What changed in this filing

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Item 1. Financial Statements

2024-08-06 compared with 2024-05-07 · 169 added, 119 removed, 402 unchanged (42% of the section changed)

4 unchanged sentences

(in thousands, except par values)

MARCH 31, 2024 DECEMBER 31, 2023

JUNE 30, 2024 DECEMBER 31, 2023

Current assets

27 unchanged sentences

5,000 shares authorized;

none issued or outstanding at March 31, 2024 and December 31, 2023

none issued or outstanding at June 30, 2024 and December 31, 2023

Common stock, par value $ 0.10 per share;

120,000 shares authorized;

58,273 and 58,112 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively

58,303 and 58,112 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively

Additional paid-in capital 254,666 252,909

9 unchanged sentences

(in thousands, except per share data)

THREE MONTHS ENDED

MARCH 31, 2024 APRIL 2, 2023

THREE MONTHS ENDED SIX MONTHS ENDED

JUNE 30, 2024 JULY 2, 2023 JUNE 30, 2024 JULY 2, 2023

Net sales $ 346,635 $ 329,582 $ 636,378 $ 625,374

2 unchanged sentences

Selling, general and administrative expenses 84,462 85,522 170,421 171,776

Restructuring, asset impairment and other charges — 142

Restructuring, asset impairment, and other gains, net

— ( 2,644 ) — ( 2,502 )

Operating income 38,151 28,908 62,597 38,385

Interest expense 6,173 8,318 12,596 16,823

Other (income) expense, net

Other expense (income), net

832 ( 528 ) ( 144 ) 972

Income (loss) before income tax expense 18,999 ( 528 )

Income before income tax expense 31,146 21,118 50,145 20,590

Income tax expense 8,588 5,321 13,408 5,507

Net income (loss) $ 14,179 $ ( 714 )

Earnings (loss) per share – basic $ 0.24 $ ( 0.01 )

Earnings (loss) per share – diluted $ 0.24 $ ( 0.01 )

Net income $ 22,558 $ 15,797 $ 36,737 $ 15,083

Earnings per share – basic $ 0.39 $ 0.27 $ 0.63 $ 0.26

Earnings per share – diluted $ 0.38 $ 0.27 $ 0.63 $ 0.26

Common shares outstanding – basic 58,281 58,074 58,260 58,077

5 unchanged sentences

(in thousands)

THREE MONTHS ENDED

MARCH 31, 2024 APRIL 2, 2023

Net income (loss) $ 14,179 $ ( 714 )

THREE MONTHS ENDED SIX MONTHS ENDED

JUNE 30, 2024 JULY 2, 2023 JUNE 30, 2024 JULY 2, 2023

Net income $ 22,558 $ 15,797 $ 36,737 $ 15,083

Other comprehensive (loss) income, after tax:

5 unchanged sentences

Comprehensive income

$ 21,070 $ 16,658 $ 24,615 $ 20,894

See accompanying notes to consolidated condensed financial statements.

3 unchanged sentences

(in thousands)

THREE MONTHS ENDED

MARCH 31, 2024 APRIL 2, 2023

SIX MONTHS ENDED

JUNE 30, 2024 JULY 2, 2023

OPERATING ACTIVITIES:

Net income (loss) $ 14,179 $ ( 714 )

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

Net income $ 36,737 $ 15,083

Adjustments to reconcile net income to cash provided by operating activities:

Depreciation and amortization 19,344 20,146

Share-based compensation expense 6,531 5,125

Gain on disposal of property, plant and equipment, net — ( 2,541 )

Deferred income taxes and other ( 4,805 ) ( 618 )

20 unchanged sentences

( 36,960 ) ( 49,063 )

Net cash (used in) provided by operating, investing and financing activities

( 19,150 ) 2,837

Net cash used in operating, investing and financing activities ( 14,369 ) ( 5,877 )

Effect of exchange rate changes on cash ( 1,942 ) 1,248

CASH AND CASH EQUIVALENTS:

Net (decrease) increase

( 20,724 ) 3,709

Net decrease ( 16,311 ) ( 4,629 )

Balance, beginning of period 110,498 97,564

15 unchanged sentences

The December 31, 2023, 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 March 31, 2024 and April 2, 2023 both include 13 weeks.

