SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

☑	QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

☐	TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

MODINE MANUFACTURING ~~COMPANY~~COMPANY

Table of Contents

~~PART I.~~

~~FINANCIAL INFORMATION~~

~~Item 1.~~

PART I. FINANCIAL INFORMATION

Item 1.Financial Statements.

MODINE MANUFACTURING COMPANY

CONSOLIDATED STATEMENTS OF OPERATIONS

For the three ~~and nine~~ months ended ~~December 31, 2017~~June 30, 2019 and ~~2016~~2018

(In millions, except per share amounts)

(Unaudited)

	Three months ended December 31,						Nine months ended December 31,						Three months ended June 30,
	2017			2016			2017			2016			2019			2018
Net sales	$	512.7		$	349.8		$	1,536.5		$	1,014.7		$	529.0		$	566.1
Cost of sales		427.3			290.8			1,276.5			845.4			445.6			471.8
Gross profit		85.4			59.0			260.0			169.3			83.4			94.3
Selling, general and administrative expenses		60.8			50.7			182.2			143.1			63.5			59.3
Restructuring expenses		9.4			1.6			11.5			6.0			1.8			0.2
Impairment charge		1.3			-			1.3			-
Gain on sale of facility		-			-			-			(1.2	)
Operating income		13.9			6.7			65.0			21.4			18.1			34.8
Interest expense		(6.3	)		(4.5	)		(19.5	)		(10.5	)		(5.9	)		(6.2	)
Other expense – net		(0.3	)		(1.0	)		(2.3	)		(2.8	)		(1.1	)		(1.1	)
Earnings before income taxes		7.3			1.2			43.2			8.1			11.1			27.5
(Provision) benefit for income taxes		(35.2	)		0.7			(37.4	)		(1.3	)
Net (loss) earnings		(27.9	)		1.9			5.8			6.8
Provision for income taxes														(2.9	)		(5.0	)
Net earnings														8.2			22.5
Net earnings attributable to noncontrolling interest		(0.4	)		(0.2	)		(1.2	)		(0.6	)		(0.2	)		(0.5	)
Net (loss) earnings attributable to Modine	$	(28.3	)	$	1.7		$	4.6		$	6.2
Net earnings attributable to Modine													$	8.0		$	22.0

Net (loss) earnings per share attributable to Modine shareholders:
Net earnings per share attributable to Modine shareholders:
Basic	$	(0.57	)	$	0.04		$	0.09		$	0.13		$	0.16		$	0.43
Diluted	$	(0.57	)	$	0.04		$	0.09		$	0.13		$	0.16		$	0.43

Weighted-average shares outstanding:
Basic		50.0			47.9			49.8			47.3			50.7			50.3
Diluted		50.0			48.5			50.6			47.7			51.1			51.2

The notes to condensed consolidated financial statements are an integral part of these statements.

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MODINE MANUFACTURING COMPANY

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

For the three ~~and nine~~ months ended ~~December 31, 2017~~June 30, 2019 and ~~2016~~2018

(In millions)

(Unaudited)

	Three months ended December 31,						Nine months ended December 31,						Three months ended June 30,
	2017			2016			2017			2016			2019			2018
Net (loss) earnings	$	(27.9	)	$	1.9		$	5.8		$	6.8
Net earnings													$	8.2		$	22.5
Other comprehensive income (loss):
Foreign currency translation		5.0			(14.8	)		32.8			(17.7	)		1.8			(25.1	)
Defined benefit plans, net of income taxes of $0.4, $0.4, $1.3 and $1.3 million		0.9			0.9			2.6			2.6
Cash flow hedges, net of income taxes of $0.2, $0, $0.2 and $0 million		0.4			-			0.4			-
Defined benefit plans, net of income taxes of $0.3 and $0.3 million														1.1			1.0
Cash flow hedges, net of income taxes of $(0.3) and $0.1 million														(0.8	)		0.4
Total other comprehensive income (loss)		6.3			(13.9	)		35.8			(15.1	)		2.1			(23.7	)

Comprehensive income (loss)		(21.6	)		(12.0	)		41.6			(8.3	)		10.3			(1.2	)
Comprehensive (income) loss attributable to noncontrolling interest		(0.8	)		0.4			(1.6	)		(0.1	)
Comprehensive income attributable to noncontrolling interest														(0.1	)		(0.1	)
Comprehensive income (loss) attributable to Modine	$	(22.4	)	$	(11.6	)	$	40.0		$	(8.4	)	$	10.2		$	(1.3	)

The notes to condensed consolidated financial statements are an integral part of these statements.

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MODINE MANUFACTURING COMPANY

CONSOLIDATED BALANCE SHEETS

~~December 31, 2017~~June 30, 2019 and March 31, ~~2017~~2019

(In millions, except per share amounts)

(Unaudited)

	December 31, 2017			March 31, 2017			June 30, 2019			March 31, 2019
ASSETS
Cash and cash equivalents	$	47.8		$	34.2		$	29.1		$	41.7
Trade accounts receivable – net		289.0			295.2			336.9			338.6
Inventories		186.8			168.5			216.2			200.7
Other current assets		60.0			55.4			69.7			65.8
Total current assets		583.6			553.3			651.9			646.8
Property, plant and equipment – net		491.3			459.0			479.1			484.7
Intangible assets – net		132.5			134.1			114.4			116.2
Goodwill		172.2			165.1			168.5			168.5
Deferred income taxes		95.6			108.4			98.2			97.1
Other noncurrent assets		27.0			29.6			89.2			24.7
Total assets	$	1,502.2		$	1,449.5		$	1,601.3		$	1,538.0

LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES AND SHAREHOLDERS’ EQUITY
Short-term debt	$	53.5		$	73.4		$	121.5		$	66.0
Long-term debt – current portion		37.9			31.8			33.5			48.6
Accounts payable		243.7			230.3			272.9			280.9
Accrued compensation and employee benefits		89.0			74.8			77.5			81.7
Other current liabilities		44.9			45.1			52.8			39.9
Total current liabilities		469.0			455.4			558.2			517.1
Long-term debt		394.5			405.7			302.2			335.1
Deferred income taxes		9.4			9.7			8.6			8.2
Pensions		105.7			119.4			100.2			101.7
Other noncurrent liabilities		52.0			38.1			85.8			34.8
Total liabilities		1,030.6			1,028.3			1,055.0			996.9
Commitments and contingencies (see Note 15)
Shareholders' equity:
Commitments and contingencies (see Note 17)
Shareholders’ equity:
Preferred stock, $0.025 par value, authorized 16.0 million shares, issued - none		-			-			-			-
Common stock, $0.625 par value, authorized 80.0 million shares, issued 52.3 million and 51.8 million shares		32.7			32.4
Common stock, $0.625 par value, authorized 80.0 million shares, issued 53.3 million and 52.8 million shares								33.2			33.0
Additional paid-in capital		227.2			216.4			240.2			238.6
Retained earnings		377.3			372.4			480.1			472.1
Accumulated other comprehensive loss		(146.4	)		(181.8	)		(176.2	)		(178.4	)
Treasury stock, at cost, 1.8 million and 1.7 million shares		(27.1	)		(25.4	)
Total Modine shareholders' equity		463.7			414.0
Treasury stock, at cost, 2.5 million and 2.1 million shares								(37.0	)		(31.4	)
Total Modine shareholders’ equity								540.3			533.9
Noncontrolling interest		7.9			7.2			6.0			7.2
Total equity		471.6			421.2			546.3			541.1
Total liabilities and equity	$	1,502.2		$	1,449.5		$	1,601.3		$	1,538.0

The notes to condensed consolidated financial statements are an integral part of these statements.

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MODINE MANUFACTURING COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the ~~nine~~three months ended ~~December 31, 2017~~June 30, 2019 and ~~2016~~2018

(In millions)

(Unaudited)

	Nine months ended December 31,						Three months ended June 30,
	2017			2016			2019			2018
Cash flows from operating activities:
Net earnings	$	5.8		$	6.8		$	8.2		$	22.5
Adjustments to reconcile net earnings to net cash provided by operating activities:
Adjustments to reconcile net earnings to net cash provided by (used for) operating activities:
Depreciation and amortization		56.8			39.9			18.9			19.4
Stock-based compensation expense		7.6			6.1			1.7			2.0
Impairment charge		1.3			-
Gain on sale of facility		-			(1.2	)
Deferred income taxes		10.1			(9.1	)		(0.5	)		1.0
Other – net		6.6			1.5			0.9			0.6
Changes in operating assets and liabilities:
Trade accounts receivable		22.3			33.2			1.6			(18.6	)
Inventories		(10.5	)		-			(15.0	)		(21.7	)
Accounts payable		2.2			(21.1	)		(3.8	)		15.4
Other assets and liabilities		3.4			(21.1	)		(11.5	)		(24.7	)
Net cash provided by operating activities		105.6			35.0
Net cash provided by (used for) operating activities								0.5			(4.1	)

Cash flows from investing activities:
Expenditures for property, plant and equipment		(55.0	)		(46.0	)		(20.3	)		(22.6	)
Acquisition of Luvata HTS – net of cash acquired		-			(363.9	)
Proceeds from dispositions of assets		0.1			4.3
Other – net		(0.9	)		0.4			1.8			2.9
Net cash used for investing activities		(55.8	)		(405.2	)		(18.5	)		(19.7	)

Cash flows from financing activities:
Borrowings of debt		121.5			475.4			342.1			105.9
Repayments of debt		(162.5	)		(113.2	)		(329.1	)		(72.7	)
Dividend paid to noncontrolling interest		(0.9	)		-			(1.3	)		(1.8	)
Purchases of treasury stock under share repurchase program								(2.4	)		-
Financing fees paid		-			(8.5	)		(1.1	)		-
Other – net		2.7			(0.3	)		(2.7	)		(3.8	)
Net cash (used for) provided by financing activities		(39.2	)		353.4
Net cash provided by financing activities								5.5			27.6

Effect of exchange rate changes on cash		3.0			(2.1	)		(0.1	)		(1.8	)
Net increase (decrease) in cash and cash equivalents		13.6			(18.9	)
Net (decrease) increase in cash, cash equivalents and restricted cash								(12.6	)		2.0

Cash and cash equivalents – beginning of period		34.2			68.9
Cash and cash equivalents – end of period	$	47.8		$	50.0
Cash, cash equivalents and restricted cash – beginning of period								42.2			40.3
Cash, cash equivalents and restricted cash – end of period							$	29.6		$	42.3

The notes to condensed consolidated financial statements are an integral part of these statements.

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MODINE MANUFACTURING COMPANY

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

For the three months ended June 30, 2019 and 2018

(In millions)

(Unaudited)

	Common stock				Additional paid-in			Retained			Accumulated other comprehensive			Treasury stock, at			Non- controlling
	Shares		Amount		capital			earnings			loss			cost			interest			Total
Balance, March 31, 2018		52.3	$	32.7	$	229.9		$	394.9		$	(140.3	)	$	(27.1	)	$	8.4		$	498.5
Adoption of new accounting guidance (Note 1)		-		-		-			(7.6	)		-			-			-			(7.6	)
Net earnings attributable to Modine		-		-		-			22.0			-			-			-			22.0
Other comprehensive loss		-		-		-			-			(23.3	)		-			(0.4	)		(23.7	)
Stock options and awards		0.4		0.2		(0.2	)		-			-			-			-			-
Purchase of treasury stock		-		-		-			-			-			(3.7	)		-			(3.7	)
Stock-based compensation expense		-		-		2.0			-			-			-			-			2.0
Dividend paid to noncontrolling interest		-		-		-			-			-			-			(1.8	)		(1.8	)
Net earnings attributable to noncontrolling interest		-		-		-			-			-			-			0.5			0.5
Balance, June 30, 2018		52.7	$	32.9	$	231.7		$	409.3		$	(163.6	)	$	(30.8	)	$	6.7		$	486.2

Balance, March 31, 2019		52.8	$	33.0	$	238.6		$	472.1		$	(178.4	)	$	(31.4	)	$	7.2		$	541.1
Net earnings attributable to Modine		-		-		-			8.0			-			-			-			8.0
Other comprehensive income (loss)		-		-		-			-			2.2			-			(0.1	)		2.1
Stock options and awards		0.5		0.2		(0.1	)		-			-			-			-			0.1
Purchase of treasury stock		-		-		-			-			-			(5.6	)		-			(5.6	)
Stock-based compensation expense		-		-		1.7			-			-			-			-			1.7
Dividend paid to noncontrolling interest		-		-		-			-			-			-			(1.3	)		(1.3	)
Net earnings attributable to noncontrolling interest		-		-		-			-			-			-			0.2			0.2
Balance, June 30, 2019		53.3	$	33.2	$	240.2		$	480.1		$	(176.2	)	$	(37.0	)	$	6.0		$	546.3

The notes to condensed consolidated financial statements are an integral part of these statements.

