What changed in this filing

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Item 1. Financial Statements

2022-03-03 compared with 2021-12-02 · 176 added, 150 removed, 542 unchanged (38% of the section changed)

5 unchanged sentences

Three Months Ended

Six Months Ended

October 30, 2021

October 31, 2020

October 30, 2021

October 31, 2020

Nine Months Ended

January 29, 2022

January 30, 2021

January 29, 2022

January 30, 2021

Cost of products sold

14 unchanged sentences

Three Months Ended

Six Months Ended

October 30, 2021

October 31, 2020

October 30, 2021

October 31, 2020

Nine Months Ended

January 29, 2022

January 30, 2021

January 29, 2022

January 30, 2021

Other comprehensive income (loss), net of tax:

7 unchanged sentences

(in millions, except share and per-share data)

October 30, 2021

January 29, 2022

Current assets:

30 unchanged sentences

Shareholders' equity:

Common stock, $ 0.50 par value, 100,000,000 shares authorized, 38,737,129 shares and 39,644,913 shares issued as of October 30, 2021 and May 1, 2021, respectively

Common stock, $ 0.50 par value, 100,000,000 shares authorized, 38,276,968 shares and 39,644,913 shares issued as of January 29, 2022 and May 1, 2021, respectively

Additional paid-in capital

Accumulated other comprehensive (loss) income

Treasury stock, 1,346,624 shares as of October 30, 2021 and May 1, 2021

Treasury stock, 1,346,624 shares as of January 29, 2022 and May 1, 2021

Retained earnings

6 unchanged sentences

(in millions, except share data)

Three Months Ended October 30, 2021

Three Months Ended January 29, 2022

comprehensive

1 unchanged sentence

shareholders'

Balance as of July 31, 2021

Balance as of October 30, 2021

Purchases of common stock

2 unchanged sentences

Dividends on common stock

Balance as of October 30, 2021

Three Months Ended October 31, 2020

Balance as of January 29, 2022

Three Months Ended January 30, 2021

comprehensive

1 unchanged sentence

shareholders'

Balance as of August 1, 2020

Balance as of October 31, 2020

Issuance of restricted stock, net of tax withholding

Stock-based compensation expense

1 unchanged sentence

Dividends on common stock

Balance as of October 31, 2020

Balance as of January 30, 2021

See notes to condensed consolidated financial statements.

3 unchanged sentences

(in millions, except share data)

Six Months Ended October 30, 2021

Nine Months Ended January 29, 2022

comprehensive

8 unchanged sentences

Dividends on common stock

Balance as of October 30, 2021

Six Months Ended October 31, 2020

Balance as of January 29, 2022

Nine Months Ended January 30, 2021

comprehensive

7 unchanged sentences

Dividends on common stock

Balance as of October 31, 2020

Balance as of January 30, 2021

See notes to condensed consolidated financial statements.

3 unchanged sentences

(in millions)

Six Months Ended

October 30, 2021

October 31, 2020

Nine Months Ended

January 29, 2022

January 30, 2021

Operating activities:

5 unchanged sentences

Gain on sale of property, plant and equipment

Impairment of long-lived assets

Change in deferred income taxes

40 unchanged sentences

The extent of the impact will depend on a number of evolving and uncertain factors, including the duration and spread of COVID-19 (and its variants), the rate of vaccinations, actions taken by governmental authorities to further restrict business operations and social activity and impose travel restrictions, shifting consumer demand, the ability of the Company’s supply chain to deliver in a timely and cost-effective manner, the ability of the Company’s employees and manufacturing facilities to operate efficiently and effectively, the continued viability and financial stability of the Company’s customers and suppliers and future access to capital.

While demand for the Company’s products improved, the recovery in demand has had business interruptions, including increased material and logistics costs, and most significantly, impacts from the worldwide semiconductor supply shortage.

The Company continues to experience business interruptions, including customer shutdowns and increased material and logistics costs, labor shortages, and most significantly, impacts from the worldwide semiconductor supply shortage.

The semiconductor supply shortage is due, in part, to increased demand across multiple industries, including the automotive industry, resulting in a slowdown in their production schedules.

