SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934



☐	~~Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934~~

☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Transition Period from _____ to _____

Commission File No. ~~0‑09115~~0-09115

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).



	~~Yes ☐~~		~~No ☒~~

As of ~~December 31, 2017,~~June 30, 2021, shares of common stock outstanding were: Class A Common Stock ~~32,291,571 shares~~31,612,671 shares.

PART I ‑ FINANCIAL INFORMATION

Item 1. Financial Statements

(Dollar amounts in thousands)


	June 30, 2021				September 30, 2020
ASSETS
Current assets:
Cash and cash equivalents			$	46,230			$	41,334
Accounts receivable, net			296,660				295,185
Inventories, net			194,700				175,100
Other current assets			83,141				63,954

Total current assets			620,731				575,573

Investments			49,646				63,250


Property, plant and equipment, net			229,207				236,788
Operating lease right-of-use assets			83,846				72,011
Deferred income taxes			2,894				3,757
Goodwill			780,375				765,388
Other intangible assets, net			285,756				333,498
Other assets			22,596				22,368

Total assets			$	2,075,051			$	2,072,633

LIABILITIES
Current liabilities:
Long-term debt, current maturities			$	4,994			$	26,824
Current portion of operating lease liabilities			25,349				23,942
Trade accounts payable			101,591				82,921
Accrued compensation			64,214				58,058
Accrued income taxes			2,479				3,612
Other current liabilities			130,838				121,511

Total current liabilities			329,465				316,868

Long-term debt			787,493				807,710
Operating lease liabilities			60,386				49,297
Accrued pension			135,108				149,848
Postretirement benefits			18,545				18,600
Deferred income taxes			84,427				78,911
Other liabilities			33,315				39,966
Total liabilities			1,448,739				1,461,200

SHAREHOLDERS' EQUITY
Shareholders' equity-Matthews:
Common stock	$	36,334			$	36,334
Additional paid-in capital	148,959				135,187
Retained earnings	844,732				859,002
Accumulated other comprehensive loss	(218,319)				(240,719)
Treasury stock, at cost	(185,958)				(178,997)
Total shareholders' equity-Matthews			625,748				610,807
Noncontrolling interests			564				626
Total shareholders' equity			626,312				611,433

Total liabilities and shareholders' equity			$	2,075,051			$	2,072,633

The accompanying notes are an integral part of these consolidated financial statements.

MATTHEWS INTERNATIONAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

(Dollar amounts in thousands, except per share data)


	Three Months Ended June 30,				Nine Months Ended June 30,
	2021		2020		2021		2020

Sales	$	428,380	$	359,422	$	1,232,191	$	1,099,166
Cost of sales	(291,122)		(238,469)		(828,424)		(737,722)

Gross profit	137,258		120,953		403,767		361,444

Selling expense	(31,463)		(28,508)		(94,618)		(93,953)
Administrative expense	(73,484)		(69,374)		(213,342)		(208,238)
Intangible amortization	(23,039)		(17,825)		(61,190)		(53,639)
Goodwill write-down	0		0		0		(90,408)

Operating profit (loss)	9,272		5,246		34,617		(84,794)

Investment income	959		1,252		3,005		1,443
Interest expense	(6,748)		(8,082)		(21,709)		(26,935)
Other income (deductions), net	(2,442)		(2,776)		(6,760)		(7,438)

Income (loss) before income taxes	1,041		(4,360)		9,153		(117,724)

Income tax benefit (provision)	2,325		6,209		(2,627)		22,672

Net income (loss)	3,366		1,849		6,526		(95,052)

Net (income) loss attributable to noncontrolling interests	(11)		420		60		491

Net income (loss) attributable to Matthews shareholders	$	3,355	$	2,269	$	6,586	$	(94,561)

Earnings (loss) per share attributable to Matthews shareholders:
Basic	$	0.11	$	0.07	$	0.21	$	(3.04)

Diluted	$	0.10	$	0.07	$	0.21	$	(3.04)

The accompanying notes are an integral part of these consolidated financial statements.

MATTHEWS INTERNATIONAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited)

(Dollar amounts in thousands)



	Three Months Ended June 30,
	Matthews				Noncontrolling Interest				Total
	2021		2020		2021		2020		2021		2020

Net income (loss):	$	3,355	$	2,269	$	11	$	(420)	$	3,366	$	1,849
Other comprehensive income (loss) ("OCI"), net of tax:
Foreign currency translation adjustment	2,904		11,240		0		0		2,904		11,240
Pension plans and other postretirement benefits	3,328		1,743		0		0		3,328		1,743

Unrecognized (loss) gain on derivatives:
Net change from periodic revaluation	(654)		(509)		0		0		(654)		(509)
Net amount reclassified to earnings	596		330		0		0		596		330
Net change in unrecognized loss on derivatives	(58)		(179)		0		0		(58)		(179)
OCI, net of tax	6,174		12,804		0		0		6,174		12,804
Comprehensive income (loss)	$	9,529	$	15,073	$	11	$	(420)	$	9,540	$	14,653


	Nine Months Ended June 30,
	Matthews				Noncontrolling Interest				Total
	2021		2020		2021		2020		2021		2020

Net income (loss):	$	6,586	$	(94,561)	$	(60)	$	(491)	$	6,526	$	(95,052)
OCI, net of tax:
Foreign currency translation adjustment	11,061		(8,297)		(2)		(4)		11,059		(8,301)
Pension plans and other postretirement benefits	7,707		5,297		0		0		7,707		5,297

Unrecognized gain (loss) on derivatives:
Net change from periodic revaluation	1,787		(4,248)		0		0		1,787		(4,248)
Net amount reclassified to earnings	1,845		(82)		0		0		1,845		(82)
Net change in unrecognized gain (loss) on derivatives	3,632		(4,330)		0		0		3,632		(4,330)
OCI, net of tax	22,400		(7,330)		(2)		(4)		22,398		(7,334)
Comprehensive income (loss)	$	28,986	$	(101,891)	$	(62)	$	(495)	$	28,924	$	(102,386)

The accompanying notes are an integral part of these consolidated financial statements.

MATTHEWS INTERNATIONAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

for the three and nine months ended ~~December 31, 2017~~June 30, 2021 and ~~2016~~2020 (Unaudited)

(Dollar amounts in thousands, except per share data)


	Shareholders' Equity
	Common Stock		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive (Loss) Income		Treasury Stock		Non- controlling Interests		Total
Balance, September 30, 2020	$	36,334	$	135,187	$	859,002	$	(240,719)	$	(178,997)	$	626	$	611,433
Net loss	—		—		(1,758)		—		—		(234)		(1,992)
Minimum pension liability	—		—		—		2,124		—		—		2,124
Translation adjustment	—		—		—		17,055		—		(3)		17,052
Fair value of derivatives	—		—		—		1,035		—		—		1,035
Total comprehensive income													18,219
Stock-based compensation	—		3,246		—		—		—		—		3,246
Purchase of 162,291 shares of treasury stock	—		—		—		—		(4,237)		—		(4,237)
Issuance of 10,300 shares of treasury stock	—		(407)		—		—		407		—		0
Cancellations of 34,727 shares of treasury stock	—		1,982		—		—		(1,982)		—		0
Dividends, $0.215 per share	—		—		(6,808)		—		—		—		(6,808)


Balance, December 31, 2020	$	36,334	$	140,008	$	850,436	$	(220,505)	$	(184,809)	$	389	$	621,853
Net income	—		—		4,989		—		—		163		5,152
Minimum pension liability	—		—		—		2,255		—		—		2,255
Translation adjustment	—		—		—		(8,898)		—		1		(8,897)
Fair value of derivatives	—		—		—		2,655		—		—		2,655
Total comprehensive income													1,165
Stock-based compensation	—		4,001		—		—		—		—		4,001
Purchase of 6,000 shares of treasury stock	—		—		—		—		(249)		—		(249)
Issuance of 17,357 shares of treasury stock	—		(685)		—		—		685		—		0

Dividends, $0.215 per share	—		—		(7,171)		—		—		—		(7,171)


Balance, March 31, 2021	$	36,334	$	143,324	$	848,254	$	(224,493)	$	(184,373)	$	553	$	619,599
Net income	—		—		3,355		—		—		11		3,366
Minimum pension liability	—		—		—		3,328		—		—		3,328
Translation adjustment	—		—		—		2,904		—		—		2,904
Fair value of derivatives	—		—		—		(58)		—		—		(58)
Total comprehensive income													9,540
Stock-based compensation	—		5,713		—		—		—		—		5,713
Purchase of 45,584 shares of treasury stock	—		—		—		—		(1,663)		—		(1,663)
Issuance of 2,045 shares of treasury stock	—		(78)		—		—		78		—		0

Dividends, $0.215 per share	—		—		(6,877)		—		—		—		(6,877)


Balance, June 30, 2021	$	36,334	$	148,959	$	844,732	$	(218,319)	$	(185,958)	$	564	$	626,312

Shareholders' Equity

Common
Stock

Additional
Paid-in
Capital

Retained
Earnings

Accumulated
Other
Comprehensive
(Loss) Income

Treasury
Stock

Non-
controlling
interests
Total
Balance,
September 30, 2017 $ 36,334
$ 123,432
$ 948,830
$ (154,115 ) $ (164,774 ) $ 552
$ 790,259
Net income (loss) —
—
35,180
—
—
(22 ) 35,158
Minimum pension liability —
—
—
1,018
—
—
1,018
Translation adjustment —
—
—
7,598
—
13
7,611
Fair value of derivatives —
—
—
1,595
—
—
1,595
Total comprehensive income

45,382
Stock-based compensation —
5,474
—
—
—
—
5,474
Purchase of 75,765 shares of treasury stock —
—
—
—
(4,415 ) —
(4,415 )
Issuance of 223,971 shares of treasury stock —
(8,922 ) —
—
8,922
—
—
Cancellations of 5,214 shares of treasury stock —
310
—
—
(310 ) —
—
Dividends, $0.19 per share —
—
(6,071 ) —
—
—
(6,071 )
Balance,
December 31, 2017 $ 36,334
$ 120,294
$ 977,939
$ (143,904 ) $ (160,577 ) $ 543
$ 830,629

Shareholders' Equity

Common
Stock

Additional
Paid-in
Capital

Retained
Earnings

Accumulated
Other
Comprehensive
(Loss) Income

Treasury
Stock

Non-
controlling
interests
Total
Balance,
September 30, 2016 $ 36,334
$ 117,088
$ 896,224
$ (181,868 ) $ (159,113 ) $ 669
$ 709,334
Net income (loss) —
—
10,322
—
—
(114 ) 10,208
Minimum pension liability —
—
—
1,536
—
—
1,536
Translation adjustment —
—
—
(31,342 ) —
59
(31,283 )
Fair value of derivatives —
—
—
5,593
—
—
5,593
Total comprehensive loss

(13,946 )
Stock-based compensation —
6,097
—
—
—
—
6,097
Purchase of 95,229 shares of treasury stock —
—
—
—
(6,499 ) —
(6,499 )
Issuance of 205,623 shares of treasury stock —
(7,893 ) —
—
7,907
—
14
Dividends, $0.17 per share
—
—
(5,389 ) —
—
—
(5,389 )
Balance,
December 31, 2016 $ 36,334
$ 115,292
$ 901,157
$ (206,081 ) $ (157,705 ) $ 614
$ 689,611


	Shareholders' Equity
	Common Stock		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive (Loss) Income		Treasury Stock		Non- controlling Interests		Total
Balance, September 30, 2019	$	36,334	$	137,774	$	972,594	$	(228,361)	$	(200,235)	$	1,130	$	719,236
Net (loss) income	—		—		(10,466)		—		—		160		(10,306)
Minimum pension liability	—		—		—		1,727		—		—		1,727
Translation adjustment	—		—		—		11,111		—		(5)		11,106
Fair value of derivatives	—		—		—		291		—		—		291
Total comprehensive income													2,818
Stock-based compensation	—		2,031		—		—		—		—		2,031
Purchase of 52,104 shares of treasury stock	—		—		—		—		(1,845)		—		(1,845)
Issuance of 11,225 shares of treasury stock	—		(450)		—		—		450		—		0
Cancellations of 17,509 shares of treasury stock	—		1,171		—		—		(1,171)		—		0
Dividends, $0.21 per share	—		—		(6,535)		—		—		—		(6,535)


Balance, December 31, 2019	$	36,334	$	140,526	$	955,593	$	(215,232)	$	(202,801)	$	1,285	$	715,705
Net loss	—		—		(86,364)		—		—		(231)		(86,595)
Minimum pension liability	—		—		—		1,827		—		—		1,827
Translation adjustment	—		—		—		(30,648)		—		1		(30,647)
Fair value of derivatives	—		—		—		(4,442)		—		—		(4,442)
Total comprehensive loss													(119,857)
Stock-based compensation	—		2,508		—		—		—		—		2,508
Purchase of 20,750 shares of treasury stock	—		—		—		—		(506)		—		(506)


Dividends, $0.21 per share	—		—		(6,648)		—		—		—		(6,648)

Balance, March 31, 2020	$	36,334	$	143,034	$	862,581	$	(248,495)	$	(203,307)	$	1,055	$	591,202
Net income (loss)	—		—		2,269		—		—		(420)		1,849
Minimum pension liability	—		—		—		1,743		—		—		1,743
Translation adjustment	—		—		—		11,240		—		—		11,240
Fair value of derivatives	—		—		—		(179)		—		—		(179)
Total comprehensive income													14,653
Stock-based compensation	—		2,539		—		—		—		—		2,539
Purchase of 722 shares of treasury stock	—		—		—		—		(22)		—		(22)
Issuance of 900 shares of treasury stock	—		(36)		—		—		36		—		0
Cancellations of 4,616 shares of treasury stock	—		277		—		—		(277)		—		0
Dividends, $0.21 per share	—		—		(6,630)		—		—		—		(6,630)


Balance, June 30, 2020	$	36,334	$	145,814	$	858,220	$	(235,691)	$	(203,570)	$	635	$	601,742

The accompanying notes are an integral part of these consolidated financial statements.

MATTHEWS INTERNATIONAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(Dollar amounts in thousands)


	Nine Months Ended June 30,
	2021		2020
Cash flows from operating activities:
Net income (loss)	$	6,526	$	(95,052)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization	97,919		88,418
Stock-based compensation expense	12,960		7,078
Deferred tax provision (benefit)	967		(11,986)
Gain on sale of assets, net	(641)		(229)
Gain on sale of ownership interest in a subsidiary	0		(11,208)

Unrealized gain on investments	(1,336)		(1,161)
Loss from equity-method investments	0		3,542
Goodwill write-down	0		90,408
Changes in working capital items	(7,513)		41,726
Decrease in other assets	2,632		5,076
(Decrease) increase in other liabilities	(6,064)		2,960

Other operating activities, net	1,407		4,036

Net cash provided by operating activities	106,857		123,608

Cash flows from investing activities:
Capital expenditures	(24,495)		(25,486)
Acquisitions, net of cash acquired	(15,623)		0
Proceeds from sale of assets	2,211		398
Proceeds from sale of investments	15,000		0
Proceeds from sale of ownership interest in subsidiary	0		42,210

Investments and advances	0		(9,723)


Net cash (used in) provided by investing activities	(22,907)		7,399

Cash flows from financing activities:
Proceeds from long-term debt	385,065		971,399
Payments on long-term debt	(434,089)		(1,063,459)

Purchases of treasury stock	(6,149)		(2,372)
Dividends	(20,856)		(19,813)
Acquisition holdback and contingent consideration payments	(1,556)		(4,689)
Other financing activities	(2,245)		(4,156)

Net cash used in financing activities	(79,830)		(123,090)

Effect of exchange rate changes on cash	776		(315)

Net change in cash and cash equivalents	4,896		7,602
Cash and cash equivalents at beginning of year	41,334		35,302
Cash and cash equivalents at end of period	$	46,230	$	42,904

The accompanying notes are an integral part of these consolidated financial statements.

MATTHEWS INTERNATIONAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

~~December 31, 2017~~June 30, 2021

(Dollar amounts in thousands, except per share data)

Note 1. Nature of Operations

Matthews International Corporation ("Matthews" or the "Company"), founded in 1850 and incorporated in Pennsylvania in 1902, is a global provider of brand solutions, memorialization products and industrial technologies. Brand solutions ~~include brand development, deployment and delivery (consisting~~consists of brand management, pre-media services, printing plates and cylinders, ~~and~~engineered products, imaging services, ~~for consumer packaged goods and retail customers,~~digital asset management, merchandising display systems, and marketing and design ~~services).~~services primarily for the consumer goods and retail industries. Memorialization products consist primarily of bronze and granite memorials and other memorialization products, caskets, and cremation and incineration equipment primarily for the cemetery and funeral home industries. Industrial technologies include marking and coding equipment and consumables, industrial automation products and order fulfillment systems for identifying, tracking, picking and conveying consumer and industrial products.

The Company has facilities in ~~the United States,~~North America, Europe, Asia, ~~Canada,~~ Australia, and Central and South America.

Note 2. Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles ("GAAP") for interim financial information for commercial and industrial companies and the instructions to Form ~~10‑Q~~10-Q and Rule ~~10‑01~~10-01 of Regulation ~~S‑X.~~S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. The year-end consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by GAAP. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for fair presentation have been included. Operating results for the ~~three~~nine months ended ~~December 31, 2017~~June 30, 2021 are not necessarily indicative of the results that may be expected for the fiscal year ending September 30, ~~2018.~~2021. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's Annual Report on Form ~~10‑K~~10-K for the year ended September 30, ~~2017.~~2020. The consolidated financial statements include all domestic and foreign subsidiaries in which the Company maintains an ownership interest and has operating control. Investments in certain companies over which the Company exerts significant influence, but does not control the financial and operating decisions, are accounted for as equity method investments. Investments in certain companies over which the Company does not exert significant influence are accounted for as cost method investments. All intercompany accounts and transactions have been eliminated.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

New Accounting Pronouncements:

In August ~~2017,~~2018, the Financial Accounting Standards Board ~~("FASB"~~(the "FASB") issued Accounting Standards Update ("ASU") ~~2017-12,~~ ~~Derivatives and Hedging (Topic 815)~~No. 2018-14, Compensation - Retirement Benefits - Defined Benefit Plans - General (Subtopic 715-20), which ~~provides new guidance intended to improve~~modifies the ~~financial reporting of hedging relationships to better portray the economic results of an entity’s risk management activities in its financial statements. This ASU is effective~~disclosure requirements for ~~the Company beginning in fiscal year 2020.~~employers that sponsor defined benefit pension or other postretirement plans. The adoption of this ASU ~~is not expected to have a~~in the first quarter ended December 31, 2020 had no material impact on the Company's consolidated financial ~~statements.~~

~~In May 2017,~~statements and the ~~FASB issued ASU 2017-09,~~ ~~Compensation-Stock Compensation (Topic 718)~~, which provides new guidance intended to clarify and reduce complexities in applying stock compensation guidance to a change to the terms or conditions of share-based payment awards. This ASU is effectiveForm 10-K disclosures for the ~~Company beginning in fiscal~~ year ~~2019. The Company is in~~ended September 30, 2021 will reflect the ~~process~~adoption of ~~assessing the impact~~ this ~~ASU will have on its consolidated financial statements.~~ASU.

