress Financial Corporation (New England) effectiveJuly  21,  2005. The amended credit facility consists of arevolving credit line with maximum borrowings of $78.3  millionand a $1.7  million term loan, each of which was amended to expireon July  21,  2009 (subject to renewal on an annual basisthereafter). Under the amended credit facility, the interest rate is2% over a Eurodollar-based rate through April  21,2006 and ranges from 1.75% to 2.25% over such ratethereafter. The amended credit facility also provides that the Companymay pay dividends or repurchase capital stock of up to $3.0million annually, as long as excess availability, as defined in theagreement, is at least $18.0  million for the 30 consecutive daysboth prior to and following the payment date. The amended creditfacility also amends the borrowing base calculation such that (i) up to$55.0  million in respect of eligible inventory may be counted and(ii) availability reserves, as defined in the agreement, may be revisedfor dilution in respect of the Company’s accounts. The amendedfacility adds financial covenants for (i) minimum EBITDA (testedquarterly commencing September  30,  2005 and not required ifexcess availability exceeds $15.0  million), (ii) minimum excessavailability ($5.0  million at all times through June30,  2006 and $13.0  million immediately after giving effectto the merger), and (iii) capital expenditures (not to exceed$12.0  million in any calendar year, if financed under the creditfacility).

On October  20,  2005, the Companyamended its Loan and Security Agreement (the ‘‘LoanAgreement’’) with Wachovia Capital Finance Corporation (NewEngland), pursuant to a Thirteenth 

45

----

Amendment to Loan and Security Agreement.Under the amended Loan Agreement, the Unused Line Fee was reducedthrough June  30,  2006. The amended Loan Agreement changesfinancial covenants for (i) minimum EBITDA (tested quarterly commencingSeptember  30,  2005 and not required if Excess Availabilityexceeds $15.0  million) such that minimum EBITDA for theSeptember  30,  2005 and December  31,  2005 testdates was lowered and (ii) minimum Excess Availability ($5.0million at all times through June  30,  2006) so as to giveno effect to the limitations on Excess Availability imposed by theMaximum Credit under the amended Loan Agreement of $80.0  millionor the Revolving Loan Ceiling. The amended Loan Agreement also includeda financial covenant requiring that consolidated inventory, excludingthe Company’s NRF and Mexpar subsidiaries, as of December31,  2005 would not exceed $122.0  million. The Company wasin compliance with these covenants at December  31,2005.

On November  19,  2004, the Companyentered into an amendment to its Loan Agreement which increased loanavailability by $1.0  million as a result of a reduction in anAvailability Reserve contained in the Loan Agreement. In addition, theminimum Adjusted Net Worth requirement, under the agreement, wasincreased from $37.0  million to $40.0  million for allperiods after September  30,  2004.

The LoanAgreement, which was originally entered into on January  4,2001, and amended thereafter, is collateralized by a blanket firstsecurity interest in substantially all of the Company’s assetsplus a pledge of the stock of the Company’s subsidiaries.Available borrowings under the Revolving Credit Facility are determinedby a borrowing base consisting of the Company’s eligibleaccounts receivable and inventory, adjusted by an advance rate.Borrowings under the Revolving Credit Facility are classified as shortterm in the accompanying consolidated balance sheet.

Amounts borrowed under the Loan Agreement prior to theamendment noted above, bore interest at variable rates based, at theCompany’s option, on either the Eurodollar rate plus a margin of2.0%, 2.25% or 2.50% depending on theCompany’s pretax profit performance, or the Wachovia baselending rate. The Loan Agreement also contained covenants regardingworking capital and net worth.

At December31,  2005 and 2004, the interest rate on outstanding borrowingsunder the Loan Agreement was 6.29% and 4.83%,respectively. The weighted average interest rate during 2005 and 2004was 5.85% and 4.29%, respectively. Available borrowingsunder the Revolving Credit facility at December  31,  2005were $17.5  million.

The term loan requires monthlypayments, totaling $0.3 million per year with a final payment inJuly,  2009.

Capitalized lease obligations relateprimarily to computer equipment and racking at the Company’sdistribution center in Southaven, Mississippi. The total future rentalpayments under the capital leases of $1.7  million includeinterest payments of $0.2  million.

Interest paidduring 2005, 2004 and 2003 was $7.0  million, $3.9  million,and $2.9  million, respectively.

TheCompany’s NRF subsidiary in The Netherlands has an availablecredit facility of five million Euro. There were no borrowings underthe arrangement at December  31,  2005.

TheCompany utilizes letters of credit in the amounts of $4.9  millionat December  31,  2005 and 2004 to back certain insurancepolicies and certain trade purchases.

Minimum future debtrepayments, excluding the Revolving Credit facility, will be $0.9million in 2006, $0.8  million in 2007, $0.7  million in 2008and $0.7  million in 2009.

Note11    Stockholders’ Equity

CommonStock:    At the Company’s annual shareholders’meeting, held on July  22,  2005, shareholders approved anincrease in the Company’s authorized common stock from17.5  million shares to 47.5  million shares.

Stockholder Rights Plan:    On September14,  1995, the Board of Directors adopted a Stockholder RightsPlan (the ‘‘Rights Plan’’), under which oneRight (the ‘‘Right’’) was issued anddistributed for 

46

----

each share of common stock. The Rights Planwas intended to protect shareholders against unsolicited attempts toacquire control of the Company that do not offer what the Companybelieves to be an adequate price to all shareholders. Each Rightentitled the registered holder to purchase from the Company oneone-hundredth of a share of Series A Preferred Stock at a price of$60.00 per one one-hundredth of a share of Series A Preferred Stocksubject to adjustment. The description and terms of the Rights were setforth in a Rights Agreement between the Company and American StockTransfer & Trust Company, as Rights Agent.

OnApril  29,  2004, the Company announced that its Board ofDirectors approved an amendment of the Company’sShareholders’ Rights Agreement to accelerate its expiration datefrom September  29,  2005 to September  30,  2004.As a result, the Rights Plan was effectively terminated onOctober  1,  2004.

PreferredStock:    In connection with the acquisition of Ready-Aire, theCompany issued 30,000 shares of its Series B Convertible PreferredStock (‘‘Preferred Stock’’). The purchaseagreement provided for a potential additional payout for the Ready-Aireacquisition based on the earnings performance of the business for theperiod January  1,  1999 through December  31,2000 that would, under certain circumstances, take the form of anincrease in the liquidation preference of the Preferred Stock. Theholder of the Preferred Stock has disputed the calculation of thepayout amount, and the Company is attempting to resolve the differencesin accordance with the arbitration provisions of the Ready-Aire stockpurchase agreement. The Preferred Stock is non-transferable and isentitled to cumulative dividends of 5%. It is redeemable at theCompany’s option, at the liquidation preference at the time ofredemption. The Preferred Stock is convertible into common stock basedupon the liquidation preference and the market value of common stock atthe time of conversion, as further defined in the purchase agreement.The aggregate number of shares of common stock to be issued uponconversion of Preferred Stock may not exceed 7% of the totalnumber of shares of common stock outstanding, after giving effect tothe conversion.

Accumulated Other ComprehensiveLoss:    Other comprehensive loss pertains to revenues,expenses, gains and losses that are not included in net income (loss),but rather are recorded directly in Stockholders’ Equity. For2005, 2004 and 2003, other comprehensive loss reflected minimum pensionliability adjustments. As a result of the Modine Aftermarket merger, in2005, other comprehensive loss also reflects accumulated foreigncurrency translation adjustments. The adjustments for the three yearsended December  31, were as follows:

|                              |  |                         |        |                              |  |        |         |         |  |        |        |         |  |  |
|------------------------------|--|-------------------------|--------|------------------------------|--|--------|---------|---------|--|--------|--------|---------|--|--|
|                         |  | MinimumPensionLiability |        | Foreign Currency Translation |  | Total  |
|                         |  | (inthousands)           |
| Balance at December  31,2002 |  | $                       | (4,492 | )                       |  | $      | — |    |  | $      | (4,492 | )  |
| Annual adjustment            |  |                    | (18    | )                       |  |   | — |    |  |   | (18    | )  |
| Balance at December31,  2003 |  |                    | (4,510 | )                       |  |   | — |    |  |   | (4,510 | )  |
| Annual adjustment            |  |                    | (1,899 | )                       |  |   | — |    |  |   | (1,899 | )  |
| Balance at December  31,2004 |  |                    | (6,409 | )                       |  |   | — |    |  |   | (6,409 | )  |
| Annual adjustment            |  |                    | 347    |                         |  |   | (620    | )  |  |   | (273   | )  |
| Balance at December31,  2005 |  | $                       | (6,062 | )                       |  | $      | (620    | )  |  | $      | (6,682 | )  |
|                              |

Note12    Retirement and Post-retirement Plans

Domestic Retirement Plans:    A majority of theCompany’s non-union full-time U.S. employees are covered by acash balance defined benefit plan. Generally, employees become vestedin their pension plan benefits after 5 years of employment. The Companyalso maintains a non-qualified retirement plan to supplement benefitsfor designated employees whose pension plan benefits are limited by theprovisions of the Internal Revenue Code.

47

----

The Company has recorded anadditional minimum liability at the end of each year representing theexcess of the accumulated benefit obligations over the fair value ofplan assets and accrued pension liabilities. To the extent possible, anintangible asset, representing unrecognized prior service costs, hasbeen recorded to offset the liabilities. The balance of the liabilityat the end of the period is reported as a separate reduction ofStockholders’ Equity.

Pension assets andliabilities associated with the Heavy Duty OEM business unit remainedwith the Company after the sale of this business unit in 2005.

Domestic Postretirement Plans:    The Companyprovides healthcare and life insurance benefits for certain retiredemployees who reach retirement age while working for the Company. TheCompany accrues for the cost of its postretirement healthcare and lifeinsurance benefits based on actuarially determined costs recognizedover the period from the date of hire to the full eligibility date ofemployees who are expected to qualify for these benefits. The Companyfunds these costs on a pay as you go basis.

Components ofnet periodic benefit cost of domestic retirement and postretirementplans for the three years ended December  31 are as follows:

|                                    |  |                  |        |                      |  |        |         |         |  |        |         |         |  |        |         |         |  |        |         |        |  |        |         |        |  |  |
|------------------------------------|--|------------------|--------|----------------------|--|--------|---------|---------|--|--------|---------|---------|--|--------|---------|---------|--|--------|---------|--------|--|--------|---------|--------|--|--|
|                               |  | Retirement Plans |        | Postretirement Plans |
|                               |  | 2005             |        | 2004                 |  | 2003   |         | 2005    |  | 2004   |         | 2003    |
|                               |  | (in thousands)   |
| Servicecost                        |  | $                | 807    |                 |  | $      | 813     |    |  | $      | 801     |    |  | $      | 2       |    |  | $      | 5       |   |  | $      | 5       |   |
| Interest cost                      |  |             | 1,842  |                 |  |   | 1,821   |    |  |   | 1,824   |    |  |   | 25      |    |  |   | 31      |   |  |   | 37      |   |
| Expected return on plan assets     |  |             | (2,065 | )               |  |   | (2,062  | )  |  |   | (2,095  | )  |  |   | — |    |  |   | — |   |  |   | — |   |
| Curtailment (gain)loss             |  |             | 181    |                 |  |   | — |    |  |   | — |    |  |   | (30     | )  |  |   | — |   |  |   | — |   |
| Amortization of netloss            |  |             | 530    |                 |  |   | 281     |    |  |   | 141     |    |  |   | 2       |    |  |   | 4       |   |  |   | 4       |   |
| Net periodic benefitcost           |  |             | 1,295  |                 |  |   | 853     |    |  |   | 671     |    |  |   | (1      | )  |  |   | 40      |   |  |   | 46      |   |
| Allocated to discontinuedoperation |  |             | 66     |                 |  |   | 395     |    |  |   | 331     |    |  |   | — |    |  |   | — |   |  |   | — |   |
| Allocated to continuing operations |  | $                | 1,229  |                 |  | $      | 458     |    |  | $      | 340     |    |  | $      | (1      | )  |  | $      | 40      |   |  | $      | 46      |   |
|                                    |

Thecurtailment charge incurred in 2005 relates to the closure offacilities in conjunction with the Company’s restructuringactivities.