The semiconductor supply shortage is also impacting the Company’s supply chain and its ability to meet demand at some of its non-automotive customers.

The Company expects this semiconductor shortage will likely have a continued impact on its operating results and financial condition in fiscal 2022.

The Company expects this semiconductor shortage will have a continued impact on its operating results and financial condition for the remainder of fiscal 2022.

Various government programs have been enacted to provide assistance to businesses impacted by the COVID-19 pandemic.

The amount of assistance the Company received was $ 2.1 million and $ 3.3 million in the three months ended October 30, 2021 and October 31, 2020, respectively.

The Company received $ 4.0 million and $ 6.2 million in the six months ended October 30, 2021 and October 31, 2020, respectively.

The amount of assistance the Company received was $ 3.1 million and $ 2.7 million in the three months ended January 29, 2022 and January 30, 2021, respectively.

The Company received $ 7.1 million and $ 8.9 million in the nine months ended January 29, 2022 and January 30, 2021, respectively.

Government assistance has been reported as other income.

The Company assessed certain accounting matters that require consideration of forecasted financial information, including, but not limited to, its allowance for credit losses, the carrying value of the Company’s goodwill, identifiable intangible assets, and other long-lived assets, and its valuation allowances in context with the information reasonably available to the Company and the unknown future impacts of the COVID-19 pandemic as of October 30, 2021 and through the date of this report.

As a result of these assessments, the Company concluded that there were no impairments or material increases in credit allowances or valuation allowances that impacted the Company’s condensed consolidated financial statements as of October 30, 2021 and for the three and six months then ended.

The Company assessed certain accounting matters that require consideration of forecasted financial information, including, but not limited to, its allowance for credit losses, the carrying value of the Company’s goodwill, identifiable intangible assets, and other long-lived assets, and its valuation allowances in context with the information reasonably available to the Company and the unknown future impacts of the COVID-19 pandemic as of January 29, 2022 and through the date of this report.

As a result of these assessments, the Company concluded that there were no impairments or material increases in credit allowances or valuation allowances that impacted the Company’s condensed consolidated financial statements as of January 29, 2022 and for the three and nine months then ended.

However, the Company’s future assessment of the magnitude and duration of the COVID-19 pandemic, as well as other factors, could result in material impacts to its consolidated financial statements in future reporting periods.

11 unchanged sentences

The Company maintains its financial records on the basis of a 52- or 53-week fiscal year ending on the Saturday closest to April 30.

The three months ended October 30, 2021 and October 31, 2020 were both 13-week periods, and the six months ended October 30, 2021 and October 31, 2020 were both 26-week periods.

The three months ended January 29, 2022 and January 30, 2021 were both 13-week periods, and the nine months ended January 29, 2022 and January 30, 2021 were both 39-week periods.

Use of estimates

3 unchanged sentences

The Company’s significant accounting policies are described in Note 1, “Description of Business and Summary of Significant Accounting Policies,” to the consolidated financial statements included in the Company’s Form 10-K for the year ended May 1, 2021.

There have been no material changes to the significant accounting policies in the six months ended October 30, 2021 other than those noted below.

There have been no material changes to the significant accounting policies in the nine months ended January 29, 2022 other than those noted below.

Recently adopted accounting pronouncements

4 unchanged sentences

New accounting pronouncements not yet adopted

In November 2021, the FASB issued ASU 2021-10, “ Government Assistance (Topic 832) ,” which requires business entities to disclose information about transactions with a government that are accounted for by applying a grant or contribution model by analogy (for example, IFRS guidance in IAS 20 or guidance on contributions for not-for-profit entities in ASC 958-605).

In November 2021, the FASB issued ASU 2021-10, “ Government Assistance (Topic 832) ,” which requires business entities to disclose information about transactions with a government that are accounted for by applying a grant or contribution model by analogy (for example, International Financial Reporting Standards guidance in International Accounting Standard 20 or guidance on contributions for not-for-profit entities in ASC 958-605).

For transactions in the scope of the new standard, business entities will need to provide information about the nature of the transaction, including significant terms and conditions, as well as the amounts and specific financial statement line items affected by the transaction.

