What changed in this filing

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Item 1. Financial Statements

2022-08-09 compared with 2022-05-10 · 157 added, 101 removed, 416 unchanged (38% of the section changed)

4 unchanged sentences

(in thousands, except par values)

APRIL 3, 2022 JANUARY 2, 2022

JULY 3, 2022 JANUARY 2, 2022

Current assets

26 unchanged sentences

5,000 shares authorized;

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

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

Common stock, par value $ 0.10 per share;

120,000 shares authorized;

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

59,097 and 59,055 shares issued and outstanding at July 3, 2022 and January 2, 2022, respectively

Additional paid-in capital 251,452 253,110

10 unchanged sentences

(in thousands, except per share data)

THREE MONTHS ENDED

APRIL 3, 2022 APRIL 4, 2021

THREE MONTHS ENDED SIX MONTHS ENDED

JULY 3, 2022 JULY 4, 2021 JULY 3, 2022 JULY 4, 2021

Net sales $ 346,605 $ 294,785 $ 634,607 $ 548,045

Cost of sales 229,899 185,793 411,102 343,015

Gross profit on sales 106,799 96,038

Gross profit 116,706 108,992 223,505 205,030

Selling, general and administrative expenses 81,371 79,830 159,863 159,132

15 unchanged sentences

(in thousands)

THREE MONTHS ENDED

APRIL 3, 2022 APRIL 4, 2021

THREE MONTHS ENDED SIX MONTHS ENDED

JULY 3, 2022 JULY 4, 2021 JULY 3, 2022 JULY 4, 2021

Net income $ 16,818 $ 15,511 $ 30,111 $ 22,449

Other comprehensive loss, after tax:

Other comprehensive income (loss), after tax:

Foreign currency translation adjustment ( 36,670 ) 3,455 ( 49,854 ) ( 16,142 )

1 unchanged sentence

Pension liability adjustment 3,842 100 5,381 189

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

Other comprehensive income (loss) ( 32,288 ) 4,300 ( 43,292 ) ( 14,459 )

Comprehensive income (loss) $ ( 15,470 ) $ 19,811 $ ( 13,181 ) $ 7,990

4 unchanged sentences

(in thousands)

THREE MONTHS ENDED

APRIL 3, 2022 APRIL 4, 2021

SIX MONTHS ENDED

JULY 3, 2022 JULY 4, 2021

OPERATING ACTIVITIES:

18 unchanged sentences

Tax withholding payments for share-based compensation ( 398 ) ( 193 )

Repurchase of common stock ( 5,582 ) —

Dividends paid ( 1,187 ) ( 1,178 )

Debt issuance costs — ( 36 )

4 unchanged sentences

CASH AND CASH EQUIVALENTS:

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

Net decrease ( 5,599 ) ( 681 )

Balance, beginning of period 97,252 103,053

15 unchanged sentences

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

The six-month periods ended July 3, 2022 and July 4, 2021 both include 26 weeks.

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

Risks and Uncertainties

1 unchanged sentence

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.

While our business activities in Russia and Ukraine are not material, we had approximately $ 2.2 million of total assets, including $ 1.7 million of cash, in Russia at July 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 Company is 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.

COVID-19 Impact

1 unchanged sentence

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.

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

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

Recently Issued Accounting Pronouncements Not Yet Adopted

In June 2022, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) 2022-03, “Fair Value Measurement (Topic 820):

Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions.” This ASU clarifies that a contractual restriction on the sale of an equity security is not considered in measuring fair value.

The ASU also requires certain disclosures for equity securities subject to contractual sale restrictions.

The new guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2023.

Early adoption is permitted.

The Company is currently evaluating the impact of adoption of this standard.

NOTE 2 – REVENUE RECOGNITION

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.

Revenue from sales of carpet, modular resilient flooring, rubber flooring, and other flooring-related material was approximately 98 % of total revenue for both six-month periods ended July 3, 2022 and July 4, 2021.

The remaining 2 % of revenue was generated from the installation of carpet and other flooring-related material for both 2022 and 2021 six-month periods.

