<PAGE>   1


                                                                      EXHIBIT 13

FINANCIAL HIGHLIGHTS

(Amounts in thousands, except per share amounts, current ratio and employee
data)

<TABLE>
<CAPTION>
                                               1999            1998            1997            1996            1995
                                             --------        --------        --------        --------        --------
<S>                                          <C>             <C>             <C>             <C>             <C>
OPERATING RESULTS
Sales                                        $261,577        $240,065        $288,866        $264,095        $151,660
Gross margin                                   64,198          54,518          66,684          61,827          31,174
Plant and business consolidation
      and closure costs                           325              --           3,958           4,389              --
Income from operations                         11,364           6,231          16,448          17,006          13,907
Income from joint venture                          --              --              --              --           2,495
Net income                                      6,816           1,647           7,875           8,420           9,074
Basic earnings per common share*             $   1.03        $    .25        $   1.20        $   1.28        $   1.39
Diluted earnings per common share*           $    .96        $    .24        $   1.20        $   1.28        $   1.39
Cash dividends per common share              $    .20        $    .20        $    .20        $    .20        $    .05
FINANCIAL CONDITION
Current ratio                                    3.24            3.34            2.65            2.46            2.27
Working capital                              $ 93,574        $ 70,176        $ 63,465        $ 56,161        $ 53,255
Capital expenditures                            8,200           8,582           7,214           5,565           4,066
Depreciation and amortization expense           7,541           6,782           8,193           7,020           3,701
Net property, plant and
     equipment                                 40,627          39,487          36,752          37,939          36,951
Total assets                                  185,895         148,527         144,540         140,266         139,718
Debt                                           61,928          42,197          37,838          38,917          40,846
Total equity                                   74,471          67,867          65,015          58,696          51,103
Number of employees                             2,562           2,367           2,322           2,139           2,001
</TABLE>

* The basic and diluted earnings per common share for 1995 is for comparative
purposes only, as common shares were not issued until October 1995, and assumes
average common shares outstanding of 6,621,000.

     On September 29, 1995, TransPro, Inc. ("TransPro" or the "Company")
completed a series of transactions pursuant to which the Company's sole
stockholder, Allen Telecom Inc. ("Allen"), contributed (the "Contribution") to
the Company substantially all of the assets and liabilities of Allen's original
equipment radiator and fabricated metal products business (the "Automotive and
Truck Products Business"), as well as Allen's 50% ownership interest in GO/DAN
Industries ("GDI"), a 50/50 joint venture partnership between affiliates of
Allen and Handy & Harman, that produces replacement radiators and other heat
transfer products for the automotive and truck aftermarkets. Immediately
thereafter, Allen caused GDI to redeem the outstanding ownership interest in GDI
not already owned by Allen (the "GDI Redemption"), thereby making GDI an
indirect wholly owned partnership of the Company. Effective April 1, 1999, GDI
changed its organizational structure from a partnership to a corporation.

     In addition, Allen effected the distribution (the "Distribution") of 100%
of the outstanding shares of the Company's common stock to the holders of record
of Allen's common stock as of the close of business on September 29, 1995 (the
"Record Date"). The Distribution was made on the basis of one share of the
Company's common stock for every four shares of Allen's common stock outstanding
on the Record Date, which resulted in the distribution of an aggregate of
6,621,349 shares of TransPro common stock. As a result of the Contribution, the
Distribution, and the GDI Redemption, TransPro owns the Automotive and Truck
Products Business and 100% of GDI, and is an independent publicly-traded
company.


                                                                               1
<PAGE>   2
     The above table sets forth certain selected historical (1995) financial
data for the Crown and G&O divisions of the Company (formerly the Automotive and
Truck Products Business). Prior to October 1, 1995, the date on which the
financial results of GDI were reported on a fully consolidated basis, TransPro's
50% ownership in GDI was reported under the equity method of accounting.
Therefore the 1995 sales, gross margin and income from operations amounts in the
table above include only three months of GDI activity. The number of employees
for 1995 includes GDI employees.


                                                                               2
<PAGE>   3
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

     TransPro, Inc. is a manufacturer and supplier of heat transfer components
and systems, replacement automotive air conditioning parts and specialty
fabricated metal products for a variety of Aftermarket and OEM automotive, truck
and industrial equipment applications, and performs vehicle conversions. The
Company operates in three business segments: Aftermarket Heating and Cooling
Systems, OEM Heat Transfer Systems and Specialty Metal Fabrication. In October
1999, the Company announced its intentions to focus on its Aftermarket Heating
and Cooling Systems segment and explore strategic alternatives for its Specialty
Metal Fabrication and OEM Heat Transfer Systems Segments.

YEAR ENDED DECEMBER 31, 1999 VERSUS YEAR ENDED DECEMBER 31, 1998

     Net sales in 1999 increased 9.0% to $261.6 million compared with $240.1
million in 1998. Sales in the Aftermarket Heating and Cooling Systems business
increased $9.9 million, or 6.3%, compared with 1998, reflecting the sales of air
conditioning parts at Evap and A/C Plus and volume increases in complete
radiators, partially offset by lower radiator core and condenser sales. Sales in
the Specialty Metal Fabrication business increased $11.5 million, or 26.0%,
compared with 1998, primarily due to increased sales in both specialty
fabricated enclosures to telecommunications customers and vehicle conversions.
Sales in the OEM Heat Transfer Systems business were essentially flat.

     Consolidated gross margin percentages improved to 24.5% in 1999 from 22.7%
in 1998. Gross margin improved 17.8% to $64.2 million in 1999 from $54.5 million
in 1998, reflecting the contribution of higher margin air conditioning parts
sales at Evap and A/C Plus, coupled with lower material costs, a higher
proportion of complete radiator sales, and manufacturing efficiencies in the
Aftermarket Heating and Cooling Systems business. Gross margin improved in the
Specialty Metal Fabrication business due to higher production levels and
improved manufacturing efficiencies in specialty fabricated enclosures,
partially offset by lower production volume in the Canadian vehicle conversion
operations. Actions the Company has taken to improve operational efficiencies
and reduce costs in the OEM Heat Transfer Systems business generated positive
gross margins for the year ended December 31, 1999, compared with negative
margins in the prior year.

     Selling, general and administrative ("SG&A") expenses in 1999 increased
$4.2 million, or 8.7%, over 1998, but were flat as a percent of sales at 20.1%.
Aftermarket Heating and Cooling Systems SG&A expenses increased due to the full
year inclusion of Evap and A/C Plus. Specialty Metal Fabrication SG&A expenses
increased, reflecting a full complement of expenses at the Plano, Texas facility
in 1999, and, in 1998 a $1.1 million reduction in certain freight accruals no
longer required at the vehicle conversion operation and a one-time dividend from
the Ohio State Workers Compensation fund of $0.6 million, offset by the
settlement of an employment related lawsuit of $0.6 million. OEM Heat Transfer
Systems SG&A expenses in 1999 included approximately $0.3 million related to the
settlement of an employment-related lawsuit. Corporate expenses during 1999
decreased $1.1 million reflecting a reduction of $0.7 million in personnel
related costs and the inclusion in 1998 of a one-time reserve of $0.5 million
against the doubtful collection of a note receivable.

     The Company recorded $0.3 million in plant and business consolidation and
closure costs in 1999 associated with the closing of the Company's Philadelphia,
Pennsylvania and Atlanta, Georgia replacement automotive condenser manufacturing
plants.

     Net interest expense increased to $4.4 million in 1999 from $3.3 million in
1998 due to higher debt levels associated with the acquisition of Evap and A/C
Plus, coupled with higher working capital levels in the Aftermarket Heating and
Cooling Systems business to support our new product introductions and
anticipated sales increases in the air conditioning parts and Specialty Metal
Fabrication businesses.


                                                                               3
<PAGE>   4
     During the year ended December 31, 1999, the Company recognized a
non-recurring; non-cash deferred tax benefit of $2.9 million related to the
change in the organizational structure of its GO/DAN Industries operation from a
partnership to a corporation. Excluding the impact of the non-recurring,
non-cash deferred tax benefit, the Company's effective tax rate was 42.8% for
the year ended December 31, 1999 and is comprised of the U.S. Federal income tax
rate, plus the estimated aggregate effective rate for foreign, state and local
income taxes. The effective tax rate declined from 43.3% for the year ended
December 31, 1998, reflecting a decrease in non-deductible expenses for tax
purposes in 1999 and a valuation allowance for the net realizable amount of
available tax benefit associated with a net operating loss carry-forward for the
Company's Canadian vehicle conversion operation.

     Net income was $6.8 million, or $1.03 per basic common share and $0.96 per
diluted common share in 1999 compared with $1.6 million, or $0.25 per basic
common share and $0.24 per diluted common share in 1998. Before the net impact
of plant and business consolidation and closure costs, legal settlement costs
and the deferred tax benefit, net earnings were $4.3 million, or $0.65 per basic
common share and $0.61 per diluted common share in 1999. Before the net impact
of legal settlement costs, the workers' compensation dividend and the note
receivable reserve, earnings were $1.9 million, or $0.29 per basic common share
and $0.28 per diluted common share in 1998.

YEAR ENDED DECEMBER 31, 1998 VERSUS YEAR ENDED DECEMBER 31, 1997.

     Net sales for 1998 declined 17% to $240.1 million compared with $288.9
million for 1997. This decline reflects the completion in the fourth quarter of
1997 of the Ford Crew Cab and DRW program and the Ford order to convert vehicles
for the U.S. Postal Service (the "Ford Orders"). Excluding the Ford Orders from
the 1997 results, sales increased by $28.3 million or 13% in 1998. Aftermarket
Heating and Cooling Systems sales increased $13.1 million or 9% over 1997 due to
unit volume gains in the radiator, heater and condenser product lines as well as
air conditioning parts sales related to the August 1998 acquisition of Evap, an
aftermarket air conditioning parts supplier. Excluding the Ford Orders, sales in
the Specialty Metal Fabrication business increased $14.8 million or 50% over
1997 levels, substantially offsetting the loss of revenue from the Ford order to
convert vehicles for the U.S. Postal Service and reflecting the full year effect
of the December 1997 acquisition of Vehicle Management Systems, Inc. ("VMS"), a
Canadian vehicle converter. OEM Heat Transfer Systems sales increased 1% over
1997.

     Gross margins of 22.7% in 1998 were lower than the 23.1% achieved in the
prior year, reflecting the completion of the Ford Orders. Aftermarket Heating
and Cooling Systems margins increased due to cost savings achieved by the move
of heater manufacturing to Mexico during 1997, efficiencies resulting from
increased volume and lower copper costs, offset by a higher proportion of sales
to lower margin customers. Excluding the Ford Orders, margins in the Specialty
Metal Fabrication business have increased during the year due to higher vehicle
conversion revenues and improved manufacturing efficiencies. These achievements
have substantially offset the negative margin impact of the completion of the
Ford U.S. Postal Service program in December 1997. Although gross margins for
the OEM Heat Transfer Systems business remained negative during 1998, there have
been substantial improvements compared with 1997.

     In 1998, SG&A expenses increased 4% to $48.3 million from $46.3 million in
1997. SG&A expenses in the Aftermarket Heating and Cooling Systems business
increased by $1.8 million due to higher costs associated with increased volume,
and the acquisition of Evap, which added approximately $1.1 million of
incremental SG&A expense, partially offset by a reduction in bad debt expense of
$0.8 million related to the 1997 bankruptcy filing of a large customer and cost
savings related to the consolidation of distribution centers during 1998. SG&A
expense in the Specialty Metal Fabrication business declined $1.2 million due to
the closing of the Kentucky facility as a result of the completion of the Ford
Crew Cab and DRW program in December 1997,


                                                                               4
<PAGE>   5
a one time dividend from the Ohio State Workers Compensation Fund of $0.6
million and the reduction of $1.1 million in certain freight accruals no longer
required at the vehicle conversion operation, partially offset by a $0.7 million
increase in personnel costs associated with increased volume and the opening of
the new facility in Plano, Texas, the settlement of an employment related
lawsuit approximating $0.6 million and residual medical costs of $0.2 million
related to the 1997 Kentucky facility closing. SG&A expenses in the OEM Heat
Transfer Systems Business increased $0.4 million due to the full year impact of
administrative costs associated with the business move to Jackson, Mississippi.
Corporate office costs increased $1.0 million due to the recognition of a $0.5
million reserve against a note receivable accepted in a 1994 asset sale
transaction, $0.4 million increase in incentive accruals and the write-off of
deferred debt costs of $0.1 million due to the renegotiation of the Company's
bank credit facility.