In ~~February 2017,~~June 2016, the FASB issued ASU No. ~~2017-07,~~ ~~Compensation~~2016-13, Financial Instruments - ~~Retirement Benefits~~Credit Losses (Topic ~~715), Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost~~326), which provides ~~new guidance intended~~financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to ~~improve~~extend credit held by a reporting entity at each report date. Subsequently, the ~~disclosure requirements related~~FASB issued ASU No. 2019-11, Codification Improvements to Topic 326, Financial Instruments—Credit Losses and ASU No. 2020-02, Financial Instruments—Credit Losses (Topic 326) and Leases (Topic 842), that provide certain amendments to the ~~service cost component of net benefit cost. This ASU is effective for the Company beginning in fiscal year 2019.~~new guidance. The adoption of ~~this ASU is not expected to have a~~these ASUs in the first quarter ended December 31, 2020 had no material impact on the Company's consolidated financial statements.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

(Dollar amounts in thousands, except per share data)

Note 2. Basis of Presentation (continued)

~~In January 2017,~~The following table summarizes the ~~FASB issued ASU No. 2017-01,~~ ~~Business Combinations (Topic 805), Clarifying the Definition of a Business, which provides new guidance intended to make the definition of a business more operable and allow for more consistency in application. This ASU is effective~~activity for the ~~Company beginning in interim periods starting in fiscal year 2019. The adoption of this ASU is not expected to have a material impact on the Company's consolidated financial statements.~~

~~In August 2016, the FASB issued ASU No. 2016-15,~~ ~~Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (a consensus of the Emerging Issues Task Force)~~, which provides new guidance intended to clarify the presentation of certain cash flow items including debt prepayments, debt extinguishment costs, contingent considerations payments, and insurance proceeds, among other things. This ASU is effectiveaccounts receivable allowance for doubtful accounts for the nine months ended June 30, 2021:



	Accounts Receivable Allowance for Doubtful Accounts
Balance at October 1, 2020	$	9,618
Current period expense / (deductions)	(296)
Translation and other adjustments (1)	(193)
Balance at June 30, 2021	$	9,129

(1) Includes the impact of foreign currency fluctuations and amounts determined not to be collectible (including direct write-offs), net of recoveries.

Note 3. Revenue Recognition

The Company ~~beginning in interim periods starting in fiscal year 2019,~~delivers a variety of products and ~~early adoption is permitted.~~services through its business segments. The ~~adoption of this ASU is not expected~~SGK Brand Solutions segment delivers brand management, pre-media services, printing plates and cylinders, engineered products (including energy solutions), and imaging services for consumer goods and retail customers, merchandising display systems, and marketing and design services primarily to ~~have a material impact on~~ the ~~Company's consolidated financial statements.~~

~~In February 2016, the FASB issued ASU No. 2016-02,~~ ~~Leases (Topic 842), which provides new guidance on how an entity should account for leases~~consumer goods and ~~recognize associated lease assets~~retail industries. The Memorialization segment produces and ~~liabilities. This ASU requires lessees to recognize assets~~delivers bronze and ~~liabilities that arise from financing~~granite memorials and operating leases on the Consolidated Balance Sheet. The implementation of this standard will require application of the new guidance at the beginning of the earliest comparative period presented, once adopted. This ASU is effectiveother memorialization products, caskets, and cremation and incineration equipment primarily for the ~~Company beginning in interim periods starting in fiscal year 2020,~~cemetery and ~~does allow~~funeral home industries. The Industrial Technologies segment delivers marking and coding equipment and consumables, industrial automation products and order fulfillment systems for ~~early adoption.~~ identifying, tracking, picking and conveying consumer and industrial products for the warehousing and industrial industries.

The Company ~~is in~~disaggregates revenue from contracts with customers by geography, as it believes geographic regions best depict how the ~~process~~nature, amount, timing and uncertainty of ~~assessing the impact this ASU will have on its consolidated financial statements.~~

~~In January 2016, the FASB issued ASU No. 2016-01,~~ ~~Financial Instruments - Overall (Subtopic 825-10): Recognition~~revenue and ~~Measurement of Financial Assets~~cash flows are affected by economic factors. Disaggregated sales by segment and ~~Financial Liabilities, which provides new guidance intended to improve the recognition, measurement, presentation and disclosure of financial instruments. This ASU is effective~~region for the ~~Company beginning in interim periods starting in fiscal year 2019. The adoption of this ASU is not expected to have a material impact on the Company's consolidated financial statements.~~three and nine months ended June 30, 2021 and 2020 were as follows:



	SGK Brand Solutions				Memorialization				Industrial Technologies				Consolidated
	Three Months Ended June 30,				Three Months Ended June 30,				Three Months Ended June 30,				Three Months Ended June 30,
	2021		2020		2021		2020		2021		2020		2021		2020
North America	$	73,831	$	81,852	$	168,652	$	151,160	$	35,909	$	25,038	$	278,392	$	258,050
Central and South America	1,225		1,571		0		0		0		0		1,225		1,571
Europe	107,427		68,702		13,072		9,163		6,831		5,647		127,330		83,512
Australia	3,352		2,865		2,613		1,795		0		0		5,965		4,660
Asia	13,880		10,790		0		0		1,588		839		15,468		11,629
Total Sales	$	199,715	$	165,780	$	184,337	$	162,118	$	44,328	$	31,524	$	428,380	$	359,422

~~In May 2014, the FASB issued ASU No. 2014-09,~~ ~~Revenue from Contracts with Customers: Topic 606~~. This ASU replaces nearly all existing U.S. GAAP guidance on revenue recognition. The standard prescribes a five-step model for recognizing revenue, the application of which will require significant judgment. The FASB issued ASU 2015-14 in August 2015 which resulted in a deferral of the original effective date of ASU 2014-09. During 2016 and 2017, the FASB issued six ASUs that address implementation issues and correct or improve certain aspects of the new revenue recognition guidance, including ASU 2016-08, ~~Principal versus Agent Considerations (Reporting Revenue Gross versus Net), ASU 2016-10,~~ ~~Identifying Performance Obligations and Licensing, ASU 2016-12,~~ ~~Narrow-Scope Improvements and Practical Expedients,~~ ~~ASU 2016-20,~~ ~~Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers, ASU 2017-13,~~ ~~Revenue Recognition (Topic 605), Revenue from Contracts with Customers (Topic 606), Leases (Topic 840), and Leases (Topic 842)~~ ~~and ASU 2017-14,~~ ~~Income Statement—Reporting Comprehensive Income (Topic 220), Revenue Recognition (Topic 605), and Revenue from Contracts with Customers (Topic 606)~~. These ASUs do not change the core principles in the revenue recognition guidance outlined above. ASU No. 2014-09 and the related ASUs referenced above are effective for Matthews beginning October 1, 2018. The Company has completed its initial detailed assessment of all global revenue arrangements and related impact of the new standard compared to historical accounting policies on a representative sample of contracts and it does not expect the adoption of these ASUs will have a material impact on its consolidated financial statements. The Company is continuing to assess the ultimate impact that the adoption of this standard will have on its consolidated financial statements and related disclosure. In addition, the Company is evaluating the changes that will be required in its internal controls as a result of the adoption of this new standard. The Company is planning to adopt the provisions of these ASUs using the modified retrospective method for existing transactions on October 1, 2018.


	SGK Brand Solutions				Memorialization				Industrial Technologies				Consolidated
	Nine Months Ended June 30,				Nine Months Ended June 30,				Nine Months Ended June 30,				Nine Months Ended June 30,
	2021		2020		2021		2020		2021		2020		2021		2020
North America	$	210,515	$	233,530	$	529,229	$	447,458	$	95,804	$	85,717	$	835,548	$	766,705
Central and South America	3,919		4,767		0		0		0		0		3,919		4,767
Europe	278,426		234,130		36,174		24,629		19,835		20,026		334,435		278,785
Australia	10,289		8,804		7,665		6,255		0		0		17,954		15,059
Asia	35,730		32,284		0		0		4,605		1,566		40,335		33,850
Total Sales	$	538,879	$	513,515	$	573,068	$	478,342	$	120,244	$	107,309	$	1,232,191	$	1,099,166

~~In January 2017, the FASB issued ASU No. 2017-04,~~ ~~Intangibles - Goodwill and Other (Topic 350), Simplifying the Test for Goodwill Impairment~~, which provides new guidance intended to simplify the subsequent measurement of goodwill and removing Step 2 from the goodwill impairment process. The Company has early adopted this ASU in the first quarter ended December 31, 2017. The adoption of this ASU had no impact on the Company's consolidated financial statements, but modifies the methodology to assess and measure goodwill impairment prospectively.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

(Dollar amounts in thousands, except per share data)

Note ~~2. Basis of Presentation (continued)~~

~~In March 2016, the FASB issued ASU No. 2016-09,~~ ~~Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting.~~ The Company early adopted this ASU in the fourth quarter of fiscal 2017, which resulted in a reduction to income tax expense of $1,234, and a corresponding favorable impact on diluted earnings per share of $0.04, both of which have been retroactively included in the first quarter results for fiscal 2017.

~~In July 2015, the FASB issued ASU No. 2015-11,~~ ~~Simplifying the Measurement of Inventory~~, which provides new guidance to simplify the measurement of inventory valuation at the lower of cost or net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The adoption of this ASU in the first quarter ended December 31, 2017 had no impact on the Company's consolidated financial statements.

~~Note 3.~~4. Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A three level fair value hierarchy is used to prioritize the inputs used in valuations, as defined below:



			Level 1:			Observable inputs that reflect unadjusted quoted prices for identical assets or liabilities in active markets.
			Level 2:			Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.
			Level 3:			Unobservable inputs for the asset or liability.

~~Level 1: Observable inputs that reflect unadjusted quoted prices for identical assets or liabilities in active markets.~~

~~Level 2: Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly or indirectly.~~

~~Level 3: Unobservable inputs for the asset or liability.~~

The fair values of the Company's assets and liabilities measured on a recurring basis are categorized as follows:


	June 30, 2021								September 30, 2020
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Assets:

Equity and fixed income mutual funds	$	0	$	25,949	$	0	$	25,949	$	0	$	24,610	$	0	$	24,610
Life insurance policies	0		4,653		0		4,653		0		4,621		0		4,621
Total assets at fair value	$	0	$	30,602	$	0	$	30,602	$	0	$	29,231	$	0	$	29,231

Liabilities:
Derivatives (1)	$	0	$	2,982	$	0	$	2,982	$	0	$	7,792	$	0	$	7,792
Total liabilities at fair value	$	0	$	2,982	$	0	$	2,982	$	0	$	7,792	$	0	$	7,792

(1) Interest rate swaps are valued based on observable market swap rates and are classified within Level 2 of the fair value hierarchy.

Inventories consisted of the following:


	June 30, 2021		September 30, 2020
Raw materials	$	38,754	$	36,157
Work in process	77,189		70,128
Finished goods	78,757		68,815
	$	194,700	$	175,100

Non-current investments consisted of the following:


	June 30, 2021		September 30, 2020
Equity and fixed income mutual funds	$	25,949	$	24,610
Life insurance policies	4,653		4,621

Other (primarily cost-method) investments	19,044		34,019
	$	49,646	$	63,250

During the second quarter of fiscal 2021, the Company received $15,000 for the full redemption of its senior preferred shares investment in a memorialization business.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

(Dollar amounts in thousands, except per share data)

~~Note 4. Inventories~~

~~Inventories~~Long-term debt at June 30, 2021 and September 30, 2020 consisted of the following:


	June 30, 2021		September 30, 2020
Revolving credit facilities	$	382,253	$	416,793
Securitization facility	90,710		67,700
Senior secured term loan	0		22,359
2025 Senior Notes	297,661		297,256

Other borrowings	11,612		20,742
Finance lease obligations	10,251		9,684
	792,487		834,534
Less current maturities	(4,994)		(26,824)
	$	787,493	$	807,710

December 31, 2017 September 30, 2017

Raw materials $ 30,622
$ 29,396
Work in process 64,645
61,917
Finished goods 84,069
80,132
$ 179,336
$ 171,445

The Company has a domestic credit facility with a syndicate of financial institutions that includes a ~~$900,000~~$750,000 senior secured revolving credit facility, which matures in March 2025, and a ~~$250,000~~$35,000 senior secured amortizing term loan. The senior secured amortizing term loan ~~requires scheduled principal payments of 5.0% of the outstanding principal~~was paid in ~~year one, 7.5%~~full in ~~year two, and 10.0% in years three through five, payable in quarterly installments. The balance~~March 2021. A portion of the revolving credit facility ~~and the term loan are due on the maturity date of April 26, 2021.~~(not to exceed $350,000) can be drawn in foreign currencies. Borrowings under ~~both~~ the revolving credit facility ~~and the term loan~~ bear interest at LIBOR (Euro LIBOR for balances drawn in Euros) plus a factor ranging from 0.75% to 2.00% ~~(1.25%~~(1.00% at ~~December 31, 2017)~~June 30, 2021) based on the Company's secured leverage ratio. The secured leverage ratio is defined as net secured indebtedness divided by ~~adjusted~~ EBITDA (earnings before interest, income taxes, depreciation and amortization). as defined within the domestic credit facility agreement. The Company is required to pay an annual commitment fee ranging from 0.15% to ~~0.25%~~0.30% (based on the Company's leverage ratio) of the unused portion of the revolving credit facility. The Company incurred debt issuance costs in connection with the domestic credit facility. Unamortized costs were $2,423 and $2,734 at June 30, 2021 and September 30, 2020, respectively.

The domestic credit facility requires the Company to maintain certain leverage and interest coverage ratios. A portion of the facility (not to exceed $35,000) is available for the issuance of trade and standby letters of credit. Outstanding U.S. dollar denominated borrowings on the revolving credit facility at ~~December 31, 2017~~June 30, 2021 and September 30, ~~2017~~2020 were ~~$337,000~~$259,237 and ~~$525,000,~~$257,439, respectively. Outstanding Euro denominated borrowings on the revolving credit facility at June 30, 2021 and September 30, 2020 were €97.0 million($115,229) and €117.0 million ($137,188), respectively. There were 0 outstanding borrowings on the term loan as of June 30, 2021.Outstanding borrowings on the term loan at ~~December 31, 2017 and~~ September 30, ~~2017~~2020 were ~~$227,591 and $232,479, respectively.~~$22,359. The weighted-average interest rate on the outstanding borrowings for the domestic credit facility (including the effects of interest rate ~~swaps)~~swaps and Euro denominated borrowings) at ~~December 31, 2017~~June 30, 2021 and ~~December 31, 2016~~2020 was ~~2.93%~~1.94% and ~~2.65%~~2.44%, respectively.

~~In December 2017, the~~The Company ~~issued~~has $300,000 ~~aggregate principal amount~~ of 5.25% senior unsecured notes due December 1, 2025 (the "2025 Senior Notes"). The 2025 Senior Notes bear interest at a rate of 5.25% per annum with interest payable semi-annually in arrears on June 1 and December 1 of each ~~year beginning on June 1, 2018.~~year. The Company's obligations under the 2025 Senior Notes are guaranteed by certain of the Company's direct and indirect wholly-owned domestic subsidiaries. The Company is subject to certain covenants and other restrictions in connection with the 2025 Senior Notes. The ~~proceeds from the 2025 Senior Notes were used primarily to reduce indebtedness under the Company's domestic credit facility. The~~ Company incurred direct financing fees and costs in connection with ~~2025 Senior Notes of $4,068, which will be deferred and amortized over the term of~~ the 2025 Senior Notes. Unamortized costs were $2,339 and $2,744 at June 30, 2021 and September 30, 2020, respectively.

The Company has a $115,000 accounts receivable securitization facility (the "Securitization Facility") with certain financial institutions which matures ~~on April 4, 2019.~~in March 2022 and the Company intends to extend this facility. Under the Securitization Facility, the Company and certain of its domestic subsidiaries sell, on a continuous basis without recourse, their trade receivables to Matthews Receivables Funding Corporation, LLC (“Matthews RFC”), a wholly-owned bankruptcy-remote subsidiary of the Company. Matthews RFC in turn assigns a collateral interest in these receivables to certain financial institutions, and then may borrow funds under the Securitization Facility. The Securitization Facility does not qualify for sale treatment. Accordingly, the trade receivables and related debt obligations remain on the Company's Consolidated Balance Sheet. Borrowings under the Securitization Facility bear interest at LIBOR plus 0.75%.The Company is required to pay an annual commitment fee ranging from0.25% to 0.35% of the unused portion of the Securitization Facility. Outstanding borrowings under the Securitization Facility at ~~December 31, 2017~~June 30, 2021 and September 30, ~~2017~~2020 were ~~$101,400~~$90,710 and ~~$95,825,~~$67,700, respectively. At ~~December 31, 2017,~~June 30, 2021 and 2020, the interest rate on borrowings under this facility was ~~2.31%.~~0.85%and 0.91%, respectively.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

(Dollar amounts in thousands, except per share data)

Note 5.7. Debt (continued)

The following table presents information related to interest rate contracts entered into by the Company and designated as cash flow hedges:


	June 30, 2021			September 30, 2020
Pay fixed swaps - notional amount	$	250,000		$	312,500
Net unrealized loss	$	(2,982)		$	(7,792)
Weighted-average maturity period (years)	2.5			2.6
Weighted-average received rate	0.10		%	0.15		%
Weighted-average pay rate	1.34		%	1.34		%

December 31, 2017 September 30, 2017
Pay fixed swaps - notional amount $ 409,375
$ 414,063
Net unrealized gain (loss) $ 6,573
$ 3,959
Weighted-average maturity period (years) 3.1
3.3
Weighted-average received rate 1.56 % 1.23 %
Weighted-average pay rate 1.34 % 1.34 %

The Company enters into interest rate swaps in order to achieve a mix of fixed and variable rate debt that it deems appropriate. The interest rate swaps have been designated as cash flow hedges of future variable interest payments, which are considered probable of occurring. Based on the Company's assessment, all of the critical terms of each of the hedges matched the underlying terms of the hedged debt and related forecasted interest payments, and as such, these hedges were considered highly effective.

The fair value of the interest rate swaps reflected anunrealized ~~gain~~loss of ~~$6,573 ($4,010~~ $2,982($2,252after tax) at ~~December 31, 2017~~June 30, 2021 and an unrealized ~~gain, net~~loss of ~~unrealized losses, of $3,959~~$7,792 ($~~2,415~~5,884 after tax) at September 30, ~~2017. The net unrealized gain~~2020, that is included in shareholders' equity as part of accumulated other comprehensive income (loss) ("AOCI"). Assuming market rates remain constant with the rates at ~~December 31, 2017,~~June 30, 2021, a ~~gain~~loss (net of tax) of approximately ~~$1,178~~$1,820 included in AOCI is expected to be recognized in earnings over the next twelve months.

At ~~December 31, 2017~~June 30, 2021 and September 30, ~~2017,~~2020, the interest rate swap contracts were reflected in the Consolidated Balance Sheets as follows:


Derivatives	June 30, 2021		September 30, 2020




Current liabilities:
Other current liabilities	$	(2,411)	$	(3,164)
Long-term liabilities:
Other liabilities	(571)		(4,628)
Total derivatives	$	(2,982)	$	(7,792)

Derivatives December 31, 2017 September 30, 2017
Current assets:
Other current assets $ 1,931
$ 1,098
Long-term assets:

Other assets 4,642
2,892
Current liabilities:

Other current liabilities —
(7 )
Long-term liabilities:

Other liabilities —
(24 )
Total derivatives $ 6,573
$ 3,959

The Company recognized the following gains (losses) in AOCI:


Derivatives in Cash Flow Hedging Relationships	Amount of Gain (Loss) Recognized in AOCI on Derivatives				Location of (Loss) Gain Reclassified From AOCI into Income (Effective Portion*)	Amount of (Loss) Gain Reclassified from AOCI into Income (Effective Portion*)
	June 30, 2021		June 30, 2020			June 30, 2021		June 30, 2020
Interest rate swaps	$	1,787	$	(4,248)	Interest expense	$	(1,845)	$	82
* There is no ineffective portion or amounts excluded from effectiveness testing.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

(Dollar amounts in thousands, except per share data)

Note 5.7. Debt (continued)

~~The Company recognized the following gains (losses) in AOCI:~~

Recognized in AOCI on Derivatives

Amount of Gain (Loss)

(Effective Portion*)

The Company, through certain of its European subsidiaries, has a credit facility with a European bank, which is guaranteed by ~~Matthews International Corporation.~~Matthews. The maximum amount of borrowing available under this facility is ~~€35.0~~€25.0 million ($~~41,931).~~ 29,698), which includes €8.0 million ($9,503) for bank guarantees. The credit facility matures in December ~~2018~~2021 and the Company intends to continue to extend this facility. Outstanding borrowings under the credit facility totaled ~~€26.2~~€6.6 million ($~~31,416)~~7,786) and ~~€22.1~~€18.9 million ($~~26,126)~~22,166) at ~~December 31, 2017~~June 30, 2021 and September 30, ~~2017,~~2020, respectively. The weighted-average interest rate on outstanding borrowings under this facility at ~~December 31, 2017~~June 30, 2021 and ~~2016~~2020 was ~~2.00%~~ 2.25%and ~~1.75%~~1.25%, respectively.

