What changed in this filing

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Item 1. Financial Statements

2023-11-09 compared with 2023-05-10 · 122 added, 112 removed, 365 unchanged (39% of the section changed)

4 unchanged sentences

except share data)

April 1, 2023 July 2, 2022

September 30, 2023 July 1, 2023

Current assets:

3 unchanged sentences

Contract assets 32,903 29,925

Inventories, net 154,315 155,741

Inventories 126,778 137,911

Other 22,930 27,510

28 unchanged sentences

Retained earnings 83,321 82,986

Accumulated other comprehensive income (loss) ( 155 ) ( 425 )

Accumulated other comprehensive (loss) ( 39 ) ( 97 )

Total shareholders’ equity 131,068 130,617

4 unchanged sentences

(Unaudited, in thousands, except share and per share amounts)

Three Months Ended Nine Months Ended

April 1, 2023 April 2, 2022 April 1, 2023 April 2, 2022

Three Months Ended

September 30, 2023 October 1, 2022

Net sales $ 147,763 $ 137,263

18 unchanged sentences

(Unaudited, in thousands)

Three Months Ended Nine Months Ended

April 1, 2023 April 2, 2022 April 1, 2023 April 2, 2022

Three Months Ended

September 30, 2023 October 1, 2022

Comprehensive income:

3 unchanged sentences

Comprehensive income $ 393 $ 1,305

Other comprehensive income (loss) for the three months ended April 1, 2023 and April 2, 2022, is reflected net of tax expense (benefit) of approximately $ 0.0 million and $ 0.1 million, respectively.

Other comprehensive income for the nine months ended April 1, 2023 and April 2, 2022, is reflected net of tax expense (benefit) of approximately $ 0.0 million and $( 0.7 ) million, respectively.

See accompanying notes to consolidated financial statements.

2 unchanged sentences

(Unaudited, in thousands)

Nine Months Ended

April 1, 2023 April 2, 2022

Three Months Ended

September 30, 2023 October 1, 2022

Operating activities:

4 unchanged sentences

Amortization of deferred loan costs 55 37

Provision for obsolete inventory — 520

Noncash Lease Expense 1,528 1,847

Inventory write-down to net realizable value 265 175

Provision for warranty 118 152

Provision for doubtful accounts — 14

Loss on disposal of assets ( 124 ) —

Loss (Gain) on disposal of assets — ( 123 )

Gain on insurance proceeds, net of losses ( 431 ) ( 934 )

9 unchanged sentences

Other liabilities ( 961 ) ( 2,227 )

Cash used in operating activities ( 17,099 ) ( 11,636 )

Cash provided by (used in) operating activities 5,623 ( 5,837 )

Investing activities:

Purchase of property and equipment ( 527 ) ( 2,526 )

Proceeds from sale of fixed assets — 2

Proceeds from insurance 2,249 —

Cash used in investing activities ( 1,367 ) ( 4,074 )

Cash provided by (used in) investing activities 1,722 ( 2,526 )

Financing activities:

Payment of financing costs ( 491 ) —

Proceeds from issuance of long term debt — 9,393

Repayments of long term debt ( 707 ) ( 543 )

Borrowings under revolving credit agreement 138,320 151,799

Repayments under revolving credit agreement ( 426,126 ) ( 432,833 )

Repayments of revolving credit agreement ( 143,170 ) ( 141,445 )

Principal payments on finance leases ( 1,326 ) ( 1,022 )

Cash provided by financing activities 16,796 13,959

Net decrease in cash and cash equivalents ( 1,670 ) ( 1,751 )

Cash (used in) provided by financing activities ( 7,374 ) 8,789

Net (decrease) increase in cash and cash equivalents ( 29 ) 426

Cash and cash equivalents, beginning of period 3,603 1,707

Cash and cash equivalents, end of period $ 3,574 $ 2,133

Non-cash investing activities:

Supplemental cash flow information:

2 unchanged sentences

Recognition of operating lease liabilities and right-of-use assets $ — $ 4,613

Recognition of financing lease liabilities and right-of-use assets $ 4,404 $ 8,757

See accompanying notes to consolidated financial statements.

