What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2022-08-05 compared with 2021-08-13 · 201 added, 666 removed, 1566 unchanged (36% of the section changed)

17 unchanged sentences

12,750  

Current assets-discontinued operations

Total current assets

10 unchanged sentences

Deferred tax asset

17,322  

Operating lease right-of-use asset

18 unchanged sentences

Income taxes payable

Current liabilities- discontinued operations

Total current liabilities

56 unchanged sentences

Acquisition related expenses

Other operating (income) expense, net

Other operating expense

Income from operations

3 unchanged sentences

Interest expense

10,760  

Other non-operating (income) expense, net

( 1,021 )  

Income from continuing operations before income taxes

15 unchanged sentences

$ 20,188  

$ 67,914  

Basic earnings per share:

8 unchanged sentences

$ 1.64  

$ 5.40  

Diluted earnings per share:

13 unchanged sentences

For the Years Ended June 30 (in thousands)

$ 36,473  

$ 20,188  

$ 67,914  

Other comprehensive income (loss):

1 unchanged sentence

Actuarial gains (losses) and other changes in unrecognized costs, net of tax

$ 12,425  

$ ( 6,864 )  

Amortization of unrecognized costs, net of tax

1 unchanged sentence

Change in unrealized gains and (losses), net of tax

( 3,501 )  

Amortization of unrealized gains and (losses) into interest expense, net of tax

( 991 )  

Foreign currency translation gains (losses), net of tax

( 3,388 )  

Other comprehensive income (loss), net of tax

$ 31,519  

$ ( 10,381 )  

Comprehensive income

$ 67,992  

$ 9,807  

$ 52,495  

See notes to consolidated financial statements.

17 unchanged sentences

( 74 )  

( 67 )  

Stock-based compensation

24 unchanged sentences

( 332 )  

( 76 )  

Stock-based compensation

1 unchanged sentence

( 21,200 )  

Adoption of ASC 606

( 55 )  

Comprehensive income:

2 unchanged sentences

Foreign currency translation adjustment

( 3,388 )  

Pension, net of tax of $5.6 million

17,508  

Change in fair value of derivatives, net of tax of $1.6 million

17,508  

Change in fair value of derivatives, net of tax of $0.9 million

Dividends declared ($0.94 per share)

12 unchanged sentences

Stock-based compensation

11,168  

Treasury stock acquired

4 unchanged sentences

Foreign currency translation adjustment

Pension, net of tax of $5.6 million

( 46,435 )  

Pension, net of tax of $1.6 million

( 269 )  

21 unchanged sentences

( 2,070 )  

19,628  

Income from continuing operations

8 unchanged sentences

Stock-based compensation

11,168  

Gain on sale of real estate and equipment

( 456 )  

Non-cash portion of restructuring charge

5 unchanged sentences

Deferred income taxes

( 1,967 )  

Life insurance benefit

( 193 )  

Contributions to defined benefit plans

( 535 )  

( 8,120 )  

Increase/(decrease) in cash from changes in assets and liabilities, net of effects from discontinued operations and business acquisitions:

3 unchanged sentences

( 18,183 )  

Contributions to defined benefit plans

( 7,717 )  

( 4,040 )  

Prepaid expenses and other assets

6 unchanged sentences

( 5,697 )  

( 11,167 )  

Net cash provided by operating activities from continuing operations

21 unchanged sentences

Proceeds from sale of real estate and equipment

Proceeds withdrawn from life insurance policies

Other investing activity

( 721 )  

( 1,485 )  

Net cash (used for) investing activities from continuing operations

3 unchanged sentences

20,003  

107,973  

Net cash provided by (used for) investing activities

Net cash (used for) investing activities

( 31,044 )  

4 unchanged sentences

106,500  

241,950  

Payments of debt

19 unchanged sentences

17,558  

25,664  

Cash and cash equivalents at beginning of year

33 unchanged sentences

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.

The estimates and assumptions used in the preparation of the consolidated financial statements have considered the implications on the Company as a result of ongoing global events and related economic impacts.

As a result, there is heightened volatility and uncertainty around supply chain performance, labor availability, and customer demand.

However, the magnitude of such impact on the Company’s business and its duration is uncertain.

21 unchanged sentences

Balance at beginning of year

$ 1,588  

$ 2,113  

$ 1,250  

Acquisitions and other

1 unchanged sentence

Write-offs, net of recoveries

(177 )  

(1,150 )  

Balance at end of year

$ 2,214  

$ 1,588  

$ 2,113  

Inventories are stated at the lower of ( first -in, first -out) cost or market.

21 unchanged sentences

Major improvements, including those made to leased facilities, are capitalized.

