What changed in this filing

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Item 1. Financial Statements

2021-01-29 compared with 2020-07-31 · 191 added, 499 removed, 498 unchanged (58% of the section changed)

3 unchanged sentences

(Dollar amounts in thousands)

June 30, 2020 September 30, 2019

December 31, 2020 September 30, 2020

Current assets:

6 unchanged sentences

Property, plant and equipment, net 236,236 236,788

Operating lease right-of-use assets 69,771 72,011

Deferred income taxes 3,752 3,757

Other assets 105,793 31,455

Goodwill 778,441 765,388

Other intangible assets, net 320,982 333,498

Other assets 23,311 22,368

Total assets $ 2,087,454 $ 2,072,633

1 unchanged sentence

Long-term debt, current maturities $ 26,826 $ 26,824

Current portion of operating lease liabilities 24,258 23,942

Trade accounts payable 73,797 82,921

4 unchanged sentences

Long-term debt 797,805 807,710

Operating lease liabilities 46,838 49,297

Accrued pension 151,457 149,848

19 unchanged sentences

Three Months Ended

June 30, Nine Months Ended

2020 2019 2020 2019

Sales $ 386,657 $ 364,944

4 unchanged sentences

Intangible amortization ( 15,221 ) ( 17,942 )

Goodwill write-down — — ( 90,408 ) —

Operating profit (loss) 10,373 ( 4,943 )

1 unchanged sentence

Interest expense ( 7,728 ) ( 9,240 )

Other deductions, net ( 2,776 ) ( 1,425 ) ( 7,438 ) ( 3,416 )

(Loss) income before income taxes ( 4,360 ) 18,413 ( 117,724 ) 37,031

Income tax benefit (provision) 6,209 ( 3,989 ) 22,672 ( 4,429 )

Net income (loss) 1,849 14,424 ( 95,052 ) 32,602

Net losses attributable to noncontrolling interests 420 205 491 541

Net income (loss) attributable to Matthews shareholders $ 2,269 $ 14,629 $ ( 94,561 ) $ 33,143

Earnings (loss) per share attributable to Matthews shareholders:

Other income (deductions), net ( 1,734 ) ( 2,819 )

Income (loss) before income taxes 1,988 ( 15,703 )

Income tax (provision) benefit ( 3,980 ) 5,397

Net loss ( 1,992 ) ( 10,306 )

Net loss (income) attributable to noncontrolling interests 234 ( 160 )

Net loss attributable to Matthews shareholders $ ( 1,758 ) $ ( 10,466 )

Loss per share attributable to Matthews shareholders:

Basic $ ( 0.06 ) $ ( 0.34 )

4 unchanged sentences

(Dollar amounts in thousands)

Three Months Ended June 30,

Three Months Ended December 31,

Matthews Noncontrolling Interest Total

2020 2019 2020 2019 2020 2019

Net income (loss):

Net (loss) income:

$ ( 1,758 ) $ ( 10,466 ) $ ( 234 ) $ 160 $ ( 1,992 ) $ ( 10,306 )

2 unchanged sentences

Pension plans and other postretirement benefits 2,124 1,727 — — 2,124 1,727

Unrecognized loss on derivatives:

Unrecognized gain (loss) on derivatives:

Net change from periodic revaluation 353 566 — — 353 566

Net amount reclassified to earnings 682 ( 275 ) — — 682 ( 275 )

Net change in unrecognized loss on derivatives ( 179 ) ( 3,032 ) — — ( 179 ) ( 3,032 )

Net change in unrecognized gain (loss) on derivatives 1,035 291 — — 1,035 291

OCI, net of tax 20,214 13,129 ( 3 ) ( 5 ) 20,211 13,124

Comprehensive income (loss) $ 18,456 $ 2,663 $ ( 237 ) $ 155 $ 18,219 $ 2,818

Nine Months Ended June 30,

Matthews Noncontrolling Interest Total

2020 2019 2020 2019 2020 2019

Net (loss) income:

$ ( 94,561 ) $ 33,143 $ ( 491 ) $ ( 541 ) $ ( 95,052 ) $ 32,602

OCI, net of tax:

Foreign currency translation adjustment ( 8,297 ) ( 9,791 ) ( 4 ) 1 ( 8,301 ) ( 9,790 )

Pension plans and other postretirement benefits 5,297 2,168 — — 5,297 2,168

Unrecognized loss on derivatives:

Net change from periodic revaluation ( 4,248 ) ( 6,074 ) — — ( 4,248 ) ( 6,074 )

Net amount reclassified to earnings ( 82 ) ( 1,879 ) — — ( 82 ) ( 1,879 )

Net change in unrecognized loss on derivatives ( 4,330 ) ( 7,953 ) — — ( 4,330 ) ( 7,953 )

OCI, net of tax ( 7,330 ) ( 15,576 ) ( 4 ) 1 ( 7,334 ) ( 15,575 )

Comprehensive (loss) income $ ( 101,891 ) $ 17,567 $ ( 495 ) $ ( 540 ) $ ( 102,386 ) $ 17,027

The accompanying notes are an integral part of these consolidated financial statements.

MATTHEWS INTERNATIONAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

(Dollar amounts in thousands, except per share data) (Unaudited)

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Unaudited)

(Dollar amounts in thousands, except per share data)

Shareholders' Equity

6 unchanged sentences

September 30, 2020 $ 36,334 $ 135,187 $ 859,002 $ ( 240,719 ) $ ( 178,997 ) $ 626 $ 611,433

Net (loss) income — — ( 10,466 ) — — 160 ( 10,306 )

Minimum pension liability — — — 1,727 — — 1,727

Translation adjustment — — — 11,111 — ( 5 ) 11,106

Fair value of derivatives — — — 291 — — 291

Total comprehensive income 2,818

Stock-based compensation — 2,031 — — — — 2,031

Purchase of 52,104 shares of treasury stock

— — — — ( 1,845 ) — ( 1,845 )

Issuance of 11,225 shares of treasury stock

— ( 450 ) — — 450 — —

Cancellations of 17,509 shares of treasury stock

— 1,171 — — ( 1,171 ) — —

Dividends, $ 0.21 per share

— — ( 6,535 ) — — — ( 6,535 )

December 31, 2019 $ 36,334 $ 140,526 $ 955,593 $ ( 215,232 ) $ ( 202,801 ) $ 1,285 $ 715,705

Net loss — — ( 1,758 ) — — ( 234 ) ( 1,992 )

2 unchanged sentences

Fair value of derivatives — — — 1,035 — — 1,035

Total comprehensive loss ( 119,857 )

Stock-based compensation — 2,508 — — — — 2,508

Purchase of 20,750 shares of treasury stock

— — — — ( 506 ) — ( 506 )

Dividends, $ 0.21 per share

— — ( 6,648 ) — — — ( 6,648 )

March 31, 2020 $ 36,334 $ 143,034 $ 862,581 $ ( 248,495 ) $ ( 203,307 ) $ 1,055 $ 591,202

Net income (loss) — — 2,269 — — ( 420 ) 1,849

Minimum pension liability — — — 1,743 — — 1,743

Translation adjustment — — — 11,240 — — 11,240

Fair value of derivatives — — — ( 179 ) — — ( 179 )

Total comprehensive income 18,219

8 unchanged sentences

— — ( 6,808 ) — — — ( 6,808 )

June 30, 2020 $ 36,334 $ 145,814 $ 858,220 $ ( 235,691 ) $ ( 203,570 ) $ 635 $ 601,742

December 31, 2020 $ 36,334 $ 140,008 $ 850,436 $ ( 220,505 ) $ ( 184,809 ) $ 389 $ 621,853

Shareholders' Equity

6 unchanged sentences

September 30, 2019 $ 36,334 $ 137,774 $ 972,594 $ ( 228,361 ) $ ( 200,235 ) $ 1,130 $ 719,236

Net income (loss) — — 3,097 — — ( 113 ) 2,984

Net (loss) income — — ( 10,466 ) — — 160 ( 10,306 )

Minimum pension liability — — — 1,727 — — 1,727

1 unchanged sentence

Fair value of derivatives — — — 291 — — 291

Total comprehensive loss ( 11,765 )

Total comprehensive income 2,818

Stock-based compensation — 2,031 — — — — 2,031

7 unchanged sentences

— — ( 6,535 ) — — — ( 6,535 )

Acquisition — — — — — 1,760 1,760

Cumulative tax adjustment for intra-entity transfers — — ( 4,176 ) — — — ( 4,176 )

December 31, 2019 $ 36,334 $ 140,526 $ 955,593 $ ( 215,232 ) $ ( 202,801 ) $ 1,285 $ 715,705

Net income (loss) — — 15,417 — — ( 223 ) 15,194

Minimum pension liability — — — 734 — — 734

Translation adjustment — — — 134 — 19 153

Fair value of derivatives — — — ( 2,020 ) — — ( 2,020 )

Total comprehensive income 14,061

Stock-based compensation — 1,366 — — — — 1,366

Purchase of 143,092 shares of treasury stock

— — — — ( 5,535 ) — ( 5,535 )

Cancellations of 41 shares of treasury stock

— 14 — — ( 14 ) — —

Dividends, $ 0.20 per share

— — ( 6,446 ) — — — ( 6,446 )

March 31, 2019 $ 36,334 $ 135,055 $ 1,041,856 $ ( 180,186 ) $ ( 187,391 ) $ 1,793 $ 847,461

Net income (loss) — — 14,629 — — ( 205 ) 14,424

Minimum pension liability — — — 705 — — 705

Translation adjustment — — — 2,639 — ( 5 ) 2,634

Fair value of derivatives — — — ( 3,032 ) — — ( 3,032 )

Total comprehensive income 14,731

Stock-based compensation — 1,156 — — — — 1,156

Purchase of 240,155 shares of treasury stock

— — — — ( 8,529 ) — ( 8,529 )

Dividends, $ 0.20 per share

— — ( 6,394 ) — — — ( 6,394 )

June 30, 2019 $ 36,334 $ 136,211 $ 1,050,091 $ ( 179,874 ) $ ( 195,920 ) $ 1,583 $ 848,425

The accompanying notes are an integral part of these consolidated financial statements.

