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Item 8. Financial Statements and Supplementary Data

2024-08-02 compared with 2023-08-04 · 661 added, 1102 removed, 809 unchanged (69% of the section changed)

5 unchanged sentences

Cash and cash equivalents

$ 195,706  

$ 104,844  

$ 154,203 $ 195,706

Accounts receivable, net

123,440  

117,075  

98,537  

105,339  

121,365 123,440

87,106 98,537

Prepaid expenses and other current assets

64,739  

45,210  

Income taxes receivable

22,028 34,432

Contract assets

45,393 31,138

Total current assets

483,253  

378,998  

430,095 483,253

Property, plant and equipment, net

130,937  

128,584  

134,963 130,937

Intangible assets, net

75,651  

85,770  

264,821  

267,906  

78,673 75,651

281,283 264,821

Deferred tax asset

14,602  

17,450 14,602

Operating lease right-of-use asset

33,273  

39,119  

37,078 33,273

Other non-current assets

22,392  

25,876  

25,515 22,392

Total non-current assets

541,676  

555,441  

$ 1,024,929  

$ 934,439  

574,962 541,676

$ 1,005,057 $ 1,024,929

LIABILITIES AND STOCKHOLDERS' EQUITY

1 unchanged sentence

Accounts payable

$ 68,601  

$ 74,520  

$ 63,364 $ 68,601

Accrued liabilities

62,031  

67,773  

56,698 62,031

Income taxes payable

10,335  

Total current liabilities

140,967  

150,768  

127,565 140,967

Long-term debt

173,441  

174,830  

148,876 173,441

Operating lease long-term liabilities

25,774  

31,357  

30,725 25,774

Accrued pension and other non-current liabilities

77,298  

78,141  

76,388 77,298

Total non-current liabilities

276,513  

284,328  

255,989 276,513

Contingencies (Note 12)

1 unchanged sentence

Common stock, par value $ 1.50 per share - 60,000,000 shares authorized, 27,984,278 issued, 11,761,700 and 11,744,991 shares outstanding in 2024 and 2023

41,976  

41,976 41,976

Additional paid-in capital

100,555  

91,200  

106,193 100,555

Retained earnings

1,027,279  

901,421  

1,086,277 1,027,279

Accumulated other comprehensive loss

( 158,477 )  

( 182,956 ) ( 158,477 )

Treasury shares ( 16,222,578 shares in 2024 and 16,239,287 shares in 2023)

( 403,884 )  

( 429,987 ) ( 403,884 )

Total stockholders' equity

607,449  

499,343  

621,503 607,449

Total liabilities and stockholders' equity

$ 1,024,929  

$ 934,439  

$ 1,005,057 $ 1,024,929

See notes to consolidated financial statements.

28 unchanged sentences

Defined benefit pension plans:

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

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

Amortization of unrecognized costs, net of tax

2 unchanged sentences

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

Foreign currency translation gains (losses), net of tax

Other comprehensive income (loss), net of tax

Foreign currency translation (losses), net of tax

Other comprehensive (loss), net of tax

Comprehensive income

2 unchanged sentences

Consolidated Statements of Stockholders' Equity

Accumulated  

Comprehensive

1 unchanged sentence

Treasury Stock

Stockholders’

(in thousands, except as specified)

Balance, June 30, 2021

$ 41,976  

$ 72,752  

$ 827,656  

$ ( 147,659 )  

15,748  

$ ( 333,093 )  

$ 461,632  

$ 41,976 $ 80,788 $ 852,489 $ ( 116,140 ) 15,940 $ ( 352,688 ) $ 506,425

Stock issued under incentive compensation plans and employee purchase plans

( 332 )  

( 76 )  

- ( 756 ) - - ( 97 ) 2,171 1,415

Stock-based compensation

- 11,168 - - - - 11,168

Treasury stock acquired

( 21,200 )  

- - - - 317 ( 31,425 ) ( 31,425 )

Comprehensive income:

36,473  

- - 61,393 - - - 61,393

Foreign currency translation adjustment

- - - ( 46,435 ) - - ( 46,435 )

Pension, net of tax of $ 1.6 million

17,508  

- - - ( 269 ) - - ( 269 )

Change in fair value of derivatives, net of tax of $ 2.8 million

- - - 9,532 - - 9,532

Dividends declared ($ 1.02 per share)

( 11,640 )  

- - ( 12,461 ) - - - ( 12,461 )

Balance, June 30, 2022

$ 41,976  

$ 80,788  

$ 852,489  

$ ( 116,140 )  

15,940  

$ ( 352,688 )  

$ 506,425  

$ 41,976 $ 91,200 $ 901,421 $ ( 153,312 ) 16,160 $ ( 381,942 ) $ 499,343

Stock issued under incentive compensation plans and employee purchase plans

( 756 )  

( 97 )  

- ( 2,355 ) - - ( 155 ) 3,696 1,341

Stock-based compensation

11,168  

- 11,710 - - - - 11,710

Treasury stock acquired

( 31,425 )  

- - - - 234 ( 25,638 ) ( 25,638 )

Comprehensive income:

61,393  

- - 138,992 - - - 138,992

Foreign currency translation adjustment

( 46,435 )  

- - - ( 6,694 ) - - ( 6,694 )

Pension, net of tax of $ 1.8 million

( 269 )  

- - - ( 120 ) - - ( 120 )

Change in fair value of derivatives, net of tax of $ 0.5 million

- - - 1,649 - - 1,649

Dividends declared ($ 1.10 per share)

( 12,461 )  

- - ( 13,134 ) - - - ( 13,134 )

Balance, June 30, 2023

$ 41,976  

$ 91,200  

$ 901,421  

$ ( 153,312 )  

16,160  

$ ( 381,942 )  

$ 499,343  

$ 41,976 $ 100,555 $ 1,027,279 $ ( 158,477 ) 16,239 $ ( 403,884 ) $ 607,449

Stock issued under incentive compensation plans and employee purchase plans

( 2,355 )  

( 155 )  

- ( 4,173 ) - - ( 223 ) 5,698 1,525

Stock-based compensation

11,710  

- 9,811 - - - - 9,811

Treasury stock acquired

( 25,638 )  

- - - - 206 ( 31,801 ) ( 31,801 )

Comprehensive income:

138,992  

- - 73,074 - - - 73,074

Foreign currency translation adjustment

( 6,694 )  

- - - ( 17,555 ) - - ( 17,555 )

Pension, net of tax of $ 0.5 million

( 120 )  

- - - ( 2,755 ) - - ( 2,755 )

Change in fair value of derivatives, net of tax of $ 1.4 million

- - - ( 4,169 ) - - ( 4,169 )

Dividends declared ($ 1.18 per share)

( 13,134 )  

- - ( 14,076 ) - - - ( 14,076 )

Balance, June 30, 2024

$ 41,976  

$ 100,555  

$ 1,027,279  

$ ( 158,477 )  

16,239  

$ ( 403,884 )  

$ 607,449  

$ 41,976 $ 106,193 $ 1,086,277 $ ( 182,956 ) 16,222 $ ( 429,987 ) $ 621,503

See notes to consolidated financial statements.

11 unchanged sentences

(Gain) loss on sale of business

Gain from extinguishment of debt - PPP loan

Deferred income taxes

41 unchanged sentences

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, 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”).

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, Turkey, India, and China.

All intercompany accounts and transactions have been eliminated in consolidation.

6 unchanged sentences

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 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.

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, 2023  and the issuance date of this Annual Report on Form 10 -K.

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, 2024 and the issuance date of this Annual Report on Form 10 -K.

Cash and Cash Equivalents

1 unchanged sentence

These investments are carried at cost, which approximates fair value.

At June 30, 2023  and 2022 , the C ompany’s cash was comprised solely of cash on deposit.

At June 30, 2024 and 2023 , the C ompany’s cash was comprised solely of cash on deposit.

Trading Securities

1 unchanged sentence

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 $ 3.7 million at 

June 30, 2023  and $ 3.0 million at June 30, 2022 .

The investments, generally consisting of mutual funds, are included in other non-current assets and amounted to $ 4.9 million at June 30, 2024 and $ 3.7 million at June 30, 2023 .

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.

The changes in the allowances for credit losses accounts during 2023 , 2022 , and 

2021 were as follows (in thousands):

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.

The changes in the allowances for credit losses accounts during 2024 , 2023 , and 2022 were as follows (in thousands):

Balance at beginning of year

$ 2,214  

$ 1,588  

$ 2,113  

$ 2,788 $ 2,214 $ 1,588

Acquisitions and other

Provision charged to expense

668 1,521 699

Write-offs, net of recoveries

(947 )  

(177 )  

( 1,556 ) ( 947 ) ( 177 )

Balance at end of year

$ 2,788  

$ 2,214  

$ 1,588  

$ 1,882 $ 2,788 $ 2,214

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.

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

8 unchanged sentences

Buildings (years)

40 to 50  

Leasehold improvements

1 unchanged sentence

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.

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 

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.

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 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.

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.

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.

Options to renew a lease are not included in the Company’s assessment unless there is reasonable certainty that the Company will renew.

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:

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)

5 to 15  

Non-compete agreements (years)

1 unchanged sentence

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.

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

5 unchanged sentences

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.

Level 1 – Quoted prices (unadjusted) in active markets for identical assets and liabilities.

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.

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, 2023 or 2022 . 

The Company’s policy is to recognize transfers between levels as of the date they occur.

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, 2024 or 2023 .

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.

