Kimball Electronics, Inc.
For the period ended Jun 30, 2026. Filed Aug 19, 2026.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2026 · Filed Aug 19, 2026
KE$19.26-5.8%Stored close · as of Nov 6, 2026
What changed in Risk Factors?
Read the current filingPrevious report: 10-K
Period ended 2025-06-30; filed 2025-08-22.
0001606757-25-000027
Item 1A. Risk FactorsCurrent report: 10-K
Period ended 2026-06-30; filed 2026-08-19.
0001606757-26-000032
Item 1A. Risk FactorsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 95 previous paragraphs and 95 current paragraphs.
47 unchanged; 19 reworded; 29 added; 29 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 0 previous and 0 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (29)
Current report
Concentration among a small number of key customers, and our customers’ ordering behavior, could materially reduce our revenues, profitability, and manufacturing efficiency.
Current report
Losses of key customers within specific industries or significant volume reductions from key customers are both risks. For fiscal year 2026, sales to our three largest customers — Nexteer Automotive, Philips, and ZF — accounted for approximately 40% of our net sales in the aggregate, and sales to Nexteer Automotive alone accounted for approximately 18% of our net sales. Over the past two fiscal years, we experienced the loss of a major automotive program from a significant customer, which was unrelated to Kimball’s performance, and we cannot assure you that similar program losses will not occur in the future. For example, our automotive customers, including Nexteer Automotive and ZF, are subject to significant cyclical, technological, and regulatory pressures. If our automotive customers reduce production volumes, delay or cancel programs, in-source manufacturing, or shift purchasing to competitors, our results of operations could be materially adversely affected.
Current report
We may not realize the anticipated benefits of the Helvoet acquisition or other future acquisitions.
Current report
On July 1, 2026, we completed our acquisition of Helvoet. Helvoet is our largest acquisition to date, expanded our manufacturing footprint into India and, additionally, the Netherlands, and materially expanded our precision molded plastics, complex tooling, and medical device component manufacturing capabilities. The success of the Helvoet acquisition depends on our ability to integrate Helvoet’s operations, employees, customers, information systems, financial and internal controls, and manufacturing processes with those of the Company on the timelines we currently expect, and to retain Helvoet’s key personnel and customer relationships.
Current report
Integration efforts may be complicated by differences in operating practices, geographic distances, differing regulatory regimes (including in India and the European Union), the need to remediate any control deficiencies identified in the integration process, and the diversion of management attention from ongoing operations. If we are unable to integrate Helvoet successfully or realize the strategic, operational, or financial benefits we expect, or if unanticipated integration costs, liabilities, or delays arise, we may not achieve the return on investment or the growth we anticipate and our business, results of operations, and financial condition could be materially adversely affected. Some of these risks are heightened by our decision to fund a portion of the purchase price from our credit facilities. Similar risks would apply to future acquisitions we may complete.
Current report
During fiscal year 2026, tariffs implemented under various U.S. trade authorities increased costs within our supply chain. We have generally recovered, and expect to continue recovering, a significant portion of these costs through contractual pass-through and repricing mechanisms. Although we may not be able to fully recover tariff-related costs, any unrecovered amounts are not expected to be material to our results of operations or cash flows. Changes in tariff policies, trade restrictions, or other international trade measures could nevertheless adversely affect our costs, our customers, our supply chain, or demand for our services.
Current report
We may not achieve the organic growth on which our strategy depends.
Current report
Our strategy to achieve sustained, profitable growth depends on our ability to expand our existing customer relationships, secure new customer programs, launch those programs on time and on budget, successfully introduce new categories of manufacturing services (including through our Kimball Solutions CDMO offerings), and expand our global manufacturing footprint (including the ramp of our new Indianapolis, Indiana medical CDMO facility). New program start-ups typically require significant investment in capacity, tooling, and working capital, and generally generate lower margins early in a program’s life. If we fail to execute on these initiatives, if new programs experience delays or higher start-up costs than we anticipate, or if we cannot secure and retain the customer demand needed to fill our expanded capacity, our revenue growth, margin performance, and returns on invested capital could be adversely affected.
Current report
Because we operate in the United States, Mexico, China, India, The Netherlands, Poland, Romania, and Thailand, we are subject to a wide and evolving range of data privacy, employee-monitoring, and cross-border data-transfer laws, including the EU and UK General Data Protection Regulations, the ePrivacy Directive, Mexico’s Federal Personal Data Protection Law, India’s Digital Personal Data Protection Act, and analogous laws in U.S. states and other jurisdictions in which we operate. AI-specific laws — including the EU Artificial Intelligence Act and state-level AI laws such as Colorado’s Artificial Intelligence Act — increasingly overlap with these privacy regimes and impose their own compliance obligations on our development, deployment, or use of AI systems.
Current report
Compliance with these laws is complex, costly, and increasingly requires cross-functional coordination among legal, IT, human resources, and business owners. Non-compliance, or perceived non-compliance, with any of these laws could result in significant civil penalties, injunctions, litigation, contract remediation obligations, and reputational harm, any of which could materially adversely affect our business, financial condition, and results of operations.
Current report
Our development, deployment, and use of artificial intelligence technologies could expose us to operational, legal, reputational, and competitive risks.
Current report
We use, and expect to continue to use and expand our use of AI, across our business, including in engineering design services, manufacturing process optimization, predictive maintenance, quality analytics, supply chain forecasting, back office productivity tools, and certain administrative functions. Some of these tools are developed internally, and others are provided by third-party suppliers, including through generally available large language models and cloud services.
Current report
Our use of AI presents a variety of risks, including operational risks (such as system errors, unreliable or biased outputs, and disruptions to business processes); intellectual property risks (including uncertainty regarding ownership of AI-generated outputs and possible infringement of third-party rights); data privacy and confidentiality risks (including the possibility that confidential customer or supplier information could be exposed through third-party AI tools); cybersecurity risks (including AI-enabled attacks such as deepfake impersonation, prompt injection, model poisoning, and automated phishing); competitive risks (including if our competitors deploy AI more effectively or at lower cost); and reputational risks (including if AI is misused or produces harmful, biased, or inaccurate outputs).
Current report
AI-specific laws and regulations are developing rapidly and are increasingly divergent across jurisdictions. Examples include the European Union Artificial Intelligence Act, the Colorado Artificial Intelligence Act, and other state-level AI laws in the United States, as well as evolving guidance from the U.S. Securities and Exchange Commission on AI-related disclosure. Complying with these laws and regulations could increase our costs, require changes to our AI systems, or limit our ability to deploy AI technologies. Failure to comply, or perceived failure to comply, could result in enforcement actions, litigation, or reputational harm. In addition, the U.S. Securities and Exchange Commission has focused on so-called ‘AI washing,’ or overstating the capabilities or business impact of AI, and we could be subject to claims if any of our public statements about AI are considered misleading.