The Company’s German subsidiary, Matthews Europe GmbH & Co. KG, has €15.0 million ($17,971) of senior unsecured notes with European banks. The notes are guaranteed by Matthews International Corporation and mature in November 2019. A portion of the notes (€5.0 million) have a fixed interest rate of 1.40%, and the remainder bear interest at Euro LIBOR plus 1.40%. The weighted-average interest rate on the notes at December 31, 2017 and 2016 was 1.40%.

The Company ~~through its Italian subsidiary, Matthews International S.p.A.~~uses certain foreign currency debt instruments as net investment hedges of foreign operations. Currencylossesof $5,957 (net of income taxes of $1,933) and currency losses of $4,377 (net of income taxes of $1,420), ~~has several loans with various Italian banks. Outstanding borrowings on these loans totaled €2.1 million ($2,500) and €2.6 million ($3,079)~~which represent effective hedges of net investments, were reported as a component of AOCI within currency translation adjustment at ~~December 31, 2017~~June 30, 2021 and September 30, ~~2017,~~2020, respectively. ~~The maturity dates for these loans range from January 2018 through November 2019. Matthews International S.p.A. also has multiple on-demand lines~~

As of ~~credit totaling €11.3 million ($13,574) with the same Italian banks. Outstanding borrowings on these lines were €4.1 million ($4,885) and €4.0 million ($4,735) at December 31, 2017~~June 30, 2021 and September 30, ~~2017, respectively. The weighted-average interest rate on outstanding Matthews International S.p.A. borrowings at December 31, 2017 and 2016 was 2.27% and 1.58%, respectively.~~

Other debt totaled $926 and $1,032 at December 31, 2017 and September 30, 2017, respectively. The weighted-average interest rate on these outstanding borrowings was 4.62% and 5.77% at December 31, 2017 and 2016, respectively.

In September 2014, a claim was filed seeking to draw upon a letter of credit issued by the Company of £8,570,000 ($11,564 at December 31, 2017) with respect to a performance guarantee on a project in Saudi Arabia. Management assessed the customer's demand to be without merit and initiated an action with the court in the United Kingdom (the "Court"). Pursuant to this action, an order was issued by the Court in January 2015 requiring that, upon receipt by the customer, the funds were to be remitted by the customer to the Court pending resolution of the dispute between the parties. As a result, the Company made payment on the draw to the financial institution for the letter of credit and the funds were ultimately received by the customer. The customer did not remit the funds to the Court as ordered. On June 14, 2016, the Court ruled completely in favor of Matthews following a trial on the merits. However, as the customer has neither yet remitted the funds nor complied with the final, un-appealed orders of the Court, it is possible the resolution of this matter could have an unfavorable financial impact on Matthews’ results of operations. The Company has determined that resolution of this matter may take an extended period of time and therefore has classified the funded letter of credit within other assets on the Consolidated Balance Sheets as of December 31, 2017 and September 30, 2017. The Company will continue to assess collectability related to this matter as facts and circumstances evolve.

~~As of December 31, 2017 and September 30, 2017,~~2020, the fair value of the Company's long-term debt, including current maturities, which is classified as Level 2 in the fair value hierarchy, approximated the carrying value included in the Consolidated Balance Sheets. The Company was in compliance with all of its debt covenants as of June 30, 2021.

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued~~

~~(Dollar amounts in thousands, except per share data)~~

Note 6.8. Share-Based Payments

The Company maintains an equity incentive plan (the ~~"2012~~"2017 Equity Incentive Plan") that provides for grants of stock options, restricted shares, restricted share units, stock-based performance units and certain other types of stock-based awards. Under the ~~2012~~2017 Equity Incentive Plan, which has a ten-year term, the maximum number of shares available for grants or awards is an aggregate of ~~2,500,000.~~1,700,000. At ~~December 31, 2017,~~June 30, 2021, there were ~~121,038~~ 1,700,000shares reserved for future issuance under the ~~2012~~2017 Equity Incentive Plan. ~~The 2012~~1,064,910 restricted share units and 75,000 stock options have been granted under the 2017 Equity Incentive Plan and are outstanding as of June 30, 2021. The 2017 Equity Incentive plan is administered by the Compensation Committee of the Board of Directors.

For the three-month periods ended June 30, 2021 and 2020, stock-based compensation cost totaled $5,713 and $2,539, respectively. For the nine-month periods ended June 30, 2021 and 2020, stock-based compensation cost totaled $12,960 and $7,078, respectively. The associated future income tax benefit recognized for stock-based compensation was $1,467 and $622 for the three-month periods ended June 30, 2021 and 2020, respectively, and $2,443 and $1,415 for the nine-month periods ended June 30, 2021 and 2020, respectively.

With respect to ~~outstanding~~the restricted share grants, generally one-half of the shares vest on the third anniversary of the grant, one-quarter of the shares vest in one-third increments upon the attainment of pre-defined levels of adjusted earnings per share, and the remaining one-quarter of the shares vest in one-third increments upon attainment of pre-defined levels of appreciation in the market value of the Company's Class A Common Stock. Additionally, restricted shares cannot vest until the first anniversary of the grant date. Unvested restricted shares generally expire on the earlier of three or five years from the date of grant, upon employment termination, or within specified time limits following voluntary employment termination (with the consent of the Company), retirement or death. The Company issues restricted shares from treasury shares.

~~For~~With respect to the ~~three-month periods ended December 31, 2017~~restricted share unit grants, units generally vest on the third anniversary of the grant date. The number of units that vest depend on certain time and ~~2016, stock-based compensation cost totaled $5,474~~performance thresholds. Such performance thresholds include adjusted earnings per share, return on invested capital, appreciation in the market value of the Company's Class A Common Stock, or other targets established by the Compensation Committee of the Board of Directors. Approximately 45% of the outstanding share units vest based on time, while the remaining vest based on pre-defined performance thresholds. The Company issues common stock from treasury shares once vested.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

(Dollar amounts in thousands, except per share data)

Note 8. Share-Based Payments (continued)

The transactions for restricted shares and $6,097, respectively. The three-month periods ended December 31, 2017 and 2016 included $2,850 and $3,337 of stock-based compensation cost, respectively, that was recognized at the time of grant for retirement-eligible employees. The associated future income tax benefit recognized for stock-based compensation was $1,341 and $2,378restricted share units for the ~~three-month periods~~nine months ended ~~December 31, 2017 and 2016, respectively.~~June 30, 2021 were as follows:


	Shares /Units	Weighted- average Grant-date Fair Value
Non-vested at September 30, 2020	750,322	$	40.88
Granted	499,050	30.06
Vested	(109,365)	55.40
Expired or forfeited	(38,467)	55.79
Non-vested at June 30, 2021	1,101,540	$	34.01

~~There were no~~During the third quarter of fiscal 2021, 75,000 stock options ~~exercised during~~were granted under the ~~three-month period ended December 31, 2017. For~~2017 Equity Incentive Plan. The option price for each stock option granted was $41.70, which was equal to the three-month period ended December 31, 2016, the amount of cash received from the exercise of stock options was $14. In connection with these exercises, the tax benefits realized by the Company was $3 for the three-month period ended December 31, 2016. The intrinsicfair market value of ~~options (which is~~ the ~~amount by which the stock price exceeded the exercise price of the options~~Company's Class A Common Stock on the date of ~~exercise) exercised during~~grant. These options vest in one-third increments annually over three years from the ~~three-month period ended December 31, 2016 and was $9.~~grant date. Unvested stock options expire on the earlier of five years from the date of grant, or upon employment termination, retirement or death. The Company generally settles employee stock option exercises with treasury shares.

~~The transactions for restricted stock for the three months ended December 31, 2017 were as follows:~~

Shares
Weighted-
average
Grant-date
Fair Value
Non-vested at September 30, 2017 501,184
$ 53.65
Granted 234,100
57.05
Vested (168,280 ) 51.54
Expired or forfeited (5,214 ) 59.51
Non-vested at December 31, 2017 561,790
$ 55.64

As of ~~December 31, 2017,~~June 30, 2021, the total unrecognized compensation cost related to all unvested ~~restricted stock~~stock-based awards was ~~$13,338~~$12,893 and is expected to be recognized over a weighted average period of ~~1.8~~2.0 years.

The fair value of ~~each~~certain restricted share units that are subject to performance conditions and the fair value of stock ~~grant is~~options are estimated on the date of grant using a binomial lattice valuation model. The following table indicates the assumptions used in estimating the fair value of ~~restricted stock~~certain stock-based awards granted during the ~~three-month periods~~nine-month period ended ~~December 31, 2017 and 2016.~~June 30, 2021.


	Restricted Share Units		Stock Options

Expected volatility	42.9	%	41.9	%
Dividend yield	3.2	%	3.1	%
Average risk-free interest rate	0.2	%	0.5	%
Average expected term (years)	3.0		5.0

Three Months Ended
December 31,
2017 2016
Expected volatility 20.5 % 20.2 %
Dividend yield 1.0 % 1.1 %
Average risk-free interest rate 2.0 % 1.7 %
Average expected term (years) 2.1
2.1

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued~~

~~(Dollar amounts in thousands, except per share data)~~

~~Note 6. Share-Based Payments (continued)~~

The risk-free interest rate is based on United States Treasury yields at the date of grant. The dividend yield is based on the most recent dividend payment and average stock price over the 12 months prior to the grant date. Expected volatilities are based on the historical volatility of the Company's stock price. The expected term for grants in the ~~years~~nine months ended ~~September~~June 30, ~~2018, 2017 and 2016~~2021 represents an estimate of the average period of time for restricted ~~shares~~share units and stock options to vest. ~~The option characteristics for each grant are considered separately for valuation purposes.~~

The Company maintains the ~~1994~~2019 Director Fee Plan, the Amended and Restated 2014 Director Fee Plan and the ~~Amended and Restated 2014~~1994 Director Fee Plan (collectively, the "Director Fee Plans"). There will be no further fees or share-based awards granted under the Amended and Restated 2014 Director Fee Plan and the 1994 Director Fee Plan. Under the ~~Amended and Restated 2014~~2019 Director Fee Plan, non-employee directors (except for the Chairman of the Board) each receive, as an annual retainer fee for fiscal ~~2018,~~2021, either cash or shares of the Company's Class A Common Stock with a value equal to $85. The annual retainer fee for fiscal ~~2018~~2021 paid to athe non-employee Chairman of the Board is $185. Where the annual retainer fee is provided in shares, each director may elect to be paid these shares on a current basis or have such shares credited to a deferred stock account as phantom stock, with such shares to be paid to the director subsequent to leaving the Board. The total number of shares of stock that have been authorized to be issued under the 2019 Director Fee Plan or credited to a deferred stock compensation account for subsequent issuance is 150,000 shares of Common Stock (subject to adjustment upon certain events such as stock dividends or stock splits). The value of deferred shares is recorded in other liabilities. A total of ~~16,139~~38,482 shares and share units had been deferred under the Director Fee Plans as of ~~December 31, 2017.~~June 30, 2021. Additionally, non-employee directors each receive an annual stock-based grant (non-statutory stock options, stock appreciation rights and/or restricted ~~shares)~~shares or units) with a value of $125 for fiscal ~~2018. A total~~2021. As of ~~22,300 stock options have been granted under the Director Fee Plans. At December 31, 2017, there were no options outstanding. Additionally, 161,724~~June 30, 2021, 271,807 restricted shares ofand restricted ~~stock~~share units have been granted under the Director Fee Plans, ~~58,574~~98,578 of which were issued under the ~~Amended and Restated 2014~~2019 Director Fee Plan. ~~25,157~~74,639 restricted shares and restricted share ~~of restricted stock~~units are unvested at ~~December 31, 2017. A total of 150,000 shares have been authorized to be issued under the Amended and Restated 2014 Director Fee Plan.~~June 30, 2021.

~~Note 7. Earnings Per Share Attributable to Matthews' Shareholders~~

~~The information used to compute earnings per share attributable to Matthews' common shareholders was as follows:~~

Three Months Ended
December 31,
2017 2016
Net income attributable to Matthews shareholders $ 35,180
$ 10,322

Weighted-average shares outstanding (in thousands):

Basic shares 31,738
32,250
Effect of dilutive securities 132
198
Diluted shares 31,870
32,448

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

(Dollar amounts in thousands, except per share data)

Note 9. Earnings Per Share Attributable to Matthews' Shareholders

The information used to compute earnings (loss) per share attributable to Matthews' common shareholders was as follows:


	Three Months Ended June 30,				Nine Months Ended June 30,
	2021		2020		2021		2020
Net income (loss) attributable to Matthews shareholders	$	3,355	$	2,269	$	6,586	$	(94,561)


Weighted-average shares outstanding (in thousands):
Basic shares	31,656		31,145		31,683		31,143
Effect of dilutive securities	537		87		435		0
Diluted shares	32,193		31,232		32,118		31,143

Anti-dilutive securities excluded from the dilution calculation were insignificant for the three and nine months ended June 30, 2021 and 2020.

Note 8.10. Pension and Other Postretirement Benefit Plans

The Company provides defined benefit pension and other postretirement plans to certain employees. Net periodic pension and other postretirement benefit cost for the plans included the following:



	Three months ended June 30,
	Pension				Other Postretirement
	2021		2020		2021		2020

Service cost	$	2,020	$	2,170	$	50	$	64
Interest cost *	1,560		1,933		94		140
Expected return on plan assets *	(2,761)		(2,232)		0		0
Amortization:
Prior service cost	(46)		(47)		(91)		(23)
Net actuarial loss *	2,730		2,386		0		0
Curtailment gain *	(220)		0		0		0
Prior service cost write-off *	526		0		0		0
Net benefit cost	$	3,809	$	4,210	$	53	$	181


	Nine months ended June 30,
	Pension				Other Postretirement
	2021		2020		2021		2020

Service cost	$	6,216	$	6,510	$	150	$	192
Interest cost *	4,654		5,799		282		420
Expected return on plan assets *	(8,286)		(6,696)		0		0
Amortization:
Prior service cost	(104)		(141)		(273)		(69)
Net actuarial loss *	8,774		7,159		0		0
Curtailment gain *	(220)		0		0		0
Prior service cost write-off *	526		0		0		0
Net benefit cost	$	11,560	$	12,631	$	159	$	543
* Non-service components of pension and postretirement expense are included in other income (deductions), net.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

(Dollar amounts in thousands, except per share data)

Note 10. Pension and Other Postretirement Benefit Plans (continued)

Three months ended December 31,
Pension Other Postretirement
2017 2016 2017 2016

Service cost $ 2,039
$ 2,138
$ 84
$ 98
Interest cost 2,049
1,841
158
157
Expected return on plan assets (2,534 ) (2,312 ) —
—
Amortization:

Prior service cost (35 ) (45 ) (49 ) (49 )
Net actuarial loss 1,752
2,509
—
—

Net benefit cost $ 3,271
$ 4,131
$ 193
$ 206
During the third quarter of fiscal 2021, the Compensation Committee of the Company's Board of Directors approved a resolution to freeze all future benefit accruals for all participants in the Company’s supplemental retirement plan and the defined benefit portion of the officers retirement restoration plan, effective April 30, 2021. Consequently, participants in these plans will no longer earn additional benefits after April 30, 2021. The freezing of these plans triggered curtailments, which resulted in the remeasurement of the projected benefit obligations and the immediate recognition of prior service costs in earnings, which were previously included within AOCI.

During the third quarter of fiscal 2021, the investment policy for the Company’s principal defined benefit retirement plan was updated to establish modified asset allocation targets. The updated investment objective is intended to reduce risk assets in favor of fixed income investments as the plan’s funding status increases. Accordingly, as of June 30, 2021, the principal defined benefit plans' asset allocation reflected 54% allocated to fixed income, cash and cash equivalents, 39% allocated to equity securities, and 7% allocated to other investments.

Benefit payments under the Company's principal retirement plan are made from plan assets, while benefit payments under the postretirement benefit plan are made from the Company's operating funds. ~~Under IRS regulations,~~During the third quarter of fiscal 2021, the Company ~~is not required to make any significant contributions~~contributed $15,000 to its principal retirement plan. Under IRS regulations, no further contributions are required to be made to the Company's principal retirement plan induring fiscal ~~year 2018.~~2021.

Contributions made and anticipated for fiscal year ~~2018~~2021 are as follows:

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued~~

~~(Dollar amounts in thousands, except per share data)~~

~~Note 9. Accumulated Other Comprehensive Income~~

Note 11. Accumulated Other Comprehensive Income

The changes in AOCI by component, net of tax, for the three-month periods ended ~~December 31, 2017~~June 30, 2021 and ~~2016~~2020 were as follows:


	Post-retirement benefit plans			Currency translation adjustment		Derivatives			Total
Attributable to Matthews:
Balance, March 31, 2021	$	(78,575)		$	(143,724)	$	(2,194)		$	(224,493)
OCI before reclassification	970			2,904		(654)			3,220
Amounts reclassified from AOCI	2,358		(a)	0		596		(b)	2,954
Net current-period OCI	3,328			2,904		(58)			6,174
Balance, June 30, 2021	$	(75,247)		$	(140,820)	$	(2,252)		$	(218,319)
Attributable to noncontrolling interest:
Balance, March 31, 2021	$	0		$	366	$	0		$	366
OCI before reclassification	0			0		0			0
Net current-period OCI	0			0		0			0
Balance, June 30, 2021	$	0		$	366	$	0		$	366

Post-retirement benefit plans Currency translation adjustment Derivatives Total
Attributable to Matthews:
Balance, September 30, 2017 $ (43,623 ) $ (112,907 ) $ 2,415
$ (154,115 )
OCI before reclassification —
7,598
1,633
9,231
Amounts reclassified from AOCI (a) 1,018
—
(b) (38 ) 980
Net current-period OCI 1,018
7,598
1,595
10,211
Balance, December 31, 2017 $ (42,605 ) $ (105,309 ) $ 4,010
$ (143,904 )
Attributable to noncontrolling interest:

Balance, September 30, 2017 —
$ 396
—
$ 396
OCI before reclassification —
13
—
13
Net current-period OCI —
13
—
13
Balance, December 31, 2017 —
$ 409
—
$ 409

Post-retirement benefit plans Currency translation adjustment Derivatives Total
Attributable to Matthews:
Balance, September 30, 2016 $ (56,050 ) $ (122,259 ) $ (3,559 ) $ (181,868 )
OCI before reclassification —
(31,342 ) 5,100
(26,242 )
Amounts reclassified from AOCI (a) 1,536
—
(b) 493
2,029
Net current-period OCI 1,536
(31,342 ) 5,593
(24,213 )
Balance, December 31, 2016 $ (54,514 ) $ (153,601 ) $ 2,034
$ (206,081 )
Attributable to noncontrolling interest:

Balance, September 30, 2016 —
$ 277
—
$ 277
OCI before reclassification —
59
—
59
Net current-period OCI —
59
—
59
Balance, December 31, 2016 —
$ 336
—
$ 336


~~(a)~~	~~Amounts were included in net periodic benefit cost for pension and other postretirement benefit plans (see Note 8).~~


~~(b)~~	~~Amounts were included in interest expense in the periods the hedged item affected earnings (see Note 5).~~

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

(Dollar amounts in thousands, except per share data)

Note 9.11. Accumulated Other Comprehensive Income (continued)


	Post-retirement benefit plans			Currency translation adjustment		Derivatives			Total
Attributable to Matthews:
Balance, March 31, 2020	$	(68,189)		$	(175,751)	$	(4,555)		$	(248,495)
OCI before reclassification	0			11,240		(509)			10,731
Amounts reclassified from AOCI	1,743		(a)	0		330		(b)	2,073
Net current-period OCI	1,743			11,240		(179)			12,804
Balance, June 30, 2020	$	(66,446)		$	(164,511)	$	(4,734)		$	(235,691)
Attributable to noncontrolling interest:
Balance, March 31, 2020	$	0		$	371	$	0		$	371
OCI before reclassification	0			0		0			0
Net current-period OCI	0			0		0			0
Balance, June 30, 2020	$	0		$	371	$	0		$	371

(a) Amounts were included in net periodic benefit cost for pension and other postretirement benefit plans (see Note 10).

