What changed in this filing

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Item 1. Financial Statements

2023-08-09 compared with 2023-05-10 · 127 added, 106 removed, 466 unchanged (33% of the section changed)

46 unchanged sentences

Condensed Consolidated Statement of Income

Three Months Ended

2023 April 2,

Three Months Ended Six Months Ended

(In thousands, except per share amounts)

23 unchanged sentences

Condensed Consolidated Statement of Comprehensive Income

Three Months Ended

2023 April 2,

Three Months Ended Six Months Ended

(In thousands)

3 unchanged sentences

Post-retirement liability adjustments, net (net of tax of $( 1 ), $ 11 , $( 3 ) and $ 13 )

( 2 ) 31 ( 8 ) 40

Deferred (loss) gain on cash flow hedges (net of tax of $( 18 ), $ 46 , $( 32 ) and $ 114 )

( 59 ) 146 ( 98 ) 423

Other comprehensive items ( 461 ) ( 19,187 ) 5,067 ( 21,185 )

4 unchanged sentences

Condensed Consolidated Statement of Cash Flows

Three Months Ended

2023 April 2,

Six Months Ended

(In thousands)

6 unchanged sentences

Stock-based compensation expense 4,886 4,536

Gain on the sale of assets (Note 2) — ( 20,190 )

Non-cash impairment costs (Note 2) — 182

Gain on sale of assets (Note 2) — ( 20,190 )

Other items, net 1,584 7,579

9 unchanged sentences

Investing Activities

Acquisition, net of cash acquired — ( 62 )

Acquisitions, net of cash acquired 277 ( 62 )

Purchases of property, plant, and equipment ( 13,246 ) ( 9,815 )

10 unchanged sentences

Exchange Rate Effect on Cash, Cash Equivalents, and Restricted Cash 579 ( 5,418 )

Increase (Decrease) in Cash, Cash Equivalents, and Restricted Cash 5,782 ( 5,190 )

Decrease in Cash, Cash Equivalents, and Restricted Cash ( 9,530 ) ( 16,135 )

Cash, Cash Equivalents, and Restricted Cash at Beginning of Period 79,725 94,161

4 unchanged sentences

Condensed Consolidated Statement of Stockholders' Equity

Three Months Ended April 1, 2023

Three Months Ended July 1, 2023

(In thousands, except share and per share amounts) Common

5 unchanged sentences

Shares Amount Shares Amount

Balance at April 1, 2023 14,624,159 $ 146 $ 117,547 $ 685,325 2,920,678 $ ( 71,569 ) $ ( 49,085 ) $ 1,941 $ 684,305

Net income — — — 29,734 — — — 212 29,946

Dividend declared – Common Stock, $ 0.29 per share

— — — ( 3,395 ) — — — — ( 3,395 )

Activity under stock plans — — 2,570 — ( 2,417 ) 60 — — 2,630

Other comprehensive items — — — — — — ( 462 ) 1 ( 461 )

Balance at July 1, 2023 14,624,159 $ 146 $ 120,117 $ 711,664 2,918,261 $ ( 71,509 ) $ ( 49,547 ) $ 2,154 $ 713,025

Six Months Ended July 1, 2023

(In thousands, except share and per share amounts) Common

Stock Capital in

Excess of Par Value Retained Earnings Treasury

Stock Accumulated

Comprehensive Items Noncontrolling Interest Total

Stockholders' Equity

Shares Amount Shares Amount

Balance at December 31, 2022 14,624,159 $ 146 $ 119,924 $ 660,644 2,949,997 $ ( 72,287 ) $ ( 54,578 ) $ 1,722 $ 655,571

4 unchanged sentences

Other comprehensive items — — — — — — 5,031 36 5,067

Balance at July 1, 2023 14,624,159 $ 146 $ 120,117 $ 711,664 2,918,261 $ ( 71,509 ) $ ( 49,547 ) $ 2,154 $ 713,025

Three Months Ended July 2, 2022

(In thousands, except share and per share amounts) Common

Stock Capital in

Excess of Par Value Retained Earnings Treasury

Stock Accumulated

Comprehensive Items Noncontrolling Interest Total

Stockholders' Equity

Shares Amount Shares Amount

Balance at April 2, 2022 14,624,159 $ 146 $ 112,651 $ 590,009 2,964,786 $ ( 72,649 ) $ ( 32,302 ) $ 1,883 $ 599,738