The following tables set forth the domesticplans’ combined funded status and amounts recognized in theCompany’s consolidated balance sheets at the measurement date,December  31:

48

----

|                                          |  |                 |        |                     |  |        |         |         |  |        |         |         |  |        |         |         |  |  |
|------------------------------------------|--|-----------------|--------|---------------------|--|--------|---------|---------|--|--------|---------|---------|--|--------|---------|---------|--|--|
|                                     |  | RetirementPlans |        | PostretirementPlans |
|                                     |  | 2005            |        | 2004                |  | 2005   |         | 2004    |
|                                     |  | (in thousands)  |
| Change in benefitobligation:             |  |            |   |                |  |   |    |    |  |   |    |    |  |   |    |    |
| Benefitobligation at January  1          |  | $               | 32,319 |                |  | $      | 30,212  |    |  | $      | 515     |    |  | $      | 526     |    |
| Service cost                             |  |            | 807    |                |  |   | 813     |    |  |   | 2       |    |  |   | 5       |    |
| Interestcost                             |  |            | 1,842  |                |  |   | 1,821   |    |  |   | 25      |    |  |   | 31      |    |
| Curtailment and termination gain         |  |            | (252   | )              |  |   | — |    |  |   | (78     | )  |  |   | — |    |
| Actuarial loss (gain)                    |  |            | 502    |                |  |   | 984     |    |  |   | (61     | )  |  |   | 18      |    |
| Actual gross benefitspaid                |  |            | (1,952 | )              |  |   | (1,511  | )  |  |   | (18     | )  |  |   | (65     | )  |
| Benefit obligation atDecember  31        |  | $               | 33,266 |                |  | $      | 32,319  |    |  | $      | 385     |    |  | $      | 515     |    |
| Change in planassets:                    |  |            |   |                |  |   |    |    |  |   |    |    |  |   |    |    |
| Fair value of planassets at January  1   |  | $               | 25,460 |                |  | $      | 21,603  |    |  | $      | — |    |  | $      | — |    |
| Actual return onplan assets              |  |            | 1,991  |                |  |   | 2,612   |    |  |   | — |    |  |   | — |    |
| Company contributions                    |  |            | 664    |                |  |   | 2,756   |    |  |   | 18      |    |  |   | 65      |    |
| Actual grossbenefits paid                |  |            | (1,952 | )              |  |   | (1,511  | )  |  |   | (18     | )  |  |   | (65     | )  |
| Fair valueof plan assets at December  31 |  | $               | 26,163 |                |  | $      | 25,460  |    |  | $      | — |    |  | $      | — |    |
|                                          |

|                                                       |  |                  |         |                      |  |        |        |         |  |        |         |         |  |        |         |         |  |  |
|-------------------------------------------------------|--|------------------|---------|----------------------|--|--------|--------|---------|--|--------|---------|---------|--|--------|---------|---------|--|--|
|                                                  |  | Retirement Plans |         | Postretirement Plans |
|                                                  |  | 2005             |         | 2004                 |  | 2005   |        | 2004    |
|                                                  |  | (inthousands)    |
| Reconciliation offunded status:                       |  |             |    |                 |  |   |   |    |  |   |    |    |  |   |    |    |
| Funded statusat December  31                          |  | $                | (7,103  | )               |  | $      | (6,859 | )  |  | $      | (385    | )  |  | $      | (515    | )  |
| Unrecognized transitionobligation                     |  |             | 4       |                 |  |   | 11     |    |  |   | — |    |  |   | — |    |
| Unrecognized prior service cost                       |  |             | 154     |                 |  |   | 206    |    |  |   | — |    |  |   | 50      |    |
| Unrecognized net loss (gain)                          |  |             | 6,882   |                 |  |   | 7,175  |    |  |   | (18     | )  |  |   | 43      |    |
| (Accrued) prepaid benefit cost                        |  | $                | (63     | )               |  | $      | 533    |    |  | $      | (403    | )  |  | $      | (422    | )  |
| Amounts recognized instatements of financialposition: |  |             |    |                 |  |   |   |    |  |   |    |    |  |   |    |    |
| Long-term pensionasset                                |  | $                | 832     |                 |  | $      | 791    |    |  | $      | — |    |  | $      | — |    |
| Accrued benefit liability                             |  |             | (6,957  | )               |  |   | (6,722 | )  |  |   | (403    | )  |  |   | (422    | )  |
| Intangible asset                                      |  |             | — |                 |  |   | 55     |    |  |   | — |    |  |   | — |    |
| Accumulated othercomprehensive loss                   |  |             | 6,062   |                 |  |   | 6,409  |    |  |   | — |    |  |   | — |    |
| Netamount recognized at December  31                  |  | $                | (63     | )               |  | $      | 533    |    |  | $      | (403    | )  |  | $      | (422    | )  |
|                                                       |

The assumptions used in thedetermination of the domestic retirement and postretirement benefitobligation at December  31 are as follows:

|                    |  |                  |      |                      |  |        |      |         |  |        |      |         |  |        |         |         |  |        |         |         |  |        |         |         |  |  |
|--------------------|--|------------------|------|----------------------|--|--------|------|---------|--|--------|------|---------|--|--------|---------|---------|--|--------|---------|---------|--|--------|---------|---------|--|--|
|               |  | Retirement Plans |      | Postretirement Plans |
|               |  | 2005             |      | 2004                 |  | 2003   |      | 2005    |  | 2004   |      | 2003    |
| Discountrate       |  |             | 5.88 | %               |  |   | 6.00 | %  |  |   | 6.25 | %  |  |   | 6.00    | %  |  |   | 6.00    | %  |  |   | 6.25    | %  |
| Salary progression |  |             | 4.25 | %               |  |   | 4.00 | %  |  |   | 4.00 | %  |  |   | — |    |  |   | — |    |  |   | — |    |
|                    |

The assumptions used in thedetermination of the net periodic benefit cost for the domesticretirement and postretirement plans for the years ended December31 are as follows:

|                    |  |                  |      |                      |  |        |      |         |  |        |      |         |  |        |         |         |  |        |         |         |  |        |         |         |  |  |
|--------------------|--|------------------|------|----------------------|--|--------|------|---------|--|--------|------|---------|--|--------|---------|---------|--|--------|---------|---------|--|--------|---------|---------|--|--|
|               |  | Retirement Plans |      | Postretirement Plans |
|               |  | 2005             |      | 2004                 |  | 2003   |      | 2005    |  | 2004   |      | 2003    |
| Discountrate       |  |             | 6.00 | %               |  |   | 6.25 | %  |  |   | 6.75 | %  |  |   | 6.00    | %  |  |   | 6.25    | %  |  |   | 6.75    | %  |
| Return on assets   |  |             | 9.00 | %               |  |   | 9.00 | %  |  |   | 9.00 | %  |  |   | — |    |  |   | — |    |  |   | — |    |
| Salary progression |  |             | 4.25 | %               |  |   | 4.25 | %  |  |   | 4.25 | %  |  |   | — |    |  |   | — |    |  |   | — |    |
|                    |

49

----

The return on assets reflects thelong-term rate of return on plan assets expected to be realized over aten-year or longer period. As such, it will normally not be adjustedfor short-term trends in the stock or bond markets. In addition, therate of return will reflect the investment allocation currently used tomanage the pension portfolio. The Company’s pension assumptionscurrently include a 9% long-term annual rate of return, which isbased upon the current portfolio allocation, long-term rates of returnfor similar investment vehicles and economic and other indicators offuture performance.

The assumptions used to developdomestic postretirement plan healthcare costs at December  31 areas follows:

|                         |  |        |       |         |  |        |      |         |  |        |      |         |  |  |
|-------------------------|--|--------|-------|---------|--|--------|------|---------|--|--------|------|---------|--|--|
|                    |  | 2005   |       | 2004    |  | 2003   |
| Initial trend rate      |  |   | 12.00 | %  |  |   | 9.00 | %  |  |   | 10.0 | %  |
| Ultimate trend rate     |  |   | 9.00  | %  |  |   | 5.00 | %  |  |   | 5.00 | %  |
| Years to ultimate trend |  |   | 3     |    |  |   | 7    |    |  |   | 8    |    |
|                         |

Assumed healthcare cost trend ratescan have an effect on the amounts reported as expense for thehealthcare plan. A one-percentage point change in the assumedhealthcare cost trend rates would have a $0.1  thousand effect ontotal service and interest cost components and an immaterial effect onthe post retirement benefit obligation.

The projectedbenefit obligation, accumulated benefit obligation and fair value ofplan assets for the pension plans with accumulated benefit obligationsin excess of plan assets were $31.2  million, $31.0  millionand $24.1  million as of December  31,  2005 and$30.4  million, $30.3  million and $23.5  million as ofDecember  31,  2004, respectively.

Benefitsexpected to be paid to participants under the Company’s definedbenefit pension plans are $2.2  million in 2006, $2.2million in 2007, $2.4  million in 2008, $2.5  million in2009, $2.6  million in 2010 and $13.9  million between 2011and 2015.

Under the Company’s postretirementplans, expected benefit payments are $64  thousand in 2006,$66  thousand in 2007, $48  thousand in 2008, $28thousand in 2009, $25  thousand in 2010 and $108  thousandbetween 2011 and 2015.

Assets of the Company’spension plans and target allocations by category of investment are asfollows:

|                   |  |                   |     |                                    |  |        |     |         |  |        |     |         |  |  |
|-------------------|--|-------------------|-----|------------------------------------|--|--------|-----|---------|--|--------|-----|---------|--|--|
|              |  |              |     | Percentage of AssetsatDecember 31, |
| AssetCategory     |  | Target Allocation |     | 2005                               |  | 2004   |
| Equity securities |  |              | 70  | %                             |  |   | 71  | %  |  |   | 72  | %  |
| Debt securities   |  |              | 30  | %                             |  |   | 29  | %  |  |   | 28  | %  |
| Total             |  |              | 100 | %                             |  |   | 100 | %  |  |   | 100 | %  |
|                   |

Equity securities areinvested in a combination of U.S. and international investments. Theplan assets do not include any shares of the Company’s commonstock. An outside investment advisor is utilized to manage and act astrustee for the Company’s pension plan assets. TheCompany’s strategy is to invest in diverse asset classes tominimize risk and maintain liquidity to ensure adequate asset values tomeet ongoing benefit obligations.

It is theCompany’s policy to make contributions to its qualifiedretirement plans sufficient to meet the minimum funding requirements ofapplicable laws and regulations. During 2006, the Company currentlyestimates that pension contributions will be $3.3  million.

401(k) Investment Plan:    Under theCompany’s 401(k) Plan, substantially all of the Company’snon-union employees and certain union employees are eligible tocontribute a portion of their salaries into various investment options,which include the Company’s common stock. The Company matches apercentage of the amounts contributed by the employees. TheCompany’s matching contributions were $0.5  million in 2005and $0.4  million in 2004 and 2003.

ForeignPlans:    As a result of the Modine Aftermarket merger, theCompany has defined-benefit plans and/or termination indemnity planscovering substantially all of the eligible foreign employees.

