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risk of governmental expropriation of our property.

Many of the laws and regulations listed above are complex and often difficult to interpret and violations could result in significant criminal penalties or sanctions. Any of these factors may have an adverse effect on our international operations which could have a material adverse effect on our business, financial condition and results of ~~operations or cash flows.~~

~~Our long-term incentive plan could require significant adjustments to compensation expense in our consolidated statements of income if management changes its determinations~~operations.

We are dependent on the ~~probability~~availability and price of ~~meeting certain performance~~raw materials.

We require substantial amounts of materials, including application-specific integrated circuits, coil and bar stock, ferrous and copper alloy sheets, extrusions, glass, LED displays, plastic molding resins, precious metals, silicon die castings and wire. The availability and prices of materials may be subject to curtailment or change due to, among other things, inflation, new laws or regulations, suppliers’ allocations to other purchasers, supply chain disruptions, changes in exchange rates and worldwide price levels. ~~The adjustments~~Any change in the availability of, lead times for, or price for, these materials could ~~be material to the financial statements.~~

In the third quarter of fiscal 2018, management determined that it was not probable that we would meet the target level of performance for fiscal 2020 under our long-term incentive plan. As a result, in fiscal 2018, we recorded a reversal of stock-based compensation expense relating to prior periods of $6.0 million.

In the second quarter of fiscal 2019, management determined that it was probable that we would meet the target level of performance for fiscal 2020 under our long-term incentive plan. As a result of changing the estimated level of performance from threshold to target levels, we recorded additional stock-based compensation expense relating to prior periods of $7.4 million.

In fiscal 2020, if management makes a determination that exceeding the target level is probable for fiscal 2020, an appropriate adjustment to stock-based compensation expense will be recorded in that period. In addition, if management makes a determination that it is not probable we will meet the target level for fiscal 2020, a reversal of stock-based compensation expense will be recorded in that period. The adjustments could be material to the financial statements.

~~Impairment charges relating to our goodwill and long-lived assets could~~materially adversely affect our ~~financial statements.~~

We regularly monitor our goodwill and long-lived assets for impairment indicators. In conducting our goodwill impairment testing, we may first perform a qualitative assessment of whether it is more likely than not that a reporting unit’s fair value is less than its carrying amount. If not, no further goodwill impairment testing is required. If it is more likely than not that a reporting unit’s fair value is less than its carrying amount, or if we elect not to perform a qualitative assessment of a reporting unit, we then compare the fair value of the reporting unit to the related net book value. If the net book value of a reporting unit exceeds its fair value, an impairment loss is measured and recognized. In conducting our impairment analysis of long-lived assets, we compare the undiscounted cash flows expected to be generated from the long-lived assets to the related net book values. Changes in economic or operating conditions impacting our estimates and assumptions could result in the impairment of our goodwill or long-lived assets. In the event that we determine that our goodwill or long-lived assets are impaired, we may be required to record a significant charge to earnings that could adversely affect ourbusiness, financial condition and results of operations.

~~We may be unable to keep pace with rapid technological changes, which could adversely affect our business.~~

~~The technologies relating to some~~

Table of our products have undergone, and are continuing to undergo, rapid and significant changes. Specifically, end-markets for electronic components and assemblies are characterized by technological change, frequent new product introductions and enhancements, changes in customer requirements and emerging industry standards. These changes could render our existing products unmarketable before we can recover any or all of our research, development and other expenses. Furthermore, the life cycles of our products vary, may change and are difficult to estimate. If we are unable, for technological or other reasons, to develop and market new products or product enhancements in a timely and cost-effective manner, our business, financial condition and operating results could be materially adversely affected.

Should a catastrophic event or other significant business interruption occur at any of our facilities, we could face significant reconstruction or remediation costs, penalties, third party liability and loss of production capacity, which could adversely affect our business.

Weather conditions, natural disasters or other catastrophic events could cause significant disruptions in operations, including, specifically, disruptions at our manufacturing facilities or those of our major suppliers or customers. In turn, the quality, cost and volumes of the products we produce and sell could be unexpectedly, negatively affected, which would impact our results of operations and financial condition.

War, terrorism, geopolitical uncertainties, public health issues, and other business interruptions have caused and could cause damage or disruption to international commerce and the global economy, and thus could have a strong negative effect on us, our suppliers, logistics providers, manufacturing partners and customers. Our business operations could be subject to interruption by power shortages, terrorist attacks and other hostile acts, labor disputes, public health issues, and other events beyond our control. Such events could decrease demand for our products or make it difficult or impossible for us to produce

and deliver products to our customers, or to receive components from our suppliers, thereby creating delays and inefficiencies in our supply chain. Should major public health issues, including pandemics, arise, we could be negatively affected by more stringent employee travel restrictions, additional limitations in freight services, governmental actions limiting the movement of products between regions, and disruptions in the operations of our manufacturing partners and component suppliers. The majority of our research and development activities, our corporate headquarters, information technology systems, and other critical business operations, including certain component suppliers and manufacturing partners, are in locations that could be affected by natural disasters. In the event of a natural disaster, losses could be incurred and significant recovery time could be required to resume operations and our financial condition and operating results could be materially adversely affected. While we may purchase insurance policies to cover the direct economic impact experienced following a natural disaster occurring at one of our own facilities, there can be no assurance that such insurance policies will cover the full extent of our financial loss nor will they cover losses which are not economic in nature such as, for example, our reputation as a reliable supplier.

Our ability to market our automotive and commercial vehicle products is subject to a lengthy sales cycle, which requires significant investment prior to significant sales revenues, and there is no assurance that our products will be implemented in any particular vehicle.

The sales cycles for our automotive and commercial vehicle products are lengthy because the manufacturers must develop high degrees of assurance that the products they buy will meet customer needs, interface as easily as possible with the other parts of a vehicle and with the manufacturer’s production and assembly process, and have minimal warranty, safety and service problems. As a result, from the time that a manufacturer develops a strong interest in our products, it normally will take several years before our products are available to consumers in that manufacturer’s vehicles.

In the automotive components industry, products typically proceed through five stages of research and development. Initial research on the product concept comes first, to assess its technical feasibility and economic costs and benefits. This stage often includes development of an internal prototype for the component supplier’s own evaluation. If the product appears feasible, the component supplier manufactures a functioning prototype to demonstrate and test the product’s features. These prototypes are then marketed and sold to automotive companies for testing and evaluation. If an automobile manufacturer shows interest in the product, it typically works with the component supplier to refine the product, then purchases second and subsequent generation engineering prototypes for further evaluation. Finally, the automobile manufacturer either decides to purchase the component for a production vehicle or terminates the program.

The time required to progress through these five stages to commercialization varies widely. Generally, the more a component must be integrated with other vehicle systems, the longer the process takes. Further, products that are installed by the factory usually require extra time for evaluation because other vehicle systems are affected, and a decision to introduce the product into the vehicle is not easily reversed. Because our automotive products affect other vehicle systems and are a factory-installed item, the process usually takes several years from conception to commercialization.

While we currently have active development programs with various OEMs for a variety of our products, no assurance can be given that our products will be implemented in any particular vehicles. During this development process, we derive minimal funding from prototype sales but generally obtain no significant revenue until mass production begins, which could have a material adverse effect on our liquidity. If our products are not selected after a lengthy development process, our results of operations and financial condition could be adversely affected.

Other automotive and commercial vehicle products that we develop are also likely to have a lengthy sales cycle. Because such technology is new and evolving, and because customers will likely require that any new product we develop pass certain feasibility and economic viability tests before committing to purchase, it is expected that any new products we develop will take some years before they are sold to customers, if at all.

Contents

Our inability, or our ~~customers'~~customers’ inability, to effectively manage the timing, quality and cost of new program launches could adversely affect our financial performance.

In connection with the awarding of new business, we obligate ourselves to deliver new products ~~and services~~ that are subject to our customers' timing, performance and quality demands. Additionally, we must effectively coordinate the activities of numerous suppliers and our and our customers’ personnel in order for the program launches of certain of our products to be successful. Given the complexity of new program launches, we may experience difficulties managing product quality, timeliness and associated costs. In addition, new program launches require a significant ramp up of costs; however, our sales related to these new programs generally are dependent upon the timing and success of our customers' introduction of new products. Our inability, or our customers' inability, to effectively manage the timing, quality and costs of these new program launches could adversely affect our financial condition and results of ~~operations~~operations.

Our businesses and ~~cash flows.~~

the markets in which we operate are highly competitive. If we are unable to compete effectively, our sales and profitability could decline.

The markets in which we operate are highly competitive. We compete with a large number of other manufacturers in each of our product areas and many of these competitors have greater resources and sales. Price, service and product performance are ~~subject~~significant elements of competition in the sale of our products. Competition may intensify further if more companies enter the markets in which we operate. Our failure to ~~continuing pressure to lower our prices.~~

Over the past several years we have experienced, and we expect to continue to experience, pressure to lower our prices. We, from time to time, provide price concessions in connection with the awarding of new business.

~~In order to maintain our profitability, we must strive to increase volumes and reduce our costs. Continuing pressures to reduce our prices~~compete effectively could have a material ~~adverse effect on our financial condition, results of operations and cash flows.~~

~~A significant fluctuation between the U.S. dollar and other currencies could adversely impact our results of operations and financial condition.~~

We have currency exposures related to buying, selling and financing in currencies other than the local currencies of the countries in which we operate. While we seek to manage our foreign exchange risk through operational means by matching revenue with same-currency costs, this may not always be effective. We currently do not use third-party derivative financial instruments to mitigate the risk of currency fluctuations. As a result, significant fluctuations in relative currency values, in particular against the value of the U.S. dollar, could have an adverse effect on our results of operations and financial condition.

~~Our Dabir Surfaces medical device products are emerging technologies. Our ability to successfully market and sell these products will depend on acceptance by the medical community.~~

We continue to develop our Dabir Surfaces medical device products, which are included in several ongoing clinical research and product evaluation studies. We will not be successful in marketing and selling these products to the medical community if we are unable to demonstrate the clinical efficacy, cost effectiveness and distinctive benefits of the products or if our customers prefer competitive products.

~~Disruption of our supply chain could have an~~ adverse effect on our business, financial condition and results of operations.

Future price reductions and increased quality standards may reduce our profitability and have a material adverse effect on our business, financial condition and results of operations.

Our ~~ability,~~supply arrangements with our customers typically require us to provide our products at predetermined prices. In some cases, these prices decline over the course of the arrangement and ~~that~~may require us to meet certain productivity and cost reduction targets. In addition, our customers may require us to share productivity savings in excess of our ~~suppliers, business partners and contract manufacturers,~~cost reduction targets. The costs that we incur in fulfilling these orders may vary substantially from our initial estimates. Unanticipated cost increases or the inability to ~~make, move and sell products is critical~~meet certain cost reduction targets may occur as a result of several factors, including increases in the costs of labor, components or materials. In some cases, we are permitted to pass on to our ~~success. Damage or disruption~~customers the cost increases associated with specific materials. However, cost overruns that we cannot pass on to our or their manufacturing or distribution capabilities due to weather, including any potential effects of climate change, natural disaster, fire or explosion, terrorism, pandemics, strikes, repairs or enhancements at our facilities, or other reasons, could impair our ability to manufacture or sell our products. Failure to take adequate steps to mitigate the likelihood or potential impact of such events, or to effectively manage such events if they occur,customers could adversely affect our business, financial condition and results of ~~operations, as well as require~~operations.

Certain of our customers have exerted and continue to exert considerable pressure on us to reduce prices and costs, improve quality and provide additional ~~resources to restore our supply chain.~~

~~We are dependent on the availability~~design and ~~price of materials.~~

engineering capabilities. We require substantial amounts of materials, including application-specific integrated circuits, coil and bar stock, ferrous and copper alloy sheets, glass, LED displays, plastic molding materials, precious metals, and silicon die castings. The availability and prices of materials may be unable to generate sufficient production cost savings in the future to offset required price reductions. Future price reductions, increased quality standards and the cost of adding additional engineering capabilities may reduce our profitability and have a material adverse effect on our business, financial condition and results of operations.

Our ability to market our automotive and commercial vehicle products is subject to ~~curtailment~~a lengthy sales cycle, which requires significant investment prior to reporting significant sales revenues, and there is no assurance that our products will be implemented in any particular vehicle.

The sales cycles for our automotive and commercial vehicle products are lengthy because the manufacturers must develop high degrees of assurance that the products they buy will meet their needs, interface correctly with the other parts of a vehicle and with the manufacturer’s production and assembly process, and have minimal warranty, safety and service problems. While we currently have active development programs with various OEMs for a variety of our products, no assurance can be given that our products will be implemented in any particular vehicles. If our products are not selected after a lengthy development process, our business, financial condition and results of operations could be adversely affected.

Our inability to capitalize on prior or ~~change due~~future acquisitions or any decision to ~~among other things, new laws~~strategically divest one or regulations, suppliers’ allocations to other purchasers, interruptions in production by suppliers, changes in exchange rates and worldwide price levels. Any change in the availability of, or price for, these materials could materiallymore current businesses may adversely affect our business, financial condition and results of operations.

We have completed acquisitions and divestitures in the past and we intend to continue to seek acquisitions to grow our businesses and may divest operations to focus on our core businesses. We may fail to derive significant benefits from such transactions. Also, if we fail to achieve sufficient financial performance from an acquisition, certain long-lived assets, such as property, plant and equipment and intangible assets, could become impaired and result in the recognition of an impairment loss.

The success of our acquisitions depends on our ability to:

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execute the integration or consolidation of the acquired operations into our existing businesses;

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develop or modify the financial ~~condition.~~reporting and information systems of the acquired entity to ensure overall financial integrity and adequacy of internal control procedures;

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retain key personnel and key customers;

~~Changes~~•

identify and take advantage of cost reduction opportunities; and

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further penetrate new and existing markets with the product capabilities we may acquire.

Integration of acquisitions may take longer than we expect and may never be achieved to the extent originally anticipated. Acquisitions may also increase our debt levels. This could result in lower than expected business growth or higher than anticipated costs. In addition, acquisitions or strategic divestitures may:

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cause a disruption in our ~~effective tax rate~~ongoing business;

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cause dilution of our common stock;

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distract our management from other ongoing business concerns; or

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unduly burden other resources in our company.

Our profitability will suffer if we are unable to successfully integrate an acquisition, if the acquisition does not further our business strategy as we expected or if we do not achieve sufficient revenue to offset the increased expenses associated with any acquisition. We may overpay for, or otherwise not realize the expected return on, our investments, which could adversely affect our operating results and potentially cause impairments to assets that we record as a part of an acquisition including intangible assets and goodwill.

Our customers may cancel their orders, change production quantities or locations or delay production.

We generally receive volume estimates, but not firm volume commitments from our customers, and may experience reduced or extended lead times in customer orders. Customers may cancel orders, change production quantities and delay production for a number of reasons. Cancellations, reductions or delays by a significant customer or by a number of customers may harm our results of ~~operations.~~

~~A number~~operations by reducing the volumes of ~~factors~~products we manufacture and sell, as well as by causing a delay in the recovery of our expenditures for inventory in preparation for customer orders, or by reducing our asset utilization, resulting in lower profitability.

In addition, we make key decisions based on our estimates of customer requirements, including determining the levels of orders that we will seek and accept, production schedules, component procurement commitments, personnel needs and other resource requirements. Changes in demand for our customers’ products may ~~increase our effective tax rate, which could~~ reduce our ~~net income, including:~~

~~the jurisdictions in which profits are determined~~ability to estimate future customer requirements accurately. This may make it difficult to schedule production and maximize utilization of our manufacturing capacity. Anticipated orders may not materialize and delivery schedules may be ~~earned and taxed;~~

~~the resolution~~deferred as a result of ~~issues arising from tax audits;~~

changes in demand for our products or our customers’ products. We often increase staffing and capacity and incur other expenses to meet the ~~valuation~~anticipated demand of our ~~deferred tax assets and liabilities, and in deferred tax valuation allowances;~~

~~adjustments to income taxes upon finalization of tax returns;~~

customers. On occasion, customers may require rapid increases in ~~expenses not deductible for tax purposes, including write-offs of acquired in-process research and development and impairments of goodwill and long-lived assets;~~

~~changes in available tax credits;~~

~~changes in tax laws or interpretation, including changes in the U.S. to the taxation of non-U.S. income and expenses; and~~

~~changes in U.S. generally accepted accounting principles ("U.S. GAAP").~~

~~Our gross profit margins are subject to fluctuations due to many factors.~~

~~A number of factors~~production, which may ~~impact~~stress our ~~gross profit margins, including the following:~~

~~tariffs;~~

~~geographical and vertical market pricing mix;~~

~~changes in the mix of our prototyping and production-based business;~~

~~competitive pricing dynamics and customer mix;~~

~~pricing concessions; and~~

~~various manufacturing cost variables including product yields, package and assembly costs, provisions for excess and obsolete inventory and the absorption of manufacturing overhead.~~

resources. Any significant decrease or delay in customer orders could have a material adverse effect on our ~~gross profit margins~~business, financial condition and results of operations.

A catastrophic event or other significant business interruption at any of our facilities could adversely affect our business, financial condition and results of operations.

~~Our information technology (“IT”) systems~~

Weather conditions, natural disasters or other catastrophic events could cause significant disruptions at our manufacturing facilities or those of our major suppliers or customers. In such event, losses could be ~~breached.~~

incurred and significant recovery time could be required to resume operations and our business, financial condition and results of operations could be materially adversely affected.

War, terrorism, geopolitical uncertainties (including the military conflict between Russia and Ukraine), public health issues (such as the COVID-19 pandemic), and other business interruptions have caused and could cause damage or disruption to international commerce and the global economy, and thus could have a strong negative effect on us, our suppliers, logistics providers, and customers. Our business operations could be subject to interruption by power shortages, terrorist attacks and other hostile acts, labor disputes, population lockdowns and other events beyond our control. Such events could decrease demand for our products or make it difficult or impossible for us to produce and deliver products to our customers, or to receive components from our suppliers. Should major public health issues, including pandemics, arise, we could be negatively affected by shutdowns, shelter in place orders, more stringent travel restrictions, additional limitations in freight services, governmental actions limiting the movement of products between regions, and disruptions in the operations of our manufacturing partners and component suppliers. Any such business interruptions could materially affect our business, financial condition and results of operations.

Russia’s invasion of Ukraine and the resulting economic sanctions imposed by the international community have impacted the global economy and given rise to potential global security issues that may adversely affect international business and economic conditions. Although we have no operations in Russia or Ukraine, certain of our customers and suppliers have been negatively impacted by these events, which in turn has impacted markets where we do business, including Europe and Asia. These events have caused additional disruption in the supply chains, which are already experiencing disruption due to the impacts of the COVID-19 pandemic and may continue to impact demand for our products. The continuation of this military conflict between Russia and Ukraine could lead to other supply chain disruptions, increased inflationary pressures, and volatility in global markets and industries that could negatively impact our operations.

Technology and Intellectual Property Risks

Our operations could be negatively impacted by IT service interruptions, data corruption or misuse, cyber-based attacks, or network security breaches.

We face certain security threats relating to the confidentiality and integrity of our ITinformation technology (“IT”) systems. Despite implementation of security measures, our IT systems may be vulnerable to damage from computer viruses, ~~cyber attacks~~cyber-attacks and other unauthorized access, and these security breaches could result in a disruption to our operations. A material network breach of our IT systems could involve the theft of our and our customers' intellectual property or trade secrets which may be used by competitors to develop competing products. To the extent that any security breach results in a loss or damage to data, or inappropriate disclosure of confidential or proprietary information, it could cause significant damage to our reputation, affect our customer relations, lead to claims against us, increase our costs to protect against future damage and could result in a material adverse effect on our business, financial condition and results of operations.

Further, the recent military conflict between Russia and Ukraine could result in cyberattacks that could directly or indirectly impact us, including the potential for retaliatory acts of cyberwarfare from Russia against U.S. companies in response to increasing sanctions on Russia. The impact of any one or more of these or other factors could adversely affect our business, financial ~~position.~~

condition and results of operations.

Any such disruption or security breach, as well as any action by us or our employees or contractors that might be inconsistent with the rapidly evolving data privacy and security laws and regulations applicable within the U.S. and elsewhere where we conduct business, could result in enforcement actions by U.S. states, the U.S. Federal government or foreign governments, liability or sanctions under data privacy laws that protect personally identifiable information, regulatory penalties, other legal proceedings such as but not limited to private litigation, the incurrence of significant remediation costs, disruptions to our development programs, business operations and collaborations, diversion of management efforts and damage to our reputation, which could harm our business and operations. Because of the rapidly changing nature of technology and the increasing sophistication of cybersecurity threats, our measures to prevent, respond to and minimize such risks may be unsuccessful. While we have secured cyber insurance to potentially cover certain risks associated with cyber incidents, there can be no assurance ~~the insurance~~it will be sufficient to cover any such liability.

In ~~addition,~~particular, the ~~European Parliament and the Council~~General Data Privacy Regulation (“GDPR”) of the European Union ~~adopted~~creates a ~~comprehensive general data privacy regulation (“GDPR”) in 2016~~range of compliance obligations applicable to ~~replace the current European Union Data Protection Directive and related country-specific legislation. The GDPR took effect in May 2018 and governs~~ the collection, use, retention, security, processing and ~~use~~transfer of personal data in the European Union. The GDPR, which is wide-ranging in scope, imposes several requirements relating to the consent of the individuals to whom the personal data relates, the information provided to the individuals, the security and confidentiality of the personal data, data breach notification and the use of third-party processors in connection with the processing of the personal data. The GDPR also imposes strict rules on the transfer of personal data out of the European Union to countries such as the U.S., enhances enforcement authority and imposes large penalties for noncompliance.

~~Products we manufacture may contain design or manufacturing defects that could result in reduced demand for our products or services and liability claims against us.~~

We may be subject to increased costs due to warranty claims on defective products. Product defects may result in product liability claims against us where defects cause, or are alleged to cause, property damage, bodily injury or death. We may be required to participate in a recall involving products that are, or are alleged to be, defective. We carry insurance for certain legal matters involving product liability, however, we do not have coverage for all costs related to product defects or recalls and the costs of such claims, including costs of defense and settlement, may exceed our available coverage.

~~Our technology-based businesses and the markets in which we operate are highly competitive. If we are~~ unable to ~~compete effectively, our sales~~keep pace with rapid technological changes, which could ~~decline.~~

The markets in which we operate are highly competitive and characterized by rapid changes due to technological improvements and developments. We compete with a large number of other manufacturers in each of our product areas; many of these competitors have greater resources and sales. Price, service and product performance are significant elements of competition in the sale of our products. Competition may intensify further if more companies enter the markets in which we operate. Our failure to compete effectively could materially adversely affect our business, financial condition and results of operations.

The technologies relating to some of our products have undergone, and are continuing to undergo, rapid and significant changes. Specifically, end-markets for electronic components and assemblies are characterized by technological change, frequent new product introductions and enhancements, changes in customer requirements and emerging industry standards. These changes could render our existing products unmarketable before we can recover any or all of our research, development and other expenses. Furthermore, the life cycles of our products vary, may change and are sometimes difficult to estimate. If we are unable, for technological or other reasons, to develop and market new products or product enhancements in a timely and cost-effective manner, our business, financial condition and results of operations could be materially adversely affected.

If we are unable to protect our intellectual property or we infringe, or are alleged to infringe, on another person’s intellectual property, our ~~business, financial condition~~competitive position and ~~operating~~ results ~~could~~of operations may be ~~materially~~ adversely ~~affected.~~

impacted.

We have numerous U.S. and foreign patents, trade secrets and license agreements covering certain of our products and manufacturing processes. Our ability to compete effectively with other companies depends, in part, on our ability to maintain the proprietary nature of our technology. Although we have been awarded, have filed applications for, or have been licensed under numerous patents in the U.S. and other countries, there can be no assurance concerning the degree of protection afforded by these patents or the likelihood that pending patents will be issued. The loss of certain patents and trade secrets could adversely affect our sales, margins or profitability.

We have and may become involved in litigation in the future to protect our intellectual property or because others may allege that we infringe on their intellectual property. These claims and any resulting lawsuit could subject us to liability for damages and invalidate our intellectual property rights. If an infringement claim is successfully asserted by a holder of intellectual property rights, we may be required to cease marketing or selling certain products, pay a penalty for past infringement and spend significant time and money to develop a non-infringing product or process or to obtain licenses for the technology, process or information from the holder. We may not be successful in the development of a non-infringing alternative, or licenses may not be available on commercially acceptable terms, if at all, in which case we may lose sales and profits. In addition, any litigation could be lengthy and costly and could materially adversely affect us even if we are successful in the litigation.

Legal, Regulatory and Compliance Risks

We are subject to government regulations, including environmental, health, and safety laws and regulations, that expose us to potential financial liability.

Our operations are regulated by a number of federal, state, local and international government regulations, including those pertaining to environmental, health, and safety (“EHS”) that govern, among other things, air and water emissions, worker protection, and the handling, storage and disposal of hazardous materials. If we violate EHS laws and regulations, we could be liable for substantial fines, penalties, and costs of mandated remedial actions. Our environmental permits could also be revoked or modified, which could require us to cease or limit production at one or more of our facilities, thereby materially adversely affecting our business, financial condition and results of operations. EHS laws and regulations have generally become more stringent over time and could continue to do so in response to climate change concerns, imposing greater compliance costs and increasing risks and penalties associated with any violation, which also could materially adversely affect our business, financial condition and results of operations.

We operate our business on a global basis and changes to trade policy, including tariffs and customs regulations, could have a material and adverse effect on our business.

We manufacture and sell our products globally and rely on a global supply chain to deliver the required raw materials, components, and parts, as well as the final products to our customers. Existing free trade laws and regulations, such as the United States-Mexico-Canada Agreement, provide certain duties and tariffs for qualifying imports and exports, subject to compliance with the applicable classification and other requirements. Changes in laws or policies governing the terms of foreign trade, and in particular increased trade restrictions, tariffs or taxes on imports from countries where we manufacture products, such as China, Egypt and Mexico, could have a material adverse effect on our business, financial condition and operating results. For instance, beginning in 2018, the U.S. and Chinese governments have imposed a series of significant incremental retaliatory tariffs to certain imported products. Most notably with respect to the automotive and commercial vehicle industries, the U.S. imposed tariffs on imports of certain steel, aluminum and automotive components, and China imposed retaliatory tariffs on imports of U.S. vehicles and certain automotive components. Depending upon their duration and implementation, as well as our ability to mitigate their impact, these tariffs and other regulatory actions could materially affect our business, including in the form of an increase in cost of goods sold, decreased margins, increased pricing for customers, and reduced sales.

Climate change and climate change regulations could adversely impact our business and results of operations.

Increased public awareness and concern regarding environmental risks, including global climate change, may result in more international, regional and/or federal requirements or industry standards to reduce or mitigate global warming and other environmental risks. These regulations or standards could mandate more restrictive requirements, such as stricter limits on greenhouse gas emissions and production of single use plastics, and could increase costs relating to monitoring and reporting emissions data. In addition, the risks of climate change may impact manufacturing, product demand, the availability and cost of materials and natural resources, and sources and supply of energy, and could increase insurance and other operating costs. If environmental laws or regulations or industry standards are either changed or adopted and impose significant operational restrictions and compliance requirements upon us, our operations or products, or our operations are disrupted due to physical impacts of climate change, our business, financial condition and results of operations could be materially adversely affected.

Products we manufacture may contain design or manufacturing defects that could result in reduced demand for our products or services and liability claims against us.

Despite our quality control and quality assurance efforts, defects may occur in the products we manufacture due to a variety of factors, including design or manufacturing errors, component failure or counterfeit parts. Product defects may result in delayed shipments and reduced demand for our products. We may be subject to increased costs due to warranty claims on defective products. Product defects may result in product liability claims against us where defects cause, or are alleged to cause, property damage, bodily injury or death. We may be required to participate in a recall involving products that are, or are alleged to be, defective. We carry insurance for certain legal matters involving product liability, however, we do not have coverage for all costs related to product defects or recalls and the costs of such claims, including costs of defense and settlement, may exceed our available coverage. Any such product defects or product liability claims could materially adversely affect our business, financial condition and results of operations.

Financial Risks

We have significant goodwill and other intangible assets, and future impairment of these assets could have a material adverse impact on our financial condition and results of operations.

A significant portion of our long-term assets consists of goodwill and other intangible assets recorded as a result of past acquisitions. We do not amortize goodwill and indefinite-lived intangible assets, but rather review them for impairment on an annual basis or more frequently whenever events or changes in circumstances indicate that their carrying value may not be recoverable. In the event that we determine that our goodwill or other intangible assets are impaired, we may be required to record a significant charge to earnings that could adversely affect our financial condition and results of operations.

We have incurred ~~a significant amount of~~ indebtedness and our level of indebtedness and restrictions under our indebtedness could adversely affect our operations and liquidity.

~~On September 12, 2018, we entered into a~~

Our primary sources of liquidity are cash generated from operations and availability under our revolving credit facility. Our senior unsecured credit agreement ~~that provided~~consists of a $200.0 million revolving credit facility and a $250.0 million term loan. As of April ~~27, 2019, $278.7~~30, 2022, $206.3 million in principal was outstanding under these financing ~~arrangements.~~arrangements and we had $199.9 million of availability remaining under the revolving credit facility. The term loan matures in September 2023 and requires quarterly principal payments of $3.1 million over the five-year term, with the remaining balance due upon maturity. The senior unsecured credit agreement provides for variable rates of interest based on the type of borrowing and our debt to EBITDA financial ratio and contains customary representations and warranties, financial covenants, restrictive covenants and events of default.

~~The~~

Our senior unsecured credit agreement imposes various restrictions and covenants regarding the operation of our business, including covenants that require us to obtain the ~~lender’s~~lenders’ consent before we can, among other things and subject to certain ~~limited~~ exceptions: (i) incur additional indebtedness or additional liens on our property; (ii) consummate certain acquisitions, dispositions, mergers or consolidations; (iii) make any material change in the nature of our business; (iv) enter into certain transactions with our affiliates; or (v) repurchase or redeem any outstanding shares of our common stock or pay ~~dividends or other distributions, other than stock~~cash dividends to our ~~stockholders.~~

stockholders when a default exists or certain financial covenants are not maintained.

The amount of our outstanding indebtedness could have an adverse effect on our operations and liquidity, including by, among other things: (i) making it more difficult for us to pay or refinance our debts as they become due during adverse economic and industry conditions, because we may not have sufficient cash flows to make our scheduled debt payments; (ii) causing us to use a larger portion of our cash flows to fund interest and principal payments, thereby reducing the availability of cash to fund working capital, product development, capital expenditures and other business activities; (iii) making it more difficult for us to take advantage of significant business opportunities, such as acquisition opportunities or other strategic transactions, and to react to changes in market or industry conditions; and (iv) limiting our ability to borrow additional monies in the future to fund the activities and expenditures described above and for other general corporate purposes as and when needed, which could force us to suspend, delay or curtail business prospects, strategies or operations.

~~Regulations related to~~

A significant fluctuation between the ~~use~~U.S. dollar and other currencies could adversely impact our business, results of ~~conflict-free minerals may increase~~operations and financial condition.

We transact business in various foreign countries. We present our ~~costs~~consolidated financial statements in U.S. dollars, but a portion of our revenues and ~~expenses, and an inability to certify that our products~~expenditures are ~~conflict-free may adversely affect customer relationships.~~

~~The Dodd-Frank Wall Street Reform and Consumer Protection Act contains provisions to improve the transparency and accountability of the use by public companies~~transacted in ~~their products of minerals mined in certain countries and to prevent the sourcing of such “conflict” minerals.~~other currencies. As a result, ~~the SEC enacted annual disclosure and reporting requirements for public companies that use these minerals in their products, which apply to us. Under the rules,~~ we are ~~required~~exposed to ~~conduct due diligence to determine~~fluctuations in foreign currencies. Additionally, we have currency fluctuation exposure arising from funds held in local currencies in foreign countries. Volatility in the ~~source of any conflict minerals used in our products and to make annual disclosures which began in May 2014. Because our supply chain is broad-based and complex, we may not be able to easily verify~~exchange rates between the origins for all minerals used in our products. In addition, the rules may reduce the number of suppliers who provide components and products containing conflict-free minerals and thus may increase the cost of the components used in manufacturing our productsforeign currencies and the ~~costs~~U.S. dollar could have an adverse effect on our business, financial condition and results of operations.

Performance-based awards under our ~~products~~long-term incentive plan may require significant adjustments to ~~us. Any increased costs and expenses may~~compensation expense which could have a material adverse impact on our results of operations.

Compensation expense for the performance-based restricted stock awards (“RSAs”) and performance units (“Performance Units”) awarded under our five-year long-term incentive program will be ‎recognized over the vesting ‎period based on the projected probability of achieving the relevant performance goals for fiscal 2025. As of April 30, 2022, we have not recorded any compensation expense for the RSAs or the Performance Units based on the probability assessment required under the accounting rules and regulations. Each quarter, we will assess the probability of vesting for the RSAs and the Performance Units and will adjust the compensation expense as necessary. At such time, we may be required to record compensation ‎expense relating to prior periods, and such ‎compensation expense adjustment could be ‎material to our results of operations.‎

Restructuring activities may lead to additional costs and material adverse effects.

In the past, we have taken actions to restructure and optimize our production and manufacturing capabilities and efficiencies through relocations, consolidations, facility closings or asset sales. In the future, we may take additional restructuring actions including the consolidating, closing or selling of additional facilities. These actions could result in impairment charges and various charges for such items as idle capacity, disposition costs and severance costs, in addition to normal or attendant risks and uncertainties. We may be unsuccessful in any of our current or future efforts to restructure or consolidate our business. Plans to minimize or eliminate any loss of revenues during restructuring or consolidation may not be achieved. These activities may have a material adverse effect on our business, financial condition and results of operations. ~~Further, if~~

Changes in our effective tax rate may adversely impact our results of operations.

A number of factors may increase our effective tax rate, which could reduce our net income, including:

•

the jurisdictions in which profits are determined to be earned and taxed;

•

changes in the valuation of our deferred tax assets and liabilities, and in deferred tax valuation allowances;

•

adjustments to income taxes upon finalization of tax returns;

•

increases in expenses not deductible for tax purposes, including write-offs of acquired in-process research and development and impairments of goodwill and long-lived assets;

•

changes in available tax credits;

•

changes in tax laws or interpretation, including changes in the U.S. to the taxation of non-U.S. income and expenses; and

•

changes in U.S. generally accepted accounting principles (“GAAP”).

Our judgments regarding the accounting for tax positions and the resolution of tax disputes may impact our results of operations and financial condition.

Significant judgment is required to determine our effective tax rate and evaluate our tax positions. We provide for uncertain tax positions when such tax positions do not meet the recognition thresholds or measurement criteria prescribed by applicable accounting standards. Fluctuations in federal, state and foreign taxes or a change to uncertain tax positions, including related interest and penalties, may impact our effective tax rate and results of operations. Additionally, we are ~~unable~~subject to ~~certify that~~audits in the various taxing jurisdictions in which we conduct business. Based on the status of these audits and the protocol of finalizing audits by the relevant tax authorities, it is not possible to estimate the impact of changes, if any, to previously recorded uncertain tax positions. Any negative or unexpected outcomes of these examinations and audits could have a material adverse impact on our ~~products are conflict free, we may face challenges with our customers, which may place us at a competitive disadvantage,~~results of operations and ~~our reputation may be harmed.~~

financial condition.

Item 1B. Unresolved Staff Comments

~~None~~

None.

Item 2. Properties

Our corporate headquarters is located in Chicago, Illinois. As of April ~~27, 2019,~~30, 2022, we leased or owned 3632 operating facilities. We believe our space is in good condition and adequate to meet our current and reasonably anticipated future needs.

The following table provides details regarding our significant properties as of April ~~27, 2019:~~

30, 2022:



Location	~~Use~~ Segment(s)	~~Owned/~~ ~~Leased~~ Use	Owned/ Leased	Approximate Square Footage
Lontzen, Belgium	Automotive	Manufacturing and Warehousing	Owned	~~153,385~~	124,000
~~Shanghai,~~ Dongguan, China	~~Manufacturing~~ Automotive and Industrial	~~Leased~~ Manufacturing	~~194,333~~ Leased		197,000
~~Dongguan,~~ Shanghai, China	~~Manufacturing~~ Automotive and Industrial	~~Leased~~ Manufacturing	~~197,000~~ Leased		147,000
~~Cairo, Egypt~~ Suzhou, China	~~Manufacturing~~ Automotive and Industrial	~~Leased~~ Manufacturing	~~120,954~~ Leased		318,000
~~Mriehel, Malta~~ Cairo, Egypt	~~Manufacturing~~ Automotive and Industrial	~~Leased~~ Manufacturing	~~299,290~~ Leased		272,328
~~Monterrey, Mexico~~ Mriehel, Malta	~~Manufacturing~~ Automotive and Industrial	~~Leased~~ Manufacturing	~~286,657~~ Leased		299,000
~~Fresnillo,~~ Monterrey, Mexico	~~Manufacturing~~ Automotive, Industrial and Interface	~~Leased~~ Manufacturing	~~120,000~~ Leased		292,000
Santa Catarina Nuevo Léon, Mexico	~~Manufacturing~~ Automotive	~~Leased~~ Manufacturing	~~128,038~~ Leased
~~Chicago, Illinois~~	~~Manufacturing~~ 158,000	~~Owned~~	~~118,000~~
~~Carthage, Illinois~~	~~Manufacturing~~	~~Owned~~	~~134,889~~
~~Rolling Meadows, Illinois~~	~~Manufacturing~~	~~Owned~~	~~52,000~~
~~Southfield, Michigan~~	~~Sales and Engineering Design Center~~	~~Owned~~	~~64,000~~
~~McAllen, Texas~~	~~Warehousing~~	~~Leased~~	~~99,360~~

Item 3. Legal Proceedings

From time to time, we have and may become involved in various litigation matters, including administrative proceedings, regulatory proceedings, environmental matters, and commercial disputes. The impact and outcome of litigation ~~if any,~~ is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that could harm our business. We are not currently aware of any ~~such~~ legal proceedings or claims to which we are a party or to which our property is subject that we believe will have, individually or in the aggregate, a material adverse effect on our business, financial condition or results of operations.

Item 4. Mine Safety Disclosures

Not ~~Applicable~~

applicable.

Supplementary Item: Information about our Executive Officers



Name	Age			Offices and Positions Held and Length of Service as Officer
Donald W. Duda	63	66		Chief Executive Officer since 2004 and President and Director since 2001.
Ronald L.G. Tsoumas	58	61		Chief Financial Officer of the Company since 2018; prior thereto, served as Controller of the Company ~~since 2007.~~from 2007 to 2018.
Andrea J. Barry	56	59		Chief Administrative Officer of the Company since January 2022 and Chief Human Resources Officer of the Company since 2017; ~~prior thereto,~~ served as CHRO for Wirtz Beverage Group from 2013 to 2016.
~~Michael S. Brotherton~~	42		~~President, Grakon since 2018; prior thereto, served as Vice President and General Manager, North American Automotive, from 2010.~~
Timothy R. Glandon	55	58		Vice President since 2006; General Manager, North American Automotive, from 2006 to 2015.
Joseph E. Khoury	55	58		Chief Operating Officer of the Company since 2018; prior thereto, served as Senior Vice President since 2015, and as Vice President and General Manager of European Operations from 2004 to 2015.
Kevin M. Martin		56		Vice President, North America since 2020; prior thereto, Vice President and General Manager, North America Automotive, from 2019 to 2020, General Manager, North America Automotive in 2018, and Director of Sales, North America Automotive from 2014 to 2017.
Anil V. Shetty	53	56		President, Dabir Surfaces since 2018; prior thereto, Vice President and General Manager, Asia, from 2015, and Executive Managing Director, Asia from 2011 to 2015.

