What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2024-08-23 compared with 2023-08-24 · 215 added, 151 removed, 866 unchanged (30% of the section changed)

30 unchanged sentences

and subsidiaries (the “Company”) as of June 30, 2024 and 2023, the related consolidated statements of income, comprehensive income, share owners’ equity, and cash flows for each of the three years in the period ended June 30, 2024, and the related notes and the schedule listed in the Index at Item 15 (collectively referred to as the “financial statements”).

We also have audited the Company’s internal control over financial reporting as of June 30, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

We have also audited the Company’s internal control over financial reporting as of June 30, 2024, based on the criteria established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of June 30, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended June 30, 2024, in conformity with accounting principles generally accepted in the United States of America.

26 unchanged sentences

The majority of the Company’s revenue is recognized over time as manufacturing services are performed when the Company manufactures a product to customer specifications with no alternative use and for which the Company has an enforceable right to payment for performance completed to date.

The Company generally recognizes revenue over time using cost-based input methods to depict the Company’s progress towards meeting its performance obligations, in which judgment is required to evaluate assumptions including the anticipated margins to estimate the corresponding amount of revenue to recognize.

The Company generally recognizes revenue over time to depict the Company’s progress towards meeting its performance obligations, using costs based input methods, in which judgment is required to evaluate assumptions including the anticipated margins to estimate the corresponding amount of revenue to recognize.

The timing differences of revenue recognition, billings to the Company’s customers, and cash collections from the Company’s customers result in billed accounts receivable and unbilled accounts receivable.

Contract assets on the 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.

The contract asset balance was $78.8 million as of June 30, 2023.

We identified the Company’s revenue recognition over time for contracts with customers as a critical audit matter because of the judgments required to evaluate assumptions including the anticipated margins to estimate the corresponding amount of revenue to recognize and contract assets to record.

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Prepaid expenses and other current assets 44,682 49,188

Assets held for sale 27,587 —

Total current assets 847,006 929,427

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Other Intangible Assets, net of accumulated amortization of $ 27,300 and $ 38,785 , respectively

Other Assets, net

82,069 38,262

Other Assets 38,262 41,131

Total Assets $ 1,207,919 $ 1,259,719

5 unchanged sentences

Accrued expenses 63,189 72,515

Liabilities held for sale 8,594 —

Total current liabilities 375,322 475,148

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Other General Income ( 892 ) ( 212 ) ( 1,384 )

Restructuring Expense 2,386 — —

Goodwill Impairment 5,820 — —

Asset Impairment

Operating Income 49,277 87,729 52,549

37 unchanged sentences

Net income $ 20,511 $ 55,831 $ 31,253

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

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

Depreciation and amortization 38,030 32,416 29,411

1 unchanged sentence

Deferred income taxes ( 8,852 ) ( 1,714 ) 772

Goodwill impairment 5,820 — —

Asset impairment 17,040 — —

Stock-based compensation 7,185 6,914 6,224

8 unchanged sentences

Accrued expenses and taxes payable ( 10,548 ) 24,956 ( 11,687 )

Net cash (used for) provided by operating activities ( 13,804 ) ( 83,178 ) 130,095

Net cash provided by (used for) operating activities 73,217 ( 13,804 ) ( 83,178 )

Cash Flows From Investing Activities:

6 unchanged sentences

Proceeds from credit facilities — 105,000 100,000

Payments on credit facilities — — ( 46,500 )

Additional net change in revolving credit facilities 13,450 ( 4,304 ) 14,936

Settlements on previous year acquisition — — 2,957

Repurchases of common stock ( 2,847 ) — ( 8,952 )

1 unchanged sentence

Debt issuance costs ( 150 ) ( 100 ) ( 652 )

Net cash provided by (used for) financing activities 99,179 103,741 ( 53,078 )

Net cash provided by financing activities 8,974 99,179 103,741

Effect of Exchange Rate Change on Cash, Cash Equivalents, and Restricted Cash ( 755 ) ( 895 ) ( 2,356 )

Net (Decrease) Increase in Cash, Cash Equivalents, and Restricted Cash ( 5,987 ) ( 56,591 ) 41,452

Net Increase (Decrease) in Cash, Cash Equivalents, and Restricted Cash 34,915 ( 5,987 ) ( 56,591 )

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

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( 3,126 ) 1,566 ( 1,560 )

Restricted share units issuance ( 2,000 shares)

( 40 ) 22 ( 18 )

Deferred share issuance ( 3,000 shares)

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

Restricted share units issuance ( 2,000 shares)

( 40 ) 22 ( 18 )

Deferred share issuance ( 3,000 shares)

Repurchase of Common Stock ( 485,000 shares)

( 9,122 ) ( 9,122 )

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

4 unchanged sentences

Compensation expense related to stock compensation plans 6,773 6,773

Performance share issuance ( 84,000 shares)

Performance and restricted share issuance ( 108,000 and 19,000 shares, respectively)

( 3,027 ) 1,549 ( 1,478 )

Repurchase of Common Stock

( 136,000 shares) (including excise tax)

( 3,035 ) ( 3,035 )

Amounts at June 30, 2024 $ 319,463 $ 316,564 $ ( 17,807 ) $ ( 77,759 ) $ 540,461

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We are well recognized by customers and industry trade publications for our excellent quality, reliability, and innovative service.

Subsequent to June 30, 2024, on July 31, 2024, we completed the divestiture of GES, our automation, test and measurement business unit.

See Note 3 - Assets and Liabilities Held for Sale for more information on the GES divestiture.

Principles of Consolidation:

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All significant intercompany balances and transactions have been eliminated in the consolidation.

Reclassifications:

Advances from customers are now reported separately under Current Liabilities on the Consolidated Balance Sheets and reported separately on the Consolidated Statements of Cash Flows.

Advances from customers were previously reported in accounts payable and accrued expenses.

Prior period amounts have been reclassified to conform to current period presentation.

See Note 2 - Revenue from Contracts with Customers of Notes to Consolidated Financial Statements for more information on advances from customers.

Use of Estimates:

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While efforts are made to assure estimates used are reasonably accurate based on management’s knowledge of current events, actual results could differ from those estimates.