50

----

Benefits under these plans are based on yearsof service and final average compensation levels. Funding is limited tostatutory requirements. The Company uses December  31 as themeasurement date for the plans in Mexico and November  30 for theplans in Europe.

Components of net foreign plan periodicbenefit cost for the period July  22,  2005 (the merger date)through December  31,  2005 is as follows:

|                                 |  |                |         |         |  |  |
|---------------------------------|--|----------------|---------|---------|--|--|
|                            |  | (in thousands) |
| Servicecost                     |  | $              | 95      |    |
| Interest cost                   |  |           | 120     |    |
| Expected return on plan assets  |  |           | (48     | )  |
| Amortization of net loss (gain) |  |           | — |    |
| Net periodicbenefit cost        |  | $              | 167     |    |
|                                 |

The followingtables set forth the foreign plans combined funded status and amountsrecognized in the Company’s consolidated balance sheets atDecember  31,  2005:

|                                                        |  |                |  |  |  |  |
|--------------------------------------------------------|--|----------------|--|--|--|--|
|                                                   |  | (in thousands) |
| Change in benefitobligation:                           |  |           |
| Benefit obligation atJuly  22                          |  | $3,793         |
| Service cost                                           |  | 95             |
| Interest cost                                          |  | 120            |
| Actuarial loss                                         |  | (10)           |
| Actual grossbenefits paid                              |  | (23)           |
| Benefit obligation at December  31                     |  | $3,975         |
| Changein plan assets:                                  |  |           |
| Fair value of plan assetsat July  22                   |  | $1,809         |
| Actual return onplan assets                            |  | 21             |
| Company contributions                                  |  | 349            |
| Actual gross benefits paid                             |  | (23)           |
| Fair value of planassets at December  31               |  | $2,156         |
| Reconciliation of fundedstatus:                        |  |           |
| Funded status at December31                            |  | $(1,819)       |
| Unrecognized net loss                                  |  | 17             |
| (Accrued) benefitcost                                  |  | $(1,802)       |
| Amounts recognized in statements of financialposition: |  |           |
| Long-term pension asset                                |  | $—       |
| Accrued benefit liability                              |  | (1,802)        |
| Intangible asset                                       |  | —        |
| Accumulated other comprehensiveloss                    |  | —        |
| Netamount recognized at December  31                   |  | $(1,802)       |
|                                                        |

Theassumptions used in the determination of the foreign retirement benefitobligation at December  31,  2005 are a discount rate of4.0% and salary progression of 2.5% in Europe and adiscount rate of 10.25% and salary progression of 6.25%in Mexico.

The assumptions used in the determination ofthe net periodic benefit cost for the foreign retirement plans for theyear ended December  31,  2005 were a discount rate of4.0%, an expected rate of return of 4% and salaryprogression of 2.5% in Europe and a discount rate of10.25%, an expected rate of return of 11.25% and salaryprogression of 6.25% in Mexico.

51

----

The projected benefit obligation,accumulated benefit obligation and fair value of plan assets for theforeign pension plans with accumulated benefit obligations in excess ofplan assets were $4.0  million, $3.2  million and $2.1million as of December  31,  2005.

Companycontributions to foreign plans in 2006 are estimated to be $0.4million.

Benefits expected to be paid to participantsunder the Company’s foreign defined benefit pension plans are$0.4  million in 2006, $0.1  million in 2007, $0.1million in 2008, $1.3  million in 2009, $0.2  million in 2010and $1.2  million between 2011 and 2015.

Assets ofthe Company’s pension plans and target allocations by categoryof investment are as follows:

|                  |  |                   |     |                                         |  |        |     |         |  |  |
|------------------|--|-------------------|-----|-----------------------------------------|--|--------|-----|---------|--|--|
| AssetCategory    |  | Target Allocation |     | As ofDecember 31, 2005Actual Allocation |
| Equitysecurities |  |              | 0   | %                                  |  |   | 0   | %  |
| Debt securities  |  |              | 100 | %                                  |  |   | 100 | %  |
| Total            |  |              | 100 | %                                  |  |   | 100 | %  |
|                  |

Note 13    Stock CompensationPlans

Stock Options:    At December31,  2005 the Company had three stock option plans (EquityIncentive Plan, 1995 Stock Plan, Non-Employee Directors Stock OptionPlan) under which key employees and directors have been granted optionsto purchase Proliance common stock. At the Company’s annualshareholders’ meeting, held on July  22,  2005,shareholders approved the Company’s new Equity Incentive Plan(the ‘‘Incentive Plan’’). The Incentive Planbecame operative immediately after the merger. The Incentive Planpermits awards of incentive stock options, nonqualified stock options,restricted stock, stock units, performance shares, performance units,deferred shares and units, stock appreciation rights and otherequity-linked awards, payable in cash or in shares of the Companystock. Under the Incentive Plan equity-based awards relating to up to1.4  million shares of the Company’s common stock may begranted, in addition to 56,400 shares available for options replacingoptions under the Non-Employee Directors Stock Option Plan (the‘‘Directors Plan’’). Awards under the IncentivePlan can be made to directors, officers or other key employees. Underthe Plan, up to 200,000 shares, in addition to shares available foroptions replacing options issued under the Directors Plan, may beutilized for grants to non-employee directors. No new awards may begranted under the Company’s previously adopted equity-basedplans, which expired in September, 2005. Under the 1995 Stock Plan (the‘‘Stock Plan’’) options were granted at fairmarket value on the date of grant and were generally exercisablecumulatively at the rate of 25% one year from the date of grant,50% two years from the date grant, 75% three years fromthe date of grant, and 100% four years from the date of grant.As a result of the Modine merger, all unvested outstanding optionsgranted to key employees as of July  22,  2005 became fullyvested. Options granted under the Stock Plan generally expire ten yearsfrom the date of the grant. The total number of shares of common stockwith respect to which stock options may be granted and restrictedshares may be awarded under the Stock Plan was not to exceed 600,000.At December  31,  2005 and 2004, respectively, 534,359 and544,359 common shares were reserved for stock options and restrictedshares granted under the Stock Plan. The Non-Employee Directors StockOption Plan (the ‘‘Directors Plan’’) providesfor the issuance of options at the fair market value of the commonstock covered thereby on the date of grant. Subject to certainacceleration provisions, each option granted under the Directors Planwill be exercisable 50% after two years from the date of grant,75% after three years from the date of grant and 100%after four years from the date of grant. Options granted under theDirectors Plan expire ten years from the date of grant. The totalnumber of shares of common stock with respect to which options may begranted under the Directors Plan was not to exceed 100,000 shares. AtDecember  31,  2005 and 2004, respectively, 36,800 and 99,200common shares were reserved for stock options granted under theDirectors Plan.

In connection with the consummation ofthe merger, outstanding options under the Directors Plan that had anexercise price greater than or equal to the closing price of Companycommon stock on the day before the merger were, at the option of eachdirector, replaced with options issued under the 

52

----

Incentive Plan having the same terms as theprior options, except that (1) the term of each option that wouldotherwise expire prior to the third anniversary of the merger wasextended to the third anniversary of the merger closing and (2) theperiod during which such options may be exercised following thecessation of a director’s service was increased from threemonths to the earlier of the third anniversary of such cessation ofservice and the end of the remaining term of the options. Outstandingoptions under the Directors Plan that had an exercise price less thanthe closing price of Company common stock on the day before the mergerremain outstanding. On July  22,  2005, non-employeedirectors exchanged options to purchase an aggregate of 56,400 Companyshares with exercise prices ranging from $7.75 to $11.75 per share.

Information regarding the Stock Plan, the Directors Plan andIncentive Plan is as follows:

|                                    |  |                  |         |                   |  |                 |      |        |  |        |      |        |  |        |      |        |  |  |
|------------------------------------|--|------------------|---------|-------------------|--|-----------------|------|--------|--|--------|------|--------|--|--------|------|--------|--|--|
|                               |  |             |         | Option PriceRange |
| StockPlan                          |  | Number ofOptions |         | Low               |  | WeightedAverage |      | High   |
| Outstanding at December  31,  2002 |  |             | 441,859 |              |  |            | 2.50 |   |  |   | 3.88 |   |  |   | 5.88 |   |
| Canceled                           |  |             | (9,500  | )            |  |            | 5.88 |   |  |   | 5.88 |   |  |   | 5.88 |   |
| Outstanding atDecember  31,  2003  |  |             | 432,359 |              |  |            | 2.50 |   |  |   | 3.85 |   |  |   | 5.88 |   |
| Granted                            |  |             | 112,000 |              |  |            | 4.51 |   |  |   | 4.56 |   |  |   | 5.25 |   |
| Outstanding at December  31,2004   |  |             | 544,359 |              |  |            | 2.50 |   |  |   | 4.00 |   |  |   | 5.88 |   |
| Exercised                          |  |             | (2,500  | )            |  |            | 4.51 |   |  |   | 4.51 |   |  |   | 4.51 |   |
| Cancelled                          |  |             | (7,500  | )            |  |            | 4.51 |   |  |   | 4.51 |   |  |   | 4.51 |   |
| Outstanding at December  31,2005   |  |             | 534,359 |              |  |            | 2.50 |   |  |   | 3.99 |   |  |   | 5.88 |   |
| Exercisable atDecember  31,  2005  |  |             | 534,359 |              |  |            | 2.50 |   |  |   | 3.99 |   |  |   | 5.88 |   |
|                                    |

|                                    |  |                  |         |                   |  |                 |         |        |  |        |         |        |  |        |         |        |  |  |
|------------------------------------|--|------------------|---------|-------------------|--|-----------------|---------|--------|--|--------|---------|--------|--|--------|---------|--------|--|--|
|                               |  |             |         | Option PriceRange |
| DirectorsPlan                      |  | Number ofOptions |         | Low               |  | WeightedAverage |         | High   |
| Outstanding at December  31,  2002 |  |             | 99,200  |              |  |            | 2.70    |   |  |   | 7.50    |   |  |   | 11.75   |   |
| Granted                            |  |             | — |              |  |            | — |   |  |   | — |   |  |   | — |   |
| Outstanding at December  31,  2003 |  |             | 99,200  |              |  |            | 2.70    |   |  |   | 7.50    |   |  |   | 11.75   |   |
| Granted                            |  |             | — |              |  |            | — |   |  |   | — |   |  |   | — |   |
| Outstanding at December  31,  2004 |  |             | 99,200  |              |  |            | 2.70    |   |  |   | 7.50    |   |  |   | 11.75   |   |
| Exercised                          |  |             | (1,500  | )            |  |            | 2.70    |   |  |   | 2.70    |   |  |   | 2.70    |   |
| Cancelled                          |  |             | (60,900 | )            |  |            | 4.72    |   |  |   | 9.37    |   |  |   | 11.75   |   |
| Outstanding at December  31,2005   |  |             | 36,800  |              |  |            | 2.70    |   |  |   | 4.61    |   |  |   | 5.50    |   |
| Exercisable atDecember  31,  2005  |  |             | 34,500  |              |  |            | 2.70    |   |  |   | 4.60    |   |  |   | 5.50    |   |
|                                    |

|                                    |  |                  |        |                   |  |                 |         |        |  |        |         |        |  |        |         |        |  |  |
|------------------------------------|--|------------------|--------|-------------------|--|-----------------|---------|--------|--|--------|---------|--------|--|--------|---------|--------|--|--|
|                               |  |             |        | Option PriceRange |
| EquityIncentive Plan               |  | Number ofOptions |        | Low               |  | WeightedAverage |         | High   |
| Outstanding at December  31,  2004 |  |             | 0      |              |  |            | — |   |  |   | — |   |  |   | — |   |
| Granted                            |  |             | 56,400 |              |  |            | 7.75    |   |  |   | 9.70    |   |  |   | 11.75   |   |
| Outstandingat December  31,  2005  |  |             | 56,400 |              |  |            | 7.75    |   |  |   | 9.70    |   |  |   | 11.75   |   |
| Exercisable at December  31,2005   |  |             | 56,400 |              |  |            | 7.75    |   |  |   | 9.70    |   |  |   | 11.75   |   |
|                                    |

Total optionsexercisable at December  31,  2004 and 2003 were 370,024 and243,679, respectively.