Current report
Our use of AI also depends on our ability to attract and retain personnel with the relevant technical skills, to invest in the necessary infrastructure, and to safeguard our customers’ and suppliers’ proprietary information. Any of these risks could adversely affect our business, financial condition, results of operations, or reputation.
Current report
Our ability to execute our strategy depends on attracting, developing, and retaining employees with the technical, engineering, and operational skills needed to run an increasingly automated, digitized, and data-driven manufacturing environment, including engineers, data and analytics professionals, cybersecurity and artificial intelligence specialists, skilled operators supporting our Industry 4.0 initiatives, and quality and regulatory personnel supporting our operations. Competition for these skills is intense and can be compounded by broader labor market pressures — including localized labor shortages, wage inflation, evolving employee expectations regarding workplace flexibility, and demographic shifts in the regions where we operate. If we are unable to attract and retain qualified personnel, to develop the technical and leadership capabilities of our existing workforce, or to manage the labor and retention effects of restructuring actions such as the closure of our Tampa facility, our ability to serve our customers, execute our strategic initiatives, and maintain operational efficiency could be adversely affected.
Current report
Failure to satisfy applicable customer, industry, and regulatory quality standards could adversely affect our customer relationships, results of operations, and reputation.
Current report
Our medical CDMO operations — including our expanded footprint in Indianapolis, Indiana and our new Helvoet operations in India and the Netherlands — are subject to additional quality and regulatory requirements, including the U.S. Food and Drug Administration’s Quality Management System Regulation (formerly the Quality System Regulation) and current Good Manufacturing Practices (cGMP), the European Union Medical Device Regulation (2017/745) and In Vitro Diagnostic Regulation (2017/746), ISO 13485, and comparable regimes in China, India, and Thailand. Failures to comply, delays in obtaining or maintaining product-specific registrations or notified body certifications, or negative outcomes from FDA or comparable inspections could result in warning letters, import alerts, consent decrees, product recalls, or the temporary suspension of production, any of which could adversely affect our reputation, customer relationships, financial position, results of operations, or cash flows. Because we also handle customer-owned drug substances and drug products in support of drug delivery programs, our failure or our customers’ failure to comply with applicable drug cGMP, controlled-substance handling, or pharmacovigilance obligations could adversely affect our medical CDMO business.
Current report
Climate change, evolving sustainability regulation, and stakeholder expectations regarding environmental, social, and governance matters could increase our costs, impose new compliance obligations, and expose us to enforcement, litigation, and reputational risk.
Current report
Customers, investors, and other stakeholders continue to focus on environmental issues — including climate change, greenhouse gas emissions, water use, waste, and hazardous materials — and on broader sustainability topics. We have made public commitments to significantly reduce our greenhouse gas emissions and waste intensity and to increase our use of renewable electricity and recycled water by 2030, and we may adopt additional voluntary sustainability initiatives in the future. Our failure or perceived failure to achieve these commitments, or to satisfy other sustainability expectations of our customers, investors, employees, or other stakeholders, could adversely affect our reputation, our customer and investor relationships, our ability to attract and retain employees, our results of operations, and our attractiveness as an investment or business partner, and could expose us to government enforcement actions and private litigation.
Current report
We are also subject to a rapidly evolving set of climate- and sustainability-related disclosure regimes. The European Union’s Corporate Sustainability Reporting Directive (CSRD) and the European Sustainability Reporting Standards (ESRS) apply, or under certain circumstances could apply, to our EU operations and, in some cases, to our global business. We prepare our annual Guiding Principles Report with reference to the ESRS as outlined by the CSRD, and continued compliance with the CSRD and ESRS, together with the European Union’s ongoing ‘Omnibus’ simplification proposals and evolving climate-related disclosure regimes in California and other U.S. states, could require significant effort and resources, particularly if the requirements do not align with existing initiatives. Transition to a lower-carbon economy could also require material investments in renewable energy, energy efficiency, and retrofitting or constructing facilities with lower-emission technology, and increases in the cost of energy, water, or other resources used in our operations or in the freight and logistics services on which we depend could reduce our profitability.
Current report
In addition, our customers have adopted, and may continue to adopt, procurement policies and sustainability goals that impose environmental, social, and governance requirements on their suppliers, including us, and an increasing number of investors have adopted sustainability policies for their portfolio companies. These practices, together with the divergent and rapidly evolving investor policies, voluntary sustainability frameworks, and regulatory regimes described above, may be difficult or expensive to comply with, may conflict with one another, and could adversely affect our reputation, business, or financial condition. Given the political significance and continuing uncertainty around these issues, we cannot predict how climate change and related legal, regulatory, and market developments will ultimately affect our operations and financial condition.
Current report
Shifts in U.S. political, tax, trade, and regulatory policy could adversely affect our business and results of operations.
Current report
Since January 2025, changes in the U.S. presidential administration have led to a series of executive orders, agency reorganizations, and rapidly evolving policy priorities that affect areas critical to our operations, including tariffs and trade policy, immigration enforcement, environmental and workplace regulation, the pace and scope of federal regulatory enforcement, and the composition of the federal workforce. These developments have introduced increased legal, regulatory, reputational, and operational uncertainty for companies that operate cross-border supply chains, including us.
Current report
The One Big Beautiful Bill Act, signed into law on July 4, 2025, made the 21% corporate tax rate permanent and made a variety of other changes to the U.S. tax code, some of which may affect our effective tax rate, cash taxes, deferred tax assets and liabilities (including in respect of GILTI, Section 163(j), and Section 174 research and experimental expenditures), and the value of our tax incentives. Further changes in U.S. tax law, or in tax laws in the foreign jurisdictions in which we operate, could adversely affect our results of operations.
Current report
Heightened fiscal and political uncertainty in the United States, including the risk of future government shutdowns, delays or terminations of federal programs, and increased scrutiny of federal contractors, could also have direct or indirect effects on our customers, our suppliers, and our results of operations, even though we do not primarily sell to the U.S. government. Any of these developments could materially adversely affect our business, financial condition, and results of operations.
Current report
Our reliance on customer supply-chain financing and receivables purchase agreements exposes us to program-availability and counterparty risks.
