STANDEX INTERNATIONAL CORP/DE/ 10-K

Item 8. Financial Statements and Supplementary Data   Standex International Corporation and Subsidiaries     Consolidated Balance Sheets   As of June 30 (in thousands, except share data)   2021     2020                     ASSETS                 Current assets:                 Cash and cash equivalents   $ 136,367     $ 118,809   Accounts receivable, net     109,883       98,157   Inventories     91,862       85,031   Prepaid expenses and other current assets     23,504       18,870   Income taxes receivable     12,750       8,194   Current assets-discontinued operations     -       2,936   Total current assets     374,366       331,997                     Property, plant and equipment, net     133,373       132,533   Intangible assets, net     98,929       106,412   Goodwill     278,054       271,221   Deferred tax asset     9,566       17,322   Operating lease right-of-use asset     37,276       44,788   Other non-current assets     30,659       26,605   Total non-current assets     587,857       598,881                     Total assets   $ 962,223     $ 930,878                     LIABILITIES AND STOCKHOLDERS' EQUITY                 Current liabilities:                 Accounts payable   $ 74,756     $ 54,910   Accrued liabilities     61,717       59,929   Income taxes payable     7,236       7,428   Current liabilities- discontinued operations     -       610   Total current liabilities     143,709       122,877                     Long-term debt     199,490       199,150   Operating lease long-term liabilities     29,041       36,293   Accrued pension and other non-current liabilities     83,558       110,926   Total non-current liabilities     312,089       346,369                     Contingencies (Note 12)                                       Stockholders' equity:                 Common stock, par value $1.50 per share - 60,000,000 shares authorized, 27,984,278 issued, 12,044,405 and 12,235,786 shares outstanding in 2021 and 2020     41,976       41,976   Additional paid-in capital     80,788       72,752   Retained earnings     852,489       827,656   Accumulated other comprehensive loss     ( 116,140 )     ( 147,659 ) Treasury shares ( 15,939,873 shares in 2021 and 15,748,492 shares in 2020)     ( 352,688 )     ( 333,093 ) Total stockholders' equity     506,425       461,632                     Total liabilities and stockholders' equity   $ 962,223     $ 930,878     See notes to consolidated financial statements.   35       Standex International Corporation and Subsidiaries   Consolidated Statements of Operations   For the Years Ended June 30                         (in thousands, except per share data)   2021     2020     2019   Net sales   $ 656,232     $ 604,535     $ 639,931   Cost of sales     ( 414,971 )     ( 389,080 )     ( 405,264 ) Gross profit     241,261       215,455       234,667                             Selling, general and administrative expenses     163,063       148,499       150,327   Restructuring costs     3,478       4,669       1,289   Loss on sale of business     14,624       -       -   Acquisition related expenses     931       1,759       3,075   Other operating (income) expense, net     -       -       500   Income from operations     59,165       60,528       79,476                             Interest expense     5,992       7,475       10,760   Other non-operating (income) expense, net     473       ( 1,021 )     1,742   Income from continuing operations before income taxes     52,700       54,074       66,974   Provision for income taxes     ( 14,157 )     ( 13,060 )     ( 18,688 ) Income from continuing operations     38,543       41,014       48,286                             Income (loss) from discontinued operations, net of tax     ( 2,070 )     ( 20,826 )     19,628                             Net income   $ 36,473     $ 20,188     $ 67,914                             Basic earnings per share:                         Income (loss) from continuing operations   $ 3.17     $ 3.33     $ 3.84   Income (loss) from discontinued operations     ( 0.17 )     ( 1.69 )     1.56   Total   $ 3.00     $ 1.64     $ 5.40                             Diluted earnings per share:                         Income (loss) from continuing operations   $ 3.14     $ 3.31     $ 3.83   Income (loss) from discontinued operations     ( 0.17 )     ( 1.68 )     1.55   Total   $ 2.97     $ 1.63     $ 5.38     See notes to consolidated financial statements.   36       Standex International Corporation and Subsidiaries   Consolidated Statements of Comprehensive Income   For the Years Ended June 30 (in thousands)   2021     2020     2019                             Net income   $ 36,473     $ 20,188     $ 67,914   Other comprehensive income (loss):                         Defined benefit pension plans:                         Actuarial gains (losses) and other changes in unrecognized costs, net of tax   $ 12,425     $ ( 6,864 )   $ ( 15,640 ) Amortization of unrecognized costs, net of tax     5,083       4,363       3,372   Derivative instruments:                         Change in unrealized gains and (losses), net of tax     3,041       ( 3,501 )     ( 1,995 ) Amortization of unrealized gains and (losses) into interest expense, net of tax     1,168       ( 991 )     1,489   Foreign currency translation gains (losses), net of tax     9,802       ( 3,388 )     ( 2,645 ) Other comprehensive income (loss), net of tax   $ 31,519     $ ( 10,381 )   $ ( 15,419 ) Comprehensive income   $ 67,992     $ 9,807     $ 52,495                                                         See notes to consolidated financial statements.   37   Standex International Corporation and Subsidiaries     Consolidated Statements of Stockholders' Equity                               Accumulated                                                       Other                                       Additional             Comprehensive                     Total   For the Years Ended June 30   Common     Paid-in     Retained     Income     Treasury Stock     Stockholders’   (in thousands, except as specified)   Stock     Capital     Earnings     (Loss)     Shares     Amount     Equity   Balance, June 30, 2018   $ 41,976     $ 61,328     $ 761,430     $ ( 121,859 )     15,279     $ ( 292,080 )   $ 450,795   Stock issued under incentive compensation plans and employee purchase plans     -       ( 163 )     -       -       ( 67 )     1,292       1,129   Stock-based compensation     -       4,350       -       -       -       -       4,350   Treasury stock acquired     -       -       -       -       438       ( 33,394 )     ( 33,394 ) Adoption of ASC 606     -       -       ( 1,107 )     -       -       -       ( 1,107 ) Comprehensive income:                                                         Net income     -       -       67,914       -       -       -       67,914   Foreign currency translation adjustment     -       -       -       ( 2,645 )     -       -       ( 2,645 ) Pension, net of tax of $3.7 million     -       -       -       ( 12,268 )     -       -       ( 12,268 ) Change in fair value of derivatives, net of tax of $0.7 million     -       -       -       ( 506 )     -       -       ( 506 ) Dividends declared ( $0.78 per share)     -       -       ( 9,955 )     -       -       -       ( 9,955 ) Balance, June 30, 2019   $ 41,976     $ 65,515     $ 818,282     $ ( 137,278 )     15,650     $ ( 324,182 )   $ 464,313   Stock issued under incentive compensation plans and employee purchase plans     -       211       -       -       ( 74 )     1,526       1,737   Stock-based compensation     -       7,026       -       -       -       -       7,026   Treasury stock acquired     -       -       -       -       172       ( 10,437 )     ( 10,437 ) Adoption of ASC 606     -       -       ( 55 )     -       -       -       ( 55 ) Comprehensive income:                                                         Net income     -       -       20,188       -       -       -       20,188   Foreign currency translation adjustment     -       -       -       ( 3,388 )     -       -       ( 3,388 ) Pension, net of tax of $0.9 million     -       -       -       ( 2,500 )     -       -       ( 2,500 ) Change in fair value of derivatives, net of tax of $1.6 million     -       -       -       ( 4,493 )     -       -       ( 4,493 ) Dividends declared ( $0.86 per share)     -       -       ( 10,759 )     -       -       -       ( 10,759 ) Balance, June 30, 2020   $ 41,976     $ 72,752     $ 827,656     $ ( 147,659 )     15,748     $ ( 333,093 )   $ 461,632   Stock issued under incentive compensation plans and employee purchase plans     -       ( 332 )     -       -       ( 76 )     1,605       1,273   Stock-based compensation     -       8,368       -       -       -       -       8,368   Treasury stock acquired     -       -       -       -       268       ( 21,200 )     ( 21,200 ) Comprehensive income:                                                         Net income     -       -       36,473       -       -       -       36,473   Foreign currency translation adjustment     -       -       -       9,802       -       -       9,802   Pension, net of tax of $5.6 million     -       -       -       17,508       -       -       17,508   Change in fair value of derivatives, net of tax of $0.9 million     -       -       -       4,209       -       -       4,209   Dividends declared ( $0.94 per share)     -       -       ( 11,640 )     -       -       -       ( 11,640 ) Balance, June 30, 2021   $ 41,976     $ 80,788     $ 852,489     $ ( 116,140 )     15,940     $ ( 352,688 )   $ 506,425     See notes to consolidated financial statements. 38     Standex International Corporation and Subsidiaries Consolidated Statements of Cash Flows For the Years Ended June 30 (in thousands)   2021     2020     2019   Cash Flows from Operating Activities                         Net income   $ 36,473     $ 20,188     $ 67,914   Income (loss) from discontinued operations     ( 2,070 )     ( 20,826 )     19,628   Income from continuing operations     38,543       41,014       48,286   Adjustments to reconcile net income (loss) to net cash provided by operating activities:                         Depreciation and amortization     33,241       32,294       29,288   Stock-based compensation     8,368       7,026       4,350   Non-cash portion of restructuring charge     ( 489 )     386       ( 329 ) Loss on sale of business     14,624       -       -   Gain from extinguishment of debt - PPP loan     ( 713 )     -       -   Deferred income taxes     836       5,635       ( 3,509 ) Life insurance benefit     -       ( 1,302 )     -   Increase/(decrease) in cash from changes in assets and liabilities, net of effects from discontinued operations and business acquisitions:                         Accounts receivables, net     ( 5,542 )     2,325       7,181   Inventories     ( 7,717 )     ( 9,050 )     7,203   Contributions to defined benefit plans     ( 8,120 )     ( 4,040 )     ( 1,359 ) Prepaid expenses and other assets     ( 8,000 )     ( 10,960 )     ( 14,271 ) Accounts payable     17,612       174       ( 2,074 ) Accrued liabilities, pension and other liabilities     4,920       2,342       6,105   Income taxes payable     ( 5,697 )     ( 11,167 )     ( 7,942 ) Net cash provided by operating activities from continuing operations     81,866       54,677       72,929   Net cash provided by (used for) operating activities from discontinued operations     1,716       ( 7,435 )     417   Net cash provided by operating activities     83,582       47,242       73,346   Cash Flows from Investing Activities                         Expenditures for property, plant and equipment     ( 21,752 )     ( 21,521 )     ( 32,507 ) Expenditures for acquisitions, net of cash acquired     ( 27,406 )     ( 622 )     ( 127,924 ) Expenditures for executive life insurance policies     ( 243 )     ( 281 )     ( 377 ) Proceeds from sale of business     11,678       -       -   Proceeds from sale of real estate and equipment     117       180       3,164   Other investing activity     ( 1,485 )     1,624       -   Net cash (used for) investing activities from continuing operations     ( 39,091 )     ( 20,620 )     ( 157,644 ) Net cash provided by investing activities from discontinued operations     -       20,003       107,973   Net cash provided by (used for) investing activities     ( 39,091 )     ( 617 )     ( 49,671 ) Cash Flows from Financing Activities                         Proceeds from borrowings     17,000       106,500       241,950   Payments of debt     ( 17,000 )     ( 105,300 )     ( 237,150 ) Contingent consideration payment     ( 356 )     ( 872 )     ( 910 ) Activity under share-based payment plans     1,273       1,738       1,129   Purchase of treasury stock     ( 21,200 )     ( 10,437 )     ( 33,394 ) Cash dividends paid     ( 11,449 )     ( 10,606 )     ( 9,826 ) Net cash (used for) financing activities     ( 31,732 )     ( 18,977 )     ( 38,201 ) Effect of exchange rate changes on cash     4,799       ( 1,984 )     ( 1,931 ) Net change in cash and cash equivalents     17,558       25,664       ( 16,457 ) Cash and cash equivalents at beginning of year     118,809       93,145       109,602   Cash and cash equivalents at end of year   $ 136,367     $ 118,809     $ 93,145                             Supplemental Disclosure of Cash Flow Information:                         Cash paid during the year for:                         Interest   $ 4,904     $ 6,324     $ 9,471   Income taxes, net of refunds   $ 17,185     $ 18,737     $ 23,969     See notes to consolidated financial statements. 39   Standex International Corporation and Subsidiaries   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS       1. Summary of Accounting Policies   Basis of Presentation and Consolidation   Standex International Corporation (“Standex” or the “Company”) is a diversified industrial manufacturer in five broad business segments: Electronics, Engraving, Scientific, Engineering Technologies, and Specialty Solutions with operations in the United States, Europe, Canada, Japan, Singapore, Mexico, Brazil, Turkey, South Africa, India, and China. The accompanying consolidated financial statements include the accounts of Standex International Corporation and its subsidiaries and are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). All intercompany accounts and transactions have been eliminated in consolidation.   The Company considers events or transactions that occur after the balance sheet date, but before the financial statements are issued to provide additional evidence relative to certain estimates or to identify matters that require additional disclosure. We evaluated subsequent events through the date and time our consolidated financial statements were issued.   Accounting Estimates   The preparation of consolidated financial statements in conformity with GAAP requires the use of estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities at the date of the financial statements and for the period then ended. Estimates are based on historical experience, actuarial estimates, current conditions and various other assumptions that are believed to be reasonable under the circumstances. These estimates form the basis for making judgments about the carrying values of assets and liabilities when they are not readily apparent from other sources. These estimates assist in the identification and assessment of the accounting treatment necessary with respect to commitments and contingencies. Actual results may differ from these estimates under different assumptions or conditions.  The estimates and assumptions used in the preparation of the consolidated financial statements have considered the implications on the Company as a result of the COVID- 19 pandemic and its related economic impacts. As a result of the COVID 19 pandemic, there is heightened volatility and uncertainty in customer demand and the worldwide economy. However, the magnitude of such impact on the Company’s business and its duration is uncertain. The Company is not aware of any specific event or circumstance that would require an update to its estimates or adjustments to the carrying value of its assets and liabilities as of June 30, 2021  and the issuance date of this Annual Report on Form 10 -K.   Cash and Cash Equivalents   Cash and cash equivalents include highly liquid investments purchased with a maturity of three months or less. These investments are carried at cost, which approximates fair value. At June 30, 2021  and 2020 , the C ompany’s cash was comprised solely of cash on deposit.   Trading Securities   The Company purchases investments for its non-qualified defined contribution plan for employees who exceed certain thresholds under our traditional 401 (k) plan. These investments are classified as trading and reported at fair value. The investments, generally consisting of mutual funds, are included in other non-current assets and amounted to $ 3.0 million at  June 30, 2021  and $ 2.1 million at June 30, 2020 . Gains and losses on these investments are recorded as other non-operating (income) expense, net in the Consolidated Statements of Operations.   