(b) Amounts were included in interest expense in the periods the hedged item affected earnings (see Note 7).

The changes in AOCI by component, net of tax, for the nine-month periods ended June 30, 2021 and 2020 were as follows:



	Post-retirement benefit plans			Currency translation adjustment		Derivatives			Total
Attributable to Matthews:
Balance, September 30, 2020	$	(82,954)		$	(151,881)	$	(5,884)		$	(240,719)
OCI before reclassification	970			11,061		1,787			13,818
Amounts reclassified from AOCI	6,737		(a)	0		1,845		(b)	8,582
Net current-period OCI	7,707			11,061		3,632			22,400

Balance, June 30, 2021	$	(75,247)		$	(140,820)	$	(2,252)		$	(218,319)
Attributable to noncontrolling interest:
Balance, September 30, 2020	$	0		$	368	$	0		$	368
OCI before reclassification	0			(2)		0			(2)
Net current-period OCI	0			(2)		0			(2)
Balance, June 30, 2021	$	0		$	366	$	0		$	366



	Post-retirement benefit plans			Currency translation adjustment		Derivatives			Total
Attributable to Matthews:
Balance, September 30, 2019	$	(71,743)		$	(156,214)	$	(404)		$	(228,361)
OCI before reclassification	0			(8,297)		(4,248)			(12,545)
Amounts reclassified from AOCI	5,297		(a)	0		(82)		(b)	5,215
Net current-period OCI	5,297			(8,297)		(4,330)			(7,330)
Balance, June 30, 2020	$	(66,446)		$	(164,511)	$	(4,734)		$	(235,691)
Attributable to noncontrolling interest:
Balance, September 30, 2019	$	0		$	375	$	0		$	375
OCI before reclassification	0			(4)		0			(4)
Net current-period OCI	0			(4)		0			(4)
Balance, June 30, 2020	$	0		$	371	$	0		$	371

(a) Amounts were included in net periodic benefit cost for pension and other postretirement benefit plans (see Note 10).

(b) Amounts were included in interest expense in the periods the hedged item affected earnings (see Note 7).

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

(Dollar amounts in thousands, except per share data)

Note 11. Accumulated Other Comprehensive Income (continued)

Reclassifications out of AOCI for the ~~three-month~~three and nine-month periods ended ~~December 31, 2017~~June 30, 2021 and ~~2016~~2020 were as follows:



	Amount reclassified from AOCI
Details about AOCI Components	Three Months Ended June 30, 2021		Nine Months Ended June 30, 2021		Affected line item in the Statement of income

Postretirement benefit plans
Prior service credit (a)	$	137	$	377
Actuarial losses	(2,730)		(8,774)		Other income (deductions), net
Prior service cost write-off	(526)		(526)		Other income (deductions), net
	(3,119)		(8,923)		Income before income tax (b)
	761		2,186		Income taxes
	$	(2,358)	$	(6,737)	Net income
Derivatives
Interest rate swap contracts	$	(790)	$	(2,444)	Interest expense
	(790)		(2,444)		Income before income tax (b)
	194		599		Income taxes
	$	(596)	$	(1,845)	Net income



	Amount reclassified from AOCI
Details about AOCI Components	Three Months Ended June 30, 2020		Nine Months Ended June 30, 2020		Affected line item in the Statement of income

Postretirement benefit plans
Prior service credit (a)	$	70	$	210
Actuarial losses	(2,386)		(7,159)		Other income (deductions), net
	(2,316)		(6,949)		Income before income tax (b)
	573		1,652		Income taxes
	$	(1,743)	$	(5,297)	Net income
Derivatives
Interest rate swap contracts	$	(438)	$	108	Interest expense
	(438)		108		Income before income tax (b)
	108		(26)		Income taxes
	$	(330)	$	82	Net income

Amount reclassified from AOCI

Details about AOCI Components
Three Months Ended
December 31, 2017 Three Months Ended
December 31, 2016 Affected line item in the Statement of income

Postretirement benefit plans
Prior service (cost) credit $ 84
(a) $ 94

Actuarial losses (1,752 ) (a) (2,509 )
(1,668 ) (b) (2,415 ) Income before income tax
(650 ) (879 ) Income taxes
$ (1,018 ) $ (1,536 ) Net income
Derivatives

Interest rate swap contracts $ 63
$ (807 ) Interest expense
63
(b) (807 ) Income before income tax
25
(314 ) Income taxes
$ 38
$ (493 ) Net income


(a)			~~Amounts~~ Prior service cost amounts are included in the computation of pension and other postretirement benefit expense, which is reported in both cost of goods sold and selling and administrative expenses. For additional information, see Note 8.

	10.
(b)			For pre-tax items, positive amounts represent income and negative amounts represent expense.

Note ~~10.~~12. Income Taxes

~~The U.S. Tax Cuts and Jobs Act (the “Act”) was enacted on December 22, 2017. The Act reduces~~years where the U.S. federal ~~corporate~~statutory rate was 35%, and additional foreign tax ~~rate~~credits. Fiscal 2020 included discrete tax benefits resulting from ~~35.0% to 21.0% effective January 1, 2018, which results in a blended U.S. statutory~~the closure of several tax ~~rate of 24.5% for the Company in fiscal 2018.~~audits. The Act also requires companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously deferred, and creates new taxes on certain foreign-sourced earnings. At December 31, 2017, the Company has not finalized its accounting for the tax effects of the Act; however, as described below, management has made a reasonable estimate of the effects on existing deferred tax balances and has recorded an estimated amount for its one-time transition tax. For the items for which the Company was able to determine a reasonable estimate, a provisional net tax benefit of $24,553 was recognized, which is included entirely as a component of income tax benefit (provision) for the three months ended December 31, 2017. The two main components of this provisional amount are discussed below.Company’s

~~Provisional amounts~~

~~Deferred tax assets and liabilities~~: The Company remeasured certain deferred tax assets and liabilities based on the rates at which these deferred tax amounts are expected to reverse in the future, which is generally 21.0% or 24.5%. This remeasurement resulted in a tax benefit of $38,010 being recognized during the three months ended December 31, 2017. The Company is still analyzing certain aspects of the Act, estimating the timing of reversals, and refining its calculations, which could potentially affect the measurement of these balances, or potentially generate new deferred tax amounts.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

(Dollar amounts in thousands, except per share data)

Note ~~10.~~12. Income Taxes (continued)

~~Foreign~~fiscal 2021 nine-month effective tax ~~effects: The Company recorded~~rate varied from the U.S. statutory tax rate of 21.0% primarily due to discrete tax expenses related to foreign operating losses, discrete tax benefits related to the resolution of uncertain tax liabilities, a ~~provisional amount for its one-time transition~~NOL carryback to tax ~~for all of its~~years where the U.S. federal statutory rate was 35%, and additional foreign ~~subsidiaries, resulting in an increase in income~~ tax expense of $13,457 for the three months ended December 31, 2017. The one-time transition tax was calculated using an estimate of the Company’s total post-1986 earnings and profits (“E&P”) that were previously deferred from U.S. income taxes. The Company has not yet finalized its calculation of the total post-1986 E&Pcredits. Additionally, state taxes, foreign statutory rate differentials, and tax ~~pools for its~~credits all affected the fiscal 2021 effective tax rate. The Company’s fiscal 2020 nine-month effective tax rate varied from the U.S. statutory tax rate of 21.0% primarily due to state taxes, foreign ~~subsidiaries~~statutory rate differentials, tax credits, the goodwill write-down, the expected NOL carryback, and ~~has not fully analyzed the state income~~discrete tax ~~effects. The calculation of the one-time transition tax is also impacted by the amount of foreign E&P held~~benefits recognized in cash and other specified assets. The tax amount may change when the Company finalizes its calculation of post-1986 foreign E&P previously deferred from U.S. federal taxation. No additional income taxes have been provided for any remaining undistributed foreign earnings or any additional outside basis difference inherent in these entities, as these amounts continue to be indefinitely reinvested in foreign operations.fiscal 2020.

The Company had unrecognized tax benefits (excluding penalties and interest) of ~~$7,994~~$8,104 and ~~$7,968~~$10,483 on ~~December 31, 2017~~June 30, 2021 and September 30, ~~2017,~~2020, respectively, of which $4,890 and $7,066 would impact the annual effective ~~rate.~~rate at June 30, 2021 and September 30, 2020, respectively. It is reasonably possible that the amount of unrecognized tax benefits could decrease by approximately ~~$3,699~~$5,655 in the next 12 months primarily due to the completion of ~~an audit.~~audits and the expiration of the statute of limitations.

The Company classifies interest and penalties on tax uncertainties as a component of the provision for income taxes. Total penalties and interest accrued were ~~$1,786~~$1,773 and ~~$1,779~~$2,172 at ~~December 31, 2017~~June 30, 2021 and September 30, ~~2017,~~2020, respectively. These accruals may potentially be applicable in the event of an unfavorable outcome of uncertain tax positions.

The Company is currently under examination in several tax jurisdictions and remains subject to examination until the statute of limitations expires for those tax jurisdictions. As of ~~December 31, 2017,~~June 30, 2021, the tax years that remain subject to examination by major jurisdiction generally are:



United States – Federal			~~2013~~2017 and forward
United States – State			~~2013~~2016 and forward
Canada			~~2013~~2017 and forward
Germany			~~2009~~2019 and forward
United Kingdom			~~2015~~2019 and forward
~~Australia~~Singapore			~~2013~~2017 and forward
~~Singapore~~Australia			~~2013~~2017 and forward

Note ~~11.~~13. Segment Information

The Company manages its businesses under ~~three~~3 segments: SGK Brand Solutions, Memorialization and Industrial Technologies. The SGK Brand Solutions segment ~~includes brand development, deployment and delivery (consisting~~consists of brand management, pre-media services, printing plates and cylinders, ~~and~~engineered products (including energy solutions), imaging services, ~~for consumer packaged goods and retail customers,~~digital asset management, merchandising display systems, and marketing and design ~~services).~~services primarily for the consumer goods and retail industries. The Memorialization segment consists primarily of bronze and granite memorials and other memorialization products, caskets, and cremation and incineration equipment primarily for the cemetery and funeral home industries. The Industrial Technologies segment includes marking and coding equipment and consumables, industrial automation products and order fulfillment systems for identifying, tracking, picking and conveying consumer and industrial products. ~~Management~~

The Company's primary measure of segment profitability is adjusted earnings before interest, income taxes, depreciation and amortization ("adjusted EBITDA"). Adjusted EBITDA is defined by the Company as earnings before interest, income taxes, depreciation, amortization and certain non-cash and/or non-recurring items that do not contribute directly to management’s evaluation of its operating results. These items include stock-based compensation, the non-service portion of pension and postretirement expense, acquisition costs, ERP integration costs, and strategic initiatives and other charges. This presentation is consistent with how the Company's chief operating decision maker (the “CODM”) evaluates the results of operations and makes strategic decisions about the business. For these reasons, the Company believes that adjusted EBITDA represents the most relevant measure of segment ~~performance based on operating~~ profit ~~(before income taxes)~~ and ~~does not allocate non-operating items such as investment income, interest expense, other income (deductions), net and noncontrolling interest amongst the segments.~~loss.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

(Dollar amounts in thousands, except per share data)

Note ~~11.~~13. Segment Information (continued)

~~Information~~In addition, the CODM manages and evaluates the operating performance of the segments, as described above, on a pre-corporate cost allocation basis. Accordingly, for segment reporting purposes, the Company does not allocate corporate costs to its reportable segments. Corporate costs include management and administrative support to the Company, which consists of certain aspects of the Company’s executive management, legal, compliance, human resources, information technology (including operational support) and finance departments. These costs are included within "Corporate and Non-Operating" in the following table to reconcile to consolidated adjusted EBITDA and are not considered a separate reportable segment. Management does not allocate non-operating items such as investment income, other income (deductions), net and noncontrolling interest to the segments.

The following table sets forth information about the Company's segments, ~~is as follows:~~including a reconciliation of adjusted EBITDA to net income.


	Three Months Ended June 30,				Nine Months Ended June 30,
	2021		2020		2021		2020
Sales:
SGK Brand Solutions	$	199,715	$	165,780	$	538,879	$	513,515
Memorialization	184,337		162,118		573,068		478,342
Industrial Technologies	44,328		31,524		120,244		107,309
Consolidated Sales	$	428,380	$	359,422	$	1,232,191	$	1,099,166


Adjusted EBITDA:
SGK Brand Solutions	$	33,258	$	20,846	$	75,426	$	61,808
Memorialization	36,402		37,734		132,080		103,020
Industrial Technologies	5,940		4,679		15,242		15,205
Corporate and Non-Operating	(15,585)		(13,862)		(47,030)		(41,009)
Total Adjusted EBITDA	$	60,015	$	49,397	$	175,718	$	139,024

Acquisition related items (1)**	(398)		(355)		(38)		(2,576)
ERP integration costs (2)**	(118)		(745)		(477)		(2,160)
Strategic initiatives and other charges: (3)**
Workforce reductions and related costs	(1,826)		(776)		(10,644)		(4,425)
Other cost-reduction initiatives	(4,871)		(4,743)		(12,339)		(20,951)
Gain on sale of ownership interest in a subsidiary (4)	0		11,208		0		11,208
Legal matter reserve (5)	0		(10,566)		0		(10,566)
Non-recurring / incremental coronavirus disease 2019 ("COVID-19") costs (6)	(1,993)		(1,871)		(4,689)		(2,534)
Goodwill write-down (7)	0		0		0		(90,408)
Joint Venture depreciation, amortization, interest expense and other charges (8)	0		(2,473)		0		(4,732)
Stock-based compensation	(5,713)		(2,539)		(12,960)		(7,078)

Non-service pension and postretirement expense (9)	(1,929)		(2,227)		(5,730)		(6,682)
Depreciation and amortization *	(35,389)		(30,168)		(97,919)		(88,418)
Interest expense	(6,748)		(8,082)		(21,709)		(26,935)
Net income (loss) attributable to noncontrolling interests	11		(420)		(60)		(491)
Income (loss) before income taxes	1,041		(4,360)		9,153		(117,724)
Income tax benefit (provision)	2,325		6,209		(2,627)		22,672
Net income (loss)	$	3,366	$	1,849	$	6,526	$	(95,052)

~~Note 12. Acquisitions~~

On November 28, 2017, the Company acquired Compass Engineering Group, Inc. ("Compass") for $49,793 (net of cash acquired, subject to a working capital true-up). Compass provides high-quality material handling control solutions and is included in the Company's Industrial Technologies segment. The preliminary purchase price allocation related to the Compass acquisition is not finalized as of December 31, 2017, and is subject to changes as the Company obtains additional information related to fixed assets, intangible assets, and other assets and liabilities.

During the first quarter of fiscal 2018, the Company completed several additional smaller acquisitions for an aggregate purchase price of $36,171 (net of cash acquired and holdback amounts, subject to working capital true-ups). These additional acquisitions strengthen the Company's operations across the SGK Brand Solutions and Memorialization segments. The preliminary purchase price allocations for the acquisitions are not finalized as of December 31, 2017 and are subject to change as the Company obtains additional information related to fixed assets, intangible assets, and other assets and liabilities.

On March 1, 2017, the Company acquired GJ Creative Limited ("Equator") for £30.5 million ($37,596) (net of cash acquired). Equator provides design expertise capable of taking brands from creation to shelf under one roof, and is included in the Company's SGK Brand Solutions segment. The preliminary purchase price allocation related to the Equator acquisition is not finalized as of December 31, 2017, and is subject to changes as the Company obtains additional information related to working capital items, fixed assets, intangible assets, and other assets and liabilities.

On February 28, 2017, the Company acquired certain net assets of RAF Technology, Inc. ("RAF") for $8,717 (net of cash acquired). RAF is a global leader in pattern and optical character recognition software, and is included in the Company's Industrial Technologies segment. The Company finalized the allocation of purchase price related to the RAF acquisition in the fourth quarter of fiscal 2017, resulting in an immaterial adjustment to certain working capital accounts.

On January 13, 2017, the Company acquired VCG (Holdings) Limited ("VCG") for £8.8 million ($10,695) (net of cash acquired). VCG is a leading graphics, plate-making, and creative design company and is included in the Company's SGK Brand Solutions segment. The Company finalized the allocation of purchase price related to the VCG acquisition in the first quarter of fiscal 2018, resulting in an immaterial adjustment to certain working capital and intangible asset amounts.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

(Dollar amounts in thousands, except per share data)

Note 13. Segment Information (continued)


(1) Includes certain non-recurring items associated with recent acquisition activities.
(2) Represents costs associated with global ERP system integration efforts.
(3) Includes certain non-recurring costs associated with productivity and cost-reduction initiatives intended to result in improved operating performance, profitability and working capital levels.
(4) Represents a gain on the sale of an ownership interest in a subsidiary within the Memorialization segment.
(5) Represents a reserve established for a legal matter involving a letter of credit for a customer in Saudi Arabia within the Memorialization segment.
(6) Includes certain non-recurring direct incremental costs (such as costs for purchases of computer peripherals and devices to facilitate working-from-home, additional personal protective equipment and cleaning supplies and services, etc.) incurred in response to COVID-19. This amount does not include the impact of any lost sales or underutilization due to COVID-19.
(7) Represents the goodwill write-down for two reporting units within the SGK Brand Solutions segment.
(8) Represents the Company's portion of depreciation, intangible amortization, interest expense, and other non-recurring charges incurred by non-consolidated subsidiaries accounted for as equity-method investments within the Memorialization segment.
(9) Non-service pension and postretirement expense includes interest cost, expected return on plan assets, amortization of actuarial gains and losses, and curtailment gains and losses. These benefit cost components are excluded from adjusted EBITDA since they are primarily influenced by external market conditions that impact investment returns and interest (discount) rates. Curtailment gains and losses are excluded from adjusted EBITDA since they generally result from certain non-recurring events, such as plan amendments to modify future benefits. The service cost and prior service cost components of pension and postretirement expense are included in the calculation of adjusted EBITDA, since they are considered to be a better reflection of the ongoing service-related costs of providing these benefits. Please note that GAAP pension and postretirement expense or the adjustment above are not necessarily indicative of the current or future cash flow requirements related to these employee benefit plans.

