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Organization and Summary of Significant Accounting Policies (Policies)

12 Months Ended

Jun. 30, 2024

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Risks and Uncertainties: STRATTEC’s operating performance is subject to global economic conditions, inflationary pressures and levels of consumer spending specifically within the automotive industry. In our fiscal year 2023, the inflationary pressures negatively affected the areas of raw materials, purchased materials and wage rates in Mexico, resulting in increased raw material and purchased part costs in the year. While our fiscal 2024 results reflect reduced raw material costs as compared to our fiscal 2023, inflationary pressures on purchased material and wage rates in Mexico persist and may continue to negatively impact our fiscal 2025 operating results.

Additionally, unforeseen global economic conditions may adversely impact our supply chain and our operations, including impacting our customers, workforce and suppliers, any of which may continue to disrupt and limit sourcing of critical supply chain components needed by us and our customers to meet expected production schedules. Moreover, these events may create added inflationary pressures on our operations, including further increases in wages and the prices of raw materials and purchased parts. All of these foregoing matters, including their scope and duration, are uncertain and cannot be predicted as to timing and cost impacts upon our operations. These changing conditions may also affect the estimates and assumptions made by our management in our financial statements. Such estimates and assumptions affect, among other things, our long-lived asset valuations, assessment of our annual effective tax rate, valuation of deferred income taxes, assessment of excess and obsolete inventory reserves, and assessment of collectability of trade receivables.

Significant Accounting Policies

Significant Accounting Policies: The significant accounting policies followed in the preparation of these financial statements, as summarized in the following paragraphs, are in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP).

Principles of Consolidation and Presentation

Principles of Consolidation and Presentation: The accompanying consolidated financial statements include the accounts of STRATTEC SECURITY CORPORATION, its wholly owned subsidiaries and its majority owned subsidiary. Equity investments for which STRATTEC exercises significant influence but does not control and are not variable interest entities of STRATTEC are accounted for using the equity method. All significant inter-company transactions and balances have been eliminated.

New Accounting Standards

New Accounting Standards: In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses. The update revises the methodology for measuring credit losses on financial instruments and the timing of when such losses are recorded. Originally, the update was effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15,

2019, with early adoption permitted. In November 2019, FASB issued ASU 2019-10, Financial Instruments – Credit Losses, Derivatives and Hedging, and Leases. This ASU defers the effective date of ASU 2016-13 for public companies that are considered smaller reporting companies as defined by the SEC to fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. We adopted this standard in the first quarter of our fiscal 2024. The adoption of this pronouncement did not have a material impact on our consolidated financial statements.

In October 2023, the FASB issued ASU 2023-06, Disclosure Improvements - Codification Amendments in Response to the SEC's Disclosure Update and Simplification Initiative. The update incorporates into the Codification several disclosures and presentation requirements currently residing in SEC Regulations S-X and S-K. The effective date of ASU 2023-06 will be the date that the SEC eliminates the corresponding disclosure requirement from Regulation S-X and Regulation S-K. All amendments must be applied prospectively. The adoption of this pronouncement is not expected to have a material impact on our consolidated financial statements.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280) - Improvements to Reportable Segment Disclosures. The update enhances annual and interim reportable segment disclosures primarily by requiring disclosures about significant reportable segment expenses and provides new segment disclosure requirements for entities with a single reportable segment. ASU 2023-07 is effective for public business entities for fiscal years beginning after December 15, 2023 and for interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. This update is to be applied retrospectively to all periods presented in the financial statements. As a result of this update, we will be required to provide single reportable segment disclosure. Annual reporting under this update becomes effective for us in our fiscal 2025. Interim reporting under this update becomes effective for us in our fiscal 2026. We are currently assessing the required disclosure impacts of this update.

In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures. The update requires greater disaggregation of income tax disclosures related to the income tax rate reconciliation and income taxes paid. ASU 2023-09 is effective for public business entities for annual periods beginning after December 15, 2024, with early adoption permitted. This update is to be applied on a prospective basis. Retrospective application is permitted. Annual reporting under this update becomes effective for us in our fiscal 2026. We are currently assessing the required disclosure impacts of this update.