Current report
During fiscal year 2026, we sold $315.8 million of accounts receivable under customer supply chain financing arrangements and $171.3 million of accounts receivable under receivables purchase agreements (“RPAs”) with third-party banking institutions. These programs enable us to accelerate cash collection but expose us to a variety of risks, including the potential loss or non-renewal of a program by a customer or financial institution, adverse changes in the pricing (including base rate volatility) or terms of these programs, and concentration of counterparty risk at particular banks.
Current report
If one or more of these programs becomes unavailable or economically unattractive, our working capital, cash flows, and interest expense could be adversely affected, and we may need to draw on our credit facilities or reduce our share repurchase or capital expenditure activities to bridge any resulting funding gap.
Removed paragraphs (29)
Previous report
Reduction of purchases by, or the loss of, one or more key customers could reduce revenues and profitability.
Previous report
We can provide no assurance that we will be able to fully replace any lost sales from these risks, which could have an adverse effect on our financial position, results of operations, or cash flows.
Previous report
Our ability to efficiently utilize our manufacturing capacity is highly dependent on our customers’ actions.
Previous report
Regardless of whether our agreements with our customers, including our significant customers, have a definite term, our customers typically do not commit to firm production schedules for more than one quarter. Our customers generally have the right to cancel a particular product, subject to contractual provisions governing the final product runs, excess or obsolete inventory, recovery of dedicated investments, and end-of-life pricing. Accordingly, our relative ability (or inability) to forecast customer demand levels can make it difficult to schedule production and maximize the efficient use of our manufacturing capacity and supply chain capabilities.
Previous report
•widespread health emergencies and foreign governments’ measures taken in response to them;
Previous report
•changes in U.S. or foreign policies, regulatory requirements, and laws;
Previous report
•tariffs and other trade barriers imposed by the United States and/or other countries;
Previous report
If our engineering and manufacturing services do not meet our customers’ quality standards, our sales, operating results, and reputation could suffer.
Previous report
Our success depends to a large extent on our ability to attract and retain highly qualified and diverse executive officers, key employees, and skilled personnel, and to continue to implement our succession plans for managers and other key employees. These employees are not generally bound by employment or non-competition agreements, and we cannot assure you that we will retain them. The labor market for these employees is intensely competitive, and compensation and benefit costs continue to increase significantly in the current economic environment. In particular, the high demand for manufacturing labor in certain geographic areas in which we operate makes recruiting new production employees and retaining experienced production employees difficult.
Previous report
Our success also depends on keeping pace with technological advancements, including Industry 4.0, and adapting services to provide manufacturing capabilities which meet customers’ changing needs. Therefore, we must retain our qualified engineering and technical personnel and successfully anticipate and respond to technological changes in a cost effective and timely manner.
Previous report
Shortages of workers could adversely impact our ability to operate our business effectively and timely serve our customers’ needs, which could adversely affect our relations with customers, result in reductions in orders from customers, or cause us to lose customers. Turnover in personnel could result in additional training and inefficiencies that could adversely impact our operating results. Our culture and guiding principles focus on continuous training, motivating, and development of employees, and we strive to attract, motivate, and retain qualified personnel. To aid in managing our growth and strengthening our pool of qualified personnel, we will need to internally develop, recruit, and retain diverse, qualified personnel. If we are not able to do so, our business and our ability to continue to grow could be harmed.
Previous report
Our failure to maintain applicable registrations for our manufacturing facilities could negatively impact our ability to produce products for our customers.
Previous report
We make substantial investments of capital and operating expenses to implement comprehensive, company-wide quality systems, certifications, and controls in our operations in an effort to ensure sustained compliance with various product and quality system regulations and requirements, and to meet the needs of our customers. However, in the event we fail to adhere to these requirements, we become subject to potential investigations and fines and penalties. Our failure to comply with applicable regulations and quality system standards could, in turn, adversely affect our customers through failures to supply product to them or delays in their ability to obtain and maintain product approvals. As a medical device manufacturer, we also have additional compliance requirements. The U.S. Food and Drug Administration (“FDA”) extensively regulates all aspects of product and manufacturing quality for medical products under its current Good Manufacturing Practices (cGMP) regulations. Outside the U.S., our operations and our customers’ products are subject to similar regulatory requirements, notably by the European Medicines Agency and the Safe Food and Drug Administration in China. For instance, we are required to register with the FDA and are subject to periodic inspection by the FDA for compliance with the FDA’s Quality System Regulation (“QSR”) requirements, which require manufacturers of medical devices to adhere to certain regulations, including testing, quality control and documentation procedures. Any determination by the FDA or other regulatory authorities of manufacturing or other deficiencies could adversely affect our business. Failure or noncompliance could have an adverse effect on our reputation in addition to an adverse impact on our financial position, results of operations, or cash flows.
Previous report
Climate change, and the legal and regulatory initiatives related to climate change, could subject us to extensive environmental regulation and significant potential environmental liabilities.
Previous report
There is increasing concern that a gradual increase in global average temperatures due to increased concentration of carbon dioxide and other greenhouse gases in the atmosphere will cause significant changes in weather patterns around the globe and an increase in the frequency and severity of natural disasters or extreme weather conditions, such as hurricanes, earthquakes, droughts, wildfires, cyclones, or floods. Physical climate risks and the operation of facilities in areas subject to increased water stress could impair our production capabilities, disrupt the operations of our supply chain and infrastructure, and impact our customers and their demand for our services.
Previous report
In addition, as regulators and investors increasingly focus on climate change and other sustainability issues, we are subject to new disclosure frameworks and regulations. For example, the European Parliament adopted the Corporate Sustainability Reporting Directive (CSRD) and the resulting adoption of EU sustainability reporting standards to be developed by the European Financial Reporting Advisory Group, with such standards to be tailored to EU policies building on and contributing to international standardization initiatives, will apply not only to local operations in the EU, but under certain circumstances, to entire global companies like Kimball Electronics that have EU operations. As part of our commitment to transparency and accountability, we wrote our annual Guiding Principles Report to align with the European Sustainability Reporting Standards (ESRS), as outlined by the CSRD. We expect that continued compliance with the CSRD and ESRS could require significant effort in future years. Other climate change disclosure requirements, and compliance with such rules, if and when they are finalized, could also require significant effort, particularly if they do align with existing initiatives like ESRS and CSRD.
Previous report
We cannot predict what environmental legislation or regulations will be enacted in the future, how existing or future laws or regulations will be administered or interpreted, or what environmental conditions may be found to exist. Compliance with more stringent laws or regulations, or stricter interpretation of existing laws, may require additional expenditures, some of which could be material. In addition, any investigations or remedial efforts relating to environmental matters could involve material costs or otherwise result in material liabilities.