* Depreciation and amortization was $26,813 and $21,833 for the SGK Brand Solutions segment, $5,838 and $5,549 for the Memorialization segment, $1,399 and $1,450 for the Industrial Technologies segment, and $1,339 and $1,336 for Corporate and Non-Operating, for the three months ended June 30, 2021 and 2020, respectively. Depreciation and amortization was $72,700 and $65,274 for the SGK Brand Solutions segment, $17,016 and $15,024 for the Memorialization segment, $4,241 and $4,320 for the Industrial Technologies segment, and $3,962 and $3,800 for Corporate and Non-Operating, for the nine months ended June 30, 2021 and 2020, respectively.

** Acquisition costs, ERP integration costs, and strategic initiatives and other charges were $3,790 and $1,794 for the SGK Brand Solutions segment, $484 and $697 for the Memorialization segment, and $2,939 and $4,128 for Corporate and Non-Operating, for the three months ended June 30, 2021 and 2020, respectively. Acquisition costs, ERP integration costs, and strategic initiatives and other charges were $14,135 and $9,058 for the SGK Brand Solutions segment, $1,279 and $1,754 for the Memorialization segment, and $8,084 and $19,032 for Corporate and Non-Operating, for the nine months ended June 30, 2021 and 2020, respectively. Acquisition costs, ERP integration costs, and strategic initiatives and other charges were $268 for the Industrial Technologies segment, for the nine months ended June 30, 2020.

Note ~~12.~~14. Acquisitions ~~(continued)~~

In April 2021, the Company completed a small acquisition in the hydrogen fuel cell industry within the SGK Brand Solutions segment for a purchase price of $2,523 (net of cash acquired and holdback amounts). The preliminary purchase price allocation is not finalized as of June 30, 2021 and is subject to changes as the Company finalizes the valuation of acquired intangible assets, and obtains additional information related to other assets and liabilities.

In January ~~3, 2017,~~2021, the Company acquired ~~A. + E. Ungricht GmbH + Co KG ("Ungricht")~~a memorialization business that produces and distributes cemetery products for ~~€24.0 million ($25,185) (net~~a purchase price of ~~cash acquired). Ungricht~~$13,100. The preliminary purchase price allocation is ~~a leading European provider~~not finalized as of ~~pre-press services and gravure printing forms, located in Germany,~~June 30, 2021 and is ~~included in~~subject to changes as the ~~Company's SGK Brand Solutions segment. The~~ Company ~~finalized the allocation of purchase price~~obtains additional information related to ~~the Ungricht acquisition~~fixed assets, and other assets and liabilities.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

(Dollar amounts in ~~the first quarter of fiscal 2018, resulting in an immaterial adjustment to certain working capital and intangible asset amounts.~~thousands, except per share data)

On November 30, 2016, the Company acquired Guidance Automation Limited ("Guidance") for £8.0 million ($9,974) (net of cash acquired). Guidance provides technological solutions for autonomous warehouse vehicles and is included in the Company's Industrial Technologies segment. The Company finalized the allocation of purchase price related to the Guidance acquisition in the fourth quarter of fiscal 2017, resulting in an immaterial adjustment to certain working capital and intangible asset accounts.

Note ~~13.~~15. Goodwill and Other Intangible Assets

A summary of the carrying amount of goodwill attributable to each segment as well as the changes in such amounts are as follows:


	SGK Brand Solutions		Memorialization		Industrial Technologies		Consolidated




Net goodwill at September 30, 2020	$	311,737	$	361,682	$	91,969	$	765,388
Additions during period	0		4,775		0		4,775

Translation and other adjustments	8,662		689		861		10,212



Net goodwill at June 30, 2021	$	320,399	$	367,146	$	92,830	$	780,375

SGK Brand
Solutions
Memorialization Industrial Technologies Consolidated

Goodwill $ 491,895
$ 347,507
$ 69,144
$ 908,546
Accumulated impairment losses (5,752 ) (5,000 ) —
(10,752 )
Balance at September 30, 2017 486,143
342,507
69,144
897,794

Additions during period 8,603
17,152
21,112
46,867
Translation and other adjustments 2,795
1,055
176
4,026
Goodwill 503,293
365,714
90,432
959,439
Accumulated impairment losses (5,752 ) (5,000 ) —
(10,752 )
Balance at December 31, 2017 $ 497,541
$ 360,714
$ 90,432
$ 948,687
The net goodwill balances at June 30, 2021 and September 30, 2020 included $178,732 of accumulated impairment losses. Accumulated impairment losses at June 30, 2021 and September 30, 2020 were $173,732 and $5,000 for the SGK Brand Solutions and Memorialization segments, respectively.

The Company performed its annual impairment review of goodwill and indefinite-lived intangible assets in the second quarter of fiscal ~~2017~~2021 (January 1, 2021) and determined that the estimated fair values for all goodwill reporting units exceeded their carrying values, therefore no impairment charges were necessary. The estimated fair value ~~for all~~of the Company's Graphics Imaging reporting ~~units~~unit, within the SGK Brand Solutions segment, exceeded ~~carrying value, therefore no adjustments to~~ the carrying value (expressed as a percentage of carrying value) by approximately 5%. If current projections are not achieved or specific valuation factors outside the Company’s control (such as discount rates and continued economic and industry impacts of COVID-19) significantly change, goodwill ~~were necessary.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued~~

~~(Dollar amounts~~write-downs may be necessary in ~~thousands, except per share data)~~

~~Note 13. Goodwill and Other Intangible Assets (continued)~~

future periods.

The following tables summarize the carrying amounts and related accumulated amortization for intangible assets as of ~~December 31, 2017~~June 30, 2021 and September 30, ~~2017,~~2020, respectively.

Carrying
Amount

Accumulated
Amortization
Net
December 31, 2017:
Trade names $ 168,467
$ —
* $ 168,467
Trade names 8,504
(2,284 ) 6,220
Customer relationships 364,554
(90,611 ) 273,943
Copyrights/patents/other 19,092
(11,978 ) 7,114
$ 560,617
$ (104,873 ) $ 455,744

September 30, 2017:

Trade names $ 168,467
$ —
* $ 168,467
Trade names 5,522
(2,030 ) 3,492
Customer relationships 333,632
(84,560 ) 249,072
Copyrights/patents/other 14,787
(11,436 ) 3,351
*Not subject to amortization $ 522,408
$ (98,026 ) $ 424,382


	Carrying Amount		Accumulated Amortization		Net
June 30, 2021:
Indefinite-lived trade names	$	30,540	$	—	$	30,540
Definite-lived trade names	148,986		(93,712)		55,274
Customer relationships	390,253		(198,793)		191,460
Copyrights/patents/other	23,843		(15,361)		8,482
	$	593,622	$	(307,866)	$	285,756
September 30, 2020:
Indefinite-lived trade names	$	30,540	$	—	$	30,540
Definite-lived trade names	148,867		(64,462)		84,405
Customer relationships	379,246		(166,892)		212,354
Copyrights/patents/other	20,704		(14,505)		6,199
	$	579,357	$	(245,859)	$	333,498

The net change in intangible assets during the ~~three~~nine months ended ~~December 31, 2017~~June 30, 2021 included the impact of foreign currency fluctuations during the period, additional amortization and additions related to fiscal 2021 acquisitions. During the second quarter of fiscal ~~2018 acquisitions.~~2021, the Company reassessed the useful lives for certain of its customer relationships. As a result of this reassessment, the Company reduced the remaining useful lives for these customer relationships to reflect their estimated remaining duration, utilizing actual historical customer attrition rates.

Amortization expense on intangible assets was ~~$6,681~~$23,039 and ~~$4,941~~$17,825 for the three-month periods ended ~~December 31, 2017~~June 30, 2021 and ~~2016,~~2020, respectively. For the nine-month periods ended June 30, 2021 and 2020, amortization expense was $61,190 and $53,639, respectively. Amortization expense is estimated to be ~~$22,201~~$22,948 for the remainder of fiscal ~~2018, $27,747~~2021, $57,197 in 2022, $40,832 in 2023, $35,336 in 2024 and $20,182 in 2025. The accelerated amortization related to the fiscal 2019 ~~$25,925~~reduction in ~~2020, $24,350 in 2021 and $22,928 in~~useful lives for certain discontinued trade names is scheduled to continue through the first quarter of fiscal 2022.

~~Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations, Continued~~

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

CAUTIONARY ~~STATEMENT:~~STATEMENTS REGARDING FORWARD LOOKING STATEMENTS AND NON-GAAP FINANCIAL MEASURES:

The following discussion should be read in conjunction with the consolidated financial statements of Matthews International Corporation ("Matthews" or the "Company") and related notes thereto included in this Quarterly Report on Form 10-Q and the Company's Annual Report on Form 10-K for the fiscal year ended September 30, ~~2017.~~2020. Any forward-looking statements contained herein are included pursuant to the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks and uncertainties that may cause the Company's actual results in future periods to be materially different from management's expectations. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove correct. Factors that could cause the Company's results to differ materially from the results discussed in such forward-looking statements principally include changes in domestic or international economic conditions, changes in foreign currency exchange rates, changes in the cost of materials used in the manufacture of the Company's products, changes in mortality and cremation rates, changes in product demand or pricing as a result of consolidation in the industries in which the Company operates, changes in product demand or pricing as a result of domestic or international competitive pressures, ability to achieve cost-reduction objectives, unknown risks in connection with the Company's acquisitions, cybersecurity concerns, effectiveness of the Company's internal controls, compliance with domestic and foreign laws and regulations, technological factors beyond the Company's control, impact of pandemics or similar outbreaks, or other disruptions to our industries, customers or supply chains, and other factors described in Item 1A - "Risk Factors" in this Form 10-Q and Item 1A - "Risk Factors" in the Company's Form 10-K for the fiscal year ended September 30, ~~2017.~~2020. In addition, although the Company does not have any customers that would be considered individually significant to consolidated sales, changes in the distribution of the Company's products or the potential loss of one or more of the Company's larger customers are also considered risk factors. Matthews cautions that the foregoing list of important factors is not all inclusive. Readers are also cautioned not to place undue reliance on any forward looking statements, which reflect management's analysis only as of the date of this report, even if subsequently made available by Matthews on its website or otherwise. Matthews does not undertake to update any forward looking statement, whether written or oral, that may be made from time to time by or on behalf of Matthews to reflect events or circumstances occurring after the date of this report.

Included in this report are measures of financial performance that are not defined by generally accepted accounting principles in the United States ("GAAP"). These non-GAAP financial measures assist management in comparing the Company's performance on a consistent basis for purposes of business decision-making by removing the impact of certain items that management believes do not directly reflect the Company's core operations. For additional information and reconciliations from the consolidated financial statements see "Non-GAAP Financial Measures" below.

RESULTS OF OPERATIONS:

The ~~following table sets forth the sales~~Company manages its businesses under three segments: SGK Brand Solutions, Memorialization and ~~operating profit for the Company's three reporting segments for the three-month periods ended December 31, 2017 and 2016.~~

Three Months Ended
December 31,
2017 2016
Sales: (Dollar amounts in thousands)
SGK Brand Solutions $ 191,766
$ 175,801
Memorialization 144,889
145,622
Industrial Technologies 32,799
27,575
$ 369,454
$ 348,998

Operating profit:
SGK Brand Solutions $ 3,152
$ 4,190
Memorialization 14,454
14,367
Industrial Technologies 318
506
$ 17,924
$ 19,063

~~Sales for the three months ended December 31, 2017 were $369.5 million, compared to $349.0 million for the three months ended December 31, 2016.~~Industrial Technologies. The increase in fiscal 2018 sales principally reflected higher sales of marking products (Industrial Technologies) and cremation equipment (Memorialization), benefits from recently completed acquisitions (see "Acquisitions" below) and the favorable impact of changes in foreign currencies against the U.S. dollar. Changes in foreign currency rates were estimated to have a favorable impact of $7.4 million on fiscal 2018 first quarter consolidated sales compared to a year ago. These increases were partially offset by slower market conditions in North America and Europe for the SGK Brand Solutions segment consists of brand management, pre-media services, printing plates and ~~lower unit sales~~cylinders, engineered products (including energy solutions), imaging services, digital asset management, merchandising display systems, and marketing and design services primarily for the consumer goods and retail industries. The Memorialization segment consists primarily of bronze and granite memorials and ~~caskets.~~other memorialization products, caskets, and cremation and incineration equipment primarily for the cemetery and funeral home industries. The Industrial Technologies segment includes marking and coding equipment and consumables, industrial automation products and order fulfillment systems for identifying, tracking, picking and conveying consumer and industrial products.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations, Continued

In addition, the CODM manages and evaluates the operating performance of the segments, as described above, on a pre-corporate cost allocation basis. Accordingly, for segment reporting purposes, the Company does not allocate corporate costs to its reportable segments. Corporate costs include management and administrative support to the Company, which consists of certain aspects of the Company’s executive management, legal, compliance, human resources, information technology (including operational support) and finance departments. These costs are included within "Corporate and Non-Operating" in the following table to reconcile to consolidated adjusted EBITDA and are not considered a separate reportable segment. Management does not allocate non-operating items such as investment income, other income (deductions), net and noncontrolling interest to the segments.

The following table sets forth the sales and adjusted EBITDA for the Company's three reporting segments for the three and nine-month periods ended June 30, 2021 and 2020. Refer to Note 13, "Segment Information" in Item 1 - "Financial Statements" for the Company's financial information by segment.


	Three Months Ended June 30,				Nine Months Ended June 30,
	2021		2020		2021		2020
Sales:	(Dollar amounts in thousands)
SGK Brand Solutions	$	199,715	$	165,780	$	538,879	$	513,515
Memorialization	184,337		162,118		573,068		478,342
Industrial Technologies	44,328		31,524		120,244		107,309
Consolidated Sales	$	428,380	$	359,422	$	1,232,191	$	1,099,166


Adjusted EBITDA:
SGK Brand Solutions	$	33,258	$	20,846	$	75,426	$	61,808
Memorialization	36,402		37,734		132,080		103,020
Industrial Technologies	5,940		4,679		15,242		15,205
Corporate and Non-Operating	(15,585)		(13,862)		(47,030)		(41,009)
Total Adjusted EBITDA (1)	$	60,015	$	49,397	$	175,718	$	139,024

(1) Total Adjusted EBITDA is a non-GAAP financial measure. See the "Non-GAAP Financial Measures" section below.

Sales for the nine months ended June 30, 2021 were $1.23 billion, compared to $1.10 billion for the nine months ended June 30, 2020, representing an increase of $133.0 million. The increase in fiscal 2021 sales reflected higher sales in all of the Company's segments. Changes in foreign currency exchange rates were estimated to have a favorable impact of $27.4 million on fiscal 2021 consolidated sales compared to a year ago. Fiscal 2021 sales continued to be impacted by the global outbreak of coronavirus disease 2019 ("COVID-19"), which has caused some commercial impacts in certain of the Company's segments and geographic locations. These impacts have included higher sales volumes for memorialization products and services, but have also included temporary business disruptions and customer project delays for certain of the Company's businesses. While substantially all of the Company's operations have remained open during the COVID-19 pandemic, management expects COVID-19 to continue to impact its sales and results of operations in the short-term as the pandemic subsides (see "Forward Looking Information" below).

In the SGK Brand Solutions segment, sales for the first ~~three~~nine months of fiscal ~~2018~~2021 were ~~$191.8~~$538.9 million, compared to ~~$175.8~~$513.5 million for the first ~~three~~nine months of fiscal ~~2017.~~2020. The increase primarily resulted from higher sales of purpose-built engineered products (primarily in support of the electric vehicle and energy storage industries) and higher brand sales ~~reflected sales growth~~ in the ~~U.K.~~Europe and ~~Asia Pacific markets,~~Asia-Pacific markets. These increases were partially offset by lower retail-based sales (principally merchandising solutions and ~~benefits from recently completed acquisitions.~~private label brand market sales), decreased brand sales in the U.S., and reduced sales of surfaces products in Europe, all of which were unfavorably impacted by COVID-19. Changes in foreign currency exchange rates ~~also~~ had a favorable impact of ~~$6.0~~$21.0 million on the segment's sales compared to the ~~same quarter last~~prior year. ~~These increases were partially offset by slower brand market conditions in the U.S. and Europe.~~ Memorialization segment sales for the first ~~three~~nine months of fiscal ~~2018~~2021 were ~~$144.9~~$573.1 million, compared to ~~$145.6~~$478.3 million for the first ~~three~~nine months of fiscal ~~2017.~~2020. The increase in sales ~~decrease reflected lower~~predominantly resulted from increased unit sales of ~~memorials and~~ caskets ~~partially offset by~~due to COVID-19. The segment also reported higher sales of bronze and granite memorial products, mausoleums, and cremation equipment, and the benefits of recently completed acquisitions. Industrial Technologies segment sales were $32.8 million for the first three months of fiscal 2018, compared to $27.6 million for the first three months of fiscal 2017.equipment. The increase in sales also reflected ~~higher sales of marking products,~~improved price realization and benefits from a recently completed ~~acquisitions.~~acquisition of a small cemetery products business. Changes in foreign currency exchange rates ~~also~~ had a favorable impact of ~~$530,000~~$4.0 million on the segment's sales compared to the ~~same quarter last~~prior year. Industrial Technologies segment sales were $120.2 million for the first nine months of fiscal 2021, compared to $107.3 million for the first nine months of fiscal 2020. The sales increase primarily reflected higher sales of warehouse automation systems and increased product identification sales. Changes in foreign currency exchange rates had a favorable impact of $2.4 million on the segment's sales compared to the prior year.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations, Continued

Gross profit for the ~~three~~nine months ended ~~December 31, 2017~~June 30, 2021 was ~~$130.7~~$403.8 million, compared to ~~$127.3~~$361.4 million for the same period a year ago. Consolidated gross profit as a percent of sales was ~~35.4%~~32.8% and ~~36.5%~~32.9% for the first ~~three~~nine months of fiscal ~~2018~~2021 and fiscal ~~2017,~~2020, respectively. The increase in gross profit primarily reflected ~~the impact of~~ higher sales, benefits from ~~recent acquisitions,~~ the ~~benefits~~realization of productivity improvements and other cost-reduction initiatives, and ~~realization of acquisition synergies. These increases were partially offset by lower sales (excluding acquisitions) in North America~~improved margins for cylinders and ~~Europe for~~engineered products within the SGK Brand Solutions segment. These improvements were partially offset by the impact of higher material and transportation costs, particularly in the Memorialization segment, and lower margins on U.K. based cremation and incineration projects. Gross profit also included acquisition integration costs and other charges primarily in connection with cost-reduction initiatives totaling $15.5 million and $6.6 million for the nine months ended June 30, 2021 and 2020, respectively.