Three Months Ended April 2, 2022

Net income — — — 26,170 — — — 239 26,409

Dividend declared – Common Stock, $ 0.26 per share

— — — ( 3,033 ) — — — — ( 3,033 )

Activity under stock plans — — 2,174 — ( 2,600 ) 63 — — 2,237

Other comprehensive items — — — — — — ( 19,077 ) ( 110 ) ( 19,187 )

Balance at July 2, 2022 14,624,159 $ 146 $ 114,825 $ 613,146 2,962,186 $ ( 72,586 ) $ ( 51,379 ) $ 2,012 $ 606,164

Six Months Ended July 2, 2022

(In thousands, except share and per share amounts) Common

11 unchanged sentences

Other comprehensive items — — — — — — ( 21,029 ) ( 156 ) ( 21,185 )

Balance at April 2, 2022 14,624,159 $ 146 $ 112,651 $ 590,009 2,964,786 $ ( 72,649 ) $ ( 32,302 ) $ 1,883 $ 599,738

Balance at July 2, 2022 14,624,159 $ 146 $ 114,825 $ 613,146 2,962,186 $ ( 72,586 ) $ ( 51,379 ) $ 2,012 $ 606,164

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

8 unchanged sentences

Interim Financial Statements

The interim condensed consolidated financial statements and related notes presented have been prepared by the Company, are unaudited, and, in the opinion of management, reflect all adjustments of a normal recurring nature necessary for a fair statement of the Company's financial position at April 1, 2023, its results of operations, comprehensive income, cash flows and stockholders' equity for the three-month periods ended April 1, 2023 and April 2, 2022.

The interim condensed consolidated financial statements and related notes presented have been prepared by the Company, are unaudited, and, in the opinion of management, reflect all adjustments of a normal recurring nature necessary for a fair statement of the Company's financial position at July 1, 2023, its results of operations, comprehensive income, and stockholders' equity for the three- and six-month periods ended July 1, 2023 and July 2, 2022 and its cash flows for the six-month periods ended July 1, 2023 and July 2, 2023.

Interim results are not necessarily indicative of results for a full year or for any other interim period.

7 unchanged sentences

Note 1 to the consolidated financial statements in the Annual Report describes the significant accounting estimates and policies used in preparation of the consolidated financial statements.

There have been no material changes in the Company’s significant accounting policies during the three months ended April 1, 2023.

There have been no material changes in the Company’s significant accounting policies during the six months ended July 1, 2023.

Supplemental Cash Flow Information

Three Months Ended

(In thousands) April 1,

2023 April 2,

Six Months Ended

(In thousands) July 1,

Cash Paid for Interest $ 4,443 $ 2,408

2 unchanged sentences

Reduction in fair value of assets acquired $ ( 270 ) $ ( 1,568 )

Cash paid for acquired businesses — ( 62 )

Reduction in liabilities assumed $ — $ ( 1,045 )

Cash received (paid) for acquired businesses 277 ( 62 )

Increase (decrease) in liabilities assumed $ 7 $ ( 1,630 )

Purchases of property, plant, and equipment in accounts payable $ 1,134 $ 26

Notes to Condensed Consolidated Financial Statements

Three Months Ended

(In thousands) April 1,

2023 April 2,

Six Months Ended

(In thousands) July 1,

Non-Cash Financing Activities:

5 unchanged sentences

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the Company's condensed consolidated balance sheet that are shown in aggregate in the accompanying condensed consolidated statement of cash flows:

(In thousands) April 1,

2023 April 2,

(In thousands) July 1,

2022 December 31,

11 unchanged sentences

Intangible Assets, Net

Gross intangible assets were $ 342,732,000 at April 1, 2023 and $ 343,130,000 at December 31, 2022.

Gross intangible assets were $ 342,742,000 at July 1, 2023 and $ 343,130,000 at December 31, 2022.

Intangible assets are recorded at fair value at the date of acquisition.

2 unchanged sentences

The Company amortizes definite-lived intangible assets over lives that have been determined based on the anticipated cash flow benefits of the intangible asset.

Accumulated amortization was $ 160,694,000 at April 1, 2023 and $ 155,834,000 at December 31, 2022.

Accumulated amortization was $ 165,300,000 at July 1, 2023 and $ 155,834,000 at December 31, 2022.

