What changed in this filing

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Item 1. Financial Statements

2022-05-10 compared with 2021-11-09 · 165 added, 266 removed, 352 unchanged (55% of the section changed)

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(in thousands, except par values)

OCTOBER 3, 2021 JANUARY 3, 2021

APRIL 3, 2022 JANUARY 2, 2022

Current assets

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5,000 shares authorized;

none issued or outstanding at October 3, 2021 and January 3, 2021

none issued or outstanding at April 3, 2022 and January 2, 2022

Common stock, par value $ 0.10 per share;

120,000 shares authorized;

59,055 and 58,664 shares issued and outstanding at October 3, 2021 and January 3, 2021, respectively

59,328 and 59,055 shares issued and outstanding at April 3, 2022 and January 2, 2022, respectively

Additional paid-in capital 254,867 253,110

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(in thousands, except per share data)

THREE MONTHS ENDED NINE MONTHS ENDED

OCTOBER 3, 2021 OCTOBER 4, 2020 OCTOBER 3, 2021 OCTOBER 4, 2020

THREE MONTHS ENDED

APRIL 3, 2022 APRIL 4, 2021

Net sales $ 288,002 $ 253,260

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Restructuring and asset impairment charges 887 ( 130 )

Goodwill and Intangible Asset Impairment Charge — — — 121,258

OPERATING INCOME (LOSS) 24,777 15,882 70,867 ( 60,237 )

Operating income 27,420 16,866

Interest expense 6,850 7,256

Other Expense 887 2,921 2,219 9,551

INCOME (LOSS) BEFORE INCOME TAX EXPENSE 16,163 7,535 46,376 ( 85,809 )

Other expense, net 170 715

Income before income tax expense 20,400 8,895

Income tax expense 7,107 1,957

NET INCOME (LOSS) $ 10,959 $ 5,913 $ 33,408 $ ( 91,545 )

Earnings (Loss) Per Share – Basic $ 0.19 $ 0.10 $ 0.57 $ ( 1.56 )

Earnings (Loss) Per Share – Diluted $ 0.19 $ 0.10 $ 0.57 $ ( 1.56 )

Net income $ 13,293 $ 6,938

Earnings per share – basic $ 0.22 $ 0.12

Earnings per share – diluted $ 0.22 $ 0.12

Common shares outstanding – basic 59,248 58,730

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(in thousands)

THREE MONTHS ENDED NINE MONTHS ENDED

OCTOBER 3, 2021 OCTOBER 4, 2020 OCTOBER 3, 2021 OCTOBER 4, 2020

Net Income (Loss) $ 10,959 $ 5,913 $ 33,408 $ ( 91,545 )

Other Comprehensive Income (Loss), Foreign Currency Translation Adjustment ( 14,553 ) 23,402 ( 30,695 ) 24,317

Other Comprehensive Income (Loss), Cash Flow Hedge 1,323 864 2,817 ( 5,627 )

Other Comprehensive Income (Loss), Pension Liability Adjustment 2,377 ( 1,471 ) 2,566 ( 80 )

THREE MONTHS ENDED

APRIL 3, 2022 APRIL 4, 2021

Net income $ 13,293 $ 6,938

Other comprehensive loss, after tax:

Foreign currency translation adjustment ( 13,184 ) ( 19,597 )

Reclassification from accumulated other comprehensive loss - discontinued cash flow hedge 641 749

Pension liability adjustment 1,539 89

Other comprehensive loss ( 11,004 ) ( 18,759 )

Comprehensive income (loss) $ 2,289 $ ( 11,821 )

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(in thousands)

NINE MONTHS ENDED

OCTOBER 3, 2021 OCTOBER 4, 2020

THREE MONTHS ENDED

APRIL 3, 2022 APRIL 4, 2021

OPERATING ACTIVITIES:

Net income (loss) $ 33,408 $ ( 91,545 )

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

Net income $ 13,293 $ 6,938

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

Depreciation and amortization 10,670 11,934

Stock compensation amortization expense (benefit) 4,150 ( 1,416 )

Stock compensation amortization expense 2,182 924

Deferred income taxes and other 4,196 230

Amortization of acquired intangible assets 1,342 1,421

Goodwill and intangible asset impairment — 121,258

Working capital changes:

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Accounts payable and accrued expenses ( 13,798 ) 28,512

CASH PROVIDED BY OPERATING ACTIVITIES 64,056 97,268

Cash (used in) provided by operating activities ( 17,696 ) 24,855

INVESTING ACTIVITIES:

Capital expenditures ( 4,781 ) ( 5,214 )

Other — ( 183 )

Cash used in investing activities ( 4,781 ) ( 5,214 )

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Tax withholding payments for share-based compensation ( 398 ) ( 179 )

Proceeds from issuance of common stock — 93

Dividends paid ( 1,771 ) ( 4,978 )

Debt issuance costs — ( 36 )

Finance lease payments ( 479 ) ( 527 )

CASH USED IN FINANCING ACTIVITIES ( 53,079 ) ( 30,183 )

Cash provided by (used in) financing activities 2,894 ( 12,981 )

Net cash (used in) provided by operating, investing and financing activities ( 19,583 ) 6,660

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CASH AND CASH EQUIVALENTS:

Net change during the period ( 10,244 ) 22,418

Balance at beginning of period 103,053 81,301

Balance at end of period $ 92,809 $ 103,719

Net (decrease) increase ( 21,164 ) 3,870

Balance, beginning of period 97,252 103,053

Balance, end of period $ 76,088 $ 106,923

See accompanying notes to consolidated condensed financial statements.

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Basis of Presentation

References in this Quarterly Report on Form 10-Q to “Interface,” “the Company,” “we,” “our,” “ours” and “us” refer to Interface, Inc.

and its subsidiaries or any of them, unless the context requires otherwise.

As contemplated by the Securities and Exchange Commission (the “Commission”) instructions to Form 10-Q, the following footnotes have been condensed and, therefore, do not contain all disclosures required in connection with annual financial statements.

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The January 2, 2022, consolidated condensed balance sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States (“GAAP”).

The nine-month period ended October 3, 2021 includes 39 weeks, and the nine-month period ended October 4, 2020 includes 40 weeks.

The three-month periods ended October 3, 2021 and October 4, 2020 both include 13 weeks.

The three-month periods ended April 3, 2022 and April 4, 2021 both include 13 weeks.

Risks and Uncertainties

The World Health Organization declared the COVID-19 outbreak a pandemic in March 2020, and many companies have experienced disruptions in their operations.