All executive officers are elected by the Board of Directors and serve a term of one year or until their successors are duly elected and qualified.

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Market Information

Our common stock is traded on the New York Stock Exchange under the symbol ~~"MEI." The following~~“MEI”. As of June 15, 2022, we had 366 holders of record of our common stock. This does not include persons whose stock is ~~a tabulation of high~~in nominee or “street name” accounts held by banks, brokers and ~~low sales prices for the periods presented and~~other nominees.

Dividends

While we currently expect that quarterly cash dividends ~~declared~~will continue to be paid in the future, such payments are at the discretion of our Board of Directors and will depend upon many factors, including our results of operations, liquidity position and compliance with debt covenants. In the first quarter of fiscal 2022, we increased our quarterly dividend from $0.11 per share to $0.14 per share.

High Low Dividends Declared Per Share
Fiscal Year Ended April 27, 2019

First Quarter $ 45.45
$ 37.70
$ 0.11
Second Quarter 41.30
27.65
0.11
Third Quarter 33.98
20.99
0.11
Fourth Quarter 32.22
25.11
0.11

Fiscal Year Ended April 28, 2018

First Quarter $ 44.95
$ 36.05
$ 0.09
Second Quarter 46.75
36.75
0.09
Third Quarter 48.44
39.00
0.11
Fourth Quarter 42.10
36.95
0.11

Issuer Purchases of Equity Securities

On ~~June 13, 2019,~~March 31, 2021, the Board of Directors ~~declared a dividend~~authorized the purchase of ~~$0.11 per share of common stock, payable on July 26, 2019,~~up to ~~holders of record on July 12, 2019. As of June 18, 2019, the number of record holders~~$100.0 million of our common stock, ~~was 397.~~

expiring on March 31, 2023. Purchases under this program may be made on the open market, in private transactions or pursuant to purchase plans designed to comply with Rule 10b5-1 of the Securities Exchange Act of 1934. We did not purchase any shares of our common stock under this program during the quarter ended April 30, 2022. As of April 30, 2022, a total of 1,593,139 shares have been purchased at a cost of $71.2 million since the commencement of the share buyback program.

On June 16, 2022, the Board of Directors authorized an increase in our existing share buyback program under which we may purchase up to an additional $100.0 million of our outstanding common stock, and also extended the expiration from March 31, 2023 to June 14, 2024.

Securities Authorized for Issuance Under Equity Compensation Plans

See Item ~~6. Selected Financial Data~~

12, “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters,” of this Annual Report for certain information relating to our equity compensation plans.

Stock Performance

The following ~~selected financial data should be read in conjunction with Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and~~graph shows the cumulative total stockholder return on our ~~consolidated financial statements and related notes included elsewhere in this report. The Consolidated Statements of Income data for fiscal 2019, fiscal 2018 and fiscal 2017, and~~common stock over the Consolidated Balance Sheets data as of April 27, 2019 and April 28, 2018, are derived from, and are qualified by reference to, our audited consolidated financial statements included elsewhere in this report. The Consolidated Statements of Income data for fiscal 2016 and fiscal 2015, and the Consolidated Balance Sheets data as ofperiod spanning April 29, 2017 to April 30, ~~2016~~2022, as compared with that of the Dow Jones U.S. Auto Parts Total Return Index, our Fiscal 2021 Peer Group and ~~May 2, 2015 are derived from audited consolidated financial statements not~~our Fiscal 2022 Peer Group. We have assumed that dividends have been reinvested and that $100 was invested on April 29, 2017. The stock price performance included in this ~~report.~~

Fiscal Year Ended
(In Millions, Except Percentages and Per Share Amounts) April 27, 2019 (1) April 28, 2018 (2) April 29, 2017 (3) April 30, 2016 (4) May 2, 2015 (5)
Income Statement Data:

Net Sales $ 1,000.3
$ 908.3
$ 816.5
$ 809.1
$ 881.1
Income before Income Taxes 103.6
123.8
115.9
110.9
120.8
Income Tax Expense 12.0
66.6
23.0
26.3
19.8
Net Income 91.6
57.2
92.9
84.6
101.1

Per Common Share Data:

Basic Net Income 2.45
1.54
2.49
2.21
2.61
Diluted Net Income 2.43
1.52
2.48
2.20
2.58
Dividends 0.44
0.40
0.36
0.36
0.36
Book Value 18.43
16.82
14.53
12.61
11.82

Balance Sheet Data:
Total Debt 292.6
57.8
27.0
57.0
5.0
Retained Earnings 545.2
472.0
427.0
358.6
356.5
Fixed Assets, Net 191.9
162.2
90.6
93.0
93.3
Total Equity 689.7
630.0
541.1
470.1
459.0
Total Assets 1,231.7
915.9
704.0
655.9
605.8

Other Financial Data:
Return on Average Equity 13.9 % 9.8 % 18.6 % 18.2 % 23.5 %
Pre-tax Income as a Percentage of Sales 10.4 % 13.6 % 14.2 % 13.7 % 13.7 %
Net Income as a Percentage of Sales 9.2 % 6.3 % 11.4 % 10.5 % 11.5 %

~~(1) Fiscal 2019 includes $3.5 million~~graph is historical and not necessarily indicative of pre-tax legal expense relating to the Hetronic litigation. See Note 9, "Commitments and Contingencies," in our consolidated financial statements for more information. During Fiscal 2019, we engaged in initiatives to reduce overall costs and improve operational profitability, which increased costs during the period by $6.9 million. Fiscal 2019 also includes pre-tax acquisition expenses of $15.4 million related to the acquisition of Grakon, income of $5.8 million for an international government grant for maintaining certain employment levels during the period and $7.4 million of stock-based compensation expense related to the re-estimation of RSA compensation expense based upon target levels offuture stock price performance. The ~~results~~Dow Jones U.S. Auto Parts Total Return Index replaces the CRSP NYSE Stock Market (US Companies) Index in this analysis and going forward, as the CRSP Index data is no longer accessible. The CRSP index has been included with data through May 1, 2021.


Company/Index	April 29, 2017		April 28, 2018		April 27, 2019		May 2, 2020		May 1, 2021		April 30, 2022
Methode Electronics, Inc.	$	100.00	$	91.91	$	67.45	$	66.56	$	106.14	$	106.69
NYSE Stock Market (US Companies)		100.00		111.51		121.66		108.22		162.74
Dow Jones U.S. Auto Parts Total Return Index		100.00		117.84		103.77		77.16		144.05		110.63
Fiscal 2022 Peer Group		100.00		104.81		104.05		82.04		140.09		129.57
Fiscal 2021 Peer Group		100.00		104.57		105.16		83.37		141.61		131.61

The Fiscal 2022 Peer Group consists of the following fifteen public companies:


Belden Corporation	Franklin Electric Company. Inc	Patrick Industries, Inc.
Benchmark Electronics, Inc.	Gentherm Incorporated	Rogers Corporation
Cooper-Standard Holdings Inc	LCI Industries	Stoneridge, Inc.
CTS Corporation	Littelfuse, Inc.	TTM Technologies, Inc.
Fabrinet	OSI Systems, Inc.	Visteon Corporation

The Compensation Committee of the Board of Directors reviews the peer group annually and from time to time changes the composition of the peer group where changes are appropriate. In fiscal 2022, the Compensation Committee added Cooper-Standard Holdings Inc., Fabrinet and Patrick Industries, Inc. based on our revenue, market capitalization and industry criteria for the peer group. Delphi Technologies PLC, Kemet Corporation and MTS Systems Corporation were all acquired in fiscal ~~2019 also include a discrete tax benefit~~2021 and were excluded from the ~~re-measurement~~peer group.

Item 6. [Reserved]

Not applicable.

Table of the deemed repatriated foreign earnings associated with the Tax Cuts and Jobs Act ("U.S. Tax Reform") of $4.8 million and a tax benefit of $2.0 million for foreign investment tax credits. In addition, fiscal 2019 includes net tariff expense on imported Chinese goods of $2.3 million.

(2) Fiscal 2018 includes $8.1 million of pre-tax legal expense relating to the Hetronic litigation. Fiscal 2018 also includes pre-tax acquisition expenses of $6.8 million related to the acquisitions of Procoplast and Pacific Insight, income of $7.3 million for an international government grant for maintaining certain employment levels during the period and a $6.0 million stock-based compensation expense reversal related to the re-estimation of RSA compensation expense based upon threshold levels of performance. The results for fiscal 2018 also includes a provisional estimated tax charge of $53.7 million as a result of U.S. Tax Reform and a tax benefit of $9.8 million for foreign investment tax credits.

(3) Fiscal 2017 includes $11.0 million of pre-tax legal expense relating to the Hetronic litigation. Fiscal 2017 also includes pre-tax exit costs for two reporting units of $2.3 million, pre-tax acquisition expenses of $1.5 million, primarily related to a potential acquisition we elected not to undertake, and income of $4.5 million for an international government grant for maintaining certain employment levels during the period. The results for fiscal 2017 include a tax benefit of $4.0 million for foreign investment tax credits, partially offset by a tax expense of $1.7 million on a dividend between foreign entities.

~~(4) Fiscal 2016 includes $9.9 million of pre-tax legal expense relating to the Hetronic litigation.~~

(5) Fiscal 2015 includes a goodwill pre-tax impairment charge of $11.1 million, a pre-tax gain on the sale of a business of $7.7 million and $3.1 million of pre-tax legal expense relating to the Hetronic litigation. Fiscal 2015 also includes a $5.0 million tax benefit related to the release of a valuation allowance against deferred tax assets in Malta.

Contents

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Management’s Discussion and Analysis of Financial Condition and Results of Operations is based upon our consolidated financial statements, which have been prepared in accordance with U.S. GAAP. You should read the following discussion and analysis in conjunction with ~~Item 6, “Selected Financial Data” and~~ our consolidated financial statements and related notes included ~~elsewhere~~ in this ~~report.~~Annual Report. This discussion and analysis of our financial condition and results of operations also contains forward-looking statements that involve risks, uncertainties, and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements because of a variety of factors, including those set forth under Item 1A. ~~“Risk Factors.”~~

“Risk Factors” of this Annual Report. We undertake no duty to update any such forward-looking statements to conform to actual results or changes in our expectations.

Overview

We are a leading global ~~manufacturer~~supplier of ~~component~~custom engineered solutions with sales, engineering and ~~subsystem devices with~~ manufacturing ~~design~~locations in North America, Europe, Middle East and testing facilities in Belgium, Canada, China, Egypt, Germany, India, Italy, Lebanon, Malta, Mexico, the Netherlands, Singapore, Switzerland, the United Kingdom and the United States. Our primary manufacturing facilities are located in Dongguan and Shanghai, China; Cairo, Egypt; Mriehel, Malta; and Fresnillo and Monterrey, Mexico.Asia. We design, ~~manufacture~~engineer and ~~market devices employing electrical, radio remote control, electronic,~~produce mechatronic products for OEMs utilizing our broad range of technologies for user interface, LED lighting ~~wireless~~system, power distribution and ~~sensing technologies.~~

~~Effective October 27, 2018, we reorganized~~sensor applications.

Our solutions are found in the end markets of transportation (including automotive, commercial vehicle, e-bike, aerospace, bus and rail), cloud computing infrastructure, construction equipment, consumer appliance and medical devices. Our business is managed on a segment basis, with our ~~reportable~~four segments resulting from the acquisition of Grakon. Prior to the Grakon acquisition, our reportable segments were Automotive, Power, Interface and Other. As a result of this change, our reportable segments are nowbeing Automotive, Industrial, Interface and Medical. ~~Historical information has been revised to reflect the new reportable segments.~~ For more information regarding the business and products of these segments, see ~~“Item~~Item 1. ~~Business.”~~

~~Our components are found in the primary end-markets~~“Business” of this Annual Report.

Impact of the ~~aerospace, appliance, automotive, commercial vehicle, construction,~~COVID-19 Pandemic

The COVID-19 pandemic and the ongoing measures to reduce its spread have negatively impacted the global economy, disrupted consumer and ~~industrial equipment, communications (including information processing~~customer demand and ~~storage, networking equipment~~global supply chains, and ~~wireless~~resulted in manufacturing inefficiencies and ~~terrestrial voice/data systems), medical, rail~~increased freight costs due to global capacity constraints. We expect that the global health crisis caused by the COVID-19 pandemic will continue to negatively impact our business and ~~other transportation industries.~~

~~Recent Transactions~~

~~On September 12, 2018, we acquired 100%~~results of operations for the foreseeable future. The extent of the ~~stock~~impact will depend on a number of ~~Grakon for $422.1 million~~evolving and uncertain factors, including the duration and spread of COVID-19 (and its variants), the rate of vaccinations, actions taken by governmental authorities to further restrict business operations and social activity and impose travel restrictions, shifting consumer demand, the ability of our supply chain to deliver in ~~cash, net~~a timely and cost-effective manner, the ability of ~~cash acquired.~~our employees and manufacturing facilities to operate efficiently and effectively, the continued viability and financial stability of our customers and suppliers and future access to capital.

We continue to focus on effectively managing the unprecedented challenges and uncertainties of the pandemic on a global basis. Management has prioritized the health and safety of our employees and their families. We adopted numerous safety procedures at our global facilities, including hygiene and disinfection protocols, testing and contact tracing, social distancing and wearing personal protective equipment. We share best practices throughout our global facilities, resulting in effective and standardized safety guidelines and procedures, updated on a regular basis, promoting the health and safety of our employees.

Global Supply Chain Disruptions

We continue to experience business interruptions, including customer shutdowns and increased material and logistics costs, labor shortages, and most significantly, impacts from the worldwide semiconductor supply shortage. The ~~business, headquartered~~semiconductor supply shortage is due, in ~~Seattle, Washington,~~part, to increased demand across multiple industries, including the automotive industry, resulting in a slowdown in their production schedules. The semiconductor supply shortage is also impacting our supply chain and our ability to meet demand at some of our non-automotive customers. We expect this semiconductor shortage to have a ~~manufacturer~~continued impact on our operating results and financial condition in fiscal 2023.

Restructuring Actions

In fiscal 2022, we initiated a restructuring plan to consolidate one of custom designed exterior lighting solutions and highly styled engineered components, with locations in Canada, China, the Netherlands and the United Kingdom. Grakon’s manufacturing capabilities and products help diversify our ~~product offerings and expand~~operations within the Industrial segment in response to logistics issues and tariffs. This action resulted in a facility shutdown and consolidation of activities into an existing location. In fiscal 2022, we recognized $3.6 million of restructuring costs. We may take additional restructuring actions in future periods based upon market conditions and industry trends.

As a result of the COVID-19 pandemic, we initiated certain restructuring actions in fiscal 2021 to rationalize our operations, lower our costs and improve financial performance and long-term cash flow generation. These actions included plant consolidations and workforce reductions in the Automotive, Industrial and Interface segments. In fiscal 2021, we recognized $8.2 million of restructuring costs.

Impacts of Macroeconomic and Geopolitical Conditions

Adverse macroeconomic conditions, including but not limited to inflation, slower growth or recession, new or increased tariffs, changes to fiscal and monetary policy, higher interest rates and currency fluctuations could adversely affect demand for our products. In addition, in February 2022, Russia invaded Ukraine resulting in, among other things, economic sanctions imposed by the international community which ~~is a key component~~have impacted the global economy and given rise to potential global security issues that may adversely affect international business and economic conditions. Although we have no operations in Russia or Ukraine, certain of our ~~strategic direction. The accounts~~customers and ~~transactions of Grakon~~suppliers have been ~~included~~negatively impacted by these events, which in turn has impacted markets where we do business, including Europe and Asia. The economic sanctions imposed on Russia has further increased existing global supply chain, logistics, and inflationary challenges.

Consolidated Results of Operations

We maintain our financial records on the basis of a 52 or 53-week fiscal year ending on the Saturday closest to April 30. Fiscal 2022 ended on April 30, 2022 and fiscal 2021 ended on May 1, 2021, which represented 52 weeks of results for each year. Fiscal 2020 ended on May 2, 2020, which represented 53 weeks of results. The following discussions of comparative results among periods should be reviewed in this context.

A detailed comparison of our results of operations between fiscal 2021 and fiscal 2020 can be found in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our fiscal 2021 Annual Report on Form 10-K filed with the SEC on June 24, 2021.

The table below compares our results of operations between fiscal 2022 and fiscal 2021:


	Fiscal Year Ended
(in millions)	April 30, 2022			May 1, 2021
Net sales	$	1,163.6		$	1,088.0
Cost of products sold		898.7			813.9
Gross profit		264.9			274.1
Selling and administrative expenses		134.1			126.9
Amortization of intangibles		19.1			19.3
Interest expense, net		3.5			5.2
Other income, net		(10.3	)		(12.2	)
Income tax expense		16.3			12.6
Net income	$	102.2		$	122.3

Net sales

Net sales increased $75.6 million, or 6.9%, to $1,163.6 million in fiscal 2022, compared to $1,088.0 million in fiscal 2021. The increase was primarily due to higher sales in the Automotive and Industrial ~~segments~~segments. The COVID-19 pandemic negatively impacted net sales in the ~~consolidated financial statements for seven a half months~~first quarter of fiscal 2021. Net sales were favorably impacted by foreign currency translation of $5.5 million, primarily due to the strengthening of the Chinese renminbi relative to the U.S. dollar in fiscal ~~2019.~~

~~In connection with the agreement to purchase Grakon, on September 12, 2018, we amended our credit agreement. The credit agreement now has a maturity date~~2022. Net sales were also favorably impacted by customer recoveries for spot buys of ~~September 12, 2023. The credit agreement includes a senior unsecured revolving credit facility~~materials and ~~a senior unsecured term loan, which are guaranteed by our wholly owned U.S. subsidiaries. See “Financial Condition, Liquidity and Capital Resources” below for more information.~~

~~On July 27, 2017, we acquired 100%~~premium freight costs of the stock of Procoplast for $22.2 million in cash, net of cash acquired. The business, located near the Belgian-German border, is an independent manufacturer of automotive assemblies. The accounts and transactions of Procoplast have been included in the Automotive segment in the consolidated financial statements for all of fiscal 2019 and nine months of fiscal 2018.

On October 3, 2017, we acquired 100% of the outstanding common shares of Pacific Insight for $108.7 million in cash, net of cash acquired. The business, located in Canada, is a global solutions provider offering design, development, manufacturing and delivery of interior lighting and electronic products and full-service solutions to the automotive and commercial vehicle markets. The accounts and transactions of Pacific Insight have been included in the Automotive segment in the consolidated financial statements for all of fiscal 2019 and seven months of fiscal 2018.

~~Results of Operations~~

~~Results of Operations for the Fiscal Year Ended April 27, 2019, Compared to the Fiscal Year Ended April 28, 2018.~~

~~Consolidated Results~~

~~Below is a table summarizing results for the fiscal years ended:~~

(Dollars in Millions) April 27,
2019 April 28,
2018 Net Change ($) Net Change (%)
Net Sales $ 1,000.3
$ 908.3
$ 92.0
10.1 %

Cost of Products Sold 734.5
668.7
65.8
9.8 %

Gross Profit 265.8
239.6
26.2
10.9 %

Selling and Administrative Expenses 142.9
115.7
27.2
23.5 %
Amortization of Intangibles 16.1
5.6
10.5
187.5 %
Interest Expense, Net 8.3
0.9
7.4
N/M
*
Other Income, Net (5.1 ) (6.4 ) (1.3 ) (20.3 )%
Income Tax Expense 12.0
66.6
(54.6 ) (82.0 )%
Net Income $ 91.6
$ 57.2
$ 34.4
60.1 %

Percent of sales: April 27,
2019 April 28,
2018
Net Sales 100.0 % 100.0 %
Cost of Products Sold 73.4 % 73.6 %
Gross Profit 26.6 % 26.4 %
Selling and Administrative Expenses 14.3 % 12.7 %
Amortization of Intangibles 1.6 % 0.6 %
Interest Expense, Net 0.8 % 0.1 %
Other Income, Net (0.5 )% (0.7 )%
Income Tax Expense 1.2 % 7.3 %
Net Income 9.2 % 6.3 %

*N/M equals non-meaningful

~~Net Sales~~. Consolidated net sales increased by $92.0 million, or 10.1%, to $1,000.3 million in fiscal 2019, compared to $908.3 million in fiscal 2018. Acquisitions accounted for $163.0 million of the increase, while$22.1 million. Without the impact of foreign currency translation ~~decreased~~and customer cost recoveries, net sales by $9.9 million. The weaker euro and Chinese renminbi impacted foreign currency translation. Net sales were also impacted by the adoption of ASC 606 whereby pre-production reimbursements are now being excluded from net sales and included in costincreased $48.0 million, or 4.4%.

Cost of products sold beginning in fiscal 2019. Pre-production reimbursements were $12.8 million in fiscal 2018. Excluding acquisitions, foreign currency translation and pre-production reimbursements, net sales decreased by $48.3 million, primarily due to lower pricing and sales volumes of existing products in the Automotive segment and lower appliance and data solution product sales volumes in the Interface segment.

Cost ~~of Products Sold. Consolidated cost~~ of products sold increased ~~$65.8~~$84.8 million, or ~~9.8%~~10.4%, to ~~$734.5~~$898.7 million ~~(73.4%~~(77.2% of net sales) in fiscal ~~2019,~~2022, compared to ~~$668.7~~$813.9 million ~~(73.6%~~(74.8% of net sales) in fiscal ~~2018. Acquisitions accounted for $113.7~~2021. The increase was primarily due to higher material, logistics and other operating costs of $88.3 million as a result of ~~the increase, while~~higher sales volumes and the impact of ~~foreign currency translation decreased cost of products sold by $5.8 million. Foreign currency translation benefitted from the weaker Mexican peso.~~global supply chain disruptions and factory inefficiencies. Excluding ~~acquisitions and~~ foreign currency translation, cost of products sold ~~decreased~~increased $81.4 million. Labor costs were higher in fiscal 2022 as fiscal 2021 included the impact of temporary salary reductions and four-day work weeks in response to the COVID-19 pandemic. This was partially offset by ~~$42.1 million primarily due to~~ lower ~~sales volumes. Consolidated~~restructuring costs of $3.5 million. Restructuring costs included within cost of products sold were $1.3 million in fiscal ~~2019 included purchase accounting adjustments related~~2022, compared to ~~Grakon inventory~~$4.8 million in fiscal 2021. Material costs were also impacted by product sales mix.

Gross profit margin

Gross profit margin was 22.8% of ~~$5.6 million~~net sales in fiscal 2022, compared to 25.2% of net sales in fiscal 2021. The decrease was due to higher material, logistics and ~~$2.8 million of~~other operating costs ~~related to initiatives to reduce overall~~associated with global supply chain disruptions and factory inefficiencies, higher labor costs and ~~improve operational profitability.~~

~~Gross Profit.~~ ~~Gross profit increased $26.2 million, or 10.9%, to $265.8 million (26.6%~~product mix, partially offset by higher sales volumes.

Table of sales) in fiscal 2019, compared to $239.6 million (26.4% of sales) in fiscal 2018. Acquisitions accounted for $49.3 million of the increase (inclusive of net tariff expense of $2.3 million), while foreign currency translation decreased gross profit by $4.1 million. Excluding acquisitions and foreign currency translation, gross profit decreased by $19.0 million, primarily due to lower sales volumes and unfavorable sales mix in the Automotive and Interface segments.

Contents

Selling and ~~Administrative Expenses~~. administrative expenses

Selling and administrative expenses increased ~~$27.2~~$7.2 million, or ~~23.5%~~5.7%, to ~~$142.9~~$134.1 million ~~(14.3%~~(11.5% of net sales) in fiscal ~~2019,~~2022, compared to ~~$115.7~~$126.9 million ~~(12.7%~~(11.7% of net sales) in fiscal 2018. Acquisitions accounted for $17.3 million of the increase, while the impact of foreign currency translation decreased selling and administrative expenses by $1.4 million. Excluding acquisitions and foreign currency translation, selling and administrative expenses increased by $11.3 million in fiscal 2019 compared to fiscal 2018.2021. The increase was primarily due to ~~a $10.0 million increase in~~higher stock-based compensation expense, ~~higher acquisition-related costs of $3.8 million~~salary expense and ~~expenses for initiatives to reduce overall costs and improve operational profitability of $4.1 million,~~travel expense, partially offset by lower ~~legal~~restructuring costs and professional fees.

Stock-based compensation expense increased $5.0 million as our long-term incentive plan was not introduced until the second quarter of fiscal 2021. Salary and travel expense was lower in fiscal 2021 as a result of actions we took in response to the COVID-19 pandemic which included temporary salary reductions and four-day work weeks (which ended in the second quarter of fiscal 2021) and the elimination of most business travel. Restructuring costs included within selling and administrative expenses were $2.3 million in fiscal 2022, compared to $3.4 million in fiscal 2021. Professional fees ~~of $5.1 million. Legal fees were lower mostly~~decreased $1.8 million mainly due to ~~the decrease in~~lower Hetronic-related legal fees. The increase in stock-based compensation expense includes expense of $7.4 million relating to prior periods. See Note 5, "Shareholders Equity,” in the consolidated financial statements for further information.

Amortization of ~~Intangibles~~. intangibles

Amortization of intangibles ~~increased $10.5~~decreased $0.2 million, or ~~187.5%~~1.0%, to ~~$16.1~~$19.1 million in fiscal ~~2019,~~2022, compared to ~~$5.6~~$19.3 million in fiscal ~~2018. The increase was due to amortization~~2021.

Interest expense, ~~related to recent acquisitions.~~

~~Interest Expense, Net.~~net

Interest expense, net was ~~$8.3~~$3.5 million in fiscal ~~2019,~~2022, compared to ~~$0.9~~$5.2 million in fiscal ~~2018. The increase was due to borrowings made in fiscal 2019 to fund the acquisition of Grakon.~~

~~Other Income, Net.~~ ~~Other income, net decreased $1.3 million to $5.1 million in fiscal 2019, compared to $6.4 million in fiscal 2018.~~2021. The decrease was primarily due to lower ~~international grant income recognized~~average borrowings. Average borrowings were higher in fiscal ~~2019~~2021 due to the precautionary $100.0 million draw-down under our revolving credit facility in March 2020, which was fully repaid in the third quarter of ~~$5.8~~fiscal 2021.

Other income, net

Other income, net decreased $1.9 million ~~compared~~ to ~~$7.3~~$10.3 million in fiscal ~~2018. During~~2022, compared to $12.2 million in fiscal ~~2018, we recorded a gain of $1.6 million related to the sale of exclusive rights for a licensing agreement.~~2021. Net foreign exchange losses were ~~$1.3~~$1.9 million in fiscal ~~2019,~~2022, compared to ~~a loss of $2.4~~$0.3 million in fiscal ~~2018.~~

2021. In fiscal 2022, we received $10.0 million of government assistance at certain of our international locations with respect to the COVID-19 pandemic, compared to $11.1 million in fiscal 2021. In addition, we received an international government grant of $1.1 million in fiscal 2022.

Income ~~Tax Expense.~~tax expense

Income tax expense ~~decreased $54.6~~increased $3.7 million, or ~~82.0%~~29.4%, to ~~$12.0~~$16.3 million in fiscal ~~2019,~~2022, compared to ~~$66.6~~$12.6 million in fiscal ~~2018.~~2021. Our effective tax rate ~~decreased~~increased to ~~11.6%~~13.8% in fiscal ~~2019,~~2022, compared to ~~53.8%~~9.3% in fiscal ~~2018. The change in~~2021. In fiscal 2022, the effective income tax rate was ~~primarily~~favorably impacted by the amount of income earned in foreign jurisdictions with lower tax rates, the release of a valuation allowance of approximately $2.0 million due to a tax law change, and less U.S. tax on foreign income of $1.7 million attributable to lower earnings in non-U.S. jurisdictions, partially offset with non-deductible compensation of $2.1 million. In fiscal 2021, the ~~enactment~~effective income tax rate was favorably impacted by the amount of ~~U.S. Tax Reform. This resulted~~income earned in foreign jurisdictions with lower tax rates, tax credits and various deductions allowed in foreign jurisdictions. In addition, the Company received a ~~provisional tax expense estimate~~benefit of ~~$53.7~~approximately $7.2 million related to ~~the deemed repatriated earnings and the revaluation of deferred taxes~~a favorable tax ruling in ~~fiscal 2018, while fiscal 2019 includes~~ a ~~$4.8 million tax benefit related to U.S. Tax Reform. For further details regarding the impacts of U.S. Tax Reform, refer to Note 7, “Income Taxes,” in the consolidated financial statements. Our~~foreign jurisdiction.

Net income ~~tax expense is impacted by the level and mix of earnings among tax jurisdictions, as well as the changes in the amounts of foreign investment tax credits realized.~~

~~Net Income.~~

Net income ~~increased $34.4~~decreased $20.1 million, or ~~60.1%~~16.4%, to ~~$91.6~~$102.2 million in fiscal ~~2019,~~2022, compared to ~~$57.2~~$122.3 million in fiscal ~~2018. Lower income tax expense accounted for $54.6 million~~2021. The impact of ~~the increase, acquisitions accounted for $14.5 million of the increase, while~~ foreign currency translation ~~reduced~~increased net income by ~~$1.7~~$1.1 million. Excluding ~~income tax expense, acquisitions and~~ foreign currency translation, net income ~~was negatively impacted by lower sales volumes, higher selling and administrative expense and higher interest expense.~~

decreased $21.2 million as a result of the reasons described above.

Operating Segments

Automotive ~~Segment Results~~

~~Below is a table summarizing results for the fiscal years ended:~~

(Dollars in Millions) April 27,
2019 April 28,
2018 Net Change ($) Net Change (%)
Net Sales $ 734.7
$ 728.7
$ 6.0
0.8 %
Gross Profit $ 188.3
$ 201.6
$ (13.3 ) (6.6 )%
Income from Operations $ 126.3
$ 156.3
$ (30.0 ) (19.2 )%

Percent of sales: April 27,
2019 April 28,
2018
Net Sales 100.0 % 100.0 %
Gross Profit 25.6 % 27.7 %
Income from Operations 17.2 % 21.4 %


	Fiscal Year Ended
(in millions)	April 30, 2022			May 1, 2021
Net sales
North America	$	400.9		$	406.4
EMEA	$	216.5		$	212.3
Asia	$	164.1		$	137.0
Net sales	$	781.5		$	755.7
Gross profit	$	150.0		$	163.4
As a percent of net sales		19.2	%		21.6	%
Income from operations	$	92.6		$	107.6
As a percent of net sales		11.8	%		14.2	%

Net ~~Sales~~. sales

Automotive segment net sales increased ~~$6.0~~$25.8 million, or ~~0.8%~~3.4%, to ~~$734.7~~$781.5 million in fiscal ~~2019, from $728.7~~2022, compared to $755.7 million in fiscal ~~2018.~~ 2021. Sales volumes in fiscal 2021 were negatively impacted from the COVID-19 pandemic. Fiscal 2022 net sales benefitted from customer recoveries from spot buys of materials and premium freight costs of $13.2 million (primarily in North America). Excluding foreign currency translation and customer cost recoveries, net sales increased $9.4 million, or 1.2%.

Net sales ~~increased~~ in North America ~~by $43.4~~decreased $5.5 million, or ~~10.4%~~1.4%, to ~~$460.8~~$400.9 million in fiscal ~~2019,~~2022, compared to ~~$417.4~~$406.4 million in fiscal 2018. Acquisitions in North America accounted for $65.9 million of the increase. North American sales in fiscal 2019 included $32.5 million from Grakon, which represents approximately seven and a half months of results. North American sales in fiscal 2019 also included $87.9 million from Pacific Insight, which represents a full year of results, compared to fiscal 2018, which included sales of $54.4 million from seven months of Pacific Insight's results. Excluding acquisitions, sales declined for our integrated center stack products and transmission lead-frame assemblies primarily due to sales mix and pricing reductions, partially offset by higher sales for our human machine interface assembly products due to new program launches. Net sales decreased in Europe by $17.6 million, or 8.3%, to $195.7 million in fiscal 2019, compared to $213.3 million in fiscal 2018. The decrease in European sales was primarily due to lower sales volumes of hidden switches, offset by higher sales volumes of sensor products. European sales were also impacted by the adoption of ASC 606 whereby pre-production reimbursements are now being excluded from net sales and included in cost of products sold beginning in fiscal 2019. European pre-production reimbursements were $9.9 million in fiscal 2018. In addition, the impact of the weaker euro decreased net sales in Europe by $5.3 million. European sales in fiscal 2019 included $33.1 million from Procoplast, which represented a full year of results, compared to $26.4 million in fiscal 2018, which represented nine months of results. Net sales in Asia decreased $19.8 million, or 20.2%, to $78.2 million in fiscal 2019, compared to $98.0 million in fiscal 2018.2021. The decrease was primarily due to lower lighting product sales volumes. Net sales in EMEA increased $4.2 million, or 2.0%, to $216.5 million in fiscal 2022, compared to $212.3 million in fiscal 2021. The weaker euro, relative to the U.S. dollar, decreased net sales in EMEA by $4.5 million. Excluding the impact of ~~our transmission lead-frame assemblies~~foreign currency translation, net sales in EMEA increased $8.7 million primarily due to ~~a combination of pricing reductions and lower~~higher sensor product sales. Net sales ~~volumes. We also experienced lower sales volumes for hidden switches, linear pressure sensors and our steering angle sensor products, the latter of which is approaching end of production.~~in Asia increased $27.1 million, or 19.8%, to $164.1 million in fiscal 2022, compared to $137.0 million in fiscal 2021. The ~~weaker~~stronger Chinese renminbi, ~~decreased~~relative to the U.S. dollar, increased net sales in Asia by ~~$1.9~~$7.6 million.

Excluding the impact of foreign currency translation, net sales in Asia increased $19.5 million primarily due to higher electric vehicle product sales volumes, partially offset by lower touchscreen sales volumes.

Gross ~~Profit.~~ profit

Automotive segment gross profit decreased ~~$13.3~~$13.4 million, or ~~6.6%~~8.2%, to ~~$188.3~~$150.0 million in fiscal ~~2019,~~2022, compared to ~~$201.6~~$163.4 million in fiscal ~~2018. The Automotive segment~~2021. Excluding the impact of foreign currency translation, gross profit ~~margin~~decreased $14.3 million. Gross profit margins decreased to ~~25.6%~~19.2% in fiscal ~~2019,~~2022, from ~~27.7%~~21.6% in fiscal ~~2018.~~2021. The decrease in gross profit ~~margin~~margins was primarily due to higher material and other costs associated with supply chain disruptions and product mix, partially offset by higher sales volumes and lower ~~sales volume and unfavorable sales mix~~restructuring costs. In fiscal 2022, we recognized $0.1 million of restructuring costs in ~~Asia and North America, which includes the impact of the sales increase of our Pacific Insight business, which currently has a higher cost of products sold as a percentage of sales~~this segment, compared to ~~other business units within the Automotive segment. Gross profit margin was also negatively impacted during~~$4.8 million in fiscal 2019 by expenses incurred for initiatives to reduce overall costs and improve operational profitability of $2.7 million and net tariff expense of $0.7 million. Foreign currency translation positively impacted North America as purchases from Mexico benefitted from the weaker Mexican peso, while the weaker euro and Chinese renminbi negatively impacted gross profit recognized by our operations in Europe and Asia.

2021.

Income from ~~Operations.~~ operations

Automotive segment income from operations decreased ~~$30.0~~$15.0 million, or ~~19.2%~~13.9%, to ~~$126.3~~$92.6 million in fiscal ~~2019,~~2022, compared to ~~$156.3~~$107.6 million in fiscal ~~2018.~~2021. Excluding the impact of foreign currency translation, income from operations decreased $16.2 million. The decrease was primarily due to lower gross profit and higher selling and administrative ~~expenses, primarily due to an increase in stock-based compensation expense.~~expenses. Selling and administrative expenses ~~also decreased income from operations~~increased due to higher salary expense, partially offset by lower restructuring costs. Salary expense was lower in fiscal 2021 due to the impact of salary reductions and other cost saving measures in response to the COVID-19 pandemic. Restructuring costs in this segment's selling and administrative expenses ~~incurred for initiatives~~were $0.1 million in fiscal 2022, compared to ~~reduce overall costs and improve operational profitability of $2.0 million.~~

~~Industrial Segment Results~~

~~Below is a table summarizing results for the~~$1.4 million in fiscal ~~years ended:~~

(Dollars in Millions) April 27,
2019 April 28,
2018 Net Change ($) Net Change (%)
Net Sales $ 206.8
$ 105.8
$ 101.0
95.5 %
Gross Profit $ 68.6
$ 28.2
$ 40.4
143.3 %
Income from Operations $ 37.4
$ 13.0
$ 24.4
187.7 %

Percent of sales: April 27,
2019 April 28,
2018
Net Sales 100.0 % 100.0 %
Gross Profit 33.2 % 26.7 %
Income from Operations 18.1 % 12.3 %

2021.

Industrial


	Fiscal Year Ended
(in millions)	April 30, 2022			May 1, 2021
Net sales	$	318.1		$	267.9
Gross profit	$	101.5		$	98.1
As a percent of net sales		31.9	%		36.6	%
Income from operations	$	67.1		$	64.3
As a percent of net sales		21.1	%		24.0	%

Net ~~Sales~~. sales

Industrial segment net sales increased ~~$101.0~~$50.2 million, or ~~95.5%~~18.7%, to ~~$206.8~~$318.1 million in fiscal ~~2019,~~2022, compared to ~~$105.8~~$267.9 million in fiscal ~~2018. Net~~2021. Fiscal 2022 net sales included $7.6 million of customer cost recoveries of premium freight costs. Excluding the impact of foreign currency translation and customer cost recoveries, net sales increased ~~in North America by $85.3~~$40.3 million, or ~~219.8%~~15.0%, to $124.1 million in fiscal 2019, compared to $38.8 million in fiscal 2018. Net sales in North America in fiscal 2019 includes $84.4 million from seven and a half months of results of Grakon. Other North American sales were relatively flat as higher sales volumes of radio remote control products were offset by lower sales volumes of busbar products. Net sales in Europe increased $8.5 million, or 21.9%, to $47.4 million in fiscal 2019, compared to $38.9 million in fiscal 2018. Net sales in Europe in fiscal 2019 includes $4.8 million from seven and a half months of results of Grakon. Other European sales increased primarily due to higher sales volumes of ~~radio remote control and busbar products, partially offset with lower sales~~all product categories in the Industrial segment. Sales volumes ~~of bypass switches and~~in fiscal 2021 were negatively impacted by the ~~weaker euro. Net sales in Asia~~COVID-19 pandemic.

Gross profit

Industrial segment gross profit increased ~~$7.2~~$3.4 million, or ~~25.6%~~3.5%, to ~~$35.3~~$101.5 million in fiscal ~~2019,~~2022, compared to ~~$28.1~~$98.1 million in fiscal ~~2018.~~2021. Excluding the impact of foreign currency translation, gross profit increased $2.3 million. Gross profit margin decreased to 31.9% in fiscal 2022, from 36.6% in fiscal 2021. The decrease in gross profit margins was due to lower gross profit margins from busbar products and commercial vehicle products and the recognition of $1.2 million of restructuring costs in this segment in fiscal 2022.

Income from operations

Industrial segment income from operations increased $2.8 million, or 4.4%, to $67.1 million in fiscal 2022, compared to $64.3 million in fiscal 2021. Excluding the impact of foreign currency translation, income from operations increased $2.0 million. The increase was primarily due to higher gross profit, partially offset by higher selling and administrative costs. Selling and administrative expenses were higher primarily due to $2.2 million of restructuring costs in this segment in fiscal 2022, compared to $1.0 million in fiscal 2021.