53

----

Additional information relating tooutstanding options under the plans as of December  31,  2005is as follows:

|                       |  |                    |         |                                      |  |                               |     |                   |  |                                 |       |        |  |        |         |        |  |        |       |        |  |  |
|-----------------------|--|--------------------|---------|--------------------------------------|--|-------------------------------|-----|-------------------|--|---------------------------------|-------|--------|--|--------|---------|--------|--|--------|-------|--------|--|--|
|                  |  |               |         | Options Outstanding                  |  | Options Exercisable           |
| RangeofExercise Price |  | OptionsOutstanding |         | WeightedAverageRemaining Term(Years) |  | WeightedAverageExercise Price |     | SharesExercisable |  | Weighted Average Exercise Price |
| $2.35 -$3.53          |  |               | 229,059 |                                 |  |                          | 5.4 |              |  | $                               | 2.98  |   |  |   | 229,059 |   |  | $      | 2.98  |   |
| 3.53 - 4.70           |  |               | 95,000  |                                 |  |                          | 8.2 |              |  |                            | 4.51  |   |  |   | 95,000  |   |  |   | 4.51  |   |
| 4.70 - 5.88           |  |               | 247,100 |                                 |  |                          | 6.1 |              |  |                            | 4.80  |   |  |   | 244,800 |   |  |   | 4.81  |   |
| 7.05 - 8.23           |  |               | 10,700  |                                 |  |                          | 2.6 |              |  |                            | 7.75  |   |  |   | 10,700  |   |  |   | 7.75  |   |
| 8.23 - 9.40           |  |               | 10,700  |                                 |  |                          | 2.6 |              |  |                            | 8.38  |   |  |   | 10,700  |   |  |   | 8.38  |   |
| 9.40 - 10.58          |  |               | 14,000  |                                 |  |                          | 2.6 |              |  |                            | 10.00 |   |  |   | 14,000  |   |  |   | 10.00 |   |
| 10.58 - 11.75         |  |               | 21,000  |                                 |  |                          | 2.6 |              |  |                            | 11.17 |   |  |   | 21,000  |   |  |   | 11.17 |   |
|                       |

The fair value ofeach option grant, included in the pro forma disclosure of SFAS 123 inNote 2, is estimated on the date of grant using the Black-Scholesoption-pricing model with the following weighted-averageassumptions:

|                         |  |         |  |         |  |        |                                 |        |  |  |  |  |  |  |
|-------------------------|--|---------|--|---------|--|--------|---------------------------------|--------|--|--|--|--|--|--|
|                    |  | 2005    |  | 2004    |  | 2003   |
| Dividend yield          |  | 0%      |  | 0%      |  |   |     — |   |
| Expected volatility     |  | 52.94%  |  | 54.8%   |  |   | —                         |   |
| Risk-free interest rate |  | 4.5%    |  | 4.7%    |  |   | —                         |   |
| Expected life           |  | 3 Years |  | 6 Years |  |   | —                         |   |
|                         |

The fair value per share ofoptions granted in 2005 and 2004 was $1.67 and $2.89,respectively.

Restricted Stock:    Restrictedstock awards vest four years from the date of the award. Unearnedcompensation, representing the fair value of the restricted shares atthe date of the award, is charged to income over the period. AtDecember  31,  2005, 2004 and 2003, there were no outstandingrestricted stock awards.

Note 14    Income Taxes

The (benefit from) provision for income taxes for the threeyears ended December  31 is as follows:

|                                                                            |  |               |         |         |  |        |         |         |  |        |         |         |  |  |
|----------------------------------------------------------------------------|--|---------------|---------|---------|--|--------|---------|---------|--|--------|---------|---------|--|--|
|                                                                       |  | 2005          |         | 2004    |  | 2003   |
|                                                                       |  | (inthousands) |
| Current:                                                                   |  |          |    |    |  |   |    |    |  |   |    |    |
| Federal                                                                    |  | $             | — |    |  | $      | 43      |    |  | $      | (1,442  | )  |
| Foreign                                                                    |  |          | 338     |    |  |   | 236     |    |  |   | 276     |    |
| State andlocal                                                             |  |          | 390     |    |  |   | 199     |    |  |   | 3       |    |
| Total current                                                              |  |          | 728     |    |  |   | 478     |    |  |   | (1,163  | )  |
| Deferred:                                                                  |  |          |    |    |  |   |    |    |  |   |    |    |
| Federal                                                                    |  |          | (6,851  | )  |  |   | 1,264   |    |  |   | (753    | )  |
| Foreign                                                                    |  |          | 253     |    |  |   | — |    |  |   | — |    |
| Stateand local                                                             |  |          | (1,325  | )  |  |   | (16     | )  |  |   | (326    | )  |
| Valuation allowance                                                        |  |          | 9,046   |    |  |   | (2,118  | )  |  |   | 1,079   |    |
| Totaldeferred                                                              |  |          | 1,123   |    |  |   | (870    | )  |  |   | — |    |
| (Benefit from) incometaxes                                                 |  |          | 1,851   |    |  |   | (392    | )  |  |   | (1,163  | )  |
| Provision for income taxes allocated to discontinuedoperation              |  |          | 506     |    |  |   | 200     |    |  |   | 478     |    |
| Provision for income taxes allocated to gain on sale ofdiscountedoperation |  |          | 2,331   |    |  |   | — |    |  |   | — |    |
| (Benefitfrom) income taxes allocated to continuingoperations               |  | $             | (986    | )  |  | $      | (592    | )  |  | $      | (1,641  | )  |
|                                                                            |

54

----

A reconciliation of the (benefitfrom) provision for income taxes at the Federal statutory rate of34% to the reported tax (benefit from) income taxes in 2005,2004 and 2003 is as follows:

|                                                                              |  |               |         |         |  |        |         |         |  |        |         |         |  |  |
|------------------------------------------------------------------------------|--|---------------|---------|---------|--|--------|---------|---------|--|--------|---------|---------|--|--|
|                                                                         |  | 2005          |         | 2004    |  | 2003   |
|                                                                         |  | (inthousands) |
| Provision (benefit) computed at theFederal statutory rate                    |  | $             | (2,748  | )  |  | $      | 1,627   |    |  | $      | (1,938  | )  |
| State and local income taxes, net ofFederal income tax benefit               |  |          | (935    | )  |  |   | 183     |    |  |   | (323    | )  |
| Foreign tax ratedifferential                                                 |  |          | 103     |    |  |   | 63      |    |  |   | 112     |    |
| Permanent difference—negativegoodwill                                  |  |          | (4,347  | )  |  |   | — |    |  |   | — |    |
| Permanentdifferences—other                                             |  |          | 69      |    |  |   | 63      |    |  |   | 55      |    |
| Reduction in tax reserves based on taxreview                                 |  |          | — |    |  |   | — |    |  |   | (108    | )  |
| Valuation allowance included inprovision                                     |  |          | 9,046   |    |  |   | (2,118  | )  |  |   | 1,079   |    |
| Other                                                                        |  |          | 663     |    |  |   | (210    | )  |  |   | (40     | )  |
| (Benefit from) incometaxes                                                   |  |          | 1,851   |    |  |   | (392    | )  |  |   | (1,163  | )  |
| Provision for income taxes allocated to discontinuedoperation                |  |          | 506     |    |  |   | 200     |    |  |   | 478     |    |
| Provision for income taxes allocated to gain on sale ofdiscontinuedoperation |  |          | 2,331   |    |  |   | — |    |  |   | — |    |
| (Benefitfrom) income taxes allocated to continuingoperations                 |  | $             | (986    | )  |  | $      | (592    | )  |  | $      | (1,641  | )  |
|                                                                              |

Significant components ofdeferred income tax assets and liabilities as of December  31 areas follows:

|                                     |  |               |         |         |  |        |         |         |  |  |
|-------------------------------------|--|---------------|---------|---------|--|--------|---------|---------|--|--|
|                                |  | 2005          |         | 2004    |
|                                |  | (inthousands) |
| Deferred taxassets:                 |  |          |    |    |  |   |    |    |
| Pensions                            |  | $             | 2,578   |    |  |   | 1,935   |    |
| Postretirement benefits             |  |          | 162     |    |  |   | 172     |    |
| Inventories                         |  |          | 2,134   |    |  |   | — |    |
| Allowancefor bad debts              |  |          | 2,013   |    |  |   | 1,374   |    |
| Selfinsurance reserves              |  |          | 943     |    |  |   | 1,021   |    |
| Warranty reserves                   |  |          | 1,393   |    |  |   | 281     |    |
| Accrued vacation                    |  |          | 743     |    |  |   | 713     |    |
| Federal and state net operatingloss |  |          | 13,755  |    |  |   | 4,914   |    |
| Deferredcharges                     |  |          | 364     |    |  |   | 478     |    |
| Depreciation                        |  |          | 2,559   |    |  |   | — |    |
| Other                               |  |          | 2,714   |    |  |   | 386     |    |
| Valuationreserve                    |  |          | (24,285 | )  |  |   | (5,843  | )  |
| Total deferred taxassets            |  |          | 5,073   |    |  |   | 5,431   |    |
| Deferred taxliabilities:            |  |          |    |    |  |   |    |    |
| Depreciation                        |  |          | — |    |  |   | (3,649  | )  |
| Inventories                         |  |          | — |    |  |   | (23     | )  |
| Other                               |  |          | (1,473  | )  |  |   | (889    | )  |
| Total deferred taxliabilities       |  |          | (1,473  | )  |  |   | (4,561  | )  |
| Net deferred taxassets              |  | $             | 3,600   |    |  | $      | 870     |    |
|                                     |

The net deferred tax asset atDecember 31, 2005 relates to the foreign operations and managementbelieves that it is more likely than not that the deferred tax assetwill be realized. The deferred tax assets associated with foreignoperations ($4.5 million) are included in other assets in theaccompanying balance sheet.

The Company’s federalnet operating loss carry forwards at December  31,  2005 ofapproximately $30.6 million expire through 2025. The net operatinglosses prior to the merger are subject to limitation under InternalRevenue Code Section 382.

As a result of the ModineAftermarket merger in July, 2005, the tax valuation reserve wasincreased by $9.4 million. The valuation reserve related to the minimumpension liability at December 31, 2005 

55

----

was $2.3 million. During the fourth quarterof 2004, the Company reversed $0.9  million of its tax valuationreserve in anticipation of the gain recorded in 2005 resulting from thesale of its Heavy Duty OEM business.

At the time offiling the Company’s 2002 tax return, the amount of netoperating loss, which could be carried back, was adjusted due to theCompany’s decision to change its method of tax accounting forseveral items and the finalization of other amounts which had beenpreviously estimated. These items resulted in additional tax refunds of$1.4  million. As the Company’s net deferred tax assets arefully reserved, this refund resulted in a tax benefit which wasincluded in the results of operations for 2003.

Theearnings of foreign subsidiaries are considered permanently reinvestedin the foreign operations and therefore no provision has been made forU.S. taxes related to these subsidiaries.

