Kimball Electronics, Inc.

Previous wording

Certain statements contained within this document are considered forward-looking under the Private Securities Litigation Reform Act of 1995. The statements may be identified by the use of words such as “believes,” “anticipates,” “expects,” “intends,” “plans,” “projects,” “estimates,” “forecasts,” “likely,” “future,” “may,” “should,” “would,” “could,” “will,” “can,” “potentially,” and similar expressions. These forward-looking statements are subject to risks and uncertainties including, but not limited to, global economic conditions, geopolitical environment and conflicts such as war, global health emergencies, availability or cost of raw materials and components, tariffs and other trade barriers, foreign exchange fluctuations, and our ability to convert new business opportunities into customers and revenue. Additional cautionary statements regarding other risk factors that could have an effect on the future performance of Kimball Electronics are contained in our Annual Report on Form 10-K for the year ended June 30, 2025.

Current wording

Certain statements contained within this document are considered forward-looking under the Private Securities Litigation Reform Act of 1995. The statements may be identified by the use of words such as “believes,” “anticipates,” “expects,” “intends,” “plans,” “projects,” “estimates,” “forecasts,” “likely,” “future,” “may,” “might,” “should,” “would,” “could,” “will,” “can,” “potentially,” “probable,” and similar expressions. These forward-looking statements are subject to risks and uncertainties including, but not limited to, global economic conditions, geopolitical environment and conflicts such as war, global health emergencies, availability or cost of raw materials and components, tariffs and other trade barriers, foreign exchange fluctuations, and our ability to convert new business opportunities into customers and revenue. Additional cautionary statements regarding other risk factors that could have an effect on the future performance of Kimball Electronics are contained in our Annual Report on Form 10-K for the year ended June 30, 2026.

Previous wording

We are a global, multifaceted manufacturing solutions provider. We provide electronics manufacturing services (“EMS”), including engineering and supply chain support, to customers in the automotive, medical, and industrial end markets. We further produce higher level and final assemblies and offer contract manufacturing organization (“CMO”) solutions which include the production of medical disposables and drug delivery devices, from precision molded plastics and cold chain management to drug integration. Our manufacturing services, including engineering and supply chain support, utilize common production and support capabilities globally. We are well recognized by our customers and the industry for our excellent quality, reliability, and innovative service. We have participated in the CIRCUITS ASSEMBLY Service Excellence Awards for the past twelve consecutive years, winning awards for excellence each year of participation and recently receiving top honors in all seven award categories. CIRCUITS ASSEMBLY is a leading brand and technical publication for electronics manufacturers worldwide.

Current wording

We are a global, multifaceted manufacturing solutions provider. We provide electronics manufacturing services (“EMS”), including engineering and supply chain support, to customers in the automotive, medical, and industrial end markets. We further produce higher level and final assemblies and offer contract development and manufacturing organization (“CDMO”) solutions which include the production of medical disposables and drug delivery devices, from precision molded plastics and cold chain management to drug integration. Our manufacturing services, including engineering and supply chain support, utilize common production and support capabilities globally. We are well recognized by our customers and the industry for our excellent quality, reliability, and innovative service. We have participated in the CIRCUITS ASSEMBLY Service Excellence Awards for the past thirteen consecutive years, winning awards for excellence each year of participation and recently receiving top honors in all seven award categories. CIRCUITS ASSEMBLY is a leading brand and technical publication for electronics manufacturers worldwide.

Previous wording

The contract manufacturing services industry is very competitive. As a mid-sized player, we can expect to be challenged by the agility and flexibility of the smaller, regional players, and we can expect to be challenged by the scale and price competitiveness of the larger, global players. We enjoy a unique market position between these extremes which allows us to compete with the larger scale players for high-volume projects but also maintain our competitive position in the generally lower volume durable electronics market space. We expect to continue to effectively operate in this market space; however, one significant challenge will be maintaining our profit margins. Pricing is competitive in the market as production efficiencies and material pricing advantages for most projects drive costs and prices down over the life of the projects. This characteristic of the contract electronics marketplace is expected to continue.

