Please answer 1 2 and 3

CHAPTER 8 1. What types of property, plant, and equipment (PP&E) does the company own? Has the investment in PP&E increased or decreased during the period? 2. How much depreciation did the company record this year? How is depreciation calculated? What useful life does the company set for its assets? Does the choice seem reasonable? 3. Does the company have any intangible assets? What are they? Are they being amortized? How? expertise in thermal management, which, when combined with our global manutacturing presence, standardized processes, and state-of-the-art technical resources, enables us to rapidly bring highly-valued, customized solutions to our customers. History Modine was incorporated under the laws of the State of Wisconsin on June 23, 1916 by its founder, Arthur B. Modine. Mr. Modine's "Turbotube" radiators became standard equipment on the famous Ford Motor Company Model T. When he died at the age of 95, AB Modine had personally been granted to of Modine today. more than 120 U.S. patents for his heat transfer innovations. The standard of innovation exemplified by A.B. Modine remains the Terms and Year References When we use the terms "Modine," "we," "us," the "Company," or "our in this report, unless the context otherwise requires, we are referring to March 31 of that year, unless indicated otherwise. Modine Manufacturing Company. Our fiscal year ends on March 31 and, accordingly, all references to a particular year mean the fiscal year ended Business Strategy and Results We thrive on innovation and use our thermal management expertise to design products that better the world. From improving indoor air quality to increasing energy efficiency of data centers to lowering harmful vehicular emissions, our businesses design quality systems and products to enable our customers to operate in the ever-changing global marketplace. Fiscal 2021 presented challenges, largely driven by the COVID-19 pandemic. Since the onset of the pandemic, our top priorities have been, and continue to be the health and overall well-being of our employees and delivering quality products and services to our customers. COVID-19 has f fiscal 2021. in pesty insegnanted the limplemented In response, we swiftis weeks, and temporary salary reductions at all levels of our organization. We withdrew most of these cost saving actions in the third quarter of fiscal cost saving actions including, but not limited to, production staffihe adjustments, furloutchortened work 2021 as production returned to more normal levels as markets recovered. Table of contents Despite the challenges, we ended the year in a position of strength. By the end of fiscal 2021, we had reached agreements to sell both the liquid-and air-cooled automotive businesses in separate transactions. These sale agreements represent significant Automotives towards our strategic exit of our a parter they the liquid-cooled automotive business is subject to the receipt of governmental and third-party approvals and satisfaction of other closing conditions. We are currently working with the buyer through the regulatory approval process. At this time, we are not able to estimate the ultimate impact of the regulatory approval process or the closing date for this transaction. We also completed the transition to our new President and Chief Executive Officer ("CEO), Neil D. Brinker. Under Mr. Brinker's leadership, our teams are energized in implementing an 80/20 strategy to examine our business using data analytics in order to focus our resources on products and markets with the highest growth and best returns. During fiscal net sales were $1.81 due to Mower sales in our 1 and present days ans percent decrease pment "HDE"), and Automotive segments, largely driven by sale, our commercial an from $1.98 impacts of the COVID-19 pandemic. Our Building HVAC Systems (BHVAC) segment sales increased 9 percent compared with the prior year. Our operating loss of $98 million in fiscal 2021 was primarily due to $167 million of impairment charges recorded in the Automotive segment, partially offset by lower selling, general and administrative ("SG&A) expenses, which benefitted from lower project costs associated with our strategic exit of the automotive businesses and cost-reduction initiatives in response to COVID-19. Our top five customers are in the commercial vehicle, off-highway and automotive and light vehicle markets and our ten largest customers accounted for 43 percent of our fiscal 2021 sales. In fiscal 2021, 63 percent of our total sales were generated from customers outside of the U.S., with 56 percent of total sales generated by foreign operations and 7 percent generated by exports from the U.S. In fiscal 2020,59 percent of our total sales were generated from customer's outside of the U.S., with 52 percent of total sales generated by foreign operations and 7 percent generated by exports from the U.S. In fiscal 2019, 58 percent of our total sales were generated from customers outside of the U.S., with 52 percent of total sales generated by foreign operations and 6 percent generated by exports from the U.S. Markets We sell products to multiple end markets. The following is a summary of our primary end markets, categorized as a percentage of our net sales: Fiscal 2021 Fiscal 2020 Commercial HVAC&R Automotive Commercial vehicle 159 Off-highway 15% Data center cooling 6% Industrial cooling Other Competitive Position We compete with many manufacturers of heat transfer and HVAC&R products, some of which are divisions of larger companies. The markets for our products continue to be very dynamic. Our traditional OEM customers are faced with dramatically increased international competition and have expanded their global manufacturing footprints to compete in local markets. In addition, consolidation within the supply base and vertical inition from suppliers in other parts of the world that enjoy economic advantages such as s, and lower tax rates. As a result, we continue to optimize our geographic footprint to provide more flexibility to serve our customers around the globe. Many of labor costs, lower health carece our customers also continue to ask us, as well as their other primary suppliers, to provide research and development ("R&D"), design, and validation support for new potential projects. This combined work effort often results in stronger customer relationships and more partnership opportunities 26% 16% 13% 84 3% Table of Contents Business Segments Each of our operating segments is managed by a vice president and has separate financial results reviewed by our chief operating decision maker ("CODM.") These results are used by management in evaluating the performance of each business segment and in making decisions on the allocation of resources amongst our various businesses. Financial information for our operating segments is included