What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2023-07-27 compared with 2022-07-14 · 220 added, 219 removed, 599 unchanged (42% of the section changed)

1 unchanged sentence

Report of Independent Registered Public Accounting Firm

Stockholders and Board of Directors

Shareholders and Board of Directors

Frequency Electronics, Inc.

2 unchanged sentences

We have audited the accompanying consolidated balance sheets of Frequency Electronics, Inc.

and Subsidiaries (the “Company”) as of April 30, 2022 and 2021, the related consolidated statements of operations and comprehensive income (loss), changes in stockholders’ equity, and cash flows for the years then ended and the related notes (collectively referred to as the “consolidated financial statements”).

(the “Company”) as of April 30, 2023 and 2022, the related consolidated statements of operations and comprehensive income (loss), changes in stockholders’ equity, and cash flows for each of the years then ended, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at April 30, 2023 and 2022, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

14 unchanged sentences

Critical Audit Matter

The critical audit matter communicated below is a matter that arose from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that:

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates.

Revenue Recognized Over Time Using Percentage-of-Completion

3 unchanged sentences

Under this method, revenue is recorded based upon the ratio that incurred costs bear to total estimated contract costs.

We identified revenue recognized over time using the POC cost-to cost method as a critical audit matter.

Given the judgment necessary to make estimates regarding the revenue and total costs associated with such contracts, specifically, the estimation of costs required to complete such contracts, auditing these estimates required a high degree of auditor judgment due to the subjectivity and judgment used in evaluating management’s estimate.

We identified estimated costs to complete for contracts where revenue is recognized over time using the POC cost-to-cost method as a critical audit matter.

The determination of the total estimated costs to complete requires management to make significant estimates and assumptions regarding labor, outside services, materials and overhead costs.

Changes in the estimates of these costs can have a significant impact on the revenue recognized each period.

Auditing these elements involved especially challenging auditor judgment in evaluating the reasonableness of management’s assumptions and estimates over the duration of these contracts.

The primary procedures we performed to address this critical audit matter included selecting a sample of contracts for testing and performing the following procedures:

Agreeing the key terms to contract documentation and testing the current year costs incurred to date and comparing current year costs incurred to date to the costs estimated to be incurred in the current year as of the prior year-end.

Testing the mathematical accuracy of management’s calculation of revenue recognized during the year for the performance obligation.

Testing the Company’s estimated costs to complete the selected contract by performing a retrospective review to identify changes in contract gross margin and assess the reasonableness of the explanation for such changes outside of established criteria.

Testing the Company’s estimated costs to complete the selected contract by evaluating subsequent events activity for changes in conditions that may result in significant changes to estimated costs to complete the contract selected for testing.

In addition, for certain contracts we evaluated management’s ability to prepare and estimate the remaining costs to complete projects in process as of the balance sheet date by performing inquiries of certain of the Company’s operations and accounting personnel.

/s/ BDO USA, LLP

Agreeing the key terms to contracts and comparing estimated costs at completion as of the current year-end to the estimated costs at completion as of the prior year-end.

Testing the Company’s estimated costs to complete by performing a retrospective review to identify changes in contract gross margin and assessing the reasonableness of such changes.

Testing the Company’s estimated costs to complete by evaluating subsequent events activity for changes in conditions that may result in significant changes to estimated costs to complete the contract selected for testing.

Evaluating management’s ability to prepare and estimate the remaining costs to complete for contracts in process as of the balance sheet date by performing inquiries of certain of the Company’s operations and accounting personnel.

Testing the mathematical accuracy of management’s calculation of the estimated costs at completion.

/s/ BDO USA, P.A.

We have served as the Company’s auditor since 2020.

14 unchanged sentences

Total current assets

Property, plant and equipment, at cost, net of accumulated depreciation and amortization

Property, plant, and equipment, net

Cash surrender value of life insurance

13 unchanged sentences

Total liabilities

Commitments and contingencies (Note 16)

Contingencies (Note 16)

Stockholders’ equity:

23 unchanged sentences

Other income (expense):

Investment income

(Loss) income on Investments

Loss on disposal of asset

2 unchanged sentences

Other income (expense), net

(Loss) income before provision (benefit) from income taxes

Provision (benefit) from income taxes

Net (loss) income

Net (loss) income per common share:

Basic and diluted (loss) earnings per share

Loss before provision from income taxes

Provision from income taxes

Net loss per common share:

Basic and diluted loss per share

Weighted average shares outstanding:

Basic and diluted

Consolidated Statements of Comprehensive Income (Loss)

Net (loss) income

Unrealized loss on marketable securities:

Change in market value of marketable securities before

reclassification, net of tax

Reclassification adjustment for realized gains included in

net income, net of tax

Total unrealized loss on marketable securities, net of tax

Comprehensive (loss) income

Unrealized gain (loss) on marketable securities:

Change in market value of marketable securities before reclassification, net of tax

Reclassification adjustment for realized gains (loss) included in net income, net of tax

Total unrealized gain (loss) on marketable securities, net of tax

Comprehensive loss

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

5 unchanged sentences

Cash flows from operating activities:

Net (loss) income

Adjustments to reconcile net (loss) income to net cash provided by operating activities:

Adjustments to reconcile net loss to net cash provided by operating activities:

Depreciation and amortization

1 unchanged sentence

Provision for losses on accounts receivable, inventories, other assets and warranty reserve

Gain on marketable securities

Loss (gain) on marketable securities

Loss on sale of fixed and other assets, net

17 unchanged sentences

Capital expenditures

Net cash used in investing activities

Net cash provided by (used in) investing activities

Cash flows from financing activities:

Repayment of PPP loan

Payment of Dividend

Net cash used in financing activities

22 unchanged sentences

Balance at April 30, 2021

Contribution of stock to

compensation expense

Exercise of stock options

and stock appreciation

rights - net of shares

tendered for exercise price

Other comprehensive

loss, net of tax

Contribution of stock to 401(k) plan

Stock-based compensation expense

Exercise of stock options and stock appreciation rights - net of shares tendered for exercise price

Other comprehensive loss, net of tax

Balance at April 30, 2022

Contribution of stock to

compensation expense

Exercise of stock options

and stock appreciation

rights - net of shares

tendered for exercise price

Other comprehensive

loss, net of tax

Contribution of stock to 401(k) plan

Stock-based compensation expense

Other comprehensive income, net of tax

Dividends paid

Balance at April 30, 2023

19 unchanged sentences

COVID-19 Pandemic and the CARES Act

On January 30, 2020, the World Health Organization (“WHO”) announced a global health emergency because of a new strain of coronavirus originating in Wuhan, China (“COVID-19”) and the risks to the international community as the virus spread globally beyond its point of origin.