Interface


	Fiscal Year Ended
(in millions)	April 30, 2022			May 1, 2021
Net sales	$	59.8		$	61.6
Gross profit	$	12.6		$	12.3
As a percent of net sales		21.1	%		20.0	%
Income from operations	$	9.9		$	8.9
As a percent of net sales		16.6	%		14.4	%

Net sales

Interface segment net sales decreased $1.8 million, or 2.9%, to $59.8 million in fiscal 2022, compared to $61.6 million in fiscal 2021. Fiscal 2022 net sales benefitted from customer recoveries from spot buys of materials and premium freight costs of $1.3 million. Excluding customer cost recoveries, net sales decreased $3.1 million, or 5.0%. The decrease was primarily due to lower sales volumes of ~~busbar~~appliance products which were negatively impacted by a shortage of semiconductor chips, partially offset by ~~the weaker Chinese renminbi.~~

higher sales volumes of legacy data solutions products.

Gross ~~Profit.~~ ~~Industrial~~profit

Interface segment gross profit increased ~~$40.4~~$0.3 million, or ~~143.3%~~2.4%, to ~~$68.6~~$12.6 million in fiscal ~~2019,~~2022, compared to ~~$28.2~~$12.3 million in fiscal ~~2018.~~2021. Gross profit margin increased to ~~33.2%~~21.1% in fiscal ~~2019,~~2022, from ~~26.7%~~20.0% in fiscal ~~2018. Gross profit margins are generally~~2021. The increase was due to higher at our Grakon industrial business. However, purchase accounting related adjustments to inventory of $5.6 million and net tariff expense on imported Chinese goods of $1.6 million negatively impacted Grakon’s gross profit. Gross profit margin also benefitted from increased sales volumes of ~~radio remote control and busbar~~legacy data solutions products.

Income from ~~Operations.~~ ~~Industrial~~operations

Interface segment income from operations ~~was $37.4~~increased $1.0 million, or 11.2%, to $9.9 million in fiscal ~~2019,~~2022, compared to ~~$13.0~~$8.9 million in fiscal ~~2018.~~2021. The increase was primarily due to ~~income from operations from Grakon, lower Hetronic legal fees and~~ higher ~~sales volumes of radio remote control and busbar products, partially offset by higher stock-based compensation expense.~~

~~Interface Segment Results~~

~~Below is a table summarizing results for the fiscal years ended:~~

(Dollars in Millions) April 27,
2019 April 28,
2018 Net Change ($) Net Change (%)
Net Sales $ 57.7
$ 73.2
$ (15.5 ) (21.2 )%
Gross Profit $ 7.8
$ 14.3
$ (6.5 ) (45.5 )%
Income (Loss) from Operations $ (0.3 ) $ 6.0
$ (6.3 ) (105.0 )%

Percent of sales: April 27,
2019 April 28,
2018
Net Sales 100.0 % 100.0 %
Gross Profit 13.5 % 19.5 %
Income (Loss) from Operations (0.5 )% 8.2 %

~~Net Sales~~. Interface segment net sales decreased $15.5 million, or 21.2%, to $57.7 million in fiscal 2019, compared to $73.2 million in fiscal 2018. Net sales decreased primarily due to the timing of a major appliance program and reduced sales volumes of legacy data-solution products.

~~Gross Profit.~~ Interface segment gross profit decreased $6.5 million, or 45.5%, to $7.8 million in fiscal 2019, compared to $14.3 million in fiscal 2018. Gross profit margin decreased to 13.5% in fiscal 2019 from 19.5% in fiscal 2018. The decrease primarily relates to lower sales volumes of our appliance products and lower sales volumes and unfavorable sales mix of our data solutions products, partially offset by lower cost of products purchased from Mexico as a result of the weakening of the Mexican peso.

~~Income (Loss) From Operations.~~ Interface segment income from operations decreased $6.3 million, or 105.0%, to a loss of $0.3 million in fiscal 2019, compared to income of $6.0 million in fiscal 2018. The decrease was due to lower gross profit.

~~Medical Segment Results~~

~~Below is a table summarizing results for the fiscal years ended:~~

(Dollars in Millions) April 27,
2019 April 28,
2018 Net Change ($) Net Change (%)
Net Sales $ 1.1
$ 0.3
$ 0.8
266.7 %
Gross Profit $ (2.8 ) $ (3.5 ) $ 0.7
20.0 %
Loss from Operations $ (8.6 ) $ (11.4 ) $ 2.8
24.6 %

~~Net Sales. The Medical segment had $1.1 million of net sales in fiscal 2019, compared to $0.3 million of net sales in fiscal 2018. The increase was due to new business gained in fiscal 2019.~~

~~Gross Profit.~~ Medical segment gross profit was a loss of $2.8 million in fiscal 2019, compared to a loss of $3.5 million in fiscal 2018. The improvement primarily relates to an increase in sales volumes during fiscal 2019.

~~Loss from Operations.~~ ~~Medical segment loss from operations decreased $2.8 million to $8.6 million in fiscal 2019, compared to $11.4 million in fiscal 2018. The decrease was due to an improvement in~~ gross profit and lower selling and administrative expenses. Selling and administrative expenses were ~~reduced by~~ lower ~~marketing and professional fee expenses, partially offset by initiatives~~due to ~~reduce overall~~restructuring costs ~~and improve operational profitability~~ of ~~$0.9 million.~~

~~Results of Operations for the Fiscal Year Ended April 28, 2018, Compared to the Fiscal Year Ended April 29, 2017.~~

~~Consolidated Results~~

~~Below is a table summarizing results for the~~$0.7 million recognized in this segment in fiscal ~~years ended:~~

(Dollars in Millions) April 28,
2018 April 29,
2017 Net Change ($) Net Change (%)
Net Sales $ 908.3
$ 816.5
$ 91.8
11.2 %

Cost of Products Sold 668.7
598.2
70.5
11.8 %

Gross Profit 239.6
218.3
21.3
9.8 %

Selling and Administrative Expenses 115.7
105.2
10.5
10.0 %
Amortization of Intangibles 5.6
2.3
3.3
143.5 %
Interest Expense (Income), Net 0.9
(0.4 ) 1.3
N/M
*
Other Income, Net (6.4 ) (4.7 ) (1.7 ) 36.2 %
Income Tax Expense 66.6
23.0
43.6
189.6 %
Net Income $ 57.2
$ 92.9
$ (35.7 ) (38.4 )%

Percent of sales: April 28,
2018 April 29,
2017
Net Sales 100.0 % 100.0 %
Cost of Products Sold 73.6 % 73.3 %
Gross Profit 26.4 % 26.7 %
Selling and Administrative Expenses 12.7 % 12.9 %
Amortization of Intangibles 0.6 % 0.3 %
Interest Expense (Income), Net 0.1 % — %
Other Income, Net (0.7 )% (0.6 )%
Income Tax Expense 7.3 % 2.8 %
Net Income 6.3 % 11.4 %

*N/M equals non meaningful

2021.

Medical


	Fiscal Year Ended
(in millions)	April 30, 2022			May 1, 2021
Net sales	$	4.2		$	2.8
Gross profit	$	(0.4	)	$	(0.3	)
Loss from operations	$	(5.5	)	$	(4.6	)

Net ~~Sales. Consolidated~~sales

Medical segment net sales increased ~~by $91.8~~$1.4 million, or ~~11.2%~~50.0%, to ~~$908.3~~$4.2 million in fiscal ~~2018,~~2022, compared to ~~$816.5~~$2.8 million in fiscal 2017. Acquisitions in the Automotive segment accounted for $80.8 million of the increase, while foreign currency translation accounted for $13.1 million of the increase. Foreign currency translation benefitted from the stronger euro and Chinese renminbi. Net sales were higher by $13.5 million in the Industrial segment which partially offset lower net sales of $18.3 million in the Interface segment.

~~Cost of Products Sold~~. Consolidated cost of products sold increased $70.5 million, or 11.8%, to $668.7 million (73.6% of sales) in fiscal 2018, compared to $598.2 million (73.3% of sales) in fiscal 2017. Acquisitions in the Automotive segment accounted for $63.0 million of the increase. Cost of products sold as a percentage of sales was negatively impacted by unfavorable sales mix related to our newly acquired businesses, partially offset by higher sales volumes in the Industrial segment.

~~Gross Profit.~~ Consolidated gross profit increased $21.3 million, or 9.8%, to $239.6 million (26.4% of sales) in fiscal 2018, compared to $218.3 million (26.7% of sales) in fiscal 2017. Acquisitions in the Automotive segment accounted for $17.8 million of the increase. Excluding the impact of acquisitions, the Automotive segment gross profit improved due to favorable commodity purchase adjustments and resolved customer commercial issues. Gross profit in the Industrial segment was higher in fiscal 2018 due to higher sales volumes, which partially offset lower gross profit in the Interface segment which was impacted by lower sales volumes.

~~Selling and Administrative Expenses~~. Selling and administrative expenses increased $10.5 million, or 10.0%, to $115.7 million (12.7% of sales) in fiscal 2018, compared to $105.2 million (12.9% of sales) in fiscal 2017. Acquisitions in the Automotive segment accounted for $9.3 million of the increase. Selling and administrative expenses for fiscal 2018 also increased due to higher wages of $8.0 million, acquisition related costs of $6.0 million, and higher travel expense of $1.5 million, offset by lower legal fees and stock-based compensation expense. Legal fees decreased by $2.8 million, mostly due to the decrease in Hetronic-related legal fees in fiscal 2018. Stock-based compensation expense decreased by $8.4 million primarily due to the reversal of expense of $6.0 million relating to prior periods. See Note 5, "Shareholders Equity" in the consolidated financial statements for further information.

~~Amortization of Intangibles. Amortization of intangibles increased $3.3 million, or 143.5%, to $5.6 million in fiscal 2018, compared to $2.3 million in fiscal 2017.~~2021. The increase was due to ~~the amortization expense related to the acquisitions of Pacific Insight and Procoplast.~~

~~Interest (Income) Expense, Net.~~ ~~Interest expense was $0.9 million in fiscal 2018, compared to interest income of $0.4 million in fiscal 2017. The change was primarily due to the increased debt levels during the period.~~

~~Other Income, Net.~~ Other income, net was $6.4 million in fiscal 2018, compared to $4.7 million in fiscal 2017. During fiscal 2018, we recognized a gain of $1.6 million related to the sale of exclusive rights for a licensing agreement.~~In addition, we had income of $7.3 million in fiscal 2018 from an international government grant compared to $4.5 million in fiscal 2017.Net foreign exchange losses were $2.4 million in fiscal 2018, compared to a gain of $0.3 million in fiscal 2017.~~

~~Income Tax Expense.~~ Income tax expense was $66.6 million in fiscal 2018, representing an effective tax rate of 53.8%. In fiscal 2017, income tax expense was $23.0 million representing an effective tax rate of 19.9%. In fiscal 2018, we recognized $53.7 million of expense related to U.S. Tax Reform. Excluding the impact of U.S. Tax Reform, our income tax expense was impacted by the level and mix of earnings among tax jurisdictions. For further details, regarding the impacts of U.S. Tax Reform refer to Note 7, “Income Taxes,” in the consolidated financial statements.

~~Net Income.~~ Net income decreased $35.7 million, or 38.4%, to $57.2 million in fiscal 2018, compared to $92.9 million in fiscal 2017. Higher income tax expense accounted for $43.6 million of the decrease, offset by acquisitions which contributed $4.0 million of net income in fiscal 2018. Net income was negatively impacted by lower sales volumes, higher ~~selling and administrative expense and higher interest expense.~~

~~Operating Segments~~

~~Automotive Segment Results~~

~~Below is a table summarizing results for the fiscal years ended:~~

(Dollars in Millions) April 28,
2018 April 29,
2017 Net Change ($) Net Change (%)
Net Sales $ 728.7
$ 632.2
$ 96.5
15.3 %
Gross Profit $ 201.6
$ 182.8
$ 18.8
10.3 %
Income from Operations $ 156.3
$ 148.3
$ 8.0
5.4 %

Percent of sales: April 28,
2018 April 29,
2017
Net Sales 100.0 % 100.0 %
Gross Profit 27.7 % 28.9 %
Income from Operations 21.4 % 23.5 %

~~Net Sales:~~ Automotive segment net sales increased $96.5 million, or 15.3%, to $728.7 million in fiscal 2018, compared to $632.2 million in fiscal 2017. Net sales in North America increased by $48.0 million to $417.4 million in fiscal 2018, compared to $369.4 million in fiscal 2017. The increase was primarily due to the Pacific Insight acquisition, which contributed $54.4 million of net sales, and increased sales for our user interface assemblies, offset by pricing reductions for our integrated center stack products and a combination of lower sales volumes and pricing reductions for our transmission lead-frame products. Net sales increased in Europe by $61.4 million, or 40.4%, to $213.3 million in fiscal 2018, compared to $151.9 million in fiscal 2017. The increase in the European sales was due to the Procoplast acquisition which contributed $26.4 million of net sales. In addition, Europe sales were higher due to higher sales volumes of hidden switches and sensor products

and increased customer funded tooling and design fees. Net sales in Asia decreased $12.9 million, or 11.6%, to $98.0 million in fiscal 2018, compared to $110.9 million in fiscal 2017. The decrease was primarily due to lower sales of transmission lead-frame assemblies due to a combination of lower sales volumes and pricing reductions and lower sales volumes for our steering angle sensor products, as the products approach end of production. The impact of currency translation increased net sales by $13.1 million in fiscal 2018 in the Automotive segment.

~~Gross Profit.~~ ~~Automotive segment gross profit increased $18.8 million, or 10.3%, to $201.6 million in fiscal 2018, compared to $182.8 million in fiscal 2017.~~ product demand.

Gross profit margin decreased primarily due to unfavorable sales mix related to acquisitions, the inclusion of $0.8 million of purchase accounting adjustments related to acquisitions and pricing reductions on certain products. Gross profit in fiscal 2017 benefitted from favorable commodity pricing adjustments of $1.0 million and the reversal of accruals of $1.0 million related to resolved customer commercial issues.

~~Income from Operations.~~ Automotive segment income from operations increased $8.0 million, or 5.4%, to $156.3 million in fiscal 2018, compared to $148.3 million in fiscal 2017. The increase was due to sales and income from operations from Procoplast and Pacific Insight and lower stock based compensation expense, partially offset with pricing reductions, the strengthening of the Mexican peso as compared to the U.S. dollar, higher intangible asset amortization expense and higher severance and travel expenses. Income in fiscal 2017 was favorably impacted due to adjustments for commodity pricing and the reversal of accruals related to resolved customer commercial issues.

~~Industrial Segment Results~~

~~Below is a table summarizing results for the fiscal years ended:~~

(Dollars in Millions) April 28,
2018 April 29,
2017 Net Change ($) Net Change (%)
Net Sales $ 105.8
$ 92.3
$ 13.5
14.6 %
Gross Profit $ 28.2
$ 20.8
$ 7.4
35.6 %
Income from Operations $ 13.0
$ 2.7
$ 10.3
381.5 %

Percent of sales: April 28,
2018 April 29,
2017
Net Sales 100.0 % 100.0 %
Gross Profit 26.7 % 22.5 %
Income from Operations 12.3 % 2.9 %

~~Net Sales~~. Industrial segment net sales increased $13.5 million, or 14.6%, to $105.8 million in fiscal 2018, compared to $92.3 million in fiscal 2017. Net sales increased in North America by $2.3 million to $38.8 million in fiscal 2018, primarily due to higher sales volumes of radio remote control and busbar products. Net sales in Europe increased $8.7 million to $38.9 million in fiscal 2018 primarily due to higher sales volumes of radio remote control and power connector products. Net sales in Asia increased $2.5 million, to $28.1 million in fiscal 2018, primarily due to higher sales volumes of busbar products.

~~Gross Profit.~~ Industrial segment gross profit increased $7.4 million, or 35.6%, to $28.2 million in fiscal 2018, compared to $20.8 million in fiscal 2017. The increase primarily relates to higher sales volumes of busbar and radio remote control products, partially offset by the higher cost of copper.

~~Income from Operations.~~ Industrial segment income from operations increased $10.3 million, or 381.5%, to $13.0 million in fiscal 2018, compared to $2.7 million in fiscal 2017. The increase was primarily due to higher gross profit and lower Hetronic legal fees and lower stock-based compensation expense.

~~Interface Segment Results~~

~~Below is a table summarizing results for the fiscal years ended:~~

(Dollars in Millions) April 28,
2018 April 29,
2017 Net Change ($) Net Change (%)
Net Sales $ 73.2
$ 91.5
$ (18.3 ) (20.0 )%
Gross Profit $ 14.3
$ 17.8
$ (3.5 ) (19.7 )%
Income from Operations $ 6.0
$ 4.0
$ 2.0
50.0 %

Percent of sales: April 28,
2018 April 29,
2017
Net Sales 100.0 % 100.0 %
Gross Profit 19.5 % 19.5 %
Income from Operations 8.2 % 4.4 %

~~Net Sales~~. Interface segment net sales decreased $18.3 million, or 20.0%, to $73.2 million in fiscal 2018, compared to $91.5 million in fiscal 2017. Net sales decreased in North America by $15.1 million to $70.9 million in fiscal 2018, primarily due to the exit of our Connectivity business in fiscal 2017. Net sales in Europe decreased $1.7 million to $0.3 million in fiscal 2018 due to lower sales volumes and price reductions on certain of our data solutions products. Net sales in Asia decreased $1.5 million to $2.0 million in fiscal 2018 primarily due to lower sales volumes of legacy products.

~~Gross Profit.~~ Interface segment gross profit decreased $3.5 million, or 19.7%, to $14.3 million in fiscal 2018, compared to $17.8 million in fiscal 2017. The decrease was due to lower sales volumes as a result of the exit of our Connectivity business in fiscal 2017 and price reductions on certain products.

~~Income from Operations.~~ Interface segment income from operations was $6.0 million in fiscal 2018, compared to $4.0 million in fiscal 2017. The increase was primarily due to a favorable sales mix, lower expenses related to the Connectivity business, lower legal expenses and lower stock-based compensation expense, partially offset with lower sales volumes and pricing reductions on certain products.

~~Medical Segment Results~~

~~Below is a table summarizing results for the fiscal years ended:~~

(Dollars in Millions) April 28,
2018 April 29,
2017 Net Change ($) Net Change (%)
Net Sales $ 0.3
$ 0.2
$ 0.1
50.0 %
Gross Profit $ (3.5 ) $ (3.1 ) $ (0.4 ) (12.9 )%
Loss from Operations $ (11.4 ) $ (8.5 ) $ (2.9 ) (34.1 )%

~~Net Sales. The Medical segment had minimal net sales in both periods from newly launched products.~~

~~Gross Profit.~~

Medical segment gross profit was a loss of ~~$3.5~~$0.4 million in fiscal ~~2018~~2022, compared to a loss of ~~$3.1~~$0.3 million in fiscal ~~2017. The increased loss primarily relates to~~2021. Gross profit was impacted by higher material costs and unfavorable sales mix, which offset the ~~vertical manufacturing integration of some key components and research efforts to expand the product offerings.~~

increase in net sales.

Loss from ~~Operations.~~ operations

Medical segment loss from operations increased ~~$2.9~~$0.9 million, or 19.6%, to ~~$11.4~~$5.5 million in fiscal ~~2018~~2022, compared to ~~$8.5~~$4.6 million in fiscal ~~2017.~~2021. The ~~increased~~increase in the loss ~~relates~~was due to higher ~~outside~~selling and administrative expenses, primarily higher advertising expenses and professional ~~fees, research and development and marketing expenses in fiscal 2018.~~

fees.

Financial Condition, Liquidity and Capital Resources

Our liquidity requirements are primarily to fund our business operations, including capital expenditures and working capital requirements, as well as to fund debt service requirements, dividends and stock repurchases. Our primary sources of liquidity are cash flows from operations, existing cash balances and borrowings under our senior unsecured credit agreement. We believe our ~~current world-wide cash balances together with expected future cash flows to be generated from operations and our committed credit facility~~liquidity position will be sufficient to ~~support~~fund our existing operations and current ~~operations. A significant amount of cash~~commitments for at least the next twelve months. However, if economic conditions remain impacted for longer than we expect due to the COVID-19 pandemic and ~~expected future cash flows are located outside of~~other geopolitical risks, including the ~~U.S. Of~~Russia-Ukraine war and the ~~$83.2~~lockdowns in China, our liquidity position could be severely impacted.

At April 30, 2022, we had $172.0 million of cash and cash equivalents, as of ~~April 27, 2019, $69.9~~which $107.0 million was held in subsidiaries outside the U.S. Cash held by these subsidiaries is used to fund operational activities and can be repatriated, primarily through the payment of dividends and the repayment of intercompany loans, ~~and the payment of dividends,~~ without creating material additional income tax expense.

~~Cash flow is summarized below:~~

Fiscal Year Ended
(Dollars in Millions) April 27,
2019 April 28,
2018 April 29,
2017
Operating activities:
Net Income $ 91.6
$ 57.2
$ 92.9
Non-cash Items 52.6
17.0
32.1
Changes in Operating Assets and Liabilities (42.2 ) 43.6
20.2
Net Cash Provided by Operating Activities 102.0
117.8
145.2
Net Cash Used in Investing Activities (470.8 ) (179.0 ) (21.7 )
Net Cash Provided by (Used In) Financing Activities 217.4
(12.7 ) (47.0 )
Effect of Exchange Rate Changes on Cash and Cash Equivalents (11.5 ) 26.0
(10.3 )
Net Increase (Decrease) in Cash and Cash Equivalents (162.9 ) (47.9 ) 66.2
Cash and Cash Equivalents at Beginning of the Year 246.1
294.0
227.8
Cash and Cash Equivalents at End of the Year $ 83.2
$ 246.1
$ 294.0

~~Operating Activities — Fiscal 2019 Compared~~

Share Buyback Program

On March 31, 2021, the Board of Directors authorized the purchase of up to ~~Fiscal 2018~~

Net cash provided by operating activities decreased $15.8 million to $102.0 million for fiscal 2019, compared to $117.8 million for fiscal 2018. The decrease was due to lower cash generated from changes in operating assets and liabilities, partially offset by higher net income adjusted for non-cash items. The $42.2$100.0 million of ~~cash outflows for operating assets and liabilities~~our common stock. Such purchases may be made on the open market, in private transactions or pursuant to purchase plans designed to comply with Rule 10b5-1 of the Securities Exchange Act of 1934. As of April 30, 2022, a total of 1,593,139 shares have been purchased at a total cost of $71.2 million since the commencement of the share buyback program. As of April 30, 2022, the dollar value of shares that remained available to be purchased under this share buyback program was ~~primarily due~~approximately $28.8 million.

On June 16, 2022, the Board of Directors authorized an increase in our existing share buyback program under which we may purchase up to ~~higher prepaid expenses and other assets and lower accounts payable and accrued expenses.~~

~~Operating Activities — Fiscal 2018 Compared to Fiscal 2017~~

Net cash provided by operating activities decreased $27.4 million to $117.8 million in fiscal 2018, compared to $145.2 million in fiscal 2017. The decrease was primarily due to lower net income adjusted for non-cash items, partially offset by cash generated from changes in operating assets and liabilities. The $43.6an additional $100.0 million of ~~cash inflows for operating assets and liabilities was due to higher accounts payable and accrued expenses and lower prepaid expenses and other assets, offset by higher inventory levels.~~

~~Investing Activities — Fiscal 2019 Compared to Fiscal 2018~~

Net cash used in investing activities increased by $291.8 million to $470.8 million in fiscal 2019, compared to $179.0 million in fiscal 2018, primarily due to acquisitions. In fiscal 2019, we paid $422.1 million for the acquisition of Grakon. In fiscal 2018, we paid $130.9 million for the acquisitions of Pacific Insight and Procoplast.

~~Investing Activities — Fiscal 2018 Compared to Fiscal 2017~~

Net cash used in investing activities increased by $157.3 million to $179.0 million in fiscal 2018, compared to $21.7 million in fiscal 2017. The increase was primarily due to $130.9 million paid for the acquisitions of Pacific Insight and Procoplast. In addition, purchases of property, plant and equipment for our ~~operations were higher in fiscal 2018 compared to fiscal 2017.~~

~~Financing Activities — Fiscal 2019 Compared to Fiscal 2018~~

Net cash provided by financing activities was $217.4 million in fiscal 2019, compared to net cash used in financing activities of $12.7 million in fiscal 2018. During fiscal 2019, we had net borrowings of $238.5 million which was partially used to fund the acquisition of Grakon. We paid dividends of $16.3 million in fiscal 2019, compared to $14.7 million in fiscal 2018.

~~Financing Activities — Fiscal 2018 Compared to Fiscal 2017~~

Net cash used in financing activities decreased $34.3 million to $12.7 million in fiscal 2018, compared to $47.0 million in fiscal 2017. During fiscal 2018, we had net borrowings of $2.0 million, compared to repayments on borrowings of $30.0 million in fiscal 2017. We paid dividends of $14.7 million and $13.7 million in fiscal 2018 and fiscal 2017, respectively. We did not repurchase anyoutstanding common stock, ~~in fiscal 2018. In fiscal 2017, we paid $9.8 million for~~and also extended the ~~repurchase of common stock.~~

expiration from March 31, 2023 to June 14, 2024.

Credit Agreement

~~On September 12, 2018, we entered into a~~

Our senior unsecured credit agreement ~~that provided~~provides for a $200.0 million revolving credit facility and a $250.0 million term loan. As of April ~~27, 2019, $278.7~~30, 2022, no principal was outstanding under the revolving credit facility and we have $199.9 million of availability under the revolving credit facility. As of April 30, 2022, $206.3 million in principal was outstanding under the ~~credit agreement.~~term loan. The term loan matures in September 2023 and requires quarterly principal payments of $3.1 million over the five-year term, with the remaining balance due upon maturity. We were in compliance with all covenants under the ~~credit agreement~~Credit Agreement as of April ~~27, 2019. See~~30, 2022. For further information, see Note 10, ~~"Debt," in~~“Debt” to the consolidated financial statements included in this Annual Report.

On December 10, 2021, we entered into a First Amendment to the Credit Agreement (“First Amendment”). The First Amendment amended and restated the Credit Agreement to provide, among other things, that upon the occurrence of certain events, the interest rate calculation method will generally transition from the London Interbank Offered Rate (“LIBOR”) to an alternate reference rate, including the Secured Overnight Financing Rate (“SOFR”) for ~~further information.~~

U.S. dollar denominated borrowings. The consequences of the discontinuance of LIBOR cannot be entirely predicted but could result in an increase in our cost of borrowing.

Our senior unsecured credit agreement provides an option to increase the size of our revolving credit facility and term loan by an additional $200.0 million, subject to customary conditions and approval of the lenders providing the new commitments. There can be no assurance that lenders will approve additional commitments under current circumstances. We may seek to raise additional capital and our access to, and cost of, financing will depend on, among other things, global economic conditions, conditions in the global financing markets, the availability of sufficient amounts of financing, and our future prospects.

Cash Flows


	Fiscal Year Ended
(in millions)	April 30, 2022			May 1, 2021
Operating activities:
Net income	$	102.2		$	122.3
Non-cash items		66.4			50.7
Changes in operating assets and liabilities		(69.8	)		6.8
Net cash provided by operating activities		98.8			179.8
Net cash used in investing activities		(37.4	)		(24.8	)
Net cash used in financing activities		(114.6	)		(142.9	)
Effect of foreign currency exchange rate changes on cash and cash equivalents		(8.0	)		3.8
(Decrease) increase in cash and cash equivalents		(61.2	)		15.9
Cash and cash equivalents at beginning of the period		233.2			217.3
Cash and cash equivalents at end of the period	$	172.0		$	233.2

Operating activities

Net cash provided by operating activities decreased $81.0 million to $98.8 million in fiscal 2022, compared to $179.8 million in fiscal 2021. The decrease was due to higher cash outflows related to changes in operating assets and liabilities. The $69.8 million of cash outflows for operating assets and liabilities in fiscal 2022 was primarily due to higher inventory (as a result of global supply chain and logistics disruptions) and lower accounts payable and other liabilities.

Investing activities

Net cash used in investing activities was $37.4 million in fiscal 2022, compared to $24.8 million in fiscal 2021. The activity primarily represents capital expenditures in both fiscal years. We received $0.6 million of cash from the sale of property, plant and equipment in fiscal 2022.

Financing activities

Net cash used in financing activities was $114.6 million in fiscal 2022, compared to $142.9 million in fiscal 2021. In fiscal 2022, we used $64.5 million of cash for the purchase of shares under our share buyback program, compared to $6.7 million in fiscal 2021. We paid cash dividends of $20.4 million in fiscal 2022, compared to $17.4 million in fiscal 2021. We increased our quarterly dividend from $0.11 per share to $0.14 per share in the first quarter of fiscal 2022. In fiscal 2022, we paid $0.3 million in taxes related to the net share settlement of equity awards compared to $3.9 million in fiscal 2021. In fiscal 2022, we had net repayments on our borrowings of $29.2 million. In fiscal 2021, we had net repayments on our borrowings of $115.2 million, which included the repayment of the $100.0 million precautionary draw-down on our revolving credit facility from March 2020.

Contractual Obligations

The following table summarizes our significant contractual obligations and commercial commitments as of April ~~27, 2019:~~30, 2022:


	Payments Due By Period
(in millions)	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years
Finance leases	$	0.8	$	0.4	$	0.3	$	0.1	$	—
Operating leases		24.0		6.5		7.3		3.2		7.0
Debt (1)		211.4		13.0		197.1		0.4		0.9
Estimated interest on debt (2)		5.6		3.7		1.7		0.1		0.1
Deferred compensation		8.0		1.6		1.9		1.8		2.7
Total	$	249.8	$	25.2	$	208.3	$	5.6	$	10.7

(1)

Assumes the outstanding borrowings under the revolving credit facility will be repaid upon maturity of the credit agreement in September 2023.

Payments Due By Period
(Dollars in Millions) Total
Less than
1 year
1-3 years 3-5 years
More than
5 years
Capital Leases $ 1.7
$ 0.6
$ 0.9
$ 0.2
$ —
Operating Leases 34.2
7.8
10.5
7.5
8.4
Debt ⁽¹⁾
295.5
15.7
28.8
247.7
3.3
Estimated Interest on Debt ⁽²⁾
46.8
11.7
20.7
14.2
0.2
Deferred Compensation 8.5
1.2
3.2
1.6
2.5
Total $ 386.7
$ 37.0
$ 64.1
$ 271.2
$ 14.4

⁽¹⁾Assumes the outstanding borrowings under the revolving credit facility will be repaid upon maturity of the credit agreement in September 2023.
⁽²⁾ Amounts represent estimated contractual interest payments on outstanding debt. Interest rates in effect as of April 27, 2019 are used for floating-rate debt.

(2)

~~We enter into agreements with suppliers to assist us~~Based on interest rates in ~~meeting our customers' production needs. These agreements vary~~effect as ~~to duration and quantity commitments. Historically, most have been short-term agreements, which do not provide for minimum purchases, or are requirements-based contracts.~~of April 30, 2022 (including the impact of interest rate swaps).

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements ~~other than the operating leases and purchase obligations noted in the preceding table.~~

as defined under SEC rules.

Legal Matters

For several years, Hetronic Germany-GmbH and Hydronic-Steuersysteme-GmbH (the “Fuchs companies”) served as our distributors for Germany, Austria and other central and eastern European countries pursuant to their respective intellectual property licenses and distribution and assembly agreements. We became aware that the Fuchs companies and their managing director, Albert Fuchs, had materially violated those agreements. As a result, weterminated all of our agreements with the Fuchs companies. On June 20, 2014, we filed a lawsuit against the Fuchs companies in the Federal District Court for the Western District of Oklahoma alleging material breaches of the distribution and assembly agreements and seeking damages, as well as various forms of injunctive relief. The defendants ~~have~~ filed counterclaims alleging breach of contract, interference with business relations and business slander. On April 2, 2015, we amended our complaint against the Fuchs companies to add additional unfair competition and Lanham Act claims and to add additional affiliated parties. ~~As of April 27, 2019, this~~

A trial with respect to the matter ~~has been set for trial~~began in February 2020.

During the trial, the defendants dismissed their one remaining counterclaim with prejudice. On March 2, 2020, the jury returned a verdict in favor of the Company. The verdict included approximately $102 million in compensatory damages and $11 million in punitive damages. On April 22, 2020, the Court entered a permanent injunction barring defendants from selling infringing products and ordering them to return Hetronic’s confidential information. Defendants appealed entry of the permanent injunction. On May 29, 2020, the Court held defendants in contempt for violating the permanent injunction and entered the final judgment. Defendants appealed entry of the final monetary judgment as well. The appeal of the permanent injunction and the appeal of the final judgment were consolidated into a single appeal before the U.S. Court of Appeals for the Tenth Circuit. On August 24, 2021, the Tenth Circuit issued a decision affirming the lower court’s ruling with the exception that it instructed the District Court to modify the injunction from the entire world to all of the countries in which Hetronic sells its products. On April 20 and 21, 2022, the District Court held a hearing related to modifying the injunction pursuant to the Tenth Circuit’s opinion, and the parties currently are preparing post-hearing briefs. The defendants also filed a petition for certiorari with the United States Supreme Court seeking to further appeal the extraterritorial application of the Lanham Act in this case. Hetronic has opposed that petition. The Supreme Court has requested the views of the Solicitor General on the petition for certiorari. Like any judgment, particularly any judgment involving defendants outside of the United States, there is no guarantee that we will be able to collect all or any portion of the judgment.

We incurred legal fees of ~~$3.5~~$3.3 million, ~~$8.1~~$5.7 million and ~~$11.0~~$5.4 million in fiscal ~~2019,~~2022, fiscal ~~2018~~2021 and fiscal ~~2017,~~2020, respectively, related to the lawsuits. These amounts are included in the selling and administrative expenses inand as part of the ~~Interface~~Industrial segment.

Critical Accounting Policies and Estimates

~~Our significant accounting policies are more fully described in Note 1, “Description of Business and Summary of Significant Accounting Policies” in the consolidated financial statements.~~

The preparation of financial statements in conformity with ~~U.S.~~ GAAP requires that we make estimates and ~~assumptions. In certain circumstances, those estimates and~~ assumptions that can affect amounts reported in the ~~accompanying~~ consolidated financial statements and notes. In preparing our consolidated financial statements, we have made our best estimates and judgments of certain amounts included in the consolidated financial statements. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable. ~~As a result,~~To the extent that there are differences between these estimates and actual results, could differ from these estimates. The following is a brief discussion of our critical accounting policies and estimates. We believe the following critical accounting policies affect our judgments and estimates used in the preparation of our consolidated financial ~~statements.~~

statements may be materially affected. Below are the estimates that we believe are critical to the understanding of our results of operations and financial condition. Other accounting policies are described in Note 1, “Description of Business and Summary of Significant Accounting Policies” to the consolidated financial statements included in this Annual Report.

The full impact of the COVID-19 pandemic is unknown and cannot be reasonably estimated for these key estimates and assumptions. However, we made appropriate accounting estimates based on the facts and circumstances available as of the reporting date.

Revenue ~~Recognition.~~ ~~We adopted ASC 606, “Revenue from Contracts with Customers” on April 29, 2018 using the modified retrospective transition method. The majority~~recognition. Most of our revenue is recognized at a point in time. We have determined that the most definitive demonstration that control has transferred to a customer is physical shipment or delivery, depending on the contractual shipping terms, ~~with the exception of~~except for consignment transactions. Consignment transactions are arrangements where we transfer products to a customer location but retain ownership and control of such product until it is used by the customer. Revenue for consignment arrangements is recognized upon the customer’s usage.

~~Revenues~~

Revenue associated with products which we believe have no alternative use, and where we have an enforceable right to payment, are recognized on an over time basis. In transition to ASC 606, we noted some customers ordered highly customized parts in which we were entitled to payment throughout the manufacturing process. In accordance with ASC 606, we are now recognizing revenue over time for these customers as the performance obligationRevenue is ~~satisfied. We believe the most faithful depiction of the transfer of goods to the customer is~~recognized based on progress to date, which is typically ~~smooth throughout the production process. As such, we recognize revenue evenly~~even over the production process through transfer of control to the customer.

In addition, from time to time, customers ~~typically~~may negotiate annual price downs. Management has evaluated these price downs and determined that in some instances, these price downs give rise to a material right. In instances that a material right exists, a portion of the transaction price is allocated to the material right and recognized over the life of the contract.

Allowance for ~~Doubtful Accounts.~~ We maintain an allowance for doubtful accounts for estimated losses resulting from the inability of customers to make required payments. The amount of the allowance is based on the age of unpaid amounts, information about the creditworthiness of customers,excess and other relevant information. Estimates of uncollectible amounts are revised each reporting period, and changes are recorded in the period they become known. We generally do not require collateral for our accounts receivable. If the financial condition of our customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required.

~~Allowance for Excess and Obsolete Inventory.~~obsolete inventory. Inventories are valued at the lower of cost or net realizable value and have been reduced by allowances for excess and obsolete inventories. The estimated allowances are based on our review of inventories on hand compared to estimated future usage and sales, using assumptions about future product life cycles, product demand and market conditions. If actual product life cycles, product demand and market conditions are less favorable than those projected by us, inventory write-downs may be required.

~~Business Combinations.~~ Accounting for business combinations requires us to recognize separately from goodwill the assets acquired and the liabilities assumed at their acquisition date fair values. Goodwill as of the acquisition date is measured as the excess of consideration transferred over the net of the acquisition date fair values of the assets acquired and the liabilities assumed. While we use our best estimates and assumptions to accurately value assets acquired and liabilities assumed at the acquisition date, our estimates are inherently uncertain and, as a result, actual results may differ from estimates.

Accounting for business combinations requires us to make significant estimates and assumptions, especially at the acquisition date including our estimates for intangible assets, contractual obligations assumed and pre-acquisition contingencies. Although we believe the assumptions and estimates we have made in the past have been reasonable and appropriate, they are based in part on historical experience and information obtained from the management of the acquired companies and are inherently uncertain.

In addition, uncertain tax positions and tax related valuation allowances assumed in connection with a business combination are initially estimated as of the acquisition date. We reevaluate these items based upon facts and circumstances that existed as of the acquisition date with any adjustments to our preliminary estimates being recorded to goodwill if identified within the measurement period. Subsequent to the measurement period or our final determination of the tax allowance’s or contingency’s estimated value, whichever comes first, changes to these uncertain tax positions and tax-related valuation allowances will affect our provision for income taxes in our consolidated statement of operations and could have a material impact on our results of operations and financial position.

~~Impairment of~~

Goodwill.Goodwill is not amortized but is tested for impairment on at least an annual basis. ~~In conducting our goodwill impairment testing, we may first perform a qualitative assessment of whether it~~Goodwill is more likely than not that a reporting unit’s fair value is less than its carrying amount. If not, no further goodwill impairment testing is required. If it is more likely than not that a reporting unit’s fair value is less than its carrying amount, or if we elect not to perform a qualitative assessment of aevaluated at the reporting unit ~~we then compare~~level by comparing the fair value of the reporting unit to its carrying amount including goodwill. An impairment of goodwill exists if the ~~related net book~~carrying amount of the reporting unit exceeds its fair value. IfThe impairment loss is the ~~net book~~amount by which the carrying amount exceeds the reporting unit’s fair value, limited to the total amount of goodwill allocated to that reporting unit. In performing the goodwill impairment test, we have the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the estimated fair value of a reporting unit ~~exceeds~~is less than its ~~fair value, an impairment loss is measured and recognized. We conduct our annual impairment testing as of the first day of our fourth quarter.~~

~~Our qualitative screen includes an assessment of certain~~carrying amount.

Qualitative factors ~~including,~~include, but are not limited to, the results of prior year fair value calculations, the movement of our share price and market capitalization, the reporting unit and overall financial performance, and macroeconomic and industry conditions. We consider the qualitative factors and weight of the evidence obtained to determine if it is more likely than not that a reporting ~~unit's~~unit’s fair value is less than the carrying amount. ~~Although we believe the factors considered in the impairment analysis are reasonable, significant changes in any one of the assumptions used could produce a different result.~~ If, after assessing the qualitative factors, we were to determine that it is more likely than not that the fair value of a reporting unit is less than its carrying value, then ~~we would perform~~ a quantitative ~~impairment test.~~assessment is performed. We may also elect to proceed directly to the quantitative ~~impairment analysis~~assessment without considering such qualitative factors.