2 unchanged sentences

(Dollar amounts in thousands)

Nine Months Ended

Three Months Ended

Cash flows from operating activities:

Net (loss) income $ ( 95,052 ) $ 32,602

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

Net loss $ ( 1,992 ) $ ( 10,306 )

Adjustments to reconcile net loss to net cash provided by operating activities:

Depreciation and amortization 27,351 28,933

Stock-based compensation expense 3,246 2,031

Deferred tax benefit ( 11,986 ) ( 4,031 )

Deferred tax provision 707 2,392

Gain on sale of assets, net ( 569 ) —

(Gain) loss on sale of ownership interests in a subsidiary ( 11,208 ) 4,465

Unrealized gain on investments in mutual funds

( 1,161 ) ( 406 )

Unrealized gain on investments ( 654 ) ( 1,048 )

Loss from equity-method investments — 407

Goodwill write-down 90,408 —

Changes in working capital items ( 3,729 ) ( 13,182 )

Decrease (increase) in other assets 1,515 ( 1,495 )

Increase in other liabilities 2,960 3,042

Increase (decrease) in other liabilities 8,813 ( 1,073 )

Other operating activities, net 638 ( 1,302 )

2 unchanged sentences

Capital expenditures ( 7,535 ) ( 9,722 )

Acquisitions, net of cash acquired — ( 11,525 )

Proceeds from sale of assets 1,689 63

Proceeds from sale of ownership interests in a subsidiary 42,210 8,254

Investments and advances — ( 4,570 )

Net cash provided by (used in) investing activities 7,399 ( 66,799 )

Net cash used in investing activities ( 5,846 ) ( 14,229 )

Cash flows from financing activities:

5 unchanged sentences

Other financing activities ( 735 ) ( 688 )

Net cash used in financing activities ( 123,090 ) ( 30,163 )

Net cash (used in) provided by financing activities ( 31,375 ) 11,916

Effect of exchange rate changes on cash 1,736 1,038

5 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

June 30, 2020

December 31, 2020

(Dollar amounts in thousands, except per share data)

10 unchanged sentences

In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for fair presentation have been included.

Operating results for the nine months ended June 30, 2020 are not necessarily indicative of the results that may be expected for the fiscal year ending September 30, 2020.

Operating results for the three months ended December 31, 2020 are not necessarily indicative of the results that may be expected for the fiscal year ending September 30, 2021.

For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's Annual Report on Form 10-K for the year ended September 30, 2020.

8 unchanged sentences

2018-14, Compensation - Retirement Benefits - Defined Benefit Plans - General (Subtopic 715-20) , which modifies the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans.

This ASU is effective for the Company beginning in interim periods starting in fiscal year 2021.

The adoption of this ASU is not expected to have a material impact on the Company's consolidated financial statements.

The adoption of this ASU in the first quarter ended December 31, 2020 had no material impact on the Company's consolidated financial statements and the Form 10-K disclosures for the year ended September 30, 2021 will reflect the adoption of this ASU.

In June 2016, the FASB issued ASU No.

3 unchanged sentences

2020-02, Financial Instruments—Credit Losses (Topic 326) and Leases (Topic 842), that provide certain amendments to the new guidance.

These ASUs are effective for the Company beginning in interim periods starting in fiscal year 2021.

The adoption of these ASUs are not expected to have a material impact on the Company's consolidated financial statements.

The adoption of these ASUs in the first quarter ended December 31, 2020 had no material impact on the Company's consolidated financial statements.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

1 unchanged sentence

Basis of Presentation (continued)

In December 2019, the FASB issued ASU No.

2019-12, Income Taxes (Topic 740) which simplifies the accounting for income taxes.

The amendments in this update remove certain exceptions to the general principles in Topic 740 and also simplify GAAP for other areas of Topic 740 by clarifying and amending existing guidance.

The amendments in this ASU will be applied using different approaches depending on what the specific amendment relates to and, for public entities, are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020.

The Company early adopted this ASU in the quarter ended March 31, 2020.

The adoption of this ASU had no significant impact on the Company's consolidated financial statements, but modifies the methodology to assess certain tax principles in Topic 740 prospectively.

In August 2018, the FASB issued ASU No.

2018-13, Fair Value Measurement (Topic 820), Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement , which modifies the disclosure requirements on fair value measurements including the consideration of costs and benefits.

The adoption of this ASU in the first quarter ended December 31, 2019 had no impact on the Company's consolidated financial statements.

In August 2017, the FASB issued ASU No.

2017-12, Derivatives and Hedging (Topic 815) , which provides new guidance intended to improve the financial reporting of hedging relationships to better portray the economic results of an entity’s risk management activities in its financial statements.

The adoption of this ASU in the first quarter ended December 31, 2019 had no impact on the Company's consolidated financial statements.

In February 2016, the FASB issued ASU No.

2016-02 , Leases (Topic 842) , which provides new guidance on how an entity should account for leases and recognize associated lease assets and liabilities.

This ASU requires lessees to recognize assets and liabilities that arise from financing and operating leases on the Consolidated Balance Sheet.

Subsequently, the FASB issued several ASUs that address implementation issues and correct or improve certain aspects of the new lease guidance, including ASU 2017-13, Revenue Recognition (Topic 605), Revenue from Contracts with Customers (Topic 606), Leases (Topic 840), and Leases (Topic 842), ASU 2018-01, Leases (Topic 842) Land Easement Practical Expedient for Transition to Topic 842 , ASU 2018-10, Codification Improvements to Topic 842, Leases , ASU 2018-11, Leases (Topic 842):

Targeted Improvements, ASU 2018-20, Leases (Topic 842):

Narrow-Scope Improvements for Lessors, and ASU 2019-01, Leases (Topic 842):

Codification Improvements .

These ASUs do not change the core principles in the lease guidance outlined above.

2018-11 provides an additional transition method to adopt ASU No.

Under the transition method, an entity initially applies the new leases standard at the adoption date versus at the beginning of the earliest period presented and recognizes a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption.

The Company adopted the standard using the transition method as of October 1, 2019.

Under this approach, the Company recognized and recorded right-of-use ("ROU") assets and related lease liabilities on the Consolidated Balance Sheet of approximately $ 80 million with no impact to retained earnings.

Reporting periods prior to October 1, 2019 continue to be presented in accordance with previous lease accounting guidance under GAAP.

As part of the adoption, the Company elected the package of practical expedients permitted under the transition guidance which includes the ability to carry forward historical lease classification.

Refer to Note 8, “Leases,” for a further discussion.

The following table summarizes the activity for the accounts receivable allowance for doubtful accounts for the three months ended December 31, 2020:

Accounts Receivable Allowance for Doubtful Accounts

Balance at October 1, 2020 $ 9,618

Current period expense / (deductions) ( 663 )

Translation and other adjustments (1)

Balance at December 31, 2020

(1) Includes the impact of foreign currency fluctuations and amounts determined not to be collectible (including direct write-offs), net of recoveries.

Revenue Recognition

3 unchanged sentences

The Industrial Technologies segment delivers marking and coding equipment and consumables, industrial automation products and order fulfillment systems for identifying, tracking, picking and conveying consumer and industrial products for the warehousing and industrial industries.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

(Dollar amounts in thousands, except per share data)

Revenue Recognition (continued)

The Company disaggregates revenue from contracts with customers by geography, as it believes geographic regions best depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors.

Disaggregated sales by segment and region for the three and nine months ended June 30, 2020 and 2019 were as follows:

SGK Brand Solutions Memorialization Industrial Technologies Consolidated

Three Months Ended

June 30, Three Months Ended

2020 2019 2020 2019 2020 2019 2020 2019

North America $ 81,852 $ 77,223 $ 151,160 $ 146,131 $ 25,038 $ 31,589 $ 258,050 $ 254,943

Central and South America 1,571 1,619 — — — — 1,571 1,619

Europe 68,702 89,254 9,163 9,847 5,647 7,076 83,512 106,177

Australia 2,865 2,912 1,795 2,239 — — 4,660 5,151

Asia 10,790 10,922 — — 839 482 11,629 11,404

Total Sales $ 165,780 $ 181,930 $ 162,118 $ 158,217 $ 31,524 $ 39,147 $ 359,422 $ 379,294

Disaggregated sales by segment and region for the three months ended December 31, 2020 and 2019 were as follows:

SGK Brand Solutions Memorialization Industrial Technologies Consolidated

Nine Months Ended June 30, Nine Months Ended June 30, Nine Months Ended June 30, Nine Months Ended June 30,

Three Months Ended December 31, Three Months Ended December 31, Three Months Ended December 31, Three Months Ended December 31,

2020 2019 2020 2019 2020 2019 2020 2019

15 unchanged sentences

The fair values of the Company's assets and liabilities measured on a recurring basis are categorized as follows:

June 30, 2020 September 30, 2019

December 31, 2020 September 30, 2020

Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total

Derivatives (1)

$ — $ 1,244 $ — $ 1,244 $ — $ 845 $ — $ 845

Equity and fixed income mutual funds $ — $ 25,264 $ — $ 25,264 $ — $ 24,610 $ — $ 24,610

6 unchanged sentences

Inventories consisted of the following:

June 30, 2020 September 30, 2019

December 31, 2020 September 30, 2020

Raw materials $ 36,424 $ 36,157

3 unchanged sentences

Non-current investments consisted of the following:

June 30, 2020 September 30, 2019

December 31, 2020 September 30, 2020

Equity and fixed income mutual funds $ 25,264 $ 24,610

Life insurance policies 4,724 4,621

Equity-method investments 386 39,761

Other investments 33,463 18,724

Other (primarily cost-method) investments 34,011 34,019

$ 63,999 $ 63,250

During the first six months of fiscal 2020, the Company made $ 9,482 of additional investments in a non-consolidated subsidiary that was being accounted for as an equity-method investment.