The Company considered the impact of COVID-19 on the assumptions and estimates used and determined that, except for the goodwill and intangible asset impairment recorded in the first quarter of 2020 and discussed in Note 10 “Goodwill and Intangible Assets,” the continued impacts to our global supply chain, and its consequent impacts on production volume, raw material shortages, raw material cost increases, higher freight costs, shipping delays and labor shortages, gross profit margins, operating income, net income, cash flows, and order rates, there were no other material adverse impacts on the Company’s results of operations and financial position at October 3, 2021.

Global economic challenges, including the impact of the COVID-19 pandemic, the war in Ukraine, rising inflation and supply chain disruptions could cause economic uncertainty and volatility.

The Company considered these impacts and subsequent general uncertainties and volatility in the global economy on the assumptions and estimates used herein.

The Company determined that except for the continued impacts to our global supply chain, production volume, raw material shortages, raw material cost increases, higher freight costs, shipping delays and labor shortages, gross profit margins, operating income, net income, cash flows, and order rates, there were no other material adverse impacts on the Company’s results of operations and financial position at April 3, 2022.

The Company’s primary credit facility has various financial and other covenants including, but not limited to, a covenant to not exceed a maximum secured net debt to EBITDA ratio, as defined by the credit facility agreement.

The Company is currently in compliance with all covenants under the credit facility agreement and anticipates that it will remain in compliance with the covenants for the foreseeable future.

The full extent of the future impact of COVID-19 on the Company’s operations is uncertain.

A prolonged COVID-19 pandemic may continue to have a material adverse impact on our operations, financial condition, and supply chains.

It may negatively impact our ability to collect outstanding receivables, manage inventory, produce our products and service customers.

The impact of COVID-19 could result in additional impairment losses related to goodwill, intangible assets, and property, plant and equipment.

As the virus spreads through communities, it could impact the physical health, mental health, and productivity of our workforce as many of them are required to shelter in place and work from home for prolonged periods of time, and it could also impact our ability to reach our customers and collaborate with them as they are required to shelter in place and work from home for prolonged periods of time.

The COVID-19 pandemic is having broad and negative implications on the global economy, which affects the size and timing of our customers’ capital budgets, and could result in delays or terminations of new and existing renovation projects, remodeling projects, new construction projects, and other projects where our products are used.

COVID-19 Impact

We continue to monitor our operations and have implemented various programs to mitigate the effects of COVID-19 on our business.

Our global supply chain and manufacturing operations continue to experience increased impacts of COVID-19 including raw material shortages, raw material cost increases, higher freight costs, shipping delays, and labor shortages – particularly in the United States.

Reclassifications

In the first quarter of fiscal 2021, the Company determined that it has two operating and reportable segments – namely Americas (“AMS”) and Europe, Africa, Asia and Australia (collectively “EAAA”).

The AMS operating segment is unchanged from prior year and continues to include the United States, Canada and Latin America geographic areas.

Segment disclosures for 2020 have been restated to conform to the current reportable segment structure.

See Note 11 entitled “Segment Information” for additional information.

Recently Adopted Accounting Pronouncements

On January 4, 2021, the Company adopted Accounting Standards Update (“ASU”) 2019-12, “ Simplifying the Accounting for Income Taxes .” The amendments in this update simplify the accounting for income taxes by removing certain exceptions to the general principles in ASC Topic 740 related to intraperiod tax allocation, the calculation of income taxes in interim periods, and the accounting for outside basis differences of foreign subsidiaries and equity method investments.

The amendments also improve consistent application of and simplify GAAP for other areas of ASC Topic 740, including franchise or similar taxes partially based on income, the accounting for a step-up in tax basis goodwill, and interim recognition of an enacted change in tax laws or rates, by clarifying and amending existing guidance.

The adoption of this standard did not have a material impact to the Company’s consolidated financial statements.

Recently Issued Accounting Pronouncements Not Yet Adopted

In March 2020, the Financial Accounting Standards Board (“FASB”) issued ASU 2020-04, “ Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting .” This standard addresses the risks from the discontinuation of the London Interbank Offered Rate (LIBOR) and provides optional expedients and exceptions to contracts, hedging relationships and other transactions that reference LIBOR if certain criteria are met.

This new guidance is effective and may be applied beginning March 12, 2020 through December 31, 2022.

While the Company is currently evaluating the impact of adoption of this standard, we do not expect the adoption of this ASU to have a material impact on our consolidated financial statements.

During the first quarter of 2022, new government imposed COVID-19 lockdowns in parts of China adversely impacted sales in that region.

NOTE 2 – REVENUE RECOGNITION

Revenue from sales of carpet, modular resilient flooring, rubber flooring, and other flooring-related material was approximately 98 % of total revenue for both nine-month periods ended October 3, 2021 and October 4, 2020.

The remaining 2 % of revenue was generated from the installation of carpet and other flooring-related material for both 2021 and 2020 nine-month periods.

Revenue from sales of carpet, modular resilient flooring, rubber flooring, and other flooring-related material was approximately 99 % of total revenue for both three-month periods ended April 3, 2022 and April 4, 2021.

The remaining 1 % of revenue was generated from the installation of carpet and other flooring-related material for both three-month periods.

Disaggregation of Revenue

For the nine months ended October 3, 2021 and October 4, 2020, revenue from the Company’s customers is broken down by geography as follows:

Nine Months Ended

Geography October 3, 2021 October 4, 2020

For the three months ended April 3, 2022 and April 4, 2021, revenue from the Company’s customers is broken down by geography as follows:

Three Months Ended

Geography April 3, 2022 April 4, 2021

Americas 54.4 % 50.1 %

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Inventories are summarized as follows:

October 3, 2021 January 3, 2021

April 3, 2022 January 2, 2022

(in thousands)

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NOTE 4 – EARNINGS PER SHARE

The Company computes basic earnings or loss per share (“EPS”) by dividing net income or loss by the weighted average common shares outstanding, including participating securities outstanding, during the period as discussed below.

The Company computes basic earnings per share (“EPS”) by dividing net income by the weighted average common shares outstanding, including participating securities outstanding, during the period as discussed below.

Diluted EPS reflects the potential dilution beyond shares for basic EPS that could occur if securities or other contracts to issue common stock were exercised, converted into common stock or resulted in the issuance of common stock that would have shared in the Company’s earnings.