In March 2020, the WHO classified COVID-19 as a pandemic, based on the rapid increase in exposure globally.

The full impact of the COVID-19 pandemic continues to evolve as of the date of this report.

As such, it is uncertain as to the full magnitude that the pandemic may ultimately have on the Company’s financial condition, liquidity, and future financial results.

For the fiscal year ended April 30, 2022, the Company had been impacted by employee absenteeism related to direct or indirect effects of the COVID pandemic, delays in the receipt of anticipated new contracts from customers administratively affected by the pandemic and limited availability or delivery delays of parts and materials from vendors affected by the pandemic.

FEI-Zyfer’s operations were particularly affected as evidenced by decreases in sales and gross margin during the fiscal year.

Management is actively monitoring the impact of the global situation on its financial condition, liquidity, operations, suppliers, industry, and workforce.

Given the continuing changing dynamics of the pandemic the Company is not able to estimate the potential adverse effects on its operations, financial condition, or liquidity for fiscal year 2023.

As of April 30, 2022, the Company has returned to essentially normal operations and will continue to follow CDC and state guidelines with an emphasis on employee safety.

The Company faces various future COVID-19 related risks.

The Company is dependent on its workforce to design and manufacture its products.

If significant portions of the Company’s workforce are unable to work effectively, or if the U.S.

Government, state and/or other customers or supplier operations are curtailed due to illness, quarantines, government actions, facility closures, or other restrictions, the Company’s operations may be impacted.

If so, the Company may be unable to perform fully on its contracts and costs may increase.

These cost increases may not be fully recoverable or adequately covered by insurance.

In the latter part of fiscal year 2021, the Company did experience some operational disruptions due to the need to vacate certain areas of the facilities for cleaning and disinfecting resulting from employees being potentially exposed to COVID-19 or following positive COVID-19 test results.

Also, certain Company vendors have been unable to deliver materials on time due to COVID-19 related impacts to their workforces or their supply chains.

These delays impacted the Company’s production costs and schedules.

Vendor delivery performance is being closely monitored and alternate sources of supply are generally available and, in some cases, are being established.

On March 27, 2020, President Trump signed into law the “Coronavirus Aid, Relief, and Economic Security (“CARES”) Act.” The CARES Act, among other things, included provisions relating to refundable payroll tax credits, deferment of employer side social security payments, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations, increased limitations on qualified charitable contributions, and technical corrections to tax depreciation methods for qualified improvement property.

The CARES Act also appropriated funds for the Small Business Administration (SBA) Paycheck Protection Program loans that are forgivable in certain situations to promote continued employment, as well as Economic Injury Disaster Loans to provide liquidity to small businesses harmed by the COVID-19 pandemic.

The Company received a loan under the Paycheck Protection Program (“PPP”) in April 2020, which it repaid in full in May 2020.

FREQUENCY ELECTRONICS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

April 30, 2022 and 2021

On May 5, 2023, the World Health Organization (“WHO”) announced an end to the global health emergency related to the coronavirus originating in Wuhan, China (“COVID-19”).

Additionally, on May 11, 2023 the Public Health Emergency declared by the U.S.

Department of Health and Human Services expired.

Certain Company vendors continue to deliver materials with longer lead times due to COVID-19 related impacts to their workforces or their supply chains.

These delays have impacted the Company’s production schedules, and increased costs associated with procurement of materials and services.

The Company continues to monitor these and its other vendors and, if necessary, seek alternative suppliers, or, in certain cases, re-design products using alternative parts and materials.

Cash Equivalents:

4 unchanged sentences

Marketable Securities:

Marketable securities consist of corporate debt securities, certificates-of-deposit, and debt securities of U.S.

Marketable securities consisted of corporate debt securities, certificates-of-deposit, and debt securities of U.S.

Government agencies.

All marketable securities were held in the custody of one financial institution at April 30, 2022 and 2021.

Investments in debt securities are categorized as available-for-sale and are carried at fair value, with unrealized gains and losses excluded from income and recorded directly to stockholders’ equity.

The Company recognizes gains or losses when securities are sold using the specific identification method.

All marketable securities were held in the custody of one financial institution during the fiscal year ended April 30, 2023.

Investments in debt securities were categorized as available-for-sale and were carried at fair value, with unrealized gains and losses excluded from income and recorded directly to stockholders’ equity.

The Company recognized gains or losses when securities were sold using the specific identification method.

The Company liquidated all holdings related to marketable securities during the fiscal year ended April 30, 2023.

Allowance for Doubtful Accounts:

4 unchanged sentences

Expenditures for renewals and betterments are capitalized;

maintenance and repairs are charged to income when incurred.

When fixed assets are sold or retired, the cost and related accumulated depreciation and amortization are eliminated from the respective accounts and any gain or loss is credited or charged to income.

maintenance and repairs are charged to operations when incurred.

FREQUENCY ELECTRONICS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

April 30, 2023 and 2022

If events or changes in circumstances indicate that the carrying amount of a long-lived asset may not be recoverable, the Company estimates the future cash flows expected to result from the use of the asset and its eventual disposition.

1 unchanged sentence

No impairment losses have been recognized in the years ended April 30, 2023 and 2022.

Inventories, which consist of finished goods, work-in-process, raw materials and components, are accounted for at the lower of cost (specific and average) and net realizable value.

