General

6 Months Ended

Sep. 30, 2021

General [Abstract]

General

Note 1: General

The accompanying unaudited condensed consolidated financial statements of Modine Manufacturing Company (“Modine” or the “Company”) were prepared in conformity with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X.  Accordingly, they do not include all of the information and footnotes necessary for a comprehensive presentation of financial position, results of operations and cash flows required by GAAP for complete financial statements.  The financial statements include all normal recurring adjustments that are, in the opinion of management, necessary for a fair statement of results for the interim periods.  Results for the first six months of fiscal 2022 are not necessarily indicative of the results to be expected for the full year.  These financial statements should be read in conjunction with the consolidated financial statements and related notes in Modine’s Annual Report on Form 10-K for the year ended March 31, 2021.

Disposition of Air-cooled Automotive Business

On April 30, 2021, the Company sold its air-cooled automotive business to Schmid Metall GmbH.  As a result of this transaction, the Company recorded a loss of $6.6 million during the first quarter of fiscal 2022, which included the write-off of $1.7 million of net actuarial losses related to the business’s pension plan.  The Company reported this loss within the loss on sale of assets line on the consolidated statement of operations.  Upon transaction closing, $5.9 million of cash within the business transferred to the buyer.  The finalization of and payment for the purchase price adjustment for net working capital and certain other items, as defined by the sale agreement, is pending.  While the Company does not expect a material adjustment, it is possible that the loss on sale may increase when the purchase price adjustment is finalized.  Prior to the disposition, the Company reported the financial results of this business within the Automotive segment.  The air-cooled automotive business’s net sales were $63.0 million in fiscal 2021.

In connection with the sale of the air-cooled automotive business, the Company provided the buyer with a 5-year, 4.0 million euro loan facility.  Borrowings under the agreement currently bear interest at 2.5 percent.  During the second quarter of fiscal 2022, the Company disbursed 4.0 million euro, or $4.7 million, to the buyer under this facility.  As of September 30, 2021, the Company recorded the loan receivable within other noncurrent assets on its consolidated balance sheet because the Company expects to receive the principal repayment more than twelve months from the balance sheet date.

Disposition of Previously-Closed Facility

During the first quarter of fiscal 2022, the Company signed a definitive agreement to sell a previously-closed manufacturing facility in the U.S.  As a result, the Company recorded an impairment charge of $0.3 million within the Commercial and Industrial Solutions (“CIS”) segment to write-down the property to fair value less costs to sell.  During July 2021, the sale was completed and the Company received net cash proceeds of $0.7 million.

Chief Executive Officer (“CEO”) Transition in Fiscal 2021

In August 2020, Thomas A. Burke stepped down from his position as President and CEO.  As a result of Mr. Burke’s departure and in connection with the search for his successor, the Company recorded costs totaling $5.5 million during the second quarter of fiscal 2021.  These costs, which were recorded as selling, general and administrative (“SG&A”) expenses at Corporate, primarily consisted of severance and benefit-related expenses based upon the terms of Mr. Burke’s transition and separation agreement and costs directly associated with the CEO search, partially offset by the impact of Mr. Burke’s forfeited stock-based compensation awards.