9 unchanged sentences
(Gain) loss on sale of assets
−Removed: Operating income
+Added: Operating (loss) income
Interest expense
Other expense - net
−Removed: Earnings before income taxes
+Added: (Loss) earnings before income taxes
(Provision) benefit for income taxes
25 unchanged sentences
Trade accounts receivable – net
+Added: Assets held for sale
Other current assets
9 unchanged sentences
Accrued compensation and employee benefits
+Added: Liabilities held for sale
Other current liabilities
44 unchanged sentences
Repayments of debt
+Added: Borrowings on bank overdraft facilities – net
Dividend paid to noncontrolling interest
1 unchanged sentence
Financing fees paid
−Removed: Net cash provided by (used for) financing activities
+Added: Net cash (used for) provided by financing activities
Effect of exchange rate changes on cash
−Removed: Net increase in cash, cash equivalents and restricted cash
−Removed: Cash, cash equivalents and restricted cash - beginning of year
−Removed: Cash, cash equivalents and restricted cash - end of year
+Added: Net (decrease) increase in cash, cash equivalents, restricted cash and cash held for sale
+Added: Cash, cash equivalents, restricted cash and cash held for sale - beginning of year
+Added: Cash, cash equivalents, restricted cash and cash held for sale - end of year
The notes to consolidated financial statements are an integral part of these statements.
7 unchanged sentences
Balance, March 31, 2018
−Removed: Net earnings attributable to Modine
−Removed: Other comprehensive income
+Added: Adoption of new accounting guidance (Note 1)
+Added: Other comprehensive loss
Stock options and awards
Purchase of treasury stock
−Removed: Adoption of new accounting guidance (Note 1)
Stock-based compensation expense
Dividend paid to noncontrolling interest
−Removed: Net earnings attributable to noncontrolling interest
Balance, March 31, 2019
−Removed: Adoption of new accounting guidance (Note 1)
−Removed: Net earnings attributable to Modine
+Added: Net (loss) earnings
Other comprehensive loss
3 unchanged sentences
Dividend paid to noncontrolling interest
−Removed: Net earnings attributable to noncontrolling interest
Balance, March 31, 2020
−Removed: Net loss attributable to Modine
−Removed: Other comprehensive loss
+Added: Net (loss) earnings
+Added: Other comprehensive income
Stock options and awards
1 unchanged sentence
Stock-based compensation expense
−Removed: Dividend paid to noncontrolling interest
−Removed: Net earnings attributable to noncontrolling interest
Balance, March 31, 2021
6 unchanged sentences
Modine Manufacturing Company (“Modine” or the “Company”) specializes in providing innovative thermal management solutions to diversified global markets and customers.
−Removed: The Company is a leading provider of engineered heat transfer systems and high-quality heat transfer components for use in on- and off-highway original equipment manufacturer (“OEM”) vehicular applications.
−Removed: In addition, the Company is a global leader in thermal management technology and solutions for sale into a wide array of commercial, industrial, and building heating, ventilating, air conditioning, and refrigeration (“HVAC&R”) markets.
−Removed: The Company’s primary product groups include i) powertrain cooling and engine cooling;
+Added: The Company is a global leader in thermal management technology and solutions for sale into a wide array of commercial, industrial, and building heating, ventilating, air conditioning, and refrigeration (“HVAC&R”) markets.
+Added: In addition, the Company is a leading provider of engineered heat transfer systems and high-quality heat transfer components for use in on- and off-highway original equipment manufacturer (“OEM”) vehicular applications.
+Added: The Company’s primary product groups include i) heating, ventilation and air conditioning;
ii) coils, coolers, and coatings;
−Removed: and iii) heating, ventilation and air conditioning.
+Added: and iii) powertrain cooling and engine cooling.
In March 2020 , the World Health Organization declared the outbreak of the novel coronavirus, COVID-19 , a pandemic.
See Note 20 for additional information regarding the risks and uncertainties to our business resulting from this global pandemic.
+Added: Disposition of Air-cooled Automotive Business
+Added: On February 19, 2021 , the Company signed a definitive agreement to sell its air-cooled automotive business to Schmid Metall GmbH.
+Added: In connection with this sale, which closed on April 30, 2021 , the Company classified the air-cooled automotive business as held for sale as of March 31, 2021 .
+Added: Accordingly, the Company has reported the assets and liabilities of this business as held for sale on the March 31, 2021 consolidated balance sheet.
+Added: See Note 2 for additional information.
+Added: Pending Disposition of Liquid-cooled Automotive Business
+Added: On November 2, 2020 , the Company signed a definitive agreement to sell its liquid-cooled automotive business to Dana Incorporated.
+Added: In connection with the pending sale, the Company classified the liquid-cooled automotive business as held for sale and, accordingly, has reported the assets and liabilities of this business as held for sale on the March 31, 2021 consolidated balance sheet.
+Added: See Note 2 for additional information.
+Added: Chief Executive Officer (“CEO”) Transition
+Added: In August 2020 , Thomas A.
+Added: Burke stepped down from his position as President and CEO.
+Added: The Board of Directors subsequently conducted a search for his successor and, effective December 1, 2020 , appointed Neil D.
+Added: Brinker as President and CEO.
+Added: As a result of Mr.
+Added: Burke’s departure and in connection with the search for and transition to his successor, the Company recorded costs totaling $ 6.7 million during fiscal 2021 .
+Added: 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.
+Added: Burke’s transition and separation agreement and costs directly associated with the CEO search, partially offset by the impact of Mr.
+Added: Burke’s forfeited stock-based compensation awards.
Sale of Facility in Germany
During fiscal 2020 , the Company completed the sale of a previously-closed manufacturing facility in Germany for a selling price of $ 6.0 million.
−Removed: As a result of this transaction, the Company recorded a gain of $ 0.8 million within the Vehicular Thermal Solutions segment.
+Added: As a result of this transaction, the Company recorded a gain of $ 0.8 million within the Automotive segment.
The Company reported this gain within the gain on sale of assets line on the consolidated statements of operations.
2 unchanged sentences
As a result of this sale, the Company recorded a gain of $ 0.1 million, which included the write-off of accumulated foreign currency translation gains of $ 0.6 million, within other income and expense on the consolidated statements of operations.
−Removed: Prior to its sale, the Company accounted for its investment in NEX using the equity method.
−Removed: Utilizing the equity method, the Company reported its investment at cost, plus or minus a proportionate share of undistributed net earnings, and included Modine’s share of the affiliate’s net earnings in other income and expense.
−Removed: See Note 12 for additional information.
+Added: Prior to its sale, the Company accounted for its investment in NEX using the equity method and reported its equity in earnings from NEX within other income and expense in the consolidated statements of operations.
+Added: The Company’s share of NEX’s earnings for fiscal 2020 and 2019 was $ 0.1 million and $ 0.7 million , respectively.
Sale of AIAC Air Conditioning South Africa (Pty) Ltd.
4 unchanged sentences
Annual net sales attributable to this disposed business were less than $ 2.0 million .
+Added: MODINE MANUFACTURING COMPANY
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: (In millions, except per share amounts)
Basis of Presentation
15 unchanged sentences
Trade receivables do not bear interest if paid according to the original terms.
−Removed: The Company records an allowance for doubtful accounts for estimated uncollectible receivables based upon historical experience or specific customer economic data.
−Removed: The Company recorded an allowance for doubtful accounts of $ 1.9 million and $ 1.6 million at March 31, 2020 and 2019, respectively, representing its estimated uncollectible receivables.
+Added: The Company maintains an allowance for credit losses, representing its estimate of expected losses associated with its trade accounts receivable.
+Added: The Company bases its estimate using historical loss experience and considers the aging of the receivables and risks specific to customers where appropriate.
+Added: At March 31, 2021 and 2020, the allowance for credit losses was $ 1.3 million and $ 1.9 million, respectively.
The Company enters into supply chain financing programs from time to time to sell accounts receivable, without recourse, to third-party financial institutions.
2 unchanged sentences
During fiscal 2021, 2020, and 2019, the Company recorded a loss on the sale of accounts receivable of $ 0.2 million, $ 0.5 million, and $ 0.6 million, respectively, in the consolidated statements of operations.
−Removed: MODINE MANUFACTURING COMPANY
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: (In millions, except per share amounts)
The Company provides product warranties for specific product lines and accrues for estimated future warranty costs in the period in which the sale is recorded.
2 unchanged sentences
See Note 15 for additional information.
−Removed: Tooling costs:
The Company accounts for production tooling costs as a component of property, plant and equipment when it owns title to the tooling and amortizes the capitalized cost to cost of sales over the estimated life of the asset, which is generally three years .
At March 31, 2021 and 2020 , Company-owned tooling totaled $ 14.1 million and $ 23.3 million , respectively.
+Added: The decrease in Company-owned tooling during fiscal 2021 was primarily due to asset impairment charges recorded within the Automotive segment upon classification of the liquid- and air-cooled automotive businesses as held for sale.
+Added: See Note 2 for additional information.
In certain instances, tooling is customer-owned.
At the time customer-owned tooling is completed and customer acceptance is obtained, the Company records tooling revenue and related production costs within net sales and cost of sales, respectively, in the consolidated statements of operations.
−Removed: The Company accounts for unbilled customer-owned tooling costs as a receivable within other current assets when the customer has guaranteed reimbursement to the Company.
+Added: If the customer has agreed to reimburse the Company, unbilled customer-owned tooling costs are recorded as a receivable within other current assets.
No significant arrangements exist where customer-owned tooling costs were not accompanied by guaranteed reimbursement.
−Removed: At March 31, 2020 and 2019, cost reimbursement receivables related to customer-owned tooling totaled $ 7.8 million and $ 11.6 million, respectively.
+Added: At March 31, 2021 and 2020 , customer-owned tooling receivables totaled $ 8.1 million and $ 7.8 million , respectively.
+Added: Of the $ 8.1 million , $ 5.6 million was included within assets held for sale on the March 31, 2021 consolidated balance sheet.
+Added: MODINE MANUFACTURING COMPANY
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: (In millions, except per share amounts)
Stock-based Compensation
4 unchanged sentences
The Company expenses research and development costs as incurred within SG&A expenses.
−Removed: During fiscal 2020, 2019, and 2018, research and development costs charged to operations totaled $ 59.5 million, $ 69.8 million, and $ 65.8 million, respectively.
+Added: During fiscal 2021, 2020, and 2019, research and development costs totaled $ 46.3 million, $ 59.5 million, and $ 69.8 million, respectively.
Translation of Foreign Currencies
9 unchanged sentences
See Note 19 for additional information.
−Removed: Income taxes:
The Company determines deferred tax assets and liabilities based upon the difference between the amounts reported in the financial statements and the tax basis of assets and liabilities, using enacted tax rates in effect in the years in which the differences are expected to reverse.
The Company establishes a valuation allowance if it is more likely than not that a deferred tax asset, or portion thereof, will not be realized.
+Added: The Company records the tax effects of global intangible low-taxed income (“GILTI”) as a period expense in the applicable tax year.
+Added: The Company uses the portfolio approach for releasing income tax effects from accumulated other comprehensive income (loss).
See Note 8 for additional information.
2 unchanged sentences
The calculation of diluted earnings per share excludes potential common shares if their inclusion would have an anti-dilutive effect.
−Removed: Certain outstanding restricted stock awards provide recipients with a non-forfeitable right to receive dividends declared by the Company.
−Removed: Therefore, these restricted stock awards are included in computing earnings per share pursuant to the two-class method.
+Added: In prior years, certain restricted stock awards provided recipients with a non-forfeitable right to receive dividends declared by the Company.
+Added: These restricted stock awards have been included in computing earnings per share pursuant to the two-class method.
See Note 9 for additional information.
7 unchanged sentences
As of March 31, 2021 and 2020, the Company’s short-term investments totaled $ 3.7 million and $ 3.2 million, respectively.
+Added: The Company values inventories using a first-in, first-out or weighted-average basis, at the lower of cost and net realizable value.
MODINE MANUFACTURING COMPANY
1 unchanged sentence
(In millions, except per share amounts)
−Removed: The Company values inventories using a first-in, first-out or weighted-average basis, at the lower of cost and net realizable value.
Property, Plant and Equipment
1 unchanged sentence
For financial reporting purposes, the Company computes depreciation using the straight-line method over the expected useful lives of the assets.
−Removed: The Company charges maintenance and repair costs to operations as incurred.
+Added: The Company expenses maintenance and repair costs as incurred.
The Company capitalizes costs of improvements.
Upon the sale or other disposition of an asset, the Company removes the cost and related accumulated depreciation from the accounts and includes the gain or loss in the consolidated statements of operations.
−Removed: Capital expenditures of $ 8.7 million, $ 17.9 million, and $ 15.8 million were accrued within accounts payable at March 31, 2020, 2019, and 2018, respectively.
+Added: Capital expenditures of $ 7.9 million , $ 8.7 million and $ 17.9 million were accrued at March 31, 2021, 2020 and 2019 , respectively.
+Added: Of the $ 7.9 million , $ 2.7 million was included within liabilities held for sale on the March 31, 2021 consolidated balance sheet.
+Added: All of the other accrued capital expenditure amounts are presented within accounts payable.
+Added: The Company’s most significant leases represent leases of real estate, such as manufacturing facilities, warehouses, and office buildings.
+Added: The Company also leases certain manufacturing and IT equipment and vehicles.
+Added: The Company recognizes right-of-use (“ROU”) assets and lease liabilities at the commencement date, based upon the present value of lease payments over the lease term.