3 unchanged sentences

except share data)

Three Months Ended Nine Months Ended

April 1, 2023 April 2, 2022 April 1, 2023 April 2, 2022

Three Months Ended

September 30, 2023 October 1, 2022

Total shareholders’ equity, beginning balances $ 130,617 $ 124,878

12 unchanged sentences

Ending balances $ 83,321 78,981

Accumulated other comprehensive income:

Accumulated other comprehensive income (loss):

Beginning balances $ ( 97 ) $ ( 425 )

14 unchanged sentences

The Company’s reporting period is a 52/53 week fiscal year ending on the Saturday closest to June 30.

The three month period ended April 1, 2023 was a 13 week period, and the three month period ended April 2, 2022 was also a 13 week period.

Fiscal year 2023 will end on July 1, 2023, which is a 52 week year.

Fiscal year 2022 which ended on July 2, 2022, was a 52 week year.

The three month periods ended September 30, 2023 and October 1, 2022, were both 13 week periods.

Fiscal year 2024 will end on June 29, 2024, which is a 52 week year.

Fiscal year 2023 which ended on July 1, 2023, was also a 52 week year.

Management’s Assessment of Liquidity

As of April 1, 2023, approximately $ 3.2 million was available under the asset-based revolving credit facility.

Our cash requirements are affected by the level of current operations and new programs.

We believe that projected cash from operations, funds available under the revolving credit facility and leasing capabilities will be sufficient to meet our working and fixed capital requirements for the foreseeable future.

Historically, we have financed operations and met our capital expenditure requirements primarily through cash flows provided by operations and borrowings under our credit facilities.

We generated operating and net income of $ 3.3 million and $ 0.3 million respectively, during the 3-month period ended September 30, 2023, and have positive working capital of $ 194.6 million as of September 30, 2023.

Due to the timing between the procurement of raw materials, production cycle and payment from our customers, we have relied on borrowings on our credit facilities and cash from operations to fund operations as the Company increased its revenues and during the first three months of fiscal year 2024.

Based on current projections, we anticipate generating cash from operations as revenue is expected to remain flat during the second quarter of fiscal year 2024 and decreasing working capital requirements as existing backlog is manufactured and shipped.

As of September 30, 2023, approximately $ 9.5 million was available under the asset-based revolving credit facility.

We are also in discussions with multiple financial institutions to extend the borrowing capacity on our credit facility.

If we are unable to meet projected operating results or extend our borrowing capacity, we may need to delay the purchase of raw materials or require our customers to fund inventory raw material costs ahead of production.

Other options to increase our liquidity include factoring receivables or leveraging foreign owned assets for additional borrowing capacity.

We believe that projected cash from operations, funds available under our asset-based revolving credit facility and additional financing options will be sufficient to meet our working and fixed capital requirements for at least the next 12 months.

Certain Significant Risks and Uncertainties Related to Outbreak of Coronavirus Disease 2019 (“COVID-19”)

9 unchanged sentences

Diluted EPS is computed by dividing net income (loss) by the combination of other potentially dilutive weighted average common shares and the weighted average number of common shares outstanding during the period using the treasury stock method.

The computation assumes the proceeds from the exercise of equity awards were used to repurchase common shares at the average market price during the period.

The computation of diluted EPS does not assume conversion, exercise, or contingent issuance of common stock equivalent shares that would have an anti-dilutive effect on EPS.

The computation assumes the proceeds from the exercise of stock options were used to repurchase common shares at the average market price during the period.

The computation of diluted EPS does

not assume conversion, exercise, or contingent issuance of common stock equivalent shares that would have an anti-dilutive effect on EPS.