2 unchanged sentences

Marketable securities - deferred compensation plan

$ 3,720  

$ 4,917 $ 4,917 $ - $ -

Foreign exchange contracts

Interest rate swaps

10,235  

4,673 - 4,673 -

Debt securities

2,679 - - 2,679

Equity securities

2,009 - - 2,009

Financial Liabilities

Foreign exchange contracts

$ 1,722  

Interest rate swaps

Contingent consideration(a)

$ 660 - - $ 660

Financial Assets

Marketable securities - deferred compensation plan

$ 3,033  

$ 3,720 $ 3,720 $ - $ -

Foreign exchange contracts

Interest rate swaps

10,235 - 10,235 -

Debt securities

2,729 - - 2,729

Equity securities

2,046 - - 2,046

Financial Liabilities

Foreign exchange contracts

Interest rate swaps

Contingent consideration(a)

$ 1,722 - 1,722 -

(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 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 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, third or fourth  year, which concluded in the fourth quarter of fiscal years 2020, 2021, 2022 and 2023  respectively. 

As of June 30, 2023 , 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 year 

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.

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 $ 1.2 million was paid in the first quarter of fiscal year 

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

The Company’s financial liabilities based upon Level 3 inputs include contingent consideration arrangements relating to its acquisition of SEPL and GS Engineering.

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 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, third or fourth year, which concluded in the fourth quarter of fiscal years 2020, 2021, 2022, 2023 and 2024 respectively.

As of June 30, 2024 , the Company has no further obligations under this contingent consideration arrangement.

The Company is obligated to pay contingent consideration to the sellers of SEPL in the event that certain financial targets are achieved during the two years following acquisition, which occurred in the fourth quarter of fiscal year 2024.

The maximum liability under this arrangement is $ 0.7 million.

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

The fair value of the contingent consideration liability associated with future payments was based on several factors, the most significant of which are typically the financial performance of the acquired businesses and the risk-adjusted discount rate for the fair value measurement.

Additionally, the Company has financial assets based upon Level 3 inputs, which represent investments in a privately held company.

4 unchanged sentences

The Company monitors this investment to evaluate whether any increase or decline in the value has occurred, based on the implied value of recent company financings, public market prices of comparable companies and general market conditions.

In the third quarter of fiscal year 2023, the Company purchased $ 2.7  million of debt securities from the same privately held company.

The available for sale asset was recorded in current asset in the Prepaid expenses and other current assets line of the consolidated balance sheet to reflect the initial fair value of the instrument acquired.

This asset will mature one year from the date of issuance.

Available-for-sale debt securities are recorded at fair market value and unrealized gains and losses are included in accumulated other comprehensive income (loss) in equity, net of related tax effects, unless the security has experienced a credit loss, we have determined that we have the intent to sell the security or we have determined that it is more likely than not that we will have to sell the security before its expected recovery.

Realized gains and losses are reported in other (income) expense, net.

There have been no changes in the fair value of the estimates for the Level 3 assets in fiscal year 2023 other than the impact of foreign exchange, which increased the fair value of the equity securities by less than $ 0.1 million from the prior year. 

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. 

In the third quarter of fiscal year 2023, the Company purchased $ 2.7 million of debt securities from the same privately held company.

The available for sale asset was recorded as a current asset in the prepaid expenses and other current assets line of the consolidated balance sheet to reflect the initial fair value of the instrument acquired.

This asset was originally due to mature one year from the date of issuance.

In fiscal year 2024 , the maturity was extended to August 2024.

Realized gains and losses are reported in other non-operating (income) expense, net.

There have been no changes in the fair value of the estimates for the Level 3 assets in fiscal year 2024 other than the impact of foreign exchange, which decreased the fair value of the equity securities by $ 0.1 million from the prior year.

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

15 unchanged sentences

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 $ 2.7 million, $ 2.3  million, a nd $ 1.7  million for the years ended June 30, 2023 , 2022 , and 2021 , respectively.

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 $ 2.4 million, $ 2.7 million, a nd $ 2.3 million for the years ended June 30, 2024 , 2023 , and 2022 , 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 $ 17.2 million, $ 12.2  million, and $ 9.6 million for the years ended June 

30, 2023 , 2022 , and 2021 , respectively.

Total research and development costs, which are classified under selling, general, and administrative expenses, were $ 20.5 million, $ 17.2 million, and $ 12.2 million for the years ended June 30, 2024 , 2023 , and 2022 , respectively.

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.

The changes in the continuing operations warranty reserve, which are recorded as accrued liabilities, during 2023 , 2022 , and 

2021 were as follows (in thousands):

The changes in the continuing operations warranty reserve, which are recorded as accrued liabilities, during 2024 , 2023 , and 2022 were as follows (in thousands):

Balance at beginning of year

$ 1,918  

$ 2,086  

$ 1,781  

$ 2,094 $ 1,918 $ 2,086

Acquisitions and other charges

( 29 )  

Warranty expense

2,230 1,939 1,083

Warranty claims

( 1,763 )  

( 1,222 )  

( 2,207 ) ( 1,763 ) ( 1,222 )

Balance at end of year

$ 2,094  

$ 1,918  

$ 2,086  

The increase in warranty expense during 

2023 compared to 2022 is primarily due to increased warranty claims in Specialty Solutions driven by increases in sales covered by warranty during the most recent fiscal year.

$ 2,209 $ 2,094 $ 1,918

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.

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.

7 unchanged sentences

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.

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.

4 unchanged sentences

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.

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.

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.

1 unchanged sentence

The income tax provision from continuing operations for the fiscal year ended June 30, 2024 was $ 21.5 million, or an effective rate of 22.6 %, compared to $ 24.8 million, or an effective rate of 15.1 %, for the year ended June 30, 2023, and $ 19.8 million, or an effective rate of 24.4 %, for the year ended June 30, 2022.

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 our income or loss, the mix of income earned in the U.S. versus outside the U.S., 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.

versus outside the U.S., 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 income tax provision from continuing operations for the fiscal year ended June 30, 2024 was impacted by the following items:

(i) a tax provision of $ 3.1 million due to the mix of income in various jurisdictions, (ii) tax benefits of $ 2.8 million related to foreign tax credits of $ 0.7 million, as well as Federal R&D tax credits of $ 2.1 million, (iii) a tax provision of $ 3.8 million related to officers’ compensation, and (iv) a tax benefit of $ 3.9 million relating to share-based compensation.

The income tax provision from continuing operations for the fiscal year ended June 30, 2023 was impacted by the following items:

(i) a tax benefit of $ 4.3 million due to the mix of income in various jurisdictions, (ii) tax benefits of $ 14.3 million primarily related to foreign tax credits of $ 11.6 million, as well as Federal R&D tax credits of $ 2.7 million, (iii) a tax provision of $ 11.3 million related to the U.S.

tax effects of international operations, and (iv) a tax benefit of $ 5.0  million relating to the partial release of the valuation allowance on capital loss carryforwards, which were utilized against the capital gain recognized on the divestiture of the Procon business.

The 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.

tax effects of international operations, and (iv) a tax benefit of $ 5.0 million relating to the partial release of the valuation allowance on capital loss carryforwards, which were utilized against the capital gain recognized on the divestiture of the Procon business.

The 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 $ 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.

(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.

Earnings Per Share

(share amounts in thousands)

Basic –

Average Shares Outstanding

11,810  

11,974  

12,156  

Effect of Dilutive Securities –

Stock Options and Restricted Stock Awards

Diluted –

Average Shares Outstanding

12,009  

12,123  

12,258  

Both basic and diluted income is the same for computing earnings per share. 

Basic – Average Shares Outstanding

11,763 11,810 11,974

Effect of Dilutive Securities – Stock Options and Restricted Stock Awards

Diluted – Average Shares Outstanding

11,904 12,009 12,123

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, 2024, 2023 or 2022.

2 unchanged sentences

Unless otherwise discussed below, the Company does not believe that the adoption of recently issued standards had or may have a material impact on its condensed consolidated financial statements or disclosures.

The Company’s recent acquisitions are strategically significant to the future growth prospects of the Company. 

In November 2023, the FASB issued ASU 2023 - 07, Segment Reporting (Topic 280 ) ("ASU 2023 - 07" ).

This update provides, among other things, enhanced segment disclosure requirements including disclosures about significant segment expenses.

ASU 2023 - 07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

The Company will review the extent of new disclosures necessary in the coming quarters, prior to implementation during fiscal year 2025.

Other than additional disclosure, the Company does not expect a change to its condensed consolidated financial statements upon adoption.

In December 2023, the FASB issued ASU 2023 - 09, Income Taxes (Topic 740 ) - Improvements to Income Tax Disclosures.

This ASU is expected to enhance the transparency and decision usefulness of income tax disclosures by requiring public business entities on an annual basis to disclose specific categories in the rate reconciliation, additional information for reconciling items that meet a quantitative threshold, and certain information about income taxes paid.

This ASU is effective for fiscal years beginning after December 15, 2024.

The amendments in this ASU are required to be applied on a prospective basis and retrospective adoption is permitted.

The Company is currently evaluating the effect of adopting this new accounting guidance, which would be applicable to fiscal year 2026.

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, 2024 , the Company evaluated the significance of each acquisition on a standalone basis and in aggregate, considering both qualitative and quantitative factors.

Subsequent to the end of the fiscal year 2023, o n July 31, 2023, the Company paid approximately $30.0 million in cash for the purchase of all the issued and outstanding equity interests of Minntronix, a privately held company.

On July 31, 2023, the Company paid $ 29.2 million in cash for the purchase of all the issued and outstanding equity interests of Minntronix, a privately held company.

Minntronix designs and manufactures customized as well as standard magnetics components and products including transformers, inductors, current sensors, coils, chokes, and filters.