+Added: See Note 16 for additional information.
The Company does not amortize goodwill;
1 unchanged sentence
The Company performs an assessment of the fair value of its reporting units for goodwill impairment testing based upon, among other things, the present value of expected future cash flows.
−Removed: The Company performed its goodwill impairment test as of March 31, 2020 and, as a result, recorded a $ 0.5 million impairment charge within the VTS segment.
+Added: The Company performed its goodwill impairment test as of March 31, 2021 and determined the fair value of each of its reporting units exceeded the respective book value.
See Note 14 for additional information.
−Removed: Impairment of long-lived assets:
−Removed: The Company reviews long-lived assets, including property, plant and equipment and intangible assets, for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be fully recoverable.
+Added: I mpairment of Held and Used Long-lived Assets
+Added: The Company reviews held and used long-lived assets, including property, plant and equipment and intangible assets, for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be fully recoverable.
In these instances, the Company compares the undiscounted future cash flows expected to be generated from the asset with its carrying value.
1 unchanged sentence
The Company estimates fair value using a variety of valuation techniques, including discounted cash flows, market values and comparison values for similar assets.
−Removed: During fiscal 2020, the Company recorded impairment charges totaling $ 8.1 million related to long-lived assets.
−Removed: See Note 5 for additional information.
Assets Held for Sale
The Company considers assets to be held for sale when management approves and commits to a formal plan to actively market the asset for sale at a reasonable price in relation to its fair value, the asset is available for immediate sale in its present condition, an active program to locate a buyer and other actions required to complete the sale have been initiated, the sale of the asset is expected to be completed within one year and it is unlikely that significant changes will be made to the plan.
−Removed: Upon designation as held for sale, the Company records the carrying value of the assets at the lower of its carrying value or its estimated fair value, less costs to sell, within other noncurrent assets.
+Added: Upon designation as held for sale, the Company records the carrying value of the assets at the lower of its carrying value or its estimated fair value, less costs to sell.
The Company ceases to record depreciation expense at the time of designation as held for sale.
−Removed: The carrying value of assets held for sale totaled $ 0.6 million and $ 1.1 million at March 31, 2020 and 2019, respectively.
+Added: During fiscal 2021 , the Company classified the liquid- and air-cooled automotive businesses as held for sale and recorded impairment charges totaling $ 166.8 million within the Automotive segment.
+Added: See Note 2 for additional information.
Deferred Compensation Trusts
11 unchanged sentences
See Note 20 for additional information.
+Added: MODINE MANUFACTURING COMPANY
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: (In millions, except per share amounts)
S upplemental Cash Flow Information
2 unchanged sentences
Income taxes paid
−Removed: MODINE MANUFACTURING COMPANY
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: (In millions, except per share amounts)
+Added: See Note 16 for supplemental cash flow information related to the Company’s leases.
New Accounting Guidance Adopted in Fiscal 2021
−Removed: In February 2016, the Financial Accounting Standards Board (“FASB”) issued new comprehensive lease accounting guidance that supersedes existing lease accounting guidance and requires balance sheet recognition for most leases.
+Added: Credit Losses
+Added: In June 2016 , the Financial Accounting Standards Board (“FASB”) issued new guidance related to the accounting for credit losses for certain financial assets, including trade accounts receivable and contract assets.
+Added: The new guidance modifies the credit loss model to measure and recognize credit losses based upon expected losses rather than incurred losses.
+Added: The Company adopted this guidance as of April 1, 2020 .
+Added: The adoption did not have a material impact on the Company’s consolidated balance sheets, statements of operations or statements of cash flows.
+Added: New Accounting Guidance Adopted in Fiscal 2020
+Added: In February 2016 , the FASB issued new comprehensive lease accounting guidance that requires balance sheet recognition for most leases.
The Company adopted this guidance effective April 1, 2019 using a modified-retrospective transition method, under which it elected not to adjust comparative periods.
2 unchanged sentences
The Company did not elect the hindsight practical expedient.
−Removed: The Company assessed its global lease portfolio and implemented a new lease accounting software solution and new processes and controls to account for leases in accordance with the new guidance.
−Removed: The Company’s most significant leases represent leases of real estate, such as manufacturing facilities, warehouses, and office buildings.
−Removed: The Company also leases certain manufacturing and IT equipment and vehicles.
Upon adoption of this new guidance on April 1, 2019, the Company recognized right-of-use assets for operating leases totaling $ 61.3 million and corresponding current and noncurrent operating lease liabilities of $ 12.4 million and $ 48.9 million, respectively.
17 unchanged sentences
The Company adopted this new guidance for fiscal 2019 using the modified-retrospective transition method.
−Removed: The Company assessed customer contracts and evaluated contractual provisions in light of the new guidance.
−Removed: Through its evaluation process, the Company identified a limited number of customer contracts that provide an enforceable right to payment for customized products, which require revenue recognition prior to the product being shipped to the customer.
As a result of its adoption of the new guidance, the Company recorded an increase of $ 0.7 million to retained earnings as of April 1, 2018 , along with related balance sheet reclassifications.
−Removed: The increase to retained earnings represented $ 3.0 million of net sales that, had the new guidance been in effect, the Company would have recognized as of March 31, 2018.
See Note 3 for additional information regarding revenue recognition.
+Added: MODINE MANUFACTURING COMPANY
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: (In millions, except per share amounts)
Income Taxes:
5 unchanged sentences
Upon adoption, the Company recorded a decrease to retained earnings of $ 8.3 million as of April 1, 2018.
−Removed: New Accounting Guidance Adopted in Fiscal 2018:
−Removed: Stock-based Compensation
−Removed: In March 2016, the FASB issued new guidance to simplify several aspects of accounting for stock-based payment transactions.
−Removed: The Company adopted this guidance beginning in its first quarter of fiscal 2018.
−Removed: The Company elected to account for forfeitures in the period in which they occur and recorded a cumulative-effect adjustment to equity.
−Removed: In addition, the Company prospectively adopted the guidance requiring all excess tax benefits or deficiencies to be recognized as income tax expense or benefit when share-based awards are settled.
−Removed: The provisions of this guidance did not have a material impact on the Company's consolidated financial statements.
−Removed: As a result of adopting this new guidance, the Company recorded a $ 0.4 million increase to both deferred tax assets and equity as of April 1, 2017.
+Added: Assets Held for Sale
+Added: 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 an d satisfaction of other closing conditions.
+Added: As of March 31, 2021, the Company anticipated the transaction would close during the first quarter of fiscal 2022.
+Added: However, the Company and the buyer are currently working together through the regulatory approval process.
+Added: At this time, the Company is not able to estimate the ultimate impact of the regulatory approval process or the clos ing date for this transaction.
+Added: 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.
+Added: The Company evaluated this disposal group and determined that it does not qualify as a discontinued operation for reporting under U.S.
+Added: 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.
+Added: In addition, the Company will continue to operate in the same major geographical areas as it does today.
+Added: On February 19, 2021, the Company signed a definitive agreement to sell its air-cooled automotive business to Schmid Metall GmbH.
+Added: This transaction closed on April 30, 2021.
+Added: 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.
+Added: The estimated loss on sale includes adjustments for cash, debt, and working capital, as defined within the definitive agreement.
+Added: 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.
+Added: The Company determined that the air-cooled disposal group did not qualify as a discontinued operation.
+Added: The Company reports financial results of both the liquid- and air-cooled automotive businesses within its Automotive segment.
+Added: 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.
+Added: Upon classification as held for sale, the Company compared each disposal group’s carrying value with its fair value, less costs to sell.
+Added: 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.
+Added: The disposal groups’ long-lived assets consist entirely of property, plant and equipment and right-of-use lease assets.
+Added: 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 .
+Added: The impairment charges related to the liquid- and air-cooled automotive businesses totaled $ 138.3 million and $ 26.8 million, respectively.
+Added: 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.
+Added: These charges are reported within the impairment charges line on the consolidated statements of operations.
MODINE MANUFACTURING COMPANY
1 unchanged sentence
(In millions, except per share amounts)
+Added: 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.
+Added: The major classes of assets and liabilities held for sale were as follows:
+Added: March 31, 2021
+Added: Cash and cash equivalents
+Added: Trade accounts receivables - net
+Added: Other current assets
+Added: Property, plant and equipment - net
+Added: Other noncurrent assets
+Added: Impairment of carrying value
+Added: Total assets held for sale
+Added: Short-term debt
+Added: Accounts payable
+Added: Accrued compensation and employee benefits
+Added: Other current liabilities
+Added: Other noncurrent liabilities
+Added: Total liabilities held for sale
+Added: 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.
+Added: The Company expects to record a loss on sale of approximately $ 20.0 million to $ 30.0 million upon transaction completion.
+Added: 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.
+Added: It is possible that the loss on sale recorded could differ materially from the Company’s estimate
Revenue Recognition
−Removed: Effective April 1, 2018, the Company adopted new revenue recognition accounting guidance ;
−Removed: see Note 1 for additional information .
The Company generates revenue from selling innovative thermal management products and solutions to diversified global markets and customers.
1 unchanged sentence
The majority of the Company’s revenue is recognized at a point in time, based upon shipment terms.
−Removed: The Company records an allowance for doubtful accounts for estimated uncollectible receivables and accrues for estimated warranty costs at the time of sale.
+Added: The Company records an allowance for credit losses and accrues for estimated warranty costs at the time of sale.
These estimates are based upon historical experience, current business trends, and current economic conditions.
4 unchanged sentences
The following is a description of the Company’s principal revenue-generating activities:
−Removed: Vehicular Thermal Solutions (“VTS”)
−Removed: The VTS segment principally generates revenue from providing engineered heat transfer systems and components for use in on- and off-highway original equipment.
−Removed: This segment provides powertrain and engine cooling products, including, but not limited to, radiators, charge air coolers, condensers, oil coolers, EGR coolers, and fuel coolers, to original equipment manufacturers (“OEMs”) in the automotive, commercial vehicle, and off-highway markets in the Americas, Europe, and Asia regions.
−Removed: In addition, the VTS segment designs customer-owned tooling for OEMs and also serves Brazil’s automotive and commercial vehicle aftermarkets.
−Removed: While the VTS segment provides customized production and service parts to customers under multi-year programs, these programs typically do not contain contractually-guaranteed volumes to be purchased by the customer.
−Removed: As a result, individual purchase orders typically represent the quantities ordered by the customer.
−Removed: With the exception of a small number of VTS customers, the terms within the customer agreement, purchase order, or customer-owned tooling contract do not provide the Company with an enforceable right to payment for performance completed to date.
−Removed: As a result, the VTS segment recognizes revenue primarily at the time control is transferred to the customer based upon shipping terms, which is generally upon shipment.
−Removed: In regard to VTS customers with contractual cancellation terms that provide an enforceable right to payment for performance completed to date, the Company recognizes revenue over time based upon its estimated progress towards satisfaction of the performance obligations.
−Removed: The VTS segment measures progress by evaluating the production status of ordered products not yet shipped to the customer.
−Removed: For certain customer programs, the Company agrees to provide annual price reductions based upon contract terms.
−Removed: For these scheduled price reductions, the Company evaluates whether the provisions represent a material right to the customer, and if so, defers associated revenue as a result.
−Removed: At times, the Company makes up-front incentive payments to certain customers related to future sales under multi-year programs.
−Removed: The Company capitalizes these incentive payments, which it expects to recover through future sales, and amortizes the assets as a reduction to revenue when the related products are sold to customers.
+Added: Building HVAC Systems (“BHVAC”)
+Added: The BHVAC segment principally generates revenue from providing a variety of heating, ventilating, and air conditioning products, primarily for commercial buildings and data centers in North America and the U.K., as well as mainland Europe and the Middle East.
+Added: Heating products are manufactured in the U.S.
+Added: and are largely sold to independent distributors, who in turn market the heating products to end customers.
+Added: Because these products are sold to many different customers without contractual or practical limitations, the BHVAC segment recognizes revenue at the time control is transferred to the customer, generally the independent distributor, based upon shipping terms, which is generally upon shipment.
+Added: MODINE MANUFACTURING COMPANY
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: (In millions, except per share amounts)
+Added: Ventilation and air conditioning products are highly-specified to a customer’s needs;
+Added: however, the underlying sales contracts do not provide the Company with an enforceable right to payment for performance completed to date.
+Added: As a result, the BHVAC segment recognizes revenue for these products at the time control is transferred to the customer based upon shipping terms, which is generally upon shipment.
Commercial and Industrial Solutions (“CIS”)
6 unchanged sentences
The segment measures progress by evaluating the production status towards completion of ordered products or services not yet shipped to its customers.
+Added: Heavy Duty Equipment (“HDE”) and Automotive
+Added: The HDE and Automotive segments principally generate revenue from providing engineered heat transfer systems and components for use in on- and off-highway original equipment.
+Added: These segments provide powertrain and engine cooling products, including, but not limited to, radiators, charge air coolers, condensers, oil coolers, EGR coolers, and fuel coolers, to original equipment manufacturers (“OEMs”) in the commercial vehicle, off-highway and automotive and light vehicle markets in the Americas, Europe, and Asia regions.
+Added: In addition, the segments design customer-owned tooling for OEMs.
+Added: The HDE segment also serves Brazil’s commercial vehicle and automotive aftermarkets.
+Added: While the segments provide customized production and service parts to customers under multi-year programs, these programs typically do not contain contractually-guaranteed volumes to be purchased by the customer.