in Note 22 of the Notes to Consolidated Financial Statements. Effective April 1, 2020, we began managing our automotive business separate from the previously-reported Vehicular Thermal Solutions ("VTS") segment. The other businesses of the VTS segment, including the commercial vehicle and off-highway businesses, are being managed as the HDE segment Our Industrial Businesses Building HVAC Systems Segment Market Overview in North America, the heating market experienced modest growth in fiscal 2021. The ventilation markets, driven by new construction and renovations, were negatively impacted by COVID-19, especially within the hospitality sectors. In fiscal 2022, we expect continued modest growth in also strong North American on and available federal and local funding for ventilation in a crowth in the origin of meinen ventilation markets, largely driven by an increased focus a the Our businesses in the United Kingdom ("U.K.") serve ventilation, air conditioning and data center markets in the U.K., mainland Europe, the Middle East, Far East and Africa. In fiscal 2021, the data center market experienced strong growth, including heightened demand from increasing reliance on virtual capabilities resulting from stay-at-home edicts. We expect increasing reliance on digital technologies, specifically colocation and cloud usage, to drive continued strong growth in the data center markets in the UK and Europe in fiscal 2022. The ventilation and air conditioning healthcare mund hit our IT In anot E, LA The following table summarizes the number of manufacturing facilities within each of our operating segments as of March 31, 2021. Americas Europe Asia Total BHVAC CIS HDE Automotive Total manufacturing facilities Of the facilities summarized in the table above, 22 include leased manufacturing space. We consider our plants and equipment to be well maintained and suitable for their purposes. We review our manufacturing capacity periodically and make the determination as to our need to expand or, conversely, rationalize our facilities as necessary to meet changing market conditions and our needs. ITEM 3. LEGAL PROCEEDINGS. The information required hereunder is incorporated by reference from Note 20 of the Notes to Consolidated Financial Statements. ITEM 4. MINE SAFETY DISCLOSURES. Not applicable. 19 Table of Contents INFORMATION ABOUT OUR EXECUTIVE OFFICERS. The following sets forth the name, age (as of March 31, 2021), recent business experience and certain other information relative to each executive Officer of the Company Name Age Position Brian. Agen 52 Vice President, Human Resources (October 2012 - Present). Neil D. Brinker 45 President and Chief Executive Officer (December 2020 - Present). Prior to joining Modine, Mr. Brinker served as President and Chief Operating Officer of Advanced Energy Industries, Inc. after serving as its Executive Vice President and Chief Operating Officer. Prior to joining Advanced Energy Industries, Inc, Mr. Brinker served as a Group President at IDEX Corporation. Joel T. Casterton 49 Vice President, Heavy Duty Equipment (April 2020 - Present); previously Vice President, Vehicular Thermal Solutions and Director Global Program Management and Quality for the Company Michael B. Lucareli 52 Executive Vice President, Chief Financial Officer (May 2021 - Present): previously Vice President, Finance and Chief Financial Officer for the Company Matthew J. McBurney 51 Vice President Building HVAC (February 2021 - Present); previously Vice President, Building HVAC and Corporate Strategy, Vice President, Strategic Planning and Developent; and Vice President, Scott A. Miller Commercial and Industrial Solutions Integration for the Company 56 Vice President, Commercial and Industrial Solutions (January 2021 - Present); previously Vice President, Global Coils and Coolers: Vice President, Building HVAC, and Managing Director - Global Operations for the Company. Sylvia A. Stein 54 Vice General Counsel, Secretary and Chief Compliance Officer (February 2020 - Present); previously Vice President, General Counsel and Corporate Secretary for the Company. Prior to joining Modine, Ms. Stein served as the Associate General Counsel, Marketing & Regulatory at the Kraft Heinz Foods Company Executive Officer positions are designated in our Bylaws and the persons holding these positions are elected annually by the Board, generally at its first meeting after the annual meeting of shareholders in July of each year. In addition, the Human Capital and Compensation Committee of the Board may recommend and the Board of Directors may approve promotions and other actions with regard to executive officers at any time during the fiscal year There are no family relationships among the executive officers and directors. All of the executive officers of Modine have been employed by us in various capacities during the last five years with the exception of Mr. Brinker and Ms. Stein, who joined in December 2020 and January 2018, respectively, whose business experience during the last five years is described above. There are no arrangements or understandings between any of the executive officers and any other person pursuant to which he or she was elected an officer of Modine. Table of Contents PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. Our common stock is listed on the New York Stock Exchange. Our trading symbol is MOD. As of March 31, 2021, shareholders of record numbered 2,220. We did not pay dividends during fiscal 2021 or 2020. Under our credit agreements, we are permitted to pay dividends on our common stock, subject to certain restrictions based upon the calculation of debt covenants, as further described under "Liquidity and Capital Resources" under Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations. We currently do not intend to pay dividends in fiscal 2022. The following describes the Company's purchases of common stock during the fourth quarter of fiscal 2021: Maximum Number or Total Number of Approximate Dollar Shares Purchased Value) of Shares Average as part of Publicly that May Yet Be Total Number of Price Paid Announced Plans Purchased Under the Period Shares Purchased Per Share or Programs Plans or Programs (a) Ianuary 1-anuary 31 2021 $50,000,000 February 1 - February 28, 2021 8,816 (5) $14.52 350,000,000 March 1 - March 31, 2021 7,088 (b) $15.25 $50,000,000 Tota! 15.904 (b) $14.85 (a) Effective November 5, 2020, the Board of Directors approved a two-year, $50.0 million share repurchase program, which allows the Company to repurchase Modine common stock through solicited and unsolicited transactions in the open market or in privately-negotiated or other transactions, at such times and prices and upon such other terms as the authorized officers of the Company deem appropriate. (b) Consists of shares delivered back to the Company by employees and/or directors to satisfy