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The following table shows the computation of basic and diluted EPS:

Three Months Ended Nine Months Ended

October 3, 2021 October 4, 2020 October 3, 2021 October 4, 2020

Three Months Ended

April 3, 2022 April 4, 2021

(in thousands, except per share data)

Net income (loss) $ 10,959 $ 5,913 $ 33,408 $ ( 91,545 )

Net income $ 13,293 $ 6,938

distributed and undistributed earnings available to participating securities ( 190 ) ( 89 )

Distributed and undistributed earnings (loss) available to common shareholders $ 10,832 $ 5,867 $ 33,050 $ ( 91,583 )

Distributed and undistributed earnings available to common shareholders $ 13,103 $ 6,849

Weighted average shares outstanding 58,403 57,979

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Long-term debt consisted of the following:

October 3, 2021 January 3, 2021

April 3, 2022 January 2, 2022

Outstanding Principal Interest Rate (1)

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Total long-term debt, net $ 506,803 $ 503,056

(1) Represents the stated rate of interest, without the effect of debt issuance costs or interest rate swaps.

(1) Represents the stated rate of interest, without the effect of debt issuance costs.

Syndicated Credit Facility

The Syndicated Credit Facility (the “Facility”) provides the Company and certain of its subsidiaries a multicurrency revolving loan and U.S.

denominated and multicurrency term loans.

The Company’s Syndicated Credit Facility (the “Facility”) provides to the Company U.S.

denominated and multicurrency term loans and provides to the Company and certain of its subsidiaries a multicurrency revolving credit facility.

Interest on base rate loans is charged at varying rates computed by applying a margin depending on the Company’s consolidated net leverage ratio as of the most recently completed fiscal quarter.

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In addition, the Company pays a commitment fee per annum (depending on the Company’s consolidated net leverage ratio as of the most recently completed fiscal quarter) on the unused portion of the Facility.

As of both October 3, 2021 and January 3, 2021, the Company had $ 1.6 million in letters of credit outstanding under the Facility.

As of both October 3, 2021 and January 3, 2021, the carrying value of the Company’s borrowings under the Facility approximated its fair value as the Facility bears interest rates that are similar to existing market rates.

As of both April 3, 2022 and January 2, 2022, the Company had $ 1.6 million in letters of credit outstanding under the Facility.

As of both April 3, 2022 and January 2, 2022, the carrying value of the Company’s borrowings under the Facility approximated its fair value as the Facility bears interest rates that are similar to existing market rates.

Under the Facility, the Company is required to make quarterly amortization payments of the term loan borrowings, which are due on the last day of the calendar quarter.

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The 5.50% Senior Notes due 2028 (the “Senior Notes”) bear an interest rate at 5.50 % per annum and mature on December 1, 2028.

Interest is paid semi-annually on June 1 and December 1 of each year, beginning on June 1, 2021.

Interest is paid semi-annually on June 1 and December 1 of each year.

The Senior Notes are unsecured and are guaranteed, jointly and severally, by each of the Company’s material domestic subsidiaries, all of which also guarantee the obligations of the Company under its existing Facility.

As of October 3, 2021, the estimated fair value of the Senior Notes was $ 316.5 million, compared with a carrying value recorded in the Company’s consolidated condensed balance sheet of $ 300.0 million, excluding unamortized debt issuance costs.

As of April 3, 2022, the estimated fair value of the Senior Notes was $ 289.5 million, compared with a carrying value recorded in the Company’s consolidated condensed balance sheet of $ 300.0 million, excluding unamortized debt issuance costs.

The fair value of the Senior Notes is derived using quoted prices for similar instruments and is considered Level 2 within the fair value hierarchy.

Other Lines of Credit

Subsidiaries of the Company had an aggregate of the equivalent of $ 6.0 million of other lines of credit available at interest rates ranging from 3.5 % to 6.0 % as of both October 3, 2021 and January 3, 2021.

As of October 3, 2021 and January 3, 2021, there were no borrowings outstanding under these lines of credit.

Subsidiaries of the Company had an aggregate of the equivalent of $ 4.0 million of other lines of credit available at interest rates ranging from 3.5 % to 4.5 % as of April 3, 2022, and $ 6.0 million of other lines of credit available at interest rates ranging from 3.5 % to 6.0 % as of January 2, 2022.

As of April 3, 2022 and January 2, 2022, there were no borrowings outstanding under these lines of credit.

Borrowing Costs

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As these fees are expensed over the life of the outstanding borrowing, the debt balance will increase by the same amount as the fees that are expensed.

As of October 3, 2021 and January 3, 2021, the unamortized debt issuance costs recorded as a reduction of long-term debt were $ 7.7 million and $ 8.6 million, respectively.

Other deferred borrowing costs, which include underwriting, legal and other direct costs related to the issuance of revolving debt, net of accumulated amortization, were $ 1.7 million and $ 2.0 million as of October 3, 2021 and January 3, 2021, respectively.

As of April 3, 2022 and January 2, 2022, the unamortized debt issuance costs recorded as a reduction of long-term debt were $ 6.8 million and $ 7.1 million, respectively.

Other deferred borrowing costs, which include underwriting, legal and other direct costs related to the issuance of revolving debt, net of accumulated amortization, were $ 1.5 million and $ 1.6 million as of April 3, 2022 and January 2, 2022, respectively.

These amounts are included in other assets in the Company’s consolidated condensed balance sheets.

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See Note 14 entitled “Items Reclassified From Accumulated Other Comprehensive Loss” for additional information.

As of October 3, 2021 and January 3, 2021, the remaining accumulated other comprehensive loss associated with the terminated interest rate swaps was $ 4.7 million and $ 8.7 million, respectively, and will be amortized to earnings over the remaining term of the interest rate swaps prior to termination.

We expect that approximately $ 3.3 million related to the terminated interest rate swaps will be reclassified from accumulated other comprehensive loss as an increase to interest expense in the next 12 months.

The following table summarizes the impact that changes in the fair value of derivatives designated as cash flow hedges had on accumulated other comprehensive loss, net of tax, during the three and nine months ended October 4, 2020:

Three Months Ended Nine Months Ended

October 4, 2020 October 4, 2020

(in thousands)

Interest rate swap contracts gain (loss) $ 864 $ ( 5,627 )

As of April 3, 2022 and January 2, 2022, the remaining accumulated other comprehensive loss associated with the terminated interest rate swaps was $ 2.9 million and $ 3.8 million, respectively, and will be amortized to earnings over the remaining term of the interest rate swaps prior to termination.

We expect that approximately $ 2.3 million, before tax, related to the terminated interest rate swaps will be reclassified from accumulated other comprehensive loss as an increase to interest expense in the next 12 months.

Derivative Transactions Not Designated as Hedging Instruments

Our Asia-Pacific operations, from time to time, purchase foreign currency options to economically hedge inventory purchases denominated in foreign currencies other than their functional currency.

Our EAAA segment, from time to time, purchases foreign currency options to economically hedge inventory purchases denominated in foreign currencies other than their functional currency.