Previous report
The long-term effects of climate change on the global economy and our industry in particular are unclear. Changes in climate where we, our customers, and our supply chain operate could have a long-term adverse impact on our business, results of operations, and financial condition. In addition, we have committed to reduce our greenhouse gas emissions, waste and hazardous waste intensity and increase our use of renewable electricity and recycled water significantly by 2030 as part of our long-term sustainability strategy, and we may take additional voluntary steps to mitigate our impact on the environment. Climate transition risks related to shifts to a low-carbon economy and the associated costs of retrofitting or constructing facilities with green technology, in addition to investments in renewable energy and energy efficiency could involve material costs or otherwise impact our customers and their demand for our services.
Previous report
Environmental regulations or changes in the supply, demand, or available sources of energy, water, or other resources may affect the availability or cost of goods and services, including natural resources, necessary to run our business. The cost of energy is a critical component of freight expense and the cost of operating manufacturing facilities. Increases in the cost of energy in particular could reduce our profitability. Given the political significance and uncertainty around these issues, we cannot predict how climate change, and the legal and regulatory initiatives related to climate change, will affect our operations and financial condition.
Previous report
•Changes in policies by the U.S. or other governments could negatively affect our operating results due to changes in duties, tariffs or taxes, or limitations on currency or fund transfers, as well as government-imposed restrictions on producing certain products in, or shipping them to, specific countries. These changes could force our customers or us to consider various strategic options including, but not limited to, looking for different suppliers, shifting production to facilities in different geographic regions, absorbing the additional costs, or passing the cost on to customers. Ultimately, these changes could adversely affect the competitiveness of our domestic operations, which could lead to the reduction or exit of certain U.S. manufacturing capacity. Depending on the types of changes made, demand for our foreign manufacturing facilities could be reduced, or operating costs in our manufacturing facilities could be increased, which could negatively impact our financial performance. Moreover, any retaliatory actions by other countries where we operate could also negatively impact our financial performance.
Previous report
Sustainability/ESG issues, including those related to climate change and sustainability, may increase our costs and impose difficult and expensive compliance requirements.
Previous report
Customers, consumers, investors, and other stakeholders, particularly in the EMS industry, are increasingly focusing on environmental issues, including climate change, water use, deforestation, waste, and other sustainability concerns. Along with our stakeholders and our broader industry, we have increased our focus on sustainability and measurement of our progress against sustainability criteria, but we cannot guarantee that we will be able to achieve relevant criteria with our current focus. Our ability to successfully execute relevant initiatives and accurately report our progress presents numerous operational, financial, legal, reputational and other risks, many of which are outside our control, and all of which could have a material negative impact on our business.
Previous report
New disclosures, along with the evolving global regulatory landscape, may present increased compliance costs and regulatory or enforcement risks, as well as increased competition from market participants who may adopt more robust sustainability/ESG reporting and sustainable business practices. If our sustainability initiatives fail to satisfy investors, current or potential customers, consumers, and our other stakeholders, our reputation, our ability to sell products and services to customers, our ability to attract or retain employees, and our attractiveness as an investment or business partner could be negatively impacted. Similarly, our failure or perceived failure to pursue or fulfill our goals, targets, and objectives, or to satisfy various reporting standards within the timelines we announce, or at all, could also have similar negative impacts and expose us to government enforcement actions and private litigation.
Previous report
In addition, our customers have adopted, and may continue to adopt, procurement policies that require us to comply with governance, social, and environmental responsibility provisions. Our customers have also adopted, and may continue to adopt, goals and policies that serve to increase their demand for goods or services that do not produce significant greenhouse gas emissions and are not related to carbon-based energy sources. Furthermore, an increasing number of investors have adopted, and may continue to adopt, ESG policies for their portfolio companies, and various voluntarily sustainability initiatives and organizations have promulgated different social and environmental responsibility and sustainability guidelines. These practices, policies, provisions, and initiatives are under active development, subject to change, can be unpredictable and conflicting, and may prove difficult and expensive for us to comply with and could negatively affect our reputation, business, or financial condition.
Previous report
We will face risks associated with the organic and inorganic growth of our business and we may neither be able to continue that growth nor have the necessary resources to dedicate to that growth.
Previous report
We plan to expand our business to new customers, new commercial applications, and new commercial markets, including those where we may have limited operating experience, through organic growth and acquisitions. Accordingly, we may be subject to increased business, technology, and economic risks that could materially affect our business. In recent periods, we have increased our focus on organic growth and customer acquisition. In the future, we may increasingly focus on this organic growth, and we may identify inorganic growth opportunities through acquisitions and customer divestitures. Expanding in the verticals in which we are already operating will continue to require significant resources and there is no guarantee that such efforts will be successful or beneficial to us. Historically, sales to new customers have often led to additional sales to the same customers or similarly situated customers. As we expand into and within new and emerging markets for our services, we will likely face additional regulatory scrutiny, risks, and business challenges from our customers, governments, and other stakeholders in those markets. While this approach to growth within new and existing commercial markets and verticals has proven successful in the past, it is uncertain we will achieve the same penetration and organic growth or identify suitable inorganic growth opportunities in the future and our reputation, business, financial condition, and results of operations could be negatively impacted.
Previous report
Changes in financial accounting standards or policies have affected, and in the future may affect, our reported financial condition or results of operations.
Previous report
We prepare our financial statements in conformity with U.S. GAAP. These principles are subject to interpretation by the Financial Accounting Standards Board (“FASB”), the American Institute of Certified Public Accountants, the SEC, and various bodies formed to interpret and create appropriate accounting policies. A change in these policies can have a significant effect on our reported results and may affect our reporting of transactions that are completed before a change is announced. Changes to those rules or questions as to how we interpret or implement them may have a material adverse effect on our reported financial results or on the way we conduct business. See Note 1 - Business Description and Summary of Significant Accounting Policies of Notes to Consolidated Financial Statements for more information on the adoption of the new accounting guidance.