The products are used in applications across cable fiber, smart meters, industrial control and lighting, electric vehicles, and home security markets. 

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 products are used in applications across cable fiber, smart meters, industrial control and lighting, electric vehicles, and home security markets.

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

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 $ 5.8  million created by the transaction is deductible for income tax purposes.

Goodwill recorded from this transaction is attributable to Minntronix's technical and applications expertise, which is highly complementary to the Company's existing business.

Identifiable intangible assets of $ 10.7 million consist primarily of $ 3.2 million for indefinite lived tradenames and $ 7.5 million of customer relationships to be amortized over 15 years.

The goodwill of $ 13.9 million created by the transaction is not deductible for income tax purposes.

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 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 final allocation of the purchase price are as follows (in thousands): 

Final 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 Minntronix acquisition, including the preliminary allocation of the purchase price are as follows (in thousands):

Preliminary Allocation as of September 30, 2023

Preliminary Allocation as of June 30, 2024

Fair value of business combination:

Cash payments

$ 10,016  

33,890 - 33,890

Less, cash acquired

$ 9,902  

( 4,661 ) - ( 4,661 )

$ 29,229 $ - $ 29,229

Identifiable assets acquired and liabilities assumed:

Other acquired assets

Property, plant, and equipment

$ 8,282 $ - $ 8,282

Customer backlog

1,120 - 1,120

1,780 - 1,780

Property, plant, & equipment

1,039 - 1,039

Identifiable intangible assets

10,700 - 10,700

13,889 - 13,889

Liabilities assumed

$ 9,902  

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 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.

( 7,581 ) - ( 7,581 )

$ 29,229 $ - $ 29,229

On February 19, 2024, the Company completed the purchase of all the issued and outstanding equity interests of Sanyu Switch Co., Ltd (Sanyu), a privately held company for $ 20.9 million, net of cash acquired.

Sanyu designs and manufactures reed relays for test and measurement and other switching applications.

Products include surface mount relays, high current relays, high insulation relays, high density relays for test boards, and RF relays which are used in semi-conductors, other electronics manufacturing and other switching applications.

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

The Company paid $ 22.2 million in cash in the third quarter of fiscal year 2024 and recorded $ 2.5 million as holdback amounts.

Holdback amounts are used to withhold a portion of the initial purchase price payment until certain post-closing conditions are satisfied and are expected to be settled within 24 months from the date of acquisition.

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 Sanyu's technical and applications expertise, which is highly complementary to the Company's existing business.

Identifiable intangible assets of $ 2.6 million consist primarily of $ 0.7 million for indefinite lived tradenames and $ 1.9 million of customer relationships to be amortized over 12 years.

The goodwill of $ 8.2 million created by the transaction is not deductible for income tax purposes.

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. 

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

Fair value of business combination:

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 Sanyu acquisition, including the preliminary allocation of the purchase price are as follows (in thousands):

Preliminary Allocation as of March 31, 2024

Preliminary Allocation as of June 30, 2024

Total purchase consideration:

Cash payments

$ 29,613  

$ 22,178 $ - $ 22,178

2,464 - 2,464

Less cash acquired

Fair value of contingent consideration

$ 30,406  

( 3,711 ) - ( 3,711 )

$ 20,931 $ - $ 20,931

Identifiable assets acquired and liabilities assumed:

Other acquired assets

$ 4,522  

Property, plant, & equipment

$ 9,453 ( 760 ) 8,693

5,709 ( 5 ) 5,704

Property, plant, and equipment

4,791 ( 223 ) 4,568

Identifiable intangible assets

10,400  

13,991  

2,600 - 2,600

6,696 1,470 8,166

Liabilities assumed

$ 30,406  

( 8,318 ) ( 482 ) ( 8,800 )

$ 20,931 $ - $ 20,931

On May 3, 2024, the Company purchased all of the issued and outstanding equity interests of Sanyu Electric Pte Ltd, or SEPL, a privately held company for $ 3.5 million.

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

The Company paid $ 1.1 million, net of cash acquired in the fourth quarter of fiscal year 2024.

The goodwill of $ 1.9 million created by the transaction is not deductible for income tax purposes.

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. 

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

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.

Acquisition related expenses were $ 0.6 million, $ 1.6 million and $ 0.9 million for fiscal years 2023, 2022 and 2021, respectively. 

Acquisition related expenses were $ 2.6 million, $ 0.6 million and $ 1.6 million for fiscal years 2024, 2023 and 2022, respectively.

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.

10 unchanged sentences

June 30, 2022

305,872  

304,290  

253,369  

321,956 305,872 304,290

Engraving Services

145,616  

136,779  

137,159  

140,591 145,616 136,779

Engraving Products

10,094 6,451 9,476

Total Engraving

152,067  

146,255  

147,016  

74,924  

83,850  

79,421  

150,685 152,067 146,255

68,931 74,924 83,850

Engineering Technologies

81,079  

78,117  

75,562  

83,476 81,079 78,117

Hydraulics Cylinders and System

61,010  

54,864  

48,776  

55,349 61,010 54,864

Merchandising & Display

44,836  

34,305  

26,049  

21,260  

33,658  

26,039  

40,238 44,836 34,305

- 21,260 33,658

Total Specialty Solutions

127,106  

122,827  

100,864  

95,587 127,106 122,827

Total revenue by product line

$ 741,048  

$ 735,339  

$ 656,232  

The following table presents revenue from continuing operations disaggregated by geography based on company’s locations (in thousands):

$ 720,635 $ 741,048 $ 735,339

The following table presents revenue from continuing operations disaggregated by geography based on company’s locations (in thousands):

June 30, 2024

2 unchanged sentences

United States

$ 449,820  

$ 429,368  

$ 386,829  

130,130  

148,028  

125,516  

144,672  

143,967  

129,908  

$ 444,373 $ 449,820 $ 429,368

130,423 130,130 148,028

132,306 144,672 143,967

Other Americas

16,426  

13,976  

13,979  

$ 741,048  

$ 735,339  

$ 656,232  

13,533 16,426 13,976

$ 720,635 $ 741,048 $ 735,339

( 1 ) EMEA consists primarily of Europe, Middle East and S.

5 unchanged sentences

Products and services transferred at a point in time

$ 668,633  

$ 675,461  

$ 619,029  

$ 642,133 $ 668,633 $ 675,461

Products transferred over time

72,415  

59,878  

37,203  

$ 741,048  

$ 735,339  

$ 656,232  

78,502 72,415 59,878

$ 720,635 $ 741,048 $ 735,339

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 assets are recorded as prepaid expenses and other current assets.

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

1 unchanged sentence

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.

1 unchanged sentence

Year ended June 30, 2024

Balance at Beginning of Period  

Additions  

Deductions  

Balance at End of Period  

Balance at Beginning of Period Additions Deductions Balance at End of Period

Contract assets:

Prepaid expenses and other current assets

$ 24,679  

69,402  

62,943  

$ 31,138  

Contract assets

$ 31,138 75,752 61,497 $ 45,393

Contract liabilities:

Customer deposits

15,505  

15,546  

$ - 1,766 - $ 1,766

Year ended June 30, 2023

Balance at Beginning of Period  

Additions  

Deductions  

Balance at End of Period  

Balance at Beginning of Period Additions Deductions Balance at End of Period

Contract assets:

Prepaid expenses and other current assets

$ 15,013  

44,168  

34,502  

$ 24,679  

$ 24,679 69,402 62,943 $ 31,138

Contract liabilities:

Customer deposits

12,972  

13,402  

$ 41 15,505 15,546 $ -

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

8 unchanged sentences

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

$ 2,298  

Inventories are comprised of (in thousands):

Raw materials

$ 45,268  

$ 56,321  

$ 44,536 $ 45,268

Work in process

20,389  

20,592  

16,202 20,389

Finished goods

32,880  

28,426  

$ 98,537  

$ 105,339  

Distribution costs associated with the sale of inventory are recorded as a component of selling, general and administrative expenses and were $ 12.2 million, $ 14.0 million, and $ 11.0 million in 2023 , 2022  and 

2021  respectively.

26,368 32,880

$ 87,106 $ 98,537

Distribution costs associated with the sale of inventory are recorded as a component of selling, general and administrative expenses and were $ 10.8 million, $ 12.2 million, and $ 14.0 million in 2024 , 2023 and 2022 respectively.

Property, plant and equipment

1 unchanged sentence

Land, buildings and leasehold improvements

$ 79,335  

$ 74,834  

$ 86,539 $ 79,335

Machinery, equipment and other

217,497  

208,878  

296,832  

283,712  

236,375 217,497

322,914 296,832

Less accumulated depreciation

( 165,895 )  

( 187,951 ) ( 165,895 )

Property, plant and equipment, net

$ 130,937  

$ 128,584  

Depreciation expense totaled $ 18.2 million, $ 18.0 million, and $ 19.2 million, respectively for the years ended June 30, 2023 , 2022  and 

$ 134,963 $ 130,937

Depreciation expense totaled $ 18.6 million, $ 18.2 million, and $ 18.0 million, respectively for the years ended June 30, 2024 , 2023 and 2022 .

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 six reporting units for impairment testing:

1 unchanged sentence

The Specialty Solutions segment includes 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.

The Procon operating unit's goodwill balance of $ 0.2  million was written off as a part of the divestiture of the business in the third quarter of fiscal year 2023.

The Company completed its annual impairment testing as of May 31, in each of the last three 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 fiscal year is as follows (in thousands):

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.