The new guidance is effective for all entities for annual reporting periods beginning after December 15, 2021.

however, early adoption is permitted.

The Company does not expect that the adoption of this standard will have an impact on its condensed consolidated financial statements;

17 unchanged sentences

A contract liability exists when an entity has received consideration, or the amount is due from the customer in advance of revenue recognition.

The net changes in the contract asset and contract liability balances for the three and six months ended October 30, 2021 and October 31, 2020 were not material.

The net changes in the contract asset and contract liability balances for the three and nine months ended January 29, 2022 and January 30, 2021 were not material.

Disaggregated revenue information

2 unchanged sentences

Though revenue recognition patterns and contracts are generally consistent, the amount, timing and uncertainty of revenue and cash flows may vary in each reportable segment due to geographic and economic factors.

Three Months Ended October 30, 2021

Three Months Ended January 29, 2022

(in millions)

6 unchanged sentences

Total net sales

Three Months Ended October 31, 2020

Three Months Ended January 30, 2021

(in millions)

6 unchanged sentences

Total net sales

Six Months Ended October 30, 2021

Nine Months Ended January 29, 2022

(in millions)

6 unchanged sentences

Total net sales

Six Months Ended October 31, 2020

Nine Months Ended January 30, 2021

(in millions)

7 unchanged sentences

Restructuring

The Company continually monitors market factors and industry trends and takes necessary actions to reduce overall costs and improve operational profitability.

The Company continually monitors market factors and industry trends and takes restructuring actions to reduce overall costs and improve operational profitability as appropriate.

Restructuring actions generally result in charges for employee termination benefits, plant closures, asset impairments and contract termination costs.

In the three months ended January 29, 2022, the Company initiated a restructuring plan to consolidate one of its operations within the Industrial segment in response to logistics issues and tariffs.

This action resulted in a facility shutdown and consolidation of activities into an existing location.

The Company recognized $ 3.1 million of restructuring costs, of which $ 1.2 million was recorded in cost of products sold and $ 1.9 million was recorded in selling and administrative expenses.

In the nine months ended January 29, 2022, the Company recognized $ 3.3 million of restructuring costs, of which $ 1.2 million was recorded in cost of products sold and $ 2.1 million was recorded in selling and administrative expenses.

In fiscal 2021, the Company initiated certain restructuring actions in response to the adverse impacts from the COVID-19 pandemic.

These actions included plant consolidations and workforce reductions in the Automotive, Industrial and Interface segments.

In the three months ended October 31, 2020, the Company recognized $ 4.2 million of restructuring costs, of which $ 2.7 million was recorded in cost of products sold and $ 1.5 million was recorded in selling and administrative expenses.

In the six months ended October 31, 2020, the Company recognized $ 7.6 million of restructuring costs, of which $ 4.6 million was recorded in cost of products sold and $ 3.0 million was recorded in selling and administrative expenses.

In the three months ended January 30, 2021, the Company recognized $ 0.7 million of restructuring costs, of which $ 0.4 million was recorded in cost of products sold and $ 0.3 million was recorded in selling and administrative expenses.

In the nine months ended January 30, 2021, the Company recognized $ 8.3 million of restructuring costs, of which $ 5.0 million was recorded in cost of products sold and $ 3.3 million was recorded in selling and administrative expenses.

Employee termination benefits are accrued upon the commitment to a termination plan and when the benefit arrangement is communicated to affected employees, or when liabilities are determined to be probable and estimable.

1 unchanged sentence

Contract termination costs are recorded when notification of termination is given to the other party.

The table below presents restructuring costs by reportable segment:

Three Months Ended October 31, 2020

The following is a rollforward of the Company’s restructuring activity for the nine months ended January 29, 2022:

(in millions)

Accrual as of

January 29, 2022

Employee termination benefits

1 unchanged sentence

Contract termination costs

Six Months Ended October 31, 2020

The table below presents restructuring costs by reportable segment:

Three Months Ended

Nine Months Ended

(in millions)

Employee termination benefits

Asset impairment charges

Contract termination costs

The Company’s restructuring liability was $ 0.2 million and $ 1.2 million as of October 30, 2021 and May 1, 2021, respectively.

