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v3.22.1

Income Taxes | 12 Months Ended
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Mar. 31, 2022
Income Taxes [Abstract] |
Income Taxes | Note 8: Income Taxes The U.S. and foreign components of earnings or loss before income taxes and the provision for income taxes consisted of the following:
|  | Years ended March 31, |
|  | 2022 |  |  | 2021 |  |  | 2020 |
Components of earnings (loss) before income taxes: |  |  |  |  |  |  |  |  |
United States |  | $ | 0.4 |  |  | $ | (48.7 | ) |  | $ | (26.1 | )
Foreign |  |  | 101.1 |  |  |  | (70.6 | ) |  |  | 36.5 |
Total earnings (loss) before income taxes |  | $ | 101.5 |  |  | $ | (119.3 | ) |  | $ | 10.4 |
Income tax provision (benefit): |  |  |  |  |  |  |  |  |
Federal: |  |  |  |  |  |  |  |  |
Current |  | $ | 0.1 |  |  | $ | (0.1 | ) |  | $ | (3.4 | )
Deferred |  |  | - |  |  |  | 58.3 |  |  |  | (1.7 | )
State: |  |  |  |  |  |  |  |  |  |  |  |
Current |  |  | 1.1 |  |  |  | 0.4 |  |  |  | (0.1 | )
Deferred |  |  | - |  |  |  | 9.2 |  |  |  | (2.3 | )
Foreign: |  |  |  |  |  |  |  |  |  |  |  |
Current |  |  | 17.8 |  |  |  | 22.0 |  |  |  | 14.9 |
Deferred |  |  | (3.8 | ) |  |  | 0.4 |  |  |  | 5.0 |
Total income tax provision |  | $ | 15.2 |  |  | $ | 90.2 |  |  | $ | 12.4 |
The reconciliation between the U.S. federal statutory rate and the Company’s effective tax rate was as follows:
|  | Years ended March 31, |
|  | 2022 |  |  | 2021 |  |  | 2020 |
Statutory federal tax |  |  | 21.0 | % |  |  | 21.0 | % |  |  | 21.0 | %
State taxes, net of federal benefit |  |  | 1.4 |  |  |  | 0.9 |  |  |  | (12.0 | )
Taxes on non-U.S. earnings and losses |  |  | 3.5 |  |  |  | (9.1 | ) |  |  | 32.9 |
Valuation allowances |  |  | (8.8 | ) |  |  | (92.9 | ) |  |  | 156.9 |
Tax credits |  |  | (3.4 | ) |  |  | 2.2 |  |  |  | (36.7 | )
Compensation |  |  | 0.6 |  |  |  | (1.3 | ) |  |  | 4.0 |
Tax rate or law changes |  |  | 0.6 |  |  |  | (0.2 | ) |  |  | 3.6 |
Uncertain tax positions, net of settlements |  |  | (0.2 | ) |  |  | 0.1 |  |  |  | (37.9 | )
Notional interest deductions |  |  | (2.7 | ) |  |  | 1.3 |  |  |  | (12.5 | )
Dividends and taxable foreign inclusions |  |  | 1.6 |  |  |  | 3.0 |  |  |  | (11.0 | )
Other |  |  | 1.4 |  |  |  | (0.6 | ) |  |  | 10.9 |
Effective tax rate |  |  | 15.0 | % |  |  | (75.6 | %) |  |  | 119.2 | %
The effective tax rates in both fiscal 2022 and 2021 were significantly impacted by impairment charges or reversals, largely related to the liquid-cooled automotive business, and income tax charges or benefits related to valuation allowances. See Note 2 for information regarding the impairment charges and reversals. The income tax benefits associated with the fiscal 2021 impairment charges totaled $24.4 million and $13.3 million in the U.S. and in certain foreign jurisdictions, respectively. The income tax charges or benefits related to valuation allowances are described below. 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. 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. This determination involves judgement and the use of significant estimates and assumptions, including expectations of future taxable income and tax planning strategies. In addition, the Company considers the duration of statutory carryforward periods and historical financial results. Based upon its analyses during fiscal 2022, the Company determined it was more likely than not that the deferred tax assets in certain foreign jurisdictions will be realized. As a result, the Company reversed the valuation allowances related to these deferred tax assets and recorded income tax benefits totaling $13.0 million. The Company’s analyses included consideration of the transaction perimeter modification during the first quarter and the termination of the sale agreement during the third quarter for the liquid-cooled automotive business and the related impairment reversals. Separately, the Company determined it was more likely than not that the deferred tax assets in a foreign jurisdiction would not be realized. As a result, the Company recorded an income tax charge of $1.6 million. Together, these fiscal 2022 valuation allowance adjustments resulted in a net income tax benefit of $11.4 million during fiscal 2022. In addition, the Company recorded a net increase of deferred tax asset valuation allowances totaling $2.5 million. 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. and in certain foreign jurisdictions would not be realized. As a result, the Company recorded income tax charges totaling $116.5 million to increase the valuation allowances on deferred tax assets in the U.S. ($103.3 million) and in certain foreign jurisdictions ($13.2 million). Of these income tax charges, the majority was recorded in the third quarter of fiscal 2021, which established a full valuation on the U.S. deferred tax assets. The Company’s analyses in the third quarter of fiscal 2021 included consideration of the impairment charges recorded for the liquid-cooled automotive business, which contributed to the Company entering into a three-year cumulative loss position in the U.S. and in certain foreign jurisdictions as of December 31, 2020. 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 allocation of the income tax provision between net earnings and other comprehensive income. 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 the 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. 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. At March 31, 2022, valuation allowances against deferred tax assets in the U.S. and in certain foreign jurisdictions totaled $85.8 million and $26.4 million, respectively. 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. 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. The tax effects of temporary differences that gave rise to deferred tax assets and liabilities were as follows:
|  | March 31, |
|  | 2022 |  |  | 2021 |
Deferred tax assets: |  |  |  |  |  |
Accounts receivable |  | $ | 0.8 |  |  | $ | 0.3 |
Inventories |  |  | 6.5 |  |  |  | 4.5 |
Plant and equipment |  |  | 19.9 |  |  |  | 7.5 |
Lease liabilities |  |  | 13.5 |  |  |  | 14.0 |
Pension and employee benefits |  |  | 27.5 |  |  |  | 24.0 |
Net operating and capital losses |  |  | 53.9 |  |  |  | 52.7 |
Credit carryforwards |  |  | 48.5 |  |  |  | 51.8 |
Other, principally accrued liabilities |  |  | 13.5 |  |  |  | 8.9 |
Total gross deferred tax assets |  |  | 184.1 |  |  |  | 163.7 |
Less: valuation allowances |  |  | (112.2 | ) |  |  | (90.7 | )
Net deferred tax assets |  |  | 71.9 |  |  |  | 73.0 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Plant and equipment |  |  | 8.6 |  |  |  | 9.8 |
Lease assets |  |  | 13.2 |  |  |  | 13.8 |
Goodwill |  |  | 4.9 |  |  |  | 5.1 |
Intangible assets |  |  | 22.4 |  |  |  | 25.1 |
Other |  |  | 1.5 |  |  |  | 0.6 |
Total gross deferred tax liabilities |  |  | 50.6 |  |  |  | 54.4 |
Net deferred tax assets |  | $ | 21.3 |  |  | $ | 18.6 |
At March 31, 2021, the net deferred tax assets presented in the table above excluded 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. At March 31, 2022, the table above includes the net deferred tax assets of the liquid-cooled automotive business, which is no longer classified as held for sale. See Note 2 for additional information. Unrecognized tax benefits were as follows:
|  | Years ended March 31, |
|  | 2022 |  |  | 2021 |
Beginning balance |  | $ | 9.6 |  |  | $ | 9.7 |
Gross increases - tax positions in prior period |  |  | 0.1 |  |  |  | 0.1 |
Gross decreases - tax positions in prior period |  |  | (0.2 | ) |  |  | (0.6 | )
Gross increases - tax positions in current period |  |  | 1.0 |  |  |  | 0.9 |
Lapse of statute of limitations |  |  | (1.2 | ) |  |  | (0.5 | )
Ending balance |  | $ | 9.3 |  |  | $ | 9.6 |
The Company’s liability for unrecognized tax benefits as of March 31, 2022 was $9.3 million and, if recognized, $1.6 million would have an effective tax rate impact. The Company estimates a $0.4 million decrease in unrecognized tax benefits during fiscal 2023 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 tax benefits as a component of income tax expense. During fiscal 2022, 2021 and 2020, interest and penalties included within income tax expense in the consolidated statements of operations were not significant. At March 31, 2022 and 2021, accrued interest and penalties totaled $0.7 million and $0.6 million, respectively. The Company files income tax returns in multiple jurisdictions and is subject to examination by taxing authorities throughout the world. At March 31, 2022, the Company was under income tax examination in a number of jurisdictions. The following tax years remain subject to examination for the Company’s major tax jurisdictions:
Germany | Fiscal 2016 - Fiscal 2021
Italy | Fiscal 2016 - Fiscal 2021
United States | Fiscal 2019 - Fiscal 2021
At March 31, 2022, the Company had federal and state tax credits of $59.0 million that, if not utilized against U.S. taxes, will expire between fiscal 2023 and 2042. The Company also had state and local tax loss carryforwards totaling $136.4 million that, if not utilized against state apportioned taxable income, will expire between fiscal 2023 and 2042. In addition, the Company had tax loss and foreign attribute carryforwards totaling $255.8 million in various tax jurisdictions throughout the world. Carryforwards in the U.S. and in certain foreign jurisdictions are offset by valuation allowances. If not utilized against taxable income, $38.5 million of these carryforwards will expire between fiscal 2023 and 2034, and $217.3 million, mainly related to the U.S, Germany, Hungary 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. subsidiaries outside of the U.S., and therefore, the Company has not recorded foreign withholding taxes or deferred income taxes for these earnings. The Company has estimated the net amount of unrecognized foreign withholding tax and deferred tax liabilities would total approximately $12.0 million if the accumulated foreign earnings were distributed; however, the actual tax cost would be dependent on circumstances existing when remittance occurs.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -URI http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
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