The six-month periods ended June 30, 2024 and July 2, 2023 both include 26 weeks.

The three-month periods ended June 30, 2024 and July 2, 2023 both include 13 weeks.

Risks and Uncertainties

23 unchanged sentences

NOTE 2 – REVENUE RECOGNITION

The Company generates revenue from sales of modular carpet, resilient flooring, rubber flooring, and other flooring-related material, and from the installation of carpet and other flooring-related material.

A summary of these revenue streams, as a percentage of net sales, for the three months ended March 31, 2024 and April 2, 2023 is as follows:

Three Months Ended

March 31, 2024 April 2, 2023

Revenue from the sale of flooring material

Revenue from installation of flooring material

For the three and six months ended June 30, 2024 and July 2, 2023, revenue from sales of modular carpet, resilient flooring, rubber flooring, and other flooring-related material was approximately 98 % of total revenue.

The remaining 2 % of revenue was generated from the installation of carpet and other flooring-related material for both three-month and six-month periods ended June 30, 2024 and July 2, 2023.

Disaggregation of Revenue

For the three months ended March 31, 2024 and April 2, 2023, revenue from the Company’s customers is broken down by geography as follows:

For the three and six months ended June 30, 2024 and July 2, 2023, revenue from the Company’s customers is broken down by geography as follows:

Three Months Ended

Geography March 31, 2024 April 2, 2023

Six Months Ended

Geography June 30, 2024 July 2, 2023 June 30, 2024 July 2, 2023

Americas 62.0 % 61.1 % 60.5 % 59.2 %

5 unchanged sentences

Inventories are summarized as follows:

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

(in thousands)

4 unchanged sentences

NOTE 4 – EARNINGS PER SHARE

The Company computes basic earnings (loss) per share (“EPS”) by dividing net income (loss) 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 (loss).

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.

The Company includes all unvested stock awards that contain non-forfeitable rights to dividends or dividend equivalents, whether paid or unpaid, in the number of shares outstanding for basic EPS as these awards are considered participating securities.

5 unchanged sentences

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

Three Months Ended

March 31, 2024 April 2, 2023

Three Months Ended Six Months Ended

June 30, 2024 July 2, 2023 June 30, 2024 July 2, 2023

(in thousands, except per share data)

Net income (loss) $ 14,179 $ ( 714 )

Net income $ 22,558 $ 15,797 $ 36,737 $ 15,083

distributed and undistributed earnings available to participating securities ( 109 ) ( 189 ) ( 282 ) ( 207 )

Distributed and undistributed earnings (loss) available to common shareholders $ 14,029 $ ( 723 )

Distributed and undistributed earnings available to common shareholders $ 22,449 $ 15,608 $ 36,455 $ 14,876

Weighted average shares outstanding 58,001 57,381 57,812 57,279

5 unchanged sentences

Diluted EPS $ 0.38 $ 0.27 $ 0.63 $ 0.26

For the three months ended March 31, 2024 and April 2, 2023, 1,049,405 and 1,728,579 non-participating securities that could potentially dilute basic EPS in the future, respectively, consisting of restricted share units and performance shares, were excluded from the computation of diluted EPS as these securities would have been antidilutive for the respective periods.

For the three and six months ended June 30, 2024, there were no securities excluded from the computation of diluted EPS that would have been antidilutive.

For the three and six months ended July 2, 2023, 1,476,804 and 1,322,278 respectively, of non-participating securities were excluded from the computation of diluted EPS because the effect would have been antidilutive.

NOTE 5 – LONG-TERM DEBT

Long-term debt consisted of the following:

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Outstanding Principal Interest Rate (1)

2 unchanged sentences

Syndicated Credit Facility:

Revolving loan borrowings $ 7,334 7.96 % $ — — %

Term loan borrowings 83,916 6.18 % 121,658 6.61 %

Total borrowings under Syndicated Credit Facility 91,250 6.32 % 121,658 6.61 %

5.50% Senior Notes due 2028 300,000 5.50 % 300,000 5.50 %

5 unchanged sentences

(1) Represents the weighted average rate of interest for borrowings under the Syndicated Credit Facility and the stated rate of interest for the 5.50 % Senior Notes due 2028, without the effect of debt issuance costs.

