VARIABLE INTEREST ENTITIES

9 Months Ended

Dec. 31, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Prior to the Spin-off, the Company controlled Nextracker Inc. ("Nextracker") through its holding of Class B common stock that did not participate in the earnings of Nextracker. As such, the shareholders of the equity at risk in Nextracker (the Class A common stock shareholders) did not have the power to direct the key activities of Nextracker and consequently Nextracker was a variable interest entity ("VIE"). The Company had the ability to control Nextracker's activities through its control of 51.4% and 61.4% of the voting rights of Nextracker as of December 31, 2023 and March 31, 2023, respectively. The Company also had the ability to receive significant benefits from the VIE (through its ability to convert its investments in Nextracker and Nextracker LLC into Class A common stock of Nextracker or cash) and as such the Company had been determined to be the primary beneficiary of the VIE. As such, the Company continued to consolidate Nextracker and the interests in Nextracker held by third parties are presented as a noncontrolling interest prior to the Spin-off. Evaluation of the VIE model and identification of the primary beneficiary requires significant judgements to be made regarding which entities can control the activities of a VIE, who can receive benefits or absorb losses from the VIE and the significance of those benefits and losses to the VIE.

On July 3, 2023, the Company's subsidiary Nextracker completed a follow-on offering to its initial public offering ("IPO"), which was completed on February 13, 2023, and issued 15,631,562 shares of Class A common stock and received net proceeds of $551 million. The entire net proceeds were used by Nextracker to acquire 14,025,000 Nextracker LLC common units from Yuma, Inc., the Company’s indirect wholly-owned subsidiary, and 1,606,562 Nextracker LLC common units from TPG Rise Flash, L.P., an affiliate of the global alternative asset management firm TPG. As a result of the repurchase of Nextracker LLC common units by Nextracker, 15,631,562 shares of Nextracker Class B common stock were cancelled. The Company received approximately $495 million from the follow-on offering, after distribution of net proceeds to TPG and expenses.

As of December 31, 2023 and March 31, 2023, noncontrolling interest was $480 million and $355 million, respectively. Net income attributable to noncontrolling interest was $36 million and $239 million for the three and nine-month periods ended December 31, 2023, respectively. Net income attributable to noncontrolling interest was zero for both the three and nine-month periods ended December 31, 2022. As a result of Nextracker's February 13, 2023 IPO, the noncontrolling interest previously determined to be redeemable prior to the IPO did not exist as of December 31, 2023. Net income attributable to redeemable noncontrolling interest was zero for both the three and nine-month periods ended December 31, 2023. Net income attributable to redeemable noncontrolling interest was $7 million and $19 million for the three and nine-month periods ended December 31, 2022, respectively.

The carrying amounts and classification of the VIE's external assets and liabilities as of December 31, 2023 and March 31, 2023 are included in the condensed consolidated balance sheets as follows:


	December 31, 2023		March 31, 2023
	(In millions) (Unaudited)
Assets
Current assets:
Cash	$	368	$	130
Accounts receivable, net	365		271
Contract assets	352		298
Inventories	203		138
Other current assets	131		35
Total current assets	1,419		872
Property and equipment, net	8		7
Goodwill	265		265
Other intangible assets, net	2		1
Other assets	401		275
Total assets	$	2,095	$	1,420

Liabilities
Current liabilities:
Accounts payable	$	375	$	211
Accrued expenses	70		60
Deferred revenue	180		176
Other current liabilities	76		49
Total current liabilities	701		496
Long-term debt	145		147
Other liabilities	439		280
Total liabilities	$	1,285	$	923