tax withholding obligations that arise upon the vesting of stock awards. The Company, pursuant to its equity compensation plans, gives participants the opportunity t8 turn back to the Company the number of shares from the award sufficient to satisfy tax withholding obligtions that arise upon the termination of restrictions. These shares are held as treasury shares. Total Number of Shares Purchased as part of Publicly Announced Plans or Programs Average Price Paid Per Share Number for Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs (a) $50,000,000 Total Number of Shares Purchased Period January 1 - Ianuary 31, 2021 February 1- February 28 2021 8.816 DI $14.52 $50,000 TOTUU March 1 - March 31, 2021 7,088 D) $15.25 350,000,000 Total 15.904 6) $14.85 (a) Effective November 5, 2020, the Board of Directors approved a two-year, $50.0 million share repurchase program, which allows the Company to repurchase Modine common stock through solicited and unsolicited transactions in the open market or in privately-negotiated or other transactions, at such times and prices and upon such other terms as the authorized officers of the Company deem appropriate. (b) Consists of shares delivered back to the Company by employees and/or directors to satisfy tax withholding obligations that arise upon the vesting of stock awards. The Company, pursuant to its equity compensation plans, gives participants the opportunity to turn back to the Company the number of shares from the award sufficient to satisfy tax withholding obligations that arise upon the termination of restrictions. These shares are held as treasury shares. 21 Table of contente PERFORMANCE GRAPH The following graph compares the cumulative five-year total return on our common stock with similar returns on the Russell 2000 Index and the Standard & Poor's (S&P) Midcap 400 Industrials Index. The graph assumes a $100 investment and reinvestment of dividends. Comparison of Cumulative Five Year Total Return $250 $200 $150 $100 $50 so 03/31/16 03/31/17 03/31/18 03/31/19 03/31/20 03/31/21 Modne Manufacturing Company Russell 2000 Index S&P Mid Cap 400 Industrials Index Indexed Returns Initial Investment Years ended March 31. Company/Index March 31, 2016 2017 2018 2019 2020 2021 Modine Manufacturing Company 100 S 110.81 $ T92.10 $ 125.98 S 29.52 $ 134.15 Russell 2000 Index 100 126.22 141.10 143.99 109.45 213.26 S&P Midcap 400 Industrials Index 100 124.60 145.10 146.90 119.46 224.07 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. Overview Founded in 1916, Modine Manufacturing Company is a global leader in thermal management systems and components, bringing heating and cooling technology and solutions to diversified global markets. We operate on five continents, in 16 countries, and employ approximately 10,906 persons worldwide. Our primary product groups include i) heating, ventilation and air conditioning: ii) coils, coolers, and coatings, and iii) powertrain cooling and engine cooling. We provide our thermal management technology and solutions to a wide array of commercial, industrial, and building heating, ventilating, Fiscal 2021 net sales decreased $167 million, or 8 percent, from the prior year, primarily due to lower sales in our CIS, HDE, and Automotive segments, partially offset by higher sales in our BHVAC segment. Foreign currency exchange rate changes favorably impacted sales in fiscal 2021 by 528 million Cost of sales decreased $153 million, or 9 percent, from last year, primarily due to lower sales volume. Gross profit decreased $14 million and gross margin improved 60 basis points to 16.2 percent. SG&A expenses decreased $39 million, primarily due to lower costs associated with our review of strategic alternatives for our Automotive segment businesses and preparing the liquid and air-cooled automotive businesses for sale. In addition, SG&A expenses decreased due to cost-reduction initiatives implemented early in the fiscal year in response to the negative impact of COVID-19. The operating loss of $98 million during fiscal 2021 represents a $136 million decline from the prior-year operating income of $38* million and was primarily due to $167 million of impairment charges recorded primarily for assets of the liquid- and air-cooled automotive businesses, partially offset by lower SG&A expenses Fiscal 2028 Highlights net sales decreased $237 million, or 11 percent, from the prior year, primarily due to lower sales in our HDE, CIS, and Automotive segments, partially offset by higher sales in our BHVAC segment Foreign currency exchange rate changes negatively impacted sales in fiscal 2020 b $46 million, Cost of sales decreased $179 million, or 10 percent, from the prior year, primarily due to lower sales volume, Gross profit decreased $5 million and gross margin declined 90 basis points to 15.6 percent. SG&A expenses increased 56 million, primarily due to higher costs associated with the review of strategic alternatives for our Automotive segment businesses, partially offset by lower-compensation related expenses. Operating income during fiscal 2020 decreased $72 million to $38 million, primarily due to lower gross profit and higher SG&A expenses. The following table presents our consolidated financial results on a comparative basis for fiscal years 2021, 2020 and 2019. Years ended March 31, 2021 2020 2019 (in millions) $'s % of sales Ss % of sales S's % of sales Net sales 1,808 100.0% 5 1,976 100.0% 3 2,213 100.0% Cost of sales 1,515 83.8% 1,668 84.4% 1,847 83.5% Gross profit 293 16.2% 308 15.6% 366 16.5% Selling, general and administrative expenses 211 11.7% 250 12.6% 244 11.0% Restructuring expenses 13 0.7% 12 0.6% 10 0.4% Impairment charges 167 9.2% 0.4% (Gin) loss on sale of assets (1) 0.1% Operating (loss) income (98 -5.4% 1.9% 110 5.0% Irfterest expense (19) - 1.1% -1.1% (25) -1.1% Other expense - net (2) -0.1% -0.2% -0.2% (Loss) earnings before income taxes (119) -6.6% 0.5% 3.7% (Provision) benefit for income taxes (90) -5.0% (12 -0.6% 0.2% Net (loss) earnings (209) -11.6% 5 -0.1% 86 3.9% Year Ended March 31, 2021 Compared with Year Ended March 31, 2020 Fiscal 2021 net sales of $1,808 million were $167 million, or 8 percent, lower than the prior year, primarily due to lower sales volume in the CIS, HDI and Automotive segments, partially offset by a $28 million favorable impact of foreign currency exchange rate changes and higher sales volume in the BHVAC segment Sales in the Cs, HDE and Automotive segments decreased $92 million, $64 million and $47 million, respectively, and were increased $20 million in our BHVAC segment. significantly impacted by market-driven volume declines and temporary plant closures early in the fiscal year due to the COVID-19 pandemic Sales (2 Tintofa 1 millindad til du talin 1091an flar Segment Results of Operations Effective April 1, 2020, we began managing our global automotive business