Derivative Instruments and Hedging Activities

The Company has occasionally entered into foreign currency forward contracts that are accounted for as cash flow hedges .

The Company has previously entered into foreign currency forward contracts and an interest rate swap which are accounted for as cash flow hedges in accordance with ASC 815, Derivatives and Hedging.

The effective portion of the gain or loss on the derivative is reported as a component of accumulated other comprehensive income (AOCI) and is reclassified into earnings in the same period in which the underlying hedged transaction affects earnings.

The derivative’s effectiveness represents the change in fair value of the hedge that offsets the change in fair value of the hedged item.

As of September 30, 2023, the Company did not have any outstanding foreign currency forward contracts.

The Company occasionally uses derivatives to manage the variability of foreign currency fluctuations of expenses in our Mexico facilities.

23 unchanged sentences

Recently Issued Accounting Standards

In January 2021, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update (ASU) 2021-01, Reference Rate Reform (Topic 848) to identify alternative reference rates that are more observable or transaction based and less susceptible to manipulation.

The Company is currently assessing the effects on its consolidated financial statements, and if it will elect this optional standard.

In March of 2020, the FASB issued ASU 2020-03, Codification Improvements to Financial Instruments, which clarifies specific issues raised by stakeholders.

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and 5) aligns the disclosure requirements for debt securities in ASC 320, Investments - Debt Securities, with the corresponding requirements for depository and lending institutions in ASC 942, Financial Services - Depository and Lending.

The amendments in the ASU have various effective dates and transition requirements which are dependent on timing of adoption of ASU 2016-13.

The Company is currently assessing the effects on its consolidated financial statements, and it intends to adopt the guidance as they become effective.

The amendments in the ASU have various effective dates and transition requirements which are

dependent on timing of adoption of ASU 2016-13.

The Company adopted this amendment as of the effective date of July 2, 2023.

This ASU did not have a material impact on our consolidated financial statements.

In June 2016, the FASB issued ASU 2016-13 “Financial Instruments - Credit Losses (Topic 326):

2 unchanged sentences

The guidance is effective for the Company beginning in the first quarter of fiscal year 2024 with early adoption permitted.

The Company is currently assessing the impact on its consolidated financial statements, and it intends to adopt the guidance when it becomes effective in the first quarter of fiscal year 2024.

Inventories as of April 1, 2023 are $ 154.3 million compared to $ 155.7 million as of July 2, 2022.

The Company adopted this amendment as of the effective date of July 2, 2023.

This ASU did not have a material impact on our consolidated financial statements.

In October 2021, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2021-08 amending Business Combination:

(Topic 805), which was necessary due to 2014-09, Revenue from Contracts with Customers (Topic 606).

The FASB issued this Update to improve the accounting for acquired revenue contracts with customers in a business combination by addressing diversity in practice and inconsistency related to (1) recognition of an acquired contract liability and (2) payment terms and their effect on subsequent revenue recognized by the acquirer.

The Company adopted this amendment as of the effective date of July 2, 2023.

These amendments are to be applied prospectively to business combinations occurring on or after the effective date of the amendments.

The Company plans to apply the practical expedients as needed for any future acquisitions.

The practical expedients cover contracts that were modified prior to acquisition date as well as determining which date an acquirer would have to determine the standalone selling price of each performance obligation in an acquired contract.

This ASU did not have a material impact on our consolidated financial statements.

In September 2022, the Financial Accounting Standards Board issued Accounting Standards Update ("ASU") No.

2022-04, Liabilities—Supplier Finance Programs (Subtopic 405-50).

This standard requires disclosure of the key terms of outstanding supplier finance programs and a roll forward of the related obligations.

The new standard does not affect the recognition, measurement or financial statement presentation of supplier finance program obligations.

The ASU became effective for the Company July 2, 2023, except for the roll forward requirement, which becomes effective July 2, 2024.