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.

At the inception of an arrangement, we determine 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 

19 unchanged sentences

Patents (years)

5 to 15  

Non-compete agreements (years)

37 unchanged sentences

Foreign exchange contracts

Interest rate swaps

Financial Liabilities

Foreign exchange contracts

$ 1,222  

Interest rate swaps

12 unchanged sentences

(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’s financial liabilities based upon Level 3 inputs include contingent consideration arrangements relating to its acquisition of 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 

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 

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. 

The Company is 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, second or third year, which concluded in the fourth quarter of fiscal years 2020, 2021, and 2022  respectively. 

As of June 30, 2022 , 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 2023  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.

During the third quarter of fiscal year 2022, the parties agreed to reduce and fix the aggregate earnout payments to a total of $ 3.4 million.

The parties also agreed to accelerate the payment of the remaining unpaid amounts.

During the fourth quarter of fiscal year 2022, the Company paid $ 1.0 million to the sellers of Renco.

The remaining unpaid amount of $ 1.2 million is payable in August 2022.

The Company has determined the fair value of the liabilities for the contingent consideration based on a probability-weighted discounted cash flow analysis.

20 unchanged sentences

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.

Our total advertising expenses, which are classified under selling, general, and administrative expenses are primarily related to trade shows, and totaled $ 2.3 million, $ 1.7  million, a nd $ 1.3  million for the years ended June 30, 2022 , 2021 , and 2020 , 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 

Total research and development costs, which are classified under selling, general, and administrative expenses, were $ 12.2 million, $ 9.6 million, and $ 6.9  million for the years ended June 

30, 2022 , 2021 , and 2020 , respectively.

19 unchanged sentences

$ 1,781  

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.

The decrease in warranty expense during 

2022 compared to 2021 is primarily due to decreased warranty claims in Scientific driven by declines in sales covered by warranty during the most recent fiscal year.

Stock-Based Compensation Plans

24 unchanged sentences

The Company does not hold or issue derivative instruments for trading purposes.

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 , 

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. 

The Company's income tax provision from continuing operations for the fiscal years ended June 30, 2022 , 2021 , and 

1 unchanged sentence

26.9 %, and 24.3 %, 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, 2022 was impacted by the following items: (i) a tax provision of $ 4.3 million due to the mix of income in various jurisdictions, (ii) a tax benefit of $ 2.2 million related to Federal R&D credit and Foreign Tax Credit, (iii) a tax benefit of $ 1.3 million related to return-to-accrual adjustments to true-up up prior-period provision amounts, and (iv) a tax expense of $ 1.0 million 

related to uncertain tax position.

The Company's income tax provision from continuing operations for the fiscal year ended June 30, 2021 was impacted by the following items:

3 unchanged sentences

(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

13 unchanged sentences

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 no outstanding instruments that had an anti-dilutive effect at June 30, 2022 or 2021.

There were 

32,000  outstanding instruments that had an anti-dilutive effect at June 30, 

There were no outstanding instruments that had an anti-dilutive effect at June 30,  

32,000  outstanding instruments that had an anti-dilutive effect at June 30, 2020 .

Recently Issued Accounting Pronouncements

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.

2020 - 04  is effective for all entities as of 

March 12, 2020 

through 

November 2021, 

the FASB issued ASU 

2021 - 10,  Government Assistance (Topic 

Disclosures by Business Entities about Government Assistance, which requires business entities to provide certain disclosures when they ( 1 ) have received government assistance and ( 2 ) use a grant or contribution accounting model by analogy to other accounting guidance.

The guidance in ASU 

2021 - 10  is effective for all entities for fiscal years beginning after 

December 15, 2021 

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”

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.

Accounts Receivable Allowances 

with early adoption permitted.

The Company does 

not  expect the adoption of this ASU to have a significant impact on its Consolidated Financial Statements.

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, 2022 , the Company evaluated the significance of each acquisition on a standalone basis and in aggregate, considering both qualitative and quantitative factors.

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

Final Allocation

Fair value of business combination:

Cash payments

$ 29,530  

$ 29,613  

Less, cash acquired

( 2,132 )  

( 75 )  

Fair value of contingent consideration

$ 30,398  

$ 30,406  

Identifiable assets acquired and liabilities assumed:

Other acquired assets

$ 4,762  

$ ( 240 )  

$ 4,522  

Property, plant, & equipment

Identifiable intangible assets

10,400  

14,153  

( 162 )  

13,991  

( 712 )  

Liabilities assumed

( 3,651 )  

$ 30,398  

$ 30,406  

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.

During the fourth quarter of fiscal year 2022, the Company paid $ 3.1 million in cash for acquired assets and liabilities of a manufacturer of magnetic components.