For the quantitative ~~analysis,~~assessment, we utilize either, or a combination of, the income approach and market approach to estimate the fair ~~values are primarily established using~~value of the reporting unit. The income approach uses a discounted cash flow ~~methodology (specifically,~~method and the ~~income and~~ market ~~approach).~~approach uses appropriate valuation multiples observed for the reporting unit’s guideline public companies. The determination of discounted cash flows is based on our long-range forecasts and requires assumptions related to revenue and operating income growth, asset-related expenditures, working capital levels, and other market participant assumptions. The revenue growth rates included in the forecasts are our best estimates based on current and anticipated market conditions, and the profitability assumptions are projected based on current and anticipated cost structures. Long-range forecasting involves uncertainty which increases with each successive period. Key assumptions, such as revenue growth rates and profitability, especially in the outer years, involve a greater degree of uncertainty.

Impairment of ~~Long-Lived Assets.~~ long-lived assets. We ~~continually~~ evaluate whether events and circumstances have occurred which indicate that the remaining estimated useful lives of our intangible assets, excluding goodwill, and other long-lived assets, may warrant revision or that the remaining balance of such assets may not be recoverable. If impairment indicators exist, we perform an impairment analysis by comparing the undiscounted cash flows resulting from the use of the asset group to the carrying amount. If the carrying amount exceeds the undiscounted cash flows, an impairment loss is recognized based on the excess of the asset’s carrying amount over its fair value.

Income ~~Taxes.~~ ~~As part of the process of preparing our consolidated financial statements, we are required to calculate~~taxes. Our income ~~taxes in each of the jurisdictions in which we operate. The process involves determining actual current~~ tax expense ~~along with assessing temporary differences resulting from the differing treatment of items for book~~ and ~~tax purposes. These temporary differences result in~~ deferred tax assets and liabilities ~~which are included in our consolidated balance sheets.~~

~~We provide for~~reflect management’s best assessment of estimated current and future taxes ~~that may be payable if undistributed earnings of overseas subsidiaries were~~ to be ~~remitted~~paid. We are subject to ~~the U.S., except for those earnings that~~we consider to be permanently reinvested. However, we continue to monitor the impacts of U.S. Tax Reform, including yet to be issued regulations and interpretations, on the tax consequences of future repatriations. Future sales of foreign subsidiaries are not exempt from capital gains taxincome taxes in the U.S. ~~under U.S. Tax Reform. We have no plans~~and numerous foreign jurisdictions. Significant judgments and estimates are required in determining the consolidated income tax provision and in evaluating income tax uncertainties.

The amount of income taxes we pay is subject to ~~dispose~~ongoing audits by federal, state and foreign tax authorities. Our estimate of the potential outcome of any uncertain tax issue is subject to management’s assessment of ~~our foreign subsidiaries~~relevant risks, facts, and ~~are not recording deferred taxes on outside basis differences~~circumstances existing at that time. We use a more-likely-than-not threshold for financial statement recognition and measurement of tax positions taken or expected to be taken in ~~foreign subsidiaries~~a tax return. We record a liability for the ~~sale~~difference between the benefit recognized and measured and tax position taken or expected to be taken on our tax return. To the extent that our assessment of such tax positions changes, the change in estimate is recorded in the period in which the determination is made. We report tax-related interest and penalties as a ~~foreign subsidiary.~~

component of income tax expense.

Our deferred tax assets and liabilities reflect temporary differences between the amount of assets and liabilities for financial and tax reporting purposes. We adjust these amounts to reflect changes in tax rates expected to be in effect when the temporary differences reverse. We record a valuation allowance to reduce our deferred tax assets to the amount that is more likely than not to be realized. We evaluate our ability to realize the tax benefits associated with deferred tax assets by assessing the adequacy of future expected taxable income, including the reversal of existing temporary differences, historical and projected operating results, and the availability of prudent and feasible tax planning strategies. The realization of tax benefits is evaluated by jurisdiction and the realizability of these assets can vary based on the character of the tax attribute and the carryforward periods

specific to each jurisdiction. In the event we were to determine that we would be able to realize our deferred tax assets in the future in excess of its net recorded amount, an adjustment to the deferred tax asset would decrease income tax expense in the period a determination was made. Likewise, should we determine that we would not be able to realize all or part of our net deferred tax asset in the future, an adjustment to the deferred tax asset would be recorded to income tax expense in the period such determination was made.

We provide for taxes that may be payable if undistributed earnings of overseas subsidiaries were to be remitted to the U.S., except for those earnings thatwe consider to be permanently reinvested. Future sales of foreign subsidiaries are not exempt from capital gains tax in the U.S. We have no plans to dispose of any of our foreign subsidiaries and are not recording deferred taxes on outside basis differences in foreign subsidiaries for the sale of a foreign subsidiary.

Contingencies. We are subject to various investigations, claims and legal and administrative proceedings covering a wide range of matters that arise in the ordinary course of business activities. A significant amount of judgment and use of estimates is required to quantify our ultimate exposure in these matters. For those matters that we can estimate a range of loss, we have established reserves at levels within that range to provide for the most likely scenario based upon available information. The valuation of reserves for contingencies is reviewed on a quarterly basis to ensure that we are properly reserved. Reserve balances are adjusted to account for changes in circumstances for ongoing issues and the establishment of additional reserves for emerging issues. While we believe that the current level of reserves is adequate, changes in the future could impact these determinations.

New Accounting Pronouncements

For more information regarding new applicable accounting pronouncements, see Note 1, “Description of Business and Summary of Significant Accounting Policies” to the consolidated financial statements included in this Annual Report.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

We are exposed to market risks from foreign currency exchange, interest rates, and commodity prices, which could affect our operating results, financial position and cash flows. We ~~do not~~manage a portion of these risks through use ~~any~~of derivative financial instruments ~~to manage these risks.~~

in accordance with our policies. We do not enter into derivative financial instruments for speculative or trading purposes.

Foreign ~~Currency Risk~~

currency risk

We are exposed to foreign currency risk on sales, costs and assets and liabilities denominated in currencies other than the U.S. dollar. We seek to manage our foreign exchange risk largely through operational means, including matching revenue with same-currency costs and assets with same-currency liabilities. We currently transact business in eight primary currencies worldwide, of which the most significant ~~were~~are the U.S. dollar, the euro, the Mexican peso, and the Chinese renminbi.

A ~~hypothetical 10% adverse~~portion of our balance sheet is exposed to foreign currency exchange rate fluctuations, which may result in non-operating foreign currency exchange gains or losses upon remeasurement. In fiscal 2022, we reported foreign currency exchange losses of approximately $1.9 million, which were primarily attributed to the remeasurement of net monetary assets and liabilities denominated in currencies other than the functional currencies of our subsidiaries. In January 2021, we began to use foreign currency forward contracts to provide an economic hedge against balance sheet exposure to certain monetary assets and liabilities denominated in currencies other than the functional currency of the subsidiary. The forward contracts have a maturity of less than three months and are not designated as hedging instruments. As of April 30, 2022, the notional value of these outstanding contracts was $38.6 million, and the net unrealized loss was $0.2 million. The impact of a change in the foreign currency exchange rates ~~could have impacted~~on our income before income taxes by $8.5 million and $1.9 million at April 27, 2019 and April 28, 2018, respectively. These estimates assume no changes other than the exchange rate itself. However, this quantitative measure has inherent limitations. The sensitivity analysis disregards the possibility that rates can move in opposite directions and that gains from oneforeign currency ~~may or may not~~forward contracts will generally be offset ~~by losses~~against the gain or loss from ~~another currency.~~

the re-measurement of the underlying balance sheet exposure.

The translation of the assets and liabilities of our international subsidiaries is made using the foreign currency exchange rates as of the end of the ~~fiscal year.~~reporting period. Translation adjustments are not included in determining net income but are included in accumulated other comprehensive income (loss) within shareholders’ equity on the consolidated balance sheets until a sale or substantially complete liquidation of the net investment in the international subsidiary takes place. As of April ~~27, 2019,~~30, 2022, the cumulative net currency translation adjustments ~~reduced~~decreased shareholders’ equity by ~~$13.6 million and~~$30.5 million. We have outstanding a euro denominated cross-currency swap which is treated as a net investment hedge to reduce our exposure to translational exchange risk. As of April ~~28, 2018,~~30, 2022, we recorded a deferred gain, net of tax, of $1.5 million related to the ~~cumulative net currency translation adjustments increased shareholders’ equity by $13.9 million.~~

cross-currency swap.

Interest ~~Rate Risk~~

rate risk

We are exposed to ~~market risk from changes in interest rates. The~~ interest rate risk ~~for~~on borrowings under our senior unsecured credit agreement ~~under~~ which ~~we had $278.7 million of net borrowings at April 27, 2019, is variable and~~ is based on LIBOR. WeAs of April 30, 2022, we had $206.3 million of borrowings under our senior unsecured credit agreement. In April 2021, we began to manage our interest rate exposures through the use of interest rate swaps to effectively convert a portion of our variable-rate debt to a fixed rate. The notional amount of our interest rate swaps was $100.0 million as of April 30, 2022. Based on borrowings outstanding under our senior unsecured credit agreement at April 30, 2022, net of the interest rate swaps, we estimate that a 1% increase in interest rates ~~under our credit agreement~~ would result in increased annual interest expense of ~~$2.8~~$1.1 million.

Commodity ~~Price Risk~~

price risk

We are exposed to commodity price risk primarily on our raw material purchases. These raw materials are not rare or unique to our industry. The cost of copper, resins, and other commodities, such as fuel and energy, has fluctuated in recent years due to changes in global supply and demand. The cost of copper increased significantly in fiscal 2022. Our gross margins could be affected if these types of costs continue to fluctuate. We actively manage these raw material costs through global sourcing initiatives and price increases on our ~~products.~~products where possible. However, in the short-term, ~~rapid~~further increases in raw material costs can be very difficult to fully offset with price increases because of contractual agreements with our ~~customers.~~

customers, which would unfavorably impact our gross margins.

Item 8. Financial Statements and Supplementary Data

~~See~~

The consolidated financial statements and supplementary data are filed within this Annual Report under Item 15, ~~for an Index to Financial Statements and~~“Exhibits, Financial Statement ~~Schedule. Such Financial Statements and Schedule are incorporated herein by reference.~~

Schedules.”

Item 9. Changes in and Disagreements ~~With~~with Accountants on Accounting and Financial Disclosure

~~None~~

None.

Item 9A. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

~~As of the end of the period covered by this annual report on Form 10-K, we performed an evaluation~~

Our management, under the supervision and with the participation of our ~~management, including our~~ Chief Executive Officer and our Chief Financial Officer, performed an evaluation of the effectiveness of the design and operation of our ~~“disclosure~~disclosure controls and ~~procedures” (as~~procedures as of April 30, 2022. As defined in Rules 13a-15(e) ~~and 15d-15(e) of~~under the Exchange ~~Act). Our~~Act, disclosure controls and procedures are controls and procedures designed to ~~ensure~~provide reasonable assurance that the information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s applicable rules and forms. ~~As a result of~~Based upon this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that ~~as of the end of the period covered by this report,~~ our disclosure controls and procedures were ~~effective.~~

effective at the reasonable assurance level as of April 30, 2022.

Management’s Report on Internal Control over Financial Reporting

~~Our management~~

Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). Under the supervision ~~and with the participation~~ of ~~our management, including~~ our Chief Executive Officer and Chief Financial Officer, wemanagement conducted an evaluation of the effectiveness of our internal control over financial reporting as of April ~~27, 2019~~30, 2022 based on the guidelines established in Internal Control — Integrated Framework ~~(2013~~(2013 Framework) issued by the Committee of Sponsoring Organizations of the Treadway Commission ~~("COSO"~~(“COSO”). Our internal control over financial reporting includes policies and procedures that provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external reporting purposes in accordance with U.S. GAAP. Management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of Grakon, which are included in the fiscal 2019 consolidated financial statements of the Company and constituted 7.5% and 4.9% of total assets and net assets, respectively, as of April 27, 2019, and 12.3% and 17.0% of revenues and income before taxes, respectively, for the fiscal year then ended.

Based ~~on the results of our~~upon this evaluation, our management concluded that our internal control over financial reporting was effective as of April ~~27, 2019.~~30, 2022. Management reviewed the results of its assessment with the Audit Committee. Our independent registered public accounting firm, Ernst & Young LLP, has issued an attestation report on our internal control over financial reporting. This report is included on page ~~F-2~~F-4 of this ~~annual report on Form 10-K.~~

Annual Report.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Exchange Act Rules 13a-15 or 15d-15 that was conducted during the last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitations on Effectiveness of Controls

Our management, including our Chief Executive Officer and Chief Financial Officer, do not expect that our disclosure controls or our internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by a management override of the controls. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

Item 9B. Other Information

~~None~~

None.

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Not applicable.

PART III

Item 10. Directors, Executive Officers and Corporate Governance

~~Information~~

The information required by this item regarding our directors ~~will be included under the captions “Proposal One: Election of Directors”~~ and ~~“Corporate Governance” in~~corporate governance matters is incorporated by reference herein to the definitive proxy statement for our ~~2019~~2022 annual meeting ~~to be held on September 12, 2019,~~under the captions “Proposal One Election of Directors” and ~~is incorporated herein~~“Corporate Governance.” The information required by ~~reference. Information~~this item regarding our executive officers ~~is included~~appears as a supplementary item following Item 4 under ~~a separate caption in~~ Part I ~~hereof, and is incorporated herein~~of this Annual Report. The information required by ~~reference, in accordance with General Instruction G(3) to Form 10-K and Instruction 1 to Item 401 of Regulation S-K. Information~~this item regarding compliance with Section 16(a) of the Exchange Act and information regarding our Audit Committee ~~will be included~~is incorporated by reference herein to the definitive proxy statement for our 2022 annual meeting under the captions “Delinquent Section 16(a) Reports” and “Audit Committee Matters,” ~~respectively, in the definitive proxy statement for our 2019 annual meeting and is incorporated herein by reference.~~

respectively.

We have adopted a Code of Business Conduct (the “Code”) that applies to our directors, our principal executive officer, principal financial officer, principal accounting officer or controller and persons performing similar functions, as well as other employees. The Code is publicly available on our website at www.methode.com. If we make any substantive amendments to the Code or grant any waiver, including any implicit waiver, from a provision of the Code to our principal executive officer, principal financial officer, principal accounting officer or controller or persons performing similar functions, we will disclose the nature of such amendment or waiver on our website or in a report on Form 8-K in accordance with applicable rules and regulations.

The information contained on our website is not incorporated by reference into this Annual Report.

Item 11. Executive Compensation

Information regarding the above will be included under the caption “Compensation Discussion and Analysis,” “Compensation Committee Report,” “Executive Compensation” and “Director Compensation” in

The information required by this item is incorporated by reference herein to the definitive proxy statement for our ~~2019~~2022 annual meeting ~~to be held on September 12, 2019,~~under the captions “Compensation Discussion and ~~is incorporated herein by reference.~~

Analysis”, “Compensation Committee Report”, “CEO Pay Ratio”, “Executive Compensation Tables” and “Director Compensation.”

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

~~Information regarding~~

Except as set forth herein, the ~~above will be included under the caption “Security Ownership” in~~information required by this item is incorporated by reference herein to the definitive proxy statement for our ~~2019~~2022 annual meeting ~~to be held on September 12, 2019, and is incorporated herein by reference.~~

under the caption “Security Ownership.”

Equity Compensation Plan Information

The following table provides information about our equity compensation plans as of April ~~27, 2019.~~30, 2022. All outstanding awards relate to our common stock. Shares issued under all of the following plans may be from our treasury, newly issued or both.


Plan category	Number of securities to be issued upon exercise of outstanding options, warrants and rights		Weighted- average exercise price of outstanding options, warrants and rights		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in the first column)
Equity compensation plans approved by security holders		1,955,759	37.01(1)			112,255
Equity compensation plans not approved by security holders		—		—		—
Total		1,955,759	$	37.01		112,255

(1)

Plan category
Number of securities
to be issued upon
exercise of
outstanding options,
warrants and rights

Weighted-average
exercise price of
outstanding options,
warrants and rights

Number of securities
remaining available
for future issuance
under equity
compensation plans
(excluding securities
reflected in the first
column)
Equity Compensation Plans Approved by Security Holders 1,325,920
⁽¹⁾
$ 35.77
⁽²⁾
1,344,034
Equity Compensation Plans Not Approved by Security Holders —
—
—
Total 1,325,920
$ 35.77
1,344,034

⁽¹⁾Includes shares issuable in connection with awards with performance conditions, which will be issued based on achievement of performance criteria associated with the awards, with the number of shares issuable dependent on our level of performance.

⁽²⁾The weighted-average exercise price set forth in this column is calculated excluding outstanding restricted stock awards and restricted stock units, since recipients are not required to pay an exercise price to receive the shares subject to these awards.

Item 13. Certain Relationships and Related Transactions, and Director Independence

~~Information regarding the above will be included under the caption “Corporate Governance” in~~

The information required by this item is incorporated by reference herein to the definitive proxy statement for our ~~2019~~2022 annual meeting ~~to be held on September 12, 2019,~~under the captions “Corporate Governance” and ~~is incorporated herein by reference.~~

“Other Information.”

Item 14. Principal Accountant Fees and Services

~~Information regarding the above will be included under the caption “Audit Committee Matters” in~~

under the caption “Audit Committee Matters.”

PART IV

Item 15. Exhibits, ~~and~~ Financial Statement Schedules

(a)

(1) Consolidated Financial Statements.

~~(a)~~ ~~The documents included in~~

Reference is made to the ~~following indexes~~Index to Consolidated Financial Statements on Page F-1.

(2) Consolidated Financial Statement Schedule.

Reference is made to the Index to Financial Statement Schedule on Page F-1.

(3) Exhibits.

EXHIBIT INDEX


Exhibit Number		Description
3.1		Certificate of Incorporation of Registrant, as amended and currently in effect (incorporated by reference to Exhibit 99.1 to the Company’s Current Report on Form 8-K filed on January 9, 2004).
3.2		Bylaws of Registrant, as amended and currently in effect (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on June 19, 2020).
4.1		Article Fourth of Certificate of Incorporation of Registrant, as amended and currently in effect (included in Exhibit 3.1).
4.2		Description of Capital Stock (incorporated by reference to Exhibit 4.2 to the Company’s Annual Report on Form 10-K filed on June 20, 2019).
10.1*		Methode Electronics, Inc. 2004 Stock Plan (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on December 7, 2004).
10.2*		Change in Control Agreement dated September 1, 2006 between Methode Electronics, Inc. and Donald W. Duda (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on September 6, 2006).
10.3*		Change in Control Agreement dated September 14, 2006 between Methode Electronics, Inc. and Timothy R. Glandon (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on September 18, 2006).
10.4*		Amended and Restated Restricted Stock Unit Award Agreement (Executive Award/Performance Based) effective as of June 18, 2004 between Methode Electronics, Inc. and Donald W. Duda (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed on March 2, 2007).
10.5*		Amended and Restated Restricted Stock Unit Award Agreement (Executive Award/Cliff Vesting) effective as of June 18, 2004 between Methode Electronics, Inc. and Donald W. Duda (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed on March 2, 2007).
10.6*		Amended and Restated Restricted Stock Unit Award Agreement (Executive Award/Performance Based) effective as of June 15, 2005 between Methode Electronics, Inc. and Donald W. Duda (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on April 6, 2007).
10.7*		Amended and Restated Restricted Stock Unit Award Agreement (Executive Award/Performance Based) effective as of August 7, 2006 between Methode Electronics, Inc. and Donald W. Duda (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on April 6, 2007).
10.8*		Methode Electronics, Inc. 2007 Stock Plan (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on September 19, 2007).
10.9*		Change in Control Agreement dated July 15, 2008 between Methode Electronics, Inc. and Ronald L.G. Tsoumas (incorporated by reference to Exhibit 10.30 to the Company’s Annual Report on Form 10-K filed on July 17, 2008).
10.10*		Methode Electronics, Inc. 2010 Stock Plan (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on October 20, 2010).
10.11*		Form of Methode Electronics, Inc. Non-Qualified Stock Option Form Award Agreement under the 2010 Stock Plan (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on October 20, 2010).
10.12*		Methode Electronics, Inc. 2014 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on September 22, 2014).
10.13*		Form of Amendment to Change in Control Agreement dated November 8, 2010 (incorporated by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q filed on December 10, 2015).


10.14		Amended and Restated Credit Agreement dated as of September 12, 2018 among the Company, Bank of America, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer, Wells Fargo Bank, National Association, as L/C Issuer, the Other Lenders Party Hereto and Bank of America Merrill Lynch, as Sole Lead Arranger and Sole Bookrunner (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on September 13, 2018).
10.15*		Change in Control Agreement dated June 14, 2017 between Methode Electronics, Inc. and Andrea Barry (incorporated by reference to Exhibit 10.22 to the Company’s Annual Report on Form 10-K filed on June 21, 2018).
10.16*		Change in Control Agreement dated as of December 7, 2018 between the Company and Anil Shetty (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed on March 7, 2019).
10.17*		Change in Control Agreement dated as of June 26, 2020 between the Company and Joseph Khoury (incorporated by reference to Exhibit 10.22 to the Company’s Annual Report on Form 10-K filed on June 30, 2020).
10.18*		Form of Transition Award Agreement (incorporated by reference to Exhibit 10.23 to the Company’s Annual Report on Form 10-K filed on June 30, 2020).
10.19*		Form of 2020 Long-Term Performance-Based Award Agreement (CEO) (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on September 29, 2020).
10.20*		Form of 2020 Long-Term Performance-Based Award Agreement (COO, CFO and CHRO) (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on September 29, 2020).
10.21*		Form of 2020 Long-Term Performance-Based Award Agreement (Dabir) (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on September 29, 2020).
10.22*		Form of 2020 Long-Term Time-Based Award Agreement (CEO) (incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed on September 29, 2020).
10.23*		Form of 2020 Long-Term Time-Based Award Agreement (COO, CFO and CHRO) (incorporated by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K filed on September 29, 2020).
10.24*		Form of 2020 Long-Term Time-Based Award Agreement (Dabir) (incorporated by reference to Exhibit 10.6 to the Company’s Current Report on Form 8-K filed on September 29, 2020).
10.25*		Methode Electronics, Inc. Deferred Compensation Plan, as amended and restated as of November 12, 2020 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on November 13, 2020).
10.26		First Amendment to Amended and Restated Credit Agreement, entered into as of December 10, 2021, among Methode Electronics, Inc., each Lender party thereto, Wells Fargo Bank, National Association, as L/C Issuer, and Bank of America, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on December 16, 2021).
10.27*		Long-Term Performance-Based Award Agreement dated as of September 29, 2020 between the Company and Kevin Martin.
10.28*		Long-Term Time-Based Award Agreement dated as of September 29, 2020 between the Company and Kevin Martin.
21		Subsidiaries of Methode Electronics, Inc.
23		Consent of Ernst & Young LLP.
31.1		Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer.
31.2		Rule 13a-14(a)/15d-14(a) Certification of Principal Financial Officer.
32**		Certification of Periodic Financial Report Pursuant to 18 U.S.C. Section 1350.
101.INS		Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL Document
101.SCH		Inline XBRL Taxonomy Extension Schema Document
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document
104		Cover Page Interactive Data File (embedded within the Inline XBRL Document)

* Management Compensatory Plan

** Indicates that the exhibit is being furnished with this report and not filed as part of ~~this annual report on Form 10-K.~~

~~(1) (2)~~ The response to this portion of Item 15 is included in this report under the captions “Financial Statements” and “Financial Statement Schedule” below, which is incorporated herein by reference.

~~(3)~~ ~~See “Index to Exhibits” immediately following the financial statement schedule.~~

~~(b)See “Index to Exhibits” immediately following the financial statement schedule.~~

~~(c)See “Financial Statements” and “Financial Statement Schedule.”~~

it.

Item 16. Form 10-K Summary

~~None~~

None.

SIGNATURES

Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934, the Registrant has duly caused this annual report on Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized.



	METHODE ELECTRONICS, INC.
	(Registrant)

	By:	/s/ RONALD L.G. TSOUMAS
	Ronald L.G. Tsoumas
	Chief Financial Officer
	(Principal Financial Officer)

Dated: June ~~20, 2019~~

23, 2022

Pursuant to the requirements of the Securities Exchange Act of 1934, this ~~report~~ annual report on Form 10-K has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.



Signature	Title	Date

/~~s /~~s/ WALTER J. ASPATORE	Chairman of the Board	June ~~20, 2019~~23, 2022
Walter J. Aspatore

/~~s / CHRISTOPHER J. HORNUNG~~s/ LAWRENCE B. SKATOFF	Vice Chairman of the Board	June ~~20, 2019~~23, 2022
~~Christopher J. Hornung~~ Lawrence B. Skatoff

/s/ DONALD W. DUDA	Chief Executive Officer, President & Director	June ~~20, 2019~~23, 2022
Donald W. Duda	(Principal Executive Officer)

/~~s /~~s/ RONALD L.G. TSOUMAS	Chief Financial Officer	June ~~20, 2019~~23, 2022
Ronald L.G. Tsoumas	(Principal Financial Officer)

/~~s /~~s/ AMIT N. PATEL	Chief Accounting Officer	June ~~20, 2019~~23, 2022
Amit N. Patel	(Principal Accounting Officer)

/~~s / MARTHA GOLDBERG ARONSON~~s/ DAVID P. BLOM	Director	June ~~20, 2019~~23, 2022
~~Martha Goldberg Aronson~~ David P. Blom

/s/ THERESE M. BOBEK	Director	June 23, 2022
Therese M. Bobek

/s/ BRIAN J. CADWALLADER	Director	June ~~20, 2019~~23, 2022
Brian J. Cadwallader

/~~s /~~s/ BRUCE K. CROWTHER	Director	June ~~20, 2019~~23, 2022
Bruce K. Crowther

/s/ DARREN M. DAWSON	Director	June ~~20, 2019~~23, 2022
Darren M. Dawson

/~~s / ISABELLE C. GOOSSEN~~s/ JANIE GODDARD	Director	June ~~20, 2019~~23, 2022
~~Isabelle C. Goossen~~ Janie Goddard

/s s/ MARY A. LINDSEY	Director	June 23, 2022
Mary A. Lindsey

/s/ ANGELO V. PANTALEO	Director	June 23, 2022
Angelo V. Pantaleo
/s/ MARK D. SCHWABERO	Director	June ~~20, 2019~~23, 2022
Mark D. Schwabero

~~/s / PAUL G. SHELTON~~	~~Director~~	~~June 20, 2019~~
~~Paul G. Shelton~~

~~/s / LAWRENCE B. SKATOFF~~	~~Director~~	~~June 20, 2019~~
~~Lawrence B. Skatoff~~

METHODE ELECTRONICS, INC. AND SUBSIDIARIES

~~FORM 10-K~~

~~ITEM 15 (a) (1) and (2)~~

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

AND FINANCIAL STATEMENT SCHEDULE



~~(1)~~	Consolidated Financial ~~Statements~~ Statements:	Page

	Report of Independent Registered Public Accounting Firm (PCAOB ID: 42)	F-2

	Consolidated Balance Sheets — April ~~27, 2019~~30, 2022 and ~~April 28, 2018~~May 1, 2021	~~F-4~~ F-5

	Consolidated Statements of Income — Years Ended April ~~27, 2019, April 28, 2018~~30, 2022, May 1, 2021 and ~~April 29, 2017~~May 2, 2020	~~F-5~~ F-6

	Consolidated Statements of Comprehensive Income — Years Ended April ~~27, 2019, April 28, 2018~~30, 2022, May 1, 2021 and ~~April 29, 2017~~May 2, 2020	~~F-6~~ F-7

	Consolidated Statements of Shareholders’ Equity — Years Ended April ~~27, 2019, April 28, 2018~~30, 2022, May 1, 2021 and ~~April 29, 2017~~May 2, 2020	~~F-7~~ F-8

	Consolidated Statements of Cash Flows — Years Ended April ~~27, 2019, April 28, 2018~~30, 2022, May 1, 2021 and ~~April 29, 2017~~May 2, 2020	~~F-8~~ F-9

	Notes to Consolidated Financial Statements	~~F-9~~ F-10

~~(2)~~	Consolidated Financial Statement ~~Schedule~~ Schedule:

	Schedule II — Valuation and Qualifying Accounts	~~F-38~~ F-34

All other schedules for which provision is made in the applicable accounting regulation of the Securities and Exchange Commission are not required under the related instructions or are immaterial and, therefore, have been omitted.

F-1

Table of Contents

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of Methode Electronics, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Methode Electronics, Inc. and subsidiaries ~~(the~~(the Company) as of April ~~27, 2019~~30, 2022 and ~~April 28, 2018,~~May 1, 2021, the related consolidated statements of income, comprehensive income, shareholders' equity and cash flows for each of the three years in the period ended April ~~27, 2019,~~30, 2022, and the related notesand financial statement schedule listed in the Index at Item 15(a)(2) (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at April ~~27, 2019~~30, 2022 and ~~April 28, 2018,~~May 1, 2021, and the results of its operations and its cash flows for each of the three years in the period ended April ~~27, 2019,~~30, 2022, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of April ~~27, 2019,~~30, 2022, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework)and our report dated June ~~20, 2019~~23, 2022 expressed an unqualified opinion thereon.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the account or disclosure to which it relates.

Goodwill Impairment Assessment

Description of the Matter

At April 30, 2022, the balance of the Company’s goodwill was $233.0 million. As discussed in Note 7 to the consolidated financial statements, goodwill is tested for impairment at least annually or when impairment indicators are present at the reporting unit.

Auditing management’s assessment of goodwill impairment requires judgment to evaluate the effects of macroeconomic and industry conditions on the fair value of the reporting units. The fair value estimate can be sensitive to significant assumptions such as revenue growth rates, gross profit, and the discount rate. The estimate also includes assumptions related to the terminal growth rate, capital expenditures, working capital levels, and other market participant assumptions.

F-2

How We Addressed the Matter in Our Audit

We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s goodwill impairment assessment process. This included testing controls over management’s assessment of qualitative factors and review of the prospective financial information and other key assumptions used in the valuation model as well as controls over the carrying value of the reporting units.

To test the goodwill impairment assessment, our audit procedures included, among others, considering existing events and circumstances in evaluating the Company’s assessment of qualitative factors, evaluating the Company's use of the income approach, testing the significant assumptions described above used to develop the prospective financial information, and testing the completeness and accuracy of the underlying data. For example, we compared certain qualitative assessment considerations and significant assumptions to current industry, market and economic trends. We also compared significant assumptions to historical performance, and other guideline companies within the same industry. We performed a sensitivity analysis of the significant assumptions when necessary to evaluate the change in the fair value of the reporting units resulting from changes in the assumptions. We also assessed the historical accuracy of management’s forecasting process and involved our valuation specialists to assist in testing certain significant assumptions in the fair value estimate.

/s/ Ernst & Young LLP

We have served as the Company’s auditor since 1966.

Chicago, Illinois

June ~~20, 2019~~

23, 2022

F-3

Table of Contents

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of Methode Electronics, Inc.

Methode Electronics, Inc. (the ~~"Company"~~“Company” or ~~"Methode"~~“Methode”) is a leading global ~~manufacturer~~supplier of ~~component~~custom engineered solutions with sales, engineering and ~~subsystem devices with~~ manufacturing ~~design~~locations in North America, Europe, Middle East and testing facilities in Belgium, Canada, China, Egypt, Germany, India, Italy, Lebanon, Malta, Mexico, the Netherlands, Singapore, Switzerland, the United Kingdom and the United States. The Company's primary manufacturing facilities are located in Dongguan and Shanghai, China; Cairo, Egypt; Mriehel, Malta; and Monterrey and Fresnillo, Mexico.Asia. The Company designs, ~~manufactures~~engineers and produces mechatronic products for Original Equipment Manufacturers (“OEMs”) utilizing its broad range of technologies for user interface, light-emitting diode (“LED”) lighting system, power distribution and sensor applications.

The Company’s solutions are found in the end markets ~~devices employing electrical, radio remote control, electronic, wireless~~of transportation (including automotive, commercial vehicle, e-bike, aerospace, bus and ~~sensing technologies.~~rail), cloud computing infrastructure, construction equipment, consumer appliance and medical devices.

Financial reporting periods. The Company maintains its financial records on the basis of a 52 or 53-week fiscal year ending on the Saturday closest to April 30. Fiscal 2022 and 2021 represented 52 weeks and ended on April 30, 2022 and May 1, 2021, respectively. Fiscal 2020 represented 53 weeks and ended on May 2, 2020. The following discussions of comparative results among periods should be reviewed in that context.

Impact of the COVID-19 pandemic. The COVID-19 pandemic and the ongoing measures to reduce its spread have negatively impacted the global economy, disrupted consumer and customer demand and global supply chains, and resulted in manufacturing inefficiencies and increased freight costs due to global capacity constraints. The Company expects that the global health crisis caused by the COVID-19 pandemic will continue to negatively impact its business and results of operations for the foreseeable future. The extent of the impact will depend on a number of evolving and uncertain factors, including the duration and spread of COVID-19 (and its variants), the rate of vaccinations, actions taken by governmental authorities to further restrict business operations and social activity and impose travel restrictions, shifting consumer demand, the ability of the Company’s supply chain to deliver in a timely and cost-effective manner, the ability of the Company’s employees and manufacturing facilities to operate efficiently and effectively, the continued viability and financial stability of the Company’s customers and suppliers and future access to capital.

The Company continues to experience business interruptions, including customer shutdowns and increased material and logistics costs, labor shortages, and most significantly, impacts from the worldwide semiconductor supply shortage. The semiconductor supply shortage is due, in part, to increased demand across multiple industries, including the automotive industry, resulting in a slowdown in their production schedules. The semiconductor supply shortage is also impacting the Company’s supply chain and its ability to meet demand at some of its non-automotive customers. The Company expects this semiconductor shortage will have a continued impact on its operating results and financial condition in fiscal 2023.

Various government programs have been enacted to provide assistance to businesses impacted by the COVID-19 pandemic. The amount of assistance the Company received was $10.0 million, $11.1 million and $1.7 million in fiscal 2022, fiscal 2021 and fiscal 2020, respectively, and has been reported in other income, net in the consolidated statements of income.

The Company assessed certain accounting matters that require consideration of forecasted financial information, including, but not limited to, its allowance for credit losses, the carrying value of the Company’s goodwill, identifiable intangible assets and other long-lived assets, and valuation allowances in context with the information reasonably available to the Company and the unknown future impacts of the COVID-19 pandemic as of April 30, 2022 and through the date of this report. As a result of these assessments, the Company concluded that there were no impairments or material increases in credit allowances or valuation allowances that impacted the Company’s consolidated financial statements as of April 30, 2022 and for the year ended April 30, 2022. However, the Company’s future assessment of the magnitude and duration of the COVID-19 pandemic, as well as other factors, could result in material impacts to its consolidated financial statements in future reporting periods.

Basis of ~~Presentation.~~ presentation. The ~~Company's~~Company’s consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the ~~U.S. ("GAAP"~~United States (“GAAP”).

Principles of ~~Consolidation.~~consolidation. The consolidated financial statements include the accounts and operations of the Company and its subsidiaries. All significant intercompany ~~accounts~~balances and transactions have been ~~eliminated.~~eliminated in consolidation.

Use of estimates. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates.

~~Financial Reporting Periods.~~ The Company maintains its financial records on the basis of a 52 or 53 week fiscal year ending on the Saturday closest to April 30. Fiscal 2019 ended on April 27, 2019, fiscal 2018 ended on April 28, 2018 and fiscal 2017 ended on April 29, 2017. Fiscal 2019, fiscal 2018 and fiscal 2017 represent 52 weeks of results.

Cash and ~~Cash Equivalents.~~cash equivalents. Cash and cash equivalents ~~include all~~consist of cash and highly liquid investments with a maturity of three months or less. Highly liquid investments include money market funds which are classified within Level 1 of the fair value hierarchy. As of April 30, 2022, the Company had a balance of $40.0 million in money market accounts. The Company did 0t have any money market accounts as of May 1, 2021.

F-10

METHODE ELECTRONICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Accounts ~~Receivable~~receivable and ~~Allowance~~allowance for ~~Doubtful Accounts.~~doubtful accounts. Accounts receivable are customer obligations due under normal trade terms and are presented net of an allowance for doubtful accounts. The Company establishes an allowance for doubtful accounts based on the current expected credit loss impairment model. The Company applies a historical loss rate based on historic write-offs to aging categories. The historical loss rate is ~~based upon past transaction history with customers,~~adjusted for current conditions and reasonable and supportable forecasts of future losses as necessary. The Company may also record a specific reserve for individual accounts when it becomes aware of specific customer ~~payment practices and economic conditions. A change to~~circumstances, such as in the case of a bankruptcy filing or deterioration in the customer’s operating results or financial position. The allowance for doubtful accounts ~~may be required if a future event or other change in circumstances results in a change in~~balance was $1.0 million and $0.7 million as of April 30, 2022 and May 1, 2021, respectively.

Concentration of credit risk. Financial assets that subject the ~~estimate~~Company to concentration of credit risk consist primarily of cash equivalents, derivative contracts, and accounts receivable. The Company’s counterparties for cash equivalents and derivative contracts are banks and financial institutions that meet the ~~ultimate collectability~~Company’s requirement of ~~a specific account balance. The~~high credit standing. For accounts receivable, the Company generally does not require collateral for its accounts receivable. When a receivable balance is determined to be no longer collectible, it is written off against the allowance for doubtful accounts. Accounts receivable are generally due within 30 days to 45 days. Credit losses relating to all customers have not been material.

collateral. Sales to General Motors Company ~~("GM") and Ford Motor Company ("Ford"~~(“GM”) in the Automotive segment, either directly or through ~~their~~its tiered suppliers, represented a significant portion of the Company's business. As of April ~~27, 2019~~30, 2022 and ~~April 28, 2018, combined~~May 1, 2021, accounts receivable from GM ~~and Ford~~ (including tiered suppliers) were approximately ~~$65.2~~$42.0 million and ~~$83.8~~$54.9 million, respectively.

Inventories.Inventories are stated at the lower-of-cost or net realizable value. Cost is determined using the first-in, first-out method. Finished products and work-in-process inventories include direct material costs and direct and indirect manufacturing costs. The Company records reserves for inventory that may be obsolete or in excess of current and future market demand. ~~A summary of inventories is shown below:~~See Note 5, “Inventory” for additional information.

(Dollars in Millions) April 27,
2019 April 28,
2018
Finished Products $ 40.2
$ 15.4
Work in Process 9.4
14.6
Materials 67.1
54.1
Total Inventories $ 116.7
$ 84.1

~~F-9~~

~~METHODE ELECTRONICS, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

Property, ~~Plant~~plant and ~~Equipment.~~equipment. Property, plant and equipment are recorded at cost less accumulated depreciation, with the exception of assets acquired through acquisitions, which are initially recorded at fair value. Equipment acquired under a finance lease is ~~stated~~recorded at ~~cost. Maintenance and repair costs are expensed as incurred.~~the present value of the future minimum lease payments. Depreciation is ~~calculated~~computed using the straight-line method ~~using~~over the estimated useful lives of 5 to 40 years for buildings and building improvements and 3 to 15 years for machinery and equipment. ~~A summary~~Costs of ~~property, plant~~additions and ~~equipment is shown below:~~

(Dollars in Millions) April 27,
2019 April 28,
2018
Land $ 3.7
$ 0.8
Buildings and Building Improvements 81.2
69.2
Machinery and Equipment 390.7
364.7
Total Property, Plant and Equipment, Gross 475.6
434.7
Less: Accumulated Depreciation 283.7
272.5
Property, Plant and Equipment, Net $ 191.9
$ 162.2

~~Depreciation expense was $27.2 million, $22.5 million~~major improvements are capitalized, whereas maintenance and $22.0 million in fiscal 2019, fiscal 2018 and fiscal 2017, respectively. As of April 27, 2019 and April 28, 2018, capital expenditures recorded in accounts payable totaled $6.4 million and $9.0 million, respectively.

