Assets Held for Sale

6 Months Ended

Sep. 30, 2021

Note 2: Assets Held for Sale

Liquid-cooled Automotive Business

On November 2, 2020, the Company signed a definitive agreement to sell its liquid-cooled automotive business to Dana Incorporated (“Dana”), subject to the receipt of governmental and third-party approvals and satisfaction of other closing conditions. During the first quarter of fiscal 2022, the Company and Dana withdrew the regulatory filing for approval of the transaction in Germany. The Company and Dana subsequently resubmitted a plan containing a modified sale perimeter for regulatory approval. During the second quarter of fiscal 2022, the Company and Dana engaged with the regulatory authority in Germany, providing responses and information as requested. As of September 30, 2021, the Company believed it was probable that the sale would close within one year and all held for sale criteria were met. Accordingly, the Company classified the assets and liabilities within the modified sale perimeter as held for sale on its September 30, 2021 consolidated balance sheet.

On October 25, 2021, the Company announced that it has reached a mutual agreement with Dana to terminate the sale agreement. Both companies have been actively engaged in the regulatory review process in Germany for many months and mutually decided that it is no longer in the best interest of either party to pursue the transaction further. As a result, the Company expects that the liquid-cooled automotive business will no longer meet the requirements to be classified as held for sale during the third quarter of fiscal 2022. The Company expects that, upon reverting back to held and used classification during the third quarter of fiscal 2022, it will measure the asset groups within the modified sale perimeter at the lower of their (i) carrying value, as if held for sale classification had not been met; or (ii) fair value. The long-lived assets within the liquid-cooled automotive business, primarily property, plant and equipment, have been fully impaired while classified as held for sale. Through September 30, 2021, the Company recorded $119.6 million of cumulative asset impairment charges related to these assets. At this time, the Company is unable to quantify or predict any adjustments to the carrying value of the liquid-cooled automotive business's long-lived assets to be recorded during the third quarter of fiscal 2022.

At each reporting date while the liquid-cooled automotive business was held for sale, the Company reassessed its fair value less costs to sell. As a result of these evaluations for the first two quarters of fiscal 2022, the Company recorded a total of $8.6 million of non-cash impairment charges related to the Automotive segment’s held for sale assets. These impairment charges reduced the net carrying value of property, plant and equipment additions during each quarter to zero. In addition, in connection with the modification to the sale perimeter in the first quarter of fiscal 2022, the Company determined that certain manufacturing operations no longer met the requirements to be classified as held for sale. As a result of its evaluation, the Company reversed $7.4 million of impairment charges to adjust the long-lived asset groups to their estimated fair value as of June 30, 2021. For purposes of its evaluation, the Company estimated the fair value of the businesses primarily using the income approach, which is a valuation technique that focuses on future cash flows anticipated to be generated by a business. The Company’s determination of fair value involved judgement and the use of significant estimates and assumptions, including assumptions regarding future revenue projections and operating profit margins, risk-adjusted discount rates, business trends and market conditions. The fair value measurements of these businesses are categorized as Level 3 within the fair value hierarchy. Refer to Note 4 for the definition of a Level 3 fair value measurement.

Assets and Liabilities Held for Sale

As of September 30, 2021, the Company presented the assets and liabilities within the modified sale perimeter of the liquid-cooled automotive business as held for sale on its consolidated balance sheet.

As of March 31, 2021, the Company presented the assets and liabilities of the liquid- and air-cooled automotive businesses as held for sale. See Note 1 for additional information regarding the sale of the air-cooled automotive business, which was completed on April 30, 2021.

The major classes of assets and liabilities held for sale were as follows:

	September 30, 2021			March 31, 2021
ASSETS
Cash and cash equivalents	$	5.3		$	8.0
Trade accounts receivable – net		27.5			54.4
Inventories		18.6			24.7
Other current assets		13.9			12.8
Property, plant and equipment – net		117.4			164.0
Other noncurrent assets		7.4			8.8
Impairment of carrying value		(119.6	)		(165.1	)
Total assets held for sale	$	70.5		$	107.6

LIABILITIES
Short-term debt	$	15.0		$	5.0
Accounts payable		24.3			46.3
Accrued compensation and employee benefits		5.8			15.5
Other current liabilities		7.0			12.2
Pensions		9.9			17.8
Other noncurrent liabilities		3.5			6.5
Total liabilities held for sale	$	65.5		$	103.3