What changed in this filing

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Item 1A. Risk Factors

2025-08-22 compared with 2024-08-23 · 35 added, 30 removed, 263 unchanged (20% of the section changed)

53 unchanged sentences

The substantial investments required to start up and expand facilities and new customer programs may adversely affect our margins and profitability.

We continue to expand our global operations by increasing our product and service offerings and scaling our infrastructure at certain facilities to support our business.

We continue to expand our global operations by increasing our product and service offerings, including as a CMO, and scaling our infrastructure at certain facilities to support our business.

This expansion increases the complexity of our business and places significant strain on our management, personnel, operations, systems, technical performance, financial resources, and internal financial control and reporting functions.

We may not be able to manage these expansions effectively, which could damage our reputation, limit our growth, and negatively affect our operating results.

We may not be able to manage these expansions effectively or successfully, which could damage our reputation, limit our growth, and negatively affect our operating results.

Start-ups of new customer programs require the coordination of the design and manufacturing processes, as well as substantial investments in resources and equipment.

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Additionally, even after acceptance, most of our customers do not commit to long-term production schedules, and we are unable to forecast the level of customer orders with certainty over a given period of time.

If our customers do not purchase anticipated levels of products, we

may not recover our up-front investments, may not realize profits, and may not effectively utilize expanded fixed manufacturing capacities.

If our customers do not purchase anticipated levels of products, we may not recover our up-front investments, may not realize profits, and may not effectively utilize expanded fixed manufacturing capacities.

All of these types of manufacturing inefficiencies could have an adverse impact on our financial position, operating margins, results of operations, or cash flows.

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dollar value of revenues, profits, or cash flows we generate in non-U.S.

• warfare, riots, terrorism, general strikes, or other forms of violence and/or geopolitical disruption;

• warfare, riots, terrorism, general strikes, or other forms of violence and/or geopolitical disruption, including the Russian invasion of Ukraine and the ongoing war there;

• compliance with laws and regulations, including the U.S.

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or foreign policies, regulatory requirements, and laws;

• tariffs and other trade barriers, including tariffs imposed by the United States as well as responsive tariffs imposed by China, the European Union, or Mexico;

• tariffs and other trade barriers imposed by the United States and/or other countries;

• potentially adverse tax consequences, including changes in tax rates and the manner in which multinational companies are taxed in the United States and other countries;

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To the extent we have excess cash in foreign locations that could be used in, or is needed by, our operations in the United States, we may incur significant penalties and/or taxes to repatriate these funds.

For example, the Russian invasion of Ukraine and the ongoing war there has impacted the global economy as the United States, the UK, the EU, and other countries have imposed broad export controls and financial and economic sanctions against Russia (a large exporter of commodities), Belarus, and specific areas of Ukraine, and may continue to impose additional sanctions or other measures.

Russia may impose its own counteractive measures.

Companies worldwide have interrupted or stopped production in Ukraine, Russia, and neighboring countries.

We do not procure materials directly from Ukraine or Russia or have facilities there, but impacts like these, wherever they may occur, can further exacerbate the ongoing supply chain disruptions that are occurring across the globe, particularly in the automotive industry.

Our European operations are located in Poland and Romania, and both of these countries are part of NATO, which is actively taking, and could take in the future, certain measures in response to Russia’s invasion of Ukraine.

The extent of the war’s effect on the global economy and the duration, scope, and impacts of the conflict are unknown and highly unpredictable, and the consequences from future actions such as increased sanctions and retaliatory measures taken by the United States, NATO, or other countries cannot be predicted but could have an adverse impact on our business operations, particularly our European operations.

Changes to U.S.

tariff measures and other potential changes in international trade relations implemented by the U.S.

or other countries could have a material adverse effect on our business, financial condition, cash flows and results of operations.

Our supply chain is heavily reliant on raw materials and components manufactured and assembled in various countries, including China.

These supply chain operations are subject to tariff and other international trade regulations in each of the countries where we operate.

For example, when imported into the U.S., such raw materials and components are subject to applicable rates of duty.

government has recently made statements and taken certain actions that have created significant uncertainty about the future relationship between the U.S.

and various other countries regarding trade policies, treaties, government regulations, and tariffs, including implementing tariffs on certain countries and implementing and subsequently pausing and, sometimes, reimplementing such tariffs on others.

Because of these statements and actions, we are exposed to the possibility of supply disruptions and increased costs and expenses.

Significant uncertainty exists about the future relationship between the U.S.

and other countries regarding trade policies, treaties, and tariffs.

We are currently evaluating the potential impact of the imposition of tariffs on our business, our customers and financial condition and implementing measures that may address or mitigate the potential impact on our business.

We cannot predict with certainty the future trade policy of the U.S.

or other countries, and we cannot reasonably predict the full extent to which these events may impact our supply chain, because any impacts will depend on future trade policy, treaty, and tariff developments that are highly uncertain and continuously evolving.

Relevant factors include whether such tariffs are ultimately implemented, the timing and duration of implementation and the amount, scope, and nature of such tariffs and potential exclusions from the application of those tariffs.

These tariffs and other unfavorable government policies on international trade (such as export controls) may increase the cost of manufacturing our customers’ products, affect the demand for our manufacturing services, or restrict our access to raw materials and components used in the manufacture of our customers’ products, each of which could negatively impact our financial condition and results of operations.

Further, such developments, or the perception that any such developments could occur, may have a material adverse effect on global economic conditions and the stability of global financial markets, and may significantly reduce global trade and, in particular, trade between the impacted nations and the U.S.

Any of these factors could depress economic activity and adversely impact the price and demand for our customers’ products, increase our costs, and affect our customers and suppliers, any of which could have a material adverse effect on our business, financial condition and results of operations.