Current wording

The contract manufacturing services industry is very competitive. As a mid-sized player, we can expect to be challenged by the agility and flexibility of the smaller, regional players, and we can expect to be challenged by the scale and price competitiveness of the larger, global players. We enjoy a unique market position between these extremes which allows us to compete with the larger scale players for high-volume projects but also maintain our competitive position in the generally lower volume durable electronics market space. We expect to continue to effectively operate in this market space; however, one significant challenge will be maintaining our profit margins. Pricing remains competitive in the market even as production efficiencies and material pricing advantages for most projects drive costs and prices down over the life of the projects, a characteristic of our business and the market that we expect to continue.

Previous wording

Beginning in February 2025, the U.S. implemented tariffs on a variety of countries and commodities, and certain countries have imposed or are considering retaliatory tariffs on U.S. exports. The global tariff landscape is highly dynamic, including legal challenges and administrative processes related to tariffs and potential refunds. Increased tariffs have and may continue to impact end customer demand. We have recovered, and expect to continue recovering, a significant portion of our tariff-related costs from our customers, although recovery may lag the timing of cost occurrence. If we are unable to fully recover these costs, our results of operations and cash flows could be adversely impacted.

Current wording

Beginning in February 2025, the U.S. implemented tariffs on a variety of countries and commodities under the International Emergency Economic Powers Act (“IEEPA”), and certain countries have imposed or are considering retaliatory tariffs on U.S. exports. The global tariff landscape is highly dynamic, including legal challenges and administrative processes related to tariffs and potential refunds. Increased tariffs have and may continue to impact end customer demand. We have recovered, and expect to continue recovering, a significant portion of our tariff-related costs from our customers, although recovery may lag the timing of cost occurrence. In the fourth quarter of fiscal year 2026, following the Supreme Court ruling that the IEEPA tariffs must be vacated, we began receiving refunds on IEEPA tariffs, a significant portion of which will be returned to our customers. While we may not be able to fully recover tariff costs, we expect any unrecovered amounts, after giving effect to our contractual pass-through and repricing mechanisms, to be immaterial to our results of operations and cash flows.

Previous wording

Net sales in the third quarter of the current fiscal year decreased 6% compared to the prior fiscal year third quarter, driven primarily by single-digit percentage declines in each end market vertical.

Current wording

Net sales in the first quarter of the current fiscal year increased 7% compared to the prior fiscal year first quarter, driven primarily by a double-digit percentage increase in the medical end market vertical, which is inclusive of the additional sales from our acquired Helvoet locations.

Previous wording

We have a strong focus on cost control balanced with managing the future growth prospects of our business. We expect to make investments that will strengthen or add new capabilities to our package of value as a multifaceted manufacturing solutions company, including through entering into a lease on a new facility for our Indianapolis operations, and our recently completed capacity expansions. Managing working capital in conjunction with fluctuating demand levels is likewise key. In addition, a long-standing component of our profit-sharing incentive bonus plan is its link to our financial performance, which results in varying amounts of compensation expense as profits change.

Current wording

We have a strong focus on cost control balanced with managing the future growth prospects of our business. We expect to make investments that will strengthen or add new capabilities to our package of value as a multifaceted manufacturing solutions company, including through entering into a lease on a new facility for our Indianapolis operations, and our recent acquisition of Helvoet. The acquisition of Helvoet on July 1, 2026, expanded our capabilities in precision molded plastics, complex tooling, and medical device component manufacturing, enhancing our ability to provide comprehensive solutions to customers across the medical and pharmaceutical markets. Refer to Note 2 - Acquisition of Notes to Condensed Consolidated Financial Statements for further discussion on our recent acquisition. Managing working capital in conjunction with fluctuating demand levels is likewise key. In addition, a long-standing component of our profit-sharing incentive bonus plan is its link to our financial performance, which results in varying amounts of compensation expense as profits change.