Subsequent Event

Subsequent Event: In August 2024, we entered into a peso forward contract providing for monthly settlements during the period September 2024 through August 2025. The notional amount over the contract period totals $33.5 million with a weighted average forward exchange rate of $19.73. Refer to the Derivative Instruments discussion below.

Fiscal Year

Fiscal Year: Our fiscal year ends on the Sunday nearest June 30. The years ended June 30, 2024 and July 2, 2023 are each comprised of 52 weeks.

Use of Estimates

Use of Estimates: The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses for the periods presented. These estimates and assumptions could also affect the disclosure of contingencies. Actual results and outcomes may differ from management’s estimates and assumptions.

Cash and Cash Equivalents

Cash and Cash Equivalents: Cash and cash equivalents include all short-term investments with an original maturity of three months or less due to the short-term nature of the instruments. Excess cash balances are placed in money market funds comprised of government agency securities, bank money market deposits and short-term certificates of deposit.

Derivatives Instruments

Derivative Instruments: We own and operate manufacturing operations in Mexico. As a result, a portion of our manufacturing costs are incurred in Mexican pesos, which causes our earnings and cash flows to fluctuate due to changes in the U.S. dollar/Mexican peso exchange rate. During 2023 and 2024, we had contracts with Bank of Montreal that provide for monthly Mexican peso currency forward contracts for a portion of our estimated peso denominated operating costs. Our objective in entering into currency forward contracts is to minimize our earnings volatility resulting from changes in exchange rates affecting the U.S. dollar cost of our Mexican operations. The Mexican peso forward contracts are not used for speculative purposes and are not designated as hedges. As a result, all currency forward contracts are recognized in our accompanying consolidated financial statements at fair value and changes in the fair value are reported in current earnings as part of Other Income (Expense), net. No Mexican peso forward contracts were outstanding as of June 30, 2024 or July 2, 2023.

The pre-tax effects of the Mexican peso forward contracts on the accompanying Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) consisted of the following (thousands of dollars):


	Other Income (Expense), net
	Years Ended
	June 30, 2024		July 2, 2023
Not Designated as Hedging Instruments:
Realized and unrealized gain, net	$	885	$	1,022

Fair Value of Financial Instruments

Fair Value of Financial Instruments: The fair value of our cash and cash equivalents, accounts receivable, accounts payable and borrowings under our credit facilities approximated their book value as of June 30, 2024 and July 2, 2023. Fair value is defined as the exchange price that would be received for an asset or paid for a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. There is an established fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable. Level 1 – Quoted prices in active markets for identical assets or liabilities. These are typically obtained from real-time quotes for transactions in active exchange markets involving identical assets. Level 2 – Inputs, other than quoted prices included within Level 1, which are observable for the asset or liability, either directly or indirectly. These are typically obtained from readily-available pricing sources for comparable instruments. Level 3 – Unobservable inputs, where there is little or no market activity for the asset or liability. These inputs reflect the reporting entity’s own assumptions of the data that market participants would use in pricing the asset or liability, based on the best information available in the circumstances. The following table summarizes our financial assets and liabilities measured at fair value on a recurring basis as of June 30, 2024 and July 2, 2023 (thousands of dollars):


	June 30, 2024								July 2, 2023
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Assets:
Rabbi Trust assets:
Stock index funds:
Small cap	$	84	$	—	$	—	$	84	$	161	$	—	$	—	$	161
Mid cap		163		—		—		163		327		—		—		327
Large cap		349		—		—		349		492		—		—		492
International		399		—		—		399		503		—		—		503
Fixed income funds		458		—		—		458		1,022		—		—		1,022
Cash and cash equivalents		—		185		—		185		—		113		—		113
Total assets at fair value	$	1,453	$	185	$	—	$	1,638	$	2,505	$	113	$	—	$	2,618

The Rabbi Trust assets fund our supplemental executive retirement plan and are included in Other Long-Term Assets in the accompanying Consolidated Balance Sheets. The reduction in Rabbi trust assets between periods resulted from $1.2 million in assets being moved from the trust in June 2024 related to a July 2024 settlement payment. Refer to discussion of Mexican peso forward contracts under Derivative Instruments above.