During the third quarter of fiscal 2020, the Company sold its ownership interest in this subsidiary for $ 42,210 of cash and $ 15,000 of senior preferred shares.

The senior preferred shares earn a yield based on an escalating rate ranging from 6 % to 14 % and are expected to be redeemed before the end of calendar year 2022.

In connection with this sale transaction, the Company recognized a pre-tax gain of $ 11,208 which has been recorded as a component of administrative expenses.

The senior preferred shares are included within other investments in the table above along with ownership interests in various entities of less than 20%, which are recorded under the cost-method of accounting.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

(Dollar amounts in thousands, except per share data)

Long-term debt at December 31, 2020 and September 30, 2020 consisted of the following:

December 31, 2020 September 30, 2020

Revolving credit facilities $ 413,483 $ 416,793

Securitization facility 64,300 67,700

Senior secured term loan 22,406 22,359

2025 Senior Notes 297,391 297,256

Other borrowings 18,112 20,742

Finance lease obligations 8,939 9,684

824,631 834,534

Less current maturities ( 26,826 ) ( 26,824 )

$ 797,805 $ 807,710

The Company has a domestic credit facility with a syndicate of financial institutions that was amended and restated in March 2020.

2 unchanged sentences

The term loan requires scheduled quarterly principal payments through its maturity date.

Borrowings under both the revolving credit facility and the term loan bear interest at LIBOR (Euro LIBOR for balances drawn in Euros) plus a factor ranging from 0.75 % to 2.00 % ( 1.50 % at June 30, 2020) based on the Company's secured leverage ratio.

Borrowings under both the revolving credit facility and the term loan bear interest at LIBOR (Euro LIBOR for balances drawn in Euros) plus a factor ranging from 0.75 % to 2.00 % ( 1.25 % at December 31, 2020) based on the Company's secured leverage ratio.

The secured leverage ratio is defined as net secured indebtedness divided by EBITDA (earnings before interest, income taxes, depreciation and amortization) as defined within the domestic credit facility agreement.

The Company is required to pay an annual commitment fee ranging from 0.15 % to 0.30 % (based on the Company's leverage ratio) of the unused portion of the revolving credit facility.

The Company incurred debt issuance costs of approximately $ 2,000 in connection with the amended and restated agreement, which was deferred and is being amortized over the term of the facility.

The Company incurred debt issuance costs in connection with the amended and restated agreement.

Unamortized costs were $ 2,565 and $ 2,734 at December 31, 2020 and September 30, 2020, respectively.

The domestic credit facility requires the Company to maintain certain leverage and interest coverage ratios.

1 unchanged sentence

Outstanding U.S.

dollar denominated borrowings on the revolving credit facility at June 30, 2020 and September 30, 2019 were $ 275,000 and $ 325,638 , respectively.

Outstanding Euro denominated borrowings on the revolving credit facility at June 30, 2020 and September 30, 2019 were € 125.0 million ($ 140,371 ) and € 125.0 million ($ 136,470 ), respectively.

Outstanding borrowings on the term loan at June 30, 2020 and September 30, 2019 were $ 28,563 and $ 53,497 , respectively.

The weighted-average interest rate on the outstanding borrowings for the domestic credit facility (including the effects of interest rate swaps and Euro denominated borrowings) at June 30, 2020 and June 30, 2019 was 2.44 % and 2.75 %, respectively.

dollar denominated borrowings on the revolving credit facility at December 31, 2020 and September 30, 2020 were $ 262,923 and $ 257,439 , respectively.

Outstanding Euro denominated borrowings on the revolving credit facility at December 31, 2020 and September 30, 2020 were € 117.0 million ($ 143,507 ) and € 117.0 million ($ 137,188 ), respectively.

Outstanding borrowings on the term loan at December 31, 2020 and September 30, 2020 were $ 22,406 and $ 22,359 , respectively.

The weighted-average interest rate on the outstanding borrowings for the domestic credit facility (including the effects of interest rate swaps and Euro denominated borrowings) at December 31, 2020 and December 31, 2019 was 2.07 % and 2.60 %, respectively.

The Company has $ 300,000 of 5.25 % senior unsecured notes due December 1, 2025 (the "2025 Senior Notes").

3 unchanged sentences

The Company incurred direct financing fees and costs in connection with the 2025 Senior Notes.

Unamortized costs were $ 2,879 and $ 3,284 at June 30, 2020 and September 30, 2019, respectively.

The Company has a $ 115,000 accounts receivable securitization facility (the "Securitization Facility") with certain financial institutions.

The Securitization Facility, which had a maturity date of April 2020, was amended in March 2020 to extend the maturity date until March 2022.

Unamortized costs were $ 2,609 and $ 2,744 at December 31, 2020 and September 30, 2020, respectively.

The Company has a $ 115,000 accounts receivable securitization facility (the "Securitization Facility") with certain financial institutions which matures in March 2022.

Under the Securitization Facility, the Company and certain of its domestic subsidiaries sell, on a continuous basis without recourse, their trade receivables to Matthews Receivables Funding Corporation, LLC (“Matthews RFC”), a wholly-owned bankruptcy-remote subsidiary of the Company.

4 unchanged sentences

The Company is required to pay an annual commitment fee ranging from 0.25 % to 0.35 % of the unused portion of the Securitization Facility.

Outstanding borrowings under the Securitization Facility at June 30, 2020 and September 30, 2019 were $ 85,270 and $ 93,950 , respectively.

At June 30, 2020 and 2019, the interest rate on borrowings under this facility was 0.91 % and 3.15 %, respectively.

Outstanding borrowings under the Securitization Facility at December 31, 2020 and September 30, 2020 were $ 64,300 and $ 67,700 , respectively.

At December 31, 2020 and 2019, the interest rate on borrowings under this facility was 0.89 % and 2.51 %, respectively.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

(Dollar amounts in thousands, except per share data)

Debt (continued)

The following table presents information related to interest rate contracts entered into by the Company and designated as cash flow hedges:

June 30, 2020 September 30, 2019

December 31, 2020 September 30, 2020

Pay fixed swaps - notional amount $ 262,500 $ 312,500

4 unchanged sentences

Weighted-average pay rate 1.31 % 1.34 %

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

(Dollar amounts in thousands, except per share data)

Debt (continued)

The Company enters into interest rate swaps in order to achieve a mix of fixed and variable rate debt that it deems appropriate.

1 unchanged sentence

Based on the Company's assessment, all of the critical terms of each of the hedges matched the underlying terms of the hedged debt and related forecasted interest payments, and as such, these hedges were considered highly effective.

The fair value of the interest rate swaps reflected an unrealized loss, net of unrealized gains, of $ 6,269 ($ 4,733 after tax) at June 30, 2020 and an unrealized loss, net of unrealized gains, of $ 534 ($ 403 after tax) at September 30, 2019, that is included in shareholders' equity as part of accumulated other comprehensive income (loss) ("AOCI").

Assuming market rates remain constant with the rates at June 30, 2020, a loss (net of tax) of approximately $ 2,234 included in AOCI is expected to be recognized in earnings over the next twelve months.

At June 30, 2020 and September 30, 2019, the interest rate swap contracts were reflected in the Consolidated Balance Sheets as follows:

Derivatives June 30, 2020 September 30, 2019

Current assets:

Other current assets $ 249 $ 548

Long-term assets:

Other assets 995 297

The fair value of the interest rate swaps reflected an unrealized loss of $ 6,422 ($ 4,849 after tax) at December 31, 2020 and an unrealized loss of $ 7,792 ($ 5,884 after tax) at September 30, 2020, that is included in shareholders' equity as part of accumulated other comprehensive income (loss) ("AOCI").

Assuming market rates remain constant with the rates at December 31, 2020, a loss (net of tax) of approximately $ 2,181 included in AOCI is expected to be recognized in earnings over the next twelve months.

At December 31, 2020 and September 30, 2020, the interest rate swap contracts were reflected in the Consolidated Balance Sheets as follows:

Derivatives December 31, 2020 September 30, 2020

Current liabilities:

4 unchanged sentences

The (losses) gains recognized on derivatives were as follows:

Derivatives in Cash Flow Hedging Relationships Location of (Loss) Gain Recognized in Income on Derivative Amount of (Loss) Gain Recognized in Income on Derivatives Amount of Gain Recognized in Income on Derivatives

Derivatives in Cash Flow Hedging Relationships Location of (Loss) Gain Recognized in Income on Derivative Amount of (Loss) Gain Recognized in Income on Derivatives

Three Months Ended

June 30, Nine Months Ended

2020 2019 2020 2019

Interest rate swaps Interest expense $ ( 903 ) $ 364

The Company recognized the following (losses) gains in AOCI:

Derivatives in Cash Flow Hedging Relationships Amount of Loss

Recognized in AOCI on Derivatives Location of Gain Reclassified From AOCI into Income (Effective Portion*) Amount of Gain

Derivatives in Cash Flow Hedging Relationships Amount of Gain

Recognized in AOCI on Derivatives Location of (Loss) Gain Reclassified From AOCI into Income (Effective Portion*) Amount of (Loss) Gain

Reclassified from

1 unchanged sentence

(Effective Portion*)

June 30, 2020 June 30, 2019 June 30, 2020 June 30, 2019

December 31, 2020 December 31, 2019 December 31, 2020 December 31, 2019

Interest rate swaps $ 353 $ 566 Interest expense $ ( 682 ) $ 275

*There is no ineffective portion or amount excluded from effectiveness testing.