Previous wording

We continue to maintain a strong balance sheet, which included a current ratio of 2.1, a debt-to-equity ratio of 0.3, and Share Owners’ equity of $578 million at March 31, 2026. Refer to the Future Liquidity section of Liquidity and Capital Resources below for further discussion of our liquidity.

Current wording

We continue to maintain a strong balance sheet, which included a current ratio of 1.9, a debt-to-equity ratio of 0.4, and Share Owners’ equity of $582 million at September 30, 2026. Refer to the Future Liquidity section of Liquidity and Capital Resources below for further discussion of our liquidity.

Previous wording

Foreign currency fluctuations had a favorable 3% impact on net sales in the current quarter compared to the third quarter of fiscal year 2025, and a favorable impact of 2% in the current year-to-date period compared to the year-to-date period of fiscal year 2025.

Current wording

First quarter fiscal year 2027 consolidated net sales increased 7% compared to the first quarter of fiscal year 2026. Foreign currency fluctuations had a favorable 1% impact on net sales in the current quarter compared to the first quarter of fiscal year 2026.

Previous wording

Selling and administrative expenses increased both as a percent of net sales and in absolute dollars in the third quarter of fiscal year 2026 when compared to the third quarter of fiscal year 2025 as well as in the first nine months of the fiscal year. The increased expenses were primarily driven by higher wages and benefits, increased profit-sharing bonus expense and stock compensation driven by improved performance, and increased professional fees relating to business transformation. The year-to-date period also included a $2.0 million recovery received during the first three months of fiscal year 2026 resulting from a customer terminating a program.

Current wording

Selling and administrative expenses increased both as a percent of net sales and in absolute dollars in the first quarter of fiscal year 2027 when compared to the first quarter of fiscal year 2026. The increased expenses were primarily driven by $2.0 million of acquisition costs relating to our recent acquisition of Helvoet as well as increased amortization on acquired intangible assets. In the first quarter of fiscal year 2026, following a customer termination of a program, an agreement was reached for the customer to compensate us for incurred costs, resulting in recognition of a $2.0 million recovery recorded in selling and administrative expenses.

Previous wording

In the three and nine months ended March 31, 2026, we recorded pre-tax restructuring expense of $0.9 million and $4.1 million for employee-related costs as we undertook restructuring efforts to align our cost structure with reduced end market demand levels and incurred costs related to the Tampa closure. In the three and nine months ended March 31, 2025, we recorded pre-tax restructuring expense of $2.0 million and $9.0 million for employee-related costs for cost structure alignment and incurred costs related to the Tampa closure.

Current wording

In the three months ended September 30, 2026, we recorded pre-tax restructuring expense of $0.4 million for employee-related costs as we undertook restructuring efforts to align our cost structure with reduced end market demand levels. In the three months ended September 30, 2025, we recorded pre-tax restructuring expense of $1.4 million for employee-related costs for cost structure alignment and incurred costs related to the Tampa closure. See Note 4 - Restructuring Activities of Notes to Condensed Consolidated Financial Statements for more information.

Previous wording

Interest expense has decreased in the three and nine months ended March 31, 2026 compared to the three and nine months ended March 31, 2025 due to lower borrowings on credit facilities and lower interest rates. Foreign currency/derivative gains (losses) result from net foreign currency exchange rate movements during the periods. The revaluation to fair value of the SERP investments recorded in Other Income (Expense) is offset by the revaluation of the SERP liability recorded in Selling and Administrative Expenses, and thus there is no effect on net income.

Current wording

Interest expense has increased in the three months ended September 30, 2026 compared to the three months ended September 30, 2025 due to increased borrowings on credit facilities primarily to fund the acquisition. Foreign currency/derivative gains (losses) result from net foreign currency exchange rate movements during the periods. The revaluation to fair value of the SERP investments recorded in Other Income (Expense) is offset by the revaluation of the SERP liability recorded in Selling and Administrative Expenses, and thus there is no effect on net income.

Previous wording

Our provision (benefit) for income taxes for the nine months ended March 31, 2026 and March 31, 2025 was $7.3 million, or 27.4% of income before taxes on income, and $3.1 million, or 23.0% of income before taxes on income, respectively.

