Assets Held for Sale

9 Months Ended

Dec. 31, 2020

Note 2: Assets Held for Sale

On November 2, 2020, the Company signed a definitive agreement to sell its liquid-cooled automotive business to Dana Incorporated. The Company expects this transaction will close during the first quarter of fiscal 2022, subject to regulatory approvals and other customary closing conditions. The Company does not expect significant net cash proceeds from this transaction based upon the one dollar selling price and adjustments for cash, debt, and working capital, as defined within the definitive agreement. The Company reports financial results of the liquid-cooled automotive business within its Automotive segment.

In connection with the pending sale, the Company classified the liquid-cooled automotive business (the “disposal group”) as held for sale beginning on November 2, 2020 and ceased depreciating long-lived assets in the disposal group. The Company evaluated the disposal group and determined that it did not qualify as a discontinued operation for reporting purposes under U.S. GAAP. As part of its evaluation, the Company considered anticipated future sales to automotive and light vehicle customers as well as sales to other vehicular customers with similar product offerings and using similar heat-transfer technology within the Automotive and Heavy Duty Equipment segments. In addition, the Company will continue to operate in the same major geographical areas as it does today.

Upon classification as held for sale, the Company compared the disposal group’s carrying value with its fair value, less costs to sell. Through this review and based upon the selling price, the Company identified an implied loss in excess of the carrying value of the disposal group’s long-lived assets, which consist entirely of property, plant and equipment and right of use lease assets. As a result, the Company recorded a non-cash impairment charge of $132.7 million during the third quarter of fiscal 2021 to reduce the net carrying value of the disposal group’s long-lived assets to zero. Also during the third quarter of fiscal 2021, the Company recorded an impairment charge of $1.7 million within the Automotive segment related to equipment that will not convey to the buyer as part of the sale transaction and is not expected to be used within the Company’s other businesses. These charges are reported within the impairment charges line on the consolidated statements of operations.

The Company separately classified the assets and liabilities of the liquid-cooled automotive business as held for sale on the December 31, 2020 consolidated balance sheet. The assets and liabilities held for sale are classified as current as the transaction is expected to close during the first quarter of fiscal 2022. The major classes of assets and liabilities held for sale were as follows:

	December 31, 2020
ASSETS
Cash and cash equivalents	$	5.3
Trade accounts receivables - net		51.7
Inventories		17.7
Other current assets		11.6
Property, plant and equipment - net		132.0
Other noncurrent assets		7.3
Impairment of carrying value		(132.7	)
Total assets held for sale	$	92.9

LIABILITIES
Short-term debt	$	6.0
Accounts payable		36.9
Accrued compensation and employee benefits		10.2
Other current liabilities		12.7
Pensions		12.4
Other noncurrent liabilities		5.0
Total liabilities held for sale	$	83.2

The Company will reassess the disposal group’s fair value less costs to sell at each reporting period until the transaction is completed. The Company expects to record an additional loss on sale of approximately $15.0 million to $25.0 million upon transaction completion. The loss on sale recorded will be impacted by changes in working capital, costs to sell, and net actuarial losses in accumulated other comprehensive loss related to the disposal group’s pension plans. It is possible that the loss on sale recorded could differ materially from the Company’s estimate.