Accounts Receivable Allowances   The Company has provided an allowance for credit losses.  All trade account receivables are reported net of allowances for expected credit losses. The allowances for expected credit losses represent management’s best estimate of the credit losses expected from our trade account receivables over the life of the underlying assets. Assets with similar risk characteristics are pooled together for determination of their current expected credit losses. The Company regularly performs detailed reviews of its pooled assets to evaluate the collectability of receivables based on a combination of past, current, and future financial and qualitative factors that may affect customers’ ability to pay. In circumstances where the Company is aware of a specific customer’s inability to meet its financial obligations, a specific reserve is recorded against amounts due to reduce the recognized receivable to the amount reasonably expected to be collected. 40     The changes in the allowances for credit losses accounts during 2021 , 2020 , and  2019 were as follows (in thousands):       2021     2020     2019   Balance at beginning of year     $ 2,113       $ 1,250       $ 1,590   Acquisitions and other     20       192       66   Provision charged to expense     605       824       (48)   Write-offs, net of recoveries     (1,150)       (153)       (358)   Balance at end of year     $ 1,588       $ 2,113       $ 1,250     Inventories   Inventories are stated at the lower of ( first -in, first -out) cost or market. Inventory quantities on hand are reviewed regularly, and write downs are made for obsolete, slow moving, and non-saleable inventory, based primarily on management’s forecast of customer demand for those products in inventory.   Long-Lived Assets   Long-lived assets that are used in operations, excluding goodwill and identifiable intangible assets, are tested for recoverability whenever events or changes in circumstances indicate that its carrying amount may not be recoverable. Recognition and measurement of a potential impairment loss is performed on assets grouped with other assets and liabilities at the lowest level where identifiable cash flows are largely independent of the cash flows of other assets and liabilities. An impairment loss is the amount by which the carrying amount of a long-lived asset (asset group) exceeds its estimated fair value. Fair value is determined based on discounted cash flows or appraised values, depending upon the nature of the assets.   Property, Plant and Equipment   Property, plant and equipment are reported at cost less accumulated depreciation. Depreciation is recorded on assets over their estimated useful lives, generally using the straight-line method. Lives for property, plant and equipment are as follows:   Buildings (years)   40 to 50   Leasehold improvements   Lesser of useful life or term, unless renewals are deemed to be reasonably assured   Machinery and equipment (years)   8 to 15   Furniture and fixtures (years)   3 to 10   Computer hardware and software (years)   3 to 7     Routine maintenance costs are expensed as incurred. Major improvements, including those made to leased facilities, are capitalized.   Leases    At the inception of an arrangement, we determined whether the arrangement is or contains a lease based on the unique facts and circumstances present in the arrangement. Leases with a term greater than  one  year are recognized on the balance sheet as right-of-use assets and short-term and long-term lease liabilities, as applicable. We do not  have material financing leases.   Operating lease liabilities and their corresponding right-of-use assets are initially recorded based on the present value of lease payments over the expected remaining lease term. The interest rate implicit in lease contracts is typically  not  readily determinable. As a result, we utilize our incremental borrowing rate to discount lease payments, which reflects the fixed rate at which we could borrow on a collateralized basis the amount of the lease payments in the same currency, for a similar term, in a similar economic environment. To estimate our incremental borrowing rate, a credit rating applicable to the Company is estimated using a synthetic credit rating analysis since we do not  currently have a rating agency-based credit rating.   We have elected  not  to recognize leases with an original term of  one  year or less on the balance sheet. We typically only include an initial lease term in our assessment of a lease arrangement. Options to renew a lease are  not  included in the Company’s assessment unless there is reasonable certainty that the Company will renew.   41       Goodwill and Identifiable Intangible Assets   All business combinations are accounted for using the acquisition method. Goodwill and identifiable intangible assets with indefinite lives are not amortized, but are reviewed annually for impairment or more frequently if impairment indicators arise. Definite lived identifiable intangible assets are amortized over the following useful lives:   Customer relationships (years)   5 to 15   Patents (years)   12       Non-compete agreements (years)   5       Other (years)   10       Developed technology (years)   10 to 20     Trade names are considered to have an indefinite life and are not amortized.    See discussion of the Company’s assessment of impairment in Note 6  – Goodwill and Note 7  – Intangible Assets.   Fair Value of Financial Instruments   The financial instruments, shown below, are presented at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Where available, fair value is based on observable market prices or parameters or derived from such prices or parameters. When observable prices or inputs are not available, valuation models may be applied.   Assets and liabilities recorded at fair value in the consolidated balance sheet are categorized based upon the level of judgment associated with the inputs used to measure their fair values. Hierarchical levels directly related to the amount of subjectivity associated with the inputs to fair valuation of these assets and liabilities and the methodologies used in valuation are as follows:   Level 1 – Quoted prices (unadjusted) in active markets for identical assets and liabilities. The Company’s deferred compensation plan assets consist of shares in various mutual funds (for the deferred compensation plan, investments are participant-directed) which invest in a broad portfolio of debt and equity securities. These assets are valued based on publicly quoted market prices for the funds’ shares as of the balance sheet dates. For pension assets (see Note 16 – Employee Benefit Plans), securities are valued based on quoted market prices for securities held directly by the trust.   Level 2 – Inputs, other than quoted prices in an active market, that are observable either directly or indirectly through correlation with market data. For foreign exchange forward contracts and interest rate swaps, the Company values the instruments based on the market price of instruments with similar terms, which are based on spot and forward rates as of the balance sheet dates. For pension assets held in commingled funds (see Note 16 – Employee Benefit Plans), the Company values investments based on the net asset value of the funds, which are derived from the quoted market prices of the underlying fund holdings. The Company has considered the creditworthiness of counterparties in valuing all assets and liabilities.   Level 3 – Unobservable inputs based upon the Company’s best estimate of what market participants would use in pricing the asset or liability.   The Company did not have any transfers of assets and liabilities among levels of the fair value measurement hierarchy during the years ended June 30, 2021 or 2020 .  The Company’s policy is to recognize transfers between levels as of the date they occur.   Cash and cash equivalents, accounts receivable, accounts payable and debt are carried at cost, which approximates fair value.   42     The fair values of our financial instruments at June 30, 2021 and 2020 were (in thousands):       2021       Total     Level 1     Level 2     Level 3   Financial Assets                                 Marketable securities - deferred compensation plan   $ 2,988     $ 2,988     $ -     $ -   Foreign exchange contracts     255       -       255       -                                     Financial Liabilities                                 Foreign exchange contracts   $ 1,222     $ -     $ 1,222     $ -   Interest rate swaps     3,096       -       3,096       -   Contingent consideration (a)     3,333       -       -       3,333         2020       Total     Level 1     Level 2     Level 3   Financial Assets                                 Marketable securities - deferred compensation plan   $ 2,065     $ 2,065     $ -     $ -   Interest rate swaps     -       -       -       -                                     Financial Liabilities                                 Foreign exchange contracts   $ 2,477     $ -     $ 2,477     $ -   Interest rate swaps     6,667       -       6,667       -   Contingent consideration(a)     1,343       -       -       1,343     (a) The fair value of our contingent consideration arrangement is determined based on our evaluation as to the probability and amount of any deferred compensation that has been earned to date.   The Company’s financial liabilities based upon Level 3 inputs include contingent consideration arrangements relating to its acquisition of Piazza Rosa, GS Engineering, and Renco Electronics. The Company is contractually obligated to pay contingent consideration payments to the Sellers of these businesses based on the achievement of certain criteria.    The Company is contractually obligated to pay contingent consideration payments in connection with the Piazza Rosa acquisition based on the achievement of certain revenue targets during each of the  first   three  years following acquisition. Contingent acquisition payments were payable in euros and could be paid in periods through fiscal year 2021.  Piazza Rosa exceeded the defined revenue targets during the  first  and  second  years and payments were made to the Piazza Rosa sellers during the  first  quarter of fiscal year  2019  and the  second  quarter of fiscal year  2020. The final revenue target was not achieved in the second quarter of fiscal year 2021. This obligation is considered settled as of December 31, 2020.   The Company is also obligated to pay contingent consideration to the sellers of GS Engineering in the event that certain revenue and gross margin targets are achieved during the five years following acquisition. The targets set in the GS stock purchase agreement were not met for the first or second year, which concluded in the fourth quarter of fiscal years 2020 and 2021, respectively.  As of June 30, 2021, the Company could be required to pay up to $ 12.8 million for contingent consideration arrangements if the revenue and gross margin targets are met in fiscal years 2022  through 2024.   The Company is also obligated to pay contingent consideration to the sellers of Renco Electronics in the event that certain earnings targets are achieved during the three years following acquisition. Contingent acquisition payments are scheduled to be paid in periods through fiscal year 2024. As of June 30, 2021, the Company could be required to pay up to $ 3.5 million for contingent consideration arrangements if the earnings targets are met. During the first quarter of fiscal year 2022, the Company paid $ 1.2 million to the sellers as Renco exceeded the defined revenue targets during the first year of the measurement period.   The Company has determined the fair value of the liabilities for the contingent consideration based on a probability-weighted discounted cash flow analysis. This fair value measurement is based on significant inputs not observable in the market and thus represents a Level 3 measurement within the fair value hierarchy. The fair value of the contingent consideration liability associated with future payments was based on several factors, the most significant of which are the financial performance of the acquired businesses and the risk-adjusted discount rate for the fair value measurement.     43       The Company will update its assumptions each reporting period based on new developments and record such amounts at fair value based on the revised assumptions until the agreements expire.    Concentration of Credit Risk   The Company is subject to credit risk through trade receivables. Concentration of risk with respect to trade receivables is minimized because of the diversification of our operations, as well as our large customer base and our geographical dispersion. No individual customer accounts for more than 5 % of revenues or accounts receivable in the periods presented.   Revenue Recognition   In general, the Company recognizes revenue at the point in time control transfers to its customer based on predetermined shipping terms. Revenue is recognized over time under certain long-term contracts within the Engineering Technologies and Engraving groups for highly customized customer products that have no alternative use and in which the contract specifies the Company has a right to payment for its costs, plus a reasonable margin. For products manufactured over time, the transfer of control is measured pro rata, based upon current estimates of costs to complete such contracts. Losses on contracts are fully recognized in the period in which the losses become determinable. Revisions in profit estimates are reflected on a cumulative basis in the period in which the basis for such revision becomes known.   Cost of Goods Sold and Selling, General and Administrative Expenses   The Company includes expenses in either cost of goods sold or selling, general and administrative categories based upon the natural classification of the expenses. Cost of goods sold includes expenses associated with the acquisition, inspection, manufacturing and receiving of materials for use in the manufacturing process. These costs include inbound freight charges, purchasing and receiving costs, inspection costs, internal transfer costs as well as depreciation, amortization, wages, benefits and other costs that are incurred directly or indirectly to support the manufacturing process. Selling, general and administrative includes expenses associated with the distribution of our products, sales effort, administration costs and other costs that are not incurred to support the manufacturing process. The Company records distribution costs associated with the sale of inventory as a component of selling, general and administrative expenses in the Consolidated Statements of Operations. These expenses include warehousing costs, outbound freight charges and costs associated with salaried distribution personnel. Our gross profit margins may not be comparable to those of other entities due to different classifications of costs and expenses.    Our total advertising expenses, which are classified under selling, general, and administrative expenses are primarily related to trade shows, and totaled $ 1.7  million, $ 1.3  million, a nd $ 2.5  million for the years ended June 30, 2021 , 2020 , and 2019 , respectively.   Research and Development   Research and development expenditures are expensed as incurred. Total research and development costs, which are classified under selling, general, and administrative expenses, were $ 9.6 million, $ 6.9  million, and $ 6.3 million for the years ended June  30, 2021 , 2020 , and 2019 , respectively.   Warranties   The expected cost associated with warranty obligations on our products is recorded when the revenue is recognized. The Company’s estimate of warranty cost is based on contract terms and historical warranty loss experience that is periodically adjusted for recent actual experience. Since warranty estimates are forecasts based on the best available information, claims costs may differ from amounts provided. Adjustments to initial obligations for warranties are made as changes in the obligations become reasonably estimable.   44     The changes in the continuing operations warranty reserve, which are recorded as accrued liabilities, during 2021 , 2020 , and  2019 were as follows (in thousands):       2021     2020     2019   Balance at beginning of year   $ 1,781     $ 1,911     $ 1,849   Acquisitions and other charges     68       ( 86 )     ( 85 ) Warranty expense     2,007       1,783       2,346   Warranty claims     ( 1,770 )     ( 1,827 )     ( 2,199 ) Balance at end of year   $ 2,086     $ 1,781     $ 1,911     The increase in warranty expense during 2021  compared to 2020 is primarily due to increased claim experience in Scientific primarily as a result of sales volume increases during the most recent fiscal year.   