(Loss) incomefrom continuing operations before taxes from United States and foreignsources for the three years ended December  31 is as follows:

|                   |  |               |         |         |  |        |        |         |  |        |        |         |  |  |
|-------------------|--|---------------|---------|---------|--|--------|--------|---------|--|--------|--------|---------|--|--|
|              |  | 2005          |         | 2004    |  | 2003   |
|              |  | (inthousands) |
| United States     |  | $             | (30,150 | )  |  | $      | (1,451 | )  |  | $      | (7,430 | )  |
| Foreign           |  |          | 1,433   |    |  |   | 510    |    |  |   | 482    |    |
| Loss before taxes |  | $             | (28,717 | )  |  | $      | (941   | )  |  | $      | (6,948 | )  |
|                   |

Net income taxes paid(refunded) during 2005, 2004 and 2003 were $1.2 million, $0.4million, and $(1.9) million, respectively.

56

----

Note 15    (Loss) Income PerShare

The following table sets forth thecomputation of basic and diluted (loss) income per common share for theyears ended December  31:

|                                                                                 |  |                                         |         |         |  |        |         |         |  |        |         |         |  |  |
|---------------------------------------------------------------------------------|--|-----------------------------------------|---------|---------|--|--------|---------|---------|--|--------|---------|---------|--|--|
|                                                                            |  | 2005                                    |         | 2004    |  | 2003   |
|                                                                            |  | (inthousands, except per share amounts) |
| Numerator:                                                                      |  |                                    |    |    |  |   |    |    |  |   |    |    |
| Lossfrom continuing operations                                                  |  | $                                       | (27,731 | )  |  | $      | (349    | )  |  | $      | (5,307  | )  |
| Less: preferred stock dividends                                                 |  |                                    | (64     | )  |  |   | (64     | )  |  |   | (64     | )  |
| Loss from continuing operations attributable tocommonstockholders               |  |                                    | (27,795 | )  |  |   | (413    | )  |  |   | (5,371  | )  |
| Income from discontinued operation, netof tax                                   |  |                                    | 848     |    |  |   | 5,527   |    |  |   | 771     |    |
| Gain on sale of discontinued operation, net of tax                              |  |                                    | 3,899   |    |  |   | — |    |  |   | — |    |
| Extraordinary income – negative goodwill                                  |  |                                    | 13,053  |    |  |   | — |    |  |   | — |    |
| Net (loss) income (attributable)available to commonstockholders – basic   |  |                                    | (9,995  | )  |  |   | 5,114   |    |  |   | (4,600  | )  |
| Add back: preferredstock dividend                                               |  |                                    | — |    |  |   | — |    |  |   | — |    |
| Net (loss) income(attributable) available to commonstockholders – diluted |  | $                                       | (9,995  | )  |  | $      | 5,114   |    |  | $      | (4,600  | )  |
| Denominator:                                                                    |  |                                    |    |    |  |   |    |    |  |   |    |    |
| Weightedaverage common shares – basic                                     |  |                                    | 10,714  |    |  |   | 7,106   |    |  |   | 7,106   |    |
| Dilutive effect of stock options                                                |  |                                    | — |    |  |   | — |    |  |   | — |    |
| Dilutive effect of Series B Preferred Stock                                     |  |                                    | — |    |  |   | — |    |  |   | — |    |
| Weighted average common shares –diluted                                   |  |                                    | 10,714  |    |  |   | 7,106   |    |  |   | 7,106   |    |
| Basic (loss) income per commonshare:                                            |  |                                    |    |    |  |   |    |    |  |   |    |    |
| From continuingoperations                                                       |  | $                                       | (2.59   | )  |  | $      | (0.06   | )  |  | $      | (0.76   | )  |
| From discontinued operation                                                     |  |                                    | 0.08    |    |  |   | 0.78    |    |  |   | 0.11    |    |
| From gain onsale of discontinued operation                                      |  |                                    | 0.36    |    |  |   | — |    |  |   | — |    |
| From extraordinary income –negative goodwill                              |  |                                    | 1.22    |    |  |   | — |    |  |   | — |    |
| Net (loss) income percommon share                                               |  | $                                       | (0.93   | )  |  | $      | 0.72    |    |  | $      | (0.65   | )  |
| Diluted (loss) income percommon share:                                          |  |                                    |    |    |  |   |    |    |  |   |    |    |
| From continuingoperations                                                       |  | $                                       | (2.59   | )  |  | $      | (0.06   | )  |  | $      | (0.76   | )  |
| From discontinued operation                                                     |  |                                    | 0.08    |    |  |   | 0.78    |    |  |   | 0.11    |    |
| From gain onsale of discontinued operation                                      |  |                                    | 0.36    |    |  |   | — |    |  |   | — |    |
| From extraordinary income –negative goodwill                              |  |                                    | 1.22    |    |  |   | — |    |  |   | — |    |
| Net (loss) income percommon share                                               |  | $                                       | (0.93   | )  |  | $      | 0.72    |    |  | $      | (0.65   | )  |
|                                                                                 |

57

----

Theweighted average basic common shares outstanding was used in thecalculation of the diluted loss per common share for the years endedDecember  31,  2005, 2004 and 2003 as the use of weightedaverage diluted common shares outstanding would have an anti-dilutiveeffect on the loss from continuing operations per share. None of theoptions outstanding at December 31, 2005, 2004, or 2003 or Series Bpreferred stock were included in the loss per sharecalculation.

Note 16    Commitments and Contingencies

Leases:    The Company’s leases consistprimarily of manufacturing and distribution facilities and equipment,which expire between 2006 and 2012. A number of leases require that theCompany pay certain executory costs (taxes, insurance, and maintenance)and contain renewal and purchase options. Annual rental expense foroperating leases approximated $8.2  million in 2005, $4.8million in 2004 and $4.8  million in 2003.

Futureminimum annual rental payments under non-cancelable operating leases asof December  31,  2005 were as follows:    $8.3million in 2006, $5.8  million in 2007, $4.5  million in2008, $3.4  million in 2009, $1.6  million in 2010 and$2.3  million thereafter.

Insurance:    The Company is self-insured forhealthcare, workers compensation, general liability and productliability claims up to predetermined amounts above which third partyinsurance applies. The Company has reserved approximately $2.7million and $2.8  million to pay such claims as ofDecember  31,  2005 and 2004, respectively.

Product Warranties:    As a result of programsoffered by Modine Aftermarket, the Company now provides productwarranties for specific product lines and accrues for estimated futurewarranty costs in the period in which the sale is recorded. The mostsignificant warranty expense estimates are forecasts based on the bestinformation available using statistical analysis of both historical andcurrent claim data.

Changes in the warranty liability areas follows:

|                                               |  |               |        |         |  |  |
|-----------------------------------------------|--|---------------|--------|---------|--|--|
|                                          |  | (inthousands) |
| Merger acquisition balance sheet              |  | $             | 2,866  |    |
| Accruals for warranties issued incurrent year |  |          | 1,119  |    |
| Settlements made                              |  |          | (1,100 | )  |
| Balance atDecember  31,  2005                 |  | $             | 2,885  |    |
|                                               |

LegalProceedings:    Various legal actions are pending against orinvolve the Company in the ordinary course of business with respect tosuch matters as product liability, casualty, environmental andemployment-related claims.

Pursuant to an Agreement andPlan of Merger dated July  23,  1998 (the‘‘Purchase Agreement’’), the Company acquiredfrom Paul S. Wilhide (‘‘Wilhide’’) all of thecommon stock of EVAP, Inc. The consideration for this transaction was apayment of $3  million in cash, the issuance of 30,000 shares ofthe Company’s Series B Convertible Redeemable Preferred Stock(the ‘‘Convertible Shares’’), and the potentialfor an ‘‘earn-out’’ payment to Wilhide based ona calculation relating to EVAP’s performance during the years1999 and 2000. There is presently a dispute between the Company andWilhide relating to the calculation of the earn-out. Wilhide claimsthat the value of his earn-out is $3.75  million, while theCompany believes that Wilhide is not entitled to any earn-out. Underthe payout formula in the Purchase Agreement, any earn-out may bepayable to Wilhide in cash. The Purchase Agreement includes anarbitration provision and the arbitration is currently proceedingbefore an arbitrator in Ft. Worth, Texas. While the arbitrationschedule has not been finalized, it is anticipated that the arbitrationhearing will occur and a decision rendered during 2006. The Companyintends to vigorously defend this matter. Depending on the amount andtiming, an unfavorable resolution of this matter could materiallyaffect the Company’s consolidated financial position, futureoperations or cash flows in a particular period. The ultimate outcomeat this time, however, is unknown.

EnvironmentalMatters:    The Company is subject to Federal, foreign, stateand local laws designed to protect the environment and believes that,as a general matter, its policies, practices and procedures

58

----

are properly designed to reasonably preventrisk of environmental damage and financial liability to the Company. OnJanuary  27,  2003, the Company announced that it hadsigned a Consent Agreement with the State of Connecticut Department ofEnvironmental Protection. Under the agreement, the Company willvoluntarily initiate the investigation and cleanup of environmentalcontamination on property occupied by a wholly-owned subsidiary of theCompany over 20 years ago. The Company believes there will not be amaterial adverse impact to its financial results due to theinvestigation and cleanup activities. The Company also does notcurrently anticipate any material adverse effect on its consolidatedresults of operations, financial condition or competitive position as aresult of compliance with Federal, state, local or foreignenvironmental laws or regulations. However, risk of environmentalliability and charges associated with maintaining compliance withenvironmental laws is inherent in the nature of the Company'sbusiness and there is no assurance that material environmentalliabilities and compliance charges will not arise. The Company alsobelieves it is reasonably possible that environmental-relatedliabilities might exist with respect to other industrial sites formerlyowned or occupied by the Company. Based upon environmental siteassessments, the Company believes that the cost of any potentialremediation, other than amounts already provided, for which the Companymay ultimately be responsible will not have a material adverse effecton the consolidated financial position, results of operations, orliquidity of the Company.

In conjunction with the merger,Modine retained the environmental liability for environmentalremediation of soil and groundwater contamination at the Mill facilityin The Netherlands, which existed at the time of the merger. As part ofthe agreement to sell the Company’s Heavy Duty OEM business toModine in March  2005, the Company retained responsibility forany environmental remediation which would result from contaminationexisting on the date of the sale at the facility in Jackson,Mississippi, which was included in the transaction.

Note17    Supplemental Cash Flow Information

Supplementalcash flow information is as follows:

|                                                                  |  |                                |         |        |  |        |         |        |  |        |         |        |  |  |
|------------------------------------------------------------------|--|--------------------------------|---------|--------|--|--------|---------|--------|--|--------|---------|--------|--|--|
|                                                             |  | Forthe Year Ended December 31, |
|                                                             |  | 2005                           |         | 2004   |  | 2003   |
|                                                             |  | (inthousands)                  |
| Non-cash investing andfinancing activity:                        |  |                           |    |   |  |   |    |   |  |   |    |   |
| Enteredinto capital lease obligation                             |  | $                              | 1,713   |   |  | $      | 288     |   |  | $      | — |   |
| Common stock issued for netassets of Modine Aftermarket business |  | $                              | 50,667  |   |  | $      | — |   |  | $      | — |   |
| Accruedexpenses for unpaid merger transaction costs              |  | $                              | 912     |   |  | $      | 370     |   |  | $      | — |   |
| Sale of inventoryon fixed assets to reduce accounts payable      |  | $                              | — |   |  | $      | 1,554   |   |  | $      | — |   |
| Supplemental disclosure ofcash flow information:                 |  |                           |    |   |  |   |    |   |  |   |    |   |
| Cashpaid for interest                                            |  | $                              | 6,968   |   |  | $      | 3,898   |   |  | $      | 2,853   |   |
| Cash paid for income taxes                                       |  | $                              | 1,303   |   |  | $      | 452     |   |  | $      | 331     |   |
|                                                                  |

Note18    Business Segments

Subsequent to the merger withModine Aftermarket and the sale of the Heavy Duty OEM business, theCompany has been reorganized into two reporting segments, based uponthe geographic area served – Domestic and International. TheDomestic marketplace supplies heat exchange and air conditioningproducts to the automotive and light truck aftermarket and heatexchange products to the heavy duty aftermarket in the United Statesand Canada. The International segment includes heat exchange and airconditioning products for the automotive and light truck aftermarketand heat exchange products for the heavy duty aftermarket in Mexico,Europe and Central America. Each product group within the Domesticsegment constitutes an operating segment and have been aggregated forreporting business segment information.

