What changed in this filing

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Item 1. Financial Statements

2024-02-06 compared with 2023-11-07 · 158 added, 64 removed, 517 unchanged (30% of the section changed)

3 unchanged sentences

(Amounts in Thousands, Except for Share Data)

September 30,

2023 June 30,

47 unchanged sentences

(Amounts in Thousands, Except for Per Share Data)

Three Months Ended

Three Months Ended Six Months Ended

December 31 December 31

(Unaudited) 2023 2022 2023 2022

23 unchanged sentences

Three Months Ended Three Months Ended

September 30, 2023 September 30, 2022

December 31, 2023 December 31, 2022

(Unaudited) Pre-tax Tax Net of Tax Pre-tax Tax Net of Tax

9 unchanged sentences

Total comprehensive income $ 16,430 $ 22,917

Six Months Ended Six Months Ended

December 31, 2023 December 31, 2022

(Unaudited) Pre-tax Tax Net of Tax Pre-tax Tax Net of Tax

Net income $ 19,044 $ 20,229

Other comprehensive income (loss):

Foreign currency translation adjustments $ 2,254 $ — $ 2,254 $ 3,333 $ — $ 3,333

Postemployment actuarial change ( 608 ) 179 ( 429 ) ( 158 ) 44 ( 114 )

Derivative gain (loss) 3,971 ( 882 ) 3,089 3,684 ( 733 ) 2,951

Reclassification to (earnings) loss:

Derivatives ( 4,492 ) 995 ( 3,497 ) ( 1,485 ) 200 ( 1,285 )

Amortization of actuarial change ( 16 ) 4 ( 12 ) ( 138 ) 33 ( 105 )

Other comprehensive income (loss) $ 1,109 $ 296 $ 1,405 $ 5,236 $ ( 456 ) $ 4,780

Total comprehensive income $ 20,449 $ 25,009

See Notes to Condensed Consolidated Financial Statements .

2 unchanged sentences

(Amounts in Thousands)

Three Months Ended

Six Months Ended

(Unaudited) 2023 2022

1 unchanged sentence

Net income $ 19,044 $ 20,229

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

Adjustments to reconcile net income to net cash used for operating activities:

Depreciation and amortization 18,067 15,608

11 unchanged sentences

Accrued expenses and taxes payable ( 9,255 ) 2,835

Net cash provided by (used for) operating activities 12,801 ( 60,194 )

Net cash used for operating activities ( 17,922 ) ( 71,921 )

Cash Flows From Investing Activities:

10 unchanged sentences

Effect of Exchange Rate Change on Cash and Cash Equivalents 368 ( 593 )

Net Increase (Decrease) in Cash, Cash Equivalents, and Restricted Cash 14,935 ( 30,136 )

Net Decrease in Cash, Cash Equivalents, and Restricted Cash ( 3,060 ) ( 22,965 )

Cash, Cash Equivalents, and Restricted Cash at Beginning of Period (1)

10 unchanged sentences

The restricted cash included in Prepaid expenses and other current assets on the balance sheet represents funds held by the Company for a foreign subsidiary’s employee savings plan.

(Unaudited) September 30,

(Unaudited) December 31,

2023 June 30,

6 unchanged sentences

(Amounts in Thousands, Except for Share Data)

Three Months Ended

Retained Earnings Accumulated Other Comprehensive Income (Loss) Treasury Stock Total Share Owners’ Equity

(Unaudited) Additional Paid-In Capital

Amounts at June 30, 2023 $ 315,482 $ 296,053 $ ( 11,046 ) $ ( 76,495 ) $ 523,994

Amounts at September 30, 2023 $ 314,255 $ 306,807 $ ( 17,781 ) $ ( 75,019 ) $ 528,262

Net income 8,290 8,290

Other comprehensive income (loss) 8,140 8,140

Issuance of non-restricted stock ( 18,000 shares)

Compensation expense related to stock compensation plans 1,867 1,867

1 unchanged sentence

( 48 ) 21 ( 27 )

Amounts at December 31, 2023 $ 316,309 $ 315,097 $ ( 9,641 ) $ ( 74,776 ) $ 546,989

Amounts at September 30, 2022 $ 310,271 $ 249,731 $ ( 27,089 ) $ ( 76,668 ) $ 456,245

Net income 10,720 10,720

Other comprehensive income (loss) 12,197 12,197

Issuance of non-restricted stock ( 14,000 shares)