The Company’s objective with respect to these foreign currency options is to protect the Company against adverse fluctuations in currency rates by reducing its exposure to variability in cash flows related to payment on inventory purchases.

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Gains and losses on the changes in fair value of these foreign currency options are recognized in earnings each period.

As of October 3, 2021, the Company had no outstanding foreign currency options.

The table below sets forth the fair value of derivative instruments not designated as hedging instruments as of October 3, 2021 and January 3, 2021:

Asset Derivatives

Balance Sheet Location Fair Value as of October 3, 2021 Fair Value as of January 3, 2021

(in thousands)

Foreign currency options Other current assets $ — $ 37

The following tables summarize gains and losses on derivatives not designated as hedging instruments within the consolidated condensed statements of operations for the three and nine months ended October 3, 2021 and October 4, 2020:

As of April 3, 2022 and January 2, 2022, the Company had no outstanding foreign currency options.

The following table summarizes gains on derivatives not designated as hedging instruments within the consolidated condensed statements of operations for the three months ended April 4, 2021:

Three Months Ended

Statement of Operations Location October 3, 2021 October 4, 2020

(in thousands)

Foreign currency options gain Other expense $ 101 $ 11

Nine Months Ended

Statement of Operations Location October 3, 2021 October 4, 2020

Statement of Operations Location April 4, 2021

(in thousands)

Foreign currency options gain Other expense $ 420 $ 90

Foreign currency options gain Other expense, net $ 185

NOTE 7 – SHAREHOLDERS’ EQUITY

The following tables depict the activity in the accounts which make up shareholders’ equity for the three and nine months ended October 3, 2021 and October 4, 2020:

The following tables depict the activity in the accounts which make up shareholders’ equity for the three months ended April 3, 2022 and April 4, 2021:

SHARES COMMON STOCK ADDITIONAL PAID-IN CAPITAL RETAINED

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— — — ( 592 ) — — —

Compensation expense related to stock awards, net of forfeitures ( 26 ) ( 2 ) 689 — — — —

Compensation expense related to stock awards, net of shares received for tax withholdings ( 30 ) ( 2 ) 1,787 — — — —

Pension liability adjustment — — — — 1,539 — —

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Balance, at April 3, 2022 59,328 $ 5,933 $ 254,867 $ 274,135 $ ( 52,349 ) $ ( 113,625 ) $ ( 2,081 )

Net income — — — 15,511 — — —

Restricted stock issuances 52 6 789 — — — —

Unamortized compensation expense related to restricted stock awards — — ( 794 ) — — — —

Cash dividends declared, $ 0.01 per common share

— — — ( 589 ) — — —

Compensation expense related to stock awards — — 1,548 — — — —

Pension liability adjustment — — — — 100 — —

Foreign currency translation adjustment — — — — — 3,455 —

Reclassification out of accumulated other comprehensive loss - discontinued cash flow hedge — — — — — — 745

Balance, at July 4, 2021 59,066 $ 5,907 $ 250,114 $ 229,833 $ ( 69,099 ) $ ( 76,473 ) $ ( 4,696 )

Net income — — — 10,959 — — —

Cash dividends declared, $ 0.01 per common share

— — — ( 593 ) — — —

Compensation expense related to stock awards, net of forfeitures ( 11 ) ( 2 ) 1,680 — — — —

Pension liability adjustment — — — — 2,377 — —

Foreign currency translation adjustment — — — — — ( 14,553 ) —

Reclassification out of accumulated other comprehensive loss - discontinued cash flow hedge — — — — — — 1,323

Balance, at October 3, 2021 59,055 $ 5,905 $ 251,794 $ 240,199 $ ( 66,722 ) $ ( 91,026 ) $ ( 3,373 )

SHARES COMMON STOCK ADDITIONAL PAID-IN CAPITAL RETAINED

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(in thousands)

Balance, at December 29, 2019 58,416 $ 5,842 $ 250,306 $ 286,056 $ ( 56,700 ) $ ( 113,139 ) $ ( 4,163 )

Net loss — — — ( 102,167 ) — — —

Issuances of stock (other than restricted stock) 220 22 197 — — — —

Restricted stock issuances 107 10 1,720 — — — —

Unamortized compensation expense related to restricted stock awards — — ( 1,731 ) — — — —

Cash dividends declared, $ 0.065 per common share

— — — ( 3,807 ) — — —

Compensation expense related to stock awards, net of forfeitures ( 255 ) ( 25 ) ( 4,114 ) — — — —

Pension liability adjustment — — — — 1,733 — —

Foreign currency translation adjustment — — — — — ( 15,245 ) —

Cash flow hedge unrealized loss — — — — — — ( 6,140 )

Balance, at April 5, 2020 58,488 $ 5,849 $ 246,378 $ 180,082 $ ( 54,967 ) $ ( 128,384 ) $ ( 10,303 )

Net income — — — 4,709 — — —

Issuances of stock (other than restricted stock) 12 1 ( 1 ) — — — —

Restricted stock issuances 70 7 2,294 — — — —

Unamortized compensation expense related to restricted stock awards — — ( 2,300 ) — — — —

Cash dividends declared, $ 0.01 per common share

— — — ( 585 ) — — —

Compensation expense related to stock awards, net of forfeitures ( 26 ) ( 3 ) ( 48 ) — — — —

Pension liability adjustment — — — — ( 342 ) — —

Foreign currency translation adjustment — — — — — 16,160 —

Cash flow hedge unrealized loss — — — — — — ( 351 )

Balance, at July 5, 2020 58,544 $ 5,854 $ 246,323 $ 184,206 $ ( 55,309 ) $ ( 112,224 ) $ ( 10,654 )

Balance, at January 3, 2021 58,664 $ 5,865 $ 247,920 $ 208,562 $ ( 69,288 ) $ ( 60,331 ) $ ( 6,190 )

Net income — — — 6,938 — — —

Issuances of stock (other than restricted stock) 7 1 ( 1 ) — — — —

Restricted stock issuances 376 38 5,277 — — — —

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— — — ( 589 ) — — —

Compensation expense related to stock awards, net of forfeitures ( 8 ) ( 1 ) 703 — — — —

Compensation expense related to stock awards, net of forfeitures and shares received for tax withholdings ( 26 ) ( 2 ) 689 — — — —

Pension liability adjustment — — — — 89 — —

Foreign currency translation adjustment — — — — — ( 19,597 ) —

Cash flow hedge unrealized loss — — — — — — 864

Balance, at October 4, 2020 58,670 $ 5,867 $ 247,012 $ 189,533 $ ( 56,780 ) $ ( 88,822 ) $ ( 9,790 )

Reclassification out of accumulated other comprehensive loss - discontinued cash flow hedge — — — — — — 749

Balance, at April 4, 2021 59,014 $ 5,901 $ 248,571 $ 214,911 $ ( 69,199 ) $ ( 79,928 ) $ ( 5,441 )

Restricted Stock Awards

During the nine months ended October 3, 2021 and October 4, 2020, the Company granted restricted stock awards for 428,400 and 308,100 shares of common stock, respectively.