This ASU, except for the roll forward requirement, was adopted retrospectively as of July 2, 2023 and did not have a material impact on our consolidated financial statements.

Inventories as of September 30, 2023 are $ 126.8 million compared to $ 137.9 million as of July 1, 2023.

Substantially all of the Company’s inventory balances are raw materials.

Long-Term Debt

On August 14, 2020, the Company entered into a loan agreement with Bank of America.

The Loan Agreement replaces the Company’s prior amended and restated credit agreement, as amended, with Wells Fargo Bank.

The Loan Agreement provides for a five-year asset-based senior secured revolving credit facility of up to $ 93 million, maturing on August 14, 2025.

On September 3, 2021, the Company entered into an amendment to the Company’s current loan agreement with Bank of America.

2 unchanged sentences

The amendment removed the cash flow leverage ratio covenant and increased the interest rate by 25 basis points.

As of April 1, 2023, the Company had an outstanding balance under the asset-based revolving credit facility of $ 116.8 million, $ 0.3 million in outstanding letters of credit and $ 3.2 million available for future borrowings.

As of July 2, 2022, the Company had an outstanding balance under the credit facility with Bank of America of $ 95.1 million, $ 0.3 million in outstanding letters of credit and $ 10.8 million available for future borrowings.

As of September 30, 2023, the Company had an outstanding balance under the asset-based revolving credit facility of $ 110.5 million, $ 0.3 million in outstanding letters of credit and $ 9.5 million available for future borrowings.

In the third quarter of fiscal year 2023, the Company entered into equipment financing agreements with Ameris Bank dba Balboa Capital ("Balboa Capital") totaling $ 4.4 million related to the Company’s existing manufacturing equipment that bears an interest rate range of 6 % - 8 % and matures in the third quarter of fiscal 2029.

Under these agreements, equal monthly payments of $ 75,000 commenced in the third quarter of fiscal year 2023 and will continue through the maturity of the equipment financing facility in the third quarter of fiscal 2029.

The Company had an outstanding balance $ 4.0 million as of September 30, 2023.

On August 14, 2020, the Company also entered into a $ 5.0 million equipment financing facility relating to the Company’s existing U.S.

manufacturing equipment that bears interest at 4.85 % and matures on August 14, 2025.

Under this loan agreement, equal monthly payments of approximately $ 94,000 commenced on September 14, 2020 and will continue through the maturity of the equipment financing facility on August 14, 2025.

As of September 30, 2023, the Company had an outstanding balance of $ 2.1 million.

As of July 1, 2023, the Company had an outstanding balance of $ 2.3 million under the Bank of America equipment term loan agreement.

Generally, the interest rate applicable to loans under the Bank of America loan agreement will be, at the Company’s option:

4 unchanged sentences

and (y) SOFR rate loans will be 2.50 - 3.00 %, resetting on a quarterly basis beginning in early 2021.

If there is an event of default under the loan agreement, all loans and other obligations will bear interest at a rate of an additional 2.00 % on the last change rates above otherwise applicable interest rates.

If there is an event of default under the loan agreement, all loans and other obligations will bear interest as a rate of an additional 2.00 % on the otherwise applicable interest rates.

In addition to interest charges, the Company is required to pay a fee of 0.25 % per annum on the unused portion of the Credit Facility, monthly in arrears.

On August 14, 2020, the Company also entered into a $ 5.0 million equipment financing facility relating to the Company’s existing U.S.

manufacturing equipment that bears interest at 4.85 % and matures on August 14, 2025.

As of April 1, 2023, the Company had an outstanding balance of $ 2.5 million.

As of July 2, 2022, the Company had an outstanding balance of $ 3.3 million under the Bank of America equipment term loan agreement.

On November 24, 2020, the Company entered into a $ 6.0 million equipment financing facility related to the Company’s existing manufacturing equipment in Mexico that bears interest at 5.52 % and matures on April 24, 2026.