Change in Estimates:

The Company reviews the estimated useful lives of its fixed assets on an ongoing basis.

In evaluating useful lives, the Company considers how long assets will remain functionally efficient and effective, given levels of technology, competitive factors, and the economic environment.

If the assessment indicates that the assets will continue to be used for a shorter or longer period than previously anticipated, the useful life of the assets is revised, resulting in a change in estimate.

Changes in estimates are accounted for on a prospective basis by depreciating the assets’ current carrying values over their revised remaining useful lives.

The review performed by the Company in the prior fiscal year indicated that Surface Mount Technology production equipment had actual lives that were longer than previously estimated.

As a result of these findings, the Company changed its estimates of useful lives on these assets to 10 years, from lives of 5 or 7 years.

The change was effective and accounted for prospectively beginning on November 1, 2021.

The effects of this change in useful life estimate for the fiscal year ended June 30, 2023 were a decrease in depreciation expense of $ 6.8 million, an increase in net income of $ 5.3 million, and an increase to basic and diluted earnings per share by $ 0.21 .

The effects of this change for the fiscal year ended June 30, 2022 were a decrease in depreciation expense of $ 6.3 million, an increase in net income of $ 4.9 million, and an increase to basic and diluted earnings per share by $ 0.19 .

Segment Information:

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We recognize revenue in accordance with the standard issued by the Financial Accounting Standards Board (“FASB”), Revenue from Contracts with Customers and all the related amendments.

Our revenue from contracts with customers is generated primarily from manufacturing services provided for the production of electronic assemblies, components, medical devices, medical disposables, precision molded plastics, and automation, test, and inspection equipment built to customer’s specifications.

Our customer agreements are generally not for a definitive term but continue for the relevant product’s life cycle.

1 unchanged sentence

Customer purchase orders primarily have a single performance obligation.

Generally, the prices stated in the customer purchase orders are agreed upon prices for the manufactured product and do not vary over the term of the order, and therefore, the majority of our contracts do not contain variable consideration.

Generally, the prices stated in the customer purchase orders are agreed upon prices for the manufactured product and do not vary over the

term of the order, and therefore, the majority of our contracts do not contain variable consideration.

In limited circumstances, we may enter into a contract which contains minimum quantity thresholds to cover our capital costs, and we may offer our customer a rebate for specific volume thresholds or other incentives;

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Customary terms require payment within 30 to 45 days, with any terms beyond 45 days being considered extended payment terms.

We utilize factoring arrangements with third-party financial institutions for certain of our accounts receivables in order to extend terms for the customer without negatively impacting our cash flow.

We participate in our customers’ supply chain financing arrangements for certain of our accounts receivables in order to extend terms for the customer without negatively impacting our cash flow.

These arrangements in all cases do not contain recourse provisions which would obligate us in the event of our customers’ failure to pay.

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Factoring fees were $ 3.4 million, $ 4.8 million, and $ 1.6 million during fiscal years 2024, 2023, and 2022, respectively, and were included in Selling and Administrative Expenses on the Consolidated Statements of Income.

During fiscal year 2024, 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 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, net on the Consolidated Balance Sheet.

At June 30, 2024, the noncurrent receivable associated with this customer in Other Assets, net totaled $ 2.5 million, which is net of the $ 2.0 million allowance for expected credit losses.

The current portion of receivables from this customer is $ 3.4 million at June 30, 2024.

Inventories are stated at the lower of cost and net realizable value.

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Assets to be disposed of are recorded at the lower of net book value or fair market value less cost to sell at the date management commits to a plan of disposal.

In fiscal year 2024, we recognized $ 17.0 million of impairment with the decision to divest of GES.

See Note 3 - Assets and Liabilities Held for Sale for more information on the GES divestiture.

Impairment of long-lived assets was not material during fiscal years 2023 and 2022.

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In the Market Approach, fair value is determined using transactional evidence for similar publicly traded equity.

See Note 5 - Goodwill and Other Intangible Assets of Notes to Consolidated Financial Statements for more information on our goodwill.

During fiscal year 2024, the Company made the decision to divest of GES, our automation, test and measurement business unit and committed to a plan to sell the business.

As a result, the business unit met the criteria to be classified as held for sale, and goodwill and asset impairment were recorded during the quarter.

See Note 3 - Assets and Liabilities Held for Sale for more information on goodwill and asset impairment and Note 6 - Goodwill and Other Intangible Assets of Notes to Condensed Consolidated Financial Statements for more information on Goodwill.

Other Intangible Assets:

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Software maintenance, training, data conversion, and business process reengineering costs are expensed in the period in which they are incurred.

We have not recognized impairment on other intangible assets during fiscal years 2023, 2022, or 2021.

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

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

These operating leases expire from fiscal year 2025 to 2057.

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

Lease right-of-use assets and lease liabilities each totaled $ 2.6 million and $ 3.1 million at June 30, 2023 and June 30, 2022, 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 Consolidated Balance Sheets.

The future undiscounted operating lease payments as of June 30, 2023 were $ 1.1 million, $ 0.8 million, $ 0.5 million, $ 0.1 million, and $ 0.1 million for the five years ended June 30, 2028, and $ 0.1 million thereafter.

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

Research and Development:

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These lawsuits alleged that certain suppliers to the EMS industry conspired over a number of years to raise and fix the prices of electronic components, resulting in overcharges to purchasers of those components.

The fiscal year 2021 amount was partially offset by lawsuit settlement accruals and payments.

Restructuring:

We recorded restructuring expenses of $ 2.4 million in fiscal year 2024 for employee-related costs as we undertook restructuring efforts to align our cost structure with reduced end market demand levels, including resizing our workforce and taking specific cost actions.

We expect to continue executing the restructuring efforts and estimate between $ 3.0 million and $ 4.0 million of additional pre-tax restructuring charges, most of which we expect in the first half of fiscal year 2025.

There were no restructuring charges in fiscal year 2023 or fiscal year 2022.

Non-operating Income and Expense:

Non-operating income and expense include the impact of such items as foreign currency rate movements and related derivative gain or loss, fair value adjustments on supplemental employee retirement plan (“SERP”) investments, government subsidies, bank charges, and other miscellaneous non-operating income and expense items that are not directly related to operations.