Inventories, which consist of raw materials and components, work-in-process and finished goods are accounted for at the lower of cost (specific and average) and net realizable value.

Depreciation and Amortization:

Depreciation of property, plant and equipment is computed on the straight-line method based upon the estimated useful lives of the assets ( 40 years for buildings and 3 to 10 years for other depreciable assets).

Leasehold improvements and equipment acquired under capital leases are amortized on the straight-line method over the shorter of the term of the lease or the useful life of the related asset.

FREQUENCY ELECTRONICS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

April 30, 2022 and 2021

Leasehold improvements are amortized on the straight-line method over the lesser of the lease term or the estimated useful life of the asset.

The Company records goodwill as the excess of purchase price over the fair value of identifiable net assets acquired.

Goodwill is tested for impairment, on a reporting unit level qualitatively, on at least an annual basis at year end to determine whether it is more likely than not that the reporting unit’s fair value is less than its carrying amount.

Goodwill is tested for impairment, on a reporting unit level qualitatively, on at least an annual basis at fiscal year end to determine whether it is more likely than not that the reporting unit’s fair value is less than its carrying amount.

If it is determined that the carrying value of goodwill may not be recoverable, the Company will write down the goodwill to an amount to commensurate with the revised value of the acquired assets.

The Company measures impairment based on revenue projections, recent transactions involving similar businesses and price/revenue multiples at which they were bought and sold, price/revenue multiples of competitors, and the present market value of publicly-traded companies in the Company’s industry.

Management has determined that goodwill is not impaired as of April 30, 2022 and 2021.

The Company measures fair value based on revenue projections, recent transactions involving similar businesses and price/revenue multiples at which they were bought and sold, price/revenue multiples of competitors, and the present market value of publicly-traded companies in the Company’s industry.

Management has determined that goodwill was not impaired as of April 30, 2023 and 2022.

Revenue and Cost Recognition:

2 unchanged sentences

The transaction price is allocated to each performance obligation and is recognized as revenue upon satisfaction of that performance obligation.

The Company derives revenue from contracts with customers by units sold with specific specifications and frequencies that are used by a specific customer and contracts where the end user is The United States Government.

The Company derives revenue from contracts with customers by units sold with specific specifications and frequencies that are used by a specific customer and contracts where the end user is the U.S.

The Company’s contracts typically include one performance obligation which is satisfied by shipped projects and completed services/reports required in the contract.

9 unchanged sentences

The Company evaluates this information continuously and bases its judgments on historical experience, design specifications, and expected costs for material and labor.

FREQUENCY ELECTRONICS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

April 30, 2023 and 2022

Contract costs include all direct material, direct labor costs, manufacturing overhead and other direct costs related to contract performance.

3 unchanged sentences

The Company expenses costs, other than sales commissions, to obtain a contract in the period for which they are incurred as these amounts would have been incurred even if the contract had not been obtained.

FREQUENCY ELECTRONICS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

April 30, 2022 and 2021

Disaggregation of Revenue

1 unchanged sentence

The amounts by segment and product line were as follows:

Year Ended April 30, 2022

Fiscal Year Ended April 30, 2023

(In thousands)

Total Revenue

Year Ended April 30, 2021

Fiscal Year Ended April 30, 2022

(In thousands)

Total Revenue

Years Ended April 30,

Fiscal Years Ended April 30,

(in thousands)

4 unchanged sentences

Consolidated revenues

FREQUENCY ELECTRONICS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

April 30, 2023 and 2022

Comprehensive Income (Loss):

Comprehensive income (loss) consists of net income or loss and other comprehensive income/loss.

Other comprehensive income/loss includes changes in unrealized gains or losses, net of tax, on securities (for Fiscal 2022 and Fiscal 2021, debt securities) available for sale during the year.

Other comprehensive income/loss includes changes in unrealized gains or losses, net of tax, on securities (for fiscal year 2023 and fiscal year 2022, debt securities) available for sale during the year.

Research and Development Expenses:

4 unchanged sentences

The customer funds received in connection therewith appear in revenues and the associated expenses are included in cost of revenues and are not included in R&D expenses.

FREQUENCY ELECTRONICS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

April 30, 2022 and 2021

Income Taxes:

13 unchanged sentences

The Company also has an investment in a privately-held Russian company, Morion, Inc.

The Company is unable to reasonably estimate a fair value for this investment.

(“Morion”), see Note 10 for additional information.

Equity-based Compensation:

1 unchanged sentence

We recognize the fair value of the award as compensation expense over the period during which an employee is required to provide service in exchange for the award.

FREQUENCY ELECTRONICS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

April 30, 2023 and 2022

Concentration of Credit Risk:

11 unchanged sentences

The new guidance must be applied on a prospective basis and is effective for periods beginning after December 15, 2022, with early adoption permitted.

The Company will not be adopting ASU 2017-04 early, and is in the process of determining the effect that ASU 2017-04 may have.

However, the Company expects the new standard to have an immaterial effect on its consolidated financial statements.

FREQUENCY ELECTRONICS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

April 30, 2022 and 2021

In June 2016, the FASB issued ASU No.

5 unchanged sentences

Earnings per Share

Reconciliations of the weighted average shares outstanding for basic and diluted (loss) income per share for the years ended April 30, 2022 and 2021, respectively, were as follows:

For the Years Ended April 30,

Reconciliations of the weighted average shares outstanding for basic and diluted (loss) earnings per share for the fiscal years ended April 30, 2023 and 2022, respectively, were as follows:

For the Fiscal Years Ended April 30,

Weighted average shares outstanding:

2 unchanged sentences

Diluted EPS Shares outstanding

** For the year ended April 30, 2022, dilutive securities noted in the above table are excluded from the calculation of earnings per share since the inclusion of such shares would be antidilutive due to the net loss for the period.

** For the fiscal years ended April 30, 2023 and 2022, dilutive securities noted in the above table are excluded from the calculation of (loss) earnings per share since the inclusion of such shares would be antidilutive due to the net loss for the period.