During the three months ended April 3, 2022 and April 4, 2021, the Company granted restricted stock awards for 302,600 and 375,600 shares of common stock, respectively.

Awards of restricted stock (or a portion thereof) vest with respect to each recipient over a one to three-year period from the date of grant, provided the individual remains in the employment or service of the Company as of the vesting date.

Additionally, certain awards (or a portion thereof) could vest earlier in the event of a change in control of the Company, or upon involuntary termination without cause.

Compensation expense related to restricted stock grants was $ 2.8 million and $ 0.6 million for the nine months ended October 3, 2021, and October 4, 2020, respectively.

The Company has reduced its expense for restricted stock forfeited during the period.

The following table summarizes restricted stock outstanding as of October 3, 2021, as well as activity during the nine months then ended:

Compensation expense related to restricted stock grants was $ 1.2 million and $ 0.7 million for the three months ended April 3, 2022, and April 4, 2021, respectively.

The Company has reduced its expense for any restricted stock forfeited during the period.

The following table summarizes restricted stock outstanding as of April 3, 2022, as well as activity during the three months then ended:

Restricted Shares Weighted Average

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Forfeited or canceled — —

Outstanding at October 3, 2021 683,800 $ 21.06

As of October 3, 2021, the unrecognized total compensation cost related to unvested restricted stock was $ 6.1 million.

Outstanding at April 3, 2022 898,500 $ 18.76

As of April 3, 2022, the unrecognized total compensation cost related to unvested restricted stock was $ 7.9 million.

That cost is expected to be recognized by the end of 2025.

Performance Share Awards

During the nine months ended October 3, 2021 and October 4, 2020, the Company issued awards of performance shares to certain employees.

These awards vest based on the achievement of certain performance-based goals over a performance period of one to three years , subject to the employee’s continued employment, and will be settled in shares of our common stock or in cash at the Company’s election.

During the three months ended April 3, 2022 and April 4, 2021, the Company issued awards of performance shares to certain employees.

These awards vest based on the achievement of certain performance-based goals over a performance period of one to three years , subject to (among other things) the employee’s continued employment through the last date of the performance period, and will be settled in shares of our common stock or in cash at the Company’s election.

The number of shares that may be issued in settlement of the performance shares to the award recipients may be greater (up to 200 %) or lesser than the nominal award amount depending on actual performance achieved as compared to the performance targets set forth in the awards.

The following table summarizes the performance shares outstanding as of October 3, 2021, as well as the activity during the nine months then ended:

The Company evaluates the probability of achieving the performance-based goals as of the end of each reporting period and adjusts compensation expense based on this assessment.

The following table summarizes the performance shares outstanding as of April 3, 2022, as well as the activity during the three months then ended:

Performance Shares Weighted Average

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Forfeited or canceled ( 115,100 ) 17.54

Outstanding at October 3, 2021 718,100 $ 14.98

Compensation expense (benefit) related to the performance shares was $ 1.4 million and $( 2.0 ) million for the nine months ended October 3, 2021 and October 4, 2020, respectively.

Outstanding at April 3, 2022 830,800 $ 14.13

Compensation expense related to the performance shares was $ 1.0 million and $ 0.2 million for the three months ended April 3, 2022 and April 4, 2021, respectively.

The Company has reduced its expense for performance shares forfeited during the period.

Unrecognized compensation expense related to these performance shares was approximately $ 9.0 million as of October 3, 2021.

Unrecognized compensation expense related to these performance shares was approximately $ 8.6 million as of April 3, 2022.

Depending on the performance of the Company, any compensation expense related to these outstanding performance shares will be recognized by the end of 2025.

The tax benefit recognized with regard to restricted stock and performance shares was approximately $ 0.8 million for the nine months ended October 3, 2021.

The tax benefit recognized with regard to restricted stock and performance shares was approximately $ 0.3 million for the three months ended April 3, 2022.

NOTE 8 – LEASES

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The discount rate used to calculate the present value of the lease liability was the Company’s incremental borrowing rate for the applicable geographical region.

As of October 3, 2021, there were no significant leases that had not commenced.

The table below represents a summary of the balances recorded in the consolidated condensed balance sheets related to the Company’s leases as of October 3, 2021 and January 3, 2021:

October 3, 2021 January 3, 2021

As of April 3, 2022, there were no significant leases that had not commenced.

The table below represents a summary of the balances recorded in the consolidated condensed balance sheets related to the Company’s leases as of April 3, 2022 and January 2, 2022:

April 3, 2022 January 2, 2022

Balance Sheet Location Operating Leases Finance Leases Operating Leases Finance Leases

8 unchanged sentences

Total finance lease liabilities $ 4,861 $ 5,038

Three Months Ended Nine Months Ended

October 3, 2021 October 4, 2020 October 3, 2021 October 4, 2020

Three Months Ended

April 3, 2022 April 4, 2021

(in thousands)

7 unchanged sentences

Other Supplemental Information

Three Months Ended Nine Months Ended

October 3, 2021 October 4, 2020 October 3, 2021 October 4, 2020

Three Months Ended

April 3, 2022 April 4, 2021

(in thousands)

6 unchanged sentences

Lease Term and Discount Rate

The table below presents the weighted average remaining lease terms and discount rates for finance and operating leases as of October 3, 2021 and January 3, 2021:

October 3, 2021 January 3, 2021

The table below presents the weighted average remaining lease terms and discount rates for finance and operating leases as of April 3, 2022 and January 2, 2022:

April 3, 2022 January 2, 2022

Weighted-average remaining lease term – finance leases (in years) 3.37 3.20

6 unchanged sentences

(in thousands)

2021 (excluding the nine months ended October 3, 2021)

2022 (excluding the three months ended April 3, 2022)

$ 13,077 $ 1,433

8 unchanged sentences

NOTE 9 – EMPLOYEE BENEFIT PLANS

During the three and nine months ended October 3, 2021, the Company recorded multi-employer pension expense related to multi-employer contributions of $ 0.6 million and $ 2.0 million, respectively.

During the three and nine months ended October 4, 2020, the Company recorded multi-employer pension expense related to multi-employer contributions of $ 0.6 million and $ 1.9 million, respectively.