The gain or loss on SERP investments is offset by a change in the SERP liability that is recognized in Selling and Administrative Expense.

Non-operating income (expense), net includes the impact of such items as foreign currency rate movements and related derivative gain or loss, fair value adjustments on supplemental employee retirement plan (“SERP”) investments, government subsidies, credit facility fees, bank charges, and other miscellaneous non-operating income and expense items that are not directly related to operations.

The gain (loss) on SERP investments is offset by a change in the SERP liability that is recognized in Selling and Administrative Expense.

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

2 unchanged sentences

Gain (loss) on SERP investments 680 701 ( 1,563 )

Credit facilities fees and bank charges

( 873 ) ( 714 ) ( 691 )

Other ( 259 ) 369 192

1 unchanged sentence

Foreign Currency Translation:

The Company predominantly uses the U.S.

The Company uses the U.S.

dollar and Euro as its functional currencies.

15 unchanged sentences

Stock-Based Compensation:

As described in Note 9 - Stock Compensation Plans of Notes to Consolidated Financial Statements, the Company maintains the 2014 Stock Option and Incentive Plan, which allows for the issuance of incentive stock options, stock appreciation rights, restricted shares, unrestricted shares, restricted share units, or performance shares and performance units for grant to officers and other key employees, and to members of the Board of Directors who are not employees.

As described in Note 10 - Stock Compensation Plans of Notes to Consolidated Financial Statements, the Company maintains the 2023 Equity Incentive Plan, which allows for the issuance of incentive stock options, stock appreciation rights, restricted shares, unrestricted shares, restricted share units, or performance shares and performance units for grant to officers and other key employees, and to members of the Board of Directors who are not employees.

The Company also maintains the Kimball Electronics, Inc.

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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.

Note 2 Revenue from Contracts with Customers

1 unchanged sentence

Beginning in fiscal year 2023, the Company changed its presentation of revenue for the industrial and public safety end market verticals by combining them into the industrial end market vertical.

Beginning in fiscal year 2024, the Company changed its presentation of revenue for miscellaneous sales previously included in Other to include in the respective customers’ end market verticals.

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

3 unchanged sentences

Automotive (1)

Medical 494.0 391.7 384.8

$ 826.4 $ 843.8 $ 590.5

425.7 500.7 394.9

Industrial (3)

Other 34.7 17.4 13.7

462.4 478.9 364.1

Total net sales $ 1,714.5 $ 1,823.4 $ 1,349.5

For fiscal years 2023, 2022, and 2021, approximately 95 %, 95 %, and 89 % 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 for which we have an enforceable right to payment for performance completed to date.

(1) For the fiscal years ended June 30, 2023 and 2022, respectively, $ 23.7 million and $ 8.3 million of the Automotive net sales were previously categorized as Other.

(2) For the fiscal years ended June 30, 2023 and 2022, respectively, $ 6.7 million and $ 3.2 million of the Medical net sales were previously categorized as Other.

(3) For the fiscal years ended June 30, 2023 and 2022, respectively, $ 4.3 million and $ 5.9 million of the Industrial net sales were previously categorized as Other.

For fiscal years 2024, 2023, and 2022, approximately 96 %, 95 %, and 95 % 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.

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

3 unchanged sentences

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 Consolidated Balance Sheets.

These payments amounted to $ 45.6 million and $ 30.9 million as of June 30, 2023 and 2022, respectively.

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

We also have deposits associated with inventory purchases classified as long term.

See Note 4 - Inventori es of Notes to Consolidated Financial Statements for further discussion.

Note 3 Assets and Liabilities Held for Sale

During fiscal year 2024, the Company made the decision to divest GES, our automation, test and measurement business unit (“disposal group”), and committed to a plan to sell the business, allowing for increased focus and support for the Company’s EMS operations.

As a result, the disposal group business has met the criteria to be classified as held for sale.

Accordingly, the Company classified the assets and liabilities of the disposal group as held for sale during the third quarter of fiscal year 2024.

The disposal group did not qualify as discontinued operations as it did not represent a strategic shift that will have a major effect on our operations and financial results.

Once the disposal group was classified as held for sale, it was reported at the lower of its carrying value or fair value less costs to sell during the fiscal year ended June 30, 2024.

The carrying value exceeded the fair value less costs to sell, and the Company recognized impairment charges of $ 5.8 million and $ 17.0 million on goodwill and assets held for sale, respectively.

The Company ceased recording depreciation and amortization on the applicable assets of the disposal group.

We assess goodwill for impairment at the reporting unit level annually or when conditions indicate an earlier review is necessary.

In connection with the preparation of our financial statements for the quarter ended March 31, 2024, we completed an impairment analysis for the goodwill recorded in the reporting unit due to the more-likely-than-not expectation of selling the reporting unit.

We determined the reporting unit’s carrying value was more than its fair value by an amount greater than the $ 5.8 million carrying amount of goodwill and thus was fully impaired.

See Note 6 - Goodwill and Other Intangible Assets of Notes to Condensed Consolidated Financial Statements for more information on Goodwill.

The major classes of assets and liabilities held for sale consisted of the following:

(Amounts in Thousands) June 30,

Assets held for sale:

Receivables, net $ 12,472

Inventories 4,395

Prepaid expenses and other current assets 1,237

Property and Equipment, net 5,861

Other Intangible Assets, net 8,010

Other Assets, net

Valuation Allowance ( 17,040 )

Total Assets held for sale $ 27,587

Liabilities held for sale:

Accounts payable $ 4,376

Advances from customers —

Accrued expenses 2,428

Other long-term liabilities 1,790

Total Liabilities held for sale $ 8,594

In the table above, Other assets, net includes $ 11.1 million of deferred tax assets and Other long-term liabilities includes $ 1.2 million of deferred tax liabilities.