(2) The Syndicated Credit Facility also includes a multicurrency revolving loan facility up to $ 300.0 million.

There were no revolving loan borrowings outstanding as of March 31, 2024 or December 31, 2023.

Syndicated Credit Facility

6 unchanged sentences

Fees for standby letters of credit are charged at varying rates computed by applying a margin of the amount available to be drawn under such standby letters of credit, depending on the Company’s consolidated net leverage ratio as of the most recently completed fiscal quarter.

As of both March 31, 2024 and December 31, 2023, the Company had $ 1.6 million in letters of credit outstanding under the Facility.

As of both March 31, 2024 and December 31, 2023, 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 June 30, 2024 and December 31, 2023, the Company had $ 1.6 million in letters of credit outstanding under the Facility.

As of both June 30, 2024 and December 31, 2023, 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.

The fair value of borrowings under the Facility is estimated using observable market rates and is considered Level 2 within the fair value hierarchy.

5 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 Facility.

As of March 31, 2024, the estimated fair value of the Senior Notes was $ 287.0 million, compared with a net carrying value recorded in the Company’s consolidated condensed balance sheet of $ 296.7 million ($ 300.0 million gross, excluding the impact of $ 3.3 million of unamortized debt issuance costs).

As of June 30, 2024, the estimated fair value of the Senior Notes was $ 283.2 million, compared with a net carrying value recorded in the Company’s consolidated condensed balance sheet of $ 296.9 million ($ 300.0 million gross, excluding the impact of $ 3.1 million of 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.

3 unchanged sentences

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 March 31, 2024 and December 31, 2023, the unamortized debt issuance costs recorded as a reduction of long-term debt were $ 4.2 million and $ 4.4 million, respectively.

Debt issuance costs related to the issuance of revolving debt, which include underwriting, legal and other direct costs, net of accumulated amortization, were $ 1.3 million and $ 1.4 million as of March 31, 2024 and December 31, 2023, respectively.

As of June 30, 2024 and December 31, 2023, the unamortized debt issuance costs recorded as a reduction of long-term debt were $ 3.7 million and $ 4.4 million, respectively.

Debt issuance costs related to the issuance of revolving debt, which include underwriting, legal and other direct costs, net of accumulated amortization, were $ 1.2 million and $ 1.4 million as of June 30, 2024 and December 31, 2023, respectively.

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

1 unchanged sentence

NOTE 6 – SHAREHOLDERS’ EQUITY

The following tables depict the activity in the accounts which make up shareholders’ equity for the three months ended March 31, 2024 and April 2, 2023:

The following tables depict the activity in the accounts which make up shareholders’ equity for the six months ended June 30, 2024 and July 2, 2023:

SHARES COMMON STOCK ADDITIONAL PAID-IN CAPITAL RETAINED

EARNINGS PENSION LIABILITY FOREIGN CURRENCY TRANSLATION ADJUSTMENT TOTAL

EARNINGS FOREIGN CURRENCY TRANSLATION ADJUSTMENT PENSION LIABILITY TOTAL

(in thousands, except per share data)

6 unchanged sentences

Compensation expense related to share-based plans, net of forfeitures and shares received for tax withholdings ( 311 ) ( 31 ) ( 324 ) — — — ( 355 )

( 311 ) ( 31 ) ( 324 ) — — — ( 355 )

Pension liability adjustment — — — — 458 — 458

Foreign currency translation adjustment — — — — ( 11,092 ) — ( 11,092 )

Pension liability adjustment — — — — — 458 458

Balance, at March 31, 2024 58,273 $ 5,827 $ 252,538 $ 334,423 $ ( 130,682 ) $ ( 33,558 ) $ 428,548

Net income — — — 22,558 — — 22,558

Issuances of stock related to restricted share units and performance shares 4 — — — — — —