The following tables provide the components of net periodic benefit cost for the three and nine months ended October 3, 2021 and October 4, 2020:

Three Months Ended Nine Months Ended

During both three-month periods ended April 3, 2022 and April 4, 2021, the Company recorded multi-employer pension expense related to multi-employer contributions of $ 0.7 million.

The following tables provide the components of net periodic benefit cost for the three months ended April 3, 2022 and April 4, 2021:

Three Months Ended

Defined Benefit Retirement Plans (Europe)

October 3, 2021 October 4, 2020 October 3, 2021 October 4, 2020

April 3, 2022 April 4, 2021

(in thousands)

Interest cost $ 916 $ 572

Expected return on assets ( 847 ) ( 1,082 ) ( 2,556 ) ( 3,184 )

Expected return on plan assets ( 1,059 ) ( 849 )

Amortization of prior service cost 32 29

1 unchanged sentence

Net periodic benefit cost $ 164 $ 156

Three Months Ended Nine Months Ended

Salary Continuation Plan October 3, 2021 October 4, 2020 October 3, 2021 October 4, 2020

Three Months Ended

Salary Continuation Plan April 3, 2022 April 4, 2021

(in thousands)

2 unchanged sentences

Net periodic benefit cost $ 332 $ 362

Three Months Ended Nine Months Ended

Three Months Ended

nora Defined Benefit Plan

October 3, 2021 October 4, 2020 October 3, 2021 October 4, 2020

April 3, 2022 April 4, 2021

(in thousands)

3 unchanged sentences

Net periodic benefit cost $ 385 $ 472

In accordance with applicable accounting standards, the service cost component of net periodic benefit costs is presented within operating income (loss) in the consolidated condensed statements of operations, while all other components of net periodic benefit costs are presented within other expense in the consolidated condensed statements of operations.

In accordance with applicable accounting standards, the service cost component of net periodic benefit costs is presented within operating income in the consolidated condensed statements of operations, while all other components of net periodic benefit costs are presented within other expense, net, in the consolidated condensed statements of operations.

NOTE 10 – GOODWILL AND INTANGIBLE ASSETS

In the first quarter of 2021, the Company determined that it has two operating and reportable segments – namely AMS and EAAA.

See Note 11 entitled “Segment Information” for additional information.

The Company tests goodwill for impairment at least annually at the reporting unit level.

The Company’s reporting units remain unchanged following the realignment of its operating segments and consist of the Americas, Europe, and Asia-Pacific.

The Americas reporting unit is the same as the AMS reportable segment, and the Europe and Asia-Pacific reporting units are one level below the EAAA reportable segment.

During the first quarter of 2020, as a result of changes in macroeconomic conditions related to the COVID-19 pandemic, the Company recognized a charge of $ 121.3 million for the impairment of goodwill and certain intangible assets.

As a result of the first quarter 2020 assessment, we determined that the fair value for two reporting units was less than their carrying value and recognized a goodwill impairment loss of $ 116.5 million in the first quarter of 2020.

The expected decline in revenue due to the impact of COVID-19 contributed to the lower fair value of our Europe and Asia-Pacific reporting units.

As such, the goodwill impairment loss was allocated to our Europe and Asia-Pacific reporting units in the amounts of $ 99.2 million and $ 17.3 million, respectively.

There were no indicators of additional goodwill impairment as of October 3, 2021.

The changes in the carrying amounts of goodwill attributable to each reportable segment for the nine months ended October 3, 2021 are as follows:

The changes in the carrying amounts of goodwill attributable to each reportable segment for the three months ended April 3, 2022 are as follows:

AMS EAAA Total

2 unchanged sentences

Foreign currency translation ( 5,325 ) ( 1,890 ) ( 7,215 )

Balance, at October 3, 2021 $ 112,072 $ 39,786 $ 151,858

Additionally, we determined that the trademarks and trade names intangible assets related to the acquired nora business were also impaired and recognized an impairment loss of $ 4.8 million in the first quarter of 2020.

The carrying value of intangible assets was $ 79.0 million at October 3, 2021.

There were no indicators of additional intangible asset impairment as of the end of the third quarter of 2021.

Balance, at April 3, 2022 $ 103,180 $ 36,630 $ 139,810

The net carrying value of intangible assets was $ 72.6 million and $ 76.2 million at April 3, 2022 and January 2, 2022, respectively.

NOTE 11 – SEGMENT INFORMATION

1 unchanged sentence

Additionally, accounting standards require the utilization of a “management approach” to report the financial results of operating segments, which is based on information used by the CODM to assess performance and make operating and resource allocation decisions.

In the first quarter of 2021, the Company largely completed its integration of the nora acquisition, and integration of its European and Asia-Pacific commercial areas and determined that it has two operating segments organized by geographical area – namely (a) Americas (“AMS”) and (b) Europe, Africa, Asia and Australia (collectively “EAAA”).

The AMS operating segment is unchanged from prior year and continues to include the United States, Canada and Latin America geographic areas.

Pursuant to the management approach discussed above, the Company’s CODM, our chief executive officer, evaluates performance at the AMS and EAAA operating segment levels and makes operating and resource allocation decisions based on segment adjusted operating income or loss (“AOI”), which includes allocations of corporate selling, general and administrative expenses.

AOI excludes nora purchase accounting amortization, goodwill and intangible asset impairment charges, changes in equity award forfeiture accounting, restructuring charges, asset impairment, severance and other charges, and an SEC settlement fine.

Intersegment revenues for the three and nine months ended October 3, 2021 were $ 20.1 million and $ 56.4 million, respectively, and intersegment revenues for the three and nine months ended October 4, 2020 were $ 15.6 million and $ 56.2 million, respectively.

The Company determined that it has two operating segments organized by geographical area – namely (a) Americas (“AMS”) and (b) Europe, Africa, Asia and Australia (collectively “EAAA”).

The AMS operating segment includes the United States, Canada and Latin America geographic areas.

Pursuant to the management approach discussed above, the Company’s CODM, our chief executive officer, evaluates performance at the AMS and EAAA operating segment levels and makes operating and resource allocation decisions based on segment adjusted operating income (“AOI”), which includes allocations of corporate selling, general and administrative expenses.

AOI excludes nora purchase accounting amortization, Thailand plant closure inventory write-down, and restructuring charges, asset impairment, severance and other charges.

Intersegment revenues for the three months ended April 3, 2022 and April 4, 2021 were $ 17.3 million and $ 15.7 million, respectively.

Intersegment revenues are eliminated from net sales presented below since these amounts are not included in the information provided to the CODM.

The Company has determined that it has two reportable segments – AMS and EAAA, as each operating segment meets the quantitative thresholds defined in the accounting guidance.