Notes to Condensed Consolidated Financial Statements

9 unchanged sentences

Total 2023 activity 1,169 1,428 750 3,347

Balance at April 1, 2023

Balance at July 1, 2023

Gross balance 119,478 211,347 143,515 474,340

7 unchanged sentences

The changes in the carrying amount of product warranty obligations are as follows:

Three Months Ended

(In thousands) April 1,

2023 April 2,

Six Months Ended

(In thousands) July 1,

Balance at Beginning of Year $ 7,283 $ 7,298

7 unchanged sentences

Contracts are accounted for on an over time basis when they include products which have no alternative use and an enforceable right to payment over time.

Most of the contracts recognized on an over time basis are for large capital projects.

Most of the contracts recognized on an over time basis are for large capital equipment projects.

These projects are highly customized for the customer and, as a result, would include a significant cost to rework in the event of cancellation.

1 unchanged sentence

The following table presents revenue by revenue recognition method:

Three Months Ended

April 1, April 2,

Three Months Ended Six Months Ended

July 1, July 2, July 1, July 2,

(In thousands) 2023 2022 2023 2022

4 unchanged sentences

The following table presents the disaggregation of revenue by product type and geography:

Three Months Ended

April 1, April 2,

Three Months Ended Six Months Ended

July 1, July 2, July 1, July 2,

(In thousands) 2023 2022 2023 2022

3 unchanged sentences

$ 245,053 $ 221,649 $ 474,811 $ 448,129

Revenue by Geography (based on customer location):

Revenue by Geography (based on customer location) (a):

North America $ 135,385 $ 124,080 267,838 248,416

3 unchanged sentences

$ 245,053 $ 221,649 $ 474,811 $ 448,129

(a) The components of revenue by geography in the three and six months ended July 2, 2022 have been recast to conform to the current period presentation.

See Note 10 , Business Segment Information, for information on the disaggregation of revenue by reportable operating segment.

10 unchanged sentences

These advance payments will be recognized as revenue when the Company's performance obligations have been satisfied, which typically occurs when the product has shipped and control of the asset has transferred to the customer.

The Company recognized revenue of $ 27,016,000 in the first quarter of 2023 and $ 34,477,000 in the first quarter of 2022 that was included in the contract liabilities balance at the beginning of 2023 and 2022, respectively.

The Company recognized revenue of $ 20,212,000 in the second quarter of 2023 and $ 13,424,000 in the second quarter of 2022, and $ 47,228,000 in the first six months of 2023 and $ 47,901,000 in the first six months of 2022 that was included in the contract liabilities balance at the beginning of 2023 and 2022, respectively.

The majority of the Company's contracts for capital equipment have an original expected duration of one year or less.

Certain capital contracts require long lead times and could take up to 24 months to complete.

For contracts with an original expected duration of over one year, the aggregate amount of the transaction price allocated to the remaining unsatisfied or partially unsatisfied performance obligations as of April 1, 2023 was $ 51,838,000 .

The Company will recognize revenue for these performance obligations as they are satisfied, approximately 74 % of which is expected to occur within the next twelve months and the remaining 26 % after the first quarter of 2024.

Certain capital equipment contracts require longer lead times and could take up to 24 months to complete.

Notes to Condensed Consolidated Financial Statements

was $ 54,925,000 as of July 1, 2023.

The Company will recognize revenue for these performance obligations as they are satisfied, approximately 75 % of which is expected to occur within the next twelve months and the remaining 25 % after the second quarter of 2024.

Banker's Acceptance Drafts Included in Accounts Receivable

2 unchanged sentences

The Company's Chinese subsidiaries may sell the drafts at a discount to a third-party financial institution or transfer the drafts to vendors in settlement of current accounts payable prior to the scheduled maturity date.

These drafts, which totaled $ 5,325,000 at April 1, 2023 and $ 5,729,000 at December 31, 2022, are included in accounts receivable in the accompanying condensed consolidated balance sheet until the subsidiary sells the drafts to a bank and receives a discounted amount, transfers the banker's acceptance drafts in settlement of current accounts payable prior to maturity, or obtains cash payment on the scheduled maturity date.