Additionally, there are anti-dilutive shares excluded in the above table for fiscal years ended April 30, 2023 and 2022 of 243,625 and 193,000 , respectively.

Contract (Liabilities) Assets, Net

At April 30, 2022 and 2021, contract assets (liabilities), net, consisted of the following (in thousands):

Contract (Liabilities) Assets

At April 30, 2023 and 2022, contract (liabilities) assets, consisted of the following (in thousands):

April 30, 2023

2 unchanged sentences

Contract Liabilities

Net (liability) asset

Such amounts represent revenue recognized on long-term contracts that have not been billed at the balance sheet dates or represent a liability for amounts billed in excess of the revenue recognized.

Contract assets and contract liabilities at April 30, 2021, were $ 14,460 and ($ 12,512 ), respectively.

FREQUENCY ELECTRONICS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – Continued

April 30, 2023 and 2022 amounts represent revenue recognized on long-term contracts that have not been billed at the balance sheet dates or represent a liability for amounts billed in excess of the revenue recognized.

Amounts are billed to customers pursuant to contract terms.

1 unchanged sentence

Revenue on these long-term contracts are accounted for on the POC basis.

During the years ended April 30, 2022 and 2021, revenue recognized under POC contracts was approximately $ 46.4 million and $ 50.2 million, respectively.

Fluctuations of contract assets and contract liabilities are due to the timing of funding, amounts billed, and revenue recorded.

Contract assets increased $ 1.1 million during fiscal year 2023, primarily due to recognition of revenue related to the satisfaction or partial satisfaction of performance obligations during fiscal year 2023 for which we have not yet billed out customers.

Contract liabilities increased $ 7.5 million during fiscal year 2023, primarily due to payments received in excess of revenue recognized on these performance obligations.

During fiscal year 2023, we recognized $ 7.1 million of our contract liabilities at April 30, 2022 as revenue.

During fiscal year 2022, we recognized $ 17.2 million of our contract liabilities at April 30, 2021 as revenue.

During the fiscal years ended April 30, 2023 and 2022, revenue recognized under POC contracts was approximately $ 39.1 million and $ 46.4 million, respectively.

If contract losses are anticipated, a loss provision is recorded for the full amount of such losses when they are determinable.

Total contract losses for the fiscal years ended April 30, 2022 and 2021 were approximately $ 4.2 million and $ 1.0 million, respectively.

FREQUENCY ELECTRONICS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

April 30, 2022 and 2021

Total contract losses for the fiscal years ended April 30, 2023 and 2022 were approximately $ 429,000 and $ 4.2 million, respectively.

Inventories, Net

Inventories, net at April 30, 2022 and 2021, respectively, consisted of the following (in thousands):

Inventories, net, at April 30, 2023 and 2022, consisted of the following (in thousands):

April 30, 2023

11 unchanged sentences

Less accumulated depreciation

Depreciation and amortization expense were $ 2.8 million and $ 2.9 million for the fiscal years ended April 30, 2022 and 2021, respectively.

Depreciation and amortization expense was $ 2.4 million and $ 2.8 million for the fiscal years ended April 30, 2023 and 2022, respectively.

Maintenance and repairs charged to operations was approximately $ 409,000 and $ 677,000 for the fiscal years ended April 30, 2023 and 2022, respectively.

FREQUENCY ELECTRONICS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

April 30, 2023 and 2022

Right-of-Use Assets and Lease Liabilities

1 unchanged sentence

Contractual arrangements are evaluated at inception to determine if the agreement contains a lease.

Certain lease agreements contain renewal options, rent abatement, and escalation clauses that are factored into our determination of lease payments when appropriate.

ROU assets and lease liabilities are recorded based on the present value of future lease payments which will factor in certain qualifying initial direct costs incurred as well as any lease incentives that may have been received.

New York lease.

In February 2019, the Company entered into an agreement to lease a building to be used as a corporate headquarters office and manufacturing facility in Mitchell Field, NY (“New York lease”).

The New York lease expires 9/30/2029 and contains renewal options, early termination, rent abatement, and escalation clauses that are factored into our determination of lease payments when appropriate.

We include options to extend or terminate leases in the ROU operating lease asset and liability when it is reasonably certain we will exercise these options.

As of April 30, 2023 lease options were not included in the calculation of the ROU operating lease asset and liability.

Right-of-Use (ROU) assets and lease liabilities are recorded based on the present value of future lease payments which will factor in certain qualifying initial direct costs incurred as well as any lease incentives that may have been received.

Lease expenses for operating lease payments are recognized on a straight-line basis over the lease term.

Lease terms may factor in options to extend or terminate the lease.

California lease.

In October 2017, the Company entered into an agreement to lease a building to be used as an office and manufacturing facility in Garden Grove, CA (“California Lease”).

The California lease expires 1/31/2025 and contains renewal options, early termination, rent abatement, and escalation clauses that are factored into our determination of lease payments when appropriate.

We include options to extend or terminate leases in the ROU operating lease asset and liability when it is reasonably certain we will exercise these options.

As of April 30, 2023 lease options were not included in the calculation of the ROU operating lease asset and liability.

Lease expenses for operating lease payments are recognized on a straight-line basis over the lease term.

Lease terms may factor in options to extend or terminate the lease.

New Jersey lease.

In February 2022, the Company entered into an agreement to lease a building to be used as an office and manufacturing facility in Northvale, NJ (“New Jersey lease”).

The New Jersey lease expires 1/31/2025 and contains renewal options, early termination, rent abatement, and escalation clauses that are factored into our determination of lease payments when appropriate.

We include options to extend or terminate leases in the ROU operating lease asset and liability when it is reasonably certain we will exercise these options.

As of April 30, 2023 lease options were not included in the calculation of the ROU operating lease asset and liability.

Lease expenses for operating lease payments are recognized on a straight-line basis over the lease term.

Lease terms may factor in options to extend or terminate the lease.