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

June 30, 2023

1 unchanged sentence

June 30, 2024

$ 136,969  

$ ( 3,537 )  

$ 133,432  

76,250  

76,583  

15,454  

$ 133,432 $ 23,929 $ - $ ( 7,451 ) $ 149,910

76,583 - - 22 76,605

15,454 - - - 15,454

Engineering Technologies

35,928  

36,293  

36,293 - - ( 38 ) 36,255

Specialty Solutions

( 246 )  

$ 267,906  

$ ( 246 )  

$ ( 2,839 )  

$ 264,821  

3,059 - - - 3,059

$ 264,821 $ 23,929 $ - $ ( 7,467 ) $ 281,283

Intangible Assets

2 unchanged sentences

June 30, 2024

$ 58,844  

$ 22,328  

$ 42,819  

$ 3,072  

$ 127,063  

$ 67,819 $ 26,121 $ 39,023 $ 3,091 $ 136,054

Accumulated amortization

( 28,667 )  

( 19,782 )  

( 2,963 )  

( 33,479 ) - ( 20,905 ) ( 2,997 ) ( 57,381 )

Balance, June 30, 2024

$ 30,177  

$ 22,328  

$ 23,037  

$ 75,651  

$ 34,340 $ 26,121 $ 18,118 $ 94 $ 78,673

June 30, 2023

$ 58,948  

$ 22,483  

$ 45,006  

$ 3,933  

$ 130,370  

$ 58,844 $ 22,328 $ 42,819 $ 3,072 $ 127,063

Accumulated amortization

( 23,847 )  

( 17,326 )  

( 3,427 )  

( 28,667 ) - ( 19,782 ) ( 2,963 ) ( 51,412 )

Balance, June 30, 2023

$ 35,101  

$ 22,483  

$ 27,680  

$ 85,770  

Amortization expense from continuing operations totaled $ 8.6 million, $ 9.5  million, and $ 11.8 million, respectively for the years ended June 30, 2023 , 2022 , and 

$ 30,177 $ 22,328 $ 23,037 $ 109 $ 75,651

Amortization expense from continuing operations totaled $ 8.2 million, $ 8.6 million, and $ 9.5 million, respectively for the years ended June 30, 2024 , 2023 , and 2022 .

At June 30, 2024 , aggregate amortization expense is estimated to be (in thousands):

20,210  

$ 53,323  

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

Bank credit agreements

$ 175,000  

$ 150,000 $ 175,000

Total funded debt

175,000  

150,000 175,000

Issuance cost

( 1,559 )  

( 1,124 ) ( 1,559 )

Total long-term debt

$ 173,441  

$ 174,830  

The Company's long-term debt matures in February 

$ 148,876 $ 173,441

The Company's long-term debt matures in February 2028.

Bank Credit Agreements

During the third quarter of fiscal year 2023 ,  the Company entered into a Third Amended & Restated Credit Agreement which renewed the existing Credit Agreement for an additional 

five -year period (“Credit Facility”, or “facility”).

The facility 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, 2023 , the Company had the ability to borrow $ 371.5 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, 2023 . 

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, 2023 , the Company’s Interest Coverage Ratio was 20.61:1.

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.

During the third quarter of fiscal year 2023 , the Company entered into a Third Amended & Restated Credit Agreement which renewed the existing Credit Agreement for an additional five -year period (“Credit Facility”, or “facility”).

The facility 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.

As our funded debt to EBITDA ratio increases, the commitment fee increases.

As of June 30, 2024 , the Company had the ability to borrow $ 347.3 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, 2024 .

The Company’s current financial covenants under the facility are as follows:

The facility also allows unlimited non-cash charges including purchase accounting and goodwill adjustments.

At June 30, 2024 , the Company’s Interest Coverage Ratio was 25:15:1.

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, 

2023 the Company’s Leverage Ratio was 0.84:1.

As of June 30, 2023 , we had borrowings under our facility of $ 175.0 million and the effective rate of interest for outstanding borrowings under the facility was 2.97 %. 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.

At June 30, 2024 the Company’s Leverage Ratio was 0.65:1.

As of June 30, 2024 , we had borrowings under our facility of $ 150.0 million and the effective rate of interest for outstanding borrowings under the facility was 2.46 %.

Our primary sources of cash for these requirements are cash flows from continuing operations and borrowings under the facility.

Other Long-Term Borrowings

At June 30, 2023  and 2022 , the Company had standby letter of credit sub-facility outstanding, primarily for insurance and trade financing purposes of $ 3.0 million and $ 5.1 million, respectively.

At June 30, 2024 and 2023 , the Company had standby letter of credit sub-facility outstanding, primarily for insurance and trade financing purposes of $ 2.7 million and $ 3.0 million, respectively.

Accrued LIABILITIES

Accrued liabilities from continuing operations recorded in our consolidated balance sheets at June 30, 2023  and 2022  consist of the following (in thousands):

Accrued liabilities from continuing operations recorded in our consolidated balance sheets at June 30, 2024 and 2023 consist of the following (in thousands):

Payroll and employee benefits

$ 30,778  

$ 31,211  

$ 26,657 $ 30,778

Operating lease current liability

Litigation accrual

Warranty reserves

3 unchanged sentences

Fair value of derivatives

16,589  

16,438  

$ 62,031  

$ 67,773  

16,631 16,589

$ 56,698 $ 62,031

Derivative Financial Instruments

Interest Rate Swaps

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 one month Secured Overnight Financing Rate (SOFR) to a weighted average fixed rate of 

1.13 % at 

June 30, 2023 .

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

The Company’s effective swap agreements convert the base borrowing rate on $ 150 million of debt due under our revolving credit agreement from a variable rate equal to one month Secured Overnight Financing Rate (SOFR) to a weighted average fixed rate of 0.85 % at June 30, 2024 .

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

Effective Date

2 unchanged sentences

February 6, 2023

25,000  

25,000 2.80 %

August 6, 2023

February 23, 2023

100,000  

100,000 0.86 %

March 23, 2025

25,000  

25,000 0.81 %

April 24, 2025

February 24, 2023

25,000  

25,000 0.86 %

March 24, 2025

$ 10,235  

$ 8,420  

The Company reported no losses for the years ended June 30, 2023 , 

2022 , and 2021 , 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. 

$ 4,673 $ 10,235

The Company reported no losses for the years ended June 30, 2024 , 2023 , and 2022 , as a result of hedge ineffectiveness.

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. 

Hedge ineffectiveness, if any, associated with these contracts will be reported in net income. 

At June 30, 2023  and 2022 , the Company had outstanding forward contracts related to hedges of intercompany loans with net unrealized losses of $ 1.7 million and $ 0.6 million, respectively, which approximate the unrealized gains or losses on the related loans. 

The contracts have maturity dates ranging from fiscal year 2024 to 2025, which correspond to the related intercompany loans. 

The Company enters into such contracts for hedging purposes only.

Hedge ineffectiveness, if any, associated with these contracts will be reported in net income.

At June 30, 2024 and 2023 , the Company had outstanding forward contracts related to hedges of intercompany loans with net unrealized gains of less than $ 0.1 million and net realized losses of $ 1.7 million, respectively, which approximate the unrealized gains or losses on the related loans.

The contracts have maturity dates in fiscal year 2025, which correspond to the related intercompany loans.

The notional amounts of these instruments, by currency in thousands, are as follows:

16,600  

2,100,000  

1,000,000  

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):

4 unchanged sentences

Prepaid expenses and other current assets

$ 10,235  

$ 4,673 Prepaid expenses and other current assets

$ 8,420  

Foreign exchange contracts

1 unchanged sentence

- Prepaid expenses and other current assets

$ 10,235  

$ 8,542  

$ 4,673 $ 10,235

Liability Derivatives

9 unchanged sentences

Interest rate swaps

$ 6,567  

$ 9,552  

$ 1,284  

$ 1,154 $ 6,567 $ 9,552

Foreign exchange contracts

( 437 )  

$ 6,130  

$ 9,932  

$ 3,356  

315 ( 437 ) 380

$ 1,469 $ 6,130 $ 9,932

The table below presents the amount reclassified from accumulated other comprehensive income (loss) to net income for the periods ended (in thousands):

6 unchanged sentences

Interest rate swaps

$ ( 4,704 )  

$ 1,964  

$ 2,287  

$ ( 6,865 ) $ ( 4,704 ) $ 1,964 Interest expense

1 unchanged sentence

( 215 ) 672 469 Other non-operating income

$ ( 4,032 )  

$ 2,433  

$ 1,730  

$ ( 7,080 ) $ ( 4,032 ) $ 2,433

The components of income from continuing operations before income taxes are as follows (in thousands):

$ 52,091  

$ 11,885  

$ 4,997  

111,858  

69,404  

47,703  

$ 163,949  

$ 81,289  

$ 52,700  

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. 

$ 33,891 $ 52,091 $ 11,885

61,232 111,858 69,404

$ 95,123 $ 163,949 $ 81,289

The Company utilizes the asset and liability method of accounting for income taxes.

The components of the provision for income taxes on continuing operations (in thousands) were as shown below:

$ 7,207  

( 651 )  

20,472  

21,490  

15,606  

$ 6,230 $ 7,207 $ 935

692 4,242 ( 651 )

17,369 20,472 21,490

Total Current

$ 31,921  

$ 21,774  

$ 13,321  

$ ( 6,978 )  

$ 1,469  

( 489 )  

( 892 )  

( 1,561 )  

$ 24,291 $ 31,921 $ 21,774

$ ( 388 ) $ ( 6,978 ) $ 486

( 684 ) ( 489 ) ( 892 )

( 1,687 ) 342 ( 1,561 )

Total Deferred

( 7,125 )  

( 1,967 )  

$ 24,796  

$ 19,807  

$ 14,157  

( 2,759 ) ( 7,125 ) ( 1,967 )

$ 21,532 $ 24,796 $ 19,807

A reconciliation from the U.S.