Under this loan agreement, equal monthly payments of $ 100,000 commenced on May 24, 2021 and will continue through the maturity of the equipment financing facility on April 24, 2026.

As of April 1, 2023, the Company had an outstanding balance of $ 3.7 million.

On November 24, 2020, the Company entered into a $ 6.0 million financing facility related to the Company’s existing real estate located in Mexico that bears interest at 5.52 % and matures on April 24, 2026.

Under this loan agreement, equal monthly payments of $ 100,000 commenced on May 24, 2021 and will continue through the maturity of the financing facility on April 24, 2026.

As of September 30, 2023, the Company had an outstanding balance of $ 3.1 million.

As of July 1, 2023, the Company had an outstanding balance of $ 3.4 million.

The interest rates on outstanding debt as of April 1, 2023 range from 4.85 % - 7.92 % compared to 4.50 % - 5.52 % as of July 2, 2022.

Debt maturities as of April 1, 2023 for the next five years and thereafter are as follows (in thousands):

The interest rates on outstanding debt as of September 30, 2023 range from 4.85 % - 8.43 % compared to 4.85 % - 8.22 % as of July 1, 2023.

Debt maturities as of September 30, 2023 for the next five years and thereafter are as follows (in thousands):

Fiscal Years Ending Amount

2027 $ 111,315

2028 - Thereafter $ 1,367

Total debt 119,701

1 unchanged sentence

Long-term debt, net of debt issuance costs $ 118,675

(1) Represents scheduled payments for the remaining three-month period ending July 1, 2023.

(1) Represents scheduled payments for the remaining nine-month period ending June 29, 2024.

The Company must comply with certain financial covenants, including a fixed charge coverage ratio.

The Company was in compliance with all financial covenants as of April 1, 2023.

The credit agreement requires the Company to grant certain inspection rights to Bank of America, limit or restrict the Company’s cash management;

limit or restrict the ability of the Company to incur additional liens, make acquisitions or investments, incur additional indebtedness, engage in mergers, consolidations, liquidations, dissolutions, or dispositions, pay dividends or other restricted payments, prepay certain indebtedness, engage in transactions with affiliates, and use proceeds.

Management believes the Company was in compliance with all financial covenants as of September 30, 2023.

The Company expects to repatriate a portion of its foreign earnings based on increased net sales growth driving additional capital requirements domestically, cash requirements for potential acquisitions and to implement certain tax strategies.

8 unchanged sentences

Withholding taxes would not apply to future repatriations from Mexico or Vietnam.

The Company has available approximately $ 10.2 million of gross federal research and development tax credits as of April 1, 2023.

The Company has available approximately $ 10.0 million of gross federal research and development tax credits as of September 30, 2023.

ASC 740 requires the Company to recognize in its financial statements uncertainties in tax positions taken that may not be sustained upon examination by the taxing authorities.

Accordingly, as of April 1, 2023, the Company has recorded $ 3.2 million of unrecognized tax benefits associated with these federal tax credits, resulting in a net deferred tax benefit of approximately $ 7.0 million.

Accordingly, as of September 30, 2023, the Company has recorded $ 3.0 million of unrecognized tax benefits associated with these federal tax credits, resulting in a net deferred tax benefit of approximately $ 7.0 million.

The Company evaluated tax law changes and regulatory guidance issued through the prior fiscal year.

Such changes and regulations include guidance under Sec.

951A, foreign tax credits, and rules relating to consolidated NOL carryback claims.

The Company evaluated the ongoing impact of these law and regulatory changes, and determined that they did not have a material impact on its provision for income taxes at the end of the prior fiscal year.

Such changes and regulations include guidance relating to foreign tax credits and consolidated NOL carryback claims.

The Company evaluated the ongoing impact of these law and regulatory changes, and determined that they did not have a material impact on its provision for income taxes.

On August 16, 2022, the Inflation Reduction Act of 2022 was signed into law.