Restricted stock issuances 58 6 941 — — — 947

Unrecognized compensation expense related to restricted stock awards — — ( 946 ) — — — ( 946 )

Cash dividends declared, $ 0.01 per common share

— — — ( 584 ) — — ( 584 )

Compensation expense related to share-based plans, net of forfeitures and shares received for tax withholdings ( 32 ) ( 3 ) 2,133 — — — 2,130

Foreign currency translation adjustment — — — — ( 2,022 ) — ( 2,022 )

Pension liability adjustment — — — — — 534 534

Balance, at June 30, 2024 58,303 $ 5,830 $ 254,666 $ 356,397 $ ( 132,704 ) $ ( 33,024 ) $ 451,165

SHARES COMMON STOCK ADDITIONAL PAID-IN CAPITAL RETAINED

EARNINGS PENSION LIABILITY FOREIGN CURRENCY TRANSLATION ADJUSTMENT CASH FLOW

EARNINGS FOREIGN CURRENCY TRANSLATION ADJUSTMENT PENSION LIABILITY CASH FLOW

(in thousands, except per share data)

7 unchanged sentences

( 132 ) ( 14 ) 1,850 — — — — 1,836

Pension liability adjustment — — — — ( 279 ) — — ( 279 )

Foreign currency translation adjustment — — — — 4,930 — — 4,930

Pension liability adjustment — — — — — ( 279 ) — ( 279 )

Reclassification out of accumulated other comprehensive loss – discontinued cash flow hedge — — — — — — 299 299

Balance, at April 2, 2023 58,053 $ 5,805 $ 246,001 $ 277,345 $ ( 133,845 ) $ ( 27,827 ) $ ( 450 ) $ 367,029

Net income — — — 15,797 — — — 15,797

Issuances of stock related to restricted share units and performance shares

5 1 ( 1 ) — — — — —

Restricted stock issuances 102 10 697 — — — — 707

Unrecognized compensation expense related to restricted stock awards — — ( 708 ) — — — — ( 708 )

Cash dividends declared, $ 0.01 per common share

— — — ( 581 ) — — — ( 581 )

Compensation expense related to share-based plans, net of forfeitures and shares received for tax withholdings

( 48 ) ( 5 ) 1,808 — — — — 1,803

Foreign currency translation adjustment — — — — 1,361 — — 1,361

Pension liability adjustment — — — — — ( 800 ) — ( 800 )

Reclassification out of accumulated other comprehensive loss – discontinued cash flow hedge — — — — — — 300 300

Balance, at July 2, 2023 58,112 $ 5,811 $ 247,797 $ 292,561 $ ( 132,484 ) $ ( 28,627 ) $ ( 150 ) $ 384,908

Stock Incentive Plan

The Company has share-based employee compensation plans, which are described more fully in Note 14 to the consolidated financial statements included in Item 8 of the Annual Report on Form 10-K for the fiscal year ended December 31, 2023 .

In May 2024, the shareholders of the Company approved the adoption of an amendment and restatement of the Interface, Inc.

2020 Omnibus Stock Incentive Plan (the “Amended and Restated Plan”).

The aggregate number of shares of common stock that may be issued or transferred under the Amended and Restated Plan on or after the effective date of the plan is the sum of 3,200,000 shares not previously authorized for issuance under any plan, plus the number of shares remaining available for issuance under the original Interface, Inc.

2020 Omnibus Stock Incentive Plan (the “Original Plan”) but not subject to outstanding awards under the Original Plan immediately prior to the effective date of the Amended and Restated Plan, plus the number of shares remaining available for issuance pursuant to the outstanding awards under the Original Plan immediately prior to the effective date of the Amended and Restated Plan, including any shares that become available due to the forfeiture, termination or cancellation of such awards.

No award may be granted after the tenth anniversary of the effective date of the Amended and Restated Plan.

Restricted Stock Awards

Compensation expense related to restricted stock grants was $ 0.9 million and $ 1.4 million for the three months ended March 31, 2024 and April 2, 2023, respectively.