Current wording

Our provision for income taxes for the three months ended September 30, 2026 and 2025 was $5.2 million, or 66.1% of income before taxes on income, and $0.9 million, or 8.3% of income before taxes on income, respectively. The three months ended September 30, 2026 include $3.0 million of withholding taxes incurred on the intercompany dividends executed to partially fund the acquisition. The low tax rate in the three months ended September 30, 2025 was driven by the new U.S. tax legislation resulting in a partial release of the valuation allowance against the business interest limitation deferred tax asset.

Previous wording

Open orders declined by 6% when comparing March 31, 2026 to March 31, 2025. Open orders at a point in time may not be indicative of future sales trends due to the contract nature of our business.

Current wording

Open orders increased by 16% when comparing September 30, 2026 to September 30, 2025. Open orders at a point in time may not be indicative of future sales trends due to the contract nature of our business.

Previous wording

Working capital at March 31, 2026 was $371.9 million compared to working capital of $381.0 million at June 30, 2025. The current ratio was 2.1 at March 31, 2026 and 2.2 at June 30, 2025. The debt-to-equity ratio was 0.3 at March 31, 2026 and June 30, 2025. Our short-term liquidity available, represented as cash and cash equivalents plus the unused amount of our credit facilities, some of which are uncommitted, totaled $358.5 million at March 31, 2026 and $373.5 million at June 30, 2025.

Current wording

Working capital at September 30, 2026 was $357.8 million compared to working capital of $360.9 million at June 30, 2026. The current ratio was 1.9 at September 30, 2026 and 2.1 at June 30, 2026. The debt-to-equity ratio was 0.4 at September 30, 2026 and 0.2 at June 30, 2026. Our short-term liquidity available, represented as cash and cash equivalents plus the unused amount of our credit facilities, some of which are uncommitted, totaled $270.8 million at September 30, 2026 and $403.8 million at June 30, 2026.

Previous wording

The following table reflects the major categories of cash flows for the first nine months of fiscal years 2026 and 2025.

Current wording

The following table reflects the major categories of cash flows for the first three months of fiscal years 2027 and 2026.

Previous wording

Net cash provided by operating activities for the first nine months of fiscal year 2026 was driven by net income adjusted for non-cash items, partially offset by changes in operating assets and liabilities. Net cash provided by operating activities for the first nine months of the prior year was driven by net income adjusted for non-cash items and changes in operating assets and liabilities.

Current wording

Net cash used for operating activities for the first three months of fiscal year 2027 was driven by net income adjusted for non-cash items, more than offset by changes in operating assets and liabilities. Net cash provided by operating activities for the first three months of the prior year was driven by net income adjusted for non-cash items, partially offset by changes in operating assets and liabilities.

Previous wording

Net income adjusted for non-cash items provided cash of $52.7 million in the first nine months of fiscal year 2026, while changes in operating assets and liabilities used $22.8 million of cash in the first nine months of fiscal year 2026, largely due to a decrease in advances from customers, which used cash of $13.2 million and an increase in receivables, which used cash of $9.8 million. Partially offsetting cash used for advances from customers and receivables was an increase in accounts payable, which provided cash of $15.1 million.

Current wording

Net income adjusted for non-cash items provided cash of $15.2 million in the first three months of fiscal year 2027, while changes in operating assets and liabilities used $34.5 million of cash in the first three months of fiscal year 2027, largely due to an increase in inventories, which used cash of $25.2 million, an increase in contract assets, which used cash of $7.7 million, and an increase in receivables, which used cash of $7.6 million. The increase of the inventories is primarily driven by purchases to support upcoming growth in certain programs. Partially offsetting cash used for inventories, receivables, and contract assets was an increase in accounts payable, which provided cash of $19.7 million.

Previous wording

Net cash used by investing activities of $38.1 million in the first nine months of fiscal year 2026 was largely due to capital investments of $43.2 million. The capital investments were primarily for the new medical facility in Indianapolis as well as to support new business awards and facility improvements.