January 29, 2022

January 30, 2021

January 29, 2022

January 30, 2021

Eliminations/Corporate

Total restructuring costs

The Company expects to incur an additional $ 0.2 million of severance costs prior to the end of fiscal 2022.

Estimates of restructuring costs are based on information available at the time such charges are recorded.

6 unchanged sentences

The estimates used to compute the provision or benefit for income taxes may change as new events occur, additional information is obtained or as the Company’s tax environment changes.

The Company’s income tax expense and effective tax rate for the three and six months ended October 30, 2021 and October 31, 2020 were as follows:

The Company’s income tax expense and effective tax rate for the three and nine months ended January 29, 2022 and January 30, 2021 were as follows:

Three Months Ended

Six Months Ended

Nine Months Ended

($ in millions)

October 30, 2021

October 31, 2020

October 30, 2021

October 31, 2020

January 29, 2022

January 30, 2021

January 29, 2022

January 30, 2021

Income before income taxes

1 unchanged sentence

Effective tax rate

The effective tax rate for the three and six months ended October 30, 2021 and three months ended October 31, 2020 was lower than the U.S.

statutory tax rate primarily due to income derived from foreign operations with lower statutory tax rates.

The effective tax rate for the six months ended October 31, 2020 was lower than the U.S.

The effective tax rate for the three and nine months ended January 29, 2022 was lower than the U.S.

statutory tax rate primarily due to the reversal of valuation allowances related to certain loss carryforwards and income derived from foreign operations with lower statutory tax rates.

The effective tax rate for the three months ended January 30, 2021 was lower than the U.S.

statutory tax rate primarily due to tax credits earned and income derived from foreign operations with lower statutory tax rates.

The effective tax rate for the nine months ended January 30, 2021 was lower than the U.S.

statutory tax rate primarily due to a benefit from tax credits earned and research deductions claimed in foreign jurisdictions and income derived from foreign operations with lower statutory tax rates.

The Company’s gross unrecognized income tax benefits were $ 5.3 million as of both October 30, 2021 and May 1, 2021.

The Company’s gross unrecognized income tax benefits were $ 5.3 million as of both January 29, 2022 and May 1, 2021.

If any portion of the Company’s unrecognized tax benefits is recognized, it would impact the Company’s effective tax rate.

1 unchanged sentence

The Company recognizes interest and penalties related to income tax uncertainties in income tax expense.

Accrued interest and penalties were $ 0.2 million as of both October 30, 2021 and May 1, 2021.

Accrued interest and penalties were $ 0.2 million as of both January 29, 2022 and May 1, 2021.

Balance Sheet Components

2 unchanged sentences

Highly liquid investments include money market funds which are classified within Level 1 of the fair value hierarchy.

As of October 30, 2021, the Company had a balance of $ 30.0 million in money market accounts.

As of January 29, 2022, the Company had a balance of $ 40.0 million in money market accounts.

The Company did not have any money market accounts as of May 1, 2021.

5 unchanged sentences

The Company may also record a specific reserve for individual accounts when it becomes aware of specific customer circumstances, such as in the case of a bankruptcy filing or deterioration in the customer’s operating results or financial position.

The allowance for doubtful accounts balance was $ 0.8 million and $ 0.7 million as of October 30, 2021 and May 1, 2021, respectively.

The allowance for doubtful accounts balance was $ 0.9 million and $ 0.7 million as of January 29, 2022 and May 1, 2021, respectively.

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

4 unchanged sentences

(in millions)

October 30, 2021

January 29, 2022

Finished products

8 unchanged sentences

(in millions)

October 30, 2021

January 29, 2022

Buildings and building improvements

4 unchanged sentences

Property, plant and equipment, net

Depreciation expense was $ 8.5 million and $ 7.6 million in the three months ended October 30, 2021 and October 31, 2020, respectively.

Depreciation expense was $ 16.3 million and $ 15.0 million in the six months ended October 30, 2021 and October 31, 2020, respectively.

As of October 30, 2021 and May 1, 2021, capital expenditures recorded in accounts payable totaled $ 2.9 million and $ 5.5 million, respectively.