The Company, through certain of its European subsidiaries, has a credit facility with a European bank, which is guaranteed by Matthews.

The maximum amount of borrowing available under this facility is € 35.0 million ($ 39,304 ).

The credit facility matures in December 2020 and the Company intends to continue to extend this facility.

Outstanding borrowings under the credit facility totaled € 12.1 million ($ 13,617 ) and € 12.8 million ($ 14,024 ) at June 30, 2020 and September 30, 2019, respectively.

The weighted-average interest rate on outstanding borrowings under this facility at June 30, 2020 and 2019 was 1.25 %.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

1 unchanged sentence

Debt (continued)

The Company’s German subsidiary, Matthews Europe GmbH, had € 15.0 million ($ 16,376 at September 30, 2019) of senior unsecured notes with European banks.

The notes matured in November 2019 at which point they were paid.

The weighted-average interest rate on the notes at June 30, 2019 was 1.40 %.

Finance lease liabilities included as a component of debt totaled $ 10,235 and $ 3,631 at June 30, 2020 and September 30, 2019, respectively.

See Note 8, "Leases" for further discussion on the Company's lease obligations.

Other debt totaled $ 10,707 and $ 395 at June 30, 2020 and September 30, 2019 respectively.

The weighted-average interest rate on other debt was 2.14 % and 5.81 % at June 30, 2020 and June 30, 2019, respectively.

The Company, through certain of its European subsidiaries, has a credit facility with a European bank, which is guaranteed by Matthews.

The maximum amount of borrowing available under this facility is € 25.0 million ($ 30,664 ), which includes € 8.0 million ($ 9,812 ) for bank guarantees.

In the first quarter of fiscal 2021, the Company extended this facility to a current maturity of December 2021 and the Company intends to continue to extend this facility.

Outstanding borrowings under the credit facility totaled € 5.8 million ($ 7,053 ) and € 18.9 million ($ 22,166 ) at December 31, 2020 and September 30, 2020, respectively.

The weighted-average interest rate on outstanding borrowings under this facility at December 31, 2020 and 2019 was 2.25 % and 1.25 %, respectively.

The Company uses certain foreign currency debt instruments as net investment hedges of foreign operations.

Currency losses of $ 374 (net of income taxes of $ 121 ) and $ 3,320 (net of income taxes of $ 1,077 ), which represent effective hedges of net investments, were reported as a component of AOCI within currency translation adjustment at June 30, 2020 and September 30, 2019, respectively.

In September 2014, a claim was filed by a customer seeking to draw upon a letter of credit issued by the Company of £ 8,570,000 ($ 10,566 at June 30, 2020) with respect to a performance guarantee on an incineration equipment project in Saudi Arabia.

Management assessed the customer's demand to be without merit and initiated an action with the court in the United Kingdom (the "U.K.

Pursuant to this action, an order was issued by the U.K.

Court in January 2015 requiring that, upon receipt by the customer, the funds were to be remitted by the customer to the U.K.

Court pending resolution of the dispute between the parties.

As a result, the Company made payment on the draw to the financial institution for the letter of credit and the funds were ultimately received by the customer.

The customer did not remit the funds to the U.K.

Court as ordered.

On June 14, 2016, the U.K.

Court ruled completely in favor of Matthews following a trial on the merits.

However, the ongoing dispute involves litigation in multiple foreign jurisdictions because the contract between the parties includes a venue clause requiring the venue for any litigation to be in the United Kingdom, while the enforcement of any final judgment is required to be executed in Saudi Arabia.

The Company continues to pursue a trial on the merits in Saudi Arabia;

however, given the recent coronavirus disease 2019 ("COVID-19") pandemic, the trial is now not likely to conclude until calendar year 2021.

As the Company has successfully completed the project and subsequently operated the equipment, the Company remains confident regarding the pending trial on the merits in Saudi Arabia and expects to be in a position to enforce the judgment and initiate collection efforts following completion of that trial.

However, the Company’s level of success in recovering funds from the customer will depend upon several factors including a successful completion of the pending trial on the merits in Saudi Arabia, the availability of recoverable funds, and the subsequent level of support of the Saudi Arabian government to enforce a potential judgment against the customer.

During the third quarter of fiscal 2020, the Saudi Arabian government implemented restrictions on travel to Mecca due to the COVID-19 pandemic.

As a result, the Company will not be able to support the operation of the incineration equipment for the local agency responsible for its operation during the current year Hajj Pilgrimage.

Consequently, the Company is now concerned regarding the level of anticipated support from the government in its collection efforts.

Therefore, when considered collectively with the extended delay in the trial date and other collectability risks, the Company established a reserve for the full value of the funded letter of credit as of June 30, 2020.

The funded letter of credit was previously classified within other assets on the Consolidated Balance Sheet as of September 30, 2019.

The Company will continue to assess the accounting and collectability related to this matter as facts and circumstances evolve.

As of June 30, 2020, the market value of the Company's 2025 Senior Notes was approximately 10% less than the carrying value.

The fair value of the Company's remaining long-term debt, including current maturities, approximated the carrying value included in the Consolidated Balance Sheets.

As of September 30, 2019, the fair value of the Company's long-term debt, including current maturities, approximated the carrying value included in the Consolidated Balance Sheets.

The Company was in compliance with all of its debt covenants as of June 30, 2020.

The Company’s lease portfolio includes various contracts for real estate, vehicles, information technology and other equipment.

At contract inception, a lease exists if the contract conveys the right to control an identified asset for a period of time in exchange for consideration.

Control is considered to exist when the lessee has the right to obtain substantially all of the economic benefits from the use of an identified asset, as well as the right to direct the use of that asset.

If a contract is considered to be a lease, the Company recognizes a lease liability based on the present value of the future lease payments, and a corresponding right-of-use asset.

As a majority of the Company’s leases do not provide an implicit interest rate within the

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

(Dollar amounts in thousands, except per share data)

Leases (continued)

lease, an incremental borrowing rate is used to determine the ROU asset and lease liability which is based on information available at the commencement date.

Options to purchase, extend or terminate a lease are included in the ROU asset and lease liability when it is reasonably certain an option will be exercised.

Renewal options are most prevalent in the Company’s real estate leases.

In general, the Company has not included renewal options for leases in the ROU asset and lease liability because the likelihood of renewal was not determined to be reasonably certain.

In addition, leases may include variable lease payments, for items such as maintenance and utilities, which are expensed as incurred as variable lease expense.

There are two types of leases, operating leases and finance leases.

Lease classification is determined at lease commencement.

Leases not meeting the finance lease criteria are classified as operating leases.

Effective October 1, 2019, ROU assets and corresponding lease liabilities are recorded on the Consolidated Balance Sheet.

ROU assets for operating leases are classified in other assets, and ROU assets for finance leases are classified in property, plant and equipment, net on the Consolidated Balance Sheet.

For operating leases, short-term lease liabilities are classified in other current liabilities, and long-term lease liabilities are classified in other liabilities on the Consolidated Balance Sheet.

For finance leases, short-term lease liabilities are classified in long-term debt, current maturities, and long-term lease liabilities are classified in long-term debt on the Consolidated Balance Sheet.

Leases with an initial lease term of twelve months or less have not been recognized on the Consolidated Balance Sheet.

Reporting periods prior to October 1, 2019 continue to be presented in accordance with previous lease accounting guidance under GAAP.

The following table presents the balance sheet and lease classification for the Company's lease portfolio:

Balance Sheet Classification Lease Classification June 30, 2020

Non-current assets:

Property, plant and equipment, net Finance $ 8,338

Other assets Operating 73,650

Total lease assets $ 81,988

Current liabilities:

Long-term debt, current maturities Finance $ 3,414

Other current liabilities Operating 23,591

Non-current liabilities:

Long-term debt Finance 6,821

Other liabilities Operating 51,039

Total lease liabilities $ 84,865

Lease expense for operating leases is recognized on a straight-line basis over the lease term as an operating expense, while the expense for finance leases is recognized as depreciation expense and interest expense using the interest method of recognition.

On the cash flow statement, payments for operating leases are classified as operating activities.

Payments for finance leases are classified as a financing activity, with the exception of the interest component of the payment which is classified as an operating activity.

The following table presents the components of lease cost:

Three months ended June 30, 2020 Nine months ended June 30, 2020

Finance lease cost:

Amortization of ROU assets $ 895 $ 1,246

Interest on lease liabilities 72 149

Operating lease cost 5,430 18,527

Variable lease cost 1,225 4,106

Sublease income ( 250 ) ( 649 )

Total lease cost $ 7,372 $ 23,379

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

(Dollar amounts in thousands, except per share data)

Leases (continued)

Supplemental information regarding the Company's leases follows:

Nine months ended June 30, 2020

Cash paid for finance and operating lease liabilities:

Operating cash flows from finance leases $ 149

Operating cash flows from operating leases $ 22,519

Financing cash flows from finance leases $ 1,196

ROU assets obtained in exchange for new finance lease liabilities $ 2,165

ROU assets obtained in exchange for new operating lease liabilities $ 11,297

June 30, 2020

Weighted-average remaining lease term - finance leases (years) 4.68

Weighted-average remaining lease term - operating leases (years) 4.33

Weighted-discount rate - finance leases 2.81 %

Weighted-discount rate - operating leases 2.82 %

The Company elected the practical expedient to not separate lease components from non-lease components for all asset classes.