Current wording

Net cash used by investing activities of $6.2 million in the first three months of fiscal year 2026 was largely due to capital investments of $10.6 million. The capital investments were primarily for the new medical facility in Indianapolis as well as to support new business awards and replacement of older machinery and equipment.

Previous wording

For the first nine months of fiscal year 2026, net cash provided by financing activities of $2.5 million resulted largely from net borrowings on our credit facilities of $15.4 million partially offset by repurchases of our common stock under an authorized repurchase plan and the remittance of tax withholdings on share-based payments. For the first nine months of fiscal year 2025, net cash used for financing activities of $126.6 million resulted largely from net payments on our credit facilities of $116.1 million.

Current wording

For the first three months of fiscal year 2027, net cash provided by financing activities of $114.0 million resulted largely from net borrowings on our credit facilities of $119.2 million partially offset by repurchases of our common stock under an authorized repurchase plan and the remittance of tax withholdings on share-based payments. For the first three months of fiscal year 2026, net cash used for financing activities of $14.0 million resulted largely from net payments on our credit facilities of $9.6 million.

Previous wording

The Company maintains a U.S. primary credit facility (the “primary credit facility”) scheduled to mature May 4, 2027. The primary credit facility provides for $300 million in revolving borrowings, with an option to increase the amount available for borrowing to $450 million at the Company’s request, subject to the consent of each lender participating in such increase. On December 20, 2024, the Company entered into an amended and restated credit agreement which resulted in the addition of a term loan borrowing, allowing for term loan borrowings of $100 million repayable in scheduled quarterly installments, and is scheduled to mature on December 20, 2029. This facility is maintained for working capital and general corporate purposes of the Company. We were in compliance with the financial covenants of the primary credit facility as of March 31, 2026.

Current wording

The Company maintains a U.S. primary credit facility (the “primary credit facility”). The primary credit facility provides revolving borrowings of $300 million, with the option to increase the amount available for borrowing to $450 million at the Company’s request, subject to consent of each lender participating in such increase, with a maturity date of April 30, 2031. The primary credit facility also provides for term loan borrowings (“term borrowings”) of $100 million repayable in scheduled quarterly installments, scheduled to mature December 20, 2029.

Previous wording

Subsequent to March 31, 2026, the Company entered into an amended and restated credit agreement on April 30, 2026 to its existing primary credit facility. This amendment and restatement changes the maturity date of the revolving credit borrowings from May 4, 2027 to April 30, 2031. See Note 8 - Credit Facilities of Notes to Consolidated Financial Statements for more information on our credit facilities, including the terms of the credit facilities such as interest, commitment fees, debt covenants, and the amended primary credit facility.

Current wording

See Note 8 - Credit Facilities of Notes to Consolidated Financial Statements for more information on our credit facilities, including the terms of the credit facilities such as interest, commitment fees, and debt covenants.

Previous wording

We participate in our customers’ supply chain financing arrangements in order to extend terms for the customer without negatively impacting our cash flow. These arrangements in all cases do not contain recourse provisions which would obligate us in the event of our customers’ failure to pay. Receivables are considered sold when they are transferred beyond the reach of Kimball Electronics and its creditors, the purchaser has the right to pledge or exchange the receivables, and we have surrendered control over the transferred receivables. In the nine months ended March 31, 2026 and 2025, we sold, without recourse, $208.7 million and $236.2 million of accounts receivable, respectively.

Current wording

We participate in our customers’ supply chain financing arrangements in order to extend terms for the customer without negatively impacting our cash flow. These arrangements in all cases do not contain recourse provisions which would obligate us in the event of our customers’ failure to pay. Receivables are considered sold when they are transferred beyond the reach of Kimball Electronics and its creditors, the purchaser has the right to pledge or exchange the receivables, and we have surrendered control over the transferred receivables. In the three months ended September 30, 2026 and 2025, we sold, without recourse, $79.8 million and $71.2 million of accounts receivable, respectively.