~~Income Taxes.~~ ~~Deferred tax assets and liabilities are determined based on differences between the financial reporting and tax basis of assets and liabilities and are measured using the enacted tax rates and laws~~repairs that ~~will be in effect when the differences are expected to reverse.~~

The Tax Cuts and Jobs Act (“U.S. Tax Reform”) includes a new global intangible low-taxed income (“GILTI”) provision which requires the Company to include foreign subsidiary earnings in its U.S. tax return starting in fiscal 2019. The FASB Staff Q&A, Topic 740 No. 5, "Accounting for Global Intangible Low-Taxed Income," states that an entity can make an accounting policy election to either recognize deferred taxes for temporary differences expected to reverse in future yearsdo not improve or provide for the tax expense in the year the tax is incurred. The Company has elected to recognize the tax on GILTI as a period expense in the period the tax is incurred and therefore has not included any deferred tax impacts of GILTI in its consolidated financial statements for its fiscal year ended April 27, 2019.

~~Revenue Recognition.~~ On April 29, 2018, the Company adopted Accounting Standards Codification ("ASC") 606, “Revenue from Contracts with Customers,” using the modified retrospective transition method. Under the new standard, recognition of revenue occurs when a customer obtains control of promised goods or services in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. The cumulative effect of initially applying the new standard was recorded as an adjustment to the opening balance of retained earnings. In accordance with the modified retrospective transition method, the historical information within the financial statements has not been restated and continues to be reported under the accounting standard in effect for those periods. As a result, the Company has disclosed the accounting policies in effect prior to April 29, 2018, as well as the policies it has applied starting April 29, 2018. See Note 2, "Revenue," for further details.

~~Periods prior to April 29, 2018~~

Revenue was recognized in accordance with ASC 605, "Revenue Recognition." Revenue was recognized upon either shipment or delivery (depending on shipping terms) of product to customers and is recorded net of returns, allowances, customer discounts, and incentives. Sales taxes collected from customers and remitted to governmental authorities were accounted for on a net (excluded from revenues) basis.

~~Periods commencing on or after April 29, 2018~~

The majority of the Company's revenue is recognized at a point in time. The Company has determined that the most definitive demonstration that control has transferred to a customer is physical shipment or delivery, depending on the contractual shipping terms, with the exception of consignment transactions. Consignment transactions are arrangements where the Company transfers product to a customer location but retains ownership and control of such product until it is used by the customer. Revenue for consignment arrangements is recognized upon the customer’s usage.

~~F-10~~

~~METHODE ELECTRONICS, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

Revenues associated with products which the Company believes have no alternative use, and where the Company has an enforceable right to payment, are recognized on an over time basis. In transition to ASC 606, the Company noted some customers ordered highly customized parts in which the Company was entitled to payment throughout the manufacturing process. In accordance with ASC 606, the Company has begun recognizing revenue over time for these customers as the performance obligation is satisfied. The Company believes the most faithful depiction of the transfer of goods to the customer is based on progress to date, which is typically smooth throughout the production process. As such, the Company recognizes revenue evenly over the production process through transfer of control to the customer.

In addition, customers typically negotiate annual price downs. Management has evaluated these price downs and determined that in some instances, these price downs give rise to a material right. In instances that a material right exists, a portion of the transaction price is allocated to the material right and recognized overextend the life of the ~~contract.~~asset are charged to expense as incurred. See Note 6, “Property, Plant and Equipment” for additional information.

Business combinations.The Company ~~has elected to treat shipping and handling costs as an activity necessary to fulfill~~accounts for business combinations using the performance obligation to transfer product to the customer and not as a separate performance obligation. Shipping and handling costs are estimated at quarter end in proportion to revenue recognized for transactions where actual costs are not yet known.

Across all products, the amount of revenue recognized corresponds to the related purchase order and is adjusted for variable consideration (such as discounts). Sales and other taxes collected concurrent with revenue-producing activities are excluded from revenue.

The Company’s performance obligations are typically short-term in nature. As a result, the Company has elected the practical expedient that provides an exemption from the disclosure requirements regarding information about remaining performance obligations on contracts that have original expected durations of one year or less.

~~Shipping and Handling Fees and Costs. Shipping and handling fees billed to customers are included in net sales, and the related costs are included in cost of products sold.~~

~~Foreign Currency Translation.~~ The functional currencies of the majority of the Company's foreign subsidiaries are their local currencies. The results of operations of these foreign subsidiaries are translated into U.S. dollars using average exchange rates during the year, while the assets and liabilities are translated using period-end exchange rates. Adjustments from the translation process are classified as a component of shareholders’ equity. Exchange gains and losses arising from transactions denominated in a currency other than the functional currency of the foreign subsidiary are included in the consolidated statements of income in other income. The amount of foreign currency gain or loss recognized was a loss of $1.3 million in fiscal 2019, a loss of $2.6 million in fiscal 2018, and a gain of $0.4 million in fiscal 2017.

~~Business Combinations.~~acquisition method. The purchase price of an acquired business is allocated to its identifiable assets and liabilities based on estimated fair values. ~~The excess of the purchase price over the amount allocated to the assets and liabilities, if any, is recorded as goodwill.~~ Determining the fair values of assets acquired and liabilities assumed requires management’s judgment, the utilization of independent appraisal firms and often involves the use of significant estimates and assumptions with respect to the timing and amount of future cash flows, market rate assumptions, actuarial assumptions, and appropriate discount rates, among other items. Goodwill represents the excess of the purchase price over the fair value of net assets acquired, including the amount assigned to identifiable intangible assets. Identifiable intangible assets with finite lives are amortized over their useful lives. Acquisition-related costs are expensed in the periods in which the costs are incurred. The results of operations of acquired businesses are included in the consolidated financial statements from the acquisition date.

~~Impairment of~~

Goodwill.Goodwill is not amortized but is tested for impairment on at least an annual basis. Goodwill is evaluated at the reporting unit level by comparing the fair value of the reporting unit with its carrying amount including goodwill. An impairment of goodwill exists if the carrying amount of the reporting unit exceeds its fair value. The impairment loss is the amount by which the carrying amount exceeds the reporting unit’s fair value, limited to the total amount of goodwill allocated to that reporting unit.

In ~~conducting its~~performing the goodwill impairment ~~testing,~~test, the Company may first ~~perform a~~assess qualitative ~~assessment of~~factors to determine whether it is more likely than not that the estimated fair value of a reporting ~~unit’s fair value~~unit is less than its carrying amount. ~~If not, no further goodwill impairment testing is required.~~ If it is more likely than not that a reporting unit’s fair value is less than its carrying amount, or if the Company elects not to perform a qualitative assessment of a reporting unit, the Company then compares the fair value of the reporting unit to the related net book value. IfSee Note 7, “Goodwill and Other Intangible Assets” for additional information regarding the ~~net book value~~Company’s goodwill impairment assessment for fiscal 2022.

Amortizable intangible assets. Amortizable intangible assets consist primarily of ~~a reporting unit exceeds its~~ fair ~~value, an impairment loss~~values assigned to customer relationships and trade names. Amortization is ~~measured~~recognized over the useful lives of the intangible assets, generally up to 20 years, using the straight-line method. See Note 7, “Goodwill and ~~recognized.~~Other Intangible Assets” for additional information.

~~Long-Lived Assets.~~

Impairment of long-lived assets. The Company ~~continually~~ evaluates whether events and circumstances have occurred which indicate that the remaining estimated useful lives of its intangible assets, excluding goodwill, and other long-lived assets, may warrant revision or that the remaining balance of such assets may not be recoverable. If impairment indicators exist, the Company performs an impairment analysis by comparing the undiscounted cash flows resulting from the use of the asset group to the carrying amount. If the carrying amount exceeds the undiscounted cash flows, an impairment loss is recognized based on the excess of the asset’s carrying amount over its fair value.

F-11

METHODE ELECTRONICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Pre-production costs related to long-term supply arrangements. The Company incurs pre-production tooling costs related to products produced for its customers under long-term supply arrangements. Engineering, testing and other costs incurred in the design and development of production parts are expensed as incurred, unless the costs are reimbursable by the customer. As of April 30, 2022 and May 1, 2021, the Company had $27.2 million and $25.0 million, respectively, of pre-production tooling costs related to customer-owned tools for which reimbursement is contractually guaranteed by the customer or for which the customer has provided a non-cancelable right to use the tooling.

Costs for molds, dies and other tools used in products produced for its customers under long-term supply arrangements for which the Company has title are capitalized in property, plant and equipment and amortized over the shorter of the life of the arrangement or over the estimated useful life of the assets. Company owned tooling was $14.6 million and $17.0 million as of April 30, 2022 and May 1, 2021, respectively.

Leases. The Company determines if an arrangement is a lease at inception. Right-of-use (“ROU”) assets represent the Company’s right to use an underlying asset for the lease term, and lease liabilities represent its obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of the Company’s leases do not provide an implicit rate, the Company estimates the incremental borrowing rate to discount the lease payments based on information available at lease commencement. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise such options. The Company utilizes certain practical expedients, including the election not to reassess its prior conclusions about lease identification, lease classification and initial direct costs, as well as the election not to separate lease and non-lease components for arrangements where the Company is a lessee. The Company elects to recognize a right-of-use asset and related lease liability for leases with a lease term of 12 months or less for all classes of underlying assets. Lease expense is recognized on a straight-line basis over the lease term. See Note 3, “Leases” for additional information.

Derivative financial instruments. The Company uses derivative financial instruments, including swaps and forward contracts, to manage exposures to changes in currency exchange rates and interest rates. The Company does not enter into or hold derivative financial instruments for trading or speculative purposes. See Note 8, “Derivative Financial Instruments and Hedging Activities” for additional information.

Income taxes. Income taxes are calculated using the asset and liability method, under which deferred tax assets and liabilities are determined based on temporary differences between the financial statement amounts and the tax basis of assets and liabilities using enacted tax rates in effect in the years in which the differences are expected to reverse. In assessing the realizability of deferred tax assets, the Company considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is primarily dependent upon the generation of future taxable income. In determining whether an uncertain tax position exists, the Company determines, based solely on its technical merits, whether the tax position is more likely than not to be sustained upon examination, and if so, a tax benefit is measured on a cumulative probability basis that is more likely than not to be realized upon the ultimate settlement. In determining the provision for income taxes for financial statement purposes, the Company makes certain estimates and judgments which affect its evaluation of the carrying value of its deferred tax assets, as well as its calculation of certain tax liabilities. See Note 11, “Income Taxes” for additional information.

Revenue recognition. Revenue is recognized in accordance with Accounting Standards Codification (“ASC”) 606, “Revenue from Contracts with Customers.”Revenue ismeasured based on consideration specified in a contract with a customer. The Company recognizes revenue when it satisfies a performance obligation by transferring control over a product or service to a customer. From time to time, customers may negotiate annual price downs. Management has evaluated these price downs and determined that in some instances, these price downs give rise to a material right. In instances that a material right exists, a portion of the transaction price is allocated to the material right and recognized over the life of the contract.

Shipping and handling fees and costs. Shipping and handling fees billed to customers are included in net sales, and the related costs are included in cost of products sold.

F-12

METHODE ELECTRONICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Restructuring expense. Restructuring expense includes costs directly associated with exit or disposal activities. Such costs include employee severance and termination benefits, asset impairment charges, contract termination fees, and other exit or disposal costs. Employee termination benefits are accrued upon the commitment to a termination plan and when the benefit arrangement is communicated to affected employees, or when liabilities are determined to be probable and estimable. Asset impairment charges relate to the impairment of ROU lease assets and equipment. Contract termination costs are recorded when notification of termination is given to the other party. See Note 4, “Restructuring” for additional information.

Foreign currency translation. The functional currencies of the majority of the Company’s foreign subsidiaries are their local currencies. The results of operations of these foreign subsidiaries are translated into U.S. dollars using average monthly rates, while the assets and liabilities are translated using period-end exchange rates. The resulting translation adjustments are recorded as a component of accumulated other comprehensive income (loss) (“AOCI”). Gains and losses arising from transactions denominated in a currency other than the functional currency, except certain long-term intercompany transactions, are included in the consolidated statements of income in other income, net.

Government grants. The Company recognizes grant income in other income, net in the consolidated statements of income when it is considered that there is reasonable assurance that the grant will be received and the necessary qualifying conditions, as stated in the grant agreement, are met. The international government grants are generally paid over a period of years and are recorded at amortized cost on the Company’s consolidated balance sheets. As of April 30, 2022 and May 1, 2021, grant receivables outstanding were $12.7 million and $18.6 million, respectively. The short-term and long-term portion of grant receivables are recorded on the consolidated balance sheets within accounts receivable, net and other long-term assets, respectively. Additionally, as of April 30, 2022 and May 1, 2021, the Company has no deferred grant income.

Research and ~~Development Costs~~development costs. Costs associated with the enhancement of existing products and the development of new products are charged to expense when incurred. Research and development expenses primarily relate to product engineering and design and development expenses and are classified as a component of cost of goods sold on the consolidated statements of income. Research and development costs were ~~$41.2~~$35.7 million, ~~$37.9~~$37.1 million and ~~$27.8~~$34.9 million for fiscal ~~2019,~~2022, fiscal ~~2018~~2021 and fiscal ~~2017,~~2020, respectively.

~~Stock-Based Compensation.~~

Stock-based compensation. The Company recognizes compensation expense for the cost of awards of equity compensation using a fair value method in accordance with ASC 718, ~~"Stock-based Compensation."~~“Stock-based Compensation.” See Note ~~5, "Shareholders’ Equity,"~~13, “Shareholders’ Equity” for additional ~~information on stock-based compensation.~~information.

Product ~~Warranty.~~ warranty. The Company’s warranties are standard, assurance-type warranties only. The Company does not offer any additional service or extended term warranties to its customers. As such, warranty obligations are accrued when its probable that a liability has been incurred and the related amounts are reasonably estimable.

~~Use of Estimates.~~ The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

~~Reclassifications.~~ ~~Certain prior period amounts have been reclassified to conform to the current year presentation.~~

Fair value measurement. ASC 820, “Fair Value ~~Measurements:~~ ~~Fair~~Measurement,” provides a framework for measuring fair value, which is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The ~~Company determines the~~ fair value hierarchy under ASC 820 requires an entity to maximize the use of ~~financial and non-financial~~observable inputs. The Company groups assets and liabilities ~~using the~~at fair value ~~hierarchy established by ASC 820, "Fair Value Measurement," which defines~~in three levels ~~of inputs that may be used to measure fair value,~~ as follows:

•

Level 1 - Quoted prices in active markets for identical assets or liabilities;

•

Level 2 - ~~Inputs other than quoted prices included within Level 1 that are either directly~~Observable inputs for similar assets or ~~indirectly observable;~~liabilities adjusted for terms specific to the asset or liability;

•

Level 3 - Unobservable inputs in which little or no market activity exists, requiring ~~an entity~~the Company to develop its own assumptions that market participants would use to value the asset or liability.

Assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurements. The Company reviews the fair value hierarchy classification on a quarterly basis. Changes to the observability of valuation inputs may result in a reclassification of levels for certain securities within the fair value hierarchy.

~~Fair Value of Other Financial Instruments.~~

The carrying values of the ~~Company's~~Company’s short-term financial instruments, including cash and cash equivalents, accounts receivable and accounts payable, approximate their fair values because of the short maturity of these instruments.

F-13

METHODE ELECTRONICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Recently ~~Issued~~Adopted Accounting Pronouncements

In ~~February 2018,~~December 2019, the Financial Accounting Standards Board ~~("FASB"~~(“FASB”) issued Accounting Standards Update ~~("ASU"~~(“ASU”) ~~No. 2018-02, "Income Statement-Reporting Comprehensive~~ 2019-12, “Income Taxes - Simplifying the Accounting for Income Taxes (Topic ~~220)~~740),” which simplifies the accounting for income taxes. The new guidance removes certain exceptions to the general principles in ASC 740, such as recognizing deferred taxes for equity investments, the incremental approach to performing intraperiod tax allocation and calculating income taxes in interim periods. The standard also simplifies accounting for income taxes under GAAP by clarifying and amending existing guidance, including the recognition of deferred taxes for goodwill, the allocation of taxes to members of a consolidated group and requiring that an entity reflect the effect of enacted changes in tax laws or rates in the annual effective tax rate computation in the interim period that includes the enactment date. The Company adopted ASU 2019-12 as of May 2, 2021, and the impact on its consolidated financial statements was not material.

In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848): ~~Reclassification~~Facilitation of ~~Certain Tax~~the Effects ~~from Accumulated Other Comprehensive Income." The amendments in~~of Reference Rate Reform on Financial Reporting.” ASU 2020-04 provides optional expedients and exceptions for applying GAAP to contract modifications and hedging relationships that reference LIBOR or another rate that is expected to be discontinued, subject to meeting certain criteria. ASU 2020-04 was effective upon issuance and the adoption of this update did not have a material impact on the Company's consolidated financial statements.

New Accounting Pronouncements Not Yet Adopted

In November 2021, the FASB issued ASU 2021-10, “Government Assistance (Topic 832),” which requires business entities to disclose information about transactions with a government that are ~~intended to address~~accounted for by applying a ~~specific consequence of U.S. Tax Reform~~grant or contribution model by ~~allowing a reclassification from accumulated other comprehensive income to retained earnings~~analogy (for example, International Financial Reporting Standards guidance in International Accounting Standard 20 or guidance on contributions for ~~stranded tax effects resulting from U.S. Tax Reform’s reduction~~not-for-profit entities in ASC 958-605). For transactions in the scope of the ~~U.S. federal corporate income tax rate.~~new standard, business entities will need to provide information about the nature of the transaction, including significant terms and conditions, as well as the amounts and specific financial statement line items affected by the transaction. The ~~ASU~~new guidance is effective for all entities for annual reporting periods beginning after December 15, 2018, with early adoption permitted, and is to be applied either in the period of adoption or retrospectively to each period in which the effect of the change in the U.S. federal corporate income tax rate is recognized. ASU 2018-02 will be effective in the first quarter of fiscal 2020. Management does not expect this ASU to have a material impact on the Company’s consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, “Leases,” which amended authoritative guidance on leases and is codified in ASC 842. The amended guidance requires lessees to recognize substantially all leases on their balance sheets as right-of-use (“ROU”) assets along with corresponding lease liabilities. The new standard requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification determines whether lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease. The new standard also requires increased disclosures to help financial statement users better understand the amount, timing, and uncertainty of cash flows arising from leases. The

~~F-12~~

~~METHODE ELECTRONICS, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

Company will adopt the standard on April 28, 2019 and will recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. Prior periods will not be restated.

The Company expects to elect the transition package of practical expedients, which permits it not to reassess under the new standard its prior conclusions about lease identification, lease classification and initial direct costs. The Company will also elect not to separate lease from non-lease components within the contract. To date, the Company has assessed its portfolio of leases and compiled a central repository of all active leases. The majority of the Company's global lease portfolio represents leases of real estate, such as manufacturing facilities, warehouses and buildings. The Company has been implementing new leasing software and is in the process of assessing the design of the future lease process and drafting a policy to address the new standard requirements.

While the Company continues to assess all the impacts of adoption, the Company estimates that it will recognize a ROU asset and corresponding lease liability of approximately $24 million to $29 million on its consolidated balance sheet.2021. The Company does not expect that the adoption of this standard will have ~~a material effect~~an impact on its consolidated ~~statements of income or cash flows.~~

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments-Credit Losses (Topic 326) - Measurement of Credit Losses on Financial Instruments.” The new standard requires the measurement and recognition of expected credit losses for financial assets held at amortized cost. It replaces the existing incurred loss impairment model with an expected loss methodology, which will result in more timely recognition of credit losses. The standard will be effective forstatements; however the Company expects to increase its disclosures with respect to government assistance beginning in ~~the first quarter~~fiscal 2023.

Note 2.Revenue

The Company generates revenue from manufacturing of ~~fiscal 2021. Management is currently assessing the impact~~products for customers in diversified global markets. The majority of the ~~new standard, but does not anticipate~~Company’s revenue is recognized at a point in time. The Company has determined that the ~~adoption of this standard will have~~most definitive demonstration that control has transferred to a ~~material impact~~customer is physical shipment or delivery, depending on the ~~manner in which it estimates the allowance~~contractual shipping terms, except for ~~doubtful accounts on its trade accounts receivable.~~

~~Recently Adopted Accounting Pronouncements~~

In January 2016, the FASB issued ASU No. 2016-01, "Financial Instruments - Overall: Recognition and Measurement of Financial Assets and Financial Liabilities." The new standard requires equity investments (except those accounted for under the equity method of accounting, or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income, requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes, requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset, and eliminates the requirement for public business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost. The standard was adopted on April 29, 2018 and did not have a material impact on the Company's consolidated financial statements.

In August 2016, the FASB issued ASU No. 2016-15, “Statement of Cash Flows (Topic 230) - Classification of Certain Cash Receipts and Cash Payments.” The amendments in this update provide guidance on eight specific cash flow presentation issues that have developed due to diversity in practice. The issues include, butconsignment transactions. Consignment transactions are not limited to, debt prepayment or extinguishment costs, contingent consideration payments made after a business combination, and proceeds from the settlement of insurance claims. The standard was adopted on April 29, 2018 and did not result in any changes in the reporting of cash receipts and cash payments in the Company’s consolidated statement of cash flows.

In May 2017, the FASB issued ASU No. 2017-09, "Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting." The amendments in this update provide guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. The standard was adopted on April 29, 2018 and did not have a material impact on the Company's consolidated financial statements.

2.~~Revenue~~

The Company is a global manufacturer of component and subsystem devices whose components are found in the primary end-markets of the aerospace, appliance, automotive, commercial vehicle, construction, consumer and industrial equipment, communications (including information processing and storage, networking equipment and wireless and terrestrial voice/data systems), medical, rail and other transportation industries. On April 29, 2018,arrangements where the Company ~~adopted ASC 606 along~~transfers product to a customer location but retains ownership and control of such product until it is used by the customer. Revenue for consignment arrangements is recognized upon the customer’s usage.

Revenue associated with ~~the related amendments using a modified retrospective approach to all contracts open as of that date. Upon adoption,~~products which the Company ~~recognized a $0.1 million increase to opening retained earnings. This adjustment was a result of modifying the~~

~~F-13~~

~~METHODE ELECTRONICS, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~Company's revenue recognition pattern for highly customized goods with~~believes have no alternative use ~~to over time recognition instead of point in time~~(such as highly customized parts), and for deferring revenue related to material rights that we provide to our customers. The overall impact to the Company's financial statements was immaterial. The Company has modified its controls to address the risks present under ASC 606.

Aswhere the Company has adopted ASC 606 using the modified retrospective approach, prior periods have not been restated, and as such they are presented under ASC 605. The impact of the changes in accounting policy on fiscal 2019 is provided below.

Fiscal Year Ended April 27, 2019
(Dollars in Millions) As Reported Adjustments Balance Under ASC 605
Net Sales $ 1,000.3
$ (24.2 ) $ 1,024.5
Cost of Products Sold $ 734.5
$ (24.2 ) $ 758.7
Total Inventories $ 116.7
$ (0.5 ) $ 117.2
Contract Assets $ 0.8
$ 0.8
$ —
Contract Liabilities $ 0.3
$ 0.3
$ —
Retained Earnings $ 545.2
$ 0.1
$ 545.1

~~Costs to Fulfill/Obtain a Contract~~

The Company incurs pre-production tooling costs related to products produced for customers under long-term supply agreements. The Company had $32.8 million and $20.5 million as of April 27, 2019 and April 28, 2018, respectively, of pre-production tooling costs related to customer-owned tools for which reimbursement is contractually guaranteed by the customer or for which the customer has provided a non-cancelablean enforceable right to ~~use the tooling. These costs~~payment, are ~~capitalized and~~ recognized into income upon acceptance. The Company concluded that pre-production tooling and engineering costs do not represent a promised good or service under ASC 606, and as such, reimbursements received are accounted for as a reimbursement of the expense, not revenue. This change resulted in tooling reimbursements of $24.2 million being recorded into cost of products sold in fiscal 2019.

~~The Company has not historically incurred material costs~~on an over time basis. Revenue is recognized based on progress to ~~obtain a contract. In the instances that costs to obtain contracts are incurred, the Company will capitalize and amortize those~~date, which is typically even over the ~~life~~production process through transfer of ~~the contract.~~

~~Contract Estimates~~

~~Due~~control to the nature of the work performed in completing certain performance obligations, the estimation of both total revenue and cost at completion includes a number of variables and requires significant judgment.

customer.

Estimating total contract revenue may require judgment as certain contracts contain pricing discount structures, early payment discounts or other provisions that can impact the transaction price. The Company generally estimates variable consideration utilizing the most likely amount to which ~~we expect~~it expects to be entitled. When the contract provides the customer with the right to return eligible products, the Company reduces revenue at the point of sale using current facts and historical experience by using an estimate for expected product returns. The Company adjusts these estimates at the earlier of when the most likely amount of consideration that is expected to be received changes or when the consideration becomes fixed. Accordingly, an increase or decrease to revenue is recognized at that time. The Company’s payment terms with its customers are typically 30-45 days from the time control transfers. As the Company’s standard payment terms are less than one year, the Company has elected the practical expedient ~~for~~under ASC 606 to not assess whether a contract has a significant financing ~~components, allowing~~component.

F-14

METHODE ELECTRONICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Costs to fulfill/obtain a contract

The Company incurs pre-production tooling costs related to products produced for customers under long-term supply arrangements. These costs are capitalized and recognized into income upon acceptance. The Company concluded that pre-production tooling and engineering costs do not represent a promised good or service under ASC 606, and as such, reimbursements received are accounted for as a reimbursement of the expense, not revenue.

The Company has not historically incurred material costs to obtain a contract. In the instances that costs to obtain contracts are incurred, the Company to not adjust the promised amount of consideration for the effects of a financing component when payment terms are within one year from the time a performance obligation is satisfied. The Company's customers' payment terms are typically 30-45 days from the time control transfers.

~~Certain of the Company's contracts contain annual contractually-guaranteed price reductions that grant the customer the right to purchase products at decreased prices throughout~~will capitalize and amortize those over the life of the contract. Most of these contractual price reductions are merely the result of efficiencies in the production process being passed down to our customers. For certain of these price reductions, however, the amount of the reduction cannot be attributed entirely to production efficiencies gained. In these cases, the annual price-downs are considered to be material rights as the customer, as part of their current contract, is purchasing an option that they would not have received without the contract to purchase future product. When a contract contains a material

~~F-14~~

~~METHODE ELECTRONICS, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

right, a portion of the transaction price is allocated to the material right for which revenue recognition is deferred until the customer exercises its option. The standalone selling price for a material right used to allocate the transaction price is determined at contract inception by calculating the portion of the option purchased relative to the estimated total amount of incremental value the customer will likely earn, based on historical data, customer forecast communications, current economic information and industry trends. The standalone selling price of a material right is not adjusted prior to customer exercise or option expiration.

Estimating the total expected costs related to contracts also requires significant judgment. In cases where the Company is recognizing revenue over time, the requirement is to record a proportionate amount of the costs of production as well. As part of this process, management considers the progress towards completion of the performance obligation, the length of time necessary to complete the performance obligation and the historical costs incurred in the manufacture of similar products, among other variables.

The Company has elected the portfolio approach practical expedient to estimate the amount of revenue to recognize for certain contracts which require over time revenue recognition. Such contracts are grouped together either by revenue stream, customer or product. Each portfolio of contracts is grouped together based on having similar characteristics. The portfolio approach is utilized only when the result of the accounting is not expected to be materially different than if applied to individual contracts. For each portfolio of contracts, the respective work in process and/or finished goods inventory

Contract balances ~~are identified and the portfolio-specific margin is applied to estimate the pro-rata portion of revenue earned in relation to the costs incurred.~~

Adjustments due to any of the factors above to net sales, cost of sales and the related impact to operating income are recognized as necessary in the period they become known. The resultant impacts from these changes in estimates are recognized on a cumulative catch-up basis, which recognizes in the current period the cumulative effect of the changes on both current and prior periods.

~~Contract Balances~~

The Company receives payment from customers based on the contractual billing schedule and specific performance requirements established in the contract. Billings are recorded as accounts receivable when an unconditional right to the contractual consideration exists. A contract asset is an entity’s right to consideration in exchange for goods or services that the entity has transferred to a customer. A contract liability exists when the Company has received consideration, or the amount is due from the customer in advance of revenue recognition. Contract assets and contract liabilities are recognized in other current assets and other liabilities, respectively, in the Company's consolidated balance sheets.

Unbilled ~~Receivables (Contract Assets)~~ receivables (contract assets) - Pursuant to the ~~over time~~over-time revenue recognition model, revenue may be recognized prior to the customer being invoiced. An unbilled receivable is recorded to reflect revenue that is recognized over time. Unbilled receivables were ~~$0.8~~$0.4 million and $0.6 million as of ~~both~~ April ~~27, 2019~~30, 2022 and ~~April 28, 2018.~~May 1, 2021, respectively. During fiscal ~~2019, $0.8~~2022, $0.6 million of previously unbilled receivables were recorded into accounts receivable. There were no0 impairments of contract assets as of April ~~27, 2019.~~

30, 2022.

Deferred ~~Revenue (Contract Liabilities)~~ revenue (contract liabilities) - For certain of the price reductions offered by the Company, the amount of the reduction cannot be attributed entirely to production efficiencies gained. In these cases, the annual price-downs are considered to be material rights as the customer, as part of their current contract, are purchasing an option that they would not have received without the contract to purchase future product. When a contract contains a material right, a portion of the transaction price is allocated to the material right for which revenue recognition is deferred until the customer exercises its option. Deferred revenue was ~~$0.3~~$0.2 million and ~~$0.2~~$0.3 million as of April ~~27, 2019~~30, 2022 and ~~April 28, 2018,~~May 1, 2021, respectively. ~~No previously~~Previously deferred revenue of $0.1 million was recorded into revenue during fiscal ~~2019.~~

~~F-15~~

~~METHODE ELECTRONICS, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

2022.

Disaggregated ~~Revenue Information~~

revenue information

The ~~Company views the~~ following ~~disaggregated disclosures as useful to understanding the composition~~table represents a disaggregation of revenue ~~recognized during the respective reporting period. Geographic net~~from contracts with customers by segment and geographical location. Net sales are ~~determined~~attributed to regions based on ~~sales from its various operational locations.~~the location of production. Though revenue recognition patterns and contracts are generally consistent, the amount, timing and uncertainty of revenue and cash flows may vary in each reportable segment due to geographic and economic factors.

F-15

METHODE ELECTRONICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


	Fiscal Year Ended April 30, 2022
(in millions)	Automotive		Industrial		Interface		Medical		Total
Geographic net sales:
North America	$	400.9	$	177.2	$	59.3	$	4.1	$	641.5
EMEA		216.5		80.8		—		—		297.3
Asia		164.1		60.1		0.5		0.1		224.8
Total net sales	$	781.5	$	318.1	$	59.8	$	4.2	$	1,163.6
Timing of revenue recognition:
Goods transferred at a point in time	$	758.4	$	318.1	$	59.8	$	4.2	$	1,140.5
Goods transferred over time		23.1		—		—		—		23.1
Total net sales	$	781.5	$	318.1	$	59.8	$	4.2	$	1,163.6

	Fiscal Year Ended May 1, 2021
(in millions)	Automotive		Industrial		Interface		Medical		Total
Geographic net sales:
North America	$	406.4	$	142.9	$	61.0	$	2.7	$	613.0
EMEA		212.3		68.2		—		—		280.5
Asia		137.0		56.8		0.6		0.1		194.5
Total net sales	$	755.7	$	267.9	$	61.6	$	2.8	$	1,088.0
Timing of revenue recognition:
Goods transferred at a point in time	$	722.1	$	267.9	$	61.6	$	2.8	$	1,054.4
Goods transferred over time		33.6		—		—		—		33.6
Total net sales	$	755.7	$	267.9	$	61.6	$	2.8	$	1,088.0

Customer Concentration

Fiscal Year Ended April 27, 2019
(Dollars in Millions) Auto Industrial Interface Medical Total
Geographic Net Sales:
U.S. $ 373.0
$ 110.3
$ 56.1
$ 1.1
$ 540.5
Malta 116.4
31.8
0.3
—
148.5
China 78.2
35.3
0.2
—
113.7
Canada 87.8
13.8
—
—
101.6
Other 79.3
15.6
1.1
—
96.0
Total Net Sales $ 734.7
$ 206.8
$ 57.7
$ 1.1
$ 1,000.3

Timing of Revenue Recognition:
Goods Transferred at a Point in Time $ 704.4
$ 206.8
$ 57.7
$ 1.1
$ 970.0
Goods Transferred Over Time 30.3
—
—
—
30.3
Total Net Sales $ 734.7
$ 206.8
$ 57.7
$ 1.1
$ 1,000.3

~~Material Customers~~

Sales to GM ~~and Ford~~ in the Automotive segment, either directly or through ~~their~~its tiered suppliers, ~~represented a~~are shown below.


	Fiscal Year Ended
	April 30, 2022			May 1, 2021			May 2, 2020
Percentage of net sales:
GM		23.3	%		27.5	%		26.8	%

Note 3.Leases

The Company leases real estate, automobiles and certain equipment under both operating and finance leases. The Company does not have any significant ~~portion~~arrangements where it is the lessor. The majority of the Company's ~~business. Net sales~~global lease portfolio represents leases of real estate, such as manufacturing facilities, warehouses and buildings. As of April 30, 2022, the Company's leases have remaining lease terms of up to GM10.3 years, some of which include optional renewals or terminations, which are considered in the Company’s assessments when such options are reasonably certain to be exercised. Any variable payments related to the lease will be recorded as lease expense when and ~~Ford approximated 35.5% and 11.6%~~as incurred. The Company’s lease payments are largely fixed. As of consolidated net sales, respectively, in fiscal 2019, 43.3% and 12.3% of consolidated net sales, respectively, in fiscal 2018 and 49.6% and 9.3% of consolidated net sales, respectively, in fiscal 2017.

3.~~Acquisitions~~

~~Fiscal 2019 Acquisition~~

~~Grakon Parent, Inc. ("Grakon")~~

~~On September 12, 2018,~~April 30, 2022, the operating leases that the Company ~~acquired 100%~~has signed but have not yet commenced are immaterial.

In addition to the operating lease assets presented on the consolidated balance sheets, assets under finance leases of ~~the stock of Grakon for $422.1~~$0.7 million ~~in cash, net of cash acquired. The business, headquartered in Seattle, Washington, is a manufacturer of custom designed lighting solutions~~ and highly styled engineered components. Grakon’s manufacturing capabilities and products help diversify the Company's product offerings and expand the Industrial segment, which is a key component of the Company's strategic direction. The accounts and transactions of Grakon have been$0.7 million are included in property, plant and equipment, net on the ~~Automotive~~consolidated balance sheets as of April 30, 2022 and ~~Industrial segments~~May 1, 2021, respectively. Finance lease obligations were $0.8 million and $1.0 million as of April 30, 2022 and May 1, 2021, respectively, and are split between other accrued expenses for the short-term portion and other long-term liabilities for the long-term portion on the consolidated balance sheets. The Company had an immaterial amount of finance lease expense in the ~~consolidated financial statements from the effective date~~years ended April 30, 2022 and May 1, 2021.

The components of ~~the acquisition. For goodwill impairment testing purposes, Grakon has been included in the Company's North American Automotive and Grakon Industrial reporting units.~~

lease expense were as follows:


	Fiscal Year Ended
	April 30, 2022		May 1, 2021		May 2, 2020
(in millions)	(52 Weeks)		(52 Weeks)		(53 Weeks)
Lease cost:
Operating lease cost	$	8.9	$	8.4	$	9.0
Variable lease cost		1.6		1.6		1.3
Total lease cost	$	10.5	$	10.0	$	10.3

F-16

METHODE ELECTRONICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Supplemental cash flow and other information related to operating leases was as follows:


	Fiscal Year Ended
	April 30, 2022			May 1, 2021			May 2, 2020
(in millions)	(52 Weeks)			(52 Weeks)			(53 Weeks)
Operating cash flows:
Cash paid related to operating lease obligations, including lease termination payment	$	10.8		$	9.3		$	8.7
Non-cash activity:
Right-of-use assets obtained in exchange for lease obligations	$	7.7		$	5.7		$	5.5
Weighted-average remaining lease term	5.3 years			5.0 years			5.7 years
Weighted-average discount rate		4.4	%		4.6	%		4.7	%

~~The Company has not yet completed the process~~

Maturities of ~~estimating the fair value of the assets acquired and~~operating lease liabilities assumed. Accordingly, the Company's preliminary estimates and the allocation of the purchase price to the assets acquired and liabilities assumed may change as the Company completes the process, which would likely impact the Company's allocation of the purchase price to goodwill. The primary fair value estimates considered preliminary are contingencies and income tax-related items. Based on the Company's preliminary allocation of the purchase price, revised as of April ~~27, 2019, goodwill decreased $2.8~~30, 2022, are shown below:


(in millions)
Fiscal Year:
2023	$	6.5
2024		4.8
2025		2.5
2026		1.7
2027		1.5
Thereafter		7.0
Total lease payments		24.0
Less: imputed interest		(3.2	)
Present value of lease liabilities	$	20.8

Note 4. Restructuring

The Company continually monitors market factors and industry trends and takes restructuring actions to reduce overall costs and improve future operational profitability as appropriate. Restructuring actions generally result in charges for employee termination benefits, plant closures, asset impairments and contract termination costs.

In fiscal 2022, the Company initiated a restructuring plan to consolidate one of its operations within the Industrial segment in response to logistics and tariff issues. This action resulted in a facility shutdown and consolidation of activities into an existing location. In fiscal 2022, the Company recognized $3.6 million ~~from the preliminary amount reported in the Company's consolidated financial statements as~~ of ~~January 26, 2019. The revised preliminary allocation of the purchase price to the fair values of the assets acquired and liabilities assumed were:~~

(Dollars in Millions)
Cash $ 6.9
Accounts Receivable 36.1
Inventory 30.8
Prepaid Expenses and Other Current Assets 1.6
Intangible Assets 221.9
Goodwill 175.3
Pre-production Costs 1.5
Property, Plant and Equipment 16.2
Accounts Payable (19.4 )
Accrued Employee Liabilities (4.4 )
Other Accrued Expenses (7.5 )
Income Tax Payable (0.7 )
Deferred Income Tax Liability (29.3 )
Total Purchase Price $ 429.0

~~The following table presents details of the intangible assets acquired:~~

(Dollars in Millions) Fair Value at Date of Acquisition Amortization Period
Customer Relationships and Agreements - Significant Customer $ 57.0
19.5 years
Customer Relationships and Agreements - All Other Customers 125.0
19.5 years
Technology Licenses 17.7
11.7 years
Trade Names 22.2
8.5 years
Total $ 221.9

The Company's consolidated statement of income for fiscal 2019 included approximately seven and a half months of the operating results of Grakon, which was comprised of net sales of $122.8 million and income before income taxes of $17.7 million.

~~Acquisition-related~~restructuring costs, of ~~$15.4 million were incurred in relation to the acquisition of Grakon for fiscal 2019, of~~ which ~~$9.8~~$1.3 million was ~~reported~~recorded in cost of products sold and $2.3 million was recorded in selling and administrative ~~expenses~~expenses.