Depreciation expense was $ 8.9 million and $ 8.7 million in the three months ended January 29, 2022 and January 30, 2021, respectively.

Depreciation expense was $ 25.2 million and $ 23.7 million in the nine months ended January 29, 2022 and January 30, 2021, respectively.

As of January 29, 2022 and May 1, 2021, capital expenditures recorded in accounts payable totaled $ 1.4 million and $ 5.5 million, respectively.

Pre-production tooling costs related to long-term supply arrangements

1 unchanged sentence

Engineering, testing and other costs incurred in the design and development of production parts are expensed as incurred, unless the costs are reimbursable by the customer.

As of October 30, 2021 and May 1, 2021, the Company had $ 30.1 million and $ 25.0 million, respectively, of pre-production tooling costs related to customer-owned tools for which reimbursement is contractually guaranteed by the customer or for which the customer has provided a non-cancelable right to use the tooling.

As of January 29, 2022 and May 1, 2021, the Company had $ 28.7 million and $ 25.0 million, respectively, of pre-production tooling costs related to customer-owned tools for which reimbursement is contractually guaranteed by the customer or for which the customer has provided a non-cancelable right to use the tooling.

Costs for molds, dies and other tools used in products produced for its customers under long-term supply arrangements for which the Company has title are capitalized in property, plant and equipment and amortized over the shorter of the life of the arrangement or over the estimated useful life of the assets.

As of October 30, 2021 and May 1, 2021, Company-owned tooling was $ 13.5 million and $ 17.0 million, respectively.

As of January 29, 2022 and May 1, 2021, Company-owned tooling was $ 13.3 million and $ 17.0 million, respectively.

Goodwill and Other Intangible Assets

3 unchanged sentences

Foreign currency translation

Balance as of October 30, 2021

Balance as of January 29, 2022

The Company tests indefinite-lived intangible assets and goodwill for impairment by either performing a qualitative evaluation or a quantitative test at least annually, or more frequently if an indication of impairment arises.

The qualitative evaluation is an assessment of factors to determine whether it is more likely than not that the fair value of a reporting unit or asset is less than its carrying amount.

No impairment indicators were identified in the second quarter of fiscal 2022.

Other i ntangible a ssets, n et

No impairment was recognized in the third quarter of fiscal 2022.

Other intangible assets, net

Details of identifiable intangible assets are shown below:

As of October 30, 2021

As of January 29, 2022

(in millions)

26 unchanged sentences

For a designated net investment hedge, the effective portion of the change in the fair value of the derivative financial instrument is recorded as a cumulative translation adjustment in AOCI in the condensed consolidated balance sheets.

Net i nvestment h edges

Net investment hedges

The Company has a variable-rate, cross-currency swap, maturing on August 31, 2023 , with a notional value of $ 60.0 million (€ 54.8 million).

3 unchanged sentences

Hedge effectiveness is assessed at the inception of the hedging relationship and quarterly thereafter, under the spot-to-spot method.

The Company recognizes the impact of all other changes in fair value of the derivative through interest expense, which was not material in either the three or six months ended October 30, 2021 or October 31, 2020.

The Company recognizes the impact of all other changes in fair value of the derivative through interest expense, which was not material in either the three or nine months ended January 29, 2022 or January 30, 2021.

Interest rate swaps

4 unchanged sentences

Subsequently, the accumulated gains and losses recorded in AOCI are reclassified to income in the period during which the hedged cash flow impacts earnings, which are expected to be immaterial over the next 12 months.

No ineffectiveness was recognized in the three or six months ended October 30, 2021.

No ineffectiveness was recognized in the three or nine months ended January 29, 2022.

Derivatives not designated as hedges

2 unchanged sentences

Gains and losses on these forward contracts are recognized in other income, net, along with the foreign currency gains and losses on monetary assets and liabilities in the condensed consolidated statements of income.

As of October 30, 2021 and May 1, 2021, the Company held foreign currency forward contracts with a notional value of $ 27.5 million and $ 14.8 million, respectively.

During the three and six months ended October 30, 2021, an immaterial gain was recognized in the condensed consolidated statements of income.