Receivables

Receivables: Receivables consist primarily of trade receivables due from Original Equipment Manufacturers in the automotive industry and locksmith/dealership distributors relating to our service and aftermarket sales. We evaluate the collectability of receivables based on a number of factors. An allowance for credit losses is recorded for significant past due receivable balances based on a review of the past due items, general economic conditions (including with respect to the impact of the Ukraine conflict and the supply chain disruptions on our customers) and the industry as a whole. The allowance for credit losses totaled $500,000 at June 30, 2024 and July 2, 2023.

Inventories

Inventories: Inventories are comprised of material, direct labor and manufacturing overhead, and are stated at net realizable value using the first-in, first-out (“FIFO”) cost method of accounting. Inventories consisted of the following (thousands of dollars):


	June 30, 2024		July 2, 2023
Finished products	$	19,833	$	15,935
Work in process		15,461		15,816
Purchased materials		46,355		45,846
Inventories, net	$	81,649	$	77,597

We record a reserve for excess and obsolete inventory based on historical and estimated future demand and market conditions. The reserve level is determined by comparing inventory levels of individual materials and parts to historical usage and estimated future sales by analyzing the age of the inventory in order to identify specific materials and parts that are unlikely to be sold. Technical obsolescence and other known factors are also considered in evaluating the reserve level. The activity related to the excess and obsolete inventory reserve was as follows (thousands of dollars):


	Balance, Beginning of Year		Provision Charged to Expense		Amounts Written Off / (Recoveries)			Balance, End of Year
Year ended June 30, 2024	$	7,115	$	1,887	$	1,222		$	7,780
Year ended July 2, 2023	$	5,489	$	1,457	$	(169	)	$	7,115

Customer Tooling in Progress

Customer Tooling in Progress: We incur costs related to tooling used in component production and assembly. Costs for development of certain tooling, which will be directly reimbursed by the customer whose parts are produced from the tool, are accumulated on the balance sheet and are then billed to the customer. The accumulated costs are billed upon formal acceptance by the customer of products produced with the individual tool. Other tooling costs are not directly reimbursed by the customer. We capitalize and amortize these other tooling costs over the life of the related product based on the fact that the related tool will be used over the life of the supply arrangement. To the extent that estimated costs exceed expected reimbursement from the customer we recognize a loss.

Value-Added Tax

Value-Added Tax: Our Mexican entities are subject to value-added tax ("VAT"). VAT is paid on goods and services and collected on sales. A VAT certification generally allows for relief from VAT tax for temporarily imported goods. Our VAT recoverable and payable balances were increased as of July 2, 2023 due to several monthly VAT tax periods being open to audit by the Mexican tax authority. As of June 30, 2024, the audits for periods prior to July 2023 have been closed. VAT recoverable balances increased $11.8 million during 2024 mostly due to a temporary issue with our VAT certification. Although the certification issue was resolved during our December 2023 quarter, we were required to pay VAT on all parts temporarily imported into Mexico before seeking reimbursement for periods in which the certification issue was outstanding, which periods are now open to audit with the Mexican tax authority along with all periods subsequent to resolution of the certification issue. VAT payable balances increased $3.5 million during 2024 mostly due to all periods subsequent to resolution of the VAT certificate issue being open to audit. We believe temporary increases in the VAT recoverable and payable balances will remain elevated until the periods under audit are closed.

Property, Plant and Equipment

Property, Plant and Equipment: Property, plant and equipment are stated at cost. Property, plant and equipment are depreciated on a straight-line basis over the estimated useful lives of the assets as follows:


Classification		Expected Useful Lives
Land improvements		20 years
Buildings and improvements		15 to 35 years
Machinery and equipment		3 to 15 years

Property, plant and equipment consisted of the following (thousands of dollars):


	June 30, 2024			July 2, 2023
Land and improvements	$	6,697		$	6,963
Buildings and improvements		39,927			41,218
Machinery and equipment		258,622			251,995
		305,246			300,176
Less: accumulated depreciation		(219,062	)		(205,730	)
	$	86,184		$	94,446

Depreciation expense was as follows for the periods indicated (thousands of dollars):


Fiscal Year	Depreciation Expense
2024	$	16,547
2023	$	17,485

The gross and net book value of property, plant and equipment located outside of the United States, primarily in Mexico, were as follows (thousands of dollars):