The table belowsets forth information about the reported segments. Previousyears’ data has been restated based upon the new segments.

The Company evaluates the performance of its segments andallocates resources accordingly based on operating income (loss) beforeinterest and taxes. Intersegment sales are recorded at cost plus anormal manufacturing profit margin.

59

----

The tables below set forthinformation about continuing operations reported segments for the threeyears ended December  31:

|                                          |  |                      |         |                         |  |        |         |        |  |        |         |        |  |        |         |         |  |        |         |         |  |        |         |         |  |  |
|------------------------------------------|--|----------------------|---------|-------------------------|--|--------|---------|--------|--|--------|---------|--------|--|--------|---------|---------|--|--------|---------|---------|--|--------|---------|---------|--|--|
|                                     |  | ConsolidatedRevenues |         | Operating Income (Loss) |
|                                     |  | 2005                 |         | 2004                    |  | 2003   |         | 2005   |  | 2004   |         | 2003   |
|                                     |  | (in thousands)       |         | (inthousands)           |
| Domestic                                 |  | $                    | 265,241 |                    |  | $      | 218,433 |   |  | $      | 198,862 |   |  | $      | (12,265 | )  |  | $      | 11,716  |    |  | $      | 1,359   |    |
| International                            |  |                 | 31,597  |                    |  |   | — |   |  |   | — |   |  |   | 1,370   |    |  |   | — |    |  |   | — |    |
| Inter-segmentrevenues:                   |  |                 |    |                    |  |   |    |   |  |   |    |   |  |   |    |    |  |   |    |    |  |   |    |    |
| Domestic                                 |  |                 | 646     |                    |  |   | — |   |  |   | — |   |  |   | — |    |  |   | — |    |  |   | — |    |
| International                            |  |                 | 6,741   |                    |  |   | — |   |  |   | — |   |  |   | — |    |  |   | — |    |  |   | — |    |
| Elimination ofinter-segment revenues     |  |                 | (7,387  | )                  |  |   | — |   |  |   | — |   |  |   | — |    |  |   | — |    |  |   | — |    |
| Corporate expenses                       |  |                 | — |                    |  |   | — |   |  |   | — |   |  |   | (9,864  | )  |  |   | (7,845  | )  |  |   | (4,568  | )  |
| Consolidated continuing operations total |  | $                    | 296,838 |                    |  | $      | 218,433 |   |  | $      | 198,862 |   |  | $      | (20,759 | )  |  | $      | 3,871   |    |  | $      | (3,209  | )  |
|                                          |

|                                           |  |               |         |                      |  |                                       |         |        |  |        |         |        |  |        |         |        |  |        |         |        |  |        |         |        |  |        |       |        |  |        |         |        |  |        |         |        |  |  |
|-------------------------------------------|--|---------------|---------|----------------------|--|---------------------------------------|---------|--------|--|--------|---------|--------|--|--------|---------|--------|--|--------|---------|--------|--|--------|---------|--------|--|--------|-------|--------|--|--------|---------|--------|--|--------|---------|--------|--|--|
|                                      |  | TotalAssets   |         | Capital Expenditures |  | Depreciation and Amortization Expense |
|                                      |  | 2005          |         | 2004                 |  | 2003                                  |         | 2005   |  | 2004   |         | 2003   |  | 2005   |         | 2004   |  | 2003   |
|                                      |  | (inthousands) |         | (in thousands)       |  | (in thousands)                        |
| Domestic                                  |  | $             | 162,216 |                 |  | $                                     | 126,518 |   |  | $      | 134,762 |   |  | $      | 7,852   |   |  | $      | 3,188   |   |  | $      | 4,476   |   |  | $      | 4,458 |   |  | $      | 4,686   |   |  | $      | 4,530   |   |
| International                             |  |          | 52,021  |                 |  |                                  | — |   |  |   | — |   |  |   | 1,040   |   |  |   | — |   |  |   | — |   |  |   | 47    |   |  |   | — |   |  |   | — |   |
| Corporate                                 |  |          | 3,102   |                 |  |                                  | 5,624   |   |  |   | 8,737   |   |  |   | — |   |  |   | — |   |  |   | — |   |  |   | 42    |   |  |   | 21      |   |  |   | 96      |   |
| Consolidated continuing operations totals |  | $             | 217,539 |                 |  | $                                     | 132,142 |   |  | $      | 143,499 |   |  | $      | 8,892   |   |  | $      | 3,188   |   |  | $      | 4,476   |   |  | $      | 4,547 |   |  | $      | 4,707   |   |  | $      | 4,626   |   |
|                                           |

Restructuring and other specialcharges included in operating income (loss) for the three years endedDecember  31 are as follows:

|                                              |  |               |       |        |  |        |                                 |        |  |        |         |        |  |  |
|----------------------------------------------|--|---------------|-------|--------|--|--------|---------------------------------|--------|--|--------|---------|--------|--|--|
|                                         |  | 2005          |       | 2004   |  | 2003   |
|                                         |  | (inthousands) |
| Domestic                                     |  | $             | 4,024 |   |  | $      |     — |   |  | $      | 1,490   |   |
| International                                |  |          | 256   |   |  |   | —                         |   |  |   | — |   |
| Total restructuringand other special charges |  | $             | 4,280 |   |  | $      | —                         |   |  | $      | 1,490   |   |
|                                              |

In 2005, 2004and 2003 sales to AutoZone accounted for approximately 17%,25% and 23% of net sales, respectively. In addition,Advance Auto Parts accounted for approximately 13%, 17%and 14% of net sales for 2005, 2004 and 2003 respectively. Thesesales were in the Domestic segment. No other customer individuallyrepresented more than 10% of net trade sales from continuingoperations in any of the years reported. The loss of one of the majorDomestic customers, indicated above, could have a material adverseeffect on the Company’s results of operations.

Trade sales by the Company’s product lines for thethree years ended December  31 are as follows:

|                                     |  |        |         |        |  |        |         |        |  |        |         |        |  |  |
|-------------------------------------|--|--------|---------|--------|--|--------|---------|--------|--|--------|---------|--------|--|--|
|                                |  | 2005   |         | 2004   |  | 2003   |
| Heat exchange products              |  | $      | 255,202 |   |  | $      | 197,941 |   |  | $      | 178,917 |   |
| Temperature control products        |  |   | 41,636  |   |  |   | 20,492  |   |  |   | 19,945  |   |
| Trade sales of continuingoperations |  | $      | 296,838 |   |  | $      | 218,433 |   |  | $      | 198,862 |   |
|                                     |

Theprincipal raw materials used by the Company in its Domestic andInternational segments are copper, brass and aluminum. Although thesematerials are available from a number of vendors, the Company haschosen to concentrate its sources with a limited number of long-termsuppliers. The Company believes this strategy results in purchasing andoperating economies. The Company has not experienced any significantsupply problems for these commodities and does not anticipate anysignificant supply problems in the foreseeable future.

60

----

Note 19    Quarterly Financial Data(Unaudited)

|                                              |  |                                         |         |         |  |         |         |         |  |        |         |         |  |        |         |         |  |  |
|----------------------------------------------|--|-----------------------------------------|---------|---------|--|---------|---------|---------|--|--------|---------|---------|--|--------|---------|---------|--|--|
|                                         |  | Year Ended December31,  2005            |
|                                         |  | 1stQtr                                  |         | 2nd Qtr |  | 3rd Qtr |         | 4thQtr  |
|                                         |  | (in thousands, except per shareamounts) |
| Net sales                                    |  | $                                       | 48,308  |    |  | $       | 58,962  |    |  | $      | 101,953 |    |  | $      | 87,615  |    |
| Gross margin                                 |  |                                    | 8,967   |    |  |    | 11,425  |    |  |   | 15,060  |    |  |   | 13,956  |    |
| (Loss) income fromcontinuing operations      |  |                                    | (2,272  | )  |  |    | (2,091  | )  |  |   | (9,869  | )  |  |   | (13,499 | )  |
| (Loss) income fromdiscontinued operation     |  |                                    | 848     |    |  |    | — |    |  |   | — |    |  |   | — |    |
| Gain on sale ofdiscontinued operation        |  |                                    | 3,899   |    |  |    | — |    |  |   | — |    |  |   | — |    |
| Extraordinary item– negative goodwill  |  |                                    | — |    |  |    | — |    |  |   | 13,207  |    |  |   | (154    | )  |
| Net (loss) income                            |  | $                                       | 2,475   |    |  | $       | (2,091  | )  |  | $      | 3,338   |    |  | $      | (13,653 | )  |
| Basic (loss) income percommonshare:          |  |                                    |    |    |  |    |    |    |  |   |    |    |  |   |    |    |
| Continuingoperations                         |  | $                                       | (0.32   | )  |  | $       | (0.30   | )  |  | $      | (0.75   | )  |  | $      | (0.89   | )  |
| Discontinued operation                       |  |                                    | 0.12    |    |  |    | — |    |  |   | — |    |  |   | — |    |
| Gain on sale of discontinued operation       |  |                                    | 0.55    |    |  |    | — |    |  |   | — |    |  |   | — |    |
| Extraordinary item – negative goodwill |  |                                    | — |    |  |    | — |    |  |   | 1.00    |    |  |   | (0.01   | )  |
| Net (loss) income                            |  | $                                       | 0.35    |    |  | $       | (0.30   | )  |  | $      | 0.25    |    |  | $      | (0.90   | )  |
| Diluted (loss) income percommonshare:        |  |                                    |    |    |  |    |    |    |  |   |    |    |  |   |    |    |
| Continuingoperations                         |  | $                                       | (0.32   | )  |  | $       | (0.30   | )  |  | $      | (0.75   | )  |  | $      | (0.89   | )  |
| Discontinued operation                       |  |                                    | 0.12    |    |  |    | — |    |  |   | — |    |  |   | — |    |
| Gain on sale of discontinued operation       |  |                                    | 0.55    |    |  |    | — |    |  |   | — |    |  |   | — |    |
| Extraordinary item – negative goodwill |  |                                    | — |    |  |    | — |    |  |   | 1.00    |    |  |   | (0.01   | )  |
| Net (loss) income                            |  | $                                       | 0.35    |    |  | $       | (0.30   | )  |  | $      | 0.25    |    |  | $      | (0.90   | )  |
|                                              |

|                                         |  |                                         |        |         |  |         |        |         |  |        |        |        |  |        |        |         |  |  |
|-----------------------------------------|--|-----------------------------------------|--------|---------|--|---------|--------|---------|--|--------|--------|--------|--|--------|--------|---------|--|--|
|                                    |  | Year Ended December31,  2004            |
|                                    |  | 1stQtr                                  |        | 2nd Qtr |  | 3rd Qtr |        | 4th Qtr |
|                                    |  | (in thousands, except per shareamounts) |
| Net sales                               |  | $                                       | 49,436 |    |  | $       | 60,400 |    |  | $      | 58,004 |   |  | $      | 50,593 |    |
| Grossmargin                             |  |                                    | 8,817  |    |  |    | 10,940 |    |  |   | 13,006 |   |  |   | 11,095 |    |
| (Loss) income from continuingoperations |  |                                    | (1,384 | )  |  |    | (161   | )  |  |   | 1,388  |   |  |   | (192   | )  |
| Income from discontinued operation      |  |                                    | 741    |    |  |    | 964    |    |  |   | 1,270  |   |  |   | 2,552  |    |
| Net (loss) income                       |  | $                                       | (643   | )  |  | $       | 803    |    |  | $      | 2,658  |   |  | $      | 2,360  |    |
| Basic (loss) income percommonshare:     |  |                                    |   |    |  |    |   |    |  |   |   |   |  |   |   |    |
| Continuingoperations                    |  | $                                       | (0.19  | )  |  | $       | (0.03  | )  |  | $      | 0.19   |   |  | $      | (0.03  | )  |
| Discontinued operation                  |  |                                    | 0.10   |    |  |    | 0.14   |    |  |   | 0.18   |   |  |   | 0.36   |    |
| Net (loss) income                       |  | $                                       | (0.09  | )  |  | $       | 0.11   |    |  | $      | 0.37   |   |  | $      | 0.33   |    |
| Diluted (loss) income percommonshare:   |  |                                    |   |    |  |    |   |    |  |   |   |   |  |   |   |    |
| Continuingoperations                    |  | $                                       | (0.19  | )  |  | $       | (0.03  | )  |  | $      | 0.19   |   |  | $      | (0.03  | )  |
| Discontinued operation                  |  |                                    | 0.10   |    |  |    | 0.14   |    |  |   | 0.17   |   |  |   | 0.36   |    |
| Net (loss) income                       |  | $                                       | (0.09  | )  |  | $       | 0.11   |    |  | $      | 0.36   |   |  | $      | 0.33   |    |
|                                         |