These drafts, which totaled $ 3,550,000 at July 1, 2023 and $ 5,729,000 at December 31, 2022, are included in accounts receivable in the accompanying condensed consolidated balance sheet until the subsidiary sells the drafts to a bank and receives a discounted amount, transfers the banker's acceptance drafts in settlement of current accounts payable prior to maturity, or obtains cash payment on the scheduled maturity date.

Gain on Sale and Other Costs, Net

Gain on sale and other costs, net recognized during the first quarter of 2022 was $ 20,008,000 , and was comprised of a gain on the sale of a building of $ 20,190,000 , net of an impairment charge of $ 182,000 .

Gain on Sale of Assets

The Company entered into several agreements with the local government in China to sell the existing manufacturing building and land use rights of one of its subsidiaries in China for $ 25,159,000 and relocate to a new facility (China Transaction).

The agreements became effective in the first quarter of 2022 after a 31 % down payment was received, including 25 % in 2021 and 6 % in the first quarter of 2022, and a land use right in a new location was secured.

3 unchanged sentences

A summary of the change in the outstanding receivable on the China Transaction is as follows:

(In thousands) April 1, 2023

(In thousands) July 1, 2023

Balance at Inception $ 17,294

6 unchanged sentences

Currency translation ( 707 )

Balance at April 1, 2023 (included in other current assets)

Impairment Costs

During the first quarter of 2022, the Company recognized an impairment charge of $ 182,000 within its Industrial Processing segment associated with the write-down of certain fixed assets that will not be moved to the new manufacturing facility in China in connection with the China Transaction.

Balance at July 1, 2023 (included in other current assets)

Other costs of $ 74,000 in the second quarter of 2023 and $ 182,000 in the first quarter of 2022 consisted of charges in the Company's Industrial Processing segment associated with the China Transaction for the write-down of certain fixed assets that will not be moved to the new manufacturing facility in China and facility moving costs.

Notes to Condensed Consolidated Financial Statements

1 unchanged sentence

Basic and diluted earnings per share (EPS) were calculated as follows:

Three Months Ended

2023 April 2,

Three Months Ended Six Months Ended

(In thousands, except per share amounts)

1 unchanged sentence

Basic Weighted Average Shares 11,704 11,660 11,693 11,645

Effect of Stock Options, Restricted Stock Units and Employee Stock Purchase Plan Shares

Effect of Restricted Stock Units and Employee Stock Purchase Plan Shares 19 29 16 27

Diluted Weighted Average Shares 11,723 11,689 11,709 11,672

1 unchanged sentence

Diluted Earnings per Share $ 2.54 $ 2.24 $ 4.94 $ 5.77

The effect of outstanding and unvested restricted stock units (RSUs) of the Company's common stock totaling 38,000 shares in the first quarter of 2023 and 17,000 shares in the first quarter of 2022 were not included in the computation of diluted EPS for the respective periods as the effect would have been antidilutive or, for unvested performance-based RSUs, the performance conditions had not been met as of the end of the reporting periods.

The effect of outstanding and unvested restricted stock units (RSUs) of the Company's common stock totaling 26,000 shares in the second quarter of 2023, 8,000 shares in the second quarter of 2022, 32,000 shares in the first six months of 2023 and 13,000 shares in the first six months of 2022 were not included in the computation of diluted EPS for the respective periods as the effect would have been antidilutive or, for unvested performance-based RSUs, the performance conditions had not been met as of the end of the respective reporting periods.

Provision for Income Taxes

The provision for income taxes was $ 9,763,000 in the first quarter of 2023 and $ 13,378,000 in the first quarter of 2022.

The effective tax rate of 26 % in the first quarter of 2023 was higher than the Company's statutory rate of 21% primarily due to the distribution of the Company's worldwide earnings, nondeductible expenses, and state taxes.

These increases in tax expense in the first quarter of 2023 were offset in part by a decrease in tax expense related to the net excess income tax benefits from stock-based compensation arrangements.

The effective tax rate of 24 % in the first quarter of 2022 was higher than the Company's statutory rate of 21% primarily due to the distribution of the Company's worldwide earnings, nondeductible expenses, state taxes, and tax expense associated with the Global Intangible Low-Taxed Income provisions.

These increases in tax expense in the first quarter of 2022 were offset in part by a decrease in tax expense related to the net excess income tax benefits from stock-based compensation arrangements and the reversal of tax reserves associated with uncertain tax positions.

The provision for income taxes was $ 20,945,000 in the first six months of 2023 and $ 23,329,000 in the first six months of 2022.