Previous wording

In addition to our customers’ supply chain financing arrangements, we have also entered into receivables purchase agreements (“RPA’s”) with third-party banking institutions for certain domestic receivables. We sell our entire interest in certain receivables for 100% of face value, less a discount. We are required to remit amounts collected as a servicer under the RPA’s timely to the financial institution that purchased the receivables. Our risks with respect to receivables we service include commercial disputes regarding such receivables and under one of the RPA’s, no greater than 5% of sold and outstanding receivables in the event of customer insolvency. In the nine months ended March 31, 2026, under this program, we sold $100.1 million of receivables. See Note 1 - Business Description and Summary of Significant Accounting Policies of Notes to Condensed Consolidated Financial Statements for more information regarding the factoring arrangements.

Current wording

In addition to our customers’ supply chain financing arrangements, we have also entered into receivables purchase agreements (“RPA’s”) with third-party banking institutions for certain domestic receivables. We sell our entire interest in certain receivables for 100% of face value, less a discount. We are required to remit amounts collected as a servicer under the RPA’s timely to the financial institution that purchased the receivables. Our risks with respect to receivables we service include commercial disputes regarding such receivables and under one of the RPA’s, no greater than 5% of sold and outstanding receivables in the event of customer insolvency. In the three months ended September 30, 2026 and 2025, under these programs, we sold $65.0 million and $28.6 million of receivables. See Note 1 - Business Description and Summary of Significant Accounting Policies of Notes to Condensed Consolidated Financial Statements for more information regarding the factoring arrangements.

Previous wording

As of March 31, 2026, following several quarters of strong cash generated from operating activities and debt reduction, we are in a much improved liquidity position with $82.5 million in cash and unused borrowings in USD equivalent under all of our credit facilities of $276.0 million. Additionally, considering expected future sources of liquidity from cash generated from operations and proceeds from the completed sale of the Tampa facility, we are positioned to meet our working capital and other operating needs for at least the next twelve months.

Current wording

Following our recent acquisition, we expect to maintain a strong liquidity position by cash generated from operations and available borrowing capacity under our credit facilities. At September 30, 2026, we had $72.8 million in cash and unused borrowings in USD equivalent under all of our credit facilities of $198.0 million. We believe our sources of liquidity will be sufficient to satisfy our working capital requirements and any other operating needs for at least the next twelve months.

Previous wording

We expect to continue to prudently invest in capital expenditures, including for capacity expansions and potential acquisitions, that would help us continue our growth as a multifaceted manufacturing solutions company. At March 31, 2026, our capital expenditure commitments were approximately $8.5 million, consisting primarily of capital related to new program wins and leasehold improvements on our new medical facility. We anticipate our available liquidity will be sufficient to fund these capital expenditures.

Current wording

We expect to continue to prudently invest in capital expenditures, including for capacity expansions and potential acquisitions, that would help us continue our growth as a multifaceted manufacturing solutions company. At September 30, 2026, our capital expenditure commitments were approximately $6.5 million, consisting primarily of capital related to new program wins and facility improvements. We anticipate our available liquidity will be sufficient to fund these capital expenditures.

Previous wording

At March 31, 2026, our foreign operations held cash totaling $81.8 million. Most of our accumulated unremitted foreign earnings have been invested in active non-U.S. business operations. The Company continually evaluates its global cash needs. If such funds were repatriated or we determined that all or a portion of such foreign earnings are no longer permanently reinvested, we may be subject to applicable non-U.S. income and withholding taxes. Determination of the amount of any potential future unrecognized deferred tax liability on such unremitted earnings is not practicable and is recorded in the period when any foreign earnings are determined to be no longer permanently reinvested. The Company asserts permanent reinvestment of foreign earnings in all our foreign jurisdictions with the exception of earnings from our China operation beginning in 2025 and thereafter.