Selling and administrative expenses for the ~~three~~nine months ended ~~December 31, 2017~~June 30, 2021 were ~~$112.8~~$308.0 million, compared to ~~$108.2~~$302.2 million for the first ~~three~~nine months of fiscal ~~2017.~~2020. Consolidated selling and administrative expenses, as a percent of sales, were ~~30.5%~~25.0% for the ~~three~~nine months ended ~~December 31, 2017,~~June 30, 2021, compared to ~~31.0%~~27.5% for the same period last year. The increase in selling and administrative expenses reflected ~~the impact of recently completed acquisitions, including $2.1 million of incremental intangible asset amortization recognized in the first quarter of~~higher performance-based compensation compared to fiscal ~~2018,~~2020, partially offset by ~~the~~ benefits from ~~cost reduction~~ongoing cost-reduction initiatives, ~~including acquisition-integration synergies.~~and reduced travel and entertainment ("T&E") costs resulting from the pandemic. Selling and administrative expenses also included acquisition integration and related systems-integration costs, and other charges primarily in connection with ~~cost reduction~~cost-reduction initiatives totaling ~~$4.7~~$13.0 million in fiscal ~~2018,~~2021, compared to ~~$8.6~~$25.6 million in fiscal ~~2017.~~

~~Operating profit~~2020. Fiscal 2020 selling and administrative expenses also included an $11.2 million gain on the sale of an ownership interest in a Memorialization business and a $10.6 million charge for a legal matter involving a letter of credit for a customer in Saudi Arabia. Intangible amortization for the ~~three~~nine months ended ~~December 31, 2017~~June 30, 2021 was ~~$17.9~~$61.2 million, compared to ~~$19.1~~$53.6 million for the ~~three~~nine months ended ~~December 31, 2016.~~June 30, 2020. The increase in intangible amortization reflected $10.1 million of incremental amortization resulting from a reduction in useful lives for certain customer relationships. Refer to Note 15, "Goodwill and Other Intangible Assets" in Item 1 - "Financial Statements" for further details. Intangible amortization also included accelerated amortization resulting from the fiscal 2019 reduction in useful lives for certain trade names that are being discontinued. Amortization for these trade names totaled $26.0 million and $28.1 million for the nine months ended June 30, 2021 and June 30, 2020, respectively. During the second quarter of fiscal 2020, the Company recorded a goodwill write-down totaling $90.4 million related to its two reporting units within the SGK Brand Solutions segment ~~operating profit~~(Graphics Imaging and Cylinders, Surfaces and Engineered Products).

Adjusted EBITDA was $175.7 million for the nine months ended June 30, 2021 and $139.0 million for the nine months ended June 30, 2020. Adjusted EBITDA for the SGK Brand Solutions segment was $75.4 million for the first ~~three~~nine months of fiscal ~~2018 was $3.2 million,~~2021 compared to ~~$4.2~~$61.8 million for the same period a year ago. The ~~decrease~~increase in segment ~~operating profit~~adjusted EBITDA primarily reflected ~~lower~~the impact of higher sales, ~~(excluding acquisitions)~~benefits from cost-reduction initiatives, reduced T&E costs resulting from COVID-19, and improved margins for cylinders and engineered products. Changes in ~~North America and Europe, and an increase~~foreign currency exchange rates had a favorable impact of ~~$1.5~~$2.0 million ~~in intangible asset amortization related~~on the segment's adjusted EBITDA compared to ~~recently completed acquisitions,~~the prior year. These increases were partially offset by the favorable impact of changes in foreign currencies against the U.S. dollar of approximately $560,000. Additionally, fiscal 2018 operating profit for the SGK Brand Solutions segment included acquisition integration costs and other charges totaling $3.8 million,increased performance-based compensation compared to ~~$6.2 million in~~ fiscal ~~2017.~~2020. Memorialization segment ~~operating profit for the first three months of fiscal 2018~~adjusted EBITDA was ~~$14.5 million, compared to $14.4~~$132.1 million for the first ~~three~~nine months of fiscal ~~2017.~~2021 compared to $103.0 million for the first nine months of fiscal 2020. The increase in segment ~~operating profit~~adjusted EBITDA primarily reflected the impact of higher ~~cremation equipment~~ sales, ~~and the~~ benefits ~~of acquisition synergies and other~~from productivity initiatives, and lower T&E costs. These increases were partially offset by the impact of ~~lower memorial~~higher material and ~~casket sales volume. Fiscal 2018 operating profit for the Memorialization segment also included acquisition integration~~transportation costs, ~~and other charges totaling $807,000,~~increased performance-based compensation compared to ~~$2.1 million in~~ fiscal ~~2017. Operating profit~~2020, and lower margins on U.K. based cremation and incineration projects. Adjusted EBITDA for the Industrial Technologies segment was $15.2 million for the ~~three~~nine months ended ~~December 31, 2017 was $318,000, compared to $506,000 for~~June 30, 2021 and the ~~same period a year ago. The benefits~~nine months ended June 30, 2020. Industrial Technologies segment adjusted EBITDA primarily reflected the impact of higher warehouse automation and product identification sales, benefits from cost-reduction initiatives, and reduced T&E costs, which were offset by increased performance-based compensation expense and higher ~~investments~~product development costs. Changes in foreign currency exchange rates had a favorable impact of $512,000 on the segment's ~~product development, and $450,000 of incremental intangible asset amortization related~~adjusted EBITDA compared to ~~recently completed acquisitions.~~the prior year.

Investment income was ~~$467,000~~$3.0 million for the ~~three~~nine months ended ~~December 31, 2017, compared to $337,000~~June 30, 2021 and $1.4 million for the ~~three~~nine months ended ~~December 31, 2016, principally reflecting~~June 30, 2020. Investment income for both periods primarily reflected changes in the ~~return on~~value of investments (primarily marketable securities) held in trust for certain of the Company's benefit plans. Interest expense for the first ~~three~~nine months of fiscal ~~2018~~2021 was ~~$7.8~~$21.7 million, compared to ~~$6.1~~$26.9 million for the same period last year. The ~~increase~~decrease in interest expense reflected ~~an increase~~a decrease in average borrowing levels ~~primarily related to acquisitions, higher~~and lower average interest rates in the current fiscal ~~year, and incremental financing costs associated with the 5.25% senior notes (see "Liquidity and Capital Resources" below).~~year. Other income ~~and deductions,~~(deductions), net, for the ~~three~~nine months ended ~~December 31, 2017~~June 30, 2021 represented ana decrease in pre-tax income of ~~$659,000,~~$6.8 million, compared to a decrease in pre-tax income of ~~$555,000~~$7.4 million for the same period last year. Other income (deductions), net includes the non-service components of pension and ~~deductions generally include~~postretirement expense, which totaled $5.7 million and $6.7 million for the nine months ended June 30, 2021 and 2020, respectively. Other income (deductions), net also includes banking-related fees and the impact of currency gains and losses on certain intercompany debt and foreign denominated cash balances.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations, Continued

Income tax provisions for the Company's interim periods are based on the effective income tax rate expected to be applicable for the full year. The Company's consolidated income taxes for the ~~three~~nine months ended ~~December 31, 2017~~June 30, 2021 were an expense of $2.6 million, compared to a benefit of ~~$25.2 million, compared to income tax expense of $2.5~~$22.7 million for the first ~~three~~nine months of fiscal ~~2017.~~2020. The ~~differences~~difference between the ~~Company's~~Company’s consolidated income taxes for the first nine months of fiscal ~~2018 first quarter~~2021 compared to the same period for fiscal 2020 primarily resulted from consolidated pre-tax income in fiscal 2021 compared to a pre-tax loss in fiscal 2020. Additionally, fiscal 2021 included discrete tax expenses related to foreign operating losses, discrete tax benefits related to the resolution of uncertain tax liabilities, a net operating loss (“NOL”) carryback to tax years where the U.S. federal statutory rate was 35%, and additional foreign tax credits. Fiscal 2020 included discrete tax benefits resulting from the closure of several tax audits. The Company’s fiscal 2021 nine-month effective tax rate ~~and the fiscal 2017 first quarter effective tax rate, as well as the Company’s fiscal 2018 blended U.S. Federal statutory rate of 24.5%, primarily resulted~~varied from the impacts of the U.S. Tax Cuts and Jobs Act (the “Act”) which was enacted on December 22, 2017. The Act reduces the U.S. federal corporate tax rate from 35.0% to 21.0% effective January 1, 2018, which results in a blended U.S. statutory tax rate of ~~24.5% for~~21.0% primarily due to discrete tax expenses related to foreign operating losses, discrete tax benefits related to the ~~Company~~resolution of uncertain tax liabilities, a NOL carryback to tax years where the U.S. federal statutory rate was 35%, and additional foreign tax credits. Additionally, state taxes, foreign statutory rate differentials, and tax credits all affected the fiscal 2021 effective tax rate. The Company’s fiscal 2020 nine-month effective tax rate varied from the U.S. statutory tax rate of 21.0% primarily due to state taxes, foreign statutory rate differentials, tax credits, the goodwill write-down, the expected NOL carryback, and discrete tax benefits recognized in fiscal 2018. The Act also requires companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously deferred, and creates new taxes on certain foreign-sourced earnings. At December 31, 2017, the Company has not finalized its accounting for the tax effects of the Act; however, management has made a reasonable estimate of the effects on existing deferred tax balances and has recorded an estimated amount for its one-time transition tax. For the items for which the Company was able to determine a reasonable estimate, a provisional net tax benefit of $24.6 million was recognized, which is included entirely as a component of income tax benefit (provision) for the three months ended December 31, 2017. The current quarter income tax benefit also reflected the impact of the realization of certain tax credits in connection with the Company's recent international structuring. Refer to Note 10, “Income Taxes” in Item 1 - “Financial Statements” for further details regarding income taxes.2020.

Net losses attributable to noncontrolling interests were ~~$22,000~~$60,000 for the ~~three~~nine months ended ~~December 31, 2017, compared to $114,000~~June 30, 2021 and $491,000 for the ~~same period a year ago.~~nine months ended June 30, 2020. The net losses attributable to noncontrolling interests primarily reflected losses in less than wholly-owned businesses.

NON-GAAP FINANCIAL MEASURES:

Included in this report are measures of financial performance that are not defined by GAAP. The Company uses non-GAAP financial measures to assist in comparing its performance on a consistent basis for purposes of business decision-making by removing the impact of certain items that management believes do not directly reflect the Company’s core operations including acquisition costs, ERP integration costs, strategic initiative and other charges (which includes non-recurring charges related to operational initiatives and exit activities), stock-based compensation and the non-service portion of pension and postretirement expense. Management believes that presenting non-GAAP financial measures is useful to investors because it (i) provides investors with meaningful supplemental information regarding financial performance by excluding certain items that management believes do not directly reflect the Company's core operations, (ii) permits investors to view performance using the same tools that management uses to budget, forecast, make operating and strategic decisions, and evaluate historical performance, and (iii) otherwise provides supplemental information that may be useful to investors in evaluating the Company’s results. The Company believes that the presentation of these non-GAAP financial measures, when considered together with the corresponding GAAP financial measures and the reconciliations to those measures, provided herein, provides investors with an additional understanding of the factors and trends affecting the Company’s business that could not be obtained absent these disclosures.

The Company believes that adjusted EBITDA provides relevant and useful information, which is used by the Company’s management in assessing the performance of its business. Adjusted EBITDA is defined by the Company as earnings before interest, income taxes, depreciation, amortization and certain non-cash and/or non-recurring items that do not contribute directly to management’s evaluation of its operating results. These items include stock-based compensation, the non-service portion of pension and postretirement expense, acquisition costs, ERP integration costs, and strategic initiatives and other charges. Adjusted EBITDA provides the Company with an understanding of earnings before the impact of investing and financing charges and income taxes, and the effects of certain acquisition and ERP integration costs, and items that do not reflect the ordinary earnings of the Company’s operations. This measure may be useful to an investor in evaluating operating performance. It is also useful as a financial measure for lenders and is used by the Company’s management to measure business performance. Adjusted EBITDA is not a measure of the Company's financial performance under GAAP and should not be considered as an alternative to net income or other performance measures derived in accordance with GAAP, or as an alternative to cash flow from operating activities as a measure of the Company's liquidity. The Company's definition of adjusted EBITDA may not be comparable to similarly titled measures used by other companies.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations, Continued

The reconciliation of net income to adjusted EBITDA is as follows:


	Three Months Ended June 30,				Nine Months Ended June 30,
	2021		2020		2021		2020
	(Dollar amounts in thousands)
Net income (loss)	$	3,366	$	1,849	$	6,526	$	(95,052)
Income tax (benefit) provision	(2,325)		(6,209)		2,627		(22,672)
Income (loss) before income taxes	1,041		(4,360)		9,153		(117,724)
Net (income) loss attributable to noncontrolling interests	(11)		420		60		491
Interest expense	6,748		8,082		21,709		26,935
Depreciation and amortization *	35,389		30,168		97,919		88,418
Acquisition related items (1)**	398		355		38		2,576
ERP integration costs (2)**	118		745		477		2,160
Strategic initiatives and other charges: (3)**
Workforce reductions and related costs	1,826		776		10,644		4,425
Other cost-reduction initiatives	4,871		4,743		12,339		20,951
Gain on sale of ownership interest in a subsidiary (4)	—		(11,208)		—		(11,208)
Legal matter reserve (5)	—		10,566		—		10,566
Non-recurring / incremental COVID-19 costs (6)	1,993		1,871		4,689		2,534
Goodwill write-down (7)	—		—		—		90,408
Joint Venture depreciation, amortization, interest expense and other charges (8)	—		2,473		—		4,732
Stock-based compensation	5,713		2,539		12,960		7,078

Non-service pension and postretirement expense (9)	1,929		2,227		5,730		6,682
Total Adjusted EBITDA	$	60,015	$	49,397	$	175,718	$	139,024


(1) Includes certain non-recurring items associated with recent acquisition activities.
(2) Represents costs associated with global ERP system integration efforts.
(3) Includes certain non-recurring costs associated with productivity and cost-reduction initiatives intended to result in improved operating performance, profitability and working capital levels.
(4) Represents a gain on the sale of an ownership interest in a subsidiary within the Memorialization segment.
(5) Represents a reserve established for a legal matter involving a letter of credit for a customer in Saudi Arabia within the Memorialization segment.
(6) Includes certain non-recurring direct incremental costs (such as costs for purchases of computer peripherals and devices to facilitate working-from-home, additional personal protective equipment and cleaning supplies and services, etc.) incurred in response to COVID-19. This amount does not include the impact of any lost sales or underutilization due to COVID-19.
(7) Represents the goodwill write-down for two reporting units within the SGK Brand Solutions segment.
(8) Represents the Company's portion of depreciation, intangible amortization, interest expense, and other non-recurring charges incurred by non-consolidated subsidiaries accounted for as equity-method investments within the Memorialization segment.
(9) Non-service pension and postretirement expense includes interest cost, expected return on plan assets, amortization of actuarial gains and losses, and curtailment gains and losses. These benefit cost components are excluded from adjusted EBITDA since they are primarily influenced by external market conditions that impact investment returns and interest (discount) rates. Curtailment gains and losses are excluded from adjusted EBITDA since they generally result from certain non-recurring events, such as plan amendments to modify future benefits. The service cost and prior service cost components of pension and postretirement expense are included in the calculation of adjusted EBITDA, since they are considered to be a better reflection of the ongoing service-related costs of providing these benefits. Please note that GAAP pension and postretirement expense or the adjustment above are not necessarily indicative of the current or future cash flow requirements related to these employee benefit plans.

* Depreciation and amortization was $26.8 million and $21.8 million for the SGK Brand Solutions segment, $5.8 million and $5.5 million for the Memorialization segment, $1.4 million and $1.5 million for the Industrial Technologies ~~businesses.~~segment, and $1.3 million and $1.3 million for Corporate and Non-Operating, for the three months ended June 30, 2021 and 2020, respectively. Depreciation and amortization was $72.7 million and $65.3 million for the SGK Brand Solutions segment, $17.0 million and $15.0 million for the Memorialization segment, $4.2 million and $4.3 million for the Industrial Technologies segment, and $4.0 million and $3.8 million for Corporate and Non-Operating, for the nine months ended June 30, 2021 and 2020, respectively.

** Acquisition costs, ERP integration costs, and strategic initiatives and other charges were $3.8 million and $1.8 million for the SGK Brand Solutions segment, income of $484,000 and charges of $697,000 for the Memorialization segment, and charges of $2.9 million and $4.1 million for Corporate and Non-Operating, for the three months ended June 30, 2021 and 2020, respectively. Acquisition costs, ERP integration costs, and strategic initiatives and other charges were $14.1 million and $9.1 million for the SGK Brand Solutions segment, $1.3 million and $1.8 million for the Memorialization segment, and $8.1 million and $19.0 million for Corporate and Non-Operating, for the nine months ended June 30, 2021 and 2020, respectively. Acquisition costs, ERP integration costs, and strategic initiatives and other charges were $268,000 for the Industrial Technologies segment, for the nine months ended June 30, 2020.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations, Continued

LIQUIDITY AND CAPITAL RESOURCES:

Net cash provided by operating activities was ~~$7.6~~$106.9 million for the first ~~three~~nine months of fiscal ~~2018,~~2021, compared to ~~$16.0~~$123.6 million for the first ~~three~~nine months of fiscal ~~2017.~~2020. Operating cash flow for both periods ~~reflected~~principally included net income (loss) adjusted for deferred taxes, depreciation and amortization, stock-based compensation expense, ~~and~~net gains (losses) related to investments, non-cash pension ~~expense.~~expense, other non-cash adjustments, and changes in working capital items. Fiscal 2021 operating cash flow also reflected a $15.0 million discretionary contribution to fund the Company's principal retirement plan. Net changes in working capital items ~~which principally related~~decreased operating cash flow by $7.5 million in fiscal 2021, and contributed $41.7 million to operating cash flow in fiscal ~~year-end compensation-related payments, resulted~~2020. The fiscal 2021 change in ~~a use of~~ working capital reflected payments of ~~approximately $10.0 million~~certain payroll tax amounts that were deferred due to COVID-19, an increase in inventory due to higher material costs, and ~~$12.8 million in the first three months~~delayed refunds of ~~fiscal 2018 and fiscal 2017, respectively.~~federal taxes.

Cash used in investing activities was ~~$108.2~~$22.9 million for the ~~three~~nine months ended ~~December 31, 2017,~~June 30, 2021, compared to ~~$15.8~~cash provided by investing activities of $7.4 million for the ~~three~~nine months ended ~~December 31, 2016.~~June 30, 2020. Investing activities for the first ~~three~~nine months of fiscal ~~2018 primarily~~2021 reflected capital expenditures of ~~$11.6~~$24.5 million, ~~acquisition~~acquisitions payments (net of cash acquired ~~or received~~and holdback amounts) totaling $15.6 million, proceeds from ~~sellers) totaling $86.0~~the sale of investments of $15.0 million, and proceeds from the ~~purchase~~sale of ~~a cost method investment~~assets of ~~$11.7~~$2.2 million. Investing activities for the first ~~three~~nine months of fiscal ~~2017~~2020 primarily reflected capital expenditures of ~~$5.1~~$25.5 million, proceeds of $42.2 million from the sale of an ownership interest in a Memorialization business, and ~~acquisition payments (net~~investments and advances of ~~cash acquired or received from sellers) of $10.7~~$9.7 million.

Capital expenditures reflected reinvestment in the Company's business segments and were made primarily for the purchase of new production machinery, equipment, software and systems, and facilities designed to improve product quality, increase manufacturing efficiency, lower production costs and meet regulatory requirements. Capital expenditures for the last three fiscal years were primarily financed through operating cash. Capital spending for property, plant and equipment has averaged ~~$45.0~~$38.6 million for the last three fiscal years. Capital spending for fiscal ~~2018~~2021 is currently ~~expected~~estimated to be ~~in the range of $45.0 million to $50.0~~approximately $40 million. The Company expects to generate sufficient cash from operations to fund all anticipated capital spending projects.

Cash ~~provided by~~used in financing activities for the ~~three~~nine months ended ~~December 31, 2017~~June 30, 2021 was ~~$102.8~~$79.8 million, primarily reflecting ~~proceeds,~~repayments, net of ~~repayments,~~proceeds, on long-term debt of ~~$113.3~~$49.0 million, treasury stock purchases of ~~$4.4~~$6.1 million, ~~and~~ dividends of ~~$6.1~~$20.9 million to the Company's ~~shareholders.~~shareholders, and $1.6 million of holdback and deferred payments related to acquisitions from prior years. Cash ~~provided by~~used in financing activities for the ~~three~~nine months ended ~~December 31, 2016~~June 30, 2020 was ~~$54.0~~$123.1 million, primarily reflecting ~~proceeds,~~repayments, net of ~~repayments,~~proceeds, on long-term debt of ~~$65.9~~$92.1 million, treasury stock purchases of ~~$6.5~~$2.4 million, ~~and~~ dividends of ~~$5.4~~$19.8 million to the Company's ~~shareholders.~~shareholders, $4.7 million of holdback and contingent consideration payments related to acquisitions from prior years, and payment of deferred financing fees of $2.0 million.