1 unchanged sentence

Provision at statutory tax rate

21.0 %  

( 1.4 %)  

21.0 % 21.0 % 21.0 %

0.4 % 1.7 % ( 1.4 %)

Impact of foreign operations

(2.6 %)  

3.3 % ( 2.6 %) 5.3 %

Federal tax credits

(8.7 %)  

( 2.7 %)  

(3.0 %) ( 8.7 %) ( 2.7 %)

Cash repatriation

0.2 % 1.0 % 1.1 %

0.0 % 6.9 % 0.0 %

Uncertain Tax Positions

( 0.1 )%  

Benefit from U.S.

tax loss carryback to prior years

Tax expense on Enginetics disposal

0.4 % ( 0.1 )% 1.3 %

Officers compensation

4.0 % 0.4 % 0.8 %

Share-based compensation

( 4.0 %) ( 0.2 %) ( 0.1 %)

Return to provision

(1.3 %)  

( 1.6 %)  

0.6 % ( 1.3 %) ( 1.6 %)

Valuation allowance release

( 3.1 %)  

0.6 % ( 3.1 %) 0.0 %

Tax expense on Procon Pumps disposal

0.0 % 0.2 % 0.0 %

( 0.8 %) ( 0.1 %) 0.7 %

Effective income tax provision

15.1 %  

24.4 %  

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.

22.6 % 15.1 % 24.4 %

The income tax provision from continuing operations for the fiscal year ended June 30, 2024 was impacted by the following items:

The income tax provision from continuing operations for the fiscal year ended June 30, 2023 was impacted by the following items:

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:

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.

Significant components of the Company’s deferred income taxes are as follows (in thousands):

tax effects of international operations, and (iv) a tax benefit of $ 5.0 million relating to the partial release of the valuation allowance on capital loss carryforwards, which were utilized against the capital gain recognized on the divestiture of the Procon business.

The 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.

Significant components of the Company’s deferred income taxes are as follows (in thousands):

Deferred tax liabilities:

Depreciation and amortization

$ ( 25,951 )  

$ ( 27,625 ) $ ( 25,951 )

Withholding taxes

( 4,773 )  

( 3,197 ) ( 4,773 )

Operating lease right-of-use-asset

( 4,495 )  

( 4,532 ) ( 4,495 )

Total deferred tax liability

$ ( 35,219 )  

$ ( 35,777 ) $ ( 35,219 )

Deferred tax assets:

Accrued compensation

$ 3,633  

$ 3,020  

$ 2,569 $ 3,633

Accrued expenses and reserves

2 unchanged sentences

Net operating loss and credit carry forwards

14,302  

21,344  

15,823 14,302

Total deferred tax asset

$ 44,478  

$ 40,893  

$ 49,426 $ 44,478

Valuation allowance

( 9,562 )  

( 12,365 ) ( 9,562 )

Net deferred tax asset (liability)

$ ( 303 )  

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, 

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. 

$ 1,284 $ ( 303 )

The valuation allowance at June 30, 2024 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.

As of June 30, 2023 , the Company had gross state net operating loss ("NOL") and credit carry forwards of approximately $ 34.9 million and $ 4.9 million, respectively, which may be available to offset future state income tax liabilities and expire at various dates from 2023  through 2043.

 In addition, the Company had foreign NOL carry forwards of approximately $ 3.2  million, all of which carry forward indefinitely.

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 statement of operations. 

Accordingly, we recorded an income tax provision in the consolidated statement of operation of $ 0.1  million during the fiscal year ended June 30, 2023 

for the shortfall of tax benefits related to equity compensation.

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, 2023, 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 $ 1.7 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. 

As of June 30, 2024 , the Company had gross state net operating loss ("NOL") and credit carry forwards of approximately $ 31.8 million and $ 3.9 million, respectively, which may be available to offset future state income tax liabilities and expire at various dates from 2024 through 2044.

In addition, the Company had foreign NOL carry forwards of approximately $ 4.1 million, all of which carry forward indefinitely

Accordingly, we recorded an income tax benefit in the consolidated statement of operation of $ 3.9 million during the fiscal year ended June 30, 2024 for the windfall of tax benefits related to equity compensation.

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, 2024, 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 $ 0.7 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.

It is not practicable to estimate the amount of tax that might be payable on the remaining undistributed earnings.

The total provision (benefit) for income taxes included in the consolidated financial statements was as follows (in thousands):

The total provision (benefit) for income taxes included in the consolidated financial statements was as follows (in thousands):

Continuing operations

$ 24,796  

$ 19,807  

$ 14,157  

$ 21,532 $ 24,796 $ 19,807

Discontinued operations

( 43 )  

( 24 )  

( 137 ) ( 43 ) ( 24 )

Total provision (benefit)

$ 24,753  

$ 19,783  

$ 13,607  

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

$ 21,395 $ 24,753 $ 19,783

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

Beginning Balance

$ 9,559  

$ 9,412  

$ 9,286  

$ 9,493 $ 9,559 $ 9,412

Additions based on tax positions related to the current year

1 unchanged sentence

Reductions for tax positions of prior years

( 208 )  

( 1,058 )  

( 77 )  

- ( 208 ) ( 1,058 )

Ending Balance

$ 9,493  

$ 9,559  

$ 9,412  

At June 30, 2023 , we had $ 9.5 million of non-current liabilities, included in accrued pension and other non-current liabilities on the consolidated balance sheet for uncertain tax positions.

$ 9,766 $ 9,493 $ 9,559

At June 30, 2024 , we had $ 9.8 million of non-current liabilities, included in accrued pension and other non-current liabilities on the consolidated balance sheet 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 state R&D tax credit exposures.

The Company decreased its uncertain tax position during the year due to the settlement of an assessment from the Canada Revenue Agency regarding Canadian withholding tax exposures and due to the reduction of federal R&D tax credit exposures.

If the unrecognized tax benefits in the table above were recognized in a future period, $ 9.5 million of the unrecognized tax benefit would impact the Company’s effective tax rate.

If the unrecognized tax benefits in the table above were recognized in a future period, $ 9.8 million of the unrecognized tax benefit would impact the Company’s effective tax rate.

The Company expects a decrease in net unrecognized tax benefits of approximately $ 8.0 million in the next twelve months as a result of the lapse in the statute of limitations.

Within the next twelve months, the statute of limitations will close in various U.S., state and non-U.S.

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

jurisdictions.

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

1 unchanged sentence

United States

2020 to 2023  

2019 to 2023  

2020 to 2023  

2022 to 2023  

United Kingdom

2019 to 2023  

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, 

2023 and 

2022 , the company had $ 1.2 million and $1.1 million for accrued interest expense on unrecognized tax benefits.

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, 2024 and 2023 , the company had $ 1.3 million and $ 1.2 million for accrued interest expense on unrecognized tax benefits.

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.

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. 

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.

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. 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 in fiscal year 2022, the Company recorded $ 5.7 million related to this litigation reported in accrued liabilities in the consolidated balance sheet and other operating expense in the consolidated statement of operations.

During the first quarter of fiscal year 2023,  the liability was paid and the matter is considered settled.

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 in fiscal year 2022, the Company recorded $ 5.7 million related to this litigation reported in accrued liabilities in the consolidated balance sheet and other operating expense in the consolidated statement of operations.

During the first quarter of fiscal year 2023, the liability was paid and the matter is considered settled.

stock-based compensation and purchase plans

1 unchanged sentence

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. The Company uses shares acquired through treasury stock repurchases for the issuance of shares of common stock for the settlement of awards under its stock-based compensation plans, with the net effect of these transactions accounting for the change in common stock outstanding.

Total compensation cost recognized in the consolidated statement of operations for equity based compensation awards was $ 11.7 million, $ 11.2  million, and $ 8.4  million for the years ended June 30, 2023 , 2022 , and 2021 , 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, $ 2.7  million, and $ 1.8  million for the years ended June 30, 2023 , 

2022 and 2021 , respectively.

There were 394,284 shares of common stock reserved for issuance under various compensation plans at June 30, 2023 . 

The Company has stock plans for directors, officers and certain key employees.

The Company uses shares acquired through treasury stock repurchases for the issuance of shares of common stock for the settlement of awards under its stock-based compensation plans, with the net effect of these transactions accounting for the change in common stock outstanding.

Total compensation cost recognized in the consolidated statement of operations for equity based compensation awards was $ 9.8 million, $ 11.7 million, and $ 11.2 million for the years ended June 30, 2024 , 2023 , and 2022 , 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 $ 2.2 million, $ 1.8 million, and $ 2.7 million for the years ended June 30, 2024 , 2023 and 2022 , respectively.

There were 242,954 shares of common stock reserved for issuance under various compensation plans at June 30, 2024 .

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 2024  and fiscal year 2026.

Compensation expense related to stock awards recognized was $ 4.8 million, $ 5.0  million, and $ 5.3  million, respectively, for fiscal years ended June 30, 2023 , 2022 , and 2021 . 

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 2025 and fiscal year 2027.

Compensation expense related to stock awards recognized was $ 6.0 million, $ 4.8 million, and $ 5.0 million, respectively, for fiscal years ended June 30, 2024 , 2023 , and 2022 .

Substantially all awards are expected to vest.