In addition, the Company elected the practical expedient to utilize a portfolio approach for certain equipment asset classes, primarily information technology, as the application of the lease model to the portfolio would not differ materially from the application of the lease model to the individual leases within the portfolio.

Maturities of lease obligations by fiscal year were as follows as of June 30, 2020:

Operating Leases Finance Leases

2020 (remainder) $ 6,738 $ 957

2021 24,211 3,721

2022 17,818 2,808

2023 11,952 1,119

2024 8,113 408

Thereafter 10,148 2,100

Total future minimum lease payments 78,980 11,113

Interest 4,350 878

Present value of lease liabilities:

$ 74,630 $ 10,235

Currency losses of $ 9,148 (net of income taxes of $ 2,968 ) and currency losses of $ 4,377 (net of income taxes of $ 1,420 ), which represent effective hedges of net investments, were reported as a component of AOCI within currency translation adjustment at December 31, 2020 and September 30, 2020, respectively.

As of December 31, 2020 and September 30, 2020, the fair value of the Company's long-term debt, including current maturities, which is classified as Level 2 in the fair value hierarchy, approximated the carrying value included in the Consolidated Balance Sheets.

The Company was in compliance with all of its debt covenants as of December 31, 2020.

Share-Based Payments

1 unchanged sentence

Under the 2017 Equity Incentive Plan, which has a ten -year term, the maximum number of shares available for grants or awards is an aggregate of 1,700,000 .

At June 30, 2020, there were 1,700,000 shares reserved for future issuance under the 2017 Equity Incentive Plan.

558,200 restricted share units have been granted under the 2017 Equity Incentive Plan and are outstanding as of June 30, 2020.

At December 31, 2020, there were 1,700,000 shares reserved for future issuance under the 2017 Equity Incentive Plan.

1,064,910 restricted share units have been granted under the 2017 Equity Incentive Plan and are outstanding as of December 31, 2020.

The 2017 Equity Incentive plan is administered by the Compensation Committee of the Board of Directors.

3 unchanged sentences

The Company issues restricted shares from treasury shares.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

(Dollar amounts in thousands, except per share data)

Share-Based Payments (continued)

With respect to the restricted share unit grants, units generally vest on the third anniversary of the grant date.

The number of units that vest depend on certain time and performance thresholds.

Approximately 38 % of the shares vest based on time, while the remaining vest based on pre-defined performance thresholds.

Such performance thresholds include adjusted earnings per share, return on invested capital, appreciation in the market value of the Company's Class A Common Stock, or other targets established by the Compensation Committee of the Board of Directors.

Approximately 45 % of the outstanding share units vest based on time, while the remaining vest based on pre-defined performance thresholds.

The Company issues common stock from treasury shares once vested.

For the three-month periods ended June 30, 2020 and 2019, stock-based compensation cost totaled $ 2,539 and $ 1,156 , respectively.

For the nine-month periods ended June 30, 2020 and 2019, stock-based compensation cost totaled $ 7,078 and $ 6,169 , respectively.

The stock-based compensation cost that was recognized for retirement-eligible employees was $ 625 for the three-month period ended June 30, 2020, and $ 1,564 and $ 1,849 for the nine-month periods ended June 30, 2020 and 2019, respectively.

The associated future income tax benefit recognized for stock-based compensation was $ 622 and $ 283 for the three-month periods ended June 30, 2020 and 2019, respectively, and $ 1,415 and $ 1,153 for the nine-month periods ended June 30, 2020 and 2019, respectively.

The transactions for restricted shares and restricted share units for the nine months ended June 30, 2020 were as follows:

For the three-month periods ended December 31, 2020 and 2019, stock-based compensation cost totaled $ 3,246 and $ 2,031 , respectively.

The stock-based compensation cost that was recognized for retirement-eligible employees was $ 883 and $ 313 for the three-month periods ended December 31, 2020 and 2019, respectively.

The associated future income tax benefit recognized for stock-based compensation was $ 239 and $ 179 for the three-month periods ended December 31, 2020 and 2019, respectively.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

(Dollar amounts in thousands, except per share data)

Share-Based Payments (continued)

The transactions for restricted shares and restricted share units for the three months ended December 31, 2020 were as follows:

Shares /Units Weighted-

3 unchanged sentences

Expired or forfeited ( 36,667 ) 57.05

Non-vested at June 30, 2020 746,348 $ 41.09

As of June 30, 2020, the total unrecognized compensation cost related to unvested restricted stock was $ 10,801 and is expected to be recognized over a weighted average period of 1.9 years.

Non-vested at December 31, 2020 1,107,810 $ 34.03

As of December 31, 2020, the total unrecognized compensation cost related to unvested restricted stock was $ 22,827 and is expected to be recognized over a weighted average period of 2.5 years.

The fair value of certain restricted share units that are subject to performance conditions are estimated on the date of grant using a binomial lattice valuation model.

The following table indicates the assumptions used in estimating the fair value of certain restricted share units granted during the three-month period ended December 31, 2020.

Three Months Ended

December 31, 2020

Expected volatility 42.9 %

Dividend yield 3.2 %

Average risk-free interest rate 0.2 %

Average expected term (years) 3.0

The risk-free interest rate is based on United States Treasury yields at the date of grant.

The dividend yield is based on the most recent dividend payment and average stock price over the 12 months prior to the grant date.

Expected volatilities are based on the historical volatility of the Company's stock price.

The expected term for grants in the three months ended December 31, 2020 represents an estimate of the average period of time for restricted share units to vest.

The Company maintains the 2019 Director Fee Plan, the Amended and Restated 2014 Director Fee Plan and the 1994 Director Fee Plan (collectively, the "Director Fee Plans").

5 unchanged sentences

The value of deferred shares is recorded in other liabilities.

A total of 30,574 shares and share units had been deferred under the Director Fee Plans as of June 30, 2020.

A total of 30,925 shares and share units had been deferred under the Director Fee Plans as of December 31, 2020.

Additionally, non-employee directors each receive an annual stock-based grant (non-statutory stock options, stock appreciation rights and/or restricted shares or units) with a value of $ 125 for fiscal 2021.

244,915 restricted shares and restricted share units have been granted under the Director Fee Plans, 71,686 of which were issued under the 2019 Director Fee Plan.

68,149 restricted shares and restricted share units are unvested at June 30, 2020.

71,686 restricted shares and restricted share units are unvested at December 31, 2020.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

1 unchanged sentence

Earnings Per Share Attributable to Matthews' Shareholders

The information used to compute earnings (loss) per share attributable to Matthews' common shareholders was as follows:

The information used to compute loss per share attributable to Matthews' common shareholders was as follows:

Three Months Ended

June 30, Nine Months Ended

2020 2019 2020 2019

Net income (loss) attributable to Matthews shareholders $ 2,269 $ 14,629 $ ( 94,561 ) $ 33,143

Net loss attributable to Matthews shareholders $ ( 1,758 ) $ ( 10,466 )

Weighted-average shares outstanding (in thousands):

2 unchanged sentences

Diluted shares 31,725 31,136

Anti-dilutive securities excluded from the dilution calculation were insignificant for the three and nine months ended June 30, 2020 and 2019.

Pension and Other Postretirement Benefit Plans

1 unchanged sentence

Net periodic pension and other postretirement benefit cost for the plans included the following:

Three months ended June 30,

Pension Other Postretirement

2020 2019 2020 2019

Service cost $ 2,170 $ 2,000 $ 64 $ 61

Interest cost * 1,933 2,301 140 180

Expected return on plan assets * ( 2,232 ) ( 2,596 ) — —

Amortization:

Prior service cost ( 47 ) ( 46 ) ( 23 ) ( 49 )

Net actuarial loss (gain) * 2,386 1,081 — ( 15 )

Net benefit cost $ 4,210 $ 2,740 $ 181 $ 177

Nine months ended June 30,

Three months ended December 31,

Pension Other Postretirement

5 unchanged sentences

Prior service cost ( 17 ) ( 47 ) ( 91 ) ( 23 )

Net actuarial loss (gain) * 7,159 3,242 — ( 45 )

Net actuarial loss * 3,021 2,387 — —

Net benefit cost $ 4,002 $ 4,211 $ 53 $ 181

1 unchanged sentence

Benefit payments under the Company's principal retirement plan are made from plan assets, while benefit payments under the postretirement benefit plan are made from the Company's operating funds.

In response to COVID-19, the federal government passed a modified relief bill, which provides additional funding measures associated with IRS regulations.

In accordance with this bill, the Company is no longer required to make contributions for fiscal 2020 to its principal retirement plan.

The Company currently expects to make a contribution of approximately $ 15,000 to its principal retirement plan during the fourth quarter of fiscal 2020, which may consist of cash and/or shares of Matthews Class A Common Stock.

The Company is also currently evaluating potential additional cash and/or stock contributions to its principal retirement plan during fiscal 2020.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

(Dollar amounts in thousands, except per share data)

Pension and Other Postretirement Benefit Plans (continued)

Under IRS regulations, the Company is required to make contributions of approximately $ 4,191 to its principal retirement plan in fiscal 2021.

The Company is also currently evaluating potential additional contributions to its principal retirement plan during fiscal 2021.

Contributions made and anticipated for fiscal year 2021 are as follows:

Contributions Pension Other Postretirement

Contributions during the nine months ended June 30, 2020:

Contributions during the three months ended December 31, 2020:

Supplemental retirement plan $ 203 $ —

4 unchanged sentences

Other postretirement plan — 808

* Amount represents expected contribution of cash and/or stock (see above).