The effective tax rate of 26 % in the first six months of 2023 was higher than the Company's statutory rate of 21% primarily due to the distribution of the Company's worldwide earnings, state taxes, and nondeductible expenses.

The effective tax rate of 26 % in the first six months of 2022 was higher than the Company's statutory rate of 21% primarily due to the distribution of the Company's worldwide earnings, nondeductible expenses, and state taxes.

These increases in ta x expense in the first six months of 2022 were offset in part by a decrease in tax expense related to the net excess income tax benefits from stock-based compensation arrangements.

Short- and Long-Term Obligations

11 unchanged sentences

Revolving Credit Facility

On November 30, 2022, the Company entered into a sixth amendment to its unsecured multi-currency revolving credit facility, originally entered into on March 1, 2017 (as amended and restated to date, the Credit Agreement).

Among other things, this amendment extended the maturity date to November 30, 2027, and increased the uncommitted, unsecured incremental

The Company's unsecured multi-currency revolving credit facility, originally entered into on March 1, 2017 (as amended and restated to date, the Credit Agreement) matures on November 30, 2027 and has a borrowing capacity of $ 400,000,000 , in addition to an uncommitted, unsecured incremental borrowing facility of $ 200,000,000 .

Notes to Condensed Consolidated Financial Statements

borrowing facility from $ 150,000,000 to $ 200,000,000 .

Pursuant to the Credit Agreement, the Company has a borrowing capacity of $ 400,000,000 and interest on borrowings outstanding accrues and is payable in arrears calculated at one of the following rates selected by the Company:

borrowings outstanding accrues and is payable in arrears calculated at one of the following rates selected by the Company:

(i) the Base Rate, as defined, plus an applicable margin of 0 % to 1.25 %, or (ii) Eurocurrency Rate, Term SOFR (plus a 10 basis point credit spread adjustment), CDOR Rate, and RFR, as applicable and defined, plus an applicable margin of 1.0 % to 2.25 %.

4 unchanged sentences

Loans under the Credit Agreement are guaranteed by certain domestic subsidiaries of the Company.

As of April 1, 2023, the outstanding balance under the Credit Agreement was $ 167,514,000 , which included $ 74,514,000 of euro-denominated borrowings.

The Company had $ 232,760,000 of borrowing capacity available as of April 1, 2023, which was calculated by translating its foreign-denominated borrowings using the administrative agent's borrowing date foreign exchange rates, in addition to the $ 200,000,000 uncommitted, unsecured incremental borrowing facility.

The weighted average interest rate for the outstanding balance under the Credit Agreement was 4.81 % as of April 1, 2023 and 4.33 % as of year-end 2022.

See Note 8 , Derivatives, under the heading Interest Rate Swap Agreement, for information relating to the swap agreement.

As of July 1, 2023, the outstanding balance under the Credit Agreement was $ 142,562,000 , which included $ 74,562,000 of euro-denominated borrowings.

The Company had $ 257,267,000 of borrowing capacity available as of July 1, 2023, which was calculated by translating its foreign-denominated borrowings using the administrative agent's borrowing date foreign exchange rates, in addition to the $ 200,000,000 uncommitted, unsecured incremental borrowing facility.

The weighted average interest rate for the outstanding balance under the Credit Agreement was 5.27 % as of July 1, 2023 and 4.33 % as of year-end 2022.

See Note 8 , Derivatives, under the heading Interest Rate Swap Agreement, for information relating to the swap agreement, which matured on June 30, 2023.

Senior Promissory Notes

6 unchanged sentences

Debt Compliance

As of April 1, 2023, the Company was in compliance with the covenants related to its debt obligations.

As of July 1, 2023, the Company was in compliance with the covenants related to its debt obligations.

Stock-Based Compensation

The Company recognized stock-based compensation expense of $ 2,238,000 in the first quarter of 2023 and $ 2,260,000 in the first quarter of 2022 within selling, general, and administrative (SG&A) expenses in the accompanying condensed consolidated statement of income.

The Company recognized stock-based compensation expense of $ 2,648,000 in the second quarter of 2023, $ 2,276,000 in the second quarter of 2022, $ 4,886,000 in the first six months of 2023 and $ 4,536,000 in the first six months of 2022 within selling, general, and administrative (SG&A) expenses in the accompanying condensed consolidated statement of income.