We operate in a highly competitive industry and may not be able to compete successfully.

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Turnover in personnel could result in additional training and inefficiencies that could adversely impact our operating results.

Our culture and guiding principles focus on continuous training, motivating, and development of employees,

and we strive to attract, motivate, and retain qualified personnel.

Our culture and guiding principles focus on continuous training, motivating, and development of employees, and we strive to attract, motivate, and retain qualified personnel.

To aid in managing our growth and strengthening our pool of qualified personnel, we will need to internally develop, recruit, and retain diverse, qualified personnel.

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For example, the European Parliament adopted the Corporate Sustainability Reporting Directive (CSRD) and the resulting adoption of EU sustainability reporting standards to be developed by the European Financial Reporting Advisory Group, with such standards to be tailored to EU policies building on and contributing to international standardization initiatives, will apply not only to local operations in the EU, but under certain circumstances, to entire global companies like Kimball Electronics that have EU operations.

The CSRD will not apply to our operations in calendar year 2024, but we are assessing our obligations under the CSRD and we expect that compliance with the CSRD could require significant effort in future years.

The SEC and the State of California have also proposed new climate change disclosure requirements, and compliance with such rules, if and when they are finalized, could also require significant effort.

As part of our commitment to transparency and accountability, we wrote our annual Guiding Principles Report to align with the European Sustainability Reporting Standards (ESRS), as outlined by the CSRD.

We expect that continued compliance with the CSRD and ESRS could require significant effort in future years.

Other climate change disclosure requirements, and compliance with such rules, if and when they are finalized, could also require significant effort, particularly if they do align with existing initiatives like ESRS and CSRD.

We cannot predict what environmental legislation or regulations will be enacted in the future, how existing or future laws or regulations will be administered or interpreted, or what environmental conditions may be found to exist.

3 unchanged sentences

Changes in climate where we, our customers, and our supply chain operate could have a long-term adverse impact on our business, results of operations, and financial condition.

In addition, we have committed to cut our greenhouse gas emissions, water usage, electrical usage, and air emissions significantly by 2025 as part of our long-term sustainability strategy, and we may take additional voluntary steps to mitigate our impact on the environment.

In addition, we have committed to reduce our greenhouse gas emissions, waste and hazardous waste intensity and increase our use of renewable electricity and recycled water significantly by 2030 as part of our long-term sustainability strategy, and we may take additional voluntary steps to mitigate our impact on the environment.

Climate transition risks related to shifts to a low-carbon economy and the associated costs of retrofitting or constructing facilities with green technology, in addition to investments in renewable energy and energy efficiency could involve material costs or otherwise impact our customers and their demand for our services.

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or other governments could negatively affect our operating results due to changes in duties, tariffs or taxes, or limitations on currency or fund transfers, as well as government-imposed restrictions on producing certain products in, or shipping them to, specific countries.

For example, our facility in Mexico operates under the Mexican Maquiladora (“IMMEX”) program.

This program provides for reduced tariffs and eased import regulations.

We could be adversely affected by changes in the IMMEX program or our failure to comply with its requirements.

As another example, the U.S.

government has imposed tariffs on certain products imported from China.

China has imposed tariffs on certain U.S.

products in retaliation.

These tariffs could force our customers or us to consider various strategic options including, but not limited to, looking for different suppliers, shifting production to facilities in different geographic regions, absorbing the additional costs, or passing the cost on to customers.

Ultimately, these tariffs could adversely affect the competitiveness of our domestic operations, which could lead to the reduction or exit of certain U.S.

These changes could force our customers or us to consider various strategic options including, but not limited to, looking for different suppliers, shifting production to facilities in different geographic regions, absorbing the additional costs, or passing the cost on to customers.

Ultimately, these changes could adversely affect the competitiveness of our domestic operations, which could lead to

the reduction or exit of certain U.S.

manufacturing capacity.

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We may also suffer reputational harm if we determine that certain of our products contain minerals not determined to be conflict-free or if we are unable to modify our products to avoid the use of such materials.

We may also face challenges in satisfying customers who may require that our products be certified as containing conflict-free minerals or that we adopt more stringent guidelines like those fostered by the Responsible Materials Initiative (“RMI”).

• We are subject to a variety of federal, state, local and foreign environmental, health and safety, product stewardship and producer responsibility laws and regulations, including those arising from global pandemics or relating to the use, generation, storage, discharge and disposal of hazardous chemicals used during our manufacturing process, those governing worker health and safety, those requiring design changes, supply chain investigation or conformity assessments, and those relating to the recycling or reuse of products we manufacture.

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We are exposed to foreign currency risk.

In 2022, the relative value of the U.S.

dollar reached its highest levels since 2000 and has appreciated sharply against many foreign currencies.

During fiscal year 2025, after appreciating sharply against many foreign currencies for several months, the dollar depreciated sharply, erasing essentially all of its appreciation since February 2022.

Fluctuations in exchange rates could impact our operating results.

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Even when not merited, the defense of these claims and legal proceedings may divert our management’s attention, and we may incur significant expenses in defending these claims and proceedings.

In addition, we may be required to pay damage awards or settlements or become subject to injunctions or other equitable remedies, which could have a material adverse effect on our financial position, cash flows, or results of operations.

In addition, we may be required to pay damage awards or settlements or

become subject to injunctions or other equitable remedies, which could have a material adverse effect on our financial position, cash flows, or results of operations.

The outcome of litigation is often difficult to predict, and the outcome of pending or future claims and legal proceedings may have a material adverse effect on our financial position, cash flows, or results of operations.

14 unchanged sentences

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

What changed 10-K

Item 1A. Risk Factors