     Net interest expense increased to $3.3 million in 1998 from $3.1 million in
1997 as a result of higher borrowings under the bank credit facility.

     The Company's effective tax rate of 43.3% is comprised of the U.S. Federal
income tax rate plus the estimated aggregate effective rate for foreign, state
and local income taxes. The rate increased from the 1997 rate of 40.8%
principally as a result of higher non-deductible expenses in relation to taxable
income in 1998.

     Net income for 1998 was $1.6 million, or $0.25 per basic common share and
$0.24 per diluted common share compared with $7.9 million, or $1.20 per basic
and diluted common share in 1997. Before the net impact of legal settlement
costs, the workers' compensation dividend and the note receivable reserve,
earnings were $1.9 million, or $0.29 per basic common share and $0.28 per
diluted common share in 1998. Before the net impact of plant closure costs, net
income for 1997 was $10.2 million, or $1.55 per basic and diluted common share.

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

     The Company is party to a Revolving Credit Agreement (the "Revolving Credit
Agreement") with five banking institutions that provides for secured borrowings
or the issuance of letters of credit in an aggregate amount not to exceed $75
million. The Revolving Credit Agreement is secured by a blanket first perfected
security interest in substantially all of the Company's assets, plus a pledge of
the stock of the Company's subsidiaries. The Revolving Credit Agreement expires
on July 1, 2003. The security interest in the Company's assets and the pledge of
the Company's subsidiaries' stock are eligible for release if the Company
achieves certain senior debt ratings or if certain financial ratios are met and
maintained. At December 31, 1999, the Company did not meet the financial ratios
required for the release of the security interest.

     Available borrowings under the Revolving Credit Agreement are determined by
a borrowing base consisting of the Company's eligible (i) accounts receivable,
(ii) inventory and (iii) fixed assets, as adjusted by an advance rate. The
aggregate amount of borrowings under the Revolving Credit Agreement was
automatically reduced by $0.5 million at the end of each quarter through June
30, 1999 and then by $1.25 million at the end of each quarter through December
31, 1999. On December 9, 1999, the Company entered into the Third Amendment to
the Revolving Credit Agreement (the "Third Amendment") to return the amount of
secured borrowings or the issuance of letters of credit to the original
aggregate amount of $75 million and reschedule the automatic reductions and
amend the leverage coverage ratio covenant. Pursuant to the Third Amendment, the
aggregate amount of available borrowings is automatically reduced by $5 million
on November 30, 2000 and December 31, 2000 and by $1.5 million at the end of
each quarter beginning March 31, 2001 through June 30, 2003. The Revolving
Credit Agreement bears interest at variable rates based, at the Company's
option, on either (a) a Eurodollar loan rate, plus an applicable margin based
upon the ratio of the Company's total funded debt to earnings before interest,
taxes, depreciation and amortization ("EBITDA"), or (b) the higher of (i) the


                                                                               5
<PAGE>   6
BankBoston, N.A. base lending rate or (ii) one-half of one percent above the
Federal Funds Effective Rate, as defined, plus an applicable margin based upon
the ratio of the Company's total funded debt to EBITDA. A commitment fee of .25%
or .375% based upon the ratio of the Company's total funded debt to EBITDA on
the average daily unused portion of the Revolving Credit Agreement is payable
quarterly, in arrears.

     The Revolving Credit Agreement contains financial covenants which, among
other things, require maintenance of a minimum tangible net worth and debt
service coverage and a maximum level of debt to EBITDA and debt to net worth, as
well as covenants which place limits on dividend payments in excess of $2.0
million per year and capital expenditures in excess of 140% of such year's
depreciation expense. On June 25, 1999, the Company entered into a Waiver and
Second Amendment to the Revolving Credit Agreement (the "Waiver and Second
Amendment"), amending the interest coverage ratio covenant and the liabilities
to net worth ratio covenant and waived compliance with the interest coverage
ratio and the liabilities to net worth ratio covenants for the quarter ended
March 31, 1999.

     Total debt outstanding at December 31, 1999 under the Revolving Credit
Agreement was $49.7 million. In addition, the Company had floating rate
Industrial Revenue Bonds totaling $13 million outstanding at December 31, 1999,
which were fully secured by letters of credit. Outstanding letters of credit
totaled approximately $17.6 million at December 31, 1999.

     During 1999, net borrowings under the Revolving Credit Agreement increased
by $19.7 million. In 1998, net borrowings under the Revolving Credit Agreement
increased by $4.4 million. During 1997, net borrowings under the Company's then
existing credit facility decreased by $1.2 million. Net income plus adjustment
to reconcile net income to net cash provided by operating activities, which
includes, among other things, depreciation and amortization, resulted in $4.9
million of operating cash flows.

     During 1999, the Company required $7.7 million of cash to support its
operations. Net income, plus adjustments to reconcile net income to net cash
used in operating activities, which includes, among other things, depreciation
and amortization, resulted in $11.2 million of operating cash flows. The Company
invested $24.6 million in inventory and $7.1 million in accounts receivable to
support new product introduction and its expansion in the air conditioning parts
and fabricated metal enclosures businesses. An increase in accounts payable and
accrued expenses provided $13.1 million in cash.

     During 1998, the Company generated $9.3 million of cash from operations.
Net income plus total adjustments to reconcile net income to net cash provided
by operating activities, which includes, among other things, depreciation and
amortization, resulted in $10.5 million of operating cash flow. Accounts
receivable collections and inventories generated cash of $4.4 million and $1.1
million, respectively. Cash was used to reduce accounts payable and accrued
expenses by $4.6 million.

     During 1997, the Company generated $10.0 million of cash from operations.
Net income plus total adjustments to reconcile net income to net cash provided
by operating activities resulted in $18.4 million of operating cash flow. The
Company's investment in accounts receivable and inventory required cash of $3.2
million and $5.5 million, respectively.

     Capital spending totaled $8.2 million, $8.6 million and $7.2 million in
1999, 1998 and 1997, respectively. In 1999, the Company purchased all of the
outstanding stock of A/C Plus for $2.25 million in cash and issued a note
payable for $0.25 million payable on the second anniversary of the closing. In
1998, the Company purchased all of the outstanding stock of Evap for
approximately $6.0 million, which included an initial cash payment of $3.0
million and the issuance of $3.0 million of TransPro, Inc. Series B Convertible
Redeemable


                                                                               6
<PAGE>   7
Preferred Stock (the "Series B Preferred Stock"). In 1997, the Company acquired
substantially all of the assets and assumed certain specified liabilities of VMS
for approximately $1.0 million.

     In 1999, cash dividends of $1.3 million and $0.1 million were paid to
holders of common stock and Series B Preferred Stock, respectively. In both 1998
and 1997, cash dividends of $1.3 million were paid to holders of common stock.

     The future liquidity and ordinary capital needs of the Company in the short
term are expected to be met from operations. The Company's working capital
requirements peak during the second and third quarters, reflecting the normal
seasonality in the Aftermarket Heating and Cooling Systems business. The Company
believes that its cash flow from operations, together with borrowings under its
current Revolving Credit Agreement, will be adequate to meet its near term
anticipated ordinary capital expenditures and working capital requirements.
However, the Company believes that the amount of borrowings available under the
Revolving Credit Agreement will not be sufficient to meet the capital needs for
major growth initiatives. The Company intends to explore financing alternatives,
including obtaining a new line of credit with sufficient borrowing capacity or
securing additional sources of capital. It is also possible that additional
liquidity may be obtained through the disposition of business operations,
although there can be no assurance that any such disposition would occur on a
timely basis, or at all. No assurance can be given that the Company will be
successful in obtaining a new line of credit or securing additional sources of
capital on favorable terms, or at all.

ACQUISITIONS

     Effective February 1, 1999, the Company purchased 100% of the outstanding
stock of A/C Plus, an air conditioning compressor remanufacturer located in
Arlington, Texas. A/C Plus had sales of approximately $2.9 million in fiscal
1998. The transaction was structured with a purchase price of $2.25 million paid
in cash and a promissory note of $0.25 million payable on the second anniversary
of the closing. Concurrent with the purchase, the Company repaid $0.5 million in
working capital debt on behalf of A/C Plus. The purchase price and working
capital debt repayment were financed through the Company's Revolving Credit
Agreement. The acquisition was accounted for as a purchase. Goodwill of $2.2
million was recorded in connection with the transaction and is being amortized
over 20 years. The results of A/C Plus have been included in the Company's
consolidated financial statements from the date of acquisition.

     Effective August 1, 1998, the Company acquired 100% of the outstanding
stock of Evap. Evap is an Arlington, Texas manufacturer and distributor of
replacement automotive air conditioning parts. Evap's fiscal 1997 sales were
$6.6 million. The transaction was structured with an initial purchase price of
$6.0 million consisting of $3.0 million cash at closing and 30,000 shares of
Series B Preferred Stock, with an opportunity for a maximum additional payout of
$3.75 million based upon the future earnings performance of the Evap business.
Concurrent with the purchase, the Company repaid $1.7 million of working capital
debt on behalf of Evap. The Company financed the cash portion of the initial
purchase price and the working capital debt repayment with borrowings under the
Revolving Credit Agreement. The acquisition was accounted for as a purchase and
goodwill of $3.3 million, which is being amortized over 20 years, was recorded
as part of the transaction. Evap's results have been included in the Company's
consolidated financial statements from the date of acquisition. The Series B
Preferred Stock has an initial liquidation preference of $3.0 million, which is
reflected in paid-in capital on the Company's consolidated balance sheets. The
potential additional payout based on future earnings will take the form of an
increase in the liquidation preference of the Series B Preferred Stock. The
Series B Preferred Stock is non-transferable and is entitled to cumulative
dividends of 2% per annum during the first year after acquisition, 3.5% per
annum during the second year and 5.0% per annum thereafter. The Series B
Preferred Stock is convertible into TransPro common stock at the rate of 50% on
the third anniversary of the acquisition, an additional 25% on the fourth
anniversary and the remaining 25% on the


                                                                               7
<PAGE>   8
fifth anniversary; and is redeemable after the fifth anniversary at the
liquidation preference at the time of redemption. The Series B Preferred Stock
is convertible into TransPro common stock based upon the liquidation preference
and the market value of TransPro common stock at the time of conversion, as
further defined in the purchase agreement. The aggregate number of shares of
TransPro common stock to be issued upon conversion of all the Series B Preferred
Stock may not exceed 7% of the total number of shares of TransPro common stock
outstanding, after giving effect to the conversion. The market value of the
TransPro common stock in excess of the 7% limitation, if any, will be paid in
cash.

     In December 1997 the Company acquired substantially all of the assets and
assumed certain specified liabilities of VMS for a cash payment of approximately
$1.0 million. VMS is located in Ontario, Canada and specializes in utility van
conversions. VMS reported fiscal 1997 sales of $1.6 million. The acquisition was
accounted for as a purchase and VMS's results have been included in the
Company's consolidated financial statements from the date of acquisition. The
Company financed the purchase of the VMS assets by borrowings under its then
existing bank credit facility and recorded $0.4 million of goodwill related to
the transaction, which is being amortized over 20 years.

END OF CREW CAB AND DUAL REAR WHEEL CONTRACT

     Until December 1997, the Company's largest customer was Ford. The Company
was the exclusive supplier of the cab portion of Ford's Crew Cab pickup truck
and the rear fender panel for Ford's DRW pickup truck under a five-year contract
that expired on December 31, 1995. The Company's manufacturing facility in
Louisville, Kentucky was dedicated solely to the production of Crew Cab and DRW
components. During 1997, Ford accounted for approximately 27% of the Company's
net sales and a significantly greater portion of the Company's total 1997
profits as a result of the higher margins and significantly lower selling,
distribution and administrative costs associated with the Ford contract compared
with the average of the Company's other businesses.