The Company recognizes compensation expense for all stock-based awards granted to employees and directors based on the grant date estimate of fair value for those awards.

2 unchanged sentences

For performance-based RSUs, compensation expense is recognized ratably over the requisite service period for each separately vesting portion of the award based on the grant date fair value, net of actual forfeitures recorded when they occur, and remeasured each reporting period until the total number of RSUs to be issued is known.

Unrecognized compensation expense related to stock-based compensation totaled approximately 12,796,000 at April 1, 2023, which will be recognized over a weighted average period of 2.0 years.

Unrecognized compensation expense related to stock-based compensation totaled approximately $ 12,021,000 at July 1, 2023, which will be recognized over a weighted average period of 1.8 years.

Notes to Condensed Consolidated Financial Statements

Non-Employee Director RSUs

In May 2023, the Company granted an aggregate of 4,340 RSUs to its non-employee directors with an aggregate grant date fair value of $ 849,000 , of which 50 % vested on June 1, 2023, 25 % vest on the last day of the third fiscal quarter of 2023 and the remaining 25 % vest on the last day of the fourth fiscal quarter of 2023.

Performance-based RSUs

14 unchanged sentences

Changes in each component of accumulated other comprehensive items (AOCI), net of tax, are as follows:

(In thousands) Foreign

Adjustment Pension and Other Post-Retirement Benefit Liability Adjustments Deferred Gain on Cash Flow Hedges Total

(In thousands) Foreign Currency Translation Adjustment Pension and Other Post-Retirement Benefit Liability Adjustments Deferred Gain (Loss) on Cash Flow Hedges Total

Balance at December 31, 2022 $ ( 54,488 ) $ ( 148 ) $ 58 $ ( 54,578 )

3 unchanged sentences

5,137 ( 8 ) ( 98 ) 5,031

Balance at April 1, 2023 $ ( 48,950 ) $ ( 154 ) $ 19 $ ( 49,085 )

Balance at July 1, 2023 $ ( 49,351 ) $ ( 156 ) $ ( 40 ) $ ( 49,547 )

Notes to Condensed Consolidated Financial Statements

Amounts reclassified from AOCI are as follows:

Three Months Ended

(In thousands) April 1,

2023 April 2,

Three Months Ended Six Months Ended

(In thousands) July 1,

2022 Statement of Income Line Item

5 unchanged sentences

Total expense before income taxes

( 4 ) ( 8 ) ( 7 ) ( 18 )

Income tax benefit 1 2 2 5 Provision for income taxes

( 3 ) ( 6 ) ( 5 ) ( 13 )

Cash Flow Hedges (a)

Interest rate swap agreements

60 ( 111 ) Interest expense

Interest rate swap agreement 76 ( 83 ) 136 ( 194 ) Interest expense

Income tax (provision) benefit ( 23 ) 20 ( 37 ) 47 Provision for income taxes

53 ( 63 ) 99 ( 147 )

Total Reclassifications $ 50 $ ( 69 ) $ 94 $ ( 160 )

3 unchanged sentences

dollar-denominated debt.

The 2018 Swap Agreement has a $ 15,000,000 notional value and expires on June 30, 2023.

On a quarterly basis, the Company receives three-month USD LIBOR, which is subject to a zero percent floor, and pays a fixed rate of interest of 3.15 % plus an applicable margin as defined in the Credit Agreement.

The Company designated its 2018 Swap Agreement as a cash flow hedge and structured it to be 100 % effective.

Unrealized gains and losses related to the fair value of the 2018 Swap Agreement are recorded to AOCI, net of tax.

In the event of early termination, the Company will receive from or pay to the counterparty the fair value of the 2018 Swap Agreement, and the unrealized gain or loss outstanding will be recognized in earnings.

The counterparty to the 2018 Swap Agreement could demand an early termination of that agreement if the Company were to be in default under the Credit Agreement, or any agreement that amends or replaces the Credit Agreement in which the counterparty is a member, and if it were to be unable to cure the default.

See Note 5 , Short- and Long-Term Obligations, for further details.

The 2018 Swap Agreement, which had a $ 15,000,000 notional value, matured on June 30, 2023.

Prior to the maturity of the 2018 Swap Agreement, on a quarterly basis, the Company received three-month USD LIBOR, which was subject to a zero percent floor, and paid a fixed rate of interest of 3.15 % plus an applicable margin as was defined in the Credit Agreement.