The Company elected the practical expedient for short-term leases which allows leases with terms of twelve months or less to be recorded on a straight-line basis over the lease term without being recognized on the consolidated balance sheet.

FREQUENCY ELECTRONICS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

April 30, 2022 and 2021

The table below presents ROU assets and lease liabilities recorded on the consolidated balance sheets as follows:

10 unchanged sentences

Total lease liabilities

Total operating lease expense was approximately $ 1.6 million for the fiscal years ended April 30, 2022 and 2021, the majority of which is included in cost of revenues and the remaining amount in selling and administrative expenses on the consolidated statements of operations.

In addition, we made cash payments of $ 2.0 million for operating leases during the fiscal years ended April 30, 2022 and 2021, which are included in cash flows from operating activities in our consolidated statement of cash flows.

Total operating lease expense was approximately $ 1.9 million and $ 1.6 million for the fiscal years ended April 30, 2023 and 2022, respectively, the majority of which is included in cost of revenues and the remaining amount in selling and administrative expenses on the consolidated statements of operations.

In addition, the Company made cash payments of $ 1.9 million and $ 2.0 million for operating leases during the fiscal years ended April 30, 2023 and 2022, respectively, which are included in cash flows from operating activities in our consolidated statements of cash flows.

As of April 30, 2023, the Company had no operating lease liabilities that had not commenced.

The table below reconciles the undiscounted cash flows for each of the first five fiscal years and total of the remaining fiscal years to the operating lease liabilities recorded on the consolidated balance sheet as of April 30, 2022:

FREQUENCY ELECTRONICS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

April 30, 2023 and 2022

The table below reconciles the undiscounted cash flows for each of the next five fiscal years and total of the remaining fiscal years to the operating lease liabilities recorded on the consolidated balance sheet as of April 30, 2023:

Fiscal Year Ending April 30,

5 unchanged sentences

Long-term lease obligations

As of April 30, 2022, the weighted-average remaining lease term for all operating leases was 6.3 years.

The Company does not generally have access to the rate implicit in the leases and therefore utilized the Company’s borrowing rate as the discount rate.

The weighted average discount rate for operating leases as of April 30, 2022 was 6.16 %.

FREQUENCY ELECTRONICS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

April 30, 2022 and 2021

As of April 30, 2023 and 2022, the weighted-average remaining lease term for all operating leases was 5.6 years and 6.3 years, respectively.

The Company does not generally have access to the rate implicit in the leases, therefore, we use a discount rate based on our incremental borrowing rate, which is determined using our credit rating and information available as of the commencement date.

The weighted average discount rate for operating leases as of April 30, 2023 and 2022, was 6.23 % and 6.16 %, respectively.

Marketable Securities

10 unchanged sentences

Fixed income securities

FREQUENCY ELECTRONICS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

April 30, 2023 and 2022

The following table presents the fair value and unrealized losses, aggregated by investment type and length of time that individual securities have been in a continuous unrealized loss position (in thousands):

5 unchanged sentences

Fixed Income Securities

The Company regularly reviews its investment portfolio to identify and evaluate investments that have indications of possible impairment.

The Company does not believe that its investments in marketable securities with unrealized losses at April 30, 2022 were other-than-temporary due to market volatility of the security’s fair value, analysts’ expectations and the Company’s ability to hold the securities for a period of time sufficient to allow for any anticipated recoveries in market value.

The Company liquidated all holdings related to Marketable Securities during the fiscal year ended April 30, 2023.

Proceeds from the sale or redemption of available-for-sale securities and the resulting gross realized gains and losses included in the determination of net income (loss) for the years ended April 30, 2023 and 2022, respectively, were as follows (in thousands):

2 unchanged sentences

Gross realized losses

FREQUENCY ELECTRONICS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

April 30, 2022 and 2021

Maturities of fixed income securities classified as available-for-sale at April 30, 2022 were as follows (at cost, in thousands):

Due after one year through five years

Due after five years

The fair value accounting framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value.

11 unchanged sentences

The Company’s money market, business account, and U.S.

securities are valued on a Level 1 basis.

The Company’s fixed income corporate debt securities and certificates of deposit are valued on a Level 2 basis.

Level 2 securities are valued at the closing prices and are consistent with quoted prices of similar assets reported in active markets.

securities were valued on a Level 1 basis.

The Company’s fixed income corporate debt securities and certificates of deposit were valued on a Level 2 basis.

Level 2 securities were valued at the closing prices and are consistent with quoted prices of similar assets reported in active markets.

FREQUENCY ELECTRONICS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

April 30, 2023 and 2022

Debt Obligations

As of April 30, 2022 and 2021, the Company had available credit with UBS Bank USA at variable terms based on its securities holdings under an advisory arrangement, under which no borrowings have been made.

As of April 30, 2022, the Company had available credit with UBS Bank USA at variable terms based on its security holdings under an advisory arrangement, under which no borrowings had been made.

As of April 30, 2023, the Company retired its advisory credit arrangement with UBS Bank USA.

Prior to retiring the advisory credit arrangement, no borrowings were made during fiscal 2023.

Accrued Liabilities

5 unchanged sentences

Deferred compensation payable

FREQUENCY ELECTRONICS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

April 30, 2022 and 2021

Investment in Morion, Inc.

3 unchanged sentences

During the fiscal years ended April 30, 2023 and 2022, the Company acquired product from Morion in the aggregate amount of approximately $ 196,000 and $ 215,000 , respectively.

During the fiscal years ended April 30, 2022 and 2021, the Company sold product and training services to Morion in the aggregate amount of approximately $ 23,000 and $ 94,000 , respectively, included in revenues in the consolidated statements of operations as part of the FEI-NY segment.

During the fiscal years ended April 30, 2022 and 2021, the Company received dividends from Morion in the amount of approximately $ 123,000 and $ 105,000 , respectively, which is included in other income, net in the consolidated statements of operations as part of the FEI-NY segment.

During the fiscal years ended April 30, 2022, the Company sold product and training services to Morion in the aggregate amount of approximately $ 23,000 , included in revenues in the consolidated statements of operations as part of the FEI-NY segment.