The results are reported within the Company's Electronics segment.

The transaction resulted in $ 2.5 million of goodwill that is deductible for income tax purposes. 

Sensor Solutions

During the 

third  quarter of fiscal year 

2022 ,  the Company acquired Sensor Solutions, a designer and manufacturer of customized standard magnetic sensor products including hall effect switch and latching sensors, linear and rotary sensors, and specialty sensors.

Sensor Solutions' customer base in automotive, industrial, medical, aerospace, military and consumer electronics end markets are a strategic fit and expand the Company's presence in these markets. Sensor Solutions operates 

one  light manufacturing facility in Colorado.

Sensor Solutions' results are reported within the Company's Electronics segment.

The Company paid $ 9.9  million in cash for all the issued and outstanding equity interests of Sensor Solutions.

The purchase price was allocated to the net tangible and identifiable intangible assets acquired and liabilities assumed based on a valuation of their fair values on the closing date.

Goodwill recorded from this transaction is attributable to Sensor Solutions' technical and applications expertise in sectors such as electric vehicles, industrial automation and medical end markets, which is highly complementary to the Company's existing business.

Identifiable intangible assets of $ 2.8  million consist primarily of $ 0.8  million for indefinite lived tradenames, and $ 2.0  million of customer relationships to be amortized over 

10  years.

The goodwill of $ 6.0  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

The fair values assigned to tangible and intangible assets acquired and liabilities assumed 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. 

The components of the fair value of the Sensor Solutions acquisition, including the preliminary allocation of the purchase price are as follows (in thousands): 

Preliminary Allocation  

March 31, 2022

June 30, 2022

Final Allocation

Fair value of business combination:

5 unchanged sentences

$ 9,902  

Fair value of contingent consideration

$ 9,902  

$ 30,502  

Identifiable assets acquired and liabilities assumed:

1 unchanged sentence

$ ( 2 )  

$ ( 679 )  

$ 1,518  

Customer Backlog

( 180 )  

Property, plant, and equipment

2 unchanged sentences

( 161 )  

15,458  

Liabilities assumed

2 unchanged sentences

$ 9,902  

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.  

 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

Final Allocation

Fair value of business combination:

Cash payments

$ 39,194  

Less, cash acquired

$ 39,193  

Preliminary Allocation September 30, 2019

Final Allocation

Identifiable assets acquired and liabilities assumed:

Other acquired assets

$ 1,928  

$ ( 35 )  

$ 1,893  

$ 2,774  

Customer Backlog

Property, plant, & equipment

( 348 )  

Identifiable intangible assets

13,718  

$ 17,350  

20,142  

( 3,708 )  

$ 16,434  

Liabilities assumed

( 419 )  

$ 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 

The goodwill of $ 34.4  million created by the transaction is deductible for income tax purposes.

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

Renco Electronics

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 purchase price was allocated to the net tangible and identifiable intangible assets acquired and liabilities assumed based on a valuation of their fair values on the closing date. 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.

Identifiable 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.

The components of the fair value of the Renco Electronics acquisition, including the final allocation of the purchase price are as follows (in thousands):

Final Allocation

2 unchanged sentences

$ 29,613  

$ 57,284  

Less, cash acquired

( 558 )  

$ 56,726  

Fair value of contingent consideration

$ 30,406  

Preliminary Allocation September 30, 2019

Final Allocation

Identifiable assets acquired and liabilities assumed:

1 unchanged sentence

$ 4,522  

$ ( 1,253 )  

$ 3,770  

Customer backlog

( 800 )  

Property, plant, & equipment

( 19 )  

Identifiable intangible assets

1 unchanged sentence

13,991  

32,949  

34,360  

Liabilities assumed

$ 30,406  

( 239 )  

$ 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. 

Acquisition Related Expenses

Acquisition related expenses include costs related to acquired businesses and other pending acquisitions. 

These costs consist of (i) deferred compensation arrangements 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 defines as acquired backlog and the step-up of inventory to fair value, or the amortization of the acquired intangible assets.

For the fiscal year ended June 30, 2020, the Company recorded deferred compensation costs of $ 1.2 million 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):

The final payment due to the seller was made during the second quarter of fiscal year 2020, and the liability was considered settled. 