separate from the other businesses within the previously-reported VTS segment. We have been managing the automotive business as the Automotive segment as we work towards the sale or eventual exit of its underlying automotive business operations. We are managing the other businesses of the VTS segment, including the commercial vehicle and off-highway businesses, as the HDE segment. We began reporting financial results for our new segment structure beginning for fiscal 2021. Segment financial information for fiscal 2020 and 2019 has been recast to conform to the fiscal 2021 presentation. The segment ralignment had no impact on the CIS and BHVAC segments. BHVAC Years ended March 31, 2021 2020 2019 (in millions) % of sales Ss % of sales % of sales Net sales 241 100.0% 5 221 100.0% 212 100.0% Cost of sales 158 65.5% 150 67.7% 149 70.1% Gross profit 83 34.5% 72 32.3% 29.9% Selling, general and administrative expenses 36 14.9% 35 15.8% 35 16.4% Loss on sale of assets 0.8% Operating income 19.6% 16.5% 12.6% Year Ended March 31, 2021 Compared with Year Ended March 31, 2020 BHVAC net sales increased 20 million or 9 percent, in fiscal 2021 compared with the prior year, primarily due to higher sales in the U.K. and the U.S., which increased $14 million and $5 million, respectively. The higher sales in the U.K. were primarily due to higher sales of data center cooling products. The higher sales in the U.S. were primarily due to higher sales of heating products, partially offset by lower sales of ventilation products. Table of Contents BHVAC cost of sales increased $8 million, or 5 percent, in fiscal 2021, primarily due to higher sales volume. As a percentage of sales, cost of sales decreased 220 basis points to 65.5 percent and was positively impacted by favorable sals mix and customer pricing. As a result of the higher sales and lower cost of sales as a percentage of sales, gross profit increased $11 million and gross margin improved 220 basis points to 34.5 percent. BHVAC SG&A expenses increased 1 million from the prior year. The increase in SG&A expenses was primarily due to higher compensation-related expenses, including commission expenses. Operating income in fiscal 2021 of $47 million increased $11 million, primarily due to higher gross profit. Year Ended March 31, 2020 Compared with Year Ended March 31, 2019 BHVAC net sales increased $9 million, or 4 percent, in fiscal 2020 compared with the prior year, primarily due to higher sales in the US, which increased $14 million, partially offset by lover sales in the U.K., which decreased $5 million. The higher sales in the U.S. were primarily driven by the increased sales of ventilation and heating products. The lower sales in the U.K. were primarily due to lower sales of air conditioning and ventilation products and a $3 million unfavorable impact of foreign currency exchange rate changes, partially offset by higher data center sales BHVAC cost of sales increased $1 million, or less than 1 percent, in fiscal 2020. As a percentage of sales, cost of sales decreased 240 basis points to 67.7 percent, primarily due to favorable sales mix and favorable customer pricing. As a result of the higher sales and lower cost of sales as a percentage of sales, gross profit increased $9 million and gross margin improved 240 basis points to 32.3 percent. BHVAC SG&A expenses remained consistent with the prior year yet decreased 60 basis points as a percentage of sales. During fiscal 2019, we sold our business in South Africa and, as a result, recorded a loss of $2 million Annual net sales attributable to this disposed business were less than $2 million. Operating income in fiscal 2020 of $36 million increased $9 million, primarily due to higher gross profit. CIS Years ended March 31, 2021 2020 2019 (in millions) of sales $s % of sales $'s % of sales Net sales 532 100.0% 624 100.0% 708 100.0% Cost of sales 465 87.5% 85.1% 593 83.8% Gross profit 67 12.5% 93 14.9% 115 16.2% Selling, general and administrative expenses 10.0% 61 Restructuring expenses 8.6% 1.0% 0.3% Impairment charges 0.1% 0.1% Operating income % 5.3% 7.5% Year Ended March 31, 2021 Compared with Year Ended March 31, 2020 CIS net sales decreased $92 million, or 15 percent, in fiscal 2021 compared with the prior year, primarily due to lower sales volume associated with the impacts of the COVID-19 pandemic and lower sales to a significant data center customer, partially offset by a $13 million favorable impact of foreign currency exchange rate changes. Sal to data center cooling and commerc 1 HVAC&R customers decreased $60 million and $43 million, respectively 531 9.2% 30 Table of Contents CIS cost of sales decreased $66 million, or 12 percent, primarily due to lower sales volume, partially offset by an $11 million unfavorable impact of Terle al contents 2021 2019 % of sales 682 594 88 744 85.3% 49 56 62 7.1% 0.4% 0.4% 7.1% 0.1% 54% 65 HDE Years ended March 31. 2020 (in millions) $'s $'s of sales $'s % of sales Net sales 100.0% 746 100.0% 872 100.0% Cost of sales 87.0% 649 87.0% Gross profit 15.0% 97 13.0% 128 14.7% Selling, general and administrative expenses 7.4% Restructuring expenses Operating income 5.1% 7.5% Year Ended March 31, 2021 Compared with Year Ended March 31, 2020 HDE net sales decreased 564 million, or 9 percent, in fiscal 2021 compared with the prior year, primarily due to lower sales volume resulting from the impacts of the COVID-19 pandemic, which were most severe in the Americas and Europe during the first half of the fiscal year. Sales to off-highway customers increased $20 million and were offset by lower sales to commercial vehicle and automotive and light vehicle customers, which decreased $52 million and $11 million, respectively. HDE cost of sales decreased $55 million, or 8 percent, primarily due to lower sales volume. As a percentage of sales, cost of sales was consistent at 87.0 percent. Beyond the unfavorable impacts of the lower sales volume, higher material costs impacted cost of sales as a percentage of sales by approximately 100 basis points. The unfavorable materials costs primarily resulted from higher commodity pricing and tariffs on imported materials. These negative impacts were largely offset by favorable impacts from improved operating efficiencies and cost savings from procurement and other cost-reduction initiatives. As a result of the lower sales, gross profit decreased $9 million. Gross margin of 13.0 percent was consistent with the prior year. HDE SG&A expenses decreased $7 million compared with the prior year. The decrease in SG&A expenses was primarily due to lower compensation- related expenses, which decreased approximately $6 million, and cost-reduction initiatives, including lower travel expenses. Restructuring expenses during fiscal 2021 totaled S3 million, consistent with the prior year. Fiscal 2021 restructuring expenses primarily consisted