Segment information below for fiscal year 2020 has been restated to reflect our new reportable segment structure.

Three Months Ended Nine Months Ended

October 3, 2021 October 4, 2020 October 3, 2021 October 4, 2020

Segment information for the three months ended April 3, 2022 and April 4, 2021 is presented in the following table:

Three Months Ended

April 3, 2022 April 4, 2021

(in thousands)

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A reconciliation of the Company’s total operating segment assets to the corresponding consolidated amounts follows:

October 3, 2021 January 3, 2021

April 3, 2022 January 2, 2022

(in thousands)

5 unchanged sentences

Total reported assets $ 1,309,785 $ 1,330,057

Reconciliations of operating income (loss) to income (loss) before income tax expense and segment AOI are presented as follows:

Three Months Ended Nine Months Ended

October 3, 2021 October 4, 2020 October 3, 2021 October 4, 2020

Reconciliations of operating income to income before income tax expense and segment AOI are presented as follows:

Three Months Ended

April 3, 2022 April 4, 2021

(in thousands)

AMS operating income $ 21,250 $ 11,647

EAAA operating income (loss) 3,093 1,025 16,435 ( 112,381 )

Consolidated operating income (loss) 24,777 15,882 70,867 ( 60,237 )

EAAA operating income 6,170 5,219

Consolidated operating income 27,420 16,866

Interest expense 6,850 7,256

Other expense 887 2,921 2,219 9,551

Income (loss) before income tax expense $ 16,163 $ 7,535 $ 46,376 $ ( 85,809 )

Three Months Ended October 3, 2021 Three Months Ended October 4, 2020

Other expense, net 170 715

Income before income tax expense $ 20,400 $ 8,895

Three Months Ended April 3, 2022 Three Months Ended April 4, 2021

AMS EAAA AMS EAAA

2 unchanged sentences

Purchase accounting amortization — 1,342 — 1,421

Restructuring, asset impairment, severance and other charges ( 89 ) 4,086 2,733 3,086

SEC fine — — 2,689 2,311

AOI $ 21,595 $ 8,586 $ 20,279 $ 7,821

Nine Months Ended October 3, 2021 Nine Months Ended October 4, 2020

AMS EAAA AMS EAAA

(in thousands)

Operating income (loss) $ 54,432 $ 16,435 $ 52,144 $ ( 112,381 )

Purchase accounting amortization — 4,269 — 4,030

Goodwill and intangible asset impairment — — 2,695 118,563

Impact of change in equity award forfeiture accounting — — 757 650

Thailand plant closure inventory write-down — 1,115 — —

Restructuring, asset impairment, severance and other charges ( 112 ) 877 266 1,371

SEC fine — — 2,689 2,311

AOI $ 21,138 $ 9,504 $ 11,913 $ 8,011

NOTE 12 – SUPPLEMENTAL CASH FLOW INFORMATION

Cash payments for interest amounted to $ 13.2 million and $ 16.0 million for the nine months ended October 3, 2021 and October 4, 2020, respectively.

Income tax payments, net of refunds, amounted to $ 15.3 million and $ 8.2 million for the nine months ended October 3, 2021 and October 4, 2020, respectively.

Cash payments for interest amounted to $ 1.3 million and $ 1.6 million for the three months ended April 3, 2022 and April 4, 2021, respectively.

Income tax payments, net of refunds, amounted to $ 2.8 million and $ 3.2 million for the three months ended April 3, 2022 and April 4, 2021, respectively.

Non-Cash Financing Activities

On March 15, 2022, the Company declared cash dividends on its common stock of $ 0.6 million, which were paid during the second quarter of 2022 to shareholders of record as of April 1, 2022.

At April 3, 2022, the dividends were recorded within accrued expenses in the consolidated condensed balance sheet.

See Note 8 entitled “Leases” for supplemental disclosures related to finance and operating leases.

1 unchanged sentence

The Company determines its provision for income taxes for interim periods using an estimate of its annual effective tax rate and records any changes affecting the estimated annual effective tax rate in the interim period in which the change occurs, including discrete tax items.

During the nine months ended October 3, 2021, the Company recorded a total income tax provision of $ 13.0 million on pre-tax income of $ 46.4 million resulting in an effective tax rate of 28.0 %, as compared to a total income tax provision of $ 5.7 million on a pre-tax loss of $ 85.8 million resulting in an effective tax rate of ( 6.7 )% during the nine months ended October 4, 2020.

The effective tax rate for the period ended October 4, 2020 was primarily impacted by a non-deductible goodwill impairment.

Excluding the impact of the goodwill impairment, the effective tax rate was 18.7 % during the nine months ended October 4, 2020.

The increase in the effective tax rate as compared to the period ended October 4, 2020, excluding the non-deductible goodwill impairment, was due to the one-time favorable impacts of amending prior year tax returns during the nine months ended October 4, 2020.

In the first nine months of 2021, the Company decreased its liability for unrecognized tax benefits by $ 0.6 million.

The decrease was primarily due to settlements with taxing authorities and a lapse of applicable statute of limitations.

As of October 3, 2021, the Company had accrued approximately $ 10.2 million for unrecognized tax benefits.

In accordance with applicable accounting standards, the Company’s deferred tax asset as of October 3, 2021 reflects a reduction for $ 3.0 million of these unrecognized tax benefits.

In October 2021, the statute of limitations for the 2017 U.S.

federal income tax return closed.

As a result of this lapse in the statute of limitations, the Company will recognize $ 1.2 million of unrecognized tax benefits in the fourth quarter of 2021.

During the three months ended April 3, 2022, the Company recorded a total income tax provision of $ 7.1 million on pre-tax income of $ 20.4 million resulting in an effective tax rate of 34.8 %, as compared to a total income tax provision of $ 2.0 million on pre-tax income of $ 8.9 million resulting in an effective tax rate of 22.0 % during the three months ended April 4, 2021.

The increase in the effective tax rate for the period ended April 3, 2022 as compared to the period ended April 4, 2021 was primarily due to a non-recurring favorable change to unrecognized tax benefits in the period ended April 4, 2021, unfavorable changes related to company-owned life insurance, an increase in non-deductible executive compensation, and non-deductible charges related to the closure of the Company’s manufacturing facility in Thailand in the first quarter of 2022.

In the first three months of 2022, the Company increased its liability for unrecognized tax benefits by $ 0.3 million.

As of April 3, 2022, the Company had accrued approximately $ 8.5 million for unrecognized tax benefits.

In accordance with applicable accounting standards, the Company’s deferred tax asset as of April 3, 2022 reflects a reduction for $ 2.8 million of these unrecognized tax benefits.