The components of acquisition related expenses are as follows (in thousands):

Deferred compensation arrangements

$ 1,170  

$ 2,810  

Acquisition-related costs

Acquisition related expenses

$ 1,618  

13 unchanged sentences

The following table presents revenue disaggregated by product line and segment (in thousands):

Revenue by Product Line

June 30, 2022

1 unchanged sentence

June 30, 2020

253,369  

185,294  

204,073  

Engraving Services

137,159  

132,586  

139,769  

Engraving Products

11,150  

Total Engraving

147,016  

143,736  

149,693  

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  

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):

3 unchanged sentences

United States

$ 386,829  

$ 364,188  

$ 370,235  

125,516  

98,665  

108,667  

129,908  

128,037  

144,636  

Other Americas

13,979  

13,645  

16,393  

$ 656,232  

$ 604,535  

$ 639,931  

EMEA consists primarily of Europe, Middle East and S.

5 unchanged sentences

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  

$ 656,232  

$ 604,535  

$ 639,931  

Contract Balances

2 unchanged sentences

Contract liabilities are customer deposits for which revenue has not been recognized.

Current contract liabilities are recorded as accrued expenses.

Current contract liabilities are recorded as accrued liabilities.

The timing of revenue recognition, invoicing and cash collections results in billed receivables, contract assets and contract liabilities on the consolidated balance sheets.

1 unchanged sentence

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):

The following table provides information about contract assets and liability balances (in thousands):

Year ended June 30, 2022

Balance at Beginning of Period  

Additions  

Deductions  

Balance at End of Period  

Balance at Beginning of Period

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  

11,739  

Year ended June 30, 2021

Balance at Beginning of Period  

Additions  

Deductions  

Balance at End of Period  

Balance at Beginning of Period

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):

We recognized the following revenue which was included in the contract liability beginning balances (in thousands):

Revenue recognized in the period from:

June 30, 2022

Amounts included in the contract liability balance at the beginning of the period

$ 2,298  

Amounts included in the contract liability balance at the beginning of the year

Revenue recognized in the period from:

June 30, 2021

Amounts included in the contract liability balance at the beginning of the period

Amounts included in the contract liability balance at the beginning of the year

Revenue recognized in the period from:

June 30, 2020

Amounts included in the contract liability balance at the beginning of the year

$ 1,358  

1 unchanged sentence

Raw materials

$ 47,000  

$ 37,257  

Work in process

22,539  

25,527  

Finished goods

22,323  

22,247  

$ 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 $ 14.0 million, $ 11.0  million, and $ 9.0 million in 2022 , 2021  and 

3 unchanged sentences

Land, buildings and leasehold improvements

$ 73,785  

$ 69,869  

Machinery, equipment and other

210,594  

203,258  

284,379  

273,127  

Less accumulated depreciation

( 151,006 )  

Property, plant and equipment, net

$ 133,373  

$ 132,533  

Depreciation expense totaled $ 18.0 million, $ 19.2 million, and $ 19.2 million, respectively for the years ended June 30, 2022 , 2021  and 

21 unchanged sentences

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. 

Changes to goodwill by segment associated with continuing operations during the years ended June 30, 2021  and 2020  are as follows (in thousands):

Changes to goodwill by segment associated with continuing operations during the fiscal year is as follows (in thousands):

June 30, 2021

1 unchanged sentence

June 30, 2022

$ 131,582  

$ 13,991  

$ ( 741 )  

$ 144,832  

77,195  

77,378  

15,454  

Engineering Technologies

43,685  

( 7,600 )  

37,085  

Specialty Solutions

$ 271,221  

$ 13,991  

$ ( 7,600 )  

$ 278,054  

Intangible Assets

2 unchanged sentences

June 30, 2022

$ 57,970  

$ 22,273  

$ 53,721  

$ 3,812  

$ 137,776  

Accumulated amortization

( 19,038 )  

( 16,768 )  

( 3,041 )  

Balance, June 30, 2022

$ 38,932  

$ 22,273  

$ 36,953  

$ 98,929  

June 30, 2021

$ 74,104  

$ 19,916  

$ 55,164  

$ 3,980  

$ 153,164  

Accumulated amortization

( 31,003 )  

( 13,006 )  

( 2,743 )  

Balance, June 30, 2021

$ 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 

Amortization expense from continuing operations totaled $ 9.5 million, $ 11.8 million, and $ 11.6  million, respectively for the years ended June 30, 2022 , 2021 , and 

At June 30, 2022 , aggregate amortization expense is estimated to be (in thousands):

33,632  

$ 76,656  

Long-term debt is comprised of the following at June 30 ( in thousands):

Bank credit agreements

$ 200,000  

Total funded debt

200,000  

Issuance cost

( 510 )  

Total long-term debt

$ 199,490  

$ 199,150  

The Company's long-term debt matures in December 2023. 

21 unchanged sentences

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.

At June 30, 2022  and 2021 , the Company had standby letter of credit sub-facility outstanding, primarily for insurance and trade financing purposes of $ 5.1 million and $ 6.0 million, respectively.