Previous report
We are or may become party to various claims and legal proceedings in the ordinary course of our business. These claims and legal proceedings may include lawsuits or claims relating to contracts, intellectual property, product recalls, product liability, employment matters, environmental matters, regulatory compliance, or other aspects of our business. Even when not merited, the defense of these claims and legal proceedings may divert our management’s attention, and we may incur significant expenses in defending these claims and proceedings. In addition, we may be required to pay damage awards or settlements or become subject to injunctions or other equitable remedies, which could have a material adverse effect on our financial position, cash flows, or results of operations. The outcome of litigation is often difficult to predict, and the outcome of pending or future claims and legal proceedings may have a material adverse effect on our financial position, cash flows, or results of operations. We evaluate these claims and legal proceedings to assess the likelihood of unfavorable outcomes and to estimate, if possible, the amount of potential losses. Based on these assessments and estimates, we establish reserves or disclose the relevant litigation claims or legal proceedings, as appropriate. These assessments and estimates are based on the information available to management at the time and involve a significant amount of management judgment. Actual outcomes or losses may differ materially from our current assessments and estimates. If actual outcomes or losses differ materially from our current assessments and estimates or additional claims or legal proceedings are initiated, we could be exposed to significant liabilities.
Reworded paragraphs (19)
Previous wording
Losses of key customers within specific industries or significant volume reductions from key customers are both risks. Our continuing success is dependent upon replacing expiring contract customers/programs with new customers/programs. See “Customers” in Item 1 - Business for disclosure of the net sales as a percentage of consolidated net sales for each of our significant customers during fiscal years 2025, 2024, and 2023. Regardless of whether our agreements with our customers, including our significant customers, have a definite term, our customers typically do not commit to firm production schedules for more than one quarter. Our customers generally have the right to cancel a particular product, subject to contractual provisions governing the final product runs, excess or obsolete inventory, recovery of dedicated investments, and end-of-life pricing. As many of our costs and operating expenses are relatively fixed, a reduction in customer demand, particularly a reduction in demand for a product that represents a significant amount of revenue, can harm our gross profit margins and results of operations.
Current wording
Our continuing success is dependent upon replacing expiring contract customers/programs with new customers/programs. See “Customers” in Item 1 - Business for disclosure of the net sales as a percentage of consolidated net sales for each of our significant customers during fiscal years 2026, 2025, and 2024. Regardless of whether our agreements with our customers, including our significant customers, have a definite term, our customers typically do not commit to firm production schedules for more than one quarter.
Previous wording
Many factors outside of our control impact our customers and their ordering behavior, including global pandemics, recessions in end markets, changing technologies and industry standards, commercial acceptance for products, shifting market demand, product obsolescence, changing sourcing strategies, and our customers’ loss of business. New customer relationships also present risk because we do not have an extensive product or customer relationship history.
Current wording
Many factors outside of our control impact our customers and their ordering behavior, including global pandemics, recessions in end markets, changing technologies and industry standards, commercial acceptance for products, shifting market demand, product obsolescence, changing sourcing strategies, and our customers’ loss of business. Our customers generally have the right to cancel a particular product, subject to contractual provisions governing the final product runs, excess or obsolete inventory, recovery of dedicated investments, and end-of-life pricing. New customer relationships also present risk because we do not have an extensive product or customer relationship history. As many of our costs and operating expenses are relatively fixed, a reduction in customer demand, particularly a reduction in demand for a product that represents a significant amount of revenue, can harm our gross profit margins and results of operations.
Previous wording
Our integrated supply chain solutions for purchasing components and materials is a competitive strength and key to our strategy as a CMO. Inflation and prices from suppliers have increased and may continue to rise. When prices rise for these or other similar reasons, they impact our margins and results of operations if we are not able to pass the increases through to our customers or otherwise offset them through cost savings. Many of our customer contracts permit periodic prospective adjustments to pricing based on decreases and increases in component prices and other factors; however, we could bear the risk of component price increases that occur between any such re-pricing or, if such re-pricing is not permitted or accepted by customers, during the balance of the term of the particular customer contract. There can be no assurance that we will continue to be able to purchase the components and materials needed to manufacture customer products at favorable prices. Accordingly, certain component price increases could adversely affect our gross profit margins and results of operations.
Current wording
Our integrated supply chain solutions for purchasing components and materials is a competitive strength and key to our strategy as a CDMO. Inflation and prices from suppliers have increased and may continue to rise. When prices rise for these or other similar reasons, they impact our margins and results of operations if we are not able to pass the increases through to our customers or otherwise offset them through cost savings. Many of our customer contracts permit periodic prospective adjustments to pricing based on decreases and increases in component prices and other factors; however, we could bear the risk of component price increases that occur between any such re-pricing or, if such re-pricing is not permitted or accepted by customers, during the balance of the term of the particular customer contract. There can be no assurance that we will continue to be able to purchase the components and materials needed to manufacture customer products at favorable prices. Accordingly, certain component price increases could adversely affect our gross profit margins and results of operations.
Previous wording
We have also experienced, and may again experience in the future, such shortages due to the effects of and responses to industry-wide conditions, pandemics, natural disasters, and other events outside our control, including macroeconomic events, trade restrictions, political crises, social unrest, terrorism, and conflicts (including the Russian invasion of, and ongoing war in, Ukraine). We cannot reasonably predict the full extent to which these events may impact our supply chain, because any impacts will depend on future developments that are highly uncertain and continuously evolving, including new information that may emerge concerning new or existing pandemics, further actions by governmental entities or others in response to the types of events described above, and how quickly and to what extent normal economic and operating conditions can resume.
Current wording
We have also experienced, and may again experience in the future, such shortages due to the effects of and responses to industry-wide conditions, pandemics, natural disasters, and other events outside our control, including macroeconomic events, trade restrictions, political crises, social unrest, terrorism, and conflicts (including the Russian invasion of, and ongoing war in, Ukraine, the conflict involving the United States, Israel, and Iran and the related regional instability in the Middle East, evolving trade and sanctions regimes affecting semiconductor supply, and the risk of prolonged reliance on select regions (including Taiwan and mainland China) for certain critical components). We cannot reasonably predict the full extent to which these events may impact our supply chain, because any impacts will depend on future developments that are highly uncertain and continuously evolving, including new information that may emerge concerning new or existing pandemics, further actions by governmental entities or others in response to the types of events described above, and how quickly and to what extent normal economic and operating conditions can resume.
Previous wording
We continue to expand our global operations by increasing our product and service offerings, including as a CMO, and scaling our infrastructure at certain facilities to support our business. This expansion increases the complexity of our business and places significant strain on our management, personnel, operations, systems, technical performance, financial resources, and internal financial control and reporting functions. We may not be able to manage these expansions effectively or successfully, which could damage our reputation, limit our growth, and negatively affect our operating results.
Current wording
We continue to expand our global operations by increasing our product and service offerings, including as a CDMO, and scaling our infrastructure at certain facilities to support our business. This expansion increases the complexity of our business and places significant strain on our management, personnel, operations, systems, technical performance, financial resources, and internal financial control and reporting functions. We may not be able to manage these expansions effectively or successfully, which could damage our reputation, limit our growth, and negatively affect our operating results.