Compensation expense related to stock compensation plans 1,664 1,664

Amounts at December 31, 2022 $ 312,085 $ 260,451 $ ( 14,892 ) $ ( 76,496 ) $ 481,148

Six Months Ended

Retained Earnings Accumulated Other Comprehensive Income (Loss) Treasury Stock Total Share Owners’ Equity

(Unaudited) Additional Paid-In Capital

Amounts at June 30, 2023 $ 315,482 $ 296,053 $ ( 11,046 ) $ ( 76,495 ) $ 523,994

1 unchanged sentence

Other comprehensive income (loss) 1,405 1,405

Issuance of non-restricted stock ( 18,000 shares)

Compensation expense related to stock compensation plans 3,480 3,480

Performance and restricted share issuance ( 108,000 and 15,000 shares)

( 2,888 ) 1,497 ( 1,391 )

Amounts at December 31, 2023 $ 316,309 $ 315,097 $ ( 9,641 ) $ ( 74,776 ) $ 546,989

Amounts at June 30, 2022 $ 311,090 $ 240,222 $ ( 19,672 ) $ ( 77,669 ) $ 453,971

Net income 20,229 20,229

Other comprehensive income (loss) 4,780 4,780

Issuance of non-restricted stock ( 14,000 shares)

Compensation expense related to stock compensation plans 3,262 3,262

Performance share issuance ( 85,000 shares)

( 2,417 ) 1,001 ( 1,416 )

Amounts at September 30, 2022 $ 310,271 $ 249,731 $ ( 27,089 ) $ ( 76,668 ) $ 456,245

Amounts at December 31, 2022 $ 312,085 $ 260,451 $ ( 14,892 ) $ ( 76,496 ) $ 481,148

See Notes to Condensed Consolidated Financial Statements .

11 unchanged sentences

Basis of Presentation:

The Condensed Consolidated Financial Statements presented herein reflect the consolidated financial position as of September 30, 2023 and June 30, 2023, results of operations for the three months ended September 30, 2023 and 2022, cash flows for the three months ended September 30, 2023 and 2022, and share owners’ equity for the three months ended September 30, 2023 and 2022.

The Condensed Consolidated Financial Statements presented herein reflect the consolidated financial position as of December 31, 2023 and June 30, 2023, results of operations for the three and six months ended December 31, 2023 and 2022, cash flows for the six months ended December 31, 2023 and 2022, and share owners’ equity for the three and six months ended December 31, 2023 and 2022.

The financial data presented herein is unaudited and should be read in conjunction with the annual Consolidated Financial Statements as of and for the year ended June 30, 2023 and related notes thereto included in our Annual Report on Form 10-K.

45 unchanged sentences

We also have the ability to and have periodically utilized additional accounts receivable factoring arrangements to provide flexible access to cash as needed.

In the three months ended September 30, 2023 and 2022, we sold, without recourse, $ 103.0 million and $ 97.6 million of accounts receivable, respectively.

For both the three months ended September 30, 2023 and 2022, factoring fees were $ 0.9 million.

In the six months ended December 31, 2023 and 2022, we sold, without recourse, $ 198.9 million and $ 225.1 million of accounts receivable, respectively.

For the three months ended December 31, 2023 and 2022, factoring fees were $ 0.8 million and $ 1.5 million, and $ 1.7 million and $ 2.4 million during the six months ended December 31, 2023 and 2022, respectively.

Factoring fees are recorded in Selling and Administrative Expenses on our Condensed Consolidated Statements of Income.

During the three months ended December 31, 2023, changes to the expected timing of payments from and risk of default for a customer resulted in the recording of an allowance for credit losses of $ 2.0 million in Selling and Administrative Expenses on our Condensed Consolidated Statements of Income.

Although the customer is not in bankruptcy and we will continue to pursue full recovery, an allowance was deemed necessary in consideration of the expected timing of payments and risk of default.

The amount expected to be collected after twelve months is included in Other Assets on the Condensed Consolidated Balance Sheet.

At December 31, 2023, the noncurrent receivable associated with this customer in Other Assets totaled $ 2.9 million , which is net of the $ 2.0 million allowance for expected credit losses.

The current portion of receivables from this customer is $ 2.3 million at December 31, 2023.