+Added: As a result, individual purchase orders typically represent the quantities ordered by the customer.
+Added: With the exception of a small number of HDE customers, the terms within the customer agreement, purchase order, or customer-owned tooling contract do not provide the Company with an enforceable right to payment for performance completed to date.
+Added: As a result, both the HDE and Automotive segments recognize revenue primarily at the time control is transferred to the customer based upon shipping terms, which is generally upon shipment.
+Added: In regard to the HDE customers with contractual cancellation terms that provide an enforceable right to payment for performance completed to date, the Company recognizes revenue over time based upon its estimated progress towards satisfaction of the performance obligations.
+Added: The HDE segment measures progress by evaluating the production status of ordered products not yet shipped to the customer.
+Added: For certain customer programs, the Company agrees to provide annual price reductions based upon contract terms.
+Added: For these scheduled price reductions, the Company evaluates whether the provisions represent a material right to the customer, and if so, defers associated revenue as a result.
+Added: At times, the Company makes up-front incentive payments to certain customers related to future sales under multi-year programs.
+Added: The Company capitalizes these incentive payments, which it expects to recover through future sales, and amortizes the assets as a reduction to revenue when the related products are sold to customers.
MODINE MANUFACTURING COMPANY
1 unchanged sentence
(In millions, except per share amounts)
−Removed: Building HVAC Systems (“BHVAC”)
−Removed: The BHVAC segment principally generates revenue from providing a variety of heating, ventilating, and air conditioning products, primarily for commercial buildings and related applications in North America and the U.K., as well as mainland Europe and the Middle East.
−Removed: Heating products are manufactured in the U.S.
−Removed: and are generally sold to independent distributors, who in turn market the heating products to end customers.
−Removed: Because these products are sold to many different customers without contractual or practical limitations, the BHVAC segment recognizes revenue at the time control is transferred to the customer, generally the independent distributor, based upon shipping terms, which is generally upon shipment.
−Removed: Ventilation and air conditioning products are highly-specified to a customer’s needs;
−Removed: however, the underlying sales contracts do not provide the Company with an enforceable right to payment for performance completed to date.
−Removed: As a result, the BHVAC segment recognizes revenue for these products at the time control is transferred to the customer based upon shipping terms, which is generally upon shipment.
Disaggregation of Revenue
−Removed: The table below presents revenue to external customers for each of the Company’s business segments by primary end market, by geographic location and based upon the timing of revenue recognition:
+Added: The tables below present revenue to external customers for each of the Company’s business segments by primary end market, geographic location, and based upon the timing of revenue recognition:
Year ended March 31, 2021
+Added: Primary end market:
+Added: Commercial HVAC&R
+Added: Data center cooling
+Added: Industrial cooling
+Added: Commercial vehicle
+Added: Automotive and light vehicle
+Added: Geographic location:
+Added: Timing of revenue recognition:
+Added: Products transferred at a point in time
+Added: Products transferred over time
Year ended March 31, 2020
Primary end market:
+Added: Commercial HVAC&R
+Added: Data center cooling
+Added: Industrial cooling
Commercial vehicle
+Added: Automotive and light vehicle
+Added: Geographic location:
+Added: Timing of revenue recognition:
+Added: Products transferred at a point in time
+Added: Products transferred over time
+Added: MODINE MANUFACTURING COMPANY
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: (In millions, except per share amounts)
+Added: Year ended March 31, 2019
+Added: Primary end market:
Commercial HVAC&R
1 unchanged sentence
Industrial cooling
+Added: Commercial vehicle
+Added: Automotive and light vehicle
Geographic location:
8 unchanged sentences
Contract liabilities
+Added: At March 31, 2021, contract assets and contract liabilities exclude amounts classified as held for sale.
+Added: See Note 2 for additional information.
Contract assets, included within other current assets in the consolidated balance sheets, primarily consist of capitalized costs related to customer-owned tooling contracts, wherein the customer has guaranteed reimbursement, and assets recorded for revenue recognized over time, which represent the Company’s rights to consideration for work completed but not yet billed.
−Removed: The $ 0.9 million decrease in contract assets during fiscal 2020 primarily resulted from a decrease in capitalized costs related to customer-owned tooling contracts, partially offset by an increase in contract assets for revenue recognized over time.
+Added: The $ 16.0 million decrease in contract assets during fiscal 2021 primarily resulted from a decrease in contract assets for revenue recognized over time and $ 7.1 million of contract assets within the liquid- and air-cooled automotive businesses that have been classified as held for sale on the March 31, 2021 consolidated balance sheet.
Contract liabilities, included within other current liabilities in the consolidated balance sheets, consist of payments received in advance of satisfying performance obligations under customer contracts, including contracts for customer-owned tooling.
−Removed: The $ 1.6 million increase in contract liabilities during fiscal 2020 was primarily related to customer contracts for which payment had been received in advance of the Company’s satisfaction of performance obligations.
−Removed: MODINE MANUFACTURING COMPANY
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: (In millions, except per share amounts)
+Added: During fiscal 2021, increases related to customer contracts for which payment was received in advance of the Company’s satisfaction of performance obligations was offset by $ 2.9 million of contract liabilities within the liquid- and air-cooled automotive businesses that have been classified as held for sale on the March 31, 2021 consolidated balance sheet.
Fair Value Measurements
6 unchanged sentences
Level 3 – Model-derived valuations in which one or more significant inputs are not observable.
+Added: MODINE MANUFACTURING COMPANY
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: (In millions, except per share amounts)
When available, the Company uses quoted market prices to determine fair value and classifies such measurements as Level 1.
3 unchanged sentences
The carrying values of cash, cash equivalents, restricted cash, short-term investments, trade accounts receivable, accounts payable, and short-term debt approximate fair value due to the short-term nature of these instruments.
+Added: In addition, the Company assesses the fair value of a disposal group for each reporting period it is held for sale.
+Added: See Note 2 for additional information regarding assets and liabilities held for sale.
+Added: The fair value of the Company’s long-term debt is disclosed in Note 17.
The Company holds investments in deferred compensation trusts to fund obligations under certain non-qualified deferred compensation plans.
3 unchanged sentences
The Company’s deferred compensation obligations, which are recorded as other noncurrent liabilities, are recorded at the fair values of the investments held by the trust.
−Removed: The fair values of the investments and obligations for the Company’s deferred compensation plans each totaled $ 3.8 million and $ 6.0 million as of March 31, 2020 and 2019, respectively.
−Removed: The $ 2.2 million decrease in the fair value of the investments and deferred compensation obligations from March 31, 2019 was primarily due to participant withdrawals during fiscal 2020.
−Removed: The fair value of the Company’s long-term debt is disclosed in Note 17.
+Added: At March 31, 2021 and 2020, the fair values of the investments and obligations for the Company’s deferred compensation plans each totaled $ 2.8 million and $ 3.8 million, respectively.
+Added: The $ 1.0 million decrease in the fair value of the investments since March 31, 2020 was primarily due to participant withdrawals during fiscal 2021.
Plan assets related to the Company’s pension plans were classified as follows:
13 unchanged sentences
Fair value excluding investment measured at net asset value
−Removed: Investment measured at net asset value
+Added: Investments measured at net asset value
Total fair value
1 unchanged sentence
The Company determined the fair value of pooled equity funds based upon quoted prices from active markets and classified them within Level 1 of the valuation hierarchy.
−Removed: The Company determined the fair value of certain fixed income securities and U.S.
+Added: The Company determined the fair value of fixed income securities and U.S.
government and agency securities based upon recent bid prices or the average of recent bid and asking prices when available and, if not available, the Company valued them through matrix pricing models developed by sources considered by management to be reliable.
11 unchanged sentences
The Company’s stock-based incentive programs consist of the following:
−Removed: (1) a long-term incentive compensation program for officers and other executives that consists of stock awards, stock options, and performance-based stock awards granted for retention and performance, (2) a discretionary equity program for other management and key employees, and (3) stock awards for non-employee directors.
−Removed: The Company’s Board of Directors and the Officer Nomination and Compensation Committee, as applicable, have discretionary authority to set the terms of the stock-based awards.
+Added: (1) a long-term incentive plan (“LTIP”) for officers and other executives that consists of stock awards, stock options, and performance-based stock awards granted for retention and performance, (2) a discretionary equity program for other management and key employees, and (3) stock awards for non-employee directors.
+Added: The Company’s Board of Directors and the Human Capital and Compensation Committee, as applicable, have discretionary authority to set the terms of the stock-based awards.
Grants to employees during fiscal 2021 were issued under the Company’s 2020 Incentive Compensation Plan.
+Added: In lieu of performance-based stock awards, the Company granted performance cash awards to the LTIP participants in fiscal 2021.
At present, the Company accomplishes the fulfillment of equity-based grants through the issuance of new common shares.
5 unchanged sentences
The Company recorded $ 0.9 million , $ 1.3 million , and $ 1.2 million of compensation expense related to stock options in fiscal 2021, 2020, and 2019, respectively.
−Removed: During fiscal 2020, 2019, and 2018, the fair value of stock options that vested was $ 1.2 million.
+Added: The fair value of stock options that vested during fiscal 2021, 2020, and 2019, was $ 1.3 million , $ 1.2 million , and $ 1.2 million , respectively.
As of March 31, 2021, the total compensation expense not yet recognized related to non-vested stock options was $ 1.8 million and the weighted-average period in which the remaining expense is expected to be recognized was 2.8 years.
9 unchanged sentences
Treasury zero-coupon issues with a term corresponding to the expected life of the options.
−Removed: The expected volatility assumption was based upon changes in the Company’s historical common stock prices over the same time frame as the expected life of the awards.
+Added: The expected volatility assumption was based upon changes in the Company’s historical common stock prices over the same time period as the expected life of the awards.
The expected dividend yield is zero, as the Company currently does not anticipate paying dividends over the expected life of the options.
1 unchanged sentence
Outstanding options granted vest 25 percent annually for four years .
+Added: MODINE MANUFACTURING COMPANY
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: (In millions, except per share amounts)
A summary of stock option activity for fiscal 2021 was as follows:
8 unchanged sentences
Exercisable, March 31, 2021
−Removed: Aggregate intrinsic value represents the difference between the closing price of Modine’s common shares on the last trading day of fiscal 2020 over the exercise price of the stock options, multiplied by the number of options outstanding or exercisable.
−Removed: As of March 31, 2020, the exercise price of outstanding options exceeded the closing price of Modine common shares and, as a result, the options had no intrinsic value.
−Removed: MODINE MANUFACTURING COMPANY
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: (In millions, except per share amounts)
+Added: The aggregate intrinsic value represents the difference between the closing price of Modine’s common shares on the last trading day of fiscal 2021 over the exercise price of the stock options, multiplied by the number of options outstanding or exercisable.
+Added: The aggregate intrinsic value is not recorded for financial statement purposes, and this value will change based upon daily changes in the price of Modine’s common shares.
Additional information related to stock options exercised is as follows:
7 unchanged sentences
The Company values restricted stock awards using the closing market price of its common shares on the date of grant.
−Removed: The restricted stock awards vest 25 percent annually for four years , with the exception of awards to non-employee directors, which fully vest upon grant.
+Added: The restricted stock awards granted annually vest 25 percent per year for four years , with the exception of awards to non-employee directors, which fully vest upon grant.
A summary of restricted stock activity for fiscal 2021 was as follows:
4 unchanged sentences
The Company recorded $ 1.1 million, $ 0.8 million, and $ 2.4 million of compensation expense related to performance-based stock awards in fiscal 2021, 2020, and 2019, respectively.
−Removed: At March 31, 2020, the Company had $ 1.1 million of total unrecognized compensation expense related to non-vested performance-based stock awards, which is expected to be recognized over a weighted-average period of 1.9 years.
+Added: At March 31, 2021, the Company had $ 0.5 million of unrecognized compensation expense related to non-vested performance-based stock awards, which is expected to be recognized over one year .
The Company values performance-based stock awards using the closing market price of its common shares on the date of grant.
Shares are earned under the performance portion of the restricted stock award program based upon the attainment of certain financial goals over a three-year period and are awarded after the end of that three-year performance period, if the performance targets have been achieved.
−Removed: The performance components of the programs initiated in fiscal 2020 and 2019 are based upon both a target three-year average consolidated cash flow return on invested capital and a target three-year average annual revenue growth at the end of a three-year performance period, commencing with the fiscal year of grant.
−Removed: The performance components of the program initiated in fiscal 2018 are based upon both a target three-year average consolidated return on capital employed and a target three-year average annual revenue growth at the end of a three-year performance period.
−Removed: Restructuring Activities
−Removed: During fiscal 2020 and 2019, restructuring actions consisted primarily of targeted headcount reductions and plant consolidation activities.
−Removed: The headcount reductions were primarily in Europe and the Americas within the VTS segment and support the Company’s objective to reduce operational and SG&A cost structures.
−Removed: Also, the Company is in the process of transferring product lines to its CIS manufacturing facility in Mexico in order to achieve operational improvements and organizational efficiencies.
−Removed: During fiscal 2018, the Company ceased production at its Gailtal, Austria manufacturing facility, primarily to reduce excess capacity and lower manufacturing costs in Europe.
−Removed: As a result of this facility closure, the Company recorded $ 8.3 million of restructuring expenses within the CIS segment, primarily related to employee severance and related benefits.
−Removed: Fiscal 2018 restructuring activities also included plant consolidation activities, targeted headcount reductions, and certain product line transfers in Europe within the VTS segment.