Stock-Based Compensation Plans   Restricted stock awards, including performance based awards, generally vest over terms from one to three years. Compensation expense associated with these awards is recorded based on their grant-date fair value and is generally recognized on a straight-line basis over the vesting period. Compensation cost for an award with a performance condition is based on the probable outcome of that performance condition. The stated vesting period is considered non-substantive for retirement eligible participants. Accordingly, the Company recognizes any remaining unrecognized compensation expense upon participant reaching retirement eligibility.   Foreign Currency Translation   The functional currency of our non-U.S. operations is the local currency. Assets and liabilities of non-U.S. operations are translated into U.S. Dollars on a monthly basis using period-end exchange rates. Revenues and expenses of these operations are translated using monthly average exchange rates. The resulting translation adjustment is reported as a component of comprehensive income (loss) in the consolidated statements of stockholders’ equity and comprehensive income. Gains and losses from foreign currency transactions are included in results of operations and were not material for any period presented.   Derivative Instruments and Hedging Activities   The Company recognizes all derivatives on its balance sheet at fair value.   Forward foreign currency exchange contracts are periodically used to limit the impact of currency fluctuations on certain anticipated foreign cash flows, such as foreign purchases of materials and loan payments from subsidiaries. The Company enters into such contracts for hedging purposes only. The Company has designated certain of these currency contracts as hedges, and changes in the fair value of these contracts are recognized in other comprehensive income until the hedged items are recognized in earnings. Hedge ineffectiveness, if any, associated with these contracts will be reported in net income.    The Company also uses interest rate swaps to manage exposure to interest rates on the Company’s variable rate indebtedness. The Company values the swaps based on contract prices in the derivatives market for similar instruments. The Company has designated its interest rate swap agreements, including any that may be forward-dated, as cash flow hedges, and changes in the fair value of the swaps are recognized in other comprehensive income until the hedged items are recognized in earnings. Hedge ineffectiveness, if any, associated with the swaps will be reported by the Company in interest expense.   The Company does not hold or issue derivative instruments for trading purposes.   Income Taxes   On December 22, 2017, the Tax Cuts and Jobs Act (the “Act” or “TCJA”) was passed which, among other things, reduces the federal corporate tax rate to 21.0% effective for taxable years starting on or after January 1, 2018.  For the years ended June 30, 2021  and 2020 , and 2019 the Company recorded federal taxes using a federal rate of 21.0 %.    The provision for fiscal year ending June 30, 2021 ,  2020   and 2019 was impacted by several law changes implemented by the Act such as the interest deduction limitation and Global Intangible Low Taxed Income (GILTI).  As allowed under U.S. GAAP, the Company has elected to treat any taxes due on future U.S. inclusions in taxable income under the GILTI provision as a current-period expense when incurred.  The Company will continue to monitor guidance regarding these changes and their impact on the financial statements in later periods.    45   The Company's income tax provision from continuing operations for the fiscal years ended June 30, 2021 , 2020 , and  2019 was $ 14.2  million, $ 13.1  million, and $ 18.7  million, respectively, or an effective rate of 26.9 %,  24.3 %, and 27.9 %, respectively. Changes in the effective tax rates from period to period may be significant as they depend on many factors including, but not limited to, the amount of the Company's income or loss, the mix of income earned in the US versus outside the US, the effective tax rate in each of the countries in which we earn income, and any one -time tax issues which occur during the period.   The Company's income tax provision from continuing operations for the fiscal year ended June 30, 2021 was impacted by the following items: (i) a tax provision of $ 5.1 million due to the mix of income in various jurisdictions, (ii) a tax benefit of $ 1.0 million from our 2019 and 2020 tax losses that the CARES Act allows to be carried back to 2014 and 2015, when the U.S. federal income tax rate was 35%, (iii) a tax benefit of $ 0.8 million related to Federal R&D credit and Foreign Tax Credit, (iv) a tax benefit of $ 1.7 million related to return to provision adjustments, and (v) the tax expense of $ 1.2 million attributable to the divestiture of the Enginetics Corporation during the year.   The Company's income tax provision from continuing operations for the fiscal year ended June 30, 2020 was impacted by the following items: (i) a tax benefit of $ 1.2 million related to the Federal R&D credit, (ii) a tax provision of $ 1.4 million due to the mix of income in various jurisdictions, (iii) a tax benefit of $ 0.7 million related to the release of uncertain tax provision reserves, and (iv) a tax provision of $ 0.8 million related to GILTI.   The Company's income tax provision from continuing operations for the fiscal year ended June 30, 2019 was impacted by the following items: (i) a tax benefit related to the impact of the Sec. 965 toll tax of $ 0.8 million, (ii) a tax provision of $ 0.3 million related to the elimination of the performance based compensation exception for executive compensation under Sec. 162 (m) of the Internal Revenue Code, and (iii) a tax provision related to expected foreign withholding taxes on cash repatriation of $ 2.1 million.   Earnings Per Share   (share amounts in thousands)   2021     2020     2019   Basic – Average Shares Outstanding     12,156       12,324       12,574   Effect of Dilutive Securities – Stock Options and Restricted Stock Awards     102       63       59   Diluted – Average Shares Outstanding     12,258       12,387       12,633     Both basic and diluted income is the same for computing earnings per share.  There were no outstanding instruments that had an anti-dilutive effect at June 30,2021. There were  32,000  outstanding instruments that had an anti-dilutive effect at June 30,  2020 . There were no outstanding instruments that had an anti-dilutive effect at June 30,   2019 .   Recently Issued Accounting Pronouncements   In  March 2020,  the FASB issued ASU  2020 - 04 ,   Facilitation of the Effects of Reference Rate Reform on Financial Reporting . The ASU provides optional expedients and exceptions for applying generally accepted accounting principles to contract modifications and hedging relationships, subject to meeting certain criteria, that reference LIBOR or another reference rate expected to be discontinued. ASU  2020 - 04  is effective for all entities as of  March 12, 2020  through  December 31, 2022.  The Company is currently assessing the potential impact of the adoption of ASU  2020 - 04  on our consolidated financial statements.   In June 2016, the FASB issued ASU 2016 - 13, Financial Instruments – Credit Losses (Topic 326 ): Measurement of Credit Losses on Financial Instruments , which modifies the measurement approach for credit losses on financial assets measured on an amortized cost basis from an “incurred loss” method to “an expected loss” method. In  November 2019, the FASB issued ASU 2019 - 11, Codification Improvements to Topic 326, Financial Instruments – Credit Losses . ASU 2019 - 11 is an accounting pronouncement that amends ASU 2016 - 13. This amendment provides clarity and improves the codification to ASU 2016 - 13. The pronouncements are concurrently effective for fiscal years beginning after  December 15, 2019 and interim periods therein. The Company adopted ASU 2016 - 13 in fiscal year 2021.  The adoption did not have a material impact on the consolidated financial statements.   As a result of the adoption of ASU 2016 - 13, the Company has updated its critical accounting policy related to trade account receivables and allowances for credit losses. See  Accounts Receivable Allowances  above.      2. Acquisitions   The Company’s recent acquisitions are strategically significant to the future growth prospects of the Company.  At the time of the acquisition and June 30, 2021 , the Company evaluated the significance of each acquisition on a standalone basis and in aggregate, considering both qualitative and quantitative factors.   46   Renco Electronics   During the first quarter of fiscal year 2021, the Company acquired Renco Electronics, a designer and manufacturer of customized standard magnetics components and products including transformers, inductors, chokes and coils for power and RF applications.  Renco’s end markets and customer base in areas such as consumer and industrial applications are highly complementary to our existing business with the potential to further expand key account relationships and capitalize on cross selling opportunities between the two companies.  Renco operates one manufacturing facility in Florida and is supported by contract manufacturers in Asia. Renco’s results are reported within our Electronics segment.   The Company paid $ 27.4 million in cash for all of the issued and outstanding equity interests of Renco Electronics. The preliminary purchase price was allocated to the net tangible and identifiable intangible assets acquired and liabilities assumed based on a preliminary estimate of their fair values on the closing date.  The Company commenced a formal valuation of the acquired assets and liabilities and have updated the preliminary intangible assets based on the final valuation results. Goodwill recorded from this transaction is attributable to Renco’s significant engineering and technical expertise in end markets supported by strong engineer-to-engineer relationships. In addition, Renco’s end markets and customer base in areas such as consumer and industrial are highly complementary to the Company’s existing business.   Intangible assets of $ 10.4 million consist primarily of $ 3.6 million for indefinite lived tradenames, and $ 6.8 million of customer relationships to be amortized over 12 years. The goodwill of $ 14.0 million created by the transaction is deductible for income tax purposes. Allocations of the purchase price for acquisitions are based on estimates of the fair value of the net assets acquired and are subject to adjustment upon the finalization of the purchase price allocations. The accounting for business combinations requires estimates and judgments regarding expectations for future cash flows of the acquired business, and the allocations of those cash flows to identifiable tangible and intangible assets, in determining the assets acquired and liabilities assumed. The fair values assigned to tangible and intangible assets acquired and liabilities assumed, including contingent consideration, are based on management’s best estimates and assumptions, as well as other information compiled by management, including valuations that utilize customary valuation procedures and techniques.    In connection with the acquisition, the Company entered into two lease arrangements and recorded right-of-use assets and short-term and long-term liabilities at inception. The Company signed a new lease agreement with a related party, an entity in which the Renco Electronics President is a shareholder, on July 15, 2020. The lease is for three years and is subject to renewal, at the Company’s option under similar terms and conditions. The Company recorded a fair value adjustment of $ 0.1 million in connection with this lease, which is included in other acquired assets in the table below. The Company recorded right of use assets of $ 3.3 million, current lease liabilities of $ 1.8 million and non-current lease liabilities of $ 1.5 million, related to two operating leases in connection with the acquisition of Renco. Renco does not have material financing leases. The components of the fair value of the Renco Electronics acquisition, including the final allocation of the purchase price at June 30, 2021 , are as follows (in thousands):                                 Preliminary Allocation September 30, 2020     Adjustments     Final Allocation   Fair value of business combination:                         Cash payments   $ 29,530     $ 83     $ 29,613   Less, cash acquired     ( 2,132 )     ( 75 )     ( 2,207 ) Fair value of contingent consideration     3,000       -       3,000   Total   $ 30,398     $ 8     $ 30,406                                                       Identifiable assets acquired and liabilities assumed:                         Other acquired assets   $ 4,762     $ ( 240 )   $ 4,522   Inventories     5,446       -       5,446   Property, plant, & equipment     -       410       410   Identifiable intangible assets     10,400       -       10,400   Goodwill     14,153       ( 162 )     13,991   Debt assumed     ( 712 )     -       ( 712 ) Liabilities assumed     ( 3,651 )     -       ( 3,651 ) Total   $ 30,398     $ 8     $ 30,406     47     GS Engineering   During the fourth quarter of fiscal year 2019, the Company acquired Ohio-based Genius Solutions Engineering Company (d/b/a GS Engineering). The privately held company is a provider of specialized “soft surface” skin texturized tooling. GS Engineering primarily serves the automotive end market and its' operating results are included in the Company’s Engraving segment.   The Company paid $ 30.5 million in cash for all of the issued and outstanding equity interests of GS Engineering. The purchase price was allocated to the net tangible and identifiable intangible assets acquired and liabilities assumed based on the fair values on the closing date. Goodwill from the transaction is attributable to the combined organization utilizing the GS technology across its global production footprint to enable customers worldwide to benefit from a combined offering for harmonized designs across a variety of surfaces and materials.   Intangible assets of $ 9.1 million are recorded, consisting of $ 5.6 million for developed technology to be amortized over a period of 15 years, $ 0.9 million for indefinite lived trademarks, and $ 2.6 million of customer relationships to be amortized over 12 years. The goodwill of $ 15.5  million created by the transaction is deductible for income tax purposes.   The components of the fair value of the GS Engineering acquisition, including the final allocation of the purchase price at June 30, 2020, are as follows (in thousands):       Preliminary Allocation                       June 30, 2019     Adjustments     Final Allocation   Fair value of business combination:                         Cash payments   $ 30,002       780     $ 30,782   Less, cash acquired     ( 622 )     ( 158 )     ( 780 ) Fair value of contingent consideration     500       -       500   Total   $ 29,880     $ 622     $ 30,502                                                       Identifiable assets acquired and liabilities assumed:                         Other acquired assets   $ 2,197     $ ( 679 )   $ 1,518   Inventories     228       168       396   Customer Backlog     180       ( 180 )     -   Property, plant, and equipment     1,391       3,179       4,570   Identifiable intangible assets     8,910       200       9,110   Goodwill     17,976       ( 2,518 )     15,458   Liabilities assumed     ( 1,002 )     452       ( 550 ) Total   $ 29,880     $ 622     $ 30,502     Agile Magnetics   On the last business day of the first quarter of fiscal year 2019, the Company acquired Regional Mfg. Specialists, Inc. (now named Agile Magnetics).  The New Hampshire based, privately held company is a provider of high-reliability magnetics to customers in the semiconductor, military, aerospace, healthcare, and general industrial industries.  The Company included the results of Agile in its Electronics segment in the consolidated financial statements.   The Company paid $ 39.2 million in cash for all of the issued and outstanding equity interests of Agile.  The purchase price was allocated to the net tangible and identifiable intangible assets acquired and liabilities assumed based on the fair values on the closing date.  Goodwill recorded from this transaction is attributable to expanded capabilities of the combined organization which will allow for improved responsiveness to customer demands via a larger pool of engineering resources and local manufacturing.    