Goodwill and Other Intangible Assets:

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Other Intangible Assets consist of capitalized software, customer relationships, technology, and trade name, and are reviewed for impairment, and their remaining useful lives evaluated for revision, when events or circumstances indicate that the carrying value may not be recoverable over the remaining lives of the assets.

As of September 30, 2023, the Company determined there have been no indicators of impairment for goodwill and other intangible assets.

As of December 31, 2023, the Company determined there have been no indicators of impairment for goodwill and other intangible assets.

See Note 11 - Goodwill and Other Intangible Assets of Notes to Condensed Consolidated Financial statements for more information on Goodwill and Other Intangible Assets.

The Company leases certain office, manufacturing, and warehouse facilities under operating leases, in addition to land on which certain office and manufacturing facilities resides.

The Company leases certain office, manufacturing, and warehouse facilities and equipment under operating leases, in addition to land on which certain office and manufacturing facilities resides.

Operating lease costs and cash payments for operating leases are immaterial to the Condensed Consolidated Statements of Income and our Condensed Consolidated Statements of Cash Flows.

Lease right-of-use assets and lease liabilities each totaled $ 3.0 million at September 30, 2023 and $ 2.6 million at June 30, 2023, respectively.

Lease right-of-use assets and lease liabilities each totaled $ 2.9 million at December 31, 2023 and $ 2.6 million at June 30, 2023, respectively.

Lease right-of-use assets are included in Other Assets and lease liabilities are included in Accrued expenses and Other long-term liabilities on the Condensed Consolidated Balance Sheets.

3 unchanged sentences

Components of Non-operating income (expense), net:

Three Months Ended

Three Months Ended Six Months Ended

December 31 December 31

(Amounts in Thousands) 2023 2022 2023 2022

20 unchanged sentences

Tax Reform, in addition to other changes, required a one-time transition tax on certain unremitted earnings of foreign subsidiaries that is payable over an eight-year period.

As of September 30, 2023 and June 30, 2023, the remaining provision recorded for the one-time deemed repatriation tax was $ 5.9 million and $ 7.9 million, respectively, payable through fiscal year 2026, with the long-term portion recorded in Long-term income taxes payable on the Condensed Consolidated Balance Sheets.

As of September 30, 2023, $ 2.6 million of the remaining deemed repatriation tax is short term and is recorded in Accrued expenses on the Condensed Consolidated Balance Sheet.

As of December 31, 2023 and June 30, 2023, the remaining provision recorded for the one-time deemed repatriation tax was $ 5.9 million and $ 7.8 million, respectively, payable through fiscal year 2026, with the long-term portion recorded in Long-term income taxes payable on the Condensed Consolidated Balance Sheets.

As of December 31, 2023, $ 2.6 million of the remaining deemed repatriation tax is short term and is recorded in Accrued expenses on the Condensed Consolidated Balance Sheet.

New Accounting Standards:

Currently, there are no issued but not yet adopted accounting standards that are expected to have a material impact on the Company.

Not Yet Adopted:

In November 2023, the Financial Accounting Standards Board (“FASB”) issued guidance on Improvements to Reportable Segment Disclosures, requiring additional, more detailed information about a reportable segment.

The guidance is effective for fiscal years beginning after December 15, 2023 and for interim periods beginning after December 15, 2024.

Early adoption is permitted.

We are currently evaluating the impact of the adoption of this guidance on our consolidated financial statements.

In December 2023, the FASB issued guidance on Improvements to Income Tax Disclosures, intended to enhance the transparency and decision usefulness of income tax disclosures.

The guidance is effective for fiscal years beginning after December 15, 2024.

Early adoption is permitted.

We are currently evaluating the impact of the adoption of this guidance on our consolidated financial statements.

Revenue from Contracts with Customers

2 unchanged sentences

Prior year periods have been recast to conform to the current year presentation.

The following table disaggregates our revenue by end market vertical for the three months ended September 30, 2023 and 2022.

Three Months Ended

The following table disaggregates our revenue by end market vertical for the three and six months ended December 31, 2023 and 2022.

Three Months Ended Six Months Ended

December 31 December 31

(Amounts in Millions) 2023 2022 2023 2022

4 unchanged sentences

Total net sales $ 421.2 $ 436.7 $ 859.3 $ 842.6

For the three months ended September 30, 2023 and 2022, approximately 97 % and 96 % of our net sales, respectively, were recognized over time as manufacturing services were performed under a customer contract on a product with no alternative use and we have an enforceable right to payment for performance completed to date.