Compensation expense related to restricted stock grants was $ 1.4 million and $ 2.4 million for the six months ended June 30, 2024 and July 2, 2023, respectively.

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

The following table summarizes restricted stock outstanding as of March 31, 2024, as well as activity during the three months then ended:

The following table summarizes restricted stock outstanding as of June 30, 2024, as well as activity during the six months then ended:

Restricted Shares Weighted Average

Outstanding at December 31, 2023 691,600 $ 12.55

Granted 58,400 16.22

Vested ( 504,800 ) 12.31

Forfeited or canceled ( 1,200 ) 13.19

Outstanding at March 31, 2024 366,100 $ 11.32

As of March 31, 2024, the unrecognized total compensation cost related to unvested restricted stock was $ 0.9 million.

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

Outstanding at June 30, 2024 244,000 $ 13.91

As of June 30, 2024, the unrecognized total compensation cost related to unvested restricted stock was $ 1.3 million.

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

Restricted Share Unit Awards

Compensation expense related to the restricted share units was $ 0.9 million and $ 0.5 million for the three months ended March 31, 2024 and April 2, 2023, respectively.

Compensation expense related to the restricted share units was $ 1.8 million and $ 1.0 million for the six months ended June 30, 2024 and July 2, 2023, respectively.

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

The following table summarizes restricted share units outstanding as of March 31, 2024, as well as activity during the three months then ended:

The following table summarizes restricted share units outstanding as of June 30, 2024, as well as activity during the six months then ended:

Restricted Share Units Weighted Average

3 unchanged sentences

Forfeited or canceled ( 5,700 ) 10.80

Outstanding at March 31, 2024 830,600 $ 11.67

As of March 31, 2024, the unrecognized total compensation cost related to unvested restricted share units was $ 8.5 million.

Outstanding at June 30, 2024 826,100 $ 11.68

As of June 30, 2024, the unrecognized total compensation cost related to unvested restricted share units was $ 7.6 million.

That cost is expected to be recognized by the first quarter of 2027.

Performance Share Awards

The following table summarizes the performance shares outstanding as of March 31, 2024, as well as the activity during the three months then ended:

The following table summarizes the performance shares outstanding as of June 30, 2024, as well as the activity during the six months then ended:

Performance Shares Weighted Average

3 unchanged sentences

Forfeited or canceled ( 16,800 ) 12.65

Outstanding at March 31, 2024 1,184,300 $ 12.24

Compensation expense related to the performance shares was $ 2.1 million and $ 1.1 million for the three months ended March 31, 2024 and April 2, 2023, respectively.

Outstanding at June 30, 2024 1,178,700 $ 12.23

Compensation expense related to the performance shares was $ 3.3 million and $ 1.7 million for the six months ended June 30, 2024 and July 2, 2023, 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 $ 9.0 million as of March 31, 2024.

Unrecognized compensation expense related to these performance shares was approximately $ 7.7 million as of June 30, 2024.

The amount and timing of future compensation expense will depend on the performance of the Company.

The compensation expense related to these outstanding performance shares is expected to be recognized by the first quarter of 2027.

The tax benefit recognized with respect to restricted stock, restricted share units and performance shares was approximately $ 0.5 million for the three months ended March 31, 2024.

The tax benefit recognized with respect to restricted stock, restricted share units and performance shares was approximately $ 1.2 million for the six months ended June 30, 2024.

NOTE 7 – LEASES

The table below represents a summary of the balances recorded in the consolidated condensed balance sheets related to the Company’s leases as of March 31, 2024 and December 31, 2023:

March 31, 2024 December 31, 2023

The table below represents a summary of the balances recorded in the consolidated condensed balance sheets related to the Company’s leases as of June 30, 2024 and December 31, 2023:

June 30, 2024 December 31, 2023

Balance Sheet Location Operating Leases Finance Leases Operating Leases Finance Leases

8 unchanged sentences

Total finance lease liabilities $ 7,637 $ 7,622

As of March 31, 2024, there were no significant leases that had not commenced.

Three Months Ended

March 31, 2024 April 2, 2023

As of June 30, 2024, there were no significant leases that had not commenced.