	June 30, 2024		July 2, 2023
Gross book value	$	180,566	$	178,592
Net book value	$	61,308	$	68,240

Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If such indicators are present, the recoverability of assets to be held and used is assessed by a comparison of the carrying amount of an asset to future net undiscounted cash flows expected to be generated by the asset. If an asset is determined to not be recoverable, the impairment recognized is calculated as the excess of the carrying amount of the asset over the fair value of the asset. Assets to be disposed of are reported at the lower of the carrying amount or fair value, less estimated costs to sell. There were no impairments recorded in the years ended June 30, 2024 or July 2, 2023.

Expenditures for repairs and maintenance are charged to expense as incurred. Expenditures for major renewals and betterments, which significantly extend the useful lives of existing plant and equipment, are capitalized and depreciated. Upon retirement or disposition of plant and equipment, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is recognized in income.

Leases

Leases: Our right-of-use operating lease assets are recorded at the present value of future minimum lease payments, net of amortization. We have an operating lease for our El Paso, Texas finished goods and service parts distribution warehouse. This lease has a current lease term through December 2028 and does not include any options to extend the lease term beyond such timeframe. We have two operating leases for office space at our Korean branch office. Both of these leases have a lease term through July 1, 2024 with automatic renewal. For purposes of calculating operating lease obligations, we included an extension of four years after July 1, 2024 as it is reasonably certain that we will exercise such automatic renewals. Our leases do not contain material residual value guarantees or restrictive covenants. Operating lease expense is recognized on a straight-line basis over the lease term.

As the lease does not provide an implicit rate, we used our incremental borrowing rate at lease commencement to determine the present value of our lease payments. The incremental borrowing rate is an entity-specific rate which represents the rate of interest we would pay to borrow over a similar term with similar payments.

The operating lease asset and obligation related to our operating leases included in the accompanying Consolidated Balance Sheets are presented below (thousands of dollars):


	June 30, 2024		July 2, 2023
Right-of-Use Asset Under Operating Lease:
Other Long-Term Assets	$	3,801	$	4,465
Lease Obligation Under Operating Lease:
Current Liabilities: Accrued Liabilities: Other	$	744	$	465
Other Long-Term Liabilities		3,390		4,000
	$	4,134	$	4,465

Future minimum lease payments, by our fiscal year, including options to extend that are reasonably certain to be exercised, under the non-cancelable leases are as follows as of June 30, 2024 (thousands of dollars):


2025	$	979
2026		1,026
2027		1,075
2028		1,127
Thereafter		558
Total Future Minimum Lease Payments		4,765
Less: Imputed Interest		(631	)
Total Lease Obligations	$	4,134

Cash flow information related to the operating leases is shown below (thousands of dollars):


	Years Ended
	June 30, 2024		July 2, 2023
Operating Cash Flows:
Cash Paid Related to Operating Lease Obligation	$	769	$	497

The weighted average remaining lease term and discount rate for our operating leases are shown below:


	June 30, 2024			July 2, 2023
Weighted Average Remaining Lease Term, (in years)		4.5			5.5
Weighted Average Discount Rate		6.2	%		6.2	%

Operating lease expense for the years ended June 30, 2024 and July 2, 2023 totaled $989,000 and $497,000, respectively.

Supplier Concentrations

Supplier Concentrations: The following inventory purchases were made from major suppliers with purchases in excess of 2.5 percent of total purchases during each fiscal year noted:


Fiscal Year	Percentage of Inventory Purchases			Number of Suppliers
2024		30	%		4
2023		39	%		6

We have long-term contracts or arrangements with most of our suppliers to assist in guaranteeing the availability of raw materials and component parts.

Labor Concentrations

Labor Concentrations: We had approximately 3,365 full-time associates as of June 30, 2024. Approximately 170 or 5.1 percent of our full time associates were represented by a labor union at June 30, 2024 at our Milwaukee facility, which associates account for all production associates at our Milwaukee, WI facility. The current contract with our Milwaukee unionized associates is effective through November 1, 2025. Additionally, approximately 152 or 4.5 percent of our full time associates were represented by a labor union at our Leon, Mexico facility. The current contract with our Leon unionized associates is effective through April 8, 2025.