−Removed: In addition, the Company recorded restructuring expenses associated with the discontinuance of its geothermal product line within the BHVAC segment.
−Removed: During fiscal 2021, the Company approved headcount reductions in the VTS and CIS segments and, as a result, expects to record approximately $ 4.0 million of severance expenses during the first quarter of fiscal 2021.
+Added: The performance metrics for the performance-based stock awards granted in fiscal 2020 and 2019 are based upon both a target three-year average consolidated cash flow return on invested capital and a target three-year average annual revenue growth at the end of a three-year performance period, commencing with the fiscal year of grant.
+Added: As noted above, the Company granted performance cash awards in fiscal 2021 in lieu of performance-based stock awards.
+Added: The performance metrics for these cash awards are the same as the metrics for the fiscal 2020 and 2019 performance-based stock awards.
MODINE MANUFACTURING COMPANY
1 unchanged sentence
(In millions, except per share amounts)
+Added: Restructuring Activities
+Added: During fiscal 2021, restructuring actions consisted primarily of targeted headcount reductions and plant consolidation activities.
+Added: The targeted headcount reductions were primarily in Europe within the Automotive segment and in the Americas within the HDE segment.
+Added: In addition, the Company eliminated the Vice President, CIS and Chief Operating Officer senior executive position and, as a result, recorded $ 1.3 million of severance-related expenses.
+Added: These headcount reductions support the Company’s objective of reducing operational and SG&A cost structures.
+Added: Also during fiscal 2021, the Company transferred production from its manufacturing facility in Zhongshan, China to another CIS segment manufacturing facility in China.
+Added: As a result of this plant consolidation, the Company recorded $ 3.7 million of severance expenses during fiscal 2021.
+Added: The Company is also in the process of transferring product lines to its CIS manufacturing facility in Mexico.
+Added: These plant consolidation activities support the Company’s objective of achieving operational improvements and organizational efficiencies.
+Added: During fiscal 2020 and 2019, restructuring actions consisted primarily of targeted headcount reductions and plant consolidation activities.
+Added: The headcount reductions were primarily in Europe within the Automotive segment and in the Americas within the HDE segment.
+Added: The plant consolidation activities included transferring product lines to the Company’s CIS manufacturing facility in Mexico.
Restructuring and repositioning expenses were as follows:
7 unchanged sentences
Beginning balance
+Added: Reclassified as held for sale
Effect of exchange rate changes
Ending balance
−Removed: During fiscal 2020, the Company identified potential impairment indicators related to manufacturing facilities in Austria and Germany within the VTS segment.
−Removed: The Company anticipates the future cash flows of these asset groups will be negatively impacted by planned wind downs of certain commercial vehicle and automotive programs.
−Removed: In response, the Company performed an impairment evaluation and recorded asset impairment charges totaling $ 7.5 million within its VTS segment to write down property and equipment assets to fair value.
−Removed: The Company determined fair value using Level 3 inputs, primarily consisting of appraisals, which considered the market rental value, market conditions, physical condition of the assets, salability in the marketplace and estimated scrap values, based on the specialized nature of the machinery and equipment.
−Removed: Also during fiscal 2020, the Company recorded a $ 0.6 million impairment charge to reduce the carrying value of the previously-closed CIS Austrian facility to its current estimated fair value, less costs to sell.
−Removed: During fiscal 2019 and 2018, the Company recorded asset impairment charges of $ 0.4 million and $ 1.3 million, respectively, related to this closed facility.
+Added: During fiscal 2021, the Company recorded asset impairment charges totaling $ 166.8 million within its Automotive segment.
+Added: See Note 2 for additional information.
+Added: During fiscal 2020, the Company recorded asset impairment charges totaling $ 7.5 million within its Automotive segment to write down property and equipment assets in Austria and Germany to estimated fair value.
+Added: Also during fiscal 2020, the Company recorded a $ 0.6 million impairment charge to reduce the carrying value of the previously-closed CIS Austrian facility to its estimated fair value, less costs to sell.
+Added: During fiscal 2019, the Company recorded asset impairment charges of $ 0.4 million related to this closed facility.
+Added: MODINE MANUFACTURING COMPANY
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: (In millions, except per share amounts)
Other Income and Expense
1 unchanged sentence
Years ended March 31,
−Removed: Equity in earnings of non-consolidated affiliate (a)
Interest income
−Removed: Foreign currency transactions (b)
−Removed: Net periodic benefit cost (c)
+Added: Foreign currency transactions (a)
+Added: Net periodic benefit cost (b)
+Added: Equity in earnings of non-consolidated affiliate (c)
Total other expense - net
+Added: Foreign currency transactions primarily consist of foreign currency transaction gains and losses on the re-measurement or settlement of foreign currency-denominated assets and liabilities, including intercompany loans and transactions denominated in a foreign currency, along with gains and losses on foreign currency exchange contracts.
+Added: Net periodic benefit cost for the Company’s pension and postretirement plans is exclusive of service cost .
During fiscal 2020, the Company sold its ownership interest in Nikkei Heat Exchanger Company, Ltd.
1 unchanged sentence
See Note 1 for additional information.
−Removed: Foreign currency transactions primarily consist of foreign currency transaction gains and losses on the re-measurement or settlement of foreign currency-denominated assets and liabilities, including intercompany loans and transactions denominated in a foreign currency, along with gains and losses on foreign currency exchange contracts.
−Removed: Net periodic benefit cost for the Company’s pension and postretirement plans is exclusive of service cost.
−Removed: MODINE MANUFACTURING COMPANY
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: (In millions, except per share amounts)
−Removed: and foreign components of earnings before income taxes and the provision or benefit for income taxes consisted of the following:
+Added: and foreign components of loss or earnings before income taxes and the provision or benefit for income taxes consisted of the following:
Years ended March 31,
−Removed: Components of earnings (loss) before income taxes:
+Added: Components of (loss) earnings before income taxes:
United States
−Removed: Total earnings before income taxes
+Added: Total (loss) earnings before income taxes
Income tax provision (benefit):
2 unchanged sentences
government enacted comprehensive tax legislation commonly referred to as the Tax Act.
−Removed: Shortly after the Tax Act was enacted, the SEC issued accounting guidance which provided a one-year measurement period during which a company could complete its accounting for the impacts of the Tax Act.
−Removed: To the extent a company’s accounting for certain income tax effects of the Tax Act was incomplete, the company could determine a reasonable estimate for those effects and record a provisional estimate in its financial statements.
−Removed: If a company could not determine a provisional estimate to be included in the financial statements, it was to continue applying the provisions of the tax laws that were in effect immediately prior to the Tax Act being enacted.
−Removed: During fiscal 2018, the Company recorded provisional discrete tax charges totaling $ 38.0 million related to the Tax Act.
−Removed: The Company adjusted its U.S.
−Removed: deferred tax assets by $ 19.0 million due to the reduction in the U.S.
−Removed: federal corporate tax rate.
−Removed: This net reduction in deferred tax assets also included the estimated impact on the Company’s net state deferred tax assets.
−Removed: In addition, the Company recorded a $ 19.0 million charge for the transition tax required under the Tax Act.
−Removed: During fiscal 2019, the Company completed its accounting for the Tax Act, which resulted in an income tax benefit totaling $ 7.7 million.
−Removed: The Company utilized its deferred tax attributes against the transition tax and finalized its fiscal 2018 U.S.
−Removed: federal income tax return.
−Removed: As a result, the Company decreased the provisional charge recorded for the reduction in the U.S.
−Removed: federal corporate tax rate by $ 9.3 million, since more deferred tax assets were utilized to offset taxable income at a higher fiscal 2018 U.S.
−Removed: federal corporate tax rate.
−Removed: The Company also decreased the transition tax liability to $ 18.9 million, a reduction of $ 0.1 million.
−Removed: In addition, the Company recorded a charge of $ 1.7 million for a reduction to state deferred tax assets.
The Tax Act included a new provision designed to tax global intangible low taxed income (“GILTI”) starting in fiscal 2019.
2 unchanged sentences
Based upon this approach, net operating loss carryforwards are deemed to be realizable if they will reduce the expected tax liability when utilized, regardless of whether the 50% GILTI deduction or applicable tax credits may have been available.
−Removed: The Company’s accounting policy is to allocate the income tax provision between net earnings and other comprehensive income.
−Removed: The Company applies its accounting for income taxes by tax jurisdiction, and in periods in which there is a loss before income taxes and pre-tax income in other comprehensive income, it first allocates the income tax provision to other comprehensive income, and then records a related tax benefit in the income tax provision.
MODINE MANUFACTURING COMPANY
1 unchanged sentence
(In millions, except per share amounts)
+Added: The Company’s accounting policy is to allocate the income tax provision between net earnings and other comprehensive income.
+Added: The Company applies its accounting for income taxes by tax jurisdiction, and in periods in which there is a loss before income taxes and pre-tax income in other comprehensive income, it first allocates the income tax provision to other comprehensive income, and then records a related tax benefit in the income tax provision.
The reconciliation between the U.S.
11 unchanged sentences
Effective tax rate
−Removed: During fiscal 2020, the Company recorded net income tax charges totaling $ 2.9 million as a result of legal entity restructuring completed in preparation of a potential sale of the automotive business and a $ 1.4 million income tax benefit resulting from the recognition of a tax incentive in Italy.
+Added: During fiscal 2021, the Company’s effective tax rate was largely driven by both significant impairment charges and income tax charges related to valuation allowances.
+Added: See Note 2 for information regarding the impairment charges recorded during fiscal 2021.
+Added: The income tax benefits associated with these impairment charges totaled $ 24.4 million and $ 13.3 million in the U.S.
+Added: and in certain foreign jurisdictions, respectively, and increased the deferred tax assets in the applicable jurisdictions.
+Added: The deferred tax assets, in turn, were evaluated for realizability, as further described below.
+Added: The Company records valuation allowances against its net deferred tax assets to the extent it determines it is more likely than not that such assets will not be realized in the future.
+Added: Each quarter, the Company evaluates the probability that its deferred tax assets will be realized and determines whether valuation allowances or adjustments thereto are needed.
+Added: This determination involves judgement and the use of significant estimates and assumptions, including expectations of future taxable income and tax planning strategies.
+Added: In addition, the Company considers the duration of statutory carryforward periods and historical financial results.
+Added: Based upon its analyses during fiscal 2021, the Company determined it was more likely than not that its deferred tax assets in the U.S.
+Added: and in certain foreign jurisdictions will not be realized in the future.
+Added: As a result, the Company recorded income tax charges totaling $ 116.5 million to increase the valuation allowance on deferred tax assets in the U.S.
+Added: ($ 103.3 million) and in certain foreign jurisdictions ($ 13.2 million).
+Added: The majority of the U.S.
+Added: tax charge was recorded in the third quarter of fiscal 2021, which established a full valuation on the U.S.
+Added: deferred tax assets.
+Added: The Company’s analyses in the third quarter of fiscal 2021 included consideration of the impairment charges recorded in connection with the pending sale of the liquid-cooled automotive business;
+Added: see Note 2 for additional information.
+Added: These impairment charges contributed to the Company entering into a three-year cumulative loss position in the U.S.
+Added: and in certain foreign jurisdictions as of December 31, 2020.
+Added: The Company’s analyses as of December 31, 2020 also considered year-to-date taxable income, which had been negatively impacted by the COVID-19 pandemic and lower sales to data center cooling customers, and future projections of taxable income in the relevant jurisdictions.
+Added: After considering both the positive and negative evidence, the Company determined it is more likely than not that these deferred tax assets will not be realized.
+Added: Also during fiscal 2021, the Company recorded a net increase of deferred tax asset valuation allowances totaling $ 22.0 million and recorded a $( 9.3 ) million income tax benefit resulting from the allocation of the income tax provision between net earnings and other comprehensive income, in accordance with the Company’s accounting policy described above.
+Added: MODINE MANUFACTURING COMPANY
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: (In millions, except per share amounts)
+Added: During fiscal 2020, the Company recorded net income tax charges totaling $ 2.9 million as a result of legal entity restructuring completed in preparation of a potential sale of the liquid-cooled automotive business and a $ 1.4 million income tax benefit resulting from the recognition of a tax incentive in Italy.
Also in fiscal 2020, the Company changed its determination of whether it was more likely than not certain deferred tax assets in the U.S.
and in a foreign jurisdiction would be realized and, as a result, adjusted the respective valuation allowances and recorded an income tax charge of $ 8.4 million and an income tax benefit of $ 1.3 million, respectively.
−Removed: In addition, the Company recorded a net increase of deferred tax asset valuation allowances totaling $ 9.2 million related to other tax jurisdictions and recorded a $ 4.5 million income tax benefit associated with the reduction in unrecognized tax benefits resulting from a lapse in statutes of limitations and settlements.
−Removed: During fiscal 2019, the Company recorded income tax benefits totaling $ 7.7 million related to the Tax Act, as discussed above;
−Removed: recorded income tax benefits totaling $ 14.5 million as a result of amending previous-year tax returns to recognize foreign tax credits that are expected to be realized based upon future sources of income;
−Removed: and recorded a $ 2.5 million income tax benefit related to a manufacturing deduction in the United States.
+Added: In addition, the Company recorded a net increase of deferred tax asset valuation allowances totaling $ 9.2 million and recorded a $ 4.5 million income tax benefit associated with the reduction in unrecognized tax benefits resulting from a lapse in statutes of limitations and settlements.