In fiscal 2021, the Company initiated certain restructuring actions in response to the adverse impacts from the COVID-19 pandemic. These actions included plant consolidations and ~~$5.6~~workforce reductions in the Automotive, Industrial and Interface segments. In fiscal 2021, the Company recognized $8.2 million of restructuring costs, of which $4.8 million was ~~reported~~recorded in ~~costs~~cost of products sold onand $3.4 million was recorded in selling and administrative expenses.

Employee termination benefits are accrued upon the ~~consolidated statements~~commitment to a termination plan and when the benefit arrangement is communicated to affected employees, or when liabilities are determined to be probable and estimable. Asset impairment charges relate to the impairment of ~~income.~~

~~As part~~ROU lease assets and equipment. Contract termination costs are recorded when notification of termination is given to the other party. The following is a rollforward of the ~~acquisition of Grakon~~Company’s restructuring activity in fiscal ~~2019, the Company recorded goodwill~~2022:


					Utilization
(in millions)	Accrual as of May 1, 2021		YTD charges		Cash			Non-cash			Accrual as of April 30, 2022
Employee termination benefits	$	0.7	$	0.4	$	(1.0	)	$	—		$	0.1
Asset impairment charges		—		3.1		—			(3.1	)		—
Contract termination costs		0.5		0.1		(0.6	)		—			—
Total	$	1.2	$	3.6	$	(1.6	)	$	(3.1	)	$	0.1

F-17

Table of $175.3 million, of which $36.9 million is deductible for income taxes.

~~Fiscal 2018 Acquisitions~~

~~Procoplast S.A. ("Procoplast")~~

On July 27, 2017, the Company acquired 100% of the stock of Procoplast for $22.2 million in cash, net of cash acquired. The business, located near the Belgian-German border, is an independent manufacturer of automotive assemblies. The

~~F-17~~

Contents

METHODE ELECTRONICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The table below presents restructuring costs by reportable segment:


	Fiscal Year Ended
(in millions)	April 30, 2022		May 1, 2021
Automotive	$	0.2	$	6.2
Industrial		3.4		1.0
Interface		—		0.7
Medical		—		—
Eliminations/Corporate		—		0.3
Total restructuring costs	$	3.6	$	8.2

~~accounts and transactions~~

Estimates of ~~Procoplast have been included~~restructuring costs are based on information available at the time such charges are recorded. Due to the inherent uncertainty involved in ~~the Automotive segment in the consolidated financial statements~~estimating restructuring costs, actual amounts paid for such activities may differ from ~~the effective date of the acquisition. For goodwill impairment testing purposes, Procoplast is included in the Company's European Automotive reporting unit.~~

~~During the fourth quarter of fiscal 2018,~~amounts initially recorded. Accordingly, the Company ~~completed the allocation~~may record revisions of ~~the purchase price to the assets acquired~~previous estimates by adjusting previously established accruals. The Company may take additional restructuring actions in future periods based upon market conditions and ~~liabilities assumed. The final allocation~~industry trends.

Note 5. Inventory

A summary of ~~the purchase price to the fair values~~inventories is shown below:


(in millions)	April 30, 2022		May 1, 2021
Finished products	$	31.8	$	24.8
Work in process		12.9		14.0
Raw materials		113.8		85.4
Total inventories	$	158.5	$	124.2

Note 6.Property, Plant and Equipment

A summary of ~~the assets acquired and liabilities assumed was:~~

(Dollars in Millions)
Cash $ 1.3
Accounts Receivable 7.4
Inventory 3.5
Intangible Assets 19.2
Goodwill 6.8
Pre-production Costs 2.3
Property, Plant and Equipment 23.8
Accounts Payable (4.9 )
Accrued Employee Liabilities (0.8 )
Other Accrued Expenses (0.7 )
Income Taxes Payable (0.6 )
Short-term Debt (3.2 )
Other Long-term Liabilities (2.1 )
Long-term Debt (20.6 )
Deferred Income Tax Liability (7.9 )
Total Purchase Price $ 23.5

~~As part of the acquisition of Procoplast in fiscal 2018, the Company recorded goodwill of $6.8 million, none of which is deductible for income taxes.~~

~~The following table presents details of the intangible assets acquired:~~

(Dollars in Millions) Fair Value at Date of Acquisition Amortization Period
Customer Relationships and Agreements - Significant Customer $ 12.3
17.0 years
Customer Relationships and Agreements - All Other Customers 2.8
11.5 years
Technology Licenses 2.1
8.5 years
Trade Names 2.0
8.5 years
Total $ 19.2

Acquisition-related costs of $1.3 million were incurred in relation to the acquisition of Procoplast in fiscal 2018, of which $1.1 million was reported in selling and administrative expenses and $0.2 million was reported in costs of products sold on the consolidated statements of income.

~~F-18~~

~~METHODE ELECTRONICS, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~Pacific Insight Electronics Corp. ("Pacific Insight")~~

On October 3, 2017, the Company acquired 100% of the outstanding common shares of Pacific Insight for $108.7 million in cash, net of cash acquired. Pacific Insight, headquartered in Canada, is a global solutions provider offering design, development, manufacturing and delivery of lighting and electronic products and full-service solutions to the automotive and commercial vehicle markets. Its technology in LED-based ambient and direct lighting expands the Company's presence within the automotive interior, as well as augments the Company's efforts in overhead console and other areas. The accounts and transactions of Pacific Insight have been included in the Automotive segment in the consolidated financial statements from the effective date of the acquisition. For goodwill impairment testing purposes, Pacific Insight is included in the Company's North American Automotive reporting unit.

During the fourth quarter of fiscal 2018, the Company completed the allocation of the purchase price to the assets acquired and liabilities assumed. The final allocation of the purchase price to the fair values of the assets acquired and liabilities assumed was:

(Dollars in Millions)
Cash $ 4.9
Accounts Receivable 18.3
Inventory 13.0
Prepaid Expenses and Other Current Assets 0.3
Income Taxes Receivable 1.2
Intangible Assets 40.1
Goodwill 50.4
Pre-production Costs 0.8
Property, Plant and Equipment 13.2
Accounts Payable (7.9 )
Accrued Employee Liabilities (0.8 )
Other Accrued Expenses (2.9 )
Short-term Debt (0.8 )
Long-term Debt (3.4 )
Deferred Income Tax Liability (12.8 )
Total Purchase Price $ 113.6

~~As part of the acquisition of Pacific Insight in fiscal 2018, the Company recorded goodwill of $50.4 million, none of which is deductible for income taxes.~~

~~The following table presents details of the intangible assets acquired:~~

(Dollars in Millions) Fair Value at Date of Acquisition Amortization Period
Customer Relationships and Agreements - Automotive $ 22.6
11.0 years
Customer Relationships and Agreements - Commercial 9.6
13.0 years
Trade Names 6.2
7.5 years
Technology Licenses 1.7
5.5 years
Total $ 40.1

Acquisition-related costs of $5.5 million were incurred in relation to the acquisition of Pacific Insight for fiscal 2018, of which $4.9 million was reported in selling and administrative expenses and $0.6 million was reported in costs of products sold on the consolidated statements of income.

~~F-19~~

~~METHODE ELECTRONICS, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

The following table presents unaudited supplemental pro forma results for fiscal 2019 and 2018 as if both the Grakon acquisition had occurred as of the beginning of fiscal 2018 and the Pacific Insight acquisition had occurred as of the beginning of fiscal 2017. The unaudited pro forma information is presented for information purposes only and is not indicative of the results of operations that would have been achieved if the acquisitions had taken place at such times. The unaudited pro forma results presented below primarily include amortization charges for acquired intangible assets, depreciation adjustments for property, plant and equipment ~~that has been revalued, interest~~is shown below:


(in millions)	April 30, 2022			May 1, 2021
Land	$	3.3		$	3.3
Buildings and building improvements		89.2			88.9
Machinery and equipment		407.5			408.0
Construction in progress		21.5			24.8
Total property, plant and equipment, gross		521.5			525.0
Less: accumulated depreciation		(324.5	)		(321.0	)
Property, plant and equipment, net	$	197.0		$	204.0

Depreciation expense ~~adjustments due to an increased debt level, adjustments for certain acquisition-related charges~~was $33.5 million, $32.2 million and ~~related tax effects.~~$29.3 million in fiscal 2022, fiscal 2021 and fiscal 2020, respectively. As of April 30, 2022 and May 1, 2021, capital expenditures recorded in accounts payable totaled $4.4 million and $5.5 million, respectively.

Fiscal Year Ended
(Dollars in Millions) April 27,
2019 April 28,
2018
Revenues $ 1,073.3
$ 1,095.0
Net Income $ 106.4
$ 70.5

Note 7. Goodwill and Other Intangible Assets

Goodwill

The Company ~~evaluates~~tests goodwill for impairment on an annual basis as of the beginning of the fourth quarter each year, ~~and at an interim date,~~or more frequently if indicators of potential impairment exist. Goodwill impairment testing is conducted at the reporting unit level, which is generally defined as an operating segment or one level below an operating segment (also known as a ~~component)~~reporting unit), for which discrete financial information is available and segment management regularly reviews the operating results of that reporting unit.

At the beginning of the fourth quarter of fiscal ~~2019,~~2022, the annual goodwill impairment assessment was completed. The Company performed a qualitative assessment for each reporting unit except for two within the Automotive segment where a quantitative ~~goodwill impairment test on~~assessment was performed. The qualitative assessments indicated that it was more likely than not that the fair value of each reporting unit exceeded its ~~reporting units. The~~respective carrying value.

For the quantitative assessment, the Company ~~utilizes a combination of an~~utilized the income ~~and market value~~ approach to estimate the fair value of ~~each of its~~the reporting units. Cash flow projections ~~are~~were based on management’s estimates of revenue growth rates and earnings before interest, taxes, depreciation and amortization ~~("EBITDA"~~(“EBITDA”) margins, taking into consideration business and market conditions for the countries and markets in which the reporting unit operates. The Company calculates the discount rate based on a market-participant, risk-adjusted weighted average cost of capital, which considers industry specific rates of return on debt and equity capital for a target industry capital structure, adjusted for risks associated with business size, geography and other factors specific to the reporting unit.

F-18

METHODE ELECTRONICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The ~~market value approach is based on appropriate valuation multiples observed for~~quantitative assessment of the reporting ~~unit’s guideline public companies.~~

~~The goodwill impairment assessment~~units indicated ~~that it was more likely than not~~ that the fair value ~~of each of~~exceeded the ~~reporting units exceeded its respective~~ carrying value. The Company does not believe that any of its reporting units are at risk for impairment.

While the Company considered the impact the COVID-19 pandemic may have on its future cash flows when preparing its annual goodwill impairment test, the full extent of the impact that the COVID-19 pandemic, the semiconductor supply shortage and inflationary impact on materials, labor and freight costs will have on the Company’s business, operations and financial condition is currently unknown. The Company will continue to assess its goodwill for impairment as events and circumstances change. Any deterioration in the Company’s forecasted revenue and EBITDA margins, could result in an impairment of a portion or all of its goodwill. The amount of such impairment would be recognized as an expense in the period the goodwill is impaired.

A summary of the changes in goodwill by reportable segment is as follows:


(in millions)	Automotive			Industrial			Total
Balance as of April 27, 2019	$	106.3		$	127.0		$	233.3
Acquisitions		0			(0.2	)		(0.2	)
Foreign currency translation		(0.1	)		(1.4	)		(1.5	)
Balance as of May 2, 2020		106.2			125.4			231.6
Foreign currency translation		0.5			3.5			4.0
Balance as of May 1, 2021		106.7			128.9			235.6
Foreign currency translation		(0.8	)		(1.8	)		(2.6	)
Balance as of April 30, 2022	$	105.9		$	127.1		$	233.0

A summary of goodwill by reporting unit is as follows:


(in millions)	April 30, 2022		May 1, 2021
Grakon Industrial	$	125.5	$	127.2
North American Automotive		99.8		99.8
European Automotive		6.1		6.9
Other		1.6		1.7
Total	$	233.0	$	235.6

Other intangible assets, net

Details of identifiable intangible assets are shown below:


	As of April 30, 2022
(in millions)	Gross		Accumulated amortization			Net		Weighted average useful life (years)
Amortized intangible assets:
Customer relationships and agreements	$	232.3	$	(55.1	)	$	177.2		14.7
Trade names, patents and technology licenses		58.0		(29.3	)		28.7		6.2
Total amortized intangible assets		290.3		(84.4	)		205.9
Unamortized trade name		1.8		—			1.8
Total other intangible assets	$	292.1	$	(84.4	)	$	207.7


	As of May 1, 2021
(in millions)	Gross		Accumulated amortization			Net		Weighted average useful life (years)
Amortized intangible assets:
Customer relationships and agreements	$	235.3	$	(42.7	)	$	192.6		15.6
Trade names, patents and technology licenses		58.7		(23.7	)		35.0		7.0
Total amortized intangible assets		294.0		(66.4	)		227.6
Unamortized trade name		1.8		—			1.8
Total other intangible assets	$	295.8	$	(66.4	)	$	229.4

(Dollars in Millions) Automotive Industrial Total
Balance as of April 30, 2016 $ —
$ 1.7
$ 1.7
Foreign Currency Translation —
(0.1 ) (0.1 )
Balance as of April 29, 2017 —
1.6
1.6
Acquisitions 57.2
—
57.2
Foreign Currency Translation 0.3
0.1
0.4
Balance as of April 28, 2018 57.5
1.7
59.2
Acquisitions 49.4
125.9
175.3
Foreign Currency Translation (0.6 ) (0.6 ) (1.2 )
Balance as of April 27, 2019 $ 106.3
$ 127.0
$ 233.3

~~F-20~~

F-19

METHODE ELECTRONICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~Intangible Assets~~

~~The following tables present details of the Company's identifiable intangible assets:~~

As of April 27, 2019
(Dollars in Millions) Gross
Accumulated
Amortization
Net
Wtd. Avg. Remaining
Amortization
Periods (Years)
Definite-lived Intangible Assets:
Customer Relationships and Agreements $ 244.5
$ 27.7
$ 216.8
17.4
Trade Names, Patents and Technology Licenses 75.5
29.2
46.3
8.4
Total Definite-lived Intangible Assets 320.0
56.9
263.1

Indefinite-lived Intangible Assets:
Trade Names, Patents and Technology Licenses 1.8
—
1.8

Total Indefinite-lived Intangible Assets 1.8
—
1.8

Total Intangible Assets $ 321.8
$ 56.9
$ 264.9

As of April 28, 2018
(Dollars in Millions) Gross
Accumulated
Amortization
Net
Wtd. Avg. Remaining
Amortization
Periods (Years)
Definite-lived Intangible Assets:
Customer Relationships and Agreements $ 64.4
$ 18.1
$ 46.3
12.3
Trade Names, Patents and Technology Licenses 35.9
23.0
12.9
5.3
Total Definite-lived Intangible Assets 100.3
41.1
59.2

Indefinite-lived Intangible Assets:
Trade Names, Patents and Technology Licenses 1.8
—
1.8

Total Indefinite-lived Intangible Assets 1.8
—
1.8

Total Intangible Assets $ 102.1
$ 41.1
$ 61.0

The Company performed an impairment test for its indefinite-lived trade name intangible asset and determined that no impairment existed atas of April ~~27, 2019 and April 28, 2018.~~ 30, 2022. Based on the current amount of intangible assets subject to amortization, the estimated aggregate amortization expense for each of the five succeeding fiscal years and thereafter is as follows:


(in millions)
Fiscal Year:
2023	$	18.9
2024		18.5
2025		17.9
2026		17.1
2027		16.4
Thereafter		117.1
Total	$	205.9

(Dollars in Millions)
Fiscal Year:
2020 $ 19.1
2021 19.0
2022 19.0
2023 18.9
2024 18.6
Thereafter 168.5
Total $ 263.1

~~5. Shareholders’ Equity~~

~~Common Stock Repurchases~~

~~In September 2015,~~

Note 8. Derivative Financial Instruments and Hedging Activities

The Company is exposed to various market risks including, but not limited to, foreign currency exchange rates and market interest rates. The Company strives to control its exposure to these risks through our normal operating activities and, where appropriate, through the ~~Board~~use of ~~Directors authorized~~derivative financial instruments. Derivative financial instruments are measured at fair value on a recurring basis.

For a designated cash flow hedge, the ~~repurchase of up to $100.0 million~~effective portion of the ~~Company's outstanding common stock through September 1, 2017.~~ change in the fair value of the derivative financial instrument is recorded in AOCI in the consolidated balance sheets. When the underlying hedged transaction is realized, the gain or loss previously included in AOCI is recorded in earnings and reflected in the consolidated statements of income on the same line as the gain or loss on the hedged item attributable to the hedged risk. The gain or loss associated with changes in the fair value of derivatives not designated as hedges are recorded immediately in the consolidated statements of income on the same line as the associated risk. For a designated net investment hedge, the effective portion of the change in the fair value of the derivative financial instrument is recorded as a cumulative translation adjustment in AOCI in the consolidated balance sheets.

Net investment hedges

The Company ~~purchased~~has a variable-rate, cross-currency swap, maturing on August 31, 2023, with a notional value of $60.0 million (€54.8 million). The Company entered into the cross-currency swap to mitigate changes in net assets due to changes in U.S. dollar-euro spot exchange rates. The cross-currency swap is designated as a hedge of the Company’s net investment in a euro-based
subsidiary.

Hedge effectiveness is assessed at the inception of the hedging relationship and ~~retired 280,168 shares for $9.8~~quarterly thereafter, under the spot-to-spot method. The Company recognizes the impact of all other changes in fair value of the derivative through interest expense, which was not material in either fiscal 2022 or fiscal 2021.

Interest rate swaps

In April 2021, the Company entered into interest rate swaps, maturing on August 31, 2023, with a notional value of $100.0 million, to manage its exposure and to mitigate the impact of interest rate variability. The interest rate swaps are designated as cash flow hedges.

Hedge effectiveness is assessed at the inception of the hedging relationship and quarterly thereafter. The effective portion of the periodic changes in fair value is recognized in AOCI. Subsequently, the accumulated gains and losses recorded in equity are reclassified to income in the period during which the hedged cash flow impacts earnings, which are expected to be immaterial over the next 12 months. No ineffectiveness was recognized in fiscal ~~2017, for~~2022 or fiscal 2021.

Derivatives not designated as hedges

The Company uses short-term foreign currency forward contracts to reduce the earnings impact that exchange rate fluctuations have on non-functional currency balance sheet exposures. These forward contracts are not designated as hedging instruments. Gains and losses on these forward contracts are recognized in other income, net, along with the foreign currency gains and losses on monetary assets and liabilities in the consolidated statements of income.

As of April 30, 2022 and May 1, 2021, the Company held foreign currency forward contracts with a ~~total under~~notional value of $38.6 million and $14.8 million, respectively. In fiscal 2022 and fiscal 2021, gains of $0.1 million and losses of $0.1 million, respectively, were recorded in earnings within other income, net in the ~~repurchase plan~~consolidated statements of ~~2,277,466 shares for $71.9 million.~~

~~F-21~~

income.

F-20

METHODE ELECTRONICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~Dividends~~

~~The Company paid dividends totaling $16.3 million, $14.7 million and $13.7 million during fiscal 2019, 2018 and 2017, respectively.~~

~~Stock-based Compensation~~

~~All stock-based payments to employees and directors are recognized in selling and administrative expenses~~

Fair value of derivative instruments on the ~~consolidated statements of income. Awards subject to graded vesting are recognized using the accelerated recognition method over the requisite service period.~~

balance sheet

~~The table below summarizes the stock-based compensation expense related to the equity awards for fiscal 2019, 2018 and 2017.~~

(Dollars in Millions) Fiscal Year Ended Unrecognized Compensation Expense at
April 27, 2019 April 28, 2018 April 29, 2017 April 27, 2019
2014 Incentive Plan:
RSAs $ 10.9
$ (2.0 ) $ 5.7
$ 5.0
RSUs 2.2
5.0
5.5
1.6
Director Awards 0.9
1.0
0.9
—
Total 2014 Incentive Plan 14.0
4.0
12.1
6.6

2010 Stock Plan:
RSUs —
—
0.1
—
Stock Options —
—
0.1
—
Total 2010 Stock Plan —
—
0.2
—

2007 Stock Plan:
Stock Options —
—
0.1
—
Total 2007 Stock Plan —
—
0.1
—

Total Stock-based Compensation Expense $ 14.0
$ 4.0
$ 12.4
$ 6.6

~~2014 Incentive Plan~~

In September 2014, the Methode Electronics, Inc. 2014 Omnibus Incentive Plan (the “2014 Incentive Plan”) was approved by the Company’s stockholders. The 2014 Incentive Plan provides for discretionary grants of stock options, stock appreciation rights, restricted stock awards, restricted stock units and performance units to key employees and directors. The 2014 Incentive Plan is intended to promote the success of the Company and to increase stockholder value by providing an additional means to attract, motivate, retain and reward selected employees and eligible directors through the grant of equity awards.

The number of shares of common stock that may be issued under the 2014 Incentive Plan is 3,000,000, less one share for every one share of common stock issued or issuable pursuant to awards made after May 3, 2014 under the 2007 Stock Plan or 2010 Stock Plan. Awards that may be settled only in cash will not reduce the number of shares available for issuance under the 2014 Incentive Plan.

Shares issuable under the 2014 Incentive Plan may be authorized but unissued shares or treasury shares. If any award granted under the 2014 Incentive Plan (or, after May 3, 2014, an award under the 2007 Stock Plan or 2010 Stock Plan) expires, terminates, is forfeited or canceled, is settled in cash in lieu of shares of common stock, or is exchanged for a non-stock award

~~F-22~~

~~METHODE ELECTRONICS, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

under certain circumstances, the shares subject to the award will again be available for issuance under the 2014 Incentive Plan. As of April 27, 2019, there were 1,344,034 shares available for award under the 2014 Incentive Plan.

In fiscal 2016, the Compensation Committee established a long-term incentive program (the “LTIP”) for key employees consisting of performance-based restricted stock awards (“RSAs”) and time-based restricted stock units (“RSUs”).

~~Restricted Stock Awards ("RSAs")~~

The grant of RSAs under the 2014 Incentive Plan are performance-based awards that are scheduled to vest at the end of fiscal 2020 based on the achievement of an EBITDA hurdle. The number of shares ultimately earned could range from 0% to 150% of the target award based on the achievement of the EBITDA performance condition.

The fair value of derivative instruments are classified as Level 2 within the ~~RSAs granted was based on the closing stock price on the date of grant. All non-vested RSAs accrue dividend equivalents, which~~fair value hierarchy and are ~~subject to vesting and paid in cash upon release. Accrued dividends are forfeitable to the extent that the underlying awards do not vest.~~

Per ASC 718, stock-based compensation expense is recognized for these awards over the vesting period based on the projected probability (70% confidence) of achievement of the EBITDA hurdle in fiscal 2020. In each period, the stock-based compensation expense may be adjusted, as necessary, in response to any changesrecorded in the ~~Company’s forecast with respect to achieving the fiscal 2020 EBITDA hurdle.~~

In fiscal 2018, the Company determined that only a threshold performance level would be achieved and adjusted its stock-based compensation expense for these awards. The result was a reversal of previously recognized stock-based compensation expense of $6.0 million. Stock-based compensation expense for these awards in fiscal 2018 was a credit of $2.0 million.

In fiscal 2019, the Company determined that the target hurdle would be achieved based on the recent acquisition of Grakon and adjusted its stock-based compensation expense for these awards. The result was an additional expense of $7.4 million. Stock-based compensation expense for these awards in fiscal 2019 was $10.9 million.

~~The following table summarizes the RSA activity under the 2014 Incentive Plan:~~

balance sheets as follows:


		Asset/(Liability)
(in millions)	Financial Statement Caption	April 30, 2022			May 1, 2021
Derivatives designated as hedging instruments:
Net investment hedges	Other long-term liabilities	$	—		$	(6.8	)
Net investment hedges	Other long-term assets	$	1.9		$	—
Interest rate swaps	Other long-term liabilities	$	—		$	(0.2	)
Interest rate swaps	Other long-term assets	$	3.0		$	—
Derivatives not designated as hedging instruments:
Foreign currency forward contracts	Other accrued liabilities	$	(0.2	)	$	—

RSA Shares Wtd. Avg. Grant Date Fair Value
Non-vested and Unissued at April 30, 2016 1,161,000
$ 33.35
Awarded 72,000
$ 34.90
Vested —
$ —
Forfeited (64,500 ) $ 33.78
Non-vested and Unissued at April 29, 2017 1,168,500
$ 33.42
Awarded 128,738
$ 40.92
Vested —
$ —
Forfeited (126,000 ) $ 34.42
Non-vested and Unissued at April 28, 2018 1,171,238
$ 34.13
Awarded 11,625
$ 38.75
Vested —
$ —
Forfeited (151,455 ) $ 34.79
Non-vested and Unissued at April 27, 2019 1,031,408
$ 34.09

~~F-23~~

~~METHODE ELECTRONICS, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~Restricted Stock Units~~

RSUs granted under the 2014 Incentive Plan vest over a pre-determined period of time, generally between three to five years from the date of grant. The fair value of the RSUs granted was based on the closing stock price on the date of grant.

~~The following table summarizes RSU activity granted under the 2014 Incentive Plan:~~

RSU Shares Wtd. Avg. Grant Date Fair Value
Non-vested at April 30, 2016 576,000
$ 33.39
Awarded 32,000
$ 34.90
Vested (11,333 ) $ 33.78
Forfeited (28,667 ) $ 33.78
Non-vested at April 29, 2017 568,000
$ 33.45
Awarded 30,925
$ 41.82
Vested (160,553 ) $ 33.72
Forfeited (56,000 ) $ 34.42
Non-vested at April 28, 2018 382,372
$ 33.87
Awarded 7,750
$ 38.75
Vested (152,328 ) $ 33.75
Forfeited (49,950 ) $ 32.42
Non-vested at April 27, 2019 187,844
$ 34.55

~~Director Awards~~

During fiscal 2019, fiscal 2018 and fiscal 2017, the Company issued 24,000 shares, 24,000 shares and 27,000 shares, respectively, of common stock to our independent directors, all of which vested immediately upon grant.

~~2010 Stock Plan~~

The 2010 Stock Plan permitted a total of 2,000,000 shares of common stock to be awarded to participants in the form of nonqualified stock options, incentive stock options, restricted stock awards, restricted stock units, stock appreciation rights, and performance share units. With the approval of the 2014 Incentive Plan, no further awards are being granted under the 2010 Stock Plan.

~~The following table summarizes stock option activity under the 2010 Stock Plan:~~

Shares Wtd. Avg. Exercise Price Weighted-Average Life (years) Aggregate Intrinsic Value (in millions)
Outstanding and Exercisable at April 30, 2016 197,332
$ 24.55

Awarded —
$ —

Exercised (125,332 ) $ 17.40

Forfeited —
$ —

Outstanding and Exercisable at April 29, 2017 72,000
$ 37.01
7.3 $ —
Awarded —
$ —

Exercised —
$ —

Forfeited —
$ —

Outstanding and Exercisable at April 28, 2018 72,000
$ 37.01
6.3 $ 0.3
Awarded —
$ —

Exercised —
$ —

Forfeited —
$ —

Outstanding and Exercisable at April 27, 2019 72,000
$ 37.01
5.2 $ —

~~F-24~~

~~METHODE ELECTRONICS, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

The aggregate intrinsic value represents the total pre-tax intrinsic value (the difference between the Company's closing stock price on the last trading day of the fiscal year and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on that date.

~~2007 Stock Plan~~

The 2007 Stock Plan permitted a total of 1,250,000 shares of common stock to be awarded to participants. With the approval of the 2014 Incentive Plan, no further awards are being granted under the 2007 Stock Plan.

~~The following table summarizes stock option activity under the 2007 Stock Plan:~~

Shares
Wtd. Avg.
Exercise Price
Weighted-Average Life (years) Aggregate Intrinsic Value (in millions)
Outstanding and Exercisable at April 30, 2016 79,666
$ 28.91

Awarded —
$ —

Exercised (22,497 ) $ 21.52

Forfeited —
$ —

Outstanding and Exercisable at April 29, 2017 57,169
$ 31.82
6.8 $ 0.7
Awarded —
$ —

Exercised (13,333 ) $ 24.67

Forfeited (1,668 ) $ 37.01

Outstanding and Exercisable at April 28, 2018 42,168
$ 33.87
5.8 $ 0.3
Awarded —
$ —

Exercised —
$ —

Forfeited (7,500 ) $ 37.01

Outstanding and Exercisable at April 27, 2019 34,668
$ 33.20
4.6 $ 0.1

Options Outstanding and Exercisable
at April 27, 2019
Shares Exercise Price
Avg.
Remaining
Life (Years)
5,000
$ 10.55
1.2
29,668
$ 37.01
5.2
34,668

~~Deferred RSUs~~

Under the 2014 Incentive Plan and 2010 Stock Plan, RSUs that have vested for certain executives, including the Company’s CEO, will not be delivered in common stock until after the executive terminates employment from the Company or upon a change of control. As of April 27, 2019, shares to be delivered to these executives were 60,600 shares under the 2014 Incentive Plan and 180,000 shares under the 2010 Stock Plan.

Under the 2007 Stock Plan, 225,000 shares of common stock subject to performance-based RSAs granted to our CEO in fiscal 2006 and 2007 were converted to RSUs. The shares of stock underlying the RSUs will not be issued and delivered until the earlier of: (1) thirty days after the CEO’s date of termination of employment with the Company and all of its subsidiaries and affiliates; or (2) the last day of the Company’s fiscal year in which the payment of common stock in satisfaction of the RSUs becomes deductible to the Company under Section 162(m) of the Code. As of April 27, 2019, 29,945 shares have been delivered in connection with these RSUs with a remaining balance to be delivered of 195,055 shares.

~~The RSUs are not entitled to voting rights or dividends, however a bonus in lieu of dividends are paid. The vested deferred RSUs are considered outstanding for earnings per share calculations.~~

~~F-25~~

~~METHODE ELECTRONICS, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~6. Employee 401(k) Savings and Deferred Compensation Plans~~

~~401(k) Savings Plan~~

Note 9. Retirement Benefits

Defined contribution plans

The Company has an employee 401(k) Savings Plan covering substantially all U.S. employees to which it makes contributions equal to 3%3% of eligible compensation. ~~Contributions~~In addition, certain of the Company’s foreign subsidiaries also have defined contribution savings plans. Company contributions to ~~the employee 401(k) Savings Plan was $1.5~~these plans were $1.2 million, $1.2 million and $1.7 million, in fiscal ~~2019~~2022, fiscal 2021 and ~~$1.4 million in both~~ fiscal ~~2018 and 2017.~~

~~Deferred Compensation Plan~~

2020, respectively.

Non-qualified deferred compensation plan

The Company maintains a non-qualified deferred compensation plan (“~~the~~NQDC Plan”) for certain eligible ~~participants.~~employees and members of the Board of Directors. Under the NQDC Plan, ~~participants~~employees may elect to defer up to ~~75%~~75% of their annual base salary and ~~100%~~100% of their annual cash incentive compensation, with an aggregate minimum deferral of ~~$3,000.~~$3,000. Directors may defer all or a portion of their annual directors’ fees or annual stock awards. The minimum period of deferral is ~~3 years.~~three years. Participants are immediately ~~100%~~100% vested. ~~No company~~The Company does 0t make any contributions ~~were made~~ to the ~~Plan in fiscal 2019, 2018 and 2017.~~

NQDC Plan.

The deferred compensation liability for the NDQC Plan was ~~$6.1~~$7.6 million and ~~$6.7~~$6.5 million as of April ~~27, 2019~~30, 2022 and ~~April 28, 2018,~~May 1, 2021, respectively. ~~In addition, the~~The Company has purchased life insurance policies on certain employees, which are held in a Rabbi trust, ~~on certain employees~~ to potentially offset these unsecured obligations. These life insurance policies are ~~recoded~~recorded at their cash surrender value of ~~$6.9~~$7.8 million and ~~$6.7~~$8.3 million as of April ~~27, 2019~~30, 2022 and ~~April 28, 2018,~~May 1, 2021, respectively, and are included in other long-term ~~assets.~~

assets in the consolidated balance sheets.

The Company also owns and is the beneficiary of a number of life insurance policies on the lives of former key executives that are unrestricted as to use. These life insurance policies are recorded at their cash surrender value of ~~$8.6~~$9.9 million and ~~$8.2~~$9.5 million as of April ~~27, 2019~~30, 2022 and ~~April 28, 2018,~~May 1, 2021, respectively, and are included in other long-term ~~assets.~~ assets in the consolidated balance sheets.

The cash surrender value of the life insurance policies approximates its fair value and is classified within Level 2 of the fair value hierarchy.

F-21

METHODE ELECTRONICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 10. Debt

A summary of debt is shown below:


(in millions)	April 30, 2022			May 1, 2021
Revolving credit facility	$	—		$	9.9
Term loan		206.3			218.7
Other debt		5.1			13.0
Unamortized debt issuance costs		(0.9	)		(1.5	)
Total debt		210.5			240.1
Less: current maturities		(13.0	)		(14.9	)
Total long-term debt	$	197.5		$	225.2

Revolving credit facility/term loan

The Company is a party to an Amended and Restated Credit Agreement (“Credit Agreement”) with Bank of America, N.A., as Administrative Agent, and Wells Fargo Bank, N.A. The Credit Agreement terminates in September 2023 and consists of a senior unsecured revolving credit facility (“Revolving Credit Facility”) of $200.0 million and a senior unsecured term loan (“Term Loan”) of $250.0 million. In addition, the Company has an option to increase the size of the Revolving Credit Facility and Term Loan by up to an additional $200.0 million, subject to customary conditions and approval of the lenders providing new commitments. The Credit Agreement is guaranteed by the Company’s wholly-owned U.S. subsidiaries. For the Term Loan, the Company is required to make quarterly principal payments of 1.25% of the original Term Loan ($3.1 million) through maturity, with the remaining balance due on September 12, 2023.

On December 10, 2021, the Company entered into a First Amendment to the Credit Agreement (“First Amendment”). The First Amendment amended and restated the Credit Agreement to provide, among other things, that upon the occurrence of certain events, the interest rate calculation method will generally transition from the London Interbank Offered Rate (“LIBOR”) to an alternate reference rate, including the Secured Overnight Financing Rate (“SOFR”) for U.S. dollar denominated borrowings.

Outstanding borrowings under the Credit Agreement bear interest at variable rates based on the type of borrowing and the Company’s debt to EBITDA financial ratio, as defined in the Credit Agreement. The weighted-average interest rate on outstanding borrowings under the Credit Agreement was approximately 2.0% as of April 30, 2022. The Credit Agreement contains customary representations and warranties, financial covenants, restrictive covenants and events of default. As of April 30, 2022, the Company was in compliance with all the covenants in the Credit Agreement. The fair value of borrowings under the Credit Agreement approximates book value because the interest rate is variable.

Other debt

One of the Company’s European subsidiaries has debt that consists of 3 notes with maturities ranging from 2023 to 2031. The weighted-average interest rate was approximately 1.4% as of April 30, 2022 and $0.5 million of the debt was classified as short-term. The fair value of other debt was $4.7 million at April 30, 2022 and was based on Level 2 inputs on a ~~recurring~~non-recurring basis.

Scheduled maturities

~~7. Income Taxes~~

~~Income Tax Provision~~

~~Details~~

As of ~~the Company’s income tax provision~~April 30, 2022, scheduled principal payments of debt are as follows:


(in millions)
Fiscal Year:
2023	$	13.0
2024		196.9
2025		0.2
2026		0.2
2027		0.2
Thereafter		0.9
Total	$	211.4

Fiscal Year Ended
(Dollars in Millions) April 27,
2019 April 28,
2018 April 29,
2017
Income (Loss) before Income Taxes:
Domestic Source $ (0.6 ) $ 11.4
$ 21.6
Foreign Source 104.2
112.4
94.3
Income before Income Taxes $ 103.6
$ 123.8
$ 115.9

Current Tax Provision (Benefit):

U.S. (Federal and State) $ (5.7 ) $ 46.8
$ 9.9
Foreign 21.5
18.8
17.0
Subtotal 15.8
65.6
26.9

Deferred Tax Provision (Benefit):
U.S. (Federal and State) 2.5
11.6
(1.2 )
Foreign (6.3 ) (10.6 ) (2.7 )
Subtotal (3.8 ) 1.0
(3.9 )
Total Income Tax Expense $ 12.0
$ 66.6
$ 23.0

~~F-26~~

F-22

METHODE ELECTRONICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 11. Income Taxes

Income tax provision

The U.S. and foreign components of income before income taxes and the provision for income taxes are as follows:


	Fiscal Year Ended
	April 30, 2022			May 1, 2021			May 2, 2020
(in millions)	(52 Weeks)			(52 Weeks)			(53 Weeks)
Income before income taxes:
U.S.	$	31.2		$	28.3		$	47.3
Foreign		87.3			106.6			101.4
Total income before income taxes	$	118.5		$	134.9		$	148.7
Income tax expense:
Current:
U.S. (federal and state)	$	5.2		$	5.8		$	5.1
Foreign		13.5			15.9			12.8
Total current expense		18.7			21.7			17.9
Deferred:
U.S. (federal and state)		0.2			1.3			6.1
Foreign		(2.6	)		(10.4	)		1.3
Total deferred (benefit) expense		(2.4	)		(9.1	)		7.4
Total income tax expense	$	16.3		$	12.6		$	25.3

A reconciliation of ~~the~~ income tax expense to the ~~prevailing~~U.S. statutory federal income tax rate ~~(21.0% for 2019, 30.5% for 2018 and 35.0% for 2017) to pre-tax earnings~~of 21% is as follows:


	Fiscal Year Ended
(in millions)	April 30, 2022			May 1, 2021			May 2, 2020
Income tax at statutory rate	$	24.9		$	28.3		$	31.2
Effect of:
State income taxes, net of federal benefit		0.6			0.1			1.5
Withholding taxes		2.5			2.7			2.3
Non-deductible compensation		2.1			0.5			0.2
Foreign tax differential		(8.1	)		(10.8	)		(8.3	)
U.S. tax on foreign income		(1.7	)		2.8			(1.0	)
Foreign investment tax credit		—			(7.2	)		(0.8	)
Research and development		(2.6	)		(2.2	)		(0.6	)
Change in tax reserve		(0.1	)		0.1			2.2
Change in valuation allowance		(2.0	)		1.8			0.8
Tax rate change, foreign		0.1			(0.1	)		(0.1	)
Other, net		0.6			(3.4	)		(2.1	)
Income tax expense	$	16.3		$	12.6		$	25.3
Effective income tax rate		13.8	%		9.3	%		17.0	%

Fiscal Year Ended
(Dollars in Millions) April 27,
2019 April 28,
2018 April 29,
2017
Income Tax at Statutory Rate $ 21.8
$ 37.7
$ 40.5
Effect of:

State Income Taxes, Net of Federal Benefit (0.8 ) 0.1
0.9
Dividends 1.8
—
—
U.S. Tax Reform Transition Tax (4.8 ) 48.5
—
Foreign Operations with Lower Statutory Rates (9.6 ) (15.3 ) (14.5 )
Current Taxation of Foreign Income 3.4
—
—
Foreign Investment Tax Credit (2.0 ) (9.8 ) (4.7 )
Change in Tax Reserve (0.1 ) 0.1
0.1
Change in Valuation Allowance —
0.4
0.3
Tax Rate Change, Foreign —
(1.5 ) —
U.S. Tax Reform Re-measurements —
5.2
—
Other, Net 2.3
1.2
0.4
Income Tax Expense $ 12.0
$ 66.6
$ 23.0
Effective Income Tax Rate 11.6 % 53.8 % 19.9 %

~~On December 22, 2017,~~

In fiscal 2022, the ~~U.S. enacted U.S. Tax Reform making significant changes to U.S. corporate income tax laws. This included a reduction in the statutory federal corporate~~effective income tax rate was favorably impacted by the amount of income earned in foreign jurisdictions with lower tax rates and the release of a valuation allowance of $2.0 million due to a tax law change. In addition, the Company benefited from ~~35.0% to 21.0%, an exemption for dividends received from certain foreign subsidiaries, a one-time repatriation~~less U.S. tax on ~~deemed repatriated~~foreign income of $1.7 million attributable to lower earnings ~~from foreign subsidiaries, immediate expensing~~in non-U.S. jurisdictions which was partially offset with non-deductible compensation of ~~certain depreciable tangible assets, and limiting~~$2.1 million.