Three Months Ended Six Months Ended

June 30, 2024 July 2, 2023 June 30, 2024 July 2, 2023

(in thousands)

7 unchanged sentences

Other Supplemental Information

Three Months Ended

March 31, 2024 April 2, 2023

Three Months Ended Six Months Ended

June 30, 2024 July 2, 2023 June 30, 2024 July 2, 2023

(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 March 31, 2024 and December 31, 2023:

March 31, 2024 December 31, 2023

The table below presents the weighted average remaining lease terms and discount rates for finance and operating leases as of June 30, 2024 and December 31, 2023:

June 30, 2024 December 31, 2023

Weighted-average remaining lease term – finance leases (in years) 3.61 3.70

6 unchanged sentences

(in thousands)

2024 (excluding the three months ended March 31, 2024)

2024 (excluding the six months ended June 30, 2024)

$ 8,589 $ 1,544

9 unchanged sentences

NOTE 8 – EMPLOYEE BENEFIT PLANS

During the three-month periods ended March 31, 2024 and April 2, 2023, the Company recorded multi-employer pension expense related to multi-employer contributions of $ 0.7 million and $ 0.6 million, respectively.

The following tables provide the components of net periodic benefit cost for the three months ended March 31, 2024 and April 2, 2023:

Three Months Ended

During the three and six months ended June 30, 2024, 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 2, 2023, the Company recorded multi-employer pension expense related to multi-employer contributions of $ 0.7 million and $ 1.3 million, respectively.

The following tables provide the components of net periodic benefit cost for the three and six months ended June 30, 2024 and July 2, 2023:

Three Months Ended Six Months Ended

Defined Benefit Retirement Plans (Europe)

March 31, 2024 April 2, 2023

June 30, 2024 July 2, 2023 June 30, 2024 July 2, 2023

(in thousands)

4 unchanged sentences

Net periodic benefit cost $ 58 $ 21 $ 116 $ 44

Three Months Ended

Salary Continuation Plan March 31, 2024 April 2, 2023

Three Months Ended Six Months Ended

Salary Continuation Plan June 30, 2024 July 2, 2023 June 30, 2024 July 2, 2023

(in thousands)

2 unchanged sentences

Net periodic benefit cost $ 326 $ 332 $ 652 $ 664

Three Months Ended

Three Months Ended Six Months Ended

nora Defined Benefit Plan

March 31, 2024 April 2, 2023

June 30, 2024 July 2, 2023 June 30, 2024 July 2, 2023

(in thousands)

2 unchanged sentences

Amortization of net actuarial gains

— ( 111 ) — ( 220 )

Net periodic benefit cost $ 386 $ 279 $ 776 $ 556

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 (income) expense, net, 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 (income), net, in the consolidated condensed statements of operations.

NOTE 9 – GOODWILL AND OTHER INTANGIBLE ASSETS

The ending balance and the change in the carrying amount of good will fo r the three months ended March 31, 2024 is as follows:

The ending balance and the change in the carrying amount of goodwill for the six months ended June 30, 2024 is as follows:

(in thousands)

1 unchanged sentence

Foreign currency translation (2)

Balance, at March 31, 2024 $ 103,197

Balance, at June 30, 2024 $ 102,497

(1) The goodwill balance is allocated entirely to the AMS reportable segment.

(2) A portion of the goodwill balance is comprised of goodwill denominated in foreign currency attributable to the nora acquisition.

The net carrying value of intangible assets other than goodwill was $ 53.8 million and $ 56.3 million at March 31, 2024 and December 31, 2023, respectively.

The net carrying value of intangible assets other than goodwill was $ 52.1 million and $ 56.3 million at June 30, 2024 and December 31, 2023, respectively.

NOTE 10 – SEGMENT INFORMATION

9 unchanged sentences

and restructuring, asset impairment, severance, and other, net.

Intersegment revenues for the three months ended March 31, 2024 and April 2, 2023 were $ 16.8 million and $ 22.6 million, respectively.