During the fiscal year ended April 30, 2022, the Company received dividends from Morion in the amount of approximately $ 123,000 , which is included in other income, net in the consolidated statements of operations as part of the FEI-NY segment.

During the fiscal year ended April 30, 2023, the Company sold no product and training devices to Morion, and the Company received no dividends from Morion.

Purchases of materials from Morion consist mainly of quartz crystal blanks which are used in the fabrication of quartz resonators.

6 unchanged sentences

The Company determined that certain payments by Morion – the majority of which occurred more than five years ago – were not timely.

Following the evaluation, on May 7, 2020, the Company voluntarily disclosed its findings to the Office of Foreign Assets Control (“OFAC”).

Following the evaluation, on May 7, 2020, the Company voluntarily disclosed its findings to the OFAC.

The Company’s voluntary disclosure to OFAC related solely to delays in collection of accounts receivable that exceeded then-applicable payment windows set forth in sanctions regulations and did not relate to any other type of payment or transaction.

1 unchanged sentence

According to OFAC, the Cautionary Letter was issued instead of pursuing a civil monetary penalty or taking other enforcement action.

Due to the current Russia-Ukraine conflict and resulting sanctions, the future status of FEI’s equity investment in Morion is uncertain.

In response to these conditions, in connection with the preparation of the audited financial statements included in this annual report on Form 10-K, the Company impaired its investment in Morion in full.

FREQUENCY ELECTRONICS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

April 30, 2023 and 2022

Due to the Russia-Ukraine conflict and resulting sanctions, the future status of FEI’s equity investment in Morion is uncertain.

In response to these conditions, in connection with the preparation of the audited financial statements included in the 2022 Form 10-K, the Company impaired its investment in Morion in full.

The impairment of $ 796,000 is included in other income (expense), net, in the consolidated statements of operations for the fiscal year ended April 30, 2022.

The likelihood of future sales to, purchases, and dividend payments from Morion is questionable.

Employee Benefit Plans

3 unchanged sentences

In accordance with the provisions of the plan, the Company can make discretionary matching contributions in the form of cash or common stock.

For the years ended April 30, 2022 and 2021, the Company contributed 44,224 and 41,118 shares of common stock, respectively.

For the fiscal years ended April 30, 2023 and 2022, the Company contributed 61,897 and 44,224 shares of common stock, respectively.

The approximate value of these shares at the date of contribution was $ 413,000 and $ 426,000 in fiscal years 2023 and 2022, respectively.

Contributed shares are drawn from the Company’s common stock held in treasury, and are removed at the Company’s original cost of acquisition of such shares on a specific identification basis, and from the Company’s common stock.

In addition to changes in the treasury stock accounts, during fiscal years 2022 and 2021, such transactions increased additional paid in capital by $ 382,000 and $ 325,000 , respectively.

Contributed shares are drawn from the Company’s common stock and during fiscal years 2023 and 2022, such transactions increased additional paid in capital by $ 351,000 and $ 382,000 , respectively.

As of April 30, 2023, the plan held a total of 499,328 shares, which were allocated to the accounts of the individual participants.

As of April 30, 2022, the plan held a total of 499,738 shares, which were allocated to the accounts of the individual participants.

FREQUENCY ELECTRONICS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

April 30, 2022 and 2021

Income Incentive Pool:

The Company maintains incentive bonus programs for certain employees which are based on operating profits of the individual subsidiaries to which the employees are assigned.

The Company maintains incentive bonus programs for certain employees that are based on operating profits of the individual subsidiaries to which the employees are assigned.

The Company also adopted a plan for the President and Chief Executive Officer of the Company, which the formula is based on consolidated pre-tax profits.

13 unchanged sentences

At the time of exercise, the quantity of shares under the SARs grant equal to the exercise value divided by the then market value of the shares will be returned to the pool of available shares for future grant under the Plan.

During the year ended April 30, 2022, employees exercised SARs representing 42,875 shares of the Company’s common stock and received 11,470 shares of Company stock.

The difference of 31,405 shares was returned to the pool of available shares and may be used for future grants.

During the fiscal year ended April 30, 2023, no employees exercised SARs and no shares were granted.

There were 185,500 shares returned to the pool of available shares and may be used for future grants under the Plan.

Forfeitures are recorded as they occur.

The excess of the consideration received over the par value of the common stock or cost of treasury stock issued under both types of option plans is recognized as an increase in additional paid-in capital.

16 unchanged sentences

Available for future grants

As of April 30, 2022, exercisable shares related to options and SARs under the plans totaled 393,500 , weighted-average exercise price was $ 10.06 , grant date fair value was $ 3,956,845 , weighted average remaining contractual term was 1.4 years, and the aggregate intrinsic value was $ 2,989,785 .

As of April 30, 2023, there was no unrecognized compensation cost related to non-vested options and SARs under the plans.

As of April 30, 2022, total unrecognized compensation cost related to non-vested options and SARs under the plans was approximately $ 7,000 .

These costs are expected to be recognized over a weighted average period of less than 1.0 years.

During the years ended April 30, 2022 and 2021, 41,875 and 85,625 shares, respectively, vested, the fair value of which was approximately $ 123,000 and $ 274,000 , respectively.

Stock-based compensation costs capitalized as part of work in process inventory or included in the cost of sales of programs on which the Company recognizes revenue under the POC method were approximately $ 92,000 and $ 103,000 for the years ended April 30, 2022 and 2021, respectively.

Selling and administrative expenses included stock-based compensation expense of approximately $ 144,000 and $ 160,000 for the years ended April 30, 2022 and 2021, respectively.

During the fiscal years ended April 30, 2023 and 2022, 35,625 shares and 41,875 shares, respectively, vested, the fair value of which was approximately $ 106,000 and $ 123,000 , respectively.

Stock-based compensation costs, for options and SARs, included in the cost of revenues of programs on which the Company recognizes revenue under the POC method were approximately $ 2,000 and $ 9,000 for the fiscal years ended April 30, 2023 and 2022, respectively.