In fiscal 2021, the ~~deductibility of certain executive compensation.~~

~~The Company’s~~ effective income tax rate iswas favorably impacted by the amount of income earned in foreign jurisdictions with lower tax rates, tax credits and various deductions allowed in foreign jurisdictions. The Company received a benefit of approximately $7.2 million related to a favorable tax ruling in a foreign jurisdiction.

In fiscal 2020, the effective income tax rate was primarily affected by the amount of income earned in ~~the~~foreign jurisdictions ~~in which the Company operates,~~with lower tax rates, the amount of tax credits earned, withholding taxes, tax reserves, and the ~~impact~~current taxation of ~~U.S. Tax Reform.~~foreign earnings. The Company had a favorable impact from operations in foreign countries with tax rates lower than the U.S. statutory tax rate. The Company earned ~~$2.0~~$0.8 million in investment tax credits primarily related to an investment in qualified ~~expenditures in Malta.~~expenditures. This was offset by ~~U.S.~~a change in tax reserves of ~~$3.4~~$2.2 million ~~incurred on its~~and foreign ~~subsidiaries’ earnings under the new Global Intangible Low Tax Income regime.~~

~~In addition, in fiscal 2019, the accounting for U.S. Tax Reform was finalized and the Company recorded a tax benefit~~withholding taxes of ~~$4.8 million as an adjustment to the provisional amount recorded in fiscal 2018. This adjustment under SAB 118 primarily consists~~$2.3 million.

F-23

Table of changes in interpretations and assumptions the Company made, additional regulatory guidance that was issued, and actions the Company took as a result of U.S. Tax Reform.

In fiscal 2018, the Company had a favorable impact from earnings in lower taxes jurisdictions. In addition, the Company recorded an unfavorable provisional estimate on the effects of tax law changes in the U.S. due to U.S. Tax Reform of $53.7 million. This was partially offset by a tax law change and recognition of additional foreign investment tax credits.

In fiscal 2017, the Company had a favorable impact from earnings in lower taxes jurisdictions. In addition, the Company had a favorable adjustment from the recognition of foreign investment tax credits.

~~F-27~~

Contents

METHODE ELECTRONICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was enacted in response to the COVID-19 pandemic. The CARES Act, among other things, includes various income and payroll tax provisions, modifications to federal net operating loss rules, business interest deduction limitations, and bonus depreciation eligibility for qualified improvement property. The CARES Act did not significantly impact the fiscal 2021 consolidated financial statements.

Deferred ~~Income Taxes~~income taxes and ~~Valuation Allowances~~

valuation allowances

Significant components of the Company's deferred income tax assets and liabilities were as follows:


(in millions)	April 30, 2022			May 1, 2021
Deferred tax liabilities:
Fixed assets	$	(4.3	)	$	(2.9	)
Amortization		(48.1	)		(49.1	)
Foreign tax		(3.1	)		(2.0	)
Lease assets		(4.5	)		(4.9	)
Derivative financial instruments		(1.1	)		—
Other liabilities		(0.6	)		(0.4	)
Deferred tax liabilities, gross		(61.7	)		(59.3	)
Deferred tax assets:
Deferred compensation and stock award amortization		6.9			6.9
Inventory		3.5			2.7
Lease liabilities		4.7			5.3
Derivative financial instruments		0			1.6
Foreign investment tax credit		29.8			34.7
Net operating loss carryforwards		17.4			15.6
Foreign tax credits		1.3			1.4
Other		3.4			3.3
Deferred tax assets, gross		67.0			71.5
Less valuation allowance		(6.8	)		(9.3	)
Deferred tax assets, net of valuation allowance		60.2			62.2
Net deferred tax (liability) asset	$	(1.5	)	$	2.9
Balance sheet classification:
Long-term asset		36.8			41.2
Long-term liability		(38.3	)		(38.3	)
Net deferred tax (liability) asset	$	(1.5	)	$	2.9

(Dollars in Millions) April 27,
2019 April 28,
2018
Deferred Tax Liabilities:

Depreciation $ 9.0
$ 6.3
Amortization 43.9
11.4
Foreign Tax Withheld 2.0
4.8
Deferred Income 0.1
0.2
Deferred Tax Liabilities, Gross 55.0
22.7
Deferred Tax Assets:

Deferred Compensation and Stock Award Amortization 8.6
7.5
Inventory Valuation Differences 1.9
1.8
Property Valuation Differences 1.6
2.0
Environmental Reserves 0.3
0.2
Bad Debt Reserves 0.1
0.1
Vacation Accruals 0.4
1.0
Foreign Investment Tax Credit 28.2
29.3
Net Operating Loss Carryovers 13.8
5.8
Foreign Tax Credits 1.1
—
Other Accruals 3.2
1.5
Deferred Tax Assets, Gross 59.2
49.2
Less Valuation Allowance 6.3
2.5
Deferred Tax Assets, Net of Valuation Allowance 52.9
46.7
Net Deferred Tax Assets (Liabilities) $ (2.1 ) $ 24.0
Balance Sheet Classification:

Non-current Asset 34.3
42.3
Non-current Liability (36.4 ) (18.3 )
Net Deferred Tax Assets (Liabilities) $ (2.1 ) $ 24.0

The Company recorded a net deferred tax liability for U.S. and foreign income taxes of ~~$2.1~~$1.5 million ~~as of April 27, 2019~~for fiscal 2022 and a net deferred tax asset of ~~$24.0~~$2.9 million ~~as of April 28, 2018.~~for fiscal 2021. In assessing the realizability of the deferred tax assets, the Company considers whether it is more likely than not that some portion or the entire deferred tax asset will be realized. Ultimately, the realization of the deferred tax asset is dependent upon the generation of sufficient earnings in future periods in which these temporary items can be utilized. In that regard, the Company has a valuation allowance of ~~$6.3~~$6.8 million ~~as of April 27, 2019,~~ related to ~~certain~~federal, state, ~~federal,~~ and foreign net operating loss carryovers and other credits ~~until~~and determined that these deferred tax assets ~~are~~did not reach the more likely than not ~~realizable.~~

~~In fiscal 2019, the Company completed a stock acquisition~~realizable standard.

As of Grakon, a U.S. multinational, which increased the overall amount of deferred tax assets and liabilities. This included an increase in the deferred tax liabilities of intangible assets, net operating losses and foreign tax credits. This was offset with an additional valuation allowance associated with a limited utilization of U.S. net operating losses in future periods.

At April ~~27, 2019,~~30, 2022, the Company had available ~~$9.0~~$36.3 million of federal, ~~and $4.8~~$68.9 million of state ~~net~~and $14.9 million of foreign gross operating loss carryforwards with a valuation allowance of ~~$5.3~~$24.2 million for federal, $24.1 million for state and ~~$0.9 million, respectively. If unused, the~~$0 for foreign. The U.S. federal net operating loss carryforwards will substantially start to expire ~~by the year 2033. If unused, the~~in 2026 and beyond. The state net operating loss carryforwards will substantially start to expire ~~by the year 2038.~~

~~F-28~~

~~METHODE ELECTRONICS, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~The tax laws of Malta provide for investment tax credits of 30.0% for certain qualified expenditures.~~ in 2032 and beyond.

Total unused credits are ~~$28.2~~$31.2 million atas of April ~~27, 2019,~~30, 2022, the majority of which ~~$27.4 million~~ can be carried forward ~~indefinitely and $0.8 million expire in 2020.~~

~~Income Taxes Paid~~

~~The Company paid income taxes of $27.8 million in fiscal 2019, $20.2 million in fiscal 2018 and $19.0 million in fiscal 2017.~~

indefinitely.

Indefinite ~~Reinvestment~~

reinvestment

The Company has not provided for deferred income taxes on the undistributed earnings of foreign subsidiaries except for certain identified amounts. The amount the Company expects to repatriate is based on a variety of factors including current year earnings of the foreign subsidiaries, foreign investment needs, and U.S. cash flow considerations. The Company considers the remaining undistributed foreign earnings that are not specifically identified to be indefinitely ~~reinvested.~~reinvested of $354.3 million. It is not practicable to determine the amount of deferred tax liability on such foreign earnings as the actual tax liability is dependent on circumstances that exist when the remittance occurs.

F-24

METHODE ELECTRONICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Unrecognized ~~Tax Benefits~~

tax benefits

The Company operates in multiple jurisdictions throughout the world and the income tax returns of its subsidiaries in various jurisdictions are subject to periodic examination by the tax authorities. The Company regularly assesses the status of these examinations and the various outcomes to determine the adequacy of its provision for income taxes. The amount of gross unrecognized tax benefits totaled ~~$3.1~~$5.1 million and ~~$1.4~~$5.3 million atas of April ~~27, 2019~~30, 2022 and ~~April 28, 2018,~~May 1, 2021, respectively. These amounts represent the amount of unrecognized benefits that, if recognized, would favorably impact the effective tax rate if resolved in the Company’s favor.

The Company recognizes interest and penalties related to income tax uncertainties in income tax expense. Accrued interest and penalties were $0.2 million at both April 30, 2022 and May 1, 2021.

The following table presents a reconciliation of the beginning and ending amounts of unrecognized tax benefits:


(in millions)	April 30, 2022			May 1, 2021
Balance at beginning of period	$	5.3		$	5.2
Increases for positions related to the current year		0			0.2
Lapsing of statutes of limitations		(0.2	)		(0.1	)
Balance at end of period	$	5.1		$	5.3

(Dollars in Millions) April 27,
2019 April 28,
2018
Balance at Beginning of Fiscal Year $ 1.4
$ 1.3
Increases for Positions Related to the Prior Years 1.8
—
Increases for Positions Related to the Current Year 0.9
0.1
Decreases for Positions Related to the Prior Years —
—
Lapsing of Statutes of Limitations (1.0 ) —
Balance at End of Fiscal Year $ 3.1
$ 1.4

At April ~~27, 2019,~~30, 2022, it is not possible to reasonably estimate the expected change to the total amount of unrecognized tax benefits in the next twelve months.

The U.S. federal statute of limitations remains open for fiscal years ended on or after ~~2016~~2019 and for state tax purposes on or after fiscal year 2013. Tax authorities may have the ability to review and adjust net operating losses or tax credits that were generated prior to these fiscal years. In the major foreign jurisdictions, fiscal ~~2012~~2014 and subsequent periods remain open and subject to examination by taxing authorities.

The continuing practice of the Company is to recognize interest and penalties related to income tax matters in the provision for income taxes. The Company had $0.1 million accrued for interest and no accrual for penalties at April 27, 2019.

~~8. Income Per Share~~

Basic income per share is calculated by dividing net earnings by the weighted average number of common shares outstanding for the applicable period. Diluted income per share is calculated after adjusting the denominator of the basic income per share calculation for the effect of all potential dilutive common shares outstanding during the period.

~~F-29~~

~~METHODE ELECTRONICS, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~The following table sets forth the computation of basic and diluted income per share:~~

Fiscal Year Ended
April 27,
2019 April 28,
2018 April 29,
2017
Numerator:
Net Income (in millions) $ 91.6
$ 57.2
$ 92.9

Denominator:

Denominator for Basic Earnings Per Share-Weighted Average Shares Outstanding and Vested/Unissued Restricted Stock Units 37,405,298
37,281,630
37,283,096
Dilutive Potential Common Shares-Employee Stock Options, Restricted Stock Awards and Restricted Stock Units 264,262
260,269
202,605
Denominator for Diluted Earnings Per Share 37,669,560
37,541,899
37,485,701

Basic and Diluted Income Per Share:

Basic Income Per Share $ 2.45
$ 1.54
$ 2.49
Diluted Income Per Share $ 2.43
$ 1.52
$ 2.48

For fiscal 2019, options and RSUs of 83,939 were excluded from the computation of diluted net income per share as their effect would have been anti-dilutive. For fiscal 2018 and fiscal 2017, the Company had no options or RSUs that were excluded from the computation of diluted net income per shares. RSAs for 594,382 shares in fiscal 2019, 363,413 shares in fiscal 2018 and 779,000 shares in fiscal 2017 were excluded from the calculation of diluted net income per share as these awards contain performance conditions that would not have been achieved as of the end of each reporting period had the measurement period ended as of that date.

Note 12. Commitments and Contingencies

Environmental ~~Matters~~

matters

The Company is not aware of any potential unasserted environmental claims that may be brought against us.The Company is involved in environmental investigations and/or remediation at ~~two~~2 of ~~our~~its United Sates plant sites no longer used for operations. The Company uses environmental consultants to assist us in evaluating ~~our~~its environmental liabilities in order to establish appropriate accruals in ~~our~~its consolidated financial statements. Accruals are recorded when environmental remediation is probable and the costs can be reasonably estimated. A number of factors affect the cost of environmental remediation, including the determination of the extent of contamination, the length of time remediation may require, the complexity of environmental regulations and the advancement of remediation technology. Considering these factors, the Company has estimated (without discounting) the costs of remediation, which will be incurred over a period of several years. Recovery from insurance or other third parties is not anticipated. The Company is not yet able to determine when such remediation activity will be complete, but estimates for certain remediation efforts are projected through fiscal ~~2020.~~

~~At both~~2023.

As of April ~~27, 2019~~30, 2022 and ~~April 28, 2018,~~May 1, 2021, the Company had accruals, primarily based upon independent ~~engineering studies,~~estimates, for environmental matters of ~~$1.1~~$1.0 million and $0.9 million, respectively. The accrual as of ~~which $0.8~~April 30, 2022 consists of $0.7 million ~~was~~ classified in other accrued expenses and the remainder was included in other long-term liabilities on the consolidated balance ~~sheets.~~sheet. The accrual as of May 1, 2021 consists of $0.6 million classified in other accrued expenses and the remainder was included in other long-term liabilities on the consolidated balance sheet. The Company believes the provisions made for environmental matters are adequate to satisfy liabilities relating to such matters, however it is reasonably possible that costs could exceed accrued amounts if the selected methods of remediation do not reduce the contaminates at the sites to levels acceptable to federal and state regulatory agencies.

In each of fiscal ~~2019,~~2022, fiscal 2021 and fiscal 2020, the Company spent ~~$0.1~~$0.5 million on remediation cleanups and related ~~studies, compared with $0.3 million in fiscal 2018 and $1.2 million in fiscal 2017.~~studies. The costs associated with environmental matters as they relate to day-to-day activities were not material in fiscal ~~2019,~~2022, fiscal ~~2018~~2021 or fiscal ~~2017.~~

~~F-30~~

2020.

F-25

METHODE ELECTRONICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~Pending~~

Litigation

The Company, from time to time, is subject to various legal actions and claims incidental to our business, including those arising out of alleged defects, breach of contracts, patent infringement claims, employment-related matters and environmental matters. The Company considers insurance coverage and third party indemnification when determining required accruals for pending litigation and claims. Although the outcome of potential legal actions and claims cannot be determined, it is the opinion of the Company's management, based on the information available, that the Company has adequate reserves for these liabilities and that the ultimate resolution of these matters will not have a material adverse effect on the Company's consolidated financial statements.

Hetronic Germany-GmbH Matters

For several years, Hetronic Germany-GmbH and Hydronic-Steuersysteme-GmbH (the “Fuchs companies”) served as our distributors for Germany, Austria and other central and eastern European countries pursuant to their respective intellectual property licenses and distribution and assembly agreements. The Company became aware that the Fuchs companies and their managing director, Albert Fuchs, had materially violated those agreements. As a result, the Companyterminated all of its agreements with the Fuchs companies. On June 20, 2014, the Company filed a lawsuit against the Fuchs companies in the Federal District Court for the Western District of Oklahoma alleging material breaches of the distribution and assembly agreements and seeking damages, as well as various forms of injunctive relief. The defendants ~~have~~ filed counterclaims alleging breach of contract, interference with business relations and business slander. On April 2, 2015, the Company amended its complaint against the Fuchs companies to add additional unfair competition and Lanham Act claims and to add additional affiliated parties.

A trial with respect to the matter began in February 2020. During the trial, the defendants dismissed their one remaining counterclaim with prejudice. On March 2, 2020, the jury returned a verdict in favor of the Company. The verdict included approximately $102 million in compensatory damages and $11 million in punitive damages. On April 22, 2020, the Court entered a permanent injunction barring defendants from selling infringing products and ordering them to return Hetronic’s confidential information. Defendants appealed entry of the permanent injunction. On May 29, 2020, the Court held defendants in contempt for violating the permanent injunction and entered the final judgment. Defendants appealed entry of the final monetary judgment as well. The appeal of the permanent injunction and the appeal of the final judgment were consolidated into a single appeal before the U.S. Court of Appeals for the Tenth Circuit. On August 24, 2021, the Tenth Circuit issued a decision affirming the lower court’s ruling with the exception that it instructed the District Court to modify the injunction from the entire world to all of the countries in which Hetronic sells its products. On April 20 and 21, 2022, the District Court held a hearing related to modifying the injunction pursuant to the Tenth Circuit’s opinion, and the parties currently are preparing post-hearing briefs. The defendants also filed a petition for certiorari with the United States Supreme Court seeking to further appeal the extraterritorial application of the Lanham Act in this case. Hetronic has opposed that petition. The Supreme Court has requested the views of the Solicitor General on the petition for certiorari. Like any judgment, particularly any judgment involving defendants outside of the United States, there is no guarantee that the Company will be able to collect all or any portion of the judgment.

Note 13. Shareholders’ Equity

Share buyback program

On March 31, 2021, the Board of Directors authorized the purchase of up to $100.0 million of the Company’s outstanding common stock through March 31, 2023. Such purchases may be made on the open market, in private transactions or pursuant to purchase plans designed to comply with Rule 10b5-1 of the Securities Exchange Act of 1934. The following table summarizes the Company’s stock buyback activity under this share buyback program:


	Fiscal Year Ended
(in millions, except share and per share data)	April 30, 2022		May 1, 2021
Shares purchased		1,425,190		167,949
Average price per share	$	44.73	$	44.66
Total cost	$	63.7	$	7.5

As of April ~~27, 2019, this matter has~~30, 2022, a total of 1,593,139 shares have been ~~set for trial in February 2020.~~

~~Lease Commitments~~

~~The Company has lease commitments expiring~~purchased at ~~various dates, principally for manufacturing equipment and warehouse and office space.~~

~~Rental expense under non-cancelable operating leases amounted to $7.6~~a total cost of $71.2 million ~~$5.9 million and $4.9 million in fiscal 2019, 2018 and 2017, respectively.~~

~~In fiscal 2018,~~since the ~~Company assumed capital leases as part~~commencement of the ~~acquisition~~share buyback program. All purchased shares were retired and are reflected as a reduction of ~~Procoplast. The net book~~common stock for the par value of shares, with the ~~capital lease assets~~excess applied as of April 27, 2019 and April 28, 2018 was $1.0 million and $1.4 million, respectively. The amortization of the capital lease assets is included in depreciation expense. The weighted average interest rate was 1.5% as of April 27, 2019.

a reduction to retained earnings. As of April ~~27, 2019, future minimum lease payments~~30, 2022, the dollar value of shares that remained available to be purchased by the Company under ~~non-cancelable capitalized~~this share buyback program was approximately $28.8 million.

On June 16, 2022, the Board of Directors authorized an increase in the existing share buyback program under which the Company may purchase up to an additional $100.0 million of its outstanding common stock, and ~~operating leases are as follows:~~

(Dollars in Millions) Capitalized Leases Operating Leases
Fiscal Years:
2020 $ 0.6
$ 7.8
2021 0.5
5.6
2022 0.4
4.9
2023 0.2
4.2
2024 —
3.3
Thereafter —
8.4
Net Minimum Lease Payments 1.7
$ 34.2
Less Amount Representing Interest —

Present Value of Net Minimum Lease Payments 1.7

Less Current Portion (0.6 )
Long-term Obligations as of April 27, 2019 $ 1.1

~~F-31~~

also extended the expiration from March 31, 2023 to June 14, 2024.

F-26

METHODE ELECTRONICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~10. Debt~~

Dividends

The Company paid dividends totaling $20.4 million in fiscal 2022, $17.4 million in fiscal 2021 and $16.3 million in fiscal 2020. Dividends paid in fiscal 2021 includes $0.9 million of dividends on restricted stock that vested during the period. The Company increased its quarterly dividend from $0.11 per share to $0.14 per share beginning in the three months ended July 31, 2021.

Accumulated other comprehensive income (loss)

Comprehensive income (loss) is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources. A summary of ~~debt~~changes in accumulated other comprehensive income (loss), net of tax is shown below:


(in millions)	Currency Translation Adjustments			Derivative Instruments			Total
Balance as of April 27, 2019	$	(13.6	)	$	-		$	(13.6	)
Other comprehensive loss		(12.9	)		(1.3	)		(14.2	)
Tax benefit		0.6			0.3			0.9
Net current period other comprehensive loss		(12.3	)		(1.0	)		(13.3	)
Balance as of May 2, 2020		(25.9	)		(1.0	)		(26.9	)
Other comprehensive income (loss)		38.6			(5.7	)		32.9
Tax (expense) benefit		(1.2	)		1.3			0.1
Net current period other comprehensive income (loss)		37.4			(4.4	)		33.0
Balance as of May 1, 2021		11.5			(5.4	)		6.1
Other comprehensive income (loss)		(42.4	)		11.9			(30.5	)
Tax (expense) benefit		0.4			(2.8	)		(2.4	)
Net current period other comprehensive income (loss)		(42.0	)		9.1			(32.9	)
Balance as of April 30, 2022	$	(30.5	)	$	3.7		$	(26.8	)

(Dollars in Millions) April 27,
2019 April 28,
2018
Revolving Credit Facility $ 35.0
$ 30.0
Term Loan 243.7
—
Subsidiary Credit Facility —
3.6
Other Debt 16.8
24.2
Unamortized Debt Issuance Costs (2.9 ) —
Total Debt 292.6
57.8
Less: Current Maturities (15.7 ) (4.4 )
Total Long-term Debt $ 276.9
$ 53.4

~~Revolving Credit Facility/Term Loan~~

~~On September 12, 2018, the Company entered into five-year Amended and Restated Credit Agreement (“Credit Agreement”) with Bank of America, N.A., as Administrative Agent, and Wells Fargo Bank, N.A.~~

Stock-based compensation

The Credit Agreement amends and restates the credit agreement, dated November 18, 2016, among the Company, Bank of America, N.A. and Wells Fargo Bank, N.A. The Credit Agreement consists of a senior unsecured revolving credit facility (“Revolving Credit Facility”) of $200.0 million and a senior unsecured term loan (“Term Loan”) of $250.0 million. In addition, the Company has ~~an option~~granted stock options, restricted stock awards (“RSAs”), restricted stock units (“RSUs”) and stock awards to ~~increase the size of the Revolving Credit Facility~~employees and Term Loan by up to an additional $200.0 million. The Credit Agreement is guaranteed by the Company’s wholly-owned U.S. subsidiaries. For the Term Loan, the Company is required to make quarterly principal payments of 1.25% of the original Term Loan ($3.1 million) through maturity, with the remaining balance due on September 12, 2023.

~~Outstanding borrowings~~non-employee directors under the ~~Credit Agreement bear interest at variable rates based on~~Methode Electronics, Inc. 2014 Omnibus Incentive Plan (“2014 Plan”), the ~~type of borrowing~~Methode Electronics, Inc. 2010 Stock Plan (“2010 Plan”), the Methode Electronics, Inc. 2007 Stock Plan (“2007 Plan”) and the Methode Electronics, Inc. 2004 Stock Plan (“2004 Plan”). The Company’s ~~debt to EBITDA financial ratio, as defined.~~stockholders approved the 2014 Plan in September 2014. The ~~interest rate on outstanding borrowings~~Company can no longer make grants under the ~~Credit Agreement was 3.98% at April 27, 2019.~~2010 Plan, 2007 Plan and 2004 Plan. The ~~Credit Agreement contains customary representations and warranties, financial covenants, restrictive covenants and events~~number of ~~default.~~shares of common stock originally authorized under the 2014 Plan is 3,000,000. As of April ~~27, 2019,~~30, 2022, there were 112,255 shares available for award under the 2014 Plan.

Stock-based compensation expense

All stock-based payments to employees and directors are recognized in selling and administrative expenses on the consolidated statements of income. Awards subject to graded vesting are recognized using the accelerated recognition method over the requisite service period. The table below summarizes the stock-based compensation expense (benefit) related to the equity awards:


	Fiscal Year Ended
	April 30, 2022		May 1, 2021		May 2, 2020
(in millions)	(52 Weeks)		(52 Weeks)		(53 Weeks)
RSAs	$	0	$	—	$	(2.1	)
RSUs		10.3		5.9		1.5
Deferred director awards		0.8		—		—
Director awards		0.7		0.9		0.9
Total stock-based compensation expense	$	11.8	$	6.8	$	0.3

2014 Plan

The 2014 Plan provides for discretionary grants of stock options, stock appreciation rights, RSAs, RSUs and performance units to key employees and directors. The 2014 Plan is intended to promote the success of the Company ~~was in compliance with all the covenants in the Credit Agreement. The fair value of borrowings under the Credit Agreement approximates book value because the interest rate is variable.~~

~~Subsidiary Credit Facility~~

The Company’s subsidiary, Pacific Insight, is a party to a credit agreement with the Bank of Montreal which provides a credit facility in the maximum principal amount of C$10.0 million, with an optionand to increase ~~the principal amount~~stockholder value by ~~up to~~providing an additional ~~C$5.0 million. Availability under~~means to attract, motivate, retain and reward selected employees and eligible directors through the ~~facility is based on a percentage~~grant of eligible accounts receivable and finished goods inventory balances. Interest is calculated at a base rate plus margin, as defined. In addition, Pacific Insight was a party to a credit agreement with Roynat which was terminated during the second quarterequity awards.

F-27

Table of fiscal 2019. Total repayments under the credit agreement with Roynat were $3.8 million in fiscal 2019, including a prepayment fee of $0.1 million.

~~Other Debt~~

The Company’s subsidiary, Procoplast, has debt that consists of eighteen notes with maturities ranging from 2019 to 2031. The weighted-average interest rate was approximately 1.5% at April 27, 2019 and $3.2 million of the debt was classified as short-term. The fair value of other debt was $16.3 million at April 27, 2019 and was based on Level 2 inputs on a non-recurring basis.

~~Unamortized Debt Issuance Costs~~

The Company paid debt issuance costs of $3.1 million on September 12, 2018 in connection with the Credit Agreement. The debt issuance costs are being amortized over the five-year term of the Credit Agreement.

~~F-32~~

Contents

METHODE ELECTRONICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~Scheduled Maturities~~

Restricted stock awards and performance units

As of April ~~27, 2019, scheduled principal payments~~30, 2022, the Company had 928,412 RSAs outstanding which will be earned based on the achievement of ~~debt~~an earnings before net interest, taxes, fixed asset depreciation and intangible asset amortization (“EBITDA”) measure for fiscal 2025. The RSAs will vest ranging from 0% (for performance below threshold) to 100% (target performance) based on the achievement of the EBITDA performance measure and continued employment. In addition, if the target performance is exceeded, an additional 464,206 PUs can be earned that will be settled in cash. At the discretion of the Compensation Committee, the PUs may be settled in shares of common stock

The fair value of the RSAs was based on the closing stock price on the date of grant and earn dividend equivalents during the vesting period, which are ~~as follows:~~

(Dollars in Millions) Amount
Fiscal Years:
2020 $ 15.7
2021 14.9
2022 13.9
2023 13.7
2024 234.0
Thereafter 3.3
Total $ 295.5

~~Interest Paid~~

forfeitable if the RSAs do not vest. Compensation expense for RSAs are recognized when it is probable the minimum threshold performance criteria will be achieved. Compensation expense for the PUs are recognized when it is probable that the target performance criteria will be exceeded. The Company ~~paid interest~~assesses the probability of ~~$8.8 million, $2.4 million~~vesting at each balance sheet date and ~~$1.1 million~~adjusts compensation costs based on the probability assessment. The cash-settled PUs represent a non-equity unit with a conversion value equal to the fair market value of a share of the Company’s common stock on the vesting date. The PUs are classified as liability awards due to the cash settlement feature and are re-measured at each balance sheet date. In accordance with ASC 718, based on projections of the Company’s current business portfolio, compensation expense has not been recognized for the RSAs or PUs in fiscal ~~2019,~~2022, as the performance conditions are not probable of being met. Unrecognized stock-based compensation expense for RSAs at target level of performance is $26.5 million as of April 30, 2022.

In fiscal ~~2018~~2020, previously granted performance-based RSAs vested at 69% of target, which was determined in the fourth quarter of fiscal 2020. The target hurdle was not achieved because of among other factors, the impact of the COVID-19 pandemic. The result was a reversal of previously recognized stock-based compensation expense related to prior years of $5.2 million. Stock-based compensation expense for these awards in fiscal 2020 was a credit of $2.1 million.

The following table summarizes the RSA activity under the 2014 Incentive Plan:


	Restricted Stock Awards			Weighted average grant date fair value
Non-vested at April 27, 2019		1,031,408		$	34.09
Awarded		0		$	0
Vested		(455,750	)	$	33.89
Forfeited		(575,658	)	$	34.25
Non-vested at May 2, 2020		0		$	0
Awarded		928,412		$	28.50
Vested		0		$	0
Forfeited		0		$	0
Non-vested at May 1, 2021		928,412		$	28.50
Awarded		0		$	0
Vested		0		$	0
Forfeited		0		$	0
Non-vested at April 30, 2022		928,412		$	28.50

Restricted stock units

RSUs granted under the 2014 Plan vest over a pre-determined period of time, up to five years from the date of grant. The fair value of RSUs granted was based on the closing stock price on the date of grant. RSUs granted in fiscal 2021 and fiscal ~~2017, respectively.~~2022 earn dividend equivalents during the vesting period, which are forfeitable if the RSUs do not vest.

F-28

METHODE ELECTRONICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table summarizes RSU activity granted under the 2014 Plan:


	Restricted Stock Units			Weighted average grant date fair value
Non-vested at April 27, 2019		187,844		$	34.55
Awarded		0		$	0
Vested		(176,994	)	$	34.25
Forfeited		(7,750	)	$	38.75
Non-vested at May 2, 2020		3,100		$	41.20
Awarded		949,712		$	28.49
Vested		(25,201	)	$	29.87
Forfeited		0		$	0
Non-vested at May 1, 2021		927,611		$	28.50
Awarded		46,300		$	48.41
Vested		(37,520	)	$	36.55
Forfeited		0		$	0
Non-vested at April 30, 2022		936,391		$	29.16

As of April 30, 2022, there were 37,520 RSUs that were vested for which shares were issued in the first quarter of fiscal 2023. As of April 30, 2022, unrecognized share-based compensation expense for RSUs was $13.2 million which will be recognized over a weighted-average amortization period of 1.8 years.

Director awards

The Company grants stock awards to its non-employee directors as a component of their compensation. The stock awards vest immediately upon grant. Non-employee directors may elect to defer receipt of their shares under the Company’s non-qualified deferred compensation plan. In fiscal 2022, the Company granted 32,505 shares, of which 17,730 shares were deferred. All dividends on deferred shares are reinvested into additional deferred shares based on the closing price of the Company’s common stock on the dividend payment date. Deferred shares will be settled with shares of common stock upon each director’s retirement from the Company’s Board of Directors. As of April 30, 2022, there were 17,956 deferred shares outstanding. During fiscal 2021 and fiscal 2020, the Company issued 33,000 shares and 30,000 shares, respectively, of common stock to its independent directors, all of which vested immediately upon grant.

Stock options

The following table summarizes combined stock option activity under the 2010 Plan and 2007 Plan:


	Shares			Weighted average exercise price		Weighted- average life (years)		Aggregate intrinsic value (in millions)
Outstanding and exercisable at April 27, 2019		106,668		$	35.76		5.0	$	0.1
Exercised		0		$	0
Forfeited		0		$	0
Outstanding and exercisable at May 2, 2020		106,668		$	35.76		4.0	$	0.1
Exercised		(24,500	)	$	31.61
Forfeited		(9,168	)	$	37.01
Outstanding and exercisable at May 1, 2021		73,000		$	37.01		3.2	$	0.6
Exercised		(13,000	)	$	37.01
Forfeited		0		$	0
Outstanding and exercisable at April 30, 2022		60,000		$	37.01		2.2	$	0.5

F-29

METHODE ELECTRONICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Deferred RSUs

Under the 2014 Plan and 2010 Plan, RSUs that have vested for certain executives, including the Company’s CEO, will not be delivered in common stock until after the executive terminates employment from the Company or upon a change of control. As of April 30, 2022, shares to be delivered to these executives were 121,200 shares under the 2014 Plan and 180,000 shares under the 2010 Plan.

Under the 2004 Plan, 225,000 shares of common stock subject to performance based RSAs granted to the Company’s CEO in fiscal 2006 and 2007 were converted to RSUs. The shares of common stock underlying the RSUs will not be issued and delivered until the earlier of: (1) thirty days after the CEO’s date of termination of employment with the Company and all of its subsidiaries and affiliates; or (2) the last day of the Company’s fiscal year in which the payment of common stock in satisfaction of the RSUs becomes deductible to the Company under Section 162(m) of the Code. As of April 30, 2022, 29,945 shares have been delivered in connection with these RSUs with a remaining balance to be delivered of 195,055 shares.

The RSUs are not entitled to voting rights or dividends, however a bonus in lieu of dividends are paid. The vested deferred RSUs are considered outstanding for earnings per share calculations.

Note 14. Income Per Share

Basic income per share is calculated by dividing net income by the number of weighted average common shares outstanding for the applicable period. The weighted average number of common shares used in the diluted income per share calculation is determined using the treasury stock method which includes the effect of all potential dilutive common shares outstanding during the period.

The following table sets forth the computation of basic and diluted income per share:


	Fiscal Year Ended
	April 30, 2022		May 1, 2021		May 2, 2020
	(52 Weeks)		(52 Weeks)		(53 Weeks)
Numerator:
Net income (in millions)	$	102.2	$	122.3	$	123.4

Denominator:
Denominator for basic income per share - weighted average shares outstanding and vested/unissued RSUs		37,234,086		38,038,615		37,574,671
Dilutive potential common shares - stock options, RSAs and RSUs		583,360		267,671		269,799
Denominator for diluted income per share		37,817,446		38,306,286		37,844,470

Basic and diluted income per share:
Basic income per share	$	2.74	$	3.22	$	3.28
Diluted income per share	$	2.70	$	3.19	$	3.26

Number of anti-dilutive potentially issuable shares excluded from diluted common shares outstanding		928,412		738,167		566,620

~~11.~~

Note 15. Segment Information and Geographic Area Information

An operating segment is defined as a component of an enterprise that engages in business activities from which it may earn revenues and incur expenses, and about which separate financial information is regularly evaluated by the Chief Operating Decision Maker (“CODM”) in deciding how to allocate resources. The CODM is the Company’s President and Chief Executive Officer (“CEO”).

Effective October 27, 2018, the Company reorganized its reportable segments upon the acquisition of Grakon. Prior to the acquisition, the Company's reportable segments were Automotive, Power, Interface and Other. As a result of this change, the Company's reportable segments are now Automotive, Industrial, Interface and Medical. Historical information has been revised to reflect the new reportable segments.

~~A summary of the significant reportable segment changes is as follows:~~

~~Grakon's automotive business has been included in the Automotive segment, while Grakon's non-automotive business has been included in the Industrial segment.~~

~~The busbar business, previously included in the Power segment, is now part of the Industrial segment.~~

~~The radio-remote control business, previously included in the Interface segment, is now part of the Industrial segment.~~

~~The medical devices business, previously included in the Other segment, now makes up the Medical segment.~~

The Automotive segment supplies electronic and electro-mechanical devices and related products to automobile OEMs, either directly or through their tiered suppliers. Products include integrated center consoles, hidden switches, ergonomic switches, transmission lead-frames, LED-based lighting, and sensors which incorporate magneto-elastic sensing and other technologies that monitor the operation or status of a component or system.

The Industrial segment manufactures ~~external~~ lighting solutions, industrial safety radio remote controls, braided flexible cables, current-carrying laminated busbars and devices, custom power-product assemblies ~~such~~(such as our PowerRail® ~~solution,~~solution), high-current low-voltage flexible power cabling systems and powder-coated busbars that are used in various markets and applications, including aerospace, computers, industrial, power conversion, military, telecommunications and transportation.

~~F-33~~

F-30

METHODE ELECTRONICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Interface segment provides a variety of ~~copper~~copper-based transceivers and ~~fiber-optic interface~~related accessories for the cloud computing hardware equipment and telecommunications broadband equipment markets, user interface solutions for the appliance, commercial food service, ~~construction, consumer, material handling,~~and point-of-sale equipment markets, and ~~telecommunications~~fluid-level sensors for the marine/recreational vehicle and sump pump markets. ~~Solutions include copper transceivers and solid-state field-effect consumer touch panels.~~

The Medical segment is made up of the ~~Company's~~Company’s medical device business, Dabir Surfaces, with its surface support technology aimed at pressure injury prevention. Methode ~~is developing~~has developed the technology for use by patients who are immobilized or otherwise at risk for pressure injuries, including patients undergoing long-duration surgical procedures.

The accounting policies of the segments are the same as those described in the summary of significant accounting policies in Note 1, ~~"Description~~“Description of Business and Summary of Significant Accounting ~~Policies," above.~~Policies.” The CODM allocates resources to and evaluates the performance of each operating segments based on operating income. Transfers between segments are recorded using internal transfer prices set by the Company.

The tables below present information about ~~our~~the Company’s reportable segments.

