Assets Held for Sale

12 Months Ended

Mar. 31, 2021

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, subject to the receipt of governmental and third-party approvals and satisfaction of other closing conditions. As of March 31, 2021, the Company anticipated the transaction would close during the first quarter of fiscal 2022. However, the Company and the buyer are currently working together through the regulatory approval process. At this time, the Company is not able to estimate the ultimate impact of the regulatory approval process or the closing date for this transaction. 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 evaluated this disposal group and determined that it does not qualify as a discontinued operation for reporting under U.S. GAAP. As part of its discontinued operations assessment, 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 Heavy Duty Equipment and Automotive segments. In addition, the Company will continue to operate in the same major geographical areas as it does today.

On February 19, 2021, the Company signed a definitive agreement to sell its air-cooled automotive business to Schmid Metall GmbH. This transaction closed on April 30, 2021. Based upon its preliminary accounting, the Company expects to record a loss on sale of approximately $6.0 million during the first quarter of fiscal 2022. The estimated loss on sale includes adjustments for cash, debt, and working capital, as defined within the definitive agreement. The Company evaluated this transaction in relation to the pending sale of the liquid-cooled automotive business, described above, and concluded each represents a separate disposal group for purposes of assessing discontinued operations. The Company determined that the air-cooled disposal group did not qualify as a discontinued operation.

The Company reports financial results of both the liquid- and air-cooled automotive businesses within its Automotive segment. Once the Company entered into the sale agreements with Board of Director approval, it classified the businesses as held for sale beginning on November 2, 2020 and February 19, 2021, respectively, and ceased depreciating the long-lived assets within the disposal groups.

Upon classification as held for sale, the Company compared each disposal group’s carrying value with its fair value, less costs to sell. Based upon the selling prices for each transaction, the Company estimated implied losses in excess of the respective carrying value of each disposal group’s long-lived assets. The disposal groups’ long-lived assets consist entirely of property, plant and equipment and right-of-use lease assets. As a result, the Company recorded non-cash impairment charges totaling $165.1 million during fiscal 2021 to reduce the net carrying value of the disposal groups’ long-lived assets to zero. The impairment charges related to the liquid- and air-cooled automotive businesses totaled $138.3 million and $26.8 million, respectively. Also during fiscal 2021, the Company recorded an impairment charge of $1.7 million within the Automotive segment related to equipment that will not convey as part of the sale transactions 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 classified the assets and liabilities of the liquid- and air-cooled automotive businesses as held for sale on the March 31, 2021 consolidated balance sheet. The major classes of assets and liabilities held for sale were as follows:

	March 31, 2021
ASSETS
Cash and cash equivalents	$	8.0
Trade accounts receivables - net		54.4
Inventories		24.7
Other current assets		12.8
Property, plant and equipment - net		164.0
Other noncurrent assets		8.8
Impairment of carrying value		(165.1	)
Total assets held for sale	$	107.6

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

The Company will reassess the liquid-cooled disposal group’s fair value less costs to sell at each reporting period that it is held for sale until the transaction is completed. The Company expects to record a loss on sale of approximately $20.0 million to $30.0 million upon transaction completion. The loss on sale recorded will be impacted by changes in working capital, costs to sell, net actuarial losses in accumulated other comprehensive loss related to the disposal group’s pension plans, and cumulative translation adjustments. It is possible that the loss on sale recorded could differ materially from the Company’s estimate