Revenue Recognition

Revenue Recognition: We generate revenue from the production of parts sold to automotive and light-truck Original Equipment Manufacturers (“OEMs”), or Tier 1 suppliers at the direction of the OEM, under long-term supply agreements supporting new vehicle production. Such agreements also require related production of service parts subsequent to the initial vehicle production periods. Additionally, we generate revenue from the production of parts sold in aftermarket service channels and to non-automotive commercial customers.

Revenue Recognition:

Our contracts with customers under long-term supply agreements do not commit the customer to a specified quantity of parts. However, we are generally required to fulfill our customers’ purchasing requirements for the production life of the vehicle. Contracts do not become a performance obligation until we receive either a purchase order and/or customer release for a specific number of parts at a specified price. While long-term supply agreements may range from four to six years for new vehicle production and ten to fifteen subsequent years for service parts production, contracts may be terminated by customers at any time. Historically, terminations have been minimal. Contracts may also provide for annual price reductions over the production life of the vehicle, and prices are adjusted on an ongoing basis to reflect changes in product content/cost and other commercial factors.

Revenue is recognized at a point in time when control of the parts produced are transferred to the customer according to the terms of the contract, which is usually when the parts are shipped or delivered to the customer’s premises. Customers are generally invoiced upon shipment or delivery and payment generally occurs within 45 to 90 days after the shipment date. The amount of revenue recognized reflects the consideration that we expect to be entitled to receive in exchange for those products based on purchase orders, annual price reductions and ongoing price adjustments, some of which are accounted for as variable consideration. We use the most likely amount method, the single most likely outcome of the contract, to estimate the amount to which we expect to be entitled. There were no significant changes to our estimates of variable consideration during the reporting periods referenced in our accompanying financial statements and significant changes to our estimates of variable consideration are not expected in future periods.

We do not have an enforceable right to payment at any time prior to when the parts are shipped or delivered to the customer. Therefore, we recognize revenue at the point in time we satisfy a performance obligation by transferring control of a part to a customer. Amounts billed to customers related to shipping and handling costs are included in Net Sales in the accompanying Consolidated Statements of Income (Loss) and Comprehensive Income (Loss). Shipping and handling costs are accounted for as fulfillment costs and are included in Cost of Goods Sold in the accompanying Consolidated Statements of Income (Loss) and Comprehensive Income (Loss).

Tooling and Pre-Production Engineering Costs Related to Long-Term Supply Arrangements:

We incur pre-production engineering and tooling costs related to the products produced for our customers under long-term supply agreements. Customer reimbursements for tooling and pre-production engineering activities that are part of a long-term supply arrangement are accounted for as a reduction of cost in accordance with ASC 340, Other Assets and Deferred Costs. Pre-production costs related to long-term supply agreements with a contractual guarantee for reimbursement are included in Other Current Assets in the accompanying Consolidated Balance Sheets. We expense all pre-production engineering costs for which reimbursement is not contractually guaranteed by the customer. All pre-production tooling costs related to customer-owned tools for which reimbursement is not contractually guaranteed by the customer or for which we do not have a non-cancelable right to use the tooling is also expensed when incurred.

Receivables, net:

Receivables, net include amounts billed and currently due from customers. We maintain an allowance for credit losses to provide for estimated amounts of receivables not expected to be collected. We continually assess our receivables for collectability and any allowance is recorded based upon age of the outstanding receivables, historical payment experience, customer creditworthiness and general economic conditions.

Contract Balances:

We had no material contract assets or contract liabilities as of June 30, 2024 or July 2, 2023.

Product Sales and Sales and Receivable Concentration:

Refer to Product Sales and Sales and Receivable Concentration included herein for revenue by product group and revenue by customer.

Research and Development Costs

Research and Development Costs: Expenditures relating to the development of new products and processes, including significant improvements and refinements to existing products, are expensed as incurred. Research and development expenditures were approximately $14.8 million in 2024 and $15.9 million in 2023.