The Inflation Reduction Act of 2022 includes a new book minimum tax on certain large corporations and an excise tax on corporate stock buybacks, among other provisions.

The Company is evaluating the impacts of this Act, and at this time the Company does not believe it will have a material impact on our consolidated financial position, results of operations, or cash flows.

The Company has evaluated the impacts of this Act, and at this time the Company does not believe they will have a material impact on our consolidated financial position, results of operations, or cash flows.

On January 27, 2021, the Company received official notice from the Vietnamese tax authorities, confirming tax benefits awarded (the “Tax Holiday”) related to the Company’s principal product line in Vietnam.

The tax rate related to this product line will be zero percent for four years beginning with fiscal year 2021, then five percent for nine years, then ten percent for one year (as opposed to the normal twenty percent each year).

Consequently, Management determined that the net operating loss in Vietnam more likely than not would result in minimal, if any, tax benefit, and the Company recorded a valuation allowance against the entire Vietnam net operating loss deferred tax asset ($ 0.2 million) in the third quarter of fiscal year 2021.

Earnings Per Share

3 unchanged sentences

(in thousands, except share and per share information)

April 1, 2023 April 2, 2022

Net income $ 1,976 $ 1,007

Weighted average shares outstanding—basic 10,762 10,762

Effect of dilutive common stock awards 103 300

Weighted average shares outstanding—diluted 10,865 11,062

Net income per share—basic $ 0.18 $ 0.09

Net income per share—diluted $ 0.18 $ 0.09

Antidilutive SARs not included in diluted earnings per share 376 619

Nine Months Ended

(in thousands, except share and per share information)

April 1, 2023 April 2, 2022

September 30, 2023 October 1, 2022

Net income $ 335 $ 1,152

15 unchanged sentences

The grant date fair value for the awards granted below were estimated using the Black-Scholes option valuation method:

July 29, 2022 August 9, 2021

July 29, 2022

SARs Granted 145,000

1 unchanged sentence

Fair Value $ 2.09

Total share-based compensation expense recognized during the three months ended April 1, 2023 and April 2, 2022 was approximately $ 76,000 and $ 75,000 , respectively.

Total share-based compensation expense recognized during the nine months ended April 1, 2023 and April 2, 2022 was approximately $ 178,000 and $ 218,000 , respectively.

As of April 1, 2023, total unrecognized compensation expense related to unvested share-based compensation arrangements was approximately $ 0.4 million.

Total share-based compensation expense recognized during the three months ended September 30, 2023 and October 1, 2022 was approximately $ 59,000 and $ 40,000 , respectively.

As of September 30, 2023, total unrecognized compensation expense related to unvested share-based compensation arrangements was approximately $ 0.3 million.

This expense is expected to be recognized over a weighted average period of 1.46 years.

No SARs were exercised during the three or nine months ended April 1, 2023 or April 2, 2022.

No SARs were exercised during the three months ended September 30, 2023 or October 1, 2022.

Commitments and Contingencies

6 unchanged sentences

If actual return rates and/or repair and replacement costs differ significantly from management’s estimates, adjustments to recognize additional cost of sales may be required in future periods.

The Company’s warranty reserve was approximately $ 78,000 as of April 1, 2023 and $ 31,000 as of July 2, 2022, respectively.

The Company’s warranty reserve was approximately $ 113,000 as of September 30, 2023 and $ 29,000 as of July 1, 2023, respectively.

Gain from Insurance Recoveries, Net of Losses

Gain from insurance recoveries, net of losses, relate to losses incurred from storm damage to the Company’s Arkansas facility on July 29, 2022, as the result of a lightning strike.

During the three and nine months ended April 1, 2023, the Company recorded a gain from insurance recoveries, net of losses, of $ 0.4 million and $ 4.0 million, respectively due to the storm event.

During the nine months ended April 1, 2023, the Company received insurance proceeds of $ 3.5 million to repair the plant and replace equipment, which should be completed by the end of the fiscal year 2023.