     In early 1996, Ford notified the Company that it planned to move the
production of Crew Cab and DRW components in-house in late 1997. Attempts to
develop new business for the Louisville plant were unsuccessful and,
accordingly, the Company closed the Louisville plant in December 1997.

IMPACT OF THE YEAR 2000 ISSUE

         The Company has completed the implementation of a Year 2000 compliant
information systems platform. There was no significant interruption of normal
operations resulting from the date change to the year 2000. The total cost of
the Year 2000 project was approximately $3.2 million of which $2.2 million was
for capitalizable hardware and software costs, which was funded by borrowings.

INFLATION

     The overall impact of the low rate of inflation in recent years has
resulted in no significant impact on labor costs and general services utilized
by the Company. The principal raw materials used in the Company's original
equipment and replacement radiator product lines are copper and brass. The
principal raw material used in the Company's specialty metal fabrication
business product lines is steel. Copper, brass, steel and other primary metals
used in the Company's business are generally subject to commodity pricing and
variations in the market prices for such materials. Although these materials are
available from a number of vendors, the Company has chosen to concentrate its
sources with a limited number of long-term suppliers. The Company typically
executes purchase orders for its copper and brass requirements approximately
three to six months prior to the


                                                                               8
<PAGE>   9
actual delivery date. The purchase price for such copper, brass, and steel is
established at the time such orders are placed by the Company and not at the
time of delivery.

     The Company manages its metals commodity pricing by attempting to pass
through any cost increases to its customers. Although the Company has been
successful in passing through price increases to its customers to offset a
portion of past cost increases of copper, brass, and steel, there is no
assurance that the Company will continue to be successful in raising prices in
the future. The Company does not use hedging transactions with respect to its
metals consumption.

ENVIRONMENTAL MATTERS

     The Company is subject to Federal, state and local laws designed to protect
the environment and believes that, as a general matter, its policies, practices
and procedures are properly designed to reasonably prevent risk of environmental
damage and financial liability to the Company.

     During 1998, the Company was fined approximately $0.1 million in connection
with certain pre-treatment water containment violations at its Jackson,
Mississippi facility. The issues were satisfactorily resolved. The Company
believes it is reasonably possible that environmental related liabilities might
exist with respect to an industrial site formerly occupied by the Company. Based
upon environmental site assessments, the Company believes that the cost of any
potential remediation for which the Company may ultimately be responsible will
not have a material adverse effect on the consolidated financial position,
results of operations, or liquidity of the Company.

FORWARD-LOOKING STATEMENTS AND CAUTIONARY FACTORS

     Statements included in Management's Discussion and Analysis of Financial
Condition and Results of Operations, which are not historical in nature, are
forward-looking statements. Such forward-looking statements are made pursuant to
the safe harbor provisions of the Private Securities Litigation Reform Act of
1995. Forward-looking statements regarding the Company's future business
prospects, revenues, orders, sales and liquidity are subject to certain risks,
uncertainties and other factors that could cause actual results to differ
materially from those projected or suggested in the forward-looking statements,
including but not limited to: business conditions and growth in the general
economy and automotive and truck business, the impact of competitive products
and pricing, changes in customer and product mix, failure to obtain new
customers, retain existing customers or changes in the financial stability of
customers, changes in the cost of raw materials, components or finished
products, and changes in interest rates.


                                                                               9
<PAGE>   10
                                 TRANSPRO, INC.

                        CONSOLIDATED STATEMENTS OF INCOME


<TABLE>
<CAPTION>
(Amounts in thousands, except per share amounts)                            YEAR ENDED DECEMBER 31,
                                                                    1999              1998              1997
                                                                  --------          --------          --------
<S>                                                               <C>               <C>               <C>
Sales                                                             $261,577          $240,065          $288,866
Cost of sales                                                      197,379           185,547           222,182
                                                                  --------          --------          --------
Gross margin                                                        64,198            54,518            66,684
Selling, general, and administrative expenses                       52,509            48,287            46,278
Plant and business consolidation and closure costs                     325                --             3,958
                                                                  --------          --------          --------
Income from operations                                              11,364             6,231            16,448
Interest expense, net                                                4,444             3,326             3,140
                                                                  --------          --------          --------
Income before taxes                                                  6,920             2,905            13,308
Provision for income taxes                                             104             1,258             5,433
                                                                  --------          --------          --------
Net income                                                        $  6,816          $  1,647          $  7,875
                                                                  ========          ========          ========
Basic earnings per common share                                   $   1.03          $   0.25          $   1.20
                                                                  ========          ========          ========
Diluted earnings per common share                                 $    .96          $   0.24          $   1.20
                                                                   ========         ========          ========
Weighted average common shares - basic                               6,573             6,593             6,553
                                                                  ========          ========          ========
Weighted average common shares and equivalents - diluted             7,089             6,804             6,586
                                                                  ========          ========          ========
</TABLE>


                 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

<TABLE>
<CAPTION>
(Amounts in thousands)                                           YEAR ENDED DECEMBER 31,
                                                         1999             1998              1997
                                                        -------          -------           -------
<S>                                                     <C>              <C>               <C>
Net income                                              $ 6,816          $ 1,647           $ 7,875
                                                        -------          -------           -------

Other comprehensive income (loss), net of tax:
    Foreign currency translation                             11                9               (26)
    Minimum pension liability adjustment                  1,111             (559)             (326)
                                                        -------          -------           -------
Other comprehensive income (loss)                         1,122             (550)             (352)
                                                        -------          -------           -------
Comprehensive income                                    $ 7,938          $ 1,097           $ 7,523
                                                        =======          =======           =======
</TABLE>



              The accompanying notes are an integral part of these
                       consolidated financial statements.


                                                                              10
<PAGE>   11
                                 TRANSPRO, INC.


                           CONSOLIDATED BALANCE SHEETS


<TABLE>
<CAPTION>
(Amounts in thousands)                                                            DECEMBER 31,
                                                                             1999                1998
                                                                          ---------           ---------
<S>                                                                       <C>                 <C>
                                        ASSETS
Current assets:
     Cash and cash equivalents                                            $     222           $     345
     Accounts receivable  (less allowances of $2,128 and $2,390)             41,689              34,173
     Inventories:
         Raw materials                                                       23,385              14,765
         Work in process                                                     11,310               7,124
         Finished goods                                                      50,651              37,886
                                                                          ---------           ---------
     Total inventories                                                       85,346              59,775
                                                                          ---------           ---------

     Deferred income taxes                                                    5,520               2,641
     Other current assets                                                     2,546               3,200
                                                                          ---------           ---------
Total current assets                                                        135,323             100,134
                                                                          ---------           ---------

Property, plant and equipment:
     Land and land improvements                                                 814                 808
     Buildings                                                               17,822              17,662
     Machinery and equipment                                                 82,066              74,319
     Leasehold improvements                                                   2,464               2,124
                                                                          ---------           ---------
                                                                            103,166              94,913
     Less: accumulated depreciation and amortization                        (62,539)            (55,426)
                                                                          ---------           ---------
Net property, plant and equipment                                            40,627              39,487
                                                                          ---------           ---------


Intangible assets (net of amortization of $810 and $348)                      7,632               6,093
Other assets                                                                  2,313               2,813
                                                                          ---------           ---------
Total assets                                                              $ 185,895           $ 148,527
                                                                          =========           =========
</TABLE>



              The accompanying notes are an integral part of these
                       consolidated financial statements.


                                                                              11
<PAGE>   12
                                 TRANSPRO, INC.

                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
(Amounts in thousands, except share and per share amounts)                                      DECEMBER 31,
                                                                                           1999                1998
                                                                                        ---------           ---------
<S>                                                                                     <C>                 <C>
                          LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
     Accounts payable                                                                   $  26,395           $  14,797
     Accrued insurance                                                                      3,820               4,404
     Accrued salaries and wages                                                             4,486               4,823
     Accrued taxes                                                                          1,558                 541
     Accrued expenses                                                                       5,490               5,393
                                                                                        ---------           ---------
Total current liabilities                                                                  41,749              29,958
                                                                                        ---------           ---------
Long-term liabilities:
     Long-term debt                                                                        61,928              42,197
     Retirement and postretirement obligations                                              5,442               7,482
     Deferred income taxes                                                                  1,912                 973
     Other liabilities                                                                        393                  50
                                                                                        ---------           ---------
Total liabilities                                                                         111,424              80,660
                                                                                        ---------           ---------
Commitments and contingent liabilities
                                                                                        ---------           ---------
Stockholders' equity:
     Preferred stock, $.01 par value: Authorized 2,500,000 shares; issued and
     outstanding as follows:
         Series A junior participating preferred stock, $.01 par value:
              Authorized 200,000 shares; issued and outstanding;
               none at December 31, 1999 and 1998                                              --                  --
         Series B convertible preferred stock, $.01 par value:
              Authorized 30,000 shares; issued and outstanding;
               30,000 at December 31, 1999 and 1998 (liquidation
               preference $3,000)                                                              --                  --
     Common stock, $.01 par value:
         Authorized 17,500,000 shares at December 31, 1999 and 1998;
         6,669,446 shares issued in 1999 and 1998 and
         6,597,335 shares outstanding in 1999 and 1998                                         66                  66
     Paid-in capital                                                                       55,074              55,074
     Unearned compensation                                                                    (66)               (113)
     Retained earnings                                                                     20,318              14,883
     Accumulated other comprehensive income                                                  (895)             (2,017)
     Treasury stock, at cost:
         72,111 shares at December 31, 1999 and 1998                                          (26)                (26)
                                                                                        ---------           ---------
Total stockholders' equity                                                                 74,471              67,867
                                                                                        ---------           ---------
Total liabilities and stockholders' equity                                              $ 185,895           $ 148,527
                                                                                        =========           =========
</TABLE>


              The accompanying notes are an integral part of these
                       consolidated financial statements.


                                                                              12
<PAGE>   13
                                 TRANSPRO, INC.

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
(Amounts in thousands)                                                                                YEAR ENDED DECEMBER 31,
                                                                                            1999             1998            1997
                                                                                          --------         --------        --------
<S>                                                                                       <C>              <C>             <C>
Cash flows from operating activities:
     Net income                                                                           $  6,816         $  1,647        $  7,875
                                                                                          --------         --------        --------
     Adjustments to reconcile net income to net cash provided by (used in)
     operating activities:
         Depreciation and amortization                                                       7,541            6,782           8,193
         Deferred income taxes                                                              (3,373)             677            (797)
         Provision for losses - accounts receivable                                            268            1,394           1,790
         Write-off of fixed assets related to plant closure                                     --               --           1,379
                                                                                          --------         --------        --------
     Total adjustments to reconcile net income to net cash provided by (used in)
            operating activities                                                             4,436            8,853          10,565
                                                                                          --------         --------        --------
     Change in operating assets and liabilities, net of acquisitions:
         Accounts receivable                                                                (7,612)           4,413          (3,217)
         Inventories                                                                       (24,640)           1,068          (5,454)
         Accounts payable                                                                   11,280              437           1,397
         Accrued expenses                                                                    1,850           (5,004)         (1,504)
         Other                                                                                 187           (2,146)            347
                                                                                          --------         --------        --------
     Total change in operating assets and liabilities,  net of acquisitions                (18,935)          (1,232)         (8,431)
                                                                                          --------         --------        --------
Net cash (used in) provided by operating activities                                         (7,683)           9,268          10,009
                                                                                          --------         --------        --------
Cash flows from investing activities:
     Capital expenditures                                                                   (8,200)          (8,582)         (7,214)
     Sales and retirements of fixed assets, net                                                 11               73             318
     Acquisitions, net of cash acquired and transaction costs                               (2,118)          (2,764)           (967)
                                                                                          --------         --------        --------
Net cash used in investing activities                                                      (10,307)         (11,273)         (7,863)
                                                                                          --------         --------        --------
Cash flows from financing activities:
     Exercise of stock options                                                                  --               --              24
     Purchase of treasury stock                                                                 --               --             (26)
     Dividends paid                                                                         (1,375)          (1,348)         (1,321)
     Net borrowings (repayments) under Revolving Credit Agreement                           19,242            3,105          (1,150)
                                                                                          --------         --------        --------
Net cash provided by (used in) financing activities                                         17,867            1,757          (2,473)
                                                                                          --------         --------        --------
Net decrease in cash and cash equivalents                                                     (123)            (248)           (327)
     Cash and cash equivalents at beginning of period                                          345              593             920
                                                                                          --------         --------        --------
     Cash and cash equivalents at end of period                                           $    222         $    345        $    593
                                                                                          ========         ========        ========

Supplemental disclosures of cash flow information:
     Interest paid                                                                        $  4,213         $  3,064        $  3,209
                                                                                          ========         ========        ========
     Taxes paid (net of refunds)                                                          $  1,861         $  1,041        $  5,722
                                                                                          ========         ========        ========

Supplemental schedule of non-cash investing and financing activities:
     The Company acquired A/C Plus, Evap, and VMS in 1999, 1998 and 1997,
     respectively; the details of which are further described in Note 14. In
     connection with these transactions, liabilities were assumed and preferred
     stock issued, as follows:
         Fair value of assets acquired                                                    $  3,060         $  5,679        $  1,000
         Cash Paid                                                                          (2,250)          (3,000)         (1,000)
                                                                                          ========         ========        ========
              Liabilities assumed                                                         $    810         $  2,679        $     --
                                                                                          ========         ========        ========
              Preferred stock issued                                                      $     --         $  3,000        $     --
                                                                                          ========         ========        ========
</TABLE>

              The accompanying notes are an integral part of these
                       consolidated financial statements.