Intersegment revenues for the three and six months ended June 30, 2024, were $ 24.5 million and $ 41.3 million, respectively, and intersegment revenues for the three and six months ended July 2, 2023, were $ 24.7 million and $ 47.3 million, respectively.

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

1 unchanged sentence

During the first quarter of 2024, the Company implemented a cost center realignment initiative to centralize certain global/shared functions.

For the quarter ended March 31, 2024, SG&A expenses for these global support functions were allocated to AOI for each reportable segment consistent with the allocation methodology used to allocate corporate overhead in prior periods.

For the three and six months ended June 30, 2024, SG&A expenses for these global support functions were allocated to AOI for each reportable segment consistent with the allocation methodology used to allocate corporate overhead in prior periods.

Prior year AOI amounts below were not recast as there was no material impact to the measure of segment profit for each reportable segment.

There were no changes to the composition of the Company’s operating or reportable segments.

Segment information for the three months ended March 31, 2024 and April 2, 2023 is presented in the following table:

Three Months Ended

March 31, 2024 April 2, 2023

Segment information for the three and six months ended June 30, 2024 and July 2, 2023 is presented in the following table:

Three Months Ended Six Months Ended

June 30, 2024 July 2, 2023 June 30, 2024 July 2, 2023

(in thousands)

9 unchanged sentences

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

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

(in thousands)

5 unchanged sentences

Total reported assets $ 1,216,117 $ 1,230,095

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

Three Months Ended

March 31, 2024 April 2, 2023

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

Three Months Ended Six Months Ended

June 30, 2024 July 2, 2023 June 30, 2024 July 2, 2023

(in thousands)

3 unchanged sentences

Interest expense 6,173 8,318 12,596 16,823

Other (income) expense, net

Other expense (income), net

832 ( 528 ) ( 144 ) 972

Income (loss) before income tax expense $ 18,999 $ ( 528 )

Three Months Ended March 31, 2024 Three Months Ended April 2, 2023

Income before income tax expense $ 31,146 $ 21,118 $ 50,145 $ 20,590

Three Months Ended June 30, 2024 Three Months Ended July 2, 2023

AMS EAAA AMS EAAA

4 unchanged sentences

Property casualty loss (1)

— — ( 1,300 ) —

Restructuring, asset impairment, severance, and other, net

1 unchanged sentence

AOI $ 26,947 $ 12,658 $ 24,034 $ 3,827

(1) Represents insurance recovery of loss recognized in the first quarter of 2023.

Six Months Ended June 30, 2024 Six Months Ended July 2, 2023

AMS EAAA AMS EAAA

(in thousands)

Operating income $ 44,999 $ 17,598 $ 33,467 $ 4,918

Purchase accounting amortization — 2,584 — 2,584

Cyber Event impact ( 225 ) ( 156 ) 492 373

Restructuring, asset impairment, severance, and other, net

253 77 1,344 ( 119 )

AOI $ 45,027 $ 20,103 $ 35,303 $ 7,756

NOTE 11 – SUPPLEMENTAL CASH FLOW INFORMATION

Supplemental cash flow information for the three months ended March 31, 2024 and April 2, 2023 is presented in the following table:

Three Months Ended

March 31, 2024 April 2, 2023

Supplemental cash flow information for the six months ended June 30, 2024 and July 2, 2023 is presented in the following table:

Six Months Ended

June 30, 2024 July 2, 2023

(in thousands)

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Cash paid for income taxes, net of refunds

16,014 10,101

See Note 7 entitled “Leases” for additional supplemental disclosures related to finance and operating leases.

Non-Cash Financing Activities

On March 12, 2024, the Company declared cash dividends on its common stock of $ 0.6 million, which were paid during the second quarter of 2024 to shareholders of record as of March 29, 2024.

At March 31, 2024, the dividends were recorded within accrued expenses in the consolidated condensed balance sheet.

NOTE 12 – INCOME TAXES

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

During the three months ended March 31, 2024, the Company recorded a total income tax provision of $ 4.8 million on pre-tax income of $ 19.0 million resulting in an effective tax rate of 25.4 %, as compared to a total income tax provision of $ 0.2 million on pre-tax loss of $ 0.5 million resulting in a negative effective tax rate of 35.2 % during the three months ended April 2, 2023.