For the three months ended December 31, 2023 and 2022, approximately 95 % and 97 % of our net sales, respectively, were recognized over time as manufacturing services were performed under a customer contract on a product with no alternative use and we have an enforceable right to payment for performance completed to date.

For both the six months ended December 31, 2023 and 2022, approximately 96 % of our net sales, respectively, were recognized over time.

The remaining sales revenues were recognized at a point in time when the customer obtained control of the products.

1 unchanged sentence

Contract assets on the Condensed Consolidated Balance Sheets relate to unbilled accounts receivable and occur when revenue is recognized over time as manufacturing services are provided and the billing to the customer has not yet occurred as of the balance sheet date, which are generally transferred to receivables in the next fiscal quarter due to the short-term nature of the manufacturing cycle.

Contract assets were $ 87.7 million and $ 78.8 million as of September 30, 2023 and June 30, 2023, respectively.

Contract assets were $ 81.9 million and $ 78.8 million as of December 31, 2023 and June 30, 2023, respectively.

The Company may receive payments from customers in advance of the satisfaction of performance obligations primarily for material price variances, inventory purchases, tooling, or other miscellaneous services or costs.

These payments are recognized as contract liabilities until the performance obligations are completed and are included in Advances from customers, if inventory related, and Accrued expenses, if not inventory related, on the Condensed Consolidated Balance Sheets , which amounted to $ 53.7 million and $ 45.6 million as of September 30, 2023 and June 30, 2023, respectively.

These payments are recognized as contract liabilities until the performance obligations are completed and are included in Advances from customers, if inventory related, and Accrued expenses, if not inventory related, on the Condensed Consolidated Balance Sheets , which amounted to $ 56.9 million and $ 45.6 million as of December 31, 2023 and June 30, 2023, respectively.

Our performance obligations are short term in nature and therefore our contract liabilities are all expected to be settled within twelve months.

1 unchanged sentence

Inventory components were as follows:

(Amounts in Thousands) September 30, 2023 June 30, 2023

(Amounts in Thousands) December 31, 2023 June 30, 2023

Finished products $ 78 $ 432

3 unchanged sentences

Accumulated Other Comprehensive Income (Loss)

During the three months ended September 30, 2023 and 2022, the changes in the balances of each component of Accumulated Other Comprehensive Income (Loss), net of tax, were as follows:

During the six months ended December 31, 2023 and 2022, the changes in the balances of each component of Accumulated Other Comprehensive Income (Loss), net of tax, were as follows:

Accumulated Other Comprehensive Income (Loss)

6 unchanged sentences

Net current-period other comprehensive income (loss) 2,254 ( 408 ) ( 441 ) 1,405

Balance at September 30, 2023

Balance at December 31, 2023

$ ( 9,578 ) $ 960 $ ( 1,023 ) $ ( 9,641 )

4 unchanged sentences

Net current-period other comprehensive income (loss) 3,333 1,666 ( 219 ) 4,780

Balance at September 30, 2022

Balance at December 31, 2022

$ ( 14,016 ) $ ( 537 ) $ ( 339 ) $ ( 14,892 )

The following reclassifications were made from Accumulated Other Comprehensive Income (Loss) to the Condensed Consolidated Statements of Income:

Reclassifications from Accumulated Other Comprehensive Income (Loss) Three Months Ended Affected Line Item in the Condensed Consolidated Statements of Income

Reclassifications from Accumulated Other Comprehensive Income (Loss) Three Months Ended Six Months Ended Affected Line Item in the Condensed Consolidated Statements of Income

December 31 December 31

(Amounts in Thousands) 2023 2022 2023 2022

17 unchanged sentences

Management refines the warranty liability regularly based on changes in historical cost trends and in certain cases where specific warranty issues become known.

This product warranty liability and expense were immaterial during the three months ended September 30, 2023 and 2022.

This product warranty liability and expense were immaterial during the six months ended December 31, 2023 and 2022.

Credit Facilities

1 unchanged sentence

Borrowing Capacity at Borrowings Outstanding at Borrowings Outstanding at

(Amounts in Millions, in U.S Dollar Equivalents) September 30, 2023 September 30, 2023 June 30, 2023

(Amounts in Millions, in U.S Dollar Equivalents) December 31, 2023 December 31, 2023 June 30, 2023

Primary credit facility (1)

29 unchanged sentences

• a ratio of consolidated total indebtedness minus unencumbered U.S.