                                                                              13
<PAGE>   14
                                 TRANSPRO, INC.
           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                  YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997

(Amounts in thousands, except share and per share amounts)

<TABLE>
<CAPTION>

                                                                                                               TREASURY
                                              COMMON STOCK                      PREFERRED STOCK                 STOCK
                                       SHARES              VALUE            SHARES            VALUE              VALUE
                                     ----------         ----------        ----------        ----------         ----------
<S>                                  <C>                <C>               <C>               <C>                <C>
Balance December 31, 1996             6,591,835         $       66                --        $       --         $       --

Net income                                   --                 --                --                --                 --
Common stock  dividends
  declared ($0.20 per share)                 --                 --                --                --                 --
Treasury stock purchased                 (2,807)                --                --               (26)                --
Restricted stock issued                  18,400                 --                --                --                 --
Stock options exercised                   4,032                 --                --                --                 --
Amortization of unearned
  compensation                               --                 --                --                --                 --
Net change in translation
  adjustment                                 --                 --                --                --                 --
Net change in adjustment for
  minimum pension liability                  --                 --                --                --                 --
Other adjustments                            --                 --                --                --                 --
                                     ----------         ----------        ----------        ----------         ----------
Balance December 31, 1997             6,611,460                 66                --                --                (26)

Net Income                                   --                 --                --                --                 --
Issuance of preferred stock
  related to an acquisition                  --                 --            30,000                --                 --
Common stock dividends
  declared ($0.20 per share)                 --                 --                --                --                 --
Preferred stock dividends
  declared                                   --                 --                --                --                 --
Restricted stock issued                   4,800                 --                --                --                 --
Restricted stock canceled               (18,925)                --                --                --                 --
Amortization of unearned
  compensation                               --                 --                --                --                 --
Net change in translation
  adjustment                                 --                 --                --                --                 --
Net change in adjustment for
  minimum pension liability                  --                 --                --                --                 --
                                     ----------         ----------        ----------        ----------         ----------
Balance December 31, 1998             6,597,335                 66            30,000                --                (26)

Net income                                   --                 --                --                --                 --
Common stock dividends
  declared ($0.20 per share)                 --                 --                --                --                 --
Preferred stock dividends
  declared                                   --                 --                --                --                 --
Amortization of unearned
  compensation                               --                 --                --                --                 --
Net change in translation
  adjustment                                 --                 --                --                --                 --
Net change in adjustment  for
  minimum pension liability                  --                 --                --                --                 --
                                     ==========         ==========        ==========        ==========         ==========
Balance December 31, 1999             6,597,335         $       66            30,000        $       --         $      (26)
                                     ==========         ==========        ==========        ==========         ==========
</TABLE>


<TABLE>
<CAPTION>
                                                                                            ACCUMULATED
                                                                                               OTHER              TOTAL
                                      PAID-IN            RETAINED           UNEARNED       COMPREHENSIVE       STOCKHOLDERS'
                                      CAPITAL            EARNINGS         COMPENSATION         INCOME              EQUITY
                                     ----------         ----------         ----------         ----------         ----------
<S>                           <C>                <C>                <C>                <C>
Balance December 31, 1996            $   52,061         $    8,030         $     (346)        $   (1,115)        $   58,696

Net income                                   --              7,875                 --                 --              7,875
Common stock  dividends
  declared ($0.20 per share)                 --             (1,321)                --                 --             (1,321)
Treasury stock purchased                     --                 --                 --                 --                (26)
Restricted stock issued                     142                 --               (142)                --                 --
Stock options exercised                      24                 --                 --                 --                 24
Amortization of unearned
  compensation                               --                 --                 99                 --                 99
Net change in translation
  adjustment                                 --                 --                 --                (26)               (26)
Net change in adjustment for
  minimum pension liability                  --                 --                 --               (326)              (326)
Other adjustments                            --                 --                 20                 --                 20
                                     ----------         ----------         ----------         ----------         ----------
Balance December 31, 1997                52,227             14,584               (369)            (1,467)            65,015

Net Income                                   --              1,647                 --                 --              1,647
Issuance of preferred stock
  related to an acquisition               3,000                 --                 --                 --              3,000
Common stock dividends
  declared ($0.20 per share)                 --             (1,323)                --                 --             (1,323)
Preferred stock dividends
  declared                                   --                (25)                --                 --                (25)
Restricted stock issued                      37                 --                (37)                --                 --
Restricted stock canceled                  (190)                --                190                 --                 --
Amortization of unearned
  compensation                               --                 --                103                 --                103
Net change in translation
  adjustment                                 --                 --                 --                  9                  9
Net change in adjustment for
  minimum pension liability                  --                 --                 --               (559)              (559)
                                     ----------         ----------         ----------         ----------         ----------
Balance December 31, 1998                55,074             14,883               (113)            (2,017)            67,867

Net income                                   --              6,816                 --                 --              6,816
Common stock dividends
  declared ($0.20 per share)                 --             (1,321)                --                 --             (1,321)
Preferred stock dividends
  declared                                   --                (60)                --                 --                (60)
Amortization of unearned
  compensation                               --                 --                 47                 --                 47
Net change in translation
  adjustment                                 --                 --                 --                 11                 11
Net change in adjustment  for
  minimum pension liability                  --                 --                 --              1,111              1,111
                                     ==========         ==========         ==========         ==========         ==========
Balance December 31, 1999            $   55,074         $   20,318         $      (66)        $     (895)        $   74,471
                                     ==========         ==========         ==========         ==========         ==========
</TABLE>



              The accompanying notes are an integral part of these
                       consolidated financial statements.


                                                                              14
<PAGE>   15
                                 TRANSPRO, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - THE COMPANY

     TransPro, Inc. (the "Company") is a manufacturer and supplier of heat
transfer components and systems, replacement automotive air conditioning parts
and specialty fabricated metal products for a variety of Aftermarket and
Original Equipment Manufacturing ("OEM") automotive, truck and industrial
equipment applications and performs vehicle conversions.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     Basis of Consolidation: The Company's consolidated financial statements
include the accounts of all subsidiaries. Intercompany balances and transactions
have been eliminated.

     Cash Equivalents: The Company considers all highly liquid investments with
maturities of three months or less at the time of purchase to be cash
equivalents.

     Inventories: Inventories are valued at the lower of cost (first-in,
first-out method) or market.

     Property, Plant and Equipment: Property, plant and equipment is recorded at
cost. Ordinary maintenance and repairs are expensed; replacements and
betterments are capitalized. Land improvements, buildings and machinery are
depreciated over their estimated useful lives under the straight-line method.
Estimated useful lives for buildings are 40 years and for machinery and
equipment are between three and ten years. The provision for amortization of
leasehold improvements is based on the lease term or the estimated useful lives
of the improvements, whichever is shorter. Upon retirement or disposition of
plant and equipment, the cost and related accumulated depreciation are removed
from the accounts and any resulting gain or loss is recognized in the Company's
consolidated statements of income.

     Goodwill: Goodwill represents the excess of cost over the fair value of
assets acquired and is being amortized using the straight-line method over 20
years. The Company periodically estimates the future undiscounted cash flows of
the businesses to which goodwill relates to ensure that the carrying value of
such goodwill has not been impaired. The Company's existing goodwill relates to
the acquisitions of A/C Plus in 1999, Evap in 1998, VMS in 1997 and Rahn,
Industries in 1996.

     Impairment of Long-Lived Assets: The Company, in the event that
circumstances arise that indicate that its fixed assets may be impaired, would
perform an evaluation of asset impairment in accordance with Statement of
Financial Accounting Standards No. 121 ("SFAS No. 121"), "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of."
The assets' carrying values would be compared to the estimated future
undiscounted cash flows of the assets to determine if a write-down is required.
There were no impaired long-lived assets at December 31, 1999.

     Foreign Currency Translation: Generally, assets and liabilities of the
Company's foreign subsidiaries are translated into U.S. dollars at the current
rate of exchange, while revenues and expenses are translated at the average
exchange rate during the year. Property, plant and equipment, and its associated
depreciation, and stockholders' equity are translated at the historical rate.
The functional currency of the Company's manufacturing operations in Mexico is
the U.S. dollar and therefore any adjustments related to currency translations
are included in results from operations. The Securities and Exchange Commission
has deemed that Mexico ceased to be a highly inflationary economy, effective for
quarters beginning after January 1, 1999. As


                                                                              15
<PAGE>   16
the Company currently uses the U.S. dollar as its functional currency, there was
no material impact on the financial position of the Company. Adjustments from
translating other foreign subsidiaries' financial statements are excluded from
the results of operations and are reported as a separate component of
stockholders' equity.

     Revenue Recognition: The Company recognizes revenues from product sales
upon shipment to its customers.

     Research and Development: Research and development costs are expensed as
incurred.

     Financial Instruments: The Company was a party to an interest rate swap
agreement which expired on December 29, 1997 involving the exchange of fixed and
floating rate interest payments. The difference to be paid or received was
accrued as interest rates changed and was recognized over the life of the
agreement as an adjustment to interest expense.

     Income Taxes: The Company accounts for income taxes in accordance with the
provisions of Statement of Financial Accounting Standards No. 109 ("SFAS No.
109"), "Accounting for Income Taxes," under which deferred income taxes are
recorded to reflect the tax consequences on future years of differences between
the tax bases of assets and liabilities and their financial reporting amounts at
each year-end.

     Earnings Per Share: Earnings per share are computed in accordance with the
provisions of Statement of Financial Accounting Standards No. 128 ("SFAS No.
128"), "Earnings Per Share," whereby net earnings are divided by the weighted
average number of shares of common stock outstanding, less shares of non-vested
restricted stock to arrive at basic earnings common share. The diluted impact of
stock options, restricted stock grants and conversion of preferred stock are
included in the weighted average number of shares of common stock and
equivalents outstanding to arrive at diluted earnings per common share.

     Other Comprehensive Income: The Company has reported other comprehensive
income in accordance with the provisions of Statement of Financial Accounting
Standards No. 130 ("SFAS No. 130"), "Reporting Comprehensive Income." Other
comprehensive income represents the change in the equity of the business from
non-owner sources and is presented in a separate consolidated financial
statement.

     Segment Information: The Company has reported segment information in
accordance with Statement of Financial Accounting Standards No. 131 ("SFAS No.
131"), "Disclosures about Segments of an Enterprise and Related Information."
SFAS No. 131 requires disclosure of financial data based on the "management
approach" to business decision making. The management approach is based on
internal information used for making operating decisions and assessing the
performance of the Company's reportable segments. SFAS No. 131 also requires
disclosures regarding products and services. Segment information is reported
separately in these notes to the consolidated financial statements.