+Added: During fiscal 2019, the Company recorded income tax benefits totaling $ 14.5 million as a result of amending previous-year tax returns to recognize foreign tax credits that were expected to be realized based upon future sources of income and recorded a $( 2.5 ) million income tax benefit related to a manufacturing deduction in the United States.
+Added: Shortly after the Tax Act was enacted, the SEC issued accounting guidance which provided a one-year measurement period during which a company could complete its accounting for the impacts of the Tax Act.
+Added: During fiscal 2019, the Company completed its accounting for the Tax Act, which resulted in an income tax benefit totaling $ 7.7 million.
+Added: The Company utilized its deferred tax attributes against the transition tax and finalized its fiscal 2018 U.S.
+Added: federal income tax return.
+Added: As a result, the Company decreased the provisional charge recorded for the reduction in the U.S.
+Added: federal corporate tax rate by $ 9.3 million, since more deferred tax assets were utilized to offset taxable income at a higher fiscal 2018 U.S.
+Added: federal corporate tax rate.
+Added: The Company also decreased the transition tax liability to $ 18.9 million, a reduction of $ 0.1 million.
+Added: In addition, the Company recorded a charge of $ 1.7 million for a reduction to state deferred tax assets.
Also in fiscal 2019, the Company changed its determination of whether it was more likely than not certain deferred tax assets of two separate subsidiaries in a foreign jurisdiction would be realized and, as a result, adjusted the respective valuation allowances and recorded an income tax benefit totaling $ 1.0 million.
−Removed: In addition, the Company recorded a net increase of deferred tax asset valuation allowances totaling $ 4.3 million related to other tax jurisdictions and recorded a $ 2.2 million income tax benefit associated with the reduction in unrecognized tax benefits resulting from a lapse in statutes of limitations.
−Removed: During fiscal 2018, the Company recorded provisional charges totaling $ 38.0 million related to the Tax Act, as discussed above, and recognized a $ 9.0 million Hungarian development tax credit.
−Removed: Also in fiscal 2018, the Company reversed a portion of the valuation allowance on certain deferred tax assets in a foreign jurisdiction after determining it was more likely than not these assets would be realized, and, as a result, recorded an income tax benefit of $ 2.8 million.
−Removed: In addition, the Company recorded a $ 1.8 million income tax benefit in fiscal 2018 associated with the reduction in unrecognized tax benefits resulting from a lapse in statutes of limitations.
+Added: In addition, the Company recorded a net increase of deferred tax asset valuation allowances totaling $ 4.3 million and recorded a $ 2.2 million income tax benefit associated with the reduction in unrecognized tax benefits resulting from a lapse in statutes of limitations.
The Company has recorded valuation allowances against its net deferred tax assets to the extent it has determined it is more likely than not that such assets will not be realized in the future.
The Company will maintain the valuation allowances in each applicable tax jurisdiction until it determines it is more likely than not the deferred tax assets will be realized, thereby eliminating the need for a valuation allowance.
−Removed: As further discussed in Note 20, the COVID-19 pandemic has resulted in risks and uncertainties to our business.
−Removed: Future events or circumstances, such as lower taxable income or unfavorable changes in the financial outlook of the Company’s operations in certain jurisdictions, could necessitate the establishment of further valuation allowances, which could have a material adverse effect on the Company’s results of operations and financial condition .
+Added: As further discussed in Note 20, the COVID-19 pandemic has resulted in risks and uncertainties for the Company.
+Added: Future events or circumstances, such as lower taxable income or unfavorable changes in the financial outlook of the Company’s operations in certain foreign jurisdictions, could necessitate the establishment of further valuation allowances.
MODINE MANUFACTURING COMPANY
18 unchanged sentences
Net deferred tax assets
+Added: At March 31, 2021, the net deferred tax assets presented in the table above exclude deferred tax assets and liabilities classified as held for sale.
+Added: At March 31, 2021, the Company recorded a full valuation allowance for the net deferred tax assets of the held for sale businesses.
+Added: See Note 2 for additional information regarding the businesses held for sale.
Unrecognized tax benefits were as follows:
10 unchanged sentences
The Company recognizes interest and penalties related to unrecognized tax benefits as a component of income tax expense.
−Removed: During fiscal 2020 and 2019, interest and penalties included within income tax expense in the consolidated statements of operations were not significant.
+Added: During fiscal 2021 and 2020, interest and penalties included within income tax expense were not significant.
At March 31, 2021 and 2020, accrued interest and penalties totaled $ 0.6 million and $ 0.5 million, respectively.
+Added: MODINE MANUFACTURING COMPANY
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: (In millions, except per share amounts)
The Company files income tax returns in multiple jurisdictions and is subject to examination by taxing authorities throughout the world.
2 unchanged sentences
Fiscal 2015 - Fiscal 2020
−Removed: Calendar 2015 - Fiscal 2019
+Added: Fiscal 2016 - Fiscal 2020
United States
4 unchanged sentences
In addition, the Company had tax loss and foreign attribute carryforwards totaling $ 211.4 million in various tax jurisdictions throughout the world.
−Removed: Certain of the carryforwards in the U.S.
−Removed: and in foreign jurisdictions are offset by valuation allowances.
−Removed: If not utilized against taxable income, $ 8.1 million of these carryforwards will expire between fiscal 2021 and 2034 , and $ 306.6 million, mainly related to Germany and Italy, will not expire due to an unlimited carryforward period.
−Removed: MODINE MANUFACTURING COMPANY
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: (In millions, except per share amounts)
+Added: Carryforwards in the U.S.
+Added: and in certain foreign jurisdictions are offset by valuation allowances.
+Added: If not utilized against taxable income, $ 6.8 million of these carryforwards will expire between fiscal 2022 and 2034 , and $ 204.6 million, mainly related to the U.S, Germany and Italy, will not expire due to an unlimited carryforward period.
The Company’s practice and intention is to reinvest, with certain insignificant exceptions, the earnings of its non-U.S.
20 unchanged sentences
For fiscal 2021, 2020 and 2019, the calculation of diluted earnings per share excluded 1.0 million, 1.1 million, and 0.4 million stock options, respectively, because they were anti-dilutive.
−Removed: For fiscal 2020 and 2019, the calculation of diluted earnings per share excluded 0.5 million and 0.3 million restricted stock awards, respectively, because they were anti-dilutive.
−Removed: For fiscal 2020, the total number of potentially-dilutive securities was 0.3 million.
+Added: For fiscal 2021, 2020 and 2019, the calculation of diluted earnings per share excluded 0.4 million, 0.5 million, and 0.3 million restricted stock awards, respectively, because they were anti-dilutive.
+Added: For fiscal 2021 and 2020, the total number of potentially-dilutive securities was 0.2 million and 0.3 million, respectively.
However, these securities were not included in the computation of diluted net loss per share since to do so would have decreased the loss per share.
+Added: MODINE MANUFACTURING COMPANY
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: (In millions, except per share amounts)
Cash, Cash Equivalents and Restricted Cash
2 unchanged sentences
Restricted cash
−Removed: Total cash, cash equivalents and restricted cash
+Added: Cash and restricted cash held for sale
+Added: Total cash, cash equivalents, restricted cash and cash held for sale
Restricted cash, which is reported within other current assets and other noncurrent assets in the consolidated balance sheets, consists primarily of deposits for contractual guarantees or commitments required for rents, import and export duties, and commercial agreements.
−Removed: MODINE MANUFACTURING COMPANY
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: (In millions, except per share amounts)
Inventories consisted of the following:
3 unchanged sentences
Total inventories
+Added: At March 31, 2021, inventories excluded amounts classified as held for sale.
+Added: See Note 2 for additional information.
Property, Plant and Equipment
6 unchanged sentences
Net property, plant and equipment
+Added: At March 31, 2021, property, plant and equipment excluded amounts classified as held for sale.
+Added: In addition, upon classifying the liquid- and air-cooled automotive businesses as held for sale, the Company ceased depreciating the property, plant and equipment within the disposal groups.
+Added: See Note 2 for additional information.
Depreciation expense totaled $ 60.1 million, $ 68.2 million, and $ 67.9 million for fiscal 2021, 2020, and 2019, respectively.
1 unchanged sentence
For fiscal 2021, 2020, and 2019, losses related to the disposal of property, plant and equipment totaled $ 0.7 million, $ 0.6 million, and $ 0.9 million, respectively.
−Removed: Investment in Affiliate
−Removed: During fiscal 2020, the Company completed the sale of its 50 percent ownership interest in Nikkei Heat Exchanger Company, Ltd.
−Removed: (“NEX”) for a selling price of $ 3.8 million.
−Removed: As a result of this sale, the Company recorded a gain of $ 0.1 million, which included the write-off of accumulated foreign currency translation gains of $ 0.6 million, within other income and expense on the consolidated statement of operations.
−Removed: Prior to the sale, the Company accounted for its investment in this non-consolidated affiliate using the equity method.
−Removed: The Company included its investment in NEX of $ 3.8 million within other noncurrent assets on the March 31, 2019 consolidated balance sheet.
−Removed: The Company reported its equity in earnings from NEX within other income and expense in the consolidated statements of operations, using a one-month reporting delay.
−Removed: The Company’s share of NEX’s earnings for fiscal 2020, 2019, and 2018 was $ 0.1 million, $ 0.7 million, and $ 0.2 million, respectively.
+Added: MODINE MANUFACTURING COMPANY
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: (In millions, except per share amounts)
Intangible Assets
7 unchanged sentences
The Company estimates that it will record $ 8.4 million of amortization expense in fiscal 2022 and approximately $ 8.0 million of annual amortization expense in fiscal 2023 through 2026.
−Removed: During fiscal 2018, the BHVAC segment discontinued its geothermal product line and, as a result, recorded a $ 1.2 million impairment charge for acquired technology intangible assets.
−Removed: MODINE MANUFACTURING COMPANY
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: (In millions, except per share amounts)
Changes in the carrying amount of goodwill, by segment and in the aggregate, were as follows:
Balance, March 31, 2019
+Added: Impairment charge
Effect of exchange rate changes
Balance, March 31, 2020
−Removed: Impairment charge
Effect of exchange rate changes
Balance, March 31, 2021
−Removed: The Company assesses goodwill for impairment annually, or more frequently if events or circumstances change that would, more likely than not, reduce the fair value of a reporting unit below its carrying value.
−Removed: Annually, the Company conducts its goodwill impairment assessment during the fourth quarter by applying a fair value-based test.
−Removed: For purposes of its assessment, the Company determines the fair value of each reporting unit based upon the present value of estimated future cash flows.
+Added: The Company tests goodwill for impairment annually, as of March 31, or more frequently if events or circumstances change that would, more likely than not, reduce the fair value of a reporting unit below its carrying value.
+Added: To test goodwill for impairment, the Company determines the fair value of each reporting unit based upon the present value of estimated future cash flows and compares the fair value of each reporting unit with its carrying value.
The Company’s determination of fair value involves judgment and the use of significant estimates and assumptions, including assumptions regarding the revenue growth rates and operating profit margins used to calculate estimated future cash flows, risk-adjusted discount rates, business trends and market conditions.
−Removed: As a result of its annual goodwill impairment test performed during the fourth quarter of fiscal 2020, the Company determined that the fair value of each of the reporting units within its CIS and BHVAC segments exceeded their respective book values.
−Removed: The Company determined, however, that the goodwill recorded within its VTS segment was fully impaired and recorded a $0.5 million impairment charge as a result.
−Removed: The impairment charge was primarily caused by a recent decline in the estimated fair value of the automotive business within the VTS segment.
−Removed: At March 31, 2020 and 2019, accumulated goodwill impairment losses totaled $ 40.8 million a nd $ 40.3 million, respectively, within the VTS segment.
+Added: As a result of its annual goodwill impairment tests performed as of March 31, 2021, the Company determined that the fair value of each of the reporting units within its BHVAC and CIS segments exceeded their respective book values.
+Added: In fiscal 2020, the Company determined that the goodwill recorded within its Automotive segment was fully impaired and recorded a $ 0.5 million impairment charge as a result.
+Added: At both March 31, 2021 and 2020, accumulated goodwill impairment losses totaled $ 31.6 million a nd $ 9.2 million, within the HDE and Automotive segments, respectively.
+Added: MODINE MANUFACTURING COMPANY
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: (In millions, except per share amounts)
Product Warranties and Other Commitments
7 unchanged sentences
Adjustments to pre-existing warranties
+Added: Reclassified as held for sale
Effect of exchange rate changes
6 unchanged sentences
The fair value of the Company’s outstanding indemnification obligations at March 31, 2021 was not material.
−Removed: At March 31, 2020, the Company had capital expenditure commitments of $ 12.0 million.
−Removed: Significant commitments include tooling and equipment expenditures for new and renewal programs with customers in the VTS segment.
+Added: At March 31, 2021, the Company had capital expenditure commitments of $ 10.0 million, excluding commitments of the held for sale liquid- and air-cooled automotive businesses.
+Added: Significant commitments include tooling and equipment expenditures for new and renewal programs with vehicular customers.
The Company utilizes inventory arrangements with certain vendors in the normal course of business under which the vendors maintain inventory stock at the Company’s facilities or at outside facilities.
3 unchanged sentences
This inventory is included within the Company’s consolidated balance sheets as raw materials inventory.
−Removed: MODINE MANUFACTURING COMPANY
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: (In millions, except per share amounts)
−Removed: Effective April 1, 2019, the Company adopted new lease accounting guidance and, as a result, recorded $ 61.3 million of right-of-use (“ROU”) assets and corresponding lease liabilities for operating leases on its consolidated balance sheet.