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):

Accrued liabilities from continuing operations recorded in our Consolidated Balance Sheets at June 30, 2022  and 2021  consist of the following (in thousands):

Payroll and employee benefits

1 unchanged sentence

$ 32,550  

Operating lease current liability

Litigation accrual

Warranty reserves

Restructuring costs

Workers' compensation

Contingent consideration

Fair value of derivatives

Lease liability

16,438  

4 unchanged sentences

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 

The Company’s effective swap agreements convert the base borrowing rate on $ 175 million of debt due under our revolving credit agreement from a variable rate equal to LIBOR to a weighted average fixed rate of 

1.18 % at 

June 30, 2022 .

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):

The fair value of the swaps recognized in accrued liabilities and in other comprehensive income (loss) is as follows (in thousands):

Effective Date

3 unchanged sentences

April 24, 2022

( 374 )  

August 6, 2018

1 unchanged sentence

August 6, 2023

( 1,401 )  

March 23, 2020

1 unchanged sentence

March 23, 2025

( 907 )  

April 24, 2020

2 unchanged sentences

25,000  

March 24, 2025

$ 8,420  

$ ( 3,096 )  

The Company reported no losses for the years ended June 30, 2022 , 

7 unchanged sentences

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. 

At June 30, 2022  and 2021 , the Company had outstanding forward contracts related to hedges of intercompany loans with net unrealized losses of $ 0.6 million and $ 1.0 million, respectively, which approximate the unrealized gains or losses on the related loans. 

The contracts have maturity dates ranging from fiscal year 2023 to 2024, which correspond to the related intercompany loans. 

8 unchanged sentences

hedging instruments

Interest rate swaps

Prepaid expenses and other current assets

Foreign exchange contracts

Prepaid expenses and other current assets

$ 8,542  

Liability Derivatives

3 unchanged sentences

Accrued Liabilities

$ 3,096  

Accrued Liabilities

4 unchanged sentences

$ 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):

2 unchanged sentences

$ 1,284  

$ 1,703  

Foreign exchange contracts

10 unchanged sentences

$ 1,964  

$ 2,287  

Interest expense

1 unchanged sentence

( 557 )  

( 1,403 )  

( 1,403 ) Other non-operating income

Net investment hedge

( 285 ) Other non-operating income

$ 2,433  

5 unchanged sentences

federal income tax rate was 35%.

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. 

tax law allows a 100%  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. 

As of June 30, 2022 , the Company maintained the assessment that previously undistributed earnings of certain foreign subsidiaries no longer meet the requirements for indefinite reinvestment under applicable accounting guidance. 

Therefore, the Company recognized deferred tax liabilities of approximately $ 1.0 million that relate to withholding taxes on the current earnings of various foreign subsidiaries. 

It is expected that 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.

26 unchanged sentences

( 1,561 )  

( 1,007 )  

Total Deferred

8 unchanged sentences

21.0 %  

( 1.4 %)  

Impact of foreign operations

4 unchanged sentences

Uncertain Tax Positions

( 1.3 %)  

Benefit from U.S.

4 unchanged sentences

( 1.6 %)  

( 3.2 %)  

Valuation allowance release

4 unchanged sentences

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.

The Company's income tax provision from continuing operations for the fiscal year ended June 30, 2022 was impacted by the following items: (i) a tax provision of $ 4.3 million due to the mix of income in various jurisdictions, (ii) a tax benefit of $ 2.2 million related to Federal R&D credit and Foreign Tax Credit, (iii) a tax benefit of $ 1.3 million related to return-to-accrual adjustments to true-up prior-period provision amounts, and (iv) a tax expense of $ 1.0 million related to uncertain tax position.

The Company's income tax provision from continuing operations for the fiscal year ended June 30, 2021 was impacted by the following items:

3 unchanged sentences

(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):

15 unchanged sentences

12,653  

19,847  

Lease liabilities

11,446  

Net operating loss and credit carry forwards

10 unchanged sentences

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. 

2022  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.

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, 2022 , the Company had gross state net operating loss ("NOL") and credit carry forwards of approximately $76.8 million and $4.4 million, respectively, which may be available to offset future state income tax liabilities and expire at various dates from 2022  through 2042.

 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.

 In addition, the Company had foreign NOL carry forwards of approximately $4.6 million, $3.7  million which carry forward indefinitely and $0.9 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.