The following table summarizes net sales and income (loss) before taxes on income for the disposal group:

(Amounts in Thousands) 2024 2023 2022

Net Sales $ 45,674 $ 68,608 $ 48,415

Income (Loss) Before Taxes on Income (1)

$ ( 23,518 ) $ 5,467 $ ( 4,075 )

(1) Includes goodwill impairment of $ 5.8 million and asset impairment of $ 17.0 million for the fiscal year ended June 30, 2024.

Also includes allocated corporate overhead expenses.

Following approval by our Board of Directors, on July 31, 2024, we entered into a definitive agreement and closed on the sale of 100% of the equity interests in GES to Averna Test Systems, Inc.

for net cash proceeds of $ 21 million, subject to customary purchase price adjustments in fiscal year 2025.

As a result of impairment already recognized in fiscal year 2024, we do not expect a material gain or loss from the transaction.

At June 30, 2024, GES included approximately 400 employees and operations in California, China, India, Japan, and Vietnam.

Note 4 Inventories

Inventories were valued using the lower of first-in, first-out (“FIFO”) cost and net realizable value.

Inventory components were as follows at June 30:

Inventory components were as follows at June 30, amounts as of June 30, 2024 exclude the amounts classified as held for sale:

(Amounts in Thousands) 2024 2023

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Total inventory $ 338,116 $ 450,319

Additionally, we have raw materials inventory totaling $ 42.8 million classified as long-term included in Other Assets, net in our Consolidated Balance Sheets.

This inventory is associated with a customer who is remediating a recall and we do not expect the inventory to be consumed within the next twelve months.

We have received deposits totaling $ 38.7 million from this customer related to this inventory, which is included in Other long-term liabilities in our Consolidated Balance Sheets.

At June 30, 2023, we had no inventory or customer deposits classified as long-term.

Note 5 Property and Equipment

Major classes of property and equipment consist of the following at June 30:

Major classes of property and equipment consist of the following at June 30, amounts as of June 30, 2024 exclude the amounts classified as held for sale:

(Amounts in Thousands) 2024 2023

Land and land use rights $ 14,689 $ 14,560

$ 12,902 $ 14,689

Buildings and improvements 125,219 125,216

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Machinery and equipment 3 to 11

Land use rights 39

Depreciation of property and equipment totaled $ 35.7 million for fiscal year 2024, $ 28.9 million for fiscal year 2023, and $ 26.0 million for fiscal year 2022.

Note 6 Goodwill and Other Intangible Assets

A summary of goodwill is as follows:

A summary of goodwill is as follows, amounts as of June 30, 2024 exclude the amounts classified as held for sale:

(Amounts in Thousands)

3 unchanged sentences

Goodwill, net $ 12,011

Impairment recorded ( 5,820 )

Goodwill classified as held for sale ( 13,745 )

Accumulated impairment classified as held for sale 13,745

Balance as of June 30, 2024

2 unchanged sentences

Goodwill, net $ 6,191

During fiscal years 2023, 2022, and 2021, no goodwill impairment was recognized.

The balance of goodwill at the GES reporting unit was $ 5.8 million at both June 30, 2023 and 2022.

For the annual GES impairment test performed in the fourth quarter of fiscal year 2023, we used an independent, third-party valuation specialist to assist in the determination of fair value for the GES reporting unit.

We used a combination of the Income Approach, using a discounted cash flow model, and the Market Approach.

The GES reporting unit fair value exceeded the carrying value by less than 2 %.

The forecast assumptions used in the annual impairment test are considered management’s best projections for the outlook of this business but are uncertain, and potential events or circumstances, such as trends in the semiconductor and consumer electronics capital equipment markets which GES serves, could have a negative effect on GES’s estimated fair value and result in impairment charges that could be material to the Consolidated Financial Statements.

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

A summary of other intangible assets subject to amortization is as follows, amounts as of June 30, 2024 exclude the amounts classified as held for sale:

June 30, 2024 June 30, 2023

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The amortization period for the customer relationships, technology, and trade name intangible assets is 15 years, 5 years, and 10 years, respectively.

We ceased amortization on the intangible assets upon meeting the held for sale classification.

See Note 3 - Assets and Liabilities Held for Sale of Notes to Condensed Consolidated Financial Statements for additional information.

We have no intangible assets with indefinite useful lives which are not subject to amortization.

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Product Warranties:

The Company provides only assurance-type warranties for a limited time period, which cover workmanship and assures the product complies with specifications provided by or agreed upon with the customer.

The Company provides only assurance-type warranties for a limited time period, which cover primarily workmanship and assure that products comply with specifications provided by or agreed upon with the customer.

We maintain a provision for limited warranty repair or replacement of products manufactured and sold pursuant to specific manufacturing contract agreements that require such provisions.

1 unchanged sentence

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

This product warranty liability and expense was immaterial during fiscal years 2023, 2022, and 2021.

This product warranty liability and expense were immaterial during fiscal years 2024, 2023, and 2022.

Note 8 Credit Facilities

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Types of borrowings available on the primary credit facility include revolving loans, multi-currency term loans, and swingline loans.

The interest rate on borrowings is dependent on the type of borrowings and will be one of the following options:

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.

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The Company had $ 0.4 million in letters of credit contingently committed against the primary credit facility at both June 30, 2024 and 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.

The secondary credit facility has a maturity date of February 2, 2024.

(2) The Company amended its 364-day multi-currency revolving credit facility agreement on January 5, 2024 (the “secondary credit facility”), which allows for borrowings up to $ 100.0 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.

The secondary credit facility has a maturity date of January 3, 2025.

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 and was immaterial to our operating results in fiscal year 2023.

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:

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(4) The Company maintains a foreign credit facility for its operation in Thailand which allows for borrowings of up to $ 10.1 million.

(5) The Company entered into a foreign credit facility for its EMS operation in China during the current fiscal year which allows for borrowings up to $ 7.5 million that can be drawn in either U.S.

dollars or China Renminbi.

(5) The Company entered into a foreign credit facility for its EMS operation in China with a new lender during the current fiscal year which allows for borrowings up to 50 million RMB (approximately $ 6.9 million at June 30, 2024 exchange rates) and canceled the prior credit facility which allowed for borrowings up to $ 7.5 million.

(6) The Company also maintains an uncommitted revolving credit facility for our Netherlands subsidiary.