These initial coverage amounts, net of equipment book value loss, are included in reported gain on insurance claims during the quarter.

During the three months ended September 30, 2023, the Company recorded a gain from insurance recoveries, net of losses, of $ 0.4 million due to the storm event.

Derivative Financial Instruments

As of April 1, 2023, the Company did not have outstanding foreign currency forward contracts.

For the three months ended April 1, 2023, the Company did not enter into or settle any foreign currency forward contracts and settled $ 7.2 million of contracts during the same period of the previous year.

For the nine months ended April 1, 2023, the Company did not enter into or settle any foreign currency forward contracts.

During the same period of the previous year, the Company entered into $ 13.9 million of foreign currency forward contracts and settled $ 17.8 million of such contracts.

As of September 30, 2023, the Company did not have any outstanding foreign currency forward contracts.

For the three months ended September 30, 2023, the Company did not enter into or settle any foreign currency forward contracts.

During the same period of the previous year, the Company did not enter into or settle any foreign currency forward contracts.

On November 6, 2019, the Company entered into an interest rate swap contract with an effective date of November 6, 2019 and a termination date of September 30, 2022, related to the borrowings outstanding under the term loan with Wells Fargo Bank.

This interest rate swap contract was terminated on August 14, 2020 when the Company entered into a loan and security agreement with Bank of America.

On the date of termination this interest rate swap was in a liability position of $ 148,400 , which has been amortized to interest expense over the original term of the swap.

On the date of termination this interest rate swap was in a liability position of $ 148,400 , which will be amortized to interest expense over the original term of the swap.

On November 6, 2019, the Company entered into an interest rate swap contract with an effective date of November 6, 2019 and a termination date of November 1, 2023, related to the borrowings outstanding under the line of credit with Wells Fargo Bank.

1 unchanged sentence

On the date of termination this interest rate swap was in a liability position of $ 776,500 , which will be amortized to interest expense over the original term of the swap.

The following tables summarize the gain (loss) on derivative instruments, net of tax, on the Consolidated Statements of Income for the three months ended April 1, 2023 and April 2, 2022, respectively (in thousands):

The following tables summarize the gain (loss) on derivative instruments, net of tax, on the Consolidated Statements of Income for the three months ended September 30, 2023 and October 1, 2022, respectively (in thousands):

Derivatives Designated as Hedging Instruments Classification of Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion) AOCI Balance

January 1, 2023 Effective

July 1, 2023 Effective

AOCI Effective Portion

1 unchanged sentence

Income AOCI Balance

April 1, 2023

September 30, 2023

Forward contracts Cost of sales $ — — — —

2 unchanged sentences

Derivatives Designated as Hedging Instruments Classification of Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion) AOCI Balance

January 1, 2022 Effective

July 2, 2022 Effective

AOCI Effective Portion

1 unchanged sentence

Income AOCI Balance

April 2, 2022

October 1, 2022

Forward contracts Cost of sales ( 79 ) — 79 —

1 unchanged sentence

Total $ ( 425 ) $ — $ 153 $ ( 272 )

As of April 1, 2023, the Company does not have any foreign exchange contracts with credit-risk-related contingent features.

The Company is subject to the risk of fluctuating interest rates from our line of credit and foreign currency risk resulting from our China and Mexico operations.

As of September 30, 2023, the Company does not have any foreign exchange contracts with credit-risk-related contingent features.

The Company is subject to the risk of fluctuating interest rates from our line of credit and foreign currency risk resulting from our China operations.

The Company does not currently manage these risk exposures by using derivative instruments.

24 unchanged sentences

therefore, the primary performance obligation in the majority of our contracts is the delivery of a specific good through the purchase order submitted by our customer.

The Company elected not to disclose information about remaining performance obligations as they are part of contracts that that have expected durations of one year or less.