     Use of Estimates: The preparation of the consolidated financial statements
in conformity with generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the dates of
the consolidated financial statements and the reported amounts of revenues and
expenses during the reporting periods. Actual results could differ from those
estimates.

     Reclassification: Certain items in prior years have been reclassified due
to current year disclosures.


                                                                              16
<PAGE>   17
NOTE 3 - SEGMENT AND BUSINESS INFORMATION

     In 1998, the Company adopted SFAS No. 131. Prior year segment information
has been restated to present the Company's three reportable segments -
Aftermarket Heating and Cooling Systems, OEM Heat Transfer Systems and Specialty
Metal Fabrication.

     Aftermarket Heating and Cooling Systems product lines include complete
radiators and radiator cores, heaters, air conditioning condensers, air
conditioning compressors and other air conditioning parts for aftermarket
customers. The OEM Heat Transfer Systems business provides manufactured
specialized heavy-duty equipment radiators, charge air coolers and oil coolers
to original equipment manufacturers. Specialty Metal Fabrication products and
services include fabrication of metal racking, enclosures and cabinetry and the
fabrication and installation of customized van interiors and vehicle conversion
components.

     The accounting policies of the segments are the same as those described in
Note 2, with the exception of the following:

         Intercompany Sales: Segment data includes inter-segment sales, at cost
         plus a standard intercompany markup.

         Allocations: Certain other expenses are allocated between segments
         based on their respective use of shared facilities and resources, such
         as information technology, human resources and finance and accounting
         functions.

     The Company evaluates the performance of its segments and allocates
resources accordingly based on income from operations.

     The tables below set forth information about reported segments for the
years ended December 31:

<TABLE>
<CAPTION>
(Amounts in thousands)                                  CONSOLIDATED REVENUES                         INCOME FROM OPERATIONS
BUSINESS SEGMENT                                1999            1998            1997           1999           1998           1997
---------------------------------------      ---------       ---------       ---------       --------       --------       --------
<S>                                          <C>             <C>             <C>             <C>            <C>            <C>
Aftermarket Heating and Cooling Systems      $ 166,235       $ 156,335       $ 143,273       $ 14,064       $  9,944       $  6,299
OEM Heat Transfer Systems                       39,328          39,257          38,864         (1,324)        (1,955)        (4,629)
Specialty Metal Fabrication                     56,014          44,473         106,729          3,002          3,693         19,206
Inter-segment revenues:
Aftermarket Heating and Cooling Systems          5,868           3,678           3,443             --             --             --
OEM Heat Transfer Systems                           16             112             543             --             --             --
Specialty Metal Fabrication                         --              --              --             --             --             --
Elimination of inter-segment revenues           (5,884)         (3,790)         (3,986)            --             --             --
                                             ---------       ---------       ---------       --------       --------       --------
Segment totals                                 261,577         240,065         288,866         15,742         11,682         20,876
Corporate expenses                                  --              --              --         (4,378)        (5,451)        (4,428)
                                             ---------       ---------       ---------       --------       --------       --------
Consolidated Totals                          $ 261,577       $ 240,065       $ 288,866       $ 11,364       $  6,231       $ 16,448
                                             =========       =========       =========       ========       ========       ========
</TABLE>


<TABLE>
<CAPTION>
                                                                                                             DEPRECIATION AND
(Amounts in thousands)                  TOTAL ASSETS BY SEGMENT            CAPITAL EXPENDITURES            AMORTIZATION EXPENSES
                                ----------------------------------     ----------------------------     ----------------------------
BUSINESS SEGMENT                  1999         1998         1997        1999       1998       1997       1999       1998       1997
---------------------------     --------     --------     --------     ------     ------     ------     ------     ------     ------
<S>                             <C>          <C>          <C>          <C>        <C>        <C>        <C>        <C>        <C>
Aftermarket Heating and
  Cooling Systems               $121,385     $ 97,336     $ 89,022     $4,272     $4,412     $3,216     $4,293     $3,995     $3,422
OEM Heat Transfer Systems         19,853       18,144       18,831      1,921      1,756      1,900      1,506      1,260      1,265
Specialty Metal Fabrication       33,156       24,882       27,189      2,006      2,365      2,098      1,555      1,346      3,329
                                --------     --------     --------     ------     ------     ------     ------     ------     ------
Segment totals                   174,394      140,362      135,042      8,199      8,533      7,214      7,354      6,601      8,016
Corporate                         11,501        8,165        9,498          1         49         --        187        181        177
                                --------     --------     --------     ------     ------     ------     ------     ------     ------
Consolidated totals             $185,895     $148,527     $144,540     $8,200     $8,582     $7,214     $7,541     $6,782     $8,193
                                ========     ========     ========     ======     ======     ======     ======     ======     ======
</TABLE>


                                                                              17
<PAGE>   18
Business consolidation and closure costs included in earnings before interest
and taxes for the years ended December 31, are as follows:

<TABLE>
<CAPTION>
(Amounts in thousands)
BUSINESS SEGMENT                               1999         1998          1997
---------------------------------------        ----        -----        ------
<S>                                            <C>         <C>          <C>
Aftermarket Heating and Cooling Systems        $325        $  --        $  336
OEM Heat Transfer Systems                        --           --           422
Specialty Metal Fabrication                      --           --         3,200
                                               ====        =====        ======
Totals                                         $325        $  --        $3,958
                                               ====        =====        ======
</TABLE>

     In 1999 and 1998, AutoZone accounted for 12% and 11%, respectively, of net
sales and comprised 29% of total accounts receivable at December 31, 1999 and
1998. These sales were all in the Aftermarket Heating and Cooling Systems
segment. During 1997, Ford accounted for approximately 27% of the Company's net
sales and were in the Specialty Metal Fabrication business.

     In 1999, 1998 and 1997, the Company had no other customers who individually
accounted for greater than 10% of the Company's net sales.

     Export sales from North America were below 10% in each of the years
reported. The Company has a manufacturing facility in Mexico and a vehicle
conversion plant in Canada. During 1999 and 1998, the Company had $5.1 million
and $4.8 million of sales in Mexico, respectively and $4.3 million and $1.4
million of sales in Canada, respectively. Substantially all other sales were
based in the U.S. Substantially all assets of the Company are located in the
U.S.

NOTE 4 - PLANT AND BUSINESS CONSOLIDATION AND CLOSURE COSTS

     In 1999, the Company recorded $0.3 million in plant and business
consolidation and closure costs, primarily for severance, related to the closing
of the Company's Philadelphia, Pennsylvania and Atlanta, Georgia replacement
automotive condenser manufacturing plants.

     In 1997, the Company recorded approximately $4.0 million of plant and
business consolidation and closure costs. Of this amount, approximately $3.2
million related to expenses in connection with the closing of the Company's
Louisville, Kentucky plant as a result of Ford's decision to move the production
of Crew Cab and DRW components in-house in late 1997. These costs included
approximately $1.5 million of severance and other employee termination costs for
the nearly 200 employees at the Louisville plant and approximately $1.7 million
for facility lease cancellation penalties and the abandonment of the fixed
assets utilized at the plant. In addition, the Company recorded $1.3 million in
plant and business consolidation and closure costs related to the consolidation
of the OEM and Aftermarket heat transfer organizations; the closing of the New
Haven, Connecticut OEM heat transfer product manufacturing plant and movement of
such manufacturing operations to Jackson, Mississippi; and the closing of the
Peru, Illinois Aftermarket Manufacturing operations and movement of such
manufacturing operations to Mexico. These charges were offset by the reversal of
previously recorded employee termination benefits of $0.5 million related to the
transfer of manufacturing operations to Jackson, Mississippi and Mexico.


                                                                              18
<PAGE>   19
NOTE 5 - INCOME TAXES

Information with respect to income taxes is as follows:

<TABLE>
<CAPTION>
(Amounts in thousands)                                                 1999            1998            1997
                                                                    -------         -------         -------
<S>                      <C>                                        <C>             <C>             <C>
     Current:            Federal                                    $ 2,207         $    83         $ 4,929
                         Foreign                                        152             123              --
                         State and local                                321              (7)          1,301
                                                                    -------         -------         -------
                                                                      2,680             199           6,230
                                                                    -------         -------         -------

     Deferred:           Federal                                        439             804            (630)
                         Foreign                                       (189)             --              --
                         State and local                                 32             255            (167)
                         Benefit related to GDI restructuring        (2,858)             --              --
                                                                    -------         -------         -------
                                                                     (2,576)          1,059            (797)
                                                                    -------         -------         -------
                         Provision for income taxes                 $   104         $ 1,258         $ 5,433
                                                                    =======         =======         =======
</TABLE>


       A reconciliation of the provision for income taxes at the Federal
statutory rate of 34% in 1999, 35% in 1998 and 34% in 1997, to the reported tax
provisions is as follows:

<TABLE>
<CAPTION>
(Amounts in thousands)                                                   1999           1998          1997
                                                                       -------         ------        ------
<S>                                                                    <C>             <C>           <C>
Provision computed at the Federal statutory rate                       $ 2,353         $1,017        $4,657
State and local income taxes, net of Federal income tax benefit            278            161           738
Operating loss not benefitted                                              124             --            --
Benefit related to GDI restructuring                                    (2,858)            --            --
Permanent differences                                                      144            106            48
Other                                                                       63            (26)          (10)
                                                                       -------         ------        ------
Provision for income taxes                                             $   104         $1,258        $5,433
                                                                       =======         ======        ======
</TABLE>

Significant components of deferred income tax assets and liabilities as of
December 31, are as follows:

<TABLE>
<CAPTION>
(Amounts in thousands)                           1999            1998
                                               -------         -------
<S>                                            <C>             <C>
Deferred tax assets:
     Inventories                               $ 2,300         $   469
     Pensions and deferred compensation          2,208           2,691
     Postretirement benefits                       459             524
     Allowance for bad debts                       854             432
     Self insurance reserves                     1,186             823
     Warranty reserves                             224             338
     Accrued vacation                              805             355
     Other                                         452             477
                                               -------         -------
         Total deferred tax assets               8,488           6,109
                                               -------         -------
Deferred tax liabilities:
     Depreciation                               (4,075)         (2,470)
     Investment in joint venture                    --          (1,425)
     Deferred charges                             (437)           (457)
     Other                                        (368)            (89)
                                               -------         -------
         Total deferred tax liabilities         (4,880)         (4,441)
                                               -------         -------
Net deferred tax assets                        $ 3,608         $ 1,668
                                               =======         =======
</TABLE>

The earnings of certain foreign subsidiaries are considered permanently
reinvested in the foreign operations and therefore no provision has been made
for U.S. taxes related to these subsidiaries. During 1999, the Company's
Canadian subsidiary generated a net operating loss carry-forward of $0.4
million, which held a 50% valuation allowance as of December 31, 1999. This
carry-forward expires in seven years. Income before taxes from United States and
Foreign sources is as follows:

<TABLE>
<CAPTION>
(Amounts in thousands)                           1999            1998         1997
                                               -------         -------       ------
<S>                                            <C>             <C>           <C>
United States                                  $7,437          $2,619        $13,043
Foreign                                          (517)            286            265
                                               ------          ------        -------
                                               $6,920          $2,905        $13,308
                                               ======          ======        =======
</TABLE>


                                                                              19
<PAGE>   20
NOTE 6 - EARNINGS PER SHARE

     The following table sets forth the computation of basic and diluted
earnings per common share:

<TABLE>
<CAPTION>
(Amounts in thousands, except per share amounts)
BASIC EARNINGS PER COMMON SHARE CALCULATION                              1999            1998            1997
                                                                       -------         -------         -------
<S>                                                                    <C>             <C>             <C>
Numerator:
Net income                                                             $ 6,816         $ 1,647         $ 7,875
Less:  preferred stock dividends                                           (60)            (25)             --
                                                                       -------         -------         -------
Net income available to common stockholders                            $ 6,756         $ 1,622         $ 7,875
                                                                       =======         =======         =======
Denominator:
Weighted average common shares                                           6,597           6,615           6,604
Non-vested restricted stock                                                (24)            (22)            (51)
                                                                       -------         -------         -------
Denominator for basic earnings per common share -
  adjusted weighted average common shares                                6,573           6,593           6,553
                                                                       =======         =======         =======
Basic earnings per common share                                        $  1.03         $   .25         $  1.20
                                                                       =======         =======         =======