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MODINE MANUFACTURING COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In millions, except per share amounts)

(unaudited)

~~Note 1:~~

Note 1: General

The accompanying condensed consolidated financial statements were prepared in conformity with generally accepted accounting principles (“GAAP”) in the United States applied on a basis consistent with those principles used in the preparation of the annual consolidated financial statements of Modine Manufacturing Company (“Modine” or the “Company”) for the fiscal year ended March 31, ~~2017,~~2019, except in ~~regards~~regard to the new accounting guidance adopted, as described below. The financial statements include all normal recurring adjustments that are, in the opinion of management, necessary for a fair statement of results for the interim periods. Results for the first ~~nine~~three months of fiscal ~~2018~~2020 are not necessarily indicative of the results to be expected for the full year. These financial statements should be read in conjunction with the consolidated financial statements and related notes in Modine's Annual Report on Form 10-K for the year ended March 31, ~~2017.~~2019.

~~United States Tax Reform~~

In December 2017, U.S. tax reform legislation was enacted and included various changes to existing U.S. tax regulations. As a result of these changes, the Company recorded income tax charges totaling $35.7 million during the third quarter of fiscal 2018. See Note 8 for additional information regarding the recently-enacted tax reform legislation.

~~Acquisition of Luvata HTS~~

On November 30, 2016, the Company completed the acquisition of 100 percent of the shares of multiple companies held by Luvata Heat Transfer Solutions II AB, a company incorporated in Sweden. Combined, these acquired companies represented the Luvata Heat Transfer Solutions (“Luvata HTS”) business. See Note 2 for additional information.

New Accounting Guidance Adopted in Fiscal 2020

~~Derivatives and Hedging~~

In August 2017, the Financial Accounting Standards Board (“FASB”) issued new guidance related to hedge accounting. The main objectives of the new guidance include aligning hedge accounting with companies’ risk management strategies and increasing disclosure transparency regarding both the scope and results of hedging programs. The Company early adopted the new guidance in the third quarter of fiscal 2018. This new guidance did not have a material impact on the Company’s consolidated financial statements.

~~Pension Costs~~

In March 2017, the FASB issued new guidance related to the income statement presentation of pension and postretirement costs. This guidance requires companies to continue to present the service cost component of net periodic benefit cost within the same financial statement line item as other employee compensation costs; however, other components of net benefit cost are required to be presented outside of results from operations. The Company adopted this guidance, on a retrospective basis, beginning in its first quarter of fiscal 2018. As a result, the Company recorded $0.6 million and $2.2 million of net periodic benefit cost within other income and expense for the three and nine months ended December 31, 2017, respectively, and reclassified the net periodic benefit cost, exclusive of service cost, to other income and expense for the comparative periods in fiscal 2017. For the three and nine months ended December 31, 2016, the Company reclassified net periodic benefit cost totaling $0.7 million ($0.3 million from cost of sales and $0.4 million from selling, general and administrative (“SG&A”) expenses) and $2.2 million ($0.9 million from cost of sales and $1.3 million from SG&A expenses), respectively, to other income and expense.

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~~MODINE MANUFACTURING COMPANY~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(In millions, except per share amounts)~~

~~(unaudited)~~

~~Share-based Compensation~~

In March 2016, the FASB issued new guidance to simplify several aspects of accounting for share-based payment transactions. The Company adopted this guidance beginning in its first quarter of fiscal 2018. The Company elected to account for forfeitures in the period in which they occur and recorded a cumulative-effect adjustment to equity. 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. The provisions of this guidance did not have a material impact on the Company's consolidated financial statements. 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.

Leases

In February 2016, the FASB issued new comprehensive lease accounting guidance that supersedes existing lease accounting guidance and 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.

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. The Company’s most significant leases represent leases of real estate, such as manufacturing facilities, warehouses, and office buildings. The Company also leases certain manufacturing and IT equipment and vehicles. Upon adoption of this new guidance on April 1, 2019, the Company ~~will be required to recognize most~~recognized right-of-use assets for operating leases ~~on its balance sheet. This guidance is effective~~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 ~~the Company’s first quarter of fiscal 2020. The Company is currently evaluating the impact this guidance will have~~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 million 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 15 for additional information regarding the Company’s leases.

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 (loss) 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.

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New Accounting Guidance Adopted in Fiscal 2019

Revenue Recognition

In May 2014, the FASB issued new guidance that outlines a comprehensive model for entities to use in accounting for revenue arising from contracts with customers. The core principle of the new guidance is that companies are to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The Company adopted this new guidance ~~also includes~~as of April 1, 2018, and, as a ~~cohesive set~~result, recorded an increase of ~~disclosure requirements intended~~$0.7 million to ~~provide users~~retained earnings.

Income Taxes: Intra-Entity Transfers of ~~financial statements with comprehensive information about revenue arising from contracts with customers.~~Assets Other than Inventory

In October 2016, the FASB issued new guidance related to income tax accounting for intercompany asset transfers. This new guidance ~~will be effective for~~requires companies to recognize the ~~Company’s first quarter~~income tax effects of ~~fiscal 2019, and~~intercompany asset transfers other than inventory at the ~~Company plans to adopt it using a modified-retrospective transition method.~~

transaction date. The income tax effects of these transfers were previously deferred. The Company is currently in the process of assessing customer contracts and evaluating contractual provisions that may result in a change in the timing of revenue recognized in comparison with current guidance. Under current guidance, the Company generally recognizes revenue when products are shipped and risk of loss has transferred to the customer. The Company is evaluating whether provisions in certain customer contracts may provide an enforceable right to payment for customized products, which may require revenue recognition prior to the product being shipped to the customer. In addition, the Company is evaluating pricing provisions contained in certain of its customer contracts to determine the appropriate timing of revenue recognition based upon the new guidance. The Company continues to evaluate the impactadopted this new guidance ~~will have on its consolidated financial statements~~as of April 1, 2018, and, ~~its~~as a result, recorded a decrease to retained earnings of $8.3 million.

Note 2: Revenue Recognition

Disaggregation of Revenue

The table below presents revenue ~~recognition policies.~~

~~Note 2:~~

~~Acquisition~~for each of ~~Luvata HTS~~

~~On November 30, 2016,~~ the ~~Company completed its acquisition of a 100 percent ownership interest in the Luvata HTS~~Company’s business ~~for consideration totaling $415.6 million ($388.2 million, net of cash acquired). Operating as Modine’s~~segments, Vehicular Thermal Solutions (“VTS”), Commercial and Industrial Solutions (“CIS”) ~~segment, this business~~and Building HVAC Systems (“BHVAC”). Each segment’s revenue is ~~a leading global supplier~~disaggregated by primary end market, by geographic location and based upon the timing of coils, coolers and coatings to the heating, ventilation, air conditioning, and refrigeration industry. For the nine months ended December 31, 2017, the Company included $451.6 million of net sales and operating income of $14.3 million within its consolidated statement of operations attributable to CIS operations. For the nine months ended December 31, 2016, the Company included $34.7 million of net sales and an operating loss of $0.3 million attributable to one month of CIS operations.revenue recognition.

	Three months ended June 30, 2019
	VTS		CIS		BHVAC		Segment Total
Primary end market:
Automotive	$	129.2	$	-	$	-	$	129.2
Commercial vehicle		98.7		-		-		98.7
Off-highway		73.9		-		-		73.9
Commercial HVAC&R		-		130.9		38.0		168.9
Data center cooling		-		24.2		10.6		34.8
Industrial cooling		-		11.4		-		11.4
Other		24.7		2.3		0.4		27.4
Net sales	$	326.5	$	168.8	$	49.0	$	544.3

Geographic location:
Americas	$	153.3	$	97.1	$	29.1	$	279.5
Europe		126.1		58.6		19.9		204.6
Asia		47.1		13.1		-		60.2
Net sales	$	326.5	$	168.8	$	49.0	$	544.3

Timing of revenue recognition:
Products transferred at a point in time	$	319.1	$	143.9	$	49.0	$	512.0
Products transferred over time		7.4		24.9		-		32.3
Net sales	$	326.5	$	168.8	$	49.0	$	544.3

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~~MODINE MANUFACTURING COMPANY~~

	Three months ended June 30, 2018
	VTS		CIS		BHVAC		Segment Total
Primary end market:
Automotive	$	145.1	$	-	$	-	$	145.1
Commercial vehicle		99.7		-		-		99.7
Off-highway		83.8		-		-		83.8
Commercial HVAC&R		-		135.3		32.0		167.3
Data center cooling		-		34.1		12.2		46.3
Industrial cooling		-		11.5		-		11.5
Other		24.2		3.0		0.8		28.0
Net sales	$	352.8	$	183.9	$	45.0	$	581.7

Geographic location:
Americas	$	150.9	$	104.8	$	25.3	$	281.0
Europe		148.4		65.2		19.7		233.3
Asia		53.5		13.9		-		67.4
Net sales	$	352.8	$	183.9	$	45.0	$	581.7

Timing of revenue recognition:
Products transferred at a point in time	$	342.8	$	153.6	$	45.0	$	541.4
Products transferred over time		10.0		30.3		-		40.3
Net sales	$	352.8	$	183.9	$	45.0	$	581.7

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~Contract Balances

~~(In millions, except per share amounts)~~Contract assets and contract liabilities from contracts with customers were as follows:

~~(unaudited)~~

	June 30, 2019		March 31, 2019
Contract assets	$	24.2	$	22.6
Contract liabilities		4.9		4.0

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 ~~Company has completed the purchase price allocation for its acquisition of Luvata HTS. During~~$1.6 million increase in contract assets during the first ~~and second quarters~~three months of fiscal ~~2018, the Company recorded measurement-period adjustments which~~2020 primarily resulted infrom an increase in ~~goodwill totaling $1.3~~contract assets for revenue recognized over time and customer-owned tooling contracts, under which more costs were capitalized than reimbursed.

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. The $0.9 million increase in contract liabilities during the first three months of fiscal 2020 was primarily ~~due~~related to ~~increases to income tax reserves and changes~~customer contracts for which payment had been received in ~~liabilities for product warranties.~~

~~The Company’s allocation~~advance of the ~~purchase price for its acquisition~~Company’s satisfaction of ~~Luvata HTS is as follows:~~performance obligations.

Cash and cash equivalents $ 27.4
Trade accounts receivable 86.1
Inventories 55.0
Property, plant and equipment 120.4
Intangible assets 130.2
Goodwill 151.9
Other assets 39.1
Accounts payable (73.7 )
Accrued compensation and employee benefits (24.3 )
Deferred income taxes (39.5 )
Pensions (14.3 )
Other liabilities (42.7 )
Purchase price $ 415.6

The following unaudited supplemental pro forma information presents the Company’s consolidated results of operations as though the acquisition of Luvata HTS had occurred at the beginning of fiscal 2016. This pro forma financial information is presented for illustrative purposes only and is not considered to be indicative of the operating results that would have been achieved had the acquisition been completed as of the date indicated.