Other Income (Expense), Net

Other Income (Expense), Net: Net other income (expense) included in the accompanying Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) primarily included foreign currency transaction gains and losses, realized and unrealized gains and losses on our Mexican peso currency forward contracts, the components of net periodic benefit cost other than the service cost component related to our pension and postretirement plans and Rabbi Trust gains and losses. Foreign currency transaction gains and losses resulted from activity associated with foreign denominated assets and liabilities held by our Mexican subsidiaries. The Rabbi Trust assets fund our amended and restated supplemental executive retirement plan. The investments held in the Trust are considered trading securities. We entered into the Mexican peso currency forward contracts during fiscal 2024 and 2023 to reduce earnings volatility resulting from changes in exchange rates affecting the U.S. dollar cost of our Mexican operations. Pension and postretirement plan costs include the components of net periodic benefit cost other than the service cost component. The impact of these items for the periods presented was as follows (thousands of dollars):


	Years Ended
	June 30, 2024			July 2, 2023
Foreign currency transaction gain (loss)	$	2,153		$	(2,935	)
Rabbi Trust Assets gain		211			202
Realized and unrealized gain on Mexican peso forward contracts, net		885			1,022
Pension and postretirement plans cost		(395	)		(722	)
Other		194			255
	$	3,048		$	(2,178	)

Warranty Reserve

Warranty Reserve: We have a warranty reserve recorded related to our known and potential exposure to warranty claims in the event our products fail to perform as expected, and in the event we may be required to participate in the repair costs incurred by our customers for such products. The recorded warranty reserve balance involves judgment and estimates. Our reserve estimate is based on an analysis of historical warranty data as well as current trends and information received from our customers. During 2024 and 2023, we recorded warranty provisions associated with customer-specific warranty claims involving our product. As additional information becomes available, actual results may differ from recorded estimates, which may require us to adjust the amount of our warranty provision.

Changes in the warranty reserve were as follows (thousands of dollars):


	Balance, Beginning of Year		Provision Charged to Expense		Payments		Balance, End of Year
Year ended June 30, 2024	$	9,725	$	2,608	$	1,638	$	10,695
Year ended July 2, 2023	$	8,100	$	2,405	$	780	$	9,725

Foreign Currency Translation

Foreign Currency Translation: The financial statements of our foreign subsidiaries are translated into U.S. dollars using the exchange rate at each balance sheet date for assets and liabilities and the average exchange rate for each applicable period for sales, costs and expenses. Foreign currency translation adjustments are included as a component of accumulated other comprehensive loss. Foreign currency transaction gains and losses are included in other income (expense), net in the accompanying Consolidated Statements of Income (Loss) and Comprehensive Income (Loss).

Accumulated Other Comprehensive Loss

Accumulated Other Comprehensive Loss (“AOCL”): The following tables summarize the changes in AOCL for the years ended June 30, 2024 and July 2, 2023 (thousands of dollars):


	Year Ended June 30, 2024
	Foreign Currency Translation Adjustments		Retirement and Postretirement Plans			Total
Balance July 2, 2023	$	13,028	$	1,166		$	14,194
Other comprehensive loss before reclassifications		2,794		(10	)		2,784
Income Tax		—		2			2
Net other comprehensive loss before reclassifications		2,794		(8	)		2,786
Reclassifications:
Actuarial losses (A)		—		(242	)		(242	)
Total reclassifications before tax		—		(242	)		(242	)
Income Tax		—		57			57
Net reclassifications		-		(185	)		(185	)
Other comprehensive loss		2,794		(193	)		2,601
Other comprehensive loss attributable
to non-controlling interest		1,106		—			1,106
Balance June 30, 2024	$	14,716	$	973		$	15,689


	Year Ended July 2, 2023
	Foreign Currency Translation Adjustments			Retirement and Postretirement Plans			Total
Balance July 3, 2022	$	16,733		$	1,855		$	18,588
Other comprehensive income before reclassifications		(4,698	)		(559	)		(5,257	)
Income Tax		(636	)		132			(504	)
Net other comprehensive income before reclassifications		(5,334	)		(427	)		(5,761	)
Reclassifications:
Sale of interest in VAST LLC		(830	)		—			(830	)
Actuarial losses (A)		—			(342	)		(342	)
Total reclassifications before tax		(830	)		(342	)		(1,172	)
Income Tax		—			80			80
Net reclassifications		(830	)		(262	)		(1,092	)
Other comprehensive income		(6,164	)		(689	)		(6,853	)
Other comprehensive income attributable
to non-controlling interest		(2,459	)		—			(2,459	)
Balance July 2, 2023	$	13,028		$	1,166		$	14,194

(A)

Amounts reclassified are included in the computation of net periodic benefit cost, which is included in Other Income (Expense), net in the accompanying Consolidated Statements of Income (Loss) and Comprehensive Income (Loss). See Retirement Plans and Postretirement Costs note to these Notes to Financial Statements below.