The Company has a domestic credit facility with a syndicate of financial institutions that includes a ~~$900.0~~$750.0 million senior secured revolving credit facility, which matures in March 2025, and a ~~$250.0~~$35.0 million senior secured amortizing term loan. The senior secured amortizing term loan ~~requires scheduled principal payments of 5.0% of the outstanding principal~~was paid in ~~year one, 7.5%~~full in ~~year two, and 10.0% in years three through five, payable in quarterly installments. The balance~~March 2021. A portion of the revolving credit facility ~~and the term loan are due on the maturity date of April 26, 2021.~~(not to exceed $350.0 million) can be drawn in foreign currencies. Borrowings under ~~both~~ the revolving credit facility ~~and the term loan~~ bear interest at LIBOR (Euro LIBOR for balances drawn in Euros) plus a factor ranging from 0.75% to 2.00% ~~(1.25%~~(1.00% at ~~December 31, 2017)~~June 30, 2021) based on the Company's secured leverage ratio. The secured leverage ratio is defined as net secured indebtedness divided by ~~adjusted~~ EBITDA (earnings before interest, income taxes, depreciation and amortization). as defined within the domestic credit facility agreement. The Company is required to pay an annual commitment fee ranging from 0.15% to ~~0.25%~~0.30% (based on the Company's leverage ratio) of the unused portion of the revolving credit facility. The Company incurred debt issuance costs in connection with the domestic credit facility. Unamortized costs were $2.4 million and $2.7 million at June 30, 2021 and September 30, 2020, respectively.

~~Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations, Continued~~

The domestic credit facility requires the Company to maintain certain leverage and interest coverage ratios. A portion of the facility (not to exceed $35.0 million) is available for the issuance of trade and standby letters of credit. Outstanding U.S. dollar denominated borrowings on the revolving credit facility at ~~December 31, 2017~~June 30, 2021 and September 30, ~~2017~~2020 were ~~$337.0~~$259.2 million and ~~$525.0~~$257.4 million, respectively. Outstanding Euro denominated borrowings on the revolving credit facility at June 30, 2021 and September 30, 2020 were €97.0 million ($115.2 million) and €117.0 million ($137.2 million), respectively. There were no outstanding borrowings on the term loan as of June 30, 2021. Outstanding borrowings on the term loan at ~~December 31, 2017 and~~ September 30, ~~2017~~2020 were ~~$227.6 million and $232.5 million, respectively.~~$22.4 million. The weighted-average interest rate on outstanding borrowings for the domestic credit facility (including the effects of interest rate ~~swaps)~~swaps and Euro denominated borrowings) at ~~December 31, 2017~~June 30, 2021 and ~~December 31, 2016~~2020 was ~~2.93%~~1.94% and ~~2.65%~~2.44%, respectively.

~~In December 2017, the~~

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations, Continued

The Company ~~issued~~has $300.0 million ~~aggregate principal amount~~ of 5.25% senior unsecured notes due December 1, 2025 (the "2025 Senior Notes"). The 2025 Senior Notes bear interest at a rate of 5.25% per annum with interest payable semi-annually in arrears on June 1 and December 1 of each ~~year beginning on June 1, 2018.~~year. The Company's obligations under the 2025 Senior Notes are guaranteed by certain of the Company's direct and indirect wholly-owned domestic subsidiaries. The Company is subject to certain covenants and other restrictions in connection with the 2025 Senior Notes. The ~~proceeds from the 2025 Senior Notes were used primarily to reduce indebtedness under the Company's domestic credit facility. The~~ Company incurred direct financing fees and costs in connection with ~~2025 Senior Notes of $4.1 million, which will be deferred and amortized over the term of~~ the 2025 Senior Notes. Unamortized costs were $2.3 million and $2.7 million at June 30, 2021 and September 30, 2020, respectively.

The Company has a $115.0 million accounts receivable securitization facility (the "Securitization Facility") with certain financial institutions which matures ~~on April 4, 2019.~~in March 2022 and the Company intends to extend this facility. Under the Securitization Facility, the Company and certain of its domestic subsidiaries sell, on a continuous basis without recourse, their trade receivables to Matthews Receivables Funding Corporation, LLC (“Matthews RFC”), a wholly-owned bankruptcy-remote subsidiary of the Company. Matthews RFC in turn assigns a collateral interest in these receivables to certain financial institutions, and then may borrow funds under the Securitization Facility. The Securitization Facility does not qualify for sale treatment. Accordingly, the trade receivables and related debt obligations remain on the Company's Consolidated Balance Sheet. Borrowings under the Securitization Facility bear interest at LIBOR plus 0.75%. The Company is required to pay an annual commitment fee ranging from 0.25% to 0.35% of the unused portion of the Securitization Facility. Outstanding borrowings under the Securitization Facility at ~~December 31, 2017~~June 30, 2021 and September 30, ~~2017~~2020 were ~~$101.4~~$90.7 million and ~~$95.8~~$67.7 million, respectively. At ~~December 31, 2017,~~June 30, 2021 and 2020, the interest rate on borrowings under this facility was ~~2.31%.~~0.85% and 0.91% respectively.

The following table presents information related to interest rate contracts entered into by the Company and designated as cash flow hedges (~~dollar~~(dollar amounts in ~~thousands~~)thousands):


	June 30, 2021			September 30, 2020
Pay fixed swaps - notional amount	$	250,000		$	312,500
Net unrealized loss	$	(2,982)		$	(7,792)
Weighted-average maturity period (years)	2.5			2.6
Weighted-average received rate	0.10		%	0.15		%
Weighted-average pay rate	1.34		%	1.34		%

The fair value of the interest rate swaps reflected an unrealized ~~gain~~loss of ~~$6.6~~$3.0 million ($~~4.0~~2.3 million after tax) at ~~December 31, 2017~~June 30, 2021 and an unrealized ~~gain, net~~loss of ~~unrealized losses, of $4.0~~$7.8 million ($~~2.4~~5.9 million after tax) at September 30, ~~2017. The net unrealized gain~~ 2020 thatis included in shareholders' equity as part of accumulated other comprehensive income (loss) ("AOCI"). Assuming market rates remain constant with the rates at ~~December 31, 2017,~~June 30, 2021, a ~~gain~~loss (net of tax) of approximately ~~$1.2~~$1.8 million included in AOCI is expected to be recognized in earnings over the next twelve months.

The Company, through certain of its European subsidiaries, has a credit facility with a European bank, which is guaranteed by ~~Matthews International Corporation.~~Matthews. The maximum amount of borrowing available under this facility is ~~€35.0~~€25.0 million ($~~41.9~~29.7 million)., which includes €8.0 million ($9.5 million) for bank guarantees. The credit facility matures in December ~~2018~~2021 andthe Company intends to continue to extend this facility. Outstanding borrowings under the credit facility totaled ~~€26.2~~€6.6 million ($~~31.4~~7.8 million) and ~~€22.1~~€18.9 million ($~~26.1~~22.2 million) at ~~December 31, 2017~~June 30, 2021 and September 30, ~~2017,~~2020, respectively. The weighted-average interest rate on outstanding borrowings under this facility at ~~December 31, 2017~~June 30, 2021 and ~~2016~~2020 was ~~2.00%~~2.25% and ~~1.75%~~1.25%, respectively.

The Company uses certain foreign currency debt instruments as net investment hedges of foreign operations. Currency losses of $6.0 million (net of income taxes of $1.9 million) and currency losses of $4.4 million (net of income taxes of $1.4 million), which represent effective hedges of net investments, were reported as a component of AOCI within currency translation adjustment at June 30, 2021 and September 30, 2020, respectively.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations, Continued

The Company’s German subsidiary, Matthews Europe GmbH & Co. KG, has €15.0 million ($18.0 million) of senior unsecured notes with European banks. The notes are guaranteed by Matthews International Corporation and mature in November 2019. A portion of the notes (€5.0 million) have a fixed interest rate of 1.40%, and the remainder bear interest at Euro LIBOR plus 1.40%. The weighted-average interest rate on the notes at December 31, 2017 and 2016 was 1.40%.

The Company, through its Italian subsidiary, Matthews International S.p.A., has several loans with various Italian banks. Outstanding borrowings on these loans totaled €2.1 million ($2.5 million) and €2.6 million ($3.1 million) at December 31, 2017 and September 30, 2017, respectively. The maturity dates for these loans range from January 2018 through November 2019. Matthews International S.p.A. also has multiple on-demand lines of credit totaling €11.3 million ($13.6 million) with the same Italian banks. Outstanding borrowings on these lines were €4.1 million ($4.9 million) and €4.0 million ($4.7 million) at December 31, 2017 and September 30, 2017, respectively. The weighted-average interest rate on outstanding Matthews International S.p.A. borrowings at December 31, 2017 and 2016 was 2.27% and 1.58%, respectively.

Other debt totaled $926,300 and $1.0 million at December 31, 2017 and September 30, 2017, respectively. The weighted-average interest rate on these outstanding borrowings was 4.62% and 5.77% at December 31, 2017 and 2016, respectively.

In September 2014, a claim was filed seeking to draw upon a letter of credit issued by the Company of £8.6 million ($11.6 million at December 31, 2017) with respect to a performance guarantee on a project in Saudi Arabia. Management assessed the customer's demand to be without merit and initiated an action with the court in the United Kingdom (the "Court"). Pursuant to this action, an order was issued by the Court in January 2015 requiring that, upon receipt by the customer, the funds were to be remitted by the customer to the Court pending resolution of the dispute between the parties. As a result, the Company made payment on the draw to the financial institution for the letter of credit and the funds were ultimately received by the customer. The customer did not remit the funds to the Court as ordered. On June 14, 2016, the Court ruled completely in favor of Matthews following a trial on the merits. However, as the customer has neither yet remitted the funds nor complied with the final, un-appealed orders of the Court, it is possible the resolution of this matter could have an unfavorable financial impact on Matthews’ results of operations. The Company has determined that resolution of this matter may take an extended period of time and therefore has classified the funded letter of credit within other assets on the Consolidated Balance Sheets as of December 31, 2017 and September 30, 2017. The Company will continue to assess collectability related to this matter as facts and circumstances evolve.

The Company has a stock repurchase program. ~~Under the current authorization, the~~The Company's Board of Directors ~~has~~had authorized the repurchase of a total of 5,000,000 shares of Matthews' common stock under the program, of which ~~1,740,381~~324,861 shares ~~remain~~remained available for repurchase as of ~~December 31, 2017.~~June 30, 2021. On July 28, 2021, the Company's Board of Directors authorized an additional 2,500,000 shares for repurchase under the program. The buy-back program is designed to increase shareholder value, enlarge the Company's holdings of its common stock, and add to earnings per share. Repurchased shares may be retained in treasury, utilized for acquisitions, or reissued to employees or other purchasers, subject to the restrictions set forth in the Company's Restated Articles of Incorporation.

Consolidated working capital of the Company was ~~$320.7~~$291.3 million at ~~December 31, 2017,~~June 30, 2021, compared to ~~$309.9~~$258.7 million at September 30, ~~2017.~~2020. Cash and cash equivalents were ~~$60.1~~$46.2 million at ~~December 31, 2017,~~June 30, 2021, compared to ~~$57.5~~$41.3 million at September 30, ~~2017.~~2020. The Company's current ratio was ~~2.1~~1.9 at ~~December 31, 2017~~June 30, 2021 and 1.8 at September 30, ~~2017.~~2020.

~~ENVIRONMENTAL~~REGULATORY MATTERS:

The ~~Company's~~Company’s operations are subject to various federal, state and local laws and regulations ~~relating~~requiring strict compliance, including, but not limited to, the protection of the environment. These laws and regulations impose limitations on the discharge of materials into the environment and require the Company to obtain and operate in compliance with conditions of permits and other government authorizations. As such, theThe Company has ~~developed environmental, health, and safety policies and procedures that include~~established numerous internal compliance programs to further ensure lawful satisfaction of the ~~proper handling, storage and disposal of hazardous materials.~~

~~The~~applicable regulations. In addition, the Company is party to ~~various~~specific environmental ~~matters. These~~matters which include obligations to investigate and mitigate the effects on the environment of ~~the disposal of~~ certain materials at ~~various~~ operating and non-operating sites. The Company is currently performing environmental assessments and remediation at ~~these~~certain sites, as ~~appropriate.~~applicable.

~~Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations, Continued~~

At December 31, 2017, an accrual of approximately $2.9 million had been recorded for environmental remediation (of which $750,000 was classified in other current liabilities), representing management's best estimate of the probable and reasonably estimable costs of known remediation obligations for one of the Company's subsidiaries. The accrual does not consider the effects of inflation and anticipated expenditures are not discounted to their present value. Changes in the accrued environmental remediation obligation from the prior fiscal year reflect payments charged against the accrual. While final resolution of these contingencies could result in costs different than current accruals, management believes the ultimate outcome will not have a significant effect on the Company's consolidated results of operations or financial position.

ACQUISITIONS:

Refer to Note ~~12,~~14, "Acquisitions" in Item 1 - "Financial Statements" for further details on the Company's acquisitions.

FORWARD-LOOKING INFORMATION:

The Company's current strategy to attain annual operating growth ~~in earnings per share~~ primarily consists of the following: internal growth ~~(which~~- which includes organic growth, cost structure and productivity improvements, new product development and the expansion into new markets with existing ~~products),~~products - and acquisitions and related integration activities to achieve strategic and synergy benefits.

~~With respect~~The significant factors (excluding acquisitions) influencing sales growth in the SGK Brand Solutions segment are global economic conditions, brand innovation, the level of marketing spending by the Company's clients, and government regulation. Due to the ~~remainder~~global footprint of this segment, currency fluctuations can also be a significant factor. For the Memorialization segment, sales growth will be influenced by North America death rates, and the impact of the increasing trend toward cremation on the segment's product offerings, including caskets, cemetery memorial products and cremation-related products. For the Industrial Technologies segment, sales growth drivers include economic/industrial market conditions, new product development, and the e-commerce trend.

During fiscal ~~2018,~~2019, the Company initiated a strategic evaluation to improve profitability and reduce the Company's cost structure. These actions leveraged the benefit of the Company's new global ERP platform, primarily targeted at the SGK Brand Solutions segment, both operational and commercial structure, and the Company's shared financial services and other administrative functions. This evaluation identified opportunities for significant cost structure improvements, which the Company expects to ~~continue~~achieve through at least fiscal 2022. The Company's recent strategic review has also resulted in improvements to ~~devote~~the commercial structure within the SGK Brand Solutions segment.

On January 30, 2020, the World Health Organization declared an outbreak of COVID-19 to be a ~~significant~~Public Health Emergency of International Concern, and subsequently recognized COVID-19 as a global pandemic in March 2020. Widespread efforts have been deployed by multiple countries around the world to prevent the virus from spreading, including temporary closures of non-essential businesses, event cancellations, travel restrictions, quarantines, and other disruptive actions. Substantially all of the Company’s operations have remained open during the COVID-19 pandemic, as they have been considered “essential” businesses during this time. However, the Company has experienced some commercial impact and business disruptions in certain segments and geographic locations as a result of COVID-19.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations, Continued

Considerable judgment is necessary to assess and predict the potential financial impacts of COVID-19 on the Company’s future operating results. Management expects that each of its business segments will experience some level of ~~effort~~impacts in the short-term, potentially due to customer business disruptions, supply chain disruptions, facilities shut-downs, changing global economic conditions, and customer project delays. Additionally, recent increases in the ~~integrations~~cost of ~~recent acquisitions, including systems integration. Due~~certain raw materials and other inflationary impacts are expected to the size of these acquisitions and the projected synergy benefits from integration, these efforts are anticipated to continue for an extended period of time. The costs associated with these integrations will impact the Company's ~~operating~~ results for ~~fiscal 2018. Consistent with its practice,~~ the near future. The Company ~~plans~~expects to ~~identify~~partially mitigate these ~~costs~~cost increases through price realization and the cost-reduction initiatives discussed above. Longer-term financial impacts will depend on ~~a quarterly basis as incurred.~~global economic conditions eventually resulting from COVID-19.

CRITICAL ACCOUNTING POLICIES:

The preparation of financial statements in conformity with ~~generally accepted accounting principles~~GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Therefore, the determination of estimates requires the exercise of judgment based on various assumptions and other factors such as historical experience, economic conditions, and in some cases, actuarial techniques. Actual results may differ from those estimates. A discussion of market risks affecting the Company can be found in Item 7A - "Quantitative and Qualitative Disclosures about Market Risk" in the Company's Annual Report on Form 10-K for the fiscal year ended September 30, ~~2017.~~2020.

A summary of the Company's significant accounting policies are included in the Notes to Consolidated Financial Statements and in the critical accounting policies in Management's Discussion and Analysis included in the Company's Annual Report on Form 10-K for the year ended September 30, ~~2017.~~2020. Management believes that the application of these policies on a consistent basis enables the Company to provide useful and reliable financial information about the ~~company's~~Company's operating results and financial condition.

The Company performed its annual impairment review of goodwill and indefinite-lived intangible assets in the second quarter of fiscal 2021 (January 1, 2021) and determined that the estimated fair values for all goodwill reporting units exceeded their carrying values, therefore no impairment charges were necessary. The estimated fair value of the Company's Graphics Imaging reporting unit, within the SGK Brand Solutions segment, exceeded the carrying value (expressed as a percentage of carrying value) by approximately 5%. If current projections are not achieved or specific valuation factors outside the Company’s control (such as discount rates and continued economic and industry impacts of COVID-19) significantly change, goodwill write-downs may be necessary in future periods.

~~Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations, Continued~~

LONG-TERM CONTRACTUAL OBLIGATIONS AND COMMITMENTS:

The following table summarizes the Company's contractual obligations at ~~December 31, 2017,~~June 30, 2021, and the effect such obligations are expected to have on its liquidity and cash flows in future periods.


	Payments due in fiscal year:
	Total		2021 Remainder		2022 (1) to 2023		2024 to 2025		After 2025
Contractual Cash Obligations:	(Dollar amounts in thousands)
Revolving credit facilities	$	382,253	$	—	$	7,786	$	374,467	$	—
Securitization Facility	90,710		—		90,710		—		—

2025 Senior Notes	368,536		—		31,500		31,500		305,536


Finance lease obligations (2)	11,024		1,232		5,967		1,780		2,045
Non-cancelable operating leases (2)	89,820		7,096		45,950		24,926		11,848
Other	20,609		984		11,459		2,132		6,034
Total contractual cash obligations	$	962,952	$	9,312	$	193,372	$	434,805	$	325,463

Payments due in fiscal year:
Total
2018
Remainder
2019 to 2020 2021 to 2022
After
2022
Contractual Cash Obligations: (Dollar amounts in thousands)
Revolving credit facilities $ 368,416
$ —
$ 31,416
$ 337,000
$ —
Securitization Facility 101,400
—
101,400
—
—
Senior secured term loan 227,591
15,625
50,000
161,966
—
2025 Senior Notes 421,974
13,125
31,500
31,500
345,849
Notes payable to banks 22,052
3,304
18,748
—
—
Short-term borrowings 4,885
4,885
—
—
—
Capital lease obligations 6,706
897
1,746
1,237
2,826
Non-cancelable operating leases 77,594
17,308
32,021
15,576
12,689
Other 14,976
2,995
5,990
5,991
—

Total contractual cash obligations $ 1,245,594
$ 58,139
$ 272,821
$ 553,270
$ 361,364
(1) The Company maintains certain debt facilities with maturity dates of twelve months or less that it intends and has the ability to extend beyond twelve months totaling $98.5 million. These balances have been classified as non-current on the Company's Consolidated Balance Sheet.