Three months ended
December 31, 2016

Nine months ended
December 31, 2016

Net sales $ 439.5 $ 1,393.3
Net earnings attributable to Modine 8.5 26.8
Net earnings per share attributable to Modine shareholders:
Basic $ 0.17 $ 0.54
Diluted 0.17 0.53

The supplemental pro forma financial information includes adjustments for: (i) quarterly amortization and depreciation expense totaling $3.2 million for acquired tangible and intangible assets, (ii) estimated quarterly interest expense of $3.5 million resulting from acquisition-related borrowings, and (iii) the estimated income tax impacts related to the pro forma adjustments, considering the statutory tax rates within the applicable jurisdictions. In addition, the pro forma financial information assumes that both $8.6 million of fiscal 2017 acquisition-related transaction costs and a $2.9 million inventory purchase accounting adjustment recorded in the third quarter of fiscal 2017 were incurred during fiscal 2016. The pro forma financial information does not reflect achieved or expected cost and revenue synergies.

Table of Contents

~~MODINE MANUFACTURING COMPANY~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(In millions, except per share amounts)~~

~~(unaudited)~~

~~Note 3:~~

Note 3: 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 1 – Quoted prices for identical instruments in active markets.~~

Level 1 – Quoted prices for identical instruments in active markets.

Level 2 – Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not 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.~~

Level 3 – Model-derived valuations in which one or more significant inputs are not observable.

When available, the Company uses quoted market prices to determine fair value and classifies such measurements as Level 1. In some cases, where market prices are not available, the Company uses observable market-based inputs to calculate fair value, in which case the measurements are classified as Level 2. If quoted or observable market prices are not available, the Company determines fair value based upon valuation models that use, where possible, market-based data such as interest rates, yield curves or currency rates. These measurements are classified as Level 3.

The carrying values of cash, ~~and~~ 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. The Company holds trading securities in deferred compensation trusts to fund obligations under certain non-qualified deferred compensation plans. The securities’ fair values, which are recorded as other noncurrent assets, are determined based upon quoted prices from active markets and classified within Level 1 of the valuation hierarchy. 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 ~~trusts.~~trust. The fair values of the Company’s trading securities and deferred compensation obligations each totaled ~~$5.7~~$6.2 million and ~~$5.0~~$6.0 million ~~at December 31, 2017~~as of June 30, 2019 and March 31, ~~2017,~~2019, respectively. The fair value of the Company’s long-term debt is disclosed in Note ~~14.~~16.

~~Note 4:~~

Note 4: Pensions

Pension cost included the following components:

	Three months ended December 31,						Nine months ended December 31,						Three months ended June 30,
	2017			2016			2017			2016			2019			2018
Service cost	$	0.1		$	0.1		$	0.4		$	0.4		$	0.1		$	0.1
Interest cost		2.5			2.5			7.4			7.3			2.3			2.4
Expected return on plan assets		(2.9	)		(3.1	)		(8.9	)		(9.2	)		(3.0	)		(3.0	)
Amortization of unrecognized net loss		1.4			1.4			4.2			4.2			1.5			1.4
Curtailment gain (a)		(0.3	)		-			(0.3	)		-
Net periodic benefit cost	$	0.8		$	0.9		$	2.8		$	2.7		$	0.9		$	0.9

~~(a)~~

During the third quarter of fiscal 2018, the Company recorded a curtailment gain as a result of the closure of a manufacturing facility in Austria (CIS segment). See Note 6 for additional information regarding the closure of this facility.

During the three months ended June 30, 2019 and 2018, the Company contributed $0.9 million and $1.9 million, respectively, to its U.S. pension plans.

Table of Contents

~~MODINE MANUFACTURING COMPANY~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(In millions, except per share amounts)~~

~~(unaudited)~~

~~During the nine months ended December 31, 2017 and 2016, the Company contributed $11.1 million and $6.3 million, respectively, to its U.S. pension plans.~~

~~Note 5:~~

Note 5: Stock-Based Compensation

Nine months ended December 31,
2017 2016
Shares
Fair Value
Per Award
Shares
Fair Value
Per Award

Stock options 0.2 $ 7.30 0.3 $ 4.60
Restricted stock awards 0.2 $ 15.90 0.3 $ 10.03
Performance stock awards 0.2 $ 15.90 0.3 $ 10.00
Unrestricted stock awards 0.1 $ 16.95 0.1 $ 9.38

Nine months ended December 31,
2017 2016
Expected life of awards in years 6.4 6.4
Risk-free interest rate 1.9 % 1.4 %
Expected volatility of the Company's stock 44.3 % 45.5 %
Expected dividend yield on the Company's stock 0.0 % 0.0 %

~~MODINE MANUFACTURING COMPANY~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(In millions, except per share amounts)~~

~~(unaudited)~~

Unrecognized
Compensation
Expense

Weighted-Average
Remaining Service
Period in Years

Stock options $ 2.6 2.7
Restricted stock awards 6.1 2.7
Performance stock awards 5.2 1.9
Total $ 13.9 2.4

Table of Contents

Note 6: Restructuring Activities

During the third quarter of fiscal 2018, the Company ceased production at its Gailtal, Austria manufacturing facility, primarily to reduce excess capacity and lower manufacturing costs in Europe. As a result of this facility closure, the Company recorded $8.2 million of restructuring expenses, within the CIS segment, during the third quarter of fiscal 2018. These restructuring expenses primarily related to employee severance and related benefits. Also in the third quarter of fiscal 2018, the Company recorded a $1.3 million asset impairment charge to reduce the carrying value of the Austrian facility to its estimated fair value, less costs to sell.

~~The Company’s restructuring actions during the first nine months of fiscal 2017 primarily consisted of plant consolidation activities and targeted headcount reductions in the Americas segment.~~

Three months ended
December 31,

Nine months ended
December 31,

2017 2016 2017 2016
Employee severance and related benefits $ 8.6 $ 0.1 $ 9.2 $ 2.2
Other restructuring and repositioning expenses 0.8 1.5 2.3 3.8
Total $ 9.4 $ 1.6 $ 11.5 $ 6.0

~~MODINE MANUFACTURING COMPANY~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(In millions, except per share amounts)~~

~~(unaudited)~~

Three months ended December 31,
2017 2016
Beginning balance $ 3.0 $ 9.2
Additions 8.6 0.1
Payments (0.6 ) (1.3 )
Effect of exchange rate changes 0.2 (0.5 )
Ending balance $ 11.2 $ 7.5

Nine months ended December 31,
2017 2016
Beginning balance $ 6.5 $ 14.7
Additions 9.2 2.2
Payments (5.1 ) (8.5 )
Effect of exchange rate changes 0.6 (0.9 )
Ending balance $ 11.2 $ 7.5

~~During the second quarter~~Table of ~~fiscal 2017, the Company sold a manufacturing facility in its Europe segment for cash proceeds of $4.3 million and recognized a gain of $1.2 million as a result.~~Contents

~~Note 7:~~

Note 7: Other Income and Expense

Three months ended
December 31,

Nine months ended
December 31,

2017 2016 2017 2016
Equity in earnings of non-consolidated affiliate $ 0.1 $ - $ - $ 0.1
Interest income 0.1 0.1 0.3 0.3
Foreign currency transactions (a) 0.1 (0.4 ) (0.4 ) (1.0 )
Net periodic benefit cost (b) (0.6 ) (0.7 ) (2.2 ) (2.2 )
Total other expense - net $ (0.3 ) $ (1.0 ) $ (2.3 ) $ (2.8 )

(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 certain foreign currency exchange contracts.

(b)

Represents net periodic benefit cost, exclusive of service cost, for the ~~Company’s~~Company's pension and postretirement plans.

11Note 8: Income Taxes

~~Table of Contents~~

~~MODINE MANUFACTURING COMPANY~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(In millions, except per share amounts)~~

~~(unaudited)~~

~~Note 8:~~

~~Income Taxes~~

The Company’s effective tax rate for the three months ended ~~December 31, 2017~~June 30,2019 and ~~2016~~2018 was ~~482.2~~26.1 percent and ~~(58.3)~~18.2 percent, respectively. The ~~Company’s~~ effective tax rate for the ~~nine months ended December 31, 2017 and 2016 was 86.6 percent and 16.0 percent, respectively. The effective tax rates for the~~first quarter of fiscal ~~2018 periods are~~2020 is higher than inthe first quarter of the prior year, primarily due to ~~third~~the absence of a $2.0 million reversal of a valuation allowance on deferred tax assets in a foreign jurisdiction recorded during the first quarter charges totaling $35.7 million related to the recently-enacted tax reform legislation in the U.S. Other factors that impacted the Company’s effective tax rate for the three and nine months ended December 31, 2017, as compared with the prior-year periods, were income tax benefits resulting from a development tax credit in Hungary, changes in the valuation allowances related to certain foreign jurisdictions,of fiscal 2019 and changes in the mix and amount of foreign and domestic earnings. ~~In addition, the effective tax rate for the nine months ended December 31, 2017 benefitted from a $1.8 million reduction in unrecognized tax benefits during the second quarter~~

As of fiscal 2018 that resulted from a lapse in statutes of limitations. The development tax credit in Hungary resulted in a tax benefit of $2.2 million and $7.9 million in the three and nine months ended December 31, 2017, respectively.

On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act includes broad and complex changes to the U.S. tax code, including (i) a reduction in the U.S. federal corporate tax rate from 35 percent to 21 percent effective January 1, 2018, and (ii) a transition tax on certain unrepatriated earnings of foreign subsidiaries. For fiscal 2018, the Company will record its income tax provision based on a blended U.S. statutory tax rate of 31.5 percent, which is based on a proration of the applicable tax rates before and after the effective date of the Tax Act. The statutory tax rate of 21 percent will apply for fiscal June 30,2019, ~~and beyond.~~

The Tax Act also puts in place new tax laws that may impact the Company’s taxable income beginning in fiscal 2019, which include, but are not limited to (i) creating a base erosion anti-abuse tax (BEAT), which is a new minimum tax, (ii) generally eliminating U.S. federal income taxes on dividends from foreign subsidiaries, (iii) adding a new provision designed to tax global intangible low taxed income (GILTI), (iv) adding a provision that could limit the amount of deductible interest expense, and (v) limiting the deductibility of certain executive compensation.

Shortly after the Tax Act was enacted, the SEC issued accounting guidance, which provides a one-year measurement period during which a company may complete its accounting for the impacts of the Tax Act. To the extent a company’s accounting for certain income tax effects of the Tax Act is incomplete, the company may determine a reasonable estimate for those effects and record a provisional estimate in its financial statements. If a company cannot determine a provisional estimate to be included in the financial statements, it should continue to apply the provisions of the tax laws that were in effect immediately prior to the Tax Act being enacted.

During the third quarter of fiscal 2018, the Company recorded provisional discrete tax charges of $35.7 million related to the Tax Act. The Company adjusted its U.S. deferred tax assets by $20.7 million due to the reduction in the U.S. federal corporate tax rate. This net reduction in deferred tax assets also included the estimated impact on the Company’s net state deferred tax assets. In addition, the Company recorded a $15.0 million charge for the transition tax. The Company expects to pay this estimated $15.0 million tax liability over the next eight years, beginning with a payment of approximately $1.0 million in fiscal 2019.

The Company is also analyzing other provisions of the Tax Act to determine if they will impact the Company’s effective tax rate in fiscal 2018 or in the future. These provisions include BEAT, as described above, the elimination of U.S. federal income taxes on dividends from foreign subsidiaries, the new limits on the deductibility of interest expense and executive compensation, and the state tax implications of the Tax Act, including the impact of the transition tax and the impact on the realizability of tax attributes and valuation allowances.