Previous wording
These risks could have an adverse effect on our financial position, results of operations, or cash flows. Certain foreign jurisdictions restrict the amount of cash that can be transferred to the United States or impose taxes and penalties on such transfers of cash. To the extent we have excess cash in foreign locations that could be used in, or is needed by, our operations in the United States, we may incur significant penalties and/or taxes to repatriate these funds.
Current wording
These risks could have an adverse effect on our financial position, results of operations, or cash flows. Certain foreign jurisdictions restrict the amount of cash that can be transferred to the United States or impose taxes and penalties on such transfers of cash if we seek to repatriate these funds.
Previous wording
We are currently evaluating the potential impact of the imposition of tariffs on our business, our customers and financial condition and implementing measures that may address or mitigate the potential impact on our business. We cannot predict with certainty the future trade policy of the U.S. or other countries, and we cannot reasonably predict the full extent to which these events may impact our supply chain, because any impacts will depend on future trade policy, treaty, and tariff developments that are highly uncertain and continuously evolving. Relevant factors include whether such tariffs are ultimately implemented, the timing and duration of implementation and the amount, scope, and nature of such tariffs and potential exclusions from the application of those tariffs. These tariffs and other unfavorable government policies on international trade (such as export controls) may increase the cost of manufacturing our customers’ products, affect the demand for our manufacturing services, or restrict our access to raw materials and components used in the manufacture of our customers’ products, each of which could negatively impact our financial condition and results of operations. Further, such developments, or the perception that any such developments could occur, may have a material adverse effect on global economic conditions and the stability of global financial markets, and may significantly reduce global trade and, in particular, trade between the impacted nations and the U.S. Any of these factors could depress economic activity and adversely impact the price and demand for our customers’ products, increase our costs, and affect our customers and suppliers, any of which could have a material adverse effect on our business, financial condition and results of operations.
Current wording
We cannot predict with certainty the future trade policy of the U.S. or other countries, and we cannot reasonably predict the full extent to which these events may impact our supply chain, because any impacts will depend on future trade policy, treaty, and tariff developments that are highly uncertain and continuously evolving. Relevant factors include whether such tariffs are ultimately implemented, the timing and duration of implementation and the amount, scope, and nature of such tariffs and potential exclusions from the application of those tariffs. These tariffs and other unfavorable government policies on international trade (such as export controls) may increase the cost of manufacturing our customers’ products, affect the demand for our manufacturing services, or restrict our access to raw materials and components used in the manufacture of our customers’ products, each of which could negatively impact our financial condition and results of operations. Further, such developments, or the perception that any such developments could occur, may have a material adverse effect on global economic conditions and the stability of global financial markets, and may significantly reduce global trade and, in particular, trade between the impacted nations and the U.S. Any of these factors could depress economic activity and adversely impact the price and demand for our customers’ products, increase our costs, and affect our customers and suppliers, any of which could have a material adverse effect on our business, financial condition and results of operations.
Previous wording
Our business may be harmed due to failure to successfully implement information technology solutions or a lack of reasonable safeguards to maintain data security, including adherence to data privacy laws and physical security measures.
Current wording
Our business may be harmed due to failure to successfully implement information technology solutions or a lack of reasonable safeguards to maintain data security, including adherence to evolving global data privacy laws, cross-border data transfer, AI-specific regulations, and physical security measures.
Previous wording
The operation of our business depends on effective information technology systems, including data management, analytics, and emerging machine learning and artificial intelligence platforms and applications. These systems are subject to the risk of security breach or cybersecurity threat, including misappropriation of assets or other sensitive information, such as confidential business information and personally identifiable data relating to employees, customers, and other business partners, or data corruption which could cause operational disruption. The unpredictability of AI, machine learning, and similar systems that automate certain operational tasks bring the potential for unintended consequences and unexpected disruptions in business operations, financial losses, and reputational damage. As we could be the target of cyber and other security threats, which are becoming increasingly sophisticated, we must continuously monitor and develop our information technology networks and infrastructure to prevent, detect, address, and mitigate the risk of unauthorized access, misuse, computer viruses, and other events that could have a security impact. Information systems require an ongoing commitment of significant resources to research new technologies and processes, maintain and enhance existing systems, and develop new systems in order to keep pace with changes in information processing technology and evolving industry standards as well as to protect against cyber risks and security breaches. While we provide employee awareness training around phishing, malware, and other cyber threats to help protect against these cyber and security risks, we cannot ensure the measures we take to protect our information technology systems will be sufficient.
Current wording
The operation of our business depends on effective information technology systems, including data management, analytics, and artificial intelligence and machine learning technologies (collectively, “AI”) platforms and applications. See also ‘Risks related to our development and use of artificial intelligence’ below. These systems are subject to the risk of security breach or cybersecurity threat, including misappropriation of assets or other sensitive information, such as confidential business information and personally identifiable data relating to employees, customers, and other business partners, or data corruption which could cause operational disruption. The unpredictability of AI, machine learning, and similar systems that automate certain operational tasks bring the potential for unintended consequences and unexpected disruptions in business operations, financial losses, and reputational damage, including if such systems produce incorrect or biased outputs, expose confidential data to third-party AI providers, or generate outputs that infringe third-party intellectual property or violate applicable privacy or AI-specific laws (such as the EU AI Act, Colorado AI Act, and other emerging AI legislation). As we could be the target of cyber and other security threats, which are becoming increasingly sophisticated, we must continuously monitor and develop our information technology networks and infrastructure to prevent, detect, address, and mitigate the risk of unauthorized access, misuse, computer viruses, and other events that could have a security impact. Information systems require an ongoing commitment of significant resources to research new technologies and processes, maintain and enhance existing systems, and develop new systems in order to keep pace with changes in information processing technology and evolving industry standards as well as to protect against cyber risks and security breaches. While we provide employee awareness training around phishing, malware, and other cyber threats to help protect against these cyber and security risks, we cannot ensure the measures we take to protect our information technology systems will be sufficient.
Previous wording
Implementation delays, poor execution, or a breach of information technology systems could disrupt our operations, damage our reputation, or increase costs related to the mitigation of, response to, or litigation arising from any such issue. Similar risks exist with our third-party vendors. Any problems caused by these third parties, including those resulting from disruption in communications services, cyber attacks, or security breaches, have the potential to hinder our ability to conduct business. In addition, data privacy laws and regulations, such as the European Union General Data Protection Regulation (“GDPR”), the UK GDPR, ePrivacy Directive, the California Privacy Rights Act (“CPRA”), and similar legislation in jurisdictions in which we operate, pose increasingly complex compliance challenges and potentially elevate costs, and any failure to comply with these laws and regulations could result in significant penalties.