Fiscal Year Ended April 27, 2019
(Dollars in Millions) Automotive Industrial Interface Medical Eliminations/Corporate Consolidated
Net Sales $ 741.6
$ 210.0
$ 57.9
$ 1.1
$ (10.3 ) $ 1,000.3
Transfers between Segments (6.9 ) (3.2 ) (0.2 ) —
10.3
—
Net Sales to Unaffiliated Customers $ 734.7
$ 206.8
$ 57.7
$ 1.1
$ —
$ 1,000.3

Income/(Loss) from Operations $ 126.3
$ 37.4
$ (0.3 ) $ (8.6 ) $ (48.0 ) $ 106.8
Interest Expense, Net 8.3
Other Income, Net (5.1 )
Income before Income Taxes $ 103.6

Depreciation and Amortization $ 25.2
$ 11.7
$ 3.2
$ 1.0
$ 2.2
$ 43.3

Identifiable Assets $ 677.4
$ 404.3
$ 88.6
$ 9.4
$ 52.0
$ 1,231.7

Fiscal Year Ended April 28, 2018
(Dollars in Millions) Automotive Industrial Interface Medical Eliminations/Corporate Consolidated
Net Sales $ 738.4
$ 105.6
$ 73.9
$ 0.3
$ (9.9 ) $ 908.3
Transfers between Segments (9.7 ) 0.2
(0.7 ) —
10.2
—
Net Sales to Unaffiliated Customers $ 728.7
$ 105.8
$ 73.2
$ 0.3
$ 0.3
$ 908.3

Income/(Loss) from Operations $ 156.3
$ 13.0
$ 6.0
$ (11.4 ) $ (45.6 ) $ 118.3
Interest Expense, Net 0.9
Other Income, Net (6.4 )
Income before Income Taxes $ 123.8

Depreciation and Amortization $ 21.3
$ 2.0
$ 3.1
$ 0.8
$ 0.9
$ 28.1

Identifiable Assets $ 632.7
$ 93.1
$ 206.8
$ 8.1
$ (24.8 ) $ 915.9

~~F-34~~


	Fiscal Year Ended April 30, 2022 (52 Weeks)
(in millions)	Automotive			Industrial			Interface		Medical			Eliminations/ Corporate			Consolidated
Net sales	$	786.3		$	325.7		$	59.8	$	4.2		$	(12.4	)	$	1,163.6
Transfers between segments		(4.8	)		(7.6	)		0		0			12.4			0
Net sales to unaffiliated customers	$	781.5		$	318.1		$	59.8	$	4.2		$	0		$	1,163.6

Income (loss) from operations	$	92.6		$	67.1		$	9.9	$	(5.5	)	$	(52.4	)	$	111.7
Interest expense, net																3.5
Other income, net																(10.3	)
Income before income taxes															$	118.5

Purchases of property, plant and equipment	$	27.4		$	2.4		$	—	$	0.2		$	8.0		$	38.0

Depreciation and amortization	$	34.4		$	14.9		$	0.2	$	1.0		$	2.1		$	52.6

Identifiable assets	$	689.8		$	455.3		$	108.1	$	7.9		$	128.0		$	1,389.1


	Fiscal Year Ended May 1, 2021 (52 Weeks)
(in millions)	Automotive			Industrial			Interface		Medical			Eliminations/ Corporate			Consolidated
Net sales	$	761.8		$	273.2		$	61.6	$	2.8		$	(11.4	)	$	1,088.0
Transfers between segments		(6.1	)		(5.3	)		0		0			11.4			0
Net sales to unaffiliated customers	$	755.7		$	267.9		$	61.6	$	2.8		$	0		$	1,088.0

Income (loss) from operations	$	107.6		$	64.3		$	8.9	$	(4.6	)	$	(48.3	)	$	127.9
Interest expense, net																5.2
Other income, net																(12.2	)
Income before income taxes															$	134.9

Purchases of property, plant and equipment	$	22.5		$	2.1		$	0	$	0		$	0.3		$	24.9

Depreciation and amortization	$	34.3		$	14.3		$	0.3	$	0.9		$	1.7		$	51.5

Identifiable assets	$	739.5		$	461.6		$	90.4	$	7.6		$	167.9		$	1,467.0

F-31

METHODE ELECTRONICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


	Fiscal Year Ended May 2, 2020 (53 Weeks)
(in millions)	Automotive			Industrial			Interface			Medical			Eliminations/ Corporate			Consolidated
Net sales	$	716.8		$	253.9		$	58.9		$	1.6		$	(7.3	)	$	1,023.9
Transfers between segments		(4.7	)		(2.5	)		(0.1	)		0			7.3			0
Net sales to unaffiliated customers	$	712.1		$	251.4		$	58.8		$	1.6		$	0		$	1,023.9

Income (loss) from operations	$	124.4		$	59.4		$	5.6		$	(6.0	)	$	(36.3	)	$	147.1
Interest expense, net																	10.1
Other income, net																	(11.7	)
Income before income taxes																$	148.7

Purchases of property, plant and equipment	$	37.5		$	5.7		$	0.3		$	0.7		$	0.9		$	45.1

Depreciation and amortization	$	31.0		$	13.7		$	0.9		$	1.1		$	1.6		$	48.3

Identifiable assets	$	670.9		$	421.8		$	71.0		$	8.8		$	198.1		$	1,370.6

Fiscal Year Ended April 29, 2017
(Dollars in Millions) Automotive Industrial Interface Medical Eliminations/Corporate Consolidated
Net Sales $ 641.0
$ 92.4
$ 94.3
$ 0.2
$ (11.4 ) $ 816.5
Transfers between Segments (8.8 ) (0.1 ) (2.8 ) —
11.7
—
Net Sales to Unaffiliated Customers $ 632.2
$ 92.3
$ 91.5
$ 0.2
$ 0.3
$ 816.5

Income/(Loss) from Operations $ 148.3
$ 2.7
$ 4.0
$ (8.5 ) $ (35.7 ) $ 110.8
Interest Income, Net (0.4 )
Other Income, Net (4.7 )
Income before Income Taxes $ 115.9

Depreciation and Amortization $ 15.5
$ 3.2
$ 4.3
$ 0.5
$ 0.8
$ 24.3

Identifiable Assets $ 462.3
$ 78.1
$ 170.4
$ 5.4
$ (12.2 ) $ 704.0

The following ~~table sets~~tables set forth ~~certain geographic financial information for fiscal 2019, fiscal 2018 and fiscal 2017. Geographic~~ net sales ~~are determined based on our sales from our various operational locations.~~

Fiscal Year Ended
(Dollars in Millions) April 27,
2019 April 28,
2018 April 29,
2017
Net Sales:

U.S. $ 540.5
$ 487.5
$ 506.9
Malta 148.5
184.0
155.5
China 113.7
117.3
127.7
Canada 101.6
54.4
—
Other 96.0
65.1
26.4
Total Net Sales $ 1,000.3
$ 908.3
$ 816.5

Property, Plant and Equipment, Net:

U.S. $ 83.9
$ 63.3
$ 44.9
Malta 33.0
36.8
26.4
Belgium 22.1
25.0
—
China 18.6
7.2
5.9
Other 34.3
29.9
13.4
Total Property, Plant and Equipment, Net $ 191.9
$ 162.2
$ 90.6

~~12. Pre-Production Costs Related to Long-Term Supply Arrangements~~

~~The Company incurs pre-production tooling costs related to products produced for its customers under long-term supply agreements. At April 27, 2019~~ and ~~April 28, 2018,~~tangible long-lived assets by geographic area where the Company had $32.8 million and $20.5 million, respectively, of pre-production tooling costs related to customer-owned tools for which reimbursement is contractually guaranteed by the customer or for which the customer has provided a non-cancelable right to use the tooling. Engineering, testing and other costs incurred in the design and development of production parts are expensed as incurred, unless the costs are reimbursable, as specified in a customer contract. At April 27, 2019 and April 28, 2018, the Company had $15.0 million and $10.1 million, respectively, of Company owned pre-production tooling, which is capitalized withinoperates. Tangible long-lived assets include property, plant and ~~equipment.~~

equipment and operating lease assets.

~~F-35~~


	Fiscal Year Ended
	April 30, 2022		May 1, 2021		May 2, 2020
(in millions)	(52 Weeks)		(52 Weeks)		(53 Weeks)
Net sales:
U.S.	$	547.4	$	510.8	$	531.5
China		224.3		193.7		116.9
Malta		178.4		173.5		143.9
Mexico		76.2		87.4		104.7
Egypt		67.2		58.4		60.0
Other		70.1		64.2		66.9
Total net sales	$	1,163.6	$	1,088.0	$	1,023.9

(in millions)	April 30, 2022		May 1, 2021
Tangible long-lived assets, net:
U.S.	$	74.2	$	75.0
Malta		38.6		43.0
China		30.1		27.2
Egypt		22.8		20.1
Mexico		21.0		24.6
Belgium		20.2		24.8
Other		10.1		11.6
Total tangible long-lived assets, net	$	217.0	$	226.3

F-32

METHODE ELECTRONICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~13.~~

Note 16. Summary of Quarterly Results of Operations (Unaudited)

The following is a summary of unaudited quarterly results of operations for fiscal ~~2019~~2022 and fiscal ~~2018:~~2021:


	Fiscal 2022
	Quarter Ended
(in millions, except per share data)	July 31, 2021		October 30, 2021		January 29, 2022		April 30, 2022
Net sales	$	287.8	$	295.5	$	291.6	$	288.7
Gross profit	$	71.7	$	69.2	$	69.1	$	54.9
Net income	$	29.1	$	27.5	$	29.4	$	16.2
Net income per basic common share	$	0.77	$	0.73	$	0.80	$	0.44
Net income per diluted common share	$	0.76	$	0.72	$	0.78	$	0.43


	Fiscal 2021
	Quarter Ended
(in millions, except per share data)	August 1, 2020		October 31, 2020		January 30, 2021		May 1, 2021
Net sales	$	190.9	$	300.8	$	295.3	$	301.0
Gross profit	$	45.1	$	80.8	$	72.6	$	75.6
Net income	$	20.7	$	38.6	$	31.9	$	31.1
Net income per basic common share	$	0.55	$	1.01	$	0.84	$	0.82
Net income per diluted common share	$	0.54	$	1.01	$	0.83	$	0.81

F-33

Fiscal 2019
Quarter Ended
(Dollars in Millions, except per share data) July 28, 2018 October 27, 2018 January 26, 2019 April 27, 2019
Net Sales $ 223.4
$ 264.0
$ 246.9
$ 266.0
Gross Profit $ 60.1
$ 70.8
$ 64.3
$ 70.6
Net Income $ 23.7
$ 14.6
$ 30.7
$ 22.6
Net Income per Basic Common Share $ 0.63
$ 0.39
$ 0.82
$ 0.61
Net Income per Diluted Common Share $ 0.63
$ 0.39
$ 0.82
$ 0.60

Fiscal 2018
Quarter Ended
(Dollars in Millions, except per share data) July 29, 2017 October 28, 2017 January 27, 2018 April 28, 2018
Net Sales $ 201.2
$ 230.1
$ 228.0
$ 249.0
Gross Profit $ 55.6
$ 62.0
$ 60.1
$ 61.9
Net Income (Loss) $ 20.5
$ 24.2
$ (24.3 ) $ 36.8
Net Income (Loss) per Basic Common Share $ 0.55
$ 0.65
$ (0.65 ) $ 0.99
Net Income (Loss) per Diluted Common Share $ 0.55
$ 0.64
$ (0.65 ) $ 0.98

~~Significant Items for Fiscal 2019~~

~~The table below contains items included in fiscal 2019:~~

Fiscal 2019
Quarter Ended
(Dollars in Millions) July 28, 2018 October 27, 2018 January 26, 2019 April 27, 2019
Legal Fees Related to the Hetronic lawsuit $ 0.9
$ 1.0
$ 0.8
$ 0.8
Acquisition-related Expenses $ 0.6
$ 10.9
$ 3.8
$ 0.1
Grant Income from Foreign Government for Maintaining Certain Employment Levels $ (1.1 ) $ (1.4 ) $ (1.9 ) $ (1.4 )
Compensation Expense Reversal Related to the Re-estimation of RSA Performance Level $ —
$ 7.4
$ —
$ —
Discrete Estimated Net Tax Benefit with Respect to U.S. Tax Reform $ —
$ —
$ (4.8 ) $ —
Foreign Investment Tax Credit $ (0.4 ) $ (1.1 ) $ (0.7 ) $ 0.2
Expense for Initiatives to Reduce Overall Costs and Improve Operational Profitability $ 0.8
$ 2.5
$ 2.6
$ 1.0
Net Tariff Expense $ —
$ —
$ 2.0
$ 0.3

~~F-36~~

~~METHODE ELECTRONICS, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~Significant Items for Fiscal 2018~~

Fiscal 2018
Quarter Ended
(Dollars in Millions) July 29, 2017 October 28, 2017 January 27, 2018 April 28, 2018
Legal Fees Related to the Hetronic lawsuit $ 2.9
$ 1.6
$ 1.5
$ 2.1
Acquisition-related Expenses $ 2.6
$ 4.2
$ —
$ —
Grant Income from Foreign Government for Maintaining Certain Employment Levels $ —
$ (1.5 ) $ (3.6 ) $ (2.2 )
Compensation Expense Reversal Related to the Re-estimation of RSA Performance Level $ —
$ —
$ (6.0 ) $ —
Discrete Estimated Net Tax Charge with Respect to U.S. Tax Reform $ —
$ —
$ 56.8
$ (3.1 )
Foreign Investment Tax Credit $ (0.4 ) $ (0.4 ) $ (0.3 ) $ (8.7 )

SCHEDULE II—VALUATION AND QUALIFYING ACCOUNTS

METHODE ELECTRONICS, INC. AND SUBSIDIARIES

(in millions)


Description	Balance at beginning of period		(Benefits)/ charges to income				Deductions		Other		Balance at end of period
Year Ended April 30, 2022
Allowance for uncollectible accounts	$	0.7	$	0.3			$	0	$	0	$	1.0
Deferred tax valuation allowance	$	9.3	$	(2.5	)		$	0	$	0	$	6.8

Year Ended May 1, 2021
Allowance for uncollectible accounts	$	0.7	$	0			$	0	$	0	$	0.7
Deferred tax valuation allowance	$	7.5	$	1.8			$	0	$	0	$	9.3

Year Ended May 2, 2020						��
Allowance for uncollectible accounts	$	0.9	$	(0.2	)		$	0	$	0	$	0.7
Deferred tax valuation allowance	$	6.6	$	0.9			$	0	$	0	$	7.5

Description
Balance at
Beginning of
Period
Charged to Costs
and Expenses

Charged to Other
Accounts—
Describe

Deductions—
Describe

Balance at End of
Period

YEAR ENDED APRIL 27, 2019:

Allowance for uncollectible accounts $ 0.5
$ 0.2
$ 0.2
(1) $ —
(2) $ 0.9
Deferred tax valuation allowance $ 2.5
$ —
$ 4.8
(1) $ 1.0
(3) $ 6.3

YEAR ENDED APRIL 28, 2018:

Allowance for uncollectible accounts $ 0.6
$ —
$ —
$ 0.1
(2) $ 0.5
Deferred tax valuation allowance $ 1.9
$ —
$ —
$ (0.6 ) (3) $ 2.5

YEAR ENDED APRIL 29, 2017:

Allowance for uncollectible accounts $ 0.5
$ 0.1
$ —
$ —
(2) $ 0.6
Deferred tax valuation allowance $ 1.3
$ —
$ —
$ (0.6 ) (3) $ 1.9

~~______________________________________~~

~~(1) Represents business acquisitions.~~

~~(2) Uncollectible accounts written off, net of recoveries.~~

~~(3) Represents change in temporary items.~~

~~INDEX TO EXHIBITS~~



~~Exhibit~~ ~~Number~~		~~Description~~
~~3.1~~		~~Certificate of Incorporation of Registrant, as amended and currently in effect~~
~~3.2~~		~~Bylaws of Registrant, as amended and currently in effect~~
~~4.1~~		~~Article Fourth of Certificate of Incorporation of Registrant, as amended and currently in effect (included in Exhibit 3.1)~~
~~4.2~~		~~Description of Capital Stock~~
10.1*		~~Change in Control Agreement dated September 1, 2006 between Methode Electronics, Inc. and Donald W. Duda~~
10.2*		~~Change in Control Agreement dated September 14, 2006 between Methode Electronics, Inc. and Timothy R. Glandon~~
10.3*		~~Amended and Restated Restricted Stock Unit Award Agreement (Executive Award/Performance Based) effective as of June 18, 2004 between Methode Electronics, Inc. and Donald W. Duda~~
10.4*		~~Amended and Restated Restricted Stock Unit Award Agreement (Executive Award/Cliff Vesting) effective as of June 18, 2004 between Methode Electronics, Inc. and Donald W. Duda~~
10.5*		~~Amended and Restated Restricted Stock Unit Award Agreement (Executive Award/Performance Based) effective as of June 15, 2005 between Methode Electronics, Inc. and Donald W. Duda~~
10.6*		~~Amended and Restated Restricted Stock Unit Award Agreement (Executive Award/Performance Based) effective as of August 7, 2006 between Methode Electronics, Inc. and Donald W. Duda~~
10.7*		~~Methode Electronics, Inc. 2007 Stock Plan~~
10.8*		~~Change in Control Agreement dated July 15, 2008 between Methode Electronics, Inc. and Ronald L. G. Tsoumas~~
10.9*		~~Form of Amendment to Change in Control Agreement~~
10.10*		~~Methode Electronics, Inc. 2010 Stock Plan~~
10.11*		~~Under the 2010 Stock Plan, Form of Methode Electronics, Inc. Non-Qualified Stock Option Form Award Agreement~~
10.12*		~~Form of Methode Electronics, Inc. Form of Amendment to Change in Control Agreement~~
10.13*		~~Methode Electronics, Inc. 2014 Omnibus Incentive Plan~~
10.14*		~~2014 Omnibus Incentive Plan Performance Based Restricted Stock Form Award Agreement - Executive Officer~~
10.15*		~~2014 Omnibus Incentive Plan - Restricted Stock Unit Form Award Agreement - Executive Officer~~
10.16*		~~Form of Amendment to Change in Control Agreement dated November 8, 2010~~
~~10.17~~		Credit Agreement dated as of November 18, 2016 among the Company, Bank of America, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer, Wells Fargo Bank, National Association, as L/C Issuer, and the Lenders named therein
10.18*		~~Form of First Amendment to Performance Based Restricted Stock Award Agreement dated as of July 19, 2017~~
10.19*		~~Change in Control Agreement dated June 14, 2017 between Methode Electronics, Inc. and Andrea Barry~~
10.20*		~~Change in Control Agreement dated as of December 7, 2018 between the Company and Michael Brotherton~~
10.21*		~~Change in Control Agreement dated as of December 7, 2018 between the Company and Anil Shetty~~
21		~~Subsidiaries of Methode Electronics, Inc.~~
23		~~Consent of Ernst & Young LLP~~
~~31.1~~		~~Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer~~
~~31.2~~		~~Rule 13a-14(a)/15d-14(a) Certification of Principal Financial Officer~~
32		~~Certification of Periodic Financial Report Pursuant to 18 U.S.C. Section 1350~~
101**		~~Interactive Data File~~

* ~~Management Compensatory Plan~~

** As provided in Rule 406 of Regulation S-T, this information is deemed not filed as part of a registration statement or

~~prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, and is deemed not filed for purposes of section 18 of~~

~~the Securities Exchange Act of 1934, and is otherwise not subject to liability under those sections.~~

F-34



Delaware	36-2090085
(State or other jurisdiction of	(IRS Employer
incorporation or organization)	Identification No.)



8750 West Bryn Mawr Avenue,Suite 1000
Chicago,Illinois	60631-3518
(Address of Principal Executive Offices)	(Zip Code)



		Name of each exchange
Title of each Class	Trading Symbol(s)	on which registered
Common Stock, $0.50 Par Value	MEI	New York Stock Exchange



Large Accelerated filerx ☒		Accelerated filer o ☐
Non-accelerated filer o ☐		Smaller reporting company o ☐
Emerging Growth Company o ☐


☒	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO



PART I
Item 1.	Business	1 2
Item 1A.	Risk Factors	3 5
Item 1B.	Unresolved Staff Comments	11 13
Item 2.	Properties	11 13
Item 3.	Legal Proceedings	11 14
Item 4.	Mine Safety Disclosures	11 14

PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	13 15
Item 6.	~~Selected Financial Data~~ [Reserved]	14 16
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16 17
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	30 26
Item 8.	Financial Statements and Supplementary Data	30 26
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	31 26
Item 9A.	Controls and Procedures	31 27
Item 9B.	Other Information	32 27
Item 9C.	Disclosure Regarding Foreign Jurisdictions that Prevent Inspections	27
~~PART III~~
PART III
Item 10.	Directors, Executive Officers and Corporate Governance	32 28
Item 11.	Executive Compensation	32 28
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	32 28
Item 13.	Certain Relationships and Related Transactions, and Director Independence	33 28
Item 14.	Principal Accountant Fees and Services	33 28

PART IV
Item 15.	Exhibits, ~~and~~ Financial Statement Schedules	33 29
Item 16.	Form 10-K Summary	33 30



	Fiscal Year Ended
	April 27, 2019		April 28, 2018		April 29, 2017
Automotive	73.4	%	80.3	%	77.5	%
Industrial	20.7	%	11.6	%	11.3	%
Interface	5.8	%	8.1	%	11.2	%
Medical	0.1	%	—	%	—	%



	High		Low		Dividends Declared Per Share
Fiscal Year Ended April 27, 2019
First Quarter	$	45.45	$	37.70	$	0.11
Second Quarter	41.30		27.65		0.11
Third Quarter	33.98		20.99		0.11
Fourth Quarter	32.22		25.11		0.11

Fiscal Year Ended April 28, 2018
First Quarter	$	44.95	$	36.05	$	0.09
Second Quarter	46.75		36.75		0.09
Third Quarter	48.44		39.00		0.11
Fourth Quarter	42.10		36.95		0.11



	Fiscal Year Ended
(In Millions, Except Percentages and Per Share Amounts)	April 27, 2019 (1)			April 28, 2018 (2)			April 29, 2017 (3)			April 30, 2016 (4)			May 2, 2015 (5)
Income Statement Data:
Net Sales	$	1,000.3		$	908.3		$	816.5		$	809.1		$	881.1
Income before Income Taxes	103.6			123.8			115.9			110.9			120.8
Income Tax Expense	12.0			66.6			23.0			26.3			19.8
Net Income	91.6			57.2			92.9			84.6			101.1

Per Common Share Data:
Basic Net Income	2.45			1.54			2.49			2.21			2.61
Diluted Net Income	2.43			1.52			2.48			2.20			2.58
Dividends	0.44			0.40			0.36			0.36			0.36
Book Value	18.43			16.82			14.53			12.61			11.82

Balance Sheet Data:
Total Debt	292.6			57.8			27.0			57.0			5.0
Retained Earnings	545.2			472.0			427.0			358.6			356.5
Fixed Assets, Net	191.9			162.2			90.6			93.0			93.3
Total Equity	689.7			630.0			541.1			470.1			459.0
Total Assets	1,231.7			915.9			704.0			655.9			605.8

Other Financial Data:
Return on Average Equity	13.9		%	9.8		%	18.6		%	18.2		%	23.5		%
Pre-tax Income as a Percentage of Sales	10.4		%	13.6		%	14.2		%	13.7		%	13.7		%
Net Income as a Percentage of Sales	9.2		%	6.3		%	11.4		%	10.5		%	11.5		%



(Dollars in Millions)	April 27, 2019			April 28, 2018			Net Change ($)			Net Change (%)
Net Sales	$	1,000.3		$	908.3		$	92.0		10.1	%

Cost of Products Sold	734.5			668.7			65.8			9.8	%

Gross Profit	265.8			239.6			26.2			10.9	%

Selling and Administrative Expenses	142.9			115.7			27.2			23.5	%
Amortization of Intangibles	16.1			5.6			10.5			187.5	%
Interest Expense, Net	8.3			0.9			7.4			N/M		*
Other Income, Net	(5.1		)	(6.4		)	(1.3		)	(20.3	)%
Income Tax Expense	12.0			66.6			(54.6		)	(82.0	)%
Net Income	$	91.6		$	57.2		$	34.4		60.1	%

Percent of sales:	April 27, 2019			April 28, 2018
Net Sales	100.0		%	100.0		%
Cost of Products Sold	73.4		%	73.6		%
Gross Profit	26.6		%	26.4		%
Selling and Administrative Expenses	14.3		%	12.7		%
Amortization of Intangibles	1.6		%	0.6		%
Interest Expense, Net	0.8		%	0.1		%
Other Income, Net	(0.5		)%	(0.7		)%
Income Tax Expense	1.2		%	7.3		%
Net Income	9.2		%	6.3		%

*N/M equals non-meaningful



Plan category	Number of securities to be issued upon exercise of outstanding options, warrants and rights		Weighted-average exercise price of outstanding options, warrants and rights			Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in the first column)
Equity Compensation Plans Approved by Security Holders	1,325,920	⁽¹⁾	$	35.77	⁽²⁾	1,344,034
Equity Compensation Plans Not Approved by Security Holders	—		—			—
Total	1,325,920		$	35.77		1,344,034



	April 27, 2019			April 28, 2018
ASSETS
CURRENT ASSETS
Cash and Cash Equivalents	$	83.2		$	246.1
Accounts Receivable, Less Allowance (2019 - $0.9 and 2018 - $0.5)	219.3			202.6
Inventories	116.7			84.1
Income Taxes Receivable	14.3			2.4
Prepaid Expenses and Other Current Assets	20.0			14.8
TOTAL CURRENT ASSETS	453.5			550.0
NON-CURRENT ASSETS
Property, Plant and Equipment, Net	191.9			162.2
Goodwill	233.3			59.2
Intangibles, Net	264.9			61.0
Deferred Tax Assets	34.3			42.3
Pre-production Costs	32.8			20.5
Other Long-term Assets	21.0			20.7
TOTAL NON-CURRENT ASSETS	778.2			365.9
TOTAL ASSETS	$	1,231.7		$	915.9

LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts Payable	$	91.9		$	89.5
Accrued Employee Liabilities	20.1			22.8
Other Accrued Expenses	33.9			21.6
Short-term Debt	15.7			4.4
Income Tax Payable	19.3			18.7
TOTAL CURRENT LIABILITIES	180.9			157.0
LONG-TERM LIABILITIES
Long-term Debt	276.9			53.4
Long-term Income Taxes Payable	33.0			42.6
Other Long-term Liabilities	14.8			14.6
Deferred Tax Liabilities	36.4			18.3
TOTAL LONG-TERM LIABILITIES	361.1			128.9
TOTAL LIABILITIES	542.0			285.9
SHAREHOLDERS’ EQUITY
Common Stock, $0.50 par value, 100,000,000 shares authorized, 38,333,576 shares and 38,198,353 shares issued as of April 27, 2019 and April 28, 2018, respectively	19.2			19.1
Additional Paid-in Capital	150.4			136.5
Accumulated Other Comprehensive Income (Loss)	(13.6		)	13.9
Treasury Stock, 1,346,624 shares as of April 27, 2019 and April 28, 2018	(11.5		)	(11.5		)
Retained Earnings	545.2			472.0
TOTAL SHAREHOLDERS' EQUITY	689.7			630.0
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	1,231.7		$	915.9



	Common Stock Shares		Common Stock			Additional Paid-in Capital			Accumulated Other Comprehensive Income (Loss)			Treasury Stock			Retained Earnings			Total Shareholders Equity
Balance as of April 30, 2016	38,181,985		$	19.1		$	112.3		$	(8.4	)	$	(11.5	)	$	358.6		$	470.1
Earned Portion of Restricted Stock, Net of Tax Withholding	146,192		0.1			—			—			—			(1.2		)	(1.1		)
Stock-based Compensation Expense	—		—			12.4			—			—			—			12.4
Exercise of Stock Options	147,829		0.1			2.6			—			—			—			2.7
Purchase of Common Stock	(342,081	)	(0.2		)	—			—			—			(9.6		)	(9.8		)
Tax Benefit from Stock Option Exercises	—		—			4.9			—			—			—			4.9
Foreign Currency Translation Adjustments	—		—			—			(17.3		)	—			—			(17.3		)
Net Income for Year	—		—			—			—			—			92.9			92.9
Dividends on Common Stock	—		—			—			—			—			(13.7		)	(13.7		)
Balance as of April 29, 2017	38,133,925		19.1			132.2			(25.7		)	(11.5		)	427.0			541.1
Earned Portion of Restricted Stock, Net of Tax Withholding	51,095		—			—			—			—			(0.2		)	(0.2		)
Stock-based Compensation Expense	—		—			4.0			—			—			—			4.0
Exercise of Stock Options	13,333		—			0.3			—			—			—			0.3
Adoption of ASU 2016-09	—		—			—			—			—			2.7			2.7
Foreign Currency Translation Adjustments	—		—			—			39.6			—			—			39.6
Net Income for Year	—		—			—			—			—			57.2			57.2
Dividends on Common Stock	—		—			—			—			—			(14.7		)	(14.7		)
Balance as of April 28, 2018	38,198,353		19.1			136.5			13.9			(11.5		)	472.0			630.0
Earned Portion of Restricted Stock, Net of Tax Withholding	135,223		0.1			(0.1		)	—			—			(1.7		)	(1.7		)
Stock-based Compensation Expense	—		—			14.0			—			—			—			14.0
Adoption of ASU 2014-09	—		—			—			—			—			0.1			0.1
Foreign Currency Translation Adjustments	—		—			—			(27.5		)	—			—			(27.5		)
Net Income for Year	—		—			—			—			—			91.6			91.6
Dividends on Common Stock	—		—			—			—			—			(16.8		)	(16.8		)
Balance as of April 27, 2019	38,333,576		$	19.2		$	150.4		$	(13.6	)	$	(11.5	)	$	545.2		$	689.7



	Fiscal Year Ended April 27, 2019
(Dollars in Millions)	As Reported		Adjustments			Balance Under ASC 605
Net Sales	$	1,000.3	$	(24.2	)	$	1,024.5
Cost of Products Sold	$	734.5	$	(24.2	)	$	758.7
Total Inventories	$	116.7	$	(0.5	)	$	117.2
Contract Assets	$	0.8	$	0.8		$	—
Contract Liabilities	$	0.3	$	0.3		$	—
Retained Earnings	$	545.2	$	0.1		$	545.1



	Fiscal Year Ended April 27, 2019
(Dollars in Millions)	Auto		Industrial		Interface		Medical		Total
Geographic Net Sales:
U.S.	$	373.0	$	110.3	$	56.1	$	1.1	$	540.5
Malta	116.4		31.8		0.3		—		148.5
China	78.2		35.3		0.2		—		113.7
Canada	87.8		13.8		—		—		101.6
Other	79.3		15.6		1.1		—		96.0
Total Net Sales	$	734.7	$	206.8	$	57.7	$	1.1	$	1,000.3


Timing of Revenue Recognition:
Goods Transferred at a Point in Time	$	704.4	$	206.8	$	57.7	$	1.1	$	970.0
Goods Transferred Over Time	30.3		—		—		—		30.3
Total Net Sales	$	734.7	$	206.8	$	57.7	$	1.1	$	1,000.3



(Dollars in Millions)
Cash	$	6.9
Accounts Receivable	36.1
Inventory	30.8
Prepaid Expenses and Other Current Assets	1.6
Intangible Assets	221.9
Goodwill	175.3
Pre-production Costs	1.5
Property, Plant and Equipment	16.2
Accounts Payable	(19.4		)
Accrued Employee Liabilities	(4.4		)
Other Accrued Expenses	(7.5		)
Income Tax Payable	(0.7		)
Deferred Income Tax Liability	(29.3		)
Total Purchase Price	$	429.0



(Dollars in Millions)	Fair Value at Date of Acquisition		Amortization Period
Customer Relationships and Agreements - Significant Customer	$	57.0	19.5 years
Customer Relationships and Agreements - All Other Customers	125.0		19.5 years
Technology Licenses	17.7		11.7 years
Trade Names	22.2		8.5 years
Total	$	221.9



	As of April 27, 2019
(Dollars in Millions)	Gross		Accumulated Amortization		Net		Wtd. Avg. Remaining Amortization Periods (Years)
Definite-lived Intangible Assets:
Customer Relationships and Agreements	$	244.5	$	27.7	$	216.8	17.4
Trade Names, Patents and Technology Licenses	75.5		29.2		46.3		8.4
Total Definite-lived Intangible Assets	320.0		56.9		263.1
Indefinite-lived Intangible Assets:
Trade Names, Patents and Technology Licenses	1.8		—		1.8
Total Indefinite-lived Intangible Assets	1.8		—		1.8
Total Intangible Assets	$	321.8	$	56.9	$	264.9



	As of April 28, 2018
(Dollars in Millions)	Gross		Accumulated Amortization		Net		Wtd. Avg. Remaining Amortization Periods (Years)
Definite-lived Intangible Assets:
Customer Relationships and Agreements	$	64.4	$	18.1	$	46.3	12.3
Trade Names, Patents and Technology Licenses	35.9		23.0		12.9		5.3
Total Definite-lived Intangible Assets	100.3		41.1		59.2
Indefinite-lived Intangible Assets:
Trade Names, Patents and Technology Licenses	1.8		—		1.8
Total Indefinite-lived Intangible Assets	1.8		—		1.8
Total Intangible Assets	$	102.1	$	41.1	$	61.0



(Dollars in Millions)
Fiscal Year:
2020	$	19.1
2021	19.0
2022	19.0
2023	18.9
2024	18.6
Thereafter	168.5
Total	$	263.1



(Dollars in Millions)	Fiscal Year Ended							Unrecognized Compensation Expense at
	April 27, 2019		April 28, 2018			April 29, 2017		April 27, 2019
2014 Incentive Plan:
RSAs	$	10.9	$	(2.0	)	$	5.7	$	5.0
RSUs	2.2		5.0			5.5		1.6
Director Awards	0.9		1.0			0.9		—
Total 2014 Incentive Plan	14.0		4.0			12.1		6.6

2010 Stock Plan:
RSUs	—		—			0.1		—
Stock Options	—		—			0.1		—
Total 2010 Stock Plan	—		—			0.2		—

2007 Stock Plan:
Stock Options	—		—			0.1		—
Total 2007 Stock Plan	—		—			0.1		—

Total Stock-based Compensation Expense	$	14.0	$	4.0		$	12.4	$	6.6



	RSA Shares		Wtd. Avg. Grant Date Fair Value
Non-vested and Unissued at April 30, 2016	1,161,000		$	33.35
Awarded	72,000		$	34.90
Vested	—		$	—
Forfeited	(64,500	)	$	33.78
Non-vested and Unissued at April 29, 2017	1,168,500		$	33.42
Awarded	128,738		$	40.92
Vested	—		$	—
Forfeited	(126,000	)	$	34.42
Non-vested and Unissued at April 28, 2018	1,171,238		$	34.13
Awarded	11,625		$	38.75
Vested	—		$	—
Forfeited	(151,455	)	$	34.79
Non-vested and Unissued at April 27, 2019	1,031,408		$	34.09



	RSU Shares		Wtd. Avg. Grant Date Fair Value
Non-vested at April 30, 2016	576,000		$	33.39
Awarded	32,000		$	34.90
Vested	(11,333	)	$	33.78
Forfeited	(28,667	)	$	33.78
Non-vested at April 29, 2017	568,000		$	33.45
Awarded	30,925		$	41.82
Vested	(160,553	)	$	33.72
Forfeited	(56,000	)	$	34.42
Non-vested at April 28, 2018	382,372		$	33.87
Awarded	7,750		$	38.75
Vested	(152,328	)	$	33.75
Forfeited	(49,950	)	$	32.42
Non-vested at April 27, 2019	187,844		$	34.55

Table of ContentsREPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Table of ContentsREPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Table of Contents

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Table of Contents

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



	Shares		Wtd. Avg. Exercise Price		Weighted-Average Life (years)	Aggregate Intrinsic Value (in millions)
Outstanding and Exercisable at April 30, 2016	197,332		$	24.55
Awarded	—		$	—
Exercised	(125,332	)	$	17.40
Forfeited	—		$	—
Outstanding and Exercisable at April 29, 2017	72,000		$	37.01	7.3	$	—
Awarded	—		$	—
Exercised	—		$	—
Forfeited	—		$	—
Outstanding and Exercisable at April 28, 2018	72,000		$	37.01	6.3	$	0.3
Awarded	—		$	—
Exercised	—		$	—
Forfeited	—		$	—
Outstanding and Exercisable at April 27, 2019	72,000		$	37.01	5.2	$	—



	Shares		Wtd. Avg. Exercise Price		Weighted-Average Life (years)	Aggregate Intrinsic Value (in millions)
Outstanding and Exercisable at April 30, 2016	79,666		$	28.91
Awarded	—		$	—
Exercised	(22,497	)	$	21.52
Forfeited	—		$	—
Outstanding and Exercisable at April 29, 2017	57,169		$	31.82	6.8	$	0.7
Awarded	—		$	—
Exercised	(13,333	)	$	24.67
Forfeited	(1,668	)	$	37.01
Outstanding and Exercisable at April 28, 2018	42,168		$	33.87	5.8	$	0.3
Awarded	—		$	—
Exercised	—		$	—
Forfeited	(7,500	)	$	37.01
Outstanding and Exercisable at April 27, 2019	34,668		$	33.20	4.6	$	0.1



Options Outstanding and Exercisable at April 27, 2019
Shares	Exercise Price		Avg. Remaining Life (Years)
5,000	$	10.55	1.2
29,668	$	37.01	5.2
34,668



(Dollars in Millions)	Capitalized Leases			Operating Leases
Fiscal Years:
2020	$	0.6		$	7.8
2021	0.5			5.6
2022	0.4			4.9
2023	0.2			4.2
2024	—			3.3
Thereafter	—			8.4
Net Minimum Lease Payments	1.7			$	34.2
Less Amount Representing Interest	—
Present Value of Net Minimum Lease Payments	1.7
Less Current Portion	(0.6		)
Long-term Obligations as of April 27, 2019	$	1.1




(Dollars in Millions)	Amount
Fiscal Years:
2020	$	15.7
2021	14.9
2022	13.9
2023	13.7
2024	234.0
Thereafter	3.3
Total	$	295.5



	Fiscal Year Ended April 29, 2017
(Dollars in Millions)	Automotive			Industrial			Interface			Medical			Eliminations/Corporate			Consolidated
Net Sales	$	641.0		$	92.4		$	94.3		$	0.2		$	(11.4	)	$	816.5
Transfers between Segments	(8.8		)	(0.1		)	(2.8		)	—			11.7			—
Net Sales to Unaffiliated Customers	$	632.2		$	92.3		$	91.5		$	0.2		$	0.3		$	816.5

Income/(Loss) from Operations	$	148.3		$	2.7		$	4.0		$	(8.5	)	$	(35.7	)	$	110.8
Interest Income, Net																(0.4		)
Other Income, Net																(4.7		)
Income before Income Taxes																$	115.9

Depreciation and Amortization	$	15.5		$	3.2		$	4.3		$	0.5		$	0.8		$	24.3

Identifiable Assets	$	462.3		$	78.1		$	170.4		$	5.4		$	(12.2	)	$	704.0



	Fiscal 2019
	Quarter Ended
(Dollars in Millions, except per share data)	July 28, 2018		October 27, 2018		January 26, 2019		April 27, 2019
Net Sales	$	223.4	$	264.0	$	246.9	$	266.0
Gross Profit	$	60.1	$	70.8	$	64.3	$	70.6
Net Income	$	23.7	$	14.6	$	30.7	$	22.6
Net Income per Basic Common Share	$	0.63	$	0.39	$	0.82	$	0.61
Net Income per Diluted Common Share	$	0.63	$	0.39	$	0.82	$	0.60



	Fiscal 2018
	Quarter Ended
(Dollars in Millions, except per share data)	July 29, 2017		October 28, 2017		January 27, 2018			April 28, 2018
Net Sales	$	201.2	$	230.1	$	228.0		$	249.0
Gross Profit	$	55.6	$	62.0	$	60.1		$	61.9
Net Income (Loss)	$	20.5	$	24.2	$	(24.3	)	$	36.8
Net Income (Loss) per Basic Common Share	$	0.55	$	0.65	$	(0.65	)	$	0.99
Net Income (Loss) per Diluted Common Share	$	0.55	$	0.64	$	(0.65	)	$	0.98



Description	Balance at Beginning of Period		Charged to Costs and Expenses		Charged to Other Accounts— Describe			Deductions— Describe				Balance at End of Period

YEAR ENDED APRIL 27, 2019:
Allowance for uncollectible accounts	$	0.5	$	0.2	$	0.2	(1)	$	—		(2)	$	0.9
Deferred tax valuation allowance	$	2.5	$	—	$	4.8	(1)	$	1.0		(3)	$	6.3

YEAR ENDED APRIL 28, 2018:
Allowance for uncollectible accounts	$	0.6	$	—	$	—		$	0.1		(2)	$	0.5
Deferred tax valuation allowance	$	1.9	$	—	$	—		$	(0.6	)	(3)	$	2.5

YEAR ENDED APRIL 29, 2017:
Allowance for uncollectible accounts	$	0.5	$	0.1	$	—		$	—		(2)	$	0.6
Deferred tax valuation allowance	$	1.3	$	—	$	—		$	(0.6	)	(3)	$	1.9