Intangible assets of $ 17.4 million are recorded, consisting of $ 13.5 million of customer relationships to be amortized over a period of 13 years, $ 3.8 million for indefinite lived trademarks, and $ 0.1 million for a non-compete arrangement to be amortized over 5 years. The goodwill of $ 16.4 million recorded in connection with the transaction is deductible for income tax purposes.     48      The components of the fair value of the Agile acquisition, including the final allocation of the purchase price are as follows (in thousands):         Preliminary Allocation September 30, 2019     Adjustments     Final Allocation   Fair value of business combination:                         Cash payments   $ 39,194     $ -     $ 39,194   Less, cash acquired     ( 1 )     -       ( 1 ) Total   $ 39,193     $ -     $ 39,193           Preliminary Allocation September 30, 2019     Adjustments     Final Allocation   Identifiable assets acquired and liabilities assumed:                         Other acquired assets   $ 1,928     $ ( 35 )   $ 1,893   Inventories     2,506       268     $ 2,774   Customer Backlog     -       200     $ 200   Property, plant, & equipment     1,318       ( 348 )   $ 970   Identifiable intangible assets     13,718       3,632     $ 17,350   Goodwill     20,142       ( 3,708 )   $ 16,434   Liabilities assumed     ( 419 )     ( 9 )   $ ( 428 ) Total   $ 39,193     $ -     $ 39,193     Tenibac-Graphion Inc.   During August of fiscal year 2019, the Company acquired Tenibac-Graphion Inc. (“Tenibac”).  The Michigan based privately held company is a provider of chemical and laser texturing services for the automotive, medical, packaging, and consumer products markets.  The Company included the results of Tenibac in its Engraving segment in the condensed consolidated financial statements.   The Company paid $ 57.3 million in cash for all of the issued and outstanding equity interests of Tenibac.  The purchase price was allocated to the net tangible and identifiable intangible assets acquired and liabilities assumed based on their fair values on the closing date.  Goodwill recorded from this transaction is attributable to the complimentary services that the combined business can now offer to customers, through increased responsiveness to customer demands, and providing innovative approaches to solving customer needs by offering a full line of mold and tool services to customers.    Intangible assets of $ 16.9 million are recorded, consisting of $ 11.3 million of customer relationships to be amortized over a period of 15  years, $ 4.2 million for indefinite lived trademarks, and $ 1.4 million of other intangibles assets to be amortized over 5 years.  The Company’s assigned fair values are final as of June  30, 2019. The goodwill of $ 34.4  million created by the transaction is deductible for income tax purposes.   49   The components of the fair value of the Tenibac acquisition, including the final allocation of the purchase price are as follows (in thousands):       Preliminary Allocation September 30, 2019     Adjustments     Final Allocation                             Fair value of business combination:                         Cash payments   $ 57,284     $ -     $ 57,284   Less cash acquired     ( 558 )     -       ( 558 ) Total   $ 56,726     $ -     $ 56,726         Preliminary Allocation September 30, 2019     Adjustments     Final Allocation   Identifiable assets acquired and liabilities assumed:                         Other acquired assets   $ 5,023     $ ( 1,253 )   $ 3,770   Inventories     324       -       324   Customer backlog     1,000       ( 800 )     200   Property, plant, & equipment     2,490       ( 19 )     2,471   Identifiable intangible assets     15,960       900       16,860   Goodwill     32,949       1,411       34,360   Liabilities assumed     ( 1,020 )     ( 239 )     ( 1,259 ) Total   $ 56,726     $ -     $ 56,726     Acquisition-Related Costs   Acquisition-related costs include costs related to acquired businesses and other pending acquisitions.  These costs consist of (i) deferred compensation and (ii) acquisition-related professional service fees and expenses, including financial advisory, legal, accounting, and other outside services incurred in connection with acquisition activities, and regulatory matters related to acquired entities.  These costs do not include purchase accounting expenses, which the Company define as acquired backlog and the step-up of inventory to fair value, or the amortization of the acquired intangible assets.   Deferred compensation costs relate to payments due to the Horizon Scientific seller of $ 2.8  million on the second anniversary and $ 5.6 million on the third anniversary of the closing date of the purchase.  For the fiscal years ended June 30, 2020 and 2019, the Company recorded deferred compensation costs of $ 1.2 million and $ 2.8 million, respectively, related to estimated deferred compensation earned by the Horizon Scientific seller to date.  The payments were contingent on the seller remaining an employee of the Company, with limited exceptions, at each anniversary date. The final payment due to the seller was made during the second quarter of fiscal year 2020, and this liability is considered settled.    Acquisition related costs consist of miscellaneous professional service fees and expenses for our recent acquisitions.   The components of acquisition-related costs are as follows (in thousands):       June 30,     June 30,     June 30,       2021     2020     2019   Deferred compensation arrangements   $ -     $ 1,170     $ 2,810   Acquisition-related costs     931       589       265   Total   $ 931     $ 1,759     $ 3,075       3. REVENUE FROM CONTRACTS WITH CUSTOMERS   Most of the Company’s contracts have a single performance obligation which represents the product or service being sold to the customer. Some contracts include multiple performance obligations such as a product and the related installation and/or extended warranty. Additionally, most of the Company’s contracts offer assurance type warranties in connection with the sale of a product to customers. Assurance type warranties provide a customer with assurance that the product complies with agreed-upon specifications. Assurance type warranties do not represent a separate performance obligation.   50   In general, the Company recognizes revenue at the point in time control transfers to its customer based on predetermined shipping terms. Revenue is recognized over time under certain long-term contracts within the Engineering Technologies and Engraving groups for highly customized customer products that have no alternative use and in which the contract specifies the Company has a right to payment for its costs, plus a reasonable margin. For products manufactured over time, the transfer of control is measured pro rata, based upon current estimates of costs to complete such contracts. Losses on contracts are fully recognized in the period in which the losses become determinable. Revisions in profit estimates are reflected on a cumulative basis in the period in which the basis for such revision becomes known.   Disaggregation of Revenue from Contracts with Customers   The following table presents revenue disaggregated by product line and segment (in thousands):       Year Ended   Revenue by Product Line   June 30, 2021     June 30, 2020     June 30, 2019   Electronics     253,369       185,294       204,073                             Engraving Services     137,159       132,586       139,769   Engraving Products     9,857       11,150       9,924   Total Engraving     147,016       143,736       149,693                             Scientific     79,421       57,523       57,621                             Engineering Technologies     75,562       104,047       105,270                             Hydraulics Cylinders and System     48,776       51,722       53,943   Merchandising & Display     26,049       31,488       34,532   Pumps     26,039       30,725       34,799   Total Specialty Solutions     100,864       113,935       123,274                             Total Revenue by Product Line   $ 656,232     $ 604,535     $ 639,931       The following table presents revenue from continuing operations disaggregated by geography based on company’s locations (in thousands):       Year Ended   Net sales   June 30, 2021     June 30, 2020     June 30, 2019   United States   $ 386,829     $ 364,188     $ 370,235   Asia Pacific     125,516       98,665       108,667   EMEA (1)     129,908       128,037       144,636   Other Americas     13,979       13,645       16,393   Total   $ 656,232     $ 604,535     $ 639,931     ( 1 )   EMEA consists primarily of Europe, Middle East and S. Africa. The following table presents revenue from continuing operations disaggregated by timing of recognition (in thousands):     Year Ended   Timing of Revenue Recognition   June 30, 2021     June 30, 2020     June 30, 2019   Products and services transferred at a point in time   $ 619,029     $ 569,426     $ 607,980   Products transferred over time     37,203       35,109       31,951   Net sales   $ 656,232     $ 604,535     $ 639,931     Contract Balances   Contract assets represent sales recognized in excess of billings related to work completed but not yet shipped for which revenue is recognized over time. Contract assets are recorded as prepaid expenses and other current assets. Contract liabilities are customer deposits for which revenue has not been recognized. Current contract liabilities are recorded as accrued expenses.   51   The timing of revenue recognition, invoicing and cash collections results in billed receivables, contract assets and contract liabilities on the consolidated balance sheets.   When consideration is received from a customer prior to transferring goods or services to the customer under the terms of a contract, a contract liability is recorded.  Contract liabilities are recognized as revenue after control of the goods and services are transferred to the customer and all revenue recognition criteria have been met.   The following table provides information about contract assets and liability balances as of June 30, 2021 and 2020  (in thousands):   Year ended June 30, 2021     Balance at Beginning of Period       Additions       Deductions       Balance at End of Period   Contract assets:                                 Prepaid expenses and other current assets   $ 9,140       30,773       24,900     $ 15,013   Contract liabilities:                                 Customer deposits   $ 2,298       9,912       11,739     $ 471     Year ended June 30, 2020     Balance at Beginning of Period       Additions       Deductions       Balance at End of Period   Contract assets:                                 Prepaid expenses and other current assets   $ 8,418       41,462       40,740     $ 9,140   Contract liabilities:                                 Customer deposits   $ 1,358       11,939       10,999     $ 2,298     During the years ended June 30, 2021  and 2020 , we recognized the following revenue which was included in the contract liability beginning balances (in thousands):       Year ended   Revenue recognized in the period from:   June 30, 2021   Amounts included in the contract liability balance at the beginning of the period   $ 2,298           Year ended   Revenue recognized in the period from:   June 30, 2020   Amounts included in the contract liability balance at the beginning of the period   $ 1,358       4. Inventories   Inventories are comprised of (in thousands):   June 30   2021     2020   Raw materials   $ 47,000     $ 37,257   Work in process     22,539       25,527   Finished goods     22,323       22,247   Total   $ 91,862     $ 85,031     Distribution costs associated with the sale of inventory are recorded as a component of selling, general and administrative expenses and were $ 11.0 million, $ 9.0  million, and $ 9.7 million in 2021 , 2020  and  2019  respectively.   52       5. Property, plant and equipment   Property, plant and equipment consist of the following (in thousands):   June 30   2021     2020   Land, buildings and leasehold improvements   $ 73,785     $ 69,869   Machinery, equipment and other     210,594       203,258   Total     284,379       273,127   Less accumulated depreciation     ( 151,006 )     ( 140,594 ) Property, plant and equipment, net   $ 133,373     $ 132,533     Depreciation expense totaled $ 19.2 million, $ 19.2 million, and $ 17.5 million, respectively for the years ended June 30, 2021 , 2020  and  2019 .     6. Goodwill   Goodwill and certain indefinite-lived intangible assets are not amortized, but instead are tested for impairment at least annually and more frequently whenever events or changes in circumstances indicate that the fair value of the asset may be less than its carrying amount. The Company’s annual test for impairment is performed using a May 31st measurement date.   The Company has identified seven reporting units for impairment testing: Electronics, Engraving, Scientific, Engineering Technologies, Procon, Federal, and Hydraulics. The Specialty Solutions segment includes Procon, Federal and Hydraulics.   As quoted market prices are not available for the Company’s reporting units, the fair value of the reporting units is determined using a discounted cash flow model (income approach).  This method uses various assumptions that are specific to each individual reporting unit in order to determine the fair value. In addition, the Company compares the estimated aggregate fair value of its reporting units to its overall market capitalization.   While the Company believes that estimates of future cash flows are reasonable, changes in assumptions could significantly affect valuations and result in impairments in the future.  The most significant assumption involved in the Company’s determination of fair value is the cash flow projections of each reporting unit.  If the estimates of future cash flows for each reporting unit may be insufficient to support the carrying value of the reporting units, the Company will reassess its conclusions related to fair value and the recoverability of goodwill.    In connection with the divestiture of Enginetics, the Company determined that, based on the net realizable value of the operations divested, the goodwill of the Engineering Technologies reporting unit was impaired. As such, the Company recognized $ 7.6 million in impairment charges during the third quarter of fiscal year 2021. As a result of the Enginetics divestiture, the Company completed an interim goodwill impairment assessment for its other reporting units in the third quarter of fiscal year 2021. As a result of the assessment in the third quarter, the Company determined that there were no indications of impairment, therefore,  no additional impairment charges were recorded.   In connection with the divestiture of the Refrigerated Solutions Group, the Company compared the fair value of each reporting unit, Master-Bilt and NorLake, to its carrying value as of March 31, 2020.  This resulted in an asset impairment charge in the third quarter of fiscal year 2020 of $ 7.7  million in discontinued operations, which represented the full amount of goodwill associated with both reporting units. In addition, due to the impact that the COVID- 19 pandemic had on projected operating results, cash flow, and market capitalization, the Company completed an interim goodwill impairment assessment for its remaining reporting units in the third quarter of fiscal year 2020. As a result of the assessment in the third quarter, the Company determined that the fair value of its reporting units, with the exception of RSG, substantially exceeded their respective carrying values.  Therefore, no additional impairment charges were recorded in connection with the third quarter 2020 assessment.    The Company completed its annual impairment testing as of May 31, in each of the last two fiscal years and determined that the fair value of each of its reporting units substantially exceeded each unit’s respective carrying value, therefore, no impairment charges were recorded in connection with the testing and assessment.    53   Changes to goodwill by segment associated with continuing operations during the years ended June 30, 2021  and 2020  are as follows (in thousands):       June 30, 2020     Acquisitions     Impairments     Translation Adjustment     June 30, 2021   Electronics   $ 131,582     $ 13,991     $ -     $ ( 741 )   $ 144,832   Engraving     77,195       -       -       183       77,378   Scientific     15,454       -       -       -       15,454   Engineering Technologies     43,685       -       ( 7,600 )     1,000       37,085   Specialty Solutions     3,305       -       -       -       3,305   Total   $ 271,221     $ 13,991     $ ( 7,600 )   $ 442     $ 278,054       7. Intangible Assets   Intangible assets consist of the following (in thousands):               Tradenames                               Customer     (Indefinite-     Developed                       Relationships     lived)     Technology     Other     Total   June 30, 2021                                         Cost   $ 57,970     $ 22,273     $ 53,721     $ 3,812     $ 137,776   Accumulated amortization     ( 19,038 )     -       ( 16,768 )     ( 3,041 )     ( 38,847 ) Balance, June 30, 2021   $ 38,932     $ 22,273     $ 36,953     $ 771     $ 98,929                                             June 30, 2020                                         Cost   $ 74,104     $ 19,916     $ 55,164     $ 3,980     $ 153,164   Accumulated amortization     ( 31,003 )     -       ( 13,006 )     ( 2,743 )     ( 46,752 ) Balance, June 30, 2020   $ 43,101     $ 19,916     $ 42,158     $ 1,237     $ 106,412     Amortization expense from continuing operations totaled $ 11.8 million, $ 11.6 million, and $ 10.5 million, respectively for the years ended June 30, 2021 , 2020 , and  2019 .   