A summary of restricted stock awards activity is as follows:

A summary of restricted stock awards activity is as follows:

Restricted Stock Awards

Weighted  

Outstanding, June 30, 2023

141,654  

$ 78.19  

55,781  

( 82,164 )  

( 11,335 )  

103,936 $ 89.38

43,929 151.99

( 59,404 ) 82.51

( 2,913 ) 120.97

Outstanding, June 30, 2024

103,936  

$ 89.38  

Restricted stock awards granted during fiscal years 

2022  and 2021  had a weighted average grant date fair value of $ 104.37  and $ 59.57 , 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 2023 , 

2022 and 

2021 was $ 7.4 million, $ 6.8 million and $ 2.8 million, respectively. 

As of June 30, 2023 , there was $ 3.5  million of unrecognized compensation costs related to awards expected to be recognized over a weighted-average period of 1.5 years.

85,548 $ 122.00

Restricted stock awards granted during fiscal years 2023 and 2022 had a weighted average grant date fair value of $ 95.32 and $ 104.37 , 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 2024 , 2023 and 2022 was $ 9.0 million, $ 7.4 million and $ 6.8 million, respectively.

As of June 30, 2024 , there was $ 4.3 million of unrecognized compensation costs related to awards expected to be recognized over a weighted-average period of 1.5 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 2024  and fiscal year 2026.

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 $ 0.2 million, $ 0.2  million, and $ 0.4 million for the years ended June 

30, 2023 , 

2022 and 2021 , respectively.

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 2025 and fiscal year 2027.

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 $ 0.9 million, $ 0.2 million, and $ 0.2 million for the years ended June 30, 2024 , 2023 and 2022 , respectively.

As of June 30, 2024 , there was $ 0.4 million of unrecognized compensation costs related to awards expected to be recognized over a weighted-average period of 0.9 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:

Risk-free interest rates

4.52 %  

0.46 %  

4.52 % 4.52 % 0.46 %

Expected life of option grants (in years)

Expected volatility of underlying stock

29.5 %  

46.7 %  

29.5 % 29.5 % 46.7 %

Expected quarterly dividends (per share)

$ 0.28  

$ 0.24  

$ 0.22  

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 %. 

$ 0.28 $ 0.28 $ 0.24

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. 

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 is as follows:

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

Annual Component

Performance Stock Units

Weighted  

Weighted Weighted

Non-vested, June 30, 2023

53,107  

$ 57.06  

$ 346,496  

142,170  

$ 72.68  

22,322  

52,972  

57,458 $ 60.53 $ 2,582,995 127,043 $ 79.66

9,103 106.10 102,823 81.41

Exercised / vested

( 12,915 )  

$ 587,859  

( 53,224 )  

( 5,056 )  

( 14,875 )  

( 19,414 ) 46.96 $ 2,067,623 ( 140,432 ) 58.81

( 1,612 ) 76.83 ( 1,478 ) 115.46

Non-vested, June 30, 2024

57,458  

$ 60.53  

$ 2,582,995  

127,043  

$ 79.66  

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

2023 , 2022 , and 

2021 had a weighted average grant date fair value of $ 98.36 , $ 108.92 , and $ 43.16 , respectively. 

The PSUs granted in fiscal years 

2022 and 

2021 had a weighted average grant date fair value of $ 102.61  and $ 58.81 , 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, 2023 , 2022 , and 

2021 was $ 4.6 million, $ 0.4 million, and $ 0.7  million respectively.

The Company recognized compensation expense related to the PSUs of $ 6.7 million, $ 6.0 million, and $ 2.6  million for the fiscal years ended June 30, 2023 , 

2022  and 

2021 respectively based on the probability of the performance targets being met.

The total unrecognized compensation costs related to non-vested performance share units was $ 3.7 million at June 30, 2023 , which is expected to be recognized over a weighted average period of 0.8  years.

45,535 $ 74.85 $ 2,095,116 87,956 $ 114.41

Restricted stock awards granted under the annual component of this program in fiscal years 2024 , 2023 , and 2022 had a weighted average grant date fair value of $ 81.41 , $ 98.36 , and $ 108.92 , respectively.

The PSUs granted in fiscal years 2023 and 2022 had a weighted average grant date fair value of $ 89.44 and $ 102.61 , 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, 2024 , 2023 , and 2022 was $ 21.4 million, $ 4.6 million, and $ 0.4 million respectively.

The Company recognized compensation expense related to the PSUs of $ 2.9 million, $ 6.7 million, and $ 6.0 million for the fiscal years ended June 30, 2024 , 2023 and 2022 respectively based on the probability of the performance targets being met.

The total unrecognized compensation costs related to non-vested performance share units was $ 3.8 million at June 30, 2024 , which is expected to be recognized over a weighted average period of 1.2 years.

Employee Stock Purchase Plan

2 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, 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.

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 38,234 at June 30, 2024 .

1 unchanged sentence

Accumulated Other Comprehensive Income (LosS)

The components of the Company’s accumulated other comprehensive income (loss) 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

$ ( 74,373 )  

$ ( 67,679 )  

Unrealized pension (losses), net of tax

( 92,761 )  

( 92,641 )  

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

$ ( 158,477 )  

$ ( 153,312 )  

$ ( 116,140 )

restructuring

The Company has undertaken a number of initiatives that have resulted in severance, restructuring, and related charges.

Restructuring liabilities are included in accrued liabilities on the consolidated balance sheet. A summary of charges by initiative is as follows (in thousands):

Restructuring liabilities are included in accrued liabilities on the consolidated balance sheet.

A summary of charges by initiative is as follows (in thousands):

Involuntary Employee

3 unchanged sentences

2024 Restructuring Initiatives

$ 2,361  

$ 2,574  

$ 4,484 $ 3,386 $ 7,870

Prior Year Initiatives

Total expense

$ 2,817  

$ 1,014  

$ 3,831  

$ 4,668 $ 3,538 $ 8,206

2023 Restructuring Initiatives

$ 2,690  

$ 1,709  

$ 4,399  

$ 2,361 $ 213 $ 2,574

Prior Year Initiatives

456 801 1,257

Total expense

$ 2,690  

$ 1,709  

$ 4,399  

$ 2,817 $ 1,014 $ 3,831

2022 Restructuring Initiatives

$ 1,313  

$ 1,975  

Prior Year Initiatives

$ 2,690 $ 1,709 $ 4,399

Total expense

$ 2,239  

$ 1,239  

$ 3,478  

2023  Restructuring Initiatives

$ 2,690 $ 1,709 $ 4,399

2024 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 other cost saving initiatives.

During fiscal year 

2023 ,  we also incurred restructuring expenses related to 

third  party assistance with analysis and implementation of these activities.

Employee Severance

and Benefit Costs

During fiscal year 2024 , we also incurred restructuring expenses related to third party assistance with analysis and implementation of these activities.

Involuntary Employee

Severance and

Current Year Initiatives

Benefit Costs Other Total

Restructuring liabilities at June 30, 2023

Additions and adjustments

( 1,257 )  

( 213 )  

4,484 3,386 7,870

( 3,402 ) ( 3,251 ) ( 6,653 )

Restructuring liabilities at June 30, 2024

$ 1,104  

$ 1,082 $ 135 $ 1,217

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 years 2022 and 2021, 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 $ 5.0 million in fiscal year 2024  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.

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 years 2023 and 2022, the Company also incurred restructuring expenses related to headcount reductions, facility rationalization and third party assistance with analysis and implementation of these activities.

The Company expects to incur additional restructuring costs of approximately $ 5.0 million in fiscal year 2025 as the Company continues to focus its efforts to reduce cost and improve productivity across its businesses, particularly through facility closures and consolidations.

Activity in the reserves related to prior year restructuring initiatives is as follows (in thousands):

1 unchanged sentence

Severance and

Benefit Costs

Prior Year Initiatives

Benefit Costs Other Total

Restructuring liabilities at June 30, 2023

$ 1,045  

$ 1,740  

$ 1,104 $ 192 $ 1,296

Additions and adjustments

( 1,501 )  

( 1,304 )  

( 1,117 ) ( 285 ) ( 1,402 )

Restructuring liabilities at June 30, 2024

$ 171 $ 59 $ 230

Activity in the reserves in fiscal year 2023 (in thousands):

3 unchanged sentences

Restructuring liabilities at June 30, 2022

$ 1,045 $ 695 $ 1,740

Additions and adjustments

( 1,684 )  

( 1,024 )  

2,817 1,014 3,831

( 2,758 ) ( 1,517 ) ( 4,275 )

Restructuring liabilities at June 30, 2023

$ 1,045  

$ 1,740  

The Company’s total restructuring expenses by segment are as follows (in thousands):

$ 1,104 $ 192 $ 1,296

The Company’s total restructuring expenses by segment are as follows (in thousands):

Involuntary Employee

2 unchanged sentences

Fiscal Year 2024

$ 1,048  

$ 903 $ 496 $ 1,399

2,414 3,042 5,456

Engineering Technologies

Corporate and Other

1,297 - 1,297

Total expense

$ 2,817  

$ 1,014  

$ 3,831  

$ 4,668 $ 3,538 $ 8,206

Fiscal Year 2023

Engineering Technologies

$ 222 $ 826 $ 1,048

836 188 1,024

Specialty Solutions

Corporate and Other

1,701 - 1,701

Total expense

$ 2,690  

$ 1,709  

$ 4,399  

$ 2,817 $ 1,014 $ 3,831

Fiscal Year 2022

$ 513 $ 243 $ 756

1,807 1,362 3,169

Engineering Technologies

2 unchanged sentences

Total expense

$ 2,239  

$ 1,239  

$ 3,478  

$ 2,690 $ 1,709 $ 4,399

Employee Benefit Plans

1 unchanged sentence

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. Obligations under the Company's defined benefit plan operated in Ireland have been transferred to the buyer of the Procon business as part of the divestiture.