As of January 29, 2022 and May 1, 2021, the Company held foreign currency forward contracts with a notional value of $ 39.9 million and $ 14.8 million, respectively.

During the three and nine months ended January 29, 2022, the Company recognized a gain of $ 0.5 million and $ 0.7 million, respectively, related to foreign currency forward contracts in the condensed consolidated statements of income.

Fair value of derivative instruments on the balance sheet

3 unchanged sentences

Financial Statement Caption

October 30, 2021

January 29, 2022

Derivatives designated as hedging instruments:

7 unchanged sentences

Foreign currency forward contracts

Other current assets

Prepaid expenses and other current assets

Foreign currency forward contracts

Other accrued liabilities

Effect of derivative instruments on comprehensive income (loss)

1 unchanged sentence

Three Months Ended

Six Months Ended

Nine Months Ended

(in millions)

October 30, 2021

October 31, 2020

October 30, 2021

October 31, 2020

January 29, 2022

January 30, 2021

January 29, 2022

January 30, 2021

Net investment hedges

2 unchanged sentences

(in millions)

October 30, 2021

January 29, 2022

Revolving credit facility

9 unchanged sentences

For the Term Loan, the Company is required to make quarterly principal payments of 1.25 % of the original Term Loan ($ 3.1 million) through maturity, with the remaining balance due on September 12, 2023.

On December 10, 2021, the Company entered into a First Amendment to the Credit Agreement (“First Amendment”).

The First Amendment amended and restated the Credit Agreement to provide, among other things, that upon the occurrence of certain events, the interest rate calculation method will generally transition from the London Interbank Offered Rate (“LIBOR”) to an alternate reference rate, including the Secured Overnight Financing Rate (“SOFR”) for U.S.

dollar denominated borrowings.

Outstanding borrowings under the Credit Agreement bear interest at variable rates based on the type of borrowing and the Company’s debt to EBITDA financial ratio, as defined in the Credit Agreement.

The weighted-average interest rate on outstanding borrowings under the Credit Agreement was approximately 1.3 % as of October 30, 2021.

The weighted-average interest rate on outstanding borrowings under the Credit Agreement was approximately 1.4 % as of January 29, 2022.

The Credit Agreement contains customary representations and warranties, financial covenants, restrictive covenants and events of default.

As of October 30, 2021, the Company was in compliance with all the covenants in the Credit Agreement.

As of January 29, 2022, the Company was in compliance with all the covenants in the Credit Agreement.

One of the Company’s European subsidiaries has debt that consists of 5 notes with maturities ranging from 2022 to 2031.

The weighted-average interest rate on this debt was approximately 1.5 % at October 30, 2021 and $ 2.2 million of the debt was classified as short-term.

The weighted-average interest rate on this debt was approximately 1.3 % at January 29, 2022 and $ 0.7 million of the debt was classified as short-term.

Shareholders’ Equity

4 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

(in millions, except share and per share data)

October 30, 2021

October 31, 2020

October 30, 2021

October 31, 2020

January 29, 2022

January 30, 2021

January 29, 2022

January 30, 2021

Shares purchased

Average price per share

As of October 30, 2021, a total of 1,132,978 shares have been purchased at a total cost of $ 49.9 million since the commencement of the share buyback program.

As of January 29, 2022, a total of 1,593,139 shares have been purchased at a total cost of $ 71.2 million since the commencement of the share buyback program.

All purchased shares were retired and are reflected as a reduction of common stock for the par value of shares, with the excess applied as a reduction to retained earnings.

As of October 30, 2021, the dollar value of shares that remained available to be purchased by the Company under this share buyback program was approximately $ 50.1 million.

The Company paid dividends totaling $ 5.1 million and $ 4.1 million in the three months ended October 30, 2021 and October 31, 2020, respectively.

The Company paid dividends totaling $ 10.3 million and $ 9.1 million in the six months ended October 30, 2021 and October 31, 2020, respectively.

Dividends paid in the six months ended October 31, 2020 include $ 0.9 million of dividends on restricted stock that vested during the period.

As of January 29, 2022, the dollar value of shares that remained available to be purchased by the Company under this share buyback program was approximately $ 28.8 million.