The Company had designated its 2018 Swap Agreement as a cash flow hedge and structured it to be 100 % effective.

Unrealized gains and losses related to the fair value of the 2018 Swap Agreement were recorded to AOCI, net of tax.

Forward Currency-Exchange Contracts

4 unchanged sentences

The fair values of forward currency-exchange contracts that are designated as fair value hedges and forward currency-exchange contracts that are not designated as hedges are recognized currently in earnings.

Gains and losses reported within SG&A expenses in the accompanying condensed consolidated statement of income associated with the Company's forward currency-exchange contracts that were not designated as hedges were not material for the three-month periods ended April 1, 2023 and April 2, 2022.

Gains and losses reported within SG&A expenses in the accompanying condensed consolidated statement of income associated with the Company's forward currency-exchange contracts that were not designated as hedges were not material for the three- and six-month periods ended July 1, 2023 and July 2, 2022.

Notes to Condensed Consolidated Financial Statements

The following table summarizes the fair value of derivative instruments in the accompanying condensed consolidated balance sheet:

April 1, 2023 December 31, 2022

July 1, 2023 December 31, 2022

Balance Sheet Location Asset (Liability) (a) Notional Amount (b) Asset (Liability) (a) Notional Amount

4 unchanged sentences

Derivatives in a Liability Position:

Forward currency-exchange contracts Other Current Liabilities $ ( 51 ) $ 430 $ ( 54 ) $ 430

Forward currency-exchange contract Other Current Liabilities $ ( 52 ) $ 430 $ ( 54 ) $ 430

Derivatives Not Designated as Hedging Instruments:

1 unchanged sentence

Forward currency-exchange contracts Other Current Assets $ — $ — $ 15 $ 647

Derivatives in a Liability Position:

Forward currency-exchange contract Other Current Liabilities $ ( 1 ) $ 100 $ — $ —

(a) See Note 9 , Fair Value Measurements and Fair Value of Financial Instruments, for the fair value measurements relating to these financial instruments.

(b) The 2023 notional amounts are indicative of the level of the Company's recurring derivative activity.

The following table summarizes the activity in AOCI associated with the Company's derivative instruments designated as cash flow hedges as of and for the three months ended April 1, 2023:

(In thousands) Interest Rate Swap

Agreement Forward Currency-

Contract Total

The following table summarizes the activity in AOCI associated with the Company's derivative instruments designated as cash flow hedges as of and for the six months ended July 1, 2023:

(In thousands) Interest Rate Swap Agreement Forward Currency-Exchange Contract Total

Unrealized Gain (Loss), Net of Tax, at December 31, 2022 $ 99 $ ( 41 ) $ 58

1 unchanged sentence

Gain recognized in AOCI — 1 1

Unrealized Gain (Loss), Net of Tax, at April 1, 2023 $ 57 $ ( 38 ) $ 19

Unrealized Loss, Net of Tax, at July 1, 2023 $ — $ ( 40 ) $ ( 40 )

(a) See Note 7 , Accumulated Other Comprehensive Items, for the income statement classification.

As of April 1, 2023, the Company expects to reclassify gains of $ 19,000 from AOCI to earnings over the next twelve months based on the estimated cash flows of the 2018 Swap Agreement and the maturity date of the forward currency-exchange contract.

As of July 1, 2023, the Company expects to reclassify losses of $ 40,000 from AOCI to earnings over the next twelve months based on the maturity date of the forward currency-exchange contract.

Fair Value Measurements and Fair Value of Financial Instruments

6 unchanged sentences

The following table presents the fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis:

Fair Value as of April 1, 2023

Fair Value as of July 1, 2023

(In thousands) Level 1 Level 2 Level 3 Total

1 unchanged sentence

Banker's acceptance drafts (a) $ — $ 3,550 $ — $ 3,550

2018 Swap Agreement $ — $ 75 $ — $ 75

Forward currency-exchange contracts $ — $ 53 $ — $ 53

Forward currency-exchange contracts $ — $ 51 $ — $ 51

Fair Value as of December 31, 2022

2 unchanged sentences

Banker's acceptance drafts (a) $ — $ 5,729 $ — $ 5,729

2018 Swap Agreement $ — $ 131 $ — $ 131

2018 Swap Agreement (b) $ — $ 131 $ — $ 131

Forward currency-exchange contracts $ — $ 15 $ — $ 15

1 unchanged sentence

(a) Included in accounts receivable in the accompanying condensed consolidated balance sheet.