The Netherlands credit facility allows for borrowings of up to 9.2 million Euro (approximately $ 10.0 million at June 30, 2023 exchange

rates), which borrowings can be made in Euro, U.S.

The Netherlands credit facility allows for borrowings of up to 9.2 million Euro (approximately $ 9.9 million at June 30, 2024 exchange rates), which borrowings can be made in Euro, U.S.

dollars, or other optional currency.

Interest on borrowing under this facility is charged at a rate of interest dependent on the denomination of the currency borrowed.

(7) The Company entered into a foreign credit facility for its operation in Poland which allows for borrowings up to 5.0 million Euro (approximately $ 5.4 million equivalent).

(7) The Company entered into a foreign credit facility for its operation in Poland which allows for borrowings up to 5.0 million Euro (approximately $ 5.4 million at June 30, 2024 exchange rates).

(8) The Company entered into a foreign credit facility for its operation in Vietnam which allows for borrowings up to $ 5.0 million.

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The primary credit facility matures on May 4, 2027.

The weighted-average interest rate on borrowings outstanding under the credit facilities at June 30, 2023 and June 30, 2022 were 6.8 % and 2.7 %, respectively.

The weighted-average interest rate on borrowings outstanding under the credit facilities at both June 30, 2024 and June 30, 2023 were 6.8 %.

Capitalized interest expense was immaterial during fiscal years 2024, 2023, and 2022.

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The Company maintains a trusteed defined contribution retirement plan which is in effect for substantially all domestic employees meeting the eligibility requirements.

Beginning January 1, 2022, the Company matches 50% of eligible employee contributions up to 6%.

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

The Company matches 50% of eligible employee contributions up to 6%.

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, $ 4.8 , $ 6.1 , and $ 4.2 for fiscal years 2024, 2023, and 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 be otherwise payable under our tax-qualified retirement plans if the IRS did not have limits on includable compensation and maximum benefits.

The SERP is structured as a rabbi trust, and therefore, assets in the SERP portfolio are subject to creditor claims in the event of bankruptcy.

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The Company established and maintains severance plans for all domestic employees and other postemployment plans for certain foreign subsidiaries.

There are no statutory requirements for the Company to contribute to the plans, nor do employees contribute to the plans.

There are no statutory requirements for us to contribute to the plans, nor do employees contribute to the plans.

The plans hold no assets.

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

Net periodic benefit costs were not material in fiscal years 2023, 2022, or 2021.

As of June 30, 2024, total obligations under these plans were $ 7.0 million of which $ 6.2 million were long term and $ 0.8 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 twelve months ended June 30, 2024 and 2023.

Note 10 Stock Compensation Plans

A stock compensation plan was created and adopted by the Company’s Board of Directors (the “Board”) on October 3, 2014.

The Kimball Electronics, Inc.

2014 Stock Option and Incentive Plan (the “Plan”) allows for the issuance of up to 4.5 million shares and may be awarded in the form of incentive stock options, stock appreciation rights, restricted shares, unrestricted shares, restricted share units, or performance shares and performance units.

The Plan is a ten-year plan with no further awards allowed to be made under the Plan after October 1, 2024.

A stock compensation plan was created and adopted by the Company’s Board of Directors (the “Board”) on September 20, 2023 and approved by our Share Owners at our 2023 Annual Meeting on November 17, 2023.

The 2023 Plan allows for the issuance of up to 2 million shares and replaced our former 2014 plan.

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.

The Plan is a ten-year plan that terminates automatically on November 17, 2033.

No award shall be granted pursuant to the Plan after such date, but awards theretofore granted may extend beyond that date.

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

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Performance Shares:

The Company awards performance shares to officers and other key employees.

The annual performance share awards are approved by the Talent, Culture, and Compensation Committee of the Board.

Beginning with awards granted in fiscal year 2022 that will vest in fiscal year 2025, awards cliff vest at the third anniversary of the award date.

To avoid a gap in the vesting of awards due to the transition from grants that vested annually in three equal installments to ones that vest after three years , two smaller bridge awards were also granted for fiscal year 2022 and fiscal year 2022-2023 performance periods.

The bridge award for the fiscal year 2022 performance period cliff vested at the first anniversary of the grant.

The bridge award for the fiscal year 2022-2023 performance period cliff vests at the second anniversary of the grant.

The award for the fiscal year 2022-2024 performance period, and future performance share awards, cliff vest at the third anniversary of the grant.

Under these awards, a number of shares will be issued to each participant based upon a combination of a profitability attainment component, based on the Company’s operating income plan, and a growth attainment component, based on the Company’s growth in sales revenue, comparing 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 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.

If a participant is not employed on the date shares are issued, the performance share award is forfeited, except in the case of death, retirement at age 62 or older, total permanent disability, or certain other circumstances described in the Plan.

We made long-term performance share grants to officers and other key employees.

The Talent, Culture, and Compensation Committee of the Board approved these annual performance share grants.

Grants cliff vest at the third anniversary of the award date.

Under these grants, a number of shares will be awarded 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 revenue compounded annual growth rate (“CAGR”) with the Electronics Manufacturing Services Industry’s three-year revenue 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 exceed the number of targeted issuable shares granted (up to a maximum of 125 %) if the Company exceeds 100 % of one or both of the above-mentioned incentive metrics.

The Company recognizes expense based on management’s expectation of achievement of the specific performance metrics monitored throughout the service period of the awards.

The Talent, Culture, and Compensation Committee of the Board approved an additional long-term performance share grant of 35,033 shares to a key employee in the second quarter of fiscal year 2024.

Any awards will vest over a 5 -year performance cycle, with one-third of the interest in the shares vesting after fiscal year 2026, another one-third after fiscal year 2027, and the final one-third after fiscal year 2028.

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

If a participant is not employed on the date shares are issued, the performance share award is forfeited, except in the case of a Qualifying Termination (a termination of service due to death, Disability, or Retirement), as defined by the Plan.

A summary of the Company’s performance share activity during fiscal year 2024 is presented below:

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The performance shares vested represent the total number of shares vested prior to the reduction of shares withheld to satisfy tax withholding obligations.