The Company elected to not disclose information about remaining performance obligations as they are part of contracts that have expected durations of one year or less.

The Company has elected to expense costs to obtain contracts as incurred as these costs are immaterial to the financial statements.

During the first nine months of fiscal year 2023, no revenues were recognized from performance obligations satisfied or partially satisfied in previous periods.

During the first three months of fiscal year 2024, no revenues were recognized from performance obligations satisfied or partially satisfied in previous periods.

Contract Balances

1 unchanged sentence

Contract assets are classified separately on the condensed consolidated balance sheet and transferred to receivables when the right to payment becomes unconditional.

The following table summarizes the activity in the Company’s contract assets during the nine months ended April 1, 2023 (in thousands):

The following table summarizes the activity in the Company’s contract assets during the three months ended September 30, 2023 (in thousands):

Contract Assets

2 unchanged sentences

Amounts collected or invoiced $ ( 127,002 )

Ending balance, April 1, 2023

Ending balance, September 30, 2023

Disaggregation of Revenue

The following table presents the Company’s revenue disaggregated for the three and nine months ended April 1, 2023 and April 2, 2022 (in thousands):

Recognition Three Months Ended Nine Months Ended

April 1, 2023 April 2, 2022 April 1, 2023 April 2, 2022

The following table presents the Company’s revenue disaggregated for the three months ended September 30, 2023 and October 1, 2022 (in thousands):

Recognition Three Months Ended

September 30, 2023 October 1, 2022

Over-Time $ 129,980 $ 134,558

3 unchanged sentences

The Company has some leases that include an extension clause.

Management has considered the likelihood of exercising each extension option included and estimated the duration of the extension option, for those leases management determined to be reasonable certain, in calculating the lease term for measurement of the right of use asset and liability.

Management has considered the likelihood of exercising each extension option included and estimated the duration of the extension option, for those leases management determined to be reasonably certain, in calculating the lease term for measurement of the right of use asset and liability.

For operating leases, management assumed a discount rate of 4.2 %.

The weighted average discount rate is disclosed in the tables below.

The components of lease cost for the three months and nine months ended April 1, 2023 were (in thousands):

Three Months Ended Nine Months Ended

April 1, 2023 April 2, 2022 April 1, 2023 April 2, 2022

Lease cost Classification

The components of lease cost for the three months ended September 30, 2023 and October 1, 2022 were (in thousands):

Lease cost Classification September 30, 2023 October 1, 2022

Operating lease cost Cost of sales $ 1,126 $ 1,334

6 unchanged sentences

Total lease cost $ 2,644 $ 2,456

Amounts reported in the Consolidated Balance Sheet as of April 1, 2023 were (in thousands, except weighted average lease term and discount rate):

April 1, 2023 July 2, 2022

Amounts reported in the Consolidated Balance Sheet as of September 30, 2023 were (in thousands, except weighted average lease term and discount rate):

September 30, 2023

Operating Leases:

1 unchanged sentence

Operating lease liabilities (1)

$ 17,471 $ 16,731

Weighted-average remaining lease term (in years)

13 unchanged sentences

Other information related to leases was as follows (in thousands):

Nine Months Ended

April 1, 2023 April 2, 2022

Three Months Ended

September 30, 2023 October 1, 2022

Cash paid for amounts included in the measurement of lease liabilities:

1 unchanged sentence

Financing cash flows used in financing leases $ 1,326 $ 1,022

Future lease payments under non-cancellable leases as of April 1, 2023 are as follows (in thousands):

Future lease payments under non-cancellable leases as of September 30, 2023 are as follows (in thousands):

Fiscal Years Ending Operating Leases Finance Leases

8 unchanged sentences

Total lease liabilities $ 15,928 $ 4,511

(1) Represents estimated lease payments for the remaining three-month period ending July 1, 2023.

(1) Represents estimated lease payments for the remaining nine-month period ending June 29, 2024.

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