Accumulated Other Comprehensive Income

The changes in AOCI by component, net of tax, for the three-month periods ended June 30, 2020 and 2019 were as follows:

Post-retirement benefit plans Currency translation adjustment Derivatives Total

Attributable to Matthews:

Balance, March 31, 2020 $ ( 68,189 ) $ ( 175,751 ) $ ( 4,555 ) $ ( 248,495 )

OCI before reclassification — 11,240 ( 509 ) 10,731

Amounts reclassified from AOCI 1,743 (a)

Net current-period OCI 1,743

( 179 ) 12,804

Balance, June 30, 2020 $ ( 66,446 ) $ ( 164,511 ) $ ( 4,734 ) $ ( 235,691 )

Attributable to noncontrolling interest:

Balance, March 31, 2020 $ — $ 371 $ — $ 371

OCI before reclassification — — — —

Net current-period OCI — — — —

Balance, June 30, 2020 $ — $ 371 $ — $ 371

Post-retirement benefit plans Currency translation adjustment Derivatives Total

Attributable to Matthews:

Balance, March 31, 2019 $ ( 36,413 ) $ ( 147,390 ) $ 3,617 $ ( 180,186 )

OCI before reclassification — 2,639 ( 2,372 ) 267

Amounts reclassified from AOCI 705 (a)

— ( 660 ) (b)

Net current-period OCI 705 2,639 ( 3,032 ) 312

Balance, June 30, 2019 $ ( 35,708 ) $ ( 144,751 ) $ 585 $ ( 179,874 )

Attributable to noncontrolling interest:

Balance, March 31, 2019 $ — $ 473 $ — $ 473

OCI before reclassification — ( 5 )

Net current-period OCI — ( 5 ) — ( 5 )

Balance, June 30, 2019 $ — $ 468

(a) Amounts were included in net periodic benefit cost for pension and other postretirement benefit plans (see Note 11).

(b) Amounts were included in interest expense in the periods the hedged item affected earnings (see Note 7).

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

(Dollar amounts in thousands, except per share data)

Accumulated Other Comprehensive Income (continued)

The changes in AOCI by component, net of tax, for the nine-month periods ended June 30, 2020 and 2019 were as follows:

Accumulated Other Comprehensive Income

The changes in AOCI by component, net of tax, for the three-month periods ended December 31, 2020 and 2019 were as follows:

Post-retirement benefit plans Currency translation adjustment Derivatives Total

4 unchanged sentences

Net current-period OCI 2,124

( 8,297 ) ( 4,330 ) ( 7,330 )

Balance, June 30, 2020 $ ( 66,446 ) $ ( 164,511 ) $ ( 4,734 ) $ ( 235,691 )

Balance, December 31, 2020 $ ( 80,830 ) $ ( 134,826 ) $ ( 4,849 ) $ ( 220,505 )

Attributable to noncontrolling interest:

2 unchanged sentences

Net current-period OCI — ( 3 ) — ( 3 )

Balance, June 30, 2020 $ — $ 371 $ — $ 371

Balance, December 31, 2020 $ — $ 365 $ — $ 365

Post-retirement benefit plans Currency translation adjustment Derivatives Total

5 unchanged sentences

Net current-period OCI 1,727 11,111 291 13,129

Balance, June 30, 2019 $ ( 35,708 ) $ ( 144,751 ) $ 585 $ ( 179,874 )

Balance, December 31, 2019 $ ( 70,016 ) $ ( 145,103 ) $ ( 113 ) $ ( 215,232 )

Attributable to noncontrolling interest:

2 unchanged sentences

Net current-period OCI — ( 5 ) — ( 5 )

Balance, June 30, 2019 $ — $ 468

Balance, December 31, 2019 $ — $ 370

(a) Amounts were included in net periodic benefit cost for pension and other postretirement benefit plans (see Note 10).

3 unchanged sentences

Accumulated Other Comprehensive Income (continued)

Reclassifications out of AOCI for the three and nine-month periods ended June 30, 2020 were as follows:

Amount reclassified from AOCI

Details about AOCI Components Three Months Ended June 30, 2020 Nine Months Ended June 30, 2020 Affected line item in the Statement of income

Postretirement benefit plans

Prior service (cost) credit $ 70 (a)

Actuarial losses ( 2,386 ) (a)

( 2,316 ) (b)

( 6,949 ) Income before income tax

1,652 Income taxes

$ ( 5,297 ) Net income

Interest rate swap contracts $ ( 438 )

$ 108 Interest expense

108 Income before income tax

108 ( 26 ) Income taxes

$ ( 330 ) $ 82 Net income

Reclassifications out of AOCI for the three and nine-month periods ended June 30, 2019 were as follows:

Reclassifications out of AOCI for the three-month periods ended December 31, 2020 and 2019 were as follows:

Amount reclassified from AOCI

Details about AOCI Components Three Months Ended June 30, 2019 Nine Months Ended

June 30, 2019 Affected line item in the Statement of income

Details about AOCI Components Three Months Ended

December 31, 2020 Three Months Ended

December 31, 2019 Affected line item in the Statement of income

Postretirement benefit plans

1 unchanged sentence

Actuarial losses (a)

( 2,912 ) Income before income tax

( 3,021 ) ( 2,387 )

( 2,913 ) ( 2,317 ) Income before income tax (b)

590 Income taxes

2 unchanged sentences

$ 364 Interest expense

2,489 Income before income tax

( 903 ) 364 Income before income tax (b)

( 89 ) Income taxes

5 unchanged sentences

Income tax provisions for the Company's interim periods are based on the effective income tax rate expected to be applicable for the full year.

The Company's consolidated income taxes for the nine months ended June 30, 2020 were a benefit of $ 22,672 , compared to an expense of $ 4,429 for the first nine months of fiscal 2019.

The differences between the Company’s consolidated income taxes for the first nine months of fiscal 2020 versus the same period for fiscal 2019 primarily resulted from

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

(Dollar amounts in thousands, except per share data)

Income Taxes (continued)

the fiscal 2020 consolidated loss before income taxes, which reflected the goodwill write-down recorded during the second quarter of fiscal 2020, which was partially non-deductible, as well as a benefit for an expected net operating loss (“NOL”) carryback.

The NOL will be carried back five years allowing it to offset income that was previously taxed at a federal statutory rate of 35.0%.

The Company’s fiscal 2020 nine-month effective tax rate varied from the U.S.

statutory tax rate of 21.0 % primarily due to state taxes, foreign statutory rate differentials, tax credits, the goodwill write-down, the expected NOL carryback, and discrete tax benefits recognized during the current year.

The Company’s fiscal 2019 nine-month effective tax rate varied from the U.S.

statutory tax rate of 21.0 % primarily due to tax planning completed during the second quarter of fiscal 2019 that resulted in a discrete tax benefit.

The Company had unrecognized tax benefits (excluding penalties and interest) of $ 11,834 and $ 15,526 on June 30, 2020 and September 30, 2019, respectively, of which $ 8,620 and $ 11,417 would impact the annual effective rate at June 30, 2020 and September 30, 2019, respectively.

The Company's consolidated income taxes for the three months ended December 31, 2020 were an expense of $ 3,980 , compared to a benefit of $ 5,397 for the first three months of fiscal 2020.

The differences between the Company’s consolidated income taxes for the first three months of fiscal 2021 versus the same period for fiscal 2020 primarily resulted from the fiscal 2021 first quarter having consolidated pre-tax income while the first quarter of fiscal 2020 had a pre-tax loss.

Additionally, fiscal 2021 included discrete tax expenses related to foreign operating losses while fiscal 2020 included discrete tax benefits resulting from the closure of several tax audits.

The Company’s fiscal 2021 three-month effective tax rate varied from the U.S.

statutory tax rate of 21.0 % primarily due to discrete tax expenses recognized in the quarter.

The Company’s fiscal 2020 three-month effective tax rate varied from the U.S.

statutory tax rate of 21.0 % primarily due to state taxes, foreign statutory rate differentials, tax credits, and discrete tax benefits recognized in the quarter.

The Company had unrecognized tax benefits (excluding penalties and interest) of $ 10,771 and $ 10,483 on December 31, 2020 and September 30, 2020, respectively, of which $ 7,557 and $ 7,066 would impact the annual effective rate at December 31, 2020 and September 30, 2020, respectively.

It is reasonably possible that the amount of unrecognized tax benefits could decrease by approximately $ 7,803 in the next 12 months primarily due to the completion of audits and the expiration of the statute of limitations.

The Company classifies interest and penalties on tax uncertainties as a component of the provision for income taxes.

Total penalties and interest accrued were $ 2,424 and $ 2,880 at June 30, 2020 and September 30, 2019, respectively.

Total penalties and interest accrued were $ 2,442 and $ 2,172 at December 31, 2020 and September 30, 2020, respectively.

These accruals may potentially be applicable in the event of an unfavorable outcome of uncertain tax positions.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

(Dollar amounts in thousands, except per share data)

Income Taxes (continued)

The Company is currently under examination in several tax jurisdictions and remains subject to examination until the statute of limitations expires for those tax jurisdictions.

As of June 30, 2020, the tax years that remain subject to examination by major jurisdiction generally are:

As of December 31, 2020, the tax years that remain subject to examination by major jurisdiction generally are:

United States – Federal 2017 and forward

3 unchanged sentences

United Kingdom 2019 and forward

Australia 2015 and forward

Singapore 2017 and forward

Australia 2015 and forward

Segment Information

9 unchanged sentences

For these reasons, the Company believes that adjusted EBITDA represents the most relevant measure of segment profit and loss.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

(Dollar amounts in thousands, except per share data)

Segment Information (continued)

In addition, the CODM manages and evaluates the operating performance of the segments, as described above, on a pre-corporate cost allocation basis.