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,

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, to not be less than 3.5 to 1.0.

The Company had $ 0.4 million in letters of credit contingently committed against the credit facility at both September 30, 2023 and June 30, 2023.

The Company had $ 0.4 million in letters of credit contingently committed against the credit facility at both December 31, 2023 and June 30, 2023.

(2) The Company entered into a 364-day multi-currency revolving credit facility agreement on February 3, 2023 (the “secondary credit facility”), which allows for borrowings up to $ 50 million, among the Company, as borrower, certain subsidiaries of the Company as guarantors, the lenders party thereto, JPMorgan Chase Bank, N.A., as Administrative Agent and Bank of America, N.A., as Documentation Agent.

16 unchanged sentences

Interest on borrowing under these facilities is charged at a rate as defined under the respective foreign credit facility.

During the second quarter of fiscal year 2024, the Company entered into a foreign credit facility for its EMS operation in China with a new lender, which allows for borrowings up to 50 million RMB, and canceled the prior credit facility which allowed for borrowings up to $ 7.5 million.

(4) The amount of Long-term debt under credit facilities, less current maturities, reflects the borrowings on the primary credit facility that the Company intends, and has the ability, to refinance for a period longer than twelve months.

The primary credit facility matures on May 4, 2027.

The weighted-average interest rate on borrowings outstanding under the credit facilities at September 30, 2023 and June 30, 2023 were 7.1 % and 6.8 %, respectively.

The weighted-average interest rate on borrowings outstanding under the credit facilities at December 31, 2023 and June 30, 2023 were 7.1 % and 6.8 %, respectively.

Subsequent to December 31, 2023, the Company amended its secondary credit facility on January 5, 2024 to increase the borrowing limit to $ 100 million from $ 50 million and change the maturity date to January 3, 2025.

See Note 14 - Subsequent Event of Notes to Consolidated Financial Statements for further information.

The Company categorizes assets and liabilities measured at fair value into three levels based upon the assumptions (inputs) used to price the assets or liabilities.

5 unchanged sentences

Unobservable inputs reflecting management’s own assumptions about the inputs used in pricing the asset or liability.

There were no changes in the inputs or valuation techniques used to measure fair values during the three months ended September 30, 2023.

There were no changes in the inputs or valuation techniques used to measure fair values during the six months ended December 31, 2023.

For more information on inputs and fair valuation techniques used, refer to our Annual Report on Form 10-K for the year ended June 30, 2023.

Recurring Fair Value Measurements:

As of September 30, 2023 and June 30, 2023, the fair values of financial assets and liabilities that are measured at fair value on a recurring basis using the market approach are categorized as follows:

September 30, 2023

As of December 31, 2023 and June 30, 2023, the fair values of financial assets and liabilities that are measured at fair value on a recurring basis using the market approach are categorized as follows:

December 31, 2023

(Amounts in Thousands) Level 1 Level 2 Total

13 unchanged sentences

Total liabilities at fair value $ — $ 1,245 $ 1,245

We had no level 3 assets or liabilities at September 30, 2023 and June 30, 2023, or any activity in Level 3 assets or liabilities during the three months ended September 30, 2023.

We had no level 3 assets or liabilities at December 31, 2023 and June 30, 2023, or any activity in Level 3 assets or liabilities during the six months ended December 31, 2023.

The nonqualified supplemental employee retirement plan (“SERP”) assets consist primarily of equity funds, balanced funds, bond funds, and a money market fund.

3 unchanged sentences

Financial instruments that are not reflected in the Condensed Consolidated Balance Sheets at fair value that have carrying amounts which approximate fair value include notes receivable and borrowings under credit facilities.

There were no changes to the inputs and valuation techniques used to assess the fair value of these financial instruments during the three months ended September 30, 2023.

There were no changes to the inputs and valuation techniques used to assess the fair value of these financial instruments during the six months ended December 31, 2023.

For more information on inputs and fair valuation techniques used, refer to our Annual Report on Form 10-K for the year ended June 30, 2023.

9 unchanged sentences

Non-designated foreign exchange contracts are also used to hedge against foreign currency exchange rate risks related to intercompany balances and other balance sheet positions denominated in currencies other than the functional currencies.

As of September 30, 2023, we had outstanding foreign exchange contracts to hedge currencies against the U.S.