At June 30, 2021 , aggregate amortization expense is estimated to be (in thousands):                     2022     9,653   2023     9,245   2024     8,415   2025     7,971   2026     7,740   Thereafter     33,632   Amortization   $ 76,656                 8. Debt   Long-term debt is comprised of the following at June 30 ( in thousands):       2021     2020   Bank credit agreements   $ 200,000     $ 200,000   Total funded debt     200,000       200,000   Issuance Cost     ( 510 )     ( 850 ) Total long-term debt   $ 199,490     $ 199,150     The Company's long-term debt matures in December 2023.    54       Bank Credit Agreements   During the second quarter of fiscal year 2019, the Company entered into an Amended and Restated Credit Agreement (“Credit Facility”, or “facility”).  This five -year Credit Facility expires in December 2023 and has a borrowing limit of $ 500 million, which can be increased by an amount of up to $ 250 million, in accordance with specified conditions contained in the agreement.  The facility also includes a $ 10 million sublimit for swing line loans and a $ 35 million sublimit for letters of credit.   Under the terms of the Credit Agreement, we pay a variable rate of interest and a commitment fee on borrowed amounts as well as a commitment fee on unused amounts under the facility.  The amount of the commitment fee depends upon both the undrawn amount remaining available under the facility and the Company’s funded debt to EBITDA (as defined in the agreement) ratio at the last day of each quarter.  As our funded debt to EBITDA ratio increases, the commitment fee increases.    Funds borrowed under the facility may be used for the repayment of debt, working capital, capital expenditures, acquisitions (so long as certain conditions, including a specified funded debt to EBITDA leverage ratio is maintained), and other general corporate purposes.  As of June 30, 2021 , the Company had the ability to borrow $ 245.2 million under the facility based on our current EBITDA.  The facility contains customary representations, warranties and restrictive covenants, as well as specific financial covenants which the Company was compliant with as of June 30, 2021 .  The Company’s current financial covenants under the facility are as follows:   Interest Coverage Ratio - The Company is required to maintain a ratio of Earnings Before Interest and Taxes, as Adjusted (“Adjusted EBIT per the Credit Agreement”), to interest expense for the trailing twelve months of at least 2.75:1.   Adjusted EBIT per the Credit Agreement specifically excludes extraordinary and certain other defined items such as cash restructuring and acquisition-related charges up to the lower of $ 20 million or 10 % of EBITDA. The facility also allows unlimited non-cash charges including purchase accounting and goodwill adjustments.  At June 30, 2021 , the Company’s Interest Coverage Ratio was 13.10:1.        Leverage Ratio - The Company’s ratio of funded debt to trailing twelve month Adjusted EBITDA per the credit agreement, calculated as Adjusted EBIT per the Credit Agreement plus depreciation and amortization, may not exceed 3.5:1. Under certain circumstances in connection with a Material Acquisitions (as defined in the Facility), the Credit Agreement allows for the leverage ratio to go as high as 4.0:1 for a four -fiscal quarter period. At June 30,  2021 the Company’s Leverage Ratio was 1.31:1.   As of June 30, 2021 , we had borrowings under our facility of $ 200.0 million and the effective rate of interest for outstanding borrowings under the facility was 2.59 %. Our primary sources of cash for these requirements are cash flows from continuing operations and borrowings under the facility.    In connection with the acquisition of Renco, the company assumed $ 0.7 million of debt under the Paycheck Protection Program, within the United States Coronavirus Aid, Relief, and Economic Security (“CARES”) Act. These borrowings were forgiven by the Small Business Administration ("SBA") in June 2021.   Other Long-Term Borrowings   At June 30, 2021  and 2020 , the Company had standby letter of credit sub-facility outstanding, primarily for insurance and trade financing purposes of $ 6.0  million and $ 7.3 million, respectively.     9. Accrued LIABILITIES   Accrued expenses from continuing operations recorded in our Consolidated Balance Sheets at June 30, 2021  and 2020  consist of the following (in thousands):       2021     2020   Payroll and employee benefits   $ 32,550     $ 24,084   Workers' compensation     2,118       2,743   Warranty     2,086       1,781   Fair value of derivatives     4,318       9,144   Lease liability     7,933       8,016   Other     12,712       14,161   Total   $ 61,717     $ 59,929       55       10. Derivative Financial Instruments   Interest Rate Swaps   The Company’s effective swap agreements convert the base borrowing rate on $ 200  million of debt due under our revolving credit agreement from a variable rate equal to LIBOR to a weighted average fixed rate of  1.27 % at  June 30, 2021 .   The fair value of the swaps recognized in accrued liabilities and in other comprehensive income (loss) at June 30, 2021 and 2020 is as follows (in thousands):   Effective Date   Notional     Fixed   Maturity   Fair Value at June 30,       Amount     Interest Rate       2021     2020   May 24, 2017     25,000     1.88 %   April 24, 2022     ( 374 )     ( 815 ) August 6, 2018     25,000     2.83 %   August 6, 2023     ( 1,401 )     ( 2,167 ) March 23, 2020     100,000     0.91 %   March 23, 2025     ( 907 )     ( 2,485 ) April 24, 2020     25,000     0.88 %   April 24, 2025     ( 192 )     ( 585 ) May 24, 2020     25,000     0.91 %   March 24, 2025     ( 222 )     ( 615 )                     $ ( 3,096 )   $ ( 6,667 )   The Company reported no losses for the years ended June 30, 2021 ,  2020 , and 2019 , as a result of hedge ineffectiveness. Future changes in these swap arrangements, including termination of the agreements, may result in a reclassification of any gain or loss reported in accumulated other comprehensive income (loss) into earnings as an adjustment to interest expense.  Accumulated other comprehensive income (loss) related to these instruments is being amortized into interest expense concurrent with the hedged exposure.   Foreign Exchange Contracts   Forward foreign currency exchange contracts are used to limit the impact of currency fluctuations on certain anticipated foreign cash flows, such as sales to foreign customers and loan payments between subsidiaries.  The Company enters into such contracts for hedging purposes only.  The Company has designated certain of these currency contracts as hedges, and changes in the fair value of these contracts are recognized in other comprehensive income until the hedged items are recognized in earnings.  Hedge ineffectiveness, if any, associated with these contracts will be reported in net income.  At June 30, 2021  and 2020 , the Company had outstanding forward contracts related to hedges of intercompany loans with net losses of $ 1.0 million and $ 2.5 million, respectively, which approximate the unrealized gains or losses on the related loans.  The contracts have maturity dates ranging from fiscal year 2022 to 2024, which correspond to the related intercompany loans.  The notional amounts of these instruments, by currency in thousands, are as follows:   Currency   2021     2020   USD     987       287   Euro     5,750       5,750   SGD     21,836       64,696   Canadian     20,600       20,600     56     The table below presents the fair value of derivative financial instruments as well as their classification on the balance sheet at June 30, ( in thousands):     Asset Derivatives     2021   2020   Derivative designated as Balance         Balance         hedging instruments Sheet         Sheet           Line Item   Fair Value   Line Item   Fair Value   Foreign exchange contracts Other Assets     255   Other Assets     -         $ 255       $ -                                                     Liability Derivatives     2021   2020   Derivative designated as Balance         Balance         hedging instruments Sheet         Sheet           Line Item   Fair Value   Line Item   Fair Value   Interest rate swaps Accrued Liabilities   $ 3,096   Accrued Liabilities   $ 6,667   Foreign exchange contracts Accrued Liabilities     1,222   Accrued Liabilities     2,477         $ 4,318       $ 9,144     The table below presents the amount of gain (loss) recognized in comprehensive income on our derivative financial instruments (effective portion) designated as hedging instruments and their classification within comprehensive income for the periods ended (in thousands):       2021     2020     2019   Interest rate swaps   $ 1,284     $ ( 7,098 )   $ 1,703   Foreign exchange contracts     2,072       1,851       ( 3,279 )     $ 3,356     $ ( 5,247 )   $ ( 1,576 )   The table below presents the amount reclassified from accumulated other comprehensive income (loss) to net income for the periods ended (in thousands):   Details about Accumulated                         Affected line item Other Comprehensive                         in the Statements Income (Loss) Components   2021     2020     2019   of Operations Interest rate swaps   $ 2,287     $ 547     $ ( 321 ) Interest expense Foreign exchange contracts     ( 557 )     ( 1,403 )     1,730   Other non-operating income Net investment hedge     -       -       ( 285 ) Other non-operating income     $ 1,730     $ ( 856 )   $ 1,124         11. Income Taxes   O n M arch 27, 2020, the CARES A ct was enacted to address the economic impact of the COVID - 19 pandemic in the U nited S tates. A mong other things, the CARES A ct allows a five -year carryback period for tax losses generated in 2019 through 2021. T he J une 30, 2021 tax provision includes benefits of $ 0.2 million and $ 0.8 million from tax losses in the years ended J une 30, 2019 and J une 30, 2020, respectively, that the CARES A ct allows to be carried back to the years ended J une 30, 2014 and J une 30, 2015, when the U.S . federal income tax rate was 35%.   57     U.S. tax law allows a one -hundred percent dividend received deduction for foreign dividends and the Company has begun to bring back cash from foreign subsidiaries.  However, the permanent reinvestment assertion must still be assessed and made regarding potential liabilities for foreign withholding taxes.  As of June 30, 2021 , we maintained the assessment that previously undistributed earnings of certain foreign subsidiaries no longer meet the requirements for indefinite reinvestment under applicable accounting guidance.  Therefore, we recognized deferred tax liabilities of approximately $ 2.4 million that relate to withholding taxes on the current earnings of various foreign subsidiaries.  It is expected deferred tax liabilities will continue to be recorded on current earnings in future periods from these subsidiaries.  The Company maintains the permanent reinvestment assertion on earnings in certain foreign jurisdictions. It is not practicable to estimate the amount of tax that might be payable on the remaining undistributed earnings.   The components of income from continuing operations before income taxes are as follows (in thousands):     2021     2020     2019   U.S. Operations   $ 4,997     $ 11,890     $ 6,794   Non-U.S. Operations     47,703       42,184       60,180   Total   $ 52,700     $ 54,074     $ 66,974       The Company utilizes the asset and liability method of accounting for income taxes.  Deferred income taxes are determined based on the estimated future tax effects of differences between the financial and tax bases of assets and liabilities given the provisions of the enacted tax laws.  The components of the provision for income taxes on continuing operations (in thousands) were as shown below:       2021     2020     2019   Current:                         Federal   $ ( 2,592 )   $ ( 870 )   $ 648   State     307       70       190   Non-U.S.     15,606       13,963       21,288   Total Current   $ 13,321     $ 13,163     $ 22,126   Deferred:                         Federal   $ 1,469     $ 2,743     $ 277   State     374       885       207   Non-U.S.     ( 1,007 )     ( 3,731 )     ( 3,922 ) Total Deferred     836       ( 103 )     ( 3,438 ) Total   $ 14,157     $ 13,060     $ 18,688       A reconciliation from the U.S. Federal income tax rate on continuing operations to the total tax provision is as follows:       2021     2020     2019   Provision at statutory tax rate     21.0 %     21.0 %     21.0 % State taxes     1.4 %     1.1 %     0.5 % Impact of foreign operations     4.0 %     0.7 %     4.9 % Federal tax credits     ( 1.0 %)     ( 3.5 %)     ( 1.5 %) Tax Reform     0.0 %     0.0 %     ( 1.2 %) Cash repatriation     4.6 %     2.2 %     3.2 % SubF/GILTI     0.0 %     1.4 %     0.4 % Uncertain Tax Positions     1.5 %     ( 1.3 %)     0.0 % Benefit from U.S. tax loss carryback to prior years     ( 1.8 %)     0 %     0.0 % Tax expense on Enginetics disposal     2.4 %     0 %     0.0 % Return to provision     ( 3.2 %)     1.0 %     ( 0.1 %) Valuation allowance release     ( 2.3 %)     0 %     0.0 % Other     0.8 %     1.7 %     0.7 % Effective income tax provision     26.9 %     24.3 %     27.9 %   Changes in the effective tax rates from period to period may be significant as they depend on many factors including, but not limited to, size of the Company’s income or loss and any one -time activities occurring during the period.   58     The Company's income tax provision from continuing operations for the fiscal year ended June 30, 2021 was impacted by the following items: (i) a tax provision of $ 5.1 million due to the mix of income in various jurisdictions, (ii) a tax benefit of $ 1.0 million from our 2019 and 2020 tax losses that the CARES Act allows to be carried back to 2014 and 2015, when the U.S. federal income tax rate was 35%, (iii) a tax benefit of $ 0.8 million related to Federal R&D credits and Foreign Tax credits, (iv) a tax benefit of $ 1.7 million related to return to provision adjustments, and (v) tax expense of $ 1.2 million attributable to the divestiture of Enginetics Corporation during the year.     The Company's income tax provision from continuing operations for the fiscal year ended June 30, 2020 was impacted by the following items: (i) a tax benefit of $ 1.2 million related to the Federal R&D credit, (ii) a tax provision of $ 1.4 million due to the mix of income in various jurisdictions, (iii) a tax benefit of $ 0.7 million related to the release of uncertain tax provision reserves, and (iv) a tax provision of $ 0.8 million related to GILTI.   The Company's income tax provision from continuing operations for the fiscal year ended June 30, 2019 was impacted by the following items: (i) a tax benefit related to the impact of the Sec. 965 toll tax of $ 0.8 million, (ii) a tax provision of $ 0.3 million related to the elimination of the performance based compensation exception for executive compensation under Sec. 162 (m) of the Internal Revenue Code, and (iii) a tax provision related to expected foreign withholding taxes on cash repatriation of $ 2.1 million.   Significant components of the Company’s deferred income taxes are as follows (in thousands):       2021     2020   Deferred tax liabilities:                 Depreciation and amortization   $ ( 28,997 )   $ ( 34,422 ) Withholding taxes     ( 4,497 )     ( 4,295 ) Other     ( 302 )     -   Operating lease right-of-use-asset     ( 4,711 )     ( 11,384 ) Total deferred tax liability   $ ( 38,507 )   $ ( 50,101 )                   Deferred tax assets:                 Accrued compensation   $ 2,610     $ 2,410   Accrued expenses and reserves     2,610       4,117   Pension     12,653       19,847   Inventory     769       588   Lease liabilities     4,783       11,446   Other     -       127   Net operating loss and credit carry forwards     16,127       22,676   Total deferred tax asset   $ 39,552     $ 61,211                     Less: Valuation allowance     ( 12,191 )     ( 15,172 ) Net deferred tax asset (liability)   $ ( 11,146 )   $ ( 4,062 )     The Company estimates the degree to which deferred tax assets, including net operating loss and credit carry forwards will result in a benefit based on expected profitability by tax jurisdiction and provides a valuation allowance for tax assets and loss carry forwards that it believes will more likely than not go unrealized.  