The number of outstanding shares presented in the above table, the amounts of unrecognized compensation, and the weighted average period include performance shares awarded that are applicable to future performance measurement periods and will be measured at fair value when the performance targets are established in future fiscal years.

Total Shareholder Return Performance Shares:

Separate from the performance shares described above, total shareholder return (“TSR”) performance shares were awarded to our CEO during fiscal year 2023.

This award was approved by the Talent, Culture, and Compensation Committee of the Board.

The participant will earn from 0 % to 100 % of the target award based on the total shareholder return ranking of the Company compared to the performance peer group at the end of the three -year performance period.

TSRs are expensed over the contractual vesting period as earned.

Separate from the performance shares described above, total shareholder return (“TSR”) performance shares were granted to our CEO during fiscal year 2023.

This grant was approved by the Talent, Culture, and Compensation Committee of the Board.

The participant will earn from 0 % to 100 % of the grant based on the total shareholder return ranking of the Company compared to the performance peer group at the end of the three -year performance period.

TSR performance shares are expensed over the contractual vesting period as earned.

The shares will vest on March 1, 2026.

If the employment of a holder of a TSR terminates before the TSR has vested for any reason other than death, retirement, or total permanent disability, the TSR will be forfeited.

During fiscal year 2023, the Company granted 42,626 TSRs at an average grant date fair value of $ 16.88 for a total fair value of $ 0.7 million.

The grant date fair value of TSR awards was calculated using a Monte Carlo simulation, with the assistance of a third-party valuation specialist.

If the employment of a holder of TSR performance shares terminates before the TSR performance shares have vested for any reason other than death, retirement, or total permanent disability, the TSR performance shares will be forfeited.

During fiscal year 2023, the Company granted 42,626 TSR performance shares at an average grant date fair value of $ 16.88 for a total fair value of $ 0.7 million.

The grant date fair value of the TSR performance share grants was calculated using a Monte Carlo simulation, with the assistance of a third-party valuation specialist.

No TSR performance shares were awarded during fiscal year 2024.

Unrestricted Share Grants:

Unrestricted shares may be granted to key employees and non-employee members of the Board as consideration for services rendered.

Unrestricted shares were granted to key employees and non-employee members of the Board as consideration for services rendered.

Unrestricted share grants do not have vesting periods, holding periods, restrictions on sale, or other restrictions.

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During fiscal years 2024, 2023, and 2022, respectively, the Company granted a total of 18,128 , 13,950 , and 6,777 unrestricted shares at an average grant date fair value of $ 25.24 , $ 23.30 , and $ 23.10 for a total fair value of $ 0.5 million, $ 0.3 million, and $ 0.2 million.

Unrestricted shares are awarded to non-employee members of the Board as compensation for director’s fees, including directors’ elections to receive unrestricted shares in lieu of cash payment.

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

Unrestricted shares are awarded to non-employee members of the Board as compensation for director’s fees, including fees that directors elected to receive as unrestricted shares in lieu of cash payment.

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

Unrestricted shares that are awarded to key employees are expensed immediately.

Restricted Shares:

Restricted shares may be granted to employees as consideration for services rendered.

Restricted shares were granted to employees as consideration for services rendered.

The contractual life of the restricted shares is three years , with one-third of the interest in the restricted shares vested after year one of the grant, another one-third after year two of the grant, and the final one-third after year three of the grant.

Additional restricted share grants were approved by the Talent, Culture, and Compensation Committee of the Board and 23,356 shares were granted to a key employee in the second quarter of fiscal year 2024.

The awards will vest over a 5 -year service period, with one-third of the interest in the shares vesting after fiscal year 2026, another one-third after fiscal year 2027, and the final one-third after fiscal year 2028.

Restricted shares are expensed over the contractual vesting period as earned.

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

During fiscal year 2023, the Company granted restricted shares to officers and other key employees for a total fair value of $ 1.9 million.

No restricted shares were granted during fiscal years 2022 and 2021.

If a participant is not employed on the date shares are issued, the restricted share award is forfeited, except in the case of a Qualifying Termination (a termination of service due to death, Disability, or Retirement), as defined by the Plan.

During fiscal years 2024 and 2023, the Company granted restricted shares to officers and other key employees for a total fair value of $ 2.8 million and $ 1.9 million.

of Shares Weighted Average

Restricted shares outstanding at July 1, 2023

60,312 $ 24.17

Granted 98,347 $ 28.03

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Restricted shares outstanding at June 30, 2024

137,283 $ 26.91

As of June 30, 2024, there was approximately $ 1.9 million of unrecognized compensation cost related to restricted shares.

The cost is expected to be recognized over vesting periods ending August 2023 through January 2026, with a weighted average vesting period of 1.3 years.

The cost is expected to be recognized over vesting periods ending August 2024 through August 2028, with a weighted average vesting period of 1.4 years.

The fair value of the restricted shares is based on the stock price at the date of grant.

During fiscal year 2023, 6,458 restricted shares vested.

During fiscal years 2022 and 2021, respectively, no restricted shares vested.

During fiscal years 2024 and 2023, respectively, 20,768 and 6,458 restricted shares vested.

The restricted shares vested represent the total number of shares vested prior to the reduction of shares withheld to satisfy tax withholding obligations.

During fiscal year 2021, the Company granted 3,322 restricted share units (“RSUs”) to new key employees at an average grant date fair value of $ 19.63 for a total fair value of $ 0.1 million, and these RSUs vested in fiscal year 2022.

The RSUs were participating securities and upon vesting, the outstanding number of the RSUs were converted to shares of common stock.

Deferred Share Units:

Deferred share units may be granted to non-employee members of the Board under the Deferral Plan as compensation for the portion of their annual retainer fees resulting from their election 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.

Directors’ 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 death, retirement, or termination of service with the Board.

During fiscal years 2024, 2023, and 2022, respectively, 26,347 , 39,032 , and 34,480 deferred share units were granted to non-employee members of the Board at an average grant date fair value of $ 25.24 , $ 23.07 , and $ 24.87 for a total fair value of $ 0.7 million, $ 0.9 million, and $ 0.9 million.