3 unchanged sentences

Management does not allocate non-operating items such as investment income, other income (deductions), net and noncontrolling interest to the segments.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

(Dollar amounts in thousands, except per share data)

Segment Information (continued)

The following table sets forth information about the Company's segments, including a reconciliation of adjusted EBITDA to net income.

Three Months Ended

June 30, Nine Months Ended

2020 2019 2020 2019

SGK Brand Solutions $ 168,140 $ 174,880

13 unchanged sentences

Strategic initiatives and other charges:

( 5,570 ) ( 1,037 ) ( 25,040 ) ( 3,149 )

Gain (loss) on sale of ownership interests in a subsidiary (4)

11,208 — 11,208 ( 4,465 )

Legal matter reserve (5)

( 10,566 ) — ( 10,566 ) —

Non-recurring / incremental COVID-19 costs (6)

( 1,871 ) — ( 2,534 ) —

Goodwill write-down (7)

— — ( 90,408 ) —

Workforce reductions and related costs ( 7,026 ) ( 2,262 )

Other cost reduction initiatives ( 3,681 ) ( 8,458 )

Non-recurring / incremental coronavirus disease 2019 ("COVID-19") costs (4)

Joint Venture depreciation, amortization, interest expense and other charges (5)

( 2,473 ) ( 866 ) ( 4,732 ) ( 866 )

Stock-based compensation ( 3,246 ) ( 2,031 )

4 unchanged sentences

Interest expense ( 7,728 ) ( 9,240 )

Net loss attributable to noncontrolling interests ( 420 ) ( 205 ) ( 491 ) ( 541 )

(Loss) income before income taxes ( 4,360 ) 18,413 ( 117,724 ) 37,031

Income tax benefit (provision) 6,209 ( 3,989 ) 22,672 ( 4,429 )

Net income (loss) $ 1,849 $ 14,424 $ ( 95,052 ) $ 32,602

Net (loss) income attributable to noncontrolling interests ( 234 ) 160

Income (loss) before income taxes 1,988 ( 15,703 )

Income tax (provision) benefit ( 3,980 ) 5,397

Net loss $ ( 1,992 ) $ ( 10,306 )

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

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(3) Includes certain non-recurring costs associated with productivity and cost-reduction initiatives intended to result in improved operating performance, profitability and working capital levels.

(4) Represents a gain (loss) on the sale of ownership interests in a subsidiary within the Memorialization segment.

(5) Represents a reserve established for a legal matter involving a letter of credit for a customer in Saudi Arabia within the Memorialization segment (see Note 7, "Debt").

(4) Includes certain non-recurring direct incremental costs (such as costs for purchases of computer peripherals and devices to facilitate working-from-home, additional personal protective equipment and cleaning supplies and services, etc.) incurred in response to COVID-19.

This amount does not include the impact of any lost sales or underutilization due to COVID-19.

(7) Represents the goodwill write-down for two reporting units within the SGK Brand Solutions segment (see Note 16, "Goodwill and Other Intangible Assets").

(5) Represents the Company's portion of depreciation, intangible amortization, interest expense, and other non-recurring charges incurred by non-consolidated subsidiaries accounted for as equity-method investments within the Memorialization segment.

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Please note that GAAP pension and postretirement expense or the adjustment above are not necessarily indicative of the current or future cash flow requirements related to these employee benefit plans.

* Depreciation and amortization was $ 21,833 and $ 12,757 for the SGK Brand Solutions segment, $ 5,549 and $ 4,840 for the Memorialization segment, $ 1,450 and $ 1,545 for the Industrial Technologies segment, and $ 1,336 and $ 1,341 for Corporate and Non-Operating, for the three months ended June 30, 2020 and 2019, respectively.

Depreciation and amortization was $ 65,274 and $ 37,364 for the SGK Brand Solutions segment, $ 15,024 and $ 14,898 for the Memorialization segment, $ 4,320 and $ 4,630 for the Industrial Technologies segment, and $ 3,800 and $ 3,867 for Corporate and Non-Operating, for the nine months ended June 30, 2020 and 2019, respectively.

** Acquisition costs, ERP integration costs, and strategic initiatives and other charges were $ 1,794 and $ 449 for the SGK Brand Solutions segment and $ 4,128 and $ 5,923 for Corporate and Non-Operating, for the three months ended June 30, 2020 and 2019, respectively.

Acquisition costs, ERP integration costs, and strategic initiatives and other charges were $ 697 for the Memorialization segment for the three months ended June 30, 2020.

Acquisition costs, ERP integration costs, and strategic initiatives and other charges were $ 9,058 and $ 3,858 for the SGK Brand Solutions segment and $ 19,032 and $ 14,014 for Corporate and Non-Operating, for the nine months ended June 30, 2020 and 2019, respectively.

Acquisition costs, ERP integration costs, and strategic initiatives and other charges were $ 1,754 for the Memorialization segment and $ 268 for the Industrial Technologies segment, for the nine months ended June 30, 2020.

Acquisitions and Divestitures

On November 1, 2018 the Company acquired 80 % ownership of Frost Converting Systems, Inc.

(“Frost”) for a purchase price of approximately $ 7,162 (net of cash acquired and holdback amounts).

Frost is a leading global supplier of high-performance rotary dies for embossing, creasing and cutting of paperboard packaging and is included in the Company's SGK Brand Solutions segment.

The Company finalized the allocation of the purchase price related to the Frost acquisition in the fourth quarter of fiscal 2019, resulting in an immaterial adjustment to certain working capital accounts.

During fiscal 2019, the Company completed small acquisitions in the Memorialization segment for a combined purchase price of $ 3,094 (net of cash acquired and holdback amounts).

The Company finalized the purchase price allocations related to these acquisitions in the first quarter of fiscal 2020, resulting in an immaterial adjustment to certain working capital accounts.

During fiscal 2019, the Company completed the sale of a 51 % ownership interest in a small Memorialization business.

Net proceeds from this sale totaled approximately $ 8,254 , and the transaction resulted in the recognition of a $ 4,465 loss for the nine months ended June 30, 2019, which is included as a component of administrative expenses.

Immediately following the transaction, the Company retained a non-controlling interest in this business.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

(Dollar amounts in thousands, except per share data)

* Depreciation and amortization was $ 19,147 and $ 21,656 for the SGK Brand Solutions segment, $ 5,469 and $ 4,636 for the Memorialization segment, $ 1,441 and $ 1,442 for the Industrial Technologies segment, and $ 1,294 and $ 1,199 for Corporate and Non-Operating, for the three months ended December 31, 2020 and 2019, respectively.

** Acquisition costs, ERP integration costs, and strategic initiatives and other charges were $ 7,355 and $ 3,446 for the SGK Brand Solutions segment, $ 1,130 and $ 328 for the Memorialization segment, and $ 2,707 and $ 9,090 for Corporate and Non-Operating, for the three months ended December 31, 2020 and 2019, respectively.

Goodwill and Other Intangible Assets

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Net goodwill at September 30, 2020 $ 311,737 $ 361,682 $ 91,969 $ 765,388

Additions during period — — — —

Divestiture during period — — — —

Translation and other adjustments 11,041 1,308 704 13,053

Goodwill write-down ( 90,408 ) — — ( 90,408 )

Net goodwill at June 30, 2020 $ 304,196 $ 360,425 $ 91,435 $ 756,056

The net goodwill balances at June 30, 2020 and September 30, 2019 included $ 178,732 and $ 88,324 of accumulated impairment losses, respectively.

Accumulated impairment losses at June 30, 2020 were $ 173,732 and $ 5,000 for the SGK Brand Solutions and Memorialization segments, respectively.

Accumulated impairment losses at September 30, 2019 were $ 83,324 and $ 5,000 for the SGK Brand Solutions and Memorialization segments, respectively.

Net goodwill at December 31, 2020 $ 322,778 $ 362,990 $ 92,673 $ 778,441

The net goodwill balances at December 31, 2020 and September 30, 2020 included $ 178,732 of accumulated impairment losses.

Accumulated impairment losses at December 31, 2020 and September 30, 2020 were $ 173,732 and $ 5,000 for the SGK Brand Solutions and Memorialization segments, respectively.

The Company performed its annual impairment review of goodwill and indefinite-lived intangible assets in the second quarter of fiscal 2020 (January 1, 2020) and determined that the estimated fair values for all goodwill reporting units exceeded their carrying values.

The estimated fair values for two reporting units within the SGK Brand Solutions segment (Graphics Imaging and Cylinders, Surfaces and Engineered Products) exceeded their carrying values (expressed as a percentage of carrying value) by less than 10% as of January 1, 2020.

On January 30, 2020, the World Health Organization declared an outbreak of COVID-19 to be a Public Health Emergency of International Concern, and subsequently recognized COVID-19 as a global pandemic on March 11, 2020.

Widespread efforts have been deployed by multiple countries around the world to prevent the virus from spreading, including temporary closures of non-essential businesses, event cancellations, travel restrictions, quarantines, and other disruptive actions.

Substantially all of the Company’s operations have remained open during the COVID-19 pandemic, as they have been considered “essential” businesses during this time.

However, the Company has experienced some commercial impact and business disruptions in certain segments and geographic locations as a result of COVID-19.

In its assessment of the potential impacts of COVID-19 on the estimated future earnings and cash flows for the SGK Brand Solutions segment, and in light of the limited excess fair values for its two reporting units (discussed above), management determined that COVID-19 represented a triggering event, resulting in a re-evaluation of the goodwill for its reporting units within the SGK Brand Solutions segment (Graphics Imaging and Cylinders, Surfaces and Engineered Products), as of March 31, 2020.

As a result of this interim assessment, the Company recorded a goodwill write-down totaling $ 90,408 during the fiscal 2020 second quarter.