The Tax Act includes a provision designed to tax GILTI, as described above, starting in fiscal 2019. The Company has elected to record the tax effects of the GILTI provision as a period expense in the applicable tax year. As a result, the Company does not expect GILTI to impact its fiscal 2018 income tax provision.

~~Table of Contents~~

~~MODINE MANUFACTURING COMPANY~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(In millions, except per share amounts)~~

~~(unaudited)~~

For various reasons, the Company has not completed its accounting for the income tax effects of certain elements of the Tax Act. In regards to the reduction in the U.S. corporate tax rate, the Company is continuing to analyze the temporary differences that existed on the date of enactment, and the temporary differences originating in the current fiscal year. In regards to the transition tax, the Company is awaiting further interpretative guidance, continuing to assess available tax methods and elections, and continuing to gather additional information to more precisely compute the amount of this tax. Previously, the Company’s practice and intention was to reinvest, with certain insignificant exceptions, the earnings of its non-U.S. subsidiaries outside of the U.S. As a result, the Company did not record U.S. deferred income taxes or foreign withholding taxes for these earnings. The Company is currently analyzing its global working capital requirements and the potential tax liabilities that would be incurred if the non-U.S. subsidiaries distribute cash to the U.S. parent, which include local country withholding tax and potential U.S. state taxes. ~~The Company expects to complete its analysis of the accounting guidance related to the Tax Act and its evaluation of the impacts of the Tax Act in the~~ ~~fourth quarter of fiscal 2018 or in early fiscal 2019.~~

~~At December 31, 2017,~~ valuation allowances against deferred tax assets in certain foreign jurisdictions totaled ~~$47.4~~$38.1 million and valuation allowances against certain U.S. deferred tax assets totaled ~~$7.0~~$6.8 million, as it is more likely than not these assets will not be realized based upon historical financial results. ~~The $1.2 million increase in the U.S. valuation allowances during the three months ended December 31, 2017 relates mainly to adjustments made to state tax attributes as a result of tax reform.~~ The Company will continue to provide a valuation allowance against its net deferred tax assets in each of the applicable jurisdictions until the need for a valuation allowance is eliminated. The need for a valuation allowance is eliminated when the Company determines it is more likely than not the deferred tax assets will be realized. ~~The Company may release the valuation allowance (approximately $3.0 million) in a foreign jurisdiction during the fourth quarter of fiscal 2018 or in fiscal 2019.~~

Accounting policies for interim reporting require the Company to adjust its effective tax rate each quarter to be consistent with its estimated annual effective tax rate. Under this methodology, the Company applies its estimated annual income tax rate to its year-to-date ordinary earnings to derive its income tax provision each quarter. The Company records the tax impacts of certain significant, unusual or infrequently occurring items in the period in which they occur. The Company excluded the impact of its operations in certain foreign locations from the overall effective tax rate methodology and recorded them discretely based upon year-to-date results because the Company anticipates net operating losses for the full fiscal year in these jurisdictions.

The Company ~~does not anticipate a significant change in~~estimates that reductions to unrecognized tax benefits ~~during~~for the remainder of fiscal ~~2018.~~2020 will total $2.8 million, primarily due to lapses in statutes of limitations, which, if recognized, would have a $2.2 million favorable impact on its effective tax rate.

~~MODINE MANUFACTURING COMPANY~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(In millions, except per share amounts)~~

~~(unaudited)~~

~~Note 9:~~

Note 9: Earnings Per Share

Three months ended
December 31,

Nine months ended
December 31,

2017 2016 2017 2016
Net (loss) earnings attributable to Modine $ (28.3 ) $ 1.7 $ 4.6 $ 6.2
Less: Undistributed earnings attributable to unvested shares - - - (0.1 )
Net (loss) earnings available to Modine shareholders $ (28.3 ) $ 1.7 $ 4.6 $ 6.1

Weighted-average shares outstanding - basic 50.0 47.9 49.8 47.3
Effect of dilutive securities - 0.6 0.8 0.4
Weighted-average shares outstanding - diluted 50.0 48.5 50.6 47.7

Earnings per share:
Net (loss) earnings per share - basic $ (0.57 ) $ 0.04 $ 0.09 $ 0.13
Net (loss) earnings per share - diluted $ (0.57 ) $ 0.04 $ 0.09 $ 0.13

Note 10: Cash, Cash Equivalents and Restricted Cash

~~Note 10:~~

Note 11: Inventories

December 31, 2017 March 31, 2017
Raw materials and work in process $ 140.0 $ 127.7
Finished goods 46.8 40.8
Total inventories $ 186.8 $ 168.5

Table of Contents

Note 12: Property, Plant and Equipment

December 31, 2017 March 31, 2017
Gross property, plant and equipment $ 1,266.2 $ 1,177.6
Accumulated depreciation (774.9 ) (718.6 )
Net property, plant and equipment $ 491.3 $ 459.0

~~MODINE MANUFACTURING COMPANY~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(In millions, except per share amounts)~~

~~(unaudited)~~

~~Note 12:~~

Note 13: Goodwill and Intangible Assets

Asia
Building
HVAC
CIS Total
Goodwill, March 31, 2017 $ 0.5 $ 13.7 $ 150.9 $ 165.1
Acquisition (a) - - 1.3 1.3
Effect of exchange rate changes - 0.8 5.0 5.8
Goodwill, December 31, 2017 $ 0.5 $ 14.5 $ 157.2 $ 172.2

~~(a)~~

During the first six months of fiscal 2018, the Company recorded a $1.3 million increase to goodwill as a result of measurement period adjustments made in connection with purchase accounting for the acquisition of Luvata HTS. See Note 2 for additional information.

December 31, 2017 March 31, 2017

Gross
Carrying
Value

Accumulated
Amortization

Net
Intangible
Assets

Gross
Carrying
Value

Accumulated
Amortization

Net
Intangible
Assets

Customer relationships $ 63.6 $ (4.7 ) $ 58.9 $ 60.5 $ (1.7 ) $ 58.8
Trade names 60.1 (9.8 ) 50.3 58.4 (7.2 ) 51.2
Acquired technology 28.4 (5.1 ) 23.3 27.0 (2.9 ) 24.1
Total intangible assets $ 152.1 $ (19.6 ) $ 132.5 $ 145.9 $ (11.8 ) $ 134.1

Fiscal Year
Estimated
Amortization
Expense

Remainder of 2018 $ 2.4
2019 9.6
2020 9.5
2021 8.9
2022 8.7
2023 & Beyond 93.4

~~MODINE MANUFACTURING COMPANY~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(In millions, except per share amounts)~~

~~(unaudited)~~

~~Note 13:~~

Note 14: Product Warranties

Three months ended December 31,
2017 2016
Beginning balance $ 9.4 $ 8.4
Warranties recorded at time of sale 2.0 1.4
Adjustments to pre-existing warranties 0.2 0.1
Additions due to acquisition - 4.1
Settlements (2.1 ) (2.1 )
Effect of exchange rate changes 0.1 (0.3 )
Ending balance $ 9.6 $ 11.6

Nine months ended December 31,
2017 2016
Beginning balance $ 10.0 $ 8.3
Warranties recorded at time of sale 4.7 3.9
Adjustments to pre-existing warranties - -
Additions and adjustments due to acquisition (a) (1.0 ) 4.1
Settlements (4.6 ) (4.4 )
Effect of exchange rate changes 0.5 (0.3 )
Ending balance $ 9.6 $ 11.6

~~(a)~~

During fiscal 2018, the Company decreased its liability for product warranties by $1.0 million as a result of measurement period adjustments made in connection with purchase accounting for the acquisition of Luvata HTS. See Note 2 for additional information.

~~Note 14:~~

~~Indebtedness~~

~~Long-term debt consisted~~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. The condensed consolidated financial statements for the three months ended June 30, 2019 reflect the adoption of this new guidance; however, the comparable prior-year period has not been adjusted. See Note 1 for additional information regarding the Company’s adoption of the ~~following:~~new guidance.

Fiscal year
of maturity
December 31, 2017 March 31, 2017
Term loans 2022 $ 270.4 $ 268.9
6.8% Senior Notes 2021 105.0 117.0
5.8% Senior Notes 2027 50.0 50.0
Other (a) 2032 12.7 8.3
438.1 444.2
Less: current portion (37.9 ) (31.8 )
Less: unamortized debt issuance costs (5.7 ) (6.7 )
Total long-term debt $ 394.5 $ 405.7
Significant Accounting Policy

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(In millions, except per share amounts)~~Lease assets and liabilities

(a)

Finance lease ROU assets are recorded net of accumulated amortization of $1.4 million as of June 30, 2019.

Components of Lease Expense

(a)

For the three months ended June 30, 2019, operating lease expense included $0.9 million of short-term lease expense. Variable lease expense was not significant.

Supplemental Cash Flow Information

Lease Term and Discount Rates

Maturity of Lease Liabilities under New Lease Accounting Guidance

Maturity of Lease Liabilities under Previous Lease Accounting Guidance

Note 16: Indebtedness

Long-term debt consisted of the following:

(a)	Other long-term debt primarily includes borrowings by foreign subsidiaries and finance lease obligations.

Long-term debt matures as follows:

~~Note 15:~~

Note 17: Contingencies and Litigation

~~MODINE MANUFACTURING COMPANY~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(In millions, except per share amounts)~~

~~(unaudited)~~

The Company has recorded environmental accruals for obligations assumed as a result of its recent acquisition of Luvata HTS, the most significant of which relates to historical soil and groundwater contamination remediation and monitoring for a manufacturing site in the United States. In addition, the Company has recorded environmental investigation and remediation accruals related to ~~subsurface~~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, ~~investigative and remedial work related to a previously-owned manufacturing facility in the United States, and groundwater contamination at its manufacturing facility in Brazil,~~ along with accruals for lesser environmental matters at certain other facilities in the United ~~States.~~States and Brazil. 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. The accruals for these environmental matters totaled ~~$17.0~~$18.9 million ~~and $16.8 million at December 31, 2017~~as of June 30, 2019 and March 31, ~~2017, respectively.~~2019. As additional information becomes available, the Company will re-assess the liabilities related to these matters and revise the estimated accruals, if necessary. Based upon currently available information, the Company believes the ultimate outcome of these matters, individually and in the aggregate, will not have a material adverse effect on its financial position. However, these matters are subject to inherent uncertainties, and unfavorable outcomes could occur, including significant monetary damages.

~~Note 16:~~

Note 18: Accumulated Other Comprehensive Loss

Three months ended
December 31, 2017

Nine months ended
December 31, 2017

Foreign
Currency
Translation

Defined
Benefit
Plans

Cash Flow
Hedges
Total
Foreign
Currency
Translation

Defined
Benefit
Plans

Cash Flow
Hedges
Total
Beginning balance $ (19.0 ) $ (133.3 ) $ - $ (152.3 ) $ (46.8 ) $ (135.0 ) $ - $ (181.8 )

Other comprehensive income before reclassifications 4.6 - 0.6 5.2 32.4 - 0.6 33.0
Reclassifications for amortization of unrecognized net loss (a) - 1.3 - 1.3 - 3.9 - 3.9
Income taxes - (0.4 ) (0.2 ) (0.6 ) - (1.3 ) (0.2 ) (1.5 )
Total other comprehensive income 4.6 0.9 0.4 5.9 32.4 2.6 0.4 35.4

Ending balance $ (14.4 ) $ (132.4 ) $ 0.4 $ (146.4 ) $ (14.4 ) $ (132.4 ) $ 0.4 $ (146.4 )

~~MODINE MANUFACTURING COMPANY~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(In millions, except per share amounts)~~

~~(unaudited)~~

Three months ended
December 31, 2016

Nine months ended
December 31, 2016

Foreign
Currency
Translation

Defined
Benefit
Plans
Total
Foreign
Currency
Translation

Defined
Benefit
Plans
Total
Beginning balance $ (39.0 ) $ (136.5 ) $ (175.5 ) $ (36.0 ) $ (138.2 ) $ (174.2 )

Other comprehensive income (loss) before reclassifications (14.2 ) - (14.2 ) (17.2 ) - (17.2 )
Reclassifications for amortization of unrecognized net loss (a) - 1.3 1.3 - 3.9 3.9
Income taxes - (0.4 ) (0.4 ) - (1.3 ) (1.3 )
Total other comprehensive income (loss) (14.2 ) 0.9 (13.3 ) (17.2 ) 2.6 (14.6 )

Ending balance $ (53.2 ) $ (135.6 ) $ (188.8 ) $ (53.2 ) $ (135.6 ) $ (188.8 )

(a)

Amounts are included in the calculation of net periodic benefit cost for the ~~Company’s~~Company's defined benefit plans, which include pension and other postretirement plans. See Note 4 for additional information about the ~~Company’s~~Company's pension plans.