Disaggregation of Revenue

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

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

Six Months Ended

Geography July 3, 2022 July 4, 2021

Americas 57.2 % 51.8 %

5 unchanged sentences

Inventories are summarized as follows:

April 3, 2022 January 2, 2022

July 3, 2022 January 2, 2022

(in thousands)

12 unchanged sentences

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

Three Months Ended

April 3, 2022 April 4, 2021

Three Months Ended Six Months Ended

July 3, 2022 July 4, 2021 July 3, 2022 July 4, 2021

(in thousands, except per share data)

5 unchanged sentences

Shares for basic EPS 59,368 59,041 59,308 58,885

Dilutive effect of stock options — —

Shares for diluted EPS 59,368 59,041 59,308 58,885

3 unchanged sentences

Long-term debt consisted of the following:

April 3, 2022 January 2, 2022

July 3, 2022 January 2, 2022

Outstanding Principal Interest Rate (1)

18 unchanged sentences

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 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.

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

As of both July 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.

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

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

5.50% Senior Notes due 2028

2 unchanged sentences

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 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.

As of July 3, 2022, the estimated fair value of the Senior Notes was $ 262.2 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 $ 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.

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

Borrowing Costs

1 unchanged sentence

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 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.

As of July 3, 2022 and January 2, 2022, the unamortized debt issuance costs recorded as a reduction of long-term debt were $ 6.4 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 $ 1.4 million and $ 1.6 million as of July 3, 2022 and January 2, 2022, respectively.

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

9 unchanged sentences

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

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.

As of July 3, 2022 and January 2, 2022, the remaining accumulated other comprehensive loss associated with the terminated interest rate swaps was $ 2.0 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 $ 1.8 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.

4 unchanged sentences

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

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 April 4, 2021

As of July 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 and six months ended July 4, 2021:

Statement of Operations Location Three Months Ended July 4, 2021 Six Months Ended July 4, 2021

(in thousands)

1 unchanged sentence

NOTE 7 – SHAREHOLDERS’ EQUITY

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:

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

SHARES COMMON STOCK ADDITIONAL PAID-IN CAPITAL RETAINED

12 unchanged sentences

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

Net income — — — 16,818 — — —

Restricted stock issuances 198 20 2,533 — — — —

Unamortized compensation expense related to restricted stock awards — — ( 2,553 ) — — — —

Cash dividends declared, $ 0.01 per common share

— — — ( 595 ) — — —

Compensation expense related to stock awards, net of forfeitures ( 14 ) ( 1 ) 2,145 — — — —

Share repurchases ( 415 ) ( 42 ) ( 5,540 ) — — — —

Pension liability adjustment — — — — 3,842 — —

Foreign currency translation adjustment — — — — — ( 36,670 ) —

Reclassification out of accumulated other comprehensive loss – discontinued cash flow hedge — — — — — — 540

Balance, at July 3, 2022 59,097 $ 5,910 $ 251,452 $ 290,358 $ ( 48,507 ) $ ( 150,295 ) $ ( 1,541 )

SHARES COMMON STOCK ADDITIONAL PAID-IN CAPITAL RETAINED

12 unchanged sentences

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

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 )

Repurchase of Common Stock

In the second quarter of 2022, the Company adopted a new share repurchase program in which the Company is authorized to repurchase up to $ 100 million of its outstanding shares of common stock.

The program has no specific expiration date.

During the second quarter of 2022, the Company repurchased 415,223 shares of common stock at a weighted average price of $ 13.44 per share pursuant to this program.

Restricted Stock Awards

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.

During the six months ended July 3, 2022 and July 4, 2021, the Company granted restricted stock awards for 500,800 and 428,400 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 $ 1.2 million and $ 0.7 million for the three months ended April 3, 2022, and April 4, 2021, respectively.

For certain restricted stock awards with a graded vesting schedule, the Company has elected to recognize compensation expense on a straight-line basis over the requisite service period for the entire award.

Compensation expense related to restricted stock grants was $ 2.6 million and $ 1.8 million for the six months ended July 3, 2022, and July 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:

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

Restricted Shares Weighted Average

3 unchanged sentences

Forfeited or canceled ( 14,400 ) 14.09

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.

Outstanding at July 3, 2022 1,029,500 $ 17.89

As of July 3, 2022, the unrecognized total compensation cost related to unvested restricted stock was $ 8.8 million.

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

Performance Share Awards

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

During the six months ended July 3, 2022 and July 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.

1 unchanged sentence

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:

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

Performance Shares Weighted Average

2 unchanged sentences

Forfeited or canceled ( 132,800 ) 17.11

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 $ 8.6 million as of April 3, 2022.