Current wording
Implementation delays, poor execution, or a breach of information technology systems could disrupt our operations, damage our reputation, or increase costs related to the mitigation of, response to, or litigation arising from any such issue. Similar risks exist with our third-party vendors. Any problems caused by these third parties, including those resulting from disruption in communications services, cyber attacks, or security breaches, have the potential to hinder our ability to conduct business.
Previous wording
We make substantial investments of capital and operating expenses to implement comprehensive, company-wide quality systems, certifications, and controls in our operations in an effort to ensure sustained compliance with various product and quality system regulations and requirements, and to meet the needs of our customers. However, in the event we fail to adhere to these requirements, we become subject to costs associated with product defects, interruptions in production, and reputational harm. Our failure to comply with applicable quality system standards could, in turn, adversely affect our customers through failures to supply product to them. Quality or noncompliance failures could have an adverse effect on our reputation in addition to an adverse impact on our financial position, results of operations, or cash flows. While we maintain product liability and other insurance coverage that we believe to be generally in accordance with industry practices, our insurance coverage may not be adequate to protect us fully against substantial claims and costs that may arise from warranty and other liabilities related to product defects.
Current wording
We make substantial investments in comprehensive, company-wide quality systems, certifications, and controls designed to satisfy customer requirements and to comply with the various product and quality-system regulations applicable to our operations. If we fail to meet these requirements, we may incur costs associated with product defects, warranty and product liability claims, production interruptions, government investigations, fines, and penalties, and our failure to comply could delay or prevent our customers’ ability to obtain or maintain product approvals or to receive products from us on schedule. Any of the foregoing could adversely affect our reputation, customer relationships, financial position, results of operations, or cash flows. Although we maintain product liability and other insurance coverage that we believe is generally consistent with industry practice, our coverage may not be adequate to protect us fully against substantial claims arising from warranty or product-defect liabilities.
Previous wording
The past and present operation and ownership by Kimball Electronics of manufacturing plants and real property are subject to extensive and changing federal, state, local, and foreign environmental laws and regulations, including those relating to discharges in air, water, and land, the handling and disposal of solid and hazardous waste, the use of certain hazardous materials in the production of select products, and the remediation of contamination associated with releases of hazardous substances.
Current wording
Increased frequency and severity of extreme weather events, sea-level rise, and heightened water stress associated with climate change could damage our facilities or those of our suppliers and customers, disrupt our supply chain, and reduce demand for our services. Our past and present operations are also subject to extensive federal, state, local, and foreign environmental laws and regulations governing discharges to air, water, and land, the handling and disposal of solid and hazardous waste, the use of hazardous materials in production, and the remediation of contamination associated with releases of hazardous substances. Compliance with more stringent laws or regulations, or stricter interpretation of existing requirements, could require material expenditures, and any investigations or remedial efforts could result in material liabilities.
Previous wording
•We are subject to a variety of federal, state, local and foreign environmental, health and safety, product stewardship and producer responsibility laws and regulations, including those arising from global pandemics or relating to the use, generation, storage, discharge and disposal of hazardous chemicals used during our manufacturing process, those governing worker health and safety, those requiring design changes, supply chain investigation or conformity assessments, and those relating to the recycling or reuse of products we manufacture. These include EU regulations and directives, such as the Restrictions on Hazardous Substances (“RoHS”), the Waste Electrical and Electronic Equipment (“WEEE”) directives, and the Registration, Evaluation, Authorization, and Restriction of Chemicals (“REACH”) regulation, and similar regulations in China (the Management Methods for Controlling Pollution for Electronic Information Products or “China RoHS”). In addition, new technical classifications of e-Waste being discussed in the Basel Convention technical working group could affect both our customers’ abilities and obligations in electronics repair and refurbishment. If we fail to comply with any present or future regulations or timely obtain any needed permits, we could become subject to liabilities, and we could face fines or penalties, the suspension of production, or prohibitions on sales of products we manufacture. In addition, such regulations could restrict our ability to expand our facilities or could require us to acquire costly equipment, or to incur other significant expenses, including expenses associated with the recall of any non-compliant product or with changes in our operational, procurement and inventory management activities.
Current wording
•We are subject to a variety of federal, state, local and foreign environmental, health and safety, product stewardship and producer responsibility laws and regulations, including those arising from global pandemics or relating to the use, generation, storage, discharge and disposal of hazardous chemicals used during our manufacturing process, those governing worker health and safety, those requiring design changes, supply chain investigation or conformity assessments, and those relating to the recycling or reuse of products we manufacture. These include EU regulations and directives, such as the Restrictions on Hazardous Substances (“RoHS”), the Waste Electrical and Electronic Equipment (“WEEE”) directives, and the Registration, Evaluation, Authorization, and Restriction of Chemicals (“REACH”) regulation, and similar regulations in China (the Management Methods for Controlling Pollution for Electronic Information Products or “China RoHS”). If we fail to comply with any present or future regulations or timely obtain any needed permits, we could become subject to liabilities, and we could face fines or penalties, the suspension of production, or prohibitions on sales of products we manufacture. In addition, such regulations could restrict our ability to expand our facilities or could require us to acquire costly equipment, or to incur other significant expenses, including expenses associated with the recall of any non-compliant product or with changes in our operational, procurement and inventory management activities.
Previous wording
As business conditions change, we must continually evaluate and work toward the optimum asset base. It is possible that certain assets such as, but not limited to, facilities, equipment, intangible assets, or goodwill could be impaired at some point in the future depending on changing business conditions. Such impairment could have an adverse impact on our financial position and results of operations.
Current wording
As business conditions change, we must continually evaluate and work toward the optimum asset base. It is possible that certain assets such as, but not limited to, facilities, equipment, intangible assets, or goodwill could be impaired at some point in the future depending on changing business conditions. Our July 1, 2026 acquisition of Helvoet is expected to result in the recognition of additional goodwill and identifiable intangible assets during fiscal year 2027, and if the integration of Helvoet, its financial performance, its customer relationships, or the projected cash flows we ascribe to those assets do not meet our expectations, we could be required to recognize impairment charges with respect to those or other long-lived assets. Such impairment could have an adverse impact on our financial position and results of operations.