The Company paid dividends totaling $ 5.1 million and $ 4.1 million in the three months ended January 29, 2022 and January 30, 2021, respectively.

The Company paid dividends totaling $ 15.4 million and $ 13.2 million in the nine months ended January 29, 2022 and January 30, 2021, respectively.

Dividends paid in the nine months ended January 30, 2021 include $ 0.9 million of dividends on restricted stock that vested during the period.

The Company increased its quarterly dividend from $0.11 per share to $0.14 per share beginning in the three months ended July 31, 2021.

2 unchanged sentences

A summary of changes in AOCI, net of tax is shown below:

Three Months Ended

Six Months Ended

Three Months Ended January 29, 2022

Nine Months Ended January 29, 2022

(in millions)

October 30, 2021

October 31, 2020

October 30, 2021

October 31, 2020

Currency Translation Adjustments

Derivative Instruments

Currency Translation Adjustments

Derivative Instruments

Balance at beginning of period

Other comprehensive (loss) income recognized during the period, net of tax (expense) benefit of $ 0.1 million;

$( 0.1 ) million;

$ 0.3 million

Balance at end of period

Derivative Financial Instruments:

Other comprehensive income (loss)

Tax (expense) benefit

Net other comprehensive income (loss)

Balance at the end of period

Three Months Ended January 30, 2021

Nine Months Ended January 30, 2021

(in millions)

Currency Translation Adjustments

Derivative Instruments

Currency Translation Adjustments

Derivative Instruments

Balance at beginning of period

Other comprehensive income (loss) recognized during the period, net of tax (expense) benefit of $( 0.6 ) million;

$( 0.2 ) million;

$( 0.8 ) million;

$ 0.8 million

Balance at end of period

Total accumulated other comprehensive loss

Other comprehensive income (loss)

Tax (expense) benefit

Net other comprehensive income (loss)

Balance at the end of period

Stock-based compensation

6 unchanged sentences

The number of shares of common stock originally authorized under the 2014 Plan is 3,000,000 .

As of October 30, 2021, there were 101,691 shares available for award under the 2014 Plan.

As of January 29, 2022, there were 101,632 shares available for award under the 2014 Plan.

Restricted stock awards and performance units

As of October 30, 2021, the Company had 928,412 RSAs outstanding which will be earned based on the achievement of an earnings before net interest, taxes, fixed asset depreciation and intangible asset amortization (“EBITDA”) measure for fiscal 2025.

As of January 29, 2022, the Company had 928,412 RSAs outstanding which will be earned based on the achievement of an earnings before net interest, taxes, fixed asset depreciation and intangible asset amortization (“EBITDA”) measure for fiscal 2025.

The RSAs will vest ranging from 0 % (for performance below threshold) to 100 % (target performance) based on the achievement of the EBITDA performance measure and continued employment.

3 unchanged sentences

Compensation expense for the RSAs is recognized when it is probable the minimum threshold performance criteria will be achieved.

Compensation expense for the PUs is recognized when it is probable that the target performance criteria will be achieved.

Compensation expense for the PUs is recognized when it is probable that the target performance criteria will be exceeded.

The Company assesses the probability of vesting at each balance sheet date and adjusts compensation costs based on the probability assessment.

1 unchanged sentence

The PUs are classified as liability awards due to the cash settlement feature and are re-measured at each balance sheet date.

In accordance with ASC 718, based on projections of the Company’s current business portfolio, compensation expense has not been recognized for the RSAs or PUs in the three or six months ended October 30, 2021 and October 31, 2020, as the performance conditions are not probable of being met.

Unrecognized stock-based compensation expense at target level of performance is $ 26.5 million as of October 30, 2021.

In accordance with ASC 718, based on projections of the Company’s current business portfolio, compensation expense has not been recognized for the RSAs or PUs in the three or nine months ended January 29, 2022, as the performance conditions are not probable of being met.

Unrecognized stock-based compensation expense at target level of performance is $ 26.5 million as of January 29, 2022, which, subject to the performance conditions being met, will be recognized through fiscal 2025.