Restructuringexpenses for the quarters ended December 31, 2005 were $0.3 million– 1st quarter; $1.1 million – 2nd quarter; $2.0 million– 3rd quarter; and $0.9 million – 4th quarter. There wereno restructuring expenses in 2004.

During the fourthquarter of 2004, the Company reversed $0.9  million of its taxvaluation reserve in anticipation of the gain to be recorded in 2005resulting from the sale of its Heavy Duty OEM business, as described inNote 4.

61

----

SCHEDULE II

Proliance International, Inc.Valuation and QualifyingAccounts

|                                           |  |                                 |        |                                 |  |               |         |           |  |                           |         |         |  |        |         |           |  |        |        |        |  |  |
|-------------------------------------------|--|---------------------------------|--------|---------------------------------|--|---------------|---------|-----------|--|---------------------------|---------|---------|--|--------|---------|-----------|--|--------|--------|--------|--|--|
|                                      |  | Balance atBeginning ofPeriod(a) |        | Charged to Costs andExpenses(a) |  | Write-Offs(a) |         | Other(a)  |  | Balance atEnd ofPeriod(a) |
|                                      |  | (inthousands)                   |
| YearEnded December 31,2005                |  |                            |   |                            |  |          |    |      |  |                      |    |    |  |   |    |      |  |   |   |   |
| Allowance fordoubtful accounts            |  | $                               | 2,746  |                            |  | $             | 2,433   | (e)  |  | $                         | (1,037  | )  |  | $      | 1,249   | (b)  |  | $      | 5,391  |   |
| Allowance forexcess/slow moving inventory |  |                            | 2,485  |                            |  |          | 4,725   |      |  |                      | (1,831  | )  |  |   | 6,196   | (b)  |  |   | 11,575 |   |
| Tax valuation reserve                     |  |                            | 5,843  |                            |  |          | 9,046   |      |  |                      | — |    |  |   | 9,396   | (b)  |  |   | 24,285 |   |
| YearEnded December  31,2004               |  |                            |   |                            |  |          |    |      |  |                      |    |    |  |   |    |      |  |   |   |   |
| Allowance fordoubtful accounts            |  | $                               | 2,353  |                            |  | $             | 509     |      |  | $                         | (116    | )  |  | $      | — |      |  | $      | 2,746  |   |
| Allowance forexcess/slow moving inventory |  |                            | 1,681  |                            |  |          | 2,278   |      |  |                      | (1,474  | )  |  |   | — |      |  |   | 2,485  |   |
| Taxvaluation reserve                      |  |                            | 7,961  |                            |  |          | (2,118) | (c)  |  |                      | — |    |  |   | — |      |  |   | 5,843  |   |
| YearEnded December  31,2003               |  |                            |   |                            |  |          |    |      |  |                      |    |    |  |   |    |      |  |   |   |   |
| Allowance fordoubtful accounts            |  | $                               | 2,348  |                            |  | $             | 499     |      |  | $                         | (494    | )  |  | $      | — |      |  | $      | 2,353  |   |
| Allowance forexcess/slow moving inventory |  |                            | 3,160  |                            |  |          | 1,450   |      |  |                      | (2,929  | )  |  |   | — |      |  |   | 1,681  |   |
| Taxvaluation reserve                      |  |                            | 6,875  |                            |  |          | 1,079   |      |  |                      | — |    |  |   | 7       | (d)  |  |   | 7,961  |   |
|                                           |

|  |
|--|
|  |  |
|  |

|     |                                                   |
|-----|---------------------------------------------------|
| (a) | Amountsreflect activity of continuing operations. |

|     |                                                                                          |
|-----|------------------------------------------------------------------------------------------|
| (b) | Amounts representbalances from the Modine Aftermarket business acquisition balancesheet. |

|     |                                                                                                              |
|-----|--------------------------------------------------------------------------------------------------------------|
| (c) | Includes $0.9million reversal resulting from the expected gain from the Heavy DutyOEM business sale in 2005. |

|     |                                                                                                                                                                         |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (d) | Amount representschange in the valuation allowance and the deferred tax asset resultingfrom minimum pension liability adjustment included inShareholders’ Equity. |

|     |                                                                                                             |
|-----|-------------------------------------------------------------------------------------------------------------|
| (e) | Represents reserverequired for adjustments associated with new customer added in 2005 andnormal provisions. |

Item 9.    Changes in andDisagreements with Accountants on Accounting and FinancialDisclosure

None.

Item 9A.    Controls andProcedures

The Company maintains disclosure controls andprocedures that are designed to ensure that information required to bedisclosed in the Company's Exchange Act reports is recorded,processed, summarized and reported within the time periods specified inthe SEC's rules and forms, and that such information isaccumulated and communicated to the Company's management,including its Chief Executive Officer and Chief Financial Officer, asappropriate, to allow timely decisions regarding required disclosurebased on the definition of ‘‘disclosure controls andprocedures’’ in Rule 13a-15(e). In designing and evaluatingthe disclosure controls and procedures, management recognizes that anycontrols and procedures, no matter how well designed and operated, canprovide only reasonable assurance of achieving the desired controlobjectives, and management necessarily is required to apply itsjudgment in evaluating the cost-benefit relationship of possiblecontrols and procedures.

The Company carried out anevaluation, under the supervision and with the participation of theCompany's management, including the Company's Chief ExecutiveOfficer and the Company's Chief Financial Officer, of theeffectiveness of the design and operation of the Company'sdisclosure controls and procedures as of December  31,2005. Based upon the foregoing, the Company's Chief ExecutiveOfficer and Chief Financial Officer concluded that the Company'sdisclosure controls and procedures were effective.

62

----

On July  22,  2005, theCompany completed its merger with the aftermarket business of ModineManufacturing Company. This acquired business contained over 150facilities located in North America, Central America and Europe andinvolved the addition of 1,400 employees. As part of the post-closingintegration of the merged entity, the Company is engaged in a processof refining and harmonizing the internal controls and processes of theacquired business with those of the Company’s historicaloperations in addition to closing and consolidating facilities. Thisprocess was ongoing during the quarter ended December  31,2005, and the Company believes that it will be completed in 2006.

In addition, during 2005, the Company has begun its projectto become compliant with the requirements of Section 404 of theSarbanes-Oxley Act at the end of 2006. To date this involves reviewingthe Company’s documentation of control procedures being followedand improving or strengthening these controls as appropriate.

Except as provided in the prior paragraphs, there have beenno changes in the Company's internal controls over financialreporting during the quarter ended December  31,  2005 thathave materially affected, or are reasonably likely to materiallyaffect, the Company's internal control over financialreporting.

Item 9B.    Other Information

None.

PART III

Item 10.    Directors andExecutive Officers of the Registrant

Portions of theinformation required by this item are included in Part I of thisReport. Other information required by this item will be contained inthe Company’s 2006 Proxy Statement under the headings‘‘Section 16(a) Beneficial Ownership ReportingCompliance’’, ‘‘Code of Ethics’’,‘‘Board Information and Committees’’ and‘‘Proposal 1: Election of Directors’’ and isincorporated herein by reference.

Item 11.    ExecutiveCompensation

The information contained in theCompany’s 2006 Proxy Statement under the headings‘‘Executive Officer Compensation’’,‘‘Executive Contracts and Severance and Change of ControlArrangements’’, ‘‘RetirementPlan’’, Directors’ Compensation’’ and‘‘Compensation Committee Interlocks and InsiderParticipation’’ is incorporated herein by reference.

Item 12.    Security Ownership of Certain Beneficial Owners andManagement and Related Stockholder Matters

Theinformation contained in the Company’s 2006 Proxy Statementunder the headings ‘‘Which stockholders own at least5% of Proliance?’’, ‘‘How much stock isowned by directors and executive officers?’’ and‘‘Table III Equity Compensation PlanInformation’’ is incorporated herein by reference.

Item 13.    Certain Relationships and Related Transactions

The information contained in the Company’s 2006 ProxyStatement under the heading ‘‘AdditionalInformation-Certain Transactions’’ is incorporated hereinby reference.

Item 14.    Principal Accountant Fees andServices

The information contained in theCompany’s 2006 Proxy Statement under the headings‘‘Proposal 2: Approval of Appointment of Proliance’sIndependent Accountants’’ and ‘‘Audit CommitteePre-Approval Policy’’ is incorporated herein byreference.

PART IV

Item 15.    Exhibits andFinancial Statement Schedules

|              |                                        |
|--------------|----------------------------------------|
| (a)(1)  | Financial Statements of the Registrant |

63

----

See Consolidated Financial Statementsunder Item 8 of this Report.

|              |                               |
|--------------|-------------------------------|
| (a)(2)  | Financial Statement Schedules |

SeeSchedule II - Valuation and Qualifying Accounts under Item 8 of thisReport.