−Removed: The consolidated financial statements for fiscal 2020 reflect the adoption of this new guidance;
−Removed: however, fiscal 2019, fiscal 2018 and prior-years have not been adjusted.
−Removed: See Note 1 for additional information regarding the Company’s adoption of the new guidance.
+Added: Effective April 1, 2019, the Company adopted new lease accounting guidance ;
+Added: see Note 1 for additional information.
The Company determines if an arrangement is a lease at contract inception.
2 unchanged sentences
ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease.
−Removed: The Company recognizes ROU assets and lease liabilities at the commencement date, based upon the present value of lease payments over the lease term.
−Removed: As its lease agreements typically do not provide an implicit interest rate, the Company primarily uses an incremental borrowing rate based upon the information available at lease commencement.
−Removed: In determining the incremental borrowing rate, the Company considers its current collateralized borrowing rate, the term of the lease, and the economic environments where the lease activity is concentrated.
+Added: The Company recognizes ROU assets and lease liabilities at the lease commencement date, based upon the present value of lease payments over the lease term.
+Added: As its lease agreements typically do not provide an implicit interest rate, the Company primarily uses an incremental borrowing rate to calculate the ROU asset and lease liability.
+Added: In determining the incremental borrowing rate, the Company considers its current collateralized borrowing rate, the term of the lease, and the economic environment where the lease activity is concentrated.
The Company believes this method effectively estimates a borrowing rate that it could obtain for a debt instrument with similar terms as the lease agreement.
+Added: MODINE MANUFACTURING COMPANY
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: (In millions, except per share amounts)
Based upon its accounting policy, the Company does not separate lease and non-lease components for any asset class.
In addition, the Company does not record short-term leases (i.e.
−Removed: leases with an initial term of 12 months or less) on its consolidated balance sheets and recognizes payments for these leases as lease expense.
+Added: leases with an initial term of 12 months or less) on its consolidated balance sheets.
Certain leases require the Company to pay taxes, insurance, maintenance, and other operating expenses associated with the leased asset.
2 unchanged sentences
The depreciable life of the ROU assets and related leasehold improvements are limited by the expected lease term, unless the lease contains a provision to transfer title to the Company or a purchase option that the Company expects to execute.
−Removed: The Company’s most significant leases represent leases of real estate, such as manufacturing facilities, warehouses, and office buildings.
−Removed: In addition, the Company leases certain manufacturing and IT equipment and vehicles.
+Added: The Company’s most significant leases represent leases of real estate, such as manufacturing facilities, warehouses, and offices.
+Added: In addition, the Company leases manufacturing and IT equipment and vehicles.
The Company’s most significant leases have remaining lease terms of 1 to 13 years.
1 unchanged sentence
If reasonably certain of exercise, the Company includes the renewal periods within the calculation of ROU assets and lease liabilities.
−Removed: The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.
+Added: The Company’s lease agreements do not contain material residual value guarantees or material restrictive covenants.
Lease Assets and Liabilities
−Removed: The following table provides a summary of leases recorded on the consolidated balance sheet.
+Added: The following table provides a summary of leases recorded on the consolidated balance sheets.
+Added: The March 31, 2021 amounts exclude operating lease ROU assets and liabilities, which each totaled $ 6.1 million, that are classified as held for sale on the Company’s consolidated balance sheet;
+Added: see Note 2 for additional information.
Balance Sheet Location
March 31, 2021
+Added: March 31, 2020
Operating lease ROU assets
11 unchanged sentences
Long-term debt
−Removed: Finance lease ROU assets were recorded net of accumulated amortization of $ 1.8 million as of March 31, 2020.
+Added: Finance lease ROU assets were recorded net of accumulated amortization of $ 2.4 million and $ 1.8 million as of March 31, 2021 and 2020, respectively.
Components of Lease Expense
1 unchanged sentence
The Company records finance lease expense as depreciation expense within cost of sales or SG&A expenses, depending upon the nature and use of the ROU assets, and as interest expense in its consolidated statements of operations.
−Removed: MODINE MANUFACTURING COMPANY
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: (In millions, except per share amounts)
The components of lease expense were as follows:
−Removed: March 31, 2020
+Added: Years ended March 31,
Operating lease expense (a)
3 unchanged sentences
Total lease expense
−Removed: In fiscal 2020, operating lease expense included short-term lease expense of $ 4.1 million.
+Added: In fiscal 2021 and 2020, operating lease expense included short-term lease expense of $ 3.5 million and $ 4.1 million, respectively.
Variable lease expense was not significant.
+Added: MODINE MANUFACTURING COMPANY
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: (In millions, except per share amounts)
Supplemental Cash Flow Information
−Removed: March 31, 2020
+Added: Years ended March 31,
Cash paid for amounts included in the measurement of lease liabilities:
6 unchanged sentences
March 31, 2021
+Added: March 31, 2020
Weighted-average remaining lease term:
4 unchanged sentences
Finance leases
−Removed: Maturity of Lease Liabilities under New Lease Accounting Guidance:
+Added: Maturity of Lease Liabilities
Future minimum rental payments for leases with initial non-cancellable lease terms in excess of one year were as follows at March 31, 2021:
4 unchanged sentences
Present value of lease liabilities
+Added: The future minimum rental payments summarized above exclude payments for lease liabilities held for sale.
MODINE MANUFACTURING COMPANY
1 unchanged sentence
(In millions, except per share amounts)
−Removed: Maturity of Lease Liabilities under Previous Lease Accounting Guidance:
−Removed: Future minimum rental payments for operating leases with initial non-cancellable lease terms in excess of one year were as follows at March 31, 2019:
−Removed: 2025 and beyond
−Removed: The Company recorded $ 19.3 million and $ 18.5 million of rental expense related to operating leases in fiscal 2019 and 2018, respectively.
−Removed: In June 2019, the Company executed the Fourth Amended and Restated Credit Agreement with a syndicate of banks that provides for a multi-currency $ 250.0 million revolving credit facility expiring in June 2024 , which modified the Company’s then-existing revolver that would have expired in November 2021.
−Removed: In addition, this credit agreement provided for both U.S.
−Removed: dollar- and euro-denominated term loan facilities, with repayments continuing into fiscal 2025.
−Removed: These term loans replaced the previously-existing term loans with repayments scheduled through fiscal 2022.
−Removed: As a result of the credit agreement modification, the Company deferred debt issuance costs of $ 1.1 million, which are being amortized over the term of the debt.
−Removed: Borrowings under both the revolving credit and term loan facilities bear interest at a variable rate, based upon the applicable reference rate and including a margin percentage dependent upon the Company’s leverage ratio, as described below.
−Removed: At March 31, 2020, the weighted-average interest rates for revolving credit facility borrowings and the term loans were 3.0 percent and 2.8 percent, respectively.
−Removed: At March 31, 2020, the Company’s revolving credit facility borrowings totaled $ 127.2 million and domestic letters of credit totaled $ 5.3 million, resulting in available borrowings under the revolving credit facility of $ 117.5 million.
−Removed: In January 2020, the Company issued $ 100.0 million of 5.9 percent Senior Notes with repayments ending in fiscal 2029.
−Removed: The Company used the majority of the proceeds to satisfy the remaining principal balance of the 6.8 percent Senior Notes, which were scheduled to mature in August 2020.
−Removed: As a result of the credit agreement modification, the Company deferred debt issuance costs of $ 1.7 million, which are being amortized over the term of the debt.
−Removed: Based upon the terms of the credit agreement, the Company determined that borrowings under its revolving credit facility should be classified as long-term debt.
−Removed: Accordingly, the Company has reclassified borrowings of $ 47.1 million under its revolving credit facility from short-term to long-term debt on the March 31, 2019 balance sheet and within the related disclosures.
Long-term debt consisted of the following:
5 unchanged sentences
5.8 % Senior Notes
−Removed: 6.8 % Senior Notes
current portion
1 unchanged sentence
Total long-term debt
−Removed: Other long-term debt primarily includes borrowings by foreign subsidiaries and finance lease obligations.
−Removed: MODINE MANUFACTURING COMPANY
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: (In millions, except per share amounts)
+Added: Other long-term debt primarily includes finance lease obligations and borrowings by foreign subsidiarie s.
Long-term debt matures as follows:
−Removed: 2026 & beyond
−Removed: The Company also maintains credit agreements for its foreign subsidiaries, with outstanding short-term borrowings at March 31, 2020 and 2019 of $ 14.8 million and $ 18.9 million, respectively.
+Added: 2027 and beyond
+Added: The Company maintains a credit agreement with a syndicate of banks that provides for a multi-currency $ 250.0 million revolving credit facility expiring in June 2024 .
+Added: In addition, this credit agreement provides for both U.S.
+Added: dollar- and euro-denominated term loan facilities, with repayments continuing into fiscal 2025, and shorter-duration swingline loans.
+Added: Borrowings under the revolving credit, swingline and term loan facilities bear interest at a variable rate, based upon the applicable reference rate and including a margin percentage dependent upon the Company’s leverage ratio, as described below.
+Added: At March 31, 2021, the weighted-average interest rates for these variable-rate borrowings was 2.5 percent.
+Added: Based upon the terms of the credit agreement, the Company classifies borrowings under its revolving credit and swingline facilities as long-term and short-term debt, respectively, on its consolidated balance sheets.
+Added: At March 31, 2021, the Company’s borrowings under its revolving credit and swingline facilities totaled $ 4.8 million and $ 1.4 million, respectively, and domestic letters of credit totaled $ 5.7 million.
+Added: As a result, available borrowing capacity under the Company’s revolving credit facility was $ 238.1 million as of March 31, 2021.
+Added: The Company also maintains credit agreements for its foreign subsidiaries.
+Added: The $ 5.0 million of outstanding short-term borrowings related to these foreign credit agreements at March 31, 2021 were classified as held for sale;
+Added: see Note 2 for additional information on businesses held for sale.
+Added: The outstanding short-term borrowings at March 31, 2020 totaled $ 14.8 million.
Provisions in the Company’s credit agreement, Senior Note agreements, and various foreign credit agreements require the Company to maintain compliance with various covenants and include certain cross-default clauses.
2 unchanged sentences
In addition, at the time of each incremental borrowing under the revolving credit facility, the Company is required to represent to the lenders that there has been no material adverse effect, as defined in the credit agreement, on its business, property, or results of operations.
−Removed: The Company is subject to a leverage ratio covenant, which requires the Company to limit its consolidated indebtedness, less a portion of its cash balance, both as defined by the credit agreements, in relation to its consolidated net earnings before interest, taxes, depreciation, amortization, and certain other adjustments (“Adjusted EBITDA”).
−Removed: The leverage ratio covenant limit was 3.25 to 1 through the fourth quarter of fiscal 2020.
+Added: MODINE MANUFACTURING COMPANY
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: (In millions, except per share amounts)
+Added: In May 2020 and in response to risks and uncertainties introduced by the COVID-19 pandemic, the Company executed amendments to its primary credit agreements in the U.S.
+Added: to provide additional financial covenant flexibility.
+Added: The amendments temporarily raised the leverage ratio covenant limit during fiscal 2021 and 2022.
+Added: In May 2021, based upon its outlook for fiscal 2022, the Company determined that such financial covenant flexibility was no longer necessary and amended the primary agreements.
+Added: The May 2021 amendments reinstated the 3.25 to 1 leverage ratio covenant limit.
+Added: The leverage ratio covenant requires the Company to limit the ratio of its consolidated indebtedness, less a portion of its cash balance, both as defined by the credit agreements, to its consolidated net earnings before interest, taxes, depreciation, amortization, and certain other adjustments (“Adjusted EBITDA”).
+Added: The leverage ratio covenant limit for the fourth quarter of fiscal 2021 was 5.75 to 1.
The Company is also subject to an interest expense coverage ratio covenant, which requires the Company to maintain Adjusted EBITDA of at least three times consolidated interest expense.
−Removed: The Company was in compliance with its debt covenants as of March 31, 2020.
−Removed: In May 2020, the Company executed amendments to its primary credit agreements in the U.S.
−Removed: Under the amended agreements, the leverage ratio covenant limit is temporarily raised.
−Removed: The leverage ratio covenant limit in fiscal 2021 is 4.00 to 1, 4.75 to 1, 5.25 to 1, and 5.75 to 1 for the first, second, third, and fourth quarters, respectively.
−Removed: In fiscal 2022, the leverage ratio covenant limit is 4.75 to 1, 3.75 to 1, and 3.50 to 1 for the first, second and third quarters, respectively, and subsequently returns to 3.25 to 1 for the fourth quarter of fiscal 2022.
+Added: As of March 31, 2021, the Company was in compliance with its debt covenants ;
+Added: its leverage ratio and interest coverage ratio were 1.9 and 9.3 , respectively.
The Company estimates the fair value of long-term debt using discounted future cash flows at rates offered to the Company for similar debt instruments of comparable maturities.
5 unchanged sentences
The Company maintains a domestic 401(k) plan that allows employees to contribute a portion of their salary to help them save for retirement.
−Removed: The Company currently matches employee contributions up to 4.5 percent of their compensation for participants.
+Added: The Company currently matches employee contributions up to 4.5 percent of their compensation.
+Added: During fiscal 2021, as part of its response to the negative impacts of the COVID-19 pandemic, the Company suspended matching employee contributions for part of the year.