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Tax Cuts and Jobs Act (“Tax Reform”) was enacted into law on December 22, 2017, making broad and complex changes to the U.S.

tax code, for which complete guidance may have not yet been issued.

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

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Deferred income taxes reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

The components of the deferred tax assets and liabilities as of June 30, 2023 and 2022, were as follows:

The components of the deferred tax assets and liabilities as of June 30, 2024 and 2023, were as follows, amounts as of June 30, 2024 exclude $ 11.1 million of deferred tax assets and $ 1.2 million of deferred tax liabilities classified as held for sale:

(Amounts in Thousands) 2024 2023

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Net foreign currency losses 12 —

Business interest carryforward 3,396 871

Asset impairment 4,099 —

Miscellaneous 3,509 2,229

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This requirement is based on the implementation of Tax Reform effective in tax years beginning as of January 1, 2022.

As of June 30, 2023, the Company has a net deferred tax asset from capitalized research and development expenses of $ 3.5 million.

As of June 30, 2024 and 2023, the Company has a net deferred tax asset from capitalized research and development expenses of $ 5.7 million and $ 3.5 million, respectively.

Income tax benefits associated with the net operating loss carryforwards expire from fiscal year 2026 to 2044.

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A valuation allowance was provided as of June 30, 2024 and 2023 for deferred tax assets related to certain state credits of $ 5.8 million and $ 4.3 million, respectively.

Except as reserved for in the valuation allowance, we believe our tax credit and net operating loss carryforwards are more likely than not to be realized in the future.

Additionally, in fiscal year 2024, we recorded a full $ 3.4 million valuation allowance on the business interest carryforward deferred tax asset, following a determination that it is more likely than not that it will not be realized.

Except as reserved for in the valuation allowance, we believe our deferred income taxes are more likely than not to be realized in the future.

The components of income before taxes on income are as follows:

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Total income before taxes on income $ 25,199 $ 74,744 $ 43,731

The aggregate unremitted earnings of the Company’s foreign subsidiaries were approximately $ 420 million as of June 30, 2023.

Most of these accumulated unremitted foreign earnings have been invested in active non-U.S.

business operations, and it is not anticipated such earnings will be remitted to the United States.

Our intent is to permanently reinvest these funds outside of the United States, and our current plans do not demonstrate a need to repatriate these funds to our U.S.

However, if such funds were repatriated, a portion of the funds remitted may be subject to applicable non-U.S.

The Company currently operates international jurisdictions which expose the Company to taxation in various regions.

The Company continually evaluates its global cash needs.

The aggregate unremitted earnings of the Company’s foreign subsidiaries, which are currently permanently reinvested, were approximately $ 482 million as of June 30, 2024.

If such funds were repatriated or we determined that all or a portion of such foreign earnings are no longer permanently reinvested, we may be subject to applicable non-U.S.

income and withholding taxes.

Determination of the amount of any potential future unrecognized deferred tax liability on such unremitted earnings is not practicable and is recorded in the period that the funds are repatriated.

The provision for income taxes is composed of the following items:

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Impact of foreign exchange rates on foreign income taxes ( 995 ) ( 3.9 ) 1,868 2.5 1,693 3.9

Non-deductible goodwill impairment — — — — — —

Valuation allowance 4,988 19.8 718 1.0 1,734 4.0

Asset impairment

( 2,882 ) ( 11.4 ) — — — —

Research credit ( 1,150 ) ( 4.6 ) ( 1,147 ) ( 1.5 ) ( 1,094 ) ( 2.5 )

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Total provision for income taxes $ 4,688 18.6 % $ 18,913 25.3 % $ 12,478 28.5 %

In fiscal year 2024, the tax effects of recording deferred tax assets resulting from the impairment recorded following the held for sale classification of GES are included in asset impairment in the above table.

Changes in the unrecognized tax benefit, excluding accrued interest and penalties, during fiscal years 2024, 2023, and 2022 were as follows:

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We recognize interest and penalties related to unrecognized tax benefits in Provision for Income Taxes on the Consolidated Statements of Income.

Interest and penalties accrued for unrecognized tax benefits as of June 30, 2023, 2022, and 2021 was $ 0.6 million, $ 0.6 million, and $ 1.2 million.

Interest and penalties accrued for unrecognized tax benefits were $ 0.6 million at each of June 30, 2024, 2023, and 2022 .

Expenses related to interest and penalties in fiscal years 2024, 2023, and 2022 were not material.

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We are subject to income tax examinations by various, state, local, and foreign jurisdiction tax authorities for years after June 30, 2018.

Global Equipment Services & Manufacturing Vietnam Company Limited is subject to tax examinations for various foreign jurisdictions for years after December 31, 2011 relating to periods prior to the acquisition date.

Note 12 Share Owners’ Equity

On October 21, 2015, the Company’s Board of Directors (the “Board”) authorized an 18-month stock repurchase plan (the “Plan”) allowing a repurchase of up to $ 20 million worth of common stock.

Then, separately on each of September 29, 2016, August 23, 2017, November 8, 2018, and November 10, 2020, the Board extended and increased the Plan to allow the repurchase of up to an additional $ 20 million worth of common stock with no expiration date, which brought the total authorized stock repurchases under the Plan to $ 100 million.

The Company has a Board-authorized stock repurchase plan (the “repurchase plan”) allowing the purchase of up to $ 100 million of our common stock.

Purchases may be made under various programs, including in open-market transactions, block transactions on or off an exchange, or in privately negotiated transactions, all in accordance with applicable securities laws and regulations.

The Plan may be suspended or discontinued at any time.

During fiscal year 2023, the Company had no share repurchases under the Plan.

During fiscal years 2022 and 2021, the Company repurchased $ 9.1 million and $ 3.0 million of common stock, respectively, under the Plan at an average price of $ 18.82 and $ 15.51 per share, respectively, which was recorded as Treasury stock, at cost in the Consolidated Balance Sheets.

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

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

During fiscal year 2024, the Company repurchased $ 3.0 million of common stock under the Repurchase Plan at an average price of $ 22.12 per share.

The Company did not repurchase any shares during fiscal year 2023.