Current wording

At September 30, 2026, our foreign operations held cash totaling $72.5 million. Most of our accumulated unremitted foreign earnings have been invested in active non-U.S. business operations. The Company continually evaluates its global cash needs. If such funds were repatriated or we determined that all or a portion of such foreign earnings are no longer permanently reinvested, we may be subject to applicable non-U.S. income and withholding taxes. Determination of the amount of any potential future unrecognized deferred tax liability on such unremitted earnings is not practicable and is recorded in the period when any foreign earnings are determined to be no longer permanently reinvested. The Company notes that during the current quarter, a one-time dividend was paid out of our China operation of $29.7 million for partial funding of the Helvoet acquisition. Due to the one-time nature of this transaction and the lack of future plans to repatriate additional funds, the Company has not changed the permanently reinvested position of our historical earnings in China nor recorded any deferred tax liability. The Company did appropriately record $3.0 million of withholding tax expense in the quarter as result of the dividend as aligned with our noted policy.

Previous wording

The Company’s Repurchase Plan allows the repurchase of up to $120 million of our common stock. Purchases may be made under various programs, including in open-market transactions, block transactions on or off an exchange, or in privately negotiated transactions, all in accordance with applicable securities laws and regulations. The Repurchase Plan has no expiration date but may be suspended or discontinued at any time. The extent to which the Company repurchases its shares, and the timing of such repurchases, will depend upon a variety of factors, including market conditions, regulatory requirements, and other corporate considerations, as determined by the Company’s management team. The Company expects to finance the purchases with existing liquidity. The Company has repurchased $113.5 million of common stock under the Repurchase Plan through March 31, 2026.

Current wording

The Company’s Repurchase Plan allows the repurchase of up to $140 million of our common stock. Purchases may be made under various programs, including in open-market transactions, block transactions on or off an exchange, or in privately negotiated transactions, all in accordance with applicable securities laws and regulations. The Repurchase Plan has no expiration date but may be suspended or discontinued at any time. The extent to which the Company repurchases its shares, and the timing of such repurchases, will depend upon a variety of factors, including market conditions, regulatory requirements, and other corporate considerations, as determined by the Company’s management team. The Company expects to finance the purchases with existing liquidity. The Company has repurchased $118.6 million of common stock under the Repurchase Plan through September 30, 2026.

Previous wording

During the third quarter of fiscal year 2026, no level 1 or level 2 financial instruments were affected by a lack of market liquidity. For level 1 financial assets, readily available market pricing was used to value the financial instruments. Our foreign currency derivative assets and liabilities, which were classified as level 2, were independently valued using observable market inputs such as forward interest rate yield curves, current spot rates, and time value calculations. To verify the reasonableness of the independently determined fair values, these derivative fair values were compared to fair values calculated by the counterparty banks. Our own credit risk and counterparty credit risk had an immaterial impact on the valuation of the foreign currency derivatives. See Note 9 - Fair Valueof Notes to Condensed Consolidated Financial Statements for additional information.

Current wording

During the first quarter of fiscal year 2027, no level 1 or level 2 financial instruments were affected by a lack of market liquidity. For level 1 financial assets, readily available market pricing was used to value the financial instruments. Our foreign currency derivative assets and liabilities, which were classified as level 2, were independently valued using observable market inputs such as forward interest rate yield curves, current spot rates, and time value calculations. To verify the reasonableness of the independently determined fair values, these derivative fair values were compared to fair values calculated by the counterparty banks. Our own credit risk and counterparty credit risk had an immaterial impact on the valuation of the foreign currency derivatives. See Note 9 - Fair Valueof Notes to Condensed Consolidated Financial Statements for additional information.

Previous wording

There have been no material changes to our critical accounting policies and estimates since our Annual Report on Form 10-K for the year ended June 30, 2025. For further information regarding our critical accounting policies, refer to “Note 1 - Business Description and Summary of Significant Accounting Policies” of Notes to Consolidated Financial Statements and “Critical Accounting Policies” in the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended June 30, 2025.

Current wording

There have been no other material changes to our critical accounting policies and estimates since our Annual Report on Form 10-K for the year ended June 30, 2026. For further information regarding our critical accounting policies, refer to “Note 1 - Business Description and Summary of Significant Accounting Policies” of Notes to Consolidated Financial Statements and “Critical Accounting Policies” in the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended June 30, 2026.