of severance expenses resulting from targeted headcount reductions in North America. Operating income in fiscal 2021 decreased $1 million to $37 million, primarily due to lower gross profit, partially offset by lower SG&A expenses. Year Ended March 31, 2020 Compared with Year Ended March 31, 2019 HDE net sales decreased $126 million, or 14 percent, in fiscal 2020 compared with the prior year, primarily due to lower sales volume, a $15 million unfavorable impact of foreign currency exchange rate changes, and to a lesser extent unfavorable customer pricing largely resulting from contractually-scheduled prie-downs. Sales to off-highway and commercial vehicle customers decreased $57 million and 551 million, respectively. These sales declines largely resulted from weakness in global vehicular markets and the planned wind-down of certain commercial vehicle programs. HDE cost of sales decreased $95 million, or 13 percent, primarily due to lower sales volume and a $13 million favorable impact of foreign currency exchange rate changes. As a percentage of sales, cost of sales increased 170 basis points to 87.0 percent. Beyond the unfavorable impact of the lower sales volume, higher labor and inflationary costs and unfavorable customer pricing negatively impacted cost of sales as a percentage of sales by approximately flo basis points and 80 basis points, respectively. These negative impacts were partially offset by improved operating efficiencies and cost savings from procurement initiatives. As a result of the lower sales and higher cost of sales as a percentage of sales, gross profit decreased $31 million and gross margin declined 170 basis points to 13.0 percent. HDE SG&A expenses decreased $6 million compared with the prior year, primarily due to lower compensation-related expenses and environmental charges related to previously-owned manufacturing facilities in the US, which each decreased approximately $3 million. Restructuring expenses during fiscal 2020 increased $2 million, primarily due to higher severance expenses resulting from targeted headcount reductions in the Americas, Operating income in fiscal 2020 decreased $27 million to $38 million, primarily due to lower gross profit, partially offset by lower SG&A expenses. 32 Table of contents AUTOMOTIVE Years ended March 31, 2021 2020 2019 (in millions) S's % of sales % of sales $'s Net sales % of sales 398 100.0% 3 Cost of sales 100.0% 489 100.0% 342 85.9% 396 89.1% 430 87.9% Gross profit 56 48 10.9% 59 12.1% Selling, general and administrative expenses 36 9.1% 45 10.1% 51 Restructuring expenses 10.5% 1.0% 6 1.5% 8 1.7% Impairment charges 167 41.9% 1.8% Gain on sale of assets (1 -0.2% Operating loss (151 37.9% (10 2.3% Year Ended March 31, 2021 Compared with Year Ended March 31, 2020 Automotive net sales decreased 547 million, or 11 percent, in fiscal 2021 compared with the prior year, primarily due to lower sales volume largely resulting from the impacts of the COVID-19 pandemic, partially offset by an $18 million favorable impact of foreign currency exchange rate changes. Sales in Europe and North America decreased $39 million and's19 million, respectively. Sales in Asi increased $12 million? -0.19% Table of Contents ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. MODINE MANUFACTURING COMPANY CONSOLIDATED STATEMENTS OF OPERATIONS For the years ended March 31, 2021, 2020 and 2019 (In millions, except per share amounts) $ S 2021 1,808.4 1515.0 293.4 210.9 13.4 166.8 Net sales Cost of sales Gross profit Selling general and administrative expenses Restructuring expenses Impairment charges (Gain) loss on sale of assets Operating (loss) income Interest expense Other expense - net (Loss) earnings before income taxes (Provision) benefit for income taxes Net (loss) earnings Net earnings attributable to noncontrolling interest Net (loss) earnings attributable to Modine Net (loss) earnings per share attributable to Modine shareholders: Basic Diluted Weighted average shares outstanding Basic Diluted The notes to consolidated financial statements are an integral part of these statements. 2020 1,975.5 1,668.0 307.5 249.6 12.2 8.6 (0.8) 37.9 (22.7) (4.8) 10.4 (124) (2.0) (0.2) (2.2) S 2019 2,212.7 1,847.2 365.5 244.1 9.6 0.4 1.7 1097 (24.8) (4.1) 80.8 5.1 85.9 (1.1) 84.8 (977 (19.4) (2.2 (119.3 (9012 (209.5 (1.2) (210.7) S $ $ (4.11) (4.11) (0.04) S (0.04) 1.67 1.65 S 51.3 51.3 50.8 50.8 50.5 51.3 Table of Contents MODINE MANUFACTURING COMPANY CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME For the years ended March 31, 2021, 2020 and 2019 (In millions) 2021 (209.5) S 2020 (2.0) 2019 85.9 S Net (loss) earnings Other comprehensive income (loss): Foreign currency translation Defined benefit plans, net of income taxes of $104, ($8.3) and ($0.3) million Cash flow hedges, net of income taxes of $0.6, (50.5) and $0.1 million Total other comprehensive income (loss) Comprehensive income (Loss) Comprehensive (income) loss attributable to noncontrolling interest Comprehensive income (loss) attributable to Modine 30.9 30.1 1.6 62.6 (19.2) (24.6) (1.5) (45.3) (37.6) (1.4) 0.4 (38.6) 112 (146.9 (1.7 (1486) (473) 0.2 (471) S 47.3 (0.6) 46.7 The notes to consolidated financial statements are an integral part of these statements. Table of Contours MODINE MANUFACTURING COMPANY CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME For the years ended March 31, 2021, 2020 and 2019 (In millions) 2021 (209.5) 2020 (2.0) 2019 85.9 $ S S Net (loss) earnings Other comprehensive income (loss): Foreign currency translation Defined benefit plans, net of income taxes of $10.4, ($8.3) and ($0.3) million Cash flow hedges, net of income taxes of $0.6, ($0.5) and $0.1 million Total other comprehensive income (loss) Comprehensive income (Loss) Comprehensive (income) loss attributable to noncontrolling interest Comprehensive income (loss) attributable to Modine 30.9 30.1 1.6 62.6 (19.2 (24.6) (1.5) (45.3) (37.6 (1.4) 0.4 (38.6) (146.9) (1.7 (148.6) (47.3) 0.2 (47.1) S 47.3 (0.6) 46.7 $ The notes to consolidated financial statements are an integral part of these statements. Table of Contents MODINE MANUFACTURING COMPANY CONSOLIDATED BALANCE SHEETS March 31, 2021 and 2020 (In millions, except per share amounts) 2021 2020 S 37.8 s 70.9 292.5 207.4 ASSETS Cash and cash equivalents Trade accounts receivable - net Inventories Assets held for sale Other current assets Total current assets Property, plant and equipment-net Intangible assets - net Goodwill Deferred income taxes Other noncurrent assets Total assets 267.9 195.6 107.6 35.9 644.8 269.9 100.6 170.7 24.5 66.2 1,276.7 62.5 633.3 448.0 106.3 166. 