The Company performed an interim assessment of its goodwill reporting units within the SGK Brand Solutions segment (Graphics Imaging and Cylinders, Surfaces and Engineered Products) as of March 31, 2020 and recorded a $ 90,408 goodwill write-down during the second quarter of fiscal 2020.

Subsequent to this write-down, the fair values of the two reporting units within the SGK Brand Solutions segment (Graphics Imaging and Cylinders, Surfaces and Engineered Products) approximated their carrying values at March 31, 2020.

The fair values for these reporting units were determined using level 3 inputs (including estimates of revenue growth, EBITDA contribution and the discount rates) and a combination of the income approach using the estimated discounted cash flows and a market-based valuation methodology.

If current projections are not achieved or specific valuation factors outside the Company’s control (such as discount rates and continued economic and industry impacts of COVID-19) significantly change, additional goodwill write-downs may be necessary in future periods.

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Goodwill and Other Intangible Assets (continued)

The following tables summarize the carrying amounts and related accumulated amortization for intangible assets as of June 30, 2020 and September 30, 2019, respectively.

The following tables summarize the carrying amounts and related accumulated amortization for intangible assets as of December 31, 2020 and September 30, 2020, respectively.

Amount Accumulated

Amortization Net

June 30, 2020:

December 31, 2020:

Indefinite-lived trade names $ 30,540 $ — $ 30,540

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$ 579,357 $ ( 245,859 ) $ 333,498

The net change in intangible assets during the nine months ended June 30, 2020 included the impact of foreign currency fluctuations during the period and additional amortization.

Amortization expense on intangible assets was $ 17,825 and $ 9,543 for the three-month periods ended June 30, 2020 and 2019, respectively.

For the nine-month periods ended June 30, 2020 and 2019, amortization expense was $ 53,639 and $ 27,165 , respectively.

The net change in intangible assets during the three months ended December 31, 2020 included the impact of foreign currency fluctuations during the period and additional amortization.

Amortization expense on intangible assets was $ 15,221 and $ 17,942 for the three-month periods ended December 31, 2020 and 2019, respectively.

Amortization expense is estimated to be $ 45,270 for the remainder of fiscal 2021, $ 47,046 in 2022, $ 28,165 in 2023, $ 26,458 in 2024 and $ 24,471 in 2025.

Subsequent Events

In January 2021, subsequent to the date of the balance sheet, the Company received $ 15,497 for the full redemption of its senior preferred shares investment in a memorialization business.

Additionally, in a separate transaction completed in January 2021, the Company acquired a memorialization business that produces and distributes cemetery products for a purchase price of $ 13,100 , subject to customary post-closing adjustments.

Management's Discussion and Analysis of Financial Condition and Results of Operations

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Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove correct.

Factors that could cause the Company's results to differ materially from the results discussed in such forward-looking statements principally include changes in domestic or international economic conditions, changes in foreign currency exchange rates, changes in the cost of materials used in the manufacture of the Company's products, changes in mortality and cremation rates, changes in product demand or pricing as a result of consolidation in the industries in which the Company operates, changes in product demand or pricing as a result of domestic or international competitive pressures, ability to achieve cost-reduction objectives, unknown risks in connection with the Company's acquisitions, cybersecurity concerns, effectiveness of the Company's internal controls, compliance with domestic and foreign laws and regulations, technological factors beyond the Company's control, impact of pandemics or similar outbreaks, such as coronavirus disease 2019 ("COVID-19") or other disruptions to our industries, customers or supply chains, and other factors described in Item 1A - "Risk Factors" in this Form 10-Q and Item 1A - "Risk Factors" in the Company's Form 10-K for the fiscal year ended September 30, 2019.

Factors that could cause the Company's results to differ materially from the results discussed in such forward-looking statements principally include changes in domestic or international economic conditions, changes in foreign currency exchange rates, changes in the cost of materials used in the manufacture of the Company's products, changes in mortality and cremation rates, changes in product demand or pricing as a result of consolidation in the industries in which the Company operates, changes in product demand or pricing as a result of domestic or international competitive pressures, ability to achieve cost-reduction objectives, unknown risks in connection with the Company's acquisitions, cybersecurity concerns, effectiveness of the Company's internal controls, compliance with domestic and foreign laws and regulations, technological factors beyond the Company's control, impact of pandemics or similar outbreaks, or other disruptions to our industries, customers or supply chains, and other factors described in Item 1A - "Risk Factors" in this Form 10-Q and Item 1A - "Risk Factors" in the Company's Form 10-K for the fiscal year ended September 30, 2020.

In addition, although the Company does not have any customers that would be considered individually significant to consolidated sales, changes in the distribution of the Company's products or the potential loss of one or more of the Company's larger customers are also considered risk factors.

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Management does not allocate non-operating items such as investment income, other income (deductions), net and noncontrolling interest to the segments.

The following table sets forth the sales and adjusted EBITDA for the Company's three reporting segments for the three and nine-month periods ended June 30, 2020 and 2019.

The following table sets forth the sales and adjusted EBITDA for the Company's three reporting segments for the three-month periods ended December 31, 2020 and 2019.

Refer to Note 13, "Segment Information" in Item 1 - "Financial Statements" for the Company's financial information by segment.

Three Months Ended

June 30, Nine Months Ended

2020 2019 2020 2019

(Dollar amounts in thousands)

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See the "Non-GAAP Financial Measures" section below.

Beginning in the second quarter of fiscal 2020, sales were unfavorably impacted by the global outbreak of COVID-19, which has caused some commercial impact and business disruptions in certain of the Company's segments and geographic locations.

While substantially all of the Company's operations have remained open during the COVID-19 pandemic, management expects COVID-19 to unfavorably impact its sales and results of operations in the short-term and for the remainder of fiscal 2020 (see "Forward Looking Information" below).

Sales for the nine months ended June 30, 2020 were $1.10 billion, compared to $1.14 billion for the nine months ended June 30, 2019, representing a decrease of $45.7 million.

The decrease in fiscal 2020 sales reflected lower sales in the SGK Brand Solutions and Industrial Technologies segments, partially offset by increased sales in the Memorialization segment.

Changes in foreign currency rates were estimated to have an unfavorable impact of $10.4 million on fiscal 2020 consolidated sales compared to a year ago.

In the SGK Brand Solutions segment, sales for the first nine months of fiscal 2020 were $513.5 million, compared to $557.9 million for the first nine months of fiscal 2019.

The decrease primarily resulted from lower brand sales in the U.S.

and the U.K., sales declines in the private label brand market, and lower sales of cylinders, surfaces and engineered products in Europe.

These decreases were partially offset by sales growth in the Asia-Pacific region and increased sales for the merchandising solutions business.

Changes in foreign currency exchange rates had an unfavorable impact of $8.5 million on the segment's sales compared to the prior year.

Memorialization segment sales for the first nine months of fiscal 2020 were $478.3 million, compared to $474.3 million for the first nine months of fiscal 2019.

The increase in sales primarily resulted from increased unit sales of caskets and higher sales of cremation and incineration equipment.

These increases were partially offset by lower unit sales of cemetery memorial products, which were impacted by COVID-19 related stay-at-home orders that limited families' access with cemeteries to arrange for their memorials.

Changes in foreign currency exchange rates had an unfavorable impact of $1.1 million on the segment's sales compared to the prior year.

Industrial Technologies segment sales were $107.3 million for the first nine months of fiscal 2020, compared to $112.7 million for the first nine months of fiscal 2019.

The decrease reflected lower sales of warehouse automation systems and decreased applied technologies sales, partially offset by higher

Sales for the three months ended December 31, 2020 were $386.7 million, compared to $364.9 million for the three months ended December 31, 2019, representing an increase of $21.7 million.

The increase in fiscal 2021 sales reflected higher sales in the Memorialization segment, partially offset by lower sales in the SGK Brand Solutions and Industrial Technologies segments.

Changes in foreign currency rates were estimated to have a favorable impact of $4.8 million on fiscal 2021 consolidated sales compared to a year ago.

Fiscal 2021 sales were impacted by the global outbreak of coronavirus disease 2019 ("COVID-19"), which has caused some commercial impacts in certain of the Company's segments and geographic locations.

These impacts have included customer project delays, temporary business disruptions, and in some cases, higher sales volumes for certain products and services such as memorialization products.

While substantially all of the Company's operations have remained open during the COVID-19 pandemic, management expects COVID-19 to continue to impact its sales and results of operations in the short-term until the pandemic subsides (see "Forward Looking Information" below).

In the SGK Brand Solutions segment, sales for the first three months of fiscal 2021 were $168.1 million, compared to $174.9 million for the first three months of fiscal 2020.

The decrease primarily resulted from lower merchandising solutions sales, which were impacted by COVID-19, and reduced sales of cylinders, surfaces and engineered products in Europe.

These decreases were partially offset by a modest increase in brand sales in the U.S.

Changes in foreign currency exchange rates had a favorable impact of $3.3 million on the segment's sales compared to the prior year.

Memorialization segment sales for the first three months of fiscal 2021 were $183.3 million, compared to $154.4 million for the first three months of fiscal 2020.

The increase in sales predominantly resulted from increased unit sales of caskets due to COVID-19, as well as improved price realization and higher sales of cremation and incineration equipment.

Changes in foreign currency exchange rates had a favorable impact of $843,000 on the segment's sales compared to the prior year.

Industrial Technologies segment sales were $35.2 million for the first three months of fiscal 2021, compared to $35.7 million for the first three months of fiscal 2020.

The decrease primarily reflected lower sales of warehouse automation systems.

Orders for warehouse automation solutions remained strong, but access to job sites to complete these projects has been restricted due to COVID-19.

Changes in foreign currency exchange rates had a favorable impact of $578,000 on the segment's sales compared to the prior year.

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