(b)

Amount represent net gains and losses associated with cash flow hedges that were reclassified to net earnings.

Note 19: Segment Information

Nine months ended
December 31,

(a)	The Company adopted new lease accounting guidance and, as a result, recorded $61.3 million of operating lease assets on its consolidated balance sheet on April 1, 2019. See Note 1 for additional information.

~~MODINE MANUFACTURING COMPANY~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(In millions, except per share amounts)~~

~~(unaudited)~~

Three months ended
December 31,

Nine months ended
December 31,

2017 2016 2017 2016
Gross profit: $'s
% of
sales
$'s
% of
sales
$'s
% of
sales
$'s
% of
sales

Americas $ 21.7 15.4 % $ 18.4 14.9 % $ 69.7 16.2 % $ 59.5 15.3 %
Europe 17.9 13.3 % 18.6 15.5 % 56.8 14.0 % 60.3 15.5 %
Asia 8.2 19.0 % 5.0 17.6 % 21.9 18.6 % 13.1 16.7 %
Commercial and Industrial Solutions (a) 18.6 12.9 % 4.4 12.7 % 66.4 14.7 % 4.4 12.7 %
Building HVAC 19.0 33.8 % 15.3 32.4 % 45.0 30.4 % 37.1 28.0 %
Segment total 85.4 16.4 % 61.7 17.5 % 259.8 16.7 % 174.4 17.0 %
Corporate and eliminations - - (2.7 ) - 0.2 - (5.1 ) -
Gross profit $ 85.4 16.7 % $ 59.0 16.9 % $ 260.0 16.9 % $ 169.3 16.7 %

Three months ended
December 31,

Nine months ended
December 31,

Operating income: 2017 2016 2017 2016
Americas $ 8.9 $ 5.7 $ 28.8 $ 14.2
Europe 6.3 8.6 22.8 30.9
Asia 5.1 2.6 12.6 4.9
Commercial and Industrial Solutions (a) (4.6 ) (0.3 ) 14.3 (0.3 )
Building HVAC 9.2 6.7 18.6 10.4
Segment total 24.9 23.3 97.1 60.1
Corporate and eliminations (11.0 ) (16.6 ) (32.1 ) (38.7 )
Operating income $ 13.9 $ 6.7 $ 65.0 $ 21.4

December 31, 2017 March 31, 2017
Total assets:
Americas $ 275.9 $ 282.9
Europe 308.1 269.4
Asia 132.5 111.3
Commercial and Industrial Solutions 606.8 576.0
Building HVAC 88.8 85.2
Corporate and eliminations (b) 90.1 124.7
Total assets $ 1,502.2 $ 1,449.5

~~(a)~~

The Company acquired Luvata HTS on November 30, 2016 and began operating the business as its CIS segment. As the Company has consolidated CIS financial results since the acquisition date, the three and nine months ended December 31, 2016 included one month of financial results from CIS operations. During the three months ended December 31, 2017, the Company recorded restructuring expenses and an impairment charge totaling $9.5 million within the CIS segment associated with the closure of a manufacturing facility in Austria. See Note 6 for additional information.

~~(b)~~

The decrease in total assets at Corporate was primarily due to a decrease in deferred tax assets resulting from the impact of tax reform in the U.S. See Note 8 for additional information regarding the reduction in the corporate tax rate in the U.S.

Item 2.

~~Management's~~Management’s Discussion and Analysis of Financial Condition and Results of Operations.

~~On November 30, 2016, we acquired Luvata Heat Transfer~~First Quarter Highlights

In December 2017, the Tax Cuts and Jobs Act (“U.S. tax reform”) was enacted and included numerous changes to existing U.S. tax regulations, including U.S. corporate tax rates, business deductions, and taxes on income in foreign jurisdictions. During the third quarter of fiscal 2018, we recorded provisional charges totaling $35.7 million for certain income tax effects of the U.S. tax reform. See Note 8 of the Notes to Condensed Consolidated Financial Statements for additional information.

~~Third Quarter Highlights~~

~~Net~~operating segments, partially offset by higher sales in ~~the third quarter of fiscal 2018 increased $162.9~~our Building HVAC Systems (“BHVAC”) segment. Gross profit decreased $10.9 million ~~or 47~~and gross margin declined 90 basis points to 15.8 percent, ~~from the third quarter of fiscal 2017,~~ primarily due to ~~a $110.2 million increase in~~lower sales in our CIS segment, which we owned for one month in the third quarter of the prior year, and higher sales in all of our other operating segments. Gross profit increased $26.4 million, including $14.2 million of additional contribution from our CIS segment.volume. Selling, general and administrative (“SG&A”) expenses increased ~~$10.1~~$4.2 million, primarily due to a $9.0 million increase of SG&A expenses in our CIS segment. Restructuring expenses increased $7.8 million, primarily due to severance expenses related to the recent closure of a manufacturing facility in Austria within the CIS segment. In addition, we recorded a $1.3 million asset impairment charge related to this CIS Austria facility. Operating income during the third quarter of fiscal 2018 increased $7.2 million to $13.9 million. Our net loss of $27.9 million represents a $29.8 million decline compared with the third quarter of the prior year, primarily due to $35.7$8.4 million of ~~charges~~costs associated with ~~U.S. tax reform, partially offset by~~our review of strategic alternatives for the ~~increase in operating income.~~

~~Year-to-Date Highlights~~

Net sales in the first nine months of fiscal 2018 increased $521.8 million, or 51 percent, from the same period last year, primarily due to $416.9 million of additional sales from our CIS segment and higher sales in all of our other operating segments. Gross profit increased $90.7 million, including $62.0 million of additional contribution from our CIS segment. SG&A expenses increased $39.1 million, primarily due to a $37.9 million increase in SG&A expenses in our CIS segment.VTS segment’s automotive business. Operating income during the first ~~nine months~~quarter of fiscal ~~2018 increased $43.6~~2020 decreased $16.7 million to ~~$65.0 million. Our net earnings of $5.8~~$18.1 million, ~~decreased $1.0 million compared with the same period in the prior year,~~ primarily due to ~~$35.7 million of charges associated with U.S. tax reform~~lower gross profit and higher ~~interest expense, partially offset by~~SG&A expenses, and our net earnings decreased $14.3 million.

CONSOLIDATED RESULTS OF OPERATIONS

~~Comparison of Three Months Ended December 31, 2017 and 2016~~

~~Third~~First quarter net sales of ~~$512.7~~$529.0 million were ~~$162.9~~$37.1 million, or 477 percent, ~~higher~~lower than the ~~third~~first quarter of the prior year, primarily due to ~~$110.2 million of additional sales from our CIS segment, which we owned for one month in the third quarter of the prior year, higher~~lower sales in ~~all of~~ our ~~other operating~~VTS and CIS segments and a ~~$15.9 million favorable impact of foreign currency exchange rate changes.~~

Third quarter gross profit increased $26.4 million, primarily due to $14.2 million of additional contribution from our CIS segment and higher gross profit in our Building HVAC, Americas, and Asia segments. Third quarter gross profit was favorably impacted by $2.1 million from foreign currency exchange rate changes. Gross margin declined 20 basis points to 16.7 percent, as the benefits from higher sales volume and the absence of a $2.9 million inventory purchase accounting adjustment, which was recorded at Corporate in the prior year, were offset by unfavorable sales mix, higher material costs, and the absence of favorable customer pricing settlements in Europe recorded in the prior year.

SG&A expenses increased $10.1 million from the third quarter of fiscal 2017 to the third quarter of fiscal 2018, primarily due to a $9.0 million increase in SG&A expenses in our CIS segment, a $1.4 million unfavorable impact of foreign currency exchange rate changes, and higher compensation-related expenses, partially offset by lower costs incurred related to the acquisition of Luvata HTS. SG&A expenses, as a percentage of net sales, decreased 260 basis points compared with the third quarter of the prior year.

Restructuring expenses of $9.4 million in the third quarter of fiscal 2018 increased $7.8 million compared with the prior year, primarily due to severance-related expenses in the CIS segment related to the closure of a manufacturing facility in Austria.

~~During the third quarter of fiscal 2018, we recorded a $1.3 million impairment charge related to the closure of a CIS manufacturing facility in Austria.~~

Operating income of $13.9 million in the third quarter of fiscal 2018 improved $7.2 million compared with the third quarter of fiscal 2017, primarily due to higher earnings in the Americas, Asia and Building HVAC segments.

Interest expense increased $1.8 million to $6.3 million in the third quarter of fiscal 2018, primarily due to the debt issued in November 2016 to finance a significant portion of our acquisition of Luvata HTS.

The provision for income taxes was $35.2 million in the third quarter of fiscal 2018, compared with a benefit for income taxes of $0.7 million in the third quarter of fiscal 2017. The $35.9 million change was primarily due to charges totaling $35.7 million in the third quarter of fiscal 2018 related to the recently-enacted U.S. tax reform. In addition, the tax provision in the third quarter of fiscal 2018 included a $2.2 million benefit from a development tax credit in Hungary.

~~Comparison of Nine Months Ended December 31, 2017 and 2016~~

Fiscal 2018 year-to-date net sales of $1,536.5 million were $521.8 million, or 51 percent, higher than the same period last year, primarily due to $416.9 million of additional sales from our CIS segment, higher sales in all of our other segments, and an $18.7 million favorable impact of foreign currency exchange rate changes.

Fiscal 2018 year-to-date gross profit of $260.0 million increased $90.7 million from the same period last year, due primarily to $62.0 million of incremental gross profit in our recently-acquired CIS segment and higher gross profit in our Americas, Asia, and Building HVAC segments. Year-to-date gross profit was favorably impacted by $2.4 million from foreign currency exchange rate changes. Gross margin improved 20 basis points to 16.9 percent, primarily due to higher sales volume and improved production efficiencies, partially offset by unfavorable material costs and incremental depreciation and amortization expense resulting from purchase accounting for Luvata HTS.

Fiscal 2018 year-to-date SG&A expenses increased $39.1 million from the same period last year, primarily due to a $37.9 million increase in SG&A expenses in our CIS segment, higher compensation-related expenses, and a $1.5$17.8 million unfavorable impact of foreign currency exchange rate changes, partially offset by higher sales in our BHVAC segment.