The valuation allowance at June 30,  2021 applies to federal capital loss, state loss, foreign loss, and state R&D credit carryforwards, which management has concluded that it is more likely than not that these tax benefits will not be realized.  The increase (decrease) in the valuation allowance from the prior year was due to the current year activity in those same federal, state and foreign jurisdictions.   59     In addition, the sale of the Enginetics Corporation in the fiscal year generated a capital loss for tax purposes.  As of June 30, 2021 , the Company expects that it is more likely than not that this loss will not be realizable in future years.  As such, the valuation allowance increased by $ 1.8 million. In addition, the Company decreased the valuation allowance by $ 5.1 million due to a return to provision adjustment on the RSG Group capital loss carryforward.   As of June 30, 2021 , the Company had gross state net operating loss ("NOL") and credit carry forwards of approximately $ 88.8 million and $ 3.2 million, respectively, which may be available to offset future state income tax liabilities and expire at various dates from 2021  through 2040.  In addition, the Company had foreign NOL carry forwards of approximately $ 4.7 million, $ 3.7 million of which carry forward indefinitely and $ 1.0 million that carry forward for 10 years.   Under ASU 2016 - 09, Improvements to Employee Share-Based Payment Accounting , all excess tax benefits and tax deficiencies are recognized as income tax expense or benefit in the income statement.  Accordingly, we recorded an income tax provision in the consolidated statements of income of $ 0.4 million during the fiscal year ended June 30, 2021 , for the shortfall of tax benefits related to equity compensation.   The total provision (benefit) for income taxes included in the consolidated financial statements was as follows (in thousands):       2021     2020     2019   Continuing operations   $ 14,157     $ 13,060     $ 18,688   Discontinued operations     ( 550 )     ( 2,613 )     ( 2,453 ) Total provision   $ 13,607     $ 10,447     $ 16,235     The tax benefit for discontinued operations relates mostly to the write-off of deferred tax liabilities from the sale of the RSG Group, and the sale of the assets of Master-Bilt.   The changes in the amount of gross unrecognized tax benefits during 2021 , 2020 and  2019 were as follows (in thousands):       2021     2020     2019   Beginning Balance   $ 9,286     $ 11,251     $ 3,003   Additions based on tax positions related to the current year     5       4       4   Additions for tax positions of prior years     121       -       8,281   Reductions for tax positions of prior years     -       ( 1,641 )     ( 37 ) Settlements     -       ( 328 )     -   Ending Balance   $ 9,412     $ 9,286     $ 11,251     At June 30, 2021, we had $ 9.4 million of non-current liabilities for uncertain tax positions. We are not able to provide a reasonable estimate of the timing of future payments related to these obligations. The Company increased its uncertain tax position during the year due to Canadian withholding tax exposures.   If the unrecognized tax benefits in the table above were recognized in a future period, $ 8.6 million of the unrecognized tax benefit would impact the Company’s effective tax rate.   Within the next twelve months, the statute of limitations will close in various U.S., state and non-U.S. jurisdictions.  As a result, it is reasonably expected that net unrecognized tax benefits from these various jurisdictions would be recognized within the next twelve months.  The recognition of these tax benefits is expected to have an impact of $8.6 million to the Company's financial statements.  The Company does not reasonably expect any other significant changes in the next twelve months.  The following tax years, in the major tax jurisdictions noted, are open for assessment or refund:   Country   Years Ending June 30,   United States   2018 to 2021   Canada   2017 to 2021   Germany   2018 to 2021   Ireland   2021   Portugal   2020 to 2021   United Kingdom   2017 to 2021     The Company’s policy is to include interest expense and penalties related to unrecognized tax benefits within the provision for income taxes on the consolidated statements of operations.  At June 30,  2021 and  2020 , the company had $ 0.8 million and $ 0.1  million for accrued interest expense on unrecognized tax benefits.   60       12.   CONTINGENCIES   From time to time, the Company is subject to various claims and legal proceedings, including claims related to environmental remediation, either asserted or unasserted, that arise in the ordinary course of business. While the outcome of these proceedings and claims cannot be predicted with certainty, the Company’s management does  not  believe that the outcome of any of the currently existing legal matters will have a material impact on the Company’s consolidated financial position, results of operations or cash flow. The Company accrues for losses related to a claim or litigation when the Company’s management considers a potential loss probable and can reasonably estimate such potential loss.   Litigation   In the second quarter of fiscal year  2019, a lawsuit was filed against Standex Electronics, Inc., a wholly owned subsidiary of the Company (“Electronics”), by Miniature Precision Components, Inc., a customer (“MPC”), seeking damages in connection with allegedly faulty sensors designed and manufactured by Electronics.  The subject sensors were incorporated by MPC into a subassembly sold by MPC to its customer, an automotive manufacturer. MPC alleges that the sensors incorrectly activated a diagnostic code in vehicles for which MPC’s customer issued a service bulletin, resulting in significant warranty costs for MPC. In the litigation, which is pending in the U.S. District Court for the Eastern District of Wisconsin, MPC seeks indemnification from Electronics for its costs. Electronics has numerous defenses to MPC’s claims and, based upon discovery completed to date, the Company believes that liability to Electronics, while possible, is not probable, and the range of any potential liability would be between $ 0 and $ 4.0 million. There have been no accrued liabilities recorded related to this litigation.      13. stock-based compensation and purchase plans   Stock-Based Compensation Plans   Under incentive compensation plans, the Company is authorized to make grants of stock options, restricted stock and performance share units to provide equity incentive compensation to key employees and directors. The stock award program offers employees and directors the opportunity to earn shares of our stock over time, rather than options that give the employees and directors the right to purchase stock at a set price.  The Company has stock plans for directors, officers and certain key employees.    Total compensation cost recognized in the consolidated statement of operations for equity based compensation awards was $ 8.4 million, $ 7.0 million, and $ 4.4 million for the years ended June 30, 2021 , 2020 , and 2019 , respectively, primarily within Selling, General, and Administrative Expenses.  The total income tax benefit recognized in the consolidated statement of operations for equity-based compensation plans was $ 1.8  million, $ 1.9  million, and $ 1.1  million for the years ended June 30, 2021 ,  2020 and 2019 , respectively.   There were 208,971 shares of common stock reserved for issuance under various compensation plans at June 30, 2021 .    Restricted Stock Awards   The Company may award shares of restricted stock to eligible employees and non-employee directors of the Company at no cost, giving them, in most instances, all of the rights of stockholders, except that they may not sell, assign, pledge or otherwise encumber such shares and rights during the restriction period.  Such shares and rights are subject to forfeiture if certain employment conditions are not met.  During the restriction period, recipients of the shares are entitled to dividend equivalents on such shares, providing that such shares are not forfeited.  Dividends are accumulated and paid out at the end of the restriction period.  Restrictions on non-vested stock awards generally lapse between fiscal year 2022  and fiscal year 2024.   $ 5.3  million, $ 4.2 million, and $ 3.7 million, respectively, was recognized as compensation expense related to restricted stock awards for fiscal years ended June 30, 2021, 2020, and 2019.   Substantially all awards are expected to vest.   A summary of restricted stock awards activity during the year ended June 30,  2021 is as follows:       Restricted Stock Awards       Number     Weighted       of     Average               Grant Date       Shares     Fair Value   Outstanding, June 30, 2020     146,015     $ 80.35   Granted     72,475       59.57   Vested     ( 44,647 )     88.70   Canceled     ( 5,832 )     42.45   Outstanding, June 30, 2021     168,011     $ 74.61   61     Restricted stock awards granted during fiscal years  2020  and 2019  had a weighted average grant date fair value of $ 71.38 , and $ 102.74 , respectively.  The grant date fair value of restricted stock awards is determined based on the closing price of the Company’s common stock on the date of grant. The fair value of awards vested during fiscal years 2021, 2020 and 2019  was $ 2.8 million, $ 2.3 million and $ 4.5  million, respectively.    As of June 30, 2021 , there was $ 3.7 million of unrecognized compensation costs related to awards expected to be recognized over a weighted-average period of 1.38 years.   Executive Compensation Program   The Company operates a compensation program for key employees.  The plan contains both an annual component as well as a long-term component.  Under the annual component, participants may elect to defer up to 50 % of their annual incentive compensation in restricted stock which is purchased at a discount to the market.  Additionally, non-employee directors of the Company may defer a portion of their director’s fees in restricted stock units which is purchased at a discount to the market.  During the restriction period, recipients of the shares are entitled to dividend equivalents on such units, providing that such shares are not forfeited.    Dividend equivalents are accumulated and paid out at the end of the restriction period.  The restrictions on the units expire after three years.  Restrictions on non-vested annual component  awards generally lapse between fiscal year 2022  and fiscal year 2024.   The compensation expense associated with this incentive program is charged to income over the restriction period.  The Company recorded compensation expense related to this program of $ 0.4 million, $ 0.3 million, and $ 0.3 million for the years ended June  30, 2021 ,  2020 and 2019 , respectively.   As of June 30, 2021 , there was $ 0.4 million of unrecognized compensation costs related to awards expected to be recognized over a weighted-average period of 1.4 years.   The fair value of the awards under the annual component of this incentive program is measured using the Black-Scholes option-pricing model.  Key assumptions used to apply this pricing model are as follows:       2021     2020     2019   Risk-free interest rates     0.18 %     1.42 %     2.63 % Expected life of option grants (in years)     3       3       3   Expected volatility of underlying stock     44.1 %     32.0 %     25.1 % Expected quarterly dividends (per share)   $ 0.22     $ 0.20     $ 0.18     Under the long-term component, grants of performance share units (“PSUs”) are made annually to key employees and the share units are earned based on the achievement of certain overall corporate financial performance targets over the performance period.  At the end of the performance period, the number of shares of common stock issued will be determined by adjusting upward or downward from the target in a range between 50 % and 200 %.  No shares will be issued if the minimum performance threshold is not achieved. The final performance percentage, on which the payout will be based considering the performance metrics established for the performance period, will be certified by the Compensation Committee of the Board of Directors.    A participant’s right to any shares that are earned will cliff vest in three years.  An executive whose employment terminates prior to the vesting of any award for a reason other than death, disability, retirement, or following a change in control, will forfeit the shares represented by that award. In certain circumstances, such as death, disability, or retirement, PSUs are paid on a pro-rata basis.  In the event of a change in control, vesting of the awards granted is accelerated.   A summary of the awards activity under the executive compensation program during the year ended June 30,  2021 is as follows:       Annual Component     Performance Stock Units               Weighted                     Weighted       Number     Average     Aggregate     Number     Average       of     Exercise     Intrinsic     of     Grant Date       Shares     Price     Value     Shares     Fair Value   Non-vested, June 30, 2020     32,387     $ 64.33     $ ( 685,647 )     79,312     $ 84.87   Granted     19,311       43.16               69,071       58.81   Exercised / vested     ( 10,474 )     64.32     $ ( 43,978 )     ( 12,560 )     91.75   Forfeited     ( 105 )     76.65               ( 6,396 )     85.51   Non-vested, June 30, 2021     41,119     $ 54.36     $ 691,647       129,427     $ 70.27     62     Restricted stock awards granted under the annual component of this program in fiscal years  2021 , 2020 , and  2019 had a weighted average grant date fair value of $ 43.16 , $ 74.37 , and $ 110.22 , respectively.  The PSUs granted in fiscal years  2020 and  2019 had a weighted average grant date fair value of $ 70.37 , and $ 106.65 , respectively. The grant date fair value of the PSUs is determined based on the closing price of the Company’s common stock on the date of grant. The fair value of PSUs vested under the long-term component of this program during the fiscal years ended June 30, 2021 , 2020 , and  2019 was $ 0.7 million, $ 0.8 million, and $ 0.7  million respectively.   The Company recognized compensation expense related to the PSUs of $ 2.6 million, $ 2.9  million, and $ 0.3  million for the fiscal years ended June 30, 2021,  2020 and 2019  respectively based on the probability of the performance targets being met. The total unrecognized compensation costs related to non-vested performance share units was $ 3.6 million at June 30, 2021, which is expected to be recognized over a weighted average period of 1.3 years.   Employee Stock Purchase Plan   The Company has an Employee Stock Purchase Plan that allows employees to purchase shares of common stock of the Company at a discount from the market each quarter. The ESPP plan, which was effective as of July 1, 2005, provided employees the option to purchase Standex stock at a discount of 5 %. The Plan was modified, effective as of April 1, 2017, to increase the stock purchase discount to 15 % and is considered a compensatory Plan. Under this amendment, shares of Company stock may be purchased by employees quarterly at 85 % of the fair market value on the last day of each quarter. The 15% discount is recorded as a component of SG&A in the Company’s Consolidated Statements of Operations. Shares of stock reserved for the plan were 54,975 at June 30, 2021 . Shares purchased under this plan aggregated to 7,509 in fiscal year 2021 , 11,132 in 2020 , and 7,698 in 2019 , at an average price of $ 66.98 , $ 52.57 , and $ 65.63 , respectively.       14. Accumulated Other Comprehensive Income (LosS)   The components of the Company’s accumulated other comprehensive income (loss) at June 30, 2021  and  2020 are as follows (in thousands):       2021     2020     2019   Foreign currency translation adjustment   $ ( 21,244 )   $ ( 31,046 )   $ ( 27,658 ) Unrealized pension losses, net of tax     ( 92,372 )     ( 109,880 )     ( 107,380 ) Unrealized losses on derivative instruments, net of tax     ( 2,524 )     ( 6,733 )     ( 2,240 ) Total   $ ( 116,140 )   $ ( 147,659 )   $ ( 137,278 )       15 . restructuring   The Company has undertaken a number of initiatives that have resulted in severance, restructuring, and related charges. A summary of charges by initiative is as follows (in thousands):       Involuntary Employee                       Severance and                   Year Ended June 30,   Benefit Costs     Other     Total   2021 Restructuring Initiatives   $ 1,313     $ 662     $ 1,975   Prior Year Initiatives     926       577       1,503   Total expense   $ 2,239     $ 1,239     $ 3,478                             2020 Restructuring Initiatives   $ 4,004     $ 606     $ 4,610   Prior Year Initiatives     -       59       59   Total expense   $ 4,004     $ 665     $ 4,669                             2019 Restructuring Initiatives   $ 953     $ 15     $ 968   Prior Year Initiatives     210       111       321   Total expense   $ 1,163     $ 126     $ 1,289     63     2021  Restructuring Initiatives   The Company continues to focus our efforts to reduce cost and improve productivity across our businesses, particularly through headcount reductions, facility closures, and consolidations. Restructuring expenses primarily related to headcount reductions and facility rationalization within our Specialty Solutions and Engraving segment. During fiscal year  2021 ,  we have also incurred restructuring expenses related to  third  party assistance with analysis and implementation of these activities.       