Accordingly, we recorded an income tax provision in the consolidated statements of income of $ 0.1  million during the fiscal year ended June 30, 2022 , 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):

6 unchanged sentences

( 550 )  

Total provision

Total provision (benefit)

$ 19,783  

2 unchanged sentences

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):

The changes in the amount of gross unrecognized tax benefits were as follows (in thousands):

Beginning Balance

6 unchanged sentences

( 1,058 )  

( 328 )  

Ending Balance

2 unchanged sentences

$ 9,286  

At June 30, 2021, we had $ 9.4 million of non-current liabilities for uncertain tax positions.

At June 30, 2022 , we had $ 9.6  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.

The Company increased its uncertain tax position during the year due to Federal and state R&D tax credit exposures.

The Company decreased its uncertain tax position during the year due to an assessment received from the Canada Revenue Agency regarding Canadian withholding tax exposures and due to statutes lapsing on state tax exposures.

If the unrecognized tax benefits in the table above were recognized in a future period, $ 9.6 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. 

jurisdictions. The Company does not reasonably expect any significant changes relating to the net unrecognized tax benefits in the next twelve months. 

The following tax years, in the major tax jurisdictions noted, are open for assessment or refund:

19 unchanged sentences

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. 

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. During the fourth quarter of fiscal year 2022, the Company and MPC agreed to a full and comprehensive settlement of this matter.

As a result, the Company has recorded $ 5.7 million related to this litigation as accrued liabilities in the consolidated balance sheet and other operating expense in the consolidated statement of operations.

stock-based compensation and purchase plans

3 unchanged sentences

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 , 

Total compensation cost recognized in the consolidated statement of operations for equity based compensation awards was $ 11.2 million, $ 8.4  million, and $ 7.0  million for the years ended June 30, 2022 , 2021 , and 2020 , 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 $ 2.7 million, $ 1.8  million, and $ 1.9  million for the years ended June 30, 2022 , 

2021 and 2020 , respectively.

6 unchanged sentences

Restrictions on non-vested stock awards generally lapse between fiscal year 2023  and fiscal year 2025.

$ 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.

Compensation expense related to stock awards recognized was $ 5.0 million, $ 5.3 million, and $ 4.2 million, respectively, for fiscal years ended June 30, 2022 , 2021 , and 2020 . 

Substantially all awards are expected to vest.

A summary of restricted stock awards activity during the year ended June 30, 

2021 is as follows:

A summary of restricted stock awards activity is as follows:

Restricted Stock Awards

Grant Date  

Outstanding, June 30, 2021

146,015  

$ 80.35  

72,475  

( 44,647 )  

( 5,832 )  

Outstanding, June 30, 2022

168,011  

$ 74.61  

Restricted stock awards granted during fiscal years 

2021  and 2020  had a weighted average grant date fair value of $ 59.57 , and $ 71.38 , 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. 

2021 and 

2020 was $ 6.8 million, $ 2.8 million and $ 2.3 million, respectively. 

As of June 30, 2022 , there was $ 3.6 million of unrecognized compensation costs related to awards expected to be recognized over a weighted-average period of 1.2 years.

17 unchanged sentences

Risk-free interest rates

0.18 %  

1.42 %  

Expected life of option grants (in years)

Expected volatility of underlying stock

44.1 %  

32.0 %  

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. 

6 unchanged sentences

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:

A summary of the awards activity under the executive compensation program is as follows:

Annual Component

Performance Stock Units

Weighted  

Non-vested, June 30, 2021

32,387  

$ 64.33  

$ ( 685,647 )  

79,312  

$ 84.87  

19,311  

69,071  

Exercised / vested

( 10,474 )  

$ ( 43,978 )  

( 12,560 )  

( 105 )  

( 6,396 )  

Non-vested, June 30, 2022

41,119  

$ 54.36  

$ 691,647  

129,427  

$ 70.27  

Restricted stock awards granted under the annual component of this program in fiscal years 

6 unchanged sentences

2020 was $ 0.4 million, $ 0.7 million, and $ 0.8  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 Company recognized compensation expense related to the PSUs of $ 6.0 million, $ 2.6  million, and $ 2.9 million for the fiscal years ended June 30, 2022 , 

2021  and 

2020 respectively based on the probability of the performance targets being met.

The total unrecognized compensation costs related to non-vested performance share units was $ 5.6 million at June 30, 2022 , which is expected to be recognized over a weighted average period of 1.0 years.

3 unchanged sentences

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.

Under this amendment, at the beginning of each calendar quarter, employees may elect to purchase shares of Company stock at a value equal to 85 % of the closing price on the last trading day of the 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 48,268 at June 30, 2022 .

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.

Shares purchased under this plan aggregated to 6,707  in fiscal year 2022 , 7,509 in 2021 , and 11,132  in 2020 , at an average price of $ 83.22 , $ 66.98 , and $ 52.57 , respectively.