(2) Lease obligations have not been discounted to their present value.

A significant portion of the loans included in the table above bear interest at variable rates. At ~~December 31, 2017,~~June 30, 2021, the weighted-average interest rate was ~~2.93%~~1.94% on the Company's domestic credit facility, ~~2.31%~~0.85% on the Company's Securitization Facility ~~2.00%~~and 2.25% on the credit facility through the Company's European ~~subsidiaries, 1.40% on notes issued by the Company's wholly-owned subsidiary, Matthews Europe GmbH & Co. KG, 2.27% on bank loans to the Company's wholly-owned subsidiary, Matthews International S.p.A,~~subsidiaries.

Item 2. Management's Discussion and ~~4.62% on other outstanding debt.~~Analysis of Financial Condition and Results of Operations, Continued

Benefit payments under the Company's principal retirement plan are made from plan assets, while benefit payments under the supplemental retirement plan and postretirement benefit plan are funded from the Company's operating cash. ~~The Company is not required to make any significant contributions to its principal retirement plan in fiscal 2018.~~ During the ~~three~~nine months ended ~~December 31, 2017~~June 30, 2021 contributions of ~~$184,000~~$15.0 million, $607,000 and ~~$437,000~~$436,000 were made under the principal retirement plan, supplemental retirement plan and postretirement plan, respectively. Under IRS regulations, no further contributions are required to be made to the Company's principal retirement plan during fiscal 2021. The Company currently anticipates contributing an additional ~~$582,000~~$298,000 and ~~$607,000~~$395,000 under the supplemental retirement plan and postretirement plan, respectively, for the remainder of fiscal ~~2018.~~2021.

During the third quarter of fiscal 2021, the Compensation Committee of the Company's Board of Directors approved a resolution to freeze all future benefit accruals for all participants in the Company’s supplemental retirement plan and the defined benefit portion of the officers retirement restoration plan, effective April 30, 2021. Consequently, participants in these plans will no longer earn additional benefits after April 30, 2021.

Unrecognized tax benefits are positions taken, or expected to be taken, on an income tax return that may result in additional payments to tax authorities. If a tax authority agrees with the tax position taken, or expected to be taken, or the applicable statute of limitations expires, then additional payments will not be necessary. As of ~~December 31, 2017,~~June 30, 2021, the Company had unrecognized tax benefits, excluding penalties and interest, of approximately ~~$8.0~~$8.1 million. The timing of potential future payments related to the unrecognized tax benefits is not presently determinable. The Company believes that its current liquidity sources, combined with its operating cash flow and borrowing capacity, will be sufficient to meet its capital needs for the foreseeable future.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS:

Refer to Note 2, "Basis of Presentation" in Item 1 - "Financial Statements," for further details on recently issued accounting pronouncements.

Item 3. Quantitative and Qualitative Disclosures About Market ~~Risk:~~Risk

There have been no material changes in the Company’s market risk during the three and nine months ended ~~December 31, 2017.~~June 30, 2021. For additional information see Item 7A - "Quantitative and Qualitative Disclosures About Market Risk" in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, ~~2017.~~2020.

Item 4. Controls and ~~Procedures:~~Procedures

The Company's disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) are designed to provide reasonable assurance that information required to be disclosed in our reports filed under that Act (the "Exchange Act"), such as this Quarterly Report on Form 10-Q, is recorded, processed, summarized and reported within the time periods specified in the rules of the Securities and Exchange Commission. These disclosure controls and procedures also are designed to provide reasonable assurance that such information is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosures.

Management, under the supervision and with the participation of our Chief Executive Officer and the Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures in effect as of ~~December 31, 2017.~~June 30, 2021. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of ~~December 31, 2017,~~June 30, 2021, the Company's disclosure controls and procedures were effective to provide reasonable assurance that material information is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, and that such information is recorded, summarized and properly reported within the appropriate time period, relating to the Company and its consolidated subsidiaries, required to be included in the Exchange Act reports, including this Quarterly Report on Form 10-Q.

The Company is in the process of implementing a global operating and financial reporting information technology system, SAP, as part of a multi-year plan to integrate and upgrade its systems and processes. As the phased implementation of this system occurs, certain changes will be made to the Company's processes and procedures which, in turn, result in changes to its internal control over financial reporting. While the Company expects to strengthen its internal financial controls by automating certain manual processes and standardizing business processes and reporting across its global organization, management will continue to evaluate and monitor its internal controls as processes and procedures in each of the affected areas evolve.

~~Other than changes with respect to the SAP implementation described above, there~~There have been no changes in the Company's internal controls over financial reporting that occurred during the fiscal quarter ended ~~December 31, 2017~~June 30, 2021 that have materially affected, or are reasonably likely to materially affect, the Company's internal controls over financial reporting.

PART II ‑ OTHER INFORMATION

Item 1. Legal Proceedings

~~Matthews~~The Company is subject to various legal proceedings and claims arising in the ordinary course of business. Management does not expect that the results of any of these legal proceedings will have a material adverse effect on Matthews' financial condition, results of operations or cash flows.

Item 1A. Risk Factors

There have been no material changes in our risk factors from those disclosed in Part I, Item IA1A to our Annual Report on Form 10-K for the fiscal year ended September 30, ~~2017.~~2020. The risk factors disclosed in Part I, Item 1A to our Annual Report on Form 10-K for the fiscal year ended September 30, ~~2017,~~2020, in addition to the other information set forth in this report, could adversely affect the Company's operating performance and financial condition. Additional risks not currently known or deemed immaterial may also result in adverse effects on the Company.

Item 2. ~~Unrecognized~~Unregistered Sales of Equity Securities and Use of Proceeds

Stock Repurchase Plan

The Company has a stock repurchase program. The buy-back program is designed to increase shareholder value, enlarge the Company's holdings of its common stock, and add to earnings per share. Repurchased shares may be retained in treasury, utilized for acquisitions, or reissued to employees or other purchasers, subject to the restrictions of the Company's Restated Articles of Incorporation. ~~Under the current authorization, the~~The Company's Board of Directors had authorized the repurchase of a total of 5,000,000 shares of Matthews' common stock under the program, of which ~~1,740,381~~ 324,861shares ~~remain~~remained available for repurchase as of ~~December 31, 2017.~~June 30, 2021. On July 28, 2021, the Company's Board of Directors authorized an additional 2,500,000 shares for repurchase under the program.

The following table shows the monthly fiscal ~~2018~~2021 stock repurchase activity:


Period	Total number of shares purchased	Weighted-average price paid per share		Total number of shares purchased as part of a publicly announced plan	Maximum number of shares that may yet be purchased under the plan
October 2020	40,000	$	22.25	40,000	498,736
November 2020	34,789	25.82		34,789	463,947
December 2020	87,502	27.99		87,502	376,445
January 2021	—	—		—	376,445
February 2021	—	—		—	376,445
March 2021	6,000	41.36		6,000	370,445
April 2021	—	—		—	370,445
May 2021	—	—		—	370,445
June 2021	45,584	36.53		45,584	324,861
Total	213,875	$	28.76	213,875

Period Total number of shares purchased Weighted-average price paid per share Total number of shares purchased as part of a publicly announced plan Maximum number of shares that may yet be purchased under the plan
October 2017 —
$ —
—
1,816,146
November 2017 75,078
58.27
75,078
1,741,068
December 2017 687
58.64
687
1,740,381
Total 75,765
$ 58.27
�� 75,765

Item 3. Defaults Upon Senior Securities

Not Applicable.

Item 4. Mine Safety Disclosures

Not Applicable.

Item 5. Other Information

Not Applicable.

Item 6. Exhibits and Reports on Form ~~8‑K~~

8-K


(a)			Exhibits

~~(a)~~			~~Exhibits~~

	Exhibit No.	Description		Method of Filing

			~~4.1~~3.1		~~Indenture, dated as~~Restated Articles of ~~December 6, 2017, by and among Matthews, the Guarantors, and the Bank of New York Mellon Trust Company, as trustee~~ Incorporation*	Exhibit Number ~~4.1~~3.1 to the Annual Report on Form 10-K for the year ended September 30, 1994 (filed in paper format)
			3.2		Restated By-laws of Matthews International Corporation, as amended January 8, 2021*	Exhibit Number 3.1 to the Current Report on Form 8-K filed on ~~December 7, 2017~~January 14, 2021
			~~4.2~~31.1		~~5.250% Senior Note due December 1, 2025~~	~~Exhibit Number 4.2 to the Current Report on Form 8-K filed on December 7, 2017~~
	~~10.1~~	~~Purchase Agreement dated December 1, 2017 by and among Matthews International Corporation Guarantors and J.P. Morgan Security LLC~~	~~Exhibit Number 10.1 to the Current Report on Form 8-K filed on December 7, 2017~~
	~~10.2~~	~~First amendment to Second Amended and Restated Loan Agreement~~	~~Exhibit Number 10.1 to the Current Report on Form 8-K filed on November 22, 2017~~
	~~31.1~~	Certification of Principal Executive Officer for Joseph C. Bartolacci	Filed herewith
			31.2		Certification of Principal Financial Officer for Steven F. Nicola	Filed herewith
			32.1		Certification Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for Joseph C. Bartolacci	Furnished herewith
			32.2		Certification Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for Steven F. Nicola	Furnished herewith
			101.INS		XBRL Instance ~~Document~~Document- the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document	Filed herewith
			101.SCH		XBRL Taxonomy Extension Schema	Filed herewith
			101.CAL		XBRL Taxonomy Extension Calculation Linkbase	Filed herewith
			101.DEF		XBRL Taxonomy Extension Definition Linkbase	Filed herewith
			101.LAB		XBRL Taxonomy Extension Label Linkbase	Filed herewith
			101.PRE		XBRL Taxonomy Extension Presentation Linkbase	Filed herewith
			104		Cover Page Interactive Data File (Embedded within the Inline XBRL document and included in Exhibit 101)	Filed herewith

* Incorporated by reference

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



		MATTHEWS INTERNATIONAL CORPORATION
		(Registrant)

Date:	~~January 31, 2018~~July 30, 2021	By: /s/ Joseph C. Bartolacci
		Joseph C. Bartolacci, President
		and Chief Executive Officer


Date:	~~January 31, 2018~~July 30, 2021	By: /s/ Steven F. Nicola
		Steven F. Nicola, Chief Financial Officer
		and Secretary



~~PENNSYLVANIA~~Pennsylvania		~~25‑0644320~~	25-0644320
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer
~~Incorporation or organization)~~	Identification No.)



~~TWO NORTHSHORE CENTER, PITTSBURGH, PA~~	~~15212‑5851~~
~~(Address of principal executive offices)~~	~~(Zip Code)~~

~~(412) 442-8200~~
~~(Registrant's telephone number, including area code)~~



	Three Months Ended December 31,
	2017			2016

Cash flows from operating activities:
Net income	$	35,158		$	10,208
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	17,238			15,159
Stock-based compensation expense	5,474			6,097
Deferred tax benefit	(38,052		)	(1,861		)
(Gain) loss on sale of assets	(576		)	55
Unrealized gain on investments	(489		)	(809		)
Changes in working capital items	(9,999		)	(12,808		)
Increase in other assets	(5,336		)	(1,177		)
Decrease in other liabilities	(1,931		)	(928		)
Increase in pension and postretirement benefits	2,833			3,318
Other operating activities, net	3,317			(1,208		)

Net cash provided by operating activities	7,637			16,046

Cash flows from investing activities:
Capital expenditures	(11,647		)	(5,069		)
Acquisitions, net of cash acquired	(85,964		)	(10,733		)
Proceeds from sale of assets	1,163			7
Purchases of investments	(11,730		)	—

Net cash used in investing activities	(108,178		)	(15,795		)

Cash flows from financing activities:
Proceeds from long-term debt	509,622			133,454
Payments on long-term debt	(396,321		)	(67,533		)
Proceeds from the exercise of stock options	—			14
Purchases of treasury stock	(4,415		)	(6,499		)
Dividends	(6,071		)	(5,389		)

Net cash provided by financing activities	102,815			54,047

Effect of exchange rate changes on cash	353			(3,602		)

Net change in cash and cash equivalents	$	2,627		$	50,696

Non-cash investing and financing activities:
Acquisition of long-term asset under financing arrangement	$	14,544		$	—



☒	~~Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934~~



	December 31, 2017					September 30, 2017
ASSETS
Current assets:
Cash and cash equivalents				$	60,142				��	$	57,515
Accounts receivable, net				320,115						319,566
Inventories				179,336						171,445
Other current assets				53,784						46,533

Total current assets				613,377						595,059

Investments				49,946						37,667
Property, plant and equipment: Cost	$	596,107				$	570,879
Less accumulated depreciation	(342,263		)			(335,346		)
				253,844						235,533
Deferred income taxes				1,890						2,456
Other assets				58,887						51,758
Goodwill				948,687						897,794
Other intangible assets, net				455,744						424,382

Total assets				$	2,382,375					$	2,244,649

LIABILITIES
Current liabilities:
Long-term debt, current maturities				$	31,390					$	29,528
Trade accounts payable				57,267						66,607
Accrued compensation				45,471						62,210
Accrued income taxes				31,211						21,386
Other current liabilities				127,332						105,401

Total current liabilities				292,671						285,132

Long-term debt				994,255						881,602
Accrued pension				104,341						103,273
Postretirement benefits				19,366						19,273
Deferred income taxes				101,449						139,430
Other liabilities				39,664						25,680
Total liabilities				1,551,746						1,454,390

SHAREHOLDERS' EQUITY
Shareholders' equity-Matthews:
Common stock	$	36,334				$	36,334
Additional paid-in capital	120,294					123,432
Retained earnings	977,939					948,830
Accumulated other comprehensive loss	(143,904		)			(154,115		)
Treasury stock, at cost	(160,577		)			(164,774		)
Total shareholders' equity-Matthews				830,086						789,707
Noncontrolling interests				543						552
Total shareholders' equity				830,629						790,259

Total liabilities and shareholders' equity				$	2,382,375					$	2,244,649



	Three Months Ended December 31,
	Matthews						Noncontrolling Interest						Total
	2017			2016			2017			2016			2017			2016

Net income (loss):	$	35,180		$	10,322		$	(22	)	$	(114	)	$	35,158		$	10,208
Other comprehensive income (loss) ("OCI"), net of tax:
Foreign currency translation adjustment	7,598			(31,342		)	13			59			7,611			(31,283		)
Pension plans and other postretirement benefits	1,018			1,536			—			—			1,018			1,536
Unrecognized gain on derivatives:
Net change from periodic revaluation	1,633			5,100			—			—			1,633			5,100
Net amount reclassified to earnings	(38		)	493			—			—			(38		)	493
Net change in unrecognized gain on derivatives	1,595			5,593			—			—			1,595			5,593
OCI, net of tax	10,211			(24,213		)	13			59			10,224			(24,154		)
Comprehensive income (loss)	$	45,391		$	(13,891	)	$	(9	)	$	(55	)	$	45,382		$	(13,946	)


Derivatives in Cash Flow Hedging Relationships	Location of (Loss) Gain Recognized in Income on Derivative	Amount of Loss Recognized in Income on Derivatives				Amount of (Loss) Gain Recognized in Income on Derivatives


		Three Months Ended June 30,				Nine Months Ended June 30,
		2021		2020		2021		2020
Interest rate swaps	Interest expense	$	(790)	$	(438)	$	(2,444)	$	108



Derivatives in Cash Flow Hedging Relationships	Location of Gain Recognized in Income on Derivative	Amount of Gain Recognized in Income on Derivatives


		Three Months Ended December 31,
		2017		2016

Interest rate swaps	Interest expense	$	63	$	807



Derivatives in Cash Flow Hedging Relationships	Amount of Gain Recognized in AOCI on Derivatives				Location of Gain (Loss) Reclassified From AOCI into Income (Effective Portion*)	Amount of Gain (Loss) Reclassified from AOCI into Income (Effective Portion*)
	December 31, 2017		December 31, 2016			December 31, 2017		December 31, 2016

Interest rate swaps	$	1,633	$	5,100	Interest expense	$	38	$	(493	)

*There is no ineffective portion or amount excluded from effectiveness testing.



	Shares		Weighted- average Grant-date Fair Value
Non-vested at September 30, 2017	501,184		$	53.65
Granted	234,100		57.05
Vested	(168,280	)	51.54
Expired or forfeited	(5,214	)	59.51
Non-vested at December 31, 2017	561,790		$	55.64



Contributions	Pension		Other Postretirement

Contributions during the three months ended December 31, 2017:
Supplemental retirement plan	$	184	$	—
Other postretirement plan	—		437

Additional contributions expected in fiscal 2018:
Supplemental retirement plan	$	582	$	—
Other postretirement plan	—		607

Contributions during the nine months ended June 30, 2021:
Principal retirement plan	$	15,000	$	—
Supplemental retirement plan	607		—
Other postretirement plan	—		436

Additional contributions expected in fiscal 2021:

Supplemental retirement plan	$	298	$	—
Other postretirement plan	—		395



	Amount reclassified from AOCI
Details about AOCI Components	Three Months Ended December 31, 2017				Three Months Ended December 31, 2016			Affected line item in the Statement of income

Postretirement benefit plans
Prior service (cost) credit	$	84		(a)	$	94
Actuarial losses	(1,752		)	(a)	(2,509		)
	(1,668		)	(b)	(2,415		)	Income before income tax
	(650		)		(879		)	Income taxes
	$	(1,018	)		$	(1,536	)	Net income
Derivatives
Interest rate swap contracts	$	63			$	(807	)	Interest expense
	63			(b)	(807		)	Income before income tax
	25				(314		)	Income taxes
	$	38			$	(493	)	Net income



Operating profit:
SGK Brand Solutions	$	3,152	$	4,190
Memorialization	14,454		14,367
Industrial Technologies	318		506
	$	17,924	$	19,063



	Carrying Amount		Accumulated Amortization				Net
December 31, 2017:
Trade names	$	168,467	$	—		*	$	168,467
Trade names	8,504		(2,284		)		6,220
Customer relationships	364,554		(90,611		)		273,943
Copyrights/patents/other	19,092		(11,978		)		7,114
	$	560,617	$	(104,873	)		$	455,744

September 30, 2017:
Trade names	$	168,467	$	—		*	$	168,467
Trade names	5,522		(2,030		)		3,492
Customer relationships	333,632		(84,560		)		249,072
Copyrights/patents/other	14,787		(11,436		)		3,351
*Not subject to amortization	$	522,408	$	(98,026	)		$	424,382



	Payments due in fiscal year:
	Total		2018 Remainder		2019 to 2020		2021 to 2022		After 2022
Contractual Cash Obligations:	(Dollar amounts in thousands)
Revolving credit facilities	$	368,416	$	—	$	31,416	$	337,000	$	—
Securitization Facility	101,400		—		101,400		—		—
Senior secured term loan	227,591		15,625		50,000		161,966		—
2025 Senior Notes	421,974		13,125		31,500		31,500		345,849
Notes payable to banks	22,052		3,304		18,748		—		—
Short-term borrowings	4,885		4,885		—		—		—
Capital lease obligations	6,706		897		1,746		1,237		2,826
Non-cancelable operating leases	77,594		17,308		32,021		15,576		12,689
Other	14,976		2,995		5,990		5,991		—

Total contractual cash obligations	$	1,245,594	$	58,139	$	272,821	$	553,270	$	361,364