Involuntary                       Employee Severance                       and Benefit Costs     Other     Total   Restructuring liabilities at June 30, 2020   $ -     $ -     $ -   Additions and adjustments     1,313       662       1,975   Payments     ( 1,274 )     ( 662 )     ( 1,936 ) Restructuring liabilities at June 30, 2021   $ 39     $ -     $ 39     Prior Year Restructuring Initiatives   The Company continues to focus our efforts to reduce cost and improve productivity across our businesses, particularly through headcount reductions, facility closures, and consolidations.  During fiscal year 2020 and 2019, the Company also incurred restructuring expenses related to headcount reductions, facility rationalization within our Specialty Solutions and Engraving segment, and  third party assistance with analysis and implementation of these activities.   The Company expects to incur additional restructuring costs of approximately $ 2.0 million in fiscal year 2022  as the Company continues to focus its efforts to reduce cost and improve productivity across its businesses, particularly through headcount reductions, facility closures, and consolidations.   Activity in the reserves related to 2020  restructuring initiatives is as follows (in thousands):       Involuntary Employee                       Severance and                       Benefit Costs     Other     Total   Restructuring liabilities at June 30, 2020   $ 520     $ 18     $ 538   Additions and adjustments     926       577       1,503   Payments     ( 1,446 )     ( 585 )     ( 2,031 ) Restructuring liabilities at June 30, 2021   $ -     $ 10     $ 10     Activity in the reserves related to fiscal year 2020 (in thousands):       Involuntary Employee                       Severance and                       Benefit Costs     Other     Total   Restructuring liabilities at June 30, 2019   $ 147     $ 5     $ 152   Additions and adjustments     4,004       665       4,669   Payments     ( 3,631 )     ( 652 )     ( 4,283 ) Restructuring liabilities at June 30, 2020   $ 520     $ 18     $ 538     64     The Company’s total restructuring expenses by segment are as follows (in thousands):       Involuntary Employee                       Severance and                   Year Ended June 30,   Benefit Costs     Other     Total   Fiscal Year 2021                         Electronics   $ 355     $ 22     $ 377   Engraving     1046       631       1,677   Engineering Technologies     37       -       37   Specialty Solutions     673       586       1,259   Corporate and Other     128       -       128   Total expense   $ 2,239     $ 1,239     $ 3,478                             Fiscal Year 2020                         Electronics   $ 355     $ 97     $ 452   Engraving     1512       499       2,011   Engineering Technologies     296       -       296   Specialty Solutions     1,326       69       1,395   Corporate and Other     515       -       515   Total expense   $ 4,004     $ 665     $ 4,669                             Fiscal Year 2019                         Electronics   $ 327     $ 27     $ 354   Engraving     662       -       662   Engineering Technologies     17       99       116   Specialty Solutions     21       -       21   Corporate and Other     136       -       136   Total expense   $ 1,163     $ 126     $ 1,289         16 . Employee Benefit Plans   Retirement Plans   The Company has defined benefit pension plans covering certain current and former employees both inside and outside of the U.S. The Company’s pension plan for U.S. employees is frozen for substantially all employees and participants in the plan have ceased accruing future benefits.   Net periodic benefit cost for U.S. and non-U.S. plans included the following components (in thousands):       U.S. Plans     Foreign Plans       Year Ended June 30,     Year Ended June 30,       2021     2020     2019     2021     2020     2019   Service Cost   $ 4     $ 3     $ 3     $ 217     $ 236     $ 189   Interest Cost     7,439       9,083       10,342       725       846       1,013   Expected return on plan assets     ( 13,012 )     ( 13,150 )     ( 13,541 )     ( 629 )     ( 868 )     ( 908 ) Recognized net actuarial loss     5,933       5,101       4,121       757       651       340   Amortization of prior service cost (benefit)     -       -       -       ( 5 )     ( 5 )     ( 3 ) Net periodic benefit cost (benefit)   $ 364     $ 1,037     $ 925     $ 1,065     $ 860     $ 631       65     The following table sets forth the funded status and amounts recognized as of June 30,  2021 and 2020 for our U.S. and foreign defined benefit pension plans (in thousands):       U.S. Plans     Foreign Plans       Year Ended June 30,     Year Ended June 30,       2021     2020     2021     2020   Change in benefit obligation                                 Benefit obligation at beginning of year   $ 264,619     $ 253,540     $ 45,190     $ 43,983   Service cost     4       3       217       236   Interest cost     7,439       9,083       725       846   Actuarial loss (gain)     ( 3,457 )     18,121       ( 746 )     2,604   Benefits paid     ( 16,513 )     ( 16,128 )     ( 1,906 )     ( 1,537 ) Foreign currency exchange rate & other changes     -       -       4,329       ( 942 ) Projected benefit obligation at end of year   $ 252,092     $ 264,619     $ 47,809     $ 45,190                                     Change in plan assets                                 Fair value of plan assets at beginning of year   $ 194,824     $ 186,205     $ 41,973     $ 39,665   Actual return on plan assets     26,277       21,447       40       4,037   Employer contribution     8,015       3,301       105       739   Benefits paid     ( 16,513 )     ( 16,129 )     ( 1,906 )     ( 1,537 ) Foreign currency exchange rate     -       -       4,805       ( 931 ) Fair value of plan assets at end of year   $ 212,603     $ 194,824     $ 45,017     $ 41,973                                     Funded Status   $ ( 39,489 )   $ ( 69,795 )   $ ( 2,792 )   $ ( 3,217 )                                   Amounts recognized in the consolidated balance sheets consist of:                                 Prepaid benefit cost   $ -     $ -     $ 5,661     $ 4,663   Current liabilities     ( 208 )     ( 208 )     ( 309 )     ( 295 ) Non-current liabilities     ( 39,281 )     ( 69,587 )     ( 8,144 )     ( 7,585 ) Net amount recognized   $ ( 39,489 )   $ ( 69,795 )   $ ( 2,792 )   $ ( 3,217 )                                   Unrecognized net actuarial loss   $ 117,847     $ 140,501     $ 4,618     $ 5,075   Unrecognized prior service cost     -       -       ( 51 )     ( 57 ) Accumulated other comprehensive income, pre-tax   $ 117,847     $ 140,501     $ 4,567     $ 5,018     The accumulated benefit obligation for all defined benefit pension plans was $ 299.8 million and $ 309.7 million at June 30,  2021 and 2020 , respectively.   The estimated actuarial net loss for the defined benefit pension plans that will be amortized from accumulated other comprehensive income into net periodic benefit cost over the next fiscal year is $ 5.9 million.   66     Plan Assets and Assumptions   The fair values of the Company’s pension plan assets at June 30,  2021 and 2020 by asset category, as classified in the three levels of inputs described in Note 1 under the caption Fair Value of Financial Instruments , are as follows (in thousands):       June 30, 2021       Total     Level 1     Level 2     Level 3   Cash and cash equivalents   $ 3,209     $ 3,148     $ 61     $ -   Common and preferred stocks     86,499       2,425       84,074       -   Corporate bonds and other fixed income securities     146,742       1,850       144,892       -   Other     21,170       -       21,170       -       $ 257,620     $ 7,423     $ 250,197       -         June 30, 2020       Total     Level 1     Level 2     Level 3   Cash and cash equivalents   $ 3,113     $ 1,684     $ 1,429     $ -   Common and preferred stocks     85,641       1,857       83,784       -   Corporate bonds and other fixed income securities     126,703       1,620       125,083       -   Other     21,478       -       21,478       -       $ 236,935     $ 5,161     $ 231,774       -     Asset allocation at June 30, 2021 and 2020 and target asset allocations for 2021 are as follows:       U.S. Plans     Foreign Plans       Year Ended June 30,     Year Ended June 30,   Asset Category   2021     2020     2021     2020   Equity securities   36 %     41 %     5 %     5 %   Debt securities   43 %     38 %     70 %     64 %   Global balanced securities   12 %     11 %     24 %     29 %   Other   9 %     10 %     1 %     2 %   Total   100 %     100 %     100 %     100 %         2021   Asset Category – Target   U.S.     U.K.   Equity securities   36 %     0 %   Debt and market neutral securities   44 %     70 %   Global balanced securities   12 %     30 %   Other   8 %     0 %   Total   100 %     100 %     Our investment policy for the U.S. pension plans targets a range of exposure to the various asset classes. Standex rebalances the portfolio periodically when the allocation is not within the desired range of exposure. The plan seeks to provide returns in excess of the various benchmarks. The benchmarks include the following indices: S&P 500; Citigroup PMI EPAC; Citigroup World Government Bond and Barclays Aggregate Bond. A third -party investment consultant tracks the plan’s portfolio relative to the benchmarks and provides quarterly investment reviews which consist of a performance and risk assessment on all investment managers and on the portfolio.   Certain managers within the plan use, or have authorization to use, derivative financial instruments for hedging purposes, the creation of market exposures and management of country and asset allocation exposure. Currency speculation derivatives are strictly prohibited.   67     Year Ended June 30 2021 2020 2019   Plan assumptions - obligations               Discount rate 0.73 - 3.00 % 0.99 - 2.90 % 0.24 - 3.70 %   Rate of compensation increase 3.25 % 2.90 % 3.20 %                   Plan assumption - cost               Discount rate 0.99 - 2.90 % 0.31 - 3.70 % 0.38 - 4.40 %   Expected return on assets 1.40 - 6.90 % 2.30 - 7.00 % 2.45 - 7.00 %   Rate of compensation increase 2.90 % 3.20 % 3.60 %     Included in the above are the following assumptions relating to the obligations for defined benefit pension plans in the United States at June 30, 2021 ; a discount rate of 2.90 % and expected return on assets of 6.9 %. The U.S. defined benefit pension plans represent the majority of our pension obligations. The expected return on plan assets assumption is based on our expectation of the long-term average rate of return on assets in the pension funds and is reflective of the current and projected asset mix of the funds. The discount rate reflects the current rate at which pension liabilities could be effectively settled at the end of the year. The discount rate is determined by matching our expected benefit payments from a stream of AA- or higher bonds available in the marketplace, adjusted to eliminate the effects of call provisions.   Expected benefit payments for all plans during the next five years are as follows:  2022, $ 18.2 million; 2023, $ 17.9 million; 2024, $ 17.8 million; 2025, $ 17.8 million; 2026, $ 17.6 million and five years thereafter, $ 86.2 million. The Company expects to make $ 1.6 million of contributions to its pension plans in 2022.   The Company operates defined benefit plans in Germany and Japan which are unfunded.   Multi-Employer Pension Plans   We contribute to two  multiemployer defined benefit plans under the terms of collective bargaining agreements that cover our union-represented employees. These plans generally provide for retirement, death and/or termination benefits for eligible employees within the applicable collective bargaining units, based on specific eligibility/participation requirements, vesting periods and benefit formulas. The risks of participating in these multiemployer plans are different from single-employer plans in the following aspects:     ● Assets contributed to the multiemployer plan by one employer may be used to provide benefits to employees of other participating employers.   ● If a participating employer stops contributing to the multiemployer plan, the unfunded obligations of the plan may be borne by the remaining participating employers.   ● If we choose to stop participating in some of our multiemployer plans, we may be required to pay those plans an amount based on the underfunded status of the plan, referred to as a withdrawal liability. However, cessation of participation in a multiemployer plan and subsequent payment of any withdrawal liability is subject to the collective bargaining process.   68     The following table outlines the Company’s participation in multiemployer pension plans for the periods ended June 30, 2021 , 2020 , and 2019 , and sets forth the yearly contributions into each plan. The “EIN/Pension Plan Number” column provides the Employer Identification Number (“EIN”) and the three -digit plan number. The most recent Pension Protection Act zone status available in  2021 and  2020 relates to the plans’ two most recent fiscal year-ends. The zone status is based on information that we received from the plans’ administrators and is certified by each plan’s actuary. Among other factors, plans certified in the red zone are generally less than 65% funded, plans certified in the orange zone are both less than 80% funded and have an accumulated funding deficiency or are expected to have a deficiency in any of the next six plan years, plans certified in the yellow zone are less than 80% funded, and plans certified in the green zone are at least 80% funded. The “FIP/RP Status Pending/Implemented” column indicates whether a financial improvement plan (“FIP”) for yellow/orange zone plans, or a rehabilitation plan (“RP”) for red zone plans, is either pending or has been implemented. For all plans, the Company’s contributions do not exceed 5% of the total contributions to the plan in the most recent year.             Pension Protection Act                           Expiration           Zone Status   Contributions     Date of                                           Collective     EIN/Plan       FIP/RP                         Surcharge Bargaining Pension Fund   Number   2021 2020 Status   2021     2020     2019   Imposed? Agreement New England Teamsters and Trucking Industry Pension Fund     04-6372430-001   Red Red Yes/ Implemented   $ 631     $ 531     $ 461   No May-25                                             IAM National Pension Fund, National Pension Plan     51-6031295-002   Red Red Yes/Implemented     513       595       644   No Oct-22 - May-25                   $ 1,144     $ 1,126     $ 1,105         Retirement Savings Plans   The Company has two primary employee savings plans, one for salaried employees and one for hourly employees. Substantially all of our full-time domestic employees are covered by these savings plans. Under the provisions of the plans, employees may contribute a portion of their compensation within certain limitations. The Company, at the discretion of the Board of Directors, may make contributions on behalf of our employees under the plans. Company contributions were $ 2.9 million, $ 3.7 million, and $ 4.0 million for the years ended June 30, 2021 , 2020 , and 2019 , respectively. At June 30, 2021 , the salaried plan holds approximately 124,000 shares of Company common stock, representing approximately 3.9 % of the holdings of the plan.     17 . Industry Segment Information   The company has five reportable segments organized around the types of products sold:   •  Electronics – manufacturing and selling of electronic components for applications throughout the end-user market spectrum; •  Engraving – provides mold texturizing, slush molding tools, project management and design services, roll engraving, hygiene product tooling, low observation vents for stealth aircraft, and process machinery for a number of industries; •  Scientific – specialty temperature-controlled equipment for the medical, scientific, pharmaceutical, biotech and industrial markets; •  Engineering Technologies – provides net and near net formed single-source customized solutions in the manufacture of engineered components for the aviation, aerospace, defense, energy, industrial, medical, marine, oil and gas, and manned and unmanned space markets. •  Specialty Solutions – an aggregation of three operating segments that manufacture and sell refrigerated, heated and dry merchandizing display cases, custom fluid pump solutions, and single and double acting telescopic and piston rod hydraulic cylinders.   