Stock-Based Compensation

Stock-Based Compensation: We maintain an omnibus stock incentive plan. This plan provides for the granting of stock options, shares of restricted stock and stock appreciation rights. The Board of Directors has designated 2,250,000 shares of common stock available for the grant of awards under the plan. Remaining shares available to be granted under the plan as of June 30, 2024 were 361,085. Awards that expire or are cancelled without delivery of shares become available for re-issuance under the plan. We issue new shares of common stock to satisfy stock option exercises.

Nonqualified and incentive stock options and shares of restricted stock have been granted to our officers, outside directors and specified associates under the stock incentive plan. Stock options granted under the plan may not be issued with an exercise price less than the fair market value of the common stock on the date the option is granted. Stock options become exercisable as determined at the date of grant by the Compensation Committee of our Board of Directors. The options expire 10 years after the grant date unless an earlier expiration date is set at the time of grant. The options vest 1 to 4 years after the date of grant. Shares of restricted stock granted under the plan are subject to vesting criteria determined by the Compensation Committee of our Board of Directors at the time the shares are granted and have a minimum vesting period of one year from the date of grant. Restricted shares granted have voting rights, regardless of whether the shares are vested or unvested, but only have the right to receive cash dividends after such shares become vested. Restricted stock grants issued vest 1 to 3 years after the date of grant.

No stock options were granted during 2024 or 2023, and all compensation cost related to previously granted options was recognized prior to 2023. Accordingly, no compensation cost related to stock options was recorded during 2024 or 2023. The fair value of each restricted stock grant was based on the market price of the underlying common stock as of the date of grant. The resulting compensation cost is amortized on a straight-line basis over the vesting period. We record stock based compensation only for those awards that are expected to vest.

Unrecognized compensation cost as of June 30, 2024 related to restricted stock granted under the plan was as follows (thousands of dollars):


	Compensation Cost		Weighted Average Period over which Cost is to be Recognized (in years)
Restricted stock granted	$	930		0.9

Unrecognized compensation cost will be adjusted for any future changes in estimated and actual forfeitures.

Cash received from stock option exercises and the related income tax benefit were as follows (thousands of dollars):


Fiscal Year	Cash Received from Stock Option Exercises		Income Tax Benefit
2024	$	—	$	—
2023	$	109	$	—

The intrinsic value of stock options exercised and the fair value of options vested were as follows (thousands of dollars):


	Years Ended
	June 30, 2024		July 2, 2023
Intrinsic value of options exercised	$	—	$	31
Fair value of stock options vested	$	—	$	—

Options outstanding as of June 30, 2024 were as follows:


	Number of Options Outstanding and Exercisable		Weighted Average Exercise Price Outstanding and Exercisable		Weighted Average Remaining Contractual Life Outstanding (In Years)
$79.73		8,070	$	79.73	0.13

Income Taxes

Income Taxes: Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of assets and liabilities and their respective tax bases and operating loss carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in years in which those temporary differences are expected to be recovered, settled or utilized. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are recorded to reduce deferred tax assets when it is more likely than not that a tax benefit will not be realized. We recognize the benefit of an income tax position only if it is more likely than not (greater than 50 percent) that the tax position will be sustained upon tax examination, based solely on the technical merits of the tax position. Otherwise, no benefit is recognized. The tax benefits recognized are measured based on the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement. Additionally, we accrue interest and related penalties, if applicable, on all tax exposures for which reserves have been established consistent with jurisdictional tax laws. Interest and penalties on uncertain tax positions are classified in the (Benefit) Provision for Income Taxes in the accompanying Consolidated Statements of Income (Loss) and Comprehensive Income (Loss).