~~During fiscal 2018, we recorded a $1.3 million impairment charge related to the closure of the CIS manufacturing facility in Austria.~~

~~During fiscal 2017, we sold a manufacturing facility within our Europe segment for cash proceeds of $4.3 million and recognized a $1.2 million gain as a result.~~

~~Interest expense increased $9.0 million to $19.5 million in the first nine months of fiscal 2018, primarily due to debt issued to finance a significant portion of our acquisition of Luvata HTS.~~

SEGMENT RESULTS OF OPERATIONS

~~Americas~~VTS net sales ~~increased $17.1~~decreased $26.3 million, or 147 percent, from the ~~third~~first quarter of fiscal ~~2017~~2019 to the ~~third~~first quarter of fiscal ~~2018,~~2020, primarily due to lower sales volume to customers in Europe and to off-highway customers in Asia, partially offset by higher sales volume to commercial vehicle ~~off-highway, and automotive customers.~~customers in North America. Foreign currency exchange rate changes had an unfavorable $12.1 million impact on first quarter sales. Gross profit ~~increased $3.3~~decreased $9.0 million and gross margin ~~improved 50~~declined 150 basis points ~~primarily due~~ to higher sales volume and improved production efficiencies, partially offset by unfavorable material costs. SG&A expenses increased $1.4 million, primarily due to a lower recovery of development costs and higher compensation-related expenses. Restructuring expenses decreased $1.3 million in the third quarter of fiscal 2018,13.8 percent, primarily due to lower ~~plant consolidation costs. Operating income increased $3.2 million to $8.9 million, primarily due to higher gross profit.~~

~~Comparison of Nine Months Ended December 31, 2017 and 2016~~

~~Americas year-to-date net sales increased $41.3 million, or 11 percent, from the same period last year, primarily due to higher~~ sales volume, ~~to off-highway~~higher labor costs, and commercial vehicle customers, increased aftermarket sales in Brazil, and a $2.0 million favorable impact of foreign currency exchange rate changes. Gross profit increased $10.2 million and gross margin improved 90 basis points, primarily due to higher ~~sales volume and improved production efficiencies,~~tariff-related expenses, partially offset by ~~unfavorable~~favorable raw material costs. SG&A expenses decreased $0.8 million, primarily due to the absence of a $1.6 million charge recorded in the prior year related to a legal matter in Brazil, which has since been settled and paid, partially offset by legal costs incurred for an environmental matter associated with a previously-owned manufacturing facility. Restructuring expenses decreased $3.6 million, primarily due to lower plant consolidation and severance expenses. Operating income increased $14.6 million to $28.8 million, primarily due to higher gross profit and lower restructuring expenses.

Europe
Three months ended December 31, Nine months ended December 31,
2017 2016 2017 2016
(in millions) $'s
% of
sales
$'s
% of
sales
$'s
% of
sales
$'s
% of
sales

Net sales $ 134.6 100.0 % $ 119.8 100.0 % $ 405.4 100.0 % $ 389.7 100.0 %
Cost of sales 116.7 86.7 % 101.2 84.5 % 348.6 86.0 % 329.4 84.5 %
Gross profit 17.9 13.3 % 18.6 15.5 % 56.8 14.0 % 60.3 15.5 %
Selling, general and administrative expenses 10.5 7.8 % 9.9 8.2 % 32.3 8.0 % 30.8 7.9 %
Restructuring expenses (income) 1.1 0.9 % 0.1 0.1 % 1.7 0.4 % (0.2 ) -0.1 %
Gain on sale of facility - - - - - - (1.2 ) -0.3 %
Operating income $ 6.3 4.6 % $ 8.6 7.2 % $ 22.8 5.6 % $ 30.9 7.9 %

~~Comparison of Three Months Ended December 31, 2017 and 2016~~

~~Europe net sales increased $14.8 million, or 12 percent, from the third quarter of fiscal 2017 to the third quarter of fiscal 2018, primarily due to an $11.1 million favorable impact of~~In addition, foreign currency exchange rate changes ~~and higher sales volume to automotive and off-highway customers. Gross profit~~had an unfavorable $1.8 million impact on gross profit. SG&A expenses decreased ~~$0.7~~$2.3 million, ~~and gross margin declined 220~~or 10 basis points ~~to 13.3 percent,~~as a percentage of sales, primarily due to ~~the absence of favorable customer pricing settlements recorded~~lower compensation-related expenses, lower environmental charges related to a previously-owned manufacturing facility in the ~~prior year. In addition, gross profit was favorably impacted by $1.4~~U.S., and a $1.0 million ~~from foreign currency exchange rate changes. SG&A expenses increased $0.6 million, primarily due to a $0.9 million unfavorable~~favorable impact of foreign currency exchange rate changes. Restructuring expenses increased $1.0 million in the third quarter of fiscal 2018, primarily due to higher severance expenses. Operating income of $6.3 million decreased $2.3 million, primarily due to higher restructuring expenses and lower gross profit.

~~Comparison of Nine Months Ended December 31, 2017 and 2016~~

Europe year-to-date net sales increased $15.7 million, or 4 percent, from the same period last year, primarily due to a $14.6 million favorable impact of foreign currency exchange rate changes and higher sales volume to off-highway and automotive customers, partially offset by the planned wind-down of certain commercial vehicle programs. Gross profit decreased $3.5 million and gross margin declined 150 basis points to 14.0 percent, primarily due to unfavorable material costs and the absence of the favorable customer pricing settlements recorded in the prior year, partially offset by improved production efficiencies. In addition, gross profit was favorably impacted by $2.0 million from foreign currency exchange rate changes. SG&A expenses increased $1.5 ~~million, primarily due to a $1.1 million unfavorable impact of foreign currency exchange rate changes and higher compensation-related expenses. Restructuring expenses increased $1.9~~ million, primarily due to higher severance expenses resulting from targeted headcount reductions in Europe and ~~equipment transfer costs. During fiscal 2017, we sold a manufacturing facility for cash proceeds of $4.3 million and recorded a $1.2 million gain as a result.~~in the Americas during the current year. Operating income ~~of $22.8~~decreased $8.2 million ~~decreased $8.1~~to $17.3 million during the first quarter, primarily due to lower gross ~~profit and higher restructuring and SG&A expenses.~~profit.

Asia
Three months ended December 31, Nine months ended December 31,
2017 2016 2017 2016
(in millions) $'s
% of
sales
$'s
% of
sales
$'s
% of
sales
$'s
% of
sales

Net sales $ 42.8 100.0 % $ 28.6 100.0 % $ 117.7 100.0 % $ 78.2 100.0 %
Cost of sales 34.6 81.0 % 23.6 82.4 % 95.8 81.4 % 65.1 83.3 %
Gross profit 8.2 19.0 % 5.0 17.6 % 21.9 18.6 % 13.1 16.7 %
Selling, general and administrative expenses 3.1 7.3 % 2.4 8.4 % 9.3 7.9 % 8.2 10.4 %
Operating income $ 5.1 11.7 % $ 2.6 9.2 % $ 12.6 10.7 % $ 4.9 6.3 %

~~Comparison of Nine Months Ended December 31, 2017 and 2016~~

Asia year-to-date net sales increased $39.5 million, or 51 percent, from the same period last year, primarily due to higher sales volume to off-highway customers in all geographic markets and automotive customers in China and India. Gross profit increased $8.8 million and gross margin improved 190 basis points to 18.6 percent, primarily due to higher sales volume. SG&A expenses increased by $1.1 million compared with the prior year, yet decreased 250 basis points as a percentage of sales. The increase in SG&A expenses was primarily due to higher compensation-related expenses. Operating income of $12.6 million increased $7.7 million, primarily due to higher gross profit.

Building HVAC
Three months ended December 31, Nine months ended December 31,
2017 2016 2017 2016
(in millions) $'s
% of
sales
$'s
% of
sales
$'s
% of
sales
$'s
% of
sales

Net sales $ 56.1 100.0 % $ 47.2 100.0 % $ 147.9 100.0 % $ 132.8 100.0 %
Cost of sales 37.1 66.2 % 31.9 67.6 % 102.9 69.6 % 95.7 72.0 %
Gross profit 19.0 33.8 % 15.3 32.4 % 45.0 30.4 % 37.1 28.0 %
Selling, general and administrative expenses 9.8 17.4 % 8.5 18.0 % 26.4 17.8 % 26.0 19.6 %
Restructuring expenses - - 0.1 0.2 % - - 0.7 0.5 %
Operating income $ 9.2 16.5 % $ 6.7 14.2 % $ 18.6 12.6 % $ 10.4 7.8 %

~~Comparison of Three Months Ended December 31, 2017 and 2016~~

Building HVAC net sales increased $8.9 million, or 19 percent, from the third quarter of fiscal 2017 to the third quarter of fiscal 2018, primarily due to higher ventilation and heating product sales in North America, higher ventilation product sales in the U.K., and a ~~$1.3~~$4.6 million ~~favorable~~unfavorable impact of foreign currency exchange rate changes. Gross profit ~~increased $3.7~~decreased $4.3 million and gross margin ~~improved 140~~declined 120 basis points to ~~33.8~~14.4 percent, primarily due to ~~higher~~lower sales volume ~~favorable~~and unfavorable sales ~~mix, and improved production efficiencies in the U.K.~~mix. In addition, foreign currency exchange rate changes had an unfavorable $0.6 million impact on gross profit. SG&A expenses decreased $0.2 million compared with the prior year, yet increased ~~$1.3 million, yet decreased 60~~70 basis points as a percentage of ~~sales,~~sales. Operating income decreased $4.2 million to $9.0 million during the first quarter, primarily due to ~~higher compensation-related expenses, including commission expenses resulting from the increased sales. Operating income of $9.2 million increased $2.5 million, primarily due to higher~~lower gross ~~profit, partially offset by higher SG&A expenses.~~profit.

~~Comparison of Nine Months Ended December 31, 2017 and 2016~~

Liquidity and Capital Resources

~~Shelf Registration Statement~~Share Repurchase Program

~~Contractual Obligations~~

~~Other than the transition tax liability recorded as a result of U.S. tax reform, as discussed in Note 8~~had approximately $47.0 million of the ~~Notes~~repurchase authorization remaining. Our decision whether and to ~~Condensed Consolidated Financial Statements, there have not been any material changes in the Company’s contractual obligations since March 31, 2017, as reported in Item 7. in Part II.~~what extent to repurchase additional shares under this program will depend on a number of ~~the Company’s Annual Report on Form 10-K.~~factors, including business conditions, other cash priorities, and stock price.

Forward-Looking Statements

Economic, social and political conditions, changes, challenges and unrest, particularly in the geographic, product and financial markets where we and our customers operate and compete, including, in particular, foreign currency exchange rate fluctuations, tariffs, inflation, changes in interest rates, recession and recovery therefrom, restrictions and uncertainty associated with cross-border trade, and, in particular, the continuing recovery and/or instability of certain markets in which we operate in China and North America, and the general uncertainties about the impact of regulatory and/or policy changes, including those related to tax and trade, that have been or may be implemented in the United States, as well as continuing uncertainty regarding the longer-term implications of “Brexit”;

·	The impact of potential increases in commodity prices, including our ability to successfully manage our exposure and/or pass increasing prices of aluminum, copper, steel and stainless steel (nickel) on to customers, as well as the inherent lag in timing of such pass-through arrangements; and

·	The impact of current and future environmental laws and regulations on our business and the businesses of our customers, including our ability to take advantage of opportunities to supply alternative new technologies to meet environmental and/or energy standards and objectives.