Outstanding at July 3, 2022 952,200 $ 13.92

Compensation expense related to the performance shares was $ 1.7 million and $ 0.7 million for the six months ended July 3, 2022 and July 4, 2021, respectively.

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

Unrecognized compensation expense related to these performance shares was approximately $ 9.4 million as of July 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 $ 0.3 million for the three months ended April 3, 2022.

The tax benefit recognized with regard to restricted stock and performance shares was approximately $ 0.4 million for the six months ended July 3, 2022.

NOTE 8 – LEASES

5 unchanged sentences

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 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

As of July 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 July 3, 2022 and January 2, 2022:

July 3, 2022 January 2, 2022

Balance Sheet Location Operating Leases Finance Leases Operating Leases Finance Leases

8 unchanged sentences

Total finance lease liabilities $ 6,109 $ 5,038

Three Months Ended

April 3, 2022 April 4, 2021

Three Months Ended Six Months Ended

July 3, 2022 July 4, 2021 July 3, 2022 July 4, 2021

(in thousands)

7 unchanged sentences

Other Supplemental Information

Three Months Ended

April 3, 2022 April 4, 2021

Three Months Ended Six Months Ended

July 3, 2022 July 4, 2021 July 3, 2022 July 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 April 3, 2022 and January 2, 2022:

April 3, 2022 January 2, 2022

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

July 3, 2022 January 2, 2022

Weighted-average remaining lease term – finance leases (in years) 3.95 3.20

6 unchanged sentences

(in thousands)

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

2022 (excluding the six months ended July 3, 2022)

$ 8,830 $ 1,109

8 unchanged sentences

NOTE 9 – EMPLOYEE BENEFIT PLANS

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

During the three and six months ended July 3, 2022, the Company recorded multi-employer pension expense related to multi-employer contributions of $ 0.6 million and $ 1.3 million, respectively.

During the three and six months ended July 4, 2021, the Company recorded multi-employer pension expense related to multi-employer contributions of $ 0.7 million and $ 1.4 million, respectively.

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

Three Months Ended Six Months Ended

Defined Benefit Retirement Plans (Europe)

April 3, 2022 April 4, 2021

July 3, 2022 July 4, 2021 July 3, 2022 July 4, 2021

(in thousands)

4 unchanged sentences

Net periodic benefit cost $ 153 $ 157 $ 317 $ 313

Three Months Ended

Salary Continuation Plan April 3, 2022 April 4, 2021

Three Months Ended Six Months Ended

Salary Continuation Plan July 3, 2022 July 4, 2021 July 3, 2022 July 4, 2021

(in thousands)

2 unchanged sentences

Net periodic benefit cost $ 333 $ 363 $ 665 $ 725

Three Months Ended

Three Months Ended Six Months Ended

nora Defined Benefit Plan

April 3, 2022 April 4, 2021

July 3, 2022 July 4, 2021 July 3, 2022 July 4, 2021

(in thousands)

5 unchanged sentences

NOTE 10 – GOODWILL AND INTANGIBLE ASSETS

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

The changes in the carrying amounts of goodwill allocated to each reportable segment for the six months ended July 3, 2022 are as follows:

AMS EAAA Total

2 unchanged sentences

Foreign currency translation ( 15,485 ) ( 5,498 ) ( 20,983 )

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.

Balance, at July 3, 2022 $ 93,020 $ 33,022 $ 126,042

The net carrying value of intangible assets other than goodwill was $ 67.2 million and $ 76.2 million at July 3, 2022 and January 2, 2022, respectively.

NOTE 11 – SEGMENT INFORMATION

5 unchanged sentences

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 for the three and six months ended July 3, 2022 were $ 19.4 million and $ 36.7 million, respectively, and intersegment revenues for the three and six months ended July 4, 2021 were $ 20.6 million and $ 36.3 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 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

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

Three Months Ended Six Months Ended

July 3, 2022 July 4, 2021 July 3, 2022 July 4, 2021

(in thousands)

9 unchanged sentences

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

April 3, 2022 January 2, 2022

July 3, 2022 January 2, 2022

(in thousands)

6 unchanged sentences

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

Three Months Ended Six Months Ended

July 3, 2022 July 4, 2021 July 3, 2022 July 4, 2021

(in thousands)