DILUTED EARNINGS PER COMMON SHARE CALCULATION
Numerator:
Net income available to common stockholders                            $ 6,756         $ 1,622         $ 7,875
Add back:  preferred stock dividend                                         60              25              --
                                                                       -------         -------         -------
Net income available to stockholders and assumed conversions           $ 6,816         $ 1,647         $ 7,875
                                                                       =======         =======         =======
Denominator:
Adjusted weighted average common shares                                  6,573           6,593           6,553
Diluted effect of stock options and restricted non-vested stock             19               4              33
Diluted effect of Series B Preferred Stock                                 497             207              --
                                                                       -------         -------         -------
Denominator for diluted earnings per common share -
  adjusted weighted average common shares and equivalents                7,089           6,804           6,586
                                                                       =======         =======         =======
Diluted earnings per common share                                      $   .96         $   .24         $  1.20
                                                                       =======         =======         =======
</TABLE>


There were outstanding options to purchase common stock excluded from the
diluted calculation because their exercise price exceeded the average market
price of TransPro common stock during the respective earnings periods. The
shares excluded and the average market prices were as follows:

<TABLE>
<CAPTION>
                               1999           1998           1997
                             --------       --------       -------
<S>                          <C>            <C>            <C>
Options                       347,115        362,000        15,000
Average market prices        $   6.22       $   7.39       $  9.16
</TABLE>

NOTE 7 - FAIR VALUES OF FINANCIAL INSTRUMENTS

     Financial Accounting Standards Board ("FASB") Statements of Financial
Accounting Standards No. 107, "Disclosure about Fair Value of Financial
Instruments" and No. 119, "Disclosure about Derivative Financial Instruments and
Fair Value of Financial Instruments," are part of a continuing process by the
FASB to improve information regarding financial instruments. The following
methods and assumptions were used by the Company in estimating the fair value of
each class of financial instruments:

     Cash and Cash Equivalents: The carrying amount reported in the balance
sheet for cash and cash equivalents approximates its fair value.

     Long-Term Debt: The carrying amounts of the Company's long-term debt either
approximate fair value or are estimated using discounted cash flow analysis
based on the Company's current incremental borrowing rates for similar types of
borrowing arrangements.


                                                                              20
<PAGE>   21
     Letters of Credit: The Company utilizes letters of credit to back its
industrial revenue bonds, certain insurance policies and certain trade
purchases, which totaled $13.4 million, $3.6 million and $0.6 million,
respectively, at December 31, 1999. The letters of credit reflect fair value as
a condition of their underlying purpose.

     Concentration of Credit Risk: The Company is subject to a concentration of
credit risk primarily with its trade and notes receivable. The Company grants
credit to certain customers who meet pre-established credit requirements, and
generally requires no collateral from its customers. Estimates of potential
credit losses are provided for in the Company's consolidated financial
statements and are within management's expectations and industry averages. As of
December 31, 1999 the Company had no other significant concentrations of credit
risk.

NOTE 8 - DEBT

     In July 1998, the Company entered into a Revolving Credit Agreement (the
"Revolving Credit Agreement") with five banking institutions to replace its 1995
Revolving Credit and Term Loan Agreement (the "1995 Credit Agreement") in order
to increase the amount of and extend the commitment period for bank financing.
The Revolving Credit Agreement provides for secured borrowings or the issuance
of letters of credit in an aggregate amount not to exceed $75 million. The
Revolving Credit Agreement is secured by a blanket first perfected security
interest in substantially all of the Company's assets, plus a pledge of the
stock of the Company's subsidiaries. The Revolving Credit Agreement expires on
July 1, 2003. The security interest in the Company's assets and the pledge of
the Company's subsidiaries' stock are eligible for release if the Company
achieves certain senior debt ratings or if certain financial ratios are met and
maintained. At December 31, 1999, the Company did not meet the financial ratios
required for the release of the security interest.

     Available borrowings under the Revolving Credit Agreement are determined by
a borrowing base consisting of the Company's eligible (i) accounts receivable,
(ii) inventory and (iii) fixed assets, as adjusted by an advance rate. The
aggregate amount of available borrowings under the Revolving Credit Agreement
was automatically reduced by $0.5 million at the end of each quarter through
June 30, 1999 and then by $1.25 million at the end of each quarter through
December 31, 1999. The Revolving Credit Agreement was amended (the "Third
Amendment") on December 9, 1999. The Third Amendment, effective in January 2000,
increases the commitment amount back to $75 million with automatic reductions of
$5.0 million each on November 30, 2000 and December 31, 2000; and then by $1.5
million at the end of each quarter beginning March 31, 2001 through June 30,
2003. The Revolving Credit Agreement bears interest at variable rates based, at
the Company's option, on either (a) a Eurodollar loan rate, plus an applicable
margin based upon the ratio of the Company's total funded debt to earnings
before interest, taxes, depreciation and amortization ("EBITDA"), or (b) the
higher of (i) the BankBoston, N.A. base lending rate or (ii) one-half of one
percent above the Federal Funds Effective Rate, as defined, plus an applicable
margin based upon the ratio of the Company's total funded debt to EBITDA. A
commitment fee of .25% or .375% based upon the ratio of the Company's total
funded debt to EBITDA on the average daily unused portion of the Revolving
Credit Agreement is payable quarterly, in arrears.

     The Revolving Credit Agreement contains financial covenants which, among
other things, require maintenance of a minimum tangible net worth and debt
service coverage and a maximum level of debt to EBITDA and debt to net worth, as
well as covenants which place limits on dividend payments in excess of $2.0
million per year and capital expenditures in excess of 140% of such year's
depreciation expense. On June 25, 1999, the Company entered into the Waiver and
Second Amendment to the Revolving Credit Agreement (the "Waiver and Second
Amendment"), amending the interest coverage ratio covenant and the liabilities
to net


                                                                              21
<PAGE>   22
worth ratio covenant and waiving compliance with the interest coverage ratio and
the liabilities to net worth ratio covenant for the quarter ended March 31,
1999.

     Long-term debt consisted of the following at December 31:

<TABLE>
<CAPTION>
(Amounts in thousands)                    1999             1998
                                        --------         --------
<S>                                     <C>              <C>
Revolver                                $ 49,683         $ 29,911
Industrial revenue bonds:
     Floating rate bond due 2010           8,000            8,000
     Floating rate bond due 2013           5,000            5,000
Unamortized debt expense                    (755)            (714)
                                        --------         --------
Total long-term debt                    $ 61,928         $ 42,197
                                        ========         ========
</TABLE>

     Total debt outstanding at December 31, 1999 under the Revolving Credit
Agreement was $49.7 million. The average interest rate for the Revolving Credit
Agreement approximated 6.55% in 1999 and 7.80% in 1998. In addition, the Company
has Industrial Revenue Bonds totaling $13.0 million at December 31, 1999, which
are fully secured by letters of credit.

     The floating rate industrial revenue bonds bear interest at a rate based on
a short-term tax-exempt bonds index, as defined in the bonds, and approximated
4.11% at December 31, 1999 and 3.60% at December 31, 1998. The average interest
rate for all industrial revenue borrowings approximated 3.58% during 1999 and
3.66% during 1998.

     Long-term debt (excluding the unamortized debt expense) at December 31,
1999 matures after 2002.

NOTE 9 - COMMITMENTS AND CONTINGENCIES

     Leases: The Company's leases consist primarily of manufacturing and
distribution facilities and equipment and expire principally between 2000 and
2004. A number of leases require that the Company pay certain executory costs
(taxes, insurance, and maintenance) and contain renewal and purchase options.
Annual rental expense for operating leases approximated $5.2 million 1999, $4.7
million in 1998 and $3.7 million in 1997. Future minimum payments under
noncancelable operating leases as of December 31, 1999 were as follows:

<TABLE>
<CAPTION>
(Amounts in thousands)
<S>                 <C>
        2000        $4,904
        2001         2,468
        2002         1,535
        2003           501
        2004           126
                    ------
        Total       $9,534
                    ======
</TABLE>

     Insurance: The Company is self-insured for health care, workers
compensation, general liability and product liability up to predetermined
amounts above which third party insurance applies. The Company is contingently
liable to insurance carriers under its workers compensation and liability
policies and has reserved approximately $2.4 million to pay such claims.

     Legal Proceedings: Various legal actions are pending against or involve the
Company with respect to such matters as product liability, casualty and
employment related claims. In the opinion of management, after review and
consultation with counsel, the aggregate liability, if any, that ultimately may
be incurred in excess of amounts already provided should not have a material
adverse effect on the consolidated financial position, results of operations, or
liquidity of the Company.


                                                                              22
<PAGE>   23
     Severance Agreements: The Company has a Key Employee Severance Policy and
has entered into severance agreements with key employees in order to provide
financial assistance if employment with the Company is terminated under the
circumstances set forth in the policy and the agreements. The policy and
agreements provide for formalized severance benefits in the event of
non-voluntary termination.

     Environmental Matters: The Company is subject to Federal, state and local
laws designed to protect the environment and believes that, as a general matter,
its policies, practices and procedures are properly designed to reasonably
prevent risk of environmental damage and financial liability to the Company. The
Company believes it is reasonably possible that environmental related
liabilities might exist with respect to one industrial site formerly occupied by
the Company. Based upon environmental site assessments, the Company believes
that the cost of any potential remediation, other than amounts already provided,
for which the Company may ultimately be responsible will not have a material
adverse effect on the consolidated financial position, results of operations, or
liquidity of the Company.

     Collective Bargaining Agreements: The Company had approximately 2,562
employees at December 31, 1999. Of these employees, approximately 1,160 were
covered by collective bargaining agreements, which expire at different times.
The Company has successfully renegotiated three collective bargaining agreements
over the last several years and feels labor relations are good, but there can be
no assurance that work stoppages will not occur in the future.

NOTE 10 - STOCK COMPENSATION PLANS

STOCK OPTIONS

     At December 31, 1999, the Company had two stock option plans under which
key employees and directors have options to purchase TransPro common stock.
Under the 1995 Stock Plan (the "Stock Plan") options are granted at fair market
value on the date of grant and are exercisable cumulatively at the rate of 50%
two years from the date of grant, 75% three years from the date of grant, and
100% four years from the date of grant. Options granted under the Stock Plan
expire 10 years from the date of the grant. Awards of restricted stock may also
be granted to key employees under the Stock Plan and may be issued in addition
to, or in lieu of stock options. The total number of shares of common stock with
respect to which stock options may be granted and restricted shares may be
awarded under the Stock Plan shall not exceed 600,000. At December 31, 1999 and
1998, respectively, 504,992 and 495,052 common shares were reserved for stock
options and restricted shares granted under the Stock Plan. The weighted average
remaining contractual life on outstanding stock options was 7.6 years and 7.3
years at December 31, 1999 and 1998, respectively. The Directors Stock Option
Plan (the "Directors Plan") provides for the purchase price per share of common
stock for which each option is exercisable to be equal to 100% of the fair
market value of the common stock covered thereby on the date of grant. Subject
to certain acceleration provisions, each option granted under the Directors Plan
will 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 the Directors Plan expire 10 years from the date of grant.
The total number of shares of common stock with respect to which options may be
granted under the Directors Plan may not exceed 100,000 shares. At December 31,
1999 and 1998, respectively, 77,800 and 56,400 common shares were reserved for
stock options granted under the Directors Plan.

     The Company applies APB Opinion No. 25 "Accounting for Stock Issued to
Employees" and related interpretations in accounting for its plans. Accordingly,
no compensation cost has been recognized in the financial statements. Had
compensation cost for the Company's plans been determined based on the fair
value at the grant dates for awards under the plans, consistent with Statement
of Financial Accounting Standards No.