104.8 77.6 1,536.1 S 1.4 S 14.8 15.6 227.4 65.0 29.2 LIABILITIES AND SHAREHOLDERS' EQUITY Short-term debt Long-term debt-current portion Accounts payable Accrued compensation and employee benefits Liabilities held for sale Other current liabilities Total current liabilities Long-term debt Deferred income taxes Pensions Other noncurrent liabilities Total liabilities Commitments and contingencies (see Note 20) Shareholders' equity Preferred stock, S0.025 par value, authorized 16.0 million shares, issued - none Common stock, 90.625 par value, authorized 800 million shares, issued 54.3 million and 53.4 million shares Additional paid-in capital Retained earnings Accumulated other comprehensive loss Treasury stock, at cost, 2.7 million and 2.5 million shares Total Modine shareholders' equity Noncontrolling interest Total equity Total liabilities and equity 21.9 233.9 66.5 103.3 42.2 469.2 311.2 5.9 58.6 75.7 920.6 372.0 4520 8.1 13079 79.5 1,042,5 ( 33.9 255.0 259.2 (161.2 (38.2) 348,7 7.4 356.1 1,2767 33.3 245,1 469.9 (2233) (37.1) 487.9 5.7 493,6 1,536.1 The notes to consolidated financial statements are an integral part of these statements, 40 Table of content MODINE MANUFACTURING COMPANY CONSOTITATED STATEMENTS CASH TATS MODINE MANUFACTURING COMPANY CONSOLIDATED STATEMENTS OF CASH FLOWS For the years ended March 31, 2021, 2020 and 2019 (In millions) 2021 2020 2019 $ (209.5 S (2.0) 5 77.1 8.6 (0.8) 6.6 1.0 5.6 (17.1) Cash flows from operating activities: Net (loss) earnings Adjustments to reconcile net (Loss) earnings to net cash provided by operating activities: Depreciation and amortization Impairment charges (Gain) loss on sale of assets Stock-based compensation expense Deferred income taxes Other - net Changes in operating assets and liabilities: Trade accounts receivable Inventories Accounts payable Accrued compensation and employee benefits Other assets Other liabilities Net cash provided by operating activities Cash flows from investing activities: Expenditures for property, plant and equipment Proceeds from dispositions of assets Proceeds from sale of investment in affiliate Proceeds from maturities of short-term investments Purchases of short-term investments Other - net Net cash used for investing activities Cash flows from financing activities: Borrowings of debt Repayments of debt Borrowings on bank overdraft facilities - net Dividend paid to noncontrolling interest Purchase of treasury stock under share repurchase program Financing fees paid Other - net Net cash (used for) provided by financing activities Effect of exchange rate changes on cash Net (decrease) increase in cash, cash equivalents, restricted cash and cash held for sale Cash, cash equivalents, restricted cash and cash held for sale - beginning of year 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. 36.6 (12.09 (377) (15.2) 14.7 (24.6) 57.9 @4,17 9070ge dalla (71.3) 6.2 3.8 4.1 (3.3) Milada bla. eeelt begale LLEGALE 13 (313) (60.5 32.7 (183.6 3.6 672.0 (630.3) 1.2 (1.3) (2.4) (2.8) (3.1) 33.3 (0.8 3.0 (145.1 1.4 (25.2 71.3 46. (1.6) 29.1 42.2 71.3 $ Table of Contents ... loss al TERRIER 29 119 lo MODINE MANUFACTURING COMPANY CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY For the years ended March 31, 2021, 2020 and 2019 (In millions) Additional Treasury Common stock paid-in Retained Accumulated other stock, Non-controlling Shares Amount capital earnings comprehensive loss at cost interest Total Balance, March 31, 2018 52.3 $ 32.7$ 229.9S 394.9 $ (1403) S (27.1) $ 8.4 $ 498.5 Adoption of new accounting guidance (Note 1) (7.6) (7.6) 84.8 1.1 Net earnings 85.9 Other comprehensive (38.1) 38.6) Stock options and awards 0.5 0.3 0.8 1.1 Purchase of treasury stock (4.3) (4.3) Stock-based compensation expense 7.9 7.9 Dividend paid to noncontrolling interest (1.8) (1.8) Balance, March 31, 2019 52.8 33.0 238.6 472.1 (178,4) (31.4) 541.1 Net (loss) earnings (2.2) (2.0) Other comprehensive loss (0.4) (453) Stock options and awards 0.6 0.3 (0.1) 0.2 Purchase of treasury stock (5.78 (5.7) Stock-based compensation expense 6.6 Dividend paid to nonconfrolling interest (113 Balance, March 31, 2020 53.4 33.3 245.1 469.9 (223.3) (3741) 493.6 Net (loss) earnings (210.7) (209.5 Other comprehensive income 62.1 0.5 62.6 Stock options and awards 0.9 0.6 3.6 4.2 Purchase of treasury stock (1.1) (1.1) Stock-based compensation expense 6.3 6.3 Balance, March 31, 2021 33.9 (161.2) $ 356.1 The notes to consolidated financial statements are an integral part of these statements. 44.9 596........ENE.......... 6.6 F !!! 6 54.3 $ 255.0 $ 259.2 $ (58.2) $ 74 $ Table.Contents MODINE MANUFACTURING COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In millions, except per share amounts) MODINE MANUFACTURING COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In millions, except per share amounts) - Supplemental Cash Flow Information Years ended March 31, 2021 2020 20119 Interest paid 17.9 $ 21.4 $ 223 Income taxes paid 19,7 18.8 222 See Note 16 for supplemental cash flow information related to the Company's leases. New Accounting Guidance Adopted in Fiscal 2021 Credit Losses 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. The new guidance modifies the credit loss model to measure and recognize credit losses based upon expected losses rather than incurred losses. The Company adopted this guidance as of April 1,2020. The adoption did not have a material impact on the Company's consolidated balance sheets, statements of operations or statements of cash flows. New Accounting Guidance Adopted in Fiscal 2020 Leases 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. The Company elected the package of practical expedients permitted under the new guidance and, as a result, the Company did not reassess the classification of existing leases or initial direct costs thereof, or whether existing contracts contain leases. In addition, the Company elected accounting policies to not record short-term leases on the balance sheet and to not separate lease and non-lease components. The Company did not elect the hindsight practical expedient. 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. In addition, the Company assessed two existing build-to-suit arrangements, for which it had recorded property, plant and equipment and long-term debt on its consolidated balance sheet as of March 31, 2019. The Company determined these arrangements represent operating leases under the new accounting guidance. As a result, the Company derecognized the previously-recorded balances and recorded $5.2 milliori of operating lease right-of-use assets and corresponding lease liabilities. As a result of adopting the new guidance, there was not a significant impact on the Company's accounting for its previously-recorded capital leases, which are now classified as finance leases under the new guidance. In addition, there was no impact to retained earnings. Also, the adoption did not have a material impact on the Company's consolidated statement of operations or consolidated Statement of cash flows. See Note 16 for additional information regarding the Company's feases. Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income In February 2018, the FASB issued new guidance related to the accounting for certain stranded income tax effects in accumulated other comprehensive income (los) resulting from tax reform legislation that was enacted in the U.S. in December 2017. This guidance provided companies the option to reclassify stranded income tax effects to retained earnings. The Company adopted this guidance as of April 1, 2019 and chose not to reclassify stranded income tax effects; therefore, the adoption of this guidance did not impact the Company's consolidated financial statements. New Accounting Guidance Adopted in Fiscal 2019 Rosenne Reconnition Table of Contents MODINE MANUFACTURING COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In millions, except per share amounts) Disaggregation of Revenue The table 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 Segment BHVAC CIS HDE Automotive Total Primary end market: Commercial HVAC&R 181.6 420.6 602.2 Data center cooling 58.7 47.3 106.0 Industrial cooling 55.4 55.4 Commercial vehicle 250.4 14.4 264.8 Off-highway 260.7 3.4 264.1 Automotive and light vehicle 97.9 357.8 455.7 Other 03 8.7 73.1 22.7 104.8 Net sales 240.6 532.0 682-1 398.3 1,853.0 Geographic location: Americas 144.2 $ 267.7 $ 388.2 51.0 $ 851.1 Europe 96.4 219.8 133.2 282.0 731.4 Asia 44.5 160.7 65.3 270.5 Net sales 240.6 532.0 682.1 398.3 $ 1,853.0 Timing of revenue recognition: Products transferred at a point in time 240.6 $ 486.3 655.2 $ 398.3 $ 1.780.4 Products transferred over time 4517 26.9 72.6 Net sales 240.6 532.0 68241 398.3 1,853.0 Year ended March 31, 2020 HDE Automotive BHVAC CIS Segment fotal 176.6 42.7 $ 4631 107.5 43.5 302221 240.8 1084 94.6 745.9 21.6 13.1 400.4 9.8 444.9 639.7 150,2 43.5 3237 253.9 508.8 116.0 2,035.8 1.8 221.1 9.8 6239 $ Primary end market: Commercial HVAC&R Data center cooling Industrial cooling Commercial vehicle Off-highway Automotive and light vehicle Other Net sales Geographic location: Americas Europe Asia Net sales Timing of revenue recognition: Products transferred at a point in time Products transferred over time Net sales $ 139.1 82.0 $ 3 345.9 232.6 4514 623.9 484.5 141.2 120.2 745.9 70.3 321.0 53.6 444.9 1,039.8 776.8 219.2 2,035.8 22111 221.1 $ 518.2 $ 4449 1057 715.1 30.8 745.9 1,899.3 136,5 2,035,8 221.1 623.9 4449 57 Table of Contents MOTINE ANTITATIITIN NANU 57 Table of Contents MODINE MANUFACTURING COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In millions, except per share amounts) Segment Total 506.3 674.0 187.0 47.8 387.6 314.1 542.8 127.9 2,281.2 Year ended March 31, 2019 BHVAC CIS HDE Automotive Primary end market Commercial HVAC&R 1677 $ Data center cooling 41.3 145.7 Industrial cooling 47.8 Commercial vehicle 352.6 35.0 Off-highway 298.1 16.0 Automotive and light vehicle 116.7 426.1 Other 3.4 7.8 104.9 11.8 Net sales 212.4 707.6 87213 488.9 Geographic location: Americas 124.9 $ 413.6 543.0 $ 71.0 Europe 87.5 244.8 177.4 369.4 Asia 49.2 151.9 48.5 Net sales 2124 707.6 872.3 488.9 Timing of revenue recognition: Products transferred at a point in time 21274 $ 571.1 829.1 488.9 Products transferred over time 136,5 43.2 Net sales 707.6 872 3 4889 Contract Balances Contract assets and contract liabilities from contracts with customers were as follows: 1,152.5 879,1 249.6 2,281.2 2,101.5 179.7 2,281.2 2124 March 31, 2021 March 31, 2020 Contract assets $ 5./ $ 21.7 Contract liabilities 5.6 5.6 At March 31, 2021, contract assets and contract liabilities exclude amounts classified as held for sale. 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. 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. 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. Note 4: Fair Value Measurements Fair value is defined as the price that would be received for an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. Fair value measurements are classified under the following hierarchy: Level 2 - Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not Level 1 - Quoted prices for identical instruments in active markets. active and model-derived valuations in which all significant inputs are observable in active markets. Level 3 - Model-derived valuations in which one or more significant inputs are not observable. . 58 Table of Contents MODINE MANUFACTURING COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (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. In some cases, where Plan assets related to the Company's pension plans were classified as follows: March 31, 2021 Level 2 Level 1 Total 225 8.9 37.3 Money market investments Fixed income securities Pooled equity funds U.S. government and agency securities Other Fair value excluding investments measured at net asset value Investments measured at net asset value Total fair value 0.1 37.4 14.5 1.0 26.9 8.9 37.3 14.5 1.1 643 119.0 183.3 March 31, 2020 Level 2 Levels Total 2.4 8.7 17.9 Money market investments Fixed income securities Pooled equity funds U.S. government and agency securities Other Fair value excluding investment measured at net asset value Investments measured at net asset value Total fair value 24 8.7 17.9 13.1 0.8 42.9 882 131.1 13.1 0.7 24.9 0.1 18.0 The Company determined the fair value of money market investments to approximate their net asset values, without discounts for credit quality or liquidity restrictions, and classified them within Level 2 of the valuation hierarchy. 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. 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 rcent 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. The Company classified these assets within Level 2 of the valuation hierarchy. As of March 31, 2021 and 2020, the Company held no Level 3 assets within its pension plans. 59 Shares Aggregate intrinsic value Outstanding, beginning Granted Exercised Forfeited or expired Outstanding, ending 0.4 (0.4 (OK Weighted-average Weighted average remaining contractual exercise price ternivears) $ 12.49 6.88 10.56 10.944 11.63 3.9 Exercisable, March 31, 2021 0.5 13.80 0.9 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. The aggregate intrinsic value is not recorded for financial statement purposes, and this value will change based upon daily changes in the price of Modines common shares. Additional information related to stock options exercised is as follows: Years ended March 31, 2021 2020 2019 Intrinsic value of stock options exercised 1.4 $ 0.1 $ 0.7 Proceeds from stock options exercised 4.1 0.1 1.1 Restricted Stock The Company recorded $4.3 million, $4.5 million, and $4.3 million of compensation expense related to restricted stock in fiscal 2021, 2020 and 2019, respectively. The fair value of restricted stock awards that vested during fiscal 2021, 2020, and 2019 was $4.5 million, $4.4 million, and $4.3 million, respectively. At March 31, 2021, the Company had $6.1 million of unrecognized compensation expense related to non-vested restricted stock, which it expects to recognize over a weighted average period of 2.7 years. The Company values restricted stock awards using the closing market price of its common shares on the date of grant. 