Stock-based compensation expense included in selling and administrative expenses, related to options and SARs, during the fiscal years ended April 30, 2023 and 2022 were approximately $ 0 and $ 45,000 , respectively.

The Company classifies cash flows resulting from the tax benefits from tax deductions recognized upon the exercise of stock options or SARs (tax benefits) as operating cash flows.

8 unchanged sentences

As of April 30, 2023, there are no outstanding shares available for purchase.

Under the 2005 Stock Award Plan the Company begin issuing Restricted Stock Units (“RSUs”) to eligible employees in fiscal 2020.

The fair value of these awards is equivalent to the market value of the Company’s common stock on the grant date and vests over a period of time.

On the applicable vesting date, the holder of a RSU becomes entitled to share of the Company’s common stock.

A portion of the RSUs awarded will vest annually until fiscal 2026.

FREQUENCY ELECTRONICS, INC.

2 unchanged sentences

April 30, 2023 and 2022

During the year ended April 30, 2022 and 2021, the Company issued 1,150 shares from common stock and 950 shares from common stock, respectively, to select employees for milestone years of service to the Company.

Under the 2005 Stock Award Plan the Company began issuing Restricted Stock Units (“RSUs”) to eligible employees in fiscal year 2020.

The fair value of these awards is equivalent to the market value of the Company’s common stock on the grant date and vests over a period of time.

On the applicable vesting date, the holder of an RSU becomes entitled to share of the Company’s common stock.

A portion of the RSUs awarded will vest annually until fiscal year 2026.

Forfeitures are recorded as they occur.

During the fiscal year ended April 30, 2023 and 2022, the Company issued 1,300 shares from common stock and 1,150 shares from common stock, respectively, to select employees for milestone years of service to the Company.

These shares were issued under the 2005 Stock Award Plan, are shares of the Company’s common stock, and are fully vested at time of issuance.

4 unchanged sentences

PSUs are subject to certain restrictions and forfeiture provisions, in addition to performance vesting conditions, prior to vesting.

A portion of the PSUs awarded will vest annually until fiscal 2025.

The following table summarizes activity for the RSUs and PSUs awards that reduce available capacity under the 2005 Stock Award Plan for the years ended April 30, 2022 and 2021:

A portion of the PSUs awarded will vest, subject to specified performance criteria, annually until fiscal year 2025.

Forfeitures are recorded as they occur.

Stock-based compensation costs, related to RSUs and PSUs, included in the cost of revenues of programs on which the Company recognizes revenue under the POC method were approximately $ 186,000 and $ 83,000 for the fiscal years ended April 30, 2023 and 2022, respectively.

Stock-based compensation expense, for RSUs and PSUs, included in selling and administrative expenses were approximately $ 200 and $ 99,000 for the fiscal years ended April 30, 2023 and 2022, respectively.

The fair value of RSUs and PSUs vested were approximately $ 124,000 and $ 78,000 for the fiscal years ended April 30, 2023 and 2022, respectively.

The following table summarizes activity for the RSUs and PSUs awards that reduce available capacity under the 2005 Stock Award Plan for the fiscal years ended April 30, 2023 and 2022:

Weighted-Average

Exercise Price

Grant Date Fair Value

Balance – April 30, 2021

6 unchanged sentences

The Company pays the benefits out of its working capital but has also purchased whole life or term life insurance policies on the lives of certain of the participants to cover the optional lump sum obligations of the agreements upon the death of the participant.

Deferred compensation expense charged to selling and administrative expenses during the years ended April 30, 2022 and 2021 was approximately $ 1.1 million each fiscal year.

Deferred compensation expense charged to selling and administrative expenses during the fiscal year ended April 30, 2023 was approximately $ 643,000 .

Deferred compensation expense charged to selling and administrative expenses during the fiscal year ended April 30, 2022 was approximately $ 1.1 million.

FREQUENCY ELECTRONICS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

April 30, 2023 and 2022

Life Insurance Policies and Cash Held in Trust:

4 unchanged sentences

Such funds will be used to continue the deferred compensation arrangements following a change of control.

FREQUENCY ELECTRONICS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

April 30, 2022 and 2021

The (benefit) provision for income taxes consisted of the following (in thousands):

Year Ended April 30,

Current (benefit) provision

Deferred tax (benefit) provision

Total (benefit) provision

The following table reconciles the reported income tax (benefit) provision, recorded primarily due to the (i) recognition of previously unrecognized tax benefits, (ii) state and local taxes, (iii) and a change in the valuation allowance, with the amount computed using the federal statutory income tax rate (in thousands):

Year Ended April 30,

The provision for income taxes consisted of the following (in thousands):

Fiscal Year Ended April 30,

Current provision

Deferred tax provision

Total provision

The following table reconciles the reported income tax provision, recorded primarily due to the (i) recognition of previously unrecognized tax benefits, (ii) state and local taxes, (iii) and a change in the valuation allowance, with the amount computed using the federal statutory income tax rate (in thousands):

Fiscal Year Ended April 30,

Statutory rate

7 unchanged sentences

Change in tax rate

Total (benefit) provision

Total provision

FREQUENCY ELECTRONICS, INC.

3 unchanged sentences

The components of deferred taxes are as follows (in thousands):

Year Ended April 30,

Fiscal Year Ended April 30,

Deferred tax assets:

3 unchanged sentences

Capital Loss carry-forward

Research & Development

Net operating loss carryforwards

7 unchanged sentences

Valuation allowance

Net deferred tax (liability) asset

Net deferred tax liability

In assessing the potential for realization of deferred tax assets, the Company considers whether it is more-likely-than-not that some portion or all of the deferred tax assets will be realized.

7 unchanged sentences

If these estimates and assumptions change in the future, the Company may be required to reduce its existing valuation allowance resulting in less income tax expense.

For the year ended April 30, 2022, the valuation allowance increased by approximately $ 1.2 million from the prior year primarily due an increase in the net deferred tax asset for which no tax benefit was provided.