                                                                              23
<PAGE>   24
123 "Accounting for Stock Based Compensation," the Company's net income and
earnings per share would have been reduced to the pro forma amounts indicated
below:

<TABLE>
<CAPTION>
(Amounts in thousands, except per share amounts)      1999             1998             1997
                                                    ---------        ---------        ---------
<S>                      <C>                        <C>              <C>              <C>
Net income               As reported                $   6,816        $   1,647        $   7,875
                         Pro forma                      6,579            1,484            7,590

Basic earnings           As reported                     1.03              .25             1.20
  per common share       Pro forma                        .99              .22             1.16

Diluted earnings         As reported                      .96              .24             1.20
  per common share       Pro forma                        .93              .22             1.15
</TABLE>

         The fair value of each option grant is estimated for the above
disclosure on the date of grant using the Black-Scholes option-pricing model
with the following weighted-average assumptions:

<TABLE>
<CAPTION>
                                       1999            1998            1997
                                     -------         -------         -------
<S>                                  <C>             <C>             <C>
          Dividend yield                2.20%           2.20%           2.20%
          Expected volatility          52.08%          48.77%          30.20%
          Risk-free interest rate       6.54%           4.80%           6.69%
          Expected life               6 Years         6 Years         6 Years
</TABLE>

Information regarding the Stock Plan and the Directors Plan is as follows:

<TABLE>
<CAPTION>
                                                                           OPTION PRICE RANGE
                                                                -----------------------------------------
                                            NUMBER OF                            WEIGHTED
STOCK PLAN                                   OPTIONS               LOW            AVERAGE           HIGH
----------                                   -------               ---            -------           ----
<S>                                         <C>                  <C>              <C>              <C>
Outstanding at December 31, 1997             392,767             $ 3.72           $ 7.97           $11.75
Granted                                      112,100               5.88             6.25             7.75
Canceled                                     (64,352)              6.24             7.91            11.75
                                             -------
Outstanding at December 31, 1998             440,515               3.72             7.64            11.75
Granted                                       97,500               5.50             5.50             5.56
Canceled                                     (57,049)              5.88             7.53            11.75
                                             -------
Outstanding at December 31, 1999             480,966               3.72             7.22            11.75
                                             =======
Exercisable at December 31, 1999             207,466               3.72             8.35            11.75
                                             =======
</TABLE>

<TABLE>
<CAPTION>
                                                                           OPTION PRICE RANGE
                                                               ---------------------------------------
                                           NUMBER OF                         WEIGHTED
DIRECTORS PLAN                              OPTIONS            LOW            AVERAGE            HIGH
--------------                              -------            ---            -------            ----
<S>                                         <C>               <C>              <C>              <C>

Outstanding at December 31, 1997            56,400            $ 7.75           $ 9.70           $11.75
Granted                                         --                --               --               --
                                            ------
Outstanding at December 31, 1998            56,400              7.75             9.70            11.75
Granted                                     21,400              5.50             5.50             5.50
                                            ------
Outstanding at December 31, 1999            77,800              5.50             8.54            11.75
                                            ======
Exercisable at December 31, 1999            48,375              7.75             9.99            11.75
                                            ======
</TABLE>


<TABLE>
<CAPTION>
                                                              OPTIONS OUTSTANDING                 OPTIONS EXERCISABLE
                                                          ---------------------------         --------------------------
                                                           WEIGHTED
                                                            AVERAGE         WEIGHTED            NUMBER         WEIGHTED
                                                           REMAINING        AVERAGE           EXERCISABLE       AVERAGE
     OPTIONS OUTSTANDING SUMMARY         OUTSTANDING         LIFE           EXERCISE             AS OF         EXERCISE
       RANGE OF EXERCISE PRICES           @ 12/31/99      (IN YEARS)         PRICE             12/31/99          PRICE
---------------------------------------  -----------      ----------        ---------          -----------     ---------
<S>                                      <C>              <C>               <C>                <C>             <C>
            $3.72 - $5.88                  211,651           9.00            $ 5.64              10,751         $ 5.34
            $7.50 - $11.75                 347,115           6.60              8.49             245,090           8.81
                                           -------                                              -------
                                           558,766                                              255,841
                                           =======                                              =======
</TABLE>


                                                                              24
<PAGE>   25
RESTRICTED STOCK

     Restricted stock awarded vests four years from the date of the award.

     Unearned compensation, representing the fair value of the restricted shares
at the date of the award, is charged to income over a four year period beginning
when the stock is issued, or over the period of actual vesting of such shares,
whichever period is shorter.

     Compensation expense with respect to all restricted shares amounted to
$47,000 in 1999, $103,000 in 1998, and $99,000 in 1997.


RESTRICTED STOCK AWARDS

<TABLE>
<S>                                         <C>
Outstanding at December 31, 1997             50,586
Awarded                                       4,800
Exercised                                   (12,435)
Canceled                                    (18,925)
                                            -------
Outstanding at December 31, 1998             24,026
Awarded                                          --
Vested                                           --
                                            -------
Outstanding at December 31, 1999             24,026
                                            =======
</TABLE>


NOTE 11 - STOCKHOLDER RIGHTS PLAN

     On September 14, 1995, the Board of Directors adopted a stockholder rights
plan (the "Rights Plan"), under which one Right (the "Right") was issued and
distributed for each share of common stock. The Rights Plan is intended to
protect shareholders against unsolicited attempts to acquire control of the
Company that do not offer what the Company believes to be an adequate price to
all shareholders. Each Right will entitle the registered holder to purchase from
the Company one one-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 Stock subject
to adjustment. The description and terms of the Rights are set forth in a Rights
Agreement between the Company and The First National Bank of Boston, as Rights
Agent.

     The Rights will become exercisable only if a person or group acquires or
obtains the right to acquire beneficial ownership of 20% or more of the
outstanding shares of common stock (an "Acquiring Person") or 10 days (or such
later date as the Company's Board of Directors may determine) following the
commencement by a person or group of a tender or exchange offer which would
result in such person or group becoming an Acquiring Person. The earlier of such
dates is called the "Rights Distribution Date." Until the Rights Distribution
Date, the Rights will be evidenced by the certificates for shares of common
stock. In the event that any person or group of affiliated or associated persons
becomes an Acquiring Person, proper provision shall be made so that each holder
of a Right, other than Rights that are or were owned beneficially by the
Acquiring Person (which, from and after the later of the Rights Distribution
Date and the date of the earliest of any such events, will be void), will
thereafter have the right to receive, upon exercise thereof at the then current
exercise price of the Right, that number of shares of common stock having a
market value of two times the exercise price of the Right.


                                                                              25
<PAGE>   26
NOTE 12 - RETIREMENT AND POSTRETIREMENT PLANS

RETIREMENT PLANS:

     The Company has noncontributory defined benefit pension plans covering the
majority of its full-time U.S. employees. Non-union employees at the Company's
GDI operations are covered by a cash balance defined benefit plan. The Company
maintains a non-qualified retirement plan to supplement benefits for designated
employees whose pension plan benefits are limited by the provisions of the
Internal Revenue Code. It is the Company's policy to make contributions to
qualified retirement plans sufficient to meet the minimum funding requirements
of applicable laws and regulations.

     The assets of the plans consist principally of equity securities, fixed
income instruments and investment contracts with insurance companies.

     The Company has recorded an additional minimum liability at the end of each
year representing the excess of the accumulated benefit obligations over the
fair value of plan assets and accrued pension liabilities. To the extent
possible, intangible assets representing unrecognized prior service costs have
offset the liabilities. The balance of the liability at the end of the period is
reported as a separate reduction of stockholders' equity, net of tax benefits.

     During 1998, the Company purchased participating annuity contracts for
certain plan participants for the payment of future benefits. The Company
remains subject to any significant risks and rewards associated with the benefit
obligations on these contracts.

     In 1999, 1998 and 1997 GDI contributed $0, $13,000 and $22,000
respectively, to multi-employer pension plans covering certain union employees
based on a stated amount per hour. These contributions are deposited directly to
the trustee and are not included in the net periodic pension cost amounts
presented in the tables that follow.

POSTRETIREMENT PLANS:

     The Company accounts for the cost of its postretirement health care and
life insurance benefits in accordance with Statement of Financial Accounting
Standards No. 106 ("SFAS No. 106"), "Employers' Accounting for Postretirement
Benefits Other Than Pensions," which requires that the Company accrue for such
postretirement benefits based on actuarially determined costs recognized over
the period from the date of hire to the full eligibility date of employees who
are expected to qualify for these benefits.

     The Company provides health care and life insurance benefits for certain
retired employees who reach retirement age while working for the Company.


                                                                              26
<PAGE>   27
The following tables set forth the Company's plans' combined funded status and
amounts recognized in the Company's consolidated balance sheets:

<TABLE>
<CAPTION>
                                                                  RETIREMENT PLANS                 POSTRETIREMENT PLANS
                                                              --------------------------          -----------------------
                                                                              YEAR ENDED DECEMBER 31,
                                                              ------------------------------------------------------------
(Amounts in thousands)                                          1999              1998             1999             1998
                                                              --------          --------          -------          -------
<S>                                                           <C>               <C>               <C>              <C>
CHANGE IN BENEFIT OBLIGATION

     Benefit obligation at January 1                          $ 30,423          $ 29,021          $   951          $ 1,171
     Plan amendment                                                 --                --              (61)              --
     Service cost                                                1,139             1,067               18               16
     Interest cost                                               1,865             1,981               56               65
     Plan participants' contribution                                --                --                8               15
     Actuarial (gain)loss                                       (4,933)            2,844              143             (195)
     Liability for participating annuity contracts                  --            (1,960)              --               --
     Actual gross benefits paid                                 (1,713)           (2,530)            (144)            (121)
                                                              --------          --------          -------          -------
     Benefit obligation at December 31                        $ 26,781          $ 30,423          $   971          $   951
                                                              ========          ========          =======          =======

CHANGE IN PLAN ASSETS

     Fair value of plan assets at January 1                   $ 26,294          $ 25,685          $    --          $    --
     Actual return on plan assets                                3,796             3,381               --               --
     Company contributions                                         846             1,019              136              106
     Plan participant contributions                                 --                --                8               15
     Purchase of participating annuity contracts                    --            (1,261)              --               --
     Actual gross benefits paid                                 (1,713)           (2,530)            (144)            (121)
                                                              --------          --------          -------          -------
     Fair value of plan assets at December 31                 $ 29,223          $ 26,294          $    --          $    --
                                                              ========          ========          =======          =======

RECONCILIATION OF FUNDED STATUS

     Funded status at December 31                             $  2,442          $ (4,129)         $  (971)         $  (951)
     Unrecognized transition asset                                 (96)             (149)              --               --
     Unrecognized prior service cost (benefit)                     760               847              (61)              --
     Unrecognized net (gain)loss                                (6,778)               69             (203)            (344)
                                                              --------          --------          -------          -------
     Accrued benefit cost                                     $ (3,672)         $ (3,362)         $(1,235)         $(1,295)
                                                              ========          ========          =======          =======

AMOUNTS RECOGNIZED IN STATEMENTS OF FINANCIAL POSITION

     Prepaid asset                                            $    147          $     --          $    --          $    --
     Accrued benefit liability                                  (5,625)           (7,271)          (1,235)          (1,295)
     Intangible asset                                              571               630               --               --
     Accumulated other comprehensive amount                      1,235             3,279               --               --
                                                              --------          --------          -------          -------
     Net amount recognized at December 31                     $ (3,672)         $ (3,362)         $(1,235)         $(1,295)
                                                              ========          ========          =======          =======

WEIGHTED-AVERAGE ASSUMPTIONS AS OF DECEMBER 31

     Discount rate                                               7.75%             6.50%            7.75%            6.50%
     Return on assets                                            9.00%             9.00%              N/A              N/A
     Initial trend rate                                            N/A               N/A            8.80%            9.20%
     Salary progression                                          4.25%             4.00%              N/A              N/A
     Ultimate health care trend rate                               N/A               N/A            5.00%            5.00%
     Years to ultimate trend                                       N/A               N/A               10               11
     Average future working lifetime (in years)                  12.67             16.64              N/A              N/A
</TABLE>


                                                                              27
<PAGE>   28
<TABLE>
<CAPTION>
(Amounts in thousands)                                           RETIREMENT PLANS                       POSTRETIREMENT PLANS
                                                       -------------------------------------       -----------------------------
                                                                               YEAR ENDED DECEMBER 31,
                                                       -------------------------------------------------------------------------
                                                         1999           1998           1997        1999        1998        1997
                                                       -------        -------        -------       ----        ----        ----
<S>                                                    <C>            <C>            <C>            <C>         <C>         <C>
COMPONENTS OF NET PERIODIC BENEFIT COST
     Service cost                                      $ 1,139        $ 1,067        $ 1,026        $ 18        $ 16        $ 27
     Interest cost                                       1,865          1,981          1,916          56          65          85
     Expected return on plan assets                     (2,015)        (2,022)        (1,956)         --          --          --
     Plan settlement                                        --             98             --          --          --          --
     Amortization and deferral of net loss(gain)           202            135             88         (34)        (35)        (32)
                                                       -------        -------        -------        ----        ----        ----
     Net periodic benefit cost                         $ 1,191        $ 1,259        $ 1,074        $ 40        $ 46        $ 80
                                                       =======        =======        =======        ====        ====        ====
</TABLE>

Assumed healthcare cost trend rates may have a significant effect on the amounts
reported for the healthcare plans. A one-percentage-point change in the assumed
healthcare cost trend rates would have the following effects.