5 unchanged sentences

Income before income tax expense $ 25,941 $ 21,318 $ 46,341 $ 30,213

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

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

AMS EAAA AMS EAAA

5 unchanged sentences

AOI $ 28,389 $ 10,131 $ 21,098 $ 9,960

Six Months Ended July 3, 2022 Six Months Ended July 4, 2021

AMS EAAA AMS EAAA

(in thousands)

Operating income $ 49,663 $ 12,282 $ 32,748 $ 13,342

Purchase accounting amortization — 2,613 — 2,862

Thailand plant closure inventory write-down — 2,053 — —

Restructuring, asset impairment, severance and other charges ( 136 ) 2,687 263 1,767

AOI $ 49,527 $ 19,635 $ 33,011 $ 17,971

NOTE 12 – SUPPLEMENTAL CASH FLOW INFORMATION

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.

Cash payments for interest amounted to $ 11.2 million and $ 11.9 million for the six months ended July 3, 2022 and July 4, 2021, respectively.

Income tax payments, net of refunds, amounted to $ 6.8 million and $ 7.5 million for the six months ended July 3, 2022 and July 4, 2021, respectively.

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 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.

During the six months ended July 3, 2022, the Company recorded a total income tax provision of $ 16.2 million on pre-tax income of $ 46.3 million resulting in an effective tax rate of 35.0 %, as compared to a total income tax provision of $ 7.8 million on pre-tax income of $ 30.2 million resulting in an effective tax rate of 25.7 % during the six months ended July 4, 2021.

The increase in the effective tax rate for the period ended July 3, 2022 as compared to the period ended July 4, 2021 was primarily due to a non-recurring favorable change to unrecognized tax benefits in the period ended July 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 half of 2022.

In April of 2021, the Company filed requests with both the Competent Authority in the Netherlands and in the U.K.

to initiate a mutual agreement procedure (“MAP”) related to the double taxation arising from adjustments made by Her Majesty’s Revenue & Customs to the Company’s U.K.

subsidiaries’ tax returns for years 2012 through 2017.

The adjustments result from the interest rate applied in the intra-group financing arrangement between a Company subsidiary in the U.K.

and the Netherlands.

In June of 2022, the Company was notified that the Competent Authorities had reached an agreement on the interest rate to be applied for the years 2012 through 2017.

The Company recognized the adjustments in the period ending July 3, 2022, based on the outcome of the MAP.

The recognition of the adjustments did not have a material impact on the Company’s effective tax rate or its financial position.

In the first six months of 2022, the Company decreased its liability for unrecognized tax benefits by $ 0.1 million.

As of July 3, 2022, the Company had accrued approximately $ 8.1 million for unrecognized tax benefits.

In accordance with applicable accounting standards, the Company’s deferred tax asset as of July 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.

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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 months ended April 3, 2022 and April 4, 2021 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 and six months ended July 3, 2022 and July 4, 2021 are reflected in the tables below:

Three Months Ended

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

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

(in thousands)

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Total loss reclassified from AOCI $ ( 1,352 ) $ ( 1,762 )

Six Months Ended

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

(in thousands)

Interest rate swap contracts loss Interest expense $ ( 1,771 ) $ ( 2,107 )

Amortization of benefit plan net actuarial losses and prior service cost Other expense, net ( 970 ) ( 1,427 )

Total loss reclassified from AOCI $ ( 2,741 ) $ ( 3,534 )

NOTE 15 – RESTRUCTURING AND OTHER CHARGES

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

Three Months Ended

April 3, 2022 April 4, 2021

Three Months Ended Six Months Ended

July 3, 2022 July 4, 2021 July 3, 2022 July 4, 2021

(in thousands)

AMS $ — $ — $ — $ —

EAAA 810 ( 62 ) 1,697 ( 192 )

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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

2021 Plan 2019 Plan 2021 Plan Total

Workforce Reduction Retention Bonuses Asset Impairment and Other Related Charges

2021 Plan 2019 Plan 2021 Plan 2021 Plan Total

(in thousands)

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Charged to other accounts — — — ( 1,509 ) ( 1,509 )

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

Balance, at July 3, 2022 $ 1,151 $ — $ 165 $ — $ 1,316

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

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Workforce Reduction Retention Bonuses (2)

Asset Impairment Total

Asset Impairment and Other Related Charges Total

(in thousands)

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(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.

In addition, during the six months ended July 3, 2022, in conjunction with the closure of its Thailand facility, the Company recorded a write-down of inventory of $ 2.1 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.

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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