Net sales include only transactions with unaffiliated customers and include no significant intersegment or export sales.  Operating income by segment and geographic area excludes general corporate and interest expenses.  Assets of the Corporate segment consist primarily of cash, office equipment, and other non-current assets.   69   Given the nature of our corporate expenses, management concluded that it would not presently be appropriate to allocate the expenses associated with corporate activities to our operating segments.  These corporate expenses include the costs for the corporate headquarters, salaries and wages for the personnel in corporate, professional fees related to corporate matters and compliance efforts, stock-based compensation and post-retirement benefits related to our corporate executives, officers and directors, and other compliance related costs.  The Company has a process to allocate and recharge certain direct costs to the operating segments when such direct costs are administered and paid at corporate.  Such direct expenses that are recharged on an intercompany basis each month include such costs as insurance, workers’ compensation programs, and audit fees.  The accounting policies applied by the reportable segments are the same as those described in the Summary of Accounting Policies footnote to the consolidated financial statements.  There are no differences in accounting policies which would be necessary for an understanding of the reported segment information.     Industry Segments                                                 (in thousands)   Net Sales     Depreciation and Amortization       2021     2020     2019     2021     2020     2019   Electronics   $ 253,369     $ 185,294     $ 204,073     $ 13,159     $ 12,339     $ 11,751   Engraving     147,016       143,736       149,693       11,140       10,595       8,232   Scientific     79,421       57,523       57,621       1,590       1,594       1,590   Engineering Technologies     75,562       104,047       105,270       5,519       6,000       5,963   Specialty Solutions     100,864       113,935       123,274       1,513       1,446       1,350   Corporate and Other     -       -       -       320       320       402   Total   $ 656,232     $ 604,535     $ 639,931     $ 33,241     $ 32,294     $ 29,288         Income (Loss) From Operations     Capital Expenditures (1)       2021     2020     2019     2021     2020     2019   Electronics   $ 46,600     $ 29,749     $ 41,227     $ 11,154     $ 5,334     $ 12,646   Engraving     22,510       20,493       23,996       6,517       10,618       13,868   Scientific     18,240       13,740       13,676       693       360       77   Engineering Technologies     6,164       14,027       11,169       1,110       1,170       3,857   Specialty Solutions     14,358       18,546       19,000       1,313       1,154       2,108   Restructuring charge     ( 3,478 )     ( 4,669 )     ( 1,289 )     -       -       -   Loss on sale of business     ( 14,624 )     -       -       -       -       -   Acquisition-related costs     ( 931 )     ( 1,759 )     ( 3,075 )     -       -       -   Other operating income (expense), net     -       -       ( 500 )     -       -       -   Corporate     ( 29,674 )     ( 29,599 )     ( 24,728 )     626       668       57   Total   $ 59,165     $ 60,528     $ 79,476     $ 21,413     $ 19,304     $ 32,613   Interest expense     ( 5,992 )     ( 7,475 )     ( 10,760 )                         Other, net     ( 473 )     1,021       ( 1,742 )                         Income from continuing operations before income taxes   $ 52,700     $ 54,074     $ 66,974                               ( 1 ) Includes capital expenditures in accounts payable of $ 2.4 million, $ 3.2 million, and $ 0.9 million at June 30, 2021 , 2020 , and  2019 respectively.         Goodwill     Identifiable Assets       2021     2020     2021     2020   Electronics   $ 144,832     $ 131,582     $ 382,045     $ 324,725   Engraving     77,378       77,195       263,406       257,104   Scientific     15,454       15,454       110,300       90,595   Engineering Technologies     37,085       43,685       114,012       147,797   Specialty Solutions     3,305       3,305       46,883       52,528   Corporate & Other     -       -       45,577       55,193   Discontinued Operations     -       -             2,936   Total   $ 278,054     $ 271,221     $ 962,223     $ 930,878     70         Tangible Long-lived assets   2021     2020   United States   $ 63,613     $ 69,548   Asia Pacific     33,722       32,057   EMEA (2)     30,677       26,057   Other Americas     5,361       4,871   Total   $ 133,373     $ 132,533         ( 2 ) EMEA consists primarily of Europe, Middle East and S. Africa.       18 . Divestitures   On March 31, 2021, the Company divested Enginetics Corporation (“Enginetics”), its jet engine components business, to Enjet Aero, LLC, a privately-held aerospace engine component manufacturing company. Enginetics generated approximately $ 9.0 million in revenue in the first nine months of fiscal 2021. The business activities, which are reported within the Engineering Technologies Group, were divested in order to focus on the higher growth and margin opportunities of the Company's core spin forming solutions business that serves the space, commercial aviation and defense end markets. The Company received $ 11.7 million cash consideration and recorded a pre-tax loss on sale of the business of $ 14.6 million, including a goodwill impairment charge of $ 7.6 million, assigned to the entirety of the Engineering Technologies segment, and a $ 5.4 million write-down of intangible assets. The sale transaction and financial results of Enginetics are classified as continuing operations in the Consolidated Financial Statements.     19. DISCONTINUED OPERATIONS   In pursuing our business strategy, the Company continues to divest certain businesses and record activities of these businesses as discontinued operations.   During the third quarter of fiscal 2020, in order to focus its financial assets and managerial resources on its remaining portfolio of businesses, the Company entered into a definitive agreement to sell the Refrigerated Solutions Group, consisting of the Master-Bilt and NorLake operating segments, to Ten Oaks Group for a cash purchase price of $ 10.6  million, subject to post-closing adjustments and various transaction fees. The Refrigerated Solutions Group was a part of the Company's Food Service Equipment segment, and manufactured refrigerated cabinets and walk-ins for customers food service and retail end markets.   The transaction closed on April 16, 2020 and resulted in a pre-tax loss of $ 20.0 million less related transaction expenses of $ 1.9 million. The Company reported a tax benefit related to the loss on sale of $ 2.6 million.   During the first quarter of 2019, in order to focus its financial assets and managerial resources on its remaining portfolio of businesses, the Company decided to divest its Cooking Solutions Group, which consisted of three operating segments and a minority interest investment.  In connection with the divestiture, during the second quarter of 2019, the Company sold its minority interest investment to the majority shareholders.  During the third quarter of fiscal 2019, the Company entered into a definitive agreement to sell the three operating segments to the Middleby Corporation for a cash purchase price of $ 105 million, subject to post-closing adjustments and various transaction fees. The transaction closed on March 31, 2019 and resulted in a pre-tax gain of $ 20.5 million less related transaction expenses of $ 4.4 million.  The Company reported a tax benefit related to the sale due to the write-off of deferred tax liabilities related to the Cooking Solutions Group. A cash payment of $ 106.9 million was received on April 1, 2019. The proceeds received were subsequently used to pay down borrowings on our revolving credit facility.   71     Activity related to the Refrigerated Solutions Group, the Cooking Solutions Group and other discontinued operations for the years ended June 30, 2021 , 2020 , and 2019  is as follows (in thousands):       Year Ended June 30,       2021     2020     2019   Net sales   $ -     $ 111,841     $ 223,067                             Gain (loss) on sale of business   $ -     $ ( 19,996 )   $ 20,539   Transaction fees     -       ( 1,933 )     ( 4,397 ) Profit (loss) before taxes   $ ( 2,620 )   $ ( 23,439 )   $ 17,175   Benefit (provision) for taxes     550       2,613       2,453   Net income (loss) from discontinued operations   $ ( 2,070 )   $ ( 20,826 )   $ 19,628       20. LEASES   In the normal course of its business, the Company enters into various leases as the lessee, primarily related to certain transportation vehicles, facilities, office space, and machinery and equipment. These leases have remaining lease terms between one and fifty-seven years, some of which may include options to extend the leases or options to terminate the leases. Some lease arrangements require variable payments that are dependent on usage, output, or index-based adjustments.    Amounts (in thousands) recorded in the Company's Condensed Consolidated Balance Sheet and Statement of Operations related to leases are as follows:       June 30, 2021     June 30, 2020   Assets                 Operating lease right-of-use-asset   $ 37,276     $ 44,788                     Liabilities                 Current (accrued liabilities)   $ 7,933     $ 8,016   Operating lease long-term liabilities     29,041       36,293   Total lease liability   $ 36,974     $ 44,309     Lease cost   The components of lease costs for the years ended June  30,   2021  and 2020  are as follows (in thousands):       Year Ended     Year Ended       June 30, 2021     June 30, 2020   Operating lease cost   $ 11,747     $ 10,791   Variable lease cost     863       492   Net lease cost   $ 12,610     $ 11,283     72     Maturity of lease liability   The maturity of the Company's lease liabilities included in continuing operations at June  30,   2021 were as follows (in thousands):       Operating Leases             2022     8,823   2023     6,213   2024     4,995   2025     4,097   2026     3,313   After 2026     13,724   Less: interest     ( 4,191 ) Present value of lease liabilities   $ 36,974       The weighted average remaining lease term and discount rates are as follows:   Lease Term and Discount Rate   June 30, 2021   Weighted average remaining lease term (years)     9.3             Weighted average discount rate (percentage)     2.61 %             Other Information   Supplemental cash flow information related to leases is as follows:       Year Ended     Year Ended       June 30, 2021     June 30, 2020   Operating cash outflows from operating leases   $ 11,025     $ 10,436             73           REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM   To the stockholders and the Board of Directors of Standex International Corporation   Opinion on the Financial Statements   We have audited the accompanying consolidated balance sheet of Standex International Corporation and subsidiaries (the "Company") as of June 30, 2021, the related consolidated statement of operations, comprehensive income, stockholders' equity, and cash flows, for the year ended June 30, 2021, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2021, and the results of its operations and its cash flows for the year ended June 30, 2021, in conformity with accounting principles generally accepted in the United States of America.   We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of June 30, 2021, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated August 13, 2021, expressed an unqualified opinion on the Company's internal control over financial reporting.   Basis for Opinion   These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.   We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.   Critical Audit Matter   The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.   74       Revenue recognition – Revenue recognized over time – Refer to note 3 to the financial statements   Critical Audit Matter Description   Revenue is recognized over time under certain long-term contracts within the Engineering Technologies and Engraving groups for highly customized customer products that have no alternative use and in which the contract specifies the Company has a right to payment for its costs, plus a reasonable margin. For products manufactured over time, the transfer of control is measured pro rata, based upon current estimates of costs to complete such contracts. Losses on contracts are fully recognized in the period in which the losses become determinable. Revisions in profit estimates are reflected on a cumulative basis in the period in which the basis for such revision becomes known. For the year ended June 30, 2021, the revenue recognized over time was $37.2 million.   We identified revenue recognized over time as a critical audit matter because of the judgments and subjectivity involved in the determination of estimated costs to complete contracts. This required extensive audit effort and a high degree of auditor judgment when performing audit procedures to audit costs incurred to date and management’s estimates of margin at completion used to recognize revenue over time and evaluating the results of those procedures.   How the Critical Audit Matter Was Addressed in the Audit   Our audit procedures related to management’s estimates of total costs and profit for the performance obligation used to recognize revenue for certain performance obligations accounted for over time included the following, among others:            ● We tested the effectiveness of controls for revenue recognized over time, including management’s controls over the estimates of total costs and profit for performance obligations.     ● We selected a sample of long-term contracts with customers for which the revenue is recognized over time and we performed the following:     o evaluated whether the contracts were properly included in management’s calculation of long-term contract revenue based on the terms and conditions of each contract, including whether continuous transfer of control to the customer occurred as progress was made toward fulfilling the performance obligation     o evaluated management’s ability to achieve the estimates of total costs and profit at completion by comparing the estimates to management’s work plans, engineering specifications, and supplier contracts, and performing corroborating inquiries with the Company’s project managers and engineers.     o tested the accuracy and completeness of the costs incurred to date for the performance obligation to supporting documentation     o tested the mathematical accuracy of management’s calculation of revenue for the contract.     ● We evaluated management’s ability to estimate total costs and profits accurately by comparing actual costs and profits to management’s historical estimates for performance obligations that have been fulfilled.   /s/ DELOITTE & TOUCHE LLP   Boston, Massachusetts August 13, 2021   We have served as the Company’s auditor since 2020. 75   REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM   Board of Directors and Shareholders Standex International Corporation   Opinion on the financial statements   We have audited the accompanying consolidated balance sheet of Standex International Corporation (a Delaware corporation) and subsidiaries (the “Company”) as of June 30, 2020, the related consolidated statements of comprehensive income, changes in shareholders’ equity, and cash flows for the years ended June 30, 2020 and 2019, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2020, and the results of its operations and its cash flows for the years ended June 30, 2020 and 2019 in conformity with accounting principles generally accepted in the United States of America.   Basis for opinion   These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.   We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.   /s/ GRANT THORNTON LLP   We served as the Company’s auditor from 2015 to 2020.   Boston, Massachusetts   August 25, 2020   76       Item 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure   Not Applicable