The Company’s expense for defined contribution employee benefit plans during fiscal 2021, 2020, and 2019 was $ 3.0 million, $ 6.6 million, and $ 6.4 million, respectively.
6 unchanged sentences
These programs are substantially unfunded in accordance with local laws.
−Removed: MODINE MANUFACTURING COMPANY
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: (In millions, except per share amounts)
−Removed: Defined Benefit Employee Benefit Plans:
Pension Plans
8 unchanged sentences
plans are maintained in Germany, Austria, and Italy and are closed to new participants.
+Added: Liabilities associated with pension plans maintained in Austria and Germany have been classified as liabilities held for sale on the March 31, 2021 consolidated balance sheet since the pension plans will convey to the buyers of the Company’s liquid- and air-cooled automotive businesses.
+Added: The held for sale pension liabilities totaled $ 17.8 million as of March 31, 2021.
+Added: See Note 2 for additional information.
The Company contributed $ 19.3 million, $ 3.5 million, and $ 8.0 million to its U.S.
3 unchanged sentences
These contributions are reported in the change in other liabilities in the consolidated statements of cash flows.
+Added: MODINE MANUFACTURING COMPANY
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: (In millions, except per share amounts)
Postretirement Plans
2 unchanged sentences
An annual limit on the Company’s cost is defined for the majority of these plans.
−Removed: The Company’s net periodic income for its postretirement plans during fiscal 2020, 2019, and 2018 was $ 0.3 million, $ 0.3 million, and $ 0.2 million, respectively.
+Added: The Company’s net periodic income for its postretirement plans in each of fiscal 2021, 2020, and 2019 was $ 0.3 million.
Measurement Date
7 unchanged sentences
Benefits paid
−Removed: Curtailment gain (a)
+Added: Curtailment gains (a)
Effect of exchange rate changes
10 unchanged sentences
Noncurrent liability
−Removed: The $ 0.3 million curtailment gain, which is associated with headcount reductions in Europe within the VTS segment, will be recognized as a component of net periodic benefit cost following the completion of the headcount reductions.
+Added: Liabilities held for sale
+Added: The curtailment gains in fiscal 2021 and 2020 are associated with headcount reductions in Europe within the Automotive segment.
+Added: The Company recognizes curtailment gains as a component of net periodic benefit cost in the period headcount reductions occur.
See Note 6 for additional information on the Company’s restructuring activities.
1 unchanged sentence
pension plans totaled $ 36.4 million, $ 35.7 million, and $ 36.5 million respectively.
+Added: The $ 0.7 million increase in the benefit obligation associated with non-U.S.
+Added: pension plans as of March 31, 2021, compared with the prior year, was primarily due to a $ 2.2 million impact of foreign currency exchange rate changes and service and interest cost totaling $ 0.7 million, partially offset by employer contributions of $ 2.2 million for benefits paid to plan participants during the year.
In fiscal 2020, the $ 0.8 million decrease primarily resulted from employer contributions of $ 2.2 million for benefits paid to plan participants during the year, partially offset by service and interest cost totaling $ 0.9 million.
−Removed: In fiscal 2019, the $ 6.9 million decrease primarily resulted from employer contributions of $ 5.9 million for benefits paid to plan participants during the year and the impact of foreign currency exchange rate changes, partially offset by service and interest cost totaling $ 1.1 million.
+Added: The accumulated benefit obligation for pension plans was $ 258.9 million and $ 263.1 million as of March 31, 2021 and 2020, respectively.
+Added: The net actuarial loss related to the pension plans recognized in accumulated other comprehensive loss was $ 151.1 million and $ 191.5 million as of March 31, 2021 and 2020, respectively.
MODINE MANUFACTURING COMPANY
1 unchanged sentence
(In millions, except per share amounts)
−Removed: The accumulated benefit obligation for pension plans was $ 263.1 million and $ 256.9 million as of March 31, 2020 and 2019, respectively.
−Removed: The net actuarial loss related to the pension plans recognized in accumulated other comprehensive loss was $ 191.5 million and $ 159.1 million as of March 31, 2020 and 2019, respectively.
Costs for the Company’s global pension plans included the following components:
5 unchanged sentences
Settlements (a)
−Removed: Curtailment gain (a)
Net periodic benefit cost
Other changes in benefit obligation recognized in other comprehensive income (loss):
−Removed: Net actuarial loss
+Added: Net actuarial gain (loss)
Amortization of net actuarial loss
Total recognized in other comprehensive income (loss)
−Removed: The settlement charges and curtailment gain resulted from activity associated with the Company’s non-U.S.
+Added: The settlement charges resulted from activity associated with the Company’s non-U.S.
pension plans.
5 unchanged sentences
pension plans.
+Added: In addition, the Company expects to recognize approximately $ 7.0 million of net actuarial losses in fiscal 2022 as part of the anticipated losses to be recorded upon sale of the liquid- and air-cooled automotive businesses.
The Company used a discount rate of 3.2 % and 3.4 % as of March 31, 2021 and 2020, respectively, for determining its benefit obligations under its U.S.
pension plans.
−Removed: The Company used a weighted-average discount rate of 1.0 % and 1.4 % as of March 31, 2020 and 2019, respectively, for determining its benefit obligations under its non-U.S.
+Added: The Company used a weighted-average discount rate of 1.0 % as of both March 31, 2021 and 2020, respectively, for determining its benefit obligations under its non-U.S.
pension plans.
11 unchanged sentences
pension plan weighted-average asset allocations at the measurement dates of March 31, 2021 and 2020 were as follows:
+Added: March 31, 2021
+Added: March 31, 2020
Target allocation
+Added: Target allocation
Equity securities
19 unchanged sentences
pension plans is to contribute annually, at a minimum, the amount necessary on an actuarial basis to provide for benefits in accordance with applicable laws and regulations.
−Removed: The Company expects to contribute approximately $ 20 million to these U.S.
+Added: The Company expects to contribute approximately $ 13.0 million to its U.S.
plans during fiscal 2022.
−Removed: Estimated pension benefit payments for the next ten fiscal years are as follows:
+Added: Estimated pension benefit payments, excluding payments for pension liabilities held for sale, for the next ten fiscal years are as follows:
Estimated Pension
35 unchanged sentences
Other current liabilities
−Removed: The amounts associated with derivative financial instruments that the Company designated for hedge accounting were as follows:
+Added: The amounts associated with derivative financial instruments that the Company designated for hedge accounting during the years ended March 31 were as follows:
Gain (loss) recognized in
8 unchanged sentences
The amounts associated with derivative financial instruments that the Company did not designate for hedge accounting were as follows:
−Removed: Statement of Operations Location
Years ended March 31,
−Removed: Commodity derivatives
−Removed: Cost of sales
+Added: Statement of Operations Location
Foreign exchange contracts
1 unchanged sentence
Other income (expense) - net
+Added: Total gains (losses)
Risks, Uncertainties, Contingencies and Litigation
1 unchanged sentence
The spread of COVID-19 and the resulting work and travel restrictions, including international border closings, have disrupted, and may continue to disrupt, global supply chains and have negatively impacted the global economy.
−Removed: As a result of this pandemic, the Company has experienced significant impacts on its operations and has suspended production at certain manufacturing facilities in China, India, Italy, Spain, Germany, the Netherlands, Austria, Hungary, the U.S., Mexico and Brazil due to local government requirements or customer shutdowns and is operating other facilities in the U.S.
−Removed: and abroad at reduced capacity levels.
−Removed: Although the temporarily-closed facilities have since reopened, many are operating at a significantly reduced volume because of low customer demand.
−Removed: The Company is focused on protecting the health and wellbeing of its employees and the communities in which it operates, while also ensuring the continuity of its business operations and timely delivery of quality products and services to its customers.
−Removed: Beginning largely in April 2020 and i n an effort to mitigate the negative impacts of COVID-19, the Company has taken actions, including, but not limited to, production staffing adjustments, furloughs, shortened work weeks, and temporary salary reductions at all levels of our organization.
−Removed: In addition, the Company is focused on reducing operating and administrative expenses.
−Removed: The Company’s consolidated financial statements reflect estimates and assumptions made by management, including assumptions regarding the future impacts of the COVID-19 pandemic, that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and reported amounts of revenue and expenses during the reporting periods presented.
−Removed: For example, assets particularly sensitive to assumptions that could be adversely impacted by the COVID-19 pandemic include goodwill and deferred tax assets.
−Removed: While the Company believes it used appropriate estimates and assumptions to prepare the consolidated financial statements, actual amounts could differ materially and future events or circumstances could have a potential negative effect on the assumptions used.
−Removed: If the Company, its suppliers, or its customers experience further shutdowns or other significant business disruptions associated with the COVID-19 pandemic, its ability to conduct business in the manner and on the timelines presently planned could be materially and negatively impacted, which could have a material adverse effect on the Company’s business, financial position, results of operations and cash flows.
−Removed: The Company sells a broad range of products that provide thermal solutions to customers operating in diverse markets, including the automotive, commercial vehicle, off-highway, and commercial, industrial, and building HVAC&R markets.
−Removed: The COVID-19 pandemic has negatively impacted these markets;
−Removed: the duration and severity of the impacts of COVID-19 on these markets are currently uncertain.
+Added: As a result of this pandemic, the Company experienced significant impacts on its operations.
+Added: Local government requirements or customer shutdowns caused the Company to suspend production at many of its manufacturing facilities in March and April 2020.
+Added: All of the temporarily-closed facilities reopened in the first or second quarter of fiscal 2021 and have generally returned to more normal production levels.
+Added: However, since reopening, production at certain of our plants has been negatively affected at times by employee absences due to COVID-19.
+Added: The Company is continuing to focus on protecting the health and wellbeing of its employees and the communities in which it operates, while also ensuring the continuity of its business operations and timely delivery of quality products and services to its customers.
+Added: Beginning largely in April 2020 and to mitigate the negative impacts of COVID-19, the Company took actions including, but not limited to, production staffing adjustments, furloughs, shortened work weeks, and temporary salary reductions at all levels of the organization.
+Added: While the Company withdrew most of the cost-saving actions in the third quarter of fiscal 2021 as production returned to more normal levels as markets recovered, it remains focused on controlling operating and administrative expenses
MODINE MANUFACTURING COMPANY
1 unchanged sentence
(In millions, except per share amounts)
+Added: The Company’s consolidated financial statements reflect estimates and assumptions made by management, including assumptions regarding the future impacts of the COVID-19 pandemic, that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and reported amounts of revenue and expenses during the reporting periods presented.
+Added: For example, the Company’s goodwill impairment review is particularly sensitive to assumptions that could be adversely impacted by the COVID-19 pandemic.
+Added: While the Company believes it used appropriate estimates and assumptions to prepare the consolidated financial statements, actual amounts could differ materially and future events or circumstances could have a potential negative effect on the assumptions used.
+Added: If the Company, its suppliers, or its customers experience further shutdowns or other significant business disruptions associated with the COVID-19 pandemic, its ability to conduct business in the manner and on the timelines presently planned could be materially and negatively impacted, which could have a material adverse effect on the Company’s business, financial position, results of operations and cash flows.
+Added: The Company sells a broad range of products that provide thermal solutions to customers operating in diverse markets, including commercial, industrial, and building HVAC&R markets and vehicular markets, including commercial vehicle, off-highway and automotive and light vehicle.
+Added: The COVID-19 pandemic negatively impacted many of these markets;
+Added: while we expect the markets will continue to recover, risk and uncertainties remain present.
The Company invests excess cash primarily in investment quality, short-term liquid debt instruments.
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The Company sells a broad range of products that provide thermal solutions to customers operating throughout the world.
−Removed: In fiscal 2020, one customer within the VTS segment accounted for more than ten percent of the Company’s total sales.
−Removed: In fiscal 2019 and 2018, two customers within the VTS segment each accounted for ten percent or more of the Company’s total sales.
+Added: In fiscal 2021 and 2020, one vehicular customer accounted for more than ten percent of the Company’s total sales.
+Added: In fiscal 2019, two vehicular customers each accounted for ten percent or more of the Company’s total sales.
Sales to the Company’s top ten customers were 43 percent, 45 percent, and 50 percent of total sales in fiscal 2021, 2020, and 2019, respectively.
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These customers operate primarily in the automotive, commercial vehicle, off-highway, data center cooling and commercial air conditioning markets.
−Removed: Collateral or advanced payments are generally not required.
+Added: The Company generally does not require collateral or advanced payments from its customers.
The Company has not experienced significant credit losses to customers in the markets served nor has experienced a significant increase in credit losses in connection with the COVID-19 pandemic.
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Derivatives – ensuring that counterparties to derivative instruments maintain credit ratings that are acceptable to the Company.
+Added: MODINE MANUFACTURING COMPANY
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: (In millions, except per share amounts)
Environmental
−Removed: The Company has recorded environmental investigation and remediation accruals related to soil and groundwater contamination at manufacturing facilities in the United States, one of which the Company currently owns and operates, and at its former manufacturing facility in the Netherlands, along with accruals for lesser environmental matters at certain other facilities in the United States and Brazil.
+Added: The Company has recorded environmental investigation and remediation accruals related to soil and groundwater contamination at manufacturing facilities in the U.S., one of which the Company currently owns and operates, and at its former manufacturing facility in the Netherlands, along with accruals for lesser environmental matters at certain other facilities in the U.S.