Restricted stock units

6 unchanged sentences

Non-vested at May 1, 2021

Non-vested at October 30, 2021

Non-vested at January 29, 2022

Under the various stock plans, common stock underlying vested RSUs held by certain executives will not be delivered until termination of employment or a change of control of the Company.

As of October 30, 2021, common stock to be delivered to these executives totaled 577,055 shares.

As of January 29, 2022, common stock to be delivered to these executives totaled 577,055 shares.

Director awards

In the six months ended October 30, 2021 and October 31, 2020, the Company granted 32,505 shares and 33,000 shares, respectively, of common stock to its non-employee directors under the 2014 Plan.

The shares vested immediately upon grant.

The Company grants stock awards to its non-employee directors as a component of their compensation.

The stock awards vest immediately upon grant.

Non-employee directors may elect to defer receipt of their shares under the Company’s non-qualified deferred compensation plan.

In the six months ended October 30, 2021, a total of 17,730 shares were deferred.

The fair value of shares granted was determined based on the closing price of the Company’s stock on the date of grant.

Stock options

In the nine months ended January 29, 2022, the Company granted 32,505 shares, of which 17,730 shares were deferred.

All dividends on deferred shares are reinvested into additional deferred shares based on the closing price of the Company’s common stock on the dividend payment date.

Deferred shares will be settled with shares of common stock upon each director’s retirement from the Company’s Board of Directors.

As of January 29, 2022, there were 17,900 deferred shares outstanding.

Stock o ptions

The following table summarizes combined stock option activity under the 2010 Plan and 2007 Plan:

3 unchanged sentences

Outstanding and exercisable at May 1, 2021

Outstanding and exercisable at October 30, 2021

Outstanding and exercisable at January 29, 2022

The aggregate intrinsic value represents the total pre-tax intrinsic value (the difference between the Company’s closing stock price on the last trading day of the period and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on that date.

The total intrinsic value of options exercised in the six months ended October 30, 2021 was $ 0.2 million.

The total intrinsic value of options exercised in the nine months ended January 29, 2022 was $ 0.2 million.

Stock-based compensation expense

3 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

(in millions)

October 30, 2021

October 31, 2020

October 30, 2021

October 31, 2020

Phantom director awards

January 29, 2022

January 30, 2021

January 29, 2022

January 30, 2021

Deferred director awards

Director awards

5 unchanged sentences

Three Months Ended

Six Months Ended

October 30, 2021

October 31, 2020

October 30, 2021

October 31, 2020

Nine Months Ended

January 29, 2022

January 30, 2021

January 29, 2022

January 30, 2021

Net income (in millions)

18 unchanged sentences

The tables below present information about the Company’s reportable segments:

Three Months Ended October 30, 2021

Three Months Ended January 29, 2022

(in millions)

5 unchanged sentences

Income before income taxes

Three Months Ended October 31, 2020

Three Months Ended January 30, 2021

(in millions)

5 unchanged sentences

Income before income taxes

Six Months Ended October 30, 2021

Nine Months Ended January 29, 2022

(in millions)

5 unchanged sentences

Income before income taxes

Six Months Ended October 31, 2020

Nine Months Ended January 30, 2021

(in millions)

6 unchanged sentences

(in millions)

October 30, 2021

January 29, 2022

Identifiable assets:

24 unchanged sentences

On August 24, 2021, the Tenth Circuit issued a decision affirming the lower court’s ruling with the exception that it instructed the District Court to modify the injunction from the entire world to all of the countries in which Hetronic sells its products.

The District Court has indicated that it will set a hearing related to modifying the injunction pursuant to the Tenth Circuit’s opinion.

The defendants have filed a motion with the United States Supreme Court seeking a 60-day extension to late January 2022 to determine if they will seek certiorari and, if so, to file their petition.

The District Court set a hearing related to modifying the injunction pursuant to the Tenth Circuit’s opinion for April 19 and 20, 2022 .

The defendants filed a petition for certiorari with the United States Supreme Court seeking to further appeal the extraterritorial application of the Lanham Act in this case .

Hetronic intends to oppose that petition.

Like any judgment, particularly any judgment involving defendants outside of the United States, there is no guarantee that the Company will be able to collect the judgment.

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