As of December 31, 2023, we had outstanding foreign exchange contracts to hedge currencies against the U.S.

dollar in the aggregate notional amount of $ 29.8 million and to hedge currencies against the Euro in the aggregate notional amount of 62.5 million Euro.

6 unchanged sentences

The gain or loss associated with derivative instruments that are not designated as hedging instruments or that cease to meet the criteria for hedging under FASB guidance is reported immediately in Non-operating income (expense), net on the Condensed Consolidated Statements of Income.

Based on fair values as of September 30, 2023, we estimate that approximately $ 0.2 million of pre-tax derivative gain deferred in Accumulated Other Comprehensive Loss will be reclassified into earnings, along with the earnings effects of related forecasted transactions, within the next 12 months.

Based on fair values as of December 31, 2023, we estimate that approximately $ 3.0 million of pre-tax derivative gain deferred in Accumulated Other Comprehensive Loss will be reclassified into earnings, along with the earnings effects of related forecasted transactions, within the next 12 months.

Gains on foreign exchange contracts are generally offset by losses in operating income in the income statement when the underlying hedged transaction is recognized in earnings.

Because gains or losses on foreign exchange contracts fluctuate partially based on currency spot rates, the future effect on earnings of the cash flow hedges alone is not determinable, but in conjunction with the underlying hedged transactions, the result is expected to be a decline in currency risk.

The maximum length of time we had hedged our exposure to the variability in future cash flows was 12 months as of both September 30, 2023 and June 30, 2023.

The maximum length of time we had hedged our exposure to the variability in future cash flows was 12 months as of both December 31, 2023 and June 30, 2023.

See Note 7 - Fair Value of Notes to Condensed Consolidated Financial Statements for further information regarding the fair value of derivative assets and liabilities and Note 4 - Accumulated Other Comprehensive Income (Loss) of Notes to Condensed Consolidated Financial Statements for the changes in deferred derivative gains and losses.

3 unchanged sentences

Fair Value As of Fair Value As of

(Amounts in Thousands) Balance Sheet Location September 30,

(Amounts in Thousands) Balance Sheet Location December 31,

2023 June 30,

2023 Balance Sheet Location September 30,

2023 Balance Sheet Location December 31,

2023 June 30,

5 unchanged sentences

The Effect of Derivative Instruments on Other Comprehensive Income (Loss)

Three Months Ended

Three Months Ended Six Months Ended

December 31 December 31

(Amounts in Thousands) 2023 2022 2023 2022

2 unchanged sentences

The Effect of Derivative Instruments on Condensed Consolidated Statements of Income

Three Months Ended

(Amounts in Thousands) September 30

Three Months Ended Six Months Ended

(Amounts in Thousands) December 31 December 31

Derivatives in Cash Flow Hedging Relationships Location of Gain or (Loss) 2023 2022 2023 2022

10 unchanged sentences

The Company also provides a discretionary contribution determined annually by the Talent, Culture, and Compensation Committee of the Company’s Board of Directors.

Total expense related to employer contributions to the domestic retirement plans was, in millions, $ 1.6 million and $ 1.5 million for the three months ended September 30, 2023 and September 30, 2022, respectively.

Total expense related to employer contributions to the domestic retirement plans was, in millions, $ 3.1 million and $ 2.8 million for the six months ended December 31, 2023 and December 31, 2022, respectively.

The Company also maintains a supplemental employee retirement plan (“SERP”) for executives and other key employees which enables them to defer cash compensation on a pre-tax basis and restore amounts that would otherwise be payable under our tax-qualified retirement plans if the IRS did not have limits on includable compensation and maximum benefits.

2 unchanged sentences

A SERP liability of the same amount is recorded on the balance sheet representing an obligation to distribute SERP funds to participants.

As of September 30, 2023, both total investments and obligations under SERP were $ 6.0 million, of which $ 1.6 million were short term and $ 4.4 million were long term.

As of December 31, 2023, both total investments and obligations under SERP were $ 5.2 million, of which $ 0.2 million were short term and $ 5.0 million were long term.

As of June 30, 2023, both total investments and obligations under SERP were $ 8.7 million, of which $ 2.7 million were short term and $ 6.0 million were long term.

The SERP investment assets are classified as

trading, and accordingly, realized and unrealized gains and losses are recognized in the Other Income (Expense) category on our Condensed Consolidated Statements of Income.

The SERP investment assets are classified as trading, and accordingly, realized and unrealized gains and losses are recognized in the Other Income (Expense) category on

our Condensed Consolidated Statements of Income.