Schedules other than the schedule listed above areomitted because they are not applicable, or because the information isfurnished elsewhere in the Consolidated Financial Statements or theNotes thereto.

|               |          |
|---------------|----------|
| (a) (3)  | Exhibits |

The information required by this Item relating to Exhibits tothis Report is included in the Exhibit Index in (b) below.

|           |                                                                   |
|-----------|-------------------------------------------------------------------|
| (b)  | Exhibits -The following exhibits arefiled as part of this report: |

|         |  |                                                                                                                                                                                                                 |  |  |  |  |
|---------|--|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--|--|--|--|
| 2.1     |  | Agreement and Plan of Merger, dated as of January  31,2005, among Modine Manufacturing Company, Modine Aftermarket Holdings,Inc. and Transpro.(8)                                                               |
| 2.2     |  | Contribution Agreement, dated as of January  31,  2005,among Modine Aftermarket Holdings, Inc., Modine Manufacturing Company,Modine, Inc. and Transpro.(8)                                                      |
| 2.3     |  | OEM Acquisition Agreement, dated as of January  31,2005, between Modine Manufacturing Company andTranspro.(8)                                                                                                   |
| 2.4     |  | Amendment toOEM Acquisition Agreement, dated as of March  1,  2005,between Modine Manufacturing Company andTranspro.(9)                                                                                         |
| 2.5     |  | Amendment toAgreement and Plan of Merger by letter dated June  16,2005 between Transpro, Inc., Modine Manufacturing Company and ModineAftermarket Holdings, Inc.(15)                                            |
| 3.1(i)  |  | Restated Certificate of Incorporation ofProliance International, Inc.(14)                                                                                                                                       |
| 3.1(ii) |  | By-laws of Proliance International, Inc., asamended.(14)                                                                                                                                                        |
| 4.1     |  | Loan andSecurity Agreement dated as of January  4,  2001, by andbetween Congress Financial Corporation (New England) as Lender andTranspro, Inc., Ready-Aire, Inc., and GO/DAN Industries, Inc. asBorrowers.(2) |
| 4.2     |  | FirstAmendment to Loan and Security Agreement with Congress FinancialCorporation.(3)                                                                                                                            |
| 4.3     |  | SecondAmendment to Loan and Security Agreement with Congress FinancialCorporation.(3)                                                                                                                           |
| 4.4     |  | ThirdAmendment to Loan and Security Agreement with Congress FinancialCorporation.(4)                                                                                                                            |
| 4.5     |  | FourthAmendment to Loan and Security Agreement with Congress FinancialCorporation.(4)                                                                                                                           |
| 4.6     |  | FifthAmendment to Loan and Security Agreement with Congress FinancialCorporation.(4)                                                                                                                            |
| 4.7     |  | SixthAmendment to Loan and Security Agreement with Congress FinancialCorporation.(4)                                                                                                                            |
| 4.8     |  | SeventhAmendment to Loan and Security Agreement with Congress FinancialCorporation.(5)                                                                                                                          |
| 4.9     |  | EighthAmendment to Loan and Security Agreement with Congress FinancialCorporation.(6)                                                                                                                           |
| 4.10    |  | NinthAmendment to Loan and Security Agreement with Congress FinancialCorporation.(7)                                                                                                                            |
| 4.11    |  | TenthAmendment to Loan and Security Agreement with Congress FinancialCorporation.(10)                                                                                                                           |
| 4.12    |  | EleventhAmendment to Loan and Security Agreement with Congress FinancialCorporation.(9)                                                                                                                         |
| 4.13    |  | TwelfthAmendment to Loan and Security Agreement with Congress FinancialCorporation.(14)                                                                                                                         |
|         |

64

----

|       |  |                                                                                                            |  |  |  |  |
|-------|--|------------------------------------------------------------------------------------------------------------|--|--|--|--|
| 4.14  |  | Thirteenth Amendmentto Loan and Security Agreement with Congress FinancialCorporation.(12)                 |
| 10.1  |  | Transpro,Inc. 1995 Stock Plan.(1)                                                                          |
| 10.2  |  | Form of Stock Option Agreement under the 1995 StockPlan.(1)                                                |
| 10.3  |  | Transpro, Inc.1995 Non-employee Directors Stock Option Plan.(1)                                            |
| 10.4  |  | Form of Stock Option Agreement under the 1995Non-employee Directors Stock Option Plan.(1)                  |
| 10.5  |  | Form of Key Employee SeverancePolicy.(1)                                                                   |
| 10.6  |  | LetterAgreement, dated December  15,  1992 between Jeffrey J.Jackson and GO/DAN Industries.(1)             |
| 10.7  |  | Employment Agreement between the Company andCharles E. Johnson.(3)                                         |
| 10.8  |  | Amendment No. 1 to Employment Agreement between the Company andCharles E. Johnson.(11)                     |
| 10.9  |  | Form of Nonqualified Stock Option Agreement (Director ReplacementOption).(13)                              |
| 10.10 |  | Director andOfficer Indemnification Agreement.(14)                                                         |
| 10.11 |  | Aftermarket License Agreement between ModineManufacturing Company and Modine Aftermarket Holdings,Inc.(14) |
| 10.12 |  | ProlianceInternational, Inc. Equity Incentive Plan.(14)                                                    |
| 10.13 |  | Tax Sharing Agreement between ModineManufacturing Company and Transpro, Inc.(16)                           |
| 21.1  |  | Subsidiaries of the Company.                                                                               |
| 23.1  |  | Consent of BDO Seidman, LLP.                                                                               |
| 23.2  |  | Consent of PricewaterhouseCoopersLLP.                                                                      |
| 24    |  | Powers of Attorney (included onsignature page).                                                            |
| 31.1  |  | Certification of CEOin accordance with Section 302 of the Sarbanes-Oxley Act.                              |
| 31.2  |  | Certification of CFO in accordance with Section302 of the Sarbanes-Oxley Act.                              |
| 32.1  |  | Certification of CEO in accordance with Section 906 of theSarbanes-Oxley Act.                              |
| 32.2  |  | Certification ofCFO in accordance with Section 906 of the Sarbanes-OxleyAct.                               |
|       |

|  |
|--|
|  |  |
|  |

|     |                                                                                                         |
|-----|---------------------------------------------------------------------------------------------------------|
| (1) | Incorporated by reference to the Company’sRegistration Statement on Form S-1 (File No. 33-96770). |

|     |                                                                 |
|-----|-----------------------------------------------------------------|
| (2) | Incorporated byreference to the Company’s 2000 Form 10-K. |

|     |                                                                                                 |
|-----|-------------------------------------------------------------------------------------------------|
| (3) | Incorporated byreference to the Company’s Form 10-Q for the quarter endedJune  30,  2001. |

|     |                                                                 |
|-----|-----------------------------------------------------------------|
| (4) | Incorporated by reference to the Company’s2001 Form 10-K. |

|     |                                                                                      |
|-----|--------------------------------------------------------------------------------------|
| (5) | Incorporated by reference to the Company’sForm 8-K filed September  20,  2002. |

|     |                                                                                   |
|-----|-----------------------------------------------------------------------------------|
| (6) | Incorporated byreference to the Company’s Form 8-K filed November22,  2002. |

|     |                                                                                     |
|-----|-------------------------------------------------------------------------------------|
| (7) | Incorporated by reference to the Company’sForm 8-K filed December  27,  2002. |

|     |                                                                                  |
|-----|----------------------------------------------------------------------------------|
| (8) | Incorporated byreference to the Company’s Form 8-K filed February1,  2005. |

|     |                                                                                 |
|-----|---------------------------------------------------------------------------------|
| (9) | Incorporated by reference to the Company’sForm 8-K filed March  7,  2005. |

65

----

|      |                                                                                     |
|------|-------------------------------------------------------------------------------------|
| (10) | Incorporated by reference to the Company’sForm 8-K filed November  19,  2004. |

|      |                                                                                  |
|------|----------------------------------------------------------------------------------|
| (11) | Incorporated byreference to the Company’s Form 8-K filed November3,  2004. |

|      |                                                                                    |
|------|------------------------------------------------------------------------------------|
| (12) | Incorporated by reference to the Company’sForm 8-K filed October  21,  2005. |

|      |                                                                                                 |
|------|-------------------------------------------------------------------------------------------------|
| (13) | Incorporated byreference to the Company’s Form 10-Q for the quarter endedJune  30,  2005. |

|      |                                                                                 |
|------|---------------------------------------------------------------------------------|
| (14) | Incorporated by reference to the Company’sForm 8-K filed July  28,  2005. |

|      |                                                                               |
|------|-------------------------------------------------------------------------------|
| (15) | Incorporated byreference to the Company’s Form 8-K filed June  20,2005. |

|      |                                                                               |
|------|-------------------------------------------------------------------------------|
| (16) | Incorporated by reference to the Company’sForm S-4 filed May  2,  2005. |

|           |                             |
|-----------|-----------------------------|
| (c)  | Other Financial Information |

None.

66

----

SIGNATURES

Pursuant to the requirements of Section 13 or 15 (d) of theSecurities Exchange Act of 1934, the Registrant has duly caused thisreport to be signed on its behalf by the undersigned, thereunto dulyauthorized.

|                      |  |                               |  |                                                        |  |  |  |  |  |  |
|----------------------|--|-------------------------------|--|--------------------------------------------------------|--|--|--|--|--|--|
|                 |  | Proliance International, Inc. |
| Date: March 31, 2006 |  | By                            |  | /s/ CHARLES E. JOHNSON                                 |
|                 |  |                          |  | Charles E. JohnsonPresident and Chief ExecutiveOfficer |
|                      |

POWER OF ATTORNEY

Eachof the undersigned hereby appoints Paul R. Lederer and Charles E.Johnson and each of them severally, his or her true and lawfulattorneys to execute on behalf of the undersigned any and allamendments to this annual report on Form 10-K and to file the same,with all exhibits thereto and other documents in connection therewith,with the Securities and Exchange Commission. Each such attorney willhave the power to act hereunder with or without the others. Each of theundersigned hereby ratifies and confirms all such attorneys, or any ofthem may lawfully do or cause to be done by virtue thereof.

Pursuant to the requirements of the Securities Exchange Act of 1934,this report has been signed below by the following persons on behalf ofthe Registrant and in the capacities and on the datesindicated.

|                                                                                                                            |  |  |  |                |
|----------------------------------------------------------------------------------------------------------------------------|--|--|--|----------------|
|                                                                                                                            |  |  |  |                |
|                                                                                                                            |
| /s/WILLIAM J. ABRAHAM, JR.                                                                                                 |  |  |  | March 31, 2006 |
|                                                                                                                            |
| William J. Abraham, Jr.,Director                                                                                           |
|                                                                                                                            |
| /s/ BARRY R. BANDUCCI                                                                                                      |  |  |  | March 31, 2006 |
|                                                                                                                            |
| Barry R. Banducci,Director                                                                                                 |
|                                                                                                                            |
| /s/ PHILIP WM. COLBURN                                                                                                     |  |  |  | March 31, 2006 |
|                                                                                                                            |
| Philip Wm. Colburn,Director                                                                                                |
|                                                                                                                            |
| /s/ CHARLES E. JOHNSON                                                                                                     |  |  |  | March 31, 2006 |
|                                                                                                                            |
| Charles E. Johnson,President, Chief Executive Officer and Director                                                         |
|                                                                                                                            |
| /s/ PAULR. LEDERER                                                                                                         |  |  |  | March 31, 2006 |
|                                                                                                                            |
| Paul R. Lederer, Director                                                                                                  |
|                                                                                                                            |
| /s/VINCENT L. MARTIN                                                                                                       |  |  |  | March 31, 2006 |
|                                                                                                                            |
| Vincent L. Martin, Director                                                                                                |
|                                                                                                                            |
| /s/BRADLEY C. RICHARDSON                                                                                                   |  |  |  | March 31, 2006 |
|                                                                                                                            |
| Bradley C. Richardson,Director                                                                                             |
|                                                                                                                            |
| /s/ JAMES R. RULSEH                                                                                                        |  |  |  | March 31, 2006 |
|                                                                                                                            |
| James R. Rulseh,Director                                                                                                   |
|                                                                                                                            |
| /s/ F. ALAN SMITH                                                                                                          |  |  |  | March 31, 2006 |
|                                                                                                                            |
| F. Alan Smith,Director                                                                                                     |
|                                                                                                                            |
| /s/ RICHARD A. WISOT                                                                                                       |  |  |  | March 31, 2006 |
|                                                                                                                            |
| Richard A. WisotVice President, Treasurer, Secretary and Chief FinancialOfficer Principal Financial and Accounting Officer |
|                                                                                                                            |
| /s/MICHAEL T. YONKER                                                                                                       |  |  |  | March 31, 2006 |
|                                                                                                                            |
| Michael T. Yonker, Director                                                                                                |
|                                                                                                                            |

67

----