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.

Obligations under the Company's defined benefit plan operated in Ireland have been transferred to the buyer of the Procon business as part of the divestiture in fiscal year 2023.

Obligations under the unfunded defined benefit plan operated by the Sanyu business in Japan were transferred to the Company as of the date of acquisition in the third quarter of fiscal year 2024 .

Net periodic benefit cost for U.S.

3 unchanged sentences

Year Ended June 30,

$ - $ - $ 5 $ 196 $ 176 $ 231

Interest Cost

9,891 9,586 7,320 1,190 1,039 768

Expected return on plan assets

( 11,973 )  

( 13,038 )  

( 13,012 )  

( 943 )  

( 855 )  

( 11,113 ) ( 11,973 ) ( 13,038 ) ( 1,404 ) ( 943 ) ( 855 )

Recognized net actuarial loss

( 57 )  

3,802 3,814 5,534 ( 607 ) ( 57 ) 336

Amortization of prior service cost (benefit)

- - - ( 3 ) ( 4 ) ( 4 )

Net periodic benefit cost (benefit)

$ 1,427  

$ ( 179 )  

$ 1,065  

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

2023 and 2022 for our U.S.

$ 2,580 $ 1,427 $ ( 179 ) $ ( 628 ) $ 211 $ 476

The following table sets forth the funded status and amounts recognized as of June 30, 2024 and 2023 for our U.S.

and foreign defined benefit pension plans (in thousands):

4 unchanged sentences

Benefit obligation at beginning of year

$ 199,825  

$ 252,092  

$ 30,868  

$ 47,809  

$ 184,682 $ 199,825 $ 25,454 $ 30,868

Interest cost

9,891 9,586 1,190 1,039

Actuarial gain

( 8,625 )  

( 42,844 )  

( 4,052 )  

96 ( 8,625 ) 555 ( 4,052 )

Benefits paid

( 16,104 )  

( 16,748 )  

( 1,391 )  

( 16,230 ) ( 16,104 ) ( 1,779 ) ( 1,391 )

Foreign currency exchange rate & other changes

( 1,186 )  

- - 1,378 ( 1,186 )

Projected benefit obligation at end of year

$ 184,682  

$ 199,825  

$ 25,454  

$ 30,868  

$ 178,439 $ 184,682 $ 26,994 $ 25,454

Change in plan assets

Fair value of plan assets at beginning of year

$ 157,851  

$ 212,603  

$ 30,986  

$ 45,017  

$ 142,114 $ 157,851 $ 22,250 $ 30,986

Actual return on plan assets

( 38,213 )  

( 4,855 )  

6,447 167 1,317 ( 4,855 )

Employer contribution

9,981 200 257 251

Benefits paid

( 16,104 )  

( 16,748 )  

( 1,391 )  

( 16,230 ) ( 16,104 ) ( 1,497 ) ( 1,391 )

Foreign currency exchange rate & other changes

( 2,741 )  

- - ( 94 ) ( 2,741 )

Fair value of plan assets at end of year

$ 142,114  

$ 157,851  

$ 22,250  

$ 30,986  

$ 142,312 $ 142,114 $ 22,233 $ 22,250

Funded Status

$ ( 42,568 )  

$ ( 41,974 )  

$ ( 3,204 )  

$ ( 36,127 ) $ ( 42,568 ) $ ( 4,761 ) $ ( 3,204 )

Amounts recognized in the consolidated balance sheets consist of:

Prepaid benefit cost

$ 2,807  

$ 6,295  

$ - $ - $ 2,570 $ 2,807

Current liabilities

( 148 )  

( 195 )  

( 277 )  

( 166 ) ( 148 ) ( 625 ) ( 277 )

Non-current liabilities

( 42,420 )  

( 41,779 )  

( 5,734 )  

( 35,961 ) ( 42,420 ) ( 6,706 ) ( 5,734 )

Net amount recognized

$ ( 42,568 )  

$ ( 41,974 )  

$ ( 3,204 )  

$ ( 36,127 ) $ ( 42,568 ) $ ( 4,761 ) $ ( 3,204 )

Unrecognized net actuarial loss

$ 120,087  

$ 120,719  

$ 4,032  

$ 1,479  

$ 121,045 $ 120,087 $ 5,273 $ 4,032

Unrecognized prior service cost

( 32 )  

- - ( 26 ) ( 32 )

Accumulated other comprehensive income, pre-tax

$ 120,087  

$ 120,719  

$ 4,000  

$ 1,441  

The accumulated benefit obligation for all defined benefit pension plans was $ 206.6  million and $226.8 million at June 30, 

2023 and 2022 , respectively.

$ 121,045 $ 120,087 $ 5,247 $ 4,000

The accumulated benefit obligation for all defined benefit pension plans was $ 199.2 million and $ 206.6 million at June 30, 2024 and 2023 , 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 $ 4.2 million.

Plan Assets and Assumptions

The fair values of the Company’s pension plan assets at June 30, 

2023 and 2022 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):

The fair values of the Company’s pension plan assets at June 30, 2024 and 2023 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, 2024

Cash and cash equivalents

$ 1,558  

$ 2,792 $ 2,792 $ - $ -

Common and preferred stocks

54,308  

53,111 - 53,111 -

Corporate bonds and other fixed income securities

97,215  

11,283  

$ 164,364  

$ 1,558  

$ 162,806  

96,522 - 96,522 -

12,120 - 12,120 -

$ 164,545 $ 2,792 $ 161,753 -

June 30, 2023

Cash and cash equivalents

$ 1,254  

$ 1,123  

$ 1,558 $ 1,558 $ - $ -

Common and preferred stocks

64,343  

62,557  

54,308 - 54,308 -

Corporate bonds and other fixed income securities

112,593  

111,058  

10,648  

$ 188,838  

$ 4,444  

$ 184,394  

97,215 - 97,215 -

11,283 - 11,283 -

$ 164,364 $ 1,558 $ 162,806 -

Asset allocation and target asset allocations are as follows:

6 unchanged sentences

Global balanced securities

Asset Category –

Asset Category – Target

Equity securities

8 unchanged sentences

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.

3 unchanged sentences

Discount rate

1.48 % - 5.60 % 1.4 % - 5.0 % 0.73 % - 3.00 %  

1.85 % - 5.60 % 1.48 % - 5.60 % 1.4 % - 5.0 %

Rate of compensation increase

2 unchanged sentences

Discount rate

1.37 % - 5.6 % 0.73 % - 3.0 % 0.99 % - 2.90 %  

1.48 % - 5.6 % 1.37 % - 5.6 % 0.73 % - 3.0 %

Expected return on assets

2.80 % - 6.65 % 2.05 % - 6.8 % 1.40 % - 6.90 %  

4.55 % - 6.50 % 2.80 % - 6.65 % 2.05 % - 6.8 %

Rate of compensation increase

6 unchanged sentences

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 fiscal years are as follows:  

Expected benefit payments for all plans during the next five fiscal years are as follows:

2025, $ 17.9 million;

2 unchanged sentences

2028, $ 17.7 million;

2028, $ 17.4 million and years thereafter, $ 81.7 million.

2029, $ 17.0 million and years thereafter, $ 80.9 million.

The Company expects to make $ 6.3 million of contributions to its pension plans in fiscal year 2025.

1 unchanged sentence

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.

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.

4 unchanged sentences

However, cessation of participation in a multiemployer plan and subsequent payment of any withdrawal liability is subject to the collective bargaining process.

The following table outlines the Company’s participation in multiemployer pension plans for the periods ended June 30, 2023 , 2022 , and 2021 , 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 

2023 and 

2022 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.

The following table outlines the Company’s participation in multiemployer pension plans for the periods ended June 30, 2024 , 2023 , and 2022 , 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 2024 and 2023 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.

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

1 unchanged sentence

New England Teamsters and Trucking Industry Pension Fund

04-6372430-001  

04-6372430-001 Red

Yes/ Implemented

$ 816 $ 695 $ 579 No

IAM National Pension Fund, National Pension Plan

51-6031295-002  

51-6031295-002 Red

Yes/Implemented

$ 1,264  

$ 1,099  

$ 1,144  

586 569 520 Yes

$ 1,402 $ 1,264 $ 1,099

Retirement Savings Plans

6 unchanged sentences

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 two operating segments that manufacture and sell refrigerated, heated and dry merchandizing display cases, and single and double acting telescopic and piston rod hydraulic cylinders.

The Procon business was included in the Specialty Solutions Segment through the date of divestiture in the third quarter of fiscal year 2023.

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. 

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 two operating segments that manufacture and sell refrigerated, heated and dry merchandizing display cases, and single and double acting telescopic and piston rod hydraulic cylinders.

The Procon business was included in the Specialty Solutions Segment through the date of divestiture in the third quarter of fiscal year 2023.

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.

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. 

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.

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.