For the fiscal year ended April 30, 2023, the valuation allowance decreased by approximately $ 1.8 million from the prior fiscal year primarily due a decrease in the net deferred tax asset for which no tax benefit was provided.

The Company has a net deferred tax liability related to the tax effect of differences between financial reporting and tax basis of intangible assets that are not expected to reverse within the Company’s net operating loss carryforward periods.

4 unchanged sentences

federal net operating losses of $ 15.6 million have an indefinite carry-forward period.

federal capital loss carry-forward of $ 9.9 million expires in fiscal year 2023.

federal capital loss carry-forward of $ 0.9 million expires in fiscal years 2025 and 2027.

federal R&D credits of $ 0.9 million begin to expire in fiscal years 2036 through 2040.

13 unchanged sentences

As of April 30, 2023, and 2022, the Company had $ 8,325 and $ 1,176 , respectively, accrued for the payment of interest and penalties.

For the fiscal years ended April 30, 2022 and 2021, the Company recognized interest (income) and expense of $ 1,176 and $( 119,000 ), respectively.

Although it is difficult to predict or estimate the change in the Company’s unrecognized tax benefits over the next twelve months, the Company believes no additional amounts will be recognized in the next twelve months.

For the fiscal years ended April 30, 2023 and 2022, the Company recognized interest of $ 7,149 and $ 1,176 , respectively.

Although it is difficult to predict or estimate the change in the Company’s unrecognized tax benefits over the next twelve months, the Company believes $ 119,000 will be recognized in the next twelve months.

The Company is subject to taxation in the U.S.

2 unchanged sentences

federal income tax returns by the Internal Revenue Service for fiscal years 2019 and prior.

The Company is no longer subject to examination by the taxing authorities in foreign jurisdictions for fiscal years 2018 and prior.

Net operating losses and tax attributes generated in closed years and utilized in open years are subject to adjustment by the tax authorities.

18 unchanged sentences

April 30, 2023 and 2022

The table below presents information about reported segments for each of the years ended April 30, 2022 and 2021, respectively, with reconciliation of segment amounts to consolidated amounts as reported in the consolidated statements of operations or the consolidated balance sheets for each of the years (in thousands):

For the Years Ended April 30,

The table below presents information about reported segments for each of the years ended April 30, 2023 and 2022, respectively, with reconciliation of segment amounts to consolidated amounts as reported in the consolidated statements of operations or the consolidated balance sheets for each of the fiscal years (in thousands):

For the Fiscal Years Ended April 30,

less intersegment revenues

Consolidated revenues

Operating (loss) income:

Operating loss:

less intersegment revenues

Consolidated operating loss

For the Years Ended April 30,

For the Fiscal Years Ended April 30,

Identifiable assets:

8 unchanged sentences

Government end-use.

In the fiscal years ended April 30, 2022 and 2021, revenues to four and three customers, respectively, of the FEI-NY segment accounted for more than 10% of that segment’s revenues.

In the FEI-Zyfer segment, two and three customers, respectively, accounted for more than 10% of that segment’s revenues in the fiscal years ended April 30, 2022 and 2021.

The loss by the Company of any one of these customers would have a material adverse effect on the Company’s business.

The Company believes its relationship with these customers is mutually satisfactory.

Sales to the major customers referenced above can include commercial and governmental end users.

In the fiscal year ended April 30, 2023, revenues from four customers, of the FEI-NY segment which each accounted for more than 10% of that segment’s revenues, were $ 7.3 million, $ 5.8 million, $ 5.1 million, and $ 4.0 million.

In the fiscal year ended April 30, 2022, revenues from four customers, of the FEI-NY segment which each accounted for more than 10% of that segment’s revenues, were $ 12.6 million, $ 6.1 million, $ 5.0 million, and $ 4.4 million.

In the FEI-Zyfer segment two customers, which each accounted for more than 10% of that segment’s revenues, were $ 4.0 million and $ 1.5 million in the fiscal year ended April 30, 2023.

In the fiscal year ended April 30, 2022, revenues from two customers, of the FEI-Zyfer segment which each accounted for more than 10% of that segment’s revenues, were $ 1.3 million and $ 1.0 million.

FREQUENCY ELECTRONICS, INC.

2 unchanged sentences

April 30, 2023 and 2022

The loss by the Company of any one of these customers would have a material adverse effect on the Company’s business.

The Company believes its relationship with these customers is mutually satisfactory.

Sales to the major customers referenced above can include commercial and governmental end users.

Foreign Sales

Revenues in each of the Company’s segments include sales to foreign governments or to companies located in foreign countries.

For the years ended April 30, 2022 and 2021, revenues, based on the location of the procurement entity and excluding intersegment sales, were derived from the following countries (in thousands):

United Kingdom

For the fiscal years ended April 30, 2023 and 2022, revenues, based on the location of the procurement entity were derived from the following countries (in thousands):

For the Fiscal Years Ended April 30,

As of April 30, 2023 and 2022, there were no material foreign sales to one specific foreign country.

Product Warranties

12 unchanged sentences

Other Comprehensive Income (Loss)

Changes in Accumulated Other Comprehensive Income (Loss) (“AOCI”) by component and reclassifications from AOCI to Other income (expense), net, for the years ended April 30, 2022 and 2021, respectively, were as follows (in thousands):

Changes in Accumulated Other Comprehensive Income (Loss) (“AOCI”) by component and reclassifications from AOCI to Other income (expense), net, for the fiscal years ended April 30, 2023 and 2022, respectively, were as follows (in thousands):

of Marketable

10 unchanged sentences

Balance April 30, 2023, net of taxes

** The reclassification adjustments represent net realized gains on the sale or redemption of available-for-sale marketable securities that were reclassified from AOCI to Other income (expense), net.

** The reclassification adjustments represent net realized (gains) losses on the sale or redemption of available-for-sale marketable securities that were reclassified from AOCI to Other income (expense), net.

Contingencies

11 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data