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):

The components of the Company’s accumulated other comprehensive income (loss) are as follows (in thousands):

Foreign currency translation adjustment

$ ( 21,244 )  

$ ( 31,046 )  

Unrealized pension losses, net of tax

( 92,372 )  

( 109,880 )  

Unrealized losses on derivative instruments, net of tax

( 2,524 )  

( 6,733 )  

$ ( 116,140 )  

$ ( 147,659 )  

$ ( 137,278 )

Unrealized losses (gains) on derivative instruments, net of tax

restructuring

6 unchanged sentences

2022 Restructuring Initiatives

$ 1,313  

$ 1,975  

Prior Year Initiatives

Total expense

$ 2,239  

$ 1,239  

$ 3,478  

2021 Restructuring Initiatives

$ 4,004  

$ 4,610  

Prior Year Initiatives

Total expense

$ 4,004  

$ 4,669  

2020 Restructuring Initiatives

1 unchanged sentence

Total expense

$ 1,163  

$ 1,289  

2022  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.

Restructuring expenses primarily related to headcount reductions and other cost saving initiatives.

During fiscal year 

2021 ,  we have also incurred restructuring expenses related to 

2022 ,  we also incurred restructuring expenses related to 

third  party assistance with analysis and implementation of these activities.

3 unchanged sentences

Additions and adjustments

( 1,274 )  

( 662 )  

Restructuring liabilities at June 30, 2022

1 unchanged sentence

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 

During fiscal years 2021 and 2020, 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):

The Company expects to incur additional restructuring costs of approximately $ 1.7  million in fiscal year 2023  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 prior year restructuring initiatives is as follows (in thousands):

Involuntary Employee

3 unchanged sentences

Additions and adjustments

( 1,446 )  

( 585 )  

Restructuring liabilities at June 30, 2022

Activity in the reserves related to fiscal year 2020 (in thousands):

Activity in the reserves in fiscal year 2021 (in thousands):

Involuntary Employee

3 unchanged sentences

Additions and adjustments

( 3,631 )  

( 652 )  

Restructuring liabilities at June 30, 2021

2 unchanged sentences

Severance and

Year Ended June 30,

Benefit Costs

4 unchanged sentences

Total expense

$ 2,239  

$ 1,239  

$ 3,478  

Fiscal Year 2021

3 unchanged sentences

Total expense

$ 4,004  

$ 4,669  

Fiscal Year 2020

3 unchanged sentences

Total expense

$ 1,163  

$ 1,289  

Employee Benefit Plans

9 unchanged sentences

Interest Cost

10,342  

Expected return on plan assets

9 unchanged sentences

$ 1,037  

$ 1,065  

The following table sets forth the funded status and amounts recognized as of June 30, 

20 unchanged sentences

Foreign currency exchange rate & other changes

( 4,951 )  

Projected benefit obligation at end of year

12 unchanged sentences

26,277  

( 8,161 )  

Employer contribution

4 unchanged sentences

Foreign currency exchange rate

( 4,560 )  

Fair value of plan assets at end of year

6 unchanged sentences

$ ( 39,489 )  

$ ( 2,792 )  

Amounts recognized in the consolidated balance sheets consist of:

13 unchanged sentences

$ ( 39,489 )  

$ ( 2,792 )  

Unrecognized net actuarial loss

10 unchanged sentences

$ 4,567  

The accumulated benefit obligation for all defined benefit pension plans was $ 299.8 million and $ 309.7 million at June 30, 

The accumulated benefit obligation for all defined benefit pension plans was $226.8  million and $ 299.8 million at June 30, 

2022 and 2021 , 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.

Plan Assets and Assumptions

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$ 3,148  

$ 1,429  

Common and preferred stocks

9 unchanged sentences

$ 250,197  

Asset allocation at June 30, 2021 and 2020 and target asset allocations for 2021 are as follows:

Asset allocation and target asset allocations are as follows:

Foreign Plans

39 unchanged sentences

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.

2023, $17.6  million;

2024, $17.5  million;

2025, $17.5  million;

2026, $17.3  million;

2027, $17.2  million and five years thereafter, $83.2  million.

The Company expects to make $0.5  million of contributions to its pension plans in 2023.

The Company operates defined benefit plans in Germany and Japan which are unfunded.

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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.

Company contributions were $ 2.9  million, $ 2.9 million, and $ 3.7 million for the years ended June 30, 2022 , 2021 , and 2020 , respectively.

At June 30, 2022 , the salaried plan holds approximately 121,000 shares of Company common stock, representing approximately 4.4% of the holdings of the plan.