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: Weighted average Shares price Non-vested balance, beginning 0.5 $ 14:48 Granted 0.8 7.53 Vested (0.5 9.64 Forfeited (0.1) 13.40 Non-vested balance, ending 0.7 $ 10.05 Restricted Stock - Performance-Based Shares $ , and $2.4 million of compensation expense related to performance-based stock awards in fiscal 2021, $, 2020, and 2019, respectively. 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 recognizet 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. 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. As noted above, the Company granted performance cash awards in fiscal 2021 in lieu of performance-based stock awards. The performance metrics for these cash awards are the same as the metrics for the fiscal 2020 and 2019 performance-based stock awards. 61 Tube.com MODINE MANUFACTURING COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In millions, except per share amounts) Note 6: Restructuring Activities During fiscal 2021, restructuring actions consisted primarily of targeted headcount reductions and plant consolidation activities. The targeted headcount reductions were primarily in Europe within the 'Automotive segment and in the Americas within the HDE segment. 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. These headcount reductions support the Company's objective of reducing operational and SG&A cost structures. Also during fiscal 2021, the Company transferred production from its manufacturing facility in Zhongshan, China to another CIS segment manufacturing facility in China. As a result of this plant consolidation, the Company recorded $3.7 million of severance expenses during fiscal 2021 The Company is also in the process of transferring product lines to its cis manufacturing facility in Mexico. These plant consolidation activities support the company's objective of achieving operational improvements and organizational efficiencies. During fiscal 2020 and 2019, restructuring actions consisted primarily of targeted headcount reductions and plant consolidation activities. The headcount reductions were primarily in Europe within the Automotive segment and in the Americas within the HDE segment. The plant consolidation activities included transferring product lines to the Company's CIS manufacturing facility in Mexico. Restructuring and repositioning expenses were as follows: Years ended March 31, 2021 2020 2019 Employee severance and related benefits 1117 $ 8.7 Other restructuring and repositioning expenses 1.7 200 Total 13.4 $ 12.2 9.6 Other restructuring and repositioning expenses primarily consist of equipment transfer and plant consolidation costs. The Company accrues severance in accordance with its written plans, procedures, and relevant statutory requirements. Changes in accrued severance were as follows: S 10.25 019 Other income and expense consisted of the following: Interest income Foreign currency transactions (a) Net periodic benefit cost (b) Equity in earnings of non-consolidated affiliate (c) Total other expense - net Years ended March 31, 20211 2020 0.5 0,4 0.6 (2.4) (3.3 (3.0) 0.2 (2.2) (4.8) s 2019 0.4 (2.3) (2.9 0.7 (4.1) $ (48.7 $ (a) 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. (b) Net periodic benefit cost for the company's pension and postretirement plans is exclusive of service cost - (c) During fiscal2020, the Company sold its ownership interest in Nikkei Heat Exchanger Company, Ltd. As a result of the sale, the Company recorded a gain of$0.1 million, which is included within the fiscal2020amount. See Noteifor additional information. Note 8: Income Taxes The U.S. 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. 2021 2020 2019 Components of (loss) earnings before income taxes: United States S (26.1) S 22.4 Foreign (70.6) 36.5 58.4 Total (loss) earnings before income taxes (119.3 S 10.4 S 80.8 Income tax provision (benefit): Federal: Current (0.1 $ (3.4) S (20.4) Deferred (1.7) State: Current 024 (0.1) Deferred 9.2 (2.3) Foreign: Current 22.0 14.9 Deferred 0.4 5.0 Total income tax provision (benefit) 90.2 12.4 On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Act. The Tax Act included a new provision designed to tax globaf intangible low taxed income ("GILTI") starting in fiscal 2019. The Company elected to record the tax effects of the GILTI provision as a period expense in the applicable tax year. To determine whether its net operating loss carryforward deferred tax assets are expected to be realized, the Company considers the applicable tax law ordering. 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. 58.3 leela 09 ble of Contents Table of Contents MODINE MANUFACTURING COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In millions, except per share amounts) 03 14.0 56.8 8.2 158.5 The tax effects of temporary differences that gave rise to deferred tax assets and liabilities were as follows: March 31, 2021 2020 Deferred tax assets: Accounts receivable 0.3 $ Inventories 4.5 4.5 Plant and equipment 7.5 4.7 Lease liabilities 15.7 Pension and employee benefits 24.0 45.1 Net operating and capital losses 52.7 70.2 Credit carryforwards 51.8 Other, principally accrued liabilities 8.9 Total gross deferred tax assets 163.7 205.4 Less: valuation allowances (90.7 (46.9 Net deferred tax assets 73.0 Deferred tax liabilities: Plant and equipment 9.8 13.1 Lease assets 13.8 15.6 Goodwill 5.1 4.8 Intangible assets 25.1 26.4 Other 0.6 Total gross deferred tax liabilities 54.4 61.8 Net deferred tax assets 18.6 96. 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. At March 31, 2021, the Company recorded a full valuation allowance for the net deferred tax assets of the held for sale businesses. See Note 2 for additional information regarding the businesses held for sale. Unrecognized tax benefits were as follows: Years ended March 31, 2021 2020 Beginning balance S 9.7 $ 13.8 Gross increases - tax positions in prior period 0.1 0.3 Gross decreases - tax positions in prior period (0.6) (1.0) Gross increases - tax positions in current period 0.9 1.1 Settlements Lapse of statute of limitations (0.5 (2.4) Ending balance S 1.9 (2.1 The Company's liability for unrecognized tax benefits as of March 31, 2021 was $9.6 million and, if recognized, $1.5 million would have an effective tax rate impact. The Company estimates a $2.4 million decrease in unrecognized tax benefits during fiscal 2022 due to lapses in statutes of limitations and settlements. If recognized, these reductions would not have a significant impact on the Company's effective tax rate. The Company recognizes interest and penalties related to unrecognized ta