<TABLE>
<CAPTION>
(Amounts in thousands)                                                    1% POINT INCREASE         1% POINT DECREASE
                                                                          -----------------         -----------------
<S>                                                                       <C>                       <C>
Effect on total of service and interest cost components                          $  3                  $  (3)

Effect of postretirement benefit obligations                                     $ 34                  $ (33)
</TABLE>


     The projected benefit obligation, accumulated benefit obligation and fair
value of plan assets for the pension plans with accumulated benefit obligations
in excess of plan assets were $5.2 million, $5.2 million and $3.7 million,
respectively as of December 31, 1999 and $13.2 million, $13.2 million and $9.0
million, respectively as of December 31, 1998.

401(k) INVESTMENT PLANS

     Under the Company's 401(k) Plans, substantially all of the Company's
non-union employees and certain union employees are eligible to save, by payroll
deductions, a portion of their salaries. Effective January 1, 1996, the amount
saved may be invested in the Company's common stock. Depending upon the Plan,
the Company matches certain percentages of the amounts saved by the employees.
The Company's matching contributions to the 401(k) Plans were approximately
$389,000 in 1999, $416,000 in 1998, and $458,000 in 1997.


                                                                              28
<PAGE>   29
NOTE 13 - QUARTERLY FINANCIAL DATA (UNAUDITED)

(Amounts in thousands, except price and per share amounts)

<TABLE>
<CAPTION>
                                                      YEAR ENDED DECEMBER 31, 1999
                                                      ----------------------------
                                               1st Qtr       2nd Qtr       3rd Qtr       4th Qtr
                                               -------       -------      --------       -------
<S>                                            <C>           <C>        <C>             <C>
Sales                                          $57,278       $70,145      $ 71,555       $62,599
Gross margin                                    14,470        18,092        17,665        13,971
Net (loss) income                                  505         5,110         1,490          (289)
Basic (loss) earnings per common share             .08           .78           .23          (.04)
Diluted (loss) earnings per common share           .07           .72           .21          (.04)
Market price of common stock:
     High                                      $ 6-1/4       $ 6-3/8      $7-15/16       $ 6-7/8
     Low                                        4-5/16         4-3/8       4-15/16             5
</TABLE>

<TABLE>
<CAPTION>
                                                          YEAR ENDED DECEMBER 31, 1998
                                                          ----------------------------
                                                1st Qtr         2nd Qtr      3rd Qtr        4th Qtr
                                                -------         -------      -------        -------
<S>                                            <C>             <C>           <C>           <C>
Sales                                          $ 50,587        $65,603       $68,535       $ 55,340
Gross margin                                     11,574         15,590        16,400         10,954
Net (loss) income                                  (139)         1,446         1,091           (751)
Basic (loss) earnings per common share             (.02)           .22           .17           (.11)
Diluted (loss) earnings per common share           (.02)           .22           .16           (.11)
Market price of common stock:
     High                                      $ 8-15/16       $ 8-3/4       $7-7/16        $ 6-1/4
     Low                                              7         7-7/16        5-5/16          4-3/8
</TABLE>

The above table summarizes quarterly financial information for 1999 and 1998. In
management's opinion, all adjustments (which include only normal recurring
adjustments) necessary to present fairly the information for such quarters have
been reflected above. Certain amounts may not agree to consolidated annual
amounts due to quarterly rounding.

NOTE 14 - ACQUISITIONS

     Effective February 1, 1999, the Company purchased 100% of the outstanding
stock of A/C Plus, an air conditioning compressor re-manufacturer located in
Arlington, Texas. A/C Plus had sales of approximately $2.9 million in fiscal
1998. The transaction was structured with a purchase price of $2.25 million in
cash, including transaction costs, and a promissory note of $0.25 million
payable on the second anniversary of the closing. Concurrent with the purchase,
the Company repaid $0.5 million in working capital debt on behalf of A/C Plus.
The purchase price and working capital repayment were financed through the
Company's Revolving Credit Agreement. The acquisition was accounted for as a
purchase. Goodwill of $2.2 million was recorded in connection with the
transaction and is being amortized over 20 years. A/C Plus' results are included
in the Company's consolidated financial statements from the date of acquisition.

     Effective August 1, 1998, the Company acquired 100% of the outstanding
stock of Evap. Evap is an Arlington, Texas manufacturer and distributor of
replacement automotive air conditioning parts. Evap's fiscal 1997 sales were
$6.6 million. The transaction was structured with an initial purchase price of
$6.0 million, consisting of $3.0 million cash at closing and 30,000 shares of
TransPro, Inc. Series B Preferred Stock (the "Series B Preferred Stock"), with
an opportunity for a maximum additional payout of $3.75 million based upon the
future earnings performance of the Evap business. Concurrent with the purchase,
the Company repaid $1.7 million of working capital debt on behalf of Evap. The
Company financed the cash portion of the initial purchase price and the working
capital debt repayment with borrowings under the Revolving Credit Agreement. The
acquisition was accounted for as a purchase and goodwill of $3.3 million, which
is being amortized over 20 years, was recorded as part of the transaction.
Evap's results are included in the Company's consolidated


                                                                              29
<PAGE>   30
financial statements from the date of acquisition. The Series B Preferred Stock
has an initial liquidation preference of $3.0 million, which is reflected in
paid-in capital on the Company's consolidated balance sheet. The potential
additional payout based on future earnings will take the form of an increase in
the liquidation preference of the Series B Preferred Stock. The Series B
Preferred Stock is non-transferable and is entitled to cumulative dividends of
2% per annum during the first year after acquisition, 3.5% per annum during the
second year and 5.0% per annum thereafter. The Series B Preferred Stock is
convertible into TransPro common stock at the rate of 50% on the third
anniversary of the acquisition, an additional 25% on the fourth anniversary and
the remaining 25% on the fifth anniversary; it is redeemable after the fifth
anniversary at the liquidation preference at the time of redemption. The Series
B Preferred Stock is convertible into TransPro common stock based upon the
liquidation preference and the market value of TransPro common stock at the time
of conversion, as further described in the purchase agreement. The aggregate
number of shares of TransPro common stock to be issued upon conversion of all
the Series B Preferred Stock may not exceed 7% of the total number of shares of
TransPro common stock outstanding, after giving effect to the conversion, as
further described in the purchase agreement. The average market value of the
TransPro common stock in excess of the 7% limitation, if any, will be paid in
cash.

     Consolidated results as of December 31, 1998 on a pro forma basis, assuming
the acquisition of Evap as of the beginning of 1998, are as follows:

<TABLE>
<CAPTION>
(Amounts in thousands)                         1998
                                             --------
<S>                                          <C>
Net sales                                    $247,356
                                             --------
Gross margin                                   57,323
                                             --------
Income from operations                          7,222
                                             --------
Net Income                                   $  2,122
                                             ========
Basic earnings per common share              $   0.32
                                             ========
Diluted earnings per common share            $   0.31
                                             ========
</TABLE>

     In December 1997, the Company acquired substantially all of the assets and
assumed certain specified liabilities of VMS for approximately $1.0 million. VMS
is located in Ontario, Canada and specializes in utility van conversions. VMS
reported sales of $1.6 million for the fiscal year ended February 1997. The
acquisition was accounted for as a purchase and VMS's results have been included
in the consolidated financial statements from the date of acquisition. The
Company financed the purchase of VMS by borrowings under the 1995 Credit
Agreement and recorded $0.4 million of goodwill related to the transaction,
which is being amortized over 20 years.


                                                                              30
<PAGE>   31
NOTE 15 - COMPREHENSIVE INCOME

The following table sets forth the income tax expense or (benefit) related to
each item of other comprehensive income:

<TABLE>
<CAPTION>
(Amounts in thousands)                         PRE-TAX      TAX EXPENSE      NET-OF-
                                               AMOUNT       OR (BENEFIT)   TAX AMOUNT
                                               ------       ------------   ----------
<S>                                            <C>             <C>         <C>
YEAR ENDED DECEMBER 31, 1999
Foreign currency translation adjustment        $    19         $   8         $    11
Minimum pension liability adjustment             1,841           730           1,111
                                               -------         -----         -------
Other comprehensive income                     $ 1,860         $ 738         $ 1,122
                                               =======         =====         =======
YEAR ENDED DECEMBER 31, 1998
Foreign currency translation adjustment        $    15         $   6         $     9
Minimum pension liability adjustment              (944)         (385)           (559)
                                               -------         -----         -------
Other comprehensive income                     $  (929)        $(379)        $  (550)
                                               =======         =====         =======
YEAR ENDED DECEMBER 31, 1997
Foreign currency translation adjustment        $   (44)        $ (18)        $   (26)
Minimum pension liability adjustment              (548)         (222)           (326)
                                               -------         -----         -------
Other comprehensive income                     $  (592)        $(240)        $  (352)
                                               =======         =====         =======
</TABLE>

The following is a roll forward of the accumulated other comprehensive income
balances:

<TABLE>
<CAPTION>
(Amounts in thousands)                                 MINIMUM           ACCUMULATED
                                   FOREIGN             PENSION              OTHER
                                   CURRENCY           LIABILITY          COMPREHENSIVE
                                  TRANSLATION         ADJUSTMENT            INCOME
                                  -----------         ----------         -------------
<S>                               <C>                 <C>                <C>
BALANCE DECEMBER 31, 1996            $(182)            $  (933)            $(1,115)
Current period change                  (26)               (326)               (352)
                                     -----             -------             -------
BALANCE DECEMBER 31, 1997             (208)             (1,259)             (1,467)
Current period changes                   9                (559)               (550)
                                     -----             -------             -------
BALANCE DECEMBER 31, 1998             (199)             (1,818)             (2,017)
Current period change                   11               1,111               1,122
                                     -----             -------             -------
BALANCE DECEMBER 31, 1999            $(188)            $  (707)            $  (895)
                                     =====             =======             =======
</TABLE>


                                                                              31
<PAGE>   32
REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholders of
TransPro, Inc.



     In our opinion, the accompanying consolidated balance sheets and the
related consolidated statements of income, comprehensive income, changes in
stockholders' equity, and of cash flows present fairly, in all material
respects, the financial position of TransPro, Inc. and its subsidiaries at
December 31, 1999 and 1998, and the results of their operations and their cash
flows for each of the three years in the period ended December 31, 1999, in
conformity with accounting principles generally accepted in the United States.
These financial statements are the responsibility of the Company's management;
our responsibility is to express an opinion on these financial statements based
on our audits. We conducted our audits of these statements in accordance with
auditing standards generally accepted in the United States, which require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for the opinion expressed above.



PricewaterhouseCoopers LLP
Hartford, Connecticut
February 14, 2000


                                                                              32