~~Operational Risks:~~

Our ability to integrate the former Luvata HTS operations into Modine, realize cost and revenue synergies in accordance with our expectations, and effectively manage any unanticipated risks that arise, while also maintaining stability within the acquired business and appropriate focus on the rest of Modine’s business;

·	The overall health and continually increasing price-down focus of our vehicular customers in light of economic and market-specific factors, and the potential impact on us from any deterioration in the stability or performance of any of our major customers;

Our ability to maintain current customer programs and compete effectively for new business, including our ability to offset or otherwise address increasing pricing pressures from competitors and price reduction and overall service pressures from customers, particularly in the face of macro-economic instability;

·	~~Unanticipated product or manufacturing difficulties or inefficiencies, including unanticipated program launch and product transfer challenges and warranty claims;~~

·	~~Unanticipated delays or modifications initiated by major customers with respect to product launches, product applications or requirements;~~

Economic, social and political conditions, changes, challenges and unrest, particularly in the geographic, product and financial markets where we and our customers operate and compete, including, in particular, foreign currency exchange rate fluctuations, tariffs (and potential trade war impacts resulting from tariffs or retaliatory actions), inflation, changes in interest rates, recession and recovery therefrom, restrictions and uncertainty associated with cross-border trade, and the general uncertainties about the impact of regulatory and/or policy changes, including those related to tax and trade, that have been or may be implemented in the United States or by its trade partners, as well as continuing uncertainty regarding the timing and the short- and long-term implications of “Brexit”;

·	Unanticipated problems with suppliers meeting our time, quantity, quality and price demands, and the overall health of our suppliers, particularly in light of continuing economic challenges in some areas of the world in which we and our suppliers operate;

The impact of potential price increases associated with raw materials, including aluminum, copper, steel and stainless steel (nickel), and other purchased component inventory including, but not limited to, increases in the underlying material cost based upon the London Metal Exchange and related premiums or fabrication costs. These prices may be impacted by a variety of factors, including changes in trade laws and tariffs and the behavior of our suppliers. This risk includes our ability to successfully manage our exposure and our ability to adjust product pricing in response to price increases, whether through our quotation process or through contract provisions for prospective price adjustments, as well as the inherent lag in timing of such contract provisions; and

Our ability to consistently structure our operations in order to develop and maintain a competitive cost base with appropriately skilled and stable labor, while also positioning ourselves geographically, so that we can continue to support our customers with the technical expertise and market-leading products they demand and expect from Modine;

The impact of current and future environmental laws and regulations on our business and the businesses of our customers, including our ability to take advantage of opportunities to supply alternative new technologies to meet environmental and/or energy standards and objectives.

·	Costs and other effects of the investigation and remediation of environmental contamination; particularly when related to the actions or inactions of others and/or facilities over which we have no control;

·	Increasingly complex and restrictive laws and regulations, including those associated with being a U.S. public company and others present in various jurisdictions in which we operate, and the costs associated with compliance therewith;

·	~~Work stoppages or interference at our facilities or those of our major customers and/or suppliers;~~

·	~~The constant and increasing pressures associated with healthcare and associated insurance costs; and~~

·	~~Costs and other effects of unanticipated litigation, claims, or other obligations.~~

~~Strategic~~Operational Risks:

·	Our ability to successfully take advantage of our increased presence in the “industrial” markets, with our Commercial and Industrial Solutions and Building HVAC businesses, while maintaining appropriate focus on the market opportunities presented by our vehicular business; and

·	~~Our ability to identify and execute additional growth and diversification opportunities in order to position us for long-term success.~~

~~Financial Risks:~~

Our ability to fund our global liquidity requirements efficiently for Modine’s current operations, particularly those in our Asia business segment, and meet our long-term commitments in the event of an unexpected disruption in or tightening of the credit markets or extended recessionary conditions in the global economy;

·	~~The impact of potential increases in interest rates, particularly in LIBOR and EURIBOR in relation to our variable-rate debt obligations;~~

·	~~Our ability to maintain our leverage ratio (net debt divided by Adjusted EBITDA, as defined in our credit agreements) in our target range of 1.5 to 2.5 in an efficient manner;~~

·	~~Costs arising from the integration of Luvata HTS;~~

·	~~The impact of foreign currency exchange rate fluctuations, particularly the value of the euro, Brazilian real, and British pound, relative to the U.S. dollar;~~

·	~~The effects of the recently-enacted U.S. tax reform legislation on our business, some of which are uncertain and may be material; and~~

The overall health and continually increasing price-down focus of our vehicular customers in light of economic and market-specific factors, and the potential impact on us from any deterioration in the stability or performance of any of our major customers;

Unanticipated problems with suppliers meeting our time, quantity, quality and price demands, and the overall health of our suppliers, including their ability and willingness to supply our volume demands if their production capacity becomes constrained;

Unanticipated product or manufacturing difficulties or operating inefficiencies, including unanticipated program launch and product transfer challenges and warranty claims;

Unanticipated delays or modifications initiated by major customers with respect to program launches, product applications or requirements;

Our ability to effectively and efficiently complete restructuring activities and realize the anticipated benefits of those activities;

Costs and other effects of the investigation and remediation of environmental contamination; particularly when related to the actions or inactions of others and/or facilities over which we have no control;

Our ability to recruit and maintain talent, including personnel in managerial, leadership and administrative functions, in light of tightening global labor markets;

·	~~Our ability to effectively realize the benefits of tax assets in various jurisdictions in which we operate.~~

Our ability to protect our proprietary information and intellectual property from theft or attack by internal or external sources;

~~In addition~~

The impact of any substantial disruption or material breach of our information technology systems, and any related delays, problems or costs;

Increasingly complex and restrictive laws and regulations, including those associated with being a U.S. public company and others present in various jurisdictions in which we operate, and the costs associated with compliance therewith;

Work stoppages or interference at our facilities or those of our major customers and/or suppliers;

The constant and increasing pressures associated with healthcare and associated insurance costs; and

Costs and other effects of unanticipated litigation, claims, or other obligations.

Our ability to successfully take advantage of our increased presence in the ~~risks set forth above, we are subject~~“industrial” markets, with our CIS and BHVAC businesses, while maintaining appropriate focus on the market opportunities presented by our VTS business;

The success of our evaluation of strategic alternatives for our automotive business within our VTS segment in optimizing the segment’s future profitability;

Our ability to identify and execute additional growth and diversification opportunities in order to position us for long-term success; and

The potential expense, disruption or other ~~risks~~impacts that could result from unanticipated actions by activist shareholders.

Our ability to fund our global liquidity requirements efficiently for Modine’s current operations and ~~uncertainties~~meet our long-term commitments in the event of an unexpected disruption in or tightening of the credit markets or extended recessionary conditions in the global economy;

The impact of potential increases in interest rates, particularly in LIBOR and the Euro Interbank Offered Rate (“EURIBOR”) in relation to our variable-rate debt obligations, and of the continued uncertainty around the utilization of LIBOR or alternative reference rates;

Our ability to maintain our leverage ratio (net debt divided by Adjusted EBITDA, as ~~identified~~defined in our ~~public filings with~~credit agreements) in our target range of 1.5 to 2.5 in an efficient manner;

The potential unfavorable impact of foreign currency exchange rate fluctuations on our financial results; and

Our ability to effectively realize the ~~U.S. Securities and Exchange Commission. We~~benefits of deferred tax assets in various jurisdictions in which we operate.

Item 3.

Quantitative and Qualitative Disclosures About Market Risk.

Item 4.

Controls and Procedures.

Evaluation Regarding Disclosure Controls and Procedures

As of the end of the period covered by this quarterly report on Form 10-Q, management of the Company, ~~carried out an evaluation~~at the direction of the General Counsel and under the supervision, and with the participation, of the Company’s President and Chief Executive Officer and Vice President, Finance and Chief Financial Officer, ofevaluated the effectiveness of the Company’s disclosure controls and procedures, at a reasonable assurance level, as defined in Securities Exchange Act Rules 13a-15(e) and 15d-15(e)~~, with the participation of the Company’s management.~~. Based upon that evaluation, the President and Chief Executive Officer and Vice President, Finance and Chief Financial Officer have concluded that the design and operation of the Company’s disclosure controls and procedures ~~are~~were effective, at a reasonable assurance level, as of ~~December 31, 2017.~~June 30, 2019.

Changes in Internal Control Over Financial Reporting

~~As part of its post-closing integration activities for the Luvata HTS acquisition, the Company is engaged~~There have been no changes in assessing, refining and harmonizing the internal controls and processes of the acquired business with those of the Company. This customary integration-related process has resulted in a change in the Company’s internal control over financial reporting during the ~~third~~first quarter of fiscal ~~2018~~2020 that ~~has~~have materially affected, or isare reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II. OTHER INFORMATION

~~PART II.~~

~~OTHER INFORMATION~~

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds.

ISSUER PURCHASES OF EQUITY SECURITIES

The following describes the Company’s purchases of common stock during the ~~third~~first quarter of fiscal ~~2018:~~2020:

Period	Total Number of Shares Purchased	Average Price Paid Per Share	Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs (a)
April 1 – April 30, 2019	———	———	———	$49,431,509

May 1 – May 31, 2019	228,308 (b)	$12.93	29,250	$49,046,555

June 1 – June 30, 2019	194,321 (b)	$13.54	150,000	$46,985,524

Total	422,629 (b)	$13.21	179,250

~~Period~~	~~Total Number of~~ ~~Shares Purchased~~	~~Average~~ ~~Price Paid~~ ~~Per Share~~	~~Total Number of~~ ~~Shares Purchased~~ ~~as Part of Publicly~~ ~~Announced Plans~~ ~~or Programs~~	~~Maximum~~ ~~Number (or~~ ~~Approximate Dollar~~ ~~Value) of Shares~~ ~~that May Yet Be~~ ~~Purchased Under the~~ ~~Plans or Programs~~
~~October 1 – October 31, 2017~~	~~_______~~	~~_______~~	~~_______~~	~~_______~~

~~November 1 – November 30, 2017~~	~~_______~~	~~_______~~	~~_______~~	~~_______~~

~~December 1 – December 31, 2017~~	~~2,438 (a)~~	~~$22.60~~	~~_______~~	~~_______~~

~~Total~~	~~2,438 (a)~~	~~$22.60~~	~~_______~~	~~_______~~

(a)

Effective October 30, 2018, 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 both shares acquired pursuant to the repurchase program described in (a) above and 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.

Item 5.

Other Information.

On July 26, 2019, the Company entered into an Employment Retention Agreement (the “Agreement”) with former Vice President, Chief Technology Officer, Scott D. Wollenberg. Under the Agreement, Mr. Wollenberg agreed to transition from his position as Vice President, Chief Technology Officer to be the lead of the Company’s Project Management Office. In his new role, Mr. Wollenberg is responsible for overseeing all aspects of the execution of the Company’s marketing and potential sale of its automotive business unit.

Upon successful completion of Mr. Wollenberg’s obligations set forth in the Agreement, Mr. Wollenberg will be entitled to the following benefits (the “Completion Benefits”):

Severance pay in an amount equal to one year of Mr. Wollenberg’s annual salary of $367,000;

A healthcare insurance subsidy;

A prorated payment of his annual management incentive payment; and

Accelerated or prorated vesting of certain previously granted unvested restricted stock, restricted stock units and performance shares under the Company’s long-term incentive plan (the “LTIP”), in accordance with the terms of the Agreement.

In the event that we consummate a sale of the automotive business, Mr. Wollenberg’s employment and the Agreement would terminate, subject to the early termination rights described below, unless the parties mutually agree otherwise.

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In the event that the Company terminates Mr. Wollenberg’s employment “For Cause,” as defined in the Agreement, Mr. Wollenberg will forfeit his right to all of the Completion Benefits. In the event that the Company terminates Mr. Wollenberg’s employment “Without Cause,” as defined in the Agreement, by providing Mr. Wollenberg at least 180 days’ notice in advance of his last day of employment, Mr. Wollenberg will be entitled to receive the full amount of his salary for the entire 180-day notice period, and will be entitled to receive all of the Completion Benefits.

In the event that Mr. Wollenberg terminates his employment with the Company at any time prior to the completion of his responsibilities as the lead of the Project Management Office by providing at least 60 days’ advanced notice, Mr. Wollenberg would forfeit all Completion Benefits.

The foregoing description of the Agreement does not purport to be complete, and is qualified in its entirety by reference to the full text of the Agreement attached to this Form 10-Q as Exhibit 10.5, which is incorporated by reference herein.

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Item 6.

Exhibits.