Previous wording
During fiscal year 2025, after appreciating sharply against many foreign currencies for several months, the dollar depreciated sharply, erasing essentially all of its appreciation since February 2022. Fluctuations in exchange rates could impact our operating results. Our risk management strategy includes the use of derivative financial instruments to hedge certain foreign currency exposures. Any hedging techniques we implement contain risks and may not be entirely effective. Exchange rate fluctuations could also make our products more expensive than competitors’ products not subject to these fluctuations, which could adversely affect our revenues and profitability in international markets.
Current wording
During fiscal year 2026, the U.S. dollar continued to depreciate against several of the currencies to which we have significant exposure, including the Euro, Polish zloty, and Romanian leu, and had a favorable 2% impact on our net sales for the year. Continued volatility in the U.S. dollar, including as a result of shifting U.S. monetary and fiscal policy, could materially affect our revenues, costs, and results of operations. Fluctuations in exchange rates could impact our operating results. Our risk management strategy includes the use of derivative financial instruments to hedge certain foreign currency exposures. Any hedging techniques we implement contain risks and may not be entirely effective. Exchange rate fluctuations could also make our products more expensive than competitors’ products not subject to these fluctuations, which could adversely affect our revenues and profitability in international markets.
Previous wording
Our primary credit facility requires us to comply with certain financial covenants. We believe the most significant covenants under our credit facilities are the ratio of consolidated total indebtedness minus unencumbered U.S. cash on hand in the United States in excess of $15 million to adjusted consolidated EBITDA, as defined in our primary credit facility, and the interest coverage ratio. More detail on these financial covenants is discussed in Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations. As of June 30, 2025, we had $147.5 million in borrowings under our credit facilities and had total cash and cash equivalents of $88.8 million. In the future, a default on the financial covenants under our credit facilities could cause an increase in the borrowing rates or make it more difficult for us to secure future financing, which could adversely affect our financial condition.
Current wording
Our primary credit facility requires us to comply with certain financial covenants. We believe the most significant covenants under our credit facilities are the ratio of consolidated total indebtedness minus unrestricted cash not to exceed $25 million to adjusted consolidated EBITDA, as defined in our primary credit facility, and the interest coverage ratio. More detail on these financial covenants is discussed in Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations. As of June 30, 2026, we had $116.6 million in borrowings under our credit facilities and had total cash and cash equivalents of $88.9 million. In the future, a default on the financial covenants under our credit facilities could cause an increase in the borrowing rates or make it more difficult for us to secure future financing, which could adversely affect our financial condition.
Previous wording
High levels of inflation in the U.S. and other countries where we operate have and may continue to increase our costs and may impact pricing and customer demand, both of which may impact our revenues and earnings. We have exposure to interest rate risk on our borrowings under our credit facilities. The interest rates of these borrowings are based on a spread plus applicable base rate, including the Secured Overnight Financing Rate (“SOFR”), the Euro Interbank Offered Rate (“EURIBOR”), the prime rate of a reference bank, or the federal funds rate. An adverse change in the base rates upon which our interest rates are determined could have a material adverse effect on our financial position, results of operations, or cash flows. Rising interest rates have increased our costs of borrowing. Additionally, volatility in capital markets could present challenges to us if we need to raise funds in the equity market. This, in turn, may cause us to adopt strategies that may be less capital-intensive. Volatility in the credit markets, including due to the recent bank failures as well as the U.S. Federal Reserve Bank’s actions and pace of interest rate increases to combat inflation in the U.S., may have an adverse effect on our ability to obtain debt financing.
Current wording
High levels of inflation in the U.S. and other countries where we operate have and may continue to increase our costs and may impact pricing and customer demand, both of which may impact our revenues and earnings. We have exposure to interest rate risk on our borrowings under our credit facilities. The interest rates of these borrowings are based on a spread plus applicable base rate, including the Secured Overnight Financing Rate (“SOFR”), the Euro Interbank Offered Rate (“EURIBOR”), the prime rate of a reference bank, or the federal funds rate. An adverse change in the base rates upon which our interest rates are determined could have a material adverse effect on our financial position, results of operations, or cash flows. Rising interest rates have increased our costs of borrowing. Additionally, volatility in capital markets could present challenges to us if we need to raise funds in the equity market. This, in turn, may cause us to adopt strategies that may be less capital-intensive. Volatility in the credit markets, including due to evolving U.S. Federal Reserve monetary policy in response to inflation, employment, and tariff-related economic conditions, may have an adverse effect on our ability to obtain debt financing.
Previous wording
Natural disasters, pandemics, or other catastrophic events may impact our production schedules and, in turn, negatively impact profitability.
Current wording
Facility catastrophes, pandemics, and other business-interruption events may impact our production schedules and profitability.
Previous wording
Natural disasters, pandemics, or other catastrophic events, including severe weather (including cyclones, hurricanes, and floods) as well as terrorist attacks, power interruptions, fires, and pandemics, could disrupt operations and likewise our ability to produce or deliver products. Our manufacturing operations require significant amounts of energy, including natural gas and oil, and governmental regulations may control the allocation of such fuels to Kimball Electronics. Employees are an integral part of our business, and events such as a pandemic could reduce the availability of employees reporting for work. In the event we experience a temporary or permanent interruption in our ability to produce or deliver product, revenues could be reduced, and business could be materially adversely affected. In addition, catastrophic events, or the threat thereof, can adversely affect U.S. and world economies, and could result in reduced demand for our customers’ products and delayed or lost revenue for our services. Further, any disruption in our IT systems could adversely affect the ability to receive and process customer orders, manufacture products, and ship products on a timely basis, and could adversely affect relations with customers, potentially resulting in reduction in orders from customers or loss of customers. We maintain insurance to help protect us from costs relating to some of these matters, but it may not be sufficient or paid in a timely manner to us in the event of such an interruption.
Current wording
Natural disasters, pandemics, or other catastrophic events, including severe weather (including cyclones, hurricanes, and floods) as well as terrorist attacks, power interruptions, fires, and pandemics, could disrupt operations and likewise our ability to produce or deliver products. Our manufacturing operations require significant amounts of energy, including natural gas. Employees are an integral part of our business, and events such as a pandemic could reduce the availability of employees reporting for work. In the event we experience a temporary or permanent interruption in our ability to produce or deliver product, revenues could be reduced, and business could be materially adversely affected. In addition, catastrophic events, or the threat thereof, can adversely affect U.S. and world economies, and could result in reduced demand for our customers’ products and delayed or lost revenue for our services. We maintain insurance to help protect us from costs relating to some of these matters, but it may not be sufficient or paid in a timely manner to us in the event of such an interruption.