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Depreciation and Amortization

$ 253,369  

$ 185,294  

$ 204,073  

$ 13,159  

$ 12,339  

$ 11,751  

147,016  

143,736  

149,693  

11,140  

10,595  

79,421  

57,523  

57,621  

Engineering Technologies

75,562  

104,047  

105,270  

Specialty Solutions

100,864  

113,935  

123,274  

Corporate and Other

$ 656,232  

$ 604,535  

$ 639,931  

$ 33,241  

$ 32,294  

$ 29,288  

Income (Loss) From Operations

13 unchanged sentences

13,740  

13,676  

Engineering Technologies

14,027  

11,169  

Specialty Solutions

2 unchanged sentences

18,546  

Restructuring charge

Restructuring costs

( 4,399 )  

7 unchanged sentences

( 1,759 )  

Other operating income (expense), net

Other operating expense

( 5,745 )  

12 unchanged sentences

( 7,475 )  

Other non-operating (expense) income, net

( 1,131 )  

7 unchanged sentences

Identifiable Assets

$ 144,832  

$ 131,582  

$ 382,045  

$ 324,725  

77,378  

77,195  

263,406  

257,104  

15,454  

110,300  

90,595  

Engineering Technologies

37,085  

43,685  

114,012  

147,797  

Specialty Solutions

46,883  

52,528  

Corporate & Other

45,577  

55,193  

Discontinued Operations

$ 278,054  

$ 271,221  

$ 962,223  

$ 930,878  

Tangible Long-lived assets

United States

$ 63,613  

$ 69,548  

33,722  

32,057  

30,677  

26,057  

Other Americas

$ 133,373  

$ 132,533  

EMEA consists primarily of Europe, Middle East and S.

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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.

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):

Activity related to the Refrigerated Solutions Group and other discontinued operations for the years ended is as follows (in thousands):

Year Ended June 30,

$ 111,841  

$ 223,067  

Gain (loss) on sale of business

$ ( 19,996 )  

$ 20,539  

Transaction fees

( 1,933 )  

Profit (loss) before taxes

$ ( 2,620 )  

$ ( 23,439 )  

$ 17,175  

Benefit (provision) for taxes

Net income (loss) from discontinued operations

$ ( 2,070 )  

$ ( 20,826 )  

$ 19,628  

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.

These leases have remaining lease terms between one and fifty-six 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:

Amounts recorded in the Company's Consolidated Balance Sheet and Statement of Operations related to leases are as follows (in thousands):

June 30, 2022

1 unchanged sentence

Operating lease right-of-use-asset

$ 37,276  

$ 44,788  

Current accrued liabilities

$ 7,933  

$ 8,016  

Operating lease long-term liabilities

29,041  

36,293  

Total lease liability

$ 36,974  

$ 44,309  

The components of lease costs for the years ended June 

2021  and 2020  are as follows (in thousands):

The components of lease costs are as follows (in thousands):

June 30, 2022

1 unchanged sentence

Operating lease cost

$ 11,747  

$ 10,791  

Variable lease cost

Net lease cost

$ 12,610  

$ 11,283  

Maturity of lease liability

2 unchanged sentences

Operating Leases

13,724  

Present value of lease liabilities

$ 36,974  

The weighted average remaining lease term and discount rates are as follows:

8 unchanged sentences

Operating cash outflows from operating leases

$ 11,025  

$ 10,436  

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

1 unchanged sentence

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 audited the accompanying consolidated balance sheet of Standex International Corporation and subsidiaries (the "Company") as of June 30, 2022 and 2021, the related consolidated statements of operations, comprehensive income, stockholders' equity, and cash flows, for the each of the two years in the period ended June 30, 2022, 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, 2022, and the results of its operations and its cash flows for each of the two years in the period ended June 30, 2022, 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, 2022, based on criteria established in Internal Control —

26 unchanged sentences

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:       

Our audit procedures related to management’s estimates of total costs and profit for the performance obligations 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.

5 unchanged sentences

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

/s/ DELOITTE & TOUCHE LLP

Boston, Massachusetts

5 unchanged sentences

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.

We have audited the consolidated balance sheet of Standex International Corporation  and subsidiaries (the “Company”) as of June 30, 2020 (not presented herein), and the related consolidated statements of operations, comprehensive income, changes in stockholders’

equity, and cash flows for the year then ended (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 year ended June 30, 2020, 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.

Our responsibility is to express an opinion on the Company’s financial statements based on our audit.

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.

We conducted our audit 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.

Our audit 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.

Our audit 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 audit provides a reasonable basis for our opinion.

/s/ GRANT THORNTON LLP

5 unchanged sentences

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

What changed 10-K

Item 8. Financial Statements and Supplementary Data