The year-over-year change in the effective tax rate is primarily due to the tax effects of pre-tax income in the current year quarter compared to pre-tax loss in the prior year quarter and favorable changes related to share-based compensation and the limitation on the deduction for business interest expenses under Internal Revenue Code section 163(j).

The pre-tax loss for the three months ended April 2, 2023, included significant unusual or infrequent items that are specifically excluded from the AETR.

The tax effects related to these specifically excluded items are recognized discretely.

The income tax benefits recognized discretely were at a lower effective tax rate compared to the estimated AETR resulting in an overall negative effective tax rate for the three months ended April 2, 2023.

During the six months ended June 30, 2024, the Company recorded a total income tax provision of $ 13.4 million on pre-tax income of $ 50.1 million resulting in an effective tax rate of 26.7 %, as compared to a total income tax provision of $ 5.5 million on pre-tax income of $ 20.6 million resulting in an effective tax rate of 26.7 % during the six months ended July 2, 2023.

Although the year-over-year change in rate was flat, the effective tax rate for the period ended June 30, 2024 was favorably impacted by an increase in tax benefits related to share-based compensation and favorable changes related to the limitation on the deduction of business interest expense under Internal Revenue Code section 163(j), which were offset by a decrease in favorable tax benefits related to the repatriation of previously taxed foreign earnings realized during the six months ended July 2, 2023.

On December 20, 2021, the Organization for Economic Co-operation and Development (“OECD”) published Pillar Two Model Rules defining the global minimum tax, which calls for the taxation of large corporations at a minimum rate of 15 %.

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We will continue to closely monitor ongoing developments and evaluate any potential impact on future periods.

In the first three months of 2024, the Company increased its liability for unrecognized tax benefits by $ 0.3 million.

As of March 31, 2024, the Company had accrued approximately $ 5.2 million for unrecognized tax benefits.

In accordance with applicable accounting standards, the Company’s deferred tax asset as of March 31, 2024 reflects a reduction for $ 2.8 million of these unrecognized tax benefits.

In the first six months of 2024, the Company increased its liability for unrecognized tax benefits by $ 0.4 million.

As of June 30, 2024, the Company had accrued approximately $ 5.3 million for unrecognized tax benefits.

In accordance with applicable accounting standards, the Company’s deferred tax asset as of June 30, 2024, reflects a reduction of $ 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 13 – 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 March 31, 2024 and April 2, 2023 are reflected in the table below:

Amounts reclassified out of accumulated other comprehensive loss (“AOCL”), before tax, to the consolidated condensed statements of operations during the three and six months ended June 30, 2024 and July 2, 2023 are reflected in the tables below:

Three Months Ended

Statement of Operations Location March 31, 2024 April 2, 2023

Statement of Operations Location June 30, 2024 July 2, 2023

(in thousands)

Interest rate swap contracts loss Interest expense $ — $ ( 393 )

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

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

( 371 ) ( 195 )

Total loss reclassified from AOCI $ ( 374 ) $ ( 585 )

Total loss reclassified from AOCL

$ ( 371 ) $ ( 588 )

Six Months Ended

Statement of Operations Location June 30, 2024 July 2, 2023

(in thousands)

Interest rate swap contracts loss Interest expense $ — $ ( 786 )

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

( 745 ) ( 387 )

Total loss reclassified from AOCL

$ ( 745 ) $ ( 1,173 )

NOTE 14 – ASSETS DISPOSED

During the second quarter of 2023, pursuant to a previously announced plan of reorganization, the Company completed the sale of its Thailand manufacturing facility for a selling price of $ 6.6 million and recognized a gain of $ 2.7 million.

The gain is recorded in restructuring, asset impairment, and other gains, net, in the consolidated condensed statements of operations and is attributable to the EAAA reportable segment.

The Company determined that the Thailand facility sale did not meet the criteria for classification as discontinued operations.

NOTE 15 – COMMITMENTS AND CONTINGENCIES

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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