~~(a)~~

~~Exhibits~~:

(a) Exhibits:

Exhibit No.	Description	Incorporated Herein By Reference To	Filed Herewith

4.1	Fourth Amended and Restated Credit Agreement dated as of June 28, 2019.	Exhibit 4.1 to Registrant’s Current Report on Form 8-K dated June 28, 2019

10.1	Form of Fiscal 2020 Modine Performance Stock Award Agreement		X

10.2	Form of Fiscal 2020 Modine Incentive Stock Options Award Agreement		X

10.3	Form of Fiscal 2020 Modine Restricted Stock Unit Award Agreement		X

10.4	Form of Fiscal 2020 Modine Non-Qualified Stock Option Award Agreement		X

10.5	Employment Retention Agreement for Scott Wollenberg, dated as of July 26, 2019		X

31.1	Rule 13a-14(a)/15d-14(a) Certification of Thomas A. Burke, President and Chief Executive Officer.		X

31.2	Rule 13a-14(a)/15d-14(a) Certification of Michael B. Lucareli, Vice President, Finance and Chief Financial Officer.		X

32.1	Section 1350 Certification of Thomas A. Burke, President and Chief Executive Officer.		X

32.2	Section 1350 Certification of Michael B. Lucareli, Vice President, Finance and Chief Financial Officer.		X

101.INS	Instance Document		X

~~101.SCH~~ 101.SCH	XBRL Taxonomy Extension Schema		X

101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document		X

101.DEF	XBRL Taxonomy Extension Definition Linkbase Document		X

101.LAB	XBRL Taxonomy Extension Label Linkbase Document		X

101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document		X

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

MODINE MANUFACTURING COMPANY

~~(Registrant)~~

~~By:~~ ~~/s/ Michael B. Lucareli~~

~~Michael B. Lucareli, Vice President, Finance and~~

Chief Financial Officer*

~~Date: January 31, 2018~~

(Registrant)

*	~~Executing as both the principal financial officer and a duly authorized officer of the Company~~

By: /s/ Michael B. Lucareli

Michael B. Lucareli, Vice President, Finance and

Chief Financial Officer*

Date: August 1, 2019

* Executing as both the principal financial officer and a duly authorized officer of the Company

3332

~~WISCONSIN~~ Wisconsin		39-0482000
(State or other jurisdiction of incorporation or organization)		~~(I.R.S.~~(I.R.S. Employer Identification No.)

1500 DeKoven Avenue, Racine, Wisconsin		53403
(Address of principal executive offices)		(Zip Code)

Title of each class	Trading Symbol(s)	Name of each exchange on which registered

Common Stock, $0.625 par value	MOD	New York Stock Exchange LLC

Large Accelerated Filer ☐☑		Accelerated Filer ☑☐

Non-accelerated Filer ☐	~~(Do not check if a smaller reporting company)~~	Smaller reporting company ☐

		Emerging growth company ☐

	June 30, 2019			March 31, 2019
Land	$	20.9		$	20.7
Buildings and improvements (10-40 years)		281.0			285.9
Machinery and equipment (3-15 years)		858.7			848.7
Office equipment (3-10 years)		93.6			92.0
Construction in progress		62.6			57.4
		1,316.8			1,304.7
Less: accumulated depreciation		(837.7	)		(820.0	)
Net property, plant and equipment	$	479.1		$	484.7

PART I.	FINANCIAL INFORMATION

Item 1.	Financial Statements.	1

Item 2.	~~Management's~~ Management’s Discussion and Analysis of Financial Condition and Results of Operations.	2122

Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	3028

Item 4.	Controls and Procedures.	3028

PART II.	OTHER INFORMATION

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	3129

Item 5. Other Information.	29

Item 6.	Exhibits.	3231

SIGNATURE	3332

	Three months ended December 31, 2016		Nine months ended December 31, 2016
Net sales	$	439.5	$	1,393.3
Net earnings attributable to Modine		8.5		26.8
Net earnings per share attributable to Modine shareholders:
Basic	$	0.17	$	0.54
Diluted		0.17		0.53

	Unrecognized Compensation Expense		Weighted-Average Remaining Service Period in Years
Stock options	$	3.6		3.1
Restricted stock awards		8.4		3.0
Performance stock awards		4.8		2.2
Total	$	16.8		2.8

	Three months ended December 31,
	2017			2016
Beginning balance	$	3.0		$	9.2
Additions		8.6			0.1
Payments		(0.6	)		(1.3	)
Effect of exchange rate changes		0.2			(0.5	)
Ending balance	$	11.2		$	7.5

	June 30, 2019		March 31, 2019
Raw materials	$	134.1	$	122.8
Work in process		35.6		32.2
Finished goods		46.5		45.7
Total inventories	$	216.2	$	200.7

	December 31, 2017		March 31, 2017
Raw materials and work in process	$	140.0	$	127.7
Finished goods		46.8		40.8
Total inventories	$	186.8	$	168.5

	December 31, 2017			March 31, 2017
Gross property, plant and equipment	$	1,266.2		$	1,177.6
Accumulated depreciation		(774.9	)		(718.6	)
Net property, plant and equipment	$	491.3		$	459.0

	VTS		CIS		BHVAC			Total
Goodwill, March 31, 2019	$	0.5	$	153.9	$	14.1		$	168.5
Effect of exchange rate changes		-		0.3		(0.3	)		-
Goodwill, June 30, 2019	$	0.5	$	154.2	$	13.8		$	168.5

	Asia		Building HVAC		CIS		Total
Goodwill, March 31, 2017	$	0.5	$	13.7	$	150.9	$	165.1
Acquisition (a)		-		-		1.3		1.3
Effect of exchange rate changes		-		0.8		5.0		5.8
Goodwill, December 31, 2017	$	0.5	$	14.5	$	157.2	$	172.2

	June 30, 2019							March 31, 2019
	Gross Carrying Value		Accumulated Amortization			Net Intangible Assets		Gross Carrying Value		Accumulated Amortization			Net Intangible Assets
Customer relationships	$	61.7	$	(10.1	)	$	51.6	$	61.5	$	(9.1	)	$	52.4
Trade names		58.9		(14.1	)		44.8		58.9		(13.5	)		45.4
Acquired technology		24.0		(6.0	)		18.0		23.9		(5.5	)		18.4
Total intangible assets	$	144.6	$	(30.2	)	$	114.4	$	144.3	$	(28.1	)	$	116.2

Fiscal Year	Estimated Amortization Expense
Remainder of 2018	$	2.4
2019		9.6
2020		9.5
2021		8.9
2022		8.7
2023 & Beyond		93.4

	Fiscal year of maturity	December 31, 2017			March 31, 2017
Term loans	2022	$	270.4		$	268.9
6.8% Senior Notes	2021		105.0			117.0
5.8% Senior Notes	2027		50.0			50.0
Other (a)	2032		12.7			8.3
			438.1			444.2
Less: current portion			(37.9	)		(31.8	)
Less: unamortized debt issuance costs			(5.7	)		(6.7	)
Total long-term debt		$	394.5		$	405.7

	Balance Sheet Location	June 30, 2019
Lease Assets
Operating lease ROU assets	Other noncurrent assets	$	64.9
Finance lease ROU assets (a)	Property, plant and equipment - net		8.8

Lease Liabilities
Operating lease liabilities	Other current liabilities	$	12.9
Operating lease liabilities	Other noncurrent liabilities		50.7
Finance lease liabilities	Long-term debt - current portion		0.3
Finance lease liabilities	Long-term debt		3.6

	Three months ended June 30, 2019
Operating lease expense (a)	$	5.2
Finance lease expense:
Depreciation of ROU assets		0.1
Interest on lease liabilities		-
Total lease expense	$	5.3

	Three months ended June 30, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	$	3.7
Financing cash flows for finance leases		0.1

ROU assets obtained in exchange for lease liabilities
Operating leases	$	0.3
Finance leases		-

	June 30, 2019
Weighted-average remaining lease term:
Operating leases	8.9 years
Finance leases	9.7 years

Weighted-average discount rate:
Operating leases	3.4%
Finance leases	2.0%

Fiscal Year
2020	$	14.2
2021		12.4
2022		9.1
2023		7.1
2024		4.7
2025 and beyond		22.9
Total	$	70.4

Fiscal Year
Remainder of 2020	$	24.0
2021		84.7
2022		21.7
2023		21.7
2024		21.7
2025 & beyond		165.8
Total	$	339.6

	Three months ended June 30, 2019
	Foreign Currency Translation			Defined Benefit Plans			Cash Flow Hedges			Total
Beginning balance	$	(42.6	)	$	(136.3	)	$	0.5		$	(178.4	)

Other comprehensive income (loss) before reclassifications		1.9			-			(1.0	)		0.9
Reclassifications:
Amortization of unrecognized net loss (a)		-			1.4			-			1.4
Realized gains - net (b)		-			-			(0.1	)		(0.1	)
Income taxes		-			(0.3	)		0.3			-
Total other comprehensive income (loss)		1.9			1.1			(0.8	)		2.2

Ending balance	$	(40.7	)	$	(135.2	)	$	(0.3	)	$	(176.2	)

	Three months ended December 31, 2017												Nine months ended December 31, 2017
	Foreign Currency Translation			Defined Benefit Plans			Cash Flow Hedges			Total			Foreign Currency Translation			Defined Benefit Plans			Cash Flow Hedges			Total
Beginning balance	$	(19.0	)	$	(133.3	)	$	-		$	(152.3	)	$	(46.8	)	$	(135.0	)	$	-		$	(181.8	)

Other comprehensive income before reclassifications		4.6			-			0.6			5.2			32.4			-			0.6			33.0
Reclassifications for amortization of unrecognized net loss (a)		-			1.3			-			1.3			-			3.9			-			3.9
Income taxes		-			(0.4	)		(0.2	)		(0.6	)		-			(1.3	)		(0.2	)		(1.5	)
Total other comprehensive income		4.6			0.9			0.4			5.9			32.4			2.6			0.4			35.4

Ending balance	$	(14.4	)	$	(132.4	)	$	0.4		$	(146.4	)	$	(14.4	)	$	(132.4	)	$	0.4		$	(146.4	)

	June 30, 2019		March 31, 2019
Total assets: (a)
VTS	$	767.9	$	749.9
CIS		628.2		604.2
BHVAC		107.0		89.4
Corporate and eliminations		98.2		94.5
Total assets	$	1,601.3	$	1,538.0

	Three months ended December 31,						Nine months ended December 31,
Net sales:	2017			2016			2017			2016
Americas	$	140.5		$	123.4		$	430.7		$	389.4
Europe		134.6			119.8			405.4			389.7
Asia		42.8			28.6			117.7			78.2
Commercial and Industrial Solutions (a)		144.9			34.7			451.6			34.7
Building HVAC		56.1			47.2			147.9			132.8
Segment total		518.9			353.7			1,553.3			1,024.8
Corporate and eliminations		(6.2	)		(3.9	)		(16.8	)		(10.1	)
Net sales	$	512.7		$	349.8		$	1,536.5		$	1,014.7

	Three months ended December 31,						Nine months ended December 31,
Operating income:	2017			2016			2017			2016
Americas	$	8.9		$	5.7		$	28.8		$	14.2
Europe		6.3			8.6			22.8			30.9
Asia		5.1			2.6			12.6			4.9
Commercial and Industrial Solutions (a)		(4.6	)		(0.3	)		14.3			(0.3	)
Building HVAC		9.2			6.7			18.6			10.4
Segment total		24.9			23.3			97.1			60.1
Corporate and eliminations		(11.0	)		(16.6	)		(32.1	)		(38.7	)
Operating income	$	13.9		$	6.7		$	65.0		$	21.4

	December 31, 2017		March 31, 2017
Total assets:
Americas	$	275.9	$	282.9
Europe		308.1		269.4
Asia		132.5		111.3
Commercial and Industrial Solutions		606.8		576.0
Building HVAC		88.8		85.2
Corporate and eliminations (b)		90.1		124.7
Total assets	$	1,502.2	$	1,449.5