2 unchanged sentences

Depreciation and Amortization

$ 305,872  

$ 304,290  

$ 253,369  

$ 11,737  

$ 11,803  

$ 13,159  

152,067  

146,255  

147,016  

10,561  

11,140  

74,924  

83,850  

79,421  

$ 321,956 $ 305,872 $ 304,290 $ 12,722 $ 11,737 $ 11,803

150,685 152,067 146,255 8,716 9,646 10,561

68,931 74,924 83,850 1,314 1,449 1,574

Engineering Technologies

81,079  

78,117  

75,562  

83,476 81,079 78,117 3,657 3,757 3,865

Specialty Solutions

127,106  

122,827  

100,864  

95,587 127,106 122,827 1,338 1,395 1,541

Corporate and Other

$ 741,048  

$ 735,339  

$ 656,232  

$ 28,474  

$ 29,697  

$ 33,241  

- - - 393 490 353

$ 720,635 $ 741,048 $ 735,339 $ 28,140 $ 28,474 $ 29,697

Income (Loss) From Operations

Capital Expenditures (1)

$ 68,979  

$ 70,428  

$ 46,600  

$ 16,542  

$ 11,809  

$ 11,154  

25,462  

21,825  

22,510  

17,109  

17,861  

18,240  

$ 64,030 $ 68,979 $ 70,428 $ 6,844 $ 16,542 $ 11,809

26,708 25,462 21,825 7,953 3,347 6,504

19,000 17,109 17,861 118 229 278

Engineering Technologies

11,050  

15,216 11,050 8,776 1,495 1,987 1,480

Specialty Solutions

25,368  

15,579  

14,358  

19,631 25,368 15,579 3,115 2,064 1,716

Restructuring costs

( 3,831 )  

( 4,399 )  

( 3,478 )  

( 8,206 ) ( 3,831 ) ( 4,399 ) - - -

Gain (loss) on sale of business

62,105  

( 14,624 )  

274 62,105 - - - -

Acquisition related costs

( 557 )  

( 1,618 )  

( 931 )  

( 2,622 ) ( 557 ) ( 1,618 ) - - -

Other operating income (expense)

( 5,745 )  

( 35,207 )  

( 34,413 )  

( 29,674 )  

$ 171,089  

$ 88,294  

$ 59,165  

$ 24,212  

$ 22,044  

$ 21,413  

( 110 ) 611 ( 5,745 ) - - -

( 32,183 ) ( 35,207 ) ( 34,413 ) 462 43 257

$ 101,738 $ 171,089 $ 88,294 $ 19,987 $ 24,212 $ 22,044

Interest expense

( 5,405 )  

( 5,874 )  

( 5,992 )  

( 4,544 ) ( 5,405 ) ( 5,874 )

Other non-operating (expense) income, net

( 1,735 )  

( 1,131 )  

( 473 )  

( 2,071 ) ( 1,735 ) ( 1,131 )

Income from continuing operations before income taxes

$ 163,949  

$ 81,289  

$ 52,700  

( 1 ) Includes capital expenditures in accounts payable of $ 0.3 million, $ 0.1 million, and $ 2.4 million at June 30, 2023 , 2022 , and 

2021 respectively.

$ 95,123 $ 163,949 $ 81,289

( 1 ) Includes capital expenditures in accounts payable of $ 1.5 million, $ 0.3 million, and $ 0.1 million at June 30, 2024 , 2023 , and 2022 respectively.

Identifiable Assets

$ 133,432  

$ 136,969  

$ 384,333  

$ 378,581  

76,583  

76,250  

262,960  

256,115  

15,454  

104,593  

114,177  

$ 149,910 $ 133,432 $ 435,473 $ 384,333

76,605 76,583 262,317 262,960

15,454 15,454 104,634 104,593

Engineering Technologies

36,293  

35,928  

120,176  

118,723  

36,255 36,293 128,897 120,176

Specialty Solutions

48,280  

57,757  

3,059 3,059 41,369 48,280

Corporate & Other

104,587  

$ 264,821  

$ 267,906  

$ 1,024,929  

$ 934,439  

- - 32,367 104,587

$ 281,283 $ 264,821 $ 1,005,057 $ 1,024,929

Tangible Long-lived assets

United States

57,087  

$ 61,540  

34,741  

32,334  

33,608  

29,736  

56,479 57,087

40,207 34,741

33,474 33,608

Other Americas

$ 130,937  

$ 128,584  

$ 134,963 $ 130,937

EMEA consists primarily of Europe, Middle East and S.

On February 28, 2023 ,  the Company divested its Procon pumps business (“Procon”) to Investindustrial, a leading European investment and advisory group.

Procon generated approximately $ 21.2  million in revenue in the first eight months of fiscal year 2023 .

 Procon, which is reported within the Specialty Solutions Group, was divested in order to focus on the continued simplification of the Company’s portfolio and enable greater focus on managing larger platforms and pursuing growth opportunities. 

The Company received $ 67.0  million cash consideration at closing, which is presented as an investing cash flow for fiscal year 2023.

  Cash consideration received at closing excludes amounts held in escrow and is net of closing cash.

The Company recorded a pre-tax gain on sale of the business of $ 62.1  million.

The operating unit's goodwill balance of $ 0.2  million was written off as a part of the transaction.

The sale transaction and financial results of Procon are classified as continuing operations in the Consolidated Financial Statements.

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.

On February 28, 2023 , the Company divested its Procon pumps business (“Procon”) to Investindustrial, a leading European investment and advisory group.

Procon generated approximately $ 21.2 million in revenue in the first eight months of fiscal year 2023 .

Procon, which is reported within the Specialty Solutions Group, was divested in order to focus on the continued simplification of the Company’s portfolio and enable greater focus on managing larger platforms and pursuing growth opportunities.

The Company received $ 67.0 million cash consideration at closing, which was presented as an investing cash flow for fiscal year 2023.

Cash consideration received at closing excluded amounts held in escrow and was net of closing cash.

The Company recorded a pre-tax gain on sale of the business of $ 62.1 million in fiscal year 2023.

The operating unit's goodwill balance of $ 0.2 million was written off as a part of the transaction.

The sale transaction and financial results of Procon were classified as continuing operations in the Consolidated Financial Statements.

During the first quarter of fiscal year 2024 , the Company recorded an additional $ 0.3 million gain on the sale of the business due to cash received in the period related to closing cash adjustments.

During the third quarter of fiscal year 2024, the company received $ 7.5 million of cash held in escrow, which was presented as an investing cash flow in fiscal year 2024 .

DISCONTINUED OPERATIONS

In pursuing our business strategy, the Company continues to divest certain businesses and record activities of these businesses as discontinued operations.

Activity related to discontinued operations for the most recent three fiscal years is as follows (in thousands):

Activity related to discontinued operations for the most recent three fiscal years is as follows (in thousands):

Year Ended June 30,

Profit (loss) before taxes

$ ( 204 )  

$ ( 113 )  

Benefit (provision) for taxes

Net income (loss) from discontinued operations

$ ( 161 )  

$ ( 89 )  

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.

(Loss) before taxes

Benefit for taxes

Net (loss) from discontinued operations

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

Some lease arrangements require variable payments that are dependent on usage, output, or index-based adjustments.

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

June 30, 2024

1 unchanged sentence

Operating lease right-of-use-asset

$ 33,273  

$ 39,119  

$ 37,078 $ 33,273

Current accrued liabilities

$ 8,036  

$ 7,891  

$ 8,289 $ 8,036

Operating lease long-term liabilities

25,774  

31,357  

30,725 25,774

Total lease liability

$ 33,810  

$ 39,248  

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

$ 39,014 $ 33,810

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

June 30, 2024

1 unchanged sentence

Operating lease cost

$ 10,391  

$ 11,153  

$ 11,477 $ 10,391

Variable lease cost

Net lease cost

$ 11,756  

$ 12,525  

$ 12,747 $ 11,756

Maturity of lease liability

The maturity of the Company's lease liabilities included in continuing operations at June 

2023 were as follows (in thousands):

The maturity of the Company's lease liabilities included in continuing operations at June 30, 2024 were as follows (in thousands):

Operating Leases

$ 8,863  

Present value of lease liabilities

$ 33,810  

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

8 unchanged sentences

Operating cash outflows from operating leases

$ 9,553  

$ 10,960  

$ 11,204 $ 9,553

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

1 unchanged sentence

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Standex International Corporation and subsidiaries (the "Company") as of June 30, 2023 and 2022, the related consolidated statements of operations, comprehensive income, stockholders' equity, and cash flows, for the each of the three years in the period ended June 30, 2023, 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, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended June 30, 2023, in conformity with accounting principles generally accepted in the United States of America.

Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated August 4, 2023 expressed an unqualified opinion on the Company's internal control over financial reporting.

We have audited the accompanying consolidated balance sheets of Standex International Corporation and subsidiaries (the "Company") as of June 30, 2024 and 2023, the related consolidated statements of operations, comprehensive income, stockholders' equity, and cash flows, for the each of the three years in the period ended June 30, 2024, 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, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended June 30, 2024, 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, 2024, 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 2, 2024 expressed an unqualified opinion on the Company's internal control over financial reporting.

Basis for Opinion

12 unchanged sentences

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.

Revenue recognition –

Revenue recognized over time –

Refer to note 3 to the financial statements

Revenue recognition – Revenue recognized over time – Refer to note 3 to the financial statements

Critical Audit Matter Description

3 unchanged sentences

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, 2023, the revenue recognized over time was $72.4 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 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.

We selected a sample of long-term contracts with customers for which the revenue is recognized over time and we performed the following:

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;

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;

tested the accuracy and completeness of the costs incurred to date for the performance obligation to supporting documentation; and

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.

tested the accuracy and completeness of the costs incurred to date for the performance obligation to supporting documentation;

tested the mathematical accuracy of management’s calculation of revenue for the contract.

/s/ Deloitte & Touche LLP

1 unchanged sentence

August 2, 2024

We have served as the Company’s auditor since 2020.

Changes In and Disagreements with Accountants on Accounting and Financial Disclosure

1 unchanged sentence

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