Adjustments made to revalue the SERP liability are also recognized in income as selling and administrative expenses and offset valuation adjustments on SERP investment assets.

The change in net unrealized holding gains for both the three months ended September 30, 2023 and 2022 was approximately $( 0.2 ) million and $( 0.3 ) million, respectively.

The change in net unrealized holding gains for both the six months ended December 31, 2023 and 2022 was approximately $ 0.1 million and $( 0.2 ) million, respectively.

Defined Benefit Postemployment Plan:

3 unchanged sentences

Benefits are paid using available cash on hand when eligible employees meet plan qualifications for payment.

As of September 30, 2023 and June 30, 2023, total obligations under these plans were both $ 6.6 million, of which $ 5.6 million were both long term and $ 1.0 million were both short term.

Net periodic benefit costs were not material for the three months ended September 30, 2023 and 2022.

As of December 31, 2023, total obligations under these plans were $ 7.4 million of which $ 6.5 million were long term and $ 0.9 million were short term.

As of June 30, 2023, total obligations under these plans were $ 6.6 million of which $ 5.6 million were long term and $ 1.0 million were short term.

Net periodic benefit costs were not material for the six months ended December 31, 2023 and 2022.

Stock Compensation Plans

5 unchanged sentences

2023 Equity Incentive Plan (the “2023 Plan”), subject to Share Owner approval at our 2023 Annual Meeting.

The 2023 Plan will supersede our 2014 Plan if it is approved by our Share Owners.

The 2023 Plan was approved by our Share Owners on November 17, 2023.

The 2023 Plan supersedes our 2014 Plan and allows for the issuance of up to 2.0 million shares.

The shares under the 2023 Plan may be granted in the form of incentive stock options, non-qualified stock options, stock appreciation rights, restricted awards, performance share awards, cash awards, and other equity awards.

On October 20, 2016, the Board approved a nonqualified deferred stock compensation plan, the Kimball Electronics, Inc.

3 unchanged sentences

For more information on the 2023 Plan, refer to our Notice of 2023 Annual Meeting and Proxy Statement.

During the first three months of fiscal year 2024, the following stock compensation was granted under the 2014 Plan and the Deferral Plan.

During the first six months of fiscal year 2024, the following stock compensation was granted under the 2014 Plan, the 2023 Plan, and the Deferral Plan.

Stock Compensation Granted Quarter Granted Shares/Units Grant Date Fair Value (2)

3 unchanged sentences

1st Quarter 71,422 $ 29.19

Long-Term Performance Shares (4)

2nd Quarter 35,650 $ 25.21

Restricted Shares (4)

2nd Quarter 23,768 $ 25.21

Unrestricted Shares (5)

2nd Quarter 18,128 $ 25.24

Deferred Share Units (6)

2nd Quarter 26,347 $ 25.24

(1) Long-term performance share awards were granted to officers and other key employees.

2 unchanged sentences

Under these awards, a number of shares will be issued to each participant based upon a combination of the Company’s profitability based on its operating income over the performance period as defined in the Company’s operating business plans for the applicable fiscal years and the Company’s growth based on a comparison of its three-year compounded annual growth rate (“CAGR”) with the Electronics Manufacturing Services Industry’s three-year CAGR.

The number of shares issued will be less than the targeted shares issuable if the Company does not reach 100 % of one or both of the above-mentioned performance metrics, and could be zero if the Company does not reach the required minimum thresholds of either metric.

The number of shares issued will be less than the targeted shares issuable if the Company does not reach 100 % of one or both of the above-

mentioned performance metrics, and could be zero if the Company does not reach the required minimum thresholds of either metric.

The number of shares issued will exceed the number of targeted shares issuable (up to a maximum of 125 %) if the Company exceeds 100 % of one or both of the above-mentioned incentive metrics.

5 unchanged sentences

If the employment of a holder of restricted shares terminates before the RSU has vested for any reason other than death, retirement, or disability, the restricted shares not yet vested will be forfeited.

(4) Additional long-term performance share and restricted share awards were approved by the Talent, Culture, and Compensation Committee of the Board and were granted in the second quarter of fiscal year 2024.

The awards will vest over a 5 -year performance cycle, with one-third of the interest in the shares vesting after year three of the grant, another one-third after year four of the grant, and the final one-third after year five of the grant.

