Kimball Electronics, Inc. 10-Q

Item 5. Other Information We are providing the following disclosure in this Form 10-Q in lieu of filing such information on a Current Report on Form 8-K. Item 1.01 Entry into a Material Definitive Agreement On May 4, 2022, the Company entered into an amended and restated credit agreement (the “Credit Agreement”) among the Company, the lenders party thereto, and JPMorgan Chase Bank, N.A., as Administrative Agent and Bank of America, N.A., as Documentation Agent. The Credit Agreement amends and restates the Company’s primary credit facility, which was scheduled to mature on July 27, 2023. The Credit Agreement has a maturity date of May 4, 2027 and allows for $300 million in borrowings, with an option to increase the amount available for borrowing to $450 million at the Company’s request, subject to the consent of each lender participating in such increase. The proceeds of the loans are to be used for working capital and general corporate purposes of the Company. A commitment fee of the unused portion of principal amount of the credit facility is payable at a rate that now ranges from 10.0 to 25.0 basis points per annum as determined by the Company’s ratio of consolidated total indebtedness to adjusted consolidated EBITDA, as defined in the Credit Agreement. The interest rate on borrowings is dependent on the type and currencies of borrowings and will be one of the following options: • any Term Benchmark borrowing denominated in U.S. Dollars will utilize the Secured Overnight Financing Rate (“SOFR”), which is a rate per annum equal to the secured overnight financing rate for such business day published by the SOFR Administrator, the Federal Reserve Bank of New York, on the immediately succeeding business day, plus the Revolving Commitment Term Benchmark spread which can range from 100.0 to 175.0 basis points based on the Company’s ratio of consolidated total indebtedness to adjusted consolidated EBITDA; • any Term Benchmark borrowing denominated in Euros will utilize the Euro Interbank Offered Rate (“EURIBOR”) in effect two target days prior to the advance (adjusted upwards to reflect bank reserve costs) for such interest period as defined in the agreement, plus the Revolving Commitment Term Benchmark spread which can range from 100.0 to 175.0 basis points based on the Company’s ratio of consolidated total indebtedness to adjusted consolidated EBITDA; or • the Alternate Base Rate (“ABR”), which is defined as the highest of the fluctuation rate per annum equal to the higher of: a. Prime Rate in the U.S. last quoted by the Wall Street Journal, and if this is ceased to be quoted, the highest bank prime loan rate or similar loan rate quoted by the Federal Reserve Board; b. 1/2 of 1% per annum above the Federal Funds Effective Rate (as defined under the Credit Agreement); or c. 1% per annum above the Adjusted Term SOFR Rate (as defined under the Credit Agreement); plus the Revolving Commitment ABR spread which has been can range from 0.0 to 75.0 basis points based on the Company’s ratio of consolidated total indebtedness to adjusted consolidated EBITDA. 35 The Company’s financial covenants under the Credit Agreement require: • a ratio of consolidated total indebtedness minus unencumbered U.S. cash on hand in the United States in excess of $15 million to adjusted consolidated EBITDA, determined as of the end of each of its fiscal quarters for the then most recently ended four fiscal quarters, to not be greater than 3.0 to 1.0; provided, however, that for each fiscal quarter end during the four quarter period following a material permitted acquisition, as defined in the Credit Agreement, the Company will not permit this financial covenant to be greater than 3.5 to 1.0 for each such fiscal quarter end, and • an interest coverage ratio, defined as that ratio of consolidated EBITDA for such period to cash interest expense for such period, for any period of four consecutive fiscal quarters ending during any period set forth below, to be less than 3.5 to 1.0. The foregoing description of the Credit Agreement does not purport to be complete and is qualified by its entirety by reference to the full text of the Credit Agreement, which is attached hereto as Exhibit 10.1 and incorporated herein by reference. Item 2.03 Creation of a Direct Financial Obligation under an Off-Balance Sheet Arrangement of a Registrant The information set forth under Item 1.01 related to the Credit Agreement is incorporated by reference in this Item 2.03. 36 Item 6. Exhibits Exhibits (numbered in accordance with Item 601 of Regulation S-K) Incorporated by Reference Exhibit No. Description Form Period Ending Exhibit Filing Date 3.1 Amended and Restated Articles of Incorporation of the Company 8-K 3.1 2/18/2021 3.2 Amended and Restated By-Laws of the Company 8-K 3.2 2/18/2021 10.1 Amended and Restated Credit Agreement, dated as of May 4, 2022, among Kimball Electronics, Inc., the lenders party thereto, and JPMorgan Chase Bank, N.A., as Administrative Agent, and Bank of America, N.A., as Documentation Agent Filed Herewith 31.1 Certification filed by Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 Filed Herewith 31.2 Certification filed by Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 Filed Herewith 32.1 (a) Certification furnished by the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 Furnished Herewith 32.2 (a) Certification furnished by the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 Furnished Herewith 101.INS Inline XBRL Instance Document - The instance document does not appear in the Interactive Data File because its Inline XBRL tags are embedded within the Inline XBRL document Filed Herewith 101.SCH Inline XBRL Taxonomy Extension Schema Document Filed Herewith 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document Filed Herewith 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document Filed Herewith 101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document Filed Herewith 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document Filed Herewith 104 Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101) Filed Herewith (a) In accordance with Item 601(b)(32)(ii) of Regulation S-K, the certifications furnished in Exhibit 32.1 and 32.2 will not be deemed “filed” for purposes of Section 18 of the Exchange Act. Such certifications will not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that the registrant specifically incorporates it by reference. 37 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. KIMBALL ELECTRONICS, INC. By: /s/ DONALD D. CHARRON Donald D. Charron Chairman of the Board, Chief Executive Officer May 6, 2022 By: /s/ JANA T. CROOM Jana T. Croom Vice President, Chief Financial Officer May 6, 2022 38