During fiscal year 2022, the Company repurchased $ 9.1 million of common stock under the Repurchase Plan at an average price of $ 18.82 per share, which was recorded as Treasury stock, at cost in the Consolidated Balance Sheets.

Since the inception of the Repurchase Plan, the Company has repurchased $ 91.8 million of common stock at an average cost of $ 15.43 per share.

Note 13 Fair Value

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(Amounts in Thousands) Level 1 Level 2 Total

Cash equivalents $ — $ — $ —

foreign exchange contracts $ — $ 1,420 $ 1,420

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(Amounts in Thousands) Level 1 Level 2 Total

Cash equivalents $ 1,541 $ — $ 1,541

foreign exchange contracts $ — $ 6,320 $ 6,320

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See Note 9 - Employee Benefit Plans of Notes to Consolidated Financial Statements for further information regarding the SERP.

Non-Recurring Fair Value Measurements:

During fiscal year 2024, the automation, test and measurement business unit met the criteria to be classified as held for sale, and as a result, a valuation allowance of $ 17.0 million was established to reflect the fair value less cost to sell of the disposal group, which was based on expected proceeds and the estimated carrying value of the net assets to be disposed.

We utilized level 3 inputs based on management’s best estimates and assumptions to estimate the fair value.

See Note 3 - Assets and Liabilities Held for Sale of Notes to Consolidated Financial Statements for additional information.

Financial Instruments Not Carried At Fair Value:

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Foreign Exchange Contracts:

We operate internationally and are therefore exposed to foreign currency exchange rate fluctuations in the normal course of our business.

We operate internationally and are therefore exposed to foreign currency exchange rate fluctuations in the normal course of business.

Our primary means of managing this exposure is to utilize natural hedges, such as aligning currencies used in the supply chain with the sale currency.

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Depending on the type of exposure hedged, we may either purchase a derivative contract in the opposite position of the undesignated hedge or may retain the hedge until it matures if the hedge continues to provide an adequate offset in earnings against the currency revaluation impact of foreign currency denominated liabilities.

The fair value of outstanding derivative instruments is recognized on the Consolidated Balance Sheets as a derivative asset or liability and presented within Prepaid expenses and other current assets and Accrued expenses, respectively.

The fair value of outstanding derivative instruments is recognized on the Consolidated Balance Sheets as a derivative asset or liability and presented with Prepaid expenses and other current assets and Accrued expenses, respectively.

When derivatives are settled with the counterparty, the derivative asset or liability is relieved and cash flow is impacted for the net settlement.

For derivative instruments that meet the criteria of hedging instruments under FASB guidance, the effective portions of the gain or loss on the derivative instrument are initially recorded net of related tax effect in Accumulated Other Comprehensive Income (Loss), a component of Share Owners’ Equity, and are subsequently reclassified into earnings in the period or periods during which the hedged transaction is recognized in earnings.

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 or expense on the Consolidated Statements of Income.

Based on fair values as of June 30, 2023, we estimate that approximately $ 3.6 million of pre-tax derivative gain deferred in Accumulated Other Comprehensive Income (Loss) will be reclassified into earnings, along with the earnings effects of related forecasted transactions, within the fiscal year ending June 30, 2024.

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

For derivative instruments that meet the criteria of hedging instruments under FASB guidance, the gain or loss on the derivative instrument is initially recorded net of related tax effect in Accumulated Other Comprehensive Income (Loss), a component of Share Owners’ Equity, and is subsequently reclassified into earnings in the period or periods during which the hedged transaction is recognized in earnings.

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 Consolidated Statements of Income.

Based on fair values as of June 30, 2024, we estimate that approximately $ 1.6 million of pre-tax derivative loss deferred in Accumulated Other Comprehensive Loss will be reclassified into earnings, along with the earnings effects of related forecasted transactions, within the next twelve months.

Losses on foreign exchange contracts are generally offset by gains 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 June 30, 2024 and June 30, 2023.

See Note 12 - Fair Value of Notes to Consolidated Financial Statements for further information regarding the fair value of derivative assets and liabilities and Note 17 - Accumulated Other Comprehensive Income (Loss) of Notes to Consolidated Financial Statements for the amount and changes in derivative gains and losses deferred in Accumulated Other Comprehensive Income (Loss).

See Note 13 - Fair Value of Notes to Consolidated Financial Statements for further information regarding the fair value of derivative assets and liabilities and Note 18 - Accumulated Other Comprehensive Income (Loss) of Notes to Consolidated Financial Statements for the changes in deferred derivative gains and losses.

Information on the location and amounts of derivative fair values in the Consolidated Balance Sheets and derivative gains and losses in the Consolidated Statements of Income are presented below.

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Note 15 Accrued Expenses

Accrued expenses consisted of:

Accrued expenses consisted of the following, amounts as of June 30, 2024 exclude the amounts classified as held for sale:

(Amounts in Thousands) 2024 2023

Taxes $ 14,052 $ 8,962

Compensation $ 24,140 $ 28,021

Non-inventory advance payments 12,974 11,660

Taxes 5,920 14,052

Retirement plan 2,915 3,909

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Total accrued expenses $ 63,189 $ 72,515

Inventory-related customer advance payments are now reported separately on the Consolidated Balance Sheets and no longer included in accrued expenses.

The prior period amount above for advance payments and total accrued expenses have been recast to conform to the current year presentation.

Note 16 Geographic Information

The following geographic area data includes net sales based on the country location of the Company’s business unit providing the manufacturing or other service and long-lived assets based on physical location.

Long-lived assets include property and equipment and capitalized software.

Long-lived assets include property and equipment and capitalized software, and amounts as of June 30, 2024 exclude the amounts classified as held for sale.

Year Ended June 30

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The changes in the balances of each component of Accumulated Other Comprehensive Income (Loss), net of tax, were as follows:

(Amounts in Thousands) Foreign Currency Translation Adjustments Derivative Gain (Loss) Postemployment Benefits

(Amounts in Thousands) Foreign Currency Translation Adjustments Derivative Gain (Loss) Post Employment Benefits

Net Actuarial Gain (Loss) Accumulated Other Comprehensive Income (Loss)

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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