These accruals generally relate to facilities where past operations followed practices and procedures that were considered acceptable under then-existing regulations, or where the Company is a successor to the obligations of prior owners, and current laws and regulations require investigative and/or remedial work to ensure sufficient environmental compliance.
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In addition, management expects that the liabilities which may ultimately result from such lawsuits or proceedings, if any, would not have a material adverse effect on the Company’s financial position.
−Removed: MODINE MANUFACTURING COMPANY
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: (In millions, except per share amounts)
Accumulated Other Comprehensive Loss
2 unchanged sentences
Balance, March 31, 2020
−Removed: Other comprehensive loss before reclassifications
+Added: Other comprehensive income before reclassifications
Reclassifications:
1 unchanged sentence
Realized losses - net (b)
−Removed: Foreign currency translation gains (c)
−Removed: Total other comprehensive loss
+Added: Total other comprehensive income
Balance, March 31, 2021
1 unchanged sentence
Balance, March 31, 2019
−Removed: Other comprehensive income (loss) before reclassifications
+Added: Other comprehensive loss before reclassifications
Reclassifications:
1 unchanged sentence
Realized losses - net (b)
−Removed: Foreign currency translation losses (d)
−Removed: Total other comprehensive income (loss)
+Added: Foreign currency translation gains (c)
+Added: Total other comprehensive loss
Balance, March 31, 2020
4 unchanged sentences
As a result of the sale of its investment in NEX during fiscal 2020, the Company wrote off $ 0.6 million of accumulated foreign currency translation gains.
−Removed: As a result of the sale of a business in South Africa during fiscal 2019, the Company wrote off $ 0.8 million of accumulated foreign currency translation losses.
+Added: MODINE MANUFACTURING COMPANY
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: (In millions, except per share amounts)
Segment and Geographic Information
The Company’s product lines consist of heat-transfer components and systems.
−Removed: The Company serves vehicular and commercial, industrial, and building HVAC&R markets.
−Removed: The Company’s VTS segment represents its vehicular business and primarily serves the automotive, commercial vehicle, and off-highway markets.
−Removed: In addition, the VTS segment serves the automotive and commercial vehicle aftermarket in Brazil.
−Removed: The Company’s CIS segment provides coils, coolers, and coating solutions to customers throughout the world.
+Added: The Company serves commercial, industrial, and building HVAC&R markets and vehicular markets.
The Company’s BHVAC segment provides heating, ventilating and air conditioning products to customers throughout the world.
+Added: The Company’s CIS segment provides coils, coolers, and coating solutions to global customers.
+Added: The Company’s HDE and Automotive segments represent its vehicular businesses and primarily serve the commercial vehicle, off-highway and automotive and light vehicle markets.
+Added: In addition, the HDE segment serves the commercial vehicle and automotive aftermarkets in Brazil.
Each operating segment is managed by a vice president and has separate financial results reviewed by the Company’s chief operating decision maker.
These results are used by management in evaluating the performance of each segment and in making decisions on the allocation of resources among the Company’s various businesses.
−Removed: Effective April 1, 2020, the Company began managing its automotive business separate from the other businesses within the VTS segment.
−Removed: The Company is managing the automotive business as a separate segment as the Company targets the sale or eventual exit of the businesses in this segment.
−Removed: Beginning for fiscal 2021, the Company will report the financial results for the automotive business as the Automotive segment.
−Removed: The remaining portion of the previous VTS segment will be named the Heavy-Duty Equipment segment and will include the heavy-duty commercial vehicle and off-highway businesses.
−Removed: MODINE MANUFACTURING COMPANY
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: (In millions, except per share amounts)
+Added: Effective April 1, 2020, the Company began managing its global automotive business separate from the other businesses within the previously reported Vehicular Thermal Solutions (“VTS”) segment.
+Added: The Company is managing the automotive business as the Automotive segment as it progresses towards the sale or eventual exit of its underlying automotive business operations.
+Added: The other businesses of the VTS segment, including the commercial vehicle and off-highway businesses, are being managed as the HDE segment.
+Added: The segment realignment had no impact on the CIS and BHVAC segments or on the Company’s consolidated financial position, results of operations, and cash flows.
+Added: Segment financial information for fiscal 2020 and 2019 has been recast to conform to the fiscal 2021 presentation.
The following is a summary of net sales, gross profit, and operating income by segment.
+Added: See Note 3 for additional information regarding net sales by primary end market.
Year ended March 31, 2021
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Corporate and eliminations
+Added: MODINE MANUFACTURING COMPANY
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: (In millions, except per share amounts)
Year ended March 31, 2019
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Corporate and eliminations (a)
−Removed: Operating income
+Added: Operating (loss) income
The operating loss for Corporate includes certain research and development costs, legal, finance and other general corporate and central services expenses, and other costs that are either not directly attributable to an operating segment or not considered when management evaluates segment performance.
−Removed: During fiscal 2020 and 2019, the Company recorded $ 39.2 million and $ 7.1 million, respectively, of costs directly associated with its review of strategic alternatives for the VTS segment’s automotive business, including costs to separate and prepare the business for potential sale.
+Added: During fiscal 2021, 2020 and 2019, the Company recorded $ 6.6 million, $ 39.2 million, and $ 7.1 million respectively, of costs directly associated with its review of strategic alternatives for the liquid-and air-cooled automotive businesses, including costs to separate and prepare the underlying businesses for potential sale.
MODINE MANUFACTURING COMPANY
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The following is a summary of total assets by segment:
−Removed: Corporate and eliminations
+Added: Automotive (a)
+Added: Corporate and eliminations (b)
+Added: During fiscal 2021, the Company recorded impairment charges totaling $ 166.8 million within the Automotive segment, primarily related to the property, plant and equipment of the liquid- and air-cooled automotive businesses, which are classified as held for sale as of March 31, 2021.
+Added: See Note 2 for additional information.
+Added: At March 31, 2021, Corporate assets totaled $ 17.5 million and were more than offset by eliminations for intercompany balances, including accounts receivable.
+Added: During fiscal 2021, the Company recorded income tax charges totaling $ 103.3 million, which established a full valuation allowance on deferred tax assets in the U.S that are recorded at Corporate.
+Added: See Note 8 for additional information.
The following is a summary of capital expenditures and depreciation and amortization expense by segment:
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Depreciation and amortization expense:
−Removed: Total depreciation and amortization expense
+Added: Automotive (a)
+Added: Total depreciation and amortization
+Added: Upon classifying the liquid- and air-cooled automotive businesses as held for sale, the Company ceased depreciating the long-lived assets within the disposal groups.
+Added: See Note 2 for additional information.
+Added: MODINE MANUFACTURING COMPANY
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: (In millions, except per share amounts)
The following is a summary of net sales by geographical area, based upon the location of the selling unit:
1 unchanged sentence
United States
+Added: United Kingdom
The following is a summary of property, plant and equipment by geographical area:
United States
−Removed: Total property, plant and equipment
−Removed: The following is a summary of net sales by end market:
−Removed: Years ended March 31,
−Removed: Commercial HVAC&R
−Removed: Commercial vehicle
−Removed: Data center cooling
−Removed: Industrial cooling
−Removed: MODINE MANUFACTURING COMPANY
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: (In millions, except per share amounts)
−Removed: Quarterly Financial Data (Unaudited)
−Removed: The following is a summary of quarterly financial data:
−Removed: Fiscal 2020 quarters ended
−Removed: Net earnings (loss) (a)
−Removed: Net earnings (loss) attributable to Modine (a)
−Removed: Net earnings (loss) per share attributable to Modine shareholders:
−Removed: Fiscal 2019 quarters ended
−Removed: Net earnings (b)
−Removed: Net earnings attributable to Modine (b)
−Removed: Net earnings per share attributable to Modine shareholders:
−Removed: During fiscal 2020, restructuring expenses totaled $ 1.8 million, $ 2.3 million, $ 2.6 million, and $ 5.5 million for the quarters ended June 30, 2019, September 30, 2019, December 31, 2019, and March 31, 2020, respectively (see Note 5).
−Removed: During the third quarter of fiscal 2020, the Company sold a previously-closed manufacturing facility in Germany and, as a result, recorded a gain of $ 0.8 million (see Note 1).
−Removed: During the fourth quarter of fiscal 2020, the Company recorded asset impairment charges totaling $ 8.6 million related to long-lived assets and goodwill (see Note 5 and Note 14).
−Removed: During fiscal 2020, costs associated with the Company’s review of strategic alternatives for the VTS segment’s automotive business totaled $ 8.3 million, $ 11.9 million, $ 14.0 million, and $ 5.0 million for the quarters ended June 30, 2019, September 30, 2019, December 31, 2019, and March 31, 2020, respectively.
−Removed: During fiscal 2020, the Company adjusted its valuation allowances on deferred tax assets in the U.S and in Brazil.
−Removed: As a result, the Company recorded net income tax charges totaling $ 3.0 million and $ 4.1 million in the third and fourth quarters, respectively.
−Removed: Also during fiscal 2020, the Company recorded a net income tax charge totaling $ 2.9 million, $ 2.7 million of which was recorded in the third quarter, as a result of legal entity restructuring completed in preparation of a potential sale of the automotive business (see Note 7).
−Removed: During fiscal 2019, restructuring expenses totaled $ 0.2 million, $ 0.5 million, and $ 8.9 million for the quarters ended June 30, 2018, December 31, 2018, and March 31, 2019, respectively (see Note 5).
−Removed: During the second quarter of fiscal 2019, the Company sold its South African business within the BHVAC segment and, as a result, recorded a loss of $ 1.7 million (see Note 1).
−Removed: During the third quarter of fiscal 2019, the Company recorded a $ 0.4 million impairment charge related to a manufacturing facility in Austria (see Note 5).
−Removed: During the third and fourth quarter of fiscal 2019, the Company incurred $ 1.2 million and $ 5.9 million of costs associated with its review of strategic alternatives for the VTS segment’s automotive business.
−Removed: The Company’s income tax benefit for fiscal 2019 includes net benefits of $ 24.4 million and net charges of $ 2.2 million in the second and third quarters, respectively, related to the Tax Act and the recognition of foreign tax credits (see Note 7).
−Removed: During fiscal 2019, the Company adjusted its valuation allowances on deferred tax assets related to two separate subsidiaries in China and, as a result, recorded a $ 2.0 million income tax benefit and a $ 1.0 million income tax charge in the first and second quarters, respectively (see Note 7).
+Added: Total property, plant and equipment (a)
+Added: In connection with the pending sales of the liquid- and air-cooled automotive businesses within the Automotive segment, the Company wrote-down the carrying value of the disposal groups’ property, plant and equipment to zero as of March 31, 2021.
+Added: The assets impaired were located in Hungary, Germany, Austria, China, the U.S., Italy, and the Netherlands.
+Added: See Note 2 for additional information on the held for sale businesses and impairment charges recorded during fiscal 2021.
Report of Independent Registered Public Accounting Firm
6 unchanged sentences
Changes in Accounting Principles
−Removed: As discussed in Note 1 to the consolidated financial statements, the Company changed the manner in which it accounts for leases in fiscal 2020 and the manner in which it accounts for intra-entity transfers of assets other than inventory in fiscal 2019.
+Added: As discussed in Note 1 to the consolidated financial statements, the Company changed the manner in which it accounts for leases in fiscal 2020.
Basis for Opinions
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Determining the fair value of a reporting unit involves judgment and the use of significant estimates and assumptions by management, which include assumptions regarding the revenue growth rates and operating profit margins used to calculate estimated future cash flows, the risk-adjusted discount rates, business trends and market conditions.
−Removed: The principal considerations for our determination that performing procedures relating to the goodwill impairment assessment of the CIS reporting units is a critical audit matter are there was significant judgment by management when determining the fair value of the reporting units.
−Removed: This in turn led to a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating evidence relating to management’s estimated future cash flows and significant assumptions, including revenue growth rates, operating profit margins, and the risk-adjusted discount rates.
−Removed: In addition, the audit effort involved the use of professionals with specialized skill and knowledge to assist in performing these procedures and evaluating the audit evidence obtained.
+Added: The principal considerations for our determination that performing procedures relating to the goodwill impairment assessment of the CIS reporting units is a critical audit matter are (i) the significant judgment by management when determining the fair value of the reporting units;
+Added: (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating evidence relating to management’s estimated future cash flows and significant assumptions related to revenue growth rates, operating profit margins, and the risk-adjusted discount rates;
+Added: and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.
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testing the completeness, accuracy, and relevance of underlying data used in the model;
−Removed: and evaluating the significant assumptions used by management including revenue growth rates, operating profit margins, and risk-adjusted discount rates.
+Added: and evaluating the significant assumptions used by management related to revenue growth rates, operating profit margins, and risk-adjusted discount rates.
Evaluating management’s assumptions related to revenue growth rates and operating profit margins involved evaluating whether the assumptions used were reasonable considering (i) the current and past performance of the reporting units, (ii) the consistency with external market and industry data, and (iii) whether these assumptions were consistent with evidence obtained in other areas of the audit.
−Removed: Professionals with specialized skill and knowledge were used to assist in the evaluation of the Company’s discounted cash flow model and certain significant assumptions, including the risk-adjusted discount rates.
+Added: Professionals with specialized skill and knowledge were used to assist in the evaluation of the Company’s discounted cash flow model and the risk-adjusted discount rates significant assumption.
/s/ PricewaterhouseCoopers LLP
−Removed: Milwaukee, Wisconsin
+Added: Milwaukee, WI
We have served as the Company’s auditor since 1935.
2 unchanged sentences
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.