The Company uses the market approach technique to value its financial assets and liabilities, and there were no changes in valuation techniques during the first three months of 2023.

(b) The 2018 Swap Agreement matured on June 30, 2023.

The Company uses the market approach technique to value its financial assets and liabilities, and there were no changes in valuation techniques during the first six months of 2023.

Banker's acceptance drafts are carried at face value, which approximates their fair value due to the short-term nature of the negotiable instrument.

The fair values of the forward currency-exchange contracts are based on quoted forward foreign exchange rates at the reporting date.

The fair value of the 2018 Swap Agreement is based on USD LIBOR yield curves at the reporting date.

The forward currency-exchange contracts and the 2018 Swap Agreement are hedges of either recorded assets or liabilities or anticipated transactions and represent the estimated amount the Company would receive or pay upon liquidation of the contracts.

The fair value of the 2018 Swap Agreement was based on USD LIBOR yield curves at the reporting date.

The forward currency-exchange contracts and the 2018 Swap Agreement prior to its maturity were hedges of either recorded assets or liabilities or anticipated transactions and represent or represented the estimated amount the Company would receive or pay upon liquidation of the contracts.

Changes in values of the underlying hedged assets and liabilities or anticipated transactions are not reflected in the table above.

The carrying value and fair value of debt obligations, excluding lease obligations, are as follows:

April 1, 2023 December 31, 2022

July 1, 2023 December 31, 2022

Carrying Value Fair Value Carrying Value Fair Value

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The following table presents financial information for the Company's reportable operating segments:

Three Months Ended

April 1, April 2,

Three Months Ended Six Months Ended

July 1, July 2, July 1, July 2,

(In thousands) 2023 2022 2023 2022

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Flow Control $ 1,290 $ 1,031 $ 2,694 $ 1,556

Industrial Processing 2,579 1,952

Industrial Processing (e) 6,129 5,073 8,708 7,025

Material Handling 1,358 843 1,820 1,227

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$ 8,777 $ 6,947 $ 13,246 $ 9,815

(a) Includes a gain on the sale of a facility of $ 20,190,000 (see Note 2 , Gain on Sale and Other Costs, Net) and non-cash charges for the write-off of an indemnification asset of $ 575,000 and the write-down of machinery and equipment of $ 182,000 in the three months ended April 2, 2022.

(b) Includes acquisition-related expenses of $ 717,000 in the three months ended April 2, 2022.

(a) Includes other costs of $ 74,000 in the three and six months ended July 1, 2023 and $ 182,000 in the six months ended July 2, 2022.

Includes a gain on the sale of a facility of $ 20,190,000 (see Note 2 , Gain on Sale and Other Costs, Net) and non-cash charges for the write-off of an indemnification asset of $ 575,000 in the six months ended July 2.

(b) Includes a non-cash charge for the write-off of an indemnification asset of $ 177,000 in the three and six months ended July 1, 2023 and acquisition-related expenses of $ 717,000 in the six months ended July 2, 2022.

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Notes to Condensed Consolidated Financial Statements

(e) Includes capital expenditures of $ 3,108,000 and $ 3,287,000 in the three and six months ended July 1, 2023, respectively, and $ 3,128,000 and $ 3,242,000 in the three and six months ended July 2, 2022, respectively, related to the China Transaction.

See Note 2 , Gain on Sale and Other Costs, Net.

Commitments and Contingencies

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Banker's acceptance drafts transferred to vendors are subject to customary right of recourse provisions prior to their scheduled maturity dates.

The Company had $ 5,981,000 at April 1, 2023 and $ 11,238,000 at December 31, 2022 of banker's acceptance drafts subject to recourse, which were transferred to vendors and had not reached their scheduled maturity dates.

The Company had $ 12,315,000 at July 1, 2023 and $ 11,238,000 at December 31, 2022 of banker's acceptance drafts subject to recourse, which were transferred to vendors and had not reached their scheduled maturity dates.

Historically, the banker's acceptance drafts have settled upon maturity without any claim of recourse against the Company.

4 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-Q

Item 1. Financial Statements