The vesting of the performance share awards could range from 0 % to 100 % of the targeted issuable shares, dependent on the achievement of specific performance metrics.

(5) Unrestricted shares were awarded to non-employee members of the Board as compensation for the portion of their annual retainer fees resulting from their elections to be paid in unrestricted shares in lieu of cash payment or deferred share units.

Director’s fees are expensed over the period that directors earn the compensation.

Unrestricted shares do not have vesting periods, holding periods, restrictions on sales, or other restrictions.

(6) Deferred share units were awarded to non-employee members of the Board as compensation for the portion of their annual retainer fees resulting from their elections to receive deferred share units in lieu of cash payment or unrestricted shares.

Director’s fees are expensed over the period that directors earn the compensation.

Deferred share units are participating securities and are payable in common stock in a lump sum or installments in accordance with deferral elections upon a Director’s retirement or termination from the Board or death .

Goodwill and Other Intangible Assets

A summary of goodwill is as follows:

(Amounts in Thousands) September 30,

(Amounts in Thousands) December 31,

2023 June 30,

3 unchanged sentences

A summary of other intangible assets subject to amortization is as follows:

September 30, 2023 June 30, 2023

December 31, 2023 June 30, 2023

(Amounts in Thousands) Cost Accumulated

6 unchanged sentences

Other Intangible Assets $ 51,136 $ ( 40,143 ) $ 10,993 $ 51,120 $ ( 38,785 ) $ 12,335

For both the three months ended September 30, 2023 and 2022, amortization expense of other intangible assets was $ 0.9 million.

For the three months ended December 31, 2023 and 2022, amortization expense of other intangible assets was $ 0.6 million and $ 0.8 million, respectively.

For the six months ended December 31, 2023 and 2022, amortization expense of other intangible assets was $ 1.5 million and $ 1.7 million, respectively.

The estimated useful life of internal-use software ranges from 3 years to 10 years.

5 unchanged sentences

The Repurchase Plan has no expiration date but may be suspended or discontinued at any time.

During both the three months ended September 30, 2023 and 2022, the Company had no share repurchases under the Repurchase Plan.

During both the six months ended December 31, 2023 and 2022, the Company had no share repurchases under the Repurchase Plan.

Since the inception of the Repurchase Plan, the Company has repurchased $ 88.8 million of common stock at an average cost of $ 15.27 per share.

1 unchanged sentence

Basic and diluted earnings per share were calculated as follows under the two-class method:

Three Months Ended

Three Months Ended Six Months Ended

December 31 December 31

(Amounts in thousands, except per share data) 2023 2022 2023 2022

9 unchanged sentences

Diluted $ 0.33 $ 0.43 $ 0.75 $ 0.81

Subsequent Event

On January 5, 2024 , we amended our 364-day multi-currency revolving credit facility agreement (the “secondary credit facility”), dated as of February 3, 2023, among the Company, as borrower, certain subsidiaries of the Company as guarantors, the lenders party thereto, JPMorgan Chase Bank, N.A., as Administrative Agent and Bank of America, N.A., as Documentation Agent.

The amendment to the secondary credit facility increases the borrowing limit to $ 100.0 million from $ 50.0 million and changes the maturity date from February 2, 2024 to January 3, 2025.

The following terms and conditions remain unchanged under the amended secondary credit facility dated as of January 5, 2024 when compared to the agreement dated as of February 3, 2023:

• The proceeds of the loans are to be used for working capital and general corporate purposes of the Company.

• A commitment fee on the unused portion of principal amount of this secondary credit facility is payable at 30.0 basis points per annum.

• The interest rate on borrowings is dependent on the type 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 a Revolving Commitment Term Benchmark spread of 175.0 basis points;

• 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 a Revolving Commitment Term Benchmark spread of 175.0 basis points;

• the Alternate Base Rate (“ABR”), which is defined as the highest of the fluctuating rate per annum equal to the higher of

◦ 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;

◦ 1/2 of 1% per annum above the Federal Funds Effective Rate (as defined under the primary credit facility);

◦ 1 % per annum above the Adjusted SOFR Rate (as defined under the primary credit facility);

plus a Revolving Commitment ABR spread of 75.0 basis points.

• The Company’s financial covenants under this secondary credit facility are the same as the financial covenants for its primary credit facility.

See Note 6 - Credit Facilities of Notes to Condensed Consolidated Financial Statements for further information on the financial covenants.

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