Unrecognized tax benefits are reviewed on an ongoing basis and are adjusted for changing facts and circumstances, including the progress of tax audits and the closing of statutes of limitations.

Based on information currently available, it is reasonably possible that approximately $ 1.7 million of unrecognized tax benefits, including the $ 1.2 million to be recognized in the fourth quarter of 2021, may be recognized within the next 12 months due to a lapse of statute of limitations.

Based on information currently available, it is reasonably possible that approximately $ 2.6 million of unrecognized tax benefits may be recognized within the next 12 months due to a lapse of statute of limitations.

NOTE 14 – ITEMS RECLASSIFIED FROM ACCUMULATED OTHER COMPREHENSIVE LOSS

Amounts reclassified out of accumulated other comprehensive loss (“AOCI”), before tax, to the consolidated condensed statements of operations during the three and nine months ended October 3, 2021 and October 4, 2020 are reflected in the table below:

Amounts reclassified out of accumulated other comprehensive loss (“AOCI”), before tax, to the consolidated condensed statements of operations during the three months ended April 3, 2022 and April 4, 2021 are reflected in the table below:

Three Months Ended

Statement of Operations Location October 3, 2021 October 4, 2020

(in thousands)

Interest rate swap contracts loss Interest expense $ ( 1,845 ) $ ( 1,328 )

Amortization of benefit plan prior service cost and net actuarial losses Other expense ( 705 ) ( 560 )

Total loss reclassified from AOCI, net $ ( 2,550 ) $ ( 1,888 )

Nine Months Ended

Statement of Operations Location October 3, 2021 October 4, 2020

Statement of Operations Location April 3, 2022 April 4, 2021

(in thousands)

Interest rate swap contracts loss Interest expense $ ( 893 ) $ ( 1,061 )

Amortization of benefit plan prior service cost and net actuarial losses Other expense ( 2,132 ) ( 1,647 )

Total loss reclassified from AOCI, net $ ( 6,084 ) $ ( 4,591 )

Amortization of benefit plan net actuarial losses and prior service cost Other expense, net ( 496 ) ( 711 )

Total loss reclassified from AOCI $ ( 1,389 ) $ ( 1,772 )

NOTE 15 – RESTRUCTURING AND OTHER CHARGES

A summary of restructuring activities for the 2021 and 2019 restructuring plans are presented below:

Restructuring and asset impairment charges by reportable segment are presented as follows:

Three Months Ended

April 3, 2022 April 4, 2021

(in thousands)

EAAA 887 ( 130 )

Total restructuring and asset impairment charges $ 887 $ ( 130 )

A summary of the restructuring reserve balance, recorded within accrued expenses in the consolidated condensed balance sheets, for the 2021 and 2019 restructuring plans is presented below:

Workforce Reduction Asset Impairment

5 unchanged sentences

Charged to other accounts — — ( 886 ) ( 886 )

Balance, at October 3, 2021 $ 2,229 $ 161 $ — $ 2,390

For the nine months ended October 3, 2021, the Company recorded restructuring and asset impairment charges of $ 3.6 million.

At October 3, 2021, the restructuring reserve was $ 2.4 million.

Balance, at April 3, 2022 $ 1,301 $ — $ — $ 1,301

Below is a discussion of the restructuring plan activities under the 2021 and 2019 restructuring plans.

2 unchanged sentences

The plan involves a reduction of approximately 188 employees and the closure of the Company’s manufacturing facility in Thailand at the end of the first quarter of 2022.

As a result of this plan, the Company expects to incur pre-tax restructuring charges between the third quarter of 2021 and the fourth quarter of 2022 of approximately $ 4 million to $ 5 million.

The expected charges are comprised of severance expenses ($ 2.2 million), retention bonuses ($ 0.5 million), and asset impairment and other charges ($ 2.0 million).

The retention costs of approximately $ 0.5 million will be recognized through the end of fiscal year 2022 as earned over the requisite service periods.

Restructuring charges of $ 3.9 million comprised of severance and asset impairment charges were recognized during the third quarter of 2021.

The restructuring plan is expected to result in future cash expenditures of approximately $ 3 million to $ 4 million for payment of the employee severance, employee retention bonuses and other costs of the shutdown of the Thailand manufacturing facility, as described above.

Expected charges and cumulative charges incurred to date under the 2021 restructuring plan are as follows:

Workforce Reduction Retention Bonuses (2)

Asset Impairment Total

(in thousands)

Estimated expected charges (1)

$ 2,258 $ 500 $ 2,536 $ 5,000 — $ 6,000

Cumulative charges incurred to date (1)

2,258 — 2,536 4,794

(1) Charges are attributable to the EAAA reportable segment.

(2) The retention bonuses will be recognized through the end of fiscal year 2022 as earned over the requisite service periods.

In addition, during the three months ended April 3, 2022, in conjunction with the closure of its Thailand Facility, the Company recorded a write-down of inventory of $ 1.1 million within cost of sales in the consolidated condensed statements of operations.

The restructuring plan is expected to result in cash expenditures of approximately $ 3 million to $ 4 million for payment of the employee severance, employee retention bonuses and other costs of the shutdown of the Thailand manufacturing facility, as described above.

The Company expects to complete the restructuring plan in fiscal year 2022 and expects the plan to yield annualized savings of approximately $ 1.7 million.

A portion of the annualized savings is expected to be realized on the income statement in fiscal year 2022, with the remaining portion of the annualized savings expected to be realized in fiscal year 2023.

A portion of the annualized savings is expected to be realized on the consolidated condensed statement of operations in fiscal year 2022, with the remaining portion of the annualized savings expected to be realized in fiscal year 2023.

2019 Restructuring Plan

On December 23, 2019, the Company committed to a new restructuring plan that continues to focus on efforts to improve efficiencies and decrease costs across its worldwide operations, and more closely align its operating structure with its business strategy.

The plan involved a reduction of approximately 105 employees and early termination of two office leases.

As a result of this plan, the Company recorded a pre-tax restructuring charge in the fourth quarter of 2019 of approximately $ 9.0 million.

The charge was comprised of severance expenses ($ 8.8 million) and lease exit costs ($ 0.2 million).

The restructuring plan was expected to result in cash expenditures of approximately $ 9.0 million for payment of the employee severance and lease exit costs, as described above.

The Company expects to complete the restructuring plan in fiscal year 2021 and expects the plan to yield annualized savings of approximately $ 6.0 million.

A portion of the annualized savings was realized on the income statement in fiscal year 2020, with the remaining portion of the annualized savings expected to be realized in fiscal year 2021.

The 2019 restructuring plan has been completed as of April 3, 2022.

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

What changed 10-Q

Item 1. Financial Statements